If you lost everything, how would you rebuild?

[avr]

I recently read an article on a blog of an author I highly admire:

A Mental Exercise: What I'd Do if I Lost Everything

A great question that all wealthy entrepreneurs ought to contemplate is "What if I lost everything?" I know it is VERY rare that there could be an event that wiped out your fortune, and typically once you become rich one of the main focuses of attention is wealth preservation.

I think it would be a great resource if a few wealthy people on this forum gave it some thought, and explained how and what they would do if they were just starting over from scratch. With all the knowledge gained over the years while becoming wealthy, how would put that knowledge to work to rebuild your wealth again in the fastest time frame possible?

Hope this generates a great discussion.

Adam

 

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[JEdwards]

I would move to Hawaii, cause I would rather be broke in Hawaii than broke in Texas.


Actually, I can tell you exactly what I would do, as I have lost everything, or better yet spent everything I had.

In the 90's I made millions and millions of dollars, being young and stupid I also spent millions and millions of dollars. $300 dollar lunches and dinners everyday, (yes I was the guy who took everyone to lunch) big house, ferrari in the garage, $225 t-shirts, lets not even talk about the money I blew gambling and a few private jets I chartered. I spent crazy money. woke up at 30, broke. Great 10 year run. After all that I ended up with a paid off very small rental house and a few old junky cars. and 200k in tax bills.

I didnt have the heart to tell people I was just a loser and lost it all so I told people I had a drug problem, it is amazing how understanding people are when you have a drug problem they say "well you over it now" etc.. But really I didn't have a drug problem, just a lazy loser problem. (this last part was a joke.)

I went from a new 5k sq ft home to 70's style 1,400 sq footer with dry rot. (yes my appliances were yellow.)I went from driving a newer Ferrari and a new Porsche to a 92 civic with 140k miles on it, I went from wearing 300 dollar jeans to wearing 18 dollar jeans from J.C. Penny's (the nice ones would not fit anymore.) I went from always carrying $5k in flash money on me, to trying to figure out who can convert the change I had saved over the years

Took a year off, sat around, watched cable, Anyone else ever hear this line before, Deshawn, you are the father? Got so bored out of my mind, grew a beard, gained 40 pounds, I was really mad at the world, I was always thinking if I just had my "eating out" money back, I would be a millionaire. ( I am probably not kidding). Over and over in my head I kept saying how could I do this to myself?

I sat there and thought about it and thought about it, I got to do something I got to make a change. I said to myself this is not me. I am not this guy. I am going to get off my lazy fat a$$, and get to work, I am going to figure something out. I am going to start calling all my old contacts and get back in the game.

Well oddly, Once you stop looking and once you stop blaming, ideas appear, someone I had not talked to for a year, gave me a little idea, I opened a little retail store, and within 4 months had 4 stores, turning about $300k a month in sales. That was 10 years ago now.

That whole 18 month episode made me a much better person, I learned so many things. I learned what not to do.

So my piece of advise to most of the young people who start making a lot of money, save some of it. Now I know you are saying that would never happen to me. I said the same thing for 10 years, and yes It can happen to you.

 

[CommonCents]

Creating wealth and preserving wealth are two different mindsets and require different skills. I've seen this many times where successful entrepreneurs get into trouble in semi retirement, not managing their money correctly or at all.

 

[Neon]

Amazing story Jack. +++speed

Notice you turned the corner when you realized you still had power to change? So many people reading this need to learn from you.

I've been running my own business for years now and have had ups and downs. Whenever things are up people want to borrow money, when they are down people tell you to get a real job.

In the end, we all have to learn the lesson that our success is there once we decide it is possible.

 

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[Graves]

Well oddly, Once you stop looking and once you stop blaming, ideas appear, someone I had not talked to for a year, gave me a little idea, I opened a little retail store, and within 4 months had 4 stores, turning about $300k a month in sales. That was 10 years ago now.

Did luck play any part in that comeback or not at all ? Because your story actually makes me LESS worried about making bad decisions and going financially bankrupt, as you went broke and rebuilded yourself to top 2% in less than a year (presumably thanks to your excellent business skills.)

