#407: Sam Zell — Strategies for High-Stakes Investing and Dealmaking

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Hello, hello, hello, Nelly. This is Tim Ferris. I figured I'd mix up the intro. Welcome to another episode of the Tim Ferris Show where it is my job. each episode typically to sit down with world class performers of all different types, from all different industries, from all different fields to tease out the habits, routines, favorite books, influences, and so on that you can in some fashion emulate or test and apply in your own life. This time around in this episode we have a slightly different format, which I'm super excited about. I will not be the one doing the deconstructing. Instead

We have my good friend Petertia taking my place. Now, Peter Tia, for those who don't know, is the common ingredient in two of the most popular episodes. on my podcast of the last, say, hundred episodes. Specifically, those are Episode number three fifty two. Doctor Peter Atia versus Tim Ferris, and episode number three ninety-eight, Peter Atia MD, fasting, metformin, athletic performance, and more.

If you want to try one of those out after you hear Peter do his thing here. I would suggest. going to number 352 where we talk about mental and emotional health and different tools that can apply there. Coming back. Two.

This episode, though. In this episode, we have Peter interviewing Sam Zell, Z-E-L, a legendary deal maker and investor. And as of the time of this recording, Sam's net worth stands at around$5.24 billion. As many listeners know and many probably don't know, Dr. Peter Atia on Twitter and Instagram at Peter Atia M D. is a former ultra endurance athlete, so he's done swimming races of twenty five miles, et cetera. A compulsive self experimenter, so we get along well, and one of the most fascinating human beings I know. He is also one of my go-to doctors for anything related to performance And longevity because blending the two is quite a sophisticated and subtle business. Peter also hosts the Drive, a weekly ultra deep dive podcast focusing on maximizing health, longevity, critical thinking, and a few other things.

He really gets into the weeds. with specialists on his show. Topics include fasting, ketosis, Alzheimer's disease, cancer, mental health, and much more. You can subscribe to the Drive on Apple Podcasts, Spotify, or wherever you listen to podcasts. And you can find links to all of this in the show notes for this episode at Tim.blog forward slash podcast. And just search at Tia A T T I A. I will let Peter take it from here. to give Sam's full bio and introduce the episode. This is one not to miss. I really enjoyed it and hope you do. As well. Thanks for listening.

I My guest in this interview is Samuel Zell. Sam is the chairman of Equity Group Investments. He's also the chairman of five companies listed on the New York Stock Exchange. He's a legendary entrepreneur and investor who's active across a broad range of industries, including energy, manufacturing, logistics, healthcare, communications, and of course real estate. Sam was recognized by Forbes as one of the hundred greatest living business minds in two thousand seventeen, and he holds a place on the New York Stock Exchange's wall of innovators for his role

in building the one trillion dollar REIT industry. He's the author of an amazing book, Am I Being Too Subtle? Which after I read the book is the reason that I wanted to interview him. Through this conversation, we cover a lot. We start with arguably the most important and transformative aspect of Sam's life, which is his parents escape from Poland on the last train out in World War Two and how this played an enormous role in his upbringing. talk about his early businesses and then the lessons that he learned along the way, in particular how he used these lessons to assess risk. We talked about his ability to assimilate large volumes of information and how that allowed him to basically play an amazing role Inside his business in predicting the market crashes of ninety one and two thousand eight with respect to real estate.

Talk about the incredible loyalty within his organization's I won't elaborate much more on this other than to say it's by most standards quite unique, and I was surprised as I got to know Sam just how much the people that surround him share incredible loyalty to him. In fact, after we recorded the podcast, we went out for dinner And eventually wound our way back to his place and his driver gave me a ride back home and I couldn't resist the opportunity to just sort of pick his brain and talk a little bit about that. And I was kind of blown away.

by the way in which he talked about Sam. And I really got the impression this was not something he was saying just because he felt he needed to say that. We talked about how Sam takes in and processes so much information and how this sort of insatiable curiosity has really been the cornerstone of his success. We end with Sam's thoughts on the current state of the economy, which is something I just couldn't resist the opportunity to pick his brain about. This is one of the most in-depth interviews Sam has given, and it's a real privilege and honor to have been the one sitting across from him. So without further delay, please enjoy my conversation with Sam Zell. Sam, thanks so much for making time today and thanks for coming over. My pleasure.

There's so much I wanna talk about, but I can't resist sort of starting at the beginning. Which is the story before you even came along, before you were born. You've written very eloquently about this in your book. And it's clear that it's shaped more of you than probably most people would realize if they just met you or even saw all of your accolades.

Tell me a little bit about your parents and how they wound up coming to the United States. My parents lived on the German Polish border. In the thirties. And my father was a grain merchant. And

the Jewish community in Poland at that time. was very, very limited and had very little exposure. To the outside world. But my father, because he was in the grain business was dealing with businessmen

All over Europe. And so he had a much Better. Understanding Of how the world had changed.

And the risk that was occurring to the Jewish people. Events like Kristallnacht that were never reported. In Poland. He knew about. And he became alarmed that what was happening.

And began planning. To leave Poland. And go to the United States. He saved up money.

One of the stories I tell in the book is the story of him basically getting money out of Poland and Getting it to Israel. Or to Palestine at the time. And so he in effect you went on a vacation.

to Egypt. In Israel or Palestine. And basically there was the Jewish organization that allowed Polish Jews.

Out of Poland. And so one day a guy showed up. At my mother's house. Who had In effect my father had told her.

Look, if some guy shows up. He can prove to you. Yeah. I know him. Give him all the money that's in the armoire upstairs.

And in between. My mother received the letter from my father. And it was a typical rosy letter, having a great time, everything is terrific. And when she opened up the letter, she found a ripped piece of paper. inside the envelope.

And then a week later a guy shows up at her door. With the other half of the ripped. Piece of paper. And That proves to her

who he is. And she gave them all the money. And Forty eight hours later. The money was on deposit.

At Barkley's Bank. In Tel Aviv. And that money eventually became The currency That they used

when they were escaping from Poland. So it's now nineteen thirty nine. It's August twenty third. Nineteen thirty nine. And

The world is stunned by the announcement. of the Molotov Ribbentrop Treaty. Which was a treaty executed between Germany In Russia.

And Basically Stalin and Hitler had made a deal. My father looked at that treaty and said this is basically an agreement To split up Poland.

And so my father got off, he was on a train. Turned around, went home. We have to leave. And

He moved my mother and my older sister who was like two. Couple hundred kilometres from their town. Went back and tried to convince other members of the family.

To come with him. Without exception. They all turn him down. He was like three or four years old. I think they all thought he was typical over enthusiastic young man didn't understand

didn't remember that in when World War One happened. The Germans invaded. Western Poland. And the locals Found that to be terrific.

They were much happier under the Germans. than they were under the Poles. The Germans were educated, the Germans were cultured. music, art. They thought it was fabulous, and they all said, This is an alarmist young man. He didn't understand as soon as the Germans come back, it's gonna be terrific again. And my father instead knew about Christopher Knock, knew about all of the anti Jewish activities in Germany.

And he couldn't convince anybody To go with him. And so finally at four thirty in the afternoon Of August thirty first, nineteen thirty nine, he got in his train And started going east.

And at six a.m. the Luf bombed the rail yards. And that was the beginning. of both the Germans and the Russians invading Poland from either side. He then Continued

And just All he wanted to do was Let's keep going east. Keep going away from Germany. And they're

Times my mother told stories of uh pleading with him to stop, okay, we're far enough away from the border, everything is gonna be fine. Instead All he said was we gotta keep going. And they went by every conceivable form of transportation from bus to train to Wagon cart.

They kept going east and Along the way there were other Refugees. Just like them.

Oh Moving east. It got to Vilmas, which was the capital of Lithuania. And that's where the Russian was.

And that's where they paused and they spent A few months in Vilnes. trying to get adjusted and at that time There were a lot of other refugees in Vilnes and so there was a community and they sharation. They were all confronted with the same challenge.

Which was How do we get out of here? And most important How do we get visas? To get out of here.

While they were in Vilmas. The Dutch ambassador who would come out of Poland. was on his way back to the Netherlands but couldn't go west. So went east and stopped in Vilnes.

And he gave out visas to Cursor. Curso is an island in the Caribbean off the coast of Venezuela. And it was a Dutch protectorate and They had historically had an open visa policy to anybody'cause they were trying to populate True, so

Particularly with Europeans. And so all of these refugees got Visas. to curse so. But the problem still became

How do you get from Vilmus. to Piero. And obviously the only way you could go was east. And obviously the answer became the Japanese. And they found a counselor.

in Kovnos which is the second large city in Lithuania. And they told him. Her story. And he took pity on them. And they literally created

Something I called a transit visa. Now there is no such thing as a transit visa. But they created it and they found a wood artisan Who made a woodcut. And they created these visas

And Sempi Shugahara, who was the council. Ended up signing. Almost two thousand And in the meantime

He sent a notice to Tokyo and asked permission. To grant the visas. And they came back and said no. And then he sent them a second question. And while he was waiting for them to respond.

Is when he filled out all the visas. And when the response came back They basically took him and relocated him. But the people had these visas.

At the same time The Russian government. was desperate. For hard currency. And so they decided that as only Russian entrepreneurs that they had a train.

And that they could sell in effect. Train passes. From Vilnes. Overnight to Moscow. And then

Eleven days and eleven nights on the Trans Siberian Express. To a lot of us talk. Where you could take a boat. To Japan. And my parents

And thirty nine dollars. Per person. Black transit. On that train.

Went overnight to Moscow. Spent the night in Moscow. Actually went to the Bolshevik Ballet. And then the next morning. Got on the train.

