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Hi I'm John Ko and welcome to icons
of DC Area Real Estate, a one on

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00:00:14,830 --> 00:00:20,650
one interview show highlighting the
backgrounds and career trajectory of

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leading luminaries in the Washington,
DC area real estate market.

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The purpose of the show is to
highlight their backgrounds and their

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experiences, and some interesting
stories about their current

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business as well as their past,
and to cite some things that you

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might take away both from
educational standpoint as well as

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lessons learned in the industry,
and some amusing and sometimes

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interesting background stories.
So I'm hoping that you will

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enjoy the show.
Before I introduce my guest, I'd like

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to share that both this podcast and
the community I started in 2021,

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called The Iconic Journey and CRA
is now part of a new non-profit

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organization with that same name.
The new company will offer

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opportunities for sponsorship to
grow the community,

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both in membership and in programs.
It also allows you as listeners to

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show your appreciation for this
podcast, which has delivered episodes

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twice monthly since August 2019
with a charitable contribution.

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Transitioning the community and
podcast into the nonprofit

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organization is underway.
The community,

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which is open to commercial real
estate professionals between the

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ages of 25 and 40 years old.
Is currently up to 65 members

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and growing.
If you would like to learn more

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about either joining the community
or contributing to the podcast,

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please reach out directly to me
at John at Co Enterprise Co e n

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t e r pre ses.com.
Separately my private company Co

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enterprises.
Now we'll focus only on advisory

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work for early stage real estate
firms and career counseling.

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If you have interest in learning more
about its services please review

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my website at Co enterprise.com.
Thank you for listening.

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Thank you for joining me for
another episode of icons of DC

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Area Real Estate.
Actually, this is the 100th

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episode of the podcast,
and I am extraordinarily pleased

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to introduce my, uh, unusual and
pioneering guest on this show.

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And that is Ethan Penner,
who was the founder of the CMBS

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commercial mortgage backed security
industry back in the early 1990s.

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And he has recently written a book
called greatness is a choice,

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which we talk quite a bit about
in the conversation.

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This interview was recorded live
at the headquarters office of

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Walker and Dunlop in Bethesda.
In their beautiful space in front

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of an audience of members of the
iconic journey, as well as a few

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of the team at Walker Dunlop.
We discussed his trajectory into the

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mortgage industry via his challenging
upbringing in a divorce household,

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starting his career in the savings
and loan industry, and then to

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investment banking with Drexel
Burnham, Morgan Stanley and then

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Nomura Securities, where he ended up.
Starting the CMS industry after

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seeing the devastation of the
early 1990s.

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With the SNL crisis, as well as,
uh, the banking, uh, uh,

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dearth of capital.
So his career after starting the CMBS

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just exploded because the market
was just really needing capital,

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and he found a way to be a bridge
to from the bond market into the

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mortgage market with that,
with that vehicle.

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And so from about 1992 93 until 98,
he they were the top firm in the

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marketplace doing at Nomura
Securities, doing tremendous volume.

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He was then let go for political
reasons in 1998.

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And he talks about it and left
the industry.

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For several years until why he and
he talks a little bit about that.

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Meets his second wife and then
emerges again in 2008, in with CBRE.

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And he talks about how he did that.
They funded him for a while and

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then he joined it, started his
own company shortly thereafter,

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about 2 to 3 years later.
He has had success with his own

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company, kind of opportunistic,
investing more and in the debt side,

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of course,
that's his experience and expertise.

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But he decided after a lot of
contemplation and going back to his

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faith, to start compiling writings
which he then built into his current

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book called greatness is a choice.
And he talks quite a bit about that.

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We talk about his philosophies.
The book is divided up into

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chapters with titles that are
very interesting, and I won't go

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into them here, but we talk about
them in the in the conversation,

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we talk a wide variety of subjects,
including real estate, finance,

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interpersonal relationships with his,
his family, his wife and his

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children, as well as his parents.
Social issues in the in the in the

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in the markets today is belief,
believe it or not,

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in a sixth sense that of who he is.
And he talks a bit about that.

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And in relation to a herd mentality
thought process in his book.

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So he's become quite a
philosopher and he believes that

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we all have greatness in us if
we choose to use it.

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So please enjoy this wide ranging
conversation with Ethan Penner.

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So welcome to the icons of DC
Area Real Estate podcast in

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front of a live audience.
Today at Walker and Dunlap, I'm

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pleased to introduce Ethan Penner,
CEO of Mosaic Real Estate Investors

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and author of greatness is a choice,
his recently released book.

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We will infuse his biography in
this conversation.

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We met each other over 25 years
ago at the Mortgage Bankers

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Conference in San Francisco.
Thank God we look the same when.

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I'll never forget what you were
wearing that night. It was.

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It was. He had a headdress on.
I think that was probably a foot

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several feet tall and a coat,
which I would call the Technicolor

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dreamcoat that you had on that night.
It was. It was pink with black lines.

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And it was I had just come from a
celebration of the Chinese New Year,

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and that was my ox colors.
Apparently some of the year of the ox

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and I just flown in with some friends
from Mexico for that party, and it

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was quite the party. So he his.
His company, Nomura at the time

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had Santana and Crosby, Stills and
Nash back to back that evening.

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For 3000 of us in mortgage banking,
it was a very special night,

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huge event and only one of many
that his company hosted over

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over several years.
So Ethan, since most of the audience

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is younger and may not understand the
market cataclysm and reset of the

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late 1980s through the mid 1990s,
perhaps share your career trajectory.

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Start at Drexel through Morgan
Stanley to mirror through those times

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and how you were fortunate enough
to build the franchise you did?

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Well, I think the word fortunate
is is definitely a very relevant

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word to use.
And, uh, and you reference,

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I think you're, you know,
I wrote a book and, um,

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there's a chapter dedicated to the
concept of timing and good timing,

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which is another way of saying
good fortune or good luck.

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And I think that anyone's success is
always a combination of hard work

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and a little bit of intelligence,
or maybe a lot, depending upon the

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person, but but also good timing,
good fortune, good luck.

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And mine was definitely a combination
of those of those things.

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Hopefully some intelligence was
in there too.

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But definitely good timing.
Good luck. Good fortune was there.

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I, I came out of college and I,
I was a very challenging time in

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the early 1980s.
It was a pretty deep recession.

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Interest rates were very, very high.
As you remember,

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the ten year Treasury was 1565. Okay.
So when we think about high

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yields like we think of today,
oh my God, the ten years at five,

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you know, there's 15.65 when I
got out of college.

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And that tends to squash economic
vibrancy pretty pretty soundly.

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You know we think about today's
fed trying to tame economic

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inflation with 5% tenure.
You can imagine how tame an

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economy could get with 15% tenure.
So I got out in that time and I

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took the first and probably only
job I was offered in finance,

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which was in the mortgage
business at a savings loan.

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I was fortunate enough to kind of
work my way quickly onto Wall Street.

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The wall Street had just adopted
mortgages as a business that

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they were interested in,
and the trading of mortgages had

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just kind of started really around
the time I got out of school.

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So was it. Was based on MBAs. Right.
So what we call our Ms. was just

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called Ms.. Right.
There was not there was no R or C,

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it was just mortgage backed
securities was a new thing. Ms..

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Fannie and Freddie were
participating.

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And I kind of started on Wall Street.
Uh, my first job was at Drexel,

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as you as you suggest, John,
I was trading non agency guaranteed.

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So credit risk intensive mortgages.
I was the first class of traders

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ever on Wall Street to make markets
in credit risk instruments.

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And then me and people like me
started to use structured finance

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techniques, which were very basic,
just taking a pool of loans and

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creating a senior 90% class in a
junior or 10% class,

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and getting the senior class
rated by the rating agencies,

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typically Double-A and selling those
Double-A bonds to bond buyers.

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And I got lured away by Morgan
Stanley, who wanted to get into that

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business, had not gotten into it yet,
and I found myself running,

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starting from scratch and running
more, really mortgage finance and

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mortgage trading for Morgan Stanley,
not including Fannie,

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Freddie's and Jenny's, uh, at the
age of 26, something like that.

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And I was the I became the youngest
principal in the history of the firm.

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And I love my career at Morgan
Stanley.

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But then, as you point out,
there was this incredible dislocation

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in commercial real estate.
And it seemed obvious to me that

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the same securitization, structural
structured finance business that

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had been applied so successfully
by people like me on Wall Street

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to single family mortgages,
could be applied to commercial real

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estate and help solve the liquidity
crisis that existed, which was,

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I don't think people today,
just like people today, can't

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imagine a ten year treasury at 15.
I think it'd be also equally

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impossible to imagine not being
able to get a mortgage at all.

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Okay, like, I mean, it didn't
matter how great your property was,

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didn't matter the location, the
occupancy, the there were no lenders.

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Like when I I'm telling you that in
1990 and you remember this 1990,

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1991, if you had a loan on this,
let's say, this beautiful office

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building that we're sitting in and it
was 100% occupied and you had a 50%

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loan to value exposure at a ten cap.
There were no lenders for you.

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Not only.
That, the lender,

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if you had a loan on.
It, no, they didn't want you to

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pay it off. No they didn't.
They would not roll it at all.

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They might give you a six month
extension, but they would.

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They wanted no part of that loan.
And there were no other lenders

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to turn to.
And so it was a weird moment

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where the an industry,
perhaps one of the largest

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industries in the United States,
everyone was facing bankruptcy and

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insolvency and. This 30 year old kid.
Me kind of had this idea that

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securitization could be the solution
to this industry's liquidity crisis.

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No one else, even though I wasn't
the only one who came from this

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background, I guess I was the only
one imbued with dreamer mentality.

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You know, like, I, I think that.
When you do something that's

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never been done before.
So securitization had never been

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applied to commercial real
estate before.

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And when you go to do something
that no one's ever done before,

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everyone tells you, well,
if it could have been done,

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wouldn't it have been done already?
Like why you and I was like, oh,

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well, I don't know. But I'm doing it.
Like my answer to that is,

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I don't know, but I'm doing it.
Everyone's the other.

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I think everyone else probably just
kind of figured if it was doable,

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someone else would have done it,
so why bother?

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I guess I don't know either.
I'm dumber, more stubborn,

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more persistent.
Maybe I believe in myself.

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I don't really know what it was,
but I just kind of ran through all

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the obstacles of doubt that existed
in the rating. Agencies on board.

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That was, well, tough.
So I'll tell you, you know,

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I do a bunch of I do lately
because of my book.

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I'm doing a lot of speaking podcasts,
public speaking, and I enjoy very

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much when it's a real estate crowd.
And we could talk specifically

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about things like that.
So how did I get the rating agencies

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to overcome what was a like level
ten fear of real estate that was

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pervasive in the world? Right.
And anyone like I left Morgan

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Stanley in order to pursue this
opportunity. Why?

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Because real estate was the third
rail of finance, and no one wanted to

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touch it because they feared losses,
loss of job, loss of money.

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And Morgan Stanley was no different.
And they said, listen, John Mack,

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who ran fixed income at the time,
it was my boss and ultimately

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ran the firm, said,
we don't want any real estate

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exposure on our balance sheet at all.
So if you want to leave and go do it,

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good luck,
but you're not doing it here.

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And I said, well, I do want to leave,
I do want to do it.

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So I'm leaving and I left.
How did I persuade the rating

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agencies?
So I'm going to I'm going to

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share a conversation with you
and your audience.

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I sat in the room, um,
with the head of one of the rating

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agencies who was structured finance,
mortgage finance guy and and I.

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It just started to explain to him the
logic that at some attachment point.

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There is great safety in the loan.
And he said, okay,

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I agree with that. Philosophically.
He said, but this gives you an idea

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of how bad things, where it goes.
But if there's any office exposure,

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we're not rating it.
There's no investment grade,

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none for office none.
So we happen to be sitting in

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00:16:08,910 --> 00:16:11,850
two World Financial Center,
where Nomura was headquartered.

217
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And I said to him, Ron.
We're sitting in this building

218
00:16:16,710 --> 00:16:21,090
and even now in a very depressed
valuation moment.

219
00:16:21,300 --> 00:16:24,000
What do you think this building's
worth? Just pick a number.

220
00:16:24,000 --> 00:16:27,180
And I don't remember what he picked,
but maybe it was 400 million.

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00:16:27,180 --> 00:16:29,760
It was a big number because a
beautiful, big building,

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00:16:30,000 --> 00:16:35,890
let's say 400 million, I said fine.
If I had a $1 million first

223
00:16:35,890 --> 00:16:39,520
mortgage on this building,
would it be rated investment grade?

224
00:16:39,550 --> 00:16:42,820
It goes. Yeah, be rated Triple-A.
I said, well, there you go.

225
00:16:42,850 --> 00:16:49,390
So so now we know that you will in
fact rate office investment grade.

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00:16:49,390 --> 00:16:50,950
And it's just a question of the
attachment.

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00:16:50,950 --> 00:16:52,930
But he goes, yeah I guess you're
right. How much risk.

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00:16:52,960 --> 00:16:55,780
Yeah, I said, so it's not a million.
It's going to be a bigger number

229
00:16:55,780 --> 00:16:59,140
than a million.
And it and it just kind of went

230
00:16:59,140 --> 00:17:03,160
from there.
But it was really, um, for me to

231
00:17:03,160 --> 00:17:08,470
start that movement, that industry,
that way of financing real estate,

232
00:17:08,710 --> 00:17:12,610
it involved a lot of
salesmanship and communication

233
00:17:12,610 --> 00:17:16,420
and a tireless amount. Right.
And a lot of skepticism,

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00:17:16,420 --> 00:17:20,170
a lot of resistance.
I convinced insurance companies

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00:17:20,620 --> 00:17:26,080
the same people who were insurance
company kind of lenders, that viewed

236
00:17:26,080 --> 00:17:30,040
this as a threat to their jobs.
I had to somehow overcome that

237
00:17:30,310 --> 00:17:32,530
to make them somebody had to
make them buyers, right?

238
00:17:32,530 --> 00:17:36,310
I had to make them buyers.
And the and the and the other bond

239
00:17:36,310 --> 00:17:39,850
buyers who were reading, who had
never bought real estate risk,

240
00:17:39,850 --> 00:17:43,180
didn't understand real estate risk,
and knew that people were

241
00:17:43,180 --> 00:17:45,880
literally dying on the vine with
real estate risk.

242
00:17:45,880 --> 00:17:48,220
I had to persuade them to consider.
So there was a lot of

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00:17:48,220 --> 00:17:51,490
salesmanship involved,
a lot of a lot of energy expended.

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00:17:51,490 --> 00:17:55,660
And when people would meet me because
I was in my early 30s at the time,

245
00:17:55,660 --> 00:17:59,770
they would frequently express shock,
like how young I was.

246
00:17:59,770 --> 00:18:02,140
And I would tell them, listen,
yeah, I'm young,

247
00:18:02,140 --> 00:18:05,140
but if I wasn't this young,
I didn't have this youthful energy.

248
00:18:05,140 --> 00:18:08,920
I don't know that I could do this,
you know, because it was a massive

249
00:18:08,920 --> 00:18:13,240
a massive amount of energy and
tireless salesmanship involved.

250
00:18:13,240 --> 00:18:16,540
How did you know you I mean.
Obviously that conversation was

251
00:18:16,540 --> 00:18:20,530
interesting, but you just had this
vision that it could happen, that

252
00:18:20,530 --> 00:18:24,340
this this industry could come, come.
About. Yeah. It seemed obvious to me.

253
00:18:24,340 --> 00:18:29,080
I knew that I understood the way
bond buyers think, which is a

254
00:18:29,080 --> 00:18:32,410
relative value based thinking.
And that's how I sold it.

255
00:18:32,410 --> 00:18:38,350
I would say, okay, listen, if a
single a corporate bond is trading at

256
00:18:38,350 --> 00:18:44,110
whatever 100 over treasuries, I know
there's some level that a single a

257
00:18:44,830 --> 00:18:48,550
real estate backbone will trade.
Maybe it's not 100, maybe it's 200,

258
00:18:48,550 --> 00:18:52,900
maybe it's 300. Tell me the number.
You know, and it really the good

259
00:18:52,900 --> 00:18:56,980
news was that the real estate
borrower had no other options.

260
00:18:56,980 --> 00:19:01,090
So whatever rate I had,
I had to charge them in order to

261
00:19:01,090 --> 00:19:04,450
placate the bond buyer.
They were hugging and kissing me

262
00:19:04,450 --> 00:19:07,780
because the alternative was to lose
the property. So it didn't matter.

263
00:19:07,780 --> 00:19:10,750
They were rate insensitive in
that particular moment.

264
00:19:10,900 --> 00:19:15,070
So that was the best time to
make money in that industry once

265
00:19:15,070 --> 00:19:18,280
you got up and running. Yes.
And I'll tell you something though,

266
00:19:18,790 --> 00:19:26,260
it taught me so much being there
doing that and, and and doing it

267
00:19:26,260 --> 00:19:32,350
in an aware state. So.
As you suggest, it was the best time

268
00:19:32,350 --> 00:19:36,460
because there was no competition.
I could charge the borrower anything

269
00:19:36,460 --> 00:19:40,900
I wanted and they would be happy.
I could tell them whatever the

270
00:19:40,900 --> 00:19:43,690
loan to value attachment point,
and they would be happy.

271
00:19:43,870 --> 00:19:49,840
And the bond buyers were getting
essentially bribed to take the bonds

272
00:19:49,840 --> 00:19:54,340
and getting overpaid for the risk.
And they were happy and we were

273
00:19:54,340 --> 00:19:57,220
making literally millions.
Junk bonds probably didn't.

274
00:19:57,220 --> 00:20:01,090
Trade me right or no, no, no,
we were making fortunes in this

275
00:20:01,090 --> 00:20:07,360
process, fortunes and making very
safe loans at exorbitant rates.

276
00:20:07,360 --> 00:20:14,260
And what was interesting was,
is that first year or two, everyone

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00:20:14,590 --> 00:20:19,090
saw what we were doing and thought
that we were going to blow up.

278
00:20:19,090 --> 00:20:21,910
And I never in my life took less
risk.

279
00:20:21,910 --> 00:20:26,260
Not before and not since,
like for me. But it reinforced me.

280
00:20:26,260 --> 00:20:30,580
This herd like thinking.
And I write about that in my book

281
00:20:30,580 --> 00:20:36,490
that, you know, to be great.
And I felt that we were great.

282
00:20:36,490 --> 00:20:39,640
We were great at what we did,
and we brought great value to

283
00:20:39,640 --> 00:20:42,220
the world of real estate and to
the bond buying world.

284
00:20:42,220 --> 00:20:46,960
We brought you incredibly unique
value that lasts to this day,

285
00:20:46,960 --> 00:20:52,630
25 or 30 years later.
And I think to be great, you must be

286
00:20:52,630 --> 00:20:56,170
willing to operate outside of the
herd. And that's very hard to do.

287
00:20:56,830 --> 00:20:59,710
But we did it and I'm very proud
of what we accomplished.

288
00:20:59,890 --> 00:21:02,560
So at the same time I was a
mortgage banker. Mhm.

289
00:21:03,070 --> 00:21:07,960
Uh, and I was told that I had to go
on straight commission in in 1990 or.

290
00:21:08,380 --> 00:21:11,620
Yeah.
And I was completely out and then

291
00:21:11,620 --> 00:21:15,250
the 92, we came back and I was
bought by like Mason I would have

292
00:21:15,250 --> 00:21:19,990
worked for them and we I mean the
industry was slow to come back.

293
00:21:20,020 --> 00:21:24,460
The first CMS loan I did the
spread was 360 I think over,

294
00:21:24,460 --> 00:21:28,270
over the tenure. Yeah.
And it was like life companies

295
00:21:28,270 --> 00:21:32,170
were once they were back in were
in the tubes at that time. Right.

296
00:21:32,170 --> 00:21:35,200
It's like well but look at the,
the property type.

297
00:21:35,200 --> 00:21:37,540
I mean look at where it is.
What else is going to trade.

298
00:21:37,540 --> 00:21:38,980
How is it.
It's not going to be a life

299
00:21:38,980 --> 00:21:41,500
company deal. Right.
And so it was interesting.

300
00:21:41,500 --> 00:21:44,800
But you guys had it was like a in
the mortgage banking business.

301
00:21:44,800 --> 00:21:48,910
It was like a tidal wave that
came on that we never expected.

302
00:21:48,910 --> 00:21:53,440
It was like it was like from nothing
to this massive amount of capital

303
00:21:53,440 --> 00:21:56,500
that just came suddenly out of, out
of, from Wall Street into the market.

304
00:21:56,500 --> 00:22:02,620
Well, it really we we built a
bridge so that the bond market can

305
00:22:02,620 --> 00:22:06,160
bring their money over the bridge
and express it into real estate.

306
00:22:06,160 --> 00:22:08,770
And real estate has never been
the same since.

307
00:22:08,770 --> 00:22:12,070
And I think that incredible look,
if there's let's say there's X

308
00:22:12,070 --> 00:22:16,120
dollars of money chasing something,
it doesn't matter what it is.

309
00:22:16,120 --> 00:22:19,810
It could be bidding for your
blazer X dollars of money.

310
00:22:19,810 --> 00:22:23,710
Might be interested in your blazer.
If through some innovation,

311
00:22:23,710 --> 00:22:29,350
I'm able to bring ten x or even two
x money to bid for your blazer,

312
00:22:29,350 --> 00:22:32,890
your blazer just got more valuable.
And so people have said to me,

313
00:22:32,890 --> 00:22:35,080
and I guess I hadn't thought
about it in that moment,

314
00:22:35,080 --> 00:22:40,450
but no one, probably beside me,
has had as big an impact on real

315
00:22:40,450 --> 00:22:45,220
estate values because I brought
in this new pool of money that.

316
00:22:46,030 --> 00:22:49,390
Had a huge, huge thing.
It stayed and it stayed in real

317
00:22:49,390 --> 00:22:52,090
estate.
And so the permanent impact to cap

318
00:22:52,090 --> 00:22:55,390
rates or real estate valuations
turn out to be quite profound.

319
00:22:55,420 --> 00:22:57,070
I wasn't thinking about that at
the time.

320
00:22:57,070 --> 00:23:01,240
I was thinking about there's a huge
problem that needs to be solved,

321
00:23:01,240 --> 00:23:06,190
and I am attracted to that.
I'm attracted to, um, voids.

322
00:23:06,190 --> 00:23:10,660
There was a void and I thought,
I can I could solve for this void.

323
00:23:11,440 --> 00:23:15,820
Before we go beyond that, I want to
go way back now to your origin story.

324
00:23:16,090 --> 00:23:20,470
Okay. So we'll shift your origins.
Your book, greatness is a choice

325
00:23:20,470 --> 00:23:23,950
discusses several details about your
child in Yonkers, New York. Yeah.

326
00:23:24,520 --> 00:23:27,850
And your family growing up poor,
as you referenced.

327
00:23:27,850 --> 00:23:30,760
Talk about a bit about your parents.
As you said,

328
00:23:30,760 --> 00:23:34,900
they were not good role models yet.
You said you learned quite a bit from

329
00:23:34,900 --> 00:23:42,990
them. Yeah. Well, look, I think that.
Parenting perhaps only rivaled

330
00:23:42,990 --> 00:23:46,500
by marriage.
Is something that we are

331
00:23:46,500 --> 00:23:51,120
literally blind and trying to
figure it out on the fly.

332
00:23:51,120 --> 00:23:55,050
So I really don't condemn my
parents for for not necessarily

333
00:23:55,050 --> 00:23:59,490
being the best parents.
My my father was particularly

334
00:23:59,490 --> 00:24:03,270
inept at that.
Just I don't I don't fault him

335
00:24:03,270 --> 00:24:06,930
for that. What your dad do.
My dad was a rabbi. Oh, really?

336
00:24:07,380 --> 00:24:10,290
And he was really good at giving
advice, but not.

337
00:24:10,290 --> 00:24:12,990
But was one of those people who were
not necessarily good at walking

338
00:24:12,990 --> 00:24:16,770
the walk in his own personal life.
And, you know,

339
00:24:16,770 --> 00:24:19,890
everyone's life's complex.
My dad's life was certainly complex,

340
00:24:19,890 --> 00:24:25,980
and he came here as a one year
old in in 1922 from Poland,

341
00:24:25,980 --> 00:24:30,600
now the Ukraine, with his parents,
who didn't speak the language.

342
00:24:30,600 --> 00:24:36,300
And I mean the hardships that I think
my answers and I write about this

343
00:24:36,300 --> 00:24:41,010
in the book that my ancestors and
everyone has an ancestor hardship

344
00:24:41,010 --> 00:24:43,590
story, you know what I mean?
Like, at some point,

345
00:24:43,590 --> 00:24:47,820
even for the people who can trace
their ancestors to the Mayflower,

346
00:24:47,820 --> 00:24:51,450
probably coming here on the Mayflower
was no easy, no easy journey.

347
00:24:51,450 --> 00:24:54,690
And when they got here,
life wasn't easy for them either.

348
00:24:54,690 --> 00:25:01,080
So I think everyone has a hardship
ancestry story. And I do too.

349
00:25:01,080 --> 00:25:04,680
And for me,
it's not that far removed. Right?

350
00:25:04,680 --> 00:25:08,820
My grandparents had that story.
My father and my mother were the

351
00:25:08,820 --> 00:25:14,460
children of, of of of immigrants
who came here and really, really,

352
00:25:14,460 --> 00:25:19,200
really struggled. And I compare it.
Maybe I'll diverge a little bit

353
00:25:19,200 --> 00:25:24,540
to today's immigrant situation.
And I would say there's a very big

354
00:25:24,540 --> 00:25:29,670
difference in their story and perhaps
my childhood or maybe your childhood

355
00:25:29,670 --> 00:25:35,430
story, in that my grandparents and
my parents too, they didn't come

356
00:25:35,430 --> 00:25:39,720
here thinking that this country
owed them a damn thing. Okay.

357
00:25:39,780 --> 00:25:45,030
They came here to leave a place
that where they felt they didn't

358
00:25:45,030 --> 00:25:50,280
have a great future for a place
where they knew that they could

359
00:25:50,280 --> 00:25:53,790
have a fresh start,
and they knew it would be hard.

360
00:25:53,790 --> 00:25:59,970
And I think my grandparents
never once imagined that the day

361
00:25:59,970 --> 00:26:04,110
would involve any fun at all.
Like the word fun wasn't part of

362
00:26:04,110 --> 00:26:10,050
their vocabulary. They just worked.
And they raised their kids and

363
00:26:10,050 --> 00:26:12,750
they made every sacrifice.
Their life was all about hard

364
00:26:12,750 --> 00:26:19,350
working sacrifice, and I think
their joy was serving their

365
00:26:19,350 --> 00:26:23,490
children and their grandchildren.
I know that my grandmothers in

366
00:26:23,490 --> 00:26:26,010
particular, because my grandfather
is both died when I was young,

367
00:26:26,010 --> 00:26:31,830
but my grandmother's, um,
the joy that they felt in kind of

368
00:26:31,830 --> 00:26:36,240
caring for me and being a grandmother
and believe me, they worked.

369
00:26:36,240 --> 00:26:41,310
It wasn't like they were, you know,
I wasn't they were there for me,

370
00:26:41,310 --> 00:26:44,160
which was incredible.
And I dedicated my book to a

371
00:26:44,160 --> 00:26:47,520
couple people, including one of my
grandmothers, because I've never

372
00:26:47,520 --> 00:26:53,220
seen such selfless giving in my
life than her and one other woman

373
00:26:53,220 --> 00:26:59,400
that I dedicated the book to.
But, um, I was I kind of grew up

374
00:26:59,400 --> 00:27:02,820
in that background, and I say,
you know, the word poor.

375
00:27:02,820 --> 00:27:06,990
I did use the word poor, and I used
the word poor in an economic sense.

