#367 Inside the Contrarian Mind of Sam Zell

What I learned from reading Money Talks, Bullsh*t Walks: Inside the Contrarian Mind of Billionaire Mogul Sam Zell by Ben Johnson. ---- Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more. ---- Founders Notes gives you the superpower to learn from history's greatest entrepreneurs on demand. You can search all my notes and highlights from every book I've ever read for the podcast. Get access to Founders Notes here. ---- Join my free email newsletter to get my top 10 highlights from every book ---- Follow Founders Podcast on YouTube (Video coming soon!) ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Senra?

  One of the craziest things that has happened as a result of the podcast is a few years ago, I read Sam Zell's autobiography, and then I made an episode on what I learned from reading Sam Zell's autobiography, and Sam Zell listened to the episode that is about his autobiography and asked to meet me as a result. And in that autobiography, he talks about the impact that his partner Bob had on him. And here's one of the stories from his autobiography. He says, "Bob was extremely frugal and watched every single nickel in our business. Bob was constantly on the lookout for anything that could be reused. He used to walk into somebody's office and while talking, would casually rummage through the person's trash can. He would take out stacks of papers that still had paperclips on them, all while continuing his conversation as though nothing out of

• 0:44David Senra?

  the ordinary was occurring. Bob would then just pull those paperclips off, hand them back to the employee, conclude the conversation, and walk out." This is a trait that Bob and Sam shared. In this book, there's a quote that says, "In a trademark Zell move, he focused on aggressive internal cost controls." I spend a ton of time reviewing all the lessons that you and I are learning from this podcast, so I reread old highlights, notes, I search through transcripts. I even built an AI assistant called Sage that helps me do this. And so this week, I was asking Sage, "Why do you think history's greatest entrepreneurs are obsessed with this? Why are they all obsessed with controlling their costs with watching their expenses?" I mean, look at this. Look at the story that Sam just told us. His partner is walking in and

• 1:26David Senra?

  rummaging through the trash can. He is not the only one that is reusing paperclips. That story has been told in another book called The Invisible Billionaire, which is about this guy named Daniel Ludwig, who at one point was the richest man in the world. And there's a story in that biography where Daniel is chastising his employees for wasting money by sending paperclips through the mail. And so I think this concise summary that was made by my AI assistant is a really good explanation of why this theme reoccurs throughout the history of entrepreneurs. And it says, "Diligent cost management is not just a tactical choice, but a strategic imperative that underpins sustainable growth, competitive pricing, and long-term resilience, whether the focus is on frugality, waste prevention, or..."

• 2:10David Senra?

  Are the avoidance of unnecessary expenses. The outcome is the same. Enhancing value for customers and stakeholders alike. I thought that summary was so good. I just texted it to my friend Eric. Eric is the co-founder and CEO of Ramp and Ramp is now a partner of this podcast. I've gotten to know all the co-founders of Ramp and I've spent a ton of time with them over the last year or two. In fact, I was in their office last week in New York. They all listened to the podcast and they've picked up the fact that the main theme from the podcast is on the importance of watching your costs and controlling your spend. And how doing so gives you a massive competitive advantage. And that is why Ramp is a perfect partner for the podcast because that is a main theme for Ramp.

• 2:51David Senra?

  The reason Ramp exists is to give you everything you need to control your spend. Ramp gives you everything you need to control your costs. If you're listening to this podcast to learn from history's greatest entrepreneurs so you can become more like them, then you have to be obsessed with cost control. There is a line in Andrew Carnegie's biography that says, "Cost control became nearly an obsession." I read this great description of Ramp from one of their customers. It says Ramp is like having a teammate who you never need to check in on because they have it handled. Ramp's website is incredible. Make history's greatest entrepreneurs proud by going to ramp.com to learn how they can help your business control costs. That is ramp.com.

• 3:30David Senra?

  A question for Sam Zell. A number of people at the company have been deeply offended by some of the statements that you've said. I wondered if you would address that here because some people have felt personally disrespected by some of your comments. This is Zell's response. First of all, I would not take back anything that I've said. Turn this around and put yourself in my position. You look at a company that requires 14 signatures for somebody to go to the bathroom. You look at a company that requires 10 signatures for somebody in York, Pennsylvania to buy a $10,000 Jeep. You listen to people in the newsroom literally talk about their total disregard for the company. That it's all about, "How do I win a Pulitzer Prize?" And I don't really give a shit about anything else. You hear attitudes that "We don't do it this way."

• 4:13David Senra?

  "No, we can't do that," over and over and over again. I've got 19,000 people out there. The challenge for me is how do I get your attention? Call me a schmuck and that's fine. Call me disrespectful of somebody, then you need to prove it. I don't think anything I've said anywhere was directed at anything more than this company lives without the 11th commandment. And god damn it all, we better get that 11th commandment back on the front page here. The 11th commandment is thou shall not take oneself seriously. Nobody is more self-deprecating than I am. If I can get everybody in this room to be self-deprecating, instead of worrying about what's politically correct or what's not, instead worry about how do we win? How do we succeed?

• 4:58David Senra?

  How do we put out a better product? How do we make more revenue? How do we make a profit? How do we provide for our retirement? Those are the challenges. The real question for me is how do I get your attention? How do I get you to have a sense of urgency? How do I get you to understand that the future of this company is currently right out there in front of us? And if we keep operating the way we've been operating in the past, there is no future. Plain and simple. So you tell me, how do I get everyone's attention? Do I just say, please, hi, I'm here, and I'm here to make all nice to you? We're not going to reduce any employment. We're just going to keep going on losing money. And then one day, it's all going to be over. So how am I supposed to get your attention?

• 5:40David Senra?

