Rick Caruso: Why Money Should NEVER Be Your Motivation (Worth $6 Billion) | E178

0:00Don't do business with bad people. You'll never make a good deal with bad people.

0:03Randall Kaplan:How important should money be as a motivation to working hard and being successful? Zero. Never thought about it. The money's going to come. If you do your job well, you're smart about it, continually reinvest, the money's going to come. How important has extreme preparation been to your success? I'm probably not as extreme as you are. I'm impressed how extreme you are, so congratulations. Will you announce on my show today whether you're going to run for mayor again or, as rumored, governor of California? Yeah.

0:49Randall Kaplan:welcome to in search of excellence my guest today is rick caruso the most influential real estate developer in los angeles who has reinvented the retail shopping experience by turning shopping malls into lifestyle destinations. His company Caruso owns 10 major retail and lifestyle destinations, including Palisades Village, including The Grove, which has over 20 million visitors a year, which is more than Disneyland. Rick ran for mayor in Los Angeles in 2022, lost by a very narrow margin. And we're going to talk about today what his political aspirations are. Rick. Thanks for having me. Welcome to In Search of Excellence.

1:22Good to be here.

1:23Randall Kaplan:All right. So now I'm going to talk to people who don't live in Los Angeles. Okay. West side of Los Angeles. I live in Brentwood. Pacific Palisades is next door. And you built the Palisades Village, which finished in 2018. Erewhon is a grocery store that has a cult-like following. There's people who fly from New York just to eat there, if you can believe that. I read that somewhere, which is insanity. Yeah, that's pretty big. But it is a place on its own. And we're going to talk about your private fire department in a few minutes. When is it going to reopen? Because I got 300 DMs from people. You got to ask Rick, when is Erewhon coming back?

2:01Randall Kaplan:When is that center reopening? Well, the whole center is going to reopen in August. So what we're doing right now is we're literally gutting the inside of it, which I know you'll talk about, but the property survived the fire. But what I really wanted to do was to assure everybody that place is safe as can be. So we gutted the inside. What does that mean, gutted the inside? Because it's open space. We took out all the drywall, the spaces that we took out on the inside of the space, we took out. So there's no smoke. There's no lingering contaminants. We ripped all the drywall, all the improvements.

2:33Of all the stores. Of all the stores. Went down to the studs. All the apartments went down to the studs.

2:37Randall Kaplan:You can't see it from the outside at all. You don't see that. That's what's happening right now on the inside of the space. Took it down to the studs. Then we treated the studs. And then we had an engineering firm come in and test to make sure it's perfectly clean. and it is, and then we're rebuilding all the spaces. So we will reopen fully operational next August. And I think Arowan will open a little bit after that. They've got a little bit longer building period, but they'll be pretty confident they'll be reopening with us. Let's go to January 7th. I work in Brentwood on the fourth floor of the Comerica Bank building.

3:16Okay.

3:17Randall Kaplan:And I'm writing a book. I got my phone off, my computer off, but my son was in town that day from college. I got my phone up, right? We're supposed to have lunch or whatever. And he's not supposed to call me till noon, but just in case he calls. So the school calls, Pelley Elementary, where my then second grader went to school. And like, okay, like they call, call again. And they're always calling. This is brought, this is Principal Herman brought to you by Caruso with a message, right? And so I never pick up the phone. I pick up the phone, evacuate because of the fire look out the window and like holy smokes for lack of a better word you can see the fire on the ridge right and you know pick up your kid immediately so i basically look at the fire which is three miles away from my office you can see it and it's black smoke it's like a tire burning you know at at that point and i get there i'm driving down sunset like a maniac double it's a it's a windy road as you know and it's double yellow and i'm honking at people and the only of people passing me, police cars, fire engines.

4:17Randall Kaplan:You get to the school, there's four schools nearby, right? You can't park anywhere. So I double park. I ran into the school, pure pandemonium, right? You know, they're calling your kid on the walk and talk. I remember carrying Carter out in my hand, like a football, you know, running down the street. Hey dad, put me down. When did you hear about the fire? Early that morning, it was probably around 10 o 'clock from one of my kids, from my son saying, dad, there's smoke. And he was on his way to our house in Brentwood. He lived in the Palisades. I was on his way to our house to use our gym. He uses the gym after I use the gym.

