Donald Trump is All Sizzle, No Steak

09 July 2007

Do you think Donald Trump is a great businessman? Dig into the numbers, and you’ll be quite surprised.

According to the July 6th edition of The New York Times Business Day, a $10,000 investment in Donald Trump’s 1994 IPO is worth approximately $636 today. (Hat tip to Tom Peters for the link.)

In 1994, “The Donald” had $900 million in personal debt and business debt of $3.5 billion. As a result, Trump skirted the edge of personal bankruptcy several times, and his hotels and casinos holding company emerged from bankruptcy and re-structuring in 2005.

It seems that, in a very real sense, Trump’s “business” is more of a cult of personality than a profit-generating company. Trump has mastered the art of image, but there’s not much backing his bluster.

By way of contrast, a $10,000 investment in Sysco (a relatively boring food service company) in 1994 would net you $60,877 today. That’s enough to keep you supplied with steak for a long time.

It distresses me that so many people still view Donald Trump as a business role model. In light of the above, you’d do much better emulating Charlie Munger or Howard Schultz.

The moral of the story: great PR and a great business are two different things. Sometimes the “boring” companies perform the best.

(Ironically, Trump is currently trying to increase his profitability by selling steaks.)

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Donald Trump is All Sizzle, No Steak

09 July 2007

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