RG 316 – How to Build a Successful Business Without Sacrificing Your Happiness with Ben Lapidus
Wealth and happiness do not always go hand in hand, but Ben Lapidus has found a way to achieve both. Listen to Ben’s philosophies in life and learn how you can build success without sacrificing your happiness.
Ben is the Chief Financial Officer for Spartan Investment Group, LLC and a co-founder and host of Best Ever Conferences. His extensive finance and business development skills helped him construct a portfolio from $0 to over $500 million in assets under management.
Ben Lapidus has been through lots of ups and downs. He created startups that didn’t work out, lost more than $200,000 of investor money, and had to build a business from scratch. Today, his portfolio is worth over half a billion dollars, and he helps other investors achieve financial freedom.
Tune in to this episode to learn more about Ben, his business, and how to build the life that you want without sacrificing your happiness.
Spend your time on something at the intersection of three things (something you’re passionate about, great at, and economically viable).
When you have lower expectations, it is easier to generate happiness.
Vanity metrics are a sign of youth, but we grow out of it as we grow older.
- Don’t be obsessed with exit options.
Be Bold, Be Brave and Go Give Life a Crack!
Listen to Podcast
Reed Goossens (00:00):
Good day Good day guys. Now, before we dive into today’s show, I want you to let you know that some of you may be aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more that’s reedgoossens.com Now back into the show.
Ben Lapidus (00:41):
But I think the, the most important thing that I learned along the way, two things I’ll I’ll mention is, uh, is this hedgehog principle concept, something that Eric Reese mentions in a lean startup machine, which is whether it’s a career or a business, you should spend your time professionally at the intersection of three things. And most people only focus on one. And if you’re lucky you get to two, but really blowing it outta the water is all three. And that intersection is something that you’re passionate about. Something that is economically viable and something that you’re great at that you can be a category of one with
Speaker 3 (01:21):
Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market, join Reed, as he interviews go getters risk takers and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing
Reed Goossens (01:41):
Good day. Good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host Reed goossens good as always ever with us on the show. Now I’m glad that you’ve all tuned into to learn from my incredible guests and each and every one of them are the cream of the crop here in the United States. When it comes to real estate, investing, business, investing and entrepreneurship, each show, I try and tease out their incredible stories of how they have successfully created the businesses here in the us, how they’ve created financial freedom, massive amounts of cash flow, and ultimately created extraordinary lives for themselves and their families life by design. As I like to say, hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.
Reed Goossens (02:28):
If these guys can do it. So can you now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bots. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes. And you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show wherever you podcast on iTunes, SoundCloud, Stitcher, and Google play, but you can also find these episodes up on my YouTube channel. So head over to reedgoossens.com, Click on the video link, and it’ll take you to the video recordings of these podcasts, but you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking in into today’s show
Reed Goossens (03:16):
Today. The show I have the pleasure of chatting with a really good mate of mine. Ben Lapidus. Now, for those of you who dunno who Ben is, I’m sure you do, but he is the chief financial officer of Spartan investment group, where he has applied his finance and business development skills to acquire their current portfolio, which is all based in self-storage. Now he’s also built the comp, uh, the corporate finance backbone of the firm and has organized hundreds of millions of dollars worth of debt and capital to go out and buy and grow Spartan investment to top it all off. He’s also the founder and the host of the best ever real estate investment conference. If you haven’t been there, definitely check it out. Google best ever conference Ben Lapidus or Joe Faris. And it’ll come up top of Google search. Definitely check that out. Um, but without further, I do wanna get him on the show today. Get him outta here enough outta me. Let’s get him outta here. Get Ben. Welcome to the show. How doing today, mate?
Ben Lapidus (04:03):
I’m doing well. Thanks for having me,
Reed Goossens (04:04):
Mate. It is good to see. I swear to God, I had you on this show before, because I’ve, I know you are a little bit of your background, but maybe it’s cuz we, we we’re good mates that I know that your background’ so well, but I, I don’t know if we have, but um, maybe,
Ben Lapidus (04:15):
Maybe at IRC I remember you, you podcasting at IRC and I was there, but maybe not. I can, I can’t remember
Reed Goossens (04:21):
yeah, yeah, exactly. But maybe, but tell, before we get into today show, can you rewind the clock and tell me how you made your first ever dollar as a kid?
Ben Lapidus (04:28):
Yeah, sure can. Uh, so my, my, my pops was one of those guys. It’s like, I’m gonna build a business machine out of my child, right? Like, uh, six, six, uh, six years old. He’s got me reading richest man in Babylon by by a Manino. So first dollar I ever made as a kid was actually a poker chip because I wasn’t entrusted with dollars. So I got, uh, some of those, uh, poker chips off of what would now be Amazon, whatever it was back then. And, uh, my dad had me stuffing tapes for what used to be called Amway. Now Quickstar global mm-hmm . He had me stuffing envelopes for his, uh, his marketing agency that he had as a, as a side hustle as a business. So when I was four, I was, I was stuffing tapes for Amway. I was stuffing envelopes for his marketing agency. My dad was a dollar, a hustler, and he used to give me dollars for the work, uh, in, in poker chips. And I cashed those poker chips in for things. I was, I was buying stuff at the, at the family store when I was four, as far as I’m concerned, I’m the reason my whole family went to Disneyland when I was eight years old. So
Ben Lapidus (05:22):
Reed Goossens (05:24):
Is he still involved with ammo today?
Ben Lapidus (05:26):
He is not. No.
