Ep808: Blair LaCorte – How Greed, Pride, and Friendship Cost Me Everything

Andrew Stotz 00:01
Hello fellow risk takers, and welcome to my worst investment ever. Stories of loss. To keep you winning in our community, we know this. To win in investing, you must take risk, but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives, and I want to thank especially my listeners in Northern California for joining fellow risk takers. This is your worst podcast host, Andrew Stotz from a Stotz Academy, and I'm here with featured guest, Blair on the court. Blair, are you ready to join the mission?

Blair Lacorte 00:37
I'm ready. I'm excited to be here. Yeah, and

Andrew Stotz 00:41
you see my, my competitive advantage is my, my podcast voice, you'll see me switch around, but for right now, I'm going to stay in my Jim Carrey, exaggerated podcast voice, so let me introduce you to the audience. Blair is a dynamic executive with experience across entertainment, aviation, AI, aerospace consulting and more. He's held CEO roles at companies like PRG, EXO jet and Autodesk, and led startups to IPOs. Currently, he's training as an astronaut for Virgin Galactic and vice chairman at the Buck Institute, Blair, take a minute and tell us about the unique value you are bringing to this wonderful world.

Blair Lacorte 01:29
Well, I think I'm perfect for the show, because, you know, I've had a lot of disasters in my career, and I truly appreciate the topic, because I believe that at the end of the day, you know, sometimes you're learning and sometimes you're earning, but you never earn unless you learn, and you never learn unless you fail. So anyone who doesn't actually have failures is either lying to you or they're a poser. So I, you know, I think this is, it's a great way to approach, you know what business is, which is, you know, getting better every day. It's an apprentice sport. Very few people, yeah, win at business on their first day out.

Andrew Stotz 02:09
That's true. And one of the responses I had from a guy that I reached out to asked to come on the show. I asked him to come on, and he said, I said, I want you to share the story of your worst investment ever. And he said, not my style. Thanks.

Blair Lacorte 02:26
That's okay, you know,

Andrew Stotz 02:28
I said, that's no problem. So anyways, so tell us about what you're doing right now. You know, you mentioned we've got some good, you know, background of what you've done in the past. You're talking about training. You're also talking about, you know, helping CEOs. You've got the Bucha Institute. What are the things that got you excited right now?

Blair Lacorte 02:47
So, you know, two years ago, I decided to transition out of I had taken a company public in the autonomous vehicle business and defense autonomy weapons business. And I said, you know, if I could do anything I wanted to do. I would do what. And so I picked three things. One was, I picked the Kroc Institute, which is for people who don't know, it's out of Purdue. We do most of the strategy for America on business strategy with our competitors around the world. So we brief many agencies on, you know, what the impact of business is on our national security? The second was the Buck Institute, which is the number one Institute in longevity in the world, and that's right up the street for me. And so I spent, I'm spending some time there. And the third is, I just, I'm coaching. You know, I was a youth coach for 20 years. My dad was a coach and, you know, and all the businesses that I've been in, when you change industries, I've been in eight different industries. In reality, I'm not bringing the content, I'm bringing the process, and I'm bringing the leadership, and which means I need to be able to help people help me. So those were the three big things I do today.

Andrew Stotz 04:03
And how do you break How do you break up your time? Between those three things,

Blair Lacorte 04:06
probably spend about 50% of my time on the coaching business, just because, with 50 CEOs globally, they come into town four times a year, and then we have monthly calls. You know, there's always something interesting. You know, one of the things is, I probably have 35 different industries, so every day, when I'm talking to someone, they're challenging me to understand, you know, what is it like to run a dating site and in Germany, compared to, you know, running a construction company for stadiums in the US, compared to even things like, what is it like to build, you know, portable parties, high end, portable bodies being the number two person in in the US and each of them have their idiosyncrasies, but reality is that they all come down to people and patterns. So every day, I get to be challenged. What

