Why I Left California - Billionaire Rick Caruso Responds To Criticism, Homeless & CRAZY Home Prices

22:26I mean, people criticize the Grove, all of our properties since I started. This guy's crazy. He's got all this open space. He didn't maximize the building footprints. we make an enormous amount of revenue on what we call the negative space, the space outside the buildings. We have a whole team of people that is monetizing that space, advertising revenue, sponsorship revenue, event revenue. It's massively significant revenue. So not only are we using that space to give people enjoyment, we're also using that space because it creates a lot of revenue for us.

23:03Iced Coffee Hour Hosts:So if someone gave you a dead mall tomorrow, Do you think you could save it? It depends where it is. Let's say the Santa Monica place. Because my understanding, they're underwater on that building. Oh, they'll give it to you. The bank has it. It was offered to us. Really? Yeah. And what are your thoughts on that? Could you save it? Knock it down. Knock it down. You have to tear the whole thing down. Yeah. It was bad when it was built. Why? It's just, it's not customer friendly. It just fundamentally can't function. a third story mall doesn't work would you put on the third floor the second floor is always 80 less effective if you go into our properties there is no entrance to a store on a second floor people just don't shop that way right so be the customer you know and uh it just was never right and then it's attached to a parking structure that is historically significant because of the architect, but the parking structure is so old and terrible.

24:04It's so frustrating to park there. You don't want to go. I think it would make great residential, but I would tear it down. And most malls will get torn down.

24:14Iced Coffee Hour Hosts:You said you walk your properties once every two weeks. Couple weeks, yeah. What's something that you spot that 99 % of investors would miss? You know, I walk them because I really want to see what our property managers are telling me as long when I'm going for a walk. As we're going for, now I'll say, you know, that plant over there, you know, we should get rid of that and get it replaced. It's not right. You know, things like that. We'll look at the buildings and whatnot. But I'm walking with them because I want to hear them talking about the business, what's generating the business, how our customers are feeling, what's working, what's not working, what retailers are doing well, what retailers maybe we need to change out.

24:55we run with a waiting list to get into every one of our properties so we have zero vacancy we've got about a million square feet more than we can satisfy so what we're doing is if a retailer isn't doing well isn't connecting for some reason has gotten tired which it happens in retailer restaurants we want that space back immediately and we want to be able to release it very different than what malls do because malls are really in the business of filling space. And we're not in the business of filling space. We're in the business of selecting the right retailers and restaurateurs that create a synergy, that work together.

25:35And where they're placed and how they're placed is really important to us. There's an art and a science to it. And we're busy and we have a waiting list because we generate higher revenue for the retailers. It's simple as that. They make more money being on our properties. They pay us higher rent because of that. So, you know, our CAGR has been 18 % over the last 30 years, which is pretty strong. And our revenue growth is significant.

26:03Iced Coffee Hour Hosts:Speaking of investments, what's been your best and worst investment? Oh, it's been my best and worst investment. Well, the best investment you always make in business is your team, for sure. Hiring the right people is the most important thing you can do to build a business. In terms of a financial return on a cash investments, I don't know. Our properties, I mean, the Grove is exceptional. I mean, the Grove is the number one or two, quote unquote, mall in the country in terms of sales per square foot. It's just, it's a powerhouse. But so is the Americana. And so was Palisades Village when it was operating.

26:47You know, we were the number one, two, and three mall in the country. They're spectacular. The Miramar, I don't know if you've been up to the Rosewood Miramar, our resort that we built in Montecito. I'm so proud of that. I'm proud of all of our properties, but we never built a hotel. And my dad, who was my best friend when he was alive, I bought the property up there. It's right on the beach in Montecito. and he literally drove over to my house and said, what the hell are you thinking? You've never built a hotel. And I said, Pop, I'll figure it out. And he said, and Rick, there's a train that runs through it.

27:27There is literally not a trolley like at the Grove. There is Amtrak that runs through it six times a day. There's the beach, there's the train, there's the rest of the property, and we have rooms on the beach. And one of the basic premises of our company is every piece of property has something that you can either isolate or celebrate. I can't isolate a train. So I got to go celebrate a train coming through the property. And I'm saying all of this because there's something very powerful in business that I think most people that are starting in business think just the opposite. That they have to know all the rules to be successful.

28:11And what I would tell people is, you're going to really benefit greatly from not knowing all the rules or breaking a whole bunch of the rules. I didn't know how to build a hotel, and I wanted to build it to look like a home where I was welcoming people home. And the hotel management people that we were dealing with just thought we were crazy. that property right now which is designed as a home patterned after one of my actually my favorite architect um is now the number one rosewood in the world um it has three forbes five stars and two michelin stars and it's the only hotel in the world that has that this is from a group that never built a resort.

29:02Iced Coffee Hour Hosts:So if you were inexperienced going into that investment, how were you successful when I feel like the main thing that causes people to fail is inexperience? You have to know what you know, right? It's like when somebody says, you know, to people in college or whatnot, go do what you're passionate about. I think that's the worst advice you can give somebody. You've got to go do what you're good at. And one of the things I'm really good at is surrounding myself with really smart people that know a lot more things than I know. And then I sort of have a way of saying, I like that idea, but I don't like that idea, right?

29:39And I can set a vision and then surround a bunch of people that can really execute to it. But I learned something a long time ago, which I just said, but I learned it from Steve Wynn, who I actually just walked up and met like 20 years ago. I think Bellagio was maybe built, what, 20 years ago, 30 years ago? Probably. When it opened up, I was up there because I was curious to see it. Because we travel a lot to see what works, what doesn't work, and get inspired by people. And I walked in and there was the front bar. And Steve Wynn and his wife were sitting there with another couple. So I just walked up and introduced myself.

30:18But what really hit me was he's sitting in his property enjoying it. And I thought to myself, how cool is that? and uh i said to him sort of as we got to know each other over the years give me your number one rule and he said be the customer follow your gut if it doesn't feel right don't do it if it

30:41Iced Coffee Hour Hosts:does feel right do it that's interesting i feel like what helps out a lot with building this business of the podcast is graham and i are pretty obsessed with just listening to podcasts and so it'd be really difficult to run a podcast if you're not just constantly in it and watching what the competitors are doing. Yeah, you're smart. That's why you've got to, I think that one of the worst things that happens in a company is when executives or anybody gets siloed and then they start staying in the office more. You got to get out, you got to experience, you got to talk to people, you got to see things, you know, see what works, see what doesn't work and challenge those things.

