Screwed Up A Good Friendship?

[Dueller]

Gee thanks, Milt. I think.

Rob, you seem to be a pretty loyal friend, And apparently a pretty astue bidnesman. One thing struck me about your last post. YOU changed the deal somewhere along the way to allow him to make more and you less. Maybe not from a legal standpoint that change is enforceable, but YOU set that precedent. If I hadda guess, you didn't wanna see your buddy screwed. But you made it clear thathe was gonna get the benefit of the bargain ya'll made, even if it came at your expense. And now it seems that he has conveniently forgotten that....especially whem he sees things going south. He's looking out for himself and making veiled threats when he sees that it may not turn out as planned. Especially if he senses you want him to make some concessions as you did.

So it seems that it is you that is trying to be more the friend than business partner and the converse for him. Not a mortal sin for either of you. Just different perspectives. Had this been a pure business venture without the complications of friendship, I suspect you would have told him to piss up a rope...here's our deal and we ain't changing it.

Seems to me he's more the one who puts business before pleasure, is looking out for his own self interest, etc. Nothing wrong with your way or his. Just different perspectives. And you can't beat up on yourself or really be critical of him if he wants to make it more business than friendship.

Besides, you could buy and sell this guy with your pocket change if ya wanted.


Back to the Godfather...remeber the scene in Cuba where Michael Corleone is asking the Jewish mobster who ordered the hit on Don Corleone. And the Jewish guy starts talking about the hit ordered on Moe Greene in Vegas years earlier obviously ordered by Don Corleone? The Jewish guy says something to the effect: "I didn't ask any questions. This was the business we chose. So...I...just...let ...it go. It was the business we chose. I'm going to bed now and when I wake up if there's a briefcase on the table with $2M in it, I'll know I have a partner. If not, I'll kinow I don't."

What did I tell ya about the GF?

[Dueller]

Or put another way....

[dtw]

I think you should sock him one square in the eye. That's how men settle things.

[RoninLB]

some people need a beating once a year to keep a good head in place.

Remember the big Catholic church wedding in Godfather and another scene where a hit happened out in wetlands with tall grasses, and another scene when a mob phone call went down and the caller said the phone number to the operator Long Beach 6- 8407

ever wonder where this Italian neighborhood was ?

[911Rob]

Hey guys, Ha; once again I appreciate the posts; well all but about 2? Yet, I probably had those coming

Here's the card I played today................

Originally Posted by Dueller

****** Milt. I think.

...... but YOU set that precedent. If I hadda guess, you didn't wanna see your buddy screwed. But you made it clear that he was gonna get the benefit of the bargain ya'll made, even if it came at your expense.

Nothing wrong with your way or his. Just different perspectives.

He showed up at my office today and he was pissed off; steaming mad. This is our second time on this project where I've seen him like this. He started by going off on what he was going to do, telling me what the court of law would uphold, etc. I mad a few digs to keep it fuming for the first few minutes.

I then told him that I could understand that he thought my intentions were to screw him out of his cut; I told him that was not the case. I also told him that his friendship meant more to me than the business relationship and I realized that I may have crossed the line that will make that repairable, but I was sorry for doing so.

I told him that I could appreciate his position and that there was no way I was planning to reneg on my commitment to pay him his fees. I then got up, walked over to him and put a mid-five figure check down right in front of him. I said, money talks eh pal.

Then I went back to my chair and told him over the next 15 minutes all the things that I was not happy about, I then gave it to him in writing; each item spelled out. I told him that I would honour the full deal for the 10 homes however I would not honour it moving forward for any future deals and upon the final completion of these 10 homes our business deal was done.

We breifly spoke about the future; I told him my alternate plans which did not involve him. I told him he would have the opportunity to continue working with me, but not if it was going to cost us our friendship.

We then went over to the site and I took him through 3 of the homes and pointed out some of the contentious issues. It was a civil afternoon.

Here's the BEST PART GUYS...... we then went for a beer! Things lightend up and we were laughing again. I felt good and he felt good.

