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Stick to Your Knitting

close-up-knittingHOWARD SCHULTZ’S DISASTROUS NBA TENURE

I recently came across some stories about Howard Schultz and the NBA’s Seattle Supersonics that were so interesting I had to blog about them.

Howard Schultz is one of America’s “celebrity CEOs,” as the founder and former Chairman and CEO of Starbucks. He is currently worth $2.5 Billion.

Mr. Schultz owned the Seattle Supersonics from 2001 – 2006, and despite his extraordinary success at Starbucks, his tenure as the Sonics’ owner was a complete disaster.

He tried to engage NBA players as if they were Starbucks employees, and alienated most of them. He made poor draft and trade decisions, the team was consistently terrible, and Schultz was often seen visibly moping at courtside (not exactly “leadership” character).

Schultz also tried and failed to get a new arena built, and he ended up selling the team to a group that moved the franchise to Oklahoma City (even though they promised to keep the team in Seattle).

My favorite stories though involved Shultz’s cheapness and arrogance. For example, the Sonics’ previous owner had always given Christmas gifts to the front office staff, but Schultz stopped this practice. When people complained, Schultz relented and gave everyone Starbucks Gift Cards – worth a whopping $3.50 each :).

Anyway, Schultz not only did a horrible job running the team, he was largely responsible for the beloved NBA franchise’s departure from Seattle. You can read more about it in this Deadspin article here.

Schultz’s failure and arrogance aside, the big reminder from all of this is to stick to your knitting. In other words, being skilled in one field does not mean you will be skilled in another.

It always takes far more time and experience to learn a new industry than most people realize.

And for those of us without Mr. Schultz’s resources, pursuing fields outside of our expertise can be unmitigated disasters.

MY OWN SEVEN FIGURE LESSON

Years ago, I learned this lesson myself.

For many years prior to the meltdown, I was a phenomenally successful loan officer with just three assistants and myself, but all that made me good at was being a phenomenally successful loan officer, and little else :).

Around 2006, seeing the meltdown coming (as did many in the industry), I invested in a high end sports training franchise without vetting my partner or the business well enough. Long story short – my partner, who was supposed to run the business, quickly bailed and left me holding the bag.

And instead of just letting the business die like I should have, I thought I could use my “business acumen” to run it myself along with my mortgage business. Needless to say, my “business acumen” was really just “mortgage acumen,” and I ended up losing seven figures.

Most of us in the mortgage and real estate industries have had some great years recently, and many may be tempted to venture into other fields when things slow down.

My advice? Stick to your knitting.

Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646