DEI Advisors Podcast

Ross Bierkan, Founder & Principal, Wellfleet Equity, interviewed by Lan Elliott

December 16, 2023 David Kong
DEI Advisors Podcast
Ross Bierkan, Founder & Principal, Wellfleet Equity, interviewed by Lan Elliott
Show Notes Transcript

Ross describes his journey to CEO of RLJ Lodging Trust and beyond.  He discusses how he helped found and build a number of key hospitality companies, and how RLJ built and continues to maintain a diverse team.  A voracious reader, Ross shares his favorite resources for continuing to grow his business knowledge, and what it takes to be successful in business.  He also explains how to seek out mentors and ask for advice.

Lan Elliott:

Hello, and welcome. My name is Lan Elliott on behalf of DEI Advisors. Today's guest adviser is Ross Birkin, the principal of Wealth Fleet Equity. For those of you might not know Ross, he has worn a number of hats, including spending nineteen years at RLJ. At that company, he was the cofounder, the chief investment officer, and also the president and CEO. So we'll talk all about that today. But welcome,

Ross Bierkan:

Ross. Thank you, Lan. Thanks for having me.

Lan Elliott:

Happy to have you on. Ross, I know you've had a really interesting career, and Our paths have overlapped a few times over the decades. Would you share some inflection points about your

Ross Bierkan:

career? Sure. Sure. Hospitality dominated, but lots of real estate alternative types too. So before I graduated from Duke University with a psych degree of all things, I interviewed with a lot of companies who came to campus to recruit. And the coolest among them were the young people from guest quarters hotels. They were enthusiastic. They were preaching the gospel, the merits of the what was then the novel concept of an all suite hotel brand. You have to remember there was no embassy suites. There was no resident sin. thEre was Granada Royale, which became an Embassy Suites, and guest quarters, and then maybe some corporate apartments like Oakwood. I think they were around already but they were fired up and they were not looking for formal hospitality training. They were looking to be disruptors. And so out of the handful of job offers I got coming out of school theirs was the lowest, and I still took it. I went With the smallest company, the underdog, there was something about that I liked. And I consider my operations experience there To have been is to have been essential to my understanding of what makes a hotel tick and how to invest in hotels and how to move the needle once you've acquired hotel or what might be unrealistic in that respect once you've acquired a hotel So I wouldn't trade that for anything. But after six years of operations, I did get an entrepreneurial edge, and I jumped when an owner of office buildings in my market. I was in Tampa at the time. Asked if I wanted to lease up his office buildings, and I thought that sounded cool. So I went into commercial real estate, but after, jeez, after less than two years of that, I made the leap into Rich, I really had the real estate bug, and I wanted to learn some of the other product types of income producing property. So I joined Grub and Ellis, And I was working in office and retail and light industrial, both on behalf of some landlords where we had leasing arrangements, and then outside of those with some tenant reps around the state of Florida and really the southeast. But it turned out that a fellow by the name of Lou Placencia worked there, and Lou was a former Hyatt guy Who had just start he was doing investment sales as well, but a couple of corporate accounts at Grub, like Westinghouse and John Hancock, it's began to ask, Who could handle a hotel sale? And he rightfully raised his hand. And so he started to build a practice at Grab he was frustrated with the model where all the brokers were kinda doggy dog around the country, and he wanted to build a better mousetrap. So he dropped a business plan on my desk, And he knew that I knew that he knew that I would not only help him market up but wanna join. And so we launched the Placencia Group in ninety three. And, again, once again, I was betting on an underdog, And, and this time, it was a startup from scratch. But in around my sixth year there I agreed to relocate the family up to DC to open an outpost here, and I got to work. And as part of my networking, I met Tom Baltimore, who at the time was an executive at Hilton who had just relocated from Beverly Hills where they were still headquartered, And it was looking to do deals here. And while we talked about deals, we often got together and just solved the world's problems. And One day, he sprung on me that he was working on a side deal that sounded pretty interesting, and he invited me to join him. And that was good fortune because we were working with Robert l Johnson to form a hotel platform. And, uh, Bob, for those who don't know, Bob was the founder and the chairman of Black Entertainment Television. And at the time, he sat on the board of Hilton, Sat on the board of US Airways, couple other boards. And but he had a strong interest in the travel and tourism industry and some insights into it and rightfully observed that minorities were underrepresented in ownership there. And so while he went to work on trying to Crack the code on the airline industry. He put us to work on trying to acquire a portfolio to get the platform started, and we launched RLJ at the end of two thousand when we bought seven Homewood Tweets from Hilton. RLJ has been a clear success, And so it seems now like it was a no brainer, but at the time, it felt speculative, and that was part of the juice, another startup. So I guess the inflection points, the tie that the ties that bind all these inflection points involved an attraction to something new a different mountain to climb and really the allure of building something from scratch with a dedicated, talented team and really feeling like You built something. Yeah,

