How Donald Trump Created a Facade of Success | Pivot

1. KSKara Swisher0:00

   Suzanne Craig and Ross Buettner are investigative reporters for the New York Times. That is underselling it. They're amazing (laughs) investigative reporters for the New York Times. They've written a new book based on a lot of their reporting they have published this year, uh, called Lucky Loser: How Donald Trump Squandered His Father's Fortune and Created the Illusion of Success. Suzanne and Russ, welcome.

2. RBRoss Buettner0:19

   Thanks for having us.

3. SCSusanne Craig0:20

   Thank you. Yeah, thanks for having us.

4. KSKara Swisher0:22

   So I went to your book event here in, in DC. It was really interesting. But, uh, you've been reporting, for people who don't know, on Donald Trump's finances for years, but you go really in depth in the book. Talk to us about, uh, what... Obviously, Donald Trump's all about talking about money, but what does his financial history tell us about him as a businessman? Let's g- let's focus on that part.

5. RBRoss Buettner0:45

   Yeah, I think that was the- our big interest in, uh, in doing this book was to get to the bottom of that. We had done three longer stories in the Times that explored different windows, how much money he got from his father and how his businesses performed in the '80s and '90s and then again after the 2000s. But stringing all that together is where you really kind of see the pattern. Um, and I think what you notice is that he's very good at, as you would expect, drawing attention to himself, at selling things when there's things that need to be sold. Often, he's drawing attention to things he never does. That's one of the themes that runs through the book is he sort of builds up his reputation by saying he's gonna do things that never happen. But operationally, he has difficulties. Um, he never seems to be very careful about the finances of projects, so he regularly spends far more than what the projects bring in. He often says that. And then he needs money from other sources outside of his business operations to support those businesses, and what we saw was-

6. KSKara Swisher1:43

   Right, so it's a bit of a Ponzi scheme is what it looked like.

7. RBRoss Buettner1:44

   A little bit. You see his inheritance filling in the holes, and then later the fortune from The Apprentice, uh, really filling in a lot of holes as well and sort of sustaining this image that he's a powerful businessman when he's really having problems that he's hiding from public view.

8. KSKara Swisher1:58

   And, uh, Suzanne, talk a little bit about how you went about this reporting, because you've been doing this for a long time.

9. SCSusanne Craig2:02

   Right, and, and like Russ said, we, we had a number of stories at the Times. There's kind of three, three big ones. We've been covering him since 2000. It's hard to believe (laughs) we're coming up on nine years of this, but says every journalist, I think, covering this guy. Um, and then we decided after the 2020 story, it was a big story we had where we got decades of his corporate and personal tax returns. You know, we found out in that, that he wasn't paying much income tax ever. Um, we also got an incredible window into how much he'd made from The Apprentice. So we laid that out, and then Russ and I had a conversation, and, and we realized we had a- a, I think, you know, we call it a skeleton for a book. But we really saw this as an epic American tale, and we wanted to tell it, and we wanted to delve further into his father. We were really intrigued about his dad from the reporting we did, you know, while we were at the paper. Um, and then we wanted to just learn more about Fred and see that impact that it had had on his life and then re-explore Donald's life, because I think there's just a lot of misconceptions that were out there. Some of them were laid down by him early on and just repeated over and over and over. And so, you know, when we decided, Russ and I had a chat, and, and Russ took a- had very heavy lifting (laughs) on the writing. He's a beautiful writer. And, um, we worked together, and I did a lot of the reporting. So we just spent a couple of years just full at it every day trying to get this together.

10. KSKara Swisher3:27

    Before I bring in Se- talk about the role of the fat- Donald Trump's father. This is Fred. Um, talk about his role and influence, because he was a pretty good business person. In this case, he was, as a s- you know, as a s- not a small time developer, a pretty big time developer in New York, which is a tough market.

