[00:00:27] Jay: Hi, everyone. Welcome to The First Customer podcast. My name is Jay Aigner. Today, I have a very special guest in a very special studio, probably the nicest studio I've seen so far. Mike Kading, CEO of Northart. Hey, buddy. How are you?
[00:00:38] Mike: Doing well. Thanks for having me.
[00:00:40] Jay: You got it, man. I'm not quite used to having such illustrious, guests here with such, you know, backdrops and ABC NBC, all the cool things that you do.
so you're no, no stranger to, these sort of conversations. So this should be fun. I am curious. sometimes people have bios out there that people can read and, you know, I don't go too much into the weeds of where they came from because it's publicly available. I did see that, you know, this was a business that you took over the years, which is definitely an interesting, kind of cool story.
but let's start where you grew up. Did you, where did you grow up and did that have an impact on you being an entrepreneur later in life? And spoiler alert, I think I know the answer to this.
[00:01:16] Mike: Yeah, for sure. So yeah, I grew up here in Minnesota. my parents originally started the business that we have. So at a high level, we design, build and rent apartments. We're focused on driving down the cost to provide more affordable housing and really solve housing affordability in America. But my parents started this business here. In Minnesota, and I was young, really young. I remember being on the field picking up nails and getting paid like 50 cents an hour, which I think was way overpaid for how much I was actually delivering, but those early years were building small buildings. And I remember my parents lost. Everything. In fact, so much so that my dad was kidnapped in Peru.
It's a crazy story there, but my parents rebuilt it back up and I got to live that journey with them growing up. By the time I went off to college, we had a small family business and I wanted nothing to do with that family business. The reason that was deep down is that I didn't want people to think it was given to me. So I had to wrestle with my own ego, but eventually got past that and decided to hop into this business full time. My dad and I doubled the size of the company. And then my dad overnight one day passed away and that was the day I took it over.
[00:02:40] Jay: that's quite a transition. how did you kind of collect yourself and move forward as the new CEO, with something kind of that quick of a transition?
[00:02:49] Mike: I was terrible. I mean, that's the one thing I've learned in life is that there's so many terrible moments, so many huge challenges that you face you that you have to overcome and kind of just one foot in front of the other. Keep working through it. But I remember the day that, the day that I happened, my dad, we got a call from the bank and the bank said, I'm so sorry, but your checks to your employees, they're going to bounce.
And I was like, we've never had an issue like that. What's going on? And so we found out that my dad had moved money into the wrong account. So we brought my dad back in to write a check to move it from the wrong account to the right account. But he wasn't able to write that check. And I knew something was wrong that night.
We came home. I stayed with my parents. We, and he seemed quiet, but by the next morning, something was seriously wrong. My mom called me back over and said, my dad wasn't willing to go to the hospital. I got there and I pled with them. Come, let's go to the hospital. And he eventually did. But what we found out is that he had a cancer that caused a stroke, that causes untimely demise. It's overnight here. I am this pipsqueak kid. I was young. It was my young, early twenties. Here I am running a small company and I didn't take the title of CEO for over five years cause I didn't feel I had earned it yet. In fact, in many ways I felt incompetent. Like I felt like I didn't know what I was doing and certainly the people around me said the same thing.
I can go into some interesting stories there, but that's how I was feeling at the moment.
[00:04:24] Jay: So when you finally did take over that CEO title. And I'm assuming, you know, there's probably a ton crammed into that five years of turmoil and growth and all sorts of stuff, but, fast forward to when you did take over and you were finally okay with being CEO and maybe you thought you had earned at that point or whatever it is.
