Kyle Matthews is the Founder and Chief Executive Officer of Matthews Real Estate Investment Services™ and has served in this role since the company’s founding in 2015. Matthews™ is the parent company of a diversified group of real estate service, investment, debt, leasing, and asset management firms. Through Kyle’s leadership, Matthews™ has become one of the country's largest commercial brokerage firms in both transaction volume and by a number of agents and employees. Prior to founding Matthews™, he led Matthews Retail Group, Inc. to become the number one real estate investment sales group at a publicly-traded, global real estate investment service company. Under his guidance, Matthews™ has experienced total revenue growth of 1,225% in the company’s first five years since its founding and has grown from 18 agents and employees to presently over 400. Furthermore, Kyle oversees the expansion of Matthews™ with the footprint having expanded from one office in El Segundo, CA, to over 14 offices nationwide.
On this episode Chris & Kyle talk about:
➡️ His story of becoming a broker and eventually starting Matthews
➡️ The characteristics and work ethic of the best brokers
➡️ Why having fun is important in business
➡️ What's going on in the current real estate market
(00:04:28) Kyle’s upbringing in an NFL family, playing football at USC, winning a national title
(00:15:33) Lessons learned from playing for Pete Carroll
(00:29:27) Kyle’s career in brokerage
(00:38:40) Working through the GFC
(00:55:24) Starting Matthews REIS
(01:14:20) The Matthews Culture
(01:29:09) How Matthews is scaling and implementing technology
(01:45:25) Work-Life Balance
(01:55:37) A Discussion on the RE Market
👉 Follow Kyle on Twitter: https://twitter.com/KyleMatthewsCRE
👉 Matthews REIS: https://www.matthews.com/
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➡️ Follow Chris on Twitter: www.twitter.com/FortWorthChris
➡️ Follow Chris on LinkedIn: www.linkedin.com/in/chrispowersjr/
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Chris Powers: All right, you all get your popcorn ready. I've been chatting with Kyle for the last hour, and today will be great. I met Kyle in 2019 in La, and we haven't chatted a lot since then, but we've been chatting for the last hour, and today will be good. So Kyle, welcome.
Kyle Matthews:Thanks for having me.
Chris Powers: I've been pumped, researching the last couple of days, just what you're up to, and you have a unique story.
So let's start there. How did you grow up and reach founding Matthews, where you are today?
Kyle Matthews:Yeah, I'll tell you my story because it will provide better context for, I'm sure, questions that come later. But you know, I grew up in the Matthews family, the Matthews football family for the football fans out there.
So my dad's Clay Matthews was a linebacker in the NFL for 19 years, you know, uncles Bruce Matthews hall of Fame offensive lineman in the NFL... My grandfather played in the NFL, and I got into brokerage and will tell that story in a second. And then, I had brothers who played in the NFL at very high levels.
I have cousins still in the NFL.
Chris Powers: What happened, man?
Kyle Matthews:I got all the good looks and intelligence compared to my brothers. It was just a blessing growing up in that world and that life; I moved around a lot.
I had a unique experience, and I asked my parents why they did that, why we moved every six months. So during the season, my dad played for the Cleveland Browns Go Browns from was born until I was about 13, And he played there for 16 years.
And then he played in the Atlanta Falcons for the last three or four years of his career. So from August to late December, I would live in Cleveland and then, at the very end, Atlanta. And then, as soon as the last game was over, we would move back to LA even if they went to the playoffs. We'd move into the same house and often moved to the same school.
But, you can imagine I was getting out of school every six months and returning to school, and I loved it. It was always exciting every six months, and it was a change of scenery. I had two unique friend groups, and when I went to Atlanta, my third friend group, sometimes I get dropped into a new school; there were five or six new school experiences and, you know, fast forward to getting into brokerage and sales.
That helped me develop emotional intelligence. You're just trying to fit in right away, and you need some sales skills because you've got to sell them on why you shouldn't get your ass kicked. You know, when I moved from L. A to Georgia in 1993 was a culture shock, so I grew up in that family with many spotlights.
From a young age, I was acutely aware that, to some degree, what I said or what I did, people were watching or listening, maybe a little more. Intently to a ten-year-old version of me than maybe, someone else. And there were just so many blessings that I received.
There are so many development advantages I had because of that experience.
And so my dad retired when I was a sophomore in high school. And imagine having your dad playing football when you were in high school, and it was a trip, and then you moved out to LA—full-time.
So I played football in high school and was fortunate enough to be invited to play at USC in 2000 when I graduated high school. And I then went to SE and played football. And my first year, we could have been better. And then they made a coaching change and hired a guy named Pete Carroll if you know that name.
And it was like a light got turned on, the fire got lit, and he came in with so much energy and enthusiasm. You know, people described him as a player's coach. But he was not a pushover man. They had a killer coaching staff, Norm Chow coach; he was there.
We had an incredible coaching staff; he just started bringing in boys, dogs, and just bodies. And we got excellent, really fast. And by the end of my time on the team, as a senior in 2003, and 2004, we won a national championship, which was an incredible experience. We could dive into that.
And so I'll tell a story; I've told this before, but it's always funny; one of the good and the bad things about going to a school like SC at that level is I was a safety, and I showed up. And, because I grew up in a family with very high-level athletes, much better than myself, there's humility.
You always know there's someone bigger, stronger, faster. And only some people who go SE know that once they get there. I knew that going in and felt good about what I brought. You know, at the time, I didn't feel confident. And I remember, like one of our first padded practices, I was in a drill line and didn't even see the play.
I just heard it, and I'm like, what was that? You see like a body flying and man, who was that? That's Troy. And I got flashes. He's good. What position did he play?
And, 72 hours into my career, I was like, man. And I need to find something else to do with my life. And I loved football, and I loved the experience. I gave everything I had when I was there, showed up and did every workout, and went hard.
And eventually, I delivered more hits than I took. But I needed to find a career even very early in my collegiate career. Like, I'm the NFL. That was my dad's destiny, but that probably isn't mine. And that's okay. Growing up in that family, you get to see and experience many benefits.
The Fame, the ropes that get open, the open doors. But more than anything, you get the benefit of seeing the underbelly, the nasty parts of being in some way affiliated with a relatively famous father or whatever brother. And you see the toll it takes on their bodies.
Chris Powers: And what would it be like after games?
Kyle Matthews:He'd be hurt; my dad's a freak. Like he played 19 years, the most games ever in the history of the NFL linebacker, 278 NFL games in addition to college and high school. So like, count that up. I don't think that's been broken, and all he ever had was a broken arm and ankle.
Like he's made of a different steal in my old man? And my uncle too. Like he has the most games ever in the history of the NFL as an offensive lineman, they're just built. Differently, it takes a toll physically. But how about mentally?
How about my dad picking me up from soccer practice? It is like the late eighties, the early nineties—no social media. There's no satellite, so you turn on the radio, and you turn on sports, soccer radio. And I'm sitting there, 12 years old, and someone is going off just ripping your father on the radio like, you know, Clay Matthews, he's old, they should cut his bum ass.
And I'm sitting there, and this works both ways. It's 1989; I'm in second grade, a couple of weeks before my dad made a mistake in a game. He was a very high-level player, but he could have done better.
And I got kids at the school, and my dad said this about your dad. And you are like, all right, fine. And then three weeks later, they're in the divisional championship game against the Bills. And it's the last play of the game on the five-yard line, Jim Kelly drops back, throws the Thurmond Thomas and my dad picks it off to win the game and go to the AFC Championship, and then it just flips, and everybody's your buddy, and everyone's like super fired up.
Then the radio talks about what a hero is. It not just numbs you to what everyone outside of you, like a real family and close friends, say. And it helps in many ways running a company or achieving success in whatever you choose, but it teaches you a precious lesson: don't get too high, don't get too low.
And don't look for value and affirmation from the masses because you'll never get it.
Chris Powers: We were talking about that. So everything you just said, you imagine 1993, you're on a radio show, seeing public opinion shift that quickly. And now the world has given us the opportunity, you're an ambassador to shift our opinion every two seconds, and you have a strong opinion about that.
Let's go down that for a little bit. Social media, how you think about the world today with that in the mix.
Kyle Matthews:I've been wrong about social media, so I'm not the best person to comment on it. I remember I was in college, dating my now wife, and she was like, check out this website.
And I was like, what is this? She's, it's this website. You could post photos of your life, and people can like them and connect all these people. I was like, that's the dumbest thing I've ever heard. Who would wanna do that? That's so intrusive. She's no, and this is big.
You might need to be corrected. What's the name of that website? Facebook. Never hear that again. I wonder if there's actual value. Social media, at a personal level, is hazardous and generally destructive. And if you use social media as a Christmas card, it works like, I want to keep people in touch with how the kids are growing up, and that's fine.
But nobody has that discipline. And from a personal level, it could be tough on people mentally and, their self-image, how they feel about their physical, professional, or financial actions. Because even though you know it, you don't know like you lose sight of the fact that you're looking at everyone's curated images of their life, and it's not real.
And you say that to yourself, but it doesn't show up; you are constantly like, manI, suck, right? And I need to be closer to deals or making enough money, or how about this? I'm not skinny enough, and I don't look good enough. And generally speaking, people who don't have social media are much happier.
I don't know if reports say that, but that's a thing if I had to guess. So real quick, I did want to finish the question about. I'm at SE Careers not, so I wanted to get into real estate and have always wanted real estate. My dad owned one building, an apartment building.
And he had bought it for my grandfather. So that's how we got into real estate. We would go to the building because I was the oldest son, so I got all the wrong jobs, right? He's Hey, we've got to wake up early; we've got to go to the building, turn a unit, collect some rent, and get the laundry income.
And I would go to this building, and I was coming of age, he'd say, Hey, what is this? And he is that's apartment building. And he was like, you know, 20 units in LA. I was like, man, so what does it do? His people live here, and they pay me rent. I was like, wait, so they live here and must give you money every month.
And it's yeah, I was like, That's so cool, I want to do that. How do I do that? Coming out of college, I knew I wanted to get into real estate. I didn't have any money, and I didn't have any real estate skills. I wasn't a real estate finance major. I didn't do internships in real estate in that sense.
And so brokerage was my path. And that's how I got into brokerage, out of college, which led to me being here today.
Chris Powers: All right, we're going to unpack all that, but there's one thing you said in there that I've written down. Pete Carroll showed up, and the team turned around quickly.
And then we've been talking and will talk a lot about your transition from broker to leader. But what did you learn from Pete Carroll that he could come into an average football team and turn it around? It's a leadership skill that he brought. What did he bring that's stuck with you?
Kyle Matthews:Yeah. So many things. There are so many layers unbeknownst to me at the time. I learned first-hand about building, running, and sustaining an incredibly high-performance team or company. Again, you know, that version as a team. But have a great time doing it.
Football at that time, and even today, like Nick Sabin, you look at the sustained, sustained success in Alabama. Nick's intense; he was one of my dad's coaches for the Browns to de-coordinate. And there are times I'm watching Alabama play, and they win a lot of games, but I'm like, I don't know if they'd look like they're having a great time.
For whatever reason, at SC, we could win just as many games, just as many championships. But like we had such a good time, it was all due to Pete and how he approached it. The foundation at SC was competition, and iron sharpens iron, right? And so he would bring, he would say, I'm going to go out and recruit the absolute best athletes around the country.
And he was very good at that. So he was just a great salesperson. He had an evident vision. He communicated that vision to the recruits and said, this is what we are doing. Here is the value to you, and here's how it will put you in a position to succeed. Ultimately likely get drafted and high into the NFL, which many of my teammates did.
And you know what he did? I'll never forget his first recruiting class. He sat the whole team down because the recruits signed in the spring, but they showed up in the summer to start working out. So it was like the start of spring ball, and the recruiting season had just finished.
We had just signed this like the number one class, and it was the first time SE he sat the whole team down, and he said, Hey guys, we had a great signing day, and I want you to see who's coming in to take your jobs. And we had to sit there and watch these guys' highlights as a team. There were some excellent players, man, and you're sitting there, and you're like, damned.
And like it's fight or flight. And we had some guys on the team who were recruiting my replacements. I'm out of here. And they transfer out and get pizza attitudes. Get them out; they're soft. The marshmallow is mentally weak. Human beings we do not want here. Get 'out here.
They will break in the fourth quarter. They will forget their assignment, and they'll do something. They will expose us late in a big game if having someone come in at their position causes them to want to transfer.
They would sit there and be like, bring this punk ass in here. Let's go. And you know what? And it drove those that stayed to get better. And I'll speak for myself, whatever the best version of myself as a player, which needed more to start there.
And that's okay. But I'm telling you, it drove me to be the absolute best version of myself. As I trained as hard as possible, I lifted as hard. I worked out as hard. I watched the film again. God made me never to be as good at football as Troy Polamalu. And as hard as that was for me to come to that, it was like, I'll find something else to do.
And I could apply many of these mentality lessons to brokerage, allowing me to get going. But the first thing Pete did was bring that competitive mindset. Not only are we going to do this, if you're the type of player we want, if you're the type of mentality we want, you're going to want this because you want these guys to push you.
And we found that as these guys were coming in, as these five stars, just absolute studs were coming in practice started to get like one's verse ones, twos, verse twos. That was another thing. We did a lot of full-pad practice. And then he would often be in college programs, either before or probably after they do the starting offensive unit verse like scout team.
