From Rejected Athlete to $66B CEO – Kyle Matthews | Ep. 197

0:05Hey, everyone. Welcome back to Founder Story. Today, we have Kyle Matthews. Kyle, you are the founder and CEO of Matthews Real Estate Investing. services, the largest privately held commercial real estate brokerage in the US, 25 offices, a thousand plus agents and employees, and over 66 billion in sales volume since 2015. I know you're going to give us some incredible tips and strategies of the success you've had, the learnings, but we got to go back in time because you have a very interesting passed around a family of professional athletes. But yeah, you took a different approach. You took a different path.

0:48So let's go back to the time when you were in college, you're playing, the possibility of you maybe being a professional before you even thought about real estate. How did this transition happen? Yeah, no, I, first of all, I appreciate you having me on Daniel. And I love how you say I took a different path. It almost makes it sound like it was a a strategic choice of mine. Unfortunately, that wasn't how it all played out. I was playing football at USC about 20 years ago when we were winning a lot of games, won national championships when I was there. We had a great coach in Pete Carroll and some amazing teammates and players that went on to the NFL.

1:23Unfortunately, I wasn't one of those players. I didn't have that. There's levels to every game and there's certainly levels to football and I didn't have that last level. and so uh but it's not something you know you really realize early on it was at the very end of my four years at school when you know coach sat me down heading my senior year and said hey we're going to go with someone younger it's like kind of hits you just like a punch to the gut and so there's there's somewhat a mourning of the athletic side but really like well what am I going to do now you know because pretty much everyone in my family before me and subsequently after me had played in the NFL.

1:57And, and so I just, uh, you know, erroneously made the assumption that that would happen for me and it just, it just didn't. And so, um, I, for a longer story for a different day, I knew I wanted to be in real estate. I liked the idea of tangible assets. I like the idea of kind of a finance based industry. Um, but I, because of the football focus, I didn't really have, uh, the technical real estate skills that most people who want to go into real estate have coming out of college. I didn't go to real estate finance classes. I didn't necessarily know how to model or underwrite properties, but I wanted to be in the business.

2:31And so very quickly, I only had a couple months to kind of accept the loss and take the L on the football side before I said, look, I got to get a job, right? And I want to be in real estate, but I wasn't going to get hired for an analyst position or development associate position, a typical entry level opportunity. And so really the only thing available to me, and it ended up being the biggest blessing professionally of my life was brokerage, real estate brokerage, a service-based industry where you eventually, if you're good enough and you can communicate your value proposition to an owner, you're hired to provide services for owners when different services in the business, whether they're buying or selling properties, leasing properties, they need debt for properties, and there's a whole host of other services.

3:12But ultimately, that's what led me into real estate was me not achieving the success I was hoping for from a football perspective. You've scaled exponentially. I mean, these numbers are incredible. And we were talking earlier, we've had people like Ryan Serhan on here before, but the numbers that you have are just exponential in this timeframe. And I think a lot of people look at it and say, wow, I want to achieve that one day. And you've been doing this, or at least you started this company since 2015, which I'm sure you also had prior experiences. But what were some of the things that when you scaled from, let's say, zero to 10 million in sales, 10 to 100 million, 100 million to a billion, what were some of these transitions or some lessons that you learned?

4:01Yeah. So, you know, what happened was I got in a brokerage and I was a broker doing the deals, you know, on behalf of clients for about 10 years. And in 2015, I was presented an opportunity because of the company I was at. I had achieved success there. I think I was their top producer globally. And they were about to go public. And so they were changing some of the internal rules around prospecting and commission sharing and all that. And again, we don't need to get into weeds there, but it didn't make sense for me to stay. And at that time in brokerage, oftentimes you evolve into what's called teams, right?

4:38They're not formally branded, but they're teams where I was the senior agent. There were a couple people underneath me, younger agents that I was mentoring, but they were also involved in my deals. I was involved in theirs. And I had a couple employees, an analyst, some marketing people. and I was like, I feel like I'm basically running my own little boutique here. I might as well just start my own thing. And that was ultimately how Matthew started. It wasn't this big plan of mine. It wasn't this well-thought-out vision or goal I had since I got into the business. It just kind of happened. And kind of silly me, I thought I would just stay small.

