Momentum Podcast: 612
This is Predictable
by Alex Charfen
If you could predict the future, you would have an unfair advantage over all of your competition. By understanding what's going to happen next in this crisis, you can have that unfair advantage. While this crisis is created an incredible amount of ambiguity and anxiety for entrepreneurs, it's actually relatively predictable what's going to happen next. If you're running a business in this crisis, this episode of the Momentum Podcast is going to give you all of the information you need to know about what reality is so that you can make the best decisions for you, your family, and for your business. I hope you enjoy.
As an entrepreneur if you could tell the future, it would give you an unfair advantage over all of your competitors. By understanding what is going to happen next in this crisis, you can have that unfair advantage.
While this crisis has created a tremendous amount of ambiguity and anxiety, it is actually relatively predictable what is going to happen next. If we look at the research on viruses throughout history, not specifically the coronavirus, we already understand how viruses act.
If you are running a business in this crisis, it's important for you to know what reality is, so that you can make the best decisions for your family, yourself, and your business.
Full Audio Transcript
Alex Charfen: This is the Momentum Podcast. If you could predict the future, you would have an unfair advantage over all of your competition. By understanding what's going to happen next in this crisis, you can have that unfair advantage. While this crisis is created an incredible amount of ambiguity and anxiety for entrepreneurs, it's actually relatively predictable what's going to happen next. If you're running a business in this crisis, this episode of the Momentum Podcast is going to give you all of the information you need to know about what reality is so that you can make the best decisions for you, your family, and for your business. I hope you enjoy.
I'm Alex Charfen and this is the Momentum Podcast, made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution and we always will be.
Morning, I'm checking in here with another briefing on this crisis, another discussion around this crisis specifically for entrepreneurs. So if you're an entrepreneur who runs a business, this is for you because here's what happens to us in crisis. Let's just get very clear on what happens in a crisis. Crisis creates ambiguity. Ambiguity, the questions, the uncertainty, the not knowing what's going to happen next creates chaos and that chaos can take away our momentum. And here's what we should do as entrepreneurs in a crisis in order to get our momentum back, in order to continue to move forward, in order to continue to create the outcomes that we want in the world, we have to understand a crisis better than the people around us. We have to understand what's going on and we have... Here's what is recommended in a crisis is that you understand most likely scenario. In fact, let me share with you a little bit about my background so I can share with you why I'm sharing this with as many entrepreneurs as I can.
See, my whole background is overcoming crisis. In fact, at 21 years old, I became a consultant. I started working with some of the largest companies in the world. I worked with Fuji Media, SanDisk, Fuji digital cameras, with Canon, with Microsoft, with Belkin. It was incredibly rewarding work. It was very difficult work. B`ut what I was doing as a consultant was always trying to figure out what was going to happen next. See, as a high-dollar consultant, as an international consultant, part of what you do is understand what is the most likely scenario that's going to play out. What is going to happen next so that I can anticipate it, I can help my clients anticipate it and we can all move forward and take advantage of whatever's happening in any situation. And I don't mean take advantage of a crisis. What I mean is we don't want to get swallowed up by it. We don't want to get hurt by it. We want to understand what's really going on.
And so when I was younger as a consultant, I saw a clear predictability of what was going on. In my 20s, there was a huge shift going from product being sold in Latin America. After two or three years in Latin America when I was working in my 20s, most of the computer product that was available down in any territory in Latin America was two or three years old. And there was this major shift going on when I was younger, watching that two or three years old wasn't cutting it anymore. We needed to shrink that gap. So when I was a consultant, one of the things that I focused on was what was most likely to happen in shrinking that gap. And I got companies like Belkin and Target and Microsoft and Canon and Logitech and all types of companies to start driving that gap down because what was most likely to happen is the demand for technology was going up in Latin America. We met that demand. Those companies that I worked with did extraordinarily well and I became known for being able to create these outcomes where other people couldn't see them coming.
