Dynamic Development
By Paula
Miller-Lester
If R. Donahue "Don" Peebles,
Chairman and CEO of the Peebles Corporation, were to rank familiar, time-tested sayings, 'mother
knows best,' might be at the very top of his list. Recognized today as one of the most successful
entrepreneurs in the nation, R. Donahue Peebles is the country's largest African American real
estate developer with a $4 billion portfolio of four-star hotels, residential and Class A
commercial properties and developments underway in Washington, D.C., New York, Detroit,
San Francisco, Las Vegas and Miami Beach.
His mother recognized that her only child possessed the potential to become an excellent entrepreneur, however, Don Peebles was focused on pursuing what he thought would be his life's work, a career in medicine. He explains that it took some time before he would discover, accept and walk into his true destiny.
"Initially I was going to be a doctor. I entered a pre-med program at Rutgers [University] but after the first year I decided that what I wanted to do wasn't best suited for my personality."
Peebles took a year off to reassess his career goals. While contemplating his next move, he found himself attracted to a field he already knew - real estate. Again, it was his mother who, without uttering a word, influenced his decision.
"I credit my mother. She got married at 17 and had me at 19. She did not get the chance to go to college so she worked as a secretary. When she was about 27 years old she bought her second house and saw how well the real estate agent had done. She became curious about the business and wanted to learn more.
She saw the opportunity in real estate, went to night school, took a real estate class and ended up being a sales agent."
The Hand That Rocks the Cradle
His mother served as an example of what can be achieved through knowledge, vision, hard word, perseverance, and determination.
"My mother had the entrepreneurial spirit and I got my induction into real estate through her. In 1968 we left Washington, D.C. and moved to Detroit. We had lived in Detroit about five years when she started her own real estate business. She did it at a time when it was very difficult for African American women - difficult for women in general - but the combination of the two made it extremely difficult."
Years before Peebles would work his way into the rarified status of a multimillionaire real estate developer he learned how to play the game of politics - which would serve him well later on - at the world's finest institution, the United States Congress.
"I credit my mother for exposing me to politics. When I was 14 years old she did a campaign event for former Mayor Marion Barry. I began to get a good sense of local politics and she thought it would be a good idea for me to go to Capitol Hill to be a Page."
While his mother arranged for Peebles to get a six-month appointment on "the Hill," it was his hard work and innovative approach to his responsibilities that allowed him to turn a half-a-year job into a six-year position.
Keep on Pushing
For Peebles, perseverance is a necessary ingredient in the recipe for entrepreneurial success. "I think the number one thing in terms of succeeding in entrepreneurship is perseverance. Not being willing to quit; not accepting failure; and being fully committed to getting the job done. Too often when entrepreneurs who are just getting into the entrepreneurial world find things very difficult - probably more difficult than they expect - they quit and go back to where they were before. The challenge is that experience teaches you that perseverance in business truly pays off. "Obviously you've got to have a good knowledge of the business you are in and have a good plan. But the key is being willing to stick it out and not be hard headed about it. If the approach you are proceeding with doesn't work, it doesn't mean you quit. It might mean that you need to come up with an alternative plan; but you don't quit.
"It's all part of entrepreneurship. Everyday life has got its ups and downs and so does business. One of the things that is important, and one of the things those who are going into business need to understand is that you are going to have some good days and some bad days. Of course, those who are already in business who are reading my book [THE PEEBLES PRINCIPLES: Tales and Tactics from an Entrepreneur's Life of Winning Deals, Succeeding in Business, and Creating a Fortune from Scratch] have a sense of that, but it's good for them to see that other people go through it and how other people respond to it.
"I look at entrepreneurship as taking two steps forward and one step backwards. The good news is that you are progressing each day. I'd say that is the number one reason that I have been able to accomplish what I have in business: an unwillingness to quit."
Armed for Battle
Once Peebles really began working in real estate, he was drawn more to the development rather than the sales side of the business. He freely admits that his initial successes could be attributed to hubris of the young. "During my early career I had the optimism of youth so when I had a setback I did not think it was going to be a long-term thing and didn't really fully understand, or appreciate the consequences.
"I happened to have had the good fortune of being in the right place, at the right time. I was in Washington, D.C., a city that was predominantly African American, with an emerging African American political power base. When I started in business in 1979 and through the '80s we had a very progressive government. The objective was to economically empower African Americans in business within the contracting community.
"Also, some of the local banks recognized that it could be beneficial for them to make loans to minority business people because a tone had been set. In many regards I can imagine that it was really the first time in the country's history where it was a positive thing, actually an advantage, to be an African American in business."
Despite the prevailing positive business environment, it became apparent that Peebles would require all his innate tenacity to attain his objectives.
"Of course the challenge was that minorities were locked out of the economic power base for so long that there was a strong establishment in DC; and if you look at the surrounding areas of Maryland and Virginia, there was a very strong, established business base that didn't really include African Americans. We really had to come in and begin to take opportunities from other people. That created a bit of a struggle because people do not want to give up that kind of opportunity easily."
Timing notwithstanding, Don Peebles knows all too well the importance of being able to see, and then seize an opportunity. "The old saying is that the definition of luck is where opportunity and preparation merge and it's true. The reality is that we all are going to see opportunity come by. Those of us who capitalize on it when it comes across our doorway do well; and I think that those who let the opportunity go by them end up unfulfilled.
"I have been fortunate where I have put myself in environments where there have been some opportunities - and I don't expect it to be easy. As a result I am willing to work hard. When the opportunities cross my pathway I try to take advantage of them because I realize that opportunities are precious and may not come again. Instincts, confidence, and recognition create the great success that comes from great opportunities.
