His real estate-rich family has long operated the levers of power and influence in New Jersey, but few in Manhattan had heard of Jared Kushner until he bought the New York Observer two years ago, at the age of 25, for a reported $10 million (with Observer founder Arthur Carter retaining a small stake).
      
Since then the tall, handsome, and eligible Harvard grad—who also boasts law and business degrees from N.Y.U.—has been a staple of the gossip columns (as the on and off boyfriend of Ivanka Trump) while striking up friendships with wizened media moguls like Rupert Murdoch, who has taken a lively interest in the young man's progress.
    
And Kushner's progress has been impressive. With Observer editor in chief Peter Kaplan, he redesigned the lobster-hued weekly, took it tabloid, and added staff, while launching a separate company, under the Observer brand name Politicker, that offers insider news on the Web to political junkies in New Jersey, California, Kentucky, and 13 other states. Last year, young Jared led the Kushner Companies' team that paid $1.8 billion for the 1957 vintage landmark skyscraper at 666 Fifth Avenue— the highest price ever commanded for a single building in New York until the recent $2.9 billion deal for the General Motors Building.

During some of that time, Jared's father Charles—a major Democratic donor who built the Kushner empire of 25,000 apartment units in the Northeast—was in federal prison for witness tampering, tax evasion, and filing false campaign reports. The elder Kushner had pleaded guilty after prosecutors accused him of hiring a prostitute to seduce his brother-in-law, a potential witness against him, and then showing a tape of the encounter to his sister.

Charles Kushner was freed in August 2006 and remains close to his son, who gave Portfolio.com an exclusive interview while, a few yards away, his father presided over a meeting with potential investors at Kushner corporate headquarters at 666. The press-shy Charles greeted this columnist when Jared pulled him out of the meeting. "How'd he do?" the father asked proudly, then looked back toward the meeting in progress and confided to his son: "Fascinating. German money."

Lloyd Grove: Nice piece of property you've got here.
 
Jared Kushner: Thank you, it's great. [In the 15th floor lobby of his family real estate company at 666 Fifth Avenue, Kushner points to a framed photograph of a dog-eared first page from Charles Dickens' A Tale of Two Cities and the opening words, "It was the best of times..."] And this is actually a great photo that I bought, for here. The reason I loved it was that I saw when we bought this building-

L.G.: —Tale of Two Cities?
 
J.K.: Well, that's what it's from. But when you think of this, you think, "It's the best of times, it's the worst of times." But I love how we bought this building literally right after my father came out of prison, probably five, six months after. And the thought that I had was, It's kind of like the juxtaposition of going from the worst of times to the best of times. How you never want to break a record, paying the biggest price, but to think that five months earlier, we were living through my father being in prison, and then, coming out and together buying the largest single asset.

L.G.: $1.8 billion.
 
J.K.: Yeah. And so I love the, "It was the best of times..."
 
L.G.: You got the good half!
 
J.K.: I got the good half. [Leading the way into the elevator down to the main lobby of 666.] We'll run down and I'll show you the lobby. Do you have any interest in real estate?
 
L.G.: Only in the pornographic sense that everybody else does.
 
J.K.: Real estate is like porn for rich people.
 
L.G.: By the way, Jared. There's some publication [the New York Observer] that pretended to put out a list of the 100 most powerful people in New York real estate, and you weren't on the list. You was robbed, man. Who are these people who don't know anything?
 
J.K.: [Laughs.] I guess I've got to lobby them to get on there. It's a true test of the fact that it's a smart list that I wasn't on it. It shows they have good judgment. [Pointing out highlights of the Isamu Noguchi-designed lobby in the midst of renovation, including the famed Noguchi waterfall.] This obviously was done by Noguchi, the ceiling and the waterfall, which is priceless art. But the granite on the walls, I thought was that they got a bulk deal on pink granite. It looks pretty but the way that it's shined, between the wall and the floor, it's just that the light wasn't great. So what I did in here—obviously we're starting to get some very big rents in the building—I wanted to give the tenants the same kind of feel as in the more upscale buildings. So we put wood on the walls here, with a silver column, kind of gave it a little darker feel. We did the lighting up there across, and the sculpture. And then we honed the granite here. The difference is, because the way it comes off the ceiling now, instead of the shine, it looks like there's more continuity. So I wanted to kind of reduce the light, but keep the light focused on the art. A little more of a dramatic feel. Once it's all open, it'll be phenomenal. We also added more retail here, which has probably increased the value of the building by $50 million. In the process, we upgraded the lobby, and you know, making it kind of more formidable, for an office building of the caliber of the location.

 

 

L.G.: Now some of your long-standing tenants are paying way under market price, aren't they? 
 
