Sam Zell passed away last year. The week he died, I researched him and learned that he was known as the real estate investor and deal maker who sold Equity Office REIT to Blackstone in 2007 for $39 billion. I purchased his autobiography. After having read the biographies of Summer Redstone and Wayne Huizenga, I wanted to learn more about deal-making entrepreneurs. I began reading Zell’s autobiography Am I Being Too Subtle?: Straight Talk from a Business Rebel.

Sam grew up in an upper-middle-class family in Chicago, but his home environment reflected his parents’ experiences. They escaped Poland on the last train before the Nazis invaded later that night and spent the next twenty-one months trying to get to the United States. They arrived in May 1941, and Sam was born a few months later.

Sam's parents were disciplined and made hard work and high achievement their priorities. Sam’s father couldn’t find a job in his field, so he reestablished himself as a jewelry entrepreneur. With this work, he provided Sam and his siblings’ upper-middle-class lifestyle and set an example for Sam.

At age 12, Sam bought Playboy magazines during trips to downtown Chicago and sold them in the conservative suburbs. He learned that for scarce items, price is no object. Capitalizing on supply-and-demand imbalances would be the central theme throughout his career.

By the time Sam left for college, a commitment to learning, an understanding of how to apply his learnings to real life, and a desire to challenge conventional wisdom were instilled in him.

During a summer break, Sam hitchhiked across the country for two weeks and learned a valuable lesson: you learn the most about people when you see them in their natural environment, so get out and see people; don’t have them come to you. He did door-to-door sales one summer but eventually found his calling. He pitched a real estate developer to let him and classmate Bob Lurie manage his building. This led to contracts to manage two other buildings.

Sam went to law school to please his parents but hated the attention to detail it required. During his second year in 1965, he used his money from property management to buy his first building for $19,500. He also bought the building next door and a large single-family house, which he converted into four apartment units. He was 23 years old.

Sam and Bob landed a large property-management contract, making them relevant market players. They started getting inbound deal flow, which resulted in an opportunity to buy a dozen adjected homes. They structured the $20,000 deals as individual purchases with $1,000 down and deferred closing, partnering with Sam’s dad to raise the equity portion of the deal. The elder Zell drove a hard bargain, demanding a 50/50 partnership.

They assembled the largest block of land held by one owner and sold it for a profit to an apartment complex developer. The entire process taught Sam valuable lessons:

• Tenacity – Always assume there’s a way to overcome any obstacle, and focus on finding it.
• Listening – The heart of any negotiation is listening. Listen to figure out what’s important to the other party.
• Scale – Scale has exponential value. The aggregate site was more valuable than the individual parcels.

This successful deal led to Sam learning about his father’s other real estate deals and to the two of them doing deals together.

In 1966, Sam graduated from law school. He was 25 with $250,000 in the bank and had made $150,000 that year. He’d built a solid financial foundation for himself and his wife. He was ready to leave Ann Arbor, Michigan, and move back to Chicago and start his law career.

Sam’s parents and their journey to the United States significantly affected Sam. His parents instilled in him a curiosity, dogged work ethic, and ability to think for himself. Sam honed these traits in school in a small market, but they were about to propel him to another level when he deployed them in a big city.

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I finished reading about James Dyson’s journey. When his autobiography was published in 2003, James was 56 or so. Since then, James has continued building Dyson. As of this post, he’s 77 and appears to be still involved in Dyson, although he’s no longer CEO.

What Was James’s Starting Position in Life?

An entrepreneur’s early years often have a lifelong impact on them, and that was true of James. His father’s death when he was nine scarred him deeply. He didn’t have a father figure who could share knowledge with him. James felt like he had to figure things out on his own, so he learned to educate himself. He became a voracious learner, and he believes anyone can become an expert on any topic in six months.

His father’s passing also instilled in him a belief that he shouldn’t waste time doing things he doesn’t want to do. He learned to say no to things like medical school and leaned into things he was passionate about, like art, despite not having a clear path to where that passion would take him. In his early years, he believed that following his convictions would lead him to where he was supposed to be.