Reed Goossens (05:27):
No. I remember, I remember getting pitched down way back in the day when I first started down my entrepreneurial route. I, um, I’m surprised they’re still around, but clearly, as you just mentioned, they’re rebranded. So, um,
Ben Lapidus (05:36):
They’re rebranded. Yeah. They made their way through various different communities in the us.
Reed Goossens (05:40):
Yeah. And in Australia, trust me, they, they made it to Australia, so awesome. But mate, walk us through your background and how you’ve built, what you’ve done today and, you know, be vulnerable with us in terms of where you’ve come from. Cause I know you have an awesome background in, you know, you mentioned businesses in building that with your dad, you know, as a young age, but you’ve gone on to do some, some pretty successful stuff and exit successful businesses over the years.
Ben Lapidus (06:03):
Yeah. I went to school for finance thought. I was gonna be a wall street, dude, finance and economics. Dual majors started the Rutgers entrepreneurial society while I was there. So I obviously had a pension for, for pain and in building businesses that, that started to blossom at an early age, 2009 had my first internship. I had worked my off to be a front office, uh, in, uh, person at all the big banks, but 2009 happened. And I ended up getting a, uh, a sales and trading job at Barclays capital, right after they bought Lehman brothers, they were trading exotic credit to derivatives. It was the, it was the CDOs. It was the stuff that brought the world to its needs. So I just got to be there during the summer to watch all the red get written off in these frozen Obama markets. And, uh, everybody was pretty angry.
Ben Lapidus (06:42):
It was not a great place to work. It was not a great industry to be in at the time. And the outside world thought that finance was the devil. So I, I remember I would go to my investment banking job during the day, work the restaurant at night to practice my a hundred hour weeks. And you know, all the, all the customers come in and oh, young man, what are you gonna be when you grow up? I’m gonna work on wall street. Oh, for the pebble. Great. You know, that kind of imprinted a little bit. So I, I decided to, to switch gears and I moved to Costa Rica and started a study abroad company, which is a, a, a, a big about face more just because I wanted to do something. I just wanted to start a business. And that’s the first thing that presented itself to me.
Ben Lapidus (07:17):
I wanted to go to Costa Rica, made a vacation out of it, found myself a, a little random niche and, um, and, and built a business out of it with the folks that I started, the Rutgers entrepreneurial society with fast forward three years later, first year outta school, we were doing $2 million a year in revenue bringing, uh, 500 kids a year to Costa Rica for 12 days at four grand, a pop giving them three credits, accredited, 80 universities from 10 countries were participating. And I was having a blast. I was at the beach every weekend. I was zip line in jumping off waterfalls climbing to the top of 40 foot wind turbines. But it kind of fell apart because of egos and hormones got three owners that are 22 years old. So got bought out, had that separation invested into my first two single families in 2012, which was really difficult to make a bad decision with and, and, and worked for ad tech for about five years, just needed a, a place to, to, to rebuild my, my, my pockets.
Ben Lapidus (08:09):
I hadn’t gotten my cash out. Um, when I first left, it took me a year to get, to get my buy out. And then I was down to 800 bucks in my pocket, living in New York city, barely able to make rent. So tried two other startups that failed, uh, and then once to go work for the ad tech industry. First company that I worked for iPod nine months later and made a bunch of 30 year old VPs, uh, millionaires overnight. And so they, they heard about this kid who bought houses making 20% cash on cash returns with 15 year mortgages in these B grade cities along the east coast. So they started throwing money at me and I ended up accidentally syndicating, um, about two dozen single family properties. And I had 800 bucks to my name, but the deal was, I wasn’t a broker.
Ben Lapidus (08:48):
I said, you take on all the mortgages. You put in a hundred percent of the capital, I’ll find the deal and I’ll do all the asset management completely turn ed key single family before that was a thing. And I take 25% ownership. So when I accrued all of this, without any of my own money or credit, I ended up with a half a million dollar balance sheet that I could bring to the bank. So that’s how I, I, I accrued my, my net worth just at a thin air. Uh, and so from there I started syndicating, multifamily learned the things that I was bad at. I also started flipping houses, learned a few more things that I was bad at. I ended up losing close to $200,000 of other, other investors money, which was the best lesson that I’ve ever learned and, uh, moved to, to, uh, to Denver cuz of my wife decided to start the best ever real estate investing conference so that I could put myself in a national form to meet some like-minded people. And as a result of that found business partners that helped me, uh, switch gears from single family, residential world, to the, to the world of self-storage. We bought our first asset in 2018. And over the last four years, we’ve accrued almost a half a billion, uh, in self storage assets on our way to a billion. So that’s the, that’s a little bit more than 90 seconds, but there you
Reed Goossens (09:51):
Go. Well, I AKA didn’t ask for 90 seconds and, uh, you volunteered at my friend, but that’s, uh, that’s an incredible story. I, I was trying to keep count of all the businesses. So Costa Rica, there was New York, there was an ad tech, there was two, apparently other startups in there. There was a single family by yourself. There were single family certifindication there was then, then, then the, the losing of the $200,000 then starting of the best ever conference now self storage and half a billion. Did I get that right?
Ben Lapidus (10:18):
Yeah. I did a lot of experimentation in my first professional decade. Yeah.
Reed Goossens (10:22):
but I think you have to, I think that’s the lesson, right? It has to be a little bit of trying of everything to, to make sure you understand where you know, where you’re going to. So, you know, today, and I’m gonna, we’re gonna go back and unpack it, but what’s been the biggest lesson coming through where you stand and sit today with all that experience and the trying of all the things.