Lan Elliott:

I love that entrepreneurial spirit, and a lot of Times you have taken the path of the underdog, as you mentioned a couple times. I love that theme as well. But all of these are major risks. You could have at any moment in time gone for a sure bet, but you didn't you took a number of calculated risks that were a major factor in your Success. Could you share more about that and how you

Ross Bierkan:

approach that? Yeah. You bet. From the very beginning, I was more interested in joining an entrepreneurial situation than walking into a sea of Cubicle is in a large established organization, and each enterprise, guest quarters, the sole proprietor, Owner of the office space, the leap into brokerage launching, Placencia Group launching RLJ, I wasn't chasing risk for the sport of it. It just seemed I was energized by the upside potential, and I thought the upside was commensurate with the risk. And, sure, there was no safety net, but I guess I always figured I could Fall back on a more conventional job if any of the pivots didn't work out. And, frankly, much of that same spirit applied to how Tom and I approached RLJ once we launched. We had a good thing going just as a vehicle of net high net worth for Bob and Sheila Johnson. Mhmm. And we could have just, gone status quo, but there was a chance to take the growth parabolic by launching into the private world where we raised three funds and then again when we sold one and then we rolled two of them up into a public entity in two thousand eleven Started trading on the New York Stock Exchange, and at each stage, we bet on ourselves, and we calculated that The upside was worth the risk. Those are

Lan Elliott:

tremendous risks, though, and it's great that you always felt that you could always Fall back on a conventional career, but I think I see a thread that runs through about Building things and being energized by creating things from the start rather than keeping an ongoing business afloat in a

Ross Bierkan:

different way. Yeah. Yeah. Yeah. One of the

Lan Elliott:

things that RLJ Jay has always been known for is being the most diverse hospitality REIT, and It has had at least fifty percent women and underrepresented groups in its makeup, and that doesn't just happen. It takes intentionality to achieve that. And I know when we talk with real estate people, they say there just aren't people. But somehow you've managed to achieve that when you at our were at r RLJ. How did you manage to do

Ross Bierkan:

that? Yeah. Yeah. You're right, Lan. It was we were always whether we were seven employees or a hundred and twenty seven employees, We were always over fifty percent women and over fifty percent minorities of some class. And From day one, diversity was just integral to the way we thought about growing the business. And, two of the three founders were african Americans. So if not us then who? Was going to lead on such important issues. In fact at the time we launched rlj There was the NFL had something called the Rooney rule where the then commissioner was imploring, if not forcing all the owners of the NFL teams when they had an opening for the head coach position to interview at least one person of color, and Bob Johnson was all over CNBC doing the same thing, calling it the Johnson rule knowing that he was borrowing from commissioner Rooney, but making the point that the same thing should happen in the corporate world, that anytime a senior level position opens up, that it's that an organization should and would benefit from the same policy. But more than that, Every day as we went about our business, our radar was up for talented women, people of color, both for our corporate office And for our hotel properties, at the operation level. And at for property level leadership, Whenever we were in the field conducting due diligence, and we were very thorough. We were very forensic in our due diligence, and it involved a lot of site tours, A lot of visits to chambers of commerce, economic development organizations convention center bureaus. Whenever we encountered a woman or person of color who impressed us, we made note of it, and we kept track of them, and we stayed in touch with them. And, at the corporate level, we took a keen interest in every diverse executive with whom we cross paths, whether they were in hospitality or banking or legal. Even if they had no hospitality experience, we were willing to take a chance on talent and energy. And this reaped unexpected benefits. We did it because we thought it was the right thing, but the benefits came to us and Because we became a place of employment where many, if not most, of our senior hires were willing to Make lateral moves at best and maybe even a step backwards from a compensation or a title standpoint to leave Well established companies to join RLJ, which was still growing because it was a diverse entrepreneurial environment, and they knew we did not have glass ceilings internally. And there's so many examples. Almost every senior person at RLJ came in that way, But probably the best known example is Leslie Hale because, she joined us from Goldman Sachs in GE When we were still a mid sized company and she was just coming in as a VP of finance, but she rose all the way from that to CEO By working your butt off, learning the hospitality industry, and taking the chance to join us in the first place. Yeah.

