Q & A Episode 52 - Losers Are Winners Part 3: Finding Success Through Setbacks with Caleb MacDonald

Jul 30

Episode #52 | Q&A with Mark D. Williams | Finding Success Through Setbacks with Caleb MacDonald

Lets turn some big loses into some big wins. In this Losers Are Winners episode, Mark and Caleb MacDonald swap stories about their early business blunders—from failed snowboard sales to endless house cleaning gigs—and how those moments shaped them into better builders. Caleb gets real about learning from those flops, staying patient, and why having solid contracts (and good people around you) makes all the difference.

About The Curious Builder

The host of the Curious Builder Posdast is Mark D. Williams, the founder of Mark D. Williams Custom Homes Inc. They are an award-winning Twin Cities-based home builder, creating quality custom homes and remodels — one-of-a-kind dream homes of all styles and scopes. Whether you’re looking to reimagine your current space or start fresh with a new construction, we build homes that reflect how you live your everyday life.

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Caleb MacDonald 00:05
When your mindset is like, what is going to help us long term, be the best builder in our local market, then your decisions go off of that sounding board, and if they check, then they check, if they don't, then we're not going to pursue them.

Mark D. Williams 00:18
Welcome to Curious Builder Podcast. I'm your host Mark Williams, returning guest episode 59 superstar. Caleb MacDonald, out of Toronto, Canada. What's up, buddy, just lighting it up in the north. Baby, lighting it up in the north. You know, technically you're south of Minneapolis, so don't get too hot and proud about your north. Your parallel runs a little south of Minneapolis. We're in the drop of Janice. We call we call that the humble brag of the great white north. I'm sure that's why people were tuning in. All right, so our Thursday series continuing on is losers are winners. So I tapped my good buddy Caleb, and thought we'd share a few losing stories here. Of you know, some failures we've had two decades now. Caleb, how

Caleb MacDonald 01:03
long you've been building? Yeah, next year's 20 years.

Mark D. Williams 01:07
20 years. Congratulations, buddy. Yeah, it's been a ride. That's a ride. Well, what you got? What are, what are some memorable fail stories? As you look back and you're like, Oh man, looking back, you'd almost like, cringe. I was thinking one sorry, just this moment, like, I remember early on, when I used to build, I was so happy that I'd have a house and I would just go take photos of it. Not a professional photographer. It wasn't staged. It was just like an empty shell. And I don't even know if I could find those photos. They'd just be cringe worthy. Now, considering, you know, the amount of attention that we spend on styling and social media and whatnot. But like early on, you're just like, hey, here's my empty house. You know, who wants to look at it or buy it

Caleb MacDonald 01:46
all day? Let's look at some drywall.

Mark D. Williams 01:50
Look at this fancy wood floor with nothing on it. So what you got? What are some? What are some? What are some things that you that you think of, that really help define your success, or think lessons that you really learned, that you feel like without that failure, you wouldn't be who you are as a business owner or a builder today.

