Rebuilding the World Trade Center after 9/11, office space in a COVID shaped future, and the #1 investment to make in life with Tal Kerret of Silverstein Properties

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January 14, 2021

Tal Kerret is the President of Silverstein Properties, a real estate development and management firm based in New York City. Silverstein Properties owns and operates 40MM square feet of office space and residential properties including the World Trade Center, which they bought just six weeks prior to 9/11. Tal shares his unique perspective of what it's been like to rebuild One World Trade and help rejuvenate downtown New York City.

Before joining the family business of Silverstein Properties, Tal was a successful entrepreneur who was a part of the dot com boom in the early days of the internet. He used that experience and passion to start SilverTech Ventures, an accelerator, incubator, and venture capital firm. Tal tells us about SilverTech’s mission and a uniquely positioned company for the COVID era they’ve incubated called Dojo. By using their proprietary technology, Dojo allows companies to actually quantify the risk of contagion in their office space. It takes into account the airflow, the size of the space and other variables to give business owners a clear understanding of the risk in each room of an office.

How do you think the future of office space will look in this new COVID shaped era?

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Transcript

Mark Peter Davis: Tal, great to have you on thank you for coming. Uh, why don't we start at the top?

Will you tell us a little bit about Silverstein properties?

Tal Kerret: Thank you, Mark. Um, Silverstein properties is a real estate [00:02:00] company, um, that is, uh, focusing on obviously everything that you can imagine real estate is, but, uh, we also focus a lot about technology. We are known mostly for our large projects, even though we do much more.

We are known for the world trade center that we acquired. It was actually on my birthday in, uh, 2001, six weeks, July 24th, six weeks prior to, uh, to nine 11, uh, thinking that everything is great and we know what to do with the buildings and how to improve and fill them even with more tenants and better tenants and take the buildings to the next level.

Uh, and then, uh, nine 11 showed up and surprised all of us in shock us as a family and as a company. Um, I feel very fortunate that my family members are with us. My wife that morning, uh, was trying [00:03:00] to take a car to the office. And, uh, this was back then when my father-in-law said, you should try the train, you should try different ways to come to the office.

Um, well, how about trying a driver? You can work from the car while you get there. I left didn't love the idea, but said, I'll try it. Wow. And, um, at the time we lived in Scarsdale, um, with our two daughters, then, uh, later we had our son, but, uh, in Scarsdale, the community can imagine, you have to get to the train station, get on the train, come to grand central.

And after we acquire the buildings, the twin towers, we moved our offices down to the world trade center to the 80th floor on the North tower. And. My wife waited for the driver and he could not find the house for over 40 minutes. He was driving in surplus, no cell service. If you live in Scottsdale, those who do live in Scottsdale, you probably know the cell service is terrible.

Uh, they didn't have ways or any Google maps on the phone. [00:04:00] So he kept on driving out of area to call back and say, I couldn't find you a street. This was a tiny street there in Scottsdale. Um, and my wife explained again, and he'd go through the street next door. At the end. She said, that's not working for me.

She got it, the car. And she drove to the office and, um, she was 20 minutes late on the West side highway when the first plane hit and everything then stopped. Um, my father-in-law had another, uh, lucky day where every morning we would meet with tenants at the top of the world, shaded the restaurant windows of the world.

I used to go for drinks there

Mark Peter Davis: when I was younger. No, and

Tal Kerret: it was a great restaurant, even on Wikipedia. It says that, uh, the year before it was the most successful restaurant in the world in terms of revenue. And it was a great restaurant grade's views. And every morning Larry would put his jacket on and go to meet the deaf, another tenant.

One of the tenants in the building to ask them, how are you doing? Is it enjoyable? What can we do [00:05:00] better for you with the hopes that's his life. He always focuses on the tenants to listen to them and then say, okay, let me do what you're asking me to do to improve things, to change things. You need me to add things to the building, go for your team.

And that morning as he's getting dressed. And my mother-in-law said to him, what are you doing? He said, I'm going to meet a tenant at the building. I believe it was Morgan Stanley. And she said, no, you're not. You're coming with me to the dermatologist. And he has a fair skin. Uh, and every few months he has to go to be checked and, um, and taken care with his skin conditions.

