In 1949, John H. Johnson was doing well. He was a millionaire at 31, and his magazines, Ebony and Negro Digest, were thriving. That wasn’t good enough for John; he feared losing it all. He launched two magazines in 1950 and two in 1951, including JET. JET was a breakout success, selling out its first issue and reaching 300,000 weekly circulation in six months.

According to his autobiography, JET’s and Ebony’s success reduced the circulation of Negro Digest, and John discontinued it in 1951 so he could focus on strengthening his company’s foundation. Cash flow issues, dealing with recessions, expanding the advertising team, and building a solid accounting and finance team all had to be done simultaneously. John recruited talented workers who lacked growth opportunities at large publishing houses. And he set up a system where everyone continuously grew by mastering several skills. Specialists weren’t allowed.

In the 1950s, John created a four-point plan to make Ebony and the Black consumer market integral parts of corporate America’s marketing and advertising plans. He wrote articles in trade publications and provided data to ad agencies and corporations to confirm the spending power of the Black consumer. His strategy worked: advertising dollars increased. However, these new believers, needing staff who understood Black consumers, poached John’s team members.

In 1954, John faced twin headwinds: a series of recessions and a shift away from newsstand sales for magazines. In one month, Ebony’s circulation dropped by 100,000. If Ebony failed, his company would collapse. John shifted the revenue mix to half subscriptions, half newsstand sales and changed the content to reflect the seriousness of what his readers were facing.

After thirteen years of fighting to survive and ten years of publishing Ebony, things finally stabilized. John’s first thirteen years had been hell, but he’d made it. He had 145 employees and a monthly circulation of 2.6 million copies across four magazines. Johnson Publishing was healthy and on solid footing.

With his company running smoothly, John lifted his head and focused outside Johnson Publishing. John and Eunice were ready to start a family but encountered infertility issues. They were rich and successful but couldn’t obtain what they both craved: children and a family. They endured embarrassing and painful exams at the Mayo Clinic, only to learn they both had healthy reproductive systems. Not being able to have children can be a blow to a man’s ego, but John and Eunice investigated adoption for a year and decided it was the best option for them. In June 1965, they adopted a two-week-old son and named him John Harold Johnson Jr. Two years later they adopted a two-week-old girl and named her Linda Eunice Johnson.

The family’s happy times didn’t last. John Jr. began having long bouts of sickness. John and Eunice learned that their son had sickle-cell anemia. They discovered that there was no cure and John Jr. would endure pain and likely die early from the disease. To make matters worse, the adoption agency had forgotten to test John Jr. when he was a baby. The situation changed John. Knowing he had limited time, he traveled less and made being home daily for dinner a priority. He dedicated Sundays to doing fun things with his family. John Jr. lived life to the fullest and was fearless. Sadly, he died in 1981 at 25. John and Eunice were devastated. John kept his son’s office at Johnson Publishing, setting it aside in his memory. And he and Eunice left John Jr.’s bedroom as it was the day he died.

John went on to do many more amazing things. He created Ebony Fashion Fair, which became the largest traveling fashion show in the world. He launched a best-selling cosmetics company and entered the cable, radio, and TV production business. He dabbled in commercial real estate and acquired Supreme Life Insurance Company. And he accomplished all these things in business while serving on numerous corporate boards and having direct relationships with and working with four US presidents.

John’s journey was incredible, and he was a remarkable entrepreneur. His companies had an enormous impact on Black Americans and changed how Blacks and the rest of the United States viewed Black America. That he bootstrapped Johnson Publishing to almost $200 million in annual revenue in the 1980s while owning 100% of the company shows how special the poor boy from Arkansas City was.

I couldn’t cover everything in John’s autobiography. I picked the things that interested me most, but it contains other great stories and details about his life and journey. It’s worth reading. He shares valuable wisdom he learned along the way.

In my next post, I’ll share my takeaways and insights from his journey and what specific traits made him so successful.

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When John H. Johnson published Negro Digest on November 1, 1942, his printer realized it wasn’t for John’s employer, Supreme Life Insurance, and that it had unknowingly subsidized the magazine. To pay the printer, John had to sell the remaining 2,000 copies quickly.

According to his autobiography, John called the biggest magazine distributor in Chicago and was told that “colored books don’t sell.” John sent thirty Supreme coworkers to buy his magazine at the distributor’s newsstands using money he gave them. This prompted the distributor to buy John’s remaining inventory and then some. The distributor started pushing the magazine aggressively and introduced John to other distributors in major cities. Within eight months, he was selling 50,000 copies a month. In July 1943, he took a leave of absence from Supreme and hired a secretary.

