Am I Being Too Subtle

That, in my definition, is an entrepreneur. Someone who doesn’t just see the problems but also sees the solutions—the opportunities.

The bottom line is if you’re really good at what you do, you have the freedom to be who you really are.

I remember this event so clearly because it was at this point in my career that I fully realized the value of tenacity. I just had to assume there was a way through any obstacle, and then I’d find it. This is perhaps my most fundamental principle of entrepreneurialism, and to success in general.

My takeaway was a whole new respect for simplicity. Development required multiple steps, and every step meant one more chance for something to go wrong.

Opportunity is very often embedded in the imbalance between supply and demand. It could be rising demand against flat or diminishing supply, or flat demand against shrinking supply.

To me, that is the essence of being an entrepreneur—to not just recognize problems but to provide solutions.

Boards that don’t exercise an ownership approach are complicit in poor-performing companies.

risk-taking rests on the ability to see all the variables and then identify the ones that will make or break you.

In addition to looking at worst-case scenarios, I look at how hard something is to execute. The simpler the goals and the steps to reach them, the more likely I’ll be successful. And if they aren’t simple to begin with, I look at how I can untangle the complexities.

Seeing potential opportunities is one thing; knowing how to take advantage of them is another.

I’ve always believed in buying into in-place demand rather than trying to create it.

As a risk-taker, my greatest fear is not having information that might protect me from making a mistake. The only way I can do that is to create an atmosphere where there are no silos—where everybody knows everything that’s going on. I tell people “No surprises” and I mean it. I’m confident enough to believe that if I catch a problem early on, we’ll be smart enough to fix it. So, don’t hide things. Relax. We don’t kill the messenger around here.

I never hesitate to pursue a new endeavor just because I haven’t done something similar before. I

My definition of “win” is not binary. It is not a zero-sum game. Negotiation that leads to a winner and a loser rarely leads to a successful transaction, or another one down the road.

Don’t take yourself too seriously. I have to restate it because so many people do. Ego and pride have their places, but when they are not self-regulated, they can be detrimental, if not debilitating.

“The definition of a schmuck is someone who’s reached his goals.” It’s up to me to keep moving the end zone, and go for greatness.

I run my company as a meritocracy with a moral compass. And for those who raise their eyebrows at that statement—who think you can’t get to the top unless you beat the crap out of everybody—you’re wrong. When you’re a repeat player, when your world is your business and your business is your world, it’s all about long-term relationships. In any negotiation I believe in leaving a little bit on the table. And in any relationship I believe in sharing the stakes. I’ve been doing deals with many of the same people for decades because the goal is for us to all come out ahead. And many of my employees have been with me for twenty or thirty years or more because if I do well, they do well.

Frankly, there’s no substitute for limited competition. You can be a genius, but if there’s a lot of competition, it won’t matter. I’ve spent my career trying to avoid its destructive consequences. Competition skews people’s assessments; as buyers get competitive, the demand for assets inflates pricing, often beyond reason.

I believe in the radius theory of business, where your ability to succeed is ultimately limited by the number of people between you and the decision. That’s because the farther from you the decision is made, the less you control the risk. History shows that businesses get buried when they don’t delegate enough—but also when they delegate too much.

So I leveled the playing field by making the invitations—and the tickets to get in—T-shirts. Guests, no matter who they are, cannot be admitted to the party without wearing their shirts in some shape or form. People make their shirts into ties and hats and skirts and scarves. Randomly—and perfectly—the dress competition I strove to avoid evolved into a creativity competition on how to “wear” the shirts. You can’t imagine the pleasure I get walking into the venue and finding eight hundred people dressed in varying expressions of the same T-shirt. It’s delightful, and it creates instant camaraderie and conversation starters.

And great entrepreneurs are always great salespeople.

I stay true to the fundamental truths: the laws of supply and demand; liquidity equals value; limited competition; long-term relationships; and the others I’ve covered. They offer a framework through which I view potential opportunity.

