Lane Hornung realized early that worrying about or reacting to the next disruptor would cause him to miss opportunities to grow his business. Find out his advice for building a successful brokerage company. 8Z Real Estate is ranked No. 230 by transactions sides in the 2019 REAL Trends 500.
Tracey Velt:
This is Tracey Velt, editor in chief of content for REAL Trends. We’re speaking to the top brokers in the country to take a peek at how they built their businesses. We’ll talk about lessons learned, personal passions, and their top strategies for recruiting and retaining productive agents.
Tracey Velt:
Today we’re speaking with Lane Hornung, founder and CEO of 8z Real Estate in Boulder, Colorado. Welcome, Lane.
Lane Hornung:
Thanks, Tracey. Thanks so much for having me.
Tracey Velt:
Yeah, let’s talk a little bit about your brokerage and how you got started in the business.
Lane Hornung:
Sure. Well, I came into real estate from a technology background. I was actually part of the founding executive team of ZipRealty. I ran business development, so I was on the tech side of the business, not real estate.
Lane Hornung:
When I left Zip and I moved back to my home state of Colorado, I decided I wanted to be on the real estate side. So I got my license, built a website, and I started building a team at a RE/MAX brokerage. We had some success with that team, which was powered by online lead generation. We actually eventually became the number one RE/MAX team in Colorado.
Lane Hornung:
And at the end of 2009, I decided to venture out on my own and founded the independent brokerage called 8z Real Estate.
Tracey Velt:
Okay. How many offices do you have now, and how many agents?
Lane Hornung:
Sure. We have 15 offices with 160 agents, and we cover the front range of Colorado.
Tracey Velt:
Okay, great. Obviously you’ve learned some things building your business, especially since you came from tech. Talk to me a little bit about your top two lessons learned while building your brokerage.
Lane Hornung:
Just a little background, 8z was founded on the belief that home buyers and sellers, they want a great agent and they want great technology. Obviously I had a tech background, so I really felt like the consumer wanted not one or the other; that that was a false choice. They wanted both. It’s much more an “and” and not an “or.”
Lane Hornung:
With that in mind, interestingly, one of the number one lessons I learned is if you spend too much time looking outside your company, scanning the horizon, worrying about or reacting to the next quote-unquote game changer or disruptor, you might actually miss the biggest opportunities to grow your business, which are usually internal and right in front of you.
And they almost always, in my experience, are based on doing something with and for the people that are already in your company. That’s number one.
Lane Hornung:
The second lesson is that company-wide initiatives, especially those involving technology, those can in fact be real game changers and drivers of growth. But you can’t take too much on and too many at once.
Lane Hornung:
I really believe you need to have a long implementation time horizon, at least six months, to get everything up and running, evaluate the results. And of course, you have to rinse and repeat incessantly to get and drive high adoption rates.
Tracey Velt:
Those are great lessons; thank you for sharing them. Every entrepreneur has an aha moment. Tell me what was yours as it pertains to actually growing your brokerage?
Lane Hornung:
I think my aha moment was … I designed 8z and our model very consciously and a little bit of the MBA in me; very methodically. So the big aha moment was the realization that one of the things I didn’t really plan for was just how much we built a team culture at 8z.
Lane Hornung:
It’s a culture where agents really rely on each other. They support each other, they cover for each other, they even coach each other. That is as important to many 8zers as all the other things that I planned and built into our model. So that was a big surprise to me, and obviously a very pleasant surprise.
Tracey Velt:
Yeah. Tell me a little bit about your business model.
Lane Hornung:
Our business model is, we’re a high productivity shop. We did 1.25 billion in the last year with 160 agents. Again, back to that consumer, the home seller, the buyer wants technology and a great agent.
Lane Hornung:
So we put a lot of technology and systems around our agents. We also put a lot of human support so they can do the art part of the business. Our expectation is that they close a lot of deals, and fortunately they’ve been able to do that.
Last year we averaged 20.8 closes per license. We measure that very strictly per license basis, not on a per team basis. And really, we do that through all the systems support and technology we put around them.
Tracey Velt:
Okay. Thank you. Most brokers build their businesses with a strategic mix of organic growth and M&A, or mergers and acquisitions. So tell me how you grew your business? Was there a year that just really, everything just popped and you had your biggest growth leap?
Lane Hornung:
We’re probably one of the exceptions to that mix, because we have grown 8z exclusively organically. I mentioned we hit 1.25 billion in volume in 10 years; all of that growth actually came organically. Most of that growth didn’t come from adding agents; you don’t have to be a mathematician; 160 agents, 10 years, that’s only 16 agents per year.
Lane Hornung:
Really, we grew the business by growing the business of our existing 8zers. As I mentioned, we’re a high-productivity shop, so we’re really trying to grow each 8zer’s business. Overall, we strive for 10 to 20% growth per year, year after year. So not less than that growth, but actually not more than that growth either.
Lane Hornung:
I believe that too much growth can undermine a company’s culture, and that’s risky. For instance, last year our volume was up 18%; our signs were up 13%. That’s right where we want to be.
No year really stands out for 8z as a big monster growth year. We’ve never grown 40 or 50%. I see those numbers are 100%; I’m a little jealous. But we have grown every year, year after year. And only one of those years was less than 10%.