John couldn’t crack 50,000 in circulation, so he wrote First Lady Eleanor Roosevelt a letter asking her to write an article in his “If I Was a Negro” column. John was persistent, and she agreed. National media picked up the article, and circulation soared to 100,000 copies. John bought a building for $4,000 and hired a permanent staff in 1944.

John realized he had knowledge gaps in the publishing business, so he cold-called top executives at prominent magazines. He quickly learned that people will tell you everything they know when you confess your ignorance. Gaining wisdom from credible insiders provided John with the blueprints for what he wanted to build and how to build it.

John didn’t have loans or investors, so he faced cash flow issues that forced him to learn cash flow management and to do some questionable things with checks and bank accounts.

In 1945, World War II was raging, and wartime rationing meant that John’s fast-growing company was using more paper than the law allowed. The U.S. government issued him a violation. He had to reduce the number of copies he printed and send the company into bankruptcy or keep printing and go to jail. John claimed ignorance of the law and passionately appealed to the War Production Board. Twenty-four other people, with their lawyers, also appeared before the board that day. John, who by design didn’t have a lawyer, was the only one who got a hardship exemption.

John refocused on the business, and two of his freelancers approached him with an idea for a new photograph-based magazine named Jive. John didn’t like the idea, but he respected their contributions to his magazine and agreed to partner with them three ways on the idea. Each would put up $1,000. After working on the concept, the freelancers didn’t put up their share of the money, so John funded the entire project and took ownership. This ended up being the turning point in his life.

Even though he was skeptical, he kept working on the idea. He eventually realized that America was shifting from reading and wanted to see themselves and the people they admired in pictures. John slowly saw that the shift to photographs could be a way to emphasize the positive aspects of Black life, highlight the significant achievements of Blacks, make Blacks proud of themselves, and recharge Black people using positivity. This became his philosophy for the new concept. John hated the name Jive, and when Eunice suggested Ebony, John ran with it.

The first issue was published November 1, 1945, by John, then 27, and a team of two other people. John initially ran Ebony with no ads to ensure that it was high quality. Ebony was a breakout success and instantly surpassed Negro Digest as the top Black publication. However, as more copies were sold, John lost more money. People praised him in public, but John hid from creditors. The high-quality magazine was expensive to produce compared to Negro Digest, which was backed by ad revenue. By the end of 1946, John was in a tough spot. He couldn’t cut Ebony’s circulation because that would reduce potential future ad revenue. But he was losing a fortune every month.

John devised a twofold strategy. He launched five mail-order businesses that he could advertise in his magazines. The revenue from product sales from the mail-order companies would offset the cash burn from Ebony. He then started personally selling ads to executives of ad agencies and then large companies. He was relentless. He called one CEO 400 times and stalked another on a train weekly for three weeks.

After two years on the verge of collapse, Ebony turned around when the ad dollars started flowing regularly. John hired the best ad person he could find and built a team of ad salespeople. He’d run the gauntlet. Seven years after launching Negro Digest, John was 31 and a millionaire. But he was still insecure and scared of failure. His fears would be a key factor driving John’s next bold bet.

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According to his autobiography, after graduating high school in 1936, John H. Johnson attended an Urban League luncheon where Harry H. Pace spoke. Pace was the CEO of Supreme Liberty Life Insurance, which provided insurance to the Black community. John rushed Pace after his speech. Pace had heard about John’s commencement speech and asked about his plans. John shared that he couldn’t afford college, and Pace offered him a part-time job at Supreme.

In September 1936, John started working part-time for $25 per month and eventually quit school to work at Supreme full-time. Supreme was the perfect environment for John and became the university where he would learn all things business over five years. Watching and learning as Pace navigated a million-dollar business gave John a thrill.

Journalism was John’s passion, and Pace assigned John to work on Supreme’s monthly newsletter. Pace was the editor, so John worked closely with him. In 1939, John was named editor. John learned as much as he could from Pace about business, life, success, and Black America as he chauffeured him to the bank every day. Lessons about focus, computerizing your mind, business being an art, and others stuck with John; he used them throughout his career.  

John eventually moved to selling insurance in the field and even supported Supreme’s general counsel running for local office. By then, Supreme wasn’t just a job for John; it was the place where he was learning how to navigate life and achieve his goals.