Andrew Stotz 04:57
do you mean by people in patterns? Yeah. So

Blair Lacorte 05:01
one of my most defining experiences was when I first got into high tech. I was in high tech for the first third of my career. Unfortunately, I made a mistake. I thought I was joining Sun oil. I joined Sun Microsystems. Little beneath to me, the head of strategy at General Electric and his counterpart had put me in and to be head of strategy for a big tech company. I almost quit after the first week, and a guy named Eric Schmidt, who went on to have Google fame, but at the time, was the head of R and D for first son, came to me. He said, listen to me. You may not know technology, but no technology gets built without people. And what I realized in that moment is that business is just like a sport, and if you can't manage the players, it doesn't matter the skills or the or the game plan. And then, you know, the second piece is just that every business has patterns, and understanding those patterns and challenging your players to be able to explain to you how they're optimizing them is really how you make players better, right? So my, that's, that's my, you know, I know that if you looked at each of the businesses I've been in, you say they're very, very different, running the world's largest live entertainment company versus the world's largest, you know, private airline, you know, versus the largest hardware company in tech, sound very different, but they're absolutely related to each other, right? It's, you know, we're just playing around with how we put people in the right positions and what patterns we're testing.

Andrew Stotz 06:35
You know, I just wrote this latest redid the chapter in my evaluation masterclass, and I did a lot of research on Tom Malone, who came up with the idea of EBITDA. We talked a little bit about this before we turned on the camera. But I, in that process, I tried to get as many videos as I could of him, you know, and watch and see what he's like. But I watched one just recently, you know, last year, I think it was, he was 80 something, and he was just talking about how, when, when you're not running the company as a CEO, you're on the board, or you're an advisor. He said, You're, it's like pushing a string, you know, you can't really make the impact that you can as a CEO. And it was, like, it was so fascinating to watch this 80 year old guy acting like he wants to get back in the ring. And I'm curious, like, what's, what's what? How has your life changed as you've gone through different stages of where you are with coaching versus the idea of being in the ring?

Blair Lacorte 07:29
Listen, it's a really insightful question. So, you know, at I'm getting a little bit older, so I can have you know, as you look, look back in time, look, being on a board sounds very prestigious. I've been in on probably over 30 or 40 boards in my career. The problem with being on a board is, especially a public board, is you're there to limit risk, right? So you're not there to run the business. You're there to help them, you know, have fiduciary duty and to limit risk, and you are there to try to help coach the CEO, but you're not there to tell the CEO what to do. So it is a completely different job than you would think it is. The only real power you have is getting rid of the CEO. And if you're getting rid of the CEO, the company's in big trouble, right? To make that kind of change. So I did not actually, you know, want to go when I I stepped back from being a CEO, I did not want to go on too many boards. I actually try to do a more active form of coaching, which is, we have an agreement upfront that I am going to challenge you, and I'm going to challenge you on business topics, not just on personal coaching and the politics of the job. And so I think you know, thus far, it's been fun for me, but you have to have a close enough relationship with the CEO that at the end of the day, after you're done challenging them, you can take a deep breath and you can go to bed that night and not worry what's going to happen the next day, because it's, it's the player on the field. So I, you know, I found a happy medium for now, but you always miss if you were, if you're a player. You always miss being on the field with your team and figuring out how to do something and pulling out that big win. But you know, at a certain age, you know the what you have to do to be a CEO is not necessarily a great trade off.

Andrew Stotz 09:19
Yeah, it's a good it's a young man sport in the sense,

Blair Lacorte 09:23
although I know you're a CEO today and a coach, so you're, you're, you're walking that fine line,

Andrew Stotz 09:29
yeah. And one, one of the things that when my best friend Dale came to Thailand, we started our coffee business here, coffee works, which is a B to B coffee roaster. He's the guy that ran it while I was working as an investment banker. So we started our, you know, business with, you know, a 5050, relationship in the ownership, but with him running the company. And he's run it for 30 years the way he wants to run it. But therefore, I've always been an advisor to him and the manager. Team, rather than, you know, the man out there doing it. So it always made me thoughtful about the type of advice I would give, how hard I would push at times, and that, you know. And so when I was listening to Tom Malone, I was thinking about how, yeah, it is pushing a string. And he said, even if you own a large part of the company, you're still pushing a string. Because ultimately, you can't tell people what to do. And even if I did tell people what to do, it's not to say that what I'm saying to do is the right thing to do. And so I really related to that. And so that's how I've really, you know, managed that business to that extent.