Lan Elliott:

And you developed someone into someone who's passionate about the hospitality industry and is a major leader within our industry. A lot of people do look to her as a great example of What we can achieve within our industry, where there are opportunities for everyone.

Ross Bierkan:

So It's an inspiring arc. Yeah. It is. Absolutely.

Lan Elliott:

Yeah. I wanted to go a little bit further down that path because You mentioned Leslie. And in two thousand eighteen, you stepped back from being CEO of RLJ, and now you focus on deals as part of Wealth Week Equity. But can you share some thoughts on the process of stepping back, and how did you prepare the company for the for a future without you because it's an interesting transition point and a pivot point in someone's career.

Ross Bierkan:

Yeah. Yeah, Lan. The I guess it's clear I enjoy growing things more than maintaining them, and so that's the short answer, but I certainly relished growing RLJ from scratch with Tom Baltimore and the team, and when Tom announced in two thousand sixteen That he was leaving to help Blackstone and Hilton spin off their real estate. Everybody understood. It's like joining the Beatles. And but it was leaving a little bit of a void in the company, and I took the CEO spot to stabilize the situation in the minds of our associates and Wall Street, the investing public. But Even though that sounds like I was coming in as a caretaker, I wasn't really interested in standing still And just babysitting the operation, and I had weekly meetings with Bob Johnson and about going big or going home, which was our way of Saying, either acquire someone or sell the company and cash out. And, because every good pump Comp public company should be for sale if it's to the benefit of the shareholders. we Had discussions with numerous parties on both sides, but we ended up going big. And in twenty seventeen, we acquired Velcor at an enterprise value of around three billion, taking our total enterprise value to about seven billion. So it was a big deal. But, But the entire time as for preparing the company for a transition, it's good governance for any organization To have a succession plan for every key position, and as soon as I took over in sixteen, I reached agreement With Bob and our board to focus on Leslie Hale as my successor. She had earned it, and she clearly had the talent. She was CFO at the time, and we elevated her to chief operating officer so that she could get better exposure hands on exposure to asset management and what makes the hotels tick individually And also give her visibility to Wall Street. And after the FelCor acquisition was complete, it was clear to me that she was at least, if not more, capable of managing the digestion of that portfolio and coming up with the in the individual asset management plans as I was. So I focused on the disposition of the six or seven major assets that were not compliant with the strategy at all when Our strategy when we bought FelCor, like the Fairmont Copley in Boston or the Renaissance Fenoy in St. Pete. And, We were able to sell those. We got attractive pricing on those with very accretive that was very accretive to our stock price. Leslie worked on the asset management plans and by the end of twenty eighteen the portfolio was in good shape, the path was clear, and it was a good time to move on. And it made for a hell of a story for her to ascend to the role. And personally, I was happy to step out, begin investing on my own, and not answer to on a quarterly basis to analysts Send and and get off the treadmill.

Lan Elliott:

Now that's fantastic, and I love the story about preparing Leslie identifying someone and helping them develop the tools to be on that stage, working with analysts, with investors and giving them the tools that they maybe hadn't had the chance to develop in other parts of their career. So really incredible to not only select someone so specifically as your successor, but also to groom them. And that's a gift that I don't think everybody gets when they step into that new

Ross Bierkan:

role. Now some organizations like to make it a dogfight. They you know, business is a contact sport, and then That happens to be the way those organizations approach it, but we thought this we thought that path was so clearly The best path that we didn't want to fool around with it. That was

Lan Elliott:

a great decision on that. I wanted to switch over a little bit to this topic of continuous growth because we've heard from many leaders how curiosity and continuing to learn as a big part of their path to leadership, and I happen to know that you're a voracious reader of business books. Where do you seek out resources when you're looking to grow, and do you have a favorite business book that you could share with our audience who's looking to advance their