11. RBRoss Buettner3:42

    Yeah, I mean, it's- it- it's an amazing arc to his career. He really was the self-created person, businessman that Donald Trump's always said that he was. Um, and he started out just building, like, garages in the up-and-coming neighborhood in Queens where, where he grew up. And then over the course of the next, like, 40 years, he really benefited from some of the big programs, uh, the government programs to solve the biggest crisises of the 20th century. First, the Great Depression, then finding- building housing for soldiers during World War II, building more housing for veterans when they got out, and then a couple of programs to sort of build up housing for middle income people later than that. And he built up this colossal empire of 10,000 to 20,000 sometimes apartments that were rentals. He never had one, except for a couple outside of New York City (laughs) , that didn't make money. Um, and so by the time Donald joins the company, Fred owns what would be during his lifetime a billion-dollar empire of rental apartments. It's kicking off tremendous amounts of cash. It has very little debt. And so Donald has this, like, windfall behind him to do what he wants. And Fred, it's a really interesting relationship to us, and it's seminal to Donald's life. Fred really puts his full faith in Donald from that point. There were other siblings, two brothers. For various reasons, Fred, the older one, falls off the scale, doesn't get his father's trust, becomes an alcoholic, and dies very young unfortunately. Um, and the younger one never really seems to be taken seriously, because Donald's already claimed the helm by then. And Fred never challenges Donald at all in anything he wants to do, and they're entirely different. As I said, Donald starts saying he's going to build things that he doesn't do. Donald's not paying attention to the bottom line. Um, Donald's taking great risk, but it's not really with his money. But Fred, throughout his life, supports him even as Donald starts to say, "I'm way bigger than my father was," when he's only built, like, one building with other big partners. But it really seems to be a seminal relationship in his life.

12. SCSusanne Craig5:41

    I have to say, Kara, though, you- you do see it in, in... Russ talked about Fred in, in that era where he went into these larger projects. They came out of government programs, and Fred was seen at the time as taking advantage of them and exploiting loopholes. And, you know, there's ev- there was an article in the- in one of the Brooklyn papers that- that ultimately called him a pariah feeding off government largesse and gouging his tenants. So you see shades of sort of what-... the practices that Donald is accused of-

13. KSKara Swisher6:09

    Well, not a good guy. Yeah, racism also, I'll say that.

14. SCSusanne Craig6:11

    Yeah, in- in- in some respects, but- but a great builder.

15. KSKara Swisher6:13

    Mm-hmm.

16. SCSusanne Craig6:14

    So, there's contradictions in that.

17. KSKara Swisher6:15

    Right, right, no, always a malevolent force. Scott, go ahead.

18. SCSusanne Craig6:18

    Yeah.

19. SGScott Galloway6:20

    Uh, nice to meet you. So, the data that I've seen is that from the '70s through the '90s when his dad ultimately passed away and inherited a- he inherited approximately 413 million is the number that sticks in my mind, and if that were invested in just an S&P index fund, it would be somewhere, depending on the returns, worth today somewhere between 10 and 20 billion. And it's very hard to nail down his actual net worth, but we know it's less than that. We know if he just stuck it in an index fund, he'd be worth more money. Which businesses have been the most successful and which have been the least successful that he's been engaged in since inheriting that money? I gotta imagine the casinos and the golf courses have not paid off, but The Apprentice was a big deal. What else has made and lost him money?

20. RBRoss Buettner7:06

    That's a great question, and I'm so happy that you remember that number because that was on a spreadsheet on my screen (laughs) for about a year and a half. We were all coming up with numbers to get to that 413. Um, and- and you're right, that's the way we've kind of looked at his wealth and his general success is that, you know, if he had just invested it and gone sailing, then he'd probably be infinitely more wealthy than he is now. Um, I mean on The Apprentice, look all he did was show up there. Mark Burnett had, the producer had cr- made this deal with NBC that he would get half or he would get all of the product integration money and it wasn't really product integration. Each show was a commercial for whoever sponsored it, and they didn't know, NBC didn't know at the time what that was going to be worth. Um, m- it took about a year to get it going, but pretty soon companies were paying $1, $2, $3, $4 million dollars to be on each episode, and Burnett, in order to persuade Donald to join that effort, who he thought was really busy, promised to give him half of whatever that would- would- would- would raise. And so that became just a huge windfall on his life, about $200 million dollars. And then there was a string of licensing deals that as soon as he became famous flowed from that. Early on, the year before he had tried to get licensing deals and he had literally been laughed out of offices. As soon as The Apprentice starts, they just start pouring in the door. Eventually, that goes bad, you see Trump University and all these developments that don't happen because he's not really doing due diligence, but still over the course of the years of The Apprentice, that generated another $200 million dollars. But when you look at the businesses that he created in that window, um, we see a lot of like alligators. The Chicago tower he secretly declared worthless on his tax returns while he's telling the world it's hugely successful. The retail part of that tower was built below grade so there's no street traffic, it's been empty now for I think 15 years. His UK golf courses have continued to suck money and require influxes of cash. The old post office, the same problem that, right, he built that thing and- and he spent too much on it, all his competitors knew he was spending too much on it, and we saw in his tax returns he was having to put $7 to $10 million dollars a year into it which we presume came from the easy money he was getting from The Apprentice and from licensing deals. So golf has been a mixed bag, real estate's been a mixed bag a little bit, uh, 40 Wall Street, for example, has been up and down at different times, um, but overall like the- the line that's stuck in my head on this is that the less involvement he has in designing and operating a business, the greater its chances of financial success.