We don't know how we're going to go forward; but I just received an email from him with an updated, proper CTC, which is a good start. Once again, the posts I read this morning were very helpful, so thanks again.

I'm gonna go and watch a movie, relax and take my mind of things for awhile; it's been a long, tuff day.

[911Rob]

My wife is happy that I got the issues off my chest. She said to me tonight, "Good, now you won't be walking around here mumbling about how you're not happy with him"

[Dueller]

You made him an offer he couldn't refuse....see....Godfatather 1. No arabian stud's head in his bed unexpectedly.

Hope the movie you're watching is Godfather.

[berettafan]

the cynical outlook is that you temporarily fixed his cash flow problem and he'll be back when that runs out.

Don't know the details but IF you aren't the one paying the subs on these 10 homes I suggest you make it that way.


Rob you seem to be a heck of a guy. The pride you take in your personal relationships consistently shows itself and I think that is fantastic.

[KFC911]

Originally Posted by 911Rob

...Here's the BEST PART GUYS...... we then went for a beer! Things lightend up and we were laughing again. I felt good and he felt good....

[berettafan]

btw, is there enough cash in the entity to cover the projected losses?

if so was it contributed in proportion to your ownership of the entity?

Is there debt? Who signed for it?

Have you been in touch with the customers and their banks? Any issues brewing re. draws vs. completion?

Whose money will cover punch list stuff after settlement?

It seems you've resigned yourself to the fact that you took on ALL the risk and less than all of the upside potential HOWEVER my concern is have you accurately evaluated the potential loss.

[schamp]

Rob, you are a better man than me. With that said, I would push this project to completion as fast as possible and be done with that guy period. No new projects for him. If you see him in a bar, talk, buy him a beer, but no business. When he started playing lawyer and telling you he was taking you to court it would have been done. Can you buy him out or would you want to? Once you move forward without him, he will get the message loud and clear. You clearly took the high road with all things considered.

[T77911S]

darn, i was hoping to move into the "new friend" spot if he did not work out.

i think you made him see things from the other side. when i was about half thru your post my thought was the business is over AND the friendship is over because things would never be the same.
i think we just resolved our issues with the PO of my wifes business. so life is good.

glad to see it is working out. i thought my wife was the only person that was that considerate or loyal to friends.

[dtw]

You could have saved a lot more time from your busy day by cutting off his genitalia, stuffing them into his mouth, and duct taping it shut. Goes without saying that you do this on a site visit or his office, but still...

It isn't about working harder, it is about working smarter.

[rnln]

as you said he is "a miserable prick". If you care, just try to play nice with him until the deal is done. After that, he's just your social friend... instead of an enemy.

Originally Posted by 911Rob

I think I might've just screwed up a good friendship?

I'm always giving people advise here and there, so I thought I'd humble myself to the PPOT Brain trust and see if it helps?

Good buddy of mine, going on 9 years now; hubby & wife friends; Dinner, Drinks, Good Times People. Kids hang together too. Lots of fun, Lots of laughs.

He's an accountant for a large developer; one of the biggest in BC. He works as the right hand guy for the owner and as the right hand guy for the companies main CA. He knows construction, development and accounting; all good attributes. From time to time he'll get some input from me to help him negotiate his day job better.

Introduce the boom and he gets gifted a lot from developer boss, "pay me when you sell it, make some money" So I help him organize a spec home, he builds it by hiring a builder and I sell it for zippo for him. Poof, he made some good dough; like $75K.

He does it again, same results; I make a little commish on the 2nd home. Nice. Then I help him get his own New Home Warranty Program and become his own builder. I go onto the company officers to do this; grats. He builds his first house, no different than hiring a builder, only he's the builder. Does well, we sell it. I give him a good deal selling it; poof he make's $100G's. My friend starts paying for the odd dinner now (true).