Two yardsticks that I use to evaluate entrepreneurs are distance traveled and personal velocity. James went further than most people will in a lifetime despite starting at a disadvantage. And his personal velocity, or the rate at which he moved toward personal goals, was exceptionally high and certainly increased his distance traveled.

How Did James Become Successful?

James’s wife, Deirdre, is a big reason he was successful. She supported him during the decade-plus when he traveled the world and the family was on the edge of financial ruin. When he was on the verge of quitting during the Amway lawsuit, Deirdre talked him off the ledge just in time for him to get a lucky break.

James is one of the most disciplined and focused entrepreneurs I’ve read about. For example, his ability to work for over 1,000 days straight, by himself, on a single product is a superhuman level of discipline, focus, and perseverance. He was clear on what he wanted and laser-focused on consistently taking small daily actions toward that goal. This led to his creating the technology that would be the foundation of his company. He moved a mountain by chipping away at it, one stone at a time, every day for years.

James was persistent but not stubborn. He knew he could build a big company around vacuums, but he was flexible on how he did it. His strategies evolved. For example, he started by licensing his technology but slowly moved to manufacturing his vacuum and selling directly to consumers as he encountered obstacles with license partners. He was rational in his decision-making. When he made a mistake, he acknowledged it and refocused his persistence on the correct actions instead of doubling down on his mistakes.

What Kind of Entrepreneur Is James?

James is a founder. He focuses on a problem and creates the best solution he can to solve it. He’s customer focused, not investor focused. He determines how to create the most value for the people who purchase his products.

James didn’t go straight to being a founder. Before founding Dyson on his own, he was an inventor. An employee of Jeremy Fry’s company. A cofounder of Dyson-Kirk with his brother-in-law. And a cofounder of Air Power Vacuum Company with Jeremy Fry. James wanted to reap the maximum reward for his efforts, and being a founder made that possible. This is likely why he still owns 100% of Dyson.

What Did I Learn from James’s Journey?

Licensing is a capital-efficient business model that I don’t have experience with. Licenses were a good way for James to generate recurring cash flows, which he used to hire his team and build out his manufacturing and direct-to-consumer operations. But licensing has downsides. Getting the details of contracts right, aligning the incentives, and dealing only with reputable partners are crucial considerations. If you get these wrong, you may never see a cent.

Vacuum cleaners aren’t a sexy market, but they’re a large one because lots of people use them every day. The autobiography didn’t say the market was growing, contrary to what I often see when companies have outsize success. But because he made a product that was ten times better than the competition, he was able to grab market share from competitors. Significantly improving products or services people use daily is a path to a big business, but the product can’t be comparable to the competition. In a market that isn’t growing, it must be an order of magnitude better.

The outsize impact on James’s products of editorial reviews in magazines and newspapers caught my attention. I knew reviews were powerful; it’s why products from unknown brands can be top sellers on Amazon. James appears to have figured this out earlier than most consumer-product companies. He also figured out that anything an ad can accomplish, true journalism can do better.

James says when you make something, sell it yourself. James doesn’t believe marketing agencies have the time or desire to learn about your product in depth. They’re best at applying their all-purpose skill to selling more of what already exists, not innovative things.

I’m bad at marketing, so seeing that he mastered this area is encouraging and gives me hope that I can too.

James is an amazing founder. His autobiography is a detailed account of his struggles. Anyone frustrated or thinking about giving up can benefit from learning about his journey.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

With licensing revenue from the United States and Japan, James Dyson wanted to crack the UK and prove all the early naysayers in his home country wrong. His autobiography says he signed a deal in early 1991 with Vax, receiving £75,000 upfront. But Vax strung James along and never began production. James had made a critical error in the agreement: he didn’t set a trigger date for the minimum royalties. If Vax had never produced the vacuum, they wouldn’t have owed him anything and he couldn’t have licensed the product in the UK to anyone else. They parted ways after settling a lawsuit.