  I went over the line on purpose, not accidentally. I went over the line on purpose to see if I could bring you to the edge. That's what we've got to do. I've got to get you to the edge. I've got to get you more worried about our revenue than anything else, because that is our survival. How soon is this organization and the company going to wake up to fact that we're on the edge? And we're either going to win or lose, and we better goddamn focus our efforts on how we get better, not on who's insulted. Nobody is trying to insult you. I want to win, and what I'm looking for are the people in this company who are prepared to step up and not worry about this fucking thing or that fucking thing, but to worry

• 6:24David Senra?

  about one thing. How the fuck do we win? How do we generate more revenue? How do we make a difference? Those are the challenges. How do we create an enormously successful corporation that provides both opportunity and sustenance for employees today and a future for them tomorrow? That is the challenge. That's what everybody should be talking about, not my fucking language, because that doesn't matter. And if it does matter to you, you're in the wrong place. And I'm not trying to insult anybody. I'm trying to get your attention. I'm trying to get you to understand that this is the game, and we're either going to win it, or we're going to lose. If we spend an awful lot of time writing and pontificating about Sam's language, we're gonna lose.

• 7:07David Senra?

  If we spend a lot of time trying to figure out how we're gonna generate more revenue, then we're gonna win. So that's my priority. And if that's not an apology, too fucking bad. I'm telling it to you straight. I'm not disrespecting anybody. I'm trying to make everybody uncomfortable. I'm trying to put you in a position where it ain't so easy like it was before, because that's the only way we've got a chance. This company lost $50 million of cash flow last year, and you never would have known if you talked to anyone around here. Nobody knew it, nobody cared. This business has been eroding before your eyes, and you're worried about my language. Why aren't you worried about your customers? My language ain't gonna make any difference.

• 7:49David Senra?

  Everything I've said was with an intent to get everybody off their asses and understand this is a crisis. We've got to save this business. We've got to make it work. We've got to prioritize. The history of this company is to divert from reality. The reality is, revenue is going down like this. So let's focus on Sam's language, not on the fact that we're going right down the elevator shaft. Now, how many articles did you read last week about my language? And how many did you read about the reduction in revenue in the newspaper business? I rest my case. Anyone else have any easy questions? That was an excerpt from the book that I'm gonna talk to you about today, which is Money Talks: Bullshit Walks: Inside the Contrarian Mind

• 8:32David Senra?

  of Billionaire Mogul Sam Zell, and is written by Ben Johnson. This book was published in 2009, right after Sam Zell suffered his greatest failure in his career, which was the bankruptcy of Tribune Media, a little less than a year after he had purchased it. There's a lot I admire about Sam Zell. That two-hour lunch I had with him will have a lasting impact on me, I think, for the rest of my life. But one of the things I most admire about him is his mindset and his perspective on failure. And I want to read this because he talks about failure or the reaction to failure in what I consider the perfect way. So it says, "Asked if he regretted making the Tribune deal, Zell noted, 'You know, my head only functions looking forward.

• 9:15David Senra?

  I'm not really very good at looking behind, so consequently, I don't tend to reminisce or mutilate myself as a result of past decisions. I think I made the right decision when I made it. I thought it was an appropriate investment at the time. Obviously, circumstances have proven the opposite, but this too shall pass.'" I'm a big MMA fan. I watch a lot of UFC. And there's this picture and quote that I have saved on my phone from this fighter named Dominique Cruz. And many years ago, after a fight, he winds up losing the fight. He's at the after-fight press conference, and you know, his face is all messed up. It's scratched up. He's got cuts and bruises everywhere. And he's asked by a reporter, like, you know, "How are you feeling? This has to be tough."

• 9:59David Senra?

  And I think his perspective on loss, on failure, is perfect, and it sounds a lot like Zell. And this is what Dominique Cruz said, "Loss is a part of life. If you don't have loss, you don't grow. This isn't tough. This is light." And I think when you study people that get to the top of their profession, they understand that, you know, obviously, some losses, some failure is inevitable. There's not a single person that ever did anything great that never experienced that. In fact, and it's very common on how they look at it, like, it's an opportunity to learn and then to move on. In fact, I was watching, Steph Curry was interviewing Michael Jordan, and Michael Jordan said something that was fascinating, and he's talking about hating losing, but the fact that losing is very, very valuable. He says, "I hate losing, but I have to respect losing because losing is a part of winning.

• 10:44David Senra?

  You never just win. You have to lose to win. Losing has to hurt to the point where you start looking like, how can I do things different? How can I change? How can I make this team better?" And so I wanted to start there because I sent that excerpt to a few friends of mine this week, and they all responded in very similar ways, that they need to remind themselves of that, that we all share that same trait, that we tend to mutilate ourselves as a result of some past decisions. And I think Zell just has the better mindset, that some failure is inevitable, learn from it, don't beat yourself up about it, and stop looking back, just keep moving forward. So then I spent the last two days after I finished reading, I finished reading this book, taking all the notes and highlights over two days ago. So the last two days, thinking about like what I wanted to talk to you about.

• 11:26David Senra?

  And what I decided I wanted to focus on is that subtitle of the book where it says, "Inside the Contrarian Mind of Sam Zell." I think I've read a bunch of about Sam Zell. I think if you want to learn his life story, it's hard to beat his incredible autobiography, which I covered all the way back on episode 269. I think his autobiography tells his life story in a far superior way than this book does. So what I've done over the last two days is organize all my notes and highlights with the goal of trying to explain how Sam Zell thought, how Sam Zell approached his life, how Sam Zell approached his work. And so in the prologue, they contrast one of his biggest successes with one of his largest failures. And so it says, "In February 2007, he sold his Equity Office Properties Trust,

• 12:09David Senra?

  the largest owner of office buildings in the world, for a hefty $39 billion to Blackstone." That was the largest leveraged buyout in corporate history at the time. And so a few weeks ago, I got an email from a listener named Tom Rester, and he sent me an excerpt from the founder of Blackstone, Steve Schwarzman's memoir. That book is called What It Takes: Lessons in the Pursuit of Excellence. And in his memoir, Steve tells a story about his initial meeting with Sam Zell two decades before Blackstone winds up buying Zell's company. It is too great for me not to read this entire excerpt to you. So it says, he's talking about the founding of, the very beginning of Blackstone. He says, "To get our business rolling,

• 12:51David Senra?

  we wrote to everyone we knew more than 400 cheerful letters introducing our new firm. We wrote about our track record and reminisced about the business we had done together. We laid out our plans and asked for work. Then we sat back and waited. I was expecting the phone to ring nonstop, but on the few occasions it did ring, it was only to congratulate us and wish us luck. How about some business, I would ask? Not right now, but we'll think about you in the future. The day after our advertisement appeared in the New York Times, I heard a knock at the door. I opened it to find a guy in leather pants and a black motorcycle jacket. We were waiting to hear from our familiar M&A clients, but we got the gang leader from The Wild Ones. Is there a Steve Schwarzman here, he said?" What are you delivering? I'm not delivering anything.

