170: Jim Spano On Looking To The Side For Success

Sometimes, it pays to look at what projects you have on the sidelines because they just might be what will lead you to success. Jim Spano is an Air Force veteran who specialized in Russian linguistics. After leaving the service, he went on to work for the Metropolitan Insurance Company and later on put up an insurance brokerage that eventually became a high-net-worth financial planning firm. His interest in real estate led him to establish his own company that focuses on renewable energy solar projects. In this episode, Jim shares how he was able to get back into the black after the real estate crash of 2008. He says that instead of always looking at the next product to deliver to the market, you need to think of developing a platform that would allow other products to get into the market.

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Jim Spano On Looking To The Side For Success

I am so glad you’re here. We have a great interview lined up. First and foremost, thank you for the great reviews on iTunes. Please keep them coming. I thrive on your appreciation and it’s easy to do. Go to Apple podcasts and leave me a review right there. In return, I promise to keep delivering great shows with amazing guests like the one we have. Did you know that this show, Your First Thousand Clients, is now a two-way conversation? You can talk back to me anytime you want simply go to YourFirstThousandClients.com, go to the episode you want to comment on and click on the Speak to Mitch button, which will record your voice and deliver your message to me and I could reply in my voice as well. Go ahead. Give it a try. Now, on to the show.

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Here’s a question for you, what do a Russian linguist and insurance executive and a solar farm have in common? The answer is that my guest has done all of that and more. Starting in the US Air Force after High School, his natural abilities led him to learn Russian and position him in several high-level Espionage activities, which were both rewarding and very interesting. From the Air Force, he went to work for the Metropolitan Insurance Company. After a few years, as the youngest sales manager in history, he started his own brokerage which he sold in 2005 and retired young. Too young because he failed in retirement. Instead, he started investing in real estate, but not houses or apartment buildings. His interest led him to build solar panel installations, which he discovered to be even more profitable than other types of real estate. With over 300 megawatts and solar generating facilities under his belt, the future in both solar and real estate shine even brighter than ever before here to show us how it’s done. Welcome, Jim Spano, to the show.

Thank you, Mitch. It’s nice to be here.

What an incredible background. Why don’t you give us an overview? Tell us how this all got started for you?

Interestingly when I was younger, I have a brother that’s only less than a year older than me. When it came time for us to graduate high school, my brother was the real smart brainiac. He managed to get himself a nice scholarship into a nice college. Jim, on the other hand, was more the athlete. He was more interested in playing soccer and wrestling and sports than he was in his academics. Unfortunately, there was no scholarship in his future. When it came time to graduate high school, his options were the Army, the Navy, the Air Force and the Marines. Given those options, he chose what he thought would be the easiest because that was in his nature.

He joined the Air Force, went to the recruiter and was told about this wonderful job. I signed up got shipped off. In fact, his first trip and flight ever was the flight to basic training. It didn’t take long and basic training. It’s only 30, 90 days whatever it is. Shortly after getting there, they show you a film on what your job was and it was a completely different one than what the recruiter had sold me. I was pretty disappointed and trying to figure out how I get out of this Air Force thing because that wasn’t the job I had any intention of doing. While I was going through those contemplations, we were in the middle of the Cold War at the time this is going back into the mid-‘70s. All the people in basic training were sent to a Linguistics test because they needed linguists.

Long story short, I scored well on their aptitude test. I was recruited into a program. We were sent to the Defense Language Institute in Monterey, California. I spent nine months becoming fluent in the Russian language and then we shipped off to Texas to learn some equipment and then off to Europe to play I Spy on the Russians and determine the military capabilities of their aircraft and so forth. It is an interesting start to a career and I was pretty excited. When it came time to leave the Air Force, I had the choice of either re-upping or going to the civilian route and being that one of the big lessons I learned while I was in the Air Force was that I wasn’t very good at taking orders. In fact, interestingly I went into the Air Force with no stripes and I came out of the Air Force with no stripes.

I had more promotions than any of my friends that went into the military with me, but unfortunately, I had as many demotions because I wasn’t very good at taking orders. Long story short, I came out of the Air Force and they weren’t very many jobs for I Spy Russians so not having any business experience and not having any ability to use the linguists the language that I learned. I basically took the first job I had and I have to preface this with the understanding that while I was in the Air Force and I went in at seventeen. By the time I was nineteen, I found myself with a girlfriend that was having a baby. It didn’t take long, two months after the baby was born the baby’s mom left Germany where I was stationed and decided not to take the baby along with her. I found myself a single dad at nineteen or twenty years old with a two-month-old baby in Europe.

