The Tim Ferriss Show Transcripts: Sam Zell — Strategies for High-Stakes Investing and Dealmaking (#407)

Please enjoy this transcript of a takeover episode in which my very good friend, Peter Attia, interviews legendary dealmaker and investor Sam Zell.

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. 

And 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.

Transcripts may contain a few typos—with some episodes lasting 2+ hours, it’s difficult to catch some minor errors. Enjoy!

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Peter Attia: 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 an investor who’s active across a broad range of industries including energy, manufacturing, logistics, health care, communications, and of course, real estate.

Sam was recognized by Forbes as one of the “100 Greatest Living Business Minds” in 2017, and he holds a place on New York Stock Exchange’s “Wall of Innovators” for his role in building the $1 trillion 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 II, and how this played an enormous role in his upbringing. We talk about his early businesses and then the lessons that he learned along the way, and, 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 1991 and 2008 with respect to real estate.

We talk about the incredible loyalty within his organizations. 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. 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.

Peter Attia: Sam, thanks so much for making time today, and thanks for coming over.

Sam Zell: My pleasure.

Peter Attia: There’s so much I want to 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 your accolades. Tell me a little bit about your parents and how they wound up coming to the United States.

Sam Zell: My parents lived on the German-Polish border in the 1930s, and my father was a grain merchant. 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. 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. He became alarmed at 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 Palestine at the time), and so in effect, he went on a vacation to Egypt, in Israel (or Palestine). And basically, there was a Jewish organization that allowed Polish Jews to get money out of Poland. So one day a guy showed up at my mother’s house, and my father had told her, “Look, if some guy shows up, and he can prove to you that 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.” When she opened up the letter, she found a ripped piece of paper inside the envelope. 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 him all of the money. 48 hours later, the money was on deposit at Barclays Bank in Tel Aviv, and that money eventually became the currency that they used when they were escaping from Poland.

So it’s now August 23rd, 1939, and the world is stunned by the announcement of the Molotov-Ribbentrop Treaty, which was a treaty executed between Germany and Russia. 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.” So my father got off, he was on a train, turned around, went home, got my mother and said, “We have to leave.” He moved my mother and my older sister, who was like two, a couple of hundred kilometers from their town. He went back and tried to convince other members of their family to come with them. Without exception, they all turned him down.

He was like 34 years old. I think they all thought he was typical over-enthusiastic young man, didn’t understand, didn’t remember that when World War I 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, they had music and 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 going to be terrific again.” And my father instead knew about Kristallnacht, knew about all of the anti-Jewish activities in Germany, and he couldn’t convince anybody to go with them.

Finally, at 4:30 in the afternoon of August 31st, 1939, he got on the train and started going east. At 6:00 a.m., the Luftwaffe 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 keep going east, keep going away from Germany. There were times my mother told stories about her pleading with him to stop, “Okay, we’re far enough away from the border, everything is going to be fine.” Instead, all he said was, “We’ve got to keep going.” They went by every conceivable form of transportation — from bus to train to wagon cart — whatever and whichever methodology they could. They kept going east. Along the way, there were other refugees, just like them, all moving east.

Eventually, they got to Vilnius, which was the capital of Lithuania. That’s where the Russian army was and that’s where they paused. They spent a few months in Vilnius trying to get adjusted. At that time, there were a lot of other refugees in Vilnius, so it was a community and they shared information. 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 Vilnius, the Dutch ambassador, who would come out of Poland, was on his way back to the Netherlands but couldn’t go west, so he stopped in Vilnius and he gave out visas to Curaçao. Curaçao was 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 because they were trying to populate Curaçao, particularly with Europeans. So all of these refugees got visas to Curaçao. But the problem still became: how do you get from Vilnius to Curaçao? Obviously, the only way you could go was east, and obviously the answer became the Japanese. They found a consulate in Kaunas, which is the second-largest city in Lithuania, and they told him their story and he took pity on them and they literally created something they called “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. Sempo Sugihara, who was the consul, ended up signing almost 2,000 of these. In the meantime, he sent a notice to Tokyo and asked permission to grant the visas, and they came back and said, “No.” Then he sent them a second question, and while he was waiting for them to respond is when he filled out all the visas. 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. So they decided that, as only Russian entrepreneurs could, that they had a train and that they could sell, in effect, train passes from Vilnius overnight to Moscow. Then 11 days and 11 nights on the Trans-Siberian Express to Vladivostok where you could take a boat to Japan. My parents, for $239 per person, bought transit on that train. They went overnight to Moscow, spent the night in Moscow and actually went to the Bolshoi Ballet. Then the next morning got on the train and spent the next 11 days and 11 nights on the train with their two-year-old daughter going to Vladivostok. They eventually boarded a boat and ended up in Japan, and then spent six months in Japan trying to get their visas to the United States, which they finally got in May of 1941. They arrived in the United States on May 18, 1941 at 6:00 a.m. in Seattle.

Interestingly enough, as only the life of an immigrant could reflect, they arrived at 6:00 a.m. in the morning, and at 6:00 p.m. they took their first English class because they were going to become Americans, and this was the most important thing in their life. So this was kind of the background, and I was born on September 28th, so I was born 90, 100 days after they came to this country. My mother was delayed with me, and so the day I was born, she went to Marshall Field’s, which was the major department store in Chicago, and started walking up and down the stairs hoping that this would precipitate the baby. Eventually that night, at 10 o’clock, the process started. 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 11 o’clock at night, so they walked the last six blocks. Then I was born very shortly thereafter. When you come from that kind of a life, and you hear the stories all over again 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 is just extraordinary. How anybody could have the self-confidence — I 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. It made me very aware of how lucky I was. He must’ve told me a hundred times 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.

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. 

This was an extraordinary background for everything that eventually happened to me, and without a question very much influenced how I made decisions going forward. Because more than anything else, what he’d told me was that anything was possible. That you didn’t start with a set of limitations; you started with the entire spectrum available, and it was how good you were, how committed you were, and how hard you were willing to work. That really was the limiting factors, not the society.

Peter Attia: Did your father ever articulate to you, in explicit or implicit terms, his decision-making process? Because when I hear that story, Sam, I think of a huge asymmetry of risk. 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 12 hours, and this, if I recall, this was the last train out of Poland. I mean, he 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 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 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?

