Setting an Example

An Interview with Sam Zell, Chairman, Equity Group Investments

EDITORS’ NOTE Sam Zell is U.S. had historically adopted a model of What is it in an entrepreneur that helps the Chairman of Equity Group over-reaching government infl uence, our him see challenges as opportunities? Investments, the private investment country would look more like Belgium It starts with an inordinate amount of self con- fi rm he founded some 45 years ago. today. My concern is that the federal poli- fi dence, which enables you to stick to your deci- He is also Chairman of Equity cies being put into place are moving us sion despite conventional wisdom or what others International, which he co-founded closer to a European model. So, yes, it is may or may not be doing. In addition, real entre- in 1999, and Chairman of fi ve pub- more diffi cult to build companies today. preneurs have an innate tendency to not just recog- lic companies listed on the New York Heavy-handed legislation like Sarbanes- nize problems, but to see solutions. These two traits Stock Exchange. Zell is also Chairman Oxley or regulation through the EPA or have repeatedly intersected throughout my career. of Tribune Company. Previously, he NLRB infl uence every decision that a There have been some very diffi cult rough patches served as Chairman for Equity Offi ce company makes today. over the past 40 years, but I always remained com- Properties Trust. He serves on the Nevertheless, we’ve seen the te- mitted to a solution, even if that meant going right JPMorgan National Advisory Board; Sam Zell nacity of creativity through companies when everyone else was going left. the President’s Advisory Board at the like Apple, Google, and Microsoft. So You have been bullish on investing in University of Michigan; and with the combined ef- there is still opportunity and the orientation to the U.S., but you have a lot of interest in forts of the University of Michigan Business School, es- create companies, but the burdens of doing so Brazil and other areas. Is the U.S. still going tablished the Samuel Zell & Robert H. Lurie Institute are greater than they’ve ever been. to offer opportunities or do you need to go for Entrepreneurial Studies. He is a long-standing Do you need to be born with an entre- to the emerging markets? supporter of the University of Pennsylvania Wharton preneurial edge? That is a political question, not an economic Real Estate Center and has endowed The Samuel Zell There is an element of entrepreneurship question. I don’t know what the future holds for and Robert Lurie Real Estate Center at Wharton. Zell inside everyone; it just varies in intensity from U.S. politics. Is Western Europe the template of is a graduate of the University of Michigan and the person to person. what America is going to be or will America be University of Michigan Law School. He began his ca- My objectives in this arena have been to able to maintain its unique environment and cul- reer in real estate while an undergraduate. create environments that will help individu- ture? That question will determine how much the als recognize and nurture that element within U.S. can grow, and consequently, the abundance COMPANY BRIEF Equity Group Investments themselves, as well as identify those very few of opportunity in our country. In addition, the (www.egizell.com; EGI) is a private invest- who are entrepreneurial to their core. In par- U.S., along with the rest of the developed world, ment company. Its founder, Sam Zell, pioneered ticular, those in this latter group, who thrive on needs a serious dose of deleveraging. It’s hard to the public equitization of the commercial real es- taking risks and being out on their own, have create growth and deleverage at the same time. tate industry through the creation and leadership no traditional road map. I took that route in In the interim, I continue to diversify into of Equity Residential, Equity LifeStyle Properties, my career, so I understand the gap traditional areas where I know there is signifi cant growth. I Equity Offi ce Properties Trust, and Capital Trust. courses leave in preparing entrepreneurs. invest in emerging markets with the understand- EGI’s investment portfolio encompasses a broad Where did your philanthropic bent ing that I am trading the rule of law for growth; range of corporate and real estate interests, a small come from? that is just part of the risk analysis. sampling of which includes Anixter International, As I have become more successful, there is Does it concern you that the U.S. can’t Covanta Energy, Rewards Network, Kuwait Energy a growing need on my part to add relevance. My get more reform in the K-12 system when Company, WRScompass, and Equity International. success isn’t ultimately measured in dollars, but in there is such an emphasis on it? what I can achieve and the difference I can make. There are a lot of competing interests in Are you concerned that the U.S. is losing its I get great satisfaction in making that difference. I the K-12 system. The unionization of our edu- entrepreneurial edge? believe entrepreneurship is the economic engine cational system has done serious damage. I’m very concerned that we’re losing our that drives this country, so fostering that orienta- Historically, the answer has always been to edge. What has made America so unique is a tion and skill set has an exponential impact. spend more money, but we’ve realized there is 200-year period of immigration that self selects How are you able to track the impact of almost no correlation between the money spent entrepreneurs – people with aspirational drive. your philanthropic efforts? and the performance achieved. The environment in the U.S., until recently, al- Much of my philanthropy is conducted in This is an enormous challenge for our coun- ways nourished that entrepreneurial spirit. a non-endowment fashion – where I make sig- try going forward. The stemming of immigration Many entrepreneurs suggest it is tougher nifi cant commitments over 3 to 10 years with no has taken a lot of parents out of the system who to build businesses today. Is there merit to that? guarantee of an 11th year. My theory is that the are concerned about their children, and without There is little doubt that the level of interfer- recipient will stay motivated and do such a good parental support, I don’t know how you can ence from the government is much greater today job that either I’ll want to continue my support, achieve performance improvement in schools. than it has ever been in my career. The philosophy or someone else will want to be associated with Do you ever think about your legacy? of the current Administration is oriented toward the program’s success. Sure, but your legacy is not defi ned in dol- government, rather than private sector, solutions. By I’m less interested in having my name on lars and cents; it’s who you have infl uenced and defi nition, government solutions are limiting. If the buildings than I am in having my name on ideas. the example you have set for others.• 48 LEADERS POSTED WITH PERMISSION. COPYRIGHT © 2012 LEADERS MAGAZINE, INC. VOLUME 35, NUMBER 2