Lessons for Advisors (and Life) From Emery Kertesz (Part One)
Emery Kertesz III. June 10, 1956-January 29, 2021
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This is the first of a five-part series on my partner, Emery Kertesz. He died on January 29, 2021, at age 64.
When I met Emery more than two decades ago, I’d rarely seen someone in worse shape. His employer had gone out of business, leaving him unemployed. He had been recently diagnosed with Wegener’s Granulomatosis, a rare disease that causes inflammation of the blood vessels. He was already symptomatic with a cough, sinus issues and watery eyes. His prognosis was uncertain. One doctor told him he could have as few as seven months to live.
Although he had extensive experience in the electronics industry, he told me his disease made him essentially unemployable. He was also uninsurable.
He was married with two young sons to support. His savings were running out.
An unlikely proposal
Emery had an idea for a new business selling audio equipment solely online. He would sell equipment manufactured by others and some products he had invented and patented.
His proposal was straightforward. He wanted me to fund his new business. The investment required wasn’t huge, but it was meaningful to me at the time. All he could promise was that no one would outwork him.
The only paperwork he provided was one page describing the business model and another one with very modest projections.
I had little knowledge of the audio business and only the most basic understanding of the internet.
I was very skeptical. How could his new entity possibly compete with the big box stores? How would he drive traffic to the new website? How could customers be assured they could pay safely online?
That evening, my wife and I took him out to dinner.
That’s when everything changed.
My due diligence
I sent Emery’s proposal to my accountant and to a forensic accountant I knew from my days of handling arbitration cases. I asked them to give me their candid assessment.
Their reactions ranged from: “The business model makes no sense,” to: “There’s a 99% probability you’ll lose your total investment.” When I told them I had decided to make the investment despite their advice, they were adamant in telling me I was “a fool.”
After our dinner, I asked my wife what she thought. She said: “There’s something about him that’s very special.” I agreed.
My wife and I often talk about what those “special” qualities were. It was a combination of humility, disarming honesty, candor and intelligence. Emery made no effort to “sell” us. He told us that betting on him was a “big risk.” He discussed the pros and cons. He told us he felt he could make it work by assembling certain products himself in his garage, keeping his costs as low as possible and paying close attention to every expense, “starting with the cost of pencils.”
The success of those companies transformed Emery’s all-too-short life and greatly enhanced mine, both personally and financially.
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The first lesson I learned from this experience is to value the advice of others but listen to your intuition as well.
The second lesson is not to be too confident about your judgment. My advisors were highly skilled and well-meaning, but there were a lot of unknowns they didn’t factor into their advice.
The third lesson was that we made this decision based on our feelings about Emery. We paid very little attention to the details of his proposal.
The decision-making process of your clients is likely to be very much the same.
That’s a valuable lesson.