James designed a new “tank vacuum cleaner” for UK consumers to distract himself from the legal drama. However, £45,000 in legal fees to negotiate a contract with a tooling partner triggered self-doubt and thoughts of giving up on the vacuum altogether. James talked to his wife about dropping the Amway lawsuit and giving up. But then his lawyer called. The Amway suit was settled. Amway would pay James a license fee on each vacuum sold in United States.

James was back in the game. He raised £600,000 from Lloyds Bank after putting up his homes as collateral. Working with a team of four out of his house, he finished the design for the Dyson Dual Cyclone, aka DC-01, in May 1992. He was 31 when he had the idea in 1978; by this time, he was 45. It took fourteen long years for him to have his own product.

James forwent future £60,000 annual license payments from his Japanese partner and negotiated a lump payment of £750,000. This partially covered the £900,000 he needed to pay for DC-01 tooling. He incorporated Dyson Appliances and hired several small Italian companies to build molds for parts. He hired Philips Plastics to produce plastic parts and assemble the DC-01, and the first unit was produced in January 1993.

Business was brisk, especially with catalog companies. Orders were rolling in until Philips Plastics tried to strongarm James. It raised parts prices by 32% and retroactively back-billed months of old orders. James sued Philips and was forced to halt production. Eventually, the court ordered Philips to release molds so James could contract with other companies to produce his parts. This experience forced him to start Dyson’s first assembly facility. By July 1993, James was producing his own products.

Dyson began selling five times better than other brands and benefited from strong word-of-mouth growth. It became the best-selling vacuum in the UK.

James next shifted his focus to proper marketing and learned valuable lessons. For one thing, he learned to despise outside agencies. And he learned that with a new consumer product, you can’t sell more than one message at a time or you lose the customer's belief. He also learned that he had to establish, with zero doubt, that his product overcame a problem that his competitors all had.

These insights resulted in his famous “Say Goodbye to the Bag” campaign, and the company's growth exploded. It went from £3.5 million in revenue in 1993 to £85 million in 1996 and was named the fastest-growing manufacturing company in the UK.

James had this idea in 1978 and didn’t get clear signs of success until 1993; that’s fifteen years. His company wasn’t a breakout financial success or recognized as a leader in manufacturing until eighteen years after his initial idea. James persevered for over a decade and now owns 100% of Dyson and employs over 14,000 people (per Wikipedia).

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

James Dyson was in a difficult spot when his board of directors fired him from his company in 1979. Luckily, he’d already been thinking about a new idea.

According to his autobiography, powder-coating dust at Kirk-Dyson was a problem. He learned that sawmills used cyclones to capture and extract sawdust, so he decided to build a thirty-foot cyclone at Kirk-Dyson for his powder-coating operation.

Around this time, he realized that vacuum cleaner bag designs limited suction because dust clogged the bag pores. As he built the Kirk-Dyson cyclone, he realized that a cyclone could solve his vacuum issue too. He created a cardboard cyclone using his old vacuum, and it worked. He had the first bagless vacuum.

He tried to persuade the Kirk-Dyson board to pursue the cyclone vacuum idea, but they refused. After being fired, he raised £25k from Jeremy Fry, used his savings, and took out a loan to launch his new company: Air Power Vacuum Cleaner Company.

Working in his home garage, James made 5,127 prototypes over three years, one painstaking change at a time. By 1982, he was frustrated, demoralized, depressed, and running out of money. He decided to license the Cyclone instead of selling it himself.

In 1982 and 1983, he talked to every manufacturer and was rejected. Eventually, Jeremy Fry’s company signed a licensing deal for £20,000 and a 5% royalty. It produced 500 units and learned a lot, but then it lost interest and sold its license.

Trying to feed his family, James was a one-man band on a mission to license the Cyclone. After three years, in 1984, he hadn’t made a penny and was going broke.

Amway Corporation reached out and they struck a licensing deal, but not before switching terms on James at the last minute. In May 1984, James signed off on the deal and got a £100,000 check. His relief was short-lived. By September, Amway was accusing him of fraud and misrepresentation. Jeremy, who was nearing retirement, didn’t want to be involved anymore. In 1985, they settled, and James repaid the £100,000. James was depressed and deeply in debt with a family to feed, but he was free from the Amway license and able to sell in the United States again.

