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

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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Read/Post Comments (13) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 26, 2014, at 11:07 PM, pinecone wrote:

    Check his rap sheet!

    He is more of a crook than the crooks...and slimery!

  • Report this Comment On January 26, 2014, at 11:58 PM, airjackie wrote:

    Issa is a career criminal but saw the corrupt lawmakers who passed a law exempting them from Prosecution. Issa started with a few thousands and quickly got to deal making and bribes as his wealth is now 400 million. Other lawmakers who collected bribes are now retiring with their money. I loved to watch Issa question Eric Holder as Holder smiled knowing he was talking to a Grand Theft Auto Congressmen. This leaves hope for Bernie Madoff as you can be a criminal and get elected as a lawmaker. Just think a criminal background you can't get a job at McDonalds but you can be a Senator or Congressmen.

  • Report this Comment On January 27, 2014, at 4:06 AM, StockBeast wrote:

    g4g5t5y6u7s3 ..

    What is it like to live on the Fox News Plantation ?

    Made up propaganda is NOT going to help score political points and win elections ..

    In fact it is going to make sure that Texas, North Carolina, and Georgia become Blue States by 2028

    Keep going buddy ... Your kind is dying off fast

  • Report this Comment On January 27, 2014, at 4:16 AM, StockBeast wrote:

    Issa is lying S bag .. that intentionally misled the country about the IRS ...

    He had evidence that the IRS targeted EVERY group no matter what political affiliation they may have appeared to have .. but Issa kept the information about liberal groups being targeted from the media ..

    The manufactured story disappeared when MD representative Cummings released all of the evidence .. the press saw Issa as the lying S bag he is .. they also now know never to believe him or republicans again

    Issa is a traitor ..

  • Report this Comment On January 27, 2014, at 9:53 AM, tom1948 wrote:

    We all like a self-made story, but something is missing here.

    He gathered up all the money he could get from family and friends and was able to invest in Quantum (did he invest thousands or millions?). Was he just another stock holder? Is this how he made his money to invest in Steal Stoppers?

    He then he loaned money to Steal Stoppers (again are we talking thousands or millions?) and took ownership when they could not pay timely.

    How does a person who based on the storage line had very little resources accomplish this?

    Sounds to me he was more like an individual acting like a well financed private equity/LBO than a bootstrapping entrepreneur.

    He was obviously financially successful. I'm just curious if he turned $10K into hundreds of millions or turned $10 million into hundreds of millions.

  • Report this Comment On January 27, 2014, at 10:48 AM, fasteddy106 wrote:

    It would appear decorum isn't high on the list of attributes among the commenters here, nor is accuracy, truth, or details backing up outrageous claims. It would appear that if you cast any doubt on the democrat/liberal/progressive/socialist agenda you are open to rude, childish, and obnoxious attack.

  • Report this Comment On January 27, 2014, at 12:01 PM, Foxnews1022 wrote:

    Hey all you envious Liberals, this is America, a Capitalistic Country & he saw an Opportunity, gambled & succeeded & I betcha the only thing the majority of you Liberals commenting negatively on Issa has ever succeeded in was going to Social Services & applying for Food Stamps plus Issa is laughing all the way to the bank, how about you???

  • Report this Comment On January 27, 2014, at 12:04 PM, ratseeker wrote:

    The real title should be Darryl Issa made his millions outsourcing jobs offshore. This is FACT, as a supplier of components his engineers would use us for samples or to help complete the design then send it offshore for manufacturing. I recently ran into one of his engineers working for another company and when he explained to his team how we knew each other I mentioned the outsourcing of production. He hung his head almost ashamed and nodded yes. Another interesting note is that the headquarters for the car alarm company is right down the hall from his Congressional office, coincidence or are we blind to trust?

  • Report this Comment On January 27, 2014, at 12:40 PM, dogjudge wrote:

    Foxnews1022.

    Hmm. Might want to make your comments about Social Services and Food Stamps to Bill Gates and Warren Buffett. They "need" their food stamps too, according to you.

    Why is it that folks such as yourself can't discuss issues, but immediately attack anyone who is anti-Republican party (a LOT of INDEPENDENTS by the way), as being on food stamps, etc.?

    The Democratic party has been out raising the Republicans for the past few quarters. That can't be coming from the 47% you folks like to disparage, so it must be coming from MORE people with money than there are in the Republican party. (I'm certain that logic escapes you.)

    Issa is laughing all the way to the bank. I could care less. What's going to count for a much longer time is heaven or hell. No doubt in my mind where Issa is going to be spending his time.

  • Report this Comment On January 27, 2014, at 12:57 PM, TMFPeoplesInvest wrote:

    Thanks to everyone for reading and commenting.

    @tom1948 Great questions, and thank you for your comment.

    1) Quantum was a small company, we're talking an investment of 50K or so (in 1980's dollars).

    2) The loan to Steal Stoppers, again (while, there is some mystery here) I think we're talking 10's of thousands, rather than millions.

    3) It does seem a bit improbable, one of the reasons I thought the story was worth retelling.

    But, from everything I gathered, the investment in Quantum was like Buffett's investment in Berkshire Hathaway (the textile business), it wasn't particularity successful, but it did provide him with money to make more investments.

    In short, Issa seems to have turn thousands into hundreds of millions.

    I hope that's helpful

    --Dave Koppenheffer

  • Report this Comment On January 27, 2014, at 2:15 PM, RickLV wrote:

    I thought EVERYONE in Congress got rich by theft...usually not from car thieves, but from pillaging our tax dollars.

  • Report this Comment On January 27, 2014, at 3:48 PM, Rob61a wrote:

    They should look into the democrats portfolio and see what thieves are there, I would not mind taking Republicans to task but make it fair and do it to the democrats as well.

  • Report this Comment On January 28, 2014, at 8:25 AM, Squirrel93256 wrote:

    - Obama supporters will go hysterical over this well sourced list of 545 examples of his lying, lawbreaking, corruption, cronyism, etc. http://danfromsquirrelhill.wordpress.com/2013/08/15/obama-25...

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