Haren Bhakta: Business Failure, Leadership Behavior, and Turning Loss Into Long-Term Success

Hi, I'm Debbie Longo, Transformational Coach,

and welcome to The Behavioral Profit. This show

is about one thing. why businesses don't perform

the way they should. Most leaders think they

have a strategy problem, but they don't. It's

behavioral. It's how decisions are made, how

pressure is handled, and how people operate inside

the business day to day. On this show, we break

down what's really driving missed targets, stalled

growth, and poor execution, and what shifts when

behavior changes. Because when behavior changes,

performance improves, and that's where profit

comes from. We have a very special guest today,

Haran Bakhtar, and we're going to take a closer

look at what's really going on. inside his business,

what's working and what's not, and where behavior

may be impacting performance. Let's get into

a good afternoon and welcome to the show. Thank

you for having me on. Thank you for being on.

I'm going to ask you today to give an example

or a situation that you personally have experienced

in a business someplace where you worked or some

type of experience that you've had in a business.

the process of what happened during the change

of this situation and then the end result is

the positive result or something that happened

where basically you went. from a negative to

a positive. That's really what we're trying to

do here. Because believe it or not, people's

situations and scenarios are very, very, very

similar. So there's a good chance that a listener

is listening to this and has been through the

example that you're gonna give or any part of

it. And they wanna know how they can get. through

this without losing sales and profits, losing

employees, making their business go bankrupt,

because any business can get through any problem

situation scenario that it's going through now.

And it doesn't have to fail. It doesn't have

to continue that negative path or negative behavior.

And when we explain about the process, I'm just

going to ask you to be as detailed as possible

as you want to, whatever, it's fine. But when

we explain about that, we're showing a basic

path to get from one place to another, basically.

So in this situation, it's basically going from

negative to positive, which is pretty much what

we're describing here in a nutshell. And when

we do that, we're not only showing that the person

can get out of it, like I just said, Inadvertently,

the person's going to have a happier life, the

individual, the business owner, right, is really

the person that we're talking about here. They're

going to have a happier life. And the ultimate

goal to all of this behavior change and everything

that we're going to talk about, the ultimate

goal is to increase sales and profits for the

business, because if the business doesn't make

money, it can't function. That's basically the

bottom line, you know. So that's really what

the goal is here. But we do this by changing

behavior, by going through a process. And that

will take us from one place to another. Does

that make sense? Absolutely. Does it make sense

to the listener? I hope so. If you could do that

for me, I would appreciate it. I've spent my

whole career in investing management and I'm

a big Warren Buffett follower. And he talks about

behavior is the number one driver. for investment

results. It's not how much you know, it's not

how smart you are, it's not how good at math

you are, but it's behavior. So you mentioned

where I had some failure and it resulted in some

success. I've had some major, major failure.

In 2017, I was at Morgan Stanley doing wealth

management and I left Morgan Stanley to start

my own little fund. investing in tiny what's

called micro cap companies. And I invested a

big amount in a tiny little company in Las Vegas

that sells show tickets. It was a publicly traded

company. So I acquired 5 % of this company and

thought I could inflict some positive change

because they were kind of struggling. And I just

saw something that maybe I could fix. So I bought

5 % of the company and fought. to get on the

board, which I did. By 2019, I got on the board

of this company, thought I could make some positive

changes. In 2020, COVID happened. The entire

show business in Las Vegas shut down. And that

was 100 % of their business was selling show

tickets on a strip of Las Vegas. It really shouldn't

have been a public company, but it was. And when

the show market shut down, that was one of the

most stressful times of my life. I put a big

amount of money and I got investors to put in

money as well. And it ultimately went bankrupt

by 2022. It went bankrupt and me and a group

of investors bought this company out of bankruptcy.

And we took over in 2022 completely. So I even

moved to Vegas for a couple months just to kind

of see it through, bring it back up to speed

once the show market kind of started again. But

it was very difficult. It was very difficult

of a business to revive. And we ended up selling

it to a show producer in 2023. But that whole

lesson taught me something very valuable. And

it's what led to the creation of my new company

Inside Ownership Index. So by having that failure,

I would have never for one thought of the idea

of the ownership index. And the ownership index

is largely a passive index where I no longer

have to pick stocks anymore. Everyone kind of

understands this, where the S &P 500 and other

index funds are probably the best way to invest

for most people. So this is what I figured out.

And I'm now betting on leaders of organizations

that are already successful. So by having that

failure, I probably would have never thought

of this idea in the first place of betting on

successful leaders and passively investing alongside

them. Yeah, that was very good. Thank you. And

I think that's an excellent example. because

I have a lot of stories about this and a lot

of examples of COVID. I used to live in the North

in the United States, but I don't live there

anymore. I live in the South now. Not for that

reason, for other reasons. But I always say that,

and one of the reasons why I really got into

the business side of this business coaching was

because of COVID, because people thought that

they went bankrupt because of COVID. Now, sometimes,

and this is another big lesson that people learn,

which is exactly what you said, sometimes people

have to go through something, a loss, a money

loss, a loss of a person, any type of thing like

that, or something traumatic, and that brings

them to the other side of something else that's

meant for them to happen. Now, sometimes that

thing that was meant to happen was always there

knocking at their door, but they just chose to

do something else instead. And that's fine because

that's just part of their process. It's not right

or wrong just the way it is. I don't know if

that was your situation. But the point is that.

