How Michael Cobb Runs Three International Businesses

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0:00 Hello and welcome to the owner meeting podcast hosted by multif family strategy. I'm Christian your channel host today joined by Michael Cobb. I'm
0:08 super excited for today's episode. So he has multiple businesses. I'm going to let you tell I'm going to let him tell you about all of them. But managing
0:15 three businesses, they're international. This is going to be a cool episode. The
0:20 point of the owner meeting podcast is learning the things that you want to do from the people who are actually doing
0:26 them. Michael's doing some very interesting things. So, Michael, welcome to the channel. Christian, thanks for having me. This is
0:31 this is great. I'm excited to be here. As a as a triple business owner, what are the three primary companies that you
0:39 are running? I'm going to have a bunch of questions on how you actually do this and do it effectively. Uh, but just for
0:44 context, uh, what industries and businesses are you in? No, great question. You know, so we
0:50 originally started about 34 years ago a small mortgage company in Bise. Uh we ran because there was no mortgage money.
0:56 Like if if if someone from Washington state was headed down to Bise to buy a condo or a house like no bank in
1:02 Washington state would lend them the money and no bank in Bise would lend a foreigner money. So this big hole in the
1:08 marketplace so basically developers were financing buyers which you know really sucked for the developer right or or the
1:15 client had to pay 100% upfront right full payment. And so it was really constricting the marketplace. So we started a mortgage company. Uh 10 years
1:22 into that we turned it into a bank. Uh and we're a bank in Bise, but we're really a mortgage bank. We still our
1:28 primary business is mortgages for North Americans, Canadians uh buying property in Bise. So that was our first business.
1:34 Second business was a development company, resort development, uh resort communities really. So we build resort
1:41 communities for expats, uh digital nomads, baby boomers, right? uh people
1:46 getting out of the cold a lot of times but also the affordability of living in a developing country. We work in Bise,
1:53 Nicaragua, Costa Rica and Panama for our development company. And then we also
1:58 have a timber business that we started in 1998 uh centered in Panama and we recently
2:04 completed a sawmill uh late last year at this point uh and we're now in
2:09 production of lumber and finished product there. So, so three uh very different businesses but somewhat
2:15 complimentary as well. I I like that I have so and this relates
2:20 to me a lot. So, I have a real estate acquisition business which I consider one of my main things, multif family
2:25 strategy which I have the over a thousand students who go through coursework, mentorship, uh people are
2:31 buying all over the country and then I run my property management company which is Texas-based. It is very easy when
2:37 you're running three projects. Even when they interlock pretty well, it's really easy to lose focus on one at the expense
2:44 of another. Um, and that was one of the big things I I met last year, met briefly with Alex Herozi and his his
2:50 overall advice, which I ended up actually not taking. I would shut down two of your businesses and focus on one. You'll do better. Uh, it's a common it's
2:56 a common difficulty of how do you do a good job managing three things that may
3:01 complement, but they're not directly the same business. Sure. How do you decide which businesses
3:07 make sense for you to be in? Question one. And my follow-up to that is going to be, how do you decide which business
3:13 gets which attention when? Because that is the hardest piece of running multiple divisions or multiple companies.
3:19 Um, how do you decide what businesses you want to be in in the first place? Well, I I think that's a really simple
3:24 answer, right? Uh, many of your folks probably heard of Zig Ziggler, right? Great sales trainer, motivational speaker. If you help enough other people
3:31 get what they want, you can have what you want, right? And so it's this this idea of being a servant, right, to say,
3:38 hey, what what need needs to be fulfilled in the marketplace? Can I serve it and can I make a can I make a
3:44 profit doing it, right? And that was with the mortgage. We we saw there was no mortgages, so we said, well, there's
3:49 a problem. Let's see if we can solve it. We set up a company to do that. Uh the development business kind of the same
3:55 thing. Uh there was a lot of really really good product for North Americans, but but it didn't meet North American
4:01 expectations. Uh lights in the bathroom would be back here and your face would be in a shadow or the door handles were
4:07 all at different heights or there'd be one outlet in the living room and people would have to run extension cords and outlet strips to plug stuff in, right?
4:14 And we just looked at that and we said like we can fix all of that stuff for free, right? Or almost free, right? and
4:21 we're just like then we will be able to deliver a a product that a North American consumer expects. Uh and then
4:27 the the the bigger piece was the community aspect and I don't have time to go into that today but but community
4:32 is critically important because when people leave their homes and jobs and retirees and they move somewhere new
4:39 making new friends is of paramount importance and so we we figured out how to do that but but we hired a company.
