“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to a hundred other good ideas. You have to pick carefully. I’m as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”
In this episode:
- The secret to success for Warren Buffett and Ted Williams
- FOMO is killing your career
- Innovation is saying no to 1,000 things
- Finding your one big thing
- How to trade “good” for “better”
- Does this activity still serve me? (the curse of sunk costs)
Plus, 4 questions to ask yourself when you are lost:
- What am I deeply passionate about?
- What activities do you feel like you were “made to do?”
- What makes economic sense?
- What do you have fun doing?
Watch the episode here
Listen to the podcast here
Why You Should Create A “Stop Doing List”
Most career advice starts with doing more, adding things to your calendar, networking, reaching out, writing, thinking and reading more. In this episode, Frank and I are going to do our damnedest to convince you to do less. This episode is all about the, “Stop Doing List,” which is something both of us frequently evaluate in our calendars of looking at those things that we are doing that are no longer serving us. We had a lot of fun making this episode. We hope you guys enjoy it. If you are new to this show, hit subscribe and turn on your notifications. If you’ve been reading for a while and you’ve not given us that five-star review on Apple Podcasts, please click that five-star and write some nice comments, so we know who did it.
Ian, you son of a bitch.
What is happening?
We got a lot of each other days.
We are pounding out episodes. That’s what happens when you get lazy for a month and don’t do any. You get a little backlog. It tends to hurt, but we are talking about things that we should stop doing and maybe we lead with this show. Maybe that’s one of the first things we should take out to save ourselves 5, 6 hours a week.
One of the things you can’t stop doing, if you’re me, is pee before you start a show.
Aside from Frank not drinking too much liquid before the show, we’re going to talk about things you should stop doing and why you should create a “Stop Doing List.” This has been a big part of my life for about the last few years. I’d say I’ve gotten much better at this. It started with stopped doing corporate career. It kept expanding from there to where there are some days where I don’t do much of anything.
Now I’d say I’ve gotten much better at saying no on a regular basis. Even when I first left NVR and certainly before when I was in a corporate job, I was bad at this. Anyone who wanted my time, I said, “Yes.” Anyone who tried to get in my calendar, I gave them a block. I’ve gotten much better at pushing things off and looking at my time and saying, “I could probably stop doing that.”
What I would argue is that it’s probably not completely accurate. I think as a younger person, what we look at is I must say, “Yes, I must do. I must please.” Anybody who has an ability to focus has the ability to say no to things. I meet a lot of people in my line of work who never finished college. To me, that’s an inability to block things out and do it. There’s a tunnel vision part of anyone who’s successful or accomplished anything where they can conjure this.
I think in knowing you from stories like you used to be disciplined with going to the library and then you’d be disciplined with partying, but you knew that both had a time, ultimately you had a goal, you blocked a bunch of other crap out and you did things. We don’t give ourselves credit for having a not-do list a lot of times because we take for granted that we do this. Anybody that I’ve seen who is successful has done this at a very high level.Anybody who has the ability to focus knows how to say no to things. Click To Tweet
There’s another side of this that I think is relevant to bring up early. Society forces you because we all have one of these, a cell phone. It almost makes it incredibly difficult not to get sidetracked. One of the things that we’re going to talk about here is news stories that you have broken to me since we’ve been friends because I wasn’t paying attention. You’re like, “Frankie, are you seeing this?” I’m like, “Nope,” and vice versa. There have been different times where I’ve called you and said, “Are you watching CNBC?” You’re like, “No, I’m on a blackout.” Anybody who is successful has a “not-doing list.” Maybe it’s not even intentional. Maybe it’s subconscious.
It’s interesting that you’re taking it all the way back to college. I went to college in the late ‘90s and there wasn’t social media. No one had a cell phone, even so there wasn’t much digital distraction. I learned some of these ignoring distractions by going to college. I lived in a fraternity house with 50 guys. There were like three engineering majors. Everyone had blowoff majors. They were on their 2nd, 3rd, some on their 4th or 5th major. They kept getting progressively easier until they were in the major of a middle linebacker.
One of my best friends and college roommate from the fraternity house still hasn’t finished college.
He wasn’t even going to class because he was living in the fraternity and he was my roommate. Frankie, I think it’s like a big physical manifestation of what social media and smartphones are. I would have to walk from Room 12 to get out of the house. I would have to walk by 11, 10, 9, 8. In most cases, almost every room door was open. You’d walk by one room and they’re playing PlayStation.
You walk by the next room. They’re watching Shawshank Redemption. You walk by the next room and there are four girls in there and they’re listening to music and drinking beer. Every room you walk by is another distraction that would convince me to take my backpack off and say, “F-it. I’m not going to class.” That looks way better. I had to learn the discipline to walk past all that shit and go to class.
