#222: Ivy Zelman (Zelman & Associates) — Non-Consensus and Correct in The Housing Industry

Ivy Zelman [00:00:00]:
If you ask me what am I most proud of for my 30 plus year doing what I do, it's the tenure of the people that have worked with me. I have analysts that have been with me for 20 years and colleagues that have been with me 15, 17 years and I think that is a testament to my leadership style and giving people more of an opportunity to participate and be involved in almost every aspect of the business and making sure that they're getting the support that they need. Whether we think of ourselves at Zellman as a family, the culture is very strong and deep and I think that is attributed to caring about them as individuals. I think family first and having that mantra has really resonated with people welcome.

Jeffrey Stern [00:00:46]:
To the Lay of the Land podcast where we are exploring what people are building in Cleveland and throughout Northeast Ohio. I am your host Jeffree Stern and today I had the real honor of speaking with Ivy Zelman, one of the most respected voices in American housing, co founder of Zellman and Associates and now Executive Vice President at Walker and Dunlap, which acquired her firm in 2021 as the leading institutional research advisory firm dedicated exclusively to the US Housing industry. Over the last three decades, Ivy has built a reputation for bold, contrarian analysis, famously calling the top of the housing market in 2005 in the bottom in 2012, moments that cemented her as a rare analyst unafraid to speak truth to consensus. That conviction has earned her numerous accolades, including recognition in Barron's 100 Most Influential Woman in US Finance for four consecutive years and induction into the California Home Building Foundation's hall of Fame. In our conversation, we trace Ivy's journey from falling into equity research to taking the entrepreneurial leap in 2007, founding Zellman and Associates amid the looming financial crisis. With we explore her approach to research and analysis, blending proprietary surveys with a nationwide network of builders, brokers and lenders to consistently separate signal from noise. We reflect on her evolution as a leader and entrepreneur, the culture that she has cultivated with a team that has stayed by her side for decades, her love of Cleveland, what it means to pay it forward today through teaching and mentorship as an adjunct professor of finance at Case Western Reserve University, her memoir, Give Me Shelter, and a whole lot more. Ivy is full of wisdom, resilience and conviction, and it was a ton of fun to hear her story today.

Jeffrey Stern [00:02:28]:
So please enjoy this awesome conversation with Ivy Zelman. Lave the Land is brought to you and is proudly sponsored by Roundstone Insurance, headquartered in Rocky River, Ohio. Roundstone shares lay of the Land's same passion for bold ideas and lasting impact from our community's entrepreneurs, innovators and leaders. Since 2005, Roundstone has pioneered a self funded captive health insurance model that delivers robust savings for small and medium sized businesses. They are part of the solution to rising healthcare costs, helping employers offer affordable, high quality care while driving job creation and economic growth throughout Northeast Ohio. Like many of the voices featured on Lay of the Land, including Roundstone's founder and CEO Mike Schroeder, Roundstone believes entrepreneurship, innovation and community to be the cornerstones of progress. Turning to learn more about how Roundstone is transforming employee health benefits by empowering employers to save thousands in per employee per year healthcare costs, please visit roundstoneinsurance.com Roundstone Insurance built for entrepreneurs, backed by innovation, committed to Cleveland I'm always thinking about where the best place to start a conversation is. And where I've arrived at for ours today is I feel that everyone I know who has found themselves deeply passionate about some area of the larger financial world has had a catalytic moment of sorts that inspired the beginning of the journey to learn about the markets and that whole world.

Jeffrey Stern [00:04:01]:
For me it was playing the stock market game, the New York Stock Exchange game, in middle school. And it was this foray into a world I didn't yet understand but found myself deeply curious about and is at the heart of, I think why I'm doing what I'm doing. And I was curious if you feel you've had that formative moment, what kind of inspired your journey into this world?

Ivy Zelman [00:04:23]:
I'd say it really was two stages. As a young child I was exposed to finance through my father's career and he was in import export and working for a global firm. And we actually wound up moving overseas for three years to London. But at that moment I kind of that time I thought, you know, I want to be like my dad, I want to be in business. It wasn't necessarily finance, it was business. And I knew I wanted to do something that had math in it. I liked math more than writing. But really when I I was in at college I was at University of or George Mason University.

Ivy Zelman [00:05:03]:
And while there I was an undergrad in accounting. And I thought, you know, take get a degree in accounting, it's safe and you'll always get a job. And that's what my dad did. And when I started talking to accountants because I was working at at the time it was Arthur Young, now Ernst and Young, I was a secretary there, putting myself through my undergrad, working full time, going to night School. I started chatting with all these accountants and saying, do you like what you do? And they're like, no, it's horrible. And many of them, you know, very honestly told me they don't think that I would be a good fit either. And I was totally devastated by that because that's what I thought I would do. And they said, you know, you should really go work on Wall Street.

Ivy Zelman [00:05:42]:
And I'm like, what's Wall Street? And that began the journey of learning about the opportunities that were predominantly initially investment banking. And then eventually that was my gateway into equity research. But that was my catalyst, I guess.

Jeffrey Stern [00:06:00]:
What about the world of equity research ultimately pulled on your curiosity the most?

Ivy Zelman [00:06:07]:
Well, I fell into it. It was not by choice in some respects. I was at Salomon Brothers, starting my career in investment banking and I was in a two year program. We were 70 analysts. I was one of three women. And after two years you're out of the job. And most 90 plus percent, 95% go to get their MBA. So I applied to three Ivies and didn't get in.

