Last week I referenced the interview I did with Dr. Peter Linneman, one of the leading real estate minds. His answers were so insightful, they’re worthy of 3 or 4 blog posts, but there was one more answer that I wanted to highlight.
I asked Dr. Linneman for his thoughts on young professionals working for a large company versus a small company. This is something I’ve toiled with a lot, so I found his thoughts particularly welcomed. The comments below are a mix of his answers and my own personal thoughts. Keep in mind that I’m speaking very generally here, each person and company is different.
The Disadvantages of Working for a Large Company
The disadvantage to working for a large institution is that it’s a large institution with all its layers, inertia, and non-decision making. There’s a reason that big institutions have that – namely, none us built it and none of us have the right to destroy it. They were built by thousands of people over hundreds of years. Take a pension fund for example, the pension fund may have $100B, but it was acquired by a bunch of people over a lot of years. So it should be hard to change things at a big institution.
The Advantages of Working for a Large Company
The biggest positive of working for a large company is that it demands professionalism, it demands process, and it demands attention to detail. I’ll give you a trivial example. You should do an annual budget on a $30M project. You’d be amazed how many small companies don’t, because it takes time. The big institution trains you on the professionalism; make a budget, report variances, revise the budget etc.
Training and experience from a large institution is also well-regarded within the field. Someone with 5 years of experience from Blackstone can seamlessly transition into a role within another large institution, while someone with 5 years of experience from a lesser-known company will struggle to break into the institutional space. Furthermore, an aspiring entrepreneur with an institutional background can utilize that experience to gain immediate credibility among his peers.
Bruce Kirsch, founder of REFM, offered advice on working for a big vs. small company as part of his wise words series. While the post was simple, the comment section was where all the action was. There’s one comment I wanted to highlight:
It has been more than 25 years since I worked for The Irvine Company (developer of master planned communities on the once 93,000-acre Irvine Ranch in Southern California.) Even after all these years, people continue to introduce me saying that I once worked for this firm.
As an entrepreneur just starting out, you will always be associated with your previous experience.
The Disadvantages of Working for a Small Company
The disadvantages of working for a small firm is that there’s really no where you can go. A lot of small businesses don’t want to grow a whole lot. Most of the small firms are looking to grow, but they’re not looking to grow by billions, they’re looking to grow by 4%. One of the common problems for a young person in a small firm is where do I go within the firm, I’ve done everything they’ve asked, I’ve progressed really nicely, but there’s only one boss and there’s 3, 7, or 9 other people and none of them are planning to die so then you have to start to look outward. And that’s a disadvantage, you could do everything right, you can be with people you like and respect, and yet you may still have to leave.
The Advantages of Working for a Small Company
The small firm is great in that you see decisions made – in all of their good and bad. I work for a small firm and I have my hand in large investment decisions as well as minute decisions such as what kind of printer should we buy.
To contrast Dr. Linneman’s comment that small firms are not looking to scale up quickly, there’s also a flipside. There are small companies out there that are just starting up and are looking to be the next Related Company or Tishman Speyer. Getting in early at these kind of firms can be a great way to begin a career in real estate.
Bruce had a great response to the comment I referenced above on his blog;
I agree with you, having a platinum brand on your resume (and the knowledge and experience that you gain from working there) is invaluable. But there’s always the temptation to join who you think will be the next “Irvine Company” while they are still small. That’s what makes this such a tough decision for many.
In the end, it all comes down to enjoying what you do, having a fabulous career meeting fabulous people, wherever that may be.
What do you think?