#298 I had lunch with Sam Zell

Transcript from https://podmenti.com/t/a8ab03d2222fa176

Okay, so this episode's gonna be a little different. What I'm gonna do first is go into detail about
What I learned from having a two hour lunch.
With Sam Zell.
He sat directly across from me for two hours. I got to stare in his eyes and hear
Crazy, crazy stories.
Uh that this from his amazing
you know, more than six decade career of being an entrepreneur.
And then after that you're gonna hear
uh a normal founders episode where I go into detail about
What I learned from reading
William Zackendorf's autobiography. So
And that came about because as I was talking to Sam Zell
I was like, Hey, uh when I was reading your autobiography, Sam.
You mentioned reading Zack and Dorse Autobiography when you were a young man and you thought it was very valuable. You got a lot you got a good idea out of there.
And I was like I bought the book.
After
Reading it about it in your autobiography.
And then he said to me, he's like, Have you read it? I go, No, not yet.
And then he said in his like deep voice, like
Read it.
And so
That was good enough for me. If Sam Zell tells me to read a book, then I will do I will read the book. And so that is what the episode's going to be about. So I want to start at the end.
First and then I'll talk to you about
how this came to be and all the stuff, uh a lot of the stuff that we talked about.
So I get home.
After
spending over two hours with them.
And the first thing I say to my wife, this is what I mean by starting at the end.
I was like I want
That
I want
that to be eighty one years old.
Still fired up.
About
Your work.
Still unbelievably curious around about the world.
Traveling all over the world.
Still reading books, still listening to podcasts, still
Uh doing deals.
One of the first things we talked about is this deal that he was doing just lit up like completely in love.
With
his work and and life in general and just unbelievably curious. He's got this uh
famous quote that he says like people sometimes ask
Ask me when I'll retire.
And he says, retire from what?
I love what I do.
And just his energy and his enthusiasm and his sheer like full zest of life. I got back and I was on like a high. Like I was like high from the conversation, right?
And so
That's I was like
I want that.
When I'm eighty one.
That's what I want to be like. I want to still be fired up.
I still want to be
You know, working.
Like this idea where you know, d a as entrepreneurs like
Our life.
And our work is really inseparable.
It's not a job. It's not some you know, even though they can be very difficult, it's not drudgery. It's not something that we do like we do it because
Sam has
He could've re if it was just about money, he could have retired, you know, fi fifty years ago, forty years ago, whatever it was.
He's not doing it for the money.
He's doing it because he loves to do it, because he has to do it, because he wants to do it.
And then the other thing that I told my wife too was like
I know f without a shadow of doubt.
This idea of hey
We need to go back through the history of entrepreneurship.
We need to read the biographies and autobiographies of the people that came before us.
To learn from them.
I'm supposed to be, you know, like I've read almost three hundred biographies. I've been doing this project for seven years so far.
You know, like the business history guy, s to so to speak.
Uh
There was not one thing.
That I could bring up.
That Sam did not already know. This guy's

historial knowledge about the history of business.
Real estate.
Entrepreneurship.
Any obscure person I could bring up, right?
I pulled everything I could think of.
I bring up a name.
He knew the name.
He knew the company the person owned. He had read the book.
And so having the opportunity to have lunch with Sam Zell and then a few weeks later have dinner with Charlie Munger, what you notice is the similarities. It's like
Okay.
Sam sold his company, you know, for almost forty billion dollars. It's like you don't
build a company and sell it for forty billion dollars and then learn all this stuff.
Like he was had an insatiable thirst for knowledge and information that could be useful to his life and his career.
His entire life.
He
knew this stuff as he was building his company. Same thing with Charlie Munger. It's like he didn't you don't become a multi billionaire.
Then in your nineties decide, Hey
I'm gonna start learning from history. It's like no, they did this.
From when they were unbelievably young, and they never stopped.
That is how I know that you and I are on the right tr w without a doubt.
We're on the right track with what we're doing here.
Okay, so that was the end. Let me tell you the beginning and how
This came about.
And this goes back to something that I've
Fun I firmly believe and I feel that
Uh podcasts.
Podcasting in in general is a miracle.
Um you really never
Ever knows.
Who is listening?
And so I get a DM
From Rick Gerston, who has been friends a close friend of Sam for like two decades. Sam has been a mentor
of his and like really helped and guided and uh like been an inspiration in his career.
And so he he I I get this and I thought it was fake.
Like I guess I should start there, right?'Cause you get all kinds of bizarre messages.
Um, like when you have a podcast, obviously.
And this came from a
Like a Twitter account where it's just like
There was no picture, there there was no content, they didn't follow anybody.
It's just saying hey.
This is who I am.
I also live in Miami. I run an uh an investment firm.
And I I was gonna see if he wanted to have dinner with Sam Zell and me in Miami. He's in Miami all the time.
And it's he's like he's always hungry for information.
And he's like, I actually turned them on to founders, which he loves.
And he really liked the episode that you did on his in uh on his autobiography.
And so I was wondering I was like
This would be incredible. I would love to, absolutely.
But I thought it was fake.
Like that was just like
There's nowhere in the world
Like why would Sam Zell want to meet?
I had read his biography, I'd heard him on podcasts, I watch videos of him.
And first of all, get into like when you meet him, it's like he's the same dude.
the same guy that you see on TV, the same guy giving interviews, the same guy giving speeches, like that's him. And that's another thing that
I found it so admirable.
I found the same thing when I was meeting with Charlie Munger is like they are authentic to themselves.
And I j that's something obviously trying to strive to be like
I just love seeing that because sometimes you see like the public persona is fake.
And it's not who they are.
And yet with Sam Zell and Charlie Miller, it's like oh
You're the exact same person.
And a lot of people have said that, like when they hear me in the podcast they may be like, Oh, this is like having a
having dinner with you is like having like a three hour long founders episode.
And so I was like, Okay, yeah.
I would love to and then I just forgot about it'cause it's like there's just like
Sam Cell does not want to meet me. Like this is absurd. Like I'm just some little podcaster.
you know, reading biographies in in a room by himself. Like why the hell would he want to meet me? That's just so bizarre.
And so then I uh then I went up like a week or two passes.
And then Rick text me.
And he's like, Okay, he's coming to give a speech at this conference on this date. Are you available that day?
And first of all, I'm like, okay.
It's Sam Zell.
Like there's nothing else in my fucking calendar, right?
Like this guy sold a company for forty billion dollars. Like, yes, I am available any time and and I'll
I would even fly to anywhere in the world to meet this guy. Like, are you kidding me?
And so anyways.
Now we have a date, we have a time. I still
Do not believe
That this is going
To happen.
I was like, No, this isn't gonna happen.
And then a couple of days later, it's like okay uh now it's set for this restaurant at this time. I'm like
Okay, now we're getting really specific. Like this is some kind of weird hoax you're doing, like this is
Pretty crazy, but I still didn't tell anybody about it.
Because I didn't believe
That it was actually gonna happen.
And so on the day
Um
On the day.
Of
Like
Now we have a date and time, now it's the morning. So I'm like, Okay, well, this this might happen. Like I'm supposed to go to lunch with Sam Cell. And then I was like, Okay
As it got closer, I was like, Okay.
Maybe it is a lunch with Sam Zell, but maybe like it's not gonna like I'm not gonna he's he maybe invited a bunch of people and I'm like the token podcaster or something like that.
There'll be like twenty five people there and won't actually get to talk to them. That's not what it was at all.
It was just me, Rick, and Sam for for two hours. It was incredible. Sa and Sam sat right
like directly across from me, I looked him eye in eye, got to talk I got to answer ask him any question I wanted.
It was absolutely incredible. But
The morning off, I'm like okay.
I tell my wife, listen, I'm gonna share my location with you.
Uh, in case they kidnap me. There's some crazy shit happening here.
I might get kidnapped.
At least you know where I am.
And so I drive
Uh to the restaurant at the time I'm supposed to be there.
And
Uh me me and Rick agree to meet like I think like thirty or forty five minutes or maybe even an hour in advance.
And we wind up having this really interesting conversation because he's got all these crazy uh interesting stories as well. He's got a really interesting career.
And then he's telling me this this story, and then uh he looks over my shoulder and he goes, Oh
There's Sam.
And I t turn around.
And
It's Sam Zell.
By himself.
Like I was just like expecting like maybe an entourage or I don't even know what I was expecting. Him to be carried in on carried in like a
Like an Egyptian pharaoh or something.
And
So he shakes my hand, he sits down right in front of me, and the first thing I say
Okay.

I was like
You're fucking Sam Cell. And he just laughed and laughed and laughed.
And so one of the first things I got to talk to him about
was something that uh his family has uh in common with my family.
If you read Sam's autobiography.
Uh you know that
His father
Uh
It was actually very interesting. I think his father was like a grain trader.
If I remember correctly.
And so he had inside information, he knew like the the the stuff going on with Hitler was not good.
And so his father escapes with his
His wife
Sam's older sister.
Uh, Sam's not born at this time. I think his wife his his mom is gonna get pregnant on the way over'cause I think uh they're in America for like ninety days by the time Sam is born. So what we have in common is the fact that
They had escape.
Uh, like y I mean Hitler's way worse than Castro, but Castro's pretty bad too.
And so they leave the on the last train of Poland and then the Nazis wind up b bombing that train. They didn't know that. So
What was interesting is how many people that Sam's father
He was trying to convince the rest of his family this is bad. We need to get out of here.
And imagine
how difficult a decision that is. Like you've lived in this country your whole life.
You have family, friends, jobs, and
you're you're somebody's trying to convince you like you have to get up and leave. So it just takes like a a different kind of person.
And I was like, Sam, like I I I had a very similar experience.
My grandfather was the same age as your father when this was happening.
He was married, he had a baby.
And he just saw that bad shit was coming with Castro and he wind up
Leaving everything. You know, he didn't have any money, came to a country uh he wasn't a citizen of, didn't even speak the language.
And just literally has to flee.
To try to protect his family.
And so I was thinking about that story before meeting Sam and
When you hear Sam talk and also in his autobiography, it's like
This guy's obsessed with learning.
He even says like in um I think he he did the
It is fantastic episode.
on the uh Tim Ferris podcast.
Uh Peter Tia actually interviews Sam Zell for the Tim Ferris podcast.
And he says it's like like I just read and read and read. I'm never without something that I'm reading. He's constantly searching for interesting information. So one of the questions I got to ask him is just like
I can't help but notice that
Your life, your family's life was changed because your father
Had
access to valuable information and yet and reading your story.
And it seems like
You did that all your life.
And in his case he he applied it to the b like is there
Am I right to pick up on that? Like
your insatiable hungry like uh thirst for knowledge, you saw the benefit. It could it it could literally save your life. Not only could it
stumble onto a an idea that you can use
Yeah, it's helpful in your business.
But like in your case, it literally saved your life. And he's like, Yes, that's exactly it.
