Like many longtime business owners, Pinnacle Estate Properties co-founders Dana Potter and Jeff Black often asked themselves what would happen to their Northridge brokerage once they retire. “Dana and I were talking about, Are we going to sell or what?” Black recalled. The pair knew how succession stumbles could derail even a successful entrepreneurial venture. But they recently reached a happy conclusion: “We don’t have to sell, we’ll just fade away,” Black said. Their confidence comes from the integration of several second-generation leaders who are working their way up the ladder at the residential real estate firm that will celebrate its 30th anniversary next month. Potter’s son Christopher, 26, works as an agent specializing in luxury properties in the firm’s Calabasas office. His son Matthew, 29, is co-founder of HomeStack, a Torrance tech company that is developing an app for real estate agents, including the Pinnacle team. Black’s daughter Courtney, 24, and son Conor, 22, are learning the ropes at the company while they finish college. The company’s two additional partners, Danny Ross and Carl Torres, also have college-age offspring who might come on board. “We’ve got a deep bench,” Black said, adding that all the partners are conscientious about not pressuring their adult children to follow in their footsteps. “I would not wish this business on anybody. It’s a lot of work. … It’s also a very emotional business, which isn’t for everyone.” But so far, the transition into a family business has not presented insurmountable challenges, and Potter is quick to point out that this isn’t the first time relatives have joined the Pinnacle team. After he and Black started the brokerage in 1985, Potter’s father, Jerry, sold houses with them for about four years. Back then, the company had just a handful of agents and they coped with very different market conditions, starting with the fact that the highest-price San Fernando Valley homes sold for around $500,000 – less than today’s Valley median home price. Conventional mortgages came with 13 percent interest rates; second mortgages were priced at 20 percent in those days. “That’s just the way things were and we dealt with it,” Black recalled. Changing times Over the years, Pinnacle has survived three serious market crises and learned how to make money even in a downturn, like when the L.A. market cratered in early 2007. But times have changed and today’s residential market in the Valley is nearly ideal, Black said. With more than 800 agents, the company sells properties from condominium units priced below $300,000 in Encino to Malibu estates listed for $10 million and up. But in recent years, Pinnacle has come to dominate the luxury sales markets in Northridge, Calabasas and Malibu, Black said, as a member of Chicago-based Luxury Portfolio International, a network of independent brokerages offering high-end properties. Overall, the $117 billion U.S. residential real estate industry has experienced 3.8 percent annual growth over the past five years and is poised for 3 percent annual growth through 2020, according to a report from Australian market research firm IBISWorld. With more than 720,000 brokerages scattered across the nation, there is no one player that dominates the industry, the report said. But Pinnacle seems to have found a winning strategy to carve out a piece of the market. “If you stand still, take a break or keep the status quo in this business, you’re dying. The secret is to constantly be in growth mode; it’s all about cash flow,” Black said. “So you keep opening new offices, adding new people and you keep the volume and income levels up.” Pinnacle was sixth out of the 40 largest residential brokerages on the Los Angeles Business Journal’s 2015 list, which ranks brokerages by sales. Pinnacle reported nearly $3 billion in sales volume and 3,800 transactions. It has a half-dozen offices in the north San Fernando Valley, with a commercial division in Calabasas, and in recent years has added title and escrow services. In 2014, the brokerage expanded into Malibu, where the median home price is $5 million. Black and Potter never dreamed of billion-dollar sales volume when they started the firm. Back then, Potter was well known in the Valley as the quarterback of the Granada Hills High School football team, which won a legendary 1970 city championship game against San Fernando High School. He went on to play for the University of Nebraska and Cal State Northridge before he met Black and the two started Pinnacle with a couple of additional partners. All of them worked for a rival brokerage at the time, and when word of their plans leaked on a Friday night, they were fired on the spot. “We had leased a little office, less than 2,000 square feet, and we remodeled it ourselves over the weekend and opened the next Monday, sitting on the floor making calls,” Black recalled. “We got a $50,000 loan and started on a shoestring.” Their goal was $50 million in annual transactions at a time when agents “farmed” geographic territories, knocking on each door in a neighborhood every 90 days. “Agents today don’t believe me, but if you worked at that three days a week you could get close to 90 percent of everything listed or sold” in the territory, Black said. “Now we consider 25 percent to be the saturation point.” Tech revolution Nowadays, the younger generation at Pinnacle is less likely to make cold calls and more likely to use social media to reach customers. That shift could be a source of generational conflict at the firm, since millennials are typically more comfortable with technology than face-to-face interaction, said Quentin Fleming, who teaches business strategy at USC and wrote the book “Keep the Family Baggage out of the Family Business.” “The younger generation may be enamored with technology, but while websites can enable people to do a lot of searching, it’s still the personal connection and relationship that makes the deal,” Fleming said. “Will the kids consider the relationship stuff for old fuddy-duddies? The key is going to be finding a happy blend that utilizes the best of the tech, with the personal knowledge and expertise in the market.” At Pinnacle, many of the emerging leaders virtually grew up at the firm. “Everyone here has known me since I was a little toddler,” said Courtney Black. That kind of familiarity can lead some in the older generation, including longtime staffers, to have difficulty taking younger family members seriously, Fleming said. “There’s a tendency, after you’ve changed their diapers and seen them in braces, for the grownups to always consider the emerging generation as kids,” he said. Treating each other professionally, including using first names in the office rather than “dad” or “son,” can help, he added. And the long-term prospects for family-run firms after handing off control tend to be good, Fleming noted. “I’ve coached some real estate companies through family transitions and they’ve been quite successful, because agents have a lot of ability to make the business what they want it to be,” he said. “That helps the second generation coming in.”