Cows: They Broke My Heart, My Back, and The Bank.
What cows taught me about failure, success, business, human behavior and myself.
Only 4% of cattle operations in the U.S. make a living solely from their cattle. Most are subsidized in one way or another. The subsidies come from other agricultural commodities, the government, an off the farm job, and other non-cattle related revenue.
With those odds…who on earth would be foolish enough to make a go at being in the 4%? Well, I can raise my hand on that one. I always knew I would work for myself and preferably something outdoors, involved in agriculture, would make a difference in the industry, and would inspire others to trail blaze. What I did not realize, as I started my first cattle company as a senior in college, were the sacrifices I and my family would have to endure as I chased my dream and chased cows. It was my venture, it was in my blood, it was all I knew….but it was not their venture, not in their blood, nor an industry that most understand.
At the time I really did not even understand myself, let alone the complex, risky, cut throat, industry I was about to enter and risk it all by doing what they told me couldn’t be done.
Entrepreneurs…are they born or taught to be that way? In my opinion, we are born this way. Sure, most anything can be learned. But can the natural ability to understand and read people, see opportunity where others see risk and liability, look at failure as an asset and a positive stepping stone to bettering yourself and success be taught? You can answer that yourself. My opinion is derived from my own experiences…it certainly does not mean I am correct.
2) Early Signs
Around the time I was 12 I had several enterprises. I was on the student government at my school. We would go around to each grade three times a week selling snacks. If a kid didn’t have the money on hand on say Monday I would tell them that is fine I will sell you this product today that is worth $0.50 (fifty cents) but on Friday you will pay me $0.75. Needless to say I was kicked out of student government. I had a paper route that I expanded by taking over the other paper routes that bordered mine. I knocked on doors and asked if I could mow their lawn once a week for $10/month. After I established a reasonable lawn mowing clientele I would add additional services, such as washing their vehicle after I mowed their lawn once a week, for an additional $10/month. At that point I asked my dad if I could open a checking account because I would like to purchase supplies and hire neighborhood kids to work for my enterprise as it was becoming too much for me to handle alone. At this point I still didn’t not know I was an entrepreneur…..I was just doing what came natural to me….business. Not only was I washing their cars and mowing their lawns, I was delivering their newspapers and building a reputation for doing what I said I would do and learning the value of hard work, sacrifice, loyalty, and what it meant to shake someone’s hand and look them in the eye as I negotiated. I also worked with my father at, well, whatever I was told to do. I worked on rental properties, around our home (washed his car and truck every Sunday afternoon, mowed lawn, watered garden, etc.) and, what I loved most, was working on the ranches.
3) Work is 90% of life.
I was brought up in a hard-working, make your own way, Italian family. They emigrated from Italy to the San Francisco Bay Area in the 1930’s. They started garbage companies, owned and operated ranches, and purchased income properties from single family homes to apartment buildings. My father only spoke Italian until early elementary school. He dropped out of school in the 9th grade to work. By the time he was 55 he owned, and operated ranches, apartment buildings and the garbage company. And, when I say operated, I mean operated and worked at these enterprises. He would leave home at 2 am every morning to go to the garbage company where he was a garbage collector as well as owner/share holder. They worked packing garbage, collected garbage bills, in person, once a month from customers and managed the company After he finished his garbage route he would stop by the apartments to sweep, clean, and do general maintenance. Once back home, around noon, he would take a short nap and then go to the other properties close to home. On Wednesday and weekends we went to work at the ranches. My father always said….”Work is 90% of life. You have to work at everything from your job to your marriage. Everything is related to work.” While most kids got together on weekends and summer break….I worked. But I can say I am a better person for it. That generation certainly was a great role model for work ethic and family values. However, they did not take as much risk, borrow much money, nor see failure as a learning opportunity. This is where my dad and I agree to disagree and one of the reasons I left home at age 17.
3) Making Your Own Way.
I bounced around form friend’s houses, to staying at the ranch, to my parent’s couch. I, to this day, keep most my clothes in a duffle bag. For 30 years I have lived out of a duffle bag. Even though I am married with two kids, I have my duffle bag on the floor next to our bed. It is always packed and ready to go. These days it is mostly for business trips and vacations….not moving.
I never had a problem being broke, it was all I knew. I always knew I could make money somehow….someway. I loved to work…but not for others. It always worked out. Just like the old man told me….”Work is 90% of life”. I dropped out of high school as soon as I heard about this thing called the “GED”. School was boring to me. Now that I look back….school just didn’t challenge me enough and I get bored if I am not challenged or interested. Anyway, took GED and was so excited I could just work now. I continued to work at the ranch as I pursued other “career” choices. I worked at an auto shop for a while and finally ended up working horses at a ranch near Mt. Diablo in Alamo California. One thing I like to think comes only from stubbornness and persistence is how I got the job at the auto shop and at the horse ranch. Neither business was hiring at the time. I would just show up every day and make friends with the owner or manager and do odd jobs for free. After a couple weeks of this they saw I was a worker, but maybe a little stupid. Why would this kid show up and work for nothing? So, after I felt they saw my potential I would make them an offer. I will work here for a month for free. No obligation to me. If after that 30 day trial period you do not like my work I will leave without issue and thank you for the opportunity. However, if you like my work I would like to be put on payroll after the 30 day period. Both companies put me on payroll in less than two weeks.