376
00:27:06,990 --> 00:27:09,990
But I don't see I'm not an
economic being.

377
00:27:09,990 --> 00:27:13,680
And which sounds strange because I'm
a Wall Street guy by background,

378
00:27:13,830 --> 00:27:17,130
but I'm not an economic being.
I didn't write a Wall Street book,

379
00:27:17,130 --> 00:27:19,350
and I didn't write a finance book.
I read a book.

380
00:27:19,350 --> 00:27:23,790
I wrote a book about life and living
and the observations I've had as

381
00:27:23,790 --> 00:27:27,780
a person who's lived a pretty
interesting walkabout or journey

382
00:27:27,780 --> 00:27:32,400
in life. My parents were poor.
My I grew up with my mother because

383
00:27:32,400 --> 00:27:35,760
my parents were divorced when I
was eight, and I don't think my

384
00:27:35,760 --> 00:27:41,310
mother had a week of savings.
Meaning if she didn't work that week,

385
00:27:41,310 --> 00:27:44,250
you know,
we were like one of the majority of

386
00:27:44,250 --> 00:27:49,020
Americans today who had no savings.
And today, I mean,

387
00:27:49,260 --> 00:27:54,330
and had the pressure to make the
money that week to pay the bills, the

388
00:27:54,330 --> 00:27:59,100
grocery bills, the rent, whatever.
And somehow we made it, you know,

389
00:27:59,100 --> 00:28:02,670
and I grew up in a neighborhood
filled with people like that.

390
00:28:02,820 --> 00:28:07,950
And I think that I love that I
did that. I'm treasure that.

391
00:28:07,950 --> 00:28:10,680
I'm proud of that,
although I wasn't at the time.

392
00:28:10,680 --> 00:28:14,670
And I talk about that too,
about how, oh, perhaps I wish I

393
00:28:14,670 --> 00:28:19,680
was born in a more affluent place,
to a more affluent family and had

394
00:28:19,680 --> 00:28:23,640
that to kind of fall back on.
But but in reflection, and even in

395
00:28:23,640 --> 00:28:27,690
the moment, I was proud of my mother,
very proud. And I still am.

396
00:28:27,690 --> 00:28:32,970
And when I say she wasn't the perfect
mother, I am completely aware of

397
00:28:32,970 --> 00:28:36,810
the hardships that she faced every
day just to pay the bills and

398
00:28:36,810 --> 00:28:41,040
survive as a single woman in the.
The 1960s and 70s,

399
00:28:41,040 --> 00:28:46,050
where I was tough and with two
little kids so and no help.

400
00:28:46,620 --> 00:28:49,260
My father's a different story.
He didn't help.

401
00:28:49,260 --> 00:28:53,460
Okay, but but he also had his issues,
and I forgive him.

402
00:28:53,580 --> 00:28:57,000
I forgave him long ago for,
you know, feelings that I might

403
00:28:57,000 --> 00:29:00,090
have had that were not so powerful.
So growing up that way was a

404
00:29:00,090 --> 00:29:02,910
character builder for you?
Incredible character builder.

405
00:29:02,910 --> 00:29:08,190
I, I felt the burden of
responsibility that I think a

406
00:29:08,190 --> 00:29:12,390
man feels when he has a family.
By the time I was nine,

407
00:29:12,570 --> 00:29:16,110
because I was the man of the house,
like my father was gone.

408
00:29:16,110 --> 00:29:20,460
My my little brother was a little
kid and kind of a delinquent too.

409
00:29:20,460 --> 00:29:24,060
And my, my mother had no one to
turn to but me.

410
00:29:24,240 --> 00:29:28,110
And she treated me because she
had no one else as an adult like.

411
00:29:28,110 --> 00:29:33,810
And so I was talked to as an adult,
as a confidante, as a person to rely

412
00:29:33,810 --> 00:29:37,770
upon, not as a nine year old kid
from the time I was nine years old.

413
00:29:38,070 --> 00:29:39,600
Well, we'll get.
Into this a little later,

414
00:29:39,600 --> 00:29:42,570
but it sounds like your father,
because he was a rabbi,

415
00:29:42,750 --> 00:29:46,500
had some influence on you based
on some of the things you said in

416
00:29:46,500 --> 00:29:50,190
your book, although you said you
came back to religion later on.

417
00:29:50,190 --> 00:29:52,260
So I want to get into that a
little bit later.

418
00:29:52,470 --> 00:29:58,020
But yeah, I'm I'm blessed to
have a great education.

419
00:29:58,470 --> 00:30:02,220
And I don't mean college. Right.
I did not have a great college

420
00:30:02,220 --> 00:30:03,900
education.
Where did you go to college?

421
00:30:03,930 --> 00:30:07,860
I don't remember, no,
I do remember I didn't really go

422
00:30:07,860 --> 00:30:11,520
to much. That's the thing. Okay.
I went for the tests.

423
00:30:11,520 --> 00:30:14,820
I went as little as I could
because I really wasn't.

424
00:30:14,820 --> 00:30:18,720
I didn't see it as a very of any
place to derive value.

425
00:30:18,720 --> 00:30:20,520
And I worked full time during
college.

426
00:30:20,550 --> 00:30:24,330
I was a full time student and a
full time worker, and I really just

427
00:30:24,330 --> 00:30:27,720
wanted to get out of college with a
degree so I can have a better job.

428
00:30:28,260 --> 00:30:32,430
But I had an incredible elementary
school education and my,

429
00:30:32,460 --> 00:30:36,450
I would say, the most intellectually
stimulated and the most

430
00:30:36,450 --> 00:30:40,710
intellectually challenged I've
ever been in my life in any group.

431
00:30:40,710 --> 00:30:43,290
Peer group was seventh and
eighth grade. Really? Huh.

432
00:30:43,650 --> 00:30:46,590
They were the smartest people
I've ever been in a room with.

433
00:30:47,280 --> 00:30:51,750
We were challenged intellectually,
far more than I've ever been

434
00:30:51,750 --> 00:30:56,220
challenged in my life since.
And, uh. And that says a lot, right?

435
00:30:56,220 --> 00:30:58,410
It's a public school.
No, I went to, uh,

436
00:30:58,410 --> 00:31:02,370
parochial school, otherwise known
by Jewish people as a yeshiva.

437
00:31:02,940 --> 00:31:07,950
I spent half the day in learning
only in Hebrew, except we

438
00:31:07,950 --> 00:31:12,720
learned the Talmud in Aramaic,
which is the language Jesus spoke.

439
00:31:12,930 --> 00:31:17,640
So I was fluent in Hebrew.
Pretty good in Aramaic.

440
00:31:17,640 --> 00:31:20,520
And then I spent the other half
of the day speaking English and

441
00:31:20,730 --> 00:31:24,210
learning English.
You know, normal things that people

442
00:31:24,210 --> 00:31:27,870
spend their whole day in class I in
school, I learn in half the day.

443
00:31:27,900 --> 00:31:29,820
I learn all the other stuff,
the other half of the day.

444
00:31:29,820 --> 00:31:35,340
And I went to school from till 5 p.m.
and by the time I got to ninth grade,

445
00:31:35,340 --> 00:31:37,620
I was like, I'm done with this.
This is your father's influence?

446
00:31:37,620 --> 00:31:40,980
No, not really.
I mean, yes, maybe, but I think that

447
00:31:40,980 --> 00:31:44,100
my mother was also quite scholarly,
and I think they both wanted me

448
00:31:44,100 --> 00:31:49,350
to have. That's all in education.
And I think that that was a big

449
00:31:49,350 --> 00:31:54,450
part of Eastern European Jewish
immigrants put such a huge, um,

450
00:31:54,450 --> 00:31:58,800
emphasis on education.
I think they understood that a

451
00:31:58,800 --> 00:32:03,330
good education is the foundation
for a well-lived life,

452
00:32:03,330 --> 00:32:08,610
whether it's making money or not.
Sure, education on higher levels

453
00:32:08,610 --> 00:32:11,880
does help income,
but I think it just helps you live

454
00:32:11,880 --> 00:32:18,000
your life with clear thinking, right?
The Talmudic studies that I had was

455
00:32:18,000 --> 00:32:21,750
like, probably going to law school,
you know, and just logical thinking,

456
00:32:21,750 --> 00:32:26,460
like just being being able to
understand and think things through

457
00:32:26,460 --> 00:32:31,530
in a logical, clear thinking way.
And, you know, my book, I think,

458
00:32:31,530 --> 00:32:36,120
is a reflection of that way of
thinking that was solidified in

459
00:32:36,120 --> 00:32:40,470
me in seventh and eighth grade.
So when you once your bar mitzvah,

460
00:32:40,470 --> 00:32:43,230
that was that was kind of the
graduation for that then, right?

461
00:32:43,230 --> 00:32:45,720
To some extent.
That was almost no, actually,

462
00:32:45,720 --> 00:32:52,650
I mean, I. I think that for many.
Young Jewish men and women.

463
00:32:52,650 --> 00:32:56,160
The bar by mitzvah is a very
important moment.

464
00:32:56,700 --> 00:33:02,400
For me, it was, um, I don't know.
It was less. I wish it was more.

465
00:33:02,400 --> 00:33:05,880
I see it for my kids and it's been
an amazing experience for them.

466
00:33:06,300 --> 00:33:09,660
I'm sad to say that for me it wasn't.
It was more of a um,

467
00:33:10,440 --> 00:33:13,650
and like it was expected of me.
Like going to college was expected

468
00:33:13,650 --> 00:33:15,390
of me getting bar mitzvah.
It was expected me.

469
00:33:15,390 --> 00:33:18,810
It was just like a almost like,
um, an obligation.

470
00:33:19,440 --> 00:33:21,690
And I certainly felt like an
obligation.

471
00:33:22,650 --> 00:33:26,280
It was just expected of me.
There was nothing celebratory

472
00:33:26,280 --> 00:33:28,650
for me about that,
which is a bummer, you know?

473
00:33:28,950 --> 00:33:33,240
And I know, like, I remember when
my first born son got bar mitzvah.

474
00:33:34,960 --> 00:33:37,810
I saw him change.
Like it literally changed him

475
00:33:37,810 --> 00:33:41,560
from a spoiled brat to a
beautiful young man.

476
00:33:41,560 --> 00:33:44,500
Literally in like,
that day was incredible.

477
00:33:44,920 --> 00:33:48,220
Maybe it wasn't that impactful.
Maybe because I wasn't spoiled

478
00:33:48,220 --> 00:33:52,150
brat going into that mitzva,
maybe because of the burden of

479
00:33:52,150 --> 00:33:55,330
responsibility that had been invested
in me since I was very young.

480
00:33:55,330 --> 00:33:58,870
So maybe I was a man because that's
about becoming a man, and maybe I

481
00:33:58,870 --> 00:34:02,080
just became a man when the divorce
happened at a much younger age.

482
00:34:04,210 --> 00:34:07,480
So what was your high school
experience or did you did you

483
00:34:07,480 --> 00:34:10,480
have any fun there?
I mean, you know,

484
00:34:10,480 --> 00:34:13,570
I liked sports and I played.
What did you do sports? Basketball.

485
00:34:13,570 --> 00:34:18,400
Baseball, football I played around
I actually, because I had this

486
00:34:18,400 --> 00:34:22,750
incredible intellectual foundation.
I went to public high school at

487
00:34:22,750 --> 00:34:25,630
10th and 11th, and then I
graduated half a year early,

488
00:34:25,630 --> 00:34:28,900
so I was barely there for 12.
I never brought a book home,

489
00:34:28,900 --> 00:34:31,930
not a single book.
I would do the homework during the

490
00:34:31,930 --> 00:34:35,620
class while the teacher was teaching.
So in one day my mother said,

491
00:34:35,620 --> 00:34:38,710
are you really going to school?
Because I've never seen a book

492
00:34:38,710 --> 00:34:40,780
at home and I literally didn't
bring a book home.

493
00:34:41,140 --> 00:34:46,180
But I just say it was easy,
given what I had been experienced and

494
00:34:46,180 --> 00:34:51,820
challenge with in my younger years.
So somehow even all this was in New

495
00:34:51,820 --> 00:34:56,230
York, in the Yonkers, New York. Yeah.
And then somehow you went out to

496
00:34:56,230 --> 00:34:58,870
California? Well, my dad.
When my parents got divorced,

497
00:34:58,870 --> 00:35:03,160
my dad moved to San Diego.
And so, so from the time I was eight

498
00:35:03,160 --> 00:35:07,150
years old, I was visiting my dad in
San Diego for a few weeks, a year.

499
00:35:07,150 --> 00:35:09,670
And so I had this California
exposure.

500
00:35:10,360 --> 00:35:14,590
And then the song California Dreaming
by the Mamas and Papas. Yes.

501
00:35:14,590 --> 00:35:17,770
Well, we were young at the time
when that came out,

502
00:35:17,770 --> 00:35:22,150
and I had I knew what I knew what
California was because of my dad.

503
00:35:22,300 --> 00:35:27,610
And I too would be sitting there in
the winters of New York wistfully,

504
00:35:27,610 --> 00:35:31,810
with tears coming down my eyes when I
heard California. Why am I here?

505
00:35:32,170 --> 00:35:36,640
Why am I not there? Right? Right.
So I always liked California and I

506
00:35:36,640 --> 00:35:40,870
understood the appeal of California.
And people hear me talk and they say,

507
00:35:40,870 --> 00:35:42,310
well,
you don't have a New York accent.

508
00:35:42,310 --> 00:35:46,930
And I think by the time I was about
nine years old, I realized there is a

509
00:35:46,930 --> 00:35:50,530
New York accent, and then there's a
non New York accent in California.

510
00:35:50,530 --> 00:35:53,800
And I just, I just decided I
don't need the New York accent.

511
00:35:53,800 --> 00:35:56,980
I'll go with the California
neutral accent.

512
00:35:57,340 --> 00:35:59,740
So you started your career in
Huntington Beach, California?

513
00:35:59,860 --> 00:36:03,760
I did, I did,
I started a savings and loan.

514
00:36:04,570 --> 00:36:06,550
There was the bottom of the
bottom of the bottom of the

515
00:36:06,550 --> 00:36:10,870
barrel of finance. Sure.
And my pay was accordingly low

516
00:36:11,440 --> 00:36:14,680
and I just grinded. Why not?
Loan officer? To start with.

517
00:36:14,680 --> 00:36:21,400
I was a loan officer trainee. Okay.
And I learned a million great things.

518
00:36:22,200 --> 00:36:26,610
That I wasn't aware I was learning
in the moment because I was,

519
00:36:26,610 --> 00:36:31,470
you know, too young and perhaps
stupid to actually appreciate what

520
00:36:31,470 --> 00:36:36,860
I was learning, but by osmosis.
I got, I got a, I got a much better

521
00:36:36,860 --> 00:36:42,020
MBA than anyone who went to Harvard.
And in that year, it was one year.

522
00:36:42,620 --> 00:36:45,290
That foundation serves me to
this day.

523
00:36:45,590 --> 00:36:49,580
I learned about corporate
interactions.

524
00:36:49,880 --> 00:36:54,050
I learned about pettiness and
corporate politics and jealousy

525
00:36:54,050 --> 00:36:56,420
and how it plays out in the
corporate world.

526
00:36:57,070 --> 00:37:01,930
I learned about how regulated
lenders.

527
00:37:03,120 --> 00:37:07,680
Or impacted by regulation,
and how that dance between

528
00:37:07,680 --> 00:37:14,100
regulators and regulators occurs,
and how impactful that is to the

529
00:37:14,100 --> 00:37:18,690
industry that they're serving.
I learned about what makes a good

530
00:37:18,690 --> 00:37:21,780
loan and what makes a bad loan.
You know, I, I learned things

531
00:37:21,780 --> 00:37:28,030
that were invaluable.
And again serve me to this very day

532
00:37:28,030 --> 00:37:33,700
and I feel like I was so blessed.
Then I learned also that if you

533
00:37:33,700 --> 00:37:39,270
really want to be great at something.
You need to know how to do every

534
00:37:39,270 --> 00:37:43,530
function of that something from
the most low level to the high.

535
00:37:43,980 --> 00:37:46,170
Uh,
it reminds me of a friend of mine.

536
00:37:46,170 --> 00:37:49,500
There's a guy I think everybody
here has heard of the company

537
00:37:49,500 --> 00:37:53,850
Montage Hotels.
And they have a Pendry in Baltimore.

538
00:37:53,880 --> 00:37:57,900
That's beautiful.
And the founder of montage is a

539
00:37:57,900 --> 00:38:01,980
guy named Alan Forstmann, who has
become a very good friend of mine.

540
00:38:01,980 --> 00:38:08,100
I adore Alan, and Alan is a
giant in the hotel industry.

541
00:38:08,100 --> 00:38:13,350
And if you go to any montage or
Pendry, you feel Alan.

542
00:38:13,350 --> 00:38:20,560
Alan is such a great CEO that.
You feel his care. He's.

543
00:38:20,560 --> 00:38:23,650
He cares for people.
And you feel cared for when you

544
00:38:23,650 --> 00:38:26,170
go to any of his hotels.
It has his personal imprint.

545
00:38:27,190 --> 00:38:32,050
Allen started out as a doorman,
the front doorman at a hotel.

546
00:38:32,050 --> 00:38:35,410
That was his first job in the hotel
industry, and he's worked his way

547
00:38:35,410 --> 00:38:40,450
up from the guy at the front door
to being the founder and CEO of a

548
00:38:40,450 --> 00:38:43,780
major international hotel company,
luxury hotel company.

549
00:38:44,620 --> 00:38:50,020
I think that I think that's been
lost, perhaps more so than I've

550
00:38:50,020 --> 00:38:53,320
ever seen it.
With the advent of technology, right.

551
00:38:53,350 --> 00:38:58,870
Technology has created billionaires,
right?

552
00:38:58,870 --> 00:39:02,920
And billionaires and center
billionaires.

553
00:39:03,730 --> 00:39:09,640
From young men and women who earned
their 20s and didn't pay their dues.

554
00:39:09,640 --> 00:39:12,610
And so, like, you know,
when we were growing up, we were

555
00:39:12,610 --> 00:39:16,150
taught you got to pay your dues.
And Alan paid his dues.

556
00:39:16,540 --> 00:39:19,270
Today,
no one wants to pay their dues,

557
00:39:19,270 --> 00:39:23,020
like, because there's there's role
models that we didn't have. Right.

558
00:39:23,020 --> 00:39:27,970
There were no 25 year olds, you know.
Well, there were no billionaires,

559
00:39:27,970 --> 00:39:31,360
by the way, when we were growing up.
But even the wealthiest people,

560
00:39:31,360 --> 00:39:37,120
they were men, mostly men in
their 60s and beyond. Yeah.

561
00:39:37,300 --> 00:39:39,880
I'm not an inherited,
but the people who made money,

562
00:39:39,880 --> 00:39:42,880
really, they didn't come into it
till they were in their 60s,

563
00:39:42,880 --> 00:39:46,150
typically, and they paid a
lifetime of dues to get there.

564
00:39:46,150 --> 00:39:50,140
And I think that's what we were
informed with when we set out in

565
00:39:50,140 --> 00:39:52,720
our career.
And I actually am happy about that.

566
00:39:52,720 --> 00:39:56,980
I'm happy I traversed that journey.
And I'm sure you are too,

567
00:39:56,980 --> 00:40:01,990
that your success is the result of a
lifetime of kind of grinding and

568
00:40:01,990 --> 00:40:06,610
learning along the way, and I think
that's an important thing about that.

569
00:40:06,610 --> 00:40:10,180
I've come to understand about life,
and I hopefully I communicated

570
00:40:10,180 --> 00:40:15,130
it well in my book.
The purpose of life is not about

571
00:40:15,130 --> 00:40:17,800
winning.
And I know so many people who

572
00:40:17,800 --> 00:40:20,920
now are so wealthy.
You know, I've, I've because of

573
00:40:20,920 --> 00:40:24,460
my journey, I've met many, many,
many mega wealthy people.

574
00:40:24,610 --> 00:40:30,270
And as they get older.
And they're facing the end.

575
00:40:30,300 --> 00:40:34,350
They realized that the importance
they placed upon wealth

576
00:40:34,350 --> 00:40:39,180
accumulation was misguided.
And and it's oftentimes too late.

577
00:40:39,180 --> 00:40:42,810
You know, I tell a story in my book
of someone that I won't mention

578
00:40:42,810 --> 00:40:46,320
his name and I didn't in the book
because I don't want to hurt anybody.

579
00:40:46,410 --> 00:40:52,320
But he's a man known well in our
industry who is a friend and who

580
00:40:52,320 --> 00:40:56,730
is one such man.
He's mega wealthy and I know him now,

581
00:40:56,730 --> 00:41:01,350
and he's quite older,
and he's very sad about how he chose

582
00:41:01,350 --> 00:41:05,160
to invest his time, his precious
time that that is so fleeting.

583
00:41:05,430 --> 00:41:10,530
And he gained massive wealth and
massive admiration for his wealth

584
00:41:10,530 --> 00:41:13,800
and power that comes with that,
but at the expense of

585
00:41:13,800 --> 00:41:19,770
experiencing love and and other
joys that he traded off for that.

586
00:41:21,210 --> 00:41:25,380
So, you know, what is the what
is it that we're here for?

587
00:41:25,380 --> 00:41:29,520
Why are we on earth. Right.
And I don't think it's for winning,

588
00:41:29,670 --> 00:41:31,890
you know,
like it goes so much against you.

589
00:41:31,890 --> 00:41:35,610
Remember when we were young to
Vince Lombardi was, you know,

590
00:41:35,610 --> 00:41:39,510
like a role model, even though we
were both very young when he was in

591
00:41:39,510 --> 00:41:43,650
his career coaching the Packers,
but he was the most famous coach

592
00:41:43,650 --> 00:41:47,910
ever to his time.
And he was famous for having said,

593
00:41:47,910 --> 00:41:54,570
winning isn't everything, it's the
only thing. And that was his mantra.

594
00:41:54,750 --> 00:41:58,440
And everyone just hears that and
repeats it and thinks, oh,

595
00:41:58,440 --> 00:42:01,650
that's great.
I've come to think that's so

596
00:42:01,650 --> 00:42:05,910
wrong headed, so wrongheaded,
and it sends people down the path

597
00:42:05,910 --> 00:42:11,310
of my friend who in his 80s,
chased that that whole idea of

598
00:42:11,310 --> 00:42:15,510
Vince Lombardi won and ended up
with nothing, lost in love.

599
00:42:15,540 --> 00:42:17,700
On the definition of winning.
Well, there you go.

600
00:42:17,700 --> 00:42:21,210
But I think we tend to think of
winning as the competition.

601
00:42:21,210 --> 00:42:24,270
Whatever the competition is,
whether it's the work competition

602
00:42:24,390 --> 00:42:28,380
for money accumulation or the
football competition for winning

603
00:42:28,380 --> 00:42:33,960
the Super Bowl, I think that the
winner in life has experienced a

604
00:42:33,960 --> 00:42:37,560
lot of learning and growth along
the way in his or her journey,

605
00:42:37,650 --> 00:42:41,790
and I think it's all about that.
I think it's all about we all have

606
00:42:41,790 --> 00:42:48,210
our our journey and it's unique to
us, and we're here to learn and grow.

607
00:42:48,210 --> 00:42:51,690
And I think that when we see it
that way, everyone is a winner.

608
00:42:51,690 --> 00:42:53,070
It's the name.
Of my community,

609
00:42:53,070 --> 00:42:58,020
the iconic journey. Ciara.
So it's a wise choice of words

610
00:42:58,290 --> 00:43:04,080
from a wise man.
So since we discussed your career

611
00:43:04,080 --> 00:43:08,640
from, uh, from there through
your pinnacle at Nomura Racing,

612
00:43:08,640 --> 00:43:12,810
what happened when the long term
capital management collapse and the

613
00:43:12,810 --> 00:43:17,730
Russian debt crisis hit in 1998?
Talk about that dramatic impact on

614
00:43:17,730 --> 00:43:22,020
your business and why you left Nomura
and how you weathered through that.

615
00:43:22,620 --> 00:43:27,330
Well, they're not exactly related,
although they were.

616
00:43:27,960 --> 00:43:33,360
They it was really the long term
capital management collapse.

617
00:43:33,900 --> 00:43:38,640
And the collapse of my business at
Nomura were both attributable to the

618
00:43:38,640 --> 00:43:43,980
same Russian bond default. Right.
So nobody imagined that a

619
00:43:43,980 --> 00:43:47,760
country would not would default
other than Argentina,

620
00:43:47,760 --> 00:43:51,030
which everyone knows defaults on
their bonds regularly. Right?

621
00:43:51,030 --> 00:43:54,960
No one imagined that Russia would
default on its bonds obligation.

622
00:43:54,960 --> 00:43:59,250
Meaning tell everyone that had
loaned the money. Tough nuggies.

623
00:43:59,250 --> 00:44:02,370
We're not paying you back. Okay?
Just in layman's terms,

624
00:44:02,370 --> 00:44:08,610
what a bond default is, I guess.
And that sent the global financial

625
00:44:08,610 --> 00:44:15,480
markets into a state of panic.
And people all wanted to because

626
00:44:15,480 --> 00:44:20,340
people act in herd like ways we know.
And it plays out in financial

627
00:44:20,340 --> 00:44:25,800
markets all the time.
So everyone reacted to the Russian,

628
00:44:25,830 --> 00:44:28,860
the Russian announcement that
they were not going to repay

629
00:44:28,860 --> 00:44:34,050
their bond obligations.
Everyone reacted as though the world,

630
00:44:34,050 --> 00:44:37,890
that nobody would pay their bond
obligations, nobody.

631
00:44:37,890 --> 00:44:42,480
So they started the only.
The only bond that they felt

632
00:44:42,480 --> 00:44:47,730
safe to own was U.S. treasuries.
And so they all sold everything

633
00:44:47,730 --> 00:44:51,750
except US treasuries.
And then they sold whatever bonds

634
00:44:51,750 --> 00:44:56,790
they had and bought US treasuries.
And so the spread in yield yields

635
00:44:56,790 --> 00:45:00,660
on US treasuries collapsed because
everyone wanted to buy them.

636
00:45:00,660 --> 00:45:04,230
So their price went up and their
yield went down and yields on

637
00:45:04,230 --> 00:45:08,040
everything else went sky high
and their prices collapsed.

638
00:45:09,030 --> 00:45:14,490
Well, everyone on Wall Street
that traded credit, whether it

639
00:45:14,490 --> 00:45:17,820
was mortgage backed securities,
commercial mortgage backed

640
00:45:17,820 --> 00:45:23,460
securities, corporate bonds,
anything at the time, they were

641
00:45:23,460 --> 00:45:28,370
hedged by shorting treasuries. So if.
You had if you worked on Wall

642
00:45:28,370 --> 00:45:34,100
Street and you ran a credit
business as we did. Yeah.

643
00:45:34,370 --> 00:45:38,780
You were long mortgages and
short treasuries.

644
00:45:39,110 --> 00:45:41,810
That was the wrong position for
that day. Okay.

645
00:45:41,960 --> 00:45:46,670
And so your mark to market losses
were growing and growing larger

646
00:45:46,670 --> 00:45:52,160
by the day as that herd chased
the opposite of that position.

647
00:45:52,160 --> 00:45:58,730
Right. I was already gone.
So so I had already left Nomura

648
00:45:58,730 --> 00:46:03,140
when this happened.
Although I had agreed it was all

649
00:46:03,140 --> 00:46:06,170
secret,
I had agreed to stay on because we

650
00:46:06,170 --> 00:46:09,770
had our big soiree that September.
The Russian bond default

651
00:46:09,770 --> 00:46:15,320
happened in July of 1998.
I had already left about a week or

652
00:46:15,320 --> 00:46:19,370
two before. Had you seen the winds?
Know nobody knew. Nobody knew.