In 1940, John met Eunice Walker, who came from a prominent southern family. Eunice’s friends told her John’s background wasn’t encouraging and he wasn’t one of the Black professionals who were likely to succeed. Eunice saw something else in John, and John relished how she listened to his dreams and made him feel that he could be somebody one day. They married in June 1942.

Pace didn’t want to take Black newspapers home. He asked John to read magazines and newspapers and prepare digests of what was happening in the Black world, which John did on Mondays. Pace used them to stay abreast of race relations and guide his conversations. John became one of the most knowledgeable people in Black Chicago. At social gatherings, he became the center of attention when he began sharing what he’d learned. People kept asking, “Where can I find that article?” and offered to pay him to find specific articles.

After several weeks, John realized he was “looking at a black gold mine.” Readers Digest and Time were popular, but there wasn’t a successful, Black, commercial magazine. But after two months of going from office to office in Black Chicago, John realized that nobody wanted to give a twenty-four-year-old insurance worker a cent toward this idea.

John was running the machine that mailed invoices to 20,000 Supreme customers. He looked around and asked himself what he could do by himself with what he had to get what he wanted. Then it hit him: he could send a letter to each of Supreme’s customers asking if they wanted to prepay for a $2 subscription to a new, Black magazine. Pace blessed the idea. John just needed one last thing: $500 to buy stamps. Desperate, he tried to get a bank loan but was turned down. Eventually, he found a bank that loaned to Blacks, but he needed collateral. He didn’t know what that meant, and he didn’t have it anyway.

After much prayer and pestering by John, his mother put up her furniture as collateral. John wrote his letter, pitching his magazine as something that appealed to what Black customers craved at the time: respect and recognition. He mailed it and crossed his fingers. It worked. Three thousand people sent John $6,000. Negro Digest Publishing was born in June 1942.

John worked by day at Supreme and by night on the magazine. Eunice helped him at night too. By October he was ready to print but needed a printer who would extend credit. John ran the duplicating machine at Supreme and managed Supreme’s relationship with Progress Printing Company. When John said to the printer, “We are publishing a magazine,” the printer assumed the magazine was for or backed by Supreme and started working without worrying about being paid.

On Sunday, November 1, 1942, Negro Digest was officially published. John realized the true potential of what he’d created when he held the first magazine.

John had successfully launched Negro Publishing, but it was a one-man company, and he wasn’t out of the woods yet. He printed 5,000 magazines and sent 3,000 to prepaid subscribers. Now, he needed to find a way to pay for the remaining 2,000 copies and cover the mailing costs for the 3,000 copies already sent to subscribers. If he didn’t figure it out fast, he’d be in jail. This led to what he would do next.

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John H. Johnson founded Johnson Publishing Company, which published JET and Ebony magazines for decades. I learned about John when I read the biography of Robert “Bob” Johnson (no relation to John). Doing some research, I discovered that John started his company with $500 and grew it to over $174 million in annual revenue by 1987—almost $481 million in 2024 dollars. He grew without bank loans or investors (i.e., customer revenue only) for over a decade. This blew my mind, so I bought John’s autobiography, Succeeding Against the Odds: The Autobiography of a Great American Businessman, initially published in 1989.

Life started out rough for John. He grew up dirt poor in segregated Arkansas City, Arkansas. When he was eight years old, his father was killed in a sawmill accident. When he was nine, the Great Mississippi Flood of 1927 ravaged his city, and his family became homeless. As a child, John was forced to work to help his family make ends meet. He grew up feeling that his family wasn’t in control of their destiny. “[A} word or frown from a White person could change our plans and our lives,” he wrote. This feeling unnerved him.

There was no radio then, so information didn’t flow freely. What people believed was possible was based on what they saw. John’s mother, Gertrude Johnson Williams, who remarried, was a “dominant force” in the family and didn’t subscribe to this way of thinking. She believed that just because she hadn’t seen something, that didn’t mean it wasn’t possible, and that John could be more than what they saw in Arkansas City. Education was the key, but Arkansas City didn’t have a high school for Black students. She devised a plan to move to Chicago for more economic opportunities and better educational opportunities for John. The plan was to leave in the summer of 1932 when John finished eighth grade, but she didn’t have enough money. By the summer of 1933, she’d saved enough money to leave. John was 15 years old.

When they arrived, they found Chicago to be a “Black metropolis.” Seeing Black entrepreneurs, politicians, doctors, and lawyers made a lasting impression on young John. And his high school had more students than the entire population of Arkansas City. The primarily Black educators and administrators were a daily reminder of what was possible.

