Why I Left California - Billionaire Rick Caruso Responds To Criticism, Homeless & CRAZY Home Prices

SUMMARY

Billionaire developer Rick Caruso discusses on the Iced Coffee Hour podcast his LA mayoral run, California housing woes, business successes like The Grove, and advice on wealth-building amid regulatory frustrations.

STATEMENTS

Rick Caruso ran for LA mayor due to perceived negligence in city leadership after working for three mayors.
Caruso believes good management and vision can uplift Los Angeles and its residents.
The California housing market remains strong long-term despite current challenges, with LA's diversity and climate as advantages.
Investors should lean into LA real estate in the right areas, anticipating a rebound.
Rent control policies tying increases to 90% of CPI make maintaining properties unsustainable over time.
Running a business in LA is overregulated, expensive, and unpredictable, hurting small businesses.
Adjacent cities like Culver City are outperforming LA due to better management.
Investment in LA real estate is at an all-time low, with some banks redlining the city.
Change in LA requires new leadership focused on economic growth and vetoing harmful policies.
Support for rent control stems from high living costs, where hardworking people can't afford housing.
Reversing housing costs demands more building to address supply-demand imbalance.
LA has the lowest housing starts in 10 years due to overregulation.
Reversing or modifying CEQA would balance environmental protection with development needs.
The California Coastal Commission should return authority to local agencies.
CEQA compliance adds about 30% to housing costs through delays and lawsuits.
Bureaucratic permitting processes, like endless inspections, frustrate developers and deter investment.
Effective leadership involves assembling experts to identify and fix development bottlenecks.
Caruso manages properties with high standards, inspired by Disneyland, focusing on pristine conditions.
His business mission is enriching lives, not just building retail centers, enabling creative features like trolleys.
Properties emphasize guest experience with cleanliness, safety, and amenities to transport visitors to a better place.
Giving away blankets at properties serves as advertising and enhances enjoyment.
Open spaces generate significant revenue through events, sponsorships, and ads.
Dead malls like Santa Monica Place should be torn down due to poor design and customer unfriendliness.
Multi-story malls fail because shoppers avoid upper levels without direct access.
Caruso walks properties biweekly to assess managers, spot issues, and discuss business performance.
Zero vacancy is maintained by curating synergistic retailers with a waiting list.
Best investment is building a strong team; properties like The Grove lead in sales per square foot.
Success without experience comes from surrounding oneself with experts and setting a clear vision.
Following Steve Wynn's advice: be the customer and trust your gut.
Worst investment was a Carlsbad project lost to a referendum, costing $10 million due to not following playbook.

IDEAS

Billionaires like Caruso are often misperceived as power-hungry, but his political run stemmed from genuine belief in improving city management.
LA's innate strengths—diversity, innovation, climate—outweigh temporary downturns, making it a smart long-term bet.
Rent control, while aimed at affordability, ultimately accelerates property decay and business flight.
Overregulation turns environmental protections like CEQA into weapons that stifle growth rather than foster it.
High-barrier entitlements create scarcity and value, but only if community input shapes projects.
Business missions centered on "enriching lives" unlock innovative features that generic retail ignores.
Psychic income from joyful customer experiences rivals financial gains in personal fulfillment.
Engraving branded items on giveaways turns potential theft into free advertising.
Negative spaces in developments aren't wasted; they're revenue engines via events and sponsorships.
Curating retailers for synergy, not just filling space, drives higher rents and zero vacancies.
Inexperience can be an asset if you break rules and surround yourself with smarter experts.
Playbooks from successes must be followed rigidly to avoid costly deviations.
Welcoming newcomers like businesses signals economic openness, unlike California's hostile bureaucracy.
Government needs KPIs and reassessment like businesses to end wasteful spending on homelessness.
Political dirtiness tests resolve, but non-career politicians can enact bold changes without reelection fears.
Switching parties strategically highlights the absurdity of closed primaries limiting voter choice.
Tort reform is essential as easy lawsuits bankrupt businesses and cities alike.
Urban disasters like Palisades fire reveal leadership negligence in basic prevention.
Private initiative, like Caruso's fire defenses, succeeds where public fails due to preparedness.
Rebuilding post-disaster should inspire resilience, turning loss into communal hope.
Homelessness solutions lie in scaling proven nonprofits, not inefficient government programs.
Gratitude practice counters success's dark side of complacency and lost humility.
Wealth formulas blend skill, hard work, and integrity for sustainable happiness.
Poor people often feel richer in spirit than the numerically wealthy, emphasizing non-monetary riches.
Cultural experiences like Italian piazzas can inspire modern community spaces.
Confidence in fundamentals allows bypassing complex analytics for intuitive decisions.