Ivy Zelman [00:06:32]:
Very devastated. And I needed to pay my rent. And there was an opening in equity research and through the people I worked with in corporate finance, they recommended me and I got the job as an associate working for an analyst at the time who covered the GSEs and the SNLS. And he had picked up the homebuilders as a favor to the firm because there was a scandal, a Treasury scandal, that resulted in John Goodfriend stepping down. And Derek Maughan came in. And at that point people thought the lights were going to go out. And so I took an opportunity to take a job that at least I knew I could pay my rent. And I fell in love with it.

Jeffrey Stern [00:07:09]:
What about it did you fall in love with?

Ivy Zelman [00:07:12]:
Well, you know, having two years of working in investment banking, it was brutal. You know, working 80 to 100 hour weeks, not really getting to do a lot of interactions with clients and management teams. If I was lucky, I'd go in a conference room and sit quietly as a little mouse watching the executives interact with my colleagues. But it was a lot of grunt work. And then when I went into equity research, I was sitting with the CEO and the C suite of management teams As a young 27 year old and having an opportunity to do so much more, like from building models, writing, interacting with clients. It was so eclectic and really fulfilling. And by falling into housing, it was easy to think, analyze the industry because of course we all have homes. So I think I just Fell into such a great spot and really found that this was, you know, I felt like I was a detective and I was digging to determine if companies were suitable investments or not.

Ivy Zelman [00:08:17]:
And so I loved every aspect of it, became extremely passionate and very competitive to be the best.

Jeffrey Stern [00:08:25]:
When do you feel you first recognized the blind spots or maybe drawbacks to institutional consensus in the world of research?

Ivy Zelman [00:08:37]:
Well, it's interesting you ask that because my colleagues in investment banking actually when I told them I was going to go on equity research, they're like, you know, you shouldn't take a job in equity research. All those analysts are monkeys. They just do exactly what managements tell them to say or they write what managements tell them to say. It's a joke, the industry's a joke. The research portion of banks is a joke. And so that consensus view, don't stick your neck out, just kind of go along with the crowd was clear to me even in advance of taking the job. And I wanted to be different. I wanted to stand out and not be like everyone else in the realm of analysts that were just listening to management teams.

Jeffrey Stern [00:09:17]:
Did you feel this entrepreneurial inclination?

Ivy Zelman [00:09:22]:
No, not for a very long time. I think I was just putting my head down, trying to do the best I could. But no inclinations for an entrepreneurial move at that point. It was too young, too green.

Jeffrey Stern [00:09:34]:
Yeah. So tell us a little bit about the development and cultivation of that within yourself over time, ultimately setting the stage for the founding of Zellman and Associates.

Ivy Zelman [00:09:48]:
Well, you know, I worked probably 15 years from Salomon to Credit Suisse and at Credit Suisse I was well recognized, already received a number one ranking number of years and had a very strong following. And I was in the midst of dealing with what was pre housing GFC and those years, call it from 2004, 5, 6. And I was more cautious, bearish, and I was going against the grain. And there were, you know, many people that were not happy with that. And not only institutional investors, management teams, even in house. Our salesforce, you know, didn't like it because our clients didn't like it. And I was being utilized beyond my little equities audience in terms of clients that were requesting to talk to me were well beyond equities. So I was dealing with clients in fixed income and asset backed securitization and I was really recognizing the value I was offering.

Ivy Zelman [00:10:51]:
But I was not being renumerated for anything more than just home building equities and building products. And it wasn't about renumeration, it was more the idea that I was confident that I had a strong following, both industry executives and clients. And I had a friend who worked at Credit Suisse that said, you should go hang your own shingle. And it hadn't dawned on me. And it was sort of what was the beginning of that bug, to become an entrepreneur. But it was someone else who whispered in my ear. It wasn't my, you know, doing on my own.

Jeffrey Stern [00:11:27]:
Yeah, well, I feel like in the, in the world of, of investing, you know, everyone is always in search of the non consensus and correct stance. And I mean, ultimately that, that is where, where you found yourself. And I'm, I'm just curious at that time, what was the foundation for your conviction in yourself and ultimately hanging your own shingle there?

Ivy Zelman [00:11:55]:
I think having conviction is something that you develop. I think as a young undergrad, I was scared because I knew that if I wasn't successful in school that it would be more challenging to get a job. So I was determined to get straight A's. I worked my butt off. I was working full time, going to night school, and it was do or die for me. And having that fear is really the driving force that ultimately got me the success I've had. Or I'm as successful as I am. And I attribute a lot of it to fear of not being successful.

Ivy Zelman [00:12:26]:
But at Salomon Brothers and at Credit Suisse, what I learned from people that were tenured in the business, go out and do proprietary research, find other sources, don't just listen to management teams. And by developing a strong network of independent private entities across the ecosystem of housing, that helped build my confidence. So I wasn't alone. I wasn't just looking at data, I wasn't just analyzing what was available through public sources, but I was going deeper and having those people to lean on when maybe things weren't going right. For example, the housing stocks were, you know, rallying. Builders were public. Home builders were giving three year forecasts saying they can grow 25% a year. Stocks were going up in my face and, you know, calling up my private builder or my private broker or talking to mortgage companies and they're like, you know, stick to your guns, Ivy.