Ben Lapidus (10:40):
Yeah. I, I, I would say that there’s lots of technical lessons that I’ve learned, right? There’s, there’s lots of, uh, of, of important knowledge that I’ve gained that have helped differentiate me in the marketplace and differentiate our investment thesis in the real estate world. But I think that the most important thing that I learned along the way, two things I’ll I’ll mention is, uh, is this hedgehog principle concept, something that Eric Reese mentions in the lean startup machine, which is whether it’s a career or a business, you should spend your time professionally at the intersection of three things. And most people only focus on one. And if you’re lucky you get to two, but really blowing it outta the water is all three. And that intersection is something that you’re passionate about, something that is economically viable and something that you’re great at that you can be a category of one with and, and, and I, and I, and people say, oh, follow your passion, follow your dream.
Ben Lapidus (11:25):
And then other people say, don’t follow your passion. Don’t follow your dream. You to be economically viable. The reality is it’s both needs to be at the intersection of all three things. So I had, I had this, uh, this upbringing where I was focused on economic viability until I was 19 years old. And I realized that wall street was not gonna be a good time. And I moved to Costa Rica and I started to study broad company partying and ziplining and jumping off waterfalls for three years. And that was a great time. And I learned that I have to have fun. I wasn’t passionate about the work, but I was having a great time. I was chasing fun. And then when I got into the real estate industry, Chris cloy a of Memphis invest. He was the first keynote speaker, the best ever conference, 2016. You were a speaker there too. You remember that two 17 mm-hmm
Reed Goossens (12:03):
Ben Lapidus (12:03):
Mm-hmm . And, uh, I sat down with him for lunch, uh, for dinner. And he said, when it comes to turnkey real estate investing, we are a category of one. We are the best at it. And at the time it was true. I don’t know about today at the time, it was absolutely true. And so I got, I got to noodling on, you know, what are my superpowers and how can I compliment that with other people’s superpowers so that we can become a category of one. Maybe that’s a very niche, pure play way of doing things, but at least we’ll be the best inside that pure play. Uh, and so that’s the focus now I get to work on my superpower. So something that I’m fantastic at, I get to, uh, lean into my a D and my shiny object syndrome by working on deals, right. I’m still in finance. So I I’m, I enjoy the heck outta my work, and I’m doing it in an industry with people like you, uh, having a great time. It’s a lot of fun. So I, I, I have, after all this experimentation found myself at the intersection of that three circle bend diagram.
Reed Goossens (12:57):
That that’s really interesting cause I, you, you, you were correct that so many people talk about being passionate. And if you do something that is, you’re passionate about, the money will come, right. But you also, sometimes it doesn’t just come. You, you can only be, you know, I’m thinking of like being an artist, right. It’s, it’s such a, such a hard thing to crack and be a very wealthy person at the same time. Usually most artists are paycheck to paycheck and have to have a second job. So finding that economically viable solution is really what I think, you know, drives. A lot of people for you was, was, was, was, you know, financial independence ever, you know, that, that economic viability push that was trying to get you into the real estate world initially.
Ben Lapidus (13:35):
Reed Goossens (13:36):
Or, or even, I shouldn’t even say real estate, I should say, starting any business. Right. Cause you clearly have, you know, uh, sort of a, for wanting to go out and sniff out the, the entrepreneurial, you know, startup sort of thing. So was that to become free and not have to work for anyone else?
Ben Lapidus (13:51):
I, I, I I’m okay. Being a leader, I’m okay. Being a general of somebody else’s army it’s. So it’s not so much about wanting the, the, the freedom of, uh, of control over what I do. I, I like direction when it, when it works and I’m also okay. Taking charge too. I, I I’ve built those skills. I know when to lead and I know when to follow and I’m, and I’m good at both now. Um, it was more so the freedom of what I was doing outside of work satisfying. I, I would not find myself stimulated or satisfied or with my expectations for my life. If I maintained a W2 income, because that’s all happiness is right. And that’s what we’re chasing happiness, uh, a good dopamine trip through our life. You know, based on our definition, our definition of wealth and happiness and happiness is typically defined by defined by reality, divided by expectations.
Ben Lapidus (14:40):
The higher your expectations are the more difficult it is to find happiness in your reality, because your reality needs to meet those expectations. If you have really low expectations, it’s a lot easier to produce a reality that generates happiness. That’s why we see people who have less, that are happier than people who have more because they have higher expectations. And I was imbued with a set of very high expectations in my childhood. That is my operating system. That’s my programming. So I knew that I had to go hunt to, to produce the reality, to match my expectations. And I have leaned into the things that I enjoy, such that I find stimulation. I found a way to match my need to create that reality with what I enjoy along the way. So that the journey is just as desirable as the destination. That’s that’s I think the key, cuz now I’m, now I’m just full of gratitude. I have the business that I want. I have the family that I want. I got my three lovely kids. I live in the state that I want, I have produced what I want and I’m not at the pinnacle. I’m not at the apex, but I know that I’m, I’m in the good old times right now.
Reed Goossens (15:40):
Mm-hmm how do you, how do you stop the mind from wanting more? Because that’s, that’s the, that’s the hamster wheel everyone gets on. Right? You get to that some, some element of success, some drip of success, but there’s always gonna be another mountain. So how do you, how do you, how do you keep that expectations in check
Ben Lapidus (15:59):
More of what I would argue more, right.
Reed Goossens (16:00):
Well, that’s what I’m asking. What is your more of what?