4:45 We we look I'm going to answer part of your question. The second question when you don't know how to do it or when you
4:52 uh well when you don't know how to do it, you got to hire other people who know how to do it, right? So and then the third business uh was the teak
4:59 timber business in Panama. Uh because there's a shortage of teik that the the short the the gap in production and and
5:06 and supply and demand is growing. They they they are cutting teak down 8 to 10 times faster than anybody is replanting
5:13 it around the world. And so you've got this supply demand imbalance that's happening and and then then the big
5:18 hurdle the mental hurdle that people have is oh I got to wait 25 years right
5:24 I know you're in you're in the real estate business you get a rent check once a month or you know a lot of people
5:29 have stocks pay a dividend once a year 25 years is a tough hurdle for people to get over um I I love it by the way
5:35 because I'm already over the hurdle I I have now have about 700 acres of teak uh growing in Panama and like I'm over the
5:43 hurdle and and if if if lots of people stay out of the business because of 25 years, that just means my 700 acres of
5:49 te's going to be worth a lot more money, right? So So those are our three businesses, but but finding opportunity
5:55 two that were truly serviceoriented, finding a need wasn't being met. And then the third one was just classic
6:02 opportunity uh a huge scale opportunity say, "Wow, I mean this is this is insane." Peak price has been going up on
6:08 average 5 and a half% a year for the last 54 years, right? So when you can see a price increase in something over
6:15 50 years at 5 and a half% a year, that's not the growth of the tree, that's not the growth of the asset. That's just the
6:20 growth of the wholesale price, right? So you see that stuff and you see this supply demand imbalance and that
6:27 imbalance continues to get wider. You're just like, okay, like I I can see how this will be highly lucrative. So that
6:33 was more of a investmenonly oriented as opposed to a service, right? the the
6:39 first two businesses and and and and by far our biggest businesses came out of service.
6:44 The second question you asked is you know how do how do you manage right? How do you manage three business
6:50 and where where I found where where you give the most attention you make the most money? It's a super I
6:57 I I hate corny sayings even though I also like Zig Ziggler who was fantastic at corny sayings.
7:03 Where attention goes, money flows. And I've seen that to be true in every single business. If a business is
7:10 struggling and all of a sudden everyone gives attention to it, it stops struggling and it makes more money than any other business.
7:15 How do you manage that? Because if your focus is on, for example, let's say you're solving a problem with the teak business and your attention's there.
7:22 It's really hard to be all your brain power on TE and then also be like, wow, am I solving the major problems in the
7:28 mortgage side and vice versa? How do you manage that? Is that just a people thing or what does that actually look like?
7:34 I'm gonna pick one word that you said because I think it's the pivotal word, manage.
7:40 I don't manage any of my businesses. I am a leader, right? I'm a leader. And
7:46 leaders don't manage. Leaders lead. Managers manage. And so what we've done in each of our businesses is we've uh
7:53 we've found incredibly competent managers and leaders. I mean, they're leaders in their own right. They have to
7:59 lead their organization, right? uh and and maybe they're just a leader in their organization. And I think in a couple
8:05 cases that's what we have. We have a leader like our banking group. We have a leader in our banking group. Horrible
8:10 man, not a horrible manager, but not a great manager, right? But he's hired a chief operating officer to run that
8:16 business, right? And and they are empowered to do so. They are financial they they have financial motivation to
8:22 be successful in their business. And so the the key is to not try to manage multiple businesses. The key is to lead
8:29 those businesses and hire very competent leaders in each of those businesses,
8:34 managers in each of those businesses to actually run the business and give them
8:39 a stake in it, right? I mean, give them a stake in the business so that so that if it is successful, they it's a direct
8:46 correlation, right? I mean, how much money you making, you get a piece of it, right? And so I think those are the
8:51 methodologies that we've used to really create businesses that are they're not
8:57 self- sustaining in the sense of like my my leadership is important and and and and maybe even more so you talked
9:03 earlier maybe before we get on I remember like so the lateral integration vertical integration right I think I
9:09 think the role of someone like me like you right is to figure out how we tie
9:14 those businesses together for the most optimal utilization of the resources that are in those businesses. Where's
9:21 the synergy? Right. And I think as as a leader, that's my role, but I don't
9:26 manage any of those businesses and and nor should I because I'm not a particularly good manager. You you've
9:33 done something that I'm really excited about and I think this is where I would say a vast majority of entrepreneurial people get stuck. They're like, "Hey, I
9:40 love business. I have all these ideas. I don't know which ones to implement or how to find the problem that I want to
9:46 solve." Each of your businesses solves a very specific problem, right? It's it's not just hey, I want to be in the
9:52 mortgage business and start company. It's I there is a lack of products specifically in bise for people in the
9:58 US and Canada to be able to build here. How did you identify I just want to go by these one at a time. How did you
10:04 identify that problem? Were you personally working on building something there? Where where did you find that problem where you said
10:10 yes this is the problem that I want to solve? It's a great story. So, uh, my business partner and I, we bought a couple condos
10:16 in Bise. He's a lawyer. Uh, he does asset protection trusts mostly for physicians. Uh, and Bise is great
10:23 jurisdiction for trusts, right? That for a lot of reasons. Anyway, so he was doing a lot of work in BISE. One of the
10:28 one day he I was in the computer business for about 13 years after college and we were roommates in
10:33 college. That's how we knew each other. Anyway, he calls me up one I think it was a Tuesday and he said, "Hey, Cobbster, what are you doing on Thursday
10:39 for the weekend?" I said, "I don't know why." And he goes, "Do you want to go to Bise?" And I'm like, absolutely. But
10:45 then I'm scratching my head and there's no Google back in in in 19 93. Um, and
10:51 I'm just like, B, where's B? I finally had to fess up, Christian. I had to go, okay, dude, where are we going? Where's
10:57 police? I had no idea. Anyway, but Thursday, got on an airplane, went to Bise, had a great time. I said, Joel, I
11:03 said, "Next time you come back, give me a little more heads up. Come with you again." Next trip down, like we started looking for real estate.
