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In this episode of Deconstructed, we sit down with Dennis Grzeskowiak of Bellwether Asset Management. Bellwether is an Inc 5000 winner two years in a row. 

Bellwether started in 2013 with three people as an independently-owned company. They started from day zero with a long-term contract with Oaktree Capital to help them build an asset management platform that answered three questions. 

  1. What are they on? 
  2. How’s it performing? 
  3. How do we think it’s going to perform? 

As a result of those three questions, they’ve built processes, procedures, and deliverables. They’ve also grown the company from three employees to soon-to-be over 80 employees. 

Dennis describes it as an adventure of finding the highest and best use of asset management tools—and working with great people.

Why Do Companies Need Services Like Bellwether?

Bellwether provides key components of asset management when there’s pressure or issues in the marketplace. First, they take into consideration a client’s business plan. Then they proactively address concerns emerging in the market. And finally, they create plans to move forward and get things back on track. 

Bellwether focuses on giving clients a proactive set of asset management tools, and their goal is to give clients what they need to manage their portfolios and execute their investment objectives. They want clients to have insight into their portfolios and a scalable platform.

Building Internal vs. Leveraging External Solutions

Building any process or infrastructure takes a lot of time and investment. So starting with something ready out of the box makes sense for most companies. 

Bellwether’s goal is to collaborate with clients so the client can maximize what they do best. Tasks like taking on the day-to-day oversight of investments give clients a continual feedback loop to make better acquisitions. 

They give clients real-time data about what’s going on in the markets where they invest. They also give them the tools from the most granular level at the asset, all the way up to the fund level to dictate fund level strategy.

Making the Complex Simple = An Advantage

Companies like Lone Star with Hudson Advisors and Deutsche Bank with Hanover Street are similar solutions in the marketplace. 

Bellwether’s competitive advantage is based on executing, refining, and evolving over the past eight years. They tell their clients how they operate and build infrastructure based on experience and exposure in debt and equity investments of all property types in commercial real estate and corporate advisory. Because they’ve seen the most complex situations and can boil it down to the most straightforward outputs, it gives them a competitive advantage over even larger competitors in the space. 

How Did 2020 Affect the Industry?

“Pressure reveals cracks, and also reveals where you’re strongest” was Dennis’ big saying for 2020. 

In distressed markets, people want to understand what’s impacting their portfolio and their assets. 

However, people found out that trying to understand what that impact is while the distress is happening is too late. So 2020 caused people to emphasize asset management, data management, and processes to understand their portfolios better—and to know what’s happening from an operations perspective currently, not just in the future. 

This new emphasis led to 2020 being one of Bellwether’s busiest years as a company. This also led to explosive growth, including hiring about 30 people.

Are Clients Making Long-Term Changes? Or Is This a Short-Term Reaction?

Dennis believes the change is long-term. 

They’ve seen more embracing of technology and systems to find scalable solutions now than ever. He believes it was both the impact of the pandemic and just the natural movement of the evolution of the market and technology.  

The distress of the past year made people more open to leveraging technology and systems to be better investment managers, acquisitions managers, and asset managers. Dennis believes that trend is here to stay, and that there is a lot more room for growth.

Discerning Technology Solutions

When considering technology, Dennis says what they need to see is the cost-benefit analysis. They also try to avoid being in beta test groups to avoid the growing pains of trying to establish a system. 

Working with over 30,000 multifamily units across the United States as a group, they’ve been at the forefront of prop tech innovation and adaptation. 

Bellwether doesn’t view itself as a tech company. Instead, they find the best applications and technologies and innovate the process of using applications versus developing them independently.

Technology Going Forward

Dennis says the biggest technology concern is not how the technology is applied or used. It’s more about the output being digestible and usable.

They’ve found plenty of software that works well on the backend but doesn’t produce a digestible output. But, unfortunately, they’ve also found tech products that provide digestible results but don’t work well on the backend. So they’re constantly hunting for a combination of the two. They look for ways to piece it together through different applications, and they keep an eye out for innovations that would have it all-in-one. 

The other significant consideration is getting everyone to adopt the technology and use it. Low user engagement makes it much harder for any tech solution to be helpful. 

What does the commercial real estate industry need more of from new talent entering the industry?

Bellwether has a philosophy of growing from the bottom up. So over the years, they’ve refined a solid two-year training program. In doing so, they’ve found it’s essential to embrace doing the little things to gain big responsibility. 

Dennis’s advice to young analysts is to understand how investment deals relate to the market, and how it’s performing relative to how you thought it would perform. 

He says to get a general understanding based on data. Without it, you’re just shooting from the hip and often don’t have an informed decision or opinion on something. 

Be somebody willing to understand from the bottom up how real estate works. Be open and receptive to the training and instruction on how to think about asset management. That is where those new to the industry will succeed, according to Dennis. 

Don’t get too far ahead of yourself and start running before figuring out how to walk.
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