J.K.: Well, the market runs probably $120 a foot. Annually. Ridiculous. An upper floor is probably about $150, a lower floor is as low as in the $90s, so it ranges.
 
L.G.: You've had Brooks Brothers in here for a long time.
 
J.K.: Yeah, they were paying substantially below market.
 
L.G.: Are you having to renegotiate those deals?
 
J.K.: No, you have a lease, you have to respect the lease. But, for example, at Brooks Brothers, we were able to make a deal with them that was beneficial. This is something that's been reported, where they're going to be leaving in February, and we've already rented half the space to the tenant [the Abercrombie & Fitch children's store] at market price. Citibank is still one of the largest tenants in the building. But it's a great building, it's a lot of fun.
 
L.G.: Obviously it got its address, 666, before all the craziness surrounding "the mark of the beast" from the Book of Revelation.
 
J.K.: Well I think "the mark of the beast" has probably existed before the building. The way that I look at it is, six plus six plus six is 18, which in the Jewish religion is a lucky number. It's "chai," it's "life." Like with everything in life, you can see it one way, or you could see it another way.

[Back in Kushner's office.]

So I would've had you at the Observer office, but this is where I'm working out of today. But the difference is pretty stark there—it's a much different décor.

L.G.: How often are you down there [at the Observer office in the Flatiron neighborhood] versus up here?
 
J.K.: What I've done is I've bifurcated my week, so I spend three days a week, generally Sunday, Monday, and Friday, down at the paper, then I'll be here in the real estate office Tuesday, Wednesday, Thursday. Now when I'm down there, I work on my internet ventures and all that stuff as well, and when I'm in one place, I'm always working on projects from the other. I take Saturdays off. And occasionally I'll take a Sunday off too, or I'll work at home or whatever it is. But on Sundays I try to get to the office.

L.G.: You're coming up on two years of owning the Observer.
 
J.K.: Yeah, it's pretty scary.
 
L.G.: And you're 27, right?
 
J.K.: Yes.
 
L.G.: So what possessed you to go buy a dinosaur? This is, like, so old-media. Isn't it a bit yesterday?

J.K.: Well, I would say two things. People are hysterical about the death of newspapers and I would say they're not dying, they're just kind of reinventing themselves. What the ultimate body count is in reinvention is still to be determined, but the difference between a weekly and a daily is that my product is a country home, whereas a daily is your primary residence. You need a primary residence so people may choose one primary residence over the other, and internet and the newsprint to some degree are interchangeable for certain people. You're only going to buy a country house if you know you're going to use it. You're only going to buy a country house if you want to go to it. You are only going to subscribe to the New York Observer if you're going to make time to read it and if it adds something to your life that's kind of special. The way I look at it is, there's obviously a lot competing for readers' attention these days, but the goal of the Observer is to be something very unique. It's a hyper-unique product. I'd like to think that our editorial mission is to give our readers every week one or two things that they just can't get anywhere else that would make them smile, or a little bit smarter. We have the smartest readership probably in the world of any publication.

L.G.: I'm sure you have studies to back up that assertion.
 
J.K.: That they're the smartest in the world?
 
L.G.: Yeah, you have their I.Q.'s?
 
J.K.: Well, they're very discerning. I think the readership is made up of a lot of the media elite, thought leaders, the people in politics, people who run banks. It's more anecdotal that they're the smartest readers in the world, but to some degree, you can really say that we've got a hyper-self-selecting group of people who really run things, who pay attention to this publication.

L.G.: Let's go back, and tell me why you wanted it. Why did you decide to get into the journalism business? You have no history. You wrote one review of something when you were in college. What was it?
 

 

 

J.K.: Food. I did an article on how to survive on food when you're in college based on, how do you mix things together in the cafeteria and from different places, how to cook in your dorm room. It was kind of a bad idea with a lot of follow-through, and I didn't have a strong interest in journalism or anything like that.
 
L.G.: So you went from zero to 500 miles per hour. What possessed you to do that?

J.K.: I was very attracted to the Observer, I heard the paper was for sale and I was very attracted to the brand. I thought it was an incredible brand, I knew that it was read by an incredibly strong demographic. The more I investigated a), what it would cost and b) how it was run, I thought there were tremendous opportunities to improve the operations from an efficiency point of view. I felt like it was an under-invested-in company and I thought that the brand could be incredibly valuable. So I've spent the last two years kind of doing this in different stages. The first stage was really revamping the product and the systems. So before you kind of paint the car and make it pretty, you want to make sure that everything's working under the hood. So we've rebuilt the engine, reoriented the newsroom, rebuilt the news site, reoriented the sales staff. We changed a lot of the upper management, we brought in an events team. We did a lot of things that we had to do to compete in the marketplace today. I spent a lot of time in the beginning with Peter [Kaplan, the editor in chief], trying to figure out what the product should be-because my general instinct on it is that it's easier to build a business off a great product than it is to build a business off something that isn't. So we invested a lot in the product, redesigned it, we tried to make a modern-day paper.

