Notes From My Journal: A Quick Side Trip for a Business Meeting
Back in Rome tonight after a few days in France. The taxi driver was a maniac. He got me from the airport to my hotel in half the time that it usually takes. I showered and dressed and went to the rooftop terrace for a drink and to write this. I’ll have pasta for dinner — delicious, homemade, al dente pasta.
The trip to France was business. But when I arrived in Paris, I had time to spend a very pleasant several hours walking through the Jardins de Tuileries and Champs-Élysées.
The meeting was at Chateau de Courtomer, two hours north of Paris in Normandy. A handsome 12th century structure rebuilt in the 18th century that we bought 10 years ago and use now and then for company meetings like these.
We had invited some of our top global marketers to spend two days with Rich Schefren, the digital marketing “guru of the digital marketing gurus.”
Rich is also a good friend, We’ve spent many a night together over the years smoking cigars and talking. Rich teaches business strategy and marketing techniques, but when no one else is around we talk theory.
It’s commonly said that our business is a “what” (happened) business, not a “why” business. And most marketers are happy with that approach. But for Rich and me, entrepreneurship, business management, and marketing would be bo-o-o-o-ring without theory to plump them up.
Among the many things I took away from Rich’s presentation, the most important was his conviction that you cannot expect to be competitive in business today unless you are absolutely up to date on digital technology.
It’s no longer possible to build a business — to attract and develop valuable customer relationships — if you cannot communicate with customers at will via all sorts of media simultaneously. This was impossible 10 years ago. It was a goal five years ago. Today, it’s as easy as making purchases via Amazon Prime.
It’s also no longer possible to be strictly a direct marketing business, as we have been since the beginning. Because of social media, every business must be concerned about its brand.
Most of what is written about brand marketing is bullshit. It’s difficult and very rare to build a sizable business that way. But you can’t expect to represent your business properly unless you devote at least some attention to countering the fake news on social media.
I do prefer Rome over Paris, but I can’t argue that it is more beautiful after seeing Paris once again. Paris has the advantage of being a planned city. The way the boulevards are laid out and the way the neighborhoods (arrondissements) are situated give the city a spectacular charm.
So I was happy to have that promenade in Paris. But I’m really excited about eating Cacio e Pepe tonight.
Today’s Word: abrogate (verb)
To abrogate (AB-roh-gate) is to abolish, annul, or treat as non-existent. As used by Doris Kearns Goodwin in Team of Rivals, her book about Lincoln and his cabinet: “The abrogation of slavery was their [the Liberty Party’s] principal goal.”
According to some genealogists, Oprah Winfrey and Elvis Presley are distant cousins.
From My “Work-in-Progress” Basket
How Not to “Land Bank”
I got the tax bill for our Canadian property just before I left for Rome.
Twenty-three hundred bucks. How long have I owned that property? It must be 20 years. That’s about 50 grand in taxes. Plus the cost of maintaining the island’s one road over the years. Maybe another five grand. So, $55,000 in total. Add that to the $55,000 I paid for the land, and my current investment – not counting the cost of money — is $110,000.
And what is this land worth today? I don’t want to know.
But I should know. So I checked. And it was worse than I feared. Maybe $35,000!
Land banking is a term applied to investments in raw land whose value one expects to increase over time. Generally speaking, owning raw land is a lot cheaper than owning property with a structure on it, because both the maintenance and the taxes are relatively low. Sometimes de minimus.
Plus, land is tangible. Therefore, in theory, it cannot be easily stolen and will provide a hedge against inflation.
That’s what I told myself when I bought it. But it hasn’t lived up to its promise.
The touted benefits of land banking were certainly the elements of my rational. But we know that buying decisions take place in the emotional, not rational, regions of the brain. So what was I feeling when I bought it?
Let’s see. I had just made 10 times my money investing in raw land on the Pacific coast of Central America. I bought it along with three friends and colleagues. One of them bought us out five years later, which doubled my money. But as part of the deal, the first investors also took individual lots. It was the value of those lots that brought my total return to 1,000%.
That raw land had been found for us by RG, a young man that we’d hired to find it for us. So when he came to us with a smaller but seemingly similar offering in Canada – five acres of a barrier island along Canada’s eastern shore – I felt I should go for it. Notice: Felt.
I rationalized the Canadian purchase by calling it land banking. I’d had one good experience already. I felt good about that. So my impulse was to do it again.
Two of my previous partners went in on the Canadian property with me. They were both hard-core land bankers. RG told us the island was beautiful. And he reminded us that “they’re not making any more waterfront property,” a cliché I have heard many times.
I never gave a thought to what it would cost me to own the property. I figured, correctly, that maintenance wouldn’t be much. But I didn’t take taxes into consideration.
I’d like to blame my decision to keep the property on ignorance and naiveté. But I can’t. I knew better. Yet I held on.
I can only explain it by relating it to the stock investor who makes a big investment in a stock that tanks and refuses to sell. He’d rather bootlessly hope for a miracle than accept that his original decision was wrong.
In other words, I used the same part of my brain to make the decision to hold on to the property that I had used to buy it in the first place.
Let that be a lesson to you!
No, let that be 7 lessons:
Rule 1.Always remember that what you pay for something – be it a house or a car or a tract of land – is only one part of the total cost of possessing it.
Rule 2.Be honest with yourself. Accept the fact that most of your buying decisions are driven by emotion.
Rule 3.Don’t use your brain to rationalize buying decisions. Use it to figure out the ways your emotional decision might be foolish.
Rule 4.If, after doing the former, you are still set on making the investment, create a Plan B – a strategy to minimize the financial costs of your bad decision.
Rule 5.Make sure that strategy includes a “stop loss” point – i.e., a point at which you will bail out of the investment even if you don’t “want” to.
Rule 6.It you can’t create a Plan B, don’t invest.
Rule 7.If you can’t create a Plan B and still want to invest, get comfortable with the possibility that you will lose every penny.
Had I followed rules 1,2, and 3, I would not have bought that land in the first place. Had I ignored those rules but followed rules 4 and 5, I would have long ago sold it for a modest loss.
Since I did none of those things, I have nothing but rule 7 to follow: I have to admit I made a foolish mistake.