You Can Only Be a Local in One Place, with Casago CEO Steve Schwab

Annie Holcombe  0:02  
Welcome to Alex and Annie, the real women of vacation rentals. With more than 35 years combined industry experience. Alex user and any Holcomb have teamed up to connect the dots between inspiration and opportunity. Seeking to find the one story idea, strategy or decision that led to their guests big aha moment. Join them as they highlight the real stories behind the people and brands that have built vacation rentals into the $100 billion industry it is today. And now it's time to get real and have some fun with your hosts, Alex and Annie

Alex Husner  0:44  
before we start the show, we wanted to take a minute to acknowledge the incredible sponsors that have made this show possible

Annie Holcombe  0:50  
wheel house has been our premier brand sponsor since August, and we are so appreciative for their support. It's been an honor to represent such an incredible company alongside our brand and to get to share the success stories their clients with our audience,

Alex Husner  1:01  
we have big news to share. Today we're excited to announce that Casa will be our next premier brand sponsor, along with co sponsors guest Ranger and good neighbor tech.

Annie Holcombe  1:10  
This is a special episode as we get to hear from Steve swag CEO and founder of Costco. Over the next several months, we'll be sharing stories of Costco franchisees as part of our spotlight on exceptional property managers.

Alex Husner  1:21  
We'd also like to thank Reverend research for sponsoring Alex and Angie's List, visit Alex and Angie's list.com To see our recommended pics with an all categories of vacation rental technology and services. Welcome to Alex and Annie, the real women of vacation rentals. I'm Alex. And I'm Annie. And we're joined today with Steve Schwab who is the CEO and founder of Costco, and my new boss. Steve,

Steve Schwab  1:48  
welcome to the show. Oh, thanks for having me, guys. So excited to

Annie Holcombe  1:53  
have it. Yeah, Alex mentioned to you that when we first put the podcast together, we had our like, target list of people that we wanted to interview and I had you on the list, worked at our company when I was at lexicon and worked with Costco. And so I was really familiar with what you guys had on the surface, but really wasn't understanding really what it was all about. So it's nice to come full circle and have Alex working for you. And then have you on the podcast. I think a lot of people know who you are. But I would love to hear who is Steve? How did castigo come to be and start us off from there.

Steve Schwab  2:24  
Sure. Yeah. And I guess in that story that you just sold, told, Alex didn't have any idea who I was, which

Alex Husner  2:34  
wasn't gonna say how much has changed in a year?

Steve Schwab  2:39  
Right. Right. I love that. That's actually the best part of that whole story. So yeah, I'm, I'm, I've been in the industry for about 21 years now, coming up on 22. I started as a kid just out of the army in college and went down to Mexico, kind of on a last minute thing and decided to live there for a little bit. And through a series of events, which being I was at a at a bar. And this really huge man, like six foot seven, was talking about how you can crawl up on a roof. And I had actually done some air conditioning and metal work in high school my senior year till I can do that. So I followed him out to this beachfront community and jumped up on the roof and grabbed a grabbed an electric drill and some in some metal screws and started fixing the problem. He offered me some money. Now I can tell something's wrong with me to tell you I didn't feel well. And so next day, he called me again and I no more work than I totally couldn't painting but I had taken beer and exchanged we became friends and he had me over for dinner at his house and his wife owns Cindy's beachfront rentals. And after a while, I hadn't seen him in a come to find out what was wrong with him. He had cancer, he passed away. And his wife called me up. Said, I think you'd be pretty good at this. And Bruce, specifically talked about you and said, Ah, Cindy, I'm really not a maintenance man. I just did a little bit of work for you guys, but not a maintenance guy. And she was no dummy. actually owning this business, he thinks that you have the right idea for running a business like this. And so through a series of looking at all the paperwork she had, there was no software. I ended up buying the company from her a little bit of borrowed money and, and a little bit of a prayer and and off we went. And that's how I got into the business. That was 21 years ago. And I still have about half of those employees left in the 70s. Before mentals one passed away. One's retired and the other housekeeper. We have now three generations of her family working for us. So pretty cool. Yeah,

Alex Husner  5:01  
that's incredible. And we hear from so many of our guests how they kind of fell into vacation rentals, and they didn't ever really plan on being in this industry. And many of us before we got into it didn't even realize that it was an industry. But when you first started I mean, did you? Did you 21 years ago? Did you know anything about vacation rentals, or that it even existed as a business?

Steve Schwab  5:25  
I knew it existed. It was on my periphery. He was anything that I could have ever done at the time, or afforded. I'd seen it knew nothing about it. They kind of had explainable how the whole thing worked to me. And, you know, from there out, it was, I didn't think that there was a lot of people like us out there, I felt very alone. I felt like we were sort of the, the redheaded stepchild of the hospitality industry, when people from the hospitality industry would say, what do you do? Oh, I'm on vacation or property manager they'd like, Oh, yeah. It was. Yeah, yeah, it felt kind of It didn't feel great at the time. It's funny how the industry has come from sort of the old, you know, the alternative, sort of side thing to becoming this multibillion dollar business and recognized as a mainstream of travel. Yeah, it's the best thing to watch. Red Carpet isn't all.