Sam Zell: I don’t think he ever articulated it that way because 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 he looked at the society that he was leaving, and particularly at his age, I think he really thought that he was making a major decision for creating optionality and freedom for his future. 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, and how critical it was to exit. 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. We live in a day of 24/7 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. We can’t really relate to the idea of a society where 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 his siblings and his friends didn’t have.

It’s no different than when we talk about being a risk-taker. What I talk about often is how critically important it is to be as knowledgeable as possible. All my life, I’ve basically focused on reading and digesting information because the more educated and up-to-date you are, the better you are to be able to assess judgment and assess risk.

Peter Attia: 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 other friends I think, were huddled around a small movie projector and they were watching something. Tell us that story.

Sam Zell: I think I was maybe six-years-old and we lived in Chicago. We lived in what’s commonly referred to as a railroad apartment, which is you had a living room at one end and the kitchen at the other end, and then it was a long row of bedrooms and baths. My bedroom was at the far back next to the kitchen.

My parents belonged to a group of immigrants that had their own little organization called the Harmony Circle Club. Once a month, they would get together in one another’s living room and talk about information, and particularly information about Poland. They were all were refugees from Poland and all Jewish, trying to get information. 

I don’t know why I got up that night, but I got up that night and I snuck right near where the living room was. They were watching an eight-millimeter movie. 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. The images were of trucks and dump trucks, and in the back of the dump trucks, in the bins, were bodies and bones and heads. They had all been dumped in the back of these trucks. And I learned for the first time that this was all about the Holocaust. 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. I sat there, and 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. 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 them in dump trucks, and find someplace where they could be dumped with lime tossed on the bodies and buried accordingly. It was an incredible thing for a six-year-old to watch. Most important of all, what I felt about it was that but for the grace of God, it could have been, should have been, my parents. In fact, most of their siblings ended up murdered in these concentration camps.

Peter Attia: 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?

Sam Zell: Well, I certainly was no different than any other teenager. But 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 closeness 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 that whatever I was doing, I was lucky I was doing it and I had to do more of it. I studied harder, and I had to excel. 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. At first, it was very frustrating and very much of a challenge and I didn’t really know what to do with it. Then, eventually, I just came to the realization that I had to be my own thing; 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. Whether it was a six-year-old watching a Holocaust movie or listening to my father telling me, “You went to a basketball game last week; why do you have to go again? Why are you so focused on having fun? You’ve got to be studying; you got to be getting better; you’ve got to be able to take on what’s going on.” 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.

Peter Attia: So, after college, how did you decide on law school? What other things did you think about? Did you have any sense of what you wanted to do?

Sam Zell: Oh, that was a very easy decision. My father’s view was very simple. You’ve got to have a profession. No matter what, you’ve got to have something that you can “hang a shingle out on.” Law school seemed like a very logical thing for me to do. Academically, it wasn’t very difficult to achieve, so I went to law school not because I wanted to practice law, but I went to law school so I had a degree and if I didn’t work out at whatever I was doing, I would be able to, in effect, still practice law and make a living. That’s what he, more than anything, stressed that I had to do.

Peter Attia: So your first stint in the law firm was a pretty short one?

Sam Zell: Yeah. Actually, the better part of the story is that I had 44 interviews. 44. Talk about rejection. I was rejected by 43. I sent all the letters, I made all the appointments, and followed up on it. What I didn’t understand was, and it was actually made very clear to me toward the end of this process when I had an interview with a big fancy firm, and I got through the first interview. I was very excited because I had been used to people rejecting me.

Then I had a second interview at the firm that went really well, and they set up a meeting for me with the senior partner whose name was on the door. I remember going in to see him. I walked into his office and it was a typical wood panel lawyer’s office with books all over the place, and he was on the phone. He gesticulated with his hand and said, “Sit down.” 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.”

I looked at him and I said, “Tell you about my deals? 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 want to be a lawyer. What about Perry Mason?” 

He laughed and he said, “You don’t understand.” And of course, the truth was I didn’t understand. 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. You built a real estate business; you managed hundreds of apartments; you bought buildings; you refinanced buildings; you wrote a manual on property management, and you’re literally just graduating from law school. How would anybody like you want to sit here and draft contracts all day?”

I just looked at him and I said, “Well, I don’t understand.” He said, “The reason you’ve been rejected like this is because everybody looks at you and says, ‘This is a guy who’s going to do something else. Why would we want to train him if he’s going to be gone very shortly?’” I’ll never forget that interview. 

I ultimately did get one job with a firm that was kind of half entrepreneur, half 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. Some client with a firm built the dormitory and they were entering into a contract with a company that provided linens. 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, particularly if you went to a good law school where, in effect, they look down on any “lawyer vocational training.” 

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 are these. It gives you a base.” I started working on form books and it was terrible. 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 had slit his wrists, because he used red pen on it and the whole thing was full of red this and red that. I’m looking at it and saying, “I just went through three years of law school and this is what ends up?” So I then redid it again and finally submitted it to him. Before he responded to me, I went into his office on Friday morning and I said, “Could I speak to you for a second?” He said, “Sure.”

As only a 24-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.” I’ll never forget the look on his face. He looked at me and he said, “What are you saying?” I said, “I don’t think this practice of law is a good use of my time.” He said, “Well, what are you going to do?” I said, “I’m just going to go back and pick up where I left off in business in Ann Arbor, and I’m going to try and build a real estate business.” He looked at me and he said, “You’re going to do what?” I explained to him that that’s what I was going to do, and I thanked him very much for the opportunity. He said, “Well, I’ve got a suggestion for you. Why don’t you 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?” I thought about that and I said, “Gee, that’s a terrific opportunity.” So I said, “Fine.” And the next day I came back to the office and I was no longer a lawyer; I was chasing deals. 

They, at the time, had a policy in this law firm where they would give everybody 50 percent of any business they brought in. The methodology behind that was that they were trying to, in effect, encourage young lawyers to be a little entrepreneurial. Maybe they’re getting estates from somebody in the family who died or contracts, but the whole idea was of “hustling business.” They, in effect, offered me the same objective, and of course, I started creating huge amounts of business.

