Episode 569: Richard Baker: Entrepreneurship Lessons From Billion Dollar Deals and Bold Risks

Hustle, crash it. >> Hi, everybody. We have welcome to another episode

of Habits in Hustle. I have a funny guest on today. I'm not really that well, I don't know, but you seem like you're very, you call it a levity. His name is Richard Baker, and I would say he's going to put it give you a better definition of what he does. But let's just say he has the, he owns and runs the largest real estate private

company in the country. >> One of the largest private owners of shopping centers in the United States. Let's leave it at that. Let's just say he's extremely successful in the real estate space, and we're going to learn a lot from him on negotiation, deal structure, like sourcing

opportunity, seeing all the things business. So before I like make

more of a mess of this, why don't you describe in a few sentences

“who you are and what you do? >> Sure. So basically, I think of myself”

as a small time entrepreneur, and I just did a lot of deals over and over and over. So when you add it all up, it turned out to be a big thing. I started out working with my father in the real estate space, and there was this company that had no stores, he's to the Mississippi cold Walmart a long time ago, and I said, wow, I should

go visit these people in Bentonville, Arkansas. So I got on a plane and I sat in the offices for two days of the of Walmart, their real estate offices were like trailers, literally trailers, and I ended up meeting them, and we had a good time and got along, and we developed a relationship, 21 year old Richard Baker, and the team at Walmart, and

eventually I started developing Walmart anchor shopping centers throughout the Eastern portion of the United States, and I ended up building 50 Walmart shopping centers of which we own all of them still today, and we lease them the properties, and all of those development deals required zero cash. So we structured every deal where we were able to

borrow all the money from the bank. So no partners, no investors, and we used the leverage in order to do that, and that's one of the themes that we talk about a lot today, and then from that, I went on to acquire sort of end-of-life department store chains. So imagine Lord and Taylor, in the United States, Hudson Bay, Canada, Germany, Belgium, the Netherlands, all over the world, all over the world.

“And that's a big, like, I'm Canadian. So that's how I kind of got”

done it. Like, wow, you like, I remember I grew up with that. I bought the Hudson Bay company in July 19th, 2008 about five minutes before they were going to go bankrupt because the financial crisis was hitting, and I bought it and merged it with Lord and Taylor, which was another sickly U.S. department store chain. And we kept both of those businesses going for, you know, 15, 16, 17 years

longer than they otherwise would have. And but this is a difficult world. We monetize those businesses. We created as much value as we could. We kept as many people working as many vendors, you know, supplying inventory and going, but at the end, those two particular businesses got put to bed, and no longer exists. But wait a minute. So when you bought, so you bought Lord and Taylor

first in 2006, right? No. Wasn't that for, like, a billion, too, right?

“I bought it for $1.2 billion, but when I bought it, it's kind of a funny story.”

I bought it as a real estate developer. So real estate developers don't normally buy 1.2 billion dollar companies. And well, let me say this, because I think this is what's going to, was confusing to me initially, and you own both. The luxury retail market, stocks, and Lord and Taylor are going to get into that. But you also own the real estate that it's in. I started it. I started in mid and

mid tier operating companies. And then I moved into, as you said, luxury retail companies. And but all of it was based on real estate. I only bought the businesses in order to capture the real estate. And when I bought all of these businesses, I financed them 100% of the purchase price or almost 100% against the real estate. And that's the, and then we monetized the real estate and

created value and did everything we could to keep the operating companies together and as strong as possible. And I guess January, this past year, after having put Neiman Marcus Berger, Goodman, Sacks, and the IP for Barney's all together in one entity. We had a run on the bank. And we made the decision. I made the decision that we should bankrupt the company in order to save the company and

to save actually multi brand luxury in the United States by bankrupting the business. We got them together. We got synergies. We saved all the jobs or

coming out of bankruptcy this week. And they'll be strong and successful and and

“merged together. So our children and our grandchildren hopefully will still be”

able to shop at Neiman Marcus and Sacks with Avenue and Berger of Goodman as we go forward. Okay. Wow. Okay. So now it now we can start from the beginning. Now we can reverse engineer this. Okay. So in 2006, you bought Lord and Taylor. You already had these. Let me just get this right. So your father was doing this. Your father brought you along to this meeting at Walmart. Then you ended up. No, no, no, no, no.

No, my father. So let you want to go way back. Let's go way back. You want to go way back. What I want to get to is that like, did you start that like this was a family business that you then took and then made it into like a monster business. Like, how big was it before you got involved? Yeah. Because did it take money to make money? Did you have a little bit like how did you do this? Okay. So I'm going to

force you to go way back. So okay. So the story is that my grandmother Sylvia came from Poland in 1921 on July 4 through Ellis Island didn't speak any English. And she ended up marrying my grandfather. They moved to Hoboken and where my grandfather was a lawyer. And my grandmother was a very bold entrepreneurial lady. And she lived early 1930s in Hoboken. And she was aggravated and frustrated because he's

beautiful homes, limestone and brownstone townhouses that used to be filled with rich families by the early 1930s, 1933. The kids were breaking the windows and they looked horrible in the rural empty because those folks had lost all their money during the stock market crash. And so my grandmother, because she had get up and go kind of way

“about her, went to meet the bank that owned most of them and said, what are you doing?”

These says terrible. And the bank said, well, there's nothing we can do. No one wants them and their zones for single family. So she said, well, why don't you get them resumed from multifamily? And they said, well, why don't you get them resumed from multifamily? So she took a purchase agreement to buy several of these houses. She was friends with the mayor's sister. She went to the planning board. She got approvals to have them converted to multifamily.

She used friends and relationships and she renovated them and leased them up. And she became a

real estate entrepreneur. And she was the first person in my family to understand how to make money

as a real estate entrepreneur with no money. And that is the philosophy of the family. My father then went into the real estate business. Ironically, with my mother's father, another family dynasty kind of story. And my father and my grandfather started building shopping centers in 1959 and into the early 1970s. I, as a child, my father would take me to go visit all of these properties. And I would see what was going on. And everyone would talk to me about

real estate because I enjoyed it. And it was interesting to me. And, but I had a vision. And my vision was, optical prop goes. I wanted to own the stores that sat in the real estate. And I thought that was fascinating. So I wanted to own the supermarket inside the shopping center. So I decided I wanted to go to the Cornell hotel school to learn how to be an operator of businesses. Because there's tremendous value if you can be an operator of businesses and an owner of real estate. And that's

my sweet spot that I find value and find interesting. So after graduating from the hotel school, I was going to go start a prototype for a restaurant chain. And my father's like, oh no,

“you should come work with me. We have a seven people in an office. We have an accountant, a lawyer,”

and we have properties. And you'll learn a lot more listening to me every day. And you should do this. I said, well, I'm going to do everything. I'm going to do the restaurant. And I'm going to learn from you and do all of that. And so, graduated from Cornell the next day, I went to work with my father, my father, a gaming little office and said, do anything you want, but don't sign your name to anything and don't spend any money. Because the philosophy in my family would I have been brainwashed,

breakfast with my grandparents and dinners and my parents. We're not investors. Anybody can invest money and make money. We're into how do you make money from no money? We call it intellectual leverage. We use our brains to create value, not capital. So the idea was, figure out how to make money in the real estate space without any money. Okay, well, how do you do that? It's not so hard. So what I did was I developed some relationships with tenants, people who were looking for

new locations and people who had credit. And of course, the first one was this great company that

had no stores these to the Mississippi, called Walmart. No one had really heard of them much in

Even today, you get out of your ass and you go someplace. If Jen calls and says she has an opening,

“you get on a plane and you go visit Jen. You don't text it and phone it and email it and zoom it”

and you go do it. So I got on a plane, I flew to Bentonville, Arkansas. Or LA. Or LA. In this case, but in that case, I flew to Bentonville, Arkansas. I sat waiting in this waiting room in this trailer for two days and eventually I got to meet with the folks. And I was an energetic smart 21 year old and I knew all about the locations and where they would want to go in the East Coast. And they said, we'd love to do work with you. Find us the right sites. So I left Bentonville,