So I decide to bring him into a development I'm doing and together we'll build a few homes; say 10. We do. First couple come in on budget, but I can't stand his accounting/control practices (and he's the accountant/job cost control) My wife and dev partner tell me, relax; we're on budget. OK, I do. Couple more houses come in on budget, but its just. Then all of a sudden in January one came way over and we were in the throws of building the last 5 all at once; this being the first of the five.

We take some immediate corrective action. We redo the CTCs (cost to complete) and reconcile all the accounts; profits are adjusted but everyone can live with it. February statements come in on budget.........

All of a sudden March comes in, (thus my note tonight) and we're way out of whack! Big Problem. We also just turned over the last of the 5 homes, with the completion of these 10 homes now; 3 were sold specs and 7 were custom builds under performance contracts. The custom builds gave him the challenges.

So we're deciding what to do with the crap and buddy says things like, "I'll get my lawyer to call you tomorrow" and "I want a contingency for the future warranties too" and "I want my fees paid regardless of the profits". Keep in mind he is being paid very well (he made the mistake of telling me how much his salary at work was....$60K/yr); we're paying him much better. Of course the LIEN word comes up.

Well this got me all pissed off and I went off on him; pretty much pounded him into the dirt and there's no chance he's coming out for awhile. My big challenge is the 9 years of friendship......... man, I don't want to throw that away and I need some suggestions?

I've worked hard at keeping the friendship, but he's become more about business than anything. He's never been a businessman before and he's gotten a rep for being a miserable prick. Your thoughts guys? I appreciate it, thanks.

[RoninLB]

sometimes kids settle business successfully with a fist fight

If you have big money as an adult you can take that attitude right up to having a lawyer on retainer and suing everybody you have a disagreement with. I know of a guy who spent over $10M getting even with a guy who screwed him out of $1M. The opposite of rich violence is poor people violence.. sos

to a more sophisticated white collar office technique of using a situation to mentally slam the pia into giving you more space when passing in the hallway etc. That works for awhile till next time. A combo move last longer of adding the attitude "he's a pia joke" among other staff and gives you more reign during next situation.

sometimes it's difficult to see through other's eyes due to morality differences etc etc and you never really get a "feel" for figuring the other guy out.



After the issue of "it takes two to tango"... this joker has you figured out and knows what buttons to press to fill his desires. He'll manipulate you more the next time as you're teaching him how to do it. I'm sure he's figured out his default of "love and kisses" will fix every leak in the dam.

Right and wrong is only an issue among equals in power.

and personally from watching you around pelican I definitely side with you if I had to choose. But it takes a single guy two girlfriends to have a clear head and three to be nonchalant. Once you attain that ambiance the rest is easy.


all above just my attitude rant

[911Rob]

Amazingly great posts again. Wow, thanks.

I did post again last night after my movie, but Wayne booted me off before I hit reply for the evening maintenance thing (most of you don't know about that, every so often at about 2AM the site gets shut down for maintenance)

My mind is still going on this issue; it's not over, but we're at peace at the moment.

I have some more thoughts to share on this....... but first I'm gonna reply to Barreta's posts.

[911Rob]

QUOTE=berettafan; btw, is there enough cash in the entity to cover the projected losses?
Yes, we're not into losses yet, just cost over runs. If I add up all my end of the expenses I've paid directly, which include surveys, permits, utility costs, commissions, etc.; then we're into losses.

if so was it contributed in proportion to your ownership of the entity?
No, I'm the sucker paying the bills. All of them.

Is there debt? Who signed for it?
No debt. There was a development blanket mortgage that was paid off over the first few sales.

Have you been in touch with the customers and their banks? Any issues brewing re. draws vs. completion?
No issues to date. All but one have completed over 90% now.

Whose money will cover punch list stuff after settlement?
It's become very clear, it's my nickel all the way to the end. (when I say "my", it's actually the development company that's owned by 2 of us.

