Podcast 435 - HGTV’s Scott McGillivray (Part 2)
BP Podcast 435: Why Successful People HATE Losing, But Aren’t Afraid to Lose with Scott McGillivray (Part 2)
Edited by Brandon Accomando
1. Gaining experience by putting yourself in difficult positions
I think that there is an art and a science to being an entrepreneur. Being an entrepreneur I think is something that was natural to me from a young age. I always just wanted to push my limits. I found a thrill out of putting myself in difficult positions. I remember when I was in high school I ran for student council president. I had never done anything political. I’d never been on student council, and I just felt like our school was not keeping up with some of the competing schools in terms of everything that was going on, so I was just like “I’m going to run for student council president.” And everyone’s like, “You can’t do that. You don’t know anything about student politics. You’re not in these courses. You’re supposed to start as a grade rep,” and then blah, blah, blah. I was like, “Nah, I’m just going to go for school president. I just want to make the decisions.” I remember I felt really unqualified, but it was just a matter of go for it, throw yourself into the situation. What’s the worst that’s going to happen? You’re not going to get it, which is pretty much where you are now. But I ran for student council president and I remember I got it. I won by a massive, dare I say, a landslide, but I won by a good threshold, and I was the most shocked out of anyone. I’m like, “I can’t believe people voted for me.” And then, I got addicted to this idea of seeing something, or someone, and learning … And again, this isn’t stuff you’re taught in school, but a great skillset that I think people could have is finding a mentor, or finding someone who’s in the position you’d like to be, and admire, and appreciate, and learn from them rather than to feel jealous, or like they’re entitled, or privileged, or inherited it. I think one of the big breakthroughs for folks, anyone, especially in the climate we’re in now where I feel like there’s a lot of the victim mentality. Everyone who’s young feels I should deserve this, and deserve this, and I have to take it from someone else. You’ve got to look at the people who have established themselves and say I admire, I appreciate, and I’m sure you had struggles as well, let me learn from that.
2. Why successful people aren’t afraid of failing
The difference between successful people and people who just dream about having success is that successful people hate losing, but they’re not afraid of it, whereas unsuccessful people are afraid of losing. When you’re afraid of losing you’re too scared to try. When you hate losing you never give up. It’s not that I’m afraid to lose. I don’t mind losing. I’m the type of guy that’s like let’s play again. I just lost. Let’s go again. I don’t mind losing, I just hate it. I actually thrive on the failure in order to work harder, and that’s probably the first mindset change that someone needs to have in order to take themselves to the next level. It’s just a small tweak. Losing is still a negative thing, but it’s not that I’m afraid of it. I’m not afraid to lose. Go ahead. I want to lose. I’m excited to be the loser, just it gets me boiling, and I’m like I can’t stay here, so I need to try again. The real answer is it’s not so much fear as it is a disdain for losing. As long as you hate losing you’re going to find a way to win, but if you’re afraid to lose you may never try. That is the death sentence of success.
3. What young or inexperienced investors should do when they feel scared of taking a risk
You would think young people, teenagers, and millennials are the ones who are most ambitious. I personally, working with people who want to be entrepreneurs and real estate investors the average age of somebody who will sign up for one of my courses, or one of my events, is 51-years-old. 51-years-old is the average age, and a lot of that has to do with right around that point you realize if I keep doing what I’m doing I’m not going to have the things that I always thought I was going to have, like you starting to realize that you’re running out of time to make that turn. There’s all kinds. Maybe it’s when you turn 50, or maybe it’s when somebody close to you gets sick, or passes away, or maybe it’s something to do with a relationship.A lot of people go through a divorce, and then you see they’re actually happier afterwards even though the pain of the divorce was devastating to them. There’s all kinds of these moments in people’s lives. But for me, being young, and trying different things, public speaking … I was petrified of public speaking, but I threw myself up on stage. I figured it out, and then I went to go watch other people do it, and I was like, “Oh my gosh. There’s a system to this. This is how you do it.” And just continuing to evolve. Just realizing as soon as I get to where I was planning on being now it’s time to evolve to the next level. There’s all kinds of things that get thrown at us, but it’s often when you’re shown how bad things can be that you will find the most motivation to rise yourself back to the top.
4. Why Scott says you “can’t lose money in real estate”
You can’t lose money in real estate. Now, there you go. People who are scared of losing money in real estate, they’re like, “I’m scared. What if I lost money?” Something that I learnt probably after a few years, I flipped a property and I lost money. I was down like 25 grand, and I remember how frustrating it was. I was like, “I can’t believe it. I did all that work and I lost 25 grand.” And I sat down at the end of the year with my accountant. I’m like this is brutal. I can’t believe I lost money in real estate, and he said, “Theoretically you have a loss but you can carry that forward against a future gain.” I said, “Wait a second. Wait a second. What do you mean? I didn’t actually lose this?” He’s like, “You lost that money, but then you get to write it off against a future gain, so you’ll be net zero when it’s all said and done.” I was like, oh my gosh, this is brilliant. How come we don’t teach people that as long as you keep working at it, and you find a way to eventually make money in real estate, even if you lost money you’re going to get it back. You’re going to be able to write it off against a future gain? I say this to a potentially unqualified audience, but if you are a serious investor, if you have your LLCs, and C corps, or S corps, or whatever company structure you have set up to invest in real estate, if there is a deal that is not profitable there are ways to write off that lost against what would’ve been a taxable gain moving forward, and therefore you never really lost the money.