Tracey Velt:
Okay. What is your strategic organic growth plan? What are you doing to help your agents become more productive?
Lane Hornung:
Some things we’ve added recently is, I think the emergence of the iBuyers and instant offers, as well as all the other new options for selling that are coming to the market, including bridge loans, concierge service. I actually think that’s a huge opportunity for brokerages. We’re investing heavily and we’re aggressively going after that opportunity.
Lane Hornung:
We’re arming our agents; in the living room, speaking with their sellers; with the latest technology so they can bring all those selling options to the table for their clients, and really remain that trusted advisor at the center of the transaction.
And potentially unstick some sellers who are locked in, or at least feel that they’re locked into their houses, and maybe are less likely to move. But when they see all these different options, it opens some doors for them.
Lane Hornung:
I’m really bullish on this opportunity. I built an iBuyer platform and spun it off as a separate company called zavvie. That’s a testament to how bullish I am on the opportunity.
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Tracey Velt:
Yeah. Great. What do you find to be your greatest challenge in the business? Specifically this year; not maybe overall, but obviously- [crosstalk 00:08:48]
Lane Hornung:
I think when you’re organically growing, your greatest challenge is typically capital for investment. There’s that mix between if you’re a profitable brokerage between taking some out for the owners, and also investing in the future of the business and growing it.
And taking care of your people, of course, retaining them. I think you’re always balancing those capital needs. And when you’re organically financed, there’s only so much to go around.
Tracey Velt:
Yes, definitely. Challenges always bring opportunities. So where do you see the most opportunity in real estate brokerage in the coming year?
Lane Hornung:
Well, I think I mentioned it around the emergence of these different options for sellers, and the ability for an agent to bring all those options to the table for their clients. I really see that the number of transactions, and the liquidity in the market, might actually increase.
Lane Hornung:
I think one of the challenges we face as an industry as a whole; I’d call it the elephant in the room; is that the average home ownership tenure has gone from seven years up to nine and change. And in some datasets it’s over 10 years that the average homeowner is remaining in their home.
Lane Hornung:
That really impacts the transaction velocity; the pie, if you will, that we all get to participate in. So I’m excited that folks may be able to have a little more ability to move with all these new options.
Tracey Velt:
Okay. Obviously, you don’t recruit a ton of agents every year. But what are some lessons learned, trying to figure out the recruiting puzzle?
Lane Hornung:
Yeah. One lesson I think I’ve learned is that frankly, 8z’s not all that good at recruiting. In particular, we’re not all that good at recruiting experienced agents. I think we have a lot to offer. At the same time, I don’t think we’ve told our story with experienced agents as well as we could have.
Lane Hornung:
We are good at taking brand-new licensees and plugging them into our platform, our systems, our support, and turning them into a $10 million plus producer in a year or two or three. So we’re good at that. But we haven’t been great at recruiting experienced agents.
Tracey Velt:
Okay. Now I’m going to get a little more personal. Let’s talk about what or who inspires you.
Lane Hornung:
First off, I’d say I’m a big believer in having mentors, in mentorship, in mentoring others. I really think that’s, for me, where a lot of my inspiration comes from; both being mentored and mentoring.
Lane Hornung:
With that as the backdrop, one of my mentors is the author Jim Collins. Jim wrote Good to Great, Built to Last. I was fortunate to work with Jim as a grad student. And Jim really has inspired me over the years to shoot for greatness, to attempt and strive to build a great organization, not just a good one. And that is my “why.”
Lane Hornung:
What’s kind of neat is last summer my son was actually a research assistant for Jim. So it’s cool to see the it come full circle. But I’m continued to be inspired to build a great organization.
Tracey Velt:
Okay. Obviously you’re a go-getter. Is there something that happened in your childhood, or a teenage experience that you had, that really shaped the person you are today?
Lane Hornung:
Well, being a teenager and child was a long way back from me, Tracey. I wasn’t exactly a teenager, but in my early 20s, I was a pilot in the United States Marine Corps. Being a marine just had a huge influence on me. In particular, the Marine Corps taught me that leadership; it’s not the bootcamp yelling and screaming you see in the movies.
Lane Hornung:
That Marine Corps leadership is actually about being a caring leader, a leader that puts his or her troops and their needs before your own, and works. Your number one job is to work, to develop and grow the folks that you’re leading. Marine Corps is a huge influence on me.
Tracey Velt:
Well, great. Yeah, I just heard [Kirstie 00:13:45] Ennis. I don’t know if you know her or not. She’s a former marine as well, and she- [crosstalk 00:13:53]
Lane Hornung:
I do know of her.
Tracey Velt:
Okay, yeah.
Lane Hornung:
Yeah, I’ve heard her speak as well.
Tracey Velt:
Yeah, she’s amazing.
Lane Hornung:
Very inspiring.
Tracey Velt:
You should definitely check out her story, so-
Lane Hornung:
Yeah, it’s very inspiring.
Tracey Velt:
Well, thank you. Yeah, thank you, Lane. Thanks for joining REAL Trends on our podcast today for the REAL Trends 500. I really appreciate you taking the time to talk to me.
Lane Hornung:
Thank you, Tracey. Very much enjoyed it.