Zell - Am I being too subtle?: straight talk from a business rebel

N o one has ever left a meeting with me wondering what I meant. When I say something it is clear, candid, and often blunt. Am I being too subtle? is my punch line when I deliver a message I consider obvious. Ill occasionally add, I can speak slower if you want, to ensure my point is received.

I can seem gruff. I know that. And I can be impatient. I have an embedded sense of urgency. What I cant figure out is why so many other people dont have it. But from an early age I realized that I had a fundamentally different perspective from my peers. And I was willing to trade conformity for authenticityeven when that meant being an outlier, which it usually did, and even if it meant being on my own.

In this book I share the story of how a restless, curious boy who grew up in Chicago made it to the Forbes 400. Ill describe the risks that paid off and those that didntand tell you what I learned in the process. Ill take you inside my world of companies, where culture is king. That is, we take great care with the way we do thingswith transparency, alignment, and trust.

I am probably best known for creating several of the largest companies in commercial real estate and for helping establish todays $1 trillion public real estate industry. But most of my investments are actually in other industries, like energy, manufacturing, retail, travel, logistics, health care, and so on. You could say Im an investor, or an allocator of capital. But what I really am is an entrepreneur. I focus less on specific industries and more on seeing opportunity in anomalies or trends that catch my attention.

I also read risk for a living. I am very focused on understanding the downside. And I have a pretty good track record, but its not perfect. You cant play at this level without some pretty big highs and lows. Of course, they dont usually happen within the same couple of years, but they did for me in 20072008 with our $39 billion sale of Equity Office, the company I built from scratch, and the $8 billion privatization of Tribune Company, which closed at the start of the Great Recession and went into bankruptcy a year later.

In real estate Im known as the Grave Dancer. That was the title of an article I wrote back in 1976, and the nickname stuck. Some might see buying and creating value from others mistakes as a form of exploitation, but I see it as giving neglected or devalued assets, in any industry, new life. And often in my career Ive been the only bidder for themthe last chance for a resurrection. Im not claiming to be altruisticjust optimistic, and confident that I can turn those assets around.

That, in my definition, is an entrepreneur. Someone who doesnt just see the problems but also sees the solutionsthe opportunities.

Not surprisingly, a fundamental part of being an entrepreneur aligns with my tendency to walk out of step with the norm. I have a saying: If everyone is going left, look right. Conventional wisdom is nothing to me but a reference point. In fact, I believe it can be a horribly debilitating concept. It often boils down to a bunch of people yelling Go this way! And once the crowd gets going, it can get real loud real fast. We saw it in the stampede of commercial real estate development in the 1970s and 1980s, the dot-com craze of the 1990s, and the subprime mortgage mania of the 2000s.

I make a point of shutting out the noisedoing what makes sense to me. I want everyones opinion, because there is tremendous value in being a good listener. But then I determine my own path. I look for clarity, and if somethings not clear, I get more information. That could mean reading various sources of news, understanding new legislation, or meeting with someone halfway across the world. The point is, I dont make assumptions. But determining my position is the easy part.

Once I have formed my opinion, I have to trust my perspective enough to act on it. That means putting my own money behind it. My level of commitment is usually high. And I stay with my decision even when everyone is telling me Im wrong, which happens a lot. If I had a nickel for every time I heard Sam, you just dont understand, Id be rich.

I believe the fundamentals of businesssupply and demand, liquidity equals value, good corporate governance, and reliable partners, to name a fewapply across the board. They inform my decision making, or what I do, just like my philosophies guide how I do it.

I run my company as a meritocracy with a moral compass. And for those who raise their eyebrows at that statementwho think you cant get to the top unless you beat the crap out of everybodyyoure wrong. When youre a repeat player, when your world is your business and your business is your world, its all about long-term relationships. In any negotiation I believe in leaving a little bit on the table. And in any relationship I believe in sharing the stakes. Ive been doing deals with many of the same people for decades because the goal is for us to all come out ahead. And many of my employees have been with me for twenty or thirty years or more because if I do well, they do well.

These long-term relationships reflect the most important lesson imparted to me by my father. He taught me simply how to