Caleb MacDonald 02:07
Yeah, I think the biggest thing is like, everything happens for a reason. Like, I'm a huge believer in fails. Are the best lessons. Like, the best mentorship I ever got was my father and some other employers over the years, and just like watching their failures, I learned so much from what they did right and what they did wrong. Like I think people just want the glass box to be so perfect, but man, in construction, when it drops, it drops. And I think one that I would over 20 years, you know, you definitely stack up some good failures. But one early on that was a big one, is I got a contract. I would take any work, like we were, four of us had to keep payroll going, so I'm like, whatever work you got, I'll take it took a contract to clean houses, which utterly sucks. The payback then this is, you know, 20 years ago was great. So I was like, no problem, probably, like, two years into my business, you know, definitely had seen some bad years and some good years since then. So took this contract 160 houses. Had to clean it every space. So brick, you're outside. I owned a backhoe at the time that leveraged to buy and borrowed some money. So I'm young, full of energy, ready to rock. Get out there. I'm like, I'm gonna make some money on this backhoe. You know, driving it down the road. Have a brand new generator in it. Generator pops out, smoosh the generator and like, brand new generator, get this big contract kaputt, so I gotta take care of that. There goes all my money. Next one I'm like, into the winter time. So you're in drywall phase insulation, you're just cleaning dusty houses, and 160 by the time you get to the end of one, you're back to the next phase of the beginning. So floors trim. And I was just like, so done with it. I was like, I hate this. I hate cleaning. Every day. The guys were upset. I was upset. We were just hated our lives, just like the same site that was it. It was just like years. It was a two year contract to build all these houses, and it was just so long drawn, like you start with footings and straw, like we're in winter, so you're smashing ice, pumping in the mud, your hands are freezing. It just sucked. So I saw this like golden opportunity that I thought was the be all, end all. I was a snowboarder. You know, living in Canada, love snowboarding. Had a buddy of a buddy who had a snowboarding company in Finland, and was like, this thing will blow up in Canada. So I was like, sweet. I'm all in. I partnered with my dad. We bought, like, I. Don't know, 1000 snowboards, which is just like a ridiculous number for someone just starting out, especially when you're like 20 and a lot of 1000 snowboards, bunch of jackets, and I was just gonna sell to the world. So went out knocked cold, called Snow shops, board shops, ski shops, you name it. Nobody's biting. Nobody knows the brand. It was a wicked brand, but they didn't. They had no presence here. Like, where was that? What year was this? This is, like two years in. So I'm about 20, so this is 18 years ago. This is a this is an OG so this doesn't have social media. There is no like, spreading the word. There's like we did put out paper flyers, printed flyers, put them on cars

Mark D. Williams 05:47
and malls. So are you? Are you still cleaning homes at this time? As we're still cleaning homes, but we're, we're

Caleb MacDonald 05:53
living for the pipe dream on the weekends and every night. So you're totally cooked because you're working all day, and then you're trying to hit snow shops when they can meet and, you know, work around their schedule. So I put all my money, like everything I had, into this golden opportunity. One year, lost all my money, had a ton of snowboards, shoved them on the top of my dad's garage and called it a day, and then went back to building kings ridge. And you know, I think the moral of the story is, like, we always think something is greener on the other side, like the grass is greener. This is gonna be better. This is gonna be easier. But I think consistency and staying at the process of doing one thing really well, like you plant the seed, you water the seed, you get to harvest that seed. I was still so new to the whole aspect of, like, patience is a great virtue. I didn't really have that. I was young. I just wanted, like, a quick reward. Like, now our kids, they literally want something like a hair band or a chocolate bar. They just amazon it and it's at the house the next day. Like there is no effort, there is no like, we would get on our bikes on a hot day bike to get whatever we wanted, some new weights or whatever we wanted from the store, we would bike to Canadian Tire like, 10 kilometers away. You can do the conversion there six miles, yeah. And then we would have

Mark D. Williams 07:27
point two, don't, don't leave off the point too. Yeah.

Caleb MacDonald 07:32
We'll call that a wash, yeah. So like you had the the energy output of, like, getting on your bike, getting a buddy to go with you, going to the store, paying the money. Now it's just like, click, click, and then there's just this like quick reward. And I think that this day and age needs a good, hard lesson of like process and like anything can be done in a reasonable amount of time, like we talk about it our team meetings and with our team all the time is like, if we set a realistic expectation for what we want to accomplish in a year, we will be within that variant. If it's a realistic, realistic expectation, and we stay with the consistent process of moving the ball forward to that target.

Mark D. Williams 08:23
So two questions, one is, how many snowboards do you have left out of the 1000 in your dad's garage?

Caleb MacDonald 08:28
I ended up, like, 10 years after that, I still had probably, like, 60 to 100 like, we were, like, giving them away $20 like, these $500 boards. Yeah, over the years, they definitely,

Mark D. Williams 08:40
yeah. Did you do you still have? Do you still ride any of them?

Caleb MacDonald 08:45
Yeah? Yeah. My word is still one of them. I'm never letting that thing go. It's worth a small fortune to me.

Mark D. Williams 08:52
That's so funny. What I could point how, and then, from the cleaning those 160 homes on a two year contract, I assume you did it at the time because you needed but to feed the meter. You didn't have other income, so that was your What did you learn from that? I appreciate the consistency and the long term vision, but how did you transition out of the home cleaning? Or do you feel like you sort of, you got your hand handcuffed, you got into a contract you couldn't get out of so you had to stay the course for two years.

