YT YouTube2Text

YouTube2Text → Transcripts → Bill Ackman: People are Going to Lose a Lot of Money

Bill Ackman: People are Going to Lose a Lot of Money — Transcript

by The Knowledge Project Podcast · 15,945 words · 2,260 segments · language en · Watch on YouTube

Open in transcriber Summarize with AI Download SRT/VTT

Full transcript

0:00Warren Buffett, the greatest investor of
0:01all time, he was not able to perceive
0:03the risks of disruption created by the
0:05internet. Well, now we have AI.
0:06>> We're the beginning of an industrial
0:08revolution.
0:08>> It's a much more complicated problem. If
0:10you had to guess, how do you think it
0:12plays out over the next 18 months?
0:14>> The pace of improvement [music] is by
0:16far the fastest of anything we've ever
0:18seen. There will come a time there'll be
0:20some form of a blow up where people lose
0:22a whole bunch of money. What's your
0:23investment process like? How do you go
0:25from I'm interested in this company to
0:27now we're writing a check for a billion
0:29dollars.
0:29>> Over time, you develop a spidey sense on
0:31people. If you look at our most
0:33successful investments, they've usually
0:34been cases where we've done something
0:36that someone hasn't done before.
0:37>> What advice do you have for the ordinary
0:39person who's making a paycheck and wants
0:41to invest? So, if you want to be an
0:44investor,
0:47[music]
0:52>> you've had a challenging year this year
0:54with Lucy. What happened?
0:56>> You know, otherwise healthy child. What
0:58happened was uh she had unbeknownst to
1:01us a what's called an arterial venus
1:03malf for which is a kind of structure in
1:07the brain where the the way they doctors
1:10describe it is the arteries you know
1:12typically blood flows into the arteries
1:14and then to the capillaries and then to
1:16the veins and when you go from arteries
1:18where there's a huge amount of blood
1:19flow to capillaries the blood flow slows
1:21down and then to the veins. So they um
1:24in her case she had what they like a
1:26bridge that went from the artery
1:28directly to the vein. So over time there
1:31was too much pressure going into the
1:33this these veins in her brain and one of
1:36those veins burst and then a large
1:39amount of blood you know filled her
1:41brain which is a confined volume. And so
1:44it you know it's a bit like a balloon
1:46blowing up inside your brain and that
1:48put pressure on the surrounding brain
1:50and and the skull. And obviously the
1:52skull doesn't move. So the pressure goes
1:54downward. It puts pressure on the
1:55midbrain. The midbrain is, you know,
1:57what keeps you breathing, keeps your
1:59heart beating. And the really
2:01unfortunate thing, we believe this
2:02happened around 9:00 in the morning
2:04based on her or ring. She lived, you
2:07know, young woman lives alone on in
2:08Williamsburg. And I texted her at 4:00
2:12that day. I had called her another time
2:14that day. Other family members had done
2:16the same, but only when she hadn't
2:18picked up her luggage. She was, you
2:20know, she was leaving for Abu Dhabi for
2:21a wedding. A friend of hers was getting
2:23married the following day and she was
2:25picking up her luggage from her mom's
2:26house and she didn't show a couple when
2:29she was 2 hours late and no one could
2:30reach her that week. Uh I was I was
2:33sleeping at the time, but uh my oldest
2:35daughter went to find her and they and
2:37they found her lying she found her lying
2:39on the floor of her apartment barely
2:40breathing
2:42uh you know face down on her right side.
2:44So and she thought she was dead. Called
2:47911. She could hear her breathing in a
2:50very labored way. And then uh I don't
2:53sleep next to my cell phone. My daughter
2:55doesn't know the landline number for my
2:56house. So she was able to call someone
2:58in the building. Guy in the building
3:00knocked on the door, you know, pounded
3:02on the door um and uh handed me the
3:05phone with my daughter on it and then
3:07hopped in a cab. The EMT didn't know
3:09which hospital to take her cuz they
3:10didn't know what had happened to her.
3:11One of the big problems uh sometimes you
3:15know the EMT thinks someone's just drunk
3:17and that's why they fail and the way you
3:19treat a drunk person is you just let
3:21time go by right time going by for a
3:24person where the brain hemorrhage is
3:25very you know the more time the brain is
3:26under pressure the more damage that can
3:28take place to the hospital at 12:05 uh
3:32and she was just you know sitting on a
3:33gurnie there while they were trying to
3:34figure out what she had eventually they
3:36gave her a CT they figured out she had a
3:38hemorrhage they called the surgeon um
3:40and and the What you need to do is you
3:42need to release the pressure on the
3:43brain as quickly as possible. And the
3:45way you do that is you remove about 40%
3:46of the skull to allow the brain to
3:48expand beyond the skull. And uh we moved
3:51her from um you know Elmhurst Hospital
3:55uh by the way uh very pleased with how
3:57they cared for her there city hospital
4:01uh in Queens. We moved her to Mount Si
4:03where you know uh Ner and I spent some
4:06time helping Mount Si. got we knew the
4:08team there and uh they also have very
4:10good neurosurgeons and and a and a
4:12neuroscience uh brain practice and you
4:16know she was on a breathing tube. Um you
4:19know she was wearing some she had
4:21bandage of course on her head and it
4:22said no bone right to make sure the
4:25nurses knew not to to be careful and uh
4:28that's how we started and so uh you know
4:31the the I basically gave the doctors the
4:33what I call the dare to be great speech.
4:35I said you know let's let's see what can
4:38be achieved by you know whatever you
4:41need from us unlimited resources you
4:43know let's look at latest and greatest
4:45technologies I mean they basically told
4:47us you know look Bill we we don't know
4:49what kind of deficit she's going to have
4:51you know 19 hours of pressure on the
4:53brain you know I didn't learn actually
4:55until weeks later they don't normally do
4:57the surgery to save someone when it's
4:59been more than 5 hours because the
5:00assumption is brain death basically so
5:0319 hours she's as close to death, you
5:05know, hours, minutes, I don't know
5:07exactly. Um, and so we didn't know what
5:09would what would become of her, but I'm
5:11I'm very optimistic person. And, uh,
5:13she's regained over time her cognition.
5:17She's the same Lucy we knew. She's got
5:18the same sense of humor. Uh, she's
5:20really kind of remarkable. She, you
5:22know, woke up not being able to to walk,
5:25to speak. Uh, and unfortunately to see,
5:28uh, her, uh, walking is coming back. I
5:32think she's going to regain her ability
5:33to walk.
5:34uh her speech very slowly is coming
5:37back. You there's something like 17
5:39vowels beyond the vowels that we were
5:42taught. Uh and she can do about 15 of
5:44the 17 now. She's you each day she's
5:47almost learning a new consonant. Uh she
5:49can say a few words. Certainly no. She's
5:51quite good at and then vision. She's
5:54even shown some progress uh there. Uh
5:57but I've you know I spent a lot of time
6:00and you know working with the doctors
6:01and you know my pitch to them was let's
6:04see what we can do for her and
6:06everything [snorts] we learned for her
6:07we can help others and you know Ner and
6:10I are going to make this available to
6:11everyone
6:13and uh 3 months after I guess I was
6:17coming back from my birthday party and I
6:20got a call from a friend we were talking
6:23about Sinai actually about doing a
6:24redevelopment of their fifth avenue
6:26venue uh campus to build a brain
6:30institute, some kind of brain center. Uh
6:32and we had very aligned with our idea.
6:35Problem with that is probably a 10-year
6:36project and super complicated.
6:38Obviously, taking down the existing
6:39hospital, moving people, bringing people
6:41back and a vacant biotechnology building
6:45became available on 65th and 11th
6:48Avenue, 10 blocks from the office. And
6:5060 days later, we closing the building.
6:52We signed a contract to buy the rest of
6:54the site. It's a 3.4 4acre site and our
6:56goal is to build the world's greatest
6:58brain institute. You know, everything
7:00from, you know, a focus on the patient.
7:02How do we get treatments to patients and
7:06there's a ton of interesting things
7:07going on in technology. Obviously,
7:09everyone knows Neurolink, but there
7:11probably a dozen other companies working
7:12on brain computer interfaces and other
7:15ways to get data from the brain, right?
7:17You think and you know, of course, AI,
7:19right? this. So, not only are we able to
7:22get more and more data from the brain,
7:24we're able to interpret that data better
7:26than ever before. So, you know, I'm
7:28hoping Lucy can speak normally and I I'm
7:31on on her own just working at it. I'm
7:34hoping her vision returns. But if she
7:36has deficits in those areas, there will
7:39be solutions in the relative short to
7:41intermediate term. you know, envision a
7:43world in where you wear a pair of
7:44glasses that basically have a camera and
7:46the camera takes in, you know, the vis
7:48the vision and and kind of ports it to
7:50your visual cortex and that's how you
7:52see. I mean, that that will be how Elon
7:54says, you know, he's going to have a
7:56rudimentary way for people to see within
7:58a relatively short amount of time and
8:00within 5 years I actually I've reached
8:02out to pretty much everyone for help on
8:04this and he told me he said 5 years we
8:06people have better vision than we'll
8:08have bionic vision in effect. The way
8:10the uh my Dr. [clears throat] Kelner
8:13describes it to me is that um it's been
8:15Lucy's lead on this whole thing. A lot
8:16of neurologists [clears throat]
8:19uh and even neurosurgeons are nihilists.
8:21They don't believe that uh the patients
8:24can make really material recoveries and
8:26they can. And we've heard, you know, a
8:28lot of interesting stories of recovery
8:30which are great to share with Lucy. Um
8:32but we're going to be able to do a lot
8:33more. And New York's actually probably
8:35one of the best places uh to do this.
8:37And there isn't anything like it.
8:39So we're we're excited about it.
8:41>> What you guys have done in response is
8:43just incredible.
8:44>> Yeah. So what's interesting is that all
8:46of the skills, experiences,
8:48relationships, resources that I've
8:50developed over my career work set me up
8:54to be incredibly well positioned uh to
8:57to help my daughter and to help other
9:00people that have this have this problem.
9:02Right? [clears throat] I'm like a real
9:03estate investor, right? So I was able to
9:05buy the building, you know, uh at a
9:07fraction of um of of what it cost and uh
9:11you know, architecture, design, also
9:14married to a very talented architect
9:15who's going to, you know, play a pretty
9:17important role here. So I think we're
9:18going to do something really interesting
9:20and we've had an incredible outpouring
9:21of people who want to be part of this
9:23who in many cases we want we love people
9:26who write to us you know who've dealt
9:28with this on a very personal level have
9:30a brother a sister a mother a parent
9:32who've who suffered and they've seen
9:34kind of the nature of the treatment
9:37that's available today and they want to
9:38change that. It's interesting and
9:40actually you know people say Bill how
9:41how do you deal with something like
9:43this? Well, the first thing I had to do
9:45is figure out how to help my child. Um,
9:48and uh, as I made progress with that,
9:52this other thing is an amazing, you
9:54know, makes me feel like something good
9:56is coming out of, you know, I I have
9:57this view that you every bad thing,
10:00something good comes from it. You know,
10:02this is among the good that's coming
10:03from what she's going through and that
10:05makes me feel good.