And he's just been this voracious reader, like
The crazy thing is
Right.
I'm this guy
Like
It speaks to a lot. Like
The idea that Sam's h how valuable Sam's time?
Like
It's insane.
Like the I got two hours of it. It's it's just
I'm so thankful. Like I I got back and I was like
That is
uh you know, uh a lunch
He may not remember and I'll never forget.
You know,'cause I'm sure he meets a ton of people. He's got all kinds of, you know, contacts and business deals and everything going on.
And I so I really do appreciate the fact that
You know, I I'll never forget this. Like I'll remember it'til the day I die.
And
Uh what's so interesting about though is like
He's telling crazy stories from his six day six decades long career.
about all different business deals, building companies.
Buying companies.
uh selling companies, all kinds of fascinating interesting stories.
Right.
And you would bring up something.
And he would explain like, Oh yeah, that business that's happening today
Is like what this guy did, this you know, I'm making up names'cause I wasn't taking notes while we I no one looked at their phone.
Oh, yeah, it's actually funny. So one time he looked at his phone.
Uh he was we we were talking about one of the pieces of advice that he had
Um was, you know, listen.
The wealthier you get.
You're just buying like
It's just nicer things of the same stuff that always happens. It's like you don't want to own a bunch of things'cause then you have to take care of them.
You know, you have to manage them every he's talking about out in your personal life.
And so his whole point is just like, you know
He o he has a place in Chicago and then a a place in Malibu, and it was funny.
Because you know how rich and famous you are.
When he wanted to show me pictures of his house, he Googled
He hands me his phone and it was Google Images and it says Sam Zell Malibu House.
And I was like, All right, man, that that's a goal of mine. Like, that's pretty crazy.
Um, but one thing he was saying is like listen.
You know, you don't want to get caught up in that. You don't want to own a bunch of stuff. You know, you're gonna make a lot of money.
In your lifetime.
And you just realize like, Okay, now you have a house and you just keep like you're just buying more. It's the same things, it just gets a little nicer. Don't get caught up in that. And so his main thing that he said to me over and over and over again.
His main piece of advice.
That's the same.
You know, we probably talked about in like six different contexts.
Was go.
For freedom.
Optimize for freedom.
I'm gonna read some of the notes that I took after.
He's everything comes down to freedom. I'm paraphrasing obviously, right? He's like if you get the freedom you can control what you do every day.
And you'll love it. And if you love it, you'll be very good at it.
And then the money will come with it.
You have to love the day to day. It does not mean it will be easy that does not mean there won't be pain, but you have to love it.
And he's like I never chased money.
I chased freedom and freedom got me the money.
And his point is is like there's no point in being rich if you're not having fun. He says
This was very fascinating too.
Um, you know,'cause you can imagine the kind of people that Sam Zell talks to and meets, and he's like, I meet a lot of rich guys and they aren't having fun.
I'm still having fun.
Then he said he's still riding his motorcycle. I know he's still traveling all over the world.
And actually this brings up another thing.
That Sam has in common with a lot of history scaled entrepreneurs. Like, why do so many of the people that you and I study on this podcast?
Like think of Sam Walton, he knows he's dying.
And he takes time out, he's got cancer all over his body.
And he takes time out.
Of the few precious time months he has, or maybe year left, and on this earth, and he writes an autobiography and he summarizes
What he learned in sixty years of his retail.
For the benefit of future generations of entrepreneurs, we may compete to
Against each other.
While we're living.
But in the end
Like they're all wanna pass on.
What they learn for the benefit of future
uh generations. And so that led me to something I was asking Sam. I was like
Like he flies in also let me go back to
This. He did say one thing. He's like, listen, you know, don't get caught up in owning a bunch of shit. It's just like you're just going to keep buying nicer versions of the same stuff. Like it's just not worth it. That's not what life is about. And he goes,
There's a true luxury in life.
He's like
He's like
There's one exception.
Try to get to private gym.

Yeah.
He's like that makes a big difference. He loves his jet.
He had um
We talked about this'cause he had just given the speech that just really uh
Like impressive conference.
Um and he gave a speech and then went directly
Uh
to to lunch with me, which is
Such a silly I can't believe they that that even
That sentence just came out of my
mouth and it's actually real. I I don't believe that.
But uh
I was like, Oh, so we're talking about Oh, so you didn't like spend the night here? He goes, No.
He's like I fly in on my jet.
I give a speech, I'm having lunch with you and I leave again.
And so
He's talking about he was telling me like what he was doing, he's like flying to, you know, London to give a speech to a bunch of other entrepreneurs and investors.
Flying all over the world.
Doing this. He does this constantly.
And I'm like, Sam.
Why are you giving these speeches? You don't have to do this, like
Like why are you doing this?
And what he said is exactly what you and I have discovered in all these autobiographies. He says it's an obligation. I'm getting goosebumps.
It's an obligation.
For me to share.
with other entrepreneurs what I learned.
Think about how crazy this next sentence I'm about to tell you is, right? Because we're history shows that humans are terrible predictors.
What we actually think will w will make us happy, right?
And so he's like, Listen, I hated writing the autobiography, it was very difficult, but I'm so glad I d I did it.
And he says my favorite day
of the week is Monday.
And I was like, Okay, why is that? And he goes,'Cause that is the time that's the day that me and my team go over all the inbound messages that we get.
From people that read my book.
And they tell them how it changed.
Their lives.
They got ideas they got, the inspiration they got.
And it's exactly
When you read
And you're gonna hear me talk about it in this episode,'cause I've already recorded the episode. I'm d I'm doing this intro after.
And I quote directly from Sam's autobiography where he's sitting there talking about it's like listen, uh he was it's nineteen seventy one.
Uh Zuckendorf's book comes out in nineteen seventy. Sam is a thirty year old man.
already, you know, ten years into this cr uh this real estate career of his.
And he's like, I I reckon Dorf's book.
And I found a really valuable idea and he tells you what it is.
How cool is that?
Like that's exactly
It's the same thing when when me like
When you listen to Funers Podcast, when you're reading the biography, you're doing exactly today.
What a young Samsell did.
you know, you never stop doing you still reading I mean, one of the first things we we talked about is some of the books he's reading. Oh, this is another crazy thing. And I'm sorry this is like disorganized. I don't have like
You know, I didn't write this out in in advance.
But
What was fascinating
Was
He's obsessed with podcasts. He's obsessed with information generally. He's reading books.
Reading uh uh you know, newspapers, magazines, everything.
talking to a bunch of people, doing deals, you know, he says, I'm doing deals
I I this is what I wrote down in my notes after.
So I don't know if this is a direct quote, but I hope it is.
He's like I'm gonna be doing deals
I'm gonna be doing deals till I fucking die.
And I hope I'm that the same way too, man. I don't want to retire. Like why?
Like you find work that you love to do.
You know, like what what did Coco Chanel do, Enzo Ferrari, Steve Jobs, what are Charlie Munger and Warren Buffett doing
They're still doing this.
Charlie's ninety nine when I went to his house, and he could still tell you what's going on.
Still telling you different deals. Like it's crazy. It's like
Why would you ever quit?
Um, but what was fascinating is like
Brings up the fact that he likes podcasts.
He starts asking me questions like why'd you start a podcast? How do you start a podcast? What's the business model like?
And then at one point I I said, I go, Sam.
You wanna
Do building businesses and making millions.
Literally.
Making millions.
decades before I was even born. I need to be asking you questions, but again, that ties into
This just like insatiable level of curiosity.
that you're gonna find the the top entrepreneurs.
It's like they're
They want to know about the world around them. And obviously some of that information is gonna flow down so they can use it in their business, right?
But even if it doesn't, like he this guy's not gonna get rich off a podcast thing, right? He could, he'd have the number one show if it was just him talking shit.
Um, I'd listen to that. I'd listen to every single episode.
But
He's just insatiably curious, still reading books, still asking questions, you know, decades after ever needing to work again.
And the best way to summarize this is a quote that I pulled from his interview on Tim Farris' podcast.
I'm con this is Sam talking, I'm constantly adding and increasing my knowledge.
In every direction I can.
And then there's two other things that I wrote down.
uh after I met him, that was fascinating'cause you know I'm obsessed with Michael Jordan.
Uh episode two twelve if you haven't listened to it yet.
That book is a six hundred page biography of Michael Jordan.
uh literally changed my life.
And he he's he's like, Yeah, I I'm I know Michael Jordan. He knew him when he was a young man. Jordan used to go to Sam Zell for advice and I was like, What do you think about Jordan? And he goes, Jordan is an extraordinary individual
The other thing that was fascinating is
Everybody knows.
that I'm obsessed with Edwin Land, right?
I keep talking about Eblin Land over and over again.
I'm like man it like
If Steve Jobs
is studying Edward Land, calling him a hero, patterning his
His uh
his own work after h after Edwin Land, we should really pay attention to him.
Yeah, I've read five I've read every single boy can find in Everland. I've re five
Five biographies of Everman Land, three of those I've read twice.
And I think I've done like six or seven episodes on them.
Sam Zell
knew exactly who Edwin Land was, right? Where a lot of young entrepreneurs don't, and I think that's devastating and they should.
But not only did he know Edmund Land, he told me
An Edwin Land story that I had never even heard.
'Cause it turns out check this out.
In like the nineteen sixties, I think this is when it was happening.
Sam Zell
Went to law school.
With
Edwin Lance Patent Attorney's Daughter.
His daughter was there and remembers the night.
That
In New Mexico.
When Edwin Lynn
goes and meets with her father to write down and to put on paper his ideas for
The
creation of a new industry. The industry that Edwin Lane is literally going to invent.
Which is instant photography.
I do want to wrap this up with really what Sam was saying, like the main message. He's just like
He's like I optimize for freedom and I only do shit that's fun.
And he was having fun.
Forever.
And if it's fun, if you enjoy it.
Like if you can find work that feels like play, which is the exact line that
I learned from Deval Rabacant, but also I found in Michael Jordan's autobiography, that's exactly what he said. People in my in his autobiography people are like, Oh, they always talk about work ethic.
They don't realize like
To me it was play.
This is like I was able I I had a bad work. His his mom would talk my mom would say like you know with
outside of b outside of sports, he was actually kinda lazy, which was shocking.
And his whole point, he's he followed up on that. Jordan followed up on that. He's like, Oh
which you see as work ethic, I just see as as playing. And I feel there's a lot of uh there's a parallel between
Sam's out, you know, who's still on it seven days a week.
Still doing deals, still trying to find interesting things to to work on. And
Interesting people to work with.
And it's because he's uh optimized for freedom.
And he only did
Shit that was fun.
And so there's one other thing and I'll wrap this up and we'll get into the episode.
uh Zeckendorf, which again, if Sam Zell is telling you to read the book. If you haven't read the book, I talk about this in the episode.
