Successful Rule Breakers: Fernando De Leon Of Leon Capital Group On How To Succeed By Doing Things Differently

An Interview With Chad Silverstein

The key to an impactful leader lies in their ability to perceive the future, accept brutal facts, and maintain present focus. They need to understand the trends and realities, and how they can navigate them to reach their goals. Falling in love with the future without focusing on today will leave you stranded, while tunnel-vision on today might leave you blindsided by future trends. Great leaders have a foot in both worlds. They dream about the future while firmly rooted in today’s realities, executing their plans step by step. Those around you may accuse you of being bipolar.

In the world of business and within every industry, there are forward-thinking leaders who go against the status quo and find success. Their courage to take risks, embrace innovation, and inspire collaboration separates them from the competition. Until 2002, Apple’s famous slogan was “Think Different”. This attitude likely helped them become one of the most successful organizations in history. This interview series aims to showcase visionary leaders and their “status quo-breaking” approach to doing business. As part of this series, I had the pleasure of interviewing Fernando De Leon.

Fernando De Leon is the founder and CEO of Leon Capital Group, a holding company overseeing twelve independently-managed subsidiaries in the three divisions: financial services, healthcare and real estate. Leon is not a private equity fund, it operates as a family holding company that takes the lead conceiving, developing, owning, and operating businesses.

Mr. De Leon began his career as an analyst at Goldman Sachs in New York. He received a BA, cum laude, from Harvard College, where he was a Hoover Foundation Scholar and a National Coca Cola Scholar. The De Leon Family Foundation focuses its work on poverty in south Texas and northern Mexico and expanding access to healthcare. The De Leon Scholars program awards scholarships to ten students annually across the state of Texas, who endeavor to improve their communities.

Thank you so much for doing this with us! Our readers would love to get to know you a bit better. Can you tell us your “Origin Story”? Can you tell us the story of how you grew up?

I was the last of six children, and the only one in my family born in the United States. I was born in Brownsville, Texas but I grew up living in the border town of Matamoros, Mexico. I attended school daily in both countries, shuttling between a public school in the morning in Texas, and in the evening at an agrarian school in Mexico.

My journey is shaped by the luck of being an American citizen. I was an English as a Second Language (ESL) student, but I used that to my advantage and ultimately represented South Texas in the Scripps Howard National Spelling Bee. I built a chess instruction program in Cameron County, Texas, which at the time was the poorest county in the U.S. Those chess teams would go on to compete nationally and become a source of pride for the predominantly Hispanic community of south Texas.

Learning English helped me land a translation job after the signing of the North American Free Trade Agreement, when US developers were looking to develop manufacturing facilities across the border. One such developer was set to build a warehouse but was missing a jobs and building permit. I leveraged a connection with the head of the local labor union to secure a 10% equity stake in the project, and by 18 I’d made enough to get my family out of poverty.

Finally, my academic pursuits were rewarded by earning a full scholarship to attend Harvard University, where I honed an understanding of government, human evolution, behavior and economics, that would support my business instincts for the foreseeable future.

Can you give us a glimpse into your journey into this industry and share a story about one of the most significant challenges you faced when you first started out? How did you end up resolving that challenge?

When I launched my own business at the young age of 26, I had about $100,000 of savings. I sought to compete with well capitalized incumbents in the real estate development field, which without capital was a challenge. I managed to use my skills in persuading government leaders to change zoning designations for land. Given that I lacked capital, I created option contracts to control the purchase and sale of these land parcels. Then, once zoned, I sold them to large national homebuilders. These builders were complex organizations that couldn’t do what I did, and I gradually built a business out of doing things others could not do.

Navigating varying business environments and constantly pivoting and adapting to different contexts, as I did in my formative years, would become the driving philosophy for every one of the fourteen businesses we have since founded in the real estate, healthcare and financial services sectors.

Who has been the most significant influence in your business journey, and what is the most significant lesson or insight you have learned from them?

The conventional thing to say is to acknowledge a wise man or a mentor. The most significant influence in my career has come from my wife, because she’s helped me read through peoples’ behaviors and intentions. She helps me understand agendas and risks that I don’t often see. The sheer number of business decisions she has impacted from age 26 to 45, multiplied by the probability of a different outcome, would be equivalent to a 25–50% change in the direction of my company’s value.

Can you share a story about something specific that happened early on that you would consider a failure but ended up being a blessing in disguise or ended up being one of the most valuable lessons you had to learn on your own?