Well, I sold that consultancy, got into real estate afterwards. Cadey and I did a ton of business in real estate, started really understanding real estate numbers. Well, in the foreclosure crisis that we had in 2007, Cadey and I lost everything. We actually went bankrupt. And part of that going bankrupt made me obsess around the numbers of what happened in the foreclosure crisis. I wanted to see what was the most likely scenario, what was happening in 2007 at the very beginning, I wanted to understand what was going to happen next. And here's what was so interesting. The data in the foreclosure crisis and the data in this coronavirus crisis were so similar. In fact, when I look at the maps of the United States today, where you see on the outside edges, on the coasts, we have these hotspots of viral activity. Well, in the foreclosure crisis on the coast, we had these hotspots and foreclosure activity.
And here's what happened early in the foreclosure crisis. This is why I'm sharing that this is predictable. As an entrepreneur, I want you to understand what you should do next. Well, here's what happened in the foreclosure crisis. This is why I think so many people are freaking out about this crisis. We don't think it's predictable. That was the same belief in the foreclosure crisis. I would go out and speak and here's what we did back then. We would look at each state in the country and we could analyze how many bad loans had been written, how many subprime loans had been written in each state in the country, and we could analyze when those ones were going to start to go into foreclosure. So we could predict with a very high degree of accuracy when a state was going to have challenges.
So here's what would happen in the foreclosure crisis. I would fly out to areas, and I would literally get in front of a room and here's what I would say. I would say, "I've done about 60 of these presentations in each city we go into, here's what we show people. We show them the numbers, we show them what the timing's going to be, and then we predict when we're going to have serious foreclosure activity. So I want to show you that for your city." And then I would go through it for the city I was in, the room I was standing in, and then I would say, "It looks like in about the next four to six months, you're going to experience significant foreclosure activity."
Here's what would happen all the time when I told people about the numbers. I would show them that we predicted the numbers in other areas. I would show them how we were successful predicting the numbers. I would show them the math behind how we did it. Then I would show them the math for their area and then they would say, "I see everything you've shown me, but I want you to know it's different here in Boise." Or in New Jersey or in Idaho or in... Well Boise is in Idaho. Wherever I was, in Utah. They would say, "Alex, you don't understand. It's not going to happen here. This is totally different. It's different than what you've seen in other places. And not only is it not going to happen here, we think we're going to be okay." Or they would say things like, "Well, our lives haven't really changed that much. We're not even feeling it. I don't think it's going to come here."
Here's what I want us all to understand about this virus and the economic condition that's been created is that it is completely and totally predictable, completely predictable. Here's what we know about a virus. There's three things that affect it. The transmission rate, how fast it goes from one host to another, the mode of transmission, how we transmit it, and the host behavior, how close our host together and are they doing things where the virus is going to transmit. And here's what we know predictably about this virus. If people are close together and one of them has it, a lot of people are going to get it. This is not a hoax. This isn't a conspiracy. I'm talking from actual science. Viruses transmit person to person. This one's an airborne or saliva born transfer virus, so talking, breathing, being around other people. And whenever somebody says, "Hey Alex, you don't know what you're talking about. This isn't really happening."
We just have to look at the fact that we're now having meat packing plants close down where people are working side by side and one of the biggest outbreaks in the entire country is at a meat packing plant in Idaho where they'd had to shut it down because a few weeks ago they had 10 cases of COVID-19. They now have over 600 and people are dying and so this virus is predictable. What's going to happen next is predictable. The fact that the numbers are going to hit your area is predictable and so here's what I want us to understand as entrepreneurs. Here's what's going to happen next. Let's just get really clear about what's going to happen next. This virus is not going away anytime soon and this is not a political discussion.
It's a scientific and logical one. Viruses that are introduced in the environment, unless we have a vaccine or an incredibly effective drug cocktail that solves most of the problems that people encounter, this virus is going to be here for a long time and so what do we need to know about... Tim, great question. How do we align this to our business? Here's what we do. We project forward and we understand that we are in a completely and totally shifting market. We are going to see... The following industries are going to have severe reorganizations and we're going to see businesses never come back, restaurants, retail, hotels, entertainment, travel, all are going to experience massive, completely reorganizing changes in those industries. We are going to see... If anybody's in a luxury based business right now it is not going to work anymore and so here's what we need to understand about being in a crisis like this as entrepreneurs is that one, we need to understand the crisis.
