Monthly Archives: December 2015

Tasty Crow

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Crows are remarkably intelligent and can live as long as 20 years. They typically have a wingspan of more than three feet and weigh nearly three pounds. A crow can fly up to 60 miles per hour and have been found as high as 14,000 feet in mountain ranges. Being smart, fast and able to fly to great heights make them particularly hard to catch. Recently I had to catch one so I could eat it . . . metaphorically speaking of course.

To be a successful entrepreneur we must have an acquired taste for crow. We’ve all heard the saying “to eat crow” which connotes humiliation and having to admit the making of a mistake. Sometimes our ego gets in the way and we do everything we can to avoid admitting that we made a mistake. We may point the finger at others. Or we may try and cover up the mistake hoping that its results will somehow vanish into thin air. I can tell you that all of these tendencies are mistakes.

One of our companies is involved in acquiring apartment properties across the country. We sold two such assets within a much shorter holding period than we had initially projected because of an opportunity to generate substantial profits. Members of our team prepared a detailed spreadsheet that showed how the sale proceeds would be distributed. These were large and complicated transactions with several tranches of equity provided by different investors. I was pleased to call two such investors to deliver the good news that they would be receiving a significant multiple of their original investment. Needless to say they were thrilled.

Within days, I received a call from my partner who oversees our apartment acquisition business unit. Apparently there was a bust in the calculations and these two investors would be receiving less than what I had told them. They were still receiving a substantial gain on the sale, but not quite as much as the expectation I had set. The mistake was honest and unfortunate but it still had to be acknowledged. Thus, I went about the task of eating crow.

I called both investors and said the following, “I’m sorry to tell you that the distribution figure I provided the other day was erroneous. We made a mistake in calculating the sale proceeds and your new amount is $X. Happily your profit is still much greater than we projected when you made your investment three-and-a-half years ago. I wanted to get back to you as soon as I learned of the error and I hope that you will still be interested in looking at future investments with us.”

Because we are a team I did not point a finger at the person who was responsible for the calculation. Instead I said that “we” made a mistake. I did not make up an excuse for what had happened. Simple but painful. The result was an expression of understanding on the part of both investors. I’m sure they were disappointed but there were no angry words and in both cases, an indication of interest in looking at the next deal.

Relationships are built on trust and can be strengthened in situations where things don’t go as planned. But this happens only when honesty and transparency are the top priority.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

crow

Pronouns

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Do you remember English class? We learned about modifiers, adjectives, adverbs, nouns, verbs and dangling participles. Diagramming sentences was a daily occurrence and understanding predicates and prepositions wasn’t far behind. And how about the way we got down in the weeds with relative clauses and rolled in the mud with non-defining or non-essential clauses? But my all-time favorite exercise in phonology involved the schwa. Which brings us to pronouns.

Pronouns are a major element of entrepreneurship. As peculiar as this may sound you’ll soon understand how very true this statement is. The next paragraph is a montage of snippets from speeches given by a very famous entrepreneur who happens to be running for president. Move past any ideological dispute you may have with this individual – that’s not the point. Instead, pay attention to the language and in particular, the pronoun usage.

“I have lobbyists. I have lobbyists who can produce for me. I have so many websites. I have them all over the place. I hire people, they do a website. It costs me $3. I will be the greatest jobs president that God ever created. I’ll bring back jobs from China, from Mexico, from Japan, from so many places. I’ll bring back our jobs, and I’ll bring back our money. I’m using my own money. I’m not using the lobbyists. I’m not using donors. I don’t care. I’m really rich. I am a nice person. I give a lot of money away to charities and other things. I think I’m actually a very nice person. I’m proud of my net worth. I’ve done an amazing job. I’ve employed tens of thousands of people over my lifetime. I’m proud of my net worth. I would build a great wall, and nobody builds walls better than me, believe me, and I’ll build them very inexpensively. I will find the guy that’s going to take that military and make it really work. I will stop Iran from getting nuclear weapons.”

I’ve selected these quotes because they overdramatize the point I’m trying to make. Notice the manner in which pronouns are used. This particular entrepreneur speaks in what I call I, Me and My language. I, Me and My language can sound arrogant and insensitive, and likely reflects the way a person thinks. Gracious and humble people don’t speak this way. They realize that it takes a team filled with talented people to succeed.

There is an alternative language that can be spoken by entrepreneurs. It’s called the We, Our and Us language. It recognizes the collective efforts and contributions of many. I’ve been working to perfect this language for many years and it has made me very much aware of how easy it is to slip into I, Me and My. Whenever I write a memo or an e-mail, I always review it before sending to replace the references to I, me and my, with we, our and us. I have come to realize how this simple act is an acknowledgement of others. And the more I write this way, the more I tend to speak this way as well. Ultimately, writing and speaking leads to thinking in this language which completes the conversion.

The entrepreneurial pronouns of we, our and us help build strong and positive relationships with others. Spreading the credit through inclusive language generates more goodwill than any amount of money could buy.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Team Trophy

Dumpster Fires

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Dumpster fires are tricky devils. They usually start out as nothing. Just a bunch of trash sitting in a big metal bin . . . and then someone flicks a cigarette butt or empties hot coals from a grill and the smoldering starts. Who knows what’s really inside the container? It could be aerosol cans, used motor oil, acetone, automotive batteries, paint thinner and a host of other accelerants. After smoldering for a while, the fire gets hotter and hotter until it becomes a raging inferno. If the dumpster is too close to a building, the entire structure could ignite and burn to the ground. Discovered early enough, a simple fire extinguisher could put out the blaze in a matter of seconds. But once it’s out of control the fire department may have a battle on its hands for hours.