 

[JEdwards]

Did luck play any part in that comeback or not at all ? Because your story actually makes me LESS worried about making bad decisions and going financially bankrupt, as you went broke and rebuilded yourself to top 2% in less than a year (presumably thanks to your excellent business skills.)

No luck at all. I never really worry about being broke, I grew up in a trailer, not even a double wide, but a single wide. It is all about choices you make.

 

[Guest3722A]

Jack, when was the last time you had to work as an employee, and, have you ever been without a permanent home and/or vehicle? If so, what did you do to dig your way out?

 

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[lightning]

Jack,
Great story, and very inspiring to read. It is fantastic that you took a lesson like that at such a young age, brushed yourself off and are now back in the game. I am sure there are plenty of people like you who made a fortune at a young age, lost it all, and still have nothing today. It dosent matter that you lost it, because you know personally that you can do it again.

Speed++ for ya, and best of luck. If you dont mind me asking, what industry is the retail store you decided to start in? (no specifics needed, just wondering if youre selling a niche product, operating a niche restaurant, etc.). Feel free to post more details as Im sure others are interested in how youre getting back to the top.

All the best,

Mike

 

[lightning]

Also Jack, would you mind sharing how you made the millions of dollars to begin with? Its always interesting to hear about someone living in the fastlane at such a young age (in your 20's).

Thanks again.

 

[Rickson9]

When I was young and had no money, I borrowed money and invested into owner-operated businesses. That is, I found successful and talented entrepreneurs who were running publicly traded businesses (eg. Jim Jannard/Oakley, Tom and Kosta Kartsotis/Fossil, Roger and Michael King/King World Productions, etc. ad naseum) and bought into their companies when prices fell to 2x book and 10x earnings or lower.

Owner-operators are incentivized by increases in stock price since the majority of their net worth is tied up into millions of shares of their own businesses so I just hitched on for the ride.

I was an entrepreneur once. 60-70 hour weeks. The whole 9 yards. Content management applications for publishers and financial institutions. I left the business and funneled all my money into other entrepreneurs. I liked the idea of not having to be an entrepreneur (no sales, no payroll, no admin, no emergencies, no nothing), not having any liability but participating in all the gains.

Along the way I discharged my debts and picked up some real estate. I didn't expect the U.S. real estate market to blow up, but it is what it is.

If I lost it all, I would just borrow money and rinse and repeat. Of course for me to lose it all, a handful of very wealthy U.S. families would all have to go broke simultaneously.

If I wanted the money bad enough, I would create a LP and funnel OTM into the same investments and take a cut of the labour-free profits. I would have to give this some thought since I don't like dealing with customers. In the past when I had a partnership, any customer that bothered me I would return their money and kick them out. No questions asked or wanted.

Unfortunately, for better or worse, my current strategy doesn't create extra value for anybody. However, it makes good money all the same.

Best regards.

 

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[MJ DeMarco]

I left the business and funneled all my money into other entrepreneurs. I liked the idea of not having to be an entrepreneur (no sales, no payroll, no admin, no emergencies, no nothing), not having any liability but participating in all the gains.

Ever thought of writing a book about this? This really sounds intriguing and on facevalue, sounds very attractive and I think there would be market for this approach. While I enjoy entrepreneurship, this is something I'd look into down the road as I get older.

 

[JEdwards]

Jack, when was the last time you had to work as an employee, and, have you ever been without a permanent home and/or vehicle? If so, what did you do to dig your way out?

August of 1990.

Speed++ for ya, and best of luck. If you dont mind me asking, what industry is the retail store you decided to start in? (no specifics needed, just wondering if youre selling a niche product, operating a niche restaurant, etc.). Feel free to post more details as Im sure others are interested in how youre getting back to the top.

Now I am in a completely different industry. But I was selling a niche product. Starting wholesaling that niche product, etc..

Also Jack, would you mind sharing how you made the millions of dollars to begin with? Its always interesting to hear about someone living in the fastlane at such a young age (in your 20's).

Thanks again.

Was dead broke, worked two jobs 100 hours a week, I threw newspapers and worked at a local warehouse. Still had no money. Went 3 years straight without a day off.

