The Art of the Art of the Deal

trumpholdsdeal

I read the first half of Donald Trump’s 1987 business-advice book cum memoir Art of the Dealer last weekend. A fun read, actually. The prose are simple and concise. The stories are amusing and replete with dropped names and power plays. The book spent 51 weeks on the best seller list in the late 80’s and I can see why. It gives the common person a window into the life of a very rich and powerful man. The first chapter is just an hour by hour recounting of a week in Donald Trump’s life. We hear about the phone calls he makes, the deals he’s considering, the charity benefits he goes to, the “work” he does at his office in Trump Tower in Manhattan. I think for a long time people appreciated it for the narrative voice. The book is written in the first person, presumably by Trump, though the book’s co-author Tony Schwartz has come out in the last year as saying that he wrote the entire thing himself with little to no input from Trump. If this is the case—and it probably is, in all honesty—then Schwartz does a magnificent job of matching Trump’s signature cadence and diction. I think it’s in line too with how people would expect an impatient and aggressive businessman to speak: short sentences with few subordinate clauses, uncomplicated ideas left largely unsupported, unfailing confidence in the truth of what’s expressed, a complete absence of anxiety. The Donald Trump of Art of the Deal, whether contrived or genuine, is very much a “don’t sweat the small stuff” kind of guy. He is shown to have an innate ability to reduce complicated matters to their most basic and essential components. He rejects doubt and counter-argument as mere distraction. A true pragmatist, Trump seems to care only about what that which prompts him to act, or the alternative, to wait it out and “keep your options open.”

One imagines the initial intent of the author and the publisher was for Art of the Deal to be an advice book brimming with useful negotiating tactics and investment tips and only a chapter or two of Donal Trump aggrandizement, just enough to establish his authority on the subject matter. Instead that formula was reversed: just one chapter of Art of the Deal is devoted to actual dealmaking; the rest is shallow memoir with a few insights thrown in about the lessons Trump learns from different episodes in his life. Reading the advice chapter, one discovers quite quickly that there just isn’t that much to the report when it comes to the Trump philosophy for doing business. The chapter even begins, “My style of deal-making is quite simple and straight forward.” Trump uses no theories of negotiation or of rhetorical persuasion. He has no special sense of how markets behave or where to find undervalued assets. He simply “aims high” and keeps “pushing” until he gets what he wants. And if you’re already playing from a position of advantage, that apparently is all you need.

Trump does have a handful of strategies for leading and dealmaking, which are referred to in the book as “Trump Cards.” Perhaps it could be worthwhile to consider a few of these individually:

 

Think Big

“If you’re going to be thinking anyway, you might as well think big.”
I can imagine Tony Schwartz writing that line with some relish. The thinking big mentality here means simply placing larger bets to reap larger rewards. Of course, to bet high you have to have some money to begin with, and you have to be far enough ahead that you can absorb the loss and live to bet again. One has to wonder for whom this advice is intended. It assumes the actor commands some degree of advantage already and that that advantage can be leveraged for still greater opportunities. I think the point of including it here has less to do with effective business strategy and more with motivational encouragement to seek—and expect—better returns. It tracks with a lot of prosperity gospel nonsense that tells people what they want to hear and not what they can come to expect. It also conveys a lot of what makes Trump appealing to people, that being the swagger and bravado of a winner.

 

Protect the Downside and the Upside Will Take Care of Itself

“It’s a very good business being the house.”

This one seems to have been thrown in to balance out the bullishness of the Think Big section. Here Trump tells us to minimize our exposure and take the easy money when you find it. I actually think the two ideas taken together constitute something that might approximate a coherent business strategy. When you are able to raise the kind of capital that Trump can, your business dealings start to transcend basic commerce. You come into the ownership of things that are so big that they are not simply properties and assets; they are things that compose the greater apparatus of society and the economy. Such investments are sure to pay, so long as society—or the part of the society that’s being laid claim to—remains solvent. Skyscrapers in Manhattan remain profitable if people keep doing business in New York. Casinos generate revenue so long as people go on vacation. The likelihood of any of these capital goods diminishing in value is comparable to the likelihood of there being some kind of social revolution that changes the way people on earth go about their daily lives. It goes without saying that the risk of losing under such conditions is quite low.

 

Maximize Your Options

“I keep a lot of balls in the air, because most deals fall out, no matter how promising they seem at first.”

All he’s doing here is telling us to hedge our bets. It’s such a banal insight that I hesitate to even lend it any thought. Though I do think it could strike an average person with average finances as novel that the more money you have to invest in things, the more options one is given for investment. Again, this advice is really only practicable if you literally have more money than you know what to do with.