Ivy Zelman [00:13:17]:
This is not good. And giving me all the reasons why it's not good. And it was really that collective network that kept me sane during what was really more than a year and a half before there was any vindication that I was right. So it was tough. I went home, cried on my couch a bunch of nights. It was challenging and I'm glad I stayed the course. And I think that that's not easy to do when you have a lot of people that are opposed to it and are complaining about you. So glad I, glad I stayed the course.

Jeffrey Stern [00:13:50]:
Right? Well, I guess take, take us back to 2007. You, you opt to take this step away from a large institutional platform like Credit Suisse, to, to, to hang that, that shingle. What is it like getting started?

Ivy Zelman [00:14:06]:
Scary, but at the same time, you know, exciting. You know, you recognize that the worst thing that can happen is you'll have to go get a job. So you have that in your back of your mind. If it doesn't work, it doesn't work. But you're working a lot more hours. You wake up excited at, you know, three or four in the morning and you're ready to start working and you're recognizing that this is do or die and you've got to do everything you can for it to be successful. So it was really thrilling. And every day during 2005, 6, 7, that we were going through the transition to the independent platform, there was so much happening, you know, the news flow, even, you know, starting as early as 06, you know, you were seeing things starting to crack.

Ivy Zelman [00:14:48]:
So it was exciting and you know, we wanted to launch. We had a six month non compete and a six month non solicitation. So we had six months. We set, set a deadline, we being, my team and I, and we were dogged about getting launched on that day, which was October 3, 2007, we circled institutional investors, asking them well in advance of even leaving Credit Suisse, would you want, would you follow me? Would you utilize our research if I go on my own? And pretty much everyone said yes. And so that was the dozen to, you know, another two dozen at the most that we circled. So now it was getting back out there once the solicitation and non compete were over. And we had a very short deadline, so we were working crazy hours. But it was thrilling and exciting.

Ivy Zelman [00:15:35]:
So we were pumped.

Jeffrey Stern [00:15:37]:
Yeah, I mean that's very early indication of product market fit, I would call it. You know, in the startup life cycle journey, how did you think about what success meant at that point? What would you say was the vision for the company?

Ivy Zelman [00:15:54]:
We wanted to create a platform that would really cover everything, housing. And when we were at Credit Suisse, we covered just home builders and building products. And we felt that the various silos in the ecosystem, you would be a much better analyst if you had all of those in combination. So we launched on mortgage companies, we launched on the home Centers we launched on the multifamily REITs. We wanted to provide a complete platform and that was our vision and do deep dive thematic work that would be value add to our clients that are not just, you know, stock jockeys writing a note on company's performance after they go out, you know, they come with when they publish earnings. So we wanted something that was really different and that was the goal. It wasn't necessarily about money and we wanted to be successful. We had a 10 year plan, you know, of achieving so much revenue, but it was really being right and being the best and having a strong following that appreciated what we did.

Ivy Zelman [00:16:54]:
And I think we achieved all of those things. It was really exciting. Hmm.

Jeffrey Stern [00:17:00]:
You mentioned the work itself framed in this kind of detective context. And I'm curious how you think about synthesis of information, signal from noise. Like how do you do good detective work and discern, you know, what, what is true and correct?

Ivy Zelman [00:17:21]:
Well, I can give you an example of what not to do. I think what many analysts might find is they get an anecdote and then they might extrapolate that anecdote to assume it's going to be the case, you know, broadly. And so I didn't want to get caught in that. So we had to determine through lengthy processes of building enough of a sample that we can then determine if the correlation to the public companies was strong enough and do back testing and see if it works. And once we were confident, then we can make calls based on that feedback that we were receiving. But to go out with an anecdote, right now there's an anecdote that was pretty negative that my colleague and I have just recently picked up on. And we're digging further because we don't want to just extrapolate that one anecdote, but we're very negative or worried about it. And now it's about building the conviction that we're, you know, assumingly that anecdote is more broad based.

Ivy Zelman [00:18:16]:
So you start there and then you work forward. But a lot of analysts might just take the antidote, downgrade stocks and really not do the work to have the confidence that they'll be right. And they get blown up that way sometimes.

Jeffrey Stern [00:18:29]:
So your surveys and research now cover builders representative of a large percentage of the United States, millions of units and homes. How do you build and cultivate such a network?

Ivy Zelman [00:18:45]:
Well, the public home builders account for roughly 60% of all new home sales. When I started covering the industry, it was less than 10% as a sector. And you think about the home builders Sort of as the core of our sector of our coverage. But then you have the tentacles of building products and everything else, multifamily home centers, et cetera, single family rental. So starting with the builders, it was so fragmented it was easy to go out there and find the companies that were willing to talk to you. Sizable private companies going through trade associations, getting introductions to private companies pretty was easy. And the network that we've built over time, we've had attrition because they've been taken out, acquired or they no longer want to fill out the survey. So we're always looking for new industry contacts, new builders, pretty much any of the ecosystem.

Ivy Zelman [00:19:34]:
We're looking for new contacts. My ex husband used to say to me, oh, she likes meeting industry people more than she likes getting jewelry. I'm like, sounds good, but that's not right. But in any case, it was our goal to build a strong network and it was easier in the early years. And we have a pretty good market share for like, for our private builder survey we have about a 20% market share. And there's always new entrants to the market, there's spinoffs, there's things that you know, have allowed us to maintain a strong network that is over 95% correlated to the public companies. And that's the goal, is to have that tight correlation that enables us to make calls with conviction. Not sure that there's any secret sauce above and beyond the surveys.