Let’s face it, most of the guys in my fraternity were not in as demanding of classes as I was and that took as much discipline. I’ve learned how to go back to the back door, go down the back steps and not walk by Room 10, 9, 8, and 7. I would get up earlier than everyone else so I wouldn’t be tempted. I try to avoid the temptations in general, but those temptations are all on your smartphone, “Look at me. Don’t do anything productive. Waste your time.” My mind was a fraternity. Every room was like a new social media app.
There’s a finite nature of this conversation, I think. It can go broad and very narrow. What I think of when I think of a not-doing list is I started it in college, moving forward, learning how to say no properly, and then learning how to say no to bigger things. When you got to my mine and Ian’s position, I had someone sit in front of me and pitch me a business idea. It sounds like a good idea. It sounds like there’s a lot of money being made, but it’s not a core fundamental of what I do. It’s going to distract me from things that I’m good at. I have to say no to it. That’s something that I would have absolutely chase down that rabbit hole years ago, but I have the discipline now.
If you look at society and who are the highest-paid people. We’re in a capitalist society so the success of this is measured through earnings. Look at your billionaires, Buffett, is an investor. Steve Jobs is basically computer. Elon Musk is doing transportation in two different methods. Those are very finite things that if you look at it, it’s very narrow. The focus is incredibly narrow. You don’t go to a surgeon that also does haircuts. You don’t do that. You find someone who has a finite skillset.
As you’re talking, Frankie, I’ve turned down an opportunity to invest in a crypto fund. I don’t know anything about crypto. I don’t add any value in nor do I want to spend a lot of hours trying to learn it all. Maybe I should. There are probably people reading saying, “I’m behind. That’s okay.” I was asked to invest in an NFT fund, which is Non-Fungible Tokens. I don’t understand all that. To me, it’s a lot of overpriced JPEG files. That’s what it feels like, so I said, “No.” I’ve been asked to invest in a cannabis farm that had promises and we both said no to that one. It’s not that I’m against marijuana. I don’t know anything about California land and regulations.
There were promises of big returns. I didn’t understand it. I didn’t want to have to spend the time. Warren Buffett always says that he passes on a lot of things and that’s because he has a very narrow window of things that he’s an expert in. He tries to stay in that range. Ted Williams wrote, in my opinion, the greatest book ever written, The Science of Hitting. He has this strike zone and he was doing this years before anyone was doing this.
He hired someone to go watch all of his games and give him a box in the strike zone and show him what his batting average was for high and inside, middle inside, low and inside, low middle, middle middle. It’s a quadrant with nine boxes. What he found was he was over 400 on everything inside even high. He hit 150 on low and outside, which everyone does. You beat that ball, it’s a strike, but you beat that ball into the ground. It turns into a ground ball every time.
What Ted Williams says is that the biggest thing that he did better than everyone else is he knew his strike zone. He knew what he hit hard and he didn’t swing at anything else. He passed. Even though it was a strike, he was very disciplined that out of those 9 boxes, 7 of them, he hit over 300 and swung at those seven boxes. The other two, he didn’t swing at them. He said, “Maybe some people hit those pitches hard. I don’t. They’re not my strikes. All I do is look for my pitch. If it’s not there, I don’t swing.”
For those of you that maybe aren’t sports aficionados, Ted Williams was the last person that bat over 400. It was many years ago.
He’s largely believed to be the greatest baseball hitter of all time. For a Red Sox fan, I’m sure you’re happy I brought him up. The Splendid Splinter is also the greatest nickname in hitting ever.
I think one of the saddest things that I ever see in life are old people that are still stretching or striving, or there’s a scheme, “I know a guy.” You hear those types of things and it’s like you haven’t built the fundamental pieces into your life where you get a chance to say, “No.” I think saying no is discretionary. It’s something you grow into if you deserve to grow into it.
It happens through schooling for me, job opportunities, honesty, “I’m not good at this. I’m going to say no to it. I’m going to take a strike. Even though it’s a strike, I can’t hit it as well as I can hit these other seven strikes.” That’s what you get to and what it manifests into in 60, 70, 80-year-olds is there’s a feeling of loss because you’re always chasing. For people who don’t always chase and can get their arms around this, there’s a real sense to me of accomplishment.
I think the first thing that I’d like to delve into here is and why so many people struggle with creating a “stop doing list” is what’s behind it psychologically. There’s a very strong role that regret plays or at least the fear that I might have regret and FOMO, Fear Of Missing Out. I think that drives people to make decisions that might not be in their best interest because in their mind they’re thinking, “What if I say no and this thing works out? What if I say no and everyone has an amazing time? What if I say no and everyone makes a ton of money on this deal?”
