Monday, 8 March 2004

John McGrath

Speaker: John McGrath
John McGrath is today considered the most influential figure in the Australian property industry. Son of a suburban publican, this chief executive of McGrath Estate Agents set up the company in 1989 and has seen it grow to Australia's largest privately owned real estate group, selling over $1.5 billion in residential property in Sydney this year.

The 2003 BRW Young Rich List estimates his income at $50 million, making him the 18th highest paid Australian under 40. The company also ranked number 73 in BRW's Fast 100 list. His two published books You Don't Have To Be Born Brilliant and The Most Valuable Lessons I have Learned have both become best sellers.

He has 6 Sydney offices and has 6% of the Sydney market. His goal is 20% before he considers interstate expansion. He was recently elected chairman of realestate.com.au, owns a $5 million commercial building in central Sydney, and is moving into a $4 million waterfront apartment.

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Transcript

Here are edited extracts from an address given to the AFR BOSS Club in Sydney on Monday March 8, 2004, by Mr John McGrath, CEO, McGrath Estate Agents

YOUR MARKET will be hot, on fire, you’ll be in demand, if you’re doing the right things. I think it doesn’t have a lot to do with interest rates, with competition, with the weather, with seasons, with the cycle; it’s got more to do with what are you doing as an individual going forward. I think the people that are doing the right things – their market is almost always on fire.

ONE BIG challenge is a thing called the law of familiarity. You know the scenario: someone has a magnificent view, a panoramic view; they fall in love with it, and after they buy their property and then they get so used to it they sort of forget it and just take it for granted – until a visitor comes along or someone who hasn’t seen it before who finds it as inspirational, and often they catch it again for a little while. Well I think that life can be like that. We are surrounded by greatness.

We are surrounded by an incredibly secure country, wonderful people, great climate, great educational institutions, great business environments within a few blocks of here and around the whole country, in a time where technology allows us to do so much more quickly than a decade ago. I’ve been in business now for about 22 years and, like many of you would recognise, the things that you can do today that we couldn’t do a decade or two ago are phenomenal. So it’s really interesting, and I think that we get so familiar with this.

And many other people come from other cultures and countries and they come to Australia and we see it time and time again; they rise to the top very quickly, because they’re not so familiar, they’ve had to struggle much harder day to day, and we get used to, I guess, the magnificence that we’re in.

SO, SO many people go to work on Monday morning at eight o’clock and they finish at Friday at six o’clock and they feel self-righteous – they have been busy, they haven’t had a moment where they haven’t had activity in their day. They’ve been answering emails, they were doing all sorts of stuff, but my view would be: what were the things that if you nailed them this week could have moved your life and your business and your career forward to the next level? And get them in first. And the other stuff will find somewhere within your weekly schedule.

ANYONE IN my business who can sell 50 properties can find a way with the right techniques and strategies and approaches to sell a hundred. Anyone who can sell 50 photocopiers can find a way to sell a hundred. Anyone who can find 25 new clients can find a way to find 50. So the doubling part is really a no-brainer; it’s just a matter of tweaking what you are doing and consistently adding it.

One of my favourite sayings is, "Success is a few small disciplines repeated every day." And that has been my story for more than two decades. Small disciplines. I have absolutely zero more talent than anyone else in this industry in this country. But I’ve applied stuff on a daily basis and I’ve stayed focused for two decades and it makes a difference, and the corollary to that is, "Failure is a few errors in judgement repeated every day."

LIFESTYLES OF the Rich and Famous was one of my favourite shows when I was a kid, because I was sitting there, I was dreaming. I was there in the working class, we lived in Bexley and I would watch that television show and I would say, one day my life’s going to look something like that. I’m glad it doesn’t, but you know, one day, I thought. At least it’s better than it was. And so it’s about design mode.

So how much time do you put into re-designing your life, because if you’re not organised now, if you’re not coping with stuff seamlessly and ready to move to the next level, it ain’t going to happen. Some people have this Lotto approach to life, like maybe next Monday if the right numbers drop my life will change, and I’ve got to tell you, it just doesn’t happen.

It does happen – it’s a 25 million to one chance; if you like those odds, keep playing it, but I’m just saying if you want to actually change your life and have a 99 per cent guaranteed certainty, it’s about making some decisions and redesigning what it is.

I’D READ the story of Roger Bannister and it sort of twigged with me. Of course, Roger Bannister, as most people know, broke the four-minute mile on May 10, 1954. Actually, he did three minutes 59.4, the first time ever. Two interesting statistics come out of the reading I had of Bannister’s story, though: five years earlier, in 1949, it had been written in British athletic journals that it would be probably be a generation or two before the four-minute mile would be broken.

