Alex Rodriguez’s “Rises from the Ashes” Journey and His Takes on Masters of Scale
The young Alex Rodriguez dreamt of two “Bs”. One is to be in business and the other is to be a major league baseball player. The adult Alex Rodriguez not only managed to achieve both the goals but nailed it astoundingly. As a Major League Baseball player for 22 years, he was a 14-time All-Star and four-time MVP and holds the record for the most grand slams ever with 25. And while his suspension in 2014 supposedly put out a flame on Rodriguez ’s reputation, just three years later, he was everywhere. This time, it was his business acumen that made him the spotlight.
The slugger-turned-entrepreneur has been busier than ever as his investment holding company, AROD Corp is in the midst of a strategy revamp. The company has invested in well-known consumer startups such as Snapchat developer Snap Inc., one of the fastest growing companies in the US, fitness chain TruFusion or other companies thriving during the pandemic, telemedicine provider Him & Hers and an investing app Acorns, just to name a few. On his real estate empire, Rodriguez has now managed over 200 employees and more than 12,000 units in 13 states.
Alex Rodriguez has been through ups and downs, but he always managed to excel at whatever he sets his mind to. Let’s read on to uncover his journey of falling and rising back to top as well as his secrets along the way.
From Tenant to Landlord
While Rodriguez was constructing his baseball career, he was also building investments. Rodriguez founded A-Rod Corp at the age of 27, which since 2003 has invested in more than 40 companies and partnerships valued at more than $1 billion. The road that led Rodriguez to become an entrepreneur was simple. “It was fear” – Rodriguez said.
“I looked at most athletes in major league baseball, and the average career is about five and a half years,” he says. “You make probably 95 percent of your money from age 20 to 30. Then the question is, what happens 31 to 80? Less than 5 percent of our athletes have college degrees. I’m not a stock broker, but if I had just that information alone, I would short the stock.”
Rather than become a statistic, he invested in his future outside of baseball. “I didn’t want to be one of these guys that ran into financial trouble,” he says.
A wizard at strategizing both on and off the field, he made a plan. “I figured if I played for five years and I bought five assets, and if I was 20, by the age of 35 with a 15-year mortgage on my loan, I would have five assets debt-free,” Rodriguez says. “That alone would be my insurance plan not to be part of the 70 percent of athletes that were bankrupt.”
Found his way into the real estate, Rodriguez believes that’s what he knows best. As a child, his family had to move every 18 months as his mother couldn’t afford to pay the rising rents even though she worked two jobs, secretary during the day and waitress at night. This little boy has ever since told himself “Goddam, if I can ever exchange places with the landlord, I’ll do it.”
Alex Rodriguez made his first investment in his early 20s, by purchasing a single duplex in Miami. The former Texas Rangers and New York Yankees slugger needed approximately $48,000 as a down payment; mere pocket change for a player who would sign the largest free-agent contract in Major League Baseball history at that point when he inked a 10-year, $275 million deal with the New York Yankees four years later.
From there Rodriguez created a real estate and development firm while managing his 22-year baseball career. “I bought a duplex, then sold that, bought a fourplex, so on and so forth, and I built that portfolio to the north of 10,000 apartment units in over 14 states all over the Southeast, predominantly secondary and tertiary markets like the Carolinas, Virginia, Houston, and markets like that” – Rodriguez once shared. When commenting on his motivation to build such an empire, Rodriguez attributed his success to pure curiosity. “I’ve had an intellectual curiosity and appetite that’s always been really large. It’s been an important vessel for me, both in sports and in business.”
Rodriguez didn’t think jumping right into investment is a smart idea. “Before investing you should take a timeout and do a few things,” he said. “No. 1: knowledge is power, so obviously learn the game and try to surround yourself with the greatest team you can find. The biggest resource we all have is human capital. Athletes usually have access to the gift and curse of great people and not-the-greatest people as well, so making those decisions early are super important.” – shared Rodriguez.
Since 2008, Rodriguez and his business partners launched Newport Industry Construction and has managed over $1.5 billion of residential, commercial and mixed-use assets. Four years later, he founded Monument Capital Management with Ramon Corona and together acquired more than $700 million of real estate assets across 13 states.
Rodriguez believes diversity is the best way to run a business. When reflecting on the 2009 World Series Championship, Rodriguez discussed how his team was incorporated with people from different backgrounds. “We had the most beautiful, diverse team. That made us great. We all brought different things to the table. I think the same is true for business.” – he recalled.
