Creating Value Before Design: Ricardo on Architecture, Development, and Better Client Conversations | 709

0:00I think people assume that you will become an entrepreneur and then you will be successful. It's not like that. It takes time. Hello, Architect Nation, and welcome back. This is the right place for you if you run an architectural practice. Today, we're exploring how architects can get involved earlier and become more valuable to their clients and create new opportunities beyond traditional design fees. If you ever wanted to win better projects, protect your fees and become the architect clients call before the biggest decisions are made, you're going to love today's episode. On today's episode, you'll discover why waiting for the client to hand you a finished brief may be keeping your firm trapped in smaller, less valuable roles, how the knowledge you already use as an architect could open the door to stronger client relationships, development partnerships, and entirely new sources of income.

0:46Why patience, honest numbers, and the right partners may matter more to your long-term success than chasing rapid growth. In today's episode, I sit down with Ricardo Alvarez, an architect who has built a thriving practice by thinking far beyond the traditional role of designer. From leaving New York and returning to Puerto Rico to stepping into development and learning how to create value before a project even begins, Ricardo shares what it really takes to build a resilient, opportunity-driven architecture business. And now a word from our sponsor.

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3:10Built for firms who bill by project, not by the hour. Right now, Business of Architecture listeners can access a special Xero offer. Get 90 % off for six months through the link in our show notes. Terms and conditions apply. So what was it that had you step outside of the traditional role of architect? Was it conscious decisions or was it challenges that you were facing as an architect that had you evolved into wearing these different hats? All of them were challenges that may be a big rock on the road and then you had to navigate around it or just go through it. Yeah. So I can say that the biggest challenge was actually when I decided to come back home from New York City to Puerto Rico, the biggest challenge was originally the size of the market.

4:09Right. So I had to navigate around that to try to make ourselves viable as a potential design provider. So that was one. And then, of course, every single challenge that we've seen, we try to find solutions. And we talked about this before, using our design thinking mentality to what is the best solution to this challenge? So I wish I could tell you that it was intentional. It was not. I had no idea that I wanted to own my own company. I don't think that was actually even in the cards. When I graduated and I moved to New York City, I assumed that I was going to be a designer at a great term. And then I was going to maybe go up the ladder.

4:56And at some point, I would be one of the leaders of those companies or that company. I would say that I did see myself at some point becoming a leader of a company. I want to be as transparent as I can. Because I did see myself that way, even though I don't know how. But then when I made the choice to move from New York City to a very tiny market, which is Puerto Rico, which is where we live now, I was not thinking about anything but trying to find a place in which I can grow as a human. so it shifted from how can I grow as a professional in New York City to how can I grow as a person in Puerto Rico so and what was it about New York that had you not want to continue your career there and do you think that you could have done the same thing in New York as what you've done here no I don't think so I think that um again I am not I don't know what the answer is but I would say that I don't think I would have had the same career at all if I would have stayed there.

6:07But when I say I don't know the answer is that when you are the kind of person you are, you tend to find solutions or challenges anywhere. I don't think I would have, it would have been difficult for me to find solutions to those issues that I would have found in New York City. Nevertheless, to answer your question, I think that the way my career has grown and the way it actually evolved would have been different if I would have stayed in New York City. But the reason I left New York City, to your question, is because I felt that from a design standpoint, it was awesome. But I quickly got disenchanted with the client relationship dynamic.

6:52And actually, I'm going to tell you a story on, you know, my mentor, who was the first person I worked for, sadly passed away maybe a couple months ago. And I'm going to tell you what is something that happened. I was actually at the printing, you know, room. Back then we had, you know, a combination of traditional printing and actually, you know, ammonia and, you know, and things like that. So the chemicals in the trash. Oh, my God. And the smell was terrifying. But anyway, the thing is that they also had fact machines, fact machines in the printing area. So all the facts that came, you could see, you know, it was it wasn't as big of a firm as it is now when I when I was there.

7:38Right. Just for, you know, for for your group. I used to work for the firm of Robert Ames in New York. And the facts came in and there was a fax that came in and I saw it on the floor. And when I picked it up, it's been a long time, so I'll say it was from Michael Eisner. The head at the time at Disney, the CEO was Michael Eisner. Michael Eisner knew Bob Stern for a while because Bob did some work for his family. Right. And Bob, I think at the time, was a member of the board of directors at the Disney company. So when I saw the facts from Michael Eisner, I was, oh, this is Michael Eisner. So I got curious and I read it.

8:21And he basically said, and they're friends. Bob, I can't believe you're charging me for the work in my house. I was actually surprised because we've given you a lot of work with the Disney company. And the fact that this person felt entitled to tell his friend that you have the obligation to do work for free shocked me. And of course I never told anyone the story and I never even though because I would have been fired I guess if I'm reading things that I shouldn't read. But my point is that But why? Why are some clients entitled to feel that our work should be done for free? Listen, and I'm not even that.

