#367

Sam Zell's Address to Employees

• Sam Zell addresses concerns about his previous statements, which some employees found offensive, by stating he stands by his comments and emphasizes the need for urgency and change within the company. (0s)
• He criticizes the company's bureaucratic processes, such as requiring multiple signatures for simple tasks, and highlights a lack of focus on the company's success and profitability. (19s)
• Zell stresses the importance of not taking oneself too seriously and encourages a culture of self-deprecation to focus on winning and succeeding rather than being politically correct. (1m8s)
• He argues that the company's future is at risk if it continues operating as it has in the past and stresses the need for a sense of urgency and focus on revenue generation. (1m43s)
• Zell admits to intentionally crossing the line with his comments to provoke a reaction and bring attention to the company's critical situation, emphasizing the need to prioritize revenue and survival over personal grievances. (2m10s)
• He calls for employees to concentrate on creating a successful corporation that provides opportunities and sustenance for both current and future employees, rather than focusing on his language. (3m1s)
• The company is facing a financial crisis, having lost $50 million in cash flow the previous year, and there is a need to focus on generating more revenue rather than being concerned about language or comfort. (3m36s)

Sam Zell's Perspective on Failure and Learning

• The book "Money Talks, Bull Walks: Inside the Contrarian Mind of Billionaire Mogul Sam Zell" by Ben Johnson, published in 2009, discusses Sam Zell's mindset and his reaction to failure, particularly after the bankruptcy of Tribune Media. (4m55s)
• Sam Zell emphasizes looking forward rather than dwelling on past mistakes, believing that decisions made at the time were appropriate despite later circumstances proving otherwise. (5m37s)
• The perspective on failure is further illustrated by a quote from UFC fighter Dominick Cruz, who views loss as a necessary part of growth and learning, similar to Zell's outlook. (6m34s)
• Michael Jordan, in an interview with Steph Curry, also highlights the value of losing, stating that while he hates losing, it is essential to respect it for the lessons it provides. (7m2s)
• Losing is considered an essential part of winning, as it prompts reflection and improvement. It is suggested that failure should be seen as a learning opportunity rather than a reason for self-criticism. (7m11s)

Sam Zell's Mindset and Early Career

• The focus is on the mindset of Sam Zell, a contrarian thinker, and his approach to life and work. His autobiography is recommended for a comprehensive understanding of his life story. (7m57s)
• In February 2007, Sam Zell sold his Equity Office Properties Trust to Blackstone for $39 billion, marking the largest leveraged buyout in corporate history at that time. (8m34s)
• An excerpt from Steve Schwarzman's memoir, "What It Takes: Lessons in the Pursuit of Excellence," recounts his initial meeting with Sam Zell two decades before Blackstone acquired Zell's company. (8m53s)
• Steve Schwarzman describes the early days of Blackstone, including sending out letters to potential clients and receiving a visit from Sam Zell, who was introduced by his sister Leah Zell, a former analyst at Lehman. (9m18s)
• On the first day at a new office, a man named Sam visited, expressing interest in learning about finance to expand his real estate ventures, which included building one of the largest real estate portfolios in the country. This unexpected meeting led to a significant business relationship. (10m39s)

Sam Zell's Curiosity and Learning

• Sam Zell, known for his relentless curiosity and desire to learn, was introduced to podcasts by a friend named Rick. Zell's interest in learning extended into his 70s and 80s, and he listened to several podcast episodes, including one about his own autobiography. (11m43s)
• Rick, who was mentored by Sam Zell, shared stories highlighting Zell's insatiable curiosity. One such story involved Zell's eagerness to learn about a mining project in Mongolia led by Robert Friedland, a billionaire miner. Despite Mongolia's limited business activity at the time, Zell was keen to visit and learn about the culture, people, and economy. (12m53s)
• Sam, despite his wealth and fame, maintained a beginner's mindset and was driven by intense curiosity, viewing business as a puzzle to be solved rather than a battle to be waged. (14m5s)
• Sam believed that good things would naturally occur if he continued learning, and he engaged with people from various backgrounds, including small business owners, to expand his knowledge. (14m29s)
• He was known for asking numerous questions and was particularly interested in understanding new ventures, such as podcasting, demonstrating his eagerness to learn from others. (15m17s)

