March 25, 2009 – Full transcription of call

And good morning everyone. This is Robert Allen on Breakfast with Bob. Welcome to our call today. Thank you for joining us from all over the county. I hear you’re calling from all parts – from San Francisco to Savannah, Georgia. I heard your name there, Ernestine, and Gordon in Dublin, and many of you from all around the country, thanks for joining with us today.

What a day. The sun came up. Isn’t that wonderful. The sun came up again. I guess it didn’t really come up. The earth turned slightly and in doing so it brought the rays of this constant sun on to our ever turning earth. And oh boy is the earth turning.

Things are spinning, aren’t they? So many amazing, incredible things that are happening. In such short periods of time, yet there are constants; things that never change. The sun came up again. What are the things that never change in your life … that are constant?

What are the things that ground you? That gives you the ability to face a spinning world where everybody is hanging on to the merry-go-round as it seems to spin faster and faster and faster.

·        What’s constant is your life?

·        What never changes?

·        What do you hold on to?

·        What’s the stability in your life?

·        What’s your northern star?

 No matter what happens in the wind, tossing waves of the ocean we’re on. You can always see that that star is always there. Never changes, always gives you direction. Something you can set your compass by. Something that always gives you hope and peace and sometimes joy no matter what’s going on.

As investors, we have to have that constancy if we’re going to take any risks at a time like this. You’re going to look back on this period, maybe it’s going to be a year maybe it’ll be two, maybe it’ll be three, who knows? And you’ll look back on these months that we’re going through right now and you’ll either say they were some of the greatest months of your life or you’ll say:

“Oh boy! I hung on tight and I’m glad I made it through that.”

What we as investors want to do, of course, is to make sure that these become the greatest profit generating months of our lives, don’t we? So there are certain foundational principles that never change, that are constant. And obviously … I’ll just let you what my constants are. You have your own, whatever makes you work and whatever gives you peace and constancy and stability.

The northern star is my belief in my Heavenly Father and my reason for being here on this earth. And I’ve got lesson’s to learn. So, I’m going to constantly be learning lessons. Lessons that hopefully make me a better person. So having challenges to be thrown at me and you, gives us the opportunity to prove our worth and to become better people, become stronger, more able to handle whatever gets thrown at us, right?

So if the purpose of life is for you to learn as much as you possible can help you become a better person – Stronger then what we’re going through at this particular time is something you should be welcoming.

 “Thank you, that was wonderful.”

Course we always want to settle into something that isn’t “dangerous” or “scary” but frankly, you know, as the saying goes:

“Ships in the harbor are safe, but that’s not what ships were built for.”

We’re outside the harbor now. And what were you built for? What were you built for? You’re a ship. What are you carrying in your cargo hold? You are a container of talents and gifts for the world. You’re carrying these gifts and talents to be able to distribute to the next port you go to in your ship, right?

So what’s your northern star on this route? As I said, mine are my spiritual values and since they are constant to me they give me peace and hope. When it comes to an entrepreneur, what are the constant things that drive an entrepreneur? Well you want to be able to solve problems, right? Isn’t that part of what entrepreneurs do? They love to solve problems profitability. (chuckles)

That’s right. We love to solve problems profitability so at a time like this are there more or less problems? More problems, therefore there’s more opportunity everywhere we look. It’s everywhere, (chuckle) right? So that’s a constant for an entrepreneur. They’re constantly looking for opportunity to solve somebody’s problem in a profitable way. We want to be a profitable servant.

They want to serve people in a profitable way. Entrepreneurs, business people, that’s what we do. So bring it on! For a real estate investor, what’s the constant in your life? Now I was watching a show the other day with one of my “competitors” and he was talking about how to promote some brand new things and that the old ways don’t work anymore.

And supposedly he had discovered this new way of doing this real estate investing. And I think he was taking a jab at me and some of the other competitors. And I said to myself:

“You know, the constants principles of real estate, they never change. They never will.”

He might have come up with a few new little wrinkles but, principles in real estate investing are absolutely constant. Never change.

You have to learn how to find good deals. There are good deals everywhere. What is a good deal? It’s something that somebody is willing to let go of, at a price below what its current market is. It’s based on the one simple principle that I’ve been teaching for 30 years now.