9:10Let me add to that. Why is architecture basically enalting the idea that we have to compete in this world class competition to see who's the best? I've never seen a lawyer basically being told, hey, I need a will. Why don't you do a will? Why don't you do a will? And you do a will. And then I'll choose the best one that fits for my family. Does that make any sense? It doesn't make any sense. Yeah. And they're service providers. How come architects are expected to work for free and be made feel little, little because you're charging them? it's like beneath you you're an architect it's beneath you if you're actually uh charging anyone that's really interesting actually i'm using that as a as a comparison with another profession same with the with the heart surgeon you know right then to put together a proposal for different things and i don't know that's not that it doesn't make any sense and we can talk about who's to blame in a minute but to your point and i made it a little long and i apologize but that's what i When I read that, I said, you know, I don't think I made the right choice.

10:29This is not the right profession. Because even if you're this successful, you are Bob Stern, which you are a successful architect in the sense of what we as architects feel success is. He's still a slave to the Patreon. How is that? Yeah. That's what actually struck me as that I could be here for 20 years and I could become a partner potentially. Yeah. And I could make some good money, but I'm still not going to have the power or the freedom to make my own choices. And that's what scared me. And that's why I live in New York. And so when you came here, I didn't come here because of architecture.

11:15I came here because I knew that I had no control and I was powerless and I couldn't come to anywhere and work in architecture. And at some point, maybe just, you know, maybe getting to different businesses, not necessarily the traditional architecture. So that's what prompted me to come back. Was that then the genesis as well? I'm going to start my own business as opposed to working for somebody else? It was a genesis, but I don't think I saw myself as a business owner in architecture. Right. I figured, well, I mean, this is it. So I might as well start selling, you know, T-shirts on the back of my car.

11:56Right. So, yeah, I never really thought about it until you asked me, but I think that that was the genesis. Of course, the other thing is that I felt in New York, I individually, and this is more of a personal thing, I felt that I was never alone, but I felt lonely. because everything I did was work from Monday to Sunday. And I needed to find myself a little bit outside of the profession. And my grandfather had a heart attack. And I realized, wow, I want to come back home because I want to spend time with family and get to know them as peers instead of only as a son or a daughter. I mean, son.

12:31And that's why I decided to come back. But it wasn't because of architecture at all. It was just like, in a way, just walking away from what I assumed architecture was because I was always told that in order to be a successful architect, you needed to be a great designer or work for a great design firm. Yeah. And so what was it then that led to the actual starting your firm? And then, let's say, one of your first development projects. Because again, that's such a sort of, if I was to say the most popular, I don't want to call it a fantasy, but that's the word that's coming up to me. The most popular desire that I hear from architects is for them to be their own clients or for them to be developers.

13:13And I'll tell you how they do it. Most architects design their own home. And that's how they become their own client. But they become their own client and they design their home because in their limited vision, I hate to say this, they think that that's what's going to bring them clients because they're going to be able to publish that house the way they designed it. And now people are going to say, my God, I need that architect. And Manah is going to come from heaven after that. And that is also not a very good business plan because you're really investing in real estate, not because you want to make money out of the real estate only.

13:48you basically are leveraging that real estate for the possibility of the vertical. Possibility of being hired as a designer only. So I think that's a different, I would say that that's a different venue. And I don't think it's as successful. It works more or less, but I don't think it's as successful as it could be. if you actually see yourself as a creator of a project instead of only using it as a vessel for something. And it's also missing that piece of the product being sold to a market as well. It's kind of like, this is my risk that I'm going to, like you say, it's for portfolio. It's for portfolio purposes.

14:38It's for portfolio and it's kind of in the mindset of like, that's how we sell. A different type of portfolio, a design portfolio, instead of a financial portfolio, which is this is an asset which I can build it. I can design this house. And instead of me living in this house, let's see if I can rent it. Now I'm going to create wealth. Yeah. How about instead of a house, I design an apartment, maybe four or five apartment complex. And then I could create wealth. That's a different mindset, if you ask me. Yes. By the way, some architects do that too. I'm not saying that they don't, but it's a different mindset that only doing it for design purposes.

15:16And so for your first foray into real estate development, how did that come about? Again, many of the things that come out in my life, actually most of them are just either timing or chance or being just lucky. And I think I need to be reminded. I try to remind myself about that all the time because if I think that as human beings, sometimes we lose sense of reality. We're like, oh, I deserve this. I deserve that. And the truth is that no one deserves anything. It's a matter of actually being in the right place at the right time. And what do you do with that at that moment? Yeah. So I was, I came back to Puerto Rico and I started working for a local firm, great people, and I learned a lot from them.

