Ep. 29 Matt Slepin

0:00:50 CR: Welcome to The Real Market with Chris Rising. Today is a very interesting podcast, it's a first for me. I am interviewing Matt Slepin of Terra Search, but Matt Slepin is also the host of his own podcast called Leading Voices. Matt spends the first part of our discussion today interviewing me, and you get to hear a lot about the experiences I've had in real estate and some personal experiences. And then I spend the second part of the podcast interviewing Matt and the complications in his long history in executive search in real estate. I think you're really gonna enjoy it.

0:01:31 Matt Slepin: We're doing my first joint podcast here.

0:01:35 CR: Mine, too. How do we start it? [chuckle] Do you have an intro that you normally do?

0:01:40 MS: I wish my guitar was here, but it's gonna come in as we're playing, and it's gonna be Leading Voices in Real Estate, and you're gonna say The Real Market with Chris Rising.

0:01:51 MS: So maybe the way to do this is I get to talk to you first because you're the real estate guy and I'm the headhunter guy. So we'll come, maybe a little bit back to headhunting, and we'll kinda go back and forth and see where we are. And we'll also talk, which will be interesting, about real estate podcast.

0:02:08 CR: Yes.

0:02:09 MS: 'Cause we have two of the leading not-get-rich-quick real estate podcast right here in this room.

0:02:14 CR: I don't want the audience to really understand the not-get-rich-quick part.

0:02:20 CR: You do it for the love of talking to people and talking about real estate.

0:02:23 MS: Well, certainly not us getting rich quick, but it is interesting. If you google real estate podcast, there are a bazillion of them. They fall into basically two categories, three categories: Category one is how brokers could be more successful as single-family residential brokers, and then the second is how to invest in real estate for the small investor, and there's 20 or 30 podcasts. I've been on a few of them that that's basically the theme. And then the other are urban planning or like what we do, which is talking to real estate leaders who are serious in the business and what that means.

0:02:58 CR: What scared me when I first started looking at it was the exact... You don't wanna be the snake oil salesperson. And when you really look at the beginning of real estate podcast, it was basically taken an infomercial and putting it to a podcast. And so, my thought when I got into this was, it was actually a visceral reaction to the cost of conferences and how there were people... I was fortunate, growing up in this business with a father who was a leader. And so a lot of the names that now kind of on the back line, but I knew them and I always thought that was such a great opportunity. And I got to know them because I'd go to a conference and I'd meet them. And I started looking at the cost of conferences with our young people, and then you run yourself out of business really quick if you're gonna have every one of your younger people go to these conferences.

0:03:50 MS: Right.

0:03:51 CR: And so I said, "What's a way to get people that I know in the business in front of people?" And I don't think there's anything more personal than having airpods on and listen to two people talk. It's a very personal way, and you get to know people. And so, that really drove it, and then the other thing that drove it for me was, I just dig technology. [chuckle] I'm so into technology that I read that the CEO of Twitter and Square only works off an iPhone, and so my goal over the last six months is to see if I can move all of my technology to only using an iPhone. I'm not quite there yet, but I'm pretty darn close. So I love the idea of the efficiency of technology. And real estate's been the last place for it to show up. And so I think a lot of the conversations I have with people who are distinguished people in real estate also comes with, "What are you doing about technology?" And so that's what was interesting to me, and what I don't know if I've done a good job and should hear what you think. It's how do you keep yourself out of the snake oil pit of 30 other broadcasts that are gonna say, "You do this and then go buy my book and pay me $19.99, and all of a sudden you're gonna be rich because you've flipped a couple houses." And I wanna keep away from that.

0:05:09 MS: And you're not doing that. We're not doing it. It's interesting. So I got into the podcasting world through volunteering for ULI. And so ULI asked me, they didn't quite put it this way, but they said, "Would you be the Terry Gross of ULI?" Now, Terry Gross is in my head every other day, and I'm like, "Oh, my god, what a blessing to be able to do that." And I interview people for a living anyhow. So that opportunity was just... Couldn't say no to it, and you're right about we get to hear leaders in the industry talk on a panel, or maybe a deep dive with a talk with a legend. But this is even more intimate that you can in front of a room of a thousand people for a 40-minute conversation. And it feels there is a level of intimacy to the headphones as you describe, a visceral.

0:05:58 CR: Well, and I don't know if you found out, but I imagine you have is, on podcast, people are pretty darn are honest. Pretty darn honest in a podcast. You get on the stage, you look at everybody out there, all of a sudden, I don't know if I wanna admit that I failed here or there. Whereas I think one of the best podcasts I did was with Sonny Kalsi of GreenOak, and he talked about losing his job at Morgan Stanley and the effect it had on him, and what's driven him and it's so great to see their success now merging with Bentall Kennedy. But that's something I don't think Sonny would have said up on a stage or Lisa Picard talking about her losing her job, and then it made me be very honest about some of the things I've gone through, and me losing jobs, and I think that's really important for audiences to hear. I think otherwise, I think what we do loses its value if we don't get people to be honest about their life experience.

0:06:53 MS: I think that absolutely true, the question and we'll see in this conversation when you and I get vulnerable, how do you ask those questions where, or have a thoughtful conversation, where someone's willing to be vulnerable, either about their career, about their life, and the things that have meaning. And what I also find interesting about real estate is there is meaning in the business that we have and so I keep looking for that in these conversations. And what meaning means in the world of industrial real estate, and logistics is one thing, but it's become even more deeply meaningful in that world over the past years, right? Because the whole retail world's changed, but certainly in housing community development how we're making our cities and that people find that to have value from where they're coming. This is not just about making money and that maybe there is the distinguishing factor with the get rich quick thing, 'cause that's not we're talking about, even though we're talking to billionaires.

0:07:51 CR: Yeah, very true. I think one of the things... Well, let's start with the vulnerability and getting people to really talk about real estate in an intimate way is I think one of the things that the podcast allows you to do is assure people that if you go off on a bad tangent, we can edit that out. Just be honest about things. And I think that gives people a familiarity and a comfort. I got a tell ya, I don't think we've ever really edited. Everybody hears it and they say, "Oh hey, I like that. I feel good that I said that". The other thing I think that's really happening in real estate that is different, and I think it's being driven by technology is that people expect much more out of their real estate experience than they ever used to. People were really, really used to be willing to have very mediocre and I would say sometimes dangerous experiences with their real estate whether it was industrial real estate office.

0:08:47 MS: Are you talking about consumers or you're talking about owners?

0:08:50 CR: Both.

0:08:51 MS: Okay.

0:08:51 CR: I think both. I think people really didn't have any expectation when they showed up at the office building that that office building was supposed to do anything for them. And I think a lot of office buildings killed people over the years with the asbestos and lead paint and where we are today, we are because technology, everything from as simple as Yelp to sensors in buildings allow us to have a more intimate relationship with these edifices than we ever had before and I see people demanding so much more because they can and they expect it now. And people didn't use to... I think you go through the '30s, '40s, and '50s, you had these wonderful buildings like PacMutual and all that, and the owners of those buildings were insurance companies who wanted to have a great place to be, but the multi-tenant office building person basically said, "Here's your space, you just sign for 15 years. I'll see you at the end of 15 years".

0:09:46 MS: Totally true.

0:09:47 CR: And that's just not the case anymore.

0:09:49 MS: And there's a wall of doorways. A hall full of doorways. And you get to go into your doorway at the end of the day or your company's doorway and there's no other feeling to the experience of being at the office.

0:09:58 CR: Exactly. And were apartments. I mean think back... The idea of a furnished apartment in the '80s, that terrible furniture and all that, what amenities? There were no amenities. You take that box with a small shower and a bathroom and that's what you get. And so I think our podcast allows us today if we ask the questions right away to get people to be very human and talk about their relationships with real estate that... And it's okay. And it didn't use to be okay, so.

0:10:24 MS: Well. And talk about Lisa Piccard cause... And she had a description. I'm gonna get this wrong, but she called it processional. She talks about that on your podcast as well.

0:10:33 CR: Yes, she did.

0:10:33 MS: And it's an experience of your office building that is more intimate and more meaningful than it ever was before. And it's not the guy in a trench coat with a hat on madmen. This is a different feeling. And she expressed it really well, but then we'll just play with her for a minute 'cause it fun. But we're both on Strava together, which is a bike riding app.

0:10:58 CR: I am on Strava too, I gotta follow you.

0:11:00 MS: We have to follow each other. And then on Instagram mostly 'cause I'm watching my grand-daughter, but I get to see where Lisa is almost every day. Now that's how different thing for an executive of a huge company to know where they're sleeping that night.

0:11:18 CR: Well, I will tell you. I think you're on to something here. I think it's great. I distinctly remember when I was working for John Cushman, in the late '90s. And John would, through his relationships have some of the largest lease deals in the country and internationally. And I would travel with him, and we would meet the CEO, always a white male, always a white male. We would have a list of buildings we were gonna go see and it was very clear where they were gonna go. They were gonna go to one of three places, somewhere close to their home, somewhere close to their country club or somewhere close to their town club.

0:11:51 MS: That's right.