James was in despair and questioning his own sanity for pursuing this project when Apex Inc., of Japan called after reading about James in a magazine. He struck a deal to license his design for sale in Japan, receiving £35,000 up front, a £25,000 design fee for completed drawings, and a 10% royalty with a £60,000 minimum annual payment. He lived in Japan for six weeks at a time for a year to launch the Cyclone.

The Cyclone does well, is priced at £1,200, and reaches £12 million in annual sales. But because Apex sells to wholesalers and because of how the royalty is calculated, James never sees more than £60,000 a year from the deal. He learned a valuable lesson: too many middlemen between the consumer and the manufacturer cut into his royalty payments and diminish his ability to control pricing. Everyone got rich from the deal except him.

In 1986, he met the CEO of Iona, a Canadian company. By November, they were ready to sign a licensing deal to sell in the United States to consumers when they learned that Amway had released a cyclone vacuum in the U.S. Amway had ripped off his design. James sued, claiming “misappropriation of confidential information,” and Iona pushed to renegotiate but paid James’s legal bills out of his royalties. Iona and James went head to head a bit more in a minor lawsuit but eventually settled, agreeing to split the legal costs and winnings from the lawsuit and continue working together.

In late 1990, S.C. Johnson called, and they struck a worldwide licensing deal to sell to businesses, paying James £120,000 upfront. He was selling through three licensing partners and digging himself out of debt. But he was still paying £300,000 a year for three years to lawyers to fight Amway.

James had the idea for the cyclone vacuum in 1979. It took three years and 5,127 prototypes before he had a working version in 1982. It took seven years before his first sale happened in Japan in 1986. It took almost twelve years before he had enough licensing revenue to work himself out of debt. All the while, he was emotionally strained, crisscrossing the globe, and fighting shady partners in court. But he was learning lessons from each negative experience and persevering.

His battles weren’t over, but after over a decade, things were slowly starting to turn the corner.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

In 1979, James Dyson got Kirk-Dyson Designs off the ground with borrowed money. According to his autobiography, things didn’t start well. Within months, he’d gone through two molding partners who reneged on fixed-price agreements. He was forced to build the parts and borrow £45,000 at a 25% interest rate to buy a molding machine.

The “Ballbarrow from Kirk-Dyson Designs” launched in May 1979. At first, it failed. The construction industry and garden retailers were used to wheelbarrows and unwilling to try something new. James learned a valuable psychology lesson: entrenched professionals will resist change longer than consumers. James didn’t know how to sell to consumers, but going direct was his only option. He ran a newspaper ad and checks started flooding in. The company became profitable.

The ad led to a gardening journalist demoing the product, loving it, and writing a glowing review. This taught James a few things:

• Journalists are the first to see potential in an invention.
• People are likelier to believe someone who has tested the product.
• One journalist’s review is worth a thousand ads.

A large direct-selling company reached out, and Kirk-Dyson began drop-shipping orders for it. The company had a 50% market share, was selling 45,000 Ballbarrows annually, and recorded £600,00 in annual revenue.

Consumer inquiries led retailers to begin asking for the product. James hired an inexperienced sales manager, who suggested abandoning direct sales and wholesaling to distributors. This was a terrible mistake. Kirk-Dyson lost contact with the consumer, and margins were cut in half because margin for wholesalers had to be factored into the retail price. The company’s cash flow became negative, and it had to borrow more money.

With sales growing, the board of directors authorized spending money on unnecessary investments. James, focused on cash flow, objected but was overruled. The company borrowed £150,000. It was forced to raise capital by selling one-third of the company for £100,000. James’s stake was reduced to one-third, making him a minority shareholder. He was also the only rational voice on his board of directors.

Between 1975 and 1977, Kirk-Dyson had a 70% market share. Financially, though, the company was struggling. It had roughly £200,000 in debt at a 25% interest rate—the interest payments alone were £50,000. The company couldn’t support those debt payments.