Blair Lacorte 10:34
And you and you'd relate to this. You know, early part of my career, I was sucked into tech and ran a bunch of tech companies. Middle of my career, I was an investor both VC and also was a partner at Texas Pacific Group, TPG. So we were a top three in the world. So I got to, I got to be trained, I believe, businesses and apprentice for I got to be trained and mentored by some of the best in the world. And early on, it was very clear. I mean, we bought IBM and formed Lenovo. We bought Neiman Marcus and bergdorfs. We, you know, owned Alcoa, you know, the you know, we bought big, big companies and Burger King. One of the things that you would say is, at the end of the day, if you're replacing the CEO and you have to step in to try to run a company, that company is in big trouble. So we were very, very, very thoughtful about how we recruited, mentored and developed our management teams, because they do something, you know, very, very different. Doesn't matter that we had control positions. You're in big trouble. If you're misaligned with your management team, you're, you are a team together. So I think that it's, you know, very insightful.

Andrew Stotz 11:43
You know, when I was lucky and when I worked, when I was in Los Angeles in 1989 I graduated from university from Cal State, Long Beach, and I went to work for Pepsi, and Pepsi paid for my MBA, which I'm forever grateful. And in addition to that, they paid me to go to some seminars with a guy named Dr W Edwards Deming.

Blair Lacorte 12:03
And, yes, very, very famous.

Andrew Stotz 12:07
I was a 24 year old guy listening to this man, and I didn't know that. You know, many years later I would write a book about his 14 Points. And I didn't know, many years later, I'd be the host of the Deming Institute podcast and be on the advisory committee of the Deming Institute, which I am. And just before this, we were talking, I was talking with someone I was interviewing, and talking about, you know, the challenge for the Deming teachings is, how do you have continuity for a company at the board level, at the CEO level to implement these kind of radical ideas that need to be implemented over a long period of time, and just changing horses in midstream and saying, Okay, now we like lean. Now we like KPIs. Now we like this. And I'm just curious like, how do you see continuity in business, and to what extent is that important? Or in America, you know, it's very common to just switch out a CEO and go a completely different direction. Look,

Blair Lacorte 13:09
I, you know, I think that there are a lot of tactics, and sometimes there is a reason to change tactics. You know, at GE, we Six Sigma and lean, you know, we spent a lot of time. We were asset heavy businesses and manufacturing and global distribution made a lot of sense to actually, you know, completely shift. I always start with in a business the culture that business has to do with what value it produces to the end user. I've told my sons many times, you know, that at the end of the day, if you've never sold anything, then you don't understand business. You're either selling or you're actually supporting someone who sells. Now that doesn't mean you're not a very important support for someone who sells, but it really comes down to what value your customer is getting out of and I always work my way backwards. Now, if I can add more value to my customer by changing some of the tactics, I'll change some tactics, and I'll and I'll change the culture a little bit if the times have changed, but as long as you're all focused on the customer, then I can explain to you why I'm changing, and I can explain to you why the content continuity matters, and why continuous improvement means that you can change. I mean, part of the challenge you'll always get as you're successful is, you know, Chris Christensen's Innovator's Dilemma, right? The more successful you are, the more difficult it is to do something and make hard decisions ahead of the curve. Usually, you wait till the curve starts to turn you're not innovating, because the risk of doing something different means you're going to lose market share if you're wrong. And I, you know, I believe that I have focused on two types of companies where I didn't have to deal with that. One was, I did turnarounds, and the other is, I did growth companies, and they're exactly the same. In a turnaround you need to change because there's something wrong, and you're probably going to change 60% Team, most people don't realize in a growth company where you've doubled and you need to double again, things need to change, because there's no way that what you did to double the first time is going to allow you to double the second time. And so it's about change. So I was drawn towards businesses that inherently knew that they had to do things differently, but it's much more difficult when you're just slowly, you know, you're slowly winning and you're increasing, you know, market share a little bit every year. To do something really radical,

Andrew Stotz 15:32
yeah, yeah. Have you speaking of GE Have you ever read the book power failure by William Cohen?

