The Future Of Small Town Marketing And Small Business Growth

I figured we would start this afternoon to end this session by going back to the beginning. So I wanted to open up a Bible here to the Genesis Chapter 1, and just read. And then look into how this might affect how we think about real estate investing.

It’s a verse you may be familiar with, Genesis 1:1 In the beginning, God created the heavens and the earth.

I think most of us have probably heard that before. In the beginning God created the heavens and the earth. What most of us have probably not ever looked into is the Hebrew behind that verse. Because, believe it or not, it was not written in English. In the original Hebrew that the verse was written in, the word for create is bara. I don’t know how to spell it in the Hebrew alphabet, but this is how it is translated translated into English. What bara means in the context of this verse is, in terms of creation, creation from nothing.

So something that did not previously exist now exists. So a zero to one entrepreneurship, you’re not just taking something existing and making it cooler or taking a bunch of ingredients that are already there and rearranging them to make something new. But you are not starting with some raw ingredients, bara implies creation from nothing. So it’s very intentional if you read the verse in the original Hebrew, that they used that word bara.

The other variation in Hebrew, I believe I am spelling this right, is asah, and the closest English translation - Hebrew is a way more nuanced language than English. There are more complexities and there’s depth and layers of meaning than English, but asah would be “make.”

So this (bara’) would be “create” and this (asah) would roughly translate to make. They kind of mean the same thing. I made something or I created something. But in this context the writer used bara’ to imply that you made something from scratch that did not previously exist.

This (asah) means you made something, but you didn’t create something. More on that later. 

When we start thinking about small towns versus big cities, most of what we’ve been talking about this week is the really tactical, granular level. Hey, if you’re investing in this building here’s the cost you need to think about. To hiring an A and E firm. Here’s what you need to think about from a tax accounting perspective. Here’s what the ROI might be. Here’s what the cash flows might be. And we’ve been really zoomed in, which is exactly what I wanted this weekend. So you could feel like you learned the specifics. I feel like we got a lot of inspiration in Naples learning what Jason is doing.

You guys came here to learn the specifics, trying to get as ground level as possible. I want to zoom way back out now and look at big picture trends. Because I think that once you can get into my brain a little bit here of how I’m thinking about this, you’ll probably be even more excited about what Jason and the Small Nation Team taught you this week. Because you’ll learn that you have the wind in your sails.

Most people today in the United States, and actually the number according to Gallup that I most recently saw - I’ll write it right here - is 80% live in a big city. 80% live in a major metro area. We take that for granted that most of America lives in a big city. Way back when America was founded, like in July 1776, 90%+ people lived in rural agrarian areas, over 90% of the population was farmers. So that has completely done a flip in the last 250 years or so.

July 4th 1776, 90%+ people lived in rural agrarian areas. We take it for granted though. That’s my main point. It was not always this way. If you go back in time far enough, like the pre-feudal ages, most people lived in the middle of nowhere. They worked the land for a lord and in exchange they got a little straw hut they could live in. And the lord promised to protect them from invading armies. Most people were subsistence farmers, and they lived in rural areas.

Cities, again it was the opposite, hardly anyone lived in cities.  And so for about 1000 years, approximately from the year 1000 to basically where we are now, the trend was moving from rural to urban. What changed this is - I’ll just put the 1440s - we don’t know the exact date, but that’s when Gutenberg invented the printing press. It had existed for centuries longer in China to give them a shoutout. But they walled themselves off from the rest of the world. So we didn’t discover that until thousands of years later. So technically the Chinese invented it, but for our purposes the printing press spawned modern civilization (in Europe), and it was the first example of a modern technology that severed the links between geography, time and distance.

We don’t think about it this way, but if you wanted to learn from marketing Guru Tim, and Tim lived in Naples, Florida, you would have to go to Naples to learn.

When we go back to the Bible, that’s why it was such a radical concept for Jesus to say drop your fishing nets and come follow me. Well, can’t I just subscribe to SMS text messages from you, and you send me out some tips and a Bible devotional every now and then? We take for granted that if you wanted to learn from someone or get information from someone, you had to be physically proximate to them. So there is this very real link between geography, information, time and distance. 

The printing press is the first example of a technology that began to weaken or sever that link.

And the printing press led to the Renaissance, 1500s 1600s and world exploration. It really sparked the modern age. After the printing press the next major thing that I would say really severed that link was - this is not to scale- but I’m going to say it’s 1861. A company you may have heard of, Western Union, invented the telegraph. 

Again it meant that for information to cross New York to San Francisco no longer took weeks or months, but it was instantaneous. This was an absolute game changer, because it meant if something happened or a new development of finding out that a crop had failed somewhere, you could immediately wire across the country and everyone knew. So they could react faster. The economy basically increased its velocity because information traveled faster. This was a huge deal.