Rodriguez applied the same value to his investment portfolio. Other than real estate, he broke ground into sports and wellness. In March 2017, A-Rod Corp bought the rights to build UFC-branded fitness centers in Miami-Dade County and invested in group exercise and yoga firm TruFusion and bought the franchise development rights for 20 locations across Florida within just 4 months later. The company also invested in IceShaker, a lifestyle brand specializing in water bottles and shaker cups, through Shark Tank, where A-Rod has served as a guest shark.
While Rodriguez remained tight-lipped about future investment opportunities, he stressed the need of bolstering his team and making “our bench stronger and deeper.”
“We’re always looking at what we think the world’s going to be in 10 years and how do we reverse engineer that?” he said. “It’s funny, people always look at history then try to apply their strategy moving forward. To me that doesn’t make much sense, really.”
A Comeback of All Comebacks
Few expected that Alex Rodriguez’s today success could only happen because of the darkest moment in his life. The sport’s longest-ever suspension for performance-enhancing drugs in 2014 seemed like a death knell for A-Rod’s reputation. “I fell from the top of the mountain, all the way to the ground,” he told. “I call it ground zero and below.”
“I was sitting there crying,” he says. “It was torture. It was like being a masochist. I was broken, dead, tapping out, thinking crazy things.” He had already decided to drop his lawsuits against baseball, to accept his penalty, but he had no idea what the result of that would be. Eventually, he said, he realized that he needed to stop fighting the allegations and start taking accountability for his mistakes. That meant calling his closest friends, family members, and business partners to apologize. “I thought these phone calls would take about two weeks,” he said. “It took about six months to build the courage. I would pick up the phone and hang it up, pick up the phone and hang it up.”
Although Rodriguez’s return to the Yankees dominated sports media in 2015, the once-astounding baseball star was never as the old days. Despite breaking few more records, the Yankees already lost interest in A-Rod. The team said the final farewell to Rodriguez in August 2016, putting an end to a messy yet lucrative baseball career.
Yet to Rodriguez, that suspension was a blessing in disguise. “The suspension cost me north of $45 million, probably more,” Rodriguez said. “It was worth every penny.” That one year off the field allowed him to nurture his thirst for real estate and business investments that began early in his playing days.
Rodriguez turned his way to become a student. “I’m trying to stay low key, and I’ve embarrassed everybody in my life, from my mother to my kids to my friends, coaches, owners, everybody in between.” I said, “Maybe I can sneak in and get a class at the University of Miami at the business school.”
One of the most terrifying yet also life-changing to Rodriguez is when he was called upon by his professor. “Literally, I wanted to run out the back door. I felt like I was at Betty Ford or something.” – he said. “I get up. He’s like, “Take off your hood.” I go, “Hi, my name is Alex Rodriguez. My last job was with the Yankees. It actually is still my current job, but I’m suspended.” And I sat down, and I was sweating. I was sweating. I’ll never forget that. It didn’t quite work.” Letting his ego aside and learning from previous mistakes is how Rodriguez rose back to the top.
Within few years after the drug scandal, his name is everywhere. He took a job as a respected commentator for Fox Sports and ESPN and quickly became a popular figure on sport shows. “He’s the defining voice for baseball, in a weird way,” says Bardia Shah-Rais, Fox Sports’ coordinating producer. “In a good way.”
Other than managing a hundred-employee company with billions worth of assets, Rodriguez also extends his presence to Shark Tank or celebrity mega-event like Grammys or Met Gala with his girlfriend Jennifer Lopez. Rodriguez’s sportsmanship has been replaced with the wealthy, posh image of a successful entrepreneur. “It’s really the comeback story of all comeback stories,” says Yankees owner Hal Steinbrenner, to whom Rodriguez is a special adviser.
“Pre-Alex-suspension in 2014 was a gladiator. Gladiators just want to kill. And winning is only seen in numbers in contracts and dollar signs. And post-suspension Alex has compassion and has a long-term view and is not interested in doing transactions, but really building relationships” – Rodriguez reflected on his transformation.
“You’re an Average of the Five People That You Surround Yourself with the Most”
Rodriguez stresses non-stop one factor that made his success: people. It’s essential to have great advisors and teammates if you want to scale up your business, or literally anything else.
He was constantly on the lookout for mentors who could guide him to make the right choices with his money. One of these was a basketball legend Magic Johnson, who Rodriguez looks up to both in sports and business, with his business empire that spanned media production, movie theaters, real estate, finance, sports teams, and even Starbucks franchises.
“I thought, “Wow, if Magic can do it, if he can play for the Lakers and win championships, and he can also be a Hall of Fame businessman in the boardroom,” I said, “Well, I can do it too. And he’s got brown skin like me. And, okay. If he can do it, I can do it.” That was the start of it.” – Rodriguez recalled.
