The only person who can cause you more harm
than a thief with a dagger is a journalist with a pen.
The following is a conversation with Bill Ackman,
a legendary activist investor
who has been part of some of the biggest
and at times controversial trades in history.
Also, he is fearlessly vocal on X, FKA, Twitter,
and uses the platform to fight for ideas he believes in.
For example, he was a central figure
in the resignation of the president of Harvard University,
Claudine Gay, the saga of which we discuss in this episode.
This is the Lex Friedman Podcast.
To support it, please check out our sponsors
in the description.
And now, dear friends, here's Bill Ackman.
In your lecture on the basics of finance and investing,
you mentioned a book, Intelligent Investor,
by Benjamin Graham, as being formative in your life.
What key lesson do you take away from that book
that informs your own investing?
Sure, actually it was the first investment book I read,
and as such, it was kind of the inspiration for my career
and a lot of my life, so important book.
Bear in mind, this is sort of after the Great Depression,
people lost confidence investing in markets, World War II,
and then he writes this book, it's for like the average man.
And basically he says that you have to understand
the difference between price and value, right?
Price is what you pay, value is what you get.
And he said the stock market is here to serve you, right?
And it's a bit like the neighbor that comes by every day
and makes you an offer for your house.
Makes you a stupid offer, you ignore it,
makes you a great offer, you can take it,
and that's the stock market.
And the key is to figure out what something's worth,
and you have to kind of weigh it.
He talked about the difference between,
the stock market in the short term is a voting machine.
It represents speculative interests,
supply and demand of people in the short term.
But in the long term, the stock market's a weighing machine,
much more accurate.
It's gonna tell you what something's worth.
And so if you can divine what something's worth,
then you can really take advantage of the market
because it's really here to help you,
and that's kind of the message of the book.
In that same way, there's a kind of difference
between speculation and investing.
Speculation is just a bit like buying, trading crypto.
Strong words.
Well, short term trading crypto.
Maybe in the long run there's intrinsic value,
but many investors in a bubble going into the crash
were really just pure speculators.
They didn't know what things were worth,
they just knew they were going up.
That's speculation.
And investing is doing your homework,
digging down, understanding a business,
understanding the competitive dynamics of an industry,
understanding what management's gonna do,
understanding what price you're gonna pay.
The value of anything, I would say,
other than love, let's say,
is the present value of the cash
you can take out of it over its life.
Now, some people think about love that way,
but it's not the right way to think about love.
So investing is about basically building a model
of what this business is gonna produce over its lifetime.
So how do you get to that,
this idea called value investing?
How do you get to the value of a thing?
Even philosophically, value of anything, really,
but we can just talk about the things
that are on the stock market, companies.
The value of a security is the present value of the cash
you can take out of it over its life.
So if you think about a bond,
your bond pays a 5% coupon interest rate.
You get that, let's say, every year
or twice a year, split in half, and it's very predictable.
And if it's a US government bond,
you know you're gonna get it.
So that's a pretty easy thing to value.
A stock is an interest in a business.
It's like owning a piece of a company.
And a business, a profitable one, is like a bond
in that it generates these coupons
or these earnings or cash flow every year.
The difference with a stock and a bond
is that the bond, it's a contract.
You know what you're gonna get
as long as they don't go bankrupt and default.
With a stock, you have to make predictions
about the business.
How many widgets are you gonna sell this year?
How many are you gonna sell next year?
What are the costs gonna be?
How much of the money that they generate
do they need to reinvest in the business
to keep the business going?
And that's more complicated.
But what we do is we try to find businesses
with a very high degree of confidence.
And we know what those cash flows are gonna be
for a very long time.
And there are very few businesses
that you can have a really high degree of certainty about.
As a result, many investments are speculations
because it's really very difficult to predict the future.
So what we do for a living, what I do for a living,
is find those rare companies that you can predict
what they're gonna look like
over a very long period of time.
So what are the factors that indicate
that a company is going to be something
that's going to make a lot of money,
it's gonna have a lot of value,
and it's going to be reliable over a long period of time?
And what is your process of figuring out
whether a company is or isn't that?
So every consumer has a view on different brands
and different companies.
And what we look for are sort of
these non-disruptible businesses,
a business where you can kind of close your eyes,
stock market shuts for a decade,
and you know that 10 years from now
it's gonna be a more valuable, more profitable company.
So we own a business called Universal Music Group.
It's in the business of helping artists
become global artists, sort of the recorded music business,
and it's in the business of owning rights
to sort of the music publishing rights of songwriters.
And I think music is forever, right?
Music is a many-thousand-year-old
part of the human experience,
and I think it will be thousands of years from now.
So that's a pretty good backdrop to invest in a company.
And the company basically owns
a third of the global recorded music.
That's the most dominant sort of
market share in the business.