Annie Holcombe  6:30  
So I've been in in vacation rentals since the late 90s. And the market that I'm in, so Panama City Beach, and, and I remember that, because the company that I worked for was hotels, and we were morphing over into vacation rentals. I were kind of riding rode the fence for a number of years. But you would go to meetings and which What are you representing here, oh, of these condominiums that are being built are these vacation rentals, and we were like, You people are causing so much problem. Like it was just it was just this, they didn't know what to do with us. And so it is funny, you know, to your point, like just to see how it's come. You know, it seems like lightning speed that we've all of a sudden become this this industry that people respect and, and look at and really know that we're not going away and that we're not alternative? Like I always joke about it. Like I don't know that I like being called alternative, because I think we are an accommodation choice. And it just depends on what people are doing. But over the time that you've seen the industry evolve. You a lot of your business was you started in Mexico. Correct. So that's where you started out. And I think that, for me living in a market that just sort of blew up overnight. I mean, I think yours was a pretty slow, methodical growth. Was that how Mexico was growing at the time? Or was it just your involvement in it was

Steve Schwab  7:44  
slow? Well, the town of Horton Jasco, I happened to catch the wave just as it was, as it was starting to build 100 resorts down there. And my competitor, which was Russian fleet management, they were sort of the 800 pound gorilla in town. And they left in the middle of the night with everybody's money. It was actually on it was on the day that Saddam Hussein was captured. And yeah, we I saw their their their vehicle barreling by just going crazy driving like recklessly towards the border, and how strange and I got to the office and realize they had left with all the homeowners money with all the payroll with everything, and through that process of taking care of those homeowners word got out. And from there on, we grew, we were we grew throughout the entire beach, and we became the favorite became the hometown boy of of the vacation rental industry in that city. And I was pretty happy with that I never planned on that much growth. It was actually a lot of learning. I'd never operated anything to that size or planned on it. So I sort of stayed in that in that that area and in the sandbox for a long time trying to figure out how to run the business. And then when we when we decided that we were probably had too much of the inventory there. We decided to go to st Carlos and so I opened up a psychoanalyst and thought I could just rubber stamp what I've done in Rocky Point and that was a punch to the face with a lot of learning yeah you don't you know when you when you go to these cities you can only be a local one place and there's a local homeowners yeah there's there's a local every every city has its own local culture when it comes to homeowners. And there's very different expectations of what the commission should be who pays for what how things work, and you know you dense their debts. They don't ensures, right? So you you've gotta go in and understand and be sensitive to each community. And that was my first lesson in being humble in and loving the community instead of thinking that you're supposed to love me. And that was foundational to our ability to grow the way we have throughout the years after that.

Alex Husner  10:28  
And how did you grow in that market? Like, once you've gotten in there and realize that it was different than what you were used to? Like? What what were the steps that you took to make some progress?

Steve Schwab  10:41  
You know, getting somebody local, come in and help understanding that I have to do it their way, they're not going to do it my way. That my success in another city, your community, has no value in this community. You know, my, whatever I've done well in another community has a zero value to the new place I go. We have to show up, we have to be humble. We have to be local, you have to love on the community and not use the community. And understand that, you know, the system and product processes, and commission rates and fees, have those off the window and start from scratch again, and rebuild to that community. There's only a few things that are always immutable, and you know, transparency, trust, ethics, being centered on your homeowners, making sure that they're well taken care of loving on your guests, so they have an amazing experience and come back. These are the sort of immutable principles, right, but everything else, start over each time. And, and be humble when you hear what the committee wants and needs. And don't try to tell them what is best for them.

Alex Husner  12:02  
We'll be back in just a minute afterward from our premier brand sponsor Costco.

Michael Godfrey  12:10  
Well, we're a family run own company, family run, only family works in it. And we're random a boutique, as people have said, I'm not sure what boutique means. But that's what we are when I started this business, helping one lady out who did all of the work herself and just wanted me to look after her property and make sure that the housekeeper got it cleaned. I thought I was the only person doing this because it was vacation rental by owner. And I wasn't an owner. So who was I, I was helping a lady out. I had no idea that this was a business, none whatsoever. And it organically grew to where it is now.

Annie Holcombe  12:55  
That's Michael Godfrey, owner, operator of Sun Valley, Idaho Casa franchise, Michael started the business in 2012. growing organically by building relationships and trust within his high end resort community.