And that is that you’re looking for a highly motivated seller.

Always you look for a highly motivated seller. And do we have more highly motivated sellers these days or less? We have million upon millions upon millions of them, highly motivated sellers.

And that number is more than it’s ever been in your lifetime. These are the best times of all times. And even in a time when it’s …  obviously there are millions of people who are trying to get rid of their properties, you have to be able to solve their problems in a profitable way. You can’t just buy a property and hope that it goes up in value.

“You have to make sure you make money on the way in so that’s constant principle.

You never buy retail, ever.”

Just a constant principle. Never changes. You buy wholesale. Somebody asked me the other day, I was on a tour with my wife last week and we went through Columbia, South Carolina, we went to Charleston, South Carolina – cities I’ve never been to. Savannah, Georgia – I’ve never been there either – and Birmingham, Alabama, I’ve never been there. And somebody said to me, I shared with him that I was the author of some of these books on investments:

“Oh you’re the guy that caused this problem, these real estate problems.”

He kind of took me back for just a minute. You know I was thinking:

“Wait a minute, wait a minute. Hold on now, hold on, wait a second.”

You have those times when you can’t think of something to say and you just kind of smile and you kind of let it go. Later on, it just dawned on me, if people were just investing the way that I constantly teach to invest; looking for highly motivated sells, always going for the wholesale deal, making money on the way in, then if they use those constant principles, they’ll always be able to continue to invest that way, profitably.

Now, what’s happened in the last year in our experience, since the prices of real estate have dropped for the first time in our lifetimes it caught everybody off-guard. But that doesn’t mean the principles change. You just constantly are going to be re-applying …  I’ve always said you should be buying at least two properties a year, minimum, for the rest of your life. You are going to buy one to keep and one to flip. At the minimum, the basic minimum.

So now you’re going to … No matter what price you paid for your real estate last year, or the year before that, or the year before that, you’re going to be doing (just like you doing real estate) dollar cost averaging. You’re going be constantly buying something below the market, constantly. No matter where the market goes. And you’re going to end up with a bargain.

Even in a time like this. It’s just our bargains kind of shift, our strategy shift at times like this. We start to go for cashflows.  And we start to find properties that are so far below the market that we can rent them out and get nice wonderful little positive cash flows from them. Sometimes we have to go to other cities to get those kinds of things. We can’t do it in California; we can’t do it in New York.

Then you go places where those kinds of deals are available. The principals are constantly there. They never change. You’re gonna look for highly motivated sellers. You’re gonna find deals, meaning that you’re gonna find something in a wholesale price and then you have to fund those deals. You have to find somebody to help you pay for it if you can’t.

So you’re always constantly looking for the deal and the money to pay for the deal. You don’t have the money … somebody does. Somebody’s got their money first now, there’s billions, and billions, and billions of it; sitting in a bank, being really nervous and being really careful, and wondering where do you put your money?

Well, where do you put your money?

Good question. Where do you put your money these days? I said in a call about two months ago, I think:

“Where you put your money is in yourself. You’re the best investment you have ever made. Investment in yourself.”

Do you make yourself stronger and wiser and smarter, and have better skills, take those skills wherever you go?

You are your best investment. How you train yourself and how you learn, and how you  skill yourself so that you can take advantages as an entrepreneur of the opportunities that are all around you. How you deepen your convictions and tap into your passions. And how you become more confident and more stable and more clear about what it is that you really want to do with your life.

That’s the best investment you’ll ever make.

And then you’ll be shifting the ways in which you invest, depending on the way the market goes. You know, as a multiple streamer you’ll either flow some real estate or you’ll flow to some on-line something on the internet or you’ll doing something on some product that you create or you’ll be moving forward on the network marketing thing that you’re doing. You’ll become the source. You become the source of constancy. You become the North Star.

You are the North Star.

As an entrepreneur with the solid spiritual grounding, with the decision that you want to make your life count. That you want to bless the world, because your ship contains the gifts you have to distribute to the people around you. The greatest gift that you can give to the people around you at a time like this is:

·        Your purposefulness

·        Your clarity

·        Your peace

·        Your constancy.

People will be attracted to that. They’ll want to have a part of what you’ve got. That’s the gift you give. That’s what you are as an Enlightened Entrepreneur.