This is how Facebook’s become a $2 trillion company. “I have to always be looking to see what someone else is doing because they might be having the time of their life and I don’t know about it.” That’s how people get addicted to looking at Facebook, Instagram and Twitter. I can’t stop that dopamine hit of, “If I’m not paying attention, someone might’ve done something amazing that I didn’t see.”
Time Magazine did a study and found that three-quarters of young adults report that they experience FOMO on a daily basis. I’ve certainly done things because of FOMO. There’s no doubt about it. I don’t know that I’ve ever felt that compelled where I’ve felt it always around me. In my opinion, I think regret and FOMO have a lot to do with why people say yes too often to things.
You’re one of the people who has helped me understand living in the moment. I’ve complimented you on that over the years. You’re like, “This isn’t the season of apps. I got kids. I’m playing baseball. We’re going to have ice cream.” You know where you’re at and enjoy it. If you listen to Ian, tell stories about college, he’d party his ass off in college because he knew that it was the time to do it. You also knew you didn’t do that Monday through Thursday at GE, but when he was young, he could do it on Thursday night. He picked this spot and always did it in a way that made a lot of sense.'If one only wished to be happy, this could be easily accomplished, but we wish to be happier than other people, and this is always difficult, for we believe others to be happier than they are.' - Montesquieu Click To Tweet
It was part of a broader context. You’re also not somebody who has fallen prey to social media. You use social media as a tool. You don’t react to it, but that doesn’t surprise me based upon your body of work. That’s who you are and how you handle inputs. What social media has done and done an incredible job of, and if you haven’t seen the movie, The Social Impact, you should. It’s a great movie and what they tell you about is all the little things they do through alerts.
I have a smartwatch because I like to track the fitness stuff that I do throughout the course of the day and the settings keep changing and I get alerts from things I don’t even care about. It’s because they want you to look at that stuff. One of the things that was popular when I was younger, several years ago was a news blackout. You’d hear people say, “I’m taking a news blackout.” It’s harder now because, literally, your watch tells you something’s happening.
When I was a kid in elementary school, my teachers would always talk about current events. I remember in the sixth grade, I was awarded because I want to current events contest. I had to compete against the 7th and 8th graders and I ultimately lost. Everybody in the 6th grade, I was the best with current events. My mom used to get a magazine. I got the newspaper. I was paying attention to stuff at least better than everybody else.
Your teachers promoted current events, but what do current events do for you? Nothing. They’re things that get you distracted. When you get a little bit older, what you learn is if you turn off current events, the big ones happen. In my life, the biggest one was September 11th. My brother called me and said, “Turn on the TV.” Something stupid, I was on a date and Ian texted me, “Manti Te’o doesn’t have a fiancée.”
I’m going to tell you that belongs in the top five news events with 9/11. It’s right there.
I was on a boring date. She went to the bathroom. I was texting back and forth with Ian. He’s like, “He got catfish.” Another one was during COVID, is I live with CNBC on. I started to feel, “I’m totally in this.” When the market was going down, it would all be red. On red days, I felt like shit. On green days, I felt better, but it didn’t impact me in any way. I shut the TV off for a while. I haven’t turned it back on since. Ian calls me. He’s like, “Are you watching game stuff?” I’m like, “No.” He had to explain it to me. In eight minutes, I was caught up.
Society trains you to think that you’re a lesser person if you’re not paying attention to these things, but what I’m telling you is that’s wrong. Who cares? Tell me what happened on this date twenty years ago. You can’t without doing some research. To me, the way to win this is to divorce yourself from the feeling of, “I must have every bit of input.” It’s the way that you had to walk down the back staircase at your fraternity house. Every piece of input in those eleven rooms is a distraction to get to school. I’m going to take the fire exit and I’m going to go to class.
I like to party and got decent grades in an engineering school but that’s all I did. You have to compartmentalize a little bit. I didn’t want to flunk out. I didn’t want to regret that I didn’t have a great time in college. I loved going out. I loved being with my friends. I loved parties. I liked girls. I liked all of that. I wanted to be in that mix. The second part of that is you’re consuming a lot of calories of beer. You do need to work out or you end up weighing 250 pounds. I needed to exercise.
It was those three things. That was it. I didn’t screw around a lot. I’d have a video game system in my room that I can remember. I didn’t sit around and watch daytime TV. I got up early. I went to library all goddamn day and every party I could possibly go to. I worked out. That’s how I spent my college. I didn’t do other things because I quickly realized if I’m letting all of those other time-wasters get involved, I’m either not going to be a social as I want to be, which was incredibly important to me or I’m not going to get decent grades. I can’t do all of it.
