One of the most important lessons R. Donahue Peebles ever learned came at the expense of a competitor, when another developer was looking to buy a piece of property and was haggling over
“They didn’t close with it,” says Peebles, chairman and CEO of The Peebles Corp. “I went in and bought it and gave the person their price. I went on to make millions and millions of
dollars on that project. They felt they had the deal all to themselves. That’s the mindset of closing the deal when it’s ready to be closed. You never know who’s out there. You never know what surprise could come up.”
Peebles has spent his career learning how to make deals, run his company and find the right people to help make him a success. He has carefully examined the art and
science of business and built the 10th largest African-American owned business in the country, with $449 million in annual revenue and more than $4 billion in projects started. And with every
new opportunity, Peebles applies the lessons he has learned from his many years in business.
Every setback is an opportunity
When Peebles began work on the Royal Palm Hotel project in Miami Beach, he discovered contaminated soil and structural defects. His options were to walk away from the deal or invest another $20 million.
“We finished the building,” Peebles says. “The city of Miami Beach had indemnified us for those types of problems. We went to them and renegotiated the land use of our property that prohibited us from building hotel/condos. Getting that restriction removed significantly enhanced the value of our property.
“When people approach business and they have a setback or an obstacle, they see it as a problem. My approach is to look at those as opportunities to do something else, something different,
and to profit from it.”
That kind of attitude takes inner fortitude.
It takes “a huge desire to win,” Peebles says. “I step back and I look at it from the practical business reality. When you look at it from the business reality, then you become more practical and
look for practical solutions. It’s all about being resourceful and practical.
“The key is to look at things and have the end result in mind. The objective is to be successful and make sure the transaction that you’re involved in is successful. In order to do that, you have
to be creative. The reality is, if you’re going to be in business, you’re going to have challenges. As an entrepreneur building a business, you’re going to be even more challenged than the typical
Moral obligation and gut instinct
Peebles could have walked away from the Royal Palm deal, but his instinct and his moral compass drove him to stick with it.
“Business is not just spreadsheets,” he says. “Sometimes you have to go with your gut instinct. That’s not a reckless gut instinct. That doesn’t mean I walk into a technology company and say,
‘Hey this is a great company. I’m going to spend $100 million to buy it.’ That’s not my business. I don’t know it. I know my business, and I’ve been doing it long enough where my gut instinct is
really an informed decision.
“I instinctively knew that Miami Beach was going to rebound. And once I got the hotel open, I would make a lot of money and it would lead to other opportunities. I recognized the consequences
were too great for me and my reputation. To fail to build that hotel under those circumstances would be devastating to my reputation.”
Peebles’ decision paid off. He recently sold 85 percent of a project for $127.5 million that cost him $80 million to build, including all the cost overruns.
“I did OK,” he says. “I made some profit. I’m going to make some more as it goes forward. Sometimes you’ve got to go with your instincts and know where they’re going to take you and know
that you’ve got a unique product or unique idea and, over time, it’s going to endure.
“A spreadsheet may not have convinced me of that. That’s why I have an advantage, as an entrepreneurial development company, compared to an institutional one. An institutional one may do
more deals. They’ll have more dollar volume out there than me, but we’ll do more interesting deals. I will make more money, and the executives who work on my projects and work for me will
make more money than their institutional counterparts because of that entrepreneurial vision and because we’re looking to do creative things.”
It all begins with persistence.
“The willingness to stay the course and see it through is a tremendous asset,” Peebles says. “It’s very difficult. It’s generally a situation where it doesn’t look like things are going the right way. It
may appear, and it starts creating self-doubt and the concern that you may be going in the wrong direction. It requires a great deal more fortitude, a great deal more comfort with your decision-making process to see it through.
“That is the one ingredient in business that requires the most adjustment and fluctuation based on the environment that you’re in. To be able to do that in business is one of the key ingredients
of success; stay on the right course — not necessarily go in a straight line. You stay the course, but you’ve got to make adjustments along the way.”
Avoid the herd mentality
Succeeding at business means being able to see and act when and where others can’t.
“If you look at the great amount of wealth in this country that has been created over time, you’ll see that many of those businesspeople, especially the entrepreneurial wealth, went contrary to
the market,” Peebles says. “If it was as easy as following the leader, then we’d all follow the leader and we’d all make money, and everybody would be happy.
