The academic year’s final installment of Entrepreneurs Unplugged brought self-made billionaire and real estate entrepreneur Sam Zell to the CU Law School. Associate Law Professor Scott Peppet interviewed Zell about his range of business experience, including his real estate empire and more recent purchase of Tribune Co. The very quotable Zell did not hesitate to share his opinions on topics ranging from his responsibility to shareholders in his companies to his feelings about government actions to curb the financial crisis (“A lot of what has been done has exacerbated the problem”). A few areas of focus from the discussion:
The roots of entrepreneurship: Zell sees the entrepreneurial spirit as an “innate gene that’s part of your thinking” and allows you to “see the problems but also the solutions.” Zell found this spirit early when he began importing Playboy magazines from the Chicago newsstands where he bought them for $0.50 on his way to Hebrew school to the suburbs where he sold them for $3 in one of his “best margin businesses” with “unlimited customer demand.”
Finding business success: Success begins with “a belief that you can do it and understand it” but goes nowhere without the ability to execute and sell, which Zell called the most “underrated and important” driver to profitable business. Zell also stressed the importance of people skills and “understanding who’s sitting across from you” and what would meet their needs while also satisfying your own needs. Zell was critical of traditional business school educations which teach that the “answer to everything was in the numbers,” as this ignores the human element.
Where newspapers went wrong: Zell was deeply critical of the newspaper industry, calling it a “monopoly business that has made little progress.” Among Zell’s critiques were misplaced priorities through caring only “about what you write and not what the revenues are” and not listening to the needs of the customer. Included in customer requests are a focus on local news, easy navigation and shorter stories since if “you only read half a story you feel unhappy and unsuccessful.” Zell asked what “company has been successful by pissing off all its customers?”
The future of media: According to Zell, value still exists in providing in-depth local coverage, but the model must change. In the old days “advertisers responded to home delivery numbers” which led newspapers to offer the cheapest prices to the most expensive distribution channel – a legacy newspapers have clung to at high costs despite changing advertiser demands. Among Zell’s beliefs in the newspaper of the future are that “giving away content [online] has to change” and home delivery is likely to turn into a “PDF sent to your Kindle” with physical papers only sold at newsstands. Zell also feels the ownership of the Associated Press must change and newspapers must view it as “a competitor, not a service provider.”
The structure of public companies: Zell takes his responsibilities to his shareholders seriously noting a singular focus on “maximize[ing] their value and protect[ing] their positions” and not “focus[ing] on Kumbaya sessions” or other activities not directly related to the business. Zell critiqued the rise of CEOs without a significant ownership stake, saying they are likely “more worried about pleasing the board members” than managing the risk of the company. To the subject of board meetings, Zell said he favors engagement from his directors whom he called “the cheapest consultants,” and hopes for meetings with “a lot of yelling and screaming.”
Entrepreneurs Unplugged is a meeting place where individuals with technical backgrounds learn about and get involved in entrepreneurship. In particular, the program offers students and faculty an opportunity to learn how a successful start up is created as well as an opportunity to network.