They're the best at taking an artist who's 18 years old,
who's got a great voice,
and has started to get a presence on YouTube and Instagram,
and helping that artist become a superstar.
And that's a unique talent,
and the result is the best artists in the world
who want to come work for them.
But they also have this incredible library of
The Beatles, The Rolling Stone, U2, et cetera.
So, and then if you think about what music has become,
used to be about records and CDs and eight-track tapes,
for those of whom, and it was about a new format,
and that's how they drive sales.
And it's become a business,
which is like the podcast business, about streaming.
And you can, streaming is a lot more predictable
than selling records, right?
You can sort of say, okay,
how many people have smartphones?
How many people are gonna have smartphones next year?
There's a kind of global penetration
over time of smartphones.
You pay, call it 10, 11 bucks a month for a subscription,
or less for a family plan.
And you can kind of build a model
of what the world looks like,
and predict the growth of the streaming business.
You predict what kind of market share
Universal's gonna have over time.
And you can't get to a precise view of value.
You can get to an approximation.
And the key is to buy at a price
that represents a big discount to that approximation.
And that gets back to Ben Graham.
Ben Graham was about, what he called,
invented this concept of margin of safety, right?
You wanna buy a company at a price
that if you're wrong about what you think it's worth,
and it turns out to be worth 30% less,
you paid a deep enough discount to your estimate
that you're still okay.
It's about investing.
A big part of investing is not losing money.
If you can avoid losing money
and then have a few great hits,
you can do very, very well over time.
Well, music is interesting,
because yes, music's been around for a very long time,
but the way to make money from music has been evolving.
Like you mentioned streaming,
there's a big transition initiated by, I guess,
Napster that created Spotify,
of how you make money on music
with Apple and with all of this.
And the question is how well are companies
like UMG able to adjust to such transformations?
One, I could ask you about the future,
which is artificial intelligence
being able to generate music, for example.
There have been a lot of amazing advancements.
So do you have to also think about that?
When you close your eyes, all the things you think about,
are you imagining the possible ways
that the future's completely different from the present,
and how well this company will be able
to surf the wave of that?
Sure, and they've had to surf a lot of waves.
And actually the music business peaked the last time
in like the late 90s or 2000 timeframe.
And that really innovation, Napster, digitization of music
almost killed the industry.
And Universal really led an effort to save the industry
and actually made an early deal with Spotify
that enabled the industry to really recover.
And so by virtue of their market position
and their credibility and their willingness
to kind of adopt new technologies,
they've kept their position.
Now they of course had this huge advantage
because I think the Beatles are forever.
I think U2 is forever.
I think the Rolling Stones are forever.
So they had a nice base of assets that were important
and I think will forever be.
Forever's a long time, but again, there's enormous,
there are all kinds of risks in every business.
This is one that I think has a very high degree
of persistence, and I can't envision a world
where beyond streaming, in a sense.
Now you may have a Neuralink chip in your head
that instead of a phone, but the music
can come in a digitized kind of format.
You're gonna wanna have an infinite library
that you can walk around in your pocket or in your brain.
It's not gonna matter that much of the form factor.
The device changes.
It's not really that important,
whether it's Spotify or Apple or Amazon
that are the so-called DSPs or the providers.
I think the value's really gonna reside
in the content owners, and that's really the artists
and the label.
And I actually think AI's not going to be
the primary creator of music.
I think we're going to actually face the reality
that it's not that music has been around
for thousands of years, but musicians and music
has been around.
We actually care to know who's the musician
that created it, just like we wanna know
who's the artist, human artist,
that created a piece of art.
I totally agree, and I think if you think about it,
there's lots of other technologies and computers
that have been used to generate music over time,
but no one wants to, no one falls in love
with a computer-generated track, right?
And Taylor Swift, incredible music,
but it's also about the artist and her story
and her physical presence and the live experience.
I don't think you're gonna sit there
and someone's gonna put a computer up on stage
and then it's gonna play and people are gonna
get excited around it.
So I think AI is really gonna be a tool
to make artists better artists.
And I think, like a synthesizer, right?
Really created the opportunity for one man
to have an orchestra.
Maybe a bit of a threat to a percussionist,
but maybe not, maybe it drove even more demand
for the live experience.
Unless that computer has human-like sentience,
which I believe is a real possibility,
but then it's really, from a business perspective,
no different than a human.
If it has an identity that's basically fame
and influence and there'd be a robot, Taylor Swift,
and it doesn't really matter.
It's a copyrightable asset, I would think.
Yeah, not sure that's the world I'm excited about.
That's a different discussion.
The world is not gonna ask your permission
to become what it's becoming,
but you can still make money on it.
Presumably there'd be a capital system
and there'd be some laws under which,
which I believe AI systems will have rights
that are akin to human rights,
and we're gonna have to contend with what that means.