16:02But I wasn't making that much money at all. And I was, and in a way, before I get to the development side, I think they made a mistake. Because what they did is that because they didn't want to raise my salary, they had some work that they didn't want to do. And they came up to me and said, hey, I can recommend you. You moonlight. Don't do it during office times. And that way you could prompt your salary or how much more you could make. And they were nice enough to refer me some residential work, small remodeling jobs and things like that. And that sadly worked out the opposite way because it gave me the confidence to say, I think I can do this.

16:43And the truth is that I make a lot more money doing this than actually being forced by being at 9 to 10 o 'clock at night, making not that much money and also not having freedom to make my own choices because I'm still an employee. And this was a good lesson for me because once we created our company, instead of actually just saying, hey, you can do stuff on your side because I can, you know, pay you a little less, we do the opposite. We need to pay them a great amount of money because they need to invest all their energy and focus and be vested in the company they're working with and for. I think that's really important as well.

17:24I guess as a business owner, if your team has got side hustles, moonlighting, there might be something missing with what you're doing. It might be you're not paying them enough. It might be that they're like, exactly. That's a very interesting way of starting a firm is that the actual firm you're working for gave you some extra work. Gave you some extra work. That's one. And the second thing that happened is that we had a family friend. Right. And again, that would not have happened in New York because in New York, I had no network. Right. Except university type network. And they're all my age at that time.

17:56So coming back to Puerto Rico and having some network because I grew up there and my family and so forth. There was a developer, friend of the family, who basically saw me. He knew who the firm I used to work with was. Yeah. And I think that in a way, they're like, oh, how can I get world-class design for cheap? So, and he said, hey, you want to do X? I think at the time it was a clubhouse for a community that they were developing. And that clubhouse paid me more money than what I was making for, you know, yearly on the office. So when that opportunity came up, actually, let me backtrack for a second.

18:42That opportunity came up and I brought that opportunity to the firm I was working for. Right. And they said, no, no, no, this is too small of a project. What are you doing? And when I saw the numbers and everything else, I was like, why am I doing the double job? So I basically quit. And that was my first project on my own. And of course, I had no idea what I was doing. But I knew that they hired me because I was cheap. I didn't have overhead to the level then and then more importantly because I was a friend of the family and I was a nice guy and that's it so that's that was my first project a couple of years later another friend of the family had a piece of land and he came up to me and said I don't know what to do here.

19:34Do you have any ideas? And I said, well, maybe we could do X, Y, Z. And I have no idea why. I said, well, why don't we develop it? And that's when he's like, oh, OK, well, we can develop it together. And I said, why don't you just put the land as equity and I'll take care of everything else? Yeah, that's basically the first development I was involved in, in which I had some degree of involvement and partnership, and that was 2006. That's how it came about. It was a family friend. It was a piece of land that was paid for. I had no idea what I was doing, and mysteriously, I offered this. And then, of course...

20:16And now you're committed once you've said that. Well, this is where entrepreneurship comes in. And I know you've asked me if I feel that I'm an architect or an entrepreneur, and I think they're embedded, but I consider myself an architect first who happens to be an entrepreneur instead of an entrepreneur who happens to be an architect. So when entrepreneurs, the entrepreneurship mentality is normally say yes and then we'll figure it out. Yes, yeah. Architects do the same in design. They just don't do that in their businesses, which is weird. And it's a matter of risk taking. And when I said yes, I'll figure it out.

20:53We'll have to figure it out. Yeah. When you're in a smaller market like Puerto Rico and you know some people because you have family members and whatever, I called that family friend and I said, I want to develop this. I don't know how. Come to my office. I'm going to take you through a performer because he was a developer. Right. And then I talked to a friend of the family who was a banker. I said, how do I go about getting finances for this? Oh, let's have lunch. And I realized that people are willing to help if you ask them questions and you make them feel that you're A, not a threat b not that you don't spend an hour talking about yourself yeah and that c that you're willing to do what they're telling you to do and you're not debating them in every single thing that they're saying that's very wise like let just being able to receive somebody's advice and execute on it that person actually feels very they feel they feel like oh this guy's listening Yeah.

21:56And I'll get to some of the things that I've done in order to try to get to know people and so forth. And the best way is to invite people for lunch and actually always begin by saying, listen, I don't want to bother you, but I have an issue and I really don't know how to resolve it. And I'm looking for your advice. That's all. It might be that when you meet with a person, you end up talking about 10 different things. But that's how you do it. Because when someone, I don't know how you feel, but if someone tries to sell you something, like, hey, I'm selling toilets and they're the best. How about if we have lunch and I put you up to speed?

