Helping Michael Zamagias achieve diversification in business
Michael Zamagias has built an array of successful businesses by solving problems, not just selling products
Adapt or perish.
It’s a phrase that has been repeated by countless businesspeople at countless companies, to the point that’s become a cliché. But Michael Zamagias learned how true the phrase is after an early lesson as a young real estate agent in Johnstown, Pennsylvania.
“I had gotten my real estate license and had begun selling houses in the area,” Zamagias says. “I loved it. I was drawn to residential real estate. But then, in 1977, the flood hit.” Johnstown’s location in the Conemaugh River Valley has historically left it susceptible to major flooding events. The city was hit by disastrous floods in 1889 and 1936; in July 1977, a third major flood hit Johnstown when a storm stalled over Western Pennsylvania and dumped nearly a foot of rain in less than 24 hours, causing upstream dams to fail.
The flood caused more than $200 million in damage to Johnstown and surrounding communities, and the local housing market collapsed. “With the residential real estate market gone, I had to move in another direction,” Zamagias says. “I moved into commercial real estate. I found I was good at it and I liked it, and that’s where I started to really build a name for myself.” Zamagias became one of the region’s top commercial leasing agents, and in 1987, moved to Pittsburgh, where he founded Zamagias Properties. But the lessons from the Johnstown Flood of 1977 stuck with him -- stay adaptable, diversify and manage risk. Those have served as a guiding principle as he built a portfolio of successful businesses over the ensuing 40 years.
“You look for messes that need cleaned up. You look for problems that haven’t been solved. If you can clean up messes and solve problems, you’re going to find customers.” - Michael Zamagias, founder, Zamagias Properties
The path to diversification
To properly diversify requires a strategy and the resources -- financial and otherwise -- to turn a vision into reality. But even more fundamentally, there must be a need. Diversifying requires identifying a hole in the marketplace that no one else is filling, an idea that no one else has yet explored, a pain point that has not yet been addressed. That rule serves as Zamagias’ compass when it comes to expanding his business.
“People want to call it a philosophy, but I think it’s simpler than that, at least to me,” Zamagias says. “You look for messes that need cleaned up. You look for problems that haven’t been solved. If you can clean up messes and solve problems, you’re going to find customers.” It would have been easy for Zamagias to rest on his laurels. His commercial real estate business was thriving.
Zamagias Properties quickly grew into one of the most prolific commercial real estate developers in Western Pennsylvania in the late’ 80s and into the ’90s. In 1988, the company launched its signature project, Robinson Town Centre, a mixed-use development on more than 700 acres between downtown Pittsburgh and Pittsburgh International Airport.
At a time when many company leaders would be focused solely on their blossoming core business, Zamagias was searching for opportunities to branch out. He found his first such opportunity in 1990, co-founding Pennsylvania Capital Bank, which served a niche market by providing premium services to high-income individuals and private companies.
“That bank has now been absorbed into Huntington via a series of purchases,” Zamagias says. “It had been sold to Three Rivers Bank, which was acquired by SkyBank, which in turn was acquired by Huntington when they moved into the Pittsburgh market.” Pennsylvania Capital Bank was a rare sale for Zamagias, as he generally prefers to build out his companies, not sell them off. “We don’t want to sell companies,” he says. “We want to run them, build them and invest in them.”
Health care and beyond
One company Zamagias has grown with a long-term vision is TeleTracking Technologies Inc. With hospitals -- emergency rooms in particular -- frequently overwhelmed by patient volume, Zamagias was part of a group that saw an opportunity to utilize software to improve the efficiency of hospital workflow.
Teletracking Technologies’ software tracks in real time available beds, patient status and staff availability, allowing hospital staff to see patients sooner, fill beds more efficiently and administer treatment more effectively. “We looked at the market and recognized that a lot of health care facilities don’t have the business tools necessary to manage some of the more frustrating aspects of running their facilities,” Zamagias says. “To date, we have around 900 hospitals that we help operate with our software, and we’re proving that health care costs can be lowered without sacrificing patient care.”
Zamagias Properties has also diversified geographically, taking on projects in Lancaster, Pennsylvania. The most recent is the former Bolvia building, a 192,000 square-foot long vacant concrete building in the middle of Lancaster's central business district. Backed by a loan from Huntington and new market tax credits that incentivize developers to take on urban projects, Zamagias is turning the building into a mixed use property, with retail on the first floor, offices and apartments on the second and third and penthouse living on the fourth.
Return on inspiration
The lessons learned from the Johnstown flood and other events throughout his career have helped to shape Zamagias as a businessman and as a person. But it is the people in his life who have served as his real driving force. Zamagias learned about hard work from his parents, who ran a food store and lunch counter in Johnstown. It was there that Zamagias received his first lessons in adaptability and resourcefulness. “I was probably in sixth grade when I started working for my parents,” he says. “I did a bit of everything. I cut meat, I was a short-order cook, I mopped floors, I carried milk into the store from the big walk-in cooler. It was all stuff that needed to be done each day, and I quickly learned that you just have to do it.”
They’re lessons Zamagias hopes to pass on to a new generation at City Oven, a downtown Pittsburgh eatery staffed by teens and young adults in need of marketable skills and structured learning opportunities. “There really isn’t a much better place to get on-the-job training than in a restaurant,” Zamagias says. “I know firsthand, from working in my parents’ store. You learn about marketing, customer service, food prep, cleanliness -- lots of things that will serve you well no matter what career path you choose. I wanted to give others a chance to learn what I learned.”
The employees of City Oven, along with those at the rest of Zamagias’ companies, comprise a workforce of 450. They provide Zamagias with the labor and intellectual capacity to keep his companies thriving, but they also provide him with something else -- inspiration. “The abbreviation ROI means return on investment, but to me, it also means return on inspiration,” he says. “I have been inspired by so many people throughout my career, throughout my life, and I continue to be inspired by them.”
Adaptability and resourcefulness have carried Zamagias a long way, and he wants to pass those traits on to the people under him. But he also wants to continue to cultivate the ability to inspire throughout the remainder of his career. “I believe you need to give people the tools, show them the goal and empower them to reach it,” he says. “Position yourself as a servant leader. If your people reach their full potential, your company will reach its full potential.”
For more information, visit www.zamagias.com.
Understanding an eclectic business
Michael Zamagias has one “alpha dog” bank when it comes to his businesses, and that’s Huntington. “They make it a point to get in front of you, to meet with you,” he says. “They’ll come in at 6 a.m. for a breakfast meeting. They make it their business to know your business.” Zamagias has been operating his own businesses for more than 30 years. For 20 of them, Huntington has served as his primary bank, and he can’t see going anywhere else.
“A lot of banks call us to get in here, and I tell them you just can’t beat Huntington, for the reasons I just stated,” he says. “There are some good banks out there, but none that are as relationship-driven as I’ve experienced with Huntington.” It’s not only about business. Huntington bankers make it a point to get to know their customers beyond their financial needs -- they want to know how they can help make a customer’s company a better place to work and a better member of the community.
“We have 450 employees, and they all have different life circumstances,” Zamagias says. “Sometimes, someone falls on hard times, and we wanted to do what we could to help them. So we set up a need fund that can assist employees with basic expenses, when they find themselves in financial difficulty through no fault of their own. Huntington was instrumental in helping us set that up.“ As much as anything else, that’s why we’ll stick with Huntington. They worked with us to go the extra mile for our employees. They understood how important that was to us.”