Blair Lacorte 15:39
I have it right here in front of me on my bookshelf. Yeah, you know it's it, but it's a great book because it tells you a narrative. I'm a big believer in biographies, because they remind you that you're not alone and that you remind you that you're human and that this is much more complicated than a one formula. But I'm also a big believer in historical novels, because we always focus on a point in time without understanding how things got there. I thought what was really interesting at the beginning of the book was, you know how much of a influence the financers had in the early days of electricity. And the fact is that, you know, the Edison did not make the big money. The big money went to the guys who actually financed and expanded and built the infrastructure. And there's a lesson, there's a lesson in that. That's one of those patterns. What kind of business are you in, right?

Andrew Stotz 16:34
Yeah, such a great book, because it also lays out that history of the early, you know, phase of America and developing, and you know how to expand. And that is a part of what was happening, was the demands to expand eventually caused the financiers to have to, you know, get involved, because, you know, you need capital for expansion. Anyways, for those people that are listening or watching, you can, you can learn more about William Cohen on episode 739, where I interviewed him. And then I honestly have to admit, I didn't read the book before I interview him, because, you know, it's my worst investment ever. So we had a great conversation. I thought, I ought to get this. And I went on Audible, and I looked at it and it was 28 hours. And I just thought, Oh God, I don't have 28 hours. So then I decided, well, I'm gonna, I'm gonna give it a try. And I can tell you, I didn't stop. It was one week, and every time I was listening, you know, every chance I got, I was listening to it, and it was so good that I ended up buying the book. And now I'm reading through it, because I just love, you know, the physical book. But yeah, now that you mentioned about GE and, you know, six sigma and all that, it's such a great, you know, story of that journey. So, yeah, fascinating. What one question I just have before we move on to the big question of this podcast is, what is your you know, when, when a CEO looks and stumbles upon you in whatever way that they do. What is it that you are telling them they're going to get out of working with you?

Blair Lacorte 18:09
Sure? I, you know I work with as I think you do as well mid sized businesses for the most part. You know, someone who's got 5 million of revenue and maybe is making 2 million, or someone who's five up to 500 million, right? But they're profitable, and they've been doing it a long time. 95% of them are owner operators. They may not have founded it, but they own it over 90% so I have a unique kind of group of people, and they all have five things that they rotate through. One is the obvious one. Hey, I want to double my business again. Yep, right. So how do I take some input from the outside? I've been in my business. I know what I'm doing. I'm considered one of the best in what I do, but I haven't seen the patterns outside of my business. You know, Funnel Vision versus tunnel vision, right? One is, how do I double the second is, okay, I am an owner, operator, but really, I'm an operator, owner. I'm spending all my time I, you know, working here, I've got great people, but they depend on me. I would like to transition. How do I give up some control? How do I feel more comfortable? So one is how to double the other is how to move back into more ownership versus operating. The third is, ironically, hey, my relationships are afraid. You know, my kids are getting older. I really haven't focused on this. How do I work my relationships in my business and outside of my business, because I've realized that I've made it and I've got enough wealth. I'm always nervous, because owner operators are always nervous. But I want to work on my relationships, and I want to work on my health. I'm in the midst of writing a book, two books, actually, one on Dunbar's number on called relativity rules on how you manage that 150 people that you can emotionally connect to at any time. Why are people relevant to you and you? Uh, the second book is, you know, called an entrepreneur's, you know, Survival Guide, which is, it's not going to help you if you die, right? So what don't CEOs do? That is the opposite of what anyone in longevity now that I'm in the business with a nonprofit would tell you to do, and, you know, trying to sit down and say, Listen, I need to do some self care. And then the final one is just, you know, how do I diversify my investments? I've only invested in my own business. I don't understand how to look at and I know you do a lot of that, yeah, you know, how do I look at another business so that I can, you know, diversify a little bit now that I've got some capital and cash in the bank. But they're all, I mean, it's all common depend, you know, and they're from 4035, or 40 different industries. They're all asking the same question. So

Andrew Stotz 20:46
double business, I'm an operator. I need to transition, kind of, let go of some of this control and get my team running it. Number three, you said was relationships? Was number four, health.