The board decided to sell a U.S. license to get on track financially. The sales manager bolted to a U.S. competitor, copied Ballbarrow, and started selling in the United States. The board sued, despite James’s objection because of the cost. They spent a fortune on legal fees but lost the case, and James wasted a year traveling between the United States and the U.K. as his mother was dying from cancer.

Reducing debt was a must. James wanted to capitalize his loans and wanted the other two major shareholders to do the same. The board, on the other hand, wanted to sell the rights to the Ballbarrow. In January 1979, it did, and at the same time fired James.

Kirk-Dyson was a sales success but a financial and personal failure. The company didn’t make money, and James’s sister and brother-in-law didn’t speak to him for ten years after the firing.

From this, James learned valuable lessons about voting control and boards of directors. Control is everything to entrepreneurs; losing it can lead to losing their company. Choose your board carefully. Investors and “businessmen” don’t think or act like founders.

James also learned how debt triggers reverse psychology for small companies. When you don’t have money, you start thinking of all the things you could do if you had money and end up overspending, getting further into debt. When you have money, you’re not desperately thinking of ways to make money, so you’re careful and don’t spend on frivolous ideas. Being free from debt frees you to think clearly and negotiate from a position of strength.

Fired from the company he founded, James had to figure out what was next.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

Months ago on Reddit, I saw a post listing a user’s favorite founder biographies and autobiographies. Against the Odds, James Dyson’s autobiography, was number one. Researching him, I learned that James Dyson is a famous inventor and the founder of Dyson, a global company famous for its cyclone vacuums. According to this press release, Dyson’s 2023 revenue was £7.1 billion, or roughly $9 billion today, and its profit (EBITDA) was £1.4 billion, or roughly $1.77 billion today. James reportedly owns 100% of the company and is personally worth over $13 billion. Intrigued, I started reading his autobiography to learn about his journey.

Life started out rough for James. His father died of cancer when James was just nine. He felt alone and that things would easily be taken away from him. This, plus being the youngest sibling, instilled an underdog mentality in James. When James’s father died, he was making a career change. James learned his first valuable lesson: don’t waste time doing something you don’t want to do.

Following his passion for art, he skipped college after high school and enrolled in a graduate-level art program at the Royal College of Art (RCA). He fell in love with industrial design and, for spending money, started a company selling cheap wine. The wine business taught him a crucial business lesson: real money is made selling entirely new products that have style and substance and can’t be found anywhere else.

James tried and failed to raise money to build a theatre for poor children that he designed, but investors put British inventor and entrepreneur Jeremy Fry on his radar. James cold-called him, and Fry offered him work on a project. James approached Fry with an idea for a Sea Truck, something new, and Fry let him run with testing the idea. Eight months after the prototype was made, Fry’s company paid James £300 for the design.

James graduated in 1970 from RCA and went to work for Fry in a marine division newly created for Sea Truck. The Sea Truck eventually succeeded after James overcame various internal and external hurdles. James learned valuable lessons: One, if you don’t invest enough in the early product and try to sell a half-finished product, you’re doomed from the start. Two, sell people on how the product fits their specific needs, not how it’s generic enough to solve all problems.

After five years, James was roughly twenty-seven and tired of rewarding shareholders of Fry’s publicly traded company through his efforts. He wanted to reward himself. He was ready to go out on his own. He invented the ballbarrow and with Stuart Kirkwood, his wealthy brother-in-law, formed a 50/50 partnership. They borrowed £24,000, which required James to put up his home as collateral. Kirk-Dyson Designs was launched. James was officially an entrepreneur!

James’s early years were traumatic and affected the rest of his life. They instilled a steely drive to prove himself and made him comfortable with blazing his own trail. These skills were valuable in launching Kirk-Dyson, but James had many more lessons to learn as a first-time founder.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

My current personal project is to read books about entrepreneurs and share what I learn from them via blog posts and audio podcasts. By sharing the journeys and wisdom of some of the most successful entrepreneurs, I aim to help entrepreneurs increase their chances of succeeding.