5:13And then it scaled very quickly. And to answer your question, it's also worth noting it was self-funded. So I have no outside investors, no LPs, no debt, like just funded it myself and, you know, and started with 10 people. It became 20, 20 became 40, 40 became 80. And just every year we seem to be growing exponentially. lessons you know lessons i've learned along the way especially as a founder of a self-funded company is it is um you know ignorance is bliss the amount of work that goes into especially the first couple years is uh yeah i i can't even prepare people for it you know it's basically every waking second of every day i would get in the office typically at 5 45 in the morning i'd stay till about 8 30 at night, Monday through Friday, Saturdays, I'd usually work six, seven hours on Saturdays and Sundays I typically go in.

6:04And it's, it's not just a job, it's a lifestyle. And I don't mean that in, in, in, you know, in terms of like, it's this incredible lifestyle, it's a grind. And that was my experience. And because I attached my last name to the business, I, I, it was probably this best and worst thing I ever, I ever did. You know, it was, it was the best thing that it created a lot of good, you know, brand synergy with who I was as a person. But the downside is if the business fails, then that failure is attached to my last name. And my father gave me a great last name and I wasn't going to mess it up. And I certainly wasn't going to assign failure to it.

6:38So it just kind of created this manic obsession, this crazy work ethic that, you know, just if, if, if any other lesson from starting a company, it's not a job, it's not something you can turn off. It is basically every second of every day until you, you have the resources to hire professional management. You have the resources to bring on great teammates to help you operate the company, which is, you know, luckily where we are today. You bring up something that we've heard before with other incredibly successful people like yourself, that they had to be forced out to start the business. I find this common, like, we work somewhere, it's pretty comfortable, but you know, we get fired, the business goes under, things change, whatever the reason is, and then we're, you know, forced out to then start something on your own, going back to the feeling of when you transition, because obviously you transition from college thinking something, and then you had to do something else.

7:34You get this brokerage job, you're doing well, senior agent, and then all of a sudden everything changes. And now you got to go do something on your own. Were there fears, hesitations? What were some of those emotions thinking, okay, I'm going to start something on my own? Or were you in a place where you're like, you know what, I'm going to crush it. I have no fears. I have no hesitation. Yeah. You know, it's interesting. I I'm, I'm happy to hear that others have had a similar, um, start to their career where they're almost forced into it. Uh, you know, I definitely am not a victim and wasn't in that moment.

8:07I could have stayed at the company I was at as a big publicly traded brokerage company. You know, you're doing North of$10 million a year in fee. it's a very comfortable life. And most people, it's like, why would you leave it? It's like, you don't unless something drastic changes. And that's what happened with the going public. Again, just the relationship between my business and the company changed significantly. And from me and my teammates standpoint, it changed for the worse. And so while it wasn't like I had to leave, I meant from an economics perspective, it just didn't make sense to stay.

8:44And so I surveyed the landscape. I looked at other companies. I was like, they're all the same. They all have this kind of structured kind of fiefdom fee sharing thing. And I said, well, then I'll just go do my own thing. And the answer to your question from an emotion standpoint, yeah, there was fear. I mean, fear has always been probably the biggest driver for me, less so as you get older, but certainly when you're younger, it's kind of like, oh, what if something bad happens? What if I fail? What if it flops. So much of the fear is driven by what will people think of me? And again, hopefully, and I've noticed this within myself, as you get older, you just care less, right?

9:18It's like the Churchill statement in your 20s, you worry about what everyone's thinking about you. In your 40s, you stop caring about everyone's thinking about you. And then they say in your 60s, you realize they were never thinking about you. Well, my fear was driven like, well, if I start this and I fail, oh my gosh, what are people going to think? And getting back to the last name, I don't want to be seen as a failure. On the other side, I think probably the biggest thing I had going for me, Daniel, just candidly, is ignorance is bliss. I was very naive to how hard it would be. I was very naive because I said, well, I'm in brokerage.