Blair Lacorte 20:57
Well, you know, in fact, I skipped health and relationships. The other one was, I need to transition my business to my kids, or I need to sell. And it was something else that I know you are having expertise in. Most people don't understand that you can package yourself a year or two years in advance and ex and really extensively change how someone will value you depending on whether it's a strategic or a financial just doing some simple things to clean up the business so that, you know, the superpower when you're selling is, you know, one is, we talked about EBITDA, but really it's the turn you get on it. What's the, what's the multiple of EBITDA that you get from someone? And there's, you know, five or six different things that every buyer looks for, and if you do them in advance, you know the difference between getting two times EBITDA and getting 10 times EBITDA? It's an awful lot of money, right?

Andrew Stotz 21:50
Yeah. In fact, last night I gave a presentation. I do something called the in three hours series, and I talk about 13 different topics. And last night's topics was how to value, you know how to value your business. And so what I did is I went through a lot of different things. The first thing I kicked off was the idea that valuation is a negotiation. Don't think about it as a formula, and it is really ultimately, how do you position yourself? But then I went through all the latest multiples, EBITDA, PE and the like, you know, and try to help them to and I give them a little, simple little model, and so they can think about that. But then I presented some research that I have done, and that research, basically, I'm just trying to look at the Yeah. So I just pulled up a slide that maybe I'll share it. Hold on one second. You can find it interesting. Hold on for one second. Let's do that

Andrew Stotz 22:55
one second.

Andrew Stotz 23:01
Okay? So this is the slide for those people that are listening. What it says is two times profit can lead to three times valuation. And the point is, as your profit margin increases, the market begins to value your business more favorably. And so that's part of what you're talking about, is getting things cleaned up buyers become willing to pay a higher PE multiple, or EV to EBITDA, or price to sales. So what I did is I did a study of net profit margin of 26,000 companies worldwide, from 2000 22,005 to 2022 and I put those companies into five categories, from worst, below average, average, above average and best. So quintiles, and here's what I found. I found that the lowest group had a net profit margin of 2% and the highest had a net profit margin of 22% so the average net profit margin was 7% for these companies during this period, I looked at a pretty long period of time, because I felt like you need to smooth out the economic cycle. So for the listener or viewer here, if you got, if you have a margin that's above 7% Congratulations, you are above average. Now this doesn't break it down by sector. I do that in some other research, but what was critical was asking the question, what is the corresponding average PE ratio relative to each group? And so what I found was the worst groups had a multiple of seven times PE, and the best group had a multiple of 33 times PE. The average PE ratio for these companies over this period of time was 14. So when companies come to me and they have a 2% net profit margin, I know that they're going to trade, on average, if it was a publicly listed company, we're not going to talk about the discounts and other things, but on average, they would trade it seven times. PE, so if you can double your profits of your business, you've already increased the E in your PE, multiple. Multiple, and you've doubled your value there by doing that, but if you then are sustaining a higher level of net margin, let's say up to 4% net margin, by doubling. Now the market would value your business at a 10 times multiple. And so now we're talking about not just doubling, but tripling as you move up to become a higher profit company. So anyways, I just thought that was interesting.

