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A Bug's Life
A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.
Last week I hosted an outdoor shindig that included both real estateurs and, en masse, mosquitos. I couldn’t do much about the real estate people, but in an effort to provide relief from the mosquitos I circled the gig with a can of bug spray and learned a lot about specialization.
One fellow, a developer with a southern accent, a loud southern accent, intercepted me with a “HEY BUDDY LET ME AT SOME OF THAT” then took the can, closed his eyes and mouth, and sprayed it all over his face. No surprise he signs personal guarantees on land loans.
An elegant woman wearing a long skirt - without slowing her conversation or making eye contact with me - extended her ankle so that I could do the spraying. That she’s a shrewd and hands-off limited partner checks out.
Another fellow, one who talks a big game about his investing prowess after the Great Financial Crisis - but to my knowledge hasn’t done anything meaningful in the past ten years - took the can from me, read with a frown the entire list of ingredients, and handed it back.
My partner took the can, sprayed a bit in one hand, then rubbed it on the back of his neck. Like a civilized person.
Another woman, a leasing pro well known for her salesmanship and force of personality, said “OH THANK GAWD”, snatched the can from me an proceeded to spray it up her skirt.
And, true to form, when I offered a friend and long-time office investor the can he replied “nah man, I’m good thanks” as mosquitos covered his bald head.
Each of these folks has a powerful set of niche skills - and they’re all different in demeanor, as evidenced by their reaction to the can of bug spray.
What they have in common, and what makes their niche skill so effective, is their broader understanding of the real estate world.
They might not be able to conn a ship (although one has a fantastic boat), set a bone, or butcher a hog, but every one of them has a working understanding of subordination and non-disturbance, rights of first refusal, pre-payment penalties, load factors, grease traps, trapped equity, TPO roofs, environmental indemnity, set backs, height limits, cap rates, rate caps, sign ordinances, coverage ratios, WALTs, CAGRs, UYOCs, NNNs, discount rates, and lease rates.
Specialization only works as part of a mass ecosystem. Niche requires broad. The really successful real estateurs have a “thing” they do but they also understand the bigger picture and their role within it. That understanding of the larger whole is what allows them to sharpshoot.
Otherwise, they’re just insects.