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My Open Letter to you all – “The Cost of Capital”
One of the things that I am most thankful for is the leadership training and skills that I have received in the military. Developing Courses of Action and understanding how to input information, so that daily you have before you Course of Action 1 followed by Courses of Action 2 and 3, allowing you to make the best decisions. Depending on that days input, Course of Action 2 or 3 can become Course of Action 1 as quick as making a cup of coffee. It is not only expected, it is routine. Leaders know how to lead and I use the military decision-making process (MDMP) in all my planning and execution. Most importantly I never panic and execute with discipline.
A few years ago when I first realized what I was building and saw how best to utilize the BENRUS trademark, I wanted to make sure I had control of its distribution and marketing. I simultaneously focused on quality swiss movements, designs and strategies which would tie into the rich history of the brand. I therefore undertook a two year plan that I knew would result in short term losses in order to ensure long term success. As a graduate of the Advanced Management Program, The Wharton School of Business at The University of Pennsylvania, I was well aware of the “cost of capital”. I looked at all options and I chose the least expensive, which was to use my own money.
I had paid for the Wyndham Estate in Newport in cash ($6.8M), so I went ahead and executed a plan. I split the estate into 3 parcels, selling one lot for $1.3M, borrowing another $1.3M on my second lot and borrowing $4M on my main lot, again, borrowing my own money as I stated earlier, I paid cash for the estate. Earlier this year I had a puchase and sales agreement on my main house and lot for $6.5M. Surprisingly and inexplicably, the Providence Journal wrote a sensational piece, wrought with errors, to include the most egregious which stated I was in receivership, which I was not. They faulted the state court system, saying they had erroneously reported it and the state happened to conveniently “fix it” afterward and the Projo made a “correction” after my attorneys threatened legal action. (It smelled of politics since just a month earlier someone suggested I should consider running for Governor after I openly complained about American Flags being trashed on the campus of Brown University on Veterans Day).
Following that article in January with a number of follow up stories with misinformation by the same journalist and a concentrated effort to attack a private business in Rhode Island and a private citizen, the Projo made it impossible to transact the property through a traditional sale. They continued to repeat misinformation in follow up articles knowing full well they were repeating sensationalized data. This led to a number of legal actions which “tied up” the property and ultimately led me to the Course of Action I chose today, which allows the bank to buy it back. For me these gross articles of misinformation and financial opportunist that tried to exploit a situation, made my decision easy. I chose not to take an offer less than $4.15M even though I had one for $4M as recent as last Friday. The bank will bid in at the above price or more, regardless, it will be above what I borrowed, and when coupled with all the previous steps for liquidity I took, I will have successfully pulled out all my cash and focused it where I needed to, in business. Most importantly, all those greedy types eager to exploit a situation will no longer be able to hold up the transaction, therefore the step I took today on my “mansion” is a no-brainer. Never panic, do not throw good money after bad, that’s what good decision-makers do, that’s what good leaders do.
Most importantly, look up the definition of entrepreneur. An entrepreneur risks everything…everything. I am comfortable doing that, I was born for it, and I am grateful to all taxpayers who gave me my education in the public schools of West Warwick and URI, to my military training at Ft Benning and Ft Bragg. You made me, I will never disappoint you, because I will never give up what I set out to do. I will always succeed, because failure is not an option. In order to judge me, you need to know my objectives. Investing in Rhode Island, and having family and real friends is what is most important to me.
One more thing: “I have enjoyed greatly living in Newport in one of the great neighborhoods in America, but I grew up in West Warwick on Providence Street and that too is one of the great communities of our state, don’t ever forget it.” Now, Let’s Go! “It’s a Better Time”