Blair Lacorte 25:25
I think that this, again, when we dive down into this subject, which everybody who owns a small business at some point in their life will want to understand and will become important that it is not necessarily linear. It can be geometric on how you value your business, and then you add in to your point that it's always a negotiation. So, you know, you can even, you know, get a little more premium by being able to negotiate. I deal with a lot of private companies, and so I always give people the example. Look, you know, the average business I'm dealing with is maybe 25 to $75 million even though we go up to 500 million. So let's say you're a $25 million business, and let's say you have a 10% profit margin, so you're bringing in $2.5 million at EBITDA, right? And you know, let's just assume that you're going to get six or seven times right, because you're growing at 10 to 15% and if you're growing it higher than that, maybe you'll get a little bit more depending on the sector. So if you look at that and you ask yourself, If I bring in another million dollars, I'm going to Mike, I'm going to pull out another seven to $10 million so that's why focusing on EBITDA matters right now. Again, you can say, Hey, listen, I got to keep my growth rate up, and I want my top line to be good. But at the end of the day, if you take an extra year and you drop in and you get more efficient by cost, or you diversify some markets and bring in some more higher margin, an extra million dollars can be worth seven to $10 million to you as the owner. And that's a big deal, right? That's a big deal for someone who's, you know, put 1520, years into building a small business. So don't underestimate what Andrew was talking about, that understanding how valuations are done is really important, and it's really important before you're ready to sell, so that you can start to get ready. Right,

Andrew Stotz 27:18
exactly right. Because when you all of a sudden are rushed into selling, you know, you end up in a lot of trouble, because the buyer is going to knock down that price in every possible way. And I

Blair Lacorte 27:29
guarantee you, you'll try to be, you'll try to do adjustments to your EBITDA and say, Oh, by the way, that's not a reoccurring cost. Need to add that back in. That's a, you know, it's, it's a linear game, not a geometric game. Maybe you'll get a little bit more, but if you can, you know, do some things a year or two before you sell, I guarantee you you can make it geometric.

Andrew Stotz 27:48
Yeah, and that's the presentation. When I talked last night, I had about 20 business owners, and what I said to them is, how many of you have yourself and your team saying something like, I've got equity in the business, and I'm compensated partially through equity. And how many of you are underpaying yourself, and if you are not paying yourself and your management team a market or above market rate, the buyer is going to knock you down hard on that, because they're going to have to replace you and the management team at some point with market rate person to get them in. And so there's all kinds of things that you know people need to prepare themselves. So I always tell people, if you want, particularly in smaller businesses, but let's say mid size. I said if you want to increase the value of your business, go home and double your salary and get your cost to be real, so that once you say, I've got a 10% net margin, if your costs are not real and you're bare, you're white knuckling it, what ends up happening is that the buyer sees that and they adjust you down and say, Actually, your net margin is sustainably at, let's say 4% not 10,

Blair Lacorte 29:00
Right? So you didn't, you didn't get paid, and you didn't get the value. So the end of the day, you suffered, but you'll get knocked down anyway, because they're buying it to go forward, not in the past. So, you know, again, simple things when you think about it, but if you don't think about it in advance, it's very difficult to change anything once you enter a process,

Andrew Stotz 29:22
yeah, well, man, that's a long, great discussion on a lot of stuff, and I appreciate it. And I've learned a lot. I've written down your five points that you talked about and just thinking about the different things that you've talked about. So I appreciate that. And now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be, tell us a bit about the circumstances leading up to it, and then tell us your story. So