Michael Godfrey  13:07  
I'm a ski instructor, my son's a ski instructor, my daughter's a ski instructor. And that makes you an ambassador right off the bat of Sun Valley. We get turist. And we get people in that look at our lives and just say, Ah, if I could ever live a life like this, so we appreciate that and we know how blessed we are to live this life. And then to have something like this business, which gets its number one goal is to bring people here and show them how we live and let them experience it. Also,

Alex Husner  13:44  
we asked Michael if he had ever imagined that he would be part of a vacation rental franchise, I had

Michael Godfrey  13:49  
no idea there was even such a thing. I went down there and met with Costco at their office. And you know, it was pretty impressive. And I started to realize how we could really piggyback on there and bring in their the resources that they have in our company without giving up our brand without giving up anything really just adding to it and just not even costing us any more money because we're already paying percentages out to our various purveyors of a you know, a different channel masters and and revenue managers and and property management software and stuff. And so it's really not a cost in in many ways. I believe it's going to simplify what we do by putting everything more in one basket and having it so spread out. So Costco offers such a large suite of

Steve Schwab  14:46  
services that

Michael Godfrey  14:49  
I look at as employees as having depth. So by going with Costco, I become a much bigger company with no great with with no additional have expenses, you know, no overhead. I mean, I don't consider that overhead. And yet I've got the, the, you know, backing of a large, you know, successful business. And, you know, they're doing it, they're doing it right. And we've done things right, I was so surprised at my first conference to find out that all this stuff I just naturally kind of did is kind of an industry standard. So by going with them, I just think we can, you know, grow bigger without adding employees. And, and having you know, the depth and knowledge of these guys that really do it. Well. I've mentioned before I said, you never know you got in on the ground floor or something until you're on the 10th floor. And you're looking back. So I think it's just I've met the people there, they're personable, they run their business like we do, it's all about relationship. And, you know, they know stuff, I know, stuff, we work together, and but they're, you know, they've got the resources to, to help out when I've got questions.

Annie Holcombe  16:05  
To hear more stories from franchisees, like Michael and learn about Casa goes vacation rental franchise model, visit Casa go.com, forward slash franchise

Steve Schwab  16:19  
was the

Annie Holcombe  16:20  
jumping off point for you to start this as a franchise, or were you managing for several years, and then decided that I could replicate a basic framework to operate, but then we needed that local person, the local flavor to really make it successful.

Steve Schwab  16:41  
A big part of the growth in Mexico was I had read an article that was called intrapreneurial enterpreneurship. And essentially, this is article about this, this young guy in the ink company, who had this great ideas about all these new colors, and what the market wanted and needed. And the old guys basically told them no, and so he left the company, and started his own company, and nearly took the old company out, they didn't have to buy him and make him a partner. So just taking this idea and going with it, and I was watching might, a lot of my team become very mature, they were worth having their own company. And if I wasn't gonna be a part of it, they were going to do it one way or another. And they deserve to. So taking some of our best people, and helping them grow their own companies, and giving them equity. And instead of being their boss, becoming a peer, and a partner with them, was my initial foray into growth. And these were people who understood the values of hospitality and ethics, and what the values that we've instilled, you know, which are the non negotiables of what Costco is, and of the principles that we use to honor those values, which were, you know, the rules around what it takes to, to uphold, you know, what our non negotiables are. And they were ready to be their own people. And so making an opportunity available for somebody who started off at $100 a week in Mexico as a front desk clerk to becoming my business partner and peer with their own ownership in Costco was the first was the first step to that. And then, as we came into the United States, I ended up with an office in Scottsdale, and through kind of a happen, chance with with two guys at a conference where Eric Reon had pretty much told all the local and small vacational companies that they should just give up, that they'll never be able to compete with Picasa. We had a talk about how this shared resources could turn into something fantastic for everybody. And they both signed up. And that was the beginning of the franchise model. So there wasn't really any plan. It's been it's been purely by trying to do the right things over time and seeing when people deserve to have success and enabling them and growing them, speaking into them and facilitating their their ability to be successful. Yeah.

Alex Husner  19:47  
I read a great line yesterday that you don't go into an opportunity you grow into an opportunity. And I believe that's so true, and certainly something that Andy and I have seen in this past year with the podcast and our own careers and Just looking at casos evolution, and now, not only hearing the story that I've heard, you know, this, this is a baseline, this is only a, you know, 50 minute podcast, but getting to hear the true behind the scenes of what took it took over, there's 22 years, you know, it's looking back, it seems like it probably all happen fast. But there's a lot that went into every single year of that process, right. And it's, it's interesting to think about the companies that have had a challenge with growing, that they've just tried to just buy another company in another market that if they've been in a beach market, they've said, let's let's diversify, let's get a mountain company or something out west. And in most cases, it doesn't really go very well. And I think the model that you took whether you intended to do that, originally or not, that's that is definitely the foundation of the success that we've had. Because when you have the local operators that they have skin in the game and accountability, and they they want to uphold that for the community and also for the organization. That that's that's the pathway to success. So it's, it's a great model, and I'm just excited to be part of it. Honestly,

