🎙️Episode 15: “The $500 Million Lesson You’ll Never Learn in Business School" - David Lichtenstein

two, one, go. >> Imagine acquiring an $8 billion entity and then shortly after you acquire it, the entire market crashes and you're left with a personal loss of over $100 million. How do you deal with that? More importantly, how do you dust yourself off, pick yourself up, and somehow create incredible success? Listen to the fascinating story of David Likenstein this week on Jewish Grit. [music] >> David, I'd like to jump right into Jewish grit. I mean, the concept is that you're Jewish and that sometimes you got to grit your teeth and you got to work through difficult situations. when when I say the word Jewish grit and I talk a little bit about challenges and somehow getting through them, what what enters your mind? [sighs] >> Well, I started my business on my own knowing nothing about business. So, I would say that every possible mistake that you can make, I've made >> and how do you uh rebound back every time that you make a mistake? >> So, it's a sense of core beliefs and I'll share some of them with you. >> Sure. I remember I once did a a deal in Kentucky [snorts] and my flight was like at 6:00 in the evening and it was done at two. So the guy who my host said he said, "Would you like to see a horse auction?" So, um, I said, "Sure, racing horses." Yeah. So, we went to the auction and a brown horse came out and it was like $2,000. Then another brown horse came out and it was $12,000. And another brown horse came out and it was a million dollars. [laughter] To me, they all look like brown horses. Maybe one had a speckle, one didn't. And the guy says, "You don't understand. The first horse is really a laboring horse. The second horse, it's a decent horse, but it has no ancestry." He says, "The last horse is a grandchild of secretariat from one side from Rolling Thunder on the other side." And he said, "When these horses come around the track and they see the finish line, something inside of them, we don't know what it is, just ignites. And those are the champions." And that's what people are betting on when they buy a yearling for a million dollars. And I think it's the same thing we come from originally from Abraham, right? [clears throat] Abraham, Bible says, went through all 10 of the 10 tests God gave him. And if you Google the most difficult things that can happen to a person in life and you Google what happened to Abraham, they coincide. sickness, war, death, uh loss of his wife, um child, anything you could imagine. And he's called Abraham our father. And the message is, you know, if your father was a great football player, every college looks to you and they say, "Oh, it's it's in the jeans, right? If you're a your your father was a great basketball player, like that fellow from LA, right? Mhm. >> They say, "Oh, the kid's going to be something." We have to look at ourselves as we are the children of somebody of a nation that's gone through every imaginable hardship. So when it hits us, we've been there, we've seen it, we've done it, we've survived it, and so can you. >> Can I drill down a little bit more? Could you give us an example where you felt you had to uh draw on your ancestral strength? >> Yeah. Well, but my biggest um blowup failure was um uh I bought a company called Extended Stay America, a hotel company. >> Sure. >> And I bought it for $8 billion. And it went bust in the great recession of '08. >> Sure. >> At the same time that Fanny went bust and Freddy went bust and banks went bust and Leman went bust >> and um it was, you know, I I I personally lost $500 million on one transaction [snorts] and I inherited nothing. It was all money I earned and it was very painful and a lot of compatriots of mine who went through difficult times at that time such as Leman never got back up on their feet again. >> But I said I have to get back on my feet again and I have to draw on different strengths that Judaism teaches us. >> And that was one of them. >> How do you find strength? >> Well, one of them is knowing that we've done it and we've survived more serious things. I think there's another Jewish teaching that is very powerful and that is the belief that each of us is a one-of-a-kind creation. So the Talmud writes this 2,000 years ago or 1500 years ago, but science tells us the same thing. Each of us have our own DNA, our own fingerprint. >> More than that, if you go to a gym, you know, today your >> your retina is one of a kind. No two people have the same retina. You look in your eyeball and the door opens up. Now the ear everybody's ear is shaped differently. There's a company that's raising money that they when bank calls you they they want you to confirm a wire and now they could with AR you can fake. So one of the things is everybody's ear canal is different and the way the response bounces off your ear canal they know who you are. Wow. So we are truly each individuals and we also believe as individuals each of us has our own mission and if something were to happen to you nobody in the world could ever replace you in that mission that you were brought here to do. Everybody remembers when the Challenger blew up and everybody was killed six and the Challenger, which was a multi-billion dollar rocket, blew up because an 11 rubber gasket failed. And that's a very Jewish concept. I don't know if I'm the rubber gasket. I don't know if I'm the engine, but I know I'm irreplaceable. And I know I have a mission. And being bankrupt isn't what part of that mission. So, it must mean that it's time to get back up on my feet and it's time for you to get back up on your feet and go accomplish your mission. >> How does one find their unique mission? >> Um, I think at some point in life there's something that speaks to you really powerfully and that other people may or may not hear and that's the voice that comes to you. And it could be many things like I know there have been many different things I'm involved in such as Kiraov right outreach which you know I'm doing in my own way you know I have this new Instagram podcast or it's a it's