In war, events of importance are the result of trivial causes. Julius Caesar, Commentarii de Bello Gallico. This is an amazing quote from Julius Caesar's Letters from Gaul, which is an incredible book that I first came across years ago, actually in high school, come to think of it, and which has stuck with me since then. It is fascinating. I highly recommend it. And also, I just want to point out, it is probably the first known example somebody who live streaming their life to a broader audience. The context of this book is incredible because it details the journal, well, actually the letters of Julius Caesar to the Roman public back home about his exploits in ultimately conquering Gaul and subjugating multiple very dangerous tribes, chieftains, war leaders. And the purpose of it was that even though Caesar was far from home, he wanted to send almost like a periodical series of updates to the Roman public about what he was doing. So when I say it was live streaming, it's about as close as you can get to live streaming in the era. And it's an incredible story. because let's go back to that first quote. In war, events of importance are the result of trivial causes. That is a direct quote from Caesar's letter back home. And what's true in war is true in basically everything else. I mean, war is just like life, stripped of all its civility and kindness and other aspects, right? I mean, you do whatever you can to win. And, you know, I think sometimes translation of war to business is maybe overdone, but not really. And I think there's a lot of validity to it. I mean, we read Sun Tzu's art of war and try to apply those lessons to business every single day. So think about that quote. Because I think it's true in real estate investing in business and in life. Events of great importance are the result of trivial causes. Trivial causes in real estate investing are your execution, your ground game, how focused you are on the minutia. I think there's a tendency in this business to be focused on the big glamorous activities, raising capital, buying a new building, social media updates for everyone. But what really matters is the micromanagement of the day-to-day operations on the ground. And just like in war. You make one couple of bad, small decisions can have huge knock-on effects down the line. So in this new series, I'm not going to do this on a week-to-week basis, but I envision this being up to four to five total podcast episodes. We're going to dig into Letters from Gaul, and maybe later we'll do The Art of War. I don't know. But I like Letters from Gaul a lot. I don't think the audience is aware of it, so I want to highlight this book particularly. And in this series, we will explore the enduring laws of strategy, empire, and execution that map really well to the world of investing. Because this isn't historical trivia. This is unchanging, timeless logic behind power, risk, and control. Because again, war is the ultimate laboratory of high risk, high reward, where everything is removed. It is just civilization at its purest, most unadulterated form. I I'm a Hobbesian, right? So if any of you read my book, you know I love Thomas Hobbes. And Hobbes' whole perspective is that humanity built governments around itself for the purpose of protecting itself from stronger oppressors that might try to steal their material possessions from them. So it's a rather pessimistic and kind of dark look at humanity. And I think anybody would agree. that if we had a massive earthquake and there were two to three weeks without social services, I think civilization would fall apart pretty quickly. Well, war and business are two things. I mean, business is certainly more controlled by law, but they are things that really peel back the polite veneer of civilization and show us things in their true primal form. So let's talk about the campaign to subdue Gaul because it's an interesting story. Gaul was a place, Gaul, by the way, for those of you who don't know, is modern day France, which is why, you know, Charles de Gaulle of France, like, you know, the term has lived on obviously beyond this period. But at the time, the Romans knew it as Gaul. It was a place of tremendous uncertainty, difficult terrain, logistical nightmares, augmented tribes, constant betrayal, local allies that turned on them on a whim, you know, just constant, many, many, many setbacks. And Caesar had to rely on principles to succeed. He had to fortify first. He had to respect the local conditions. He had to secure logistics. He had to think in years, not just in terms of battles. And honestly, I think investing, especially in real estate, or I think private equity as well, but real estate for sure is not too dissimilar from this. It's not just a clean spreadsheet exercise. I've talked a lot about how underwriting, you know, makes what is really an art at the end of the day masquerade as a hard science. Real estate is a chaotic business. You don't know what's going to happen. There's a lot of risk. you know, the one certainty is uncertainty, right? Like things go wrong, pillars break, pipes burst, pipes freeze. There's, you know, in the last big snowstorm we had here in Portland, I knew multiple people that had brand new buildings where their pipes froze and burst. And we own 1910 vintage assets where the pipes rode through it like it was nothing. How do you account for that? Nobody would expect that to happen in a brand new building. I mean, it's wild, right? Wild. And you don't know. So in my view, Those with clear frameworks, frameworks that they have conviction in, not certainty, but conviction, are most likely to survive. So let's talk about what I view as the five strategic laws that Julius Caesar kind of passed down to us as universal field strategy that you can apply to your investing business or to your approach building your portfolio as you think about being an investor. So first of all, the Romans were masters at this. Number one, fortify