And then the starting defense verse the scout team offense at SC, we're going one's verse ones every day, full pads. And he's, it's competition. He would create scenarios of the 10, the five, and the two-yard line. And then we would rank him and whichever unit one, the other unit had to like, we had to do up-downs, we had to do barrel.
It was intense, so the practices got so hardcore, and as the talent elevated throughout my time there, you were going against guys in practice that it was accessible by the time the game came on Saturday. There's no way that guy across the line at UCLA is nearly as good as the left tackle on pass rushing against, or the receiver I'm covering, or the running back I'm trying to beat for a second in practice like That punk ass player in that powder blue uniform like that's not going to and that's why we smashed them every year, you know?
You know, that's just how we got after it. And then so, the games almost became more accessible, and then we started smoking people. And so it created this highly competitive environment. And many times, where the mistake is made in leadership that I got to see Pete do as they create this high-pressure, high-stress environment, there's never a release.
And you win a lot, but you don't necessarily enjoy it, or sometimes there's like an implosion, there's like this, everyone mentally breaks. What Pete did was he understood human beings so well. I don't know if that's a skill you can learn, and Pete just had it, and he was born with it.
And I don't know if anyone's ever met Pete, Carolyn and said, I don't like that guy. You don't like him because he beats your team. But I don't think if you met him, you'd he's such a likable guy. And so he knew precisely that moment up until the point where we were, like, we were a little too stressed.
It was fragile preparing for the national championship when everyone's stressed, and it's the biggest game of your life, and it rings on the line and then all of a sudden, Snoop Dogg would show up to practice and, he'd play, he'd practice with his entire practice.
Or I remember he was, hey guys, don't worry about it. I know this sounds weird. We got a guy trying out, a punter, and we're just looking for help on the kicking team. And you know, I already talked to Mike, our punter; he's cool with it and understands we're always looking to get better.
He's over there, and we look; there's this guy, and he's in, helmet, full pads. He has a visor on. So you're already like, why is a punter wearing a visor? And his body doesn't look like an athlete.
And we're doing our drills during his deals. And then at the end of practice, he's like, he's going to do some punts. And I'm on like punt protection team, and I'm like, blocking for this guy. And his punts are horrible. We're going to try him out.
And we're all sitting, man, what is going on? It is such a waste of tongue. This guy is not going to make the team. What's happening? So then he is like, all right, but I won't live drill. We're going to punt, and he will return it. I want you guys to go down and tackle him. And then I'm on; it's a punt protection.
And then you release, run down the field, and look to smash somebody. So they get the ball, this guy catches, he can't even catch it. He's running, and I'm running down, and we're running down like whack, just like smashing this guy. And he is; let's do it again.
And we're like, this guy sucks, man. And we did three or four of them, and suddenly, It's like people as always, all right, hey, practice over. Come on up, And this guy's sitting on the outside, he's Hey man, loved having you out here, but hey, I don't think it's going to work out.
And he takes his helmet off, and it's Will Ferrell. And he's, you know what, if you coach, I don't even want to be, and we are like dying. And this is from what I can remember, this is like bowl practice week, and this is the most stressful time of year, everything you've done for the entire season leading up to this moment to win the Rose Bowl or the Natty.
And this is how Pete was so good at just breaking that. We're, like, dying laughing. And then it's four days before the biggest game of our life. And so you asked the question, what was it about Pete that he did so well? And I want to make sure I answer that question. He did two things. He set the table, tone, and foundation of the entire program; we will compete at all times.
We will never stop getting better. If you can't handle the pressure, if you want to go somewhere to have an excellent minor career, I'll take it to brokerage. You want to do a couple of deals and work at another company. You come here to be the absolute best, whatever you can be, whatever we can get out of whatever last drop of juice we can squeeze out of the orange.
That is you physically, mentally, and emotionally like that's why you come to SC then. And hopefully again with Lincoln Riley, that's why you come to Matthews, and then you celebrate and act like an absolute clown and have a great time. You celebrate your success, and you celebrate your teammate's success.
That's a big thing. I remember one time it was in a scrimmage real quick, and then we moved on. I was close to making a big play, which was selfish; I said I wanted to make a play, and a teammate beat me to the tackle for a loss. I was happy for my teammate. It was one of my closest buddies, but something about my body language, it's just that I was frustrated.
I didn't get there. And, like the play, gets over it right now, grabs my face mask, and says, " Hey, you need to be able to be happy for your teammates. And it would help if you showed enthusiasm. And I said I know I'm happy, but man, I wanted to get there. And I said it's hard to be enthusiastic when I don't make the play.
And he goes false enthusiasm's better than no enthusiasm. And he's right, even if there's a time when your teammate gets to the play before you or an agent at the same company gets a listing before you, even if you genuinely don't feel it, like make them think you do. And you'll be shocked at how quickly you'll be like, you know what, I am happy.
Even though I want to be the number one agent, I'm happy they earn that business. I call it sibling rivalry. I want all my siblings to succeed, and I want to be a little more successful.
Chris Powers:I can relate to that so much. You are talking about treating others. And somebody once said to me, you know, why don't you compliment that person?
And in my head, it was like, Because I don't mean it. I would, but that would be fake, and it was like a moral justification to me. And how's that strategy working out for you a hundred percent? And I was like, and it could have been better. And they were like, why don't you just fake compliment that person and see what happens?
You compliment them, you see them light up, you see their energy, and you care about yourself. Correct?
Kyle Matthews:Yeah. And then all of a sudden, you track more flies with honey than shit. That's it. And so my dad used to say that, my dad didn't ever curse something I've got to get better at.
But I think he would say, you track more flies with honey than, you know, poop or what. But it never left me. It's okay. I talk a lot about it's like Jordan, Michael, Jordan when he got in the league, he wanted to go after Larry Bird and Magic and just wanted to beat him. And a lot of that is being young.
It was when you were younger in your career, and you hadn't yet achieved the heights you had, and Jordan hadn't become the GOAT yet. But eventually, what he found out is you can want to be better than someone. You can want to compete to beat their ass and to win championships, but that in no way should ever rob you or take away your ability to have a massive appreciation for their skill.
As well as gratitude that they exist, It forces you to improve. So when I was a young agent, I looked at more accomplished or successful agents like this guy, but as it came up, I realized they were perfect for a reason. They were good. Like, as their skills, communicating value, enthusiasm, ability to overcome objections, commitment to the grind, and, what I say, full-time savages.
And first of all, I eventually was like, you know what? I can't hate this guy. He's a stud, like credit to you. But then I realized that I needed those boogeymen, I needed them out there because if they weren't there, like what gets me up in the morning, not every day can I rely on my natural, I'm just fired up to be here.
Some days you need that; you need someone to say no. That person's out there, and they're doing it, so you've got to do it too. And eventually, I had gratitude for those people being in my life as competitors. Because I knew that ultimately not only would I be a better version of myself, but I would also achieve more success.
I would do better in my career because they existed. And then you want to be around those people, develop close personal relationships, and get to know them. And more often than not, you realize they're successful. You're successful because, from a personality and mindset, you have tremendous amounts in common.
And then you develop genuine friendships. So yeah. You know, a hundred percent.
Chris Powers: I'm on the same page with you on that one. You look at Tiger Woods; like any PJ tour player would say, his coming into the game elevated everybody to not even places like the next level to places they never even thought were possible.
And yeah, you see it with the greats. They bring everybody else around you and give you whatever, a chip on your shoulder if you don't already have one.
Kyle Matthews: Yeah. And we talk about that at Matthews all the time. The company is Matthew's mentality, and it's like that, and I can't make you think that way about life.
I can't make you see other people that way, whether it's competitors outside the company or even, you know, your teammates within the company where yes, you want them to be successful, but you want to be the number one agent, but you need them a lot more than you think. And not to like, not for your reinforcement of good, happy feelings, and like to give you a hug when you're down.
No. It would help if you push yourself because the truth is that you could always be doing more, and you'll never know how much you got in you until someone forces it out of you.
Chris Powers: All right. So you get out of college, the NFL, NFL wasn't going to be for you, but you were going to create your own NFL or your sport, and you got into brokerage.
And now let's start going down the road of you took to it quickly, you were hyper-focused on it, and you said, I'm going to be like the best there ever was. What makes a great broker? What started happening in those first years that gave you the confidence and start building your business?
Kyle Matthews:A little history lesson here. People make assumptions, and I understand why as to where I'm at today. Oh, it, you know, it just was a natural fit for you. And you started fast. No, I did not, and it wasn't perfect, and I was terrible and did not close a deal for 17 months.
Chris Powers: And what year did you enter the industry?
Chris Powers: So brief financial.
Kyle Matthews:Yeah. Let me set the table. The most significant market ever. And I closed nothing. And to give you a sense of how bad I was, now this is what makes me so effective as the CEO of a brokerage company, is I say, if I could do it, you could do it because there's no way you're worse than I was.
But the one thing I had that not everyone has is I never would quit. Because you know what happens? When you quit, you are a quitter, and you're a fucking quitter. And I am not a quitter. We're not allowed to quit. My family, my dad told me many things when I was growing up.
I probably didn't listen to most of them, but I remember that one. I knew that I was never allowed to quit a sport, ever. One of my kids is struggling with the sport right now. He said Dad, I don't want to play this. I said sorry, dog. You can't quit when the season's over. You can choose not to play the sport again.
Now you've got to play another one. You've always got to be active. But you'll never quit. You're a Matthews. And Matthews never quit, and it's not allowed. And, I was like, I can't quit. And it just stuck with me. So I was like, I never can quit. Do you know what I'm going to do?
I'm going to get successful in this business, and then I'm going to quit. Because I wouldn't say, I like a brokerage.
Chris Powers: What was your first day like? You showed up, and you probably had, I know—baggy khaki pants.
Kyle Matthews:Oh no. The worst guy. I had to mark the HAB uniform, and I probably had a black suit, black shirt, gold tie, and brown pants.
And you know, I was bawling on a budget, baby. The night before, I was living on a draw, baby. No, I didn't have a draw. I had debt. Listen, the night before my first day at the office; I had to YouTube. Thank God YouTube had just come out nine months before I had to YouTube how to tie a tie.
No one in my family ever had a job; they all played football. I showed up, and so I didn't, you know, I probably wasn't listening, but I didn't know what time to show up, so I showed up at 5:45 because in the morning my work, so lemme tell you, I showed up my first day at 5:45 in the morning, and I showed up at 5:45 every day for the rest of my life.
Until covid, so every day for my entire career, I get in the office at 5:45. So what time do you wake up? Wake up at 4:45. What? I wouldn't like it. I'm not a morning per; I hate waking up. My bed is so comfortable. I do it because someone else is out there, and they're doing it too. As I said, you've got to have a boogieman.
So anyway, listen, I get there the first day at 5:45; you know what time the first agent showed up? 7:30. I sat outside for an hour and forty-five minutes, and that was that, and I showed up the first day. I was curious to know what a cap rate was and was surprised to find out what IR was. I showed up like I got so much love for Marcus.
They hired me, gave me a shot, but didn't have computers for you, so I showed up, and they were like, where's your computer? I was like; I do not have a computer. They said you've got to buy one. So, I had to buy a computer.
And so, getting into the question of brokerage, I didn't know anything about real estate.
I didn't know anything about sales. I am naturally very introverted and shy, and I am confident I have the world's worst case, undiagnosed social anxiety disorder. Like I am shy and don't like talking to people, which is hilarious that I went into brokerage because I didn't know what brokerage was.
You know, this is a true story. My dad and I are very close so I could tell and share these stories publicly. You know, I was interviewing for a job, and it was like the first interview I went on, and you know, my dad calls me, I was like, Hey, how'd it go? I was like, it's good.
I felt perfect. I might get a job. It's cool. Are you going to take it? I was like; I don't know. I got some other interviews and am still trying to figure out what I want to do. And he goes, excuse me. Who do you think you are? You get the luxury of choosing. You take the first job offered to you, Marcus, and military Aino's first job offered.
I said I was in, boom. Get my old man told me something. Bring your computer. I wonder if I knew I didn't get paid and I showed up the first sec. How much did I get paid, dog? Like nothing. All right, fine. Perfect. So anyway, I didn't know real estate.
I didn't have skills, but I knew I had one thing. It was an indomitable will to outwork anyone and everyone. I would sacrifice more than anyone else. And one of the best things about coming out of that again, it's not the military, it's not that serious, but it's a military lifestyle. In college football, like every morning, I wake up at 5:30, workouts 6 to 8, school8 to 12, lunch at the training table from 1 to 2:30, the film from 2:30 to 4:30, practice from 4:30 to 7:30, then training table again, then film, then bed, boom, night after night from 18 to 22 years old.
That was my life. And looking back, that was not most people's college life. And man, I feel like I missed out, but I got in a brokerage, so I was like, all right, I wake up early, I can stay, I could work. And I went to my manager then; Jonathan Weiss is an extraordinary person to me.
He hired me, he trained, he coached me, and I said, Hey, who's the person who gets in the earliest? And he is, that guy, you know, 6:30, okay, who stays late. He says it's that person over there, and he stays till 8:30. I was like, all right, I'm coming in 30 minutes early; I'm going to stay 30 minutes later.
So I worked 6 to 8:30, 6 to 9, more or less every day, from 22 to 35. And that included getting married and having kids, and that was just where I was mentally. Because I said I have to make this work, and I know nothing, and because I know nothing, and I worked those hours, and I was making more cold calls than ever, you know, we have standards at Mathews.
