Why the Best Real Estate Deals Lack Clarity (And Still Win) | Ep 121

James: Here's what I

I want you to do.

I want you to imagine that you decide to risk multiple

years of your life

to go

into the great

beyond, where there is literally no map of

you being there, you're risking your

life, your reputation, your capital,

are risking

everything on this epic adventure, okay? You're like, we're not talking

about Star Trek.

Thought that would be awesome.

No. What we are talking about is Lewis and Clark and I'm gonna

share a

whole on

the Furlo

Capital Real

Podcast where we

dive into the intricacies

passive real estate investing. And our

mission is to equip

to invest

wisely in both property

and people no matter what trail you're on,

so that together we can build wealth while improving housing.

I'm James, this my wife Jessi

Jessi

Jessie. I

Jessi: I think I'm a little risk adverse to do something like that if I'm honest.

Like I, I do like exploring and going to new places,

James: but

yeah,

Jessi: not having a map or any idea what I'm walking into would be like, eh, it doesn't seem smart. I don't

know.

don't know. Maybe if

I, it

James: it depends on your purpose.

Jessi: yeah

like

I think part of their purpose, and hopefully we'll learn more about them was to make a map.

And

so it's

yeah, if one doesn't exist, like someone has to go out there and start writing things down.

James: So

to set the stage.

Thomas Jefferson was president, had just

negotiated

Louisiana purchase with France, who decided, they

were like,

yes, we technically own this land, but we can't defend it, so we might

as well

get some money out of

it before the US just takes it over.

Perfect. But so

they bought it

and the question was, what did we buy? That

was the

other fun part.

France didn't even really know, and it was

Jessi: how did France own it?

James: Dude, I don't know.

Jessi: They sent somebody

James: over

Yeah. I think the Spanish had it at one point. Then the French got

it.

Jessi: right.

James: French Indian War, I think was a

Jessi: Wild west. That's, yes.

James: And

even then's kind, we would call that the East

now,

Yeah,

But

Jessi: yeah,

James: It was crazy. And there, there's some sort

of

hey, it's everything

above the 45th

parallel.

But then the big question

Jefferson had was, is there a waterway path connecting coast to coast? So

they knew that the Pacific Ocean existed?

Jessi: Sure.

James: They knew it was. That way,

but

they didn't know how far

Jessi: Uhhuh

James: and they didn't know what was in between

Jessi: Oh my

James: And so

Lewis and

sent out with, I think

it was 31 people total.

And not all

of them were

soldiers, but with a

group of dudes.

Jessi: Yeah.

James: We're gonna

go figure

out,

Jessi: explorers.

James: it will take as long

as it takes.

Jessi: Wow.

James: Yeah. Yeah.

Jessi: That's crazy to sign up for that kind of mission where it's we don't know if we're gonna come back. We don't know what we'll encounter.

James: Yeah,

Jessi: We have no idea if we have enough food or supplies

James: along the

way we're gonna take tons

of notes and there

make sure

we don't miss anything.

Yeah. They

that was

secondary job was to like a, it was to get the path, but

then

was also to note different plants, different animals, topography,

Jessi: That would be really fascinating. 'Cause you'd find so many new.

Things that you're just

oh, I've never seen

James: this.

before. Yeah. What were they saying? It was, he is up there.

I can't remember if he's number one, but it was like for the

most discovered

of a single person.

Jessi: Wow.

James: Like

he's he's top three.

Jessi: That's pretty cool. 'Cause you're saying, so they started in Louisiana or near

James: oh,

they started in DC

Jessi: Okay. So all Yeah. All the way in the east.

Yeah. Yeah.

And we're gonna go all

James: way across. Yeah. He was like,

the only guy. Him and the group. Were the only ones to go coast to coast.

For. A long time.

Jessi: Yeah.

James: Decades.

Jessi: Yeah.

James: And the first ones in history to do it.

Jessi: And there is still,

James: far as

Recorded

history.

Jessi: I don't know if there's a trail that you can walk their pathway, but there is some sort of trail. You can go coast to coast,

right?

James: Probably,

yeah.

I mean I don't

Jessi: think so.

James: In theory, like you can take, what is it, highway 20?

Jessi: Yeah. You

James: go from, you can go, that takes all way from Newport to Boston.

Jessi: Okay.

James: So that's there's

now that's

Jessi: pretty

James: close and road, which is

pretty crazy. And no, they ended up actually going. They followed mostly the Missouri and so they went up north, up

Minnesota, Montana, and

then a little bit through Idaho.

Ultimately ended

in Oregon.

In

Astoria? In Seaside.

Jessi: Yeah.

James: That was

where like, that's

Jessi: that's where they hit the

James: coast finished, and then they're like,

cool, this place is miserable.

Turn

around and go back

Jessi: home.

Oh, that's sad.

Yeah.

As organ transplants. It makes sense though. The Oregon coast

James: yeah.

They hit their winter time.

Jessi: Ooh. You're

James: just

Jessi: oh, you worse.

James: I'm so sorry guys.

Jessi: was like rainy, cold

James: Blustery

Oh yeah. Oh yeah. It was.

was.

And they were

having trouble keeping their food

other stuff.

And

at one point they were like, would they miss? 'cause

that was their

second winter and the first one was, it was

north, I wanna say like Montana area ish. But

yeah, it was like snowy

but they were like, that was great. 'cause it was

was snow and it was sunny.

Jessi: You would at least build shelters

James: And they had, and they

they were.

were,

they

had some good Indian friends. Okay.

The book uses the term Indian the entire time. That's probably

what I'm gonna default to just 'cause

been listening to that for hours upon hours.

Also further back here, this is part of the

US is turning 250 years old and so I am listening to history books. I started with Washington and now I'm on Lewis

Clark.

And now I will start another book and

we'll probably talk

each of 'em.

'cause I think there's lessons to

learn.

Yeah. From history

for it. But

yeah, so read the book and it

really good, the

ending, I'll be honest,

it was sad. Lewis did not finish well. Aw. Yeah.

I think part of what happened was

had this grand epic

adventure, which is like what we're gonna focus on. Sure. But in the end,

became governor

of

Louisiana Territory.

Jessi: Oh.

