YouSaid · the spoken record

Sam Zell

lines on the record: 123
first: 2020-01-23
most recent: 2020-01-23
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“And the National Association of Real Estate Investment Trust asked me to give the keynotes speech. I remember working on this bullet points for the speech as I was flying into New Orleans, and I basically got up there and I said to them, I said, guys, I said, we have a horrible track record as a real estate industry dealing with the public. Because up until then, the only reason that there was any kind of a public real estate trust or real estate anything was because there were no other options. In other words, you know, so if you wanted to dump some properties, you created a real estate investment trust and you took the worst of your properties and sold it to the public. And this public where the fish, you know, the old poker story of if you're sitting there and you don't know who the fish at the poker table is, it's you. Well, that's how they did it and it was not driven on what were the basics of...”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Of what was available was dramatically more available than ever before. And in 1993, in October, the National Association of Real Estate Investment Trusts, which was really another backwater organization whose sole objective was to protect the REACH law as written in 1958, with no understanding of the bigger scale questions and liquid real estate and what this was all about. In 1992, at the National Association of Real Estate Investors conference, I think they had 20 people. Between 1992 and 1993, as more and more people became more and more knowledgeable, when we had our conference in October of 1993 in New Orleans, we had 1,500 people. They'd never seen that many people involved in anything to do with real estate.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“So, people like me were sitting there and saying, you know, where is the capital going to come from for the real estate industry in the future? Somewhere along the line, the thought process became, well, it's going to be real estate investment trust. And in effect, we're going to have to access the public markets in order for the real estate industry to continue going forward. And so we began studying it and actually working with Merrill Lynch on the first of the, quote, modern REITs. I became very involved in the processing because I recognized that this was the solution and that ultimately this, if done right, would ultimately fulfill the ultimate dream, which was quote unquote liquid real estate. Because ultimately real estate was illiquid. And that was a big problem. So if you could create liquid real estate, then the”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Have been very difficult. So the idea was that you'd create these reets, and then the classic description was the little old lady from Pasadena who wanted to own a piece of a New York office building. But effectively, because it was so unattractive compared to the private real estate side, it attracted very, very few significant players. It attracted very limited amount of capital. And it was kind of a backwater of the real estate business. And then in 1989, we ended up with a very serious oversupply of real estate. And that led to a couple insurance companies went broke to savings and loan industry went broke. And little by little, all of the sources of capital that had funded the private side disappeared.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I mean, that's when I did. And I was, you know, we've built a major real estate company, we had huge office apartments, retail”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“You had to distribute most of the income. So that was created in 1958, and they were, I don't know how many there were, but there were probably 10 or 15 that were created over the next give or take 25 years. The industry never grew very much. By the time 1991 came around, the entire industry was only $7 billion. And the reason was that the private real estate market was so much more attractive that the red world up until that point only attracted people that came from insurance companies or non-entrepreneurial scenarios. And effectively, it was just kind of a byproduct of the real estate industry, but all the action was on the private side.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“It all began in 1958 when President Eisenhower signed something called the Cigar Bill. And it was some kind of legislation that had to do with cars and I don't know what it was. Somebody had added a provision that created the quote real estate investment trust. And the idea was that they wanted to create a vehicle that effectively created an opportunity for small investors to own pieces of large real estate projects. And the REIT concept basically said Whereas a corporation is subject to double taxation because REIT's real estate was illiquid, they eliminated one of those two steps so that in effect the REIT law allowed the creation of a vehicle that didn't pay corporate tax but only pay tax on the distribution and the requirement was that in order to qualify for a reach”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Yes, well, first of all, the two of them before Bob died spent a lot of time talking about philanthropy. And they both decided it's very cheek today to talk about the giving pledge. But this was 1990. Nobody heard of the giving pledge. But these two people said, you know, we have a fortune that we've made and we have to give it away. And we want to give it all away. And we don't want to burden our children with any significant inheritance or the burdens that come with it. And so, in effect, before he died, they kind of had an act as to what they were going to do. And she happened to be a nurse. So particularly focused on medical and eventually the Lurie Hospital and a lot of other things that she did that were all involved in medical and created a wonderful legacy for him.