S2:E19 | Ari Rastegar: The Oracle Of Austin Real Estate

Ari Rastegar, the Oracle of Austin Real Estate and CEO of Rastegar Property Company, is our guest here today. He is one of the most influential power players in the commercial real estate world. He is also the author of The Gift of Failure, which is exactly what he did. His career didn’t start out well. He experienced failure and bad grades. He started his firm with a $3,000 loan in law school. But that didn’t stop him. He learned from his failure to find success. Now, he successfully invested and exited in 38 cities, 12 states, and 7 different asset classes. Join Don Williams as he talks to Ari about how he built his real estate empire. Discover how his business is not his business but an extension of his life.

For information on how to work with Don visit Work With Don Williams
You can also reach out to Don Williams at https://donwilliamsglobal.com
Please join Don and his businesses in support of St. Jude’s Children Research Hospital in its Mission to cure Childhood Cancers. You can donate to St. Jude at stjude.org/donate

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Ari Rastegar: The Oracle Of Austin Real Estate

Building A Real Estate Empire

I got a real treat for you. I got this uber real estate investor from Austin, Texas. He has been referred to as the Oracle of Austin. He put together a portfolio of 30 to 40 cities, 10 to 15 states, and 5 million square feet of property. He’s an overachiever. Ari Rastegar, welcome to the show.

Don, thank you for the kind words and thank you so much for having me.

Ari, tell me what you’re doing now.

We’re developing over $1 billion of new construction in 2022 through breaking ground. I own 100% of my company. I started with a $3,000 loan when I was in Law school. I delivered pizzas at DoubleDave’s. I went to two community colleges before they let me into Texas A&M University. If a guy like me can figure it out, I assure you you’re smarter than me and you have better opportunities. It’s a matter of knowing where you’re going, knowing your why, and having the grit to go there. I don’t even know how many apartment buildings and office buildings we own.

We’ve been in 38 cities, 12 states, and 7 different asset classes. We manage money for the biggest public pension funds, family offices, insurance companies, and high-net-worth individuals from all over the country. We’re doing master plan communities, which we’re calling futuristic suburban. It is a new way of a closed-loop ecosystem for a master plan development that has built for rent houses, has apartments, has a local coffee shop and barbecue place, a brewery, an elementary school for the city, and office buildings. We are using a bunch of technology to enhance that user experience.

We have high rises going up in Phoenix, Dallas, and an office building in downtown Austin. We’re doing what we love, helping our investors, and keeping it running. My book called The Gift of Failure comes out in July 2022. The name itself can tell you that I’ve certainly failed myself forward as John Maxwell would say. I’m a father of three. It’s probably the greatest joy in my life. My biggest regret if I have any regret in life is that I don’t get to spend as much time with them during these early years at 2, 6, and 9, as I wish I could.

Everything has a cost. We’ll come to learn that. For everything you do, there is something that you don’t do. As you’re out there doing the things that you’re doing, remember that you pay for it one way or another. You don’t take care of your health when you’re young, you’re going to pay for it in medical bills and be sick later on in life. Everything has a cause and effect and a level of duality. As entrepreneurs, we feel that in such a stark, visceral way more so than a lot of others do. People say, “You have to love what you do.” That’s complete nonsense because they don’t call it work for a reason. They call fun. Fun is fun. Work is work.

I paid to do my hobbies.

Hobbies cost money, too. The point is you need to love why you’re doing it, not love what it is. I don’t love going on the construction site and putting up sheetrock or doing whatever. I love creating a home for a family that’s maybe cheaper than the new construction next door. I love how that makes me feel being able to deliver a superior product to what the end base consumer is and being consumer-obsessed. That is a holistic philosophy that applies to anybody that’s out there being a proven entrepreneur.

The full title is Proven Entrepreneur Success Stories and what many people ignore is that every success story has a failing.

The name of my podcast launching on May 12th, 2022 is the same title as my book, The Gift of Failure. It is understanding how the introspection into failure is where lessons come and where growth comes. We’ve had this negative baggage around the words failure and selfish. As an example, if I’m going to be a doctor and do 18 hours of residency, that’s selfish. I didn’t see my family on Friday, but I’m going to go save 20,000 people’s lives. It’s resignifying what these words are going to mean.

Every success taught me one thing. The more successful I became is maybe being more of an idiot. Failures taught me lessons to be able to progress, grow, and continue, even though it was painful to examine that I’m responsible. I tell people all the time, “It’s not my fault.” I’m like, “It’s not your fault, but it’s your problem one way or another.” It’s having introspection, being comfortably uncomfortable to learn what went wrong and go do it right. The next time, make a different problem. Don’t make the same problem.

