Empathy's Impact on Growing a Property Management Company - The Nest-DC story | Fourandhalf - Internet Marketing for Property Management Companies

Empathy’s Impact on Growing a Property Management Company – The Nest-DC story

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Our guest today is someone who is very interesting, her name is Lisa Wise, who is with a company called Nest DC. As we go through this show, you may want to visit nest-dc.com to get exposed to the actual website so you understand Lisa’s company and what they are all about.

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I came across Lisa’s website by accident while we were doing a property management webinar with LeadSimple. Her page was assigned to me for conversion optimization advice. As I was reviewing other websites, I stumbled upon Nest, and I got a great tour of that website. I liked how it looked from site aesthetics to their 6-minute promo video. I wanted to meet the person behind the company and talk to her about what it took to build Nest DC and where she’s going with it.

Q: So on the last podcast I heard you on, which I think was Executive Leader Radio, you mentioned that you are at about 500 properties. That was about 10 months ago. Where are you right now?

A: We’re in the same place right now with Nest DC, but we have spun out our portfolio and separated the residential management side of our work that falls under the umbrella of Nest DC. Our association management is no longer in that portfolio, and is now managed under Roost. So, we’re still growing and building out new opportunities for revenue streams. We’ve tightened up the portfolio so we can really focus on different specialties with the two different companies.

Q: So Roost is also your company?

A: Yes. Roost DC is an outgrowth of Nest. It’s a sister company. Nest has become a success because we’ve had an exceptional team. Without our staff, we don’t have anything to offer that’s out of the ordinary. I have put together a loyal, fun, sophisticated, and motivated team of people that have made this company thrive. So one of the things I wanted to do was to reward those team members with an ownership opportunity, to really feel like their stumbling upon Nest was a good, once-in-a-lifetime opportunity. Rather than splitting Nest up, which would have been logistically complicated and less prudent, we took the associations we were managing out of the portfolio and we spun that work out into a new company called Roost. Roost DC is an LLC with 11 owners. All of the Nest employees were invited to become shareholders. Eleven of them did, and we are not aware of any other employee-owned management company that is not a family.

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Q: Very impressive.  So I am a big proponent of making sure that employees are happy. Happy employees make happy customers, and that is the perfect world. What you guys did is pretty amazing. We have a standard and generic offer like most technology start-ups where we offer options to our employees, but you actually made a company for those committed to the cause. I have met thousands of property managers in my career and I’ve never seen anything like that. How is it working for you and how long have you been doing it?

A: We’re approaching the end of our second year of business with Roost and it’s been one of the best professional decisions I’ve made. I’m proud of it. One of the great things about working with colleagues who are also co-owners is that you’re getting real buy-in and commitment. There’s a focus on high-quality customer service, attention to the brand, teamwork, and a level of focus that you won’t get from an hourly employee. You can reward them all you want, but when an ownership is at stake, it really lends itself to a different customer experience, and it’s been great for business. It’s been fun to work with team members who are co-owners and it’s created a different experience for our customers. One of our chief complaints we get in the association environment is that there’s a lot of turnover. And when you’re a team of co-owners, that variable goes away.

Q: When you say turnover, you mean employee turnover, right?

A: Exactly. Traditional portfolio management brings a lot of turnover, and some of the buildings we work with get frustrated if one to two different managers are their point of contact annually. It’s hard to maintain the institutional knowledge that you need to manage well.

Q: I couldn’t agree more. The continuity and progression of a team is paramount in a service business. I model a lot of my back end organization after the most successful property management companies I work with. The team needs to be responsible for their portfolio of clients. A lot of things can be done on an assembly line, but when it comes to relationships, it’s not assembly line work. People need to be connected to individuals making customers happy. Before becoming a property manager, what did you do, and how did you get into the property management business?