Steve Schwab  21:11  
I'm excited for you to be part of it. The key to this is to the future, since I've said this, you know, it's how are you going to find somebody who really loves the community, as an employee from another state? Yeah, you know, that back to that you can only be a local one place, find somebody who really loves the community, and understands, you know, the understands the expectations and is accountable to their neighbors. This is still a local business. And you know, people talk a lot about scale and efficiencies, but you can't put scale efficiency to knowing who you can call it to in the morning, or who you went to high school with who's now it has a maintenance company, and we'll pick up the phone for you during the morning because you got to flood going, you know, who's going to turn that wrench, who's gonna be there and who's going to own that relationship locally, you know, this that business owner, it's not a 40,000 50,000 $80,000 hired suit, it's somebody who's like, Man, I gotta get up. This is how I feed my family, I own this business. And they're gonna go up and turn wrenches in the middle of night or or fix a cleaning issue. Because something went wrong with it with the coordination of it. That's that's what this business is really about. It's about like, loving on those homeowners enough to take care of their property when it's inconvenient. And and being obsessed with building the best guest experience you can possibly make. So that the owner is better served in wins more by those guests who love the property coming back over and over again.

Alex Husner  23:03  
Yeah, you told her a story the other day I think is so telling of that about a homeowner in Rocky Point. And something that happened in a car accident. Can you share that

Steve Schwab  23:14  
with us again? No. Yeah, sure. So I've I've been on this kind of mental journey about what love letters are to homeowners and homeowners to us. And we have the summer that's been with us for 21 years now since the very beginning. Canadians lady and her husband you know, anytime you see him, they'll sit down and and and talk with you for an hour really lovely people David with the so long that the resort that they own it didn't have internet when they bought so he come to our office on our computers and there was like, Hey, we got to do reservations like just one more minute you know and and so the Yeah, I get questions like Steve, we got to pay overtime. So we get our work done because the computers are being used like love on him just love on him. And so, yeah, sure enough, they end up in a in a in a fender bender. And they have neighbors in town that they obviously trust. They have family in town. A couple of actually we speak Spanish and when you're in a wreck in a foreign country, and you have the police there and communication is not going well. I think it's an unusual idea to go ahead and call your vacation rental property manager because you're in a fender bender. to police, but that's exactly what it did. And it was a love letter to Kosovo by calling us like, yeah, the relationship had been built on a principle that had transcended business, she knew we actually cared about her as an individual. We, we, we weren't, we wanted her to be, well, it wasn't just a matter of like, Hey, we're going to rent your property, we're going to clean it, we're going to fix any problems, we'll pay for damages we'll collect from guests, we'll make sure that you're fumigated well respected, and then all the lights turn on. It goes beyond that. It was like we cared about her. And she knew it. And as soon as she called, we had five people there, she was surrounded by Casio uniforms, translating, negotiating, calling local connections, who were who we knew, and it worked out really well. And that was a love letter back to her that we care about you that this isn't transactional. And you're not on your own, when you're outside of this, that if you call us for anything, we have a relationship, we don't have a relationship with your property. It's not a relationship, your property is a relationship with you. And we care about you. And, you know, and Sally, she's had some, we've made some mistakes, or she's had questions about, you know, like, what's on the statement? Or, you know, why did you charge this rate or, you know, what's going on with this cleaning, or what's going on with this, you know, work order. But she never calls to fire us, she calls to work on the relationship and have questions about, you know, what's you know, about the account? And that's also a love letter, right? Because if you build those deep relationships, and, you know, it's not how often you you talk to them is how much you care about them when you do talk to them. And yeah, as them as a human being. And when they call to fix the problem. Even if they're frustrated with you. They're doing that because they have a relationship with you, and they trust you. Not because you're just something that can be undercut or undervalued, you know, you can't charge less commission for more trust. And it's not a commodity. Yeah. And so yeah, love letters to homeowners and love letters from homeowners is needed and guest is, is the name of this, we're not in a we're not in a business of just logistics. This is a business, a relationship with our homeowners, our guests, our team and the community. And we just happen to do vacation rentals as the way to pay for it all. But it's a four way relationship. And we're in the business of relationships.