The Civil War - part of the reason it was so bloody and so many people died wasn’t just the weapons technology, it was that information could travel much faster. So if a spy saw that Lee was moving his army to Gettysburg the Union could react instantly because of telegraph lines. We had never had that before. So in the War of 1812 the whole battle of New Orleans with Andrew Jackson was fought weeks after the British had already surrendered, because we didn’t have that technology.

We take it for granted like a fish doesn’t know what water is. But back then there was this link between time, distance, geography that we completely take for granted today. So the printing press, the telegraph, and the next major piece that again most of us take for granted - because there’s not a ton of old people in here - but 1956. Does anyone know why that date is significant in American History?

Television?

Close. The Eisenhower - Thank you, Andrew. The Eisenhower Interstate System. We completely take this for granted, but this is actually one of the biggest technological developments in world history. Because it connected all these small towns with these big cities, and partially for the first time where you were born was not your identity anymore. Because you were connected to the rest of the country. 

If you look at a map of the United States before the Interstate System of where people lived, if there was a map on population, almost everyone lived in the Eastern Time Zone. And it’s actually still that way to this day if you look at a population map. It’s why most sports games are played on Eastern Time Zone. It’s where 80% of the population lives. So we still see the artifacts of that. But back then it was - I mean I don’t know the number - but probably 99% that lived on the Eastern Seaboard. The Interstate connected the country in a way it was never connected before.

But in that process, if you’ve seen the movie Cars, it devastated small towns because what they did was they started building bypasses around small towns. So it incentivized people to move here (big cities). 

My home town is one of those examples. We used to have a thriving main street area where there was a downtown like Jason said with a J.C. Penny, lots of retail, shopping, The Puritan Cafe where my grandpa used to go for business meetings to meet with other business people all the time. None of those places exist anymore because they just thought it was more convenient if we reroute Highway 12 around downtown Wilmar. And now no one has to drive through it anymore. And pretty much overnight downtown died because there’s no traffic flow there anymore.

Alison’s Boutique is in an even smaller town, New London, and that’s 10 times smaller than Wilmar, but they have a thriving downtown main street. The main reason is that there is still a main road. Is it Highway 9? Highway 9 goes through New London. So they still have traffic flow. They didn’t build a bypass. 

So in the process of building the Eisenhower Interstate System, they basically gutted America’s main streets and created a huge incentive to move to a big city. Because it made it easier to drive faster to get between these cities. It wasn’t such a big lifestyle decision of “I want to go to a big city because I can drive 80 miles an hour and get there now.” You’re not taking Route 66 anymore to get to Southern California. You take the big Interstates or you fly.

The other question that’s interesting to me when I look at some of these dates is if you ask anyone what was the golden age of America. What were the “Good Old Days”? Like a Norman Rockwell painting of a good old American small town. They will say the 1950s. Interesting, what happened in the 1950s to change that? 

Some people might say the 1960s, but this actually took 40 years to be fully completed. They were building interstates for decades because it’s such a massive project. It was the Interstate System that really changed this Americana feeling of a golden age of a main street where it’s walkable and you go to restaurants.

What Jason is describing we used to have is what I’m saying. It’s nothing new, we used to have it, and we abandoned it. So this entire trend here is really a trend of centralization. People concentrating in a big city. This is my drawing of a pro-sports stadium. This is a really tall building that has antennas to say “look we’re taller than other buildings.” And 80% of America lives there now because of the trend of centralization. When did malls come in? 1970s right about here.

What is a mall? It’s centralizing all the main street businesses and putting them all in one place. A mall is a city of retail. So the macro trend happening in society for most of the last 100 years is all centralization. Now, why would anyone want to live in a big city? What’s the one word reason you move to a city?

Jobs, right? The second reason that a Millennial might give of why they want to move to a city is things to do. We have taken this for granted our entire lives that the cities have the jobs. They just do, duh. It’s a fact of life. Of course that’s where all the jobs are. 

But let me ask you a question. What would happen if that were no longer true? What would happen if a technology were invented perhaps that severed the link between where you have to live and where you can work? What would that look like? You’d be a fish out of water. You never realized, we thought our whole lives that cities are where the jobs are.

And that’s why people moved to the cities throughout this process. You know, in the Industrial Revolution they wanted to get off the farms where they were basically subsistence farming/starving. They would rather have a job in the city because, as awful as those jobs were in the Industrial Revolution, it still paid more. And you were less likely to die than living out in the middle of nowhere subsistence farming. So yeah, it might have been poor working conditions compared to what we think of now. But the reason they moved to the cities was because it was better than where they were coming from. They moved for jobs.

Now if you take that away, cities have things to do. But would you rather live in a city if you could have a high paying job or live in a small town, such as Bellefontaine for example, and make big city money? 

What we’re about to see is the reverse trend of what we’ve been seeing for the last 100 years. And this is like a big deal! Moving from here back to here. So it’s really a trend of decentralization, and that’s obviously a buzzword right now with Crypto and everything going on in Tech, decentralization in Tech. But this is a huge, huge deal. It’s like the opportunity to get ahead of a trend before the rest of the world sees it coming.

