Speaker 1:
Coming up today on David vs Goliath.
Michael Kaeding:
But we’re willing to do it because we want the best. And the best is what changes the game.
Adam Degraide:
You know what? That’s going to be the name of this episode. 5,000 Weeks to Live.
Speaker 1:
Welcome to today’s episode of David vs Goliath. A podcast dedicated to helping small businesses leverage technology to not only help them compete against their large competitors, but win. Your host is currently the CEO of Anthem Business Software, A three-time Inc. 500 recipient and a serial entrepreneur with a passion to help small businesses everywhere find, serve, and keep more customers profitably. Please join me in welcoming your host, Adam Degraide.
Adam Degraide:
Hey, everyone, it’s Adam Degraide with the David vs Goliath podcast. Welcome. Hopefully you’re having a fantastic day like I am. It’s beautiful here in sunny Central Florida. It’s actually 81 degrees out. Can you believe it? I feel bad for all my friends that are up north hanging out in the cold, but some people love that.
Anyway, today’s episode is brought to you by Automate My Social where you can automate 100% of your business’ social media and never have to think about it again. That’s right. It does content creation, posting, distribution, strategy. It’s unbelievable. Save thousands of dollars a year, have a better return on investment. Check it out at automatemysocial.com.
Visit us online at davidvsgoliathpodcast.com. There you can subscribe to be on the podcast, I mean apply to be on the podcast and also subscribe to receive information from time to time on the podcast. We are so excited to have Michael Kaeding today from Norhart. And what they do is they build design apartments and they rent them out. He’s changing the apartment rental space. This should be a lot of fun. Michael, welcome to the David vs Goliath Podcast.
Michael Kaeding:
Oh, thank you so much for having me.
Adam Degraide:
So great to have you. Glad you were able to make it. And I was watching one of your little intros beforehand and what I thought was fascinating is that your whole vision, it seems pretty big. I mean it’s definitely not a small vision at all. You’re committed to solving America’s housing shortage and affordability crisis and in doing so we hope to improve the way we all live.
I thought that was pretty cool and I love your studio by the way. So for the watchers, which are primarily watchers on this podcast and the listeners, tell the folks a little bit about yourself and a little bit about your business.
Michael Kaeding:
Yeah. So I’m CEO of Norhart and we design, build and rent apartments. But really we’re focused on transforming the way this is done, in turn, reducing the cost of housing. Right now we’re about 20 to 30% less, but we think we can achieve 50%. But think what that means. It means that someday you could have rent that was half, or your mortgage payment might be half. That’s the kind of long-term impact that we want to make.
Adam Degraide:
That’s a pretty big goal and that’s pretty lofty. I mean I would love to have, first of all, I don’t have a mortgage, knock on woods, but-
Michael Kaeding:
Awesome.
Adam Degraide:
… but I still pay taxes. If I could have those in half, that would be ideal. It’s a really interesting concept. And how do you go about trying to make housing affordable? So what is Norhart’s secret that’s a little bit different than the others?
Michael Kaeding:
Well just take a step back for a moment and look at other industries like manufacturing. Over the past 60 years, they’ve improved productivity by 760%. Agriculture has improved by 1500%. So if you just can apply the technologies and techniques that they’ve used into construction, you can see radical improvement.
And so to give you some sense of that, one simple technique is by bringing a lot more in-house. In the world of construction, the owners are different than the developers who coordinate the construction, different than the general contractors and the subs like the plumbers, electricians, HVAC, even the suppliers and the manufacturers. We’ve taken that all in-house. So from shoveling the dirt on one end to handing the keys off to the resident on the other.
By doing that, we can now apply some techniques for manufacturing. Toyota produces a car every 55 seconds and we’re doing that sort of technique in our buildings and now we’re producing an apartment unit every five hours. But shifting the way we’re doing work a little bit, but then you take a 15-month project, you actually squish it down to about nine months just by that one change.
Adam Degraide:
It’s pretty dramatic. I mean it’s actually pretty brilliant if you think about it. You’re taking everything, you’re making it streamlined. How would you describe the quality of your apartments compared to the other ones that take longer and cost more?
Michael Kaeding:
Yeah, we’re some of the nicest properties in our state. So we’re primarily in Minnesota right now, but our latest project is a hundred million dollar project in Minnesota, but it’s way up there with some of the nicest projects.
Adam Degraide:
That’s awesome. Minnesota’s awfully cold right now. Are you hanging in there?