a Instagram YouTube it's called we are off the page and I think throughout life we all have voices that we hear and that others don't hear and uh I'm talking about voices of good and voices of reason and voices of positivity not you know the crazy voices that people hear and when we hear that voice it's really our mission talking to us. >> So how do you balance I know that I came into your apartment and you were sitting there and you had a safer you had a Torah book open and that's what you were doing. How do you balance that with your professional career? >> So I think it's a few things I think it's about one is about like everything else in life boundaries like when I do this I do this when I do this I do that and and set up you know the times that you need for each of them and those times in life change. So, for example, when I went out to work, my wife was expecting I was second kid. I had no idea what I was going to do. And I went into real estate because I figured you really don't need to know much to get into real [snorts] estate. It's in effect. >> No college degree. >> No college degree, you know. And um I work I was working um 100hour weeks trying to get established and I couldn't learn for the first few years much at all. you know I was you know but then as you get established and you realize hey you know there's such a thing called delegating you know you you have you you're putting bread on the table already and you say I have a I have a certain amount of free time well you can spend that free time scrolling through Instagram you can do it you know watching movies and Netflix and I always get a kick when I see in the paper New York Times again the 15 movies on Netflix you must see this week before they [laughter] phase down I speaking 50 I haven't watched a movie probably in 25 years right so it's a question of where do you want to spend your really valuable time and I'm not speaking anything about you know if if if you want to watch Netflix bless you if you feel that it really chills you out and takes away the stress in your life then it's really important and holy but if you feel there's something else that speaks to you and I had learned in yeshiva for many years beforehand and learning is a really meaningful part of my life and when I learn I'm able to just the world sort of disappears. You know what's amazing about when you open up a gamura, right? So, you're opening up something that part of it, the Mishna was written around 2,000 years ago in either Jerusalem or Babylon. And the Talmud was written in Babylon around 1500 years ago. Rashi on the right is coming from France, medieval France around a thousand years ago. Toshus on the left is around 900 years ago. Then I have in the back I have the rush who's from Spain and also you know and the rabb you know and suddenly from the whole world I'm surrounded by two and a half thousand years of knowledge or 3,000 from five continents and they're all for the most part often disagreeing with each other and debating and suddenly you get sucked into this debates and you say who's right and who's wrong and let's look at how has time affected it how has time proven who's right and who's wrong and the world starts to disappear then setting boundaries around it. And when I'm in this room, my phone is gone and um that's how you do it. >> Has your definition of success changed from when you were first selling encyclopedias? I did my research. Um to where you are today? >> I don't think so. I think success to me um is about fulfilling your potential and your potential changes over time too, right? But I think that in each one of us there is a book and the book is waiting to be written. Everybody writes their own story and it's up to one person. You [snorts] >> you imagine if American youth would all know this and every year they the beginning of whatever the year the beginning of the year is for them they take time to write a 365day uh personal mission statement or business plan. I think this country would look a lot different. People are react reactive. They're not proactive. >> Yeah. >> What do you think is just from somebody who's had his has his finger on the pulse of so many different things. What do you think is the single biggest mistake that young people starting out at their career have when they make the mistake? What is the mistake that they make or >> um I think young people don't realize they don't teach this in school and shame on them. [snorts] They don't realize how often they will fail and they don't realize that failure is a part of the process. And we look at digitized heroes like guys like Zuckerberg or and there are people who magically you know seem to have made it through. And there's a reason for that too. But the vast majority the 99.99999% including most of the Forbes 400 have failed many many times in Judaism. Failure is part of life. [snorts] We we fall and we get up and we fall and get up. And every day in our prayers, we say, "Lord, yesterday I think I really screwed up, but today let's hope for a better day." And when we recognize that failure is part of the process of success and you're never going to shoot that three-pointer unless you've >> taken the shot >> many times and failed, right? One out of two, one out of three, right? And it's like that in life. So if we could say I embrace failure as part of the process and that the year that Babe Ruth hit his 60 home runs, he also led the league in strikeouts, right? And that takes away some of that stigma and fear and embarrassment. And I'm always talking about failures, right? I've I've had many, right? I have a a big book at home. all the failure all my failures I keep it all the fool stupid things I have done [snorts] right and when we recognize that it's um it's very empowering right and I think many kids when they start out have big dreams right and we want to dream big there's something you know I heard a story once um there was a little girl in class in art class she was like five years old in first grade and she was drawing and drawing And then the bell rang and the teacher said, "Time's up." The