53: Building the largest multifamily lender in the nation, with Willy Walker CEO of Walker & Dunlop

My pleasure, Ben.

There are. I guess you got to wind the clock back then to 2003 when I joined the firm and it was a fantastic company. It was a wonderful platform to join but it was a small company. It was just as you rightfully said it was around 50 employees and it was a very profitable firm but it was a small firm. It didn't have a wide reach and I had joined Walker and Dunlop from having run significantly larger businesses having been in the private equity world and seen how a firm like TPG did and does what TPG does, having worked at Morgan Stanley and seeing how Morgan Stanley does what it does. And I think that one of the great gifts I had was not joining the family company right out of business school or undergrad where I would have looked at what was there and said, 'Okay, let's think about how we make this bigger.' And let's just say that our footprint at the time was just the greater Washington area. Maybe we expand to Philadelphia. Maybe we expand down to Charlotte. That would have been the growth trajectory we would have been on. But because I'd gone and done a lot of other things and run much bigger businesses, I had a good sense of saying, why don't we create another Morgan Stanley? We're nowhere close to creating another Morgan Stanley. And if we were able to someday, probably long after I'm here, hallelujah. But the point being is having a vision for what you might be able to create is, I think, very important. And I was blessed to both have a lot of work experiences before joining Walker Dunlop and then also some mentors that allowed me to think big. The second thing that I would say was very important was making sure that the people on the team were aligned on that growth path and what we wanted and needed to do. There were a couple of bankers and brokers at Walker Dunlop who weren't aligned with that. They wanted to keep their client list to themselves. They wanted to do mortgage banking in the way that mortgage banking was done in the 1990s and not how it's done in 2010 or 2020. And so making sure that we had the right people on the team was not only important but challenging because it wasn't like I just showed up one day and said, 'Great, you're not on the team. You're off and I'm going to put somebody else there.' It was a small company. Everyone was important to our performance on a day-to-day and quarterly and annual basis. So you can't just walk in and say, 'You're done.' But over time, we got the right people on the team. The third thing was M&A. Walker and Dunlop had never acquired a company prior to me joining the company. And when we focused on our first acquisition, I will never forget walking into my former colleague Howard Smith's office and our chief underwriter was sitting at the table and our Howard Smith who was our president and one other person and I said we're going to acquire Column Guarantee from Credit Suisse and their first question was how do we know how well the people are trained? How do we know the credit quality of their portfolio? And there were all these questions of if it wasn't built here, we can't have faith and confidence in it. And I basically said to them, that's what diligence is for. And we went and made the acquisition of Column, the first acquisition we've made, and we've now acquired 18 companies subsequently. So 17 others, including Column, which was the 18th, or maybe it's 16 others and Column's 17. And then I would say there have been plenty of mistakes I've made and we've made collectively. I think one of the other pieces to it is that I have always had personally and as from a company standpoint a chip on our shoulders of being the person who wasn't good enough, wasn't capable enough, was the small fry that shouldn't be in the room, if you will. And so I think having that sort of thought that we actually can belong, we can be big, we can show up in a room and have people like CBRE or JLL pay attention to us. When I first joined the company, we'd walk in a room and everyone would be like, 'You'll never compete with CBRE or JLL.' So now that we actually compete with them on a day-to-day basis, it's okay, great, we've gotten there, but let's not get complacent. Let's keep driving forward. Let's be better. Let's grow. Let's keep going. And so I think that constant sort of what I would call chip on the shoulder is an important component of both me as an individual and us as a company, which has allowed us to grow as fast as we have and accomplish as much as we have.

It came from really grade school and being in a highly competitive environment in grade school into high school where I was a good athlete. I was a student leader and I was a very mediocre student and I was around a lot of hyper or exceptionally gifted students. And so I was made to feel pretty stupid. And so for my high school years and even into my college years, I consider myself to be pretty average as it relates to intelligence and capabilities. And then when I got out of college, I moved to Latin America. I started reading a tremendous amount. I got into my work and dove into it feet first and had a very young general management experience and then applied to business school. And when I got into Harvard, Ben, I was very nervous that they'd made a mistake and that somehow they saw something in me that wasn't what I actually was and that I was going to get to Harvard and not be able to keep up. And when I got back my first exam, they score on a 1, 2, and 3 scale at Harvard. 10% get ones, which are A's, 80% get twos, which are a pass, and 10% get a three, which is a fail. And that's the forced curve that they have at HBS. And when I got back my first big exam and I got a one on it, all of a sudden I was like, whoa, like I belong here. Like I can actually do this stuff. I can actually be exceptional here. I took that feeling to the max. I took every course I could. I was an honors student. I was in the student body. I was on the lacrosse team and on the hockey team and I was an editor of the student newspaper. I did everything at HBS that I possibly could to say to everyone, I'm good enough to be here. And I'm sure there were plenty of people who went to Stanford and Yale undergrad who sat around and said, 'Why is that guy so freaking insecure and we're here to get an education and do what we want to do.' And I was like, 'I'm going to prove to everyone that I'm good enough to be here.' And you know, over time and as you get successful with your career, some of that stuff burns off, but a lot of it has got these core wounds that are very hard to heal. And so as a result of it, while I'm clearly now that I'm 58 years old and have had some success, a lot more quote unquote mellow or not feeling like I've got to constantly prove myself, but at the same time being a publicly traded company, I'm constantly aware of how we stack up, how we compete with the competition, how we look from a shareholder return standpoint and all that stuff. But that's just core to me and my kind of core competitive nature.

