a question for Sam zel 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 zel'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 politer prize and I don't really give a [ __ ] about anything else you hear attitudes that we don't do
it this way 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 godamn it all we better get that 11th commandment back on
the front page here the 11th commandment is Thou shalt 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 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 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 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 organ ganization in the company going to wake up the fact that we're on the edge and we're either going to win or lose and we better godamn 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 [ __ ] thing or that [ __ ] thing but to worry about one thing how the [ __ ] 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 [ __ ] 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 are we going to lose if we spend an awful lot of time writing and pontificating about Sam's language we're
going to lose if we spend a lot of time trying to figure out how we're going to generate more Revenue then we're going to win so that's my priority and if that's not an apology too [ __ ] 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 going to make any difference everything I've said was with an attempt 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 Prior prze 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 extra from the book I'm going to talk to you about today which is Money Talks bull [ __ ] walks inside the contrarian mind of billionaire Mogul Sam zel and is written by Ben Johnson this book was published in 2009 right after Sam zel suffered his greatest failure in his career which was
the bankruptcy of tribun media a little less than a year after he had purchased it there's a lot I admire about samel that 2-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 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 zelle noted you know my head only functions looking forward 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
circumstance 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 Dominick Cruz and many years ago uh after a fight he winds up losing the fight he's at the the after fight press conference and you know his 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 and I think his perspective on loss on failure is perfect and it sounds a lot like zel and this is what dominic crew 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 uh Steph Curry was interviewing Michael Jordan and Michael Jordan said something 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 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 excert 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 zel 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 spend the last two days after I finish
reading I finish reading this book taking all the notes and highlights over two days ago soent the last two days thinking about like what I wanted to talk to you about and what I decided I wanted to focus on is that subtitle the where it says inside the contrarian mind of Sam zel I think I've read a bunch of about Sam zel 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 organized all my notes and highlights with the goal of trying to explain how samel thought how samel approached his life how samel approached his work and so in the prologue they contrast one of his big biggest
successes with one of his largest failures and so it say in February 2007 he sold his Equity office properties trust the largest owner of Office Buildings in the world for a hefty $39 billion to Blackstone that was the largest leverage buyout in corporate history at the time and so a few weeks ago I got an email from a listen named Tom rester and he sent me an excerpt from the founder of Blackstone Steve
schwartzman's Memoir that book is called called what it takes lessons in the pursuit of excellence and in his Memoir Steve tells a story about his initial meeting with Sam zel two decades before Blackstone winds up buying zel's company it is too great for me not to read this entire exer to so it says he's talking about the founding of the very beginning of Blackstone he says to get our business rolling 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 done together we laid out our plans and asked for work then we sat back and waited I was expecting the phone to ring non-stop 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 my name is Sam zel Leah told me that I
should meet you in 1979 we had hired Leah zel at Leman 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 B biker was her brother what's with the outfit I said I left my motorcycle downstairs where
downstairs I sorry I chained It Up on Park Avenue to a fire pant our first day this is some future I thought he must have thought the same thing looking at me sitting there in my suit in our bare office the phone's 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 2 and 1 half hours sitting on the floor talking 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 and so that brings me to the second thing that I absolutely love about samel 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 opport opportunity the crazy opportunity to have a 2-hour lunch with samel and that came about because my friend Rick who I didn't know at the time was best friends and mentored by Sam zel for like two decades and so even when he was in his
70s and 80s zel was relentlessly curious about the world around him so he would see Rick with headphones in all day and he wanted to know what Rick was listening to and Rick said podcast and so then zel was like okay teach me about podcast so Rick sends him like 10 episodes 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 zel's autobiography so in the past
few days I was telling Rick that I'm making another episode on samel he's like oh I got a bunch of samel 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 friedin fredin is this billionaire minor I actually actually did an episode on him a long time ago
it's episode 131 which is based on this book called The Big Score fredin also appears in a bunch of the episodes I've done at Steve Jobs because Steve lived on friedland's commune when they were like much younger than they like 19 or 20 but Rick told me the story about the meeting that he facilitated between zel and fredin as this illustration of this just 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 you know had very little business activity it's kind of like an insular uh 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 wind up staying at the gangas Khan Hotel turns out almost everything in Mongolia is named after gangas 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 and while he was there he was obsessed with that asking questions he want 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 s 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 happened in Egypt happened in Iraq in fact he told me the story where they 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 going to 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 the that's heard of this conversation he sits down on the
floor hey I don't know anything about Finance why don't you teach me it's 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 well you're the one with 61 years of contrepreneur experience I need to just shut up and listen and he was just obsessed with like learning well podcasting why did you start a podcast