And spent the next eleven days and eleven nights on the train. with their two year old daughter. Going to the lot of stuff. And then eventually

And ended up in Japan. And then spent six months in Japan. Trying to get to the United States.

which they finally got in may of nineteen forty one And they arrived in the United States. May eighteenth. Nineteen forty one. It's six AM

In Seattle. Interestingly enough. As only the life of an immigrant could reflect. They arrived at six AM in the morning. And six PM

They took their first English class. Because they were gonna become Americans. And this was the most important thing. In their life. So

This was kind of the background and I was born September twenty eighth. So literally I was born. Ninety hundred days. after they came to this country. And typical of my mother was late with me. And so the day I was born

She went to Marshall Fields, which was the major department store in Chicago. And started Walking up and down the stairs. Hoping that this would precipitate The baby.

And eventually that night at ten o'clock the process started. And so they got dressed, went downstairs. Got on a streetcar. And rode the streetcar to the point. Where they had to get off and change.

To go to the hospital. But the other streetcar didn't come and it was eleven o'clock at night. So they walked the last six blocks. And then I was born very shortly. Thereafter. But when you

Come from that kind of a life and you hear the stories all over again for all of your young period of time. It gives you a very different perspective. On life. The idea of somebody literally picking up and leaving.

Where they were. It's just extraordinary how anybody could have the Self confidence. Mean he didn't know where he was going. He had a wife and a baby daughter.

And All he was doing was Going away from The threat. So it made me very aware of how lucky I was.

He must have told me a hundred times that How lucky I was that I was born in the United States. how the streets of the United States were Paved with gold. Not

Monetary gold. But freedom. And that was really what it all meant. And he over and over again lectured me on how important it was. To understand How unique.

An experience it was to live in a country. Where you really had the freedom. To make decisions. you had the freedom to work harder or work less or Change professions or

Do whatever it is you wanted to do, as long as you didn't disturb. Your neighbor. So this was an extraordinary background for everything that eventually happened to me. And without question.

very much influenced. How I made decisions. Going forward. Because More than anything else, what it told me was

Yeah. Anything was possible. You didn't start with a set of limitations. You started with The entire spectrum was available.

And it was how good you are, how committed you were, how hard you were willing to work. That really was the limiting factors. Not the society. Did your father ever articulate to you in explicit or implicit terms.

his decision making process around because when I hear that story, Sam, I think of a huge asymmetry of risk. So if you go back to the moment, the committed step, which is when your father had to decide to leave or not to leave. Now he couldn't have known that the train track was going to be bombed in twelve hours. And this if I recall, this was the last train out of Poland. This I mean you didn't leave any margin there. There's a very Asymmetric. risk issue, which is to be wrong to leave unnecessarily.

has a downside. But to Stay. incorrectly has another downside. obviously the latter has a much bigger downside. In other words, it's a very asymmetric risk.

So from a risk perspective, your father made the right decision, not just because history turned out to make it right. But simply on the basis of first principles. Your whole life, which we'll talk about as we continue this discussion, is so based on understanding risk. Does that lesson stand out to you in terms of teaching that element of risk? Did your father ever articulate it that way? I don't think he ever articulated it that way'cause I don't think he ever

Thought about it as risk and reward. I think he thought about it as survival. I think he thought about it and said What am I giving up? When we looked at

The society that he was leaving. And particularly In his age. I think he really thought that he was making a major decision for creating optionality and freedom.

For his future. And I think that he had heard enough of what was going on in Germany and Austria at the time that I don't think he had any doubt. Of how big the risk was. How critical it was. To exit. And yet.

He was unable to convince everybody else. But everybody else were Settled. They had their professions. They were Living in this relatively small city.

And most important had very little exposure. to the outside world. I mean we live in a day of Twenty four seven sound. from the cable TV stations and we live in a world where there's newspapers every day that come from all over the world and We can't really relate to the idea of a society that

More information. was literally Limited. And the further you got from the point you were standing, the less dependable the information was.

So he was functioning with a lot of Information. That's His siblings and His friends didn't have.

No different than when we talk about being a risk taker. What I talk about often is how critically important it is. Two. Be as knowledgeable as possible. that all my life I've basically focused on reading and digesting information.

Because the well Educated. Up to date. You are The better you are.

Judgment and it's as risk. When we had dinner a while back, you told me a footnote to the story you just told, which is Years later, I don't remember how old you were, you may have been five, six, seven, eight. You came out of your bedroom one night and your parents and maybe some of their friends, I think, were huddled around a small movie projector and they were watching something.

Tell us that story. I think I was maybe six years old. And we lived in Chicago and we lived in What's commonly referred to as a railroad apartment. Which is

He had a living room at the one end and the kitchen at the other end, and then it was a long row of bedrooms and bath. And my bedroom. Was it the far back next to the kitchen? And my parents had a group of immigrants

that had their own little organization called the Harmony Circle Club. They would get together in one the other one's living room and talk about information and particularly information about Poland and when they all were refugees from Poland. And all Jewish. And all trying to

Get information. I don't know why I got up that night, but I got up that night and I Stuck into the Where the living room was.

And they were watching an eight millimeter movie. And uh I remember looking at the movie and as I'm sitting here talking, I can tell you that I can represent the images that I saw. And the images were of trucks. And dump trucks.

And on the back of the dump trucks. In the bins were bodies. and bones and heads and Mm. Somehow or other they had all been dumped in the back of these trucks.

And then I learned for the first time that this was all about the Holocaust. And these were smuggled out movies that were made. of what was going on in these camps. in Poland right before the end of the war.

And I sat there and I f at first I couldn't conceive of what I was watching. And then when I talked to them about it afterwards, I never told them that I snuck out to watch. But we talked about things over the dinner table, et cetera. And I began to understand that these concentration camps

literally were created to wipe out a population. And as efficiently as possible kill them. And then put'em in dump trucks and find some place where they could be dumped and lime, tossed on the bodies and buried accordingly. So it was an incredible thing for a six year old to watch and Most important of all.

What I felt about it was that But for the grace of God. Could have and should have been my parents. And in fact, most of their siblings ended up murdered in these concentration camps.

When you think about sort of your teenage years. You have a really unique set of personality traits, Sam. One of them is You pretty much do what you think is right, whether it's popular or not. Was that trait evident when you were growing up? Was that trait?

evident, for example, during adolescence when Most of us succumb to the need to sort of be approved by others and do what others think is the right thing to do. Well, I certainly was no different than any other teenager. T.

The fact that I wasn't any different. Didn't really change the fact that I was very different. and lived in a house where the closen to which they came to being exterminated was very much aware for everybody all the time. I grew up in a house where my parents

took the position and whatever I was doing, I was lucky I was doing it, and I had to do more of it. I had to study harder. And I had to excel. And Other parents. didn't have these kinds of influence on their children. So it became obvious to me at a relatively young age that

I was different. And that as much as I wanted to be accepted and as much as I wanted to be Like everybody else. I also recognized that I wasn't And that I couldn't.

And that At first it was very frustrating and very much of a challenge and I didn't really know what to do with it. And then eventually I just came to the realization that I had to be my own thing. And I had to be who I was.

And that other people had different ideas and different objectives and That was fine. But I couldn't accept what everybody else was thinking about.

I also grew up in a world where The rest of the kids that I grew up with, they were kids. But I grew up in an environment where They didn't really give me much of a chance to be a kid.

In effect, whether it was a six year old watching Holocaust movies or or listening to my father telling me he went to a basketball game last week, why do you have to go again? And why are you so focused on having fun? You've got to be studying, you've got to be getting better, and you've got to be able to take on what's going on. Well, needless to say, I didn't listen to everything he had to say. But living in that kind of an environment was very, very different.

than what my peers were doing. So after college, how did you decide on law school? What other things did you think about? What did you have any sense of what you wanted to do? That was a very easy Decision. My father's view was very simple. You gotta have a profession.

No matter what, you gotta have something that you can quote a Hanuel Shingle on. And law school seemed like a very logical thing for me to do academically. I was very difficult to achieve. And so I went to law school not because I wanted to practice law. I went to law school so I had a degree. And that yep. I didn't work out at whatever it is I was doing.

I would be able to in effect still practice law and make a living, and that's what he More than anything stressed that I had to do. So Your first stint in the law firm was a pretty short one. Yeah, well actually the better part of the story is that

I had forty four. Interviews. Forty four talk about rejection. And I got rejected by forty three. And I sent all the letters and I made all the appointments and followed up on it. And what I didn't understand was that And it was actually made very clear to me when Toward the end of this process.

I had an interview with a big fancy firm. And I got through the first interview and I was very excited because I had been used to people rejecting me. And then I had a second interview at the firm and went really well and They set up a meeting for me with the senior partner.

Whose name was on the door. And I remember going in to see him. I walked into his office and it was a typical uh wood paneled lawyer's office with books all over the place and he was on the phone and he gesticulated with his hand and said, Sit down and I sat down and he finished the phone call. Then he got up and he closed the door to his office.

And he said, Tell me about your deals. And I looked at him and I said. Tell you about my deals and I want a job.

He said We would never hire you. You wouldn't last more than three months. I said, what are you talking about? I said, I want to be a lawyer. I mean what about Perry Mason? And he laughed and he said you don't understand.

And of course the truth was I didn't understand. And so I basically asked him about it and he said Do you understand you put on your resume? All the things that you did

While you were in law school. And while you were an undergraduate. And you built a real estate business. You managed hundreds of apartments, you bought buildings, you refinanced buildings, you wrote a manual on property management.

