E258: Ryan Serhant: Why Leaders Who Don’t Evolve Get Left Behind

0:00Season two of this show is probably the most raw season of reality television I've ever seen and I've ever been a part of. It'll be uncomfortable for people to watch. It tackles a lot. It goes through addiction. There's so much in the show that I've just never seen before in the space. There was an altercation in the office. They're shot in real time. It was a fight. Not staged. No, not staged. Dude, I wish. It would make my life so much easier. There's a deal we did, Peter did. He's a new cast member this year, that he sold for$60 million. I have a buyer and he f***ed me over in real time. We're in the car filming.

0:42$35 million, all cash. And he hangs up the phone on me. And we do a U-turn and we drive back to the office and the cameras just followed. We go up into the office and I call him out. I go into the cell phone booth. I try to put the deal together. and I lose it and he sells it to somebody else in real time as it's happening. And I had a mental breakdown and broke a whole vase on our first floor. And then the episode just ends. We're not doing the deal. Take me back when you sold your first$13 million home on YouTube. How did that happen? It was on West 18th street and 7th. So between basically 7th and 8th, which is not where everyone decides they want to live.

1:30We were broker number two. And the seller was very frustrated that it hadn't sold because in the West Village, this house is$40 million. This is 10 years ago. If you're going to sell real estate in today's world, you can't just take pretty photos and stick them on the internet or run ads. You're just, you're fishing with blind bait in the dark and maybe you get lucky. And that's how every other real estate agent operated. So we created a video started with me at the top of the house and then cut through the house like an elevator and this is 10 years ago today this would be boring then on youtube like this was like how did they do that and you just dropped it on youtube just dropped it on youtube and then it had a pool in the basement and i convinced my wife to be in the video too and so it ended with the two of us falling in the pool in all of our clothes a 13 year old girl she sees it shows it to her mom who's looking for a townhouse on the east side and says, this is what you want.

2:24You want a house with a pool in it that's modern. She sees the house. She loves the house. She used to be sold on location a little bit, but she just cared about it. They offered us$12 million. We countered, came up to$13 million. We did the deal. So the deal didn't happen in YouTube.com, but that buyer was sourced through the kid through YouTube. What was your commission on that deal? Probably 2.5%. So roughly 350K? Yeah, about. Is that the moment you realized that social was the future and the traditional real estate was a dying thing? It was a proof point for me because I started Million Dollar List in New York in 2012.

3:04I saw the power of content to commerce for luxury items, which until that point had really been done, let's say like for cars, but everything then below market. So makeup, right? Consumer goods, anything you can follow the credit card. Yeah. You can buy with a credit card. A house really can't buy with a credit card. Even today. Um, there's just too many different spokes in that deal wheel. And so, uh, I'd been putting things on social and we've been finding buyers and brokers through Instagram, you know, which kind of had come out in 2013, but it was the first time I'd created my own version of what I did on Bravo.

3:44shot it put it on youtube the next day to millions of people who sourced it and find it really targeted a marketplace and then actually sold it and i used that house as as as my case study for like five years um and then obviously they started rolling in from there and even back from there 2010 you really bet your career on social were you sure that that was the right thing to do? Or was it just kind of an inkling? I hope I'm right. I didn't really have another choice. Like I'm not from New York. I didn't have family here helping me out. It wasn't like I was best friends with a lot of rich people.

4:25Like I looked at the top agents in New York city, the top agents in the country, and they all came or had some sort of hook that enabled them to leapfrog over the competition. And I had zero. The only thing I had was, was I understood my audience, um, on social better than I think anyone else in sales at the time. And I understood reach. And so if everyone else went to a swanky Upper East Side private school, I had YouTube, you know, if everybody else like had a rich family that was going to give them their first listings and deals and connections at Shabbat. I had Instagram. And I just really, really, really created this media enterprise to create deal flow.

5:14Even today, like studios at the company is top of funnel organic lead gen in our pyramid. Like the company is an upside down pyramid. Starts with studios, then goes into sell it, right? And then so on and so forth to get down to the bottom. Everybody creates deal flow, creates content. Round and round and round we go back to the top of the pyramid. And those are the early days. You've built a rare combo of really viral things and also luxury brand. How do you balance those two things? And how do you know that you're not hurting your brand by doing something too crazy? Any desire to be a quiet, under-the-radar salesperson, I definitely hurt.

