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Building a Culture That Sticks: The RockStep Way with Andy Weiner (Episode 504)
Introduction
Hey, have you really thought about the culture in your business? You know, when you got two or more people together, you’ve got a culture, whether you like it or not? Today, my guest is going to share with us his journey as a business leader, founder, owner and operator. And we’re going to dive into that significance of the right kind of culture. His name is Andy Weiner. Andy, welcome to the show.
Hey, Doug. Excited to be on the show.
Yeah. So give us a quick flyover of your background and your backstory. What pulled you into the business world?
Meet the Guest: From Weiner Stores to RockStep Capital
Sure. Hey, Doug. My my grandfather came from Eastern Europe to Houston in the 20s and started a chain of clothing stores here in Houston called Weiner Stores. And in its heyday, it had over 150 stores, and I ran the operations of the company. So I’m a retailer by by heart. I ran the store operations, real estate systems, logistics, HR and just developed a love of retail.
And then about 30 years ago, I started my company called Rock Step Capital, and we are a shopping center investment company and have been doing it for 30 years. And we have built or acquired about 10,000,000ft² of shopping centers. We currently have properties in 11 states. We’re vertically integrated. We have about 100 employees. We do our own leasing and property management and acquisition disposition, construction, everything in-house.
Our geography is a little unique. We do. We don’t do the big cities. We do what we call secondary or tertiary markets. We have a name form called hometowns. Hometowns are markets that have a low cost of living, high quality of life, engaged civic community, low crime, but something driving population growth. Whether it’s a major university or a military base, or a growing hospital district or tourism fortune 1000 company, or within the halo of now let’s call it 90 minute driving radius of a big city where people are moving to these lower cost of living cities, but are still within that gravity pull of the big city.
So that’s our geography. We buy open air shopping centers, we buy enclosed malls. A kind of our secret sauce is when we buy an enclosed mall, we always get local business leaders to be part of our to be partners with us. And so we actually will go to that city and meet the leadership, engage with the leadership and get them to be our partners as a criteria for investing. Okay. So we are all about reducing risk and and basically bringing in local influence.
The Story Behind the Name “Rock Step”
Now your capital company named Rock step there’s a significance to that name.
So tell us there is a significance Doug. So I will tell you what it means. The word rock step is chosen very carefully. It’s not a word in the dictionary, but dancers know what it is. It’s a dance move. So when you rock step, it’s when you switch directions, when your couple’s dancing, when you’re swing dancing or ballroom dancing, when you switch directions on count seven and eight, 123, one two, three. Rock step.
Or a teacher might say ball, pivot, change. And so I love swing era music. The 1950s, big band, Frank Sinatra and Ella Fitzgerald and Sammy Davis Jr. That genre I don’t know if you’re familiar with that era, Doug, but I like that swing era music. So we use it as a metaphor, to be nimble, to be agile, to be responsive. and we use it as a verb. Doug, we got a problem. We got a rock step. We got to switch directions or. Doug. Great opportunity here. Let’s all rock step. So everybody, our company knows how to use it as a verb.
The 26 Rock Steps: Rules of Behavior That Drive the Company
And then I wrote 26 very detailed rules of behavior, very detailed that I expect everybody at Rock step to live by. And we call these rules rock steps. And we have a ritual that we call the rock step of the week. And we choose one rock step, and we rotate every week, and our whole company gets on a call at 10:00 Monday and we talk about the rock step of the week.
Somebody writes an essay, and he or she shares what that rock step means to the whole company. And then they call it random two or 3 or 4 people to ask them, what does that rock step mean to you? Okay. And we do this every week and we do it. There’s 26 rocks. It’s twice a year. We rotate and we’ve been doing it for ten years.
And so here is a list of all 26 rock steps. This is by far the most important thing in our company. I am emotional about it. I’m religious about it, I talk about it, and I expect everybody to live by these rules. If you, Doug, came to an interview at Rock step, you’d go to rock step. You look at the 26 rules are called the rock step way. And then you would have to choose those three rules that most those rock steps that most resonated with you. And then you’d have to choose those three that were more challenging for you, and you’d have to bring that to the first interview, and that would be part of the first interview.