You start to make 500 cold calls a week. I was ripping 556 650 a week because my ratios were so bad. I go to a meeting; I couldn't convert it to BOV; I'd present BOVs. I couldn't earn listings because I was so uneducated. And at the time, this wasn't just unique to my company; the business generally was understood.
There needed to be formally structured mentorship programs. Here's a phone; let me know when you need me. Please only bug me once you have a hot lead. I was like; I don't know what a hot lead is.
What does that mean? They said they want to buy a value add multi-family in Beverly Hills and a cap.
That's a hot lead, and no, it's not. But I was never going to quit, and I just kept getting better, and finally, my first three listings expired because the only listings I could get were overpriced ones. They're like, this idiot will take this deal at this price, and it doesn't bother me if it doesn't sell.
But finally, about 17 months in, I closed the deal, and then six months later, I closed another, then three months later, I closed another, and then I started rolling, and I got better. But I always want to correct the record because many people understand why, and I assume the brokerage guy was born for it.
No, I couldn't have been not more born for this profession than any person ever, which allows me to look another person in the eyes. Many of them are young guys or gals coming out of college, whether they have the best personality or the worst, whether they know a ton of real estate or not. And I looked in the eye and said, you could be the greatest of all time, but you can never quit.
You have to keep going. Most don't. Yeah, okay. But it gives me tremendous conviction when I'm coaching these young men and women up in the business because I did it and didn't have any real estate skillsets. I didn't know anything about sales. My personality is not, and I'm calm right now because, you know, it's four of us in a room, and I could get rolling, but if you ever see me at a conference like I am back against the wall frozen, I don't want to be here. Please get me out here as quickly as possible. And my entire family's like that. And so when we're at the next conference together, I will go around the room and tell everybody, Hey, talk to people. And you know, then get ready to scrap Rob.
I'll dip. I'm like, I'm out, but those are all real estate owners. I get that; I'm out. Like life's too short, and I'm dealing with this.
Chris Powers: All right, so you’re there. You have your baggy pleated khaki pants and oversized coat.
And you got, you did took you 17 months.
Kyle Matthews:Yeah. I look like an Uber driver. Yeah.
Chris Powers: Looking like an Uber driver. And you’re getting paid like one, too, at the time.
Kyle Matthews:No. Uber drivers are way better paid, though.
Chris Powers: Okay. So we’re not even there. Yeah.
Kyle Matthews:In California, Uber drivers get benefits. The UABB five or whatever that proposal proposition was.
Chris Powers: Yep. What was the tipping point? Was it somebody who was there? Like when did you start to get it?
Kyle Matthews:Great financial crisis, PFC Best thing that ever happened to me because I was the only one dumb enough to keep working and not give up.
And everyone else who is more intelligent than me, more educated, they say brokerage is a horrible industry. You’ve got to get out. Real estate is the epicenter of the metaphorical bomb in our economy. Get out of real estate, get whatever job you can, and brokerage; there are no transactions.
My friend, you are an idiot.
Chris Powers: And at this point, you had been in for four years. So you were Starting.
Kyle Matthews: I was starting to make hay. In my first year, I made no money; I made a hundred grand in my second year, and in the third year, is 300. So you’re like, yeah, I’m all right.
Let’s go, baby. You know, I’m about to be paid. Nope. It went back down big time. Year four went down to two 50, and year five; it was 110 grand now. I was like; I had closed three or four deals in the worst 2009. But I was like, see, I got a job. I’m paying my bills.
I was married then, and my wife had a job. And I was like, yeah, I was the wealthiest man in Babylon. I was like, this is, I’m living the high life. Like no way am I giving up this gig. I was at an office that had 80 desks. It was like they had 80 desks, and there were 81 people at all times pre-G.F.C.
By 2009 and 10, there were like 20 guys. It was a wasteland. I was in one cube and did retail, so shopping centers, and a short net lease. And the guy across from me, Dave Harrington, did multi-family in LA, and Dave’s now president of our company, and we just every day pushed each other.
Every day, we just looked at each other high and talked shit. You’re a little bitch. I’m not going to make more calls than you. And we just pushed each other, and we were, like I said, the only guys dumb enough not to quit, dumb enough to keep making calls, dumb enough to think that any call or any meeting or any BOV would ever even lead to a deal that would sell because almost none of them did.
But what happened was in 2011, it started getting a little better. It still sucked. But you look at year over year, and transaction volume increased. And then a deal was still like, you know, 20% of the pre-G.F.C peak 2006, and then 2012, it got a lot better. And then, in 2013, the deals came back. But the thing about a brokerage is true about your business and the principle, and the deals come back.
But the brokers come back slower, So the deal volume returns. But for the brokers, it takes a while for the brokerage ranks to fill up. And the ones that do, they’re new. And you’re 4, 5, 6, 7 years in the business; you have more experience. But more importantly, you went through a massive crisis, and your skillsets are on point now.
Now you are like; I know how to manage pricing expectations. I know how to overcome objections. I know how to look emotionally and mentally. I know how not to get too excited about a deal because I just went through a period where nothing was selling, and I can’t count that money before it closes because I will probably never see it.
And so I’m just mentally better suited for this business. And 2012, 2013, 2014, man, it’s like I got shot out of a cannon. Like it just went, let’s say I hit heights that I never had in my wildest dreams thought were imaginable. I have created generational wealth where just pure financial terms would never have to work again.
And it was all because of two things. I was never going to quit. And there was a massive dislocation in the market. Not as bad as what we’re seeing today, but today is a perfect example of that opportunity for so many young agents at Matthews, just in the business. It’s a perfect opportunity for young principals.
Because when the GFC hit the older guys, 50 and 60. They had made so much money, owned buildings, had wealth, and had distractions. They had kids, and they were like; I’m done. I saw many successful agents doing millions a year before GFC said, okay, this is it.
It’s like it’s time. And then I saw insane amounts of 22 to 32-year-old agents who had just quit because they weren’t making money or they had made some money and spent it all doing stupid things like, and I’m not just talking like popping bottles and buying boats. I’m talking like they had bought real estate, highly levered.
Then they lost it all. And that was a distraction. But then also, again, brokerage differed from a career you wanted to be in. So there’s this giant chunk of your peer competition that’s gone, and one day you wake up, and the bomb stops falling. You look at yourself, and I’m like, alive.
And you look around, and everyone else is gone, and you’re like, all this is for me now. And that is what’s happening today. And that’s the message. You’re seeing 55, 65, 75% velocity declines. And everyone’s this is so bad. I was like, first of all, this is how you and I get old.
It could be a better financial crisis. Because it isn’t, but not yet; it’s a real deal. It shouldn’t be that bad. I don’t even, and it’s a real deal. But this is in a weird, twisted sixth sense what you want. You don’t want anyone to suffer. You don’t want anyone to feel financial pain, but you recognize, like in straightforward markets, any broker can make money.
It teaches bad habits. In any good market, we’re valued industrial, like value’s just rising. Bad operators, bad developers, wrong principles, bad fundraisers, they can do; good ones always do better. But it’s a challenging market. It’s not that outstanding owners or outstanding agents make let, don’t like to make less money.
We all make less money. But it’s, I call it, the gold rush, man. The gold rush for those two or three years is coming out of a tough time. You just don’t quit and keep chopping wood. Keep swinging the axe. Eventually, the tree fell, and we did precisely; we did something the other day, like to the victor go the spoils like the spoils of battling through this market or to GFC.
The spoils were significant on the other side.
Chris Powers: It’s like what you said about the football game. It is where you’re practicing your ass off when the game starts again, and it will be easy.
Kyle Matthews:Yeah. Some of those games were easy for us again, and not for me. They’re like, Kyle, we need you to run down full speed and put your head into the wedge.
I was like, and I’ve got that. Like, I can do that. And I was like, can I get out there and drop a little cover too? It’s no wig, you know.
Chris Powers: Paint this one picture, and you can paint it in 30 seconds a minute. I don’t care. But for anybody going, man, things are callous right now. You talked about O 9 and 10, but paint a picture.
What were O9 and Ten as a broker? Because it was dark.
It was empty.
What was your pitch? What’d you tell people in O 9? Man, Hey, sorry you bought that building for 10 million. I’ll sell it for two right now.
Kyle Matthews:By then, I had started to get better, and I realized, wow, I had to have an interest generator on the call.
I had to have a purpose for the call. The best way in sales to get something going is well keep them from hanging up, and that’s the instant generous something of value. Hey, a deal just traded down the street. Hey, I just saw this lease get executed, and here are the updated market rents.
And at that time, they were falling and just said, look, I’m here to provide this information; ideally, you know how valuable it is. Ideally, you know how it applies it. If not, I can provide that to you. Let’s grab a coffee; let’s grab lunch. You’ve got to eat, and you might as well. Let me pay for it. What I always said was effective.
I only did breakfast meetings because it was the cheapest meal. There’s an intimacy about breaking bread with people, and it’s the cheapest meal and has the lowest opportunity cost of my time. I’d say, Hey, we breakfast at 6:30, like 6:30. It’s yep. Like 6:30, So 6:30to 7 45.
I do breakfast, I get out of there for 25 bucks, and I’d have that meeting, and I’ll talk about what we were talking about in a second. And then I get to the office by 8:30. And 9 o’clock call time. And then I still was ripping my coldies, you know, I was like, oh my gosh, I was hitting it.
So the answer to your question is I would keep the owners in touch with what was going on in the market, from updated sales to updating rents, and that was the driver. And then getting them to engage in a conversation is, look what is happening at your building?
What concerns do you have? I’m not cold calling you saying I have the answers, but I certainly can work hard to achieve some information and provide some service; I’m not saying you’re not going to lose money, but there are, there are 100% ways to mitigate those losses. And I could put you in a position through me, the services and information I have at my disposal, my effort, my energy, and what I bring to the table.
I’m not here to say I will make you money and can help keep you from losing more. And I, most of the time on the call, you don’t know how or why, but you know, there is a way you need him to gauge into the conversation. Then I got to that breakfast meeting, and he said, look, then I was retail.
He said I got this strip center. There are ten units. I’ve already lost three tenants, my other seven, and all their rents are above market. Because this was like GFC, and okay, where are market rents? Are there ways you have dove into your tenant’s creditworthiness? Do you understand where market rents are?
What if we could cut the line and say they’re paying 36 bucks a square foot and the market’s 28? What if we went proactively and said, Hey, we’ll give you 32, but we need you to extend the lease? And then, okay, extension, like we’ll proactively reduce your rent, but we’re looking for a commitment here.
We’re looking to get the weighted average lease trim of the asset up. If nothing else, put your anxiety to bed. And ideally, maybe there’s a refinance on the table, but again, there was only a little lending. And it’s like, how about this?
It’s the more excellent complete theory. You have an asset, your rents are grossly inflated, and the weighted average lease term is for you. So in four years, most of those leases will come due, and there will be a mark to market like your rents will come down. Are you aware of this?
No, I wasn’t. Okay. It is a bomb, and a clock and four years are left on it. You want to avoid holding this asset when it does. So even if we have to sell it for less than what it’s worth today in the GFC, which is less than what it was worth two years ago, that’s still the right move.
And we’ll get you into an asset. Even at the exact yield, there are some closing costs. So your net effective yield will be lower than what you’re getting. But if you look at your wealth and what happens over five years by making that trade versus staying in this, the net is significantly better by executing this trade, even in a lousy market.
Because if you’re doing a 10:31, you’re swimming in the same market. You sell low, and you buy low; yeah, you sell high, you buy high. I always remind owners that you only get some upside and the downside, right? So I would have that conversation. I said, I understand the value of your assets has gone down, but right now, I recognize, and I empathize with you hearing that the value of the assets is less.
I feel that I know, and lemme tell you, it’s not about me, but this is the worst part of my job. It is coming and sitting down with an owner and saying that the value of your asset and holdings has decreased. But that doesn’t change the fact that it has. And now, we need to talk about moving forward; what’s the best path?
But right now, another broker is conversing with the asset owner you’ll buy, who’s saying the same thing. So your assets come down, and their assets come down. But if we 10:31, we’ll get you into an asset, even if the yield’s slightly less, but all of their rents are replaceable, and their price per pound is lower.
Therefore, the corner is better, Security-wise and safety-wise, even in one of the worst markets ever. It may be a better asset than that, will not be good; let someone else take that risk, whether they’re a fool and they just don’t know or have a special relationship with sure tenants they can get them to sign.
That’s fine. God bless. I always tell owners we want them to do well on the asset, but there are better properties for you. And then I got better, and I communicated it. So, Dave, I would carpool to save money for gas. Like we would bring lunches init’s cliché, we’d make lunches and little sandwiches.
PBJ: I was more like a Turkey club guy, but okay.
Chris Powers: Three pieces of bread or two? You’ve got to save on that money.
Kyle Matthews:You know? I wasn’t working out; I had no time to work out. So I had to keep my figure, and I could, you know, I didn’t have that luxury.
And so we would rip, you know, it’s like your first couple years in Bro Creek, you know you’re signing up for many cold calls. Like most people, that’s 250, 300. For me, it was 500 cold calls. 500 a week. And so for the first year or two, even three years, and then when, like, 2007, I started making a little money, you start seeing that slip.
Now some of that is because I have six listings and four escrows, so there’s only so much time in the day, but candidly, that’s what the weekends are for. I could always get that time back. So it was because I felt like I was on the path in years five, six, and seven; I got back to that darkness of 500 cold calls and no deals.