10:06>> Did you always have that view or was
10:08that learned?
10:09>> I figured that out over time. when was
10:12there a moment when that
10:13>> Well, you know, I've had a few near uh
10:16death experiences in uh in business and
10:18in each one of those cases, I was
10:21materially better off after that. So,
10:24those are kind of, you know, good
10:27lessons. The what does not kill you
10:29makes me stronger thing is it is
10:31definitively true.
10:32>> And by the way, for my child, for Lucy,
10:35I think this is going to be good for
10:37her.
10:38>> Say more about that. Look, she's a
10:40wonderful, amazing person, but if you
10:42can recover from something as
10:44devastating as this, it's going to make
10:46her into like a superhuman person. And
10:48she was, she is a wonderful human being.
10:51I mean, one of the things that's helping
10:52her recover is, you know, one, you know,
10:55her mom has been there every day. You
10:57know, I move my office into the
10:59hospital. you know that with within a
11:02day of of her moving into the hospital,
11:03I did two IPOs, the two Persing IPOs I
11:06did from the room 1107, room 107 on the
11:1111th floor of of of 11 West at uh Mount
11:13Si Hospital. Um the power of Zoom. So I
11:16did I would do a Zoom meeting for 45
11:17minutes and then I would go spend 15
11:20minutes with my daughter and then I'd do
11:21the next meeting. And so I had my
11:23daughter as the inspiration, you know,
11:26for [clears throat] these two IPOs, uh,
11:28that we were working on and we only
11:29moved her out of the hospital uh, August
11:328th. Um, and she's been rehabilitating
11:34in Bridgeampton. Then she's coming back
11:37um into the city, you know, for a little
11:40procedure and then she's moving into her
11:42own apartment that we've been uh we
11:44bought an apartment in our building
11:46within a few weeks of the incident and
11:49we've [clears throat] been designing it
11:50to be you know the best rehab recovery
11:53place for her to live and and uh you
11:56know socialization, social interaction
11:59is absolutely critical for someone
12:00recovering from something like this. the
12:03emotional support that you get and
12:04everything. And her friends have been
12:05amazing. Her friends have been with her
12:07every day. Every day one or one or more
12:09of her friends shows up and talks to
12:12her, uh, eats with her and engages with
12:15her and, uh, you know, she's like this
12:17super giving person, ton of friends. Um,
12:21everyone loves Lucy and so she's she's
12:23getting an amazing return on that. Uh,
12:26you know, because her friends are are
12:28showing up to save her. All of this
12:30makes me feel that humans can be so
12:34amazing.
12:34>> Yeah. I mean, you know, the uh you can
12:38recover from almost anything. Yeah. Um
12:42and and by the way, there's a lot more
12:44hope for people who've had strokes, uh
12:47brain injuries, uh military TBI type
12:51stuff. Uh and there are a number of
12:54people in the field that have been
12:56really frustrated with
12:59you know how far we've not gone who want
13:02to be the ones that fix this.
13:03>> What's been preventing us from going
13:05further? Like why why haven't we pushed
13:07the limits on this stuff?
13:08>> Uh the answer is u some combination of
13:10the insurance industry and just
13:12economics and hospitals that how they
13:15work. I mean a neurosurgeon wants to do
13:17their surgery and they move on to the
13:18next one. Neuros surgeons are highly
13:19compensated but they get paid for doing
13:21surgeries. They don't get paid for the
13:23recovery of the patient over time. Um
13:26you know rehabilitation every hospital
13:28has some kind of rehabilitation program
13:30but in many cases it's embarrassingly
13:32inadequate. Uh and the insurance company
13:34might pay for only 6 weeks of care. Uh
13:36and then they get sent home and their
13:38home is you know not the ideal place and
13:41and you need it's in a major takes a
13:43village. What if they're the pre
13:45principal bread winner and and they're,
13:47you know, devastated by this? Maybe the
13:49other family member has to go out and
13:50work as opposed to care for them. You
13:52know, the one of the most depressing
13:53things I was told u by the head of rehab
13:56at u actually at Mass General we've been
13:58talking to and they said, "Bill, you
14:01know, what Lucy's achieved is
14:02remarkable. She's had, you know,
14:03incredible care. The typical person,
14:06one, they wouldn't do the surgery. to if
14:07they do the surgery, you know, the
14:09typical patient, you know, ends up in a
14:11nursing home with when they check out of
14:13the hospital because the family can't
14:14take care of them and they die a few
14:16months later from pneumonia because just
14:18the care that can be achieved in a
14:19nursing home. It's like super
14:21depressing. And so, you know, this is
14:23one of the cases where, you know, I'm
14:26financially unconstrained in my ability
14:29to help her and so we can maximize the
14:31care. Now what we're going to try to
14:32figure out in the institute is how we do
14:34this in a way that everyone can have the
14:37benefit of the care and and uh
14:39technology is going to help a lot. A
14:41great speech therapist could be $500 an
14:43hour that you know insurance will pay
14:45for whatever percentage of that but only
14:47for some period of time but people can
14:49keep recovering years and years later
14:51but of course AI could be an amazing
14:53speech therapist. Um so there there are
14:55lots of ways that technology are going
14:58to enable us to help people recover from
15:00these injuries. And by the way, this
15:01all, you know, we're calling it, the
15:03focus is brain rehab, recovery, and
15:05longevity, right? What does a brain
15:08rehab recovery institute do? It focuses
15:10on brain recovery and your physical
15:12recovery. The brain plus your physical
15:14recovery, it's fundamentally longevity.
15:16And the other thing that hospitals don't
15:17aren't very good at is nutrition, right?
15:20The food in hospitals is frightening,
15:22right? They have someone who has a, you
15:23know, heart attack and the next morning
15:25they're having like pancakes with syrup
15:27with orange juice. In Lucy's case, you
15:29know, we made food for for every meal.
15:32Uh the institute's going to have amazing
15:34food [snorts]
15:35um because nutrition is, you know,
15:37critical. So, there are a lot of things
15:38we can do um taking advantage of this
15:42financial circumstance. I'm going to use
15:44it in a way that will enable us to build
15:45something optimal and I think ultimately
15:47self-sustaining. [clears throat]
15:48>> You're an incredible father. Like, what
15:50an amazing response to terrible
15:52circumstances.
15:54You know, I would I would feel if I
15:57couldn't do it, I would be one of the
15:59most frustrated people in the world. I I
16:01literally feel like I was designed to
16:03help her. Like everything I know how to
16:05do.
16:05>> You mentioned the Aura ring, the data on
16:08the Aura ring. What was the data that
16:09indicated something was
16:11>> So, I've been in touch with the CEO of
16:12AR. He actually reached out on Twitter
16:14and I think you can certainly with an
16:16Apple Watch and hopefully with an Aura
16:18ring. So, what happened was um if you
16:21look at her spike, I actually put it on
16:23Twitter at like 9:00 or so, it there was
16:27a there was a very quick spike in her
16:30pulse and then uh kind of a drop off
16:34that looked, you know, kind of unusual.
16:36And if you combine that spike and a drop
16:38off with someone falling, like the Apple
16:40Watch has an alert when someone falls,
16:42>> right? Well, if it that happens and it
16:45happens when there's a huge spike in
16:46their their uh you can reasonably assume
16:49>> you can say you know did they have a
16:50heart attack did they have a whatever
16:51you know these are things you can look
16:53at and I think or ring should have the
16:54same capability
16:56>> and they're I think they're working on
16:57it.
16:58>> How do you keep your mind in a healthy
16:59place? Like what do you do to keep your
17:02your head right?
17:03>> I play tennis almost every morning or do
17:05some form of exercise. I think that's
17:06probably the most important thing I do
17:08cuz it's the one thing I do over the
17:10course of the day where I'm I'm
17:11completely focused on the ball that's
17:14coming at me uh as opposed to whatever
17:16else is going on. So, I think that is a
17:18really important form of meditation for
17:21me. That's one. I got a good night's
17:23sleep. I spent time with my family.
17:26Things like that.
17:27>> Do you still meditate?
17:28>> I haven't in a while. Uh I did for this
17:32challenging year and I, you know, I was
17:34middle of divorce. I was not kind of on
17:36my own and it it [clears throat] really
17:37helped and I probably should find 20
17:40minutes a day to meditate.
17:42>> How do you manage it all? I mean, you
17:44have four effective public entities. You
17:48have this with your daughter. You have a
17:51seven-year-old. You want to be a great
17:53husband. How do you harmonize all of
17:56these things?
17:56>> So, Persian Square has come a long way
17:58from when I started it. When I started
18:00it, I was sort of the chief bottle
18:02washer guy. Um, and I would come up with
18:04all the ideas and I have an analyst that
18:06would help me prosecute them. And that's
18:07how we and and there was activism. I was
18:09the guy, etc. Over 22 years, we built an
18:12amazing team. We're in an industry where
18:14the half-life of someone who works for a
18:17firm, you know, people are paying in the
18:19top people can move from one place to
18:21another and get huge, you know, $100
18:23million bonuses for showing up, things
18:25like this.
18:26>> And the result is a lot of turnover in
18:27the industry. We have no turnover at
18:30Persian Square.
18:30>> Is that good or bad? Well, if there's
18:33someone that we've, you know, we we've
18:35had no turnover. We obviously we've made
18:37some mistakes and we and we replaced
18:38some people over time, but if you look
18:41at the investment team, the investment
18:43team has been the same team for now 9
18:46years um with a couple of new additions.
18:49And that's actually a really good thing.
18:50You know, if you have a constant
18:51revolving door of new people, you don't
18:53really know that you can trust people
18:54over time. Um you know, are they really
18:57telling you the truth? Are they really
18:58telling you all the risks and rewards of
18:59a particular situation? When you've
19:01built a relationship with people and you
19:03work with them for 9 years
19:04[clears throat] and you have this
19:05culture of of transparency and
19:07candidness, I don't for a second ever
19:09question anything that's being told to
19:11me by a member of the investment team.
19:12They're telling me the the flat, you
19:15know, candid truth. That's a very
19:17comfortable uh place. So the answer to
19:20your question is the Persian investment
19:22process is incredibly wellrun by a very
19:26experienced team uh that I play an
19:28important role in at the ultimate say
19:31but I am no longer the guy that
19:32generates the bulk of the ideas. I'm
19:34someone that generates a minority of the
19:36ideas in the portfolio. So that's
19:37helpful. And then the business itself uh
19:41you know the way it's structured is you
19:42know Ben is responsible for running a
19:43lot of the business elements of Persian
19:45Square. Um, so that frees me up to
19:49think. It frees me up to work on more
19:50strategic stuff and it frees me up to
19:53come up with the occasional, you know,
19:54kind of uh idea. Um, so Persian kind of
19:58takes care of itself. Well, we have a
19:59number of public entities. We have an
20:01amazing accounting team. Um, and you
20:04know, those public companies all sort of
20:05do the same thing. They're really just,
20:07you know, there's the management company
20:09that earns fees from the entities we're
20:10on. That's Ping Square Inc. PS ticker.
