05 December 2010

Relationships are Important

Years ago, I worked at Home Depot while going to school. And while there I had the opportunity to read the story of how Home Depot rose from obscurity to Fortune 500 fame: Built from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion.

Written by the founders of Home Depot, Bernie Marcus and Arthur Blank, the book was actually being sold at Home Depot at that time, complete with a garish bright-orange hardcover. Being a poor college student, I took to reading a copy during my lunch-break and never actually bought a copy.

I learned a very important lesson from that book. There are many times in Home Depot's history where the relationships the two founders forged resulted in success where failure seemed inevitable.

First, there's their relationship with each other. It's difficult enough to maintain a friendship when you go into business together, these guys did it. And they trusted each other enough to tie their fates together in a very real way.

Then there's Ross Perot. He was all set to bank-roll Home Depot as the initial investor with a $2m capital infusion and would've owned nearly half the company. But he made a bone-head power play. He demanded that Bernie and Arthur drive Chryslers because he was a "Chrysler-guy" and all his "guys drove Chryslers". Well, this did not sit well with them, and did not bode well for the future of their business relationship either if Perot is being so demanding about even what car they drove. So, with no guarantee of money from any other source, they pulled out of the deal.

Because Perot tried to coerce these two into conforming with his transportation choices, he missed out on Home Depot's massive growth over the proceeding years. To give you perspective on this, Perot would've ended up being worth nearly $100 billion only 20 years later. He would've been the richest man on the planet by a long shot, more than doubling Bill Gates's total.

Later, the founders secured funding only because they had a great relationship with a venture capitalist. But the man's boss wouldn't let him invest in Home Depot. For over a year he tried to get his boss to change his mind because he believed in these two guys, and ultimately threatened to quit his job and take his $25 million worth of clients with him if his boss did not agree to fund Home Depot! Only then did his boss relent and Home Depot secured their startup funding and the rest is history!

He put his job on the line for them, his future. That's what a strong relationship can result in.

 Anyway. I write this because yesterday I was offered a position on the Board of Directors of a friend's company. Years ago we started a company together and forged a close bond of trust and friendship and have kept in touch all these years.

Now, all these years later, he's put together a C-corporation with initial financing from a group of friends and peers. I'll be helping them build a business plan and strengthen their marketing material.

The business is purchasing distressed and REO properties from banks in bulk, remodeling and rehabbing them as needed, then finding renters for them and ultimately selling them off to investors with a rental history.

It's a similar concept to the company we'd started together years ago, shortly before the bottom fell out of the real estate market.

There were two books back then that I greatly enjoyed and learned from which hit a similar theme of relationships and leadership in general. I find leadership a fascinating topic and there's few better speakers and writers on it than John Maxwell. The books I read back then are: The 21 Irrefutable Laws of Leadership and Developing the Leader Within You. I notice Maxwell has a book out now focused on just relationships, called Relationships 101. Definitely on my wanted list now.

I don't know where this opportunity may lead; I'll take things a step at a time. But I do know that I've been introduced to a group of ambitious, smart people who want to make things happen and believe I can help them do that. Even though I've refocused my ambitions on writing, I still love the business world, this sense that one can change the world and make an idea into a reality. That's the highest expression of creativity!

And, I do need some work to pay the bills while I finish writing that best-seller, heh.

I also consider my business experience to be a boon to my writing. In studying business and economics, I learned things that will and have already informed my writing. I learned a great deal about people and what motivates them, as well as how money works and how incentives create societal activity. More on that later.