653
00:46:19,370 --> 00:46:23,480
But I knew that we were in a
vulnerable spot if something

654
00:46:23,480 --> 00:46:26,600
like that were to happen.
But I didn't have a chance to

655
00:46:26,600 --> 00:46:29,030
address that risk.
I had some ideas, actually,

656
00:46:29,030 --> 00:46:32,810
but I left, and I'll tell you the
circumstances under which I left.

657
00:46:32,810 --> 00:46:37,490
They were not pleasant.
But I agree to stay on, and I agree

658
00:46:37,490 --> 00:46:41,240
to stay on the board of directors.
And I and I continue to own a

659
00:46:41,240 --> 00:46:46,010
significant stake in the company.
So its collapse was very painful for

660
00:46:46,010 --> 00:46:49,910
me because I owned a significant
stake even after me leaving.

661
00:46:49,910 --> 00:46:51,890
That turned out to be worth very
little.

662
00:46:51,890 --> 00:46:53,960
Now, the reason it turned out to
be very little.

663
00:46:54,810 --> 00:47:01,120
No other firm on Wall Street.
Um took any losses with the exception

664
00:47:01,120 --> 00:47:07,060
of long term credit and no more.
And the reason was because everybody

665
00:47:07,060 --> 00:47:11,260
else who had the same book,
long mortgages or corporates and

666
00:47:11,260 --> 00:47:14,950
short treasuries,
they just stayed the course.

667
00:47:14,950 --> 00:47:19,150
They didn't sell anything.
And they knew that in time the

668
00:47:19,150 --> 00:47:22,300
panic would reverse itself,
as all panics do.

669
00:47:22,540 --> 00:47:26,350
And by the first quarter of the
next year, by roughly December,

670
00:47:26,350 --> 00:47:31,810
January, February of 98 and 99,
the whole trade reverse itself.

671
00:47:31,810 --> 00:47:35,680
And so spreads went back to normal.
And if you didn't sell anything,

672
00:47:36,160 --> 00:47:39,730
you were fine, you didn't lock
in any losses, and your paper

673
00:47:39,730 --> 00:47:48,850
losses ultimately were reversed.
Nomura. Sold and. That was dumb.

674
00:47:48,850 --> 00:47:52,420
Long term capital was forced to sell
because they were overleveraged.

675
00:47:52,420 --> 00:47:55,090
They were. 99%.
They were forced to sell. Right.

676
00:47:55,510 --> 00:48:03,730
But but the other firms first Boston
Salomon, Lehman that as big or bigger

677
00:48:03,730 --> 00:48:07,570
losses on a more to market basis that
Nomura did they just didn't sell.

678
00:48:07,600 --> 00:48:11,810
Now why did no more sell?
No more salt because I was gone

679
00:48:11,930 --> 00:48:14,210
and they didn't have faith in
anybody there.

680
00:48:14,570 --> 00:48:18,650
And so they didn't understand
the business and they didn't

681
00:48:18,650 --> 00:48:21,680
understand the impermanence of
that mark to market loss.

682
00:48:21,680 --> 00:48:26,750
And they panicked, as we have
seen in the financial markets,

683
00:48:26,750 --> 00:48:31,160
foreign investors like Japanese do
when they don't really understand

684
00:48:31,160 --> 00:48:36,160
what's going on and they panic.
Many people I know made a fortune

685
00:48:36,160 --> 00:48:38,950
buying from the Japanese.
Do you think you could have

686
00:48:38,950 --> 00:48:41,020
convinced them?
They would never have sold if I

687
00:48:41,020 --> 00:48:48,100
was there now, why wasn't I there?
So that. So that's the other I. I.

688
00:48:51,040 --> 00:48:55,860
I had a guy that hired me at Nomura.
I left Morgan Stanley as I told

689
00:48:55,860 --> 00:49:00,220
you to start.
Uh, pursuing this commercial

690
00:49:00,220 --> 00:49:04,240
real estate business,
which later became known as CMBS.

691
00:49:04,420 --> 00:49:07,570
I was backed by Cargill,
and I had my own little company,

692
00:49:07,930 --> 00:49:12,430
and we did, I don't know,
maybe $1 billion worth of business.

693
00:49:12,430 --> 00:49:16,570
It was the first billion dollars of
CMBS ever done, wasn't called CMBS.

694
00:49:16,570 --> 00:49:19,750
We didn't name it then.
And then someone introduced me

695
00:49:19,750 --> 00:49:23,200
to someone at No More,
this particular individual who

696
00:49:23,200 --> 00:49:28,120
had been brought in with Max
Chapman to kind of turn Nomura

697
00:49:28,120 --> 00:49:33,850
into a successful US operation,
who was obviously very big in Japan,

698
00:49:33,850 --> 00:49:37,750
had been in the US for 70 years
with some operation that had

699
00:49:37,750 --> 00:49:40,930
never once made money,
they'd never made money in 70 years.

700
00:49:40,930 --> 00:49:44,830
And they brought kind of a Wall
Street legendary figure, Max Chapman,

701
00:49:44,830 --> 00:49:49,300
who was CEO of Kidder Peabody,
to come run their US business.

702
00:49:49,300 --> 00:49:53,380
And he brought one of his right
hand guys to run fixed income.

703
00:49:54,090 --> 00:49:58,650
That guy met me,
and he and I got along and he saw

704
00:49:58,650 --> 00:50:04,320
what I was doing, and he gave me
the capital to build my business.

705
00:50:04,320 --> 00:50:08,130
So really wasn't no more.
It was a brand new business with

706
00:50:08,130 --> 00:50:11,790
a financial backing of Nomura.
By virtue of this one individual

707
00:50:11,790 --> 00:50:15,630
who worked for Max.
Well, this one individual who

708
00:50:15,630 --> 00:50:19,320
worked for Max when I got there
was running fixed income and maybe

709
00:50:19,320 --> 00:50:23,680
making 1 million or 2 a year.
But he had a percentage deal

710
00:50:23,680 --> 00:50:26,110
with Nomura,
so he had a percentage of profits of

711
00:50:26,110 --> 00:50:31,420
every business that reported him.
Well, by virtue of my business

712
00:50:31,420 --> 00:50:34,630
reporting him, he went from making a
million a year to about 20 million

713
00:50:34,630 --> 00:50:40,680
a year. So he was very happy.
Because I was his golden goose,

714
00:50:40,680 --> 00:50:45,090
right? You know, and he deserved it.
He found me. He believed in me.

715
00:50:45,180 --> 00:50:49,560
He kind of paved the way so I
didn't have to run into any

716
00:50:49,560 --> 00:50:53,640
internal obstacles. Yeah.
To build my business and to run

717
00:50:53,640 --> 00:51:00,850
my business.
Well, by 1997, we were too big

718
00:51:00,850 --> 00:51:05,200
for Nomura and we were.
We needed to have our own

719
00:51:05,200 --> 00:51:08,320
corporate identity.
We needed to have other investors,

720
00:51:08,320 --> 00:51:10,990
other lenders.
We were dependent entirely upon

721
00:51:10,990 --> 00:51:15,550
Nomura for our financial backing.
And and we had outgrown them.

722
00:51:15,550 --> 00:51:18,160
They were now not doing as well
in Japan.

723
00:51:18,160 --> 00:51:23,320
We were growing by leaps and bounds
and growing internationally.

724
00:51:23,320 --> 00:51:26,860
And we we deserved a need in our
own corporate identity,

725
00:51:27,040 --> 00:51:31,630
and we were in the process of doing
a spinoff. It's a longer story.

726
00:51:31,630 --> 00:51:36,040
It's a whole podcast story and
maybe a whole MBA class story,

727
00:51:36,190 --> 00:51:39,310
but it's a kind of cuts through
the basically the bottom line.

728
00:51:39,310 --> 00:51:45,640
This individual who hired me felt
threatened by an unhappy about me

729
00:51:45,640 --> 00:51:49,810
leaving, even though I brought
him with me in the spinoff and.

730
00:51:51,760 --> 00:51:56,410
Was envious of the economic division
of the new the to be formed new

731
00:51:56,410 --> 00:52:03,490
company, and went to the Japanese
and got permission to fire me, even

732
00:52:03,490 --> 00:52:07,570
though we were very good friends,
and he got my two right hand guys,

733
00:52:07,570 --> 00:52:11,170
and he needed one of them to agree
to stay on and run the company.

734
00:52:11,170 --> 00:52:14,890
If he did fire me.
Fellows, I won't name any names,

735
00:52:14,890 --> 00:52:18,670
but one of the two agreed to do that.
Okay, one of its you said he

736
00:52:18,670 --> 00:52:22,210
would not do that. Okay.
And I don't want to shame anyone

737
00:52:22,210 --> 00:52:24,160
or anything.
It's, you know,

738
00:52:24,520 --> 00:52:27,250
I could write one of those books,
by the way, which would be really,

739
00:52:27,250 --> 00:52:29,710
really painful for people to read.
I'll never do that.

740
00:52:29,860 --> 00:52:36,730
But but faced with that and
being a 30 something year old,

741
00:52:37,060 --> 00:52:43,870
cocky, borderline arrogant.
God of Wall Street with a lot of

742
00:52:43,870 --> 00:52:47,020
money.
I didn't react positively or

743
00:52:47,020 --> 00:52:50,650
calmly to that news.
I felt betrayed, I was betrayed.

744
00:52:51,130 --> 00:52:54,670
I never once looked in the
mirror and asked myself,

745
00:52:55,090 --> 00:52:57,940
how did I let this happen?
And maybe how did I help bring

746
00:52:57,940 --> 00:53:00,670
it about?
You know, what did I do to inspire

747
00:53:00,670 --> 00:53:04,240
people to act in this way?
I know that now.

748
00:53:04,240 --> 00:53:06,190
I know relationships are give
and take.

749
00:53:06,190 --> 00:53:09,430
But in that moment I saw evil
and I saw good.

750
00:53:09,430 --> 00:53:12,100
I saw myself as good and them as
evil.

751
00:53:12,280 --> 00:53:18,700
And I saw myself as larger than
life and someone who didn't need

752
00:53:18,700 --> 00:53:22,360
them or anyone.
And I basically just said, screw you,

753
00:53:23,050 --> 00:53:26,320
take the job and shove it, take the
company and shove it up your ass.

754
00:53:26,590 --> 00:53:29,950
I'm going to go recreate this
without you, and I'm still going

755
00:53:29,950 --> 00:53:32,320
to own part of this,
which I had a contract to do.

756
00:53:33,340 --> 00:53:37,810
And I think it's similar to Steve
Jobs thinking I created Apple.

757
00:53:38,950 --> 00:53:42,250
Screw you. Remember they fired him.
Yeah. I'll go create Apple again.

758
00:53:42,460 --> 00:53:45,550
Well, he didn't do so he tried next.
That didn't work so well right.

759
00:53:45,610 --> 00:53:47,920
Work so well didn't work so well.
And he ended up going back to

760
00:53:47,920 --> 00:53:50,200
being CEO of Apple.
And that worked out quite well.

761
00:53:50,910 --> 00:53:54,510
I had a similar experience. Next.
Didn't work out so well for me

762
00:53:54,510 --> 00:53:58,150
either, you know? And, um.
And we were both a little bit

763
00:53:58,150 --> 00:54:01,810
too full of ourselves.
Perhaps Steve Jobs in me, and not to

764
00:54:01,810 --> 00:54:05,890
compare myself to Steve Jobs, but.
But I guess I was that in our

765
00:54:05,890 --> 00:54:10,030
industry at that time.
And, you know, you live and learn.

766
00:54:10,030 --> 00:54:12,490
I mean, it's part of, like I say,
learning and growing.

767
00:54:12,610 --> 00:54:15,040
I'm a different version of myself,
thank God,

768
00:54:15,040 --> 00:54:19,030
than I was when I was in my late 30s.
And if I wasn't,

769
00:54:19,030 --> 00:54:23,410
I would have say I wasted the last 25
years of my life learning nothing.

770
00:54:23,890 --> 00:54:26,590
That was a great learning experience.
In the moment,

771
00:54:26,590 --> 00:54:30,220
I didn't understand how great of
a learning experience was.

772
00:54:30,220 --> 00:54:36,400
I just felt betrayed and hurt and
felt like the rug of my life had been

773
00:54:36,400 --> 00:54:41,260
pulled out from under me and lost
about what that meant for my future,

774
00:54:41,590 --> 00:54:45,910
and I couldn't retell this story
that I'm retelling you in short form

775
00:54:45,910 --> 00:54:49,720
without tears welling up in my eyes
because I was filled with self-pity,

776
00:54:50,770 --> 00:54:57,010
and I ended up figuring out,
with some help, that I stumbled upon,

777
00:54:57,820 --> 00:55:03,280
how debilitating self-pity and
victim mentality thinking is.

778
00:55:03,460 --> 00:55:08,800
And I was able to and coached to
rethink that story.

779
00:55:08,800 --> 00:55:14,530
And all stories where one feels
victimized and rethink the story

780
00:55:14,530 --> 00:55:18,700
from the perspective of the active
player instead of the passive player.

781
00:55:18,700 --> 00:55:22,330
Okay, I got hit by a bus,
but why did I walk out into the

782
00:55:22,330 --> 00:55:24,700
street without looking?
You know what I mean? Yeah.

783
00:55:24,700 --> 00:55:27,430
I mean, it's that kind of thing.
And you can cry,

784
00:55:27,430 --> 00:55:31,780
you get hit by a bus and you go, man.
And the bus driver was texting,

785
00:55:31,780 --> 00:55:35,350
you know, well, that's a bad guy.
He was texting, driving a bus.

786
00:55:35,350 --> 00:55:38,410
I got hit by it.
But but I also walked into the

787
00:55:38,410 --> 00:55:41,740
middle of the street and allowed
myself to get hit by the bus.

788
00:55:41,890 --> 00:55:46,960
I wasn't a completely passive player.
You never saw any of this coming? No.

789
00:55:46,960 --> 00:55:50,260
I was just like that person who
walked into the street and got

790
00:55:50,290 --> 00:55:53,530
hit by a bus.
Yeah, by texting bus driver. Yeah.

791
00:55:53,530 --> 00:55:57,580
And it doesn't relieve the burden
of responsibility from the texting

792
00:55:57,580 --> 00:56:02,560
bus driver when you think that way.
But you start to, as you own your,

793
00:56:02,560 --> 00:56:06,490
your life and you own your bad
stories and your painful stories,

794
00:56:07,300 --> 00:56:10,510
you can grow from that.
You can't grow if it's always

795
00:56:10,510 --> 00:56:13,900
somebody else's fault, right?
And you can't grow past it and

796
00:56:13,900 --> 00:56:19,510
become a productive human being.
And I so I thank God that I was able

797
00:56:19,510 --> 00:56:25,870
to grow past that victim thinking,
grow past that, and tell that

798
00:56:25,870 --> 00:56:30,160
story in a different way.
I really am lucky that I met my my

799
00:56:30,160 --> 00:56:34,840
second wife, and I've been a great
foundation for me in my life and

800
00:56:34,840 --> 00:56:41,920
built built a great new family,
but also helped me prioritize life

801
00:56:41,920 --> 00:56:45,310
and what means, what what life means
and what needs to be prioritized.

802
00:56:45,310 --> 00:56:48,760
And I think it was the greatest
blessing that I was knocked off

803
00:56:48,760 --> 00:56:52,420
of my perch, so to speak,
because if I wasn't knocked off,

804
00:56:52,420 --> 00:56:55,930
I would never have left.
You know, you're intoxicated by

805
00:56:55,930 --> 00:56:59,290
the position that you're in when
you're in those kind of positions.

806
00:56:59,290 --> 00:57:04,180
And I'm sure I was too.
And I've developed into a person

807
00:57:04,180 --> 00:57:07,450
I'm proud to be.
And I think the person that I was and

808
00:57:07,450 --> 00:57:13,300
was heading to become forget about
even being proud of I wouldn't have,

809
00:57:13,870 --> 00:57:19,360
I wouldn't have, I wouldn't have
enjoyed my own life to the level that

810
00:57:19,360 --> 00:57:23,170
I have been blessed to enjoy it.
So did you have to go through

811
00:57:23,200 --> 00:57:27,370
therapy or what? What did you do?
No, I mean, not really, actually.

812
00:57:27,370 --> 00:57:30,490
I went I, my sister in law,
one of my sisters in law, told me

813
00:57:30,490 --> 00:57:35,560
about a seminar that she went to.
It was in LA, oddly enough,

814
00:57:35,560 --> 00:57:38,260
and I had a house or an
apartment in LA at the time,

815
00:57:38,260 --> 00:57:42,700
and she didn't know my background,
so she wasn't telling me to go

816
00:57:42,700 --> 00:57:45,580
because she thought it would be good
for me because of my background.

817
00:57:45,580 --> 00:57:48,520
She just thought it was great
she had gone and she said,

818
00:57:48,520 --> 00:57:51,070
you would love this,
not knowing my background at all.

819
00:57:51,070 --> 00:57:54,160
And I was like, okay,
I'll go because I have one of my

820
00:57:54,160 --> 00:57:59,920
philosophies is always go.
If someone asks me to go, I believe

821
00:57:59,920 --> 00:58:03,280
that that's my destiny to go.
Like, I don't believe in

822
00:58:03,280 --> 00:58:06,160
coincidences, right?
And so if you're invited somewhere,

823
00:58:06,580 --> 00:58:09,310
there's a there's a purposefulness
to it, just like there's a

824
00:58:09,310 --> 00:58:13,510
purposefulness to everything.
So I almost always go.

825
00:58:13,510 --> 00:58:17,230
And so I follow my own advice and
I she said you would love it.

826
00:58:17,230 --> 00:58:21,190
And I said, well, it can't hurt to
go. And if it stinks, I'll leave.

827
00:58:21,370 --> 00:58:22,480
I don't have to spend the whole
weekend.

828
00:58:22,480 --> 00:58:26,110
It was a weekend thing starting
Friday morning.

829
00:58:26,710 --> 00:58:30,340
I figured I can't hurt to go and
if I don't like it, I'll leave.

830
00:58:30,700 --> 00:58:36,220
And I, I learned this lesson,
this very important lesson about

831
00:58:36,460 --> 00:58:40,000
victim victimhood and victim
mentality thinking.

832
00:58:40,000 --> 00:58:43,120
And man, we could just look
around the world today.

833
00:58:43,880 --> 00:58:48,950
And blame so much of what is wrong
in the world today by collective

834
00:58:48,950 --> 00:58:54,020
victim mentality, thinking that would
be reversed immediately if they

835
00:58:54,020 --> 00:58:58,100
were able to understand what I was
taught that day in that seminar.

836
00:59:00,830 --> 00:59:06,230
So it liberated me to live my life in
a productive way. So that was 1998.

837
00:59:06,590 --> 00:59:09,950
Well, that seminar was 2000.
That was it took me two years of

838
00:59:09,950 --> 00:59:14,600
of tears and self-pity before I
stumbled upon that seminar.

839
00:59:15,710 --> 00:59:19,250
And then eight years later,
you you, uh, joined CB.

840
00:59:19,250 --> 00:59:21,350
So what happened in that interim
time?

841
00:59:21,380 --> 00:59:27,350
Well, I, I, I met my second wife.
Yep. Um, and.

842
00:59:28,840 --> 00:59:32,380
My whole life changed, you know?
She's very powerful woman, and she's

843
00:59:32,590 --> 00:59:35,740
got a lot of amazing qualities.
She opened my eyes to a different

844
00:59:35,740 --> 00:59:40,150
way of living life and prioritizing
different things family, health,

845
00:59:40,150 --> 00:59:46,600
fun and not work.
And at the same time, uh, so I wasn't

846
00:59:46,600 --> 00:59:51,340
really ready to go back to work.
I, I mentally, I wasn't ready,

847
00:59:51,340 --> 00:59:54,490
I wasn't in a position.
And after being betrayed where I

848
00:59:54,490 --> 00:59:57,610
felt I can trust people.
And if you don't trust people,

849
00:59:57,610 --> 01:00:00,220
how do you work? Right.
And so I had been betrayed by

850
01:00:00,220 --> 01:00:06,460
people I trusted.
And so I needed to reimagine life and

851
01:00:06,460 --> 01:00:09,700
and regain my trust in humanity.
And, uh,

852
01:00:09,700 --> 01:00:13,420
I need to get away a little bit.
I had led such a big life,

853
01:00:13,420 --> 01:00:18,130
and I had so many people in my life.
Like Michael Milken once said to me,

854
01:00:18,130 --> 01:00:20,920
we became friendly in my no more
years.

855
01:00:21,160 --> 01:00:24,310
And he said to me, if you are
dispensing capital, you'll never

856
01:00:24,310 --> 01:00:26,920
be lonely. And I wasn't lonely.
You know,

857
01:00:26,920 --> 01:00:32,470
I had a lot of friends, right?
I was dispensing capital and I felt I

858
01:00:32,470 --> 01:00:38,260
needed to get away from everyone,
disconnect from everyone and see

859
01:00:38,260 --> 01:00:41,380
who was still my friend.
Perhaps years later, you know,

860
01:00:41,380 --> 01:00:45,190
I'll resurface years later.
And the best place to kind of do that

861
01:00:45,190 --> 01:00:48,640
is the big island of Hawaii. There.
There was literally nobody there.

862
01:00:48,640 --> 01:00:53,110
And it's very far from everywhere.
And so we moved to Hawaii.

863
01:00:53,500 --> 01:00:56,020
We spent about three years
living on the Big Island.

864
01:00:56,020 --> 01:01:00,970
My wife and myself, we had a young
daughter who was one at the time,

865
01:01:01,510 --> 01:01:06,130
and we enjoyed life and it was
beautiful three years and allow me to

866
01:01:06,130 --> 01:01:13,620
clear my head. It allowed me to.
Rebuild myself in a new way.

867
01:01:13,980 --> 01:01:17,670
And then I kind of got to come back
to work and be a producer again,

868
01:01:17,670 --> 01:01:20,010
because that's so much of a part
of who I am.

869
01:01:20,010 --> 01:01:22,230
Your Wall Street Journal
subscription when you were there?

870
01:01:22,500 --> 01:01:25,140
Well, I pay attention.
I definitely pay attention.

871
01:01:25,890 --> 01:01:37,020
Okay, so I came back to the world of
work and production, um, in 2000 and,

872
01:01:37,020 --> 01:01:45,040
uh, six. And it was obviously.
Bull market like you're crazy.

873
01:01:45,340 --> 01:01:48,280
Market? That made no sense.
I hate bull markets,

874
01:01:48,430 --> 01:01:56,290
so there was nothing there for me.
Because in a bull market, no one.

875
01:01:56,560 --> 01:02:03,430
No one's paying anyone to be smart.
In fact, being smart is an obstacle

876
01:02:03,430 --> 01:02:09,250
to maxing out your return because
smart people see risk and less

877
01:02:09,250 --> 01:02:13,750
smart people don't see risk.
So their enthusiasm to buy is

878
01:02:13,750 --> 01:02:18,280
not impeded by any fear.
And in a bull market, you're rewarded

879
01:02:18,280 --> 01:02:23,770
for buying more, not less. Right.
And so so I think bull markets tend

880
01:02:23,770 --> 01:02:27,640
to reward people who are a little
less skilled or perhaps less ethical.

881
01:02:27,640 --> 01:02:33,640
Both they just by unimpeded by any
concern for risk. That's not me.

882
01:02:33,640 --> 01:02:37,990
I'm I'm not either of those people.
I could see something happening

883
01:02:37,990 --> 01:02:40,810
when I was in the real estate.
I was working for Ackman's at

884
01:02:40,810 --> 01:02:43,450
the time.
I was in New York at the Real Estate

885
01:02:43,450 --> 01:02:46,000
Board of Realtor Real Estate,
whatever, the real Estate Board

886
01:02:46,000 --> 01:02:49,540
of New York meeting.
And I was sitting there and watching

887
01:02:49,660 --> 01:02:55,570
a guy from he was with either
Bear Stearns or KSS First Boston,

888
01:02:55,930 --> 01:02:58,810
and he was drawing this chart of CMS,
and he said, let's,

889
01:02:58,810 --> 01:03:03,580
let's now tranche the A piece.
So we tranche the A piece. Yeah.

890
01:03:03,580 --> 01:03:06,490
I said, wait a minute.
You're trashing the A piece and

891
01:03:06,490 --> 01:03:10,750
you're trying to sell the C
position of the A piece as if it's,

892
01:03:10,750 --> 01:03:14,410
I mean, I, I said, wait a minute,
there's too much math here.

893
01:03:14,860 --> 01:03:18,550
Well the lemon was was dry and they
were trying to squeeze another

894
01:03:18,550 --> 01:03:21,280
drop or two out of the lemon,
but it was dry. Yeah.

895
01:03:21,280 --> 01:03:23,710
And they were doing everything
they can to find another drop

896
01:03:23,710 --> 01:03:28,060
out of that lemon. Everything.
So in the problems obviously

897
01:03:28,060 --> 01:03:32,830
CMBS went awry.
Asset values were incredibly

898
01:03:32,830 --> 01:03:38,350
wrong because it fueled by too
much debt that was poorly priced,

899
01:03:38,470 --> 01:03:42,730
incorrectly priced.
But the root of the problem was in

900
01:03:42,730 --> 01:03:45,220
the single family mortgage market,
which I came from.

901
01:03:45,220 --> 01:03:48,190
And I understood as well as I
understand the commercial market

902
01:03:48,190 --> 01:03:53,230
and on the single family side,
both because of public policy and

903
01:03:53,230 --> 01:03:57,520
also because of Wall Street's desire
to squeeze more drops out of a

904
01:03:57,520 --> 01:04:03,480
lemon that the lemon has literally.
Hundreds of billions of dollars

905
01:04:03,480 --> 01:04:08,010
of loans were being extended to
borrowers who had no ability to

906
01:04:08,010 --> 01:04:12,810
ever repay the loan. None.
So how could that end?

907
01:04:13,020 --> 01:04:16,110
And when people say, well,
securitization is a problem,

908
01:04:16,110 --> 01:04:19,920
it's like, no, no.
If you have a sausage factory and

909
01:04:19,920 --> 01:04:24,930
you put beautiful, healthy meat,
grass fed from animals that have

910
01:04:24,930 --> 01:04:30,480
been treated very humanely into
the sausage machine, you're going

911
01:04:30,480 --> 01:04:33,840
to have delicious and healthy
sausages coming out the other side.

912
01:04:34,530 --> 01:04:36,750
On the other hand,
if you put crappy meat.

913
01:04:37,680 --> 01:04:41,910
From poorly treated animals into
the sausage factory.

914
01:04:42,330 --> 01:04:46,890
The other side will produce very,
very unhealthy sausages.

915
01:04:46,920 --> 01:04:49,800
Securitization is just the the
sausage factory.

916
01:04:49,800 --> 01:04:53,310
You put good loans in,
you're gonna get good bonds,

917
01:04:53,490 --> 01:04:57,090
you put bad loans in, you're going to
get bad bonds. It's pretty simple.

918
01:04:57,090 --> 01:05:03,420
Securitization created that calamity.
As much as food creates obesity,

919
01:05:03,420 --> 01:05:06,390
food doesn't create obesity.
It's what you do with the food

920
01:05:06,390 --> 01:05:08,730
that creates obesity.
And if you're eating good food

921
01:05:08,730 --> 01:05:11,070
and the right amount,
you're going to be just fine.

922
01:05:11,580 --> 01:05:16,080
So I hear a lot of times, are you
personally, do you feel responsible

923
01:05:16,080 --> 01:05:20,070
for the 2008 and not at all.
I didn't make any bad loans.

