[The 90’s raw: Buzz Neusteter]

Raw footage for the award-winning series The 90's. This tape features an interview with Buzz Neusteter, a business consultant who gives advice on the real estate market and speaks about his optimism for the business world. The voice of the interviewer, John Schwartz, is very quiet since he does not have a microphone.

00:00Copy video clip URL Business consultant Buzz Neusteter sits against some shelves, and the camera is tight on his face. Neusteter does not want to give details about himself, but interviewer John Schwartz prods him a bit, and wants to know a little about his background. They talk about beards and the ’90s as they prepare for the interview.

05:52Copy video clip URL Schwartz asks about the Neusteter department store chain. Neusteter says his loan company works with real estate and new companies, and they utilize non-traditional methods for providing resources.

07:47Copy video clip URL Schwartz asks for examples of things that work, and things that don’t. Neusteter says, “We do things that are off-beat.” They get involved in cases such as when one partner buys out another, and cannot bring in a traditional source. They provide an “off-beat way to collateralize,” looking for growing companies rather than liquidating companies. They also work with entrepreneurs with good ideas, in order to help them succeed.

11:40Copy video clip URL Schwartz says this sounds like venture capitalism, and Neusteter says it is similar but they don’t have the same structure. “We look at each deal on its own merits.” He talks about his group’s diverse expertise.

13:14Copy video clip URL Neusteter is asked about real estate, and he talks about liquidity and loans. “Real estate crashes can create opportunity for entrepreneurs.” Schwartz asks about Colorado, and Neusteter talks about the warning signs for crashes.

16:45Copy video clip URL Neusteter is questioned about the experience of a real estate crash, and Neusteter recommends cutting one’s losses if you own real estate.

17:56Copy video clip URL The tape cuts, and Neusteter talks about devaluing markets, and the actions that people should take: “To act quickly, not to wait for better times.” He recommends that if you buy something and cannot sustain it, you have to talk to your tenants and financiers.

19:49Copy video clip URL Schwartz says it sounds like there’s a lot of psychology behind this, and asks Neusteter to talk about the “greater fool psychology.” Neusteter responds by talking about a cycle of boom and bust. “As long as there’s money there that’s available… then there’s almost a little engine that overheats,” Neusteter says about Colorado’s real estate market. “The lenders lost sight that the market was being overvalued.”

25:10Copy video clip URL Schwartz asks about the opposite end of things, where people undervalue assets. Neusteter says the smart investor is not speculative but looks at the downside rather than the upside. He discusses peaks and valleys, the bottom of the market psychology, and raw land.

28:33Copy video clip URL Schwartz says that investors always make mistakes, and that the business world is actually based on people making mistakes. Neusteter agrees that every investor makes mistakes. They then talk about lemming-like market situations, where people make collective mistakes. However, Neusteter sees no problem in this.

30:36Copy video clip URL Neusteter is asked what his philosophy is about how to handle cycles, and to go into where there is more upside and downside. Schwartz asks about the psychological toll, and Neusteter says it depends on where one is in the cycle. He says people are typically not equipped to deal with the downside environment, “and many times they get frozen.”

33:02Copy video clip URL Neusteter says he comes from a merchandising background, and talks about marking prices down instead of allowing them to devalue themselves. He also recommends that you “be open to communication.” Schwartz asks for specific stories.

35:03Copy video clip URL The tape cuts and Neusteter is reluctant to tell stories about failures. Neusteter talks about an operating business, where they got involved with a merchandising entrepreneur where everything in the store cost 99 cents. They liked the idea because there was a lot of merchandise available, especially household items. They started this five or six months ago, and it is growing at a fast rate. Schwartz asks about consumer interest and opinion. The stores, Neusteter says, “have stuff for everyone… Not a lot of display, not a lot of fancy presentation… It’s easy to spend a dollar.” In addition, the whole family can find something.