• 13:36David Senra?

  My name is Sam Zell. Leah told me that I should meet you. In 1979, we had hired Leah Zell at Lehman. She had been an English major at Harvard and had just gotten a PhD. After talking with her for a few minutes, it was obvious that she had an exceptional mind. Though she knew nothing about finance, I had decided to give her a chance. She had proved to be a terrific analyst. This biker was her brother. "What's with the outfit?" I said. "I left my motorcycle downstairs." "Where downstairs?" "I cha-- (laugh) sorry." "I chained it up on Park Avenue to a fire hydrant." Our first day, "This is some future," I thought.

• 14:16David Senra?

  He must have thought the same thing, looking at me sitting there in my suit in our bare office, the phones silent. "Look, I'm sorry, we just moved in today. We've hardly got any furniture yet." "That's okay," said Sam. He sat on the floor, leaned against the wall, and began to talk. He owned some real estate and wanted to buy some companies, but he didn't know much about finance. "Why don't you teach me?" he said. I later found out that I shouldn't have been misled by the outfit. Sam's version of owning some real estate meant he was building one of the largest portfolios of real estate in the country. All he told me that day was he bought bankrupt properties and wanted to build an empire. We spent two and a half hours sitting on the floor talking.

• 15:01David Senra?

  In the years to come, we would do a lot of business together. This one unexpected visitor turned out to be worth more to Blackstone than all the clients we expected in those early days who never came.

• 15:14David Senra?

  And so that brings me to the second thing that I absolutely love about Sam Zell. It's this relentless, intense curiosity, this desire, this continuous desire to learn. So I guess I should back up. You might not already know this, in case you haven't listened to every single episode I've ever done, but I had the opportunity, the crazy opportunity, to have a two-hour lunch with Sam Zell. And that came about because my friend Rick, who I didn't know at the time, was best friends and mentored by Sam Zell for like two decades. And so even when he was in his 70s and-- 80s, Zell was relentlessly curious about the world around him. So he would see Rick with headphones on all day. And he wanted to know what Rick was listening to. And Rick said podcasts. And so then Zell was like, OK, teach me about podcasts. So Rick sends him like 10 episodes.

• 15:58David Senra?

  I think seven out of the 10 were episodes of Founders. One out of the seven was the episode 269, which I did on Sam Zell's autobiography. So in the past few days, I was telling Rick that I'm making another episode on Sam Zell. He's like, oh, I got a bunch of Sam Zell stories for you. And a lot of the stories center on this insatiable curiosity, this love of learning new things. He wanted to learn about new places, new people, even as he got older. And so Rick introduced Sam to Robert Friedland. Friedland is this billionaire miner. I actually did an episode on him a long time ago. It's episode 131, which is based on this book called The Big Score. Friedland also appears in a bunch of the episodes I've done on Steve Jobs because Steve lived on Friedland's commune when they were like much younger. They were like 19 or 20.

• 16:43David Senra?

  But Rick told me the story about the meeting that he facilitated between Zell and Friedland as this illustration of this relentless, insatiable curiosity that had no end. So he was saying, hey, Robert has this project in Mongolia, developing one of the world's largest mines. I think it was a copper mine. And this is many, many years ago. And at the time, the country had very little business activity. It's kind of like an insular country. And even though it was not common at the time to go to Mongolia for business or even tourism, when Rick told Sam about Robert and what he was doing, Sam immediately said, let's go. And so they go to Mongolia. They went up staying at the Genghis Khan Hotel. Turns out, almost everything in Mongolia is named after Genghis Khan. And really, Sam just wanted to go. He wasn't thinking, oh, this is going to turn into a deal. He wanted to go to learn.

• 17:27David Senra?

  And while he was there, he was obsessed with asking questions. He wanted to know about the culture, the people, the government, the market, how the economy worked. And even though Sam, at this time, already had a massive amount of wealth and fame, he was fine having a beginner's mindset. He was not an expert in mining. He was not an expert in Mongolia, but he was fueled by this just intense curiosity. To him, it was all about learning. It was another puzzle. In fact, there's a great line in his autobiography. He says, "Business is not a battle to be waged. It is a puzzle to be solved." And one of my favorite things that Rick said about Sam was that Sam knew that good things would occur naturally if he just kept learning. And Rick told me a bunch of other stories just like this that would take place all over the world. It happened in Egypt, it happened in Iraq. In fact, he told me the story where

• 18:10David Senra?

  they would go to Iraq. Obviously, you know, Sam's one of the richest and most famous people in the world when this is happening, so he's gonna be able to meet the top business people in all different countries. But he would also spend time in like these nondescript, simple offices, talking to like local, small business people. And he wasn't ever trying to be someone he's not. Think about the excerpt that started this conversation. He sits down on the floor, "Hey, I don't know anything about finance. Why don't you teach me?" Like, it didn't matter who the person was. He, like, the entire world was a classroom. He could learn from anyone. I can't believe how many questions he asked me. And I was like, whoa, you're the one with 61 years of entrepreneurial experience. I need to just shut up and listen. And he was just obsessed with like learning about podcasting. "Why did you start a podcast? How do you start a podcast? What's the business model?" He was just lighting me up with questions.

