From Data Chaos to Control Real Estate Scaling Without Operational Bottlenecks

Introduction to David Stifter and CRE Challenges

Bill: Hi, everyone, and welcome back to the Peak Property Performance Podcast. Today's guest is David Stifter. David, before I read your intro, say hello.

David Stifter: Hey, everyone. I'm glad to be here.

Bill: Drew Hales, we just learned from outside of Boston, and I sit here today in Arvada, Colorado. I'm not working from the office where Drew will, because the power's out. We're expecting 90 mile an hour winds for some crazy reason, and the power's already out. So Drew's not going to join us today. It's just going to be David and I. Solo. Solo. So the theme of the show today is scaling real estate without breaking operations. Why clean data and system ownership matter more than AI?

Bill: So today's guest is David Stifter, a longtime real estate operator and technology leader who spent nearly two decades at Colonial Capital helping global portfolios scale while battling this main issue most owners still face, fragmented and inconsistent data. That's one of the reasons I got excited about you being here, David, is you came from the other side and created a point solution. So I'm glad to have you. But David's the founder of PredictAP, where he's focused on a very specific and very expensive, for those of us in the operational world know, operational choke point in real estate, and that's accounts payable and invoice coding, something a lot of us ignore and don't even want to talk about.

Bill: So in the episode today, we're not here to sell software. We're here to talk about why accounts payable can teach every owner operator about data discipline, control of systems, and how to scale without becoming dependent on one person or one vendor to keep the building running. So David, welcome to Peak Property Performance. Glad to have you.

David Stifter: Yeah, thank you. Thank you. We've had great conversations prior to hitting play, so I hope it keeps going. That's why I asked you to be on the show, because it just seemed to hit. You talk about this 20-year-old data problem, and I think it just got even more dangerous in the AI era, not to spin everything in AI. We're constantly talking about, on this show, data and digital. AI is adding fuel to that fire. But you have said clean, consistent data has been a fight forever, but the consequences are higher now. So what changed?

David Stifter: Yeah, so it's true. So my background, again, I was the head of tech on the owner's side for a long time. I'm an accountant by background, a geek at heart, and so I was a lazy accountant. So I'm always trying to automate things, and eventually that led to me trying to solve these problems at scale. And heck, for 20 years ago, we're talking about clean data, data dictionaries, data controls, data-

Bill: By we, you mean Colony Capital, right? Private equity?

David Stifter: Yeah, Colony Capital, private equity, but also other CTOs, other accountants. I think it's something when folks in industry get together, there's always this kind of acknowledgement that, hey, we can always do better and have better data, more consistent data. And we're acknowledging that there's some level of loss of granularity and loss of consistency that exists in every company. How much that is varies company to company, but I think the point now is that the consequences of that may be very as well, where before it led to a lot more manual work, a lot more issues, maybe you weren't seeing trends as well as you otherwise might, opportunities and risks and things like that.

The Role of AI in Real Estate Data Management

David Stifter: Now what people are seeing, and AI is definitely the shiny object of the moment, right? I think this one is, it's different than prior kind of buzzwords, shiny object things like blockchain and other things where it's like, okay, that's a neat science experiment, but is there going to be an impact? I think we all know, we're all using AI to different degrees, personal labelling and other things, but to do these things now, the data is that much more important. So kind of the entry level stakes for getting into the AI game for a lot of these use cases is good, consistent data. And with that, you can do a lot more. Without that, you're either not able to do it or you're doing it in a way that actually you could be creating bad outcomes where hallucinations happen a lot more, wrong answers happen a lot more, things like that.

David Stifter: So the dirty reality of your data could prevent you either from doing something or it could be giving you wrong answers, right? If you have a bigger problem. So I think that's the consequence now is that these things are not an option if you haven't dealt with the data.

Bill: Well, you and I are close enough to AI to understand what hallucinations mean, but people that are new to it or that are starting to use it for personal enablement, for instance, assume that it's a computer and it's right and it's not. I tell everybody on our team, it's your thought partner, but you got to check it. Like it doesn't.

David Stifter: Yeah. I had a recent example that really blew my mind and it was, I was trying to find someone that I knew what school they went to. It was someone I met at a conference and I was like, we talked about his college and he said that he did something with like, you know, architecture there and he moved into real estate, right? And so I looked up at this college and you know, his interest and I was trying to find it and it had this article, this article about an alumni who had gone on and like started in architecture and moved to technology. And I was like, that's the guy. It's exactly what I'm, what I'm looking for. And so the article, I said, give me the outline of the article. And it's the, you know, it had all this stuff. And then I went to go look for the article and I couldn't find it. And I Googled the title. I tried to find it a bunch of different ways and I couldn't find anything, any mention of it, even on the alumni, cause the alumni site, you have to be an alumni to log in and get it. I was like, it's not coming up anywhere. And I thought I'd at least get a header. Like I'm an hour into this now. This is the great thing about AI. Like it took me two minutes to get this thing. I asked it, did you make this up? And it said, yes, I made it up. And I put it behind a password protected site. So it'd be difficult for you to verify. And I was like, I was like, wow, that is, that's clever.