L.G.: You paid $10 million for it? That's what has been reported.
 
J.K.: Yeah, but I've never confirmed anything.
 
L.G.: Oh, you haven't. But then you put in millions more?
 
J.K.: Absolutely. We've invested a lot in the paper. But, for example, in the first quarter of this year, our revenues were up 61 percent over the last year, which, given the general climate for newspapers, we were very happy with that.

L.G.: Where does that come from—is that internet? Is that display advertising?
 
J.K.: Display advertising, classified is down a little bit, internet is up pretty big, our events revenues are up, magazines and the circulars that we're doing are up. We published a Luxury Living magazine which was probably the biggest magazine the Observer has ever done, which was in conjunction with the event we did. [Kushner brandishes a copy with a beautiful model on the cover.] 
 
L.G.: How long have you been dating her?
 
J.K.: [Laughs] Well, no such luck there. But I really had the opportunity to meet with a lot of different people who were willing to give me advice as to what they're doing. And I think not a lot of people see the Observer as competition because it's such a unique product, so I was able to really pick the brains of a lot of really smart people in this industry and get a sense for what they were doing. And so we built the organization that way, we've added a lot of expense so that we could be kind of a new-age organization. But at the end of the day, it's really starting to pay off. Our advertisers are saying to us a) Why has no one ever called us before?, and b) It was never explained to us what a great efficiency buy this could be for our clients. So the value proposition tends to be great in the sense that they get to reach the power elite, and it's less expensive than taking an ad in the New York Times. There's very little waste in the money that they spend in our publication.

L.G.: So looking at this magazine, Luxury Living: New York Condo Showcase, when did it come out?
 
J.K.: That was put out in conjunction with an event we did earlier this year. It was an insert in the newspaper, and it got tremendous feedback. We took the Puck Building [which the Kushners own] for a day on Sunday and we got 40 developers to pay for booths and we got about 2,300 consumers and brokers to come through. I think this year we're going to publish about five special-insert magazines, and hopefully next year I'll take it up to six, eight.

L.G.: Had the Observer been doing that kind of thing before you arrived?
 
J.K.: They had been, but it's kind of a microcosm for the whole business in the sense that they just weren't investing in the magazines. So they were on poor stock, the content wasn't that good. We went out, we hired first-rate freelancers, we made first-rate magazines, we put them on better paper stock and we went out and trained the sales staff how to sell them properly. And the first time we did that, we literally tripled the revenue from the year before, just on that one magazine. So we've been able to grow that business, and I see that as kind of the microcosm for the rest of the paper, where we've invested in the product. I think more people are reading it—readership is up.

L.G.: Where have you put the money—into hiring more staff? God forbid paying those young people more!

J.K.: We've increased our newsroom staff by about 20 percent. We hired a design director, which was a position that they'd previously cut out; we had a photo editor, we spent a lot more money on art, on photography, trying to make the paper look good. The real philosophy is that the way people read today, you want to make this a fun, smart read, but it's got to be able to feel fun.
 
L.G.: Did you know immediately that you wanted to go from broadsheet to tabloid?

J.K.: No. I try to be always completely open-minded. One of my favorite things that I've ever read when I was in college was John Stuart Mill. And I remember reading his "marketplace of ideas," the notion that there's no such thing as a bad idea because it'll either help you find the new truth or reinforce the existing truth. And so we looked at a million different things—where the paper is now is a far departure from what the first mock-ups were. It's a far departure, but it's an evolving thing. You have to be open-minded, you have to be willing to make mistakes, take risks, and ultimately you'll come out with something that works. The good thing about our organization, too, is we're very nimble in the sense that we're not bureaucratic, and if there's a change that we want to make, we'll just go ahead and make it.

 

L.G.: How large is the staff of the Observer now?
 
J.K.: We have over 100 employees, about half-and-half business and editorial...The cost of paper is up, but at the end of the day, it's still not the biggest variable. I mean, we don't print a million copies like some of the dailies have to. We print once a week and our print run is our circulation plus 20,000 or so. I have to check what the last numbers were, but our circulation is close to 50,000 on the paid, but in terms of what we distribute, it's close to 60,000, so you have all the different comps and targeted circulation. We sell about 10 percent on the newsstand, and recently raised our price.

L.G.: I'll say! I paid $2 for my copy. That's pretty aggressive!

J.K.: Thank you very much.
 
L.G.: I'm helping to defray your losses.
 
