Podcast Episode 13 The Art of the Deal

Question 1

Book Title: The Art of the Deal

Answer 1

About the Authors: Donald Trump

Question 2

Donald John Trump was born on June 14, 1946, in Queens, New York City. Before entering politics, Trump had a successful career in real estate as a businessman and television personality. He is the fourth of five children of Fred and Mary Trump. Donald Trump attended the Wharton School of the University of Pennsylvania, graduating with a degree in economics.

Answer 2

In the 1970s, Trump joined his father’s real estate development company, eventually taking over and renaming it The Trump Organization.

Question 3

Over the years, he became known for his high-profile real estate ventures, including Trump Tower in New York City and various luxury properties around the world. He also gained national recognition by being the host of the reality TV show “The Apprentice.”

Answer 3

As the 45th President of the United States, Trump’s presidency was marked by a focus on economic policies, tax reforms, deregulation, and a commitment to conservative judicial appointments.

Question 4

“The Art of the Deal” is a memoir written by Donald J. Trump and author Tony Schwartz, published in 1987. The book provides insights into Trump’s business career and his approach to deal-making. It covers Trump’s early real estate ventures, his involvement in high-profile projects like Trump Tower, and the challenges he faced.

Answer 4

The central theme revolves around Trump’s business philosophy, which emphasizes boldness, persistence, and negotiation skills. The book offers anecdotes from Trump’s various business dealings, providing readers with a glimpse into his mindset and strategies. It also delves into his experiences, successes, and setbacks in the real estate industry.

Question 5

He describes a typical week in his life, how he got started in real estate, breaking into the New York real estate and New Jersey Casino scenes, and trying to get the US Football League started (a competitor to the NFL).

Answer 5

After reading this book, my main impressions of Donald Trump are that even at 40 years old, when he wrote this book, he was driven, relentless, a fierce fighter, and a showman.

Question 6

Main Lessons:
Hire the Best
Think Big

Answer 6

Fight Hard
Trust Your Instincts

Question 7

Hire the Best
Hire The Best: I have a very simple rule when it comes to management: hire the best people from your competitors, pay them more than they were earning, and give them bonuses and incentives based on their performance. That’s how you build a first-class operation.

Answer 7

Think Big
I like thinking big. I always have. To me it’s very simple: if you’re going to be thinking anyway, you might as well think big.

Question 8

Get Opinions & Talk to a Lot of People
I’m a great believer in asking everyone for an opinion before I make a decision. It’s a natural reflex.
I have learned much more from conducting my own random surveys than I could ever have learned from the greatest of consulting firms.

Answer 8

Work the Press
The point is that if you are a little different, or a little outrageous, or if you do things that are bold or controversial, the press is going to write about you.

Question 9

Leadership is perhaps the key to getting any job done.
I know from my own experience that the only way to get even the best contractor to finish a job on time and on budget is to lean on him very, very hard. You can get any job done through sheer force of will—and by knowing what you’re talking about.

Question 10

Notable Quotes:

Answer 10

My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want.

Question 11

One of the keys to thinking big is total focus. I think of it almost as a controlled neurosis, which is a quality I’ve noticed in many highly successful entrepreneurs. They’re obsessive, they’re driven, they’re single-minded and sometimes they’re almost maniacal, but it’s all channeled into their work. Where other people are paralyzed by neurosis, the people I’m talking about are actually helped by it.

Answer 11

The final key to the way I promote is bravado. I play to people’s fantasies. People may not always think big themselves, but they can still get very excited by those who do. That’s why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration—and a very effective form of promotion.

Question 12

What I Like:

Answer 12

Easy read

Question 13

Interesting

Answer 13

Provides some general good advice

Question 14

What I Dislike:
Mostly focuses on his wins, not so much on his losses or failures–makes the whole book seem a little less genuine and impactful, in my opinion

Answer 14

-Doesn’t delve too deep into Trump as a man
You kid of get a sense of him, but you don’t come away from the book feeling that you “know” him or can relate to him very much
-Lacking depth overall

Question 15

Lessons to Implement:
Hire the Best
Trust Yor Instincts
Work the Press

Answer 15

Who Should Read This:
People doing deals in big cities with a lot of politics and bureaucracy
If you want to break into a bigger real estate scene, this book might help encourage and motivate you that you can succeed

Question 16

Book Rating: 6/10
-Easy, interesting, and enjoyable read
-Lacking depth - mostly surface level book

Answer 16

-Don’t get below the surface of Donald Trump
-Also don’t get too in-depth about how to negotiate or complete big RE deals

Question 17

Chapter 1: Dealing: A Week in the Life:
-Structure: You can’t be imaginative or entrepreneurial if you’ve got too much structure.
-Less is More: Sometimes—not often, but sometimes—less is more.

Answer 17

-Move Quickly: It shows that it pays to move quickly and decisively when the time is right.
-Listen to Your Gut & Stick With What You Know: That experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you’re generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don’t make.