Why Did I Start Thinking about Amazon’s Affiliate Program?

I’ve conducted weekly feedback sessions with listeners as part of my feedback loop. A few weeks ago, one listener told me she purchased an autobiography on Amazon after listening to one of my podcast episodes. This was good because my post was valuable enough to her that she took action to purchase the book. It was also bad because I would have never known about the purchase if it hadn’t been mentioned during our conversation.

I wondered how I could get data on purchases that were prompted by my blog or podcasts. This led me to Amazon Associates, Amazon’s affiliate-marketing program.

What Were My Concerns about Using Amazon’s Affiliate Marketing?

I didn't like the idea of adding affiliate-marketing links. It felt tacky, and I thought people would think I was doing it only to make money off book sales. That would make them suspicious and defeat my purpose. I decided the only way to know for sure was to ask.

During my feedback sessions, I asked about the perception of affiliate-marketing links. To my surprise, listeners shared two important insights. First, it’s fair to include them because my blog or podcast might help them discover and purchase a book. Second, it’s such a common practice now that people don’t look down on it. They expect it. People are appreciative when someone helps them discover new things; it adds value for them.

That feedback proved I was thinking about this the wrong way. I decided to move forward and become an Amazon Affiliate.

Have I Implemented Amazon Affiliate Marketing Links?

Yes. I signed up last week. Friends purchased books so I could test the flow of data. I encountered an issue with links on iPhones initially routing to the Amazon mobile app but then quickly jumping to the Safari web browser. That was annoying because the data tracking was broken when the jump between the mobile app and Safari occurred. If I couldn’t fix this, there was no point in moving forward because a high percentage of people listen and read on iPhones. After spending more time on this than I had planned (and being annoyed), I figured out a hack that appears to be working. Fingers crossed!

I started updating links on my blog and podcast. Over the next week or two, most links to books will be updated to affiliate links.

What Should Blog Readers and Listeners Know?

• I’m doing this only for books and Amazon. I don’t plan on using affiliate links for any other products or websites.
• Any purchase you make via affiliate links doesn’t cost you anything extra. Amazon sells the item for the same price and shares part (a very small share) of the purchase price with me as a commission.
• My objective is to get data, not money. From a monetary perspective, this isn’t a great use of my time. On a $10 book purchase, the affiliate commission is maybe $0.50 if I’m lucky. But from an insights perspective, it’s extremely valuable. Understanding what books are being purchased helps me understand what’s valuable to listeners and readers. Knowing this helps me double down on what’s working and focus my efforts on reading books from the type of entrepreneurs listeners and readers are interested in.

I hope this gives you insight into my thinking. If you want to share your thoughts on this decision, I’m all ears. Feel free to reach out!

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

I finished reading about Wayne Huizenga’s amazing entrepreneurial journey. His biography was published in 1995 when Wayne was 57 or so. He wasn’t done. He continued building before passing in 2018. The public companies he was involved with and the value they created for shareholders are testimonials to his entrepreneurial success:

• Waste Management – Wayne was a founder and helped take this company public. It’s still public and, as of this writing, has a market capitalization (i.e., valuation) of over $80 billion.
• Blockbuster Video – He built this from $7 million and sold it for over $8 billion.
• Republic Services – He bought into this company and grew it. It’s still public and, as of this writing, has a market capitalization of over $60 billion.
• AutoNation – He founded this company and spun it out of Republic Services in 1998 via an IPO. It’s still a publicly traded company and, as of this writing, has a market capitalization of over $6 billion.

Wayne also founded two professional sports teams and bought the NFL’s Miami Dolphins.

How Did Wayne Become So Successful?

Childhood pain instilled drive in Wayne. He watched his father fail and go broke. This scarred him and sowed in him a fear of financial insecurity. Wayne was also born with an intense personality. These two traits fueled Wayne’s tireless work ethic and frantic pace. Wayne worked constantly and did multiple things at once. In the 1950s, friends realized that Wayne was different when he installed a phone in his bathroom. Wayne’s drive had a downside, too. His first wife divorced him, and he openly shares regrets of not being around to see his children grow up. Executives working under Wayne also sacrificed personally to keep up with him.