A: I was a policy consultant for a healthcare organization and then moved into senior leadership roles where I was the executive director for healthcare or environmental nonprofits. I segued into that after graduating with a degree in political economy and before that a film degree. I always joke that a film degree gets you from one end of town to the next. Those educational experiences prepped me for what I would do for 12 solid years. When I was living in Arizona, I bought an 1893 adobe duplex. It was cheaper to own something in grad school than it was to rent, so I bought it. I loved working with my hands and I liked giving my neighbor and tenant a great and unique living experience. I sort of kept that in the back of my brain and used that property to buy and manage other properties. I had a nice little portfolio on the side while I pursued my nonprofit work. When the great recession hit, I was really burned out from raising money in nonprofits, so I decided to pivot and start my own property management company. I did it really organically with our core philosophy, which has been the same since the day we started: we believe high-quality property attracts high-quality tenants. When people are happy where they live, they make better neighbors and you have a greater city. That philosophy has always shaped what we do. Here we are with a viable company eight years later.

Q: What were the first and biggest challenges you had to overcome? How did you do it? What would be your Empathy in PMconstructive advice for anyone starting out?

A: Billing. It’s really hard to ask people to pay you for your time and your work. It’s hard to place value on that, particularly when no one wants to pay you for property management. We wanted to make it something that people felt great about buying into, but that took a lot of time. So billing and justifying our rates and helping people understand that there is value in something that they may never actually need to leverage. At some point, property management is a great mixture of service and passive income. If you’re lucky, there’s not a lot to be done. You take care of emergencies and you can sail a little bit. So it’s hard to always justify your value. In the beginning, it was hard for me to figure out how to do the baseline contractual billing and to help owners understand that properties need to be maintained to a certain standard in order to manage them well. Then, I’d feel bad about approaching them with turnover costs or telling them they needed to have their windows replaced. It felt like because they were so put off by even having to pay for management at all, I had to be the bearer of more financial bad news and I’m still never comfortable with it.

Q: We just had a conversation with Deniz Yusef, who is a Business Development Coach in Australia, and one of the first things he said is that clients are almost ashamed to charge for their services. I understand that it’s hard to justify your value to customers and to figure out a fair rate. So how did you overcome that, because it’s very common for business start-ups? What measures have you put in place to combat that and move forward?

A: I think that when we could make the argument that by paying our fees and helping us ensure that the tenants have the best possible experience and the space is maintained and cared for, you’re really setting the relationship up for success. So if you have a great property, you’ll have tenants that care about it and respect it. So spending the money on us and on making sure you have a great product will save you money over the long term. I think that once we were able to make those arguments and actually anchor them in real life scenarios and examples, it was easier for owners to understand that. And being able to present the idea that you can pay $1,500 to get everything done right now or $3,000 over the course of a year, it’s really the right investment. It’s another sales technique and something we believed in.

Q: How did you communicate that? You’re in a space where you had some really good case studies. I’m trying to fish out specific advice for people dealing with this. How do you tell customers this?

A: Our proposals are very transparent with pricing. Be up front so no one has to ask you why you charge what you do. Be proactive and define the fee structure. People are concerned that they’ll get nickeled and dimed. Let them trust you. Be ready to answer their questions, but show them everything before they ask. Don’t be apologetic. We are experts and we have learned a lot of lessons the hard way. Offering free property management is easy to slip into if you’re not careful.

Q: How do you feel about publishing pricing schedules on websites?

A: We publish our rates, and happily so. If someone is price shopping and they see our rates our higher, then they skipped a phone call. There is no reason for us not to be upfront about our pricing. If competitors want to charge less, that’s fine. Our attitude is that there is plenty of business, so we want people to get the right fit. Publishing rates is transparent and it saves the customer time.

Q: I think the most successful people I speak with agree. Everything should be detailed and laid out, and we like to connect growth goals with our prices. I want to communicate to potential customers, not competitors. We want to work with people who fit our criteria as much as they want to find a service provider who fits their needs. What do you think about offering two or three different plans instead of just one model?

A: I have tried every version of pricing out there and the more straightforward and simplified we could make it, the more efficient it was. Different packages really didn’t work out for us. We had situations where we would offer a lease-only option and that equaled total disaster because the tenants didn’t want to deal with the owners, they wanted to deal with us, because that’s where their relationship started. Owners didn’t understand the complexity of being a landlord, so they were trying to save money, but weren’t prepared for what they had to do. So we don’t do different versions of management. We know what we are successful with, and we want the owners to understand the value of our work and let us do every part of it. People who want to slice and dice what we offer are generally the people who are going to question our value over and over again. So we just stopped doing that. We offer management of a condo or a house. The property management fee structure is different because one is more complicated to manage than the other.

