Survival of the Fittest!

If Darwin was alive today, he might use the real estate and mortgage industry to prove his theories on Survival of the Fittest. In the new millennium things happen so fast that we have seen companies come and go in the space of less than a decade. Timelines are moving at an ever-quickening pace and it has become easier to witness the growth and evolution of companies as well as industries.

 

It wasn’t all that long ago that we were able to witness the massive restructuring of the computer industry. The middle to late 90s proved to be a boom-time for almost anyone that knew anything about computers or the internet. If you have a phone book lying around from the late 90s, open it up and look up computers. There is no doubt that you will find a ton of computer companies no matter where you live. But try calling some of those phone numbers and find out how many of them are still in business.

 

You see, principles that apply to the natural world, commonly apply to the business world. In this case, the principle is survival of the fittest. Many of these companies didn’t have the discipline or business acumen to stay in business. This is not necessarily a bad thing…it is all part of a process, just like the process of decay. Economic growth, as well as, rapid economic growth has its place in business and nature and it would be wrong to label it in anyway, including “good” or “bad.” During rapid growth phases, there is typically a swarm of sub-growth or expansion as well. During the late 90s, the internet grew by leaps and bounds and companies as well as individuals figured out new and exciting ways to use it. Many of those “new ways” didn’t pan out. Many of those companies did not have a sustainable model and most of them disappeared over night.

 

The same thing has happened in the real estate industry. It was so incredibly prosperous that we leapt ahead in so many ways. A lot of the things that transpired in the last decade helped to push the limits of our imaginations and many of those things have ultimately failed. As a nation of investors, we know what works and we know of many things that don’t work. It is as natural as the seasons. Now, as you look around at the horizon, take stock of who is still standing and who isn’t. The weak are gone and the strong are still standing. There are some anomalies out there…there are a few weak companies that are still standing and a few good ones that went away, but by and large, nature has taken its typical, statistical toll on our business. Some things just take care of themselves.

 

As for the businesses, products and procedures that have failed, we need to collectively learn our lessons, as I believe most of us are. I think that we are going to see a ton of creativity in the next few years and hope that translates into highly qualified transactions. For the past decade we have been a high-volume business, but for the next 5 years at least, we need to become a high-quality business if we are all to survive.

 

To those of you still standing…Congratulations! You have survived! Now let’s thrive!

 

To your success!

 

Robert D. Cass

 

 

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