James: And

Jefferson's hypothesis. He goes, I just, the man wasn't meant to be sit still, and he

just. Outta hands. It

wasn't

good. And he ended up,

that's a

Jessi: bummer.

James: Yeah. He ended up

ended up actually committing

suicide.

and super sad, but that's

what we're gonna focus on.

'cause he

had an amazing first part of his

life.

Yeah. And a ton

potential and

was like

of Jefferson's closest like confidants, friends, that kind of thing, which I didn't actually

know.

Jessi: Yeah.

James: And Clark

was

like.

like borderline best

friend type of thing. And they ended up after

that adventure, they stayed

Jessi: together. So to Louis,

Lewis and Clark were best friends. Correct. Which kinda makes sense.

sense.

James: You spent

Jessi: a ton of time together.

James: Yeah. Yeah.

Jessi: Had the,

James: but

they didn't know each other

well before the

They had done it was like four months together

and, but I

guess there was like

an instant

bond where they were like, you're

my guy.

And so

So they,

Jessi: I get that there's certain people I would choose for the zombie apocalypse and others not so much.

James: Yeah. So what I want to do

is take you through what,

Jessi: gonna blow past that.

what's good. It's good.

James: Yeah. Yeah.

Jessi: That is how I view this expedition. Zombie apocalypse level, like I'm putting together my team, we may not survive.

James: Oh yeah. I mean

there was definitely some of that, some of it. But yeah.

Jessi: Okay.

Compared, this is like total tangent.

James: Do it

Jessi: Do it comparative to the Donner Party, Oregon trail esque type of story.

Okay. How does this, how do events that happen in this expedition compare? Is it like, they were great. They

James: were

Jessi: fun.

James: Everyone, dude, everyone lives for starters.

Jessi: Wow.

James: Oh yeah.

Jessi: How,

James: let's get

into that.

Jessi: Yeah,

James: So for starters

I gotta admit, I

had some misconceptions.

I thought it was

like.

Merwe Lewis, William Clark, and Saka Julia

Jessi: Oh yeah,

James: oh

Jessi: yeah,

Oh yeah,

James: yeah.

No, there were 31

total in this party, like they were

happen to be the

Jessi: which

I guess maybe that is.

is,

I don't know, like I get that from like a historical photo or image perspective.

It's I'm not gonna draw all 31 on these other support characters. Like it's just the main people. Yeah. That's the

main

story,

James: which we'll get into. The main people part of it as well, in a little bit of, I

ever get to these field days,

Jessi: there's

what is that called in a movie where you just, you have a body,

James: Yeah, that's a, it's like

an extra,

Jessi: yeah,

an extra

James: or

what is it? Yeah, it's like when you have

those movies that have classrooms

and

there's clearly like these are the five

main kids. Yeah, these

Jessi: are the main kids.

James: But then there's,

Jessi: but

James: then there's 20 other kids in the

Jessi: Yeah. We know there's a classroom over there.

It's

James: and every

in a

a while they might

something, but honestly, like it's only two or other, three other people

who might have a speech part, which is, that's

Jessi: Sad, but

James: No,

No that's

very much what

Which is fine.

That's how it is.

Jessi: Yeah.

I'm sure they did a lot.

James: They did do a

lot. Yeah.

we're gonna talk about

that. I have

field entry

notes.

Jessi: Ooh. '

James: cause

they made

Jessi: Took

James: journals,

Tons of just

Jessi: and stuff and maps. I wonder if there's a map like that you can look

up,

James: man,

I tried looking at a map of what? Of their

journey.

Jessi: Of their journey,

James: yes, there is. That

Jessi: Like that they recorded

James: Clark was in charge of writing the map

you can actually see the map that he, like the final map that he made. It is online. You can search for it

and then you

can obviously find maps

well of their course that they took.

Jessi: Okay.

James: And

finding. Copies of the journals is incredibly hard and 'cause I've looked

for it. 'cause I was like, dude, I would love to see this journal. And apparently when. When Lewis got back, he actually this is part of the issue, like he never actually got around to publishing

his work,

but he had all the original notes and stuff.

then after he died, that

where Jefferson got

ahold of it

was like, he and Clark were like, okay, we're

gonna put this thing together.

But by then, years

passed and interest had waned, so

they only printed like a thousand copies of it.

And I think

if you get

hands on it, like that's not a cheap book to get.

And then over time there's been other versions of it that have

put together. There's

one, now it's 10

volumes. It's holy moly it's bigger than this

Jessi: Wow.

James: of of all the stuff and combining

all

the notes

things. And that's like a few thousand dollars. I was like,

dude, man I'm

not

to drop four Gs on a set of books, but

Jessi: Maybe excerpts are good

enough.

James: Yeah, I would love to

some of the original copies

Jessi: That'd be pretty

James: notes

pictures. 'cause they drew all the birds and the plants and rivers and

whatever.

in there. Super.

cool.

Jessi: Huh.

James: Okay.

Okay.

Field entry number

one.

Obviously

we've already

about it. They left without a map.

Jessi: Yep.

James: didn't exist.

As we were talking about yeah, so we actually, we already talked about this, Jefferson, he commissioned them 'cause he was like, I just, what is this thing that we bought and we just wanna know about the consonant in general. And they believed there might be a water route. They just didn't have any

proof of it. Because no white man had ever been

that far. And obviously no GPS no reliable maps, just no precedent. There was nothing.

And and so I, so

what

I'm gonna do is

here's situation, then we'll tie it into, so for an investor

Jessi: point Ooh Yeah.

James: Kind of thing,

right? This is almost how every meaningful deal happens, right?

You don't have perfect comps. You don't necessarily have clean and perfect projections. We joke about that all the time.

the time.

Jessi: Yeah.

James: And sometimes the

argument would be like if it was obvious, it would've

already

priced into it, and so probably wouldn't be a good deal. And I would say oftentimes the

clearer the roadmap, the lower the

return.

Sure. So you and I, we were looking jokingly, obviously

to who,

to who, when you listen to it. I sent a property out to my family. I was like, guys, I

found this awesome

rental. We should buy it because it's in Italy, Furlo

Sounds awesome.

Five

bedroom, seven bath, $4 million.

Jessi: But

James: it looks amazing.