0:11:51 CR: And the discussions that would go on about the CEO was about what size their office was gonna be and literally hand motions of, I don't care where those people sit. It was just the mentality of the day. Today when we do tours in our projects, it's almost universal. You're gonna have a committee, usually driven by HR. It's gonna be probably more women than men. And it's gonna be talking about, "Does this space... Is this an attraction for employees."

0:12:21 MS: Right.

0:12:21 CR: They look at real estate as a part of their benefits and because of that the experiences that people want and desire are far different than they used to be. And I see that coming out and I think Lisa is really at the forefront of that and in understanding that. And I think you look at Google and Facebook and Apple and what they've done in their corporate campuses that I often say, I think part of the things that WeWork has done is bring that to the multi-tenant experience.

0:12:51 MS: How can I afford that? We're about to get a new lease, and we're looking how can I afford that as a five-person office?

0:12:57 CR: Exactly. And that's where WeWork and some of the competitors have stepped in, but it's all experiential, it's all experiential. And when you live in a world where you're expected to be connected 24/7 even though we all talk about, "Oh we gotta put that phone away." But everyone's expected to be connected. When you live in a world where your supposed to be a perfect parent and you're supposed to be at every sports game and every school play. When people are in an office, the idea that you come in and you shut the door and you have no human interaction, it's just not acceptable and people don't do it. The only people doing it are the people who are still at the... Who are still able to produce income, doing things in a way that's 20 or 25 years old. And that's a very small segment. And so I think Lisa's a great example. I think there's a lot of people... I do think though that real estate as a whole, is very slow.

0:13:46 MS: Right.

0:13:47 CR: Very slow.

0:13:48 MS: But if you think across the sectors, so we just talked about office with EQ office, and what we'll probably be talking about with your business, but if you look at certainly hospitality, certainly in apartments, industrial, different story, certainly retail? They're all experiential now.

0:14:00 CR: But industrial is being driven. Anything that's urban industrial is being driven not to meet the needs of employees, but being meet the needs of the robots and the people who work with robots in those, so it's just a different kind of amenity.

0:14:15 MS: Right. But all across the board in real estate, that bar is changing significantly, and I think maybe driven first by hospitality because we have those experiences going around the world.

0:14:24 CR: Yes.

0:14:25 MS: And then feeling it. And then we want that in our apartment, we want it in our condo, we want it in our office building. So let's use that as a segue, I wanna hear about your business. And I'll ask two questions at once, which is a funny mash-up but talk about Rising partners and what you guys do. But then also your dad who looms large, he was one of my first clients. But he looms large as a large man, but he was that guy in the corner office. So I wanna think about how you just said, "Hey the guy in the corner office." I really thought your dad is the prototypical one of them.

0:15:00 CR: Yeah.

0:15:00 MS: But first, talk about your business. Tell me your partnership with your dad. And how has this grown and what you guys do?

0:15:04 CR: Well, there's no way to talk about Rising Realty Partners without talking about my father. He and I never, for most of my adult life, never worked together. I went to Duke University, played football at Duke and graduated with a double major, came back...

0:15:19 MS: Double major in?

0:15:20 CR: History and political science.

0:15:21 MS: Okay.

0:15:22 CR: Got to play for Steve Spurrier which was an incredible experience. And I have lots of head ball coach stories that I can go through. He's the one who gave me a nickname that sticks today, which is High Rise. We were stretching when I was a freshman, and he comes on, and he goes, "Chris, you're dad builds buildings don't he?" I said "Yeah, coach he does." he goes, "Rising, I'm gonna call you High Rise." And so most of my friends from college today call me High Rise. My younger brother had the unfortunate experience that he went to Duke, he walked on and he earned his scholarship, and some of the guys I played with were coaching there and they said, "Well if you're High Rise, we're gonna call you Low Rise." [laughter]

0:15:58 MS: Oh boy.

0:16:00 CR: So my brother's been Low Rise, and I've been High Rise. But anyway, I came back I was... My first job was teaching high school, I taught at Loyola High School, coached football, involved in the drama department.

0:16:12 CR: And so I was coaching football and I was involved in the drama department. I enjoyed teaching the first year, I was really passionate. The second year, I started to realize that the Heart's game at recess was the same thing I did last year, the lesson I was presenting was basically the same thing I did last year. And I had great, great respect for everyone who made a career out of teaching. I wanted to do something more. Part of it was technology. I had a Compaq computer, it was the only kind of portable computer, it was like a briefcase. And I was doing things on that, that other people weren't. And I said, what do I wanna do? And I talked to my father, and my father had gone to law school and he said, "I think you can go to law school or business school." I thought law school was great and so I applied to law schools and ultimately decided I didn't wanna leave, I had a pretty nice life, living down in the South Bay when one at 23 could afford to do that. You can't do that anymore.

0:17:07 MS: Right.

0:17:08 CR: And I went to Loyola Law School and that allowed me to keep coaching. And I came out, and I practiced for a very short period of time with a legend in the business named... It was at Pillsbury Madison & Sutro, and I worked for a gentleman named Michael Meyer. Michael Meyer?

0:17:22 MS: Yeah.

0:17:23 CR: And had a great experience learning leasing and learning Purchase and Sale.

0:17:28 MS: So, was your goal in law immediately to be in real estate law?

0:17:32 CR: Yeah, I didn't really... Being a litigator wasn't...

0:17:36 MS: Just to make sure.

0:17:36 CR: Yeah.

0:17:37 MS: And not entitlement? 'Cause that's where your father really is a genius.

0:17:40 CR: Yeah, that's where he was very successful. No, I didn't know enough. And I think that was... I just kind of followed the path that kinda came up.

0:17:49 MS: Sure.

0:17:50 CR: But I got very... I still remember right before I started work, I said, to my father, I said, "Dad, is being a lawyer like being in law school?" and he's like, "Well what do you mean?" I was like "Do you study all the time? Do I have to read documents all the time?" He's like, "Oh no, don't worry about it." I still remember my first week at Pillsbury. They brought me in, dark wood, very claustrophobic feeling office space. Put me in a small office, handed me a lease and shut the door and I called my dad. And I said, "This is exactly like being in law school." And he's like, "yeah, I didn't wanna discourage you."

0:18:20 CR: So I just, it didn't fit what I wanted to do, even though I had the experience of having wonderful mentors there. But if I hadn't had gone to law school, if I hadn't had done that, I wouldn't have had the opportunity with John Cushman. And John had Lynn Williams who's a legend in the business as a broker in her own right, had been working for John as his right hand. She had moved on to become her own broker and build a team. And so John was looking for a Chief of Staff, and so I got to do that for three or four years and got to see every kind of deal you could possibly do.

0:18:53 MS: What does the Chief of Staff mean?

0:18:54 CR: It means write every letter, be at every meeting, be at everything, follow-up, give John feedback... John goes, he's 150%. He goes so hard that he really is benefited when he had someone there who could help him not drop things, and even though John's a legend, and I'm very fortunate between Steve Spurrier, Mike Myer, and John Cushman. And then, I'll liaise with my father to have some amazing experiences.

0:19:21 MS: Just rubs off.

0:19:22 CR: Yeah. And So in 2003, I had been working for John for several years, I started looking around, we sold Cushman Realty to Cushman Wakefield. Cushman Wakefield was much more "what is the five block radius that you're gonna be a broker on?" And it just didn't work for me. And so I thought about why don't see if I can... I looked at my clients and said, "I've got five clients, if I keep one and I keep 100% of that commission, maybe I can do something for a year." And I of course, just gotten married at that point, and didn't really tell my wife that this was what I was gonna do, but we... I started but I think at first I was like, "I'll call it the Flint Ridge group and keep it very nondescript" and then someone is like, "you have a great last name with a great father and business call it rising something." So I said well, it's only me, so I'll call it The Rising Real Estate Group.

0:20:15 CR: And I was able to do my first deal. I bought 626 Wilshire here in Downtown LA, I had met Oscar De La Hoya's money person, Richard Safer when I was working for John. I went to pitch him over at Library Tower on this idea that there's a Magic Johnson theaters, why isn't there a golden boy theaters? And he said, "That's a great idea, Chris, what do you wanna do?" And I said, "Well I hadn't thought of that yet. But I'm glad you wanna do it." And on the way out the door, they said, "You know, Oscar, would really like to buy an office building." and I'm like "Well, that's something I might be able to do." I run into a gentleman named Dick Schnell, who I... Legend in the business, in the sense that he's been around forever, and very creative and done a lot of different deals. And I mentioned to him, I'd like to buy an office building. Didn't really say hi, and he goes "I think I might know one." And we bought 626. Oscar was my equity.

0:21:07 MS: And when you set up your real estate company, was this to continue brokerage or this...

0:21:11 CR: Both. Anywhere I could make a fee.

0:21:14 MS: But now you're buying for your own account?

0:21:16 CR: Now I'm buying... Well, I didn't really have my own personal money.

0:21:18 MS: Your own account, but you're buying.

0:21:20 CR: Yes. And I took my brokerage commission, rolled it into the deal, we were buying it from Michael Barker, Barker Pacific Group. Michael had bought it with Bow Post. He didn't wanna sell within a year because he wanted to be capital gains so we had a long escrow. I was talking to Grubb and Ellis at the time 'cause I'd never done property management, I didn't know what I was gonna do there but I figured I'd white label it as they say. Right as we were getting close, Michael calls me and says, "Chris, I just moved my office in here. What if I left money in the deal, and partnered with you? I'll do the property management, you do the leasing?" the building was empty, so there's a lot of lease fees there. At the time, it was a good move and in retrospect, it was a horrible move because Michael's still in the building that we all still own and he's still getting property management fees, and I'm not getting any leasing fees. But nonetheless, it got me to understand property management.