9:51I'm doing great. Clearly, I figured out I'm 32 years old. I have all this money. Let's go do it. And it's just, there's so much more to operating a business versus just like providing a service. And, you know, people always ask, you know, knowing what you know now, would you do anything differently? And the cliche answer, which there's truth in it is like, well, no, I wouldn't do anything differently because look at where I ended up. But it was certainly much harder, much more complicated. And really the word we use around here is sacrifice. There was so much more sacrifice in those first couple of years than I ever could have fathomed.

10:24And I wouldn't change anything. I wouldn't have it any other way. It's a blessing to be where I am today. Could I do it all over again, knowing what I know now? I don't know, man. I don't know. Because again, ignorance is bliss. If you don't know what you're getting into, when it hits you in the face, you're just like, well, I'm already committed. Let's get to work. That is so true. It's better to not know the future. It's really better to not know the future in the sense of that, because I'm with you. If I knew everything that was going to happen, I would have ran from entrepreneurship. I would have just kept the corporate job.

10:54I like the ignorance is bliss. I want to go back to what you were talking around, you know, the grind of working so many hours. There's always this attraction to, at least on social media, there's this attraction like I want to be a business owner because I want freedom. And I always think like when I had a corporate job, I had 160 hours of vacation a year. And when I left, I was able to leave and not think about it. I almost feel like when I had a corporate job, I had more freedom because I wasn't stuck. Like you're saying, like, like it's in the beginning, at least, you know, when you when you don't have like a lot of hands, other people that are working and can do the business.

11:33But when you're really grinding, you're like, really, you're stuck in it. You got to do it. How do you how do you feel about this? Where I just see a lot on social media around everyone wants to be an entrepreneur because of the word, you know, the freedom and being able to work when they want, wherever they want. You know, you bring up such a great point, freedom. And so, you know, I'm not trying to oversimplify life, but for the sake of our 20 minute interview today, let's say that there's a mental freedom and a financial freedom. And what they're talking about is like, hey, I want financial freedom.

12:03And that's it's a blessing. It's a blessing to be financially independent. It's a blessing to not have to worry about paying your bills. I think the number one cause of divorce in America, I could be wrong, is like a financial strife. And so, yeah, sure. If financial freedom is a blessing and if it's creating tremendous anxiety and stress and worry and fear in your life, you, you know, in my humble opinion, you should, you should work towards trying to put that to bed. But what I wasn't aware of, and this is kind of the point I think you're making, which I couldn't agree more with is, is the mental freedom you lose.

12:36And I wasn't aware of that. So it's like, Hey, I want to be a founder to your point, social media. I want, I want freedom. I want freedom. and financial freedom is a blessing. But what you give up for financial freedom, certainly for a period of years, let's call it for me, you know, we're roughly a decade in, is the mental freedom from your work. And I can't necessarily represent that I've lived another life and I've been in a, what I'll call a traditional job, but you're absolutely right. Like when you're an employee or when, in my case, when you're an agent, you kind of have mental freedom where you're like, you know, you're only beholden to yourself.

13:09You're only responsible to yourself and or the clients you provide a service for. But as long as you're making more than you're spending and you feel good about your savings, that's it. Like you kind of, you know, whether it goes up or goes down, the only person it affects is you. And there's a freedom in that. When you start a company and whether you have five employees or, you know, in my case, like let's call it a thousand people, it's not about you. It's very much not about you. And that creates, while if, you know, if business is good, it creates financial freedom. And that's great. like I touched on earlier, you don't have mental freedom and you're never disconnected from work.

13:45And when I have four young children between the ages of 14, 11, 7, and 3, and so that I would say is the biggest focus I've had over the last couple of years is especially as they've grown up and they're becoming young men and women, it's to be mentally free of my work when I'm home. And respectfully, that's something I've only been able to accomplish as the revenue and the net income of the company has really scaled to hire professional management or promote within Matthews to actually help operate, run the company so that I can be present with my family and not have to be constantly tending to the business.

14:19But the first Daniel, first five, six, seven years, that was not how it was. And it was, like I said, it was, it was, I definitely wasn't aware I signed up for that and the financial freedoms always a blessing, but the mental, the, the, the loss of mental freedom from your work is a big, big challenge. And it's something that I wish every founder knew what they were signing up for when they start a business. I didn't know. And I think to your point, most people don't. A lot of the regrets that we've heard from other founders who have been doing it for many years is in the beginning, the phase of not being able to really be there for their families, spouses, like all the issues that have come along with that because they've had to put all of their energy into the business.