“The herd mentality is where people are all pursuing the same direction in the marketplace. Right now, people are running away from real estate. What has happened is that there is an environment where people are turned off because the media has been continuously discussing the downturn in the residential real estate market.”
Peebles is taking advantage of that.
“Fewer developers are investing in residential real estate,” he says. “Fewer lenders are investing in residential real estate, especially in high-rise condos in markets like Las Vegas, Miami, San
Francisco. The hot investments right now are hotels and office buildings.
“We just bought a prime development site for a 40-story condo project in San Francisco. We bought a 14-acre site in Las Vegas where we’re going to build a $1.6 billion project that will include
a hotel and several high-rise condos.”
It’s all about not following the herd.
“As a businessperson, you want to buy when very few people are buying,” Peebles says. “And you want to sell when very few people are selling. If you buy when few people are buying, theoretically, you should be able to get a far better price. And if you are selling when fewer people are selling, you should be able to command a higher price.”
Swimming against the current is usually a difficult thing for business leaders to do. But for those who know when to make the right choice, the payoff can be huge.
“It’s harder and not the obvious choice,” Peebles says. “Those kinds of decisions require courage. They require a level of confidence and comfort in your decision-making process. I believe in
my decision-making process. I know that I’m on the right course. I’ve done the research. I feel like I’ve got a good feel for a particular market and, based on that, I’m willing to act on it.
“It’s real simple in business. We’re going to all have great opportunities that are going to cross our pathway. Some people will take advantage of those opportunities that are going to cross our
pathways. Most will let them walk by. The difference between the winner and the loser in business is the one that capitalizes on the opportunity — that’s the winner. The loser ends up failing to
capitalize on their opportunities.”
Hire good people and let them do their job
As their companies grow, entrepreneurs often have a very difficult time relinquishing responsibility.
“Building from the ground up, one has to approach this as if your life depends on it,” Peebles says. “That’s what it takes to build a successful business. They’ve made so many sacrifices, and
they’ve also placed such great importance on it along the way that it’s such a precious entity, it’s hard for them to hand it over.”
Peebles has been an entrepreneur for more than half his life and has learned to make the transition.
“I recognize there are other things that are important in my life,” he says. “My company’s important to me, but it doesn’t define me. It’s not the most important thing in my life. The most important things to me are my wife, my children, my family — having a good life. The name of the game here is to have a successful life. A successful life doesn’t just mean making money.”
Being successful means being able to delegate.
“I just brought on a chief operating officer who assumed the role of president of our company,” he says. “I don’t want to be bogged down with the operations of the business. I want to be free
to continue to help build it.
“The key for an entrepreneur looking to find somebody is to look from within the sphere of contacts and interactions he’s had over the years. Look for somebody that can fit into what you want
within that environment, somebody you know, somebody you respect — not your buddy, somebody that you have a good relationship with, that you enjoy working with, that you have confidence
Having that kind of trust in people makes handing responsibility to them much easier.
“I tend to try to bring up people who have a similar drive as I do and a similar focus and commitment to doing something unique — not necessarily just making money — but doing something
unique and making a significant contribution.
“I tend to bring up people who had to work hard to get where they are. The harder you have to work to get where you are and the further you’ve come, the more resourceful you have to be.
That’s really the concept of every step back being an opportunity in disguise for a resourceful person.”
Those kinds of people often want to control their own destiny; to keep them on the payroll, Peebles lets them.
“I create a culture of entrepreneurship so that all the key executives that work on our projects have ownership stakes in the projects that they work on,” Peebles says. “Consequently, that makes
them owners, and they become more entrepreneurial. As a result, they become more creative.”
It’s all about motivation.
“I’m driven by more than making money,” he says. “That is not necessarily the best course of action for a businessperson, but for me it works. I’m driven by the opportunity to break new ground,
break barriers, demonstrate and prove that there is great opportunity in the country to do things that are contrary to what success could mean and to create more opportunity for the next generation of minority entrepreneurs that come behind me.
“You can do it on your own terms, conduct yourself well, do well and be successful.”
HOW TO REACH: The Peebles Corp., www.padcorp.com