I was fired from Goldman Sachs for being a poor employee. I realized I would never be a good employee, because I wasn’t a political person. Large companies today are essentially government jobs programs for the white-collar class. I preferred building organizations and assets that I could call my own.

Leading anything is hard, especially when grappling with a difficult situation where it seems that no matter what you decide, it will have a negative impact on those around you. Can you share a story about a situation you faced that required making a “hard call” or a tough decision between two paths?

I saw the changing landscape in brick-and-mortar retail when our industrial buildings were fulfilling goods for customers. A lot of the employees in the retail business had been with me in the start-up years, and I had to sell off the retail assets and redeploy that capital into industrial and logistics. Having to let go of 50 people that had been loyal, and through no fault of theirs had been disrupted by technology, was one of the hardest things I’ve ever had to do.

Let’s shift our focus to the core of this interview about ‘Successful Rule Breakers’. Why did you decide to “break the rules”? Early on, did you identify a particular problem or issue in how businesses in your industry generally operated? What specifically compelled you to address this and want to do things differently? Please share how you went about implementing those changes and the impact they had.

I realized that the growth of the private industry was going to be massive for the next 30 years. All of the savings of Americans were being partially allocated to alternative investment vehicles in a tsunami of capital. And private equity wasn’t there to build anything, it was there to take capital from investors, charge a fee and resell assets to another private equity group. The movement of this capital would require real assets and durable companies as recipients of this flood of capital. So, if we built them the market would reward us disproportionately well. I sought to industrialize a process to build operating companies and real assets.

In the ever-changing business landscape, how exactly do you decide when to adhere to industry norms versus “breaking the rules” and forging your own way? Can you share an example?

Human beings imitate their parents from the moment that they’re born. We learn how to eat from them, we learn language from them, and we learn how to procure everything we will need to survive. Those that cannot learn, don’t do very well in their prospects for survival. Natural selection reconfigures these adaptive attributes over thousands of years, and the inevitable result is that a high proportion of entities end up imitating other entities. Without imitation we cannot create culture, language, social structures, commerce and ultimately, we could not survive, much less cooperate and thrive.

Imitation, however, invites a regression to the mean. If you do what everyone else does, you’re going to get the same results that everyone else gets. If you act average, you’re going to be average. The opposite is to diverge, but when one does, peer groups are likely to enforce elements of social compliance on the divergent.

When a member of a group deviates from prescribed behavioral norms and institutions, we also tend to see physiological and emotional barriers. For instance, when you do something that others don’t validate, it often creates a pit in our stomach, causing discomfort. Why is that? Because social structures in insects and primates require compliance, or the entire group may suffer. If all ants didn’t follow the ant in front of them, they couldn’t secure food for the group or for itself. I spent my formative years in college studying evolutionary biology and upon entering free enterprise, I realized the same social structures existed there.

So, we tend to follow the social fictions that we create because we can’t all act entirely independently — that would create chaos.

The sweet spot for business, prosperity and human progress is having the acumen to recognize which old ideas we should follow and play along with, and which ones to ignore and disrupt entirely.

The opposite of imitation is contrarianism — from which is born the modern equivalent of entrepreneurship. That is, the act of creating something from nothing. Presumably, something that people value, want or need, and something that improves human lives.

What guidance or insight can you offer to new entrepreneurs trying to follow existing and accepted industry norms while at the same time trying to differentiate themselves in the marketplace?

There are unique challenges to being different. For one, fighting dogma is exhausting. Extreme uncertainty creates loneliness, not exactly the best environment from which to recruit talent that understands your purpose. With abstraction, and without a playbook to follow, it’s difficult to choose the ideal entry point, and your people get anxious. Next is the need to create validation from key constituencies like lenders or investors. And once you do that, there is still a need to leverage a brand and market positioning.

The unique upside to being contrarian is that there is much larger value extraction, and less real competition. You can define and control the true opportunity field.

Being right entails providing utility to others. If the current state of the market provides a good or service that provides utility of say “4” to its consumers, and you provide utility of “8”, for the same or lesser cost, then you’ve created value for others that the market should recognize.

The financial value that you derive should typically be a pretty predictable formula: the utility delta created over a benchmark offering, multiplied by the total number of beneficiaries that you positively affected.

Here is the main question of our interview. To make an impact, you have to champion change, get creative, and take risks. Please think back about the decisions you’ve made that have helped your business get to where it is today and share your top 5 strategies or decisions that helped you succeed by doing things differently. If you can, please share a story or example for each.