Okay, so I’ll give you an example of what three most resonate with me and what three are most challenging. So we are actually on rock step number one. We just completed rock step 26 last week. So this week rock step number one is called Do the Right Thing always. We are in the investment business and you’ve got to absolutely stop. If there’s an ambiguity about the right way to handle something you got to figure it out.
Another one of my favorites is actually next week’s Rock step. Rock step number two keep family. First, you have to take care of your family and your health before you take care of rock step. Okay. And then another one of my favorites is rock. Step number five. Be punctual. For me, on time is five minutes early, and if you’re on time, you’re late. It’s about courtesy. It’s about respect. It’s about paying your bills on time. Those are my three favorites.
My more challenging three are rock. Step number six be responsive. I’m doing a video with you right now.
I’m not responding to emails I get behind. Very hard for me to be appropriately responsive. It’s a challenge. Rock. Step number nine. Another one that’s difficult. Listen generously. Generously is the key word. I struggle with this one. I think my wife would tell everybody on this podcast that I am a terrible listener. I actually think women probably listen better than men, Doug. But it is going to be a perpetual challenge for me.
That rock step and then the final one that’s a challenge is the one from last week. Rock step 26 keep things fun, my wife says. Andy, you take the fun out of the fun. Okay. I’m very serious. I will let you know. Doug, that on the inside I’m very happy. But I’ve got. I’m very serious in business style. My wife, on the other hand. She’s giddy. She’s laughing, she’s smiling. But on the inside, she’s kind of like a nervous wreck. So we balance each other out.
So I spend a little time with you, Doug, on this. Because following these rules, creating a ritual around these rules, talking about them using the language every day about these rules is by far the most important thing at Rockstar. It’s how we resolve conflict, how we build a great team, how we build trust. And we’re not perfect. We can hold each other accountable And people come into my office and say, Andy, you’re not following these two rock steps. And it happens a lot. And we have to follow these rock steps with our investors, our tenants, the communities where we operate, our lenders and our service providers. And I go to tears. I go to the mat. There is nothing, nothing more important than these 26 rock steps.
Why Most Culture Initiatives End Up in a Drawer
You know, Andy, kudos for thinking through that, developing it and then taking the action to make it come to life. I think that’s always a big challenge. I have seen organizations that spend some time and money visiting the idea and the question, what kind of culture do we really want to have? Do we need to modify our culture because of changing the the changing world around us, or events that have happened and what often happens.
The time and money spent designing a nice flip card there to spell out what they are goes in a drawer and the day after is is nothing.
Yeah, I.
Actually think that that there is. I see organizations get challenged by putting things on their wall, the 5 or 6 rules or values, etc. we’ve designed a little different. We are really focused on behaviors. Okay. I mean, yes or no. Are you a jerk or not? Okay. Are you a careful steward of our assets or not? and these are specific yes and no behaviors.
Now, other people have values, but values, a funny word. We’re just into behaviors. And if we behave in these certain ways, be transparent. Bring it every day. Be a brand ambassador. Provide solutions, you know. And in other words, don’t dump a problem on somebody else’s back. Think through the options and then come up with a recommendation. And I mean, these are specific. Yes. No. Did you do it or not? Okay.
And that’s how we have designed it. And that’s why we believe it’s very effective.
Do the Right Thing Always: A Story from the Field
You know your value number one. Do the right thing always I use that. And I’ve told that story this story a couple of times on the show. I had a client. He was a commercial construction company owner over in Florida. And as I got to know him, I we began talking about culture and values, he said. He said, basically, we only have one. And I said, what’s that? And he said, we do the right thing? And I kind of facetiously smirked and I said, yeah, really? What? So what does that mean? And he said, no, seriously. He said, in my business, it’s notorious for things to happen that aren’t right, and the cost to fix them typically gets passed through in some other change orders, some other line item down the road, he said. I don’t allow my company to do that. If we goof or one of our subcontractors goofs, we eat it and and we disclose it fully to our clients.