I went back and I began to I created maps in the old days. We had these paper maps and we had little pins and I figured out all the county seats. I figured out where all the competitive retailers were and I figured out before Walmart figured out all the places they wanted to go. Then I went to those towns and I built a little team and we entered into purchase agreements to buy sites large enough for Walmart anchor shopping centers, but in towns where there was only one site left and in towns where

they would give me a free option. So now you say, well, why would anyone give you a free option? Well, so here's the conversation. I meet with the fellow by the name of Mr. Levinson, Levinson. Mr. Levinson, I'd like to buy your vacant shopping center that's broken down

in Gloversville, New York and you want to sell it for a million dollars. I'll buy it, but I need

12 months to get governmental approvals because I'm going to build a Walmart anchor shopping center. And it's like, great, I'd like a 10% deposit. I'm like, I'm not going to give you any deposit. It's like, well, why are you not going to give me any deposit? Because I have the relationship with Walmart

“and I have the expertise in order to get those approvals. So if you want to actually sell your property,”

I'm the guy. If you want to try to sit here in your office and try to call the guys from Walmart to make the deal yourself and then you negotiate to deal with them good luck. So we said, okay, I get it. I'll give you a free option and you'll spend the money to get the approvals, which I did and when you get all the approvals, you'll close. Sure. So now I have a free option. No money. I spend a little bit of my time or a lot of my time, a little bit of money to get the

approvals. I signed a deal with Walmart. I signed a deal with the Hanorford Brothers supermarket chain. I made a deal with McDonald's. I put a Greek restaurant somewhere else and I did it all efficiently, no brokers and no middlemen and did the construction with our own construction company and our own people and I produced a shopping center package that was financed of all credit tenants, all the approvals.

“So I went to a local bank. I borrowed the money. I got, but they gave you the money based on what”

you're ready for your, your company had. No, they only a non-recourse loan against this one particular property and how did they do that? I had signed leases with credit tenants. I had all the governmental approvals. They did something they call a construction loan and they funded the money as we spent it and they funded 75 in those days, 75% of value when it was done. They funded in advance. So 75% of value when it was done was more than 100% of cost. Okay. I did that 50 times over and

over and over. So no partners financed all the deals. We still own all the shopping centers together. So the Walmart ones, you don't own Walmart obviously, but you, we don't, no, I don't know, Walmart building. We own the buildings, we own buildings and we own all the, the real money was made in the 20,000 square feet of shop space next to Walmart and the out parcels. The deals I made years ago for $15 a foot are now renting at $15, $60 a foot. Wow. But then, how did you go from

doing the strip mall situation to then transitioning into these luxury real estate? Okay. So, so as I did the shopping center story for 17 years. Now it's 2005 and Walmart's not so popular and the environmental issues of getting approvals for large retail. It was very getting very hard to do the type of transaction I had done. Let me ask you a question. I'm going to keep on

interjecting here. Good. So until 2005, you were basically, you owned mostly just the real estate.

You weren't owning the obvious business. Only real estate business. Only real estate business. So only in 2005, did you switch and go into then purchasing the luxury, the operating company and in addition to the real estate. Gotcha. Okay. Go on. Okay. So now by 2005, I'm like, wow, this is too hard. I can't continue to develop real estate like this. I need a new way of thinking. And the new way of thinking was to buy these old dying departments to our chains that

owned a tremendous amount of real estate. Wait, hold on, I got another question. At this point,

business? Yes. So I have, I have a brother and two sisters, none of them are interested in the

“family business, not involved. Okay. My father was great and he and I had great fun and worked together,”

you know, until he passed away in 2020. And so you and your dad basically did. So basically, my dad and I got it. Okay. Continue. Okay. So now in 2006, late 2005, I have this idea that we're going to buy operating companies that own real estate. And what I find out is there's a lot of retail chains that own a lot of real estate that's worth more than the entire value of the company. So the first one was Lord and Taylor. So first one they ended up buying. We worked on some other ones.

Lord and Taylor was owned by Macy's. They wanted $1.2 billion for the company. They owned 49 pieces

of real estate. And they weren't really interested in talking to Richard Baker. They had huge private equity firms, KKR and all these guys. And no one wanted to pay up the $1.2 billion. So I figured out through a friend had to get a meeting with this fellow by the name of Ron Tyson, who was the vice chairman of what was then called Federated. And I went to meet with him. And I said, I'm a real estate guy. I want to buy Lord and Taylor because I think I can

“properly monetize it with real estate. He said, well, you have to pay $1.2 billion. I said,”

I'll pay $1.2 billion. But I need 120 days in order to get the deal, you know, in order to close. Done. Did you try and negotiate with the guy? I didn't negotiate with them. Sometimes,

Jen, you have to use the power of yes. Yes, there's a really powerful thing when you use it the right

way. So I made a deal with this fellow to buy this chain for $1.2 billion. And now, I have to finish that. Why, why, why? Because I believe because I believe the real estate was worth $500 million more than the $1.2 billion. So real estate is not an efficient business category. When you buy IBM stock, everyone pays the same price for IBM stock every day. But real estate is a very inefficient. No one knows what one piece of property is worth. And some

people have a great skill of understanding and some people don't. And you have to be bold sometimes

“and go with your gut and make it happen when you know. And some people will never know when they”

shouldn't play. But I knew and felt confident and had conviction that the value of the real estate

assets at Lord and Taylor were worth $500 million more than the $1.2 billion. Based on what? Based on

a seven months of analysis that I did prior to going and talking to the fellow where I went and evaluated every property being the guy who developed Walmart centers and target and knew about JC pennies and all these different retailers. I had a very good understanding of what these properties were worth. Why do you think he was? Why do you think he, you know, made it $1.2. Why do he want $1.2? Because it was a big company and they told their shareholders they were going to sell it

for $1.2 billion. They weren't going to sell it for less. The other people who were bidding on it were people who were bidding on an operating company. I didn't look at it as an operating company. I was bidding at it on it as real estate. So to me the real estate was worth a lot more. So now I have a, you know, I'm a real estate guy. I got a real estate lawyer and I got another fellow who's who I brought in to help me with the operating company. And I'm negotiating day and night

on this purchase agreement to buy this, you know, 40, it was a 51 store chain, 49 pieces of real estate. And I'm talking to my father every night and he's like, what are you doing? We're in the shopping center business. You know, we build shopping centers for 10 million or 20 million or we just build one for 100 million. We don't buy $1.2 billion operating companies. What are you doing? And they're not going to enter into a purchase. Every one of those shopping centers I developed, I had a

a single purpose LLC that had no assets. And I got a free option, free purchase agreement to buy that shopping center. He's like, do not going to let you, they're not going to sell you Lord and Taylor like it's a vacant piece of farm land with a no asset single purpose entity. They're represented by Goldman Sachs, JP Morgan and Skadden Arps. That's not going to happen. I'm like, relax. I'm going to keep going through the process here. The entity I was using was something called NRDC, NRDC, equity

partners fund seven. And that was what was in the papers. I made it up. It was just a single purpose entity. And I'm going to go shading and we're negotiating. One day, and I guess it was late September in 2006. I actually was late August 2006. I 12 midnight time square. I go to a pay phone.

federated, this many, many tens of billions of dollar company represented by all of these folks, signed a purchase agreement with NRDC, equity partners fund seven for $1.2 billion,

gave me 120 days. Never asked for my financials, didn't ask for a deposit. What happened was they just

thought I was one of these big private equity firms, because we have a decent profile. And they just assumed they did none of the work, which by the way, for all of your entrepreneurs listening,

“that's how life is sometimes. The big people tend to be lazy, maybe not as smart as you imagine”

they are. And that's where your moment comes. And that's where your opportunity is. And that's where my opportunity was. So now it's midnight. By the way, I say to the gang, because I talk about that all the time. It's always these people that you think are so this and that they're not that smart. They're not that smart. And you got to go for it. Yeah. So and by the way, so you'll get slapped down and slap down and slap down. I fail more times. But every now and then I get away with it.

I win. I get it right. And then I end up talking to Jen about it because it's epic. But Jen's not asking about the 90 things I got wrong. I'm going to. You haven't given me time. I'm going to

out talk you. So you'll never get to the bit. So so now my father says, well, I guess that's great.

