In 2004 I was a scared, lonely graduate of the Huntsman Program at the University of Pennsylvania with no job. That summer I spent riding my bike around Philadelphia and felt like I had no purpose. That fall, I moved to San Diego and interned for Senator Dianne Feinstein. It was an unpaid internship, so I worked at a t-shirt warehouse fulfilling orders for $8/hour. By the end of three months, I had learned how to use one of their electric dollies (it was a tower that allowed you to go up and down about two levels in this warehouse that was reminiscent of the aisles at Home Depot, except this place was much, much darker and dustier) so well I would be racing down the aisles at the touch of a lever. I surfed almost every other day, and seeing the waves behind my eyes when I closed them, was the only thing that helped me sleep at night. At Senator Feinstein’s office, I was taking constituent calls and researching the economic impact of American Indian casinos and military bases. Little did I know that would help me later. At this stage I was still confused, except I knew I wanted to do something related to real estate.
By the end of November, I had been promoted to $9/hour at the warehouse, and I was still rabidly surfing every day. I remember there was this one time my contacts flew out while I was in the car – a freak accident because I was developing this condition called swollen pupillae behind my eyelids – and I surfed, nearly blind at -900/-1000, just by watching the color of the water grow darker and darker. I also drove to the break and back, although I could barely see the colors of the traffic lights. This just testifies to the fact that I was not in the right state of mind.
At Senator Feinstein’s office one day, we got this fax letter that was written in ALL CAPS and was sent from someone from beyond the border (Mexico), and described Mexican drug violence and retribution in such detail that I got scared. It was written as if the guy was being chased and was trying to run away. I gave it to my supervisor but he just smiled and said this isn’t a job for us. I remember thinking that both me and the guy who sent it believed in a government that was more powerful than it actually was. What if it were true? Shouldn’t it be worth investigating?
While still down there I interviewed at the San Diego office of Marcus & Millichap. The only thing I remember about the presentation was first, that the guy put up a slide showing a matrix of how much you could earn if you were a) a star, b) mediocre, and c) a dunce. The dunces were growing their income from $80k to more than $120k. The stars started at $150k and were growing their income to over $800k. To me, for some reason, it didn’t seem like a lot. It seemed normal. I also remember that second, he looked at my resume and said, liberals can’t work here, shaking his head almost gently. I said that on the whole, I was conservative when it came to economics and trade. He nodded his head.
I didn’t get a job there or anywhere else for a while. In December I responded to an ad in the UCLA newspaper, because I was staying with a friend in Westwood now, in a two bedroom with 6 other guys. It was for a real estate job in El Segundo that paid $12/hour. At that point I was so desperate for a job that this seemed like a lot of money, especially since my last paying one had paid $9.
I took the interview and got the job within three days. I remember taking a test during the interview, it was a StrengthsFinder test that highlighted my weaknesses and strengths. I put it in that order because the guy hiring me mentioned only a weakness that stood out to him. The computer had indicated that I may be ‘easily bored’. While this was true, my reply to him was that my focus was greater than my tendency to get distracted.
The substance of my work here was to validate about 4,000 contact records by cross-referencing them through Lexis-Nexis, public sources, and other means. The job took me several months. I don’t know how I endured that. Actually, I do – it’s because the office itself was a prank-filled, roughhousing frat with outsize characters, some of whom were probably insane. This was a time when young 20-year olds were making millions by merely picking up a phone and dialing. It was like a gold rush. To me, it was a social experiment and completely eye-opening, mainly by virtue of the fact that it violated every single thing I had learned at Wharton about business and valuations. It shattered my worldview, I felt like I was a social anthropologist embedded in an alternate universe. Those experiences were actually the origin of this blog. I collected enough stories to later write a book about it. People have said that the characters don’t seem real, to which I would say that is the highest compliment you can give, because that is exactly what I was trying to communicate. It is all real.
I was there about a year, surfing at El Porto every day – sometimes three times: before work, at lunch, and after work. I have fond memories about the level of my metabolism back then. I could eat anything and get away with it. I remember we used to take our boss’ Black Card (with permission of course), and order meals at restaurants that were on the order of three entrees per person. I would finish my share. But surfing meant a lot more to me than just an intense metabolism. It instilled in me a reverence, an awe, an acceptance of the world.
