Episode 11 - Steve Yoch of Felhaber Larson Law
Episode #11 | Steve Yoch | Perspectives on Starting a Construction Company
Steve dives into construction law and the intricacies of running a business while protecting yourself. A self-described "Dirt Lawyer", Steve shares in-depth scenarios that so many business owners face. Regardless of what business you own, these examples are very helpful in understanding how to navigate difficult situations! From his stories of "Crazed Homeowners" and trade partnerships that go astray, he's got many lessons for business owners to soak in. A lifelong pursuer of education and research, Steve has authored 2 books on our US History (Becoming George Washington and Becoming Benedict Arnold ), a passion he shares while even explaining how to write a book. You don't want to miss this episode of The Curious Builder!
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About Steve Yoch
Steve Yoch is a lawyer at Felhaber Larson in Minneapolis. He enjoys helping clients avoid and solve problems. His extensive experience allows him to assist clients in evaluating all the alternatives when facing legal challenges. Most importantly, Steve values the long-term relationships he develops with his clients.
He has written and taught widely on legal topics. He is co-editor of the two-volume, Minnesota Real Estate Deskbook.
Steve is also the award-winning author of Becoming George Washington. His next book, Becoming Benedict Arnold, is scheduled to be released in 2023. He is volunteer counsel for the Housing First Foundation providing assistance to homeless veterans through MACV. He has also volunteered for SMRLS for over 30 years providing pro bono legal assistance to the poor.
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Welcome to the curious builder Podcast. I'm Mark Williams, your host time. We're here with Steve Yoch. From Felhaber for Larson's today. Welcome, Steve, thanks for coming on.
00:08
Great to be with you. Thank you.
00:09
I've got a bit of a cold. So I apologize for that. And let's just jump right into it. I've met you before, because you teach classes as a lawyer for Minnesota Housing First. And I thought, as a lot of the people listening to the show are probably business owners, people in the trades in Minnesota, you have a very unique point of view. The other people that we've brought on are, you know, builders, and people that own businesses that you advise. So I thought it'd be really interesting to have you on. And before we get started into some of your experiences with these types of entities, goes a little bit how you became a lawyer, and why did you pick Construction Law?
00:43
I went to law school because I was good at college. And I thought it would be I thought law school would be like college, with the parties, all that sort of stuff. So I went straight from college to law school, came back home to Minnesota. And I was wholly disappointed. Law school sucked. But for that I graduated and learn that it's what I was meant to be. But the reason I know that I'm a real estate lawyer construction lawyer is because we'd like to call dirt lawyers is my dad was a builder. So my dad had a was in construction, and was always a real estate developer. And we used to drive around and look at properties and buildings as a kid, we'd always go, that's a good look at building. His was more commercial, but he also built multifamily residential. So dirt is in my blood. So I started out litigating doing all kinds of stuff as a young lawyer. But when I got to start making more choices, I naturally moved towards, towards builders towards litigation towards selling and buying dirt.
01:35
Interesting in our growing up, did you have any aspirations to build? Or is that something you knew you did not want to do?
01:40
What was it was two rules with my dad? One was is that we could never work for him? Yep. And second was, I was very academic, which I think you kind of know, and being a lawyer really played to my relative strengths. So as soon as I went to law school, and I got to learn, I got to read write and talk. Yeah, it's kind of what I was at. Right? Right. So that's why I did it. I now have some valid involvement with our family businesses, but not much. Yeah, my dad's 81. Yep. But he's sharp. So anyway, it's, I was meant to be a dirt lawyer.
02:09
Interesting. That's, I've never heard you that phrase before. I kind of like that. How did you know just because I think a lot of people that are listening to this show are owning their own business. And you offer a unique perspective. Other than calling a lawyer, obviously, to set up their business, what are basically some one on one things that if you were to start a business, it could be any business, it doesn't have to be in the trades, or a builder or even a construction or, you know, dirt business, if you will, what are some just basic things that people should do to set up a business because a lot of times people, you know, they look at an entrepreneur, and you know, for myself, my dad was an entrepreneur. And so my uncles, everyone around me, I just thought that's what you did, you know, and so for me anything other than that would be weird. But I understand a lot of people look at it like this really difficult thing to do. And I think a lot of it just, like, just start doing it. And, you know, sometimes leaping without looking, it has its advantages, but I understand that starting a business, obviously, a business plan, coming up with a little bit more, you know, method beforehand is probably advantageous.
03:09
Yeah, I mean, first of all, people come in a lot of times with ideas. And, you know, most of the time at the time to get to me, they have a pro forma, right a lot. I've done a lot of startup companies of all different kinds, they have a performer, we need to figure out what the entity structure is going to be. And one of the big problems as partners, right? Are you going to partners or not? And if you are, how, what's that relationship going to be? You need to have a buy, sell. I mean, it's great when you have a new idea and and usually have a partner, it's a great deal. And everything's going to be great. We have the greatest idea since sliced bread and can, you know, can beer? And yet, what if we don't get along? What if they're the DS, death, disabilities, agreement departure, right, any one of those, and you need an agreement for that. So if you got a partner, it's better to create an agreement when you're all getting along. And any decent lawyer can help you figure that out. You also need to have an entity. You don't want to operate without an eddy in front of you a C Corp, an S corp, an LLC, that says to the world hey, I'm Mark Williams, but I'm not working Mark Williams, I'm when you're very disciplined about it, because you're Mark Williams, but construction, you know, comma, repair LLC, right, yeah, you got to put the world on notice on that, otherwise, they're gonna come after you personally. Right. And then the last thing is, you know, make sure you set up all the accounts and do another sort of stuff. It's it's mundane. And one of the things that folks complain about, it's like, God, that's a lot of paperwork. You know, that's a total pain, I want to start either building widgets or building houses. And my response is always listen, you're in the business of making money. And one of the reasons you do these things is to protect yourself from personal liability. That's the only reason you're doing it. Right and, and to protect yourself to some extent from your partner, because you may get along with your partner, but if he gets hit by a bus, you're going to be partnered with his wife, unless you have set up some sort of procedure for that
04:54
interesting. One of the businesses and that's a total generality. How many partnership business says Are there compared to, you know, sole proprietors?
05:03
Well, a lot of people have partners. Now you can be a partner without filing with the Secretary of State and creating an entity that's just a general partnership, a partnership model people who there's two guys working together much more common than a solo guy, right? More often than not, it's a group of people that have an idea. There's a bunch of people running it, it's a function of capital, right? They need to have money that multiple people can put in. So they tend to be together. And then it's usually great for a while, but stress and tension or deaths, disabilities, departures, right, that creates tension, and it's better to have those things worked out at the beginning, relatively low cost. And by the way, when it happens, they have an agreement in place. They say, you know, Bob got recently, guy, Bob actually got hit by bus. Right? When I hit my bus, he got hit by cancer, but he died. And what are the two? What are the remaining guy? Do we look me up? We look to the agreement said, Okay, you gotta buy him out. And here's the terms. And here's how it works. Right? Right. You're not a partner with his wife. This was your bed.
05:56
So that surprises me. I mean, maybe it's because everyone in my family is all their own owners. And we don't have any I've always been told as a little kid that partnerships are very difficult they are and but are you saying that a sole proprietor is actually less common than a partnership of some sort? Well,
06:11
people tend to more often coming coming to me, they are not the only soul on interest, I would say you, you are a minority.
