In his book “Clutch: Why Some People Excel Under Pressure and Others Don’t” (Portfolio, 2010), Paul Sullivan looks at the criteria that account for performance — including financial performance — in times of challenge or adversity. Here is an excerpt.
Alec Haverstick II, left, a co-founder of Boxwood Strategic Advisers, counseled Frederick Peters, the owner of Warburg Realty Partners, on an Old World notion of discipline and thrift.
Paul Sullivan writes about strategies that the wealthy use to manage their money and their overall well-being.
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How have you handled (or mishandled) your money in clutch situations?
FREDERICK PETERS is not the type of man you would expect to have financial problems. He owns Warburg Realty Partners, which sells some of the most expensive apartments in Manhattan to people with unimaginable wealth.
Mr. Peters was born into this world, though you wouldn’t guess that, either, at first glance. Dressed in a black shirt and black pants, with close-cropped hair gone thin in spots, he looks like an avant-garde musician, not a business owner and certainly not a descendant of a trifecta of banking families — Warburg, Rothschild and Schiff. Had I not been told, I would have never guessed that a few months before our meeting in March 2009 he had been forced to make decisions under extreme pressure to keep his firm afloat.
“My business pretty much ran into a wall on Lehman Brothers Day,” he told me.
That day — Sept. 15, 2008 — was when the once-great trading house ceased to exist. While it shocked the global financial system, the firm’s collapse had a more personal effect for Mr. Peters. It caused his otherwise wealthy, savvy clientele to immediately think they were broke when they were far from it.
In November 2008, Mr. Peters said he was feeling anxious when he went into a meeting with his board. Instead of talking about the prospects for a recovery in the coming year, the chief financial officer ran through doomsday scenarios: What would happen if the business went down 30, 35, or 40 percent? When he heard the answers, Mr. Peters was shocked not only by how much he could lose but also by how quickly he could lose it.
“I told my C.F.O., ‘Let’s see where we are at the end of the first quarter,’ ” he said. “A week later, he came to me and said, ‘I know you don’t want to have this conversation, but I don’t think we can wait that long.’ ”
From his headquarters on the Upper East Side, Mr. Peters had added four more locations to become a dominant player in the city’s luxury real estate market. Making the hard choices his C.F.O. demanded — namely closing an office in Harlem — was too much for him to bear. “I needed to think about it,” he recalled. “I went out for a walk.”
What Mr. Peters struggled with was not entirely a financial decision. He was not going to be living on the street if his business failed. He was wrestling with something that inhibited clear thinking much more — and causes people across a range of professions to choke under pressure. “The biggest problem for me was pride,” he admitted.
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Most people associate clutch performances with a triumphant sports moment: the home run that wins the game or the basket at the buzzer. But each of these contains an element of luck, and clutch is not luck. Being clutch is the precisely executed series of plays down the football field, not the Hail Mary pass. It is also something that goes far beyond the world of sport, to business, politics, war, any area where a person’s individual actions under pressure can mean the difference between success and failure. And while it has a mental component, it is not a mystical ability. Being clutch is the ability to do what you can do under normal conditions under extreme pressure.
Mr. Peters had run his business well in the 30 years he had owned Warburg Realty. Now through no fault of his own he found himself in a financial crisis that threatened the future of his firm. This was the definition of a clutch situation. Over the next few months, he responded well because his actions were guided by the five traits of people who are great under pressure: focus, discipline, adaptability, being present and a mix of entrepreneurial desire and fear of losing his business. He also avoided the three traps that cause most people to choke: he took responsibility for what needed to be done, he did not overthink the situation nor grow overconfident when his business stabilized. Yet none of this was preordained on that day in November.
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