At my job I started learning about real estate and how it was done, which has served me well overall. In 2006 I moved onto another job, a quieter one, working for a private equity firm in the same office building in Rosecrans. My boss this time was more sedate, and the office only had three people. Two of us at times. I just modeled the **** out of every P&L and setup sheet that was sent our way. Now that I was on the buyside, technically, instead of on the brokerage side, it was harder to feel the pulse of the market. I wanted to do a ‘deal’ very desperately, to learn more about this whole PE business. By the way, I had gotten another promotion from about $30k a year to $40k. To me, that was an improvement. No equity though.
The only ‘deal’ I remember doing was that a Nevada broker tipped us off to some shopping center in Las Vegas, and my boss bought it and flipped it a few months later for a 75% gain. I remember one of the partners calling in and saying ‘are you telling ME that you guys got me a 75% return in six months! You guys are studs!’ Unfortunately, this was a deal that was a no-brainer deal, meaning I had no hand in underwriting or modeling it.
I must have underwritten/modeled a few hundred deals, and only one was acquired, an office up north in Berkeley. To me at the time, the pace was too slow and I began making plans to leave. It was also because I felt this inexpressible desire that the real estate shenanigans had gone too far, that something was just off in the world and that I might be in a position to be harmed most by it. By ‘shenanigans’ I meant valuations of properties at sub-4 cap rates, price appreciation, etc. I remember getting pitched a no-cash-flow deal. Basically it was a real estate deal with a three year holding period where they wanted us to invest only for principal appreciation. This was the level of certainty that people had that prices would only go up! Something felt wrong to me.
Back at Penn, I had cold-called a company called Economics Research Associates. I had found it by googling the terms ‘research’ and ‘economic’, two search terms that I felt aligned perfectly with what I wanted to do. I discovered that they were a real estate consulting firm in the field of theme parks and casinos and resorts, which was far sexier than the original work I had in mind. I gave them a call, and they politely told me there were no current openings, but I kept in touch. One time in San Diego I remember I did a phone interview with a partner in SF while in the car, because I was too scared to say that I would call him back later. I was driving, and kept driving aimlessly, because I had no presence of mind to pull over.
Anyway, I gave these guys a call once again. One of the partners suggested we meet for breakfast. I dressed up in a shirt and tie, which I never did at my job, and met him at Metlox Village in Manhattan Beach, where I actually saw one of my bosses in the background pacing back and forth, looking at his phone. I knew he saw me. No matter. I talked to the partner of ERA about real estate developments in Dubai and Korea. He said they could consider me for hire.
The other company I interviewed for at this time was Rip Curl. My interviewer was a former banker and he looked at my resume and said, ‘you’re on the partner track at this company, why do you want to leave?’ There were a lot of things I couldn’t express to him at the time about the market and its valuations. I said I wanted to represent a ‘brand’, be more integrated with operations, etc. I remember showing up for the interview, in the OC, in a suit. Everyone there, including the guy interviewing me, was wearing t shirts and flip flops. We had a good talk, and afterwards he took me out to the parking lot, opening the back of his car, and gave me a wetsuit. Now that, was a cool company.
I had no game plan or anything. But I quit my job on the strength of…nothing. Both companies told me they were not hiring. I think it was more on the basis of wanting to escape. So I surfed and bought a motorcycle and rode my skateboard around my block in Palms. My motorcycle was an old CBR 600, with no fenders or plastics, in the naked style far before the manufacturers started designing bikes like that deliberately. I crashed it one time trying to get on the freeway and ran out of gas on the 5 to the 10 interchange. All this spooked me and I sold it.
But then ERA called me back two months later, because someone had just quit! It was August 2006. I was happy. I was hired, and my first week there, they sent me to work on a project in Korea for a multi-billion dollar development. I was young and naive and felt self-important. I rode business class for the first time and got a taste of what all of my classmates were probably doing on a weekly basis.