06:17
What about my mind? What about my multiple personalities? Right? Well,
06:20
there's a lot of you going on. So you're never alone, right. But for most folks that come in, they have multiple people start to sing, okay. And I would just caution people did one, you got to figure out the numbers, and you got to make sure your business right. You know, for startups, certainly, everything costs three times as much and takes twice as long. Second is if you have a partner, you need a clear agreement with them on on the DS. And then finally, you do need to create an entity structure create a separate bank account, and that business needs to be separate from you. So you're not personally liable. If bad stuff happens. And believe me, bad stuff happens.
06:51
It's interesting, a little bit of a tangent here, I brought on a few other builders that are like my, like myself, third generation, and they're much bigger than I am. And one thing I had heard was that in order to work for the family company, they had to work five years outside the family company, and get either a major promotion, or basically demonstrate to the family company, basically, that was their way, as I understand it, that they would keep creativity going and rejuvenation so that people just because your last name was x didn't mean you're part of the family business. You know, in some ways, I hope my kids don't want to become builders, because it's a very difficult business. But you know, we'll play this podcast again and 20 years, if they if they want to, and I want to, but I always thought I was really impressed that there was that kind of foresight that Saturday wise, to me,
07:38
that's a really good idea. You know, I would I guess I said earlier, I my dad said, You're not going to be in the family business, right? Because he was very much and I intergenerational family businesses are a lot of my clients. So I'm not in any way ripping it. But there is that challenge nepotism, right? That did the son or daughter really have the skill set to do it and to send them away. And now I am somewhat involved again, in the family business, but I've had a long life doing other things. And I don't have to prove myself anymore. But I do think that intergenerational challenge and interesting, it's the third generations that the hardest. If you've got dad founded the company, son or daughter comes in that generation usually does. Okay. It's that third generation transition that use it really hard.
08:17
Interesting, I'd always heard it was the second with this idea that like the first one, you know, they had the idea, the inception, they got, you know, maybe the second one had it handed to them. But the third one, if you're if you've made it three generations, like clearly something is going right. But so
08:30
well, that's my experience has been that third generation is often because often they just sell the business. Yeah, right. There's could be Listen, there are lots of fights between two sons when they give when dad dies, right? That happens all the time. There's a ton of cases in Minnesota, if you want to look at a bunch of family fighting each other. There's Grossman versus Grossman and Pedro versus Pedro. You know, there's lots of families that have fights, I think you also is from an estate planning perspective, you have a family business, the worst thing you can do as a own business owner is not have a clear plan that you can tell your children. My plan was always with my dad, you're not in the business. Right? Right. You got to go make it on your own. Yeah. And for what she gave me much to accomplish that I wasn't going on the street, but I didn't work for him a clear plan of succession. And you need to think about that. If not, it'll work out when I'm dead. Because believe me it often doesn't, right. And so if you're anyone listening to this is intergenerational family business, they intend their son or daughter to take over. They need to really clearly define that whoever evokes you add on having this outside apprentice period is a really great idea.
09:30
Yeah, like that helps. How I'm kind of my next question along this line is what are some common mistakes that you see people that will come to you, let's say they call you and they've already had their business? You know, you know, I obviously consulted with another partner of yours before he retired. So we had some ducks in a row, but we you know, obviously you you can need to continually update your contracts stay relevant and read, you know, as your company changes, you need to make sure you're updating but I guess let's say let's just assume for the sake of this question, a company calls you up to five years in or 10 years in what are some Common mistakes that you've seen businesses make that you're like, we need to make these
10:04
changes, I'm going to focus on builders, okay? Is it because I represent a ton of them, and that's probably who's listening. So first of all, what tends to happen is they come in because they're in a fight with their partner, and they didn't have a bias to start with. That is super expensive, right? Because if they're not getting along, maybe I can help mediate, maybe I'll know their lawyer, we can cut a deal. But more often than not, it gets into very expensive shareholder litigation and valuations, that sort of stuff. So that's a big mistake, that thing I said earlier about doing the contracts in the front end, that's a really bad mistake, when they call if they're in a fight with their former partners, or the spouse or their former partner. Or the other common mistake is all the time, which you don't make, but many has had many do, you know, they haven't updated their contract in five years. And the Minnesota Legislature constantly changes what builders have to do, right. So you add up 10, the latest statute, you got to accept the building standards. The it's worthwhile having folks look at that, and very often they don't have that in place. Another really common mistake is their corporate records are bad non existent, or they're not maintaining, the way you can become personally liable when you have a company is failure to maintain formalities, that is you now have your filing with the Secretary of State, you don't treat your entity as different from yourself, you mix the money together, it's a lot of times, it's about the money, you cannot use that credit card that you have for the company to go buy your groceries at HyVee. If you're going to do that, then you really got to go back and have an intercompany account. It's as reimbursement from Sam Smith to Sam Smith construction, so that your records reflected it's a separate set of books, and a lot of people aren't doing that, especially if it's a smaller business. Ironically, written an article of this, the smaller the business, you more you need the protection, nobody's going to think that Bill Gates is Microsoft or Microsoft says Bill Gates, right. But if you're Sam Smith construction, they might Sam Smith, and Sam says construction can be the same thing, right, and they can pierce the corporate veil. So those are probably the three biggest mistakes I see. Okay,
11:55
and that, we'll talk about that in a little bit about the three different major types of corporations, from business models, builders in the area. And you can use names or not use names, who are some really successful models that you have been impressed with, basically just on how they either structured or clients that you've had, you know, I know, you know, so many builders in the industry, what are some key factors, if you're listening to this, you're like, I want to emulate these principles. And here's some some companies it is
12:25
not because you're here you are, you are exceptional at doing the things that that people should be doing. So you do everything that I'm going to just talk, okay, one is creating an entity structure and following it creating separate accounts, looking at your contracts regularly, and updating them, which is sort of an ongoing process that you do and good contractors do. The other is really good contractor. So I will, you know, I'm prefer not to say by names, because they have had to hold me to it. But you know, one of the things that really sophisticated smart contractors do is when you're a builder, all your liabilities in your building entity, right? If a homeowner is going to make a claim against you, it's going to be against that operating entity with whom they signed the contract. But let's say you start building some assets, like you have a truck, you have a whole bunch of tools, you started owning other pieces of land, those should be segregated and separate from your operating entity and sophisticated construction companies have a rental company that in turn rents the lift, for example, to the construction company there we have a lease because we maintain formalities, right, this isn't their separate, it's just like if you'd hired from somebody else, they have a lease with that. They might have multiple operating entities, in which case, they might have an employee lease and they're actually one other entity owns the employees or has a contract with the employees and then leases it to various operating and
13:44
just for those listening and I correct me if I'm wrong, but let's just say you're a corp we'll talk about this in a minute, I guess, you know, a corp an S corp, an LLC. So you would say in this let's say Mark D Williams custom homes would have a LLC and we'll call it Mark Williams, LLC, rental, whatever and then that company would hold on to my trucks and whatever in your saying I have a lease back option to Mark D. Williams corporation itself. Yep. And why would I want to do that? That's
14:09
a really good point. So okay, so you build a house in the wall folds down and crushes a kid. Okay, worst case thing I can think of. You'd have insurance, your insurance may cover it, but I always like to think of a company as walls of defense, right? So at the center is you your personal liability, and then around it is your company, and then around that is other entities you have. And by mutating for males, you help with that. But if they get at your operating entity, and they get a judgment against your opportunity, you may be out of business. You may or may if you don't have the right insurance or whatever, but that only is a judgment against that entity, not you because you've kept yourself separate. They get a judgment against your operating entity but your assets they can only collect against that entity. If you're the lift and the truck and your tools and all your other stuff, maybe even some land you own are in separate LLC is a judgment against Mark Williams homes construction is not a claim. against Mark Williams rental LLC, or property holdings, LLC, are those other entities. So it limits how much in fact, I had to deal with a client who we had like 30 LLCs. And he was developing down in Rochester, and there was a big judgment against his construction company. And these guys went after him for years, trying to get after all his other LLCs. His office manager was a former Arthur Andersen accountant, and he was crazy anal. And I remember they had the lawyer on the collection side saying to me, you know, we're just never going to have to collect against your guy. He's just created all these entities. It's horrible. And I'm like, it's really horribly Wonderful. So that guy who got this judgment against him, and it was a huge judgment, continue to be able to operate his businesses, we actually then later created a new entity, as an operating entity where his son had the license, and not him, he essentially got out of the building business because of this incident. But all his assets are preserved. Right. And so he was able to take those assets, create a new building entity with his son as being the head of it. And they moved forward. And they did just fine.