31:15So what's been your worst investment? We did a project down in Carlsbad and we got it approved And then the local mall, which is typical of what happens, has happened to us many times, owned by Westfield, created a referendum to overturn the improvements, approvals. And they won the referendum. We lost it. Another group tried to do that to us at Americana. We won that referendum. This one we lost. We lost it because we outsmarted ourselves, meaning we didn't follow what we knew worked. and we just didn't follow our playbook, which was really staying close and listening to the community. And it was just a massive mistake, and I had to write it off.

32:06How much did you lose in that? About 10 million. Oh.

32:11Iced Coffee Hour Hosts:That's not that bad. No. All things considered. At the time, it was. How did it feel to just lose 10 million dollars like that? It didn't feel. It felt terrible. Was it a big portion of your net worth at the time? I don't have partners. Yeah, it was a big portion of my net worth. What'd you learn from it? When you have a playbook that works, follow it. I mean, you'll always have things where you need to adjust and pivot, but our team, including me, didn't follow what we knew worked. And we didn't stay as connected and as close to the community as we would normally do. Because when you take a look at every one of our projects that we built, they're in areas that are very, very tough to build projects.

32:51You're not going to have another hotel built on the beach in Santa Barbara or Montecito. It's just not going to happen. It's just so difficult to get those entitlements. The fact that we got it done is pretty remarkable. And we created a lot of value. And it's been a great investment. And people enjoy it. So it's great. But we did it by really staying close to the community and listening to them. And making changes that the community really wanted to have made.

33:19Iced Coffee Hour Hosts:So consequently, if you have a playbook that doesn't work, such as the governance of California or the city of Los Angeles and you need change, if California went all in to fix the state's problems, realistically, how long would it take to fix it? I don't think that long. Now, I run really optimistic in life, but I don't think that long. And I tell you why. I think if you change the narrative to start is the most important thing. The next governor says We're open for business We welcome you here We're actually going to have your back We're going to drop the cost of housing We're going to help you get Housing We're going to build a lot more housing We're going to have clean and safe streets But nobody headed west to fail We're going to go be that state again Where you're going to come here And your dreams are going to come true When I started my business I knew nothing about the development business.

34:16I'm this lawyer. But I felt so strongly that Los Angeles was a place where I could dream big, work hard, and one rung at a time, I could pull myself up and build a business. I just really believed that. I don't know if people now believe that. And that's what you've got to bring back.

34:40Iced Coffee Hour Hosts:That's all Graham and I ever wanted was to build a business, scale, have employees, have staff, get a warehouse, pay ideally lower taxes to reinvest back in the business. We were both residents of California. We left to Las Vegas. I was able to buy my first house ever in Las Vegas, which I would not have been able to do in California. Because of that, I got in when rates were really low and that was great. I built equity in that house and I just got a new place with a warehouse in the back. and that's our new headquarters for this entire operation. But that would have been impossible to do in Los Angeles.

35:14Iced Coffee Hour Hosts:I would not have been able to get that warehouse over here. Yeah, the other thing is when I announced that I was leaving and that was in 2020, I got an email from the business administration of Las Vegas saying, hi, Graham, I saw your video. I want to welcome you to Las Vegas. If there's anything you need, here's my cell phone. We're happy to have you. How about that? Los Angeles, instead, you get this like 1 % tax that if you forget to file this like online form, they assume you make 500, you know, some certain amount of money and then they send you a bill of like$5 ,000. But you're absolutely right.

35:47And every one of those principles though is a basic good business principle, right? In business, you wanna be welcoming your customer and thanking your customer. It's just so simple. You send a note, you pick up the phone, you call, you talk to people. Like I look at, this is crazy. Every morning, I look at the guest check-in list at the Miramar Hotel, and I identify if there's somebody there I know that's checking in, or if there's somebody that is some kind of special person that I either want to get to know or whatever the case may be to make sure they have a welcome note from me with my cell phone on it saying, please give me a call if you need anything.

36:29That's just basic, good business. The state and the city should operate the same way. to your point. And the city should have said, please don't leave. What can we do to keep you

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38:15Iced Coffee Hour Hosts:The link is down below in the description. Enjoy. So you ran for mayor back in 2022 as a non-career politician, but as a career entrepreneur business person. What would you say is the strongest argument for and against career entrepreneurs running for political office? Well, I think the strongest argument against it is that they don't understand how government works, which is nuanced. It's different than how business works to some extent. A lot of the same principles in business that are smart and are important can certainly apply and should apply to government. What I would say as the pro is having somebody that it's got good managerial skills, that understands how to manage an organization, that understands how to build a team, that understands how to set goals and have KPIs around those goals to judge whether you're successful and on the right track and to constantly be reassessing those things like you would do in business.

39:16Applying that to government would be amazing. It would just be amazing. Like we're spending billions and billions of dollars on getting people off the street or homeless off the street. It's not working, but we continue to do the same thing. We should be putting measurements of success around that and saying the goal is the right goal. Let's get people off the street and give them a better path to a better life. But let's not keep doing the same thing where we're not successful. And so having that managerial mind and business mind, I think would be incredibly. Now, for me, I felt that I had, which I do, I felt I could do both.

40:00I had the experience of being in government. I was a young commissioner and I ran Department of Water and Power when I was 25 years old. I had to learn everything. I had no idea what I was doing. But Tom Bradley gave me a chance and he gave me some very tough assignments and he trusted that I was going to be able to pull him off. And with his help and others, we did. When there was energy deregulation, Department of Water and Power was being threatened and from a business standpoint, almost went into bankruptcy because of the Enrons of the world. Dick Reardon asked me to come back and turn the business around, which I did.

40:38And then Jim Hahn asked me to be the police commissioner of L.A. to turn around the problems that L.A. was having after Rodney King beating. We had crime going out of control, new management systems, new managers, new chief of police. I changed everything up. And so I've seen what works in government, and I see what hasn't worked in government. So I liked my resume running for mayor, but obviously not enough people did.