Ben Lapidus (16:03):
So, you know, you know, like that, that, uh, that wall street movie with HIL bow and, uh, mm-hmm, , what’s his name? Josh bro. He’s like, how, what’s your number? He just goes more and, and like, that’s not me. I looked at, what do I want outta my life? I, I do not want to measure myself based on, uh, uh, a currency based number that is not my singular KPI for what I would define as success for my life. I see the monetary resources that I’m being allocated from my participation in our economy as a tool to produce, uh, outcomes in other KPIs for my life. So what I’m looking for now is the best return on time, not the best return on investment, not the best raw dollar income. I want to hit a certain net worth. And then beyond that, my efforts professionally are about producing the best return on time, because I look at the spectrum of what this existence has to offer.
Ben Lapidus (16:54):
And industry is very stimulating. It’s very exciting. It’s fast paced. It’s enjoyable. You can, you can enjoy the game of industry, but there’s other, there’s other ways to, uh, process this existence and have more diverse experiences. And I enjoy diverse experiences, whether that’s, um, in academia or non profit sector or government or travel and leisure or, uh, arts and entertainment, there’s other ways to live this life. And so I would like to add more diversity into my lived experience. So by producing the best return on time, I can open up my life to invite more opportunities for personal growth and introspection in these other arenas of what this reality has to offer,
Reed Goossens (17:35):
Has that always come naturally
Ben Lapidus (17:37):
Has what always come
Reed Goossens (17:38):
Mindset. Yeah. That mindset, because I’m sure. And I’m, I’m, I’m sort of thinking back to your story. I’m sure some of the, I don’t wanna say failures, but the tripping has, you mentioned testosterone and, you know, breakups of companies and you and I have had personal conversations about us, you know, things, things get to a pedestal that everyone starts getting a bit of elbowy has that. So is this current mindset come from those lessons of, of, of, of, you know, the ups and downs of you’ve experienced?
Ben Lapidus (18:05):
Oh, I, I mean, I I’ll get a little head of here, so, so, you know, stop me and, and put me back on track if, if I do, but I, no, I would say no. I mean, vanity metrics is, is, uh, is a sign of youth, I think. Right? So I, I think we all kind of come out of school or we get into our businesses and, and we assign vanity metrics as our, as our yard stick for success and kind of measure them up against other people. I, I would say that I like anybody else came outta my childhood with certain insecurities. Uh, and, and I think that’s part of what adulthood is, is becoming aware of your prior programming and, and, um, being introspective and cerebral about what those insecurities are and why you have them and, and working through them. So I, I, I would say that probably supplanting those vanity metrics was very helpful, you know, to say, I, I had a vanity metric and I’ve exceeded that, that certainly helps.
Ben Lapidus (18:52):
Uh, but I don’t think that I’ve, I’ve pushed the yard stick further because I’ve been introspective as to why that metric was my vanity metric to begin with. And I, I, I, I would say that the, the biggest inflection point for me in that shift was finding the right partner, who, who questioned my values, who questioned my conclusions, um, and who kept asking me why to make sure that I was focused on, on what those right metrics are. You know, you, you get married, you start a family and, um, your priorities shift, right? And, and that’s not a bad thing. It’s not a bad thing.
Reed Goossens (19:26):
Talk to me about Spartan capital. You know, you, you, you, you of Spartan investments, I should say, um, you, you started that in 2018, I believe. Right. That was, was that you mentioned that was through the best ever conference. You know, obviously you host that that’s, if people dunno what that is, again, I encourage people to Google best of a conference. You’ll find Ben’s pretty face alongside Joe’s. How did that how’d that come about?
Ben Lapidus (19:47):
Yeah. So spartan investment group was started in 2014, uh, by Scott Lewis and a college buddy, uh, Ryan Gibson joined one year later, they were flipping houses in DC doing very, um, very impressive creative flips in DC, you know, taking a brownstone for a single family and turning into a four condo, uh, uh, property with a pop top or a dig out or both. So it had half million dollar margins. I found that very impressive, like the construction management, the, the ability to, to blow through the permits and the planning processes of those things. Meanwhile, I had accrued over 50 units and I was a, I was a cashflow king. I had created great cash flow and I had lost $200,000 trying to flip, right? So like I knew what my strengths were and I knew what my weaknesses were. I knew that I was great at underwriting deal, making negotiating, um, capital markets acquisitions, being able to just do anything quantitatively.
Ben Lapidus (20:35):
I had a, had a natural intuition for, and I had the posture to be a good negotiator as well, and just make good deals, but managing vendors, property managers, construction managers, business operations, not my, my natural strong points, anything that had to do with organization or things that a D D don’t support not great. I like to lean into my shiny object syndrome with the transaction level side. So when we, when we started the best ever conference in 2016, we had our first, uh, event in 2017. I accidentally invited Scott Lewis to be the very first speaker. It was a, it was an accident, but it was a happy accident. He was rated third best speaker that year in our, in our, uh, speaker survey. And by consequence of that first interaction, he had just moved to Denver. I had just moved to Denver, uh, within a month of each other.
Ben Lapidus (21:17):
We started skiing together, uh, spending a couple, couple of weekends, uh, a month for about a year. And when my New York city role, after having moved to Denver, started to wrap up Scott and Ryan, uh, who were now the only two people working in spartan investment group were starting to say, you know, our DC flips, that’s not really a, a business we want to be in anymore. Our margins have been squeezed. They had just started going through what Scott calls, the military decision making process to evaluate what our investment thesis should be. And I kind of jumped in right at that time, uh, with our, my complimentary skillset. And we concluded storage was the right answer. Um, and in 2007, 2017, we bought our first parcel for ground up development. We bought our first asset in 2018, uh, preexisting asset. And in 2019, it started to scale from there.
