Last week on Methods of Prosperity
Chiune Sugihara defied orders to save the lives of Sam Zell’s parents, and thousands of Jews during World War II. Sugihara issued visas for many Jewish refugees including Sam’s family. He helped them escape the Nazis, providing refuge in Japan. After a perilous journey, they arrived in the United States, settling in Chicago. That’s where Sam was born in 1941. Sam’s father, a former Polish grain merchant, reinvented himself as a jewelry merchant. The family maintained strong Jewish values. They celebrated the anniversary of their American arrival every year. This imparted gratitude and ambition in their children. The resilience and resourcefulness of Sam’s parents influenced him. He embraced entrepreneurship early on, selling magazines in suburban Chicago. This experience taught him the fundamentals of supply and demand.
The following is Methods of Prosperity newsletter number 75. It was originally deployed November 21, 2024. As of July 29, 2025, original subscribers have received up to Methods of Prosperity newsletter no. 111: Diane Hendricks.
Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Let me know how I can help you out. For more information about the author, please visit seanallenfenn.com/faq.
Part 75.
Key Lessons:
Partner with someone who improves your work.
Sometimes a job gives a false sense of security.
Others want to project their limitations on you.
Assume you can do whatever you want.
To him who has, more will be given.
You don’t own enough real estate.
Be indifferent to rejection.
Learn how to sell.
It was 1959. Sam Zell enrolled at the University of Michigan. He was a political science major living in the fraternity house of Alpha Epsilon Pi. Sam lasted six weeks living at the fraternity house before moving out. He was a loner and a restless student, not an academic who wanted to be popular.
One day, in the middle of his Junior year, Sam visited a friend’s apartment. His friend mentioned that his landlord bought the house next door, to knock down. The landlord was going to build a fifteen unit student housing apartment building. Sam had an idea.
“Let’s pitch him to manage it,” Sam persuaded his friend, “Who better than us? We’re students. We know what students want. We’ll run the building, maintain it, and each get a free apartment.” The reality was that they didn’t know how to manage apartments. Sam and his friend had no clue what it entailed. But it never occurred to Sam that he couldn’t do it. If you’re not aware that you can’t do something, the barriers to doing it disappear. That management contract was Sam’s first real estate project.
Sam wasn’t trying to start a business. He was more interested in a chance to have a free apartment. By his Senior year, the landlord gave him a second student housing apartment to manage. One of Sam’s fraternity brothers and friend named Bob Lurie became interested. If Sam and his partner needed a third guy to help manage the student housing, Bob offered, he’d be willing to join them. A few months later, the landlord gave them a third building. That’s when Bob joined the team.
Bob was an engineer and organized character. Bob was famous for carrying IBM punchcards in his shirt pocket, and using them to make lists. He was a calm, pragmatic, planner who kept a sharp mental record of every detail. His attention to detail was a compliment to Sam’s lack of detail. Bob helped Sam turn that project into a real business.
During the summer, Sam sold cosmetics door-to-door for Helene Curtis. That’s how Sam learned sales. If you’ve never sold products unannounced, you may find rejection difficult. You must build up a tolerance for “no”. In fact, you must expect it. You learn to keep asking. Find ways to get a conversation going. Your chances of closing a sale increase if you can hold a conversation with strangers. At the end of the day, Sam always made one more call than required. The lesson here is to build up indifference to rejection. It’s fundamental to being an entrepreneur.
Even though Sam was an entrepreneur, his parents pressured him to have a job. They insisted that he needed a profession. The concept of being a dealmaker wasn’t on their map of reality. So he went to the University of Michigan law school. He hated it. The rules and attention to detail were boring, but he learned how to think. Later in life, as his deals became more complex, his law education gave him specific knowledge.
In 1965, Sam bought his first building in Ann Arbor, a three unit apartment building. It was during his second year of law school. He bought it for $19,500 with $1,500 down. Which he had saved from his apartment management business. He added value to the building and doubled the rents. Why not do that again? Two months later, he bought his second apartment building, next to the first. But there was a house in between those two apartment buildings. That was a good reason to buy the house. He had enough savings. All he needed was a few bank loans.
Sam was 23 years old with a BA in political science. He knew nothing about finance. Did that stop him? Of course not. It never crossed his mind that he might be too young to start an investment business. He didn’t know any better. So he was able to get the loans from the bank.
His management company took over of the properties. They renovated and rented the units. The assets did well. That led to a huge management contract for a property at Eastern Michigan University. Which added to the scale of Sam’s assets under management. That gave him a good reputation. Sam earned the kind of reputation that made other people want to do deals through him.
That allowed deals to start coming to him. A friend from law school reached out to him, asking for advice. This friend’s father bought a house for his friend which received an offer from a developer. The offer was for $3 per square foot for the land. What should he do?
Sam discovered that the property value was $3.50 per square foot, and he would buy it with a partner. But it wasn’t big enough to build a new development. That’s why Sam and his partner decided to buy the house next door in addition. Why not keep going? They bought another house on the block, and then another. Sam was the pitch man. He visited each homeowner and persuaded them to sell their house until he owned one full block of land. They were all cash deals. A thousand dollars each to tie up the properties, with deferred closing around $20,000.
That experience revealed how people are. One of the sellers tried to convince Sam to lie to their neighbors. They protested that their house was worth more than their neighbors’ house, so Sam should pay more. If Sam paid them more, their neighbors would want more. “Pay us more, and we won’t tell them,” the seller connived.
To be continued…
I like you,
– Sean Allen Fenn
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