“But we're going to come up with the $1.2 billion. I'll figure that out tomorrow. So now go home,”

go to sleep, go to the office. And I write up on my white board, a new structure, LNT, uh, Lord and Taylor holding company, Lord and Taylor property company, Lord and Taylor operating company. The company had $120 million of Abidah. So I moved 80 million of Abidah to the property company. So the operating company would pay rent to the property company. The operating company would have 40 million of Abidah after paying rent. So now I had a real estate company of $80 million of Abidah.

So now it was a booming period. It was 2006. The wonderful banking firms of Lehman Brothers,

Bear Stearns and CIT before they went bankrupt the first time. Let me agreed to lend me $1 billion,

$175 million to buy Lord and Taylor for $1.2 billion. So now I go back to my father and we had two

“partners, a fantastic partners, Bill Mac and Lee Nibart. We went, I went back to my three partners and”

said we need $25 million in cash to buy this $1.2 billion business. My father was like, oh, we don't do that. You know, we use our brains. We don't use our cash. We pile up our liquidity. We don't use our liquidity to invest in deals. And I said, well, this is a pretty unbelievable situation. You can control $1.2 billion with $25 million. So very grudgingly, my father agreed and I had just made some money and I refinancing. So I put that money into the deal. My father put some money in Bill

Mac and Lee Nibart put some money in and now we own Lord and Taylor for $1.2 billion. And the idea was to immediately break it up into pieces and sell off the pieces and make a, make a profit. But what kind of pieces? You tell our audience just basically we were going to sell a package of stores to Walmart, a package of stores to Jacy pennies, a package of stores to target, close it down and be done. That was the business plan. Okay. But on the way to the closing of strange thing happened,

Macy's had decided to rebrand all the stores on the East Coast Macy's, if you recall, and they were filing space, they were a, a filings department store and they were all of these different name plates. Well, because filings is very much like a New York in Chicago. It was Marshall Fields and they were all, and there were marshes and Connecticut. They took all these regional name plates and they turned on Macy's. When they did that, some of the customers said,

I want to shop at Macy's, I'm going to try Lord and Taylor. So sales, dumb lock, sales at Lord and Taylor start going up by 10%, right after right before we bought the company. So I'm like, how hard could it be to run a department store chain? How about we run it instead of liquidating it? So now we begin to run the business and be being who you? There was a great CEO at the time by the name of Jane Elfers and she was in the chair and she had a team and we began to operate

this business. I became the chairman. So now I went from running my family real estate business that had 40 people to being the chairman of Lord and Taylor which had 10,000 employees and I went through the business with Jane Elfers to CEO and I used a perspective and a brain of a real estate

perspective of a real estate entrepreneur versus an operating company entrepreneur are very different.

“Tell us I walk through with Jane the first day and they had these jewelry cases and inside the”

jewelry cases were the nicer jewelry and on top they had these like wire things where they hung all of the cheap jewelry and it was so much cheap jewelry on the top you couldn't see the good stuff in the case. So I said to Jane, I said well what would happen if we had the last of the cheap stuff so you could see the good stuff would elevate the offering and people would think about she said yeah you're probably right we got carried away too much cheap stuff it's it turned and

we could do that I said well how would you how would you execute that well we would reduce it by 10

percent reduce it by 40 percent test it do 18 stores do another 18 stores and over the next 20

months it would eventually get done. I said forget that what are we going to lose immediately

“sell off the jewelry put two on each case and upgrade the jewelry and just do it everywhere.”

Next we walk to the next department and so I was willing to take more risk on things that I didn't think had a lot of downside risk to them. And also you also speed you didn't waste a lot of time like it was efficiency. Oh yeah like this is like that's a good thing. Okay having been 20 years later now good and bad so I am super fast I make decisions but I'm not using all of the available analytics that you could use in making these decisions. I think I made many many many many

many many of the right decisions and the weight of going slow would have been so bad that even the decisions I made that were wrong I did the right thing but I move very quickly I make decisions

and not always the right decisions but we make them work. Don't you do think that's probably

one of a top skill that people need to have to be successful as an entrepreneur? Absolutely and

“you know being an entrepreneur requires courage so you have to and I think it took me a long”

time probably too long to have enough courage to push back harder on the operators than I did and because I know the business and it took me a while to learn it and I wish I had been had more push back earlier on more confidence. So did you naturally have a lot of these skill sets like because you couldn't easily excuse me for saying this but you know given your bat like your generational situation you could have been an apple baby but you weren't. Do you know what

an apple baby is? Yeah so I'm a worker bee so you know or I'm in the trenches I'm in the trenches I'm out there doing it and that nature of you think you believe in nature versus nurture like because that either you have like it sounds like you have an in like in your DNA. Yeah I totally believe that all of us have certain things and and by the way the worst parents could mess you up a bit and the best parents on earth can have a kid that just has the wrong DNA pieces and

no matter and you're like why is that kids such a screw up the parents are so lovely in the pit so we all come out the way we come out and so so I'm a crazy entrepreneur I run around do different types of businesses. I then went from Lord and Taylor and I bought the Hudson Bay company. Wait say on Lord Taylor I want to get finished with this so I'm not finishing it went on and I don't have a lot for you. Do you make money on the Lord and Taylor? We made a lot of money on

all the ventures that we did. I'll give you a little example in the end we sold the building on 5th Avenue to we work for 850 million dollars but before they finished the full transaction they had problems and I flipped the building to Amazon for $1.2 billion so we did you know we did very well in that one building and we had 48 other buildings some of which we sold for a hundred million dollars and 50 million dollars and we made money in all those years during the process so we did

very nicely any. I would say so but wait a minute because I know about that deal the you sold the

wasn't the sack the sack of the Lord never built it on 5th Avenue. That was the one okay so

that wasn't what year did that happen? That happened in 2000 and like 16. In 2016 you sold that building for a billion too. I sold the building for 850 to Adam Newman at we work at the closing Adam showed up $150 million short so he says to me I need you to give me a preferred equity investment of 150 so I go to my father and my partners and I say which should we do he doesn't

you'll take a piece of paper and even if he never pays you the money you still did better than

“what the building was worth. Wow okay. So then he closes on the building I have a”

$150 million preferred equity piece so when he had his problems he's a brilliant guy by the way whatever but when he had his problems I was in the mix because the old I was the preferred equity. So when it came time to making the deal with Amazon me along with a series of folks from we work helped get that deal done. Now the 150 was worth more because they sold the building for a billion to 52 to Amazon. Well by the way that buildings worth double today and Amazon killed

it made over a billion dollars on that one deal. Wow so then that's just that one building from Warren and Taylor right so how much overall cumulatively did you think you made from the Lord and Taylor did? We did just fine. Well no I want to give people something perfect. It's complicated.

“It doesn't mean exactly. We invested $25 million we got all our money back in 18 months”

and then we made a lot more. Well we talked so the whole deal was $1.2 back then. Right and we put

in $25 million in cash which we got back a year and a half later. The problem is we just kept I got my money

back. Now I just kept merging. I never put any more money in. Now we merged Lord and Taylor with Hudson Bay and now get to that okay so how are you finding these opportunities? Are you just doing knack for like forcing and finding these opportunities? Yes I have to do this because I get off my ass. I meet people. I talk to people. I am inquisitive. I learn and each of these companies I worked on for years and thought about it, put the pieces together and Hudson Bay was really poorly

operated in Canada and the Lord and Taylor team was strong so I was able to buy the Hudson Bay

“company and you and merge it with the Lord and Taylor company which was crazy merging a U.S.”

department store chain with the Canadian department store chain. How did you do that because Hudson Bay wasn't in the U.S. and how much did you buy Hudson Bay for? I bought Hudson Bay and closed on July 19th 2000 and 2008 right before the great financial crisis and I bought the company for one point

approximately 1.2 billion Canadian which was at part at the moment at that moment and the company

would have been bankrupt three months later with the pandemic but because we had the support of Lord and Taylor to help it get through that period we were able to get through the financial crisis. What happened was I took this company that they were running atrociously, I broke it up into pieces, I got great teams to run the Bay Department store, the Hudson Bay Department store, the sellers, the fields and the different operating companies that they had. When I bought the Hudson Bay

company they had over $7 billion in sales and 72,000 employees. So on July 19th I had created a new company called the Hudson Bay Trading Company which was a holding company to now own Lord and Taylor and the Hudson Bay Company. At that point I became what unfortunately is the last governor of the Hudson Bay Company which is the first governor was in 16, losing my mind. The 16, 16, 16, 62 was the first governor, continuously operated you learned in school, operating company and so now I was

the governor of the Hudson Bay Company. We had 80,000 employees at 42 years earlier and it was all screwed up and because this company was terribly run and now I merged it with the other companies. I took the top, merged the two companies of the top hundred executives. We exited 97 of the top hundred executives in the first 90 days. Just imagine that crazy thing and we brought in new people. We broke the company up into different pieces. We got it stable. We had a one guy by the

name of Don Watros who was our chief operating officer saved the company. He put us in a position from the closing in July to October of that year where he cut $500 million a year of operating expense out of the company. The good thing about buying really badly run companies is often there's a lot of savings you can make and he cut that and the company's ran better without that expense. So he got us through. Then a crazy thing happened. We got through the financial crisis.