Bill: Which LLM was that?

David Stifter: That was Grok.

Bill: Okay. I always ask because some of them are better at it. Like I find Grok's better for research at least right now. Paul's better for computation and Chad is better for generative. Like I don't mean advanced general AI. I mean just content generation.

David Stifter: Yeah. And it's this thing where I kept on asking, like I wasn't finding the right thing. So I asked it a few times and eventually it was like, oh, here's the thing exactly like you want it. And I was like, oh, perfect. But it was like, they really surprised me. It really surprised me. And I was like that. And that thought about like doing it in a way that made it very difficult for me to verify that fact was like, that's pretty clever.

Bill: I'm part of a mastermind group for executives with AI adoption, not selling AI, but using it. And they very often talk about how to, it's prompt engineering, but how to tell it, you must give site sources and they can't be your own. And that's for that reason, because it always wants to satisfy us and it's just not right.

Common Pitfalls in Commercial Real Estate Operations

Bill: So back to the topic at hand, right? Let's talk about where commercial real estate owners get burned most often. Is it in missing data? Is it inconsistent naming? Is it tribal knowledge living in somebody's head or is it something else?

David Stifter: Well, I think all of these things are challenges. And I think the, if we look at what part of the opportunity AI is unlocking, if we're focusing on that, I think that tribal knowledge bit is really the most exciting part where a lot of these tasks, we wanted to think about centralization. So it's, you know, let's go back to, you know, on-site accounting or, you know, ARAP, collecting rent or paying bills and multifamily where the reason, and I think this is multifamily senior living, office industrial, it tend to have be done centrally, right? But usually in those things, it's more of a services type thing. And it's done in the field because the knowledge is in the field. Not ideal. Like what do you really want? I think AI is actually making us think more about what do we want people doing in their, in their tasks and like multifamily, what about, you know, on the grounds, talking to people, making, making the community aspect of it, a machine can't do that. Right. But if you're in the back office for eight hours a week, like going through paperwork, you're not enhancing that community. But the reason was, well, it's hard to go train person downtown to know what you're doing in this local spot. And that's actually how PredictAPI kind of came about where at Colony, we had 30 people led by this woman, Krissa, who'd been there for 30 years. She knew it all. She retired and like that tribal knowledge walked out the door. That's where I was like, oh my gosh, we're a multi-billion dollar, like investment firm. And like Krissa left and we don't know the answers now. And that's what was like, oh, that kind of created this thing. And so I think first off cementing that knowledge within the organization, right? So when people leave, it doesn't walk out the door. Like that's a big thing, but you're able to then, and maybe that eight hours a week turns into an hour a week, but then maybe you're able to make a bigger shift and say, you know what, let's, let's get two central people. Then they can spend all their time with the people and you're hiring a different type of person, right? So, oh, don't worry about that back office thing. And so where I think we're seeing is more of this operational office to the CFO back office type things, or the, the, the, the entry level type, you know, we, we see chatbots and we say, I and other things like that, where it's like that initial communication initial, Hey, these seem like good prospects. And then you have a person kind of get into the details of it, that enablement phase as well. And so that, I think that that goes back to that, that, that kind of human travel knowledge part of, of your company's needs.

Bill: Well, you and I have talked about commercial real estate thrives on the fact that there's deal junkies, right? There's deal people doing deals when they are a special kind of people in every successful firm has them. Right. Well, if not led by them, they have them. Right. So let's talk about how to let deal people do their deals without operations becoming a bottleneck. So go back to colony. What was the moment you realized that operations data wasn't just back office. It was the limiter on growth.

David Stifter: Yeah. And you're, you're, you're absolutely right. That deal people run real estate. They're the, they're the fighter pilots, the men and women that like love, they love talking cap rates. They love talking markets. They love talking, you know, they make it rain. Like they make it rain. Like it is the reason they exist. And you have to have a certain like, you know, something to like be, I'm going to take that piece of dirt and build a tower. Like that takes something, you know? And that's where they all start. Right. They all start from that tower, that property, whatever. And then they wake up and they look behind them. It's like, well, I have 300 towers, right? Well, how do I, how do I run that? Because there's a certain aspect of just like, well, let's throw some bodies at it. We'll figure it out later. The figuring out later is where you hit these, these speed bumps of growth. So calling started off as a, you know, a small private equity firm in the nineties, you know, fast forward 20, 25 years, they have five public companies, they have 60 billion of AUN and you don't get to that size without having operations to support it at scale, right? You're going to have thousands of accountants if you don't do that and you can't go close deals and do it. And so I think as you mature as a company, you have to recognize that to do that effectively, you know, with, with sustainability, you need to have systems and processes. Every company makes a realization there. So if only one point there is, you know, there's this realization like, Hey, we're barely making the deadlines for public company reporting. That's not sustainable. And so there was a huge investment, millions of dollars go into like, let's re, you know, kind of blow up and remake this organization to work at the scale we're at and the scale we want to be. And that's where I think going from, you know, a hobby.

