Following Donald Trump’s surprising presidential victory last November, I decided to know more about this political newcomer. I thought a good place to start was the book he wrote with Tony Schwarz thirty years ago, “The Art of the Deal,” (Ballantine Books, 1987). Many political figures write books to launch their presidential run. This best-seller was written decades before Mr. Trump entered the political arena when he was just 40.
Some of the book is autobiographical. Fred Trump, his father, was a real estate entrepreneur in Queens. Donald followed in his footsteps … sort of. Rather than specialize in low value rental housing, The Donald decided to specialize in Manhattan high rise properties. He moved to the borough and began to walk the streets, learning the neighborhoods (one of his important business elements is market knowledge). He was able to find bargains during economic downturns and turn them into profitable winners when the economic cycle rebounded.
He explains that while location is the most important ingredient in real estate, a close second is not overpaying for the property. Don’t become so enamored with a property that you overpay and lose the opportunity to turn a profit. The old axiom applies: buy low; improve the property; sell it for a profit. How many of you watch DIY reality shows like “Flip and Move?”
In the second chapter, he explains his “Trump Cards,” the elements of a good deal. Among them are: setting lofty goals; protecting the downside; maximizing options; use (lending) leverage; enhance your location; publicity; fighting back; and cost containment. Many of these techniques he was able to apply to his presidential campaign, a case where he found business and politics intersect.
For example, he does not take attacks lying down like some of his predecessors; instead, he fights back. When he is accused of colluding with the Russians, he counterpunches with the wiretapping charge. His campaign was relatively low cost compared to his opponent; while she was raising huge amounts of money at private fund-raisers, he was filling arenas and entertaining throngs of supporters. The contrast between the two campaigns could not have been more stark.
Understand this about our new president – he is a negotiator. His predecessor did not have a good reputation as a deal-maker, largely staying above the political fray and allowing his party leaders in Congress to fight it out on matters like the 2009 Economic Stimulus and the Affordable Care Act. I do not expect the same from President Trump.
The book does cover popular media and sports. As a young man, Trump wanted to make movies. When his career went another direction, he satisfied that interest with his popular reality show “The Apprentice.” When his foray into professional football failed, he replaced that passion with owning golf courses instead.
There are interesting chapters covering the development of the Grand Hotel and Trump Towers. There is also the example of Central Park’s iconic Wollman Skating Rink. When Trump took it over, the rink had been closed for six years, run up huge costs, and was mired in government red tape. After repeated attempts, he took the project over and promised to open in six months at a cost of $3 million … and he would absorb any overruns. He brought it in under budget and ahead of schedule, just like he promised.
I think the same frustration and spirit fueled his presidential aspirations. He was so incensed by Washington ineptitude that he felt he could do a better job. He almost reached that conclusion in 2012 and closed the deal four years later.
“The Art of the Deal” covers his early real estate projects in New York and the casino business in Atlantic City. It does not cover his resort developments. I think the family business is largely out of the gambling arena today. Instead, dozens of world class golf courses and their guest hotels are in the portfolio.
When Trump wrote “The Art of the Deal” thirty years ago, all of the New York politicians he worked with were Democrats. In fact, he may have been a registered Democrat at the time as his political allegiance has shifted over the years … but not his core principles.
It is safe to say that since the inauguration, while he has accomplished quite a bit through executive orders (financial markets and consumer confidence are positive early signs), there has been no “presidential honeymoon.” His opponents would argue that he doesn’t deserve such respect, but would argue vociferously if they received the same treatment. Now that the replacement for Obamacare has been introduced in Congress, let’s see how he does with the first major legislation.