When I came out of the Air Force, I have this little girl. She was probably three, four years old at that time and I was in a hurry to be able to care for her and coming out with only two stripes to no stripes basically left me with no savings. I had nothing to depend on. I had to take the first job I could get that first job was I answered in the paper which was a clerk typist. While I was doing that job for three months, I responded to an ad in the paper for a management training position in Metropolitan. Long story short I got the job and was promoted. I was the youngest salesman in the history of the company to actually make sales manager and it took me all of a year and a quarter to get fired. This history isn’t looking good, but it does turn out better in the end.

You found your way into the Air Force and you didn’t realize that you had language capability, but you did and then you discovered it. You picked up sounds like you picked up Russian quickly, is that right?

Yes. Interestingly, I had no idea that I had the propensity to learn a language. When I did get into the Air Force and I did study, my first two weeks I was doing terrible. I had another young Airman that was assigned as my roommate and he was one class behind me he asked me to tutor him. As I began to tutor him, I realized, “This is easy.” I never studied. You’d go to class and you get done. I never ever studied. Suddenly, I found myself reviewing the information and it made it so easy for me. When I graduated, I did graduate the top of the class. I picked up on language quickly. I was surprised myself.

That sounds like you’ve had this angel sitting on your shoulder for quite a while now. It’s the same angel that found you a study partner, that showed you that ad in the paper and when you applied to Metropolitan. Not to say that these aren’t your natural abilities and gifts. I always like to look at the external influences on entrepreneur’s life. In many cases, I discover and in my own life as well, that these things line up. If we’re paying attention, there they are. Does that make sense to you?

That’s interesting that you say that. I spent most of my life saying that there was a little angel on my shoulder. That was based on the fact that I was a little bit of a rebel as a young man, which is obviously why I wasn’t good at taking orders. I’d like to give them. When you go in as an enlisted person in the Air Force, you don’t give orders, you take them. Not being one to take orders well, it was a struggle but it also taught me something important. From the day that I got out of that Air Force, I took that first position with Metropolitan out of desperation. I needed the income. I was fired by Metropolitan because I started my own business. When they learned about it, they said, “You can’t do both.” I chose to continue on my own business and to leave the Metropolitan family.

Of course, you did. What else would you choose? Readers, I should disclose that Jim and I met at an entrepreneur school called The Mavericks. We discovered in casual conversation that there was a connection back to the time of our parents. Our parents were both in the same exact business, which was the wholesale custom jewelry business. Jim, did you have to have that opportunity to work with your dad when you were still at the stage before you left for the Army?

Sure. That’s where my entrepreneurial real spirits came from. My dad was a truck driver. We were selling costume jewelry to the flea market and managed to begin to sell to the people. He sold at the flea markets. He worked his way up the chain to the point where he was going overseas and importing and became the largest importer of custom jewelry in the US. What was interesting is when he started the business at the flea markets, we started actually on the very first location. I used to go with him to the flea markets and I’d open up my own stand and I competed with dad. Oftentimes, I did better than dad.

Ultimately, when I went into the Air Force, he opened up an actual physical location and that’s actually where he met your dad. I believe the two of them had done some business in Rhode Island. I know I spoke to my brother who ran my dad’s company. When I came out of the Air Force, my brother was now running that company for my dad. I was given the opportunity to go work for them for the company that I helped my dad started. I found it I’ve just wasn’t going to go work for my brother. He’s eleven months older than me and it didn’t rub the right way for me. That’s how I ended up over starting my own company. I learned the ins and outs of running a business and hustling and you know becoming a real salesman by working with my dad at those flea markets.

Everything I start with when it comes to being an entrepreneur all came from my dad and all of what he taught me. The amazing things that he accomplished as a young man including building candy stores all over New York City. My dad was an entrepreneurial guy. He taught me so many great lessons. Back to the story about you leaving the insurance business to start your own agency. How did that then lead to real estate?

