What Does The Responsibility Shift Look Like Opening Your Own Team or Firm

All right, welcome back to another episode of CRE – The Unspoken Truth. I’m Charlie Coppola, joined with my father, Craig. Today’s an interesting one. I’m really excited to talk about this and hear your thoughts, but the topic today is, we’re going to be talking about the responsibility shift to starting your own firm, opening your own firm, or starting your own team. And so, you know, the place I want to start, the way I understand it, is you started Lee & Associates, the Arizona office, when you were 30, I believe, and you had had, you know, a couple good years there before. What was that process, thought process, like? And, like, what were you thinking at the time? Were you, you know, deciding between staying where you were at, or moving, or starting your own thing?

So, I had started brokerage in 1984. We started Lee & Associates in 1991. I was 30 years old. So, I had about seven years experience, and I was, at that time, had kind of had a nice rise. I was the top, the last couple years, the top producing broker at Grubb & Ellis in the office division. And so, I was there kind of fair-haired child, young broker that was getting the leads from management. And when we left, that was their big pitch, is like, “You have so much opportunity here.” And when we left, it was like, there were seven of us that left. And in hindsight now, after 35 more years, 34 more years, it was the best decision I ever made.

And we were scared at the time. Your older sister, Kate, was born. I was finishing my master’s at ASU at night and weekends, and we started the company. And so it was a pretty scary time. But I knew, I always, you know, again, I always went back to… one of the reasons we become brokers is so that we can control our own destiny. And every time I look at a Twins uniform, or the George Brophy bobblehead that I got, knowing that the Twins released me, that they were in control of my future, and I knew that as a broker I would be in control of my own future. And ownership is that next step.

Yeah. So this is interesting because, you know, from my perspective, you know, working at a company, you know, I’ve not been a broker, and then now starting CRE OneSource, there was a big shift for me from being an employee to an owner.

Oh, yeah.

You know, brokers, you know, in theory, right, they run their own business. They eat what they kill. And so, you know, I’d be curious to hear what that shift was like, ’cause in theory you were still running your own business. You still had all of that responsibility before. So what was that change like when you started Lee Arizona?

Well, it’s really interesting. I had had lunch with Bill Gosnell, who was really the main guy. He was the top producer ever at Grubb & Ellis. He was the one who left, and then asked me, along with several others, to join him with Lee. And Bill was the driving force of that. I had lunch with Bill two days ago, and he turns 80 in the next couple weeks. And I remember Bill had a sign on his desk at Grubb & Ellis, and the sign, this sums it all up. It said, “The next best thing to making a deal is to see the guy in the cube next to you lose one.”

And so brokers are by nature super competitive, and at the big shops, where they don’t have ownership, they’re even more so. And I would argue the CBRE, JLL, Cushman & Wakefield, Newmarks are more competitive internally to their own peers than they are externally to people at Lee & Associates or other offices. And so that change, when we started Lee & Associates, to be happy when somebody else made a deal, because when you own the company, the pie is growing. It’s not a fixed pie that you’re trying to get something from. It is a growth mindset, and that’s a big shift.

Yeah, so was that one of the… like, walk me through early days. What were some of the best things about, you know, starting Lee & Associates in that shift? And then, you know, obviously you were anxious and nervous. What were some of the worst things about the shift?

Well, this is an old story, but we had moved out… when you leave a brokerage company, you leave in the middle of the night, because you have deals. So I actually was moving out at 2:00 in the morning on a Saturday night, and I had a bunch of deals going, and literally there was another broker came in. He was a single guy, and he came in at 3:00 in the morning, and he called the manager. So at 3:00 in the morning the manager showed up at my house, and we were unloading files and stuff. He said, “What are you doing?” I said, “Hey, I made a decision to go to Lee.”

And that caused me, the first year at Lee & Associates, I had 61 deals on my TIP that Grubb & Ellis made me honor, every one of those deals. So in 1991, I was, like, low man on the totem pole at Lee & Associates, because I was… They didn’t announce it, but I was number one at Grubb & Ellis, because I had 60 deals that I closed over there. So that was a really terrible time, because, you know, just that period. But then also, you know, the uncertainty. You know, there’s a lot of fear, uncertainty, and doubt when you start your own company. How does this work?

And when we closed the first year, and we had a big profit, I think our splits first year were 80-something percent, we were like, “Where the hell was all the money going?” Because we were getting 55 or 58% at Grubb & Ellis. So it took us about nine months. We started in September, so I would say then, like, this has been more 14 months, 15 months. And we were like, “Oh, wait, this really does work.”