16:02
I have a tangent question on that I had always been told by my accountant, and you know, for those listening, you are my lawyer. I don't know if I'm paying for this legal advice or not. But my question on this is, if I had been told that, let's say Mark delivers Custom Homes, I mean, you need to keep liquid capital, let's say in the main company, right. And let's say, you know, for whatever, let's use real numbers here, let's say I want to keep two or $300,000 of operating capital, you know, you know, this would not be my clients money, but our own, you know, profitability, or in our reporting, just liquid cash. But anything beyond that, if it was left in the company, versus dispersed as like a dividend or allocated towards an LLC, is now subject essentially to, its attacked if that company, if during that period of Mark Dylan's custom homes was sued, whatever money was in that bank at that point in time, like a snapshot, that is an asset that could go after if, let's say, it was dispersed to me for our annual bonuses or hover, I choose to pay myself I could keep personally, let's say, you know, excess money with myself personally, and I was launched back to the company. Is that a way to essentially shelter some of your some of your cash or some of your assets within an actual company? Well, there's
17:18
there's two different questions there. One is, at the moment a lawsuit is filed, or actually, it's when you've been threatened with a lawsuit. If you start shifting your assets away from the operate any that's a fraudulent conveyance. Yep. Okay, so they can under unwind all those, the principles that you're talking about is, yes, you could loan money back to the company, and then you could pull that money out, the extraordinary transactions in the face of a claim are almost always going to be unwound as a fraudulent conveyance. What that's one of the reasons why you don't have any problems. Yes, you can put you should pull dividends out to yourself, yes, if you want to leave operating cash in the business, and you want you to be the lender, as an insider, they may like may be more likely to pierce the corporate veil. However, if you took those assets out, gave them a dividend in the ordinary course of business to you distribute to, that'd be fine. If you want to loan money to the company, again, you loaning money, the company a little more problematic. You owe ever shifting money out, then and buying a lift and a tractor and all that stuff, and keeping in your rental LLC, or buying land and keeping in a land holding LLC. And as long as you maintain that separation, those are just fine.
18:24
So interesting. So yeah, I mean, right now, we do not have an LLC, and I just bought a couple of trucks, I would like to buy an office. So you know, I'll probably give you a call tomorrow.
18:34
And for that situation, we would create two separate entities, we would create one for the land holdings for the property for your office. And then we would create another entity where we would put some of your years in and stuff that you would lend or you would lease not lend lease back to and it would be at market rates. But it will allow you first of all to get some deductibility. And more importantly, it would segregate those assets.
18:55
I think a lot of business owners. I mean, I'm certainly not the first person to ask this or do this. But it also seems just to your earlier comment, like a lot of paperwork. It's a lot but it does seem like it is akin to armor, like if you're going into battle versus having just a shield, right, you're
19:09
building you are building defense in depth, right. And you're protecting your assets. You know, the interesting thing is, you know, what's the most important thing about being a good builder? Build well, right, right,
19:18
being a job like these are all worst case scenarios.
19:20
Yeah. And so people go God, you know, I'm a good builder. I don't need this. I've been doing this for 30 years, I haven't had any trouble. And the reality is, you're lucky, right? We're building this for two things. One is, is because there are crazy people out there who are awful. And even if you do great work, they are still going to be terrible. And in the worst case scenario, they come after you you're going to want those assets protected. The other worst case scenario is something really bad happens, changes in the business market or something bad happens and it's not an insured risk. Right. You want to protect your spending all your life building the work you've done and builders do. And builders have a particularly tough challenge because a 327 a in Minnesota the statute statutory warranty statute, really extends warranties up to 12 years after your last construction project. So you're retired, right right now, and they'll want to come after that business, but that business never had the assets and the assets or elsewhere, you're going to be okay. And that builders, I think uniquely need to plan more for potential liability than say someone who's making chairs
20:18
when I tell people that we are on the hook for iOS 10. But I believe it's if they file it by the 10th. year, they have two years, right, set your repose. Yep. And so I think people are blown away, especially other business owners, right? Not so much clients, because they're like, Okay, and ultimately, knock on wood here. I mean, we've never had any claim ever in our history like that. And so, exactly, the staples for mica that's, you know, a fake. Yeah, it's alarming that you are warranting something for so long. And it's very expensive. And obviously, I've never right insurances and all those kinds of things in place. And that's why Yeah, we
20:51
most most businesses are warranting stuff for up to six years, the breach of contract and written fraud in Minnesota is six years, the Uniform Commercial Code is much shorter. So
21:00
which is surprising, a commercial building has less timeframe. So like the commercial building we're in right now is governed less than like a house. Absolutely.
21:07
Why protect homeowners Minnesota has a very unusually aggressive statutes protect homeowners and, you know, I'm also licensed in Wisconsin, Wisconsin doesn't have it. How far is Wisconsin? Right? It's contractual. So they can set it what they want. I mean, the builder, the builder and the homeowner consent in no way. Now, generally, there's there are, it's up to unconscionability. Right. If it's totally unfair, like I'm not guaranteeing this, you're taking the house as is they're not going to do that. But yes, they can have very short statute warranties in Wisconsin.
21:41
Interesting. When an idea I'm guessing you do. When did 27 A become a law in Minnesota?
21:47
Well, it's been a law. I've been practicing for 33 years. And I would say for most of that time, it's been there. Wow. So yeah. And so it's it is a it's, it's, I think it's a huge boon for Minnesota homeowners. Yes. But it's very hard on our builders. Yeah. Because it's that long continuum. Now. It's the one to 10 One year bumper to bumper, the way I like to think of it two years HVAC, plumbing and electrical, and then 10 is structural. Correct. So it's not bumper to bumper for 10 years understood. But I also would say that people do really strictly enforce it, the courts tend to be very generous to homeowners about their ability to enforce it on statute limitations and other grounds. And we have a legislature that is very pro homeowner as against builders, housing first works very hard to try to level the playing field and see that everyone's treated fairly. And so they they are the advocates and the best advocates I think we have in Minnesota for builders,
22:39
right? I mean, it's amazing. I have a question for you. That's kind of akin to this question. You know, we develop, you know, let's say some of our builds are maybe six months to a year in design, maybe a year to two years and actually building in one thing that I would say we struggled with, but you know, you've spent you've basically been on call, you've been the server at a great restaurant for this entire experience. They are you have they've now paid the bill, and they have left the building. But our clients still text us call us all the time. Now, I don't want to be that's part of customer service. And I'm not going anywhere, nor do I want to, but what have you seen as far as successful clients are successful builders transition from telling their clients like, hey, the build is over. We're no longer a 24/7 service. And but it's still maintaining a level of respect, like they just built a two to $5 million house with you. And for practical reasons, like I'm gonna be there generationally, like, I not only want their future business, and you know, and but it's not selfishly, like I really enjoy these people. But it's, you know, I can't be getting texts from 100 clients for it. Do you understand that? I
23:44
know exactly. The problem is, first of all, for a year, you're on the hook anyway, right? Yes. Largely, I mean, there's some points where you are you it's not punch list, you're not but from substantial completion or occupancy. You got a year, you could say, I'm sorry, that's no longer covered under Minnesota statute warranty, and I won't do it. In fact, there's a case called the Vallejo case. In Minnesota, there's a thing called equitable tolling. So if they call you up and say, I got this problem, we fix it. It's in the first year, or maybe it's HVAC plumbing into the second year. And you go, Sure, I'll get to it, but you don't. And they call you up and say, Hey, I still got this problem. You fix it. Yeah, I'm gonna send some over. And you delay beyond the statute limitations, right? They have to bring it by the way, when they know of a claim they have to bring it within two years, they have to provide you written notice within six months, and they have to commence it within two years.