41:05Iced Coffee Hour Hosts:What surprised you the most about the pace of politics? We've had a few people on and they say it's been dirtier than they expected. Yeah, it is dirty. It's a mean business. It's a cutthroat business. And so good, so good, so good. New markdowns up to 70 % off are at Nordstrom Rack stores now. Stock up and stay big on shoes, tops, dresses, accessories, and more must-haves for summer. Join the Nordiclub to unlock exclusive discounts. shop new arrivals first, and more. Plus, buy online and pick up at your favorite Rack store for free. Great brands, great prices. That's why you Rack. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs.

41:53Iced Coffee Hour Hosts:It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs. The thing, the advantage that I have is I'm not looking for a career in it. And I've got a really great life. I got a wife that I love. I got four kids that are fantastic and I love.

42:27For me, I really wanted to give back. I believe in higher purposes. I believe your business should have a higher purpose. I believe your life should have a higher purpose. And I've lived my whole life trying to do things that really help other people. It's just the way I'm wired. And so I looked at it as I want to go do that. And so the meanness and all of that, you know, it gets to you a little bit, but I would just brush it off. I mean, just tell you a quick story if I can. Yeah, please. At the time that Jim Hahn asked me to be the president of the police commission, So in los angeles You have the mayor of los angeles and then you have the police commissioner reports to the mayor And they have the chief of police reports to the commissioner different and the commission Different than new york.

43:14So that's the way it works We had a very very popular chief of police in los angeles named bernie parks He looks like he came out of central casting Good looking guy wore the uniform better than anybody had been in lapd for many many years There's black gentlemen, hugely popular across the city. Rodney King beating happens. Terrible riots, all this kind of stuff happens. There was a whole bunch of things that happened within the department that needed to be changed. And it was so bad, this is before Bernie became chief, but it was so bad that there was a federal consent decree and there was a federal judge actually overseeing the department.

43:57And crime was spiking out of control. and there were more officers leaving than coming into the academy. So the rank and file were dwindling. That's the problem Jim Hahn presented to me. You got to go fix that. Massive issue. One of the things I identified is I got to get rid of Bernie Parks. Politically, absolutely incorrect thing to do, especially in Los Angeles. I had to go. There was no choice. And then I made the second really politically incorrect thing. I hired a white guy from Boston with a funny little accent, guy named Bill Braddon, but the smartest cop in the country to come in, right?

44:41What I learned from that process was if you're not worried about getting reelected or reappointed, but just doing the right thing in government, incredible change can happen. And we got crime down to levels not seen since 1950. It was just incredible. And that can happen again. And during that process, it was so mean that they were burning me in effigy to try to intimidate me. And we were under construction at the Grove, and they would march on the construction site to shut down the project, which we had to shut down every time there'd be a march on the project. So it was costing me a lot of money.

45:25But I saw through it because what I knew I was doing was right. It was for the greater good in the city. Everyone was going to benefit from it, and everybody did benefit from it. We need to have that clarity, whether it's in your business or whether it's in government. You have to have clarity. You have to have a higher purpose, and then you just have to lean in. Why do you think Karen Bass won? I think there's a lot of reasons. Listen, I think Karen is a likable person. She was well-known. She was in Congress for many, many years. She was in the state legislature for many, many years. You know, I was new.

46:03And, you know, I think, you know, obviously there was a liking to Karen. So, you know, I think Karen is a nice person that just doesn't have the right experience to do what needs to be done. She was, the legislative branch, is very different. If you're in Congress, you're drafting a bill, you're modifying a bill, you're getting an amendment to a bill, you're going to hearings, you're getting a bill passed, the bills passed, we're done. Let's go back to our offices. If you're in the executive branch, a mayor, a governor, a president, you need executive skills, you need management skills. And to translate that over is very difficult.

46:45What do you think is the biggest misconception

46:47Iced Coffee Hour Hosts:people had about your campaign? That I was doing it just for my own power, that I wanted to gain power. It was the farthest thing from the truth. Did people think that maybe you could push these projects through if you had, like, mayor power of Los Angeles? What do you think was going through their mind? Yeah, there may have been. But, you know, I stepped away from the business. There was a management team, separate board that was operating the business. So the conflict rules are very, very strict in the city of L.A. So I wouldn't have been able to do that and I wouldn't have wanted to do any of that.

47:20And I certainly wouldn't have done any more business in the city of L.A. when I was when I was mayor. But, you know, I think that there's, you know, honestly, that, you know, being a I even hate saying it, but being a billionaire gets used against you. And, you know, people have notions of what billionaires are like. I think everybody gets bundled into like they're selfish or they're disconnected. They don't understand what the real world is about. I couldn't be any more different than that, you know.

47:53Iced Coffee Hour Hosts:But how much does a gallon of milk cost? A gallon of milk cost? Yeah. I know basically what a carton of milk costs, which is about three and a half bucks. But I don't know what a gallon. Okay, what about a dozen eggs? How much does a dozen eggs? Depends where you buy a dozen eggs lately. Let's just say on the lower end, you're going to Errolon. Well, yeah, on the lower end, I'm going to Errolon. But I love Errolon. I actually ran into the founder of Errolon last night. You know, we have an Errolon at our property. And I think, listen, that's a great business model. What is their business model?

48:28But think about what they did. He's created a culture around the market. and he's able to price things like nobody's ever seen before. I couldn't even tell you what eggs cost at Erewhon because we wouldn't buy our eggs.

48:41Iced Coffee Hour Hosts:It's probably about$12 to$15. You wouldn't buy your eggs at Erewhon? I wouldn't buy my eggs at Erewhon because you can buy really great eggs at Trader Joe's. Yeah, that's true. I mean, I think Trader Joe's is an incredible business model. They're a tenant of ours also, right? But I think what he created, there is a culture there. This goes back to what I said is, depending on how you describe your business, you get permission to do things. and expand your business, there's a culture there. It's not a grocery store. This is an experience and it's about your health and it's about everything that's important to you.

