#367 Inside the Contrarian Mind of Sam Zell

The podcast episode explores the themes of cost control and resilience in entrepreneurship, emphasizing lessons from Sam Zell's autobiography and his interactions with other successful entrepreneurs. The host shares how Zell's frugality and strategic cost management, exemplified by anecdotes such as reusing paperclips, are crucial for sustainable growth and competitive advantage. Zell's mindset of learning from failures and maintaining relentless curiosity is highlighted, alongside his belief in setting ambitious goals and valuing straightforward communication. The episode also underscores Zell's influence on the real estate industry and his dedication to teaching and sharing knowledge with future generations.

• Sam Zell and his partner Bob exemplified extreme frugality in business, emphasizing the importance of cost control.
• Cost management is seen as a strategic imperative, crucial for sustainable growth and competitive advantage.
• Historical examples of entrepreneurs like Daniel Ludwig demonstrate a consistent focus on minimizing waste and unnecessary expenses.

"Bob was extremely frugal and watched every single nickel in our business. Bob was constantly on the lookout for anything that could be reused."

• This quote illustrates Bob's meticulous attention to cost control, a trait shared with Sam Zell, highlighting the importance of frugality in their business operations.

"Diligent cost management is not just a tactical choice, but a strategic imperative that underpins sustainable growth, competitive pricing, and long term resilience."

• This statement underscores the strategic importance of cost management in ensuring long-term business success and competitiveness.

• Sam Zell's leadership style is direct, sometimes controversial, aimed at creating a sense of urgency and focus on business priorities.
• Zell emphasizes the need for self-deprecation and not taking oneself too seriously to foster a winning mindset.
• His approach involves challenging employees to prioritize revenue generation and business success over personal grievances or political correctness.

"I would not take back anything that I've said. Turn this around and put yourself in my position... The challenge for me is how do I get your attention?"

• Zell's unapologetic stance reflects his belief in the necessity of direct communication to drive organizational change and focus.

"The 11th commandment is, thou shall not take oneself seriously. Nobody is more self deprecating than I am."

• This quote highlights Zell's belief in self-deprecation as a tool for fostering a productive and focused work environment.

• Sam Zell views failure as an inevitable part of business, focusing on learning and moving forward rather than dwelling on past mistakes.
• He shares a mindset with other successful figures, recognizing the value of loss and failure as opportunities for growth and improvement.
• Zell's forward-looking approach is mirrored by other leaders like Dominic Cruz and Michael Jordan, who see losing as integral to eventual success.

"I'm not really very good at looking behind. So consequently, I don't tend to reminisce or mutilate myself as a result of past decisions."

• This quote captures Zell's forward-thinking approach, emphasizing the importance of not dwelling on past failures but instead learning from them.

"Loss is a part of life. If you don't have loss, you don't grow. This isn't tough. This is light."

• Dominic Cruz's perspective aligns with Zell's, viewing loss as a necessary component of personal and professional growth.

• Zell's contrarian approach is characterized by challenging conventional wisdom and taking calculated risks.
• His career has been marked by both significant successes and failures, demonstrating his willingness to venture into uncharted territories.
• Zell's mindset is focused on identifying opportunities where others see obstacles, a trait that has defined his business ventures.

"Inside the contrarian mind of Sam Zelle... how Samzell thought, how Samzell approached his life, how Samzell approached his work."

• This quote introduces the theme of Zell's contrarian mindset, which is central to his approach to business and life.

"In February 2007, he sold his equity office Properties Trust... for a hefty $39 billion to Blackstone."

• This example of a successful contrarian move by Zell illustrates his ability to capitalize on opportunities that align with his unique perspective.

• Sam Zell, initially appearing unconventional, turns out to be a significant business figure with a vast real estate portfolio.
• The unexpected meeting with Zell became more valuable than anticipated clients, showcasing the importance of unexpected opportunities.

"My name is Sam Zell. Leah told me that I should meet you."

• Sam Zell's introduction highlights the importance of personal connections and unexpected introductions in business.

"All he told me that day was he bought bankrupt properties and wanted to build an empire."

• Zell's approach to business involved identifying undervalued assets and envisioning their potential, a key trait of successful entrepreneurs.

• Zell's relentless curiosity and desire to learn played a crucial role in his success.
• His willingness to explore new areas and learn from others is a testament to his growth mindset.

"Even when he was in his seventies and eighties, Zell was relentlessly curious about the world around him."

• This quote underscores Zell's lifelong commitment to learning, regardless of age or status.

"He wasn't thinking, oh, this is going to turn into a deal. He wanted to go to learn."

• Zell's motivation was driven by learning and exploration rather than immediate business gains.