• 18:55David Senra?

  Like, this intense curiosity was directed at me, wanting to know, "What's this podcast thing all about?" So let me go back to the prologue of the book, because there's just some fantastic quotes about Sam, which I really think helps you and I get into his mind. "Ever the optimist, Zell saw the Tribune bankruptcy as being far from an unmitigated disaster." Listen to what he says here. "True entrepreneurs never fail. Sometimes it doesn't work out, but they never fail." And then remember, the book is published right after his biggest failure. What is he doing? "Zell remains in hyperdrive with an ongoing program to sniff out new investments on a global scale. He had no intention of slowing down, continuing to spend some 1,200 hours a year on his private jet, combing the world for

• 19:39David Senra?

  the next investment opportunity." Another thing that I really admire about him, and I know I've repeated this in the past, but I think it's worth saying again, is the fact that what you see with Zell is what you get. I read his autobiography before I met him. I made a podcast on it. I watched every single interview I could find about him. The exact same person you would see on TV is who shows up in person. And one of the things that he said to me, and I thought about it here, because it talks about, you know, he has no intention of slowing down, he's spending 1,200 a year, 1,200 hours a year on his private jet. And he was talking about a lot of the mistakes he sees that other rich guys, and he's like, "I know all of them." How they, a lot of the mistakes they make is like, you know, a lot of them are miserable, they don't have any fun. He says a lot of them, and then how they spend their money, you know, he would advise against. He's like, "They keep buying slightly nicer versions of the same shit." And he says, "The things

• 20:24David Senra?

  that you own start to own you." And he had a piece of advice for me, which I loved. And he goes, "There's only one true luxury in the world, and that's a private jet." And he says, David, try to get to private jet money. He obviously put his jet to great use. And there's another great line. As any other single individual, he has had the greatest impact on the real estate industry. People in the industry want to know what he is thinking and they look to his thinking as their own strategic thinking. He is a visionary. That doesn't mean he's right every time, but he's a visionary. So a lot of very successful current real estate entrepreneurs have told me, I just copied Zell. When you ask them, and I always ask entrepreneurs, like, who are your entrepreneurial heroes? Who's been your biggest influence?

• 21:08David Senra?

  They will say over and over again, there'll be other people, but I don't think there's a single one that had so, a single real estate entrepreneur that I've ever talked to that didn't have Zell on the list. And one of the real estate entrepreneurs I asked about this recently, we've talked about it a bunch of times, my friend Chris Powers. And so I text him, I was like, hey, I'm doing another episode on Zell. If you've got time, can you text me the impact he's had on your career and your thinking? And he gave me this great response. He said, number one, a no BS way of saying it like it is. Remember how this episode started where he's just trying, he's like, guys, we lost $50 million last year and you're worried that, you know, adults are using unkind language? So number one, a no BS way of saying it like it is. The amount of bad businesses and bad decisions that come from people not being willing to call a spade a spade is disastrous.

• 21:53David Senra?

  Don't bullshit and people will follow you, even if it causes short-term discomfort. Number two, buying existing real estate eliminates a lot of the risk development brings in. When you buy, it's a function of cost of purchase and cost to lease. And so that influenced Chris's because he used to try to develop and Zell was anti-development. Number three, supply versus demand are the biggest drivers in investment success. The amount of times in his autobiography, in his interviews, in this book, he's just like, it comes down to supply and demand and cash flow. Zell has a way of describing things. He just gets right to the essence of it. Number four, buy assets in high demand that can't be easily replaced. This is why we got into Class B industrial in 2016.

• 22:36David Senra?

  Number five, if it weren't for Sam Zell, we wouldn't be doing what we do today. His writings and interviews inspired our pivot into Class B industrial. And so let me pull out this highlight from his autobiography. The way I would summarize it is go where it is less crowded. Frankly, there's no substitute for limited competition. This is Sam Zell talking, okay? Frankly, there's no substitute for limited competition. You can be a genius, but if there's a lot of competition, it won't matter. I've spent my career trying to avoid its destructive consequences. Competition skews people's assessments. As buyers get competitive, the demand for assets inflates pricing, often beyond reason. I jokingly tell people that competition is great for you.

• 23:18David Senra?

  Me, I'd rather have a natural monopoly, and if I can't get that, I'll take an oligopoly. And so if you go back to this book, you really see that Zell is easy to interface with. It doesn't mean everybody's gonna love him. Obviously, he's very polarizing, you know, if you have no filter. But he is easy to interface with, he's easy to understand. I think that's why he's so beloved by so many people. And I think a lot of people were loyal to him for decades. So listen to this excerpt, it made me laugh. He described the outcome of the sale to Blackstone in typical Zell fashion. This is what Zell said. I think it was Confucius who said that money talks and bullshit walks. What you hear is what you get. There is no pretension. There is no bullshit. He appears to have stepped directly out of some bygone era when corporate titans cared less about their public appearance

• 24:01David Senra?

  and more about making vast sums of money. He is an avowed capitalist, and he loves the art of doing deals. As he put it, "I just make money. That's what I do." And this is another story that Rick told me. So first of all, this is something I'm really trying to aspire to. Let me first read this highlight from Zell's autobiography. He says, "Long-term relationships reflect the most important lesson imparted to me by my father. He taught me simply how to be. He often told me that nothing was more important than a man's honor, a good name. Reputation is the most important asset." This is exactly the advice that That Charlie Munger gave me. He's like, you know, I met Buffett when I was, when he was 28. I was 35. There's a group of guys.

• 24:44David Senra?

  We built a seamless web of deserved trust and we did deals together for decades. One story that Rick told me, it's not in any book. He was talking about he would go back to the same financing partners over and over again. And in many cases, I don't remember the exact numbers, but he would offer to pay more. So let's say, I think he was doing, getting a loan for like 150 million. Let's say the, the, the interest rate at the time was, you know, seven and a quarter. And Zell would be like, okay, that's great. I'll pay seven and three quarters. And the people are like, no, no, we said seven and a quarter. He's like, yeah, I know what you said, but I'm willing to pay seven and three quarters. And so Sam would teach Rick what he said. He's like, listen, on a $150 million loan, this is going to cost me an extra $2 million. In the grand scheme of things, that's irrelevant. What's more important is now we have a good relationship and a true partnership.

