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| Enjoying my Father's Day gift |
For many years, I've set and shared annual goals. I enjoy them, but also feel it's time to evolve for four reasons:
- I like the idea of finding problems to solve.
- Studies show that a year is too long and tends to let us set goals too low. Instead, we should focus on 12-week increments.
- I've started reading annual letters from CEOs I look up to and really like the format.
- I hit my big goal, which often drove my annual goals.
So, with that, here's my first annual letter, which will look back on 2020 and forward to 2021. There will still be goals, but they'll be framed as problems to solve, not SMARTER goals.
I started the year by saying goodbye to HP and setting a 2020 goal to relax. I primarily focused on three areas:
- Managing our rentals and filling our recently acquired storage facility.
- Building Majordomo
- Spending time with family
Let's get into it!
2020: Financial Freedom = Time Freedom
Leaving HP after 12 years was a radical change for our family. For one, I lost all track of time ("What day is it?") for three months, and now set my own schedule. It also meant I worked a lot fewer nights and weekends.
My schedule is a big deal for me. I run my life by my calendar. If it's not on the calendar, it doesn't exist. I could get all philosophical and say, "time is our most precious resource and therefore should be carefully managed." But I'm not. I merely like order and completeness - with everything! - which includes my calendar (and laundry, dishes, cars, files, table settings, music, passwords, spreadsheets, etc.).
Last year I made two relatively large changes to my schedule.
First, I overestimate how long it'll take to complete a meeting or task. If someone says, let's meet for an hour, I suggest 90 minutes (or at least schedule it that way in my calendar). I used to regularly have 30-minute meetings that went 45 minutes, and it drove me crazy. No more.
This is important for two reasons: One, I no longer feel rushed and think better. Two, I do less. But here's the thing: it becomes apparent that I'm doing less while setting my schedule. So, instead of deciding what to cut when I run out of time (because something took longer than planned) - where urgent items always win - I now determine what's important ahead of time and schedule it in.
Not only can I make sure I've devoted time to my most important things, but I can also make sure I've scheduled in breaks. And, sometimes, I get surprised by finishing 15 minutes early instead of 15 minutes late.
It's not perfect, and sometimes I do over-schedule myself, but now it's the exception instead of a daily occurrence. Here's an example week:
Blue = me & Furlo Family Homes events
Green = shared Jessi / family events
Orange = Majordomo meetings
Brown = time-blocked tasks (more on this next)
Second (back to the main list of changes I made to my schedule), I incorporated time-blocking into my calendar. Since high school, I've kept simple to-do lists: X needs to happen by Y date. It worked well when everything was required. However, as an adult, most of the items on my to-do list are self-imposed/optional and without a specific due date. Most importantly, my list is long: way more things are on my list than I can possibly accomplish.
And so, the heat-of-the-moment decisions of what to do next often defaulted to the most urgent items, to something easy, or to the task that's top of mind. Leaving a list of incomplete, potentially important/complex tasks undone, and the feeling of being busy, yet unproductive.
So now, ahead of time, I block out time to work on things. And I try to block out more time than I think I need. I do less, but the items are of higher impact.
This was not an easy transition. I struggled with intentionally not doing things. I struggled to identify, and commit to, important things. In March, I really felt the anxiety of leaving so many little things undone. Wasn't I supposed to have copious amounts of time to get it all done?!
I've now come to terms with it. I view my to-do list as suggestions of things I could do, not things I need to do. If I need to do it - it's in my calendar as a time-blocked event. Everything gets at least 30 minutes. If it's a creative project, it might be 2-3 hours, repeated over 4 days. If I finish early, great! I get to schedule something else.
And some days I blow it all off because Samson invited me to play Super Mario on the trampoline.
When people talk about "Financial Freedom," what they're really talking about is the desire to work on things important to them. They dream of saying to their boss, "No, this isn't worth my time anymore. I'm out." But, and I can't stress this enough, the goal shouldn't be an empty schedule. The goal should be a schedule full of things you want to work on, with plenty of breaks, and the option to change it when something more interesting comes along.
Losing Money on Storage Units
Not everything was perfect this year.