Uh, and he said, no, cancel, the dermatologist is said, I'm not canceling. We canceled lots, not canceling again. You're coming with me. And he did what he promised, uh, what he taught me to do many, many years ago, which he said, um, the number one rule in your life. And it was very intense, listening to him, uh, is to learn the words yesteryear.

So eventually he said [00:06:00] saved his life. And he said, yes, the year canceled the meeting and went to the doctor. Uh, and the rest is history. Uh, we lost employees here. We lost four employees and we lost a lot of friends and tenants and people that we were very close with and we made a decision and a commitment to rebuild the world trade center.

Um, and we are now. When we look out the window and I'm sitting here looking at the buildings, um, we have built the entire place back. We are missing one more tower that we are working on. Um, what cost us to buy 3.2 billion 3.25 is costing us over 20 billion to rebuild. And that's, that's a project we are known for.

Uh, but we do a lot more. We own buildings, uh, across New York and in other cities, uh, Philadelphia LA, we built the largest four seasons. Uh, Which is in Disney, the Disney park. Um, we have a nice partnership with the four seasons where we have also downtown. We built [00:07:00] and we are building another one, uh, internationally and other hotel and residences.

Uh, and we liked it. Do things that change communities that impact the area, not just yet another building. That's less interesting for us. It's more can we make. A difference. Can we bring a community together and create some sort of an increase in place of people that would love to work, live, and play and enjoy themselves, and really have a different way of life.

Um, and we're trying to do that also internationally, as well as in New York. So sort of a

Mark Peter Davis: benevolent real estate mission.

Tal Kerret: That's our mission.

Mark Peter Davis: Um, so can we rewind to the nine 11 better? The story you just told about. The near miss for your family

Tal Kerret: is shocking. And the

Mark Peter Davis: whole situation we all know for, uh, millions of people was a heart-wrenching situation.

Uh, we don't need to recount that here, um, how it would happen [00:08:00] after what happens in the aftermath of a tragedy of owning a building like that, owning a property, the chaos of rebuilding. What, what does that look like for people on the inside? So I think we all, we, a lot of us know the story of the politics and everything else happening around the world, geopolitical politics, but I don't think many can imagine what you guys were going through.

Um, you have made a major investment in property. Catastrophe happens. People's lives are lost.

Tal Kerret: How do you recover? No, I'm, I'm trying to reflect and look back in time. And when you live through it, it's a decision you make because we had many, many exit points that we were offered many, many times to get out and make a big profit insurance companies that did not want to pay, uh, that were battling us.

We were in court with them for a long period of time for over six years. [00:09:00] Um, and they were saying things behind closed doors that they would not say in public. Uh, and when we should discuss it here, but 22 insurance companies, uh, over a hundred lawyers on the other side, uh, one group of lawyers representing us to battle that and say, we have the rights and the need for the city of New York for the United States and for the world to rebuild the world trade center.

And you owe us some amount of money that would be needed. It's not even enough to build it, but we need that capital to build a lot of that capital by the way, went to the port authority to build underground, but it's a constant, it was a constant, it still is a battle. There are 19 government organizations we are dealing with on a weekly basis.

Uh, some of them are more functioning than others, uh, but you can imagine what it is to deal with government organizations. They. They don't care about the economics. They don't understand necessarily, or at least they don't behave as if they understand [00:10:00] what it means for the lives of the people involved, because time does not impact them the same as it is facts, uh, the business community.

Okay. Our job was to bring it back, to create a place you want to be in. When people said you will not see anybody coming to downtown, New York, New York, nobody would want to be here. And we've made a decision. Larry made a big decision to say, I'm going to give the rest of my life and I'm going to rebuild this.

You didn't need this. He doesn't change his lifestyle, but he decided he's not going to leave a hole in the ground. And then we went and interviewed the families and spent a lot of time with a big part of the families. Almost every family that was willing to talk. Uh, the lost loved ones. And we actually have employees here.

We said, you have a room, you have a place to work. If you lost a loved one. And we have people working here till today that are in marketing department, in the development and construction that are working in our firm and they lost a sibling. They lost a parent, uh, and [00:11:00] they said, we're going to rebuild this.