 

Know the Market

“…I don’t hire a lot of number-crunchers, and I don’t trust fancy marketing surveys. I do my own surveys and draw my own conclusions.”

It has taken us all a very long to time to admit it, but Trump does know his customer. He has an instinct for seeing what people want most and a willingness to deliver. He doesn’t say it anywhere in the book, but if you look at the sort of businesses Trump runs and the message he reflects back to the consumer, you can unmistakably see what he thinks people want—and he isn’t wrong. People want to feel like they’re winners. They want to feel like they’re prospering and doing well in life. They want to think that they’ve been blessed with intelligence, prowess, and good luck. In the beginning of his career Trump sold newer, slightly nicer apartments to middle income people, and these apartments gave them the feeling of upward mobility. Then he moved on to Manhattan and began selling to a nouveau riche, people who actually were winning at capitalism and wanted material affirmation of their success. He bought casinos knowing that that brief and fleeting sense of victory the gambler gets from the occasional win will always keep the people coming back. Seeing professional sports as yet another delivery mechanism for getting the consumer his fix of vicariously experienced victory, he bought a football team. And of course now he is running for President of the United States on a one plank platform of making people feel as though America is winning again.

Understand, I see nothing wrong with people wanting to feel like they are doing well in life. It makes perfect sense that we should want to succeed as individuals in a world dominated and defined by market competition. There is no shame in demanding one’s dignity and wanting to be acknowledged and admired. I take issue with the man who presumes to sell our dignity to us to us as a fungible commodity. The scam here is that Trump is not offering a means for obtaining victory in life. He’s only offering the feeling of having won. There’s no guarantee that the feeling will signify real accomplishment, or that it will persist, or that there will be any truth to it at all.

trumpandphones

There are about a half dozen other Trump Cards in the “Elements of the Deal” chapter, all of them having to do with consumer manipulation, managing exposure, and exerting leverage from a position of power. None of these lessons are actionable for normal person, and I don’t think they were ever intended to be. Art of the Deal does not teach you how to get rich. It teaches you what it’s like to be rich. It lets you sniff the bankroll without giving you any of the bills. And sadly, for a lot of people, having tickets to the show of someone else’s life is good enough. I suppose luxuriating in fantasies of another’s luxury rather than putting something on the line to realize your own is a way of minimizing exposure.

Cab Economics

uber

Listened to this podcast story about Uber and the economics of variable rate car services. The story is premised on the question of whether it’s fair for a cab driver to charge extra for a ride when demand is higher. I was surprised to hear so many people on the customer end complain in interviews about how they felt they were being cheated. The typical taxi passenger is cheated to a much greater degree by the outmoded municipal rules that govern the ride service business. In many places cab fares are standardized for all companies and the law restricts the number of companies and cabs that can operate within city limits. These systems are set up specifically to thwart competition between drivers and to make sure that everyone get some business. Rules are different in every city. Some places have next to no restriction on taxi carriers; but most do. I don’t know where the laws come from or why they were passed in the first place. I can say with some certainty that standardization has an unmistakably negative effect on quality of service. It isn’t favorable to the consumer. It does mean that the cab companies pull in regular and reliable profits. One cab company in the town I grew up in had been in business since 20s. It was a small but assured revenue stream for this old ,wealthy family that had always owned it.

When I graduated college, I worked for that company for a little while, or more accurately I contracted with them since none of the drivers were actual employees. What we were, in fact, were customers of the cab company. We would pay them rent to use their cars and their dispatch service. It was then up to us to make enough money on our fares, on top of the money needed to pay for the car, to support ourselves. As you might imagine, this sort of arrangement attracted a lot of dodgy people: deadbeat dads trying to hide their incomes so that they didn’t have to pay child support, ex-convicts who couldn’t get traditional employment, people on disability who wanted a sit-down job that the government didn’t know about. The whole operation was sketchy as hell, and I blame the city for setting it up so that it could be that way

I can say with confidence that municipal control over fares and licensing has a ruinous effect on cab service in a city. If you’ve ever called for a cab to take you to the airport and they never showed up, it’s because of the way taxi service is regulated. If you’ve ever been taken to your destination via an indirect route, it’s because of the way taxi service is regulated. So much of what’s wrong with getting a cab could be remedied if we let drivers and companies compete with each other directly for our business and let them control their own pricing models.