Especially if you're in real estate, no brainer. You have to read the book. There's so much stuff in that book that you'll be able to understand that I won't because I'm you know, that's not my industry.
And it's just a fun book, like full of crazy stories.
But I do want to s I I pulled this transcript'cause right after I had lunch with Sam Zell, I went on uh Jim O'Shaughnessy's podcast, which is called Infinite Loops, and I pulled a transcript because some of the stuff was like okay
That was like fresh in my mind. I wanna make sure that I'm not missing anything.
And I found something.
And I've already like alluded to it previously.
I'll wrap this up here. I'm just gonna read
I'm going to read this paragraph. And it's talking about something me and Sam had in common is that the fact that, you know
I think eighteen members of his family died. I had a bunch of family members that never left Cuba.
And his father, Sam Sell's father, would tell him over and over again.
You don't know how lucky you are.
To be born in this country.
Right. And so
And that's the way Sam still feels to this day. And it's like I had that experience too.
Uh you know
When you're the son of a Cuban immigrant.
Like lit people literally the United uh the University of Miami, this is
This is hard data to come by.
Because if it's not like people are announcing in advance that they're going to the shore of Cuba and sending their children on these rafts and hopefully they they land in America.
Because because you're not announcing it beforehand.
They had it's hard it they're
They have a hard time figuring out like how many people have died.
You know, how many people didn't make it?
Like y you can go and look. I I've seen this in person.
I actually grew up
Meeting people.
That came over on rafts.
Like a little kid.
And you hear these stories, like that's going to impact your the way you think about things.
And so
uh the University of Miami estimates, I think
Somewhere like quarter million people, maybe two hundred to three hundred thousand people.
uh died at sea.
And so this idea where it's like you you're raised
I was raised by a father saying, you know, like
you're very blessed to be born in this country where, you know, you're not you don't have to worry about a Hitler.
Or the stuff that we had to run from or the the amount of
Just
a genocide that took place where we where our family is from.
And so I I heard that same story. Like, you know, you're very you have no idea how lucky you are to be my dad's not an American citizen to this day.
To this day.
And I just happen to be American citizen because
decades before I was born, my grandfather had the the foresight. It's like, Oh, we gotta get the hell out of here.
And I just happen to be born here.
Something that
uh Sam saw when he was younger that his family was watching videos
uh and when he was like six years old of uh all these like Jewish bodies in dump trucks and it was just dead bodies that the Nazis had killed and then put in dump trucks.
And when we were talking about this this is what I referenced earlier, I said, Sam
Here's the weird thing. This is me now quoting myself from his other podcast. It's gonna be weirder. Your dad was voracious for information and that saved his life.
And yet when you tell the story
Of you being a teenager, a young man.
you were like nineteen or twenty years old and you were also voracious information.
And I asked him, Is that the same thing? Is that the same concept?
And it's like, Oh, I know how valuable information is. It can literally save your life.
And in an entrepreneur's case, the right information can literally build a fortune. And he's like
It's the exact
Same.
Thing.
And so if you and I could ask Sam Zell
for advice. I think his advice would be constantly add and increase your knowledge in any direction that you can.
And I sincerely hope that the work that I'm doing on Founders Podcasts
helps play a role.
in your life and in your work.
We were not meeting our obligations.
For more than three years I'd been maneuvering to keep a sudden greatly overextended company from actually falling over the edge of the cliff.
To this end.
I had gone deep.
Into personal debt.
But on that Friday afternoon, in May nineteen sixty five.
Time ran out.
twenty six years of work.
was now moving down the chute.
I told my driver to take me back to our Madison Avenue office.
This is where I had started Webb and Nap's climb.
And here I would stay with it.
To its fall.
In large part it was a matter of my own personality.
I like to build.
I had ideas.
All kinds of ideas.
That nobody else was willing to carry out.
So I carried them out myself.
We branched off in several directions at once. That is an entire story in one sentence.
And leads to his bankruptcy. We branched off
In several directions.
At once.
We were buying land and properties, putting up individual buildings in various cities, creating a string of new shopping centers and industrial parks across Canada.
And drilling for oil.
Off the coast of South America.
The secret of any great project is to keep it moving.
Keep it from losing momentum. That's actually good advice.
And this for me meant a constant flow of telephone calls and trips.
Often by company plane to Montreal, Chicago, Washington, Cleveland, Philadelphia, Denver, and Points West.
In New York and in every town where we had interest, there is a constantly changing scheme.
of contracts, agreements, and trades to be kept in motion.
I have never been afraid of debt.
One day when the head of the Morgan Bank stuck out his hand at a gathering of bankers and said to me
Bill, you look like a million dollars.
I said back, I'd better
I owe you three million.
At that time.
We all laughed.
But in May NT sixti five.
No one was laughing.
Web and Nap.

And his reaction might surprise you.
Once we had completely gone under
There was almost a welcomed stillness.
For month after month we had been working to raise cash, to make one last deal, to fend off or pay off creditors.
Now all action ceased.
Even our phones were disconnected.
I could no longer act for the company.
I became in effect.
A bystander at a wake.
and an official non person.
A role both unfamiliar and unenjoyable.
A number of people who used to call on me.
Vanished.
Quite a few people who I tried to call.
We're suddenly not available.
Only my creditors were ever anxious for a chat.
I learnt
That there was betting that I would choose to end the drama samurai style.
By committing suicide.
There were moments when my depression was absolute.
But killing myself
Was something I was not about to do.
Only my personal assets
Not my brains were in hock.
I still knew how to make money for people.
Moreover, with the fantastic pressures of
Of Web and Nap's last few years off my back.
I was beginning to feel
Like a man suddenly released.
From solitary confinement.
My conscience was now clear.
For the present
I was busy and relaxed.
Marion, that's his wife.
Marion and I saw more of each other.
We went out to plays.
And we travelled.
We spent our summer in France.
I had turned over our home to creditors.
But we had acquired a quiet place.
And we were happy.
We were planning another trip in the spring of nineteen sixty eight.
Marion flew to South America for a month.
From there she'd fly to Guadalupe in the Caribbean.
I flew down to Guadalupe to meet her there.
I arrived two hours before Marion's plane was due.
The scheduled arrival time.
Came and went.
But no plane landed.
A few moments later the announcement came over the loudspeaker.
The plane had crashed.
The sensation from then on
Was one
Of being in a dream
From which I couldn't wake up.
After Marion's death
I declared personal bankruptcy.
Wow, what a start to this book. This guy goes from being
the greatest real estate man in New York and maybe the entire country in the forties and sixties.
To blowing up his company after twenty six years.
Then a year later
His wife dies in a plane crash, and then two years later.
In Nineteen Seventy he publishes
this book. So that was an excerpt from the book I'm going to talk to you about today.
And the one Sam Zell told me that I had to read.
Uh, one that Sam Zell talks about in his autobiography.
That he read when he was a young man.
He's actually around thirty years old when he read this book.
And that book is Zeckendorf, the autobiography of the man who played a real life game of Monopoly and won the largest real estate empire in history.
And so before I jump into his early life, something I was thinking about this morning before I sat down to talk to you.
'Cause this book is over fifty years old. And what is interesting is I'll I'll go into more detail on this later, but
There's so many times.
Where the what makes this book so fascinating is not only this guy had an incredible career, he's got a lot of good ideas about building businesses and a lot of bad ideas that you and I definitely need to avoid, right?
But he also knew everybody.
Like there is
Four, five, maybe ten different well known historical figures.
That are historical figures to you and I today because they've all passed on.
That are alive in this book.
And there was just something that hit me real heavy this morning.
Where
This guy's been dead for I don't know forty years.
Uh, I think he died shortly after the book uh was published.
And it's on a like we can't talk to'em.
We can't interview'em.
And what I realize is like reading this book is
First of all to have a one sided conversation.
With
somebody that went through one of the most unique life experiences and work experiences that that's ever lived.
And it's also a form of like being able to interview or to ask him questions.
Because you you'll
understand if you read this book and I hopefully I can c convince you to buy it and read it.
I mean if Sam Zeltoes to read it, I think that's good enough, right?
But um
What happens is by the time you get to the end, like you know who he is.
Some of the I told you before in some of these cases where you and I go over these books, like sometimes you feel like wow, I know who this person is. And sometimes they're still kind of
Like they're more of like a a figure that's far away.
Where
I feel like Zeckendorf by the end of the book becomes like this old friend of yours and you just live through
It's like you gather around you're like his grandson, you gather around.
and he's just recounting the story of his life to you. And by the end you you feel like you definitely know who he is.
As a person.
And the reason I bring that up is because that feeling is a good feeling. I my life is better off
For having read this th like spent the last week going over
Bunch of red material.
Uh on Zackendorf.
And I feel like
Getting to that end, that completion is
First of all, it's not something that we see in modern day life. Like every single thing, if we're especially we're on our devices all the time, like those are just never ending feeds. Everything we're looking at.
Whether you're scrolling Netflix or scrolling
You know, Instagram. It never ends.
Where you get to the end, there's a completeness to this.
This is over
The time I spent with Zeckendorf will be long lasting, so
I'm not sure why I was thinking about that this morning or where that idea or feeling came from, but
any time that that happens, I'm sure to tell you about it. So I'm gonna jump right into his early life
We don't spend much time there'cause we get right into
We're getting right into this, guys.
Insane career.
But there are just a few sentences. You know, there is, you know, two or three chapters on his early life.
I just pulled out a few sentences that I think give you
We'll give you an idea exactly who he is.
And so he says by the time I was eight or nine years old, I had discovered that if I acted up enough
I could get thrown out of Sunday school each weekend.
and spend the day fishing. What may be
The greatest quote about entrepreneurs ever came from the book that I covered last week, which is comes from Avon Chinard.
And he says, if you want to understand the entrepreneur, study the juvenile delinquent. And if you sit there and actually think about what Avon is thinking what is saying.
Like that's exactly what we're seeing here.
Like
You'll understand the way they think if you look at the juvenile delinquent. Talks about his dad.
Uh my dad was a cultured, quiet, and kindly man who did not believe in strict authoritarian controls.
And I was his only son.
So what he's telling us is his parents, and he's gonna say his mom did as well, his parents let him follow his natural drift.
Mother also let us grow in our own way.
And Zekendorf is the rare high school and college dropout.
And then he has a great line about this.
I did not finish high school. Most of the courses bored me completely. So he takes like uh their version of like I guess what we'd call
uh today in America, the G E D.
Uh, so you drop out of high school, but you can take uh an exam. If you pass exam, you get like the equivalent
So he enrolls in college. So at age seventeen, I entered New York University.
And then he has a great line here. Though I now hold four honorary degrees, I was a college dropout.
Classes were dull and a waste of time.
I was anxious to be in the real world of business, so I quit college.
So then he's in his early twenties and he starts working his first job in the real estate industry.
For his uncle.
There's actually a really good description. I'm gonna tell you uh I think the there's actually better description in this uh this article that was sent to me by a listener.