4) What made me decide to go to college?
I knew at this point that I wanted to be a ranch manager. I saw what a college education could do for me at this point. I also witnessed, and worked for, very talented people that let their talent over ride ethics. I decided that I would not sacrifice my personal or business morals. My way out was college. Not only did I want a change, but I did not want my named tarnished by being associated with these talented, yet morally bankrupt, mentors. So, I left for college to study animal science. The best decision of my life.
5) It is not what you know…but who you know.
If college taught me anything at all…it was that it is who you know, not what you know. I learned the value of networking and socializing. I was not the best student, however I was looked at as a valuable resource when it came to cows and horses.
6) I meet my wife in college.
She was 19, and beautiful. I was 22 and just joined a fraternity. The minute I laid eyes on her I knew she was the one I wanted to wake up with every morning. Aside from that…she always believed in me. My biggest inspiration has been a quote from her. She told our children that she always knew I would be successful. An inspiration for sure. When I met her in the fall of 1993 I drove an old broke down 1972 Ford F250. I never had a real job and I had no idea what I wanted to do after college accept it had to do with the risky proposition of being in the cow business. If success was in my future she deserved ever benefit that came with the success. Unfortunately struggle, failure, and uncertainty precede success. And she stayed by my side through all of that.
7) I actually graduated…with units pending while starting my first cattle company.
My senior year I started my fist cattle company with a loan from my father. No bank would lend a recent college graduate money to start a company. The bankers actually laughed at me and told me my $50,000 request was not worth their time. Within 6 years I was borrowing close to $4 million. Interest was close to 12% at that time…their loss and ultimately mine. Today I would never borrow at 12%. I was paying over $250,000 in interest and I was not getting a paycheck. In 1997 I bought 60 cow calf pairs and started my real education.
8) We got married and moved to the town I grew up working on the family ranch.
In 1999 we married. I took all we had and put into the company. I drained our personal savings account several times to keep the company moving forward. My wife never doubted my decisions or my dreams. How fortunate am I? I could not put it into words.
By 2005 I had close to 1200 cow calf pairs. Ranches, employees throughout the state…and bankers that would load me 100%. Within 3 years my dreams turned into my families nightmares. My dad co-signed on multi-million dollar loans for me. At the time I was young, idealistic and optimistic. I grew up learning that if you work hard it will all work out. I could have never been more wrong in my life.
9) The learning years.
I was only in my late 20’a by now. I had millions of dollars, assets, and livestock under my company’s management. By 2008 the economy was in a freefall collapse. Unknown to me at the time…the bank I borrowed from was one of the largest lenders to foreclosed single family homes. Sort of it is….they cashed out large agricultural companies that had a marginal loan to value ratio. I ran the numbers day and night. Sleeping in my office and falling asleep at my desk. All the time wondering…”Why are they cashing me out now?” They needed to cover their losses from the housing market. But I did acknowledge that the assets where theirs, not mine or my companies. So, when I thought I was getting a new loan officer, I was getting visits by a “Special Assets Manager” from the bank. It only took one visit for me realize they were not there to refinance me….but to cash me out and get their assets back. I hid cattle and assets throughout two states. I knew cows where the collateral and they could not force the sale of collateral until all the cows where accountant for and liquidated. They gave me 6 months to pay back $4.2 million in a down cattle market.
From this experience I learned several things. Never collateralize cattle with property. You can always buy cows. But if they take you property you have no way of making a living. I also learned that banks loan on what you look like on paper…not who you are or how talented you are. I finally caved and gathered and shipped all the cattle to auction to pay them off. The reason was not because I feared them, I feared their power. My dad was gracious enough to co-sign for me when no bank would back me. In return, they were going to take my dad’s home and other properties unless I cooperated. I told them no way in hell they are going to touch my dad’s lifelong hard work and investments without a fight. I said you better bring the National Guard and guns…because if you are going to take from someone like my dad I am willing to die or go to prison.
In short, they were paid off in full. The banker actually called and said he was impressed by my tenacity and how I got them paid in full. Never again would I use a bank. Banks invest in assets, interest rates, and credit score. They do not invest in people, talent, or opportunity.
10) My failures that affected others that believed in me.
