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| Q&A |
Peeble's Principles
01/01/2008
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R. Donahue Peebles is a highly successful real estate
developer, with a $4 billion portfolio of residential and commercial properties
in the East, the West and Florida. Today, he lives in Miami, but he was born
into a single-parent household in Washington, D.C. His book, The Peebles Principles: Tales and Tactics from an
Entrepreneur’s Life of Winning Deals, Succeeding in Business and Creating a
Fortune from Scratch, offers aspiring entrepreneurs some
lessons learned over the course of his remarkable career. Peebles recently spoke
with former Worth editor Matt Purdue about the upside of the
real estate downturn and how, as a developer, he deals with the challenges of
local politics.
You have numerous successful real estate projects around the
country. Why not stop and relax?
 I did my first deal when I was
26. By the time I was finished, I was 29. I was worth millions and I had an
income of about $400,000 a year from that one building. I could have stopped; I
could have retired on that. But the entrepre-neur is not driven solely by
money. It’s also a desire for self-actualization.
There are a couple of types of businesspeople. One makes that
money and says, "Hey, this is great. I’m done. I’m going to retire, I’m going to
protect what I’ve got and that’s it. I’m going to enjoy life." Those people
generally didn’t like the business they were in. They did it because it was a
means to an end and they made some money. The people who like the business
they’re in say, "Hey, it worked out. Now, how can I do this better? I made a few
mistakes on this first deal. I’m not going to make those mistakes again. I’m
going to go back to the drawing board, I’m going to try it again. Because I like
what I’m doing, I’m going to see if I can do it better."
You obviously like that process. Does it differ when you are
working in a hypercompetitive place like Manhattan?
If you are in a particular
business, and you learn it and you understand it, then it can become portable in
terms of geographic location. The first building I did was $10 million back
in 1986, and it was a 100,000-square-foot building. I do the same exercise,
exact same process, in building the $1.6 billion project that we’re doing in
Vegas at Las Palmas.
One of the lessons I try to teach people in The Peebles Principles
is, don’t be afraid of numbers. If you’re going to do something that’s $20
million and it’s the same process as $200 million, great. The same [is true]
about develop-ment: The fundamentals are the same. The players are different,
the process is different, and that differential you can hire. I can hire the top
lawyers. I can hire the top architect. I can hire the top lobbyist, to the
degree I need any kind of political stuff.
Los Angeles has a much more laid-back environment. Also, California—L.A., San Francisco—is a more high-minded business environment. Money
is not necessarily the only element. It is a much more enlightened environment
in terms of environmental [issues], in terms of taking care of other people. New
York is a dog-eat-dog world. New York is capital.
There are also activists in New York who say, "You can’t tear down that 200-year-old building!"
The absolute center of that kind
of thing is San Francisco. We were working on a project in a town called
Pacifica. That city was essentially insolvent; it had about a $1.5 million
deficit on a $22 million budget. [Pacifica is now meeting a budget of $23.9
million.] My project was going to create a lot of money for that
community—$17 million a year, and its budget, total, was $22 million.
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