22:38I'm like, I don't want to be sold that. Even though you're still selling. It's just a different way because you're selling yourself. as a curious person, someone that's vulnerable and willing to ask and see more important, someone that has potential upside. And one day the banker, maybe you'll become their banker. One day you'll become a developer for them. So that's a kind of, that's what I did. And they gave me clarity. They gave me direction. And they basically were my mentors. And my best mentors in my whole professional career has been everyone but architects. Everyone. Again, I'm not saying that architects are not good mentors.

23:22I'm just saying that sometimes architects, younger architects, see you as a potential threat. And I don't, that doesn't make any sense. One of the greatest mentors actually are the older architects who are retired. They're great because they're not, they don't see you as a competition. And we can talk about that. They can be very transparent. Oh, they are absolutely transparent. And if they're humble enough, they're willing to be vulnerable. And that's when you're like, my God, at least I'm an idiot, but I'm less of an idiot because we're all idiots. So you feel that there's a community of idiots, right?

23:57So you feel at least that you can relate to some of the challenges. So with this development project, obviously it worked out. It did because of timing too. Right. Because it was 2006. If it would have been in 2008, chances are that I would have gone bankrupt. So timing matters. And the speed of things matter. We were able to do this project very quickly because we didn't ask for entitlement changes. We didn't ask for anything. We just said, okay, this is what we can do. No variations once it was in? None. We can do it. let's get it done and move quickly to try to, because it was for sale. It's a for sale project.

24:34Right. Okay. And so once the project was completed, no, you were selling the products before it was completed? Oh, no, no. We started that in 2002. Okay. It was finished in 2006. Okay. And it was fully sold that year. So fully sold before anywhere near completion. Oh, well, fully optioned. I think that the selling, I think people confuse that. And I think that's a good point you bring in because when realtors tell you, Oh, it's fully sold, but it hasn't been built. No, it has been optioned. I see. There's a big difference. So you're paying for the option to buy it. They're paying for an option to buy the property, but it's not sold till the day you basically close it.

25:14And we have to make sure we're not aspirational enough to claim that something has been sold is the asset has not been finished. So I was never relaxed until the day that we did the closing and then the money was actually in your bank. Actually in my bank. Yeah. So beforehand, when they're buying it, they're buying the option to buy it. They're buying the option to buy it. That money goes into an escrow account. You can't touch it. You can't touch it. Correct. So I'm very uptight about that because I love to call myself a realist. Sometimes my wife claims that I'm not a realist, that I'm a pessimist.

25:51But for me, it's a matter that I don't want to live through stories. I have to live through the reality. And the reality is when the money is deposited. I can't tell the bank, for example, I have$100 million in contracts if I don't have the order to proceed signed. Because, yeah, you can sign a contract. But how many projects fall into pieces before you even begin an order to proceed? So I like to use an expression that I've heard that I am a little bit of a paranoid person, but I don't let paranoia take over because that becomes fear. But I love having a degree of paranoia because it makes me be more focused and try to find all the things that may happen instead of think, oh, no, it's already set.

26:47It's done. No, no, it isn't. So that conscious paranoia, I kind of love it, to be honest. So once you kind of completed that project in 2006, obviously we had 2008, everything goes to kind of craziness, really bad news for developers. Yeah, everyone in the industry mostly. What did you do then to bridge that? Once you had the kind of taste for development, did you want to become a real estate developer? No, no, no. I actually, I've always wanted to be an architect And I think that development, what it gave me, it was the possibility of actually having a little bit of freedom for me to continue to design the projects.

27:25One. And secondly, I thought that development could be on a case by case thing. I wasn't thinking of having a development company at all. It was just like, oh, on a project by project basis, I may or may not partner with the developer and then do that. But I wasn't seeing myself as a leader of the development. It was just having a chance to tap into different opportunities to monetize our value. That was beyond only design. But 2008 hit us. And of course, that scared the living crap out of me. And it goes back to timing. I wasn't ready to take any risks of that level because I had one child born and I had a second coming.

28:09Now I have three. and then the mindset changed out of the blue. It just became fearful. And fear could freeze you of making some decisions. And I was very much afraid of getting into the real estate stuff because I realized that it was really outside your control. Even though I claimed that if you were a developer, you could have more control. No, because the world is a bigger world and anyone that maybe had everything aligned perfectly went to nothing because of things that were outside of their control. And I figured, what do I control? I control my services. I control my product. And if I could do servicing, I minimize risk because I don't have the liability of a developer or contractor or any of that.