So maybe four weeks later they came to me and they said, “Well, we had this deal where we gave you 50 percent, but that was really under the assumption that maybe you’d bring in one deal, and so you’d get one positive experience. But the volume you’re doing, we can’t afford to give you 50 percent. So we’re going to make it 35 percent.” I said, “Okay.” 

Then three or four weeks later they came back, and they said, “Well, you know, we made this deal with you at 35 percent when we were assuming you were going to bring in X amount of business. Now you’ve brought in twice as much and we’ve got to cut it down to 25 percent.” I said, “Okay, so we’ll cut it down to 25 percent.” So in effect at the end of the first year, and this is 1966, and at the end of the first year, I think that my “job” paid me $7,600 after I passed the bar on a per annum basis, and I think I made $75,000 as a result of my percentage of the business I had brought in.

Well, that was a huge number and I was obviously thrilled about it. Then they gave me a bonus, and the bonus was $200, and I remember it was the most depressing thing. What I wanted was recognition. What I wanted was them to understand that I was a rainmaker. Instead, by virtue of paying me $200, they were telling me that what I was doing wasn’t very valuable. I remember I was so depressed I didn’t know what to do. 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, the end of the year, I was gone and set up my own shop.

Peter Attia: 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 — the 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 in real estate?

Sam Zell: I think that one of the most significant things that happened was that while I was in law school, I went home and I sat down with my father. My father had been a very successful businessman and had joined other people in investing in commercial real estate opportunities. So I came to him and I said, “Tell me about your deals.” He kind of proudly looked at me and said, “Sure,” and he started describing it to me the deals that he had invested in. While I listened to him, I realized there was a consistent theme to what he was talking about. Basically, he was investing in deals that were in major American cities — New York, Chicago, Los Angeles, San Francisco — but nowhere else.

Second, he was getting, what he was very proud of, was a four percent return. I had been doing deals in Ann Arbor where I was getting 16 percent, 20 percent, and 25 percent, and I just didn’t understand. I came to the conclusion that what he and his buddies were 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; Madison, Wisconsin; Tampa, Jacksonville, and Orlando; Reno, Nevada; and Arlington, Texas. All of which were small cities, growth cities, and ones where there was no competition.

It dawned on me that when it was all said and done, the single most important criteria as an investor is, “What was your competition?” 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, a lot more deals, and a lot less attractive returns as a result. So that’s when I kind of learned about, or I 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. That became a principle of everything that I did.

So the first major deal I did was an apartment building in Toledo, Ohio. You’ve got to understand that part of the time, not too different from today, Toledo wasn’t a very popular place and I was keenly aware of that. But what I realized also was that because Toledo was a car manufacturing center and because it was referred to often as the “armpit of the nation” in a very negative environment, that also meant that no insurance company that made the loans for real estate was going to underwrite a deal in Toledo when the statistics said the city was shrinking.

All I looked at was the fact that I was able to buy one of the few apartment buildings in town, and I didn’t have any competition. That deal was one of the most successful deals that I had ever done simply because there was no competition. Therefore, where there’s no competition, you can produce exceptional margins, and that was a great first lesson.

Peter Attia: And how did you price it? Are you pricing this based, at the time that is, were 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?

Sam Zell: 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 19 percent. This was in the same environment where I had seen my father was investing money at four percent. My father had just sold a number of interests and deals, so I brought him this deal and he looked at it and scans it, and basically, he said, “Yeah, come on, this is bullshit.” He called up a friend of his who was a property manager and said, “My son, Sammy, has brought this deal and it’s ridiculous, it’s 19 percent, but would you take a day and go look at it?”

The guy went and looked at it, came back and said, “It’s a terrific deal and I’ve adjusted all the numbers, and they came much more conservative, but it’s still an eight percent return in an environment where four percent was the standard.” He recommended that we go ahead with it, and he put some of his own money in it. So we did the deal and sure enough, it produced 19 percent just like I said it was going to.

Peter Attia: But that was the first deal your dad came in with you?

Sam Zell: Yeah.

Peter Attia: How did that feel?

Sam Zell: Actually, that was the second deal. When I was in school, I ended up buying a square block kind of house by house. I didn’t have the money, but I had enough to tie up the properties and he eventually came and put up money and helped me get that first thing done. But this was the first investment deal.

Peter Attia: 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?

Sam Zell: I 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 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 — in that what 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. I went from that deal to one in Orlando, and one in Tampa, and one in Reno, and et cetera, et cetera. After the first deal, it was the last time I ever had any trouble raising money.

That first deal required $280,000 of equity, which in 1959 or 1968 or whatever, was a lot of money. But once I’d done that one transaction, people lined up to invest with me. Probably, they were enthralled by the fact that how could a 25-year-old be actually doing this? I didn’t even know that every other 25-year-old didn’t do it as well; it never even crossed my mind. I just kind of did what I thought made sense.

Peter Attia: 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, and I want to go back to this, but even if we stand here today, now, of course, everybody says — look, Sam, you’ve created an asset class that we haven’t even got to yet that we’re going to 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 101. That mattered when there was a huge sort of gap.”

Sam Zell: When I took Econ 101 at the University of Michigan, I walked into the first class, and written on the blackboard was “supply and demand.” I have to be honest with you, I’m not sure that there was ever anything else in Econ 101 that I learned that was relevant. 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.

Peter Attia: What was your philosophy around purchasing assets that were already capable of deploying yield versus developing assets?

Sam Zell: Well, at that time there were a lot of income-producing assets that were available. I’ve always been a great believer that there’s a lot of “execution risk” that has to be fit into your thought process when you’re making a decision. In that particular time, again, keeping it very simple, if I could establish a definition of cash flow and in effect I would — I remember going to developers and saying, “It’s really simple. Take the bottom line, multiply it by six, and that’s what I’ll pay.” I didn’t know that it 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 16 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?

Peter Attia: When did you start to appreciate the operational side of risk? In those early small deals, like your first deal in college where you were 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 started to scale this enterprise, you have to now trust other people to help you operate the business. How did you make that transition, and how did you manage that risk?

Sam Zell: Again, I think you’re giving me way too much credit. I just don’t think I thought about it that way. I thought about the fact that somebody had to cut the lawn, and I knew that if I grew the size of the business, it wouldn’t be me who had to cut the lawn. Not being the one cutting the lawn or cleaning the hallways or whatever, that was certainly as much an objective as making money.

