The following essay by Steve Sjuggerud illustrates an important truth about entrepreneurship. Contrary to popular belief, successful entrepreneurs (as opposed to those who make money and then go broke) are not usually risk takers. Quite the opposite, they weigh risks and rewards and don’t move forward unless they can comfortably live with the downsides.
By Dr. Steve Sjuggerud
The life story of Bob Mayer is titled Without Risk, There’s No Reward: Tales, trials and truisms from the amazing life of a pioneering southern California developer.
I met Bob last week, while staying at a hotel he built… the fantastic Hyatt at the Huntington Beach Waterfront. It turns out Bob is a subscriber of mine. He’s also a gifted storyteller and a successful entrepreneur.
My favorite way to learn about investing in an area that I am not an expert is to seek out the experts – guys who have legitimately succeeded – and learn from them.
Bob has lived an incredibly full life… He’s in his eighties… But he could easily pass for a man in his fifties. When we met, he seemed happy – on top of the world. I’m sure not many real estate developers feel that way today. Bob must be doing something right.
He started from humble beginnings, but he always had big dreams. He joined the Army Air Forces out of high school during World War II with visions of being a fighter pilot. After the war, he spent the early 1950s “working hard, pushing wheelbarrows,” earning $1 an hour for a construction company.
In 1955, with three kids to feed at home, he started his own business. He succeeded. By the 1960s, his company was the largest apartment developer in Southern California. In the next few decades, he ventured into other businesses… extended-stay hotels, banking, Las Vegas casinos, and more.
Bob was certainly never afraid to dream – and never afraid to try to make it happen.
When we met, he told me “Running a hotel isn’t the fun part. The fun part is getting there… It’s starting from nothing, and turning it into something… just to see if you can make it work. That’s the fun part.”
Bob retired in his 50s in 1980… and found himself bored. While in high school, he lived in Huntington Beach, California. His mind kept wandering back to Huntington… He had dreams for a certain run-down 50-acre parcel of oceanfront land, just south of the Huntington Pier. He pursued those dreams…
Out of all his endeavors over the years, Bob says his post-retirement dream for developing the Huntington Beach Waterfront “carried the greatest likelihood of failure. Yet it turned out to be the most successful of all… and was unquestionably worth the risk.”
To get the job done, Bob had to navigate through the city bureaucracy, lawsuits, relocating existing residents, dealing with environmental issues (including wetlands and an abandoned gas station on the property), getting (and keeping) financing and permits to build hotels… The list goes on and on.
Right from the start, when the lease on this chunk of earth on the beach was in a bankruptcy sale, Bob was mentally calculating his downside risks versus his potential rewards. Bob wrote:
I calculated that the worst-case scenario would have me merely running the existing mobile home park, golf course, and motel until 2013, and then walking away at the expiration of the lease.
I would have enjoyed a modest but reasonable return on my original investment for 35 years. With this scenario as my downside, I felt comfortable enough to begin thinking about the possible upside.
The rest of the story is fascinating, as are Bob’s other stories of success and failure in a life well lived.
After “over twenty five years of diligent effort, we finally came to terms with the City of Huntington Beach…” Bob wrote in his book. “While it has taken much longer than I had ever envisioned… it has produced results far more impressive than any I had ever thought possible.”
If I want to learn about real estate, I don’t want to read a “how-to” book about real estate, written by a journalist who has never been a property investor…
I want to hear stories directly from a successful entrepreneur and figure out how I can apply the lessons that are between the lines. And I want to hear his mistakes so I can try to avoid them. The stories of Bob’s successes and his failures are both fun to read.
His book is titled, Without Risk, There’s No Reward. It’s a good read from a guy who lived it – and succeeded. I suggest you check it out…