Long story short but someone said something along the lines of lets get into this business, and I said that is stupid, what about this, well "this" other thing was huge. From a start-up cost of $3,500 bucks charged on a friends c.c we grossed $6,000 our first day. Then it was on. Never grossed under that again for 10 years. By 1997, I actually had a huge operation, 60 employees, forklifts and everything, college graduates running the operations. Had a really cool corner office on the top floor of a class a office building.

Sad when it ended.

 

[Michael W.]

When I was young and had no money, I borrowed money and invested into owner-operated businesses. That is, I found successful and talented entrepreneurs who were running publicly traded businesses (eg. Jim Jannard/Oakley, Tom and Kosta Kartsotis/Fossil, Roger and Michael King/King World Productions, etc. ad naseum) and bought into their companies when prices fell to 2x book and 10x earnings or lower.

Owner-operators are incentivized by increases in stock price since the majority of their net worth is tied up into millions of shares of their own businesses so I just hitched on for the ride.

I was an entrepreneur once. 60-70 hour weeks. The whole 9 yards. Content management applications for publishers and financial institutions. I left the business and funneled all my money into other entrepreneurs. I liked the idea of not having to be an entrepreneur (no sales, no payroll, no admin, no emergencies, no nothing), not having any liability but participating in all the gains.

Along the way I discharged my debts and picked up some real estate. I didn't expect the U.S. real estate market to blow up, but it is what it is.

If I lost it all, I would just borrow money and rinse and repeat. Of course for me to lose it all, a handful of very wealthy U.S. families would all have to go broke simultaneously.

If I wanted the money bad enough, I would create a LP and funnel OTM into the same investments and take a cut of the labour-free profits. I would have to give this some thought since I don't like dealing with customers. In the past when I had a partnership, any customer that bothered me I would return their money and kick them out. No questions asked or wanted.

Unfortunately, for better or worse, my current strategy doesn't create extra value for anybody. However, it makes good money all the same.

Best regards.

Awesome story. I've come to the conclusion I am on my last startup, and I would rather get into a business already operating and scale it. I've always been able to improve something already created, as opposed to just create.

 

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[David]

Thanks for the input Jack.

I guess when your making a lot of money, you just don't care or analyze it enough before you use it.

 

[Graves]

When I was young and had no money, I borrowed money and invested into owner-operated businesses. That is, I found successful and talented entrepreneurs who were running publicly traded businesses (eg. Jim Jannard/Oakley, Tom and Kosta Kartsotis/Fossil, Roger and Michael King/King World Productions, etc. ad naseum) and bought into their companies when prices fell to 2x book and 10x earnings or lower.

Owner-operators are incentivized by increases in stock price since the majority of their net worth is tied up into millions of shares of their own businesses so I just hitched on for the ride.

I was an entrepreneur once. 60-70 hour weeks. The whole 9 yards. Content management applications for publishers and financial institutions. I left the business and funneled all my money into other entrepreneurs. I liked the idea of not having to be an entrepreneur (no sales, no payroll, no admin, no emergencies, no nothing), not having any liability but participating in all the gains.

Along the way I discharged my debts and picked up some real estate. I didn't expect the U.S. real estate market to blow up, but it is what it is.

If I lost it all, I would just borrow money and rinse and repeat. Of course for me to lose it all, a handful of very wealthy U.S. families would all have to go broke simultaneously.

Wow, isn't this similar to what Warren Buffett does ?

 

[Rickson9]

Wow, isn't this similar to what Warren Buffett does?

Yes, but on a microscopic scale

But you are correct, I read what he did and thought it was brilliant so I copied it. No need to reinvent the wheel.

1. borrow money for free (limited partners in a partnership)
2. buy businesses already run by successful entrepreneurs

Obviously Buffett magnified it significantly by:

1. opening up multiple partnerships
2. buying insurance companies (where customers generally pay money for nothing if the insurance company reserves properly for future claims)

The first two steps are essentially the idea. #1 could be from a partnership, a bank, a job, family members, whatever. #2 is any owner-operated business; public or non-public. Public is just easier. It's harder to get a non-public owner to give you a stake in his/her business for a big discount. If I went up to a successful non-public owner-operator and said that I would like to pay 10x earnings and 2x book for his/her business that has been increasing profits for a decade or more, he would tell me to get lost. If the stock market tanks the owner-operator has no say and can't stop me from buying his/her business at 10x earnings and 2x book from the public.