We're not going to leave a hole in the ground. And we have a mission. We have a mission, we have a vision we're going to rebuild it stronger, better. So it won't. Ever come down again. Now I come from a place that, uh, terrorism is not acceptable. There was a miss supposed to put fear in you and is coming as a way to fight, um, some progress.

On the other side, it's in many cases, terrorism is coming from place that, uh, someone has a different opinion and doesn't accept your opinion in life and they decide to do something negative. We should never give up on those. Otherwise there will be a hole in the ground, out the window. Downtown New York would have been a disaster.

Same with the country. I came from the terrorist attack and people say, we will never give up. So for us, it was a mission, a life mission. In that period of time, it wasn't easy. It was a pain, it was scary. It was concerning. It was how do you communicate this with your kids that are young? My, [00:12:00] my two daughters within, uh, 12 and nine, um, They don't understand it.

And you have to very carefully explain it. How do you explain it to kids? It's not easy. Um, and then we had to pay for a hole in the ground. Wrong ground meant that when we don't have the insurance money for a period of six years, it was about $11 million a month when there were no tenants paying at that time.

So we can go over that story, uh, over and over. And I can look at it in my mind, but I think it's our obligation. I don't think it's about anything else, other than doing the right thing. It's not about the money we could have cashed out long time ago. Um, but then we would have been maybe financially doing well, but the city would not do well.

The community would not do well downtown would not do great. Um, and I think that would have been the wrong thing to do.

Mark Peter Davis: So this became your family's more or less life mission. This wasn't a financial [00:13:00] decision.

Tal Kerret: Not at all. It was not a financial decision. It was a life mission. And he still is. And I think we are proud of where we are.

We still think there is a long way to go, always to increase the community, to build, uh, the last tower and to get the right tenants because the buildings are always as good as the tenants in them. Um, but I think it's shown and he's doing the right, the right thing. It's shown that resilience and grit and not giving up is always important.

And if you do the right thing at the end of the day, you have a beautiful community that is built. The downtown is amazing. Now we moved to live downtown because of it. I just, we decided to move our family here because of all of this.

Mark Peter Davis: And a lot of new York's technology scene has moved down there because of the work you've done.

And I think rightfully so, they would be very proud of. And now you had mentioned a couple of times through there that you're from another country, for those who don't know you're from Israel, uh, w what brought you to the States? How did you make that transition?

[00:14:00] Tal Kerret: Um, taking us back in time lane. Um, so going back, um, I wasn't born a real estate person, as you can imagine.

I was born in, uh, in Israel. Can't get rid of the accent. And I always saw my parents working so many hours, including weekends, and my mother was working till 8:00 PM. Uh, and I made a decision very at the very young age that I don't want my life, my kids, my family, even though I was young too, to be with the same type of life.

And, um, I did the best I could at the time I started working, um, while I was at school at the age of 14 and, um, That led to the future of my, uh, my business decisions. But I working at 14 made my first, uh, college real estate decision by buying an apartment, uh, uh, across the street from my parents' home.

So [00:15:00] didn't go far, but I bought that at the age of 17 and, uh, and then went to the army, like many people do. I served for six and a half years. Uh, was flying some airplanes and, um, became an officer over in the army. And when I came out, uh, went to the university, decided to study as fast as I humanly could took eight, nine classes a semester, finish it as fast as possible and had already an ideal for startup a company.

I wanted to start with, uh, two other friends of mine. Co-founders where we started that. Um, Uh, that the company with the idea of e-commerce at the time, it wasn't a big 1997. Uh, and we said we were going to build a platform for a lot of companies to run their own e-commerce, uh, business. Uh, I had even the fortune of meeting one of the people that today's a legend, uh, and having a nice [00:16:00] debate with them back in, uh, 97 98.

Uh, in Menlo park and, uh, looking back in time, um, he, he actually knew what he was talking about. I didn't know it. Then he was talking about selling books. Uh, Abel's bought into the meeting by John Doerr. His name is Jeff Bezos and we had a nice dialogue,

Mark Peter Davis: uh,

Tal Kerret: and we built the platform that would help power other other sites.