Peter Attia: Did you ever go into deals where you were the developer now and you were going to take that sort of construction risk as well?

Sam Zell: I did that in the late ’60s when I built my first apartment project in Lexington, Kentucky, and when I also built the project that ultimately led to my relationship with the Pritzkers, which was this project in Lake Tahoe. In both cases, they were development projects and they were from the ground up. In both cases, I was very disappointed at how difficult it was. I kept looking and saying, “This doesn’t make any sense. You’re taking all this risk. You’re starting to build something when you don’t know what the market’s going to be like when you finish it. Either you’re putting it up for rent or you’re putting it up for sale. It depends on what the conditions are when you finish. You’re subject to variances in costs.” There’s no greater lesson of inflation than designing a project and finding out that it costs 20 percent more than you thought it was going to 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. The fact that they made a mistake, it was too bad, but I was the guy who had to live with that mistake and then lived through it. 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?” 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.

Peter Attia: You mentioned Jay Pritzker a moment ago. How did you meet him?

Sam Zell: I had a friend of mine, who was a national broker of real estate, and he and I were friends. 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.” I said, “Oh yeah, I’ve heard of them. They are very wealthy people in Chicago.” He said, “Jay is really extraordinary, and Jay is looking for somebody to come work for him who is under 30, a lawyer, and a successful real estate entrepreneur.” 

I said to this guy, “Well if somebody actually met those criteria, why would they want to work for Jay, or frankly work for anybody else?” He says, “You’re being too glib; this is an extraordinary guy. You really need to meet him.” So I said, “Okay.”

He called Jay and the next morning I went over to Jay’s office at nine o’clock. We just hit it off. I sat at his desk from nine o’clock until 4:30. Meanwhile, he took calls, he made deals, and I listened and we talked about everything back and forth. 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.” 

I looked at him and I said, “Gee, that sounds like a Pritzker deal.” He didn’t laugh. 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.”

Ultimately, at 4:30 that afternoon I said to him, “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?” So, we did a deal together, and that was the first of maybe 10 or 15 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. I found him to be one of the most intriguing individuals and, frankly, the smartest risk guy I ever met.

Peter Attia: What did you learn from him about risk?

Sam Zell: Boy, I’m not sure I know where to start, but I think it begins with the fact that you had to be realistic. You had to be able to look at it and say, “What could go wrong?” 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 was interesting, but not productive. Focusing on the downside was what risk was all about. To the extent that you could quantify the downside, to the extent that you understood what the risk was you were taking, your chances of survival were much better.

I think the key ingredient of 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. 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 that has to be right in order for the deal to work? 

We were working on a deal, then in 1969, and it was very complex. I put together a very complex presentation and sat down with him and it took me 25 minutes to explain how we were going to do this and do that and do this and do that. At the end, he looked at me and he said, “Well, step seven is the only step that’s really relevant. That’s where the risk is.” In this case, it was a multi-use complex and the risk really was, could you re-lease the office space? If you could lease the office space, everything else worked.

All the other things that I did to mitigate this, to mitigate that, they were all irrelevant. The only real issue was, could you or could you not rent the office space? If you could, the deal was going to work. If you couldn’t, all the other stuff didn’t matter. The ability to zero in on 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.

Peter Attia: Sam, is it safe to say that those lessons apply across all asset classes? 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 401(k) dollars, do you still think about it through that lens?

Sam Zell: I don’t know how you can think about it in any other way. If you’re investing 401(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?” 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.

There’s 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 the critical ingredient? And the why usually connects to the word risk.

Peter Attia: Where did you meet Bob?

Sam Zell: Bob and I pledged the same fraternity at the University of Michigan in 1959. We were both part of a 21-guy pledge class. I didn’t know him very well. We then both worked on a campus-wide thing called Softshell, and we got to know each other a little better. But basically, we didn’t really know each other at all. We were friends, like all of my fraternity brothers, but I wasn’t really a big fraternity guy. Then when I was a senior and had started this real estate business, I was in the house one night for dinner and he said, “I heard you were renting apartments and kind of running a little student housing project.” I said, “Yeah.” And he said, “That’s really intriguing. If you ever need anybody else to join you, you should call me.” Literally a couple of months later we got our third building. There were two of us together, and we now needed a third guy. We talked about it and we offered Bob the opportunity to join us, and he did.

Bob was an engineer and a very, very organized character. So he, in effect, started turning what was hardly a business — it was two guys trying to get a free apartment — and he helped us turn it into a business. Then when I graduated from law school, I was confronted with this incredible decision of what was I going to do. At that point, I think I made a quarter of $1 million my senior year in law school. It was just an enormous amount of money and I was a big deal in a small pond. The question was, should I stay in Ann Arbor? I obviously had done very well there, and I knew everybody. I went back and forth about it and I finally said, “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?”

So I decided that I was going to sell everything in Ann Arbor and moved to Chicago to see if I could build a career. Eventually, it came time to figure out who I was going to sell the business to, and Bob became the obvious person because he was going to stay there. I basically sold him the business and the last thing I said to him was, I said, “When you get tired of screwing around and you want to come play with the big boys, call me.” He laughed, and I laughed, and then I moved to Chicago. We continued kind of a very touch base relationship, but not much. Then about three years later he called me, and he said, “Sam, do you remember the last thing you said to me?” I said, “Yes.” And he says, “Well, I’m ready.” I said, without hesitation, I said, “Come on.”

So he moved to Chicago and I was very sensitive to the fact that I didn’t want him, if he was going to be my partner, I didn’t want him to ever work for me. 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’ll eventually become partners, 50/50 partners.” And literally that’s what happened. We started out at 85/15, and then we were 70/30, and then we were 60/40, and then we were 50/50, and it all became an example of transferring risk because he, in effect, began taking on the risks that I was taking, and we built the business together.

Peter Attia: I remember hearing somebody once talk about great partnerships. I wish I could remember who said this. 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?

Sam Zell: Yeah. I’ve never heard that phrase, but I think that’s exactly right. In other words, our skill sets were very different. I mean, he was really an engineer. He literally, if the books didn’t balance, he would just stop until they worked out. I would be willing to go talk to anybody and chase down anything, and he was a homebody. But we had a unique relationship and we could finish each other’s sentences. We understood each other.

