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.

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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.

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With licensing revenue from the United States and Japan, James Dyson wanted to crack the UK and prove all the early naysayers in his home country wrong. His autobiography says he signed a deal in early 1991 with Vax, receiving £75,000 upfront. But Vax strung James along and never began production. James had made a critical error in the agreement: he didn’t set a trigger date for the minimum royalties. If Vax had never produced the vacuum, they wouldn’t have owed him anything and he couldn’t have licensed the product in the UK to anyone else. They parted ways after settling a lawsuit.

James designed a new “tank vacuum cleaner” for UK consumers to distract himself from the legal drama. However, £45,000 in legal fees to negotiate a contract with a tooling partner triggered self-doubt and thoughts of giving up on the vacuum altogether. James talked to his wife about dropping the Amway lawsuit and giving up. But then his lawyer called. The Amway suit was settled. Amway would pay James a license fee on each vacuum sold in United States.

James was back in the game. He raised £600,000 from Lloyds Bank after putting up his homes as collateral. Working with a team of four out of his house, he finished the design for the Dyson Dual Cyclone, aka DC-01, in May 1992. He was 31 when he had the idea in 1978; by this time, he was 45. It took fourteen long years for him to have his own product.

James forwent future £60,000 annual license payments from his Japanese partner and negotiated a lump payment of £750,000. This partially covered the £900,000 he needed to pay for DC-01 tooling. He incorporated Dyson Appliances and hired several small Italian companies to build molds for parts. He hired Philips Plastics to produce plastic parts and assemble the DC-01, and the first unit was produced in January 1993.

Business was brisk, especially with catalog companies. Orders were rolling in until Philips Plastics tried to strongarm James. It raised parts prices by 32% and retroactively back-billed months of old orders. James sued Philips and was forced to halt production. Eventually, the court ordered Philips to release molds so James could contract with other companies to produce his parts. This experience forced him to start Dyson’s first assembly facility. By July 1993, James was producing his own products.

Dyson began selling five times better than other brands and benefited from strong word-of-mouth growth. It became the best-selling vacuum in the UK.

James next shifted his focus to proper marketing and learned valuable lessons. For one thing, he learned to despise outside agencies. And he learned that with a new consumer product, you can’t sell more than one message at a time or you lose the customer's belief. He also learned that he had to establish, with zero doubt, that his product overcame a problem that his competitors all had.

These insights resulted in his famous “Say Goodbye to the Bag” campaign, and the company's growth exploded. It went from £3.5 million in revenue in 1993 to £85 million in 1996 and was named the fastest-growing manufacturing company in the UK.

James had this idea in 1978 and didn’t get clear signs of success until 1993; that’s fifteen years. His company wasn’t a breakout financial success or recognized as a leader in manufacturing until eighteen years after his initial idea. James persevered for over a decade and now owns 100% of Dyson and employs over 14,000 people (per Wikipedia).

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In 1979, James Dyson got Kirk-Dyson Designs off the ground with borrowed money. According to his autobiography, things didn’t start well. Within months, he’d gone through two molding partners who reneged on fixed-price agreements. He was forced to build the parts and borrow £45,000 at a 25% interest rate to buy a molding machine.

The “Ballbarrow from Kirk-Dyson Designs” launched in May 1979. At first, it failed. The construction industry and garden retailers were used to wheelbarrows and unwilling to try something new. James learned a valuable psychology lesson: entrenched professionals will resist change longer than consumers. James didn’t know how to sell to consumers, but going direct was his only option. He ran a newspaper ad and checks started flooding in. The company became profitable.

The ad led to a gardening journalist demoing the product, loving it, and writing a glowing review. This taught James a few things:

• Journalists are the first to see potential in an invention.
• People are likelier to believe someone who has tested the product.
• One journalist’s review is worth a thousand ads.

A large direct-selling company reached out, and Kirk-Dyson began drop-shipping orders for it. The company had a 50% market share, was selling 45,000 Ballbarrows annually, and recorded £600,00 in annual revenue.

Consumer inquiries led retailers to begin asking for the product. James hired an inexperienced sales manager, who suggested abandoning direct sales and wholesaling to distributors. This was a terrible mistake. Kirk-Dyson lost contact with the consumer, and margins were cut in half because margin for wholesalers had to be factored into the retail price. The company’s cash flow became negative, and it had to borrow more money.