20:13uh there are uh two funds that are
20:16publicly traded that own effectively the
20:17same portfolio. You know there's certain
20:19governance responsibilities we have for
20:21those entities but uh they're really
20:23actually each of them have independent
20:24boards of directors. So our role there
20:26is as as the uh kind of external
20:29investment manager. Um we have excellent
20:32boards at both of those. You know the
20:34typical closedend fund board is a bit of
20:36an embarrassment. I don't know if you
20:38how closely you follow the space, but
20:39you know, you've seen Boaz Weinstein
20:41going into proxy coms. The typical
20:43closed end fund board is a group of
20:45people who not to I don't want to pick
20:48any I let's say Black Rockck for the
20:50moment. I I think I read somewhere that
20:52you know they they sit on 86 the same
20:55six directors sit on 86 clos fund
20:57boards. It's hard to do real governance
20:59when you sit on 86 boards of directors,
21:01right? The typical limitation is four,
21:03you know, from by ISS. We hired actually
21:05real directors. We pay them like real
21:08directors. Uh they're not serving on
21:10multiple, you know, uh 50 other uh so we
21:13have really good boards and what we do
21:15is fundamentally simple. So Persian kind
21:17of runs itself to some degree just
21:19because of delegation, incentives,
21:22alignment. You know, the we have the
21:23best alignment because no one's paid on
21:26individual stocks. They're based on
21:27performance. At the end of the day,
21:28performance is going to be the biggest
21:29driver of our management company because
21:31the compounding of the underlying assets
21:33is what grows our fee stream. So it's
21:34just a very aligned entity. You know, I
21:36own about 45% of the company. Uh the
21:40team owns another I think 35% of the
21:43company and then we have, you know, a
21:44minority interest held by the public and
21:46and some strategic investors that
21:47invested with us. So it's, you know, if
21:50you get the alignment right, you get the
21:52people right, and you've got, you know,
21:54some principles written on a stone
21:55tablet and you've been doing it for a
21:56while,
21:57>> but you're super competitive.
21:59>> Sure.
21:59>> I know you want to be the best investor
22:01in the world.
22:02>> Sure. And so you're this is like one
22:05path and then there's another path. It's
22:07like dad and husband and
22:10>> I would say the one thing I would say in
22:12the last you know the setup of this AOI
22:15thing has consumed some mind share of
22:17mine as you would expect over the last
22:1960 or 90 days cuz I'm assembling the
22:20team just like with you know there's a
22:23moment it's a bit like we ran a proxy
22:26contest we took control of a board of
22:27directors now we got to bring in a new
22:28CEO once we bring in the CEO and the
22:31teams in place and announced and
22:32everything else I don't get involved in
22:34the day-to-day operations and the same
22:36think it's going to be true for the AOI.
22:38It's going to be like another portfolio
22:39company in some sense. Uh although I'll
22:41you know we're all going to sit on the
22:42board you know I'm going to chair the
22:44board but there is a you know a bit it
22:47is similar to I don't think I could be
22:48doing setting up the AOI and we had a
22:50proxy contest underway at the same time.
22:52>> AOI is the Aman Oxman Institute just for
22:55everybody listening.
22:56>> Yes.
22:58>> Every few years a new platform earns its
23:00place at the top of every smart
23:01advertiser's media plant. The people who
23:04find it early build advantages that are
23:06very hard to close. Apploven just had
23:09the most remarkable run in adtech
23:10history and now they've opened that
23:12engine to businesses like yours. Over a
23:15billion people play mobile games every
23:17day. Focused, not scrolling with no feed
23:20competing for their attention. Apploven
23:23puts your brand in front of the right
23:24customers and optimizes purely for your
23:26growth. Brands like Wayfair, Kit, Ridge,
23:30and Nectar are already scaling on it
23:32while most of their competitors don't
23:33even know it exists. Ready to find your
23:36next million customers? Go to
23:37apploven.com/shane
23:39and launch your first campaign today.
23:45I built an AI version of myself with Hey
23:47Jen. What you're about to see in here is
23:49my digital avatar. I asked it why some
23:52professionals build an audience while
23:54most stay invisible. And here's what it
23:55said. Hey Shane, the professionals
23:57breaking out right now aren't the most
23:59talented ones. They're the most visible
24:02ones. That's their edge. They show up on
24:04video constantly and nobody else can
24:06keep the pace. Record yourself once and
24:09I close that gap so you become the face
24:12people trust. That's Hey Jen. Record
24:14yourself for 15 seconds and get an
24:17avatar that keeps you posting without
24:18filming. So you don't need to become a
24:20full-time content creator. 30 million
24:22people already use it from financial
24:24advisors and real estate agents to 85%
24:27of the Fortune 100. Your first three
24:29videos are free at heyen.com/TKP.
24:32That's hygen.com/tkp.
24:37When do you do your best thinking? Often
24:40when I'm on vacation, actually some of
24:42my best ideas are ones where I'm
24:44literally totally relaxed or I'm in the
24:47shower.
24:47>> You've done a lot of research about
24:49bubbles. I'm curious like how would you
24:51explain what a bubble is?
24:53>> A bubble is when human nature uh when a
24:58lot of money is being made and people
25:00have a lot of FOMO and they want to
25:02participate in having money being made
25:04and it leads more and more money going
25:06into the same trade if you will until
25:09overvaluation takes place [snorts] and
25:12then you know a bullance and then
25:15eventually the bubble bursts. They seem
25:17to happen around these technological
25:19changes like railroads, automobiles,
25:21transistors, the internet.
25:23>> Sure.
25:24>> Are we in one now?
25:25>> Well, we're in certainly in a
25:26transition. You could say AI is
25:28absolutely transformational and it's the
25:30most transformational technology I think
25:31of of uh of all of our respective
25:34lifetimes. There are bubble-l like
25:36elements. Uh there's a lot of crazy
25:38stuff going on, you know, in the private
25:41world of venture. I think we're starting
25:43to invest in some you talk about a
25:45bubble where Persian is now investing in
25:47some venture uh stage businesses, you
25:50know, met with a company, let's say two
25:52weeks ago and they weren't raising
25:54money. 2 days later they close around
25:56you like they were preempted by some
25:58investor who put 50 million in at a $400
26:00million valuation and then two weeks
26:03later they raised another $50 million at
26:05a billion dollar valuation, you know. So
26:07there's there's a lot of people fearing
26:08missing out on
26:11you know [clears throat] the future and
26:12so a lot of capital going into venture a
26:16lot of competition and a lot of
26:17preempting and uh leading to very high
26:20valuations you know that I saw a company
26:23you know series A round at a 5 billion
26:25pre- money.
26:26>> How do you avoid that FOMO? It depends
26:28on what you where you are in life, you
26:30know. Um
26:32Warren Buffett was, you know, remarkable
26:35for his discipline over a 60-y year
26:36career. And actually, interestingly, in
26:38the last real bubble, the internet
26:40bubble, that's when Bergkshire stock hit
26:42like an all-time low, cuz people said
26:43he's kind of lost it. While all these
26:45other people were making money, he just
26:46did didn't participate, but he just
26:49shouldered on. I think it's a question
26:50of short-term versus long-term
26:51perspective.
26:52>> What advice would you give founders
26:54right now who might be trying to raise?
26:56It's a great time to raise capital
26:59and assuming you raise the capital,
27:01don't spend it so quickly expecting
27:02money will be there forever. What this
27:04is reminiscent of is in the internet
27:06bubble, there was effectively unlimited
27:08amount of capital available for kind of
27:10suspect business plans and then there
27:13was a piece in Barren uh one uh weekend
27:18and [snorts] it listed all of the
27:19internet companies in the public markets
27:21and how much cash they had left based on
27:24kind of their their burn rate and how
27:26many months to go before they went to
27:27zero. That was probably the week before
27:30the market blew up. What happens to a
27:32private company that has no capital?
27:34There's a certain discipline associated
27:36with bootstrapping yourself and then you
27:37take in 50 million or 100 million or
27:39[snorts] and you completely change the
27:41way you deploy capital betting that
27:43there will anytime you need money you
27:45could just tap the markets. There will
27:46come a time there'll be some form of a
27:49blowup a pretty highprofile one where
27:51people lose a whole bunch of money and
27:52that will cause a reset. And I think the
27:55the companies that are disciplined in
27:56how they spend the capital so they have
27:59years of runway will be the survivors
28:00and the ones that have to raise money in
28:023 months will be gone. My advice to
28:04founders is treat every dollar as if
28:06it's your own money and spend it really
28:08carefully and don't expect the kind of a
28:10bulliant freely available capital thing
28:12to to exist forever.
28:14>> So raise money now but keep it in the
28:16bank. Don't don't spend it
28:18>> or spend it judiciously. How do you see
28:21the difference between investing which
28:23is what you've typically done in the
28:24public markets versus private markets in
28:27terms of ventures?
28:28>> Sure. So public markets were investing
28:29in what we call super durable growth
28:31companies. You know businesses that are
28:33the most dominant companies their
28:34respective spaces. They're highly
28:35profitable. They have strong balance
28:37sheets. Uh and the and the key sort of
28:39success factor is predicting kind of
28:42their ability to continue to you know
28:44either gain or maintain market share and
28:47grow their business and have pricing
28:48power in the public markets. you know,
28:51yes, the CEO matters, but we've always
28:53had the view, well, if we don't like the
28:54CEO, we can we can find a better one. In
28:57venture, you're really betting on the
28:59person and more than the business plan.
29:02And you're investing in a company that
29:03is, you know, maybe pre-revenue or it's
29:07losing money. You're betting on their
29:09ability to grow at a fast enough rate
29:11that ultimately they they go from being
29:13a capital consumer to one that's going
29:15to generate cash over time. Uh so it has
29:17some similar elements but it's much more
29:20founder dependent CEO dependent than the
29:23public markets. You know the the best
29:25public market companies something
29:27happens to the CEO you can find another
29:28great person to run it. Uh the best
29:31private companies you know without the
29:34CEO it's it's you probably write it off.
29:37>> How much are you waiting sort of the
29:39idea versus the person? I wait the
29:42person more than the idea because often
29:44the the original idea is not the idea
29:45that turns out to be the success and the
29:47founder is going to hit a roadblock.
29:49Original idea doesn't work. You know my
29:51most successful venture investment. Uh I
29:53didn't like the idea. Uh this was um
29:56Kang which was uh Bomb Kim and his his
29:59business plan was to create the Groupon
30:01of South Korea and even at that time
30:03which was 2009. I thought Groupon was a
30:05really bad business model but he made a
30:07very powerful case for why South Korea
30:08was a great place to launch an internet
30:10business. and I liked him. Um, [snorts]
30:12and ultimately he built the the Amazon
30:13of South Korea. Really nothing to do
30:15with with the original business model.
30:17So the the most successful you're really
30:20betting on their ability to to manage
30:22through, you know, the challenges that
30:24emerge and and figure out a business
30:26model over time.