Yeah. Yeah, it was going to be a follow-up question. It’s just, like, what were some of the great things, and how long did it take for you to be like, “Wow, this was a great decision”?

I think it’s a couple of years. It’s not right away. It’s not right away, because there’s a shift, too. When you’re at a big firm, it’s a different sell. You know, you’re coming in, you’re selling the company, where, you know, CBRE were the largest real estate company in the world, and we were the greatest thing since sliced bread. And then when you go on your own, at the time, Lee & Associates was really relatively small. We’re big today. We’re the sixth largest in the US today. But we were the ninth office, and so we were a small nine-office, first office outside of California, eight other offices in LA and in Southern Cal.

And we had to learn how to really hunt. We weren’t hunting on a farm where they had salt licks, and they had food put out for the deer so that you could know where they were eating. We were hunting on our own. And that is really a differentiator. That’s a second differentiator, I think. If you’re a hunter, a real hunter, and you like to go chase business, then owning your shop is a good idea, or joining a place like Lee & Associates.

Right. Right. So, I want to fast forward a little bit to, you know, starting a team, because, you know, even when you moved over and started Lee Arizona, you were still, you know, really responsible for yourself. Now you have a team, you have salaries to pay, you have livelihoods that you’re responsible for. What was that shift like? You know, the added responsibility, and then, like, also the pros and cons to kind of making that decision.

Before we jump to teams, let me give you one other thing.

On the ownership side, there’s a mind shift change between a taker… When you’re at a big shop, you’re fixed splits. So, you’re trying to get everything you can. If you get a 2,000 foot sublease, you want a color brochure and you want it professionally done by graphics. And you’re just trying to get as much as you can. Every day you’re in the manager’s office saying, “Hey, that guy got this assistant. He got this sign.” So, you’re trying to take as much as you can. When you own the company and there’s a bigger picture, it becomes not necessarily a giver, but it’s certainly an understanding that, like, I don’t need that. Because it affects my splits down the road, at the end of the day, or the profit sharing, whatever it is, as the owner of the company. So, the difference between a giver and taker is a different one for an owner.

Now, on a team, you’re right. When I was 30, I was on my own, in the first 20 years of my business. So I had another 14 years where I was really a solo. I had an assistant, maybe, and I had a runner. But I didn’t have a full team. I brought Andrew Cheney on 23 years ago now. And that was really the first time where I said, “Okay, now we’re going to have a team.” We renamed the team from the Coppola Group to the Cheney… Coppola Cheney Group. And at that point you’re going, like, “Okay, now I have even a layer.” It’s really a nuance layer. It’s like, I have ownership at Lee & Associates, and now I have ownership in this team, and I’m obligated at that point to really train and spend time with my teammates to make sure that they’re the best that they can be.

And so that’s one of the things that, well, I always tell the story, is I got my master’s, my MBA, in 1991, and I didn’t use it until 2003.

So I had 11 years where I was like, why did I get my master’s? And then I started managing the team, you know, ’cause the role at Lee & Associates, you know, you have people doing stuff for you, but when it’s your team, you don’t.

Yeah.

So.

Yeah. I think I know the answer to this, but what did you have to stop doing, or what did you have to change, when, you know, you wanted to start building that team and leading effectively?

Well, I think at the end of the year we’re going to do a couple on splits and how teams are formed. One of the things that I’m a firm believer of, and this is not universal… We have a couple of teams in our office where the brokers, the team members, go to every meeting together. They don’t divide and conquer. We made a conscious decision, and one of the reasons why Andrew joined me, still with me, is that we are different people. His skill set is different than mine, and therefore we are rarely in the same room together. I would say that maybe we’re in the same room two hours a month. And so Andrew’s doing different things. He’s built his business different, and I’ve helped coach him differently than how I did it. And so our posture is, we want to have one plus one equals three. A lot of team members like the comfort of having somebody else in the same room.

Yeah.

So that’s one thing that we focused on at Coppola Cheney, is that we’re building different sets. The second thing that we’re trying to do is we’re trying to eliminate everything but unique ability. It’s the Strategic Coach concept. And then we’re trying to say, “Look, Craig, this is what you do really well. I want you doing that 75, 80% of the time.” So, what we try to do in our team is, we’re in our UA, excellent circles, over 80% of the time, and we’re out in the competent area… where zero incompetent. We’re 20% or less competent, and everything else is excellent or unique. And we spend a lot of time on that.