4:51So it's fun. We get to see each other in the mornings. But yeah, I learned about it then. And then we monitor it, obviously. And we had our people embedded in the command station watching it.

5:00Randall Kaplan:I hope you're enjoying this video so far. But before we jump back in, I want to know if you've ever thought about what you need to do to reach a nice level of success in your life. Over the last 25 years, I've been an advisor to more than 50 companies. I've invested nearly 100, including Google Lyft and Seagate. And I also co-founded a company that today is worth more than$15 billion. I've been incredibly blessed in my journey. And at this stage of my life, I want to give back. I want to share the lessons I've learned so you can reach incredible success way faster than I did. In my own journey, I've learned that having the right mentor is a massive advantage to achieving our goals.

5:32Randall Kaplan:I'm hugely passionate about mentoring others. I'm looking for a few hungry entrepreneurs are excited to take action on their journey to incredible future success. So if that's you, I've got an opportunity. In the description of this video, there's a link where you can apply to work with me. All you need to do is answer a few simple questions. And if you're a good fit, my team will reach out so we can build a game plan together. All right, now let's get back to the video. You did something in advance, though. I mean, we all knew the winds were coming. Right. They were forecast 100 mile per hour winds.

5:58Randall Kaplan:Right. There was fire warnings. Right. Right. So you did something smart, very preventative. Right. We're two days in advance. Why don't you tell people what you did and how you were able to save that center from getting burned down? Because everything around it burned down, except yours is basically standing by itself, except for the gas station that my friend owns across the street. Well, what we were able to do is not only save our property, we saved everything on our block and we saved everything across the street, that whole block. So there's one commercial block that's still remaining that our team saved.

6:29We learned a lot up at Miramar's. We were building Miramar up in Montecito. So there was the, I think it was the Martin fire. I forget what the name of it was. And we were just in framing. I talked to one of our senior people and I said, listen, if that fire comes over the hill, the fire department, rightfully so, is going to have all their resources to saving homes and they're not going to have the resources to protect us. What are our options? He came back and he said, we can hire private firefighters and have our own water tanks and have retardant. We can spray the retardant down on the framing, blah, blah, blah.

6:58And I said, okay, do it. Put the plan in place. And we mobilized during the fire up there with a private firefighting team, retardant, and our own water. So we weren't taking resources away from the city. And at the same time, we were protecting ourselves. We had that plan in play at the Palisades. We knew we were building in an area that is a fire risk. We designed and built the property to make sure there was no combustible materials. What looks like wood is really concrete. We don't have vents and eaves where embers get in, things like that. So it started with a very smart design, very smart construction materials, and we had a plan on the shelf in case there was a fire.

7:36And so two days before when we were getting these notices of the winds, catastrophic winds that was coming up on our phones, we deployed. And we had private firefighters, our own water and retardant with the same philosophy that the firefighters are going to have to protect and should first protect the homes. We can take care of ourselves. And we were able to do that. And we saved, like I said, the full block along with eight of our own residences. But listen, it was a terrible disaster up there. I'm grateful to our team. They did an amazing job. And because of that, we're going to be able to reopen, which is giving that community hope that their town is coming back.

8:13And that is really gratifying to me that we're going to be part of giving people not only the hope, but the will to rebuild because it's an enormous amount of effort to rebuild that town. And we're very active up there supporting those people. as we are in Altadena and in Malibu.

8:29Randall Kaplan:There's a ton of conversation out there, as you know, especially in LA, about whose fault this was. That it was allowed to get to where it gets. I mean, so many of my friends, you know, my daughter, we knew at Pali, 95 % of the families live in the Palisades. We live in Bretwood. We got into Pali. So maybe 80 % of our friends' homes burned down and everyone's of the same mentality. It's not gonna actually burn down because there's a fire department on Sunset right next to your center, actually. I live in Brentwood. There's a fire department 0.7 miles down the street from me. I'm never thinking that our home is going to burn down.