Q: You have tested and went through iterations of your business before you came to this decision. It’s all about trying different things. You’ll never know until you try different things. You could be a thousand-unit company if you had many different levels of service. But that’s not your goal, is it? You don’t want to be everything for everyone. You have a specific niche, and I respect that.

A: We learned the hard way.

Q: That’s what testing is all about. You want to fail so your fundamental setup is established. Do you sell yourself, or do you have someone doing that for you?

A: I have several people. Most of my team is cross-trained to do that, which is good because everyone can represent the company. There are three people who will rotate with sales calls and leads and then follow up with a client and go all the way to the point where they start paying their leasing fees.

Q: And you have 21 people in your company. So, that’s another distinction that I see between high growth and highly profitable entrepreneurs and companies that are just sort of there. It’s the effort to get new prospective clients and have sales people or people who care enough to sell and get the right client in the door every time the opportunity arises. I think that’s paramount. Investing money, effort, and training so sales people can represent your company and answer questions. What were some of the particulars that you can share, some methods for training and helping people get up to speed to be great sales people for your company?

A: Empathy is the most important thing that any of our sales reps and staff can have when they get to work each day. I use the word pretty strongly. We need to understand where our tenants are coming from and the experiences they are having. We need to understand our clients and what they are going through. We’re dealing with people in highly emotional situations where they’re talking about moving their highest asset, which is their house, and they’re generally in a point of transition that can be very charged. Coming to those conversations, whether it’s a sales conversation or a maintenance conversation, with empathy helps us be our best. It helps us in our day to day work and it better represents the work we do for people who sign on with Nest or with Roost. So we talk a lot about what each experience means for our clients. What is it like to prepare a property for rent? We take for granted that it’s every day work for us, when for most of our owners, this is the first and last time they will hire a property manager. The strongest impression that they can get from a company is that we understand what they’re going through. I think that the empathy piece helps us anchor the conversation and keep our clients comfortable and trusting. You’ll have better luck bringing people on board who feel good about the management relationship they’ll have. So we spend a lot of time going over these scenarios so we can understand what it’s like to be moving or the stress around a bad tenant. We put ourselves in their shoes. From there, each of our staff members need to understand how houses and apartments work. That’s part of what we’re selling – that we know how they work. There are a lot of property management companies with people answering the phones who don’t know how to help. We spend a lot of time training our team to know how our property functions. The space we occupy actually is similar to some of the properties we manage. So we get to interface with our work and see what a living and breathing building is like.

Q: Really innovative. One of the people I follow and listen to a lot is Gary V., and one of his key hiring principles that he uses to measure interviews is emotional intelligence. Empathy is a big part of it. Building that emotional bridge between you and a prospect is critical. I advise against just working off script. There’s space for the scripting, but once you have someone on the phone and you can connect, it makes a difference. One of the key principles is building an emotional bridge. That’s a huge differentiator between you and your competitors. This is critical and I’m happy to have found that your principles are so core to our human psychology. Very few people use this. Listening helps, and it’s what I teach. You have to care more than anyone else. We bring property management clients into our office and talk through their day. My team is immersed into their lives. You do that too; you even have a house that is similar to your clients’ homes. There are filters and heaters and toilets. Is there a specific way you teach empathy? How do you determine if someone has it? Besides giving them exposed to the challenges, are there specific things you do to build empathy?

A: When we have staff that take frustrated clients really personally or when a situation starts to go south and people take it personally, those are the staff members to invest in. We talk about how intensely emotional this job is for everyone on our team. It seems like a drawback, like we should be able to leave our work at the end of the day and not care whether or not a refrigerator gets replaced. We stumble on that sometimes, and from an efficiency standpoint, it’s a losing battle. But from a caring perspective, it’s really what makes us special. If we didn’t care so much, we wouldn’t be good at what we do. Staff members who blow things off or displace blame or don’t see their own responsibility, those are not people ready to create a unique experience. That’s how we vet for empathy.

Q: Have you had to fire people?

A: Oh, yeah.