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. 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, we both had children, but we focused our time together on our enterprise. 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 of building a business. So we spent 99 percent of our time focusing on building our business relationship and we ended up with completely unrelated social relationships.

Peter Attia: Were you one of the first people that Bob told when he was sick?

Sam Zell: Yes, I was. But to be honest with you, I didn’t understand it.

Peter Attia: Do you remember what he said to you?

Sam Zell: Yeah. He came down with a relatively aggressive form of cancer that he was going to get chemotherapy. I just assumed that he would suffer a little bit and he’d be fine, and then we’d go on. And this was in September of ’87 that he told me that. We 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 going to be a painful process, but there was never a terminal end to it. Then, in February of 1990, 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 because I wanted to talk to you.”

I said, “Okay.” He says, “I want you to know that I’m going to die.” 

I looked at him and said, “You’re going to die?” That wasn’t under 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 this.” He says, “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, and I’ve got to prepare for it.” I’ll never forget that morning as long as I live, because it was so shocking to me because just, I never even thought that dying was an option, that there could be a terminal event here. You know, I got a cold, he got sick, we got — I didn’t really connect it. But it was from that point forward that we started to prepare, and eventually he died in June of 1990.

Peter Attia: 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? How did you think about losing a partner who was your equal at that point?

Sam Zell: I think that as I think back on it, I think that all I could think about was our legacy, and I think that I was more motivated rather than less motivated. That I wanted to do more because as far as I was concerned, everything that I did represented me and represented him. Later on, when I endowed the Real Estate Center at Wharton, I endowed it under Samuel Zell and Robert Lurie. When we did the Entrepreneurial Center in Michigan, I did it under Samuel Zell and Robert Lurie, because everything I thought I was doing, I always thought I was doing for us. 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.

Peter Attia: His wife has really carried on quite a legacy. I actually heard of Bob even before I heard of you many, many years ago, through his wife’s legacy of their philanthropy.

Sam Zell: Yes. Well first of all, the two of them before Bob died, spent a lot of time talking about philanthropy. They both decided — it’s very cheek today to talk about The Giving Pledge, but this was 1990, and nobody heard of The Giving Pledge. But these two people said, “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.” So in effect, before he died, they kind of had a pact as to what they were going to do. She happened to be a nurse, so they particularly focused on medical, and eventually Lurie Hospital and a lot of other things that she did that were all involved in medical and created a wonderful legacy for him.

Peter Attia: Let’s shift gears for a moment and talk about 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 a one trillion-dollar asset class.

Sam Zell: It all began in 1958, when President Eisenhower signed something called the Cigar Bill. It was some kind of legislation that had to do with cigars, and I don’t know what it was, but somebody had added a provision that created the “real estate investment trust.” The idea was that they wanted to create a vehicle that effectively created an opportunity for small investors to own pieces of large real estate projects. The REIT concept basically said, whereas a corporation is subject to double taxation, because REITs or real estate was illiquid, they eliminated one of those two steps. So that, in effect, the REIT law allowed the creation of a vehicle that didn’t pay corporate tax but only pay tax on the distribution.

The requirement was that in order to qualify for a REIT, you had to distribute most of the income. So that was created in 1958 and they were, I don’t know how many they were, but they were probably 10 or 15 that were created over the next give or take 25 years. The industry never grew very much at the time. When 1991 came around, the entire industry was only $7 billion, and the reason was that the private real estate market was so much more attractive. That the REIT world, up until that point, only attracted people that 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 was on the private side.

Peter Attia: In other words, people weren’t buying pieces of REITs, people were actually doing private investments in real estate directly?

Sam Zell: Yeah, I mean that’s what I did. We built a major real estate company, we had huge office apartments, retail — 

Peter Attia: But ordinary people like me could not have participated in that type of deal.

Sam Zell: It would’ve been very difficult. The idea was that you’d create these REITs, and then the classic description was the little old lady from Pasadena who wanted to own a piece of New York office building. But effectively, because it was so unattractive compared to the private real estate side, it attracted very, very few significant players, it attracted very limited amount of capital, and it was kind of a backwater of the real estate business. Then in 1989, we ended up with a very serious oversupply of real estate and that led to a couple of insurance companies that 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 and saying, “Where is the capital going to come from for the real estate industry in the future?” Somewhere along the line, the thought process became, “Well, it’s going to be real estate investment trust, and in effect, we’re going to have to access the public markets in order for the real estate industry to continue going forward.” So we began studying it, and actually working with Merrill Lynch on the first of the “modern era REITs.”

I became very involved in the process because I recognized that this was the solution and that ultimately this, if done right, would ultimately fulfill the ultimate dream, which was “liquid real estate.” Because 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. 

In 1993, in October, the National Association of Real Estate Investment Trusts, which was really another backwater organization whose sole objective was to protect the REIT law as written in 1958, with no understanding of the bigger scale questions and liquid real estate and what this was all about, in 1992 at the National Association of Real Estate Investors Conference, I think they had 20 people.

Between 1992 and 1993, as more and more people became more and more knowledgeable, when we had our conference in October of 1993 in New Orleans, we had 1,500 people. They’d never seen that many people involved in anything to do with real estate. 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 I basically got up there and I said to them, “Guys, we have a horrible track record as a real estate industry 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 because there were no other options. If you wanted 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 who were the fish — you know the old poker story of, 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. It was not driven on what were the basics of real estate or cash flow, it was basically driven on commissions.

Peter Attia: So it was very shortsighted?

Sam Zell: 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 1984 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 1993, and we had an extraordinary opportunity to take this and make it into something really significant. But we had to be, in effect, custodians of the public’s trust as opposed to those that took advantage of the public’s trust.

Peter Attia: Now speaking of, you started this story by talking about the savings and loan crisis in the early ’90s. You wrote a letter in the late ’80s, and I don’t think you necessarily predicted the S&L crisis, but you certainly foreshadowed the circumstances that led to it.

Sam Zell: Yeah. I wrote an article for NYU’s Real Estate Center.

Peter Attia: This is what? ’88?

Sam Zell: This is ’88. I sat around trying to figure out the title for the article, and I ended up coming to the conclusion that the right title for the article was “From Cassandra with Love.” Cassandra was this lady in Troy who was cursed by the gods by making true predictions that nobody would believe. I then sat down and wrote out an article that basically predicted what was going to 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 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?