I am always questioning, always calculating the implications of broader events. How will worldwide depressed currencies affect capital flows and world trade? Does it create opportunity for international expansion among multinational companies? What real estate needs will they have? How can we get a first-mover advantage into new markets? And on and on. Luckily, I don’t need much sleep. If there’s one consistent theme, it’s that I’m always on the lookout for anomalies or disruptions in an industry, in a market, or in a particular company. Recognizing the psychology of market extremes can lead to attractive points of entry.

“You don’t go wheeling and dealing for the money, you do it for fun. Money’s just a way of keeping score.” And that’s how I see it. I’ve always been much more drawn to the experience.

Where there is scarcity, price is no object. This basic tenet of supply and demand would later become a governing principle of my investment philosophy.

But my experience with Mrs. D was also about the value of really listening, which is at the heart of any negotiation. Understanding what’s truly important to the other person out of the dozen or so things they might tell you. Mrs. D’s brother had to be taken care of. That was her bottom line. Homing in on that got the deal done.

Jay taught me to use simplicity as a strategy. He had an uncanny ability to grasp an extremely complex situation and immediately locate the weakness. He always said that if there were twelve steps in a deal, the whole thing depended on just one of them. The others would either work themselves out or were less important. He had a laser focus on risk.

Virtually everyone on the team had a piece of everyone else’s deal, so while we always had a healthy level of lighthearted internal rivalry, everyone also went out of their way to make sure the other person’s deal succeeded. That basic principle has never changed over the decades.

We were rich in assets but starved for cash, and the insatiable need for capital dominated my waking hours. There were weeks when our billion-dollar company was scrambling to scrape up enough money to make payroll.

“If you really understand it, you don’t need a book,” I said. “You could put it on a single piece of paper.” They looked uncertain. “I assume this says things are going to be great, right?” They nodded. “What happens if you’re wrong? How do I get out of the room?” “What do you mean?” Randy asked. “How bad can it get?” “Well,” he said, “it’s pretty bad now, and if we fail to fix it you could lose some operating capital. But I don’t see a station in Denver ever being worth less than $4 million. I mean, the building, the transmitter—the physical assets alone are worth close to that.” “Okay, great. How good could it get?” The answer, in short, was very good. So I said, “Go do it.”

Believe me when I say that when we bought into manufactured homes, nobody in the sophisticated real estate world had ever gone close to one of these communities. It wasn’t even on their radar screens. But we didn’t care that we were going to get labeled as mobile home guys or hear jokes about being “trailer trash.” We were nomads in search of opportunities and returns.

The most reliable measure of our buildings’ value remained—and had always been, in my opinion—replacement cost. Replacement cost mattered more to me than rents or comparable prices or vacancies or economic growth or stock price. This was because replacement cost determined the price of future competition.

The answer is a definitive no. I never allow my personal feelings to interfere with my duty to the shareholders, or even with my own private investments. Sentimentality about an asset leads to a lack of discipline.

taking risks is really the only way to consistently achieve above-average returns—in

I chose not to invest because of what happens at the end of every commodity cycle—more supply than demand.

As you know by now, I love a market or deal that is starved for investors.

“You’ve got to be able to look at the deal and know what it hinges on to know whether it works or not. If you realize that the key component works, then you use the numbers to test it. You don’t do the numbers to find out eight hours later whether it was worth starting.”

That means I put my money behind theirs (say $150,000 of my money to $30,000 of their money), and if our investments or funds achieve their minimum target metrics, my people get returns based on the aggregate ($180,000).

see a trend or anomaly, outline a general direction, and say, “Let’s go.” My people get together and debate all the variations that direction could mean, and then they go off and try to prove they are right in their particular interpretation. It is an R&D approach to opportunity. And it creates a healthy internal competition, a charge in the atmosphere where everyone is propelled by the other to do their best. At the same time, as I’ve mentioned, everybody shares the spoils and risks of whichever deal wins the day. So even if your deal isn’t picked, you want the other person’s to succeed.