Some anecdotal evidence…

When I was a cab driver, I used to work the bar time crowd. This was in Madison, Wisconsin, a college town full of bars. When the bars let out at 2am, hordes of inebriated people would flood into the street, and everyone all at once wanted to go someplace else. It was like a salmon run to the cab drivers, wall-to-wall business. A driver could make a third of his money for the night during that 2 o’clock hour if he worked it right. What you wanted is to do as many rides for as many people as possible the shortest amount of time that you were capable of doing them. You wanted short rides so that you could turn over and get a new ride in the cab right away. And you wanted to drive a lot of people at once, since each body added a dollar to the fare. So we’d look for big groups of students because most of the students in Madison lived downtown, and if you worked for them you could be pretty sure that you’d be done with their ride in five or six minutes and you’d be ready to work again. What we would avoid is older, affluent-looking people whom we could tell probably lived in the suburbs and were downtown to blow off some steam and have fun like they did when they were kids. If these people got in your cab, they’d take you all the way out to the edges of town and you’d miss out on the bartime frenzy. Now this is exactly counter to how the market should work. The wealthier customers would all get served last, and business of the poorer, more numerous underclasses was coveted. There isn’t much in a capitalist economy that functions this way, and I can tell you that the rich and entitled do not appreciate being neglected by service workers. They’d bang on my windows and kick at the car because I’d lock the doors on them. One time, on New Year’s eve, I had a man offer me sixty dollars to take him home to Middleton, about eight miles away. I did a calculation in my head and determined that I could make it worth my while for $90. He agreed. I took him home and we were both happy. Uber has made a wildly successful business out of doing exactly this.

I will say, it is interesting how the rules of our bartime game completely inverted the normal market. Instead of going after the whales we all hustled after the big schools of little fish. When the prices are all fixed, the only way you can prosper is by scaling up and being efficient, spending less of your time serving more people. It’s a good case for setting up a market that is more egalitarian and that works for more people. It would be effective in the majority of cases, but completely dysfunctional for anything irregular or outside of a foreseeable norm.

Work speak

A collection of abhorrent book titles about excelling in business (No links provided, no one wants that):

The Secret Language of Business: How to Read Anyone in 3 Seconds or Less

No B.S. Price Strategy: The Ultimate No Holds Barred, Kick Butt, Take No Prisoners Guide to Profits, Power, and Prosperity

The Toilet Paper Entrepreneur: The tell-it-like-it-is guide to cleaning up in business, even if you are at the end of your roll.

The Power of Impossible Thinking: Transform the Business of Your Life and the Life of Your Business

Zero Resistance Selling: Achieve extraordinary sales results using the world-renowned techniques of Phycho-Cybernetics

Hypnotic Writing: How to Seduce and Persuade Customers with Only Your Words

Winning Body Language: Control the Conversation, Command Attention, and Convey the Right Message without Saying a Word

When I first began working in business I found I had a very difficult time communicating with people. There is a language of action that one uses at work. If you are employed, as most people are, in a field that demands execution and accomplishment, it is necessary that you be brief, direct, and purposeful with your expressions. One must make assertive proposals, and mean them. It is expedient to use well-worn clichés as shorthand for more complex ideas. Always be attentive to details since each detail of a matter can be exploited as an opportunity to speak and to make people pay attention to you. Nobody in business writes in paragraphs: ideas are listed as bullet points. There is no expectation that one’s thoughts should cohere and should support one another when one is speaking. If you try to support a statement you have made and provide justification for your reasoning, people will get bored and become impatient with you. Business people use verbs more than nouns. Business people avoid using dependant clauses in their writing and their speech, except of course for relative clauses. Relative clauses are employed by business people to qualify things. Qualification is preferred over justification. Business are very good at foreseeing potential outcomes and planning for them. Time is constantly referenced. Individuals are assigned responsibility and made to report progress toward a goal. Reports of subordinates to their superiors usually need to be very detailed but also easy to follow. This is so the superior can appear knowledgeable when explaining the accomplishments of his or her team and, by extension, to take credit for them.

Business speak coalesces out of the intersection of pragmatism and opportunism. This is how one begins to think when one has dedicated his or her thinking to productivity. I struggled to imitate these customs with only occasional success when I was working in the corporation. After a period of about eight or nine months of resistance, I had to accept that given the circumstances, business speak was an effective means of putting matters in order and articulating shallow consequence. So I kind of acquiesced and began using it, but I never became adept. I am not a man of action. I am not troubled by problems of practical application and often do not see them when they exist. I stammered in phone conferences, included superfluous information in my presentations and sat paralyzed and useless in meetings about projects I actively avoided knowing anything about.