Do you know what a leader’s most important job is? If you think it is sales or vision, according to our guest today, that is wrong.
Our guest today is Sief Khafagi, who is the founder of Techvestor and previously worked Facebook having hired more than 1,000 employees. He shares with us his point of view on what is a leader’s most important job.
LINKS FROM THE EPISODE:
- You can visit our guest’s websites at: https://www.techvestor.com/
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CONNECT WITH OUR GUEST:
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- LinkedIn – http://linkedin.com/in/timschurrer/
- Twitter – https://twitter.com/timschurrer
ABOUT OUR GUEST:
Sief Khafagi is an ex techie turned real estate investor who has helped thousands diversify into real estate after spending nearly 5 years at Facebook. He’s syndicated acquisitions totaling more than $100M while designing & developing more than 25 properties. Today, he’s the founder of Techvestor, which helps real estate investors and busy professionals passively invest in the emerging asset class of short term rentals (aka Airbnbs).
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TRANSCRIPTION:
Tom DuFore, Big Sky Franchise Team (00:01):
Welcome to the Multiply Your Success podcast, where each week we help growth-minded entrepreneurs and franchise leaders take the next step in their expansion journey. I’m your host, Tom Dufore, CEO of Big Sky Franchise Team. And as we open today, I’m wondering if you know what a leader’s most important job is. And if you think it might be sales or vision, according to our guest today, that’s wrong. Our guest is Sief Khafagi and he is the founder of Techvestor and he previously worked at Facebook. He shares with us his point of view on what a leader’s most important job is, and gives us some practical tips on how we can get better at it. Sief is a techie turned real estate investor who’s helped thousands diversify into real estate. After spending nearly five years at Facebook, he’s syndicated acquisitions, totaling more than $100 million while designing and developing more than 25 properties. Today he’s the founder of Techvestor, which helps real estate investors and busy professionals passively invest in the emerging asset class of short-term rentals. So let’s go ahead and jump into my interview with Sief Khafagi.
Sief Khafagi, Techvestors (01:09):
My name is Sief Khafagi. I’m the CEO and founder over at Techvestor and techvestor.com. We run a short term rental fund for passive investors who want to get into the world of “Airbnb” as we all know it, but don’t want to do the work or put in the energy or deal with guests. And don’t want to put around $250,000 check. Our minimum is 25K, so we’re making an asset class that historically that’s been hard to enter, a little bit more accessible for most.
Tom DuFore, Big Sky Franchise Team (01:35):
Wonderful. Well, we’re going to dive into that here in a little bit, but what I thought would be fun to talk about is how you got into Techvestor and creating this. So give us a little background about where you started in the tech world and kind of what led up to here.
Sief Khafagi, Techvestors (01:50):
Yeah, so I’ll actually take us back to our college days. I was at San Diego State back in the day. I had started a small little company helping people essentially beat the interview. You’re a college student. I was focusing, at the time on computer science, and how can you get into Facebook or Google or some of these high flying tech companies and how do you actually beat those interviews. And college students aren’t really taught how to do well in interviews and it was a nice little niche on campus. And it was something that was a strength of mine back in the day. We were doing pretty well, well enough where Facebook, Meta these days as they’re known, called and said, “Hey, how about you stop helping people beat our interview and come internally and help recruit them.”
Sief Khafagi, Techvestors (02:29):
So it was an offer at the time that was exciting. They were growing. It was a team that had 89 people when I first joined for our infrastructure team and we ended up taking that team from 89 to over 1,100 people over the next few years, building a company as I like to call it. They thought it was called building a team, but everything broke many times over. It was a fun experience. While I was there, we did a lot of traveling mostly to open up new offices and a lot of recruiting activities and stayed in a bunch of Airbnbs and we were like, “Why is this so bad?” And when we dug into the data and dug into the market and especially when COVID came around, naturally where people were trying to break out go places, experience, what did things happen, we recognized that in multi-family as an example, 24% of assets are held by institutions. In single family, 2.4% are held by institutions. And in short term rentals specifically, which is a niche within the niche itself, is held less than 1% of institutions. That means 99% of short term rentals are owned by non-institutional partners.
Sief Khafagi, Techvestors (03:34):
And for us we’re like, “Well, that could be why this could be better.” So we developed a technology platform that allows us to find and acquire these homes, that’s proprietary to us. We built an incredible team, which I know we’re going to talk about today. We got into this app site class because we saw so much opportunity, and so far it’s been incredibly fruitful. We just closed on our first fund, $36 million later, and we are starting fund two here in the next few weeks.