how do you start a podcast what's the business model it was just lighting me up with questions 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 just some fantastic quotes about Sam which I really think helps you and I get into his mind ever the optimists zel 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 zel 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 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 zel is what you get I read his his 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 one of the things that he said to me and I thought about 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 you he was talking about a lot of the mistakes he sees the other Rich guys and he 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 that a lot of them and and then how they spend their money you know he he would advise against he's like they they keep buying slightly nicer versions of the same [ __ ] and he says the things that you own start to own you and he had a piece of advice for me which I love 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 zel when you ask them and I always ask entrepreneurs like who are your entrepreneur Heroes who's biger Big been your biggest influence they will say over and over again there'll be other people but Z I don't think there's a single one that have so a single real estate entrepreneur that I've ever talked to that didn't have zel on the
list and one of the real estate entrepreneurs I asked about this recently we've talked about a bunch of times my friend Chris Powers and so I text him I was like hey I'm doing another episode on zel if you 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 nobs 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 don't [ __ ] 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 that influenced Chris's because he used to try to develop and zel was anti-development number three supply versus demand are the biggest drivers an investment success the amount of times in his autobiography and his interviews in this book he's just like
it comes down to supply and demand and cash flow zel has a way of describing things he just gets right to the essence of it number four bu Assets in high demand that can't be easily replaced this is why we got into class B Industrial in 2016 number five if it weren't for samel 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 zel 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 exuse 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 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 zel's EAS it interface it doesn't mean everybody's going to love them obvious he's very polarizing you know if you 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 exert it made me laugh he described the outcome of the sale to Blackstone in typical zel fashion this is what this is what zel said I think it was confucious who said that money talks and [ __ ] walks what you hear is what
you get there is no protention there is no [ __ ] he appears to have stepped directly out of some bygone era when corporate Titans cared less about their public appearance 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 this is something I'm really trying to Aspire to let me first read this this highlight from zel'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 Charlie Munger gave me
he's like uh you know I met Buffett when I was when he was 28 I was 35 there's a group of guys we built a seamless web of deserve 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 7 and a quarter and Z would be like okay that's great I'll pay Seven and three4 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 three4 and so Sam would teach Rick what he said he's like listen on $150 million
loan this is going to cost me an extra $2 million and the grand scheme of things that's irrelevant what's more important is now we have a good relationship and a true partnership 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 zel 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 sell's favorite book was what makes Sammy run the book recounts the rags to Rich's story of Sammy Glick a charismatic Jewish boy who early in life decides to escape the ghetto and climb the ladder of success
zel 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 I am somebody who has been very fortunate 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 reach adjust 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 an 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 who how good I was 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 is going to die early like while he's still in his 40s from colon cancer unfortunately seems Bob lurry 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
zel's unlimited ambition and so it says zel recounted a humorous moment that embodied his philosophy during this era we are 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 out the ugly mid1 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 zel 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 zel said about this time zel described the real estate industry
at the time as a really shitty business meaning that he had become crowded with investors looking to emulate his strategy zel isues copycats and competition and that's when Sam and Bob start looking for opportunities outside of the real estate industry in fact there's a line there's a funny story in that since that zel tells in his autobiography that really describes like you know he people describe zel as an
investor he describes himself as an entrepreneur and a professional opportunist so this is from zel'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 who 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 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 view that as an asset rather than a liability zel 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 distress which could be managed out of its dold droms 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 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 non-existent and he liked that just fine so they do this throughout the 80s and then we see this reoccurring thing 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 these developers were building these huge skyscrapers what zel'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 zelzer 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 invaluable tenant when it comes to real estate developers no matter how discipline 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 10year supply of freshly built office space in shiny glass and steel and empty skyscrapers and one of the ways that zel 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 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 like legendary piece of New York real estate other biders became like 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 and these people trying to buy Rockefeller Center there's just hilarious there's a couple hilarious things that zel says during this and this is one of them asked if he foresaw obstacles to his bid to control one of the world Landmark property zel 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 yeah of course there's a lot of obstacles and 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 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 zel it's very obvious like he's in it for the challenge by this point in his 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 how what's inside his mind how he thinks and so as he's going through this negotiation and in the contract he put a breakup fee in there in case Rockefeller Center was sold to another buyer which he was so he wents up pocketing an $ 11.5 million
breakup fee but more important than that he winds up leveraging his role in this high-profile 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 that's another form of resourcefulness in fact he told me at lunch that he was writing all these like
op EDS and became wellknown known in Chicago uh this like the late 1970s early 1980s and as a result of that the the the fact that you know he his he was known in the business community in this case it was spread through newspapers was that he got invited uh he said the best non-real estate investment he ever made was was what happened to him uh with the story I'm about to tell you where he uh he gets invited as as
part of his notoriety gets invited to buy into the Chicago Bulls a few years I think it was two years years before they drafted Michael Jordan and so if I remember correctly he said something like you know the the annual div he has to do nothing for that right he just has like the suite if he wants to go watch uh Bulls games after the initial investment he didn't have to do any 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 of the New York Times all that just made made a more wellknown and open up un unexpected and unpredictable opportunities as a result