I began flying to Korea on a monthly, if not bi-weekly basis. There was a speculative theme-park boom (if you can call it that, because none of them got built) the likes of which had never before been seen. This was insanity on a completely different level, although it was not only Korea. Every market in the world wanted to be like Dubai, although Dubai was out-Dubaiing everyone else with the most imaginative real estate developments in the world. I had never taken a real estate class at Wharton, but I try to imagine now how they would suggest we value things like casinos in the same of a sphere floating on water, or assault-rifle theme parks, or the investment return on recreating the Las Vegas strip in the middle of mudflats in an Asian country. Well, no matter. I could teach that class.
I was in the air more than I was at home in my apartment in Palms, and those were the years I was treated the best. I had an expense account, flew business class, stayed at nice hotels. This wasn’t like other types of consulting, where you had to stay onsite at a client’s company for months, or transaction-based where you had to get in, do the deal or negotiate, and fly out. My business trips were leisurely, even. I had one or two days of meetings. And extra days or weekends to see the city (and my friends), party, play. One of the proudest interactions I had with a client at that time was when, after a bout of mandatory karaoke, he took me aside and said that he hadn’t trusted that we could get the job done – but when he heard me sing so well (it was the Beach Boys’ Surfin USA) he knew that I had a solid character.
But when I got back from my trips, jet lag would hit me like a bomb. I’ve never adjusted well going east. Something about crossing the date line over the Pacific that just messes you up. I’m in a paralysis of energy for about three weeks.
At ERA I was promoted twice within eighteen months. Things were good. At bonus time, the partner who had hired me asked me what I wanted for my bonus. I asked for it. I got it. I probably lowballed it by a large amount. Then ERA was acquired. And things in the world began slowing down in 2008.
So we left to start a new company, Pro Forma Advisors, the week of September 8th, 2008. We had great momentum. I was close with the developer of Legoland Korea (which is still on-going, by the way, one of the rare few), and my partners and I were close with a savings bank that at the time was acting more like a hedge fund, trading ethanol and investing in projects like wind farms in Germany and casinos in Cambodia. They promised us a lot of work.
Then Lehman happened, and then, just to put it in surfing terms, it was like a giant wave collapsed on my head, picked me up and took me over the falls, and I almost drowned but then surfaced in the whitewash, and it was quiet and uneventful.
2009 was a bad, bad year. For everyone else too, I’m sure, but it wasn’t good times to be in the real estate business. It was the first down cycle I had seen and I won’t forget it. The company survived though. I traveled a lot, mostly for play. For business travel, we took coach. It was our own money and hard to justify. I scaled down. I moved in with my parents and I kind of just passed that year in a comatose, hermetic state. Money wise, I did better than ever before, which taught me the economics about being my own boss, the realities of overhead, and the feeling of responsibility.
I jumped into starting the company without mentally preparing myself, but the year did it for me. I learned about not ever really being able to walk away from work, when you’re trying to create money out of nothing and you have no name or track record. It was time to look at what was really important. I stopped drinking during this time period too. I think in many ways I grew up, although the year did make me a little more withdrawn. Especially since I lived at home.
At the beginning of 2010 one of my contacts from the brokerage where I used to work back in 2005 called me with an opportunity. To appeal property taxes. The business is growing and it is ‘ridiculous’, he said. The business made perfect sense to me, and for me it was the world gone full circle. It was satisfying in a way, like seeing a story end, tying up loose ends. The valuations back in the 2004-2006 days, they really hadn’t been sustainable. I had been right!
Right after I agreed to start helping out, I got a call from Berkeley offering me a scholarship. I accepted that too. I was still doing Pro Forma work. I had no intention of ever going back to feeling purposeless or just ‘floating’ again. That year I went down to the California Counties and appealed more than $100 million in property values personally. I created a program where instead of taking 40 minutes to comp a property and put the relevant paperwork together, it took about 10 minutes. I did about 800 of the cases before leaving in August for school.
At Berkeley I discovered my ideal lifestyle. The city just kind of has that effect on people, doesn’t it. In the morning I would take Chinese classes. Then I would spend some time in the library either reading for class or doing tax work. Then I would go work out or eat at the cafeteria (me and one of my classmates were the only MBA students there. I thought it was a shame that the business students didn’t realize the value in getting a buffet for every meal for only about $6 per), read or take a nap, go to class and get the academic version of what had just happened in the last few years, read some more, then go to sleep. It was about 6 hours of concentrated work a day. Any more than that and it was unproductive and had diminishing returns. I still think that is the ideal split, which tells you a lot about the kind of work I am suited for.