We ended up selling the company and start a new company in the. Think the games, business and the casual games business. Now as a CEO of the, my first company, um, I knew that the market is here. It's not in Israel, a country at the time with a six and a half million people that there's not enough, uh, commerce.

And there won't be enough commerce there anytime soon. And, um, I moved to the United States and sort of where's the best place to be. Is it New York, Chicago, Atlanta, all [00:17:00] the cities are great. Uh, spent a month in every city that, uh, no five cities and pick New York at the end for different reasons, uh, to be the hub, the center for my life at the time.

And that's how it brought me here again, as a, as an immigrant with hopes with, uh, ideas, uh, with grand ideas. And then it started to grow, uh, with the second company, which, uh, became at the time the largest. Uh, distributor and PA platform and, uh, service for cancel games. Uh, we were powering sites like, uh, MSN of Microsoft and Yahoo and, uh, even, uh, AOL and electronic arts Pogo site that download and purchases of games are there.

We're down to our platform. The company grew and grew. Um, we had 11 yeah, offices around the world, 750 employees. Uh, and it was, um, I would say both [00:18:00] life-changing, uh, dramatic at times. It's very scary. Cause you wake up in the morning and you say, what is going on here? How, how do we have this? And what's going to surprise us next.

Cause there were a lot of surprises showing up and dealing both with consumers and with large organizations, uh, the internet at the time that was growing and growing. Uh, and, uh, every year I would have a conversation with Larry and my father-in-law would say, you know, it's, it's nice what you're doing there with, with those types of games.

Not sure I understand all these games, but we need you in the car. In the family business, you should join the family business. And I kept on saying, but I want to build a billion dollar company. And he said, I understand. And every year he would, uh, spend time with me again. And then one day he says, look, um, I'm 78.

Um, I'll be 80 soon and I need you in the family business. So let's figure this [00:19:00] out. And he took me in, uh, in the ride and showed me buildings. And he said, you see this building a billion dollar in this building $2 billion. And once you see those things,

Mark Peter Davis: there's your billion dollar company.

Tal Kerret: Yeah. So he said, we need you here and understood that, uh, that message went very well in that car ride.

And, uh, I made that decision. I gave a year notice, uh, to my board, to the investors, uh, spend time there. And they, they, uh, paid me well, uh, sold my share and came to the Foundry business back then. So that's about a decade ago, uh, where I joined the company. And, uh, it didn't start as, as the president of the company, but as a senior vice president that is learning, moved from being a chairman of a company, a founder.

To become a senior vice president because I knew I had to learn a lot and then grew through the ranks and, uh, reached the position of being the president here.

Mark Peter Davis: That's a rags to riches story, uh, both on your own. Right. [00:20:00] And then obviously the family you married into, right. That's a must have been challenging in a lot of respects.

I think when people hear that they're probably, um, focusing on the money and I'm sure the money was part of it for you. But what I also hear when I hear it, it's a lot of responsibility, right? Uh, the transition from getting a company of 750 folks with offices all over the world. That sounds like a lot of responsibility.

And I think the responsibility of joining the family business probably is Herculean. How has that changed things for you? Is life more stressful, running a giant conglomerate that you know, your family depends on. And a lot of other families depend on how has it changed things?

Tal Kerret: Um, I think we all grow, uh, we all learn and, um, I'm everybody says those things, but, uh, I really feel that the team around me is, [00:21:00] is making me so much better.

Um, I thought we hired great people in my previous company, in a company called Oberon, or I play in the games world in the tech world, everything was moving very fast. Um, everything was new all the time here. Things are very methodical. Um, there's a lot of, uh, complexity and a lot of complications. And if you don't get the, the gravity of what we do and the companies we deal with.

Um, that many of them, we have a lot of tenants that are substantial companies and you see it all of a sudden we'd smart, smart people, CEOs of these companies. Um, we have thousands of tenants, but if I'm looking at the top, uh, we have 245 of the top 1000 companies as tenants. So all of a sudden, when you can sit with the, with the top of these companies or my wife and I had a conversation the other day with the CEO of Moody's, I didn't dream about sitting in.