Alex Husner  27:52  
We think about it like when's the last time you got in a car wreck? And you called your dentist, right? Or? Don't do that. I mean, it's kind of unusual to call your vacation on manager. But when you think about it, it actually is it's less unusual, because and I'm sure our listeners can relate to this. I mean, they the companies that understand this business know exactly what you just said it is a relationship business, it's about trust, it's about empathy, and for that homeowner to call you it's like you guys, you're hurt people. So that's, that's everything goes back to that saying of

Annie Holcombe  28:28  
you know, people forget what you do for them, but they never forget how you make them feel. And I think that there's a lot of people that have come into this business in the last you know, I'll say 1824 months, from a dollars and cents standpoint, thinking they're gonna make money. And we Alex and I talk about this a lot of times they get rich quick, guys, women, gals, whatever you want to say. And don't understand that, that you know, this is a very big business, but it's a very small industry in terms of the number of people and we're all interconnected. And we all have relationships with each other and there is that trust that is so important that I don't think that you get at the same level in other industries certainly not in the hotel side of the business I think it's it's just more of a it's black and white business let's you know, the heads and beds let's get the dollars and use your Reynolds has so much more tug at the heartstrings. It's a it's a it's it's a feeling. I mean this our industry is actually an emotion and that's that's the way I look at

Steve Schwab  29:24  
it. Yeah, 100% it's, you know, people are concerned about how do they feel about what you do? I mean, you can do everything right, and they don't trust you they're gonna walk away. Absolutely. You know, you can be providing more revenue. You can be cleaning the property better you can be cheating their guests like rockstars and if they don't trust you, they're not mistake. And the very first time you make mistake, they're gonna be calling to fire you not to fix it. Yeah,

Alex Husner  29:57  
absolutely. No, you just said it's a fail. And that just immediately reminded me of conversations that I had with Pilar, who is the director of Costco university when I was down there for a couple of weeks back in December. And she, you know, explained this whole concept to us about how you know what, what we're doing. It's not, it's not the what, it's not how it's the Y. But what that y really means is it is the feeling that you get when you're, you're helping guests, you're helping owners, but I wanted to use that as a segue, Steve, to ask a little bit more about Costco University. Of course, when I've gotten home, that's the first thing anybody who follows me on social media asked about is, tell us about this amazing school you went to? And how hard were the tests? And what was it like? And is it is it a real university? And it's I think it's mystifying to a lot of people that this even exists. But tell us a little bit about the university and its importance and the role it plays for casaco.

Steve Schwab  30:51  
Yeah, so it started off originally, you know, Puerto Penasco, Rocky Point, by the way, the name, Rocky Point, and Portland Jasco refers the same town, that is the town with two names.

Alex Husner  31:07  
There's a lot of people in Gaza that have two names to learn against.

Steve Schwab  31:13  
You, you've gone through an entire cultural experience of everything having to Nate's right

Alex Husner  31:18  
Isago, casaco.

Steve Schwab  31:24  
It's, it's into our mantra. So Costco University was started because in Rocky play, it was a fishing village. And we had homeowners who were buying for the United States who had specific expectations of, of communication, of cleaning of, you know, accounting, and I was working with a local labor force who was used to being Fisher, you know, fishermen. And so the cultural, the disparity in culture was pretty dramatic. And I was struggling to bridge that gap of expectations. So the idea of taking the time to invest into the people that we choose to live eight hours of our day with, was the precipice of why costume University, I think you do people a disservice when you sit them down, and hand them a job, and don't set them up for success. Right. And so, you know, in No, in no elite unit was ever part of, in which there wasn't an indoctrination, training. And, and, and, and build out to what was expected for me, and how to do my job that I was ever part of. So it just fit into this, that it's not fair to sit somebody next to somebody who does reservations, watching for two days. And tell him good luck. It's you're setting him up for failure. And that's not fair. So we hired somebody, and we started training them, where we can give them the time and energy to to bring them in not only from like, how to use the software, but also like, what's our values? And, you know, what's expected of you? And how are we supposed to treat our homeowners and how we're supposed to treat our guests and getting them ready for success. And it worked. We started to see that we could, if we picked quality people that had the same values, personal values, as we did, then the business values, were never in conflict, and being able to go from just saying, because that's what we do to be articulate. Here's what we do, and why. James gives them all agency to make decisions. Yeah. And then having the hard skill sets to be able to like to use the software and have a resource to go back and get more training. And it's a big reason that we were able to scale the business from just like, you know, 50 properties to about 130, where there's sort of a breakpoint. And then, you know, when you get about 250 properties, again, there's another breakpoint where suddenly like, what you were doing, then, what got you here, is it going to get you there and and being able to build through those breakpoints was a costume University part of it. And as we started your franchise, like, well, we'll take them to customer University. And that was really unfair to costume University. Because it wasn't built for it. It wasn't built for business owners. It was really you know, it got up to that point, but it was really built for employees. So Costco University has gone through a huge transformation. It continues to transform itself into a real university. for business owners, and the people who work for those business owners to learn the industry from the ground up, understand the immutable principles of vacation rental, which is, you know, trust transparency, being owner centric, just experience and then taking those and doing ongoing support with ongoing training recertifications you know, our, our yearly convention, they can come back as often as they like to get training, they can send employees down, who are new to get more training, equipping the very best people with the right tools, and the right knowledge is the formula for success, right. And so, Costco University plays a part in giving them the knowledge and training for success in that, you know, then the tools and the right people's is up to the individual business owner. But without that third leg of the stool doesn't stand. And it's, it's a differentiator. And, you know, last year, I was shocked, because Pilar, who's our Dean of the University, who's universally loved. She tracks the hours of support, we last year, we put in 6600, and change in hours of support for our franchisees and our partners to be successful. And I don't know anybody else who's doing that. And there's no extra charge for as much support as you need, from tech support with a software to training support on how to, you know, to build out your cleaning teams to, you know, to learning management systems remotely, where we hired people like Dirk Johnson to come in and do a complete masterclass. That's, that and with videographers of how to clean these properties, how to set the properties, how to hold the standards, and it's empowering those local heroes, you know, those those people who are coming in new or have been doing it for a while, and they've been isolated, to be able to, like, have resources to fall back on to it makes us it makes our partners best in class, when you take someone who's local, and loves that community, and is invested into the business, and then gives them a community to support them. And the training for their team. And, you know, the resources to be able to do the right stuff to you know, to do to make the right decisions to support their team. It's a it's a formula for success.

