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Interview with Kevin Maggiacomo, CEO of Sperry Van Ness

Kevin Maggiacomo is the President and CEO of Sperry Van Ness International, as well as one of the few CEOs of major real estate firms that I can think of that has embraced social media.  You can find him on Twitter where he is @Maggiacomo, or on his blog, http://www.maggiacomoblog.com/.  Kevin was good enough to answer some questions that I had about his outlook on social media and how it ties in with running a commercial real estate company.  Kevin’s perspective is unique and valuable insofar as he has created a mandate to have 100% adoption of social media within the Sperry Van Ness brand.  That’s a tall order for a company of close to 1,000 advisors, so Kevin’s motivation in doing this was important for me to understand.  I lead with a question about consolidation in the CRE brokerage space because Kevin is uniquely qualified to provide some commentary on the future of the business.

Reeder: Without naming names, we can agree that several of the national commercial brokerage firms have experienced strong challenges in this market. How does this affect what looked like a steady march towards consolidation into a handful of brands?

Maggiacomo: 2009 marked the bicentennial of Charles Darwin. Really, he turned 200 this past spring. This anniversary has spurred some discussion about Survival of the Fittest. I won’t delve into the theories of natural selection or evolution, but there is something fascinating about the economic concept which suggests that only the strong survive significant recessions. Those who are better equipped for survival going into the CRE downturn will come out on the other side in dominant fashion.

This is their time.

In 2006, various studies reported that there were an estimated 115-125k commercial real estate brokers in the marketplace. I expect to see significant attrition, and the market could lose 50% or more of the practitioners. In terms of market share, firms will be chasing a bigger piece of a smaller pie. That said, I see consolidation continuing, but in a different manner: Robust real estate markets, record setting values, volume and velocity, strong P&L’s and easy access to corporate debt were parts of the lives of every national brokerage from 2001-2007. These conditions provided the major national firms with the ability to acquire smaller firms, and helped to facilitate some of the larger mergers that we witnessed (CBRE’s 2.2B acquisition of TC in 2006). Times have changed.

Some of the major nationals are over leveraged, have little cash to spend, minimal access to debt, others have chess pieces already in place on every spot on the board. Therefore, fewer firms will be participating in the march toward consolidation. Growth will come to brokerages with little debt, cash on hand and healthy balance sheets.

They will acquire smaller firms and will gain significant market share as a result. I also expect to see opportunity oriented private equity firms placing some large bets on the servicing side of our sector, and acquiring or making significant investments in brokerages. These investments pro-forma to deliver high yields when market conditions improve.

You’re probably in the minority in terms of CEOs who have embraced Twitter and social media. What was the spark that told you it might be worthwhile?

I read an article highlighting Boston College’s (which is in my neck of the woods) decision not to provide email addresses/accounts to their students, in favor of implementing an email forwarding service, further announcing that they will rely heavily on social media to disseminate information. It became clear to me that Web 2.0 was here, significant changes in the way we send and receive information were on the way, and the young leaders of the future were way ahead of typical CRE professionals. My primary job as a CEO is to attempt to describe the future, and I realized that SVN could lead the charge, or be laggards and adopt SM several years from now, and the project was immediately kicked-off.

As a CEO, do you worry about the “free for all” that is Twitter? Any broker within the brand can disseminate any message they want to and there are limits to how you can control the brand message without established best practices.

I am concerned but feel that the cost of not proactively and aggressively embracing SM outweighs the cost of any potential negative which might arise from the "free for all" set-up that exists.

Further, it has been said that the only thing that you can control in certain situations is that way that you react to them. Control the controllable, so to speak. SM is here to stay and its growth is extraordinary. I am more concerned about training our Advisors on the effective use of SM to stimulate business, pointing out the risks and pitfalls, than I am with establishing SM rules and policies.

As for brand damage that outsiders might inflict, everything that makes SM potentially negative can be leveraged to make the experience equally as positive. If you deliver great products, services, genuinely care about your clients and customers and embrace social media, then good things will happen.

Commercial real estate is typically late to the party in terms of adopting tech improvements. If Twitter and social media are becoming more important, how do you get your people to adopt these resources, or is it not important?