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I think that as I think back on it, I think that all I could think about was our legacy. And I think that I was more motivated rather than less motivated. And then I wanted to do more because as far as I was concerned, everything that I did represented me and represented him. And later on when I endowed the real estate center at Wharton, I endowed it under Samuel Zell Robert Lurie. And when we did the entrepreneurial center in Michigan, I did it under Samuel Zell and Robert Lurry because everything I thought I was doing, I always thought I was doing for us and that I thought what I did and how I did it reflected as much who I was as I wanted the world to remember who he was.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And he says it was obvious to me that you just didn't accept that as a possibility and you needed to know that we're at the end here now and I've got to prepare for it. I'll never forget that morning as long as I live because it was so shocking to me because it just, I never even thought that dying was an option, that there could be a terminal event here. I mean, you know, I got a cold. He got sick. I didn't really connect it, but it was from that point forward that we started to prepare and eventually died in June of 1990.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“That he told me that. We went on and he had surgery and he had various issues and suffered a lot. But then came back and I just never assumed that anything was other than just going to be painful process, but there was never a terminal end to it. And then in February of 1990, he came down to the office on a Saturday and he hadn't been to the office for a month. And he said, I came down today because I wanted to talk to you. And I said, okay. He says, I want you to know that I'm going to die. And I looked at him and said, you're going to die? That wasn't on the list of options that I thought was possible. He said, no, no. He said, you don't understand. I've been trying to tell you for a couple of years now that this is very serious and very rampant and that not too many people survive.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, he come down with a relatively aggressive form of cancer that he was going to get chemotherapy. And I just assumed that he would suffer a little bit and he'd be fine and we'd go on. And as this was in September of 80,”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Lives both had wives, both had children, but we focused our time together on our enterprise. And once a year we had dinner, the four of us, and we had a wonderful time, but we never really tried to connect the personal day-to-day relationship with the personal relationship to building a business. So we spent 99% of our time focusing on building our business relationship and very little time. And we ended up with completely unrelated social relationships.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I've never heard that phrase, but I think that's exactly right. In other words, our skill sets were very different. I mean, he was really an engineer. I mean, he literally, if the books didn't balance, the numbers didn't try to, he would just stop until they tie it out. I would say, well, they're close enough, you know, and next. And I would be willing to go talk to anybody and chase down anything. was a homebody, but we had a unique relationship and we could finish each other's sentences. We understood each other. And later on kind of understood also that a very important part of our partnership was that we didn't have much of a social relationship. So we didn't have the classic partner of the wife who says, how come they got this and we got that? We basically had independent social.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And then we were 60 40, and then we were 50 50. And it all became an example of transferring of risk because he, in effect, began taking on the risks that I was taking. And we built the business together.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Laughed and I laughed, and then I moved to Chicago. And we continued kind of a very touch-based relationship, but not much. And then about three years later he called me and he said, Sam, do you remember the last thing you said to me? And I said, yes. And he says, well, I'm ready. And I said, without hesitation, I said, come on. And so he moved to Chicago. And I was very sensitive to the fact that I didn't want him, if he was going to be my partner. I didn't want him to ever work for me. And so I said, instead of paying you a salary, I'll give you an opportunity to own a piece of the deal. And as time goes on, we'll increase that to the point where we'll eventually become partners, 50-50 partners. And literally, that's what happened. We started out at 8515. Then we were 73.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Good I can be. I have to find out what I can do, how far can I push and test my limits? And so I decided that I was going to sell everything in Ann Arbor and move to Chicago and see if I could build a career. Eventually it came time to figure out who I was going to sell the business to. And Bob became the obvious person because he was going to stay there. I basically sold him the business. And the last thing I said to him was I said, when you get tired of screwing around and you want to come play with the big boys, call me.