Sam Zell's Optimism and Investment Philosophy

• Sam was an optimist who saw opportunities even in failures, such as the Tribune bankruptcy, and continued to seek new investments globally, spending significant time traveling on his private jet. (15m37s)
• He was consistent in his public and private personas, and he criticized other wealthy individuals for their lack of enjoyment and poor spending habits, advising that possessions should not own a person. (16m14s)
• Sam considered a private jet the only true luxury and encouraged others to strive for it. (16m57s)

Sam Zell's Influence on Real Estate Entrepreneurs

• Sam Zell is recognized for having a significant impact on the real estate industry, with many entrepreneurs considering him a visionary and a major influence on their strategic thinking. (17m10s)
• Numerous successful real estate entrepreneurs have cited Zell as a key influence, often mentioning him when asked about their entrepreneurial heroes. (17m37s)
• Chris Powers, a real estate entrepreneur, highlighted Zell's influence on his career, noting Zell's straightforward communication style and his preference for buying existing real estate over development to minimize risk. (17m58s)
• Zell emphasizes the importance of supply and demand as primary drivers of investment success, and he advises investing in high-demand assets that are difficult to replace. (18m40s)
• Zell's writings and interviews inspired a strategic pivot into Class B industrial real estate for some entrepreneurs, emphasizing the value of limited competition. (19m15s)
• Zell's approach to competition involves avoiding its negative consequences, preferring situations with limited competition, such as natural monopolies or oligopolies. (19m20s)

Sam Zell's Communication Style and Business Relationships

• Despite being polarizing due to his unfiltered communication style, Zell is appreciated for his clarity and has maintained loyalty from many people over the years. (19m56s)
• Confucius is quoted as saying that money talks, and the text describes a person who seems to embody this philosophy, focusing on making money rather than public appearances. This individual is described as a capitalist who enjoys making deals. (20m16s)
• The text highlights the importance of long-term relationships and reputation, as taught by the individual's father, emphasizing that a good name is the most important asset. This advice aligns with what Charlie Munger shared about building a web of deserved trust with partners. (20m50s)
• A story is recounted where the individual, Sam Zell, would offer to pay more interest on loans to maintain good relationships with financing partners, prioritizing long-term partnerships over short-term financial gains. This approach ensured that people made money with him, especially when taking companies public. (21m20s)

Sam Zell's Drive and Ambition

• Sam Zell's favorite book is "What Makes Sammy Run," which tells the story of Sammy Glick, a boy who rises from poverty to success. Zell often references this book in speeches, as it mirrors his own life. He believes in constantly testing limits and adjusting goals to avoid reaching them too soon. (22m18s)
• The text concludes with a story about Zell's decision after graduating from law school, where he chose to leave Ann Arbor, Michigan, to test his belief in having no limits, seeking an environment that would challenge him further. (23m6s)
• Sam Zell moved back to Chicago to test his limits and pursue his ambition, believing he couldn't fully realize his potential in Ann Arbor. (23m28s)
• Zell and his partner, Bob Lurie, built a business by acquiring distressed and bankrupt companies during the 1970s U.S. economic recession, avoiding high-risk, high-debt development strategies. (24m9s)
• Zell was known for his anti-competition stance and avoided following the herd, which led him and Bob to seek opportunities outside the real estate industry when it became crowded. (24m30s)