924
01:05:20,070 --> 01:05:23,580
I didn't create a machine that kind
of encouraged people to make bad

925
01:05:23,580 --> 01:05:29,250
loans. The system made bad loans.
So you started your enterprise

926
01:05:29,250 --> 01:05:32,940
at CBRE, and that year.
I did because I knew the world

927
01:05:32,940 --> 01:05:36,420
was going to fall apart.
And I know I am attracted to

928
01:05:36,420 --> 01:05:40,590
those moments.
Those are moments where smart,

929
01:05:40,590 --> 01:05:45,480
disciplined people are rewarded,
where there is a differentiation.

930
01:05:45,660 --> 01:05:49,440
And I like those moments and I
like figuring things out.

931
01:05:49,440 --> 01:05:53,280
I like solving problems.
I like all that stuff.

932
01:05:53,280 --> 01:05:59,040
And I knew in 2007 that there would
be historic problems coming from

933
01:05:59,040 --> 01:06:03,480
the excesses of 2005 and six.
And I was right.

934
01:06:03,540 --> 01:06:07,470
And so I was attracted to come back
to work. I did end up at CBRE.

935
01:06:07,470 --> 01:06:10,110
I was friends,
and I'm friends with Brett White,

936
01:06:10,110 --> 01:06:15,660
who was the CEO of the firm.
Um, Brett and I had no plans for

937
01:06:15,660 --> 01:06:20,530
me to go to work at CBRE, and we
just went. Want to go play golf.

938
01:06:20,560 --> 01:06:25,810
The week of Christmas 2007.
And he asked me it was me and

939
01:06:25,810 --> 01:06:27,730
him and two other guys,
and he called me and he said,

940
01:06:27,730 --> 01:06:31,900
could you come and just have lunch
with me before the other guys come?

941
01:06:32,080 --> 01:06:35,800
Because I don't understand
what's going on in the world.

942
01:06:35,800 --> 01:06:40,030
And you're my smartest financial
friend, and I would like for you

943
01:06:40,030 --> 01:06:42,190
to explain it to me.
And so I met him for lunch.

944
01:06:42,910 --> 01:06:44,980
I explained to him what I
thought was going on.

945
01:06:44,980 --> 01:06:49,540
I explained to him how there
would be losers,

946
01:06:49,540 --> 01:06:55,060
and how CBRE could respond in a way
that might be capitalized on that.

947
01:06:55,390 --> 01:06:59,050
And he asked me if I would ever
consider coming to work at CBRE.

948
01:06:59,170 --> 01:07:03,790
And I told him, no, there's
35,000 people. Public company.

949
01:07:03,790 --> 01:07:06,820
That's not really appealing to me.
I'm an entrepreneurial guy.

950
01:07:06,940 --> 01:07:10,120
And he said, I said to him,
but I guess you're the CEO.

951
01:07:10,120 --> 01:07:14,110
So if you could create an
entrepreneurial island for me with an

952
01:07:14,140 --> 01:07:18,880
entrepreneurial deal that allowed
me to own part of my business,

953
01:07:18,880 --> 01:07:24,100
I suppose I could use this platform
in extremely productive ways.

954
01:07:24,100 --> 01:07:29,020
And so he said, okay, let's do that.
And then I did ultimately join CBRE.

955
01:07:29,290 --> 01:07:32,350
Had a wonderful time there.
I mean. CBRE is brokers, right?

956
01:07:32,470 --> 01:07:35,800
Brokers are independent people.
Degree is an amazing company.

957
01:07:35,800 --> 01:07:40,990
It is, as you know, amazing, amazing
company. I loved my time there.

958
01:07:41,380 --> 01:07:44,560
I thought the people were first
class through and through.

959
01:07:45,510 --> 01:07:49,590
I was so impressed with the company
and I still to this day am deeply

960
01:07:49,590 --> 01:07:53,490
impressed with the company. Um.
So you were there for how long?

961
01:07:53,790 --> 01:07:57,090
How long was it. Was there for?
4 or 5 years.

962
01:07:57,120 --> 01:08:01,470
There was a management change.
As you know, Brett left.

963
01:08:02,160 --> 01:08:05,130
Brett was my rabbi.
Brett had created that

964
01:08:05,130 --> 01:08:08,640
entrepreneurial island for me.
And even though I had a legal

965
01:08:08,640 --> 01:08:14,160
documentation for my deal with CBRE,
let's just say the successor

966
01:08:14,160 --> 01:08:18,360
management team wasn't happy with
that because I was an outlier.

967
01:08:18,360 --> 01:08:21,270
Like, I was the only person in
the history of CBRE who owned

968
01:08:21,270 --> 01:08:24,060
part of their business.
They didn't like that exception

969
01:08:24,060 --> 01:08:26,960
to the rule.
They made me an offer that I

970
01:08:26,960 --> 01:08:32,420
could only refuse, and I did.
Okay, so that's ultimately what

971
01:08:32,420 --> 01:08:36,840
left me to leave. And, uh.
You know, again,

972
01:08:36,840 --> 01:08:39,660
I don't necessarily blame them.
I mean, I think that when you're

973
01:08:39,660 --> 01:08:43,530
running a big company, it's hard
to have exceptions to rules.

974
01:08:43,530 --> 01:08:46,140
And I guess that public company,
it's I get it.

975
01:08:46,140 --> 01:08:50,280
I don't have any bad feelings.
I Bob, who wasn't necessarily

976
01:08:50,280 --> 01:08:53,250
directly involved,
is a CEO and we're very good friends.

977
01:08:53,250 --> 01:08:55,770
I have lunch with him a couple
times a year.

978
01:08:55,770 --> 01:08:59,700
I really care for him as a person.
He's been in my house.

979
01:08:59,700 --> 01:09:01,800
I have nothing against anyone,
I think.

980
01:09:01,800 --> 01:09:06,300
I think he made people made
decisions with regards to me that

981
01:09:06,300 --> 01:09:09,180
they felt they had to make for
the betterment of the company,

982
01:09:09,180 --> 01:09:12,660
and, you know, that was their
job to make those decisions.

983
01:09:12,660 --> 01:09:14,940
Are you making contrarian bets
when you're really not at all?

984
01:09:14,940 --> 01:09:18,360
No, no, no, no, not at all.
When I was operating as I was

985
01:09:18,360 --> 01:09:22,080
supposed to and I was running,
what was the most profitable part

986
01:09:22,080 --> 01:09:28,290
of the CBRE investor's business?
I was building a great business and

987
01:09:28,290 --> 01:09:31,980
delivering returns that were at or
higher than we promised investors

988
01:09:31,980 --> 01:09:34,980
and growing the business well,
I did, I did my part.

989
01:09:34,980 --> 01:09:37,830
I think that the deal the
entrepreneurs deal that I cut

990
01:09:37,830 --> 01:09:40,680
didn't sit well with them.
Got it. And that's okay.

991
01:09:41,760 --> 01:09:44,730
And then subsequently, you formed
the company you're now? Yeah.

992
01:09:44,730 --> 01:09:47,970
I decided to be a real entrepreneur
instead of being an entrepreneur

993
01:09:48,840 --> 01:09:53,250
in an island of a big company.
And and that has been what I've

994
01:09:53,250 --> 01:09:56,760
been doing for the last,
I guess, eight years or so.

995
01:09:57,240 --> 01:10:02,220
And I kind of we had a bunch of
different pockets of money,

996
01:10:02,640 --> 01:10:06,450
separate accounts primarily,
but we had one large commingled

997
01:10:06,450 --> 01:10:12,940
fund and the large commingled fund.
I kind of dodged a bullet for myself

998
01:10:12,940 --> 01:10:19,510
and my investors in the sense that I.
I saw that when Covid came in 2020,

999
01:10:19,990 --> 01:10:25,810
but I felt that the world was
entering a newly a new risky period,

1000
01:10:25,810 --> 01:10:29,650
you know,
that I didn't know how that risk

1001
01:10:29,650 --> 01:10:33,460
would manifest itself negatively.
I just knew that it would likely

1002
01:10:33,460 --> 01:10:37,840
manifest itself negatively.
I would never have imagined that

1003
01:10:37,840 --> 01:10:41,110
the fed would march interest
rates up as they have I.

1004
01:10:41,290 --> 01:10:47,440
I think it's, by the way, incredibly
stupid and and destructive,

1005
01:10:47,440 --> 01:10:51,460
unnecessarily destructive.
But they did it. But but I didn't.

1006
01:10:51,460 --> 01:10:55,690
I knew that something negative was
likely to happen in the financial

1007
01:10:55,690 --> 01:11:01,720
markets because of inspired by Covid,
and that caused me to think, I want

1008
01:11:01,720 --> 01:11:06,130
to get my investors liquidity because
we were in illiquid positions.

1009
01:11:06,130 --> 01:11:09,910
And so I spent the next 18
months I shut the fund.

1010
01:11:09,910 --> 01:11:14,620
It was an open ended fund,
and I pursued liquidity,

1011
01:11:14,620 --> 01:11:19,900
and I was able to consummate a merger
with a publicly traded mortgage

1012
01:11:19,900 --> 01:11:25,270
REIT that closed, fortuitously
in March of 2022 with no lockup.

1013
01:11:25,270 --> 01:11:31,210
So literally the peak price for
mortgage rates, no lockup rates had

1014
01:11:31,210 --> 01:11:36,350
not yet begun to be marched up.
We got out of the nick of time now.

1015
01:11:37,310 --> 01:11:42,620
I. You know that.
So that that since that time I've

1016
01:11:42,620 --> 01:11:45,770
been uncomfortable with the market.
I remain uncomfortable with the

1017
01:11:45,770 --> 01:11:47,240
market.
So I haven't launched any new

1018
01:11:47,240 --> 01:11:52,850
vehicles, and I've been sitting
around patiently because we both

1019
01:11:52,850 --> 01:11:55,100
have been around this industry a
long time, for years.

1020
01:11:55,430 --> 01:11:58,580
And what we've seen is that when
price action happens,

1021
01:11:58,760 --> 01:12:04,580
that values go down abruptly.
There's usually a years long period

1022
01:12:04,820 --> 01:12:09,260
of nothing happens because sellers
obviously don't want to sell.

1023
01:12:09,950 --> 01:12:12,500
Buyers don't want to pay
yesterday's prices.

1024
01:12:12,500 --> 01:12:16,310
They want to pay today's cheaper
prices and things until they're

1025
01:12:16,310 --> 01:12:19,700
forced to. Things don't trade.
So I knew that was likely to occur

1026
01:12:19,700 --> 01:12:23,450
and I didn't want to go raise money,
promise investors activity that

1027
01:12:23,450 --> 01:12:26,300
I didn't think would happen.
And it turns out I was right.

1028
01:12:26,300 --> 01:12:30,410
And so I wrote a book.
And so and instead of managing money,

1029
01:12:30,410 --> 01:12:33,260
I basically became an author.
Let's talk about volatility for

1030
01:12:33,260 --> 01:12:37,250
a minute okay.
So you you pioneered the CMBS

1031
01:12:37,250 --> 01:12:39,290
business and grew it
significantly up to 98.

1032
01:12:39,290 --> 01:12:42,800
Then a hiccup occurred and then
it recovered in the 2000.

1033
01:12:42,830 --> 01:12:48,230
Grew astronomically until the GFC
in 2008 when it crashed once again

1034
01:12:48,230 --> 01:12:51,650
and then once again recovered.
Talk about the volatility in this

1035
01:12:51,650 --> 01:12:56,360
business and compare it with the
lower beta life insurance lending

1036
01:12:56,360 --> 01:13:00,890
business that was more had more
slack and alternative options

1037
01:13:00,890 --> 01:13:04,850
allowing for diversification.
Do you think CMBS is a sustainable

1038
01:13:04,850 --> 01:13:09,140
business model and could it evolve
into something less volatile? Okay.

1039
01:13:09,890 --> 01:13:18,410
I think that the the notion of
volatility is a poorly and

1040
01:13:18,410 --> 01:13:27,520
misunderstood notion. Okay.
If for those who are not seeing this,

1041
01:13:27,520 --> 01:13:33,190
I'm holding up my iPhone.
So if I if if this iPhone in my

1042
01:13:33,190 --> 01:13:38,390
hand today.
Could fetch $100 and just pick a

1043
01:13:38,390 --> 01:13:44,070
number $100.
And then tomorrow there was a

1044
01:13:44,070 --> 01:13:46,590
flood of this.
Vintage iPhones hit the market.

1045
01:13:46,950 --> 01:13:51,150
It would not be worth $100 anymore to
be worth something less, and maybe

1046
01:13:51,150 --> 01:13:59,340
substantially less than $100, right?
And if I was forced to sell this

1047
01:13:59,340 --> 01:14:02,580
iPhone.
I would find out exactly what

1048
01:14:02,580 --> 01:14:06,810
the price that it would fetch,
and I would go, man, the price

1049
01:14:06,810 --> 01:14:09,780
of iPhones are very volatile.
You know, it was $100 yesterday,

1050
01:14:09,780 --> 01:14:15,330
and now maybe it's $35 today.
But if I didn't have to sell and

1051
01:14:15,330 --> 01:14:17,760
I just thought, well,
people are paying a lot less,

1052
01:14:17,760 --> 01:14:21,150
there's a lot more iPhones for sale.
I just put it in my pocket.

1053
01:14:21,690 --> 01:14:24,240
I'm going to use it for another
year and maybe two.

1054
01:14:24,900 --> 01:14:26,910
Don't tell me what it's worth.
I don't even care.

1055
01:14:27,060 --> 01:14:30,090
It's not information I'm
interested in. I wanted $100.

1056
01:14:30,390 --> 01:14:33,390
It was not a $100 bid.
I don't need to know.

1057
01:14:34,900 --> 01:14:37,510
So then I don't know how
volatile it is.

1058
01:14:37,510 --> 01:14:41,440
I just know it's a little less
than $100, but my price?

1059
01:14:41,440 --> 01:14:45,370
$100 and there's no $100 bid.
I think that the real estate

1060
01:14:45,370 --> 01:14:49,450
industry.
So Sam Zell, I would give him

1061
01:14:49,450 --> 01:14:54,550
and I would give there was a guy
at Merrill Lynch who ran equity

1062
01:14:54,550 --> 01:14:56,560
investment banking, real estate,
equity investor banking,

1063
01:14:56,560 --> 01:15:01,530
Richard Salzman.
Richard Salzman was the Ethan

1064
01:15:01,530 --> 01:15:07,230
Penner of Rights, and Sam Zell
really was Richard's kind of like

1065
01:15:07,380 --> 01:15:12,780
horse that he rode to the success
of creating today's Mortgage real

1066
01:15:12,780 --> 01:15:18,780
Estate REIT industry, or the.
I created the kind of the the

1067
01:15:18,780 --> 01:15:22,770
debt side.
We both what we both did was we

1068
01:15:22,950 --> 01:15:27,810
we brought real estate out of
the closets and the and out of

1069
01:15:27,810 --> 01:15:31,530
the conference rooms into the
public market.

1070
01:15:31,650 --> 01:15:37,680
And so now the public market was
setting a price every minute for

1071
01:15:37,680 --> 01:15:42,670
real estate.
And that price was moving based

1072
01:15:42,670 --> 01:15:45,940
on the public markets willingness
to pay for real estate debt or

1073
01:15:45,940 --> 01:15:48,880
real estate equity.
And it was moving every minute.

1074
01:15:50,010 --> 01:15:54,630
Before that.
Before 1990, roughly 92 or 93.

1075
01:15:55,050 --> 01:15:57,480
All the real estate was private,
all of it.

1076
01:15:57,480 --> 01:16:01,440
So the loans that were made by
insurance companies or banks

1077
01:16:01,920 --> 01:16:05,670
never saw the light of day.
They were made and owned by that

1078
01:16:05,670 --> 01:16:09,030
lender.
Documents were sitting in a drawer.

1079
01:16:09,790 --> 01:16:15,000
And when the loan matured.
I mean, if the loan if the borrower

1080
01:16:15,000 --> 01:16:17,940
couldn't repay it, then there was
just a negotiation of an extension.

1081
01:16:17,940 --> 01:16:20,130
You know,
pay me a fee and we'll we'll talk

1082
01:16:20,130 --> 01:16:25,290
about it in a year or two. Right.
And the same thing with real estate

1083
01:16:25,290 --> 01:16:30,960
assets. There was no price discovery.
And now all of a sudden, with the

1084
01:16:30,960 --> 01:16:35,460
advent of the REIT and the CMBS,
there was price discovery.

1085
01:16:35,460 --> 01:16:41,970
So when we look at CMBS or REITs,
we see price volatility because

1086
01:16:41,970 --> 01:16:46,410
we have minute to minute,
day to day market opinion of the

1087
01:16:46,410 --> 01:16:50,600
value of those things.
The real estate that is not in

1088
01:16:50,600 --> 01:16:53,690
the public market is not.
There's no opinion being

1089
01:16:53,690 --> 01:16:56,900
expressed about its value minute
to minute or day to day.

1090
01:16:56,900 --> 01:17:01,490
But it's fairly safe to say that if
the real estate were to be pulled

1091
01:17:01,490 --> 01:17:05,120
out, that loan was pulled out of
the insurance companies drawer and

1092
01:17:05,120 --> 01:17:09,890
sent out into the public market for
price discovery, they would discover

1093
01:17:09,890 --> 01:17:13,940
it's just as volatile as CMBS.
You understand? Well, because.

1094
01:17:13,940 --> 01:17:16,970
The markets are that way today.
But when I grew up in the business

1095
01:17:16,970 --> 01:17:19,160
and I was started at Prudential,
yeah, but.

1096
01:17:19,160 --> 01:17:21,860
Because there was no public no,
we didn't. Have that.

1097
01:17:21,860 --> 01:17:25,640
We didn't have public didn't touch.
Well, there was no connectivity

1098
01:17:25,790 --> 01:17:30,320
between the capital markets. No.
And real estate assets of any kind.

1099
01:17:30,500 --> 01:17:32,210
No connectivity, no real.
Estate was looked at.

1100
01:17:32,330 --> 01:17:38,060
But real real estate was volatile.
It's just that you didn't know it.

1101
01:17:38,060 --> 01:17:39,710
Okay.
That's true because it didn't trade

1102
01:17:39,710 --> 01:17:42,500
as much. Well, there was no reason.
It was a longer term.

1103
01:17:42,680 --> 01:17:46,370
But no, there was no but there was no
there was no vehicle for trading.

1104
01:17:46,550 --> 01:17:50,150
And so you sold when you were in
the money and you didn't sell

1105
01:17:50,150 --> 01:17:52,700
when you weren't in the money.
And that was that.

1106
01:17:52,700 --> 01:17:56,840
And so it's interesting.
Though I was I grew up in appraising

1107
01:17:56,840 --> 01:17:59,360
property and I was looked at,
you know, I was in the Appraisal

1108
01:17:59,360 --> 01:18:02,900
Institute looking at long term value.
And how did you come up with a

1109
01:18:02,900 --> 01:18:04,490
cap rate?
We had what was called the band

1110
01:18:04,490 --> 01:18:07,070
of investment.
And you looked at what's the

1111
01:18:07,070 --> 01:18:09,590
equity return you need,
what's the debt return?

1112
01:18:09,590 --> 01:18:13,340
So this was a scientific structure.
At that time we didn't have Wall

1113
01:18:13,340 --> 01:18:15,410
Street to trade off,
except the inside.

1114
01:18:15,410 --> 01:18:18,740
The insurance companies, they were
trading bonds. They were trading.

1115
01:18:18,860 --> 01:18:21,290
They disconnected real estate
from that thing.

1116
01:18:21,290 --> 01:18:23,960
Well, they had to allocate their
portfolios, but they.

1117
01:18:23,960 --> 01:18:26,750
Disconnected. Mortgages, but.
They disconnected, just like I

1118
01:18:26,750 --> 01:18:30,530
think in venture capital is another
place where they've done a very

1119
01:18:30,530 --> 01:18:34,340
good job of disconnecting reality,
as though there is, though

1120
01:18:34,340 --> 01:18:37,460
there's something called gravity.
But gravity doesn't apply to

1121
01:18:37,460 --> 01:18:41,030
this area. Okay.
You know, I think it's just self

1122
01:18:41,030 --> 01:18:44,780
deceit. Put yourself to see.
Well, people live very happily

1123
01:18:44,780 --> 01:18:47,930
in self deceit.
They like to tell you life insurance

1124
01:18:47,930 --> 01:18:51,320
companies will tell you they allocate
their assets accordingly based on

1125
01:18:51,320 --> 01:18:55,820
risk, as their perception was.
And I'm sure they were, but I think

1126
01:18:55,820 --> 01:18:59,510
they were misunderstanding the risk
of the real estate market there,

1127
01:18:59,510 --> 01:19:02,360
probably because they were
because there was no reminder.

1128
01:19:03,350 --> 01:19:05,450
No, they didn't mark the.
Market without the reminder.

1129
01:19:05,450 --> 01:19:07,640
They don't know how risky it is.
It's no mark to market.

1130
01:19:07,880 --> 01:19:09,890
There's no reminder.
Yeah, I agree,

1131
01:19:10,430 --> 01:19:12,110
I can argue with that earlier.
By the way,

1132
01:19:12,110 --> 01:19:16,430
I have to tell you a story, okay?
It inspired me to abandon my

1133
01:19:16,430 --> 01:19:21,620
initial inclination to create CMS.
So my initial inclination was in

1134
01:19:21,620 --> 01:19:28,430
1988, not 1993.
And in 1988, I was a young big

1135
01:19:28,430 --> 01:19:33,110
shot at Morgan Stanley running the
credit risk mortgage business.

1136
01:19:33,110 --> 01:19:38,720
And Morgan Stanley and I thought, why
not go after that big giant market

1137
01:19:38,720 --> 01:19:42,980
that no one seems to be after on Wall
Street called commercial real estate.

1138
01:19:43,490 --> 01:19:47,570
So I, I started to dip my toe
into that arena.

1139
01:19:47,660 --> 01:19:51,110
And if you remember Morgan
Stanley owned a real estate

1140
01:19:51,110 --> 01:19:54,590
brokerage company.
You know, there was another one.

1141
01:19:54,590 --> 01:19:57,650
And I'm blanking on the name.
But if I said it, you know,

1142
01:19:57,740 --> 01:20:00,830
Harvey Brooks, Harvey,
they own Brooks Harvey.

1143
01:20:00,830 --> 01:20:05,930
So I moseyed over to talk to some
of the guys at Brooks Harvey who

1144
01:20:05,960 --> 01:20:10,610
were as far afield from bond trading
desks where I lived, right from an

1145
01:20:10,610 --> 01:20:14,060
intellectual or knowledge based
standpoint, as one could imagine.

1146
01:20:14,450 --> 01:20:18,290
And they were telling me, I said,
what's going on in in the world

1147
01:20:18,290 --> 01:20:20,690
of commercial mortgages?
And they said, well,

1148
01:20:20,690 --> 01:20:24,710
it just so happens we're arranging a
mortgage right now for this office

1149
01:20:24,710 --> 01:20:29,270
building in midtown Manhattan.
And it was the the lender was

1150
01:20:29,270 --> 01:20:34,070
Traveler's Insurance Company. Yeah.
And I said, well, what kind of

1151
01:20:34,070 --> 01:20:38,990
terms are you getting the borrower?
And it was like a ten year loan.

1152
01:20:40,280 --> 01:20:45,830
And the rate on the loan was lower
than the ten year US Treasury.

1153
01:20:46,040 --> 01:20:51,470
Lower. So think about this.
Think about what disconnection means,

1154
01:20:51,470 --> 01:20:57,470
some imbecile.
The CIO of travelers is literally

1155
01:20:57,470 --> 01:21:04,070
lending money to an office building.
And all the risks attendant with

1156
01:21:04,070 --> 01:21:07,700
that, when all you have to do is
buy the US ten year Treasury and

1157
01:21:07,700 --> 01:21:10,880
he'd have a better yield.
And I thought, okay,

1158
01:21:10,880 --> 01:21:13,970
there's no CMS here.
And I went back to the residence.

1159
01:21:14,300 --> 01:21:18,650
Forget this. This is insanity.
Because because the disconnection

1160
01:21:18,650 --> 01:21:23,660
created those kinds of kind of like.
Mortgage bankers love that pricing.

1161
01:21:23,690 --> 01:21:26,510
Of course it made great,
made great sense to you as an

1162
01:21:26,510 --> 01:21:31,760
intermediary, but as an investor,
it made less than no sense. And so.

1163
01:21:32,630 --> 01:21:37,580
So as the world changed and the real
estate market got exposed to the

1164
01:21:37,580 --> 01:21:41,060
capital markets and relative value,
which goes back to what we talked

1165
01:21:41,060 --> 01:21:44,450
about in the beginning of this
conversation, was now introduced to

1166
01:21:44,450 --> 01:21:48,530
the real estate investment world.
The world has never been the

1167
01:21:48,530 --> 01:21:52,340
same for real estate,
but they still do talk about gee,

1168
01:21:52,340 --> 01:21:56,150
CMS is volatile, but how come my
loan portfolio is done?

1169
01:21:56,300 --> 01:21:59,690
And the reason is price discovery.
You don't ask for price discovery.

1170
01:21:59,690 --> 01:22:01,850
If you did,
you'd find out is very volatile.

1171
01:22:03,170 --> 01:22:05,780
Earlier this year, you were
interviewed on another podcast

1172
01:22:05,780 --> 01:22:09,560
and cited that the largest macro
trend over the last 40 years was

1173
01:22:09,560 --> 01:22:14,690
declining interest rates, and that
that is not and that has now changed.

1174
01:22:14,840 --> 01:22:18,740
Howard Marks of Oak Creek Capital
also made that observation recently

1175
01:22:18,740 --> 01:22:23,870
and is recommended a reallocation of
their their investments internally.

1176
01:22:24,350 --> 01:22:27,740
You indicated that you will be
looking toward inflation

1177
01:22:27,740 --> 01:22:30,800
protected investments.
And due to the outstanding debt

1178
01:22:30,800 --> 01:22:33,650
on the US balance sheet,
inflation is inevitable.

1179
01:22:34,520 --> 01:22:37,790
Perhaps elaborate on this and what
strategies you would recommend

1180
01:22:37,790 --> 01:22:41,600
to young professionals in our
industry and in general about where

1181
01:22:41,630 --> 01:22:47,150
where to place capital today?
Well, I think there is like three

1182
01:22:47,150 --> 01:22:50,540
questions embedded in that question.
So I'm going to try to address

1183
01:22:50,540 --> 01:22:53,120
I'm trying to that's a good way
to ask the question. All right.

1184
01:22:53,120 --> 01:23:01,480
So I think first of all.
I'll start with young people in

1185
01:23:01,480 --> 01:23:06,100
the real estate industry.
I love real estate for a variety

1186
01:23:06,100 --> 01:23:10,690
of reasons. I love real estate.
And as you and I were talking even

1187
01:23:10,690 --> 01:23:16,930
before we started the podcast,
primarily because real estate is a

1188
01:23:16,930 --> 01:23:19,870
reflection of society's inclinations.
Right?

1189
01:23:19,870 --> 01:23:25,060
And so if you want to be a good
real estate investor, you must ask,

1190
01:23:25,060 --> 01:23:29,770
ask and answer the question in
what physical structures do

1191
01:23:29,770 --> 01:23:34,120
people want to enjoy life, right.
And if you can answer that question,

1192
01:23:34,150 --> 01:23:36,760
you're going to invest
accordingly and do very well.

1193
01:23:36,760 --> 01:23:40,000
And if you don't answer that
question or even ask that question,

1194
01:23:40,210 --> 01:23:42,220
you'll be stumbling and bumbling
in your career.

1195
01:23:42,220 --> 01:23:44,980
And I think too few real estate
people think that way.

1196
01:23:45,010 --> 01:23:49,330
So when I write a book on philosophy,
which I did, and people think, well,

1197
01:23:49,330 --> 01:23:52,960
why did a guy who's known in real
estate write a book on philosophy

1198
01:23:52,960 --> 01:23:56,290
is because I think philosophy and
understanding human nature and

1199
01:23:56,290 --> 01:24:00,880
human behavior is fundamental to
being a good real estate person.