I said previously, Ben, that there's certain people who can kind of see the future and can build a company to what they think is going to happen. Elon Musk, Steve Jobs, plenty of others who have an ability to look around corners and see what the future's going to bring. I'm not one of them. I'm not one of those guys who if I had not seen what I could turn Walker and Dunlop into and actually seen larger firms and how they go do it, I wouldn't have just sat down and said that's what we can do. So I think seeing the vision, seeing the future is very important and I was fortunate to have experiences that did that as it relates to was that misguided? No. One of the core attributes that I believe I have is just a certain sense of tenacity from having gotten kicked in the shins or kicked in the teeth a lot of times in my life. One of my great mentors, a gentleman named Jack Hennessy who ran Credit Suisse said to me when I was starting up an airline in Argentina when I just gotten out of business school and I showed him the business plan and Jack said to me, 'Get as many scars as quickly as possible.' And what Jack was saying was take risks, fail, and learn from your failures because everyone's going to do that. And I was fortunate to be in a time in my career where the bet of my time, the bet of the amount of money that I did or didn't invest in the airline wasn't something that would ruin my life. So, I could take risks. If I had done that airline startup, let's just say 10 years ago, and I'd put a lot of money into it and it was like my big career move and I had three kids and a family and all that kind of stuff. If what had happened to the airline, which it went bankrupt because all of our plane contracts and all of our fuel contracts were in dollars and the Argentine government devalued the peso in 2000 and the thing went goodbye, right? If I'd had all my chips into that, boy, that's a bad day, right? So, I was able to take risks and get experiences early in my life when they weren't going to completely derail my life or my career or whatever else. And then I think that underlying competitive nature, one of the reasons I like to hire athletes is because they've been in a competitive environment. Clearly, students also can be in a very competitive environment as far as wanting to get A's and competing with everybody to get great grades. But there is something in the sports world of going out on the field competing and you're either going to win or lose and how you deal with both your winning and losing I think is extremely helpful to people in the business world. And so that core competitive nature of me of going out and running marathons really fast or triathlons really fast or competing in college and lacrosse and things of that nature, I think creates in me somebody who just likes to succeed and win. And when we lose, I am not quick to just brush it under the mat and move forward. I like to look at it, figure out why we lost, and try and do better.

I don't know that I'd agree with that in the business world. I think that everybody in the business world understands the need to compete, the need to win. I have a little paperweight on my desk right here that says on it, 'Winning isn't normal.' And it was given to me by my friend John Fish who was the head of the chairman of the real estate round table and runs an incredible construction company called Suffolk in Boston. And you know winning isn't normal but it's required if you're going to stay in business whether you're a small business or a big business. If you're not winning you're going to go out of business. I think a lot of people hear Jeff Bezos say that one day Amazon won't exist and we see Amazon in all of our life and we're like how could Amazon ever go away? Don't forget that GE almost went away. Had Larry Culp not come in and saved GE, GE was going down. GE was the largest company in the world by a market cap standpoint in 2000. Largest. And Larry Culp did an amazing job of saving it. But quite honestly, under Jeff Immelt's leadership from when he took over from Jack Welch until Jeff Immelt left, GE almost went under. So there's no even if you're the largest market cap company on the face of the planet, there's no escaping that you've got to win. You've got to maintain clients. You've got to continue to put up the numbers. So like this I would put forth not trying to dive into politics on this too much but I look at what Mandani's administration thinks they're going to do in New York and the woman who's now the head of tenant representation saying that properties should go from being owned by individuals to being owned by the common good. We make loans, we make loans and we're one of the largest lenders in the country and one of the largest multifamily lenders in the country. We make loans to owners who take responsibility for those assets. We don't lend to conglomerates of people who all have let's hold hands and hope that this all works out. This is hard dollars and cents lending. They better pay us back and if they don't pay us back, we're going to take that asset over. There's no this isn't let's just have a good time. Yeah. That competitive spirit has to be underneath everything you do. Now to your question, Ben, have there been times when I've gone too far? 100%. Has that competitive nature, competitive spirit made me miss an opportunity, go after an opportunity that I either should have done and didn't do or did do and shouldn't have done? 100%. But at the same time, I am a big believer that if you work harder than the competition, you will win. I grew up with a mom who sat there and looked at my report cards in grade school back to where I told you I built my chip on the shoulder. And she'd look at these very mediocre grades of a bunch of B's and a C spattered in here and there. And she'd said, 'But you made the effort roll.' And we would get effort grades of ones, twos, and threes. And I would get a lot of ones for effort. She'd be like, 'But honey, you tried hard.' And that was the consolation of getting a very mediocre scorecard. But at the end of the day, there's no doubt in my mind people can out hustle the competition.