Ross Bierkan:

careers. Yeah. There's great resources out there now that Really weren't around early in my career to the same degree. I like the continuing ed and certification programs at the universities like Cornell and Michigan State, But they're excellent, but there's also other institutional quality sources of that kind of training. Maybe not Specific to hospitality, but universal to real estate from organizations such as n a I o p, NAIOP, and ULI NAREIT, CCIM and others. And there's multiple benefits to these programs that, you exercise your mind and get smarter, Hopefully. buT you also meet people, and your professors and your classmates become part of your business network. And you impress your employer or your future employer with your initiative. I wish I had done more of those Back in the day, but the choices were not as vast way back then. On the book side, I gotta say a lot of business books are full of platitudes that we already know, and so Two alternatives that made big impressions on me straddle those kinds of books, and one of them is very Practical and touches on common life lessons, but it's so specific. It's not just plan it's so specific With so many practical examples, it's like a primer on how to succeed and you're gonna chuckle because it's written by Dale Carnegie, and it's called how to win friends and influence people, and it's been around forever. It's been around so long that people have forgotten about it. But as you read through it, it's full of great historical nuggets that keep your attention. You constantly say, oh, I didn't know that. I didn't know that. I didn't. But you're soaking up the lessons without even realizing it, and reading a chapter a day in that book would be a real awakening for a earlier in their career. And then the other is at the other, the other bookend, It's more modern, really tactical for any business. It's called the Innovator's Dilemma by Clayton Christensen. No platitudes here, just warnings. He's he's a Harvard Business School professor who broke down how disruptive businesses can supplant successful businesses who never see it coming. And a lot of the examples are technological, like Everybody knows mainframes to desktops to laptops, but the hotel business has been slow to evolve, And small things like keyless check and big things like OTAs and short term rentals have been disruptive, and this book helps frame how this happens and how to be disruptive Instead of a victim of disruption, and I enjoyed the heck out of it.

Lan Elliott:

Those are both great recommendations. I am going to add both of them to my list. I've obviously heard of the Dale Carnegie book, but never actually read it. It's one of those books you're that's on your to do list, but I'm glad to have the

Ross Bierkan:

recommendation and You'll fly through it. It's it's a treat. It feels a little bit folksy because of the vintage, But it really nails home the points. Thank you for

Lan Elliott:

that. Let's talk a little bit about mentors and champions, and maybe you could share how important it is to find mentors and champions in the business world. How does one go about it? And perhaps have You had mentors or champions that have advanced your career, and how did they do that?

Ross Bierkan:

Yeah. Mentors are certainly helpful. And Every now and then, they might actually identify you and take you under their way. But more typically, finding a mentor takes a little bit of chutzpah, And you have to have the courage to approach them in an appropriate fashion and ask for the relationship. And I personally believe that the majority tend to be receptive. I know how impressed I am when a young person approaches me Seeking help and I appreciate their drive and their intent to succeed. I was not good at that. I was not good at that during my career. I slogged it out mostly on my own. I didn't have the social courage to ask for help, but one of the more influential business people I interacted with Came late. It's when we formed RLJ, and it was Tom Baltimore. And when we formed the company, I discovered what a force of nature he is, And some of his skill is aptitude. He's smart as hell. He's articulate. He's literate, But a lot of it is attitude. A lot of his success stems from attitude and his intention. He is always prepared, and no matter how many hours or days it takes, and he absolutely refuses to accept failure, He drives himself, his executives, his employees to achieve difficult goals, and even expects the same of third party Vendors like legal teams and accounting services and management companies and the hotel brands. He was never technically my mentor, but he's my champion. And as we work shoulder to shoulder, I learned a lot more about being a successful business person from him than he did for me. I

Lan Elliott:

love that, and sometimes they're someone that's shoulder to shoulder with you. They're not necessarily someone that's much more senior the new. I also loved what you mentioned about the courage that it takes to seek out a mentor, because there is that piece of vulnerability that you need to have to ask for help, but the gifts and the rewards that you can get from doing that are so tremendous. I do think there are People who have trouble asking for help, and that's really what I wanted to talk about. Next was advocating for yourself because there is a generalization that women and some underrepresented groups have more difficulty asking for things that they are looking for, and that could impede them from being elevated to the c suite or getting promotions or other things that they might seek out. What would you tell our viewers who are struggling to find their voice. What's the right way to ask for something they really