INSIGHTS

Effective urban leadership mirrors business acumen: assemble expert teams, set measurable goals, and pivot from failures to drive inclusive growth.
Overregulation in housing creates a vicious cycle of scarcity and resentment, solvable only by balancing protections with streamlined incentives.
Defining a business by human enrichment expands creative possibilities and revenue streams beyond transactional limits.
Inexperience fosters innovation by encouraging rule-breaking, provided it's guided by surrounding expertise and customer intuition.
Political independence and middle-ground philosophies are crucial to bridging divides and fostering practical progress.
Bureaucratic inertia in disasters underscores that predictable risks demand proactive private and public plans.
True wealth emerges from integrity-infused hard work, growing the economic pie for collective opportunity.
Gratitude sustains humility amid success, preventing arrogance and enhancing life's psychic rewards.
Homelessness demands bundled services from proven models, not siloed housing, to restore humanity and efficiency.
Community-centric development builds enduring value through scarcity and genuine support.
Misconceptions of billionaires overlook job creation and philanthropy as forces for communal uplift.
Open business practices, like personal welcomes, humanize large entities and retain talent.
Cultural inspirations from global traditions can revitalize local spaces for joyful connection.
Vetting teams and visions rigorously avoids playbook deviations that lead to failure.
Scaling successes in nonprofits could transform social issues at a fraction of governmental waste.

QUOTES

"I ran for office because I saw massive negligence on part of the leadership in the city."
"I would not bet against LA. I would lean into this time."
"It's a problem for sure. Um running a business in this city, it's overregulated. It's very expensive. It's unpredictable."
"They're disincentivizing investment. And I I think investment I would imagine is probably at an all-time low in the city of Los Angeles."
"You've got to reverse the cost of living, which you can do in the state, and you got to reverse the cost of housing, which you can do."
"If you could knock 20% off the cost of housing because you still protected communities with fair and balanced laws but you weren't overregulated, you'd have a housing boom."
"We're in the business of enriching lives."
"The reason is that when a customer comes onto our property, our philosophy, our business mission isn't that we're in the business of building retail centers or resorts or apartments."
"You can't run a business where everything is connected to a cash register."
"We're not in the business of filling space. We're in the business of selecting the right retailers and restaurant tours that create a synergy that work together."
"You've got to go do what you're good at. And one of the things I'm really good at is surrounding myself with really smart people."
"Be the customer. Follow your gut. If it doesn't feel right, don't do it. If it does feel right, do it."
"I believe in higher purposes. I believe your business should have a higher purpose. I believe your life should have a higher purpose."
"If you're not worried about getting reelected or reappointed, but just doing the right thing in government, incredible change can happen."
"We have to have a sense of humanity. These are people. They're human beings."
"More is caught than taught."
"The greatest income you make? It's the psychic income."
"Work really hard and follow your dream as long as you're really good at it."
"Dear Lord, you've given me so much. Please give me a grateful heart."

HABITS

Walking properties every few weeks to inspect conditions, discuss operations, and gather insights from managers.
Maintaining pristine standards daily, treating openings as "showtime" with no gates or closures.
Studying competitors and inspirations like Disney through mutual exchanges with Imagineering.
Sending personalized welcome notes with cell phone to special guests at properties.
Reviewing guest check-in lists each morning to identify and connect with notable visitors.
Practicing daily gratitude for family, opportunities, education, and business joys.
Surrounding oneself with smarter experts to execute visions while refining ideas intuitively.
Operating on handshakes within the company, emphasizing integrity over contracts.
Getting out of the office to experience customer interactions and challenge siloed thinking.
Listening closely to communities during project development to build support and reflect needs.
Focusing on simple math over complex spreadsheets for investment decisions.
Celebrating life's simple joys, like watching families in created communal spaces.
Instilling values through actions rather than lectures, as children learn by observation.
Traveling to observe successful ventures for inspiration and adaptation.
Mobilizing pre-planned emergency responses, like private firefighters during disasters.
Curating tenant mixes with an artful science to ensure synergy and performance.
Waking up grateful every day to counter potential complacency from success.
Partnering personally with stakeholders during crises to rebuild with purpose.