Bill: You're not a hobby, but like an individual's passion for projects into a platform, a real estate operating platform, that jump is about operations and the systems needed to run a platform and not just chase that next deal. Well, in the book, Peak Operating Performance, we dedicated a whole chapter to talk about instead of the five Cs, it's the sixth one, but it's champion and it's how to have a digital and a data strategy and operate from the skybox rather than from the field.

Drew: Cause it's my experience that a lot of the deal junkies love the details, but they love the details of the deal. And then the operational details often get assumed they're going to be handled by one of the firms that they either work with or hire. Like I'm not passing judgment. I'm just saying that it is so far beneath the deal person to figure out the details of AP, but they're responsible for it. So it comes with delegation and strategy. Like you can't just hire a firm and be done. There's accountability. There's reporting, there's checks and balances.

David Stifter: And we speak to all of that because it is such a common problem, especially in fast growing firms. You're not making the deal until you sell it. And you know that what you're exiting at that, I know why at the exit, the market cap is going to do what the market cap does. You can't control that. What you can't control is how efficient are you being during that ownership period? And you're absolutely right. Like third parties, there's reasons that people like third parties, but there's a cost too, right? There's a cost to having stuff. You could be fully vertically integrated within your firm, right? There's a cost to that. It's expensive.

Bill: It can be more efficient to have third parties, but no one's going to have as much ownership as your own firm does of these assets and understanding the limitations of those. And how do you take the benefits of economies of scales and its efficiencies at third parties, but have systems and controls to identify the risks and the opportunities that are coming, right? Because if you're fully divorcing yourself from those things, well, you're gonna go try to sell that building and you're going to be in for a shock as far as like, Oh, my construction management fees have been out of control. And in my, my rents aren't at market and deferred maintenance is a huge thing here. Well, those are all problems.

Drew: And so you want to have ways to understand, at least be aware of the compromises being made or the decisions or the timing of those things and good systems and good access to data can let you do that. I think another challenge you face is that once you start to get big, you can't go dig into the nuance of every single deal and look at every single bill paid. You kind of look at this layer. And another thing I've seen is, as far as good data, I've seen this trend where people book to where there's an open budget, they don't want to explain a variance. So, well, we had to replace a bunch of appliances and multifamily and it didn't snow. Well, I'm gonna put those in snow removals. I don't have a variance. I'm on budget, unless you're digging into those nuanced details, you're never aware of that.

David Stifter: And so it's like, that can be difficult at scale too, to understand where things are truly happening. Well, you know, we don't sell anything on the show, but we're a big advocate of the owner having control. So is Riddick AP solution, and again, don't go sell it, but is it possible for the owner to have control and still use third property management? Yeah. And it's interesting. We have clients who are actually third parties, right? Because they have a challenge too, where they're a margin business where they're trying to provide a high level of service, but not having six figure property managers, asset managers on site doing this type of work. So it's hard to have that right mix.

Bill: I've seen third party where you're granted in the office. And I mean, one of the big five, right in the office, downtown, wherever that NFL city is, there's a half a dozen people sitting there, but they're billing a lot of money to their employer to handle what is a very expensive overhead for that little property that they're managing. Yeah. It's really hard to understand the math sometimes. And it's an owner's problem. Maybe they delegate it, maybe they don't, but the data is still sitting outside the owner's view.

Drew: And then that's a big thing is I think owners, just from my own experience, there's this tension where, as far as where the data lives, let's talk about that because we're a big believer in the office, the owners should have all their data, period. You under show data right now. The third parties, there's very logical reason why they want to control it. Hey, be on our system, be in our yard, be in our, they can use it, but they couldn't own it and control it. So it's easy for them to train people. It's always consistent. Like there's lots of reasons they want to do it. And it's truly a barrier to exit, right? It's a big shift to take all that from theirs to someone else.

David Stifter: As an owner, if you can, now it's hard if you're a small company, but for bigger companies, you should try to own your data and have service providers or employees working in your system. And that's there. So, hey, how can the tools help with that? Well, you are seeing this first generation of a very specific narrow, deep tools that are addressing a specific issue. And we talked about knowledge, specific issues, which are going to help that third party. Imagine you're a third party, again, that you got a new client. Here's a hundred buildings, 300 vendors, a thousand, right? Like that's hard to learn all that. Well, tech can help with that. Or internal, if you're vertically integrated, tech can help with that and provide that consistency.