Tom DuFore, Big Sky Franchise Team (03:58):
Really, really incredible there, with what you’ve done and built. And one of the pieces that I was interested in talking through is how you recruited so many people, not only when you were at Facebook, but certainly for your own growing enterprise here. And our primary audience tends to be either business leaders of small to mid-size businesses where they are in a growth phase or in franchising, where people are recruiting and bringing franchisees in. And so relevance of finding quality and great people. I’d just love to hear if you have any tips, tricks, suggestions, ideas that you would be comfortable sharing.
Sief Khafagi, Techvestors (04:38):
I think the first thing might even be an obvious one that people have heard plenty of times, but as a leader you always have to be recruiting. And I think people often mistake the small business owner or growth-minded business owner as someone who’s always got to be selling and growing revenue. I disagree. I think you always have to be recruiting and hiring people who can grow revenue. It’s a first step in between where you want to get to from a numbers perspective. I spend probably 30 to 50% of my time just thinking about our organization, our design, our org design, people that we’re missing, where we have a risk in our organization, where we can lower that risk, if we need to hire, how do we go find them?
Sief Khafagi, Techvestors (05:17):
And then I think you got to go put in the work. We certainly work with recruiting partners on an external basis, but you’ll catch me on LinkedIn sliding into those DMs. And my team has a running joke, I’m the DM king because I recruited each and every one of them individually specifically because I slid into their DMs in one way or another, whether it was via Twitter or Instagram or LinkedIn or in person or referral or something. Or I got onto their podcast and I was like, “Hey Tom, you should consider joining us.” A big strategic advantage we have is the caliber of talent we have. I saw this firsthand while I was at Facebook. I think Facebook was able to grow to be as successful as it was, certainly because of its product, but more certainly definitely because of the people that were there and the level of people you’re working with. And so while we were at Facebook going from 89 to over 1,100 people, it was not an easy feat. In fact, everything that you thought worked would break within the next 90 days because of the growth.
Sief Khafagi, Techvestors (06:14):
Your interview process is in need to change. You need to get buy-in from other people to interview. You’re going from doing 10 interviews a week to a hundred and if not more than that. And how do you get buy-in from people, especially from engineers who are like, “Hey, I’m here to focus on code and build and product.” And you got to help them understand that people are important, people on their team. And I think one thing you learn as a leader very quickly is if you’re feeling a lot of pain because you’re overwhelmed with work and you need help, you feel that pain very obviously, and then all of a sudden you start to prioritize recruiting, you start to prioritize people. But naturally everyone thinks they can do it themselves until at some point there’s a breaking point. And that’s a total normal kind of journey as you kind of get there.
Sief Khafagi, Techvestors (07:02):
A couple other hacks we had was we built from the inside out. And what I mean by this is many people think about hiring more entry level immediately and then figuring out who to hire as senior leaders later. We took a opposite approach as hiring senior leaders first. And we don’t focus at all on entry level talent for techvestor really. And the reason for that is because as a small team, we’re a team 27 between contractors and full-time, is we needed to focus on people who could come in and own their domain very quickly, easily, efficiently, with less dependencies on other people. And I think as a leader you really need to understand org design is when you hire one person, that person likely has a dependency on somebody else or another team and what does that look like, and does that team have the resource and knowledge to support this person or is the dependency going to continue to be there, because you start to create friction very quickly.
Sief Khafagi, Techvestors (07:54):
And org design is very, very, very [inaudible 00:07:57] a chance to read into org design, Google it, read on org design in a bunch of great books out there on org design and blogs and articles and podcasts. And org design is an art, it’s a science as well. And you need to understand as a leader what you need to bring to your organization.
Tom DuFore, Big Sky Franchise Team (08:15):
That’s a really interesting point about org design and focusing on that. So to someone that’s maybe launching a new franchise organization or maybe a growing mid-market enterprise that’s expanding, what suggestions, you said read some blogs and books. Is there any one particular resource or two that maybe stood out to you or was helpful for you as you went through this?
Sief Khafagi, Techvestors (08:37):
Yeah. And people may not love my answer here, go copy your strongest competitor. And I think this is the McDonald’s analogy. So McDonald’s has a real estate strategy which is very simple. They find the best possible real estate they can buy on some corner or corners where they can get enough traffic and domain where that property makes a lot of sense. For that location to open, tying it into the world of franchises. And you may know this as well, Tom, but what the Burger King strategy is, is “I’m going to get that corner across the street.” And then you see these people coming in. I live in California where we have our In-N-Outs and our Chick-fil-As. And what you often see with those types of restaurants is things start to pop up around them because they have a huge cult following of people who love their product.