Ivy Zelman [00:20:20]:
It's a lot of blocking and tackling, looking at data, trying to understand historical trends, coupling that with valuation. So it's not just surveys, it's also the deep dive thematic work we did actually during The July of 2005, an example of thematic work, we published a report called Investors Gone Wild. And we probably like a 50 page report that went through, you know, the risks associated with investors in the housing market and the mortgages that they were getting or the lack of down payment and the risk associated with that. And we had like a thousand people on our, on our conference call. And that report was one of many that was going above and beyond stock research. One, you know, individual company notes and giving themes and topics that were really critical that people didn't understand or didn't dive deep into. And that was one of the major parts of our success too. Continue to, you know, you're kind of poking the bear.

Ivy Zelman [00:21:17]:
You're getting into subjects that probably aren't written about and that could either piss people off or you know, get great feedback. In fact, lots of builders had told me if it wasn't for our research, they probably would've kept buying land, the private builders and they therefore really were grateful because they didn't wind up going bankrupt because they listened to us. And so I've had that feedback is the best type of results you'd hope for. You know, that's what you, you know that achieving that to helping someone to stay out of trouble is a great accomplishment.

Jeffrey Stern [00:21:54]:
I think absolutely in the spirit of those surveys and also in the context of this podcast, I mean I am constantly trying to understand how to ask better questions. And so I'm very curious. When you think about those surveys, what have you learned about asking the right questions? What is the importance of the questions themselves?

Ivy Zelman [00:22:20]:
Well, I think that having enough discussions with the industry executives you're speaking with, what should we be asking and going through sort of the exercise of asking. You always ask predominantly the same questions every month, but then some topic comes up. So you're going to frame the question. For example, student loans right now are a big issue because there's many millions of people that have not been paying their student loans through the SAVE program that's now been abolished. And we are going to see by September of 25th many of those people are going to be in fault and they will have wages garnished. We are already seeing a negative impact from those people starting in May of 25 that have been not paying their mortgage that they now are being dinged by their credit bureaus are being notified. So you could see a credit score go from 700 down to 500 unbeknownst to them until they go to try to buy something. This is an area that we're going to include now in a survey question.

Ivy Zelman [00:23:19]:
Are you seeing any fallouts in terms of contract signed because people were pre approved and then they lost and they were re underwritten and they fell out because they're student loan. And we're getting answers like 7% of our survey contacts said yes, we are seeing that now. Seven percent's not a lot. What do you do from here? You start talking to mortgage servicers, you start dealing with entities that are involved in all assets of shelter and asking all of them the questions. So it's the subject and framing the question. If you don't get the answer you want, a lot of people will ask questions and frame them such that they'll almost steer the client, steer the industry executive to what you want them to say. So you try to stay away from that, leaving it more open ended. And we have comment boxes so we'll try to be concise.

Ivy Zelman [00:24:07]:
But I think that one of the things I've been known for and less so now I've matured. But I used to ask questions that a lot of people wouldn't ask and be rather assertive, bold about them. And I think that was one of the things that stood out to institutional investors. I wasn't afraid to ask tough questions and whether that was viewed combatively or you know, people didn't like it, that were bullish. But I remember asking questions in their early years of the call it pre GFC even early as 2004 and 5. What is your average credit score? What's your loan to value for your. And people are like why is she asking wasting all these time asking these questions. And so I was poking the bear and people didn't like it.

Ivy Zelman [00:24:50]:
And that's just, you know, an area that I think people might be more inclined to just go along with the flow. Do you know what management says maybe have a follow up after. So that was definitely a differentiator.

Jeffrey Stern [00:25:03]:
That's awesome perspective. What's your opinion, thoughts, reflections on.

Ivy Zelman [00:25:13]:
That.

Jeffrey Stern [00:25:13]:
Sort of irrational exuberance of people and why they were uncomfortable with those questions? What do you think feeds that and what ultimately I mean you've been on the again non consensus and correct side of the bottoms and tops of markets. What do you feel like causes people to turn and reconcile with reality?

Ivy Zelman [00:25:35]:
When do they reconcile with reality or what's happening that they're not reconciling with reality?

Jeffrey Stern [00:25:40]:
I think both.

Ivy Zelman [00:25:41]:
Yeah, well I think that managements will steer people and provide their perspectives and sometimes that drinking the Kool Aid so to speak is really bought into by institutional investors. So they have a position and they believe in that position. It's going to take a lot to derail them to wanting to sell that stock. And I could tell you that very smart people that were very bullish didn't care about some of the things I would talk about. Almost like they weren't listening and they were just so laser focused on what they thought that they would dismiss things that I would bring up. And I remember going into.

Jeffrey Stern [00:26:20]:
They didn't want to hear it.

Ivy Zelman [00:26:22]:
No, they didn't want to hear it. And I remember being in a portfolio manager's office and I won't mention who but very successful portfolio manager. And he walked in the room and I was waiting for him to come in and start the meeting and he said just tell me one thing, are the company's buying back their stock? And I said yes. He says have a nice day and walked out. So he didn't even give me the opportunity to walk him through the things that were concerning to me. So I think there's people that are closed minded. But I remember being at lunch with a institutional client with my salesperson in Boston and I was talking about being very concerned about some of the trends we were seeing. And this client turned around and said, you know what, I hope the stocks go down 50% so I can buy more.

