Grandpa Lost His Shirt Too
“Why Age and Wisdom are Separate Concepts”
I have noticed a bit of an unsettling trend as I have been meeting with people in commercial real estate. We have been worshiping at the altar of experience. That is, it seems like most people believe the single most important characteristic a real estate executive can have is experience and more is always better. People imply that, without fail, older (more experienced) CRE professionals are better decision-makers than younger professionals.
I beg to differ and I am going to tell you why. I will save my opinion on the most important characteristic of CRE executives for later, but for now let’s focus on the logic behind the “EXPERIENCE IS EVERYTHING” argument.
First, if I were to interpolate from that theory, then I would make it as granular as possible. Let’s take the idea that more-experienced (usually older) professionals make better decisions than less-experienced (younger) pros. If I were to apply that logic to a small level, say one day, then someone who has been in the business for one single day more than you would be a better decision-maker than you are because they are more experienced. Most people would agree that a 65-year-old CRE executive is probably a better decision-maker than a 25-year-old executive. But are you so sure of that logic that you say that someone with ONE more day of experience is a better decision-maker? I wouldn’t. It has to be several years, right?
Well that brings up another point. Even if I were to grant you that more experienced professionals always make wiser decisions than less experienced ones, I would ask you to define how much more experience is necessary? Is a 62 year old executive substantially better than a 52 year old executive? How about a 42 year old executive? Tell me the number of additional years experience necessary to distinguish an exceptional decision maker.
Let’s use an example to illustrate. Company X is going to interview you and your coworker, Joe, for the role of Managing Director of this office. You and Joe have the same role currently. You got in the business in 1995. Joe got in before that. You have outperformed Joe for each of the past 5 years and you almost doubled his revenue last year. Your network of contacts is probably three times Joe’s. Everything else about you two is exactly the same (age, height, looks, personality, skill set, etc.). First, let’s say Joe got into CRE in 1994. Who gets the job? Probably you, right? What if he got into CRE in 1990 (Making him a 20-year veteran and you just a 15 year veteran)? Does Joe get the job then? What about 1985? 1975? Does your company turn down the 35-year veteran for you? How many more years of experience for Joe will cancel out the fact that you are clearly the better candidate?
Hopefully you will recognize that everyone’s answer to that question will be different. That’s because there is no magic number or formula for the “right” amount of experience. It always depends on the situation, person, and company. Experience is no silver bullet.
Don’t believe me? Then let’s look around the city.
What companies around Atlanta (and the country, for that matter) have struggled mightily through the recession? Which firms have had massive layoffs, property defaults, bankruptcy filings? Now, how old is the senior executive of that firm. Each company has a head guy that has to sign off on every major decision and new development and he or she is ultimately responsible for the successes and failures of the company. So, are the executives of all these struggling companies in their twenties? Thirties?Fifties?
I would say the distribution is pretty even. I do not have any objective data in front of me, nor have I run a regression analysis that included executive age as an independent variable. But I am fairly certain that companies run by 60-year-olds had just as much trouble as companies run by 30-year-olds. Grandpa lost his shirt in the great recession just like everyone else did. So, all that fancy EXPERIENCE didn’t save investors from losing tens of millions of dollars on bad deals.
Now, I am not saying that experience doesn’t matter. In fact, it may be one of the more important tools a CRE professional can possess. But it is not the silver bullet/cure-all that people seem to think that it is. You can’t simply go out and hire the most experienced people in the city and assume you are going to make huge wads of money. It is much more complicated than that. My theory is that wise people will make good decisions regardless of their age. Old people DO NOT have a monopoly on wisdom and there is no magical age where you all of the sudden become wise.
I guess it comes down to human nature. We as humans tend to classify the people we meet. Since there are 7 billion people on the planet it would be physically impossible to know each one personally, so we classify people. For instance, if you are an Atlantan and you go and visit NYC, the people you meet will have opinions about the food you like, the sports you watch, the clothes you wear, the car you drive, the price of your house, or whatever. The point is, they have an idea of what people from Atlanta are like and they classify you in that group of people.
The same is happening with experience in CRE and it shouldn’t. Haven’t you heard people say “He’s fresh out of school” or “She is a 3 to 5 year experience girl” or “He is a junior VP type” or “She’s one of those 20 year veterans who lost her job in restructuring?” I bet you have. That bothers me because I believe (perhaps naievely) that more than anything else in our business, people matter. Your team and the people you work with are what will ultimately determine your success in this business. Surround yourself with winners, and you’ll win. Surround yourself with losers . . .
So, since people are the most important aspect of my business, I always try and take the time to get to know someone personally. I never look at resumes. I would rather have a nice, detailed conversation with someone about who they are than glance at where they went to school and what their first two jobs were. That will come up eventually. I want to know what type of person this man or woman is and where they see themselves in 10 years. That will tell me if it is worth my time to get to know them well. Some number (age) doesn’t really tell me anything.
Here is my request: Take your time to get to know people in the industry. Get to know them well. Don’t even waste your time with a resume because you will start to classify people in your head. Rather than classify someone as young or old or tall or a property manager or whatever, get to know someone’s current skill set, personality, hobbies, and wisdom. The people you meet who have a knack for relationships and tend to be great decision-makers (even with small decisions) will be the ones you will be reading about in the Business Chronicle sooner or later. In my opinion, people are the most important piece of our industry and the most important time you spend in your career won’t be visiting property or sitting in front of a model or going to county hearings or calling a broker, it will be the time you spend getting to know the people in your industry.
So please, let’s back away from the altar of experience and see if we can judge each professional on who they are and what their skills are, because if experience were all that mattered then we wouldn’t have hundreds of empty $500,000 townhomes in Villa Rica, Conyers and Eastpoint.
Am I wrong?