24:31
And they also they also have to come to us first, like they can't go have it fixed and expect us to pay right. We always have the right to work fix your own opportunity
24:38
repair statute. Yeah, however, they need to tell you in writing so one of the things too is one of the things that you could say is well, when did this first arise? And it was often people want to say Ah, that's been going on for a year or years and I know only now I'm getting back to you. Well, actually, that bars their claim, right? If they were aware of it for more than six months, and did not give you written no Notice of the claim they're barred.
25:02
Do I have to get that in writing? Because what if that's a verbal thing? Do I respond back with an email? Per the conversation we had today? You had mentioned to Ben years? Yeah, I usually
25:08
what I one of things you Yes, you should get it in writing, because they'll deny it also. I mean, in Minnesota, it is legal to record conversations for at least one party. So you can't like bug a room. But you could have a recording on it. If you recorded the conversation with them. They said, hey, yeah, we've been aware of this for a year. And we're only getting back to you now because we tried to be patient. Well, that would be that would bar their claim. Right? I mean, I've been in those situations. But we're back to equitable tolling, if you keep promising you're going to fix it. And you never do. You can't say up too late statute limitations is run your actions saying I'll get to it, but you don't tolls or extends under statute limitations. So this is really hard to your point, what should builders do if they don't want to do anymore? They gotta go like this. Right? They got to send them a letter, send them an email saying, I'm sorry, I will not fix that. That is not covered by the statute limitations, which I know then an excuse the legal term, but then the asshole flag just went up, they're gonna be mad at you. You said no. But what Vallejo says is, unless you actually put a stake in the ground and say no, you know, you arguably, if you say, I'll take care of it, even if it's not covered, they're gonna hold you to it. And that
26:17
tends to be I also think it's also a hallmark of what has made us successful as well. It's a fine line between being a good person running a good business, setting clear expectations in sometimes, as you know, because I've called you I've had clients, essentially, use my personality against me. And I guess I'm okay with that, at the end of the day, if I have one out of 100. Because really, our clients are amazing. And this is really just trying to talk to other business owners, because I'm not the only builder that struggles with
26:43
us. But it depends too on your business model. Yeah. So you build a relatively small number of extremely high end homes, that makes you more service oriented, there are also more economical, more economical builders that are doing more volume, and are not, as you know, attuned to people that are building multimillion dollar houses getting calls from their clients after the statutory period. They have to be able to say, No,
27:08
right, especially if you had 40 of them, I have foreign that 40 Right. Now, I'm going to hold the department, right?
27:13
Someone's got to say no, no, I, the big builders in the ones I work with, they're big builders worked very hard to try to accommodate their clients too. But there comes a point where you have to say, Look, lady, I'm sorry. You know, we were not doing melt nail pops after two years. Yeah, right. You, you can go fix them yourself, or, you know, whatever, you have an electrical problem three years later, five years later, and I've had situations where like they were they claimed it was, well, a defective chimney. And it was 14 years after they had built the house on my. So, you know, we said no to that
27:43
you'd mentioned on that 10 years or so before, you know, email and cell phones and my dad's career, you know, they would have those lawyer boxes with all the documents. Yeah, I remember very clearly, because my dad was a total Pyro, that on your time, I'm sure the lawyers did not like this, or this is going if you go out in our backyard, and three acres, he'd stack them up higher, and he just would smile ear to ear and then people would ask him a couple years later, what paint color was in that house? And he goes, I have no idea. And you know, he was retired. I
28:11
know you're not in you're not required to keep it, I would keep it through the statute of repose. Yeah, I keep it for 12 years, which is ridiculous. You're keeping all this stuff. And then I think you can get rid of it. And I actually tell guys that retire men and women that retire in their businesses, you should keep that entity in place for the 12 years interest. That's what you know, again, another thing for builders, that's another expense, you know, but but by keeping that NDA in place, it creates another layer of protection interesting. So
28:34
you have to do you have to do some sort of minimal insurance than to just like, ah,
28:37
it depends on the nature of your insurance. So there's two types of claims made, and occurrence under its occurrence, you won't need it because the actual negligent act occurred during the policy existed, if you had a claims made, you will need to keep what's called tail coverage for the end.
28:50
Interesting. Well, let's transition a little bit. We've talked about it a lot. I think most people listening may know this, but just go over the different types of companies. So my, you know, I'm sure there's more but you have a corporation, S corp, and LLC, just give us a real high overview of what those three are and how they played together.
29:07
Sure. The most original most basic Corporation, which in America goes all the way back to the Jamestown Colony, was the first Corporation the United States, which is a C Corp. That's the traditional corporation that you see, for most large companies that is subject by the way to double taxation. That is both the company itself gets taxed at a corporate level, and then the owners get taxed on their income. So most builders, smaller builders are not C corpse. Okay? They're they're usually you can make what's called an S corp election. And s corpse can can be treated as a single person, entity or partnership. For purposes of tax purposes, you avoid double taxation. There's a lot of limits on being an S corp. So for example, in a corporation or an LLC, the distribution rights need not match not match ownership rights. So you own 30% of the business, but you get 60% of the distributions. But in an S corp. It has to match if you have 70% of the votes and your partner is 30 You get 70% of distributions and he gets 30. That's it.
30:02
Interesting. So there's partnerships are maybe a little bit more difficult to structure an S corp?
30:08
Well, unless you've defined it, yes, right. And again, that's if you haven't written agreement, it's fine. So you've got C, we've done C corpse, you have s, corpse, s corpse are very common. Also, when you're running a company, and you have employees, and a decent amount of complexity, an S Corp is an easier company generally to operate, than if you have a bunch of employees in an LLC, an LLC, then you have some self employment taxes, and some more complicated issues. If you're an LLC. There are other entities too. In Minnesota, there's limited partnerships, which are limited, and they're limited liability, limited partnerships. There's a bunch of other entities, they're more specialized and are often used to create funding. So you want to create a limited partnership that says you're going to have a bunch of limited come in, which would for contractor would be unusual, you're going to be the general partner in the development of this apartment building, you're going to be one who's has unlimited liability as the general, as the name implies, they have limited liability, they're a little bit more silent investor. So
31:05
interesting. So like, I'm looking at a land deal right now, let's say six acres, I don't know the price, let's call it $2 million. And they're approaching us saying, hey, we'd like you to build in that case, I would keep my dealings custom homes or maybe credit side LLC, but then I'd have a limited liability company with these investors. Yeah, to just take down the land development, but keep it separate from the building.