This is going to be here for several years. Here's what's going to happen. In the next six months to a year, we are going to see continued lower contact among human beings, either mandated by the government or people just not going out as much because we're going to see the continued spread of this virus. We're not going to just eliminate it. It's not going to go away. All the work we've been doing with social distancing and isolation has been to flatten the curve, to slow down the transition of the virus, not to end it. So we have to understand this is going to be here for a while and so for the next few years, here's what we're going to see. This virus is going to be controlled through a number of different things. One is lower contact with human beings. Two is responsible behavior by human beings, and then here's the big one.
Three, we're going to see a ton of new policies around protection and more personal protective equipment, gloves, goggles, bodysuits, and masks. We're going to see more of that type of equipment flood the international market than we've ever seen before. The orders are already placed. There's hundreds of millions of masks that have been ordered just for delivery in the next few months. There's billions on their way and so here's what's going to happen. This is how we align our businesses around this. We understand the virus isn't going away. We understand that for the time being, we are in a challenged distressed market with a lot of people who are scared and we need to look at our businesses and here's some changes you should make right now. If your business is selling a vitamin, you need to start selling a painkiller. And here's what I mean by that.
If you're selling something that improves people's lives, that makes things better, that makes them feel better, that doesn't get heard in a crisis. You have to sell painkillers. You have to go from selling something that makes things better to something to end someone's problem. In a crisis like this, if you're selling a solution, if you're selling a painkiller, if you're selling something that takes problems away, if you're selling something and it takes someone from a feeling of constraint to a feeling of momentum, you are going to crush it in this crisis. So understand that is the first thing to do. The second thing to do is to look at your business and analyze what type of changes are you going to make? If you're in a service based business where it's hand to hand contact with people, if you're in a business where you're around other people, where people need to come into your location, right now, you should be deciding how you're going to make them feel safe.
How are you going to make them feel like you care? How are you going to make them feel like you're protecting them? Last week I was on a call with a few hundred dentists in a Dentist Entrepreneur Organization___, amazing organization. And in that group what they were talking about constantly was, how are they going to make people feel safe? Dentists are probably the safest doctor's office you could walk into in any time period. Dentists are one of the few professions where they have in their offices, sterilization and cleaning. Dentists deal with people who have viral infections like AIDS and are surgically operating on them in their offices. And even in the conversation with dentists that back into the mid-eighties have been leading the charge on personal protective equipment, even they're talking about stepping it up and doing more and making people feel safer.
So what are you going to do in your business to do the same thing? And then here's another thing that, just one last thing. So number one, painkillers over vitamins. Number two, how are you going to make your clients feel safe? How are you going to bring them back? And then number three, and this one's big, is as an entrepreneur, are you understanding what's happening with this virus as it unfolds? Are you tracking the data behind this virus, not the opinions? Not the opinions, not the conjecture, not the conspiracy theories, and certainly not the political arguments because here's what I can tell you about this virus. It's Mother Nature. Mother Nature doesn't listen to conspiracy theories. It doesn't really care about political arguments. Could give a rip about what anybody's saying. Mother Nature just keeps going. And here's what we know about this virus.
It's real. There is a significant percentage of the population that is dealing with it right now and it is going to continue to spread. So understanding the data behind the virus is crucial. So here's what I suggest for every entrepreneur I work with. Identify a few sources of data that work for you and stay out of the news. Stay out of the conjecture. Get out of the political discussion. Quit arguing with people on Facebook. And here's what I can tell you about conspiracy theories. I've never met an entrepreneur that focused on conspiracy theories in a crisis and then exponentially grew their business. In fact, in 2010 or 11, I can't remember what year it was, Cadey and I were growing a business called the Certified Distressed Property Expert designation in real estate. In fact, right behind me here, these three Inc. 500 awards, we got, this was for 2011, this was for 2012, this was for 2013. In '13, we weren't in the 500. We were in the 5,000 but we were one of the fastest growing companies in the country all of those years.