The there's no such thing as a bad thing that

happens. There's no such thing as a negative

thing. There's no such thing as a traumatic experience.

That's a feeling. Yeah, it's hard to say that

when you're actually in it. But no, I get your

point. And it was that failure that really allowed

for the success of my new company. So, yeah,

no, it's definitely a learning curve. And that's

the thing. You can't see it. Some people can,

but most of the time you can't see it until you're

out of it. That's the thing. But here's the thing

with that. Maybe I might learn from that. And

the next time this happens, maybe I might be

a little bit more aware or just aware of my surroundings

or maybe not, because things are really meant

to happen in a certain for a certain reason.

So sometimes people lose money. It's like the

end of the world. but if they come out the other

side and they do something else and Eventually

they get that money back or make a big investment

where they wind up getting twice as much money

back Then it really did work out but sometimes

people just do well on the past and say, I lost

this money, this happened, this business went

down. And there are so many, there's tons of

examples like this. Tons, because there were

so many businesses affected by COVID. So now

here's my question to you, okay? If... the business

had a different attitude and behavior, would

that company have went out of business or was

it solely because they lost all of their customers

and clients because of COVID? No, 100%. It actually

had nothing to do with COVID. It had to do with

much deeper problems than that. And so when I,

this was a $6 million company when I basically

started buying their stock and and ultimately

got on the board. I mean, for a $6 million company

to be public, these are tiny, tiny penny stock

companies. And I went through the last 20 years

of their filings and they probably, for a $6

million company, they probably spent about 18

to $20 million in legal expenses. This is before

I got involved. So you're talking about a company

that spent, for a $6 million company spending

$18 million in legal expenses. So this company

had a terrible behavior problem. So it didn't

go bankrupt because of COVID. It went because

they were spending money on just the wrong things.

And let me add that this is a business of selling

show tickets on the strip of Las Vegas through

kiosks. They didn't sell show tickets online.

Can you believe that? This was 2017 and 18 when

I started getting involved. And this is the opportunity

I saw to, okay, it's a no brainer. This company

is spending all this money on legal expenses,

not selling show tickets online. I thought this

was a no brainer for me to get involved and inflict

these changes. Let's just stop spending money

on these dumb things and invest in on a website

and a mobile platform to sell show tickets. So

had the company behaved much better, it would

have had a cash reserve to weather the storm

of COVID and it didn't. And that was the problem.

So it was completely a behavior problem. They

just didn't prepare. And the weird thing is,

the funny thing is, they experienced a similar

thing to this in the past. So when 9 -11 happened

in 2001, it wasn't shut down, but it was a ghost

town. People were not traveling. And also, I

think it was in 2018, there was a shooting on

the strip of Las Vegas, and that affected foot

traffic on the strip of Las Vegas big time for

a while. So the point is that the company needs

to, when you have a business that's tied to like

one region, doing one thing, you kind of have

to prepare for the unexpected Black Swan type

events. And they were just unprepared. And by

the time I got involved, I got on the board and

I didn't have control, but I got on the board

in October of 2019. by March the following year,

COVID happened. So it was just too late to really

inflict any kind of change that could have helped

the company. Yeah, yeah. So this company clearly

had some type of mismanagement problem or problems,

and they probably maybe could have did a lot

better in revenue if they sold tickets online.

Why they didn't do that, we don't know. because

people are someplace and then they travel to

Las Vegas. You know, most people don't live there.

So it's, you know what I mean? It kind of makes

sense, right? To buy something online. I mean,

I went there. Yeah. And I went deep in my research.

So we're talking about a company that had maybe

30 employees. And I went to those kiosks, asked

the employees, like, have they ever met upper

management? And for a 30 person employer company,

these employees have never met, some of them

have never met upper management. So for a 30

person company, everyone should know each other,

especially for a type of business like that.

And so I just saw a lot of opportunity that I

thought I could fix. And I just never really

got the chance to kind of just lost my money

before, before I got to inflict those type of

changes. And yeah, so that that was just one

of the most stressful times in my life. And yeah,

it's quite difficult. And it worked out. I mean,

I don't know about everybody else. In terms of

me coming up with this company through that failure.

Yeah. So that. And this is the story that we're

talking about, because this is basically going

from negative to positive. And this is not a

situation that you just witnessed. This is something

that you partly owned. So this was like a big

thing for you, because hopefully now through

your business now and whatever you're doing now,

you've reaped a lot of rewards from that. And

hopefully that money didn't really matter too

much now. Of course, losing money is not always

a good thing. But the point is that things happen

for reasons. And I can't always think about I

invest money and then I lose money. So I'm going

to go and invest money or make a company or whatever

and just focus on that. Things happen for reasons.