My first apartment in Chicago, right after I graduated, when I was working at GE, I was so stressed. I was working a million hours. I still was young, single and in my early twenties. I lived in one of the coolest cities in the world. I wanted to go out on Fridays and Saturdays and have a great time. I wanted to go be social. I had a TV, but it didn’t have cable. I had 2, 4 and 7. It was scratchy. It was hilarious. People come over and be like, “Turn on the TV.” I’m like, “Good luck.” It was one of the clickers. It was so old.
I lived in these crappy apartments and part of the reason was I didn’t want to feel comfortable in my apartment. I wanted to either be in the office. I would either be a GE or I’ll be out with my friends. My apartment was the worst. The AC didn’t work. I would sweat my ass off in the summer and the heat didn’t work. I was cold. Those two first places were hilariously terrible places to live because I didn’t want to get comfortable being sedentary and sitting around on my ass. I was focused. “I’m going to kick ass at GE and have an amazing time in Chicago.” That’s about all I’m going to do. That’s what I’m focused on.
We started this by saying at the beginning of your career, you weren’t good at it, but you were. Now we’re getting into the nuanced detail of once you get into your career, then you have to even be more selective. What are the things that are walking past those eleven other fraternity rooms? How do you continue to whittle things down? The magic in this is there’s no particular right answer. There’s no way to get this 100% right all the time.
It’s a body of work that’s constantly in motion and you have to do your best to navigate it. Someone who I listened to that Ian and I both liked, we both met is Gary Vee. He talks about missing out on Uber. That’s a big miss, but he got 15 or 20 other ones incredibly. We always focus on the ones that we miss, but you might be forsaking the other 10 to 20 things you got incredibly right.
He didn’t miss Facebook, Twitter and Instagram. He didn’t miss any of those early. He did well with it. In our half-ass research, there are hundreds of studies showing that people that spend an inordinate amount of time with social media are unhappier than people who don’t. I personally almost never watch cable news, if anything.
When I’m on TV, I’m on Netflix or something with my kids watching something. I know that if I watch cable news a few days in a row, I start to get gloomy and depressed. I stay away from it. I don’t care if I’m out of the loop. Some of the happiest people I know have no idea who’s in political office and what’s going politically around the world.
They’re oblivious to it because what are you going to do to control it? Part of the reason why you get miserable when you stare at social media and cable is there’s nothing you can do to control it other than a threat, complain and bitch. There’s nothing you can do about it. Montesquieu, a philosopher in France, has got a great quote, “If one only wished to be happy, this could be easily accomplished, but we wish to be happier than other people. This is difficult for we believe they’re happier than they are.”
I think that’s part of the problem with social media is it’s so carefully curated. No one puts anything on there that’s negative. I find it even funny when a travel team or a Little League team wins a tournament. Every parent wants to be the first one to post a picture showing their kids won the tournament. They don’t ever post shit when their team drops out after two games in that tournament, “I had a great time. We went 0 and 3. We got our ass kicked in all three games. We’re proud of these boys.”
That never gets posted. You only see when someone won a tournament, then I feel bad like, “My team hasn’t won a tournament in a couple of months. We’ve got to get practicing more.” I start to feel miserable. That’s why I don’t have Facebook on my phone. I don’t have Instagram on my phone. Frank has to tell me if he posted something on Facebook for me to look at. I look at it on a desktop. I try to turn off my phone. No notifications, nothing. Leave me alone.
You and I text each other when we post stuff, but we don’t have notifications.
You have to tell me, “Something went up on Facebook. Go engage on it.”
Ian and I were somewhere. I don’t remember where we were, in Miami or Lauderdale. I can’t remember. There was this beautiful woman in high heels and a bikini walking around a pool. Ian and I are talking, having cocktails or whatever but she looked miserable. For an hour, she kept walking around the pool with her phone and taking pictures. We’re both sitting there like, “This looks like a very unhappy person who’s no doubt got one million followers on Instagram.” That’s what people are looking for.
They saw the one picture where she was smiling and saying, “Having a great time by the pool,” where there was no one. It was a bunch of real estate dudes sitting around talking. She’s taking 100 pictures for the one to make it seem like she had an amazing time where she looked like one of the more unhappy people I’ve come across. I talked a little bit about having the big boxes that you focus on in my life. I don’t party much at all. I’m married. I got kids, but I do spend a lot of time on fields. I spend a lot of time coaching and going to watch my kids. I sit and I watch entire practices. I love it.
I soak it up. I’m in tournaments all weekend. That’s one of my big boxes. That’s one of the areas of my time when I’m considering, “Can I take this on?” One of the first thoughts in my head is, “Will this interfere with that?” I only have a window of 5 or 6 years where my kids are in that cool age where you can coach them, be on the field a lot and give them away to the high school coaches. For me, any new venture, opportunity, anything I say yes to, can’t break that momentum I have going with my kids. That’s where I’m at right now. Do you know who Vilfredo Pareto is, Frankie?