15:05And I really, I like, I've never heard this before, but I really, really like how you said the mental freedom because of that, that piece of not being mentally free, you can't do everything you want to do. And you have to sometimes choose between, you know, you may be your family or you have to take a work trip or, you know, whatever that is. Um, I, I, it'd be great to understand your development as a person, going from those early stages or the first five to seven years to now transitioning to the CEO of all of these people? And how have you personally changed along as it's progressed further to closer to now?

15:47Yeah, I would say the biggest development in me as a person and a CEO, and those are so intertwined, it's the same thing. I'm not a different person at home than I am here in terms of the foundational values and characteristics. is I would say when I was, you know, I'm 42 now. So when I was 32 and I started Matthews, I had such conviction and certainty about almost everything in life, whether it was parenting or business. And there comes so much inherent judgment in that. I was so judgmental, like this is how it's done. And this is the way, and this is the right way. And this is wrong. And these people wrong and I'm right.

16:25And look at my track record and look at my results. And that's why you should follow me. And there's pluses and minuses. So as I've gotten older, I've become less judgmental. And because I'm less certain, I'm like, well, I feel very strongly. And my experience taught me this. But maybe there is a different way. Maybe there is, I won't say a better way, but another way that it's not necessarily everything in life is a one size fits all, whether that's personal or professional. The value of being certain, and again, not necessarily judgmental, but the judgment part comes with the certainty that you're right at 32 years old.

16:59is that you have tremendous conviction. And if people actually buy into what you're teaching, coaching, or leading them towards, you could be very, very effective, right? And I say this as humbly as possible. I'd like to think for a new CEO in 2015, roughly 10 years ago, 32 years old, I was very effective as evidenced by the results. But I was certain that I was right and there was one way and it was the way I was doing it. As you're on this earth longer, whether it's as a business person, as a parent, anything, a teacher, a student, you just start to see like, oh, like that person also found success and they do it differently.

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19:09You just, you start to become exposed to more, more strategies, more paths to success, more ideas. And the biggest, to answer your question, the biggest change in me is I'm much more willing to consider a different path. Now, I still have very strong opinions and the guys and gals here would say, well, yeah, that's funny Kyle says that because he's still very opinion, very, very strong opinions. But I would say I probably, I would say if I can be accurate in my own self-assessment, which is very hard to do at times, is I'm much more open to hearing a different idea. Again, I'll still make the decision than I was maybe 10 years ago.

19:49I was like, nope, this is the way and I'm right. And this is what we're going to do. Well, I, you know, only because I was lucky enough to be bored in my family. I've met so many of these athletes. And so I got to pick the one I never got to meet. And I was, and still I'm the biggest fan of this person. And it's a shame. I'll never get a chance to meet him, Kobe Bryant. There's so many amazing lessons to be learned by watching his life and his career. But so much of who I am as a person, let alone how I operate this company, is really a mindset mentality, foundation of mindset mentality. In fact, I have a podcast, The Matthews Mentality, where I sit down with high achievers across all industries.

20:34And yeah, I have them tell their story arc and where are you from and how'd you get in the business. But really, I say, what are your motivations? What drive you? What is your why and how has that changed? Because I find that fascinating about myself, how my motivation and my why has evolved over the years. And really a lot of my perspective and my curiosity about mentalities, mindsets, and really the drive, like what drives people to be great? You know, that 1 % and why does the other 99 % have it to that degree? I don't know the answer to the question, but I'm certainly exploring it is because of Kobe Bryant.

21:06And I spent a lot of my time growing up in Los Angeles, I had the privilege of being a fan of the Lakers still am. And so he brought a lot of joy to my life in terms of winning championships, like, you know, but I just, I, I, I am fascinated and I find who he was so remarkable from a mental toughness. And, and that is one of the most attractive qualities I find in people, whether it's in my wife, what I hope my kids, you know, that we're working on that, but with my teammates here is I love skills. I love intelligence. I love emotional intelligence. But more than anything, I love mental toughness because it's my humble opinion that mental toughness in yourself and or your teammates will see you through almost anything professionally life's going to throw at you.