Q: How do you do that? This is, I think, something we have to do. It’s difficult and I hate it. But for the welfare of our company, some decisions need to be made. It’s especially hard when they’re good at what they do, but they don’t fit. They don’t have that empathy. How do you do it?

A: Sometimes, very well and sometimes very poorly. The moments when we have handled it well are when we quickly realize that a person isn’t a fit, and we let them go quickly. That’s better for everybody. It gets harder when you have a relationship with someone. They might get along with staff, but maybe they don’t have the skills to do the job well. And you’ll wonder if you can make things better. There’s a relationship, and we value culture and staff. If an essential staff member leaves, it’s hard on everyone else. But if you’re investing in someone who doesn’t add value to the whole team, it’s not fair to the others who are pulling their own weight. So, we try to position it as an opportunity to be somewhere where they are going to thrive. We try to keep people as part of the family even if they’re not part of the team. It’s the pits, but it’s also necessary. Do what’s best for the business so everyone thrives.

Q: The hard ones to fire are already part of the group and they might be a good culture fit, but not a professional or business fit. I’ve always struggled with it. Are there any specific ways you interview new team members that may reveal some of that emotional intelligence, or empathy? How do you give them a chance to be a great team member from the start? Do you have any tricks?  

A: It really depends on the position we are hiring for. Generally, we force them to spend a lot of time with us, and if they can hold their own with us, and all of our interesting and familial interactions, they have half the battle done. We aren’t ever interested in people with property management backgrounds. They tend to come with bad habits. We talk about approaches and customer service, but it depends on the position. We spend a lot of time with people and different teams of people interview. When people can get through that and they are still excited about the job, then they’ve passed half the test.

Q: We do similar things. It’s almost a whole team interview that takes half a day. They might be able to trick one person, but they can’t trick 10 people. So we collaborate as a group, and we agree. So the advice is to immerse your whole team into the interview process. Let your people be the character judges with you. I agree that industry experience isn’t necessary. We’re looking for character and emotional intelligence. Property management and marketing are not rocket science. You need the right people and the skills can be acquired.

A: I always make the argument that property management is very easy and relationship management is very hard.

Q: Very true. One last question – being in the service business like me and all of our listeners, when do you know when to hire the next person? How do you make that decision?

A: When people are crying at their desks.

Q: Okay, projections are sometimes off. If you think one person can handle 100 accounts, but 20 clients are bringing in 30 percent of the revenue, and the rest don’t, then certain clients take more time. So anything beyond that?

A: As an employee-owned company and a profit-sharing company, we now have our team that’s fairly motivated not to just add folks because we’re busy. We need to look at the season first. It’s cyclical. We might be breathlessly busy and begging for a new staff member, but two months later we know it will be slower. So we have to ask if we can get through the storm without committing to more payroll. We have managed to bridge those gaps and get past harder and high season periods. We hire temp help when necessary, and that has worked. College students have come in to do showings during the summer season. So, you have to be creative. We also take a look at what’s making us busy. We study why we think it’s time to hire. Is it because we are spending too much time on back and forth conversations or data entry or systems problems? If that’s the problem, then we are obligated to fix the system and then add staff second. We have gotten much better at doing that. Now we ask ourselves how we can grow as much as possible with the best customer experience inside and outside.  Our team members are customers, just like our clients. If people are happy and we know we’re delivering an exceptional service, then fine tuning the systems is the way to go. If we feel like we’re compromising our services, staffing is the way to go.

Q: I like that distinction. A systems problem versus a staff problem. When you’re scaling and starting out, there are a lot of hats to wear and it’s hard to be disciplined to review and implement systems.

A: Right. Every system is temporary. Your portfolio will collapse on your systems at some point, and you have to start over. If you’re not open minded about doing that, it can be destructive. You won’t be able to make up for the mistakes that are happening.

Q: Two more short questions. What do you do as a CEO? What does your day and month look like?

A: My in-office time is purely collaborative. I spend a lot of time available to my team to solve problems, and answer questions. There’s a lot of sales and project management involved. We do a lot of construction and project management in our company, and I like that. So I work with our contractors on large-scale projects in the field. And then growth projections and looking at how we’re going to increase the business over time. So there’s a lot of strategic planning and looking at our systems and investments. A lot of networking too. That’s generally how I spend my days. And then getting to the client interactions on nights and weekends. I invest the time to make sure I’m still offering a quality customer experience. I don’t want to sell something and not be able to deliver on it.