30:27>> How is AI changing the investment
30:28profession?
30:29>> The most important thing an investor has
30:31to do is assess the risk. I mean, the
30:34value of a business is the present value
30:35the cash generates over its life. And
30:38it's life, you know, the early years of
30:39the life matter more than the later
30:41years. But you need to predict with a
30:43pretty high degree of confidence what a
30:44business is going to look like 10 years
30:46out, 20 years out, 30 years out if you
30:48want to if you want to make a illquid
30:50long-term investment in the business.
30:52Um, and we we look at even liquid
30:54investments that way. You want to invest
30:56in something that you know if the stock
30:58market were to shut for 10 years, you're
31:00happy to own it. It's good discipline.
31:01So the thing that you need to think
31:02through is the risk of disruption. You
31:04know what AI has done is massively
31:06increase the risk of disruption. So you
31:08got to be very very thoughtful about you
31:10know the businesses you in you know
31:12businesses you know go back to Warren
31:13Buffett. If you go back and read Warren
31:15Buffett the great greatest investor of
31:17all time uh he was not able to perceive
31:20you know the the risks of disruption
31:22created by the internet for example you
31:24know Wikipedia disrupting World Book. Um
31:27well now we [clears throat] have AI.
31:30It's it's a much more complicated
31:31problem. All of us are guaranteed to
31:33look foolish with one business or
31:34another that we didn't anticipate the
31:36risk of disruption because of AI.
31:37>> What businesses do you think become more
31:39valuable as a result of AI? actually met
31:41with the one of the founders of
31:43cognition yesterday. very interesting
31:45company and their uh software or their
31:49AI in effect enables
31:52uh you know banks you know big financial
31:55institutions for example that spend a
31:57ton of money on you know dealing with
31:59legacy systems because of an elomeration
32:02of acquisitions they did over time they
32:04can kind of rewrite the cobalt into uh
32:06you know modern code and do it in a
32:08matter of days as opposed to many months
32:10and I think the cost to run big
32:13financial institutions is going to come
32:15down meaningfully because of uh because
32:17of AI big spenders if you will on tech
32:19are going to be able to bring some of
32:20that they're going to become a lot more
32:22efficient that's now the question is are
32:24they going to be able to keep the profit
32:25right if everyone uh everyone's going to
32:28be forced to uh use the best software to
32:31run their business you more efficiently
32:33become more AI native and the question
32:35is whether they get to keep that profit
32:36or whether the profit or the margin gets
32:38passed on to the customer and that's a
32:39function of the nature of the business
32:40and pricing power you know the problem
32:42with money generally is It's a commodity
32:44and banks are in the business of
32:46providing providing money. So it's it's
32:49a complicated question depends on the
32:50business. I think AI will enable the
32:53creation of many businesses that here
32:55too for cannot be created before and AI
32:58will enable
33:00entrepreneurs people to become
33:02entrepreneurs who never been
33:02entrepreneurs before. Just even the most
33:04recent uh like overnight release of meta
33:06I haven't had a chance to play around
33:07with it but guys in the office were
33:09talking about how easy it is to use I
33:11think it's muse whatever.
33:12>> Yeah muse.ai. Yeah.
33:13>> Yeah. How easy it is for people to now
33:15create their own agents to do stuff for
33:17them. The pace of improvement is by far
33:21the fastest of anything I've ever seen.
33:23You know, if you think about Microsoft
33:25in the old days, you know, 1.0 versus
33:262.0, it might be, you know, a couple
33:29years or more between between [snorts]
33:31updates of of consequence. You know,
33:33here you get an update of consequence in
33:35days. It's a bit like driving a Tesla
33:36and they're, you know, overnight they're
33:38updating the software.
33:38>> Does that scare you as an investor?
33:40>> I'm generally not frightened. So scare
33:42is probably the wrong word but I would
33:44say you you have to be very thoughtful
33:46about the moes and how wide they really
33:50are and uh I think it's the most
33:53complicated question for an investor how
33:55to predict the risk of disruption
33:56businesses that that seem like the most
33:58dominant businesses in the world. There
33:59will be some that will just disappear.
34:01Let me tell you about the best new
34:03product that I've used in the past 5
34:05years. It's the Madic vacuum. This thing
34:08vacuums, it mops. Maddak does
34:10everything. Other robots bump into
34:12things, but the Madic sees things. It
34:15actually avoids the problems. And the
34:17Madic automatically adjusts between my
34:19carpeted surfaces and my hardwood
34:21floors. It's also super easy to
34:24schedule. I have it run every night
34:26while I'm in bed, and every morning I
34:28wake up to clean floors. Messes happen,
34:30and when they do, Madic rolls into
34:32action. Go to madak robots.com today and
34:35put Madak to work for you.
34:41Ever hit 3 p.m. and feel like your brain
34:43just quit? For a lot of people, that's
34:46not caffeine or sleep. It's
34:48electrolytes. And water alone won't fix
34:51it. That's why I drink Element every day
34:54after lunch. Zero sugar, no dodgy
34:57ingredients, just a real dose of sodium,
34:59potassium, and magnesium. I know you're
35:02all thinking electrolytes are for
35:04athletes, but you don't have to be an
35:06athlete to benefit from it. and it
35:08tastes great. Stay sharp in the
35:10afternoon and grab a free 8count sample
35:13pack with any purchase at
35:14drinklement.com/tkp.
35:17That's drinklmnt.com/tkp.
35:24How do you go from I'm interested in
35:26this company to now we're writing a
35:28check for a billion dollars into it?
35:30>> Usually, it's not a company we just woke
35:33up and heard of. So, we're looking for
35:35the best businesses in the world. So
35:36over time we kind of build this you know
35:38call it a library of companies that
35:39we've followed for a long period of
35:40time. We've liked the business and we
35:43haven't had a chance to own it because
35:45you know we may have done a lot of work
35:47but we said look at this price at 35
35:48times earnings or whatever it's hard for
35:51us to get to a 20 plus% rate of return
35:53which is our ambition. So we do the work
35:56and then put it aside on valuation
35:57concerns and then we wait for the day
35:59that either a some macro event happens
36:03covid gives us a chance to buy that kind
36:05of a business or even you know the
36:07[clears throat]
36:08sas
36:09apocalypse
36:10>> yeah apocalypse
36:12>> which caused you know pretty much
36:13everything to do with software to get
36:15repriced that gave us an opportunity for
36:17example to buy Microsoft in our view at
36:18a very uh attractive valuation and ao a
36:22host of other really high quality
36:23businesses but the process process is uh
36:26we typically have two members of the
36:28team do a deep dive on a company.
36:30They'll start obviously with kind of the
36:31SEC filings, 10Ks, 10 Q's, conference
36:33call transcripts. [snorts] Then uh we'll
36:36kind of assemble what the key issues are
36:37that we're trying to understand. We
36:39spend a fair amount of time on expert
36:41networks. We'll talk to former employees
36:42of the company. We'll talk to other
36:44industry experts. We'll talk to people
36:46like competitors to kind of get to, you
36:48know, the the underlying issues and and
36:50then we kind of build a a model of the
36:53business um and kind of get an
36:55assessment of, you know, how does this
36:56pencil what kind of return does this
36:58generate at the price we can buy it for
36:59today? You know, those are some of the
37:01elements. Then that team will put
37:03together like a a deck um and they'll
37:06present it to the group. Now, that
37:08twoerson team is usually is not Ryan or
37:11myself. Uh Ryan's our C our CIO uh our I
37:16guess I call it the portfolio manager
37:17and we do our own sort of independent
37:19assessment which gives us enough
37:20information to be dangerous to ask the
37:22right questions and then we have the
37:24balance of the team another five people
37:25who haven't done the work in the name
37:27and that group comes together to discuss
37:29an investment and out of that meeting
37:31may come a decision to make an
37:32investment in the company or may say
37:34okay there's still some open issues
37:35let's get to the bottom of this concern
37:37and then they'll go back and do the work
37:39and come back to the team that's the
37:40basic process. How are you guys using AI
37:43internally in that investment process to
37:45either speed up the work or do work that
37:47you normally couldn't do?
37:48>> Yeah, today we're really using AI more
37:50as a research tool to learn about a
37:53certain subject that's relevant. It
37:55hasn't, I would say, crept too deeply
37:58into a process. We're not using it to
37:59build models. In a world where everyone
38:02has the same access to AI, it's hard to
38:05be differentiated. I I think there, you
38:07know, what's left to humanity is kind of
38:09the outside the box thinking, the
38:12creative process, the insight that's
38:15gleaned from looking at all the facts.
38:16Whereas AI is a bit of a review of
38:18everything that happened before. And if
38:19you look at our most successful
38:20investments, they've usually been cases
38:22where we've done something that someone
38:23hasn't done before. you [snorts] know,
38:25buying a credit default swaps before,
38:28you know, a a pandemic, for example, or
38:30investing in a the stock of a bankrupt
38:33company or shorting the credit of a AAA
38:35company before the financial crisis.
38:36Those are among our best investments and
38:38they were you you couldn't have found in
38:40a model, you know, AI would not have
38:43told you to do any of those things.
38:44>> A lot of value investors have
38:46underperformed sort of like post 2010,
38:492011, but you haven't. Why do you think
38:51that is? We've been very good about
38:55continually sort of increasing our
38:57standards for business quality. We want
38:59to own the best businesses uh in the
39:01world uh that are have a very low risk
39:03of disruption and I think we're quite
39:05disciplined about that. And the other
39:07thing is that we're not just a longon
39:08only equity investor. Uh we have
39:11opportunistically made a pile of money
39:13in a couple of cases when we've had a
39:15view about macroevents that's different
39:17from others. And when you have that uh
39:19and you can find an asymmetric way to
39:21make that bet, you can make a lot of
39:22money. So we made a lot of money kind of
39:25going into COVID because we I would say
39:27were weeks ahead of the world and and of
39:29a few that there would have to be a
39:31global economic shutdown. Uh and we made
39:33a lot of money because we said there has
39:34to be massive inflation. [snorts] So we
39:36bet that rates would rise. One of the
39:38things we did that you know we we had a
39:40we've talked about it before but we had
39:41this very large laws circa 2015 2016 and
39:46after that experience I said we got to
39:47take our investment principles and
39:48literally engrave them on a stone tablet
39:49and put them on our desk. It's a very
39:51good way having a checklist is actually
39:53not a bad way to make sure you avoid
39:56mistakes and we have a good checklist.
39:57>> What's on that checklist?
39:59>> The nature of the businesses we're
40:00investing in simple predictable free
40:02cash flow generative companies the kinds
40:04of management teams that we're looking
40:05for. focus on large cap kind of liquid
40:08uh public companies an aversion to
40:11shortselling. Um that was an something a
40:14good uh a good lesson and uh on the
40:18asymmetric side we're looking for a case
40:20where we have a view that's different
40:22from the rest of the world and that we
40:24can express that view with an instrument
40:26where the payoff is very large relative
40:28to the amount of capital that we put to
40:29work. But you know it's a very simple
40:31we're looking for the best super durable
40:33growth companies in the world. We spend
40:34a lot of time thinking about moes and uh
40:38obviously we want them run by the best
40:40teams in the world or if it's not run by
40:42the best team in the world we want to
40:43have someone in mind that we could
40:45install if we need to replace the team.