Jessi: It's in, yeah,

James: it's

Jessi: There's a pool

James: And

that one, the unclear path is I don't

actually

for it.

but like all

the renovations done, it's ready to rock. It looks amazing.

And so the closer you

get to that, the more like the less of a

good investment opportunity it

But the more, it's more of a

man, I don't know what happens when we open up this wall.

Yeah. That's where deals can be

had, but

Jessi: yeah. Is that there's a bigger payout for more risk? Is that always

the case? Yeah. Typically

It's so interesting. Yeah. If you think about Lewis and Clark, that was the case. Like they took incredible risks, but the payoff was also

James: Yeah. And do I, I can't remember if I put this

in my notes or not.

Yes, they did take incredible risks, but they

were also careful. They assembled an awesome team.

I can,

Jessi: Yeah. They had a team and myself,

James: here,

but

yeah.

yeah.

Anyways

Jessi: so they didn't,

it's not like they knew, they didn't have a map or any. It's because they didn't have a, how do I wanna say this? Because they didn't have a math, didn't, doesn't mean they didn't have a plan of sorts.

Correct. They did

James: They

They were essentially like,

we're gonna take this river

far as we can

go.

Jessi: Yeah.

James: We know there's the continental divide. There's

Rocky Mountains out there. And then they

were like,

yeah.

Jessi: so like in real

estate,

you may not know all the different information or exactly where you're headed, which could be a good thing, but you have a plan.

You've got something.

James: Yeah. And I,

this reminded me a lot of our Baker Tower investment, right? It's the tallest building in Oregon, east of the Cascades. It's 10 stories. There's 23 units. There's a lot of stuff there. And the nummies and the numbers were really messy

at the beginning.

'cause there's just, there's so many moving parts for it.

And I could see

back of the napkin this is a good deal.

I know it's a good deal. But I gotta run through the numbers as best as I can. And

were just so many

unknowns. Like one of 'em

turning the upper floor rental into a

vacation rental. I think I know what it'll

for. I think I know what the demand is,

but I don't actually know.

Jessi: You

don't actually

James: Same with the

ballroom repositioning

it doesn't exist anywhere. This is a premier place for people to be. I never done that. Yeah.

Yeah. I didn't know. And so there was just, there was a lot of a lot, the unknowns were high, there's directional conviction

there.

And so

I, the mental

model that I.

that I thought

of was,

it's not that clarity is necessary a prerequisite, but direction is, yeah.

You gotta know yep, this is the goal. This is how

we're going to get there.

Jessi: Sure.

James: Yeah. Field

entry number two,

the portage around Great Falls.

So Porage,

I'm sure you're fully aware of what it's not

porridge.

Porridge but

Portage, which is

essentially

you you take your boats and you carry 'em

across land.

It's in, it's

as miserable as it

sounds.

Jessi: Oh my word.

James: So

you get to a

where you're like, oh, the water stopped, but there's a river, 10 miles that way. Let's get some logs. Let's roll it. Let's pick up all this stuff. Let's go.

So

What happened was

expedition, they hit the Great Falls of the

Missouri.

and what are you gonna do?

There's no detour. It

It was down, it was an

mile portage uphill,

by the way,

because of how waterfalls work.

Oh

God.

So

they carried the boats,

supplies, equipment, they had to build crude wagons in

order to pull this

off.

Jessi: Oh my word.

James: And this,

terrain itself was just, it

was brutal. Yeah.

Like

mountainous, what they talked to about, about.

were prickly pair thorns.

their feet were

all cut up. Like I think it was Clark specifically was like at one point he

was like, they'd like,

he's I can't

walk. My

feet are

Jessi: Oh my

James: bloody,

my

word

and blistery

Jessi: from

James: from like the

thorns. 'cause they were just wearing

moccasins

once.

'cause your clothes only last so long and that, and

so they would go off, go hunting, get some deer

bison or whatever.

And

they were making clothes. They were

all like,

knew how to sew.

and you had to do their own medicine.

Turns out,

Jessi: Holy cow.

James: Lewis was

A great

doctor.

Jessi: would not have even thought of that.

As a thing, but it's oh yeah, if you're hiking hundreds if not thousands of

miles,

like you're gonna need a couple pairs of shoes.

James: Yeah.

Jessi: not gonna have the same pair. And I would imagine their initial pair of shoes were not that great.

James: Yeah. Know.

it was classic. When they got back it was just all

leather. That's what they had.

Jessi: That's, yeah.

they had. That's what, yeah. Yeah.

Was what

James: They thought it was only gonna

take a

few days. No, it took

a month for them

to do it.

It was miserably

hard.

So this, by the way, so the insight there is

this is what real friction can look like, right? It's not necessarily catastrophic failure, it's just relentless

difficulty, right? And that's and most deals don't fail

It is

more of that,

the timeline stretches out or the costs

start

creep in.

Or more

importantly,

energy and interest level drains. I have had this on a piece of land where I was

super excited about

some development work. It just, it wasn't working out. The numbers didn't make sense and I was like, ah, okay. I like, I gotta go back to the drawing board. I'll think about it.

And a couple years later I was like,

oh yeah,

I got this thing. I gotta do something

with it.

And so one of the things that you just gotta plan for is not necessarily that big risk downside, though. You definitely should, but it's just, what's that slow grind? You gotta be aware

of it. And so it reminds us we did a flip.

in Lebanon and

we, it

was

The person living there, he was older, starting to have dementia, was talking about going into hospice, and the family was like, we just wanna get rid of it.

And so we bought it and got a really good seller financing deal

on it.

And then

Sunk a hundred grand into fixing it up. And and it was just hard because part of the problem that we ran into was the timeline just kept slipping. And it was one of those, at first, they were like,

oh,

we can get this thing done

two months.

They didn't

start the project for a month

They were like, okay. So now we're like, like three months. And then

it turned

out like

they were still trying to do other jobs and finish it up and jumping around, and it just

Just kept going. And at first, like I was not mentally prepared for that. As a matter of fact, we

were like, oh yeah, we know you

can't get there the first week.

So my partner and I, we went and did the demo. Like we're

gonna get you guys ahead. And then they got

then they

saw, like once things opened up, they're like, eh, actually we kinda need to demo a

a little bit more.

Jessi: Oh

word.