how did you start acquiring new customers? Right. Cause I mean, it feels like that would be one of the. Harder things to do in an established business that's already had, you know, doing all this stuff. How did you decide to go out and find new customers
[00:04:57] Mike: Yeah, so as we started building these new buildings, we had large amounts of units that we now have to fill. And as long as they stay vacant, you've got huge debts and you can't afford to pay them. You will go bankrupt unless you can find the people you need to find. So there were a lot of avenues that we took to find new customers. One of the interesting studies that we did that might be useful to people is we started studying, was it worth spending the money on advertising, or is it better actually to lower prices to attract people more maybe natively because they find you in some way? We actually found for us, at least it's much better spending money and advertising and building up a brand. So we started doing that. We used to sort of established practices, ILS is in the apartment space, but we also did Google ads, Facebook ads and things of that nature. But honestly, that's just like one level. When we started realizing later is this, what's more important, vastly more important is about building a relationship.
with an audience with people, right? And so we then started down this route of content creation. Uh, we like podcasts like this, me attending and being on podcasts, me being on the news and TV and all of that sort of stuff. We started to realize that we needed to be out there so that when people thought about apartments, when they thought about apartment investing as well, that they would think our name.
So that's where it started. And now we're in a world of investment where we're finding new customers.
[00:06:32] Jay: and just to take a zoom out real quick when you guys were building these buildings. Did you have, I'm assuming you had to like buy space and then was there any sort of like customer in that perspective where you're selling a big building to somebody, were you building these for yourselves? And then your only real customers were the people who were going to come live there.
Like who was the customer for you guys back then?
[00:06:56] Mike: yeah, so we were building it for ourselves and our real customers, simply our residents. Um, and the reason we do that is it drives down, helps drive down the cost of construction.
[00:07:09] Jay: It makes sense. All right. So talk to me about capital raising, man. This is a, it's a definitely got a big shift from normal operations. when you're, you know, trying to get people into a building that you have built. why are you guys getting funding or going after capital or whatever it is you're doing?
and how has that experience been so far?
[00:07:30] Mike: Yeah. So in the world of what we were doing, because our costs were so low, banks were just giving us all the money we needed. It was magical. And then something happened in the past year or two where interest rates have started to rise and with rising interest rates means that banks are willing to give you less money for your projects. Well, financially, everything still works. We just had to find money from other avenues. And so. We started a variety of avenues. One is connecting with more traditional investors and institutional investors. But I think the more interesting one that we've been working on is more retail. And so we spent a year getting approval from the SEC and stuff to create a retail product that offers a high rate of return, a high interest rate for people who lock in between six and 24 months. But. It's great to create the product and they make it really attractive as a product is, but that's not good enough. You have to find the customers, right? They don't just show up at your door. And so the first thing we did is we looked at other people that have been successful and then we worked to replicate their success. And so part of that was simply building out the, a webpage specifically for investment, building out the landing page, building out advertising. so we spend a lot of money on Facebook ads, which are working really well right now. by just replicating what they've done and anything that's interesting and it's functioning well for us, but we've got another team that's working simply on more quote unquote experimental techniques. And so they're not really experimental. They're experimental in the sense that they're not proven as well in this space, but we have influencer marketing that we're starting. So reaching out to influencers, paying them to, drive traffic for us. We're also using more traditional media and what we're finding there, Is that the, it's not so much about pulling the customer in.
It's more about building a reputation again. So if you have like a radio host or a TV host, that's well known. And they say, Hey, look at no hard invest. This is a good product that gives people an extra degree of trust. Um, and then, yeah, we're doing some even more creative stuff with podcasts and brain building and things of that nature as well.
[00:09:48] Jay: So you've got two kind of tracks right now, right? It's the investment side and then also your building side, right? So is the, and is the goal for the one to feed the other? So that you guys get the investments to build more units to kind of continue to have residents move in? Is that kind of the line?
[00:10:06] Mike: exactly. So because our costs are low enough, there's a good amount of profit in our projects, but what we're trying to do is to build up the system that builds housing, right? If we can build up the system, then we can work to reduce the cost of housing for everyone longterm. But that system is really hard to build. And so, there is the employee part of it, the systems, the process, which I actually think is a lot harder. And then there's the capital race part of it too, because you need access to capital. You need money up front to pay for all of that, that then earns a return over time. And we need people willing to give us that money temporarily until we can pay it back in the form of profits and dividends.