It didn’t. I started an insurance brokerage back in I believe we started in 1981 or 1982. I ran until 2005 but over the course of those 25, 30 years, I grew it from the insurance brokerage into a high-net-worth financial planning firm. That’s where I related well with other interpreters and having the finance background and the insurance background, I was able to help them to manage their assets and financial plans. Later on as that business grew, those clients began to look for alternative investments. That’s where I began to develop different real estate projects under general partnerships. My clients could invest in those partnerships as limited partners. Real estate markets come and go and when the real estate markets turned. Because we had low debt, we managed to do well. We got through the ‘86 to ‘88 downturns and I retired before the 2008 downturn.

I retired in 2005 when I sold the business and how I got into real estate was when I sold my financial planning business, I had a number of different real estate deals that I had done. One of the partners in one of my deals came to me and they had this amazing opportunity to develop a hotel and resort property in Mexico. Initially, I had done some small deals in New York City converting some apartment buildings to condos. We did okay. Years later and at the end of my career as a financial planner, I had done a couple of these larger resort deals.

I got together with my brother who had sold his company and which was the family business. I wouldn’t work for the family of my brother, so I ran my own business, but we had both sold our businesses and decided that we’d get together and start this real estate business. We failed at retirement. I got terribly bored after four or five months. I bought my own little Lake in my own beautiful place and I fish all day and that gets boring after a while. I got together my brother and said, “Let’s start a family foundation. We’ll start a new business will start a real estate business so we can pour all of our profits into our philanthropy.” That resonated well with both of us and the rest of the family. We got my entire family together. We formed Spano Partners. My brother and I ran it for many years. It was primarily focused on developing real estate. As you can imagine, when 2008, 2009 came and the real estate market crashed by 2010 or 2011, we were in bad straits. We had all development properties and development properties have the lowest value in a real estate downturn.

We literally had lost 78% of our assets in value. What got me out of that was we building a 500,000 square foot mall in New Jersey. I was building a small solar plant and I was back feeding green power into the mall and marketing is the first all green wall in the US. Target was our anchor, which is a big sustainability company. When 2010 came, Target terminated all their development contracts and suddenly I had a property that had been appraised to $26 million that had no development rights. I had a $10.5 million loan on it. When the loan came due, we came up for renewal and they always reappraise. When every appraised, without all those approvals and contracts, it went from $26 million to $6.5 million and I had to $10.5 million loan. The regulators and the bank were quite concerned as was I, but we worked it out. We got together it was a time when the banks were not for closing and they were working with the real estate developer.

I took that small, three-quarter megawatt solar field. I built a 3.5-megawatt solar field. I sold it to a local utility paid my debt down and then use the ground lease to service the remaining debt and I turned a bad loan into a performing loan. Having that success, I went around the state and I repurposed all of my other projects. I had an industrial park where we’re doing phase two. Phase one had sold out, but I couldn’t sell a single unit in phase two. We converted it to solar approval and I built the 12.5-megawatt solar field. I sold it to a fund and literally made more money than I would have on the industrial park. With that success, I went around the state and repurposed numerous properties and effectively became the largest privately-owned developer of solar in the state of New Jersey.

As a backdrop, I’ll add one little piece on that first property that I had, that three-quarter megawatt that I managed to keep that property by building a larger field. It was 138 acres. I carved out thirteen acres for the solar field and the other 125 acres. I was able to sell 280 housing lots or building lots for $28 million. Obviously, putting me immediately into the block. It also left me 175,000 square feet of retail space that is all pure profits. The solar industry saved my real estate business and since then, both businesses have thrived.

It sounds like a great story. Readers, we’re talking to Jim Spano. He is an incredible guy. He has an incredible journey. We’re about to launch into a little bit more about how you could take some of where you’re doing and turn it sideways, think of it differently and make it work for you. Jim, this is the point in the show where we like to have you take the mic and talk a little bit about, what do you think you learned that entrepreneurs would find valuable at this point and could make use of in their own business and on their own lives?

The first piece of advice I’d give is endurance and fortitude. You need to face your fears. You need to overcome the obstacles. You need to overcome it with a positive attitude. Most people, when they face adversity, their first instinct is to shy away and to back off and to reassess. Frankly, what I find when I’m facing adversity is it empowers me. I take that adversity and that fear and I convert it to power. I take that strength and I have a belief that to every problem there’s a solution. If there’s no question there’s always a solution. It is just, how do we figure it out? Rather than shying away when you are faced with adversity, you can use that as your fuel to power you forward into giving you that focus to figure out, what can I do differently? How do I get out of this box on men and find the answer that’s not in this box? My suggestion is there is nothing that you can’t overcome other than your own fears.

