We have all heard of the power of “yes.” But what about the power of “no”? Recently, I read the biography Snowball on Warren Buffet.
There are many unique attributes that have made Warren Buffet one of the greatest investors of all time: his ability to ignore criticism, his long-term focus, his remarkable ability to devour his way through volumes of books without distraction, his detachment from emotion for investing, his tremendous frugality, and much more.
Buffet does have something we can all replicate. Not easily, and very achievable with great return for the effort: the ability to say the word “no.” “No” is quite possibly the most valuable word in the English language. “No” is a great negotiating tool, a time saver, a deal saver, and perhaps even a life saver. I have often bemoaned of the precious commodity of time and the importance of guarding it. “No” is your most reliable tool to guard time.
Gary Keller, of Keller Williams, uses “no” as his default answer. He does not spare the use of “no”; instead, he recognizes the more things he says “no” to, the more he can say “yes” to those things that he really desires to invest in. If you use “no” as your default word, when you do say “yes,” those around you will see it as a noteworthy and significant commitment by you.
There are, as with all things, exceptions and caveats to the firm “no.” As Derek Sivers suggests, if you’re starting your career, do the opposite and say “yes” most often to create basic building blocks. As you grow, you will find the need to say “yes” to everything rapidly declines. It is up to you to determine that point in time. Rely on your gut instinct, review your calendar commitments, and review others’ advice to determine when it is time to switch from a default “yes” to a default “no.”
For deals, imagine if you used “no” as your default and were renowned for it in the brokerage community. Sounds bad? What if you combined that “no” with a brief explanation why you turned down the deal and combined it with what you were looking for? Brokers will continue to send you potential deals and take it very seriously when you tell them “yes.” They will appreciate that you took the time to provide feedback along with your “no.” What you are looking for is language that can be cut and pasted and that will keep you focused on what you find best while quickly providing your “no.” Is the data on the deal accurate, and do the facts support the fundamentals of “your” kind of deal? If it is sound data and the answer the data provides is “no,” than pass on the deal. Don’t force or ignore the data, convincing yourself that you can make it a “yes.” Rely on the data as a tool for “no.”
I am developing a data-driven analysis to weight as many factors when reviewing a deal as possible, measuring everything from demographics and area vacancy to parking and signage. All those data points, systematized, can help you refine your “no” or “yes” quickly. A strong set of data points and acknowledgment as a person who sticks to their model equates a “yes” with something of value to investors and lenders. They will recognize your default is “no” and that when you come to them with a “yes,” it is a strong opportunity.
A while back, I was on a long run with a friend, Weston, whom I regularly trained with. Before this particular run, over the past couple of months, he was daydreaming about he and I competing as a team in the Texas Water Safari. The Safari is a nonstop endurance canoe race in the dead of summer that starts in San Marcos, TX, and finishes 260 miles downstream after crossing a bay in the Gulf of Mexico. Weston was pushing hard to get me to commit and do the grueling event with him. I knew many people who competed in the Water Safari and had toyed with the idea myself. In the past, I chose not to do it because it just did not appeal to me. I, the ardent competitor always looking for the next over-the-top mind-and-body-breaking challenge, continuously backed away from the Safari. It just wasn’t my thing. Weston was pushing hard. The great adventure, our combined endurance strength—if not now, when? He pressed hard to get a “yes” from me. I stopped mid-run, looked at Weston, and said “no.” I explained I have zero interest in suffering from a wet, blistered rear-end and battling bugs and exhaustion. I do not regret that “no” for a single minute. We could have trained for half a year, bought gear, recruited a support team, and likely finished. All that suffering, and we would have “finished.” I made the right decision with “no.” I choose my battles and the use of my time, and so should you. I am a long way from being exceptional at saying “no” and continue to add more “no’s” to my repertoire.
The more you commit to, the less productive you are for each commitment, with few exceptions. If you are going to do something that requires significant resource allocation of your time and capital, understand it comes at the cost of all the other things you instead could be doing. Is it really what you want? Simply say “no.” That way, when something does come across your desk, you will have the time, desire, and capital to say “yes.”
A famous and very successful venture capital firm has a policy where it is required that someone argues against the deal. Someone at the table takes the contrarian position. It is then up to the person who brought the deal to work through the “no”; to fight past objections; to analyze the deal for flaws; and to make sure that the investment of reputation, time, team, and money on the deal is a better investment versus the next best alternative. Having the built-in “no” to fight through increases thought and due diligence for making a wise decision.
My real estate mentor, Robert Jorrie, had a policy at his law firm called the XXX Rule. If a client obtained three X’s on their folder, they were politely asked to find another firm to work with. How often do we hear at national SEC Marketing Meetings critiques of a presentation along the lines of “How long have you had this deal? Why can’t you get it done? Why are you putting up with this client?” At what point is the deal and the current client deserving of a “no”? If you cannot get the deal done for the client and they will not listen to your advice, shouldn’t you say, “I can no longer be of service to you?” Is it not in your best interest, and the client’s, to make progress? The XXX Rule is your “no.”
What parameters can you put in place to help create a “no” for a type of client or type of deal, meeting request, or anything that is not the best fit for you and your limited resources?
The leader of the “Melrose” clothing store chain as well as “Commercial Builders Group” has refined his “no” over the years. His clothing store chain of over 100 stores and his portfolio of 3 million plus square feet of commercial real estate matches his “no.” He focuses on real estate investing in Central and South Texas with few exceptions. He has decades of knowledge for those regions. He is approached regularly with strong opportunities around the country. He says “no” just as regularly. To store locations around the nation that meet many of the criteria, but not all of them, he says “no.” To business investments outside his wheelhouse, he says “no.” This is not a pessimistic, fear-driven, or negative approach. Quite the opposite, it is an optimistic approach that allows him to succeed significantly by saying “yes” to deals that suit him! His track record clearly shows he says “yes” often, within a very limited scope, and it has paid off. Likewise, the charitable foundation he created has transformed and been refined over time. The focus is now on investing in only those organizations that meet the foundation’s target areas, and where the donation can have a long-term significant impact. By saying “no,” he helps focus the foundation’s capital on the limited “yes’s,” increasing the chances the donation will have tremendous game-changing impact on those limited number of organizations.
Afraid of turning away the client or rejecting a potential deal? That’s OK; just set a high bar. Start with, “I must focus on doing an extraordinary job for you, Ms. Client. My minimum fee is $70,000.” Ms. Client can now choose the “yes” or “no” for you. The same applies for a deal. What is your minimum cash on cash, IRR, product type, cash multiple, or deal size? You design your criteria. The deal comes across your plate and is a 35% IRR but a $100,000 deal: let the broker know your minimum deal size is $1,000,000, and you only do hard corners (or whatever it is for you). Ask the broker what deals they have that meet those criteria. Those opportunities will soon come across your plate.
Omar Hamoui said, “If someone asks you for something, provide them with a clear ‘no’ or a delivery date.” Omar is right. If you cannot commit to a delivery date, your answer should be “no.” That way, you have room to meet the delivery dates for those things worthy of your time.
Because we began with Buffet, I will end with another powerhouse entrepreneur, Bill Gates. Both Gates and Buffet have been separately asked, “What is the #1 thing that has made you successful?” They both answered “focus.” As someone with a good dose of “ADHD,” long-term focus is difficult for me to achieve. Sure, I am able to launch forward with short bursts of focus. Long-term focus, not so much. The power of “no” creates the ability for bandwidth and hence natural room for added focus. Create your focus using the power of “no.”
I look forward to hearing both your “no’s” and your meaningful “yes’s.”