I don’t.When you start to take on water, you sink. Click To Tweet
He’s Italian. Vilfredo Pareto was an economist in Italy hundreds of years ago. He studied who owned all the land in Italy. What he found was 80% of the land was owned by 20% of the people. He was so fascinated by this metric that he went and started studying if it held other things like offices, stocks, or companies.
He looked at all kinds of different things as an economist and he found that the 80/20 rule fit, whereas 80% of outcomes come from 20% of our efforts. I’ve always looked at this as 80% of the stuff that I do in a day, the tasks that I do, don’t move the needle and don’t matter. What are the big things where I should be spending my time that are going to drive real outcomes for me personally, my team, my company or whatever else I’m doing?
To me, the 80/20 principle is tired at this point because I’ve been hearing it for years, but if you’ve never heard of it, it’s something you should pay attention to and you should focus on. I have built a fairly sizable portfolio of rentals in a very narrow lane. We’ve added things to it, but in very narrow focuses in one particular market. Now, Ian and I have talked about us going into Virginia Beach and doing things along those lines. We’re going to do them, but the timing is right on it. There’s a world out there.
The first thing you have to do is get a foothold on it. Once you get a foothold on it and if you can master it, that’s where something good starts to happen. Facebook, all these other inputs, news, that stuff could all pull you away from it. I can tell if someone’s a good real estate investor based upon where they do their deals. I have a guy who’s an educator who has my cell phone number. He called me up. He’s like, “I’m going to do a deal in Orange, Virginia.” It’s in the middle of nowhere.
This is not Orange County, California. This is Orange County, Virginia with a population of 412.
The point is he lives in Virginia Beach, which is an hour from me and this is an hour further. This is a deal that’s two hours away. He’s like, “I’m going to do this deal. It’s an incredible deal.” I’m like, “You have no lead flow if you’re saying yes to a deal in Orange.” He’s like, “We can make $60,000.” I’m like, “You’re going to spend 100 hours in the car. I don’t want to do it.” He’s like, “You’re closer than me.” I’m like, “No, that’s not for us.” That’s a nuanced example of something we would say no to.
This guy has a huge social media following. He probably posted this to a ton of people, but our company is way bigger. Our assets are larger because we say no to deals in Orange, Virginia because there’s tons of stuff right here in Richmond that we can do a better job on. This manifests in so many different ways, but you have to be able to do this.
Focus is so critical for a company. I worked for two big companies. One of them is General Electric. It does everything and didn’t work. Their brand was heavy industrials, motors, generators, turbines, aircraft engines and locomotive engines, big stuff. That’s what you think of GE. That’s classic GE.
When I think of GE, I think of light bulbs, appliances and things around the house.
JPMorgan. You think about the old school and bringing it all up. That’s what made that company but they turned around during the financial crisis and are like, “Shit, we own mortgages in Eastern Europe.” They’ve got NBC, a whole smattering of different media outlets. What are they doing there? There were so many little businesses they had tried to bolt on to get growth to where there was no identity of the company.
I moved over to NVR, there were all kinds of opportunities for NVR to buy companies. They kept doing the same boring stuff over and over again. They did it better than everyone else. They wouldn’t even go to new markets. A new market would be the one next door. They would move over. It’s good you’ve got to learn in that environment because that’s what you’ve done. Cava Companies is Charlottesville. Richmond’s a little better. I’m going to go to Richmond. For the better part of a decade, that’s all you’ve done is Richmond. You dominated Richmond. Now, you’re peeking over the next market over, but it took you a long time to even think of a different market.
When you start to take on water, you can sink. This is something you and I have talked about with GE privately. GE would take a brilliant executive who is great at motors and move them to NBC, which is television. How in the hell are those two things linked? If you have a smart person, you’re like, “We’ll move it here.” Where my business is clearly a fraction of the size of any of these other businesses we’re talking about but if I have someone who works on the fix and flip side, Eddie is a great example. He seen everything in construction, moving into sales, he gets it. He knows this is a deal or not a deal as he’s vetting it. It’s so much easier to promote from within and to grow when you do something around a core.
When I was at NVR in the late ‘90s through 2010, the goal was if we went into a new market within two years, we want to be in the top four. What they would do is once they were inside the top four, they get a second division. They would slowly work towards the top two. You would very slowly work to the top one. Inside of five years, you go from no presence to the top builder in a market. You get economies of scale. You get people calling you, bringing you the best stuff.
What happens is you go from no presence to the gorilla in the marketplace in no time by having this insane discipline around one thing. There’s a quote, I don’t have written down, but it’s loosely this, like, “Work your ass off, have favorable market conditions, and ten years from now, people will tell you you’re an overnight success.” The way to do it is to have a blinded focus on a thing. That’s how it starts to happen.