There’s an obvious parallel between dumpster fires and the minor irritating problems that entrepreneurs encounter every day. We all experience situations that we tend to ignore. Perhaps there is a petty conflict between two members of our team. Maybe it’s a nagging customer service issue or a piece of equipment in the plant that isn’t functioning properly. We know the problem is there, but we simply choose not to address it wishing and hoping that it will just go away. After all, we have bigger crises to deal with. Right?

But we all know what eventually happens. The conflict between team members blows up big time and someone quits or has to be fired. Other team members are dragged into the drama which impacts productivity and damages our culture. The customer service issue results in the loss of a customer and perhaps a nasty post in the social media world hurting our brand in a much broader way. Now we’re in damage control mode involving multiple members of our team who are trying to restore our reputation. And that piece of equipment in the plant that wasn’t functioning properly? It finally breaks completely, shutting down the entire production line in the process. Oh, and one of our team members was injured when the machine finally died.

Each of these situations began as a small smoldering dumpster fire. Immediate attention (the fire extinguisher) would have resulted in a solution that put out the fire. The wider ranging consequences of inaction would have been avoided. This leads us to conclude that we need to look for small problems every day and intentionally take the necessary steps to fix them. I know that I have small festering issues that need my attention. But sometimes I just don’t want to face them at the moment. So I give myself a 24-hour pass and make sure they pop-up the next day on my task list. I’ve learned that it takes discipline to handle the small stuff or else I’ll eventually have to spend a whole lot more time and money untangling things later. I’ve found that the 24-hour pass approach works well for me. And I may even find myself thinking about what the solution will be before the end of my self-imposed deadline. Unfortunately there is no other trick to it other than “just do it.”

Small seemingly inconsequential problems can explode into dumpster fires that consume our lives. It’s better to take small incremental steps to solve the problems as they arise and then we won’t have to call the fire department because our house is burning down.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

dumpsterfire

Balls in the Air

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Have you ever heard of Anthony Gatto? I hadn’t either. Gatto has been on the list of the world’s best jugglers every year since 2003 when the list was first compiled. He started juggling when he was almost four years old and is the only juggler ever featured on a Topps trading card. Among his amazing performances were juggling eight balls for one minute and 13 second; nine balls for 54 seconds; seven rings for 15 minutes and six seconds and 12 rings with 12 catches. All are world records. I’ve tried many times and can’t even master juggling two balls – much less eight. I did notice that Gatto doesn’t hold any records for juggling chainsaws – so he must be a pretty smart guy!

For entrepreneurs the obvious metaphor here involves the juggling act that we perform every day. But I want to talk about it in a bit of a different context. The question I want to pose is that of focus vs. diversification. What do I mean by this? I’ve said before that I don’t like to take risk, but I’ll manage risk all day long. This is a Grand Canyon-huge distinction. Taking risk for me is akin to gambling – and I’m not a gambler. Managing risk is a process and allows me to stack the odds in my favor. So what does focus vs. diversification have to do with managing risk?

There is a school of thought that says we should focus on what we do best. And we should hone our craft to the point that we then are the best at what we do. Several very successful companies are focused on a single product. Crocs, Spanx, Michelin, Roku and Gorilla Glue are all such companies. They have developed their product to the point that it’s in such high demand that there is no need to add to their product mix. Southwest Airlines has focused for decades on solely flying the Boeing 737 aircraft. The advantages for them are numerous including the manner in which they stock spare parts, train their mechanics and flight crews, route and position planes, etc.

I believe that there is an inherent risk to being so focused on a single product line. This risk includes business cycles where a particular product type might fall out of favor. Technological advances have been known to make many products/services obsolete. Remember Blockbuster Video? It was a high-flyer for a long time and was pretty much focused on a bricks and mortar delivery of videos. But it became so focused that it failed to realize that it needed to change its entire business model and product suite to adapt to rapidly changing consumer preferences. Now the company is out-of-business.

This brings me to the strategy of diversification. Our organization has always had multiple product lines. In the 1970s through the 1990s, we were primarily involved in the commercial real estate industry with leasing, brokerage and property management. And we handled office buildings, shopping centers, industrial facilities and apartment communities. In some years the leasing and brokerage business might be slow, but the property management business would be booming. Then there were times when the opposite occurred. Yet we were able to maintain fairly consistent revenues and margins throughout the various cycles we encountered.

Since 2000 we’ve diversified even more extensively including construction, maintenance service, building components distribution, tax credit syndication, apartment acquisitions, apartment development and venture capital investments (outside of the real estate world). We’ve organized into business units specializing in these areas with a managing director leading each. With this structure each leader is able to focus on being the best in class. The overall enterprise benefits from a highly diversified product/service offering balanced with a focus sufficient to excel. To accomplish this, a considerable investment was made in human resources to enable the focus and specialization. Our organization also wins with the vertical integration that has resulted. Multiple business units are able to participate in various internally generated projects as well as provide products and services to third parties.

Keeping a lot of balls in the air actually requires considerable focus. When we can do both successfully we are able to minimize the risks that we face as entrepreneurs.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

juggling