0:22:15 CR: And so we've owned that since 2003, Oscar, Michael Barker, and I. And that kicked off me partnering with Michael on deals on one-off basis. We raised a fund together and I was perfectly happy doing all of that. And my father, in 2005, sold Catellus.

0:22:34 MS: Right.

0:22:35 CR: And he took over that company when it was valued about $400 million market cap and sold it at $5.8 billion market cap, great success, 11 years. Went onto the board of ProLogis for two years. And it was '07, height of the market, things were going great. My dad just said, "I wanna retire." and I said, "Okay let's figure this out." "Great, let's start a business. You can come into my business and we'll figure it out." So that was kind of Rising Realty part... I changed the name from Real Estate Group to Rising Realty Partners.

0:23:07 MS: '07?

0:23:07 CR: '07.

0:23:07 MS: Did you buy a whole ton of stuff real quick?

0:23:09 CR: We didn't buy anything. Thank god.

0:23:11 MS: Okay good.

0:23:11 CR: We started looking around saying, "We can't make sense of any of this." So we started doing some consulting work for some people and Robert Day owned Cabo Del Sol, he was looking to sell it. We did a big project down there, a consulting project. So we're starting to build something, but we didn't quite know what it was gonna be. And then the world started to take a turn and we got a call from the board at McGuire properties. My father said, "We've asked Rob to step down, would you wanna take over? It's a 33-million square foot portfolio, it's in great distress, it's over-levered." My dad's wife started this business with my son and another gentleman. So if I come, they come.

0:23:55 CR: So we looked at it over a month or two. Decided to go over and my father became Chairman, CEO, and I became head of asset sales. And it was difficult, there was a culture over there that had been built over the years that reflected Robin. Even though Robin, my father were partners, they weren't the same kind of people. And I had never experienced anything about nepotism, 'cause I never worked for my father before and I was a broker really in my mind. In my mind, I go make a commission, I support myself. But boy, when I went over there, there was a lot of backbiting and I'd be very honest that part of what's driven me since then, is to prove all those people wrong. Some very specific people.

0:24:36 CR: But nonetheless, we were there for about two years and in that time, the company went from almost going bankrupt to recognizing we needed to take it from 33 million down to 14 million, which was basically the LA assets. So we sold off a bunch of assets, spent a lot of time with the special servicers. We hit summer of 2010 and said "Okay, now it's time to go raise capital. We got this great platform." The issue we dealt with was the activists who had brought us in specifically by a hedge fund called JMB, decided to sell and then we were stuck, then we had a board that was more professional board. People making a lot of money between three and four boards, a million dollars a year total and all this stuff, or more. Well, the last thing they wanted to hear was the plan that my father and I presented, which was we wanna bring in $500 million. It can't come in all at once, because we gotta go do these... We have to negotiate on each of the assets we wanna keep, and if all the money is in, they're gonna ask us to pay off at par, that's not gonna work.

0:25:37 CR: The stock price was down in the threes and our view was anybody who owns stock was at option value, what the board saw was a dilution, it was a 90% dilution and nobody wants to get another board seat if you vote to dilute the stock. I think it's short-sighted and... So ultimately, I saw there was not an opportunity for me and there was a little bit of a power play move made by a couple people. I'll be honest about this. I don't think they ever realized that one of the things that nobody wanted as a job there was to run the IT. IT reported to me. So there's a lot of people out there who wrote some very ugly emails about me and my father and I read them all.

0:26:17 MS: Be careful about that.

0:26:18 CR: If they're listening. [chuckle] I do know the horrible things you said, but they did this coo and basically, went to a couple board members, one who wanted to be CEO and said that Chris is terrible for the company and he needs to go. And my father called me in and said, "I just got a call from the chair of the board, and they want me to fire you. If you want me to quit, I'm gonna quit too." And I was like "Dad, Let's be rational about this. I don't wanna be here anyway. And why don't you take a few months and see what you can do." I was totally happy to go back to being a broker and buy some of the assets that I saw out there that we were selling at bargain-basement prices. So my father stayed but he didn't stay much longer. He stayed... I think this happened in August, and by January he was gone.

0:27:04 MS: And what's this time? This '09...

0:27:05 CR: Okay so we were there in 2008 to 2010. I left in August of '10, he left in January of '11. And then they brought in the gentlemen who took... Who wanted to be the CEO, and he just sold everything off. The only people who had made money were people who owned some of the preferred...

0:27:20 MS: Right.

0:27:21 CR: It was a horrible thing for the shareholders, I think it was despicable, but life goes on. And my father and I looked at each other in 2011, and said, "do you wanna put Rising Realty Partners 2.0 back together?" and we said we did.

0:27:33 MS: Hey, let's just go back for a sec.

0:27:35 CR: Yeah.

0:27:35 MS: Just a comment, and I'm curious about it. So you're at McGuire Partners, which has history for your family 'cause your dad was one of Rob's long term partners. He'd a lot of partners go through over the years but your dad, one of the most storied partners. And the company had been mismanaged and messed up by the time you came in, but you're also at the worst part of the cycle and anyone who wants to get a liquidity event on the board at the worst part of the cycle is making a bad decision by definition.

0:28:04 CR: Yes.

0:28:04 MS: I think it's what you said, but I'm translating it into my words. Which is have a patient strategy versus let's-figure-out-what-the-value-is-today strategy and clearly LA has rebounded.

0:28:16 CR: Yes.

0:28:16 MS: Amazingly Well.

0:28:18 CR: Yes.

0:28:18 MS: So...

0:28:20 CR: Well, I think the problem was, you didn't have any real developers on that board, you had lawyers and career board members. You also... Is the only board I've ever seen where board members talk to employees on a consistent basis. And it's just not acceptable. There was the disloyalty and the conniving, but that's... Everybody knows Rob. The kinda... Anyway. I've never seen the kind of disloyalty... And the emails that people wrote. And then, I just said, "Are you guys stupid? I know this is happening." I think for me, I didn't wanna stop it 'cause I didn't wanna be there. I wanna be out doing... I think, for my father, what was really... He was going through some health issues at the time with fibromyalgia and he was really beat up. And so, I don't think if it would have been five months later, that he would have let some of the things ferment. But once it fermented, then you lose your appetite for it. And I think what's sad is it could have been the basis for a company that would be an International company that...

0:29:23 MS: Rebirth really well.

0:29:24 CR: Yeah. 'cause you just can't put those assets back together.

0:29:27 MS: Yeah. It's just... One thing I take from the conversation is, first of all, you had the confusion for a team in their defense, a Father-son there, which is just weird, let's just say it's weird.

0:29:38 CR: At a public company... Public company.

0:29:40 MS: That has dynamics to it. The second is that you're in the darkest days of recession never knowing how are you gonna come back. And employees get into this kind of negativity...

0:29:50 CR: Yes.

0:29:51 MS: Cycle which had been in that company for a long time, anyhow.

0:29:54 CR: Yes.

0:29:54 MS: So it's the perfect storm of not working and you're not a big company guy.

0:30:00 CR: No.

0:30:00 MS: Part of what you're saying.

0:30:00 CR: Part of what I'm saying is that kind of company. [chuckle] Yeah. Yeah.

0:30:02 MS: So, Rising 2.0.

0:30:04 CR: So one of the things we saw was that in that era from '07 to '11 or '12, the small... For the most part, the small developer got wiped out. There was a ton of talented people who didn't have a job and there was no platform being built. They were public company... People who... Their options go public. There were people who sold, got bought at bargain-basement, but there wasn't any new company, of, "Hey, we really know how to fix elevators, we really know how to do heavy construction, we know how to do development." So that was the dream for Rising was to do it, but do it in a 21st century way. So where I really have been driving the company is on technology. Let's do more with less. And we are a paperless office. We... Everybody communicate, we do not use email to communicate, we use Asana. We use lots of technology in such a way where when we come to the office, it's like a clubhouse for a sports team, it's here to have collaboration. It's not a place to just get work done because you can do almost everything on an iPhone or an iPad or for sure a laptop.

0:31:17 CR: So we wanted technology to be a driver. And then the other thing that was really important to me is I saw early on, just by living in Pasadena quite frankly... Climate change is real. And that summer's, this last August, we had the hottest August we've ever had in Pasadena. And this February, we had the coldest February we've ever had. And I kept looking at how do you do things in the industry that we're in that is 40% of the carbon is... That is emitted is through commercial. 70% of the electricity used in the United States is used by commercial real estate. And I saw just dumb things happening all the time. There was a time you drive downtown at 10 o'clock at night and you'd see these buildings with nobody in it and the lights are on.

0:32:06 MS: Right.

