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The Internet bubble burst right after Y2K. The real estate bubble burst after the middle of that same decade. And pretty much every other bubble burst after the COVID pandemic circled the globe.
There were lots of reasons, of course. But one consistent cause was mindset — people believed that with all the new technology and new things happening in the world, the old rules didn’t apply anymore. And so they abandoned business fundamentals and tried things they might never have attempted in more normal times.
Unfortunately for them, the history of societal mania has shown us that the rules remain the same even when the tools change drastically.
That got me wondering what would happen if a business superstar from 50 or 100 years ago — a Carnegie or a Rockefeller perhaps — looked at today’s business environment. What would they think of the Internet and all the new opportunities it has created? What would they make of Bitcoin, NFTs, Blockchain, AI, and ChatGPT?
Would they do things differently or would they run their enterprises with the same business fundamentals that brought them success before the information age?
Of course I don’t have access to the wisdom of Carnegie or Rockefeller outside of history books. But I was lucky enough to learn about business fundamentals from a superstar of the previous generation – a man who built his business before digital technology became the ubiquitous norm.
My dad was a visionary businessman with rules he believed applied to all businesses. Since my father passed away, I’ve dubbed his adages Lessons From Lenny, and I think about them often.
My father believed that all businesses required careful control of the same six Ms regardless of what industry you were in:
- Momentum and,
He also believed six business fundamentals were critical to success:
- Revenue can hide a lot of errors.
- Never run out of money.
- Cash is king.
- You don’t make money when you sell; you make money when you buy (a rule Sam Walton built his empire on, by the way).
- Always sell the dream.
- But my father’s rule of buying property was the most well-known.
My dad believed that when you purchase real estate or anything negotiable and expensive, you must offer a price that’s so low it embarrasses you. According to my dad, your offer is too high if you can say your price with a straight face. And if you go into the negotiation with your spouse or partner and they don’t walk out of the room because they’re disgusted at how low your offer is, that’s proof that it is too high.
Friends and neighbors throughout South Florida still tell me that they were able to buy their homes, cars, boats, or whatever at a great price because of my dad’s rule.
“But wait,” I already hear you saying, “what about sellers’ markets when buyers are paying more than the asking price just to buy the property of their choice? How does your dad’s rule of offering low prices work then?
For that answer, we have to go back one generation further and ask my grandfather, Poppa Hy.
As I recall, my Poppa Hy had only one business fundamental — “Buy low, sell high.” Poppa Hy believed that simple advice could heal all business ills.
“But Poppa,” I’d naively ask, “What if I buy low, but it still goes down?”
He’d stare at me knowingly for an agonizing 30 seconds before slowly answering:
“Then don’t buy it.”