Today, I thought I might do something a little different.
What follows won’t be financial research… at least not in the traditional sense. But in the course of writing a new report, I dug through the mental filing cabinet and recalled a story from my early days as a real estate man.
Thinking back on the story made me chuckle, and I thought you might find it interesting. And if not, rest assured we’ll return to our regularly scheduled program tomorrow.
But for today…
The year was 2000, and I was about to turn a stretch of South Carolina wilderness into a Wal-Mart.
100 Acres in Hartsville
Twenty-four years ago, I had the good fortune to secure a 100-acre site in a small town called Hartsville, South Carolina. I was under contract on the land for $10,000 per acre. Yes, that would be $1 million for just the land. Adjust that figure for inflation if you want. But rest assured, it was a lot of money.
But in order to close, I had to obtain a commitment from a client to build and operate a store on the property. And I had the perfect client in mind—Wal-Mart.
To do that, I had to visit the firm’s corporate headquarters in Bentonville, Arkansas. So—scrappy young developer that I was—I scheduled a meeting and booked a flight with Delta.
But then, life happened.
My young daughter fell ill one day ahead of my trip. So, I canceled the flight. But the next morning, she had improved. And I decided I could still make the Wal-Mart meeting.
Flying Delta was out of the question. So, I called a friend who owned a small plane.
“Wish I could help you, Brad,” he said over the phone, “but the plane is already in use. Why don’t you try a charter service?”
And so, I did.
The company informed me that a King Air was available. In case you aren’t familiar with King Airs, these planes are produced by Beechcraft and are powered by twin-turboprop engines (they have propellers).
Depending on the model, these planes cruise at around 200 to 325 mph and require around 2,000 feet to land.
Beechcraft King Air 360
I agreed to charter the trip (I didn’t even ask how much it cost) and quicky drove over to the local airport. The King Air lands, I hopped aboard, and off we went.
When I arrived in Bentonville, I took a taxi over to the Sam Walton Real Estate building and waited to meet the real estate manager. I waited around two hours, drinking cheap coffee and seeing what was on offer in the vending machines.
Finally, the meeting started, and I briefed my contact on the project known as Hartsville Crossing.
After I finished my pitch, the Wal-Mart man leaned back in his chair, thought about the proposal, and said he liked it.
So far so good.
“Are you headed home?” he asked.
I said I was.
“When will you be back in Hartsville?” he continued, “I’m off to see some sites a few hours away.”
A brilliant idea occurred. In that case, why not fly back to South Carolina with me? I hadn’t intended to bring back a passenger, but I sensed an opportunity to get quicker approval. That’s never a bad thing for these types of deals.
He leaned back in his chair again, thought on it some more, and said he needed to go home to get his suitcase.
We agreed to meet back at the airport in an hour.
But then…
Taking a Nap
When I got to the airport, the two pilots informed me that they couldn’t fly. They needed to take a nap.
I thought they were joking…
Turns out, federal regulations require pilots to have a minimum of 8 hours of rest in a 24-hour period. And they are not allowed to fly more than 30 consecutive hours without at least 8 hours of rest.
I knew I had to get back. And now, I had an important client in tow. So, I did the only thing I could: Get another plane… any plane.
Thirty minutes later, a Lear Jet landed in Bentonville. It was not for Sam Walton. It was for Brad Thomas, up-and-coming Wal-Mart developer.
My client from Wal-Mart arrived and we boarded the jet. We flew to Hartsville in less than an hour. However, when we arrived, there was a large storm, and the pilots informed us that they could not land the plane.
It was getting dark outside. And we had to change plans.
I dropped off the client in a small town outside of Atlanta, GA. He had a meeting the next day and told me he couldn’t go to Hartsville.
‘It’s never easy,’ I remember thinking.
Fortunately, he’d be free in two days. We’d reconvene then.
After dropping him off, I flew back home. After unpacking my bags, I called up the charter service and asked them to set up another trip to Hartsville. They were starting to recognize me by now.
Two days later, yet another plane landed at my local airport. This time, it was a Citation. I hopped on the plane and flew over to pick up my client.
At long last, we were on our way into Hartsville, this time with no storm clouds. We landed, traveled to the site, and spent about an hour inspecting the property.
He was quiet for a bit, surveyed the property again, then turned to me.
“I like it,” he said, “I’ll recommend the site to the investment committee next week.”
Jackpot…
Is This Your Plane?
Back to the airport we went. Back on the Citation we got. The plane took off, banked, and turned back towards Atlanta.
I was feeling pretty proud of myself. Here I was, a young guy trying to make it as a big-time real estate developer. And I had snagged one of the great whales of commercial retail.
It was around this time—mid-air—that my client turned to me and asked something I’ll never forget: “Is this your plane?”
I couldn’t help but laugh to myself. Here I was, a guy in his thirties who’d never even seen a first-class cabin. And an executive with the country’s largest retailer thought I owned a multi-million-dollar jet.
In truth, I had never flown in a King Air, Lear Jet, or Citation. I felt like a billionaire by now, especially because I knew that I was going to build my very first Wal-Mart store.
Paying the Bill
A few weeks went by.
One day, a letter came in the mail. It was from the charter service, a bill for all those planes I booked.
I was scared to open the envelope. I had no clue how much it would cost to fly on these fancy planes. I really hadn’t bothered looking too closely at costs. That was probably a mistake, but I just knew it had to get done.
I ripped open the envelope and scrolled down to the bottom.
$28,000
That was in 2000. It would be at least double that now.
I quickly revised my travel budget in my development proforma from $10,000 to $40,000. That might seem like a lot, but it was pocket change compared to the project’s total development cost of around $20 million. And had it not been for those charter services, I don’t know if the deal would have gotten done.
Even as I think back on that more than two decades later, I still know that it was absolutely worth it.
That Wal-Mart got built. The good people of Hartsville had their store.
I drove through Hartsville not too long ago. And, on a whim, I thought I’d stop by and see how the store was doing. And sure enough, there it was, as beautiful as the day I built it, my first big win.
Regards,
Brad Thomas
Founder, Wide Moat Research