Episode 569: Richard Baker: Entrepreneurship Lessons From Billion Dollar Deals and Bold Risks

**Jen Cohen** (0:01)
Hi, guys.

**Richard Baker** (0:01)
It's Tony Robbins. You're listening to Habits and Hustle. Crush it.

**Jen Cohen** (0:06)
Hi, everybody. We have welcome to another episode of Habits and Hustle. I have a funny guest on today.
Not really that, well, I don't know, but you seem like you're very, you've got a lot of levity. His name is Richard Baker, and I would say he's going to probably give you a better definition of what he does. But let's just say he owns and runs the largest real estate private company in the country.

**Richard Baker** (0:31)
One of the largest private owners of shopping centers in the United States, let's leave it at that.

**Jen Cohen** (0:35)
Let's just say he's extremely successful in the real estate space, and we're gonna learn a lot from him on negotiation, deal structure, sourcing opportunities, seeing all the things business. So before I make more of a mess of this, why don't you describe in a few sentences who you are and what you do? Sure.

**Richard Baker** (0:56)
So basically, I think of myself as a small time entrepreneur, and I just did a lot of deals over and over and over. So when you add it all up, it turned out to be a big thing.
I started out working with my father in the real estate space, and there was this company that had no stores east of the Mississippi called Walmart. It's a long time ago, and I said, wow, I should go visit these people in Bentonville, Arkansas. So I got on a plane and I sat in the offices for two days of Walmart. Their real estate offices were like trailers, literally trailers, and I ended up meeting them.
We had a good time and got along and we developed a relationship, 21-year-old Richard Baker and the team at Walmart. Eventually, I started developing Walmart anchored shopping centers throughout the eastern portion of the United States, and I ended up building 50 Walmart shopping centers, of which we own all of them still today, and we leased them the properties, and all of those development deals required zero cash. So we structured every deal where we were able to borrow all the money from the bank. So no partners, no investors, and we used leverage in order to do that, and that's one of the themes that we talk about a lot today. And then from that, I went on to acquire sort of end of life department store chains. So imagine Lord & Taylor in the United States, Hudson Bay in Canada, Germany, Belgium, the Netherlands.

**Jen Cohen** (2:33)
All over the world?

**Richard Baker** (2:34)
All over the world.

**Jen Cohen** (2:35)
To Hudson Bay, like I'm Canadian, so that's how I kind of got hooked on it. Like wow, I remember, I grew up with that.

**Richard Baker** (2:41)
I bought the Hudson Bay Company in July 19th of 2008, about five minutes before they were going to go bankrupt because the financial crisis was hitting. And I bought it and merged it with Lord & Taylor, which was another sickly US department store chain. And we kept both of those businesses going for 15, 16, 17 years longer than they otherwise would have.
But this is a difficult world. We monetized those businesses. We created as much value as we could. We kept as many people working, as many vendors, supplying inventory and going. But at the end, those two particular businesses got put to bed and no longer exist.

**Jen Cohen** (3:24)
But wait a minute. So you bought Lord & Taylor first in 2006, right? Wasn't that for like a billion too, right?

**Richard Baker** (3:30)
I bought it for $1.2 billion.
But when I bought it, it's kind of a funny story. I bought it as a real estate developer. So real estate developers don't normally buy $1.2 billion companies.

**Jen Cohen** (3:43)
Well, let me say this because I think this is what's confusing to me initially, and you owned both. You owned the luxury retail market, Saks and Lord & Taylor are going to get into that. But you also own the real estate that it's in, which is very rare.

**Richard Baker** (3:59)
I started in mid-tier operating companies and then I moved into, as you said, luxury retail companies. But all of it was based on real estate. I only bought the businesses in order to capture the real estate. When I bought all of these businesses, I financed them 100 percent of the purchase price or almost 100 percent against the real estate. Then we monetized the real estate and created value and did everything we could to keep the operating companies together and as strong as possible.