40:47>> Why did you stop shortelling?
40:49>> I never actually liked shortselling. Uh
40:52because it's it's asymmetry in reverse,
40:54right? You can lose infinity and your
40:56amount you can make is finite. But I was
41:00uh we shorted the bond insurers going
41:03into the financial crisis and that was a
41:04very
41:05>> that was the MBIA one.
41:06>> Yeah. But most of the money we made we
41:08made on the credit default swaps as
41:09opposed to shorting stock and then we
41:11did nothing. And then someone pitched me
41:13on a fraudulent pyramid scheme. And then
41:16we did the work and said, "It's a
41:17fraudulent pyramid scheme." And we said,
41:19"How can we lose money shorting a
41:21fraudulent pyramid scheme and then
41:23delivering to the FTC, you know,
41:25detailed analysis? You know, they
41:27they'll have to investigate. And the
41:29people being harmed are the most
41:30disadvantaged people in society." So, we
41:32thought it was an amazing setup. And we
41:34like to make investments where the the
41:36wind is at our back. And we said, "Look,
41:37the wind's at our back. we're helping,
41:38you know, a group of disadvantaged
41:40people are being taken advantage of.
41:41It's an evil company. This has to work.
41:45And uh we underestimated the risk of
41:48market dynamics, i.e. Carl icon showing
41:50up, buying the stock, putting capital to
41:52[snorts] work uh against us. And it just
41:54reminded us that it's a really shitty
41:55business. The company that you were,
41:57they're shorting the pyramid scheme. We
41:59won't mention the name, but that
42:01generated these huge attacks against
42:03you. There was websites against you.
42:04There was a famous uh CNBC segment that
42:07I think came as a result of that. Was
42:09that what what about the personal cost
42:11to you when you're willing to put out a
42:13contrary opinion like that?
42:15>> Well, it's much easier to be a investor
42:17in companies. You make a lot more
42:19friends, right? You buy a stock, other
42:21people pile in with you, it goes up,
42:22everyone wins. You short a stock and in
42:25that case we were the vast majority of
42:26the short interest. So, everyone else
42:28was sort of on the other side. that you
42:30had a company that we were an
42:32existential threat to. They were willing
42:35to use whatever they had been attacked
42:37over time by critics, by media, by
42:39otherwise. They built up a lot of
42:41infrastructure to go after the critics.
42:44So, they were kind of wellprepared to
42:45kind of go after us. And then we be it
42:48became a bit of a of a hedge fund trade
42:50where let's go squeeze Bill. That was
42:52kind of the unfortunate part of it
42:54where, you know, the in some sense the
42:56industry is like, okay, these guys are
42:58over their skis. we can squeeze them
43:00out. And uh that was not the fun part.
43:03>> You were relatively quiet, I would say,
43:05from a public life point of view
43:07compared to what you were before. And
43:08now in the last few years, you've you've
43:10been a lot more vocal. Why now?
43:12>> I've always been kind of a free speech
43:14kind of thing. You go back to my high
43:16school yearbook. Um I was I was listed
43:18as most verbose and uh my my yearbook
43:21epithet was a closed mouth gathers no
43:23foot. So I was sort of known for being
43:26expressive about uh my point of view.
43:29You know, one of my important drivers in
43:31life was I always wanted to be able to
43:33say what I believed. You know, as my
43:34follower count grew on Twitter, it gave
43:37me on the margin more influence. And as
43:39I cared about various issues, you know,
43:41I wanted to help advance a narrative.
43:44And that's why I've been more public
43:45about it. And I've I've been rewarded by
43:48it working, you know, beginning with
43:50smaller things. Um, and uh, you can
43:53actually influence uh, the
43:55administration, the course of history
43:56with a with a tweet, which is pretty
43:58cool. A lot of evil can go by if no
44:00one's willing to say the emperor is not
44:02wearing clothes or or more.
44:04>> I want to come back just one second to
44:06the AI thing before we move on from it.
44:07Like, how are you using that personally?
44:09>> I'm using it a lot more recently. Uh,
44:11you know, my daughter's had a major
44:13health incident and AI is amazing at,
44:16you know, vetting, helping you make
44:18medical decisions for a child. It's an
44:21incredibly powerful tool and I think
44:23every doctor should actually be checking
44:25their work with with you know Dr. Claude
44:29or pick your favorite u website favorite
44:32AI.
44:33>> Do you think companies like Brookfield
44:36get more valuable where it's like a
44:38tangible almost infrastructure becomes
44:40more valuable in a world of AI? And
44:42there's another bet and I'd love to hear
44:44your reaction to this which is you know
44:46sort of Thrive is starting to buy these
44:47sports teams under the assumption that
44:49we have this barbell right we have AI in
44:52in one hand and uh on the other hand
44:54these tangible experiences are going to
44:56become more and more meaningful to
44:57people and presumably they'll pay more
44:59for those experiences.
45:01>> So [snorts] on Brookfield I think it's a
45:04incredibly well-run amazing company.
45:06They're very good at infrastructure and
45:08they're very good at financing. They're
45:09very good at building things. So think
45:11data centers, think power. Um, you know,
45:14there's effectively infinite demand for
45:16compute and uh, you know, they're very
45:19well positioned. So I think Brookfields
45:21is an AI winner for sure. They'll
45:23provide a lot of the backbone, you know,
45:25[clears throat] power and otherwise. You
45:27know, I'm big big Josh Kushner fan. Um,
45:30you know, I I don't know how much of the
45:32recent uh, baseball investment is is
45:36Thrive related or personal. I'm I'm not
45:38not quite clear to me, but I do think uh
45:40that there's a lot of um people sitting
45:44home being lonely, but you go to a big
45:46sport event, you know, the feeling that
45:48you have at a Knicks game, maybe at the
45:51end of the game, you half the half the
45:52crowd is unhappy, but while it's
45:54underway, it's sort of a very human
45:57elation type experience. Now, I don't
46:00know that baseball teams are, you know,
46:04they're not valued in a way that I think
46:06about valuing most assets. I think
46:08they're valued more more like an artwork
46:11than than a a financial enterprise. You
46:14know, the vast m, you know, number of
46:16sports teams, as far as I know, if they
46:18make money, it's not it's not a lot. And
46:21it's not like the owner is expecting
46:22them to generate massive cash. You know,
46:25they're taking a small return today on
46:26the basis that it's going to generate a
46:28lot more cash flow in the future. I
46:29would think vast majority of sports
46:30owners prepared to spend every dollar
46:32that they're allowed to, you know,
46:33[snorts] in expanding the franchise.
46:35>> Are you going to buy a sports team?
46:36>> No. So,
46:38>> you went from being uh an occasionally
46:40loud activist to trying to enact change
46:43behind the scenes. Why the change? And
46:46is it more effective this way?
46:48>> It's because we were able to effectuate
46:50change behind the scenes and we weren't
46:51when we started, right? When we went
46:52into the business, we didn't have
46:54credibility or reputation. We hadn't
46:56been in the boardroom. I was 20, you
46:59know, 20 plus years uh younger and uh in
47:03that world where you have limited
47:05financial resources, you have limited
47:06reputational resources,
47:08you can buy 5% of a company uh and you
47:11have to win on the power of the idea to
47:13get the big institutions to support you.
47:14You might have to end up in a proxy
47:16contest, etc. 20 years later, I've been
47:19on multiple boards as have other members
47:21of the team. uh we have a track record
47:24for of success of investing in a company
47:26being a long-term investor. In the early
47:28days, they would say, "Oh, you're just a
47:29short-term investor." Well, over time,
47:31we've been able to prove that we're
47:32actually our interests are the interests
47:34of the long-term holders of the
47:35business. And so, today, when we buy a
47:37stake in the company, we literally get
47:39letters from the CEO. You know,
47:41recently, we made a number of new
47:42investments. And in a couple of the
47:43cases, we actually got very nice, three
47:46of the five or six cases, we got letters
47:47from the CEO saying, you know, thank you
47:49so much for investing in our company.
47:51you know, I read your second quarter
47:52letter. You think about the business in
47:54the way we do, you know, let us know and
47:56we can come see you. And if we have any
47:58ideas, you know, for them, I'm sure
47:59they'll be very receptive in taking
48:00them. Uh, in that world, we don't have
48:03to be an activist.
48:04>> Do you think if you're going to go
48:06activist, you should have to hold your
48:08shares for a certain period of time?
48:10>> I don't think you should be legally
48:11required, but I think yes. I I think
48:14activism to more direct answer to a
48:16question that is focused on causing the
48:18stock price to go up in the short term
48:20but causing the company to long-term
48:22harm obviously makes no sense. You know
48:23cut your expenses dramatically i.e and
48:26underinvest so that we can report a more
48:28profitable quarter that's not going to
48:29be [snorts] lead to a good outcome or
48:31you know what lever up the company and
48:34return the capital to shareholders. You
48:35know, the the most extreme version was
48:36green mail, which has largely been
48:38outlawed, but you can view certain kinds
48:42of activism as as a form of almost green
48:45mail. You know, let's let's benefit the
48:46short-term holders at the expense of
48:48people who are stuck owning the stock.
48:50And the board's job is to kind of shut
48:51that stuff down. And I think
48:52shareholders today, you know, the the
48:54the Vanguard, Black Rockck, you know,
48:57the index fund owners are not going to
48:59be they're forever owners. they're not
49:01going to support some kind of short-term
49:02initiative that that will cause
49:04long-term negative consequences.
49:06>> You talked about index funds there for a
49:07second. What advice do you have for the
49:09ordinary person who's like making a
49:11paycheck and wants to invest?
49:14>> So, if you want to be an investor, it's
49:16something you got to allocate real time
49:17to. It's something you have to study and
49:18learn. You got to do your homework on
49:20companies. So, that's a decision. If you
49:23just want to have exposure to the stock
49:25market, I do think index funds are a
49:26very good approach and they've beaten
49:28most active investors over long periods
49:29of time.
49:30>> How would you do that? Would you do um
49:32dollar cost averaging on a monthly
49:34basis? Would you be like, "Oh, it's high
49:35now, so I'll hold off." Like, how do you
49:37think about
49:38>> I think the key is to one, start young,
49:40um so the sooner you can start putting
49:42aside money that you can invest for the
49:44long term, the better for your
49:45retirement. You know, the power of
49:46compounding. I wouldn't sit around
49:48holding cash because you think the
49:50market's expensive.
49:51>> You mentioned stock options earlier. I
49:52want to come back to that. How do you
49:53think about stock options from a mature
49:55company perspective or it's like let's
49:57say Meta or uh Microsoft or an example
50:00like that where they could pay cash
50:01easily to um but they use options where
50:05they use restricted stock as some form.