Question 18

-Pick a Winner: it’s a lot better to side with a winner than a loser.
-Hire the Best: my philosophy is always to hire the best from the best.

Answer 18

-Cleanliness: I’m a stickler for cleanliness,

Question 19

Chapter 2: Trump Cards: The Elements of the Deal
-Keep Pushing: MY STYLE of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want.

Answer 19

-Deal Making: More than anything else, I think deal-making is an ability you’re born with. It’s in the genes. I don’t say that egotistically. It’s not about being brilliant. It does take a certain intelligence, but mostly it’s about instincts.

Question 20

Get Rich Quick: most people who try to get rich quick end up going broke instead.

Answer 20

Think Big: I like thinking big. I always have. To me it’s very simple: if you’re going to be thinking anyway, you might as well think big.

Question 21

Make a Statement: I wasn’t satisfied just to earn a good living. I was looking to make a statement. I was out to build something monumental—something worth a big effort.

Answer 21

Total Focus: One of the keys to thinking big is total focus. I think of it almost as a controlled neurosis, which is a quality I’ve noticed in many highly successful entrepreneurs. They’re obsessive, they’re driven, they’re single-minded and sometimes they’re almost maniacal, but it’s all channeled into their work. Where other people are paralyzed by neurosis, the people I’m talking about are actually helped by it.

Question 22

Downside: Protect the Downside and the Upside Will Take Care of Itself

Answer 22

Plan for the Worst: In fact, I believe in the power of negative thinking. I happen to be very conservative in business. I always go into the deal anticipating the worst. If you plan for the worst—if you can live with the worst—the good will always take care of itself.

Question 23

Be Flexible: I also protect myself by being flexible. I never get too attached to one deal or one approach.
Maximize Your Options

Answer 23

Get Opinions: I’m a great believer in asking everyone for an opinion before I make a decision. It’s a natural reflex.
I have learned much more from conducting my own random surveys than I could ever have learned from the greatest of consulting firms.

Question 24

Deal from Strength: The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you’re dead. The best thing you can do is deal from strength, and leverage is the biggest strength you can have. Leverage is having something the other guy wants. Or better yet, needs. Or best of all, simply can’t do without.
Use Your Leverage
My leverage came from confirming an impression they were already predisposed to believe.

Answer 24

Best Deals: First of all, you don’t necessarily need the best location. What you need is the best deal. Just as you can create leverage, you can enhance a location, through promotion and through psychology.
Enhance Your Location

Question 25

Get the Word Out: It’s in the nature of the job, and I understand that. The point is that if you are a little different, or a little outrageous, or if you do things that are bold or controversial, the press is going to write about you.
-The funny thing is that even a critical story, which may be hurtful personally, can be very valuable to your business.

Answer 25

-The final key to the way I promote is bravado. I play to people’s fantasies. People may not always think big themselves, but they can still get very excited by those who do. That’s why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration—and a very effective form of promotion.

Question 26

-Fight Back: But when people treat me badly or unfairly or try to take advantage of me, my general attitude, all my life, has been to fight back very hard.
-Deliver the Goods: if you don’t deliver the goods, people will eventually catch on.

Answer 26

-Contain Costs: Contain the Costs I believe in spending what you have to. But I also believe in not spending more than you should.
-Even small jobs can get out of control if you’re not attentive.
-Have Fun: Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.

Question 27

Chapter 4: The Cincinnati Kid: Prudence Pays
Well-maintained real estate is always going to be worth a lot
Hard Work: It’s not how many hours you put in, it’s what you get done while you’re working.

Answer 27

Stealing: My philosophy has always been that if you ever catch someone stealing, you have to go after him very hard, even if it costs you ten times more than he stole.
Fear: You can’t be scared. You do your thing, you hold your ground, you stand up tall, and whatever happens, happens.

Question 28

-Fight: “I’m just not built that way. I’d rather fight than fold, because as soon as you fold once, you get the reputation of being a folder.”
-Politicians: The simple fact is that contributing money to politicians is very standard and accepted for a New York City developer.

Answer 28

Nonnavigable Permits: A nonnavigable permit, which I became an expert about very quickly, is the federal approval required to build on certain waterways, and getting it requires an act of Congress.

Question 29

Chapter 7: Trump Tower: The Tiffany Location

Answer 29

Floor Area Ratio (FAR): Specifically, the total square footage of a building can be no more than a certain multiple of the square footage of the building lot.

Question 30

As of Right: An “as of right” building is one that doesn’t require any variances.

Answer 30

421-A tax exemption: In return for improving a site, developers were entitled to an exemption from real estate taxes over a ten-year period. Every two years the exemption decreased by 20 percent.

Question 31

Chapter 8: Gaming: The Building on the Boardwalk

Answer 31

To this day not many people or companies are willing to go through the nightmare of licensing in New Jersey, which gives Nevada a big advantage in attracting new investors.

