#300 - Chris & Jason Celebrate Episode 300 - Building Our Partnership, Fort Capital, Tech/AI, and the Future

Chris Powers: Jason, welcome. 

Thank you for the hundredth time. Maybe not. Like 10. 

Jason Baxter: Probably. It's been a lot. 

Chris Powers: It has been a lot. You've been a great guest. You've been the guest that started this whole podcast.

Jason Baxter: Really? We did do the first one? Wow. 

Chris Powers: Yeah, the first one. And that was in December 2018. And so, if you're listening to this. It might be fun to listen to that; we were idiots then; maybe we're just less idiots now. 

Jason Baxter: Probably not that fun. 

Chris Powers: But it's been almost five years. We're now on episode 300.

And when they asked me who would I want to do episode 300 with? I was like, Jason, I have to do it with Jason.

Jason Baxter: Well, congratulations on 300. That's impressive.

Chris Powers: Thank you. Yeah, it's been fun. I certainly didn't know it was going to happen with this thing. 

Jason Baxter: Yeah. We discussed it early on, what it could do, how amazing it would be, and all that.

But the challenging part for me is how you stay consistent. How do you continue to find entertaining guests, exciting guests? And so you deserve a ton of credit for Not just keeping it going but also finding amazing people to talk to. 

Chris Powers: You've helped me through my lows because when you do 300 episodes, there are times you're like, man, I don't know if I can do another episode, and you've continued to keep it positive.

And I'm happy to say I love doing it as much today as I did back then. I would love it more. 

Jason Baxter: You've done well at it. 

Chris Powers: I appreciate it. Today we'll talk about partnership stuff. I tweeted to anybody listening to this and got great feedback and questions.

We've discussed some things before, but it's just a refresher. But a lot of this is just new stuff. And so we'll chip off the block and see where it goes; we'll do partnership. We'll talk about some things about Fort. We can discuss our tech and some personal questions at the end.

Question one, where you compliment each other and where you clash deadlock breaking process. And how do you each deal with conflict? What comes to mind? 

Jason Baxter: What comes to mind to you? 

Chris Powers: Part of starting a partnership. So let's start with a partnership. I said this in the tweets.

I hit the partner lottery. I hope you feel the same, but that doesn't mean getting married. Every day is just a hundred. But we've learned to complement and deal with clashes over time. When we partnered at the beginning, it was like, okay, in my eyes, we see the world the same. We were both super ambitious; we liked and trusted each other. And what benefited our partnership was as we had worked together on the other side of the table before. 

Jason Baxter: For at least a period. 

Chris Powers: Yeah. And we office together, it was always in the spirit of partnership, but it was also, we still need to write something on paper.

We just said, let's office together. We'll do deals. There'll be structured like partners. But if in a year or two, we realize this isn't going to work, it's like dating, it'll be a clean breakup. And that was a huge advantage. Some people like, Hey, you want to be my partner? Yeah, I want to be my partner. We got nothing to split up. We'll each take whatever, and we'll get going. And then a year later, they're like, what did I do? 

Jason Baxter: Yeah. And then, when conflict happens, it's more of a decision. Do I want to do this anymore? I've had enough of this, and many partnerships end. And so I don't think like you were touching on this.

It's different from how we deal with conflict. And what was the other part of the question?

Chris Powers: How do we complement each other, and how do we deal with conflict?

Jason Baxter: That's an evolution? So the key is, what was the foundation when it started? When I think of that question, it's not like it started; it's just been magical.

That's not how any partnership relationship, anything ever works. But I think we're fortunate in the sense of how your career started very early entrepreneur, all the things that you had done to build experience and grow work, even though super valuable and way more valuable than some of the things I had ever done, because I hadn't had that opportunity, but different than the way I had done, but we ended, or when we met, I was in a place that said, I want to go back to just being fully entrepreneurial run, take this and, whatever ideas we come up with and run with it, you were already there, but where I had the fortune and sort of the way my life turned out early on was that I went down a more traditional path of learning a lot of things.

So that compliment if I needed to have all the entrepreneurial risk-taking structure built into how I did my day-to-day, but you did. I had all the business operational orientation of what we needed to do to accomplish something in a particular way. And the combination led us to a great start.

Chris Powers: It did, and to be fair. It's I didn't know what I didn't know. You know a lot about how companies look as they get bigger. Hey, we need to do this. And I'd be like, no, you need to do deals. Cultural just happened, teams will build themselves, and people will manage themselves, which was like early. 

Jason Baxter: Can I tell one funny story? So we office in a little office building. It was an excellent office building, but we still needed to be partners, but I just moved in and started the office with Chris and a couple of other people.

And Chris would get there early in the morning, sometimes earlier than me, but we got there early to meet one morning. It was like seven o'clock, which was early for me. And we were talking about hiring and money and making money, and we were working on a deal at the time, and I was explaining to you. It is when we're considering hiring Shana, but we were discussing hiring and the need. I explained the need to bring somebody else on, not just Shana but other people or whoever we talked about at the time.

And you were like, yeah, but how do we pay for them? And not necessarily not understand how, but why would I do that? I make so much money doing this. And I'm like, yeah, but how much money do you pay in taxes? And you were like, but what does that matter?

But it was more; it wasn't that you couldn't figure that out; it was more of just where you were as an entrepreneur looking at it as I'm capable of doing this. I can do all this, and look how much money I make; that's great. It would be best if you were more scalable as an individual. And the way I just looked at that is if you shift that mentality at the time, and that's how I saw if I had to do it on my own.

So I was speaking for myself in terms of if I'm going to do this on my own, I've got to commit to investing money in people to scale myself. And so I use the tax analogy to say, how much will you pay this year? And, as an individual, we're making pretty good money that year.

And it was X, and I said you realize if you paid an employee, that's less taxes you'll pay. So you can either pay the IRS or you can hire people. It will still cost you a little more, but it's less than you think. And that's where many people get caught up as if they're an individual making a lot of money; they can keep doing that.

It's just a choice. But if you want to scale, you must change your mindset. So that was funny because it was shortly after that. Then it was higher. And then, we looked up two years later, and we had 25 people, 

Chris Powers: Okay. So this is where we complement each other. That's a perfect antidote; I can tend to believe in something or see the vision of it, of what it needs. Like I quickly get to the end goal, I can sometimes start acting as if that end goal is in place. It's where we complement each other, and this is another question about how you and I talk about the future.

We love talking about the future. Over time, we've realized what's natural and fun to discuss. But where Jason compliments me, this is one where he's always keeping me grounded in, or you're always, I'm talking to you in the third person.

It keeps me grounded in that it's all great, but we have something we've got to do today and tomorrow and the next day and framing it as we can get to exactly what you just said. A million steps have to happen in between, where I need to be complimented and where I've learned over time, and that's just part of maturing. I would leap out five years and judge everything happening then.

Based on why we're not there, this is what it looked like in five years. So I judged everything against that rather than judging everything as how are we building towards that, right? 

Jason Baxter: And it's just being able to take a long-term mindset like it's a long game, and that's all of life.

Business is the best analogy for getting to do everything necessary if you want to do it. And what everybody wants to do in business is to make money. It's not that money's the by-product. And we talk about this in other aspects of our business, but it's the by-product.

It's just like all the success we have. It's just the by-product, but it's what you do today. And I'm not naturally a person today. One thing that Chris and I also learned throughout the years was to better understand each other, our team, and our people by using tools. And we've discussed things like culture index in the past, but to understand yourself and your strengths and weaknesses.

And I don't look at them as weaknesses. It's the things, who I'm inherent, who I am. And that's okay, but as long as I'm aware of it, I don't care if it's a weakness. I have to be aware that when I'm making that decision, I go, Oh yeah, that's part of why I'm making that decision.

I don't naturally do that, and so instead of trying to get good at focusing on today, what I do is understand that it's natural for me to jump to the future and then go, I want that. And then ask me, okay, what will it take? What's it going to take?