James: we just kinda it just kept going and going. And we

were like,

oh,

okay.

Okay. And then part

of what happened is

were

like, the cost is what it is. Yeah,

Don't go over it. And so that was

the timeline was the thing I gave.

and which is

fine.

It happened, but

there was just, there was emotional fatigue that happened there. There

was decision fatigue. 'cause

kept being like, okay, we're gonna do this or are we gonna do that?

There was just that capital drag

that was happening, like

the money just kept being tied up and it took

a

year to go

through this, a project

that I was like, oh, we'll easily be wrapped up

in six months.

Yeah. It didn't happen so. Your mental model is you don't just underwrite outcomes, you wanna underwrite that endurance piece as

I think that's

important.

Jessi: That is true. Heading into the deal, setting your expectations correctly can make a huge difference.

James: Yeah. And I've gotten better about that now. I'm

like, whatever

our timeline is, yeah.

We just double it.

Jessi: Yeah.

James: Done. If you tell

me six months

I'm underwriting a

deal and I'm

telling everybody two years.

Jessi: Yeah,

James: that's what we're doing.

Jessi: Yep.

James: So getting better

at it. Okay.

Field entry number three. You're

gonna love

this one.

The mountains weren't supposed to be

there.

Jessi: Oh my word.

James: So

after

months of navigating the Missouri, they finally reached what they believed was the final

It was a single range of mountains. They expected the cross and then descend it easily to the Pacific. Instead they hit what are called the Bitter Root Mountains.

So they got

of the Rockies.

hit the Bitterroot Mountains, and at this, and it was at this moment where this

Jessi: Oh no,

James: no,

shoot.

Because it

wasn't just one mountain

It was range after range to the point where like they couldn't see

the end of

it. Yeah.

and there was no cla, there was no clear path, and winter was setting

in

and it was just

like,

Jessi: uhoh.

oh,

James: okay, here we go.

And so

they began the crossing.

Horses were starving. There was like almost no foraging available. Men, they were eating this it was this portable soup that they had, which was described as, yeah, not very delicious. They were even eating their own horses. Point they were starting to eat some dog, like they just they had to do it.

The snow eventually got so deep that they could barely move forward and progress was just like a few miles per day. It was pretty bad. At one point in time they were entirely re reliant on a Shoshone guide. What was his name? It was like, I can't remember. It was like it was like, relax, George, something like it was his, the way

his name

was or,

Get Lost Al or something like that.

It was a funny name. I don't remember what

was, but it was good. Anyways. They were

like,

gotta get us outta here, man. Which he

did by the way, obviously. That's awesome.

They made it

and yeah, and it was just this, and the hard part was what they thought was gonna be like, oh yeah, we'll just go to the mountains and keep going.

No. It was like one of the most dangerous and demoralizing parts of the expedition, which

again,

like.

There were a couple of those, as you can tell. And

so they didn't just

face difficulty. 'cause we've already talked about that, like the grind. It was just that realization that their mental model of the journey was

completely wrong.

That's the point that I'm trying to get across with this one. The inside is every

serious investment

has this this wasn't supposed to happen moment, or, you tear open a

wall and go oh,

okay. And so that's like the real risk in the deal. That's how you respond when those deal breaks.

You know when it, I'm sorry. When the deal breaks your

expectation.

Jessi: Yeah. When you have to reset your expectations,

W

how will you

respond?

James: Yeah. And I think there's a lot of investors who turn back.

That with

people

with rentals.

You get a

a bad tenant.

Jessi: Yeah.

James: they destroy

your unit

and they just go,

Jessi: just like,

just like, I'm done.

James: done. I don't want anything to do with this. This was not what I was expecting from it. Which is fine. I think about our line

It's 11 units. When we bought it, it was 50% vacant and we decided to rehab the entire thing. And

And I remember

that there was a point where. We were going through just the rehab plan.

So this is super early on in this investment and I got so

overwhelmed. Because like

we had fixed up

Jessi: yeah.

James: unit

Jessi: Like one

James: all

of

a sudden

was 11

times

the amount that it used to be. And I just was like, I don't know man. I became deer in a headlights for a bit and I was like, ah, I don't know what to do.

Which thankfully I got really good advice from my dad who was like, just, he goes, you

already know how to do one unit. Forget about 10 of them. Just do the

one

Jessi: focus on one.

James: once you got that

one turned,

do the next one. Once you got

that one turned,

do the next one, da. And so that

was actually what

I did.

It

And it was funny, like once I thought it through and planned it, it suddenly became I guess if I'm buying carpet, I don't wanna buy it 11 times. So I'll sort it all at once. I guess if I'm buying an appliance, I don't want to buy just one, I guess I'll buy all of them. And so I, it was I

quickly was able to re-expand out to the 11, but it

was, ah,

man, it was there. I remember that. It was that moment where I

I was like,

what?

Jessi: this is so much

James: I

I get

into? This is crazy. This is more money than I've ever spent on

anything.

It

Jessi: Yeah. You have to chop it up into

James: yeah.

Jessi: Reasonable chunks.

It reminds me too,

of

Like the mental game that you play in sports or athletics. Like I can remember running, there is a piece of like physically training, being fit, getting your body ready. But if you come up against a hill that you weren't expecting or the hill just keeps going, yeah, that is mentally exhausting.

Like it's challenging and you do have to reframe your expectation to be like, okay, I'm just gonna take one more step, there's a hill and I'm gonna get to the top and it's gonna be okay. But it's or you say, this is too hard. I'm done. Yeah. I can't do it. But that reframing of expectations is super hard.

James: Yeah, you definitely, man, you hit that point. We recently took over managing a place to a larger apartment building and and

we walked in with

no

one oh, there's a few vacancies.

And it turned out like there was.

ah, it wasn't quite twice as many, but

it was a lot.

Jessi: You're like oh,

shoot

James: and

we definitely had

that other moment. We're like, okay. But ultimately I was like,

just one step at a time, one step at a time, which I think was their thing. They're

like, Nope, we're just gonna,

Jessi: I can't even imagine getting this top of this mountain range being like, yes, it's downhill from here.

James: Yes. Go. Like

where're the, oh shoot.

