This year, Marcus & Millichap turned 50 and the Calabasas-based national brokerage has never been stronger. Hessam Nadji began serving as chief executive in March 2016, a decade after joining the company as vice president of research. He has held various senior management roles, including chief marketing officer and head of the company’s specialty brokerage divisions. In 2013, Nadji played a leading role in the company’s initial public offering. Under his leadership, Marcus & Millichap has expanded its footprint through a series of strategic acquisitions including McGill Commercial in Canada; Pinnacle Financial Group; Mission Capital; and LMI Capital. Last year, Marcus & Millichap closed 1,943 transactions totaling $7.67 billion. Nadji spoke with the Business Journal about how his approach has led him to successfully navigate the company through the pandemic.
Question: What did you do before Marcus & Millichap?
Answer: Prior to Marcus & Millichap, I was with Grubb & Ellis for 11 years in the earliest stages of my career, but I had a very unique privilege to work with (Harold) “Hal” Ellis and the senior management team. Hal had seen a lot of my work as a research professional and promoted me to oversee research and technology for Grubb & Ellis, which at the time was the third largest full-service firm. So at I had a large responsibility at a very young stage of my career.
What did you learn at Grubb & Ellis?
I got to see firsthand what happens to a company that is too aggressive, takes too many risks and chances and can get overleveraged and get hurt. And that’s exactly what happened at Grubb & Ellis. I brought that knowledge and experience with me into the role of being CEO.
How have you applied that at Marcus & Millichap?
Certainly, we’ve found the right balance between growth and change and bringing about evolution without putting the company at too much risk. That ultimately is the defining job of the CEO – to balance risk and reward. There are ways we can grow faster and our incredibly powerful balance sheet today really puts us in an ideal position of being aggressive and having plenty of defensive capital, but also taking care of our shareholders.
How did you get hired at Marcus & Millichap?
My value proposition that I presented to George Marcus and Bill Millichap when they decided to hire me was to bring a research advisory component to the brand. Unlike the way that research had been thought of traditionally as a bunch of reports or seminars as an intellectual exercise, my goal was to integrate (information, market research and forecasting) and take a position on what we think is going to happen and share the sales component of the dialogue to a long-term relationship advisory interaction. They took a bet on me to bring that to Marcus & Millichap partly because they had commissioned McKinsey & Co. as a consulting firm to provide (insights) on their long-term growth strategy.
What was the result?
McKinsey came back with two conclusions: One, the brand had to be (less) a transactional brand and more of an advisory brand. That lined up very closely to what I wanted to do coming to Marcus & Millichap. And second, (to) cater toward the private investor. No one had really focused on the private investor market because it was very hard to penetrate. And my recommendation to Marcus & Millichap at the time when it was really a regional brokerage firm was that it could go national but will probably have to happen organically because you would really need the research advisory expansion to make that organic growth happen.
Why did the company go public in 2013?
I was chief strategy officer at the time and my position was to work with our then-CEO and the board on long-term strategy and looking at different ways that the company could grow. The IPO was certainly part of that and my role there was to work with the investment banking team that we had retained, to educate them and the public on the size of the market and the strength of the private investor niche that Marcus & Millichap dominated. Most participants in the business don’t realize that private investors trading from $1 million to $10 million price range account for 80 to 85 percent of transactions that occur in the U.S. year in and year out. And that’s the market that we dominate. It is not only a large market, it’s very fragmented. The top 10 brokerages including us even to this day have about a 25 percent share of transactions that occur (in that category); 75 percent of the market is not served by the top 10 brokers. It was these compelling opportunities that made Marcus & Millichap positioned very well to go public. It was my job to bring out these very important factors behind the company’s long-term growth.
How have you grown the company?
My first priority when given the opportunity to lead the company was to accelerate the growth and improve change management. When the company is coming up at the time on 45 years of history, there’s always opportunities to improve internal execution. We were ready for new leadership besides the CEO. I wanted to promote the most effective managers that were driving the company’s success and (add) outside talent to the team to bring in intellectual capital. This all manifested in a significant turnover of our regional managers and leadership teams. I promoted five division managers at the time to oversee our various offices.
What was the result?
We created a position of chief administrative officer Greg LaBerge. He had a business consulting background and we appointed him chief administrative officer to oversee technology, research marketing and administrative services. So all of our infrastructure is now coordinated and streamlined under one executive at the C-suite level, which was the first time the company had ever done that.
We brought in a new CFO Steve DeGennaro who had no real estate experience, but he brought that Silicon Valley technology orientation, which also includes mergers and acquisition experience. I brought in Mark Cortell as our chief legal officer, also with M&A experience, from the private equity world. We recruited Evan Denner as head of our capital markets and financing division who is a 30-year veteran in all aspects of lending, equity and the capital markets. That combination has brought about more positive change and real-time decision-making than ever before because we now have a deeper bench of expertise both in-house and from the outside to move faster on things like acquisitions. We acquired nine companies in the last three years, which became an important focus. … And we introduced more technology upgrades and infrastructure in the last three years than we did in the prior 10 years. The payoff was very clear when we were doing very well during the pandemic.
What do you enjoy about running the company?
The most rewarding part is knowing how different Marcus & Millichap really is. I’m very proud with the way that we have stayed focused to our values and to constantly forcing ourselves to reinvent and get better, and to be the chief ambassador of that to the world, internally and externally, is something that I really enjoy.
What’s the biggest challenge?
We want to do a lot more, a lot faster. Reality always reminds you that you need to set the right priority and we have to be very careful not to make mistakes because we’re very ambitious.
How does media coverage fit into your management style?
Our media coverage is dominant in the industry because the media likes our content. Whether it’s CNBC or Fox Business or MSNBC or Bloomberg, we really focused on creating the content that the business community and the real estate community sought. We became very good at it. We started doing webinars in 2008. So when the pandemic hit, the idea of doing webinars was nothing new for us. We just did more of them.
What do you enjoy outside of work?
My family and I live in Lake Sherwood, part of Westlake Village. We moved there six years ago from Northern California, where I had lived for more than 25 years. I have three kids, the youngest one is 20 years old and a sophomore at Boston College. … I enjoy time with family more than everything else. I’m a big car enthusiast. I share that with my youngest, who also loves cars. I was a huge Beatles fan growing up. I’m really into the music and the marketing genius of the Beatles.
Can you share a memorable experience from your career?
If I had to pick one, it would be when I got the call from George Marcus that he would like me to be the CEO of this phenomenal company. It was a life-defining moment and I’ll never forget it.