Growing Adaptive

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When you run a small business, you always have to keep two different things in mind:

  1. What you are doing to produce revenue right now; and
  2. How to steer the company towards more revenue / higher margins over the long term

As many of you know, we’re involved in several different businesses, each with its own opportunities and issues. They are:

  1. Managing investor money: Whether through funds or one-off deals, we raise capital from high net worth individuals and families and use it to buy and renovation apartment buildings;
  2. Fee-for-service: We have a large and growing business of helping owners acquire, renovate and manage buildings. On these deals, we don’t have ownership stakes… we just get paid cash fees for doing the work;
  3. Brokerage: Adaptive has 6-7 agents (depending upon whether you count my assistant, who is licensed) running around helping investors buy their own buildings. I have personally trained each agent and I spend a lot of time supervising them in order to make sure that our clients receive very high quality, honest advice; and
  4. Property management: We have a management infrastructure set up to manage our own deals, the fee-for-service deals, and a few properties for 3rd party owners. This is, frankly, a loss-making, pain-in-the-ass business, but one we stay in because it facilitates the other, more profitable business lines.

Over the long term, I think there is plenty of opportunity for Adaptive to grow each of these business lines into fairly large-scale operations. The problem is that, for now, we don’t have enough scale in any of them to hire high quality managers to take the reins and go. So, for better or worse, I’m involved in all aspects of the business.

At some point, I’m going to find a mentor who has built a business like ours from scratch and get some reliable advice about whether it makes sense to continue to spread our efforts out or focus on 1-2 key business lines. Until then, we’re probably going to keep grabbing the opportunities in front of us.

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