39:09Copy video clip URL Schwartz asks if he thinks that America is getting poorer, and Neusteter smiles and disagrees, but acknowledges changes. “Fundamentally, America is getting stronger,” though there have been changes in the industrial and international spheres. We have shifted away from manufacturing, he says. Schwartz asks how there can be a strong base without manufacturing, and Neusteter says “We’re in a different world, with different need,” and consumers are looking for different product. Schwartz cites the Japanese and their dominance in manufacturing.

42:33Copy video clip URL Schwartz asks how America is getting stronger. According to Neusteter, we have become a larger part of world trade, and we have a lot of agricultural opportunity. Neusteter says that we invest for the short-term, in comparison to the Japanese, who look to long-term investments.

45:19Copy video clip URL The tape cuts, and Schwartz questions Neusteter about retailing. He says that it has undergone a lot of changes because the consumer, the demands of the consumer, the infrastructure, etc. have changed. “There are a lot of changes in the way that one goes about presenting and selling goods.” He lists different types of merchandising used. As for the consumer, Neusteter says that the perception of the shopping experience has changed, and has caused a change in the atmosphere of the marketplace in order to make it a pleasant experience.

49:25Copy video clip URL Schwartz asks about Wal-Mart overtaking Sears, and Neusteter is “excited” by the tactics of Wal-Mart, and how they blanket so many categories of merchandise, and how they gained the cooperation of manufacturers. Compared to Wal-Mart, Sears must spend their money in updating.

51:24Copy video clip URL Schwartz goes back to the “pleasant experience” supplied by stores, and Neusteter talks about how people shop only when they need to now, and says now they need to “be induced to shop… by an entertaining experience.” Neusteter says families go out and shop together now at shopping centers, and it’s a “community experience.” He talks about kids in malls, and Schwartz pushes him to say there is something lacking in society that caused this congregation at malls.

55:43Copy video clip URL They move to another topic, leveraged buy-outs. Neusteter says some are positive, and some are negative. He sees a lot of greed in leveraged buy-outs, but generally they can be a good thing. He thinks that some companies would go out of business without such buy-outs: “Buy-outs give an opportunity for corporations to have new blood.” In short, they have gotten bad publicity but the publicized cases were those that happened quickly and badly. Neusteter can’t think of any good leveraged buy-outs though.

58:51Copy video clip URL Schwartz asks what is happening with banks, and Neusteter responds by saying that they are in “a highly regulated position” which has created “a tremendous liquidity problem.” “To me, the pendulum has swung from too easy to too tight.” Banks are not giving out loans easily enough, and are being too conservative, according to Neusteter.

01:01:34Copy video clip URL Schwartz asks if Neusteter knows of anyone in real trouble, and he says that he knows many people who are having trouble renewing their loans. He says that people have lost communication with their banks. He gives the example of cable television, which had a lot of trouble providing collateral. But that creates opportunity for his business. Schwartz wonders how the banks got into this position, and Neusteter that they created their own problem by creating speculation, and making it too easy to get loans in the past.

01:05:45Copy video clip URL They ask Neusteter about the “messy” quality of the economy, and Neusteter says that the “laissez-faire” system is messy by nature. Neusteter says that what we perceive as problems can also provide opportunities for entrepreneurs. “Through adversity can come prosperity.”

01:08:47Copy video clip URL Schwartz asks about this through the lens of a working person or consumer. Neusteter says it is difficult to be “contrarian,” and to interpret the bad as good; “you can get swept up.” He attributes the difficulty to the psychology of the market and human nature, and says “it’s a real discipline.” Discipline, according to Neusteter, entails understanding, planning, and not allowing one’s emotions to interfere (which does not mean they are not people-oriented). Schwartz asks what exactly creates good chemistry, and Neusteter says they tend to work slowly with teams in order to establish compatibility.

01:14:32Copy video clip URL They change the subject to areas of the economy that have growing opportunity, and Neusteter names technology as a broad category, and more specifically waste management and environmental corporations as sectors that have a lot of opportunities, especially in light of social issues. Specifically, he talks about Ben & Jerry’s and an English cosmetics company. He also describes some changes in employee environments, and the new real estate opportunities in new kinds of housing. All of his answers have the flavor of non-traditional ideas and methods, and focus on social issues.