And then if you start backing into it, you realize, okay, if we do this, we're going to do that. We got to do that. And that's where we are slightly different. But that's where the value comes in. Because sometimes I will get caught up in the execution of getting that done, and you're always envisioning what could be next.

And even though I tend to do that, I often fall into that pattern, but we have so much to do, and it's a balance. You got to do both. And so that's where we complement each other. 

Chris Powers: As we said, we're both ambitious. Another complimentary is, and you could describe it from your point of view.

And again, it goes back to the word trust, and even dealing with conflict is if there's just an embedded level of trust, and trust doesn't mean you're going to agree on everything. It means that everybody shows up for the right reasons and makes the best decisions with what they know.

And so it's different from what we agree on; there are things we sometimes have differing views on. But we complement each other with one thing because it's our nature. We're not afraid to tell each other, this is what you did, or I'm thinking.

It is how I'm looking at the situation. Honestly, it's only sometimes the most comfortable, but over time you go through it enough. And for me, it's like, look, Jason doesn't want the worst for me. He's telling me whatever he wants to tell me, but it's not because he doesn't like me, or it's personal or the same, or vice versa. 

So it starts there, but we do have, and as time passes, we have open, candid conversations. Now, also, after however long it's been, how long is it? Eight, we'll call it eight years. 2015 is when we first started working together, but your lanes get more defined.

And, there's just stuff you're doing that maybe I used to think I had an opinion on, or that's my place to say something like over time as the lanes get, you learn it's there are only a few things that are going on that we're often like, okay, here's something that I thought or here's something you thought that we're in conflict on.

I don't know if I'm saying that, but it feels like we've gotten in such lanes over time. 

Jason Baxter: 100%, and that's probably been the biggest or most significant change in the evolution of how we got to where we are today is going from we have to do everything together.

We're working together, and we're tackling things together. We're just like figuring it out. And you sometimes try to make a decision, and I try to say no, I can't entirely agree. That's where you can create conflict instead of saying, " What are your strengths? What do you want to be doing every day? 

Because that's the most important thing, it's not really about how we get where we're going. And I should make these decisions. First, say, what do you want to be doing daily? Because if you say I don't want to be sitting in that meeting.

Then you can't have an opinion in that meeting. And the same for me. So I do this with the team all the time. I can't have an opinion. I can have an opinion, but I can't go into that meeting and inject that opinion if I'm not willing to take ownership of that situation. And so we've gotten good at identifying over the years.

It's not my place. And then we become supportive instead of saying I don't think we should do that. We can ask questions, and you're alluding to the honesty of saying I have a strong feeling or opinion.

And we both feel free to do that all the time. And we have no problem having challenging or, like, what most people would think is confrontational conversations. They probably don't feel like that to you and me because we're used to it. But if somebody was observing it, they were probably like.

They're disagreeing, and I don't feel like it'sWe'reI feel like we're just And, that's super valuable because I don't, a lot of people get into the, especially to men often. And why, if I sum it up, we've gotten good at, for the most part, leaving our egos out of trying to get to what the right thing to do, the best decision, and the impact.

Where we're going, the excitement, the future, all that stuff, and just treating it for what it is and not interjecting like our ego. I'm correctly got to be correct. 

Chris Powers: And a lot of that, like, we have much to steward. Now we have a fantastic team and a huge responsibility. We have lots of assets. We have lots of relationships.

Like this, there's that book, ego is the enemy, but that is the worst possible way to run a business. 

Jason Baxter: Cause everybody has a part of the ego that will drive some decision or feelings, but you just, same thing. You just got to be aware of it. Keep it down.

Chris Powers: And the other, the only other thing that comes to mind is, like, when you first partner with someone, it's like exciting. We're like in this; we're going to meetings together. We're just going to talk all day, every day, about everything. And you and I would stay at the office till eight or nine at night.

Saturdays, Sundays, and people like, what are you all doing? And looking back, a lot of times, it was like everybody was gone. And then you and I would talk for hours about different stuff. And there's so much great that comes out of that. But then, over time, you realize. We were creating more ideas.

It was just like; it became a bad idea.

Jason Baxter: So that's part of the evolution of a business. So that I look at that as part of the building phase. You got to do that work. It's not like we were making mistakes. It's what got us where we are. So I look at everything, and it happened exactly the way it was supposed to, and it evolves.

Chris Powers: It's more just saying like what worked at a five, six, seven people partnership doesn't work at a partnership. Of this, you can't almost get to where we're at. If you continue that forever, right? 100%. What is the most significant upside and downside to having a partnership? We talked a lot about the upside.

I've thought about the downside as much.

Jason Baxter: Honestly, we, you, anybody, could come up with a downside of having a partner. Yeah, if I didn't, if Chris went here, I'd make more money. If Chris went here, I might not make any money, and vice versa. And so there's always, you can take a downside and spend it the other way.

And the downside of having a partner is that if it's not working, you must recognize that and realize that it's holding each other back. Still, if it's a good partnership and things are working well and look at all our success, it's tough to say what's the downside and this is a choice.

It goes into how you view everything you do. It's an attitude. I choose to view our situation, this company, and the decisions we made. None of it would have happened if we wouldn't, if we hadn't made these decisions at any point, we could have said, yeah, I'm going to do my own thing, or you're going to, I'm going to get, that's great.

But what would happen? It wouldn't have been as good as it is now. 

Chris Powers: I agree. 

Jason Baxter: And what we're doing is the best thing we could have done.

Chris Powers: We hold each other accountable. We naturally push each other; it's like osmosis. It's just you're constantly pushing each other.

And I agree on the downside. Like, I've never really thought of it as a downside. The downside is that it needs to be fixed and is hard to untangle at some point. 

Jason Baxter: And that's an important part, to be honest about, which we've done. We haven't had to do it intentionally if you're unhappy, but it's been evident that we would know if it weren't working.

And we would be mutual about what we should do. And I don't know if that's ever been an issue, but if it were, there would be an obvious solution. Whatever that looks like, whether good or bad, doesn't matter. There would be an obvious solution.

Chris Powers: And there's been moments. Again, a healthy partnership is in bringing like Zach into it. As we talk about our partnership annually, sometimes we adjust how it works. Sometimes, who's doing what and how we're incentivized, cause things to change.

And so, it may not answer this question directly, but if you're not looking at your partnership through a fresh lens of where you are in that moment, periodically throughout time. That could lead to downside resentment—things of that nature. 

Jason Baxter: Yeah, I agree with that.

Then the Con and I've always done an excellent job, and I will take some credit for this because it's just who I naturally am. And you're the same way we put much trust in. Yes, we document things. Yes, we have agreements in place, but we don't hang our hat on those in any way where we're like holding them over each other or Forge.

We've never returned to a document and said wait, and I need to find out where they are. So when Con says we talk, when we talk about them, what we do is we use that as an opportunity to make sure we're on the same page. And then, yes, Zach, our attorney, gets paid because he gets to spend six months updating them.

You can't tell that's a dig on Zach, but I'm joking, but we haven't ever thought of having those agreements in place as any negative. It's all positive that we can get aligned and move forward positively. And the only other thing to add to that is my viewpoint.

And I know, even if you don't, and we've talked about this. But even if you don't necessarily look at how you give back to the overall situation the same way I do, I think it's the same thing because I feel it's the same way, which is as long as each partner, no matter what the contract says, no matter what the agreements are, no matter what, if each person is attempting or feels like they're giving 51% back to the partnership, that means you feel like you're doing more for the partnership.

Then you're obligated to do that. If each partner does that, then it's a win-win. But the minute one partner is doing 51% and the other partners like doing 30% right of whatever the obligations are, then that's where resentment starts to build. So that is all about how committed people are and how they feel about their actions.

