Competition
Escape artist
How Yizhak Toledano keeps Sky Development Inc. nimble enough to stay one step ahead of the market
By Mike Cottrill
Smart Business Miami | July 2007
Page 1 of 1
You’ll have to forgive Yizhak Toledano if he’s not interested in a
long-term relationship.
It’s not that Toledano, a dedicated family man with a wife and
five children, has any real problem with commitment, but when it
comes to Sky Development Inc., the development firm of which he
is principal, chairman and CEO, Toledano has been careful not to
get married to one market.
Instead, Toledano knows that a flowing market can dry up quickly and potentially stunt his company’s growth. So to keep his company expanding when the market isn’t, he has created a special
niche within the industry. Keeping his eye on where the most
growth is available, he’s been able to jump on those flourishing
markets quickly and then move on to other successful arenas.
To do that, Toledano had to build a lean company that works
hard to understand when and where it captures the best market
share — and one that is also able to make a smooth transition into
another market.
“The No. 1 strategy is, we like to find out if the project can
work with today’s market and today’s environment,” Toledano
says. “We try to put all the information together not just for the
next 60 or 90 days, we want to look toward the next two, three
years.”
The idea is to clearly define an entrance and exit strategy and
timeline for a new market. Toledano says you have to study the
potential successes of a market and how long they’ll last
before you become committed. You also need to have a good
name everywhere you go so you can keep spreading out, and
you need to build a team with experience so you know when
you can make these decisions.
Implementing these strategies, Toledano has grown Sky to
more than $260 million in revenue.
Look for an exit sign
When it comes to growth, Toledano says the most important
part of his vision is very basic: He has to see the doorway.
“As a leader, you make sure that when you are entering into
a business that you can see your way in and your way out,”
Toledano says.
He doesn’t deal in clichés too often, but there’s one Toledano
knows is too true to avoid.
“When I’m looking at something and it appears to be too good
to be true, that means it’s too good to be true,” he says.
Toledano knew, for example, that a development boom in Las
Vegas over the past few years was a temporary boon to his
company, not the ultimate meal ticket. So, when his people
saw more and more companies moving in and fewer people
buying the developments, he was quick to move on.
“What happened with the market for the last five years wasn’t so real,” he says. “When you’re doing a project, if there are
another 50 productions going on around you, but there are
only 20 buyers, someone will get stuck with the leftovers.”
But with the appropriate exit strategy, Sky never has to ask
for a doggy bag. Toledano keeps his top people focused solely
on the way the market is headed in both the short term and the
long term, so they know when to start changing directions.
Part of facilitating that exit strategy for Sky is outsourcing
nonessential labor forces. While Toledano keeps his senior-level developers on staff full time, he’s more than willing to hire temporary engineers and architects when he goes to
another market. Without giving permanency to certain positions, he knows it can be a little bit easier to take a step back
when the market dries up. It also gives Sky a chance to work
with a staff already knowledgeable in the market.
“We’re outsourcing about 60 percent of the business,” says
Toledano. “You can get more projects and do several projects
at the same time. Letting other people do the job, and letting
my people check in at the end of the day, is easier than just
starting from ground zero.”
The outsourcing also provides flexibility for Sky. With
Toledano and his core group of employees watching the market, they can spend more time as visionaries and more time
scouting for tomorrow.
That has given the team at Sky the ability to look ahead to see
that when it completes one cycle, it may have to change pace.
In 2006, for example, Sky completed more than 1,000 condo
units. When Toledano realized that the market was more prosperous in commercial development, he was able to refocus his
team and start off 2007 with a focus on commercial work.
But Toledano made sure not to tie his team too far up in commercial work. He understands that his biggest strength is his
ability to make a clean break from an avenue when it starts to
close down.
“The lender is trusting my judgment — that I evaluate the
deal, that I look at the site and that I have a way in, and I have
an exit strategy,” Toledano says. “For them, and for me, the
most important thing is to have a solid exit strategy on every
deal.”
Be a market visionary
In order to have the flexibility of outsourcing a large portion
of the labor force, Toledano has to be sure that his team is full
of experts who can examine the market direction. His main
goal in his tight-knit crew is to make sure that his full-time people share the same goal.
“The No. 1 thing I’m bringing to the table is my experience,”
Toledano says. “When I interview someone, I feel the chemistry, I see the vision. The most important thing I want my people to understand is that we have to be market visionaries.”