We bought a 70-unit storage facility (J&J Mini-Storage), with one single-family home, at the end of 2019. Going into 2020, it was 50% vacant, and the goal was simple: get vacancy over 90%. We experimented with advertising and found two consistent sources: Google Adwords and Sparefoot. We ended up spending 10% of our revenue on advertising - about 10% more than I expected!
Since I live 30 minutes away from the facility, we set up a virtual office. People call a phone number, then fill out the paperwork and sign the rental agreement online. Once they do it, we send them a lock combo to get into their unit. In 2021, we're working on automating even more of the process so people can get into their units faster. And so my assistant doesn't need to answer every phone call within 15 minutes and have them set-up within an hour.
We also learned that we needed to do some minimal screening. When we started, we didn't verify anything. Now, we require a recent paystub or a deposit equal to one month's rent. You would be shocked at how many people back out when we ask for proof of income.
As of right now, we have 2 units available.
Sounds great, right?
Well... we also lost $9,000 throughout the year.
Here's a chart of our income and expenses, with the cumulative profit (well... loss in this case) going across the bottom:
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| The black line across the bottom is the cumulative loss of $9,000. |
The loss is primarily for four reasons, two of which are directly COVID related.
Reason #1 (non-COVID)
It costs a lot more to find someone to rent a storage unit than a residential unit. Craigslist and Facebook Marketplace work great for residents. But what would you do if you need a storage unit? You'd go to Google and search for "self-storage in XYZ" and then start calling the top hits.
We paid for ads on those searches and Sparefoot. I didn't include an advertising line item in my original analysis (yikes!) but ended up spending over $5,000 ($150-$200 per unit)! Given that most of the units are now full, I expect future advertising expenses to be much lower since the vacancy rate is now lower.
Reason #2 (non-COVID)
I installed a $2,000 security system myself and paid $3,000 to clear out many, many, many(!) truckloads of blackberry bushes. These are expenses I don't anticipate happening again. Though there will always be some sort of capital improvement expense, such as new roofs, repainting, and parking lot repairs.
Reason #3 (COVID)
When the lockdown started, we went for five weeks(!) with zero phone calls. That's good from a health perspective, but it put me behind on filling units.
Reason #4 (COVID)
11 customers stopped making payments at some point, and the pandemic created a massive gray area around collections/auctions. The residential moratorium is clear, but how it applies to storage is less clear. I decided to be as conservative on the rules as possible. But that put us in the hole around $5,300.
We have a plan to get back on track in 2021, which I consider incredibly fair (1. start paying something and worry about catching up later, if ever. 2. Remove your stuff and we'll call it even. 3. Ignore me and we'll auction it for you.)
2021 Outlook
Given those reasons, I don't expect to lose money in 2021. Still, it definitely made 2020 a tighter year financially than I would like.
Majordomo
Majordomo had a big year. At the end of 2019, we launched the Domoreport: repair estimates based on a home inspection within 24 hours, specific to your zip code.
In 2020, we launched four improvements:
- Customers can download the Domoreport as a CSV. This is helpful, as an example, for larger property investors who have their own database already.
- We also made it super easy to archive Domoreports, which is a big deal for agents and inspectors with many orders. Now they can de-clutter their list to only active deals while still finding old orders when needed.
- We made an app called the Domoscore, which lets people quickly assess a home's condition. It doesn't replace a home inspection, but it can help surface issues sooner.
- Finally, at the end of the year, we launched our most significant improvement: the Request List. This lets agents seamlessly take the next step with the Domoreport's repair costs: create a request list that goes with a repair addendum during inspection negotiations.
- Plus a whole bunch of bug fixes, naturally.
We also created a video that shows how the Domoreport works:
Relaxing During 2020
My goal in 2020 was to consciously, purposefully, find time to relax. And I did!... Mostly.
The pandemic offered an opportunity to stop doing many things, and I did, which helped.
We also started a family tradition of eating dinner by candlelight on Saturday nights, similar to the formal practice of Sabbath. Our kids are young enough that it only lasts through dinner, and as they get older, we want it to last the entire evening. For it to be a tech-free time to read, play board games, and hangout.