• 25:29David Senra?

  And so it's not about the money I'm going to make or lose on this deal. It's what happens on the next one and the next one and the next one. Sam Zell would never try to screw over his partners and try to squeeze them for every last dollar. In fact, it was important to him because he took so many companies public, that people made money with him. Next part I want to tell you about is his favorite book and his belief that there is no finish line. So Zell's favorite book was What Makes Sammy Run. The book recounts the rags to riches story of Sammy Glick, a charismatic Jewish boy, who early in life decides to escape the ghetto and climb the ladder of success. Zell often refers to this book in personal conversations and in dozens of speeches that he gives every year at business conferences and educational forums. The story mirrors his own life in many respects.

• 26:14David Senra?

  I am somebody who has been very fortunate to have had the opportunity to test my limits. And I would remind you philosophically that my definition of a fool is somebody who has reached his limits. Almost by definition, whatever your goals, whatever goals you set, you need to constantly readjust them so that in no time do you reach your goals before your time is up. And I think that's the conclusion that Sam arrived at early in his life. In fact, there's a story in the book when he graduates from law school. He's like, well, do I want to stay in Ann Arbor, Michigan? Even though I have this successful real estate business? And if you have the belief that you don't have any limits, then you need to put yourself in an environment where you can test that, right? And so he arrives at the very rational conclusion. He says, I decided that I had to find out how good I was

• 26:56David Senra?

  and that I'd never be happy if I didn't really understand what I was capable of. And I don't think I could really test that in Ann Arbor. And so he moves back to Chicago. And so part of testing his limits is the fact that he had unlimited ambition. There's a great story in the book. So he has a partner. His partner's going to die early, like, why is he still in his 40s from colon cancer, unfortunately? His name's Bob Larry. But at this point in the story, they're building a business together. And this anecdote that's in the, in the, in the book really illustrates, you know, Zell's unlimited ambition. And so it says, "Zell recounted a humorous moment that embodied his philosophy during this era. We were flying across the United States and I said, 'Bob, here we are over Nebraska. Look down there. Do you realize how much real estate we don't own yet? For the next 10 years, Sam and Bob snatched up distressed and bankrupt companies, riding

• 27:41David Senra?

  out the ugly mid-1970s US economic recession. They shunned the high-risk, high-debt development game, which saw many real estate titans teeter on the brink of bankruptcy.'" And one of the most consistent and remarkable things about Sam Zell is how anti-competition and anti-following the herd he was. In the 1970s, him and Bob have a unique strategy. Soon, a bunch of people start copying. And this is what Zell said about this time. "Zell described the real estate industry at the time as a really shitty business, meaning that it had become crowded with investors looking to emulate his strategy. Zell eschews copycats and competition." And that's when Sam and Bob start looking for opportunities outside of the real estate industry.

• 28:25David Senra?

  In fact, there's a line, there's a funny story in, that Zell tells in his autobiography that really describes like, you know, people describe Zell as an investor. He describes himself as an entrepreneur and a professional opportunist. So this is from Zell's autobiography. "We were enjoying the sunny day, drinking wine and eating sandwiches, when an old woman carrying a shopping bag down the nearest mountain walked towards us. It was filled with high-quality cannabis, and she offered to sell it to us for $10. So we bought it and shared it enthusiastically with our new friends. At some point, the guy I was sitting next to me turned and asked, 'So what do you do? I replied, 'I'm a professional opportunist,' and that has been my response to that question ever since." And so when real estate becomes crowded and competitive,

• 29:08David Senra?

  Sam and Bob start buying companies. And this is a description of that. They carried no preconceived notions about how to buy and sell companies outside of real estate, but they viewed that as an asset rather than a liability. Zell believed that true entrepreneurs follow their instincts based on what they see around them and take a common sense approach to the game of buying, running, and selling companies. They set no hard and fast rules about what companies they would buy. Potential deals merely had to have the same basic characteristics. A company in a growth industry, in financial trouble or distressed, which could be managed out of its doldrums and into a potential market leader. And when I read that part in this book, I thought of what Sam said in his autobiography. He says, "It has never occurred to me to question whether I should do something simply

• 29:53David Senra?

  because I hadn't done it before." And another contrarian thing that he was doing among people buying a bunch of businesses at the time is he wasn't looking for synergies. He says synergies among his corporate properties were nonexistent, and he liked that just fine. So they do this throughout the 80s, and then we see this reoccurring theme. You get in early when there's limited competition, and then you get out when profits start getting competed away and people start copying you. By the late 1980s, distressed turnaround opportunities became scarce. But as one door was closing, a large and unlocked window was ready to open. Sam and Bob were once again ready to hit the commercial real estate industry with a vengeance. And so all this money was flowing in the 80s, so all of these developers were building

• 30:38David Senra?

  these huge skyscrapers. What Zell's about to do here, he raises two opportunity funds. He does this in 1988 and 1989. I think he raises over a billion dollars in 13 months. So, and this is why. We, as an industry, had committed hundreds of billions of dollars to unproductive usage, Zell observed. And we had done so because the promise was, "Build it today because it'll cost me more tomorrow," not because there was any economic justification. There is one generally infallible tenet when it comes to real estate developers, no matter how disciplined they might presume themselves. Given access to easy money, they will feed at the trough and overindulge. They are, after all, human. Soon, there was a 10-year supply of freshly-built office space in shiny glass and steel and

• 31:23David Senra?

  empty skyscrapers.

• 31:26David Senra?