[00:10:47] Jay: So, I mean. How involved are you in the day to day of marketing and sales and bringing in new customers? I mean, we do think I'm sure you do lots of things like this and kind of you're the one that's out front and center. what about strategy and like, you know, defining what you guys, what initiatives you guys are going to go after, right?
Because I feel like as a CEO, a lot of the initiatives. Run through me like I can my favorite saying, and I'm still gonna take credit for them. I don't think I came up with it was,I like to delegate. solutions and not problems, right? So like, I don't want to just be like, here's a problem.
You guys go figure it out. It's more like, let's figure out a solution together. And then the team goes and implements it. Is that kind of your track today where you're kind of kicking off initiatives and doing some of this forward facing marketing stuff and doing biz dev and doing all that stuff, and then you've got these teams that kind of execute individually on those different tracks that you're going after,
[00:11:45] Mike: Yeah, exactly. sort of high level. I do spend a fair amount of time in the strategic planning, the thinking, like the high level stuff to make sure all the pieces in the right place and we're headed in the right direction. And we could talk a lot about that purpose, vision, mission, building the right culture.
That's a lot of my time. But I would say another big chunk of my time is helping newer initiatives get kicked off the ground. So something like the no hard invest marketing, I am pretty involved in that simply because it's newer, right? Helping that move forward. But what I try to do is if some new initiatives, we can hire someone that's amazing, that can just take it over and run with it on day one, and I love doing that, but then if I am involved in it, the next thing I'm doing is can I raise someone up or hire someone in who can take over what we've learned so that I can move on to the next thing?
[00:12:38] Jay: what do you think it is, or what type of initiatives? Are easier to outsource like that, like, why are there some that have to be driven internally?
[00:12:50] Mike: That's a really interesting question. Actually, I think. so when we're hiring people to take on an initiative, the big challenger is finding the right person to take it on. And we could talk quite a bit about that. But,but even that hiring the right person, you may think you are the right person, but still not quite the right fit.
Once you've got the right amazing person, it's golden. It's just done. You're solved. But until that point, it's just hard getting to that level. And actually I would say the same thing about third party companies. I've worked with a lot over the years and it really matters the person within that company that you're working with. Right? I have many examples where the company is great. I know the leadership, the company, they're amazing. And the person I'm dealing with is like, why am I like, I'm nice, in my back of my head, I'm thinking, why am I wasting my time with this person? And they don't know really what they're talking about. But when you find that right, amazing person, it's a game changer. And so we do work with their party companies. but really it's, they've got to be amazing, like world class. They can't just be pretending.
[00:13:59] Jay: And what are the things that you. Either struggle to fully let go, which is my problem sometimes,
or that you just really feel passionate that you should be involved in, when it comes to the business, what are those kind of core things that you make sure that you have your hand in?
You mentioned the marketing for the investment side, cause that's new, right? Is it just new stuff? is it really important stuff? Is it fun stuff? Like what is the criteria for you to be involved?
Number one is like culture, purpose, mission, values, culture related stuff. And so there are things that I do that may seem strange. Like I run every orientation. It's important to me because I'm trying to build the right kind of culture in the organization. And I probably won't give that up for a while. Um, so that's sort of number one. That doesn't really change. then. Beyond that, I am more than happy handing as much off as I possibly can. my average work week is easily 80 hours. some weeks it's a hundred, right? So the more I hand off the better. I do step in when things aren't working super well in an area and needs a little bit of help to get the right people, the right systems, right infrastructure in place to move it over that threshold. What do you do to keep yourself from burning out? I mean, you're working 80 hours a week. I mean, do you take enough time off to counterbalance that? Do you just love it so much that, you know, it's not 80 hours of work that it feels like every week. What do you do to prevent burnout?