11:10 We found a couple condos and we over the next few months after that we bought them. Right. We're laying and now in
11:16 this condo complex there's 11 buildings. There's a pool. They all face the ocean. The next U-shaped 11 buildings was under
11:23 construction. And over the course of many months, you know, 6, eight months, nothing happened in the three buildings
11:29 next to us that were in construction. So Joe and I are laying by the pool one day just hanging out, whatever. And the
11:35 developer comes by. We're like, "Hey Jim, how you doing?" And I'm like, Jim, what why aren't you building the rest of
11:40 those? I never see anybody working. And he tells us the story about no mortgage money. And he tells us that he has been
11:46 financing like three quarters or more of his buyers, right? And so we're sitting there and we're like, well, okay, Jim,
11:52 so you're collecting as much money. Yeah, I usually get, you know, at least 25% down, sometimes 50% down. What kind
11:58 of interest rate you charging? 12 to 14%. 12 to 14%. Right. And we're like,
12:04 and and when we bought the condos, Joel's lawyer, negotiator, Jim gave us a
12:10 20% discount for making full payment. Like that was the deal. We we'll pay
12:15 full payment. Give us your best price. It was 20% off the off the asking price. You know, Joel said to Jim, he goes, "Hey, Jim, would you sell us your paper
12:23 for that same 20% discount?" And Jim, I'll never forget Jim's face. He kind of goes,
12:28 "Yes." I mean, it was just like he cocked his head and he said, "Yes." Like there was no processing time. Yes.
12:34 Yeah. So Joel and I whatever he leaves and Joel and I sit there for a while and we think okay we can buy 12 12 plus% paper
12:40 for 80 cents on the dollar like yeah this is a good business you know. So he went out he went out and raised a bunch
12:47 of money with some doctor clients. I went out to my buddies in the computer industry. We put together a few million
12:52 bucks went to BISE and started buying mortgages from developers. So that was the genesis. It was seeing something
12:59 kind of odd. You're not finishing your buildings. That's your business. Right. talk to the developer. Why aren't you
13:05 hearing the answer and then realizing kind of almost immediately like, "Wow,
13:10 that's a real business. There's real money there. We just need to figure out how to do it." And the and and then then
13:15 the next piece of it is then not so much with the mortgage company. That was just me and him and whatever. We just did it.
13:21 But when we decided to become a bank, right, we went out and hired professional bankers. We hired banking
13:28 consultants to help us find banking professionals, right? Started a bank
13:34 from scratch, right? We knew nothing. And and I'll give you another example. When I went to Panama in 1998 to buy my
13:40 first 100 acre, you know, cattle pasture to plant te on, I knew I knew nothing
13:46 about teik. So I spent a couple days the library of congress again pre Google, right? 199798.