Q: Let’s finish with this. If you and I talk in 12 months, where would you like to be? Are there any high level goals?

A: I’d like to see 100 percent growth in Roost DC and 25 percent growth for Nest DC. I’d like to see 200 percent growth in our construction and turnover business, and I’d like to see us continue to win INC 5000 awards, the DC City Paper Best Places to Work, and make sure that if we are reaching out to the community they are telling us we’re doing our best work. I want to make sure we are having a strong and meaningful impact on the community. I want to point at what we’ve done for the Food Bank and the Humane Society and the Neighborhood Society. We are part of a community and we want to make it better every day.

I appreciate your time, Lisa. Thank you for sharing some of this wisdom.

Thank you to our sponsor, the Property Management Grow Summit, which is in January of 2017. We’ll essentially be pulling back the curtain on the greatest growth strategies in the industry. That agenda includes things like lead generation, strategic planning, sales, productivity, lead nurturing, financial models, etc. This conference is truly designed for the growth-minded property management entrepreneur who wants to step out of the norm, like Lisa. She will be speaking at the conference, and we’re really excited about that. If you haven’t seen the site yet, go to pmgrowsummit.com and check it out. Look at some speakers and check out some videos.

If you need help with sales or marketing for property management companies, please contact us at Fourandhalf. Thank you for listening, and we’ll see you next time.

Alex Osenenko

About Alex Osenenko

Alex’s professional mission in life is to help small businesses grow and thrive. Alex is the President and CEO of Fourandhalf.com and a Co-Founder of the PM Grow, Inc. His business philosophy is simple: Happy Customers are created by Happy Employees, which results in Happy Shareholders. Alex's deep commitment to entrepreneurship and improving the lives of small business owners everywhere empower him to host “The Property Management Show” bi-weekly Podcast and speak internationally on the subjects of Growth, Marketing, Sales, and Entrepreneurship.

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Alex Osenenko
President and CEO

Alex’s professional mission in life is to help small businesses grow and thrive. He is the President and CEO of Fourandhalf.com and is serving his 5th year on the Board of Directors for CALNARPM.

After spending 9 years in the trenches with his property management clients, Alex draws on his experience to host “The Property Management Show” Podcast and co-authors a weekly Property Management Blog on Fourandhalf.com. Alex has extensive experience speaking for various NARPM events at the local, state, regional and national level.

Alex is a graduate of San Francisco State University with an Electronic Commerce Systems Degree. His business philosophy is simple: Happy Customers are created by Happy Employees, which results in Happy Shareholders. Alex serves on the Board of Directors of CALNARPM (California Chapter of National Association of Residential Property Managers) and hosts a Podcast “The Property Management Show“, available on iTunes.

 

John Bykowski
Chief Operating Officer

After graduating from the University of Michigan with a film degree, John proceeded to do everything but. During his career, John has specialized in operations and has developed processes for small companies in diverse industries, such as bleeding-edge marketing technology, social networking, trade shows and exhibitions, and cloud software. John and Alex had worked together previously, and when he needed someone to help take Fourandhalf to the next level and beyond, Alex brought in John as his first employee, and later, business partner.

In addition, now that he’s using his film school know-how to help property managers look their best in their blogs, his mom no longer feels his degree was a complete waste of time.

Danny Morris
Director of Account Management

Born in Australia and growing up in Israel, Danny has spent a lot of time traveling the world between those two places. After completing his military service in Israel, Danny began following his biggest passion, writing, which he discovered while backpacking South America and publishing his first book.

When it was time to unpack, he returned to Australia to complete his Journalism studies amongst the beaches of sunny Perth. Danny is a huge online fan and after working in a number of related jobs, he finally gets to combine his two favorite things, working with media and people.

Marina Osenenko
Product Manager

Marina draws upon her real estate, business operations and customer service expertise for Fourandhalf. Her favorite part of being with Fourandhalf is the opportunity she has to really get to know our clients, build professional customer relationships and truly be part of a team that assists in their success.