1200
01:24:00,880 --> 01:24:03,520
And so I would tell young people
today.

1201
01:24:05,140 --> 01:24:09,310
The world is in a state of
incredible, as you well know,

1202
01:24:09,310 --> 01:24:14,320
incredible change.
The things that were attractive

1203
01:24:14,320 --> 01:24:20,110
in John Coe and Ethan Pena's
journey in life as young men.

1204
01:24:20,840 --> 01:24:25,100
Are very different today.
People's desires of how to live life,

1205
01:24:25,100 --> 01:24:28,250
where to live life,
how to allocate their time,

1206
01:24:28,430 --> 01:24:33,080
how to interact with each other, and
where to interact with each other.

1207
01:24:33,380 --> 01:24:36,140
Those are very different than in
our lifetime.

1208
01:24:36,590 --> 01:24:40,160
And most of the real estate stock
in the world today was built to

1209
01:24:40,160 --> 01:24:45,350
answer that question for our lifetime
and even generations before us.

1210
01:24:45,710 --> 01:24:50,450
So that means there's a lot of
shaking up that's going to occur

1211
01:24:50,450 --> 01:24:54,650
in real estate.
And shaking up is very rewarding

1212
01:24:54,650 --> 01:24:58,520
for young, thoughtful,
enterprising people.

1213
01:24:58,520 --> 01:25:03,110
So I think the future of real estate
is going to be exciting and very

1214
01:25:03,110 --> 01:25:06,920
rewarding for people who think
philosophically, who are students

1215
01:25:06,920 --> 01:25:10,550
of human behavior and who could
express themselves accordingly in

1216
01:25:10,550 --> 01:25:16,160
this industry. It's very exciting.
I think technology obviously will

1217
01:25:16,160 --> 01:25:20,420
have a huge impact in answering
some of those questions.

1218
01:25:20,420 --> 01:25:25,310
And so I also talk in my book
about intersections and how real

1219
01:25:25,310 --> 01:25:28,370
estate itself is an intersection
business because it lives at the

1220
01:25:28,370 --> 01:25:34,730
intersection of a lot of things.
Politics and zoning. Tax policy.

1221
01:25:34,910 --> 01:25:40,730
Construction and design. Finance.
Capital markets and economics.

1222
01:25:40,730 --> 01:25:46,550
Human behavior. Intersections.
I would find intersections live

1223
01:25:46,550 --> 01:25:49,100
at intersections.
It's fun and rewarding.

1224
01:25:49,430 --> 01:25:54,170
So that's one that's the the
last question you asked the.

1225
01:25:56,360 --> 01:26:01,130
Second question you ask about
investing in inflationary places

1226
01:26:01,130 --> 01:26:05,780
where inflation.
I think inflation is one of the most

1227
01:26:05,780 --> 01:26:12,260
poorly understood ideas in economics.
I think that people often

1228
01:26:12,830 --> 01:26:17,390
confuse cause and effect when
thinking of inflation, so they

1229
01:26:17,390 --> 01:26:23,950
look at higher interest rates.
As, uh, as perhaps even the

1230
01:26:23,950 --> 01:26:29,110
definition of of inflation or
certainly the result of inflation.

1231
01:26:29,980 --> 01:26:32,890
Sometimes maybe they think of it
as the cause of inflation.

1232
01:26:34,480 --> 01:26:37,330
I think of that is somewhat
disconnected today.

1233
01:26:37,360 --> 01:26:43,030
I think that the reason is because
the federal government interest rates

1234
01:26:43,030 --> 01:26:50,410
used in my bond trading years, when
the fed had a much less invasive,

1235
01:26:51,550 --> 01:26:55,690
um, orientation towards the
financial markets than they have

1236
01:26:55,690 --> 01:27:00,010
expressed in the last decade and
continue to express inflation, was

1237
01:27:00,010 --> 01:27:04,030
the market price for money? Right.
I mean, I'm sorry, interest rates

1238
01:27:04,030 --> 01:27:08,470
was the market price for money.
So someone wanted to borrow, someone

1239
01:27:08,470 --> 01:27:13,900
had money to lend and interest rates
was the price of that transaction.

1240
01:27:16,640 --> 01:27:20,900
And it was largely a free market.
So if there were more people wanting

1241
01:27:20,900 --> 01:27:25,460
to borrow than wanting to lend.
Interest rates went up if more people

1242
01:27:25,460 --> 01:27:30,710
wanted to lend than to borrow.
Interest rates went down pretty

1243
01:27:30,710 --> 01:27:36,200
simple.
When 2008 happened and the world

1244
01:27:36,200 --> 01:27:41,270
as we know it almost ended,
the fed decided that.

1245
01:27:42,150 --> 01:27:49,920
As the fed does when they see
the world teetering on anarchy

1246
01:27:49,920 --> 01:27:55,520
that they needed to.
Solve for that anarchic risk,

1247
01:27:55,520 --> 01:28:00,170
and the only lever they have is
to flood the money, the market

1248
01:28:00,170 --> 01:28:03,740
and the world with cheap dollars.
And so they flooded.

1249
01:28:04,250 --> 01:28:10,070
There's been $8 trillion of
essentially new money has expressed

1250
01:28:10,070 --> 01:28:17,270
itself since 2008 into the world.
And that is by definition, inflation.

1251
01:28:17,270 --> 01:28:21,110
So if you go back to the economic
definition of inflation,

1252
01:28:21,110 --> 01:28:24,230
when the word was because the
word inflation has been in the

1253
01:28:24,230 --> 01:28:28,610
English language for a long time,
but it only started to be used,

1254
01:28:28,640 --> 01:28:35,060
I believe, around the 1920s or
30s in relation to economics.

1255
01:28:35,060 --> 01:28:41,780
And the word was used to describe
the inflation of money supply.

1256
01:28:41,780 --> 01:28:46,040
That's what it was.
So the word inflation originated in

1257
01:28:46,040 --> 01:28:50,030
economics as a measurement of money
supply. Money supply is inflating.

1258
01:28:50,030 --> 01:28:54,140
Well, that's what happened.
$8 trillion was conjured out of

1259
01:28:54,140 --> 01:28:57,800
thin air and injected into the
world by the fed.

1260
01:28:57,800 --> 01:29:02,690
That is the definition of inflation.
And yet what was interesting is that

1261
01:29:02,690 --> 01:29:07,070
during that $8 trillion infusion,
which was historically large,

1262
01:29:07,220 --> 01:29:10,460
interest rates remained
historically low.

1263
01:29:10,460 --> 01:29:13,070
And people were going like,
well, there's no inflation.

1264
01:29:13,070 --> 01:29:17,060
Interest rates were 1%.
Yes, there is inflation.

1265
01:29:17,060 --> 01:29:20,720
$8 trillion was created.
It's just that interest rates

1266
01:29:20,720 --> 01:29:24,740
were being suppressed and they
were being suppressed by the same

1267
01:29:24,740 --> 01:29:29,900
powerful forces that had created
the $8 trillion, which is go back

1268
01:29:29,900 --> 01:29:35,480
to why I said I was very surprised
to see the fed allow rates.

1269
01:29:35,480 --> 01:29:39,530
By the way, the word fed allow
is also a weird thing for a free

1270
01:29:39,530 --> 01:29:42,800
market person like me to say.
I grew up on a bond trading desk

1271
01:29:42,950 --> 01:29:47,900
where the fed didn't intrude, and so
markets determined where rates went.

1272
01:29:47,900 --> 01:29:52,940
But since 2008, the fed has
determined where interest rates go.

1273
01:29:52,940 --> 01:29:55,340
The bond market is just it's
just there.

1274
01:29:55,340 --> 01:29:58,670
But it's not really determining much.
Supply and demand don't

1275
01:29:58,670 --> 01:30:01,490
determine much.
The fed determines where rates go.

1276
01:30:01,850 --> 01:30:07,280
And so I would make interest rate
bets today I think that interest

1277
01:30:07,280 --> 01:30:12,950
rates are if you say what does the
fed slash the US government need.

1278
01:30:13,220 --> 01:30:15,470
They need interest rates to go
back to 1%.

1279
01:30:17,040 --> 01:30:19,680
Are they smart enough to know that?
I'm not so sure.

1280
01:30:19,860 --> 01:30:21,840
So I wouldn't make interest rate
bets.

1281
01:30:21,870 --> 01:30:26,190
I do, though, believe inflation is
with us wherever interest rates go.

1282
01:30:26,190 --> 01:30:29,160
Doesn't matter.
And I think, uh,

1283
01:30:29,160 --> 01:30:35,940
owning inflation protection assets,
not owning cash will be continue

1284
01:30:35,940 --> 01:30:40,050
to prove to be a good idea.
So I think that's answers most

1285
01:30:40,050 --> 01:30:43,530
of your question.
So, Ethan, you are now a real estate

1286
01:30:43,530 --> 01:30:48,390
lecturer at Pepperdine as well.
Talk about your curriculum there

1287
01:30:48,390 --> 01:30:51,870
and why you decided to teach.
What lessons do you share with your

1288
01:30:51,870 --> 01:30:58,350
students that they've probably never
heard before? Well, that's for sure.

1289
01:30:58,350 --> 01:31:02,550
That's for sure.
John, I'm not your typical guy

1290
01:31:02,550 --> 01:31:06,660
in our industry, as you know,
and I'm even less typical in a

1291
01:31:06,660 --> 01:31:14,340
college campus. Okay.
I, I was attracted to teaching,

1292
01:31:14,910 --> 01:31:19,530
you know, long ago. I like teaching.
I feel like learning and

1293
01:31:19,530 --> 01:31:23,670
teaching go hand in hand.
And I think that I think that you do

1294
01:31:23,670 --> 01:31:26,340
them both at the same time. Right.
I think that when you have a

1295
01:31:26,340 --> 01:31:32,340
conversation with another human
being, you're teaching and learning,

1296
01:31:32,340 --> 01:31:35,730
and that's the fun part of human
interactions.

1297
01:31:35,730 --> 01:31:39,780
And so I've always seen it that way.
And every time I was invited from

1298
01:31:39,990 --> 01:31:44,790
my Wall Street career to speak
as a guest lecturer in a class

1299
01:31:44,790 --> 01:31:47,730
or to a university or whatever,
I would always accept.

1300
01:31:47,880 --> 01:31:53,850
And then one day I was moving back
out to California in about 2000.

1301
01:31:53,850 --> 01:31:58,320
And, um, I want to say 12 or 13.
I'm not sure exactly which one.

1302
01:31:58,320 --> 01:32:01,290
I think something like that.
And I got a call from.

1303
01:32:02,360 --> 01:32:06,230
A friend of mine who I had who's
a professor at USC's graduate

1304
01:32:06,230 --> 01:32:11,030
business school, and he said,
and who I had guest lectured at

1305
01:32:11,030 --> 01:32:15,230
his in his class numerous times.
And he said, I have a it was about

1306
01:32:15,230 --> 01:32:18,980
I think he called me it was July.
And he said.

1307
01:32:19,670 --> 01:32:22,220
I have a kind of an emergency
ask of you.

1308
01:32:22,220 --> 01:32:26,840
The professor who teaches the
mortgage backed securities class at

1309
01:32:26,840 --> 01:32:31,130
in graduate business school at USC,
accepted a job in the Obama

1310
01:32:31,130 --> 01:32:34,580
administration and were left one
month before his class is about

1311
01:32:34,580 --> 01:32:36,740
to begin with.
No professor, would you ever

1312
01:32:36,740 --> 01:32:40,520
consider teaching a class not just
guest lecturing, but actually

1313
01:32:40,730 --> 01:32:44,870
being the teacher for the class?
And I said, you know, sure.

1314
01:32:45,110 --> 01:32:48,440
I said, yeah, I'd do it.
And he warned me, you know,

1315
01:32:48,440 --> 01:32:52,640
like when you guest lecture,
you can improv, you know. Yeah.

1316
01:32:53,030 --> 01:32:56,750
But when you're teaching,
a full semester is a lot more

1317
01:32:56,750 --> 01:33:00,980
preparation involved than I think
you are probably imagining.

1318
01:33:01,190 --> 01:33:03,530
And I said, oh, it's okay, I'm fine.
I'll, I'll,

1319
01:33:03,530 --> 01:33:06,800
I'll write the syllabus and I'll do
all the things that you need to do.

1320
01:33:06,800 --> 01:33:10,850
And I won't use a textbook,
of course, because I don't believe in

1321
01:33:10,850 --> 01:33:15,650
textbooks, you know, especially in
today's world, John, where things

1322
01:33:15,650 --> 01:33:20,300
are continually evolving. Right.
So the way things were done even

1323
01:33:20,300 --> 01:33:25,760
five years ago or ten years ago are
so far are so much less relevant

1324
01:33:25,760 --> 01:33:30,800
than one would imagine, let alone
textbooks from 20 or 30 years.

1325
01:33:30,800 --> 01:33:34,130
Yeah, literally completely
irrelevant in most fields,

1326
01:33:34,130 --> 01:33:37,760
including finance and real estate.
So I said I would teach it,

1327
01:33:37,760 --> 01:33:41,450
but I'm going to do it my way.
I said fine, and I taught that

1328
01:33:41,450 --> 01:33:44,540
class and I had great fun.
I it was a Thursday.

1329
01:33:44,540 --> 01:33:49,460
You can imagine the Thursday evening
classes for graduate students.

1330
01:33:49,610 --> 01:33:54,290
And so I realized what I was up
against and I had to teach.

1331
01:33:54,290 --> 01:33:58,700
I had to assigned it to me.
And his only job, I would give him

1332
01:33:58,700 --> 01:34:02,990
money, and his only job was to
bring beer and pizza to the class.

1333
01:34:02,990 --> 01:34:06,470
And that way I figured, okay,
well, a fair shot of getting

1334
01:34:06,470 --> 01:34:10,010
their attention. There it is.
Yeah, that's why I did that.

1335
01:34:10,010 --> 01:34:15,440
And that that became a pretty popular
class. I bet. For obvious reasons.

1336
01:34:15,800 --> 01:34:18,470
And since then I haven't looked
back and I've taught pretty much

1337
01:34:18,470 --> 01:34:21,740
every year.
I switched to Pepperdine after a few

1338
01:34:21,740 --> 01:34:26,060
years, not because I didn't like USC.
I love the USC, but because it's

1339
01:34:26,060 --> 01:34:29,360
just closer to my house in LA.
You know, that's a very

1340
01:34:29,360 --> 01:34:33,320
important consideration. Sure.
So it's it was close to my office,

1341
01:34:33,320 --> 01:34:34,970
closer to my house,
and I didn't want to sit in

1342
01:34:34,970 --> 01:34:40,850
traffic and go to downtown LA.
Now I would say the the motivation

1343
01:34:40,850 --> 01:34:44,390
to teach is what I said,
I like sharing, I find it a good

1344
01:34:44,390 --> 01:34:48,710
learning experience, right?
I bounce my ideas off of,

1345
01:34:48,740 --> 01:34:55,010
you know, 25 to 50 smart,
aspiring young men and women and and

1346
01:34:55,010 --> 01:34:58,730
I invite them to call bullshit on me.
And it becomes and my class is a

1347
01:34:58,940 --> 01:35:02,390
four it's usually four hours,
which is quite daunting when you

1348
01:35:02,390 --> 01:35:06,710
think about teaching your classes.
But the only way that I thought

1349
01:35:06,710 --> 01:35:10,490
it would work, and it does work,
is to make it a lively conversation.

1350
01:35:10,490 --> 01:35:14,210
And it was a lively conference.
So it's not one man lecturing

1351
01:35:14,210 --> 01:35:18,200
for four hours or even an hour,
which would be dreadful.

1352
01:35:18,200 --> 01:35:20,750
You know, I would never want to be on
the receiving end of that, let alone,

1353
01:35:20,750 --> 01:35:25,640
you know, or on the giving end.
So so it's a very engaging, uh,

1354
01:35:25,640 --> 01:35:31,670
lively, challenging conversation
where I insist upon participation.

1355
01:35:31,670 --> 01:35:38,570
I call on people, and I insist upon
them being forthright and and being.

1356
01:35:38,720 --> 01:35:43,040
I know that it's that I reward
people who challenge me. And so.

1357
01:35:43,580 --> 01:35:46,520
So I learned a lot,
and I hope they learn a lot.

1358
01:35:46,520 --> 01:35:50,000
And I guess the one thing is,
uh, giving you a long answer to

1359
01:35:50,000 --> 01:35:53,480
your question.
The one thing I would mention that is

1360
01:35:53,480 --> 01:35:57,050
very special about the class I give,
which besides the obvious,

1361
01:35:57,050 --> 01:36:01,850
which is I give them real
practical knowledge because I

1362
01:36:01,850 --> 01:36:05,540
don't teach from a textbook,
I teach from real life experience

1363
01:36:05,540 --> 01:36:09,200
and what's going on in the world.
But the big thing that I give them,

1364
01:36:09,200 --> 01:36:12,740
which is covered in my book,
in a chapter that I adore,

1365
01:36:12,890 --> 01:36:16,610
which I thought of even calling
the book this and actually called

1366
01:36:16,610 --> 01:36:20,270
our website This Intersection.
So the website for my book,

1367
01:36:20,270 --> 01:36:23,000
as you know, is called Great
Intersection dot com or great.

1368
01:36:23,330 --> 01:36:30,020
Yeah, great great intersection.com.
And intersections are where greatness

1369
01:36:30,020 --> 01:36:35,960
occurs is where understanding occurs.
And education and information

1370
01:36:35,960 --> 01:36:40,130
absorbed in isolation is a very,
very little value.

1371
01:36:40,280 --> 01:36:47,330
And I really feel bad for students in
all fields who are given knowledge

1372
01:36:47,330 --> 01:36:52,610
in isolation and not really taught
about the interconnectivity and

1373
01:36:52,610 --> 01:36:58,490
this reciprocation of influence
that one one, one one variable has

1374
01:36:58,490 --> 01:37:04,190
with many, many other variables.
And so when I teach, I guess my focus

1375
01:37:04,190 --> 01:37:10,440
would be finance, financial markets,
real estate. Securitization.

1376
01:37:10,440 --> 01:37:16,140
But what I'm teaching is always the
intersection of those things with

1377
01:37:16,140 --> 01:37:21,780
politics, sociology, human behavior.
All that stuff. Economics.

1378
01:37:22,140 --> 01:37:26,040
And so it's a it's a very
wholesome class or education,

1379
01:37:26,190 --> 01:37:29,400
at least it's what I'm aiming for.
You bring case studies then or do

1380
01:37:29,400 --> 01:37:32,670
you just based on your experience.
Sometimes I do.

1381
01:37:32,670 --> 01:37:36,810
So sometimes I'll, I'll, I'll is
four hour and a four hour class I

1382
01:37:36,810 --> 01:37:40,470
guess formatting it is interesting.
So what I'll do what I've been doing

1383
01:37:40,470 --> 01:37:47,280
recently, uh, is take about half
the class and focus on a topic.

1384
01:37:47,730 --> 01:37:52,500
Uh, so let's say two hours of the
four hour class is focus on a topic,

1385
01:37:52,500 --> 01:37:55,830
a specific topic.
It could be securitization,

1386
01:37:55,830 --> 01:38:00,180
for example, or it could be about
banking. It could be whatever.

1387
01:38:00,180 --> 01:38:04,050
It could be it could be about
obsolescence in real estate.

1388
01:38:04,050 --> 01:38:07,560
And there's a topic and that's
the thematic topic of the day.

1389
01:38:07,980 --> 01:38:09,840
Let's say that takes an hour and
a half.

1390
01:38:10,430 --> 01:38:14,420
There's probably about a half hour on
current events or things that are

1391
01:38:14,420 --> 01:38:18,680
happening in the world in that week
or that day that I want to cover.

1392
01:38:19,280 --> 01:38:24,020
And then there's about an hour
that's dedicated to case study.

1393
01:38:24,560 --> 01:38:29,540
And then I usually wrap up with about
a half hour on a chapter or two of my

1394
01:38:29,540 --> 01:38:33,560
book and discuss. Oh, there you go.
So there's some philosophy there.

1395
01:38:33,650 --> 01:38:40,760
You do have a textbook? Yeah.
That's great.

1396
01:38:41,090 --> 01:38:45,440
Well, I love that your book in some
ways reminds me of meditations by

1397
01:38:45,440 --> 01:38:50,540
the Roman emperor Marcus Aurelius,
which was a diary for his own use.

1398
01:38:50,870 --> 01:38:55,160
I sense that this is how you started
it as an essays of your own thinking.

1399
01:38:55,160 --> 01:38:57,530
I may be wrong,
but that was my suspicion.

1400
01:38:57,680 --> 01:39:01,820
Clearly, your religious awakening
stimulated your passion to write

1401
01:39:01,820 --> 01:39:05,390
much of its content.
In retrospect, do you think you

1402
01:39:05,390 --> 01:39:09,620
matured into this thinking?
Talk about that evolution to a more

1403
01:39:09,620 --> 01:39:13,400
spiritual life and put it in context
of interpersonal relationships

1404
01:39:13,400 --> 01:39:19,190
and business? Well, I wrote I.
Let's start with the origins of

1405
01:39:19,190 --> 01:39:23,010
the book.
I had always had in my mind, John,

1406
01:39:23,010 --> 01:39:29,130
and I think I always had in my mind
that it would be amazing to write.

1407
01:39:29,980 --> 01:39:34,960
Something like my ideas about my.
About life, my observations,

1408
01:39:34,960 --> 01:39:38,620
my experiences,
and my ideas that I could hand

1409
01:39:38,620 --> 01:39:44,140
physically to my children so that
they may hand it to their children,

1410
01:39:44,140 --> 01:39:48,970
and being passed on generationally
as some sort of a family heirloom.

1411
01:39:49,150 --> 01:39:54,100
I wished that I had such a thing.
I wish that I had something that

1412
01:39:54,100 --> 01:39:59,110
goes back 5 or 10 generations.
Imagine if you had that, how valuable

1413
01:39:59,110 --> 01:40:02,440
that would be in your life, right?
And so I thought, well, I always

1414
01:40:02,440 --> 01:40:04,810
thought, why don't I create that?
So that was in my head.

1415
01:40:05,290 --> 01:40:11,350
I'm an inveterate note taker,
so I use my iPhone notes section.

1416
01:40:11,350 --> 01:40:16,090
And when I have ideas,
I create a new note and I write my

1417
01:40:16,090 --> 01:40:22,800
ideas and I write a few things.
Around Christmas of 2020.

1418
01:40:22,830 --> 01:40:27,420
It was Covid and I was sitting having
breakfast with my daughter, who was a

1419
01:40:27,420 --> 01:40:31,800
high school senior experiencing high
school from home because of Covid.

1420
01:40:31,830 --> 01:40:37,170
We were having breakfast together and
she asked me what I would be buying.

1421
01:40:37,410 --> 01:40:41,160
Um, my brother in law and his family
who were coming over for a small

1422
01:40:41,160 --> 01:40:44,940
gathering for Covid Christmas.
And I said, well, you know,

1423
01:40:44,940 --> 01:40:48,360
I don't really like buying
Christmas presents for adults.

1424
01:40:48,360 --> 01:40:51,360
And three of the four of them were
adults. One of them was a kid.

1425
01:40:51,360 --> 01:40:53,610
And I thought, okay,
I'll buy a lot of presents for.

1426
01:40:53,610 --> 01:40:56,640
But the adults said, you know what?
I'm going to write them a write

1427
01:40:56,640 --> 01:40:58,680
a book and I'm going to give
them the book.

1428
01:40:58,680 --> 01:41:02,220
And she laughed and said, well,
it's ten days before Christmas.

1429
01:41:02,610 --> 01:41:04,200
When are you going to write the book?
And I said, well,

1430
01:41:04,200 --> 01:41:06,900
I'm going to write it right now
when we're done with breakfast.

1431
01:41:07,290 --> 01:41:12,330
Well, by the time she came back to
that table, why not left for lunch?

1432
01:41:12,330 --> 01:41:17,580
Four hours later, I had finished 100
pages and 65 short chapters. Wow.

1433
01:41:17,580 --> 01:41:20,610
And that became the foundation
of this book.

1434
01:41:21,480 --> 01:41:27,930
Then I went out and try to print
ten copies, so I'd have gift for

1435
01:41:27,930 --> 01:41:31,560
the family coming over,
and then some left over from my

1436
01:41:31,560 --> 01:41:35,940
kids and such, and no printer
would print fewer than 100 copies.

1437
01:41:35,940 --> 01:41:40,410
So I printed 100 copies, and I had 90
more than I had plans for, and I just

1438
01:41:40,410 --> 01:41:44,100
started giving them out to friends
and people that came into my office.

1439
01:41:44,100 --> 01:41:49,590
And and it got circulated. Right.
And it was really Ethan shorthand,

1440
01:41:50,010 --> 01:41:52,350
but it was a shorthand version
of this book.

1441
01:41:52,350 --> 01:41:55,920
And the reviews I got from
people who didn't even know me

1442
01:41:56,280 --> 01:41:59,700
were inspirational to me.
You know, most probably the one

1443
01:41:59,700 --> 01:42:03,870
I share that's most powerful one
was someone in Abu Dhabi had

1444
01:42:03,870 --> 01:42:08,250
gotten his hands on my book,
and I didn't know the guy who was a

1445
01:42:08,250 --> 01:42:13,260
friend of Chris Ludeman. Oh, sure.
And and so we talked and this

1446
01:42:13,260 --> 01:42:17,250
individual said he loved my book and
that every night that he has the

1447
01:42:17,250 --> 01:42:20,460
opportunity to put his 12 year old
son to bed, he keeps the book on

1448
01:42:20,460 --> 01:42:23,910
the nightstand of his 12 year old.
They read a chapter together and

1449
01:42:23,910 --> 01:42:29,400
spent 15 minutes talking about it.
And I thought how amazing that

1450
01:42:29,400 --> 01:42:34,290
my book not only is reaching my
kids or hopefully my descendants,

1451
01:42:34,290 --> 01:42:38,820
but that it's valuable enough for a
father to use as a way to communicate

1452
01:42:38,820 --> 01:42:43,410
ideas to his own son or half all
the way around the world. Right?

1453
01:42:43,920 --> 01:42:47,910
So that inspired me to think
maybe I have something more here

1454
01:42:47,910 --> 01:42:51,630
than just a family heirloom.
And I let it sit for a year

1455
01:42:51,630 --> 01:42:55,110
because I didn't really.
I knew I had to rethink how I

1456
01:42:55,110 --> 01:42:57,900
positioned the book so that someone
who didn't know me might buy it.

1457
01:42:58,470 --> 01:43:00,990
It took me about a year.
I redid the book.

1458
01:43:01,620 --> 01:43:04,590
Printed another hundred copies,
sent them out into the world,

1459
01:43:04,590 --> 01:43:10,080
and through a friend who had written
books, his literary agent liked it.

1460
01:43:10,080 --> 01:43:14,190
He gave it to this publishing house,
and they kind of called me and said,

1461
01:43:14,190 --> 01:43:18,780
we want to sign you to a contract.
And and then the book got we went

1462
01:43:18,780 --> 01:43:22,650
through an editing process and here
it is. So that's the book. Great.

1463
01:43:23,040 --> 01:43:27,750
The book title, Greatness is is a
choice you define as not a gift,

1464
01:43:27,750 --> 01:43:31,200
but an actual choice we can make
throughout every day.

1465
01:43:31,650 --> 01:43:37,740
You go on to say the feeling of
self-worth I enjoy is most most,

1466
01:43:37,740 --> 01:43:40,440
the most valuable thing I
possess possess.

1467
01:43:40,440 --> 01:43:45,810
The question I want to ask is how do
you walk the tightrope of self-worth?