So this is a Gallup Poll;  this is where I got this statistic 80% of people currently live in cities.

What if I told you that 40% of people don’t want to? They would rather live in a small town or rural area. Again, a Gallup Poll 40% not 5% or 10% or 12%. 40% of people, if they had the choice, would live in a rural area or a small town. That’s actually 100 million+ people if you look at the American population. If given a choice would move out of big cities if it became possible.

Now, what technology in a word is driving this trend? The internet, right? The internet makes it possible to have a remote job. The internet has been around for obviously 25 years, but the  difference now is that speeds are now fast enough that you can actually work from home now and do a good job. It’s not a dial-up internet anymore. The concept of Netflix really took off not when they invented mailing DVDs but when speeds got fast enough to stream HD video.

Social trends in large part are driven by tech trends, and sometimes that creates a reinforcing relationship where tech trends are driving people to move. So working remotely is a big deal. And I think that most of us take it for granted, because we all work remotely. But the really crazy thing is that this stat came out before Covid. So I don't know what this number is now.

But imagine being locked in your condo in New York City or San Francisco or in Minneapolis or Columbus. Do you think it’s only 40%? It’s 40%+. That’s a 2019 stat that 40% of people would move to a small town if given the choice. The problem is when you think of small towns they don’t have jobs. That’s why people don’t move to them. And they also don’t have things to do relative to a big city. But again, tech comes to the rescue. 

There’s a company called Jetson named after the show called the Jetsons that’s building mini personal helicopters. There’s Tim in his mini personal helicopter that are $90,000, fully electric and rechargeable, don’t have to have a pilot license. A computer flys it for you. It’s designed to park in a standard parking spot. It operates where it takes off vertically, and you can park it in a standard parking spot. 

So if Tim wants to live in Bellefontaine, but Tim is a hockey fan and wants to see the Blue Jackets play when they have a home game. He can take his Jetson, fly there, get there in probably 30-45 minutes, watch the game, and then fly back. And it’s flying itself. I don’t have to have a pilot license. I just hit a button and key it in, and it takes me there. Right now these are $92,000. So that’s like, without economy of scale, without people really starting to buy them and take off. More than likely, something like this will cost $50,000 within the next 5-10 years.

So it will become within reach for an upper middle class person. Let me just lay this out as specifically as possible so that you can think concretely about this versus the big picture stuff. You could live in Bellefontaine, have a Jetson or whatever brands come out in the future, fly to Columbus while you’re working or watching a movie or doing whatever, and it’s flying. So you are not stuck in traffic. It’s a technology that severs the link between geography, time and distance.

How many of these 40% if they had access to something like this would say, “Oh cool, that’s it. I’m moving to Bellefontaine” or, “I’m moving to (insert name of small town) because I can have all the benefits of a big city without all the things I hate about the big city. Remember this was before Covid. 

So what are small towns lacking? Jobs don’t really become an issue anymore because my market is the world if I have the internet as a distribution platform. It doesn’t matter where Tim lives. He can operate Platform from Naples or Antarctica or Minnesota. It doesn’t matter. So jobs really aren’t that big of a deal. 

The only thing holding back the explosion of small towns is number two. Things to do. And that’s where I see economic opportunity. This is where it gets back to bara’ versus asah. We have the opportunity to create businesses that give people entertainment, places to shop, places to eat, and things to do in small towns. And get ahead of this trend before the rest of culture realizes that this is where things are going.

If you’ve seen the success of downtown Bellefontaine, you can’t be like, “Oh cool I’ve seen a pizza place work. I’m gonna open up another pizza place in Bellefontaine.” It probably wouldn’t support another one like it. You had to get there first. Most of us know small towns where - I was just talking to Allison about this. There is latent demand. There are people with money there, and they are driving an hour away. 

I don’t think Jason went into too much detail here, but the reason that he had an idea for a pizza place originally was the owner who started 600 had places in Columbus. And Jason kept peppering them. “You’ve got to open up a branch in Bellefontaine. You’ve got to open up a branch in Bellefontaine.”

And he was like “No, no, no.” For years this went on, and eventually Jason was there on a Friday night. And he pointed out half the dining room. And he’s like “that person, that person, that person…” They’re all here from the county. They drove an hour away to eat pizza. People from the town were driving an hour away. If you brought it to them, there’s already a demand there. If you have a thing to do, there’s people who have money who want to support it. We’re in this inbetween time right now where the trend has already started. 

This is not Tim’s theory that some people might start working remotely. It’s already a thing. And yet, it’s not widely distributed yet. There are still tons of companies that are experimenting with it. Like my mom is an accountant and still goes to work today. That’s everyday. That’s insane. Why does an accountant have to go to an office? That’s insane, right?

Most of you obviously are realtors. You don’t even think like “why does my brokerage need an expensive office somewhere that I go to?” That’s stupid. Most of the economy hasn’t caught on to that yet. Most of the legacy economy is stuck in old business models that we have to go to an office. Employees have to work in a specific geographic area. And once the rest of the world catches up this is a huge, huge trend.