Now it's early 2010 and yeah it's actually September of 2010 and I get a phone call from the

of Walmart Canada?" And I said, "Sure. I knew something was crazy because Walmart had never

come to visit me. You always went to Benville. They never came to visit you. And here they were coming to New York to visit me. So they came and they said, "Richard, we hear that you're negotiating

“a deal with targets to buy zellers." You remember zellers well. And zellers was like 400 stores”

of kind of like the Kmart of Canada and I said. It was the Kmart of Canada. So I said to them, "Well I can't really discuss that with you, but why would you want to you have all those stores?" What he said obtusely was we want to keep target out of Canada so we can own all of Canada and we'll take all the stores. So he said, "Well how much do you want for it?" I said,

"I would like $2.2 billion." So what are you talking about? You just bought the entire company.

This is the crap. You bought the entire company for $1.2 billion. Two years ago, how could you possibly want $2.2 billion for this? I said, "Well I'm not selling you an operating company. I'm selling you a platform of real estate." So even though zellers didn't own any real estate,

“they had lease control at very low rents because it had been so many years. So I was selling Walmart”

access to the zellers' leases and their average rent was $5 a foot. The market rent was $12 a foot, so if you took the $7 multiplied it by the square foot, used the 6% cap rate, it came to $2.2 billion. So he's like, "Well that's a lot of money." I said, "Think how much money you'll lose when Target comes to Canada and does $5 billion and takes away all your growth in Canada." I said, "Okay." So I said to him, "But I want you to know I'm going to have a process. There's going to be

Target and Walmart and there's going to be one point of contact me. No break, brokers, no intermediaries. I am going to talk to the head of mergers and acquisitions and the CEO of Walmart Canada and I'm going to talk to the guys at Target and there's no one in between us. And whoever comes in and signs a no-outs deal, hard deal for the highest dollar amount, gets it." Okay. So they leave and what do I do next? I pick up the phone and I call Target because I wasn't

working with Target and I get the head of real estate on the phone from Target and I say, "Scaught. If you guys ever want to come to Canada, this is your last chance because I have a buyer for

“sellers and it's a perfect fit for Target and you need to let me know whether you're interested."”

He said, "Okay. You know we've looked at it over the years. I don't know. I don't know. I said great. Call me back two days later and said the CEO of Target wants to meet with you. Can you come and see us tomorrow?" I said, "Yes. I flew to Minnesota, sat with the CEO and the CFO of Target and the head of real estate and they said, "We're interested in buying it but we want you to exclusively talk to us." I said, "I can't do that. I have another buyer but I will tell you everything I tell

them. It'll be an open process and if you want to do it then you'll do it." And they said, "Okay. We want you're these 50 stores. The best 50 stores at a 400 and we'll pay you $500 million." I said, "You're wasting your time. Forget about it. The businesses were $2.2 billion and I'm not selling you those stores for $500 million. Got on the plane, flew home." Then Walmart, Walmart, Walmart bid $800 million. Then a target came back and they bid a billion dollars and then Walmart

bid a billion too. Now it's Christmas time and I always thought I was going to make a deal with Walmart.

How could Walmart possibly let? I'm a Walmart guy. I knew everybody. How could this possibly go to Target? Now it's mid-December, about to go away for Christmas and I have a deal with Target for $1 billion, $850 million, not including the inventory. So that would basically be a $1 billion, $850 million profit after all the expenses and I shake hands with Target. Walmart is kind of not responding because I don't think they believed the number when I told it to them. I was dealing with the CEO

and CFO of Target and I was dealing with the second person at Mergers and Acquisition at Walmart. That's a lesson. So the people from Target say to me, "We're ready to get a purchase agreement done. I fly to Minnesota with my same one real estate lawyer and my operating guy." I get to Minnesota, the tire top floor of the Target's law firm, the entire management team of the Target Corporation is there. They have 20 different conference rooms with lawyers

all these different groups and we've spent four days, four and a half days negotiating a purchase agreement going from room to room to room, me and two guys and them with 50 people. And by Friday at noon, we had a completed purchase agreement and they had a board meeting at Target on Monday

for $2,900 million checks, wires, one on the day of closing in one 90 days later. And so I

fly back to my office. I'm in my office. It's Friday at 5 o'clock, the phone rings. My secretary

“comes in, back when that's how it worked. And I had the CEO of Walmart and the CEO of Walmart”

International on the phone they wanted to talk to me. So I'm like, all right, here it comes. They figured it out. By the way, they both have spies on each other's companies. You can't believe what really goes on. Really? For sure. So now they're like Richard, we understand you made a deal with targets for Canada, for sellers. They were so nice and so gracious. We screwed up. It's our fault, but you can't sell it to Target. We are going to send a team to Westchester to your office

and we'll get a purchase agreement signed by the end of the weekend and we'll pay you an extra $100 million. You're my guys. I can't believe we're sitting in this position, but I can't do it. And sometimes in life, you know, character and integrity, 100, I don't know what will happen if they said 200 million. But for 100 million, I was able to have character and integrity for $100 million. And I said, I'm sorry, I shook hands with the nice people from Minnesota and if their board

turns it down on Monday, I'll be back to you and we'll make whatever deal that you want to make, but I have to go with this deal. So they said, we understand, nowhere is, you know, sorry, we screwed up. They were really gracious. So by Monday, Target approved the deal. They signed the papers and they wired me $900 million in cash the next day. And my father who had been very

grumpy since writing his share of the $25 million check was all smiles. Never said another,

never said another aggravated thing to be again for the rest of his entire life. And everyone's very happy was a great win. And is that why, so this is you? And of course, then of course, you just can't make it up. Target thinks they're so smart. I told them they should come in incrementally and convert store by store and do it over time. And people, they were so arrogant. And they insisted on taking the Zellers name off of every building. They insisted on firing

30,000 Zellers employees. They wanted nothing to do with the word Zellers. By the way, I still own Zellers at that, they didn't even want the name Zellers. They wanted the leaseholds. And they screwed it up. So they came. They spent $5 billion converting everything and doing this. And within two years, they fired the CEO and they bankrupted Target Canada and closed the entire thing down. And Walmart ended up getting everything they wanted anyway. Oh, my God. I was going to

actually ask you a story ever. Okay, first of all, I was going to actually ask you about that because so you were the one to brought Target into Canada in the first place. That was a big deal. I remember us. One of the, one of the, one of the, one of the, one of the, one of the, we made a billion $850

“million dollars profit after having bought the company two years earlier. Because I remember that was”

such a massive like deal. Like in terms of not just a deal of money-wise, but like everyone was so excited. But Target, they were coming in. And it was expensive, by the way, when they brought their, when they brought Target in. So, and Walmart is like the, it is so prevalent in Canada. So that was you. That was all me. That was all me. And you, I understand, are from Winnipeg. You know how many times I was in Winnipeg? Yes. I have a lot of friends in Winnipeg. You do?

I do because the people from Winnipeg say that everything in Canada revolves around Winnipeg.