Michael Kaeding:
It’s terrible. There’s like three feet of snow along the roads. It’s just-
Adam Degraide:
Just so I guess the question I’ve always wondered is, so if you’re building and you’re doing construction, you only have a small window of time to do it in up there anyway. Otherwise, people aren’t out there building apartments right now.
Michael Kaeding:
We are. And so that’s one of the things you have to change is how do you continuously do work even when that temperature is negative outside?
Adam Degraide:
Oh my gosh. I remember, for the watchers and listeners several years back, I went to Minnesota, Minneapolis for the Super Bowl to watch Tom Brady at the time lose to the Philadelphia Eagles. I’m a Patriots fan.
Michael Kaeding:
I was there.
Adam Degraide:
I was there as well too. And I’ll never forget trying to find my ride afterwards that I had. I had a prearranged ride because I didn’t want to take any chances. 45 minutes it took me to get to the rider and it was negative 15, 20 degrees below. And I’m a Floridian man. For me to do that. I thought I was going to die, but I survived. I couldn’t believe it and I made it through. And I really liked Minnesota quite a bit. I mean the cafes were nice, the restaurants were good, the people were really cool. And I enjoyed my time there. It was a lot of fun.
So one of the things I also learned about is that you didn’t start the business, you kind of inherited the business. And one of the things that you were sharing with people before on a couple of other podcasts and some other episodes that I’ve watched in other places is that, you went in it with no preconceived ideas, which I think is wonderful.
So you had a probably a successful business you’re taking over for the family, you’re coming in with fresh eyes, fresh ears, and a whole unique way of looking at it. You mentioned the unfortunate thing that your dad passed away suddenly. Sorry about that.
Michael Kaeding:
Yeah.
Adam Degraide:
But all of that impacted you to have, now you got pressure, you had weight on you, you had things you had to do that made a huge difference. Talk to the watchers and listeners a little bit about that transition and that weight that was on you and how you got the weight and control off your back.
Michael Kaeding:
Yeah. And so originally my parents always wanted me to join the family business, which was very small at the time, but I didn’t really want to jump in because I didn’t want people to think it was given to me. So I really struggled with my own ego initially. But then I did jump in because deep down, I always wanted to make a positive impact in the world in some way.
And I realized what an opportunity to take this small business and grow it to something larger that can have a more meaningful, at least nationwide impact. So my dad and I were together for a couple of years and then he passed away kind of unexpectedly overnight. And overnight here I am having to run this business. And honestly I didn’t really know what I was doing, but I think there was some magic in that because we just started to naively solve problems.
We started to question the way things were done. And in doing so we started to change the industry. I mean, one little example is just the culture and construction is not great. Tends to be kind of a rough and tumble kind of environment and we didn’t like that, so we wanted to change that aspect and we fought very hard to find the best people. In fact, the best people nationwide. We actually fly people in every single week for work from other states. But in doing that, in changing that perspective and finding the best people and changing the culture, that was probably foundationally the biggest, most important change that we did to affecting this industry.
Speaker 1:
That’s awesome. It’s really, really important. People are critical and looking at things with a fresh lens makes all the difference in the world. So hang on one second. We’re going to take a break from our first sponsor here, Automate My Social on David vs Goliath. We’ll be right back.
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Adam Degraide:
And we’re back with Michael and Adam on the David vs Goliath Podcast. We’re learning about how to make housing more affordable by thinking outside the box. And you were mentioning the fact that your lack of experience became one of the greatest assets that Norhart has at the time. And obviously, clearly you have a sense of design. I can tell by, I think that’s a clock behind you or something that’s on the wall. That’s pretty cool.
But at the end of the day, Michael, it takes people to do this. So even though you had some ideas you needed to have a good team built around you. Tell us a little bit about the people in the organization and those people that you rely on every day to make it happen.
Michael Kaeding:
Yeah. So about four or five years ago, we really recognized the importance of the best people. And what we found is that truly the best of the best, the world-class people, they perform at about two to three to five, even 10 times better than the average people. And I’ve seen it play out over and over and over again. And so we’ve now become hyper-focused on finding those great people, attracting them here, building the right culture that supports them.
Now this also means paying top of market salaries, which might seem expensive, but it’s actually inexpensive when you compare to what the results they’re producing and then really driving that forward. I mean, we are even a little bit crazy on how proactive we are about letting people go that aren’t the right fit. And in doing so, you get a world-class team.
So for example, we do precast concrete as part of our overall facility. One of the top guys in the country, we were able to find and reach out to me. Pled with him, “Would you come work for us?” And he was actually living in Florida and he said-
Adam Degraide:
And he moved to Minnesota?