Sam Zell's Approach to Business and Investments

• Zell described himself as an entrepreneur and a professional opportunist, emphasizing his approach to seizing opportunities as they arose. (25m27s)
• When real estate became competitive, Zell and Lurie began buying companies without preconceived notions, viewing their lack of experience as an asset. They focused on companies in growth industries that were in financial distress but had the potential to become market leaders. (25m39s)
• Zell believed in following instincts and taking a common-sense approach to buying, running, and selling companies, without setting hard and fast rules. (25m50s)
• Unlike others, Zell did not seek synergies among his corporate properties, preferring to manage them independently. (26m29s)
• In the late 1980s, distressed turnaround opportunities in the market became scarce, prompting Sam and Bob to re-enter the commercial real estate industry with significant investments. They raised over a billion dollars in two opportunity funds between 1988 and 1989. (26m49s)
• During the 1980s, there was a surge in commercial real estate development, with many developers constructing large skyscrapers due to the availability of easy money, leading to an oversupply of office space. (27m3s)
• Sam Zell is described as a highly rational investor who avoids getting caught up in market bubbles. He focuses on economic prospects and refuses to let emotions cloud his investment decisions, adhering to his motto of being a professional opportunist. (27m55s)
• Zell attempted to gain control of Rockefeller Center twice but refrained from overbidding when competitors became emotional and increased prices beyond what he deemed reasonable. He viewed the process as a test of his problem-solving skills and was motivated by the challenge rather than financial gain. (28m31s)
• During a high-profile negotiation involving Rockefeller Center, a breakup fee was included in the contract, resulting in an $11.5 million payout when the center was sold to another buyer. This deal also provided significant media exposure, enhancing the individual's reputation in the business community. (29m51s)
• The media coverage and increased notoriety led to an invitation to invest in the Chicago Bulls, which turned out to be a highly profitable non-real estate investment. The annual dividends from this investment exceeded the initial investment, and the equity value increased significantly. (30m40s)

Sam Zell's Leadership Philosophy and Principles

• The individual is described as highly competitive, with a strong desire to lead and dominate industries. This competitive nature is reflected in a personal philosophy that emphasizes the importance of being the leader, as encapsulated in the saying, "unless you're the lead dog, the scenery never changes." (31m33s)
• The individual is known for stubbornly pursuing goals until they are achieved and has a set of principles that are repeated consistently over time. These principles are compiled in a book called "Sisms," highlighting the importance of having a shared base of knowledge for entrepreneurs. (32m11s)
• Equity University was established to train individuals in an organization under a uniform set of operating principles, emphasizing teaching over training. Soul Price, a highly influential retailer, believed that leaders should spend 90% of their time teaching. (32m50s)
• Soul Price's ideas influenced notable figures such as Sam Walton, Jim Sagal, Bernie Marcus, and Jeff Bezos. He famously stated, "You train an animal, you teach a person," highlighting the importance of teaching in leadership. (33m2s)
• Sam Zell emphasized memorable maxims and principles, such as "liquidity equals value" and "conventional wisdom is nothing other than a reference point," stressing the importance of repetition in persuasion. (33m31s)

Blackstone's Acquisition of Equity Office Properties

• During a bidding war for Sam Zell's company, Blackstone used a strategic financing tactic by involving 16 banks with $2 billion each, reducing the likelihood of competitors securing financing. This tactic was reminiscent of a strategy used by Rockefeller. (33m58s)

Sam Zell's Personal Philosophy and Authenticity

• Sam Zell, like Charlie Munger, was comfortable with his persona and unconcerned with others' opinions. He believed in designing a life one loves to live, emphasizing the importance of freedom to control one's work and pursue what one loves. (35m3s)
• Pursuing something one loves can lead to long-term dedication, resulting in skill improvement and financial success. This idea is linked to a book's content, where a character named Zel is described as having abundant self-confidence, allowing him to push boundaries and express his opinions openly. (35m52s)
• Zel is characterized by his intelligence and lack of a filter, making him compelling and interesting to many people. He emphasizes the importance of salesmanship, considering it a crucial skill for success. (36m7s)
• According to Zel, effective communication and the ability to sell ideas are essential for true leadership. Simplifying ideas so others can understand and support them is a valuable asset. (36m32s)
• Zel values authenticity and does not concern himself with others' opinions, although he experiences the same doubts and fears as everyone else. He believes fear is a healthy trait and closely related to courage. (37m16s)
• The documentary "The Defiant Ones," featuring Jimmy Iovine and Dr. Dre, is highlighted as a favorite. Jimmy Iovine discusses the power of fear, suggesting it can be harnessed to drive one forward rather than hold one back. He emphasizes the importance of hard work and using fear as motivation. (38m5s)