Another factor in Wayne’s success was his strategy. He focused on building large companies through acquisitions. Picking the right types of companies and markets was key. Wayne’s criteria were simple:

• Service industries with repeat business
• Growing industries
• Industries dominated by mom-and-pop entrepreneurs, who are easy to take market share from
• Economies of scale that a large player can benefit from

If you don’t know something exists, you can never benefit from it. Wayne worked to make sure he was in the flow of information, which contributed to his success. In private markets he had a network of wealthy, early-stage investors with whom he shared deals. On Wall Street, he had a network of investment bankers and analysts. Owning three sports teams kept him in the know with titans of various industries. When something was happening or about to happen, Wayne knew about it.

Last, Wayne figured out his playbook for compounding his wealth rapidly. He learned how perception on Wall Street worked and how to scale companies rapidly. He combined those two things to create his initial wealth base by growing Waste Management quickly. He then compounded that wealth even faster by applying the same playbook to Blockbuster.

What Kind of Entrepreneur Was Wayne?

Wayne was a buyer. He was a deal maker. He enjoyed the thrill of winning deals and building an empire by acquiring. But Wayne had no desire to run an empire. He was not an operationally minded entrepreneur. He could pick and acquire the pieces of his empire, but putting them together and managing them fell to others.

Wayne was never satisfied. He always wanted more. People who worked closely with him repeated this throughout the book. He never said “Good job.” Instead, he always said “You could have done more.” The $23 million fortune he accumulated at Waste Management wasn’t enough, so he quit. The $8.4 billion signed deal with Viacom to acquire Blockbuster wasn’t enough, so he pushed Sumner Redstone for more stock before the deal closed. No matter what, he always wanted more. His thinking about pursuing more when he already had enough is best captured in this quote: “Why do you climb the mountain? Because it’s there.”

What Did I learn from Wayne’s Story?

• Entrepreneurship through acquisitions is a viable path to building a publicly traded company.
• A deal-oriented entrepreneur is well suited to partnering with an operationally oriented person. Otherwise, the foundation could crumble as more acquisitions are added.
• When building something to sell in the short to medium term, you’ll likely be playing the perception game. You can’t always control perception. Perception can lead you to do things that may not benefit your customers.
• Dealmaking is a skill. If you’re doing a deal and you don’t have this skill, find someone who does. The downside to a bad deal can be big.
• Wayne’s rules for making a deal:
  • Don’t fall in love with a deal.
  • Don’t paint yourself in a corner.
  • Never say anything that won’t allow you to come back in the front door.
  • Don’t say anything is a deal breaker (if you renege, you kill your credibility).
  • A deal is never dead if you don’t let it die.
  • Always let the other side set the initial price.
  • Recognize what the other side really wants out of a deal.
  • Know when to walk.
  • Don’t take no for an answer.

Wayne was an amazing entrepreneur. His biography is a blueprint for anyone interested in building companies by acquiring, learning about dealmaking, getting into the business of sports franchises, or compounding wealth in the stock market.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!

Wayne Huizenga’s fascination with perception on Wall Street continued to fuel his desire to build Blockbuster into a diversified entertainment company. According to his biography, in June 1993, he met with advisors from Wall Street to discuss expanding into entertainment. The meeting resulted in a list of three potential partners: Viacom, Paramount, and Polygram Inc.

Over lunch, Wayne pitched Viacom’s Sumner Redstone on merging, but Redstone was busy trying to acquire Paramount. Viacom’s acquisition of Paramount meant that two targets on Wayne’s list would become one. Polygram was owned by Philips Electronics, which was restructuring and couldn’t entertain any deals.

Viacom announced its deal for Paramount, kicking off a bidding war between Redstone and QVC’s Barry Diller that gave Wayne an opportunity. As the price got higher, Redstone needed a partner. Wayne agreed to buy $600 million worth of preferred Viacom stock and receive a 5% dividend. Wayne did a stock offering at $30 per share to raise $424 million of the $600 million needed.