9:08Randall Kaplan:Thankfully, we had a lot of ash, but we were fine. And no one took stuff out of their home, right? Because it's just not going to burn down. There's no way it's going to burn down. So people didn't take their possessions, their photos. Didn't even have time. They didn't have time by the time they realized it's going to burn. Mayor Bass, Karen Bass at fault. Is the former LAFD commissioner, Kristen Crowley at fault? Who's really to blame for this? Well, listen, I don't think the city was prepared. It's clear the city was not prepared. And the after action report proves that. It could have been stopped.

9:42Fire never had to happen. And so we know that now. Had the city been better prepared, there wouldn't have been a fire. People would still be in their homes today. People, kids would be in their schools today. And that's based on an independent report. Listen, the buck stops at the mayor. The mayor should have had the city more prepared and doing the right things and following up. And she made a decision to be out of town. But she also made a decision, apparently in lead of this, not to ask a lot of questions from the fire department, from all your agencies, from DWP. Are the reservoirs full? Do we have enough water?

10:11Are we prepared to deal with this? Did the fire that started on January 1st, is it completely out? What a lot of people maybe don't realize is the original fire that started January 1st was still smoldering. That's what reignited on the 7th. Had the fire department actually put it out and monitored it, it would not have reignited on the 7th. And therefore, there wouldn't have been a fire. There would have been winds. There wouldn't have been that fire. This disaster was completely preventable. We know that now. That is just as bad as it gets to me. I mean, it's negligence at the highest level.

10:44It's beyond being unprepared.

10:45Randall Kaplan:You entered politics when you were essentially 25 years old. You were having lunch with a lobbyist. With a lawyer, a friend of mine. Well, you know, who had a badge, was on the LA Fire Department board. You said, oh, that's cool. And then at 25 years old, you became the youngest commissioner on the LAWP board. The youngest commissioner in the city, in the history of the city, yeah. You're listening to part two of my incredible interview with Rick Caruso, one of the most successful real estate developers in the world, whose net worth is$5.9 billion. Rick ran for mayor of Los Angeles in 2022. And on today's show, I'm hoping he's going to announce he's running for mayor again.

11:21Randall Kaplan:If you haven't yet listened to part one, be sure to check that one out first. Now, without further ado, here's part two of my incredible interview with Rick. Right. In the history of the city, 80-year-old. And then in the history of the organization. And then the next year, you became the president as well. And then years later, you ran the L.A. Police Commissioner Board as well, where I think you served for three years. Then in 2020, you decided that you were going to run for mayor. You talked about it years before, and then you ran. And then the word on the street was, here's Rick Caruso, billionaire, who's going to spend a lot of his own money to basically become the mayor of Los Angeles.

11:57Randall Kaplan:And you're going to buy your way in. J.B. Pritzker is a law school classmate and friend of mine. And when he was running for governor, he got the same criticism. I remember him calling me on the phone. He said, hey, Randy, I'm running for governor. And I said, I mean, he wasn't looking for money. He spent his own money. He spent$100 million of his own money. Right. And he aired to the Hyatt Hotel Fortune for those people who don't know. And I said to him, I said, hey, JB, you're going to spend$100 million of your own money and you're going to buy your way into the governor's office. He said, yes, I am.

12:30Randall Kaplan:I said, why would you do that? He said, because I think I can make a difference to the people in my state. Tell us you lost to Karen Bass, 52 point something percent to 47 point something percent. And all of my friends were pissed because we wanted you to win. Well, thank you. I appreciate that. Yeah, we still want you to win. And what was the thought process? Why did you want to become mayor, number one? And how do you think you lost? I wanted to become mayor because I worked for three mayors. I worked for Tom Bradley. I worked for Dick Reardon. I worked for Jim Hunt. And I really learned a lot.

13:02And I saw what great mayors can do. And those three, in my opinion, were three really great mayors for us. And I learned the sort of the management skills necessary to manage the city, which is a very complex city. And then on top of that, what I was seeing, which all of us have seen, the city was in a state of decline. We had rising homelessness. We had rising crime. You know, all these things were going on. And it was clear to me that all of that could be solved, given the right management, given the right leadership, all of these kind of things. And I feel confident I could do it. And I wanted to give back.

13:35I loved public service. What Tom Bradley and Dick Reardon and Jim Hahn did is they gave me really tough assignments because they trusted that I could figure it out. And they were complicated assignments. And so I wasn't worried about being able to figure out the problems of the city. So I ran. I don't think anybody buys an election. You know, I spent my own money because I needed to get my name out there. And I was running against somebody that was well known. You know, who'd been in politics for 30 years, whatever the case is. And I've known Karen Bass for a long, long time.