[00:15:30] Mike: you know, my dad died at a relatively young age. and it reminded me how short life really is. You know, we only live about 5, 000 weeks here on earth. And for me, I don't want to waste a minute of my life. And so for me, the most important thing is to figure out like, what am I put on this earth to do? What am I most passionate about? What do I want to make the biggest impact in? And for me, I've always been the kind of person that wants to make a meaningful, positive impact in the world. And the way that I think I can do that with my life and the team's lives is affordability by basically creating a manufacturing link systems in the world of housing.
and because of that, because I so understand what that is for me, yeah, there's hard, there's awful days. I promise you it's a lot of work. This is not easy. But because I know that at the end of the life, my life, I want to have some kind of meaningful, positive impact in the world. Like I wouldn't want to do anything else.
Like for me, I go on a vacation, I get bored within a few hours. not joking. Like I can't stand it. so that's, It's just aligning my day to day with who I am as a person and where I want to be long term.
[00:16:49] Jay: What is, what does money mean to you today compared to maybe 20 year old Mike?
[00:16:57] Mike: It's in money.
[00:16:58] Jay: Yeah. Just money in general.
[00:17:01] Mike: I have never, and this, people always question me on this, but I have never been motivated by money. I am motivated by the impact that I can leave, right? Like, today if I wanted to. I could retire, right? I could sit in the rest of my life on a beach, right? And like, what am I going to do at the end of my life?
You're going to shove a hundred dollar bills on my grave. Like it just doesn't matter. Money is a tool. It's things like raising capital to solve a problem. It's a tool to get something done, to accomplish something in life. And so even as a young, kid, I had the same sort of perspective. It was all about what's the biggest impact I can make.
[00:17:38] Jay: Does that come from your parents or something? Cause it's not a very, I would say. Typical kids viewpoint, right? Unless it's driven from the parents, like kids want candy and bubble gum and, you know, dollars to go by this and that. I mean, especially these days. where did that come from for you?
[00:17:58] Mike: There may have been something screwed up in my brain when I was born, but I mean, even as a kid, you know, when I was a kid, I was really into like creating really amazing fun, special effects for like movies. Now this is kid level, but still for being a kid, we had full 3d animation. We had sets, we had a pirate ships and castles and it was crazy.
We had a hundred kids. It was all kids working on this. And so I was really fueled by the fact that we were doing something that was far beyond what other kids my age were doing. Right. So like, yeah, that it's just how far can we push the world and make an impact in the area that we're working
if you had to start everything over again tomorrow with everything, you know, but you're starting at square one and your goal is to, you know, solve the affordability problem with housing with a business, what is step one for you to get this business off the ground? on in the world of housing. It's basically start small, earn enough money, buy a house, start renting it out. And then buy a duplex, buy a 10 plex, and then start looking at, can I start doing construction? And it's, and then can I add on, can I improve the way the costs are done? And there's a lot of sweat equity and things involved initially. But I think maybe a more interesting point for people is one of the tips or techniques I wish I had known younger is How to build and leverage the right relationships to go further faster. And so one very simple technique, we're on a podcast here is start a podcast, right? It's so simple, but the benefits are immense.
And the reason that is, is you start a podcast, you're starting to build a little bit of an audience. But secondly, you're starting to network and you can network with people out of your league, right? Maybe you can't get Bill Gates in your podcast, but you can get the local entrepreneur who knows 10 times as much of you, has 10 times the resources as you and build a relationship because you can go to him and say, Hey, I got this podcast. Would you be interested in being a guest on my podcast? I like to showcase you to my audience. Right? And then as soon as you have that relationship, you ask him for the next guest and you can work your way up. You know, we have our own show, that I literally, most of my guests are billionaires. The way that happened is because I networked with the right people initially, and then they started meeting me, having me meet other billionaires.
And I've got this big network of billionaires that wouldn't have happened without a podcast. So there's, that's just a peek into that world, but there's so many more techniques in that space that if you're just thoughtful about how you play the game, you can go so much further, so much faster than everyone else.
[00:20:58] Jay: speaking about the, you know, spinning up real estate or anything these days, With housing, you know, single family housing, at least over here in Pennsylvania, going crazy. It's been going crazy for months, and I think all over the country. is there a bad time to get into real estate or get into investing or buying a house if things are high and interest rates are high is now a bad time to start a business trying to do kind of what you mentioned by 1 house by 2 houses by 3 houses.