Yeah. What would you say, like, characteristics of a great broker versus characteristics of a great leader are? Like, different things that, if I’m a good broker and I’m thinking about this jump, I really need to make sure I’m working on these couple things.

You know, it’s just like if you’re an athlete, and, you know, the difference between a great player and a great coach. I’m not sure there’s any great players that have become great coaches, right? The coaches tend to be people who are mediocre in their craft, and they have to work really, really hard to be good. And the superstar brokers are probably best served to hire somebody that really manages the team for them, and they continue… again, we get back to this unique ability.

Darla Longo, who’s at CBRE, the, I think, number one producer ever, still working in her later years, and she has this massive team, and they just put Darla… she has one job. That’s it. She’s out there generating business. Jim Trobaugh, who I worked with in ’80, in the Grubb & Ellis, and went to CBRE, he literally had a 30 or 35-year career. All he did was cold call for 35 years. That was what he was good at, he liked it. He’d come in and he’d call hours a day, 40 days a week, and that team built it around him, and he had just a fantastic career. So that’s what we kind of look at, is what are the skills that you love doing, and we put you in that skill. That’s what a good team does.

I’d say, you know, I think of Steve Kerr, is one that came to mind, who he was a good player. He wasn’t Michael Jordan, you know, and he’s become a great coach, you know.

He had a lot of grit, you know, he had a lot of grit, and Jordan respected him enough to, you know, obviously give him the winning shot at one of the championships. But again, to that point, it is a constant reminder to me that sometimes brokers aren’t meant to be team leaders. You can generate a team, but the purpose of generating a team is to allow you to do what you do really well, more and more. And I think that’s one of the learnings that people have as brokers over time, is, where am I really good? And for some brokers, starting a business is the worst thing you could do, because they have no administrative skills, no accounting skills, no, you know, team leaders…

Team leaders, yeah.

Yeah. Well, and if that’s not what you’re passionate about, or you’re good at, or something you really want to be good at, then all it’s doing is taking away from what you are good at, which is going to get business, or whatever it is, right? So.

Yeah, I totally think they could…

They could start the team, but they need the second member of their team to do it. Because there’s going to be a two-year learning curve of not trying to do things that you’re not good at, but the learning curve of building the team. Building a team is no easy… I mean, it is incredibly difficult, and I am shocked at how many brokers get in bed with another broker and form a team without really thinking about it. “Hey, I kind of like this person, I kind of like what they do, and I think we should join up.” And then two years later it doesn’t work out, and they wonder why, and it’s like, well, you didn’t do your homework, right? What am I looking for?

Is that common in the market, and if, just, guys will team up and then kind of break up? And, like, does that happen kind of all the time?

Yeah, it’s really common when the market turns south.

Mhm.

Everybody’s happy while we’re making money.

Yeah.

And then as soon as the market takes a dump, it’s like, “You’re not doing what you’re supposed to do, and I can make more money without you.”

Yeah. Couple final questions here. What advice would you give to someone specifically on the fence of, should I start a team, should I partner up with someone, or should I keep doing what I’m doing? If they’re teetering on that fence, what would you say?

Well, I think it’s super easy in our business, which is great. One of the reasons I became a broker, one of the reasons I continue to be a broker, is it’s super easy. As you know, building OneSource is just a… it’s a mess. I mean, we now… I don’t know, how many people do we have right now?

Seventeen.

Seventeen. So, we have 17 people, like, and they’re across the board. We have five computer engineers, we have salespeople, we have onboarding people.

All different personalities.

All different. It is really hard to build a company. But brokerage, it’s really easy to kind of build a half team. Add an assistant. If you want to do that, add an assistant. And that would be the telling point. Can you keep it? I hear from brokers all the time, “I can’t keep an assistant.” But it’s because you treat them like… And you’re not a very good leader. And so you’ll understand right there, it’s like, okay, well, this is an indication that you shouldn’t continue to build your team.