Michael Kaeding:
He didn’t move. That’s the thing. Part of our agreement is that we agreed to fly him up to work every single week. So not only are we paying for a salary, we’re paying for all this commute, but we’re willing to do it because we want the best. And the best is what changes the game.
Adam Degraide:
I love that, man. I love the fact that you’re passionate and that you see the value. You made a really good statement. When you pay people, well, I think they say that 20% of the people do 80% of the work.
Michael Kaeding:
Yes.
Adam Degraide:
If you can find those 20% of the people and let go of the other 80% you can get all the work you need done. And you know what really showed me this, and I think COVID was horrible for everyone, but my last business, we had a lot of employees and during COVID we had obviously had to lay a bunch off. It was terrible. But what we discovered is that by going from 80 people down to 30, we got more work done better, more efficiently, had higher customer satisfaction. Didn’t realize how much waste was actually going on in the office until it was removed because then when everything was shrunk and the work volume stayed the same, everyone rose. The cream rose to the top and it was pretty profound to actually experience that and to go through that. Now how many people are on the team?
Michael Kaeding:
We’re a couple hundred.
Adam Degraide:
That’s awesome. And your current revenues when you started and then where you are now?
Michael Kaeding:
Oh, we started, it was maybe half a million a year. And now we’re probably $20, $30 million a year.
Adam Degraide:
That’s awesome, man. That is so fantastic. It must feel good for you. Is it still a family business? Are you still working with family?
Michael Kaeding:
My mom is lightly involved. She owns a little piece of it, but my wife and I are the ones that are the primary owners.
Adam Degraide:
That’s awesome, my man. What’s been the biggest challenge for you when it comes to people, recruiting people? Because that’s one of the things that people have a hard time with. They say, they always say, “Well, it’s easy for you to say you get this guy or you’re commuting him, you’re doing well with revenue.” Let’s say somebody had a smaller budget, but they had a really passionate vision. What would you recommend to them and how to attract them and get them interested in joining that organization and how do you do it with yours specifically?
Michael Kaeding:
Yeah, so I think it’s about building the right culture and for us it’s really understanding the elements of that culture. So purpose, mission, values, all those things have meaning to us. Our strategies, we just have three. Our habits, our principles, things like talent density and driving that higher. We actually spend a couple of hours with every new hire to outline that culture and usually people come away from that and be like, “Wow, look at what we can be a part of.”
So we want to communicate those things to potential hires as a big part of it. Another big part of it, we struggle with hiring substantially. And what we ended up doing is we ended up hiring a whole recruiting team just to go out there-
Adam Degraide:
That’s great.
Michael Kaeding:
… and reach and find people that we needed to-
Adam Degraide:
How big is that team right now? Two or three?
Michael Kaeding:
13 people.
Adam Degraide:
That’s amazing.
Michael Kaeding:
Yeah.
Adam Degraide:
The biggest company that I’ve ever ran, Mike, had about 180 employees. It was my first company. It was called BZ Results and I ended up selling it to ADP and it’s still exists today. CDK Global I think is who ended up buying it from them afterwards. For one of those things it was like, I like smaller organizations. It’s funny because I’ve run big organizations. We were doing, I think it was like $30, $40 million a year at the time.
There was just so many people, my eyes were always glazed over. I’d walk in and then I knew I was in trouble when I would call the business and they would say, “And, Adam, may I ask what this is regards to?” I’d be like, “Well, I own the place so if there’s any way you could let me chat to my COO, that would be amazing.”
And that showed me that I needed to create videos so they knew who I was. Because as a company gets bigger, it’s important that you stay in communication and in contact. So recruiting, so you’re recruiting people. Do you have a formal training program? Is that part of the 13, what they do as well too?
Michael Kaeding:
We have elements of formal training. So the values and that sort of stuff comes through orientation and we have follow-up orientations, we have safety training, kind of training. There’s, depends on what position you have, there’s different elements of training that they go through.
Adam Degraide:
That’s awesome. How do you market your properties right now? What are some of the mediums that you’re using as a business to market and find your renters?
Michael Kaeding:
Yeah. So there’s, in the apartment space, there’s things called ILS’s. This is like apartments.com, For Rent, that sort of thing. We’re on all of those. We do SEO work through our website. And one unique thing is we really try to differentiate our website. And so if you go into our website, it feels almost a little cartoon-y. Some people don’t love it, but what’s interesting, it sets us apart from every other real estate or property management company out there that feels a little bit more, I don’t know, strict and professional. [inaudible 00:18:26] try to show our heart-
Adam Degraide:
I’m going to take a look at it myself right now. Yeah.