1468
01:43:45,840 --> 01:43:52,150
Humility puts the. And arrogance.
Also, please define hotspots

1469
01:43:52,150 --> 01:43:55,600
from your perspective and how it
is different than arrogance.

1470
01:43:56,470 --> 01:44:01,030
Well, hotspot is a Yiddish word.
Yes, and I would say chutzpah.

1471
01:44:01,930 --> 01:44:07,690
Is what I had.
Leaned on so heavily to create

1472
01:44:07,690 --> 01:44:14,590
the CMS market, right?
It's the belief in one's self.

1473
01:44:15,010 --> 01:44:21,580
In the face of essentially universal
doubt that you can do something.

1474
01:44:22,450 --> 01:44:28,860
That no one else has ever done.
That's the epitome of. That's right.

1475
01:44:30,060 --> 01:44:32,790
Does it border on arrogance?
Yeah. For sure.

1476
01:44:32,970 --> 01:44:36,180
Did I kind of walk over the line
once in a while in my life?

1477
01:44:36,240 --> 01:44:40,990
For sure, I'm sure I did.
And that deals with one of my

1478
01:44:40,990 --> 01:44:44,800
favorite topics that I write in
my book, a chapter called duality

1479
01:44:45,130 --> 01:44:52,630
and the fine line, as you suggest,
of like balancing opposing ideas,

1480
01:44:52,630 --> 01:44:56,290
right? Humility and arrogance.
Right? Opposing things.

1481
01:44:57,390 --> 01:45:01,800
Arrogance is a negatively
connotation word, but so I might

1482
01:45:01,800 --> 01:45:07,710
choose humility and chutzpah or
humility and high confidence. Right?

1483
01:45:07,710 --> 01:45:12,960
Because they seem like opposites,
but they kind of have to coexist,

1484
01:45:12,960 --> 01:45:18,180
I think,
to be a a fulfilled human being.

1485
01:45:18,270 --> 01:45:22,140
You have to have one foot in
humility and one foot in, in high

1486
01:45:22,140 --> 01:45:25,470
degree of self-confidence, right?
And willingness to say, I could do

1487
01:45:25,470 --> 01:45:28,650
what no one else has ever done.
At the same time, be humble enough

1488
01:45:28,650 --> 01:45:35,250
to know I'm just a guy, right?
And, uh, and that and that means

1489
01:45:35,250 --> 01:45:39,690
all that it means on the frailty
and fragility and all that stuff

1490
01:45:39,690 --> 01:45:44,070
and knowing that.
And I think this balancing act

1491
01:45:44,070 --> 01:45:47,910
that we have to walk, you know,
think about I use this as a good

1492
01:45:47,910 --> 01:45:55,450
example of duality in my book, but.
If if you realize how insignificant

1493
01:45:55,450 --> 01:45:58,390
you are and you're honest about it
and you're like, okay, I'm just a

1494
01:45:58,390 --> 01:46:05,140
person, my lifespan is a flash,
a flash in history, nothing I do

1495
01:46:05,140 --> 01:46:10,060
will ever be remembered, even seems.
And maybe it'll exist, but they

1496
01:46:10,060 --> 01:46:16,450
won't remember me, and that's fine.
And, and and I'm very insignificant.

1497
01:46:16,450 --> 01:46:19,750
Right.
And I think from that you can

1498
01:46:19,750 --> 01:46:22,450
live a fruitful life.
From that you can have real

1499
01:46:22,450 --> 01:46:26,980
relationships, from that you can.
And not taking yourself so seriously.

1500
01:46:26,980 --> 01:46:31,390
You can be healthy in every way,
and you can let yourself off the

1501
01:46:31,390 --> 01:46:33,730
hook when you fail,
which is most of the time.

1502
01:46:34,300 --> 01:46:40,180
On the other hand,
if you don't have confidence to

1503
01:46:40,180 --> 01:46:44,470
try things that are daring,
you won't ever achieve anything.

1504
01:46:44,920 --> 01:46:49,900
And so you need to say, well.
And so my father used the phrase

1505
01:46:50,410 --> 01:46:54,730
everyone puts their pants on one
leg at a time. And that's a.

1506
01:46:55,060 --> 01:46:57,610
And today there's a less genteel
way of saying that.

1507
01:46:57,610 --> 01:47:01,960
Yes, but that was the genteel
generation, our parents generation.

1508
01:47:01,960 --> 01:47:06,820
And I never forgot that.
And it inspired me that one.

1509
01:47:06,820 --> 01:47:13,090
What that means inspired me to know
that even though I'm no better than

1510
01:47:13,090 --> 01:47:17,770
anybody else, and none of us are
particularly great in the sense

1511
01:47:17,770 --> 01:47:22,450
that we're insignificant, we're
also all created by the creator,

1512
01:47:22,450 --> 01:47:27,880
whatever that means to you.
And so we are all also in.

1513
01:47:28,060 --> 01:47:33,100
We're also imbued with a lot of
ability and and no one more than

1514
01:47:33,100 --> 01:47:37,120
me or you. We all have a lot.
And why not try?

1515
01:47:37,420 --> 01:47:42,640
So I started my podcast to share
wisdom of real estate leaders who

1516
01:47:42,640 --> 01:47:47,170
have experienced their careers with
the early challenges and unknowns,

1517
01:47:47,170 --> 01:47:50,650
and found their way to success
through a myriad of paths.

1518
01:47:51,530 --> 01:47:55,880
The reason I did it was to inspire
the inner spirit of young people who

1519
01:47:55,880 --> 01:48:00,350
have the thirst for knowledge and
understanding of not only what to do

1520
01:48:00,350 --> 01:48:05,000
and how to do it, but why they did
it and what drove them to do it.

1521
01:48:05,790 --> 01:48:08,700
Is this similar to the understanding
you encourage each of your

1522
01:48:08,700 --> 01:48:13,890
students and readers to take away?
I think you said it really perfectly.

1523
01:48:13,890 --> 01:48:15,930
I wouldn't I wouldn't even.
Think that at that.

1524
01:48:15,930 --> 01:48:20,670
Yes, the answer to that is yes.
That's great. That's great.

1525
01:48:20,670 --> 01:48:23,970
I kind of figured that after reading
your book that that was kind of

1526
01:48:23,970 --> 01:48:29,090
the message you were trying to.
To leave so that allow someone else

1527
01:48:29,090 --> 01:48:33,530
more or less the the old metaphor of.
You know, you learn how to.

1528
01:48:33,560 --> 01:48:37,550
You you give somebody fish or
you teach them how to fish and

1529
01:48:37,550 --> 01:48:41,360
that that that whole metaphor.
Yeah. Yeah, that's. What I mean.

1530
01:48:41,360 --> 01:48:45,500
The book is,
is a call to awareness, right.

1531
01:48:45,500 --> 01:48:49,310
Call to thinking it's not, uh,
it's not.

1532
01:48:49,310 --> 01:48:53,180
Here's Ethan's ideas being
shoved down your throat.

1533
01:48:53,180 --> 01:48:55,920
That's absolutely not what it's
about. Hmhm.

1534
01:48:57,680 --> 01:49:00,650
One of your books chapters
discusses risk.

1535
01:49:01,340 --> 01:49:05,200
What is your gauge for risk look
like? When you do.

1536
01:49:05,350 --> 01:49:08,950
When do you think something is
too risky to proceed?

1537
01:49:09,760 --> 01:49:13,600
Can you cite an example of a
difficult decision you made not

1538
01:49:13,600 --> 01:49:17,770
to proceed on something you
thought was too risky, but turned

1539
01:49:17,770 --> 01:49:21,520
out to be a missed opportunity?
Oh my God,

1540
01:49:21,520 --> 01:49:25,420
I have so many of those done.
I can tell you what's one that

1541
01:49:25,420 --> 01:49:29,080
comes to mind that really was like,
oh shit, I wish I had done that.

1542
01:49:29,440 --> 01:49:37,870
I mean, honestly, honestly, I have a
lot of those. So one, um, one is.

1543
01:49:38,860 --> 01:49:43,810
We'll start with a kind of a missed
opportunity that I have so many that

1544
01:49:43,810 --> 01:49:48,040
I chuckle about, but let's take one.
So there is a guy who,

1545
01:49:48,040 --> 01:49:52,810
unfortunately, is sadly recently
passed a guy named Gary Winnick.

1546
01:49:53,080 --> 01:49:57,130
I don't know if you've ever heard
the name Gary. So no Gary Winick.

1547
01:49:58,140 --> 01:50:04,540
Um, grew up in Queens or Long Island,
New York. And a born salesman.

1548
01:50:05,230 --> 01:50:08,740
So, not surprisingly,
he found his way on Wall Street

1549
01:50:08,740 --> 01:50:14,590
to working for Michael Milken,
who understood the value of a

1550
01:50:14,590 --> 01:50:19,480
born natural salesman and became
an important part of the Milken

1551
01:50:19,480 --> 01:50:25,760
junk Bond machine at Drexel.
Gary was a salesman. Right.

1552
01:50:25,760 --> 01:50:29,540
I would not have considered Gary.
Financial sophisticate.

1553
01:50:29,960 --> 01:50:32,600
I would consider him more of a
salesman and.

1554
01:50:33,230 --> 01:50:36,800
And a dreamer and a salesman.
Also, a great salesman is also a

1555
01:50:36,800 --> 01:50:40,370
dreamer because they believe
things that perhaps that can

1556
01:50:40,370 --> 01:50:43,250
happen that most people may be
dismiss out of out of hand.

1557
01:50:44,120 --> 01:50:49,910
And Gary had a very successful
career. And I knew Gary a bit.

1558
01:50:49,910 --> 01:50:52,460
We were both involved in
philanthropy together.

1559
01:50:52,730 --> 01:50:56,420
He's a lovely, lovely guy as a
personal guy, a nice family man.

1560
01:50:56,930 --> 01:51:00,260
He actually married his high school
sweetheart, and when he died at

1561
01:51:00,260 --> 01:51:03,830
age 75, they've been married for,
I want to say 50 plus years.

1562
01:51:04,100 --> 01:51:07,700
Mhm. Nice family.
He died prematurely about 2 or 3

1563
01:51:07,700 --> 01:51:13,230
years ago. Sadly in his mid 70s.
Gary called me when I was at

1564
01:51:13,230 --> 01:51:17,730
Nomura and I was king of the hill.
And he said, I'm in New York

1565
01:51:17,730 --> 01:51:21,240
because I was living in New York.
He was a lay guy, and he had moved

1566
01:51:21,240 --> 01:51:24,480
to LA with Mike, and he said,
I want to buy your drink.

1567
01:51:24,480 --> 01:51:26,850
And I have a I have a deal.
That is huge.

1568
01:51:27,480 --> 01:51:34,140
Okay, so I meet Gary and we're at
the same Regis at the bar area in

1569
01:51:34,140 --> 01:51:39,300
the lounge, having a drink on a
wintry evening, and I think I'd have

1570
01:51:39,300 --> 01:51:42,090
dinner to go to, but I, you know,
had an hour to hang out with Gary.

1571
01:51:42,540 --> 01:51:48,840
And Gary tells me about his plan
to lay undersea cable to connect

1572
01:51:48,840 --> 01:51:54,240
the European and the US continent.
And I said to Gary and he said,

1573
01:51:54,240 --> 01:51:59,460
this is an incredible opportunity for
securitization because it's real

1574
01:51:59,460 --> 01:52:03,360
estate in a sense. It's cash flows.
And and you're the guy.

1575
01:52:03,930 --> 01:52:07,470
And I'm telling you, John,
if I had said yes, yes,

1576
01:52:07,470 --> 01:52:11,130
I could have gotten it done.
Yes, I could have probably gone.

1577
01:52:11,130 --> 01:52:15,090
Warrants for big part of Global
Crossing, which is the company

1578
01:52:15,090 --> 01:52:18,930
he ended up creating.
But instead I said, Harry,

1579
01:52:19,170 --> 01:52:21,960
you're a born salesman.
What the hell do you know about

1580
01:52:21,960 --> 01:52:24,360
underwater cable?
What are you talking about?

1581
01:52:25,170 --> 01:52:27,600
And I just kind of, like,
dismissed it out of hand.

1582
01:52:27,600 --> 01:52:30,630
I thought, you know,
Gary's kind of kooky.

1583
01:52:31,200 --> 01:52:35,250
He's too much of a dreamer for me.
I'm making enough money.

1584
01:52:35,250 --> 01:52:37,080
I don't need this shit.
You know what I mean?

1585
01:52:37,080 --> 01:52:39,750
It was one of those things that
I just.

1586
01:52:40,380 --> 01:52:44,040
I just said no out of hand without
thinking about it more carefully,

1587
01:52:44,040 --> 01:52:49,890
without even, you know,
the the the the older, more wiser,

1588
01:52:49,890 --> 01:52:53,370
more mature version of me.
So I had plenty of people would

1589
01:52:53,370 --> 01:52:56,280
have thrown two smart people at
it and said, Gary,

1590
01:52:56,310 --> 01:52:59,880
meet with my two smart people,
give them all the information.

1591
01:52:59,880 --> 01:53:03,330
We're going to dive really deep
into this and see literally.

1592
01:53:04,170 --> 01:53:07,950
Yeah, literally.
I said I was too busy to get on

1593
01:53:07,950 --> 01:53:10,260
to my dinner and just like,
you know what, Gary?

1594
01:53:10,620 --> 01:53:13,350
No, this is not going to that's
not going to work for me.

1595
01:53:13,350 --> 01:53:18,270
I'm not interested.
And within, I don't know, a year.

1596
01:53:18,540 --> 01:53:22,290
Global crossing was a large public
company, and Gary was worth $10

1597
01:53:22,290 --> 01:53:27,060
billion at a time when $10 billion
really mattered. It was a big deal.

1598
01:53:27,390 --> 01:53:29,730
And to his credit, I mean,
we were made friends.

1599
01:53:29,730 --> 01:53:31,590
He never held it against me that
I said no.

1600
01:53:31,590 --> 01:53:34,860
Obviously he did fine without me.
But when you talk about missed

1601
01:53:34,860 --> 01:53:39,990
opportunities and being dismissive
of another person's dreams,

1602
01:53:39,990 --> 01:53:42,360
which is really not what I'm
known for, like I'm actually

1603
01:53:42,360 --> 01:53:47,340
known in our industry as being a
facilitator of people's dreams.

1604
01:53:47,340 --> 01:53:50,730
And yeah, so proud of that,
John, because I am that.

1605
01:53:50,730 --> 01:53:55,140
But in that one moment, right.
Caught me in a moment where I was

1606
01:53:55,140 --> 01:54:00,420
dismissive, I had become I'd become
maybe too big for my own britches.

1607
01:54:00,420 --> 01:54:04,950
I didn't, I didn't, you know, I just
I think that's one of the risks of

1608
01:54:04,950 --> 01:54:09,810
success is becoming more closed.
And I think that and it's it's

1609
01:54:09,810 --> 01:54:13,740
also one of the risks of aging.
And, you know, I've gotten I've

1610
01:54:13,740 --> 01:54:17,430
been blessed to have some nice
things said about me in my life.

1611
01:54:17,430 --> 01:54:19,800
I would say one of the ones that
I treasure the most,

1612
01:54:19,800 --> 01:54:22,920
like the compliment.
I have a couple compliments that I've

1613
01:54:22,920 --> 01:54:26,940
gotten that really meant something
very, very, very important to me.

1614
01:54:27,030 --> 01:54:34,290
My first born son, Daniel, once said
to me not that long ago that the

1615
01:54:34,290 --> 01:54:39,750
thing he is most impressed with me
about is my openness to change.

1616
01:54:39,750 --> 01:54:43,110
And he said most people at a
certain age and a certain level

1617
01:54:43,110 --> 01:54:47,190
of success become closed.
And they stop learning and they

1618
01:54:47,190 --> 01:54:51,120
stop becoming inquisitive and they
stop growing as human beings. Yeah.

1619
01:54:51,120 --> 01:54:54,960
And and I think, of course,
we both are old enough to know,

1620
01:54:54,960 --> 01:54:58,320
and I've seen that happen in
generations older than us and,

1621
01:54:58,320 --> 01:55:01,320
and now in our generation.
And I'm not that way.

1622
01:55:01,320 --> 01:55:05,190
I am naturally the person who says,
I want to learn from everyone.

1623
01:55:05,520 --> 01:55:08,700
I mean, I'm a yes guy.
I'm open to change.

1624
01:55:08,700 --> 01:55:11,040
I'm open to believing I'm wrong
about something.

1625
01:55:11,430 --> 01:55:15,420
But that day, that stupid day
that Gary caught me, I wasn't in

1626
01:55:15,420 --> 01:55:18,480
the mood to learn anything new.
And I wasn't in the mood to

1627
01:55:18,480 --> 01:55:22,380
believing in Gary's dreams, and I.
I paid a significant financial

1628
01:55:22,380 --> 01:55:26,270
price for that.
But it wasn't risk that it was.

1629
01:55:26,570 --> 01:55:29,090
No, it would have been.
It wasn't. Risk for.

1630
01:55:29,090 --> 01:55:32,240
You and had nothing to do with risk.
Well, I guess we talk about risk

1631
01:55:32,240 --> 01:55:36,620
in the sense of money lost. John.
Yeah, I think that we I think

1632
01:55:36,620 --> 01:55:42,320
that money is only one resource
we measure. Time is much higher.

1633
01:55:42,350 --> 01:55:45,200
That's the. Biggest thing. Yeah.
And so I didn't want to risk

1634
01:55:45,200 --> 01:55:49,670
time on Gary and his wacky
Global Crossing idea.

1635
01:55:49,760 --> 01:55:53,240
And I also didn't want to risk
reputation. Right.

1636
01:55:53,240 --> 01:55:56,930
Like, okay, you know, maybe I get
involved in this and it blows up.

1637
01:55:56,930 --> 01:56:00,620
And, you know, my beautiful
reputation is tarnished a bit.

1638
01:56:00,620 --> 01:56:03,470
I don't know what it was that
caused me to be dismissive.

1639
01:56:03,470 --> 01:56:07,370
I think it was mostly I just didn't
really think he was the guy to pull

1640
01:56:07,370 --> 01:56:11,390
it off. Well, um, and in your.
Position at Nomura,

1641
01:56:11,600 --> 01:56:15,590
that that investment to me is
not a real estate investment.

1642
01:56:15,590 --> 01:56:20,000
That's, that's, you know, yeah,
that's an entrepreneurial, you know,

1643
01:56:20,000 --> 01:56:22,040
venture capital type of investment.
Well.

1644
01:56:22,460 --> 01:56:25,730
I think the way he framed it,
which was correct, correct way to

1645
01:56:25,730 --> 01:56:29,780
frame it, is that there would be
cash flows I could securitize.

1646
01:56:29,960 --> 01:56:33,320
And so while while technically
it wasn't real estate.

1647
01:56:34,350 --> 01:56:36,120
You know,
I could have pulled it off through

1648
01:56:36,120 --> 01:56:39,960
the securitization window that I,
that I played with in and I could,

1649
01:56:40,080 --> 01:56:43,980
I could have made something happen,
but I just did I just didn't I was

1650
01:56:43,980 --> 01:56:48,510
dismissive. Right. It's a band play.
I mean, it was a bond investment,

1651
01:56:48,510 --> 01:56:51,300
but not necessarily secured by
real estate per se, I don't know.

1652
01:56:51,570 --> 01:56:54,090
Yeah, that would be a tough
security to sell,

1653
01:56:54,090 --> 01:56:58,140
I think if you're just securing it
as cables underneath the ocean.

1654
01:56:58,140 --> 01:57:02,790
But yeah, but if you have if you.
Have credit contracts you could do

1655
01:57:02,790 --> 01:57:06,300
it. There was ways. To do it. Yeah.
I just didn't even want to spend a

1656
01:57:06,300 --> 01:57:11,460
minute on it. I got it. That's cool.
So it's interesting that you

1657
01:57:11,460 --> 01:57:16,710
suggest not to share your your
unreserved opinions.

1658
01:57:17,370 --> 01:57:21,180
And you have very few citations
in the book and no footnotes or

1659
01:57:21,180 --> 01:57:24,660
a bibliography.
What are your favorite books and

1660
01:57:24,660 --> 01:57:28,860
authors other than the Bible?
Who has influenced your thinking?

1661
01:57:30,600 --> 01:57:35,490
Without question, I.
I'll tell you who I love and then who

1662
01:57:35,490 --> 01:57:40,340
I admire. I and both I mean both.
Hermann Hesse.

1663
01:57:40,760 --> 01:57:47,450
Yes, I love and admire.
I mean, I am. I adore his books.

1664
01:57:47,750 --> 01:57:51,440
Maybe not every one of them.
The Glass Bead Game was a bit hard

1665
01:57:51,440 --> 01:57:57,140
to penetrate. But. But siddartha.
I think it's the finest book ever

1666
01:57:57,140 --> 01:58:00,590
written. And I read it as a teenager.
And then I picked it up again

1667
01:58:00,590 --> 01:58:03,050
last year.
And when I read it as a teenager,

1668
01:58:03,050 --> 01:58:07,660
I really liked it.
What if I was simplistic and now

1669
01:58:07,660 --> 01:58:12,520
with the benefit of age?
I read it again last year and I

1670
01:58:12,520 --> 01:58:17,080
thought I didn't really get it
fully or appreciated its.

1671
01:58:17,650 --> 01:58:20,740
Here's why I think it's the greatest
book ever written, and I didn't think

1672
01:58:20,740 --> 01:58:25,090
it when I first read it, because
when I read it as a 61 year old man

1673
01:58:25,090 --> 01:58:30,730
versus a 15 or 16 year old young man,
I got completely different messages

1674
01:58:30,730 --> 01:58:34,000
and understandings out of it.
I think that's a sign of a great

1675
01:58:34,000 --> 01:58:36,820
book, right?
That you can be the same person.

1676
01:58:36,820 --> 01:58:40,330
Ethan Penner can read it at
different stages of life and

1677
01:58:40,330 --> 01:58:44,230
appreciated both times, but really
understand different things.

1678
01:58:44,230 --> 01:58:46,750
And I hope my book is that way,
I really do.

1679
01:58:46,750 --> 01:58:49,840
I hope my book is something that
is readable.

1680
01:58:49,840 --> 01:58:55,450
It is readable by a 12 year old, and
it's also readable by a 70 year old.

1681
01:58:55,450 --> 01:58:58,390
And I believe that they'll get
different things and both value

1682
01:58:58,390 --> 01:59:02,320
out of it.
So, so Siddartha my favorite book.

1683
01:59:02,500 --> 01:59:04,450
I think that's the best book
I've ever read.

1684
01:59:04,720 --> 01:59:10,030
My favorite book of his two is
Narcissus and Goldman,

1685
01:59:10,030 --> 01:59:15,250
which is just a a beautiful
story about life's journey.

1686
01:59:15,250 --> 01:59:20,170
And, um, it's just so well written
and it's so smart and there's so

1687
01:59:20,170 --> 01:59:24,220
much great philosophical
underpinnings to the story.

1688
01:59:24,490 --> 01:59:27,760
The characters are incredible,
the settings amazing.

1689
01:59:27,760 --> 01:59:30,910
It's medieval Europe,
it was beautiful.

1690
01:59:30,910 --> 01:59:35,350
So I loved those two books.
I really I really admire George

1691
01:59:35,350 --> 01:59:38,080
Orwell.
I mean, those two books are timeless,

1692
01:59:38,080 --> 01:59:42,070
and I frequently say when people
ask me, how's your book sales

1693
01:59:42,070 --> 01:59:44,470
going right now?
We're 2 or 3 weeks after the

1694
01:59:44,470 --> 01:59:48,340
launch of my, you know,
the official availability of my book

1695
01:59:48,340 --> 01:59:50,980
to be bought, how book sales going?
And I always say.

1696
01:59:51,880 --> 01:59:55,960
George Orwell's books probably
didn't hit bestseller lists the

1697
01:59:55,960 --> 02:00:00,010
first year they were out, you know?
But here we are, 70 or 80 years

1698
02:00:00,010 --> 02:00:03,310
after they were written,
and they're probably selling more

1699
02:00:03,310 --> 02:00:07,600
today than they've ever sold.
And I think that I want my book

1700
02:00:07,600 --> 02:00:10,390
to have a journey.
I don't know why George Orwell is

1701
02:00:10,390 --> 02:00:14,980
in the best case, where it's merit
based, where people buy my book

1702
02:00:14,980 --> 02:00:19,660
and they read it and they say,
man, this is really good reading

1703
02:00:19,660 --> 02:00:23,140
and I learned so much from it.
I want to pass it on to people.

1704
02:00:23,140 --> 02:00:26,680
And then word of mouth carries it.
I think so much of marketing today,

1705
02:00:26,680 --> 02:00:30,760
John,
is just gimmicky to stuff jam people,

1706
02:00:30,760 --> 02:00:35,770
stuff things down people's throats,
trick them into buying stuff.

1707
02:00:35,770 --> 02:00:38,230
George Orwell's books were not
distributed that way,

1708
02:00:38,230 --> 02:00:42,460
and neither will my book be.
And I pray that if I wrote

1709
02:00:42,460 --> 02:00:46,240
something valuable that 50 and 70
years from now, my descendants

1710
02:00:46,240 --> 02:00:49,390
would be proud to say, you know,
my great grandfather wrote this

1711
02:00:49,390 --> 02:00:52,690
book and look, look at it.
It's really helping people today.

1712
02:00:52,870 --> 02:00:57,160
So George Orwell's two books are
inspirational. They're brilliant.

1713
02:00:57,160 --> 02:01:01,240
He was an amazing man, a brilliant
man, and I love his books.

1714
02:01:01,240 --> 02:01:04,780
Ayn Rand is a controversial
writer today.

1715
02:01:04,780 --> 02:01:09,040
It's fashionable to dislike her
amongst young people today, because

1716
02:01:09,250 --> 02:01:15,460
she was pretty harsh about expecting
excellence out of people and when

1717
02:01:15,460 --> 02:01:19,270
they didn't produce excellence being,
I don't know, quick to kind of

1718
02:01:19,270 --> 02:01:23,200
toss them into the trash can,
so to speak, in her judgment.

1719
02:01:23,650 --> 02:01:27,910
But I think she did something that
has never been done before or since,

1720
02:01:27,910 --> 02:01:33,520
which is she wrote two,
not one 2000 plus page books that

1721
02:01:33,520 --> 02:01:37,300
are literal page on page turners.
You know, like whether you agree with

1722
02:01:37,300 --> 02:01:41,980
her ideology or you find faults in
her ideology. What a storyteller.

1723
02:01:42,100 --> 02:01:48,310
I mean, incredible storyteller.
She really was amazing to write

1724
02:01:48,310 --> 02:01:54,430
those two incredible books.
And look, I find that there, uh,

1725
02:01:54,670 --> 02:01:59,540
most of what she.
Believes, and her story's kind

1726
02:01:59,540 --> 02:02:04,580
of told philosophically resonate
very positively with me.

1727
02:02:04,910 --> 02:02:07,850
Do I think she maybe missed a
few things?

1728
02:02:07,850 --> 02:02:13,700
Yes, I do, but by and large, I would
recommend those books to anybody.

1729
02:02:13,700 --> 02:02:17,510
They're worth the thousand page read.
And that that says a lot.

1730
02:02:17,510 --> 02:02:20,900
Because you know me,
I'm a brevity lover and I wrote a

1731
02:02:20,900 --> 02:02:26,600
short because I'm a brevity lover.
Her books are kind of out there

1732
02:02:26,600 --> 02:02:30,380
outstanding long books.
So I would say those books.

1733
02:02:31,390 --> 02:02:34,450
Um, great. Are important to me.
Those are important.

1734
02:02:34,870 --> 02:02:39,490
One mindset you bring up is the
potential for magic. Mhm.