If you can’t… You know, how are teams built? They’re built one person at a time. And even in our team, you and I started this, but I would have never started this. Knowing what I knew with Coppola Cheney, I would have never started OneSource if you hadn’t committed. Right? And we would have never been successful like we are now if we hadn’t gotten Sam Absalom, and then Brock Baker. I remember when we recruited Brock, he’d been with us a year or two as an intern, and he was graduating, we were like, this is a really critical hire for us. And it was really, literally, it was Alex, we kept Alex, Sam, and then Brock, and then you. It was like that four core was really important to us, and it’s still important today, and all three of you are still with us, and, and that’s, all four of you are still with us, and it’s incredibly important as you build a team. So a broker can do that, but just start with one and then add another one. Build the team slowly, not ramp it up and hire…

Put these pieces together, blah blah blah.

Absolutely right.

Okay, and then last question. We spent some time on the team, but to tie it back to opening your own shop. So I know we have a lot of independent brokerage companies, and then we also have a lot of brokers at the big shops that are customers and that listen to these. What advice would you share to someone who is on the fence of, like, and may have an opportunity to go start their own thing, or open a new office? What would you tell that person?

Well, I am a big proponent of it. One of the worst things that happens to brokers is we develop, over four or five years, we develop our skill set and we get a niche, and then we stop growing. And…

For 30 years.

You just do the same thing for 30 years, and, first of all, the build business gets super boring. Yeah, you can make a lot of money, you can have a lifestyle, and you can live in a big home like I do. But you’re not fulfilling your destiny. And so the idea of taking some risks, changing it up a little bit, building a team, maybe joining a different shop, those things make you a better broker. And I became a better broker when I left Grubb & Ellis and went to Lee & Associates, because I had to become a real hunter. And I remember the first couple of deals where I was going head-to-head with someone from a bigger shop and lost the deals, and I’m like, in my mind, I simply said to myself, I have to get better. And that forced me to become a better broker.

And then the other thing that really happens, and because we’re big proponents of this, is that you start looking at the world from the owner’s perspective. Every time I go into a client, or, you know, I just invested in another real estate deal. But most of my deals that I’m an LP in are because I’m investing with other brokers that are buying their deals, and I trust those guys. So my buddy Paul Braun at JLL in San Diego, and Chris Voss, they’re buying some medical buildings. I don’t know anything about medical, very little about medical office. But those guys do, and, you know, I’m happy to get involved with their deals, because I really trust… and they know the marketplace. So I think there’s a lot of growth that can come from that as you explore.

I’ll end with, like, a personal story for myself. We had started CRE OneSource, and I had, you know, given notice to my last company, but I was sticking around to help them train the next group, and I was kind of doing both, right? OneSource and working at my last company. And my last company was a small company, and we had grown a lot, and I was, you know, part of those decisions, in those rooms, in those meetings on the management side. And, you know, I thought I knew what it meant to lead a company, or at least, you know, be in those rooms.

And it was in that period where I was still doing both, and it was, like, very early days of OneSource, and there was one customer we had, and there was a problem with the software. And I literally, you know, got the email, and I was like, who do I go to? Who can help me with this? And that was the first time where I realized, it’s me. I have to figure this out. Yeah. And that’s been, you know, every day since then. But I vividly remember where I was sitting when I read that email, and that feeling I had of, like, well, I could call Craig, but he’s not going to know better than I am. Like, I got to figure it out.

It’s a crazy thing when the buck stops with you, and there’s where the growth really occurs. And it’s really interesting, because that brings up a story. We brought a team over from CBRE, you know, over the 30 years. We brought into Lee & Associates… we would recruit senior brokers. And this team stayed with us for four or five years and never got this giver versus taker thing. They had been at CBRE so long, they were always fighting the team, “We need this, we need this, we need this,” and it just wasn’t a good fit. And five years later, they left and went to another big shop, because they were in the taker mindset and never got into the, “Hey, we’re really owners here, and this matters.” And so there’s some people there… They’re great brokers. They just didn’t fit into the organization as an owner. And so you had this experience and you manned up, but you could have easily said, “Look, I’m going to go be a COO at some other company right now, because I don’t want this kind of pressure.”

Yeah, “I’m going to sleep better at night.” Or whatever.

And your former boss, who ran the company, just took it. She is a total beast, right? She’s like, “The buck stops with me, always has, always will.” And she came up, you know, she didn’t go to college. Every step of the way… And one of the reasons why, you know, we invested with her is because of that. She knew exactly what she was going to do, and she built an incredible company, as we’re doing here at OneSource.

Yeah. Yeah. Cool. This is near and dear to my heart, just ’cause I’ve gotten to live it over the last five years, and you’ve obviously lived it your last 30 years. But really appreciate it. Thank you. Thank you so much.

Thank you.