That was the experts’ view and they said that because people were doing it in four minutes ten, four minutes twelve, and they were coming back with huge lactic acid build-up, they were mentally, physically distraught and they were getting to a point where they just couldn’t see an improvement of 12 seconds in a period of under 20 or 30 years. Bannister broke it five years later, didn’t read the article, steps up on the track, three minutes 59.4.

That’s interesting on May 10 – but the more interesting thing was between May 10 and New Year’s Eve that year, 17 other people broke the four-minute mile. So the question is, was it the four-minute mile or was it the belief system of those other 17 athletes that they were waiting for someone?

SO I went there and then a few years later, having sold very well and having done some good records in sales, I decided at 24 years of age that I would set up my own business. And I said to myself, so what do I want to have? I want to have the world’s best real estate company.

I DECIDED at 24 years of age that I would set up my own business. And I said to myself, so what do I want to have? I want to have the world¹s best real estate company.I want to change the way that real estate’s bought and sold. And I would talk to people about this because you want to share, when you’ve got a passion you want to share it and talk to people about it. And people laugh at you and I call them the dream takers, the people who want to sort of pretend that you can’t do anything on the planet when we all know that you can.

SLEEP WAS an incredible distraction for me because I just wanted to get out there and build a great business, and one by one I’ve been fortunate to be able to surround myself and bring on and build our team in a number of ways with great people, and that’s been a great honour as well. So that’s really, I guess, how I came to be here, and as I said, it’s kind of cool that 15 years later I come back to the same room and I meet this wonderful audience of people that have come to spend a bit of time tonight.

But I thought I might just show you a few things about what do we do and what’s the background to them that I think might be a little bit different. Because a lot of people are in business or getting into business, starting their own business, and I’ll just run through some of the things we do.

ONE OF the first things I looked at was marketing, and in those days it was like postage stamps, where the agent would go to the property, they’d take the Box Brownie camera and they’d write their own ad, which was always terrible, and they would send it to the Wentworth Courier or the Manly Daily or whatever and it would be a very average ad. So I thought, there’s got to be a better way of doing this because my standard for myself was, if it doesn’t look like it’s just jumped out of Vogue Living it doesn’t deserve to be on our pages under our letterhead.

So that was the standard for our designer, for our photographers and everything. We’ve put a lot of work into creating ads that are inviting, that are realistic, that present the property in it’s best light, choosing the right elements and so forth, choosing to have the fireplace going when you take the photograph, having the television on, having the gate 45 degrees ajar, having no Creepy Crawly or no leaves in the pool.

It’s the attention to detail, I think, that really in the early days set us apart, and I think that a lot of people have followed that, which is fantastic for them and we’ve got to keep moving up to do that. But it’s really that attention to detail, to say you know the little things really do count. And I read a story many years ago and it talked about one of the guys that was running a top junior league in baseball in America, and they said to him, how do you get more crowds than the senior league?

More people come here on a Saturday to watch your teenage kids than go and watch some of the adults. And he said: “I do it with clean washrooms.” And I thought, clean washrooms? And he went on to say, If you look after the customers and you make sure the washrooms are clean and the food is good and the people at the turnstile smile, and, he said, if you do those little things, you’re bound to have people come and have a good time. And they’ll keep coming back and they’ll bring a friend next time and that will grow your business. And I never forgot that. Clean washrooms and the attention to detail is really important.

PEOPLE SAY to me, why do you tell all your best ideas to other agents? I said, because I know they won’t do it, it’s not a problem for me. In fact I did a talk a few months ago in New Zealand, about brand, marketing, sales and so forth for a couple of hours. And they were very kind at the end; they gave me applause and a few people afterwards came and introduced themselves and they said, John, you know, wish we were in Australia. I said, why was that? They said: All that stuff would work over there but it just doesn’t work here in New Zealand.

It’s a different people, more conservative; people don’t want that sort of approach, they don’t want these sort of things driving around town. And it’s interesting that not long after, maybe a month after, I was in Melbourne and I had a very similar response – gave a similar talk, had a lot of people applaud and come up and a few people said to me at the end, wish we were up in NSW, that would be really cool, all this stuff would work really well.

And I thought, I’ve heard this before. Until I got to the Parramatta Park Royal out there and I do the talk and they’re saying to me, if we were in the Eastern Suburbs, man, this would go gangbusters. So that very night I went home and I dropped to my knees, I thanked the Lord for giving me the foresight to put my office in the only four square kilometres of the Southern Hemisphere and Australasia where people want service and they can appreciate branding and they can appreciate quality marketing.

But it shows you people’s mindset, you know – it wouldn’t happen to me, it couldn’t happen over here, but it’s worked for you. I’ve got to tell you, these ideas, they weren’t any more exotic than the humble beginnings that I’ve spoken to you about. And this business today which does over $2 billion in sales started in a lounge room with one line and a passion to do it differently and to build a better mousetrap and to find enough people.

