Santangel's Review


Sam Zell: “I’m also the fastest ‘no’ in the west”

We happen to agree with Zell that author wasted far too much time talking about Tribune, but this interview from earlier this month is still worth reading (registration required) as it let’s us get inside Zell’s investment process a little. It also includes one of the best examples of supply and demand we’ve ever seen.

One of the most important questions an investor must answer is “where do I spend my time?” Successful investing is, in part, a numbers game. The more opportunities you can effectively look at, the better your final decision will be. Put another way, the more rocks that are turned over, the higher the likelihood of finding buried treasure. Time then becomes the limiting factor in the equation. As is readily apparent from his interaction with the interviewer, Zell is very guarded of wasting his own time, but more importantly, he gives us a clue about how he is able to turn over so many rocks. His key, it seems, is saying “no” really quickly.

“I’m also the fastest ‘no’ in the west,” he continues. “There’ve been people who’ve worked for me who will spend an inordinate amount of time before they conclude not to do something. One of the skills I have is the ability to look at something and rapidly make a risk-reward analysis as to whether it’s worth doing.”

This ability to say no quickly and to do so effectively (without missing too many good opportunities) is a very underrated skill for investors, but Zell clearly understands its importance.

To be filed under amusing anecdotes, Zell tells the story of how he got his first start “in business.” Its a great story and a tremendous example of localized supply and demand at work:

“Mr Zell had displayed an early aptitude for entrepreneurship. As a boy, he would buy Playboy magazines downtown for 50 cents each and sell them on to his school mates in the wealthy suburb of Highland Park at a hefty mark-up.”