With so much of Sky’s general labor off the table, Toledano
makes plenty of time to focus on how the company will grow.
“First of all, we have a weekly meeting, and at those, we are
updating all the status with the project and also our vision and
agenda — what we’re going to look for over the next six
months,” he says. “We talk about what deals we have on the
table, what offers we have on the table and the terms that
we’re still working on. When the time comes, all the decision-makers in the company are there to make a decision on strategies for tomorrow.”
Outsourcing also gives Toledano’s team the time to scout the
next big thing.
“We have weekly meetings and daily e-mails between the
entire staff,” Toledano says. “I’m giving everyone updates on
the market. Those that will be outside of the office looking at
new prospects, I let them give me feedback from wherever
they are so that I know I’m getting the most updated feedback.”
To keep that feedback coming in, Toledano is willing to pick
up more experienced full-time staff along the way. When he
works with someone who shares his vision or someone who
comes highly recommended from a company that he’s had success with, he taps that resource for his next opening.
“My team now is people that I’ve worked with in the last
seven or eight years in some way,” Toledano says. “Some were
service providers to me, and I had the opportunity to work
with them. We also came across people that did other projects
in the past and have been introduced with me through people
I trust.”
Overall, to structure his company’s growth, Toledano says
that he can’t just act as Sky’s only market visionary. He knows
that to find new areas of growth, he has to have a group of talented people watching the market.
“The days of the one-man company are over,” Toledano says.
“In order for a company to really grow, you have to have a good
team, and a good team will work with you only if you are the
type of person that people can work with you day to day, and
people can live with you and trust you.
“My philosophy is, the first step in making money is investing
in good employees. If you want those employees, you have to
let them participate in the success of the company. The most
successful people in the world, the No. 1 success that they had
is getting the right people to work with them.”
Build trust, build your company
Trust is a very important word for Toledano. When you want
to grow, your reputation is all you bring to a new market.
Toledano understands that it takes more than a handshake and
a smile to warm up new lenders, so he ensures that he is welcome wherever he goes by keeping up his end of the business
deal — even if it comes with an added cost.
“No matter what it takes, no matter what it costs, my philosophy in business, whether it’s with lenders or my people, is if I
make promises, I always deliver 100 percent,” he says. “If I said
something, if it’s going to cost me $1 or $1 million, I still have
to deliver it.”
Toledano knows that when he steps into a new market, he
needs something for collateral.
“I think that my ability, my track record with a lot of lenders
helps us grow,” he says. “If I’m working on a deal and I know
that I can offer terms to close in two weeks, I will have the
money to close in two weeks. It’s coming from prior relationships with lenders and my track records with those people.
They trust me.”
That trust can lead to big relationships when a company is growing. Sky has done transactions with industry big boys, such as
Merrill Lynch and Key Bank, and Toledano knows that his standing
in the industry is making its way around the block.
“In order to be in the game and to be in the business for the
long term, you need to create a good name, and you have to
understand that a good name is one of the most important
things that a person can have,” Toledano says.
Toledano says you have to make sure that honesty goes down
to even the most mundane details of the organization.
“What I explain to my people is, if you promise something to
someone, if you signed a contract with someone, you’ll respect
it,” he says. “This is a philosophy everyone has here on a dayto-day basis, on an hourly basis. If we make a commitment,
we’ll deliver it. That’s why I’m always telling my people, think
about that before you execute a contract, think about it before
you put a deal together.
“Make sure that on every little detail that you commit to that
you’ll deliver it all the way. You want to make sure of that
before you start any kind of commitment or put anything on
paper.”
That honesty also helps Toledano keep his employees. As the
company grows, he’s frank with his staff about Sky’s success,
and he shares the wealth. He makes sure that employees can
feel comfortable at Sky by letting them know how things are
going, so they can plan to keep the company in their future.
“I let them understand that with me, they’re going to stay in
business for the long run, and we’re not a fly-by-night corporation,” Toledano says. “If I’m making money, that means my
employees are making money. My employees do not work
strictly on salary. By being honest, and with them knowing me
and working with me day in, day out, and knowing that I keep
my word, I think it gives them the cushion and comfort level to
make other commitments in their lives.
“They can commit to bigger mortgage payments or car payments because they know they have something to count on.”
HOW TO REACH: Sky Development Inc., (305) 933-4646 or www.skydevelopmentinc.com
