Despite and perhaps even because of the lack of capital and the problems lurking in everyone's portfolio, this may be a terrific time to build your best years in real estate.
One of the more exciting movies in 1978 was a film about Vietnam called "The Deer Hunter" directed by Michael Cimino. It won five Academy awards that year, including best picture and best director. Vincent Canby of the New York Times wrote:
"Michael Cimino's "The Deer Hunter" is a big, awkward, crazily ambitious, sometimes breathtaking motion picture that comes as close to being a popular epic as any movie about this country since "the Godfather."'
It seemed that this was the first time that a popular, mainstream Hollywood movie captured the national anguish of the Vietnam War in a way that many people could relate to and understand. Although Mr. Cimino had directed a successful film before,
"Thunderbolt and Lightfoot", this was his first film that made everyone take notice. It was a breakthrough for American popular culture as well as for Mr. Cimino.
The film cost about $15 million to make and grossed over $50 million.
In 1980, Mr. Cimino's next film was released,
Heaven's Gate. It was a breakthrough of another kind - one that almost destroyed his career as well as United Artists. Vincent Canby's
review from the New York Times included the quote:
"...an unqualified disaster..."
The film cost about $40 million to make and grossed less than $3.5 million.
Although there are many reasons why one film was successful and the other was not, (most of which I am not qualified to comment on), there is something instructive here for innovation:
New projects may not always do well when too much money is thrown at them.
Although an investment is required - paradoxically, too muchmoney can have a stifling effect. Innovation and problem solving on a movie set (or with a product or a company) is difficult and risky. When there is ample money involved, the tendency is not to risk it. One can always buy a solution if you have plenty of money to spare. Conversely, when money is scarce and resources hard to find, it is easier to take chances, to experiment and to innovate.
Interestingly, there is a footnote to "Heaven's Gate". Even though the initial release was not very successful, it spawned innovation anyway. Jerry Harvey of the
Z Channel (a cable pay TV channel) released a revised "Director's Cut" of the film that was reasonably successful with their subscribers as well as on VHS and DVD releases. It may have been one of the first "Director's Cut" releases - and since then, "Director's Cut" VHS and DVD releases have enjoyed brisk sales for other notable films. "Heaven's Gate, the Director's Cut" was a video marketing innovation.
My guess is that Mr. Harvey felt there wasn't that much money at stake to try something new with a movie that wasn't successful. The risk was relatively low and the reward was high enough to make it worth while.
Innovation, whether it is in movies, in science, or in business, is a difficult, risky, dirty and often painful process. If a situation is too easy - it might not be worth the trouble to innovate. Most of the big innovations of the computer age seemed to have started in garages. Some of the best ideas inside companies come from those pilot projects that few people even know about. The most effective marketing can come from companies short on cash but long on need to reach out to new customers.
Here's a simple example that I came across recently that shows how a lack of money can encourage innovation:
Recently, my dentist of the last dozen years, (
Dr. Shawn Post) handed me a stack of business cards. Business in the current recession is challenging, as many patients are putting off their regular visits in order to save money. He is the best dentist I have ever worked with and most of his other clients are as fiercely loyal as I am. Over the years, I have referred a number of friends and associates to his care.
Like most small medical practices, he has limited resources for marketing his services, and no sales force to help find new clients. Instead he decided to outsource his sales and marketing to his clients.
On the back of each business card is a $50 gift certificate. Any new client who brings the card in for a dental visit, will get $50 off. Plus, anyone who gives this card to that new client will also get $50 off. My dentist is paying his clients $50 for each new client they bring in!
The simplicity as well as the sophistication of this tactic is striking. It is measurable, it leverages the fierce loyalty of his clients, and it undoubtedly will lead to new business. All of this for the up-front cost of a box of business cards.
Of course, this kind of tactic and other inexpensive ideas wouldn't work for a real estate company...or would it?
Now that resources are tight and the need for new business more imperative than ever, all the right conditions are in place. No more throwing money at a problem - now it's time to innovate.