But again, I wasn’t going to quit. So we were ripping 500 calls. Did you enjoy it? At that point in my life, no, no cold calls. I didn’t dread them as you do early on because you had been hung up on so many times, and you realized nothing terrible happened. Yeah. I’d been called the worst things on the planet and then realized it’s not like they post on social media like a hundred thousand people.
Yo, this guy Kyle Matthews call me. He’s an idiot. Maybe they do that now, and that sucks if they do. But yeah, I saw it like Twitter; sometimes there’s like owners like, yo, I just got this call from this broker, and this is what he said, and he’s so stupid. Look at this deal. It’s such a bad deal.
And I was like, man, you’re a fucking hater. Come on like that. That’s a human being on the other line, and that’s a broker trying to make it. And I understand he might have had a terrible intergenic, and he might even be a rude little show that guy a little grace.
Come on. Like how bad is your life? You’ve got to take time out of your day. How successful could you be if you’re going on Twitter and posting about some call, deal, or broker post, and you hate it? Get a life.
Chris Powers: Cold calling has been the key to my early six. I would cold call, and we’re in 2023, and it’s still the best way to generate business.
Kyle Matthews:It is excellent. There’s no, but how about this? Let me change the mentality for all the owners listening. You don’t want a cold call from the guy three times a day, but you want him to call you when he is got that hot lead. How does that work? Yeah. Let me tell you how that works out for you.
It doesn’t; you know whom that broker will call when he finally digs up that good; he will call the owner who was nice to him. He will call the owner, who allowed him to, to the broker to take him to breakfast. He will call the owner, who’s Hey, listen, and I don’t have anything. I know you call me a lot.
Keep doing it. Because the owner’s smart enough to realize this guy calls me once a month. Maybe he has the same crappy intergenic. What are your plans? That’s a terrible interest generator, you know? But I know that will take five minutes, 12 times a year, 16 minutes. That’s one hour of my life.
Ten years in a row. That’s 10 hours of my life. But over the next ten years, if this guy stays in the business and he sells me one deal, I will make millions on it. And let me tell you, 10 hours to make a million dollars, that’s a hundred thousand dollars an hour. Is that a good return on your time?
Chris Powers: That’s fucking pretty good. That’s a good time, and I would take time.
Kyle Matthews:Never hang up on a cold caller broker. Because you never know who’s going to be the great ones. They all can be great, and you want them to send you their best deal. The deal that you’re going to make millions on the deal, that’s going to change your life, but you don’t want to take their five-minute, crappy cold call.
That’s not how it works.
Chris Powers: That is not how it works. That is a great way to frame it.
Kyle Matthews:I’ve had a lot of practice. Like so, I started doing this. I don’t want; only call me if you have a deal. And then, as I got older, I got a little money. You are like, all right.
But then I was just like, wait a minute, hold on—time out. You want me only to call? And then I started battling these guys on the phone. And most owners like it. All right. I like this. I like it, and a lot of people responded positively to no. I asked, how many real estate values add real estate buyers are in this submarket?
There are 50 buyers. There are a hundred of you. Only one of me is ripping 500 cold calls to private clients digging, dredging the swamps, and beating the bushes. There’s only one of me. So let’s reset the table here. I won’t say I’m more valuable, but we’re on par. Let’s, and I wanted the owners to know I was coming at it like, hold on.
I bring as much to you as you bring to me. It is a mutually beneficial relationship. You are not doing me favors right now. Okay. But I’m also not doing you favors like we can put each other in a position to be more successful, but you have got to take my cold call. You’ve got to take the cold calls.
Chris Powers: You have got to take the cold calls. I used to tell people when I’d cold call them to buy their buildings. I’m trying to give you money, and I am calling with a briefcase of money I want to give you in exchange for your property. That is, I’m not selling you life insurance.
Kyle Matthews:I’m not some asphalt broker calling to get a listing. I know.
Chris Powers:It could be worse, man. I could be a broker.
Kyle Matthews:Calling all is fair in love and war.
Chris Powers:All right. So you never give up. You make it through the heat of 2009, the great financial crisis. By 2014 you’re flying through the sky, and at some point, you decided maybe I will start my deal. How did that transition happen?
Kyle Matthews:So I was at the first company I had started at, my business is taken off. It’s 2011, 2012. Like I was doing well, and it was shopping centers, In retail. Most of my business was a long story, which is less relevant to this conversation; I had gravitated to an account-based institutional business and was like a non-core.
And so retail had gotten hammered in the GFC not more than anything, but it was terrible. And these publicly traded companies had been punished for their B and C non-core assets, and it just crushed their portfolios because that’s where they experienced much pain.
But they had recognized their core top 15 MSA best assets did better. And so the street, based on how their shares are, you know, they go up and down, which drives a lot of the C-Suites decision making as you know, they said, Hey, we want to get rid of all our non-core assets. And so Kimco at the time had, and don’t forgive me, I might be off by, but they had 800 centers and came out on a public call and said, Hey, we want to get down to 300 of the best.
And so I was like, they’re going to sell 500 centers. And then pre said that and Winegar, Regency, and Brick Smore, Central WA to Brick Smore and our PAI and Invent trust. And I had just I’ve gotten in with a couple of them. Like I’ll tell you, I have so much love, respect, and gratitude.
A guy named Dan Horowitz who’s the CEO of DDR, which is now site centers. I will have Dan on the podcast in a couple of weeks.
It is what he’s doing to me fast. Like Joe Dan, you like to fly out to Nashville and inconvenience yourself. Sit Dan, I appreciate you, man. I always got a nice bottle of wine for him. So anyway, I think he was, he played football, Colgate out of football and, I couldn’t even tell you how we connected. He gave me a shot on a crappy $3 million center in some Nowheresville, and I worked my ass and found a buyer.
It’s a tough, okay, fine then like Kim Co. Matt Golden, one of my closest buddies now in the business. Like he handled the west, and like I got to know Matt, and he gave me a shot on a terrible deal, really tough deal in like Sacramento, and I got it done, and then I just called every other Hey, you know, I’m doing deals for DDR and Kim Co.
It’s a good time. We’d sit down and talk. I’m the non-core specialist because, at the time, all the brokers were, like, giving me those big centers. And I was like; they’re going after a 70 million center. And my attitude was like, give me ten sevens, give me your worst, give me, you’re tired, you’re hungry, you’re poor.
I’m the trashman, and I’ll take it out. As the mafia figured out, there’s a lot of money in the trash. And so I started getting in front of these decision-makers and these owners, whether it’s CIO, CEO, like EVP of transactions and saying, Hey, I’m here to talk about these complex assets. And they’re like, nobody else wants to touch these things.
Like brokers were still, they didn’t want to get their fingers dirty. And I lived in the dirt and was like, let’s go. And I started selling them. And so I started doing all this institutional business with the most significant operating Reits and then their private equity partners, like Blackstone or Angelo Gordon.
And the feedback I started to receive at the time was like, Hey, we love working with you, but in committee, it takes more work to get you approved from a sale because of, you know, whatever the flag you’re rocking. And then, I needed more support because my business was growing so much.
And this is a big thing about Matthews. We’ll dive into it later. And the company I was at was like, Hey, I now have 20 listings, 12 escrows, and I still need to generate more business-like Kleiner-facing negotiating. Like it’s, I call the sausage making; it’s the production of BOVs and OMS, coordinating digital and ground photography, drafting email blasts, and negotiating at the time with Mail Chimp or Constant Contact and how many end of the postcard company.
And like I was doing, it’s a do-it-yourself company, and you are your own entire company. And at the time, and I don’t know if it’s changed because it’s been a while, it was like, you need help. Hire it. Pay for it. And I’m a simple-minded guy, and I’m a good teammate.
So then I hired an assistant, and it’s like I was doing more complicated deals every deal. I had to have a 10-year cash flow model, lever at IRSs. And then, I had to hire an analyst. Then I had to hire a graphics person and a transaction manager. And then, I’m basically like this company.
I have payroll, and I have insurance. The worst part was I was managing human beings, which is fine if that’s what you sign up but I needed to do RPAs revenue-producing activities, which we call at Matthews RPAs and brokerage. You know, cold call, meeting, pitch, negotiate. If you’re doing one of those four things at a given time, it’s not a high-value activity, an RPA, and probably inefficient.
At the company, I reached a point where it was 50% of my time, and I was making calls, meeting owners, traveling in the country, pitching, and negotiating deals. But 50% of my time, I’m sitting in InDesign, Photoshop a photo, you know, wondering, is there a better way to get more cars in this parking lot?
You know, the ground arrow photography. Back then, the photographers would send helicopters up and didn’t have drones. It is how old school was and costly, but the helicopter went up on the wrong day. They went up on Thursday and were supposed to go up on Saturday; more cars were in the parking lot.
Now you’ve got to get back up, but they don’t want to. And it was just like, this can’t be good. And so it was just a combination of things. I remember the big one: I had a brother named Clay drafted to the Packers. And I had some clients call, some owners say, Hey man, like we’ve always wanted to go to Lambeau Fuel.
And we love are you going? I was like, yeah, I’m going this fall. And yeah, we’d love to go. And I was going, you know, I’ll just put a crew together, and I’ll do like a client event. And so I got 12 big clients with whom I had yet to do business. I had casual relationships, so it wasn’t like I had never talked to them, but I hadn’t done business with him.
So I went to my manager and wanted to do this trip. It’s going to cost about 20 stacks. It will be a big one, like 40,000 today, but let’s go. I was on a 60-40 split; I’ll put in 12; you put in eight. We were talking about this earlier. Yeah. No, he said we don’t do that.
I was like, no, I understand. I do it for everyone like we had to do it for you. I was like, okay, okay. But only some people’s asking for this’s. Fine. All right. How about this? I’ll put up 20 and then reimburse my eight for the first deal that closes. No, we’re not going to do that either. It is good, and he said no. I agree that this gets Ed.
We don’t, and this is not our business. We don’t. So I did it. I just spent the 20 grand, and this is like 2011, 2012. I’m still licking wounds from the GFC, and I wasn’t rolling, and $20,000 is a lot of money.
Chris Powers: We’re still eating club sandwiches with two pieces of bread.
Kyle Matthews:No, you know, I’m, maybe you got the third piece. Maybe I got some mayonnaise on it now. Okay. As I may drop tomato at that point, I was starting to feel confident, getting a little, you know, to blow up big. But no, I did it and, you know, went on the trip.
They had a great time, but it was like, it was amazing because I got to know them on a personal level. They got to know me. I think they felt like that energy I brought, and they’re like, and we’ll give this guy a shot. I didn’t like, you know, the 12 I got over the next 12 months, I was awarded two or three deals, you know, and that brought in three, 400 grand, took their 40% the company.
And that’s why I was like, man, this isn’t a partnership. And I just, that was what, I think that was the straw that broke the camel’s back. It just, it was time. Yeah. And I’d been there for almost a decade, and it had been a great run. And to this day, I am grateful for the opportunity, and I’m very close with many people there.
So it just was time. Like I wanted to be at one company forever, I tell brokers that if you are a fast-growth broker, you must be at a company. If you’re a slow-growth broker, you don’t want to be at a fast growth, and you want to be slow growth. You want to align yourself with the ethos, energy, and capital investment and like the mentality of the company leaders you’re at.
So if you’re an absolute dog and, like, I’m grown, let’s reinvest, reinvesting. You’re at a company that’s generally stable. Hey, no, we’re good. No, we have our deployment. As everything fits perfectly, it’s going to create a lot of rubs, a lot of friction.
And you don’t want that type of aggravation or resentment. Like life’s hard enough, let alone, you know, brokerage. And without even getting into all the other things. And so I’m answering your question. I ended up going over to a company called Colliers International. Okay. It was the same thing where it was like, and it was a do-it-yourself company.
And again, I don’t know if it’s changed, but it was, like, the difference was they don’t do any retail. We love having you do whatever you want. So at that point, I was, effectively, they put me in this office, and once a month, my manager came by. Do you need anything?
I’m like, no, I’m good, all right, cool. And I went there in January 2013, and in 2013, you know, was their top guy in the west. And in 2014, I was the top guy globally out of many thousand agents. I wanted to start something other than my own company.
Really? Yeah. So I’ll tell you this story. If people are shocked, like it was February 2015, I’ll try and condense this February 2015, and my manager’s Hey Kyle, we have this awards thing in Denver. It’s like the Everest Awards, and you’re the top producer. We want to give you the award.
It was like, no, man, what is it? Like a trophy? Just send it to me again. I’m not shy. I do not want this love award. Go, just put it over there. I and it’s not essential to me. You are giving me a higher split. Yeah. I’ll fly out to Denver. You are giving me support; let’s go.
But like an award, no, it’s all good, man. Honestly, you don’t, no. He’s no. The president of America will be there and the CEO like thousand people. I was like, definitely not going. He’s looking; it would be a bad reflection on me if he didn’t go. And one thing, I’m always going to be a great teammate.
Yeah. Even if I don’t, I don’t want to; lemme get back to football. I don’t want to block this guy, and I want to score a touchdown. But not every time my play’s going to be called; man, that’s just life. That’s being part of a team. You get only some of the benefits, the fantastic experience of being on a team, but we call those wide receivers every place I want the ball.
And so I was like, that’s fine. So I go out there and do the award, and I thank you, it’s like a ten-second speech, and I’m out. And then, after the team introduced me to the leadership and said, Hey man, when you return, I want to talk to you.
