Latest / Success Story with Scott Clary / Lessons - How Taking Calculated Chances Built a Business Empire | Michael S. Liebowitz - Serial Entrepreneur

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Lessons - How Taking Calculated Chances Built a Business Empire | Michael S. Liebowitz - Serial Entrepreneur · Success Story with Scott Clary

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  In this lessons episode, learn why betting on the right founder or CEO is the most important
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  signal of long-term business success. Discover how adaptability beats rigid planning and fast
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  changing markets. Learn why great entrepreneurs do not always make great investors and understand
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  how people, not just products, are at the core of every successful acquisition.
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  So one thing that I find interesting is when somebody's been a great entrepreneur and they built
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  the business and it's been acquired and then they have a whole bunch of money that they're
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  sitting on. They make a lot of investing mistakes because a good entrepreneur doesn't always mean
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  a good investor. And now you've been doing it for 30 years. You're not new to this, but for
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  somebody that looks at businesses, I think there's lessons in this for an entrepreneur who's
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  building and also investors looking at putting their money into the right business and betting
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  on the right person. What should an entrepreneur be thinking about? What should an investor be
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  looking for that you've seen is a good signal for success? Well, the number one thing is the
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  person you're betting on. Everything is a jockey bet. Everything. You better know that the person
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  that you are as leading that business has the attributes that I mentioned. They're entrepreneurial,
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  they've got a great idea. It's incredible. They know how to execute it. And if they don't know how
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  to execute, that's okay, but higher people that can execute, right? Make sure you put the right team
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  in place that's going to do it. And you want to meet that team. But it's all a jockey bet. Like
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  when meta, right, was falling apart and the stock went from if you remember, from $300 to $88,
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  I bought more. I bought more for one reason. I think Mark Zuckerberg is an absolutely brilliant
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  genius. It was a jockey bet for me. And the fact that he changed the company's name from Facebook
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  to meta at the top. He was at the top. And he thought he needed to change the name to bring that
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  business into the future. How many entrepreneurs or CEOs of a company that are at the top have a
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  trillion dollar business and feel the need to change the name of the company to bring it into the
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  next century, as you would call it. And I said to myself, wow, to me, that told me everything
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  about with that guy's thinking. And it told me is he's not going anywhere, right? That's another
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  guy that like he's a CEO, he created this is his whole life. He's not going because if he's out
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  of there, I don't want to own that stock. Okay. And so at the end of the day, when I look at businesses,
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  I'm always looking at this. Who's the CEO that's running that company? That's the bet you're making.
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  That's where you see some businesses where somebody takes over this decrepit thing that's going
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  on and they turn it into the most unbelievable business that they could turn it into. And that's
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  the only thing you're betting on in my opinion. There's a lot more, obviously, but that's the number one
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  criteria for me is who's the CEO? You know, it's interesting because again, you mentioned like the
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  the 5E button sold this business multiple times. I've seen many times where you have this
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  incredible and to sort of further your point, there's always incredible founder CEO that builds a
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  business and then it's sold the private equity or it's sold to a strategic buyer and then it goes
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  to shit. And that's because the person isn't there anymore. Well, I sold the business to private
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  equity. Okay. Before I sold it the last time. Okay. So I tell you about that business I bought it,
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  I sold it back. I sold it in 2016 to private equity and then me and a private equity firm sold it
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  again. Okay. The private equity funnel on name them because they're great is a stone point capital.
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  And they always understood that they couldn't run the business. They understood from the beginning
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  who the guy is or girl is that's running that business. Okay. And that's it. And when we got an
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  offer to sell it, they said, we'll own this business with you forever. We don't care. Okay. But if
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  you want to sell it, we'll sell it too. And again, it's the same thing. So you have private equity,
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  you have people that, you know, companies that buy businesses and they're really smart and
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  not just giving these other example. When I sold that business, I had another offer for it that was
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  more. I chose to sell it to those guys because they've been around the block 500 times. I knew they
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  would make me more money on the second hit and they were going to let me run that business how it
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  needed to be run. Right. And that's the other thing again, they were making a jockey bet. It's like
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  who's, you know, listen, after the settlement, I got calls from, you know, other private equity
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  funds that I did business with in the past. And every one of them called me and said, Hey,
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  is there anything for us to do with you here? They were making the jockey bet about me. Yeah.
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  It was the same thing, right? That's all what it's about. There's other things you have to
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  diligence to. But the number one thing, again, I had a thing on my family office website. I don't
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  think we have that website up anymore. But it was a quote that I had and it said, you can't do a good
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  deal with a bad guy and you can't do a bad deal with a good guy. I like the truth. It's the
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  truth. You know, and you know why you can't do a bad deal with a good guy? Because ultimately,
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  businesses goes up down. It's dynamic. It's this and that if you're doing it with the right person,
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  you'll figure it out. You'll figure it out. You'll adapt. As an investor, you just have to figure
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  out that right person, the one founder, the one CEO. That's really the person you're
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  team or team. But the question or the point is, how do you take that idea and translate it into
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  running a whole company? So how do you take that idea of finding that right person and then you
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  just deploy that against the whole company so that you always attract the right people?
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  Well, there's always stages of everything, right? So it's not all coming. You're not going to come
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  up with it all day one. It's not going to be like, all right, we're going to put out this blueprint.
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  I got this great CEO. I've got this great CFO. I've got this great product. And here you go. Here's
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  the plan for the future. I've been at Douglas Alman for nine weeks. My business plan has changed
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  15 times. It may be different next week. And what I mean by that is that I keep learning new things.
