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The art of entrepreneurship requires the ability to look at life through a different lens from anybody else, said billionaire Sam Zell, chairman of Equity Group Investments.
All his life, Zell said, he could observe his surroundings and see ways for improvement. “I walk down the street, and I see a guy painting a wall,” Zell said, “and I can’t help myself. I look at it and say, ‘Gee, if you moved the ladder another six feet this way, then he could more efficiently paint the wall.’”
The entrepreneurial real-estate magnate spoke to students in the Executive MBA Program May 25 at Gleacher Center. Dressed informally in jeans, Zell stressed motivation over intelligence and seeing solutions over seeing opportunities.
Being an entrepreneur requires self-motivation, self-confidence, courage, and conviction to head away from the pack, he said. “It’s really hard to make significant margins if you are walking down the street with everybody else,” Zell said.
He told how in the 1980s, he had warned the real estate industry that “the end of the world was coming” because real estate had been turned into a commodity. He also predicted the low period would carry with it tremendous opportunity. The last article he wrote about it was called “From Cassandra, With Love,” referring to the Greek figure legendarily cursed by the Gods with making accurate predictions nobody would believe.
In fall 1988, he said he worked hard to raise a first fund of $400 million, then started buying empty office and apartment buildings around the country. “And every now and then I would turn around and look over my shoulder to see where everybody else was. And there was nobody there.” It happened for so long that Zell said, “I had to re-convince myself that I was right,” he said. “Going right when everyone else is going left requires enormous courage and enormous conviction.”
An entrepreneur also has a “higher appetite for risk,” he said. “You can’t create capital unless you’re willing to not be right all the time,” Zell said. “Our whole philosophy is: be right 70 percent of the time, know what your downside is on 30 percent of the time, and go for it.”
Zell is in the process of acquiring the Tribune Company, which includes the Chicago Cubs professional baseball team. Public interest has been high in what will happen under Zell’s control.
“I promise you I don’t know anything about the newspaper industry,” Zell said. “Within the world of conspiratorial thinking, the obvious assumption is that I have some extraordinarily devious path and as soon as I get control, I’m going to turn the newsroom over to the elephants or I’m going to bring the American Conservative Union into the pressrooms.
“But the answer is, I have the self-confidence to believe that given the right structure, given the right kind of analysis, and given the right kind of management, we can succeed,” he said.
As for the Cubs, Zell said that organization pays a ballplayer $20 million a year “to be right one out of three times, to get a hit one out of three times,” and he plans to sell the team. “You can’t believe how many people want to own the Cubs,” Zell said. “That means there’s economic disarray ahead of us, in terms of anybody making a rational economic decision. And my goal is to take advantage of that.”
The Tribune Company was not Zell’s first media buy. In 1995 Zell bought his first radio corporation at a time when no one owner could own more than 17 stations. Then in February 1996 the telecom industry was deregulated. The only limitation was no one owner could own more than 40 percent of any given market.
Zell made his move. He called in management and said, “Gentlemen, this is your moment. You need to go out and buy every radio station in America.”
By mid-1998, Zell had gone from owning 17 stations to owning 234. He sold them to Clear Channel for $6.9 billion.
“It takes conviction to see an opportunity and execute it,” Zell said.
Zell struck a chord with the MBA students. “He was the perfect speaker particularly for the Executive MBA program, where all of us work full time,” said student Sara McVey. Faced with a rigorous academic program and possible career changes on the horizon, “you just stick to inside the lines,” McVey said. Students can feel good about “someone like him giving permission to go outside the lines.”
—Mary Sue Penn