13:52 I went to the library of two days read everything I could read on teik. Not because I thought I would actually know
13:59 very much about teik, but because I was going to Panama the week later or something. I wanted to interview three
14:06 forestry companies and I wanted to have really good questions, right? And so I
14:12 used my research to come up with intelligent, you know, perceptive questions to interview forestry
14:18 companies. And we ended up hiring one called Hoforestall in 1998. And they planted our plantation. They've
14:24 maintained our plantations now plural for 27 years. So again, by finding the
14:30 right people who know their business, right? That's the key. It's always about
14:36 people. It's always about people. Well, and there there's two ways to be generally speaking, there's two primary
14:42 ways to be successful in business. One is you have specific specialized knowledge and it's a service that you
14:47 can offer and you can build off of your own knowledge base. Or two, you identify the opportunity. you don't have the
14:53 knowledge base yet and you need to immediately recruit the people and build the business. Those are the two ways to do it is either your specialized
14:59 knowledge or you have to lever the specialized knowledge of others. Everything out there besides that like you you identified the fundamentals of
15:06 teik, right? You have a commodity where you're like, "Hey, I I like the fundamentals on this." Y how did you land on teik. It's a very
15:13 specific thing to find. So what what about that? Was that a material that you
15:18 were using in your hospitality building? Is that something where I'm just curious on that's such a unique piece of your
15:25 business. It doesn't really relate directly to mortgage. How did that fit in and and why that business?
15:31 So, when we looked at it, uh we we did some initial research to just see uh because Panama passed a reforestation
15:38 law. Basically, that's why we even heard about it, right? So, they pass a law that says, "Hey, if you plant a bunch of
15:44 teak trees, we'll give you tax incentives. you know, you don't have to pay income tax, Panamaeanian income tax
15:49 on your first harvest. US citizens do, but whatever. Anyway, but it's a it's a really good incentive law. And they
15:55 featured several species. I can't remember what the there was a faster growing species and I can't remember
16:00 what it was. There was teak at 25 years and there was mahogany at 35 years. And and and when we when we started talking
16:07 to the forestry company because what do I know about any of these? Nothing, right? Hakobo is the guy we were working
16:13 with then. Who's by the way, he was a little I say a little. He was a forestry engineer, a junior forestry engineer.
16:18 Today he's general manager of the company, right? So it's just great to grow with people over, you know, a couple decades or three decades, right?
16:25 Anyway, so we asked Obo what like really what what's the best uh uh time value of
16:31 money on on things and and he said uh teik. So that's why we went with teak. Again, that wasn't our decision. We
16:37 could have gone with mahogany or the other species just as readily, but but what's the best time value of money and
16:43 teik was the answer. Yeah. Very interesting. Very interesting. Okay. You settle on that business gets
16:49 launched. When you were launching these companies, what was there I'm trying to word this this question correctly. Was
16:55 there a specific hardest part of business? It could be on the first business, the second business. Was there
17:01 a certain struggle in getting one company started where you're like, "Wow, we didn't anticipate this and it was
17:07 just not at all what we expected." I feel like every time you start a business, you have unexpecteds. Was
17:12 there one that stood out where you're like, I had no idea that we're going to come up against this? We had no idea how hard it was to do
17:19 business in Central America. I I have I have heard this many times.
17:26 Um Yes. Yes. Is it is it resistance specifically to
17:31 Americans or is it just resistance to is it just the way they do business is just not the way we do business? time time
17:38 does not have the same meaning to them, right? It it it and and and sometimes
17:44 people throw around the word lazy. I I've I've really not found lazy to be an issue. It's not a lazy issue, right?
17:50 It's a time issue, right? It's it we value time and punctuality like so
17:56 intensely as a as a North American culture. But in Central America, it's a little more fluid. It's a little more
18:02 loose, right? I mean you got very hardworking people but they might show up you know late right now they might
18:08 work late too but if you got a crew of if you got a cement crew coming in got a rebar crew like hello everybody got
18:15 arrive at the same time right I mean like you can't have you know and so you get these inefficiencies that happen
18:21 because you you know and and and and I would just say there's I mean there are other things too uh bureaucracies are
18:28 different bureaucrac here here's the thing bureaucracy is the same around the world lots paper, lots of people wanting
18:34 to put their approvals on stuff. In the United States, Canada, we're so fortunate to have most of this stuff
18:40 fully automated at this point, right? It's still a pain in the ass to go to the DMV. I get it. Right? We all dread
18:46 going to the DMV. Right? Now, we don't have to. Now, we can do it online. That's my point. Now, you can do it online. 20 years ago, going to the DMV
18:52 was it was uh right. You want to go to the DMV in Panama? I mean, just get ready to wait hours and
18:59 hours and hours. Again, it's not because the person behind the counter is not working hard. They are working hard. It's just everything's paper. It's in