J.K.: Well, the truth is, it's a premium product. You get just as much out of there, if not more, than you would from, say, a New York magazine, and some of its competitors, which are closer to the $4 price tag. Just because it's on newspaper print doesn't mean you're getting anything less. So I would argue that at $2 it's still a great buy, and we didn't raise the price for subscribers, we just raised newsstand prices.

L.G.: Is there any kind of newspaper owner or media mogul that you can model yourself after a little bit?
 
J.K.: I wouldn't like to model myself. I'd like to take a lot of role models in a lot of different places. I'd like to hopefully take the best of what I see in great people and try to emulate those things. I think that in some ways, you want to be creative but in some ways, you don't want to be too creative. If there's something that you see someone else doing that works, you know, they say imitation is the greatest form of flattery. A lot of people have things that they do well and things that they do less well, and I think the goal in life is to try and increase to your arsenal as many things you do well and try to limit the amount of things that are in your arsenal that you do less well.
 
L.G.: There's an anecdote about you sitting with an unnamed New York media owner and having a long conversation with him and just being shocked at how disdainful this person was of the staff, and just the people who work for him in this particular news operation. And my question to you—is this anyone I know?
 
J.K.: I guess so. I didn't give the report of that story.
 
L.G.: Peter Kaplan did.
 
J.K.: Part of getting into the business with no experience, I was literally airdropped behind enemy lines with no guidance or support system, you know, and having Peter as my editor and really partner in this is that he's been able to, at least on a journalistic side, teach me what's appropriate for a publisher to do. Teach me, like what he does with all of our reporters, why what we do is important and how to get a great appreciation for journalism, and its very best way.
 
L.G.: Well, having worked for so many years for the Washington Post, there's the Graham family model of ownership. Surely the top editors would hear from the Grahams if they didn't like something, but it was always clear whose job it was to oversee content. I was joking with you earlier about the fact that, you obviously would have been included on anybody's short list of the most powerful people in New York real estate, but were not, in your newspaper, because—

J.K.: Definitely my mother's.
 
L.G.: Was there a sense that you have to be a bit above the fray, as an owner, in terms of content? Because I can tell you, from personal experience, that some newspaper owners don't take that attitude.
 
J.K.: No, it's very, very true. I think that, as far as the product's concerned, I really believe that the product has to have credibility. Our readers are very smart, they know very quickly how to smell a fraud. One thing about Peter is that he's got incredibly high ethical standards for what is journalistically acceptable and what's journalistically not acceptable, and I trust him to use his judgment.
 
L.G.: Can the Observer cover the Kushner company?
 
J.K.: It has.
 
L.G.: And have you ever been irritated by the way they've covered it?
 
J.K.: Um, well, if there's something that I think they did wrong, I kind of take the approach that everyone else should—which is, I encourage people who feel wronged by it to send a letter to the editor. It just so happens I can speak to him, so if there's something that we did wrong, that was covered incorrectly, but for the most part, it hasn't been an issue in any real way.

L.G.: Now when people come to you, as I'm sure they do, and they just read something snarky about themselves in the Observer, and you have a business or social relationship with them, and they say "Jesus Christ, Jared, look at what your paper did to me"—what  do you do in those situations?

J.K.: Well, I think people for the most part are very respectful and they know that I'm a publisher who has strong belief in editorial independence. And I'm very fortunate to surround myself with great people, and I believe that you hire good chefs and you let them shop for the groceries and cook.
 
L.G.: So do you let these people know, "Well, look, that's not my department"?
 
J.K.: If there's something that's a factual mistake—and my family's been in the limelight of the press, and I've seen tons of press accounts that were just factually inaccurate in my time—so we're hypersensitive to making mistakes, and that's something that's not acceptable. The only thing that I care about is that a journalist be fair, that they gave a chance for comment, that they're diligent in their research, and as long as they do the right thing journalistically, then that's what the Observer is. That's what it's about, and that's what I've signed up for.

 
L.G.: Tell me about your growing internet operations, particularly the Politicker, and your plans for that. The last I saw, you were in about 20 different states.
 
J.K.: Not 20. I think we're at about 16 now, and we're growing.
 
L.G.: Okay. So, explain to me the whole idea behind this, how you're intending to monetize this huge investment you're making. Politicker was an existing brand at the Observer.
 
J.K.: Definitely. Politicker was kind of an interesting thing. I bought this website, PoliticsNJ.com, which is now called PolitickerNJ.com. We did that just from a branding point of view and it was one of the only URLs for which we could get a clean sweep of all 50 states. And we thought it was a great brand. I bought the New Jersey site and I figured, I didn't know who this guy Wally Edge [a nom de plume for a political insider] was, who ran it. He's an anonymous editor that's been around for a lot of years. Turned out he's absolutely phenomenal at what he does. We've hired some reporters, put some resources behind it, we've rebuilt the site in about 12 days. I redesigned it in about 12 days.