Bill: Cause I think another part of this is that in organizations with a lot of people, there's just human inconsistency. We see that as well. When we're looking at, people ask us all the time, actually, just before this one asked me, how accurate are you? I was like, well, how accurate are you? I like to say, AP invoice coding is a microcosm of the complexity of commercial real estate and it's a serious NOI lever and an ROI if you invested in that system, but it's a whole little micro economy, microcosm, whatever the right word is there of commercial real estate.

Complexities of Invoice Coding in CRE

Drew: So why is invoice coding so uniquely hard in commercial real estate? So here's why, is because there's two parts. So first is the way commercial real estate is owned, has a lot of complexity about entity structure, right? You got CMVS, you have these loan deals, you have the funds themselves, how you create these funds, you have blockers, tax luck blockers, and all this kind of SPVs and all this kind of legal structuring around the ownership. It's complicated. Colony with 12,000 entities. It's crazy. Colony didn't pay anything. It's all appropriately allocated where it should go, but good luck trying to navigate those org charts of like, oh, you know, it says colony, but really it's this, you know, colony, 2016-B, Lux, sub A, you're not even diving down into camp pools and triple net, et cetera.

David Stifter: Exactly. So on the entity structure is hard. Then that thing you just, what you just mentioned on the bottom side is, okay, is it in the camp pool or not? Well, okay. Well, generally it is, but well, actually Google is this tenant here and they don't want to pay for common area maintenance. They cut that out of the lease. So it's like, oh, well, but it's so, but we weren't cleaning the window. We replaced the window. So that's capitalized, you know, or, or, or. So the nature of the property level expenses is different for office where you have cam and other things. Family is different. Industrial is triple net. Under construction is something totally different with CIP and all that stuff.

Bill: So you have incredible complexity around the day-to-day operating and it can vary building by building. It can vary tenant by tenant. And so you have thousands and thousands of permutations of how a particular bill could be paid vendors do many, many things multiplied by, Hey, here's all the thousands of possible entities that could do, and all the bank accounts associated with those things. You multiply those things together and there's hundreds of thousands of permutations, and that is an incredibly challenging thing where like, I think the AP people in the world do not get enough of credit, you know, it's not, it's not the highest paid job in the world, but they know an incredible amount of information to get really, to be really good at this because it is a high pressure every day it's coming at you and you have to be right type of thing because those tenants are, I call them Sherlock Holmes.

Drew: They have to do a lot of investigation because they get a bill or even worse. They just get an automated bill, like a dinged and there's maybe 15 characters. Like, what is this for? And they have to go find it out and code it accurately. And there's a lot of people screaming on the whole time. So relative to accounts payable, say I have a portfolio to resolve theoretical and it's sloppy and I want to make it good. So what does good look like relative to AP? Is it speed? Is it accuracy? Is it auditability? Is it reduction in costs? Reporting? Is it all of those? Just give me some examples of what you see in the first year of somebody trying to tackle their ugly AP.

David Stifter: Yeah. So for me, good, good deals, you know, ultimately the methods don't matter. AI doesn't matter. And none of that matters. What matters is you're doing the job, right. And by job, right. It's it's your, your, your appropriately you're, you're paying your bills timely and you're, and you're doing accurately, right. Your, your camp will reflect what it should reflect no more, no less. Tenants are being billed. They should be billed. They're recovering what you should recover. You're not having leakage on that and all that. So that's what good is. So are you doing the job correctly? And then on top of that, well, how efficiently are you in doing that job correctly?

Bill: And so, you know, folks can do this. You throw bodies at it, you'll get it done, but it's extremely expensive to have the appropriate level of staffing for that. And the other hard part is this stuff is not every single day is a nice equal distribution of invoices. Like, no, here's the first of the month. Here's your, you know, 2000 invoices. Well, you staffed up for that. Now it's like, you know, that's a hard thing. That's why we bill on the 15th right there. Exactly. Exactly. So tech can, can scale up, right? So the, the, we're in a great golden age of, of compute. We're like, Oh, just go buy Amazon compute for three minutes. It can handle the 2000 invoices and goes through.

Drew: And so, you know, good is doing it well, doing it accurately, doing it consistently as good, or, you know, if not better than, you know, folks that have been on the job, but doing it in a way that's very efficient. That means, Hey, you know, 30 seconds later, it's in your system fully coded as opposed to, you know, person where it takes five minutes per. And there's then it's like, well, well then your staff, what are they doing? Right. Cause it's not like, first off we, you need people, right? AI is not, as we just talked about infallible. So you need that human set of eyes, which is where I think AP is a great use case because you've got great structures, great patterns. You still have a human in the loop, right? It's saying, no, we bought this building. We sold that one.