There are two things to keep in mind. When Walker Dunlop went public back in 2010, there were many more publicly traded companies back then than there are today. And the private equity markets were not nearly as large and robust back then as they are today. So that 15 years between 2010 and 2025 have transformed markets both less companies being in the public market as a number of companies not market cap then but as a number of companies the number of companies has shrunk and then the private markets have grown dramatically. So back when we went public, while there was plenty of private equity interest in Walker and Dunlop in 2009 when I went to recap the company, the private markets weren't nearly as robust and therefore didn't look as appealing to me as the public markets did. The second thing is that I think at the end of the day, you got to figure out what you're trying to accomplish. If you're trying to create capital to invest in your company, you can get that in the public markets, you can get that in the private markets. If you're trying to exit your company, you can get that in the public markets, you can get that in the private markets. So, you can go either path. I do think that there was something that was very alluring to me about having a publicly traded company. And some of the things I had no idea about and other things just seemed interesting to me. But at the end of the day, it's been a fantastic 15 years as far as being a publicly traded company. We've been very fortunate that our financial performance has been exceptional and that our shareholder returns have been exceptional. And at the same time, if you don't need to go public, don't go public. Like, you need to access the if you need to access the capital markets, go do it. We today, while we have $800 million of debt at Walker Dunlop, and being able to access the debt markets is very helpful to us. On the equity side of things, we're not a big issuer of equity capital. We're not like a REIT that uses their balance sheet to go and do a tremendous amount. So quite honestly, W&D doesn't access the capital markets the way that many large publicly traded companies do. But at the time I needed to do something from a capital structure standpoint, looked at the private markets, saw the public markets were open to us, and we went out through the public markets.