31:23
Absolutely. Okay. Interested, whoever owns the land should be separate from the building entity, there's no way your construction company should do it. So LLCs are extremely flexible. Again, who owns them what voting rights they have, what distribution rights they have, that can all be in Minnesota recently adopted this statute, it is kind of a partnership model. So if you're in an LLC, you're in a partnership, really, with the other owners, but it's very flexible, is and you want to be smart, you want to lay out, I have more voting rights, you have more distribution rights, it could be equal, it could be proportional. But LLC is a very flexible in Minnesota, they're comparatively cheap, you know, I have a client that does a lot of work in California, creating entities in California are like five times as expensive here. So you spend a few $100 to create that LLC, and then you pay a relatively nominal filing fee every year. It's completely worth it. And I have clients that have I have one client that has probably 4050 LLCs. And we're constantly moving land in and out of those LLCs we have a big chart. So he's like, I just sold this property, and they just bought this one. Right, right. And the reason we're doing that is to protect liability from flowing between those entities, right? Someone gets a judgment against, you know, XYZ land holdings 12. Our liability is limited 12 They can't go after 13 or 11. Yep. So. So beyond the big three, corporate, corpse, s corpse and LLCs, there are other specialty entities that usually relate to financing or estate planning.
32:49
Interesting. Yeah, I think that's good for for now, anyway, consult Steven. For more information about why it wasn't
32:56
complicated, they wouldn't have a job. So it's all good.
33:00
Transitioning, you represent Minnesota Housing First, I do. Tell me a little bit about how that relationship came. And, you know, I assume that even with Faulhaber Larson you teach classes and give us a little education because that's how I met you. I took some classes from you, you know, through our education or continuing education, you know, met you at the big night. Oddly enough, I was dealing with a crazed homeowner, one of your, one of your classes. And so that led to some side conversations. Tell us a little bit about
33:28
housing first was previously Bazzi, my now retired wonderful partner, Tim Hassett really got to know the folks there way at the beginning, when he was there many years I taught have taught well, for at least 2522 years there, a lot of different classes and all kinds of different stuff. And as the nature of life that leadership changed and Tim retired, I stepped in as they stepped back to the new leader, leader, James vaguely who just came in, it's really exciting. And is it really dynamic guy, and I've been working with James and his his team. So I do the sort of general corporate stuff and their business stuff. And I've gotten to know them very well. Also, one of the things people may not know is Housing First is tremendously generous with the public. There's a housing first foundation, where housing first helps coordinate fund and invest in new homes for homeless veterans in conjunction with McAfee, the Minnesota Association, we've
34:23
we've been lucky to partner with them. So a lot of times our homes will be elected to be the dream home. And during the Parade of Homes in the spring in the fall in Minnesota, you know, you know, the be home to her. And you know, they'll pick four homes, usually the highest end homes are the most you know, in the right location, which we happen to often often operate in. And so then all the entry fees will go towards that foundation is great. And so then you know, Donnie, who used to run it and a number of other people will come through and help support it, but it's a great message. It's a great it's a great thing I used to have, sometimes people come up not knowing anything about the foundation and it says right in the sign for the foundation. Like why am I giving this builder $5 And I'm like, hey, it's not a goal. Want to be paid for Mark do custom homes. Here's the link to that page.
35:04
We put in a whole number of homes now with in conjunction with McAfee and lonar. By the way, it's a three way agreement between Minnesota Housing, first foundation, Luminar, and McAfee. And they've done tremendous good. So I do a lot of work, I volunteer all my time on that. And then I do a lot of the general corporate business work for McAfee and then or for housing first. And then also I teach, and I really enjoy teaching. It's been really interesting. I used to, of course, teach in person, everybody would go to the class and you're just standing there, they'll be, you know, initially there'd be 100, guys, women paying attention, then cellphones came out, then you'd have and computers. So now you got 200 People not paying attention. That was what's interesting now is I'm increasingly doing classes online. So I go over to Housing First, they have a great studio facility. And I have recorded a number of classes, including that that crazed homeowner class that people seem to really like. And so it's weird now, because the classes are all floating out there in the ether. And I've taught probably half, maybe three or four, and I've got a new one I'm going to teach in the spring, but it will be virtual again,
36:05
how do you know being as an educator or a teacher in this format, you've taught two classes where they pay attention classes, but they don't pay attention. And then you have obviously a digital format. Yeah, you know, one of the reasons why I chose a podcast, especially for the first year, I it was important to me that all of them be in person, because it's just more enjoyable to talk to someone, the nuances of you know, body language and things like that. What's it like teaching to a camera?
36:28
It's really hard. So there's a camera in Australia, it's a totally dark room. So the room is basically black with a bright light on it. Oh, my. And so. And as you know, I like to joke, right? So, and I've taught that particular class many times, and there's a couple of funny parts of the thing. And I have to just like, the hope that they're laughing, right? When I tell him a joke, because I'm not getting a laugh, right? Yeah. So it's, and when I love teaching in person, and so I like joking with In fact, it's kind of funny, over the years, the criticisms I've got too much, or that I've gotten was one, you joke around a lot. This is very serious. I'm like, well, actually, I take what we do. incredibly seriously. I don't take myself that seriously. Right. Right. So and there's a big difference in life. I like that quote. And so and by the way, housing versus just like we don't care, just keep doing. And because I like it when people laugh. And oh, by the way, the questions when they're in person are fabulous. Yes. And I love answering questions, you can tell I love just talking. And that's not the case when you're virtual, right? Sometimes I have I've got people and encourage people do it in the class. They have followed up with me and emailed questions, and I answered them, that's fine. I like talking to people. But it's harder. Yeah, I imagined, I know, it's way more convenient for builders, right? They can grab their phone and be sitting on a beach and taking my class. Right. Right. Good for them by that's a better part of the world. But for me, it's not as much fun.
37:50
I agree. I think I would I enjoy the interaction as someone who loves to communicate. And I think also, you're playing off the person. Like I think if even with this being in person, right ourselves, like a lot of times the questions the way the conversation goes, I mean, it's just,
38:07
it's the new world. Yes. And to housing versus credit, they adopted it early there, they created the facilities, they did the things you need to do. And I
38:15
would say as a user, I like it a lot. It's like even I'm on a few committees with housing first, right? I'm on the artisan home committee and the private homes committee and not have have to drive, you know, half hour 40 minutes each way for these hour meetings. While I'm happy to do it. And I still think it's probably better, man, you're because it's volunteer time, essentially. Right? It's more, I think, while zoom obviously can get old after a while. It's extremely productive in terms of time, especially that transit time.
38:40
Oh, great. Now it's to COVID changed everything. And it definitely changed this a little bit for us, too.
38:45
Yeah. Interesting. Well, let's talk about some of those classes. So we already talked about legally running a business. I think we've covered that in depth. And I love stories people I think another reason why laughing I think is important both in teaching as well as somber moments is people remember when there's emotion, at least it does for me, I was a speech calm major. And one of the classes that I want to stories I told was about my edit down syndrome uncle and whenever I told the story, I got really emotional and at baseline I'm not an emotional person in terms of being like sad, but I could make people in the in the crowd cry. And it's interesting how emotion and you know, levity, soberness all these things are emotional, we're human, like we feel emotion, right. And I think when you tap into that, people remember things right, like your ears prick up, when there's one of those things that happen. Tell us a little bit about this, you know, respond to homeowners threats, I called the crazed homeowner speech, but you know, there's a lot of do's and don'ts but maybe to stay high level on this and then maybe a story or two because I think this is really applicable. I mean, every single it's a little bit like therapy when you I've never really been on a lot of these builder trips. Kids, my wife is pretty introverted. And the last thing she wants to do is go on a vacation with you know, 30 other builders, but myself personally, I would love it. I would, I would, I would love it and I would be going solo my wife will not come with Yeah, but anyway, the idea is like a lot of it is, I find so much value in shared experience. I mean, one of the main reasons why I started the podcast was to talk to other builders. And you know, this is a way that I mean, how often you get one hour, you know, where it's you are just going back and forth. And it's really, really enjoyable. I don't know if anyone else is enjoying your seat, but I enjoy being with you.