28:56So for years, we just threw ourselves into just becoming the best architecture firm that it could be. And I always saw ourselves as potential partners, but not at all as developers. I think that's really great as well. The kind of actually, you're still an architect. And then you put a lot of energy into building out a great traditional architecture firm. Because we talk here on the podcast a lot about different new business models. But actually just doing the traditional architecture model really well. You will. You can be successful. You can be successful. You can be successful. And then you can use the profits from a well-run architecture firm into building out these different avenues and tentacles that the octopus in the firm.

29:41Yes. And again, it's interesting, like we were talking yesterday and you were saying that perhaps only 25 % of your design work is actually doing development or doing design for your own development. Correct. It depends on the year, but it could be 25 % of all the design work we do is for, quote unquote, for another company that we own, which is a development company. So we still have 75 % of everything we do is the traditional architecture and interior design firm that I guess we're familiar with. Yeah. And it was great. When we do these podcasts, I often ask people to fill out their numbers.

30:20Okay. And you were very generous in sharing some of your financial numbers. A lot of people don't. And I understand why they don't. Why? Well, I think because they're not that great. Okay. Well, exactly. So they're hiding something. Yeah, they're hiding something. And so... So it's a facade. Yes, it's a facade. Right. I argue that they're good at that. Yeah, and it's great. And you've got some fantastic numbers here. Like we have a number that we call net operating revenue by full-time equivalent employee. And we call it the 200 Club. So any company that's doing$200 ,000 per full-time equivalent employee.

30:56That's a really, be proud of that. That's a really good indicator. And yeah, you guys are up at 250, which is superb. Really, really superb. And for a company this size as well. Well, it's hard to get there. Yeah. It's not easy. And yes, right now we're there, but we can't stop. Yeah. Because this is the challenge with our profession. It's a never-ending roller coaster. So you can't feel confident and comfortable like, oh, we've made it. What do you mean? Yes. It's a little different when you do maybe a different type of industry in which you could take some earnings and then actually just live out of your interests, right?

31:41Yeah. So, yeah, we're very proud of that. But there have been ups and downs and ups and downs and ups and downs. How do you deal with them? That's where it gets. I think that's where the story really is. Instead of only the living happily ever after. I mean, I always find weird. I mean, I'm lucky because I've been married for 22 years. and I consider our marriage successful. But, you know, when kids read their stories, it's like, oh, and they got married at the end and then they live happily ever after. My life began really when I got married. So the happily ever after is the story. And it wasn't happily ever after.

32:26I mean, it was a bunch of stuff happening, right? And that is a story that people miss. And that is the story. And I think that when we talk about businesses in general, when you only focus on the happiness stuff and you don't really go deep in all the failures. Yes. People get the wrong impression of what it is to be successful. I see it with my daughters. I mean, because they are looking at social media. And then they only show the guy or the woman that's actually sitting on a private plane. And then just, oh, I'm an, what is it? An influencer. and I have my own plane. You know, let's talk about some numbers here.

33:05Okay, how many people could be in the 1 %? It's very limited. And now they're spewing this perception that if you do not reach that, you are not successful. Yeah. And I think that in a way, we as architects make the mistake of doing the same. And I'm going to tell you a story. Maybe 15 years ago, I was in Florida and I went to the AIA Florida, which I don't normally go to often. And I'll tell you why in a minute. And there was a presentation. There's three architects who were talking about their practice. And I'm like, awesome. I can see a young person that had a small practice, someone that had it for a longer time.

33:44So there were three levels, three types of practitioners. And then one of the questions was like, how do you get clients? Because I think that's something that people don't talk about, you know. How do you get clients? Do they show up in the door because you're so amazing? No. I mean, at least not us. I mean, and then all three of them basically said, oh, I never had a problem. I mean, my design work is so well respected that, you know, I don't know. It's like, I don't know what you're talking about. We're amazing. It's like, what? Dude, come on. Okay. That's nonsense. And by the way, I'm not going to respect them less for being vulnerable and saying that you guys have no idea.

34:30That's a story I want to hear. As a matter of fact, I lost respect by them trying to basically sell to architects. Do that with a client then, but don't do that with me. Okay. Don't tell me, I know marriage. I mean, I've been in it. Let's talk about marriage. Let's talk about friendships. Let's talk about challenges. That's where growth begins. And I struggle with that. I struggle. My wife is awesome because she's transparent and she's vulnerable. And I came from a generation that my father was the provider. And you provide and that makes you a good father. So I thought that that's what I had to do.

35:09I had to create the great opportunity for the team members. And I wasn't going to include them in the challenges because. It becomes very lonely like that. Right. It's very tough. It becomes lonely. But at the same time, you create your own fantasy and you start spewing nonsense. So my wife would tell me all the time, stop selling. I mean, they should like you and they should love this because of who we really are, not who you aspire to be. And even that, because aspiration is good, too. Do you really want to be that? What is it? So years ago, and this is awesome, we were chosen. I don't think you know this, but we were very proud.