John’s classmates were poor, but John was a level below them. He had to wear clothes his mother made for him. During the Great Depression, his mother and stepfather lost their jobs, and the family went on welfare for two years. The shame of this experience left a lasting impression on John. Poverty and his deep southern accent made John the target of ridicule.

Determined to get even with classmates, he threw himself into excelling at his schoolwork. He became a voracious reader of self-help books, Black literature, and Black history. John spent significant time in the public library reading books about Blacks who had succeeded against the odds, which energized him. He also became an avid reader of Dale Carnegie’s books, especially How to Win Friends and Influence People. John took Carnegie’s principles to heart. He practiced in the mirror for hours daily and forced himself to speak up in class. The hard work paid off. His classmates didn’t just stop teasing him; they elected John class president in his junior and senior years. And John was invited to give a commencement speech at his high school graduation, which was highlighted in local newspapers.

John was a good student and received a partial scholarship to the University of Chicago, but it wasn’t enough, and his family couldn’t help. It was the depths of the Great Depression, and John was desperate to find a way to pay for college; this, plus the confidence he’d gained from practicing Carnegie’s methods, would lead to what John would do next.  

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I finished reading about Sam Zell’s journey. Sam was a colorful person, and his autobiography captures this. He published this book in 2017, when he was 75, and passed away last year at age 81.

What Was Unique about Sam’s Upbringing?

Sam grew up in a middle-class family, but his upbringing was unusual. His parents left Poland’s familiarity and spent almost two grueling years migrating to the United States. When they made it, they started from nearly zero and built a prosperous life (and learned a new language). His parents thought and acted differently than his schoolmates’ parents. Recognizing you’re in the wrong situation, taking action to get to the right situation, and successfully rebuilding from zero highlights the immigrant mentality ingrained in Sam’s parents.

That mentality was the reason Sam’s parents weren’t killed by the Nazis, and they instilled that mindset in their children. Sam’s comfort in going against conventional wisdom, ability to repeatedly change strategies, and dogged work ethic resulted from being raised by parents who embraced the immigrant mentality.

How Did Sam Become So Successful?

Sam embraced capital leverage throughout his career. He often used two forms of capital leverage simultaneously. He borrowed from banks and raised money from investors to purchase investments, which is common in real estate. When he invested using leverage, he could invest in opportunities that exceeded the capacity of his capital and magnified the returns when deals were successful. Conversely, leverage magnified painful periods for him.

Sam also invested when the prices were so low that his downside risk was significantly reduced while his upside potential was massive. For example, in real estate, he purchased when properties were selling below replacement cost, meaning that any new competitors would be forced to charge higher rental rates than Sam. 

Buying at the bottom and using capital leverage significantly reduced his probability of being crushed by leverage and magnified his gains.

Sam was a macro thinker. He could understand the implications of a macro change, such as a new law, and what micro actions to take to capitalize on it. Thinking top-down and being right about micro implications is extremely difficult, and executing on such understanding consistently is extremely difficult and rare. Sam had this gift and drew on it to invest in more than just real estate.

Sam recognized the value of having access to liquidity when using capital leverage in the business. He understood that the stock market is the only reliable source of liquidity. Even when times are tough, people are still buying and selling in the market. Sam spent time mastering the IPO process and learning how to run a company in a manner that met public-market investor expectations.  

What Kind of Entrepreneur Was Sam?

Sam was an entrepreneur, not a founder. He wasn’t focused on a specific problem or solution. He was always looking for an opportunity to make money. Finding creative and intellectually stimulating ways to make money excited him. He had no interest in focusing intensely on a single problem for an extended period.

Sam enjoyed the art of deal-making, although he doesn’t appear to have been a zero-sum thinker. He wanted everyone to win so he could do more deals with them in the future and not take every penny for himself.

Sam was a high-level strategic thinker. Operational details didn’t interest him at all. He understood this and leaned into it. He was at his best when partnered with someone operationally minded, such as Bob Lurie.  

What Did I Learn from Sam’s Journey?

The immigrant mentality is a powerful force and can change one’s life trajectory. This mindset comes with risks, but if consistently applied, it will likely put you in a better situation.

Being driven and intense exacted a price. Sam was married three times.

Thinking in terms of supply and demand is a simple way of evaluating opportunities. There’s no substitute for limited competition. Thinking about when supply and demand curves will intersect and the opportunity that will be created stuck with me.

Risk evaluation—constantly evaluating the downside and upside of every situation and acting only when downside is limited—is something to keep top of mind.

