#367 Inside the Contrarian Mind of Sam Zell

**David Senra** (0:00)
One of the craziest things that has happened as a result of the podcast is a few years ago, I read Sam Zell's autobiography, and then I made an episode on what I learned from reading Sam Zell's autobiography, and Sam Zell listened to the episode that is about his autobiography and asked to meet me as a result. And in that autobiography, he talks about the impact that his partner, Bob, had on him. And here's one of the stories from his autobiography. He says, Bob was extremely frugal and watched every single nickel in our business. Bob was constantly on the lookout for anything that could be reused. He used to walk into somebody's office and while talking, would casually rummage through the person's trash can. He would take out stacks of papers that still had paper clips on them, all while continuing his conversation as though nothing out of the ordinary was occurring. Bob would then just pull those paper clips off, hand them back to the employee, conclude the conversation and walk out. This is a trait that Bob and Sam shared. In this book, there's a quote that says, in a trademark Zell move, he focused on aggressive internal cost controls. I spend a ton of time reviewing all the lessons that you and I are learning from this podcast. So I reread old highlights, notes, I search through transcripts. I even built an AI assistant called Sage that helps me do this. And so this week I was asking Sage, why do you think history's greatest entrepreneurs are obsessed with this? Why are they all obsessed with controlling their costs, with watching their expenses? I mean, look at this. Look at the story that Sam just told us. His partner is walking in and rummaging through the trash can. He is not the only one that is reusing paper clips. That story has been told in another book called The Invisible Billionaire, which is about this guy named Daniel Ludwig, who at one point was the richest man in the world. And there's a story in that biography where Daniel is chastising his employees for wasting money by sending paper clips through the mail. And so I think this concise summary that was made by my AI assistant is a really good explanation of why this theme reoccurs throughout the history of entrepreneurs. And it says, diligent cost management is not just a tactical choice, but a strategic imperative that underpins sustainable growth, competitive pricing and long term resilience. Whether the focus is on frugality, waste prevention or the avoidance of unnecessary expenses, the outcome is the same, enhancing value for customers and stakeholders alike. I thought that summary was so good, I just texted it to my friend Eric. Eric is the co-founder and CEO of Ramp, and Ramp is now a partner of this podcast. I've gotten to know all the co-founders of Ramp, and I've spent a ton of time with them over the last year or two. In fact, I was in their office last week in New York. They all listened to the podcast, and they picked up the fact that the main theme from the podcast is on the importance of watching your costs and controlling your spend, and how doing so gives you a massive competitive advantage. And that is why Ramp is a perfect partner for the podcast, because that is a main theme for Ramp. The reason Ramp exists is to give you everything you need to control your spend. Ramp gives you everything you need to control your costs. If you're listening to this podcast to learn from history's greatest entrepreneurs, so you can become more like them, then you have to be obsessed with cost control. There is a line in Andrew Carnegie's biography that says, Cost control became nearly an obsession. I read this great description of Ramp from one of their customers. It says, Ramp is like having a teammate who you never need to check in on because they have it handled. Ramp's website is incredible. Make history's greatest entrepreneurs proud by going to ramp.com to learn how they can help your business control costs. That is ramp.com.
A question for Sam Zell. A number of people at the company have been deeply offended by some of the statements that you've said. I wondered if you would address that here because some people have felt personally disrespected by some of your comments. This is Zell's response. First of all, I would not take back anything that I've said. Turn this around and put yourself in my position. You look at a company that requires 14 signatures for somebody to go to the bathroom. You look at a company that requires 10 signatures for somebody in York, Pennsylvania to buy a $10,000 Jeep. You listen to people in the newsroom, literally talk about their total disregard for the company. That it's all about, how do I win a Pulitzer Prize, and I don't really give a shit about anything else. You hear attitudes that we don't do it this way. No, we can't do that over and over and over again. I've got 19,000 people out there. The challenge for me is how do I get your attention? Call me a schmuck and that's fine. Call me disrespectful of somebody, then you need to prove it. I don't think anything I've said anywhere was directed at anything more than this company lives without the 11th commandment. And God damn it all, we better get that 11th commandment back on the front page here. The 11th commandment is, thou shall not take oneself seriously. Nobody is more self-deprecating than I am. If I can get everybody in this room to be self-deprecating, instead of worrying about what's politically correct or what's not, instead, worry about how do we win? How do we succeed? How do we put out a better product? How do we make more revenue? How do we make a profit? How do we provide for our retirement? Those are the challenges. The real question for me is, how do I get your attention? How do I get you to have a sense of urgency? How do I get you to understand that the future of this company is currently right out there in front of us? And if we keep operating the way we've been operating in the past, there is no future. Plain and simple. So you tell me, how do I get everyone's attention? Do I just say, please, hi, I'm here, and I'm here to make all nice to you? We're not going to reduce any employment. We're just going to keep going on losing money. And then one day, it's all going to be over. So how am I supposed to get your attention? I went over the line on purpose, not accidentally. I went over the line on purpose to see if I could bring you to the edge. That's what we've got to do. I've got to get you to the edge. I've got to get you more worried about our revenue than anything else because that is our survival. How soon is this organization in the company going to wake up to the fact that we're on the edge and we're either going to win or lose and we better goddamn focus our efforts on how we get better. Not on who's insulted. Nobody is trying to insult you. I want to win and what I'm looking for are the people in this company who were prepared to step up and not worry about this fucking thing or that fucking thing, but to worry about one thing. How the fuck do we win? How do we generate more revenue? How do we make a difference? Those are the challenges. How do we create an enormously successful corporation that provides both opportunity and sustenance for employees today and a future for them tomorrow? That is the challenge. That's what everybody should be talking about. Not my fucking language, because that doesn't matter. And if it does matter to you, you're in the wrong place. And I'm not trying to insult anybody. I'm trying to get your attention. I'm trying to get you to understand that this is the game and we're either going to win it or we're going to lose. If we spend an awful lot of time writing and pontificating about Sam's language, we're going to lose. If we spend a lot of time trying to figure out how we're going to generate more revenue, then we're going to win. So that's my priority. And if that's not an apology, too fucking bad. I'm telling it to you straight. I'm not disrespecting anybody. I'm trying to make everybody uncomfortable. I'm trying to put you in a position where it ain't so easy like it was before, because that's the only way we've got a chance. This company lost $50 million of cash flow last year, and you never would have known if you talked to anyone around here. Nobody knew it. Nobody cared. This business has been eroding before your eyes, and you're worried about my language. Why aren't you worried about your customers? My language ain't going to make any difference. Everything I've said was with an intent to get everybody off their asses and understand this is a crisis. We've got to save this business. We've got to make it work. We've got to prioritize. The history of this company is to divert from reality. The reality is revenue is going down like this. So, let's focus on Sam's language, not on the fact that we're going right down the elevator shaft. Now, how many articles did you read last week about my language? And how many did you read about the reduction in revenue in the newspaper business? I rest my case. Anyone else have any easy questions?