Reed Goossens (22:02):
For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multi-family value, add deals, then head over to reedgoossens.com And sign up for my monthly newsletter by signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States, and much, much more. So head over to reedgoossens.com and sign up to date now back into the show. That’s incredible. And what, how have you scaled the company? Give us a snapshot of what it looks like today.
Ben Lapidus (22:41):
Yeah, so, uh, the, the way that we’ve scaled the company is by taking a massive step back and pretending that we were a thousand person company with when we had five people here and we focused on three things, strategy, culture, and people, development, strategy, culture, and people development, cuz at the executive level, those are the three things that you should really be focused on. If you’re hustling, raising capital, doing deals and you’ve got a hundred person team and you are at the top and you’re not focused on strategy, culture, people, development, not just one of them, but all three, you’re definitely not preparing yourself for skilled growth. So, um, we focused very heavily, very early on on what are our values? What do they mean? What’s our mission statement. Let’s pick it apart. What’s our vision statement. What’s our creed, what’s our, our guiding principles for how to operate with good judgment, freedom and responsibility for our team members so that we don’t create a bureaucracy.
Ben Lapidus (23:26):
That’s slow to move. What is our strategy? Let’s look at a three year plan. Let’s go through the military decision making process by going through our environmental skin, identifying courses of action, evaluating those courses of action. Uh, and then ultimately selecting one and building a, a plan around that. What is the infrastructure that we’re creating with annual key initiatives, quarterly rocks, uh, KPIs and, and ongoing tasks, uh, for ourselves and our team members that we can keep ourselves on track. And then finally, how are we, um, identifying recruiting, retaining people and developing them to be leaders inside of our organization so that they can take on the free, the, the decision making processes that we’re pushing down to free ourselves up to move on to the next things that we can adequately scale. Those are the three things that we focused on very early on and continue to do. So as we, as we grow the company,
Reed Goossens (24:09):
People are watching, there’s a book. The background called traction sounds exactly like, uh, all, all those little nuggets that you were saying were coming from that. That’s, it ‘s incredible to see how you guys have grown because I know it was, um, you’re moving across the country. Like, you know, I think Ryan’s in Seattle, you’re in, uh, not DC in Denver. You’re doing flips in DC. It does sound very, you know, disjointed. Then now focus on what you, you know, those three VI vision strategy, culture, people development, I think is really, really important in and around growing something for the future. So what does, how many, how many people you got working now at Spartan? What does it look like? Cause I know you I’ve seen you guys grow quite quickly over the last, uh, handful of years.
Ben Lapidus (24:51):
Yep. I just heard yesterday. We’re at 92 people. We should be at a hundred by, uh, by September that breaks out to about 50, uh, onsite managers in about 40 ish, uh, corporate level staff.
Reed Goossens (25:02):
Got it. And that’s all between Denver in Denver,
Ben Lapidus (25:06):
Uh, about 30 something in Denver and 10 in Seattle.
Reed Goossens (25:09):
Nice. Nice. Who what’s what’s Seattle do out there.
Ben Lapidus (25:12):
Yeah. So Seattle’s our capital team. So, uh, we we’ve got three capital strategies, our, our public debt, our private debt and our equity,
Reed Goossens (25:20):
Our capitalism. Yeah, no I I’ve. I’ve uh, interviewed Ryan Gibson. I think that was at, I, IREC. That’s probably where you saw me speaking about it. Um, so, so with, with all this great growth what’s where is the company going? Where’s it going for you personally as well? Like what’s, is there an end goal in sight right now? Because you know, you talk about vision and, and, and culture, but there has to have a rudder at some point, right. Where, where, where does it make sense to, you know, the target to be is, is it, is it a, is it to sell it at some point? And now I’m talking, you know, 10, 15 years down the
Ben Lapidus (25:51):
Line. Yeah. Yeah. I, I, I, um, it’s, it’s funny. I, I come from like a tech startup world from, from a decade ago before being in the real estate space. And the mantra there was do not keep your eye on the exit, keep your eyes as far away from the exit as possible, keep your options as open as possible, focus on building for success and for growth. And the exit options will present themselves. And that’s, that’s kind of the mindset that I’ve maintained. Um, and, and we’ve introduced as much flexibility and choice into our exit plans for our real estate holdings as possible. We’ve got four or five different strategies for every S that we have, if we’re limited to one, we don’t buy. Um, and it’s the same thing is true for our opco, uh, originally there. So we’re at the end of our three year strategic plan, we had a 22, 2020 to 2022 strategic plan in that plan was written, um, a competency in three asset classes.
Ben Lapidus (26:37):
So right now we focus on self-storage and originally we wanted to be able to diversify outside of self-storage, that if some adverse conditions entered the storage space, we had options for transacting in other assets. It was a more of a anti fragility strategy than anything else, but the opportunity has been so strong in self-storage that we’ve maintained focus. And we’ve said, let’s not get distracted with other asset classes. And I think that’s just as true today, despite the macroeconomic conditions that we’re living in than, than prior. Uh, the, the runway for storage is still very long. The opportunity for growth is still fantastic. The fragmentation in this space still hasn’t been taken fully advantage of. Um, so we’re, we’re still laser focused on self storage. Um, you know, we’re at half a billion today. I don’t see that runway, um, being limited until we’re in the five to 10 billion range.