How much work are you putting in? How much emphasis is the thought of the business? And so if you look around, it's different from that. Chris and I are doing the same thing every day, but there's no doubt about our output. Like the output that you're doing, look around.

We're setting or having the 300 podcast episodes that only happen by doing something. So the output of what we're both doing to make this thing go is full speed. It is more advice I've recognized as partnerships start to break down as one partner starts not necessarily to take advantage but lets off the gas pedal some, and then it turns to those agreements.

Oh, we have a 50-50 partnership, and you're getting, you're only doing 30% of the work, right? That's where it just becomes resentment, right? And that's when you get to that. If you're reviewing your contract annually, it's like, hey, I did way more than you last year. That's a huge problem.

We've never even had to think that way because you're as driven as any human I've ever met. And I try to be, so as long as both people put that effort in, it's hard to mess it up.

Chris Powers: And I can speak for myself like there's yeah, I appreciate it more and more over time.

You're a little older than me, not a ton, but a little bit, but you've experienced things I haven't experienced, both personally and professionally. So there's also, going back to the compliment, I have a partner I get to learn from. And I think that, but I'm sure there are things that you learn from me and, but I think that's a critical part of a partnership that you're interested in learning from each other over some time where it's not some stale yeah, we just, we've been partners forever.

So we're staying partners. I've always felt like I've yet to learn from you. 

Jason Baxter: Yeah, I think that's a good point because you keep learning from me, but if both people are putting that effort in, then there's always going to be something to learn because you look, all the conversations you have, not just on the podcast, but just all the relationships being in YPO, things like that become invaluable because I don't have the time to do that.

And so that's my view into that world. So it's always learning in some way, shape, or form. And it's the same thing on the business side where I'm in the trenches. Sometimes like we were growing, we built a team, and we're making decisions. And then that's an opportunity, like the leadership training we just did, like how much value was that for even for me to have to go back through it and present it with Steve on our team, but that's an opportunity for you to see into that world and go, Oh, man, we're teaching all the leaders in the company this, and I can learn it too.

So anyway, a lot of value.

Chris Powers: Okay. A couple more in partnership. And again, not to keep going back, but it was, I'd want to know how you balance keeping each other informed of the big picture, visioning ideas and thoughts while also not freaking each other out or upsetting the apple cart, AKA balance every day with the long term possibilities.

Jason Baxter: We touched on how we get here, but I'll clarify how we have those conversations. We meet every Monday, and Chris has gotten much, much better at understanding what's already going on in a broad sense to know not how to upset the apple cart, meaning he's you're always coming up with good ideas or thoughts or hey, where are we at with this?

Where are we going with this? Or especially regarding what we're working on, like extensive capital raising. Those are fruitful conversations that were aligned. So there's no upsetting the apple cart in terms of the big picture stuff, even though I don't necessarily do that every Monday when something is coming, like things we're talking about right now, correct, or even leadership training or stuff that I see as big. Not a necessary change, but like the future, this is what will happen with the company from this standpoint. We talk about that in-depth, and I paint the picture the new ask questions, and then a lot of times, I will be like, a man, that's a great idea, right, and then we incorporate, or we think about it.

And a lot of times, it's just seeding the conversation. So it will likely happen over the next year or two years. And that helps us establish this shared vision that we've both had a chance to marinate on throw an idea and come back the following week.

Hey, ask a question. And it's not even that intentional at this point. We're not sitting here thinking this; I'm just reflecting on how it happens. How do we communicate at this point? 

Chris Powers: One of my favorites, you call it business days of the year, was last Friday when we had lunch for four hours.

And what started like a regular lunch, just going through a series of things, became this long discussion, but it goes to what you said they're the Monday morning meetings. They're less formal instruct structured now, but we show up knowing what we're doing.

Trying to do, which is to push things forward. And I appreciate your compliment that I'm no longer upsetting the apple cart. I think years ago that the meeting was like putting the both of us, right?

Jason Baxter: Cause you would have an idea, and I would jump on board and say, Oh yeah, we got to do this.

Chris Powers: But to anybody listening to this, you might go what changed, and the several things changed, maturing, learning all those things, to me, there's 12 that are, I look at, but we have dashboards. I can see the entire company so much for years or a year. I'd ask you a question.

Have you looked at the dashboard now? Have you looked at it? And over time, you just get trained. Like I'm going to go through that whole dashboard, or I'm going to look at different parts of the company that I need to see. And if something that is top of mind comes out of that.

I'll ask you, but it's almost eliminated everything, which goes back to transparency and communication now. 

Jason Baxter: That is, and this all goes to what this question is about, how do you stay aligned on the vision is a lot of the things are in motion and those shouldn't, you should not have to talk about.

Regularly, the things that are already naturally happening and performing well are doing what they're supposed to do because that's not high-value conversation. And when you think about at least the way, I think about myself and having a conversation with you, I don't ever want to feel like we're just wasting our time.

Meaning that we're just sitting there talking about something that isn't going to make a change. Everything's going to stay the same just because we talk about this. And so when I think about things like that, what you're saying and why even my mind would go, have we looked at the dashboard yet? Or let it get in tune with just the facts so that we can have good through and not spend time learning the facts. And so that I'm saying that is in line with this question, which is if you do that, you get to a point where, especially as business partners, you're mainly having high value, high-level conversations that are about the future and where we're going in a way that creates the alignment.

The minute you get in the day-to-day and think that's what Two partners or founders or anything like that, at that level, that should be thinking about the future if they're talking about the day-to-day and like their weekly meeting, there's a problem. 

Chris Powers: The other thing I thought of is when you know the facts when talking about the future from a set of facts. Everything's possible when you don't know the facts and are talking about the future.

Jason Baxter: It's more of a dream than a true vision. It's A delusion, not an illusion. 

Chris Powers: Don't get me wrong. Delusions are fun; they're so fun. They don't make money and build companies. 

Jason Baxter: That's what creates the conflict. And that's how you get to the question that this person's asking how the alignment gets off.

One person knows limited information or some information they've chosen to digest, and then they create a future in their mind. And the other person does the same thing. The key is if you are both working from the same data set, you can, and then one person comes in to talk, you're seeing the same future, and that's the challenge.

And we've been told this. And another value that we have or benefit that we've had is understanding each other's profiles from a proper cultural standpoint, the culture using the culture indexes. We've always known that the fact that we're both forward-thinking future-driven people that there could be divergence at some point in your future versus mine; mentally, you're thinking this, and I'm thinking this, and that's what happens when two people are trying to create a future in their mind and then execute on that, and so I think.

What we're talking about here is that we've tried to work hard at making sure that we don't do that because this thing that we've built and the opportunity in front of us and how we're executing it's pretty clear on how to do it. The only risk is if we mess it up.

So let's not do that. So let's stay aligned on the vision. And you have to be intentional.

Chris Powers: And the business is always an expression of us, but the bit. There's a breaking point where you realize the business is not you; it's the team. It's everything, and It is. Let yourself make it personal and about you, and stay in the weeds.

And that is just the recipe for a complete business.

Jason Baxter: That's when the team is always on edge. They need to know when you will come in and make a change. It's Oh my God, what's he thinking today? And that's why you must stay out of that and let that thing run.

Let the meetings get better. Let the people get better; let them run. And our job is to guide the ship. It's like playing from up here.

Chris Powers: All right. The last one is on partnership. The most pivotal conversation or decision the two of you have ever made from our friend Pump out in Florida. 

Jason Baxter: That's a pretty tough one. I'll let you think about it. There are many conversations, not many, but there's a handful of conversations. I may have to because I didn't think about this question beforehand. Still, there are times throughout our partnership when there have been challenges, whether it be what the right next move is something we're working on at that time and how to look at it or how to handle it or when it comes to people and decisions.

And then we go through things like Covid. There have been things like that where it put us in a position to have discussions that you would consider pivotal. We handled and got through them in a way that would be where we are today anyway. So they were more on the path of where we are, and we handled them the right way.