Ivy Zelman [00:27:07]:
And I bet you he wasn't thinking that when they went down 50%, but that was the, you know, and I'm sitting here like, okay, do it, whatever you want. But I think that there's a lot of, I think of it as like sort of you're at a party and everybody's getting drunk, like they're all getting wasted and it's fun, everybody's having a great time. And then I walk in and I'm the sober one at the party and I'm a downer and no one wants to talk to me. And so it's more fun to be happy and upbeat and you know, like the stocks going up every day, it's a difficult thing to go against the grain. So sometimes people just dismiss it or they rationalize things that you're providing to them as not a big deal. So those are some of the things that I ran into.

Jeffrey Stern [00:27:54]:
Yeah. That is fascinating. So if 2007 call it is kind of the prelude or introductory chapter to Zellman and Associates, how would you outline the subsequent chapters in the journey and evolution of the business itself?

Ivy Zelman [00:28:14]:
Well, early on in 07, as we were sort of framing what the of the business strategy would be, it was pretty much do exactly what we did at Credit Suisse, but just add more sectors. And so we slowly began to due diligence on other sectors. But it was really in 08 when we recognized that not only we're in a severe recession, but we have such strong relationships with industry executives on the private side that we should start providing investment banking services. So we brought in my partner's brother who had been at Bear Stearns, Tony McGill. And he was, he had been in capital markets and he spearheaded going after that network and trying to provide investment banking services. Now clearly in the middle of a very severe recession, there wasn't a lot going on. But over the years he's built a great business. And that's really the two arms of Zellemon Investment banking and equity research.

Ivy Zelman [00:29:09]:
We haven't really done much beyond that. But I think the evolution of the firm was Adding new stocks and building relationships with whatever the new sector was, building surveys behind that, which take a lot of time, a lot of effort, and continuously adding more thematic research, whether we're doing deep dives on demographics or we're providing insights on what's happening with what. The mortgage market for a while was just arrested. The mortgage industry was consolidating. You saw the large banks like J.P. morgan and Citi. I'm not going to. We're not.

Ivy Zelman [00:29:45]:
We're not doing FHA anymore. And I remember we published a report in 2013 called the Great Unwind, and it was talking about the mortgage industry and how it's going to come back and provide, you know, more broadly to the prospective buyers. So just doing what we set out to do and build our coverage universe, provide thematic research, hopefully make great housing calls. So it was pretty simple plan.

Jeffrey Stern [00:30:13]:
You mentioned at the onset that at least from within, you didn't really think of yourself as an entrepreneur, that it took an outside influence, you know, someone to kind of probe that from within. How do you feel you've evolved as an entrepreneur and how have your thoughts on what that even means, evolved with the company?

Ivy Zelman [00:30:37]:
You know, I think my journey had a lot of challenges. As you go through your career, you recognize when you work for a large institutional firm, you know you're going to get your paycheck. You don't have to worry about how the firm's revenue is doing, what the bills that they get, whether utilities and rent and electricity. All those things like now as an entrepreneur, they're all on you to take care of everything. So there's a lot more stress, I think, than I ever felt. I was always stressed out. I'm kind of stressed out. I'm not stressed out anymore.

Ivy Zelman [00:31:09]:
But it was a lot of stress, a lot of financial burden that I felt that was on me now and therefore just working much harder. I also had three kids when I left Credit Suisse. They were 3, 5 and 7. So balancing a family and my new business was difficult. It was very challenging. I traveled a lot. And so I evolved from being, call it stressed out and neurotic to more of a calm demeanor that, you know, has happened with, you know, more steadiness of the business and appreciation that our credibility in the market. I don't have to be so worried all the time.

Ivy Zelman [00:31:48]:
And I think that is a big change for me. I also recognize a lot of headwinds that our industry was facing back in 2017, 18 that were so concerning that we had to reconfigure how we went about going after institutional investors because the market headwinds such as MIFA 2, which was new regulatory changes that came out of Europe, really putting pressure on our clients, wallets and of course the computers, you know, program trading, active money managers losing share. And I was really, really worried because we were seeing clients shut down, hedge funds were shutting down because they were not performing well. And during those 17, 18, 19 years, 20, 17, 18, 19, I was like, I'm worried for my future. So I went about trying to find a buyer for my company and thinking I need an exit strategy. And that was really because of the writing on the wall that I was very concerned about. And ultimately we did sell in July of 21 to Walker Dunlop. And I think it's a good fit.

Ivy Zelman [00:32:54]:
I'm here for four years, continuing to plan on being here. I think that the financial burden piece is gone. And now I'm very comfortable and really building the team and trying to develop them and pass the baton. You know, I used to be on news channel CNBC all the time and Bloomberg and I pushed my analysts to be on TV now. So I'm still doing it. I'm still the face of the firm. But there's a lot more autonomy for our senior analysts that maybe wasn't as significant or as prevalent back early. In the early years, I was sort of mama bear involved in everything.

Ivy Zelman [00:33:33]:
And I've stepped back and I've really given them the opportunity not only to continue to develop, but to take the reins. And I plan on being here for as long as they'll keep me. But it's about internal development and being there as the backstop always, and to help them in any way I can to continue to be successful.

