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Sam Zell — Strategies for High-Stakes Investing, Dealmaking, and Grave Dancing (#407)

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“If I can’t run it, then I don’t want to own it.” — Sam Zell

Welcome to another episode of The Tim Ferriss Show, where it is my job to sit down with world-class performers of all different types to tease out the habits, routines, favorite books, and so on that you can apply and test in your own life. This time, we have a slightly different episode. I will not be the one doing the deconstructing. Instead, we have a takeover by my very good friend, Peter Attia.

As longtime listeners of the podcast know, Dr. Peter Attia (@PeterAttiaMD) is a former ultra-endurance athlete, a compulsive self-experimenter, and one of the most fascinating human beings I know. He is also one of my go-to doctors for anything related to performance or longevity.  Peter also hosts The Drive, a weekly, ultra-deep-dive podcast focusing on maximizing health, longevity, critical thinking, and a few other things. Subscribe on Apple Podcasts, Spotify, or wherever you listen to podcasts.

In this episode, we have Peter interviewing Sam Zell, a legendary dealmaker and investor.  Sam is the Chairman of Equity Group Investments, and he was recognized by Forbes as one of the “100 Greatest Living Business Minds” in 2017. He holds a place on New York Stock Exchange’s “Wall of Innovators” for his role in building the $1 trillion REIT industry. Sam is also the author of Am I Being Too Subtle?: Straight Talk From a Business Rebel. 

This is one not to miss. Please enjoy!

You can find the transcript of this episode here. Transcripts of all episodes can be found here.

Listen to the episode on Apple Podcasts, Spotify, Overcast, Stitcher, Castbox, Google Podcasts, or on your favorite podcast platform. 

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

This episode is also brought to you by FreshBooks. I’ve been talking about FreshBooks — an all-in-one invoicing+payments+accounting solution — for years now. Many entrepreneurs, as well as the contractors and freelancers that I work with, use it all the time.

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This episode of The Tim Ferriss Show is brought to you by Brave, the next-generation Web browser. Brave was built by a team of privacy-focused, performance-oriented pioneers of the Web at the direction of Brendan Eich (co-founder of Mozilla Firefox and creator of JavaScript) and Brian Bondy. Brave now has more than 10 million monthly active users — including me.

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What was your favorite quote or lesson from this episode? Please let me know in the comments.

SCROLL BELOW FOR LINKS AND SHOW NOTES…

Want to hear the last time Peter was on the podcast? — Listen to our conversation here. In that interview, we discuss Centenarian Olympics, goblet squats, metformin for longevity, xenon gas for performance enhancement, archery, tearing phone books in half, and much more. (Stream below or right-click here to download.)

#398: Peter Attia, M.D. — Fasting, Metformin, Athletic Performance, and More

SELECTED LINKS FROM THE EPISODE

SHOW NOTES

  • Sam details the long journey his parents took to escape Poland just hours before the German invasion in 1939 and arrive in Chicago via Russia and Japan by 1941, and how lucky he really was to have been born in the United States. [10:04]
  • Taking the risk to leave everything behind by making a choice that history proved to be the right one, did Sam’s father ever articulate to him, in explicit or implicit terms, his decision-making process? [22:32]
  • Has Sam always been one to do what he thought was right, no matter how unpopular it might be? Did his family’s close call with extermination factor into his own outlook? [25:44]
  • Why did Sam pursue an education, and then a career, in law — and then swiftly abandon it? How did he turn what could have been a huge waste of time into a unique opportunity, and how did this lead to him setting up his own business? [31:08]
  • How Sam diverged from his father’s real estate investment strategy to land successful deals in untapped and overlooked markets. [39:46]
  • Sam recalls the first real estate deals he made with his father and the level of thought that went into them. [42:50]
  • What was the only real takeaway Sam brought out of Econ 101 class in college, and what was his philosophy around purchasing assets that were already capable of deploying yield versus developing assets? [47:10]
  • When did Sam start to appreciate the operational side of risk, and how did he manage it? [49:33]
  • The variables that can delay a project and teach an unwary developer a very expensive lesson about inflation. [50:24]
  • How did Sam meet Jay Pritzker, the man he considers “the smartest risk guy” he ever met — and what did he teach Sam about risk? [52:04]
  • Is there an asset class for which these lessons about risk don’t translate? [56:40]
  • Where did Sam meet Bob Lurie, and how did they discover the “complementary skill sets but shared values” that made them ideal business partners? [57:55]
  • Sam talks about dealing with the shock of Bob’s death from cancer in 1990, and how he and Bob’s wife committed to the philanthropy that would be his posthumous legacy. [1:03:24]
  • What’s a real estate investment trust (REIT), and what is Sam’s role in the creation of what has become a more than one trillion-dollar asset class? [1:07:35]
  • What disaster did Sam foresee as early as 1988 that turned him into a “Cassandra” among real estate investors, and what factors made it seem inevitable? [1:14:05]
  • What made the recession in 2008 different from other financial crises tied to real estate? [1:20:05]
  • Does Sam believe the state of commercial real estate occupancy or glut in supply and demand is a “canary in the coal mine” for the US economy? [1:24:22]
  • What is a leveraged buyout (LBO)? [1:25:12]
  • Why does Sam think of office-sharing firm WeWork as “the Enron of real estate,” and what tipped him off years before anyone else seemed to see it? [1:25:54]
  • Why Sam would never buy a business he couldn’t run, and why it’s important for everybody involved in a business to have some skin in the game. [1:29:31]
  • What’s the secret to Sam’s collection of loyal business collaborators — many of whom have worked with him for 20 to 30 years? [1:31:06]
  • How did Sam facilitate the needs of an employee who decided that she wanted to go to divinity school, and what is she doing today? [1:33:47]
  • Why and when did Sam get in the habit of giving year-end gifts that get remembered, and what’s changed about the process over the years? [1:34:43]
  • A big part of how Sam mitigates risk is to know as much as possible about his world. As a lifelong learner, how does he stay abreast of what’s going on in that world? [1:37:48]
  • According to Sam, a typical CEO of a Fortune 500 company travels 250 hours a year. He travels 1,000, but insists that he doesn’t take what most people would consider vacations. Where does he go, and what motivates him to go there? [1:41:26]
  • What does Sam mean when he says “We suffer from knowing the numbers,” and how does he find a balance between knowing too much and not knowing enough when it comes to business? How would he teach someone to find their own balance? [1:44:14]
  • Now in his 70s, what are Sam’s plans for retirement? [1:45:48]
  • Is Sam optimistic about where the US economy appears to be headed? Does it seem overly interwoven with the fate of China’s economy, or can it prosper with or without China? [1:46:46]
  • How does a first-generation kid like Sam inspire and encourage his kids to excel with the same intensity that his own parents directed at him? [1:53:04]
  • Outside of the day-to-day concerns of the business world, what problem is Sam most interested in solving? [1:55:05]

