How did Donald Trump Become a Billionaire?
Well, for starters it helps to pick the right father. By the time The Donald had finished college and was ready to follow in his father's footsteps, Fred Trump was already worth over $150 million. If we adjust those mid-1970s numbers for inflation Trump Sr. was worth close to half a billion in today's money. That's not a bad way to start your career.
Despite all the advantages that came with being Fred Trump's boy The Donald had a rough go of it initially. His biggest problems came in the casino business when he attempted to play against the big boys of Las Vegas which included TV talk show host Merv Griffin. Trump got slapped around quite badly for a few years and became a joke in Sin City. However, when you're a real life Richie Rich you can afford to be a slow learner.
Ever the self-promoter, Trump saw no reason not to write a book about his deal-making brilliance titled The Art of the Deal. Humiliations at the hands of other casino and hotel owners be damned! Here are some quotes from the book on how he started to become a billionaire:
"My style of deal-making is quite simple and straightforward," he writes. "I aim very high, and then I just keep pushing and pushing to get what I'm after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want."
"Most people think small, because most people are afraid of success, afraid of making decisions, afraid of winning," he writes. "And that gives people like me a great advantage."
Protect the downside and the upside will take care of itself.
Trump decided that he'd rather own casinos than be a gambler himself. He viewed gamblers with contempt as suckers.
"I always go into the deal anticipating the worst," he writes. "If you plan for the worst — if you can live with the worst — the good will always take care of itself."
"The only time in my life I didn't follow that rule was with the USFL [the defunct United States Football League]. I bought a losing team in a losing league on a long shot. It almost worked, through our antitrust suit, but when it didn't, I had no fallback. The point is that you can't be too greedy."
He advises only going into deals if you can afford to recover if things go south.
"I never get too attached to one deal or one approach," Trump writes. "For starters, I keep a lot of balls in the air, because most deals fall out, no matter how promising they seem at first. 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, even to the best-laid plans."
Know your market.
Trump admits to preferring his own research rather than relying on the opinions of consultants and outside experts. He makes it a habit to collect as many opinions as possible about a potential real estate deal before committing to it.
"Trump Tower is a building the critics were skeptical about before it was built, but which the public obviously liked," he writes. "I'm not talking about the sort of person who inherited money 175 years ago and lives on 84th Street and Park Avenue. I'm talking about the wealthy Italian with the beautiful wife and the red Ferrari. Those people — the audience I was after — came to Trump Tower in droves."
Enhance your location.
Trump disagrees that location is everything in real estate.
"You can take a mediocre location and turn it into something considerably better just by attracting the right people," he writes, explaining that this is what he did with the Trump Plaza location in New York City's Upper East Side. He took the glamour of his Fifth Avenue location, where it wasn't hard to sell luxury, and used its name brand to sell apartments to the same audience in a much less glamorous location.
Trump's point is that rather than overpay for something that is already established, you have the option to acquire something cheaper that has the potential to be improved,
Use your leverage.
According to Trump the only way you're going to get the deal you want is if you come from a position of strength and can bluff the other side into thinking that you have something they need. As a result, he's not afraid to blur reality to gain leverage. "When the board of Holiday Inn was considering whether to enter into a partnership with me in Atlantic City, they were attracted to my site because they believed my construction was farther along than that of any other potential partner."
"In reality," he writes, "I wasn't that far along, but I did everything I could, short of going to work at the site myself, to assure them that my casino was practically finished. My leverage came from confirming an impression they were already predisposed to believe."
Get the word out.
Once you've made a deal, the only way to ensure that it's going to be worth something is by attracting customers. Trump also believes in creating a public persona to help you squeeze the most out of deals. Trump loves to stir up controversy to grab the media's interest.
"I play to people's fantasies," he writes. "People may not always think big themselves, but they can still get very excited by those who do. That's why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular."
"You can't con people, at least not for long," Trump confesses. "You can create excitement, you can do wonderful promotion, and get all kinds of press, and you can throw in a little hyperbole. But if you can't deliver the goods, people will eventually catch on."
"The risk is that you'll make a bad situation worse, and I certainly don't recommend this approach to everyone," he writes. "But my experience is that if you're fighting for something you believe in — even if it means alienating some people along the way — things usually work out for the best in the end."
Ultimately deal-making should be about the thrill of winning and accomplishing something, not solely for making money, Trump says.
"Money was never a big motivation for me, except as a way to keep score," he writes. "The real excitement is playing the game."