Along the way, Rodriguez gradually added mentors to provide him with the education he lacked, in some cases, a father figure, too. Mark Mastrov (24-Hour Fitness), Marc Lasry (Avenue Capital), and one of his longtime idols, Warren Buffet. To form the relationship with the world’s third-wealthiest man, the 25-year-old Rodriguez just emailed Buffett’s longtime assistant and asked for a meeting. “I literally cold email him, and I thought I would never get an answer. Literally, a few hours later: “Thank you for the note. Yes, I’m your insurance. Make sure you stay healthy. And by the way, if you do want to come up to Omaha, how’s November 5th?”
“Of course, I flew out there on November 5th, and that started about six or seven years of me not missing a year where I would go spend about five or six hours with him.” – he shared. It was from Warren Buffet that he learned the importance of having excellent people around. “What I learned from Warren is really a few things. Number one, that you’re an average of the five people you surround yourself with, so collecting great people is vital. You start moving in the direction of the people, good or bad.”
The people you’re working with are no less imperative. When hiring people, Alex Rodriguez prefers to have people with P.H.D, not in a conventional from Harvard or Yale way, but Poor – Hungry – Driven. For him, people who align with his vision and are driven to build a great team culture is what pushes him this far at being an entrepreneur.
When talking about the pandemic struggle, Rodriguez refers to his team as the key driver to move forward. “We’ve always thought communication is very important, so we have tripled down on it to the point where we try to have daily meetings for at least 30 minutes or an hour. While people are at home and working like you and I are right now, through Zoom, we want to preserve connectivity and also give confidence to the team that we’re hanging tough, that when we get to the other side, we’re going to be better than we were before.” – he shared.
Takeaways from Alex Rodriguez
As an investor, Rodriguez takes one key lesson from Warren Buffet to be his all-time strategy: Stay in your circle of competence. Go narrow and deep, not wide and shallow.
“We really understand the things that we’re passionate about so that we can bring to the table more than just capital. With anything we get involved with, we look for ways where our brands, our reach, or our team can infuse a lot of energy and create enterprise value.” – he shared. “That’s why we’ve gotten into things that we really understood, whether it’s health and fitness, whether it’s consumer products. They are things that we believe in. We wouldn’t get involved with something were we not also a consumer.”
On Building a Team
Rodriguez believes building a great team is a challenging part but definitely a rewarding one. He constantly asks the question “What does the perfect team look like?” and visions his own. “If you have a really smart guy from Omaha who’s 21 years old with a crew cut, and you have another 21-year-old at Michigan playing quarterback with a crew cut, and one day they take their competitive advantages and put them together, they have a dream team. That to me looks like Warren Buffett and Tom Brady.”
That’s what young entrepreneurs should think about. “Who is the Warren Buffett in your community with incredible intelligence, business acumen, experience? Then you have to create an alignment, both spiritually and economically, that works and gives everyone protection. You sign those documents, then you put your head down and go have a bunch of fun. Then Tom Brady can go throw touchdowns and win championships, and Warren Buffett can do what he does best, which is take that money and invest it. It’s as simple as that.” – Rodriguez said.
On Personal Development
“Knowing your fundamentals” is Rodriguez’s advice to make huge progress. “In baseball, the reason why I play so long is because I was really great at my fundamentals” – he shared. The same goes for business.
“It doesn’t matter what schools you went to, what matters is that you have great fundamentals; you have great attitude; you wake up every day and I would say you’re the one bringing someone to the party or you’re taking something away; you’re a part of the solution or you’re a part of the problem” – Rodriguez emphasizes. “The CEO shouldn’t be motivating you to do your job. If I were a young entrepreneur, I would be the first one there, the last one to leave and say: the answer is yes, what is the question?” For Rodriguez, attitude is what determines altitude and young entrepreneurs should have those cores at heart.
The Next Move
Alex Rodriguez could fall or rise but he didn’t take no for opportunities. “I always tell young entrepreneurs, don’t be afraid to try. Failure is part of it,” Rodriguez says. This former New York Yankees just partnered with Walmart Inc. e-commerce veteran Marc Lore to form a venture capital firm called Vision/Capital/People or VCP.
The firm is the next stage in a burgeoning alliance that aims to leverage the duo’s star power, business expertise, and money access. Rodriguez and Lore, who are in talks to buy the NBA’s Minnesota Timberwolves, have already completed several transactions together. In a broader scene, this is just another opportunity for Alex Rodriguez to satisfy his entrepreneurial spirit and pick up more partners along the way.