Ben Lapidus (27:22):
So we we’ve just got so much room for growth. No, is it to be sold? No. Is it to be Blackstone? No, but also yes, to both like, I, I mm-hm , you know, just keep growing, uh, not for the sake of growth, but for the sake of self growth. So I, I’m not really interested in growth for the sake of growth. I’m interested in growth because of my shiny object syndrome because of how obsessed I am with putting myself in positions that I get to learn more about who I am and what I’m capable of. That is like my favorite thing about industry right now, more so than the money is that I get to continuously learn at a higher velocity about who I am, what I’m capable of. I get to battle test myself and what my values are and question them more regularly and become a more poised, rooted person into who I am and what I believe. Uh, so I’m gonna continue to want to do that as long as the opportunities to, to, to, to battle test myself, keep presenting themself in front of me.
Reed Goossens (28:13):
That’s awesome. No, and I think that’s very clear in terms of having cuz when you mentioned tech startup, I was like, oh, exit, exit, exit, exit exit, right? Everyone’s like flip, flip, flip, flip that baby until we can get, you know, get out. Um, but having don’t be obsessed with the exit options I think is very wise, uh, because it is as an entrepreneur, there is the tendency to look at that, right. You know, particularly coming from the tech world, you, you know, it is a, where can we scale it to a point where we can get a big exit? I can go do you know, business number two, three, and, and hearing your story. You’ve already done so much in such a short period of time. So, uh, I’d love to do this interview in 10 years time and see if, uh, see, see if you’re still at spot.
Reed Goossens (28:52):
Not, not in a disrespectful way. Just no, no, no. Yeah. In a curiosity way, because I think there’s so many people in entrepreneur, particularly on this show, just constantly curious, right. You’re constantly gotta be challenged and, and that’s the bus, that’s the beauty of building something from scratch. I think that’s what everyone is, is, is, uh, is drawn to, and if you can get a big exit, fantastic, or you can keep scratching your rich in terms of the growth and then fantastic as well. Um, so with that being said, what are you, what are you focus on personally? I know we mentioned in the green room before we press, uh, record, you’ve got a, you just had a little baby boy and here is, uh, he’s coming along. What, what, what else are you doing outside of the real estate world to keep you, you know, the best ever been
Ben Lapidus (29:33):
The best ever been? Well, I like to pretend that all of my studies are for the purpose of, uh, being, being a better economist and a, and a better predictor patterns and, and a lot of that’s true. Um, but I have, I have found, you know, when, when you’ve got three kids under the age of four and you’ve got, you know, uh, a company of, of 40 people that, that you’re managing and, and, and in a certain way, there’s, there’s some similarities between those two lives. There’s a, there’s a, not a lot of time. Uh, so I, I found audio books have been really stimulating. So I, I’ve made a bit of a study out of anthropology, a bit of a study out of physics. I’ve gotten really into quantum physics. And if you’re gonna ask me my best ever book during the lightning round, I’m sure you are best ever book.
Ben Lapidus (30:11):
Excuse me, you’re gonna ask me about a book in the lightning round. Um, I I’m, I’m just, I’m really into studying other things that expand my understanding of the flow of ideas and the flow of evolution and, and the flow of our universe specifically, yal Harari wrote homo sapiens, homo dais, um, other anthropology books. Like I, I made a study outta this book called work and just having the mindset of a 12,000 year trend to watch like how the, how the homo sapien species has progressed over time, um, is so much more interesting than thinking in terms of the last 90 years, because those are the people that I’ve been exposed to in conversations for the first 30 years of my life, being able to read, uh, books about like the history of economics and seeing how that social science came together, being able to see the history of how quantum physics science sciences came together at the turn of the century, it helps shape an understanding of ideological evolution.
Ben Lapidus (31:09):
And if you can see how ideas throughout our species evolve over time and, uh, accumulate over time, as we become more connected, you can kind of start to predict how different ideas might, uh, shift our approach as a species going forward. What’s our agenda now that we’ve kind of conquered war disease and famine for the most part, which was kind of our agenda for the last 500 years. Um, and, and, and those things can help you become a better investor. You can see the patterns, um, if you understand the movement of things and the movement of ideas over time. So that doesn’t really answer your question, but Hey, that’s keeping me really intellectually stimulated doing a lot of hiking, a lot of skiing, spending time with the kids. Um, and yeah,
Reed Goossens (31:53):
awesome. I think we could have a whole episode on just on what you, what are you scratching outside the real estate world just before we get into the, uh, top five investing tips, what are your sort of thoughts on where we are right now in, in the I’m sort of asking everyone who’s coming on this show, because it’s been we’ve, we’ve, we’ve come together. We’ve grown up together in terms of coming through the 2012 thirteens fourteens and had its successes now into a little bit different times as operators. What are you seeing in the real estate world and, and macroeconomics?
Ben Lapidus (32:22):
I mean, you, you, I think you and I got started pretty much around the same time. So like getting started right after the last recession, we’ve just been waiting for this for, for forever. Right? So I feel like a kid in a candy shop, like I’m in a toy store, just like, is it finally happening? I’ve been waiting for this for 12 years. right. Like you got to see everybody else make a killing on the last up swinging. And, and we’ve just been waiting for our turn. So, and on one hand, it, I, I wanna be as conservative as possible. On the other hand, I wanna be as excited as possible. So, so here, here’s my thoughts. We, we, we’re seeing in the wall street journal, I think was like two days ago, two, two announcements came out one first time. We’ve had negative, uh, transaction growth in commercial real estate sector, uh, may over may of last year to this year, you can see from the last four or five months, just that growth has just like started to dip.