And why do things happen? And was this something

negative that happened that triggered something

good? for me to do things, different things like

that, because COVID helped a lot of people. I

hate to say it, but it's true in tons of ways,

tons of ways. So COVID had a positive outcome

in so many ways. But here's the thing, people

had to die because of it. Companies had to go

bankrupt. Companies had all kinds of problems

because of it. So there was a lot of stuff that

had to happen. in order for tons of people to

change and learn lessons and all that stuff.

And I hate to say it that way, but it's really

true. I mean, I started my business. One of the

big reasons was because of COVID, because companies

were going out of business because I'm a life

coach also. I'm not promoting myself because

that's not what this is about. But the point

is that this was a very good thing that you did.

And like I said, the result was very good. So

how do you feel right now the second with your

new business and everything that happened in

the past and basically everything we just talked

about in this podcast. How do you feel from all

this? What's the end result? I never envisioned

that would have this something I believe in and

love as much as I do with this new company that

I've created. And it just feels so good to have

something that I love with all my heart and soul.

And with every fiber of my body, I just believe

in that. For one, I know I'm doing good for people

because how many financial advisors and money

managers kind of remove money from the system

by charging high fees and things like that for

clients where I created a low cost index fund,

which has brought money back to the individual

investors in a large way. So in the fifties,

advisors were charging commissions on trades,

then slowly they got into money management and

charging a much smaller fee, maybe like 1%, maybe

a little bit more. But still, it's still coming

out of the pockets of the individual investors

when I think more and more people are understanding

that they don't need financial advice anymore.

They could just park their money in low cost

index funds. And that's really democratizing

retirement, things like that, investing in the

stock market. So I'm just really proud of what

I created. And I'm just happy that I have something

that I really believe in. So I'm really excited

about the future. And that's really, to me, the

best result that you could possibly get, especially

in the type of situation like this, because a

lot of people, like I said, had issues with their

business with COVID and never really recovered.

So they really had to go through like a really

low bottom where they didn't have money to feed

their family or put gas in their car. So to really

get back on their feet. And some people were

out of out of a job. They were out of work for

years and what took years and years, not just

a few months. So some people go through a lot.

Another thing I'm very proud of is that, for

example, Warren Buffett and Berkshire Hathaway,

if you ask Warren Buffett, what's the worst investment

he's ever made? And he would say it was Berkshire

Hathaway. And the first business he bought was

with Berkshire Hathaway was these windmills that

they owned and textile business. And they're

all out of business now. But he kept the name

Berkshire Hathaway as a reminder of that failure.

And same with me. So the ticketing company is

Ticks Corp. And my corporate structure, I kept

the same name is Ticks Corp. So Ticks Corp owns

my new business inside ownership index. I'm not

going to get rid of that name. It's going to

be kind of the way Buffett did it. We're keeping

the name Berkshire Hathaway. Most of the early

investments Warren Buffett did all went out of

business. A lot of people don't realize that.

So he's talking about one of the best investors

to ever live and all the early investments that

Berkshire Hathaway did are out of business. A

lot of people think of Kodak as failing because

they didn't invent the digital camera, but that's

just not true. They failed because they kept

fighting. They kept fighting to win in a business

that just no longer was going to grow. So you

don't lose when you understand that that that

line of business is is dying. So Buffett had

many businesses that are dying. He still does.

And what he does is he takes the capital out

of those businesses and reinvest elsewhere. So

Kodak failed because they kept trying to win

in a business that that just was no longer going

to happen. No one's going to buy film. And they

kept trying to win in that game or even Late

they started trying to get into digital cameras

when they had no experience what they could have

done is pivoted to something completely different

But instead they kept investing so much money

in an area that they were just never gonna win

Yeah, that was good and sometimes Businesses

have to go through this failures in order to

really know and really realize that they really

need to succeed, because there's a lot of businesses

and singers and people from show business and

stuff that just failed a lot in the beginning.

And that really motivated them to succeed, to

say, I'm really going to do this this time, I'm

not going to accept this failure. That's a good

way to close and also in closing I would like

to say any business can get through anything

and there's no such thing as a negative situation

or scenario in a business and that can always

be turned around into a positive and the business

hopefully will not go bankrupt and they will

increase sales and profits and if they don't

then they hopefully they'll learn from that.

The employees or the business owners or whatever

will learn from that. So there has to be something

positive that comes out of this. Whether the

business goes bankrupt or not, there has to be

because there's no such thing as a negative situation

because anything that's negative, I could turn

into a positive. And that's really the bottom

line. So before we wrap up, I want to leave you

with this. That's what behavioral profit is all

about. Understanding what's really driving performance

inside a business. If something isn't working,

it's easy to assume. its strategy, the market,

or external factors. But more often than not,

it's how the business is operating day to day.

Once that shifts, everything else follows. If

your business isn't performing the way it should,

there's a reason, and it's not random. If you

want to identify what's driving your results

and fix it, connect with me directly. Thank you

for listening, and I'll see you on the next episode.

And thank you, Haran, for being on the show.

I really appreciate it. Thank you.