Blair Lacorte 29:48
I'm going to tell you three bad investments I made. But there are three different themes that I think apply to everybody, and they all have to do with emotion, right? Worst. Investment I ever made, and I went to look for it. I have a plaque somewhere, because I made a plaque, and I put it on my wall, and it's and I just changed offices. So I can't find it, but I will put it back up. I invested when I was 22 years old in oil well. Now why was that in a bad investment? Number one, I knew nothing about the oil markets, and I had seen someone who had made money. Number two, I actually didn't learn about how the business worked. It was a bet on one, oil well, so there was no portfolio theory in it. Number three, it was all about greed. I had seen someone make money where they get, you know, paid every month for the rest of their life, as long as the well went. And I never and the greed kept me in I kept investing in it. In the end of the day, the oil was below quality, was not as much as we thought it would be, and I never pulled my money back out again. So greed and hubris of assuming that you are the guy that that well, if a well gets out of Texas, then the guy who's got that well either didn't have any friends or didn't have any relatives in Texas, so be very careful when someone comes to you with a great deal, why you? Why? Why you? Right? The second one was relates to something you've done for the last 30 years, the coffee business. I got out of business school. I had done an IPO. I made some money. I wanted to diversify. I had a my roommate, very good friend, started a business called coffee.com was going to do single estate coffees, which actually is very popular today. Back in 1999 it was new, we invested in it, and it seemed to be doing well. And then he needed more money, and then I didn't want to put in more money, because I didn't feel like it was going to it was going to actually make it. And, you know, friends and family rounds are really interesting, because that's the best way to lose friends or family. Now, I didn't hold it when it went bankrupt. I didn't hold my roommate responsible, but he never talked to me again. Felt like, you know, I'm a friend. I should have put more money and thrown it away, right? So be very careful about friends and families round. First, greet and hubris. Second, friends and family. Best way to lose friends and family is to actually invest with them. Okay, if it goes really well, they'll get diluted. If it goes really badly, they'll lose all their money. So be careful. Third is another emotion, which is pride. When I did my IPO in 99 we were the number one IPO in the number one year of the internet, okay? And, you know, sold some stock. I felt good about myself. And then I started to think, these guys are going to take advantage of me, because, you know, I don't come from a lot of wealth. I broker called me one day. I said, I want to sell a bunch more shares. At 60 called me and said, It's 59 and a half. You want to sell shares? And I thought to myself, he just wants his commission. You know, he's trying to take advantage of me. I said, You know what, I'm going to hold. Went from 59 and a half to 50 to 45 to 30 to 25 to 20 to 10 to six to two. And I didn't sell. Why didn't I sell? Because my pride got in my way. Do not get emotional about investments. You can get emotional because you are interested in it, and that motivates you to do research. But investments are done on the numbers, and they're done on betting on people, and the second you know that the people aren't any good or the numbers aren't working out, don't invest anymore, or try to get your way out. So that's my, that's my, you know, hat trick, you know. But I, as I said at the beginning, you learn something from everything you do. And I learned my lessons there, and I went the places I did make money. Some of the lessons came from there. The one thing I would leave you with, though, is the worst investment that you can make is to put your time into something that you don't enjoy or that you know is not going to work out. And that's about opportunity costs. I see people stay in things because they're going to grind it out, and they think it can be done. But when a business starts to middle, you have to ask yourself, are you on the wrong side of the macro trend? Because if you're too early, you're too late. Doesn't matter how smart, how hard working you are, it just doesn't matter. And you putting in another couple years just to prove that the macro is stronger than the micro is not a good investment in opportunity cost, or again, doing it for emotional reasons. You know, not, not a good thing to do, so be very careful. The number one asset you have to invest is your time.

Andrew Stotz 34:29
Yeah, wow. So when I think about this, I think about greed and pride and family and friends and then opportunity costs, a lot of different lessons. I'm curious if we were to think about a young man or woman listening right now, and you know, we want them to avoid these mistakes. Ultimately, that's the goal of what we're trying to get to here. What. Be your advice as to how to approach either any of these specific situations when they get in front of that situation of getting an opportunity to invest in a coffee.com or they got an opportunity to sell at a profit and they have pride come in, what would be some ideas about what they could do to not make the same mistakes we've made.

Blair Lacorte 35:23
Sure? Well, you know, if you bundle those, those first three up and, you know, getting emotional and not understanding, I would say, and I say this to my sons, the first thing to do is to not look at the business, but look at the business of the business. What is the market, and when is this market going to actually change or grow? Because, again, I said it before. It's worth saying again, most people fail because with good ideas, because they're too early or they're too late. So when someone comes to you with an opportunity and they say, get in. Now, get in. Now, you know you need to understand where you are in that macro cycle. That's the first decision you have to make. The second decision you have to make is your own portfolio balancing. There are some investments that you're going to you have a chance of losing it all, and you can make high upside, high risk, high return. How much are you going to put in that you know, of your wealth into that investment when you're younger, maybe you put a little bit more into it. But as you start to get to the point where you want to make money, as buffet, would say, you don't look for things that have the high risk of loss, you know, that's gambling, right? You look for things that preserve capital and that they can run through a cycle. So if they're too early, you can, you can wait for it, and you're very pragmatic about it. Now, I would say this is my personal opinion, is that if you want to go and take some risks when you're younger, you can do it with your time, because the opportunity cost isn't as expensive, because you can still learn no matter what you're doing once you hit 40 or 50 and you know what you're good at, and you're valued for that. Now you're arbitraging off of the skills that you actually have. So I would say, think, think about where it is in the cycle. Then second, think about, you know, preservation of capital. And think about where you are and where you're going to spend your time, but passive investments, taking high risks on passive investments. When you say it out loud, it sounds stupid. You have no control over it, and it's very high risk, right? At least if you're young and you're working someplace you can either learn or you can have an impact on the risk reward profile. So that's my thoughts for today.