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 1993, I predicted that we would be $250 billion in 10 years, and well on our way to a trillion, and everybody thought I was truly insane.

Peter Attia: What is that number today?

Sam Zell: Just shy of $1 trillion.

Peter Attia: What is it that you saw in ’88 that you knew was going to create a real problem in the next couple of years? 

Because again, it’s easy I think now to say, by the way, I’m going to give you another question. I’m going to ask you in a moment just so I don’t forget it as much as you. I want to talk about the differences between ’91 and 2008, 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 2008 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 ’91 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.

Sam Zell: Yeah, I guess all I can remember about that period was that this was the ’80s, when the Japanese invaded the US market. The Japanese came here and made the ultimate classic mistakes that all kinds of investors have made coming to the United States. That is, what works in my home market, obviously this works somewhere else in a different market. The Japanese flooded the market with capital, occupancy levels across the country in 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. I remember vividly when I started raising money for the first real estate opportunity fund in 1989, I was confronted with a challenge where I walked 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.” They looked at me and said, “Wait, what are you talking about? We just heard from our appraiser that our portfolio has gone up in value.”

I said, “That’s BS. That’s never 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 for all the occupancy that we were creating.

Peter Attia: So you were raising a fund at that time for distressed assets basically? You knew that the shoe’s going to fall, I want to have lots of dry powder for when something happens?

Sam Zell: But nobody had ever raised a fund before, not for a distressed property.

Peter Attia: So you’re talking about an asset class that people can’t fathom at that point?

Sam Zell: In 1989, 80 percent of the institutions that I pitched to didn’t have real estate as an asset class.

Peter Attia: Let me make sure I understand what you’re saying. You’re saying 30 years ago — 

Sam Zell: 30 years ago.

Peter Attia: 80 percent of pensions and endowments didn’t have real estate in the book of business?

Sam Zell: As an asset class, that’s correct. They owned stocks and they owned bonds, and that was it. There were a couple of really far out investors who had some real estate, but there was a very famous study by Ibbotsen, I-B-B-O-T-S-E-N, that in 1992 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 on the fact that the end of the world is coming and get ready and be prepared and be part of the funding. That first fund was unbelievably difficult to raise, and then the rest of them were very simple.

Peter Attia: What was different in ’08? 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 ’08, but some pieces that were different. You lived through both of these, 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.

Sam Zell: Well, but that’s not true.

Peter Attia: Sorry, I should say, why it had less containment.

Sam Zell: The 2008 crisis was the first recession since World War II where real estate was not in oversupply at the beginning. 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 2007, although I sold equity office at 2007, but by the time 2008 came, it was softening, but it wasn’t an oversupply. Every other recession — ’73, ’81, ’89 — all of them were real estate recessions triggered by oversupply. So that made 2008 very different than all the rest of them.

It also meant that this also occurred at a time when interest rates were going down, so whereas in the past when there were oversupplies, there was an enormous incentive on the part of the lenders to get rid of it at any cost. In 2008, 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 ’08 and ’09 were nowhere near as attractive as they had been in the other cycles.

Peter Attia: 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 ’08 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.

Sam Zell: But remember, all of the previous crashes were precipitated by rising interest rates. So ’73, interest rates went as high in ’73 as 12 percent, which was just unbelievable at the time. So the cost of carry to a lender in terms of taking back a property was very high, so they bit the bullet. Also, up until 1990, the real estate business had a very different accounting treatment. If the 1975, and from ’73 to ’75 or ’77, I probably bought more real estate than anybody in the United States. 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 “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 1990, the game had changed, and you, in effect, had to take a write-off based on the discounted cash flow. So, in effect, coming up with a deal for a dollar down and a hope certificate and giving them a long-dated note, you didn’t have to mark the note to market, created a very different environment. So, in 1973, the name of the game was make the transaction happen. By 1990, the name of the game was you had to be able to discount it out. And so, therefore, in 1973, I didn’t need a lot of cash. I raised the fund because I realized the only way I was going to be able to take advantage of this enormous market opportunity was by basically paying cash and buying stuff at 20 and 30 and 40 cents on the dollar.

Peter Attia: 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?

Sam Zell: Historically that has been the case, mostly because the oversupply 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 creates problems in other forms of finance as well. In 1989, when we had that massive oversupply of real estate, we also had the beginning of the LBOs. When the LBOs started, they were very conservatively financed. By the time five or six years had gone by, they were very aggressively financed.

Peter Attia: Can you explain to people briefly what a leveraged buyout is?

Sam Zell: Sure. A leveraged buyout, in effect, is taking a company and whereas a normal company would have let’s say 30 percent leverage, you buy it by, in effect, creating 70 or 75 percent leverage, and you make a whole series of “material improvements” that improve the cash flow and “create the opportunity” to make a lot of money going forward.

Peter Attia: Make a lot of money, because so much of the value is in debt at that moment in time.

Sam Zell: Right, 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.

Peter Attia: 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 WeWork. But you were one of the first people to talk about WeWork through the lens of marginal supply. And, in many ways, there are a few people that can comment on that type of a business model more than you. What is it about WeWork that years ago had you scratching your head saying, “I don’t understand this business?”

Sam Zell: Unfortunately, not understanding it was not one of my problems. I think I understood it pretty well.

Peter Attia: But you didn’t understand why it could be viewed as so valuable.

Sam Zell: Yeah. Well, my first exposure to the WeWork model, which is basically leasing an office floor for 15 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 Fegan in the late ’50s. In the late ’50s and early ’60s, no new office building existed without a floor or two leased to Fegan. And then supply became much more prevalent, and he went broke. Then somebody else did it again and they went broke. And eventually, even today, the largest coworking company in the world, called Regus, they went broke. Why? Because if you’re the marginal supplier, when things are good, everybody uses you. When things start to soften, you’re the first one to feel the impact.

The idea that WeWork was some kind of technology company, I didn’t understand that, unless maybe they came up with a special way to underwrite beer or something, but it was basically a giant promotional effort. It was just the Enron of real estate.

Peter Attia: It’s funny, hearing you describe it in marginal terms, makes 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 2008 — 

Sam Zell: Exactly the same thing.