The only reason towns like Wilmar, Hutchinson in Minnesota or wherever your small towns are that you’re passionate about. Meridian is too cool, too popular, too growing. Cuino is a half hour away from everywhere else though. And it’s still very much a small town. Whereas San Antonio is a big community. Hondo is the Bellefontaine of South Texas. It’s a small town where the nearest big city is an hour away. And right now there’s not enough stuff to do, but there’s natural beauty, a low cost of living. That even if the economy contracts, someone can move somewhere with high housing prices. They can buy a house with $250,000 or $300,000. They’re shocked because they’re  used to coming from the city where that same house would cost $500,000 or $600,000.

There are all these trends where you basically can’t argue with me. It’s already happening, but the reason it’s not really blowing up yet Bellefontaine style is that Bellefontaine had an entrepreneur who created while everyone else was just kind of like oh it’ll never work there. So it takes someone willing to create something from nothing, and this is why we can’t rely on Chambers of Commerce. We can’t rely on Citi economic development or government agencies because all politicians do at the end of the day is asah (make).

The best case scenario, if they are not actively destroying value, is that they are just moving stuff around. They’re taxing one group and spending that tax money somewhere else. Best case scenario is it’s a zero sum game. So all politics can do is asah. 

Entrepreneurship is bara’. You’re taking something that didn’t previously exist, and it’s zero to one business growth. There was not a gourmet pizza place in Bellefontaine and Jason was like it could work here. We’ve got to get this going. The money is here. It should work. I don’t have proof, but I feel it’s gonna work. And it did.

And now that business brings in 2 million bucks a year with a 30% profit margin. $600,000 net profit, and he owns half of it. I don’t know if you guys were doing this math when Jason was talking about it, but Jason personally makes $300,000 a year from 600. Just his share of the profits of 600 Downtown is $25,000 a month plus rents. He’s making more from a pizzeria than many of you are making from your entire real estate business that you are working 50-60 hours a week on. Because he’s riding this trend of decentralization. That business is only gonna increase in the future, because he’s still early.

I think this decentralization trend right now of moving into small towns that we are right now where the internet was in like 1997. People are talking about it like it’s peak, but 1997 is so early. We’re still early in the internet. That’s how early we are in this trend.

When you asah think of it as the … It’s kind of like in finance what a bond is. When you take the mentality of bara’ it’s like stocks. It’s starting a company. There’s risk. It’s uncertain. There’s ambiguity. There’s no promise it’s going to work, and it’s where all the upside is. So if you take this mentality of thinking small towns seem to be growing, and there seems to be something there, I see something that other people don’t see then what do you do next?

I start viewing small towns as an asset class. Usually when we think of asset classes, we think of tech, precious metals, gross stocks, cash flow stocks, right? I’m starting to think of small towns as an asset class. It’s a bunch of properties that have something in common, but they’re not all the same. But they rise and fall with each other. So if I was looking to maximize investment returns over the next 10-25 years, I’d be looking at how I can ride this wave. Because every big company that now is worth billions of dollars (Again, we take it for granted. A fish doesn’t know what water is.) They’re really just big companies because they rode a wave. 

What do Facebook, Apple, Amazon, Google, all these companies have in common? They just rode the wave of the internet. They didn’t really know what they were doing for the first 5-10 years because they were figuring it out. But if you’re riding a wave, the wave always subsidizes your lack of knowledge. Because if that’s the way things are going, you can figure it out along the way. 

You don’t want to go into a dying industry, and be the best executor or implementor of a dying industry. Where you are fighting the tide, right? This is a huge wave, and it’s just beginning. You’ve probably seen Platform start to do this over the last year. In case you’ve had inklings.

But in case you haven’t noticed, we’ve put a lot more emphasis on small towns in our copy. We’re sponsoring a rodeo this summer. 

That’s because I’m trying to put an emphasis on how Platform is gonna help agents that work in smaller towns. Because I think that’s where all the opportunity is. Cities are always gonna do well by the way. So this is an interesting statistical reality. You see articles that say cities are growing. Cities still didn’t shrink during Covid lockdowns. Cities continued to grow. And they will. 

This number of 80% is probably not going to change in 10-15 years. This is probably gonna be 90%. Even though all of this I’m saying is where the opportunity is, these things can co-exist. And it’s because of simple math. 

If a city has millions and millions of people, but that city loses a couple thousand people. Let’s say the city loses 10 thousand people. And this small town of Bellefontaine gains 1500 people. We’re +1500 here and -10,000 people, but this city started with millions of people. This is a way bigger deal as a percentage. So this is still where the opportunity is,even if the city might have lost 10,000 people. But 11,000 people move there. Net gain - or I should say 20,000 people move there. So they lost 10,000 people, but it’s +20,000. So they are still up 10,000. 