And the conversation with the [00:22:00] CEO of companies. Like it can downgrade a country, actually,

Mark Peter Davis: it's a lot of power.

Tal Kerret: Uh, yeah. And they're sitting in this building actually be underneath, uh, this office in this building or sitting with the companies like Uber or Spotify and really having the real dialogues. Uh, it has a lot of responsibility behind it.

And, uh, you need to take that with the right attitude and understand what it means. And, uh, you grow a lot, you mature a lot and you shouldn't get confused. I shouldn't get confused with where I am and, uh, thanks to Larry. Thanks to my wife. She's incredible in these, uh, in this aspect, in every other aspect, she's my, always my boss off everything.

We call it the BOE, um, because she's amazing. And she sits behind me on behind this wall. That's where she is. That's her office. Um, so we are together all the time and we can spend time digesting and analyzing and learning. And [00:23:00] the difficulty of running a startup is one, uh, the difficulty of running, uh, and being in a business like this, a family business that is run as a startup, but on a big scale and is constantly moving in, shaping and adjusting is very impressive.

It's to deal with big problems on large scale. Uh, in between our projects and the development projects we have about depends on when, which day you will wake up, but something that could be between 10 and 15,000 people working on the projects. And we have operations in China, in different countries.

That's every one of these people is alive, is a person that cares about something. Every one of our tenants is a great tenant, but he's a lot of responsibility as well. So I think it's, um, It's changed. It changed me a lot. Um, and I, I hope that for the better I

Mark Peter Davis: live in the startup community, right. And a lot of the people who have become big names, running companies, we all know most of them didn't come from anything, or they came [00:24:00] from normal lives and now have this tremendous responsibility.

What advice do you have for people who are on their way up? And there's a moment when they get to a perch where things are different for them. Maybe it's a little bit more lonely. Right. Maybe it's a little bit more complicated. What have you learned personally that you think would be good wisdom for those people and when they kind of ascend to that level, which many people are seeking, but it's not entirely a blessing, not always a blessing.

Tal Kerret: Um, I think the number one thing I've learned is that you must have an anchor and remain humble. We we all going to get to the same place at the end. Unfortunately, COVID note COVID, uh, life is finite and we'll all get to the end and then we'll wake up. If you have the opportunity and you know, it's coming and you are [00:25:00] a week before and you ask yourself, did I do everything I wanted to do?

Did I do the right thing? Did I spend time with my family? Because nobody's going to count the number of zeros you have in the bank account. It's ego only. Once you reach a certain level, it doesn't change what you eat. It doesn't change what you drive. It doesn't change anything. And if you learn it fast enough, you'll have a better life.

So if you have a partner in life, a spouse that is, uh, someone who is your soulmate, you, you have made it doesn't matter what you, what you've done financially. And if you don't, you have a terrible life moving forward. And the biggest lesson is that the investment, the number one investment that people forget is in their spouse and finding the right person.

And it doesn't matter what your preferences are, but find a soulmate, someone you can share and work with and understand you because there are moments that you are alone. There are moments that someone doesn't understand, investors, partners, tendon, someone [00:26:00] would not understand, and you have to take and make the tough decisions and take the right direction.

And it's not going to be the ideal direction for everyone. You're going to have a lot of unhappy people in that process. And if you don't have someone that anchors you and says, you'll find we are doing the right thing, or you're, you're totally wrong. Someone who can look at you in the face that this is really wrong.

And I have, I'm having those conversations all the time. Um, I remember the times where my daughters were younger and I was wrong all the time. I woke up in the morning. I was wrong before I even had my coffee. Um, but we timed that improved actually. Uh, they said, they say that that he became a wiser or they became older.

Um, but if you really focus on that relationship on the family, on your kids, on your spouse, you will have a good life. And right. And again, everybody has their own rights. Uh, I think, I think the right thing is to say, if I were on the other side, Larry always tells me if you were on the other side, what would you [00:27:00] expect someone to do?

If you are the other side of this data, when we're looking at, we had many cases like this, where negotiations, and then we get to a certain situation and then something disrupts everything, and someone else comes and wants to take the place of that tenant. We actually have that example in another building.