So Winnipeg is the center of Canada. And you never would, as an American, I never would have

believed it. But I kept finding myself in Winnipeg right up until- Oh, I'm never heard that in my life. Right about right up until the pandemic, when I got a call from a grand chief Jerry Daniels, the chief, the, the, the, the grand chief of the first nations people based in Winnipeg. Yes. So, he came to visit me and I gifted on behalf of the Hudson Bay Company, the Hudson Bay store in downtown Winnipeg, that big building, which is now under construction

“to be a spectacular new First Nations building. I thought that's what you're talking about.”

The poor, um, poor decision meeting or whatever. Oh, my God. But that's crazy. I can't believe you think

myself there. There's, there's something about the business and, you know, there's a lot of, there's a lot of agricultural wealth and, you know, natural resources and trains and things that go through, uh, Winnipeg. And anyway, I used to be, I mean, it was quite a quite an impressive city at one point, a long time ago. Well, well, well, before you're, uh, your grandparents. Okay. Well, yes. But I mean, a lot of great people come from Winnipeg. A lot of like smart, successful people.

I'm not just saying that, but it's true. But I live in a small place. Yeah. Well, they lived in Toronto for many years. But, and my sister and my mom now live Montreal. But that's, we need to hear it over there. So, that's really interesting. I, I hope, when the Canadians listen to this part, I'm going to actually clip this part for all the Canadians because this is really interesting because this is a massive thing back then. And then winners, you remember Winnipeg? Yes, of course. Winnipeg.

Winnipeg is part of what ate up the Hudson Bay business over time. Really? Yeah. So, Winnipeg is owned by T.J. Max of course. Of course. And they do very well in Canada. And now the, the, I had nothing

to do with Winnipeg. They're the very dominant retailer in Canada. And you were never involved

with hope run for you. Never involved with hope run for you. Okay. It has there, what has there been

“a deal that you passed up that you regret that you should have actually done? So, I'm really”

like a stalker. So, I, in 2005, I wrote a memo to my team, my little team. And I said that we should buy, Lord and Taylor, the Hudson Bay Company, Galleria, Kauf often, Germany, sacks with Avenue and Neiman Marcus. And we bought, that was in 2005, I was 39 or whatever I was. And we bought all five of those companies. Took me, Neiman Marcus, it took over 20 years to get them all done. But we had a plan. So, entrepreneurs, as you know, we're not fly by night people, we're very thoughtful

and tactical and have long-range plans. And we know what we're doing. And, um, not always, but some

are. And, um, I think sometimes people think that entrepreneurs are a little flighty and one day they're this and one day they're that, I listen to your recent podcast on entrepreneurs. And I took a little offense. Which one did you listen to? I have a lot on entrepreneurs. The one, just a couple days ago, what was it? Yeah, you kind of were bashing, you were bashing the, not real on entrepreneurs. Oh, I mean, the solo after so. Okay, that's time to talk. Yeah. Yes, time and long. So,

“I listen to that. So, I think one of the great things about the United States is this wave of”

entrepreneurs, um, that's going on, that's exploding. And, um, in other places like Europe or in Asia, they don't have this culture of, uh, entrepreneurship. They rely on the government to take care of them, where they rely on big companies to take care of them. And in the United States, we talk a lot about this philosophy of being a, uh, a zoo bear or a jungle bear. A zoo bear is someone who may be, uh, works at Goldman Sachs and they go in the morning and they get a little pellet at lunchtime

and maybe in the afternoon, they do a little dance and get a tap on the head and then they go home. A jungle bear is an entrepreneur and they eat what they kill. And if they don't kill anything, they die. And so, any person who can figure out how to feed themselves by doing whatever it is that they have to do, I personally, uh, reward them with the entrepreneur banner. And if you're an Uber driver and you do, and you sell bagels on the side and you, uh, and you, uh, you know, uh,

make jewelry for your sister-in-law, you're an entrepreneur. And, uh, what's going to happen in this country with AI and the change of, uh, what's going to happen in these corporations, people are going to need to take care of themselves in a much larger way than we historically have done. And it's going to be okay. And it's going to work and people are going to figure it out. Let me take a quick break to tell you about something that has genuinely changed how I

performed throughout the day. For years, I just assumed that my mental sharpness had a ceiling. That by mid-afternoon, I was running on fumes, slower to think harder to focus, and even a little

more irritable than I wanted to be. And I never really thought this supplement was going to change that.

“But I was wrong. Since I started taking magic mind every morning, I think more clearly, I focused”

longer, and I much more productive in the afternoon than I used to be. And that actually surprised me. Magic mind is this daily two-ounce shot that gives you a sharp reminder and sustained energy. It's built with clinically backed ingredients, like Lyons, Maine, Ashwaganda, Tumark, Machia, developed over 10 years of research. This formula is now encapsulated,

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“that you need to know of how confident they are. You can also find magic mind and stores near you”

through their store-lake locator on magic mind. And I was a little skeptical too, but now, I notice when I don't take it. And that's the only proof I need. So, don't forget to check out magicmind.com to find out the stores near you and get 50% off your first order out of course, magicmind.com. Now, I want to get back to a couple of questions that you said that we didn't kind of circle back to.

The one is that when you're making the deal between Walmart and Target, one crucial point

that people may be not think about who they're actually dealing with. The difference between dealing with the CEO versus the second in command or can you kind of just expand on that whole thing? So, whenever you can deal with the decision maker, that is the way to go. And we all know that. And in this case, this was really important and a big deal for Target. And so, the CEO and the CEO themselves were involved. While it was a big, important deal for Walmart, there's such a big

company that they kind of handed it down a little bit. And they kind of lost a little moment there because they weren't as on the balls they should have been. Can you give people some advice or somehow, like, how does that happen? Every time you can maneuver your way to get to the boss, maneuver to the boss without insulting the other people in the food chain. So, that's the problem. How do you maneuver to the top of the pyramid and not

if insult or offend somebody? That's a very tricky game. Okay. So, first of all, we talk about principles. One of the key principles is relationships. So, you want to spend time and have relationships in meet people and then you have friends. And the friends have friends. And, you know, I'm working on something in a friend of mine called the boss of this other company and I started right at the top. So, you use your relationships, the best you can to get yourself to the top of the

house. How much would you say of your success has been timing versus skill? Okay. People always say to me,

"Oh, you're so lucky. How did you get that done? And how did you get that done?" The answer is, I manufacture my own luck. And, because I work harder, I'm more prepared, and I make it happen. I'll give you an example. So, if you have little kids and you go out, watch some play soccer, they're all running chasing after the ball. But there's always one kid who always ends up with the ball and makes the goal. That kid understands where the ball's going, not where the ball is. And so,

“if you want to be successful, you have to be a little more strategic and understand where the”

world's going. So, when the ball pops out, you're the one who got the ball and you make the goal. And I spend a lot of time thinking about the world being strategic and understanding. So, that I'm in the right place when it happens. This boom that you're on with entrepreneurs and this energy and all the things that you're talking about, you're of the moment. You were in the right place at the right time. This is going to explode. 10 times. You think it's bigger ready. Entrepreneurs,

entrepreneurs are going to be 10x. What it is that's going on now. And who's talking to them and who you think in your space? Oh, there's lots of people. There's not. And if you look at our entire educational system from kindergarten to graduate school, the amount of programs, the amount of discussions on how to be an entrepreneur is infinitesimal, unbelievably small. So, the people who are going to be able to coach and show people the road on how they can be successful being entrepreneurs.

“I think it's a big opportunity. And that's part of what I'm trying to do is help people. I've”

always been interested in helping and, you know, I've worked with Cornell for over 20 years.

My wife and I support their Baker program in real estate, which is a two-year masters. And I've spent 20 years going up there teaching people and talking about how to be a real estate entrepreneur. And I think there's more efficient ways to do it. People like you can tell the message and tell lead people to what they need to do, how they need to think about becoming an entrepreneur. Because what's going to happen is every company that has 200 vice presidents, guess what?

They're going to fire right now, half 100 of those vice presidents. What are going to happen

The rest of them are going to be like, "I need to figure this out." And there's no job for them.