14:07Randall Kaplan:Do you like her personally? I do. Listen, I think Karen Bass means well. It's a very different skill set to be a legislator, to be in Congress and be drafting bills, passing bills, sitting at hearings, on and on and on than being an executive. When you're a mayor, you're an executive. When you're a governor, you're an executive, as you know. That means you've got to define goals. You've got to create a team. You've got to have expertise. You know, you got to have systems in place to get things done. You don't do that in the legislative side. So it was clear to me that the skill set was not matched up.

14:42And we had just went through that with Eric Garcetti, who was a legislative.

14:46Randall Kaplan:Who was on my show, who's an old friend. I met him when he was running for city council the first time. And you know what he said about being mayor? He said, it's a thankless job. You have no power, essentially, to make any real decision because you've got the board of commissioners and it's really your main job is to really work as someone who can put together people to actually make the decision. Couldn't disagree with him more. Couldn't disagree. Okay. Couldn't disagree with him more. And I think that's why he was a weak mayor. Okay. Because he didn't. Well, he was. He's a great guy though.

15:16He's a great guy. Just because you're a weak mayor doesn't mean you're a bad guy. Just because Karen Bass has not been a good mayor doesn't mean she's a bad person. You know, that would be like if I went and decided I'm going to go do brain surgery, I'm going to do a terrible job. That doesn't mean I'm a bad person. Yeah. It just means my skill set isn't lined up with the job responsibilities. Eric, as a council person, that's a legislative job. To move into the mayorship, he wasn't qualified to do it. And we had huge problems. And the problems have now gotten worse. I don't think anybody in this city that I know of will honestly say the city is better today than it was 10 years ago.

15:54The city is better today than it was five years ago. The city is better today than it was a year ago. I don't know how you could say that. Financially, homeless, crime. Do we have clean streets? Do we have safe streets? We don't have any of that. I'm saddened for the city, but I'm also so positively optimistic that all of it can change. Because I do think it's the greatest city. And with the right leadership, with making some really smart decisions, the city will bounce back.

16:21Randall Kaplan:Will you announce on my show today whether you are going to run for mayor again or, as rumored, governor of California? Yeah. No, I won't do that today. But there'll be an announcement soon. And it's a very tough decision because I want to do what's right and where I can be really productive. You know, I'm at the state of my life. I want to be productive. and I want to give back. And I've done that my whole life. And like I said, I loved working for Tom Bradley and Dick Reardon and Jim Hahn. You can make an enormous difference. I couldn't disagree with Eric more. You can make an enormous difference.

16:58Look at what Tom Bradley did. Look at what Dick Reardon did. Look at what Jim Hahn did. They made enormous differences in this city. The mayor's got more than enough power to do a lot of great things.

17:07Randall Kaplan:So keeping it very simple, if you could just list that one by one without going into them, because I know we're getting toward the end of the show. What are three things that you would do as mayor of Los Angeles? The first three things that are different than what Karen Bass is doing. I would enforce the laws, clean the streets, not allow drugs to be sold in our streets, which is only harming the homeless population even more. I would make the streets cleaner, safer. I'd have homeless getting into shelters and homes and giving the services that they need. And I'd bring down the cost of housing dramatically, which I know how to do.

17:40So LA has become too expensive to live in, and we need to drop that cost of living in this city, which we can do. It's only gone up under her leadership. We need to turn that around.

17:48Randall Kaplan:Okay, so let's talk about the cost of homes in Los Angeles as well. It's very expensive to live here. If you live in the west side of Los Angeles, the average home in the Palisades was over$3 million. California is a democratic state. You are a Democrat. And there's something in Los Angeles that's called the mansion tax. that essentially says if your home is over$5 million, you're taxed an extra 4.7 % on the house. If it's over$10 million, you're taxed, I think, 5.3%. That's obviously very popular to the state of California, where most people don't have a house that's$5 million. So there was a tax that was passed, overwhelmingly, that the state estimated was going to bring in hundreds of millions of dollars in revenue and has backfired tremendously because it's put a massive damper on the number of people who want to sell their homes.