Best regards.

 

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[Rickson9]

Ever thought of writing a book about this? This really sounds intriguing and on facevalue, sounds very attractive and I think there would be market for this approach. While I enjoy entrepreneurship, this is something I'd look into down the road as I get older.

Thought about it. That's about it. I should look for a ghost writer and just dictate it.

 

[FDJustin]

When I make it to that point, if I lost everything I would... I guess I would turn towards whatever business friends I made and say "Look, this is how things went to pot. I'll make sure that never happens again; so if you're not scared off... Tell me what you look for in a proposal."

Or to make it more immediately appropriate, by asking "What would you do if your current project failed?" I would start seeking out people who have a lot of legal contacts, insurance companies, and hospitals.. And build up supporting numbers and details for "Plan B", and get to work on that. Use the failed project as proof for some VC / Investment partner / myself that I can get something done. Actually, I often wonder if I should be going with "plan B" now. "Plan A" (the game I'm working on) isn't going anywhere, but B, if done right and well received, can change our very society.

 

[cookiejaar]

about 3 years ago, after reading MJ's life long post, with 900 dollar to my name and a burning desire for the fastlane, I was fortunate enough to turn the initial 900bucks into a nice 250k, and made around 100k in two years. It may not seem much for many of the fastlaners, but for a broke highschool drop out, it was almost like a dream.

Today, I'm sitting here in front of my computer scrolling through the forum, and 3 dollar left in my wallet. Thinking, how in the world did get here? Long story short, drug and gambling.

So, what I plan to do? Simple, I will not accept defeat, nor will I look for a 8-5 job, Instead a PAPER and PEN.

 

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[DeletedUser394]

'It's only after we've lost everything, that we're free to do anything'.

I'm broke as well. Which isn't uncommon for people at my age, except I had plenty of money a while back.

So technically I've lost everything, and now that I know what it feels like to no longer be able to do what you want to do when you want to do it. (because you're to busy working a job, just to have enough money to pay the bills and have nothing left after to say that you're broke).

This gives me even more drive to succeed. No way will I allow myself to continue on the path that I was on.

 

[oddball]

Yes, but on a microscopic scale

But you are correct, I read what he did and thought it was brilliant so I copied it. No need to reinvent the wheel.

1. borrow money for free (limited partners in a partnership)
2. buy businesses already run by successful entrepreneurs

Obviously Buffett magnified it significantly by:

1. opening up multiple partnerships
2. buying insurance companies (where customers generally pay money for nothing if the insurance company reserves properly for future claims)

The first two steps are essentially the idea. #1 could be from a partnership, a bank, a job, family members, whatever. #2 is any owner-operated business; public or non-public. Public is just easier. It's harder to get a non-public owner to give you a stake in his/her business for a big discount. If I went up to a successful non-public owner-operator and said that I would like to pay 10x earnings and 2x book for his/her business that has been increasing profits for a decade or more, he would tell me to get lost. If the stock market tanks the owner-operator has no say and can't stop me from buying his/her business at 10x earnings and 2x book from the public.

Best regards.

Do you have a source for finding these companies or just good old google search?

 

[Ferrari Girl]

It is all about choices you make.

How true. We are all exactly where we are right now because of the choices we made, good or bad. Thank you for sharing your story. Glad to see you back on top.

 

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[Rickson9]

Do you have a source for finding these companies or just good old google search?

Personally I just used a the stock screener on Yahoo! Finance. Before the interweb I scoured through Value Line at the library.

Best regards.

 

[oddball]

Personally I just used a the stock screener on Yahoo! Finance. Before the interweb I scoured through Value Line at the library.

Best regards.

Danke! I will have to take a look.

 

[DeletedUser2]

So, I had a good Run, created 18M in wealth in 2 yrs. ZOOM boy that was fun.

Had a daughter, and Decided to move out of the big city, didn't really want to raise a child there.

the day we moved, the world changed. the banks crashed, the real estate market tanked, and suddenly I was alot poorer than I had been in a while.

So, I did what I always do when broke. I go buy something.