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Third building. So there were two of us together, and we now needed a third guy. So we talked about it and we offered Bob the opportunity to join us. And he did. And eventually, and Bob was an engineer and very, very organized character. So he, in effect, started turning what was literally hardly a business. It was two guys trying to get a free apartment and helped us turn into a business. And then when I graduated from law school, I was confronted with this incredible decision of what was I going to do. At that point, I think I made a quarter of a million dollars my senior year in law school. It's just an enormous amount of money, and I was a big deal in a small pond. And the question was, should I stay in Ann Arbor? Obviously, it done very well there and I knew everybody. And I went back and forth about it, and I finally said, you know, I have to find out how.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Bob and I pledged the same fraternity at the University of Michigan in 1959. We were both part of a 21 Guy Pledge class. I didn't know him very well. We then both worked on a campus-wide thing called Soft Shell, and we got to know each other a little better, but basically didn't really know each other at all until we were friends and like all of my fraternity brothers, but that wasn't really a big fraternity guy. And then when I was a senior and I had started this real estate business, I was in the house one night for dinner and he said, you know, I heard you were renting apartments and kind of running a little student housing project. And I said, yeah. And he said, that's really intriguing. If you ever need anybody else to join you, you should call me. And literally a couple months later, we got our...”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I don't know how you can think about it in any other way. I mean, if you're investing 401k dollars, you're basically trying to provide for your retirement or for your future. So then the question becomes, okay, what stands between you and achieving the objective? And if you can understand what it is, then you can quantify the risk. Can I rent the office space? If I can rent the office space, if I can bet on Raleigh, North Carolina being a growth area because of the research triangle. That's the assumption. That's what makes you decide to invest in Raleigh or somewhere else. There's always some epiphany point that is what motivates you to make the decision. And that's the ultimate judgment you make. This is why I'm doing this. Why is a critical ingredient? And why? Usually connects to the word risk.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Space, if you could lease the office space, everything else worked. So, all the other things that I did to mitigate this, to mitigate, they're all irrelevant. Only real issue was, could you or could you not rent the office space? If you could, the deal was going to work. If you couldn't, all the other stuff didn't matter. And the ability to zero in on what it is that represents the decision-making risk. That's really where it all comes down. And that's really what I learned from him.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And they don't understand what the risk they're assuming is when they do the transaction. And what he taught me more than anything else was look at the deal and figure out where is the vulnerability, where is the assumption you've made that has to be right in order for the deal to work. And we were working on a deal in 1969, and it was very complex. And I put together a very complex presentation and sat down with them and took me 25 minutes to explain how we were going to do this and do that and do this and do that. And at the end, he looked at me and he said, well, step seven is the only step that's really relevant. That's where the risk is. If you can satisfy yourself that step seven, in this case it was a multi-use complex and the risk really was, could you release the office?”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I'm not sure I know where to start, but I think it begins with the fact that you had to be realistic. You had to be able to look at it and say, what could go wrong? You know, if I learned anything from him, I learned that everything, if it went too well, you could survive. The only time you couldn't survive is if it didn't go so well. So focusing on the upside was interesting, but not productive. Focusing on the downside was what risk was all about. And to the extent that you could quantify the downside, to the extent that you understood what the risk was you were taking, your chances of survival were much better. I think the key ingredient of that is focusing on what is the risk you're taking. I think a lot of people get in a lot of trouble because they do a transaction.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Me, I should come to work for you. Why don't we just do a deal together? And so we did a deal together, and that was the first of maybe 10 or 15 deals that we did over the years in various different places and different kinds of structures that led me to spend a lot of time with him and find him to be one of the most intriguing individuals. And frankly, the smartest risk guy I ever met.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And so I said, okay, so he called Jay, and the next morning I went over to Jay's office at 9 o'clock. We just hit it off. And I sat at his desk from 9 o'clock until 4.30. And meanwhile, he took calls and he made deals, and I listened, and we talked about everything back and forth. And when we got to lunch, he sat me down and he said, this is an incredible opportunity for you, Sam. You can come work for me and do real estate deals and you got to keep 5% of everything you do. And I looked at him and I said, gee, that sounds like a prince curil. And he didn't laugh. But I said, you just need to understand that if I have all of the characteristics that you really want, then you shouldn't be able to hire me. And ultimately at 4.30 that afternoon, I said to him, you know, I said, rather than spend all this time where you keep trying to convince.