19:05 file cabinets, right? You just run up against these kinds of things 15 different ways all the time. And so what
19:13 I've found, and this is a saying I came up with, right? You you have to learn
19:19 acceptance without acquiescence. It's hard. I mean, that is a razor thin thing
19:26 to balance on, right? Acceptance. Okay, I I get this, but without acquiescence
19:31 of or I'm going to give up, right? Because it's it's tough. I mean, it it and and and so two two things. One,
19:38 finding people to lead your businesses and teams to work. And most of our businesses uh uh really we utilize uh uh
19:46 locals, whatever country we're in, whether it's Bise or Costa Rica or Nicaragua or Panama, whatever, right? We're using uh really recruiting and and
19:54 and and and having local but but there are some expats in the mix because our
19:59 customer base is expat right if our but I always you know if our customer base was you know panameanian I would have
20:06 pan I pan this whole stack would be panameanian right but it's not right because and so what you have to find if
20:13 you have expats in the mix and we do have expats in the mix uh because of our client interface um that's a real
20:20 special breed of person uh that you have to identify and and that's been challenging too Christian right the the
20:27 the the identification of somebody and then retention of that person uh uh if
20:32 you if you misidentify there's no way you can retain like you know what I'm saying we tried for a while and it just
20:37 was yeah just you can't make it work um so the identification of the qualification characteristics of that
20:43 person that make them a good fit for that environment that's tough that that's tough
20:49 how do you find good people you had mentioned You're a leader, not a manager. So, you have to find the right people, not not just the qualified
20:55 people. You have to find the right people that are going to work with you correctly, someone who you can lead in the right direction. Uh, how do you find
21:02 these people? You know, I I I put myself out there. So, for example, I uh I've done a ton of
21:07 work with the National Association of Realtors. I served on the board of directors of the National Association uh
21:13 for for a year. I've I've been in many of their, you know, global committee and and some of the other global alliances
21:18 committee and and so I've I've engaged. I attend I attend their annual conference every year. I attend their
21:23 midyear conferences. I speak at a ton of local and state association meetings uh on the real estate side. On the banking
21:30 side, my business partner does that because he's the lawyer and that kind of drops into his in into his turf, right?
21:36 So, he circulates in a lot of banking and finance kinds of meetings uh on that side. And then on the timber business,
21:43 um, I really didn't have to deal very much with it until very recently. Uh, I I joined the International Wood
21:49 Processing Association and attended their uh, convention in Colorado Springs a couple weeks ago. Uh, again, I I I
21:57 believe in bellyto belly, Christian. I think I think you can you can see a resume and that tells you if they're
22:02 qualified, right? Uh, you can have a couple phone calls and a Zoom call, you know? I I think to to really know
22:08 someone, you have to spend time with them and and my experience has been uh
22:14 uh conferences and events are great because yeah, there's the formal part, but there's the going out for dinner and and you know, and and do they chip in
22:20 the right amount? That's a huge one for me. Like, okay, the bill's, you know, 200 bucks, we're all in for 50 bucks.
22:26 Well, did they put in their 50 or you know, they didn't put in the tax and the tip and, you know, they're in for 40 and
22:31 all of us are chunking in more. Like I look for those kinds of character issues in social settings uh that that really
22:38 tell me the measure of the man and and those higher character. The bottom line
22:44 I've always said I mean if you need an accountant find find some accountants right but higher character and so I use
22:51 these social settings in physical in-person uh uh events. Well, well, it
22:56 doesn't have to be conf. So, I speak at a lot of conferences, too. So, I use those networking, but in-person networking. Christian, I think that's
23:03 been our true key to finding the right people and leadership. Uh, and managers,
23:08 too. It doesn't have to be a leader. It can be a manager. Um, that will be of the right character first of all, but
23:14 also of the right temperament and personality to work well in that environment. Now, one of the most
23:20 expensive decisions you can make is giving equity in a project to the right person, which is why character is so
23:26 important. When you earlier you had mentioned rewarding people out of the success of the business, what does that
23:33 typically look like for you in these roles? Is that actual ownership in the company? Is that profit share? What is
23:39 what have you found has been the right incentive to match the incentives to the objectives? I
23:45 kind of a mix of all of them in the bank. uh because ownership in the bank is is very ownorous in terms of uh uh
23:51 know your client and and just all kinds of uh due diligence that the central bank of bise requires um and so there do
23:59 it in the form of bonuses uh that are that are driven you know tied to profit right so so people in the organization
24:05 who are not shareholders uh can can benefit from the success that they drive you know for the bank um you know in our
24:12 in our uh development company because we've we are a share company we're a private share company, but we have
24:18 shares and so we've rewarded many of our people over the years with with stock in the company. Uh so that they they
24:25 benefit directly from that. Uh our salespeople obviously uh the direct correlation there is commission, right?