6:01Um, but the world is really big, relatively speaking, and all of the business I've received that's inbound from people who don't know me, where I've been able to create a relationship with them while I sleep because I'm engaging with them through platforms in a way that compounds over and over and over and over and over and over and over again, outweighs any potential deal I could have done if I had been the quiet, under the radar, very traditional, oh, I don't do that kind of goofy stuff broker. This goes back to your philosophy on not being a secret agent. People don't know what you sell if you don't tell them what you sell.

6:46Why is there such a disconnect with people and so few people actually talk about what they do? I think there's a confusion between bragging and being confident in your abilities to help people. Like when I talk about success, I never, and I think the reason my audience connects with me so much and the reason so many people come to this company and they buy the books and they watch the shows is I don't give myself my own trophy ever. Most people who talk about themselves and their own business, they do it because they award themselves their own trophies. I talk about the business because I'm so excited about the wins and the deal my buyer got and the deal my seller got.

7:32And I talk about our agents now more than I talk about myself ever. I still do a significant amount of transactions, and I never talk about them. So that's the subtlety in that you're passionate about what you're talking about, but you're really talking about the client, the opportunity, the property, not Ryan this, Ryan that. The Ryan this, Ryan that comes in somewhat of a self-deprecating tone, which I think is helpful. And I learned that in the Million Dollar Listing years. There was an episode during Hurricane Sandy in New York City where it was a rough time to be in New York City because we had no power south of 42nd Street.

8:11And they filmed the whole thing. And I was by myself. I was alone. my parents like do you know we're busy and i didn't know what to do and people really connected with me with me at that point and i was i was hard on myself and i was like wait but that's how i always am i'll just be vulnerable like if you if you elect to put yourself out there into the world you can't go one toe in the water and i'm like i tell everybody i meet now like the internet calls bullshit more than the person sitting in front of you because the person sitting in front of you, or we're here, we made this effort, you're going to give me the benefit of the doubt, because you're sitting in that chair.

8:49I'm not going to scroll. You're not going to scroll. You can't. I mean, you could. It would be weird. But on the internet, I can scroll from you this minute I sense any bullshit. And so you have to be more authentic online than you are even in front of your own family now. And I think people connect to that, right? They connect to the failures. You'll see season two of this show is probably the most raw season of reality television. I think one I've ever seen and two I've ever been a part of. Like it'll be uncomfortable for people to watch. It tackles like I mean, it tackles a lot. I mean, it goes through addiction like it.

9:31I mean, like there's there's so much in the show that like I've just never seen before in the space. I'm excited for people to see, but I think it might be a hard watch for some people. We'll get to some spoilers in a bit, but I want to double click on this vulnerability, especially in real estate. It's such a traditional market. When did you decide to be vulnerable and did you have to calibrate that over time? Did you become too vulnerable and then you had to step it back? Talk to me about that. No, I think, I mean, for what it's worth, I get more business the more vulnerable I am. Has it ever backfired?

10:11Probably. I don't know of a specific example. I mean, I'm also just myself and I do a lot of weird, goofy things. And that's backfired because agents, my competition will use it against me. And I have these moments where I'll freak out on studios here and there. I'm like, people aren't taking me seriously anymore. Like, why am I chasing ping pong balls down the street? Why am I, you know, running in an inflatable tube through Soho to push, you know, our courses, you know, because my competition can't do what we do online. They don't have the audience we do. So they do exactly what they know how to do, which is to talk poorly about it and say, it doesn't mean anything.

10:51It's stupid and it's goofy. So, you know, a lot of times, especially early in my career, I would go to a pitch with a client. The client would say, listen, I love you. I totally get it. But I met with five other brokers and they told me everything that you do will hurt me and hurt the house, that it's all stupid. The social media thing isn't real. And in 2013 to 2018, maybe there was some honesty to that. But it was, it was, you know, I had to really educate people, which is why that deal, that townhouse deal in 2015 was so, was so helpful for me because I could use it and they could use the clients as case studies too, as testimonials.