Ben Lapidus (33:07):
And now we’ve dipped into the negative round round. Um, so, you know, we’re hearing in the space that industrial transactions as slows, we’re starting to see price corrections there, hotel office, even multifamily just a little bit. I think the last two holdouts are on the major food groups are retail and self storage, but we are starting to see just a little bit of softening in the self storage space, tiny, tiny, tiny bit. I’m not expecting that much correction anywhere in the single families and self-storage and multifamily. Uh, I know that the, the other article that I mentioned was that Janet yell is suggesting that inflation is, is expected to continue to stay high, despite all the interest rate movements that have happened already. And another point of movement over the next 40 days, she’s still expecting, um, uh, inflation to stay high. So I, I, I, I would underwrite short term interest rates.
Ben Lapidus (33:51):
I would stress test them to be pretty high, like, like a, like a risk free rate of five, six, 7%, which is a solid movement from zero to 1% that we’ve experienced for a long time. But to me, while that looks scary from a short term perspective, it looks like opportunity to me from a mid to long term perspective. Cuz if interest rates go up, which they have already and cap rates haven’t adjusted, which in our space, they haven’t, there’s no spread. If, if you’re underwater on your spreads, if your arbitrage is negative, how do you buy the only people that can buy have cash? Well, the answer is when cap rates do adjust, even if your spreads are a lot thinner, at some point in time, we will over correct whether it takes two years for this Russian war to go away or not, whether it takes however much time to get off of, you know, oil issues, uh, not investing into more oil and our oil prices being so high, however long it takes.
Ben Lapidus (34:46):
At some point it will swing in the other direction and the fed is gonna be freaking out doing the exact same thing that they’re doing in the other direction, deploying just as many tools, uh, to, to move, um, inflation or unemployment or whatever they’re trying to push in the other direction. And cap rates will have been locked in at the prices that we purchased them at when they were elevated in response to the current movements. So if we can lock in higher cap rates today, with the expectation that interest rates are gonna go down tomorrow, then over the long term, our spreads are actually gonna be higher. As long as you can float that spread over time. It’s a little bit of a gamble. It’s a little bit of a gamble that doesn’t last forever and you can lose money when you gamble. So what we’re doing to hedge is we’re making sure that we’re buying highly occupied assets with very below market rents.
Ben Lapidus (35:28):
So even if we’re, we’re buying them at negative spreads, based on today’s performance, if you know, self-storage is a great inflation hedge, because we can move rents within 30 days of, of purchasing it and we can move it again, 30 days after that. And again, 30 days after that, so we can move rent and response from inflation, as far as the, the particular market can push us. So if we can push rents 40% in a six month period that might accommodate for our overpayments on debt service while locking in a higher cap rate, such that long term, we have higher spreads. So that’s kind of the thesis that we’re toying with at the moment,
Reed Goossens (36:00):
Everyone is paying attention. You have to re re re rewind that and make sure Ben gets that again. But what he is actually saying is, yeah, today you’ve gotta be buying stuff with adding value, which is what I’m always hearing is always constantly adding value. So whether it’s in the rents, even if you are negative in cap rates versus interest rates, which, you know, let’s face it, we all, if you’re actively buying the last 12 months, it’s probably what you, you you’ve been doing, but you have to be sure that you’re adding that value and the value creation comes in knowing your market in terms of whether rents are today. And that’s what I do on the multifamily side. That’s what Ben does. And the self story side and backing into, you know, that is your hedge against, you know, quote unquote risk because you’d know where the market is going to. So, um, you, yes, you might be buying it a two and a half cap, but you know, in the stabilization it might be a, a four and a half or a six cap. So Ben I’ve had an absolute pleasure having you on the show, mate. Uh, at the end of every show, we’d like to dive at the top five investing tips, you ready to get into it?
Ben Lapidus (36:53):
Let’s do it,
Reed Goossens (36:54):
Mate. What is the number one daily practice that you keep on, on track towards your goals?
Ben Lapidus (37:01):
I express gratitude, but not in a notebook. I tell my kids and my wife every day, what I’m grateful to them for my business partners. If I can
Reed Goossens (37:08):
if they’re listening, question number two is what’s been th e, who’s been the most influential person in your career today.
Ben Lapidus (37:15):
Yeah, I, I, I would say there’s three, the, the three people that who impacted each of those three circles. Uh, so, so number one, uh, is, is my folks, the people who got me economically minded, who, who kind of set those really high standards for myself and, uh, who, who demanded more of me than what is normal for, for kids? Um, the second is, uh, one of my business partners who, who, uh, I had three in that study abroad company, two were my age and one was twice my age. And that one, he was a little bit out of his mind, but he taught me to chase fun and, and, and to make sure that was included in my life, make sure my life had color and my business dealings had color and, and enjoyment in them. And then, and then number three, um, you know, I’m gonna, I’m gonna point to my two business partners who made sure that we are going to be the best at what we do. It might be very niche. It might be very limited, but we’re gonna be the best inside that circle.
Reed Goossens (38:01):
That’s awesome. That’s awesome. Love it. Uh, question number three is what’s the most influential tool in your business? So when I say tool, it could be a phone, like a physical tool. It could be a book, or it could be a, you know, an actual piece of software, which you use as a tool that you just can’t run your business without. What is it?