Some of this too is people want to try to be a little bit too diversified. They think about diversification. They think about if one thing fails, it’s the old Plan B and C. I’m a fan of diversification. I’m probably a little more diverse than you are. You’ve done an awesome job of you know your market, where you buy or your zip codes. You buy houses, fix them up, flip them or hold them and rent them. It’s simple. You’re very close to my father-in-law in what you do. He does it with truck trailers and you do it with the house. He knows his deal. He’s done it for fifty years and it’s profitable. He knows it well.
I’m a little different in that. I don’t know that I’m hedging my bets as much. Some of the assets that I own don’t take up as much of my time, so I found some other things to go do. For me, I’m commercial real estate. I have a tech company that I’m now spending a lot of time in and more and more all the time. I’m in live coaching and video programs. That’s it. Everything I do revolves around that. Now, I’m starting to get more involved with you and other real estate. It’s probably three big areas that I spend my time in. I don’t know that I’m doing it hedging. I’m doing it because opportunistic, I can add value in all of those spaces. That’s why I’m doing it.
This is something that’s a weakness of mine, stocks, options and playing in the market. I’ve never been great at it. I’ve made money on it, but I’ve never been incredibly good at it. I talked to my brother or I talked to Ian. They’re incredibly good at it. They read prospectuses and stock forms. They understand and get it. It’s exciting to them. I don’t get it. I don’t see it. I don’t understand it. This is like current events. Most people are going to tell you, “You need to understand the stock market.”
I disagree. I have almost nothing invested in the stock market. I have an enormous portfolio because I know how to see things in my market. I know how to see things in real estate that others can’t see. I burned the boats with nearly everything except for residential real estate in Richmond or something that’s value-add in Richmond, which is insanely niche.
What I can see is 2, 3, 4 years ahead. I’m not always right, but I’m right enough where I can buy on fundamentals and then I have these huge wins. Why did I go into this? Ian and I both have different strengths and weaknesses. You’re going to have different strengths and weaknesses. The important thing is to focus your 80 on the things that you’re good at and have a gift at. I could focus all my time on stocks, but I’m not going to get anywhere because I don’t get it.
At its core, I can read it. I can talk to you about it. I don’t see it. I’ve had this dialogue for two decades, but I see this and I see it very well. I got to a place where I was honest and said, “I got these other opportunities.” I don’t understand them as well. I do get this one. I see a path to making money on it and building a business and a career and I’m going to focus everything I can on it.Put yourself in a position where there's someone to teach and help you. Focus on being as good as you can. Then branch out and be very disciplined on the things that make the needle move the most. Click To Tweet
From a “stop doing” perspective, there are a couple of reasons why you’re not in stocks. One, you need capital to run the business that you have. You need capital to get debt, acquire new land and run your business. Putting money into stocks where you could get a return and spend some time thinking about it would dilute your ability to grow your core business, which I think is a higher margin and certainly a better tax advantage position for yourself. You are in a position where you are so close to a certain asset class that you understand what’s underpriced and overpriced. I think that’s very important.
If we’re going to talk about investing, I’m not the world’s greatest investor. I’m good. I’ve done well in stocks. I’ve looked at them hard enough and read enough quarterly and annual reports. I pay attention to it because it’s interesting to me. I like it. I enjoy it. I enjoy businesses and how they’re run that I think I can normally find an under or overpriced equity. I’m not the greatest. I’m not saying I’m Wall Street caliber. I’m not as good as you are in real estate.
Part of that for me, I’ve done well because I normally know when to calm down and say, “The market collapsed, but these things are cheap.” I was buying a lot in March 2020. If you and I both have $1 million of cash and COVID happens in March or April, you were good at saying, “That’s some cheap real estate. I’m going to go snag it up.” I think I was good at saying, “That stocks should not have dropped 50%. I’m jumping in on that.” We both did the same thing. You have expertise in one area. I have expertise in a little bit different area.
The do-not do list is this. I don’t feel like I’m missing out because you’re making money in the stock market. I’m the only person on earth who’s lost money between 2005 and 2015 on Apple stock. I always sold it at the wrong time. Ian’s making money on Wall Street. I talked to Ian about what he’s investing in, he sees and thinks. I don’t hang up and say, “I need to call my broker and put money into these stocks.” What I do is take that information and synthesize it against what I’m good at. He’s seen patterns and opportunities. He’s seen things that he’s smart. Inside of my area of focus, where do I see these things? Where does that work? Where does it not work?
