I recently interviewed Man Group CEO Robyn Grew on my podcast, Thirty Minute Mentors. Here is a transcript of our interview:
Adam: Our guest today is the leader of the largest operator of self-storage properties in America. Joe Margolis is the CEO of Extra Space Storage, an S&P 500 company with more than 4,000 sites, 8,000 employees and 2.4 million customers. Joe, thank you for joining us.
Joe: Thank you for having me. Pleasure to be here.
Adam: You grew up in Woodbridge, Connecticut. You played defensive end at Harvard. You wound up going to law school and started your career as a lawyer before entering the world of real estate. Can you take listeners back to your early days? What early experiences and lessons shaped your worldview and shaped the trajectory of your success?
Joe: Well, certainly playing football was a big part of who I became. And when you think about football and the amount of work you have to put in the preseason and the off-season, the amount of practice for the amount of time you actually spend playing the game. It’s a lot of hard work and preparation for just a little bit of reward at the end. And I think that’s a really strong lesson for life and for business. Also in football, you constantly have to overcome setbacks. The other team gets the first down, you gotta pick yourself up off the ground and try to stop them on the next series. And then lastly, teamwork is so fundamental to football and other sports. And I think fundamental to business and life in a lot of respects. Certainly, playing football was crucial to who I became. And I think about my father and the example he set. He was a very hardworking man of few words, led by example. And he always used to say to me, you know, Joe, you want to be the hardest worker in the room. You never want to give up and you want to do the right thing. When you think about it, almost all life can be encompassed in those three simple pieces of advice.
Adam: I love it. A lot of key themes there we’ll dive into over the course of this conversation. The importance of putting in the work. Persistence, resilience, there are going to be setbacks, being able to overcome them. You mentioned the importance of teamwork, an early lesson that you learn by virtue of playing sports. And lastly, doing the right things, all great lessons.
Joe: I think perseverance, as you said, is really important in all accomplishments. Nothing ever comes easy. There’s always ups and downs and setbacks. I think it’s really important to be willing to say, I need help, or I don’t know, or you explain that to me, but I still don’t understand it. Can you give me some help? And that’s how you learn. And you can never stop learning. And that’s the only way to get better. So, you know, if I could give folks a couple pieces of advice, those would be them.
Adam: I love that. And the importance of saying, I don’t know, ties directly into the power of humility. One of the most important characteristics among the most successful leaders, an underrated quality among the most successful leaders.
Joe: Now, I agree. I think that’s very true.
Adam: Are there moments in your career that you look back on that were game-changing moments that you look back on and say, these experiences really helped me get to where I am today?
Joe: One that really changed the trajectory of my life was in 1998. I was working with Prudential, now Prudential Global Investment Management, their real estate private equity funds. My job was to find real estate companies to invest in. I was in Los Angeles and got a call from a woman I knew, Diane Olmsted, who said, Joe, your assistant tells me you’re in Los Angeles. Do you have time to meet this guy, Ken Woolley? And I said, sure, who’s Ken Woolley? Well, he has 12 self-storage properties. And I said, no way, not institutional, no exit, can’t leverage, dirty property type. She said, I know, I know, just spend an hour and talk to him. Well, I ended up spending about four hours with him. Went to the first self-storage property I ever went to and took a big chance investing institutional money in, at that time, non-institutional asset class. Prudential made a $150 million investment of growth capital and extra space, allowing it to get big enough to go public. I ended up being on the board after it went public and then getting this job. So you never know who you’re going to meet, who’s going to teach you something or change your career or give you an opportunity. And I try to tell my kids, meet everyone you can and talk to everyone because you can learn from all of them. You never know how it’s going to affect your life.
Adam: What a great lesson. Take the meeting. You never know who that person is that is going to change your career, that’s going to change your life. You don’t know when that moment is going to happen and it’s only going to happen if you’re open to allowing it to happen. Absolutely. You made reference to setbacks that you encountered that you were able to overcome. What were some of the failures, setbacks, obstacles that you encountered along the way that you were able to overcome? And what are your best tips for anyone listening on how to navigate the failures, setbacks, and challenges that they face in their lives and in their careers?
Joe: When I left Prudential in 2004 with two really great guys from Prudential, we started our own investment management shop and we raised some money and we’re investing in real estate. And we were pretty far up on the risk spectrum. And that whole business blew up in 2009 and we lost some of our investors’ money, which is really painful. Never forget doing that. Hard to do. And I think we had some partnerships, not with the right people, not with people who have the same interests and goals as we did. And it just takes you back to your success can largely be attributed to who you choose to affiliate yourself with, who your team is and their values and their interests. That was a painful lesson and one that took a lot of years to work through.
