Muhammad Ali is often considered the greatest boxer of all time, and if you asked him, he would tell you that he thought so, too. David Malcolm, San Diego real estate expert, said that Ali would often say over and over again, “I am the greatest,” as if he were reminding himself of that.
Ali lived by that phrase even before he became famous. But while he was great in the boxing ring, he was not “the greatest” in any other sport.
So, what can we learn from this?
“You can’t be great without being bad,” says Malcolm. “Some may consider that to be an oxymoron, but it’s really subtle wisdom.”
Below, Malcolm illustrates this with two great examples of companies that are bad — and how it actually makes them great in the end.
Costco is Great for Families on a Budget
Costco is a warehouse store geared toward families on a budget. People pay an annual membership fee to obtain access to the store and then benefit from the big discounts they enjoy by buying in bulk.
The concept has certainly caught on, especially in recent years. Costco’s annual revenue has increased year-over-year 9.21 percent from 2019 to 2020, then 17.49 percent from 2020 to 2021, and finally 15.83 percent from 2021 to 2022 — all the way up to $226.95 billion.
In that time, the company has also been very successful profit-wise, with the annual gross profit for 2022 reaching $27.57 billion, an increase of 9.22 percent from the year before.
However, Costco isn’t great for everyone. For example, single people often can’t benefit from the discounts Costco offers. Why? Because they are required to buy 24 rolls of toilet paper instead of two to four or cannot consume the large quantities of single food items they have to purchase before it all spoils.
Will Costco change its business model to appeal more to these single people? Absolutely not. The company makes up for not making these smaller individual sales by selling huge quantities and having a fast turnover of inventory. So, while their margins are low, they make it up on volume.
“Costco clearly is bad at some things. However, it’s able to be very successful as a business because it’s great at one thing — providing families on a budget with a way to purchase the affordable goods they need,” says San Diego real estate expert David Malcolm.
Cal West Apartments Switches Out Tubs for Showers
Cal West Apartments, a trusted provider of quality rental housing in San Diego and South Riverside counties, was recently faced with a quandary. The company – which David Malcolm serves as president of – was debating whether to replace the bathtubs in its units with showers.
The issue was that tubs cause problems. For example, if someone falls asleep while the tub is running, the water overflow not only damages that particular unit but can also damage adjacent units. This can also result in mold, dry rot, and other major problems.
With tub-and-shower combo units, issues can arise if a renter doesn’t pull the shower curtain inside the tub. Again, this could result in significant water damage, dry rot, and mold. Plus, getting in and out of a tub — when taking a bath or a shower — presents a fall risk.
At Malcolm’s insistence, Cal West Apartments came around to seeing bathtubs as more trouble than they were worth.
Malcolm explains, though, that there was a great deal of push-back about doing away with bathtubs. Many people enjoy relaxing in a bath, and parents, especially, want their kids to take baths.
But, to be great, Cal West Apartments knew they had to be bad to some people. So, they swapped out tubs and replaced them with high-quality showers. The results were impressive.
In surveys, renters said they overwhelmingly preferred showers over tubs. In addition, Cal West Apartments experienced reduced renter turnover and achieved much better financials thanks to fewer repairs and lower renter turnover.
Again, the lesson here is that to be great, you’re going to have to be bad sometimes.
“And maybe you will find that being bad is not as bad as you think,” says Malcolm. “That is what we experienced.”
About David Malcolm
David Malcolm of San Diego is an influential real estate professional, entrepreneur, and community leader with over five decades of work experience. Mr. Malcolm is an esteemed graduate of Harvard Business School’s Presidents Program, a licensed real estate agent and broker, and a Certified Commercial Investment Member. He has run and advised multiple public and private companies and held several municipal and statewide public offices.