The Mother Lode of Treasures Troves

It was 8pm on Friday, Jan 23, 2016, the day before the Blizzard of 2016 rattled the mid-Atlantic states producing widespread record snowfall. I was just back from a long vacation and found myself at the local Home Depot store, frantically looking for salt to spread on my driveway before the snowstorm started.

As only procrastinators can understand, my timing could not be worse. Salt was the most sold item for that day. Not a single bag remained in the store. All I saw was the sign tag of the price it was sold for, which said $9.99, almost double the regular price. Capitalism at work, I thought to myself.

As I turned to walk out of the store, another sign caught my attention, ‘Mulch on Sale’ it said, $0.99 per 2 cubic feet bag, down about 75% from its normal summer high price of $3.99 per bag. Being a genetically pre-programed gardening enthusiast (mom did it till age of 85), I backed up my truck and loaded all the bags that were on the shelf.

“Mulch for $0.99? Never seen it this low” asked the surprised associate at the checkout counter “You are the only one I have seen buying mulch today”

“I know. I came for salt, but never seen mulch this low and spring is just round the corner" I replied and added half-jokingly "The real challenge is explaining this to the wife. She is expecting salt”

The associate seemed to relate “Good luck with that” he said as he handed me the receipt.

Cultivating a Founders Mindset

Most people have been in my shoes at some point in their lives. But more often than not, it is for small transactions like the one I experienced, when unexpectedly coming upon a sale in the local grocery store, or at a shopping mall, or on Amazon. Financial assets such as stocks are bigger bets, where going against the grain often pays off handsomely. I am not referring to the purely speculative windfall from stocks such as Gamestop or AMC (although there is nothing wrong with that), but the steady and consistent wealth building opportunity that temporary downturns in the economy regularly presents in great long term American businesses (such as Microsoft, Boeing, and Etsy, etc) and other assets classes such as real estate and commodities.

The real power of this rather modest idea is that if consistently applied to more impactful opportunities, it has the potential to set you up for long-term success that is almost impossible to achieve in the normal course of our lives. Over the years I have benefitted greatly from making bets on higher value items, when it was out of favor, when the demand for was low, when there was fear in the air, and there are few believers. Which is why I love this quote from the greatest investor of all time, Warren Buffett:

“Be fearful when others are greedy and greedy when others are fearful”

This principle is what I call ‘founder mindset # 101’. In fact, it was the unexpected windfall profit from the first real estate property, a humble one-bedroom condo in Great Neck, New York, that I purchased in the mid 90's during a lull in the economy, with the savings I had mustered working for almost seven years. Two years later, when the economy turned around, the $20,000 down payment I made yielded a windfall profit of $75,000. It was this money that provided the seed funding for my first startup. With lot of hard work and plenty of good luck, the venture survived few near death experiences (following 911) and started on the path of growth. But it was not all smooth sailing.

At the height of the economic crisis of 2007-08, I and some of my partners had to invest more money into the company, even when the future looked gloomy. Very much like the character actor Tom Hanks, played in the movie Cast Away, I had no choice but to hunker down and ride out the difficult few years. After the crisis passed, powered by the team that stuck with me thru the crisis, the company quickly grew into a multi-million revenue firm, employing hundreds of people. We went on to join the ranks of the Inc 5oo listing of fast-growing private firms. Years later, when we sold the company, I made sure that every investor got their money back, and then some. The icing on the cake was that some of my coworkers and investors followed me to creating multiple new ventures and investment opportunities. This brings me to ‘founders mindset #102’ - think like an owner. To paraphrase Warren Buffett:

“Buy (or build) a business, don't just rent stocks”

My research on successful startups shows that by facing and overcoming constant adversity, founders develop a mindset characterized by grit, willingness to experiment, acceptance of risk and uncertainty, patience, delayed gratification, and leveraging their hard-earned trust. Founders operate with a quiet confidence due to the belief, often not grounded in facts, that the worst storms too shall pass and their day under the sun will come.

Many entrepreneurs I have meet and researched have effectively leverage the simple principle of contrarian thinking and acting, in ways big and small, as they grapple with risk and uncertainty to keep their ventures alive. By thinking ahead and taking action when most others don’t, successful founders actually lower the risk of failure. Of course, there are risks associated with such an approach, which is why most startups fail. However, with a heady mix of grit, creativity, leveraging relationships, patience, and some luck, people who act when others shy way, eventually join the small group that beat the odds.

In my current role as professor of innovation and entrepreneurship, I teach students the core tenants of the founder’s mindset. These include how to solve problems by equipping themselves to dig deeper to better understand and reframe problems, learning by doing, take advantage of unexpected opportunities, understand that failure is a necessary part of the learning process, and building alliances to respond to issues they may face along the way. Such an approach is a transferrable skill, that can be applied to their personal and professional lives. I believe that it is more than a skill; it’s a mindset, a way of thinking. This is the same mindset that founders, and innovators use to propel their ideas forward and build wealth and prosperity for their stakeholders. The same mindset explains why certain people who have overcome greater adversity, such as minorities and immigrants, have achieved higher rates of success as entrepreneurs in America.

Indeed, many experts agree that the modes of thinking and acting that the founder’s mindset engenders, is at the heart of the American Dream.

The Mother Lode: Investing in People

My personal experiences bare out that investing limited time, money, and attention with a focus on the uncertain future potential, rather than the immediate certainty, is much more than just a winning financial strategy. It is a core value that I believe in, that goes far beyond building personal wealth. For me, the best outcomes of applying this value has been in investing in people.

How has that worked out for me?

There have been multiple occasions when, driven more by intuition than by reason, I have invested in and stayed with great people when they were having a bad season and when the chips were stacked against them. Barring a few cases, the results have and continue to amaze me. More often than not, the people I have put my trust in have lived up to the potential that I could barely glimpse thru the fog of their lives.

In many cases, people who I put my faith in when the facts did not add up, have gone above and beyond. They took charge of the opportunity to turn things around for themselves and their families. By validating the trust, I placed in them, each of these individuals have proven to be foundational to my personal and professional growth. Truth be told, by helping them, I was actually helping myself. That's what I call Win-Win. But here is the real kicker, there is a third Win. Few of the people who walked thru the doors I opened, went on to be effective leaders themselves, mentoring others who deserve a break.

Win-Win-Win. This is the reason, why I believe.

So here is the deal. Next time when your spouse, child, relative, friend or colleague goes out on a limb, takes a stand, or makes an investment in someone or something or a cause that they really believe in, instead of asking “What the heck?”, just relax, take a deep breath, smile and say out aloud “That sure is a heck of a deal!" Because, it well may turn out to be.