At this point everyone blamed for everything from the weather to interest rates. Thank you for the compliment that I could influence those factors…but I cannot, do not, and will not. By the end of 2009 I paid off the banks and had nothing. My wife was filling out food stamp applications. I had got into an altercation with a “squatter” on one of the ranches (which in California apparently squatters have more rights than the property owner) and was charged with 5 felonies and facing 3 years in San Quinten. Apparently, threatening to hit someone over the head with a tire iron is considered a “terrorist threat” and charged as a felony. What? I am not a terrorist…I was just protecting my property. After I told him to leave the property ASAP I was walking to my truck. I hear the door open and heard the words…”Hey John, fuck you, make me leave.” As I turned around to look at him I noticed a gun in his hand. I thought, fuck me…No, fuck you. I grabbed a tire iron out of the back of the truck and started to walk back to the house. He slammed the door. I didn’t miss a stride as I kicked open the door. I walked up to him and started yelling at him. I then smashed a stereo on a desk with the tire iron. I told him…”I will bash your fucking head in next if you do not get off this property.” I noticed he had wet himself at this point. So I figured it is one thing to pull a gun on someone, it is a different story to pull the trigger. I turned my back on him and started to walk out of the ranch house. As I was walking I said, “If you going to shot me, then shot me, otherwise get the fuck off this property.” Within 15 minutes I was home, showering and going to have dinner with my wife and kids. My wife came in the bathroom and said the sheriffs are here to arrest me. I went outside and asked that they take me around the corner. “Not in front of my kids. I will not go.” They thought the same and took me around the corner and did what they had to.
I was not in a good place. I grew up thinking if you work hard and do honest business everything will be just fine. I did all that and now I was broke, I almost had my dad’s property sold and I was facing prison time. At this time I checked into a rehab. My second best decision of my life. But, what do people like us think….”Opportunities”. I tried to bring business cards to rehab and jail. What a fucking idiot. I still did not realize anything in life but business. Opportunities are everywhere, right? Prison, rehab, business meeting….who cares? It’s all an opportunity. So, I thought. I looked at failure as part of the game, a chance to better myself. Those around me saw failure as a chance to kick me while I was down…cowards in my opinion.
11) Starting over
By the time I got out of jail I had formulated a new business plan. Fuck the banks and fuck those who kicked me while I was down. Within a month of getting home I put together financing from other cattle operations that believed in me. I got home in January and by March I had put together $500,000 to start over. All on hand shake deals. No contract or anything in writing. These people believed in me and what I could do. They were all paid back within 12 months. The cattle market was in a slump at this point. I took that money and bet on something no one else did….the ground beef market…butcher cows. I noticed that even after the down turn in the economy most families still bought ground beef. Whether at the supermarket or at a restaurant. Ground beef was in demand. In good times or bad…it is a household staple product. I saw something no one else did. Within a year I turned $500,000 of hand shake loans into $1,000,000. I had to borrow $3,000 from my 9 year old daughter who had a sheep business I help her start when she was 5. I paid her back in 6 months with 10% interest. Talk about a humble experience. You will never know. Not too many people impress me….but my daughter does for sure.
12) Up and Running…then crawling.
I was up and running now. But physically I was falling apart. Between 2009 and 2012 I had gone broke and lost literally everything. In 2008–2009 I was liquidated and broke. In 2009 I went to rehab. In 2010 I went to jail. In 2012, a year after I got home from the can, I had a heart attack. For three days I was having little heart attacks. I figured I was just working too hard and getting a little sick. On the third day, if I waited another couple hours before my wife took me to the emergency room, I would have died right at my desk in my office. Day three in the hospital I was ready to leave. I heard the nurse tell the doctor, “He is up and dressed every morning wanting to go to work.” I told them I need to get back to work. Check me out, or I am leaving right now.” Later that year while I was delivering a calf in the field I had my back fractured by the cow which I just helped deliver her calf. She came around behind me while I was still sitting on the ground and hit me in the lower back. It took me almost an hour to crawl back to my truck. I drove to our house and it took me another hour to crawl from the truck, up a few stairs, and into bed. Here I laid for 5 days. Urinating in a bucket because I could not get up and walk to the bathroom. If I tried to get up in the morning it was like my legs turned into a piece of pasta and I would just collapse. I would tell my wife just give me my daily planner and cell phone. I would lay there making phone calls and doing business until I got frustrated enough to crawl back into the bed. On day six I conceded. I called my wife and asked her to call an ambulance and take me to the hospital. Out of all the things that have happened to me in my life I was never fearful. This was different. I thought I may never walk again. “Holy shit…how will I work?” After a week in the hospital with little progress, they threw me back in an ambulance and carried me to my bed on a stretcher and rolled me back into my bed. It was like bringing your broke down car to a mechanic on a tow truck and a week later he sends in back to you on a tow truck. This is bullshit. I had my wife get me a walker. We had a physical therapist come to the house and explain to me the situation and how to use my core strength to get up, not fall down, and make it to the walker. Throughout the day, and mostly at night when I could not sleep, I would get up, grab the walker and walk back and forth all night from the bedroom to the fireplace in the family room. Within a week I was, with my walker, working the squeeze chute at the cattle corrals.