1735
02:02:39,610 --> 02:02:43,690
Your reference to helping most
unmet needs of others will

1736
02:02:43,690 --> 02:02:46,420
richly reward you.
What is the most daunting

1737
02:02:46,420 --> 02:02:50,440
challenge you took and how and why
did it turn out the way it did?

1738
02:02:53,200 --> 02:02:57,130
The most daunting challenge that
I've ever taken in my life.

1739
02:03:01,450 --> 02:03:04,270
I would say it's a tie between
two things.

1740
02:03:05,050 --> 02:03:11,630
Getting married a second time.
In the face of the anecdotal evidence

1741
02:03:11,630 --> 02:03:15,560
that I experienced in my marriage and
my parents marriage, that marriage

1742
02:03:15,560 --> 02:03:19,610
isn't really such a great spot.
Or at least I'm not really good

1743
02:03:19,610 --> 02:03:25,630
at it. That's a courage.
And committing and really

1744
02:03:25,630 --> 02:03:29,740
learning how to commit myself to
being a good partner in marriage,

1745
02:03:29,740 --> 02:03:33,790
which I only recently feel I'm
beginning to actually figure out.

1746
02:03:33,790 --> 02:03:37,660
After being with my wife for 24
years and being married,

1747
02:03:37,660 --> 02:03:42,940
or with my first wife for 17.
So I think that is a courageous

1748
02:03:42,940 --> 02:03:48,010
thing to do to to be vulnerable
and committed, really committed

1749
02:03:48,010 --> 02:03:53,920
in a marriage. It takes courage.
I also adopted a boy from Ethiopia

1750
02:03:54,760 --> 02:03:59,220
and that takes courage to.
To to really just say.

1751
02:04:00,990 --> 02:04:05,490
I'm going to make this work.
You know, it's hard to raise kids

1752
02:04:06,690 --> 02:04:10,470
even when they're your own biological
kids, right? We all know that. Mhm.

1753
02:04:11,280 --> 02:04:16,050
Um, and it is harder to raise
kids who are adopted from other

1754
02:04:16,050 --> 02:04:22,350
cultures and other circumstances.
Yeah. And it takes courage.

1755
02:04:23,100 --> 02:04:29,990
But you know what? It takes courage.
To just bring your best every day,

1756
02:04:29,990 --> 02:04:31,820
which is really what my book is
about.

1757
02:04:31,820 --> 02:04:38,960
My book is about kind of demystifying
greatness, which we tend to assign

1758
02:04:38,960 --> 02:04:44,120
to a rarefied group of people.
We tend to agree that our athletic

1759
02:04:44,120 --> 02:04:49,670
heroes are great, or we tend to
agree that whoever our heroes

1760
02:04:49,670 --> 02:04:54,290
are great and we tend to ascribe
their greatness to genetic gifts,

1761
02:04:54,290 --> 02:05:00,170
perhaps, or to some better than
human attributes that they possess,

1762
02:05:00,170 --> 02:05:04,130
that we don't possess.
And we let ourselves we

1763
02:05:04,130 --> 02:05:07,640
shortchange ourselves when we
when we allow that definition to

1764
02:05:07,640 --> 02:05:11,510
be our governing definition.
And I think my book is a direct

1765
02:05:11,690 --> 02:05:16,400
rebuttal of that definition.
My book is a direct challenge to

1766
02:05:16,400 --> 02:05:19,550
me personally and to everyone
who reads it.

1767
02:05:21,000 --> 02:05:23,940
To find the greatness within
themselves.

1768
02:05:24,570 --> 02:05:27,600
Not in the same way that people
think about greatness,

1769
02:05:27,600 --> 02:05:30,870
which is typically like a lifetime
achievement, like created CMS.

1770
02:05:30,870 --> 02:05:34,380
And therefore I'm great.
That's not what I think about

1771
02:05:34,380 --> 02:05:40,650
when I think about greatness.
I think about, did I show up on time?

1772
02:05:41,730 --> 02:05:45,840
I'm honoring the person who was
investing the only thing of

1773
02:05:45,840 --> 02:05:48,960
value in their life,
which is their life, their time.

1774
02:05:49,050 --> 02:05:54,810
And I didn't make them. Wait.
Did I show up and give 100% to

1775
02:05:54,810 --> 02:05:58,860
them in that encounter?
Am I here with you and the people

1776
02:05:58,860 --> 02:06:02,160
who are listening and investing?
The only thing of value in your in

1777
02:06:02,160 --> 02:06:05,250
their life, which is their time?
Did I give them some value?

1778
02:06:05,250 --> 02:06:10,710
Did I bring my 100% best self to
this moment? If I did, I'm great.

1779
02:06:11,160 --> 02:06:14,280
There you go.
Did I cook a hamburger for my

1780
02:06:14,280 --> 02:06:19,140
child and really, really try to
make it a delicious hamburger?

1781
02:06:19,140 --> 02:06:21,690
Or did I just mail in the effort?
Right?

1782
02:06:21,690 --> 02:06:25,830
And if I did the former, I brought
my greatness to that moment.

1783
02:06:25,830 --> 02:06:30,060
And when they tasted that hamburger,
that greatness will elevate them

1784
02:06:30,060 --> 02:06:33,030
in that moment.
Just as I hope this encounter with

1785
02:06:33,030 --> 02:06:36,480
you and your audience elevates as
well, because I think greatness,

1786
02:06:36,480 --> 02:06:40,050
we all have that magic.
And when we touch it and we share

1787
02:06:40,050 --> 02:06:43,710
it with other people, it's an
elevated moment for everybody.

1788
02:06:44,220 --> 02:06:47,010
And the ripple effect of that,
I think, can be profound.

1789
02:06:47,760 --> 02:06:50,310
One of my favorite sections in
your book is fulfilling

1790
02:06:50,310 --> 02:06:54,960
Potential is Fulfilling. Yeah.
Your dad said that there is no

1791
02:06:54,960 --> 02:06:57,840
greater sin than unfulfilled
potential.

1792
02:06:57,960 --> 02:07:02,130
Learning your skills and talents
and maximizing them in work you

1793
02:07:02,130 --> 02:07:05,130
love is fulfilling.
How did you come to learn this

1794
02:07:05,130 --> 02:07:07,740
lesson?
Did the concept of fulfillment

1795
02:07:07,740 --> 02:07:12,570
change for you over your life?
Well, I think fulfilling

1796
02:07:12,570 --> 02:07:17,220
potential is a very tricky thing,
and that concept of fulfilling my

1797
02:07:17,220 --> 02:07:21,720
potential continues to evolve.
And I understand now that as it

1798
02:07:21,720 --> 02:07:29,550
should. Um.
I kind of found myself in my career,

1799
02:07:29,550 --> 02:07:35,370
like many people do by default.
It was the only job I got, right.

1800
02:07:35,370 --> 02:07:38,220
You know, I got this job in the
mortgage lending business.

1801
02:07:39,020 --> 02:07:42,470
Not because I liked mortgage
lending or even knew what it was.

1802
02:07:42,500 --> 02:07:45,440
It was just the first job I got
offered in a recessionary moment

1803
02:07:45,440 --> 02:07:48,500
and I took it.
And I've been trying to get out

1804
02:07:48,500 --> 02:07:51,560
of the industry pretty much ever
since that first job,

1805
02:07:51,560 --> 02:07:54,620
and I just can't get out.
Finally,

1806
02:07:54,620 --> 02:07:57,170
I wrote a book is a philosopher,
so maybe I'll be out now.

1807
02:07:57,170 --> 02:08:01,280
But but I've been trying to get
out my whole life and and find

1808
02:08:01,280 --> 02:08:04,670
other potential because I know I
have it like I'm.

1809
02:08:04,670 --> 02:08:10,520
I'm not a mortgage guy. I'm.
I'm human. I've got other qualities.

1810
02:08:10,520 --> 02:08:16,010
And so when I'm seeing through the
prism of he even the highest level,

1811
02:08:16,010 --> 02:08:19,250
he created the modern mortgage
market.

1812
02:08:19,250 --> 02:08:22,190
But that sounds pretty damn good.
But I still hear it as he's a

1813
02:08:22,190 --> 02:08:25,910
mortgage guy and I like I'm not a
mortgage guy. I'm more than that.

1814
02:08:25,910 --> 02:08:29,450
I'm different than that.
And so what is my potential?

1815
02:08:29,750 --> 02:08:33,890
But then I realized,
so I kind of fought that fight

1816
02:08:33,890 --> 02:08:37,580
internally through my career.
And at some point along that,

1817
02:08:38,120 --> 02:08:41,300
that journey of fighting,
that fight internally,

1818
02:08:41,870 --> 02:08:48,680
I began to realize that it's not
at all important what we do,

1819
02:08:49,070 --> 02:08:53,720
but how we do it. Like I said.
So it didn't matter whether I was

1820
02:08:53,720 --> 02:08:59,870
a mortgage guy, a widget guy,
an actor or writer, it didn't matter.

1821
02:08:59,870 --> 02:09:05,150
And it doesn't matter because those
are just vehicles for being me.

1822
02:09:05,360 --> 02:09:09,080
There you go.
And it's just an excuse to bring me.

1823
02:09:09,440 --> 02:09:12,890
And do I bring me great.
Or do I bring me shitty?

1824
02:09:13,010 --> 02:09:15,140
That's the fulfilling of potential.
That's cool.

1825
02:09:15,740 --> 02:09:19,490
Another concept that resonates
with me is your ripple effect.

1826
02:09:20,360 --> 02:09:24,680
The impact on one life positively
affects the entire world.

1827
02:09:25,070 --> 02:09:28,940
It is the exact principle behind
the community I built and why.

1828
02:09:28,940 --> 02:09:33,740
Even if it grows to be hundreds,
I still want to meet each one

1829
02:09:33,740 --> 02:09:38,210
prior to joining the community.
My guess is it's one of the reasons

1830
02:09:38,210 --> 02:09:44,270
you write the role of the book.
Yeah. I there's a Jewish teaching.

1831
02:09:44,450 --> 02:09:48,530
I don't know, it's probably.
More broadly accepted.

1832
02:09:48,530 --> 02:09:51,590
Although I learned it in the context
of Jewish teaching, I'm sure it's

1833
02:09:51,590 --> 02:09:54,440
taught in Christian teaching,
and other other religions.

1834
02:09:54,440 --> 02:10:00,140
Do that to have saved one life
or have two positively impacted

1835
02:10:00,140 --> 02:10:03,890
one life is as though you've
saved the whole world.

1836
02:10:04,100 --> 02:10:08,360
And as I say in my book,
I always thought that was like,

1837
02:10:08,360 --> 02:10:12,860
you know, some kind of you tell
that myth to children, you know?

1838
02:10:12,860 --> 02:10:17,660
And but I really understand that
there's math behind that.

1839
02:10:17,870 --> 02:10:20,540
So when I was thinking about how
do I market my book, right?

1840
02:10:20,540 --> 02:10:23,870
I mean, I'm somewhat known in
certain fields, right?

1841
02:10:23,870 --> 02:10:27,860
I somewhat known in real estate,
I'm somewhat known in finance.

1842
02:10:27,950 --> 02:10:31,700
And there's plenty of people I can
sell my book to or introduce my book

1843
02:10:31,700 --> 02:10:35,120
to in the fields that I'm known.
But nobody outside of those

1844
02:10:35,120 --> 02:10:38,270
fields really knows me at all.
And I'm thinking, well,

1845
02:10:38,270 --> 02:10:41,690
how do you sell your book? Right?
That challenge of I wrote a book.

1846
02:10:41,690 --> 02:10:46,100
I'm pretty proud of it.
And I started to think about,

1847
02:10:46,100 --> 02:10:51,890
you know, this compound doing math.
And I realized that if I can

1848
02:10:51,890 --> 02:10:57,920
persuade 15 people, 15 to become
missionaries for my book.

1849
02:10:59,270 --> 02:11:02,600
Well, everyone knows 15 people.
They can arm twist everyone,

1850
02:11:02,600 --> 02:11:04,760
right? We all do.
I think I know more than 15,

1851
02:11:04,760 --> 02:11:10,280
but we all know everyone knows 15.
And then if they each in turn

1852
02:11:10,640 --> 02:11:14,880
arm twist 15 people.
And if that goes on,

1853
02:11:14,880 --> 02:11:18,780
eight times 2.5 billion people
will have bought my book.

1854
02:11:19,020 --> 02:11:21,330
Well,
eight times doesn't seem like a lot.

1855
02:11:21,360 --> 02:11:25,410
Okay, but but compounding is
pretty damn powerful.

1856
02:11:25,920 --> 02:11:28,680
Well, that got me thinking because
I started thinking about it in

1857
02:11:28,680 --> 02:11:32,220
the context of buying my book.
It got me thinking about

1858
02:11:32,880 --> 02:11:37,050
touching a person, right?
This this ripple effect that's

1859
02:11:37,050 --> 02:11:43,960
not just about buying a book,
but being influenced. So. You.

1860
02:11:43,960 --> 02:11:47,770
Let's say I use this example
because I actually thought of

1861
02:11:47,770 --> 02:11:52,450
this in a particular moment.
I was in Austria with a friend,

1862
02:11:52,840 --> 02:11:59,620
and I over tipped the waitress and
the friend said to me, I don't know.

1863
02:12:01,470 --> 02:12:06,600
Didn't agree with my over tipping.
Maybe the maybe the waitress wasn't

1864
02:12:06,600 --> 02:12:10,800
as good in that person's mind as
I thought. Whatever it was.

1865
02:12:10,950 --> 02:12:15,960
And I said to the person, you know,
I'm not going to miss the amount that

1866
02:12:15,960 --> 02:12:21,990
I'm over tipping this individual.
But if this over tipping puts that

1867
02:12:21,990 --> 02:12:27,090
waitress in a kinder, better,
happier frame of mind, you know,

1868
02:12:27,090 --> 02:12:33,270
having to be a very busy place in
Vienna, imagine how her elevated

1869
02:12:33,270 --> 02:12:39,870
state of happiness because of
this over tipping will influence

1870
02:12:40,530 --> 02:12:44,460
the 100 or 200 people she serves
that rest of that day.

1871
02:12:44,670 --> 02:12:50,490
And then if they walk away
because her spirit has elevated,

1872
02:12:50,880 --> 02:12:55,740
they're now a little elevated.
And imagine what that ripple effect

1873
02:12:55,740 --> 02:13:00,900
of this extra 10 or 20 bucks that
I've tipped her, that maybe is not

1874
02:13:00,900 --> 02:13:05,010
beyond what she was expecting.
It's a cheap way to elevate the

1875
02:13:05,010 --> 02:13:07,890
world. You know what I mean?
And I thought, it's amazing, right?

1876
02:13:07,890 --> 02:13:15,660
So I do believe that we underestimate
the impact, both positive and even

1877
02:13:15,660 --> 02:13:22,410
negative, that we have in our own
little way of touching people

1878
02:13:22,410 --> 02:13:27,600
and how broadly that can ripple.
So Julius Erving, Doctor Jay wrote

1879
02:13:27,600 --> 02:13:32,100
the foreword of your book saying
that you were an inspiration to him.

1880
02:13:32,520 --> 02:13:35,610
Is he one of your idols?
Who else is an idol?

1881
02:13:35,880 --> 02:13:40,170
Either someone you know or not
or not and why?

1882
02:13:40,170 --> 02:13:43,080
What characteristics and others
do you most admire?

1883
02:13:44,580 --> 02:13:50,600
Well, my my number one idol.
And role model that I grabbed

1884
02:13:50,600 --> 02:13:53,690
when I was a teenager as being
my role model.

1885
02:13:54,140 --> 02:13:58,760
But I wanted to kind of pattern
my myself after as a person was

1886
02:13:58,760 --> 02:14:03,800
a fictitious character played by
Humphrey Bogart in Casablanca named

1887
02:14:03,800 --> 02:14:09,390
Rick. Rick aka. I mean, why not?
I mean, if we're going to pick a.

1888
02:14:09,510 --> 02:14:11,430
Model that.
Doesn't have to be real people,

1889
02:14:11,430 --> 02:14:18,300
you. Know? No. So I. Picked Rick.
From Casablanca because Rick was the

1890
02:14:18,300 --> 02:14:26,790
embodiment of many things that I held
and continue to hold very, very dear.

1891
02:14:26,820 --> 02:14:33,930
One is, he was understated and
and modest and humble.

1892
02:14:34,320 --> 02:14:41,130
He was funny and self-effacing.
He was successful. He was kind.

1893
02:14:41,760 --> 02:14:46,780
He thought about other people.
Um. He was.

1894
02:14:46,780 --> 02:14:51,790
He made sacrifices for other people.
He was. Chivalrous.

1895
02:14:52,510 --> 02:14:55,720
He was courageous.
You know, he had every attribute.

1896
02:14:55,720 --> 02:14:58,870
If you asked me to check,
make a checklist of attributes

1897
02:14:58,870 --> 02:15:02,770
that I would love to embody.
I think Rick covered most all of

1898
02:15:02,770 --> 02:15:07,810
them in a way that I've never seen,
even a fictitious character cover.

1899
02:15:07,810 --> 02:15:13,420
So? So Rick's my hero. He remains.
He's been my hero since I met him as

1900
02:15:13,420 --> 02:15:18,880
a viewer of Casablanca in my early
teens, and nothing has changed.

1901
02:15:18,880 --> 02:15:23,680
And I probably watch Casablanca
at the very least once a year to

1902
02:15:23,680 --> 02:15:29,470
just meet and revisit.
Rick and I still cry at the

1903
02:15:30,010 --> 02:15:36,610
incredible generosity of spirit that
he displays when he sends the love

1904
02:15:36,610 --> 02:15:41,320
of his life off with her husband,
in spite of the fact she has no

1905
02:15:41,320 --> 02:15:43,990
love for her husband because it
was the right thing to do.

1906
02:15:44,750 --> 02:15:49,190
And and I try to do the right thing
too. And I think inspired by Rick.

1907
02:15:49,760 --> 02:15:51,710
That's great.
There's nobody who's a close

1908
02:15:51,710 --> 02:15:54,680
second to Rick, you know,
because everybody else is real and

1909
02:15:54,680 --> 02:15:59,720
human with full of flaws, just
like you and me. Right? But I do.

1910
02:15:59,720 --> 02:16:03,860
I do have tremendous admiration
for Julius.

1911
02:16:04,070 --> 02:16:11,000
I met Julius when I was 35 years old.
So 28 or 29 almost, you know,

1912
02:16:11,000 --> 02:16:16,940
years ago, and hit it off really,
really well and became fast friends.

1913
02:16:16,940 --> 02:16:20,390
Best friends.
And I've got to see Julius.

1914
02:16:22,450 --> 02:16:28,120
I mean many, many, many, many,
many times in the public domain where

1915
02:16:28,120 --> 02:16:35,290
his size and music seven and his
visibility and his fame attracts

1916
02:16:35,710 --> 02:16:42,740
continual and ever present attention.
And I've never seen him act anything

1917
02:16:42,740 --> 02:16:51,830
but gracefully and kind and patiently
and respectfully to every overture,

1918
02:16:51,830 --> 02:16:54,770
you know. Can I take a picture?
Can I have a hug?

1919
02:16:54,800 --> 02:16:58,190
Can I have an autograph?
Let me tell you about the story

1920
02:16:58,190 --> 02:17:01,790
about how you played this game.
And I'll never forget. And.

1921
02:17:02,450 --> 02:17:06,110
And the guy's amazing, you know?
And I've been around.

1922
02:17:07,250 --> 02:17:12,200
Uh, celebrities, famous people.
Nobody's even close, right?

1923
02:17:12,230 --> 02:17:15,830
I mean, he is really commendable
in his humanity.

1924
02:17:15,830 --> 02:17:19,700
His humanness is his generosity
of spirit.

1925
02:17:20,270 --> 02:17:24,860
He's a beautiful, beautiful person.
And I'm so proud that he's my

1926
02:17:24,860 --> 02:17:27,320
friend and that he was willing
to write that for.

1927
02:17:27,860 --> 02:17:32,060
One of the first professional
basketball games I ever saw was.

1928
02:17:32,970 --> 02:17:35,340
He was playing for the
Philadelphia 76 ers.

1929
02:17:35,340 --> 02:17:39,840
And I was I grew up in Detroit.
So I was the Pistons and the Sixers.

1930
02:17:40,290 --> 02:17:44,280
And I'll never forget when he
came down the court.

1931
02:17:44,670 --> 02:17:49,230
He his he would come off the ground
literally at the top of the key.

1932
02:17:49,950 --> 02:17:54,060
Yeah.
And fly through the air and slam

1933
02:17:54,060 --> 02:17:56,220
the door.
I've never seen anything like it.

1934
02:17:56,220 --> 02:18:00,300
And I've seen Michael Jordan play.
And I didn't see Jordan even do that.

1935
02:18:00,300 --> 02:18:04,350
So yeah, I would tell you, John,
that, you know, because your

1936
02:18:04,350 --> 02:18:08,280
listeners are generally young and
many of them have never they've

1937
02:18:08,280 --> 02:18:12,150
heard the name Julius Erving and
maybe they've seen him speak,

1938
02:18:12,150 --> 02:18:15,330
maybe they've seen a highlight
of him and 1 or 2 shots.

1939
02:18:16,190 --> 02:18:21,170
But the Julius Erving that really
was something to behold was before

1940
02:18:21,170 --> 02:18:24,980
the time you referenced when he
was a new Jersey net? Mhm.

1941
02:18:25,310 --> 02:18:29,030
Uh, and he was a new Jersey net.
I think the ABA,

1942
02:18:29,780 --> 02:18:33,860
Julius Erving caused the merger
between the ABA and the NBA because

1943
02:18:33,860 --> 02:18:37,370
the NBA needed they know it's true.
They needed Julius Erving in

1944
02:18:37,370 --> 02:18:40,490
their league.
Their league was not valid without.

1945
02:18:40,730 --> 02:18:45,050
I mean how could you be the best
sports league when you don't have

1946
02:18:45,050 --> 02:18:48,410
the best player in the world in
your league? It made no sense.

1947
02:18:48,410 --> 02:18:53,840
So honestly, Julius forced the
merger between the ABA and the NBA

1948
02:18:53,840 --> 02:18:58,700
because he was he was in the ABA
and the NBA needed him and the

1949
02:18:58,700 --> 02:19:02,570
team he played for when the merger
happened was the new Jersey nets.

1950
02:19:02,900 --> 02:19:05,210
Uh, they were the Long Island
nets at the time.

1951
02:19:05,210 --> 02:19:07,970
They had not moved to new Jersey.
And.

1952
02:19:08,770 --> 02:19:14,530
Julius was probably,
I don't know, 24, 25, 23.

1953
02:19:15,160 --> 02:19:18,280
And that version of Julius the
NBA has never.

1954
02:19:18,520 --> 02:19:22,660
Never saw I did because I was an
ABA fan. I was a basketball fan.

1955
02:19:22,840 --> 02:19:26,530
I used to go to games to see him.
And I'm telling you.

1956
02:19:27,300 --> 02:19:30,060
It was breathtaking,
as you suggest, to watch him

1957
02:19:30,060 --> 02:19:35,310
play the level of athleticism.
Michael Jordan doesn't even come

1958
02:19:35,310 --> 02:19:38,340
close now.
Michael Jordan, one might say,

1959
02:19:38,340 --> 02:19:41,010
is a better all around
basketball player than Julius.

1960
02:19:41,010 --> 02:19:45,810
And it certainly had greater success
as a bull than than Julius found.

1961
02:19:45,810 --> 02:19:48,870
But Julius, with the nets,
won three straight NBA championships,

1962
02:19:49,110 --> 02:19:54,960
one straight ABA and won three
straight ABA finals MVP in an

1963
02:19:54,960 --> 02:20:00,150
ABA that was filled with stars.
Okay, so I don't know,

1964
02:20:00,150 --> 02:20:05,070
I think I think that a lot of really,
really smart basketball people.

1965
02:20:05,580 --> 02:20:08,790
He's in the discussion on who's
the greatest player of all time.

1966
02:20:08,790 --> 02:20:13,050
You know, whether it's him or Michael
Jordan or now some people say LeBron,

1967
02:20:13,050 --> 02:20:16,320
which I think is absolutely absurd,
but it doesn't matter.

1968
02:20:16,320 --> 02:20:20,340
He's he's he's really he was
something to watch. Yeah.

1969
02:20:21,480 --> 02:20:26,370
So what is your definition of
success and how has it changed

1970
02:20:26,370 --> 02:20:35,480
during your life. Mhm. Well.
It's definitely changed.

1971
02:20:35,480 --> 02:20:40,130
As if it didn't. It'd be pretty sad.
Just like I always say to people, if

1972
02:20:40,130 --> 02:20:43,460
you haven't changed your mind on some
things over the course of your life.

1973
02:20:44,330 --> 02:20:47,300
Well, that's a pretty sad state
about, you know, what you've

1974
02:20:47,300 --> 02:20:50,450
learned along the way, right?
I mean, I didn't I didn't get

1975
02:20:50,450 --> 02:20:54,080
brought into this earth with
anywhere near perfect knowledge.

1976
02:20:54,080 --> 02:20:58,100
So I've had to learn my, you know,
through observation and hard knocks

1977
02:20:58,160 --> 02:21:02,060
like, like everybody and uh,
and my definition about everything,

1978
02:21:02,060 --> 02:21:05,000
including success,
has evolved over time.

1979
02:21:05,740 --> 02:21:08,080
I think that greatness,
which is the title of my book,

1980
02:21:08,080 --> 02:21:11,680
Greatness of Choice and Success,
maybe you would use them

1981
02:21:11,680 --> 02:21:16,420
synonymously, and I think that I
would answer the question for both.

1982
02:21:16,420 --> 02:21:22,480
What does that mean as bringing
your very best to your life?

1983
02:21:22,480 --> 02:21:26,080
Your very best?
It's not a competition, right?

1984
02:21:26,080 --> 02:21:29,920
You're living.
Each human being is really

1985
02:21:29,920 --> 02:21:34,420
living his and her own journey.
It's a very personal journey,

1986
02:21:34,420 --> 02:21:37,630
and it's almost like it's tailor
made for you.

1987
02:21:37,630 --> 02:21:41,590
I think that the people you meet
along the way, the experiences

1988
02:21:41,590 --> 02:21:45,280
that you have along the way,
the lessons you learn along the

1989
02:21:45,280 --> 02:21:50,140
way or don't learn along the way,
that's all meant for you personally.

1990
02:21:50,140 --> 02:21:56,080
And so if you bring it hard,
as hard as you can, as good as you

1991
02:21:56,080 --> 02:22:00,100
can in every moment of your day,
the best of your ability,

1992
02:22:00,280 --> 02:22:03,700
you're going to learn the most,
grow the most.

1993
02:22:03,700 --> 02:22:06,610
And I think that's why we're
here and have the most

1994
02:22:06,610 --> 02:22:12,850
fulfillment as a result of that.
So to me, success or greatness is not

1995
02:22:12,880 --> 02:22:17,020
what I think younger people think,
which is the amazement of money

1996
02:22:17,020 --> 02:22:21,970
or trophies or championships.
Those are cool things, of course,

1997
02:22:21,970 --> 02:22:26,500
and it's nice to have them, but you
don't need any of them to be great.

1998
02:22:26,830 --> 02:22:29,980
Asked Charles Barkley. By the way.
You don't you know,

1999
02:22:29,980 --> 02:22:33,940
you don't need any of any trophies
and you don't need any money.

2000
02:22:33,940 --> 02:22:39,940
I mean, you know, greatness is.
Is a personal and success is a

2001
02:22:39,940 --> 02:22:42,880
very personal thing.
And, you know,

2002
02:22:43,120 --> 02:22:47,140
only you know whether you've
achieved it or not on a daily basis.

2003
02:22:47,140 --> 02:22:49,300
And I think it's one that needs
to be achieved daily.