I had just created a new web business a few month prior, and it was just barely getting traction, but it was growing.

and I saw the power of the internet for the first time really, in regards to making money with it. so I went out, knowing no one, in my new town, and raised money quickly, and purchased cash flowing web businesses.

when ever broke, raise the money, and go buy the income streams, then improve them like your life depends on it. and you can be back to $ pretty quick.

Im not all the way back, but making some money is pretty quick once you understand the fundamentals. (ya I know, always back to the fundamentals, boring old fundamentals....)

this should be fun. any one care to race to the on ramp?

 

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[00N8]

In a similar boat as zen*******, created about $6M net profit in a partnership ("The Empire" as we dubbed it) from thin air in as many years wholesaling pre foreclosures, but it didn't last and pretty much all of it is gone now.

Much of the profit was reinvested into a computer system for a similar but different niche. Once the housing market crashed the giant lump sums from the pre foreclosures dried up. Simultaneously the computer system niche stalled and despite marketing it to perfect candidates either timing or other variables didn't work out and it's still languishing.

So at this point I'm cruising along in the slowlane remembering the fastlane days and working to get back there. It's taken too long to accept failure on the computer system, but I am finally in a space to let it go and pick a different road.

While I didn't lose my house or hit rock bottom, not everyone in the Empire got through the fallout unscathed, and it sucked watching it all go to crap.

Even going the fastest speed in the slowlane sucks, so here's to the next road :cheers:

 

[DeletedUser2]

wait i need to post this

 

[DeletedUser2]

So at this point I'm cruising along in the slowlane remembering the fastlane days and working to get back there. It's taken too long to accept failure on the computer system, but I am finally in a space to let it go and pick a different road.

While I didn't lose my house or hit rock bottom, not everyone in the Empire got through the fallout unscathed, and it sucked watching it all go to crap.

Even going the fastest speed in the slowlane sucks, so here's to the next road :cheers:

Here is the thing I learned most. First, it was not my first crash so It didn't destroy me

1. No one took my birthday away,
2. no one came to eat me. (this is a seriously common thing of entrepreneurs that I coach BTW)
3. no one pointed to me on the street and laughed
4. the people I have in my life care alot about me, and its a good way to weed out your fair weather friends, (because honestly those are not real friends)
5. your still alive, and that means your smarter and faster next time....

Now I was depressed for a little bit, but here is a trick for those of you who don't know this.
you HAVE to go trough a grieving process.
you cant go around it.
you cant skip it
you cant ignore it and expect to be able to get back on top with out dealing with it.

so here is the trick. if you are going to have to go through it. Dig in. Deal with it. treat it like a focused workout or a focused endeavor. its almost like a startup.
It will eat up almost all your time, and energy for a little while. deal with it. focus on getting to the next stage of the stages of grief. process it and get it done!
if you drag this out, you will be very ineffective for a long time. certainly not at the top of your game

But if you do that, you can go through the stages of grief pretty quick.
1st time i lost a biz, i was young and it took me 1.5 yrs to get over it.

the next time I lost an apartment complex it took me 9 months.

when I lost 18M within a week I had another business up and running.

dealing with a "Dead Deal" and the grief head on, I was able to get back to making money fast

 

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[Bozigian]

When I was young and had no money, I borrowed money and invested into owner-operated businesses. That is, I found successful and talented entrepreneurs who were running publicly traded businesses (eg. Jim Jannard/Oakley, Tom and Kosta Kartsotis/Fossil, Roger and Michael King/King World Productions, etc. ad naseum) and bought into their companies when prices fell to 2x book and 10x earnings or lower.

Owner-operators are incentivized by increases in stock price since the majority of their net worth is tied up into millions of shares of their own businesses so I just hitched on for the ride.

I was an entrepreneur once. 60-70 hour weeks. The whole 9 yards. Content management applications for publishers and financial institutions. I left the business and funneled all my money into other entrepreneurs. I liked the idea of not having to be an entrepreneur (no sales, no payroll, no admin, no emergencies, no nothing), not having any liability but participating in all the gains.

So is that called angel funding? Limited partnership?

 

[Bozigian]

I now know to be even more careful about handling money and how it can be lost. Jack Edwards thank you for your story.

I bet Scott Alexander is in the same shoes that you once were, he spent a bunch of money everyweek just preserving his appearance.

If I was rich right now then I would not know how I would buy things.