So I don't necessarily at the time would probably not have thought of them as pivotal, but they were definitely like points in the road in which we dug our heels and said, no, I believe this, and you believe this, or that's we're not doing that. It definitely could have been there could have been breaking points.

And I get it. That may be what Pomp is asking. Were there points where it could have been like going separate ways or a change of course of the business or something like that?

Chris Powers: And reflecting on how we've handled things, which I don't think was, like, What we were thinking about doing.

But every time, looking back, these were pivotal decisions. But if you also look at how we got to them, they were never made in like a gut. 

We seek counsel, or one that comes to mind, which was in the making, was the decision that I probably didn't need to be CEO anymore.

But that didn't start by saying, " Hey, do you think you should be CEO anymore? It started with. Hey, we need to hire a COO; it was an evolution. And that led to you going and doing a lot of research and then being like, and I found the best thing I've ever read on whether we should hire a COO.

We both read it together. Then we called the author, who became our executive coach. Then we spent months and months talking to him. And then the facts started to present themselves. 

Jason Baxter: And we got a clear picture.

Chris Powers: We got a clear picture. 

Jason Baxter: And in somebody, that is one of the most pivotal ones, not because of our decision, but how we got there and that we made the right decision regardless of who and why.

We made the right decision because what we were and what we did at that time was learn a lot about our business. We learned a lot about the people. We learned a lot about ourselves, and we learned a lot about how to think about the scaling of a business in general. Then we could use that to look at our company differently.

And in that process, it was apparent where our overlap was and where we were potentially going to create conflict in the future or have that divergence of futures, right? That was very easy. Once we got that feedback and went into it, I did not think; I didn't go into it thinking, this is what I want out.

I didn't know what the outcome would be. And so we knew we needed to be set up for success. At the time, we were both committed to bringing on some version of a CEO. We'd already started to meet with people and all that.

And it's not to say that you can't do that in a company or you can do that and come to me and be wrong. You might be right. That's up to somebody to discover. But what we learned is that. What we said we wanted to build, what we were building, and how we did it would not have aligned with that. We would have just been doing that as a band-aid and creating major conflict in the company, and it would have been more stress on me and more work. You would have gotten less of what you're trying to get from just an understanding or like an alignment or freedom or all those, and so what I think from a pivotal standpoint it was.

That probably was the biggest one, not because we decided for you to do something and me to be CEO, but because of how we got to look at the company and change the company's future based on the structure. We reorganized every single team in the company based on those discussions.

Chris Powers: Then we organized the whole company, but it started with, should we hire a COO or not? Exactly, another pivotal decision. I think again, and these are in hindsight. We didn't know this was our moment, but we did a great job. And we're going to talk about it a little bit going here are things we want to do, but we have to get to scale first, and scale to us means no property management.

Like we're going to keep buying deals. Look at the company's core, and once that company is large enough to where other parts of the business can come on profitably with great teams and great incentives, we'll start getting into those things in hindsight. And you talk to many folks like we had been in property management.

We got out of it because it was a drag, and we needed the scale to hire the folks and do it the way we wanted. And so again, a pivotal decision that we made along the way that other companies don't make that don't scale as quickly as they start taking on too much. Early on, because again, they look at other companies and go, they do that, but what they miss is, they do that because they're at scale.

And that's always something; we're having conversations about new tangential parts of our business that now make sense. It didn't make sense three years ago. 

Jason Baxter: Yeah, and they're just going to keep coming, but that goes back to how we got there. That was a pivotal moment in thinking about the structure, and it was all happening around the same time.

So we've talked about that. We have flywheels and things like we have a flywheel and how we use it. We've yet to talk about how we got to that moment where we also did that, especially in this context. And it was actually at the same time that we were going through the discussions with Lex, but it was just before that I had been challenging myself through that CEO sort of thought process and thinking about the team and the structure instead of trying to figure it out.

What I did at that moment was to go backward and think about all the things that I'd already learned because sometimes you forget maybe you already know the answer right, or maybe you already know where the information is to learn the answer right and so what I did first was go back to all the leadership and management training and all the stuff that I had learned and the first thing I did was go back to my notes and ever note from 2011, 2012 

I had notes on important things  I was learning as I was going through leadership training at a previous life and in management training, and one of the first things I wrote at the top of that page was good to excellent, and the flywheel by Jim Collins. I broke those down at the top as if being like super impactful for me then, and at the time, I didn't think Oh my God, this is the answer.

I was just like, and I need to review that. And so I reread that book, or I listened to the entire book that weekend. I went and walked on trail hours and listened to the book at 1.5 speed. Cause I'd already listened to it. But I returned and said, Hey, we got to read this. You got to read this book.

And at the time, we weren't even talking about the fly watch. So we got to read good to great. And I made a whole picture for the office because it had all the concepts of good to excellent on there, like all the companies and what I remembered as soon as I started reading. I was like, and this must have been meant to be because I was trying to figure out how to build this great company.

I had the instinct that we got to do things to build a great company because I had this sort of previous knowledge that I just needed to go back and read. But as I listened to it, it started to come to me that what was separating the people who built great companies versus good, right?

That's the whole concept of the book. And as soon as I got that clear in my mind that there were things we could do, I realized that I've got to start researching the company's structure, not necessarily we need a COO. It was more about what structure you want to have and who's making the decisions, and how you align the team.

It became clearer about where to focus my attention or our attention. And that's where I said, you know what? Before starting that, let's determine what's important to us as a company. And we had mission statements. We have a purpose. We know what we're doing, but we must always identify clearly.

Like, how does our business make money? How does it propel? We knew how it made money, but we should have put it into the context that this would get better if we did. It will get better, and then this will get better. And if we do all that, we'll do more of this, right? That's the flywheel.

And once we put that in place and said, we need to figure out what this is for you, we immediately scheduled a retreat and offsite. I'm sure you remember we just took four people. We hand-selected people that, at least, I thought would help us come to that conclusion. It was different from the company's traditional group of managers and leaders.

I picked four people that would be insightful enough to help determine what this looked like. And we went, and we spent. Hours were spent designing a flywheel, thinking through it, scrapping it, starting over, and thinking about its impact. And that's how we landed on what it was.

And that evolution sets us up for all those other things. That was that pivotal moment of saying we know what our business is. And then you combine that with the structure of working with somebody like Lex and saying, oh, now we have a framework of how to structure the company, and we've got our flywheel those two things combined is what is now looking back that those two things were together super pivotal.

Chris Powers: And it's easy to say now because we did it for a while, but most companies don't know they're like, they haven't a loosely held idea of how their company runs and what makes it better, but they have no idea what their flywheel is. And many people, I tweet about it now all the time. I know it's like religion at Fort, but I still get the sense and laugh when they laugh.

They say this fun wheel thing that you all have. 

Jason Baxter: Many people throw it on the wall or something like a purpose or mission statement. But if you identify the buckets and say, if I'm not working on one of these to improve them, I'm wasting my time.

And if I'm working on one of them instead of the other, it will start to show up in those numbers, the facts, right? If one of mine says, I'm going to attract top-tier talent, which one of them does. And we have a hiring need, and we need help getting them. We need help. It becomes so evident in your company where you should focus your attention. So then you start talking about setting goals and things, and it becomes easy because you know what to do next.

And if you go back and read things like good to excellent, you realize that's what companies have been doing for a hundred years they fit. It is a concept that has been introduced previously. The key is people can now get better at it quicker because of where we are in the world with technology.

Chris Powers: All right. We'll talk about Fort for a little bit.

This one's easy. I'll answer the question, but it said the ownership structure is your management company, its own LLC. And how does that all break out? Is the GP all one company, or is there a GP LLC set up for each different asset? Fill in the gaps. Fort Capital is a limited partnership. Fort Capital employs people and owns furniture, computers, servers, and things of that nature.

