How to Buy (or Sell) Anything

I learned an important lesson in 2013: everything is related to sales.

My career started in politics, as a Congressional intern. I soon moved into a position on the legislative staff, where I spent a lot of time forming strategy and meeting stakeholders, especially lobbyists.

As my career advanced, I ran into similar patterns across industries. Lobbyists turned into SaaS sales people, then real estate brokers, then general contractors, and so on.

I realized that everyone is selling something. Brokers sell other people’s inventory, while dealers sell their own inventory. This is the nature of the market.

What about buyers, though?

Are buyers just passive role players?

In the worst cases, yes. At best, absolutely not.

The most effective buyers are exceptionally strategic. They don’t buy based on features and benefits. They buy to address a clearly defined problem with a thoughtfully engineered solution. They use sales tactics to get the best deal on the least required scope available.

Strategy is Broken

These days, people throw around “strategy” with reckless abandon. Superficial decisions are branded as strategic to ensure they pass a sniff test with leadership. New technology is prioritized over old because there’s always a “strategic” imperative to modernize.

The problem with all this “strategy” is that it usually works in the wrong direction. It usually resembles an executive running around the company trying to find a problem for his solution.

Great strategy is bottom up.

Unfortunately, many executives have a bias toward execution – at all costs.

Execution produces tangible results, and with the right timeline, an executive can secure a promotion before the result of the execution comes to fruition. In the best case, he can claim a win for establishing a winning system and team. At worst, a failure resulted from his absence.

Great strategy is problem-first.

Before we start any evaluation of solutions, we must clearly define the problem.

Salespeople and marketers spend enormous sums to distract us into listening to their version of “the problem.” When we accept their version, the sale of their solution makes perfect sense. Sometimes, there’s clear alignment. Most of the time there are many inconsistencies.

This is where our executive loses his way. He accepts the vendor’s definition and searches for it in his fiefdom.

Now, consider your investments – most likely, your biggest individual strategic positions.

Passive Investing is Dangerous

When I hear passive investing, I think of index or time-dated mutual funds. Those are products designed for people who don’t care or have the capacity to learn about financial markets.

They’re fine for the herd, but if you’re reading this, they’re likely not fine for you.

Interestingly, those truly passive vehicles are often safer than active vehicles posing as passive. If you invested in a multifamily real estate syndication in 2021-22, you know what I’m talking about.

Passive investing is a misnomer. It implies that investing activity is only about the holding period. In fact, the best investing is 90% selection and 10% asset management. Therefore, a passive approach means you’re not putting in sufficient time on front end due diligence.

As a passive investor, you’re the executive that gets sold on the seller’s definition of the problem.

This is why I prefer the term residual income over passive income. Residuals imply benefit beyond the hard work that established the income stream. Passive implies endowment with little to no effort.

Double Diamond Strategy Design

One of the most timeless design methodologies involves approaching problem definition and solution engineering in two phases. The first phase involves opening the aperture to gather as much intelligence about the problem (or challenge) as possible, then narrowing to a root cause. Next, you pursue a similar approach to explore the solution set to design the solution.

We must do the same with our investments – tangible and intangible.

Very few people pursue investing for strictly financial reasons. The tangible result is rarely the goal.

You can’t survive on bank statements alone.

We’re chasing the intangibles that the tangibles can unlock. These are security, pride, status, comfort, and power, among others.

The key to selecting great investments is to work backwards from our deepest held values. Ask, what is most important for me historically that has never really changed? This will reveal the root problem that you’re looking to solve.

For me, independence is foundational.

I don’t want to answer to any one master. I’m happy to have many masters because their individual power is diluted. However, monopolistic or oligopolistic power runs against my deepest values.

Buying and Selling are Two Sides of the Same Coin

Once you have a clear definition of the problems you want to solve, you can engineer the best solution. This involves the same approach that the best salespeople take.

Narrow your focus and pursue relentlessly.

Real estate became dominant because it’s omnipresent and approachable. However, there are many better ways to build wealth with both active and passive income streams. (Note: passive income not investing.)

• Franchising
• Buying existing businesses
• Investing in business private placements
• Vending
• Opportunistic credit
• Consulting

These are just a few ideas, but you can see it varies widely. 

The reality remains that if we accept the problem as defined by the salesperson, we’ll always see their engineered solution as the one we need.