My Notes on Sam Zell’s Book “Am I Being Too Subtle” - Fabulous Life Lessons of a Value Investor and Entrepreneur

“Am I Being To Subtle?” is Sam Zell’s colorful autobiography packed with life, work and entrepreneurial success lessons. I first saw a TV interview with Sam Zell over 10 years ago and I really enjoyed his rational points of view on the markets, economy and investing. Since, I have been a fan and follow his commentaries, news, and insights, and was very glad when his book came out.

I also felt a sense of commonality with Sam, since I am also an immigrant to the US. Sam tells the story of his parent’s risky ordeal to scape Poland just days before the Germans bombed all train tracks out of the country. It took his parents and sister 21 months to finally reach the US, and thanks to his parent’s sense of urgency and drive to save his family they were able to survive the Holocaust, no small feat by any means. I can’t compare with Sam’s family ordeal, but I too owe much gratitude to my mom and family for encouraging and supporting me to come to the US and seek a new life out of Venezuela, the country where I am from. Venezuela is no Nazi Germany, but its current government has turned out to be the most destructive, corrupt, criminal and murderous dictatorship of the twenty-first century; thanks to my family who eventually all emigrated to the US, I was able to scape the fangs of that regime’s destiny in Venezuela.

Coincidentally, out of many of his travels around the world, Sam visited Venezuela, which he describes as one of his most memorable trips. He explored, along with his local business partner the Tepuis, which are unique tabletop mountains and the Angel Falls, the world’s highest waterfall. I have never been to that part of Venezuela but hopefully in the future I will able to take my family back and enjoy the amazing natural wealth of the country.

Sam has become one of the most influential and successful billionaire entrepreneurs in America, with ventures in a variety of verticals including, real estate, energy, manufacturing, logistics, healthcare and media. He is well known as the father and early supporter of the REITs, he also built Equity Office from scratch to become the largest office building REIT in the country, which he eventually sold for $39 Billion right before the financial melt-down in 2007.

In the book, Sam shares his rules and key ingredients for a successful personal and business life, which include:

1) Reputation: from an early age Sam learned from his father the importance of Shem-tov Hebrew for keep a good name. In my book reputation is the most precious and only true and lasting value/asset we have in our balance sheet as entrepreneurs. Industries are small and you end up doing business with the same group of people over an over. If you burn bridges or destroy your reputation then you will find yourself out of the game really fast. If you carry your business with respect, responsibility, integrity and honesty people will be open to do business with you and value partnering with you. As Warren Buffet said, it could take decades to build your reputation and just seconds to destroy it. So guard your reputation, be a quality player in the long term game of life and business.

2) Contrarian View / Margin of Safety: Sam’s investing philosophy is value investing. He takes his time to analyze the supply and demand dynamics of every deal. He is also very focused on the downside, calculates and understands the risks; he invests in deals below replacement value or below intrinsic value (Margin of Safety). Invest in deals with big upside and small downside and never risk what you cannot afford to loose.

3) Skin-in-the-game: I think this is the most repeated phrase in the book “Skin-in-the-game.” Sam describes skin in the game as the discipline of always committing your own capital into your startups and investments. I am a big believer of having skin in the game, it works because naturally all invested parties are driven to make the right decisions for the business and not what benefits just one individual. Skin in the game is a great equalizer because it places all the partner’s interests in creating value and working with tenacity to achieve success. I have been involved with companies where management is not invested and the outcome is almost always detrimental to value creation and shareholder value. Nassim Taleb the author of “The Black Swan” just wrote a book titled “Skin In The Game”, I just bought the book. You can watch a short video on his thesis here:

4) Opportunities: Sam has a great entrepreneurial mindset; he is always looking for opportunities everywhere. He is always reading books, newspapers and listening to anything that might be a clue for a hidden opportunity. He is also a power networker and traveler, spending over a thousand hours flying around the world visiting new places and meeting new people. All this time and work is very helpful because it sets your mind to always be open for new opportunities and jump on them when they knock on your door. Opportunities are not always there but you have to be patient and be prepared, once they come you will be ready to take advantage of them.

5) Never look back: Sam says that his head is not able to turn all the way back, he can only see straight. What he means is that he is not dwelling in the past. We all make mistakes and fail all the time, but we can turn all our mistakes and failures into amazing learning opportunities and understand you gain experience and progress from those events. In his book Principles, Ray Dalio shows his equation or formula for success and progress [ Pain + Reflection = Progress ]. If we can reflect and learn from the psychological pain that our mistakes and failures make us feel, we will progress and learn much faster than if we just dwell in the past and do nothing to change how we approach things.

6) Charity: I think this is the most important lesson of the book; charity is the ultimate growth tool for any human being, contributing and helping others is the only way for anyone to be truly successful. From a very early age Sam’s parents taught him the importance of tzedakah, which in Hebrew means giving to others and it is viewed as a moral and spiritual obligation. Sam is very generous and has contributed to universities, religious institutions, entrepreneurial centers, scholarships, etc. Charity or contributing to others gives you different insights since you are not thinking all the time about what you can get, but what is more powerful is to think and act with what you can give.

I highly recommend you read the book.