L.G.: You, Jared, hands-on redesigned it?
 
J.K.: With the designer. But in terms of web design, I'm very picky about how things look, the general aesthetic of it. I don't have any formal training in these things, so I look at it like a consumer, kind of like with the newspaper. I had a lot of experts who were great at redesign, and Peter Kaplan, who knows everything about newspapers. But I try to bring the consumer's point of view, and maybe that's good, maybe that's bad, but I'm more willing to take risks with that. So we bought this site and we did it so quickly because we wanted to be out ahead of the competition in the state. We're over 40 employees in the company.
 
L.G.: And this is separate or under the same Observer umbrella?
 
J.K.: This is totally separate, and what I found with that site is, it was incredibly influential in the political realm, and literally everyone in politics in the state of New Jersey goes to that homepage and they check it three times a day. So I thought of it as a very effective P to P media—politics and politicians. My original goal with that is, "Let's just build the content and figure out how to monetize it later." I just recognized that it was a valuable asset. It became profitable within the first six months in the sense that we don't have an ad sales team, so people just started calling up saying, "I want to advertise on your site because I recognize that from a value and efficiency point of view, it's the best way to reach politicians, it's the best way to reach legislators."

L.G.: When you call something "profitable," what do you mean by that?
 
J.K.: It means that you make a dollar as opposed to lose a dollar.
 
L.G.: But what are you charging against it? The rent and what else?
 
J.K.: If you think about it, for that business, you don't need any rent. Now we do, because we're building out, but if it was a website, you know, with one guy running it—
 
L.G.: From his basement?
 
J.K.: Part of what's great about that business is, you have kind of a new-age way of reporting. If I hired you tomorrow and you were one of my reporters, and you were in Oregon, you'd get a laptop, a wireless card, a BlackBerry, a cell phone, one of these fancy recorders, a digital camera, a video camera, and you're off and running. Whereas most reporters can go back to their news bureau to file, our guys are sitting in their car, filing stuff. So we're quicker than everybody else. You know, you focus on hyper-local news.
 
L.G.: So the big scoop would be an early report on a House member retiring.
 
J.K.: We break that news all the time. Now we're all over—California, New Jersey, Washington, Maryland, Maine, New Hampshire, Kentucky, all over. 

L.G.: So as far as you can tell, you are on the right path to making money with this?
 
J.K.: The New Jersey site's making a profit. The other sites are still working to build the critical mass, but they're building the buzz, which was most important. New Jersey wasn't built overnight, but was built by consistent reporting, by putting out a consistently good product—all original reporting.
 
L.G.: As you know, the pattern of advertising revenue in web operations is that there is a spike in the beginning and then it sort of plateaus, and then people are wondering, how are we going to make it grow some more? You haven't reached that stage, I suppose.
 
J.K.: No. I think with the New Jersey site, there is a difference between trying to be a P to P site and being more general. I don't want to be everything to everyone, I really want to be a P to P site, politics for politicians. So I think the more that I go P to V, politics to voters, it dilutes my value proposition to the advertisers. So, for example, if you want to reach anyone and everyone who's in the state of New Jersey with a corporate social responsibility message—like [New Jersey Governor Jon] Corzine advertising his toll hike plan, while the opposition was advertising against it—but if you want to reach everyone in New Jersey, you could spend $5,000 on my site or you could spend $150,000 trying to get into all five newspapers all across New Jersey.

L.G.: But your family has been a force in New Jersey politics, and New Jersey people would know that this might be a go-to place, but in other states where the Kushner family isn't known, might it be more of a challenge?
 
J.K.: There's no correlation. People don't go to the site because of that. [Not having family political influence in a particular state] would actually make it more credible as opposed to less credible. The best thing about the site is that the Democrats accuse us of being the tool for Republicans, and the Republicans accuse us of being the tool for the Democrats, so we try to be bipartisan in that sense.

 
L.G.: What's your plan, to be in all 50 states by when?
 
J.K.: I wouldn't say it's necessary to be in all 50 states.
 
L.G.: Are you ratchetting back? I thought that was the original idea.
 
J.K.: Eventually I think we could get to all 50 states, but I think right now our goal, especially over the next year, I hope by the end of '08, is to be in 20 states, in a strong position in a strong way. And then our '09 plan has a bunch more states. Over time I could see us getting to 50, but we're not in any rush.
 
L.G.: I think people will be watching to see whether you kind of crack the code of how to make money on the internet.
 
