I had no idea about Sam Zell before reading his book (which I only found out via Brad Feld), Am I Being Too Subtle?: Straight Talk From a Business Rebel. He runs Equity Group Investments, and their tagline is: “We identify opportunities others don’t – and invest like others can’t.” Do visit their website, it really is quite interesting. I tremendously enjoyed the book, I highly recommend reading or listening to it.
Here are some notes I made from his book.
- always have a sense of urgency
- trade conformity for authenticity
- be blunt
- culture is king
- read risk – always understand the downside
- listen. There is great value in this because you then know the motivations of folk.
- look for clarity. Drown out the noise. Conventional wisdom tends to be a lot of noise.
- “If you are really good at what you do, you have the freedom to be who you really are”
- His daily routine: workout at 4.45am, then in the office by 6.30am, and stays there till 7pm. And he still does this at age 75!
- Where there is scarcity, price is no object
- There is value in tenacity
- Use simplicity as a strategy
- Strive to be asset rich, cash poor
- Weak economies breed troubled companies
- “Competition is great for you, but I’d rather have a natural monopoly; if I can’t have that I will take an oligopoly”
- Board of Directors tend to have “good resumes whom are often past their prime”
- Board members should be viewed as cheap consultants to the business. Management team should use them regularly.
- Do not depend on people unless you understand their motivations. Listen to know their motivations!
- When people ask Sam Zell what he does? “I am a professional opportunist.” (what a great job title)
- He is always at his best when the scenario around him is at its worst
- We should never get into a phase of “irrational denial” (like if people get cancer, you don’t get treatment, you will die)
- Always make lists. Check them off.
- “Liquidity equals value”
- Find good companies with bad balance sheets
- It is important to have owners, not just managers, in leadership positions
- See micro-opportunities in macro events
- Real estate tends to lag the general economy. So it falls slower than the rest of the economy when there is pain.
- Sam is not pessimistic, but realistic. Go in with eyes wide open.
- In real estate, he tends to assign walk scores. Takes number of steps to public transport. To the nearest Starbucks. Etc. This will tell you value of property.
- “Please God, give us one more oil boom and we promise we won’t screw it up.”
- “Everyday you choose to hold an asset is a day you choose to buy it.” Therefore if you get an offer greater than what you would pay for the asset today, you should sell!
- Calculate risk, know what the downside is. Ask: if all goes wrong, what do I get from this deal?
- “I don’t like auctions unless I am running them.” Bidding wars are something he doesn’t like to participate in.
- Experience – you understand risk only this way. Experience teaches you how to minimise the downside.
- Be an optimist. Focus on what is next. Do not lament on what could have been.
- Emerging markets have built-in demand.
- Global business requires:
- good partners
- aligned objectives
- vision, direction, strategy
- Sam describes himself as the Chairman of everything but the CEO of nothing
- Radius theory of business is the number of people between you and the decision. This will affect your ability to succeed.
- Businesses that delegate too much fail as well.
- Culture can either inspire or stifle innovation/creativity.
- Fast decision making and autonomy is what usually wins out.
- Be ready to pivot
- Spot opportunity early for long term gains.
- He is a voracious consumer of information. Reads 1 book per week. Knows how to get relevant information. Reads 5 newspapers per day and 5 magazines per week.
- “If you lie down with dogs, you wake up with fleas”
- In everything you do, always be thinking of the next deal. Play it straight. You can be successful AND ethical in business. Do you consider their circumstances over your own? Loyalty definitely matters.
- Always be tenacious, optimistic, have drive and conviction.