50:08I mean the benefit of of of some form of
50:12restricted stock or options is the
50:14vesting. It gives you some ability to
50:16retain talent in a way that just paying
50:18someone cash every year doesn't. So I
50:19think it's still a very useful uh tool.
50:22It's also obviously creates more
50:24alignment. People actually care about
50:25the share price which I think is an
50:27important discipline uh for employees.
50:29Now Persing Square the management
50:32company which was the gift we gave with
50:33with purchase. We don't intend to issue
50:36uh any meaningful amount of options or
50:38restricted stock. We have an employee
50:40base that you know already owns. We
50:42spread equity very widely throughout the
50:44firm. So you know 80% of the stock or so
50:46is held by the held by the team. So we
50:49we're in the fortunate position of not
50:50having to issue equity or options for a
50:53very long time. But maybe 20 years from
50:55now we have a new generation that
50:56doesn't have any equity in the company.
50:57We may choose it can be a useful tool.
50:59>> I was very happy the market gave me an
51:01opportunity to purchase some of that
51:02when it came out. It went down to like
51:04$23 or something.
51:05>> Yeah, I bought some, too.
51:07>> Want to talk about Netflix for a second?
51:09You bought this. You sold it like a
51:11month later and then now you've rebought
51:13it. What went into that decision? You
51:16were wrong, now you're right. How did
51:18you change your mind?
51:19>> Netflix is one of the companies if you
51:20will in the library uh that we had done
51:23a lot of work on over time and
51:25[clears throat] what created the
51:26opportunity at least the first time as
51:28we thought about it was they had missed
51:31subscriber growth uh guidance stock got
51:34crushed and uh you know we think Netflix
51:37is an amazing business uh with a very
51:39dominant position and we bought a
51:42meaningful stake in the company. Uh we
51:44then met with management and we shared
51:47our detailed deck with them. They they
51:50completely agree with our thesis on the
51:51company. So we felt we were kind of
51:52super aligned with management. We talked
51:54about things like why Netflix and we
51:56said why don't you take have an
51:58advertising model lower cost advertising
51:59model. They said we're never going to do
52:00it. About uh 3 or 4 weeks later um they
52:04announced earnings. And if you go back
52:07and review the earnings call, management
52:09seemed like shell shocked. uh they were
52:13uh you know they missed the subscriber
52:16numbers again. Uh they seemed very
52:18surprised by this. They talked well
52:19we're going to have to adapt. We're
52:21going to have to launch an advertising
52:22model. You know literally 3 weeks before
52:24they said they would never do it. And
52:26you know my takeaway was you make an
52:28investment in a company and then you
52:30learn new information that's
52:31inconsistent with the original thesis.
52:34you either have to buy a lot more
52:36because the stock's gotten cheap and you
52:37believe that the new information is uh
52:40not material or you have to exit because
52:42the thesis is broken. And we made the
52:45decision to exit on the thesis, if you
52:47will, being broken. Now, the letter we
52:50wrote to our investors, we said, look,
52:52um we're selling for this reason. We
52:54think management is going to be able to
52:56work through this problem. But what
52:58Persian Square invests in the highest
52:59certainty companies in the world and we
53:01think the dispersion of outcomes here
53:03has widened dramatically. They may
53:05[clears throat] get it right and maybe a
53:06home run, but they also there's a much
53:08greater probability that they don't get
53:09a ride. They don't know anything about
53:10advertising models and whether that's
53:12going to be successful or not. And so
53:15with the wide dispersion of outcomes, we
53:16have a better place to deploy the
53:17capital. we took the money, we bought uh
53:19Google, Alphabet because again for us
53:22it's not we don't need to make it back
53:24the same way we lost the money right we
53:25can always take a tax loss which has
53:27some value to us and redeploy it in
53:29something else which is higher certainty
53:32and again if you look at the Persian
53:33Square portfolio we own the highest
53:34certainty predictable companies in the
53:36world this lost its certainty element at
53:37least in our mind and what's happened
53:39since they executed extremely well they
53:42built a very successful advertising
53:43model they became an even more dominant
53:45company um they became a much more cash
53:47flow generative business and you know
53:50the streaming wars they won. You know
53:52the Disneys of the world, the Paramounts
53:54of the world, you know, have kind of
53:56been pushed aside. Netflix, you probably
53:58turn off the lights practically before
54:00you turn off your Netflix and they're
54:02they're incredibly well positioned to to
54:04to innovate. They're the place you go of
54:06any creative person to sell your content
54:09or to produce your content. And then but
54:12the stock because they executed really
54:13well went back to a very high multiple
54:15and not interesting. And then relatively
54:17recently the stock got cut in half
54:18again. So now we had uh the high
54:21certainty business we thought we owned.
54:23They proved themselves at a price that
54:25made sense. We bought it back.
54:26>> The business um that you're involved
54:28with that I think people know the least
54:30about is Howard Hughes. How did you get
54:32involved in that and why are you so
54:34excited by it?
54:35>> Sure. So Howard Hughes was an entity we
54:39created to make it other another
54:41investment successful. So we invested in
54:43a company called General Growth. We
54:44bought the stock during the financial
54:46crisis. We paid the stock was down 99
54:4812%. We bought 25% of the company and we
54:51we did so a few months before it filed
54:54for chapter 11 and it was actually we
54:56were pushing the board to file for
54:57chapter 11. They were trying to avoid
54:58it. was a case where it was inevitable
55:00but our view is we could run a
55:01restructuring where the shareholders
55:03could keep their investment in the
55:04company maybe with some delusion and and
55:05that's I joined the board of the company
55:07we led that restructuring what created
55:09complexity in general growth versus its
55:12direct competitor which was a company
55:13called Simon Properties which is still
55:15quite successful
55:16today was they had addition to class A
55:19shopping malls they owned a lot of land
55:22a lot of and they did a lot of
55:23development and a business that they had
55:25acquired from Rouse they own these
55:27so-called MPCs their small cities and
55:30the market hated that business. So we
55:31said, look, let's make general growth
55:33look exactly like Simon by taking all of
55:35those business, all these kind of land
55:38plays, these MPCs out of the company and
55:41anything else that didn't look like a
55:43class A mall. We took all the non-core
55:44stuff and stuck it in Howard Hughes on
55:46the theory that and and by the way, it's
55:48the first time that I've ever seen
55:50normally when you spin off a company
55:52from another company, the spinning
55:54company stock price drops by the value
55:56of the thing you spin off cuz it's kind
55:57of like a dividend. In this case, we
55:59spun off general of uh Howard Hughes and
56:02John Roto stock went up like the market
56:04the overhang from this. So it was a
56:06David [snorts] Simon called it shitco.
56:08Uh he was putting in a competitive bid
56:10our structure which a deal we did with
56:12Brookfield was to create this entity. We
56:14called it Howard Hughes he called he was
56:16making fun of it by calling it but
56:17it was really sort of go because it
56:19was just everything that was
56:20>> the assets nobody wanted so to speak.
56:22And then we hired I thought of quite a
56:23very good entrepreneurial team uh David
56:26Winer Grant Hurlist to kind of work
56:27through these assets over time until the
56:30portfolio was quite focused in the last
56:32five or six years to just MPCs. We said
56:35look the market's finally going to
56:36understand why this is a really good
56:37business and
56:38>> and MPCs are master plan communities.
56:40>> They're small cities at this point. So,
56:42we own the Woodlands in Houston, which
56:43is, you know, a small city, 150,000
56:46people, something like this,
56:48>> [snorts]
56:48>> uh, with, you know, high-rise office
56:50towers and shopping centers and, you
56:52know, uh, schools and churches. Uh, I
56:54describe the business a bit like Sim
56:56City, the game, where we act as kind of
56:58the benign owner of these communities.
57:01And what's in it for us is we own all of
57:03the uh, commercial land and all the
57:06residential land. We sell the
57:07residential land to home builders. We
57:09sell we don't sell the commercial land.
57:10We use it to build whatever the
57:11community needs. And if you take a very
57:13multi- long multi-deade view, this is a
57:16business that over time generates a huge
57:17amount of cash. And we have uh a series
57:19of these small cities. But after 14
57:22years of Wall Street wanting nothing to
57:25do with the business, uh we said look,
57:27we it's time for us to re kind of
57:29transform Howard Hughes into something
57:31else. And the reason why Wall Street
57:33doesn't like the core Howard Hughes
57:34business is they is, you know, land and
57:37development
57:39sort of have a bad long-term track
57:40record. And while our land is very
57:43different from just any land, you it's
57:45literally imagine you owned New York
57:47City and you owned all the vacant
57:48commercial land and all the vacant
57:50residential land and you owned it over a
57:52hundred-year period of time, right? You
57:54you could you make an absolute you
57:55literally make trillions of dollars.
57:57That's really the opportunity. And
57:59actually the land that we own is in
58:00places where people are moving to.
58:02Texas, Las Vegas, Hawaii, but still as a
58:05public stock, it's it's always traded at
58:07a big discount to the value of its
58:09assets. So over time, we've, you know,
58:11we we've bought a significant stake in
58:13the company. We now own 47% of the
58:15company, and we're transforming into
58:16what we call a modern day Bergkshire
58:18Hathaway. What did Buffett do? He
58:19started with a dying textile operation.
58:22Over time, he liquidated the textile
58:24operation. He reinvested the capital in
58:26insurance and banking and a candy
58:29company and other businesses over time
58:30and he built a conglomerate ultimately
58:33but a conglomerate that compounded its
58:35capital at a very high rate over a long
58:37period of time and it did so without
58:38issuing issuing very little stock.
58:41[snorts] So, what we've done since we've
58:43made our investment in the company,
58:45since I became executive chair, since
58:46Ryan became their CIO, is we acquired an
58:50insurance company called Vantage
58:51Holdings, a PNC uh specialty insurer and
58:55reinsurer. Most recently, we recruited,
58:57I believe, the best management team in
58:59the insurance industry, and we're going
59:00to build this little insurer into a big
59:03insurer over time with that very
59:04talented team underwriting the risk that
59:06we take on. And then Persing Square is
59:09managing the assets. What Buffett did
59:11that was unique is he ran an insurance
59:14operation and actually in the beginning
59:16he didn't he didn't do a very good job
59:17with that. It took him time to learn how
59:18to run an insurance operation but he
59:20managed the assets not in just a
59:22portfolio of fixed income securities
59:24which is the typical approach for
59:25insurer but he took basically all of the
59:27float generated from writing insurance
59:30and he put that money in short-term
59:32treasury so that there was plenty of
59:33capital available to pay claims. Then he
59:36took the balance of the assets to the
59:38insurer and he bought common stocks. And
59:39Buffett was a very good common stock
59:41investor as we know. And so the insurer
59:43ultimately over time made money on the
59:45liability side by making a profit
59:47writing business, collecting more
59:49premiums than it paid in claims. Uh and
59:51that it earned a attractive return on
59:53its assets. And when you earn an
59:54attractive return on assets and you have
59:56basically negative cost liabilities, you
59:59can run an insurer that generates a 20%
1:00:01or more annual rate of return. And
1:00:04that's what we're underway to do at
1:00:06Howard Hughes. Now, no one notices and
1:00:08no one cares. Why? Because it's still a
1:00:09real estate company that people hate,
1:00:11but the nature of Howard Hughes's core
1:00:13business is over time it selfquidates.
