Scott Ramsey  00:02

Welcome, thanks for joining us. Thank you to our wonderful guests, Karen, Lori, and Jenn — dear friends and leaders about the marketplace.

Everyone’s talking volatility, everybody’s talking unprecedented times, healing from a 100-year event in a global pandemic, inflation (one of our words of the hour). And of course, everyone’s trying to figure out what’s happening with Fed policy and how that constrains capital markets and impacts your businesses. So, we thought it would be a great time to come together, talk to some leaders about the marketplace, and listen in and hear their best practices about how they’re leading their firms through these volatile times.

So just a couple of minutes of introductions. If we can go alphabetically, that’d be great. So Jenn, that’s you.

Jennifer Brouse  01:04

Great. Thank you, Scott. Really appreciate being here, and it’s a pleasure to be on this panel with Lori and Karen as well. I’m Jenn Brouse. I am the CFO for the GP/strategic capital business of Blue Owl Capital, formerly known as Dial. What Dial does is buy minority stakes in asset management firms. We sit shoulder-to-shoulder with the founders of these businesses. We are permanent capital structure. We also have a product that lends to asset managers — so, same asset, just a different part of the cap table. And we’ve since started a product that buys minority stakes in basketball teams. So that’s the Dial (now GP/strategic capital) division of Blue Owl. Blue Owl was formed in 2021. It was a merger of the Dial business with Owl Rock, a direct lending firm, to create what is Blue Owl, a solutions provider to the private marketplace. We’ve since started a third strategy within our real estate arm, and we’re two years in. We’re really proud of what we’ve done, and we look forward to what’s to come in the future.

Scott Ramsey  02:14

That’s fantastic. Thanks for that. Karen.

Karen Harmon  02:19

Thanks, Scott. I’m Karen Harmon. I oversee the accounting and reporting for Greystar’s North America investment management business. For those of you who are not familiar with Greystar, we are a global, vertically integrated real estate firm, offering expertise across investment, property management, and development and construction in the rental, housing, logistics, and life sciences sectors. So that’s a bit of a mouthful. But what’s really the most exciting for me about that introduction is that when I started with the firm nine years ago, it would not have included the words “global,” “life sciences” or the “logistics” sectors, nor would it have included a lot of the specific rental housing sectors like active-adult and single-family residential and student and credit. So the business has just had an incredible amount of growth and evolution since I’ve been here. And with that evolution, we’ve had to continually rethink our operations platform. So while I certainly don’t have all the answers, I can say that I’ve been there. And I’m really looking forward to the discussion today.

Scott Ramsey  03:41

Thanks, Karen. Appreciate you joining. Lori?

Lori Biancamano  03:45

Thanks, Scott. I’m Lori Biancamano, I am with BGO. I’m a managing partner and head of new product development in fund formation. BGO, also known as BentallGreenOak, is a combination of Green Oak and Bentall Kennedy, which merged in July of 2019. So similar to Karen, I’ve been through mergers, reorganizations and working to create efficiencies within our organization. I think we are very global business across 27 countries, give or take, with over 1,400 people. So we are managing efficiency on a real-time basis. And always striving to ensure that although we are global that our clients have a consistent experience within the BGO platform, because we do like to have that continuity that we can offer, the solutions in one country or in the next, and then be able to have one BGO brand. So happy to be with you, and happy to have the discussion with Jenn and Karen.

Scott Ramsey  04:47

Appreciate that Lori, thanks. And if you don’t mind, why don’t we keep the microphone with you… Broad strokes: What are some of the primary challenges that are right in the middle of your desk that you and your executive colleagues are solving for today — given the backdrop of this best-practices session?

Lori Biancamano  05:13

We’ve been in a continual growth challenge mode since I joined Green Oak, and continuing since our merger, I think this is the first of years where we’ve had a moment of what I’ll call a pause in both our capital-raising and our transaction activity. So what we as a firm have really been focused on is the efficiency. We’ve been able to grow top line and done very well over that in the past few years. And now it’s really tightening up that bottom line. And I think environments like this always cause you to do that, and there’s a need for it. So I do think we are better positioning ourselves to come out of this when transactions are back, when we can deploy our capital very efficiently. And we’re creating infrastructure and finance and support for the business as it continues to grow in that next evolution.