21:51And personally too, but I'm going to talk professional here. Whether it's a recession, whether it's a bad quarter, whether it's a bad product or something's not working. If you're mentally tough, you're going to find a way to push through it and keep working and not give up. most people in real estate who fail, they don't fail because they don't have the acuity. They're not smart enough. They're not even emotionally. That's not it. It's just because they're not mentally tough enough. And when it gets hard over a long enough period of time, they give up. And the reason I'd want to meet Kobe Bryant to your question and spend time with them is just like, I've found I'm most inspired when I'm the least motivated person in the room.

22:26And that's hard to do. I'm very motivated. I'm very driven. I think my reputation within my industry, you know, kind of precedes me in terms of my, my work ethic. And I, I, you know, the culture of the company is a shadow of the CEO. Like the work ethic of Matthews is, is, is hardcore. Right. And, but it, it, it's really, you know, a lot of it being inspired by Kobe Bryant and the way he approached his career, you know, that, that would be it Kobe for sure on the athlete side. And again, part of it is I've, I've had the opportunity to, to hang out with a lot of the best football players and, and, uh, I love them all, but yeah, it would be Kobe for me from a professional standpoint, it's such a cliche answer.

23:04And, you know, I have to provide a disclaimer. This is not meant in a political sense, you know, so it's Elon Musk. I think what the guy, just from a professional standpoint, what he's been able to achieve, you know, obviously the PayPal thing was great and he had incredible teammates there. And, you know, so many of them, uh reed hoffman or or peter teal or you know david sex but how in the world does a guy build a car company from scratch he builds a a rocket you know spacex from scratch like it's insane like how does he how does he do it you know how does he uh how does he find the time you know does he sleep but but really is he just naturally gifted has i'd love to hear how he's evolved as a leader in the time and you know maybe what perspective or what he do differently but But, you know, again, putting what he's working on aside right now, I just, it's fascinating.

23:56And I'd love to just spend time with the guy. And I got one job, you know, here and it's a company. Okay, there's a thousand people. It's big. But like, man, it takes so much. And every night I'm crawling to bed, right? That and the four kids, I could exhaust you. But how in the world does he do it? You know, the companies are bigger, certainly more public. I mean, he has a gas tank. He has a resolve. getting back to mental toughness that guy at least right now is showing he's mentally tougher than i ever could be i don't even know how he's dealing with what he's dealing right now but it would definitely be elon thank you for sharing that um i i really love the both both answers i could totally relate to those things um we got to spend a day with gary v and from an energy perspective that guy has more energy than anyone i've ever experienced in my life i don't even know how he does it, man.

24:49That guy goes 24 seven at a hundred miles a second. And I was really, really amazed at all the things I learned that day. I just could not believe how much energy I was tired. Some people are just built different and those guys are built different and getting back to, you know, kind of how I've changed over the years. Like when I was, you know, 10, 15 years ago, I don't want to say a hater, but I'd be like, well, you know, I could do that or I could do this. And now I'm just like, nah, that guy, he's just a savage or that gal. Like she's just, she's just she you know she's smarter than me she better me as you get older and i think part of it professionally get comfortable with what you've accomplished it's so much easier to give people their flowers and say no they're that that person is just like that i look up to that person and there's every day i look up to more and more people because as i gain perspective in life as a as a ceo as a father as a husband and as a friend i just realize how much harder it is and how much more complicated everything in life is than maybe i thought you know when i was 22 coming out of college and had it all figured out.

25:48And so, you know, again, looking at what Kobe was able to accomplish or Elon, and there really are a lot of examples, but those two stand out as it relates to your question. It's such a, it's incredible. And it's a privilege to, to, to have been able to learn from both of them. Uh, even, even if it's, you know, from afar, from arm's length, I haven't had the opportunity to meet either of them, but yeah, just both of those people I look up to tremendously. Uh, yeah. Thank you for sharing that, by the way, this has been really great. We could probably talk for another hour. I have tons more questions, so you got to come back and then we can dive into whatever, whatever's been changing.