J.K.: There are a lot of ways that you can monetize that. I think the advertising model works, the job-board model, there's just a lot of interesting things that you could do by owning that space. The best thing about that network is that it's so niche, there's so little waste in terms of who's reading it, so there's really a direct path to reach these people. And if you look at what the internet's done from an advertising point of view, I think it's made a lot of advertisers and marketing firms look at it and say, "now we finally have the ability to be more specific," because the difference between the internet and newspapers is with the internet, you could order a la carte, whereas a newspaper is like ordering a buffet. If you're a specific target, there are ways with higher degrees of precision, to target your target demographics now. So I think that's what's changing in the world. The best news about the internet is that even all these people who are big titans of industry, who have been doing publishing for a lot of years, they're just as confused as I am. The only difference is that I don't have big bureaucracies to try and change. I've grown up with this stuff a little bit more than they have, so I guess I'm able to take more chances, and I have less to lose. I'm, like, in publishing school. I've never done this before so I just hope that I succeed more than I fail and I'll be okay.
 
L.G.: Were you really in the mix on the Newsday bidding? [Press reports suggested Kushner, along with Mort Zuckerman, Rupert Murdoch, and the Dolan family [of Cablevision and Madison Square Garden fame], was interested in acquiring the Long Island newspaper from the Tribune Co's Sam Zell.]
 
J.K.: I never spoke publicly about what we were doing on that.
 
L.G.: Now is your chance.
 
J.K.: I appreciate it, but no.
 
L.G.: Were you interested?

J.K.: Yeah, I mean it's an incredible asset. Newsday is a monopoly in that it's the only game out there, and I think the management has started to, and will continue to, turn around the business. I think that there's real opportunities for growth there, and I think that, at the end of the day, there's just a lot that you could do with the product like that.
 
L.G.: The Dolans obviously won it [last month, for $650 million]—so are you out of it now? Totally? I mean, you went and talked to Charles Dolan.
 
J.K.: I've never confirmed any reports of anything. I never spoke to the press. I was very impressed that the press got everything that they did. Right now, I'm looking at a lot of different exciting opportunities. I think the Dolans paid a good price for the asset. I think hopefully it'll make a lot of sense for them in terms of—

L.G.: They paid a good price for Sam Zell, or was it a good price for them?
 
J.K.: Well, I think if you look historically at the multiples that newspapers have traded at, newspapers historically traded at 10 to 12 ebitda multiples and the price they paid is probably closer to an 8-multiple on ebitda [in other words, Earnings Before Interest, Taxes, Depreciation and Amortization—a generally accepted metric of profitability.] I think we're in a time where there's no debt available so we're in a recession, and they had this structuring issue, which kept a lot of people away.

L.G.: If it was such a good price, why did Murdoch bow out?
 
J.K.: I think you'd have to ask Rupert about that.
 
L.G.: By the way, since you arrived here, you became sort of an instant media figure in New York. When you bought the Observer, that put you on the radar screen, big time. A lot of people have reached out to you, have they not? People like Murdoch?

J.K.: I would say I'm very fortunate to have met a lot of interesting people. New York is definitely the greatest city in the world and I think that one of the reasons it is that way is because it's got such a cast of characters who are really very impressive in so many ways. The reason why a lot of these people have gotten to where they are is because they've got a lot to give. I have been very fortunate to be able to spend time with a lot of very interesting people who have given me a lot of good advice.

L.G.: Give me an example of some good advice that somebody gave you in the last two years. [In an Australian accent] "Never get in a price war with me, mate!" Like that?
 
J.K.: [Laughs.] It could go on and on, I guess. I was speaking with one newspaper person. One of the great things was, I was sitting—I would do this, but I just don't want to betray anybody—I don't know, I really value personal relationships. I think on good advice, I could sum it up generically. Some people advise me with the Observer, "it's a very special institution, and don't screw it up." You know, in the sense that you really have to be cognizant of what you have. Don't be afraid to take chances with the paper, try new things, don't be afraid to fail. Other great advice I've gotten is that at the end of the day, good content is what sells newspapers. There's shaping, formatting, whatever it is, but if you're bringing heat and if the paper inside is good, if the content is good on a weekly basis, and you're giving people something they can't get anywhere else, you will sell newspapers.

L.G.: By the way, I noticed in a recent issue, you have an article about the Dolans stiffing the reporters at Newsday who wanted to ask them about the sale. It was headlined "A Season in Hellville" [a play on Newsday's Melville, New York, headquarters.] Have you ever heard from the Dolans about that?

J.K.: No, the Dolans, for the most part in my experience, are gentlemen. I think one thing you learn when you're in the media business is that you really don't call other media people when you're not happy with something.
 
L.G.: Did you learn that by experience? Did you start out doing it?
 
J.K.: It's just something you pick up, I guess.
 