That’s why you see these articles that say cities are where all the action is. Cities are where all the opportunity is. Well, look, even throughout Covid the cities are still growing. But what’s a bigger deal to a place? A city that already had 1.5 million people adding 10,000 or a city like Bellefontaine that had 15,000 people adding 1500? That’s a 10% increase. 

For a city to have the same delta, they’d have to have 100,000 more people in a year. There’s no city that’s even close to doing that. So this is where all the action is, even with way smaller numbers. Because if you’re in a small town that has 15,000 people or I would still view a town with 30,000-40,000 people as a small town, that small town adds 2,000 people in a couple of years then that completely changes the economics of that small town. Because you can’t build houses that fast. 

Housing prices increase. Typically, every person who moves into a new area adds 3-4 other jobs that have to support it. And the other thing is that not all people moving are created equal. It’s not a very PC thing to say, but the type of people that are drawn to move from the big city on this bridge of decentralization - And they find their dream rural area or small town somewhere - If that move is being driven by a desire for that pastoral, provincial lifestyle … I want a couple acres. I want my kids to grow up and be able to walk around to meet the neighbors and know people. That small town Americana. That person probably has a remote job. That’s the reason they are making the move.

Because remember,  we’ve established that, let’s be honest, there aren’t jobs in small towns. There are not awesome jobs places hiring in Bellefontaine. Jason probably disagrees, but there’s not, compared to Columbus. It’s an objective that there is more economic opportunity in Columbus. You can’t argue with that. 

So the type of people who are making the move are not being driven by jobs. It’s because their job is delinked between time and place. They have a remote job. Remote jobs pay more. If you have a remote job, you’re probably making $60,000-$80,000 a year or more. That’s just an economic fact. There aren’t people with remote jobs that are working for $11 an hour, $12 an hour, $15 an hour. Remote jobs pay more, so the type of people that are making this move are the exact type of people you would want to move into your community. Because they are the type of people who have money to spend at the Flying Pepper. They have money to spend buying a $30 pizza and then going out and getting dessert afterwards.

The people with incomes that are going to grow are the ones moving. That’s where all the opportunity is. So just to wrap a bow around this whole week, I want you thinking big picture too. It’s not just interesting ideas of here’s what the tax implications of investing are. Or here’s what my cash flow calculation is or here’s the cost to start a pizzeria. That’s all cool, and we have to know that knowledge. But once you realize the broader trends that are at play, if you just step back and look at everything happening, give it 10 years. And if you go to some small town and start a kickass pizzeria or a coffee shop, a Mexican food place … I mean Jason is going to start tons of awesome businesses I’m sure in the next couple of years that we don’t even know about.

You can make way more from that opportunity when you ride a cultural wave because it’s like pouring gas on a fire. Then you can by just thinking about maybe I’ll try this. Maybe I’ll buy an AirBnB somewhere. I’ll start a single family home. And maybe after all expenses, I might make $500 a month on it. 

This is a huge trend, and I believe in it so much that this is where I’m gonna be putting my money. I think that small towns are the future. Even though cities will continue to grow, 80% will be 90%. Cities will continue sucking up most of the population, but small towns are where the actual entrepreneurial investment opportunity is. Even Thomas Jefferson foresaw this 250 years ago. And I don’t have the quote memorized. So I’m gonna pull it up on my phone quick. 

So he told this in a letter to James Madison. James Madison was the architect of the Constitution. He’s a huge reason why we have a bicameral legislature with a Senate and a House. And they were debating back and forth, and what Jefferson said was, “I think our governments will remain virtuous for many centuries as long as they are chiefly rural and agricultural. And this shall be as long as there are vacant lands in any part of America. When they get piled upon one another in large cities as in Europe, they will become corrupt as in Europe.”

So Thomas Jefferson grew up a planter/farmer in rural Virginia. He saw that if you live in a small town where I know my neighbors, and I’m not dependent on people like in a big city. People in big cities are dependent on politicians for everything. You naturally are freer. 

You’re gonna think for yourself more and be more independent minded if you are rural. That’s why Jefferson was the president when I guess it was 20-25 years after the Constitution that he was president. And he bought the Louisiana Purchase because he knew as long as America was expanding Westward and there were rural areas and towns for America to expand into, America would stay free and prosperous versus if we were constrained to a tiny area. 

And then as you stay in cities, you become more dependent on the politics of that city because the politicians like micro-managing and planning everything. 

So that exchange between Madison and Jefferson is even why we have a Senate right now. Because think of what the purpose of the US Senate or the Electoral College is in the context of all this. It’s protecting this so that this doesn’t get violated by this. Because Wyoming, which has no-one, still has two Senators. The same as New York which has a huge percentage of the population. Without Madison and Jefferson focusing on that - like we’ve got to protect the small towns in rural areas from being bullied by big cities - you wouldn’t have a US Senate. You wouldn’t have an Electoral College where Wyoming can cancel out the votes from California or Florida or Minnesota or wherever. 

