August 9, 2016

Doing business with Donald Trump

Neil Barsky NY Times -  Amid all the self-made myths about Donald Trump, none is more fantastic than Trump the moneymaker, the New York tycoon who has enjoyed a remarkably successful business career. In reality, Mr. Trump was a walking disaster as a businessman for much of his life. This is not just my opinion. Warren Buffett said as much this past week.

Between 1985 and 1991, working mainly for The Daily News and The Wall Street Journal, I covered Mr. Trump’s travails and interviewed him dozens of times. On several occasions he threatened to sue me, though he never did. But he didn’t hide his opinion of me. In “Trump: The Art of the Comeback,” his 1997 book, he wrote: “Of all the writers who have written about me, probably none has been more vicious than Neil Barsky of The Wall Street Journal.”

At the time, he was a glamorous New York City personality and an Olympic-level self-promoter who had persuaded banks and bondholders to extend him billions of dollars of credit to buy everything from a yacht to the Plaza Hotel to the Eastern Air Lines Shuttle.
He was also a skilled negotiator with an almost supernatural ability to pinpoint and attack his adversaries’ vulnerabilities, as several of his Republican primary opponents discovered. Since his financial emergency in the 1990s, he appears to have sworn off taking on large amounts of debt, and instead has used his brand to collect fees on real estate and other projects. This has greatly limited his downside risk, but has also capped the amount he can earn, since he often does not own the underlying equity on the projects that bear his name.
Since leaving journalism in 1993, I have been a Wall Street real estate analyst and a hedge fund manager. I have studied how businesses thrive and why they fail. Mr. Trump’s political rise has been maddening for me to watch, and I sometimes feel like the character played by Kevin Bacon in the movie “Diner” who screams the right answers to a TV quiz show as the contestants get them wrong.

“The issue isn’t that he’s crass,” I want to shout. “It’s that he’s a bad businessman!”

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