11:32I'm like, all right, call them. Well, I know there's always this collaboration between social and real life, but what's the largest property you've ever sold through social media? $160 million. And what was, what property was that? It was a property in Palm Beach. It was this year and the kid found me, introduced me to the banker of the family. The banker called me, interviewed me, introduced me to the family. Family bought the property over the phone. So I know you've said that season one changed your life, changed the trajectory of your life. In the last year, there was a lot of highs and a lot of lows.

12:10What's one really high moment that a lot of people don't know about? I went, I invested so hard during the tariff fallout. That was like the best weekend of my year to where, you know, I don't talk about investments ever. I don't talk about money ever. It's not really my lane. It's not my niche. When I do, it doesn't really perform well because people are like, show us real estate, real estate clown. You know, swipe away. but I had like I had been waiting for a reset and resets now happen so fast right if you ship yeah you're in a bear market on Friday you're a bull market by Tuesday and every time there's a correction it's the worst it's ever been and every time things are hot it's never been better and it never changes whether it's COVID a terrorist attack global pandemic a hurricane right it never ever ever changes 33 year old tiktok mayor yeah exactly when mom donnie won we had 48 hours of the mom donnie discount and then it went away because nothing changed uh but we pushed hard right uh what was i talking about before then you're talking about the trump tariff oh yeah yeah what did you invest in just money into the markets like i because i'm you know when when when COVID hit and the market fell 10 ,000 points, I, like a lot of people was in nervous, especially because we were about to start the business and we were about to start the company.

13:43I thought we were going to announce Serhant on July 1st. That was going to be July 4th week. My birthday was July 2nd. All these pieces of paper in this hallway say announcement by July 1st. And then COVID hits, throws us off. Things got pretty dark. And then we pushed until September. But I was like, man, if there's ever a big market correction ever again, it never lasts. And I'm going to double down. And I waited. And it never happened until Trump announced his tariffs with that poster. And the market sold off so fast up until that one moment, right, where he came back out and was like, I'm going to figure it out 30 days.

14:21The day before that, I mean, I put a lot of money just generally into the marketplace. and that was great. That was a great one. Last time we chatted, you were just growing really quick. I know this past year, you grew another 50%. What has had to change in you as the CEO in order to scale certain?

14:46Oh, everything. I think I've had to learn to become incredibly clear about what I want in people. I've always given people the benefit of the doubt, like hire for intelligence, hire for energy, enthusiasm, empathy, get good people, make sure they're uniquely qualified and they'll figure it out. And when they don't do that, it then builds resentment. And so I've really had to learn to be very, very, very clear on this is exactly what I want if I'm going to pay you and you're going to be here. And if you don't do this, then I've made it very clear what I want. And then I'm not going to pay you anymore.

15:23And then we don't have to work together. It's totally fine. There's other companies. that was hard oh that was a low moment this year's firing our president um uh about that yeah it was um hard man like with every employee you hire and every agent too but i think you have no one's perfect i'm not perfect at all and i i kind of have this like cost I'd say I have this benefit and risk seesaw with everybody. And for everybody who is currently here and working, the benefits outweigh the risk. And the risk can be personal, they can be cultural, they can be about the work, right? They can be about the work product sometimes.

16:10And sometimes the risk then starts to outweigh the benefit and you have to make difficult decisions. So I don't want to go into details because I can't, but that was a moment where like, I don't know, like it felt like such a failure on my part. Like anytime you have to let someone go. um and it is the failure of the ceo because you hired him exactly and for you know for for the rest of the company too like for somebody you know at the c-suite level you know who has a leadership role they're only effective if they work with everybody so it's not like you're letting go of somebody who's doing you know one action and then they don't do that action anymore um uh and that was that was a brutal brutal low moment to go through and it was time after time after time again, because I kept vouching and vouching and the company, everybody kept coming to me.

17:02And I like, you know, I think culture is defined by the behaviors you allow. Right. So the implied culture, not the stated culture, the way everybody understands how this business moves is defined by what you allow to happen. If you allow laughter, right, there's humor. If you allow innovation, there's excitement and there's growth. If you allow bad behavior, if you allow lying, if you allow harassment, all the things, even if that person's work product is really, really, really great, you have set the tone that bad behavior is worth it if the work is there and it becomes incredibly unhealthy.