And I’ve got to tell you in the early days, and in fact all along, it can be hard finding people who buy into a vision of greatness because a lot of people have been in learned mediocrity and their other businesses hadn’t insisted on high standards and so forth, so it’s really a matter of going out there and reinventing a better mousetrap.

THERE ARE a few things I have learned over the years. One is, think bigger. Thinking small doesn’t serve anyone. It doesn’t serve you, the people around you, the community, the government, the country. Thinking big is really critical, so just when you’re starting to think big, think a lot bigger, and just when you’re reaching that point just go and double it or triple it, and go and talk to, learn about, read about, go to seminars, listen to tapes, visit with businesses and people that are doing it far bigger and far better and far more successfully than you. Because it’s in those moments when you interact with them, those are the things that change your life.

Number two, surround yourself with great people. And I mentioned Michael Sheargold, who’s been a great coach and mentor of mine; I’ve mentioned my board of directors, who are five of the most brilliant people that I could have ever hoped to surround myself with. My own team, my executive team, my sales people, my assistants. You know, I don’t think I’m great, but I think that I’ve been able to hire and have a lot of people and mix with a lot of people around me who are great – and I think we can all do that.

If you’re passionate and enthusiastic and you have high standards, people will be attracted to that. So you don’t have to pay inordinate amounts of money to get these things, you’ve just got to be something that gets people excited about being around and then just look after them. and that’s really important.

Number three is, please get organised. You’re only one of two things: you’re either highly organised or you’re not. If you’re not you’re going to be falling by the wayside, because to do big, exciting things, thinking big, you’ve got to be time efficient, and you’ve got to have your dollar productive activities in place and your idea weeks and your big rocks in your diary. Really important to get highly organised.

Stay focused. As I said, 20 years on I am really careful not to get distracted. I know that I’m proficient at real estate and real estate is what I know, so I just keep doing it, keep doing it every day, keep doing it passionately, get up every day and just say, I want to do it a bit better today than yesterday.

Next one: sweat the small stuff. Nothing’s unimportant. In brand everything’s important. The way you answer the phone, the type of coffee you serve, the type of premises, the stationery, the paper that you print on, the things that your team are saying – it’s all important stuff, so please sweat the small stuff.

And please don’t believe your own publicity. I see so many people, they go out and they create some great stuff and their intention is really positive, but they start to get a taste of success and they start to get carried away and they get ahead of themselves.

And I think the great people, they’re grounded, they have two feet on the ground and they understand. And I’ve got to tell you, if you guys knew how many mistakes I made you wouldn’t be paying dollars to come in this room, you know, you’d be there saying, I should be up on the stage talking, not him.

Health is so important, you know. It’s really important, and the health statistics are frightening. In our country, in our lucky country, where beautiful food is in abundance and affordable, where the climate is there, where you can exercise yourself and people are like, how many people do you know who die of old age? Not enough, not many.

So the thing is really, again, whatever you do in success, never compromise your health. Make sure that that comes first. Watch the stress levels, you know, watch your habits, what you’re eating, what you’re doing every single day. Make sure you give time to yourself to exercise and relax and spend it with friends and family.

And the last one is, hang in there, because, you know, you just really never know how close you are. Two years into my business, you know, I didn’t understand cash flow and accounting, still don’t, but now I’ve got people around me who understand it, and I’ve got to tell you that it was so close. I was like a month away from this business going broke, but I hung in there and I made some tough decisions and I changed some ways I did things, and at the end of the day I survived to live another round and to keep going and going forward.

QUESTION: I just wanted to ask if your approach to negotiating when your company was small has changed since the company has become large. Do you feel more comfortable about saying no than you did in the beginning?

JOHN MCGRATH: Obviously the bigger you get, I guess, there are some benefits: more doors can open, economies of scale, you can attract better quality team members. So I think there’s no doubt that… I don’t think I approach business a lot differently from before, but I think your business does have a natural attraction for other people and other things happen in your life, definitely.

Q: In your book You Inc you talk about looking for a gift in everything that happens – the negative experiences, the bad things that happen. Can you elaborate on that point?

JM: Even when I nearly went broke in the business there was a gift in that which said you’ve got to either get totally up to speed with this finance thing or you’ve got to hire good quality or better quality people around you, so that was a gift.

The mistakes we’ve made in business, they’ve all been gifts, because each and every one of them if you take them the right way you then turn around and you tighten up your business and you go back to the drawing board. So it was really about: it doesn’t matter what happens to you in your life, how you respond is the only thing that matters.

Venue

Four Seasons Hotel Sydney