“I WONDER IF I’LL EVER HAVE A COMPANY THAT DOES $10 MILLION IN SALES”
Yes, that quote is from me.
I can clearly remember being twenty-two or twenty-three years old and wondering out loud if I ever would be the head of a company that had $10 million in sales.
I also remember some time later, when I was wondering about $20 million. Then $40 million. Then $100 million.
You get the picture.
In that way, I was like almost every entrepreneur alive. I dreamed about being successful and then building on that success.
If you don’t have those sorts of dreams, you may not be much of an entrepreneur. As a rule, entrepreneurs are dreamers at heart. If they weren’t, they’d likely settle for making a living as an employee, just like everyone else.
But the kind of dreaming that allows entrepreneurs to spot opportunity has to be carefully managed. Maintain perspective as you dream—always look and work for something bigger and better, but understand that dreams are often made up of relatively small steps along the way.
On the other hand, dreaming that gets out of control can hinder or trip up even the most gifted and skilled entrepreneurs.
LISTEN!
Learn to be patient. Not the easiest thing for many aggressive entrepreneurs to do.
That’s not to say dreaming is bad. If anything, it’s essential for anyone who works to succeed. But perspective is everything.
My own story is an example of that. The current scope of my business interests is enormous, from professional sports to restaurants to gambling and entertainment.
But it’s taken me thirty years to get here. And yes, I was as guilty as any entrepreneur when it comes to dreaming big. However, I also knew that building dreams has to be done systematically—with an ongoing eye to spot opportunity, but also an understanding that opportunity requires long-term commitment and patience.
I knew that from the start. I made sure that I was positioned to take full advantage of every opportunity I identified, both financially and logistically. But I never looked at any one success as the Big Dream come true, that one knockout punch in my fight to succeed. They were merely steps along the way—granted, some bigger and more significant than others, but steps nevertheless.
One significant opportunity I capitalized on occurred when I took my restaurant company public, on August 14, 1993. In the early ’90s, many restaurant chains—Outback Steakhouse, The Cheesecake Factory, and others—were going public. It was a new fad among restaurants to access the public markets; everyone seemed to be doing an initial public offering (IPO). I saw that it was a great funding opportunity and did the same.
When I woke up on August 15, 1993, the day after my IPO, my personal stock in Landry’s was worth over $100 million. Between 1993 and 2002, Landry’s went back to the public market five more times with follow-on stock offerings and raised over $400 million to fuel our explosive growth. This is very difficult to do unless you’re delivering on all your promises to investors and experiencing tremendous business success.
With all the capital that was raised, Landry’s grew from approximately $30 million in revenues in 1993 to over $1 billion in revenues by 2004.
Still, I wasn’t satisfied. I had this burning desire to expand Landry’s business empire. Do you know how many $10.95 shrimp dinners a restaurant has to sell to pay its rent? As I told my management team, the restaurant business is one of the hardest businesses to excel at. You have to take multiple raw products that come in your back door and turn them into something you can then sell to your customers, all at a high quality and on a consistent basis. Meanwhile, retailers take the same product in and resell that same merchandise without having to do anything to it and with much less staff. And casinos, they have slot machines. There’s no product to sell. Slot machines are like a bank where people make deposits, but you don’t have to give them all their money back!
I had been going to Las Vegas for years with my family and knew Landry’s was missing out on a tremendous opportunity if we didn’t get into the casino business. So in 2004, Landry’s did the largest bank and bond financing ever done on Wall Street by a restaurant company at that time and raised over $800 million. With cash in hand, we seized the opportunity to buy the Golden Nugget in Las Vegas.
Since the old ownership group had insufficient working capital, when I showed up with $340 million in hand, it was an easy decision for them to sell the Golden Nugget to me. After Landry’s invested another $180 million into the casino property, the brand was resurrected, and with four more Golden Nugget Casinos and Hotels built over the next ten years, it is now one of the most recognizable names in the casino industry.
But like I say, when things are good, never forget that things can go bad. That was the case with all stocks, including restaurant and casino stocks, back in 2008 and 2009, when the financial crisis hit the United States. The share price of consumer stocks plummeted across the board, as stock multiples contracted (the price of a stock relative to its actual earnings).
Bad news for some, but an opportunity for me. Again, when things are bad, we tend to forget that things will be good again. Since Landry’s stock price had fallen to a ridiculously low number and because of my rainy-day cash and business acquaintances turned friends, I was a bull and seized the opportunity, starting in 2009, when I bought 100 percent of my company back amid fear and chaos on Wall Street. This all happened during the time General Motors and AIG, the largest insurance company in the world, went bankrupt, and investment banking giants Lehman Brothers and Bear Stearns failed. When the financial markets recovered, as I knew they would, and stock market multiples returned to normal levels, I completed my purchase in 2010. I was standing as the sole owner of Landry’s, a $1.2-billion revenue company generating nearly $200 million in annual cash flow, and I had a personal net worth that qualified me for the Forbes 400 list for the first time.
That’s a great story that describes an enormous jump in wealth. But it’s also an example of opportunity that took more than a decade and a half to play out. And basically, it involved taking one step—the opportunity to go public—and, some sixteen years later, taking another step—the opportunity to go private again.
“You’re trying to run a marathon, and you haven’t even shown me you can crawl.”
It’s like I told one entrepreneur on my show Billion Dollar Buyer: “I never shot for the stars. I took things one step at a time—and it took a long time.” Or, as I commented to another, “You’re trying to run a marathon, and you haven’t even shown me you can crawl.”
In my work with entrepreneurs of all sorts, I’ve seen many business owners, particularly younger ones, who lose sight of that—a self-imposed impatience that can lead even the most promising business owners to want way too much, way too fast.
This circles back to the issue of humility. If you approach yourself and your business with a humble attitude, you know what you can reasonably do and what you cannot. And that allows you to take advantage of even the smallest opportunity instead of being frustrated by that One Big Break that never seems to come your way. You can position yourself to set reasonable goals.
Patience also plays into the way you approach certain deals. Many entrepreneurs make the mistake of going after business too aggressively, sending the message that they’re willing to do anything to get the deal done. That can backfire in a big way. Yes, they may get the deal, but not the one they had hoped for, because the person on the other side of the table knew how badly they wanted it and pulled their pants down.
Here’s what I do. Having evaluated everything I need to take into consideration, I make my best offer. I tell the person with whom I’m negotiating that it’s my “walk-away offer.” If that’s good enough to close the deal, great. If not, I’m prepared to walk away.
The key here is to say what you mean and mean what you say. If you say you’re going to walk away if the other person hesitates, make sure you do just that. That’s because, more often than not, if what you offered was genuinely fair, chances are good the other person will come back to you, and the deal will get done.
Put another way, let the deal come back to you. It takes patience, it takes confidence, but it’s a great way to make the most of the opportunity at hand.
It’s okay to chase deals on occasion. But, just as often, take time to let the deals chase you.
LISTEN!
The lesson here is to pursue opportunity at every chance, but realistically. It has to be the right opportunity, not just any opportunity. Remember that there will always be another opportunity coming along. Don’t be afraid to walk away from a deal. Don’t chase a deal—let it come back to you.
Not every deal has to be a home run—singles pieced together can score just as many runs as one long ball.
TILMAN’S TARGETS
• As an entrepreneur, it’s essential to dream—but to dream realistically.
• Don’t chase a deal—let it come back to you.
• Not every deal has to be a home run.
• Spotting opportunity requires patience. There’s always another deal on the horizon.