Adam: Who do you try to surround yourself with? And what are the most important qualities for anyone to look for as they’re trying to figure out who to surround themselves with?
Joe: We have to start with integrity. You want to be with people who are always going to do the right thing, even if no one else is looking, and that you can trust, and that will put their trust in you. And I think without that, nothing else matters. But once you get that, you want people who are hard workers or driven and who are willing to make mistakes and willing to let others make mistakes and willing to share the credit and try to have the other guy win and build them up. And if you have those things, you can teach a lot of the technical skills and the technical knowledge that’s necessary. But those are the qualities of the people who will help the team get to the top.
Adam: You’ve made reference a couple times to the importance of integrity, doing the right thing, an early lesson that your dad shared with you and clearly a guiding principle in how you lead and in what you look for as a leader. How do you define integrity and how do you figure out whether or not the person that you’re surrounding yourself with is a person of integrity?
Joe: I think the second part isn’t as easy as the first part. To me, integrity is someone who is true to themselves, true to their values, and will make the right decision, do the right thing when someone’s looking or when someone’s not looking. Long term, being honest, being true to your word, following through, admitting mistakes, all those things pay off in the long term. And it’s hard. Lots of people can come in for an interview and appear to be people of integrity and not be. But when you deal with a lot of people, the truth kind of surfaces fairly quickly.
Adam: Was there a moment in your career when your integrity was challenged, an ethical challenge that you look back on that you had to really wrestle with? And if so, how did you handle it?
Joe: So that private equity fund that I mentioned earlier that we started, we had one limited partner who challenged us that we made a decision that was not in the best interest of the partners, but in the interest of ourselves. It was absolutely not true, but it was very difficult to prove a negative and we had to spend a lot of time. Luckily, myself and my partners had built up reputations with our other investors that didn’t really sign on for that theory. And we worked through it fairly quickly. It’s tough when someone challenges what you feel is part of your core being, being honest and doing the right thing.
Joe: That’s a difficult thing to go through.
Adam: integrity, humility. At the end of the day, we’re really talking about a lot of the core principles of the very best leaders. What can anyone do to become a better leader?
Joe: I think the best leaders first lead by example.
Joe: You need to demonstrate by your actions that you’re willing to do everything you’re asking other people to do. The best leaders are teachers and they allow mistakes. If you beat people up, when they make a mistake, they’re going to be less likely to be willing to go out on a limb and make decisions. And you want people to make decisions and not have to get to 100% fact gathering before you make a decision. So you have to allow mistakes and let people learn from them. And I think great leaders share credit and reward with people. And that’s a good motivational tool. There’s a quote by Dwight D. Eisenhower that I love. That says leadership is the art of getting other people to do something you want to do because they want to do it. As CEO, I have dictatorial power, right? I can tell people to do whatever I want them to do and force them to do it. That’s my leadership style. They’re not going to put in maximum effort and they’re not going to keep going when things get hard and they’re not going to succeed. but if you can get them to do what needs to be done because they understand why it needs to be done and they want to do it, you’re going to get better effort and better results.
Adam: I love that quote. It’s one of my favorite quotes as well. And it really speaks to the importance of even if you have the authority to lead, not leaning on your authority as a leader. And most people in the workplace don’t have the authority to get other people to do what they want them to do. But even if you do have that authority, your effectiveness as a leader doesn’t lie in your authority, it lies in your ability to compel the person who you are ultimately leading, influencing, persuading to get to a place where they’re doing what you want them to do because, as you put it, they ultimately want to do it. Absolutely. How, as a leader, can you make that happen?
Joe: I think a lot of it is one in the way you treat people. If you treat people with respect and as peers, they’re more likely to be on the team. And then secondly, people need to understand the why behind what they’re doing. If you just tell people this is what you need to do, they’re less likely to be passionate about it. unless they understand this is how this fits into the organization’s goals. This is the impact it could have. This is why it’s important. And then I think you need to share success and credit. Everybody likes to be patted on the back. Everyone likes to get a few extra dollars if they’ve done a good job. It’s a good way to motivate people.
Adam: A big part of Extra Space Storage’s success has been your ability to create a really successful culture. How and what are your best tips for all leaders on how to build winning cultures?