49:13Iced Coffee Hour Hosts:See, my initial impression of Arowana, I remember the first one that opened up and I just remember seeing the prices and it was a spectacle to be able to go there and see, oh my gosh, this is a$20 strawberry. Oh my gosh, these almonds are$25. Everything is so expensive. And then it seems like it just created this barrier where you walk in there because you know that other people in that same league, so to speak, could shop there. And then it started going viral. Why do people shop there then? Why do they do the volume that they do? I think it's no different than why people buy designer clothing or they drive a really expensive car as a status symbol.

49:52Iced Coffee Hour Hosts:I think they want to send a message to people that they could afford it. I think there's truth to that. A lot of truth to that. I would also say his product is really good. It is. I mean, the soups are exceptional. The food bar is exceptional. And the quality of the ingredients are really good. Yeah. But he's pricing it up and God, God bless him. He's got a huge customer base. So what do you say to people that argue it's unethical to be a billionaire? How is it unethical? I mean. They say that you don't need that amount of money, that how could you have billions of dollars when there are people that are struggling to.

50:32Iced Coffee Hour Hosts:I don't know put food on their table. I don't think one thing has to do with the other I mean, I started a business from scratch And I built it up over the last 35 years and along the way i've hired thousands of people and created thousands and thousands of jobs and created Little economies within the cities that I built in that have benefited Thousands and thousands of people. So I don't feel bad about my success at all. I'm very proud of my success and have given back to the community in a huge way in terms of our philanthropy. So I'm very proud of that. So why do you think that's such a common or popular thought that people have then?

51:15Because I think people, and rightfully for most of it, feel unheard. They feel left behind. They feel like there isn't somebody fighting for them, helping them out. And we do need to be doing more because we've created cities like Los Angeles, like New York, that are so expensive to live in, it creates a resentment. And I can understand that. And if you work hard and you're doing all the right things and you still can't afford to live close to work and you have to drive an hour and a half to get to your apartment or to your house, you start resenting that and you'll resent somebody that got a lot of money.

51:58Iced Coffee Hour Hosts:So whose fault is it then that there are places like this that exist that are extremely unaffordable for the average person? Where does the buck stop? It's the policymakers. You know, policymakers have made a whole bunch of policy and laws that have worked against us. We've talked about a few of them here. We've got policy and laws in this city that make it so difficult to build. People aren't building, so the cost of housing goes up. Go change those policies. And I think that there's been an ideology that has been pushed And although it's proven not to work People still are somehow loyal to it You know, you look at the DSA You look at the Democrat Socialist Group Those policies don't make any sense They're great soundbites You know, have no cops Get rid of the jails You know, free grocery stores I mean, that doesn't work It's never worked anywhere Go find a place that that works A government-run grocery store I've seen them I've seen them in Cuba Not a lot on the shelf And everything is rationed So, you know, but people are hurting for solutions And that group has tapped into the hurt and the pain And what mainstream elected officials need to be doing Is sitting back and saying these policies aren't working And we're going to change them And give everybody an opportunity to do better Give everybody an opportunity to make money and have success.

53:33That's the way it should be. That's what our country was founded on.

53:36Iced Coffee Hour Hosts:Now, when you were running, could you explain you were Republican and then switched to run as a Democrat? What was your mindset behind that? Well, I was a Republican like 12 years ago, and I left the Republican Party 12 years ago. And I became, I was just independent. it. And then right before, well, during the Trump first thing when he ran, there was a guy named John Kasich. And I really liked John Kasich. And John Kasich, because he was the only person we felt could stop Trump from winning California. And so I wanted to support John to be sort of a barrier to trump so i became a republican to support john so i could vote because in california you can't vote for the party that you're not a part of it's a screwy law and then after he failed john failed then i became an independent again and then i didn't want to go back to the republican party but i wanted to have a party so i went to the democratic party why is there that law that says that you can only vote for the party you're registered for.

54:49Iced Coffee Hour Hosts:For the primary. But why can't you vote for someone you just agree with regardless of their affiliation? You should. It could be because let's say there's only one Republican frontrunner. And so you know that they're going to win the primaries. And then there are two people on the Democrat side and you could be a Republican registered voter and then vote for, you know, the person that you think would most likely lose against the Republican primary winner. It could be. I don't know. You could be right. I just never understood why it has to be left or right. Why it can't just be that this person is running and you like what they have to say a little more than the other guy and why it has to be.

55:30Iced Coffee Hour Hosts:Because it just seems like politics has become so divided that it's like far right or very far left and the middle completely gets ignored. A hundred percent. You're absolutely right. And that's really one of the biggest challenges I think we have as a state, a city, a country, is to move back to the middle and be middle right, be middle left, but be in the middle and find common ground to move things forward. That's my philosophy, at least. And what about forgetting and encouraging businesses to start up in California? There were recently two Twitter posts that went somewhat viral. One of them was a story of a 30-year business in California.

56:07Iced Coffee Hour Hosts:The employee was fired for not showing up on time. So she sued for gender discrimination. She won. She had free legal resources, and the business owner decided he couldn't afford that loss and ended up selling. There's another story on Twitter about a demolition business the employee didn't like, apparently, allegedly, his Christmas bonus. He sued for a back injury. He got five others to join the suit for the same injury. The insurance went up by$700 ,000 a year for the business, and they had to settle for$30 ,000 each. And what I'm told or my understanding is that the state will sometimes offer free legal services and partner with the employees to launch the suit.

56:49I don't doubt it. I mean, tort reform is so critically important in California because I was talking to two CEOs, separate conversations yesterday. They were complaining about the same thing. It's so easy to sue. These large judgments come down against companies. You know, the lawyers love these laws. You know, we deal with it, obviously, all the time. We have millions and millions of people on our property. And we have to have tort reform so there's some balance. And there are actually also bankrupting cities. The amount of money the city of L.A. is spending on settlements is insane. um and i think most cities are the same way what's surprising to me is that the mansion tax we could

57:34Iced Coffee Hour Hosts:look back now and see is a is a failure it raised only a fraction of the money they promised but that money funds lawyers for tenants to be able to file lawsuits against their landlords and what i've seen just anecdotally talking to a lot of landlords out there they're getting hit with habitability lawsuits and being forced to settle because it's so expensive to fight it. So even if the landlord is in the right, the tenant could just claim this and they know it's going to cost $50 ,000 to fight. The tenant doesn't have anything at risk and the landlord is forced to settle. And so a lot of people are leaving the business because of that.

