Lessons Learned and Earned, Part I
A couple of months ago, Al Holloman, a broker in our Queens office and a member of the local chapter of CCIM, asked me if I would speak at the upcoming CCIM luncheon in late April. I accepted, but was surprised by the topic the folks at CCIM wanted me to address. Most of the time when I speak in public, I am talking about the investment sales market or some aspect of the trends between buyers and sellers of properties in the New York metro area.
The topic for this speech was to be my experiences in the brokerage business and the lessons that I learned along the way. Preparing was more difficult than I imagined, as it took me on a trip down memory lane back to my early days in real estate. We are often so caught up in our day-to-day activities that we fail to take a step back and observe things from a macro perspective. This engagement would force me to do that.
Certainly, I am very proud of what Massey Knakal Realty Services has become over the years. Since 1988, we have sold over 4,000 investment properties having a market value in excess of $15 billion. Since 2001, when CoStar began tracking the market, we have sold over 2,200 properties in New York City, nearly four times the number of our closest competitor, which has sold fewer than 600. Putting my speech together made me think about how we got here. I think I can sum it up by saying it took a lot of hard work and a lot of luck (not necessarily in that order). Paul Massey and I have made hundreds of mistakes over the years, especially in the early days, but fortunately haven’t made many of them more than once. Today, we have fantastic partners and a senior management staff that helps keep us moving in the right direction. From the mistakes we have made and the experiences that we have had, there have been many lessons learned. When I finished preparing my notes for the CCIM speech, I had come up with 30 lessons learned and, interestingly, none of them were real estate-specific. Most of them are applicable to any service business and some are even more far-reaching.
In this week’s column, I would like to begin sharing those lessons with you. First, a little background.
My career in real estate started by accident. In 1981, I was a freshman at the Wharton School at the University of Pennsylvania. Like most Wharton students then, I wanted to be the next great Wall Street trader. In order to get into one of the big investment banking firms after college, I thought a résumé showing a strong track record of summer work would be helpful. During spring break of that year, I drove around Bergen County, N.J. (where I grew up), dropping off my résumé at every commercial and investment bank that I saw. I was coming out of a Paine Webber office in Hackensack and across the hall I saw “Coldwell Banker.” I entered the office and dropped off a résumé thinking it was another bank.
Later that day, I received a call from someone at CB wanting to set up an interview the next day for a summer job. Prior to the interview, I went to the library to look up this “bank” so I would look knowledgeable in the interview (remember, no Internet in 1981). When I discovered that Coldwell Banker was a real estate company, I almost did not go to the interview. Who wanted to get into the commercial real estate business? Not me!
As it turned out, it was the only summer position I was offered. I took the job and loved it from my first day. I went back my next two summers and started my full-time career with CB after graduating in 1984. So …
Keep an open mind and think outside the box.
After that first summer at CB, I took as many real estate and related courses as I could at Wharton. One of those was entrepreneurial management.
One day we had a guest speaker who was a Wharton alum. He told us that when he was in school, he wanted to be an investment banker like everyone else. As it turned out, he entered the pet food business and found that he loved it. He said that whenever he ran into his old Wharton buddies, who were mostly working on Wall Street, they would often look down their noses at him because he sold dog food for a living. He quickly got over feeling like a second-class citizen as he was making millions a year and was incredibly happy doing what he loved.
This taught me that enjoying what you do is one of the most important things there is. People who do a particular job simply for the money often get burned out and are generally not as happy as people who do what they are really driven to do. If you have passion for your work, you can achieve great things and it may not seem like you are struggling to make things happen.
Be passionate about what you do.
I was very lucky to have met Paul my first day on the job. He had spent a year in CB’s “wheel program,” where he spent a few months in different divisions of the company learning about all of the different services the company was offering. He decided he wanted to get into the investment sales area, which is the sector of the business I was attracted to.
On my first day, the boss told me to follow Paul around. At the time, CB had about 50 brokers leasing office space and four brokers specializing in sales. Paul was one of those four and the other three each had at least 20 years of experience and couldn’t be bothered with the two youngsters fresh out of college.
On my second day on the job, Paul and I decided to become partners and work on all of our transactions together. A year later, we were made the co-directors of the investment sales division (it felt kind of strange being the bosses of the more experienced guys). We grew that capability within the firm and left there in 1988 to form our company. I have been partners with Paul since 1984 and feel so fortunate that our partnership has worked as well as it has for so long.
People often ask what the secret to a lasting partnership is. I’m not sure I know the answer, generally, but for us it has worked because of an equal passion for the business and an equal work ethic. If we logged the hours worked over the past 27 years, I would imagine that our totals would be extraordinarily close.
Your partner(s) must have a similar passion and work ethic.
One of the secrets to Massey Knakal’s success has been our territory system, where each agent is assigned a specific neighborhood in which to specialize. This platform requires a system of rules and guidelines to dictate parameters pursuant to which business is done. A clear understanding of these rules and guidelines and their strict implementation by management is required to give the platform integrity.
At CB in the mid-1980’s, they attempted to implement a similar system but, unfortunately, the rules were not applicable to everyone equally. The minute the system appears to be-or is-inequitable, it breaks down.
In our platform today, everyone is treated equally. A new broker who joins the firm has the same exact protections as does a 20-year veteran. No one is “more equal” than anyone else.
Rules must apply to everyone equally.
Paul and I first decided we wanted to start our own firm in 1986. We figured we needed about $300,000 to make that happen. We confidently went to Chemical Bank, where we had been banking for two years, and asked to speak to someone about a new business loan to start the company. We did not expect any problems-we were successful brokers, had good balances and always went out of our way to say hello to the branch manager.
To our chagrin, we were told to go start the business and once we established a successful three-year track record, we could apply for what would be a modest business loan. Leaving the bank with our tails between our legs, we came up with a two-year plan to save the money that we needed to start the business. Each morning, as Paul and I had breakfast (something we did together every day for about 15 years), he would pull out his pen and, on the back of a napkin, write down how we were coming along with our plan, what transactions were scheduled to close and how much money we would put aside from each sale to meet our objectives.
If you are starting a business, don’t expect bank financing for a while.