Jason Baxter: And as the asset manager, it manages the capital. 

Chris Powers: Their job is to manage capital and assets and everything we do, but they need to own the real estate for the high level. 

Jason Baxter: It manages the investment. So it is an investment manager that is responsible for bringing in the capital.

That goes into standalone individual deals and manages that process in the capital.

Chris Powers: And then manages the properties through a separate LLC, Our limited partner.

Jason Baxter: So our company is based on our flywheel, right? So when you talk about the different areas of our business that we can now expand on when we build those businesses, we build them as standalone businesses under our umbrella company.

To say they're technically housed in their entity. Still, we do that so that the business can know that we can run it as a profitable business on its own, so every business is a standalone business, much like we operate a real estate so fort capital is a parent company, and then it has the sort of satellite companies that help operate all the aspects of the real estate.

Chris Powers: Regarding individual deals, they sit in their own LLC and then each.

LLC has a GP, LLC attached to it? Correct. And we're the GP, but if we buy 1, 2, 3 A, B, C, street, LLC, there will be a GP called 123 ABC, GP, LLC. And then within that GP is an entity that you and I have. That is fixed, and it is our entity. And then, The rest of the partners in that are critical team members from Fort Capita0l might be our DAC or somebody that brought us a deal.

Jason Baxter: So those are people on our side of the deal. 

Chris Powers: But the constant for you and I is we have an entity that is the same every time that is a limited partner of the general partner of that deal. I know that's a lot, but that is how it works. That's how the question was asked. 

Jason Baxter: Thank the attorneys for those.

All it's meant to do, though. It's not meant to be complicated. What it's meant to do is say there's a capital company that goes out and identifies and finds opportunities. When those opportunities are found, there's a need to raise capital and buy and own that real estate. That all happens.

In a separate entity, which is what you're talking about, we still need to be inside that entity as the person that goes and finds it the sponsor. We do that by using what you just mentioned as an entity so that we become a partner in that new entity, and we repeat that process every time.

So it is simple. It's a repeatable process that we have a structure, an org chart that every deal we go into, there's these three components, and it's pretty straightforward. And it's typical. It's not that uncommon. The further you get up the food chain, though, as we've learned regarding the size of deals, the more the capital becomes.

And what we've learned over time is there's a high value in what we're doing and how we do it. 

Chris Powers: Were there points in your growth where you just needed to figure out if you were right? And if so, how did you handle them? 

Jason Baxter: Points In our career?

Chris Powers: Points in our company's growth? 

Jason Baxter: Oh, there's for sure. I know a couple.

Chris Powers: There's a ton; the first one that comes to mind is the pivot to industrial. Should we keep developing the pathway forward? Or are we going to build a more sustainable company? And again, in hindsight, we were just brilliant and picked the right thing. 

And I didn't pick up on it. As you did, you kept coming in and going, Hey, these developments will run out. Like we got to put more developments on the board. I was looking at cash flow. You were looking at cash flow, and I was not, but you said these developments run out at this date, so we need more developments or something else.

And that was when we were like, what company do we want to buy? 

Jason Baxter: You were already, But you were already looking at industrial with this. You'd already brought the idea. 

Chris Powers: But not in the sense of at the time. It wasn't to replace but to add to the other thing.

We were in the add-on business. Just keep adding on ideas. But then you and I went on a retreat. It's right. My memory is a bit foggy, but we left there, and we're like, we decided from this day forward; no new deal that walks in here is it can only be industrial.

And I don't care if the most excellent multifamily deal on the planet walks in tomorrow. We're not pursuing that anymore. And so you could look back and go, I wonder if we needed clarification. We're always. Our default is confidence. So that's good. But it was definitely like, and the funny thing is, what we picked to go forward with was something we had never done before.

Jason Baxter: Yeah. It can look like luck, but there were some indicators at the time.

Chris Powers: And we've discussed on podcasts why we chose industrial, what it all meant. 

Jason Baxter: The returns at the time were outstanding. And then it was that convergence of Chris had seen an idea and opportunity.

I saw a risk in the business from a cash flow standpoint, and then I married those two. And that happened organically, even that part wasn't like, Oh, this is the solution. But what it was is like, look how many of these are, this is a great investment idea. And now, look at the cash flow.

And then, I could scale that into how we grow a company on this. Cause developers are lumpy.

Chris Powers: There's, it's just a lumpy revenue stream. And then we knew that in a down market, development sometimes shrinks for one, two, three years. And so you see these development companies get bloated, and then they let everybody go and hire everybody back.

And we were like, no, we want consistent cash flow, a consistent business that we can scale easier. We thought buying something was more accessible than developing something. And then, obviously, the thesis, which we've talked about a ton, is something we believed in. 

Jason Baxter: Yeah. And was the question of what, something that we made a wrong decision.

Chris Powers: Were there points in your growth where you needed clarification on whether you were right?

And if so, how'd you handle them? And so I brought that up: we thought we'd be correct, but that was a big decision. It was rolling the dice. 

Jason Baxter: I thought I was thinking of another one at the proper time. The one that you mentioned does fit that question. The one I was thinking about was more of a people discovery thing, where we often thought we needed something.

So it's like when we needed the CEO. But before that, there were many times when we thought the, and I was as convinced as you were that we needed a CFO or a specific position. And it's not to say that wouldn't have helped us, but our company was not in a position to need this thing.

We needed to be more competent to know what they would do and how they would impact everything. And so we were probably thinking that what you were talking about earlier is thinking five years out and thinking we were already there and trying to fit that into our box.

We needed to build the company and the organizational structure and get it to a place where. The needs started to become evident. We were trying to force people into a business because you're like, we want to be significant. We want to be a real estate company. So if you're going to do that, then you need one of these, and you need one of these, and you need one of these.

And that's just not true. If, unless you're an owner, operator, or entrepreneur that doesn't have the skill or the ability or the people around you that are going to help you grow the business and you have no other options, you're going to bring somebody in. That's what you and I are. We're already those things.

So to think that we needed something else to come in and do this was, we needed to make that decision earlier. 

Chris Powers: I would finish that sentence. And you've taught me this, and it's just taken lots of reps to realize it. It's what you said. We were already doing those things. And what we kept doing was thinking someone like I remember even talking about capital raising.

Sometimes it's. We can outsource all that. But then you're already doing it all the time. That's why you think you can outsource so much that you forget you're already doing many things and are the person. It makes sense at some point, but you can delegate it all when you're getting into a delegation role.

And that's where I'm going, like realizing what's good to delegate today and what you maintain control of forever. 

Jason Baxter: Or at least until it is evident that it's time to do that because it's holding you back.

Chris Powers: For sure. And then the idea that I indeed fell into this way more than you did that all problems can be solved by hiring that next person.

That you need to know what your problem is. So you think the problem is you don't have that person.

Jason Baxter: And sometimes it is the answer, but most of the time it's you're trying to, or anybody is trying to solve the problem like the most straightforward way they can think there's a magical person that's going to come in and know it all like the Elon Musk of the world is going to step in and solve the world's problems, and the truth is if you have a company, and it's already doing something, and you know where you're trying to fill a gap, you first have to have that identified and understand before you even think about bringing somebody in because 90% of the time you bring that person in.

It upsets the Apple cart because they don't know what's happening in your business. They got to get up to speed. They may be going to blend with the culture. It doesn't matter how much work you do ahead of time. There still needs to be a gap between them getting up to speed.

And so if you're trying to bring on something like a CFO, you're doing it because we need it today. You're already making the wrong decision because that's different from how you bring on a CFO. And that's what I'm saying: sometimes we need this.

Or we thought we did, and you realize they need to come in to solve something. And then the example of that is, there were times, and this is, these were great companies, but we have brought on fractional CFOs, which were great people. They had tons of skills, but what we realized was what we wanted in value.