21. KSKara Swisher9:38

    So talk a little bit wh- wh- what- this- this- Suzanne, this idea of wealth and success, how he put this out as sort of using creative accounting, using various tax codes and rules to his advantage, not something other people don't do and he actually brags about it, "Why shouldn't I take advantage of it?" So can you talk a little bit about what, how he does that and creates these faux, um, faux ideas that he's rich? He just says it, right? I mean, it doesn't...

22. SCSusanne Craig10:04

    Well, I think that, what a great, yeah, 'cause there's- there's of course the use of the tax code but I think wh- when I think about that question when you first said it, I think about just this crazy image that he projects that's not backed up by reality. You look at one of the things I always remember about the book was when we got, um, or just the project it was, we got it before we started the book, we got 10 years of tax records from 1985 to '94 and in that was of course the year he wrote Art of The Deal and we were thinking, "Well, there's maybe gonna be some good news in there." That year, he's writing a book saying he's this master deal maker and he lost $45 million dollars in change that year. So behind the curtain, that's what's going on and in that decade, we actually were able to find out 'cause we got some anonymized taxpayer data through the National Archives in Washington, we were able to go in and compare his taxes for that decade to a huge number of other taxpayers and in that year, it looked like he lost more money than any other single American taxpayer. But what he did th- this is like the interesting part of how it started is he was a- able to identify I think really in- in the '80s, I mean in the '70s he was spinning this story that he was richer than he was but then he fell in with not just the Larry Kings of the world who, where he was able to get on CNN and repeat it, but wealth porn sort of took off in the '80s and you saw him on shows like Lifestyles of the Rich and Famous with Robin Leach and- and he had- he had the accoutrements of success so he's flying around in his helicopter, he was on his yacht, he was losing a lot of money, we- we know that now from his taxes, but they loved him and- and not a lot of really rich people wanted actually to be on that show 'cause it's sort of tacky but- but he was all in and it- and- and it perpetuated this idea that he was rich and then he was getting on the rich lists and all that. I mean, it really did feed on itself but he started in the early '70s by lying about his wealth famously to The New York Times saying he was worth couple hundred million dollars, actually his dad was.And then it just rolled up, and it kept ... The number kept getting bigger and bigger.

23. SGScott Galloway12:11

    One of the things I really appreciab- appreciate about your work is that you both really did the work. Reading through, uh, some of your work, I just can't imagine how much time you were in a conference room with bad coffee, trying to string together tax filings-

24. SCSusanne Craig12:24

    (laughs)

25. SGScott Galloway12:24

    And really connect the dot. Really do appreciate th- that you did the work. And also that the New York Times would support you, or support ... Provide you with the resources to do that kind of in-depth work. My question is around Donald Trump Media. 80 million shares at 23 bucks a share, you know, one p- Whatever's that, 1.84 billion worth of, of value in those shares. My understanding is he hasn't sold any, and that would come up on a filing if he had sold them. But if I were him, I would be writing calls, I'd be doing pre-paid variable forwards. I would be borrowing on margin like crazy to diversify. Do you have any sense of, or any evidence around what he is doing to diversify-

26. KSKara Swisher13:11

    That share's-

27. SGScott Galloway13:11

    Monetize tha- those shares?

28. KSKara Swisher13:14

    A- A- But you left out, run by that well-known tech executive, uh, Devin Nunes, but go ahead. Sorry. (laughs)

29. SGScott Galloway13:21

    (laughs) N-

30. KSKara Swisher13:23

    Let me just tell you, this podcast makes more money, by far, than, than Trump Media.

Episode duration: 14:51