24:31 Sell, get commission, whatever. Um and then in our teak business, our Panama uh uh business, uh we actually found our uh
24:39 our lead guy. He moved himself and his family down there and we cut him in on 10% of the business. So that like
24:46 there's a big success kind of quotient in there like he generates million dollars of profit for the business. He's
24:52 keeping a hundred grand and he gets a salary too. Like he's salaried, right? He is salaried because he has a family
24:58 and all that kind of stuff and he was building a sawmill for two and a half years to get our stuff. So it was no no
25:03 no plus side, right? Um, but now that we're operational and our first container of lumber is headed out uh uh
25:09 later this month and our finished products are coming out of the gate, yeah, that that 10% will be a meaningful
25:15 number to him going forward. And and that's such an genius thing. I think a lot of people when they first think about like, oh, I'm bringing on
25:20 people, I'm rewarding with the company, they immediately think equity. And that's not always the right answer. uh
25:27 equity can be if it's someone who's really a key member and they understand what it is to be an owner, but I've seen
25:32 so many people give equity when they should have given a bonus structure or they give equity when someone's doing a
25:37 recurring task that really deserves and should be rewarded with more salary. Having that right balance of bonus
25:44 incentives, profit share incentives, uh what tasks are salary verse ownership, and what's the riskreward of each of
25:50 those? It sounds like you've used each of those completely differently in every business and appropriately in every business, but it's such an important
25:56 consideration. When I ask people, "What's the highest stupid tax you've paid?" 90% of them say, "Hey, it's been
26:04 a partnership mistake. I let the wrong person into my business." And often times it's it's it's their fault for
26:10 they gave someone who didn't need to have equity equity that they weren't ready for. And I see that happen again
26:16 and again and again in business. being an owner isn't the right answer for a lot of people to be involved in the
26:23 company. That it takes a very specific person. It sounds like you have the exact right person in Panama. They're
26:28 moving down there. They're on a salary. This is they're they're tying most their life to the company. That that's the one
26:34 time where you go absolutely ownership's appropriate, right? I I think when it's when the when the tasking is entrepreneurial, right,
26:42 and you find an entrepreneurial person because you have to um then I think equity is is probably most times maybe
26:48 not all times but most times a good piece, right? Because then it's because you are building something from the
26:53 ground up and that is entrepreneurial. Um and and then ownership of a piece of that I think is relevant. But you're
27:00 right, different circumstances and different strategies and different uh uh parts of the business require different
27:06 compensation structures. Absolutely. And if if you're going to do this, that that's one of the the early things to
27:11 make sure you learn. Just spend a week learning compensation models and what
27:16 works when that you'll apply it for the rest of your career. Yeah, it's is one of the things I see
27:23 missed most frequently by newer entrepreneurs. So the way you were saying that I'm like, "Yep, this is 101.
27:29 This is how you set up a business and compensate correctly. Uh, speaking of
27:34 large mistakes, we talk about the stupid tax all the time on this channel. We ask every single guest, uh, it doesn't mean
27:39 you're stupid. I mean, the dumbest you'll ever be is when you start, and you're going to learn a heck of a lot along the way. Uh, what is the most
27:46 expensive mistake? And this could be personally expensive. It could be monetary. To you, what is the most
27:51 expensive lesson that you learned that we can learn uh because you made the mistake for us? Uh, you know, and this was a big one.
27:57 This was an expensive one. And it was monetarily significantly expensive. It was reputationally
28:04 uh uh largely expensive. Um we were approached by a this is our real estate
28:09 development business. We were approached by a developer. We have a huge piece of property. Our Grand Pacifica property is
28:16 three and a half miles of Pacific beachfront. Right. The property is three and a half miles by a mile deep. 2500
28:22 acres, right? And and literally we're building a small town and we've we've built a village at this point. We're not
28:27 a small town yet, but we are a village. A couple hundred addresses and people and all kind of golf course and stuff going on. So, we were approached by a
28:34 guy who said, "Hey, I'd like to build a condo building and some and some residences around the condo building on
28:40 part of your property." And we said, "Fine." So, we worked out a deal with him uh and and we basically put the land
28:45 we put the land in the deal for a piece of the sales price, right? Because we said like he's going to invest a lot of
28:50 money building the building. We'll put our land in. He invests the money to build the building. Well, the the the
28:56 the mistake was we did not do enough due diligence. And truly like the the the
29:02 character issue and part of part of the reason I'm so character-driven these days is like I mean he he built a third
29:09 of a building never I mean concrete and rebar uh ran off with people's money um
29:15 and uh kind of left left a whole bunch of us in the bag. Uh and and that was
29:20 that was huge. That was back in 2008 n something like that whatever 8 n 10.