Jeffrey Stern [00:33:54]:
What do you feel you've learned about leadership in the context of that? Helping elevate people, help them realize their potential. What's your perspective on leadership?

Ivy Zelman [00:34:06]:
Well, I think if someone, if you ask me what am I most proud of for my 30 plus year doing what I do, it's the tenure of the people that have worked with me. My partner, I mentioned Dennis McGill, he no longer was with us, he's no longer with us. He was not a fan of working for a public company in a bureaucratic situation. And so. But he and I had been together for 23 years and I have analysts that have been with me for 20 years and colleagues that have been with me 15, 17 years. And I think that is a testament to my leadership style and giving people more of an opportunity to participate and be involved in almost every aspect of the business and making sure that they're getting the support that they need. Whether we think of ourselves at Zellman as a family, the culture is very strong and deep. And I think that is attributed to my leadership and being caring about them as individuals.

Ivy Zelman [00:35:03]:
I think family first and having that mantra has really resonated with people. So they have to take care of their kids. This is well before people were doing remote work. I have always been in the camp. People that are professionals don't need to be micromanaged and you should have confidence in them. And if you don't, you shouldn't have them there. And I think those things, but really getting them involved in every aspect of the business. A lot of the young analysts today that work at big institutional firms that usually leave after two years, they might sit behind their desk and only do modeling all day, or they'll write an earnings note.

Ivy Zelman [00:35:36]:
They don't get to go visit management teams, they don't get to meet institutional investors. They don't get to talk to private companies. So they're very limited. That's because some of the senior analysts are scared they're going to be better than them. I see that a lot. But throwing them in the deep end and giving them every opportunity has been a huge success and we've had a big payback from it.

Jeffrey Stern [00:35:57]:
So post acquisition, you are not just the chief analyst anymore, but you're also the steward of the culture as you kind of just outlined it. I'm very curious about how you think about scaling your non consensus often perspective on the market, on different situations, this kind of intellectual honesty inside a larger platform. How do you not dilute the essence of what the spirit of what you were working on is in partnership with a much larger organization?

Ivy Zelman [00:36:43]:
Well, I think that was one of the attributes that they offered us, that they would not place pressure on us about any of our industry calls that we were making. In fact, when Willie Walker went to executive committee to talk about wanting to acquire Zellman, some of the feedback from the management executives was, well, what happens if we don't like what she's writing? And he said, I think that our clients should hear both sides. Whether there's information they're providing that's not positive. They need to know both sides, bullish and bearish or, you know, things that might be concerning. And I think that's been their philosophy as it relates to Zalman. They have allowed us to be autonomous and yet supportive. So nothing's really changed from our intellectual honesty, even though we're at a bigger organization. They didn't have any research investment banking.

Ivy Zelman [00:37:32]:
So we've provided, you know, new businesses for them.

Jeffrey Stern [00:37:36]:
What do you wish more people understood about the work that you do?

Ivy Zelman [00:37:40]:
I think they do understand the work they do. I don't think there's a lack of support or the view that we have very strong credibility in the market. I think where there's executives out there that might not want to hear macro and they're very focused in their lane. They might be a home builder and they only care about the east side of Cleveland. They don't really care about what's going on in the macro world. They're doing themselves a disservice to not being more open to understanding what's happening in the ecosystem and the benefits of what that could do for their business strategy and potential risks. So really more buy in to the opportunity to how much value we can add them. And I'm thinking more on the industry executive side as well as institutional investors.

Ivy Zelman [00:38:28]:
Like, oh yeah, we get other people's housing research. We don't need your research, you're expensive. And we'll try to show them on why we're differentiated and the value that we add. So we've definitely hit walls. And yet we just try to articulate the attributes that we have found are very successful with other institutional investors or management teams and try to outline them. And sometimes we succeed, sometimes we don't.

Jeffrey Stern [00:38:56]:
So just geographically, Cleveland isn't the region people associate with Wall Street. How has being rooted here influenced your perspective on the work and the business?

Ivy Zelman [00:39:15]:
I love that question because when I was planning on moving to Cleveland, I was only a year. I got married in May of 98 and my ex husband was pretty much, we're going to move to Cleveland, we're going to start our family in Cleveland. So if you're not okay with that, we shouldn't move forward. And I was scared because where's Cleveland? You know, no idea. Grew up in New York in Long island and lived in the city for 10 years. But his family was there and he had a whole network of friends and people he grew up with. So when I moved here, I realized it was much like the suburbs I grew up in. And Credit Suisse was very supportive.

Ivy Zelman [00:39:57]:
David, my ex, had also worked in the business as an institutional salesman. And you know, they were like, sure, we'll set you up an office in Cleveland. So they made it really easy. So I come to Cleveland and I was seven months pregnant. It was so easy to get acclimated because of his family and his friends as on the personal side and on the work side, had my own office. I hired an associate to help with the platform. But being in Cleveland was great. I remember looking out the window at my house and I was on with a salesman from Credit Suisse.

Ivy Zelman [00:40:29]:
He's like, oh, God, Cleveland sucks. And I'm like, yeah, it really does. I'm looking out the window, I see some deer on my lawn that's, you know, a lot bigger than my house. What my house costs in Cleveland is like a quarter of what it would cost in New York. And so really started to appreciate the suburban lifestyle and not being in the city anymore and getting to travel anytime I wanted to the city. But being in Cleveland was a better quality of life. And I thank my ex husband for bringing me here. And in fact, even after I got divorced, I went back to the city.