  And one of the ways that Zell is described by a lot of people that worked with him is that he's just incredibly rational. He lived through a ton of bubbles. And in almost all cases, he avoided getting caught up with it. And he says, "I don't invest in anything other than economic prospects. If it's not economic, I'm not interested." He just stubbornly refused to be swept away by emotions that could cloud his vision of what constitutes value investing. And that goes back to his very simple motto, "I make money. That is my talent. That is what I do. I make money. I'm a professional opportunist." And you see how rational he was, because in many cases, like, there's things in the book, like, he wanted to get control of Rockefeller Center. I think he wanted to do this twice. And both times, he was, because it was such a legendary piece of New York real estate, other bidders

• 32:11David Senra?

  became more emotional and just kept increasing the price past what he thought it was worth. And so there's a lot of media coverage of what was going on, of these people trying to buy Rockefeller Center. And there's just hilarious, there's a couple hilarious things that Zell says during this, and this is one of them. Asked if he foresaw obstacles, "tis bid to control one of the world's landmark property," Zell replied with a blunt dose of realism: "lots." That reminded me of Charlie Munger's quote, where he says, "It's not supposed to be easy. Anyone who finds it easy is stupid." So, Zell, of course, there's a lot of obstacles in me trying to get one of the world's landmark properties. That's how it's supposed to be. This is what he says, "Rockefeller Center is interesting because it has an unending number of players, both real and potential. It's like a jigsaw puzzle with an enormous number of moving parts. And the person who can see them all and know why they're moving

• 32:56David Senra?

  and where they're moving will win." Ultimately, he viewed the entire exercise as a personal test of his problem-solving skills. And that's one of the things I most admire about Zell. It's very obvious, like, he's in it for the challenge. By this point, and it's even, he's still got another, like, 20 years to live. Even at this point, he's got more money he can ever spend. He was in it for the challenge. He just loved the game. And so, this is another form of resourcefulness to me, because I skipped over, you know, all the details. I'm really just trying to give you an idea of, like, what's inside his mind, how he thinks. And so as he's going through this negotiation in the contract, he put a breakup fee in there in case Rockefeller Center was sold to another buyer, which it was. So he went up pocketing an $11.5 million breakup fee. But more important than that, he winds up leveraging his role in this high-profile

• 33:39David Senra?

  deal-making to his advantage because his name had been nonstop in the business headlines in both The Wall Street Journal and The New York Times for months. How much free publicity and media coverage did he get? That's another form of resourcefulness. In fact, he told me at lunch that he was writing all these op-eds and became well-known in Chicago. This is like the late 1970s, early 1980s. And as a result of that, the fact that he was known in the business community, in this case, it was spread through newspapers, was that he got invited. He said the best non-real estate investment he ever made was what happened to him with the story I'm about to tell you, where he gets invited as part of his notoriety.

• 34:23David Senra?

  He gets invited to buy into the Chicago Bulls a few years, I think it was two years before they drafted Michael Jordan. And so if I remember correctly, he said something like, you know, the annual dividend, he has to do nothing for that, right? He just has like the suite if he wants to go watch Bulls games after the initial investment. He didn't have to do anything day-to-day. That his annual dividend that he received was more than his initial investment and had been for many years. And I think the equity value was up like, something like 400x. And so undoubtedly, as he's making this play for Rockefeller Center and it's being covered, you know, every day in The Wall Street Journal and The New York Times, all that just made him more well-known and opened up unexpected and unpredictable opportunities as a result of that. It's just another form of resourcefulness by Zell.

• 35:06David Senra?

  Another thing that Sam repeats over and over again, he says, unless you're the lead dog, the scenery never changes. He does not want to look at another dog's acts. He wants to be the one leading and he is super competitive. And it says, "When he senses that he can totally dominate an industry, he takes the bit between his teeth and makes a run for it." This is something he also talks about in his autobiography. But in this book, it says, "He would never be described as a gracious loser. His competitive nature does not allow for finishing in second place. Second is the first loser," said Zell. "To him, nothing but winning really counted, and he's been known to stubbornly pursue an object of his desire until he gets what he wants." In his autobiography, the way he described this, he says, and it made me laugh too, and I have this saved on my phone as well.

• 35:49David Senra?

  "I suffer from being very competitive, and that is not limited to things I can do well." And if you go back to that line, he has this handful of principles that he repeats over and over again, like unless you're the lead dog, the scenery never changes. In fact, they're compiled into a book called Samisms, and I'm supposed to get a copy and I'm going to make an episode, it might be a short episode. But this is something that's excessively important, I think every single entrepreneur should do, should identify a handful of principles and you should repeat them for decades. I think a lot of these entrepreneurs, like Zell and others, they understand the importance of having the shared base of knowledge. In fact, talked about, he would set up these things called Equity University, because he named every single one of his companies Equity, and would formally train all of the people in his organization under a uniform set of operating principles. And what they're calling training, I call teaching.

• 36:32David Senra?

  I think Sol Price is the most influential retailer to ever live, I've done multiple episodes on him, but ideas, Sol's ideas were influential on Sam Walton, on Jim Sinigal, on Bernie Marcus, on Jeff Bezos, the list goes on and on. He has a great line about this, in fact, this is what he told Jim Sinigal, he said that if you're not, as the leader of the company, if you're not spending 90% of your time teaching, you're not doing your job. And he used the word "teach" because Sol Price has a famous quote where he says, "You train an animal, you teach a person." And I think that's exactly what Sam Zell was doing with these very memorable maxims and principles that he'd just repeat over and over again. Unless you're the lead dog, the scenery never changes. There's a bunch of them spread throughout this book and his autobiography, like liquidity equals value, trying to be right 100% of the time leads to paralysis, conventional

• 37:17David Senra?

  wisdom is nothing other than a reference point, let the asset be what it wants to be. But I can't repeat that enough, the importance of repetition. Repetition is persuasive, you gotta repeat, repeat, repeat for decades. When Blackstone was trying to buy Sam's company, there was like a bidding war going on. And I thought Zell's observation here had a historical precedent, and I bet you, if he was still alive, I'd love to be able to ask him this, because I almost positively he knew this. And so he was talking about just an intelligent move by Blackstone here. And he's like, listen, I'm sure there's no question that Blackstone is above reproach, Zell opined in his typical tongue-in-cheek manner. The fact that they decided to finance their $32 billion offer with 16 banks at $2 billion