Diller bid higher, forcing Redstone to rework his proposal. Redstone needed someone willing to buy $1.2 billion worth of Viacom stock so he could use that cash to offer Paramount shareholders more cash in his cash-and-stock bid. Wayne agreed. He would buy $1.8 billion worth of Viacom stock, but with one condition: regardless of the outcome of the Paramount deal, Blockbuster and Paramount must merge.

The deal included a collar provision called a variable common right. If, on the first anniversary of the merger, Viacom shares were too low, Blockbuster shareholders would receive additional Viacom shares.

A lot of drama happened before the September breakup deadline. Wayne and Sumner’s relationship deteriorated. But the $8.4 billion deal was approved by Blockbuster shareholders and closed.

Wayne quit and owned a stake in Viacom worth $600 million. It was a bittersweet ending, but Wayne kept going. He didn’t need more money, but making money is still a challenge he enjoys. He summarized his thinking about this with this line: “Why do you climb the mountain? Because it’s there.”

In 1995, he and his friends invested $27 million for 6 million shares and warrants for another 12 million shares in Republic Waste Industries. Wayne personally invested another $13 million, and banks completed a private placement for $70 million. The stock went from $4 to $26 in months because of the “Huizenga effect.” Wayne was off to the races again with a new company and richly valued stock he could use to build a diversified services company!

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Wayne Huizenga made Blockbuster Video's positive perception by Wall Street a priority. His biography details his success in doing this early. But business is never a straight line up and to the right. As business operations ebb and flow, so will perception.

In May 1989, Bear Sterns analyst Lee Seidler highlighted acquisitions-related accounting practices that he claimed inflated Blockbuster’s earnings and stock price. The inflated stock was used to acquire more businesses, further inflating earnings. Perception tanked, and the stock price took a hit. This marked the beginning of a rough patch for the company.

In 1991, the Gulf War began, and consumers watched the latest developments on CNN. Blockbuster reported growth of 31% that quarter, but Wall Street expected 40%. The stock tanked. The cable industry launched interactive cable with more channel options. Cox Enterprises, a major cable operator, announces its sale of eighty-two Blockbuster locations. Blockbuster had a confidence crisis, and some executives believed Wayne, not having the conviction of a founder, compounded the issue.

Desperate to change their perception, Wayne began diversifying. He struck a deal to buy a U.K. video rental chain, Cityvision. As part of that process, he convinced Phillips Electronics N.V. to invest $66m in Blockbuster, which provided the cash needed to close the Cityvision deal. Wayne hoped the vote of confidence by a $31 billion technology giant would squash Wall Street’s fears about technology risks.

Wayne went further by getting into music retailing. In 1992, Blockbuster spent $185 million in cash and stock to buy 236 Sound Warehouse and Music Plus stores from Roy E. Disney. That same year, he struck a deal with Richard Branson Virgin Music to open Virgin Music stores in the United States. Blockbuster went on to copy Virgin’s concept and open smaller Blockbuster Music stores, which didn’t go over well with Virgin and Branson.

That same year, Wayne met with an investment banker and Wall Street analyst to discuss Blockbuster entering the entertainment industry. In 1993, he purchased 35% of Republic Pictures Corp, its thousand-film library, and warrants for $25 million. Also in 1993, he purchased 48% of Aaron Spelling’s Spelling Entertainment and its hits, such as the Beverly Hills 90210 TV show and Terminator movies, for $140 million. Wayne combined the two publicly traded companies into one, of which Blockbuster owned 70%. He also bought 20% of Discovery Zone’s indoor playground business for $10 million in 1993.

Wayne used his dealmaking skills and transformed Blockbuster into an “all-around entertainment company.” Analysts took notice, and perception started to change. This, combined with positive and increasing cash flow, led institutions like State Street to buy and lift the stock price.

This increasing cash flow (and somewhat positive perception) would ultimately lead to the biggest deal of Wayne’s life.

Prefer listening? Catch audio versions of these blog posts, with more context added, on Apple Podcasts here or Spotify here!