40:20
First of all, you know, I love to talk. So that's what we'll talk about Chris homeowner. So first of all, how that class developed was, I have had many, many, many, many, many clients who have dealt with crazy homeowners. It doesn't. And there's, there's two themes to that speech. One is you gotta have your documentation, we create documentation, the energy separation, all the things we talked about, not for the good client, not for the majority clients, if you're lucky, you'll get one of these every 10 years, right. But the reality is those for these people are out there, you can do the finest quality work, but they're just horrible people. So if your paperwork is in order, that protects you, and also protects you if there's a dispute. So one big thing is do your paperwork, it's a pain in the butt. We've talked a lot about this already. But it's those best practices or would save you because what happens is the first thing they always say, when I get called when somebody has crazy homeowner is, well, let me see your contract. And we've you exchanged emails, let me see all your change orders? Well, you know, we, we've been helping them a lot. And we didn't do change orders. I'm like, well, first of all, that's illegal. Under Minnesota law as a builder, you need a written change order. And second of all, they're gonna, what you just did for free, you did for free, you're screwed, you're not gonna get that money back. Right? Where if you said it's a change order, and I'll do this, and you'll concede that you've got to get it in writing. The second thing is, is you've got to be a professional, right, you're held to a different standard, they're allowed to be crazy, the statutes kind of contemplates their craziness. And one of the stories that I tell that I know, is the best example in my speech was, I just wonder if a client this big guy is now passed away. And he is a mountain of a man. And he always wear work boots, and nice jeans. And fingers are humongous. But he was really, really good looking guy. I mean, like, I looked like a troll next to him. And clients loved him. And, and he was a hunter and the whole deal. So very physically intimidating guy, but wasn't intimidating. Everybody just loved him. And my wife was like, He's just like a big bear. But he goes over these people's house, and he gets out of his truck. And we have all this on video, which is pretty wonderful. And I'll explain why he gets out of his truck. And the wife of the guy is in the bay window in the front of the house. She's got the curtain open, she's filming as my client arise, which by the way is legal because her husband had given consent to be filming. This is back to that recording issue. And she's even got the mic so he can you can hear because the window is ajar. And my guy gets out and he says, you know, hey, how you doing? We should talk about this because he's gotten a nasty cough. And this is a call from the guy and the guy goes into his garage and starts screaming at them and comes out with a hoe, you know the like the Yeah, like the loopy hoe with a little triangle on it. Yeah, kind of hope. Yeah. And starts like screaming in my fantasies and swearing at my guy and he's shaking it. Now my guy could have taken three steps toward out of his hands, broke it over his leg and thrown the guy through the front window. Instead, my guy puts his hands up says, hey, look, you got to put that down. You got to you got to stop swearing. gotta calm down, the guy continues and shaking my goes, we'll talk when you've come down. He gets in his car and he left. It's all on video and you say how do I know that's on video. My guy clearly wasn't filming it. Well, they later made a claim at the Department of Labor and Industry against my client. And and they submitted that they submitted the video because they thought somehow it showed how uncooperative my client. So it's, it's the quintessential example of builders are held to a higher standard of behavior, how you
43:44
succeed, but to be clear to all business owners, essentially not only builders as well, I think builders are held to a higher standard. Interesting, okay.
43:50
I think I think when dealing with a homeowner, everybody in business is held to let's say, if you're to business people, you're held to a higher standard than the client than a consumer understood, right? Probably somebody at Best Buy is going to be held higher than the person that walks in the door. But for builders in particular, I believe we as builders, and people who's been with builders for so long, you're going to be held to a higher standard behavior. You can't they're supposed to be emotional because it's their house. What is the visceral thing is their hearth and home? And so builders have to really not respond? And I think one of the classic responses is, you know, you're sitting it's, it's always Friday afternoons, right? They get out of work, they see something, they're pissed, they've had a couple of drinks, right? And they get they text you a horrible text, right? And you're, by the way, maybe it's seven o'clock on a Friday, and you're entitled to have a cocktail or two, and you're sitting there with your wife in a bar and the thing goes ding, and you look at it, and they've just called you terrible things. You have a natural tendency, you want to take that text right back, you know, back atcha and the horse you wrote it on, right? What you have to do is go no, I'm going to put that aside. Right? I've had a drink or two You are I'm gonna deal with this first thing tomorrow morning. Right? Because if you write back in that text and say what you're really thinking, it will haunt you. Right? You're by the way, the only really nice thing too is it's an added benefit. If they write crazy mean letters or texts, and you write very professional,
45:18
drives him bad drives him nuts. So I'll say that's not really to toot my own horn, but just something for those listening that has really helped me personally, you know, I have three young kids, as you know, family time is extremely important. I tell my clients that, you know, essentially at five o'clock, you know, like the dentist or you know, your appointment, like, you know, it's off. Now, if there's an emergency or something water's coming in, of course, always answer but it really stressed that that's important to work life balance, and most of my clients really respect that actually, it especially when you explain the reasons why. But the reason I bring it up, as you mentioned, the texting about two years ago, I think it was the social network was a documentary on just you know, how much digital stuff affects our lives. And I took it very, I turned off all my texting, email, any notification other than my phone. So I always tell people, because I'm a verbal person, call me I will answer I will return the phone call. Or but you know, for me, texting is, I'll be there. I'm five minutes late. Can you pick up something here? I can't tell you how many texts that are just like can you know, because I've sent them to just page long texts. It's so ridiculous. I'll often say thank you for your text. In the future, please respond by email, I'll respond tomorrow with an email, just try to get it back into a business setting, right? I want them to feel heard a lot of times, most, this almost never happens, right? In the 18 and a half years I've been building, I've had two difficult clients, if you will, where I've had to learn a lot of this. And you know, they've been in the last year. Unfortunately, every builder told me I'm way overdue. So I look forward to the next 18 years of peace and quiet. And anyway, but the point of it is, is I do feel like setting up some boundaries. And I think that's the reason I bring it up again, is it helps me not to react and now might you've complimented me before on this, you know, my natural, I get when people get hot, I get cool. Sometimes that actually makes them much matter, which is okay. Which is Yeah, which
47:10
is you're creating a good record.
47:11
Right? You dry. So anyway, for anyone listening out there, you know, set some parameters for yourself, you're good at what you do, take pride in what you do. And you know, it's so easy, we get defensive of what we do, right. And so you take a lot of ownership in it. So when people attack you for doing a really hard work, it's, it's difficult to take Yeah, and
47:28
never respond with an irritated response. It just, it never reads well, it never even if you are and by the way, I can guarantee you, they're 100% on the line, they're 100% in the wrong there, what they've written is personally offensive. What you need to do is stop and think of like you were behaving with your, you know, your ILL behaving teenager, right? Right, it doesn't do any good to scream at them, because it's good to set boundaries, right and, and to be polite and professional because what happens someday is either a judge or a jury of the department and industry is going to read what you wrote, You don't ever want to regret it. You want to be able to say, I hear you I respectfully disagree with you. Here's why. Here's what our plan is going forward. Please let me know if you agree and I agree emails a better venue to be doing it. Right.