0:32:06 CR: And you're just like, "what is going on here?" So I really wanted impact strategies whether it was energy star ratings or when we did this... Our first project which I'll talk about, here at PacMutual. I wanted to do something that was a statement about, "Hey this is a building that cares about the environment. And so we did two things: One is the project we're in here, we bought our first deal as Rising Realty Partners we bought in 2012, April 2012 or yeah, April 2012. It was three buildings here, historic building, the building you're in right now, 1908, it was built as the headquarters for Pacific Mutual Life Insurance Company. Pacific Mutual Life was founded by the four wise men of California, Crocker, and Huntington and Leland Stanford and Hollingsworth, right?

0:32:58 MS: I should know the fourth 'cause I kind of live in Nob Hill, but...

0:33:01 CR: But it was the first insurance company west of the Mississippi, and in 1906 it was based in San Francisco, there was an earthquake, as we all know. And if it wasn't for a young person running up to get the securities out of the safe, it would have been destroyed. So the Board gets together and they say we have to move this headquarters to a place where an earthquake can never take us down and where they don't have earthquakes.

[chuckle]

0:33:23 CR: So they decided on Los...

0:33:24 MS: Iowa.

0:33:24 CR: They decided on Los Angeles, across from what was then Los Angeles Park. And they built this, it was an Olympic-style building in 1908. In 1922, they built the 12-story building right next door, that was the largest import of tile from Italy that had ever been done in the United States. It's a beautiful Beaux-Arts building. And then in 1927, they built a parking garage, which was the first underground parking garage. But from about the 1930s when they redid the Olympic facade and did a Beaux-Arts Facade... No, not Beaux-Art...

0:34:03 MS: Deco?

0:34:04 CR: Art Deco. Thank you.

0:34:06 MS: Right.

0:34:07 CR: I usually don't forget that, but an Art Deco facade. It really didn't get touched. And what happened was in the '70s and '80s, there was no historic commission, people started putting in literally tiling bathrooms that looked like it should be a Marina del Rey on a chips episode. Pink and mauve and... And so when we bought it, what we saw was... This isn't a 450,000 square foot building that's like library tower, these are three buildings and it's an urban campus. So we did things that were unheard of which were like ripping out retail to create two corners between the two buildings so we can have two restaurants and that's now the Pancake City and then Tender Greens.

0:34:48 MS: Right.

0:34:48 CR: And we had a stairwell in the '80s when we had the first interstate fire, the city said, "You gotta put in sprinklers and you gotta put an exit stairwell." And they literally just put on an exit stairwell, put it in stucco and painted it beige and it sat there from the '80s until we bought it. And I looked at that and said, "Wow, if you took out the retail below it, that could be a small little courtyard and you could do the first vertical garden and green wall in Los Angeles. And that will create a great retail spot. Well, that today and you'll still see the green wall there that overlooks beautiful Pershing Square is where Pitchoun is. And one of the things we were very... We had Starbucks here. I like Starbucks, I think they're fine. But I also think that the type of nourishment you have access to is important. And so we wanted a collective mix. And so we went early on Tender Greens, Pitchoun, a legitimate French Baker, Le Pain Quotidien. So we wanted quality food options here. And when we sold this to Callahan Ivanhoe, we sold it for the highest price. Up-to-date in 2015 it was well over 400 bucks a foot.

0:35:54 MS: Highest price in?

0:35:55 CR: In Los Angeles at the time in 2015.

0:35:57 MS: Okay.

0:35:57 CR: A 90% lease building. It was hard to sell it. I looked down and I see that's the Terrazzo floor from 1908. And it means a lot to me. But the idea was, what else could we do? And we were the first privately owned historic registered building to get LEED platinum. And that has really driven our firm in the sense that you can take historic buildings and you can make them LEED Platinum, you can measure the carbon, you can measure the quality of the water, the air or the light, all of these kinds of things. And report back to your investors, not just your IRR, but your metric. And not just your multiple on your invested income, but all these metrics about... It was producing this much carbon when you bought it, it's now doing X minus... The water quality was this. The light... Access to light was this. So, that's really driven our firm as we've grown and we've grown...

0:36:48 CR: Now, we're a firm that at our height we own 5.5 million square feet, we've sold some things we're down about 4 million square feet that we own. We do property management, third party on another million and a half. I would really like to grow third-party property management not because... Obviously, it's a low-margin business and all of that but it's because I think we're doing things in property management that everybody should be doing. And one of the...

0:37:13 MS: What does everything mean?

0:37:14 CR: Okay, so one of the things that people don't focus on that often is to get a LEED platinum designation. It's as much as what you do to the building in terms of investment as it is, how well do you know your tenants and how are you changing your tenants' behaviors? And I just think most property managers have not wanted to go to that length to really understand. Are you using water bottles? How are people getting here? How are you disposing of your e-waste? How are you disposing of your trash? Are you recycling? And it's that catered experience that I think really drives the value and... People want community. And I think we can do that and we've proven you can do it in a third party way as well as for our own account of things that we own. Most of our buildings... In fact, all of them have a concierge service. These are things that I remember as a young lawyer, I was told "write these things out of the lease. People don't want to pay for these things." Well, you know what? People want them today because what people really want is more time in their day.

0:38:08 MS: Yeah.

0:38:08 CR: So if they can have their dry cleaning put in their car, and they don't have to go an extra run to go get it or they can use Insta-cart, to have groceries put in their car instead of sitting outside of their door at home or Amazon delivered to your house or their kid's Birthday Party, how do they rent tables? Well, we have someone who can help them. And it's not just for the CEO, it's for the assistant to the intern. How do I get restaurants at Bestia? One of the best restaurants in LA. We can help with that. And I think these are things that we're bringing to our asset management light property management, our full-service property management that I don't... I think part of it is 'cause we have passion, and we have mission to what we do and people care deeply about this. And I also think we allow them to participate when they're successful. And so, when the card says Rising, they know they're part of a team. If it says some of the other big firms, I think it's more of just a job. And so I'd really like to continue to grow. And the other part is the way we use technology...

0:39:08 CR: Now, our competitors are doing a lot of this stuff, so I don't wanna say that we're the only ones, but just getting the building off paper and stop the old coming down handing the rent check...

0:39:20 MS: I get something under our door every Friday morning that's either a newsletter or a notice that the elevators are gonna be down on Saturday. I don't understand.

0:39:29 CR: So we're working on things like real effect of building apps. Where I wanna see us go over the next year or two, is in our buildings as a tenant, you have access to an app that's dedicated to people who are coming to see people in your office, you send it to them, they download it, they register just like you do for clear, anything like that. And they come in, they never have to check in, 'cause we know they're here. There's privacy concerns people have but I think security... People are always wanting to do that in place of security, and so we're moving towards that. We're moving towards all of our interaction being digitally with our... We already do this. There are no more newsletters that go underneath the door. No more, "Hey, the elevator is gonna be out next Tuesday," and it's a piece of paper then ends up all around the offices. And I think that's what people demand, I really do.

0:40:17 MS: And how much of this is talking about... 'Cause the technology and digital part are better afforded by huge companies.

0:40:24 CR: They are.

0:40:25 MS: So you know big property managers in the office world are going in that direction, but if you don't have it as a small company, then you're going further and further behind.

0:40:35 CR: So I am not a believer in customized software. I think you have to be able to buy something off the shelf and then customize it and I think some of our competitors are... They forget that they're not tech people, they hire a bunch of tech people and things get lost. So we've been a little slower than I wanna be because of that. But I just think it's no different than air conditioning today. [chuckle] You wouldn't not have a great air conditioning in a building, why would you not have great technology? And it's just part of the cost of doing business. And so I don't care if it's not totally proprietary to me.

0:41:09 MS: We're gonna move on the conversation. But I do a couple of questions I'm curious about. So one is about what you've described, how that differs in how your company is run and managed internally, your workforce is a more appealing place. Do they wanna work for you because of this kind of communication, this kind of technology or this mission? What does that mean in running and leading the company day to day?

0:41:32 CR: Well, I would say a couple things. Our culture is by far the most important thing, and one of the great things is, our company is about 60% women and about 50% minority. We want a voice at the table for a lot of different voices. We also have some guidelines that I firmly believe. And having had some horrible experiences as a broker in McGuire, we treat everybody with respect. We do not accept people yelling and degrading people. Look, we all can get mad and lose our temper, but you gotta quickly apologize. We really care about those kinds of things that you treat people with respect. We also... I firmly believe that people should have easy access to communicate and I think the technology that we use allows people not to feel like, "Boy, if I'm not in the office by 7:30, I'm gonna be in real trouble." It's much more, "Well, did you get your work done? And I can see you got it done at 6 o'clock in the morning 'cause that's all been stamped."

0:42:29 MS: Right.

0:42:30 CR: So I think people like that... We were really early on, ditching the suits. My father's here. I mean, he still sleeps with the tie bar, I can't change that.

[laughter]

0:42:39 CR: But I've never understood that we have these people who go and compete in the Olympics, and they compete in these big stadiums and they're working out in the most technologically advanced clothing and all this stuff, but yet we tell people put on a suit and tie or a skirt and pantyhose and go be at your best in the most uncomfortable thing you can wear. It's like do you come home at night and put on a suit if you're gonna do some extra work? And so we were very early on saying, "Look, dress respectfully. But I don't really care about what you're wearing." I think that culture has come through. I think treating people as adults is a big piece of it. And I think people like working here because they are treated with dignity and respect and not as a number. And so I think that's how we...

0:43:24 MS: And so how much does it matter in that rubric that you have a purpose or a meaning or a mission...

