Sunday, April 03, 2016

Trump: The Art of the Deal by Donald Trump (Book Review #18 of 2016)



Trump: The Art of the Deal
I read this book after reading D'Antonio's biography of Trump; which I recommend reading prior to reading anything written by Trump himself for better context. The Art of the Deal was written in 1987 and it helps to know the context for the events in it, and leading up to it. I have been completing books by all the major candidates. This work is slightly better than Marco Rubio's American Son. Whereas 95% of Rubio's book is about his family and emotions, only about 5% of Trump's book is that. 95% covers his business dealings, political wrangling, and various enemies. Both Rubio's autobiography and this work, Trump's first, are pretty dry. This is a 1.5 star book, I would avoid it unless you really enjoy New York real estate. Look at the pictures pages; mostly buildings and a few of who Trump has rubbed elbows with. If none of those excite you, then put the book down. Mafia, undocumented workers, and other finer points also don't get mentioned here, so if you're looking for exciting angles like that you'll be disappointed.

Trump says up front "I don't do it for the money...I do it to do it...I like making deals, preferably big deals. That's how I get my kicks" (p. 10). Trump is essentially one of the world's biggest real estate agents. He reaches out to people when he gets wind they might be down on their luck and ready to sell their property cheaply. He knows how to market property he's looking to offload to the right people. He gets lucky along the way, having missed some of the market downturns. This book contains only a couple of hints of financial difficulties, when he suddenly shuts down a hotel or offloads a property-- you have to ask "But a few pages ago, he seemed confident he could manage this property?" Casinos were a relatively new venture for Trump then, and in the boom years of the mid-80's, he was making money on them; you don't read about later problems (except his battle with Holiday Inns) or bankruptcies in this work. Back then, Television City and building the world's tallest building were soon-to-be-realities in Trump's mind, not boondoggles that never worked out in today's hindsight. Along the way, the unfortunate, gullible, green, or otherwise foolish people who Trump gets the better of get a little bit of shame or ridicule, but this book is more politely worded than Trump's rhetoric in 2016.

If you want his philosophies in negotiation and deal-making, there really is only one chapter (two). The first chapter is nauseating in walking through a week of Trump's activities in 15-minute blocks, every phone call, every meeting, every idea. It's all about dropping names and showing his confidence. Unlike Rubio's books, these early details are actually useful-- the phone calls are often on deals that are resolved and explained elsewhere in the book.

"To me it’s very simple: if you’re going to be thinking anyway, you might as well think big. Most people think small, because most people are afraid of success, afraid of making decisions, afraid of winning" (p. 41). Interestingly, he links this to discovering what he thinks is Jimmy Carter's ability to become President. Carter asks Trump for an enormous $5 million donation for his library; few people have made a more audacious request than Trump himself. Carter became President by going for it, and later was shown to be a disaster. Trump credits Reagan's success to the same audacity-- he speaks with confidence so the American people are assured, "only now, nearly seven years later, are people beginning to question whether there’s anything beneath that smile" (p. 50). (Trump's criticism in the book of trade policy with Japan is another less-than-veiled criticism of the Reagan administration.)

"I always go into the deal anticipating the worst. If you plan for the worst—if you can live with the worst—the good will always take care of itself. In addition, once I’ve made a deal, I always come up with at least a half dozen approaches to making it work, because anything can happen" (p. 42-43).

"I’m a great believer in asking everyone for an opinion before I make a decision. It’s a natural reflex" (p. 44). This tidbit is paradoxical because Trump withholds disclosing some ideas and decisions so as to maintain his leverage ("Leverage: don't make deals without it," p. 46). He also ignores the advice of "everyone" in parts of this book and relies on his gut. He writes disparagingly of opinion polls, he doesn't trust them (p. 234).

He criticizes the mantra of "location, location, location" as being from either the weak or those who don't know any better. He can take a bad location and make some audacious claims, get media attention, and suddenly win by "psychology" (p. 46).

Trump learned thrift from his father-- the only way Fred Trump could make money off low-rent tenants was to keep building and renovation costs to a minimum. Donald, however, prefers to build luxury buildings that spare no expense in showing their quality. But he still writes that "the day I can’t pick up the telephone and make a twenty-five-cent call to save $10,000 is the day I’m going to close up shop" (p. 52).