He said, now, to be truthful, what that gives me, I’m not the cheapest bit in the on the street out there and people know that, but they also know they’re not going to get nickel and dimed in in the process. If we agree on a budget, you’re going to get the budget. You know, it’s it’s going to work. And so we were walking a property one day and one of his supervisor superintendents came up to him and said, hey, boss, you know that trench over there? We’re going to have to dig it. It’s it’s like a foot off where it needs to be. And we just can’t, you know, keep that that way. And so, you know, they said, okay, let’s go after it. And, you know, he he turned to me and he said, see, my guy already knows the right thing to do. And he said, and it’s a given that we’re going to get that done so that everything after that works like it’s supposed to.
And he said it’s it’s just something I aggressively enforce in my company.
That’s great. That’s great. no, it’s it’s that’s number one for a reason, by the way, you know.
Right.
Number one.
Yeah, yeah.
Accountability Goes Both Ways
So as you’ve developed this culture over the years. And you said something else I thought was intriguing, that that people will come to you and say, Andy, you’re not living these two rock step values or principles. You know, that speaks volumes again, to the kind of culture that you have consciously and intentionally built where people feel entitled or empowered to come to you and call that out.
Yeah.
And and I wish they would do it more often. Doug. So, you know, it’s like I’m the boss and the boss is scary to some people, so but but I want to encourage people to come to me.
Yeah, yeah.
And let me ask you this. As as things go on day by day, do you actively reinforce when you see one of those behaviors that is in line.
It is consistent. It is achieving the goal. Do you call that out for positive reinforcement?
Well, yes. Yeah.
The Brilliant Jerk Mistake
Well look you have to. I’ll give you an example of something that I do and something that I failed to do. Okay. So I think being positive is all about being specific and timely about somebody who does something good. And I try to be positive and make an effort. And being positive is one of our rock steps. I’ll tell you what number it is. It is where is it? Here it is number 22. And so I think I do a decent job on being positive.
Doug I think we rock set 23 is don’t be a jerk. And what’s interesting is I don’t want any jerks at Rock step. And I made a mistake once where I brought in an executive who I thought would be transformative to the company. In other words, I didn’t follow the rock step because I thought this person was going to change the company for the better, and it was such an important change.
I was going to relax my standards and it didn’t work, and it was a mistake. And so when I talk about don’t be a jerk and I say, we don’t have any jerks at this company, I modify that to say, we really don’t have any brilliant jerks, because sometimes people let their standards down. And I did it by bringing in a brilliant jerk, and that person was just disruptive.
And so we all know what a jerk is. It’s easy to identify and there’s a lot of jerks around. Okay. And so we do not want jerks at rock step, and we don’t want brilliant jerks at rock steps. So that was that was a mistake I made. I made lots of mistakes in my lifetime. I’m an expert on mistakes, okay? I’m an expert.
Well, yeah, as we all are to be, you know, totally truthful about it. That’s where we get how and where we get to where we get because of the learning from those moments. Yeah. Now that I love that terminology.
Brilliant jerk. Yeah, I had one of those too. I did the same thing. I made a placement of an individual. I was building a company and thought I needed a CEO type, and I identified a candidate. And ironically, it was someone I had known in the industry for many, many years. And we had worked kind of in parallel circles. And I, I thought I knew and understood everything about this person brought them in and day one, it just exploded some things, you know, right away and I, I didn’t let it linger for more than about two weeks. And then I said, you know, this is just not going to work. We’re we’re going to separate here and move on.
Yeah.
So funny how those things can happen.
Yeah.
Investing in Hometown America: How RockStep Picks Its Markets
Well, as you’ve, diversified geographically, let’s talk about that a little bit because you do inevitably introduce some local values, local behaviors and ideas. As you start partnering with various folks, how do you try to bring others into the fold and into the mindset of of rock step.
Even as employees or or when we try to invest? I mean, walk me through it. Specifically the question to make sure I answer it.
Right. Well, let’s let let’s start on the the investment and partnering side. You know, when you when you identify a market you want to go into and there’s a maybe a specific property in question.
So let’s.
Say. Yeah. So here’s how we do it. Let’s say we identify that there is a, a mall enclosed mall in a one mall town. We analyze the town. Does it have growing population or how many of the essential drivers. And we have six essential drivers that we look for are in this town. And then if the answer is population stable or growing and there are drivers, we then look at the property. Where is it located? Is it at the main? At main. Does it have the pole position of retail in the market or is it on the edge? Is Walmart and Target behind the property or in front of the property? We then look at the physical part of the property because the parking lot.