0:43:31 CR: What matters to me...

0:43:32 MS: Matters to you and we'll talk about returns in a moment 'cause I wanna talk about that as well, but I'm just curious if you articulate that there's a reason to be here and you articulate something different or special about your company, I think it helps you come to work, and it helps it not just be about get rich quick which is the very beginning of our conversation. And in real estate people create fortunes but it also has you different level of pride in what you do.

0:43:56 CR: Yeah.

0:43:56 MS: And your company unique.

0:43:58 CR: Well, I think everybody has to have a uniqueness statement in whatever they do. What makes you and your company unique? And I put it down to three things: One is our diversity and real estate is not a very diverse business.

0:44:09 MS: Yeah.

0:44:10 CR: I think secondly, is our use of technology which allows people to communicate more effectively and efficiently. And the third thing because of technology, you also have to have a lot of personal interaction. And then people go, "Wait a second. What do you mean by that?" I mean we have some rules here. Tuesday, Wednesday you are expected to be in the office days. Those are our "let's get down to business, talk face-to-face." Monday, Thursday, Friday. Now look, if you're a property manager, you need to be in all the time. But the expectation is we're gonna have face-to-face meetings on a continual basis, so that we can express ideas. And once we know we're on the same page, we go out, we use technology to communicate. So I think those are three things that make us different. I also think, if you're a climate change skeptic you're not gonna last here. [chuckle] It's just not gonna work.

0:44:57 MS: Shouldn't last anywhere.

0:44:58 CR: Yeah.

0:44:58 MS: That's a different story.

0:45:00 CR: And if you're a hide the ball, lock... We don't have offices but lock your office, lock my drawer kind of person, it's just, you're gonna quickly feel not welcome. And those are the things I think we do well. I think our returns speak for themselves. We've really had some great success. We're not as big as I wanna be. I haven't raised the kind of money I want us to raise. My mission is that every state should... Not by regulation, but because it's good business, a lot of what we have is regulation in California. So whether it's some things in Title 24, every building should have sensors so that when you're not in the room... It's just a smart thing to do. Your building is more efficient, you make more money off the rent, but it's not national yet. It's our goal to take it to places like Utah, and Colorado, and Texas, and...

0:45:52 MS: Prove it out and make it affordable, it's gonna go elsewhere too.

0:45:55 CR: And it is happening now I got... This isn't some magic dust that I keep hidden. And because people are figuring it out, but it just needs to be a mantra of what to do. But I do think, what we're doing that is different than anybody else is when someone invests in us, in a building, they should know what it's doing to the environment, and what it's doing to the people there. I think it's asinine that these building is gonna have a thousand people in it and you can't get 110% of people to care about homelessness in the neighborhood. I'm not talking about trying to solve homelessness for the whole region, but "Hey, let's get together toiletry bags and go hand it out and treat people in this community as people." And we're doing that, and we have a social piece of what we report back and usually around a cause or how much money we've raised as a community. But I just think that we spend so much time staring at devices and all that, that when we're not, people wanna feel like they're a sense of the community and I think that drives value in your office product or your multi-family or your retail. And so I think that's part of what we do. So our property managers are having interactions in ways that others aren't because we require it to do the things that we do.

0:47:00 MS: Hey, go back to story about this building for a second and talk about returns, and the dollars that you put in to become LEED platinum for the... One of the first renovated buildings particularly a building this old. But if... And I'm gonna bet that the returns were extraordinary, but the extraordinary returns may have something to do with LA and something to do with the time of the decade of the recession and recovery that we've been in. If you were to take a hit on putting that amount of stuff in, some kind of return hit, is that still something you or others should do versus... Or does it bring the best returns?

0:47:42 CR: It's a good question, so here's how I would answer it. Well, first, just on the metrics, we bought this for 140 a foot, we recapitalized it for 240 a foot and then we sold it for 440 a foot, so all within three years. So those numbers matter.

0:48:00 MS: Pretty good, yeah.

0:48:00 CR: We also took it from 50% leased to 90% leased. We believe through our case studies that we can show over and over again, that when you make these kinds of investments, people are willing to pay higher rent. One can say, "Well look at the cycle you're in." I get all that. You can't get away from one thing in real estate. You either buy it right or you don't buy it right. And no amount of all of this stuff can make up for that. If you over-pay for something and you buy it the wrong time, you really can't make it up. So, I wouldn't link those two... I think you have to link it to, "who else bought in 2012, What was their return versus what we got?"

0:48:42 MS: Right.

0:48:42 CR: And I think when you do that case study, apples to apples, it shows that you get a better return when you do these things.

0:48:49 MS: I don't know that tenants pay for what's between the walls, I know they pay for what it feels like, what it looks like, what the lobby experience is and how the experience of the building has changed. But between the walls, and the energy efficiency may be less of the...

0:49:05 CR: I think that's changing, I really do, 'cause I see these RFPs that come out and the questions that people ask, and I think it's important to them to be able to go back to attract talent and say "This is a LEED platinum building" whether someone knows what LEED platinum means or not.

0:49:18 MS: Cool.

0:49:19 CR: I think it matters to them though.

0:49:20 MS: Okay.

0:49:20 CR: I really do.

0:49:21 MS: I'm not asking you 'cause I'm a skeptic of climate, so I really care about this stuff.

[overlapping conversation]

0:49:27 MS: Last question, one more question.

0:49:27 CR: We gotta switch over to you.

0:49:27 MS: Got it, okay we will. But the last question is like, I don't know about you working for your dad and what has your either dad brought to the equation or, what's working with your dad mean to you? Just kind of talk about that.

0:49:41 CR: Well, it's priceless, he's a wonderful human being, he's a generous wonderfully nice person. His biggest, most influential mentor was a gentleman named Warren Christopher, former secretary of state. My name is Christopher because of that. And Warren Christopher was always someone who said, "You gotta listen first." And so my father really, throughout his career taken that to heart. He, for most of my life, was kind of an Adonis. Ran the New York marathon, did all these things. He got bulkier as a former football player, he said "I gotta lose weight and he put his mind to it and he did it and... All these kind of things that are things that I aspire to be and do. What's been interesting is where he is at this point in his life. He's 70... Going to 78, and how he's changed. He is very respectful of me and hands over things to me and respects that I can do things. And so the father-son relationship has really kind of changed today. Yeah, I think he's very grateful for everything that he's been able to do and sees that now he's on the legacy point, not the making money point of his life. And so he is very concerned about if I get on a podcast and say, "We're gonna be LEED platinum, we better be LEED platinum." [chuckle]

0:51:03 MS: Right.

0:51:03 CR: He is a believer in doing these things because he sees that it makes money. He still wants to have his own office. He wants to be able to close the door. I don't think he can change. If someone's worked that way for 70 years, they're not gonna stop working that way. But he gets it that his grandchildren, his grandson, who's named after him, at nine years old, does more on an iPad and on an iPod than he does on his own computer, so he gets that.

0:51:28 MS: Right.

0:51:30 CR: Honestly, it has been hard for me to watch him age because I still think of my dad who would be up at 5:00 in the morning. So that's harder to see. I think it's harder for our team here. He's not the vocal presence that he used to be, but he's in everything we do. And my greatest prideful thing about all of this is we'll be moving our offices next month to the trust building on Spring Street, between fourth and fifth, and the building we bought, the trust building was the headquarters of [0:52:03] ____ & Meyers. And in 1966 my dad spent his summer...

0:52:08 MS: Wow.

0:52:09 CR: In that building, and we're moving to the seventh floor which was the floor he was on. So the last office building that he will be a part of in office is the same one. It was the first one that he was ever in. So we're really excited about that.

0:52:19 MS: That's great. That's great.

0:52:20 CR: Yeah. Well, I have never been interviewed like this, so I... Now I feel like I got a high bar here to match that what you're doing, but why don't you talk a little bit about, you've been in the search business for a long business, executive search business.

0:52:33 MS: Yeah.

0:52:34 CR: But what you do is much more than that.

0:52:36 MS: Right.

0:52:36 CR: Can you talk a little bit, number one, about coming out of college, coming out, you went to Oberlin, I believe. And did you ever think you were gonna be in the real estate business generally? And then what led you towards the executive search business?

0:52:50 MS: Yeah, great question. So graduated Oberlin, I had no idea what I wanted to do, I did not wanna have a career in business. Business meant nothing to me, and like you, I was gonna go teach.

0:53:01 CR: Yeah.

0:53:02 MS: And I didn't. I was in Washington DC, so instead of teaching, I said, "Well, I should work on the Hill." 'Cause it's a city of politics. And so I did briefly, and then I worked... But I wanted to make a difference in the world, so I was either gonna work for a congressman, I interned first for a congressman, and then I was gonna get a real job. And the real job was gonna be in some kind of a public interest group. And I didn't know what it was, so I was interested in the environment, I was interested in women's rights for which I had very little credibility. And I was interested in, not real estate, I was interested in cooperatives because I lived in a student housing co-op when I was at college and thought that was a really interesting way for business to be conducted. And so somehow I got a job as a lobbyist for a group called The National Association of Housing Cooperatives.

0:53:54 CR: Wow.

0:53:54 MS: That was my first job, I think it was 14...