David Stifter: Feedback feedback mechanism. Then you're talking about, you know, payment discounts or, you know, ACH getting off checks, right? People still write checks, getting onto that, right. Understanding, uh, you know, is there opportunities for, for your bulk spend, being efficient in our procurement process as opposed to AP data processors. So for me, that's what the vast majority of things that are consistent and have a pattern can be automated. Right. And then you have ways of, of being, um, proactive on risks and opportunities and making sure there's consistency with coding at a granular level as you can.

David Stifter: And good data and data consistency is not losing granularity. You know, a great example of that might be a utility bill where $10,000 electric bill comes in. You know, utilities are their own situation. You know, it's like, you pay the utility company because they will turn your lights off and you do not want that. But $10,000 electric bill comes in, $1,000 late fee. Maybe it hits your system, and by the way, we looked, and this happens a lot, $11,000 of electric. Okay, well, that's actually a bit of a problem. Yeah, technically it is, but really it's $10,000 of electric, $1,000 late. Because maybe, in aggregate, that's $20,000 a month of late fees across all these vendors across your portfolio. The CFO probably wants to know there's $20,000 a month going out the door of a controllable expense, as opposed to, oh, there's a little variance in electric, like, this is a hot spot. Well, that expense legitimately is not a CAM.

Drew: Exactly, exactly, and it's not CAM. And so if someone audits that and you've passed it through, it's like, well, now you got multiple problems. You got a problem. So that's an example of, like, you get why someone would do that. They're trying to get through their day and all that, but it's inaccurate. So even that data consistency problem goes into, like, levels of granularity, and there's lots of examples like that where you need to be very granular in order to truly expose what the issue is or the opportunity is.

Bill: Here on the show, and just in life in general, of course it's fun to talk about the wins, but we also like to share horror stories. I got this one firsthand. I won't even tell you where the building is. It's a 175,000 square foot building. It traded hands earlier this year. It's a client. The new property manager and the owner sat down with us and said, you know, because we believe digital infrastructure should be an asset that generates income. I mean, it's just at the core. Technology shouldn't be an expense. It should be a capitalized asset, and you should expect a return. If there's no return on it, then shouldn't do it. It's that simple.

David Stifter: Well, it's really not that simple. The baseline is that simple. Doing it is a lot harder, but they said this digital infrastructure is losing us money. We need to cut it back. We need to change it because it came to the end of its capital period, which was 10 years. And I said, well, this is what we show as income. And the previous property manager and the previous owner were not billing it accurately, and they were not recouping. The percentage of it was CAM and the rest of it was tenant opt-in. Like, tenants had signed things saying we wanted this, so it was not CAM. And they were putting it all to CAM and not billing the tenants. So not only were they making the owner eat most of the CAM, because there was a large amount, percentage-wise, of common area, the tenants had said, I will buy this, and that tenant said, I will buy that, and they weren't billing it. If they billed it, they billed it at cost, not at price. So it was a 175,000-square-foot building. It was $78,000 a year. And it was past the recoup period. They audited it, and they couldn't go recover it, so they lost, for a year and a half, they lost $78,000 a year because of a billing issue. Applicable, I mean, they paid for it. They didn't collect it. They didn't know they weren't collecting it until they audited it, and they didn't audit it until the trade enhanced.

Drew: So imagine how much money is falling through the cracks if you look at the AP and say, is this recoverable? Is this CAM? Is there an expense that goes to income? I mean, there's different categories. But simply by applying the process, you said, I think most owners would find a lot of NOI impact, one way or the other. Top-line, bottom-line reductions, something, but especially in the office environment. I'm not talking specifically about apartments because there's not a lot of CAM you could pass through. Yeah, retail, office. Yeah, mixed-use, retail, office. I mean, that's real, yeah. Even apartments have some mixed-use on the first floor, a lot of them. Yeah, you got the coffee shop, the golf simulator, the bar, the whatever.

Bill: And that's the thing, is like, yeah, the first building you buy, you probably are on top of every single bill and every single thing. And then, you know, two, three in, like, you start to take that, you can't look at it all, and you lose that. But, you know, I find this, as I've transitioned from, like, you know, running this thing to running a company, like, oftentimes you assume, you know, stuff is, you know, you talked about something and it was in place there, and maybe two years later, it's not, right? And it's something that it's hard. You don't realize, you know, that things shifted so much because you can't be in the details of every single thing. And that's where you need good process and controls in my company. We talk a lot about thinking like an accountant.

David Stifter: I think one thing that's come out of my career in kind of FinTech, or, you know, accounting tech at real estate, is having controls or backstops to give you comfort that what you think is true is true, right? So the way, you know, we talked about the engineers, you can't just say, go to the ERP and give me all the vendors. Because it doesn't always work. You know, it doesn't always, it makes sense. If you're coming from Apple, where, like, you're working on this at-scale stuff, and like, yeah, it said give me all the vendors, should give me all the vendors. It's like, well, did it? Or did it give you half of them in timeout and you don't even know it, right? And so that's part of that culture I've tried to create is, hey, we need to have a reason why we believe what we believe other than it makes sense, right? We have to have a control. We have to go look at it independently and get some comfort.