58:15Well, the mansion tax needs to be changed for sure. And not only has it resulted in not raising a lot of revenue, but it's put a cold blanket on investing in LA because you have an extra tax now. So when you're going to buy in LA, you have to build into the fact that when you sell, or if you're going to develop in LA, if you're going to sell, you have to build into your pro forma now that five or 6%. So it's increasing everybody's cost. And there we go again, increasing the cost of apartments or condos or homes because the mansion tax makes it more expensive. Do you think it's possible for a Republican to win California?

58:56Numerically, I think it's very difficult. Almost impossible.

59:00Iced Coffee Hour Hosts:What about an independent? Probably more likely, depending on, you know, the independent. Do you plan on running for mayor or governor? I plan on doing one or the other. I have really honestly had a very tough time for a good reason on which path. I have many people that are really encouraging me to run for governor. I have many people really encouraging me to stay local and help the city. And the question for me is, where can I go to do the most good, the quickest? I don't want a career. I want to go, I want to serve, and then I want to end my service and go be a private citizen again. And I'm going to land a decision within the next, I don't know, 30 days or so, but I'm coming down to the end of the road.

59:48Iced Coffee Hour Hosts:The reason I ask that is because January 7th is going to be the one-year anniversary of the Palisades fire. Right. And so you get the Palisades fire and the Altadena fire and the Malibu fire. So you had over 14 ,000 homes, structures burned down, businesses destroyed, tens of thousands of jobs. I mean, just think about in the Palisades alone, when you have 7 ,000 homes that burned down, how many jobs are lost? How much revenue is lost to the city of Los Angeles that's going to impact everybody in Los Angeles? I think a lot of people may think about it and say, you know what, the Palisades is a wealthy community.

1:00:29They can go fend for themselves. Well, I'm sorry, everybody. Everybody in Los Angeles is impacted by that because there's less revenue coming into the city. You don't have homes paying the same taxes. You don't have businesses paying in business taxes. All of these kind of things. And revenue in the city of Los Angeles is already going down. and they're increasing the cost of services. So it's a bad intersection what's happening. But the seventh is gonna be a very sad day in this region because people died, the communities were wiped out, schools burned down, churches, synagogues, just the extent of the devastation.

1:01:14And I just hope that everybody, as corny as this sounds, says a prayer, gives some thoughts to the people that were impacted because the far, far majority of the people that are impacted have very few choices. We'll ever be able to come back to their community that they loved or rebuild the home that they lost. And the city should be doing more. The county should be doing more. The state should be doing more. And the federal government should be here with funding because it has to be the largest urban natural disaster. It just has to be the largest. And there's been zero federal funding.

1:01:56Iced Coffee Hour Hosts:Whose fault do you think that would be? Is that on California for not clearing the brush and putting out the fire in time? Did they catch the... We know where the fault is. I mean, the after action report now that came out is clear that the fire would have been put out had they done their job. There was a fire on January 1st that was not sufficiently put out. The fire department, the firefighters said, it's not properly out. We need to remain here. They were called off of it and said, go back to your station. The 7th comes up. The winds come up. That fire reignited. It wasn't a new fire. Had that fire been put out properly on the first, the second, the third, the fourth, or the fifth, or the sixth, no fire on the seventh.

1:02:44And one more thing. Even if they hadn't put it out, had they pre-deployed a fire truck to that area, it would have been put out. So massive negligence on part of the leadership in the city.

1:02:58Iced Coffee Hour Hosts:Who called it off and why did they call it off? It was called off by some supervisor. I don't know why. It's being investigated and it should be investigated because, like I said, put aside the homes, I think in the Palisades alone, I think it was 12 people died. They were stuck in their homes. I heard that you were able to save your entire development in the Palisades with what was equivalent to a swimming pool of water. Is that true? That's an interesting, I don't know how much water, but we did save it. We not only saved our property, we saved all the properties on our side of the block and across the street.

1:03:36So we mobilized. So when you go up to the Palisades now, you're going to see one block of the downtown that still remains. And that's because we had private firefighters that we hired. We had our own water and we had retardant. And we put that plan together years ago. And we also built the Palisades village with non-combustible materials, knowing that we're in a fire region. But, you know, this gets back, you know, what's predictable is preventable. We had a plan and we pulled the plan off the shelf and our team mobilized and we had the people there. And had the city had a plan, you wouldn't have had the Palisades fire.

1:04:20Iced Coffee Hour Hosts:Did you have many neighbors reaching out to you, thanking you for saving their properties? Oh, yeah. Did you have the city reaching out to you saying, how did you do this? What did you do right? And what did we do wrong? No, not one call from the city. Not one call? Not one call. We had our neighbors very grateful. We had individual merchants, incredibly grateful, not one call from the city. No, I'm very grateful that we were able to save the village because that village, and we're going to see it this Saturday, every year we have a manure lighting, we have a Christmas tree lighting. And we're having our Christmas tree lighting this Saturday.

1:04:55There's no homes around us. We rebuilt our little open space park. It's pristine. The Christmas tree is there. It's fully decorated. And we're going to have the full ceremony, no different than we had last year before the fire. And I'm sure it's going to be filled with tens of thousands of people, which is going to be great. And it's going to be a mix of joy and sorrow, but it's going to be fantastic. And I really believe that that village, as we reopen in August, is going to be giving people hope that their town is going to come back and give them enough hope that they're going to have, you know, the determination to rebuild their house and come back to that community.

1:05:34So I'm very grateful that we have it. Now, financially, we are going to take a hit by reopening. We would do better not reopening and continuing collecting insurance for loss of income. We lose that when we reopen, right?

1:05:53Iced Coffee Hour Hosts:Are the businesses worried about reopening and not having so many customers as they did before? How does that work? What is the logistics? It's a good question. The interesting thing is, you know, we use a lot of systems that monitor who our customers are and where our customers come from. And so we know how many customers we have left. So we lost about 30 % of our trade area. But that also means we have 70 % of our trade area, right? So it's not bad. And what I've done with every one of our retailers, including new retailers or restaurants that we want to have come, I call them myself and I say, would you partner with me to rebuild Los Angeles?