• Zell viewed business as a puzzle to be solved, not a battle to be waged.
• His optimism and approach to failure reflect a resilient entrepreneurial mindset.

"True entrepreneurs never fail. Sometimes it doesn't work out, but they never fail."

• Zell's perspective on failure emphasizes resilience and learning from setbacks as key components of entrepreneurship.

"Business is not a battle to be waged. It is a puzzle to be solved."

• This quote illustrates Zell's strategic and problem-solving approach to business challenges.

• Zell's influence on the real estate industry is profound, with many entrepreneurs emulating his strategies.
• His investment principles focus on supply and demand, cash flow, and avoiding competition.

"As any other single individual, he has had the greatest impact on the real estate industry."

• Zell's pioneering approaches have shaped the strategies and thinking of countless real estate professionals.

"Frankly, there's no substitute for limited competition."

• This statement highlights Zell's preference for markets with less competition, allowing for greater strategic advantage.

• Zell's authenticity and straightforwardness are central to his personal and professional philosophy.
• He values reputation and long-term relationships, emphasizing integrity and trust in business.

"What you hear is what you get. There is no pretension. There is no bullshit."

• Zell's directness and lack of pretense are key aspects of his character and business dealings.

"Reputation is the most important asset."

• This quote reflects Zell's belief in the enduring value of integrity and a good reputation in business.

• Zell prioritized long-term partnerships and was willing to invest in these relationships for future benefits.
• He believed in creating mutually beneficial relationships rather than maximizing short-term gains.

"It's not about the money I'm gonna make or lose on this deal. It's what happens on the next one and the next one and the next one."

• Zell's focus on long-term partnership value over immediate financial gain demonstrates his strategic foresight and relationship-building skills.

• Sam Zell's philosophy revolves around the idea that there are no limits to one's ambitions and goals.
• He believes in constantly readjusting goals to ensure continuous growth and self-discovery.
• Zell's life mirrors the story of Sammy Glick from "What Makes Sammy Run," which emphasizes escaping limitations and achieving success.

"I am somebody who has been very fortunate to have had the opportunity to test my limits."

• Zell emphasizes the importance of exploring one's potential and not settling for predefined limits.

"Whatever your goals, whatever goals you set, you need to constantly readjust them so that at no time do you reach your goals before your time is up."

• Continuous goal setting and adjustment are crucial for personal and professional growth.

• Zell describes himself as a professional opportunist, seizing opportunities beyond traditional real estate.
• His strategy involves identifying distressed companies with potential for turnaround and growth.
• Zell's approach is characterized by a lack of preconceived notions and a focus on instinct and common sense.

"I replied, I'm a professional opportunist. And that has been my response to that question ever since."

• Zell identifies himself as someone who capitalizes on opportunities, regardless of the industry.

"They carried no preconceived notions about how to buy and sell companies outside of real estate, but they viewed that as an asset rather than a liability."

• Viewing lack of experience as an asset allows for innovative and flexible approaches to business.

• Zell's investment strategy often goes against the crowd, avoiding high-risk and highly competitive markets.
• He prides himself on rational decision-making, focusing solely on economic prospects.
• Zell's ability to remain unemotional and rational during market bubbles is a key aspect of his success.

"I don't invest in anything other than economic prospects. If it's not economic, I'm not interested."

• Economic viability is the sole criterion for Zell's investment decisions, avoiding emotional influences.

"He just stubbornly refused to be swept away by emotions that could cloud his vision of what constitutes value investing."

• Zell's discipline in maintaining a clear vision of value investing is crucial to his success.

• Zell is highly competitive, striving always to be the lead dog in any industry he enters.
• He believes in the importance of being the leader, as echoed in his saying, "unless you're the lead dog, the scenery never changes."
• Zell's competitive drive is a defining trait that influences his business decisions and strategies.

"Unless you're the lead dog, the scenery never changes."

• Being a leader is essential for Zell, as it ensures control and direction in business.

"Second is the first loser, said Zelle. To him, nothing but winning really counted."

• Winning is paramount for Zell, and he does not settle for second place.

• Zell emphasizes the importance of teaching and instilling core principles within his organization.
• He believes in the power of repetition to reinforce these principles over time.
• Zell's approach aligns with influential leaders like Sol Price, who advocate for teaching over training.

"You train an animal, you teach a person."

• Teaching is about imparting knowledge and principles, while training is more mechanical.

"Trying to be right 100% of the time leads to paralysis. Conventional wisdom is nothing other than a reference point."

• Zell's principles focus on flexibility, avoiding perfectionism, and questioning conventional wisdom.