Sief Khafagi, Techvestors (09:26):
A lot of franchises have this, but I think we can all agree that there are some that have a tier above some of the others. And we look at that in the same way when we look at hiring people. Our most recent hire, he was previously the head of revenue at a competitor of sorts, not a direct competitor but an indirect competitor who drove revenue for 38,000 homes in this space. And that’s someone that I want on my team. He’s proven, he’s experienced, I’m like, “How do I get him?” And he also, here’s a tip, overpay for great talent. I’m telling you right now, overpay for great talent. I can’t tell you how often I see leaders and organizations not land a candidate because of 20 grand. And I’m like, “Amortize that out over the next 12 months or over the next three years where this person is going to add a lot of value to you and your organization, by far a horrible decision for you to let them go.”
Sief Khafagi, Techvestors (10:27):
Secondly, overpay them with performance bonuses. And you might be like, “Why are you bringing compensation?” Because at the end of the day, compensation matters. People need to understand this, especially in the leadership work. Everyone always loves to talk about culture and our mission. And those things are very important, don’t get me wrong [inaudible 00:10:46]. But people care about what they’re making. It is a thing at the end of the day. And we got to respect that. We got to understand that. We got to play the game the way it was intended to be played. Everyone on my team has a performance incentive plan where if they can do X, they’re going to get Y. We’re incredibly ROI driven, entire team, entire organization to the bottom line in every possible way you can. It makes things incredibly easier. Formulaic, people come in they know where they’re at, but overpay for great talent. Be the Burger King to someone’s McDonald’s. Those are the types of things that I think people will recognize.
Sief Khafagi, Techvestors (11:17):
And you don’t need to reinvent the wheel but guarantee you that most times, especially perhaps in the franchise world, you’re not really reinventing the wheel, you’re really taking an existing concept of sorts, putting it somewhere else, maybe making it a little bit better in some way. But a lot of the same foundation that was successful over here is likely is going to be successful over here. Now can you replicate it? Are you going to do the work? Are you going to go find and hustle and grind and do those types of things? Those are the things that typically where we’re going to separate a few people.
Tom DuFore, Big Sky Franchise Team (11:48):
I like how you are talking about McDonald’s real estate play and companies like Chick-fil-A, and these other organizations that are out there doing it. And this ties back to Techvestor with what you are doing. There are many clients that we work with and a lot of franchises out there that don’t have a real estate play. So segue back to you, how can you maybe help fill the void for a potential real estate investment with what you’re doing with Techvestor?
Sief Khafagi, Techvestors (12:14):
Yeah, we’re solving the problem of, “Hey, maybe I have my own asset, maybe I’m invested in a, maybe I’m invested in multi-family.” And then people know about Airbnb because they use Airbnbs, but they never considered it as an asset class to go invest in short term rentals because it really hasn’t been made available in an easy way. The old school way of getting the short term rentals is, “I have a second home,” usually is how it starts, “Or a vacation home, I’m going to rent it down in Airbnb from time to time. I’m going to do everything myself until I burn out,” because you will burn out. It’s a lot of work, pricing, running it, guests, everything. It is a job. And you’re going to find out why Airbnb hosts on average churn every 17 months because it is a job unless you’re doing it the correct way.
Sief Khafagi, Techvestors (13:00):
So then eventually you’re going to hire a property manager, they’re going to take a bunch of your revenue because they’re going to take it off the top, as they should because it’s a lot of work. But now you have an asset that you put in a quarter million dollars into and it’s maybe not generating the best possible yield. It’s not diversified. It’s not tax advantage in the best possible ways, et cetera. We flipped that model in its head and we said, “Hey, short term rentals should be passive, should be diversified when you invest with us, you’re a shareholder in a hundred plus properties in our portfolio, so you get a little bit of seasonality. Beach towns, mountain towns, metros, all those things. 25 grand, all the tax benefits of direct ownership, none of the work, no guests, no toilet. Those are actual things that happen. And more importantly, we’re a team that focuses exclusively on this space, on this niche. And it’s not your job, it’s our job to ensure that the portfolio is doing well. And most importantly, our performance is tied to the performance of that portfolio as a general partner. And so we always want to make sure we align incentive.”
