Business is a family affair

Last updated on May 13th, 2019 at 02:28 pm

Zilber Ltd. Strategies Executed
– Hire employees who have strong commitments to their families.
– Analyze markets for revenue potential years before that potential is realized.
– Prepare for the down cycles of a business by maximizing gains "when the sun shines."
As an executive in the cyclical real estate industry, Joseph Zilber has survived decades of ups and downs.
Zilber, who founded Towne Realty Inc. in Milwaukee in 1949, has persevered through the post-World War II housing boom, the Cold War, the runaway inflation of the 1960s, the budget deficits, unemployment and high interest rates of the 1980s, the technology boom of the 1990s and whatever it is we’re going through now.
Along the way, Towne Realty, now operated by Zilber Ltd., has grown from a business that started by building one single-family home in Milwaukee to a residential and commercial real estate empire in the Sunbelt.
The company has more than 2,000 employees and owns "hundreds of millions" of dollars in real estate throughout Nevada, Arizona, California, Florida and Hawaii.
Zilber, who shows no signs of slowing down at age 86 and is still "hands-on" as the chairman of his business, still calls Milwaukee his home, even though he spends most of the winter months in the warmer climes of Florida and Hawaii. He and his wife, Vera, who recently passed away, have played significant philanthropic roles in the community.
Towne, which at one time owned 10% of the real estate in downtown Milwaukee, is renewing its commitment to its home city and has plans for some major development projects. Zilber will meet with Milwaukee Mayor Tom Barrett to discuss those plans this fall.
During a recent visit back to Milwaukee, Zilber was interviewed by Small Business Times executive editor Steve Jagler about the company’s strategies and methods of business execution. The following are excerpts from that interview:
SBT: What’s the secret to success in the real estate industry?
Zilber: "Do you realize that so much of it has to do with the economy and how the economy is working at the time? We all know that there are ups and downs. If you can get over the downs, you take care of the ups. To do that, you have to have a staff that is very loyal and very participant. You have to make sure that it’s people that you want to have in your legacy and how they will react to the future, because we are here only for a certain period of time."
SBT: You’ve lived through so many economic cycles. Are there any core principles that have carried you through these many decades?
Zilber: "My thoughts have always been you make hay when the sun shines, and you make sure you don’t dissipate it all when things are bad. Because things are not always going to be rosy, and your decisions have to be made on that basis. We today have to prepare, so if the next three years are good years, we have to have the materials to work with. You don’t know if the next three years are going to be very good or not."
SBT: Patience must be a real virtue in the real estate industry. You don’t always get a big immediate turnaround on investment. You’ve got to be prepared to hold onto an asset and let its value grow over time.
Zilber: "Funny you should ask. At times, it is. You’ve got to take it all into account. You’ve got to see where you’re going and what’s happening. But most of it depends on the people that you have and their loyalties, and your loyalties to them. Our company has been a long-term company."
SBT: You mentioned your people. In the book "Execution: The Discipline of Getting Things Done," the authors write about how important it is to hire the right people, reward the "doers" and keep good employees who are executing the company’s mission. So many of your employees have stayed here so long. What have you gone by when you’ve interviewed people for employment at your company? Do you go by gut instinct, that, "Yes, this is our guy?"
Zilber: "Most of the people we have, we have taken from other companies that have worked with us."
SBT: So you know them?
Zilber: "We know the people that we put on, and we know the way we think they’re going to go. And we know how they think, because we’ve worked with them for some time, or they came up through the ranks."
SBT: Are there any qualities you look for when you’re interviewing a candidate?
Zilber: "Yeah, mainly, I look at family. I mainly look at their family and how they react to their family. Ours is a long-term company, and we don’t have people who come and go. Once they’re here, it’s their home. It’s their family. We’re their family. All of us are family. We hope that they’re treated that way."
SBT: So, you think you can tell a lot about a person’s professional qualities by looking at how they treat and interact with their family?
Zilber: "Yes, I do. I think that’s very important. And how they interact with the community. We really don’t want any flash-in-the-pan guys. The older I get, I have not changed in that thinking. And we still have bets around that I’ll still be around for a while."
SBT: A corporate culture transcends from and through the CEO. How would you describe your company’s corporate culture?
Zilber: "Well, I look at it as many businesses that we operate here in different areas of the country, and every area is very different than other areas. But you work hard, and you will be treated properly. I think that’s part of it, that everybody feels that they are treated very fairly and they have all the benefits of what we can give them – all the 401k’s, the bonuses, the deferred comps, health care benefits and everything else they can have for themselves.
"I like the family picnics that we have had for the last 40 years or so. Every year, it gets bigger and bigger, and there’s more kids around. That’s what it’s all about. We have a lot of the children (of employees) who work for us. That was not by choice. It was by the fact that they could do the job."
SBT: Obviously, you foresaw the population growth in the Sunbelt and migration West 50 years ago. In the real estate business, the standard clichZ is location, location, location. Is that true, or is it overstated?
Zilber: "It happens to be right. Location is everything. But what location is today may not be tomorrow."