So, what are they going to do? They're going to become entrepreneurs. And if they're newscasters for CBS, they're going to create podcasts. And they're going to create their own way of talking to people. If they're in the architecture space, they're going to go steal one of the clients from their firm and have one client and make enough money for that one firm, that one decision rather than being an employee for the architecture firm. So, there's going to be an explosion of entrepreneurs

in this country. And the productivity in this country is going to go through the roof because using Claude as an entrepreneur is unbelievable. I spend two hours every single morning talking to Claude and plotting and working and figuring stuff out. And that's where the world's going.

So, can you talk about this AI for a second? Because that is where the world is going.

“But because of that, there's also this going to, I think that you can obviously chime in,”

that there'll be a need for human connection. Like you've made your entire, your whole business was based around getting like showing up in person, like going, talking, not just texting, and not just standing some memo through email. You were very much face to face. Like, that's your personality. That's my personality, by the way, too. We're losing that more or more or more. We're not losing it. People like us that can do that. People like the folks that are

paying attention and following you, they have that. Now, instead of having 10 people who are the dead weight, building all of the processes and things that needed to be done, so that the sort of the entrepreneur could execute. Now, a good part of that could be done with the help of Claude. Yes. Okay. So, when you see you do two hours with Claude, your favorite. Why are you using Claude? Okay. So, Claude, good for versus the other ones. I don't know. So, look, I have many, many

folks that work for me. It all started with me saying, ask, chat, GBT, ask Claude, and then I got frustrated with having to ask them to ask Claude, and someone took 10 minutes and showed me how to do it myself, which, of course, allowed us to build this unbelievable relationship. Now, Claude knows everything in the world. There is about me and how I'm thinking, what deals I'm working on and all of that, so that it's very responsive. And it turns out that I spent my whole life prompting.

“So, the key to the AI is prompting. Well, I used to say to Ryan, Ryan, what if we did this and”

did it this way, did it this way? He'd come back and say, I'll let you know in three weeks when I figure it out. Now, I prompt Claude and Claude comes back to me over 10 minutes and lays it out and helps me think through it. So, then what I do now is I take, I build two, three, four Claude memos a morning and then I send the Claude memos to my team members and say, what do you think of this? How can we execute this? So, now, the productivity I'm getting is mind boggling just from

February to today, the level of advancement in this AI offerings for people like me has been incredible.

Is Ryan going to have no job pretty soon? No, Ryan's going to have a job, but I won't need three Ryan's. Yeah, and I'm going to need one Ryan. So, we're so special about Ryan because you stole them from someone else. What did he have? I'm still Ryan. I built Ryan with Ryan's great help

“and Ryan and I are partners, but Ryan knows exactly how I think and you could go take Ryan in another”

room and ask him any question you asked me and he can answer exactly the same way I kept. In fact, Ryan built an AI Richard, you can go on our website, Bakerhouse1921.com and you can click on a button that says AS Richard and they have an AI version of me where they scraped all my plot, all my emails, all my Instagram and you can ask it real estate questions and an answer is just like me, looks like me, talks like me. Ryan did this. Yeah. So, how did you find Ryan? So,

can I get a Ryan? Cause I think I need a Ryan. Ryan, do you have another one? We could build a AI Ryan. So, Ryan worked on our team at Sachs with Avenue was very talented and when we decided to do this project, we brought Ryan into to lead the content piece. So, you're doing all content Ryan, right? Okay. But you told me before you went to Princeton for architectures at what happened and now you're like, you guys working on it? We live in a world where we're all reinventing ourselves,

right? The world keeps changing and I was a real estate guy then I was an operating company guy then I was a digital guy and I'm a deal guy and right now I'm an advocate for entrepreneurs and I want to teach the world and help people be successful and take care of themselves because in the end when they put you in the ground, it's not going to say he made this great deal in the

in February and Costa Rica to rethink and reimagine where the world was going. Were you at

re-center? You know what? I'm Ben. You know, yeah, I wasn't there but I met Ben.

“They, oh my gosh. So, someone we work with is very, is an investor for an end. Did you like it?”

Yeah, I was supposed to go there. I liked it. I thought it was great and so I was, I was, I rented a house on the beach near there and I met Ben. This was a Santa Santa Teresa. Yes. And we're apparently everyone goes for reset. Yeah. Yeah. Yeah. Yeah. Yeah. It's a world of broken toys on the beach. Exactly. It's all the broken toys are hanging out so we all, so I had 80 people coming and going for a month to come and visit and say hello. I have had probably over a hundred thousand

folks that have worked for me over the last 20 years and I can call on almost any one of them today and they meet me, talk to me, spend time with me, help me and because we had that kind of

relationship with all these folks and I'm a builder of people and that's amazing. And yeah,

“so it's good. So this is my next stage in life. How can I be more helpful to help people transition”

into where the world's going? And how are you going to be more helpful? I'm going to teach people and give as much knowledge as I can and be as helpful as I can to folks who want to be entrepreneurs. And so far we have a free summer internship. We have been doing free boot camps. We're going to have boot camps starting this fall that are sponsored by cone resonate and Wilkie Far and we're going to be charging people for those boot camps. And we're going to create an ecosystem where entrepreneurs

can get together and be comfortable. We're launching at Cornell, which is really exceptional,

a living learning community. So I bought a Greek revival mansion on Cornell's campus and we're

turning it into a private club for entrepreneurs and it's going to have tremendous content and

“activities and it's going to have women and wage grant like, so Baker House is going to be located”

at Cornell's campus. It's for Cornell students, undergraduate and graduate students. They can join this club. They can work at a 500 beds a housing in addition to the club. You can be a resident member or a non-resident member and you'll have to go through the Baker House boot camp sort of like initiation and then you'll be an entrepreneur and be able to live and have this experience. And we'll have all kinds of content and activities, a gym, a Nordic spa, but what's really cool

is I'm also building a craft center. I did a lot of research and what I found is that a large number of very successful entrepreneurs and scientists were crafters, painters, sculptors, ceramics, cooking and there's something about that creative and hands-on activities that generate our best scientists and our best entrepreneurs. So it was part of this experience at Cornell, we're going to bring I'm doing an entire building for crafting. It's going to be very cool all.

So I had so much interest in all of this outside of Cornell that we've decided to build and offer this Baker House boot camp, which as I said, we're going to do long we're doing eight two-day Baker House boot camps this fall in New York City. So I don't know, we're going to create a community from the ground up. Yeah, so it's going to be fun. So the ones that you're doing in, like, it's an eight-two-day one. Yes. Where are they going to be? They're going to be in Manhattan,

across from Carnegie Hall in a, in the cone-resonix event center and they're sponsoring it along with Wilkie Far another law firm. We've other people talking to us about how to get involved. So we'll see where it all goes. But, um, like, who is going now? Like, who? Okay, so let's talk about that. So the people that are excited about the Baker House boot camp are young entrepreneurs, people who want to change careers, veterans, very big group, retirees, white women,

black women, who want to be entrepreneurs and they want to take control of their own life. They are tired of living in a world where one, there isn't a job they can have that properly rewards them, big problem, where they're working somewhere for a bunch of jerk-offs and they can't be successful and express themselves. One of the things that's most shocking to me is the low percentage of women, real estate entrepreneurs. I can't quite understand why women are the most

perfect natural folks to be real estate entrepreneurs. They are used to running a household and running a complex family situation. They know how to fix things. They know how to actually do it.

You're forgetting agents. I'm not talking about real estate agents. What percentage of real estate

“entrepreneurs do you think are women versus men? Okay. Like the barber conference of the”

world? Barber conference of broker and I don't count that. Okay. So give me an example who you would count? Yeah. You can be an example of anyone who buys and sells properties and buys them and rents them out and owns them. Think of all these buildings in Beverly Hills. I know many commercial. I know a lot that maybe flip homes and then sell those. That doesn't count. That counts. But that counts. It's a small number. We're not sure the number. We think it's about

10 to 20 percent of real estate entrepreneurs are women. Why are you a broker? Yes. You have started a brokerage firm. She's an entrepreneur and, you know, but for brokers. So which is great. brokers are great. No, that was she was residential broker. By the way, residential and commercial brokers can easily become real estate entrepreneurs and buy their own and own their own properties. We spend a lot of time teaching people how with very little to no money they can own properties.