Scott Ramsey  06:00

As we’ve gotten to know each other, largely through the pandemic and post-pandemic period, I have seen very intentional leadership by the executive management of BGO. Talk to me a little about how you’re dealing with your rank and file. What are you looking for in terms of the mix of in-person contact and virtual workflows, as you’re looking to tighten up that bottom line?

Lori Biancamano  06:34

Being a real estate company, we are very much an in-the-office culture. And probably since summer of 2020, that’s been very much a focus of management. We understand that not everyone wants to go back to pre-pandemic levels, but we do think it’s important. So we are encouraging teams to be in the office — but not just being in the office: being in the office when their team is in the office. What we want is the interaction amongst the teams: people coming in on days when it’s just themselves in the office does not create what we’re looking for. And as you know, we are very much an in-person manager with our outsourced providers, I encourage the team to be seeing people — we probably did it four times a year pre-pandemic, hopefully we’re back to two times a year. I think that creates the establishment of a partnership. We view you as an outsource to ourselves such that we want to be interacting in the same dynamic way with you as we interact with our other clients: we’re on the road seeing other investors, we’re hosting in-person meetings. So we very much are moving back to the in-person culture — with some exceptions, I think we’ll always have some exceptions for those that understand that maybe three days a week is working. But I would say we, in particular, are really focused on being in the office and being back with our partners such as yourself.

Scott Ramsey  07:57

Ignoring the irony that we’re on Zoom at the moment, we really enjoy intentionally being together as well. That’s fantastic. Thanks for that.

Karen, similar thought: your organization, your operation for Greystar: What’s the primary consideration? How are you using this time in the market? What are the go-forward strategies for you and the rest of the executive team?

Karen Harmon  08:34

Yeah, I would say, while we have certainly seen a slowdown in transactions, as everyone tries to understand if or when we will be in a recession, and what that recession will look like, this has actually presented quite an opportunity for the finance teams — particularly my forecasting and planning teams — to work hand in hand with the business leaders to run scenario analysis, and continually re-forecast how changes or potential changes in the market will impact our business. The challenge that we have is that we need to be able to do that quickly. And so that we’re giving timely information over to our business leaders to be proactive and, therefore, capable of making the decisions today that preserve or expand our options for tomorrow.

Scott Ramsey  09:31

So how are you encouraging your business leaders — both front office, middle office, back office — to make room and lead through what sounds like some technology change. And how can we make sure that’s not just planning, and make sure that it tactically is enabling the business? I think we’ve all experienced that: Technology change or digitalization can often be a panacea, right? It sounds great. Great in a boardroom, on a whiteboard. But how is it helping to tighten up that bottom line, as Lori mentioned?

Karen Harmon  10:20

I think there’s so many great technology products out there, that it’s been really tempting to take a tech-first approach to solving any of these operational issues. And you see that mindset of, “Well, if we just had the right software products, our lives would be so much easier.” But as a lot of us have probably experienced, tech can’t solve a broken or just an inconsistent process. And what we’ve discovered is that if we spend time really mapping out our processes and our workflows before going to the software vendor, we can find some real low-hanging fruit of improvements and enhancements that will help us in the way we do things today, as well as better inform us for how a tech solution can fit into that.

Now, specifically, within the investment management business, that can be a really nuanced business. Our fund structures continue to evolve to meet investor needs, and the reporting that investors require also continues to evolve. And so you hear a lot as well, “This is really different, or this is really complicated.” And to an extent, that’s true. But it’s important not to wrap up the complexities and nuances with the things that are truly portfolio-agnostic — of which there are plenty. And so we need to set a high bar for those nuances, for things that are really limited to what adds value to our investors or to our business. And if we can pinpoint those processes, that can be consistent and scalable, it’ll be much easier to build a technology platform without a high degree of customization — there will be some customization, but without a high degree of customization. And that’s really important because as you alluded to, Scott, about technology implementations, even the simplest one, can take a really long time, and they can pull our team members away from their day jobs.