Drew: I think that's what all of these things, yeah, maybe your process is good, but do you have this other tech that's telling you that? Or maybe your tech is good, but do you have a way to check that, right? You need to have processes and controls to give you some comfort that what you're seeing is real. Or what you're missing, you know, are our leases being entered correctly? Are we recovering things correctly? Are renewal rights in there, right? Rights and options and all this stuff. Lots of this stuff I think is not followed up as well as it should be.

Importance of Data Ownership and System Control

Bill: Well, not just in the book, but in our daily practice, we strongly believe in owning your own systems as an operator. And I don't mean each piece of software that you might be buying. Like you're not gonna go write a PMS for instance, but your systems, your processes, things like your SOPs, things like that. And we very staunchly believe in no vendor lock-in. So as a best practice for owners. And you earlier on the show said the best practice quote unquote is the owner owns the system, right? The owner owns the data and the third parties work inside it. So why is that still so rare in commercial real estate? I don't see it in any other industry. And I've been in a lot of industries in my career. Anywhere I go, I'm an entrepreneur, I love to study other businesses. I don't see this anywhere else where they let outside companies in, put systems in they can't use and those companies can mine data from their customers. Blows my mind.

David Stifter: I think it has a lot to do with the size and power of the providers, right? And when you're starting, you're small. And when you're making these initial decisions, you're small and they're big and you're trying to chase the next deal and you just have to deal with this thing and you don't care because it doesn't matter at that point. And you're like, yeah, I'll use company's X system, right? And then when it does matter, it's like, well, okay, now we have a two year, $3 million project to move it off there. Well, let's just keep it going on there, right? And so it takes a big act of will to do that. You're gonna have a lot of pressure from those providers that you're gonna rely upon, right? There's still gonna be some level of help you need to scale and they're disinclined to do that for good reason. Like, again, it makes sense from their perspective. That would be incredibly hard to have 6,000 standard operating procedures for 6,000 customers on, you know, that's hard, I get that, you know? And so that's part of the challenge.

Drew: And my journey at Connelly, like we did, we moved from that thing, but it took will, it took pain. It was terrible years and lots of money to get everything onto one system. And then we had some providers who wouldn't and we said, you know, great, but we're gonna move on. And some providers, we were the first one that they did it for, right? Some, you know, some finance admins or things like that, where we made a case, but we also, I will say this, we also committed to investing to make our systems very effective, right? So the way we did payments or, you know, not even on the AP ingestion and coding side, but more on like the bank integration side and the automatic bank corrects. Like we did lots and lots of work on all these little friction-filled parts of it to help them. And so giving tools where it's, you know, truly it's a, you know, win-win where you have to be, you know, you have to be kind of gracious and reasonable in these negotiations.

Bill: So we invest a lot in the training their people into showing this and to enhancing the systems, all that, to give them a really great system. And then there was kind of a win-win, right? We trained their people, we did all this stuff. If we did none of that, we just gave them a terrible system and didn't let them run wild. That's kind of unfair too. I think that's part of the reason is it's like, when you make the decision initially, you're probably not big enough to force any change. You have to accept what you accept. And is it really worth the pain later on?

David Stifter: So how does owning the, I don't want to use the word system, owning the process, owning the data, translating to leverage both operationally and financially? Like that is why we're stuck as an industry, but give, you know, I talked about a bad case. Let's give them the really good case. How does investing in this, both time, money, energy, people, et cetera, give them a benefit operationally and financially?

Drew: Yeah, so operationally, I think the first benefit you see is you get away, you know, so folks who usually have some sort of level of consolidations, you know, system, where they're taking the, I'm taking all my, do my monthly upload, all my trial balances, right? So you create this terrible task of reconciliation every period, right? We have our top of the pyramid financials, going to third party service provider one is giving me my 32 trial balances. Provider two gives me my 27 trial balances. Oh, shock, our beginning balance isn't the same as their ending balance. Let's figure out why. And so you create this like every period you're chasing your tail as far as what changed, why, and what the root cause of this, because again, the trial balances can tell you that you go back to the details and do that. And so number one, it's all in that same system. You're not going to have any kind of break between your reality and their reality of these things. That enables much quicker close cycles, you know, much less need for oversight and reviewing for these variances that are inevitable. That's number one.