2004
02:22:49,300 --> 02:22:51,760
I don't think it's a lifetime
achievement award.

2005
02:22:51,760 --> 02:22:54,160
You know,
I think it's a grind every day.

2006
02:22:54,160 --> 02:22:57,940
I think some days we all go to
bed and we say, man,

2007
02:22:57,940 --> 02:23:02,020
I really did it today. Like today.
I'm so proud of who I was.

2008
02:23:02,020 --> 02:23:06,070
And maybe the next day you go to bed,
you go like, oh God, I kind of

2009
02:23:06,070 --> 02:23:10,120
missed something, you know, or I
wasn't there as I should have been.

2010
02:23:10,120 --> 02:23:14,200
Like with Gary Winnick, for example,
you know, and and I'm not proud of

2011
02:23:14,200 --> 02:23:18,610
myself. I judge somebody harshly.
I was not attentive.

2012
02:23:18,610 --> 02:23:23,230
I wasn't there fully for that person.
I, I didn't make the right

2013
02:23:23,230 --> 02:23:25,990
choices for myself.
And I should have known better.

2014
02:23:25,990 --> 02:23:30,850
But I wasn't in an aware state.
I think awareness is a prerequisite

2015
02:23:30,850 --> 02:23:34,270
for success in greatness,
and I think that living in an aware

2016
02:23:34,270 --> 02:23:40,500
state as best as we can, uh, is the
formula for both. That's great.

2017
02:23:41,010 --> 02:23:44,640
You say that people fight people
that fight the herd mentality

2018
02:23:44,640 --> 02:23:48,810
and dare to say the right thing.
Our contrarians and their

2019
02:23:48,810 --> 02:23:52,560
opinions are probably true.
Perhaps cite examples of your

2020
02:23:52,560 --> 02:23:55,290
contrarian thinking.
What do you believe that very

2021
02:23:55,290 --> 02:23:57,120
few others believe? Believe.

2022
02:24:03,450 --> 02:24:06,600
It's a wonderful question that I
didn't come prepared to answer.

2023
02:24:08,370 --> 02:24:16,020
Okay. As you know.
I didn't come prepared to answer

2024
02:24:16,020 --> 02:24:18,810
any question.
I know you're great at improv.

2025
02:24:18,840 --> 02:24:22,980
I one of my chapters is Live in
improv,

2026
02:24:23,370 --> 02:24:27,510
and I could explain that if you want,
but I want to answer your question

2027
02:24:27,510 --> 02:24:29,910
in the context of that philosophy.

2028
02:24:35,610 --> 02:24:39,540
So I'll be controversial and
I'll be spiritual and I'll be.

2029
02:24:39,720 --> 02:24:44,500
I'll answer your question with that.
What we don't see.

2030
02:24:45,270 --> 02:24:52,050
I think our senses that we lean on
touch and and vision and and hearing

2031
02:24:52,050 --> 02:25:02,110
and taste and smell. They serve us.
Obviously. But they also block us.

2032
02:25:02,620 --> 02:25:06,970
And the reason I say they block
us is because when we don't, when

2033
02:25:06,970 --> 02:25:12,640
things don't hit any of our senses,
we just assume they're not there.

2034
02:25:14,200 --> 02:25:19,870
So if we can't sense it according to
our our senses, we disbelieve it.

2035
02:25:21,670 --> 02:25:29,430
And I believe that there's energy.
And I think there was a lot of things

2036
02:25:29,430 --> 02:25:35,580
we don't see, touch, smell here,
feel that's real and more real

2037
02:25:35,580 --> 02:25:39,840
than the things we can touch,
see, smell, hear and feel.

2038
02:25:41,970 --> 02:25:50,040
And I think one of them is, um,
knowledge, for example.

2039
02:25:52,030 --> 02:25:56,540
Where do ideas come from?
Like, where does innovation come

2040
02:25:56,540 --> 02:26:03,650
from? Real innovation. Right.
Yeah, but but it it isn't it's not

2041
02:26:03,650 --> 02:26:08,420
manufactured inside of a brain.
It's I think it's I think it's the

2042
02:26:08,420 --> 02:26:12,800
channeling of energy that's external.
There's a prayer in the Jewish

2043
02:26:12,800 --> 02:26:18,230
morning prayer thanking God for
imbuing us with wisdom and knowledge.

2044
02:26:18,260 --> 02:26:23,150
And I think that that's what I'm
referring to, that there is a

2045
02:26:23,150 --> 02:26:28,880
universal wisdom and knowledge
that we can become conduits for.

2046
02:26:28,880 --> 02:26:33,320
So I'm going to tell you my a Nomura
story that I that goes to this point.

2047
02:26:35,490 --> 02:26:39,600
And how I got to this.
Well, it started with one day I found

2048
02:26:39,600 --> 02:26:44,790
myself an important person in an
industry and being asked to speak

2049
02:26:44,790 --> 02:26:48,540
in front of big audiences, and I'd
never done public speaking before.

2050
02:26:48,870 --> 02:26:53,010
And like all novice public speakers,
I wrote my speech out,

2051
02:26:53,010 --> 02:26:56,640
literally wrote it word for word
on yellow paper.

2052
02:26:56,640 --> 02:27:00,720
And I went to the podium in Boston
in front of a thousand people

2053
02:27:00,750 --> 02:27:05,490
and started reading my speech.
I'm self-aware enough to realize

2054
02:27:05,490 --> 02:27:08,940
after a few minutes that this is
really not going well,

2055
02:27:09,360 --> 02:27:14,820
that I'm reading from this yellow
pad into a nobody's liking this.

2056
02:27:14,820 --> 02:27:17,100
This is not nothing.
Nothing about this is

2057
02:27:17,100 --> 02:27:24,030
interesting or human or real.
So I took the bold step of crumpling

2058
02:27:24,030 --> 02:27:28,380
up the yellow pad piece of paper,
throwing it on the floor at my feet,

2059
02:27:28,920 --> 02:27:31,560
and now it's just me and the mic
and the audience.

2060
02:27:31,890 --> 02:27:37,290
And I had to give it a go.
And I was about a minute of complete

2061
02:27:37,290 --> 02:27:40,950
silence where I tried to think of,
okay, what next?

2062
02:27:40,980 --> 02:27:46,110
And then I went and I would say I
gave I would give myself a c-plus

2063
02:27:46,110 --> 02:27:49,650
performance on that first day,
but I realized it was better than

2064
02:27:49,650 --> 02:27:53,130
the F that I would have given
myself before when I was reading,

2065
02:27:53,670 --> 02:27:57,540
and I decided, I'm going to do this
forever, I'm never going to prepare.

2066
02:27:57,540 --> 02:28:02,520
And then I went a step further
and I decided, because, you know,

2067
02:28:02,520 --> 02:28:05,610
you remember back in the early
90s when I was in Omaha,

2068
02:28:05,730 --> 02:28:12,630
I was the only game in town.
So the path into my office was a

2069
02:28:12,630 --> 02:28:16,920
full line of people every day
trying to borrow money from me.

2070
02:28:17,770 --> 02:28:23,410
And I decided I'm never going to.
I don't want to know who's

2071
02:28:23,410 --> 02:28:26,350
coming to meet me.
I don't want to know who they are.

2072
02:28:26,380 --> 02:28:28,000
I don't want to know their
background.

2073
02:28:28,000 --> 02:28:29,920
And I don't want to know why
they're coming.

2074
02:28:30,610 --> 02:28:35,440
I'm going to hear and feel them
in their authenticity.

2075
02:28:36,480 --> 02:28:40,170
And I'm going to be able to react
organically and authentically to

2076
02:28:40,170 --> 02:28:45,000
what I feel in that moment.
I don't know, I just came to

2077
02:28:45,000 --> 02:28:49,620
that philosophical foundation of
how to deal with people,

2078
02:28:50,010 --> 02:28:53,100
and I never look back.
And I continue to operate to

2079
02:28:53,100 --> 02:28:56,490
this day that way.
But I can remember being

2080
02:28:56,490 --> 02:29:00,600
literally amazed.
So a meeting would happen with

2081
02:29:00,600 --> 02:29:04,050
someone I'd never met before.
They would explain to me what

2082
02:29:04,050 --> 02:29:07,920
they were looking to accomplish,
what their deal was,

2083
02:29:07,920 --> 02:29:12,840
what they wanted from me.
I would react completely organically.

2084
02:29:13,720 --> 02:29:18,050
They would walk out.
And I would often sit there and

2085
02:29:18,050 --> 02:29:25,550
think to myself. In reflection.
Where did the brilliant words that

2086
02:29:25,550 --> 02:29:31,440
just came out of my mouth come from?
Because they were not in my head.

2087
02:29:31,770 --> 02:29:35,070
They were not pre thought they
were not pre-planned.

2088
02:29:35,340 --> 02:29:38,700
But somehow words just flowed
out of my mouth.

2089
02:29:39,430 --> 02:29:43,270
Brilliantly and beautifully that
were almost not even mine.

2090
02:29:43,840 --> 02:29:46,540
And there was an almost an
out-of-body experience, like I was

2091
02:29:46,540 --> 02:29:50,530
watching a movie that I was in,
and every meeting was like, that

2092
02:29:50,530 --> 02:29:54,340
meeting after meeting was like that.
And that's when I really started to

2093
02:29:54,340 --> 02:30:01,010
appreciate this. This whole idea of.
There's there's knowledge and

2094
02:30:01,010 --> 02:30:06,590
wisdom that Jews pray for in the
morning that is there.

2095
02:30:06,590 --> 02:30:09,050
It's in the universe,
and I don't understand it.

2096
02:30:09,260 --> 02:30:11,900
So when you think about thinking
outside the herd, well,

2097
02:30:11,900 --> 02:30:14,270
I don't think that's a
conventional way of thinking,

2098
02:30:14,480 --> 02:30:17,660
but I do believe it very deeply.
And I say that prayer with

2099
02:30:17,660 --> 02:30:20,300
conviction every morning.
That's,

2100
02:30:20,300 --> 02:30:25,760
that's that's an incredible story.
Since the the audience of the podcast

2101
02:30:25,760 --> 02:30:28,640
is aimed at young real estate
professionals, please offer your

2102
02:30:28,640 --> 02:30:31,940
thoughts on where are you being
focused today on both the investment

2103
02:30:31,940 --> 02:30:35,660
and development businesses,
product types, geographies, niches?

2104
02:30:35,690 --> 02:30:37,700
And then I have two more questions.
And that's it.

2105
02:30:39,170 --> 02:30:44,450
Well, again I go back to the
human behavior question. Yes.

2106
02:30:44,450 --> 02:30:51,440
Ask yourself. And ask others.
Where do you and beings want to

2107
02:30:51,440 --> 02:30:57,110
experience life, and how do they
want to experience life and create

2108
02:30:57,110 --> 02:31:02,390
the physical spaces that address
those desires? Great answer.

2109
02:31:04,280 --> 02:31:07,910
It's a great answer in the.
Locations that people want to be in.

2110
02:31:08,120 --> 02:31:12,320
It's kind of first principles
thinking. Yeah. It's pretty simple.

2111
02:31:12,350 --> 02:31:15,500
Yeah. It really is.
What advice would you give your

2112
02:31:15,500 --> 02:31:22,010
25 year old self today? Okay.
This is a really.

2113
02:31:22,010 --> 02:31:25,640
Again, I'll go against the grain.
It's in my book.

2114
02:31:25,700 --> 02:31:29,600
It's under a chapter entitled
Advice Giving is Senseless.

2115
02:31:32,760 --> 02:31:39,240
I wouldn't give my 25 year old self
any advice. The reason is this.

2116
02:31:41,280 --> 02:31:47,880
One and perhaps most importantly
in this case, what a 62 year old

2117
02:31:47,880 --> 02:31:53,490
man thinks is right and wrong.
And their perspective on life is

2118
02:31:53,490 --> 02:31:57,240
completely inappropriate for a 25
year old person to be thinking.

2119
02:31:58,260 --> 02:32:02,850
I know because of I've lived
life how challenging life is,

2120
02:32:02,850 --> 02:32:09,600
how likely efforts are to meet
with failure, and we don't want 25

2121
02:32:09,600 --> 02:32:12,240
year old people thinking that way.
We want them swinging for the

2122
02:32:12,240 --> 02:32:17,190
fences and being bold and daring.
I still want to be bold and daring,

2123
02:32:17,190 --> 02:32:19,770
so I don't even want to give myself
the advice of a 62 year old,

2124
02:32:19,770 --> 02:32:23,280
let alone a 25 year old.
So I would say I would not give

2125
02:32:23,280 --> 02:32:28,140
any advice if I was pressed hard
pressed to give advice.

2126
02:32:28,680 --> 02:32:32,430
It would be the very basic stuff
like trust.

2127
02:32:32,430 --> 02:32:37,170
Trust your instincts, your children,
trust your instincts. Okay. Be true.

2128
02:32:37,170 --> 02:32:41,820
You know,
character and values matter a ton.

2129
02:32:42,840 --> 02:32:48,720
Way more than financial reward.
Yes. Treasure each moment.

2130
02:32:49,500 --> 02:32:53,880
Put yourself in the position to
enjoy your life with people who

2131
02:32:53,910 --> 02:32:56,910
you can enjoy your life with and
who will uplift you.

2132
02:32:57,450 --> 02:33:00,480
Those are the basics, but those
are the obvious ones. All right.

2133
02:33:00,720 --> 02:33:05,550
This is a question I ask every guest.
And in this case,

2134
02:33:05,550 --> 02:33:08,340
because you live in Los Angeles,
I'm going to ask it in a different

2135
02:33:08,340 --> 02:33:13,410
way than I normally ask my DC folks.
If you could post a statement on

2136
02:33:13,410 --> 02:33:18,390
a billboard on the the 405 in Los
Angeles for millions to see, what

2137
02:33:18,390 --> 02:33:27,700
would it say? Live in a live aware.
Two words because you can't fit

2138
02:33:27,700 --> 02:33:32,920
a lot of words on a billboard.
Live aware. That's great. Ethan.

2139
02:33:32,950 --> 02:33:36,010
Thank you very much. All right.
Appreciate it very much.

2140
02:33:36,160 --> 02:33:37,870
Pleasure to be with you.
Appreciate it.

2141
02:33:38,530 --> 02:33:40,720
And thank you, uh, audience,
for coming.

2142
02:33:44,430 --> 02:33:49,260
And now maybe sign a book or two?
Yeah. Of course. Absolutely.

2143
02:33:49,770 --> 02:33:53,100
Any questions from anybody?
I didn't leave it open, but if

2144
02:33:53,100 --> 02:33:57,930
anybody has any questions before
they leave, you know, for what?

2145
02:33:57,930 --> 02:34:06,070
I'm just going. To do it. All right.
So you earlier in the podcast you

2146
02:34:06,070 --> 02:34:12,370
were discussing, you know how young
people today don't pay their dues

2147
02:34:12,370 --> 02:34:16,600
or don't have to? I don't want to.
I think that I think that young

2148
02:34:16,600 --> 02:34:21,970
people today that were influenced
by the outsized successes at

2149
02:34:21,970 --> 02:34:26,620
early ages of people like Mark
Zuckerberg and people like that.

2150
02:34:27,560 --> 02:34:31,370
I think they're, they're they're
not as inclined because they

2151
02:34:31,370 --> 02:34:35,480
have data points that John and I
didn't have when we were 25.

2152
02:34:35,960 --> 02:34:40,340
So when someone says,
you gotta really grind, you know,

2153
02:34:40,340 --> 02:34:43,550
for 20 years before you're going to
see the benefits of your success,

2154
02:34:43,550 --> 02:34:47,840
or at least ten or at least five or
at least seven or whatever it is,

2155
02:34:48,110 --> 02:34:53,150
you can point to real data points and
say, oh man, just look at this kid.

2156
02:34:53,390 --> 02:34:57,350
He's 25 and he's worth $20
billion or $100 million.

2157
02:34:57,350 --> 02:35:01,910
What the hell are you talking about?
And I would just say, I don't know.

2158
02:35:01,910 --> 02:35:03,650
I don't really understand that.
You know what I mean?

2159
02:35:03,650 --> 02:35:07,400
It's not my generation, so I think I
don't condemn young people for this.

2160
02:35:07,400 --> 02:35:10,640
It just they have data points
that we didn't have,

2161
02:35:10,640 --> 02:35:14,120
and that's going to naturally
cause them to think differently.

2162
02:35:14,300 --> 02:35:18,200
And I don't judge that right or
wrong. I just think. But I do feel.

2163
02:35:19,320 --> 02:35:23,970
That the journey of paying dues
is a reward.

2164
02:35:24,000 --> 02:35:27,150
That in and of itself is a
rewarding journey, and I think

2165
02:35:27,150 --> 02:35:31,770
that I feel a little sorry for the
Mark Zuckerberg's of the world.

2166
02:35:32,430 --> 02:35:37,290
Even Mark Zuckerberg,
who made chief success very I

2167
02:35:37,290 --> 02:35:40,950
achieve success very young.
I was at the top of this industry and

2168
02:35:40,950 --> 02:35:44,820
the financial industry in my 30s,
not my 20s, but in my 30s.

2169
02:35:45,180 --> 02:35:47,940
And I wish I had.
In retrospect,

2170
02:35:48,450 --> 02:35:51,180
it would have been better if it came
to me when I was in my late 40s,

2171
02:35:51,180 --> 02:35:54,150
you know, like I probably was too
young to fully appreciate it.

2172
02:35:54,600 --> 02:36:00,690
Well, given that information,
would you agree that what they're

2173
02:36:00,690 --> 02:36:05,460
doing at their age right now, um,
is based off of data points, like you

2174
02:36:05,460 --> 02:36:10,410
said they have that you didn't have,
but they're actually choosing to be

2175
02:36:10,410 --> 02:36:16,860
great in their, in their moment,
um, by making decisions to pursue

2176
02:36:16,860 --> 02:36:23,190
innovation while avoiding leading
some of the pitfalls in terms of how

2177
02:36:23,190 --> 02:36:27,780
they spend their time building their
career and actually using their time

2178
02:36:27,780 --> 02:36:32,760
to enjoy and put time into. Yeah.
Again, I don't I don't say what

2179
02:36:32,760 --> 02:36:37,560
I said to judge them or to judge
a generational difference.

2180
02:36:37,560 --> 02:36:42,240
It's just an observation, that's all.
It's not writer or wronger.

2181
02:36:42,240 --> 02:36:53,090
It just is. Sam. I like my journey.
I wouldn't trade it for their

2182
02:36:53,090 --> 02:36:56,120
journey, but.
But I hope they feel the same way.

2183
02:36:56,330 --> 02:36:59,000
You know what I mean?
We all get to love our own journey.

2184
02:36:59,000 --> 02:37:04,620
It's our own journey.
Go ahead, Sam. This has been a.

2185
02:37:05,220 --> 02:37:08,430
Masterful and just a.
Wonderful opportunity to be in a room

2186
02:37:08,430 --> 02:37:11,310
with you on your, your, your journey.
Um,

2187
02:37:12,240 --> 02:37:17,760
at the risk of against sailing too
close to the wind with the podcast.

2188
02:37:18,420 --> 02:37:23,310
One of the the very intriguing topics
of interest rates and the fact that

2189
02:37:23,310 --> 02:37:28,590
your career coincided with this
great deal of interest rate decline.

2190
02:37:29,400 --> 02:37:33,990
Um, but your career also blossomed
into the era where America had,

2191
02:37:34,560 --> 02:37:38,580
at least in hindsight,
unprecedented peace and prosperity,

2192
02:37:38,580 --> 02:37:43,170
perhaps, and in your lifetime,
comparatively to the lifetimes

2193
02:37:43,170 --> 02:37:47,160
of the people in this room?
I would say it's fairly not a

2194
02:37:47,160 --> 02:37:52,350
controversial statement to say
that the issue of the shores are

2195
02:37:52,350 --> 02:37:57,010
more rocky.
Geopolitically or domestically and

2196
02:37:57,010 --> 02:38:02,860
abroad, what would be sort of.
Without getting into politics per se.

2197
02:38:02,890 --> 02:38:06,100
What would be sort of your great
fears?

2198
02:38:06,100 --> 02:38:10,270
Or if you're looking around corners
or for people building a career?

2199
02:38:10,660 --> 02:38:14,170
What are sort of some of the
geopolitical domains that maybe

2200
02:38:14,170 --> 02:38:17,860
you're tracking, um,
that are a source of concern or

2201
02:38:17,860 --> 02:38:21,070
maybe a source of opportunity in
terms of navigating markets?

2202
02:38:22,210 --> 02:38:29,800
Well, I, I'm a very big believer.
In the divine perfection of the

2203
02:38:29,800 --> 02:38:34,220
world.
So I don't see the God versus the

2204
02:38:34,220 --> 02:38:39,920
devil fight that some people see.
And I also don't see randomness.

2205
02:38:39,920 --> 02:38:43,250
Like that's scary.
I see perfection,

2206
02:38:43,820 --> 02:38:49,250
and I see that when bad things,
so-called bad things happen to me.

2207
02:38:51,710 --> 02:38:56,720
They're brought to me as a gift
to elevate me, to teach me.

2208
02:38:56,750 --> 02:39:00,770
We don't learn from our successes.
We learn from our stumbles and

2209
02:39:00,770 --> 02:39:04,970
our falling and our failure.
The world is going through.

2210
02:39:06,770 --> 02:39:11,420
A growing period, a learning period.
And I think it's only through the

2211
02:39:11,420 --> 02:39:16,550
revealing of our shortcomings
that are brought to the surface.

2212
02:39:17,090 --> 02:39:22,190
Do we all get to see it in all
of its glory or grossness?

2213
02:39:23,050 --> 02:39:30,220
So that we can address it.
I think that hopelessness is a

2214
02:39:30,220 --> 02:39:36,310
very bad formula for a society.
I don't think we have to look

2215
02:39:36,310 --> 02:39:40,060
overseas to see that we're
fomenting in this country.

2216
02:39:40,570 --> 02:39:44,470
Hopelessness, hopelessness,
like we've never seen in this,

2217
02:39:44,500 --> 02:39:49,330
in this country before.
I'll give you a statistic.

2218
02:39:49,330 --> 02:39:54,640
So in the New York public school
system in New York is whether

2219
02:39:54,640 --> 02:39:57,790
you like New York or not.
It's considered like the most

2220
02:39:57,790 --> 02:40:02,770
powerful city in the world,
even. Right? Uh, New York.

2221
02:40:02,770 --> 02:40:06,220
So New York public school system
has about a million, a little

2222
02:40:06,220 --> 02:40:09,550
less than a million students,
rounded up to a million students.

2223
02:40:10,840 --> 02:40:15,640
11% of those students are homeless.
Which means that after school,

2224
02:40:15,640 --> 02:40:18,700
they go home to the street or to
homeless shelters.

2225
02:40:19,690 --> 02:40:24,070
11%, 70% of those students live
below the poverty line.

2226
02:40:25,340 --> 02:40:29,300
How is the future of New York
going to be anything but

2227
02:40:29,300 --> 02:40:35,330
challenged with that reality?
How would we allow this to occur

2228
02:40:35,330 --> 02:40:40,310
as a society?
How do we allow our leadership?

2229
02:40:40,640 --> 02:40:45,600
How do we elect leadership?
That doesn't even address or

2230
02:40:45,600 --> 02:40:50,640
acknowledge or point out,
let alone come up with solutions

2231
02:40:50,640 --> 02:40:55,740
to this hopelessness that is being
built inside of New York City,

2232
02:40:55,740 --> 02:40:59,790
the power center of our country,
and other cities all over the

2233
02:40:59,790 --> 02:41:07,030
country. So I think that.
I think that I said the words

2234
02:41:07,030 --> 02:41:10,480
live aware would be what my two
words would be,

2235
02:41:10,480 --> 02:41:16,210
and what my book is a calling for.
One of the biggest mistakes that

2236
02:41:16,210 --> 02:41:21,460
I think my generation has made,
and I think continues to be made in

2237
02:41:21,460 --> 02:41:30,790
these generations, is to much trust
in government and the process of

2238
02:41:30,790 --> 02:41:37,000
government to much trust in, uh,
when we turn on turn the faucet,

2239
02:41:37,540 --> 02:41:41,080
there's this trust that clean water
is going to come out that we can

2240
02:41:41,080 --> 02:41:45,220
drink. When we turn on our shower.
That water is going to come out

2241
02:41:45,220 --> 02:41:49,390
that won't harm our skin.
It's clean where we flush our toilet,

2242
02:41:49,660 --> 02:41:55,570
that the the refuse will go
somewhere safe, or that we buy food,

2243
02:41:55,570 --> 02:41:59,620
that it's healthy for our bodies.
That's all trust that we're

2244
02:41:59,620 --> 02:42:03,700
investing in government.
And I think that what we're learning

2245
02:42:03,700 --> 02:42:08,800
is that that trust is being poorly,
poorly invested with no checks and

2246
02:42:08,800 --> 02:42:16,270
balances by the people in a democracy
who are supposed to be aware and

2247
02:42:16,270 --> 02:42:22,240
alert and investing in that trust.
So I think we're we're going to

2248
02:42:22,240 --> 02:42:26,770
learn as a society that when you
don't take that stuff seriously,

2249
02:42:27,100 --> 02:42:31,240
there's going to be a big price
to be paid, and it'll be

2250
02:42:31,240 --> 02:42:34,750
unfortunate and uncomfortable.
And it's already unfortunate and

2251
02:42:34,750 --> 02:42:37,480
already uncomfortable and
manifesting itself in.

2252
02:42:39,490 --> 02:42:43,390
In an argument and discussions
in cities around this country

2253
02:42:43,390 --> 02:42:48,460
that are divisive for sure and
unhealthy for sure.

2254
02:42:49,030 --> 02:42:53,440
And getting through that's going to
be tough. But we will get through.

2255
02:42:53,440 --> 02:42:56,710
That's the other thing there's always
going to be because I believe,

2256
02:42:56,710 --> 02:43:02,860
as I say in my last chapter.
There's an inadvertent conspiracy

2257
02:43:03,700 --> 02:43:09,160
amongst everyone to live tomorrow.
Nobody wants today to be the last

2258
02:43:09,160 --> 02:43:14,080
day they live, and no one wants the
world to be ended as we know it.

2259
02:43:14,320 --> 02:43:19,030
No matter whether we're poor,
hopeless, homeless, rich,

2260
02:43:19,390 --> 02:43:22,720
political, not political.
We all want to get together and

2261
02:43:22,720 --> 02:43:25,660
figure out how tomorrow can
exist for all of us.

2262
02:43:26,170 --> 02:43:33,100
And so I think that that inclination
to, um, solving problems will,

2263
02:43:33,100 --> 02:43:35,920
will ultimately work.
I think I believe in the

2264
02:43:35,920 --> 02:43:39,220
American system.
It's very uncomfortable when

2265
02:43:39,220 --> 02:43:42,790
it's challenged and it is being
challenged, but I believe that

2266
02:43:42,790 --> 02:43:49,390
will will come out of it. Okay.
It's going to be a bumpy road, and I

2267
02:43:49,390 --> 02:43:54,340
think there's a lot of opportunity in
being part of the solution instead of

2268
02:43:54,340 --> 02:43:58,060
being part of the problem. Right.
I think the easy path is to be part

2269
02:43:58,060 --> 02:44:02,470
of the problem, which is to be
part of the divisive discussion,

2270
02:44:02,830 --> 02:44:06,910
to be pro this and anti,
then that's the that's what

2271
02:44:06,910 --> 02:44:09,790
everyone's defaulting to.
I always go where no one's

2272
02:44:09,790 --> 02:44:13,660
defaulting to which is okay let's
let's find a way to work together

2273
02:44:13,660 --> 02:44:18,100
to create tomorrow. Be great.
There's a lot of reward.

2274
02:44:18,100 --> 02:44:20,530
In going there.
Not a lot of people agree with us.