1:00:16So each year we sell hundreds of
1:00:18millions of dollars of land. Over time,
1:00:20our land assets will go away. Each year
1:00:22we sell, you know, hundreds of millions
1:00:24of dollars of condominiums in Hawaii.
1:00:26We've got 4 billion of condominiums
1:00:28under contract uh in the process of
1:00:31being delivered. we generate something
1:00:32appro approaching 300 million of uh net
1:00:35operating income from the real estate
1:00:36assets. So historically we took all of
1:00:38the cash we generated and reinvested
1:00:40real estate. We bought another MPC in
1:00:41Phoenix for example. We're no longer
1:00:44going to do that. We're going to
1:00:45reinvest whatever capital is necessary
1:00:47to make these small cities continue to
1:00:49be amazing places to live and they and
1:00:50they're always highly ranked as among
1:00:52the best places to live in the country.
1:00:54But beyond that, we're going to generate
1:00:55billions of capital that we're going to
1:00:57deploy initially in insurance. And when
1:00:59you mean deploy, that goes into the
1:01:00equity component of sort of the
1:01:03insurance company, which allows you to
1:01:04write more premiums, but allows you to
1:01:06invest sort of the equity that will
1:01:08become capital. Uh we've already put 300
1:01:10million of additional capital advantage
1:01:12since we bought the company. And over
1:01:14time, we'll as we generate and over time
1:01:16as we uh generate more cash from the
1:01:19real estate operation and we're looking
1:01:22at things we can do to accelerate the
1:01:24transformation from a real estate
1:01:26company to an insurance holding company.
1:01:28Um, but you what what Buffett had was he
1:01:30had a big stake in the business. He
1:01:32owned half we owned 47% and that allowed
1:01:35him to think long term. So, we're taking
1:01:37the long-term approach. Uh, we've
1:01:39recruited you know uh a very very
1:01:42talented team [snorts] and so I think we
1:01:44have the the liability side uh you know
1:01:47set up for us to be doing smart things
1:01:49in insurance and um we're going to do a
1:01:52good job managing the assets.
1:01:53>> I have so many questions about this. So
1:01:54modern day Bergkshire Hathway that term
1:01:57gets thrown around a lot. What does that
1:01:58mean to you?
1:02:00>> It means we're going to operate much the
1:02:01same way Buffett did in terms of
1:02:03insurance will be that I mean the driver
1:02:05of the value of Birkshire Hathaway over
1:02:06time is its insurance operation. When
1:02:09Buffett talked about it buying Coca-Cola
1:02:11or other American Express or other
1:02:13companies, those are assets purchased in
1:02:15the insurance company. So, we're going
1:02:17to take a long-term view on the way we
1:02:20manage this insurance operation and
1:02:22we're going to grow the business without
1:02:23issuing a lot of common stock, right?
1:02:26So, there are finite number of shares
1:02:27outstanding. And the beauty of
1:02:29insurance, it's actually a very cash
1:02:30generative business. So, what you're
1:02:32going to see over the next several years
1:02:33is the business transforming. You know,
1:02:35today it's probably 70% real estate and,
1:02:38you know, maybe 30% uh insurance by uh
1:02:43capital and then it will migrate, you
1:02:45know, over the next uh 5 years to
1:02:47something maybe 70% or 75% insurance,
1:02:5125% real estate unless we figure out a
1:02:53way to do that more quickly.
1:02:54>> So, if you were to list the keys to
1:02:56Berkshire success, sort of like looking
1:02:58back, it's the uh he had control so he
1:03:00could make
1:03:02>> take a long-term view. He wasn't exposed
1:03:03to the short-term wins of his
1:03:04shareholders. He had permanent capital.
1:03:06He didn't pay dividends. He retained all
1:03:08the capital the business generated. He
1:03:10had a very a talent for investing in
1:03:12common stocks and he was able to recruit
1:03:15talented uh people to run the various
1:03:18businesses of of Berkshire Hathway and
1:03:20he also didn't dilute his shareholders
1:03:21by issuing a lot of stock options or by
1:03:24issuing stock and acquisitions.
1:03:27>> Why don't more people copy that? It
1:03:28sounds so simple. It's not sexy to be in
1:03:31the investment operation of insurance
1:03:33company. I think that's a big part of
1:03:35the reason why people don't do this.
1:03:37Now, it's difficult to get to a 47%
1:03:40stake of a public company. Usually
1:03:42doesn't happen. You know, this is sort
1:03:43of a creature of history. Do you think a
1:03:45lot of Berkshire's success though boils
1:03:47down to the fact that I mean Buffett
1:03:49could have been paid 2 and 20 at some
1:03:51point, but he took this modest salary
1:03:53and sort of grew his wealth alongside
1:03:55the shareholders. like how different
1:03:57would the success of Berkshire look had
1:03:59he taken two and 20 on not that you're
1:04:01doing that but like on the portfolio.
1:04:03>> I think his willingness to work for free
1:04:06in effect was a very helpful thing to
1:04:09the the ethos around Berkshire probably
1:04:12made negotiations around compensation
1:04:13for other uh employees uh easier. Look,
1:04:17Buffett ran a partnership where he he
1:04:19got something like 25% of the profits
1:04:21over a 6% return and the costs were
1:04:22covered by the partnership. And by the
1:04:24time he retired from that business, I
1:04:26think he had 100 million under
1:04:27management of which 25 million uh was
1:04:30his and the 75 million was held by other
1:04:32investors. But I think he figured out
1:04:34that if I keep running in this
1:04:37partnership format, one I don't have
1:04:39permanent capital. He was getting tired
1:04:40of dealing with investors who were
1:04:42giving him money, taking him money that
1:04:43were affecting his results. He probably
1:04:45did the math and said, "Look at the
1:04:46power of compounding. If I, you know, if
1:04:49I own half of this little Berkshire
1:04:51Hathaway thing and I generate a 20%
1:04:53return for the rest of my life, I'll end
1:04:55up in a very good place and the marginal
1:04:57promote is not that important to me."
1:04:58And mother, he was able to run the
1:05:00investment operation as a oneman band,
1:05:02which I think also uh enabled him to do
1:05:05this. I remember talking to Charlie Mer
1:05:07one night about and I asked him what the
1:05:10most underrated aspect of Berkshire
1:05:11Hathaway success has been. the one the
1:05:14part that people don't talk about the
1:05:15most and he said we were almost never
1:05:17forced to make decisions by
1:05:20circumstances so we always had options
1:05:22how do you think about that what's your
1:05:23reaction to that
1:05:24>> we've designed our business around that
1:05:25you know the unique thing about Persian
1:05:27Square is if you look at the various we
1:05:30manage uh an offshore entity called
1:05:32Persian Square Holdings uh employees own
1:05:3428% of that company we manage Howard
1:05:37Hughes it's owned directly and
1:05:40indirectly about the same by employees
1:05:42plus uh the Persian Square funds and
1:05:46then we just took public an entity
1:05:47called Persing Square USA and employees
1:05:49invested you know 500 and something
1:05:51million dollars in the entity. So you
1:05:52know what's unusual about us is we have
1:05:56sort of these anchor stakes in each of
1:05:57the public vehicles we run and each of
1:05:59them is sort of a permanent capital
1:06:01entity which means that you know if
1:06:03there's a panic in the market and people
1:06:04want liquidity they can sell the stock
1:06:06of each of these various companies but
1:06:08the capital stays in the vehicle which
1:06:10enable us to buy stock you know during
1:06:12the covid crash or to buy stock you know
1:06:14during the financial crisis. I think one
1:06:17of the very smart things Buffett did is
1:06:19he decided at a certain age that you
1:06:21know how he wanted to live his life and
1:06:23he didn't want to live a life dealing
1:06:25with constantly raising money which is
1:06:28what you have to do if you're in the
1:06:29hedge fund business. You know the the
1:06:30hedge fund business when you do really
1:06:32well institutional allocators take money
1:06:34away from you because you come up too
1:06:36big a percentage of their portfolio.
1:06:37When you have a bad period people take
1:06:39money away from you because you're
1:06:40having a bad period. So uh you [snorts]
1:06:42have to be and you really can't close
1:06:45because uh what happened if you're not
1:06:49open people don't do diligence on you so
1:06:51that the next time you need to raise
1:06:52capital it's a it's a many month process
1:06:54for people to learn about your business
1:06:56again. So it's a
1:06:57>> and you're spending all your time like
1:06:58raising capital.
1:06:59>> As you get bigger and bigger, it
1:07:00consumes a huge amount of your time. And
1:07:02I attribute our biggest investment
1:07:04mistake to my being distracted by having
1:07:08to be on the road to some extent raising
1:07:09capital to try to keep the capital base
1:07:11stable. And we made a decision to just
1:07:13get out of the business of managing
1:07:14money where the money could leave you
1:07:16know the sort of open-ended funds. And
1:07:18if you look at Persian Square today, if
1:07:20we just compounded anything close to
1:07:22historic rates, we'll be managing a
1:07:24trillion dollars in 20 years. And that's
1:07:26plenty. You know, that's a good
1:07:27business.
1:07:28>> Let's talk about Braymont. How did you
1:07:30get involved with the uh watch company?
1:07:32>> Yeah, Raymont. Uh so I I the story here
1:07:36is I was at Haraju's board meeting uh
1:07:38and it was in Dallas and it was the our
1:07:41office at the time was in a mixeduse
1:07:44complex with a shopping center and uh
1:07:47during a lunch break I went down to the
1:07:48mall and I walked by a watch store and
1:07:51uh there was a very good young salesman
1:07:53and uh he talked to me about a Vermont
1:07:56watch. which I never heard of the brand
1:07:57before and I ended up buying a watch and
1:08:00uh I somehow lost it over time. I have
1:08:04like a watch safe and it kind of got
1:08:05buried in the watch safe. And years
1:08:08later I was uh heading to London for
1:08:11actually Persian Square related reasons
1:08:14and uh a friend had just told me that he
1:08:16was wearing a nice batic Philippe watch
1:08:19walking down the street in London and
1:08:21[clears throat] it was stolen and
1:08:22actually he's like Bill you cannot wear
1:08:24a nice watch in London anymore cuz
1:08:26you're going to get you know at best
1:08:28they're going to steal it at worst you
1:08:29know you can get hurt. So, I literally
1:08:31said, "What watch can I wear that I can
1:08:34we're a little less concerned about
1:08:36losing it and or it's not a recognized
1:08:38brand that that a thief is going to go
1:08:40after." I'm like looking through my
1:08:42watch drawer and I found this Burma
1:08:43watch. I'm like, "This is a super cool
1:08:44watch." So, I put it on and uh I was in
1:08:48staying in Mayfair and I was walking
1:08:50down the street and I I walked by the
1:08:51Burma store like like literally like the
1:08:53day the next day when I got to London.