And you say, if you were in their shoes, would you feel that you were done wrong? If you do, that's not something we can do, period. It doesn't matter what financial implications it has. It does not matter. Uh, and I think that's a way to live because I don't want to regret one day at the end of a life, which will come to regret that I did things the wrong way.

You

Mark Peter Davis: talk a lot about the strength of your core relationships. Did this social mobility you experienced in your business success, um, over on, and all the ventures before and where you are now, did you lose relationships? Uh, are there relationships you can look back on where. They [00:28:00] just couldn't endure your transition, friends, family.

Tal Kerret: Uh, not with family, family. I think, um, the relationships are great. I, I, um, there, there always regrets and I, I like to live my life with less regrets if I can. Obviously I live in the United States, which is far from where my. Uh, parents are, and my brother is, um, and I'm saying my parents, I lost, uh, my mother about a year ago.

Um, and we didn't have enough time. And that was a surprise to all of us. It was not expected. So in retrospect, if I had more time and I knew, and that it's coming, I would have done things differently in terms of spending more time there. All the time with her find the business would have taken. It's fine.

If I needed more time there, you never know. And when it's needed, you cannot go back and change time. [00:29:00] Um, I don't think that I can pinpoint friends that I lost in the process. Um, but I had less time with some friends because I moved into a high pressure. I was before in a high pressure environment that they could integrate those types of friendships easier than in a, in an environment like this with a tremendous amount of responsibility, uh, and also responsibility for family at the same time.

So you have to balance it and sometimes you don't have enough time for some close friends. So to your point, um, I don't know if there is an ideal world. I don't know. Um, but, uh, I hope I'm doing the best. I can looking at everything in, uh, in the mirror and saying, what would I change at the moment, other than, uh, spending more time with my mother and father, um, which is it's not easy.

Uh, at the moment you cannot go back and change. So I'm trying to be on the phone with my father and doing COVID. I couldn't even fly to see him. So [00:30:00] Israel with a quarantine and lockdown. So we hope to see him soon. Can

Mark Peter Davis: you tell me a little bit about SilverTech ventures, a lighter note? Uh, just give me an overview of what that is.

Sure.

Tal Kerret: Uh, SilverTech ventures is a platform. Some would call it an accelerator and a fund that helps startups grow and become successful. The entire mission of the platform is to spend time with the companies it's not a 12 week program or a 14 week program. That's preparing you for a presentation. It's a life together.

And the companies come and sit with us and spend a lot of time with us. We have a team of people who are experts in. Product management, raising capital, taking the company to the next stage and helping some entrepreneurs don't know when they need the help, but they have all the resources available for them, giving them the platform to do that.

And they sit with other people from the same community or the CEOs together in the same area. They have a lot of space here that they can [00:31:00] spend time with their team and they constantly come and spend time with us to help them with introductions and taking them to the right places. I'm trying to reflect it happened.

Um, because part of it is luck, real luck bumping up into the right people. Um, and a big part of it is passion. And I always had the passion of, uh, looking at other entrepreneurs and kind of being at all with what they are doing. And saying, this is amazing. And I, I, how can I help? How can I help to make it a success?

Even when I had my previous companies, I always spend time with other entrepreneurs and said, what can I do? Is there anything I can do to help? And one day I bumped into a gentleman called Charlie Fetterman that was leaving the building while I came in, gave him a hug. I don't know why. Uh, and he accepted, this was pre COVID.

We could hug people and, uh, I knew him as a, as a mentor, as a smart person in the, in the tech world who [00:32:00] had, um, Mo M and A's than anybody will facilitate it more Mondays than anybody in the country. Uh, he ran the largest investment banking firm in high-tech in the nineties that bid at 24% of all the high-tech MNAs and many of the IPO's and, um, doing that, he had the end game in mind.

He saw the end game. And the moment I saw him, he, he was such a sweet personality and he was smiling at me and I said, uh, what are you doing? And he said, I'm retiring. So you'll retire. And he was in his fifties. I said, that makes no sense. Come, come with me. And I took him to see Larry, Larry Silverstein.

And Larry asked him the same question. How old are you? And he said, you're not retiring, targets him in office. He's not retiring. That's how it started. And then we said, okay, if we want to help startups, let's do