At this point the cattle market was great and cattle producers where overly optimistic. I would custom graze cattle for a customer. I would push my lease payments to December 31st of each year but have the custom graze customers pay the entire year up front. I would then ask them for a loan equal to their year’s payment for my livestock management fees. So, if a customer was going to have a $300,000 bill with me for managing their cattle for the year I would ask if they could pay that up front on January 1st, then loan my company the equal amount in exchange for future custom grazing contract that secured their money. It allowed me to speculate with cows until my rent was due in 12 months. I back the loan with a contract that would guarantee them a year’s rent if I could not get them paid in 12 months. Needless to say…no one ever had to exercise that option. I was up and running once again.
13) What goes up must come down
At this point I was, after 20 years, reaping the rewards of my hard work. Between my two companies I was bringing in $2.5 to 3.5 million a year. I could do no wrong…so I thought. I saw this wreck coming. Cattle were priced way above their true value. I decided to take some cow money and buy a vacation rental in Tahoe. This would diversify my income and let me ride out the down turn in the cattle market. What I failed to do was acknowledge the affects it would have on my customers. I lost all my cattle broker customers and my custom grazing clients where hesitant to make yearlong deals. The market crash I bragged about avoiding came full circle and hit me in the ass. Everyone turned on me. If I owed someone one load of cattle for a loan I now had to give them two loads. It was a 50% down turn. One equaled two and I had to pay off past believers as they became non-believers as their companies suffered.
14) I will do whatever it takes to get the job done.
I know this will sound bad… but I will do whatever it takes to get the job done. If I have to steal a car to get to a meeting….so be it. I will return the car washed, full of fuel with an apology note and rental fee. But in the end….I will do whatever it takes to get the job done.
15) What I learned from cows.
If you have watched cows as much as I have you will notice they may better a little smarter than we give them credit for. I have seen thousands of cows have a calf. Not taught to them…it’s natural to have the calf. And their maternal instincts take over. They do not need to go to a Lamaze class to deliver and care for their offspring. They do not need to see a commercial explaining the benefits of spending time with you offspring. It is all they know…it is natural. Cows have what most animals have…fight or flight instinct. When backed into a corner, or protecting their offspring, they will do what comes natural. The cow, like us humans, has two choices at that point. What would you do?
Cows have a four compartment stomach. The omasum, abomasum, reticulum, and reticulum. Very efficient at turning forage into protein. It is an amazing set up. And guess what…they know what to eat and what not to eat without being told or seeing a chart in school or a commercial. They know how to make their own way. That brings me to the: Entrepreneurs: Are they born this way, or are they taught to be this way? Watch cows in their natural environment and you may be able to answer that question.
16) My final thoughts…as twisted as they may be.
When I see seminars and webinars on how to be an entrepreneur I wonder…then I know. The only entrepreneur in that room is the person selling all the attendees admission tickets, CDs, and the book they wrote.
Failure = opportunity in my mind. It is a stepping stone to success and becoming a stronger person. Success (personal life and business life) is only achieved after failure. On the back of my business cards I have a quote: “Only those who dare to fail greatly will ever achieve greatly,”
When I tell normal people (non-risk taker types) my story I get different responses. Most are along the line of…” Holy shit….you know you should write a book.” In their mind after I walk away they are probably thinking, “What a fucking idiot. Why isn’t he dead by now?” and, after I see in their eyes that I lost their attention, “I should of never asked him about cows. He talks too fast and I didn’t understand one thing he said.” I could go on forever about cows and my opinion on entrepreneurs and failure, but I don’t want to lose your attention.
Do what comes natural. If you look as failure and risk as an opportunity….they you know what I am talking about and my story is most likely not much different than yours. If you read this and say, “What an idiot.” Then there is no way I could ever explain to you how people like myself think. I may be an idiot…or I may not. I love to be knocked down. Because I will stand back up every damn time stronger and wiser. My wife does not think like me….but she believes in how I think and she believes in me. I once told her two things that she really didn’t think made sense. One, I have no problem being knocked down. In fact I welcome it. Two, I would rather get a “D” or “F” in school than a C…A “C” means I am just average. The road we take is long, narrow, bumpy, and unknown. There is no use looking in the rearview mirror. If you’re in the middle of this road you can take a ride with me, or I will have to run you off the road. Never let someone fool you into thinking it cannot be done. Never let someone fool you into thinking in can be done.
I get goosebumps from this quote in the movie “GOLD”: “I wake up every morning and think, I don’t have to do this. I get to do this.” I tell myself that several times a day.
I get to do this. Thank you for your time. John P.