What I’m hearing is when you hit a point, it’s a rough patch and you’re struggling, get confident that you will find the pivot. It’s got to be there and the goal is to not panic and quit. Instead, to look for that pivot point and then act. Would you say that’s a way to summarize what you just said?

Absolutely. That pivot point also gives you the opportunity to look sideways and the verticals. We typically are always focused on the horizon looking straight ahead. What’s the next big thing I can do? What’s the next product I can deliver to the market? Sometimes we have to look to the side. We have to say instead of looking for the next product to deliver to the market, how do I develop a platform that allows other products to get into the market? If I’ve been successful with my existing product and I’ve done a great job at getting it into a marketplace rather than trying to think of the next product to put into that marketplace, sometimes if we’re struggling with that next product look to the side. There are other opportunities that present themselves when you get out of that box.

It is such great advice and a little bit different than what I’ve heard before. I like the way you say it and I also obviously see the results of you doing it. I myself have done some of that in my own life. We quit our jobs and started a software company only to find that after we got done developing the software, there was no need for it anymore in the marketplace. We asked ourselves, “Who else could use this? How else can we repurpose this? What else could this be?” That led to the creation of my eight-figure company. All these things come for a reason. That’s the other theme of this show in particular with entrepreneurs is that even every failure is a blessing in disguise. You need to find exactly where it lies and take advantage of it. Jim, what other advice would you have for people particularly those who are just getting started? Anything else that might come to mind as to what we could tell these folks to motivate them and get them going?

I’m going to tell you to be proud of your failures. Most people are afraid to admit their failures and they’re afraid to relive that failure. The first thing when I meet new entrepreneurs and one of the first things I tell them about is all the times I failed. Your failures are what give you the understanding and the ability to get out of that box. What I’ve learned is that when you fail, it gives you the strength to succeed. Many people face failure at the end of their careers. To me, a failure in one career is an opening to a new opportunity that needed to present itself and could not present itself because you were too focused on your existing path of failure.

Sometimes we need to fail to get ourselves out of that box and just start thinking about alternatives. I used my real estate example. I feel terrible in that real estate development. I was in a horrible position. The only way that I could get out of it is to look sideways. While I’m doing a real estate deal and naturally, the horizon would be, “How do I get this real estate deal to move forward?” Instead, I look to the side and said, “How do I take that solar field and how do I use that to enable me to save my real estate deal?” Always look to the side and not straight ahead all the time.

There are two companies who come to mind who never did look to the side when the view was right there for them to see. The first one is Sony. Do you remember the Walkman? Didn’t Sony have the chance to be the iPod of now? It shocks me and saddens me in some way because I used to love Sony. As a kid, I had a Walkman in three colors. I love that device. They owned the portable music market and gave it away because they could not look sideways.

You can say the same thing with Palm. Kodak is another one.

In Kodak’s case, they even had the patents for digital and they refused to use their own patents. A bunch of old guys sitting up in corporate said, “How can we bastardize our own income by replacing film?” Nobody was in that boardroom to say, “If you don’t, somebody else will.” It would probably be somewhat someone overseas in possibly Japan and that’s exactly what happened. That’s great advice, Jim. I like the way you put that to and illustrated it with your own life and examples. How about another one?

How about another failure? I was developing a real estate project in Mexico. It was actually a JW Marriott project. I have about $23 million stranded in that project. One would look at that and say, “What a horrible failure.” However, it was that project and the experience and the learning that I got from doing that project that’s enabled me to build the businesses that I have now. One of the lessons that I learned from that was building the right team. If you want to have a successful company, you have to have the right management in place and back then, I approached it with friends.

I approached it not finding the very best and most capable synergetic team. I tried to pull people together that I thought would be loyal to me. That was my first big failure with JW Marriott is I put the team together and it was the wrong team. It took me two and a half years to do something that should have taken me a year and had I done it in the year, it would have been a huge success. Instead, it took me two and a half years and that brought me into 2007 and 2008 when the markets crashed and I lost that you job opportunity. To this day, I still have over $20 million stranded in that one project, but I know for a fact that not only will I recover that but I’ll make a huge profit when the time is right.