Simple tools can have a big impact. Sam used outlines to organize his thinking and cut to the heart of complex issues. When he was in trouble, he made lists and zeroed in on the tasks to accomplish each item on his list. This helped him from being overwhelmed.

Capital leverage make it difficult and stressful to weather the inevitable rough periods in the business cycle. When you’re at the top of a cycle, upside potential is reduced and downside risk increases. This is a great time to reduce or eliminate your capital leverage.

Finally, Sam was eccentric and did things his way, but he did everything at a high level and to the best of his ability. Because he did everything at a high level, he won more than he lost. Because he won more than he lost, people embraced his eccentricity. If you’re excellent at what you do, people will accept you for who you are, regardless. Everybody loves a winner!

Sam was an amazing entrepreneur. In his autobiography, Sam provided specific details on some of his biggest deals. Anyone interested in buying companies, entering new businesses, or using frameworks when investing can benefit from reading his book.

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Sam Zell was riding high in the 1980s. According to his autobiography, the early 1990s were one of his most difficult periods. His partner of twenty years, Bob Lurie, died of cancer in his 40s, which rocked Sam. He was in denial about the severity of the situation until Bob sat him down and told him he needed to prepare for Bob to die. To make matters worse, his second marriage ended in divorce in 1994.

While Sam navigated those challenges, the economy went into a recession. Sam’s companies couldn’t refinance their debt and struggled to make payroll. Sam was on the brink of default and failure.

Listing his companies publicly on the stock market was his only option for raising cash. Sam dove into learning everything about this process and, in 1991, completed his first IPO for a portfolio company. Learning how to run the IPO process would be a valuable skill. During this period, Sam listed seven of his companies for about $2 billion in total.  

Sam recognized he wasn’t the only one struggling. Many companies had too much debt and were desperate to raise capital. In 1990, Sam created a $1 billion fund to invest in distressed companies; he bought ownership stakes at discounted prices.

Sam also spotted a structural change in real estate:

• Easy money from Japan lent to US developers caused overdevelopment
• The savings-and-loan crisis eliminated a key source of lending to real estate
• The Tax Reform Act of 1986 reduced tax benefits for syndicate investors (such as Sam’s father), which reduced the capital these investors allocated to real estate

With most real estate using 80% to 90% borrowed money, Sam recognized that these factors, plus a recession reducing rental demand, would make it impossible for property owners to service their debt loads. This would lead to a real estate crisis worse than the Great Depression.

Sam was right. Commercial real estate lost 50% of its value. Losses were estimated at $80 billion. Between 1989 and 1996, Sam raised four funds for $2.1 billion and went on a buying spree.

In 1992, Morgan Stanley created a new real estate investment trust (REIT) structure called an umbrella partnership real estate investment trust (UPREIT), which allowed property owners to contribute property to REITs listed on the stock market and gain liquidity without triggering a tax event. Property owners could turn illiquid buildings into liquid holdings that generated predictable cash flow (UPREITS must distribute at least 90% of taxable income to shareholders annually). Sam leveraged his decade of taking companies public in 1997 by taking his four real estate funds public as a UPREIT and named it the Equity Office Properties (EOP) Trust.

Ten years later, in 2007, Sam perfectly executed a competitive bidding process between Blackstone Group and Vornado Realty Trust and sold EOP to Blackstone for an eye-popping $39 billion. Sam’s timing was impeccable—the Global Financial Crisis was approaching.

Sam also leveraged his experience investing where populations grew and started investing in real estate in emerging markets. He created Equity International in the late 1990s and began partnering with developers in emerging markets who were great operators. Sam provided the capital and best practices on financial discipline and strategies and helped prepare the developers for public-market investors.

This period was a wild journey full of ups and downs for Sam. But two things stood out to me. Sam had an uncanny ability to recognize macro events and understand how they impacted the supply and demand of real estate and capital available to companies. He masterfully positioned himself to take advantage of these insights before others appreciated them. Sam also did a great job identifying and learning skills that could be helpful in the future. He could have relied on investment bankers to run his IPO processes, but he decided to learn the skill himself because he knew it would be valuable in the future given that public markets are the most constant source of liquidity.

In the next post, I’ll share my takeaways from Sam’s journey.