01:20:55Copy video clip URL The tape cuts, and we hear them talking but Neusteter is not on camera. They are talking about a specific opportunity in which Jim Sternfield (the cameraman) is interested. We hear a woman’s voice joking with Neusteter, who then sits down again.

01:24:23Copy video clip URL Schwartz says that Tom Weinberg instructed him to ask about down-towns, but Neusteter does not want to talk about the history of Neusteter’s on tape.

01:25:42Copy video clip URL Neusteter talks about James Rouse, and the ripple effect for creating housing for people who have no money. Schwartz asks about business’ obligation to do good, and Neusteter says not everyone agrees, but that business tends to create good on its own. However, Neusteter says that “doing well by doing good” is not sufficient on its own, but is a beneficial part of any company philosophy.

01:29:18Copy video clip URL Schwartz asks Neusteter about the government’s involvement in the economy. He responds that he supports as much of a laissez-faire economy as possible, with regulations only in specific cases. He doesn’t think that governments should save companies or place embargos.

01:30:43Copy video clip URL Schwartz gives Neusteter the opportunity to speak out about any other things that are bothering him or on which he wants to express his opinion. Neusteter says that he is an optimist, and says that he is disturbed by the amount of crime and other social problems. He is frustrated by business abuses, but he feels nothing that he needs to preach on. Schwartz draws out of Neusteter a critique of the media, which focuses on the bad news more than the good, and this “creates pessimists, if they’re inundated by negative news.”

01:35:14Copy video clip URL Schwartz asks what he wants to speak out about in the business realm, and Neusteter says “the most difficult issue in business today for me is the feeling that we need to be surrounded by attorneys, and the amount of formalization of agreements between people” and the implications of this rigidity for interpersonal communication. He finds that this inhibits doing business, because you are always separated by legal documentation, and this creates cynicism. “I would like to work with people on the level of human being to human being.” He adds that this problem is “symptomatic of the complexity of doing business today.”

01:39:22Copy video clip URL Schwartz says that, “Running things according to money creates a cut-throat environment,” and that business works against human values. Neusteter says that businesses cannot always be benevolent, but he says running a business “can be done with some understanding of circumstances…. Decisions do have to be made that are tough.” However, above all, businesses cannot be benevolent if they are not in business at all.

01:41:29Copy video clip URL Schwartz asks why businesses are a worthwhile pursuit, and Neusteter points out other aspects of business besides making money. For instance, establishing worthwhile relationships with other people and other opportunities that business leads to, and says that these things are what make business fun. He says too many people are too serious about business. Schwartz wants to know what specifically about business is worthwhile, and Neusteter says that Schwartz assumes that money is the essence of business, and this is not true. Neusteter can say that this is not the case because his company does not specifically work to maximize profit.

01:47:18Copy video clip URL Sternfield and Schwartz argue about the essence of money, and Schwartz and Neusteter say that money is artificial, while Sternfield argues that it is the base for people’s lives. Neusteter says that we could go back to bartering, but money does not have to be the only purpose in creating a business. They talk a little about not-for-profit organizations. For instance, telemarketing companies can even be not-for-profit, as well as Paul Newman’s salad dressing and other products, and a place in Phoenix that sells bells. They talk about tax-exemption and not-for-profit status, and the camera moves to Schwartz, who is explaining the distinction. The camera goes back to Neusteter, who is sitting in an armchair in a corner.

01:56:04Copy video clip URL The interview ends. Neusteter talks about a company they are working with at the moment, that does not seek profit but rather the pride of having a company. Schwartz tells a similar anecdote. Neusteter speaks briefly about the corporate world versus the world of private and smaller companies. “There are a lot of underlying, more humanist objectives that we find,” and he attributes this to the “severe structure,” bureaucracy and formality of the corporate world.

02:01:02Copy video clip URL End of tape.