Alex Husner  38:00  
It makes everybody stronger, right? I mean, it really makes every part of it stronger, the support is huge.

Steve Schwab  38:07  
At the end of the day, this is all just people this is this is a very asset light. Business is all about your people. So if you're not going to quit your people with the ability to be successful, you're crippling yourself.

Annie Holcombe  38:22  
Dave, I wanted to ask, and I asked my father and I was told I'm not supposed to say he was a Marine. He's always a Marine, was in the Marines. And so a lot of his structure for me growing up kind of, I think, evolved from that place in his life. And you mentioned kind of the indoctrination of things through through life that every time you were set up in a group it was there was an indoctrination. There was a process. And so do you feel like your experience as an Army Ranger was crucial to how you evolved in Kosovo in general, but just the culture that you were able to build and build out for Costco?

Steve Schwab  39:01  
Yeah, and first of all, thanks to your dad for service, semper fi, he's listening.

Alex Husner  39:06  
He's always our dads are every if nobody else does, dads, do I love that?

Steve Schwab  39:16  
So yeah, yeah. I had leaders like John speedo, and Andy Oh, Rick, and a handful of others that were instrumental in that time of my life. The thing that was crucial or systematic that that struck me was, at some point, about 180 units, this company really started getting away from it. I was I was I wasn't able to speak into people anymore. And I have a big belief that as a leader, we have to speak into our people. Having good emotion more intelligence. So you have empathy, but while also holding them to the standards, and being really clear about the standards is important. So when you take emotional intelligence and hold people to the standards, that's the mark of a mature leader, that, that those standards being clear is kindness. The way that you approach it, to not be cool is the way you get people to follow you. But you take those and be able to speak into into individuals is how you, you do it on a one on one basis. But as his company was really getting away from me, it was becoming unwieldly things were happening in the company that were not how I envisioned this thing to be started going back to looking at like, you know, Ranger Battalion, and wondering like, Why does Ranger Battalion work? Or why is the paternity work? You know, why do these organizations do well, and the founders of Ranger Battalion wrote a credo. And they had, they had values that they had in mind. And they wrote a set of rules that we all had to repeat every single day. And we all understood how to make decisions off of this. And we were held accountable, we had a signer paid, we actually had a signed paperwork that we are both the Ranger creed, we could be kicked out of radio, Tanya, some people were the when it comes to making decisions based on those principles, it's why you could take a you could take a small group of rangers who were out in in a remote area, in harsh terrain, with hostiles in front of them, and unclear set of directions, just only knowing what their goals and the mission are, what the principles that they've been that they've been assigned to, and believe in to us. And they can accomplish those goals, doing the right things without the oversight of leadership. And so, we I sat down, and I wrote out the principles that espoused our values. And they and and I believe that values are immutable principles can evolve. And our principles have evolved, we've created this thing called the orange credo. And it talks about owners renters, you know, it talks about, it talks about nurturing, it talks about guiding each other talks about excellence. These, these principles are a guide, so that when your housekeeper is out to the home by herself, if she's been having a great leadership group that's working with her and talking about daily, she can make decisions based on what she knows our values are, and these principles are or when your maintenance man has to make a decision, you can make it and he can back his decisions based on the principles, that clarity, that clarity of what expectations are, through these principles is not only kind to them, but it gives them the ability to make judgment calls and back it and on your principles. And you know, it may not always be the best decision, but it'll always be a good decision, if they understand the principles that they operate, because they can defend it. And I will sound like, if you can defend it to the to the credo, you're never in trouble. If you look and say I, I'm I went out. And I spent this money and did the extra time to take care of this owner, because our very first principle is I am the owners data. And I was being honest. I'm like, good enough. Okay, yeah. And so the ability to grow beyond a specific leader is instilling those principles that honor your values, and talking about on a daily basis, where you start to turn a herd of cats, into a team of horses, because they all know what to do. And they all can do it on their own. And with a little bit of guidance, and given a mission and restriction ahead, they'll all decide they'll all know exactly what they need to do and make decisions in your absence. Yeah, it's, it's a well,