Caleb MacDonald 09:18
No, no, we, we scaled. So I hired like five guys, and then I had my other five guys doing, you know, our daily work. So it worked out long term. I think just having that longevity mindset, like in our office, I'm like, I'm gonna be here for 100 years, is our goal in business. So any of our decisions need to be bounced off of that sound board. It's like, what's your goal? If you want to just scale and sell then you're going to make different decisions, like buying new machinery and tools and office things or whatever it may be. But when your mindset is like, what is going to help us, long term, be the best builder in our. Local market, then your decisions go off of that sounding board, and if they check, then they check, if they don't, then we're not going to pursue them. So I think, yeah, it was a great opportunity. Learned a lot, and it definitely was a grind, and consistency came into play, like you just don't want to clean the exact same house the next day, when you just clean like 10 of them the day before. But

Speaker 2 10:20
I been

Mark D. Williams 10:28
listening to the podcast for a while now, or even if this is your first episode, I talk about the contractor coalition summit all the time. Our next one is happening November 7 through November 10 in Chicago, and all the details can be found at the contractor coalition summit.com You've got Brad Levitt, Nick schifr, Tyler, Grace, Morgan, Molitor and myself will all be there. We've got great content over three days. You've got builders from all over the country try to get it to about that 30 people number. And we'll have sponsors as well that add a lot of value to each one of these dedicated days where you're talking about contracts and spreadsheets and margin and whether you're doing fixed bid or cost plus your pre construction agreements. I mean, the list goes on and on and on. If you haven't been following it yet, you should. The contractor coalition summit Instagram page is giving you a steady diet of the conversations that are being had, a lot of promo reels, a lot of the interviews that I've done personally at Omaha, which was my first contractor coalition, where I'm part of the leadership, interviewed all 36 people that attended, and we're going to be unveiling each one of their interviews over the next couple of months, so people that were not able to attend and would like to can kind of get a better idea of the value that builders are getting. So if you're going to sign up and come to Chicago, you can type in the promo code, curious builder, and get $2,500 off, and we'll see you in Chicago. Have you ever made, you know, like, a business decision that you look back and you're like, Oh man, the way I structured that was very poor, or that really went, you know, a way that I could have now either protected through my contract, or I wouldn't have made that mistake now that you're, you know, two decades in.

Caleb MacDonald 12:07
Oh, yeah. So like, our contracts are a great example. We had some clients take advantage of us just being very open and honest, and they burned us real good. So we spent a small fortune with a local market lawyer that's like, big downtown Toronto. And, you know, dialed in our our process of, how do we collect money? What's the cadence of how we collect money? You know, we want it always to be a win, win. So when we're winning and they're winning, like the project's going at a good clip, and we basically work our contract, pay to pay to play, is how we kind of talk about it, and it just sets up the stage for both parties to feel comfortable. Because we've definitely been over leveraged, and people took advantage, and we got some serious burns in our in our sheets from well, and

Mark D. Williams 12:59
I've seen, and I don't know specifically what you're referring to. I mean, sometimes you mean, sometimes you don't define the scope, or you don't define, like, the labor burden, because you guys self perform a lot of your own work, correct? We do? Yeah, I remember, I don't know if Nick schifr had, you know, I'll bring him on the podcast at some point from NS builders, but he's talked about a contractor coalition. I can't remember if he talked about it when you were down at Huntington's with me, but basically, he had a client who was a lawyer that they didn't define their internal laborers burdens. And then the client was a lawyer came back and said, I'm not paying you for any of that stuff. And, you know, took them for, you know, six figures, which was super unethical, because the guy knew what he was doing on the front end right, which is makes it even worse. But, and Nick basically shrugged his shoulder and said, I won't make that mistake again. And he talks about it all the time. I've seen even where clients a lot of times, we're trying to do a good job. And sometimes you feel like, now is not the day to submit an invoice, but honestly, it's never the right day to submit the invoice, so you should submit it anyway. And I've seen so many contractors, myself included, where you're like, I'm gonna wait for kind of the right time and the right time, and then before you know it, you're a couple months in, where you're doing work for free, essentially, because they haven't paid you for it. And then you submit the bill, and they're like, I'm not paying it, and then you have no recourse. And so I don't know if that's sort of what you're hinting at, but