Here's just a quick story about an anecdote from that time period. So in 2011 or in 2012, I think, I went to Washington for what was called a distressed properties round table. I can't remember exactly how they titled it, but I went to Washington and I was in a room with Director of the Treasury Paulson, the Deputy Director of the Treasury, an assistant from there, and probably about 40 other human beings that were from a variety of different organizations. There was all the major lenders, so Chase, Citi, Bank of America, Wells Fargo. I remember everybody who was there from those places. Some of the major real estate brokers, RE/MAX, Century 21, Prudential was in the room. Major, major investors like the backend money for mortgages, the backend money that comes into the market to buy mortgages.
There was servicers in the room. So it was a round table to solve what was going on in the foreclosure crisis. It was about three hours and for the first two hours, it was messy and stumbly and people really weren't talking and I was getting more and more engaged, let's say. And then at one point, I started talking. I had done a tremendous amount of research on the foreclosure crisis. I really felt like I understood what the solution was. So I kind of took over the meeting and in the last hour and a half of the meeting, I was very dominant. I actually spoke more than anybody else. And at one point there was a question from one of the lenders directed to Secretary Paulson and he literally said, "That is an excellent question." And then looked at me and let me answer it. So I was in a round table where I ended up contributing more than anybody else in the room.
And it was because there wasn't a lot of solutions being shared. Now I don't share this story to make myself sound important or look good. I share this story because of what happened later that week. So I left this round table in Washington and it was serious. The people in the room literally represented the largest brokerages, the largest banks, the largest investment firms, the largest servicers. We're talking hundreds of billions of dollars represented in the room. And I felt privileged to be in the room and I was shocked by how little input there was from the other people in the room as to what we needed to do. I was actually surprised at the lack of understanding of what we should do that we had in the room. But here's why I share this story.
Later in the week, there was actually a very elaborate article written on some site, I can't remember what it was, about this massive conspiracy theory around the foreclosure crisis and how the Rothschilds, and I think it was like the Rothschilds and the Rockefellers or something and [inaudible 00:17:04] and some other organization, that how all of these organizations had gotten together and commanded all these people to go to Washington and there was a round table, a supposed round table, that was held in Washington and it was really a conspiracy to take all of our money and get people out of their homes and get people through foreclosure and that this was just a way of bringing on the new world order.
I was in the room. I talked to more than anybody else. Nobody had a clue what was going on. There was not bringing on the new world order. Honestly, it was a bunch of people trying to figure out what was happening. And so the fact that I have been in the room when there was a very elaborate and believed story on conspiracy theories, it tells me everything I need to know about conspiracy theories. Most of the time, Archim was right. The shortest distance between two points is the right one. The obvious logical answer is usually the one we should be dealing with. And here's what I want everyone to know. It doesn't matter how you think this virus originated, it's going to follow a very predictable curve, just like the foreclosure crisis. So here's what I want us all to do, start selling vitamins over painkillers.
Get really clear on what's going on in this issue with you so that you can create momentum and move things forward and understand the data behind the virus. Stay away from the conspiracy theories, the conjectures, the guesses, the politics, and all of the news because this is the greatest opportunity we've ever had as entrepreneurs. I'm going to say it again. The coronavirus has created the greatest opportunity we ever had as entrepreneurs. Now I'm not cheering the crisis on, don't misunderstand. What I'm saying is the cracks in the economy that are being created right now, the shifts that are happening at the highest levels of business and the highest levels of government, the absolute tectonic changes that are changing in society right now are going to be guided and governed and recreated and rebuilt by entrepreneurs just like you and I. And every crisis in the past, including the Great Depression, has created multi-billion dollar companies run by ordinary people just like you and me.
And so what I want us to understand is if we get distracted by the subject matter of this crisis, we are giving up one of the biggest opportunities we have in our lifetime. If you're an entrepreneur, the universe just paved a super highway right to your front door. There is more opportunity right now to introduce a new product because new products in a crisis are the ones that are trusted. They're expected, they're not questioned. There's more opportunity right now to go in a new direction because that is the entire world. There's going to be a huge new direction and there's more opportunity right now to make a contribution to the people you sell to than maybe we've ever had in our entire lives because this crisis is significant, it's going to take years to get past and by understanding it, overcoming it, and moving forward, we are part of the solution.