Her time away from work is happily spent watching her children grow up and attempting to keep up with them! Any spare moments beyond nurturing her children are filled with hiking, spending time with friends, exploring the Bay Area and squeezing in a non G-rated movie every now and then.

Marie Liamzon
Product and Marketing Manager

Before joining Fourandhalf, Marie worked for one of the largest banks in the world. She took on different roles, but couldn’t find what she was looking for. She pursued a variety of side projects until she finally decided it was time for a career change.

Marie is very passionate about helping people and learning new things. In her spare time, you might catch her exploring new places and taking far too many pictures.

Kyle McLean
Customer Success

Born in San Diego County, Kyle McLean has since migrated to the Oakland woods. A fan of tall trees and tall tales, he holds a bachelor’s degree from the creative writing program at the University of California, Riverside and is a licensed California Certified Shorthand Reporter.

After a few years as a freelance court reporter, Kyle has joined Fourandhalf for an opportunity in sales and digital marketing. In addition to reading and writing, his hobbies and interests include gardening, hiking, soccer, coffee brewing, and craft beers.

Karen Wyle
Account Management

Originally from the Philadelphia area, Karen moved eight times in seventeen years all over the East Coast and to the Midwest before settling here in Northern California six years ago. She is an alumna of Brandeis University with a BA in American Studies and earned a MBA in Marketing Management from Indiana University in Bloomington. Karen’s business career has been well-rounded, with experience including advertising, direct marketing, corporate retail, product management, new product development, and new customer generation. Beyond an office setting, she has been thrilled to volunteer her time giving back to the community with KPMG’s Family for Literacy, at her daughter’s school, and as a Girl Scout Troop Leader. Karen enjoys music, good food, traveling to new places, completing jigsaw puzzles, meeting people and making connections.

Karen became a part of Fourandhalf’s Account Management team in 2016, relaunching her marketing management career after a pause to raise her family. She is excited to rejoin the business world and to work with such a strong marketing management team.

Paige DeRuyter
Account Management

Paige graduated from Chico State University with a degree in Journalism. Her favorite part of working at Fourandhalf is helping clients create and produce educational blog content to grow their business. She is an avid sushi enthusiast who enjoys riding her bike and watching college football and in her free time.

Nissim Boozaglo
Web Hosting Support

After working as a Radioshack store manager, Nissim decided to change his career path and pursue his passion for music production by getting his B.A.S. from Expression College for the Digital Arts. Nissim has a beautiful 8-year-old girl and loves cooking delicious homemade food and going camping with her! At Fourandhalf, Nissim is responsible for the implementation of the clients’ Landing Pages and Google Adwords campaigns.

Theresa Barnes
Campaign Director

Theresa Barnes was born and raised in the Bay Area and graduated with her Bachelors Degree in Communications Studies at San Francisco State University. She worked in aviation at a private FBO for 3 years, and other industries, before joining the Fourandhalf team. She finds a balance between being a young mother, work, and living a healthy lifestyle outside of work by staying as active as possible. She is dedicated to customer satisfaction and having a great work ethic.

Brittany Stephens
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Brittany recently moved to the Bay area after graduating from California State University Chico with a degree in Business Marketing. She is known for her excellent communication, customer service skills, and shameless nerdyness. Her passions include: music, tabasco, Lord of the Rings, and the Golden State Warriors.

Logan Jones
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After graduating from CSU Chico with a Degree in Business Marketing, Logan moved back to the East Bay and pursued a career in sales. With an attention to detail and a relentless drive, he strives to improve himself and his passions each day. When not at work Logan enjoys playing guitar and writing songs, and occasionally performing around the Bay Area. He is an avid sports fan keeping up with everything SF Giants, 49ers, Cal Bears, and Golden State Warriors.

Hope Lumbley
Account Management

Hope recently moved to the Bay Area after graduating from Chico State University with a degree in Journalism. She is coffee crazed, dog obsessed and hopes to visit all National Parks. One of the greatest times in her life was when she lived abroad in Costa Rica and hopes to travel more of Central America in the future. She feels blessed to work for a company who supports her love for travel and the need to learn more about what the world has to offer.

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