Peebles worked hard; and he did succeed. Ironically, his love of politics; his association with former Mayor Barry; and, according to some who were close to the situation - jealousy, converged to create a perfect storm that would hand him the biggest loss of his career and propel him to unimagined prosperity.
"Back in 1995 the City was working on a deal to bring the Washington Wizards [known at that time as the Washington Bullets] back into the City. They were building an arena for them [the Verizon Center] on government-owned land and the City needed to relocate government employees who were occupying the two buildings that were going to be torn down to make room for the arena. They had a bid process - the City actually went out and hired an independent consultant to evaluate all the proposals - and the bid I submitted, $58 million less than the nearest competitor, was selected as the best. The consultant in the report wrote that the City would be foolish not to go with our proposal."
Despite his knowledge of the Washington political system - Peebles had given leadership to the City's property tax appeal board - he was completely taken aback by what happened next.
"Interestingly, I had not supported Barry during the campaign; but after he won we buried the hatchet. He was the Mayor and it was important for the City to unite and get on with the business of moving forward. The Washington Post and a couple of the city council members criticized the deal for months. When the proposed lease agreement went before the city council for approval it got stalled there. Ultimately Barry pulled my lease agreement from the city council and they went on to do a short-term lease with someone else.
"I lost a deal that probably would have made me $20- $30 million over time and still was a great deal for the City. I bought the buildings from lenders at the very bottom of the real estate market when the banks were taking all these buildings back so I bought them very, very well."
Not only did Peebles lose potential revenue, he also had to deal with the loss of money for the work he had already begun. "I had actually started the build out work because the Mayor had asked me to move forward. There was this mad rush to make it possible for Abe Pollin [Wizard's owner] to break ground by a target date.
"I was astonished. I did nothing wrong; I did nothing illegal; I was $58 million less expensive; and indisputably the best. There could be no issue. I thought that the media should have been saying, 'wow, local boy makes good'. I was born in DC, grew up in DC, and went to public schools in DC. My mother grew up and graduated from schools in DC, they should have embraced the story.
"Unfortunately, the mainstream media could not imagine that I could be doing business and not be in cahoots with Marion Barry.
My wife, Katrina was as surprised as I was about our deal getting pulled. She was very disappointed but also very supportive. I went away on vacation with my wife to Miami. We got an apartment down here. A few months later we were back down here for New Year's Eve and I read a story about a hotel project that the city was looking for an African American developer to develop a four-star hotel in South Beach. South Beach was just at the beginning of its renaissance and so I looked at it; told my wife that there was a deal we were going to win; and we were going to start doing business down here.
"My wife helped put together all the packaging and submissions for the RFP (Request For Proposal) so it was a true team effort. We both wanted to win it so that we could get some independence from Washington, DC.
"We won it [the hotel deal] and I ended up building and developing it and we did very well. We just sold it two years ago for the highest price that anyone has ever paid for a hotel down here [reportedly over $127 million] and I ended up doing about a half-a billion dollars of projects here in Miami. I would never, ever have been receptive to doing business anywhere else had I gotten that lease deal approved through the city council. I would have been so comfortable and so complacent in Washington that I would not have looked at doing a deal anywhere else.
"At the end of the day I made about $40 million on that hotel deal. When I left Washington in 1998 I had a net worth in the teens. Today, it's over $300 million. Because of that terrible setback I was receptive to doing business elsewhere. I think my biggest loss as a businessperson ultimately ended up being my biggest gain."
The Sun Always Rises
Don Peebles believes that you should never allow others to limit how far you can go. While he does not hide the fact that he uses his political savvy to the best advantage, he has proven that his abilities to succeed are not based on who you know but what you know - and, just as important, what you can do.
"When I came to Miami Beach, I didn't know anybody. The black population in Miami Beach is three percent and I went before a city commission where all seven members, including the Mayor, were all Anglo or Jewish commissioners. I bid against seven other bidders, most of whom were very established local developers who were very entrenched here, and I beat them on their home turf. And it wasn't easy, either.
"The local developers wanted to get this prize piece of property - one where one could make a great deal of money. But I realized that if I didn't quit, and I kept fighting hard, I could win. They underestimated me. Down here, they had not become accustomed to an experienced, sophisticated African American businessperson so they did not expect me - I had the element of surprise. I won the second-largest public/private project they had and I did it as a complete outsider.
"Everyone had made the implication that I had done well in DC because of my political contacts. I came down here, didn't know anybody and made a fortune.
"My problem in DC was that I didn't know my place. I didn't acquiesce and I wasn't happy to be in the mix and I wasn't interested in having a small piece of the deal just to get political favor. I wanted to own the deal. I wanted to be the lead developer. I wasn't interested in window dressing. I was also able to play the power game just as well, in fact better, than the established developers. Consequently, I think the mainstream media and the establishment saw me as somewhat of a threat.
Peebles, who still owns buildings in Washington, says the City prepared him to fight - and win. "It wasn't easy in Washington, DC and you always had to have a fight. But that taught me a couple of things. One, you cannot take anything for granted. The best plan, the best deal doesn't always win out. Two because someone is black is not going to make them my best friend all the time; just because they are white is not going to make them my enemy all the time either.
"DC prepares you to push hard. When you look at Washington DC as a whole and you look at the successful African American businesspeople there not one of them has gotten their success without having to fight to get it.
"There are going to obstacles out there, and a double standard exists, but we should not accept that double standard. We should put an end to it. A prominent politician once asked me, sarcastically, 'how many buildings do you want to own?' I answered, 'see, there is the problem. Did you ask a majority developer how many buildings he wants to own? I want to own as many buildings as I can. And you should want me to."