PEOPLE MENTIONED

The Tim Ferriss Show is one of the most popular podcasts in the world with more than 900 million downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.

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14 Replies to “Sam Zell — Strategies for High-Stakes Investing, Dealmaking, and Grave Dancing (#407)”

  2. loved the Sam Zell interview and guru like status that Sam commands,but was hoping Peter would have asked about some of Sam’s failures notably the Tribune.Then we could get some perspective of failure and success and how to learn from both.

    Reply

  3. Don’t Fuck With Cats: Hunting an Internet Killer.
    Highly recommend – Netflix

    History of Japan by Bill Wurtz.
    Highly even higher recommend – Youtube

    P.S Great choice with Julieta Venegas’s song a few weeks ago. I love her song with Marisa Monte, it’s one of those feel good, think about life, relax, all in one songs.

    Enjoy!
    Isa Paez

    Reply

  4. very interesting interview, sam zell is really a great businessman, precursor of today’s investments. High stake advice is very useful. [Moderator: link removed.]

    Reply

  5. Hey Tim

    Question for an episode:
    Who is a top performer that brings burned out top performers back in their A game?
    What does an efficient Stress and Burn Out Rehab look like?
    How do you tackle and reverse everything from mental issues, memory losses, hard self talk and depression to physical pain, digestion problems, head aches, constant tiredness etc

    Your listeners have been following you closely dissecting the routines and habits of top performers.

    What about people who optimized and maxed their strength and capacity, worked intensely and eventually burned out navies they did not balance themselves and listen closely to take care?
    How do the recover and get back on top in a sustainable way?

    There is tons of people talking about stress symptoms, what is does to people and how to prevents it.
    I guess some talk about the rehab and recovery for top performers – I just can’t find it and alongside (primary male) depression this is a huge interest for me and other listeners

    TT

    Reply

  6. I was surprised that Tim and Peter Attia, both of whom I admire for many accomplishments, not the least being their support of spirituality, would lionize Mr. Zell as a great businessmen and not question his amoral behavior when, after earning $1 billion personally in the Equity Partners deal, he forced thousands of employees of Tribune Co. to invest their retirement savings in his scheme to buy the company for him and then forced the company into bankruptcy, causing the employees to lose their savings but Mr. Zell lost nothing at all. He probably thinks this is another example of his genius, but I’d expect Dr. Attia and Tim to ask: is there ever enough money for billionaires to say I have enough and I’m not going to screw little guys any more? Look At Sears, Toys’R’us and many others. this may be the signal issue facing America and it wasn’t mentioned.

    Reply

    1. If you want to know about Zell’s tribune failure, read his book. He was pretty candid and open about his strategy, his mistakes and his personal losses and that deal.

      Reply

  7. Really like the risk and decision making themed podcasts by Peter Attia, like this one and the one his site with Annie Duke. If he ever got to do one with Aaron Brown (ex-CRO of AQR, one of the original Wall Street quants, author of some great books on risk taking and an original thinker) that would be fantastic. Another great one would be with Ed Thorp.

    Reply

  9. This is my favourite podcast of the year so far. Sam is very clear-headed and pulls no punches. billionaires, but where’s the cash… love it. I was very touched by his family background and was very interested and touched to hear about his work relationships and how much he cares about his partners and associates. No wonder this man inspires so much loyalty: he’s a genuine person underneath his “hard” persona and is thoughtful, intelligent and generous. I’d love to meet him someday.

    Reply

  11. Perfect example of someone not knowing “how things are done” and doing them way better. In reference to his father making 4% and he makes 16%. Love it.

    Reply