They were never going to be able to give us. So our expectations needed to be corrected. And they, even though as talented and intelligent as they were never going to be able to give us what we were trying to, especially what you were trying to get at that moment. And so we were just, it was obvious looking back, but we were trying to make that decision too quickly.

Chris Powers: And so the lesson learned there is if you have to make quick decisions on big things, there's probably something else at play. 

Jason Baxter: Never make a quick decision on a person. There's nothing worse than having to start over, let them go, let them leave, and have to do it again. 

Chris Powers: Yep. We've touched on this and answered it in pieces, but what did you have to unlearn to scale where you all are? 

Jason Baxter: We touched on most of that but had to unlearn how to stop running full speed. And that goes through that whole Lex conversation, our consultant, and just going through that discovery.

We had to learn to stop being these wild Entrepreneurs just running full speed, buying the following deals, and doing the following. Man, we need two of these. Let's hire two more asset managers. And just what you start to do is repeat what you know in the world, the industry, how other people have done it.

You're just like, we have this many assets, and it's getting stressful, and we have too many of this. So it's what I just said about hiring quick people. You start hiring, and people think scaling a business is just doing more and hiring more people, and it'll get bigger. And What we had to learn to scale was, say, you have to build a company to scale.

And that's what we learned from Lex:

Slow down.

Get your organization and structure.

Get all the entropy out of it.

Get it set up correctly.

And then all that other growth will happen because you're already the entrepreneur.

You'll already go out and hustle; do this first step. And that required us to slow down a bit. And then we, it didn't take us that long, but we, in my mind, looking back, we probably slowed down for 10, 12 months where in my mind, it felt like we were working on a lot of days today people, training structure, our setting, all that stuff, but looking back, it was priceless wouldn't change it.

Chris Powers: This is, and we've talked about this a lot, and there's an episode Johnny will plug that we talk about how to build a world-class operating company and GP fees. It's episode 181, but Johnny will plug it.

What do you think about fees in the operating company? And I got a real say, and you already touched on it. I give Jason immense credit for this because the standard in the industry is to treat your operating company like this loosely fledgling thing that makes enough money to cover overhead, and everything else is at the deal.

And all the upside happens in the deal. Now, the funny part is. If you look at the best companies in our industry, only some are doing that, but as if you're a smaller business, it's how most people think. And guess what? I thought that way, too. That was just how I was raised in the industry.

Jason Baxter: You think about the biggest real estate companies. Asset managers, why would they want all this, or why would the small groups even think like them? They're the real people. They're technical; they start as the deal people, just like their deal shops. And so the more prominent companies are successful because they need people like that who want to get the deals done.

Put them together, even own them for a while and ship them upstream or package them or however, they do it. But that's part of; it's just part of the cycle of real estate. You start down here, and if you ever want to get to that more prominent organization, that's good to great. Many people say, no, we want to do deals.

The people say, but if I'm going to build an organization, I have to think about it as a company. And how are we going to make money? And if I'm going to do that, then who's going to pay me? Why should we make money? So you got to build a great organization that provides value and makes a difference as opposed to, I go out and find deals.

And this is the IRR we can make on this deal. It's this different mindset. And so you got to, to get it to that point, you got to do the hard work, which is you got to build something that is giving the value that you can't just be down. Here's a deal, guy, and go; we will start charging fees for what?

So sometimes, when people think about fees, from an investment side, you think about him from the standpoint of just cost, as opposed to what I am getting for the cost, right? It's not a cost. You're getting a value. Do you know the value? And that's how I think about it because I'm not charged.

I would never charge anything to any real estate deal that I didn't think was providing more value than it cost. It's not fair because I'm an investor in the deal. 

Chris Powers: And so are you, and our industry does the absolute worst one. The word fee is just like a stigmatized word. You call it an allocation, but people gloss over it. You call it a fee, whatever; the word fee has a negative connotation, but it's what you just said. 

Jason Baxter: It's what services are you paying for? 

Chris Powers: The industry does a terrible job of, or the companies do a terrible job of saying this is what's behind the fee. So you hear Oh, this company charges a 2% asset management fee.

This company charges 2%. So you assume all things are equal. One company has a team of 20 proprietary software. Just go down the list, and the other team is three or four people outsourcing. 

Jason Baxter: Outsourcing, everything having calls every week and hoping everything works out.

Chris Powers: And so I won't go through the whole thing, but if you're an LP is like, I would start challenging more your GPs and say, what's behind the fee because it, once we explain all these things to people, it's hard to not agree with it. Now you might still say, I agree with all that. I still don't want to do that. 

Jason Baxter: And great. You're not for us, so going back to the original, my thought process on those more prominent companies. So how did they exist? How does BlackRock exist? How does Goldman Sachs exist?

How does JLL exist? They charge lots of fees, and people are happy to pay it. Why? Because over time, they have a proven track record and performance and value that they've created, which is what we're doing. Some people will invest in BlackRock, Blackstone, and JLL; some people aren't, and that's fine.

What we're angling for is the people that want the value. 

Chris Powers: Somebody said it on a podcast the other day. It was on invest like the best; it was said well. And it was by; it was a great episode. I'm pulling it up; It was by Jeremy Giffen. And he just said something to the degree of why you pay fees and why you pay promotions to people.

If you felt better at it, you could do it alone.

Jason Baxter: It's a free market. 

Chris Powers: Yeah. Two, sometimes they'd say Oh, we'll buy a REIT. What a lot of people are doing is outsourcing confidence to someone else to make a decision that they couldn't make.

And so they're willing to pay somebody else a promotion. And I only want to get into paying them fees because the fees are paying for people. It's the cost to do it. It's not just like free money out of thin air. But you're outsourcing confidence to somebody else to make the decision.

It was a well-elegant way of putting it. 

Jason Baxter: It is a great way to put it. And you're just deciding your risk profile and where you're willing to place your bet. You can; anybody who wants to invest in a REIT can that appears to be lower risk, but look at the blended average of REITs.

Some perform, some don't. Who's managing? And what are the fees that are being charged? You can dig into all these things. It's people that want to do it without thinking about it. And people that want to do it. We're thinking about it. And then there are people in that world that are intelligent, sophisticated investors that understand what they want to invest in.

They understand exactly what fees they want to pay. They understand precisely the return they're looking for and try to match that up with what sponsors are in the market. And sometimes, that is the guys or girls or people that Charge the lowest fees; that's just not going to be us because we're providing something else.

The same type of people are willing to invest in sophisticated, confident, or confident people with track records. That's the investor and what I'm betting on, and the world would show that, which is why there are so many massive companies. And especially when it comes to real estate.

It's because more investors want that than the risk of the small deal shop that wants to turn and burn and make a quick pop when the market's good. Everybody loves them; we've been in that position; people want to invest when there are hot deals. We want to find those deals. But we think about the operations because we want to do it better than anybody.

And that costs money. And that's how we create value. And that's how we protect the asset.

Chris Powers: That's a great segue into why we often think of ourselves as operators or many people in this industry think of themselves as deal-doers. We have built a company around operations, which. By the way, if you do them well, it leads to doing a lot of great deals, managing them well, and generating returns, and I go back to the flywheel.

Jason Baxter: Yeah. We've talked a ton about this. How do we present our company? What are we? What do we say we are? And we're an investment firm. We're an asset manager. 

Chris Powers: We're a real estate, private equity. 

Jason Baxter: We are all those, but at the end of the day, we are going and finding intelligent real estate investments.

We are raising capital for that and trying to execute a plan if you boil it down. So how are you going to do that? What is an investment? Investment is someone other than handing you dollars and magically getting money. Something must happen between handing in those dollars and getting the money back.

What is that? It's. However, you operate the asset. It's the leasing. It's property management. It's the construction. It's the management. It's all those things. You only get that return back by the quality and the capability of the people in the middle. That's what we realize. We're going to say we're an investment.