Failure is not the opposite of success. It is a part or a component of success.

It is an inherent part of success. It is a recipe for success. If you were baking a cake and you miss putting in the flour, you can think of failure like that. It is an ingredient to success, albeit maybe the most important ingredient. Everyone has had a soup that grandma made. You’re like, “Maybe it needs a little more salt,” and you put a little more salt in it. All of a sudden, the flavor opens up. Failure is very similar to that. It’s an ingredient towards that success. It cannot be looked at as anything other than what it is, an ingredient. It’s not bad. It’s not good. It can’t stand alone. It needs a synergistic effect of other things, but it is part of the process.

Let me take you back all the way to young Ari, age 5 to 18. You’re a schoolboy. We go all the way back to the household you were raised. A lot of different people have different households they were raised in. Was there an adult who was an entrepreneur who set an entrepreneurial example for you as a young boy?

No. My parents divorced when I was young. My dad is Iranian. My mother comes of German descent. I’m a first-generation American. My father became an attorney later on in life when I was about eighteen years old and then went out onto some entrepreneurial stuff of owning his own law practice. He has done that but I was already an adult at that point. My mother and my stepfather were blue-collar and hardworking. My stepfather was the Dean of Theater Arts at Texas State University. He was always a working actor.

This concept of money was very taboo in my home because I hate saying to hear people say, “He came rags to riches.” We didn’t have much money by any stretch of the imagination, but I’m born in America. It’s hard to complain when you’re born in America and you have all these great things around you. We were monetarily much lower middle class. We didn’t want anything which is great. This concept of innovation and doing something on my own at first was a little bit egocentric, like wanting to do my own thing, create something, and do something.

I came to realize, listening to my authentic voice, that that’s coming from a deeper human need of wanting to contribute, grow, and give my full self into whatever that’s going to be. I’ve been an entrepreneur my entire life, whether we’d go to Sam’s Club or to Walmart when I was in 3rd, 4th, or 5th grade, buy a box of lollipops or a box of Airheads and we’d be selling them for $0.25. I’ve been an investor or an entrepreneur my entire life as far as I could remember. If you want this hoodie, it’s for sale. Do you want it? It’s worth $50. You could have it. It is who I am in that regard.

It was a journey. I was an awful student in middle school and high school. I had a severe speech impediment. I had to go to seven years of speech therapy to learn how to talk. My wife always jokes, “Ever since Ari learned how to talk, he never shut up.” I’ve been in this for many years. I’ve had my own company, Rastegar for many years and we’re headed into the billions.

A quick Google search will tell you that. I experienced being in law school, undergrad, delivering pizza, selling cars, being able to sell this, moving to New York, living in a 200-square-foot apartment when I’m in my mid-twenties, and using student loans to pay for law school. I’m on the build side at 5:00 in the morning, building single-family homes, and rushing to class.

If people knew what it took to build this multibillion-dollar empire that we’re building, I don’t think they would do it because it’s so taxing unless you have that deep, God-given, nature-given, hard-wired, or whatever phraseology you want to use. I’m a man of God. I’m a big believer that I was given gifts to use and utilize. They’re not of me. If you don’t have that, you’re screwed at the outset with all due respect. if you don’t have that grit and that resilience, no matter how great the product is or the ambition is, the chances of success are slim to none.

At its core definition, successful people take actions that unsuccessful people don’t or won’t.

I’ll even qualify that. Successful people take massive action that unsuccessful people don’t. Successful people do things that unsuccessful people don’t. It’s pretty binary to the point that you’re making. The only qualification I would make to the true ethos of this particular discussion of success stories of proven entrepreneurship is you have failed if you’re a proven entrepreneur. You have overcome resilience. You’ve been kicked in the teeth when you had a plan. Mike Tyson said, “Everybody has a plan until they’re punched in the face.” If you have any success stories as a proven entrepreneur, you know exactly what we’re talking about.

I want to get some wisdom. We know that a piece of success is failing. Think back across your career for a hard lesson, an event that when it occurred was like, “That hurts.” Now, in retrospect, looking back, it turned out to be something very positive but at that time, it was brutal.

In my book, this story is in much more detail. I’ll give you the cliff notes of it. You’ll read it in the book if you feel like boring yourself for an hour and a half. In all honesty, being an English major by trade, it was my great honor to be able to write this book and put these things out there. My hope is that it will help a lot of people condense the 10,000 books I’ve read in my life into a shorter, more palatable version. There was an entertainment company that I started back in 2011 with one of the wealthiest and most powerful real estate financiers in New York City. I’ll save you the details of how we met. It was very serendipitous to my old wrestling coach.