Everything I do is predicated on the assumption that there’s another deal. And the way you get to the next deal is to play it straight.

But a quarter of a point means relatively nothing in this transaction for us, and it guarantees that every single buyer makes a profit the moment they buy the issue. And if everybody’s a winner, they’re gonna come back.”

The teen years are usually all about fitting in, but in that moment I discovered that fitting in just wasn’t important to me. I was more comfortable standing apart than I was in searching for a common denominator with others. I could embrace my tendency to go against conventional wisdom. And it would later end up defining my career.

But the question is still interesting, because they actually left me with so much more than money. It was an inheritance of intelligence, curiosity, drive, resilience, and self-determination. They instilled in me a commitment to learning and an understanding of how to apply it in real life, to challenge convention—to leave when others stay, to be aware of risk and prepare for it. I certainly feel “self-made” in one sense, but in another I recognize the incredible contribution of my parents in shaping my values and success.

The wisdom of crowds sometimes means finding the lowest common denominator.

That guy had a sense of logic and orientation that was completely foreign to me. He never had a doubt. Priceless. That experience never left me. It was a lesson in the value of how much you learn by seeing people in their own environments. Today I could probably get just about anybody to come to my office for a meeting, but that wouldn’t tell me much. Instead, I spend over a thousand hours a year on my plane traveling around the world to meet with people. I want to see what they are like on their home court, how they treat their people and the examples they set.

While I was unaware of it at the time, my real compensation for that job wasn’t monetary. It was learning about and getting comfortable with rejection. And as I would later realize, indifference to rejection is a fundamental part of being an entrepreneur.

I was creating structures and terms that had never been done before. I went to Jay and took him step-by-step through this incredibly complicated transaction. And damn it if he didn’t just look at me and say, “But, Sam, isn’t the real key to this whole thing just to rent the office space?” And sure enough, that’s what the whole transaction was predicated on. Jay’s level of intellectual rigor really appealed to me. And I immediately latched on to the understanding that I could cut right to the heart of something complex if I broke the problem into pieces. It was a matter of organizing my thinking. A discipline. It brought me back to seventh-grade social studies where I learned how to create an outline. It was the same core concept, just applied at a more sophisticated level. I still apply it today.

Also, board materials are prepared with all relevant information prior to meetings. Board members are expected to read the materials in advance, and the real purpose of the meetings is to generate robust discussion. Our board meetings are often raucous, with frequent interruptions, questions, and commentary. As a result, our companies have always benefited from the combined wisdom of our directors.

If you’re not aware that you’re not supposed to be able do something, the barriers to doing it are dramatically lessened. It didn’t matter that students hadn’t done it before, or that the role was always performed by professional management companies. That desire to take a risk, to test my limits, to ask “Why not?” was part of my DNA, and I don’t think I’ve changed that much since.

Trust was one of his abiding principles. He’d always bet a lot more on the person than on the deal.

We had unquestionable, 100 percent trust in each other. We never had a written partnership agreement, and we lived out of the same checkbook. If he was building a new home for his family, he’d take a draw from our joint company money. If I was building a new home for my family, same thing. We never had to account to each other for anything we spent.

I went on to outline what our industry had to do if it was going to thrive on Wall Street. Boiled down, it was all about transparency, predictability, and accountability. We had to earn investors’ trust.

Beyond that, our culture is driven, creative, playful, effective, and smart. We encourage confidence and nurture the ability for you to have an opinion—and to back it up intelligently.

I believe loyalty defines your character. Do you stick with your friend, colleague, or partner when it’s not easy?

Redundancies are much more predictable and transparent than theoretical opportunities to add value. My focus is always on the downside. Overly optimistic assumptions lead to the graveyard of corporate acquisitions.

I don’t write a job description and then look for someone to fit it. I find talented people who fit my organization and then look for ways to use them. Most of the time that system works as expected. When occasionally it doesn’t, it’s abundantly clear.

An entrepreneur is anyone who is independent, creative, inventive, and willing to take risks.