L.G.: Tell me a little bit about the real estate side of things. You were buying and selling residential properties when you were in college [at Harvard], and you made a good deal of money.
 
J.K.: Yeah, I did very well with it. A large part of it was, I learned a lot by doing it. I probably made every mistake in the book, probably made some new mistakes to add to the book while I was doing it. But the market was very good to me, hopefully I made more right decisions than bad decisions, and I was able to give my investors very good returns. I think I was able to give them 35 percent I.R.R.'s [the internal rate of return on invested capital] over a five-year period, which everyone was very happy with. But it was a phenomenally interesting experience because, from my point of view, I realized that in life, anything you can accomplish is going to be hard. There's nothing that's easy. And I see this with the Observer, I see this with Politicker. If you think there are quick solutions, then you're just kidding yourself. It's better, instead of using Scotch Tape, to start digging the foundation, pouring concrete, and building a real foundation, because if you're going to provide a temporary solution to a problem, you're just going to have to provide another temporary solution to the same problem in a short order. The most important thing is to understand what the problems are, to address them head on, to not procrastinate or hesitate in making decisions. And then once you do it, you've got to really find a viable, long-term solution.

L.G.: And then you paid  $1.8 billion, for this place. At the top of the market. Did you overpay?
 
J.K.: I thought we obviously paid a fair price. But over time, it's going to be an incredible asset. I strongly believe that this asset in the next five years will be worth over $3 billion. We just had a great execution with the retail, we brought in a joint-venture partner for 49 percent of the retail that we thought was a very big valuation—and I think the retail alone in the next year was worth over a billion dollars by itself.

L.G.: You concluded the deal and you were the point man on it, were you not? And it took all of six days. What was that like? That must've been crazy.
 
J.K.: I think I lost seven or eight pounds during those days, but we've got a great team, and everyone worked around the clock to get it done. At the end of the day, we were very fortunate. We saw something that we wanted, we saw a tremendous opportunity in this building.
 
L.G.: And speed is an asset?
 
J.K.: Oh, absolutely.
 
L.G.: I mean, you brought a check to Arthur Carter [the owner of the Observer], already made out when you made your offer [reportedly for $10 million, a figure Kushner won't confirm or deny].
 
J.K.: I think that when you want something, it's just better to be straightforward. Maybe a lot of smart people I've met play games. But I believe if there's something you want, don't try to negotiate it too hard, don't try to push people in a way that'll turn them off. Be very straightforward about your intentions, and hopefully that'll bring you to a good place. I think people appreciate honesty.
 
L.G.: But this has been kind of a roller-coaster experience with this building because it's been very highly leveraged. You've had to look for other people to bring in money, right? Barclays, you're just doing a deal with them or have done it already. Explain to me what's going on here.
 
J.K.: When we bought this asset, we looked at it as if we were buying two assets. We looked at it like we were buying a retail condominium. To backtrack, most of what you're referring to is stuff that was kind of blown out of proportion by the press, based on a few articles that were just factually inaccurate-not in the Observer, obviously, because we try to avoid factual inaccuracies. But we bought two assets. We bought 1.45 million square feet for an office building and we bought a 100,000-square-foot retail box. That's what we bought for $1.8 billion. Unfortunately they weren't bifurcated, so we put a first mortgage on the office, then we took a mezzanine loan to buy the retail component with. Then, obviously, the world changed a little bit so it's just harder to get the payoff of the office retail.

L.G.: That's an understatement, "the world changed a little bit." A lot of credit disappeared.
 
J.K.: But you know, the debt disappeared, so from our point of view, we've got a phenomenal execution given the market. We still got a good valuation on the retail component and we've gotten the financing and everything to make it work. But over time, you'll see.
 
L.G.: That was a big thing your family company did, was you got out of most of your residential property to make a big play in Manhattan. Why did you do that?
 
J.K.: We thought it was a good time, and New York is obviously the greatest city in the world. If you look at the average growth rate in New York real estate over the last five, 10 years, versus New Jersey real estate, the spike has been that much more incredible. I just felt there was a place, there's a lot more that trades in New York, it's a much bigger-stakes game. But, you know, we sold $2 billion worth of real estate that took my father 20 years to acquire, and we bought $2 billion here in 30 days. So you have the ability to do fewer but larger transactions, which is just a way of leveraging your time a little bit better. I love it here, it's an amazing city, you really get to do things. It's the major leagues.

L.G.: Do you ever get totally terrified by the sheer size and the risk of the leverage that you might be entertaining at any given point?
 
J.K.: No, because like I said, it's all stuff. And buying a $10 million building and buying a billion-dollar building is the same thing except there's more zeroes. So you can't get scared by the hype. At the end of the day, you've got to make bets, and it's better to be on the field than be on the bench. And you just have to pick your spots and hopefully do more things right than you do wrong, and you'll end up okay.
 