In a lighter note, as we were going through Charleston, South Carolina, we ate at a restaurant called “Hyman’s Seafood.” And if you’ve ever been it’s down by the … what they affectionately call “The Slave Market.” It’s where the folks, many, many hundreds of years ago, used to sell their wares. They would have a market there where the poor folks would sell their wares to people coming by.

So right next to that – now it’s a place where you have hundreds of little shops and stalls. And it’s a place right in downtown Charleston. And right next to that is this seafood restaurant called Hyman’s.

Strange name. but is an amazing restaurant. It seems like every single famous person that’s ever been to Charleston has eaten there, because of all the plaques on all the tables where all the famous people sat. And I was sitting at the place where Billy Joel had sat and eaten because his name plate was right there where I was sitting on my table with my wife.

And something that  really shocking that happened to me here was…. First of all, talk about being constant, the food was good, it was great. And it was well priced. Beautiful restaurant, you know, seafood-ish. Lots of people. It’s supposed to be a major recession going on, there’s supposed to be the greatest recession since the Great Depression. We’re going through a great recession, right?

Well the restaurant was full and there were lines of people wanting to get in. And it was a Wednesday and they have 180 employees, and we were amazed. My wife has what she called an antenna and she when just kind of spots things that are really good, good for us.

She said:

“My antenna is up”

And we were driving by this restaurant, it’s on a major street, and she said:

“That’s it.’”

So we parked the car. I learned to kind of follow her antenna cause it’s most of the time right, very rarely wrong. And yet we went in there and had a great meal and it was fun and the food was incredible, and wow!

And then a gentleman was walking through. I said:

 “He looks familiar.”

I thought I saw his name on some of the pictures that are on the walls here introducing famous people. And he was a very un-assuming gentleman, he was probably 45 years old. He wore jeans if I remember correctly. Like I said, un-assuming. And he was going from table to table to table, and he was just saying:

“Thanks for coming, we really appreciate it.” “

“Hope you enjoy it.”

“What did you like, anything we can help you with, was there anything that wasn’t up to your satisfaction?”

The owner of the restaurant was coming through and talking to every single table in that restaurant. It was a big restaurant. Must have been 200 or 300 hundred people in there. And several floors of it. And he stopped and talked to me personally. He didn’t know who I was, just:

“How’s it going?”

He was so personable. And come to find out from one of the waitresses that’s what he does every day.

Every single day! Talk about constants. He was touching his customers every single day. It made you feel so special. Most businesses don’t do that. They have layers of people in between the boss and the customers, and I was really impressed. Blown away frankly. Talk about how you make a business that really works no matter what’s going on in the economy.

You make a business that people flow to because they get value. They get what it is they wanted. They achieved what it is they were hoping to get when they were attracted to your particular business. As an enlighten entrepreneur, that’s what you do. You become the North Star for your business. You become a source of attraction by the way in which you treat the people that you service, right?

It’s hard to do. I’m sure it’s hard for him. He’s got 180 employees to manage. He’s got suppliers to bring the food in that door every day. He’s got garbage trucks taking out the refuge at the end of the day. He’s got bankers to deal with. He’s got leases; he’s got a million details to take care of to make that business work. But it turns that his family has been in that same spot since like 1890. And they had been part of the mercantile business since the earlier days.

But the great-, great-grandfather had been an entrepreneur over 100 years ago. And those genes had gone through his sons and his daughters and all the way through some 25 years ago  – about – this one great-, great- grandson starts a restaurant round the same spot where his great-, great-grandfather had started this little store. He just decided to take the entrepreneurship principals and he applied it to food instead of applying to selling dry goods, and blankets and stuff like that.

He’s selling food, he’s selling it the same way. He’s just taking care of his customers. He’s making his customers feel special. You’ve got to hand it to Hyman. It was amazing. And in the little buckets at the tables there were some funny little things. Must of been 10 of them, and I grabbed a couple of them. He wanted everybody to be entertained while they were there.