Question 32

Value Engineering: One way we stood to save money was from something known as value engineering. Through value engineering we determined that we’d save a lot of money by installing them on a lower section of roof, just seven floors up, because that roof could be poured much sooner. In turn we’d be able to start all the piping and electrical work for the air-conditioning six months earlier.

Answer 32

Detailed Plans: The second way we saved money was by producing very complete plans, so that contractors could bid on every aspect of the job.

Question 33

Hire The Best: I have a very simple rule when it comes to management: hire the best people from your competitors, pay them more than they were earning, and give them bonuses and incentives based on their performance. That’s how you build a first-class operation.

Answer 33

Chapter 9: Wynn-Fall: The Battle for Hilton
It pays to trust your instincts.

Question 34

Timing: final thing that helped us keep costs down was the state of the construction industry in Atlantic City in the spring of 1982. The only casino still under construction by then was the Tropicana, and thousands of local construction workers were either out of work or about to be. That gave us a lot of leverage with contractors

Answer 34

Depreciation: One reason that I particularly liked owning the facility myself—rather than with any partner—has to do with the value of depreciation. Depreciation is the percentage of the total value of a building that an owner is permitted to deduct each year from his taxable earnings. The rationale is that money spent to maintain a building—to offset its normal wear and tear—shouldn’t be taxable.
-I appreciate depreciation. For me the relevant issue isn’t what I report on the bottom line, it’s what I get to keep.

Question 35

Chapter 10: Low Rent, High Stakes: The Showdown on Central Park South
-Modest: But then, “modest” isn’t my favorite word.

Answer 35

Rent Control: The second problem, which I didn’t fully understand until much later, is that it’s almost impossible to legally vacate a building filled with rent-controlled and rent-stabilized apartments. I knew that some tenants were sure to resist moving, but I figured time was on my side. I could afford delay. I was prepared to be as patient—and as persistent—as I needed to be. What I underestimated was how much the tenants stood to lose. I soon came to understand a simple axiom: the lower the rent, the bigger the apartment, and the better the location, the harder people will fight to keep what they have.

Question 36

Rent Control: Unfortunately, rent control is a disaster for all but the privileged minority who are protected by it. As much as any other single factor, rent control is responsible for the desperate housing crisis that has plagued New York City for the past twenty years.
-Perhaps the worst thing about rent control is that it stopped protecting the people who needed it the most.

Answer 36

-Impulse: You don’t act on an impulse—even a charitable one—unless you’ve considered the downside.
-Post-Modernism: In truth, my heart wasn’t totally in it. I’d never been a big fan of postmodernism, the architectural movement that first mixed classical elements with modern design. To me, it often represents the worst of both worlds. The materials and the craftsmanship are rarely first-class because most builders won’t pay what that requires, and the classical elements in postmodern designs almost always look imitative. At the same time, these elements interfere with the sleek look of the best modern design.

Question 37

Chapter 11: Long Shot: The Spring and Fall of the USFL
-Committees: To me, committees are what insecure people create in order to put off making hard decisions.

Answer 37

-Consultants: but I like consultants even less than I like committees. When it comes to making a smart decision, the most distinguished planning committee working with the highest-priced consultants doesn’t hold a candle to a group of guys with a reasonable amount of common sense and their own money on the line.

Question 38

Chapter 12: Ice Capades: Rebuilding Wollman Rink
-Press & Politics: If there’s one thing I’ve learned from dealing with politicians over the years, it’s that the only thing guaranteed to force them into action is the press—or, more specifically, fear of the press.

Answer 38

Leadership: Leadership is perhaps the key to getting any job done.
I know from my own experience that the only way to get even the best contractor to finish a job on time and on budget is to lean on him very, very hard. You can get any job done through sheer force of will—and by knowing what you’re talking about.

Question 39

Chapter 13: Comeback: A West Side Story
Self-Support: The truth is that unless you design a project to be self-supporting as you build it, you risk getting eaten alive before you’ve turned the corner into profit.

Answer 39

LOI: One of the first things that anyone should learn about real estate—and New York real estate in particular—is never to sign a letter of intent. Years can be spent in court trying to get out of a seemingly simple and “nonbinding” agreement

Question 40

Create Awareness: The more awareness and excitement I could create early on, the easier it was going to be to attract buyers down the line. A lot of developers build first and promote later, if at all.

Answer 40

Skyscrapers: When you build any structure higher than about 50 stories, the construction costs escalate geometrically.

Question 41

Chapter 14: The Week That Was: How the Deals Came Out
To me, what matters is the doing, and giving time is far more valuable than just giving money.

Answer 41

In my life, there are two things I’ve found I’m very good at: overcoming obstacles and motivating good people to do their best work. One of the challenges ahead is how to use those skills as successfully in the service of others as I’ve done, up to now, on my own behalf.