Who knew I was doing uh this book.
And so it's called uh Zackendorf Revisiting the Legacy of a Master Builder. I'll leave the link down below. You can read in, you know, five minutes.
But it's just going and reflecting back on his career many decades after he passed away.
And so I read the article and I just pulled up some quotes.
And I wanna give you this overview now.
before we go into the rest of the book because I think it gives you like colors it in beforehand.
And kinda will make the ideas that you and I talk about later uh stick even more.
So first it says a glance back at the life of the developer William Zackendorf Senior is proof that there are no new ideas under the sun. That is a main thesis of this podcast.
When I was sitting here thinking
I was like I went and looked up, I was like, Okay, this this book came out
In nineteen seventy, if you read Sam Zell's autobiography, he says it was around nineteen seventy one.
When he picks up the book.
That means Sam, Zell.
was like in his early thirties, is it made him he was
Around thirty years old when he first
Read the book.
And later on in this book we'll get into what Sam Zell said about the Hawaiian technique, which is like the main idea that he took away from this this uh book.
that he got from Zecondorf that he used not only his real estate career but also his business career as well.
But what I was thinking is like oh he's doing
This line, a glance at the life of developer Zekendorf, is proof that there are no new ideas under the sun. We are doing the exact same thing now together that Sam Zell was doing.
fifty years ago when he was a young man
trying to learn from the great people that came before him looking for ideas that can help them in their work. I just love that idea.

From the article, no question he was the greatest real estate guy
New York has ever seen.
He dominated the nation's uh real estate industry from the nineteen forties through the early nineteen sixties.
In a climate like today
He would have been worth a trillion dollars.
And then this is the part that I want to read to.
'Cause the description, it's a summary of where we are in this book, whereas Zekendor's about to tell you and I
About
Mm.
His first job and why he had to leave.
'Cause he felt his uncle was screwing him over.
Early on, Zecondorf's uncle challenged him to fill a half empty building at thirty two Broadway.
Which the firm had just purchased by the time the uncle returned from a European trip.
Zekendor filled all but two small offices.
But instead of praise, his uncle demanded to know when he would rent the remaining spaces. Zeckendorf quit the next day.
And this is the punchline. If he was gonna make any money, uh any real money in real estate, he decided he would have to do it on his own.
And just two more things from this article. This is the anti advice. This is the advice where I feel if we're sitting down
And we're having this one kinda side conversation with Zeckendorf. He's telling us, Hey, avoid this.
Uh, executive employees were having to sneak'em down back elevators to avoid the growing number of cr creditors banging on the front doors. This is the early nineteen sixties when everything starts to unravel.
And really
The anti advice
uh that I got from Zeckendorf would be what Charlie Munger says, like your job in life is to get in a great business and then stay there.
And Charlie's
Point here is like
I can tell you that advice. You're just not gonna do it.
Uh it's so hard to build a wonderful business.
You're not going to be assaulted from the outside. Most most likely you're the one that's actually going to screw it up.
It s it goes against human nature to get into something good and actually stay there.
And so this is the description of the business that
Second or five.
He had it. It was in his hands.
If we were to take the assets that Web and NAP had in nineteen sixty one and value them at today's values, this article is being written in the uh early two thousand, so maybe like two thousand seven, I think.
If we were to take his assets uh in nineteen sixty one and put them in today's values
Uh, they'd be worth between twenty five and thirty billion dollars.
So all he had to do was sit still.
This is a description of him. He had to do every deal
that came down the pike. Whatever the deal was, he wanted to do it. That's not an exaggeration.
I try to keep track of every single weird
This guy did not contain himself just a real estate. I'll get into some of the stuff he buys. One of the funniest things I've been telling stories to friends today, or this week.
I was like, dude, I'm reading this book about this guy.
He's like in his thirties.
He's working for Web and App. They're like, Oh, we like this club. So they buy a nightclub, right? And then he uses it he uses the nightclub.
As his office.
It's like if today me and you buy a club
And they were like, Hey, we have to have a meeting, and our office is essentially like the VIP room of the club every night. He's just and he has like this phone set up. It's just he's a hilarious guy.
But the point was like he'll just do all kinds of deals.
Uh, which you know, we'll we'll obviously go into.
So it says uh whatever he whatever the deal was, he wanted to do it. So
Talks about
fact that that was his first uh his first job working for his uncle
I really just wanna pull out I don't wanna go into much detail there'cause I'm just looking for ideas that you and I can use in our business, right?
And so this was very fascinating. This is his sales technique. His d his uncle gives him the job and then takes off to Europe.
And so he's like okay, well, how do I fill a half empty building? I have no experience.
And so then he just goes to every single building. This guy's relentless.
Every single building on Wall Street.
I tackled the job by taking the elevator to the top floor of every building on Wall Street.
Then I would work my day my work my way down floor by floor, canvassing each office.
On each floor.
I would march in with the bold statement.
I understand your lease is expiring and I'd like to show you a space at thirty two Broadway.
Of the prospective tenants I approached, one out of five would come over to thirty two Broadway to have a look.
One of every five that looked would take a lease, but that was enough.
And so he gets back.
And he f he does the calculations like how much money he made his uncle
He was paying him twenty five dollars a week, so his uncle doesn't give him any praise, but he also the reason he quits is because
He's like, Why okay, twenty five dollars a week.
I'll bump you up to forty dollars a week.
And
And Zekador's like what are you talking about?
That did it. The commission to an outside broker uh would have come close to twenty five thousand dollars. I told Sam what he could do with his forty dollars a week and I left.
And that
Right there is what I wrote on this page, an entrepreneur is born.
even when technically he's a junior partner and he's he's working for somebody's company, he's got founder mentality. He acts like an entrepreneur all the way through.
And eventually he's in complete control of the company.
Nothing anti advice.
On him.
This is something that's gonna come up a lot and I'm gonna repeat myself because it's the main theme of the book. This guy
cannot stop spending money as soon as money hits his pocket
From the time he's a young man.
Until he's older, he just spends and spends and spends it.
And then he is addicted to debt, which obviously leads to his downfall, unfortunately.
And again, I'm not trying to criticize this guy. We're trying to learn from him.
I think he's extremely likable. Like
This is one of my favorite books. I cannot believe the stories that are in the book.
And you'll just fall in love with the like his gregariousness, he's a promoter.
I feel like he's the wise old man telling us, Hey, don't do don't do this. Even if he says if he could do it all over again, he would just do the same, but he would do it bigger. So I don't even know if he learned his own lesson.
So he says uh he's doing a bunch of deals. My commission on this on the sale of this building came to eight thousand dollars. So he was wise to be an entrepreneur.
Why would I take forty bucks a week? I do one deal and make eight thousand dollars. Now here's where he messes up. I was twenty three years old and I never had so much money before.
It made me uncomfortable.
And I thought we had better spend it quickly. So he takes
This uh it's gonna be his first wife, but he's just dating her. There's not mar they're not married yet.
Actually they get married.
And then he's like, Okay, I have eight thousand dollars, I need to spend it immediately. And he goes and takes us like long ass honeymoon.
to Europe and he goes to Paris and he meets all these other high rollers.
And he gets back, he's got no money.
And that's not good because this is the nineteen twenty nine crash in the Great Depression.
And so there's there's a few interesting things to like what he's doing during the Great Depression.
I do wanna pull out something here because this doesn't
There's parts of this book, so obviously if you're in real estate, you probably already know who Zeckendorf is. I would imagine you've already read the book. If not, obviously pick it up. There's a lot of things in here that you will understand that I won't understand because real estate's not my business.
But
He has these just drastic examples of and I guess real state's really no different than other asset prices that have that we see in these these dr uh these like uh financial panics.
Where
He he's detailing all these crazy deals that are happening because all these people are over leverage.
And I'm like
Second orf.
You noticed this when you were a young man. Why didn't like how could you not avoid the same fate?
So he talks about the p the the people that own the Ritz Carlton Hotel.
And he says,
the what was happening is the people that were not leverage, the people that had a bunch of cash, no debt
He said they were cornering and squeezing. These are the words that he used, right?
And so one example he says the Ritz H hotel
Which cost twenty five milyen dollars to build.
Sold for seven hundred twenty five thousand dollars.
And it had a hundred thousand dollars worth of liquor in it at the time.
And he goes into such great detail. That's when I wrote I was like, I wonder why he didn't learn this lesson. Like he was addicted to leverage.
He's so close because he starts working his big break, he's works for the the Aster family.
These are the descendants of John Jacob Astor, which we'll get to in a minute. He was actually the first multi millionaire.
in uh US history.
He he points us out on the same page.
He says the non borrowers, right? The people that own it free and clear, which we're gonna get into. This is absolutely insane.
The non borrowers such as the Asters, who owned all their properties free and clear, could ride through almost any storm. And so when I got to this part
Another real estate guy that I did a podcast on, which was fascinating.
Uh, this guy named Francis Greenberger. It was episode 243. He became a billionaire because he's one of the first people to do co-ops in New York City. I think this is like in the 1970s.
But he has a line in the his autobiography, which I thought was fascinating.
And he says this ruthless industry talking about real estate, right? Everybody's like, Oh, it's so easy to make money in real estate.
And Greenberger's like, No, it's not.
This ruthless industry.
Has created far more bankruptcies than it has billionaires. That is a great line.
Saying no is the most important judgment you could make. So that is Francis's
Advice to us.
What I the reason that came up is because
You know, there's a lot of real estate billionaires. A lot of people that make a lot of money in real estate.
But the pages that I'm on when they're in the Great Depression.
They are
Francis is right. Th this ruthless industry.
Is creating far more bankruptcies than it does billionaires.
And so even during the Great Depression, he never left the real estate industry. He just kept working in it till he died.
So at this point he's a young man.
This is what he's doing. He's a New York City real estate broker. He made his living
Uh by two ways. One, he was a negotiator for property owners trying to salvage their estates by renegotiating mortgages.
And he also was busy scouting out increasingly scarce buyers for properties.
That the banks and insurance companies were doing
Their best to unload. Says though I didn't always earn it, this is the point, this is why I'm reading this to you. Though though I didn't always earn it, I managed to spend close to twenty thousand dollars a year during the pr the depression.
So so he'd spend twenty thousand even if he didn't make it.
You see are we seeing a recurring theme already early into the book?
By the standards of the nineteen thirties, we were a f affluent, but we were often broke. And so he is married.
He's also this wild party like crazy guy.
So as we can imagine, he's this isn't gonna last very long.
He's gonna go through his div uh this is his first wife, so he's gonna get divorced.
My personal life though was not nearly so successful as my as my business career.
It was becoming increasingly obvious.
To both Irma and me that we were mismatched.
I thought of little else but working and then having a good time. We drifted apart and I began to find other women increasingly interested interesting.
and a divorce seemed the only reasonable conclusion.
And so then Zeckendorf goes back into his poor money managing habits, unfortunately.