0:53:56 CR: Did you know there was a national association when you were looking? [chuckle]

0:53:58 MS: I didn't even know what associations were, but they... That's a longer story, but I got into that, and then over time I realized I wasn't that interested in politics, wasn't that interested in lobbying, but I was interested in real estate. So I wound my way through the real estate world, and about halfway through I'm in my late 30s, and I hadn't found that thing in real estate that was for me. The role didn't make sense, I did Asset Management, I did Development, I did Finance, so I did everything, and I was trying them all out, and I was... Failing is the wrong word, but it was something like that, I was mediocre. That's the right word. I just hadn't found what fit for me. And then I was running a trade group called the Multifamily Housing Institute, which was a dream in some ways to run something, it was very exciting. Organization waiting for a purpose that it didn't yet have, actually. But my wife had a relocation... Job relocation to California.

0:55:00 CR: Oh, wow.

0:55:00 MS: So I had to take this kind of not yet figured out career at age 40, and at age 40, I tell a story, I got on the cover of National Real Estate Investor and Real Estate Forum in the same month.

0:55:12 CR: Wow.

0:55:13 MS: So that was cool.

0:55:14 CR: Yeah.

0:55:14 MS: It means zero. But you're in Washington. So that means something. Moved out to the West Coast, said, "Hey, let me go do this, let me go do that." Couldn't figure out what it was. And that experience base was not that valuable. As a 40-year-old going back into acquisitions or going back into asset management.

0:55:32 CR: Yeah.

0:55:32 MS: It's a fish out of water. And I bumped into this recruiter guy named Peter Hall, who your dad will know. And Peter said, "How about if you join me?" And I'm like, "Oh, come on, I can't do that. What's recruiting all about?" And I said I'd give it a try, but only 60% of my time, so that I could take the other 40% of my time and look for a real job.

[chuckle]

0:55:57 MS: And I had three or four initial assignments, and on each of those assignments I was the proverbial fish in the water. And within about three, four months, I said, "Okay, I'm gonna give this a try. It's a weird niche."

0:56:12 CR: So what were the one or two things that hit for you?

0:56:18 MS: Yeah, yeah. So, first of all, I always say this is unfair to Peter. I knew more about the clients and the role than he did. And I knew more about the candidate pool than he did. Maybe 'cause I came from the East Coast. But all of a sudden the strategy to find people made sense to me. The meaning of the role made a lot of sense to me because I'd experienced in this broad background of weird stuff that didn't connect, I'd done all those jobs. So, all of a sudden, the jobs made sense. I wanted every one of them, by the way, but... And I knew how to talk to people about it, I just immediately engaged well. And then, over the years, the part that really hit me was, I can make a difference here, I could be good at this, I could be great at this. And for the first time, I could talk to someone like your dad, and hold my own, because from this little niche place I had a lot to offer. And I was a person seeking, having a lot to offer until I found this exact platform where I could offer it, and going on from there.

0:57:21 CR: That's a very commission-based business, is it not?

0:57:23 MS: It's a very commission based business. I'm not a salesy guy, so it's more... But you'll find this, and you know this, in real estate brokerage, it's those who are more consultative who have the longest runways and the longest careers, because they're bringing intellectual capital to the table, alongside the sales skills. But it is commission-based, absolutely.

0:57:44 CR: Was that a change in your thinking about the world? When you go from not having a paycheck every two weeks to, "I gotta get this done." Did that...

0:57:53 MS: Yeah, well, first of all, there's a base. So that helps.

0:57:56 CR: Okay.

0:57:57 MS: And a lot of commission people have base, of course, but it did drive me, and it's interesting, it continues to drive me, and I hire in my firm non-salesy people because that's our culture and our approach to the business. But the eat-what-you-kill thing alongside the, "I'm not a salesy person," is an awkward combination. But it drives me every day. So I've fully embraced it and I understand it in my gut.

0:58:27 CR: And your office is in San Francisco?

0:58:29 MS: We're in San Francisco. We have a person in Southern Cal, three people on the East Coast, so we're kind of all over.

0:58:34 CR: And what's your down the strike zone, middle of the strike zone search that you do continually in the business today?

0:58:44 MS: Good question. So first of all, we do about 60%-65% of our works in the apartment business, half of which is low-income housing, half of which is conventional, which reflects the apartment business pretty well, and the other one-third are in the other food groups or real estate. So one down the fairway means it's in multifamily 'cause we understand that the best. Second down the fairway, just looking at what the work has been over the past couple of years, there's a boatload in need for asset managers. And it's really people who own, understand, strategize what to do with the building. There's other who buy, there's others who manage, but the strategies behind how to hold that portfolio in asset management, that's the function that's upgraded may be the most and therefore, there's been the most change in that area and the need for strong smart people.

0:59:34 CR: Let me ask you this 'cause it's something I talk about a lot that... I've never really truly, I mean, I get a lot of the arguments, but I've never really truly understood why there aren't more women in leadership positions at real estate companies. And I ask Lisa that question too. From your perspective, are you seeing more women coming to the real estate business? Do you see more opportunity? What do you see from the executive side on women in real estate? Investment banking, you see women coming out of business school going there, you see it in other industries, product industries, the tech industry. It's just not been a big push over my career. Can you explain it and do you think it's changing?

1:00:13 MS: So, I'll give personal stories, as well as anecdotal in the world, I don't know statistics. Personal story, my wife's a senior professional in real estate world and she has battled through that to be successful. She's been very successful, very meaningful, but there is... Has been a battle particularly of women of her generation. I think maybe that changed the name of the game a little bit because those were the pioneers in a lot of respects in what's been a male-dominated business.

1:00:45 MS: Second personal perspective is my 24-year-old who was about to go to planning school or Emerald school and works at the Urban Land Institute. So she's the young person who wants to be in this business and wants to make a difference in America's communities. So what does that mean? So there we are two bookends in the world. Second thing is, my first search, I had three... I had four first searches and I quote them all the same way. But one was for a company where we didn't... We couldn't talk to a woman. And the client says, "I wanna, I wanna... " I'm now gonna do the accent here. "Man, I want a guy, I want a guy to represent us on the West Coast and the guy is gonna have a big fraternity ring and he's gonna be between 36 and 40 years old." I hope my client doesn't recognize my doing his voice, which I do all the time. We didn't speak to a single woman. Now, I would have shoved a woman into that category if there was one between, not even those ages, but it just didn't work.

1:01:45 MS: Second one, we did a search for a Cushman & Wakefield. And then the third one, we did a search for Fannie Mae. So, funny thing. The first one had to be a guy between 36 and 40 and at the end of the day, he was a 42-year-old, and the guy called him "the old man." John, if you're listening to the podcast, I'm sorry. Second one was for a Cushman & Wakefield and there were no women in the business. Third one for Fannie Mae is they wanted a woman. And it had to be a woman. It had to be a woman Chief Credit Officer and I was breaking the law by walking around the NBA conference saying, "Getting women Chief Credit Officers?" Men need not apply. But Fannie Mae knew how to break the law in that way, maybe for a good end, but not necessarily good.

1:02:33 MS: Last answer to your question. I think the world is changing. It has been a male-dominated business, obviously, from what I said, particularly the transaction business. And the amount of business that does get done in informal networking ways, the guys have had for decades together growing up in the business, skiing, drinking, golfing, that those pathways make it brutally difficult for success for women. And the business may be done at 11:00 at night and maybe women have a five-year period where they can't be out at 11:00 at night if they have a kid.

1:03:08 CR: Yeah.

1:03:08 MS: So those are big headwinds, they're all changing.

1:03:12 CR: Yeah.

1:03:12 MS: In some segments of the business, particularly the brokerage transaction world, the headwinds are harder. There's great examples of massively successful women in this, but it's harder there. But then in the other functions of commercial real estate, asset management, property management, everyone says property management, that's unfair because it's all women. But HR, CFO, investment banking, plenty in both sides.

1:03:37 CR: Yeah. So I think it really was a good answer. I think you really hit some things. I'm just seeing change and I blame it on... I think technology is the major reason is for why things are changing, but I don't see golf having the impact in my business life the way it did 15 or 20 years ago. I don't wanna spend four hours on a golf course anymore, I don't love golf and I don't see people asking me to spend four hours on a golf course anymore.

1:04:05 MS: Right.

1:04:05 CR: I also think that the age of the private male club has long since passed and I think that nobody does long lunches anymore. There's no drinking involved in lunches and I think... So I think those things are starting to go away and I think there's also a realization that I know we have in our company, but I think others have which is, it's a very good balance to have equal men and women because that's what your clients are.

1:04:30 MS: Right.

1:04:31 CR: The days of all white males showing up, and that was your client, is that it's not it.

1:04:36 MS: And push you further also because your clients, if say you're an apartment company, and your clients have different colors as well as different genders, and gender there's three and four genders, not just one or two genders anymore.

1:04:47 CR: Yeah.

1:04:47 MS: But if your client... If the people work at a company, designing apartment building or designing an office building or designing the services in a hotel or retail space, it has to reflect and reflect an understanding of that diverse background, and not everyone is in the top 10% or 20% of the economic scale, and we're serving those folks too. So how do we understand them as customers?

1:05:12 CR: What's interesting is we got a couple white males here.