It was weird, but we decided to build a global entertainment company that would do parties around the Super Bowl and NBA All-Star Weekend. We went in and signed the biggest acts in the world. I’m talking about the halftime show which is the Black Eyed Peas, Puff Daddy or P. Diddy, and David Guetta. We had Mark Zuckerberg there. We had Facebook as a sponsor. We did it at the highest level imaginable in year one on a show shoestring budget. I went to sleep one day a multi-millionaire with all the tables, the sponsorships, and the ticket sales sold.

All of a sudden, the biggest ice storm in the history of Dallas, Texas hit that year. It was crushing. We still did the parties. It was not nearly as profitable. We barely recouped the money in this “unforeseen event.” In hindsight, I’ve now come to learn to plan for the unplannable, have more capital reserves, don’t plan for perfection, plan for excellence and have mitigation and things in place. As a young entrepreneur in my twenties, I didn’t think that way.

Our next event was the following weekend at the Playboy Mansion. Before all this salacious awful stuff came out about the Playboy mansion, it was the crème de la crème of parties. Forty-eight hours before that party, after getting killed in Dallas at the Super Bowl and the snowstorm, Legionnaires’ disease broke out of the Playboy mansion and they canceled the party. It went from the pain of proverbially wanting to jump off a building to soul-crushing.

You can’t even make this stuff up. Legionnaires’ disease broke out after the biggest ice storm in the history of Texas all within a one-week period when we were planning on making $5 million to $8 million in net profit, going to barely maybe being able to recoup capital. What that taught me was a few things, plan better, perform better, stress test better, and find contingency protocols which we do in our global investment business. Even beyond that was esoteric. The Yiddish say, “Man plans, God laughs.”

I was not meant to be a party promoter or an event coordinator but I learned supreme customer service of how to treat celebrities who now are investors, clients, and vendors. We treat them with that celebrity red carpet and unbelievable investor relations. Some of those people that attended the parties became clients later on in the future. I found my true calling in real estate which pivoted me in that direction.

That one was full-on soul-crushing. It put me exactly where I needed to be. We celebrated the seventh anniversary of Rastegar in 2022 is wholly owned. I couldn’t imagine a better failure to lead me to what my destiny was going to be. At that time, God knows I did not have the wisdom, the understanding, or anything. It was, “Poor me. God is punishing me. This is horrible. Everything is going to crap.” From a business standpoint, it was truly the greatest blessing of my life.

Even Jerry Jones, owner of the Dallas Cowboys and the NFL felt your pain during that ice storm. If people can remember, there were sheets of ice that were 30 x 30 yards sliding off the roof.

It canceled Prince’s entire show. Prince had a show. The tent collapsed and we still went off without a hitch. We still had our events. Everybody performed. They were smaller. The events were incredible. They weren’t as profitable. That set the tone for me of what the next several years of my career were going to mean. Going back and looking at those lessons, I didn’t have the maturity, the wisdom, the knowledge, or the life experience to understand them. Still now many years later, however long it’s been since we started that enterprise, I’m still learning why that had to happen to be where we are.

It continues to be a blessing that keeps giving. The greatest soul-crushing failures that we all experience in any place of our life. If we have the guts to continue to take introspection, not to dwell, not to suffer, not to, “Woe is me,” but with a true analytical mind, de-emotionalize to say, “What can I learn? Where am I? Except for this happening, I would not be here.” It’s called the butterfly effect. Even on a smaller scale, you will find tremendous blessings that came from what that was.

I either win or I learn. Learning is just a slower winning.

Winning in the short term is like winning a battle. I’d rather take the learning and win the war than win the battle. You come to learn that. Look at baseball. I’m not a huge sports guy. We have tons of professional athletes, investors, and celebrities. I get to learn a lot from them, talk with them, and spend time with them. In baseball, if you strike out 7 out of 10 times, you’re not just good. You’re in the Hall of Fame. That means that you missed 70% of the time and you’re in the Hall of Fame.

The guys that strike at that don’t get a hit 75% of the time are barely in the League. There are a whole lot of people that are hitting 250 to 275 but a few are hitting that 300.

I found that universal truth that different opposing or on their face opposing views like Republicans and Democrats is an easy thing. I don’t ascribe to politics. I don’t care about it. I disagree with everybody in some way, shape, or form, including my six-year-old son. Some stuff that Dem say are good. Some stuff the Republicans say is good. Some stuff that each side say is stupid. I don’t think either one got it all right.

With that said, if you take two different parties like that that supposedly should disagree on everything and they agree on one thing, I’m very interested to learn what that one thing is. There’s a higher probability that that has some merit and that goes for everything and anything in life. If there’s a universal truth that Lao Tzu spoke about and Jordan Peterson is talking about now and they both are coinciding, those are the things that pique my interest to learn more of what the universal truths are that can be applied to anything. To me, my business is not my business. It’s an extension of my life. It’s not what I do. It’s who I am.