Alex Husner  44:14  
it's a well oiled machine. And I say that not just from the culture standpoint, but you think about it and I hadn't really thought this way until this conversation but really those values and what you just explained was also part of how you built the software right or the a lot of the intent behind some of the things that you built in the software for the transparency and just being the owners advocate making sure that there's there you know, there's complete visibility into what what goes on and the ease that it gives to your staff to be able to service the guests and the renters too, but talk a little bit about that on the technic technology side because that is a really important part to cost ago and to what we're able to offer franchisees and to property owners

Steve Schwab  44:57  
Yeah, so, you know, from a technology point of view, I was privileged enough to be part of the journey with Carlos on streamline. And you know, it's the software matters it is, it is a force multiplier in your ability to do a job efficiently and the logistics of what's happening without the human error is greatly decreased by those by that software. And how you use the software will determine how well you do with it. You know, I've watched people with the exact same operating system, one person says, changed my life, and another person says it's completely useless. It's the technology matters, but the training and use of that technology is the key. We've we've built out things like, I mean, we built our streamline, we've built on add ons like the Casa app, which is really a human resources, task management and and accountability tool, which we're actually going through a complete rebuild again, because as we've grown, we've outgrown it a little bit. And the complexities are getting deeper. We have software like audiences, which is a homeowner acquisition tool,

which is under constant construction and rebuild and improvement. You know, just the, the tech suite as a whole

matters in these days, because you can be competitive without it. But the application of how is used is the real advantage. Yeah, absolutely.

Alex Husner  46:52  
I was telling somebody earlier about the QR code technology that we've developed, that we have in the rooms to help guests understand how to use the hot tub or to the Wi Fi, the shower, I mean, literally anything that could cause a guest to have to call you. And we all know in this business that they're going to call, they can't figure something out. And the person I was telling about this, when I thought I'd said I discovered the fire or something, and he was just blown away. But when you think about it, you know, I've talked to some of our locations that they say that that's reduced their phone calls their service calls by 90%. So it's things like that, but I feel like you know, your experience within the business for so many years, that enabled you to really be able to develop these systems and software's that, that help us be able to run run better and more efficiently. And that's that's the difference. We talked about this a lot on the show with a lot of the newer software's that are out there that it just doesn't have that 22 years of experience boots on the ground, you know, using the software and being in the business.

Annie Holcombe  47:52  
Yeah. Anticipating the need. Yeah. becomes one. Yeah, yeah,

Alex Husner  47:57  
that's actually one of the our credo. Yeah, yeah.

Steve Schwab  48:04  
Yeah. You know, the best values you're gonna find is people come up with amazing inventions when they get hit around the head and neck enough to finally figure out a solution. Yes, sometimes. And sometimes the list of those phone calls and you know, we have a woman who's about to become an orange badger, which means she's been with us for 10 years. In the Scottsdale office, her name is Susanna. And her superpower is patients. And I've, I would sit in my office and listen to Susanna be so kind to who was obviously a very old person on the other line, tried to figure out how to work remote control for hours.

Annie Holcombe  48:50  
Oh, my God.

Steve Schwab  48:52  
I was like I was I was like, I was like, throwing a rope over rafter to hang myself was

like, and she's just so rad. No, no, let me show you again. Just love her. But the amount of hours she was spending and it was was nuts. And I had a experience where I went down to Cabo with a headlight for my foreigner and, and you know, I'm mechanical, and my dad was a mechanical, I'll take I'll put this new like this new headlight and two hours later, I've got all the bolts out and I cannot pull the stupid headlight out. I finally watched a YouTube video. And there's like this. There was like this bolt we had to reach underneath the bumper back up and back around and unscrew it from like where you can never see it. Right I've been yanking on this bumper. I had the bumper like all warp historical, friggin pro borrowing on this thing. As literally as soon as I watched the YouTube video, like within three minutes as like, and I walked back in and Marco who's in the Cabo office, I hear him on the phone call. He's like, no, no, just turn the heat up just the knob on the right. And I'm like, Man We need a YouTube video. Yeah, like, Oh my God, wait, it sounds like wait a minute. So I went and that video is how to do it, that went back to the office and like that had to, like, create a QR code and a printed QR code. And I had to make it, go to the YouTube video and upload the to YouTube video, then I had to get it laminated and had to go back and stick it in there like, well, this is never gonna work. This is too much work. So, you know, the system we have now is we have these pre built placards. And you can make the video right at the house, upload, stick it to the wall, and it's done. And it's Yeah, yeah. 90% Drop in calls for anything that we put a QR code on? Yes. was

Alex Husner  50:40  
when I was at Casco University, I don't know if I've told you this, Steve, I don't think I've told you any. But one of the days I was out in the field with David seeing how they, they actually put these in the units. I recorded some of the directions. So how to use the Wi Fi how to turn the shower on how to turn the TV on. And I was so nervous recording this little bit. David said, he's like, where are you nervous? podcast, and you know, you're on stage and stuff like that. I don't know. I was just like, I don't want to mess this up. Because I don't want the guests to end up calling because they watch the show. And they were so like,

Annie Holcombe  51:13  
I don't know what she doesn't know what she's doing.

