During a recent vacation on the island of Maui, I became interested in how the recession had affected the real estate industry in a market that is dominated by second homes and investment property. The numbers are similar to what is happening on the mainland. The quantity of sales are down dramatically, the average sale prices are lower by some 20%, and properties languish on the market for in some cases over a year. That being the case, I decided to drop in on an open house and speak with a local realtor.
The house that attracted my attention is very similar in size and quality to my own home in rural Vanderburgh County. The price however is as the realtor put it "a steal at only $ 8 million dollars". Now that is quite a difference in what such a house commands in my neighborhood. It must be that oceanfront thing and the perpetual great weather. I was intrigued. During the course of conversation, I learned that the home is owned by a dentist from Georgia who bought another home just across the bay so he could have a sunset view instead of the sunrise view that this home offers. The dentist's total investment in the two homes now stands at a cool $ 20 million. I was beginning to think that I should have become a dentist instead of a CEO.
Dentistry is a profession that requires the highest levels of both education and dexterity, but $ 20M houses? I learned through the Bureau of Labor & Statistics that a general dentist in Georgia earns a median wage of $ 171,280 and that in Indiana that figure is $ 158,080. I do not understand why we pay less in Indiana than Georgia but who am I to argue with statistics. I further learned that by specialization, a dentist can earn as much as $ 315,000. This will enable one to have an extremely good lifestyle but not to own $ 20M in Maui real estate outright. The numbers just do not add up.
Invention and Innovation are the Keys to Wealth Creation
A further conversation yielded the knowledge that the owner of these homes is no ordinary dentist. He actually owns a portfolio of patents that he invented to improve the way that dental care is provided. What happened is that this gentleman while working as a dentist identified and developed ways to improve his dental practice. He furthermore took the initiative to design, build, test, patent and commercialize his inventions and innovations. So, what this dentist did is assumed the risk, made the investment, and ultimately reaped the rewards for his ideas and initiative. He transferred from dentistry to become an inventor, innovator, and a successful entrepreneur. He also created new knowledge that has been used to improve the lives of scholars and their patients the world over.
"Where a new invention promises to be useful, it bought to be tried" Thomas Jefferson
One Person, One Region, One Nation
The free enterprise system has richly rewarded this dentist inventive efforts and he is now really one of the super wealthy. That which works for individuals can also work for societies and nations. By creating new knowledge, forming risk capital, and unleashing the energy of inventors and entrepreneurs, the United States has become the leader in both Nobel Prizes and wealth creation. The world's best and brightest, but more importantly the most ambitious have routinely flocked to our shores to pursue their business dreams. Some places are much more attractive and supportive of entrepreneurial spirits than others. Attractiveness is about lifestyle and amenities of place.
Supportiveness is however about access to talent, tolerance for risk, the ability to form local investment capital, and having an atmosphere where being an entrepreneur or inventor is looked up favorably. As this dentist has proven, one can go it alone, but a full support network and a culture of creative achievement are what will insure that more and more transformational people will succeed in the wealth creation that is most certainly the only sustainable way to provide continuous growth to the nation's economy.