[laughter]

1:05:14 CR: White, Catholic, Jewish guy, talking about how we give opportunities for women. What about more generically about where we are? What do you see as where we are in the cycle based on the searches you're doing today? And are you a canary in the coal mine or will you not know that the economy is turned until after it's turned?

1:05:32 MS: Yeah, well, the last time we knew when it did turn because I had five searches cancelled within a two-week period it was like... When Layman bounced or died, over a two-month period we had clients with $40,000; $50,000; $60,000 in our pocket, who said, "Sorry, we're done." And it was all at once, we didn't expect it because we thought that commercial real estate would be immune, we thought it was a residential crisis. God, were we wrong.

1:06:00 CR: Yeah.

1:06:00 MS: I don't see that at all now, although I see signs of topping, lots of signs of topping, but we could sit around the top for a long time. Our business has not really changed. We're doing development searches, we're doing asset management searches, we're doing succession searches. It's all happening in a normal way, and I think supply demand with people is at kind of a balance, which suggests we're in the middle of a cycle, although we know it's massively mature. The last thing is, I think, my guess is we... Fingers crossed, we're not gonna have another big gulp-moment as we have a couple of times in the past 20 years. We'll have a slowing of the world, but I think the real estate world has also changed. I think the real estate world is significantly more institutional and the bar has been raised for everybody, as things we've talked about, like technology, by having larger companies. The big companies raise the bar for everyone in terms of getting to use technology, their use of information, their use of reporting what investors are a global investor base. So the demands are much higher, and therefore the sophistication of people in these different functions has to be that much greater. So, with increasing sophistication in the business, there's need for us to help because companies are improving in each of those areas.

1:07:27 CR: I was gonna ask, the first thing is, how often now are people asking technical questions of you about a person's skill set? As opposed to... It used to be... Do they have their fraternity ring and all that. But today, when someone says "I wanna hire someone," do they, are the descriptions more technical in nature than they used to be? Do they know Argus? Do they know Yardi? Do they know whatever software that's out there? Are those the kind of questions being asked or is that later in the game?

1:07:58 MS: It's later in the game, but it's a funny question because I went into age immediately. We wind up recruiting people who make 200,000-300,000 dollars or more. So we're not recruiting junior people, people coming into the business. Usually, people in the second half of their career, if that's a different way to look at it. They're not running Yardi, they're not running Argus themselves, so their skill set unless it's in finance, doesn't really matter about that.

1:08:23 CR: Yeah.

1:08:23 MS: They certainly have to understand that, know how to manipulate it, know how to work that. Those are the questions I wind up not asking, and we don't do tests with anyone in terms of their technical skills. But in every search we do, I have the four or five things I'm looking for. An interview was all about where do they fit within the skill set of knowing how to do these things. So that becomes really technical, and I like to talk about this is, I'm pretty, really, really good at figuring out, "Okay, does Chris have these four or five experiences? How strong are they?"

1:08:56 CR: Yeah.

1:08:57 MS: "How are the levers in each of those experiences?" and then alongside that is, "What's Chris like? I wanna work with him. Is he gonna be happy with you? Is there a cultural fit? You guys gonna work well together and have fun."

1:09:07 CR: Yeah.

1:09:08 MS: And one's precise, I could be precise on skill set, technical qualities. I'm gonna be imprecise about what's Chris like. It's an imprecise question, subjective versus objective. The magic in search is to do our best to facilitate and understanding that second part.

1:09:25 CR: So you've got a lot of competitors out there and you've been at other shops you [1:09:29] ____ and struggles, in the Ferguson, and several others. What do you think makes Terra Search different than some of your competitors out there?

1:09:38 MS: Yeah, in some ways, in search we do the same thing, and the end result may be very largely the same, which is "Okay, a butt hits the chair six months later," whatever that is. What goes on in the journey between now and then is really different. So, that journey and the interaction with both candidates and with the client is a consulting exercise that really matters. And everyone does a good job, everyone has their own way of doing that good job. At our firm, I know what we care about is understanding candidates, treating candidates and their careers with as much integrity as we can, and getting to know them as well as we can, because every one of those relationships I think is the future of our business. We spent an hour and a half with a candidate in an interview, we're gonna spend that hour and a half with 10 candidates. One candidate is gonna get the job, while I form 10 relationships.

1:10:33 CR: Yeah.

1:10:34 MS: And I view it that way. It's easy to view those people as bodies coming in and out the door. And in a small shop, they're not bodies, they're our future, and so we're able to take the extra time to look at it and feel it that way. And that's what gives nurture and meaning to my team, that's what gives nurture meaning to me, and it's the same with a consultative relationship with a client. We don't wanna just get it done and get it over with. And what's the journey that the client experiences along the way? What are they learning about their own company? What are they learning about the fit in their company? What are they learning about their competition through interviewing four, five, six people? What are they learning about where they're going, and what their organization looks like through what the search process is? And so, the butt in the chair is a part of that along the way it's the end result, but all the rest of that is the stuff that matters.

1:11:25 CR: So what is... What was your most spectacular fail and what did you learn from it, in terms of placing someone?

1:11:34 MS: Boy, that's a good question. Well, the one thing I wanna come up with and this is not about placing someone, is there was a fail in my career, this just came to mind, as you said it, is not knowing that I should have my own firm and not knowing that I was pretty opinionated about what worked and what didn't work and not previously having had the confidence to go do it and take the stab. And then when I did it, I did it with a partner, and we both knew we didn't get along that well. And this is a wonderful person [chuckle] but I didn't... We both didn't go into that relationship with conviction, it took three years to then realize that, and then ultimately, unwind it. So those were mistakes. Those were not knowing my Ps and Qs that I actually do know in search, I'm better at it for clients than I am for myself.

1:12:24 CR: I think it's common for all of us, but yeah.

1:12:26 MS: Yeah. So.

1:12:26 CR: And so what about in terms of going through those experiences as you look at you placing someone?

1:12:35 MS: Yeah.

1:12:36 CR: And usually it's probably you have two or three options for that employer. Is there anything that you have learned over the years that would make you just about a person that you go, "I'm just gonna hold that name back." Or do you think it's your responsibility just to give them three options that you think qualify and let them decide? How much filtering out are you doing?

1:13:00 MS: Yeah, ton of filtering out. But it's interesting. So one is I wanna give options and I'll often give options that I don't believe in, and I'll tell the client that. I'm not holding back, I'm saying, "Hey here's four people. They all fit the job description." And remember, I said "Here's the skill set on the... " you're seeing my hand motions, but "here's the skill set on my left hand and here's the fit on the right hand." and if the person checks the boxes on each of the skill set experiences both big enough as well, as well enough, then I want the client to meet that person. And I don't want my judgment about I didn't like them that much because whatever, that's subjective and I'm not gonna hold that person back from the client, because the client may have a different subjective experience of the person than I have. Also because that candidate's qualified, I want them to see a contrast of qualified people and maybe also that weirdo candidate came from a great company. So the things they get to talk about in the interview is, you know, information about someone else is really good information.

1:14:00 CR: Yeah.

1:14:00 MS: So I'm not making that judgment. I will not hold back my feelings about that person at all from the client. And then we get to interact about the feelings. And sometimes those feelings evolve in terms of my initial judgment about interaction versus the other person's. Last comment to that is interviews in a natural setting. So the experience you have with someone talking through an interview and I'm remembering someone who I interviewed for your dad for CFO at Catellus, who took charge in a very strange way of an interview, but I try to make the interview not a stressful or formal situation, so I'm trying to figure out what that real person feels like, and I think we get to do a pretty good job about that. But then it's the other steps in the interview process, it's meeting the client and having the client do non-interviews with the candidate. What's a non-interview?

1:14:56 CR: I don't how to...

1:15:00 MS: Yeah a non-interview might be dinner.

1:15:00 CR: Yeah.

1:15:01 MS: Used to be golf. It's not.

1:15:02 CR: Yeah.

1:15:03 MS: It may be a working session. You roll up your sleeves and solve a problem, you talk about a deal. It's... Sometimes it just takes time, 'cause I do long interviews and the reason I do a long interview is if I have to shove it into 60 minutes or 45 minutes or 30 minutes, I'm not gonna understand that person, it's the stuff in between, the spaces in between the comments that mean more than the comments. So, long answer to your question. But we don't hold any information back from the clients.

1:15:32 CR: Do you find when you're interviewing people... Do you think you have a sense now when you can separate the wheat from the chaff? Can you tell someone's putting on a face and not who they really are, or is it just part of the human experience? You never really know until they've been placed and they're sitting in that seat?

1:15:52 MS: You know, I think you can have a sense of who's genuine. One story, this is a funny one, is I will tell you, in every case when I interview someone, one of the things we interview for of course is, "okay, why did you leave that company and what got you to the next company?" And it's those moments of transition that a recruiter has to know and a good recruiter understands because we know they left Maguire partners at a certain year. Of course, they did it, right?

1:16:18 CR: Yeah.

1:16:18 MS: Or they left wherever they went. And of course, they went to Trammell Crow a certain year because it was a great time to be at Trammell Crow. Oh no wait, they went to Trammell Crow when it was sucked. Not a good decision. So we have context for those changes. No one ever, rarely, in those transitions says they were fired.