Alex Husner  51:18  
And we can track how many times those QR codes have been scanned. Yeah. I mean, that's really the whole thing. You know, if it's useful. Yeah. I mean, like it's complete trackability to whether or not it's helping operations. So

Steve Schwab  51:28  
yeah, it's, it's really cool. And if that home ends up going out of inventory, the QR code automatically switches over to a video. That's a advertisement for Costco. So Oh, wow. I

Alex Husner  51:41  
love that. Yeah, that's cool. Yeah.

Annie Holcombe  51:46  
Where do you see I mean, obviously, you've got Alex now so you've got a superpower to help you kind of catapult to the next level. But where do you see castigo going? In 510 years? I mean, will we ever get the answer? Is it Kosovo or Isago? I don't know. But where are you guys gonna go in 10 years?

Steve Schwab  52:04  
Some things are meant to be left unanswered.

Alex Husner  52:09  
Mysterious.

Steve Schwab  52:12  
I'll put the correct pronunciation on the back of my headstone.

Alex Husner  52:17  
Oh my god.

Annie Holcombe  52:20  
I'm really closer in age. I don't know it's gonna be a race.

Steve Schwab  52:26  
Did you ever hear about the woman who said that she would never give up for oatmeal. The only time she'd ever get for oatmeal cookie recipe was over a dead body. And she got the she had the recipe put on the back of Red Stone

Annie Holcombe  52:40  
put it in my my obituary, I guess.

Steve Schwab  52:45  
Because I think it's I think it's a great way to to get people to come visit your headstone. Yes, but it's pretty funny anyways. So you know, we're gonna continue to grow, we've got a goal of pretty aggressive goal for this year. I would tell you this, that if you look at the top 10 residential, real estate companies in the world, they're all franchises. And there's a reason why it's still a local business. Like we keep going back to those local realtors know, know their area, know their city love their city. They're, they're beholden to and accountable to their areas. But they needed tech, and they needed distribution, and they wanted a recognizable name. And they and that's why you when we see a red wine balloon, we all know, ReMax is sustainable, and it's generational. And I believe that vacation rentals is still a very personal and very local business. And being able to empower these local heroes with better tools every year. And a ton of value for them is the model that gets us to a consumer facing brand. So, you know, article is to not just grow bigger, but to grow better and recognizable. And the number one job we have, through a series of different strategies is to be the most valuable resource that local property managers under the Costco umbrella could ever ever have. If we continue to do that growth and brand name recognition will take care of itself along with along with Alex's help

the more the more Love letters we send out to homeowners. Yeah. And the more love letters we get back, the better the company gets. Yeah. And your

Annie Holcombe  55:08  
earnings just magically dropped.

Alex Husner  55:14  
cinematic effect real anyways, not watching on YouTube. And he's gone.

Annie Holcombe  55:21  
Terry White will love that.

Alex Husner  55:22  
Yes. Well, Steve, thank you so much for coming on the show. And just my pleasure. This is this is exciting. We've obviously Andy has wanted to have you on the show for a year and a half since we started. I wanted to have you have you on the show since I first met Ryan about a year ago now. But it's been such an amazing journey. I'm sure everyone who's who's seen my social media knows that I'm a little bit obsessed with the company and where we're going and, and just in love, love with it. And I think when you have employees that become part of that employer brand and just that love the mission, that's where the secret sauce is, and just it's been great getting to know everybody and learn what this culture really is all about. But if anybody wants to contact you, what's the best way for them to get in touch?

Steve Schwab  56:11  
You can always email me as steve@costco.com as Ste ve at CSA geo.com. Or, if you're looking to learn more about franchising, Alex VX

Alex Husner  56:30  
that's the first time that I'm getting somebody's contact info. Where I asked you said I want to say thank you

Steve Schwab  56:40  
so much. Thank you for having me. Really appreciate you guys. Anyway, if anybody works here,

Alex Husner  56:46  
yes. If anybody wants to get in touch with Andy night, go to Alex and Annie podcast.com. If you're enjoying the show, we'd love to hear from you. If you could leave us a review wherever you listen to your podcast and until next time, thank you for tuning in.

Transcribed by https://otter.ai