Try out this thought exercise: think about what it takes to run a great restaurant. If you're like most folks, you come up with great food, fair prices, good location, and terrific service. Let's call those a restaurant's success attributes. Okay, now name all the places you can think of that have been in business for at least 10 years that have nailed all four areas.
I ask folks these questions when I travel, and no matter where I go, no group gets much higher than a list of a few restaurants. Why? Because it’s not easy to be good at all four success attributes. It’s not impossible. Really, it’s not even hard. But it does require effort.
The same is true in any business. There are going to be three or four things that you need to be good at in order to earn a place in people’s minds as the “go-to” in your area of expertise. Those specific areas have to operate well, almost in balance with each other to be operating at optimum efficiency. It’s like the guy spinning plates – you’ve got to keep the important ones spinning.
As a Texan, I love football analogies. So think about football. You’ve got coaching, defense, offense and special teams. If one of those areas is operating poorly, you might win a few games but you aren’t going to win any championships.
What does this have to do with making investors' money in real estate ventures? Everything! It is why we've chosen to focus on the small and medium sized opportunity set. And it is why we've chosen to emphasis the strong risk-adjusted returns we can make through horizontal development, with short project timelines.
It isn't that our team can't do more. It's that in order to optimize our ability to deliver results to our investor partners, we've chosen to be outstanding at the specific things that we need to do in our chosen niche.
Comments