• 38:00David Senra?

  each, instead of three banks at $10 billion each, might have Perhaps they were thinking that if they could get 16 banks for $2 billion each, there weren't going to be a lot of fucking banks left to finance a competitor. And when I read that quote from Zell, I immediately thought of Rockefeller did this. Rockefeller used a very similar tactic in the early days of his career. He would go around to all the Cleveland banks and any of the ones that lent him money also got stock in his company. And Rockefeller did that so the banks couldn't or wouldn't fund Rockefeller's competitors. And then another thing I loved about Zell, and it's the same thing that Charlie Munger had too, he's just downright comfortable with his persona.

• 38:42David Senra?

  This is another thing that me and Rick, Zell's friend and mentee, were talking about. He told me, he's like, Sam truly did not care what other people thought of him. In fact, the most important lesson, we were talking about this at dinner a couple nights ago before I was going to record this episode, the most important lesson that he learned from him and that I learned from him as well, was the importance of designing a life that you love to live. And there's no possible way you can do that in an authentic way if you're concerned with, oh, what is this person going to think? In fact, that is the main lesson that I learned from the lunch, and I'm just going to read you the note that I wrote myself. Go for freedom. He said, he repeated the importance of freedom, I don't know, like five or six times in two hours. Go for freedom. Freedom allows you to control what you work on. If you control what you work on, then you can work on what you love. If you love it, you'll do it for a long time.

• 39:24David Senra?

  If you do it for a long time, you'll get really good at it and money will come as a result. And I think that's related to what's taking place in the book, where it says, he proudly admits to an abundance of self-confidence, which allows him to continually push the limits of what he views possible. One thing that can be said of Zell with absolute certainty, you always know where he stands and what he's thinking. He almost never keeps his opinions to himself, which is part of what makes him so interesting to so many people. It's a combination of his intelligence. He is clearly brilliant and his filter is less than others, so he's willing to say what's on his mind while most of us have impulse control. He is delightful and insightful and therefore quite compelling.

• 40:04David Senra?

  One thing Zell repeats too is the importance of salesmanship. Sales is like the maybe the most valuable skill you can have. According to Zell, salesmanship is a gift that should be revered. Contrary to popular belief, he said, "Nothing is bought and everything is sold." He believed his ability to communicate and gain followers was one of the great keys to his success. Zell so highly values the art of communication that he insists it is essential to the making of a true leader. "I realized that being able to sell your ideas is what leadership is really about. Your ability to define and delineate your ideas, to bring them to a level of simplicity, so that others can both understand and buy in, is an extraordinary asset and a requirement to achieve true leadership."

• 40:47David Senra?

  Now, I keep repeating the fact that, you know, Zell didn't care what other people thought. He wanted to live a life that was authentic to him. He wanted to, you know, what you see is what you get. That doesn't mean he didn't have the same exact feelings and doubts and fears that we all had. And this, to me, is one of the most important paragraphs in the entire book. One might get the sense that Zell is fearless. He insists, "Quite the opposite is true." Listen to that. "Oh, Zell's fearless." He's like, "No, bullshit. That is not true." This is what he says. "At times, going against conventional wisdom is painful, lonely, and for sure creates all kinds of self-doubt and fear. I might add that fear is an extraordinary healthy characteristic. I don't do business with anyone who's not afraid, and I won't hire anybody who is confident to the point, confident to the point where fear is not very close to the surface.

• 41:32David Senra?

  I have often said that fear and courage are cousins and very closely related." One of my favorite documentaries, maybe my favorite documentary of all time, is called The Defiant Ones. If you haven't watched it, it's about the relationship between Jimmy Iovine and Dr. Dre. It is excellent. But Jimmy Iovine talked about, he has, he has one of the most unique ideas I've ever heard. And he talks about how fear is a powerful thing. It's going to echo what Zell just told us. And so Jimmy said, fear is a powerful thing. It's got a lot of firepower. If you can figure out a way to wrestle that fear to push you from behind rather than stand in front of you, that is very powerful. I always felt I had to work harder than the next guy just to do as well as the next guy.

• 42:15David Senra?

  And to do better than the next guy, I had to just kill it. That's still with me in how I work. I just go in. And so Jimmy, I was watching an interview with him one time, and I think he was asked like the single best idea or the most important trait he ever had. And he's like, yeah, I trained myself that anytime I felt fear, to take a step forward, to use fear to push me from behind instead of letting fear stand in my way. Back to more Samisms. I'm going to repeat the importance of repetition here. Sam is a brilliant guy and has a number of sayings that as you get older, you have more appreciation for. Things like, let the asset be what it wants to be, or if you're not the lead dog, the view never changes. He's an extremely unique individual.

• 42:58David Senra?

  He can take almost any business and have an impact and make it better. He would tell you that his concepts are pretty consistent. Ultimately, everything is driven by cash flow. If you focus on what the real cash flows are and what you can do to impact those cash flows, that ultimately is what creates value. The basic business concepts are consistent. Another important thing to repeat is the fact that Zell just got right to the essence of all these deals, or something he learned from Jay Pritzker. Says Zell, I love this, Zell insists that briefings be kept to a single page, no matter how complicated the deal or issue. Anything more is summarily dismissed. For Zell, simple ideas and concepts have yielded the highest rewards.

• 43:42David Senra?