Ivy Zelman [00:41:00]:
I wanted to be in the city. I was like, I miss New York. I miss New York. And I actually at, you know, my older age, didn't like it and moved back to Cleveland. And so here I am, ironically, in Cleveland, despite not being with my ex husband anymore. So I. I'm a big fan. And in fact, I think Cleveland is probably one of the most underappreciated cities in the country.

Ivy Zelman [00:41:21]:
And, you know, we drive down 480 to the airport and it's like no traffic, you know, it's great. And we're like, we better be careful what we wish for. We want to bring in a lot more businesses to Cleveland. But I do think that the affordability here is probably one of the few markets that even has affordability. A lot of Midwest markets do. But I'm a big fan.

Jeffrey Stern [00:41:44]:
That's awesome. I love that perspective. So you had mentioned earlier on that of the primary maybe motivations or drivers for you, maybe they were grounded in a fear of sorts. And I'm curious from where you are today, what you find is motivating you and what you are excited about? Looking forward.

Ivy Zelman [00:42:10]:
I think the fear is diminished substantially. Not feeling the stress that I did pre sale. I do feel now I don't want to be just a capitalist. What else can I do to pay it forward? I actually published a book back in 21, in October of 21 called Give Me Shelter after my love of the Rolling Stones. But the book is really about my journey and I feel like paying it forward is important because there's a lot of young people that might be intimidated to think they can get a job on Wall street. And I was one of them. And I was able to overcome a lot of obstacles. So I wanted to write about that and tell people you can do whatever you want and there's ways to get there.

Ivy Zelman [00:42:56]:
That's why I published the book. And then I started looking at what else can I do to pay it forward. So I'd go speak at universities during COVID mostly through zoom. My kids schools. I was working with local high schools, Hathaway, Brown, Laurel, as well as university schools, WRA and you know, working with investment clubs. And I really liked it. So I'm now teaching at Case at Western. And it's great.

Ivy Zelman [00:43:22]:
I love it. It's really rewarding. I actually spend. I only had 13 students, junior rising seniors, some rising juniors. But I'm actually in touch with many of them still. And I find that it's extremely rewarding. And where I am with Zelman, I'm really excited about the people I'm developing and watching them and feeling so proud at their success. So Alan Ratner, who's been with me for over 20 years, most of the analysts that started with me started as summer interns and came back when they graduated.

Ivy Zelman [00:43:56]:
But Alan was a Michigan kid. I remember we used to give him crap just because he was from Michigan and would always give the Michigan kids a lot of hard time. But Alan's now on cnbc and when I put on the tv, I'm so excited, like my little brother. And to see him on CNBC and how successful he is now, those are things that really are very rewarding. Watching the young analysts that grow up with me and watch them get married and not watch them have children. And so it's been really rewarding. And I just want to keep doing the same thing. I don't know what else it will bring.

Ivy Zelman [00:44:30]:
My aspirations. I worked so many hours, Jeff, it was crazy. And I'm finally, you know what might have been 80 hours a week traveling. I now am kind of 40 hours a week and it's nice. And what's next for me? I've thought about maybe starting a fund that I could invest in companies in the housing sector and raise capital to co invest and not sure when I'll do that, but that's something I've thought about. But right now I'm pretty content and enjoying life. Finding the empty nesting portion of now life is really rewarding. So far so good and we'll see what happens.

Jeffrey Stern [00:45:13]:
Yeah, well, I'm certainly glad to hear that. What do you wish your students take with them from your experience and your earned wisdom having been on this journey and what do you hope your students take with them from your teachings?

Ivy Zelman [00:45:38]:
I think it's about being able to go above and beyond and you know, when I was sitting in class in a horseshoe and going around the room and asking them to tell me a little bit about themselves. Small group people are very quiet and shy and I think it sometimes takes time for them to be more vocal. But once, you know, we establish a relationship, go out there and network, find whether it's family, friends, neighbors, you name it, teachers, and go ask them about their journey and talk to them and find out what they like, what they don't like and create a spreadsheet. Because a lot of people, they want to go in finance. Well, what area of finance? Well, I don't know. Want to go in marketing? Well, I don't know. Well, go do some due diligence and do information interviews. Something I really did as young adult myself prior to when I found out from the accountants that I shouldn't be in accounting.

Ivy Zelman [00:46:34]:
I, I then started meeting, doing informational interviews for, with investment banks that and not being afraid to ask questions. Look me in the eye when you shake your hand, shake my hand. And having interpersonal skills and I think that people generally are receptive to it, but it might not be as easy for them as it is for me. So appreciating, it's a journey, but being able to ask a lot of questions and finding people that you can, you know, have as mentors, it's really important for young adults.

Jeffrey Stern [00:47:04]:
Yeah, I love that as well. I would be remiss, I think, to not ask if you have any current non consensus opinions about the world and where you think we're going that you feel convicted in, but that no one agrees with.