35:54I am proud of the fact that we were chosen by the London Business School as a case study. We are actually a case study in the London Business School. We're the only architecture firm in the world as a case study in London Business School as of today. And it's awesome because they go deep. And they go deeper and deeper. And they look at your numbers and they're like, what? What are you talking about? So you can't hide the truth if you really want to be a case study, which they came to us. And that process was amazing because it gave you clarity of all the things that you first, on the things that you've done right.

36:33Yeah. Because sometimes you're like even afraid that, oh, maybe I haven't done great stuff. And it gives you validation. But the second thing is that it gave you a clarity on all the things that you're not doing right. and that you have to be vulnerable if you really want to fix those things or improve on them or maybe change your business method. And that was an incredible aha moment. And that's when I felt honestly for the first time that I had a responsibility to actually be transparent in order for the next generation or whoever of professionals could say, oh, they did it, we can do it, and this is how.

37:21But really, really seeing the actual numbers. That's why I felt so comfortable showing them to you because there's some things I'm sure you could see that we can do better. Sure. But if not, this is who we are. Yeah, and I love that. And this is a big thing I like to advocate for all architects is to become transparent with your numbers. Right. Because then you can start, and you can start talking about them. Yeah. You know, in our kind of smart practice groups from the guys you met yesterday. Everyone's very transparent with their numbers. I have to say, I hate to interrupt you, but that was awesome.

37:52I mean, what you guys are doing, the way you're doing it, not only looking into management, but really looking at the full and holistic view of the business of architecture. Not only your podcast, which, you know, I followed for years, but also spending the energy with people one-on-one, looking at their companies, seeing what they can do better, learning from them. Absolutely. And having people sit with each other, peers, different companies, being able to be vulnerable with each other and telling each one of them their challenges. It's an excellent business method, but it's very human. Yes. And I thought it was awesome.

38:37I mean, listen, you guys are doing a really good job there. I appreciate that. Thank you. I wish I knew years ago. I wish you would have existed 15 years ago or 20 years ago so I didn't have to hit my head so many freaking times. Yes, yeah. Well, it's exactly that. It's like the human side of business is so important because it's very easy to put on a mask and then pretend everything is working. The majority of the architecture profession, we all act like we've got stuff together. Right. And the stories of success are messy. They are messy. They're messy and like you say, They're up and down and there's something wonderful in just knowing the up and down story of it.

39:19And it's not, I haven't seen any firm that is just, they do amazing design work and there it happens. When I go into firms, you know, great designers, I can see that they've got, you know, you've got a team there of business developers who are going out. I can see the tragedies that have happened. There are sometimes firms kind of go for this process where they have to let go of half the team. And we've been through that. Yeah. not half but we've been through that uh and it's horrifying and i can tell you it is a very very difficult process to go through but to your point i think that um a looking at the real story allows all of us to grow yes uh not only the people you're telling the story too but yourself because you have to analyze you know or you have to be reminded maybe of what you what you went through And I think that the biggest sort of quote-unquote failures are often the catalyst for something wonderful to happen.

40:15Every single failure or whatever you want to call it that we've had can be seen as failure because it was an opportunity for growth. And I've absolutely learned more from our failures than our successes. As a matter of fact, one of the challenges I have as a human being is that I never focus on my successes. I focus on what's next. What's next? That's what's nice. I mean, we're talking about before. If I have coffee or if I have, you know, tea, I just can't have caffeine. So maybe your viewers can see it. We don't need it. No, no. It's actually I'll use the word again. It's horrifying. But anyway, what I'm saying is that I don't I'm not sure what the successes are.

40:59I need other people to sometimes remind me to give me some perspective. I'm just focused always on what's next. And that is also somewhat problematic. Now that I'm getting older, I'm trying to be more intentional about reminding myself some of those things or reminding myself what success really means to me instead of what it means to you. Because the truth is that if you think I'm successful, but inside I'm rotten and I don't love myself, I'm missing something. So all those challenges have made us grow a lot more and find solutions to problems that we didn't know existed. And or and find problems that we didn't even know knew were a problem before, was a problem before.

41:43How do you communicate the realities of business with the team? Well, now we do. Now we do. We have a leadership, but we used to not do it. It was the same mentality of my dad. Don't worry. I'm making money. You guys be kids. No, we're very, I would, I am proud to say that we are very transparent with a team on, well, I hope maybe you can ask them and maybe they'll say I'm full of crap. But I'm telling you that we are, I don't remember ever working on a company that is as transparent as we are. with the good and the bad. We actually, because of the B Corp, in a way you have to be transparent too.