before you expand. Every single Roman campaign began with a fort. And I grew up as a kid, you know, I love this joke about how often do men think about the Roman Empire. And I think the short answer is I think about it all the time. But I was thinking about it as a kid before it was a meme. And I had a book that highlighted the way the Legion worked and operated. And one of the things that always stood out to me was every time the Roman army would camp, they would build a fort, which is amazing. So they were always fortifying. They were always building out something sustainable for themselves to protect themselves as they advanced and conquered more territory. And in investing... I think it's a similar point. Don't scale your portfolio without getting your operations in order. You need to first stabilize, then grow. And this looks like a lot of different things, right? I mean, if you're an investor that is investing in passive syndications, it's a little bit different. You don't have the same worries that I might have on a day-to-day basis, but the subject matter is the same. I think if your home base is riddled with credit card debt and you're spending more money than you make, Like you ought not to be investing in syndications then. Like you first need to get your home operations in order. If you're making more money than you spend every single month and you can start putting capital out, great. Then the next question is, what are your backend operations look like as an LP, as a wealthy individual that invests, right? Like how are you tracking your spending and your income? How are you tracking your investments? How are you managing your deal flow? How are you managing what's coming in? What is your process to build out your backend as a sponsor? doing what I do, it looks different, right? It's how am I monitoring KPIs? How am I managing day-to-day operations? What does my accounting management process look like? What does my backend look like? One thing we've been working on a lot is the backend for bookkeeping and accounting. I mean, it hasn't been great and we're improving it. And we're investing in new systems and software to improve and strengthen that function, because it's an important piece of the entire puzzle. And a lot of people, you know, myself included at times, grow faster than we build up our base, because I think our society really glamorizes fast movement and aggression. But like, we also need to move forward while fortifying as we expand. Number two of the five strategic laws that I take away from Letters from Gaul. Caesar made battle, well, let me say, local reality is greater than than central vision. What do I mean by that? So Caesar made battlefield decisions based on the terrain, not on what some higher up back in Rome told him to do. He had to deal with what was happening on the ground. I think there's two ways to look at this. I'm going to try to break each of these down into how an LP might think about this and how a sponsor might think about this. So from an LP standpoint, I think I go back to the Warren Buffett-ism, invest in what you know, right? Don't do things that are not something that you understand. Your ability to understand and comprehend what you are investing in is really critical. It is the on-the-ground micro-understanding of what it is you're doing. As a sponsor, I think it looks a little bit differently. It's like, trust what's going on on the ground. understand what's happening on the ground. I have had so many instances where I was, you know, I'm an investor in multiple states and multiple cities. And my home base is Portland. And I grew up in the San Francisco Bay Area. So I know both of those markets very well. We also invest in Seattle. I've been very fortunate to have very good mentors and partners in Seattle. And, you know, I understand Seattle very well. We've invested a lot in Seattle and Tacoma. But I don't know it as well as a local. I'm not on the ground. And it's fascinating when I bring a deal and Capitol Hill, right? Great neighborhood. And I say, this is a fantastic deal. It's a good location, blah, blah, blah. And local operators will say to me, hey, you don't want to be on that end of the street. It's fascinating. That end of the street. It's that micro. Understand what's happening on the ground. Understand that models can distort the reality of the situation. Another quick anecdote, we looked for a little very short period at investing in East Portland, which is a relatively rough part of town when I was very early in my career. And we underwrote a deal. It looks fantastic, high cash flow, beautiful, like it was going to be amazing. And I had a long conversation with another mentor that had more experience in the market. And he was like, your numbers are all off. Like you don't understand this neighborhood. Like this neighborhood is really rough, really hard to collect rent. You need to... Factor in a large delinquency loss. You need to factor in the difficulty of collecting rent, of security patrols, of a much higher management fee because the asset is so management intensive. Local understanding versus 50,000 foot high. If Caesar had taken that perspective of looking at a map from hundreds of miles away and trying to make decisions, he would have lost. He would have lost dramatically. So deep local understanding. The third, logistics management. Now, the Romans were experts at this. The Romans obviously built roads. They mastered logistics, food supply, discipline. It wasn't about flesh. It's actually really interesting. If you compare Gallic and Germanic warriors to Roman legionnaires, generally speaking, they were larger, fiercer warriors. There's a reason a lot of the gladiators that were brought back as slaves were German warriors, for example. But the Romans beat them. And now we all know the, you know, Teutonburg Forest, some of the big disasters that happened to the legion. But generally speaking, Rome subjugated