People were investment managers. Who will they pay somebody else to do that, or we'll get so good at it that nobody can beat us? That's what we're doing. So when we say we're the operator, we're the people that ensure it. We are in control of ensuring that if we are going out and making an investment and raising capital and saying this is what we project returns to be. We'll de-risk ourselves as much as possible by ensuring we're in control and doing it better than anybody else.

And so if you look at your company through that lens, you're like, yeah, We can call ourselves whatever, but at the end of the day, the way that we get the money back and we build a strong track record is being the best operator. And that always turns into more. 

Chris Powers: Okay. It's coming up a lot. When will you get into additional property types, or will you?

Jason Baxter: It's like the decision to get into property management. It could be a more precise cut, but the market dictates the same way when we see the opportunity to enter the industry. For Fort Capital, the way our structure is, our operating system, and our company is built to be able to handle anything.

That's not necessarily the intention to buy anything. Still, if the market shifts and we see an opportunity, it will most likely be directly connected to industrial by being a newer vintage, a more significant type, and different locations. Still, it will be an offset of that first before it's ever.

We're going into hotels. We don't plan for that in the future at this moment. If the company evolves and we continue to get to a place, and then those opportunities present themselves, we will be ready. That is not a focus of how we think about the next few years. It doesn't mean we're unaware of it, and we don't track everything because we do.

We're tracking many opportunities that might be interesting to learn. And we're always doing that. So, we'll wait to project out ten years and say, yes, in 10 years, we'll buy hotels or something. I am still determining what will be technical because I am still determining what the real estate market will do.

What would they have told you if you asked somebody five years ago to start a real estate firm that was going into office? I'm going to own 50 million square feet of office by 2024. What would they tell you today? 

Chris Powers: I'm selling 50 million square feet of office. 

Jason Baxter: So the point is the market dictates that we will make sound investment decisions that return to being the best operator.

Chris Powers: What I would add, and you touched on it, is.

You said we're building a company that can do anything it does, I don't think you and I woke up one as kids going, we're going to buy class. That's the dream. They're so beautiful. They make my soul tickle. But that's what we're doing now. We're building a company that we will know when it's time.

To go, we could get into hotels and start adding self-storage, but it won't be taking team members from the industrial team. And hey, now you're it will be at a scale where we have the platform and the backbone of the company. So solid that you could build teams around certain theses that don't.

That one may share information in a good way. Still, they don't take resources from each other where there's entropy, or somebody shows up to the office that day; I wonder if Jason will have me working on industrial, self-storage, or retail. 

Jason Baxter: And that goes back to the operating platform, the system in the center of our flywheel being the best real estate operator.

It doesn't say we'll be the best industrial operator. Operator means. Do you have the systems? Do you have the processes? Do you have the technology? Do you have team structures that could scale no matter what real estate you're operating? Can you be the best at it? That infrastructure is what we're talking about.

We're talking about the infrastructure of a company in place, which will allow us to do whatever we want. 

Chris Powers: Yeah, it's one of the most exciting times to be at Fort. It's a year where only a few deals are getting done. The market's slow, but what we're working on.

And where the company is, and where we're headed, the type of capital we're starting to talk to, you can sense that the launching pad for the next ten years was a question of where will you be in 10 years? Things are getting to where I believe it will be, one of the country's most meaningful real estate companies.

And we're well on our way to being there. 

Jason Baxter: Yeah, that's possible. I don't think nothing is ever given, but if I had to bet on how, what are the odds that we have become a fantastic company? That's more national. It's for sure going to happen. I would bet on that all day what that looks like.

I plan out ten years if the real estate market changes. But the company will continue to get better and will continue to become world-class. And then, and the reason I know that is because going back four years ago, this was a year after I went to singularity, you had gone the year before, and for those who don't know, that's a future sort of technology-driven thing out in silicon valley where you learn about the future it set us down this path of really committing to building technology into the company that was going to set us up to be able to scale. And evolve and not lock us in or be accountable for how things work in the future. And that infrastructure that we put in place is just now. It's been working for many years, but now when you see things like AI that are starting to gain traction and how much that's changed even in the last six months.

The things we put in place four years ago are set up to take advantage of this moment in time that many companies will not be able to take advantage of, not at the speed we're taking it. They will. All companies will take advantage of things like AI at some point, but it will take time.

And that will be our advantage in front of many things. So we're doing things today that we probably thought wouldn't happen for the next couple of years, but because of the rapid development in AI that's happened, over the last six months is allowing us to take advantage of some of these things that are going to set us apart.

Chris Powers: We don't have to go into the definitive ways we're starting to incorporate AI daily, but you could spend a little time. What do you think about it? It goes back to the beginning of the partnership and how we talk and seed conversations. Yeah, we went to Singularity University in 2018.

They told us all this stuff was coming. It was hard to imagine. And now it's by the day, and it's yep. What exactly happened the way it should? From my perspective, looking at you, it's top of mind. It's captivating. There's so much you have to figure out where you'll spend your time on it.

But you don't have to relate it to specific things, for where's your head? 

Jason Baxter: It's a bit of a race. And in the grand sense, because there are companies that, like I mentioned, we have a head start. Still, some companies have a head start because they've been planning for this. They're because it is so confusing how many things are coming out, how many things change that those companies that can take advantage of it will be able to separate from the general population of companies and people that cannot get up to speed. There will be a definite gap that is formed. And my goal is to make sure that Fort Capitals are on the other side of that gap and not just on the other side of it but leading it. In terms of what we're doing, that's where I think we're a little bit have a unique take on it because there are probably not a lot of class B industrial real estate operators to be the best real estate operator in the world, and have technology built that is set up to take advantage of AI the way that ours is.

And if you combine all those things, even if there's the Dozens of them. That's a few when you look at the size of the world or even the United States. And so I see it as an opportunity to take advantage of what's happening today and build on it. But regarding its technical aspect, I see the real advantage, and this would be more of my take.

People can do research. I won't get into the details of how we will use it precisely because what we will do with it is unique and very proprietary. And there's going to be a ton of value there. But what I would say is. There's a lot of hype around things like chat GPT and all the plugins and things you can use.

It's great, but our vision is to have our own. And that's what most companies will have. And so our vision is to have our own. I wouldn't say I like to use the term chat GPT. Still, a large language model, because it is different than that, that we are hyper-tuned, That our business can communicate with it, knows explicitly everything about our business and industry.

And what we do that hyper tuning and fine and a hyper-focus and what you're doing gives you an advantage as opposed to people that will use the general language models, which is open AI. They're going to continue to get smarter. They're going to provide a ton of value. There will be lots of cool things you can do with it.

And it's going to automate tons of stuff that won't be as powerful as bright as we get and how fast we can move, making better decisions, even if it's just at a team level, right? The process level won't be as impactful as what we can do internally with ours. And so that's where I see it going over six months.

It is happening so fast; it's a game-changer. For not just what we're doing but for society, the people that take advantage of it, I'm super grateful that we've leaped to spend money on things that we started doing years ago because you can miss this moment if you're not careful, right?

And I don't mean everybody will have to get up to speed with AI, but many people will miss the moment of adopting it and taking advantage of it. No matter what happens, they'll always be propelled ahead of everybody else because they just got a head start.

And if you think about AI and how it works, what happens when AI gets smarter? Every time somebody asks a question, every time its intelligence gets, it continues to grow. If you're on the front edge of that, and your information is at the front edge of that, and your decision-making is at the front edge of that, if you're coming in at any point down here and it's new to you, you have to play catch up.

Or if you have to train your data or model, all that stuff is a gap that will be impossible to catch up. Because by the time you get your information into a system and you're asking good questions, the person that did it a year ago their AI is already a thousand times smarter than yours.

And that's a dumbed-down version of what it is. Still, we are attempting to make sure that our version of what we're doing in our company, being the best real estate operator in the world, builds into our operating system and AI that allows our system to be more intelligent than anyone else's and hopefully stay at the front edge of that. 