And everyone agreed at the time that’s genius. Even most States have that. In most State governments they have a Senate and a House, because they want the same thing. Or they don’t want, let's say, Columbus, telling people what they can and cannot do in Bellefontaine. So there’s both a Senate and a House in both Federal and State governments.Even way back when, 250 years ago Thomas Jefferson called all this, there is something nice about living in a small town that just cannot be recreated in a big city. 

Recently researchers (sociologists) have developed what’s called The Savannah Theory of Happiness. Is anyone familiar with or anyone’s ever heard of that? They’ve done big. Studies the largest one was of 15,000 people where they pulled people from big cities and small towns. And they found you are objectively happier on all measures of wellbeing that even track heart rate, heart disease, levels of cortisol and all that living in a small town. In a rural area with regular access to nature. It’s just a fact. They can’t deny it. 

They call it now The savannah theory of happiness that humans are happier when we are closer to nature, not mashed together in a big city. Like if you go on a trip to Chicago, do you go to Chicago for 10 days, or do you go to Chicago for a weekend? Most people go to New York City or Las Vegas or Chicago for a weekend, because that’s about what your brain can take. We have maybe never given words to that, but it’s like this is awesome and then I’m ready to go home. After about 2,3 or 4 days that’s about enough, and I’m gonna head home.

And yet when people take vacations in nature, they typically spend a week, two weeks or August, right? Because you really relax when you get into a place in nature. I don’t know the exact population density, I can’t grab it for you off the top of my head, but they’ve done studies that where you live in terms of people per square mile, the density, determines how you think politically. They’ve narrowed it down to an exact number of if you are from an area that has a population density of humans per square mile less than this (number), you’re gonna go on this side politically. And if you are from an area that’s more than that, you’ll go on this side. 

This completely shapes how you experience the world, and I think that people - all things being equal - would rather live in a less populated area with more room to run around. So we are even re-imagining what Platform’s brand is like.  We’re trying to get more clients in small towns. That’s the way Platform is headed. We know that our marketing works best in those areas. And I think we are riding a wave. 

So I’m not just saying this because I think it’s interesting. It’s how I’m betting my entire career and business. 

Audience: But it’s also clicks per pay. So you are getting more in a small town.

Tim: Yeah. Because you’re…if you’re in a town of 30,000 people, and you have a video that gets 20,000 views, every adult has seen it multiple times. Because out of 30,000 people 15,000 are kids. So that means every adult in the area has seen your video statistically multiple times. 

If you’re on Long Island and you get a video that gets 20,000 views, it’s like cool. Do you want a cookie? There’s 4 million people there, right? It doesn’t matter.

So we get better results for people, if you’re in a somewhat rural, small town area. 

Yeah?

Audience discussion. To reinforce this, what you are saying, one of the reasons why Ohio is ground zero for presidential elections is it’s one of the places that has an equal number of cities to rural areas. It’s almost 50/50. Most States don’t have that. So we’ve got a real good mix. I was just in _ on Tuesday talking about the problems of … They say the trend was that people always go where the jobs are. And now employers want to go where the people want to live. 

Tim: Yep. So, I actually, in the first draft of this presentation, I had a third point which maybe wasn’t super relevant to this talk. But, if you have the ability to choose, the third point is natural beauty. All things being equal, if there is stuff to do, if you have access to the internet for your job, all things being equal, ceteris paribus, you’d rather live somewhere with natural beauty.

So if I were thinking about where I want to invest, I’d look at okay, what is? Naples is beautiful, but also Naples is not a small town. What has upside that’s a beautiful place to live and things to do? Like Punta Gorda or further north? Like what are those small towns that still have that vibe? Their still beautiful, but they’re still upside. Or a hilly country that has mountains.  That's why I bought in Spearfish. Again, I’m putting my money where my mouth is. 

I bought 6 acres in Spearfish last year, because it checks all those boxes. It’s gorgeous. There’s no income tax. And, it’s still a small town. Spearfish is about like Bellefontaine. That’s where all the action is in the future. And so, not only can you position yourself as an expert in one of these places as a realtor because you know this is where population is trending, but you can build businesses that can end up making you far more than you were in your real estate career. If you just have one that does well. Thoughts? Disagreements? 

Audience: The two largest economic developments…

Tim: Right down the road, right.

Audience: The next one coming is Intel which will dwarf the other. 100 billion dollars and it’s in my direction. 

Tim: Yep.

Audience: They picked it because of its rural nature, lifestyle. They know there’s not enough houses. But the people will come because they want to live here. 

Tim: Yep, most people don’t believe reality until they see it. That’s something, if you’re taking notes, write that down. Most people don’t believe reality until they see it. Most people here probably did not know this existed until I just told you. And it still won’t matter until you see one. And it still won’t matter until the range increases because right now you can only go about 30 miles on one of these. But at the rate battery tech is progressing, that’ll be 100 miles really soon. And soon it’ll be 150, and so you could live in the absolute middle of nowhere. Fly into your jet when you want to go into a big city and go out for a nice sushi dinner or go see a stand up comedian you love, or go see a pro sporting event.