• Zell leverages media coverage and public recognition to his advantage, creating opportunities.
• His involvement in high-profile deals, like the Rockefeller Center bid, increases his visibility and opens doors.
• Zell's resourcefulness is evident in how he capitalizes on publicity to enhance his business prospects.

"He winds up leveraging his role in this high-profile deal, making to his advantage because his name had been non-stop in the business headlines."

• Media presence is a strategic tool for Zell, enhancing his business reputation and opportunities.

"All that just made him more well known and opened up unexpected and unpredictable opportunities as a result of that."

• Public recognition leads to unforeseen opportunities, showcasing Zell's adaptability and strategic thinking.

• The decision to finance a $32 billion offer with 16 banks at $2 billion each instead of three banks at $10 billion each is a strategic move to limit competition.
• This tactic is reminiscent of Rockefeller, who used a similar strategy with Cleveland banks to prevent them from funding his competitors.

"The fact that they decided to finance their $32 billion offer with 16 banks at $2 billion each instead of three banks at $10 billion each might have suggested perhaps they were thinking that if they could get 16 banks for $2 billion each, there weren't going to be a lot of fucking banks left to finance a competitor."

• This quote highlights the strategic thinking behind spreading financial commitments across multiple banks to reduce competitive threats.

• Sam Zell emphasizes designing a life centered around personal freedom and authenticity.
• Freedom allows individuals to choose work they love, leading to long-term success and financial rewards.

"Go for freedom, he said. He repeated the importance of freedom. I don't know, like five or six times in 2 hours. Go for freedom. Freedom allows you to control what you work on."

• Zell's focus on freedom underlines its role in enabling personal and professional satisfaction and success.

• Salesmanship is considered a vital skill, with the belief that everything is sold, not bought.
• Effective communication is essential for leadership, involving the ability to simplify and sell ideas.

"I realized that being able to sell your ideas is what leadership is really about. Your ability to define and delineate your ideas, to bring them to a level of simplicity so that others can both understand and buy in is an extraordinary asset and a requirement to achieve true leadership."

• This quote emphasizes the importance of communication in leadership and the necessity of selling ideas effectively.

• Zell argues that fear is a healthy characteristic and closely related to courage.
• Fear should be harnessed to drive action rather than hinder it.

"At times, going against conventional wisdom is painful, lonely, and for sure creates all kinds of self doubt and fear. I might add that fear is an extraordinary healthy characteristic."

• The quote illustrates the role of fear in fostering courage and pushing boundaries in business and personal growth.

• Zell values simplicity in business dealings, insisting on brief, one-page briefings for complex deals.
• Cash flow is the primary driver of business value and success.

"Zelle insists that briefings be kept to a single page. No matter how complicated a deal or issue. Anything more is summarily dismissed."

• This quote highlights Zell's preference for simplicity and focus, ensuring clarity and efficiency in business operations.

• Zell is characterized by intense curiosity and a commitment to continuous learning.
• He advocates for looking forward and not dwelling on past failures.

"Failure is inevitable. It's part of every entrepreneur's journey. Move forward. Do not look back. The bottom line is, what happened in the past stays in the past. My head only looks forward."

• The quote underscores the importance of resilience and a forward-looking mindset in entrepreneurship.

• Zell values nonconformity and setting his own agenda, focusing on activities he enjoys.
• He advises pursuing freedom and not conforming to others' expectations.

"I'm a guy who has an extraordinary good time. I'm a guy who really focuses on not being anywhere I don't want to be and not doing anything that I don't want to do."

• This quote reflects Zell's philosophy of living life on his terms and valuing personal freedom above all.

• Zell felt a responsibility to share his knowledge with other entrepreneurs.
• He traveled globally at his own expense to impart his learnings to the next generation.

"He considered it an obligation to pass knowledge onto the next generation."

• This quote highlights Zell's commitment to mentorship and the dissemination of knowledge.

• Zell emphasizes that professional success is a lifelong journey, not something achieved quickly.
• He encourages aiming high and making big plans, inspired by Daniel Burnham's philosophy.

"The point was not becoming him. It was that becoming whoever you are is going to be an ongoing process, and that professional success is not crafted in five years. It's crafted in a lifetime."

• The quote illustrates the concept of continuous growth and the long-term nature of achieving success.

• Zell's ultimate goal was to make a difference in various fields, including business and philanthropy.
• He wanted to be remembered as a man of his word and someone who made an impact.

"Most important of all, whether it be in the business world, the philanthropic world, or the sports world, I want to make a difference. That's what motivates me."

• This quote encapsulates Zell's driving motivation to leave a lasting impact and contribute meaningfully to society.