Joe: I didn’t create this culture. I wish I could take credit for it. This culture was created by the founder and early folks here. And when I became CEO, one of my goals was to try to maintain the culture. When we were 12 stores, the CEO knew every store manager and what their dog’s name was and what they liked on their pizza, and they’d had several meals together and had that personal relationship. With 8,000 employees, I don’t even know all our teammates now, much less have that personal relationship. So how do you maintain those kinds of small values and relationships where everyone is treated with the same amount of respect? Everyone has a voice at the table. Everyone has a career opportunity when you’re a larger company with a lot of layers of bureaucracy. And one way we do that is we make sure it’s not my job, that it’s everyone’s job to be a guardian of our culture. And people are encouraged when we’re talking about making whatever decision to say, is this consistent with our values? How does this affect our culture? People are encouraged and rewarded for raising their hand and saying, I think what we’re about to do is contrary to the type of company we want to be. And we spend a lot of time talking to people. I spent an hour this morning with all of the store managers in Utah, just talking to them and answering questions. And a lot of store managers or entry-level employees at companies don’t get a chance to talk to the CEO. And I think that’s wrong.
Adam: Drew, you shared a lot of great advice there and really just to zero in on a couple of points that you shared. Number one, as a leader, you can’t do everything. You can’t control everything. In fact, you can’t control most things. As you mentioned, when you have a 12-person team, it’s a lot easier to directly influence and impact everyone in your organization, but when you have 8,000 plus people who you’re leading, you just simply can’t. So it ultimately comes down to surrounding yourself with great people and empowering them. As a leader, one of your most important jobs is building other great leaders. Great leaders create great leaders. Second thing that I love that you shared is with all of that said, you have to lead by example. You have to be there. You have to be present. I love the example that you shared today, spending an hour with your store managers, being there on the ground, being present. There’s no substitute for that.
Joe: I agree 100%.
Adam: You also mentioned that you’re not responsible for the culture and that you weren’t at Extra Space Storage at the very beginning, but you’ve been a part of the company from pretty early on and you’ve been a key driver of Extra Space’s incredible growth. What have been the keys to growing and scaling the company? And what are your best tips for anyone on how to grow and scale their business?
Joe: Well, I don’t want to take too much credit. There’s a lot of really fine people who have contributed over the years to the success of this company, too many to name. I think we were lucky to be in a great industry. We were in self-storage when it was a nascent non-institutional industry run by getting the biggest yellow page ads. And now we’re a very technology intensive, very large national company. So there was a good opportunity. I think we had very smart people who saw that opportunity and not that mistakes were made, but in general made great capital allocation and strategic decisions to grow the company, took chances, took opportunities when they presented themselves and have had a lot of success because of them. We’ve always had a philosophy around partnership. We believe partnership, internal and external, is really important. So when we do a transaction, we want to do a win-win transaction. We want both parties to be really happy. At the end of the transaction, we want to be known as the counterparty that did what they said they were going to do, that was fair and honest. And when you do that, it tends to generate more opportunities. People want to do business with you because they know you’re true to the word. You’re going to try to seek win-win situations. Sometimes you have leverage and you don’t necessarily need to use it to cram the best deal down the other party’s throat. So we always try to be fair, honest, seek win-win solutions, look for the long term. And I think that’s created a lot of opportunities for us over the years.
Adam: It speaks to the importance of taking the meeting. You don’t know where your next deal is going to come from. But what you do know is that if you’re not trying to find that next deal, you’re probably not going to get it.
Joe: Absolutely. Well said.
Adam: Do you have any tips on the topic of dealmaking?
Joe: Well, I could tell you what’s been successful for us is we approached a deal. Our first question is always, what are your business objectives? What do you want to accomplish? And try to determine what it is that would make this a successful, profitable deal for the other side. Because if you just go in and say, we want to buy your store or we want to do this or we want to do that, and it’s all about you. I don’t know how you get to a deal when you start with what are the goals and objectives of the counterparty and try to work a transaction and structure a transaction that achieves those goals. I think you’re much more likely to succeed. But also you may learn you can’t do it and that’s fine too, but at least you’ve tried and you’ve had the conversation.
Adam: Was there a deal that stands out to you that was a key learning experience for you that helped shape the way that you do deals today?
Joe: Boy, so many, so many. I mean, the deal that stands out is really the most recent significant deal where, you know, we did a stock for stock merger. with the third largest self-storage company in July of 2023. And that was a contested deal. Another storage company put in a hostile bid for them and we ended up doing the transaction. And I think a part of the reason was because of cultural fit and feeling by the other company that their shareholders would be well taken care of within our company.
Adam: Were there any key learnings from that experience?