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I had a friend of mine who is a national broker of real estate. And he and I were friends and he called me one morning and he said I was in Atlanta yesterday with Jay. And I said, Jay, who? And he said, Jay Pritzker. And I said, oh yeah, I heard of them. They're very wealthy people in Chicago. He said, Jay is really extraordinary. And Jay is looking for somebody to come work for him who is under 30, a lawyer real estate entrepreneur. And I said to this guy, I said, well, if somebody actually met those criteria, why would they want to work for Jay or frankly work for anybody else? And he says, you're being too glib. This is an extraordinary guy. You really need to meet him.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Thought it was going to cost because the costs have gone up in the meantime. So all the variables and the weather and all the things that happen and contractors making mistakes. And when they made a mistake, there was nobody else to blame it on. And the fact that they made a mistake was too bad, but I was the guy who had to live with that mistake and lived through it. So I kept looking at all the variables and saying, I don't understand why would anybody be a builder when you're taking on all these variables and the best thing that happens is at the end, you produce the same thing that you got when you...”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I did that in the late 60s when I built my first apartment project in Lexington, Kentucky. And when I also built the project that ultimately led to my relationship with the Pritzkers, which was this project in Lake Tahoe, in both cases, they were development projects and they were from the ground up. And in both cases, I was very disappointed at how difficult it was. And I kept looking at it and saying, this doesn't make any sense. You're taking all this risk. You're starting to build something when you don't know what the market's going to be like when you finish it. Either you're putting it up for rent or you're putting it up for sale depends on what the conditions are when you finish. You're subject to variances in costs. I mean, there's no greater lesson of inflation than designing a project and finding out that it costs 20% more.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Again, I think you're giving me way too much credit. I just don't think I thought about it that way. I mean, I thought about the fact that somebody had to cut the lawn. And I knew that if I grew the size of the business, it wouldn't be me who had to cut the lawn. And not being the one cutting the lawn or cleaning the hallways or whatever was certainly as much an objective as making money”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I didn't know that that was a very high price. I was creating a price structure that was very attractive to me. I just thought, gee, I wouldn't do this unless I got a 16% return. So six times cash flow made perfect sense. And that's the way I thought about it. That's the way I thought about how do I raise money in the same manner. What was attractive enough to get somebody to entrust their money to me?”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Well, at that time there were a lot of quote unquote income-producing assets that were available. I've always been a great believer that there's a lot of quote-unquote execution risk that has to be fit into your thought process when you're making a decision. In that particular time, again, keeping it very simple, if I could establish a definition of cash flow and in effect, I would literally remember going to developers and saying, it's real simple. Take the bottom line, multiply it by six, and that's what I'll pay.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I took Econ 101 at the University of Michigan. I walked into the first classroom and written on the blackboard was supply and demand. And I have to be honest with you, I'm not sure that there was ever anything else in Econ one hundred one that I learned that was relevant that if you understand and are focused on how supply and demand affects pricing, how it affects decision making, how it affects risk, it's the governing principle of everything. But it's also simple.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“One transaction people lined up to invest with me. Probably they were enthralled by the fact that how could a 25-year-old be actually doing this? I never knew that every other 25-year-old didn't do it as well, never even crossed my mind. I just kind of did what I thought made sense.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Couldn't even imagine thinking that way. All I thought about was here was a transaction that made sense. I thought it was terrific from a yield point of view. It never dawned on me that this wasn't what everybody did. By the way, that's kind of a theme in what I do in that what I did was I never really understood that what I was doing was so unique. I just thought I was kind of making it up as I went along. And I went from that deal to one in Orlando and one in Tampa and one in Reno and et cetera, et cetera. And after the first deal was the last time I ever had any trouble raising money. So that first deal required $280,000 of equity, which in 1959 was 1968 or whatever it was a lot of money. But once I'd done that,”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Actually, it's the second deal. My father, when I was in school, I ended up buying a square block, kind of house by house. And I didn't have the money, but I had enough to tie up the properties. And he eventually came and put up money and helped me get that first thing done. But this was the first quote-unquote investment deal.