And of course there’s this saying from Woodrow Wilson, a quote that you’ve heard of a thousand times. But that’s why quotes are so powerful, because there’s so much truth in them. And the quote is entitled “Persistence”:

“Nothing in the world can take the place of persistence.
Talent will not. Nothing is more common then unsuccessful man and women will talent.
Genius will not. Unrewarded genius is almost a proverb.
Education will not. The world is full of educated derelicts.
Persistence and determination alone are omnipotent.
The slogan “Press On”, solved and always will solve the problems of the human race.”

And on something of a lighter note there was a thing called “The Circle of Life.” On the back here it talked about the various different ages of our life:

“At age 4, success is not peeing in your pants.
At age 12, success is having friends.
At age 16, success is having a driver’s license …

(You remember those days, don’t you? It was the thing you wanted the most.)

 
At age 25, success is having sex.
At age 35, success is having money.
At age 50, success is having money.
At age 60, success is having sex.
At age 70, success is having a driver’s license.
At age 75, success is having friends …

(Cause your friends are leaving.)

 

At age 80, success is not peeing in your pants.”

(chuckling) Talking about the circle of life. What’s constant you in your career as an entrepreneur is your decision to do what you have to do, right? So I want to thank Jan Miller who sent me an e-mail and linked me up to Malcolm Gladwell’s recent speech at the New York Public Library. It’s http://www.nypl.org.

That’s the New York Public Library, nypl.org. I think if you search around there you’ll probably find it.

The rest of the link is:  http://www.nypl.org/support/multimedia/multimedia.cfm

If you listen to this later you can rewind it and get that link. And you go to that link, and it’s a speech that’s about 40 minutes long by Malcolm Gladwell. And he is the guy who has written “Blink”, and who wrote “The Tipping Point”. and has written the new one that just came out, that’s on the top of the Best Sellers List called the “The Outliers”. Talking about the people who are really successful.

And he basically is giving hints about what his new book is going to be about. He’s got another one coming out. He’s writing an article in the New Yorker about it and he was basically talking about his research. And he really was talking about the underdogs. I don’t know if that will be the title for his next book. More than likely that’s the subject of it and if you want to watch it, it’s fascinating. Talking about how the underdogs win. How often do the underdogs win?

Are you underdog? Do you sometimes feel that way? Well, he says, according to somebody he quoted and I didn’t take the notes, but you can go back and find it yourself. He said that he went … somebody did some research on the last 200 of the greatest wars in the last 1,000 years or so. Something like that.

And found out that the underdogs, people who were not excepted to win matter of fact people who were 1/10th the size of the big army that they’re fighting. That the underdogs won. These are the underdogs that are 1/10th the size of the big army … that the underdogs won a third of the time.

A third of the time the big army was defeated by somebody who was so far below their measure of strength is was ridiculous. He talks about the story of David and Goliath and how David was the underdog and how Goliath was obviously ten times stronger, if not more, than this David. And so he uses that as the story throughout. It’s very fascinating. And I really enjoyed it.

He’s just as good a speaker as he is a writer. He tells stories, and that is something that is fascinating, frankly, to me. He talks about the Davids and Goliaths. They did some more research and found out the reason that the underdogs won is because they did things, they didn’t play the game the way the big ones played.

Goliath had the armor on. He has the swords and all of his regular conventional armor. But David put the armor on, according to the story in the Bible, Saul gave he his armor and David put it on and said:

“I can’t use this stuff. That’s not me. I’m going to have to use what I’m good at.”

He took the armor off cause there’s no way he could have won that battle with the sword. What underdogs do is they have to take their strengths, the things they’re good at and that’s what they play with no matter what the other army is doing. You can’t play a big game if you have no idea how that game is played. You have to play the game you are good at playing.

And David says:

“I know how to use a sling shot.”

And he went out and chose his five smooth stones and we all know the story. And he attacked his opponent’s weak spot. He attacked that with his strong suit.

And they found that when … in the third of the times when the small army beat the big army – or when the underdog won – the underdog won because – although they won a third of the time … but what they found is that the times that they lost – these small armies lost – is because they were trying to beat the big armies. But two-thirds of the times when they lost it was because they were trying to play the big army game. They were trying to play with tanks and things that they were not good at.

But when they won … when the small armies – when the underdogs – used their strong suit … when they did what they were good at that they won two-thirds of the time. And what he talks about in the speech – it was a fascinating speech – he talks about this small group of seventh grade basketball team in Northern California.