Joe: There were a lot of key learnings. And if I ever get the chance to do another $15 billion merger, I’ll put them to work. It might be my only one or our only one. I think a lot of what made us successful in that transaction were many of the things we talked about earlier. We were very honest and open and cooperative in our early discussions with the counterparty. We had approached them years earlier to try to merge and they said they weren’t interested. And we said, fine, and we went away and we didn’t go hostile. And I think that was important to them. And I also think internally, the team together, and we said, we have this giant mountain to climb in a very short period of time. Let’s all decide collectively what we’re going to put aside, what we’re going to focus on, who’s going to do what. It really forced me to push decisions down the organization as far as I possibly could, because there was so much going on, it was so difficult. If everything had to come to me, we wouldn’t have done it in time. So we really empowered people down the organization and let them make decisions, sometimes different decisions than I would have made, but supported those. And it allowed us to really, we did this transaction in 135 days, which was pretty incredible.
Adam: Joe, what advice do you have for anyone interested in working in the field of real estate or for anyone who is working in the field of real estate on how to excel in the field of real estate?
Joe: Well, it’s of course important to be a technical expert. You need to learn and understand how real estate works and the cash flows and whatever property type or types you’re involved in. So, I mean, there is fundamental industry knowledge that needs to be learned. And then I think it’s really important and it’s really important to ask questions and reach out to people and say, you know, can you help me understand this? And just really never stop learning and try to connect yourself with people who you think are good role models and can help you advance.
Adam: Are there any mentors in your life and your career that stand out to you and any tips on the topic of mentorship?
Joe: I mean, I’ve been lucky to have lots and lots of people in my life, starting with my father and really some of the guys I played football with who have gone on to have great success have been role models for me. Some of the early people I worked with at Prudential. And the founder and prior CEOs of this company have all been great mentors and supporters and teachers for me. And I’d also say that my wife has been a great supporter and someone to keep me centered and balanced. You know, sometimes it’s important to have someone outside of the day-to-day battles to give a different perspective. And I’m not sure I could have done what I’ve done without her. Pretty sure I couldn’t have.
Adam: I want to get into that in just a minute, but want to ask a quick follow-up on mentorship. How can anyone be a great mentor and how can anyone as a mentee optimize a mentor-mentee relationship?
Joe: The first thing to be a great mentor is to model the behavior and culture that you want. It’s hard to tell someone they should do something if you’re not doing it yourself. And I think you have to listen as a mentor and try to assist the person not in becoming you, but in becoming who they can be. Everyone has to be themselves. Everyone’s path to success. Definition of success is different. And I don’t think a mentor is someone to try to mold someone into who they are. It’s someone who tries to unlock the unique talents and abilities of the person they’re trying to help.
Adam: Being a great mentor is not about trying to make your mentee the second-best version of you. It’s about empowering them to get to a place where they can become the best version of themselves. How, as a mentee, can you optimize your relationship with a potential mentor?
Joe: I think it’s important to continually ask questions. Don’t be afraid to say, I know you explained that to me last week, but I’m still a little fuzzy on it. Just try to get into rooms and listen. I think a lot of learning goes on when you’re in the investment committee room and you’re just listening to the discussion. And then afterwards you say, you know, why was this decision made? Or did you explain this a little bit? So I think being a sponge is just a great opportunity. being in and around where the business is done, you can soak up a lot.
Adam: It really comes back to the power of curiosity.
Joe: Yeah, that’s a good way to say it.
Adam: You mentioned the role that your wife has played in allowing you to attain balance. How do you view balance as a leader and what advice do you have for anyone on how to approach work-life balance?
Joe: Everyone’s formula is different. I’m a little bit of a workaholic, so my definition of balance may be different than others, but we all need to find balance that will make us happy in our lives. And that’s different for everyone. I mean, one thing I learned moving from the East Coast to Utah is the family values out here are strong. And it’s important for people to go home and have dinner with their families unless they’re really needed at work. And if it can get done tomorrow, go home and have dinner with your family. If it’s needed today, you have to stay, but it’s not always needed today. So I have learned something from the culture out here and I think balance is important in everything.
Adam: Joe, what can anyone listening to this conversation do to become more successful personally and professionally?
Joe: I think it’s important to be yourself. My path, definition, to success may not be someone else’s. You have to be yourself; you have to be honest with yourself on what your strengths and weaknesses and goals are. And you have to make a plan and execute it and overcome obstacles. Because there will be obstacles, there will be setbacks.
Adam: Joe, thank you for all the great advice. And thank you for being a part of Thirty Minute Mentors.
Joe: Thank you, my pleasure.