Ben Lapidus (38:16):
AirPods, airs, AirPods, AirPods. And you know why, because you, you, you get so few moments, you know, when, when you’re, when you’re operating at this kind of velocity, you get so few moments to do something for yourself. And so the AirPods, I, I, I have to make sure I’m building scaffolding around my a DD to like, stay on track and I don’t trip over myself. Right? So the, the AirPods, they gimme notifications in my ears. They let me know it’s time to be done. So know, like I’m in meetings all the time with an AirPod in, in one ear. And, you know, when I, when I do get five minutes in between things, I like flip that book back on and I get five more minutes of content when I’m riding in the car, I can make sure that I’ve, I, I can, I can do a call or I can do my audio book if I’m on a plane or whatever. So the AirPods, um, I do really well with consuming audio information versus visual information. Um, and so it’s, it’s just, it’s accelerating my understanding of what’s going on around me, by having something speaking in my ear, telling me about it all the time.
Reed Goossens (39:07):
love it. Love it, mate. Uh, question number four in one sentence, what does being the biggest failure in your career to date and what did you learn from that failure?
Ben Lapidus (39:15):
The biggest failure that I’ve had to date was doing a bunch of flips with, with hubris without hubris. I always forget what that word means, um, without humility. So I guess with hubris, um, and thinking that I could just automate this thing, you know, this, this very corner specific asset specific jurisdiction, specific type of business model, I could just run it on an autopilot. I can, I can find other vendors and they’ll do it all for me and have ’em speak to each other, build the systems and processes. Well, turns out I’m terrible at that terrible at building systems and processes. I lost not only all the upside, but also all the principle plus extra cash that I dumped into the business to try and get it back on track. Ultimately failing to get it back on track and having to fire sales, some assets.
Ben Lapidus (39:58):
So the lesson that I, I learned a couple of lessons, what I’m bad at, what I need to compliment, which is my vendor management, my construction management. I just don’t like to stay involved, uh, in the operations. I, I’ve kind of learned to mitigate that a little bit, but I’m still not excellent at it. And I’ll always need people to support me to do that. The second thing I learned is don’t always follow the operating agreement, follow your own internal compass. Uh, when I lost everybody’s money, it was an equity play. I didn’t have to pay them anything because it was an equity play. I was the operator and I lost all the money, but this wasn’t, this was an alpha risk. You know, this, this was operator error. Uh, and I felt like I had lost all the money, not the conditions of the asset, not the conditions of the market. I had made the mistakes. So I had to, I to get the cash together, but I got everybody their cash back plus eight and a half percent annualized. And to me, I think I was 25. At the time I have a 60 year runway of doing business. I’m not gonna launch it by having this be my, my reputation that I lose people’s money. Right? Like I’m going to set my reputation. Right. It felt like the right thing to do. And that’s paid dividends since
Reed Goossens (41:04):
Then. That’s awesome. That’s awesome, dude. No, love it. And I think that’s such a great way to set you up for, for success. Thinking about the 60 year runway, rather than, you know, what’s gonna happen. If you have to come outta pocket a little bit, when you’re 25 years of age, I’m sure you’re still gonna survive. Yep. Mate, last question is where can people reach you to continue your conversation ought, be in your sphere? Where do they go?
Ben Lapidus (41:21):
Yeah. You want to go to the best ever conference, cuz it is the best place to congregate for all commercial real estate investors, passive investors, operators, syndicators, uh, one place every year, salt lake city, Utah, March 8th through 10th.
Reed Goossens (41:33):
besteverConference.com Or if you wanna it me up by emailing you, check me firstname.lastname@example.org. Awesome stuff. My friend. Look, I wanna thank you so much for jumping on the show today to share your incredible knowledge, just to reflect what I took away from today’s show, I think is, you know, I, I love talking about the culture and focusing on the three things that you are, your company needs to be good at and having the ability to look forward to when you may become a thousand people or what it takes to become a thousand people, even though you only have five people right now, I also love watching your journey cause I’ve known you personally for so many years come through, uh, some really awesome times. And now coming out the other side where you’ve got a, a company that Spartan is really the, uh, the pinnacle of in the self-storage space and you’ve, you’ve been there to create it all from scratch.
Reed Goossens (42:13):
So, so well done. Um, and you know, in the last little bit, I think I, I could get you back on the show and talk to you a lot more about the history of economics and, and the way you think, because it sounds like you’re a deep thinker and I’d love to hear some recommendations maybe after the show of some books you’re reading outside of real estate. But, but without that, without being said, did I forget anything in that summary? Ah, no. That’s great. Awesome. Look, thank you so much for jumping on the show. Enjoy the rest of your week and we’ll catch up very, very soon. Thanks for having Reed. Well then you have another cracking episode jam pack with incredible advice from Ben remembered, head over to the besteverconference.com or just, you know, Google best ever conference. It’s coming up here in salt lake city, uh, in March next year.
Reed Goossens (42:51):
Definitely get along. I’ve been speaking at that for many, many years. It’s an incredible cracking event that everyone gets to in the industry. If you’re looking to get started in this industry, go to that event, uh, with that being said, I wanna thank you all for taking some time outta your day to tune in, to continue to grow your financial IQ. Cause that’s what we’re all about here on this show. If you do like the show, give it a five star review on iTunes. All the show notes will be up on my show on my website, I should email@example.com and we’re gonna do it all again. Next week’s remember be bold, be brave and go give life a.