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In the 1970s, Sam Zell refined his business principles to the following:

• If an opportunity has a large downside and minimal upside, steer clear—and if it has a minimal downside and large upside, go after it
• Make sure you’re getting paid sufficiently for the risk you take
• Never risk what you can’t afford to lose
• Keep it simple: the more steps, the more opportunities to fail

He also refined his thinking on supply and demand:

• Opportunity is embedded in the imbalance between supply and demand
• Both rising demand against flat or diminishing supply and flat demand against shrinking supply create opportunistic imbalances

According to his autobiography, Sam’s refined thinking led him to realize that his thesis of investing in high-growth second- and third-tier cities had run its course. Other investors had recognized the opportunity, so more capital was chasing these properties, increasing prices and reducing returns. By 1973, Sam realized that the supply/demand imbalance in commercial real estate was getting extreme. Easy money had led to more development and too much supply, which Sam predicted would decrease rental rates. At the same time, a recession was beginning, which would reduce demand. In short, supply was increasing rapidly and demand was about to start decreasing.

Sam sold his properties and started stashing cash to take advantage of the crash he thought was inevitable. He also launched First Property Management Company to focus on managing distressed properties. Until the market crashed twelve months later and Sam was buying properties at 50% discounts, everyone thought he was insane.

Between 1974 and 1977, Sam used a creative strategy to purchase $4 billion worth of properties with $1 down per property. He borrowed at a roughly 6% fixed interest rate while inflation was 9% or higher—so he was making 3% the second the deals closed. He realized the real money in real estate is made from borrowing at a long-term fixed rate in an inflationary environment, which increases property value and rents and depreciates the value of the loan.

Sam became known as the grave dancer because he bought at deeply discounted prices when others were afraid. But he viewed it as an opportunity to resurrect properties with potential. His low entry price drastically reduced his downside risk and increased his upside potential. This perspective gave him the conviction to bet heavily and be contrarian.

In the 1980s, Sam saw overdevelopment in real estate again but believed the sector had structurally changed. He realized that his business principles and focus on supply and demand could be applied to companies, too, not just real estate. Setting a goal to have 50% of his investments not be in real estate by 1990, he bought distressed companies that had borrowed too much but owned lots of assets like plants and machinery. A weakening economy provided him with ample businesses that fit his criteria and that other investors didn’t want to invest in. He went on a deal spree. In the book, Sam discusses the deals for several public companies he bought entirely or partially.

During this period, Sam also learned that businesses reliant on borrowing benefit from understanding the motivations of their lenders and their methodologies for issuing loans. Doing so led to companies Sam owned offering financing to buyers. At that time, having these loans on their books allowed Sam’s companies to borrow more from banks, which was counterintuitive.

During this period, Sam sharpened his understanding of risk, business, and supply and demand, which led to his transition from real estate investor to investor. When asked what he did for a living, Sam began confidently saying, “I’m a professional opportunist.”

This new outlook would profoundly affect the rest of his career, but first, he’d have to survive some challenging times.

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When Sam Zell returned to Chicago, he was rejected by 43 law firms. When he finally landed a job at a small law firm, he lasted four days. Reviewing contract details all day was painful. When he quit to start doing deals again, the firm made him an offer: if he would stay, they’d do his legal work for him and give him a 50% commission on any legal business he brought in.

According to his autobiography, Sam did so well bringing in new business that he made three times as much money as the junior partners. The firm cut his commission to 25%. What he brought to the table wasn’t being valued, so he quit, which was risky given that his wife was pregnant. Sam was 25 and didn’t want to be held back by anyone else’s rules. He wanted to control his own destiny.

He started his own investment firm focused on investing in small, high-growth cities with limited competing capital. Colleges were growing, so he focused on buying apartments in cities with universities. In 1966, he closed his first major deal, a $1 million apartment building, with his father as an investor. Sam predicted it would yield 19% annually, while his father thought it would yield 8%. It ended up generating 20% annually. Sam expanded to Tampa, Orlando, Jacksonville, and Reno.

He tried to develop properties from scratch, but mistakes with Lake Tahoe and Lexington, Kentucky, projects burned Sam. He learned that development was complex and risky. Things outside of your control can change and doom a project between the idea and completion stages. Sam couldn’t stomach that level of risk.

In 1969, Jay Pritzker, part of the family that founded Hyatt Hotel Corporation, tried to hire Sam to scout deals for him. Sam declined, but Jay became a mentor and co-investor with him. Sam’s relationship with Jay elevated his thinking as an investor. Sam learned to understand risk, that most deals depend on one or two things, and that you can organize your thinking to cut to the heart of something complex by breaking it into pieces and creating an outline.