Michael Kaeding:
Yeah. Go for it.
Adam Degraide:
Norhart.com. Let me see. Oh, I like it. I’m actually going to pull it up really quickly for the watchers and listeners.
Michael Kaeding:
Yeah.
Adam Degraide:
So let me me see. It’s been a while since I’ve screen captured on this one. Share it. Here we go. All right, now you can see. “Hi. We are Norhart. We design, build and rent apartments,” and yeah, yeah, I see what you’re saying about the cartoon-y. Those look nice. So you’ve got the Lexington Loft apartments, the Encore apartments. I like it.
Michael Kaeding:
Yeah, it’s just a different feel, but it helps set us apart. It gives people a little bit more sense of heart.
Adam Degraide:
Now, is that like a community center? Do you have a movie theater in the community center?
Michael Kaeding:
Yeah. Yeah. Quite the amenities. In our latest building, it’s restaurant, coffee shop, there’s a spa, there’s a rooftop pool. It’s pretty incredible.
Adam Degraide:
That is absolutely awesome. And I got to stop sharing this because if I don’t, it’s going to keep going. Love it. I love it, man. So people need to check it out. Norhart, N-O-H, right? Or N-O-R-H-A-R-T.com-
Michael Kaeding:
That’s correct.
Adam Degraide:
… if you’re in the Minnesota area, it’s awesome. Well, we’re going to take another break from another sponsor. When we come back I want to talk to you about one of my favorite subjects, which is courage. Because it does take a lot of courage to run a business for that many people. And having you and your wife involved, that’s also a challenge. So stay tuned. You’re with the handsome host, Adam Degraide and his amazingness, Michael will be right back.
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Adam Degraide:
And we’re back for our final segment on the David vs Goliath Podcast. And so you and your wife work together. Has that been a challenge or is that fun?
Michael Kaeding:
It’s been pretty good. We don’t work together as much as we used to. She’s more home with the kids now, but for the first five or so years, we work together every day, day in and day out.
Adam Degraide:
I still, I work with my wife. We have a couple kids, we have a full-time nanny, which is helpful. And I wouldn’t want to do business without my wife.
Michael Kaeding:
Yeah.
Adam Degraide:
There’s no doubt about it. She’s amazing. So when it comes to courage, it takes a lot of courage to take over a family business, especially once you lost your mentor. Right?
Michael Kaeding:
Mm-hmm.
Adam Degraide:
Your father, he knew a lot about what was going on. You come into that situation, you take it over, it’s not easy. It’s not for the faint of heart. What has given you the resolve to stay positive in the midst of challenges and to continue the vision that you have to make housing affordable and what gets you motivated every day? You get out of bed and you say to yourself, “I’m so psyched because I’m doing this.”
Talk to the people about the intangibles that it takes because I’ve discovered in my life as an entrepreneur, if you don’t have passion about your business, nobody else is going to. And if you don’t have courage for the future in your business, nobody else is going to. So tell us a little bit about your experience in that regard.
Michael Kaeding:
Yeah. So my dad died young. And one thing I think a lot about is how short life really is. We only have about 5,000 weeks to live. And so every day I wake up I ask myself, “How do I want to spend the short time I have here on Earth?” And for me, a really big part of it is that I want to make some kind of meaningful, positive impact in the world. And so that’s what drives me to this.
The impact I think we can make is in housing, but you’re certainly right about needing courage. There are so many moments in growing a business, especially as rapidly as we have that you’re on the cusp, you’re on the edge of either something great or falling apart. And-
Adam Degraide:
So true.
Michael Kaeding:
… having to learn the skills, one of the things I think a lot of people get afraid of is having to jump into something new that they’d never done before. And there have been so many points for us that if we had said, “Nope, we’re done, we’re going to stay it safe,” we wouldn’t be anywhere near where we are today.
Adam Degraide:
It’s amazing. Is it really true? 5,000 weeks? Is that what we actually lived on average?
Michael Kaeding:
It’s something like that. Yeah.
Adam Degraide:
You know what? That’s going to be the name of this episode. 5,000 Weeks to Live. And it’s funny, I’ve actually interviewed people that own mortuaries and cemeteries on the David vs Goliath Podcast. So we celebrate life here and we celebrate death. 5,000 weeks to live. How can people find you and find out more about what you’re doing?
Michael Kaeding:
Yeah, you can come visit our website, norhart.com as we mentioned earlier, N-O-R-H-A-R-T.com. On there you can see our social channels as well. One kind of fun thing is we’ll be launching a podcast soon and it’s called Becoming a Unicorn. It’s about the journey of-
Adam Degraide:
I love that.