Let’s look at this street appeal. What’s the roof like? And then we analyse the tenants, we analyse the net operating income, we look at the stability of net operating income and in the enclosed mall space, you know, the cap rates are very attractive. They’re generally 13 to 17% cap. And so if so then the question becomes how confident are you that you can stabilize net operating income. So if you can keep net operating income stable at a 15 cap and you lever at 55% at 6.5% interest, you can kind of do the math pretty quickly and say, hey, that’s pretty good. That’s a lot of cash flow, so much cash flow that you can pay a current preferred return. And we’re typically at 8%, and you have additional cash to return to the investors without doing a refi. And you’re also amortizing your debt. So you’re building wealth through cash flow.
And so that’s how we think about it. And we look at every single moral opportunity in the country on market and off market.
The Power of Local Partners
We own 14 malls right now. We’re looking at two right now that are on market. And that’s how we think about it. And then we go to the market and we meet the business leaders. And these are people who care about the community. They can give us feedback on employment, on reputation of that asset, reputation of the market. And if those business leaders don’t believe in me or rock step, if they don’t believe in that property, they don’t believe in that community, we’ll walk the deal. If we don’t get local partners to put alongside my capital, and our investor capital will walk the deal.
Now, the advantage of local partners is three one. They help with entitlements. They help with property taxes. They help with incentives, they help with leasing. So they’re kind of our eyes and ears on the ground. Number two, particularly in the enclosed mall space debt is hard. And many times our local partners own the local bank or they’re on the board of the bank and we get very favorable debt.
And then finally, number three, we open up a new channel for exit, because often our local partners have a net worth of 25 to 1 million, to 100 million, you know, to a billion or more. And they want to own the asset when we’re ready to sell. They want to own it. So you open up another channel.
So that’s how we think about a market. And we study every single hometown in the United States. We’ve ranked the top 100. We’re focused on these markets. We study these markets. We look at properties in these markets. We look at where retailers want to grow in these markets. and that is our geography. That’s what we focus on.
And hometown America. People are nicer. People want you to succeed. There is a difference between the big cities and hometowns, and there really is. And I’ll give you an example. In my former days, when I first started, I was doing some work in Houston, and we wanted a national retailer and the broker for it was not a good guy and would only wanted to tell the retailer about us if he got paid a fortune.
And there’s another situation where another broker was taking his clients on sex trips to Mexico, and that’s how they got stuff done. And so we were boxed out because I’m not a sex trip to Mexico kind of guy. Okay. And then I started working with Tractor Supply Early in my career and I, you know, Tractor Supply was primarily these secondary tertiary markets. And I realized that that type of geography was better fit my values. And I started building a business based upon hometowns. Now, the only disadvantage of hometowns is that geographically, it’s harder to get to.
Yeah, okay.
I mean, you simply have more travel time, and that’s a real issue for you and your team for for us and our team, because it’s not easy to get to places. I’m going to Aberdeen, South Dakota tomorrow. And there’s one flight, you know, two flights a day out of Minneapolis. And if I end if I miss it, I’m driving five miles, five hours. And, you know, it’s not easy to get there.
Not easy to get to these places. So it’s but if you can manage the travel exposure and you’ve got a team of people who are willing to travel and have a heart for hometowns. it’s simply a lot of fun and it’s very fulfilling.
Retail vs. Amazon: Why Shopping Centers Are Back in Fashion
So is your market as you’ve described it? Has it been adversely impacted by the Amazons of the world and all the.
Good question. Let’s talk about Amazon. So Amazon Doug killed the week retailer Amazon and Covid. I mean Covid just kind of buried the coffin for the week. Retailers and those that didn’t that survived have developed their own e-commerce strategy, their own app, their own distribution, their own set of bricks and mortar stores, fleet of bricks and mortar stores to effectively hold, if not gain market share against Amazon. So you’ve got a dozens of these companies that have very strong balance sheets. And they’re telling Wall Street, you know what? We want to grow by 100 stores next year. Aldi grocery store 225 stores. TJ Max 130 stores a year.