Around 1970, Bob Lurie rejoined Sam in Chicago at the firm, now called Equity Group Investments. Bob complemented Sam and they worked well as partners. Bob stayed in the office, viewed things pessimistically, and focused on details. Sam was Mr. Outside, an optimistic salesman who hated details. They had a team of 10 in the 1970s and encouraged everyone to wear what they wanted, believing that if you dress funny and are great at what you do, you’re eccentric. They wanted to attract eccentric who would do a phenomenal job, not mediocre people who could dress the role. Early on, Bob and Sam reinvested everything in deals and their business, so they were cash poor and ran the company on a shoestring budget.

In the 1970s, Sam and Bob met a brilliant dealmaker named Arthur Cohen, and they learned a valuable lesson from Cohen’s struggles. Cohen acquired an offshore mutual fund that offered daily redemptions to investors, but it held real estate, which couldn’t be sold quickly. When the market turned sour, the combination of long-term assets and daily investor redemptions put pressure on Cohen to raise cash quickly. Sam and Bob took advantage of Cohen’s predicament and bought several of his properties at attractive prices because they could decide and close quickly.

Things were going well for Sam until 1976. Then, partners at a law firm he used to craft tax-advantageous deals were indicted. One partner, Sam’s brother-in-law, was convicted. Sam was indicted, too, but the case was dropped. The stain of an indictment on his record would follow him for years. Sam learned how important reputation is when people began to question his.

Sam was in control of his own destiny, but being in control didn’t mean things were always smooth. Sam learned painful lessons, most notably how to understand and minimize deal and reputational risk. A focus on risk would play a critical role throughout his career, but especially in the next phase of his journey, a period when Sam was known as the Grave Dancer.

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Sam Zell passed away last year. The week he died, I researched him and learned that he was known as the real estate investor and deal maker who sold Equity Office REIT to Blackstone in 2007 for $39 billion. I purchased his autobiography. After having read the biographies of Summer Redstone and Wayne Huizenga, I wanted to learn more about deal-making entrepreneurs. I began reading Zell’s autobiography Am I Being Too Subtle?: Straight Talk from a Business Rebel.

Sam grew up in an upper-middle-class family in Chicago, but his home environment reflected his parents’ experiences. They escaped Poland on the last train before the Nazis invaded later that night and spent the next twenty-one months trying to get to the United States. They arrived in May 1941, and Sam was born a few months later.

Sam's parents were disciplined and made hard work and high achievement their priorities. Sam’s father couldn’t find a job in his field, so he reestablished himself as a jewelry entrepreneur. With this work, he provided Sam and his siblings’ upper-middle-class lifestyle and set an example for Sam.

At age 12, Sam bought Playboy magazines during trips to downtown Chicago and sold them in the conservative suburbs. He learned that for scarce items, price is no object. Capitalizing on supply-and-demand imbalances would be the central theme throughout his career.

By the time Sam left for college, a commitment to learning, an understanding of how to apply his learnings to real life, and a desire to challenge conventional wisdom were instilled in him.

During a summer break, Sam hitchhiked across the country for two weeks and learned a valuable lesson: you learn the most about people when you see them in their natural environment, so get out and see people; don’t have them come to you. He did door-to-door sales one summer but eventually found his calling. He pitched a real estate developer to let him and classmate Bob Lurie manage his building. This led to contracts to manage two other buildings.

Sam went to law school to please his parents but hated the attention to detail it required. During his second year in 1965, he used his money from property management to buy his first building for $19,500. He also bought the building next door and a large single-family house, which he converted into four apartment units. He was 23 years old.

Sam and Bob landed a large property-management contract, making them relevant market players. They started getting inbound deal flow, which resulted in an opportunity to buy a dozen adjected homes. They structured the $20,000 deals as individual purchases with $1,000 down and deferred closing, partnering with Sam’s dad to raise the equity portion of the deal. The elder Zell drove a hard bargain, demanding a 50/50 partnership.

They assembled the largest block of land held by one owner and sold it for a profit to an apartment complex developer. The entire process taught Sam valuable lessons:

• Tenacity – Always assume there’s a way to overcome any obstacle, and focus on finding it.
• Listening – The heart of any negotiation is listening. Listen to figure out what’s important to the other party.
• Scale – Scale has exponential value. The aggregate site was more valuable than the individual parcels.

This successful deal led to Sam learning about his father’s other real estate deals and to the two of them doing deals together.

In 1966, Sam graduated from law school. He was 25 with $250,000 in the bank and had made $150,000 that year. He’d built a solid financial foundation for himself and his wife. He was ready to leave Ann Arbor, Michigan, and move back to Chicago and start his law career.