Can you Literally Just graduating from law school. How would anybody like you want to sit there and draft contracts all day? And I just looked at him and I said, Well I don't understand. He said The reason you've been rejected like this

It's because everybody looks at you and says, This is a guy who's gonna do something else. And why would we want to train'em? If he's gonna be gone very shortly. I never forget that interview and uh ultimately did get one job.

Actually with a firm that was kind of half entrepreneur. Yeah. Law firm. I got there the first day and I had this tiny office that was like six by six. They gave me a contract to do.

Between a linen supply company And a dormitory at Northern Illinois University. And some client with a firm was Built. the dormitory and they were entering into a contract with a company that provided linen.

They wanted me to write the contract. Well For anybody who's been to law school. They know that the day you get out of law school You don't know anything about being a lawyer.

You may know a lot about theoretical conflicts of interest and broad concepts of the law, but how to draft a contract? Not a chance, and particularly if you went to a good law school. where in effect they look down on any quote unquote Vocational training. And so

I went and I asked the guy who was sitting in the next office and he gave me some form books. And said here, this th gives you a base and so I started working in the farm books and I it was terrible. So I submitted the first draft after a couple of days and it came back and it looked like the senior partner who had reviewed it. I had slit his wrists because he used a red pen on it, and the whole thing was full of red this and red that, and I'm looking at it and saying. I just went to three years of law school.

And this is what ends up and So I then redid it again and finally submitted it to him and before he responded to me he I went into his office on Friday morning and I said Could I speak to you for a second? He said, Sure. And

as only a twenty four year old would have thought I looked at him and I said You know I really don't think this is a good use of my time. And I'll never forget the look on his face. And he looked up at me and he said

What are you saying? I said I don't think this Practice of law is Good use of my time. He said, Well what are you gonna do?

I said, Well I'm just gonna go back and pick up where I left off and business in Ann Arbor and I'm gonna Try and build a real estate business. And he looked at me and he said You're gonna do what? And I explained to him that that's what I was gonna do.

And that I thanked him very much for the opportunity and he said well I've got a suggestion for you, I said Why don't she just stay here? And The law firm will do the legal work.

on your real estate. And we'll invest with you and help you get started. And I thought about that and I said, Well Gee, that's A terrific opportunity and so uh I said fine. And the next day came back to the office and I was no longer a lawyer.

And I was Chasing deals. They at the time had a policy in this law firm where They would give everybody

Fifty percent. of any business they brought in. And the methodology behind that was That we're trying to in effect encourage young lawyers to be

a little entrepreneurial and maybe they get an estate from somebody in the family who died or a contract, but the whole idea of quote unquote hustling business. And so they in effect offered me the same objective. And of course I started creating huge amounts of business. And so I don't know, maybe four weeks later they came to me and they said, Well

We had this deal. where we gave you fifty percent, but that was really under the assumption that maybe you bring in one deal and so you'd get one positive experience. But the volume you're doing, I mean, we can't afford to give you fifty percent. So we're gonna make it thirty five. I said okay.

So then three or four weeks later they came back and they said, Well, you know, we made this deal with you at thirty five when we were assuming you were gonna bring in this amount of business and now you brought in twice as much and we gotta cut it down to twenty five. I said okay, so we'll cut it down to twenty five. And so in effect at the end of the first year. I think that This is nineteen sixty. Six.

And at the end of the first year I think that my quote unquote job paid me Seventy six hundred dollars after I passed the bar. on a per annum basis, and I think I made seventy five thousand dollars. As a result of my percentage of the business I brought in.

Well, that was uh Huge number. And I was obviously thrilled about it. And then they gave me a bonus. And the bonus was two hundred dollars.

And I said I remember it was the most depressing thing I what I wanted was recognition. What I wanted was them to understand that I was really pretty and instead by virtue of paying me two hundred dollars, they were telling me that what I was doing wasn't very valuable. And I remember I was so depressed I didn't know what to do and I went to the gym. And I shot free throws.

for an hour or two hours. Just to try and get this buzz out of my head. But then I realized that I had to leave. Subsequent to that, not too long thereafter, uh the end of the year, I was gone and set up my own shop. So let's go back to some of those early deals because in many ways that's sort of where you cut your teeth on your principles, that principles that have sort of guided your career

through some of the largest deals in real estate history. Can you recall sort of a representative deal from those days. What was your sort of overarching principle on real estate? Well I think that one of the most significant things that happened was

But while I was in law school. I went home. And I sat down with my father, and my father had been a very successful businessman. and had joined other people in investing in quote unquote commercial real estate opportunities. So I came to him and I said, Tell me about your deals.

And he kind of proudly looked at me and said, Oh, sure, and he started describing to me the deals he had invested in. And when I listened to him I realised there was a consistent theme. to what he was talking about. And basically

He was investing in deals that were in Major American cities. New York, Chicago, Los Angeles, San Francisco. But nowhere else.

And second of all, he was getting What he was very proud of was a four percent return. And I had been doing deals in the Ann Arbor where I was getting sixteen, twenty, twenty five percent. And I just didn't understand. And then I realized or I came to the conclusion.

That when he and his Buddies were doing We're investing in what was already existing proven commodities which were the major cities.

And that in effect if I were willing to invest outside of those major cities, I was in a competitively Better position. Whereas he was investing in New York, Chicago, and Los Angeles, et cetera, I ended up investing in Ann Arbor and Madison, Wisconsin, and Tampa and Jacksonville and Orlando and Reno, Nevada, and Arlington, Texas. All of which were small cities.

Growth cities. And ones where there was no competition. And it dawned on me that when it was all said and done, the single most important criteria in As an investor Was

What was your competition? And to the extent that you were able to operate and invest in arenas where there was little or no competition. You got much better deals. And where there was more people Lot more deals and a lot less attractive returns as a result.

And so That's when I kind of learned about or didn't really understand what I was learning at the time. But what I really concluded was that competition was terrific. Particularly for somebody else. But for me

The real goal was to find situations where I could Operate. in a competitive environment that gave me the edge. And that's became a principle of everything that I did. And so whereas the first major deal I did was an apartment building in Toledo, Ohio, and you gotta understand that part of the time

Not too different from today. Toledo wasn't a very popular place. And I was acutely aware of that. But what I realized also was that because Toledo Manufacturing Center and because it was referred to often as the armpit of the nation and in a very negative environment.

That also meant that No insurance company that made all the loans for real estate. was gonna underwrite a deal in Toledo. when the statistics the city was shrinking, etcetera. But all I looked at was the fact that I was able to buy one of the few apartment buildings in town.

So I didn't have any competition. So that deal was one of the most successful deals that I had ever done simply because There was no competition. And therefore, where there's no competition, you can produce exceptional margins. And that was a great

First lesson. And how did you price it? Are you pricing this based At the time that is. Are you thinking about this just on the basis of cash yield, or were you factoring in some sort of equity improvement in this real estate? That assumes a much greater knowledge level for me than was conceivable at the time. All I looked at was

How much were we investing? What was the cash on cash return? The first deal, the cash on cash return was nineteen percent. This was in the same environment. Where I'd seen my father was investing money at four. І my father had just sold a number of interesting deals.

So he in effect I brought him this deal. And he looked at it. Scan. And basically said, Yeah, come on, this is bullshit. But he called up

A friend of his Who is a property manager. And said, you know, my son Sammy has brought this deal and it's ridiculous. It's nineteen percent. But would you take a day and go look at it? So the guy went and looked at it. Came back and said

You know, it's a terrific deal. And I've adjusted all the numbers and become much more conservative, but it's still an eight percent return. in an environment where four percent was the standard. So he recommended that We go ahead with it.

And he put some of his own money in it. And so we did the deal. And sure enough, it produced nineteen percent, just like I said it was gonna But that was the first deal your dad came in with you? Yeah. My father when I was

in school I ended up buying a square block. Kind of house by house. And I didn't have the money. But I had enough to tie up the properties.

And he eventually And help me get that first thing done. But this was the first quote unquote investment deal. And is that something that did you pause for a moment, I guess, and take some pride in that in a way that was like, wow, here I am I'm now

indirectly sort of helping my family support itself as well? Or was that just sort of below the radar of how you thought about it? Couldn't even imagine thinking that way. All I thought about was Here was a transaction that made sense. I thought it was terrific from a a yield point of view.

It never dawned on me. That this wasn't what everybody did. By the way, that's kind of a theme in what I do, and that when I did was I never really understood That what I was doing was so unique. I just thought I was kind of making it up as I went along.

And I went from that deal to one in Orlando and one in Tampa and one in uh Reno and et cetera, etc. After the first deal. Was the last time I ever had any trouble raising money. So that first deal

required two hundred eighty thousand dollars of equity. Which in nineteen fifty nine was or nineteen sixty eight or whatever it was. It's a lot of money. But once I had done that one transaction, people lined up to invest with me. Probably they were enthralled by the fact that how could a twenty five year old be actually doing this?

I didn't remember that. Every other twenty five year old didn't do it as well. never even crossed my mind. I just kind of Did what I thought made sense. And

You're sort of realizing this principle though already, right? Which is Being where everybody else is is sort of not the place to be. I mean, you've written about this a lot. As we sort of fast forward for a moment, I want to go back to this, but Even if we stand here today, now of course everybody looks at Sam, you've created an asset class that we haven't even got to yet that we're gonna talk about. But You really come back to very fundamental principles when you speak about things. You talk about supply, you talk about demand, you talk about competition, as though those things still apply. Whereas Many people today sort of think that come on, that was econ one oh one. That mattered when there was a huge sort of gap. When I took econ one oh one at the University of Michigan.

I walked into the first classroom. And written on the blackboard was supply and demand. And I have to be honest with you. I'm not sure that there was ever anything else in econ one oh one that I learned. That was relevant. And if you understand and are focused on how supply and demand affects pricing, how it affects decision making, how it affects risk.

