Posted by: BayAreaComRE | February 3, 2010

Entrepreneurship, Malcolm Gladwell & Real Estate

If you haven’t checked out our “Recommended Reading” section please do, we’ve included some very helpful books that we’ve read and highly endorse (link here). At the very bottom of the Recommended Reading page we’ve just posted an awesome article by Malcolm Gladwell from a recent New Yorker entitled “The Sure Thing – How Entrepreneur Really Succeed“. It’s widely apparent that Gladwell is a progressive thinker and modern savant, and this excerpt really drives that point home. But why do we think you should check it out? We consider, although slightly behind the times in a few aspects, the commercial real estate industry to be highly entrepreneurial. Whether it be brokerage, investments, management, or any facet of the game, creativity and passion are rewarded.

To that point, Gladwell’s main thesis in the post is that often times, the concept of the cowboy, risk-taking entrepreneur is misleading, and that it’s the calculated “risk averse” entrepreneur that succeeds in the end.

“…entrepreneurial spirit could not have less in common with that of the daring risk-taker of popular imagination. Would we so revere risk-taking if we realized that the people who are supposedly taking bold risks in the cause of entrepreneurship are actually doing no such thing?”

Gladwell continues by cataloging some of the most revered businessmen of the last several decades; Ted Turner and his bets on an Atlanta television station and the Atlanta Braves, John Paulson of Paulson & Co. who shorted the most recent real estate cycle by purchasing default swaps in 2006 against the jovial mortgage lenders (considered to be “The Greatest Trade Ever“), Giovanni Agnelli, the founder of Fiat car company, and his gamble with other peoples money to start a car company, and on and on and on. The most important theme that all of these successful entrepreneurs share is that they are extremely calculated risk takers who exploit a market inefficiency. These are not “leaps of faith” as dramatized by public media, they are painstaking calculations often pushing the individuals to “work so hard to find the sure thing because anything short of that gave them ulcers.”

This serves as a great lesson for people in the RE industry, especially those that have lived through this last cycle. A lot of the inane investments and deals that were made in 2005-2007 we’re on a whim, with very little due diligence. We don’t want to spoil the goods of the article, but the 5-10 minute read will further the notion that the time and focus you spend on your work now, if calculated and methodical, will reap great rewards in due time.


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