Last month I set a company goal of 100% Advisor adoption of social media. Getting CRE executives to adopt new technologies and communication media are not easy but the potential results make the initiative well worth the effort. Training and instruction will help, but the sharing of SM best practices and success stories will be more impactful. A good number of SVN Advisors have, in essence, created a new value chain built around SM and geared towards helping them to win business and better service their clients in the process. Through blogging, Tweeting, reading the blogs and Tweets of others, and by focusing on helping people/readers, several Advisors in this category have seen an increase in business in this down market. These exemplary Advisors will help to champion the adoption effort, and total adoption will soon follow.

Without using the tired term “distressed assets” and in 140 characters or less, tell me where there is going to be real opportunity for investors in the next three months.

Follow debt vs. property in A mkts, approach deals w/liquidity(group investing will lower LTV’s), quick closes, strong returns will result.

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October 20th, 2009 | Category: Social Media | 10 comments

Viewing 8 Comments

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    Finally someone in CRE is starting to get it. Great post
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    I still don't understand how adopting a 140-character social media platform will help drive business. It does seem useful for a CRE broker to make a quick post about a listing or a recent transaction in their market, but if I am a CRE owner and looking for someone to help sell my property a 140-character blurb isn't going to close the deal for me.

    It also seems that with so many people adopting these platforms that the quality of the information will suffer. There will be very unsophisticated users making posts for the sake of making a post, rather than passing along meaningful information that could impact a transaction.

    So, other than the "me too" mindset, will those experienced users of social media please explain to me how it can help their busines and how it has helped their business?
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    TB1000- Are you a computer sent from the future? Just kidding.

    I think Duke Long gets it right. These tools are about engaging others in communication. Twitter simply lowers the bar in terms of time commitment/attention required for that communication. It is also the first platform that defaults to public viewing of profiles. That has led to its extreme growth. Personally, I find tons of value in the speed in which I can acquire new connections. Not every connection is valuable, but some are, and roadblocks to acquiring connections (see LinkedIn) don't help.
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    TB1000 first this is a friendly reply.Second it is about interaction with existing and potential clients.The platforms are not intened to be a 1975 newspaper block add.You and your company can actually have a personality( assuming you have one to start with).140 character blurbs once a week that say:BUY ME or I AM THE BEST EVER are comicial. Research a little more and wade in with the rest of us or....get out of the way!!
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    I appreciate the replies but neither response has yet to lay out how this will drive your business. Sure, you make new virtual connections but have those connections driven tangible results to your bottom line?

    I'm in a different area of the industry where social media is actually frowned upon, but I am curious to how it actually adds value. How does it make your business any different than the millions of other users that are using it? Bottom line results are driven by people and businesses with an edge on their competition. This can be experience, talent, intellect, work ethic, a real network with meaningful connections, etc.

    dukelong, you mentioned its about interaction with potential or existing clients but how does this make it more valuable than simply picking up the phone. How much value can really be added in 140 characters or less?
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    Type your comment here. DRIVE Business, Add Value,Best Practices,Pick Up the Phone, hey it's 1985 and Tom Peters is calling.TB1000 is that your real name or do you exist at all. Show me that you want to be human,and I might actually do business with you, or are you just .....a voice that wants to be heard. Google my name. I am not hiding and neither are the people I am now doing business with or will do business with. As for the value or whatever of Social Media as a tool....Turn IT OFF....I DARE YOU.
    p.s. send me your facebook page so I can see you are real or I will consider this an fun little exercise,not really a conversation at all.
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    Okay, so I read through your drivel twice and still didn't see a response on how it adds value and adds to your bottom line.

    Again, I am just trying to better understand the value add (in terms of $$ to the bottom line) that being on Twitter can provide to someone in your line of work. It's a pretty simple question, but you keep making obscure references to past years and joining in the movement or dealing with the reprecussions of not doing so.
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    TB1000 - I think you have a legitimate question here that I didn't answer in my first reply. However, I think the response can fill an entire blog post, so I'm going to do that and post it later today. Also, I suggest a steel cage match between you and Duke Long. But not MMA/Octagon style. I want to see 20 foot steel cage walls like the 1980's WWF matches.
 
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