It's the governing principle of everything. But it's also simple. What was your philosophy around purchasing assets that were already capable of deploying yield versus developing assets.

Well At that time. There were a lot of quote unquote Income producing assets. that were available. I've always been a great believer that there's a lot of

quote unquote execution risk. That has to be. fit into your thought process when you're making a decision. In that

Again, keeping it very simple, if I could establish a definition of cash flow And in effect I would literally remember going to developers and saying it's real simple Take the bottom line, multiply it by six, and that's what I'll pay. Now I didn't know that that was a very high price. I was creating a price structure that was very attractive to me.

I just thought, gee, I wouldn't do this unless I got a sixteen percent return, so six times cash flow. Made perfect sense. And That's the way I thought about it. That's the way I thought about how do I raise money. In the same manner.

What was attractive enough to get somebody to entrust their money to me. When did you start to appreciate the operational side of risk? So in those early small deals, like your first deal in college where you're basically buying homes on a block and renting them back to students.

I assume you're the one rolling up your sleeves. You're the one doing the heavy lifting. At some point as you start to scale this enterprise. You have to now trust other people. To help you operate this business. How did you make that transition and how did you manage that risk? Again, I think you're giving me way too much credit. I just don't think I thought about it that way. I mean I thought about the fact that somebody gotta cut them on.

And I knew that if I grew the size of the business, it wouldn't be me who had to cut the wrong. and not being the one cutting the lawn or cleaning the hallways or whatever. was certainly as much an objective as making money. So did you ever go into deals where you were the developer now and you were gonna take that sort of construction risk as well? I did that. In the lake.

Sixties. My first apartment project in in Lexian, Kentucky. And when I also built the project that ultimately led to my relationship with the Pritzkers, which was this project on Lake Tahoe. In both cases, they were development projects. And they were from the ground up.

And in both cases I was Very disappointed in how difficult it was. And I kept looking at it and saying this doesn't make any sense. You're taking all this risk. Yeah. starting to build something when you don't know what the market's gonna be like when you finish it.

Either you're putting it up for rent or you're putting up for sale. Depends on what the condition are when you finish. You're subject to variances in costs. I mean, there's no greater lesson of inflation than designing a project. And finding out that it costs twenty percent more than you thought it was gonna cost because the costs have gone up in the meantime. So all the variables and the weather and all the things that happen and contractors making mistakes And when they made a mistake.

There was nobody else to blame it on. And the fact that they made a mistake. Well Too bad, but I was the guy who had to live with that mistake and and live through it. So I kept looking at all the variables and saying. I don't understand why would anybody be a builder when you're taking on all these variables and

The best thing that happens is at the end you produce the same thing that you got when you bought an existing stream of cash flow. You mentioned Jay Pritzker a moment ago. How did you meet him? I had a friend of mine who was a a national broker of real estate. And he and I were friends and he called me one morning And he said, I was in Atlanta yesterday with Jay. And I said, Jay Who? and he said Jay Pritzker.

And I said, Oh yeah, I heard of them. They're very wealthy people in Chicago. He said, Jay is really extraordinary. And uh Jay is looking for somebody to come work for him. Who is under thirty. A lawyer. And a successful real estate entrepreneur.

And I said to this guy, I said, Well If somebody actually met those criteria. Why would they want to work for Jay or frankly work for anybody else? And he says, You being too glib, this is an extraordinary guy. You really need to meet him. And so I said okay, so he called Jay and and the next morning I went over to Jay's office at nine o'clock.

We just hit it off. And I sat at his desk. From nine o'clock. Until four thirty. And meanwhile he took calls and he made deals and I listened and we talked about everything.

back and forth and when we got to lunch he sat me down and he said This is an incredible opportunity for you, Sam. You can come work for me and do real estate deals and you get to keep five percent of everything you do. And I looked at him. Ah I said. Gee, that sounds like a Prince Cardio. And he didn't laugh. But I said you just need to understand that if I have all of the characteristics that you really want.

then you shouldn't be able to hire me. And ultimately at four thirty that afternoon I said to him, you know, I said Rather than spend all this time where you keep trying to convince me I should come to work for you, why don't we just do a deal together? And so we did a deal together, and that was the first of maybe ten or fifteen deals that we did over the years. in various different places and different kinds of structures that led me to spend a lot of time with him and find him to be one of the most intriguing individuals and frankly the smartest risk guy I ever met.

What did you learn from him about risk? Boy, it I'm not sure I know where to start, but I think it begins with the fact that You had to be realistic. He had to be able to Look at it and say, What could go wrong?

You know, if I learned anything from him, I learned that Everything if it went too well. You could survive. The only time you couldn't survive is if it didn't go so well. So focusing on the upside.

But not Productive. Focusing on the downside. Was what risk was all about.

And to the extent that you could quantify the downside. to the extent that you understood. what the risk it was you were taking. Your chances of survival. We're much better.

Think the key ingredient in that is Focusing on What is the risk you're taking? I think a lot of people Get in a lot of trouble.

because they do a transaction and they don't understand What the risk they're assuming is. When they do the transaction. And what he taught me more than anything else was Look at the deal and figure out where is the vulnerability.

Where is the assumption you've made? It has to be right. In order for the deal to work. And we were working on a deal in an in nineteen sixty nine. And it was very complex. And I put together a very complex presentation and sat down with him and took me twenty five minutes to explain.

How we were gonna do this and do that and do this and do that. And at the end he looked at me and he said well step seven. Is the only w step that's really relevant. That's where the risk is. If you can satisfy yourself that step seven in this case, it was a multi use complex, and the risk really was could you release the office space?

If you could lease the office space, everything else worked. So all the other things that I did to to mitigate this, to mitigate all irrelevant. Only real issue was Could you or could you not Rent the office space.

If you could The deal was gonna work. If you couldn't All the other stuff didn't matter. And the ability to zero in.

Um What it is. That represents the decision making risk. That's really Where it all comes down.

And that's really what I learned from him. And Sam, is it safe to say that those lessons apply across all asset classes? I mean, is there an asset class where that logic doesn't stand front and center for you. If you're someone like

Me who's thinking about Where to invest four o one K dollars Do you still think about it through that lens? I don't know how you can think about it in any other way. I mean, if you're investing four oh one K dollars, you're basically trying to provide for your retirement. Or for your future.

So then the question becomes, okay. What stands between you and achieving the objective? And if you can understand what it is. Then you can quantify the risk. Can I rent the office space?

If I can rent the office space, if I can Bet on Raleigh, North Carolina being a growth area because of the research triangle. That's the assumption. That's what makes you decide to invest in Raleigh. Or Somewhere else.

Is always Some Epiphany point. that is what motivates you to make the decision, and that's the ultimate judgment you make. This is why I'm doing this.

Why is it critical ingredient? and why usually connects to the word risk. Where did you meet Bob? Bob and I Pledged the same fraternity.

at the University of Michigan. In nineteen Fifty nine. We were both part of a twenty one guy pledge class. I didn't know him very well. We then both worked on

Campus wide. thing called Soft Show and we got to know each other a little better. But basically. Didn't really know each other. at all until we were friends and like all of my fraternity brothers, but I wasn't really a big fraternity guy.

And then when I was a senior and I had started this real estate business I was in the house one night for dinner and he said, You know, I heard you were renting apartments and kind of running a little student housing project. And I said, Yeah, and he said, That's really intriguing. If you ever need anybody else Okay.

Join you. You should call me. And Literally a couple months later, we got our third building. So there was two of us together. And we now needed a third guy. So

We talked about him. We offered Bob the opportunity to join us. And he did. And eventually and Bob was an engineer and very, very organized character. So he in effect. started turning what was literally uh

hardly a business. It was two guys trying to get a free apartment and uh helped us turn it into a business. And then when I graduated from law school I was confronted with this incredible decision of what was I gonna do. At that point, I think I made a quarter of a million dollars my senior year in law school. It's just an enormous amount of money and I was a big deal in a small pond, and and the question was, should I stay in the Ann Arbor? I obviously had done very well there and I knew everybody.

And I went back and forth about it and I finally said, you know. I have to find out. How good I can be. I have to find out what I can do. How far can I Push and test my limits.

And so I decided that I was gonna Sell everything in Ann Arbor. And move to Chicago and see if I could build a career. Eventually. it came time to figure out who I was gonna sell the business to.

And Bob became the obvious person because he was gonna stay there. I basically sold them the business. And the last thing I said to him was I said, when you get tired. Screwing around.

And you want to come play with the big boys. Call me. We laughed and I laughed and then I moved to Chicago. And we continued kind of a very uh touch base relationship, but not much. And then about three years later he called me and he said, see him.

Do you remember the last thing you said to me? And I said yes. And he says, Well, I'm ready. And I said, Without hesitation, I said, Come on.

And so he moved to Chicago. And I was very sensitive to the fact that I didn't want him. If he was gonna be my partner. Didn't want him to ever work for me. And so I said instead of paying you a salary.

I'll give you an opportunity to own a piece of the deal. And as time goes on we'll increase that to the point where we eventually become Partners. fifty fifty partners. And literally that's what happened. We started out at eighty five fifteen.

And then we were seventy thirty, and then we were sixty forty. And then we were fifty fifty. And it all became an example of transferring the s of risk. Because he in effect began taking on the risks that I was taking.

And we built the business together. I remember hearing somebody once talk about great partnerships. I wish I could remember who said this, and the gist of what they said was Excellent partnerships. are when you have they just used the example of two people. Obviously partnerships can be more than two people, but they said when you have two people who have Complementary skill sets, but shared values.