29:26 Yeah. Anyway um but but it was I mean it was a a massive fail uh at so many
29:32 levels but but the fact that he ran off with a bunch of people's money never delivered their products um you know
29:37 that was a big problem that you know we had to sort out uh over the next you know five to seven years and you know I
29:43 mean it we did we did but boy it was painful. Yeah it was painful. that that
29:49 is almost always the answer on this channel. It's it's not one mistake that you made. It's not one one like, oh
29:56 well, we made this business. It's almost always it's the people. It's always the people. It's the most expensive lesson
30:02 every single time. I I you could probably go back through the last hundred episodes of this podcast and
30:08 maybe pick out a small handful where it was like, "Hey, I made a misstep and I should have done this." almost every
30:14 time it's the one person and it it comes down to character and who are you
30:20 working with it is people are the biggest variable in your business people think your biggest risk is corporate
30:26 policy uh interest rates that happens in real estate all the time people are going to be a million times
30:32 more variable than interest rates could ever be interest rates can double people can tank your business instantly
30:38 crazy uh expensive lesson one that that sounds like that was pretty largecale
30:44 project to make that decision on. That didn't that doesn't sound like a small project to have them in on.
30:49 Oh, it was it was a doozy. Okay. It was a doozy. Whatever. Ultimately, what is the solution? You
30:56 mentioned over the next five to seven years you guys, you know, you make it right. You worked through it. But what ultimately what was the work through to
31:02 correct that? So, so, so ultimately there was he had a couple partners who ended up cleaning up
31:07 the financial side. Um the the problem for us was is that you know we had
31:12 people screaming and yelling and it and it really kind of uh put a hurt on our project from a PR standpoint for a
31:18 number of years. You can't believe you know and and and the and they the word they ripped me off. It's like whoa whoa
31:25 whoa. Like we did all we did was put the land in the deal. Like we we didn't sell it. We didn't write contract. We didn't
31:31 do anything. We just put the land in the deal and said hey pay us you know I can't remember 50 grand a condo or something whatever it was. I don't
31:37 remember. Anyway, but but we didn't get paid. We didn't get paid either. So, it wasn't like, you know, we made a bunch
31:42 of money like we never got paid, right? So, like but the problem was is people
31:47 would generally say, "Oh, they ripped me off and they was but it wasn't
31:52 Isn't it the worst feeling too? We recently had uh it was a viral post. Uh I have a resort, Robin Hood Build
31:59 Resort, and we had a wedding couple there who they asked us to clean cabins. We don't allow midstay cabin swaps, but
32:05 there's a miscommunication. We allowed them this one time to do it. They had some deli rolls that got thrown out in
32:12 the fridge. They wanted for their wedding. What they posted online, cuz again, this is a staff member, was a
32:18 whole bunch of lies about us politically, about a political affiliation that I don't have. So, they got the post to go viral. And they said
32:25 that we our staff knowingly stole $2,000 of sharerie. It was some Costco deli
32:31 rolls in a mini fridge. Yeah. But the reputation, it got a million views. I got hundreds of negative
32:39 reviews. Of course, Google fixes this. Uh but I had days of hundreds of negative reviews. You get death threats
32:46 over shakuderie boards is part of business. It doesn't have to
32:51 be true, but that was something that a a junior staff member did on a summer 18
32:59 cabin resort in Hood Canal, Washington. I mean, this is like a population of a thousand people. You would never think
33:05 that you would get reputational damage from this. Obviously, yours is a larger scale, but the reputation stuff as an
33:12 owner, it does not matter what level it happens on. You take the full blame no matter
33:17 what. It's part of business. That's right. Absolutely. And and and you have to make right. Whatever it is,
33:22 you have to make right. Exactly. Exactly. You have to do the best you can. And at the end of the day,
33:29 have to move forward, but you have to handle as directly as you can. And the the ownership is that's that's comes
33:34 with the term owner. You own all of it. The good, the bad. Uh and when it goes well, do your best
33:40 to give that credit to your your staff and your partners. And when it goes terribly, you you're the one who owns it. And that's that's part of what it
33:46 takes to lead. Christian, can I tell you that's that's my gem to hear you say that because I say that all the time. If
33:53 you know we talk about stuff, I'm like, if it goes well, it's all you. If it goes bad, it's all me. Right. And and
33:58 you know what? as as a leader and as a manager, you you are a phenomenal leader and and I don't know if a manager or
34:04 not, but you're a phenomenal leader because great leaders give all the credit of good stuff to other people
34:09 because that's what empowers them and encourages them and and and and really allows them to be what they need to be
34:15 for the organization, right? But when stuff goes bad, yeah, you you own it, you eat it because you know what that
34:22 that's your job. So, right on, man. Right on. And it feels good when you when you do that. It feels good for you
34:28 as a leader. But if I can take it back even to just being selfish. You get the best outcomes for your business if you
34:34 do that. There is no actual monetary benefit to you stroking your ego and
34:39 taking credit. Did that's that that is capital for you to give to other people. Um and it will pay dividends.