I mean, certainly there's I'm sure there's better times, but is there a bad time to do it?
[00:21:38] Mike: Yes, for sure. And I would say, so we talked about our investment platform before one of the things with our investment platform is we guarantee the returns or the Northart invest as a company guarantee is a return. So they're well protected, but if you don't have something like that in place today would actually be a bad time to invest. And the reason that is, is you have high interest rates and everyone's cost basis is so high that most of the deals just don't make financial sense. So since our costs are low, we haven't had the same issue, but in the United States it's about a 70 percent drop in new apartment construction that's happening right now. And then there's a, in the twin cities, it's actually been a 90 percent drop. So that's naively, that's a bad perspective. the flip side though, is if you can get a deal to make sense right now, if you can get your costs lower and you've got some kind of advantage to get in the marketplace, it's actually a really good time because you're going to be opening a property when others are not doing so. Right. And so from a construction standpoint, I think today is actually a good time. If you can pull it off from a buyer's standpoint, if you're going to buy cheap property, I'd wait six, nine months. We're starting to see a change in that market. Well, you'll likely have deals that you hadn't seen in a decade, frankly.
[00:23:01] Jay: All right, well, I have one more question, non business related. And I'm going to even say non housing related because I feel like that may be your answer. So I'm going to just give you one straight, that's more about you. if you could do anything on earth and you knew you couldn't fail, what would it be?
[00:23:17] Mike: Interesting. I would love to meet like 10 or a hundred most interesting people in the world. Like Elon Musk, Bill Gates, presidents, prime ministers, that sort of thing. And just have an honest, authentic conversation with each one of them to learn. What they've done throughout their life. I feel, especially since I've been able to meet so many amazing people in the world, the people at that sort of level, they just think differently than most other people.
And letting some of that rub off on you is incredibly useful. So that if I could do one thing is get them all in a room and just have a chat.
[00:23:58] Jay: That is a first for that. That's a fantastic. I love that answer. I think that may be my new answer. That's a great one. and yeah, even some of those like, I mean, you know, if it was anybody, there's plenty of people historically that would just be so amazing to have in that room, you know, along the way.
so if people are looking to find you, Mike, where can they find you directly if they want to reach out? And then, where do we find more about, your two amazing endeavors you have going right now? where can they find you?
[00:24:26] Mike: Yeah, so you can visit our website, Northart. com that's N O R H A R T dot com. And then there's two interesting things there. One is invest. you can click on invest and learn more about that platform. And the second is our shows. And the more interesting, probably the most interesting show right now is zero to unicorn.
That's about the journey. People are on going from nothing to billion dollars status. And, one of my favorite guests on there to give you some sense was Michael Uslan is the originator and the executive producer. Of Batman, as well as Lego movies and National Treasure and many others that you've heard of before. But what's interesting about his story is it took him 10 years to get to the point of being able to make the Batman movies a reality. From the point that he purchased the movie rights as a 20 year old. It's crazy. But just the tenacity, the energy, the willingness to get people slamming doors in your face over and over again, telling, you know, it was such an inspiring story.
And so that, that episode comes out in season two, which will be launching here very shortly.
[00:25:40] Jay: and I would be remiss to ask, where did the name Northart come from?
[00:25:45] Mike: It is, we looked at thousands of different random combinations of letters and words and things of that nature. It was a dot com that was available. It was really the simple answer, but the more inspirational answer. Is that, Nor is North, Norwegian, Strength, and Heart is the Softness, the Connection, the Relationship, and we wanted to have both in that name.
[00:26:08] Jay: Beautiful. All right, brother. Well, you've been fantastic. I can't thank you enough. I think people have definitely learned some awesome stuff today about, how to build an empire like Mike, enjoy the rest of your week, brother. I'll talk to you again soon. Thanks for being on.
[00:26:21] Mike: Yeah, thanks for having me.
[00:26:22] Jay: See you, Mike.