Jessi: It's just,

I can't even see the end

James: Yeah. I just don't even know how far is this? Oh my word. Yeah. So bad. So

bad. So expect the unexpected

and pricing your own reaction, not just the risk. That's like the

mental model.

Jessi: So interesting. You gotta play like the what if game.

James: Yeah, a

Jessi: of

it. What if and would you rather

James: Yeah. I actually just listened

to this other really cool

podcast. Little Andrew Huberman, a few nerds out there, and and he was talking to a scientist talking about setting goals and stuff, and it was really interesting.

She said two things that happen where successful people is, number one, for whatever reason, they see, like they were talking about like physical site, they see things closer than normal. And part

of it's

like.

A, they might be in better shape. So it doesn't

look, something doesn't look as far to

someone who's in good shape.

Interesting. For someone who's not

There's that physical aspect of it.

But they do a

a job of focusing on

the next thing? What's

the

next thing? What's next thing. Like they

don't focus on the annual goal, they focus on the week goal, the daily goal.

That's it. And then they

end

painting it. And

we've had that running

right? Where it's oh, I'm struggling.

Okay. Just to the post.

Jessi: today?

James: Just

to get to the

tree. Get to the end of the block.

Jessi: Oh, yeah. Yeah. With

James: Like that kinda stuff. Yeah, that's what people who do it. And then they

talk about Michael Phelps

and how

he

He won eight gold medals in Beijing. Beijing, his first one. And he had

already won seven.

And

if he did

the breast

stroke, I think is what it

which was his best race. It was his final one. If he won eight, he was gonna set the record well. And when he jumped into the pool, his, goggles. Goggles started filling up with water, right? Not great, but what they talked about was that he

and his coach

had practiced the what if this happens, and his coach

had taken it like he'd jump

into the pool his before he jumped into the pool,

coach would like tape and snap his

Jessi: Oh

James: him. Oh.

Just to mess with them. And then he would have to

do it. And so one of the things he learned

was he knew exactly how many strokes to do for each thing. And so Phelps talks about, yeah, I just closed my, and just

closed my head and just started counting. He goes,

Jessi: oh,

James: and I knew it,

Jessi: my

James: And so

He

ended up winning

and

which is, it's crazy impressive. And

so anyway, they were talking about that for

for goal setting. It's yeah, you gotta have that worst case

scenario.

Jessi: Yeah. If you don't have everything in place exactly the way you want.

James: counterintuitive to

me, which I've,

I don't

know what to do about this.

It's, they

say

you know how like

can create a vision board or stuff like that, or maybe tell other people

that's

goal. They go. The risk

with that

is they say in order to get motivated to actually do something, you have to have like a little bit of stress. It's

like the,

I forget which kind of blood pressure it is.

Like you actually

now

Have it right.

Raise a little

And that's

like you're

getting going, it's almost like nervous energy type of thing. Sure. They go,

they said what happens is if you're like, I wanna

do a goal, so you go and make a

board, you like

you accomplish something.

And you made

that, and you actually watch your motivation.

They watch you

like actually calm down

and your motivation lowers. Same

thing if you tell other people, oh, I'm going to write a book. And people go,

that's awesome. They

you get the endorphin hit from people going, that's awesome.

Oh, they go and it's actually it

dramatically

decreases the chances of you writing a book or do

whatever.

I know, right?

Jessi: Like

that. That is a strange

psychological principle.

James: So what they tell you to do.

Apparently, and like I, I'm not a genius at this, I don't know. What

they tell you to do is

focus on

what are those

What

happens if you don't hit the goal?

And what happens for those barriers and obstacles that

get in your way?

because

a, it helps you like think through the path on

how to

around it, but

it keeps that stress level

high.

Jessi: Oh.

James: And so you're motivated to not

let the, you're better off to focus

on the not

the bad thing happen than strange. The joy of the good thing,

Jessi: Uhhuh,

James: That's

Jessi: That's weird.

I,

I would have to noodle on that a little bit more. I,

James: yeah,

Jessi: like I'm trying to, that was

for free.

James: It has nothing

to do with

the book,

Jessi: In my own life of is that really how I would function?

It's I think it is more often than not. But anyways,

James: own. So I

wanna

talk about something controversial.

Jessi: Oh boy.

James: Okay. I'm gonna

Jessi: it's

James: oh, I'm so excited to get it canceled. Yes. In Sack in particular. This is field note number four.

Jessi: Oh

James: Yeah.

Jessi: Americans.

James: Ah, yeah, I, these, it's

okay.

So

Again, I'm about to get canceled and I can tell. Okay.

So

I

be careful on how I say

this.

I don't see

big deal with her. That's my takeaway.

Okay. Okay. She helped on the trip. I'll admit this. Like

she was valuable to have there, right? She she joined pretty early on. She was young. She had recently just had a kid and was traveling with that kid, which any

mom will be like,

That in and of itself is impressive. So there's that,

Jessi: but

James: she wasn't in command of anything and she

was

so the deal was like she was actually with her

It was the husband who they really were interested in having on the team. And then she came

along oh, there's this one Indian tribe, way further

down that she happened to.

So she was part

of that tribe

Then was captured from an

enemy tribe.

and then that was when her husband, like either bought

her or,

rescued her from there. And so this other tribe

no

one had ever talked to. And so they're like, oh, you could be our you could be our

Interpreter person.

And so that's what she did. So like she was helpful for

a couple conversations, and they did

talk about how she regularly would,

she shared the tent with Louis and Clark and

her husband.

To stop other guys from being a temptation for other guys. Yeah, I

learned that too.

They the other

guys were

were

very friendly

with all the ladies across the

land, and

of them had some sort of venereal disease

my gosh.

Word. Except for the captains. They were pretty cool. And I was like,

And I was like, oh, man. Yeah. Anyways yeah, it was the, I think it was again, the Shoshone tribe. I think that might've been SI can't.

remember.

Sorry. But anyways what I thought was interesting is that they, as they moved through unfamiliar territories they were constantly

at risk of being perceived as a war party.

Jessi: Oh,

James: Think about it. You got a group of armed men, group of

Jessi: guys. Yeah.

James: That equals a threat. But, and

here's what's interesting.

You had a woman

traveling with a baby that

signals

completely different,

and that regularly they were like.

at least

it was highlighted a

a

times in

book where they

were like, oh, hold on a second.