17:46it's this double-edged part of empathy yeah taken to the extreme every action someone does could be explained by some some reason that's some childhood trauma so if you just chase the reasoning back you could you could excuse anything you can excuse murder you know his parents his father might have beaten his mother and he went to med school but that doesn't make it right yeah and as a ceo you have to balance that empathy with pragmatism and and how to build the great organization. Yeah. Pink flags are red flags in disguise. You know, like I've had, it's also hard on the hiring side. Like it takes, it takes time to hire the right person.

18:22And I know I've gotten close on a handful of different executives this year. And then there's just something that doesn't click. And I'd rather, I'd rather not take the risk, right? I don't want to for their life to uproot their life. Sometimes these people have to move and like, if I'm just gonna, if it's not going to work, I'm just going to make sure it just doesn't work. Have you ever thought about sitting down and etching the surhand cultural values this is what we stand for this is what we don't stand for yes and and making it really explicit yeah we have a success at surhand doc that goes to employees and what are some of those core values for employees you know i say first and foremost is just brutal brutal brutal transparent honesty like you have to be honest to you have to perform magic.

19:09You just have to. What do you mean by that? Like you have to do something that your department or other people don't know how to do. Otherwise, how are you being additive? And to be a one-on-one. To the culture. Yeah, be a one-on-one in the company you're in. Like every new employee who starts here, I sit down with them, say here's the four things I care about. First thing, okay, you have to establish credibility, right? Like why are you here? Make sure everybody knows that you're credible, you're hired for a reason. Second thing you have to do is you have to gain respect. Third thing you have to do is you have to earn trust.

19:46Respect and trust are not created equal. Very different. And the fourth thing you have to do is you have to perform a magic trick. Be a one-of-one and let people know that, oh, you know how to do that thing over here that we didn't know how to do. Thank God you're here. And everyone will be able to move much, much faster that way. Because I've never really thought about the difference between respect and trust. What's the difference? I mean, you might trust a family member, but you also might not respect them too much. You know, like I have friends. I trust them with my life. I don't really respect them.

20:21So you don't respect their life choices, but you might trust them to look at the biggest names, you know, in lights these days. Really respect them. You respect what they've been able to do. Probe, don't trust them. because you know they're going to be out for themselves. So you've got to be able to walk that fine line when you're playing a team sport, which is what it is to be a company. What's one thing that broke over the last year that you had to fix internally to really get to the next level? Every system we have. Like we crossed a thousand agents earlier this year, which I think when people look at a brokerage and they say a thousand agents, that's not a lot.

21:02You have to remember, 1 ,000 agents is 1 ,000 LLCs for the most part. It is 1 ,000 businesses that we then have to support, right, in the back end and in the front end. So it's a significant amount of work. We're at about 1 ,500 now, but it was a lot. So the way we set up the business was for a startup company. And so as you scale, everything breaks. You know, there's that classic phrase of building an airplane while you're flying it. Yeah, it's not so awesome when you're in the middle of it. Making a parachute while you jump out of the plane. Exactly. Right. Somewhat scary. Yeah, this year, I mean, in specific, like our payment system just was not up to par with where we needed it to be to be national.

21:53And we decided to move west this year. So we started in Arizona. We just opened up in Las Vegas. right so we're starting to fill in the united states and the way you do things in every state in this business is so different so a lot of those systems of protocols and processes um really were put to the test and there's like a phrase i had most of this year which is just like what got you here won't get you there from systems to the tech to the people so before we move on i have a surprise i want to bring my wife oh and your co-star jessica markowski talk about season two. Let's do it. Let's bring on Jessica.

22:29Jessica. Hi. Well, support for today's episode comes from Square, the all in one way for business owners to take payments, book appointments, manage staff and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique or managing a service business, Square helps you run your business without running yourself into the ground. It's actually thinking about this the other day when I stopped by a local cafe here. Welcome. Thank you so much for having me on your podcast. So season two, what was the most difficult part in season two for you? The most difficult part for me, honestly, from season one, I think just the podcast alone that I did was something I was not really proud of.