One decent example of Trump's good fortune but head-scratching logic is his purchase of what would be Trump Castle (and now the Golden Nugget), which he bought nearly-completed for a song from an overextended Barron Hilton who was denied a gaming license. It seemed a bit odd to me that Trump would be eager to own competing casinos in Atlantic City and expect all to exceed expectations. Indeed, Trump's Castle later folded after Trump opened his Taj Mahal. Trump makes low offers to people he feels "sorry for" because of circumstances in their life, is able to obtain financing better than others can do to previously successful deals, and understands the process better, such as having a gaming license before building.

If you are interested in any hints about Trump as a chief executive in a political position, Trump's greatest achievement is showing up Ed Koch's City Hall by completing a project that New York had spent millions of dollars and several years of blundering-- the Wollman Rink in Central Park--under-budget and on time, at his own benevolence. He later ran the rink for years, hiring Ice Capades to do it right. In this case, Trump had the media on his side-- he made an offer to the city that they ultimately couldn't refuse, but seemed to desperately want to refuse, and the media and public sided with Trump (as opposed to him being the "greedy developer" the media and Ed Koch targets elsewhere). He notes several aspects of New York City law, such as requiring any project over $50,000 to have multiple contractors for, that hampers development and efficiency. Trump points out how rent control laws hamper development and ruin properties, but does not oppose it outright; he takes a middle ground of means-testing. Trump lost a battle in waiting out and trying to run out tenants of a rent-controlled property-- many of whom were wealthy and influential, like many owners of the choicest rent-controlled properties in New York--but is eager to trumpet how he won out in the end by selling the building for a profit (somehow; it seems some of the legal and opportunity costs incurred a long the way go unaccounted for, but I digress). Trump and his father donate to politicians, engage in personal dialogue with them, use them where they can. But where Trump could go to battle and with Ed Koch he pulls no punches. "(W)hen people treat me badly or unfairly or try to take advantage of me, my general attitude, all my life, has been to fight back very hard" (p. 49).

Trump writes that he (actually) dislikes talking to the media, particularly about his personal life. Ivana makes several positive appearances in this book, she is managing Trump Castle. His kids are young, he has a son who seems to have a particular taste for business. Trump admits that he is not one to play dolls and cars with his kids, he enjoys them more as they get older and he can interest them in the family business. He writes glowingly of his parents, but seems to downplay any roll his father played in both connecting him politically and in business, leaving out any connection that his father had previously to Roy Cohn, for example. He claims his grandparents immigrated from Sweden, instead of Germany. Donald basically wanted to succeed beyond his father's accomplishments-- he wanted to make a name in upscale Manhattan as his father had done in Queens.

I am writing from the vantage point of being a Kentuckian-- Trump's first operation was the purchase of a building in Cincinnati. Trump discusses in detail his hiring and admiration of an unscrupulous manager of that property, known to be a thief and conman. Trump writes disparagingly of the former tenants of the building from the Kentucky hills who filled tiny apartments with lots of small children who destroyed the place; Trump found ways to collect rent or run them out. Trump got lucky on his first deal, during the real estate boom there was a lot of money flowing into real estate investment trusts, one of which sent a green, young agent to buy his property and never bothered to inspect it. Trump knew it was turning into a lemon as the neighborhood went downhill, and quickly sold it for profit. Trump also randomly meets a couple from Louisville via David Letterman and compliments the city.

As pointed out by various other publications, perhaps one example of the danger of Trump's brashness is his experience with the USFL. He bought a team in an already-established league and was immediately able to improve his roster from his own cash. Rather than settle for the league's strategy to compete where the NFL was not, he quickly used his resources and media attention to bully the other owners into engaging in more lavish spending for players, and to move their season from spring to fall to directly compete against the NFL, something that was suicidal in hindsight. Nevermind that polls said fans wanted a spring league-- he doesn't trust polls. Never mind that he was never at risk of financial ruin over the league's performance like some of the owners were; their teams folded and that left the better teams, just as he liked it. At publication, Trump was still quixotically going after the NFL-- the jury had ruled for the USFL that the NFL was engaging in anti-competitive behavior, but awarded the USFL no damages and the league folded. Trump hoped to muster support for an appeal process or, oh well, consider starting yet another league. His players in this period-- Hershel Walker and Doug Flutie among them-- enjoyed playing for Trump because he spent as much as he could to make their team NFL-quality. Other players in the league did not have that luxury.

1.5 stars out of five. Read up on how the projects highlighted in this book --including his marriage-- panned out; judge for yourself whether Trump has changed, learned, improved, or gotten worse.

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