Wouldn’t some facts be helpful first? - Posted by John Behle
Posted by John Behle on April 03, 2003 at 24:32:32:
I’ve watched as you and/or others just copy John Reed’s material and paste it every time Allen’s name comes up.
Much of it is in-accurate. Do you care to know or just to satisfy your agenda?
Allen made money in real estate, made money with his books and made money on seminars. His seminar company was mostly run by other people when the troubles began. His focus was on his book and semi-retirement.
Most of the tax problems were from the “Allen Group” company. Since he was an officer or on bank accounts, tax liens and penalties were put against him. That is a little different than being some tax criminal as Reed makes him out to be.
There is an error in growing too fast, or continuing on a path of high overhead when market conditions change. The factors affecting the company were somewhat unique. I was at Mark Haroldsen’s Christmas party in 1983 when he shared how Al Lowry had declared war on himself and Robert Allen. Lowry thought he was and should continue to be the king of the seminar business. All three businesses were hurt. Al Lowry went down first, then Allen. Haroldsen wisely cut back the company and overhead and survived. Lowry would find out where the Allen Group was holding a seminar and immediately schedule one in the same cities (usually three per weekend). He would throw tens of thousands of dollars into advertising just to purposely hurt Allen by drawing sales and customers away. It affected profits for both of them. Lowry paid the worst and first price. He had also invested in a health spa business that failed.
At the same time, as the seminar industry was glutted by these three groups and others, some really bad press started. Sixty Minutes started following one public speaker named Joe Land around and did a piece on him. That and newspaper articles hurt the entire industry. I’ve watched three of those expand and collapse cycles in the seminar business in the last 30 years.
It can be an error to keep plowing money into a business when sales are down. It’s a tough call to know if the downturn is temporary or permanent or whether someone can ride out the cycle. Haroldsen did, Allen and Lowry did not. If some of the tragedies hadn’t happened, Allen might have been able to.
It’s a challenge to know when and how to scale back a business. To let people go, sell office buildings, discontinue projects and find ways to cut expenses. It’s a challenge for an experienced manager, but many of the people in Allen’s company calling the shots were not highly trained and skilled managers, but people who rose up through the ranks - never seeing a downturn.
I know Bob was not heavily involved in the day to day operations because I did some consulting and writing for the group. I was in the process of helping design what was basically the most complete real estate course ever put together right when some of their problems began happening. I had meetings with Bob and his brother related to the course and had also had discussions of Bob co-authoring my “Paper Game” book and helping in the promotion. Bob was too busy to spend any time on it or give some kind of personal touch to it where he might feel comfortable adding his name to it.
Bob’s exact role in the day to day operations of the company I believe were limited. He was finishing one book, doing a book tour for Simon and Schuster and building his dream home. That doesn’t relieve him from liability of troubles the company ran into, but it shouldn’t invalidate him as an individual, teacher or experienced professional. Granted, with his name on the line and potential liabilites he should have taken control of the company and cut back, but like I said, that would be a hard decision for even an experienced manager involved in the daily activities.
Bob was stung by the failure of that company. Payroll tax liens were a problem. The speaker fees mentioned related to fees owed to some speakers when the company shut down. It’s not like Bob took these people, defrauded or mislead them. I’m not positive that the suit referred to was even against Bob. I know his brother Richard was sued and worked hard to pay it back. I’m not sure Bob was, but if he was an officer in the company, he might have been. Reed mentions the suit, but not the payback. I haven?t read where Reed paid back the banks or others that lost money on his Texas failures.
I was owed money by the Allen Group also, but didn’t sue anybody. I settled for the rights to their mailing list and made a great deal more money on that than what I was owed.
I was in the Allen Group offices a few days before and the day after the avalanche destroyed his home. I was good friends with one of his financial managers and he told me that the insurance had expired a few days before the avalanche and they would not renew for some reason. I’ve been to the site and it appears someone made a huge error ever approving a building permit, but it was not that steep a slope or a known avalanche area. Just a little bit of a freak winter. There aren’t a lot of sites available in the Sundance area, so his options were probably limited, but it was a beautiful site. Visually, you would not immediately think ?Avalanche risk?, but whoever gave out the building permit should have known if it was a risk. I?m not sure how all that works in the Sundance area. Robert Redford owns most of the property and there may not be as formal a procedure for building permits as you would have in a non-recreational area.
They had just finished it, had something like a million dollars of furnishings and personal items and were a few minutes away from having a large house warming party. If someone had not been stuck in the road and delayed his wife by about twenty minutes, she would have been preparing for the party right in the living room that the avalanche went through. The avalanche cost him a great deal and it wasn’t because he was an idiot or irresponsible.
Bob also lost money in a restaurant chain he had invested in. I guess an MBA and a best selling book can make someone feel like they can succeed in any business, but he had no business in the restaurant industry. The partner he trusted took him to the cleaners. He also invested in one or more films where I believe he lost money.
Allen is a creative salesman, speaker, motivator and idea man, but possibly not the best manager. It’s common for the visionary idea man that begins a business to not have the skills, personality or inclination to successfully follow it’s growth and market downturns. I wouldn’t fault Apple Computers because of the limitations of Steve Jobs who founded and then nearly destroyed the company. To totally invalidate Allen or another because they have made errors is stupid. Losing your shirt in a declining real estate market like Texas is not more honorable than losing your shirt in the seminar business. You could argue that Reed personally made the mistakes that lost his buildings in Texas while Allen primarily made the mistake of trusting and delegating to other people. There is an extreme double standard at play there. I and others knew the times to be in and out of the Texas market.
Allen made mistakes. Almost anyone has - unless they just hide out on the sidelines. Allen moved to California around 1987. What other factors led to the bankruptcy I don’t know. This BS of slamming him because of them is ignorant.
I remember watching a special on Donald Trump’s problems. He violated many principles in his book, was affected by the loss of his top managers in a helicopter crash and entered into the casino business when his expertise was primarily in real estate.
The ONLY way he avoided bankruptcy is because he owed so much to several banks that his collapse would be theirs too. They were effectively forced to do all they could to keep him afloat and build him back up. So, he goes from to Billionaire to hundreds of millions in debt, back to Billionaire.
I haven’t burned Trump’s books because he made mistakes.
Many years ago, there was a Cholera epidemic. Tens of thousands were dying and it threatened the whole world population. A scientist discovered it was in the water supply and that if people boiled their water, they would be ok. They did and they were. The scientist later drank a glass of unboiled water and died.
Should people have stopped boiling water because he made a mistake or didn’t follow his own advice?
I can’t speak to Allen’s current products or services. Sounds like they carry a high price, but I can’t judge. You should judge it by current feedback and investigation of the product or service itself, not dismiss it because Allen both made mistakes and was hurt by the mistakes of others.