Chris Powers: if you had to give one example, we're a real estate company. Everybody's probably thinking Oh, you're going to use it to underwrite deals. Or you will use it to search Google Earth to find properties faster. But every time I talk to you, you're like, that's an elementary school, like not even close. If you had to give one thought as to how we might use it, that's interesting.

Jason Baxter: Yeah. There are so many; this is the thing. 

Chris Powers: I want one. 

Jason Baxter: I know, but here's the thing. On the operating side, you must have a business you understand and envision how it would affect your operation. So the way we're going to use it is unique.

But if you take some concepts of one aspect of Fort Capitol, right? That is what We've always focused on from the beginning, right? What's something we focused on from the very beginning that you've always been passionate about? It's marketing. Look what we're doing right now, right?

Marketing, especially in a company like Fort Capitol, has forever changed. It has forever changed, even though it will take time to implement some of these things. There needs to be a return to how it used to be done. And over the next year, it will continue to involve where you won't even recognize the past of how you market.

And so, if we take things like LinkedIn posts, think about most small real estate companies. They probably have a marketing person, which we do; you'll still have that. You won't have to have someone trying to create and come up with content. So If you in the past needed somebody that understood everything that was going on in the business and knew how to think about the business, then you are responsible for coming up with good, clever content. Then they have to package it together, and then they post it.

You'll be able to do that. You can do it right now and create hundreds of those posts. And minutes and you go, where's the content come from? The content is already there. We're talking right now. It's all content. All the stuff we publish and all the OMS rewrites all the stuff. We already document.

We are already on Slack team anniversaries or people anniversaries, and promotions. All that stuff is already tracked. So when you connect with an AI, it's gathering that data for you. You say, what are? Give me ten great things. Or, every time there's an anniversary, create a LinkedIn post. Here's a template.

Oh, don't even come up with a template. It'll come up with a template. So things like that will become so automated that the marketing piece of it, the outreach piece of it, will just be given, and people get so good at it that it will become the norm. But if you think about the efficiency that creates, how much time are we spending on, oh, man, we need to build our brand or do that.

That will start to be built into how the business runs, not somebody having to think about it, right? That doesn't mean there's not somebody there overseeing and watching it. And this is a crucial point. It is more advice to myself. Also, as a reminder, anybody who hasn't thought about it this way.

AI one, I recommend getting on board quickly if needed. If there are people, even if you're a manager or responsible for people and you're worried that well, but I don't want to, I'm not using AI to replace people. You're right. It would help if you didn't think about AI replacing anyone.

That is not the goal. If it ever gets to that point in the future, you should be happy because everybody has to relax. If, in the meantime, and for the next decade, the way that we should look at AI is it's not replacing people. But the people that learn to use AI will replace people that don't, and so that's why my advice is if you're not on board, I will get on board because if you're a person, a manager, an owner, an operator, a CEO, and I don't care what position you're in if you.

Aren't you on board at some point? Somebody will come along very quickly who can do your job with the support of AI that appears to be 1000 times better than you. And that will become valuable. And so if you're a person that's not using it, how you will appear to the people that do, or how you will appear to the rest of a company will be like somebody that's their first day at work.

And that'll happen quicker than we realize. And pretty much every position, I can give some basic examples. I'm going to the details, but there are several people on the team that I have been working directly with for months on how we can use certain things. And we've been using him now for months.

But what I did was I took that time to try to get them excited about it, but also educate them and show them some tricks that I learned. And we share those now. And Within a very short period, things that we used to do one way, we would never do again, even without AI. We would never even try to compute in our brain or come up with a thought about how to start this process or a thing.

There are several things that we do now without using AI first because there's no way I can combine the different concepts and consider every single thing of those three concepts. At one time, the way the AI is so if we start that way, the clarity that it gives me on thinking about all three of those concepts at the same time about that question is mind-blowing because now then, I can form an excellent opinion and then I can tweak and edit it. I can ask better questions, and because there are people now, at least three people in the company would not use it for certain things already.

And we're just talking about months. If you fast forward a year, there is most of the things in the company people will not use AI for. They'll use it because they'll think, why would I not? And so I equate it to if you're sitting at dinner. Tonight, you're chatting with your friends or family, and somebody says, " Hey, let's go to the movies.

Would you ever sit there and say, Hey, who wants to go out to the newspaper machine and try to buy, and where do those even exist? No. Does somebody want to guess when we will go to the movies? No. What do you do? Everybody picks up their phone, and they Google, right? That is what AI is on an infinite scale.

That's what I'm talking about, like work. In the same way, you would not use your phone to Google what to go to the movie; there are things in the office and in work and life that you will not use AI again because there's no reason why you wouldn't. It increases your brain capacity beyond belief.

And over-emphasize that if you still need to get into it, Start with Chat GPT, watch as many YouTube videos as you can, and pay attention because it's familiar and fantastic. And it's going to give everyone a ton of opportunity. 

Chris Powers: This may be a premature question, but even as you're, as you run the company daily, this is starting to make its way into the company fast, right?

What is like an indicator or metric or something that you're like, this is sick. It is helping the company succeed. We're becoming more successful. 

Jason Baxter: We already have those. That's how wild. That's how fast.

Chris Powers: So what would be like one thing that you know it's working?

Jason Baxter: So the numbers that we use are already influenced by the meaning of the way we evaluate numbers.

So this is another excellent example. It doesn't give away any secrets of how we will use it, but crunching data numbers. It will no longer be a thing you don't have to do. So here's an example. We calculated leasing data to set new goals on leasing velocity renewal probabilities.

So we just did a release podcast before this that we're pushing out a deal. And we talk about renewal probabilities that everybody uses in underwriting. In the past, we can go back and look at data and say how many leases we have renewed. And what type of tenants was it?

And what's the probability of a tenant renewing, whether on a gross lease or a triple net lease? And we can ask all those questions, and we can fine-tune that data. And it takes analysts, lots of work, and they dig in and try to do it. Now we have this capability already dropped in.

We already have the leasing data of all our tenants' leases abstracted, meaning they're digitally transformed into our system. And all the critical data points are already in our data. It's what I go back to. We've been doing this for years, but I can type the question because our system's data is so clean.

What I don't even have to say is the probability of renewals. I can ask AI how, what things to consider across our entire leasing portfolio, and what metrics I should consider broadly. And it will give me ten key points that are almost always better than if I just said, I want to know renewal probability. Those data points the AI can see that I might not even consider.

You can always go back and say okay and give me renewal probability. And by the way, it will give you what you're thinking about already, but it also crunches the number and says, this is what it is. And then what do I need to do if I want to increase my occupancy by 10% in the next quarter?

Not only will it say, this is how many you need to lease. These properties are the ones that have the most opportunity based on vacancy, based on tenant type, based on, and keep going. And I could do this exercise right here that we're doing for hours; that's what it's capable of.

And that's already showing up, and we're just testing. We're just playing around with it right now. But the structure that we're building is such that it can ingest the data that we've already found a way to start tracking for years now. And so that we can communicate our data with AI seamlessly and have infinite resources of Yeah, Answers immediately.

And it will be a game changer across every part, and measuring it will not be a problem because the AI will measure it. That's how it's going to show up. 

Chris Powers: That is a perfect place to end. We're doing an episode in six months because you kept saying in six months, so we'll do an AI episode in six months.

I need to be like three months. But anyway, this was a calm conversation. We just got we got to cover some stuff. We don't usually get to go over again. Thank you for being number one and number 300, and, yeah, it's fun. All right. 

Jason Baxter: Congratulations on 300 again. Thank you. 

Chris Powers: I hope you've enjoyed this episode of the Fort podcast.

Be sure to follow us on your favorite podcast platform or hop over to YouTube to watch full video episodes if that's what you prefer. For more information, you can check out @thefortpod.com