Did that describe you and Bob? Yeah, I've never heard that phrase, but I think that's exactly right. our skill sets were very different. I mean He was really an engineer, I mean He literally uh if the books didn't balance.

The numbers didn't trade it. He would just stop until they tie it out. I would believe well, they're close enough, you know, and next and I would be willing to go talk to anybody and chase down anything and and he Was a home body. But we had a unique relationship and we could finish each other's sentences. We understood each other and later on I kind of understood also that

A very important part of our partnership was that we didn't have Much of a social relationship. So we didn't have the classic partner of the wife who says, How come they got this and we got that? We basically had independent social lives, we both had wives both had children.

But we focus our time. Together on our enterprise. And once a year we had dinner the four of us. And we had a wonderful time. But we never really tried to connect.

the personal Day to day relationship with the personal relationship to building a business. So we spent ninety nine percent of our time Focusing on building our business relationship and very little time.

And we ended up with completely unrelated. Social relationships. Were you one of the first people that Bob told when he was sick? Yes, I was. But to be honest with you

I didn't understand it. Do you remember what he said to you? Yeah, I mean he come down with a relatively aggressive form of cancer that he was gonna get chemotherapy and uh I just assumed that

He would suffer a little bit and he'd be fine and we'd go on. And as this was in September of eighty. Seven. that he told me that. week went on and he had surgery and he had various issues and suffered a lot.

But then came back and I just never assumed that anything was other than just gonna be painful process, but there was never a And then in February of nineteen ninety. He came down to the office on a Saturday and he hadn't been to the office for A month.

And he said I came down today'cause I wanted to talk to you. And I said, Okay, he says I want you to know that I'm gonna die. And I looked at him and said. You're gonna die? That wasn't on the list of options that I thought was possible. He said, No no, he said, You don't understand. I've been trying to tell you

For a couple of years now. That this is very serious and very rampant and That not too many people survive us. And he says and it was obvious to me that you just

Didn't accept that as a possibility. And you needed to know that we're at the end here now and I've gotta prepare for it. I'll never forget that morning as long as I live because it was so shocking to me. 'Cause it just I never You

Fact it. Dying was an option that that there could be a terminal event here. I mean, you know, we I got a cold, he got sick, and we got you know, I I didn't really connect it. But it was from that point forward. That we started to

Prepare. and he eventually died in June of nineteen ninety. Did his loss change. Anything in you with respect to your horizon

Your risk. Your desire to do the work. Or were you able to compartmentalize that and sort of move forward? I mean, how did you think about losing a partner who was your equal at that point? I think that as I think back on it.

Yeah. I think that All I could think about was our legacy. And I think that I was more motivated. Rather than less motivated.

And then I wanted to do more. Because as far as I was concerned, everything that I did represented me and represented him. And later on when I endowed the real estate center at Wharton, I endowed it under Samuel Zell Robert Lurry and when we did the entrepreneurial center in Michigan. I did it under Samuel Zoo and Robert Lury because everything I thought I was doing

I always thought I was doing for us. And that I thought what I did and how I did it. reflected as much. Who I was as I wanted the world to remember. Who he was.

His wife has really carried on quite a legacy. I mean, I actually heard of Bob even before I'd heard of you many, many years ago Through his wife's Legacy of their philanthropy. Yes. Well, first of all, the two of them before Bob died. Spend a lot of time talking about philanthropy.

And they both decided it's very uh cheek today to talk about the giving pledge. But this was 1990. Nobody heard of the giving pledge. But these two people said, you know. We have a fortune that we've made. And we have to give it away. And we want to give it all away. And we don't want to

burden our children with any significant inheritance or the burdens that come with it. And so in effect Before he died. they kind of had an a pact as to what they were gonna do, and she happened to be a nurse. So

particularly focused on medical and eventually the Louri Hospital and uh a lot of other things that she did that were all involved in medical and created a wonderful legacy for him. An asset class that many people take for granted today called REITs, which I'll have you explain to folks. But what I think is most interesting is the role that you've played personally through your firm in actually creating something that we now really take for granted. So

Maybe spend a second explaining what a REIT is and then let's kind of hear about Basically the creation of what's now a more than trillion dollar asset class. It all began. In nineteen fifty eight. when President Eisenhower signed something called

The cigar bill. And it was some kind of legislation had to do with cigars and I don't know what it was. But somebody had added a provision That created the quote real estate investment trust And the idea was that

They wanted to create a vehicle. That effectively created an opportunity for

Small investors. Oh Large Real estate projects.

And the re concept Whereas a corporation is subject to double taxation. Because Reet real estate was illiquid.

They eliminated one of those two steps so that in effect the Reet Law allowed the creation of a vehicle that didn't pay corporate tax. But only pay tax on the distribution. And the requirement was that in order to qualify for a REIT, you had to distribute Most of the income.

So that was created in nineteen fifty eight. And they were I don't know how many there were, but there were probably ten or fifteen that were created over the next give or take twenty five years. The industry Never

grew very much and by the time nineteen ninety one came around, the entire industry was only seven billion dollars. And the reason was that The private real estate market. Was so much more attractive. That

The re world Up until that point. Only attracted people It came from insurance companies or non entrepreneurial scenarios. Ineffectively

It was just kind of a byproduct of the real estate industry, but all the action. In other words. people weren't buying pieces of REITs, people were actually doing private investments in real estate directly. Yeah, I mean that's when I did. huge office apartments, retail uh But ordinary people like me could not have participated in that type of thing would have been very difficult. So the idea was that you'd create these reets and then the classic description was the little old lady from Pasadena who wanted to own a piece of a New York office building.

But effectively because It was so unattractive compared to Yeah. private real estate side It attracted very, very few

significant players, it retracted very limited amount of capital. And it was kind of a backwater of the real estate business. And then nineteen eighty nine. We ended up with a very serious over supply of real estate.

And that led to uh couple of insurance companies went broke, the savings and loan industry went broke. And little by little all of the sources of capital That had funded. The private side.

Disappeared. So people like me were sitting there saying, you know, where is the capital gonna come from? For the real estate industry in the future. Somewhere along the line the thought process became well It's gonna be real estate investment trust. And in effect

We're gonna have to access the public markets in order for the real estate industry. to continue going forward. And so We began studying it and actually working with Merrill Lynch on. the first of the quote modern area area reads.

I became very involved in the processing because I recognize that this was the solution. And that ultimately this, if done right, would ultimately fulfill the ultimate dream which was quote unquote liquid real estate. 'Cause ultimately real estate was illiquid. And that was a big problem. So if you could create liquid real estate

then the scope of what was available was dramatically more available than ever before. And in nineteen ninety three In October. The National Association of Real Estate Investment Trusts which was really a another backwater organization whose sole objective was

to protect the Reach Law as written in nineteen fifty eight, with no understanding of the bigger scale questions and liquid real estate and what this was all about. In nineteen ninety two at the National Association of Real Estate Investors. Conference. I think they had twenty people. Between nineteen ninety two and nineteen ninety three, as more and more people became more and more

Nowledgeable. When we had our conference in October of nineteen ninety three in New Orleans, we had fifteen hundred people. They'd never seen that many people involved in anything to do with real estate. And the National Association of Real Estate Investment Trusts asked me to give the keynote speech. I remember working on the bullet points for the speech as I was flying into New Orleans and

And I basically Кат уряд, а й це гайз. I said We have a horrible track record.

Dealing With the public. Because up until then The only reason that there was any kind of a public real estate trust or real estate anything was was because

There were no other options. And I was, you know, so if you want to dump some properties, you created a real estate investment trust and you took the worst of your properties and sold it to the public. And it was public with a fish, you know, the old poker story of uh if you're sitting there and you don't know who the fish at the poker table is, it's you. Well, that's how they did it, and then it was not driven on what were the basics of real estate or cash flow. It was basically driven on commissions. So it was very short sighted. Because all the action was on the private side.

And I basically said I remember in that speech, I said I was driving around Houston in nineteen eighty four and I saw a bumper sticker. And the bumper sticker said Please God, give us one more oil boom. I promise we won't screw it up this time. That's where the real estate industry was in nineteen ninety three. And we had an extraordinary opportunity

and make it into something really significant. But we had to be In effect. Custodians of the public's trust. as opposed to them that took advantage of the public's trust.

Now speaking of you started the story by talking about the savings and loans crisis in the early nineties. You wrote a letter in the late eighties. And I don't think you necessarily predicted the S and L crisis, but you certainly foreshadowed the circumstances that led to it.

Yeah, I wrote an article for NYU's real estate. Center. This is eighty eight. I sat around trying to figure out the title for the article. And I ended up coming to the conclusion that the riot title for the article was from Cassandra With love.

Now Cassandra was this lady in Troy. who is cursed by the gods by making true predictions. That nobody would believe. And I then sat down and wrote out An article basically predicted what was gonna happen to the real estate industry.

And what the future was. True to form. of Cassandra. Nobody believed me. Everybody said, Oh, Sam the pessimist again. He's trying to discourage other people so he can have more of the market. I mean just all kinds of non recognition or non willingness to accept What to me was simple logic. But it reflected what has been a kind of a hallmark of my career, and that is my ability to sit down and think through.

Where is tomorrow? And how can I identify where tomorrow is going and how can I position myself. To take advantage of that. And that article led me

To lead the whole conversion of the real estate industry To the real estate investment trust industry and create liquidity. In that speech in October of nineteen ninety three, I predicted that we would be two hundred and fifty billion dollars in ten years and well on our way to a trillion. And everybody thought I was truly insane. What is that number today?