My road to affluence was erratic.
I was often in debt, sometimes little more than two steps ahead of a sheriff.
And forever scrambling for some way to turn an extra dollar. Whenever I did get a little money.
I put it I try to put it to work. I led an active social life.
I was especially fond of restaurants. This is the n the not the last time he's gonna say he's like having a hard time paying his bills.
This is I'm only thirty pages into the book.
And this has already happened so many times that I wrote to myself
I feel I should quote James J. Hill here.
uh was so fascinating about sitting down and talking to Sam Zo is that every single person
This is not an exaggeration.
Every single entrepreneur from history.
That I brought up to Sam Zell.
It's not
One thing.
that I could tell like he knew who everybody was, even these obscure people.
So I brought up
in the flow of conversation conversation we're talking about something with JP Morgan.
And James J. Hill and the railroads and everything else. So I bring up James J. Hill. He knew exactly who he was, had read his biography, knew the name of his company off the top of his head.
There's no notes in this entire time. No one looked at their phone the entire time.
And so the the reason I bring that up is because
J like Sam Zell knows who James J. Hill is. Charlie Munger knows who James J. Hill is. Warren Buffett knows who James J. Hill is. This is who I actually heard.
Like I I think I was listening to them either talk or reading their shareholder letters and they're like, Hey, they they always I think it might have been poor Charlie Dominic, actually. They talk about the operators that they really respect and admire.
And the cat mentioned this James J. Hill guy. So who the hell's James J. Hill?
And
So I went up reading a biography on him.
That was uh episode ninety six, I think.
But
The reason I I got to this part, I'm thinking about everything that's going on in this book. I was like
one thing that stuck out of my mind and I hadn't read
It says I read uh James J. Hill back in two thousand nineteen.
This quote from James Chang Hill I never forgot, so I wanna read it to you'cause what
Unfortunately, Zackendorf is not
It never is not learning in the nineteen thirties and you know, obviously he had a hard time learning his his entire life.
James Jahoa understood in the eighteen hundreds.
And this is what he said.
Uh if you want to know whether it's a
You are destined to be a success or a failure in life.
You can easily find out.
The test is simple and it is infallible.
Are you able to save money?
If not.
Drop out.
You will lose.
You may you may think not.
But you will lose as sure as you live.
The seed of success is not in you.
If you want to learn from one of the hardest, most formidable entrepreneurs
to walk the face of the planet. Listen to episode ninety six.
I really need to do to read that w that book again. I I I I don't think
You know, I don't only did ninety six podcasts at that point. So I don't know if I did a d a disservice, like uh have a lot more practice now. Three times as much practice. So
But
Man, and and read that book. That that guy was absolutely incredible. He was the only entrepreneur that ever if I'm if I recall correctly, he's the only entrepreneur in history.
To ever successfully
uh build a profitable railroad without going into bankruptcy first.
the less successful, the less formidable
Railroad operators were actually easy prey for JP Morgan. It was interesting because JP Morgan and James Hill would hang around with each other, they didn't really like each other, but they're kind of like frenemies and they would do deals and stuff.
And so it's like financial success and financial like uh fortress of cash.
And a profitable company which James J Hill.
had was like cryptonite to JP Morgan, because JP Morgan would
He would he would take over these these crappy run companies, these over leverage companies, these people with, you know, C and B player entrepreneurs.
And he did this so often, made so much money that they didn't call it reorganization of the railroads, they called it Morganization.
So moving back to this story, he's doing he's got about twelve years of just experience. He's got like this middling success.
He's not really figuring things out, though he does have this good network. He knows
the buildings and knows a lot of people, but he's not making a ton of money.
And so essentially like where we're coming in this book is like he is thirty three.
And frustratingly unsuccessful.
Says the many dozen of business projects schemes and coups with which I struggled, although they ate up time and energy did not seem to be getting me anywhere.
In by nineteen thirty eight I felt listen to this.
I think every entrepreneur has felt this for.
I felt
That all I was doing
was scrambling up straight.
Walls. Imagine if he would have quit here.
And so he does a good deal with this other there's a private partnership called Web and Nap.
And he winds up we'll we'll get into he I think he fills up one of their buildings.
And so he says, when the repu reputable, but if not very profitable firm of Web and NAP offer me a partnership, I accept it. So Web and NAP is the company.
It's private.
eventually he's gonna take it over. He's gonna buy it out his partners for I think five million dollars. We'll get there later in the book. Takes it public. That is the vehicle that he uses and it builds up.
uh and dominates, you know, for for in the forties and uh all the way to early nineteen sixties.
But this idea.
And again.
I think uh learning from history is a form of leverage, right?'Cause at thirty three
He is frustratingly unsuccessful, middling success.
Think about a thirty year old Sam Zell.
Picking up this book.
Learning from using
the the life experience of Zackendorf is leverage.
Second uh Zell was
Already at thirty.
Further ahead than
Zackendorf was a thirty three, obviously never went down the same path, like
It sold his company for almost forty billion dollars, one of the most successful entrepreneurs ever lived.
But just I love this idea. Like I
You know, seeing Sam Zell he's eighty one when I met him.
And y that's what he looks like. Like you like
That's a
An older wise man, right? But that's not the Sam Zell that picked up this book.
That always blows my mind when I I
People probably think I'm some kind of weirdo. Like I go back and stare at like pictures of
What they look like when they were young.
When they were the one.
The version of themselves that built
The success that the older versions of them get to enjoy. That's what you and I are doing right now.
I just love that idea. I can never um I never stop.
Yeah.
I never start thinking about it. So
Really when you think about Zenorf, he's a master salesman.
This is what he was doing and how he came into web and app.
In nineteen thirty seven I had been the broker in the sale of an office building.
uh to Web and Knapp. That the the next year when several major tenants moved out, the building began to lose money. Web and Nap asked me to bring in some new tenants. I was able to repopulate the empty floors rather quickly. Sounds like what he was doing for his uncle, you know, fifteen years earlier.
They invited me to join the firm and I accepted.
What I this is why I'm reading the section section to you.
What I brought with me.
to the company or thirteen journeyman years of experience in the buying, selling, financing, and renting of New York real estate.
I was familiar with almost every block of property in town.
I also brought energy.
And personal drive.
If some of my partners were rich
I was ambitious.
I became the chief enthusiast.
And he takes his enthusiasm to the club.
I'm just gonna read this to you'cause it's just always so funny.
Uh we had a part ownership of a nightclub. It turned out to be great fun. I had my own corner table with a phone.
And for five years I did as much business there as for my Madison's Avenue office.
I just love the fact.
This guy's in his thirties.
in Manhattan doing uh business out of a nightclub every night. That's just hilarious.
And so this is the part of his life that's really important. If we were watching the movie, you'd pause right here, and you're like, Oh, he's starting to figure out. He's starting to figure out how to create value.
But he's still low on money.
But as long as he's focused on creating value, he'll get the money.
And so at this point in story
It's also obvious wh why this guy went bankrupt.
So it says uh we start drawing on our own modest capital. West and NAP does not have a lot of much money.
Uh, we began to do a bit of buying and selling of other people's properties where Web and NAP did not have the financial weight to swing a deal alone.
So they don't have their own money, so what do they do? They syndicate
And so this is also something that that Zackendorf was really good at. He built a bunch of relationships. And so, you know, he plays I think he c he says at one time in the book, he played like
Instead of musical chairs, he played like musical banks.
Um, so he you would take money from, you know, all different kinds of banks, insurance companies, uh, wealthy families.
Also would syndicate with people wanting to
put money into real estate all over the country. And so this is the first uh mention that we syndicated our projects with other investors. But my personal financial situation was unchanged.
The check for my son's first term
At school.
was returned with the notation insufficient funds, and my tailor was waiting payment for my last two suits.
And so this middling success may have never changed if he didn't get his first big break.
This is where he's going to work for the descendants of John Jacob Aster, that is the first multi million uh mul multi million in the United States.
When Aster dies in eighteen forty eight
he was actually the richest man in America. Now check this out. So he dies in eighteen forty eight.
He'd made money in like fur trapping.
and then took that money and started buying a bunch of real estate in New York. So he dies eighteen forty eight.
Almost a hundred years later, by nineteen forty two.
His family, his descendants, own fifty million dollars.
of New York real estate free and clear. No debt.
So a hundred years later
And that's fifty in nineteen forty two money.
Imagine what that real estate would be worth today.
And so Zeckendorf and his firm are the ones that are actually gonna organize, reorganize all their properties, they're gonna sell off some.
And this is where he's learning the the the value of brand. The ma a great brand is like magic. That applies to a family name just as it does to a company name.
And so it says, uh once they get the deal, it says on June nineteen forty two.
We were engaged as exclusive consultants for the reorganization of the Astor's holdings. The next morning the New York Times printed on the front page the story. The front page coverage made us overnight the most important real estate firm in America.
First he goes into like the non rational aspects of real estate and brands in general. I soon learned that there was an invisible but tangible aura.
About the Aster properties.
that made them attractive. Remember this part for the very, very end.
Because he experiences the reverse.
So the Asters are like
Unbelievably valuable, has a great brand name. Eventually Web and NAP, the brand name gets so bad, people just essentially waited for him to to to starve.
It'll make more sense when we get there.
But it's the reverse of what's happening uh in early in his career.
So it says uh they had an aura that the Aster properties made them attractive. If the great Astate had owned them, they must have extra virtues because old Aster
Had been so shrewd.
And so he goes to sell off some of these properties, but this is what I meant about he's really good at reacting to changes on the board. What does that mean?
This is
Post.
Hitler
controlled Europe. A number of refugees who had come to Hitler.
Or come to the United States from Hitler controlled Europe.
Uh, these new buyers were far less interested in the total price of a property than what the actual down payment would be.
A low down payment gave them maximum leverage.
For the inflationary rise in values that they were anticipating.
So what do you do?
Changed he's increased the prices.
Right, got more for the actual price, but
uh lowered the down payment. I sold for very low cash down payments, but steep prices.
uh on a sales price of say a million dollars for a property.
That would have sold on the cash market for$400,000. So this might go for$400,000 if you had all cash.
He's gonna charge you a million'cause you don't have all cash.
But you only have to pay fifty thousand dollars or less as a down payment.
Then he didn't stop there. Then I would take the mortgage
uh I would then turn to the mortgage companies and sell off my paper. When they asked what we wanted from them in cash.
I would suggest six hundred and sixty thousand dollars.
I would immediately follow this with the announcement that Aster
would accept a second mortgage for the remaining two hundred
and eighty four thousand dollars of the million dollar million dollar price. I hate
using numbers and audio.
But I think if I read through this, you'll understand what he's doing here. The fact that Aster would take a subordinate mortgage served as a psychological guarantee, making the mortgage buyers
Courageous enough to take our paper.
Having then converted our paper mortgage into cash
We then went forth and bought more blue chip properties.