And you could essentially have all the benefits, but be close to a city. Because this is something I argue with my friends about all the time. Because I’m like the anti-hipster. I’m like …I’m not cool. I drink milk when we go out to eat. I’m decidedly not cool. 

But if I could live somewhere rural and I basically eliminate the pros and cons list where it’s like I don’t really want to do that. I’d rather just have all the pros. I can live somewhere rural, and it’s like well if I want to get sushi and take Bella out for Valentine’s day or a birthday or whatever. Just some random date and go somewhere fancy and go to a pro sports event or if she wants to see a musician she likes. Whatever. You’re not typically doing that on Tuesday nights or Monday nights.

This is the argument I always have with my friends. Like why do you live in Minneapolis where you get a shitastic home for like $500,000, where there are drive bys in your neighborhood all the time? You know? But I’m close to restaurants. Like, cool, but are you eating out every night? No. You might on the weekend.

Why would you not live here, and then when you want to go to eat then by all means, go to the city and then fly back? You could still have that. People aren’t willing to drive right now. So even just this technology, I think, is gonna change the world. No one’s talking about it. 

Andrew lives on 50 acres on a private lake on a peninsula in a log cabin surrounded by rolling hills flanked by apple orchards on both sides. He’s about to buy, is it a 100 acre parcel? That’s on the other side of the road.

Andrew: A few years out, it’ll be 75.

Tim: 75. So he’ll like increase that to 125 acres, and he’s in a rural area 2 hours outside a major city. And he can afford that in his 20s. And he didn’t get a subsidy from anyone. So it’s not like I gave him money or our family gave him money. It’s just when you live somewhere that’s the middle of nowhere you can afford that. And he had a remote job. Right.

So he’s actually a leading indicator that proves what I’m talking about. You could live a baller life that maybe multiples your income by a factor of 10 because you have big city pay, living in a small area. But also things are cheaper here. So it’s not just one variable; it’s two, right. The cost of living is lower, and you’re getting big city pay. 

Like at Platform, I don’t care where Jaci lives. I’m not gonna pay you less if you live in a small town or more if you live in a big city. So if we have employees that live in big cities, I’m like, why? You could live anywhere. Why wouldn’t you live somewhere that increases your earning power by $1000 or $2000 or $3000 a month? You know? And people don’t see it yet. Because they don’t believe reality until they see it.

So until this literally has…until this costs $30,000 and can go 100 miles, people won’t take action ahead of its implementation I guess. What would you do … Maybe it’s easier to look historically … What would you do if in the 1890s you foresaw everything that was gonna happen with the automobile? What would you invest in if you saw it a decade or two before everyone else? 

Audience: Tires.

Land miles away.

Tim: Yeah because the car completely opened up the country where people started driving and traveling. Like hotels/motels didn’t really exist. They were only a rich person thing when wealthy people would travel, right? Gas stations and fuel stations. And right about now those are about to be decimated because with everything moving electric at some point in the next … I don’t think it’s gonna be 5 years, but 10-15 years out. There’s really no need for convenience store gas stations, because most convenience stores sell gas at cost. Hoping you go in and buy stuff for your road trip.

So those might go the way of the past. And who knows what those will be replaced with. Think about all the malls as we’ve centralized everything and went away from main streets. And we went all or none on shopping malls which are just a centralization of local stores. What are all those malls going to become in the future? 

We’re still in this period of time though, where there are tons of local main streets that absolutely suck. They’re just terrible, and they’re cheap. Like everyone knows Warren Buffett.  He’s super rich, the richest investor ever. They think he’s this amazing investor, but he really hasn’t made any good investments in the last like 20 years. Almost all of his good investments were made 30-40 years ago. Does anyone know why? Does anyone want to take a stab at that?

Audience: He doesn’t invest in anything that he doesn’t understand. 

Tim: True.

Audience: Speed of information.

Tim: What’s that?

Audience: Spread of information?

Tim: Kind of. It has to do with information. So yes, compound interest is absolutely true. He’s made his money because he’s just had time in the market, you know. His whole investing philosophy is based on an idea that doesn’t work anymore. Like you’ve learned everything from Benjamin Graham and the whole philosophy was value investing. Which is like buy companies or buy stock which has a low PE ratio, price to earnings ratio. So like ideally, something in the single digits where you can buy a company that’s worth 10 million dollars but cash flow is 100,000 a year. So that’s a PE of 10 million divided by 10. So in other words, you buy it, and you get your money back in 10 years.

He almost exclusively bought companies that when he looked at their book value that PE was really low, but this was back before all this data was centralized. He would personally do research. Drive or fly around the country and ask companies that he was an investor and I want to look at your books. And he’d find opportunities. Like wow, this company no one’s ever heard of, and they have PE of 6. That means in 6 years I get my investment back. And he would go all in on that company buying shares because other investors didn’t have access to that information. 