48:14
Transitioning a little bit the relationship between, let's say, aside from the homeowners, if you have a discrepancy with one of your subcontractors, so recently, again, nothing has happened in my career. Until recently, I had two contractors that, you know, the work that they did was subpar. Most of the strength of what we do is relationship based, right. So I've used most of my people for multiple decades. And I had the privilege of having their a family run business. I was a family run business. And so you have these amazing You can't build the homes that we build unless you have a relationship and a trust both ways. So usually, not only do you have five other homes going on where I can say, Hey, Mr cabinetmaker Mr. Kyle, guy, I need your help here. You know, I don't really even need to say I'm using you on five other projects. But every once in a while you get a specialty project in this particular person I'm talking about was a specialty project, I did not have a relationship with them. And their work did not hold up, and they would not honor it. So it became a really difficult situation for me, because they happen to also be with one of the homeowners that was very difficult as well. And so I ended up stepping up to the plate taking care of the work, and I had to do a judgment against the person I'm not really a lawsuit person. It just, you know, that wasn't really what I was trying to go for. But sometimes you have no choice. You know, I was out of pocket, walk the listeners through a little bit. How does the judgment work against maybe another trade partner? I think there's some caps on that. So they don't have to go let's say, you know, full legal walk us through a little bit how that works.
49:39
First of all, it starts with the agreement you have with the sub. So you need to have you know, it's hard because they send you a Pio or you send them a you know, they send you an invoice you you know you send them a Pio you want something done, you want it done quickly. You fax or scan or whatever the specs. What you ideally want is some sort of overarching agreement. So what I like is seventh annual subcontract dreamin that automatically renews. And then you can just send your normal stuff. But if there's terms and conditions in that annual contract it defines, for example, do you want attorney fees provision? If I get in a fight with you, I want you to pay my attorneys fees. If I lose, I'm only going to sue you if you're wrong. Right. So I've attorneys fees provision, do you have like a venue provision that says it's just has to occur in whatever county is convenient for you Hennepin County, right? You don't want to have to fight them if they're from Rochester down in Homestead. So those, it's good to have a an overarching agreement that says this, it will handle all agreements that are between the two of us, I don't need to find a sign of full contract on every deal. We'll do it however we do it. But these terms and conditions will apply. That's the most important thing. The second because it even if you've had a long term relationship. Yeah, I agree that most things are about relationships. But I have a client recently that had was a concrete related kind of business. And the son took over and he was a dank, right? And the dad was great. Right? Right. And then my client was like, wow, what do I do in that situation? Is it because you need to get new contract, because you can't trust the son, he's, he's a wanker, let's go get him treat him arm's length. And maybe things will get better in a few years, and maybe you got to find new contractor. But I think having that main contract in place now if they breach it, it's like all other things. I believe in a graduated response at the subs aren't doing the work. First of all, as the general contractor, as you demonstrated, you are ultimately responsible for the condition the home, if they do a bad job, you have a claim against the sub. But the homeowner doesn't care you got to
51:34
fix and that was the deal I had, I think it cost me 15 or 20,000. It has been a year and a half since I fixed it. And you just helped me basically garnish wages but didn't even know what that was a thing? Yeah, in order to get a judgment. I think you can only go up to what 15,000? Minnesota?
51:49
Well, there's a limit and conciliation court conciliation. So in that, because it was a smaller amount, you were able to get a judgment. So without going into the details, your matter you if it's below, I believe the threshold is 15,000. But it could be 20. I remember for smaller claims corner, you and weight got a small claims judgment based on their defective work. And based on your the contract you had, you got to judgment now what my old boss used to say, there's three parts to every lawsuit, liability damages and collection. Right? Because did he do bad work? Yes. How much were you damaged? You know that, then you got to collect that
52:22
that was a part that was never explained to me really hard.
52:24
So in Minnesota, you get a judgment. So you got your damage demonstrated they were liable, and you demonstrate your damages. Now the court issued a judgment order. It has to be docketed in the courts, which takes a long time. And then you got a judgment. Well, what do you do with it? Well, you can garnish their bank accounts, if you know where they are, you can garnish if it's an individual, you can potentially garnish their wages, if they have any real property can file a lien against it. It's it's not easy. By the way, in Minnesota 200 times easier than Wisconsin, Wisconsin makes collection very difficult. In Minnesota, it's comparatively easier. So here's another here's an advancement in Minnesota, but it's a pain. And it takes a long time to collect. Right. And it requires some discipline and some willingness, depending on the language of your contract, you may not be able to collect attorneys fees associated with trying to collect so you're spending good money after bad
53:11
I have a funny story for you on this that is only coming to me now. So as I mentioned before, my dad built homes for 30 years, we build four homes a years he built 40 different price range, but he had a judgment. Now let's think about it. I was in high school, and he couldn't collect money on it. It was someone who was a good client, but he just owed him money. And it wasn't much I think it was like $1,000 You know, it was to be paid over like five years, just pay me $100 A month or whatever, just something small. He said I can't get it. So he laid out the terms for me, I remember very clearly I was a teenager, he said I want you to this is what I would advise you to do. Whatever you can collect, you get 50% of, you know, $1,000 to a 16 year old. That sounds amazing. And he goes I would call him every Monday and every Friday that just as a reminder saying, Hey, I'm Mark. I'm David Williamson. And this is Mark Williams, I'm calling to remind you that you owe David Williams construction, you know, $100 and your payment is due this month. They never returned my phone calls ever but they write the checks. I think I got a couple out of them. I think I think it took a while. I think I'd have to go back and look, I know I got some money. But I think the whole point of it was because remember dad with his big wolfish grin. He got his point across. He wanted to demonstrate to me how difficult that was. That was just a son. I often comment about because I went to college, but I sometimes think like what did I actually learn in college? I think I learned a lot of things outside of college. When we were like 5678 years old. Like the age my kids are now my dad would have us pick up the office phone and answer like we're the receptionist or or my dad would want to get the concrete guy on the phone. He would hand me the phone. He said, you know, please call the concrete guy. So I would call hon one of us will say goes I don't know just get him on the phone. And he said it was it was always I never thought about this if he had a master plan. I think he just liked delegating. And so here's my you know my six year old sister Ashley and she would call up and she'd be like, you know, you know please hold your mister you And I remember she hated it. And I kind of liked it. But you know, anyway,
55:04
my dad has picking up trash on.
55:07
I believe we did that we
55:08
did that. No, that was I did not answer the phones. But yeah, we did a lot of sweeping and a lot of trash picking up
55:12
anyway. Yeah, well, we could talk forever. We don't have a ton of time left. I did want to one of the things that is so interesting about you, I call you a renaissance man, because you're involved with everything. And well, most of the people I'm having on as business owners, but you obviously have created a number of more businesses than anyone on here, we'll have you're an author, and you have two books out. One is called Becoming George Washington that's been published and you're working on another called Becoming Benedict Arnold. I've just been curious. How in the world did you get into wanting to write a book? And is writing a book a little bit like starting a company?