Jessi: Yeah. What are you

doing?

James: What's up with you guys? Uhhuh, who's this?

Who is she? And

So

that was

helpful. Just her presence.

Jessi: Yeah. I guess I would like, I can see both sides of the story. I will say, like, all of my experience

up, I'm not saying she is

James: worthless for

Jessi: the record.

I will say all of my experience growing up, the interpretation that we got of Saka Julia was that. She was like guiding them.

James: Yeah. Kinda a

a Pocahontas type

figure.

Jessi: Yeah. Like she's

James: this way guys.

Jessi: She knows the land. She knows where she's going. She knows the tribe. And so she's in charge.

She's quote unquote in charge or

She was like

James: the tour guy.

Jessi: But more what it sounds is No, she was a part of the trip and lots of things she did were highly valuable. Like this example of they weren't a war seen as like a warring tribe.

James: Because

Jessi: They're like, why do you have this

James: with you? And as, as they got closer to where,

like where

she grew up.

Yeah. They were points goes, oh, I know where we are. I've

been here before. And they're like,

Jessi: which like,

James: That's valuable. Cool.

Jessi: To have.

Yeah.

James: Especially

when you're going over

those mountains and you're

like, ah, I don't

know man, how

much

further? She goes, I know this. Wait,

Jessi: I know this place.

James: Sure. Yeah. Yeah.

Oh, I'm so excited for the next one.

Jessi: That's pretty

James: Yeah.

So

Jessi: so

James: I don't, lots to

Jessi: Was her role maybe over-glorified?

Probably, yes.

James: But yes.

Jessi: Yes.

James: Yes.

And the thing

Jessi: was she a unique individual on the trip?

Yes.

James: Yes. And all the other

guys.

were

very valuable.

Jessi: Yeah.

James: Like

was borderline.

Had they not had everyone, I don't think it would've been a success because

actually part of what the plan was initially was they

were gonna go partway through.

And then they were

gonna

a couple guys back with the journals they'd written so far,

Oh. Just so we have it.

And at that point, both

of us in

in

and Clark were like, Uhuh, we need everybody all hands on deck for this.

Like it's

critical.

Jessi: Interesting.

James: Yeah. And

And so obviously we can't run the experiment to know if that was true, but

that

was how they felt

the moment.

You think about the Portage thing, right? Dude,

Jessi: just

James: you need

all of

Jessi: you

a couple, you

James: And

lot of them, they were going

up river, by

way, so

like they were pulling ropes,

all sorts of stuff, navigating it was intense.

It was super

hard work.

And

yeah,

she was there, like she didn't help out with any of that part

of it.

Jessi: Was keeping another human

alive.

James: I

I know.

I'm

just, when you, but when

you think about what

was the overall goal

and what were they doing?

I was like,

yeah, she was there. She was valuable

along

with everybody

else.

Jessi: think it's interesting that none of the other dudes had wives or their wives didn't join them. Like really? Was that only Frenchman? Was he the only one who had married a Native American?

And

And she got

she got

James: So here's

here's the

Jessi: deal.

So

James: here's the, they actually met them

On the

trail.

Jessi: Oh,

James: so they were

not

of

the

Jessi: They weren't part of the

James: of the original

folks? I can't remember if it was at their first fort that they got to, or like the

second That makes

Jessi: more sense

James: then.

was

was pretty

early on. But yeah, they

met him and they were like, dude, you're

valuable to have around.

And

she was like,

I'm from this area where you guys are

headed.

They

were like. Hey

we should talk. And

they couldn't. And Lewis and

Clark could talk directly to her, like

the husband did the translation between all of them.

Dude,

there were so many times where it was like

they were translating like four different versions

through to get it back to them. It was so intense. A

lot of sign language is really crude.

There. Hello?

Jessi: going that way.

James: Yeah.

Yeah.

This is

Jessi: There's mountains.

James: Yeah. Oh, definitely. Okay.

They didn't succeed because.

The group didn't succeed because they were the smartest. They succeeded because they had the right

people.

And I think that's important. Like when you're investing with somebody, like you don't necessarily want the genius investor,

thankfully,

Jessi: What you're saying is you want a woman on your team.

James: Yes. That's what I'm saying. Specifically had Native American woman

who speaks multiple languages,

Jessi: who's also a mother.

James: Who's also a mother that's, oh my gosh, you're gonna get

so much trouble.

into

I'm

Jessi: sorry.

I'm sorry.

This is why I think this is why it's a

deal, is because like in many other cases, women are not included, not seen, not valued, not any of that. Yeah. Which, even if you think about her situation, like she was bought out of slavery or something like, yeah, come on. Yeah. And so

it's like I

get what someone wanting to overcompensate to be like no.

She was valuable and she, was a woman. She's, she survived this thing. Not only that, she just had a child. That's crazy. That's so hard. So it's I totally get it. I totally get it. But yes, your point stands, you should have the right people on your team regardless of

their gender or

James: Yes, we are a non-discrimination

Jessi: or race or

or age

James: Yes.

Jessi: or genius level. Just if they have abilities that you

need.

James: Yes.

Yes. Put on your team. And there's, okay.

Other side quest just for

the fun of it.

'cause I think this is so fascinating.

Jessi: Yeah.

James: Is you have companies who want to have a more

diverse team

Jessi: Sure.

James: 'cause there's tons of value in having different perspectives, like just from different backgrounds

All this stuff

we were just

talking about, super important.

But here's what's fascinating is

find that you

get a different outcome. Let's just say, I dunno,

we're gonna make up a number. You wanna bring in 10.

Like our you have 10 openings. You are like, and we wanna make sure that

a more diverse set of people.

You get a

you get a one outcome. If it's one manager hiring 10 people versus 10 managers hiring one person.

' cause

what happens is, think about this

your manager

perspective. If you only have one hire,

you are like, I'm

looking for the best of the best.

Period. I don't care about diversity

is important, but what I care about

is the

for this one role. And

so it tends to

homogenize towards,

male, that kind of thing. Just because it is, because for reasons, just the way the culture

works, they tend to have

the, their, the, like objectively

from

ways you can measure it the best.