Sam’s parents and their journey to the United States significantly affected Sam. His parents instilled in him a curiosity, dogged work ethic, and ability to think for himself. Sam honed these traits in school in a small market, but they were about to propel him to another level when he deployed them in a big city.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

I finished reading about James Dyson’s journey. When his autobiography was published in 2003, James was 56 or so. Since then, James has continued building Dyson. As of this post, he’s 77 and appears to be still involved in Dyson, although he’s no longer CEO.

What Was James’s Starting Position in Life?

An entrepreneur’s early years often have a lifelong impact on them, and that was true of James. His father’s death when he was nine scarred him deeply. He didn’t have a father figure who could share knowledge with him. James felt like he had to figure things out on his own, so he learned to educate himself. He became a voracious learner, and he believes anyone can become an expert on any topic in six months.

His father’s passing also instilled in him a belief that he shouldn’t waste time doing things he doesn’t want to do. He learned to say no to things like medical school and leaned into things he was passionate about, like art, despite not having a clear path to where that passion would take him. In his early years, he believed that following his convictions would lead him to where he was supposed to be.

Two yardsticks that I use to evaluate entrepreneurs are distance traveled and personal velocity. James went further than most people will in a lifetime despite starting at a disadvantage. And his personal velocity, or the rate at which he moved toward personal goals, was exceptionally high and certainly increased his distance traveled.

How Did James Become Successful?

James’s wife, Deirdre, is a big reason he was successful. She supported him during the decade-plus when he traveled the world and the family was on the edge of financial ruin. When he was on the verge of quitting during the Amway lawsuit, Deirdre talked him off the ledge just in time for him to get a lucky break.

James is one of the most disciplined and focused entrepreneurs I’ve read about. For example, his ability to work for over 1,000 days straight, by himself, on a single product is a superhuman level of discipline, focus, and perseverance. He was clear on what he wanted and laser-focused on consistently taking small daily actions toward that goal. This led to his creating the technology that would be the foundation of his company. He moved a mountain by chipping away at it, one stone at a time, every day for years.

James was persistent but not stubborn. He knew he could build a big company around vacuums, but he was flexible on how he did it. His strategies evolved. For example, he started by licensing his technology but slowly moved to manufacturing his vacuum and selling directly to consumers as he encountered obstacles with license partners. He was rational in his decision-making. When he made a mistake, he acknowledged it and refocused his persistence on the correct actions instead of doubling down on his mistakes.

What Kind of Entrepreneur Is James?

James is a founder. He focuses on a problem and creates the best solution he can to solve it. He’s customer focused, not investor focused. He determines how to create the most value for the people who purchase his products.

James didn’t go straight to being a founder. Before founding Dyson on his own, he was an inventor. An employee of Jeremy Fry’s company. A cofounder of Dyson-Kirk with his brother-in-law. And a cofounder of Air Power Vacuum Company with Jeremy Fry. James wanted to reap the maximum reward for his efforts, and being a founder made that possible. This is likely why he still owns 100% of Dyson.

What Did I Learn from James’s Journey?

Licensing is a capital-efficient business model that I don’t have experience with. Licenses were a good way for James to generate recurring cash flows, which he used to hire his team and build out his manufacturing and direct-to-consumer operations. But licensing has downsides. Getting the details of contracts right, aligning the incentives, and dealing only with reputable partners are crucial considerations. If you get these wrong, you may never see a cent.

Vacuum cleaners aren’t a sexy market, but they’re a large one because lots of people use them every day. The autobiography didn’t say the market was growing, contrary to what I often see when companies have outsize success. But because he made a product that was ten times better than the competition, he was able to grab market share from competitors. Significantly improving products or services people use daily is a path to a big business, but the product can’t be comparable to the competition. In a market that isn’t growing, it must be an order of magnitude better.

The outsize impact on James’s products of editorial reviews in magazines and newspapers caught my attention. I knew reviews were powerful; it’s why products from unknown brands can be top sellers on Amazon. James appears to have figured this out earlier than most consumer-product companies. He also figured out that anything an ad can accomplish, true journalism can do better.

James says when you make something, sell it yourself. James doesn’t believe marketing agencies have the time or desire to learn about your product in depth. They’re best at applying their all-purpose skill to selling more of what already exists, not innovative things.

I’m bad at marketing, so seeing that he mastered this area is encouraging and gives me hope that I can too.

James is an amazing founder. His autobiography is a detailed account of his struggles. Anyone frustrated or thinking about giving up can benefit from learning about his journey.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!