Caleb MacDonald 14:17
oh yeah. Like, leverage is king. Like, when they need you, like I talk about, the last weeks of the project are like months to the client. If you submit your bills like you said, it's not always optimal. And we did the same thing for a while. We would hold back, hold back. Now, once the work's completed that week, we have a bi weekly schedule. We send out a bill. If it doesn't get paid, we don't come back. It's very like we how often,

Mark D. Williams 14:42
how often, I mean, we have in our contract, if you don't pay us within seven days, we have the right to stop work. In my 21 year career, I've never stopped work. Come to think of I've never really had a client not pay me either, though. But you know, sometimes you're fart out the order stuff, and we take pretty big down payments. I think one of the biggest changes we've made over the last. Probably five, six years, was we take a, probably a five or, sorry, a 10 to 15% down payment on the front end, which isn't that radical, except that we don't, we take that off the final bill that does not count towards any of your monthly draw. So for easy numbers, right? If it's a million dollars, and we asked for $150,000 down, that is against the final draw. So month one, you are getting billed. And that was something we learned at contractor coalition that was super helpful. And I think just us understanding and explaining it, because sometimes people are like, well, I don't and banks sometimes will kind of give you flack for that. I don't know how often you have to deal with bank financing. Most of our clients are either paying cash or home equity line, so it doesn't seem to be an issue. But have you ever?

Caleb MacDonald 15:43
Yeah, we've definitely been burnt, like we had one client basically was working for a numbered company. I don't know that.

Mark D. Williams 15:50
He was sorry, what's a numbered company? Mean,

Caleb MacDonald 15:53
a numbered company is just a registered company, but it has no name. So in Canada, you would hire kings Ridge, but we would be Ontario. 123456, is what we're actually registered as with the CRA with the government. So this guy had a numbered company on his check, so it didn't say a name. So I'm not researching the numbered company. I was maybe five years into business, and he had been paying us through a big company he was working for and then hiring us to do these main floor gut and redos and some bathroom work. And so what happened is I just get a lawyer's letter in the mail saying I owe a whack load of money from all these jobs because I was in cahoots with this guy who was stealing money from this big Corp and then writing all these checks to these smaller jobs that he was doing on the side as a side hustle. So I thought he was doing it as his full time thing. This was just a side gig for him. So he was funneling money as an expense out of this big company, and so we had to pony up, hire a lawyer, say, hey, we had no idea we have our contracts with this client, and it clearly states what we're doing, where we're doing the work, the addresses. And he had forged all the addresses. He had forged the, yeah, the payment structure from this big company, and put it under these big jobs that are not even in our local area. Like, I'm like, I would never even go to these places. So that was a big learning curve. Like, I thought I did my due diligence, and there's always a curve ball that you don't know when you're young. So I think the biggest thing that I encourage young people that are starting out is, like, get like this. Like, get around people that know what's up, that have been in business for more than 10 years, and ask the right questions. Like, what did you do? Why did you do it? How have you been able to stay afloat? Like, if you're in business for more than 10 years, you're in the top, like, five to 10% like, it's, it's a wild feat that nobody thinks that it's a big thing. Like, we had one other competitor was just killing it, went and bought all new machines and trucks and spend a bunch of money, and he's no longer in business. Two, two of them actually, within like, a five year period. I was, like, all jealous. I was like, Man, I'm just using these old trucks. They're breaking down. I gotta pay to fix them. And this guy just pops out of the grass and he's killing it in our local market, and then he's not here. So the goal is like, Get wisdom and then run with it, but make a plan that's gonna last the test of time, like, if you over leverage yourself, and then you go into a dry season, which we've gone through three different dry seasons over the 20 years, of like, there's no work, like you gotta not have a massive overhead, or it's just going to eat everything you got and more. So learning from others is the best advice you could possibly give someone like, you know, our relationship, I'll text you. I'll be like, yo. What do you think about this? Like Brad, I'll be like, yo. What should I do here? Like asking people that are farther ahead than you or at the same level, makes the world of difference for learning and making it long.

