In 2008, my brother Dave and I were on the front lines of a developing credit crisis that would financially impact us severely, and many other millions across the world. Because of our occupation at the time, we could see it approaching before the media began reporting on it. We learned some incredible lessons during that time. I hope to share the most important lessons that are applicable to the current state of the world.
The story begins
Our story begins in 2007. We left our jobs at Countrywide Home Loans in Northern California, uprooted our families, moved to Texas and started our first business together: Renoak Financial. When we launched Renoak we spent months developing partnerships with a couple dozen different banks and lenders across the country, reached out to our old clients, and let them know that we were ‘Open for business’.
Things changed
From our launch throughout the remainder of 2007 and very early 2008, things seemed OK. We thought we’d made a good decision to leave the safety of working for a large corporation. The prospect of being entrepreneurs and building our first company together seemed promising. But, something changed. Washington Mutual, one of our larger lending partners drastically changed its underwriting guidelines for Home Equity Lines of Credit. They made multiple changes within a very short timeframe, sometimes making changes within the same day. Although an announcement hadn’t been made, we knew something was wrong.
Panic sets in
In the weeks that followed Washington Mutual’s underwriting changes, all of the other banks and lenders followed suit. We knew that these changes would have an impact on Americans’ ability to borrow. We also understood that home prices would plummet, and we also knew that our business would be greatly impacted. But we were young, lacking experience or a frame of reference. Our response… was to panic. Apparently we were not alone.
Being unprepared and closing a business
We were correct in our assessment of what would follow, but we were unprepared. In the following months, every one of our banking and lending partners either shutdown their lending programs or went out of business, except for three. For us, it was an armageddon scenario — something we couldn’t have imagined in our worst nightmare. What followed, were months of agony, no income, loss of savings, loss of equity, and the eventual closure of our business. Ouch! It was brutally painful.
New opportunities, new skills
The loss eventually gave rise to new opportunities. We experimented with consulting. We worked on commercial financing requests, which resulted in us learning completely new skills. In the years during the credit crisis, we completed the sale of distressed assets on behalf of banks, closed SBA loans for clients, advised on debt workouts between clients and lenders, and got involved in business advisory. It was a time of incredible learning and growth.
All that learning often came at the expense of income. We had many, many months of no income. But, we learned a ton. It also set us on a path of constant learning, and constant growth. We were no longer content to only be mortgage originators. We adapted, and increased the breadth and depth of our knowledge. We went back to school and completed Master’s Degrees while working for employers. Our journey back to self-employment was long and arduous. All this learning is now an essential part of our business DNA and has allowed us to attempt several different ventures since the closure of Renoak.
Looking back now, I can see that this experience of tremendous learning and coping with loss, has prepared us for this current crisis.
Lesson 1: Don’t panic.
At the moment, there are many reasons to view the state of the world and to fear. Don’t. Stay calm, look at the things you can directly control. Don’t focus on the things you cannot. One mistake that we made during the credit crisis, was to focus on all the things going on around us that we couldn’t control. We let those things determine our state of mind and influence our personal and business decisions. Don’t let panic direct your decisions.
Lesson 2: Look for opportunities.
The world is constantly changing and evolving. Accepting this fact will help you adapt. As humans, we have incredible resiliency. We’re capable of going through REALLY hard things, and we are capable of learning and changing. When the world changes, you need to change. Don’t stay stuck on how the world was… Change. There are going to be opportunities during this current COVID-19 crisis. Some of these opportunities to learn and grow are going to be painful. Don’t complain, don’t focus on the pain… focus on growth.
America and the world will be a better place once we’ve worked through this current crisis. I strongly believe this. If you own a business, adapt. And do it quickly.
Lesson 3: Maintain hope.
Hope is powerful. Without hope, those gray days seem to last forever. Of course, we’re going to experience pain, loss, grief, depression, anxiety, and doubt. But… cling to hope. Don’t give up. Don’t give in to absolute fear. Don’t focus on the losses. If you have your moments, it’s OK. Remember, the sun will come out.
Looking back at the credit crisis, when we were in the middle of it, it seemed like it would never end. It seemed like the world would never go back to how it was.
In fact, the world improved afterward and was better. The economy and peoples’ lives improved far greater than anything that existed before the crisis. The world changed. The world adapted. Don’t live in fear. Live with hope.
Hope has the power to bring about change.
It is often in the darkest skies that we see the brightest stars. Richard Evans
Tomorrow…
When I was six years old, I remember watching the movie “Annie” in the Pinetown Hill Street Theater, with my parents. This was my first introduction to a musical. This story resonated with me, even though I was living halfway across the world in South Africa.
The main character, a little girl Annie of 11 years, lived in an all-girls orphanage in New York. She was inspiring. Despite the tragedy of her circumstances, not knowing who her parents were, and having an oppressive (although comical) manager, Miss Hannigan. She adopted a motto of hope in the form of a song, “Tomorrow”. I loved this song 38 years ago, and I still love it today. It perfectly represents Hope.
The sun will come out
Tomorrow
Bet your bottom dollar
That tomorrow
There’ll be sun!
Just thinking about
Tomorrow
Clears away the cobwebs,
And the sorrow
’Til there’s none!
When I’m stuck in a day
That’s gray,
And lonely,
I just stick out my chin
And Grin,
And Say,
Oh
The sun will come out
Tomorrow
So ya gotta hang on
’Til tomorrow
Come what may
Tomorrow!
Tomorrow!
I love ya
Tomorrow!
You’re always a day away
When I’m stuck in a day
That’s gray,
And lonely,
I just stick out my chin
And Grin,
And Say,
Oh
Tomorrow!
Tomorrow!
I love ya
Tomorrow!
You’re always
A day
A way!
We got this!