Ivy Zelman [00:47:23]:
Probably more high level. I do expect that migration that has occurred in this country during, you know, what occurred during COVID with many people going to the Southeast Southwest, I think we're seeing that migration is already normalized. And I think because of heat, floods, fires and a lack of affordability, which has also been attributed to homeowners insurance, soaring costs, property taxes, I think people are going to come back to the middle of the country and I think they're gonna start looking at the Midwest as a very attractive alternative. And so I think there'll be more growth in the Midwest on a long term basis. And many people don't believe that. And I'm not suggesting if climate change is one driver, affordability is another driver. But I also think that whether climate change is man made or not man made, it doesn't matter to me. It's just people dealing with factors that I just described could compel them to return to wherever where they came from or just leave those markets where they've been for a long time.

Ivy Zelman [00:48:26]:
So I'm very bullish on the Midwest and that's definitely contrarian. Most management teams don't even want to go to the Midwest. They'll say, oh, there's no population growth. And I think they are tend to go to markets where everybody else is going. A little bit of a sheep mentality. So I would recommend to many organizations go to Cleveland. It's a great place to have your company and your employees will be very grateful.

Jeffrey Stern [00:48:51]:
Yeah, well, for what it's worth, I obviously agree with you and basically devoted this chapter of my career to help realize that.

Ivy Zelman [00:49:03]:
Yes, exciting.

Jeffrey Stern [00:49:06]:
Very exciting. Awesome. Well, I think we can work to bookend our conversation here, but before we get to our traditional closing question, I want to just ask if there's something you had wish that I had asked. You know, when you reflect on your journey thus far, is there anything that comes to mind is particularly important that, that we, that we haven't talked about?

Ivy Zelman [00:49:30]:
You know, probably my greatest love are my children. And you know, it's part of all of our lives of raising kids while working, many of us and working moms especially being able to balance, you know, doing what you want to be a great mom, you want to be a successful business person. But my kids, I think now after a very long process of watching me and my career, finally looking at me and saying, wow, you know, my mom really worked hard and she's a great role model. And I think that for young women, I think especially in what is a male dominated world of finance, I think having my two daughters as well as my son, but just to have their support and to see how proud they are of me now is really rewarding. And I know that as they move into their careers and they're all two are graduated, one's still in school, having the ability to be there at their side and to see their careers develop is really exciting. But you know, every night I went up to their rooms, read to them, hung out with them individually, and made sure that, you know, my presence, no matter how much I was working, I was there for them. So that was a tough balancing act and I'm proud that I was successful. They sometimes will give me crap and say, oh yeah, mom, well you weren't here for this and you weren't here and you know, I did the best I could But I do think the end result is that they're extremely proud of me.

Ivy Zelman [00:51:03]:
And I think that they know that being independent and not depending on a man, the girls especially, is really something that I'm proud of.

Jeffrey Stern [00:51:13]:
Well, thank you for sharing that. That's beautiful.

Ivy Zelman [00:51:17]:
Thank you.

Jeffrey Stern [00:51:17]:
I will ask our traditional closing question then, which is for a hidden gem in Cleveland, something you think other people should know about, that maybe they don't.

Ivy Zelman [00:51:30]:
I think for me, I love the ability to drive in my car and be able to go play golf. You know, I'm a golfer, and when I was in New York, it was painful to get to a golf course. So we just have such beautiful parks. I love the Metro parks. I take my dogs for walks all the time. So I'm just in love with the topography here and how beautiful it is. And I think that's really underappreciated.

Jeffrey Stern [00:52:01]:
Yeah. I also agree.

Ivy Zelman [00:52:02]:
What's your favorite?

Jeffrey Stern [00:52:02]:
Wholeheartedly agree with that. I mean, I feel the whole city is a hidden gem to your kind of observation about it. It's, I think, just greatly underappreciated. And it has such an amazing history, culture, arts, nature, and I think a very optimistic path ahead, too.

Ivy Zelman [00:52:26]:
Yeah, people think of Cleveland maybe from their sports teams as sports centric, but as you pointed out, from a cultural perspective, you can go see Broadway shows. There's plenty of great restaurants, lots of cultural opportunities. So it's a hidden gem in total.

Jeffrey Stern [00:52:42]:
Yeah. Amazing. Well, Ivy, I just want to thank you very much for taking the time, sharing a bit about your story and reflections on all of it. I really appreciate it.

Ivy Zelman [00:52:55]:
Well, thank you for doing this podcast. It's great that you're chatting with Cleveland business leaders and getting the message out about how great Cleveland is. So awesome.

Jeffrey Stern [00:53:04]:
Thank you. If folks had anything they wanted to follow up about, where are you directing them?

Ivy Zelman [00:53:11]:
Online on the interwebs zelmanassociates.com or I'm@ivylmanassociates.com Welcome. Anyone interested?

Jeffrey Stern [00:53:24]:
Awesome. Well, thank you again. That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show. So if you have any feedback, please send over an email to jeffreyofthelandfm or find us on Twitter oddleoftheland or Sternfa J E F E. If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on itunes or on your preferred podcast player.

Jeffrey Stern [00:53:55]:
Your support goes a long way to help us spread the word and continue to bring the Cleveland founders and builders we love having on the show. We'll be back here next week at the same time to map more of the land. The Lay of the Land podcast was developed in collaboration with the UpCompany LLC at the time of this recording. Unless otherwise indicated, we do not own equity or other financial interests in the company which appear on this show. All opinions expressed by podcast participants are solely their own and do not reflect the opinions of any entity which employs us. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Thank you for listening and we'll talk to you next week.