At cash discounts.
And then we repeated this process.
If you read the book, we are on page forty eight and forty nine when they go into great detail about the numbers and what he is doing here.
So that was his first good idea. His second good idea was the fact that he refused a flat fee. He wanted to bet on himself.
When we made our initial proposal regarding the management of the Aster Estate, I had refused a f a flat fee. I explained
That when we delivered
That he
Which is uh the guy what is his name? His name this is there's so many asters.
This is Vincent Aster that he's dealing with.
Uh that Vincent Aster
uh could pay us what we were worth. If we didn't deliver, he didn't have to pay us anything.
At the end of the first year
Mm.
Yeah, you say.
He enormously uh enormous he tripled, essentially tripled uh the earnings
From uh Astor's assets.
So it says at the end of the first year
Uh he kept asking us to present him with a bill, and I finally did so for the amount of three hundred and fifty thousand dollars.
When I presented my bill, Aster said, Pay him and send him a bunch of plot a bunch of flowers for me.
And then this is the third and maybe most important good idea that happens at the end of this section and why I have so many highlights on just two pages.
Because he realizes so
What you'll realize, like he's an outsider, right? Did not grow up wealthy.
dealing with one of the most well one one of the most wealthiest families.
And the planet.
And then he's like Wait a minute.
I can play with these guys.
When I got to this section I thought of this this quote.
of Larry Bird.
Uh, that actually made a video of him playing on loop.
Kinda crazy, but um
It's like
twenty second clip of Larry Bird that I
play for like two or three minutes straight because I like what he says and I'll tell you what I I I brought up in the past, but let me tell what he says.
So it says my relationship with Aster gave me my first close look.
and contact with the world which because of because of its wealth and exclusiveness
Fascinated and attracted me.
However, this world was not always did not always capture my mist my respect.
I found Vincent Aster quite amiable.
Sometimes humorous.
But not very bright.
If he had not inherited his great fortune, he
He probably could not have done much on his own.
He lived in a very narrow
Self satisfied.
But not particularly brilliant circle.
And so it's a great line I thought of when I when I got to that. People muddy the waters to make them seem deep. When you're on the outside, it always looks more difficult.
And so uh Larry Bird was reflecting back
He went to like this tiny little school for college, goes into the NBA and everybody's telling him like oh you like
You're not gonna th this is a different level. You can't hang with these guys.
And Zackendorf's like going almost like going from amateur levels to the pros, and he gets into the pros like wait, I can actually hang with these guys.
And so Larry Bird says
Oh, they said you never played against a UCLA or a Notre Dame or an IU. They said he won't be able to get his jump shot off in the pros. He won't be quick enough. He won't be able to rebound.
He says, It took me three days after rookie camp. I found out, hey, this league is nothing.
I can play in this league and I will dominate in this league.
And so what Zackendorf is realizing in real estate in the nineteen forties, Larry Bird is realizing in b in basketball
in the late nineteen seventies, early nineteen eighties.
I thought this was actually an interesting idea he had on the dangers of over negotiating.
And so sometimes he would just call. If he he if he knew what he was going to wanted the property for, if he could
If they said, let's say he wants to pay, you know, seven hundred and fifty thousand dollars for a property and they say
Oh, sell two for seven fifty. So, okay, I'll just take it.
He did not he he thought you were doing yourself a disservice, like just you know what the value is, you know what you'd pay.
And if they say that, don't try to keep negotiating down.
I don't try I didn't try to bargain, I hate to bargain.
In my judgment a property is w if if in my judgment a property is worth the asking price, I see no reason to try for less.
A lot of shrewd dealers think this is foolish, but I notice that others tend to lose more business and to poison relationships by trying to refine an already good bargain.
Beyond a reasonable point.
There is a much better flavor left in everybody's mouth when such haggling is avoided.
I wanted the property, their price seemed reasonable to me, and so we were in business.
And so then he's got an entire chapter on what was his most important deal he ever did. This is this thing called he was gonna call X City.
Winds up becoming uh the location of where the United Nations is.
Um in Manhattan.
And this is a wild thing. This is why I love reading history'cause you know, obviously New York City's one of my favorite places to visit.
And just this idea where
If you were living there in the nineteen forties, like you could go de to like a say you want to go see a show, you'd go to a theater.
You come outside.
And it'd be like a truck.
uh hauling cattle.
Yeah, because
theater district is right next to all the slaughterhouses and the smell, as you could imagine. It's not good.
And so he has this deal.
And as he's putting together this deal, which is gonna go on multiple pages.
I really think
I went back through all the highlights and it's gonna happen over like six or seven pages and I was like, you know what?
This is really how Zackendorf's mind worked.
And this is where I think he had his most talent, like
The stuff that this guy had in his mind, and you could argue maybe he didn't have it
You know, full grasp on his mind considering like
his business got so complicated got away from him.
But he was just able to hold all these different ideas.
And he went up buying like seventy five it's something like
I wanna say seventy five different properties.
And just the way you did it. So let's just jump into it.
Uh the slaughterhouses had been there for so long that they seemed untouchable.
And so they're owned by this company called Swift and Wilson.
Since the Swift and Wilson meat packing companies who own the slaughterhouses held an irrevocable
and profitable franchise to operate in Manhattan, there seem little hope of ever getting them out.
So it was unpleasant for the people that are visiting there.
He's like, Hey, can we do something with this?
So he winds up meeting a real estate broker who says, Hey, I'm actually married into the Swift and uh
Uh, Wilson family.
And
If you can
get a buyer at seventeen dollars per square foot we're willing to sell.
Uh so it says Dunbar ha that's who he's dealing with, Dunbar had approached us first. This is really, really important.
This is something that pops up over and over again. You've got to figure out how. If you're if you're
businesses is getting a look.
at the best deals first, whether you're buying companies, making investments in the early startups, whatever it is that you're doing.
You gotta figure out how
to get the best you see the best deals first. This is something that um
Like obviously Charlie W Munger and Warren Buffett have mastered
uh Sam Zell and when we had lunch he was talking about the fact that
he was invited into certain deals because of how well known he was in Chicago in like the the in the nineteen eighties, which was a fascinating story.
And the same thing is happening to Zuckendorf here because this previous association with Asters, people are like, Oh, the Asters think that Web and Nap and Zuckendorf is the guy.
So
Essentially they they outsource their decision making to other people. I guess the more more uh main point here.
Dunbar had approached us first. Thanks to Web and NAP's growing reputation, we were getting more and more such first offers.
And so then we get into how his mind works. I thought to myself that at seventeen dollars per square foot, the property would cost six point five million dollars.
But with the slaughterhouses gone, I was sure the price could jump.
To fifty, seventy five, or maybe even as high as a hundred dollars per square foot. So he's paying seventeen, which is expensive now.
But he's like, Okay.
That's expensive for what it is now, but not what we can turn it into. That's why he talks can refers to himself as an entrepreneur.
Finding ways to increase the value of the of what he's working on. Then there were the value depressed properties around the slaughterhouses, right? You're not going to have many people that want.
to deal with the smells and all the stuff that comes with that.
which would also rise in value from a two and five dollar per square foot
Base.
So I said
Let's keep he's telling Dunbar, let's keep this off the market for a while.
And this is the deal he puts up. He never has any money.
Just never.
Like this never th what he's about to do here, he does over and over again.
Uh, we would put up a million dollars for a one year option against a total six point five million dollar price, okay?
So
He's putting up a million, they want six point five million, he's like, I'll give you a million.
at the end of the year we have to pay the remaining five point five million dollars.
Doesn't have that money.
In the meantime, the packing companies would quietly make arrangements to relocate and the arrangement between us would be kept secret so not to precipitate a price rise.
land rus in the area, which is what he's gonna go do. Then he's gonna go around and buy all these other properties, right? The next problem was where to find one million dollars in cash.
So not only does he now have the six point five million.
He does not have.
The one million.
Much less the other five point five five that he's gotta come up with in twelve months from now.
He gets the one million dollars because he says I solve that one million dollar problem by forming a syndicate. Remember we mentioned this earlier, consisting of ourselves.
The Chicago financier and two New York real estate speculators.
Now that we have the slaughterhouse option in hand, we need as much
of the other land surrounding them as possible. So that's why he hires these three or four uh different properties.
Brokers.
And say, buy this up on the low, we don't want
you know, people to find out what we're doing, they'll jump in advance of us. We picked up about seventy five properties, an average of nine dollars per square foot. Remember he thinks, hey, this might be worth
fifty, seventy five, a hundred dollars square foot square foot.
These individual purchases were financed by local banks and insurance companies.
So he's doing all this.
He's calling it X City, but he doesn't actually know what it's gonna be. So the next thing we determined was what should we do with the parcel of the land that we assembled? And this is where the randomness of life.
comes in. Suddenly a new totally unexpected possibility developed. In nineteen forty six, the United Nations
Had been plagued
And perplexed by the problems of finding a permanent home.
And it s suddenly clicks with Zeckendorf, he's like, Oh, it occurred to me that we actually have the ideal site for the UN.
And so Zecondorf is plugged in with not only the business community but also the politicians.
This is what I wrote.
Doing big deals while drunk. He's at this party.
He's drunk on
He's drunk on a ton of champagne.
And the guy that's negotiating for the United Nations is there too.
So they wind up hammering out this deal.
And he's like, Listen, I paid six and a half million for the slaughterhouses. What would you offer for them? And the guy's like, Would you sell for eight and a half million?
And he's like
Uh, he's like, Yeah, deal. And then he goes, I had a lot of champagne by that time. So he wakes up the next day not realizing he's like, Did that really happen?
Which is hilarious.
And he gets a call and he says, Yeah, they're gonna give you that uh eight point five million dollars to the UN
And they're gonna take your property.
And then he says the property was being purchased. Exclamation point. I couldn't believe it.
And then he's uh then he leaves the office and he goes, I carry my hangover home.
And so I think it's obvious by now this guy's default aggressive. He's full like he's got one speed and he's always on.
His partners get really uncomfortable with this.
His partner's actually at Web and Nap, they want to break up. And so this is where he's gonna buy them out, which is fascinating is the way he frames this.
'Cause the chapter that where this is going on, it's called End of an Error.
Start of a rain.
And so they first suggested like we should just, you know, liquidate the business, we'll sell off all their assets and then we'll divvy up the cash.
And so he says at first I was upset by my partner's decision to liquidate. This is gonna r m uh remind you
Uh, and I have one of our favorite aphorisms.
Problems are just opportunities and work clothes.
At first I was upset by my partner's decision to liquidate.
My partners felt that Web and App should assume a more conservative and more comfortable role. I on the other hand
Was bent on a new program of speculative growth. I began to see in their departure not so much potential trouble.
As a fantastic opportunity, I bought my partners out for over five million dollars.
And so to get that five million, he doesn't have the five million as we already know right now, so he's gotta go deep in debt.
