← Success Story with Scott D. Clary
Success Story with Scott D. Clary
Lessons - How Taking Calculated Chances Built a Business Empire | Michael S. Liebowitz - Serial Entrepreneur
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- [00:00]
Sam
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- [02:26]
Peter Cunho
Well, the number one thing is the person you're betting on. Everything is a jockey bet everything, right? I mean, you you better know that the person that you are as leading that business has the attributes that I mentioned, right? They're entrepreneurial, they've got a great idea. It's incredible. They know how to execute it. And if they don't know how to execute, that's okay. But hire people that can execute, right? Make sure you put the right team in place that's going to do it and you want to meet that team. But it's all a jockey. Like when, when Meta, right, was falling apart and the stock went from, if you remember, from 300 to $88. I bought more. I bought more for one reason. I'm going to tell you this. I think Mark Zuckerberg is an absolutely brilliant genius. It was a jockey bet for me. And the fact that he changed the company's name from Facebook to Meta at the top. He was at the top and he thought he needed to change the name to bring that business into the future. How many entrepreneurs or CEOs of a company that are at the top have a trillion dollar business and feel the need to change the name of the company to bring it into the next century, as you would call it? And I said to myself, wow. To me, that told me everything about what that guy's thinking. And it told me he's not going anywhere. Right? That's another guy that, like, he's a CEO, he created, this is his whole life. He's not going there because if he's out of there, I don't want to own that stock. Okay? And so at the end of the day, when I look at businesses, I'm always looking at this, who's the CEO that's running that company? That's the bet you're making. That's where you see some businesses where somebody takes over this decrepit thing that's going on and they turn it into the most unbelievable business that they could, you know, turn it into. And that's the only thing you're betting on, in my opinion. There's a lot more, obviously, but that's the number one criteria for me is who's the CEO.
- [04:21]
Sam
You know, it's interesting because again, you mentioned, like the, the fact that you bought and sold this business multiple times. I've seen many times where you have this. And to sort of further your point, there's always incredible founder, CEO that builds a business and then it's sold to private equity or it's sold to a strategic buyer and then it goes to shit. And. And it's because the person isn't there. Anymore.
- [04:41]
Peter Cunho
And, well, I sold the business to private equity, okay? Before I sold it the last time, okay? So I told you about that business. I bought it. I sold it back. I sold it in 2016 to private equity. And then me and a private equity firm sold it again, okay? The private equity funnel, I'll name them because they're great, is Stone Point Capital. And they always understood that they couldn't run the business. They understood from the beginning who the guy is or girl is that's running that business, okay? And that's it. And when we got an offer to sell it, they said, we'll own this business with you forever. We don't care, okay? But if you want to sell it, we'll sell it, too. And again, it's the same thing. So you have private equity. You have people that you know, companies that buy businesses, and the really smart private. And I'll just give you other example. When I sold that business, I had another offer for it that was more. I chose to sell it to those guys because they'd been around the block 500 times. I knew they would make me more money on the second hit, and they were gonna let me run that business how it needed to be run. Right? And that's the other thing again. They were making a jockey bet. It's like, who's, you know, listen, after Douglas Elman, I got calls from, you know, other private equity funds that I did business with in the past. And every one of them called me and said, hey, is there anything for us to do with you here? They were making the jockey bet about me. Yeah, it was the same thing. Right? That's all what it's about. There's other things you have to diligence, too. But the number one thing again, I had a thing on my family office website. I don't think we have that website up anymore. But it was a quote that I had, and it said, you can't do a good deal with a bad guy, and you can't do a bad deal with a good guy. Am I the truth? It's the truth. And you know why you can't do a bad deal with a good guy? Because ultimately, businesses goes up, down. It's dynamic. It's this and that. If you're doing it with the right person, you'll figure it out. You'll figure it out. You'll adapt.
- [06:39]
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- [08:19]
Sam
As an investor, you just have to figure out that right person, the one founder, the one CEO that's really the person you're building or team. But the question or the point is how do you take that idea and translate it into running a whole company? So how do you take the idea of finding that right person and then you just deploy that against the whole company so that you always attract the right people.