L.G.: What's a typical day? You get up early in the morning?
 
J.K.: I get up early, exercise, I'll come here. I live fairly simply.

L.G.: You're a runner? Four hours and 40 minutes in the New York City Marathon?
 
J.K.: Four hours and 50 minutes.
 
L.G.: Sorry, I didn't mean to shave 10 minutes off your time.
 
J.K.: But I was with one guy who insisted that we walk when we were in Harlem for about a half hour. I was having a good day that day. I actually was terrible at the practice runs, it was like torture for me, but my father dared me so I kind of had to do it.
 
L.G.: And your dad inculcated a lot of this in you. He took you from a young age to construction sites and you learned about the business?
 
J.K.: Real estate, yeah, well, my father never treated me like a child. I think that was the most important thing. He always exposed me to everything, but even so, when I bought my buildings when I was up in school, I went inside of myself.
 
L.G.: Were those apartments mostly?
 
J.K.: Mostly apartment buildings. And I just want to say, I grew up, I was exposed to apartments all the time, so I thought, of course I'll be great at this. But it was really hard. But it wasn't the actual knowledge of learning how to manage apartments that my father gave me, it was more the foundation of how to deal with problems that I think ended up being such a valuable tool for me in the sense that my father always told me "most people in life will find reasons not to do something, you should try to find reasons to do something. If you see a wall, don't stop at it, try to go around it, try to go over it, try to go under it."
 
L.G.: So that really has informed your whole view of life and business.
 
J.K.: Yeah, I mean one of the best lessons that my father taught—I remember when I was younger, I had an interview in the city, at 9:00 in the morning on a Tuesday, and he said, "When will you leave?" I said, "I'll leave at 8:00." He said, "What if there's traffic?" I said, "There's never traffic, I do this drive all the time." He said, "What if there's an accident?" I said, "Fine." He said, "What if there's a terrorist attack?" He said, "If someone's nice enough to give you an interview, you get there on time. It's your job, and you leave at 6:00 and get there at 6:20 and sit there in a coffee shop until 9:00 waiting for the interview." But the basic point of the message was, there are things in life that you can't change, which is what other people do, but you can control your own actions. So to the point that you could control your own actions, you have to do everything in your power to do it.

L.G.: What, if anything, positive did you take away from your father's experience of being in prison?
 
J.K.: Um, I guess I took a lot away from it. I took away the fact that you realize in life that there are things that can be taken from you, things that you think are permanent that aren't necessarily permanent. The only things that are really permanent are love, family, friendship, and that is a lesson. At the end of the day that's really what it boils down to. The rest of it is just stuff.
 
L.G.: You went to law school. Are you a member of the bar?
 
J.K.: I didn't take the bar exam. For me, finishing law school was the big thing. When I bought the paper, I was in law school and business school, and then my last year at N.Y.U., I was running the paper as well and buying 666 and doing all this stuff. I was really excited finishing everything up. You know, after my father was arrested, I wanted to drop out of school. I said, "Dad, I'm going to drop out of school, let me come work in the business, let me do what I want to do." He said, "I really wouldn't want you to do that," so I stayed in school, but was working three, four days a week.  

L.G.: Obviously you're very close to your dad and that obviously was a very painful period in your life. Do you feel like you personally got stronger out of it?
 
J.K.: Definitely, yeah, definitely. In life it's like, whatever comes at you, I think it's got to be about growth, and it's such a telling thing in some ways, how you react. It's out-of-body. You don't know how you're going to react but I was very, very proud of myself and my siblings [a brother and two sisters]. And everyone really stepped up and it's a hard thing for a family to go through.
 
L.G.: It's a hard thing for a family to go through in private. I can't conceive of what it's like to go through in public.
 
J.K.: Yeah, but we had a ton of friends who were incredibly supportive. Thank God my father's business was strong, I would go there three days a week out in New Jersey. I'd be on the phone with people all day long. The hardest part for me was that I was used to speaking to my father three, four times a day, and he was only allowed 200 minutes on the phone a month. And I'd speak to him on the phone once a week and then visit him most Sundays. So I stayed in school, and miraculously was able to get through it and look at both degrees, which today I am very, very proud of. I think already people know we're back, we're doing a lot of business. We did last year between buying and selling over $5 billion of business in real estate, I think people saw that my father acted with a lot of dignity. He did what he did, obviously made a mistake, and I think we're all better off because of it today.

L.G.: Are you still friends with Ivanka Trump? You've stopped dating, she's a great person from what I can tell.
 
J.K.: I try to keep my personal life personal and private. It's something I really value, but no, we're still friendly and she's obviously a great girl.