And so if you’re trying to revolve the technology around a high degree of customization, what we see is one of two things happening: One, the implementation just fails, or two: it’s going to start to feel like one of those cathedrals that take 100 years to build. And we’re in a world where in the past few years, we’ve seen a global pandemic, in the past few years, we’ve seen a banking crisis. So we need to think about those solutions now that’ll be able to be executed quickly — whether that’s a process improvement, or a process improvement leading to a technology solution that will better prepare us for whatever it is that’s coming next.

Scott Ramsey  13:05

That’s such a great metaphor, I think. Imagine if the business plan you laid out and intended to be followed had to be completed by somebody else because you’re now retired, right? And often — it’s a bit of an exaggeration, but — that’s exactly what happens. So really wise advice, know your business, don’t hire somebody to come solve it for you, especially when they’re selling you technology.

Jenn, what is happening in the larger market that is driving the demands that we’ve been talking about today? What are those levers around liquidity, around the assets? What’s driving all of this churn out there?

Jennifer Brouse  14:06

Well, Scott, I think it’s safe to say that there’s a lot happening in the macro: Rates are changing and they’re continuing to change. The interplay with inflation. The regional banking crisis, and just how bank appetite and balance sheets are tightening across the board, even in the larger space. The looming recession — I love the phrase, “recession obsession” — and uncertainty in the political world. All of these dynamics impact how we operate our funds and how we run our business. And we’re used to that, right? Our industry is always changing. It’s not something that we aren’t used to — and quite frankly, we like it. It creates opportunity.

But it does require us to be on all the time. Karen mentioned it, Lori mentioned it: data is huge. It’s a buzzword these days, but the macro environment that we are living today is emphasizing the importance of high-quality data so that we can do our jobs effectively. We need to make sure that we can do the scenario planning that Karen mentioned, that we have the information, that we know our business, so that we can be reactive, we can be responsive, and we can think about what has happened, what’s happening now, and what will happen. And we can play out different sorts of scenarios. I mean, if you take the interest-rate environment that we’re in, and everything going on with the banks, these are really interesting times, and we’re still in the early innings. There’s a lot to be seen at the regional bank level, and just how fund finance changes as a result. I think we are in an interesting spot to be very helpful in helping make the right decisions as we look to the future.

Scott Ramsey  15:48

Yeah, big moving tectonic shifts. Speaking of shifting environment, what are you looking for from your partners, and specifically, bank partners?

Jennifer Brouse  16:11

So I would say, partnership is key, right? It’s taking the ride with us, it’s leaning in, it’s knowing we can count on our relationship, that these are long-term strategic partnerships. When I think about our service providers and how we actually execute on our business effectively, I think about quality, reliability, expertise, all of that. And I think about best-in-class processes and controls and technology, and thinking about the future and growth. But some of those are baseline expectations that every major player in this space is expected to deliver. And I think the real best differentiator comes in terms of just the partnership, and really being there through these challenging times and along for the ride.

Scott Ramsey  17:07

We agree. Well, I think that is taking us most of the way through our time today. We’ve set aside a few minutes at the end here to take some inquiry from the field. And I have to say that this first question that came through. I think we might all get some nasty emails as follow-ups to this or perhaps LinkedIn commentary if we didn’t address it: AI.

I think we are AI-obsessed, we are A-scared, we are AI-excited about what this could mean to our business and personal lives. How are you managing? I think this is something that’s interesting. Obviously, there’s tremendous amounts of upside and capital moving, from an investment perspective. From an operations perspective, everybody wants to know: Is software going to take my job or make my company so much more efficient or effective? How are you leading through at this your respective firms? I’ll leave that open for all to address.