FACTS

LA housing starts are at the lowest level in 10 years due to regulatory hurdles.
Regulations contribute about 30% to the total cost of housing in California.
Caruso's company hasn't made a new ground-up development investment in LA for 6 years.
Small businesses in LA struggle with growth, hiring, and expenses from overregulation.
CEQA lawsuits create delays that inflate holding, legal, and consultant costs.
Caruso's properties achieve 18% rent growth over 30 years through premium curation.
The Grove ranks as the number one or two mall in the US by sales per square foot.
Rosewood Miramar, Caruso's first hotel, holds three Forbes five-stars and two Michelin stars.
LA's city council settlements cost billions, bankrupting municipal budgets.
Mansion tax raised far less revenue than promised while funding tenant lawsuits.
Palisades fire destroyed over 14,000 structures, killing at least 12 in that area alone.
Nonprofits like Downtown Women's Center achieve 90% success in permanent homeless housing.
LA spends nearly $1 million per person on homelessness, versus $100 daily for effective orgs.
California has the most homeless of any state; LA the most of any city.
Federal consent decree once oversaw LAPD due to severe departmental issues post-Rodney King.
Crime in LA dropped to 1950s levels under Caruso's police commission leadership.
LA has over 300 excess parcels suitable for homeless housing development.
18,000 women sleep on LA streets nightly, facing high abuse risks.

REFERENCES

The Grove (retail center developed by Caruso).
Americana (retail center in Glendale).
Palisades Village (Pacific Palisades development, fire-surviving project).
Rosewood Miramar (Montecito resort, first hotel project).
Santa Monica Place (failed mall example, bank-owned).
Disneyland (inspiration for property management and standards).
Steve Wynn (met at Bellagio, advice on being the customer).
Tom Bradley (former LA mayor, appointed Caruso commissioner at 25).
Dick Riordan (former LA mayor, recruited Caruso for DWP turnaround).
Jim Hahn (former LA mayor, appointed Caruso police commissioner).
Karen Bass (2022 LA mayor opponent).
John Kasich (supported in 2016 primaries to counter Trump).
Bernie Parks (former LAPD chief, replaced by Caruso).
Bill Bratton (hired as LAPD chief from Boston).
Downtown Women's Center (homeless nonprofit with 90% success rate).
Union Rescue Mission (effective homeless services organization).
Weingart Center (homeless support group mentioned).
Hope the Mission (low-cost homeless housing at $100/day).
California Environmental Quality Act (CEQA, law to reform).
California Coastal Commission (state agency needing revamp).
Italian piazzas (childhood inspiration for communal spaces).
Bible passage on gratitude ("Dear Lord, you've given me so much. Please give me a grateful heart.").
After-action report on Palisades fire (reveals negligence).
Steadfast LA (Caruso's group providing $1M in business grants).

HOW TO APPLY

Identify your core strengths and pursue ventures where you excel, avoiding passion-driven distractions.
Surround yourself with experts who know more than you, then refine their ideas with your vision.
Define your business mission broadly, like enriching lives, to enable innovative expansions.
Walk your operations regularly to spot issues, assess performance, and engage teams directly.
Curate partners or tenants for synergy, maintaining a waiting list to replace underperformers quickly.
Treat every opening as showtime, enforcing pristine standards through daily execution.
Monetize open spaces via events, sponsorships, and ads while prioritizing guest enjoyment.
Be the customer: trust your gut on decisions that feel right for experience quality.
Listen intently to community needs during planning to gain support and create value through scarcity.
Assemble a crisis playbook in advance, mobilizing resources like private teams for predictable risks.
Practice daily gratitude to maintain humility and appreciate non-financial rewards.
Operate on integrity, using handshakes and avoiding bad partners for long-term success.
Get out of silos: experience your product personally and observe competitors for inspiration.
Set measurable KPIs for goals, reassessing failures like in business to apply to social issues.
Scale proven models, like nonprofits for homelessness, at lower costs with bundled services.
Welcome stakeholders personally during challenges to build resilience and communal purpose.
Focus on simple fundamentals over complex analytics for confident, intuitive investments.
Instill values through actions, letting children observe hard work and generosity.

ONE-SENTENCE TAKEAWAY

Embrace strengths, integrity, and community focus to build wealth and revitalize cities like LA.