This is a lesson that I unfortunately had to learn the hard way too and that is hire slowly and fire fast. My biggest mistake was holding on to people too long because I felt some form of loyalty to them but in the end, I had to let him go anyway. This whole idea of team building and management is far into entrepreneurs who have never done it before because it’s new. When we start an enterprise, what do we do? We bring in our friends. We bring in our family we bring in the people that we trust because we think that’s more important than skills. For a while, it might even look like it was working but ultimately if you try to staff a company with people who don’t have skills that learn on the job types, then you can only go so far. I’m sure you discovered that too.

Not only did I discover it. I’ll give you a perfect example of years ago. I put together a team for a company called Radiant REIT. That’s a Real Estate Investment Trust that’s focused on loaning to solar developers. It was super successful. We take it in over $2 billion of business in a matter of the last two years. How did we do that? I put together the right team a team of experts in the REIT industry. None of whom I knew but I did go through a recruiting company and I recruited the right talent and a combination of experts in the solar industry. By bringing a team with the combined expertise of the Real Estate Investment Trust business as well as the solar industry, I was able to put together this company that is now a major player within the solar industry across the country.

It’s been a pleasure hearing your stories and relating to them as we continue to do it the more we speak. I have a question for you and I like this question because the audience knows that it helps us to better understand each of the guests that appear on the show. Who, in all of space and time, would you like to have one hour to enjoy a walk in the park, a quick lunch or an intense conversation with?

My answer may surprise you but my answer would be Jesus Christ. I can’t think of a person that I could gain more from than Jesus Christ.

I don’t blame you. I understand why and he’s been popular on this show. Tell me a little bit why?

Irrespective of what your religious beliefs are, I don’t believe that you could find a human being that was more empathetic, which was more worthy of my adoration. A person that spread love above and beyond his own personal interest. If there’s one thing that I’ve learned in the business, it’s that honesty, integrity, truthfulness, everything that encompasses the human being we know is Jesus Christ are all keys to success and not only your business, but in your personal relationships. When I say in business, it’s in your business relationships because you cannot be successful in business unless you develop a network of good relationships with people that have the same morals, values and beliefs that you have.

The word you used is values and that’s the key for me. I’m looking for people who share my values when I want to invite them into a team. That’s all kinds of values, financial, work and ethics and values. These are the things that make all the difference when having teammates. Jim, we’re at the grand finale point. We are about to ask you the change the world question. What is it that you are doing or would like to do that truly has the potential to literally change the world?

That’s actually an easy question for me. What I’m doing now is in fact already changing the world. We have a world that is in a disastrous state of affairs relative to its climate. I don’t think anybody argues that we have significant climate changes and issues that are affecting our daily and our financial lives. What I’m doing with Radiant REIT is I am lending to the solar industry billions of dollars enabling power generation from solar sources as opposed to carbon-based sources. It significantly reduces the carbonization of the atmosphere. One aspect and I have my company my-RESI, which is a Solar Storage company focused on providing an enabling the grid to be managed with 100% renewable assets

People don’t realize it but the grid operates on a balance of demand and generation. You need to generate the same exact amount of power that people are using at any given moment, which means that you have that without that balance, you have a frequency and your computers blow up. Everything shorts out. In order to maintain that balance, you have to be able to decongest the transmission lines and that’s what this company will do which will enable more solar and less reliance on fossil fuel-generated power. The same holds for my companies and Spano Partners. Those companies focus on large-scale solar development, which again decarbonizes has the atmosphere. Most of my work in the last years since this climate has become such a significant issue has been on addressing the sources within the industry that are necessary to be rallied together to affect climate change. We have a focus. Every state sets up their rules, countries set up their rules, but we need a world approach to decarbonizing our atmosphere. Hopefully, what I’m doing is going to contribute to that ultimate effort.

It sure sounds like it, Jim. Even your free giveaway has an element of that as well. Why don’t you tell the audience about what they’re going to get for being an audience of the show?

Anybody that requests it, we will be sending out a solar-powered charger so that you can charge your iPhones and Galaxies and your computers with solar-based power and no carbon generation or whatsoever.

This is a physical gift, people. You’re going to get this in the mail. Jim, it was such a pleasure getting this time with you. I enjoyed our conversation. I can’t wait until we get a chance to talk again next.

I’ll look forward to that, Mitch. I thank your audience for reading and hopefully contributing to the effort to decarbonize our atmosphere.

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