With sales growing, the board of directors authorized spending money on unnecessary investments. James, focused on cash flow, objected but was overruled. The company borrowed £150,000. It was forced to raise capital by selling one-third of the company for £100,000. James’s stake was reduced to one-third, making him a minority shareholder. He was also the only rational voice on his board of directors.

Between 1975 and 1977, Kirk-Dyson had a 70% market share. Financially, though, the company was struggling. It had roughly £200,000 in debt at a 25% interest rate—the interest payments alone were £50,000. The company couldn’t support those debt payments.

The board decided to sell a U.S. license to get on track financially. The sales manager bolted to a U.S. competitor, copied Ballbarrow, and started selling in the United States. The board sued, despite James’s objection because of the cost. They spent a fortune on legal fees but lost the case, and James wasted a year traveling between the United States and the U.K. as his mother was dying from cancer.

Reducing debt was a must. James wanted to capitalize his loans and wanted the other two major shareholders to do the same. The board, on the other hand, wanted to sell the rights to the Ballbarrow. In January 1979, it did, and at the same time fired James.

Kirk-Dyson was a sales success but a financial and personal failure. The company didn’t make money, and James’s sister and brother-in-law didn’t speak to him for ten years after the firing.

From this, James learned valuable lessons about voting control and boards of directors. Control is everything to entrepreneurs; losing it can lead to losing their company. Choose your board carefully. Investors and “businessmen” don’t think or act like founders.

James also learned how debt triggers reverse psychology for small companies. When you don’t have money, you start thinking of all the things you could do if you had money and end up overspending, getting further into debt. When you have money, you’re not desperately thinking of ways to make money, so you’re careful and don’t spend on frivolous ideas. Being free from debt frees you to think clearly and negotiate from a position of strength.

Fired from the company he founded, James had to figure out what was next.

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Months ago on Reddit, I saw a post listing a user’s favorite founder biographies and autobiographies. Against the Odds, James Dyson’s autobiography, was number one. Researching him, I learned that James Dyson is a famous inventor and the founder of Dyson, a global company famous for its cyclone vacuums. According to this press release, Dyson’s 2023 revenue was £7.1 billion, or roughly $9 billion today, and its profit (EBITDA) was £1.4 billion, or roughly $1.77 billion today. James reportedly owns 100% of the company and is personally worth over $13 billion. Intrigued, I started reading his autobiography to learn about his journey.

Life started out rough for James. His father died of cancer when James was just nine. He felt alone and that things would easily be taken away from him. This, plus being the youngest sibling, instilled an underdog mentality in James. When James’s father died, he was making a career change. James learned his first valuable lesson: don’t waste time doing something you don’t want to do.

Following his passion for art, he skipped college after high school and enrolled in a graduate-level art program at the Royal College of Art (RCA). He fell in love with industrial design and, for spending money, started a company selling cheap wine. The wine business taught him a crucial business lesson: real money is made selling entirely new products that have style and substance and can’t be found anywhere else.

James tried and failed to raise money to build a theatre for poor children that he designed, but investors put British inventor and entrepreneur Jeremy Fry on his radar. James cold-called him, and Fry offered him work on a project. James approached Fry with an idea for a Sea Truck, something new, and Fry let him run with testing the idea. Eight months after the prototype was made, Fry’s company paid James £300 for the design.

James graduated in 1970 from RCA and went to work for Fry in a marine division newly created for Sea Truck. The Sea Truck eventually succeeded after James overcame various internal and external hurdles. James learned valuable lessons: One, if you don’t invest enough in the early product and try to sell a half-finished product, you’re doomed from the start. Two, sell people on how the product fits their specific needs, not how it’s generic enough to solve all problems.

After five years, James was roughly twenty-seven and tired of rewarding shareholders of Fry’s publicly traded company through his efforts. He wanted to reward himself. He was ready to go out on his own. He invented the ballbarrow and with Stuart Kirkwood, his wealthy brother-in-law, formed a 50/50 partnership. They borrowed £24,000, which required James to put up his home as collateral. Kirk-Dyson Designs was launched. James was officially an entrepreneur!

James’s early years were traumatic and affected the rest of his life. They instilled a steely drive to prove himself and made him comfortable with blazing his own trail. These skills were valuable in launching Kirk-Dyson, but James had many more lessons to learn as a first-time founder.