Like you actually cannot replicate that strategy today because all financial information is available at the click of a button. Like you can just go on Yahoo Finance and sort every available public stock by PE. So there is no more informational asymmetry. You actually - a young Warren Buffett today could not replicate what Warren Buffett did back then. Because information is completely readily available. You can’t like find exceptions I guess is what I’m saying. 

Right? Except this. This is information asymmetry. It’s like you know something that the rest of the world has buried their head in the sand, and they don’t see. Maybe because they don’t want to see it. Right? This is an actual informational advantage of cool like, Heather, you live in like Medina County, Hondo Texas. You see all this stuff happening already.

So you’re probably on like the tip of the spear in terms of seeing this trend. And there’s still no one doing anything. There’s no people opening retail restaurants. You know the way people made money in the Gold Rush wasn’t finding gold. It was selling pickaxes to the people moving out there.

Audience: It’s crazy how nobody’s doing anything. I haven’t met one. Of 250 houses and another neighborhood coming in. 918 houses. I mean our town is about to double in size. 

Tim: And nobody is starting the retail businesses to serve all those people. 

Audience: Nobody is doing anything. We don’t have, like entertainment wise, we don’t have a movie theater. One with one movie a week, and it’s usually an old one. No bowling. I mean nothing. There is nothing to do. 

Tim: And so the last thing I’ll say here is, because I know I just like Blah! Gave you a bunch of information. But most of you are in a high margin cash flow business. Like your cost of goods are a tiny percentage of your overall business, right? Like you might think, oh no my expenses were 20% of my income last year. It’s like well, that’s an 80% profit margin. That’s amazing. Like most businesses would kill to have an 80% profit margin, right? Like if you make $300,000 a year as a realtor you know, more than likely you spent less that $50,000 in that business.

Right, so you have a very high margin, cash flow driven business. This strategy, what Jason is doing, is more driven by a balance sheet mentality. About I’m not necessarily going out and trying to build businesses that are gonna make a ton of cash flow, but I’m optimizing for 10 years from now. If I own the real estate and I own a business that is at least successful enough to pay the expenses - the mortgage and everything - then I’m acquiring the property for free. 

Most people think about buying a property and finding a tenant. But if you own the business that pays it, then the business is building equity for you. And at some point the population trend will make that business profitable. So it’s still a win if you buy and building, put a business in it and get it going whether you start a pizza place, car shop or whatever. As long as it’s paying for itself, the population increase will turn it profitable in the next 5 years. 

So Jason thinks in 10 year increments. I don’t think he ever explicitly said this, but he’s optimizing for what’ll maximize my portfolio value and my financial situation 10 years from now. Because if he wasn’t doing that, he would not be spending the amount of money he’s spending on consulting, branding, pumping absurd amounts of capital into some of these buildings that he has. Because he’s not concerned with short term cash flow.

Does it help that he has a pizza business that brings in $600,000 a year in profit? Yeah, that helps. But now he has a tax problem, so he invests into all these other buildings to shield that income. He doesn’t want to show a huge, taxable profit. Remember, Jason said he hasn’t paid taxes in 7 years. 7 years? Something like that. He hasn’t paid federal taxes in that long. Because of all of the projects that he is doing.

So imagine what Jason will have after having like a decade head start, really a multi-decade head start in Bellefontaine. I think anyone can do it. You just need to find the small town that ideally has not things to do, but maybe has natural beauty and is somewhat near a major city where people might want to live. And then look at market trends, are people moving there? Like look at are people with remote jobs moving somewhere? 

If that’s happening, then there’s huge opportunity there. And ask yourself the question: do people who live there drive more than half an hour to 45 minutes away for dining experiences, shopping or retail? Because there are a lot of small towns where that’s true. There is money in the small town. Like in our crappy hometown in Minnesota, there’s a turkey company called Jenny O, that’s a billion dollar company. Billion with a B. And it’s in this tiny town.

So all the corporate executives of this billion dollar company about the size of Bellefontaine are in this tiny home town. And yet, it’s still a hometown that people will drive an hour away to go to Olive Garden. Because this is a nice meal out. Or if they’re classy and they’re into seafood, it’s Red Lobster and is also an hour away. So if people aren’t leaving, but they are still spending money elsewhere, those would be the two things.

Are people with remote jobs moving there? And are people who live there spending their money elsewhere? Well, that’s a slam dunk then. You know, that’s about as have your cake and eat it too as you can possibly get. Where you’re living in the bara’ world versus the asah, but there’s really not a down side.

So just so everyone understands what opportunity zone is. It’s basically like you can put money into buildings if it’s in a federally designated opportunity zone. But you don’t have to worry about doing a 1031 on the backend, because you don’t owe taxes on the capital gain appreciation. You could still do … Everything Jason is doing he could still do in the opportunity zone. Because he would just 1031 it or just never sell. 

You know. So, cool, well thank you guys for coming out. And good.