“That is a magical. You should come. You're invited. We're doing a Joe dissenter from Spartan”

races. Dremth is idea up. I never, why is it called boot camp? Because Joe made it up. Joe made it up.

So Joe sponsored the first Baker house boot camp, which is this weekend, June 26th, 2728. In Vermont, we are over subscribed. We have 50 people showing up. He's joking. I made people like carry up pills of water. Well, this is good. Yes. While this is going on, Joe is running a death race. Yeah. Oh, my gosh. I get it. No one. My people aren't doing that. My people are getting wine, cheese and food. And mine's going to be very civilized. But in the background is going to be Joe's

death race. Yeah. And that's the opportunity. But the opportunity for women to become real estate entrepreneurs. This is the single best time in history for that to happen. Okay. So then that's that's a good segue into my next question. When you look at the real estate market today, where is the opportunity that most people are actually missing? Yeah. Okay. There's a huge opportunity for real estate entrepreneurs. In think of, we were just walking around the outskirts of

a rodeo today. You know, all those little buildings in the side streets, and they have like a restaurant or retail, and they have office or apartments upstairs, the United States, millions of those. Who owns those buildings? And I don't own by Blackstone and Voroneto. They're owned by your uncle and your, you know, older folks and they over the history and they used to have their jewelry store down there. Yeah. Yeah. And okay. What's happening is there's an entire generation of people

that's going to pass away in this passing away. And those properties, there are states going to get a stepped up value. So they don't have to pay the tax because when they die, they get a stepped up value. So the estates of those folks are going to sell those properties because there won't be a tax disadvantage to sell them. And they don't want to own them. They don't want to own them. Oh, that was Dad's hardware store. Now I live in, you know, Bramuda and I don't care about

Winnipeg or whatever it is. And the local people in Beverly Hills and Winnipeg or whatever it is are going to be able to buy those properties. They're going to retent them and put a Pilate Studio and a restaurant and they're going to make the apartments cooler by putting in a cold plunge and a sauna and the basement and they're going to be able to get a traditional financing and be very tax efficient. They're going to be real estate professionals. They're going to get bonus depreciation

and there's going to be endless amounts of excellent investments for real estate entrepreneurs. And they're not going to be competing with Blackstone and people like that because they don't want

“those assets and that's what's going to happen. So yeah, I think there's so much to learn by this”

because I think that if you're not, it's a, it feels complicated. Is it? It's, it feels complicated but it's not. And in two days, I said people down and I give them examples. Tell them how to do it.

The other thing that's really cool about our bootcamp is we match people up in groups. So in the first

morning, we put together maybe a person who has a large bank account and maybe a person who's really good at running numbers and maybe someone who's a personality deal person and we put them into groups and then we have them work for the two days as a group and one of the things we talk about is learning how to have the right partner. The right partner is not someone that looks just like you, the right partner is someone who complements you and has skills that go with your skill set.

I think that's, so that is, that's the name of the game, right? Not everyone has to be the same and it end up like a lot of times things fail because you, you want to mirror the person that

like you don't balance each other out. I want to come and do this thing. You should do it.

Let's pick a date. I should. I should go do it. I love to have you and you can come on. Let's find a day in New York in the fall and then we can do, we'll build into it a segment where you and I can speak together. Yeah, because I think people, I think this is actually a really interesting opportunity for people because I think that people don't know what they don't know, right? And so they fall into these positions, like they're selling the course on social media,

that seems like a much more lower barrier entry. But this is, this is very engaging in everyone says to me, do it online to, I'm like, forget that. The whole point is, let's get off your ass and go somewhere and learn and this is not as profitable, not as efficient,

“but if you want to learn how to be a real estate entrepreneur, this is the best way in two days,”

very economically. You can learn all the tools. You can meet people. Then what we're going to do is we're creating a community online. So starting this Wednesday, we're launching something called office hours with me. And I'm going on and for an hour or two hours, whatever it takes. We're, we're going. Okay, all you need to do is go on our website,

a bakerhouse, 1921.com, and you can sign up for free to go on our office hours. It's incredible.

You can ask me or my team members questions. And you can listen to other people's questions. The not, nobody costs to talk to your lawyer. You have a real estate lawyer. You're real estate lawyer costs a thousand dollars an hour. And we're going to have people far better than that that you can talk to and ask questions. More importantly, you can hear or the people don't

“earn $2,000 an hour by the way, go ahead. Yeah. So anyway, we're, we're just trying to be helpful,”

have fun, create a community. We, we're, there's nothing like this in the world. This is a Cornell-based program that's authenticated by Cornell University. I'm teaching at a Cornell. We have a club, a complex, at Cornell University. And we are opening this up to people, anyone in the world who wants to learn about being an entrepreneur. And we're going to create communities so people can work together in order to, you know, be successful. I love that. Okay,

thank you for that. I have a couple more questions. Okay, and even Mark is acquisition. We're going

to talk about that. It closed for $2.7 billion. How did you, like, again, evaluate, like,

value something that's actually struggling? That's the big question. Okay. So I owned sacks. And how did you buy sacks for? I bought sacks for $1.3, I'm sorry, $2.6 billion in, in 2013. 2013. Before you even tell me about Neiman's, is that like a flailing, like this brick and mortar in general, isn't that like a, like a flailing business? Okay. There are industries in the United States that have tremendous headwinds. And there's rational reasons and irrational reasons,

whether it's media companies, magazine companies, retail, all kinds of businesses, tremendous headwinds. And many of them aren't going to make it. And they're going to be reorganized. So in 2013, when I bought sacks, I had a plant. The plan was immediately to roll up Barney sacks, Neiman's in Bergdorf, Goodman into one company in 2013, not wait a decade to get there. Unfortunately, through a whole variety of reasons, it took me a lot longer to get to where I

needed to go. During the process, Neiman Marcus went bankrupt during the pandemic. So that created a lot of problems. And just for people who don't know, why do people, why would somebody

“go into bankruptcy on purpose? Can you explain that? I think it's important. Yes. We went into”

bankruptcy in January, it's tax global after having merged Neiman sacks and Bergdorf together. We went in in order to protect the business and the vendor. How do you protect the business? Um, vendors were concerned about the financial condition of the company. So they were concerned to ship goods. So if we hadn't gone bankrupt and they didn't ship the goods, the company could have gotten liquidated, which would have been disastrous. So in order to be careful and protect

the business from getting liquidated, we filed for bankruptcy early enough that there were still assets and inventory and things. And now the company is getting reorganized by very capable people and is coming out of bankruptcy in the next week. And we'll be around for a long time and a much better financial condition. So it's actually can benefit the company because it saves the company. Yes. In this particular case, the goal was to bring Bergdorf's demon sacks and the

Barney's IP together in one company and say huge amounts of expense by instead of having two marketing teams and two IT teams and it was all going to be on one set of systems. Those synergies

were making an EBITDA. So that's enough to save those companies. So I'm very disappointed that the company went bankrupt, but I'm thrilled that we got all the companies together before they fell apart. Do you use money on that? I lost a lot of equity going forward that I would have had.

How much equity would you have had? Oh, a lot. Like how much 80 percent? Oh, I probably lost a half

a billion dollars. And then what, so, but I made it, you know, I did the right thing, for the, I did the right thing, for the vendors, I did the right thing, for the employees of the company. And I'm very satisfied that this will be a strong, high quality company going forward. And I'll just have to figure

“out how to make more money doing something else. I was going to say, what are you going to do now?”