34:47 Same as the blame. Blaming your junior staff member for a hor horrible thing
34:52 that didn't need to happen. you have no benefit monetarily. Like it makes no
34:58 business sense. It it and Zig Ziggler, you mentioned him earlier, he's fantastic at talking about ego. Ego does
35:04 not help you in business. Uh but that is all stuff that you can spend. If if you take the blame for things, you get
35:11 credit for that. Like you're you will build loyalty. And if there's news coming in, you can
35:16 give that to other people. That's compensation that you can give. You will build a better company. But
35:22 there is zero benefit uh to ego as an owner and as a leader. Uh that was the
35:28 biggest lesson for me early on especially because I started young which means inherently I had too much ego when I started my businesses. It only but I
35:35 have to say Christian I think ego is what lets us step out right I mean
35:42 confidence right I mean maybe there's you know bad ego and good ego but I'm just saying like ego is important because ego is what lets us step out of
35:49 the norm out of the comfort zone to do something that most folks won't do and
35:54 and so I I think ego is probably a good thing until it's a bad thing.
35:59 Yes. I don't know agree with that too. Confidence is everything. Whe when when
36:05 you feel that you need the credit for everything good or or you don't take responsibility for the bad, that's where it gets it only hurts you. It doesn't
36:12 help. Correct. Michael, where do people find more? Your your business insights are fantastic. I
36:18 know you're a public speaker. Where where's the easiest place for people to connect with you, to learn
36:24 from you, to hear all the insights that you have on business? What's the easiest way for people to find you online? Well,
36:30 you know what? Uh, our our ECI website, but I'll tell you what I'd like to do, Christian. I would like to give every
36:36 single person listening here a free gift. This is my book, How to Buy Your Home Overseas and get it
36:43 right the first time. Right now, it's not just buy your home. How to invest overseas. It doesn't have to be a home.
36:50 It could be an investment. Right? How to invest outside your home country and get it right the first time. Uh, it's on
36:55 sale at Amazon, but if people simply email bookcopment.com,
37:02 bookcopment.com, I'll send them a coupon, they can go to Amazon, they can download the Kindle
37:08 version of my book for free. Uh, this book is all, you talked about lessons and mistakes. This book is a compendium
37:16 of every mistake, maybe not every, most of the mistakes I've made, many of the
37:21 mistakes other people have made and how to avoid them going forward. This this
37:26 book is is really a gold mine in that. And and you know what, and and and folks
37:32 will learn a lot about me and our businesses um just by seeing how we address those things. There's no there's
37:37 no call to action. There's no selling in this book at all. Um this is a due diligence handbook. And you know, I just
37:43 read some interest Gallup just did a bunch of studies recently at the end of last year. Yeah. Uh apparently 40% of women would move
37:51 overseas right now given this uh ages 18 to 44. 40% um would move overseas given
37:57 the opportunity right now. Retirees are now at about a third of retirees are considering a lifestyle overseas. So the
38:04 number of people looking at going overseas is dramatically larger than it was a decade ago. And and you know I I
38:11 we don't know what we don't know. And when we go overseas, we're playing on a different rule game. We're playing on a
38:17 whole different field. It's not I mean we're playing American football here and we go play football down there. I mean
38:23 like it's not even the same game, right? And so the the rules of the game are really important and and this book
38:29 really highlights how we can do it. Well, by the way, I I'll give the I'll give the cheat answer. The answer is
38:36 ultimate humility. It's the opposite of ego, right? Ultimate humility. If I had
38:41 to sum up my book in in one word, it would be well, that's two words. Ultimate humility. Humility.
38:47 I love that. And I also love book titles that are exactly on point. Get it right the first time. Uh that is uh that is
38:53 everyone's goal and a fantastic book title. Uh everyone, you can check that out. The link is also below in the show
38:59 notes or if you're watching on YouTube, it'll be in the description below. But check that book out and completely free.
39:05 So, thank you so much for offering that. That is uh phenomenal and a ton of people are looking to do this and I know a ton of people who have done it wrong.
39:11 So you you solve a uh like everything you do, you've identified a core problem and you have a solution.
39:16 I I've done it wrong too. That's that you know, we all do it wrong, right? But but I think when we can put that stuff down in writing to help other folks
39:23 folks do it better, that's a huge win for every you know. Yeah. Oh, I love that. Well, guys, check out
39:28 that free link. Thank you so much for listening. The whole point of this podcast is bringing you people who have done the thing that you want to do. If
39:34 you don't have time to do that owner meeting, the owner meeting is how I built every single piece of my business. I met with the people who've already
39:40 built the business, learned from them, and made less mistakes than the people who came before me. If you want to do the same thing, download the podcast,
39:47 leave us a like, follow the pod. We'll see you guys on the next episode.