If you’re questioning my ability to review a book on deal making, let me share this with you. Giovanna and I have recently went on a bit of an OfferUp spree, selling many of our things for a pretty profit! For example, we sold two swivel chairs we bought from Goodwill at $15 each for a total of $225. So, yeah, I think I know a thing or two about making killer deals.
“Commonsense” 🔗
“The Art of the Deal is a commonsense guide to personal finance”, can be read on the inside cover of my copy of the book. I found this not to be the case. It’s much more of an autobiography, with hardly applicable lessons, detailing how Donald Trump got to where he is in the late 1980’s.
The book is structured with a summary of a week-in-the-life to open it, a reflection on that week as the concluding chapter, and an almost chronological story of major deals in real estate development to fill the middle. The lessons in all of these deals are hardly applicable because they are the types of deals only accessible to the already ultra-wealthy.
I’ve heard the “small loan of one million dollars” clip before regarding Trump’s story of his business start, but that wasn’t mentioned in The Art of the Deal. The book illustrates his business start by saying his net worth after graduating college in 1968 was about $200,000, all tied up in apartment buildings. Commonsense might have said to just invest that money in the S&P 500, which would amass over $35 million dollars by 2023 if dividends were reinvested since 1968.
Passive investing is not mentioned in The Art of the Deal. Instead, readers are told of takeover attempts with purchases of 5 - 10% of publicly held companies. I’ve done a bit of investing myself, and one thing I’ve learned is that it is a lot easier if you’re already rich. The real meat of the book has little to do with stocks, though.
Real Estate 🔗
Trump’s start in real estate is through his father’s business. His father started as a tradesman, building single family homes, but scaled his business quickly. By the time Donald Trump graduates college, his father’s business was primarily low- and middle-income apartments in the New York City burroughs. The first deal in this book is for a similar apartment complex.
Trump and his father purchase a rundown apartment complex soon after he graduates college. They make renovations and establish management until a tenant shares with him that the area is turning. One drive around the Cincinnati neighborhood is enough for Trump to decide to sell, and he ultimately does, taking a sizeable profit. This type of work isn’t for him; he wants to do something big.
Manhattan, with its wealth and glamour, is where Trump wants to be doing business. His first deal in Manhattan is for some empty lots that he ends up selling to the city by finding a good deal, exercising patience, and leveraging the media to tear down his competition. It’s easy to overlook this first deal in Manhattan since he was only a broker, but the skills and relationships help him with one of his most important projects - the Commodore Hotel.
The Commodore Hotel is a rundown hotel that Trump must finance, fully develop, market, and get city approval. The reader learns a lot of Trump’s business style in this chapter. A couple of interactions really stick out to me as being particularly cutthroat.
First, Trump’s architect is fired while working on the project. He describes the events like this, “Then one evening in the middle of April, Der called to tell me that he’d been fired […] and I was able to use the situation to my advantage […] I paid him a very modest fee.” He used the man’s misfortune to underpay him. The next example was even more aggressive and dishonest.
He was trying to sell the Commodore Hotel to Hyatt company. Jay Pritzker was CEO, and Trump got along well with him; the deal was going smoothly up to the close. “But what I had going for me was that Jay Pritzker wasn’t at the closing […] Meanwhile, the bank gave Hyatt one hour to make a decision […] While we were waiting, I wrote up a covenant myself […] it said Hyatt can’t open any competing hotels in the New York area.” By sneaking in this covenant without Pritzker’s awareness, Trump would seriously damage Hyatt. In fact, the founder of Hyatt, A.N. Pritzker, would continue to make trips to New York to try to remove this covenant. “He would say ‘I’d love you to let us [build hotels in New York].’[…] I’d find some way of changing the subject, because I liked him so much that I never had the heart to say no to him directly.”
Many of the other deals in The Art of the Deal are quite similar. Trump finds a property that is undervalued and needs development, he undermines people while demanding kindness and loyalty, he fights with local officials by dragging them through the mud in the press, and he exits quickly when necessary. The relationship with and utilization of the press is better illustrated in two other deals: Trump Tower and Wollman Rink.