5. The importance of talking to those who are older and have more experience than you
And then, I got into real estate, and I remember when I got into real estate I was like … These guys gave me a time machine. This is a gift that anyone can take advantage of, is talk to somebody who’s at least a generation, if not two, older than you, and just ask them this question, “If you were me at my age what are the five things you would do right now?” And then, go and do those five things, literally, because otherwise you’re going to look back in 20, 30, 40, 50 years from now and wish you had done them.
6. Scott’s top pieces of advice for young people just starting out their careers
There’s no job interview where they’re going to say, “You know what? Before we hire you we want to see your grade eight report card.” Never is that going to happen, so just have a good time in your teens, and then when you’re in your 20s you still don’t have to know what you’re doing to do when you grow up, but you have to throw caution to the wind and get experience. Take the job, go on the trip, date the people.Some people get too caught up, like you said. They’re almost over educated. They’re 22, and they’ve got three degrees, and they’re like, “Well, I have an MBA, and a doctorate, and a bachelor’s degree and I need to start my career,” and I’m like, “No, you don’t because in 10 years from now you’re probably going to want to change your career, and you’re going to start from scratch anyway.” You need to just get life experience, and relationship experience. The people that you meet and have a relationship with in your 20s are the ones who are going to open all the doors for you in your 40s, and 50s. You need to get to know people, and you need to hustle too. You really need to hustle. Like I said, if you can get your hands on a piece of real estate, whether it’s buying the whole thing, partnering with your parents, getting together with five friends, get your hands on a piece of real estate that cashflows. That’s it.
7. Why people in their 30s aren’t really interested in real estate investing
And it fascinates me that people who are interested investing in real estate, if you look at it in a graph there’s a bump, like you see 19, 20 you get these people interested in real estate, and then by about the age 30 you see this huge drop off. All of a sudden, people in their 30s aren’t really interested in real estate investing, and then by 45 you see the hockey stick effect. The amount of people looking for real estate information skyrockets from 45 to 70-years-old. Those are the hungriest people. And for the longest time I was like, “What is wrong with people who are in their 30s? Why aren’t they interested in real estate?” And we started to actually send questionnaires out to the people who weren’t registering, or won’t showing up, and it turns out they were too busy. They had young kids. They were trying to establish their careers. They were distracted by life, which is really what puts this important emphasis on if you can set yourself up in your 20s, if you have a couple investments, then you get to actually live your 30s, and come out in your 40s with something that’s killing it.
8. How Scott runs his companies and what he’s doing to be a better leader
I think the ultimate recipe for being a successful leader I haven’t figured out that recipe yet. I’ll be the first one to be honest to say I’m not the best leader I could be yet. That’s the most important thing. I always put the word yet behind something that you haven’t accomplished. I’m not the best yet. I’ve tried. I’ve tried several different things. I’ve tried to be the company culture first guy, like try to just please everybody, and that led to basically an impossible mission of trying to keep everybody happy. And I’ve also tried to run it’s my way or the highway, everybody get onboard with it, and that’s a whole different kind of company culture that creates where basically you get your nine to fivers, and then you lose everybody. Nobody’s invested after that. I think the real magic’s going to be in finding a balance between the two, finding a way to keep people motivated, but not at the cost of the company.
9. How you can be the MVP of your company
And so, if you’re listening to this, and you want to do better in your company, I promise you your boss is dying to see you step up and act like you own the company, what you would do if this was your money. This question comes up in my own businesses every week where someone says, “Hey, David. They countered us at this. What do you want to do?” I’m buying condos in Hawaii right now, and they’ll come back and say, “Hey, what’s the decision?” And I’ll say, “Well, if this was your money what would you do?” And they say, “I’d ask the lender if he can do better.” I’m like, “Well, why don’t you do that?” That wasn’t a really hard thing to do, but when you’re in that W-2 mindset you’re not thinking like it’s yours, and man, if you want to get to the top of the heap be the one person in that company that does that when everybody else is just, “When can I take my vacation? When can I clock out? When can I absolve myself of any responsibility that’s going on as fast as possible?” I’ve seen some incredible people, and I’ve seen the worst in people as well. I’ll be the first to admit not everybody has potential. I just don’t believe that. I’ve seen a lot of duds, and some people just haven’t tapped into it yet, and then other people have just mastered it. I think one of the best job interviews, I remember hiring this guy who still works for me, and in the job interview when it came to compensation his whole thing was it doesn’t even matter what you pay me now, because I am going to earn whatever you’re going to pay me.
10. How to gain the most financial benefit from your youth
It won’t do it in years one through five. You get into years 15, 20, 25 it’s flying past you, and if you planted more of those trees when you were younger, like you said, you’ve got this swell behind you. That’s the big regret I have from my 20s is I was out there trying to outwork everybody in the restaurant industry thinking I’m making more money than all my buddies because I was making 30 grand a year, and they were making 12 grand a year. What did any of that mean now where we could make that in a week? I should have been learning, getting better at building relationships, talking to more 80-year-old people, putting those pieces in place so that when I got to this point I was primed. I was a little bit behind, so I think that’s fantastic advice. That’s what I would tell everyone I know in their 20s. Don’t worry about what you’re earning. Worry about what you’re learning. The time to earn will come when you get a little bit older.