And the coach was a fellow from India who had never coached basketball and never even seen much of it. He began to coach this little team of girls who were going to lose, there’s no way in the world they could every win because other teams were stronger and they were better, and they were taller, and they there the best. And they played basketball. And he says:

“You know that, I’m going to think about this. What it the weak point of my opponent’s team? What’s our strong suit? Our strong suit is we can’t play basketball, but we can harass.”

So when they throw the ball in, we get a point the ball goes to the opposing team and they have to throw the ball in at the opposing end of the court.

He says:

“We’re going to give them a full court press the whole way down the court. And we’re going to make it hard for them to throw the ball in. We’re going to cause them to be so flustered. even these great, great players, we’re going to cause them to be so flustered that they can’t bring the ball in. They’ll scream, they’ll wave their arms, they’ll just act like wild women.”

And what happened was by them attacking the opponent’s weak link there they threw the ball in at the end of the court, they would end up getting the ball back and then they would do layups. They could do layups. They can’t do three points and they’re not very good at shooting free throws, and they’re not very good at shooting jump shots but they can do layups.

That was their strong suit. In other words if they could get the ball away from their opponent, run underneath the basket, which was their basket, they could do a layup. As he tells the story, he kind of spreads it throughout the 40 minutes of his speech, that this team that couldn’t do anything – it was the worst team – it actually went to the nation championships by focusing on one thing, on the one weakness of their opponent. And their one strong thing they could do which was to do layups.

Finally they were knocked out in the semi-finals by a referee who just hated this kind of basketball. He said this is not basketball. Basketball is you bring the ball down the court, you pass it around a little bit and somebody shoots a long shot and they make it. And then you get the ball, and you come down the court and do the same thing. And for you to harass people at the one end is not basketball, that’s not the game. So he called three times as many fouls on this little small team, and they there knocked out in the semi-finals of the nation championship.

So once again I want to thank Jan Miller for forwarding that link to me: http://www.nypl.org/support/multimedia/multimedia.cfm.

I think that if you go to nypl.org which is the New York Public Library.org you’ll be able to see this speech he gave about three weeks ago. And what I came away with from that, and what I want to leave you with today is that you’re an underdog. So am I.

We look at these great companies that are failing, all around us. These huge corporations, General Motors, AIG, General Electric, Ford, all the car companies, all these massive, colossal, behemoths; they’re just literally failing all around us. 

They’re being beaten by upstart, underdog entrepreneurs in China and in India. in Japan they’re getting their pants beaten big time by underdogs all around the world. And what I think the lesson of it is for the future is that you and as enlightened entrepreneurs, we just have to do what we do best. We have to find our strong suits

Find the strong things that we do and focus in on the weak points of our competitors. We’re going to deliver the products that we’re destined to deliver to make the world a better place. That’s what we do. Now my strong suit, I try to make complicated things simple. I like to be able to communicate those ideas.

So today I’m going to get in my car and drive up to Los Angles. We’re going to be brainstorming all day long on how to say a message, strong enough and clearly enough that the infomercial that you’re going to see (some time in the next month or two) is going to tell the message of what we’ve be talking about today. People are going to turn on the television , they’re going to see this infomercial of this Robert Allen guy.

He’s going to appear to be, hopefully, – this is what they keep telling me –  a sincere fellow that people are going to hear the message and they’re going to say:

“I believe what he’s saying. I believe him. He’s believable. He seems to be an honest guy. And his message seems to be interesting. It’s kind of exciting. There’s lots of truth in it. There’s opportunity everywhere, right?”

So today we’ll brainstorm that with my team of the director, and all of my partners.  I’ve attracted to me some of the best people in the world at doing television infomercials. And these guys are … these guys they are unbelievable. Just incredible. They know how to generate sales and how to make it work down to the penny. And I attracted them to me, to my strengths. And I’ve attracted their strengths to my strengths. And we’re both working with each other hopefully to create this product.

How do these things happen? That my next door neighbor, literally my next door neighbor – who is one hundred feet away from me to the west of my house that I’m in this very moment – right now, this second –  my very next door happened to be the guy who is this expert on infomercials.