Michael Kaeding:
… being a small business to a billion-dollar enterprise and can learn more about us through that as well.
Adam Degraide:
And that’s going to be called, what’s that podcast going to be called again? Becoming a Unicorn?
Michael Kaeding:
Becoming a Unicorn.
Adam Degraide:
Is that still available, that name, for a podcast?
Michael Kaeding:
Yeah. Yeah.
Adam Degraide:
That’s awesome. Good for you, man. And you going to be hosting it?
Michael Kaeding:
Yes.
Adam Degraide:
Well good. I hope I can be a guest on that sometime.
Michael Kaeding:
Yeah.
Adam Degraide:
That’ll be a lot of fun. And I heard that you built up, you’re a pretty good LinkedIn following. You have like 60,000 followers. How did you go about doing that? A lot of people are, I never work it. I just don’t even, I never even think of, I’m just so busy with so many other things, running my businesses and stuff, I never think to do it, but that’s pretty aggressive. What was your strategy in doing that personally?
Michael Kaeding:
Yeah, so we actually got to the point where LinkedIn contacted us and said we were one of their top 11 influences on the platform. The way we did it is really analyzing what successful people did on the platform and replicating that.
And so our strategy at the time was all about communicating our culture and our beliefs about supporting employees.
Adam Degraide:
Interesting.
Michael Kaeding:
You’ll find quotes and articles and stuff on that and it really got some tremendous momentum and engagement. And the interesting challenge there is, I didn’t have an end game. It was just kind of like fun to grow an audience, but I wasn’t doing much with it, so I-
Adam Degraide:
Now you need Becoming a Unicorn. Becoming a Unicorn is perfect.
Michael Kaeding:
Yeah. Yeah. There we go.
Adam Degraide:
You got 60,000 followers. You got a built-in audience. Are they still engaged with you on a regular basis on there?
Michael Kaeding:
Not quite to the same extent, but there still is engagement, yeah.
Adam Degraide:
It’s funny. I feel like I’ve got, I’ve got 15,000 subscribers here, 12,000 subscribers here, 2,000 subscribers here. They all suppress the subscriptions.
Michael Kaeding:
Yeah.
Adam Degraide:
I sometimes wonder, why am I getting subscribers when you’re not really pushing it out to them? Yeah, you might have it in a small, little tiny feed, but you’re not really distributing it to the subscribers. If they subscribe, they should know every time that something comes up. But they don’t do that. They want you to pay for it. But I also understand that-
Michael Kaeding:
Yeah. Those algorithms have changed in the last few years. I’ve seen that myself.
Adam Degraide:
Oh, man. Massive. And if you’re a business with any business association whatsoever, gone are the days of organic anything. They’re all absolutely, absolutely charging you, which is why it’s important that you build your own property. And I think it’s smart that you’re doing that with Becoming a Unicorn. Can’t wait to hear it. Can’t wait to have it. It’s been awesome having you on the podcast. Have you enjoyed it?
Michael Kaeding:
Oh, it’s been great. So thankful to be here.
Adam Degraide:
I’m so glad to have you on there as well too. It’s nice to get somebody with a nice professional set. I’ve had people in t-shirts and hats. Last week the guy I had on, actually one of the most viewed episodes recently was a guy that I had, his name was, oh what was his name? I got to find it really quick. Stay tuned. I’m going to look it up right now. He was awesome.
Drew Spaventa. That’s it. Drew Spaventa. You have to go watch his episode, Michael, because he has the most amazing picture in the world. It’s episode, just so you know, what is it called? Secrets of Not Taking Yourself Too Seriously. Episode 69. And he has the most amazing backdrop and you might get inspired by it, so go check it out-
Michael Kaeding:
I love it.
Adam Degraide:
… because I know you got a studio there that you do these in. And Drew Spaventa was a character and he lived exactly the way he looks and it was a real fun interview just like this one was as well.
Thank you for joining me on the David vs Goliath Podcast. I wish you and everyone at Norhart the best and I just hope that you guys continue to grow and crush it. I love your spirit, I love your energy. I wish you the best. And thank you watchers and listeners once again for tuning into the greatest entrepreneurial podcast in the world, David vs Goliath. We appreciate you.
Make sure you like, subscribe, share, tweet it, whatever you got to do, get it out there. We all appreciate it. Have an awesome day, Mike. Thank you for joining us and listeners and watchers, have a great day. I’ll see you next week.