- [08:40]
Peter Cunho
Well, there's always stages of everything, right? So it's not all come. You're not going to come up with it all day one. It's not going to be like, all right, we're going to put out this blueprint. I got this great CEO, I've got this great cfo, I've got this great product. And here you go. Here's the plan for the future. I've been at Douglas Elliman for nine weeks. My business plan has changed 15 times. Okay? It may be different next week. Okay? And what I mean by that is, is that I keep learning new things, I keep meeting new people, I keep running across different things within the company and I adapt to it. And if I said something to somebody two weeks ago and they, and now I changed it and they call me up and say, but you said this, I Don't really care. Okay? I'm gonna do what's right at the moment that it's there. And if you're not a CEO that doesn't know how to adapt to current events, you're the wrong CEO and you're running the business with your ego. Because the only person that won't change is a person that's ego is in the way. Right. So for us at Douglas Elliman, our business plan may be a little bit different. It may be a little varnished, a little. It may be a little polished, or it may be adjusted in another month or two months. Right now we're coming up with plans. Obviously, we have plans. We, I think about plans every day. We have a team that we think about what we want to do with the business. And I think generally we have a generalized blueprint of what we want to look like. But within that blueprint, things may change. Some people may change some business plans. Maybe somebody brings us an unbelievable idea that we say, you know what? Wow, we haven't seen that before. I'm not passing on that idea. I want to. I want to. Maybe I want to implement that or a piece of technology that I think is transforming to our business. And now we need to basically, you know, turn the wheel a little bit to the left. That's what we're going to do. And we're going to be dynamic. And you know, the business that I sold that we talked about that it felt like a new business the day I sold it, because we were always innovating, we were always doing new things. And Douglas Elliman is going to be an entrepreneurial, mean, lean, innovative, winner attitude business that's going to be dynamic. Okay. And do really interesting things. Be on the forefront of our marquee real estate business with a name that is the best in the business. And we have an amazing opportunity here. And again, we may look a little different than Everybody else in 12 months or two years, and we're excited about that.
- [11:17]
Sam
No, I think that first of all, I think that you have the right. I think the best CEOs are entrepreneurs. I truly do believe that. I don't think that you can airdrop an MBA and be as good a CEO. I mean, this is like a. I'm sure there's some great CEOs that do have the Ivy League education, but I think that entrepreneurs, just how fast they think and how comfortable they are with radical ideas, I think that's more and more who you're gonna have to see in that C suite because Technology changes so fast. World changes so fast, you can't just be comfortable with an idea and set it and forget it. I don't think business exists like that anymore.
- [11:53]
Peter Cunho
Well, it's interesting. So I met with a, an engineering, coding, you know, technology developer a couple of weeks ago, right. And we started talking about building a piece of technology for us. Okay. I did that before, and one of my insurance businesses, we built technology. They told me it would take six to nine months to build. It took two and a half years. It ended up being great technology. But the insurance business is a different business in residential real estate. And the problem with building our own right now is by the time we finish building our own and, and conceptualize it and beta test it, it's probably going to be obsolete. Okay? And today there are so many companies out there building technology for residential real estate. We don't need to build it, we don't need to. And it really goes along the lines of what you're saying, right? Is that you want to build and you want to do all these things, but the market is moving so fast that, you know, and listen, we have competitors that went out and built, spends a fortune of money building technology. And we see their technology. It's fine. It's not groundbreaking anymore. It may have been groundbreaking two years ago when they released it. There's nothing groundbreaking about it. You could buy it off the shelf today. So, you know, like you said, things move so quickly. If you're not willing to adapt as a CEO in business, in real time, forget it.
- [13:14]
Sam
And when you do, when you do make those acquisitions, you have to make that, you give that acquired company the air to breathe. So you don't just stifle the innovation that made them who they are too. Because I see that happen a lot as well. You acquire a company and then all of a sudden, just corporate bullshit just destroys that entrepreneurial innovation that made that company so great.
- [13:33]
Peter Cunho
Most of the time when you see acquisitions and you know, at that company, I was with NFP while I was there, we did 400 acquisitions, okay? So you see every bit. And again, it gets back to, who are you buying? Who is that person? Because you don't want to buy a business. And the people that built it created a great leaf. Yeah, of course, like, we don't, we don't want to buy a business, right? That the people. Because we're buying a people business unless we buy a product, you know, so you want to make sure that those people that you're buying are going to stay and are Motivated and like you said, most. Douglas Hellman has bought other brokerages that were profitable before we bought them and now they're not. Okay, well, what went wrong there, right? Did you buy the wrong entrepreneur? Did we put too much bureaucracy on them? You know, did we not innovate? So for us, if we're going to look at an acquisition, it's going to be an accretive from day one. It's going to add value from both businesses, right? So let's say we pay a 5 multiple for something, right? We want our effective multiple post closing to be a two or three. Right? Because there are operating efficiencies. We have the platform, maybe they don't. Or maybe we've got redundancy someplace and we're going to fold them in and eliminate the redundancy. So, like, you know, those mathematical decisions. And then again, you have the people aspect of it too. And that's why it's also important to take your time, don't find a deal and be like, this is the greatest thing, and rush to close it. Because the diligence period is an incredible period of time to find out about the people that you're dealing with. People show themselves, right? So go through that. It's like the interview process. Don't do one. I hired one person in my life on the spot, okay. When in my insurance business. And just so you know, she was one of the best people I ever hired. Okay. But that was lucky.
- [15:15]
Sam
I think that was very lucky.
- [15:16]
Peter Cunho
That was lucky. My, my process after that is like a 5, 6, 7, 8, 9 or 10, you know, period of time, you know, to hire because you learn a lot in that process.
- [15:28]
Sam
Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one. Sam.