Just shy of a trillion dollars. What is it that you saw in eighty eight? That You knew was going to

create a real problem in the next couple of years. Cause again, it's easy, I think, now to say By the way, I'm gonna give you another question I'm gonna ask you in a moment, just to so I don't forget it as much as you. I wanna talk about the differences between ninety one and two thousand eight, because You in many ways saw both of these coming, though they were very different types of crises. So I want to come back to that. But it's easy to look back at two thousand and eight. And say, well, of course there was going to be a credit crunch because of X, Y, and Z. And it's easy to look back at ninety-one and draw the same Conclusions, it's not that easy to say it before it happens.

And it's hard to go back and sort of remember what you saw at the time without the knowledge of Hindsight. Yeah, I guess. All I can remember about that period was that this was the eighties when the Japanese invaded the US market. The Japanese came here.

And made the ultimate classic mistakes and All kinds of investors have made. coming to the United States and that is what works in my home market Obviously this works somewhere else in a different market. The Japanese had flooded the market with capital.

Occupancy revels across the country and every form of real estate were down. Supply was way out of Whack. And it wasn't very hard to Predict. That this was the end of the world in terms of real estate.

And I remember vividly when I started raising money for the first real estate opportunity fund in nineteen eighty nine. I was confronted with the challenge where I walk in and Sat down with an insurance company or a pension fund, and I said, the end of the world is coming. Here's the oversupply, here's the this, here's the that. And they looked at me and said, Wait, what are you talking about? We just heard from our MAI, our appraiser, that our portfolio has gone up in value.

I said, That's BS. That's not ever happened. Look at the numbers. Look at what the numbers are telling you and look at where tomorrow's numbers are. I remember giving a speech at that time and talking about the fact that The missing element was We didn't have enough tenants. From all the occupancy that we were creating. So you were raising a fund at that time for distressed assets, basically. You knew that the shoe's gonna fall. I wanna have lots of dry powder for when something happens. But nobody had ever raised a fund.

Before. Not for a distressed property. So you're talking about an asset class that people can't fathom at that point. In nineteen eighty nine, eighty percent of the institutions that I pitched to didn't have real estate as an asset class. Let me make sure I understand what you're saying. You're saying in thirty years ago eighty percent of pensions and endowments didn't have real estate in their book of business. That's correct. They own stocks and they own bonds.

And that was it. And there were a couple of really far out investors. Who had some real estate. But there was a very famous study by Eppinson, I B B O T S E N That in nineteen ninety two reached the startling conclusion that real estate was a separate asset class.

But prior to that. So here's this guy coming in and worse than that, he didn't even wear a suit and tie. And he's pitching us in on the fact that the end of the world is coming and get ready and be prepared and be part of a fund and that first fund was unbelievably difficult to raise. And then the rest of them were Very simple.

So what was different? In Oh eight. Because I think for many people listening to this. I don't remember the savings and loan crisis because I just wasn't really old enough, but I remember learning about it when I became involved in credit risk. more than a decade later or about a decade later.

And so it became a historical lesson. And it had some pieces that were similar to O eight, but some pieces that were different. You lived through both of these. The therefore you're in a much better place, I think, to explain where they were similar and where they were different, and why the second one ultimately was much bigger. Well But that's not true. Sorry, I should say why it had less containment. Well. The two o eight crisis.

Was the first recession. Since World War Two. where real estate was not in over supply. At the beginning. That's really not the truth of the matter is the oversupply was in single family houses.

But that's a different class than commercial real estate. But commercial real estate. Although it wasn't great in two oh seven. Although I sold equity office at two o seven. But by the time two o eight came

It was softening. But it wasn't an oversupply. Every other recession Seventy three Eighty one, eighty nine, all of them.

We're Real estate recessions triggered Bye. Oversupply. So that made two o eight very different.

than all the rest of them. This also occurred at a time when interest rates were going down. So Whereas in the past when there were over supplies

There was an enormous incentive on the part of the lenders. To get rid of it at any cost. In two oh eight. the cost of carry was going down, therefore the motivation to get rid of it. was much less and

The lenders were willing to take less hits. Therefore the opportunities as a distressed buyer in O eight and o nine We're nowhere near. As attractive as they had been in the other cycles. Yeah, I actually remember you writing something on that.

And that was a big aha moment for me. Because I didn't have the historical context you laid out, but I saw O eight up close and Remember thinking that's a great point. If you have a declining interest rate environment heading into a crash, it's a totally different animal. But remember All of the previous crashes were precipitated by rising interest rates.

So seventy three, I mean, interest rates went as high and seventy three is twelve percent, which was just unbelievable at the time. So the cost to carry to a lender in terms of taking back a property. So they Hit the bullet. We also up until

Nineteen ninety. The real estate Business. Uh had a very different accounting treatment. If in NT Seventi Five

And from seventy three to seventy five, or seventy seven, I probably bought More real estate than anybody in the United States. I've all of it was bought a dollar down in a hope certificate. Because I'd go to the insurance company and at that time the definition of taking a hit. was a scenario that was quote unquote not recoverable within five years.

So if you could make a case that it was recoverable. Within five years you didn't have to take a write off. By the time we got to nineteen ninety, the game had changed. And you in effect had to take a write-off based on the discounted cash flow. And so in effect coming up with a deal for a dollar down and a hope certificate and giving him a a long dated note. You didn't have to mark the note to mark it, created a very different environment. So in nineteen seventy three the name of the game was

make the transaction happen. By nineteen ninety the name of the game was you had to be able to Discount it out. And so therefore in nineteen seventy three I didn't need a lot of cash. I raised the fund because I realized the only way I was gonna be able to take advantage. And this enormous market opportunity was by basically paying cash.

And Buying stuff at twenty and thirty and forty cents on the dollar. Is it safe to say, Sam, that commercial real estate occupancy or glut or supply demand, however you want to think about it. is kind of a canary in the coal mine for the US economy.

Historically That has been the case. Mostly because That over supply is usually a function of Too much capital availability and not enough discipline.

So in effect, although it may end up creating oversupplies in real estate, it inevitably Create problems in other forms of finance as well. So in nineteen eighty nine when we had that massive oversupply of real estate, we also had the beginning of the LBOs. And uh when the LBOs started, they were very conservatively financed by the time five or six years had gone by, they were Very aggressively financed and Can you explain to people briefly what a leverage buyout is?

Sure, a leverage buyout in effect is taking a company And whereas a normal company would have let's say Терті перцен леч You buy it by in effect creating seventy or seventy five percent leverage. And you make a whole series of

Quote. Meet the improvements that improve the cash flow and quote, create the opportunity to make a lot of money going forward. Make a lot of money because so much of the value is in debt at that moment in time. And in effect the equity is very small. So if you make some significant improvements, the impact on a very small amount of equity is pretty gargantuan.

Mm-hmm. Now As we sit here today and record this, Sam, there's no one listening to this who hasn't been following the story of We work, but You were one of the first people to talk about

We work through the lens Of Marginal supply. And in many ways there are few people that can comment on that type of a business model. More than you. What is it about We Work that years ago had you scratching your head saying, I don't understand this business. Unfortunately, not understanding it was not one of my problems. I think I think I understood it pretty well. You didn't understand why it could be viewed as so valuable.

Well, I mean, my first exposure to the We Work model, which is basically leasing an office floor. For fifteen years. And then breaking it up and then leasing it to small users. At higher rates.

The first example of that was a guy named Paul Fijin in the late fifties. In the late fifties and early sixties. No new office building existed. Without a floor two least defeating. And then

Supply became much more prevalent. And he went broke. And then somebody else did it again and they went broke. And eventually even though today the largest co working

company in the world called Regis. They went proke. Why? Because if you're the marginal supplier When things are good. Everybody uses you and when things start to soften, you're the first one to feel

The impact. So the idea that we work with some kind of technology company. I didn't understand that unless maybe they came up with a special way to underwr or something, but it was basically a giant promotional effort. You know, it's just the Enron of real estate. You know, it's funny, hearing you describe it in marginal terms.

Make so much more sense. for someone like me who doesn't have a great knowledge of economics, but knows enough. When you look at the marginal cost curve of oil, you realize the reason the tar sands get hammered first in two thousand eight exactly the same is once the marginal cost became below the cost of crude, you're hosed. Well just think about it. What was We Work's competition? It was Plug at Starbucks.

In other words, the guy came and he and he occupied a desk from you, but if things got tough he went back to Starbucks and plugged his computer into the wall and he was in the co working space. First of all, that insight to me is it's a great example of how After the fact it's obvious, but before the fact you think how was that not more obvious? But come on, how could it not be obvious? I mean, where did these guys come from? They came from Starbucks.

That's just such a great way to think about it. Just tell me The cash flows that we work generate. Where do they come from? Do they come from prophets?

In other businesses? Or do they come from venture capital? Which in effect doesn't have the discipline of profitability. And the answer was obvious. And it still is today, and by the way.

When it's all said and done. Any company that doesn't have a barrier to entry. Is vulnerable in any business. Just look at how many competitors we work has spawned. Now most of'em have been spawned because we work sold as technology concept. But the reality is that they're creating new We Works all the time, just calling them different things.

There's something else that I know in the tech space we've talked about before, which is governance. And this is something that you've said so many amazing things on governance. Everything from at one end of the spectrum, which is You wouldn't buy a business that you couldn't run. On one level, you sort of have to be able to run a business that you're going to invest in. I mean that's why although we have been agnostic and we've been in twenty five different or thirty or fifty different businesses, but the standard has always been if I can't run it, then I don't want to own it. And so we don't do rocket engines. We don't do biotech. 'Cause if the proverbial hit the fan, I could always step in. And there have been numerous examples over the years where I've had to step in and

Take over and temporarily make something work. But if I can't do that, then that's above my pay grade. I'm disciplined enough not to get involved in things that I couldn't run if I had to. Another principle of yours is sort of everybody has to have skin in the game. Well, I mean, to me that's not a principle. That's just basic logic. I mean, if I'm depending on you to perform

And you aren't at risk. I'm a fool. So every single thing I've ever done, including when I first started in business. From the first day. Everybody who was in a decision making

Always had a piece of the action. And that piece of the action required an investment. Now it might be a very small investment. But relative to their net worth.