We did the hard lesson. Let’s go to the other side. What about a work speed moment? Things are going pretty well. All of a sudden, you implement a new strategy. You do a new hire and did a couple of things together. The hockey stick explodes.

I’m born and raised here in Austin, Texas. I bought a bunch of great stuff. They were conservative. All of a sudden, every major company, Tesla Oracle and Facebook, all came here and the hockey stick went straight up. I wish I could say it was because I predicted it. I had some artificial intelligence. I had inside baseball. It’s my hometown. We knew the local players. We did the math. We thought that viewers were longer timelines to reach the success that we thought to get a healthy, conservative return.

Our performance got thrown out of the water in a good way. Everything went up way more than we had expected. As a dear friend of mine’s father used to say, “You don’t need to plan for good news.” That was the inflection point. When Austin went gangbusters in the few years, our whole portfolio and the value went up. Investors did well and have allowed us to expand exponentially across the country and now the world.

I’m going to put you in a time machine and take you all the way back to twenty-year-old Ari. You get about 60 seconds to say, “Listen to what I’m going to tell you. This is going to help speed you along your path.” What is something you know now that you wish you knew then? What do you tell young Ari?

I’ll tell him a couple of things. One thing I tell him is that this too shall pass. The good stuff and the bad stuff will pass. You need to find a way to be calm and still, no matter what is happening externally. Learn transcendental meditation so that you can still your mind and not be reactionary. No matter what looks like the doom and gloom at the moment like, “I failed an exam. Someone said this. I got into whatever,” that seems so important, learn to be less reactive.

Look at it, deal with it, and move on. Keep almost a Zen-like level of calmness, not because you don’t feel the things and to feel them, but to know that they will pass, the good and the bad, if things are going great for you, don’t think that they’re going to always go great. Prepare for something to go wrong. When they’re going bad, you need to know it’s not always going to be bad. Don’t get in a funk. Keep going. most of all, stay still.

If somebody wants to reach out to you, you got a podcast coming up. You got a book coming out. There is nothing better you can do to get your message out than write a book. Ari and I are brothers of different mothers. He talks about delivering these exceptional experiences. My number two book is titled Romancing Your Customer because I see the customer journey map as very parallel.

Send me a link so I can buy it. I want to read it.

I’ll be happy to do that. I’ll do better than that. I’ll send you a copy of the book as my, “Thank you for being on the show.”

When my podcast launches, we’ll book you as well to come on. We’ll talk about your book and our stuff as well. We share a similar mindset on life. We’re brothers from another. There’s a lot more that we can give. The whole point of you doing this show, me doing mine, and me writing the book has everything to do with growth and contribution. I wish I had someone to share these conversations with me. I live in a world of abundance where there’s enough for everybody. We should be sharing these things as much as we can. We’ll continue to have that going and the dialogue.

Thank you so much for having me. We’re going to be doing this again. Maybe I’ll come to the show again when the book comes out. I will have you on ours. Whenever you’re in Austin, Texas, you’ll be my personal guest. We’ll be having a lot of time but this will be great. You can find me pretty easily. If you type in Rastegar or Ari Rastegar anywhere on Google and you want to find me, you can. A twelve-year-old boy in the UK sent me a million messages. He found me. It was on the cover of the New York Post, Page Six. We’re writing a kid’s book together about goal setting and health for children. If you want to find me, you could find me.

I reserve the right to recall the witness counselor. This is the first of many conversations. Ari, thank you so much for being on the show.

It’s my pleasure. Thanks so much.

Important links

• Ari Rastegar
• The Gift of Failure
• Romancing Your Customer

About Ari Rastegar

Forbes recently labeled him, “The Oracle of Austin.” Last year he was inducted into the Commercial Observer’s Power 100 list, which ranks the topmost influential power players in the commercial real estate world. He is the youngest inductee ever to grace the page.

His book: The Gift of Failure – alongside his own podcast by the same title is set to come out in early July with a slew of heavy-hitter guests sharing their own personal experiences with failure turned into steppingstones. He started his firm with a $3,000 loan in law school. Since then, he has successfully invested and exited in 38 cities, 12 states and 7 different asset classes. Currently he is one of the most prolific buyers, owners, and developers in the Austin MSA, originally his hometown.

For information on how to work with Don visit Work With Don Williams
You can also reach out to Don Williams at https://donwilliamsglobal.com
Please join Don and his businesses in support of St. Jude’s Children Research Hospital in its Mission to cure Childhood Cancers. You can donate to St. Jude at stjude.org/donate