But there’s no new shopping centers being built. So you have all these companies that want to grow into an inventory of shopping centers. That’s not growing because construction costs have gone up and interest rates went up. So retail is actually in fashion because of the squeeze that multifamily and to some extent industrial felt in 2022, 2023. So we’re in fashion right now and we’ve got positive leverage. In other words, you’re buying something like at a grocery center, anchored center, at a non cap, borrowing at seven, or an enclosed mall at a 15 cap borrowing at 7%. So you’ve got positive leverage. You add debt, you get more cash flow to equity.
That multifamily deal. I’m looking outside of my window in the Heights that’s valued at four and a half or five cap, but debt on it is five and a half 6%. You put in debt on it. You hurt the cast. Negative leverage. So. Retail has got positive leverage and Amazon has matured. It’s still growing in terms of market share, but it’s not growing at the same rate of growth because all of these other retailers are now pushing back on Amazon.
Yeah.
You know, it’s interesting I had a long time friend and colleague who’s now past. But he always talked about the market will seek its own equilibrium. And that’s why we see business cycles. We see booms and busts that things go up and down accordingly. But there’s always some notion of equilibrium in the middle there that everything either rises or falls back to. Yeah. And if you can create a good business model, that is justified on the equilibrium you’re you’re more likely to avoid, you know, the the ups and downs and stabilize things as you go. Yeah. Good, good. Well, Andy, what what have we not hit about your rock step culture?
Yeah, I.
Becoming the Country’s Leading Educator on Shopping Center Investing
Will tell you, there’s one thing I’d like to leave you with, and that is that one of the missions of our company is to be the country’s leading educator of investing in shopping centers. And we have if you go to rocketship, I’d encourage your listeners, listeners, if they want to learn more about everything associated with the shopping centers, co tenancy provisions, exclusive clauses, types of shopping centers and commercial real estate, they should go to our website and go to our education center.
We’ve got over 200 articles on every aspect of real estate and shopping centers. And then we also have videos. We have a YouTube channel called the Shopping Center Channel, and you can go there and see videos on the off price industry, on why Walmart is so strong and how it killed family businesses like ours, on issues like the growth of youth, sports, tourism and how it impacts the shopping center sector. On Instagram, I’m the shopping center guy, so please follow us or follow us on our YouTube channel called the Shopping Center Channel. So I think I want to leave everybody with the message of it’s it’s important to learn. And, you know, they should please go to our website and go to the education center.
Closing Thoughts
Very, very well, Andy. And as always, folks, we’re going to have those links in the show notes. So do feel free to hop down there. Andy. This has been great. I appreciate you sitting in and giving us some new insights on this very important sector.
And remember the rock steps. Doug.
Okay.
Remember those rock steps? Okay.
Absolutely. What a strong culture. Think about the rock step way.
Right.
Well, folks, this is the part of the show I do like to remind you, we have a likewise, we have a YouTube channel. A video version of these shows are over there. And we’ve eclipsed number 500 at this point. So we got a lot of content ourselves. Hop over there, check everything out, leave me a comment, join the channel. And for now, I think that’s it. We’re going to say goodbye. Go out there. Make it a great day.
Meet Our Guest – Andy Weiner
Andy Weiner is the Founder and CEO of RockStep Capital, a Houston-based investment firm with nearly three decades of success revitalizing communities across the U.S. With degrees from Stanford and UT, plus executive training at Harvard, Andy combines disciplined leadership with a deep personal curiosity. Fluent in multiple languages and passionate about history, aviation, and sports, he brings a unique perspective on building resilient businesses while pursuing lifelong learning.
Here are Andy’s social links and contact information:
- website – rockstep.com
- email to contact me – andyweiner@rockstep.com
- LinkedIn profile – linkedin.com/in/andy-weiner
- YouTube channel -https://www.youtube.com/@TheShoppingCenterChannel
Connect with Doug Thorpe
- LinkedIn: https://www.linkedin.com/in/dougthorpe/
- Doug Thorpe Website: https://dougthorpe.com/
- Podcasts: https://podcasts.dougthorpe.com
- Twitter: https://twitter.com/dougthorpe_com
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- Instagram: https://instagram.com/dougthorpe_com
- YouTube: https://youtube.com/@dougthorpe