kid keeps on drawing. Teacher waits another minute. She goes back and she says, "Um, you know, it's it's time's up." She says, "Wait, I need another few minutes." She says, "What are you drawing?" I'm drawing a picture of God. So the teacher looks at she says, "But but nobody knows what God looks like." So the little girl looks at her. They will in two minutes. Beautiful. I think we all have dreams and we have big dreams and [snorts] that's that's who we are as children. And you know that if you go into a a first grade class and the picture the teacher p picks up a red piece of oak tag and she says, "What color is it?" If there's 25 kids in the class, how many will raise their hand? 24 or 23. Now, fast forward to college and a teacher asks a question. He she who has the answer to this on the black on the board? How many kids will raise their hand? Maybe one. What happened between first grade and college? And the answer is we happened. We shamed, we ridiculed, we mocked, we laughed, and we taught us not to raise our hands anymore. And that those dreams that we had when we were three and four and five to let them die, right? And when we go back out into the world or become older, we have an election to make. Do we want to be the five-year-old or do we want to be the 20 year old? And one of the ways to have that courage, it's one of a few, is to recognize failure doesn't mean anything. It's just a step. >> Doesn't define you at all. >> It's a stepping stone. You learn from it. I think um somebody once said, you learn much more from your failures than from your successes. And that allows us to step back into our own five-year-old shoes. >> Do you have a mentor? >> Many mentors. I'm a big believer. You know, when we go someplace, and I travel fairly often, my wife gets all upset. I always, "Excuse me, where is that street? I just want to be sure." He's like, "You asked four times already." You know, like just, you know, you shouldn't ask so many directions. I'm the guy I'm the least embarrassed guy to ask. And people for the most part are willing to think, you know, where I'm going and I and I very rarely end up in the wrong place when you ask 20 people along the way, where you're going, right? And that's sort of a metaphor for life. There's so many expertes. I'm the guy who's always saying in meetings, wait, I don't understand that. Could you explain that? I don't get it. Explain it to me again. Why? Because there's nothing embarrassing about knowing my rebi and yeshiva was from may rest in peace. And what his most common line when you would ask him questions was that's a good question that I don't know the answer to [snorts] that I don't know that I don't know and I learned from him that the wiser you are you recognize that you don't know and the people who don't ask and say think they do know it's either out of embarrassment or stupidity so you ask me if I have mentors I have as many mentors >> spiritual professional >> what do you think I ask after after that >> I think you surround by people >> yeah because in all these areas there are people who know more than me you know there are so many different areas of expertise in any business right why not ask when you don't know >> when you're looking to hire someone in your company what are the key criteria for somebody that you think could be successful >> I think that absolutely the best criteria depending on what age the person is is what has the person done date because even though they say in the bottom of the commercials past credit is no >> indication of future. >> It's not true. >> Somebody who's paid their credit cards for years will continue to pay their credit cards and somebody who hasn't won't pay you either. Right? So it's really looking about what have you done to date and if the answer is I've really failed at that and I failed at that and I failed you're probably going to fail at your next job too. Right? So to me it's not important what school you went to but did you well were you interested in doing well at at school? Did you do well in your class? Did you do well? You went to a C-class school because your parents couldn't afford to send you to someplace else or because you had to help your mother because your father was sick or there's a million reasons. But while you were there did you put in the effort and did you try? Because people who try will always try and people who have figured out a way to succeed will always figure out a way how to succeed. And to me that is the single best and most relevant thing when you're hiring. If you were sitting with our 70,000 80,000 students and young professionals across the globe literally 300 locations in five continents and you had an opportunity to share one message with them, what would you tell them? I would say don't let fear impact your life. We know you have dreams. You know you have dreams. You know you have capabilities. You know how to think big. The the the joker in the deck is fear. And if you could make that commitment, I will not let fear get to me. I will fall down on my head. I will be bloodied. I will lose a tooth, but I will get back up and I could fall again and I will get back up again. Nobody's expecting you to get it right. Not on the first time, not in the second time, not on the third time. But if you have that commitment and you say, "I will not fear shame. I will not let that negativity get in my way." You will be successful in a way that surprises you. >> Thank you so much, David. It has been a true privilege. So many great things to think about. I think on my drive home from Manhattan, I'm just going to try to keep rehearsing what I heard and you should continue to do great things for the Jewish people. >> Thank you. Honored to be here. >> Thank you for listening to Jewish Grit and Oly mentorship podcast. At OM mentorship, we believe that everyone needs a mentor. What better way is there to tap into your personal and professional potential than with a Jewish mentor at your side? Learn more at olami.org/metorship. Don't forget to keep listening on Apple Podcasts, Spotify, or wherever you get your podcasts.