144: Millennial Money with Grant Sabatier

If I have given you the impression that my life since leaving surgical training has been all ups and no downs, I have unintentionally misled you. The first business I started which was an owner operated medical business did well quickly its true. It allowed me to start investing in real estate. But that first acquisition I did not go well and it turned out to be a $300K lesson in how due diligence should NOT be done. I’m happy to say that my fortunes with real estate have, indeed, been quite good since that time. But some of my business ventures have been up and down. A few years ago when my initial medical business seemed to be slowing down (around 2012), I started to look around for business models within medicine that could hedge my position. My first business, as some of you know, was a cosmetic surgical business that was all cash pay and it still exists in Chicago. The second business was related to a business covered by insurance. I decided I would stop being an operator on the first business and focus on this second business to create that hedge as soon as possible. That was around 2014 or so. My hunch was that with this second, insurance based model, I was on to something and that there was a window of opportunity to take advantage of it. I was right. In fact, that second model made a seven figure plus profit in its first year and pretty much made up for the lagging cosmetic business. I felt like a genius for doing what I did. In fact, not only did the new business save the old one, it seemed to some how drive a lot of energy into the initial cosmetic business. All of the sudden, it seemed like everything I touched was turning into another million dollar business. I bought some more apartment buildings around that time which was a really good move as well. But…I also ended up doing something stupid. I decided that if my cosmetic business could be successful in the third largest market in the country, I could open up a few more across the country and really kill it. I figured if I could do what I was doing in Chicago in four other medium size markets,  I could potentially walk away with $40-50 million dollars. Now, that in and of itself was not a bad idea. I’ve seen similar things done. In fact, a company emerged at around the same time that was doing almost the exact same thing. However, they had a couple of advantages over me. First, they knew what they were doing! I knew how to dominate one city and I had the staff who could execute what I wanted them to do. I did not have the operational skill set, nor did my staff, of replicating our business model in multiple different states. My competitor was staffed with professional operators and the deep pockets of private equity making sure to guide their investment towards success. That brings me to the other major advantage of my competitor: capitalization. I was making so much money in 2014, I figured I’d do the whole thing myself. My competitor was using private equity money with unlimited pocket depth that would see the project through despite a few years of multimillion dollar losses. Suffice it to say, I lost that battle. After losing a small fortune, I retreated back to Chicago. The good news was, that despite the failure, the two Chicago based businesses were still killing it but now a lot of that money was going into paying down debt from the failed venture rather than underpriced Chicago real estate. When I think about what I could have made with that money by buying more real e...