It was meaningful and they had skin in the game. Speaking of your firm Sam, you you you've uh you know I've spoken to several people who have worked for you and I know people in your circle, it's a little bit unusual in the the extent of loyalty that has followed you. You tend to collect people. They don't really go anywhere.

Yeah, I don't know whether collect is that I never thought of it in terms of collection, but I think it's true. But they don't leave, right? They don't leave. We have a long history of even if you went to my world today, you'd be shocked at how many people have been there for twenty and thirty years. And obviously I take great Pride in the fact that they have had the confidence level to stay with me all these years and and in many cases in different roles. I mean, you know, that's also always been part of it. It was I'm

I'm really focused on the individual and his or her capabilities. And if I have trust in somebody and I have confidence in somebody, I'm just as comfortable having them do business A or business B. 'Cause I think in the end the success or failure is really function of how good a businessman you are, how good are you in making judgments. And that's what separates the men from the boys. So

creating this long term loyalty and connectivity is very important. How do you do it? I don't know. It just kinda happened to me, but I when I look around in my own world, I can't help but say that one of the key things that has separated and distinguished me from other people

is that I have always been accessible. In other words, I make A joke of the fact that I've had the same office for thirty some odd years and only four years ago did I discover there was a door. On the office. Because I never closed the door.

So that means that I was available to everybody. And by virtue of being able to be accessible to everybody. I'm in effect lowering the overall risk. Because there's no excuse if Sam's available. The same manner, I've never had much of a hierarchical structure.

Never even thought of it that way. Everybody wears the same thing to the work every day and there's no secrets and I know one of my favorite words is the enemy is without. In other words, we did a little drawing of a a bunch of wagon trains circled, and the point being that the enemy is on the outside. Not inside. Supposedly Abe Lincoln created a team of rivals. Well, maybe running a government you need a team of rivals. I don't know.

But when you run a business, you don't need a team of rivals, you need a team of partners. who are rivals to the outside. And that's always been a critical part of the way we think and the way we operate. You told a story once about a woman working for you who came to you and said she'd had a change of heart and she wanted to go to divinity school. How did you handle that? Well, I mean, the answer is in the end, nothing is more important than in effect. facilitating people

Two Test their limits, reach their goals. And she sat down with me and said, I'm at a stage in my life where I really w need to change how I'm thinking. And Oh I Didn't necessarily envy her or wanna go to divinity school myself.

I said, Well, if that's what you want to do, then how can we arrange your work schedule so you can go to divinity school, get a degree, and still stay relevant in the business world? And that's what we did. What does she do today? Still works for me and she Doesn't do any holy roller stuff.

But in effect that experience is very relevant to what she does and her almacenary activities and other things, which is wonderful. We have a mutual friend, which is how we met. And one day I was in his office, this is probably five years ago, and I saw something in his office and I was like That's an incredible piece of artwork. And he said, Oh, it's a Christmas present from Sam Zell.

And I would learn later when you and I met Th there's more to that story. So tell me a little bit about how you think about these gifts. Well, I think you gotta go back to nineteen seventy six. I've been in business for

Give or take. I don't know, eight years and uh I'd started getting, you know, chocolates and grapefruits and all kinds of Christmas things, pens, pencils, and I felt motivated and felt that I had to somehow or other respond to. All these people sending me this stuff.

But the idea of me sending out a calendar with my name on it or a pen or a pencil, I just it's just crazy, isn't it? But that wasn't who I was. And so I decided that what I was gonna do was I was gonna send out to people some memento of where my head was at that particular year. And so the first year I sent out just a simple loose side block with a samism on it, which was we suffer from knowing the numbers. Every year I kept coming up with something different that reflected where my head was at or

where I thought we were going or what I thought was happening. And then when you do something for a very long period of time it tends to get out of hand. And so by nineteen ninety four The idea was well let's do a music box. And so we did a little automaton with a music box and a

happened to be uh Bee's song, but basically uh talking about where we were and uh and where the real estate industry was and then we kept going and we did that for another twenty years. How much time goes into preparing that? Well, the answer is a lot. We ended up doing a lot of these very complicated

automatons and uh We ended up Getting a group in California. That did the models for Star Wars. Movie.

to start doing these year end gifts for me. Probably took about six months. The good news was we produced really exciting Products the bad news was that I was basically making a prediction.

Where my head was at. Six months before it was delivered. history turns out that I was pretty good at that. I mean probably the most significant example of that was december thirty first, nineteen ninety nine. I sent out a piece. That was

Basically calling an end to the dot com boom and it was basically the Emperor has no clothes. And the song was Paul Simon's Fifty Ways to Make a Billion. I basically made fun of the idea that people are just thought that it was just so easy and let's just and it all the idea for that year's gift had come when somebody said to me, You know, you must really be pissed off. You spent all those years becoming a billionaire and these people became a billionaire overnight.

And I said When it turns to cash, call me. You're kind of a lifelong student. Earlier you alluded to the fact that A big part of how you mitigate risk is

know as much as is possible. About your world. Now when you were Investing in dime bag stores on the side of Ann Arbor. blocks, the world was a lot smaller than it is today. So

How do you stay abreast of your environment and the environment you invest in today? What do you do to learn? I read. And I read. And I read. And I read. I'm never without something that I'm reading.

I read five newspapers a day. I read Three magazines a week. I listen, I'm trying to observe, I'm trying to figure out and When I think about it. I think about the fact that

I have some kind of a unique capability. Two Sift through. volumes of information. And only remember the parts that are relevant.

I mean I read Maybe one and a half books. Every two weeks and most of them are escapist novels. And when I read'em, it's Grisham, it's Baldacci, it's Whatever it is. It's just I'm very involved. I'm love reading him.

And the day after I finished him I can't remember anything about'em. I don't remember who the protagonist was, I don't remember anything, but if there was a description of uh Berlin. I remember the description of Berlin because that in effect has potential relevance. Going forward.

And so somehow or other I'm able to get rid of the what I call the non relevant information. Create stories. Was very entertaining while it happened. But it's not relevant. To tomorrow.

And somehow or other I'm able to Hang on to And use That kind of unique information. So one of the stories that's applicable this is I was on a motorcycle trip.

In Chile. And last day it rained like crazy and we were we cut the trip short by a day and we started coming home early. And I realized that we were gonna get home at three o'clock in the morning. And that didn't make a lot of sense. And so we're trying to figure out well, jeez, could we stop someplace on the way from Chile to Chicago? And

Where could we stop? And then I remembered that I had read this Protagonist Escapist book where the final scene Was a shoot out on a golf course on an island in the Caribbean. And at this golf course.

was part of a resort. They had an international airport. Inside. The resort. And we ended up

Coming up in the name of the airport. And we're thinking of the resort and we ended up landing there, spending the night and then coming back to Chicago at four o'clock the next afternoon. Yeah. But that was really typical somehow or other The only thing about the story

That I could remember. was this a unique scenario of an international airport inside of a resort. I don't remember anything else about the book. And remaining other than the shoot out at the end. But the only thing that was relevant in the book to me in the future

was the airport and the resort. Everything else was superfluous. But it's that kind of segmentation. And absorption. that I think contributes to the decision making that I'm constantly making. I'm constantly Adding and increasing

My knowledge of everything in every direction I can. I mean, a number of years ago I went to Ulan Bator. Why would I go to Ulan Bator? Well, Uombaktor happens to be the capital of Mongolia. And I had read some place that They had opened uh

Gucci store and another high end retail store in Ulan Bator. And I said Why would they do that? And it turned out that the country was in a giant resource boom. And so I said, We gotta go look at it and see what's there. That's kind of the way I attack and look at all kinds of information.

You can't be an entrepreneur. Unless you're really curious, you gotta see the problems. You gotta see the solutions, and you can't see them from afar. You gotta see them up front. That's why you know I end up

Traveling a thousand hours a year on my plane. The typical CEO of a Fortune Hundred company travels two hundred and fifty hours a year. But I gotta see everything. And when I'm making risk decisions and I'm making decisions on partners I want to see them in their home territory. Almost anybody will come see me if I invite them.

But that Doesn't do me anything. It's also particularly relevant that if you go see them, you can decide when to leave. You mentioned obviously travel. You have been to some crazy places. You've been to places that most people don't think of as vacation destinies like Iraq and Syria. Yes. I don't take vacations.

As a matter of fact, that word is kind of foreign to me I never been one to sit on a beach. I don't know how to do that. I just want to see stuff. And you know, one of the great stories that my wife and I talk about is that we Went to Syria right before Syria came apart. And we went to Damascus and we went up into the various parts of Syria and We had one.

Day that we just didn't have enough time. We said, Well, we'll go to Aleppo next time. And uh in between. course Aleppo is destroyed so that only motivates me more to constantly see stuff. And one of my great stories was I saw this video of the biggest copper mine in the world and they're in Jawa.

It was run by a company called Freeport MacMaran out of New Orleans. And I ended up at a conference sitting next to the CEO and I said, I just read about this incredible mind. And I wanna go see it. And he said, Tell me and I'll set it up for you. So we flew into the jungle where there was a Airport literally built into the jungle just to serve the mine.