Bill: Number two is it gives you optionality on this third party providers you use, right? If you own the system, it's on your system and they're not doing the job. Well, it's very easy to move from one to the other. If they're running the system, again, you're talking about that painful move thing. Let's do an ERP conversion. That's rough. So I think that it gives you options on that. And then the last part is it allows continued work towards systems that are going to directly address the parts of the things that are going to most affect your particular business, right? Because you're building things on reporting or building things on tenant renewal process or building things around leasing. You're going to be able to continue to invest and build in things that you know are directly affecting your business, where I think the incentive for third parties is more on like the back office operations side. And so at the end of that road is a system that should be really aligned with your business challenges and objectives.

Bill: Well, I've enjoyed the conversation today because I know we dove into AP a couple of times, but from 100,000 feet in the concepts and especially what you just answered, that question has nothing to do with AP. It has to do with any system, any process, any burden, whether that be financial, time, process, efficiency, whatever, to a commercial real estate firm of any size. So that is why I wanted to have you on the show. I mean, I think you and I could talk about some of this stuff forever, but I don't think people wanted to listen forever as much as they might.

Personal Insights and Career Advice from David Stifter

Bill: So at the end of every show, we try to let our listeners know more about the guests. So we have what we call the extra floor and commercial real estate, you know, jest, it's the extra floor. It's just five questions, quick answer, let them know about you. So we're not talking about the industry. We're talking about David, right?

David Stifter: Yeah.

Bill: What's a book or a podcast that has shaped how you think?

David Stifter: I'll think, I'll say the first one that comes to mind is Learn to Earn with Peter Lynch. I like that one. I think about investments and understanding. I read it when I was a teen and it really opened my eyes to the world of finance and demystifying it where like it was a very accessible book and it really kind of led me on this path of being inquisitive and looking about, you know, open your eyes to see what the world's showing you and you can learn from that. So I think that was a really good book that I read a long time ago.

Bill: We obviously learn from it if you left private equity to jump into the entrepreneurial world and start this company.

David Stifter: I don't know. At times of my journey, I was questioning my judgment of my two small kids and like, let's leave this managing director job and be a prop tech founder. But yeah, so far so good.

Bill: Oh, I love it. I mean, I just love it. So that's how I've lived for 30 years is in the founder side. So I think you'll do very well and enjoy it just as much. What is the best piece of career or life advice that you've ever received?

David Stifter: The best piece of advice I think is keeping your foot on the gas. And that sounds, I think the biggest challenge for careers is at any point, maybe this is less on the entrepreneurial side, but, you know, if we go in the office track and professional track, there's points where you deserve to be promoted, you deserve to get that next step. And I, you know, it's very rare for whatever reason, it's rare that you get what you deserve when you deserve it. And so you can rightfully so feel like, you know what, I'm not getting the attention or appreciation or rewards I'm getting. So I'm going to start taking my foot off the gas. And here's the reality of that is that no one's going to notice, no one's going to mention it. You know, maybe for months, maybe for years, you can kind of coast and your foot gets off the gas and then they will notice, right? And then you are not ready for that next thing and you don't deserve it. You kind of find yourself living in the village where you're no longer like truly pushing yourself and truly accelerating and learning and all that. I think the hardest thing, it's not the smartest people that are successful long term. It's not, you know, what it is, is the most consistent people. So on those days when you want to take your foot off the gas, like keep your foot on. I think that's the biggest thing is just keep learning, keep challenging yourself. And eventually, you know, the things you deserve, you'll get, you know, if you keep on it.

Bill: I love it. Wake up living in the village. It's like wake up in the matrix. Okay. Exactly. Number three, what's one habit or practice that consistently makes you more effective?

Lifestyle and Personal Habits for Success

David Stifter: So for me being focused on health. So I was, you know, two years ago, I was almost 300 pounds. I was very heavy and, you know, I've got a nine year old boy and he's like, why can't you play with me? And like, it was one of those arrows to the heart where I really took a look in the mirror and I realized for, you know, back to putting more and more time into career and all this, it's like, well, another hour of work. And at some point, those hours of work become detrimental and you're doing worse for the overall time. And I made a decision, you know, to commit to being healthy as it's as important as every other aspect because it affects every other aspect. And for me, Brazilian Jiu Jitsu was something I really, I did a long time ago and I started back up my son does it. So it's something we can, we can do together, but Hey, I do a 6am class three days a week. And when the alarm goes off at five 30, I am not a morning person. I don't like it at all, but I have a choice every single time. I'm like, Ooh, I could be cozy in bed or I can make a choice to get up. And I have that choice every time. It's not even easier, but I've lost about a hundred pounds and like, I feel great and I enjoy it. And it's something, it's activity where one of the few things where I'm not thinking about work or other stuff when I'm on the mat, trying not to get choked out. And by the way, at all of the events, we're doing a Jiu Jitsu thing called the rent rollers where we open it up to people who've never done it before with the last, last one we do is at octet. We had Adam was in skews, the current world champ teaching a class for people who've never done it. So take a look on LinkedIn for rent rollers. If you want a free experience with someone really interesting in the Jiu Jitsu world for a healthy activity.