  He said, having conviction means that you can shut out the noise. It's amazing how many of these descriptions and principles are repeated about Zell from people all throughout his career that knew him. Zell insists that he's constantly eager to learn and to do rather than sitting pat with what he's already learned in his life. He is intensely curious. So many people describe him as intensely curious. The bottom line, and then he repeats this again, and the fact that he's not going to beat himself up. Failure is inevitable. It's part of Every entrepreneur's journey, move forward, do not look back. The bottom line is what happened in the past stays in the past. My head only looks forward. It doesn't turn backwards. He repeats that over and over and over again. Another great quote from Zell, "The true test of an entrepreneur is someone who spends his life constantly testing his limits.

• 44:24David Senra?

  The definition of an idiot is someone who has reached his goals." And then this could almost be like Zell's mantra, "Nonconformity is wonderful." And I think Zell took his own advice because he says Zell likes to set his own agenda. He says, "I'm a guy who has an extraordinary good time. I'm a guy who really focuses on not being anywhere I don't want to be and not doing anything that I don't want to do." And so that's why I think his main advice when I talk to him, that when he repeated it over and over again is go for freedom. You know, he's saying, "Hey, I like to set my own agenda. I like to have a good time. I'm a guy who really focuses on not being anywhere I don't want to be and not doing anything I don't want to do." One of the things I printed out to prepare to talk to you was my notes that like the main takeaways from the lunch I had with him. And one of the things was that you have an obligation to share what you learn, that

• 45:08David Senra?

  Sam flew all over the world to talk to other entrepreneurs at his expense, just to teach everything he learned. He considered it an obligation to pass knowledge on to the next generation. And so there's a, there's a couple of examples in this book where he's giving talks, you know, and in many cases he's doing so at business school. And this is what my favorite exchange that ever happened, this is gonna be very like Charlie Munger-esque. A favorite Zell classroom moment came during one of his frequent visits to the Wharton School of Business. And at the end of the talk, there's Q and A, and it says, "One of the kids said, 'I think you're really great and I admire you and all that you've done. I want to be like you in five years.'" Sam looked at him and said, "Why the hell do you get to be like me in five years when it took me 40?" And this is perfect. The point was not becoming him.

• 45:53David Senra?

  It was that becoming whoever you are is going to be an ongoing process and that professional success is not crafted in five years. It's crafted in a lifetime. We talked about one of his favorite books. This is one of his favorite quotes. One of Zell's favorite quotes is from the American architect Daniel Burnham, who famously said, "Make no little plans. They have no magic to stir men's blood and probably themselves will not be realized. Make big plans, aim high in hope and work." And I think a few pages later, he gives his own interpretation of that quote. Says, "Everything I do is motivated by doing it right, by doing it better, by doing it different, by answering the questions that other people couldn't." Remember that excellent quote from his autobiography?

• 46:36David Senra?

  "Business is not a battle to be waged, it's a puzzle to be solved." I really do believe that what drove him is the challenge. And then when the book ends, Zell is turning 68 years old, and he's asked what message he would like to have on his tombstone. Zell responded without thinking, "He was a man of his word. Most important of all, whether it be in the business world, the philanthropic world, or the sports world, I want to make a difference. That's what motivates me."

• 47:03David Senra?

  And he couldn't have known then, but he had 13 years left to live. He definitely made a difference. He made an impact on millions of entrepreneurs. Sam Zell is without a doubt one of my favorite people I've ever studied. Very glad I had the pleasure to meet him. If you want more, listen to episode 269, that is, the autobiography of Sam Zell, and then episode 298, where I go over the lunch. I think the first 30 minutes of that podcast is recollections from the lunch I had with him. And then the last part is that book that he read as a young man. He read Zach Andrus' autobiography. He found an idea in that book that he used throughout his entire career. And then I go over what I learned at the second half. So that's episode 298. That is where I'll leave it for the full story. If you want to buy the book, use the link that's in the show notes. It's on your podcast player, it's available at founderspodcast.com. You'll be supporting the podcast at the same time.

• 47:48David Senra?

  That is 367 books down, 1,000 to go, and I'll talk to you again soon. So at the beginning of this episode, you heard me reference the fact that I spent a lot of time reading and rereading notes, highlights, searching through my transcripts. And I even built this AI assistant that helps me do this. So what I was talking about is this thing called Founder's Notes. Founder's Notes is this internal tool that I built for myself that keeps track of all my notes, all my highlights, and transcripts for every single episode that I've ever made. So the highlights for every book that I've read for the podcast, for the notes that I've left on the highlights, and the transcripts are all in one giant searchable database that gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand when you need it.

• 48:31David Senra?

  Almost every single person that you and I study on the podcast were obsessed with learning from history. Many of them were obsessed with reading biographies, Sam Zell included. And I think it's because they understood what Charlie Munger said, and he said it so eloquently. He said that learning from history is a form of leverage. Founder's Notes gives you the ability to learn from history's greatest entrepreneurs on demand. The podcast is a great tool to learn from history, but it's pushed to you. Founders Notes gives you the ability to control it. It gives you that ability to tap into the collective knowledge of history's greatest entrepreneurs and use it when you need it. Existing subscribers of Founders Notes have been using it to make decisions inside their company. They've been using it to prepare for client meetings, for board meetings, to find ideas on hiring, marketing, leadership, and to use it to help them think through any issue that they're running into as they run their company.

• 49:15David Senra?

  If you are already running a successful company, and if you're going to spend hours and hours listening to different Founders episodes, I would encourage you to heavily invest in a subscription to Founders Notes. It makes the lessons that you're learning on the podcast even more powerful. If you subscribe, you'll have access to my AI assistant called Sage. When you ask questions to Sage, it automatically search all my notes, highlights, and transcripts and gives you a concise answer. You also have access to exclusive, private podcast feed called Sage Advice, which has 51 short bonus episodes available nowhere else. You'll also be able to browse all my highlights by book, and you can search through all of my transcripts as well. And so if you want to tap into the collective knowledge of history's greatest entrepreneurs on demand, you can do so easily by going to foundersnotes.com. That is founders with an S, just like the podcast,

• 49:58David Senra?

  foundersnotes.com, and sign up for a subscription today. Thank you very much for your support. Thank you very much for listening, and I'll talk to you again soon.