A Face Tale
This tale isn’t about investing in markets. This tale is about hiring an employee, and not just any employee, but the type of employee you need when you must replace yourself. The same lesson applies to hiring an investment advisor, and it has to do with the same level of thinking you should use. It recognizes you are still responsible, but you must hire where you fall short.
In 1964, one of my father’s childhood friends, Gonzalo, was able to leave Cuba and immigrate to the United States with his family. He was one of several dozen families who lived with us while I was a child, and it was a familiar pattern. Leave Cuba, go to America, stay with Carlos and Rina for orientation and then go on your way to make room for the next family. It was great to meet so many relatives and friends of the family and to catch a glimpse of the two things they all had in common, optimism and determination. In this particular case, my father’s friend stayed just a few weeks and then headed down to Miami in my father’s old Volkswagen beetle.
Several years later, when I was in my late teens, we went on a family vacation to Miami and visited him. He had become quite a successful businessman despite the fact that he came to America with no money, couldn’t speak the language and only had a 4th grade education. Yet, he had built one of the largest material supply companies in the state. I was impressed and asked Gonzalo how he had done it.
He said that at first he worked as a doorman at an expensive building, but was fired because he didn’t speak the language well enough. He held a number of odd jobs after, but he was fired due to his inability to speak the language or read well. That’s when he decided he needed to have his own company, because if he did, then he could work as hard as he wanted without the fear of losing his job. He set about looking for a job that would give him the skills to start his own business and to save money. He became a roofer. Monday through Friday, he would work in the hot Florida sun installing roofs. After a while, he got very good at it. He got so good that he would do side jobs on weekends. Soon Gonzalo and his crew were working seven days a week, weather permitting, for themselves. Well, the crew was really working for Gonzalo, but they felt like it was their own business since he shared in the profits with them.
Their work with homeowners soon expanded to the installation of gutters, siding, windows and doors. The business kept growing, and Gonzalo soon had to open an office and a warehouse to store his materials. Over time, he would build excess inventory and would sell it at a discount, and he soon found himself distributing materials to other roofers and home improvement businessmen in the area. It didn’t take long for him to realize that the building supply business was a natural way to augment his income and keep him from either going up on roofs or spending inordinate amounts of time trying to find new customers. So he took the plunge. He turned the service side of the business over to one of his original crew and took control of the distribution or supply side of the business.
This went well for many years, but then Gonzalo noted a disturbing trend. He said that although he had achieved a level of success that most people would have found satisfying, he wanted more. He wanted to get bigger, but couldn’t establish a foothold with any of the larger clients. He assessed the situation and clearly recognized that, with the larger potential clients, he was the problem. He made a decision to hire a “Cara” or a face. He felt that he couldn’t be the face of the business in order for it to grow dramatically. He needed someone that could be that face. It seems that despite his pricing, quality and reputation he had repeatedly failed to win the large material supply contracts because he didn’t present himself well. He knew he couldn’t change, so he hired someone to “be” him. He hired someone to be the president of his company, the face of his company. He did this just as surely as people hire investment advisors to be their face in the investment arena.
It was clear Gonzalo was in much the same situation as the person who is looking to hire an expert advisor to assist them with their finances. So how did he do it? He placed ads in the paper and received numerous responses. He then interviewed each candidate in the presence of two college business professors that he had hired to assist him in the process. Later, when they agreed on several qualified candidates, he then had them tested for intellectual acuity and settled on three candidates. He then hired the one who he felt he could work best with and gave the new president 25% of the company’s future growth from the day he joined.
The rest is history. The firm grew, and Gonzalo and his new president made a fortune. It was funny to walk around his warehouse and see him in short sleeves and work slacks running the business as the majority owner and vice president, yet most of the world including the company’s staff, had no idea who the true owner was. Gonzalo knew how to hire an advisor. Learn from him. Put your ego aside; focus on the things you do well and hire those that can do certain things better. As always, remember Gonzalo. He never abdicated his responsibility.
After he told me his story, I said something silly such as, “Imagine where you would be if you could read, write and speak the language fluently?” Without missing a beat, Gonzalo replied, “I’d be a doorman.”