And we went up to the mine and saw stuff that I'll never forget. So it's curiosity. It can't be an entrepreneur. You can't be a risk taker unless you're also just ape about knowledge. And you just gotta keep absorbing and and separating out that which is relevant and that which isn't. It's very easy to get overcome by too much information and therefore you can't make decisions.

You've gotta be able to sort it out. I mean you alluded to that earlier when you talked about your very first Christmas gift, which had a quote about what was the exact quote? Something about the number suffer from knowing the numbers. Yeah. How do you draw that line? I'm a person, Sam who will always err on the side of analysis, paralysis. Maybe it's because I was an engineer. I don't know. And obviously knowing none of the numbers is counterproductive.

How have you navigated that balance or maybe asked another way? How would you teach somebody or help somebody find their own way? Well, the origins of that sentence we suffer from knowing the numbers. Really reflect that. That there been numerous times in my career.

When everybody else was doing stuff. And I wanted to do it too. Except I knew too much. It was too knowledgeable. And so if I didn't know as much.

Then I could make the same mistakes they were. But By virtue of knowing The numbers. It became the disciplinary factor that kept me from making a mistake and becoming part of conventional wisdom instead of an independent thinking.

Ah, so you actually are praising the knowledge there and not criticizing it. I mean, it'd be so much easier if I didn't know so much. Then I could just say, Hey, everybody's buying the fang stocks, you know, jump on the bandwagon. But that's just not the way I think, and I've spent my whole life trying to separate what other people think is cool. And what I know is something different. So You're in your seventies if I'm doing my math right.

And you're not even close I mean, you'll never retire. I've never asked you this question in other context, but I know the answer. Like retire can't exactly w what does retire mean to you? Retire would mean stopping something that is retire from what? Yeah, exactly. I mean I haven't worked since the fourth day that I was in that law firm. Or as my dad used to tell me, make your vocation your vacation. You'll never work a day in your life. And that's exactly what I've done. I mean I've spent my whole life I loved everything I've done. I love getting up in the morning. I never was Found myself

Getting up in the morning and saying, Oh my God, I gotta go do this again. And I've tried very hard to focus my life on Never doing anything I don't want to do and never being any place I don't want to be. With all the lessons that stand behind you. Lots of people think.

The US economy. has been too frothy for too long. And lots of people, myself included. Are wondering, Oh my gosh. Should I be sitting in all of these equities at this moment? Should my four oh one K be

distributed this way versus that way. I certainly won't ask you those types of granular questions, but on a more macro level. How bullish are you on the US economy at this point in time. And I guess just for context, we're having this discussion in October of Two thousand nineteen. So

What's your view? You've been through every cycle. And you also have the luxury of seeing cycles both in and out of this country because of the nature of your work. What do you think about the world we live in today? Well When all is said and done, you have to think from the perspective

of what I call pure logic. For twenty five years and people ask me about interest rates. For twenty five years. The United States the risk free rate of return was five point six percent.

If the risk free rate today was five point six percent. the country would be broke. As with the rest of the world. So

You start with the assumption That's The world we live in. creates a set of limitations. I think one of those limitations today is

That Нобайки афо. For interest rates. To go up. So therefore.

I think that And with the amount of debt being created, that's even more the case today. So I think that Number one. I think we're

Probably I don't think we're in a bullish environment. Despite the fact that Stock market today is at an all time high. I don't think it's the same kind of an all time high

As it has been in other quote frothy periods. I think we've Pretty much come to the conclusion. That growth is limited. And I think growth is limited, but I think growth is gonna continue to be positive.

I'm very sensitive to the question which I get all the time about what inning are we in. But I also think that people aren't focused on What I think is even more important question, when did the game start? So in the stock market it was January or February of oh nine. But if you were in the real estate business

The real estate business was really terrible. in January of ten and January of eleven and january of twelve. and only started beginning to get better in thirteen and fourteen. So what inning are we in? When did it start?

And I think the same thing is true of a lot of other things. So I guess what I would tell you is I think that The environment is benign. Not aggressive. Not pessimistic.

I think that our whole system is based on or built on growth. And We are in a period of substandard growth. And substandard growth. I think

is also recessionary d in effect defers Recessions. So I think it's very likely that we will continue to bounce along. Till the beginning of twenty one. And maybe even for longer.

Because In effect the central banks don't have the tools. With which to defend themselves. Therefore they have to keep The process.

Benign. Here we are in What's supposed to be the eighth or the ninth inning. And instead of the Fed raising rates, they're lowering rates. Yeah, that's the weird thing, isn't it? It's sort of like having a fire department

That's low on water. Well, that's one way to look at it, but I think another way to look at it is it it's having a fire department who figures that the best way to solve to mitigate the risk is to wet everything down before the fire begins. Yeah, yeah, slow drip with sprinklers. Yes. Well, I like the way you're thinking about that and and I like your optimism.

In terms of the US's position globally Sam Look, I mean h in the eighties, as you described earlier, everybody thought that Japan was coming to eat the lunch of the United States. Today, obviously, that sentiment has been replaced by China. Do you see the relationship between the US and China as much more complicated and much more interwoven, or do you see them as independent economic behemoths? Well, I guess gotta start by the fact that

I think that China has been taking advantage of the United States. For twenty years. I think when China was admitted into the WTO. There was an assumption. that by virtue of them being admitted into the WTO that they were gonna behave differently.

The reality is they've behaved as every mercantilist since the beginning of time. and we have not had the what I'll call independence or clearness of thought. to understand what was going on and only now are we Frankly, out of necessity. Creating the kind of

environment that challenges China and in effect says to them, you can't continue to take advantage of us. And if you do, we're gonna change the terms of the game. And of course, that's a very political question, which I don't think either of us want to dive into. Do you believe that we are tethered to each other in some way from a sort of supply and demand standpoint. In other words, do you believe that the fate of one country rests somewhat with the other independent of behavior change?

Wow. I think that There's little doubt that all of the countries of the world are Much more connected today. than they ever have been.

Obviously the two biggest by definition are much more connected. I don't think that we can Ignore. China's existence.

Nor do I think China can ignore our existence. And one way or another we have to find A middle ground. Where China can continue to prosper and grow. But not in

the mercantilistic portion like identifying five industries. they're gonna pour capital into. to take over AI and stuff like that. We can't afford to let that happen. Sam, what advice would you give to someone like me? So like you, I'm first generation.

And when I look at my kids they are growing up in an environment that has more to offer, more opportunity, more Privilege, more comfort. than the environment I grew up in. I have to imagine the same is true for your kids.

How do you think about instilling in our kids The lessons and virtues That First generation kids had instilled into them without

much thought on the part of their parents because they were the defaults. I guess no matter what you say, I think it comes down to Can you Inspire your children. Can you encourage your children

To excel. My message to my children has always been Go for greatness. Never fantasized of anybody of my children working for me.

If it turned out that one of my children had The talents necessary. That'd be great. But what I really communicated to them over and over and over again is find what makes you Happy.

Find the challenge. And then excel at it. Be the best you can at who you are. and with the talents that God has given you. That's the message that I've given to my children over and over and over again.

Yes, I've been very successful and yes, they're gonna have Less challenge financially. Then I did it. But Financial challenge is not the ultimate answer.

The ultimate answer is Can you maximize what skills or genes or understandings you have And make a difference. That's what we're on this earth for and that's what our responsibility is and

I as a parent am responsible. to inculcate my children. With that. And hopefully what I've done financially and otherwise.

Gives them the freedom. Two. truly excel at whatever turns them on. Last question, Sam, outside of your business world. What problem are you most interested in? I know that your wife, who have had the privilege of meeting Helen

Is very involved philanthropically. As you think about your priorities. Over the next twenty, thirty years. Let us pray. Where do you see the ability to apply

Your problem solving, your resources. Two Problems that go Beyond your day to day problems within business, which is you're constantly a problem solver there. Well, I think maybe the best way to describe it to you is that I've been very focused on freedom of speech. I'm very, very concerned about

America is truly unique. America is like no other country in the world. I've been the beneficiary of that. And the challenge that I have and the thing that I worry about most is can we keep America capable? of providing unique opportunities for people to test their limits and excel. And freedom of speech is one of the most important things. I think

And I've been very concerned about what's going on on the college campuses, what's going on in business Where politically correct Is the standard That

In effect I think Challenges. The freedom. That has made this country great. And so that's probably the single biggest issue that concerns me more than

Anything else. Do you think the pendulum is Just going through a cycle and that we're just seeing a very extreme end of it with respect to that particular issue? I hope that's the case. But I'm not sure that is the case.

And I'm not sure that The perpetuation of standards in universities or or in the workplace is not changing our society in a way that ultimately is gonna be deleterious opportunity for our children and our grandchildren.

Well Sam I know that for you to sit down for this long is a big ask. So I I'm really grateful for this chance. I feel like in some ways we've barely scratched the surface of all of the stories that are out there And all the Samisms, we didn't even get to twenty we might have scratched the surface of five or six of them, but I wanna thank you so much for your time today. And I've enjoyed this discussion as much as any I've had with you. Well, it's my pleasure and it's very fulfilling to think that People will listen

and will reach their own conclusions and find what parts of it resonate with them. And if I've created that kind of an opportunity, then the time spent is very, very, very cheap. Thank you, Sam.

Hey guys, this is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun before the weekend? And Five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the the world of the esoteric as I do. It could include favorite articles that I've read and that I've shared with my my close friends, for instance. And it's very short. It's just a little tiny bite. of goodness before you head off for the weekend. So if you want to receive that, check it out, just go to fourhourworkweek.com that's fourhourworkweek.com all spelled out and just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it. This episode is brought to you by Brave, the next generation web browser. I love Brave. And if you haven't heard about it,

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