Let's go to the risk side then let's go to the opportunity side and how I frame things when we get up against the wall if you will. So on the opportunities missed, we almost sold Walker and Dunlop in the spring of 2008, just before the great financial crisis to one of the big investment banks. And that deal fell apart in May of 2008 due to the impending great financial crisis. And then in October of that year, Fannie Mae and Freddie Mac, who are our two biggest lending partners, went into conservatorship. And there were plenty of days in October of 2008 at the beginning of the great financial crisis where I said, 'Did I miss the greatest opportunity ever in selling the company in May of this year? And will we ever survive?' So in those moments, you just have to take a deep breath and deal with what the world is giving you and you have to keep moving forward. You can't sit there and say, 'This is too hard or I'm too freaked out or I should have done the deal or whatever else.' You can't look back. You can't do anything about it. So forget about what was an opportunity at the time. If you didn't execute on it, you didn't do it. Then your world is what it is in front of you today. Fast forward to January of 2009, we had the opportunity to buy a company when nobody else was buying companies and we bought Column Guarantee from Credit Suisse because Credit Suisse wanted out of the commercial real estate lending space. And so at that time we stepped into an opportunity when everyone else was running out the door. So we played offense when others were playing defense. Okay. The one thing on that deal that I did that I was able to do was I gave stock to Credit Suisse in Walker and Dunlop rather than using cash which I didn't have to buy the company. So at that time as I was thinking about the future of Fannie and Freddie and buying a company from Credit Suisse with stock of Walker Dunlop I was like I'm either going to have a business three years from now or I'm not going to have a business three years from now. So if Fannie and Freddie go away zero is still zero. If Fannie and Freddie stay in business and they take stock in Walker and Dunlop and we've now doubled the size of the company, we can grow. This thing's going to be worth a whole lot more money. So, we were able to structure a deal that was a one-way option, if you will, only because if it went to zero, right? So, I look back on those times and say that's when you step forward. Fast forward to the pandemic. The moment that the federal government granted forbearance on every loan that Fannie Mae, Freddie Mac, and HUD guarantee, every loan. My CFO called me and said, 'We got a lot of people lining up for forbearance, and guess who needs to advance payments to the bond holders? We do. We Walker and Dunlop.' And guess who doesn't have billions of dollars in capital sitting on their balance sheet to advance payments to bond holders if a whole bunch of people line up and say, 'I want forbearance on my loan.' Us. So, there was a period there from the beginning of the pandemic until we got a warehouse line put in place with Bank of America to be able to potentially fund advances to bond holders that was very much, whoa, what's tomorrow bringing? And by the way, I had we bought a company previously that had an earnout payment due to it. And I called the person who sold me their business and I said, 'Look, we don't I'm trying to hoard every dollar of capital I have in case a lot of people show up and say they want forbearance and we need to advance payments. So, I'm asking you, would you maybe can we give you a deferral of that earnout payment so we can keep the capital at Walker and Dunlop in case I got to forward it to bond holders and I'll pay you a premium to what I'd pay you today?' And that person said, 'No, I want my money today.' And I have never ever forgiven that ever. We were against the wall. That person said, 'My money is more important to me than the future of Walker and Dunlop.' We paid him and as you can imagine, he's no longer with Walker and Dunlop and not somebody that is high on my list as it relates to people who would put their own personal interest in front of the interest of the company. So those types of experiences, they test you. They make you sit there and say, 'I got to hoard every dollar of capital.' And guess what? Nobody showed up for forbearance. We didn't have to advance payments. But for a period of time there, I'm trying to hold on to every dollar I've gotten. I've got someone who we bought their company who shows up and says, 'Oh, by the way, I want to get paid out.' Those are the types of things you got to deal with. The other piece to it during the pandemic particularly was communication. When times are tough, when times are tough, the natural reaction is, I don't know what's going on. I'm going to pull back on my communication. I'm going to pull back and just say what I need to say, but I don't know where the world's going. Therefore, I can't talk with conviction, and therefore, I'm not going to talk. Big mistake. One of the great things that we did in the pandemic was to talk to everyone every single day. The Walker webcast came out of the pandemic of wanting to communicate with our clients, which today has been listened to by over 22 million people and hundreds of thousands of people every week still come to listen to the Walker webcast because we wanted to communicate. We wanted to get out to our clients to say, 'We don't know what the world's doing, but let us give you tidbits so you can make your own conclusions. You can make your own planning about what the world has in store for you.' So, we've been fortunate, Ben, to zig when others have zagged. We bought a company in the GFC when nobody else was buying companies. We overcommunicated during the pandemic and created the Walker webcast. We've done some things when up against the wall that have ended up being very valuable to us, but believe you me, there have been plenty plenty of sleepless nights during those times and there have been some really hard decisions.

That's tough because they're the most dramatic because they have such contrast, but that doesn't mean that they're the most important as it relates to the growth of the company or the culture you create. But I would say that there is no doubt that when things are great, you can't really tell people's character. When things get ugly, people's character that just to go back to it, not to dwell on it, but that earnout payment to that person who said, you know what, I want my money. And I'm sitting there pleading with him saying, the future of our company might depend on me not giving you this money and keeping it on our balance sheet. And he said, you know what? I don't care. I want my money. He had a legal right to it. We paid him. But that shows

Someone's character at that moment when the chips are down. And so I do think that it's when the contrast is there and when the tide rushes out that you actually see what people are made of. Whereas when things are going great, you don't really see it. But nonetheless, one of the great deals we ever did was the acquisition of CW Capital from Fortress back in 2012. The market had healed by that point. There was no distress in the market. Fortress wanted out. We wanted in. We struck a great deal and that ended up doubling the size of Walker and Dunlop and being one of our really great acquisitions. But that wasn't like that, that was just a great deal. I think that times of trouble tell you a lot about people's core character and also test leadership incredibly. But that doesn't necessarily mean that's the only time that sort of great things are done. Great things are done every day by being consistent in the way that you manage the business, lead the business, and the way that you react to all the different things that come to you as a business leader.

I think it's really difficult to make any generalizations there. Ben, intellect is super important. It's not by coincidence that Mark Zuckerberg and Bill Gates both dropped out of Harvard, okay? Super super intelligent people and saw things that others don't see. And so you're never going to hear me say, 'Oh, I don't think education or intelligence is important.' It's actually super super important. I think it is. But intelligence is also created in various ways. First of all, there's EQ versus IQ. So, if you're going to be an effective leader, you better have a bunch of EQ along with IQ. But, by the way, I've got a business school classmate of mine who I think has about zero EQ, who has 160 on IQ, and has an enormous business that he's built, wildly successful. You can't sit there and say it's all about EQ. And he's done pretty well overindexing on the IQ side. Then there are also plenty of people, former head of Sun Microsystems and other huge companies who sit there and say, 'I was dyslexic, a terrible student, and all I've created my incredible success on is a bunch of EQ and then also getting really intelligent on the things that I needed to know to build Microsystems and the company that was built into.'

No, I think that was Chambers.