I tried not setting a morning alarm but ultimately didn't like it. Not because I missed things, but because I like the regular morning routine of reading my Bible, praying, journaling, planning, and exercising. Doing it in the afternoon was OK - better than nothing! - but I really like quietly starting off the day focusing on my relationship with God.
Books
I managed to read some books. I highly recommend each of them and hope this list sparks some interest for you.
- Doctrine by Mark Driscoll and Gerry Brashears
- Bible using my 25-days a month reading plan
- Evicted by Matthew Desmond, via audiobook
- Obviously Awesome by April Dunford
- Romans 1-7 For You by Timothy Keller
- The Chronicles of Narnia by C.S. Lewis, via audiobook
- The Ride of a Lifetime by Robert Iger, via audiobook
- Unlimited Memory by Kevin Horsley
Colorado Road Trip
Travel was light this year. When the lockdown started, I took a last-minute round trip flight to Colorado from Seattle and back on the same day(!) to help out with a family emergency. The round trip was $60 in total. Given how cheap the tickets were, and our family's low health risk, we contemplated taking a trip somewhere else but ultimately decided to submit to the lockdown request.
But in the summer, we took a road trip to Colorado. The kids traveled amazingly well, and it was great seeing family. It was delightful seeing Jessi's grandmother one last time. And chances are pretty high that'll be the last road trip to Colorado since Jessi's parents are moving to Washington sometime this year.
How To Solve Sudoku Puzzles
I know I'm late to the party, but this year I learned how to solve Sudoku puzzles. To be clear, I knew the basic rules, but never learned any strategy. Last year, I decided to learn. The app I play is called Good Sudoku and I like it because it teaches you different strategies for handling progressively complicated puzzles. I'm currently working on identifying Y Wings and am enjoying the challenge. Side note: I also foresee a future where I tackle the Rubik's Cube. Anyways, if you've ever wanted to get better at Sudoku, I recommend trying this app.
Speaking of apps...
New Phone; No Social Media or Videos
While upgrading my phone, an unusual thing happened: I couldn't copy over all of my existing apps and settings to my new phone. Instead, I needed to do a fresh install from scratch. So, I decided to NOT install any social apps or video apps. While I was at it, I uninstalled all video apps from my iPad. So far, the only one I miss is Youtube.
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| Don't worry, I'm not a minimalist. There are 64 additional apps in my app library. |
I still have access on my computer, so I'm not part of the #deletefacebook crowd, but more in the #visit-occasionally group. And I regularly watch Netflix, Disney+, Apple TV+, Amazon Prime Video, and Youtube on my TV.
It all comes back to wrangling my schedule. I found that I could "unintentionally" spend an hour (or two!) watching videos and reading tweets. By removing the easy access on my phone, I naturally spent more time on more important/planned activities.
As a general rule, if I question keeping something in my life, I start by removing it and then adding it back if I genuinely miss it. Not only do I do that with apps, but also email newsletters: I unsubscribe and then re-subscribe later if I want. And the stuff in my house: I put it in the garage, and then only bring it inside if I want it, and after a year, I can choose to give it away knowing I didn't use it for a year.
If you feel like you might be spending too much mindless time on any app. Try deleting it for a month as an experiment. Just see how it goes. If you genuinely miss it, you can re-download it.
Remote Learning
Kindergarten
Elinor started dual emersion (Spanish & English) kindergarten this fall via Zoom. It consisted of three 30-45 minute sessions five days a week. At first, I didn't think it would be very effective because of the limited teaching time. But now, after observing it, I think it was fantastic, and potentially better than in-person learning for us. There are a few reasons it worked so well for us, and wouldn't for other families.
- Jessi used to be a kindergarten teacher in the dual emersion program. Elinor had a 1:1 experience with someone trained in her exact program. So, Jessi would observe the class, and then support what Elinor learned with additional exercises, all in Spanish.
- Jessi also runs an in-home pre-school and Elinor was able to participate when not on Zoom calls.