of that just another form of resourcefulness by zel 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 ass 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 zel 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 autography the way he he he
described this he says he made me laugh too and I have this saved on my phone as well I suffer from being very competitive and that is not limited to things I can do well and then if you go back to that line he has this like 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 in a book called sisms 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 you should identify a handful of principles and you should repeat them for decades I think a lot of these entrepreneurs like zel and others like 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 like every single one of his companies equity and would formally train all of the the people in his organization under a uniform set of operating principles and what they're calling training I I call teaching I think uh Soul price is the most uh influential retailer to ever live I've done multiple episodes on him but you
know ideas Soul's ideas were influential on Sam Walton on Jim Sagal 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 syal he said that if you're not as a leader of the company if you're not spending 90% of your time teaching you're not doing your job and he Ed the word teach because Soul price has a famous quote where he says you train an animal you
teach a person and I think that's exactly what Sam zel was doing with these very memorable maxims and principles that he just repeat over and over again L you're Le dog the scenery never changes there's a bunch of them spread throughout this book in his autobiography like liquidity equals value trying to be right 100% of the time leads to paralysis conventional 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 rep repetition is persuasive you got to repeat repeat repeat for decades when Blackstone was trying to buy Sam's company there was a there's like a bidding war going on and I thought zel'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 cuz 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 zelop Pine in his typical tongue and cheek manner the fact that they decided to finance their $32 billion offer with 16 banks at $2 billion each instead of three banks at $10 billion each might have suggested
perhaps they were thinking that if they could get 16 banks for $2 billion each there weren't going to be a lot of [ __ ] Banks left to finance a competitor and when I read that quote from zo 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 zel and same thing that Charlie merer had too he's just downright comfortable with his his Persona this is another thing that me and Rick uh zel's friend and mentee were talking about he told me 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 them and that I learned from them 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 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's proudly admidst 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 zel with absolute certainty you always know where he stand and 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 one thing zel repeats too is the importance of salesmanship of sales
is like the maybe the most valuable skill you can have according to zel 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 success zel 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 now I keep repeating the fact that you know zel 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 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 zel is fearless he insists quite the opposite is true listen to that oh zel's Fearless he's like no [ __ ] that is not true this 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 I've 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 iven and Dr Dre it is excellent but Jimmy iven talked about he he is 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 zel 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 his well as the next guy 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 one time and I think
he was asked like the single best idea or the the 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 sisms 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 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 zel just got right to the essence of all these deals is something he learned from the from Jay pritzer says Z I love this zel insists that briefings be kept to a single page no matter how complicated the deal or issue anything more is summarily dismissed for zel simple ideas
and Concepts have yielded the highest rewards 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 zel from people all throughout his career the N zel insists that he he's constantly eager to learn and to do rather than sitting Pat with what he's already learned as 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 failur is are 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 zel the true test of an entrepreneur is someone who spends his life constantly testing his limits the definition of an idiot is someone who is reached his goals and then this could almost be like zel's Mantra non-conformity is wonderful and I think zel took his own advice because he he says zel 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 repeat it over and over again is go for Freedom you know he's saying hey 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 them and one of the things was that you have an obligation to share what you learn that Sam flew all over the world to talk to other entrepreneurs at his expense just to teach everything he learned uh he considered it an obligation to pass knowledge onto the Next Generation and so there's a there's
a couple 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 one my favorite exchange that ever happened his can be very like Charlie Monger esque a favorite zel classroom moment came during one of his frequent visits to the warden School of Business and at the end of the talk there's Q&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 5 years Sam looked at him and said why the hell do you get to be like me in 5 years when it took me 40 and this is perfect the point was not becoming him it was that becoming whoever you are is going to be an ongoing process and that professional success is not crafted in 5 years it's crafted in a lifetime we talked about
one of his favorite books this is one of his favorite quotes one of zel'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 most moated 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 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 zel is turning 68 years old and he's asked what message he would like to have
on his Tombstone zel responded without thinking he was a man of his word most important of all whether it be in the business world the philanthropic world world or the sports world I want to make a difference that's what motivates me 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 zel 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 zel and then episode 298 where I go over the lunch the I think the first 30 minutes of that podcast is uh 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 Z Andor autobiography
he found an idea in that book that he used throughout his entire career and then I go over what I learned uh at the second half so that's episode 298 that is where I'll leave it for this full shortly if you want to buy the book use in the link that's in the show notes are available on your podcast are available at FP podcast.com you'll be supporting the podcast at the same time that is 367
books down 1,000 too 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 build this AI assistant that helps me do this so what I was talking about is this thing called Founders notes Founders notes is this internal tool that I built for myself that keeps track of all my
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