As a younger person, I would have hung up the phone and thought, “I need to get into stocks.” As someone who’s figured out how to put blinders on, I don’t worry about that. I take that as input that I can now focus on what I’m good at. That’s a very big shift from where I was as a kid. What it’s led me to is to be insanely disciplined in where I spend my time because that’s where my expertise is.
His capital’s limited. Frank has done well for himself. He doesn’t have unlimited capital to fund his business. Clearly, he’s doing a show with me. He’s not done that well. He’s hanging out with me. I mentioned how I’m spreading myself around a little bit now. I have 3 or 4 big things I’m focused on but for years before that, I was all in on one company and that’s because I owned a lot of stock. Like you, Frank, I could see that our stock was underpriced. I knew how well things were going, our sales pace and how bad we were beating up our competition. I was an insider, which is why I wasn’t allowed to talk about how good we are doing.
As an executive insider, that’s illegal to talk about. I knew so much that it would be illegal to tell people how good we were doing. If I’m in a company like that, I went all in. I worked as hard as I could. I went for every promotion. I wanted to gobble up as much stock as I could because I could see that we were underpriced. I also didn’t sell that stock for ten years.
I didn’t sell it so I could buy some real estate and be an investor or do something that I wasn’t invested enough and didn’t know. I turned down opportunities to do other things and kept it all in on that because I knew that it was going to grow substantially from an investing perspective, which is not unlike what you’re doing with Cava Companies. When you have extra capital, you dump it back into your business because it’s working and profitable. Time margin is doing well.
If we take this from micro to macro a little bit, what Ian and I are talking about is we’ve found relative success. The way that we did it is the first thing is we put ourselves in a position and around people or at companies that had inertia that would teach us and help us. We were focused on being as good as we could in those roles. As we branched out and did things on our own, we tried to be very disciplined around the things that made the needle move the most. An example of this in my business is I could’ve realized immediate profit on properties that I held, but I held the properties because I wasn’t looking to win right this minute. I was looking to give myself a longer-term horizon and have income coming in for a while.
With every property I hold, I get to get the income, but I get depreciation. I get all of these other things that start to add up. It changes it from how much you earn and keep. That’s the important part. That’s the best thing about real estate. It’s almost owning a dividend stock. What has to happen is a lot of focus in the home building sector brought me here.
Learning everything I could about this particular sector gave me an incredible opportunity to do this, but it’s very narrow-focused. If we start getting into what small-cap tech companies are working on, I’m not your guy, but I don’t feel like I’m a less free human being because I don’t know those things. That discomfort is what social media capitalizes on and takes away your free time or your ability to focus on something else.
Steve jobs have an awesome quote on innovation. He says, “People think focus means saying yes to the thing you’ve got to focus on, but that’s not correct at all. It means saying no to the other hundred good ideas that there are, you have to pick carefully. I’m as proud of the things we haven’t done as the things that I’ve done. Innovation is saying no to a thousand things.”
If you think about Apple, it was a computer and then it was an iPod, iPad and iPhone. There’s always one product driving 80% of the revenue of that company. It still is the iPhone. The iWatch is doing well, but if Apple is going to be as good in the next few years as it has been the last twenty, it better come up with something different than the iPhone.
It’s milk to that as long as it can. It’s going to need to come up with something else big, but they are a great example of 80% of Apple’s revenue always coming from one product. Google, 80% of their revenue comes from search. Amazon, its core business. All of these companies have all these little side businesses all over, but there’s always some cash cow milking it. The side business is what you’re hoping is if you start twenty of them, one becomes the future’s cash cow. The one you have now runs dry. That’s what they’re doing.
One other quote that I think is good on this, Jim Collins in his book, Good to Great, talked about a lesson that came to him over years of looking at all these companies that went from good to great, “In cataloging the key steps that ignited their transformation, my research team and I were struck by how many of the big decisions were not what to do, but what to stop doing.” What he found is all these companies that went from good to great companies got very focused on the one thing that they could be exceptional at in the world and dropped a lot of the businesses that weren’t adding to the bottom line.
I think it’s always healthy. I do this on a regular basis where if I’m not happy with where I’m going, in anything, whether it’s personal or business goals to go look at how I spent my time that day or the day before. I don’t go do like a one-month study or anything crazy. I’ll go look at how I spend my time. I think, “Where did I waste a bunch of time? What can I stop doing? What can I get rid of? What can I take off of my plate so that it focuses me on something else?” It is an incredibly healthy exercise to go through.
As a manager, I’ve done this before, where I sit down with my team and say, “What’s our one big thing? What’s our one big focus? Good. We’re all in agreement. What things do we need to stop doing so you have more time to focus on our one thing?” If you do that little drill, those two questions, get your team to all agree, what is the one big thing we’re working on? Two, what’s in your way of spending more time on that. Am I the reason? Did I put some policy in place, process, regular meeting on your schedule? Do I have you fill out some report that’s not adding to our one big thing? What can I kill? What can I take away?