1. The key to an impactful leader lies in their ability to perceive the future, accept brutal facts, and maintain present focus. They need to understand the trends and realities, and how they can navigate them to reach their goals. Falling in love with the future without focusing on today will leave you stranded, while tunnel-vision on today might leave you blindsided by future trends. Great leaders have a foot in both worlds. They dream about the future while firmly rooted in today’s realities, executing their plans step by step. Those around you may accuse you of being bipolar.

2. Understanding both the power of compound interest and the difficulty getting it, is the heart and soul of understanding a lot of things. Everyone has opinions but they all reflect themselves in the growth of capital.

It takes real knowledge of human behavior to predict future outcomes. The best predictors of the future are just those willing to take a second look at everything and work harder at assessing options.

Everything, always, is moving, forever. So don’t double down on old instincts when presented with new insights. Your objectivity should allow you to strip decisions of emotions and fears, and real insight of all supply chains — so that you know where to position yourself for maximum value extraction.

3. Leaders that don’t understand demographics have a blind spot about the future. And investing is all about the future. Without a full understanding of these social variables, investors are making imperfect assessments about every variable. You could be slow and ideological in the past, but today your algorithm needs to train on the right data. So, learn every day, learn all the time. Your knowledge trains on your knowledge.

The characteristics that will allow the business to prevail in the near future are unknown today, because everything is changing so fast — so constant adaptation, prevents obsolescence. I see people and companies do well that are not the smartest, or have particularly good ideas, but they’re learning machines — so learn, adapt and learn.

4. You should never, when faced with one misfortune, let one misfortune increase into two or three because of a failure of will. I believe America has become very soft — if you even have a tad bit of resilience and moxie, everything out there is for the taking.

5. Be slightly irreverent, and don’t blindly respect the established incumbents in any field. Most people that have done anything of significance are normal people like us, except they had at least a temporary lack of fear of failure. Most people try to move away from fear, but you should cultivate it, organize it and leverage it. Thats how survival works.

Fear is highest when you’re looking at the ultimate destination. So, to reduce fear, close the gap. Focus on the smallest action that moves you forward. Ultimately, the goal is to end up owning your freedom. Success in business really only gives you one great reward — the freedom to continue doing what you enjoy.

As a leader, how do you rally others to align with your vision? Also, how do you identify those who may not be fully committed or even silently sabotaging or undermining your efforts? What steps do you take to address these situations?

Most people have never pushed themselves to achieve; they’ve never been asked to experiment with the boundaries of their own talents. When you put people in a position to see if they can accomplish and they do, they’re the most loyal people in the world. Because you believed in them more than they believed in themselves.

Leadership has a price, and winning has a price — mostly a psychological price, but also a physical one. A lot of our people run out of stamina, because we pull people that don’t necessarily want to be pulled and challenge them when they didn’t want to be challenged. I’d never ask anyone to do anything that I wasn’t willing to do myself, therefore I will push people to consistently high levels of discomfort — a discomfort that comes from perpetually iterating in order to find solutions.

Most problems cannot be solved without opening yourself to uncertainty. Some information cannot be surfaced without a bit of chaos and conflict. All of this makes people anxious; everyone wants to be done with it, but if done correctly the discovery process exists in perpetuity.

Imagine we’re sitting down together two years from now, looking back at your company’s last 24 months. What specific accomplishments would have to happen for you to be happy with your progress?

We are growing two new businesses in the insurance and specialty lending sectors. My focus for the next 24 months is on making those substantial contributors to the holding company’s balance sheet.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I would empower pension funds to own a larger percentage of their own capital and compound interest, relative to their investment managers.

Thank you so much for sharing all of these insights. We wish you continued success and good health!

About the Interviewer: Chad Silverstein, a seasoned entrepreneur with over two decades of experience as the Founder and CEO of multiple companies. He launched Choice Recovery, Inc., a healthcare collection agency, while going to The Ohio State University, His team earned national recognition, twice being ranked as the #1 business to work for in Central Ohio. In 2018, Chad launched [re]start, a career development platform connecting thousands of individuals in collections with meaningful employment opportunities, He sold Choice Recovery on his 25th anniversary and in 2023, sold the majority interest in [re]start so he can focus his transition to Built to Lead as an Executive Leadership Coach. Learn more at www.chadsilverstein.com