- Elinor didn't know any better. As far as she knows, Zoom is school. Funny story: for a long time, she thought the other students were actors, just like on a TV show. It wasn't until she saw a classmate in real life that she realized they were "real people."
- Elinor is extremely comfortable with video apps because our whole family lives far away and it's the primary way we communicate with them.
- Elinor was able to slowly ramp into school: she's been able to figure out the language and school work aspect, without having to also deal with new social situations or leaving the comfort/safety of her home for an all-day classroom. As a result, I think she'll have a much better transition into all-day school than what typically happens (based on Jessi's observations as a teacher in this exact program).
MBA For Life
2021 Problems to Solve
J&J Mini-Storage
Our move-in process is too cumbersome. Someone calls, and we talk on the phone to determine the move-in date, ask if they want a lock, and if they're going to pay an extra deposit or provide proof of income. They then send us a picture of their driver's license and a recent paystub. They also watch a video that explains how we do things. We create a rental agreement via Docusign and set up payments within Cozy.
When that's all done, we text them the code along with a map of the facility. (Plus, we add their information to our systems.) Here's our internal checklist on ClickUp:
It's honestly not a lot, but it can feel that way to someone who simply called looking for storage. If we had an office, you'd just present them with each piece one at a time. So, that leads to two questions to solve:
- How do we present our setup in a comprehensive, yet non-overwhelming, way?
- How do we make it so we don't need to continually monitor each step? Right now we need to manually send the next thing, and it's not very efficient.
Majordomo
We're focused on two areas: sales and scalability.
Sales
In Great By Choice by Jim Collins, there's a concept called "Fire Bullets, Then Cannonballs":
First, you fire bullets (low-cost, low-risk, low-distraction experiments) to figure out what will work—calibrating your line of sight by taking small shots. Then, once you have empirical validation, you fire a cannonball (concentrating resources into a big bet) on the calibrated line of sight. Calibrated cannonballs correlate with outsized results; uncalibrated cannonballs correlate with disaster. The ability to turn small proven ideas (bullets) into huge hits (cannonballs) counts more than the sheer amount of pure innovation.
2020 was all about firing remote/virtual bullets. We're still working on calibration and empirical validation. We have a couple of potential hits, but we're not sure yet. Our problem to solve this year is to prove a small bet so we can concentrate our resources on a big bet.
Scalability
We're at a precarious spot with the number of orders we can handle. It's precarious because we human-analyze each report, and those people require training. If we received 1,000 orders tomorrow, we'd have a problem because we don't have enough people to handle that volume.
In 2020 we cut our processing time by two-thirds, which is excellent! We did it by streamlining our backend system, but it's still fundamentally people-driven.
In addition to finding and training more people, we want to figure out how to transition to a primarily machine-driven process, with people performing quality control. It's a fascinating problem that involves machine learning, and could reduce our processing time to 1/12 of the time it is today - capable of handling spikes of 1,000 orders in a day.
Writing
This is less of a problem and more of a desire: I want to write more. Last year, I created an online class for people interested in investing in real estate called Sign Here. I really enjoyed making it - organizing all that I've learned - and the feedback has been great. I'd like to continue writing blog posts (and video scripts since Youtube is a thing). I like the idea of continuing book reviews since that, selfishly, helps me retain what I learned. And I'd like to write some topical posts: How I schedule and prioritize my time, how I budget and manage repair projects for the rentals, and my morning routine.
I'd also like to write a book someday. I have many tactical questions for publishing a book, but I'm still at the "Is this topic interesting?" stage. Other questions are: how do I organize my ideas? How do I build writing into my life? I'm going to start with The Practice by Seth Godin to help me figure it out. I might also take Malcolm Gladwell's MasterClass on writing since I really like his style.
Closing Thoughts
Does it feel strange not having SMARTER goals this year?
Yeah, but focusing on these larger problems makes sense for where I am today. And in a lot of ways, it feels like a continuation of last year: Keep on managing the rentals and stabilizing the storage business. Keep growing Majordomo. Keep playing with the kids and resting during nights & weekends.
I'm not anticipating any significant changes, but if God has other plans for us, we'll try to be ready and willing to make those changes.
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