It seems you've resigned yourself to the fact that you took on ALL the risk and less than all of the upside potential HOWEVER my concern is have you accurately evaluated the potential loss.
Yes, that's correct. Largely because I didn't want to be the builder, when we started this project in late 2006, you couldn't get a builder if you paid him a million dollars, fyi. Subtrades were the same, it was very challenging.

berettafan; the cynical outlook is that you temporarily fixed his cash flow problem and he'll be back when that runs out.
Thanks for your insight. I am aware of this. I tried to offer him a deal whereby he would accept some responsibility to the bottom line; he refused. I also gave him the opportunity to put some of his "profits" on the table; he did not. I'm going to give him the chance one more time. I've paid him some funds, I'm paying him some more today now that I have an accurate CTC from him. I'm not stupid, I could see the money flying out the window the last two months. Saw this coming.

At this point he's more like an employee than a partner. I've taken over control of the site 100% and will be organizing the completion of the remaining 10% to do.

Don't know the details but IF you aren't the one paying the subs on these 10 homes I suggest you make it that way.
He pays the subs. Out of $1.8 Million in sub payments, we only have about $50K left to pay, so it's irrelevant at this point. I've made it clear that I'm holding the $50K back from him (builder) until deficiencies/seasonal work is done; whereby he must holdback from subs. Another reason I wanted subs, I hate dealing with subtrade payments/issues. This guy is great at that stuff.

I ask myself, If I was the builder, could I have done the project more economically myself. Fact is, probably not. So I'll pay the bills and move on without the guy.

Rob you seem to be a heck of a guy. The pride you take in your personal relationships consistently shows itself and I think that is fantastic.
Thanks buddy, easier said than done at times. I value friendship very highly, there is nothing I wouldn't do for a friend. What else is there in life.

I had one of our deals fall through in this development; so now I have to list/sell that home to someone else. The original purchaser bought the home with a $50K deposit, blueprints, custom designed. He made me do some stupid things and he added costs to the project with some of his selections (hardwood in bedrooms, extra windows, fancy tiles); I let the guy go on the extras because he was cool and didn't hassle me about the small stuff like most do. Just before completion the bank pulls the plug on the dude.

We spoke to his bank and tried to salvage the deal; it was salvagable but ugly, the guy really couldn't do it. My dev partner and I both unilaterally agreed to give the guy back his $50K and cancel the contract.

When we were discussing our revenues vs: expenses with our builder, he exclaimed, "why would you do that? you could've kept his deposit" Ha, yeah we could've, but we still have the home and it'll be easy enough to sell. We're gonna take a small hit on it, it pisses me off that I did the extras for the guy, but it in end it was the right thing to do. Thus, one good partnership vs: the other not so good.

[911Rob]

Originally Posted by schamp

Rob, you are a better man than me. With that said, I would push this project to completion as fast as possible and be done with that guy period. No new projects for him. If you see him in a bar, talk, buy him a beer, but no business. When he started playing lawyer and telling you he was taking you to court it would have been done. Can you buy him out or would you want to? Once you move forward without him, he will get the message loud and clear. You clearly took the high road with all things considered.

Sad reality of the situation isn't it.

[schamp]

Rob, seems everybody has a friend that gets lost over money or something similar. I know I do. Long story but can't have the guy or his wife at my house. Things disappear. You are doing it right and can look at yourself in the mirror. One of the two has to go. Either the business or the friendship. I bet when the business goes he will be gone along with the friendship. The guys kids will still be around some. From the pictures, the dynamic will be changing soon. Kids in different schools, off to school, etc. Without business ties, the guy is history. I will bet you a beer, this guy burns the bridge with you in the next couple of months.

[911Rob]

schamp; sorry I can't take that bet, I'm Irish and our beer is far too valuable to us

You're right though, very right.
Sorry about your buddy.

Sad case for me, this is just gonna be another notch in the post; I've lost countless numbers of friends over money and business. It sucks. Fact is, people do stupid things because of money.

Challlenges in life just bring out the real person; ya gotta love it really. Everyone is nice when things are going well, but you find out who the person is when the chips are down. At the time, when the chips are falling, it's always tough; but afterwards, once the cards are played you just move on with your head held high.

the word is "character", you can't buy it.