It's a local

maximum I guess, is what

Jessi: would say. Which a lot of people would argue is a problem. However, it's just, it's also a

James: Yes. But

if you have a single manager

in charge of hiring 10

people,

they no longer focus

on the one. They focus on the

group

go, what's

better for the organization,

group. And

they will dramatically add a lot more diversity to the group

because they're

not trying to get

the,

They're not trying to

on a single vector.

Is what I'm trying to say.

And so you

get a lot more diversity.

It's just, it's

a very interesting problem

larger organizations have to try to grapple with. 'cause they'll

say, yes, at an organization level, we want this,

But when the decisions are pushed

down,

which is the

right thing to do.

It doesn't tend to optimize best for diversity.

It's a weird problem that there's no easy solution for outside of, that's

why you do get

The mandates for, hey, we're

gonna have

some percentage

of

someone

to be X,

Y,

It's like trying

to solve that particular problem.

Jessi: Sure.

James: 'cause

as an individual, you won't do it,

but if you don't have a choice, then you will.

But

then you get resentments and all

stuff and it's

Jessi: Was I only chosen because I was

James: And

even the manager they're like, ah, you're a

diversity hire. You know what I mean? You're like,

ah, dude.

Which, yeah,

I've, it's messy, complicated, messy.

Anyways, that was just a little side thing that I find interesting and super hard to

solve. That's

Jessi: interesting.

James: and I don't know what to do about it.

All right. So speaking of people, most investors overanalyze deals and potentially underwrite the

people doing

it.

And

talked about this a lot of

previously on the podcast of and it's about the sponsor, it's about the

person.

Like that what matters most. Oh yeah. I was like, what did I mean by that?

So I remember our very first duplex that we bought columbus was why are

are you

smiling?

Jessi: Oh, I just remember the feeling of, it seemed like a lot of money at the time and there was a lot of stuff that needed to happen on

it.

James: But what I

was interesting, so specifically

one of the things that

was during the inspection period, the guy crawled under the house and found standing water in the crawlspace. Yeah. And he got out and was like, I don't know if I've ever seen a crawlspace quite that bad before.

And for us, newbies were like,

I don't know what

do. Yeah. But thankfully

our agent

was an awesome team member and

he was able to say okay,

I

understand this. Everything's solvable. Let's figure out what it would

to solve this. And so through some negotiation, having the seller take care of some stuff and then we were able to do some

research and

come up with a plan to fix some other things, it was eventually dry and it was great.

And it ended up being a good purchase. And the point

of my

story was like, yeah,

we just had a good agent

who was on our team and was able to help and guide us. And so I think

Jessi: Makes a

James: is important. Okay. Field entry number five. I can feel you're getting excited is the last one. And. I think this

is okay.

When everyone thought they were wrong is the name of this one. Okay. So the expedition reaches this critical fork in the river

system

and it it heads off

in two directions.

Or it goes from two into one, 'cause again,

they're all going up river.

And the question is, which

one's the true Missouri?

Wasn't certain. And again,

this isn't like a,

this isn't just a small, let's just pick one, right? Like you go in the

wrong direction.

wasted time, wasted supplies, potential failure of the entire mission. And so the problem was that they just didn't, the rivers didn't clearly match expectations and obviously there's no map.

They go which ones which, and there's just, there

was no

way to, to

validate

it. Wow.

Jessi: Wow.

James: And let's see here. Okay so

they essentially are

like, they're like,

I dunno, I guess we'll hang out here for a little

bit and try to

we'll think it through. And

then they went, we're gonna send parties

up a couple days on one up, a couple days on the

other,

Jessi: come back.

James: They get to a point

where it's crazy. Everyone in

the group is it's this one

Except for Lewis and Clark. They're

like.

I hear you guys, but I'm pretty sure it's this

Jessi: oh my word.

James: This other one.

And and it's like 100,

including

Julia, 100%

of everyone else

is

guys, you're idiots. It's obviously this

one. And they're like,

I know what you're saying, but

there's like subtle hunch

just like in watercolor, water, speed, all

that stuff we're

like, I'm like, I

pretty good that it's this other

one.

Wow. And and it was like, it was to the point where like.

okay, we're gonna sit

on it for another day.

Maybe we'll do a little more exploring. Like we get it like they

hurt everybody.

And

and ultimately. It was crazy. Ultimately they

were like, okay,

we're going the way that

we think is right.

To which

to their credit, all the men were like,

I totally think you're

wrong.

Jessi: but let's go.

James: go. Go.

And

Jessi: That's a good team.

James: Yeah. And to trust

Jessi: their leadership.

James: And it was based on again, subtle observations.

Directional. Directional. There we go. Directional reasoning. And it was based on just judgment, not certainty, obviously. Like they were like, oh man, we think so. And so they did it. And what was crazy is, so there's a, they

know there's another set of falls, which it

Gets back to the other

set of falls that we're talking about.

They were like, that's

our sign that we picked the right one.

Jessi: Oh.

James: And so they're like.

here we go. And at one point, Lewis is just

They're just going and going again. They don't really know how far. And he's oh my gosh, I so hope we see these falls. I so hope. And he just talked about how he heard it and he was like, la, yes, so much stress.

Just instantly

re relieved.

He was like, these are the most pret falls I've ever seen in my life. Which I

I don't doubt that they were absolutely amazing. And

he was like,

oh my gosh, that's not just one. Like it's a whole series of falls. And that was when the Portage thing, they were

were like. Ah,

oh, what?

Okay, here we go. But yeah, just crazy

where it was like everyone was saying this is the direction.

They're like, I

hear you.

I really

do,

but

but

we're gonna go this other way. And they

turn out to be right.

It's amazing. You're like, dude, crazy. And

And

Jessi: That's wild.

James: everyone stuck with the where would

Jessi: they have ended up

they went the other way?

James: It was

headed more south. Oh, and I don't actually, I don't actually know

answer to that 'cause they never explored it. It would be

fascinating to be like,

Jessi: Interesting.

If you followed the

the Missouri.

James: What would the other

Jessi: an offshoot Yeah. Would they end up in

James: Something? There was something else. It wasn't this one, but there was another time

they chose a direction and it added two months to their trip, which they

were like, whatever.

