Real Estate's Asset Safety

Craig Fuller shares his perspective on risk assessment in business investments, particularly comparing real estate to software ventures. His view challenges conventional wisdom about risk in different business sectors.

Key Points:

• Real Estate vs Software Risk Assessment:

  • Real estate has lower risk due to underlying physical assets
  • Even if a project fails, you still own tangible property
  • Example: "If the real estate project went to 0, I'm gonna lose 3.5 million, but I still own 3.5 acres of land"

• Investment Philosophy:

  • Focuses on asymmetric risk opportunities
  • Willing to take more "shots on goal" than typical entrepreneurs
  • Values having physical assets backing investments
  • Prefers using bank debt because it's "frankly pretty cheap"

• Personal Risk Tolerance Drivers:

  • Previous experience of being fired and starting over
  • Confidence in ability to rebuild if everything fails
  • "I'm not afraid of losing it all and I know that I can get it back"

• Business Portfolio Strategy:

  • Main business (FreightWaves) serves as safety net
  • Uses this security to take bigger risks in other ventures
  • Leverages bank financing instead of equity funding
  • Views diversification through multiple projects as risk reduction

• Approach to New Ventures:

  • Evaluates worst-case scenarios
  • Focuses on potential upside with limited downside
  • "If we're right and we get a 3 or 5 or 10x multiple on that business, that creates an enormous amount of value"