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Family success


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  • | 6:00 p.m. December 29, 2006
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Family success

Entreprenuer by Jean Gruss | Editor/Lee-Collier

The Pezeshkan family name is well-known in construction circles in Naples. Another Pezeshkan has made his mark in the architectural field and offers lessons for succession planning.

The Pezeshkan name in Naples seems to be synonymous with success.

Most visible is Fred Pezeshkan, the high-profile president and CEO of the Gulf Coast's largest construction company by revenues, Kraft Construction Co.

But his younger brother, Rey Pezeshkan, has made his mark on the architectural scene. His company, Architectural Network, has been an integral part of downtown Naples' revival over the last decade.

The company has designed eight of the buildings on tony Fifth Avenue South and is now involved in Renaissance Village, a large mixed-use project that will redefine the busy intersection of U.S. 41 and Fifth Avenue.

But the success of the projects mirror an approach that Rey Pezeshkan has taken within his business. He builds new companies and gives employees an ownership stake so they'll stick around.

Pezeshkan also is opening an office in Chicago. That's because that city has the highest concentration of architects and he wants to tap into that talent pool. That too will be a separate company and the employees there will have an ownership stake.

Beyond retaining the best employees, Pezeshkan says giving employees ownership means the company can move on without him. Pezeshkan, 51, asked himself six years ago: "What happens to the company if I die tomorrow?"

It's a question many owners of private businesses should ask themselves, he says. "Most of us have been so busy that we haven't thought about transition," Pezeshkan says. His advice: it's never too early to start and it's a good idea to make the transition slowly and methodically over a 10-year period. "Who's the person who will succeed you?" he asks rhetorically. "If you don't know, you haven't started."

Building new companies

About six years ago, Pezeshkan felt the company no longer had to worry about survival. He stepped back and examined how to make sure he could attract the best employees and retain the ones he had.

"To be able to have really good people, they have to be part of the process," Pezeshkan says.

For example, he hired interior designer Edie O'Riley and realized that she might leave if she didn't have a vested interest in the business.

It's not uncommon in the world of architecture for someone to work for a firm for a few years and then get the entrepreneurial bug and form a separate practice.

So Pezeshkan formed a new company called Interior Design Network and gave O'Riley and other designers at the firm an ownership stake in it. Pezeshkan retains the majority of the business so he can control the overall vision.

He did the same thing with another group of talented urban designers within his firm. He formed Urban Design Network, which focuses on designing residential neighborhoods.

Talented young recruits demand a seat at the table these days, Pezeshkan says. "They come right out and want to sit next to the boss," he says. He lets them by giving them an ownership stake. "They're smarter than we were when we got out of school," Pezeshkan says.

Pezeshkan doesn't limit the new kinds of companies he creates. For example, he hired a talented computer expert to maintain the firm's computers but realized that he, too, might leave. So Pezeshkan created Information Technology Network. The company now has four computer experts who own a part of the company and maintain networks for other construction companies, landscape architecture firms and an assortment of other clients in addition to its own firm.

Pezeshkan isn't limited by geography, either. He's created yet another company called Architectural Network Chicago which will tap into the city's huge talent pool of architects. With Naples' high cost of housing and expensive lifestyle, it's not always easy to recruit and relocate new employees.

Eventually, each company will have 15 to 20 people that will be responsible for their own profits and management. But they'll collaborate on bigger projects as needed, Pezeshkan says. Setting up these separate companies absolves Pezeshkan from having to oversee too many people. "I don't want to manage lots of people," he explains.

Employees with an ownership stake also have a greater interest in teaching younger and less experienced employees. "We have to train correctly," Pezeshkan says. The firm's internship program is rigorous and demonstrates a clear path to success. For example, Matthew Kragh, a principal with Architectural Network, started as an intern. "We grow people here," Pezeshkan says.

Pezeshkan won't reveal financial data, but he says revenues have tripled in the last six years and the staff has grown from 20 to 32 people in that period. Pezeshkan can't say how many more companies he'll create over the next few years. "We will start companies as we need to," Pezeshkan says. He expects each one to be profitable after one year.

In the end, Pezeshkan says his business strategy arose out of the need to create value for his clients. That meant retaining the best employees. "It took me 12 years to learn good business sense," he says. "People are your best assets."

Growing in Naples

Rey Pezeshkan left his native Iran when he was just 14 years old and completed high school in Ohio while his older brother, Fred Pezeshkan, attended Ohio State University. Rey also later attended Ohio State, graduated with a degree in architecture and stayed in the U.S. while the Iranian revolution unfolded.

After a stint working for the state of Ohio, Rey Pezeshkan and American-born wife Linda followed brother Fred Pezeshkan to Naples in 1980. But Naples was a sleepy little town back then and Rey found work in Fort Myers instead.

In 1987, he formed his own firm with partner Clint Gamble in Naples. "The growth was starting to happen," Pezeshkan says. When Gamble retired in 1990, Pezeshkan renamed his firm Architectural Network. "I started the company with just a couple of credit cards," Pezeshkan says chuckling.

Fortunately, Fred Pezeshkan was well established with Kraft Construction at the time and introduced him to clients. "Sometimes it was easy to open the door," Rey Pezeshkan acknowledges.

Rey Pezeshkan's first customer was a physician friend from Ohio. Architecture Network designed a 60-unit condominium building at the new Pelican Bay development in Naples. One project led to another and Architectural Network became known for its condominium work.

Then, Pezeshkan met Aubrey Ferrao, the president and chief executive officer of Gulf Bay Group of Companies. The Naples developer became Architecture Network's biggest client in the early 1990s, generating 50% of the company's business. "It took our firm to a certain level," Pezeshkan says. In the Pelican Bay development alone, Gulf Bay built $2 billion worth of condominiums. In all, Gulf Bay has built $7 billion worth of condos in Southwest Florida.

By about 2000, Pezeshkan's firm had blossomed and he could afford to be choosy. Working with just a half-dozen big clients, Architecture Network narrowed its focus on projects Pezeshkan thought could add value to the property.

For example, Architecture Network helped Naples developer Jack Antaramian add 80 condos to his project by including a public plaza in the Renaissance Village project in downtown Naples. It was a gesture of goodwill towards the city and local officials returned the favor by granting Antaramian an additional floor of height to his project. "It was a breaking point for the project," Pezeshkan says. "That creates value."

What's more, Antaramian and Pezeshkan teamed to sponsor a design competition with a $20,000 prize to figure out a way to link Fifth Avenue South over U.S. 41 to Renaissance Village. Two professors from the University of California at Berkeley won and the city is now conducting a traffic study that could lead to the design's implementation.

-Jean Gruss

 

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