1:08:56[snorts] So, I walked in. I really like
1:08:57the watches and I end up buying eight
1:09:00Vermont watches uh for basically his for
1:09:03gifts. And uh that night I I had uh
1:09:06dinner with the chair of Persian Square
1:09:09uh holdings and I gave him a I gave him
1:09:13a Burma watch and and uh oh, I wrote a
1:09:16little note when I left the shop. They
1:09:18gave me like a free Burma clock that I
1:09:21could put on the wall and I I said, "You
1:09:23know who owns this company?" and they
1:09:24said, "Oh, two British brothers, the
1:09:26English brothers." And so I wrote them a
1:09:28little note and I said, you know, "Dear
1:09:30Mr. Mr. and Mr. English, um, if at some
1:09:33point you are interested in having a
1:09:35partner, I would be interested in
1:09:37potentially being that partner and
1:09:39perhaps I could help you grow your
1:09:40company." I've always kind of my father
1:09:41kind of taught me to like watches, you
1:09:42know, a bit of a father-son thing. And
1:09:47uh, they they uh, emailed me back. I did
1:09:51a zoom and uh they they said actually we
1:09:54have a longtime holder that's interested
1:09:56in selling their interest and uh ended
1:09:59up buying a small a smaller minority
1:10:01stake in the company
1:10:03and time went on uh and the thesis at
1:10:07the time was we have this really good
1:10:09growth strategy we're going to open all
1:10:10these boutiques you know our boutiques
1:10:12are profitable well it didn't work out
1:10:15and um they burned through the capital
1:10:17pretty quickly but I view these
1:10:20investments a bit like hobby
1:10:22investments. So I it's not like
1:10:23something I I put a lot of resources in
1:10:25and doing it was a it was a bit of a
1:10:26Warren Buffett style investment where I
1:10:28didn't do due diligence. I just assessed
1:10:29the character of the people I was
1:10:30dealing with. Shans the only involvement
1:10:33I had was helping recruit a new CEO
1:10:35again a guy named David Gerato.
1:10:38Anyway, the things weren't working out
1:10:41between David Day and the board. uh and
1:10:45the board had had a disagreement with
1:10:47him about the direction of the company
1:10:49and I sided with David. I thought he was
1:10:51making all the right decisions. He
1:10:52dramatically improved the quality of the
1:10:54watches. He's a phenomenal watch
1:10:56designer. I love the direction. But sort
1:10:59of the old guard who had been with the
1:11:00company for 20 years felt it was too
1:11:03much change. It was coming too quickly.
1:11:05You know, we even have a new a new logo.
1:11:07Uh are we losing the ethos of the brand?
1:11:10And uh there was a bit of a a board
1:11:12fight. uh and uh you know being a bit of
1:11:14an activist [laughter]
1:11:16I uh was sort of got a little more
1:11:18involved and ended up putting in a chunk
1:11:21more capital buying [snorts] effective
1:11:23control of the company uh I I joined the
1:11:26board as non-executive chair my nephew
1:11:30uh I inserted as kind of to help fix
1:11:32things and they've made amazing progress
1:11:34in the last uh I would say year or so
1:11:38and it's been kind of a fun you know
1:11:40other people in my industry buy sports
1:11:41teams I own this little watch company
1:11:43and it's super cool. And this is a watch
1:11:46that's going to go to the moon. Um
1:11:48>> I got to get one of those.
1:11:49>> Yeah, this is it's called the supernova
1:11:51and the one of the things that's cool,
1:11:53the face has all of these phosphorescent
1:11:55the face lights up completely at night.
1:11:57It looks like these solar arrays in
1:11:59space.
1:12:00>> You know, it's a ceramic, you know, you
1:12:02got a ceramic uh bezeling.
1:12:04>> It's a Swiss movement. you know, one of
1:12:05the highest quality Swiss movements and,
1:12:07you know, it's phenomenal design and uh
1:12:10we've got a lot of fans out there and I
1:12:11think people like
1:12:13I like wearing a watch where the guy
1:12:15does, you know, doesn't know what I paid
1:12:17for it. Yeah. And also because they're
1:12:20they're they're less uh well known, the
1:12:22thiefs don't chop off your wrist for
1:12:24them yet. I mean, maybe that's when we
1:12:26get to that point, maybe that's good for
1:12:28the brand. Talk to me about recruiting a
1:12:30new CEO. That's one of the things that
1:12:31you've done as an activist and you sort
1:12:33of did it here again. what is the
1:12:35process that you undertake to find the
1:12:37best person in the world for that
1:12:38position? Like how do you do that? Why
1:12:40are you so good at that? So, uh, we've
1:12:43done it a couple different ways over
1:12:44time. For persing, the way we've
1:12:45generally done it is in our experience,
1:12:48finding someone who's done it before is
1:12:51the is the the lowest risk, highest
1:12:54return potential. So Chipotle went
1:12:56through crazy food safety issues and we
1:12:59needed someone in Brian Nichols name
1:13:01kept coming up and then we use these
1:13:03sort of expert networks to talk to
1:13:05people who used to work for Brian or
1:13:08compete against Brian and you can learn
1:13:10a lot by the kind of 360
1:13:13um uh views and you know just had kind
1:13:15of glowing references and then we meet
1:13:17the guy. I would say one of my best
1:13:19skills though it's not been perfect.
1:13:21I've made a few mistakes. You know, over
1:13:23time I've become a very good judge of
1:13:24people. Um, you know, [clears throat]
1:13:27what what do you need? You need people
1:13:28who are super passionate about the job,
1:13:29a lot of capability, a lot of energy,
1:13:32and and you know, honesty, character,
1:13:34etc. And you can assess that, I think,
1:13:37in in an hour.
1:13:38>> I want to switch gears a little bit and
1:13:40talk about you as a person. Um, what are
1:13:43other people's biggest misconceptions
1:13:45about you? You know, I had this
1:13:46experience over the course of my life
1:13:47where people would say, "Bill, I had a
1:13:49completely different impression of you
1:13:50based on what I read in the media and
1:13:52when I meet you uh in person. Bill, you
1:13:54seem like a really nice guy."
1:13:56>> Yeah, you're much nicer.
1:13:58>> And and perhaps some of my uh Twitter uh
1:14:02expressions make people think I'm I'm
1:14:04I'm just a fire brand or whatever. Um
1:14:06but uh I'm not a I'm not a hostile kind
1:14:09of person. I'm just someone trying to
1:14:10get to the truth.
1:14:11>> I think media media like positions
1:14:13people in this way, right? like certain
1:14:15people for whatever reason through your
1:14:17activism you kind of get positioned in
1:14:19this and then people form these
1:14:21misconceptions. I actually think that we
1:14:23we you know the urbal life thing did do
1:14:26some reputational damage over time
1:14:28because they sort of called me out. You
1:14:31know being a short sellerist I would say
1:14:33the general populace just thinks that's
1:14:35like an evil bad thing. And so I think
1:14:39having that be very much in the uh the
1:14:42rearview mirror uh you know the Urbal
1:14:44Life short was like the end of 2012.
1:14:46That was a long time ago.
1:14:47>> Believe it or not we not made an
1:14:48activist investment for more than a
1:14:49decade.
1:14:50>> Wow. The last activist investment was
1:14:52was in 2016.
1:14:53>> Would you ever do it again?
1:14:55>> I don't think we'd have to be an
1:14:57activist in any kind of traditional
1:14:58form. We will get quite involved in the
1:15:01companies were involved in. And I guess
1:15:03if we were had a big stake in a company
1:15:05we felt they were doing the wrong thing
1:15:06and we thought it was worth the energy.
1:15:09And I don't know that we're ever going
1:15:10to have to run another proxy contest. I
1:15:12don't think you run a proxy contest
1:15:13against someone with, you know, three
1:15:14million Twitter followers. I think I
1:15:15think it ends badly for management. I
1:15:18think we have a sufficient amount of
1:15:19influence that we can get to the right
1:15:22answer with dialogue. That's what I
1:15:24think. So I don't think we have to be an
1:15:26activist. Activism is when you're
1:15:28outside the boardroom and you're not
1:15:30going to get invited in today. I think
1:15:33any company that we're a shareholder in,
1:15:35if we wanted board representation, they
1:15:37would give it to us because we're a
1:15:38major shareholder. We've got a good
1:15:39reputation. We're a long-term investor.
1:15:41We're going to do the right thing for
1:15:42the business.
1:15:43>> We always end with the same question,
1:15:44which is, what is success for you? My
1:15:47definition of success for you know
1:15:49obviously Persian Square is you know I
1:15:51want the investors obviously you can
1:15:53measure it have a very attractive you
1:15:54know life-changing make a life-changing
1:15:57investment with us so that by the time
1:15:58they retire they they can they can do
1:16:00the things they want to do they can pay
1:16:02for education for their kids they can
1:16:04buy the house they want to retire in um
1:16:07you know for me my my definition of uh
1:16:09of you know 60 is like a been a moment
1:16:13for me I celebrated my 60th birthday in
1:16:16May.
1:16:17>> Wait, go deeper on that moment for you.
1:16:18What does that mean?
1:16:20>> I sort of think about each year like I
1:16:22love the summer. It's one of my favorite
1:16:23times of year and the summer goes by so
1:16:26quickly and um you know most people live
1:16:31you know healthy people live to their
1:16:3380s. I'm 60 so that's 20 to 25 years
1:16:36from now and I'm I'm hoping to AI and
1:16:39and uh you know doing a better job
1:16:41enables me to live to to meaningfully
1:16:43more than that. I have a grandmother
1:16:44lived to almost 106 and she smoked and
1:16:46drank.
1:16:48Um I don't know if that was contributing
1:16:50to her longevity but um you know I want
1:16:53to by the time I have no more time I
1:16:56want to have had a significant life and
1:16:58my definition has always been I want to
1:16:59have the greatest beneficent impact on
1:17:01the largest number of people. you know,
1:17:04obviously you start with you family and
1:17:07friends and so on, but um and actually I
1:17:10think this institute is going to be a
1:17:11way I'm going to be able to have a huge
1:17:12impact and something that's really
1:17:14needed. So success for me is getting is
1:17:17having a significant life.
1:17:20[music]

About this transcript

This page contains the full transcript of Bill Ackman: People are Going to Lose a Lot of Money by The Knowledge Project Podcast, generated from the public captions YouTube serves with the video. The transcript has 15,945 words across 2,260 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

What you can do with it

Use the transcript to take notes, quote the speaker, build a study guide, generate a summary with ChatGPT or Claude via the YouTube Summary tool, or export it as a timed subtitle file with YouTube to SRT. You can also re-open it in the transcriber to translate the transcript into 100+ languages.

Free YouTube transcript tool

YouTube2Text is a free YouTube transcript generator — no signup, no daily limit. Paste any YouTube link and get the full transcript instantly, with timestamps, click-to-jump, translation to 100+ languages, AI prompts for ChatGPT, Claude, and Gemini, and exports to TXT, SRT, VTT, or Markdown.