My Best Mistake: Run from the Fire, You Get Burned
April 23, 2013 /LinkedIn/ – In late 1986, many people in the real estate world were too caught up in the decade’s big gains to notice that the industry was headed for a meltdown.
But as a senior partner at the world’s largest private real estate developer, Trammell Crow Company, I’d been seized by a grim premonition. Here we were at a firm with more than $10 billion in leveraged real estate assets, and spending billions more each year buying and building new properties. I had to ask: how long would it be until we were speeding out of control down a mountain of debt?
We’d long been driven by the credo of founder Trammell Crow, who liked to remind young partners that, “in the history of the world, the seller has always been wrong.” Most of us had grown up in a system that was allergic to selling, slowing down, or borrowing less than we could. So, we plowed ahead doing what we did best – building new buildings.
From where I sat, I wasn’t even sure we could find the brakes in time. I argued for serious pruning of our development activity, and later implemented a series of shipshape measures to batten down the hatches. Still, my pleas to “sell every non-strategic asset” conflicted so directly with Trammell’s philosophy that I never did what I needed to: make my case to him face-to-face.
Instead, Trammell and I tiptoed around each other, addressing the organization piecemeal until it was obvious to everyone that there was little unity at the top. By the end, I’d even left the state, opting instead to commute 1,000 miles to work every week.
Then the market crashed. The company was rocked, partners jumped ship, and I found myself embroiled in needless litigation with my most important mentor – now my former employer. This episode may well have contributed to an eventual sale of Trammell Crow Company – not what anyone was hoping for.
The way I mismanaged this conflict is, to this day, my worst professional mistake. But I took from it my most valuable and enduring lesson: Problems deferred are problems magnified.
It’s easy to turn your back, or keep your mouth shut, or to take half-measures. But if you don’t squarely face the reality you see, you’re doing a disservice to yourself, your colleagues and your family.
The real estate meltdown seared the pain of my worst mistake into a strong and indelible message. In the 25 years since, I’ve never stopped reminding myself to seek out and take on problems. And sooner, not later. I can’t say I’ve found perfect solutions to every one, but I can say that approach has helped me conquer many challenges since.
Here’s how I’ll end this story: I’m now a board member of a $4B specialty real estate finance firm called Ladder Capital Finance, founded by Brian Harris. Brian’s dad, a firefighter in Brooklyn, taught him, “If you see a fire, run toward it, not away from it.”
As you can tell by the name of the company – and the fact that Brian founded it in 2008, just when the housing market was again in flames – he hasn’t forgotten his dad’s advice. And neither have I: Now, whenever I see smoke, I remind myself of that painful mistake 25 years ago, and run towards the fire.
By Joel Peterson