I recently had the experience of going for a ride in the incredible new Lucid Air electric car. It lived up to the hype. I was with a 6’6” friend in the back seat and we had huge amounts of leg room.
The seats were amazingly comfortable, the car was beautiful inside and outside, accelerates shockingly fast and it is the car that everyone should dream of owning, if everyone didn’t want to buy an SUV!
Rivian is another newer car company that has released a really great electric pickup truck and SUV. And everyone wants them. The problem is the new car company is still “ramping up production” and haven’t been able to fulfill all the orders they have received. In Q4 2022, the company lost $1.7 billion!
I grew up a car guy and I love cars still. When I finally bought a used Tesla in 2020, Tesla had been around for 17 years! The Model S came out in 2012. At the time I bought my car, Tesla was worth over $100 billion. One of the main reasons I waited so long before I bought one was business continuity. Car companies go out of business all the time. Even Elon Musk said, “Unless something changes significantly with Rivian and Lucid, they will both go bankrupt. They are tracking toward bankruptcy,” in July 2022.
When a car company goes bankrupt, or closes its doors, owners of those cars have major problems. How will you repair the car? Can you get spare parts? What happens to the value of the car if you want to sell it? Who would buy a car that can’t get replacement parts?
Business continuity planning was something I learned early in my career managing a servicing operation for a mortgage company. If key personnel can’t work, who is taking their place? The same conversation is relevant with our construction and real estate companies.
When we are trying to win a construction job, we are often competing with a sole proprietor general contractor who has lower margins and can have a lower bid. But what happens when that guy falls off a ladder? Who is going to take over the job? If his bid is a few thousand less than our bid and he has a delay, how many months would it take before the interest on loans to fund the project and the opportunity cost of the lost rent exceed the difference on the lower bid? Often, it’s a difference of just 1-2 months delay before the cheaper contractor gets more expensive. With our company, we have backup personnel for every role. If our project manager can’t work, we have another PM that we can plug into his role without skipping a beat!
With real estate, an experienced agent has a huge advantage over a newer agent. In fact, I would say it’s extremely risky to do business with an agent that has done less than 10 transactions. Ideally, a new agent should partner with an experienced agent until they are comfortable with all the intricacies of buying and selling homes. Stats show that 87% of realtors quit within 5 years of getting their license. With a newer agent, they are unfamiliar with the sales process. Passing the real estate test does not provide any practical knowledge when it comes to buying or selling a house. Newer agents are unknown to the top producers in the area that sell the most homes. Agents always prefer to work with agents that they know or that they know have a good reputation for closing deals smoothly! With CalHomeCo, we have a large (and growing team) of experienced agents that can step in any time if the primary agent is unavailable for any reason.
In reality, Lucid and Rivian will likely survive and do well for the foreseeable future. But the message does apply when hiring a professional for construction or real estate (or any other profession!). One of my favorite quotes is from Red Adair, “If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”