Sief Khafagi, Techvestors (13:56):
So we flipped out on its head, built our own proprietary technology to go out and identify 100,000 homes a month we want to underwrite, which by the way, 94% of the time they suck. So we want to focus our energy on the top percentile at homes. These are all tools, resources that we have that your average user never would have, because 75% of people who own an Airbnb own one, 95% of them own three or less. And so because of that, you’re never going to get the element of scale. So we are becoming the institutional partner in this space and we want to become that kind of go-to in that space as well.
Tom DuFore, Big Sky Franchise Team (14:33):
Really interesting. Well, this is a great time for us to transition in the show where we ask every guest, before they go, the same four questions. The first question we like to ask is, have you had a miss or two in your journey and career and something you learned from it?
Sief Khafagi, Techvestors (14:47):
Yeah, I think one of the initial misses that I think I take it back to is, early in my career I was a very, very strong individual contributor. I grew through the ranks very quickly as an IC. And when I transitioned to management, I assumed everyone could perform like I did at the time. And this is oftentimes what you see in organizations, is people who are really strong with their role individually, transition into management and then there’s this friction of, “Why can’t you just do what I used to do?” And so I need to reposition my thinking. And I didn’t do so immediately. This was actually a big hurdle for me at the time, which is putting my educator hat on and be like, “How can I go up level and up skill other people?” Because even though that is the longest, hardest path to success versus me just stepping in and doing it myself, that is the most scalable path as an org leader. And you have to think about what’s scalable.
Sief Khafagi, Techvestors (15:44):
You can do everything, but you can’t do everything at the same time. And if you want to be in a growing business, you’re going to have to learn how to teach, grow and skill people over time periods.
Tom DuFore, Big Sky Franchise Team (15:53):
Well, let’s talk about a make or two. You’ve already shared some throughout this, but I’d love for you to talk about a make or two along the way.
Sief Khafagi, Techvestors (16:00):
The first one, I think, was getting a mentor. One of my early mentors when I was at Facebook was someone that I never expected to be a mentor, first and foremost. And he was someone that I had looked up to as someone who had grown through the ranks. We actually butted heads a lot and I thought that was a reason you would never become a mentor of mine. But it was actually the exact reason I would seek him out to be a mentor. And that was a huge win for me in my career because I got to understand almost the opposite way of doing things, and understand a collective perspective of X, Y, Z can happen in X, Y, Z way too and still work. And that gave me a little bit more of a well-rounded picture. And I think for me being more open at the time. Again, I was young. I joined Facebook at 23. And so for me it was a ride of a lifetime in many ways.
Sief Khafagi, Techvestors (16:50):
And I’m coming into 23 egotistical as a young kid, landing a gig like this, getting paid what I was getting paid. And I was like, “This is going to be fun.” And then all of a sudden I walk into an environment and I’m like, “Wow, everyone here is smarter than me.” And I’m like, “Oh my God, I got to my game up.” And that’s why I’m talking about the level of talent, but also recognizing that you aren’t the smartest person in the room and being able to go up to someone who you believe is smarter than you in some domain and being like, “Hey, you’re smarter than me at this. Can you show me this? Can you teach me this? Can help me get through this?” I think is recognizing those opportunities. And I did that very early in my career and I think those are the things that would allow me to jump in many ways and learn things that I jumped.
Sief Khafagi, Techvestors (17:33):
And also just being in the room, the people who are sponges are oftentimes the ones that are invited to the room. Just being in the room half the time is enough to gain so much knowledge that you just don’t get anywhere else. But when you don’t want to be a sponge, no one wants to invite the guy who thinks he knows everything into the room. So that’s a huge way of understanding the emotional intelligence and the EQ of how humans work.
Tom DuFore, Big Sky Franchise Team (18:01):
Yeah, that’s great, great advice. The name of the show is Multiply Your Success. I’d love for you to talk about a multiplier you’ve used in growing.
Sief Khafagi, Techvestors (18:09):
To no surprise, it’s going to be people. I think hiring is a huge skillset of mine, something I’ve been really good at for a long time. And I think it’s evident in the organization we’ve been able to build today. And people at the end of the day, we will live, die, and breathe by them every single day. I can’t tell you how many times I share appreciation to my team. Sabrina, my co-founder, does the same. Every leader in our team does this. We know how important it’s for our team to feel appreciated and to grow and to have those resources. And we can’t do it without them. There is no way you’ll ever build anything massively successful in any type of way, doing it all on yourself. Even if you’re a one man or one woman business, you still need help and resources because you’re probably relying on vendors or contractors or software providers or something.