RECOMMENDATIONS

Invest in LA real estate selectively in rebound-prone areas despite current regulatory hurdles.
Advocate for CEQA reforms to cut housing costs by 20% through balanced environmental reviews.
Prioritize team-building as your top investment for sustainable business growth.
Walk properties biweekly to maintain standards and uncover operational insights.
Define business missions around human enrichment to inspire creative revenue streams.
Give branded amenities freely to turn user experiences into organic advertising.
Curate tenants synergistically, using waiting lists to ensure zero vacancy and premium rents.
Break rules innovatively when inexperienced, guided by expert entourages.
Follow proven playbooks rigorously, adjusting only for community input.
Welcome businesses personally to retain talent and signal economic openness.
Apply business KPIs to government, measuring successes like homelessness reductions.
Enact bold changes without reelection fears to drive real societal progress.
Shift to independent or middle-ground politics to bridge divides effectively.
Demand tort reform to curb frivolous lawsuits bankrupting small operations.
Pre-plan for disasters with private resources, as public systems often fail.
Scale nonprofit homeless programs bundling housing with mental health services.
Practice daily gratitude to counter success-induced complacency.
Focus on skill, sacrifice, and integrity for fulfilling wealth creation.
Draw from cultural inspirations like piazzas for modern communal designs.
Personally engage rebuilding efforts post-crisis to foster regional resilience.

MEMO

Billionaire developer Rick Caruso, known for transforming Los Angeles landmarks like The Grove and Americana into vibrant hubs, joined the Iced Coffee Hour podcast to defend his unsuccessful 2022 mayoral bid against Karen Bass. Far from a power grab, Caruso framed his $100 million self-funded campaign as a response to civic negligence, drawing from decades serving under mayors like Tom Bradley. "I ran for office because I saw massive negligence," he said, emphasizing that effective governance demands business-like management to uplift all residents amid LA's diversity and innovation.

California's housing crisis loomed large in the discussion, with Caruso urging investors to "lean into" LA despite sky-high prices and rent controls pegged to 90% of CPI, which he warned could render properties unmaintainable. Overregulation, including the California Environmental Quality Act (CEQA), inflates costs by 30% through lawsuits over minor impacts like bird patterns, stalling the lowest housing starts in a decade. Caruso hasn't launched a new LA development in six years, citing redlining by banks and adjacent cities like Culver City poaching business. Solutions? Reform CEQA for balance, devolve Coastal Commission powers locally, and foster supply to tame demand-driven prices.

Caruso's empire thrives on enriching lives, not mere retail. Inspired by Disneyland's immaculate operations—gleaned from mutual studies with Imagineers—his properties demand "showtime" perfection, from trolleys to free blankets that double as ads. Open spaces, derided as underutilized, generate massive event revenue. Walking sites biweekly, he spots neglected plants or tenant synergies, maintaining zero vacancy via curated waiting lists. His first hotel, Rosewood Miramar, defied skeptics by celebrating an un-isolatable Amtrak line, earning top global accolades despite zero prior experience.

Politics surprised Caruso with its meanness—effigies burned during his LAPD overhaul—but as a non-career entrant, he enacted changes like slashing crime to 1950s levels by ousting a popular chief. Bass won on familiarity, he noted, but lacks executive skills for LA's executive demands. Party switches from Republican to independent to Democrat underscored closed primaries' flaws, pushing for middle-ground unity. Tort reforms and mansion tax tweaks are urgent, as lawsuits bankrupt firms and cities alike.

The Palisades fire exposed leadership voids: a smoldering January 1st blaze, prematurely dismissed, reignited catastrophically on the 7th, destroying 14,000 structures and lives. Caruso's private firefighters saved his village using non-combustible materials and retardants, yet received no city outreach. Reopening in August, he's rallying retailers to "rebuild Los Angeles," projecting 70% customer retention. Federal aid's absence in this urban disaster highlights misplaced priorities.

Homelessness, with LA topping national figures, is "completely solvable," Caruso asserted, by scaling nonprofits like Downtown Women's Center (90% success) at $100 daily versus the city's $1 million per person. Bundle housing with addiction and mental health services; utilize 300 excess parcels. Policies enabling open drug sales exacerbate migration and cycles, unlike Miami's housed streets. Families and 18,000 nightly women victims demand urgent humanity.

Wealth's formula? Skill, sacrifice, integrity—without the last, success sours. Caruso, from immigrant roots, dismisses unethical billionaire tropes, proud of job creation and philanthropy. Poor communities in South LA inspire with spiritual richness, craving opportunity over handouts. Dark success sides like arrogance yield to daily gratitude: "Please give me a grateful heart." To youth: Hone talents, work relentlessly, as he did post-law firm bankruptcy, pivoting to real estate on spousal urging.

Ultimately, Caruso eyes another run—for mayor or governor—prioritizing quickest impact. LA's spirit endures, he believes, if leaders restore dream-chasing ethos. Private initiative, like his fire defenses or psychic income from snow-draped family joys at The Grove, models resilience. As California grapples with waste—$300 billion state budgets overspent—business principles could reclaim prosperity for all.