C&B Notes

Silicon Valley Value

Charlie Munger has offered that “all intelligent investing is value investing — acquiring more than you are paying for.”   John Arrillaga’s approach to developing modern Silicon Valley’s real estate infrastructure is an applicable case study of this principle.

From the start, he and Peery approached their land deals with an acute sense of price and value — and a challenging short horizon.  Boyd Smith Sr., co-founder of WSJ Properties, a real estate development company and longtime Peery Arrillaga partner, recalls Peery telling him: “You make your money when you buy [not when you sell].  You buy something you know is going to be worth more a month from now, and you buy it at a very advantageous price.”

His way of doing business seems wonderfully, refreshingly anachronistic — and to hear legions of other Valley notables tell it, it is the reason Arrillaga, who bats away offers to take cushy director seats on startup boards, has become a role model to a new generation of entrepreneurs and executives, many of whom initially seek his development expertise but keep coming back for his wisdom.  It’s no surprise, perhaps, that Andreessen looks to his father-in-law regularly for advice; Horowitz, though, says he’s just as solicitous of Arrillaga’s ear.  The developer advises him on everything from real estate matters — “Always buy from a leveraged, distressed seller,” he says — to why it’s not worth cheating on your wife (somewhat self-explanatory).  Says Horowitz: “He is the guy everyone wants to do business with.”