Something exciting is going down. I was like, okay. I picked up the body language and was like, okay. So when I got back, they told me we were going public. I was like, fuck yeah, let’s go. What does that mean? I know what going public means. I was like, fuck yeah, let’s go. What does that mean? I know what going public means, but do I get money?
No. Do I get stock? Nope. What? They’re like, and you could be under a giant microscope. Yeah. Like more paperwork and more regulation. No, it wasn’t. I was like, and they’re like, it opens up capital markets, and we get cheaper across, we can invest in platforms. I was like, okay, I get down with that.
And they’re like, and we want to talk to you about something about your business, it’s unique to call yours; you’re in LA. But my deals were everywhere. There was a time it was like a Blackstone JV with DDR. They’re like, Hey, we got a center in Wisconsin, one in Cincinnati, and one in Georgia.
You know, three states. And if I had an outstanding teammate at Collier’s in that market, which sometimes I did, I would generally be speaking line them up and let’s work it together. I wanted it, but most markets still needed it. So I do it myself. And I provided high-level service kept getting hired.
And then, at the time, I had brought on some young guys, basically all my younger brother’s friends, they had all said, Hey, can you men, we want to get into real estate? Can you mentor me? I was like, yeah. You know, and that’s a different conversation. But I had very set principles and expectations regarding taking time away from my business to mentor; here’s what I need to see from you.
And they were doing net leases. And so through that, I was doing a lot of net leases and net leases everywhere. You could have a guy in LA, who’s focused on C stores, and he could close 30 deals in 20 different states. Yeah. So Collier came, and they said, Hey, it was a first service was like a Canadian company, and they were building through M and A.
They weren’t organically growing there, buying many companies and just doing PE roll-up and then selling to the market at a higher multiple. And the money in between is the free money. And they were buying all these, you know, it’s like Houston Realty advisors, and it’s like we do sales, leasing, and management in Houston, one office like, and they’re like, we don’t have a Houston office.
So they were buying all these things, but in their negotiations, they offered them, if I remember correctly. And again, there are a lot of concussions here. So it’s like exclusive market coverage rights, which means any deal, like in the Colliers network, as we’ll go through you, and you’ll get a percentage of it.
They made these agreements with these companies and never told me that. And they came, Hey, just as we roll these companies up, you’ll have to start giving a big chunk of your fee to these local. I was like, hell no. It’s their market. And I was like, no. Someone like me couldn’t come in and earn the business if it was their market.
They’re sleeping like they are not doing their job. If I called an owner on an asset in Houston, Texas, which I didn’t like, I was working more on an account, and then they would say, Hey, I’ve got an asset in Houston. The owner would say, Hey Kyle, I love you and, in these markets, will work with you, but if it’s Houston, it will be this guy at your company.
But I never got that. That conversation never took place. And so they were like. You’re going to have to; I was like, no, I’m not. That’s why Matthews exists. And I said, you like the top producer? They’re like, you know, and you make up 2% of our revenue. We’re going to side on the, with the other 98.
And they were like, and they were super friendly. Again, I’m still very close with all the leadership there at the time. Still, look, this is not only destructive to my business, let me put myself in with the junior agents coming up under my guidance, but they also needed to have that.
Like they couldn’t suddenly have 30, 40% of every deal out the door, like on a tax, like a fiefdom tax, and so I just said, Hey, I’m going to have to go. And they said we understand. And then I looked at, you know, okay, CB JLA, it’s all the same thing, and it’s a bunch of little fiefdom silos like it’s all you can’t do a deal in this market.
If you do, you have to pay for this, and it’s very different. And then everything else was a boutique. I wasn’t returning to where I was, which needed to be clarified. So I was like, I got eight, nine employees, and I got 15, 20, and junior. I was like, and I’ll do my own thing.
Chris Powers: When you left and started Matthew’s office, one was in El Segundo.
El Segundo. Man, you took, so you started; it wasn’t like you in a laptop on day one. You had a whole team built out the day you started the entire team.
Kyle Matthews:But the reason for that was because when I went to Colliers, I said, Hey, I’m going to go, I’m just going to do my own thing. They said, yeah, we get it. Like, I’m not going to go to one of your competitors.
It just doesn’t make them have the same rules. They’re like, okay, I get it. And they’re like, what do you want to do about all these guys? I was like, I’d like for them to come with, but I’m not going to; I want to have that conversation with your blessing. And they said, no, we assume they’re coming with you should talk to them because they won’t stay here.
If you leave, they aren’t coming with you like they’re gone, and we will fire them. And I was like, and I didn’t want that. So with Collier’s blessing, I sat them down and said they knew what was happening and there were some issues. And I said, Hey listen, here’s what’s going on.
Here’s what’s happened. I’m going to start this company. They’ve permitted me to speak with you, and I love for you guys, too; I will start it regardless, even if it’s just me. But if you see value in me and believe this is the right decision, love for you to have you at the company. You know, they gave me whatever, 45 days to figure it all out.
The Collier threw me a party on the last day. It was very amicable. They kept my call years email on. I had 118 deals under contract, all of which went through Colliers for 12 months. Like it was all good, it was all good. It was a unique situation. They realized we were going public because of what they were doing.
And it was like man, and it was a home run for them. They did everything right. There’s no judgment because I would’ve done the same thing as they crushed it. They understood it was putting me in a tough spot, and it was like, I don’t want to say collateral damages didn’t feel like it was, hey, I said, not everything’s meant to last forever.
You hope they do. Yep. But they’re saying, Hey, take your time. It can’t take forever. But the only thing was they wanted to avoid any public announcements because they thought it might cause issues in some of the conversations they were having as they were going public. So I started Matthews on April 24th, or 27thit was.
Monday the 27th. So that was almost eight years ago to the day. Did I answer your question? Yeah, you did it, and it’s very different. And no business plan and I’m like, yeah, I’m just going to do this.
Chris Powers: I’m tempted to ask when I hear 118 deals. And then you said that at one point you made 300,000, but then we never really figured out as a broker the production levels you could get up to.
But I’m assuming this is north of eight figures.
Kyle Matthews:Yeah. Which allowed me to start a company. Matthews is big now. Yeah. There’s no outside investment, and there’s no debt.
Chris Powers: You didn’t raise venture capital at a single dollar guy at a precede $700 million valuation.
Kyle Matthews: Oh, if that, you know, because I’m an idiot, and I have no background in business.
Yeah. If I had known, I could do that. Could I? Can I still do that? You can do that. All right. Let’s talk. No. Like I said, I had been so blessed, like God’s been good to me, man. And he’s been good to my family, wife, and kids, but we’re just talking brokerage. Like I am the luckiest human being ever.
If you look at when I started where I started the G.F.C., people say you make your luck. And no doubt I understand that concept. And like hard work. It’s like the harder your work, and you’re lucky, you get, no doubt. But so many little weird things happen along the way that set up perfectly.
What I’ve accomplished is that. There is no way I can stand before anyone and say, I did this. You stand on the backs of giants. That’s right. The only time I’ll say is I founded the company. Like, I am the founder. Okay. But it’s all of us. We have 12 principles. One of our principles is not I, me, my, it’s we, us.
The first principle is Matthews is the team. Second, always protect your teammates. And so maybe it’s football background, maybe I don’t know, it’s just me. That could be how I was raised, and it’s just a little bit of everything. There is no way I could ever sit here with you today without the men and women I’ve worked alongside my entire life.
Yeah. But definitely at Matthews. And that allows us to have so much fun. It allows us to prank, talk shit to each other, and do all those fun things. Because like we’ve been through the battles and we, you know, we’re in, we battle every day, and we’re still in a battle.
Chris Powers: We discussed it earlier when sitting in the conference room.
What’s the line between we’re here to get shit done, and we’re not here to play ping pong and foosball in the office all day.
Kyle Matthews:Yeah. You know, it’s Conor McGregor. We’re not here to take part, and we’re here to take over. That’s us. And you are doing that. Let me, stupid football analogies I’ve recognized; we’ve done a lot.
I recognize people on the outside like, damn, what the hell? We are backed up on our goal line as I look at it. We got a couple of first downs. We’re moving the chains, but we’re on our 30-yard line with 70 yards ago. We got so far to get to our destination, the end zone, billion dollar public exit. So you could sit here and say, you’ve done, sure.
I get that. I recognize that. I’m not discounting that we’ve accomplished a lot, but we are so far away from where we’re heading that it doesn’t feel like it. Yeah, it doesn’t feel like it. So I got a lot of fire in my belly to keep going, and I know my teammates do. Let me get to your question. You said, Hey, what is the line between having and paraphrasing having that culture fun and celebrating success, but then becoming the company that has the beer guard in the ping pong table?
First of all, you’ve got to define fun. Fun for me is winning and playing ping pong. You could win, and it’s not winning. Drinking beer at an office, like, what the fuck? That’s not winning.
Chris Powers: But work-life balance. I’m just teasing you.
Kyle Matthews:That’s funny. You tease me, and I’ll do that. Let’s like, hey, let’s go, baby.
I’ll talk about that. Probably, and what’s next? No. Okay, fine. You know, those are distractions. It is my opinion. It is the first time I’ve seen a brokerage company grow as we have or done what we’ve done where their value proposition to their agents is we got beer gardens and ping pong tables.
Do you know what our value proposition is? Our technology, our database, our support, our shared service platform, our culture, and the way we push our agents like this is a culture of accountability. Do you want to do a couple of deals, go to any other, you want to drink some beer on a Thursday?
Do you want to play ping pong? Okay. Not here, buddy. Yeah. All right. We’ll have a ping pong table. But that’s because we set up a competition, and then there was just left there. That’s not what we’re here to do. We’re, this is not a social club, this is not a country club.
There are country clubs where you can play ping pong and beer. If you got a garage, set one up, and invite your buddies on a Friday night. We are here to be successful, and through success, it opens up all the beer and ping pong you want. Yeah. But not here. We’re here to be great, and we’re here to win.
We’re here to take over. We’re here now. We’re not here to take part like, and guess what? As much as we talk about, oh, like this generation, there’s so like this generation, like there are still dogs out there. They’ve got to work harder to find them. That’s okay. We go to 156 career fairs a year. I will find those fuckers, you know?
Yeah. Who wants, who is ready to go? And many people at 22 came out of college and were told this is valuable in a company, like pet insurance and net pods. You know, that’s not us. Now this is the sales side, and these are the agents. We have an operations-centered Phoenix you go into, which is 80, 90 employees, like not agents.
That office environment’s going to be different. They’re different. First of all, they’re wired differently; men, they’re creatives. It’s very different. So I do want to, like, we do have that. It’s just agents. You’ve chosen a career. There is no time for ping pong. Yeah. All right. And you know what?
There’s time for cold calling. You know what? There’s time to get better. You understand how to communicate your value reputed market research and where market rents are going on meetings, traveling to present deals in person, and conferences. That’s what there’s time for because, especially at an early age, if you at 22 starts doing that and you never give up, and you keep going, I am a testament that by the time you’re 40, and I know that sounds so old to these young youngsters, but it’s not.
And it comes quickly. And at 40, you could punch your ticket to any life you want. If you want to spend the rest of your life playing ping pong and drinking beer, very probably unfulfilling life. But you can do that if you want to spend the rest of your life. Let’s talk about something tangible, like starting a charity or a foundation and pursuing the rest of your life in philanthropy to find a cure.
Do something and, you know, address a prom that is near and dear to your heart. It sets you up to do that too. And everything in between. All right? You want a big house. If you want to send your kids to private life, whatever it is, you want to spend the rest of your life focusing on your health and wellness like it’s all there for you.
But it all gets set up by those first 5, 10, and 15 years in a career like a brokerage where there is no ceiling. And that’s why you choose it. You don’t choose it because it’s easy, and you don’t choose it because it’s fun. Ripping 500 cold calls a week and getting told no on every call if they answer, that’s not why you choose it.
You choose it because you want to live. The life you promised yourself you would live when you were a kid. You want to live the life that every night you’re laying in bed, and you’re going to sleep, and you dream about living whatever that life looks like. Whether it’s earthly life, an extended life, or a conceptual one, you are willing to do whatever it takes and make however much sacrifice, wherever long it takes to get there.
And some people at our company are 27 years old, making 2 million bucks annually. That was not me. I wasn’t that good, and I wasn’t that smart. I worked harder or as hard, but that didn’t happen for me. And unfortunately, some people are five years into their career, and they’re, you know, they’re doing three, four five years in.
You’re doing okay. I’m just saying, but I know one thing for a fact about a brokerage is that if you go hard, the way we coach at Matthews and the way anyone should, and you do it and never stop, you will get to where you’re going. Nobody can stop you from your destination. You could have a lousy mentor or a challenging product type.
You could have a terrible market great financial crisis that will slow you down. It’ll make the road windier and bumpier. It will affect the journey, but it will never affect your ability to reach the destination. However, you define that. And the tragedy of my job is that many people quit.
The hardest part of my job is seeing what they could be. I see the best version of themselves, but they don’t see it. It’s not that they don’t believe in themselves, think it’s too far away, or think it’s unattainable. I’m not saying anyone lacks confidence, I’m just saying they don’t see the path, and I know it’s right there.
It may be 15 years down the road, but I know they’re going to get there.
Chris Powers: When you say there’s a 27-year-old making 2 million bucks a year, we’ve talked a lot about this. Anybody that’s listened to this far has already heard your story, but what are the characteristics of somebody that’s 27 years old making 2 million bucks?