55:42
Yes. For the answer. The second question is, yes. The first one is, you know, as I said, I'm a super nerd, right? So I like I like reading. I like writing, I like researching. And that's what I've been doing for over three decades. And, uh, sometime in 2014, I've always read a lot of biography. I always loved George Washington. The more I read about George Washington, the more I liked and admired him by the way, the more I read about read about Thomas Jefferson, the less I do. But in particular, I became sort of fascinated, and how does he become an indispensable founding father, without George Washington, the revolution would have failed. And that led me to his childhood. And I found the story that no one knew, right? I mean, even nerds didn't know it. And it's George story from 14 to 28. It's the least known part of his life, George caused the French and Indian War. I mean, like he played a role in it. I mean, it was his fault. And by the time he's in his mid 20s, he is the colonel running the entire Virginia Military in his early 20s. He's a colonel and by the time the war ends, he's the second most famous man in America, and is second only to Benjamin Franklin, and has married Martha Costas, the wealthiest woman in Virginia. And also, I believe, interest and he was crazy, brave. My original title, instead of becoming George Washington was George Washington action hero. He had horses shut out from under him, he was just insane. And I also believe he had an affair with a woman named Sally Fairfax. And I want to be clear, this was before Martha. George was not bad. It certainly was in a loveless marriage. And it's a great story. And so I just started writing it, which I really had no idea how much I would enjoy it. And it was an incredible experience. And then that led me and that was so much fun. And book was well received. That that led me to start writing about Benedict Arnold, who is our greatest trader is, and I wrote it from his perspective, and it's with my publisher right now, it should be out in spring.
57:33
Amazing. How How does one write a book? I mean, so you did the research? I mean, did you? Did you plot out like a, you know, I'm a big nerd, I listened to a lot of sci fi and fantasy novels, and I haven't think about all these great ideas. How you know, in yours is more of a historical fiction, obviously, these are historic history. But how, how does one go about blocking out? Or what was your journey to blocking out an actual book? Or did you just literally just start writing and and just kind of formed? Well,
57:57
first of all, for anybody out there that wants to write a book, how you should start writing a book and start writing it? Yeah, right. I mean, there's so many people I talked to, like, I'm gonna write a book. I'm like, well just start. Yeah, that's how it works. You just write and things happen, or they don't. For me, I'm constrained by the historical reality. So I have an outline of the period of his life that I'm writing. Gotcha. So that outline for me becomes more and more dense when George and I write footnotes as I'm dictating it. So I know where the sources come from. So I read a book. And I'll keep inserting what I learned from that book, and then in another book, and I keep inserting it, and there's footnotes below. And eventually sections of the book become so dense, there's so much detail about that particular event, that there's this transcendental moment for me, it's when it converts into dialogue. So I'll never forget the very first one, I often don't sleep well at night. So I wake up in the middle of the night. And the George Washington gets elected to the House of Burgesses, and he's sitting in a tent when he found out we know all this, waiting, and the results arrive late at night, it's hot. There are a lot of problems with mosquitoes. So he's sitting in this canvas tent, and he has basically two choices. You Sit and Sweat in the tent, and a hot night, like boiling life, or you open the 10 get eaten by mosquitoes. Well, we're all from his own Boundary Waters, we understand what the solution is, right? You sweat, you just rather sweat and be fighting off mosquitoes. And his guys come in and tell him he's won. And that entire scene just came into my head dialogue. There's a couple of jokes, but the entire thing came into my head at once, in middle tonight, and I dictated the dialogue. And that's why all right until the rest of my life, because those are those these transcendent moments when the dialog comes in your head. And you know, what George was thinking or what Benedict was thinking or what others were saying is why I love doing it. And why I'm going to keep doing it until I die. My third book is on is becoming Ben Benjamin Franklin. And that's going to actually be two volumes. So I'm already starting to do the research on that.
59:49
Wow. When you when I mean these are obviously very famous individuals. How does one go about writing a book or having the confidence to write a book thinking like, oh, man, there's been so much written about this guy, what am I going to add to the The world but you just mentioned, hey, this period of this person's life nobody knew anything about Yeah. How did you? How do you overcome the first part of like, this is a very well researched topic already and then to where do you go to find this information?
1:00:12
So first of all, George is the most, there's books come out every year and George, there are scholars that have their life dedicated to him. Every letter that we have that George sent and received has been organized by the University of Virginia, what's called the George Washington papers. They're fully annotated. So I've read every letter that George ever sent or received, during the relevant periods of my books, it's about eight volumes. There are several things for Benjamin Franklin, there's for Thomas Jefferson, there is not for Benedict Arnold. Right? There is one book that has some letters. So I read, I do a lot of research. I love researching. I love reading the books, I don't know how many books I read for George, I read more for Benedict, and you just do the research. For George, it's important. If you look at the front of my book, for those who get it, it says a novel. My book is very a novel like it at its peak, it had 1400 footnotes. And there are about 30 pages in the back of the book with detailed author's discussions with citations about, you know, what I hate about historical fiction, which this is, is at the end, they said, I made this person up, I made this up. And here's nothing's made up in my book, as far as I know, but there are periods where it's more controversial. And here's what some of the some of the nonfiction authors say. And here's what others say. And I think it's important when you write historical fiction, to know where that line is, right? My book, George is about 95%. What happened 5% and braiding and primarily to Sally Fairfax. We don't know, we'll just never know, right? But I get to choose. So I haven't haven't the right. And Benedict Arnold is the same way. Right? And so it there's supposition, but a lot of research, and I enjoy the researching a lot. Reading and doing the research and then the writing process, the whole publishing part, not so much. But because it's just kind of not I don't
1:01:54
know, give us you know, we were basically out of time. But give me the three minute overview. If you can like what it takes to publish, like you've done all this work has taken you years of research, what happens you have this book, you hear about editors that slash at dice it edit it,
1:02:07
yeah, what an editing process is brutal. And they do. But also, it's embarrassing, because you made so many mistakes. The end, you got, like I'd have battle maps made, I had to get images, and I need to get permission from the Library of Congress and regale and other places to get images to put in the book. So there's a lot of logistics, even when it's public, you have to get permission. Yeah. Why? Because they require a request and require attribution. And you don't want them mad at you. And it costs you nothing to get it sometimes, by the way, I needed high resolution images of people that you couldn't otherwise get. So Yale, for example, is really good about it. And the Library of Congress is good. So and then I had maps made. Yep. And so that kind of stuff. The maps are kind of fun, actually, yeah. But then you go to a publisher, and they beat up your book, you also have to have the cover designs, you got to figure out what the cover is gonna look like. And then you got to go through the whole publishing process and promotion, and you have a lot of speeches and you get if you're lucky to get to TV and radio interviews. So that's, it's fun. But you know, and we're gonna have a big party. Yes, right. Big book release party as we did for George. So I'm working on that right now too. So there's a lot of other logistics that I never thought of, I was just a guy that that have an idea. I'm gonna write a book, right? It's been enough fun that I'm gonna keep writing books. And lawyering
1:03:18
well and into that point, creating a business is like that to idea I'm gonna start a business it's just like I created a
1:03:24
separate LLC, by the way so here's how I'm like most people's hobbies minus tax deductible so I created an LLC, I kept track of all my expenses it as a separate checkbook and all the expenses that I incur, which are a lot and I spent a lot of money on books I have a very tolerant wife but I unlike having a snowmobile my, my purchases are tax deductible as part of the separate business entity they have that Carpe Diem publishing, that I run my entities through
1:03:49
great name. Yeah, thank you very much for coming on. It was a delight to talk with you. Where can people find you if they're interested in reaching out to you for either legal advice or any of your books?
1:03:57
Well, my book is easy. My last name is why och. And it's er, we own yahoo.com. So that's where my my books are. Same name, if you will put my name in and lawyer and Yaak y o ch. I'm the only one I got a weird last name. So yeah, it's like sock, but it's not why Oh, CH. Well, I
1:04:15
can say personally, obviously, can't say enough about you both as a friend and also as someone who mentors us in our own business. So thank you very much. Anyone listening, please reach out to Steve. He's amazing. And have a great day. Thanks for coming on.
1:04:28
Thank you. It's a lot of fun, and I appreciate it. Thanks, Steve.
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