1:06:40and they'll inevitably say, Rick, are you talking about rebuilding the village? And I said, no, no, no. I'm talking about rebuilding Los Angeles because the way we come out of this, the way we come back will have a positive domino effect over the whole region. And it will show that this region is resilient and we're coming back and it's going to get people's attention. Will you partner with me to do that. And so far I've gotten everybody to say yes. And the people that I love the most are the ones that will say, and you know what? It really doesn't matter what our revenue is going to be. We want to be part of this mission.

1:07:21This goes back to the higher purpose, but I believe they're going to do very well, very well. We have a lot of customers. That little center had a big trade area. We were pulling from Holmby Hills, Beverly Hills, Santa Monica, of Brentwood. So I think we're all going to do great. And we've got great restaurants and I'm very excited about the reopening.

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1:10:20Iced Coffee Hour Hosts:Trading at Schwab is now powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos, and more, all curated just for traders. Plus, guided learning paths with content designed to fit your unique interests. No sifting to find exactly what you need so you can spend your time learning to trade brilliantly. Learn more at schwab.com slash trading. Do you think the entire situation would have been different had the Palisades been a low-income area? No, I don't think it had anything to do with that.

1:10:56I think this is all about incompetence, bad judgment. That's what it's all about. It has nothing to do with income or lifestyle.

1:11:04Iced Coffee Hour Hosts:It does appear as though L.A. is set to profit, though, off of the rebuilds with the permits and everything. No, I think they're going to take a massive financial hit for a long time. With the way that they haven't been incentivizing or expediting the permits and waiving the fees. Well, they should be waiving the fees. I mean, shame on them. The other day they postponed it. It's been a year and they still haven't waived fees. A year. What are you waiting for? These people lost everything and you're not waiving fees. And to your point, the city should be saying, what incentives can we put in place to get you to build quicker, to get you back in, to get that business reopened, to get those jobs rehired?

1:11:48We're giving out, you know, I formed this group called Steadfast LA. We're giving out million dollars in business grants so small businesses can reopen and stay open because you want the job creation, you know, to happen. The city should be doing that, right? It's crazy. No, I agree.

1:12:05Iced Coffee Hour Hosts:So what does California do with all of the money? I don't know. If you were governor, are you able to see exactly line by line where the money goes and be able to audit California? And how much control does the governor actually have in terms of the state's budget? He's got veto power. He or she has veto power. So a lot of control. I think what you have in the state and what you have in the city is you have to break it apart and rebuild it. It is fundamentally not working from a budget standpoint. And you just can't be wasting the money that's getting wasted. And you have an enormous amount of money.

1:12:50I think the state budget is about$300 billion or something. I mean, it's just a massive amount of money. And like any other business would do, say, okay, we got$300 billion, but that's all we're going to spend. And let's prioritize what we're going to spend our money on. And the same in the city. I mean, the city was a billion dollars over budget last year. They don't have a billion dollars to be over budget.

1:13:13Iced Coffee Hour Hosts:What did we learn about the federal government? They spend, is it like - Oh, man. It was, okay, guess how much the federal government spends to run the United States every second. Oh, my God. It's every second or every minute, I thought was every minute. Yeah, every minute. What is it? $13.2 million a minute. Wow. A minute. But imagine if the federal government every minute spun a wheel or something and maybe one person, one U.S. citizen got a million dollars and they had$12.2 million to build a new development, to build a new park. And they could do that every single minute. You're right. Be a game changer.

1:13:47Iced Coffee Hour Hosts:What upsets me is that it seems like there's a bunch of, I don't want to call it money laundering. It seems like a lot of handshake deals of, hey, we're going to raise sales taxes by three cents on this thing and we're going to have all this money. And then you and I are going to make an agreement that, you know, some of that money is going to go to you because you own this property and you could run it as so and so. And now, you know, you get a kickback on this. We could say we're doing good and we're running this thing. It just seems like a lot of that is going on. It's being investigated. You're right.

1:14:19It's being investigated now. And the other thing that's being investigated is the fact that this after-action report never had the facts that the original fire was not put out. And so that's like a cover-up.

1:14:32Iced Coffee Hour Hosts:Yeah. Right? And the cover-up, as we learned from Nixon, is always worse than the actual act. Yeah. So I think there's some really naughty stuff that happened that is going to get brought out. Yeah. See, I think the private sector should really be in charge of most of these things in California. And instead of getting grants to cover 100 percent, the grants should be able to cover 30 to 40 percent so that every dollar you spend is still more money out of pocket than you get back. But you are at least reimbursed and have an incentive to be able to do something affordably. Because otherwise, it just seems like if you get a blanket budget of$100 ,000 to build a bathroom, you're going to spend$100 ,000 to build the bathroom.

1:15:15You're absolutely right. And there's no accountability on top of it. Correct. Yeah. No, it's a massive problem. And we've created a system that has no accountability. So that's why we have so much waste. How would you recommend solving the homeless issue, which has seemingly only gotten a lot worse? Yeah, well, unfortunately, you know, California has the most homeless of any state in the country and L.A. has the most homeless of any city in the country. So those aren't awards that we want to have. I think it's completely solvable. And you do it at first. And I said this for many, many years. There's organizations that do an incredible job.

1:15:54Downtown Women's Center, Union Rescue Mission, Common Concern, they have a 90 % effective rate of taking people in from the street, giving them housing, giving them the services that they need, whether it's drug addiction, care, treatment, mental health care, whatever the case is, 90 % effective rate, meaning they're not going back onto the streets. Okay, let's empower them. Let's fund them. Let's scale organizations that have a track record of success of dealing with it and dealing with it at a fraction of the cost that the city's dealing with it. The city is costing the city almost a million dollars a person to house them.

1:16:39It's ridiculous. We have some organizations in Los Angeles hope the mission is doing it for$100 a day, right? So let's scale those up. We can get a lot of people off the streets and we need to build a lot of housing for them, but we can do that. Los Angeles alone has over 300 parcels of excess land. Let's use it for housing and create decent housing for homeless. They give them a sense of pride and respect and the services that they need. Absolutely solvable. Other states have done it. Other countries have done it. We haven't done it because we haven't had the courage, the backbone, or the right policies to make it work.