Kyle Matthews:Yeah, generally speaking, the only commonality, the only consistent trait in the dozens and dozens of those that we do have, and this is true about any successful agent at any company I’ve ever worked at or could build a relationship, is the discipline of working long hours, making lots of excellent calls, presenting lots of proposals.
Okay, over a long period. And a proposal is A B O V. You’ll hear me use those interchangeably as a bad habit like a proposal. I propose you sell your asset, hire me to lease, and engage me to provide a service to find your debt. It’s got it. The reason we call it a proposal, A B O V is more of an investment sale, and we do more than that.
We do debt origination, and we do leasing, we do investment sales. We will do more than that very soon, whether it’s property insurance, valuation, or debt servicing. And that’s more of where we’re heading. But so a proposal, we could call it B.O.V., broker opinion of value for the investment side. When an agent calls you up, I’d like to see what it’s worth and consider selling.
So the three things, if you said, give me three traits of a broker, tell me three things about a broker, and I’ll tell you if they’re going to be successful. Not assuming they keep doing it. What time do they get in the office, how many calls do they make, and how many proposals do they present?
And if I only had one, it’d be presented proposals. That is the metric that matters the most, and that’s the metric. Now I presented 103 proposals before I want to listen like that. You know, it’s funny. My son struck out in baseball several times the other day, and it was just eating his heart out.
And I said, Hey, listen, man, I get it. It sucks. Like I have struck out in baseball. What if I told you I struck out 103 times when I started my career? He was like, what? I said, yeah, you know, proposals. And he knows the vocabulary because he’s been sitting at my dinner table for 12 years.
You don’t get lucky as they know all about cold calls, but I presented a hundred and said, you know what we call it? We call it a pitch. It’s a lot like baseball. We call it pitch. I call Matt Bats. You have got to keep getting at-bats and keep swinging the bat. Eventually, you’re going to make contact.
Eventually, you’re going to hit it out of the park. I said, I struck out 103 times, and you know what? I realized about 50 and 60 in we’re not allowed to curse in my house. My kids don’t curse; I don’t curse in my house or here. Don’t we save those for the podcast? Hopefully, they don’t hear this house.
Oh no. But I said you’ve got to say if I strike out. Never accept it. I never like it, but move on. It’s okay. You’ll keep getting better, but you can never keep stepping up into the battery spot cause, say, I don’t want to play this game. I was like, no, you’ve got to keep going.
You’ve got to keep stepping up. And so if one thing is, it would be proposals presented. Now if they presented a hundred, we, our market leaders who run the office, our managing directors who oversee that, and up to me like this is how involved I am in the company, Chris, I will get on the phone with an agent, and I will roleplay this with them To this day, I mean we have 500 agents, I think 450 have my cell phone.
So sometimes that sucks. I can always not answer. But I get back to almost everyone and say, okay, you presented a hundred proposals. I’m sure some free pizzas are in there, and that’s okay. But like free pizzas are proposals that you maybe shouldn’t present, but you’re just trying to justify a reason to do it.
Yeah. Okay. Could you walk me through it? The first thing I will say is to return to the Matthews University training program. There is a 300-page manual. There are 105 modules, module 68, the pitch where there’s one module 64, the preparation for the pitch module 68, the pitch, and a 21 step.
Have you gone back and looked at that? Something as simple as you make an agenda for the meeting. You only go to b B.O.V. presentation if you say, Hey Chris, do you have an agenda for this meeting? If not, I’ve presented one already. You’re like, damn, this guy’s serious. Okay, here’s my agenda. Nobody does this.
We do it. So there you go. I just gave away one of our secrets. All our agents will be pissed, and God damn it, I can’t do this. It’s hard balancing this new social media where I’ve got to give them a show them a little leg. But I can’t give away the secrets. You’ve got to come to Matthew’s if you want them.
And here’s my plug, but I want to come to Matthew’s. You can, yeah. Leave. I invited you. I know. I’m going to come. All right, good. So anyway, where’s I come with that? Proposals. And so I said to start there, but the one, you have your agenda, it’s different. You have their agenda.
Just list the 21 steps and write out what is okay—step four. Remember, don’t sit across the table. Sit to the side across as adversarial. I know we’re doing podcasts now. Yeah. But it’d be better if I sit on your side because we’re on the same team and in a huddle instead of a negotiation.
You don’t want to negotiate with your client, and you want to negotiate with the buyer. You want to be on the same, just little things I picked up on over the years. It’s all there. Matthews University. Go back to your training dog. And then they’re like, okay. I said I want you to do this for the next 10.
Do this exactly like this, and we’ll do this call again. You’re presenting, you know, one and a half weeks, two weeks. Great. I’ve never seen someone consistently present two B.V.S. a week and not do insanely well. And what’s that? 5, 6, 7 weeks. All right, let’s call back 60 days from now, we’re going to put this on my system, put it on the calendar, and I’m going to see how it goes.
And every time that I do it, it’s so different. It’s that’s it. It’s a simple business brokerage, and it’s a challenging one, but it’s a simple one.
Chris Powers: Did you draft that?
Kyle Matthews:Everything we drafted, and you just got it all out of your head. Listen. Do you know what we did during Covid?
Was it March 17th? We went home on March 18th. I called the top 10 guys and said we wouldn’t sit around our asses for the next months or years. I said I wanted to revamp this training. We’ve got to bring Matthew’s universe. I got this whole vision, and we started banging them out. And at the time, it was about 80 lessons, and I wrote about 30.
Dave wrote 15, 20, and then others had 4 or 5. A quick story is that you got two weeks for each of these and sent them back to me. And they’d send them to me, and I’d say, Bill or Max or whoever it was, is this the best you can do? And they’re like, fuck. It would help if you come back to me in a week.
Come back to me in a week. I was like, Max, Bill, Chad, this is the best you can do. And they go, so you go another week. Our training class was in June, so it’s like early May. And they sent it back, and all of them said, Kyle, this is the best I can do. I said, good, then I’ll read it this time.
That was a great lesson. Kennedy, Paula Kennedy in the story is, do the absolute best you can do the first time because you can there’s so much more, there’s so much better. Whether it’s an effort, a product, a service, or whatever you’re doing, you can do so much more than you think.
I did this to the market leaders. So to answer your question, we revamped our entire and wrote everything from scratch. It’s 105 modules, and it has live training throughout the summer. So Matthews University, we’ll have June 5thand 200 people showing up. Half are new agent hires, and another half are interns, usually rising seniors.
We want to become our recruiting class for the following year. Like a law, like a summer program. And we train them all, you know, some interns don’t come back, that’s fine. I hope they go into real estate and speak highly of us. But yeah, it’s been amazing. And that was during Covid, and we just battled to do it.
And then, about five weeks in, I was like, we’re getting back in the office. And early May 4th, I drove from Nashville to Dallas and opened the office personally. And then if I’m there, everyone’s gotta show up. So yeah, we got back to work right away. And that was one of the biggest reasons we flew out of that thing.
And like we were balling. And to this day, especially the big public companies, because they got many distractions. Politically and culturally, they got a lot of distractions right now. And we don’t have any distractions and work. And so they’re still struggling to get people in the office.
They’re still 50, 60% occupancy, and we’ve been 101% since June 2020. And again, that is Matthew’s mentality. If we hire the right guys and gals, they couldn’t imagine they don’t want to work from home. They did that for five weeks, and they hated it.
Chris Powers: Could you imagine being at the top of your game? But saying, I’m going to take this one from home.
Kyle Matthews:No, not in our business.
I am open-minded that there are professions, coding, like in account where not driving 30 minutes in the office. Like I create efficiencies. Let’s assume you don’t have a bunch of young kids.
If you have young kids in your house, there are better environments for being locked in. Okay. But I am open-minded that there are multiple professions and jobs where that makes sense, not in brokerage or sales. And I always say it’s like a company’s like a band. Everybody could play their instrument in a separate room, but it’s only music when done together.
Chris Powers: On that note, you started with one. In general, one of the most impressive things about you and the company is especially you, though you’ve gone from broker to broker. C.E.O. and like business leaders. So you’ve said you don’t do brokerage anymore? I do. No brokerage. You all now have 19 offices and counting.
Kyle Matthews:This is true. 19. We counted them all off this morning. I counted them off from the top of my head. Yes. Because you were like, Hey, what, you got 15? I was like, yes. Six months ago, we might, you know. Yeah. Every day there’s a new office. So yes. 19 offices.
Chris Powers: Speak a little bit. Let’s bring it home on what are all of you doing differently.
How do you determine when to start a new office? Like, why is Matthews, and you can hear it, why it’s different, but you’ve mentioned technology, shared services, support, and then you’re opening an office a month now. So what’s the vision? Where are we headed? What’s all this look like?
Kyle Matthews:Okay, so there are a lot of questions in there. 55 questions in one. Yeah. Let me unpack that. So what is Matthew you do differently? What is our value of representation, and what much of our value to the broker is passed through, though, and owner? So I use these interchangeably. It’s three things.
Okay. The first, and I’ll dive into each. The first is our shared service platform. Okay. The second is our tech stack. Our technology really technology creates efficiency. So efficiency through technology. And the third is culture. We’ve discussed that much, and I’ll touch on that again. Okay.
And so the first is a shared service platform. So what does that mean? And I spoke about this briefly earlier when I was at other companies, and I understand this is still a thing. Much of my day as an agent was spent on non-R.P.A.s, non-revenue producing activities. I was, I’m researching a property.
Okay, that’s fine. Our agents will still research if it’s efficient, but I didn’t have a button or a person like, Hey, here are these five properties. Can you get me the contact info? I’ll cold call them. I’ll cold call them. Cold calling is not a problem. I need the numbers. No one was there for me to do that, so I had to do that.
Okay. Starting with that’s like the base, but then I generate a B O V, and again, there is part of a brokerage that you always stay on which comps to use, which ones are relevant. How do, where do I price it if I’m underwriting it? What are the market five-year unleveled I.R. expectations? What are the assumptions?
Can I defend them? Okay, that’s fine. But what about building that model? For us, it was like Argus. Creating that model took two or three hours, and I was making a proposal in half a week, and I was shopping, and I had to do that myself. Then it was the marketing of the B O V. It was the production of the InDesign file.
I paid Adobe for my InDesign, and I’m at a big company, but this is how it was. So credit to them, you probably have pretty good margins, but it was like, okay, but this is just time and my attitude. And as a founder, the analogy I use is Air Roger’s best quarterback.
Okay, that’s not an analogy, and that’s a fact. A rod, that’s my guy. He’s a great quarterback because he only spends time as a quarterback. Yeah. When he is not making his dark retreats like he’s only working out, throwing the spiral, watching a film, or getting with his coach, he’s not coordinating the halftime meals.
He’s not negotiating room blocks for the away game hotels, and he needs to understand payroll services for all the security like he’s just a quarterback. And I looked at myself like. I’m a player on the field, an athlete for brokerage, and doing all this distracting work.
And so at Matthews, 90% of that is gone. So at Matthews, yes. Many of our guys will still research numbers, but if there’s just a number you like, click a button. We have a data research department, so onshore and offshore, they’ll find the number and kick it back to you. Okay, cool.
That saves me four minutes. Great. That’s four minutes. That’s another excellent call. How about the B O V production? If it’s a more important deal, we have 60 or 70 people in Phoenix like they click a button in the system, and I’ll talk about the system Atlas in a second, where it sends a message. Say, Hey, B.O.V. requested, this is the agent.
It’s a 15-unit industrial deal in Fort Worth and B.V.S. due in 10 days, seven days, or four days in different urgency levels.
Chris Powers: You’re talking dirty to me—fifteen units in Fort Worth.
Kyle Matthews:Yeah. So suddenly, they start creating the whole wire frame, and they’re already starting on the market overview and the submarket overview.
They’re already doing ground area photography through our network, and they’re already doing everything. The brokerage’s just identifying, okay, here it’s all done in the system. So the broker drops comps in the system, and he says, starts pricing here. We have analysts like, Hey, no, do I, yeah, I’ll do a ten-year cash flow model.
Not only do they not have to do it themselves, they don’t have to manage these people. They’re professionally managed, and they’re employees at Matthews. It’s done. It’s expensive for us, so our margins are less than any one deal, but our agents do so many more deals. That’s why our Matthews agents, the young agents at Matthews, are moving up the ranks much faster than any other company.
That’s why we put more new agents into the industry than every other company combined over the last five years. I would bet on that. Or the O.M., you earn the listing. You’re awarded the listing, and you get, like, Hey, I need an O.M. that’s done for you.
It’s all these, and there are transaction managers like it allows them to keep making calls, going to meetings, presenting proposals, and traveling to see clients keep negotiating their deals so they do more deals. Still, they take half that time to work out and hang with their buddies, but half the time they apply back, it’s still.
A net plus to us, it’s not Costco, but it’s like Costco’s look, we’ll make less money on any one bottle of water, but we’ll sell way more water. And so the shared service platform allows them to generate more business, number one and number two, saving them time having to do it.
Number three, it saves them time. You have to manage people, and I had to manage people at my companies. When you hire your first employee, let me ask what your maternity policy is. What happens if they’re driving to take a photo of a building that you’re pitching on and they get in a car accident, that this is, are real things?
Okay, what happens? Oh, you’ve got to review them. You’ve got to onboard them. You have to create the job description. It’s all you, and it’s all distractions. None of which are revenue-producing activities. All of which I had to do at both companies I was at. And if I had to guess what 90% of brokers are still doing, I had to pay for the last part.