We're here exploring, we're seeing it.

what do we care? As long

as we

there? Sure. But in

retrospect, they're like, oh, that

Jessi: like, we could have just

James: through. That would've been really convenient. It happens.

So

at some point, every

serious investor, they face a fork

where the data isn't conclusive and the crowd doesn't necessarily agree with you either.

And so the question becomes

do you need agreement

or do you need conviction and consensus? It is comfortable, but it's not always profitable, right?

This is the whole

Buffet, right? Sell high by low, that kind of

thing. '

Cause that's not, 'cause everyone's doing the opposite of you at that point.

And and even if everyone agrees with your deal. Or I

would say, and if everyone's this is obvious,

should

totally do that,

That itself might be a slight

warning sign

that it's already been over picked. I remember we flipped a piece of

land

In Indiana.

Never

saw the piece of land, never visited it.

Just did some data

Jessi: It's

Like the Louisiana

James: across the Yeah, exactly. I was

like, what is this thing I bought?

Yeah. No, I had a Google Maps. That was my how I checked it

it out.

And I remember that was one where like even you and I were like, we're not,

Jessi: what is,

James: We're gonna.

Yeah.

Jessi: yeah, what are we

James: Are we really gonna put 40,000 cash into this piece of land on the middle of nowhere?

What's the plan here? I was like, no, it's all good. I took a class

on it online. It's fine. Jack Bosch, it's

Jessi: right.

James: And

Yeah,

Would you let me do it? But it was definitely like

not normal.

Jessi: Not standard.

James: Yeah, because I remember I eventually I talked about that purchase and taught a class on it. I had a lot of

of people come

up to, it was like.

What this was out of

nowhere.

And yeah, which was in the class. He was like, yeah, no one does this. He's

It is crazy. If you're doing flips, he's man, you gotta

it is competitive. You

gotta get after it.

He's but

in the land game, he's there's nobody calling.

And he's and there's no attendance, toilets, termites, nothing Super easy. I was like, it was pretty easy-ish. It's gambling to a degree, unless you buy it at a reasonable price, which is what I did. I bought it at like 50% market value. So I was like, all right, I feel pretty good. I'll make money off of this, which I did.

And yeah. So the trick is you don't necessarily want to move recklessly, but you do wanna have that informed conviction. So your mental model is you don't need consensus. You need a defensible thesis and a willingness to

live with it.

it.

Jessi: See, that's the piece. Okay. That's what that, that was the phrasing that I was waiting for. 'cause I

I was like,

okay. I'm like, how do you get over the fact that we could be wrong?

What would that have turned out? Would the would their team have been like, that's it. We're so done. Like we're going on our own, we're gonna split. Or I don't know, like

you get

James: that sense.

They were pretty good leaders.

It was also like, dude, there's

of us out in the middle of nowhere, like where all

we got

where

I think the guys would've been

do we try to tell you?

And it probably would've hurt morale

a little bit. And honestly they

some of that too, where they're like,

Jessi: some,

James: Hey, we got over this hill. Oh,

Oh, which

whichever's

Jessi: Similar

They had other paths that they were like, oh, that we could have done this differently.

Yeah. And it would've been a lot shorter.

Yeah.

So maybe they

would've survived.

James: What was interesting

when they finally got to Oregon

and they had to like, where are we gonna, where are we gonna stay for

the winter?

That was actually one where they put it out to a boat to everyone.

like, wherever you guys want to go. They had three spots, like we'll

do one of

the three.

And, but part of

of it, they were like,

these all stink. We

won't buy 'em

'em from everybody.

so that no one can point to us and go, you picked the

horrible

spot. And

Jessi: because they knew they were all bad.

James: Yeah. Exactly. And yeah.

And they were.

wrong. Yeah. It was pretty miserable.

All of the

the Indians in in Oregon were like, they were like, just not.

Not in the same caliber as some of the others. Like they were

like, they regularly tried

to steal stuff

them.

Just didn't seem

as educated, motivated,

kind of thing. And so they were like, there

was that

Jessi: grumpy. ' cause they were soggy

dude, right?

All the time.

James: Yeah.

I was, it was fascinating.

It was super fun in

book.

I was like,

I know what that

is.

Jessi: that

James: recognize

that name all of a sudden.

That was super cool. But

then there was like.

they were

this is miserable. Dude,

I feel for you man.

I get it. Alright,

let's close out this whole field

journal,

if you will. And I, there was like, so there

was,

I dunno. So a

a field journal,

The idea behind it is this is how you move forward when there's no map, like it's your thing of Hey, I'm taking notes. I'm trying to figure it out along the way. So if I had to

distill it down.

to just those few entries, right? It's move with direction, not certainty.

Expect the portage or the grind reality. It's gonna break your

plan.

So be prepared to adjust. And second or fourth, not all value shows up on paper. Such as the people part of it. And then you won't always get consensus first and that's okay. Defensible thesis and a willingness to live with it, I think is really

good.

And again, it's not that they had, Lewis and Clark didn't have any better information, they just kept moving forward. And and in my experience, like I think that's the trick. You dunno, you just kinda keep going forward. So when you're standing at your own fork in the river. Oh yeah. And you actually are missing information.

Are you just being asked? The question you gotta ask yourself, am I

just being asked to move forward without a map? And if so, that's okay.

Jessi: Yeah. It reminds me of a lot of biblical principles actually,

where

it's like,

you are not gonna know,

James: Which, by the

the way,

which is

Jessi: exactly where this is going.

James: One of the other

in places where women were highly respected relative to culture, and it was very counter-cultural at that time to be like, no, women are

important and have value.

What?

What?

Jessi: So Yeah. Yeah. It's true.

James: I can respect the Scaa piece from that standpoint.

Oh my gosh,

Jessi: exactly.

James: I'm just trying not to get canceled here. Oh boy.

Jessi: Oh, boy.

James: Yeah. So there you go. It was a great

book. I enjoyed listening to

It was

undaunted courage. I think I've already mentioned

It's worth a listen.

It was pretty

good.

And yeah if you wanna

know about our undaunted courage

in investing and

what we do, you

can

us

out

Furlo.com

You can our investing thesis that I like to think

is defensible and I regularly live with.

And yeah, and if you're interested in investing, you, there's ways for you to do that.

So with that, thanks for listening. Have a

a great day.

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