23:13And just overcoming that was very, very difficult for me. So it always just like played in the back of my head that I knew that I had so much to really still prove at the company. So that was always difficult for me. On other hand, what was your biggest highlight from season two? I think the biggest highlight for me was I managed to get a big listing in Tribeca. And I wanted to do it quickly, effectively, efficiently, to really prove that I could really do my job well. And I think we'll see that on season two. Just like managing, like representing both sides and navigating that was just something I've never done before.

23:53so learning as I was doing it was really fun. Well, thank you, Jessica. Okay, bye. Enjoy your podcast. Oh, that was it? You're leaving now? Yeah. What's one scene in season two that made you think, holy shit, I can't believe this happened? There are so many, man, honestly. First of all, I love that Netflix gives us a lot of freedom to make a show no one's ever seen before. To your point of like the Purple Cow. No one wants to sit down and watch something they've seen 10 ,000 times even with different people. So the show has like a real narrative thread with voiceover. You know, you're really watching the show through the eyes, like an entrepreneurial lens.

24:31Very cinematic. Yeah, it's incredibly cinematic, which is unique. We break the fourth wall this season. And so there's multiple times where I talk directly to the camera and it is very jarring. I think the audience, like I remember when I first showed first clips to people just to see like, hey, is this going to work? Or even to show it to Danny and his fiance, they've like rewound. and they're like, I don't know what just happened. That was kind of weird. But then you're like, okay, now I have to watch more. So I think that's really, really cool. There was an altercation in the office. They're shot in real time.

25:06There was a fight. Not staged. No, not staged. I wish. It would make my life so much easier. And then I had to really have like a CEO boss moment again with Niall. and that scene though um is probably one of the strongest scenes i've seen ever in reality tv um there is a fight between me and jordan march that's completely insane um there's a deal we did peter did he's a new cast member this year um uh that he sold for 60 million dollars and i had a buyer and i was excited because we were filming you know we filmed for six seven months and netflix just films in real time, obviously. So like if deals happen, they catch them.

25:51If they don't happen, they don't catch them. And there's not a lot of like pressure to make sure things happen, but they just want to see what's going on. And it's like a, it's a blink of time. And so I have a buyer that I've been working for a long time. Peter joins the company and then we put him on the show and he's got this deal. I'm like, Oh, this is awesome. This is like, what a great story, right? We can film this. I got a$60 million deal and put it together. and he me over in real time as the camera so i'm we're in the car filming 55 million dollars cash i present to him and he hangs up the phone on me and we do a u-turn and we drive back to the office and the cameras just followed like you you see it cool reality yeah it's like it's like it's yeah it's like the real world they're like shaky they're like what's happening we go up into the office and I call him out and he's like taken aback.

26:42You see a lot of people on camera that usually aren't because they were just working on the second floor. I go into the cell phone booth. I try to put the deal together and I lose it. And he sells it to somebody else in real time as it's happening. And I had a mental breakdown and broke a whole vase on our first floor. And then the episode just ends. So that seems insane. I also, I put together another deal at 111th Avenue. And the entire negotiation happens from when I'm in the shower to when I get my shirt on. In real time. It was really weird. But it's like cool to also watch that. It's your real life.

27:22Yeah, real life. Like we got to go to Miami this year. We got to like the executive team from Mercedes-Benz flew in from Stuttgart, Germany. We got the Silver Arrow car. You know, so like how do you launch a$1.5 billion skyscraper? You know, an interviewer asked me the other day, it's like, define season two in two words. And all I could think of was an emotional skyscraper. That's what the show is. A lot of people look at you as the real estate agent, but you're also a character. It's your real life, but you're also building this cinematic experience. Talk to me about how you build a narrative arc around a season for something like an owning Manhattan that's based on real life.

28:07you, you create the world to then improv. So, you know, we sit with the team of producers and we say, okay, like, what are the properties that we think we can get access to? Cause you need location releases, appearance releases. Like it's, you can't just roll around, you know, and open people's doors with a Netflix camera. It doesn't work that way. So you have to have approvals, right? You have to be able to get into places. Um, but then we kind of look at like, What's the arc of the company? Season one, we went from, we were a couple hundred agents. We added a couple hundred during filming and we were under attack.