That was the hard part. Because then you have to decide should I pay to send this out via. Constant Contact 150 bucks, or could I call buyers locally? And that affects owners and the service you’re providing, which now you’re saying, could I get away with selling this deal without having to spend all this capital on it?
The owners respectfully, I’m sure they want you to make more money, but they’re like, look, you need to provide me with the best service possible you need, which ultimately is exposure, amongst many things. But the biggest thing is you’re effectively showing up for a marketing assignment, and your job is to expose and defend the asset and negotiate and all those things, but get exposure.
And now you’re deciding if you want to use all the tools and resources available for a broker because you’ve got to pay for them. That’s taken out of the decision-making process. Matthews and it’s just there. Yeah. Bang. So that’s the shared service platform and all of those. Let me know real quick.
Features, benefit to the owner. When you hire a Matthews agent, they have more time to call buyers and a broader reach and exposure. They can provide you with a better service because they have more time to provide it, which is a brokerage. And so, let’s say all brokers are the same.
They all work the same amount of time. They all make, but if one broker has 90% of his time to go out and find you, that buyer who’s going to pay the most aggressive price or find you the deal that you’re looking for your 10:31, and the other broker has 60% of their time over a long enough period, over enough brokers and enough deals, the company that provides that is likely over time going to provide a better service.
The second is technology. And this is a big one. The most significant part of it is the database. But first, I’ll touch on, and we have investor predictor. So any buyer that comes to our website with Cookie, we track their computer. It’s above my pay grade. We have a whole software development team at Matthews, and you know, some C I H, but no.
So you go to our website first. Your company has, your computer has I S P. We start, okay? It’s connected to your profile. I could go in at any time. He’s looked at industrial deals in these three markets, right? That’s proactive. But what if I told you when I list an industrial deal in Phoenix, it provides me with an investor predictor?
Here are the likely buyers, in addition to people who own near the area, in addition to the email blast, in addition to going on CoStar and seeing who bought similar buildings. Here is a list of people based on digital body language and digital activity. Here’s a list. So if I’m going to make a hundred random calls to buyers, Why not this one?
And so it increased the probability of sourcing buyers the needs and led marketplace like our agents. And again, I’m not saying these are unique to Matthews, and some aren’t. Needs and leads. I’m talking to you, an agent, and you say I’m looking for industrial 10 to 20 million in these ten states.
Okay, great. I’m an agent, let’s say, in Nashville. I’m only working in Tennessee. I can’t track it but I create these needs and leads in our marketplace. Anytime any deal hits the system in Matthews, it pushes it to me, and it pushes it to the listing agent. The listing agent will receive, Hey, Kyle Matthews, an agent out of Nashville, has a buyer with a need that matches your lead and vice versa.
And you can put listed deals. You can even put unlisted deals. Hey, I have an off-market deal. It’s an industrial deal, and it’s X amount, square feet, X amount, a million, and it’s in this market. And it pushes it to the buyer’s agent, who says, Hey, there is a deal. It’s an off-market deal put in the system by an agent in our Phoenix office that matches your need for Chris’s powers.
Yep. And so it just increases the probability of hitting that click-to-sale system. As an agent, I would send broker emails out, or sorry, I e-blasts, whether 5,000, 10,000, or 20,000 people. I hope they got it. I had no idea. I hope they call me. I’d call them if they’re a logical buyer, but there is no way to see what was happening digitally on the other side.
Our technology embedded within our system is you get real-time alerts. So if I send out an e-blast and it’s a multi-family asset, I’m the listing agent. Depending on how you set your filters, I get notified within 31 seconds of someone opening, clicking, or downloading, and I only want to see who downloads it.
And in the first couple of hours, I might get a 100, 200, 300. Lease. Says Hey, Joe Smith at Smith Multi-family Ownership Company is looking at your deal and has all their contact. And I call and I, Hey Joe, it’s Kyle Matthews. Hey, listen, I just sent you a deal. You might be looking at it. I love this deal and think it’s perfect for you.
And here’s why. It gives me the ability to overcome its objections in real-time. It’s like walking onto a car lot. What happens? The sales guy comes out and says, Hey, I see you looking at this car. I like this car. Wanna you test drive it? It’s pretty good. And then I’m like, no, it’s too expensive. No.
It’s less expensive if you think I got this incredible just for you. I got this incredible. Take it off the lot now—financing deal. Just come on inside. Let’s sit down. I’m going to walk you through the financing. Zero A.P.R. for the first 18 months. You know, and again so it just allows us to overcome those objections.
Objections are like cement. You’ve got to get to them before they settle. It’s hard to crack it after that. And then the most prominent thing and the most significant thing and the size of Atlas, our database, right? Atlas was the Titan God who held the world on his shoulders, right? Atlas, this is you hold it holds our business upon its shoulders.
It’s one of the biggest misconceptions about brokerage. Owners like yourself, you think? Am I in this database? Oh yeah, a hundred percent. You’re right. Oh, man. We were like, I should quit my job if you’re not. We suck. I’m out. Oh, 100%. We have a million people north of a million people.
Wow. All right. Here’s what’s up. Most owners think that companies are competition these databases, and they don’t. You say, okay, what are the most prominent companies, name them J.L.L., CV, Kush man. Nope.
Chris Powers: Colliers. Nope. Does Marcus? Nope. Oh no. They make their agents do it. Because you talk to any new agents at Marcus, what do you do in the first year?
I have to build my database, But it’s their proprietary one.
Kyle Matthews:Yeah. Okay. So the more prominent companies, some of these companies, the big publicly traded, may have a database, but it’s all like giant institutional owners.
Yeah. It’s like in the industrial, with 300, 400 biggest industrial owners. Or if it’s like the DFW market, it’s the 30, 40 biggest owners. I know this because I got boys at all these companies. And when you get a listing, what do you do? Like now, we send it to our Excel list.
I wondered how DA’s there are, but people need to use them. Nobody curates the data, and nobody puts it in. And he is there is no private client information. And that’s why they can’t, and they struggle to source 10:31 buyers. But like now, if you have a 70 million asset industrial deal in Dallas, a multi-family deal in L.A. retail deal in DA Georgia, how many buyers are there?
It’s like 50 or 60 buyers and the same buyers. You know who they are. Like maybe now and then, some new fund will show up. But again, it’s out there on the mul like you’ll see the deal. But who pushes value for the 5, the 10, and the 15 products? It’s those 10:30 ones, and it’s those private clients.
They don’t have anything. You mentioned Marcus. So again, it’s been a decade since I’ve been there, so I have to qualify the same things that may have changed. They haven’t. It’s that I had my database, and when I earned a listing, it went out to me, and I was like, I got an extensive database, and I got 20,000 people, right?
I had eight or nine years of databasing me the whole time every morning, five researchers a day. Keep the doctor away. It’s every morning, and I got at six, and from six to seven, I researched five new contexts. All right? It was all me. It was tough. It was like 20,000. I was like, I got 20,000 person database.
Now at Matthews, your first day million North of America, everyone has access to it. Now there are all types of rules like there are protections, there are locks. The most considerable segmentation, like you’re not going to get, you’re an apartment building in New York City because you’ve never signed up.
There’s, you know, you have form capturing. Hey, this is what I’m looking for. But my point is, if ultimately I’m an agent, I’m interviewing for an assignment, and you’re like, Hey, how do you expose this asset? Look at this thing. Yes, I know. I research every owner in DFW, and I know who they are.
I will cold call them, and they will get, and you know what? There’s a 60, 70% chance that the buyer stands on the rooftop of the deal, and you listed a 60, 70% chance the buyer owns a building you can see. That’s like an old-school brokerage rule, and I still think that’s true. But the 20, the 30, 40% of new buyers, it’s their first time buying into a market.
It’s the California 10:31 exchange bar. How are you going to be the best buyer that ever was? They’re the best. But how are you going to source them at every other company? It’s LoopNet. It’s Krei. It’s my internal broker referral network. I will put it in our insider system, and my agent, the agents at the company in California, will take your deal, which probably has a lot of objections.
You have a big ranch, and you have full occupancy. There’s no upside. All downside, right? And I have to overcome those objections. You’ll rely on an agent six states away who probably needs to do their product to be the first person to introduce your product to that magical buyer.
That’s a wrong decision. I want my agent to introduce it. I want my agent to, and you know why? Because they’re the most qualified. They know the asset the best. They know the market rents the best. They know what objections they’ve had time to prepare. And it increases the probability that when that buyer receives a deal, they won’t be like, delete, or not interested.
No, I’m not too fond of this. And just the size of this database, it’s an insane listing or earning of a listing tool because you get to go to an owner and say if we’re just here to talk about marketing and reach like. Here’s what I say, and I call. Do you remember the Pepsi challenge? Let’s drink the two sodas.
You tell me. It’s I always say Pepsi challenges it. I tell the agents to tell the owner to come into Matthew’s office, sit at their desk and have access to this thing for a second, and understand the power at their fingertips. And then, say, Hey, if I hire you, can you send this deal to every potential buyer that anyone’s ever spoken with?
And you can look them in the eye and say yes. Now go to another competitor and say another broker shop and say, Hey, sit down at their desk. Say, Hey, if I hire you, I know you’ll send it to everyone you’ve talked to and researched, but can you send this directly to everyone in the market who’s ever interacted with anyone at your company?
They’d be like, what are you talking about? No. What? Why? How? It’s okay. And then here’s the second part of that, Chris. Show up at 6:30 in the morning at Matthew’s office. Everyone will be there, suited and booted, ripping, ready to go. Show up at Matthew’s office. Now, show up at a competitor’s office at 7:30 in the morning.
The doors are fucking locked. No one’s there. And that’s the third part. See how I tie that together? Culture. We talked about a lot of culture about keeping it fun. Okay. No, I’m talking about the culture, work, and work ethic.
Chris Powers: But I thought work-life balance and all the colleges are telling their kids that you need to work hard. And so not too hard, though. I’m just laying this softball right out here for you.
Kyle Matthews:So I have a theory on work life. It’s my favorite answer. It is what Zag wants me to say, go to my social media, and you can see if you’re your I know I retweeted it. Thank you for that. It’s not that colleges or professors. Some do, Sure.
Spouses and promotes work-life balance. Don’t work that hard. All right. When we were growing up, half the room was like, I need to be successful and want to take over the world. Maybe that’s us. Okay. And the other half didn’t, and that’s okay. Because, again, God makes everyone different.
But I thought 20, 30, 40 years ago, and I think the other half that’s Hey, I want to get a job, and I want to make a little money, and I want to, and which, again, there’s no judgment. It’s just different. Back then, they were quiet, like, Hey, they looked at guys like you.
And I was like, and those guys are crazy. Why would they want it? I don’t want that. And we were like, that’s cool. And they just said, and you do, And we go our separate ways in life in the sense we choose different paths. The issue now in our culture, in our society, is that the other half of the room is so loud.
And not only do they say, Hey, I disagree with that life of 80 hours a week. That isn’t very nice. You work to live, and you live to work fine. I have things about your choices, but I live and live. Like you live your life, I live mine. But nowadays, that other 50% scream at you, and they, like, you’re in. It isn’t good.
And they drip with judgment and can’t stand you for it. And I think internally, and it makes them feel guilty. It makes them feel bad that they’re not choosing that. Because they know deep down that if they were willing over a long period to make that sacrifice and put to the side the thirsty Thursday, it’s okay, no, put to the side all the hobbies and the social activities that’s what you give up.
From 22 to 35, I worked nonstop. That’s all I did. Was it? I got married, and I had three kids. Now I got four three kids. I went on tons of vacations. I coached my kid’s sports. So it wasn’t all I did, but what did I sacrifice? I did not sacrifice my life. I did not sacrifice my marriage. I did not sacrifice my kids and my time with my kids.
Do you know what I sacrificed? Some workouts. I got a little softer around the belly, and I’m still working on that. I sacrificed. There are Saturdays for the boys. I sacrificed hobbies and things I like but don’t need to do. So the rest of my life, I can do those whenever and wherever I want if that’s what I want to do.
Right now, I want to do something else. I want to keep spending time with my family and don’t want to keep kicking ass.
Chris Powers: And all the people that didn’t sacrifice and did Thirsty Thursdays forever and now 35, it’s no longer cool to be social all the time. And they’re like, fuck, now I have to get started.
Kyle Matthews:But yeah, And then that's demoralizing. And I'm generalizing here, which I don't like to do, but now they're pissed, and they're angry, and they're just, they're screaming at us. I hear you go. Okay now. Yeah, I did a talk at the University of Alabama, and by the way, I've given this speech a thousand times at Matthews.
The Matthews guys rolled their eyes like, oh, here we go—work-life balance. I've heard this one, but it was a pretty act now that I have social media. An active post is like someone's video where I was talking about a conversation. There was a reporter in LA when I was living out in LA, and I think it was an LA business journal.
We wanted to come and talk about Matthews. We had started a couple of years, we were increasing, and I was telling her my hours. I get in the office at 5:45, and I stay at 7, 7:30. I have at the time, you know, probably two kids, and I coached their sports, and she's, oh my God, like. When do you have time for work-life balance?
You're doing all this at the company, and then you got the kids, like, when do you have time? How do you balance work and life? And I was like, and I'm just rolling, and I'm just making stuff up. And I'm like. It is something other than what I practiced. And I said like work-life balance or workday balance.
