Take Inspiration From Donald Trump … But Carefully
OK so you’ve read The Art Of The Deal.
Have you ever found yourself in quiet moments alone, pondering the Trump story, thinking you’re going to do what he did? Whatever liquid motivation Donald Trump was channeling from the gods, you’re going to get some of that and do what he did?
Alright, so now twelve months have gone by and you are looking back, trying to reconcile the gap between your humble output and the record of the early Trump years.
Don’t beat yourself up.
As with the legend of Bill Gates, there is more to the story than just other worldly will, and “brilliance”. Gate’s case is documented in Outliers by Malcom Gladwell. But Trump’s story has remained as a touchstone for real estate investors over the decades, when really, he should have been one of Gladwell’s ‘Outlier’ subjects as well.
Gladwell’s premise for Outliers was extraordinary success is no accident, however it is not repeatable due to the extraordinary circumstances that contribute to it occurring.
First, Trump got his 10,000 hours at the knee of his father, Fred Trump. Fred Trump built his first house in 1923 at the age of 18, and by 1945 when Donald was born, he had a thriving construction company building houses and apartment buildings for returning GIs. Donald began accompanying his father to the construction site at age five. Throughout his childhood Donald had a front row seat, watching Dad negotiate with vendors and contractors in the living room of his home in Queens.
In his teens Donald got more involved in his father’s company. By his early twenties, when he located and partnered with his father on the 1,154 unit Swifton Village Apartments (a foreclosure) in Cincinnati, the business of real estate is all Donald Trump had ever done.
Second, he had the financial backing of his father, Fred Trump. By the mid 1970s Fred Trump had been in business for 50 years and accumulated 100,000 units. His financial statement was significant, around $40 million. He introduced Donald to his private and institutional banking relationships, Manufacturers Hanover Trust, and the Equitable Life Insurance Company.
Third, there were the political connections. Fred Trump was a member of the Madison Club in Brooklyn, a center for the Democratic Party machine of the time. There he met Abe Beame, who would go on to be New York City Mayor, and Beame’s close political associates, publicist Howard Rubenstein, and lobbyist/lawyer Bunny Lindenbaum. Fred Trump’s biggest breaks as a developer came through his Madison Club connections. They were also central to Donald Trump’s first two Manhattan projects.
Fourth, during the 1960s a gradual economic and social decay had set into New York City. By 1975 it was facing bankruptcy. Prime (interest) Rate was 10% in 1975, rising to as high as 20% in April, 1980. New York City property values in the mid 1970s were historically depressed. For property developers, deals were everywhere.
For a young developer striking out in Manhattan, these were extraordinary circumstances.
What is not in dispute though, is Trump had soaring vision, unstoppable confidence, and a drive others had trouble keeping up with. There was then, as there is now, his unnerving belief in himself.
So when Donald Trump’s first two Manhattan deals, the selection of the (Jacob K. Javits) Convention Center site, and the conversion of the Commodore Hotel into the Grand Hyatt Hotel, were completed and became huge successes, this was the work of the right man, in the right place, at the right time. But neither would have happened without the financial backing and political connections of Donald Trump’s father, Fred Trump, or the uniquely favorable economic conditions of the time.
So when looking at Trump and seeking inspiration from the legend of Trump, take care to focus on the right things to be inspired about.
Intense focus: The difference-making trait also cited by Warren Buffett and Bill Gates as the primary driver of success. Trump learned the game of real estate development from Fred Trump, but once on his own he focused intensely on every part of the process. The result was excellent deal flow, and flawless execution.
100 calls a day: In The Art Of The Deal and The Art Of The Comeback, the Donald takes the reader through a typical day for him working in his office on the 26th floor of Trump Tower. In both, his schedule shows a block of 60-90 minutes leading up to 5 o’clock where his secretary calls and connects him to important contacts, rapid fire, one after the other. Many end up as messages on answering machines, most are just brief conversations to say hello and be in touch. In The Art Of The Deal, Trump says explicitly 100 calls a day (often more) is what reveals the pulse of the market and puts you in the mix.
Spends time in his strengths, delegates the rest: One thing Donald Trump knows about himself is he is a ‘big picture’ guy, so that’s where he stays. His strengths reside in conceiving grand visions, and hounding others to put the pieces together for those visions to be realized. He stays true to himself in this regard, and delegates all of the supporting activity to employees and contractors.
Hires the “best”: Such is Donald Trump’s opinion of (respect for) himself, that the only people allowed to touch the component parts of his projects are those who are the best in their field. Only the highest quality work is acceptable to Donald Trump. This has resulted in a lot of contractors being forced to do more, or better work, before being paid, and others being only partially paid, sometimes not paid at all because their work wasn’t, by Trump’s standard, “the best”. On the other hand it resulted in Barbara Res, a woman, being hired in 1978 as construction manager for Trump Tower and men and women of every race and religious background populating the positions of upper management in the Trump Organization, because they are the best at what they do.
Wayne Barrett introduced himself as Trump’s nemesis in 1979, when he wrote his first article on Trump in Village Voice. But even in his 1992 book, “Trump”, what became very clear after reading it was you got one chance with Donald Trump. If you are the best and deliver on your word, your hired. If you fall short of that in any way, you’re either ‘not hired’, or you’re fired.
A force of nature, but also a state capitalist up there with the best of them.
Donald Trump is a force of nature. No doubt. When you learn the facts, you also know he is a state capitalist up there with the best of them who has worked the system to his advantage.
But the stardust quality Donald Trump has comes from his genuine passion for what he is doing, which is all mixed up and blended with his love of his parents, their support of and devotion to him, the worship of an older brother lost to alcoholism, and his naked love for and appreciation of … himself. 🙂
Trump’s confidence is what drives his critics nuts. “Who does he think he is?”, “How can he possibly say that?”, are common complaints.
But it is an object lesson to us, real estate investors who want to somehow channel some of his success.
Forget trying to reproduce his results. They are a feature of who he was and where he sat at a specific time and place in New York City business history.
Instead, try and relate the more personal parts of his story to your own life. Think about … what drives you, who loves you, who do you love, what do you love about yourself?
Think hard about that last one. That’s the secret The Donald is trying to pass along to us.
Do your best. Be the best. You’re worth it.