Are you poor? Do you need a loan for me? Well, I'm going to, you know, walk my way back to the bus station and, you know, take the greyhound back to New York after this. So I'm just fine. You don't have to worry about me. I'm not, I trust me. I'm not worried. I'm just fine. I have, I have a very nice business with my son and I'm a nice family business and we have a good time and we do healthy things that are good. Okay, wait, so tell me something. So like, let's, let's get back to the

Neiman, but deal. But does that mean is your son working with you? Is that what you said? Your, my son,

Jack runs our family real estate business. So we own 10 million square feet of Walmart anchored

and other anchored shelves. My son is 29 years old, very capable, very disciplined. He runs the real estate business. We also have a private equity business. He runs the private equity business. How big is the private equity business? Private equity business is a small boutique family office business. Okay, for how much? A lot. Like, I was talking to 100 million, 200 million, a billion, two billion, six billion. If we add it up the volume of all of our operating

businesses, it's, you know, over two billion dollars. Okay. And so is your son as driven and ambitious as you? My son is, my son is very thoughtful, very smart, very capable. People often think

“he's a lot like me, but the truth is he's a lot more like his mom, who's much more buttoned up,”

much more focused. And, but he has a very good mix of his, his grandparents, his mother and his father. Do you have another child? I have an older son who's an artist. He's an abstract oil painter, went to the Royal College of Art in London. And I have a daughter who's getting a degree in forensic psychology at John Jay in New York. They're both of them are not involved in this. Nope. Okay. So let's get to Neem and Marcus. So how did that? So what, what, how did that come to be?

You had these five companies that you wanted to get and you got them all. I, I worked for over a decade to buy Neem and Marcus. And why? Why? Why were you so obsessed with that one? Because merging it with SACs created the $600 million of synergies. So if you wanted to save the luxury multi-brand category in the United States and the put them all together, they in work, competing with each other. How come? Because there's just, just wasn't enough,

margin in selling other people's goods to support the kind of service level that people expected.

“What was the difference between the two of them? Like, I, I, I, I much, I much, that's why it was stuff.”

That's why it was so much synergies because the same person who bought, you know, handbags could buy handbags for Neem and SACs and Burger. Yeah, they're very interesting. But Burger felt more, it felt special and more elevated and they still have a separate team. But there's a lot of, a lot of, of economies of scale putting all these businesses together. Like, what about Harris? Where is that fallen to the whole, like, Harris is not in the U.S.

Yeah. It's a whole different ball game. Yeah. But you never tried to buy Harris.

Wasn't interested in buying Harris was on my list. Wasn't on your list. And we were just interested in cleaning up what was going on in the United States. And I feel very comfortable that we accomplished our goal. Right. I won't make as much money as I would have, we had not gone bankrupt, but I still feel good that we put it all together and did the right thing. Okay. So now, so the Neem and Deal happened, like, what we're, the kind of, you know, to do it.

And raise eight billion dollars last year to merge Lord and to merge SACs with Avenue and Emen Marcus together, it took eight billion dollars of capital, which we raised. It was very difficult transaction to get done. Eight billion. Eight billion dollars. And so all that money now, you lost the five pieces. We didn't lose the money and get lost. The money was, the money was used to refinance the business. The, the business going forward

it's going to be profitable. And the money that got lost was the equity. Yeah. That was, that was put in the company. So that's my loss and other people's loss. And, you know,

that you can give someone who's just starting out right now. Okay. First one is kind of similar to

“your, your philosophy is you have to have courage. I call it courage. You call it being bold. Yeah.”

And I spend a lot of time now with young entrepreneurs, young real estate entrepreneurs, and biggest problem they have is pulling the trigger. They can't pull the trigger. And, um, and I want to be the one to hold their head under water to pull the trigger, but having courage and being bold. Now, how do you have courage and be bold? My philosophy is you need to do investments that require no money. Easier to be bold and, and courageous

when you're not going to lose any money. So I beg people, please do not borrow money from your in laws and your friends and do not invest your money, figure out how to make money with no money. And it can be done. It can be done day in and day out. And, or a little bit of money, money that you can afford. That's the trick to having the courage and being bold to make it the lab. Two other ones. Give me two other lessons. Two other lessons. To say again, sorry.

Okay, I wanted three lessons that you would need to be successful as an entrepreneur. Okay, so you got to work harder than everyone else and have tremendous energy and be focused. It doesn't just sound a hobby. It doesn't just happen. You got to work hard. How important do you think like ability is? It's an interesting question. I think it's certainly a thing. And, um, I rely on it. I'm a likable person and it works. There are, I know other people who were like trying to

jerk off and they still are successful. So, you know, being smart, being clever, being capable, those who are very important features. And if you have all those features, maybe being personable

is an as important. But I always coach people to be social and be the personable and that's an

“easier way of going. I think it's very important. See, I always talk about the fact that I believe”

there's so, there's these underrated skill sets that are actually much more foundationally important for business than, like, the over at once, right? Like, just because you have a, because you're going to Princeton or Harvard, you could be academically super smart, but not have any street smarts or not be very likable. And so, there's all this data and research that I've seen in just my own experiences and talking to a lot of people who do it, you know, very successful, who have been very successful.

I've noticed that the people who raise the most money, it's because they're the most likable, the people who get the most opportunities because they're the most likable, because people want to work with people they like, not just people who are competent, right? Like, I think there's a lot of these, like, very, these nuanced details, like, devils in the details, they're very important. You write, you are likable. You're very affable, you got a lot of levity. It would make someone

rather be with you than some stick in the mud who's just extremely number oriented, right? So, yes, but it's kind of a scary concept because in the end, if you're going to be an investor, or you're going to work with someone, you want someone who's going to share, who's going to perform at the highest level, and you want someone who's competent. But we talk a lot about relationships, business is all about relationships. So, if you're, if you're not personable, then you can't have

relationships. So, I would spin what you're saying, slightly different, and I would say relationships

“are super important, and you need to go out of your way to make relationships and work with people.”

By the way, that's not being an opportunist and searching of that person that happens to be the one person that's going to help you. My wife and I have a philosophy, we wake up every day, and we try to just do the right thing. And we just help anyone that we can help, and it is the most magical win. I hope someone that just was a random person, or whatever. Next thing I know, that person knew someone that I was working on a deal, and if everyone just woke up every day,

and did the right thing, it is that is the way to be the biggest opportunist. It will come back

to you in a thousand ways. You and I are very similar. We think similar. I always say that the

people that help you the most in life are the people you least expect. So, you've got to be nice to everybody, and always, you know, always start with how you can be helpful to them. Which comes back to where you started. If you're a person that likes people, and is a nice person, good things happen. I also think being very curious is the gateway to opportunity. Because if you're curious, that's when you figure out and find these opportunities that you otherwise never would.

So, what I say to always is that if you're a curiosity on a scale of one to ten is a two, get it to a five. You don't have to be ten, and if not everyone's going to be like me or you, who are like super curious and want to know, or me. I'm super curious and want to know everything. But if you're someone who's like, don't care at all, that's a big, big no-no.

I'm very enamored with people who are creative now. So, we used to be a little bit like,

oh, they're going to be a musician or an artist or they studied the arts and school or whatever, and society was a little bit like, you know, what are they going to do? How are they going to support themselves? Well, in this new world, it used to be really important to be super smart, no-lots of stuff. Well, smart is now becoming a commodity. I have clawed in my pocket. I can ask to claw anything. So, the real power going forward is going to be creativity. People who think

differently, people who see different people who are inquisitive, that is the power going forward. And when I talk about entrepreneurship, I have now opened up the dial to include

“artistic and artists. That's why we're doing this craft center as part of our mission, and creatives”

are, this is going to be the revenge of the creatives in the next stage of the world. I love that. I think that's a, that's such a great perspective, actually, because you're right, because anybody can now with, with clawed in chat, GPT, everyone, you have smart in your pocket. So, what are you going to do differently? I also think the other, just to add one more thing,

“I think empathy is very important for this exact same reason. Compassions are really important”

for these same reasons. Anything that gives you a human touch point that you can't find on a computer AI is the next level. So, with that being said, Richard, I thank you so much for being on this show.

It's been a long time. I think it's been like almost two hours. So, you did, for your first podcast,

you did fantastic. This is so much fun. Thank you for having me. You were an excellent guest.

“I've, honestly, I've learned so much from you. I'm not just saying that to be polite,”

because you're on this show. I'm serious. You gave a lot of great information and you're a great storyteller. And that's another one very important. I do. Somebody listen to my left. Yeah, that's great. And so, for anybody who wants to know more about what Richard is doing and bringing to the world of entrepreneurship, you can follow him or go check out his website at

Okay, well, first of all, I'm on Instagram on my speaker. I'm your schooler house 1921. And

you go to our website, Bakerhouse1921.com. I love that. Thank you so much. For being on the show. And thank you all for listening. And goodbye.