42:26And we have, if you go to our website, you can download last year's, you know, it's called Impact Report. Right. And it tells you where we've done good, some of the areas that we see that we space opportunities for growth. And it's there. And we're not a public company. But B Corp forces you to think from a public mentality standpoint and understanding that you have a responsibility. That's why it hasn't been that difficult for us to achieve that. Because as I've gotten less young or older, I see my position as a leader in the industry is that I have to become a mentor. And it's less about us.

43:12It's more about the next generation looking at us and saying, I don't want to do it that way. That was a mistake. But they need to know what mistakes we made in order for them to hopefully grow from that. Yes. Yeah. And exactly that being transparent and creating a business culture. Do you guys talk about money a lot in the business? No, we do. The profit managers, the profit project managers, they're aware of fees. They're aware of profit. No, no, no. They're 100 % aware. But this is not the case. what I mean is that beyond them the people in the administration the people who are in business development social media, they know this because we tell them and also we've done something that might be hopefully will be interesting to you is that as you know I'm teaching mysteriously I don't teach I used to teach architecture but I'm not teaching architecture anymore I teach at the business school now in North End University of Notre Dame.

44:10And what I teach is real estate development. I teach placemaking for real estate developers. I teach affordable housing. Why do I bring it up? Because the same courses that I'm teaching at a university level, I am actually bringing it to the office and I'm presenting those courses in real estate to architects here. So at least they know the lingo. They understand what are the risks that their clients are taking when it comes to development and know what an NOI is and know what a return on investment is and IRR. So those things, we are also open about educating them about real estate development.

44:51And I'm not surprised. Some of them one day might say either A, I want to be your partner in the real estate development company or B, I want to be a real estate developer. And this is perfectly fine. That's it. No issue. Yeah. I love that. Tell me a little bit about selling. and your approach to selling and the way that you win work? Well, there are a couple of things that we have mysteriously developed, but again, it wasn't intentional. Right. Okay. Well, early on, we realized that many times when we talked to either government or a private sector or anyone, they came to us late, late all the time.

45:33Like, oh, listen, we're going to do an RFP or we're looking for an architect. This is the program. This is the square feet. This is the location. And I want you to do a proposal for that. And then when we looked at their numbers, we would be like, well, who came up with the program? Who came up with the square footage? Oh, we hired XYZ to do it. Well, who did the entitlements and the zoning? Oh, we hired a lawyer for that. So we realized early on that we were not included in the conversation at all, at all. I know I'm saying this. Architects think that they're the center of the universe. You're not if you're not invited at the table before pre-development even begins.

46:22So we asked them, how come you didn't include? Well, I mean, this is a vertical design, so whatever. So we started being curious and actually openly saying, why don't you next time include us? We're not going to charge you. We just want to be able to be part of it. Because what we realized is that in the middle of design, we encounter that the program doesn't work. That the entitlement you think you can do does not work. And now you have to pay twice because we have to redesign a lot of things just because we were not included from the beginning. So we were very vocal to everyone that we were hired.

47:03And of course, when you tell people, I'm not going to charge you, they're like, oh, sure. Next time we'll bring you in. And that's how they started calling. Like, hey, Ricardo, we're looking to do this, but we're looking at three or four pieces of land. If you want to come in, we can just tell you what we're thinking and then you can tell us what you think. And we're doing that for free. And by the way, a lot of architects do that. They work for free because they want to get the vertical. But there's a whole value that is not being monetized. That architects not only can, should be leading. Why is a lawyer leading entitlements?

47:41I'm not sure about that. You can hire them to do the closing, but do you need them to come up with the best solution for a project? I don't think so. It's those decisions as well. They're so fundamental to the project. They are the most important decisions you can make on a project. And they're so valuable. And the fact that we're architects are not inviting themselves or finding ways to be involved in that value add. That means that when the client comes to you, they've defined their little box. Correct. Architect fees get squeezed into it. Architecture profession complains. No, that understands me as well.

48:20Right. And I'll say this, but it's an easy sell for developers. And I'm going to tell you why. Because developers are all about risk management. So if you tell them, I'm going to minimize your risk, but be included in a process that allows you to basically minimize it, why not include us? So that's how we started to do what I called the backdoor architecture. You enter from the back, but you actually leave through the front. Did becoming a developer help you get better at doing this front-end type of work? The opposite. Doing that front-end type of work allowed me to become a better developer.

49:01Interesting. Yeah. Interesting. Because there's no way I would have been a better developer if I didn't understand all the issues you have to deal with in redevelopment, which are a lot. Yeah. Has being a developer made it easier for you to win projects with developers or do they see you as a threat or like as competition? That was my biggest mistake. And I think I was wrong about that. I assume that if my competition knew, I mean, not my competition, my clients knew that I could potentially be a competition, that they wouldn't hire me. And two things happened. Number one, the people that see you as a competition, honestly, they're not aligned with your values.

