How Car Thieves Helped This Man Become the Richest Man in Congress

Unlike other Congressmen, Darrell Issa amassed his fortune in a rather unique way. Here's a story that can teach investors three very important lessons.

Jan 26, 2014 at 12:45PM
Issa

Darrell Issa has been the U.S. House Representative for California's 49th district since 2001. And according to OpenSecrets.org, Issa is considered the richest man in Congress, amassing a net worth between $330 and $600 million.

The Congressman didn't inherit his money like Jay Rockefeller, marry into it like John Kerry, or make it in private equities like Mitt Romney. Darrell Issa made his fortune in car alarms.

A fate that few would have predicted for the grandson of Lebanese immigrants. Even fewer, perhaps, when Issa dropped out of high school in favor of the Army, where he worked as an Explosive Ordinance Disposal Technician -- which means he was part a team that swept and disabled bombs. 

His story is one of great determination -- and one that every investor can learn three very important lesson from.

Take some risk
Every great investor or business owner -- from Warren Buffett to Elon Musk -- has taken a big, calculated risk. And in 1980, Darrell Issa would make one of the greatest gambles of his life.

Issa gathered all the money he could -- which included borrowing money from his family -- and invested in the technology company Quantum.

Quantum manufactured CB radio parts. A business it wouldn't take long for Issa to realize was drying up. The company did, however, have a bright spot. It began manufacturing parts for the car alarm manufacturer Steal Stoppers.

Invest in businesses that solve a problem
Steal Stoppers was facing its own financial struggles and had taken a loan from Issa. A loan that the owner of Steal Stoppers wasn't able to promptly repay -- and Issa took over the business. 

It just so happened that the 1980s saw one of the biggest spikes in motor vehicle theft in history.

Car Thefts per 100k Population | The Motley Fool | Data from the FBI

For investors, businesses that don't need to sell customers on why they need the product have a fantastic competitive advantage. And it wasn't long before Issa was selling Steal Stoppers' products to the likes of Ford, Toyota, Rolls Royce, BMW, and General Motors.

If you're not first, you're better off
In a keynote by Malcolm Gladwell, he explained there isn't a great advantage to being first, because in many cases, it's better to come along after and be an innovator rather than an inventor -- a theme tech investors should be familiar with. 

In 1985, Issa sold Steal Stoppers and started Directed Electronics, which would go on to make better car alarms.

Issa went into his new endeavor believing cars needed more than an alarm. They needed true deterrents -- and that's exactly what he did, creating the company's signature product the Viper car alarm. So, for those of you who love loud, annoying voice-recorded car alarms, you can thank Darrell Issa.

Directed Electronics would go on to be one of the top aftermarket car accessory providers on the market.

U.S. Representative Darrell Issa
Issa sold controlling interest in the company to Trivest, Inc in 2001 after being elected to Congress. Directed Electronics would continue on and is now owned by Charlesbank Capital Partners. 

Darrell Issa's story is an amazing one -- and for investors everywhere, remember to take calculated risk, invest in strong companies with simple solutions to not-so-simple problems, and always choose an innovator over an inventor.

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