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CHANGING STRATEGIES
the most effective. Collins refers to this strategy as “20-mile marching,” a term he learned from Roald Amundsen, who led the first successful expedition to the South Pole. Collins describes Admundsen’s approach this way: “Amundsen adhered to a regime of consistent progress, never going too far in good weather, careful to stay far away from the red line of exhaustion that could leave his team exposed, yet pressing ahead in nasty weather to stay on pace.” Competing against Amundsen was Robert Falcon Scott. Scott failed to properly prepare, then rushed ahead as far as he could on good days and then hunkered down on bad ones. In the end, he exhausted his men and not only did they not make it to the South Pole, but unfortunately Scott and most of his party lost their lives in the attempt. Real estate investors are particularly prone to taking the “Scott approach” to investing because many real estate investing strategies are designed for fast results. Wholesaling and flipping can generate huge yields quickly and, with proper implementation, reliably. New and experienced investors alike may fall prey to the allure of fast returns and confuse those returns with overnight success. However, that extreme perspec- tive generally creates a situation that cannot last for the investor. Collins described the 20-Mile March as more than philosophy. He described it as a business operations guide. “It’s about having concrete, clear, intelligent and rigorously pursued performance mecha- nisms that keep you on track,” he wrote. How will you subject yourself, as Collins recommends, to both the dis- USING THE 20-MILE PHILOSOPHY IN REAL ESTATE
comfort of “unwavering commitment to high performance” in tough times and “holding back” in good conditions? In real estate, this process will require you to free yourself from what John Maynard Keynes called “animal spirits” or the supposed two emotional states of stock market investors: greed and fear. After something good happens, the natural response is to double down. And after something bad happens, the natural response is to retrench. There are times, of course, when such reactions make sense. But for the most part, such ad hoc responses make things all the worse. For example, the best re- sponse to the crash of 2008 wasn’t to drop out of real estate. The best response was to start buying when prices were cheap. The famous stock investor Benjamin Graham noted, in his famous book, The Intelligent Investor , that our natural in- stincts are often backwards. “The intelli- gent investor realizes that stocks become more risky, not less, as their prices rise – and less risky, not more, as their prices fall.” Such advice makes obvious sense to our rational mind, but our rational mind is often not in control. REAL ESTATE GROWTH REQUIRES THE RIGHT MINDSET A sustained and consistent growth mindset must be the mindset of every real estate entrepreneur. It counteracts our natural (and incorrect) biases. It prevents us from hunkering down in fear, which could cause us to miss all sorts of great opportunities. But even more importantly, it prevents us from making terrible mis- takes by overplaying our hands.
The Dangers of the “Overnight Success” Myth REAL ESTATE SUCCESS RELIES ON RATIONAL ACTIONS, NOT LUCK.
in 1976. In 1984, when the Macintosh was invented, the company started to gain traction, but it continued to strug- gle through the 1980s and 1990s. In fact, it was Apple’s iMac and consumer products that finally made the company the “overnight success” it is today and, in the process, made Jobs a billionaire. SUCCESSWITH “20-MILE MARCHING” Business professor Jim Collins re- searched companies that have thrived under volatile market conditions compared to those that did not for his book Great by Choice . He found that the companies that “made it” were those that neither hunkered down nor jumped ahead too quickly. It was the consistent year-over-year approach that was by far
by Andrew Syrios
he four dastardly words, “be- came an overnight success,” have perverted the expectations of far too many entrepreneurs, including real estate investors, for far too long. Entrepreneur- ship is not a sprint, it’s a marathon. And it’s critical for any entrepreneur - new or seasoned - to understand that. Otherwise, a burnout or calamity is all but inevitable. Most “overnight successes” are little T
success” because when the company went public, Gates was worth $350 million. However, growing the company to the point it could go public in such a profitable manner took Gates 11 years. NO. 2 APPLE Steve Jobs struggled for decades to put Apple on the map after founding the company in Cupertino, California,
more than fads that quickly fade. Think of the Macarena. Even for companies that many people view as “overnight successes,” the true story is anything but. Here are two extremely famous examples to drive that point home: NO. 1 MICROSOFT This company and founder Bill Gates are often described as an “overnight
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Andrew Syrios is a real estate investor and blogger with Stewardship Properties. Learn more at StewardshipProperties.com or email
Andrew@stewardshipproperties.net.
46 | think realty magazine :: november 2018
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