Peter Attia: Is once the marginal cost became below the cost of crude, you’re hosed.

Sam Zell: Well, just think about it. What was WeWork’s competition? It was this plug at Starbucks. In other words, the guy came 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 coworking space.

Peter Attia: First of all, that insight to me 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?

Sam Zell: But come on, how can it not be obvious? Where did these guys come from? They came from Starbucks.

Peter Attia: That’s just such a great way to think about it.

Sam Zell: The question that I keep asking people about WeWork was, just tell me the cash flows that they were generating, where did they come from? Did they come from profits in other businesses or did 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. 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 WeWork has spawned. Most of them have been spawned because WeWork sold this technology concept, but the reality is that they’re creating new WeWorks all the time, just calling them different things.

Peter Attia: 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 are going to invest in.

Sam Zell: Yeah, that’s why although we have been agnostic and we’ve been in 25 different or 30 or 50 different businesses, but the standard has always been, “If I can’t run it, then I don’t want to own it.” So we don’t do rocket engines, we don’t do biotech — because if the proverbial hit the fan, I could always step in, and there’ve 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.

Peter Attia: Another principle of yours is sort of everybody has to have skin in the game.

Sam Zell: Well, to me that’s not a principle, that’s just basic logic. If I’m depending on you to perform and you aren’t at risk, I’m a fool. 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 position in my firm always had a piece of the action, and that piece of the action required an investment. It might be a very small investment, but relative to their net worth, it was meaningful, and they had skin in the game.

Peter Attia: Speaking of your firm, Sam, 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 extent of loyalty that has followed you. You tend to collect people. They don’t really go anywhere.

Sam Zell: Yeah. I don’t know whether they’re collectors, I never thought of that in terms of collection, but I think it’s true.

Peter Attia: But they don’t leave, right?

Sam Zell: You 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 20 and 30 years. Obviously, I take great pride in the fact that they have had the confidence level to stay with me all these years, and in many cases, in different roles. That’s always been part of it. 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 him do business A or business B. Because I think in the end, the success or failure is really a function of how good a businessman you are, how good are you at 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 kind of happened to me. But 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 30 some odd years and only four years ago did I discover there was a door on the office, because I had 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.

In 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 work every day and there’s no secrets — One of my favorite words is: the enemy is without. In other words, we did a little drawing of 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. That’s always been a critical part of the way we think and the way we operate.

Peter Attia: 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?

Sam Zell: Well, the answer is, in the end, nothing is more important than, in effect, facilitating people to test their limits, reach their goals. She sat down with me and said, “I’m at a stage in my life where I really need to change how I’m thinking.” Although I didn’t necessarily envy her or want to 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.

Peter Attia: What does she do today?

Sam Zell: Still works for me. She doesn’t do any holy roller stuff, but, in effect, that experience is very relevant to what she does in her eleemosynary activities and other things, which is wonderful.

Peter Attia: 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, that there’s more to that story. So tell me a little bit about how you think about these gifts.

Sam Zell: Well, I think you’ve got to go back to 1976. I had been in business for give or take, I don’t know, eight years, and I had started getting chocolates and all kinds of Christmas things, pens, pencils, and I felt motivated and felt that I had to somehow 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, it’s just crazy. That wasn’t who I was.

So I decided that what I was going to do, was I was going to send out to people some memento of where my head was at that particular year. The first year I sent out just a simple Lucite 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. Then when you do something for a very long period of time, it tends to get out of hand. And so, by 1994, the idea was, “Well, let’s do a music box.” So we did a little automaton with a music box and it happened to be a Bee Gees song, but basically talking about where we were and where the real estate industry was. Then we kept going and we did that for another 20 years.

Peter Attia: How much time goes into preparing that?

Sam Zell: Well, the answer is a lot. We ended up doing a lot of these very complicated automatons and 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.

Probably the most significant example of that was December 31st, 1999. 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. The song was Paul Simon’s “50 Ways to Make a Billion.” I basically made fun of the idea that people had just thought that it was just so easy. The idea for that year’s gift had come when somebody said to me, “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.”

Peter Attia: You’re kind of a lifelong student. Earlier, you alluded to the fact that a big part of how you mitigate risk is to know as much as possible about your world. When you were investing in dimebag stores on the side of Ann Arbor blocks, the world was a lot smaller than it is today. How do you stay abreast of your environment and the environment you invest in today? What do you do to learn?

Sam Zell: 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 to sift through volumes of information and only remember the parts that are relevant. I read maybe one and a half books every two weeks and most of them are escapist novels. When I read them — it’s Grisham, it’s Baldacci, it’s whatever it is — it’s just I’m very involved. I love reading them. The day after I finish them, I can’t remember anything about them. I don’t remember who the protagonist was, and I don’t remember anything, but if there was a description of Berlin, I remember the description of Berlin because that in effect has potential relevance going forward.

Somehow or other I’m able to get rid of what I call the non-relevant information. Great 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 typical of this is, I was on a motorcycle trip in Chile and last day it rained like crazy and we cut the trip short by a day. We started coming home early, and I realized that we were going to get home at three o’clock in the morning and that didn’t make a lot of sense.

So we were trying to figure out, “Well, geez, 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 shootout on a golf course on an island in the Caribbean, and that this golf course was part of a resort and they had an international airport inside the resort. We ended up coming up with the name of the airport and the name of the resort, and we ended up landing there and spending the night and then coming back to Chicago at four o’clock the next afternoon.

But that was really typical, somehow or other, the only thing about the story that I could remember was this thing unique scenario of international airport inside of a resort. I don’t remember anything else about the book. I don’t remember anything other than the shootout 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. It’s that kind of segmentation and absorption that I think contributes to the decision-making that I am constantly making. I’m constantly adding and increasing my knowledge of everything in every direction I can.

A number of years ago, I went to Ulaanbaatar. Why would I go to Ulaanbaatar? Well, Ulaanbaatar happens to be the capital of Mongolia. I had read someplace that they had opened a Gucci store and another high-end retail store in Ulaanbaatar. And I said, “Why would they do that?” It turned out that the country was in a giant resource boom. So I said, “We’ve got to go and 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’ve got to see the problems, you’ve got to see the solutions, and you can’t see them from afar — you’ve got to see them upfront. That’s why I end up traveling 1,000 hours a year on my plane, but a typical CEO of a Fortune 100 company travels 250 hours a year.