Mark D. Williams 19:20
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Caleb MacDonald 20:13
so it went to court, and he was doing it with like 10 other people, or maybe more. So basically, we got, you know, exempt out of it. The documentation showed that we were not involved, but we still lost out and had to pay lawyers a bunch of money just to protect our name. So it stunk and at the time, like you don't have tons of capital, you're very small ship sailing down a windy River. It's not like you have money to just drop five or 10 grand just to protect your name at the end of the day. It worked out. I learned a lot of things

Mark D. Williams 20:50
that, what could you, what could What could you have done differently? I mean, the guy had a numbered company, so I should have, like,

Caleb MacDonald 20:57
researched that number and seen where it's registered, like, you can get your your bookkeeper or a lawyer to research the name and see if it's actually him on title, which is crazy, because he had Signing Authority. So I would have found that he had Signing Authority for that account, but it wasn't his account. So it's a foggy Road, like, Who knows if I could have done anything different or better. But I think, you know, going forward, we have a very bolstered package that we send out, and it's designed for both parties to win. That's the goal. Like we want our clients to tell their friends about us, that we traded them fair, that we treated them right, and we were done on time

Mark D. Williams 21:39
and on budget. Did you do you out of curiosity, I know clients do this. I'm pretty trusting person. I don't I mean, as long as the checks cash and they seem, with it like I've never done a background check on any client I've ever I know some people that they'll do. You know, they pay a company do background checks and security checks, things like that. How in depth do you go with vetting your clients, and at what point, I mean, is it after the first phone call, the design retainer, the PSA agreement? Like, at what point are you sort of engaging? Like, hey, I want to know who this person's back end. You know what it looks like on a business side?

Caleb MacDonald 22:13
Well, yeah, and now we need processes, because I don't even meet some of them. Well, lots of them. Like, that's a whole different department that has, you know, there's so many people now taking that so we have a process. We don't, per se, do a background check, but we just have red flags that will go over in our weekly meetings with my elite team, and just say, Okay, what was the red flag? And then we'll all assess, is it worth going down the road? And then we'll fire the client, as you would say, and not even say, sorry, we just can't take that project, because it's just not worth when we see a few red flags, you know, we have a process that we have that's proven, and it just weeds that out. So the last, like, five years, we haven't really had any of these big dumpster fires, because we have the processes in place to safeguard against them.

Mark D. Williams 23:08
Yeah, we've got one that we're actually, I don't even know where it's going to go. By the time this airs, I guess we'll have made a decision where, you know, it kind of seemed to come out of nowhere, but I knew the the previous builder that was tasked with it, the homeowner reached out to me and said, Hey, you were highly recommended. And anyway, long story short, this industry is too small. We knew someone who knew someone and like, Hey, is it this project? And we're like, yeah. And so I talked to the builder, and, you know, there's like, six it's a family thing, which is super cool, like, at the service level, it's like, cool, this whole family unit wants to build a home together. But the red flag for me is like, you know, only one captain can drive the ship. You know, you can't, you can't drive, you can't drive a home by six people committee. And it's like husbands and wives and parents. I'm like, oh boy. I haven't met with him yet, so I don't know, but one of my things when I meet with him will simply be, is like, when it comes to change orders and design direction, like, we need one signature, we need one voice. And like, I'm happy to support this because I think it's super cool. Like, cool, like, I would want that for my family, yeah, but you can't. I can't. I'm not a psychologist by choice. I think we're all psychology. Yeah, that's a whole I'm gonna put Caleb McDonald on retainer for this one. Guys, oh boy. Well, I want to respect the audience's time. Every time I get into these stories that they keep on going, I want to keep going with them, but I appreciate coming on the podcast, and I'm glad that you were a loser so you can be a winner. So thanks for coming on.

Speaker 2 24:29
Hey, man, open book over here. Have

Mark D. Williams 24:32
you ever had a question that you really want to know the answer to and dive really deep on it? Or have someone that you feel like is in a safe space that maybe is even outside of your state where you can really ask any question, knowing that they'll be honest and open and help you Well, you're in luck. The curious builder is available for one on one consulting. You can go to the curious builder podcast.com and book a time with me for one hour under the one for one page. I look forward to talking with you soon. Thanks for tuning in to curious builder. Podcast. If you liked this episode, do us a favor. Share it with three other business owners. The best way that we can spread what we're doing is by word of mouth, and with your help, we can continue to help other curious builders expand their business. Please share it with your friends. Like and review online, and thanks again for tuning in.