SBT: In other words, a preferable location today might not be so preferable 10 years from now?
Zilber: "It might not be valuable. I can tell you that in Phoenix, Ariz., the growth has been so tremendous that you won’t recognize it from four or five years ago. They went through Scottsdale, and now we’re out on the way west part. You’d never believed it went that far into the desert. Today is a real estate man’s dream, actually."
SBT: How so?
Zilber: "The demand is very great, and of course, you’ve got to know your costs and work on your costs to make sure that there’s a differential between the sales price and the costs. Today, there is demand for real estate, and the interest rates are low, and people can buy."
SBT: All of the indications are that interest rates are going to rise. Are you doing anything to protect yourself?
Zilber: "Well, you try to get forward commitments. Lock in forward commitments. If you can do that at a rate which will not hurt you, you do it. Otherwise, you take the gamble that the country is not going to go backwards. There will always be a need for new housing, because housing is something that does deteriorate. With generations and generations, there are new needs."
SBT: As you look back, you started by selling one single-family home …
Zilber: I still remember it (laughs).
SBT: Look where this company is now. Do you ever scratch your head and say to yourself, "How the heck did we do that?" Or is it too much to ponder?
Zilber: "That’s a good question. I never look back. Never look back. Always try to look forward and see what it is in the next five years or 10 years. We’ve gone into businesses the last five years that we have not really been in, like commercial developments, where we hold the properties for a long term."
SBT: Phoenix, Las Vegas, California, Florida and Hawaii were all such significant growth markets for you. They’ve been built up. Are there other markets that, looking ahead, Mr. Zilber, you say, "That’s where the next boom is going to take place. That’s where we’ve got to be?"
Zilber: "Yes. Look at a place like New Mexico."
SBT: Are you doing anything there yet?
Zilber: "No, but that’s in the future. You must understand. You can only grow so much. Your growth can only be as much as you can handle. There comes a time when you cannot handle more growth with the people that you have. So, you do not grow at that time. You just take care of what you’ve got. Right now, we’re oversold with properties, so we’ve got to produce those properties. Raw materials (prices) are hurting us."
SBT: What about the Milwaukee market?
Zilber: "We’ve started back to be a significant player in this market, and we will be a significant player in this market. This is our home. Milwaukee is our home, and we do expect, everything being equal, we will become significant players in the Milwaukee market in everything."
SBT: Would it be safe to presume that in the next few years, your company will have some ambitious commercial development and redevelopment in Milwaukee?
Zilber: "Yes. That is a plan that we hope to be successful in. Milwaukee, to me, is still my home. I have done so many things in Milwaukee, that I would like to keep doing as much as I can. There were times, you know, that we built all the high-rise buildings along Prospect Avenue, and we owned so much of downtown. But times change. There’s an evolution in everything."
SBT: With so many manufacturing jobs being outsourced overseas, there are so many vacant industrial sites in Milwaukee. When you meet with Mayor Barrett in September, will you be involved in coming up with some creative reuses of vacant factory and warehouse sites?
Zilber: "We hope to be involved with that. For example, in Elgin, Ill., we’ve got maybe 20 office buildings where we took a whole area and redid it."
SBT: One last question, right out of leftfield, Mr. Zilber. Have you been approached about playing an ownership role with the Milwaukee Brewers?
Zilber: "The answer is … not for 20 years. No. Now, the Bucks, I pred-near had. Herb Kohl bought the Bucks, and he said, ‘Joe, you want half of it?’ And I said, ‘No, not for what you paid.’ Because I had a deal with Mayor (Henry) Maier at the time to buy the Bucks. He (Maier) called me in Hawaii and said, ‘Joe, you’ve got to help us out here.’ I said, ‘I’ll be there Monday.’ And by Monday, Herb Kohl had bought it. Paid $18 million for it, and my price was $14 million. Look how dumb we are sometimes. When he asked me to go half-and-half, I said, ‘No, Herb. You paid too much.’ (Laughs) Today, it’s worth $175 million or something like that.
"As for the Brewers, would I? No."
Stable at the top
By any measure, the combined tenure of the senior management team at Zilber Ltd., Milwaukee, is remarkable.
Twenty-two of the real estate company’s top managers are married and have never been divorced. Their marriages have lasted an average of 15 years. They average at least 17 years of service with the firm.
Their devotion to their families is no accident. Joseph Zilber, who founded the company and remains its chairman at age 86, says the No. 1 consideration he gives to job candidates is evaluating how devoted they are to their families.
The management team oversees Zilber’s companies, which include Towne Realty Inc., Towne Investments and The Towne Group.
The tenured personnel of the company and their lengths of service at the firm include:
Joseph Zilber Founder & chairman of the board 55 years
Jerry Stein Chief executive officer 47 years
Art Wigchers Chief operating officer of real estate 28 years
Jim Janz Chief operating officer of finance & administration 35 years
Don Mantz Director of design & construction 29 years
Jim Borris Director of The Towne Group 18 years
John Kersey Director of Towne Investments 25 years
Jack Tsui Chairman of Towne Realty Hawaii 1 year*
Bob Braun Chief financial officer 23 years
Sue Laabs Corporate controller 17 years
Ann Kramer-Haag Director of human resources 26 years
Mike Mervis Assistant to the chairman 30 years
Jim Young General counsel 31 years
Steve Chevalier Director of fiscal planning 26 years
* Jack Tsui was the company’s banker for 35 years.
May 28, 2004 Small Business Times, Milwaukee, WI

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