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Him much more conservative, but it's still an 8% return in an environment where 4% was the standard. So he recommended that we go ahead with it. And he put some of his own money in it. And so he did the deal. And sure enough, it produced 19%, just like I said, it was going to.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“That assumes a much greater knowledge level for me than was conceivable at the time. All I looked at it was how much were we reinvesting? What was the cash on cash return? The first deal, the cash on cash return was nineteen percent. This was in the same environment where I had seen my father was investing money at four. And my father had just sold a number of interests in deals, so he in effect brought him this deal. And he looked at it as basically said, you know, come on, this is bullshit. But he called up a friend of his who was a property manager and said, you know, my son Sammy has brought this deal and it's ridiculous. It's 19%. But would you take a day and go look at it? So the guy went and looked at it, came back and said, you know, it's a terrific deal. And I've adjusted all the numbers.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“I did was an apartment building in Toledo, Ohio, and he got to understand that part of the time, not too different from today, Toledo wasn't a very popular place. And I was keenly aware of that. But what I realized also was that because Toledo was a car manufacturing center and because it was referred to often as the armpit of the nation and a very negative environment, that also meant that no insurance company that made all the loans for real estate was going to underwrite a deal in Toledo when the statistics the city was shrinking, et cetera. But all I looked at was the fact that I was able to buy one of the few apartment buildings in town. So I didn't have any competition. So that deal was one of the most successful deals that I had ever done simply because there was no competition. And therefore, where there's no competition, you can...”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And it dawned on me that when it was all said and done, the single most important criteria as an investor was what was your competition? And to the extent that you were able to operate and invest in arenas where there was little or no competition, you got much better deals and where there was more people, lot more deals and a lot less attractive returns as a result. And so that's when I kind of learned about or didn't really understand what I was learning at the time. But what I really concluded was that competition was terrific, particularly for somebody else. But for me, the real goal was to find situations where I could operate in a competitive environment that gave me the edge. And that became a principle of everything that I did. And so whereas the first major deal”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And I had been doing deals in Ann Arbor where I was getting 16, 20, 25%. And I just didn't understand. And then I realized or I came to the conclusion that what he and his buddies were doing were investing in what was already existing, proven commodities, which were the major cities, and that in effect, if I were willing to invest outside of those major cities, I was in a competitively better position. Whereas he was investing in New York, Chicago, and Los Angeles, et cetera, I ended up investing in Ann Arbor and Madison, Wisconsin, and Tampa and Jacksonville and Orlando and Reno, Nevada, and Arlington, Texas, all of which were small cities, growth cities, and ones where there was no competition.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think that one of the most significant things that happened was that while I was in law school, I went home and I sat down with my father. And my father had been a very successful businessman and had joined other people in investing in quote unquote commercial real estate opportunities. So I came to him and I said, tell me about your deals. And he kind of proudly looked at meself, sure, and he started describing it to me the deals that he had invested in. And when I listened to him, I realized there was a consistent theme to what he was talking about. And basically, he was investing in deals that were in major American cities, New York, Chicago, Los Angeles, San Francisco, but nowhere else. And second of all, he was getting what he was very proud of was a 4% return.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And I remember I was so depressed, I didn't know what to do. And I went to the gym and I shot free throws for an hour or two hours just to try and get this buzz out of my head. But then I realized that I had to leave. Subsequent to that, not too long thereafter the end of the year, I was gone and set up my own shop.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“It down to 25. I said, okay, so we'll cut it down to 25. And so in effect, at the end of the first year, I think that, and this is 1966, and at the end of the first year, I think that my quote unquote job paid me $7,600 after I passed the bar on a per annum basis. And I think I made $75,000 as a result of my percentage of the business I brought in. Well, that was a huge number, and I was obviously thrilled about it. And then they gave me a bonus, and the bonus was two hundred dollars. And I said, I remember it was the most depressing thing. What I wanted was recognition. What I wanted was them to understand that I was really, and instead, by virtue of paying me $200, they were telling me that what I was doing wasn't very valuable.