Sief Khafagi, Techvestors (18:57):
And I think multipliers, when people think about people, you don’t have to be hiring a person internally. It could be a resource externally, it could be a software that allows you to scale faster or do things differently. Those are all ways of multiplying yourself. And at some point humans make a lot of sense to do so as well.
Tom DuFore, Big Sky Franchise Team (19:14):
The final question we ask every guest before they go is, what does success mean to you?
Sief Khafagi, Techvestors (19:20):
I’m a new dad, so I have two kids, [inaudible 00:19:23], two boys. And success to me, simple means the ability to spend as much untethered time with them as I can while they’re going up, but specifically as they get older to be able to be involved. I was in a position where my dad was a lot older when he had me, and naturally when I was in a position to have kids, I wanted to have kids as young as I could. And then I thought I’d actually have more kids at this point than I do. I’m 30 and two kids. I thought I’d be 25 and three kids and all that. We’re all delusional when we’re younger. I wanted to be available and I thought how my dad worked back in the day to provide three jobs and every single thing. And we’re putting in the work now, but success to me is spending time with my family. It’s really that simple. Health, wealth comes with that and family.
Tom DuFore, Big Sky Franchise Team (20:10):
Thank you for sharing that. Well, and Sief, before we go, is there anything you were hoping to share or get across you haven’t had a chance to yet?
Sief Khafagi, Techvestors (20:17):
Thank you for having me on the show. I think a lot of people who are business owners and are looking for things like franchises or operating franchises, you’re typically a little too busy to invest in your own thing. So if you’re looking to exposure in the short term rental asset class and there’s not many competitors out there, we hope you’ll give us a shot and talk to our investor relations team. We’d be happy to educate you there.
Tom DuFore, Big Sky Franchise Team (20:38):
And what’s the best place for someone to connect if they’re interested in learning more?
Sief Khafagi, Techvestors (20:41):
You can check us out at techinvestor.com, request a book or call with someone on our team. We have a bunch of resources, we’ll send you all of our information. We lead with education first. And we want to make sure it’s a good fit for both of us.
Tom DuFore, Big Sky Franchise Team (20:53):
Sief, thank you so much for a fantastic interview today and let’s go ahead and jump into today’s three key takeaways. So takeaway number one is when Sief described what a leader’s most important job is, which is what we titled the show after, it is as a leader, you must always be recruiting. That’s your number one job, not just revenue focused, not just marketing, not just leading or providing vision. It’s always be recruiting. And I even thought it was interesting how he talked about how he’s always doing it even on podcasts that he’s interviewed on or pinging people on LinkedIn directly just to see if they might have an interest. I thought that was great that he’s living that and showing that.
Tom DuFore, Big Sky Franchise Team (21:36):
Takeaway number two is he provided a few ideas to help build out your plan for recruiting and to be more effective and better at it. He said, “First step is build an organizational chart and build an org design of where you want to grow to and start thinking about how you’re going to fill those positions.” He also said to go copy your strongest competitor. Do you have a competitor in your field that might be worth imitating for some of the things that they have going on? And the last suggestion he gave was to overpay for great talent and do so with performance bonuses. That way then you’re able to tie your team and their compensation to the bottom line so that their interests and the company’s interests are aligned.
Tom DuFore, Big Sky Franchise Team (22:23):
Takeaway number three is when he talked about a miss that he had in his career. And he said that he grew as an individual contributor based upon his individual talent and drive and success. And that eventually led to promotions. And when he became a leader and a manager, he had this assumption that other people would have the same drive and skill and motivation. And what he realized is that they don’t. And so he said, “If you want to be growing a business, you need to learn how to teach.” And I thought that was just a great takeaway, which ties back to that, always be recruiting. You’re constantly teaching and finding and coaching these folks as they come into your system.
Tom DuFore, Big Sky Franchise Team (23:06):
And now it’s time for today, today’s win-win. So today’s win-win comes when Sief shared about his multiplier. And probably to no surprise, it’s this idea of people, of hiring and finding great people. And he said, “You cannot grow anything of size or have any sort of success without other people involved.” And so I think when you bring these great people in and you provide them the opportunity that they’re looking for, it’s going to be a win for you, a win for your business, big win for them to be a supporting and contributing member of this growing team, and all the while creating greater opportunity for all of those involved. And so that’s the episode today folks. Please make sure you subscribe to the podcast and give us a review. And remember, if you or anyone you know might be ready to franchise your business or take their franchise company to the next level, please connect with us at bigskyfranchiseteam.com. Thanks for tuning in and we look forward to having you back next week.