1:17:21Iced Coffee Hour Hosts:Why is it not a federal issue? Because it seems like a lot of homeless come from other states and it seems like they really migrate towards California versus other coastal states like Florida. Let's just say, why isn't this a federal issue? The policies in Florida, they don't allow it. I mean, we're allowing in the city of Los Angeles open sale of drugs. And so that brings a lot of people on the streets and keeps people on the streets. It keeps them addicted. Why are we allowing that to happen? I mean, those are the policies of our elected officials. And so you go down to Miami. I talked to the mayor of Miami, and she was telling me, I think they almost have no homeless now because they built enough housing.

1:18:05and they don't allow people to stay on the street because they have the housing for them. Newport Beach in California has no homeless. They did, they built the housing. LA can do it. It's a massive problem, but it is solvable.

1:18:20Iced Coffee Hour Hosts:Is it incorrect to say that those cities that you mentioned enforce no camping on the streets and it's not necessarily that those people are in housing, but they're just pushed out and then they go to Los Angeles? Well, the mayors that I've talked to are providing the housing. They are providing the housing, so they're not pushing people. Now, there's going to be some portion of the population that's not going to want to live in a shelter, live in a house, whatever the case is, that wants to live on the street, I guess. I don't think most people want that for themselves. So you're going to have some of that.

1:18:54But let's assume that we can get 50 % of the people off the street. Wow, that would be great. So let's just start there. I think we can do it. I know we can.

1:19:02Iced Coffee Hour Hosts:But what amount of it is the actual housing itself as opposed to the drugs that, you know, the drug problem and the homeless problem? Or mental health. And mental health, they're all kind of just like co-mingled. A lot of the people that I've seen, yeah, a lot of people I've seen in Santa Monica do not appear down on their lock. They truly appear as though they have severe mental illness, severe drug addiction to the point where they cannot function on their own. That putting them in a home would do nothing. No, you have to do it with services. And that's been the big mistake in L.A., what L.A.'s done, because they've had this program where they've taken over hotels and they put a homeless person in the hotel room.

1:19:43Well, you're just creating a bigger problem. And they're not going to stay there. And they're just going to use drugs or whatever the case is. So that's why these organizations that I named bundle everything with the services. And that's why they've been so effective. You have to have the services of mental health care and drug addiction. And by the way, it's just the right thing to do. I mean, it's inhumane. You know, we've got this massively wealthy country, massively wealthy state and massively wealthy city. We shouldn't have people living and dying on our streets.

1:20:14Iced Coffee Hour Hosts:It always reminds me, this is like the first time I ever heard this being said by a rather mainstream person, but Elon Musk, oddly enough, said it's not compassionate to call these people unhoused when in actuality they're more like, I mean, this is kind of abrasive, but like homeless drug zombies. Like it's people that are walking on the street that are clearly suffering to a very, very deep level and we're just letting them exist. Well, I think it is not compassionate. I mean, I've said that during my campaign that we have to have a sense of humanity. These are people. They're human beings. And what you have growing, I mean, I'll give you a statistic that should scare the hell out of you.

1:20:54One is one of the largest growing populations right now are families. We have more kids on the street than ever before. And shame on us for allowing that to happen. There should not be a child living on the street, period. End of story. 18 ,000 women tonight are going to go to sleep on the street in the city of los angeles 18 ,000 the majority of those women will be abused in some form or fashion taking advantage of on the streets tonight when it gets dark it just shouldn't be happening you just this is where leadership matters and you have to say we're not doing this anymore period we're going to give these people a better path of life and help them out.

1:21:38Can you save everybody? There's going to be some people that won't want the help, whatever the case is. You will save the far majority of them.

1:21:46Iced Coffee Hour Hosts:Moving on from that, I want to ask you just a few other questions about your career and life in general. What do you think is one misconception about money that holds people back? Are people held back by a misconception of money? There's a premise to the question. They believe that either you have to do bad to make money, that they can't be wealthy, that them earning money takes away from someone else's ability to earn? I mean, I couldn't disagree with that more. I think the pie grows. I know the pie grows, right? So the better an economy does, more people have more opportunity to do better. That's just the way life works.

1:22:25And, you know, listen, there's people that make money that maybe have bad intent and people make money that are good people with good intent. I think money is something that I've never sat down and said, because somebody asked me this the other day, did you sit down and say to yourself, I want to be worth X amount of money one day? It never crossed my mind. Did I want to work hard and be successful and have a successful business and whatnot, be able to buy a home and all these things? Absolutely. But I do think it's really important when you're starting a business, just focus on building your business, focused on being the best, being the most innovative, having a high level of integrity, because I believe that's so strongly in business.

1:23:12And the money will come, the success will come if you work hard enough at it and if you're good enough at it and not worry about what you're making or what your net worth is going to be.

1:23:23Iced Coffee Hour Hosts:How do you instill that in your kids? Because they would grow up in a different environment than you did. Yeah. And they grew up also watching me build a business, right? So they saw my work and I've been, I'm a big believer in this saying that more is caught than taught. Children see what you do as a parent. They see what you do going to work and how hard you work and you instill values. And yes, we have a very nice lifestyle, but they're very humble. They're very generous. And every one of them works very hard. So I'm very proud of them. But you have to instill those values in your children.

1:24:05What do you think is the formula to becoming wealthy? I think it's being good at what you do and integrity. I think you have to have three things. I think you have to be a skill set that's very good. you have to be able to work hard and sacrifice and you have to have integrity if you have the first two without the last one you'll be successful but ultimately you'll be miserable and fail you you want to be able to build an enterprise build a business that's built on virtues and what i tell people in my company and and we do it to this day we operate on a handshake and don't do business with bad people.

1:24:51You'll never make a good deal.