Andrew Stotz 37:40
Great. And this is a very broad question. You can answer it any way you want, but what's a resource, either of yours or any other that you would recommend for our listeners?

Blair Lacorte 37:52
Sure? Well, you know, one of the things is, you know, most of the people I have in my coaching group are established owner operators, but that doesn't mean that a lot of things we cover there wouldn't be interesting. You can go to the PPE mastermind.com, and we put up all the speakers, we bring in. You have to look at you listen to the speakers, and you apply it to your type of business, or your situation. Again, this is business. Is an apprentice sport. It's got to do with growth. It's got to do with seeing patterns. It's got to do with understanding who you are and where you can leverage yourself. And the best way to do that, as we talked about before the podcast, reading biographies, looking at historical, company history you know, histories and documentaries or listening to speakers that you know get you to think differently about things, is going to accelerate your ability to learn.

Andrew Stotz 38:44
Yeah, that's that's what made Dr Deming such an interesting influence, because he definitely blew my mind as a young guy, and he still his thoughts and the way he talked about things really helped me think differently so

Blair Lacorte 38:56
well, just to be on a podcast that you know we talk about him, makes me feel good that you know, speaking be mentioned with greatness,

Andrew Stotz 39:05
yeah, and for those listeners and viewers that aren't listening to the Deming Institute podcast, make sure you go there, because we have conversations, and we're about to come out with one with the guy that probably spent the most amount of time with Dr Deming in his life, and he's 79 years old. His name is Bill scherkenbach, and we're going to be, I'm going to be doing some interviews with him, and we just had our first kind of discovery discussion today, and so I'm really looking forward to that. So last question, what's your number one goal for the next 12 months?

Blair Lacorte 39:38
You know, I think for me, where I am today. It's self care. What am I doing for myself? When you're a leader, sometimes you get boil like the frog. I mean, you have an obligation and you have, you know, it's a privilege to be a leader, and it's a privilege to actually be able to run a business. But sometimes you don't look at. At yourself as an athlete, and you don't give yourself the time and care that maybe you give some of the people that work for you. So I'm trying to not feel guilty about actually doing some self care and doing some things for

Andrew Stotz 40:14
me. Fantastic. I broke. I fractured my toe two months ago, and it's finally healing, and I just can't wait to get back out walking at the park, which I just realized I miss it so much. And that is a form of self care, because not only is it healthy, but it also gives me the space to think and, you know, go through ideas. So for each person out there, self care is, you know, different mean, has a different meaning for everybody, but it's such a valuable thing. So yeah, great,

Blair Lacorte 40:44
yeah. And I apologize the dogs have been unleashed, so I think that's probably is a signal of our time.

Andrew Stotz 40:49
Yeah. So listeners, there you have it. Another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. And as we conclude, Blair, I want to thank you again for joining the mission, and on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Blair Lacorte 41:12
Go out there and have fun this. You know, it's a privilege. 50% of the world lives on subsistence. Another 25% doesn't get to make the decisions if you have the financial or mental capability to try new things, you're all we're all blessed. So go out there and have some fun. All

Andrew Stotz 41:28
right, that's a wrap on another great story to help us create, grow and protect our Well, fellow risk takers, let's celebrate that. Today, we added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying, I will see you on the upside you.