And he says I was a sole owner of the company. I was also deeply in debt, but never, except for rare moments, have I ever had
my head very far above the financial water, and never have I let this trouble me.
And I mean that's
It's interesting, like that he says that'cause you know, obviously that that kind of thing is gonna lead to bankruptcy eventually. I was still dissatisfied. I wanted to do more. So he's like, Okay, well how am I gonna pay back I wanna
No like
pay off this five million dollars.
But I wanna expand. So he does this reverse merger.
With another holding company.
And that's how he gets Web and App to be public. He says I now had a publicly listed company.
I now had a vehicle for my ambition.
and started on phase two of my career. And when he says phase two
He means that.
I've read a ton of books.
This is the first time ever. So
Once he's a public company.
He starts the book again.
With a prologue.
So there's three there's three parts to this book.
Every single time
There's a prologue.
Where it's like, okay, this is a line of demarcation, like this is a change in my life. I don't think I've ever seen this before.
And so he starts off telling us what part two is going to be about. This is actually a great metaphor, what he's about to say here, and I think it works with relationships and it works with biographies too.
So it says just as a man living in a mountain valley sees
And is closely aware of only a few of the nearest great peaks above him.
So it too is it with a man comfortably settled
At some modest elevation in our own society.
If he begins to climb, he is describing himself.
If he begins to climb, however.
He will soon notice
From his new perspective.
that there are actually a great many peaks on all sides around him.
This is really, really important.
What is more?
Once he has reached a high enough altitude, he will discover something else.
He will see that many of the greatest peaks.
are interconnected
By high ridges or narrow plateaus.
А де сню лево
They are readily accessible.
Each one
To the other.
Right, this is about relationships at the top.
Part two of this book is an account.
Of my travels and dealings.
Among some of the denisons inhabiting the elevations and peaks.
of American society.
Why is that important? Because these people
have resources and power and they make things go
So much faster. The importance to me

that in an hour I could achieve what previously would have taken a year or more of effort to perform.
And so one example of that is when he's trying to
to figure out uh to close the deal w uh with the UN.
Like it's
H it helps if you can call the mayor of New York.
And then he gives advice on how to actually attain and to get to scale up to these peaks.
One way to succeed is by aiding and supporting the position of others.
Through new or ingenious ideas or projects.
This usefulness to others is in large part
The reason for my own excess uh my own success.
To me the best path.
to wealth is what Henry Ford said. Money comes naturally as a result of service.
The focus should be on making
the lives of other people better and then you'll be able to capture some of that value. Money comes naturally as a result of service.
And so let's go back to this idea that to read this autobiography is to have this one sided
you know, ten or fifteen hour conversation with Zeckendorf. And what Zeckendorf does wonderfully is he doesn't hide who he is.
He knows he's unapologetically extreme.
And he just has to follow his natural drift. So
He's fifty years old.
And he says something, like, you know, we're about
Ten years from him going broke, or bankrupt, rather.
And he's like, Listen, I could have settled back as a multi millionaire.
And a property holder.
That's it. I'm made in life, I'm rich.
Owns a properties, just chill out. But with all with so many useful things waiting to be done, I know
More new how to settle down.
to mere money counting.
Then a bee in a clover knows how to doze in the sun.
I lived and loved a hyperactive
sixteen hour day.
And it is this point when he is fifty.
That he comes up with his greatest idea.
This is known as the Hawaiian technique.
There is a ton of detail'cause it's gonna go over
If you buy the book in the index, just go to Hawaiian Technique.
And you can actually, um you can actually like go right to this I mean, I read the whole book, but
I think buying the book and just reading the the like six or seven pages, whatever this is.
on the Hawaiian t technique are so um important.
I actually found great
um summaries of it. So first I wanna go to why I'm reading this book and to begin with.
This is where
before I met Sam Zell in person and at lunch, I had read the uh his uh autobiography, obviously, and I had bought the book.
Um and so obviously I
mentioned I had bought the book and he's like, Did you read? And he's like
That's like no, he's like, read it. And so that's how we arrived at where we are right now, right?
And so I want to read to you from Sam Zell's wonderful autobiography.
Which if you're listening to this, I assume you already read or at least listened to the podcast I did on it. It's episode two sixty nine, if you haven't, but I'd buy the book too,'cause it's absolutely excellent.
And so this is what he's saying. He's gonna describe
He doesn't call it the Hawaiian technique, but this is what he's talking about.
And so this is what Sam Zell says. Remember, this is around nineteen seventy one, so Sam would have been around thirty years old.
Around the same time, uh, I had read the book Zeckendorf, the autobiography of the man who played a real life game monopoly and won the largest real estate empire in history. It reinforced the approach of viewing the whole.
to its individual pieces.
But at
But for a different purpose. Zeckendorf was perhaps one of the greatest real estate developers of the modern era.
Zekendor's autobiography was packed with colorful stories.
But what fascinated me most was his strategy.
Zackendorf viewed assets as a sum of parts.
So he could increase the value of the whole.
Various parts were more valuable to different buyers.
So Zackendorf could maximize the value of his holding overall.
In effect making one plus one equal three.
For example.
One Park Avenue in Manhattan.
which the marketplace had valued at ten million dollars.
Was ultimately worth fifteen million in Zeckendorf's hands.
He calculated everything separately.
The building's title.
The land
The leases
The individual mortgages.
I thought this
Was brilliant.
I adopted an approach both inside
and later outside of the real estate industry.
And so at the time I was re reading my highlights from Sam Zell's autobiography.
I had somebody by the name of Daniel K. Ludwig
on Twitter send me a message. Now this is hilarious.
Because
If you ask like the random entrepreneur on the street
That doesn't listen to the founders' podcast?
They're not gonna know who the hell Daniel K. Ludwig is, even though he was at one time the richest man in the world.
You and I know him by the term the invisible billionaire.
It was episode two ninety two.
And episode sixty eight.
And so this anonymous account on Twitter named Daniel K. Ludwig sent me this message. It was interesting. He says Zeckendorf both Zuckendorf and Ludwig are my heroes.
But Zeckendorf went bankrupt in the end, being overleveraged, whereas Ludwig's foundation and operations are still running.
And so he had sent me
A summary
of
The Hawaiian technique.
And so there's three paragraphs on this to add to what Sam Jell just told us. In fact, some of Zecchador's financial maneuvers anticipate some of the highly aggressive financing in the recent real estate market.
For example th for example, there was his Hawaiian technique.
Which he claimed in his autobiography to have discovered while fishing on a Hawaiian beach.
The theory had to do with breaking up a property into various components, which is what Sam Zell just told us, right?
It's ground leasehold, its fee position, it's operating leasehold and a residual position, and seeking out various investors for each.
Zackendorf thought about the idea of diversify investors.
Finding investors.
who are not just bankers or insurance companies, but actually going out to the public.
To find local investment.
And this is how Zackendorf wraps up.
the section on the Hawaiian technique. The Hawaiian technique was so flexible that it became a very powerful tool.
the Wine Technique became the principal tool of the web and nap expansion.
And so then I have to tell you about this absolutely bizarre encounter with Howard Hughes. There's a bunch of people in the book.
uh that I've done podcasts on that are these eventual historical figures that are still alive.
Howard Hughes is the first one and this is the longest section.
'Cause he's just such a bizarre person.
And I thought the story was hilarious.
Uh, Howard Hughes was an indust is an industrial genius and paradoxical man.
And has been phenomenally successful.
He has produced some disastrously costly movies.
He's also known as a famous Hollywood Don Ju who collected and discarded beautiful women the ways boy the way boys collect and discard model airplanes.
For the past twenty years.
He's also managed to live
As a travelling recluse.
He deals with his various company managers only intermittently, thro obscure intermediaries.
Midnight phone calls.
Or summonses to secret out of the way meeting places. He Zeckendorf is going to be summoned.
by Howard Hughes.
Just this is the most bizarre
The most bizarre story in the entire book.
And so through one of Hughes's friend and you can use that word loosely, this this guy named Spiro. Spiro is like as much of a friend to Harvard Hughes as Harvard Hughes could have, right?
Uh, Howard's like thinking of okay, I'm gonna d what if like what's the price? Like can I sell off everything I have?
And
Zagondor's really interested in that. He teams up with uh some of the Rockefeller families.
And so they're like okay.
there's like this super secret w way you have to meet Hughes. And so we're gonna pick that story up here.
Rockefeller and I flew out to Los Angeles.
And we met Spiro so we lunch at the Beverly Hills Hotel.
Uh, we found ourselves programmed into a script that only members of various underground organizations like the CIA could take seriously.
At precisely one thirty, Spiros was to get up and take a tax to a predetermined place.
Where he would be met and then taken to the rendezvous.
At one fifty, Rockefeller and I were to go to a certain intersection where a man wearing a red shirt
would contact us and drive us to the rendezvous.
The meeting was then to be attended by Spiros, Rockefeller, and me.
So they get in the car.
After a time we found ourselves in a seedy section of town.
We soon stopped in front of a flop house.
The building was now being patrolled by four or five young, neatly dressed men with crew cuts. These were Howard Hughes's Mormon entourage.
They escort everybody into the building they go to the top floor.
Our escort wrapped on the door with a distinct pattern of knocks.
The door opened and there stood Howard Hughes.
He had a three day growth of a beard.
Wore a V neck shirt.
Soiled trousers.
And dirty tennis shoes.
It only gets weirder in conversation. They start talking, he says in the most casual way, he asks, So what do you fellows want?
Since it was Hughes who had approached us through Spiros, and since polite indirection had done nothing for me in previous meetings,
I decided to be blunt.
Howard, you know damn well what we want.
We didn't come three thousand mile miles to admire your old trousers.
Or because we like this part of town. We came here to buy. I was told that you were ready to sell.
And so this goes on for a while.
Zakondor tries to close him. He's like, Listen, I have in my hand a cashier's check. Then this is the f the interesting part. He tries to hand him
the the letter.
uh the guaranteed letter of guarantee and a cashier's check.
And then he freaks out, he's like, Don't ask me to touch it. And so he's like afraid of bacteria.
And then they go back and forth for a while and then he then Hugh says
Uh, I will not take this. Why not? It's not enough. What is enough?
I won't tell you.
Do you want to sell?
Under certain circumstances.
What circumstances?
If the price is right.
What is the price?
the price that you might offer me. If it is enough, I will sell.
Then Second Earth asked, Are we fifty million dollars apart? Hugh said no.
Do you mean it's less?
He said no, I mean more. For a man who supposedly wanted to get down to serious business, he was acting like an original
Coy mistress.
But I kept trying.
Are we a hundred million dollars off?
Are you offering it? No, I'm asking you.
He said, I told you I won't tell.
All right, I'll find out.
I'm offering you four hundred and fifty million. Will you take it?
No.
Howard, what do you want?
I won't tell you.
Howard, take it or leave it, five hundred million.
He said, I'll leave it.
And then it gets even weirder.