How does that happen? I can’t explain it to you. All I can explain is that I have deep faith that things happen for a reason. And how is it that we ended up buying the home right next door to where he bought a home.

He came over to my house one day and said Bob,

“I’m trying to do this infomercial. What do you think?”

And I gave him some of my advice. And he gave me some of his advice. I told him what I thought he ought to do and give him a few little pointers and tips from my own experience. I’ve done like 20 infomercials now. I did my very first infomercial in like 1981. So I’ve been doing these infomercials, these television things for 28 years.

And how did he know that he was going to be moving right next door to me? These things happen, don’t they? So today, we’re going to be driving two hours away, up to Los Angeles, today. We’ll both drive in separate cars. Our cars will pull out of the driveway at about the same time. We’re going to drive all the way to Los Angeles, today, to meet with the rest of the team to brainstorm the final pieces of the infomercial.

We’re going to shoot the final pieces tomorrow. Yesterday we had 10 or 15 of our best testimonials come in from all around the country. Yesterday the filming was done and it’s in the can now and I got a call from the partner of my neighbor next door here. He called me yesterday and I was getting my car washed. He called me yesterday on the cell phone and says:

“Bob, the testimonials were brilliant! They’re the best I have ever seen. People were sharing their stories, they were tearing up because of the effect that you’ve have on their life.”

We’ve got a gentleman who’s got a three million dollar net worth today and who used to work at Wal-Mart. This is the story that we captured on film yesterday, it was spectacular. So I’m going to do today what my strong suit is.

I’m going to challenge you today to do what you’re good at. Find your talent, then magnify it. Be the best you can at it. What Malcolm Gladwell said in his last book, “The Outliers”, he said:

“In order for you to become a world class talent, it’s not talent that does it …

(As I was reading this quote about persistence).

 

It’s not talent. And it’s not genius. And it’s not education.”

It’s a Woodrow Wilson quote – President of the United States. What Malcolm Gladwell said in his last book, “Outliers”, have you read it? –  “Outliers”  – The first chapters, he lays down the principle that is constant, it’s true. He says:

“In order for you to be world class, for you to be the best at something, you’re going to have to put in about 10,000 hours.”

And in order for you to put in 10,000 hours, which is somewhere between five and ten years of work in order for you to get to “world class” at something. If you want to be a world class entrepreneur you want to be the best of the best, the wealthiest of the wealthiest – do you really want to live in your dream home? And you want to enjoy the lifestyle of your dreams?

The bad news is it’s going to take you five to ten years. The good news is most people work at something for 50 years and retire on half of what their top salary was. If you’ll just do what enlightened entrepreneurs do, you study it, you’re passionate about it, you’re persistent.

You’re like the Northern Star – you’re going to do whatever you have to do. And when you do that – as you get better and better at learning and growing and becoming stronger and more confident and doing better deals and getting beyond the bad deals. Letting those bad deals be learning experiences for you. Learn what not to do by doing enough bad deals, so you finally say:

“Okay, I’ve learned what not to do now!”

And then you go to the next stage which is learning what to do right and finding some successes here and some successes until finally you become the entrepreneur or the enlightened entrepreneur you are destined to be. You go from David who was nothing, who was nobody but a shepherd boy and you become King of your world. You become the best of the best of the best.

I was listening to another gentleman talking about how you get leaders. What is a leader? His name is Tom Schreiter. I was listening to some of his CDs the other day. In fact I’m listening to his CDs and learning some new things about new ways of doing network marketing. So he’s one of the pros at it so I wanted to study his tapes. And what he said about leadership – I was just listening to this the other day – and he said:

“A leader is a person who is constantly learning.”

That’s how you can tell what a leader is. Who a leader is. They are insatiably learning. Constantly learning. Even if it takes you 10,000 hours.

Well, my time has run out for the day because I have to get on the freeway to drive up Los Angeles to do what I just explained to you. I wish you well. I wish you to be the king and the queen of your life. The president of your own life. The CEO, the chairman of the board. The leader of your life.

Constantly and insatiably learning, growing, getting better and better and better at what you do. That’s my message and my hope for you. I hope you heard something today, some little thought or two that inspires you to keep moving forward. And we’ll see you again next Wednesday on Breakfast with Bob.

Bye everybody.