That winter I went to Beijing to continue my Chinese at BLCU. It was a Siberian winter and I got sick the first week there, from a combination of something I ate and my decision to go running around the track in -10 degree weather. I lived in a tiny room that with the heat on became drier than the Sahara, so I rigged a crazy humidifier system using a wet towel and hanging it from the vents on the wall. I had never lived with so little, and never been colder in my life. The classrooms had no heating system so we sat in there with fog coming from our breaths, my head so cold I couldn’t think, my fingers frozen solid, but I loved it. I loved Beijing. I loved the people, and I loved the way people spoke there (which is still a source of arguments with my Taiwanese wife). I didn’t even notice all the killer smog. I went to Hong Kong for the first time in the middle, then got sick again when I got back. I considered it all an immunization process. This one was really bad. I had a headache that on the intensity scale was somewhere between ‘percussion drill’ and ‘jackhammer’, and my language partner took me to the hospital. The only thing I remember her asking me was, ‘Chinese’ or ‘Western’ medicine? I didn’t care, but I lay down for a day or two and felt better. You can’t comprehend how grateful I was. Before I left I took her to a ‘gourmet meal’ at Pizza Hut, which she had never had before, and I dumped three cartons of Haagen-Dazs ice cream off at her dorm, because she had never tasted that either on account of their stratospheric markup policies in China.
I also visited Erdos in Inner Mongolia during this time, one of China’s ‘ghost towns’. We landed at the airport and had no transportation, but my translator had struck up a friendship with a minor official while on the plane. He and his wife drove us into town. The next day we had lunch at a restaurant whose menu was lamb-heavy, in the Mongolian/nomadic style. The owner turned out to be from the urban planning department, and told me everything I had wanted to know about Chinese development. Then we took a picture together.
When I got back to Berkeley in 2011, I looked for an internship. I ended up at GE Capital in Norwalk, doing real estate valuations. The scale of what they do there, and the systems in place and the resources and people available at their disposal, is mind-blowing. I had never worked at a company that large. I had never worked at a company where I needed a security badge, or one where the meeting rooms and work areas looked like the lobbies and business lounges of the Four Seasons (or the W, depending on which area of the floor you were in), and had never gotten that type of treatment from brokers and suppliers. When you call a place and say you’re with GE Capital, you are a certified royal. People actually return your calls, and your wait time on the phone is shortened. I hope to earn that kind of treatment again.
The internship was good. But I regret it in a way too, because I turned down a job at a Mongolian company to do so. It would have been a much livelier/cooler above paragraph if I had taken that job, right? They wanted me to help them plan a residential development made up of yurts. But I had this insecurity about working at a ‘name brand’, which led me to GE. In retrospect I should have gone to Mongolia. This is all too painful to think about so I’ll stop. Suffice it to say I learned my lesson. Go for the fun, people.
After that I went to Hong Kong for study abroad. I was doing both tax work and the consulting work at this time too, and flew over to Korea to work on the second iteration of a Universal Studios theme park with Lotte, who had acquired the rights. In between our classes we took trips to the Philippines, Singapore, Thailand, and the mainland. We mostly just traveled, and did a few boat trips. We called them junk trips but they were chartered yachts that we moored in the outlying islands to play on the beach.
Most importantly though, I met my wife in Hong Kong, at a place called Daddy O’s. It was halfway west to Sheung Wan from Central, and served hot wings whose spiciness was illustrated by color. The spiciest wings were of a red that bordered on bruise-purple, and had a skull and crossbones next to it. We picked this one. My tongue turned numb after the first one, and my left leg went numb after the second. After the third my limbs were throbbing, and my brain notched up into intense survival mode. I was crying and snot was falling out of my face, and at that moment she walked in. I remember only that she smelled good, because I couldn’t see her face. After I had recovered in the sole bathroom (to the resentment of the people in line behind me), I came out and I was literally on fire that entire night. My brain had been kicked up a notch because it thought I was dying, so I was so witty and conversational and charming. At least, that’s how I remember it. At the end of the night she left in a taxi without saying bye but I still knew I would see her again.