1:16:34 MS: Often they were, [chuckle] or they were pushed out pretty hard. And so my team often comes back, and they go "Well, this is why they left here, this is why they left here." I said, "Wait until the references." And even the references don't necessarily tell the truth about that time. But understanding those transitions, figuring out what is in between the truth and the reality. And everyone has their own Rashomon-like view of their story. So, that to me is maybe more important than to someone a little bit more formal in interview. And again, in my interviews, the way I do it is, let's get comfortable and just talk. If it's gonna be quick, it's gonna be formal. If it's gonna be slow, then you're gonna get to those other spaces.

1:17:17 CR: One of the things I just... I keep hearing what you're saying... And I hope for those people in our audience who are younger and at the beginning of their career, I hope everyone understands that a career literally is a career. And if you leave one place poorly, don't think you can cover it up. That if you make poor decisions early in your career, they're gonna follow you, because in a business like real estate, there's so many touch points. And I think it just hit me that you were saying is, you're better off always just being yourself. Don't try to be someone you're not. Don't try to massage things in your past, they are what they are.

1:17:51 CR: And I think that's... The hardest part for me in hiring, is I care so deeply about attitude and passion. You can't fake that. And if you're cynical and don't really believe the stuff, it's gonna come out at some point. And how do I get that... Elicit that in the interview process? And I think that people... I'd much rather have someone who just comes out and says, I'm Eeyore, but that's a positive thing for your company," than, "No, no, the sky is always blue." And then they come, and they become Eeyore... Because if I know I'm hiring Eeyore, I'm fine with that.

1:18:23 MS: That's right.

1:18:23 CR: But don't be who you're not.

1:18:25 MS: It's really hard to figure that stuff out. And I talk to young people all the time. And part of the reason for the podcast is, lessons for kids trying to navigate a career. And people will make a lot of mistakes. They'll make mistakes with relationships. When you're young and impetuous, you'll do crazy things with relationships. You'll use people in different ways. And one of my favorite terms in our business is, "We use people." Well, use people either comes from integrity, or non-integrity. It's a word that implies non-integrity. But this is what we do, this is the nature of business. But over the years it is a long game, and so you have to view a career as you're gonna be in this for 40 years.

1:19:05 MS: Your relationships are gonna last for 40 years. So, build and build them slowly, build them in a way that matters and cares. Treat people well over the long term. It will get reciprocated over that long career. And the people when you're 25, who you grow up with in a company, when you're all 45, you're gonna be running companies together. And so that period of time really, really matters.

1:19:26 CR: Yeah. Well, we've been going quite a bit of time.

1:19:28 MS: We have.

1:19:30 CR: I would like to just kinda ask you here at the end. When you wake up in the morning and you think about your day, and most days, what is it that you're passionate about, just in general? It doesn't necessarily have to be about work, but what drives you?

1:19:43 MS: Well, the thing that drives me is actually people interaction. I love what I do, and I love talking to people. I love making a difference in those conversations with people. And if it's a job seeker who I'm talking to, If it's a candidate who I'm trying to figure out, and understand, and work with. If it's a client... If it's someone like you, or if it's a podcast, those things give me massive positive energy. Bureaucracy gives me slow energy. [chuckle] That stuff is like, "Oh. My God, I gotta do this, but I care about it." But it's those interactions where I get to shine, and really have a great time.

1:20:17 CR: Well, I think you're a natural doing the podcast. This has been really... I really enjoyed it.

1:20:20 MS: Me too.

1:20:22 CR: We hopefully got equal time in all of this. I don't know. [laughter]

1:20:24 MS: We did. We're fine. Let's do last questions, though.

1:20:27 CR: Okay.

1:20:27 MS: Talk about a great moment from the podcast. Not this one, but in your experience of doing that, and let's share a couple of stories of things that... 'Cause I've been blown away doing this.

1:20:38 CR: Yeah. Well, I'll tell you. I think I mentioned it earlier, but my interview with Sunny Kelsey, I'm so pleased for his success recently, but his willingness to be honest, and you don't necessarily think an investment banker coming on the show would be so honest. And also being honest about the things that are important to him outside of work. And so, that was a great one. I think Darla Longo, I had online, and to her to really talk about the difficulties she faced in the '70s, being an industrial broker who was a woman, and some of the, I wouldn't say awful, but they were awful, things that she had to go through, and the pride she takes today in being one of the most successful industrial brokers. To have that humanness come out from her, I thought was wonderful. Lisa is an all-time favorite. Ones that have really got me excited, recently, I had a Cindy Flynn on, and Cindy, I met her husband through IPO. I just wanted her on because she's a 33-year-old woman who's pregnant, who has a seven-person woman-only law firm and they don't have office space.

1:21:47 MS: Wow. Don't have office space?

1:21:48 CR: No, they don't need it. They have like a WeWork, not a WeWork, but they have a place where they can... They have to have a conference room in Orange County, they can do it. But it was such a cool story of like, "I'm gonna make my life what I want it to be. I wanna be a mother, I wanna be a businessperson, I wanna be an entrepreneur, and I don't need to... I can do it all through technology." And it just was like, "That's cool."

1:22:08 MS: That works.

1:22:08 CR: And as I do this more and more, real estate's in an important backdrop but since real estate's a backdrop of everything, it's really the personal stories of people saying, "This happened to me. This is how I felt. This is how I responded. This is where I'm going." And, I mean, I say every day, I wake up every day, and if I wanted to just focus on all the horrible things that are happening to our company, so therefore me, that's a horrible existence. And we could go out of business at any time, and if I focused on that... And so, I like to be around people who have the same option. I can look at it as the worst pressure ever, or look at it as an opportunity. And that's what drives me in these things, is getting to know someone. And then, hopefully, there's a 24-year-old out there who says, "I can be in this business." And that's why I... What about you?

1:22:58 MS: So, 24-year-olds are my avatar for this as well, because they're in my mind, but I'll tell a couple of stories. One, not a podcast story, just 'cause yesterday, I was at a ULI breakfast board in San Francisco Council, and I sat next to a friend, I said, "How you doing?" He says, "It's unbelievable!" And he's a guy who's 60-years-old, 62-years-old, and he said, "Happy, I love my job, I love where I live, life is just cool. I'm excited about it." And I feel the same way. So, that first thing, but it just charged me up and you said exactly the same thing. But I'll riff on four or five moments from the podcast that blew me away, and they all become kind of personal. So, obvious one, Sam Sell while in college has the gumption to tell a property owner/developer that he needs to help them figure out college housing, and he has a little bit of confidence that guy. And that continued from that moment for him.

1:23:58 MS: Another moment, Camden Property Trust, when they decided they wanted to be one of America's best places to work, and they found the Fortune 100 best places to work contest, if that's the right word. And they put everything in the company against, "We're gonna get on that list and stay on that list." And what does that mean for a company? They wanted to be a great place to work. You said the same thing in the conversation. And what rigor does it take to be at that level, in that public of an environment as a public company. Other great stories, Digital Realty Trust, a friend of mine, Bill Stein, runs Digital. They went from $250 million to... I'm gonna get this wrong, one of the 10 largest REITs.

1:24:42 CR: Yes they are.

1:24:43 MS: Public company, global company, and in a space that did not exist in the world 15 years ago. Didn't mean anything. Another moment from the podcast, one of my very favorites. Marianne Tighe, who's a broker with CB, an amazing woman, in New York, had never heard the word "real estate" till age 36. She's in a... I'm gonna get the word, Zepparella? Was it the water taxi in Venice? And some guy said, "You should try real estate." And then she did, and then became the most successful woman in New York, which is the hardest city in the world in a male-dominated business, and has been a legend in that business.

1:25:21 CR: Yes she has.

1:25:22 MS: So, how do people do those things? And last week I interviewed a guy named Cedric Bobo, who's using the, in my words, he's using real estate to teach inner city kids to not be disenfranchised in their neighborhoods so they can make investments in real estate and gain financial literacy.

1:25:41 CR: Wow.

1:25:42 MS: He's doing it, he's about to do it in Los Angeles, he's doing it in the Bronx, he's doing it in Atlanta, he's doing it in Detroit. Private equity guy, turned his career into that.

1:25:50 CR: Unbelievable.

1:25:51 MS: So, we have lots of stories in our world, and there's personal stories, there's deep stories, there's ways that people have found success. And I will tell you, for me, what do I get out of it? It rubs off on me.

1:26:04 CR: Yeah, I agree with you.

1:26:05 MS: Right? And so, my bar has risen considerably because of the conversations I'm able to have with these amazing people.

1:26:13 CR: Yeah, I agree. I think I'm very passionate about it myself. It gives me a passion for life, and this one does too. This has been terrific.

1:26:23 MS: Cool. I agree. Thank you very much.

1:26:25 CR: Thank you Matt. Alright.

1:26:25 MS: I'm gonna hit the stop button here.

1:26:27 CR: Terrific.

1:26:29 CR: Well, thanks Matt. That was a terrific podcast. I really appreciate the interview and having the chance to interview you. To our audience, please, please, come find us at chrisrising.com and download the podcast. You can find the podcast on all of the platforms, Apple and all the others. I really appreciate you all listening to us. You can find Matt on Twitter @MSlepin, M-S-L-E-P-I-N, and please follow me @ChrisRising. Thanks so much.