Sam Zell's Business Acumen and Simplicity

• Sam is described as a brilliant individual with sayings that gain appreciation over time, such as "let the asset be what it wants to be" and "if you're not the lead dog, the view never changes." He is known for his ability to improve any business by focusing on consistent concepts driven by cash flow. (39m7s)
• Sam emphasizes the importance of simplicity in business dealings, advocating for briefings to be kept to a single page regardless of complexity. He believes that simple ideas and concepts yield the highest rewards and that having conviction allows one to ignore distractions. (39m51s)
• Sam is characterized by his intense curiosity and eagerness to learn, preferring to move forward without dwelling on past failures, which he views as inevitable in an entrepreneur's journey. He believes the true test of an entrepreneur is constantly testing limits, and he values non-conformity. (40m20s)

Sam Zell's Legacy and Mentorship

• Sam sets his own agenda, focusing on freedom and enjoying life by not being in places or doing things he doesn't want to. He advises others to pursue freedom and shares his knowledge with other entrepreneurs, considering it an obligation to pass on what he has learned to the next generation. (41m1s)
• Sam frequently gives talks, often at business schools, to share his experiences and insights. He is compared to Charlie Munger in his approach, and his interactions with students, such as during Q&A sessions, are highlighted as memorable moments. (41m47s)
• Sam Zell emphasized that professional success is a lifelong process, not something achieved in a short span of five years. He highlighted the importance of becoming one's own person rather than trying to emulate someone else. (42m11s)
• One of Zell's favorite quotes is from architect Daniel Burnham, which encourages making big plans and aiming high. Zell interpreted this as doing things right, better, and differently, and solving puzzles rather than waging battles. (42m34s)
• At the age of 68, Zell expressed his desire to be remembered as a man of his word who made a difference in various fields, including business, philanthropy, and sports. He lived for 13 more years after making this statement, impacting many entrepreneurs. (43m13s)

Podcast and Founders Notes

• The speaker has studied Sam Zell extensively and recommends episodes 269 and 298 of their podcast for more insights into Zell's life and career. Episode 298 includes recollections from a lunch with Zell and discusses a book that influenced Zell's career. (43m42s)
• An internal tool called Founders Notes was developed to organize notes, highlights, and transcripts from podcast episodes. This tool serves as a searchable database to access the collective knowledge of successful entrepreneurs, emphasizing the importance of learning from history. (44m33s)
• Founders Notes is a tool that allows users to access and control the collective knowledge of history's greatest entrepreneurs, aiding in decision-making for company operations, client meetings, board meetings, and generating ideas on hiring, marketing, and leadership. (45m20s)
• Existing subscribers use Founders Notes to enhance the lessons learned from the podcast, making them more impactful for running successful companies. (45m30s)
• A subscription to Founders Notes includes access to an AI assistant named Sage, which provides concise answers by searching through notes, highlights, and transcripts. (45m57s)
• Subscribers also receive access to an exclusive private podcast feed called Sage Advice, which contains 51 short bonus episodes not available elsewhere. (46m5s)
• The service allows users to browse highlights by book and search through all transcripts, facilitating easy access to entrepreneurial knowledge on demand. (46m12s)
• Interested individuals can sign up for a subscription at FoundersNotes.com to utilize these resources. (46m21s)