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“A little entrepreneurial, and maybe they get an estate from somebody in the family who died or the contract, but the whole idea of quote-unquote hustling business. And so they, in effect, offered me the same objective. And of course, I started creating huge amounts of business. And so, I don't know, maybe four weeks later they came to me and they said, well, we had this deal where we gave you 50%, but that was really under the assumption that maybe you bring in one deal. And so you'd get one positive experience. But the volume you're doing, I mean, we can't afford to give you 50%. So we're going to make a 35. I said, okay. So then three or four weeks later, they came back and they said, well, you know, we made this deal with you at 35 when we were assuming you were going to bring in this amount of business. And now you've brought in twice as much. And we got to cut.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And he looked at me and he said You're going to do what? And I explained to him that that's when I was going to do and that I thanked him very much for the opportunity and he said, well, I've got a suggestion for you. I said, why don't you just stay here? And the law firm will do the legal work on your real estate and we'll invest with you and help you get started. And I thought about that and I said, well, that's a terrific opportunity. And so I said, fine. And the next day came back to the office and I was no longer a lawyer. And I was chasing deals. They at the time had a policy in this law firm where they would give everybody 50% of any business they brought in. And the methodology behind that was that we're trying to, in effect, encourage young lawyers to be.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Just went to three years of law school, and this is what ends up. And so I then redid it again and finally submitted it to him. And before he responded to me, I went into his office on Friday morning and I said, could I speak to you for a second? He said, sure. And as only a 24-year-old would have thought, I looked at him and I said, You know, I really don't think this is a good use of my time and I'll never forget the look on his face. And he looked up at me and he said, what are you saying? Said, I don't think this practice of law is good use of my time. He said, well, what are you going to do? Said, well, I'm just gonna go back and pick up where I left off in business in Ann Arbor, and I'm gonna try and build a real estate business.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Know a lot about theoretical conflicts of interest and broad concepts of the law, but how to draft a contract, not a chance in particular if you went to a good law school where in effect they looked down on any quote unquote lawyer vocational training. And so I went and I asked the guy who was sitting in the next office and he gave me some form books and said, here this gives you a base. And so I started working on the form books. It was terrible. So I submitted the first draft after a couple of days. And it came back and it looked like the senior partner who had reviewed it had slid his wrists because he used a red pen on it and the whole thing was full of red this and red that and I'm looking at it and saying.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Like this, it's because everybody looks at you and says, This is a guy who's going to do something else. And why would we want to train him if he's going to be gone very shortly and never forget that interview and ultimately did get one job actually with a firm that was kind of half entrepreneur, half law firm? I got there the first day and I had this tiny office that was like six by six. They gave me a contract to do between a linen supply company and a dormitory in northern Illinois University and some client with a firm was built the dormitory and they were entering into a contract with a company that provided linens. They wanted me to write the contract. Well, for anybody who's been to law school, they know that the day you get out of law school, you don't know anything about being a lawyer.”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“And he said, Tell me about your deals. And I looked at him and I said, tell you about my deals. I want a job, he said. We would never hire you you wouldn't last more than three months I said what are you talking about? I said I want to be a lawyer what about Perry Mason? And he laughed and he said you don't understand and of course the truth was I didn't understand and so I basically asked him about it and he said do you understand you put on your resume all the things that you did while you were in law school and while you were an undergraduate and you built a real estate business you managed hundreds of apartments you bought buildings you refinanced buildings you wrote a manual on property management and you're literally just graduating from law school how would anybody like you want to sit there and draft contracts all day and I just looked at him and I said well I don't understand he said the reason you've been rejected”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, actually, the better part of the story is that I had 44 interviews. 44 talking about rejection and I got rejected by 43 when I sent all the letters and I made all the appointments and followed up on it and what I didn't understand was that and it was actually made very clear to me when toward the end of this process I had an interview with a big fancy firm and I got through the first interview and I was very excited because I had been used to people rejecting me and then I had a second interview at the firm and went really well and they set up a meeting for me with the senior partner whose name was on the door and I remember going in to see him I walked into his office and it was a typical wood paneled lawyer's office with books all over the place and he was on the phone and he gesticulated with his hand and said sit down and I sat down and he finished the phone call then he got up and he closed the door to his office”
2020-01-23 · The Tim Ferriss Show · #407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking · IDENTIFIED FROM THE TRANSCRIPT