It is such a liberating exercise to do with teams every time I’ve ever done this. It is so liberating to them that someone listened. When you go take it away, say, “You’re right. We needed to measure that five years ago. That’s a stupid metric. Let’s kill it. Can we kill that report? Let’s quit talking about it. I won’t look at it anymore.” That jazzes up a team when you take away that wind, or at least even if it’s perceived for them to be wind in their face, their sailboat, it can jazz a team.
I’m going to go in a slightly different direction. I want to end with the questions that we have on here. Steve Jobs, back when he was still alive, did a commencement speech in 2005 at Stanford. It’s a great speech. When it came out, I watched it a bunch of times, but he has in there the tagline is stay hungry, stay foolish. I have on the wall of my office a cool painting with that saying on it. It’s to what Ian was talking about staying focused on things that you like and you’re jazzed about. What Steve Jobs does in a sixteen-minute commencement speech is talk about how he got impassioned.
He started Apple was ousted, to reinvent himself, came up with a company called Next, then it was Pixar. Ultimately, he went back to Apple and invented the iPhone. This is how to revolutionize our lives and saying no to things was critically important, but having things you’re excited about are important. Ian talked about the two questions. We have in our outline the three questions. What are you deeply passionate about? I talked about this. What do you genetically-coded for? What makes economic sense?
Those are three questions that you should constantly think about if you’re trying to say no to things to get somewhere where you’re not. I do not want to discount the second one. What are you genetically coded for? I did an interview on a podcast. How we prep for an interview. I want damn near every interview I’ve ever been in. My prep is very different than Ian is. It’s not like I wasn’t prepared. He was or vice versa. It’s not how I prepare to be ready. It’s different. Ian’s a reader. I’m a feeler. I touch. I talk. It doesn’t mean one approach is wrong. It means that’s the approach for me.
If I was trying to copy Ian, I wouldn’t be as successful because it’s not how I’m genetically coded, but I’m honest with that. I’m okay with it. I can’t write as well as he does. We let him write. I find real estate deals he can’t. I go find the deals. That’s how this stuff all comes together. If you’re not comfortable in your own skin, society, social media will tell you to go chase shit. What I’m telling you is, to be honest about it. I’ll close with this, Ian, and I’ll let you wrap.
I was listening to a guy named John Burley. He had a book series when I got into real estate investing. I liked John Burley. I’ve met and known him. He doesn’t have a hugely popular name. If you Google him, you’ll find him. I remember sitting in a pool with the earphones in listening to him and he talked about how he was an accountant and how being an accountant gave me an advantage.
I remember thinking like, “I wish I was an accountant. I wish I was John Burley.” I stopped and said, “I’m not an accountant. I barely got to see an accounting. I’m terrible at accounting.” What I am is a lot of things he isn’t. This guy is successful being an accountant. I work for the best builder in the world. How can I not be successful? He’s got a disadvantage against me. When I made that shift in my head, shit took off.All companies that went from good to great focused on the one thing that they could be exceptional at in the world and dropped many businesses that weren't adding to the bottom line. Click To Tweet
I love your three questions. It’s worth repeating them before we finish this episode, what are you deeply passionate about? What are you genetically coded to do? What activities do you feel you were made to do? What makes economic sense? What can you make a living at? I’m going to use one example to finish this off.
For me, I love to write. It’s fun. I enjoy it. I’ve always enjoyed it. I liked the leadership aspect thinking of it. I feel like I’m good at it. I don’t know if I was made to do it. I’m not Stephen King, but in my world, I’m good at it. I have not written. I worked my butt off to get a contract with Forbes. I wrote for them for two years and I did well.
I got some well-read articles on that site, but I haven’t written one article for them all year. I’ve not written anything for Forbes. The reason being is it takes me like eight hours to write an article for Forbes, to think about it, outline, edit, get it up onto their website. It’s a lot of work. It doesn’t make a lot of economic sense because for those hours, the things that I mentioned I was doing earlier, commercial real estate deals with you, the upside of those things that I brought up is so significantly higher than writing that I’ve stopped doing it. I’m passionate about it. I’m encoded for it. I have better opportunities.
The thing I would leave everyone with is sometimes you’ve got a good thing you’re doing and spending time on it by habit. Forbes was that for me, but there are much better ways you could be doing it. A lot of people don’t stop to think, “I’ve got it good, could I have better?” I would tell you to use a stop doing list so you can trade good for better. I found a better use of my time than doing this show with you, Frankie. I’m not going to drop you yet. I’m going to keep this on my keep doing list.
Making a discretionary choice that serves you is what this boils down to.
It’s a great episode, Frankie.
Talk to you soon.
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