The Most Expensive Spreadsheet I Ever Built
In 2010 I had a notebook that I am still embarrassed about.
The notebook had six modular plots in it. Small lots, in a market I understood, at a price I had run six different ways by the time anyone else got to the table. I had soil notes. I had cost-per-square-foot pulled from three modular suppliers. I had a phasing model. I had a tax map. I had a comparable rents file. I had a punch list of zoning issues I was going to have to clear. I had a spreadsheet that had been edited so many times the original column headers were no longer visible at the top of the page.
What I did not have was a deposit on any of the six lots.
If you had asked me at the time, I would have told you I was being careful. I would have told you I was running the numbers properly. I would have told you that this was due diligence.
What I was actually doing was inspecting.
There is a distinction I have spent a lot of years trying to put words to, and I am going to try it again now because I think it is the single most expensive lesson I have ever paid for.
Inspecting is gathering data. Inspecting is engineering mode. You look at the thing in front of you and you ask what is it, what is it made of, what condition is it in, what is missing, what might break.
Assessing is the other thing. Assessing is investor mode. Assessing is the question of how I would want my money spent on this, how long I am going to hold it, whether the math survives a slow rental market, what the actual exit looks like, what happens if I tie my capital up here and not somewhere else.
They are not the same. They look the same from the outside. They feel the same when you are sitting in front of a spreadsheet at the kitchen table. They are not the same.
In 2010 I inspected those six plots into the ground. The construction risk, which is what usually scares investors out of the room, was the part of the deal I had spent two decades getting paid to manage. I was the guy you wanted in the room for that conversation. I knew what could go wrong, what each module would cost to install, what the schedule looked like with weather, what the labor pool around those lots was capable of.
I did not have an answer to the question that mattered.
The question that mattered was. Am I going to put a deposit down or not.
A senior developer pulled me aside one afternoon and told me, plainly, that the work I had done was good. That the plan was sound. That if I did not lock up the land in the next thirty to sixty days with a non-refundable deposit, somebody else would. He told me that the analysis was a separate question from the decision to participate. He told me they were not the same question.
I did not listen. I went back to the notebook. I refined the spreadsheet. I added a scenario. I gave myself another month.
The land was gone within the month. Not because the market moved. Because somebody less detailed than me committed.
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I lost more than a deal that summer. I lost a year of momentum. I lost a piece of the version of myself I had been trying to become, the version that could carry the engineering brain into a different kind of building. The version that could be both.
That is the moment the dual lens framework started for me, even though I did not have the language for it for another decade.
What I had been doing was inspecting forever, because inspecting is safe. Inspecting feels like working. Inspecting produces artifacts. Inspecting is the part of the process that I was trained for, that I was paid for, that I was good at.
Assessing is uncomfortable. Assessing is naked. Assessing is the part where the engineer puts the clipboard down and a different person picks up the pen. Assessing is where you have to admit that no amount of additional inspecting will tell you whether to commit. At some point the data stops, and a decision is the only thing left.
I did not ask myself that question in 2010. I asked it for the first time in 2011, on a different deal, after I had already paid for not asking.
This is what I want you to take from this if you take anything.
When you find yourself rerunning the same numbers, look up from the spreadsheet and ask which mode you are in. If you have been inspecting for a month, the additional inspection is not making the decision any clearer. The decision is a different muscle. You have to switch to it on purpose.
The engineer in me still wants one more data point. He always will. The investor in me has learned that one more data point is the most expensive line item in any analysis.
—Jon
If you are in the middle of a decision right now and you cannot tell which mode you are in, hit reply with the deal. No pitch. No advice. Just a real second pair of eyes. The question I forgot to ask myself in 2010 is the one I will ask you.