Ross Bierkan:

want? Yeah. One thing. In my experience, a key part of success in this area is showing up in person. I know remote work challenges this, but whenever possible be in the room. Find ways, certainly volunteer whenever that opportunity is there, but ask to be in the room. And, and when you are, show your capability and, Equals build your credibility. And I'm so spoiled by the culture that we maintain in RLJ because no woman ever had to Specifically asked to be noticed. We sought opportunities to elevate them, and I, I signed up RLJ to be one of the original sponsors of the Castel project, which is now part of AHLA Foundation. And we sent Keith Hendrickson to attend the inaugural class, and I believe the organization has sent someone just about every year. Beyond that, if we had rock star performers that wanted to further themselves, but we're feeling like, The succession within the organization, not that it was a glass ceiling, but that there was a capable person in front of them. And we'd encourage them to Go to business school, and we sent a number of young women to Harvard Business School and subsidized their program and promised to keep a job form when they graduated, if that's what they wanted when they graduated. And in one case she returned for a while. In another case, they went on to bigger and better things, but we felt great gratification out of Being a launch platform. Yeah. But but showing up and making yourself present And trying to be as involved as you can in the rainmaking, in the business development side of the business where revenues are generated And not necessarily settle for back office administrative HR, things like that. Yeah.

Lan Elliott:

There's a big part to raising your hand for those sorts The things I think a lot of people sit back and they think they'll come and notice me and ask me, but I think so much of it is raising your hand and saying, hey. That looks really interesting. Is that something that I could do?

Ross Bierkan:

Agreed a hundred percent. Yeah. Yep.

Lan Elliott:

ROss, one of our favorite questions at DEI Advisors is around what advice would you give to your younger self? And I think a lot of self empowerment is or is requires self reflection. And I think this is one of those questions that I think requires a bit of self reflection. And what I love about it is it changes. I know my answer has changed over the years. So I'm really curious at this point in your career, what advice would you give to your younger self?

Ross Bierkan:

My younger self probably wouldn't listen, but I guess I'd say, look. It's Go it's going to be okay. You're on the right track. Follow your intuition about this Concept of taking risk and billing a company, it's a viable strategy. You're not you're not Taking a wrong turn in your career. Don't waste energy on second guessing or peeking over the corporate fence At big companies and with shiny amenities like company cafeterias and meditation rooms and softball leagues participating in hungry start ups is really a dynamic way to go and completely legitimate choice. It

Lan Elliott:

has served you very well for

Ross Bierkan:

sure. It worked out. It did.

Lan Elliott:

And one final piece of advice, if you wouldn't mind, Ross, for our viewers, and keeping in mind that the mission of DEI Advisors is around empowering personal success. What final nugget would you offer to our viewers who are looking to advance their careers?

Ross Bierkan:

Yeah. It kinda circles back to the two questions prior, but other than showing up, I'd say Be very specific. Determine what it is that you want. Identify the goal. People generally wanna be supportive, but you can't simply ask for generic help. It's important to articulate your ask, Whether it's a near term objective like a project in which you'd like to be included or a longer term career objective, and if you could frame it in your own mind clearly enough that, you can give yourself the elevator pitch and it and it resonates with you, Then you're ready for the ask. And then secondarily, kinda As your career advances, remember where you came from, keep an open door policy. Before you know it, the tables will turn and you'll be a mentor yourself, and it could be self, and it could be a formal relationship or it could be informal. While I was CEO when I wasn't traveling, I'd go to the company break room at lunchtime, and I'd sit down at a table of associates and just let them start firing questions or talk about what's on their mind. And to be in a position to be beneficial in such a way and to be accessible and supportive Has been so fulfilling to me throughout my career. I'd wish it on anyone. Thank

Lan Elliott:

you. That is wonderful advice. I love both the specificity, being specific as to what help you're looking for, and the idea of giving back, which, of course, is part of what you're doing today. And Ross, thank you so much for being on, for sharing your wisdom with our viewers and for continuing to mentor and elevate women and underrepresented groups and others in our industry. Thank you for all you do.

Ross Bierkan:

Such a pleasure, Lan. Thank you.

Lan Elliott:

And for our viewers, if you've enjoyed this interview with Ross, I hope you'll go to our website deiadvisors dot org and look for additional interviews with hospitality industry leaders. Thank you.