49:43Yeah. Because that's a problem. Because they see you as a hired gun. And they don't see you as a true partner. And one day, they're going to hire someone else anyway. So, I wasn't worried about those. Of course, there's worry in the sense that you're going to get less work and you have to learn how to say no. But besides that, one thing I misjudged is that if I would become a developer, they would see me as a threat. What I've learned is that the people who are the mid-time developers, not the big developers, they value that a lot because they don't know as much as a big developer. And they need that architect to actually be able to minimize their risks by actually having a conversation early on about some of the challenges that they will have.

50:29Yes. And that created partnerships. So if we came in as an architect and then, oh, no, you need more than that. Actually, and that has happened a lot. They hire us as architects. And in the process, they're like, oh, no, we need you as a partner in the development. And because we have separate companies, the development consultant fees are separate than the architecture work. Love it. Love it. It's fantastic. And to wrap up on, what's been the most important lesson that you've learned from some of the challenges or failures of entrepreneurship? If we can call them failures. Well, I think that speed.

51:16I think people assume that you will become an entrepreneur and then you will be successful. It's not like that. It takes time. And actually, the most successful people are the people who have patience. I can tell you some of the development projects that we're working on, we started eight, nine years ago. And now it's when we're actually doing the closing. So patient money means a lot. And being patient in understanding and trusting yourself, you know, that you will get there. It's one of the things that I've learned. When I was younger, I didn't have that level of patience. I'm not saying I have it today, but I have it a lot more than before because I still am a kind of person that wants to get things done.

52:01But I would say that the thing that I've learned the most is understanding that this process takes time, that I can continue to be a successful architect and only charge for fees. and that's fine, but that's not necessarily going to create a long-term business model that's going to not only provide for my family, but also give my team members an opportunity of wealth and continuation. So I think that being able to be patient has helped me a lot in my career. But I mean, I know this sounds very particular, but also choosing who your partners are. The most important decision you can make in your life is who you choose to either partner in life or marry.

52:54The same thing happens with your business. If you're going to be partners with someone in your business, you have to have the same level of aligned values that you were actually looking for when you're looking for a life partner. So why is it different? Oh, a life partner is fine, but one for business, it could be anything. No, because if your values are not aligned, you're going to have more chances of being unsuccessful. So choosing your partners and you have a choice, you can choose them. They don't have to choose you. That's something that I think it has to be reminded. In my case, I was lucky enough to be chosen and I chose a life partner, my wife, that has made me a better human being every single day.

53:41So every time I feel alone and fearful or impatient, she is an absolute beacon of clarity. And I was lucky enough to marry my wife. But that doesn't mean that you can't find partners in your businesses that can't be the same. I have a partner. We have a partner in the business. His name is Antonio Garate, someone that I've known for my whole life who I trust completely. And he chose me, I chose him. And we're so lucky that we found each other. So I know that when things go badly, he's going to be there. But things are great, he's going to benefit from it. But if, so that's important. I would say that that's also very, very key in my personal success.

54:35Amazing. Perfect place for us to conclude the conversation there. Thank you so much. Absolutely amazing. Thank you so much for being so transparent and actually up here in the studio and the conversations we've had over the last few days. It's been really, really inspiring. Well, again, I want to thank you for what you're doing. I think that you have the platform for it. And I keep forcing all of us to choose failure as a way to showcase growth is awesome. So thank you. before every breakthrough is a breakdown. I love that. I might steal that. Thank you. Is your firm bleeding money? After working with hundreds of architecture firm owners, we've seen that Scope Creep doesn't just drain your team and turn you into a bottleneck.

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57:39Built for firms who bill by project, not by the hour. Right now, Business of Architecture listeners can access a special Xero offer. Get 90 % off for six months through the link in our show notes. Terms and conditions apply. today's episode of the business of architecture show is sponsored by smart practice tm the world's leading step-by-step solution for architectural practice owners that want to structure their existing practice so the complexity of business doesn't get in the way of the architecture because you see if free advice was enough everyone would already be crushing it the truth free advice can only take you so far the breakthroughs come when the advice is designed around you so if you're ready to quit being a glorified administrator and get back to architecture again go to smartpracticemethod.com to discover the proven simple and easy to implement smart practice method that is revolutionizing firm management for owners and teams hey ryan willard here and i want to thank you for joining us today and remind you that the views expressed on this show by our guest do not represent those of the host and we make no representation promise guarantee pledge warranty contract bond or commitment except to help you do your best work and be handsomely paid for it carpe diem