1:24:52Iced Coffee Hour Hosts:And how would you say that wealthy and poor people see money differently? You know, my grandparents were poor, both sides. They were immigrants. My grandfather was a gardener in Los Angeles. I rode around LA in a gardening truck with him on his route. They were poor. They never thought about being poor. my grandmother and my grandfather would tell you they're rich. They had a family, they had food on the table, they worked hard, and they wanted their kids to get educated and do well. My other grandparent, my other grandfather was an elevator operator in Chicago at the Roosevelt Hotel. I don't think he ever considered himself to be poor.

1:25:36So I think there's so many hardworking, I deal with so many people in Los Angeles that are poor from a numerical standpoint, but are so incredibly rich. My wife and I and my kids were so involved in South LA, Watts, Skid Row. We work down there. We support these organizations. We're physically there. We know the families. They're at or below the poverty line. Most of them that we know, they are struggling financially, but they are rich in spirit and they are rich in their lives. and they just want an opportunity to work hard and do well. That's really what they want. And they're inspiring to us.

1:26:17That was the greatest thing on the campaign is meeting people that weren't complaining. They just said, we want to be able to work hard and have an equal opportunity to do well. And we want our kids to be able to walk to school without worrying about going around an encampment or whatnot. Just basic things that we all care about. I think we're all pretty much the same, what we care about.

1:26:39Iced Coffee Hour Hosts:Was there anybody that you met on the campaign trail that really surprised you? Oh, so many people. Yeah, I loved it. Because I saw parts of L.A. I mean, I've grown up here and everything. And I saw parts of L.A., though, that I would have never seen. And communities that are so rich in diversity and culture, like Filipino town is phenomenal. I never spent time in Filipino town. Shame on me. But the food, the culture, the music, the people, you know, the ethic of hard work. It was just great. You know, the Latino community, Boyle Heights. There's just so many great communities in L.A. There's great diversity here.

1:27:17And that's the strength of the city.

1:27:19Iced Coffee Hour Hosts:Do you think there's a dark side of success, too, that you've experienced? Well, I think the dark side maybe is, I'm sure there's a positive side and a negative side to everything. That's life. I think you can become complacent. You can become arrogant. You could lose your humility. You could lose gratitude. You know, one of my favorite sayings, passages out of the Bible is, dear Lord, you have given me so much. Please give me a grateful heart. And I think waking up grateful every day is really critically important. And, you know, sometimes maybe when you have too much, you can forget that. But for the grace of God, you know, you wouldn't have what you have.

1:28:02And that's the way I try to live my life. What do you practice gratitude for? For everything that I have. I mean, I'm so incredibly lucky. I was given a great education. I was given a great family, great parents, grandparents, opportunity to build a business, have a successful business, have an incredible team of people I love going to work with and being around every day. I have projects that I get to enjoy myself and walk around and actually see people. The greatest, what people say to me is like, what's the greatest income you make? And I said, it's the psychic income. Tonight, come to the Grove and watch the snowfall at six and seven o 'clock.

1:28:46The fountain goes off and it starts playing, I'm dreaming of a white Christmas. The whole place is decorated. It's just gorgeous. And snow starts falling. It's fake snow. Go convince somebody at that moment, it's fake snow. And you see couples hugging. You see children dancing. You see families together. That is my income, my psychic income. It's, I feel so grateful that I'm in a business that I can be financially successful and give people joy. You should go out there and watch it.

1:29:24Iced Coffee Hour Hosts:What's your advice to young people watching this who see what you did and want to recreate that today? Work really hard and follow your dream as long as you're really good at it. Figure out what you're really good at. and then just work your ass off. What made you so good at doing this? I was so lucky that I found, listen, I practice law. I was probably an okay lawyer at best. It wasn't, I wasn't wired for it and I wasn't into it, but I did it. And probably the best thing that happened to me is the law firm that I was with at the time was the largest law firm in the United States and went bankrupt.

1:30:03I was out of a job. I was forced to make a decision. And it was my wife when I went home that night and said, congratulations, you just married a guy that's out of work now. I'm going to go put my resume up for the law firms. She said, no, we literally went down to the McDonald's at Santa Monica and Beverly Glen and had dinner. And she said we were living in an apartment near there. She said, you've always wanted to be in real estate. Do it now. Just go do it. And that's what and I started the company. so just but i i knew i loved real estate i knew i loved building i just felt that and when i was practicing law i learned enough about it that i knew i could be good at it i had to learn more but i knew i could be good at the fundamentals of it i wasn't really great in like running a pro forma i still do everything on the back of an envelope you know my team will come in with reams of spreadsheets.

1:30:58I look at them, whatever. If it doesn't make sense in simple math for me, I don't do it. And I don't know. I just had the confidence that I could do it. And I love people. And so I got into the retail business, not because I knew anything about retail. I got into the retail business because that's where I could create these places for people to go. and when I was a young kid going to Italy and visiting family I was always taken by the piazzas you know people come out the sun's getting a little low they're sitting at a table the kids are running around there's a little music in the background a bottle of wine opens up you're having it I mean it's just this you're celebrating life right in this common square and I just thought to myself, how great is this?

1:31:46I grew up that way. So I said, can I duplicate that? That's what was driving me because I just love that feeling. And I love watching people out there. I still do to this day, like I said. And so I think if you could find that, and maybe that is creating a new AI model, whatever just excites the hell out of you, but you got to have the discipline and you got to have the talent.

1:32:13Iced Coffee Hour Hosts:Well, I think people are now ready for a change and I do hope that you run for something. Thank you. I hope so too. I appreciate that. That was super fun. I will say extremely impressed. And also you're just a normal person, which is very refreshing because I mean, as normal people ourselves, or at least maybe just me, I don't know about this guy. You hear about people that are running for public office or just politicians being just weird, Polish, normal, like unnormal people, but you seem very just grounded down to earth. And I wish you success. Appreciate that very much. Thank you. Thanks for having me on.

1:32:47I really enjoyed this. Thank you for coming on. You guys are great.

1:32:49Iced Coffee Hour Hosts:If I was in California or LA, he'd have my vote. 100%. There we go. So for anyone watching this in California or Los Angeles, I hope you take a walk. Thank you guys so much for watching. Thank you for coming on. Congratulations on your guys' success. Thank you very much. Appreciate it. Well done. Till next time.

1:33:35We'll see you next time. All the great deals happening now. Save big money at the Nards.