I was right. I followed her to Taiwan at the end of the year and met her mom, and I kind of knew it then already that we would go the distance. I finished up my semester and came back to Hong Kong. I set up the Pro Forma Advisors Asia office and worked out of a cubicle in World Wide House, Central. I was still doing the tax work at this time, and had refined my program so that it now took less than 5 minutes to prepare one case. We traveled a lot, for pleasure, to places like Japan and Thailand and Sri Lanka and Dubai, where I finally saw the mind-blowing, monumental developments I had only studied on paper. I traveled for work too. One time I went to Beijing and walked around Happy Valley Beijing. After I got back to the hotel room, I read that the AQI (air quality) had been 750, out of a scale where 300+ is hazardous. No wonder I had been able to stare directly at the sun at around 2 pm. I felt the effects only later in Hong Kong, where I woke up two nights in a row in a hacking, intense coughing fit. A message to Universal Studios: do you understand the depth of the problem? I really don’t know how you’re going to build a park there, just saying. Another time in Bangkok I thought I was late for a meeting so I hopped on the back of a motorbike in a full suit, with a suitcase slung over my shoulder. It is a thing of mine that I do not like to be late. I kept making the driver go faster, and we narrowly missed a few cars, passed a car-on-motorbike accident, and did all kinds of highly illegal maneuvers to get there. When I got there, they told me I was 3 hours early. I said I am never late for a meeting. Then I left and came back.
We moved back to the States last year, 2013. I’m wrapping up my tax business. By now I’ve made the interface web-based and I’ve have trained an army of analysts to do it, so I supervise. And we rolled the tax clientele into a brokerage. Two months in, and we’re seeing prices at cap rates lower than during the heights of the 2005-2006 years in some geographies. I don’t know what to make of it, we just closed a deal last week at a 3.5% cap. I’m still doing consulting. Remember, dreams are free and abundant, so when your job is to make sense of dreams, it will always be a stable business. Although last year I went to Bangkok again right when the demonstrations were in their infancy. We drove by the capital buildings and saw the rice farmers camped out. It was pouring rain, and I saw the people huddled under tents pouring out the water, which was flooding in. A few months later the place exploded. The project shut down.
I went to China a lot last year. My personal sentiment is that they are at where Korea was in 2007, in a theme park bubble. Hopefully they will have a quicker learning curve. Fingers crossed there. But I’m still figuring things out. I’ve only realized that I have absolutely no ability to gauge the depth of a market or its long-term prospects. I thought the theme park consulting business would be dead 5 years ago, during 2008. I’ve come to the realization that things like this don’t just die, they change. We need to constantly change too.
I’m no longer the scared, lonely, depressed kid I was 10 years ago. I’ve gained the ability to think more critically and see above the noise. I’ve learned how important it is to delegate if you want to perform higher-value work. I’ve learned the importance of selling, but selling does not come naturally and I will need to work on it. I’ve become more forward looking. No more staring at the ceiling regretting every decision I’ve made. I’ve given up on perfectionism on many things (not all). It might be because I’m more impatient, so I push things through at the Pareto 80% level, the sufficing level. I think I have developed a more systems-thinking worldview and understand a little bit more about how these systems work. And by extension, the ability to see through hare-brained, money-making schemes that will not work. Also, the ability to gauge how long something will actually take, and more patience overall. Or is it more…lassitude and laziness?
What I’m losing is the patience to do the grunt work, and perhaps my overall tendency for completeness. As the world gets more familiar, I’m losing more and more of those moments when things moved me to absolute tears. I’m losing energy, small drop by drop. As the things I attend to, and delegate, grow in size and number, I’m losing the time and focus for single-minded dedication to a task. I’m losing the tendency to jump into things.
More cautiousness is involved. I remember last week I stood at the edge of the water watching the waves come in for about twenty minutes, instead of just paddling in. The past me would have just started going. This is metaphorical but also applies to any new idea I have. Sometimes, still, I get this blinding, mentally crippling rapid heartbeat, bordering on a mild panic attack, when I realize all the things I still want to do and the time and energy it will take to accomplish them, and I compare it against the time I think I have left. I’m anxious and still ambitious.
Live boldly and with exuberance, everyone.