Trump Tower is a very similar deal to Commodore Hotel. One exception this time is that there are Art Deco sculptures he must remove that are part of the original structure if he wants to build his giant, glass tower. His crew tells him that it will cost more money and take more time to remove them without damaging them, so he decides to demolish them. The press surrounding this event was negative towards him, but ultimately drew a lot of attention to Trump Tower. “Looking back, I regret that I had the sculptures destroyed. I’m not convinced they were truly valuable, and I still think that a lot of my critics were phonies and hypocrites[…] Ironically, the whole controversy may have ended up being a plus for me in terms of selling Trump Tower.” He clearly doesn’t regret this since it helped with the sale. Maybe he thinks he regrets it, but as a reader, I believe he would have done it again.
A hockey rink in Central Park that Trump could see from his apartment called Wollman Rink had been under construction for years with no end in sight. At $3 million, this was a very small project for Trump. He decided he wanted to throw his hat in the ring, “I genuinely felt I could get the job done, and I believed the rink was something hundreds of thousands of New Yorkers - including my own children - had a right to enjoy. Whatever anyone may think, my motive was this simple[…] There were those who said I went a little overboard holding press conferences about Wollman Rink. Perhaps they’re right, but I can only say that the press couldn’t get enough of this story.” Again, readers would question his motives due to the importance Trump attributes to press attention. He wanted the Wollman Rink project as an opportunity to gain positive press and to build negative press against the city.
The American Dream 🔗
A New York Times review quote printed on the front cover of my copy of The Art of the Deal reads, “Trump makes one believe for a moment in the American dream again.” Maybe the American dream in the 1980s was meant to be unattainable, or maybe it was to graduate college with the equivalent of $1.8 million ($200,000 in 2023 dollars). I always understood the American dream to be the ability to achieve success despite the hand you’re dealt.
Trump is dealt a pretty sweet hand, but continues to push himself. The reader may wonder why he is willing to work such long hours and put himself under constant stress just to continue to make deals. In his only genuine show of remorse in the book, Trump explains the intense pressure and the effect it had on his brother.
Perhaps I was too young to realize that it was irrelevant what my father or I thought about what Freddy was doing. What mattered was that he enjoyed it. Along the way, I think Freddy became discouraged, and he started to drink, and that led to a downward spiral. At the age of forty-three, he died. It’s very sad, because he was a wonderful guy who had it all, but the pressures of our particular family were not for him. I only wish I had realized this sooner.
It’s clear that he understands the pursuit of happiness is important. Trump’s American dream - his pursuit of happiness - is to gain as much influence and power as possible. It’s easy to see this looking back after his presidency, but the signs were there in The Art of the Deal.
Final Thoughts 🔗
I was prepared for a personal finance book by one of the most prolific figures of my lifetime. What I got was more of a villain origin story of how a man became obsessed with power and started on the path of dishonesty and greed. He tears down his friends and enemies alike all in service of himself. At the same time, he is unaware of his own decision making, thinking he might have acted differently in the past, only to continue to repeat his behavior.
Shortly after its release, I listened to a reading of The Mueller Report. I have no doubt in its validity now. The behavior Mueller describes is the same type of behavior Trump describes of himself in The Art of the Deal. The January 6 Report is on my stack of books to read, and I’m sure this book will give me context for that. Trump’s own skewed perception of his self is the only thing left to cast doubt on these large bodies of evidence against him in major controversies.
As a part of the larger Trump story that includes his presidency and countless controversies, The Art of the Deal has its place. As a finance book, it is trash. I give it 2/5 stars.
… 🔗
More Interesting Quotes 🔗
I wanted to include some more quotes that didn’t fit into the review. First, when discussing con-men, Trump compares Jimmy Carter’s failures with Reagan’s success, “Ronald Reagan is another example. He is so smooth and so effective a performer that he completely won over the American people. Only now, nearly seven years later, are people beginning to question whether there’s anything beneath that smile.” To read Trump’s labeling Reagan a conman contradicts what I assume a lot of people calling Trump a “Reagan Republican” think of his opinion on Reagan.
Trump also showed glimpses of pro-social sentiment. When entering legal battles over his Central Park properties to try to evict rent-controlled tenants, he shares this opinion, “Unlike most developers, I don’t advocate eliminating rent control. I just think there ought to be a means test for anyone living in a rent-controlled apartment. People below a certain income would be permitted to keep their apartments at their current rent.”