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

I finished reading about Wayne Huizenga’s amazing entrepreneurial journey. His biography was published in 1995 when Wayne was 57 or so. He wasn’t done. He continued building before passing in 2018. The public companies he was involved with and the value they created for shareholders are testimonials to his entrepreneurial success:

• Waste Management – Wayne was a founder and helped take this company public. It’s still public and, as of this writing, has a market capitalization (i.e., valuation) of over $80 billion.
• Blockbuster Video – He built this from $7 million and sold it for over $8 billion.
• Republic Services – He bought into this company and grew it. It’s still public and, as of this writing, has a market capitalization of over $60 billion.
• AutoNation – He founded this company and spun it out of Republic Services in 1998 via an IPO. It’s still a publicly traded company and, as of this writing, has a market capitalization of over $6 billion.

Wayne also founded two professional sports teams and bought the NFL’s Miami Dolphins.

How Did Wayne Become So Successful?

Childhood pain instilled drive in Wayne. He watched his father fail and go broke. This scarred him and sowed in him a fear of financial insecurity. Wayne was also born with an intense personality. These two traits fueled Wayne’s tireless work ethic and frantic pace. Wayne worked constantly and did multiple things at once. In the 1950s, friends realized that Wayne was different when he installed a phone in his bathroom. Wayne’s drive had a downside, too. His first wife divorced him, and he openly shares regrets of not being around to see his children grow up. Executives working under Wayne also sacrificed personally to keep up with him.

Another factor in Wayne’s success was his strategy. He focused on building large companies through acquisitions. Picking the right types of companies and markets was key. Wayne’s criteria were simple:

• Service industries with repeat business
• Growing industries
• Industries dominated by mom-and-pop entrepreneurs, who are easy to take market share from
• Economies of scale that a large player can benefit from

If you don’t know something exists, you can never benefit from it. Wayne worked to make sure he was in the flow of information, which contributed to his success. In private markets he had a network of wealthy, early-stage investors with whom he shared deals. On Wall Street, he had a network of investment bankers and analysts. Owning three sports teams kept him in the know with titans of various industries. When something was happening or about to happen, Wayne knew about it.

Last, Wayne figured out his playbook for compounding his wealth rapidly. He learned how perception on Wall Street worked and how to scale companies rapidly. He combined those two things to create his initial wealth base by growing Waste Management quickly. He then compounded that wealth even faster by applying the same playbook to Blockbuster.

What Kind of Entrepreneur Was Wayne?

Wayne was a buyer. He was a deal maker. He enjoyed the thrill of winning deals and building an empire by acquiring. But Wayne had no desire to run an empire. He was not an operationally minded entrepreneur. He could pick and acquire the pieces of his empire, but putting them together and managing them fell to others.

Wayne was never satisfied. He always wanted more. People who worked closely with him repeated this throughout the book. He never said “Good job.” Instead, he always said “You could have done more.” The $23 million fortune he accumulated at Waste Management wasn’t enough, so he quit. The $8.4 billion signed deal with Viacom to acquire Blockbuster wasn’t enough, so he pushed Sumner Redstone for more stock before the deal closed. No matter what, he always wanted more. His thinking about pursuing more when he already had enough is best captured in this quote: “Why do you climb the mountain? Because it’s there.”

What Did I learn from Wayne’s Story?

• Entrepreneurship through acquisitions is a viable path to building a publicly traded company.
• A deal-oriented entrepreneur is well suited to partnering with an operationally oriented person. Otherwise, the foundation could crumble as more acquisitions are added.
• When building something to sell in the short to medium term, you’ll likely be playing the perception game. You can’t always control perception. Perception can lead you to do things that may not benefit your customers.
• Dealmaking is a skill. If you’re doing a deal and you don’t have this skill, find someone who does. The downside to a bad deal can be big.
• Wayne’s rules for making a deal:
  • Don’t fall in love with a deal.
  • Don’t paint yourself in a corner.
  • Never say anything that won’t allow you to come back in the front door.
  • Don’t say anything is a deal breaker (if you renege, you kill your credibility).
  • A deal is never dead if you don’t let it die.
  • Always let the other side set the initial price.
  • Recognize what the other side really wants out of a deal.
  • Know when to walk.
  • Don’t take no for an answer.

Wayne was an amazing entrepreneur. His biography is a blueprint for anyone interested in building companies by acquiring, learning about dealmaking, getting into the business of sports franchises, or compounding wealth in the stock market.

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