countless tribes that were comprised of warriors that pound for pound were better and stronger fighters than your average Roman legionnaire. So why did Rome win? Because at the end of the day, logistics and discipline are what wins, right? And The Romans had really strong logistics. They kept their supply lines controlled. This goes back to point one, fortify before you expand. They had a system to feed the legion, to equip the legion, that they were able to out-compete and out- logistics, their opponents, right? In our world, that looks like property management systems, CapEx systems, managing your debt, managing everything that's going on. Logistics in this case is really a proxy for all of the different components that go into managing and running your investment portfolio, whatever it may be, right? So if you're an individual investor that's buying stocks, what is your process of to understand and keep in touch with everything that's going on with your portfolio. What is your process to hold the people that invest money on your behalf accountable? What KPIs are you looking at? I think all of these are analogous to logistics. As a direct real estate investor, what are the KPIs I hold my property management company accountable for? What are the systems that I put in place so that we don't have drop balls all over the place and everything is really clean? Number four, Strategic time horizons have to be stretched. Caesar didn't fight in this battle for quarter-by-quarter wins. I will say, it's a fascinating read because there's so many setbacks, like legions decimated, allies turning on him, marching into battle, and one of his closest allies turns against him and they have to beat a hasty retreat. I mean, it can go on and on. There's so many amazing things about it. But this is the thing. They never stopped They didn't give up. I mean, that was like one of Rome's great talents, right? They just never stopped. They can take dramatic losses, but they were never willing to stop the fight. They had a long-term strategic time horizon and they stuck to it and they won. Ultimately, they won because they outlasted their enemies and they kept going. And I really think investing is a lot like that in general across the board. Your time horizon is cannot be short-term if you want true long-term success. You must be a long-term investor to really benefit from the compounding effect. I mean, I'm going to quote my favorite Charlie Mungerism again, never stop compounding unnecessarily. Well, compounding really happens best when you have a long-term time horizon. So you have to stay at it. And number five, the edge of operating at the very edge is fragile. So therefore, discipline is non-negotiable. When leaders get soft, if Caesar had gotten soft, they would not have won. There are many examples now of dubious historical quality, because remember, this was really a puff campaign for Caesar to represent himself to audiences back home. But there are several examples of Caesar himself entering the fighting alongside his men to rally them and win battles that might have been lost otherwise. There's many examples of him providing commendations and awards to centurions who did the same, who inspired the legion to fight harder. Don't get soft. Being soft in investing looks like passive ownership, not being involved in the details. Inattention equals ruin. Remember our first quote in this. In war, events of importance are the result of trivial causes. The sloppiness that comes from lack of discipline are the trivial causes that lead to significant issues down the road. And I said earlier, you know, this point on Germanic warriors being bigger and stronger than the average Roman soldier. It's true. But Romans still won because they were disciplined, because they locked shields and worked as a team and fought together in a disciplined format. And Germanic warriors were used to one-on-one duels, overwhelming their opponent with giant sword swings. And the Romans didn't fight like that. And they won, like they won decisively. So discipline is non-negotiable. You have to be disciplined. You have to monitor the micro. And I think that's the same if you're an LP, by the way. I think the best LPs we have understand what's happening. I prefer my investors to know what's happening and like engaged investors that ask good questions and understand. Because ultimately, good or bad outcome, it's better for me if my investor understands exactly what's happening than if they're very, very passive and unattentive to what's going on. So... Discipline is non-negotiable on the edge of anything. So Caesar didn't win Gaul just because he had better swords. He won because he built a machine that could survive stress. And honestly, that is our job too. Whether we're buying real estate, managing capital, stewarding a team, building your family's portfolio, the laws, the timeless laws and strategic wisdom here do not change. We will go further into each of these principles on a go-forward basis, why they're so hard to do and why it separates the pros from the amateurs. In the meantime... If you haven't done it already, on the course of listening to this episode, I would highly recommend picking up your own copy of Letters from Gaul. It's a fantastic book. It's really interesting. You will really enjoy it. If you haven't done it yet, please leave a review for us on your podcast service of choice. It really helps the show out. The Timeless Investor Show is growing. We're having an increasing number of downloads per episode as we continue to produce good content. And I have an interesting lineup of future guests that are going to be coming on as well. So you won't always just have to listen to my voice, but there There'll be some good stuff coming down the pipe. Think well, act wisely, build something timeless. Thank you for being here. This is your host, Ari Van Gemeren with the Timeless Investor Show. And I look forward to seeing you next week.