And I was like, you're talking about like workday balance. And right now, I don't have any. And I said, but work while life balance, I'll have way better balance than you do. And like I have no filter. And she's, I said, what do you mean? I said workday balance. Indeed, right now, I wake up, go to work, go home, put my kids in bed, talk to my wife, sleep, wrench, wash, and repeat weekends.
I coach my kids; I play with my kids. And if it's nap time, I go to the office like, yeah, it's brutal, it's hard. Spartan lifestyle, right? All time. Train for war. But I'm doing this so one day, God willing, the creek doesn't rise. I will have the luxury of never having to work again at a young age.
And that's my hope. I'm not too fond of hope. That's my strategy; strategy's good. That's what I know to be true. If I do this, it will work out, and I might be an idiot. And maybe I'm wrong, and I don't think so. So that's my choice. And I said, right now, your day is more balanced, like working eight hours daily.
I said, then what do you do for Robbie's? Like, I go to yoga, and I spend time. I said, no, that, that's what I figured. I said, so right now, yes, I work more than you, but I said, work-life balance is a myth. And I said, tell you why. Because from 22 to 32, I'll work eight hours a week from 32 to 35, 37 I was, yeah, trying to do the math years. I'll work 60, and from 37 to 42, I'll work 20; then, at 42, I'm done. And so add that up like the hours per year, Fifty work weeks in a year. And then you take 40 hours a week times 50 weeks a year. 2000 hours times 40 years. Because you'll probably have to work that long unless your parents give you a bunch of money, which I'm not getting at, that's 80,000 hours.
And then, when I added mine, I added a whiteboard because I always have one. Cause the whiteboards are fantastic. And mine was like 68,000, and I said, so you're going to work more than me, and you need a work-life balance, and I do, and she wasn't happy about that, but it taught me that I always try and break things down to the facts.
I don't like to state opinions as facts. So here are the facts. Convince me otherwise; she's I'm, I can't. And I was like, there you go. And it just I've always shared that story, and I shared that story at the University of Alabama at the real estate school. I was, you know, given a talk to you about a month ago.
And yeah. Look, it's delayed gratification. You know, the first sign of maturity in kids it's delayed gratification. You go to a three-year-old and say, Hey, you could have a cookie Today or two tomorrow. And they'll always choose one today and then ask for one tomorrow. Yeah. Because they're three, and they'll probably get it.
You go to a five-year-old and say you could have one today and two tomorrow. I have four kids. Two of my kids would've taken the one, and two of my kids would've taken the one tomorrow. And they but by seven, they almost all take the two tomorrow. Because they're maturing and thinking, wait a minute, if I sacrifice a little today, if I sacrifice this cookie, which I want so bad right now, tomorrow I get two, I can do that.
That's one day. When it comes to your career and professional success, it's a much longer sacrifice, but there are many more cookies at the end. Yeah. And so that's what I tell these guys and gals when they start at Matthews. I share with anyone willing to listen, like, God willing, life is long, and you've got a plan for that.
You know, some tragedies happen every day, and they're terrible. Okay. Put that to the side. But what if you live 80, 90, or a hundred years old? What if, especially daily, people have better access to health or awareness about food and Da. What if you are 50, 60, or 70, like you, still are in great shape?
You could still do a lot of things. You're not sitting in a chair watching like Fox News for the rest of your life. You know, it's no, you actually could do things. What if you're still working, man? That sucks, and you're working but not building wealth because things are always expensive.
They're getting more expensive by the day, like inflation. I know CPI was down to five, thank God, but of course, CPI is still, you know, still hanging in there. But my point is, what are you giving up in your twenties and early thirties? Like me, you can find your life partner and get married.
You can have children and be an involved mother and father. You can do these things when you sacrifice some workouts. Indeed, you sacrifice your time, like socializing. But those things fade. Those are like hobbies and activities, and then for the rest of your life, if you make those sacrifices up front. You delay the gratification, the amount of socializing, the amount of working out, the amount of whatever you want in life, and maybe it's a material thing, maybe it's boats and cars, and to each their own.
That's not my scene, but God bless man. Whatever brings you happiness, I got a rule. Do whatever makes you happy as long as it's not pissing anyone else. If that's what makes you happy, that's awesome, man. Yeah, that's it, but it has to come from somewhere. And the thing with sacrifice, much like the wealth of compounds in the sense that if you can do it earlier, it will build and build and build.
And it's not so much that they're being encouraged by the establishment and the institutions. Indeed, there are those professors, but there are always those professors, right? It's more than the other side of the room that doesn't want to do that through social media is seeing.
The benefits of those who did, and it's just getting thrown in their face every day, and they're pissed off, and they're angry. And what do people do? They rarely reflect internally and ask what choices led me to this place where I'm not necessarily living the life I want.
But instead, now they're projecting it out, and it's becoming part of the culture where if you say, Hey, if I go to 22 years about to graduate, hey, what do you want? If they went to their classmates, say, you know what? I want to be super successful. I want to make a ton of money. I want to retire young and do everything I want in life.
They're like, oh my God, that's terrible. And it's no, that's just what that person wants. They're not judging you like, but it's just for whatever reason. So in my little soapbox that I stand on, I battle that message a little bit. And that's my thoughts on work-life balance.
Chris Powers:I love that thought on work-life balance, so I wanted to hit on it.
All right. We've been going for a while. Let's bring it home on what you're seeing in the market. What are you telling agents? What are you seeing? You think the worst of it is past us.
Kyle Matthews:Let me clarify, speaking from a brokerage standpoint with velocity declines. And I'll tell you why is velocity declines for a brokerage company or an individual agent. You want all your clients to make money at all times, and it's always better when they do. Okay. But in terms of your market, it's the market conditions for transactions. And what happened was last year, when.
Powell and the Fed said nine raises in 12 months, going from zero to four and a quarter, four and a half. And the ten years went from 1:30 in February to 4:20 in October. Think about that. In eight months, it went up almost 300 basis points. I'm going to use generic numbers here.
Let's say February last year, like coming out of 2021, the most insane year ever, heading into 2022 big pipelines. Everyone's just feeling good about themselves. Let's say the average cap rate across all product types is a five, and the average cost of capital debt is a three and a half. Do you follow?
Just like simple. Yeah. 150 basis points. With amortization, your debt costs, and there's close to your cost of the cap close to your yield de cap rate that you're buying in. So you know where the 4, 5, and 6 are. That's a stabilized cash in cash, and that's fine. I'm just using this as a base. When debt rises, when borrowing costs rise, 300 bases 0.3% from three and a half to six, six and a half on average.
But your cap rate's still at five, nothing. Pencils and transactions. Once that 10:31, like a pig and the snake is swallowed like it's gone, you see velocity crash down. December was down 77%, or that was in November. That's significant. And so what we're seeing now, which is why the worst is over from a transaction velocity standpoint, is we are seeing massive cap rate movement.
It is happening, you know, September, October, we had yet to see it. There still were some crazy sales, but November, December, Jan now you're seeing them. You're like, damn, that deal traded like a high six. I would've traded mid-five last year out of seven. You're starting to see sevens.
It was like. There were seven; the last time I saw that was in 2015. Let's go, baby. Come on. Like especially buyers, you know, it's, I've been waiting around forever. It's like, all right, your cost of borrowing has gone up. Your cost of LP money has gone up. It's all relative, but yeah.
You make your money on the buy in the market you're buying in, but we're seeing cap rate movement. But we've also seen debt costs stabilize and decrease slightly. It peaked on October 24th, and the tenure was at 4:20. Today, it's 3:40, 3:50. I didn't check today.
It's moving around slightly, but that's 60, 70 basis points. Debt's 25, 50 BPS cheaper than it was. Fewer lenders are in the market today, but there are still some lenders. So that's why it's so important to have; we have embedded capital markets agents in our company, which is crucial if you're an investment sale guy.
So now we're seeing cap rates moving up. We're seeing debt stabilize and even come down a little bit. We're getting closer to market equilibrium, where cap rates, on average, are 150 BPS higher than debt. If the debt is six and a half, I know this sounds crazy. CAPA rates must get to eight.
They've got to go from five to eight, but they're moving. They're at six, six, and a quarter six. They're marching, and as long as they will keep marching up because buyers are undefeated, they've never lost this battle. All sellers either don't sell or those with real motivation always have to find religion and sell.
Chris Powers: I have to ask you one question. For the folks right now, you can go on and a lot of the single tenant stuff, dollar Generals, whatever, still price at five and a quarter. They're not selling, and that is finally washed out. So those are just brokers willing to take five and a quarter listings.
Kyle Matthews: Yeah. Bad brokers, historically, have yet to go through a challenging market. Even for guys who started in 2011, Covid was like a stop-start. It does. It wasn't even like an actual recession for brokers, just there were no deals for 90 days, and it came back like wildfire. So you have brokers in the business for ten years, 12 years, almost making millions and millions.
It is the first time they have been in a market like this. And they're learning hard lessons.
Chris Powers: And they have significant overhead too at the household.
Kyle Matthews:Yeah, most of their overhead, it sounds weird, is assets they've purchased. They're super liquid. They make all this cash, and as soon as they get it, they buy real estate.
Then they become a liquid. But they have assets. But now, the value of those assets is going down. They're okay. I can only speak for some, and I can speak for agents at Matthews like it's separate from Matthew's University, like wealth management. But we communicate to be conservative, safe, and stay liquid.
We always recommend you have 24 months of whatever your net is saved in cash or cash equivalent. Buy real estate, fund your 401k, and do all those things. We all tell B brokers one of the best ways to earn business. If your client's raising money, put some money in as an lp, giving you a good shot at winning the business.
Yeah. You know, it's a product you specialize in, and they appreciate it. Yeah. Regardless, those are agents, and I don't mean this disparaging like they just haven't had to be. They're just not. They still need to be battle-seasoned vets. Yeah. The vets aren't doing it. Yeah. Deals need to take the listing.
They'll have it come back to them on the rebound and lower press. Oh, they'll move on to higher probability—his probability brokerage.
Chris Powers: I will tell you as a principal right now, which is, it's been a flip for a long time. Everybody wants a real off-market deal with no fence but no brokers involved.
I want to talk directly to you now; in this market, it's changed. If a broker's bringing a deal out and they're a good broker, they've already brought the seller down; they already listen.
Kyle Matthews:Bad markets, challenging transaction markets, reset broker value, correct? Time. There are so many developers that we have done a lot of business, but first of all, it starts with fee compression.
Your fees go from three to two to one on a chunkier. Let's call it a commodity, like a net lease. Yeah. And then eventually they're like, everybody knows what product I got. They could reach out. I don't even need to list this. And in a market like 21, I will constantly battle, say, a broker will get you a better price.
And even if they don't, they'll save you time. Like I always say, what's the fee you'll pay? It was 50 grand, 70 grand, and a hundred grand. How much is your time worth? How much is aggravation? I'm always going to battle. I believe in what we're doing, but in today's, as we have, I. Developers are reaching out like, " Hey, I need someone to help.
Please, who's the best broker I need? And I was like, two years ago, this product was flying. So again, you never wish, and you never root for recessions. It's tough. Like we're battling. We're like, and I always equate it to a fight. Like we are taking punches. We're, but we're landing punches. You know, we're landing, we got a slight swelling under our left eye.
My rib hurts. I will take a couple of weeks' vacation when I leave this. No doubt. But no, we're doing well. The bigger the public companies, they've got to report. So I know what they do. And they're getting smoked right now. Yeah. And the boutiques are 12 months from now; there will be boutiques that you know of, that I know of that will not exist, and we're already seeing it.
I've already heard of, in the last 90 days, three boutique companies that didn't pay their brokers on closing. So hey, give me a couple of months. We're just a little tight. And I'll tell you why that is. Gets back to Matthew's growth is like in a good market. Every boutique makes money. Yeah. And then what does the owner do?
They sweep that cash. Yeah. They're like, okay, like, what is my payroll? It's, you know, it's 500 grand. All right, great. I'll leave 500 grand for the next 12 months. But it made 2 million. Okay, I will take that million, half them, and buy real estate. I'm going to buy that big home. I'm funding my kids 5 29.
Like good things, I'm going to give it to charity. Awesome. But then, when the market turns, they don't have a lot of cash in there, and then they start bleeding. What are you going to do? You're going to do a capital call; you're going to go to your investors and say, Hey, fund this business. And they're like, where'd the money go?
You'll go to your ger and say, Hey, I need the lower splits. That is not happening. No way. Not a down market. You know, you know what they do? They start pulling massive resources. They start letting marketing people go and transaction management analysts. And you see every public company who has to announce, they've all publicly said, Hey, we're cutting 400 million in overhead.
And it's that's who, those are human beings. Like, where did all the money go? You guys made so much money over the last couple of years. Where'd it go? Shareholders. Okay, fine. That's the public world. Okay. What about the boutiques? They swept it. Yep. And now they're getting smashed, and they're about to break.
They're about to tap out—no moss, like they don't want more of this. And we get those phone calls.
Chris Powers: All right, buddy.
Kyle Matthews:Thanks for having me. It was fun and was fantastic.
Chris Powers: Yeah. Thanks for coming on.
Kyle Matthews:No, thanks. I don't do a lot of these, and I've got to do more, is what they tell me. But No, you do a great job.
Chris Powers: No, it's good. You know it, and I'm a fan—likewise, buddy. And I want to make a deal with you all.
Kyle Matthews:Yeah. You could sell a deal through us anytime.
Chris Powers: All right, great. Now let's grab lunch, and we'll talk about what deal you want to sell.
Kyle Matthews:All right.