But I’ve got to see everything. 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.

Peter Attia: 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 destinations, like Iraq and Syria.

Sam Zell: Yes, I don’t take vacations. And matter of fact, that word is kind of foreign to me. I’ve never been one to sit on a beach — I don’t know how to do that. I just want to see stuff. One of the great stories that my wife and I talk about is that we went to Syria right before Syria came apart. We went to Damascus and we went up into the various parts of Syria. We had one day that we just didn’t have enough time. So we said, “Well, we’ll go to Aleppo next time.” In between, of course, Aleppo was destroyed. 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. It was run by a company called Freeport-McMoRan out of New Orleans. I ended up at a conference sitting next to the CEO and I said, “I just read about this incredible mine and I want to go see it.” And he said, “Just tell me and I’ll set it up for you.”

So we flew into the jungle where there was an airport literally built into the jungle just to see the mine. We went up to the mine and saw stuff that I’ll never forget. So it’s curiosity. You can’t be an entrepreneur, you can’t be a risk-taker, unless you’re also just ape about knowledge, and you’ve just got to keep absorbing — 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. So you’ve got to be able to sort it out.

Peter Attia: And you alluded to that earlier when you talked about your very first Christmas gift, which had a quote about — what was the exact quote? 

Sam Zell: “We suffer from knowing the numbers.”

Peter Attia: 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?

Sam Zell: Well, the origins of that sentence, “We suffer from knowing the numbers,” really reflects that there have been numerous times in my career when everybody else was doing stuff and I wanted to do it too, except I knew too much. I 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 thinker.

Peter Attia: So you actually are praising the knowledge there and not criticizing it?

Sam Zell: No, I’m not criticizing it at all. I’m saying that it’s a burden. It’d be so much easier if I didn’t know so much, then I could just say, “Hey, everybody’s buying the FAANG stocks. Jump on the bandwagon.” But that’s just not the way I think. I’ve spent my whole life trying to separate what other people think is cool and what I know is something different.

Peter Attia: So you’re in your 70s, 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 another context, but I know the answer — 

Sam Zell: Retire?

Peter Attia: Exactly. What does retire mean to you? Retire would mean stopping something that is — 

Sam Zell: Retire from what?

Peter Attia: Yeah, exactly.

Sam Zell: I haven’t worked since the fourth day that I was in that law firm.

Peter Attia: Or as my dad used to tell me, “Make your vocation your vacation. You’ll never work a day in your life.”

Sam Zell: That’s exactly what I’ve done. I’ve spent my whole life, I’ve loved everything. I love getting up in the morning. I never found myself getting up in the morning and saying, “Oh, my God, I’ve got to go do this again.” 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.

Peter Attia: 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 401(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 2019. 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?

Sam Zell: Well, when all is said and done, you have to think from the perspective of what I call “pure logic.” For 25 years, and people ask me about interest rates, for 25 years the United States, the risk-free rate of return was 5.6 percent. If the risk-free rate today was 5.6 percent, the country would be broke as with the rest of the world. So you start with the assumption that the world we live in creates a set of limitations. I think one of those limitations, today is that nobody can afford for interest rates to go up. Therefore, I think that, and with the amount of debt being created, that’s even more the case today.

I think that, number one, I think we’re probably, I don’t think we’re in a bullish environment despite the fact that the 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 “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 going to continue to be positive.

I’m very sensitive to the question, which I get all the time, about “What inning are we in?” I also think that people aren’t focused on, what I think is even more important question, “When did the game start?” In the stock market, it was January or February of ’09, but if you were in the real estate business, the real estate business was really terrible in January of ’10, and January of ’11, and January of ‘12, and only started beginning to get better in ‘13 and ‘14. 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. Substandard growth I think is also recessionary in effect defers recessions. So I think it’s very likely that we will continue to bounce along till the beginning of ’21, 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. As you see 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.

Peter Attia: Yeah. That’s the weird thing, isn’t it? It’s sort of like having a fire department that’s low on water.

Sam Zell: Well, that’s one way to look at it, but I think another way to look at it is, 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.

Peter Attia: Yeah. Yeah. Slow drip with sprinklers.

Sam Zell: Yes.

Peter Attia: Well, I like the way you’re thinking about that, and I like your optimism. In terms of the US’s position globally, Sam, look, in the ’80s, 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?

Sam Zell: Well, I guess you’ve got to start by the fact that I think that China has been taking advantage of the United States for 20 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 going to behave differently. The reality is they have 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. 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 going to change the terms of the game.”

Peter Attia: 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?

Sam Zell: Well, 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. One way or another, we have to find a middle ground where China can continue to prosper and grow, but not in the mercantilistic fortune by identifying five industries that they’re going to pour capital into to take over AI and stuff like that. We can’t afford to let that happen.

Peter Attia: 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?

Sam Zell: 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.” I never fantasized of any 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 going to have less challenge financially than I did, 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. 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 to truly excel at whatever turns them on.

Peter Attia: Last question, Sam. Outside of your business world, what problem are you most interested in? I know that your wife, who I’ve had the privilege of meeting, Helen, is very involved philanthropically. As you think about your priorities over the next 20, 30 years — 

Sam Zell: Let us pray.

Peter Attia: Where do you see the ability to apply your problem solving, your resources, to problems that go beyond your day-to-day problems within business, which is you’re constantly a problem solver there?

Sam Zell: 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. 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. I’ve been very concerned about what’s going on in 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.

Peter Attia: 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?

Sam Zell: I hope that’s the case, but I’m not sure that is the case. I’m not sure that the perpetuation of standards in universities or in the workplace is not changing our society in a way that ultimately is going to be deleterious to the future, and to the opportunity for our children and our grandchildren.

Peter Attia: Well, Sam, I know that for you to sit down for this long is a big ask, so I am 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 20. We might have scratched the surface of five or six of them. But I want to thank you so much for your time today and I’ve enjoyed this discussion as much as any I’ve had with you.

Sam Zell: Well, it’s my pleasure. it’s very fulfilling to think that people will listen to this conversation and will reach their own conclusions and find what parts of it resonate with them. If I’ve created that kind of an opportunity, then the time spent is very, very, very cheap.

Peter Attia: Thank you, Sam.

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