Lori Biancamano  18:23

I can start with that. I think we are all of those things: excited about how AI can be used, and to your point, also cautious and making sure we understand we use it the right way. We have from the top down established a steering committee that is guiding that discussion. So we don’t have one-off usages that perhaps are not — security is obviously an utmost concern with respect to information that’s going outside of the firm. So we’ve intentionally planned to put that from a top-down initiative. And what we’ve tried to do in our group of pilot programs is really understand how AI can augment the position. We don’t view it as replacing it. but it’s augmenting and creating efficiencies that truly then can lead ultimately to all of what we’ve been talking about today. Bottom line: growth, because it’s freeing individuals up to more effectively do their job, because they learn from AI, as opposed to replacing, and it’s been well received with our investors as well. We have a giant data science team here at BGO. And they spend a lot of time on, and have been mining data for a long time. And this is just further augmenting that, even in our investment strategies and how we look at where and when we should be investing in certain locations.

Karen Harmon  19:46

I’ll echo what Lori said, mostly. We have a steering committee established at Greystar to understand what our possibilities are. I think purely from an operations standpoint, we think about augmenting our team-member experience and potentially having AI as a tool to perform some of the more manual processes that they have to go through. I’ll probably repeat what I said before: you have to have a good, standard process. AI is going to do what you tell it to do within the boundaries that you set. And so there’s work to be done sometimes to just get ready for those implementations.

Scott Ramsey  20:32

Jenn, any thoughts, from your perspective?

Jennifer Brouse  20:41

I agree: more of the same. I think it is an enhancement, it’s complementary. It’s not going to replace certain things that you’re just going to need a body and a brain to do properly. But it will absolutely make the experience better for everybody.

Scott Ramsey  20:59

That’s great. ChatGPT suggests that until AI has intuition and emotion, that our employees are safe… but thanks for using AI.

I think perhaps to build on what we’re doing here, one of the other questions that came in was about best practices and resources, forums or events in your wake, and perhaps ahead of you. What have you found helpful in exchanging best practices, exchanging notes, information sharing with peers and similarly minded professionals?

Lori Biancamano  21:49

Scott, what we’ve tried — again, back being in person, I think a lot of going back to conferences, going back to industry events — is something that continues to further that conversation. We all collectively, I’m sure on this call and elsewhere have our peer network and those that “We know you’ve done this, what are the pitfalls and things we can share with?” but I think it’s continuing just outreach and understanding that we are all going through very similar things in our role. We’re all trying to create efficiencies in the wake of all of the outside and external pressures that are coming to each of our firms in this environment. So I think it really is just finding like-minded peers so we can compare ourselves to various groups in the industry. Those are the groups that I look to, to seek input from — and in some ways, alternatives as well, because not all of us have the same thinking. And sometimes a new thought is actually an initiative that we can start to think about creating efficiencies for us.

Jennifer Brouse  22:52

And just to add to that — I’m sure Lori and Karen agree with this — but we look to our partners, it’s our service providers, it’s our bankers, it’s everybody that helps us do what we do. You guys have an interesting perspective on the market and how others are doing things. And we often look to you as an extension of our team to make sure that we’re taking all that in.

Karen Harmon  23:19

Yeah, I think it’s really critical to focus on building out that internal network — whether that be within your organization, from prior roles with partners like yourself, Scott, or people that you meet along the way at conferences and the like. Normally, when we’re going through a question or an issue, it’s time-sensitive, and picking up the phone and really getting a pretty candid response over the phone, is extremely helpful. For those that are attending conferences, I think my piece of advice would be: To the extent that you have an opportunity to get more directly involved with that organization, either through some kind of a task force, or through participating on a panel, the networking that comes out of that tends to be much more impactful than just showing up at the conference and attending the happy hours. I know that everybody’s really busy and that can be difficult. But I think to the extent that you can take advantage of those opportunities every now and then it’ll help along the way.

Scott Ramsey  24:34

Appreciate all of that, agree. All of you can attest that over the tenure of our relationship, I’ve asked for quite a lot of advice, coaching and insight. So I appreciate that partnership. And thank you so much for being gracious with your time today. We are right at our time limit so Karen, Lori, Jenn, thank you so much for joining us, I appreciate your sharing. And, of course, to those who attended, thank you for joining the conversation. There are quite a few other questions that have come through and we’ll address those in prose shortly following the webinar. Thanks for your time. We’ll talk to you soon.