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  I keep meeting new people. I keep running across different things within the company. And I
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  adapt to it. And if I said something to somebody two weeks ago and now I change it and they call me
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  and say, but you said this, I don't really care. Okay. I'm going to do which right at the moment
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  that is there. And if you're not a CEO that doesn't know how to adapt to current events, you're
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  the wrong CEO and you're running the business with your ego because the only person that won't
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  change as a person that's ego is in the way, right? So for us at Douglas Alman, our business plan
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  may be a little bit different. It may be a little varnished a little or maybe a little polished or
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  it may be adjusted in another month or two months. Right now we're coming up with plans.
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  Obviously we have plans. We think about plans every day. We have a team that we think about what
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  we want to do with the business. And I think generally we have a generalized blueprint of what we
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  want to look like. But within that blueprint, things may change. Some people may change. Some
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  business plans. Maybe somebody brings us an unbelievable idea that we say, you know what? Wow.
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  We haven't seen that before. I'm not passing on that idea. I want to maybe I want to
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  implement that. We were a piece of technology that I think is transforming to our business.
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  And now we need to basically, you know, turn the wheel a little bit to the left. That's what we're
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  going to do. And we're going to be dynamic. And you know, the business that I sold that we talked
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  about, it felt like a new business the day I sold it because we were always innovating. We were
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  always doing new things. And Douglas element is going to be an entrepreneurial, mean, lean,
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  innovative, winner attitude, business. That's going to be dynamic. Okay. And do really
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  interesting things. Be on the forefront of our marquee real estate business with a name that is
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  the best in the business. And we have an amazing opportunity here. And again, we may look a little
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  different than everybody else in 12 months or two years. And we're excited about that.
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  I think that first of all, I think that you have the right, I think the best CEOs are entrepreneurs.
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  I truly do believe that. I don't think that you can air drop an MBA and be as good as CEO. I mean,
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  this is like, I'm sure there's some great CEOs that do have the Ivy League education. But I think
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  that entrepreneurs just how fast they think and how comfortable they are with radical ideas.
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  I think that's more and more where you're going to have to see in that C-suite because technology
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  changes so fast, world changes so fast, you can't just be comfortable with an idea and set it and
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  forget it. I don't think business exists like that anymore. Well, it's interesting. So I met with a
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  an engineering, coding, you know, technology developer a couple of weeks ago, right? And we started
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  talking about building a piece of technology for us. Okay, I did that for one of my insurance
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  businesses we built technology. They told me it would take six to nine months to build. It took two
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  and a half years. It ended up being great technology. But the insurance business is a different
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  business in residential real estate. And the problem with building our own right now is by the time
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  we finish building our own and conceptualize it and beta test it. It's probably going to be obsolete.
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  Okay. And today, there are so many companies out there building technology for residential real estate.
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  We don't need to build it. We don't need to. And it really goes along the lines of what you're saying,
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  right? Is that you want to build and you want to do all these things. But the market is moving so fast
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  that, you know, and listen, we have competitors that went out and built,
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  expensive fortune and money building technology. And we see their technology. It's fine.
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  It's not groundbreaking anymore. It may have been groundbreaking two years ago when they released it.
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  There's nothing groundbreaking about it. You could buy it off the shelf today. So you know,
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  like you said, things move so quickly. If you're not willing to adapt as a CEO in business in real
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  time, forget it. And when you do, when you do make those acquisitions, you have to make that you
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  give that acquired company the air to breeze. You don't just stifle the innovation that made them
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  who they are too because I see that happen a lot as well. You acquire a company and then all
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  of a sudden just corporate bullshit just destroys that entrepreneurial innovation that made that
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  company so great. Most of the time, when you see acquisitions and you know, at that company,
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  I was with NFP while I was there, we did 400 acquisitions. Okay. So you see every bit. And again,
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  it gets back to who you buy. Who is that person? Because you don't want to buy a business and the people
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  that built it created a great leaf. Yeah. Of course. We don't want to buy a business, right?
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  That the people, because we're buying a people business, unless we buy a product, you know,
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  so you want to make sure that those people that you're buying are going to stay and are motivated.
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  And like you said, let's do this element is bought other brokerages that were profitable before
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  we bought them. And now they're not. Okay. Well, what went wrong there? Right? Did you buy the wrong
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  entrepreneur? Did we put too much bureaucracy on them? You know, did we not innovate? So for us,
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  if we're going to look at an acquisition, it's going to be an accretor from day one. It's going to
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  add value from both businesses, right? So let's say we pay a five multiple for something, right?
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  We want our effective multiple post closing to be a two or three, right? Because they're operating
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  efficiencies, we have the platform. Maybe they don't or maybe we've got redundancy someplace and
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  we're going to fold them in and eliminate the redundancy. So like, you know, those mathematical
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  decisions. And then again, you have the people aspect of it too. And that's why it's also important
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  to take your time. Don't find a deal. This is the greatest thing and rush to close it because
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  the diligence period is an incredible period of time to find out about the people that you're
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  dealing with. People show themselves, right? So go through that. It's like the interview process.
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  Don't do one. I hired one person in my life on the spot. Okay. Went in my insurance business.
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  And just so you know, she was one of the best people I ever hired. Okay. But that was lucky.
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  I think I was very lucky. That was lucky. My process after that is like a five, six, seven, eight,
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  nine or ten, you know, period of time, you know, to hire because you learn a lot in that process.
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  Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you
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  never miss an episode. And if you want to dive deeper into this conversation, check out the links
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  in the description to watch the full episode. See you in the next one.