Uh Hugh says
Uh I'll tell you what we'll do. I don't wanna talk any more today. We'll all go down to Las Vegas and we'll talk down there.
And so this is the plan he was comes up with, and then as if we were ten year old members of some secret membership club.
Four grown men who among them commanded or could influence a significant share of American wealth.
Sat there as Hughes programmed a properly secret rendezvous.
And this is what he wanted them to do. We were to meet Hughes at midnight at a semi abandoned airport on the outskirts of Los Angeles.
He would fly us to Las Vegas.
But a what would arrange that we would be driven to town in separate cars.
Once in Las Vegas, we must go directly to our rooms under no circumstances.
Were we to leave them during daylight when we might be seen and start rumors.
And what's even weirder is they all flew
On the same plane.
As if they couldn't talk on the flight. Instead had to do this like weird rendezvous.
So as you can imagine, this deal never w uh wind up working out. And this went on for page after page after page of just bizarre
Interactions with Howard Hughes.
So then there's this interaction with a New York family called the Reeds.
They own at the time a a New York competitor to the New York Times.
It's called the New York Herald Tribune. And
What
What Zekendorf realizes here.
is this play that Joseph P Kennedy is trying to do against
The read. So J Fad
The one that made
The Kennedy family rich.
I wrote a biography of
J Joseph B. Kennedy.
Years ago. I think it's episode four Founders.
And it's like seven hundred or six hundred page book called The Patriarch. It's absolutely it's the book's actually incredible.
But
This section made me think of one of my favorite scenes from Game of Thrones. I just re watched over the last few months.
the entire series of Game of Thrones and would take notes on lines or or or insights to human nature.
That appeared.
And so there's something in this
In the last season of Game of Thrones.
I've mentioned it before on the podcast. I just want to bring it bring it to your attention again because it's something I also see in the history of entrepreneurship.
And it's
this cutthroat, which is this guy that came from the outside the outskirts, and th his name is Bron in the series, and through the series we see him constantly like climb his way up. And so at the very last season he was hired by
Cersei Lannister to kill
Her brothers.
Jamie and Tyrion Lannister.
He goes the cutthroat. Braun goes and says, Hey, my s your sister wants you dead.
You told me a long time ago if anybody ever hired me to kill you, that you'd always pay me more.
I want you to give me if you guys win this war, I want you to give me
This castle and this land called Highgarden. And so there's a discussion
Where Jamie says back to him.
High garden will never belong to a cutthroat. So that starts what I s one of the most important
you know, sayings or paragraphs in the entire series.
And Braun is really talking about like how wealth is built.
And he says, No, he says uh high garden will never belong to a cato. No.
Who were your ancestors?
The ones who made your family rich.
Fancy lads in silk.
They were cutthroats.
That's how all the great houses started, and so
We know about JFK.
R F the Kennedy family dynasty and everything that turned that.
That happen after it.
But Joseph P Kennedy

As we'll see here.
The Reeds were then the owners of the New York Herald Tribune.
Early in the fall of nineteen fifty six, I received a call from Mrs. Helen Reed.
Bill, I need your advice.
Would you recommend that I sell my plant where her her newspaper is?
For one point seven five million dollars and then lease it back.
I said that depends on the terms of the lease and how badly you need the money. So the reads are in a
They were at one point affluent.
They're in a bad financial spot.
The interest would be eight percent, she said.
Since at that time money was averaging between four and five percent, I told her
It was a low price for the property.
and a very high rate of interest. So he sees okay.
That's a weird deal.
Why would somebody be offering this?
You know, she built a newspaper. She's probably not
Like some kind of financial genius.
And so Zeckendorf's gift is being able to read between the lines. It's like okay, well
That's a very low price for your property and a very high rate of interest.
So then I asked her, Who are you selling to?
I don't know who I'm selling to.
And then he says who's the real estate broker?
It's John J. Reynolds. He knows that John J. Reynolds is the real estate broker that Joseph P. Kennedy uses. He also knows because he's
He knows everybody in the like the the important figures in American business uh at this time in history, right?
In that case, Helen.
Uh, I'm going to ask you a very simple question. Would you sell your newspaper to Joseph P K Kennedy for one point seven five million dollars?
What do you mean, she said.
I said he's your customer.
And this is the the cutthroat part of it, right?
He is giving you just a little less money than you need.
to force you to go broke.
He has set the interest rate just a little too high.
to make sure that you do.
Not only will he have your plant, but
But he will also have your paper all through
A very
Low cost real estate purchase.
She says, Do you really think that?
He says I don't think it
I know it.
How do you know that, she asks?
Because that's the way Kennedy does business.
And so that insight by this fictional character Braun in Game of Thrones is something I see over and over again.
Who were your ancestors, the one that made your family rich.
Fancy lads in silk?
No, they were cutthroats.
That's how all the great houses started.
What's so fascinating to me is this book is almost three hundred pages.
And
Yet the entire downfall, because I think it is so painful, and I think that's exactly what he says. He says that the the downfall could be an entire another book.
It's only like the last like
Ten pages.
And so this is where it's like
These are all notes to myself.
It's like David.
Do this, that's a good idea. Or David, avoid this.
And you just see the same thing happen over and over again.
I'm gonna go through a couple of the reasons.
And it just s starts to unravel. Like his business got too much uh way too complex, but
couple of weeks ago I I read the bi the autobiography of David Packard and you know, back in the nineteen fifties, he said something like
More businesses die from indigestion than starvation.
And it's amazing how many times.
That is proven to be true.
Secondo
business went bankrupt not from starvation. It went st bankrupt by indigestion.
By now it was nineteen sixty and Web and App
Nap had spread.
Then
Over a variety of projects, all of which
We're crying out for cash.
Part of the problem.
May have been
That we were already doing so much in so many other places. That is another sentence of uh on an another page.
He just said listen, we're r by nineteen sixty we're super spread then.
We got a ton of projects.
Most of them.
Or
Draining our bank account.
They all need cash.
So he then he says, Well part of the problem is that
I'm doing too much in too many other pla places.
The distracted do not beat the focused, right? What does Steve Jobs tell us? Focus is saying no.
Unfortunately, Zekindorf saw every deal and he just took it.
And
When I'm thinking about this
I'm also thinking about the difference between like avoiding like who are the people that successfully avoided second or's fate?
Obviously been s eyeball deep in Munger and Buffett lately.
And I just remember what they say is like you always have a fortress of cash.
So then we go back into this idea of like
More businesses die from indigestion than starvation, like buds on a prize rose bush.
All these and dozens of other projects had not fully
profitably blossomed as of yet. So what does he mean?
I got dozens.
Dozens of projects.
With
Money tied up.
debt on those things and they're losing money.
Every
Month.
every year and it's just draining, draining, draining. So then what I do, I go out and
Borrow more money.
Then
Can't pay some of the creditors and this all the this house of cards, unfortunately, is gonna fall.
And he says we borrowed more and more and more.
We took first, second, and third mortgages.
and any other kind of in of debt.
possible. That is a crazy sentence.
Then he gets into bad deals.
He winds up
Backing.
This thing called freedom land.
And part of the problem with free land is one
This guy's no Walt Disney, as we're about to see.
But you're also jumping on a trend.
So what do I mean there? The idea of freedom land.
was a as a fallout from the explosive success of Walt Disney's fabulous Disneyland.
So it says C V Wood had worked with Disney on Disneyland.
He had convinced himself and a number of other people, including Zeckendorf.
that Disneyland's success was really a matter of Woods rather than Disney's idea and management.
And the difference between Disneyland, which is
Fabulously.
Successful.
And for
Th a product of Walt Disney, right?
And Freedom Land.
The product of C V Wood is as follows, year after year to it closed, it siphoned away Web and Knapp's funds and credit.
For a total drain of twenty million dollars.
And it's a series of events that lead to the beginning of the book where he actually goes bankrupt. I have not the space in this book.
nor the hard at this time to go into a detailed description
of the last days and final founding.
of Web and Nap.
I was and still am too close too intensely.
And emotionally involved in those events.
It is a tale of minor ventures devised to stave off disaster.
While we prayed to put together one or more major projects that could finally begin to pull the company back together.
Exactly when we moved from a hopeful position
into a desperate one, I cannot say.
If any alarm bells rang,
I did not hear them when I got to that section in the back of my mind there's two quotes that we've learned on the podcast recently.
Wisdom is prevention.
Charlie Munger.
The wise people don't solve problems, they avoid them. Wisdom is prevention.
And then on episode two seventy five, Paul Graham.
Be hard to kill.
Unfortunately, his second dwarf was not able to prevent this and he was easy to kill as we're about to see here.
An unexpected combination of trends and events.
Coupled with our own actions caused us to found her.
We had losses rather than income.
On our books during these stretched out periods.
Instead of producing income, we were burning away our financial resources інsted.
Our hotels drained away cash we didn't actually have.
Freedom Land was running a losses. Roosevelt Field was not making any money.
We held numerous other properties.
These later were sold off as best as we could, but now was running into an ironic this is what I mentioned earlier.
An ironic reverse of what went on during the first years of my career.
In the nineteen forties when we were handling this store estate
The very fact that we own a property
That we owned that property gave it a certain name and glamour which appreciated its market value.
But in the nineteen sixties, so this is a good the difference between a great brand name and what's happening is his brand name is soiled. It means it's singling to the market something else, right?
The uh the very fact that we owned a property gave it a certain name and glamour, which appreciated its market value. But in the nineteen sixties
That a beleaguered Webb and Nap owned a property was a signal.
to some potential buyers to hold back our bid low.
In the expectation that in our eagerness for cash
The opposite of having a fortress of cash, which Munger and Buffett and Zell have, right?
In our eagerness for cash.
We would hold a fire sale. The sharks sensing the distress of our situation kept circling.
The fall of Web and Nap when it came was an upsetting
Ego devastating event.
But in a way it was also a relief. I was like a man led out of jail. The ordeal was over.
The increasing pressure of the three years was finally off.
I had no intention of bonom bemoaning the past.
My son Ronnie and I and a handful of old employees
Set up a new company.
I called General Property Corporation and went into business.
Within a year we were making money.
The Zekendorfs were alive and well and very much in the real state.
We were severely limiting capital.
But we had brains.
Experience and contacts.
In good time.
I have come to realize
That since the fall of Web and Nap, I have been privileged.
To live and to savor a second life.
And a second career.
How many other men get such an opportunity, I do not know.
But I'm grateful for mine.
The job now is to select
Among the possible choices
And get to work.
I really like his perspective at the end of the book. It reminded me of Mozart's personal motto, which was never despair.
That is where I'll leave it.
For the full story, I highly recommend and Sam Zell recommends as well reading the book. If you buy the book, using the link that's in the show notes in your podcast player.
You'll be supporting the podcast at the same time.
That it's two hundred and ninety eight books down one thousand ago.
And I'll talk to you again soon.