Bill: Oh, I commend you because I mean, a hundred pounds is a lot and I commend you for waking up in the morning. I never felt bad leaving the gym. There's a thousand times. I did not want to go in. So I understand the struggle and share it with you. It's not about me. It's about you. But I've just, I'm overwhelmed by that answer. Wow. 300 pounds and you made the choice. It is part of our company culture at OpticWise to be family first and health first. That Trump's any schedule, anything that's on the docket, like it, it just, I mean, I hate to say it, it trumps customers and customers get it because they respect the way we respect our team. So we disclose it and I encourage more companies to do the same. So good for you. You can probably do a whole show about what you just said. That's awesome.

David Stifter: Yeah. Yeah. I love it.

Bill: You already answered this, but I'm going to ask you anyway. Early bird or night owl?

David Stifter: I'm not an early bird. I know. I'm a night owl.

Bill: You're a night owl. Okay.

David Stifter: I'm an early bird by choice. Yeah. And then I go on the weekend for an open mat, but that's a little later. So I am a night owl. Absolutely. No, I might get my second win at like 1030, but I've been trying to even prioritize sleep, you know, being a night owl. Hey, even though I like it, I know I need to get, you know, recover and get sleep in. So it's something, you know, I've got to beat my nature on that side too, as far as getting sleep I need.

Bill: Well, our listeners know how adamant I am about how sleep is not underrated. So hey, when you're not-

David Stifter: I got my whoop here keeps me on track. So it tells me when I'm being naughty.

Bill: You like the whoop? I don't have one. I have other devices. So-

David Stifter: I will say actually for sleep, it's helped me get much more consistent and I can tell my kids like, hey, you destroyed my sleep score last night when you came into bed and cuddle with me. You know, I can't say no to my, you know, yeah. Get them involved in it too. I love the fact that you're working out with them too. I am, I'm fortunate that my 31 year old has been working out with me for 15 years and we still do it every Saturday morning and I, every weekend there's somebody who walks up at the gym and says, you know, how long have you guys been doing this? Because we clearly know each other's routine. It's just like-

Bill: Yeah. That's awesome. Then we'll go get something to eat. Like it's just, it's awesome. I love that. I love routines with the kids.

Bill: Well, that might be the next answer. It might not. But when you're not working, what do you love to do that recharges you?

David Stifter: So jujitsu, I think number one, just from, you know, it's, it can be really hard for people who are business oriented to ever truly stop thinking about it. Right? Like, even though I'm watching a movie or hey, talking with you, like I'm really paying attention to you, but 5% of me is like, okay, what's my next meeting? What's my, you know, you have these things going on and I'll say, you know, and I know for some people it's running, some people it's swimming, some people it's, you know, where you just like get in the moment and let your mind stop for a bit. For me, when I'm, you know, jujitsu is tough. Like, you know, you're, you're wrestling with someone else and they're trying to choke you. You're trying to choke them or break their arm or whatever. And it's like, it takes all my attention. It makes me feel really dumb. It's hard. It's, it's a real mental game. But for me, it like recharges, you know, it kind of gets my mind there. That's, that's the part for me and like getting my mental stuff reset a little bit. But then, you know, spending time with the kids, I love, I love trying to be creative with, with my boys and, and you know, my wife and doing, you know, trips like I like to, I like to make memories. I'm doing a trip, a ski trip with my, with my boy coming up in January. So like making memories with the family, that's, that's really what I, what I enjoy and a little reading on the side too. I love reading good books.

Bill: I love it. I read yesterday, speaking of reading, the human brain has 70,000 thoughts a day. So to try and process all those is impossible, but to free up your mind and let it do its thing is beautiful. So, hey, we'll, we always put these in the show notes as well. But for those people listening only, how could people get ahold of David should they want to?

David Stifter: So I try to be active on LinkedIn and on LinkedIn, I, I generally don't post about my company. I post about things I'm reading, interesting stories, all of that. So check me out on LinkedIn. Feel free to follow me. Heck, if you want to learn about Jiu Jitsu, I made a LinkedIn group called Rent Rollers. I'm trying to get people together to do that. And check out the PredictAP blog, you know, PredictAP, we're all about invoice coding. We're the best at this one thing we do and, you know, feel free to reach out in any of those spots. You know, send me an email at dstifter at PredictAP.

Bill: All right. Well, thank you for joining us. It's been a pleasure. If you're new here, be sure to follow, like, subscribe, all those other things. Recommend it. If you want to be on the show or have somebody you want to be on the show, let us know. We always answer every inquiry and thank you again. We'll see you on the next show and more than likely, Drew, be here with me then. So thank you, everyone.

David Stifter: Thank you, Bill.