Well, there's sort of name and likeness rights
that have to be protected.
Now, can a name be attributed to a Tesla robot?
I don't know.
I think so.
I think it's quite obvious to me.
Okay, so those are more potential artists
for us to represent at Universal.
Exactly, exactly.
All right.
That's sort of one example.
Another example could be just the restaurant industry, right?
If you can look at businesses like a McDonald's, right?
It's whatever the company's like, a 1950 vintage business,
and here we are, it's 75 years later,
and you can kind of predict
what it's gonna look like over time.
And the menu's gonna adjust over time to consumer tastes,
and I think the hamburger and fries is probably forever.
The Beatles, the Rolling Stones,
the hamburger and fries are forever.
I was eating at Chipotle last night
as I was preparing these notes.
Thank you, thank you.
And yeah, it is one of my favorite places to eat.
You said it is a place that you eat.
You obviously also invest in it.
What do you get at Chipotle?
I tend to get a double chicken.
A bowl or a burrito?
I like the burrito,
but I generally try to order the bowl,
cut the carb part, and double chicken, guac, lettuce,
black beans.
And I'm more of a steak guy,
just putting that on the record.
What's the actual process you go through?
Literally, the process of figuring out
what the value of a company is.
How do you do the research?
Is it reading documents?
Is it talking to people?
How do you do it?
It's all of the above.
So Chipotle, what attracted us initially
is the stock price dropped by about 50%.
Great company, great concept.
Athletes love it, consumers love it.
Healthy, sustainable, fresh food made in front of your eyes.
And great, Steve Ells, the founder, did an amazing job.
But ultimately, the company's lacking some of the systems
and had a food safety issue.
Consumers got sick, almost killed the rent.
But the reality of the fast food quick service industry
is almost every fast food company
has had a food safety issue over time,
and the vast majority have survived.
And we said, look, such a great concept,
but their approach was far from ideal.
But we start with usually reading the SEC filings.
So the companies file a 10K or an annual report,
and they file these quarterly reports called 10Qs.
They have a proxy statement which describes
kind of the governance, the board structure.
Conference call transcripts are publicly available.
It's kind of very helpful to go back five years
and kind of learn the story.
You know, here's how management describes their business.
Here's what they say they're gonna do,
and then you can follow along to see what they do.
It's like a historical record of how competent
and truthful they are, and it's a very useful device.
And then, of course, looking at competitors
and thinking about what could dislodge this company.
And then we'll talk to, if it's an industry
we don't know well, we know the restaurant industry
really well, music industry,
we'll talk to people in the industry.
We'll try to understand the difference
between publishing and recorded music.
We'll look at the competitors.
We'll talk to, we'll read books.
I read a book about the music industry
or a couple books about the industry.
So it's a bit like a big research project.
And there are these so-called expert networks now,
and you can get pretty much anyone on the phone,
and they'll talk to you about an aspect of the industry
that you don't understand and want to learn more about.
Try to get a sense, you know, public filings of companies
generally give you a lot of information,
but not everything you want to know.
And you can learn more by talking to experts
about some of the industry dynamics, the personalities.
You want to get a sense of management.
I like watching, you know, podcasts.
If a CEO were to do a podcast or a YouTube interview,
you get a sense of the people.
So in the case of Chipotle, for example,
by the way, I could talk about Chipotle all day.
I just love it.
I love it.
I wish there was a sponsor.
I'll mention it to the CEO.
Don't make promises you can't keep, Bill.
I'm not making, can't.
Brian Nichols, a fantastic CEO.
He's not gonna spend $1
that he doesn't think is the company's best interest.
All right, all I want is free Chipotle.
Come on, now.
I was saying, oh.
And so you look at a company like Chipotle,
and then you see there's a difficult moment in its history,
like you said, that there was a food safety issue.
And then you say, okay, well,
I see a path where we can fix this.
And therefore, even though the price is low,
we can get it to where the price goes up to its value.
So the kind of business we're looking for
is sort of the kind of business
everyone should be looking for, right?
A great business.
It's got a long-term trajectory of growth
out into the, even beyond the foreseeable distance, right?
Those are the kind of businesses you wanna own.
You want businesses that generate a lot of cash.
You want businesses you can easily understand.
You want businesses with these sort of huge barriers to entry
where it's difficult for others to compete.
You want companies
that don't have to constantly raise capital.
And these are some of the great businesses in the world,
but people have figured out
that those are the great businesses.
So the problem is those companies
tend to have very high stock prices,
and the value is generally built into the price
you have to pay for the business.
So we can't earn the kind of returns
we wanna earn for investors by paying a really high price.
Price matters a lot.
You can buy the best business in the world,
and if you overpay,
you're not gonna earn particularly attractive returns.
So we get involved in cases where a great business
has kind of made a big mistake,
or you've a company that's kind of lost its way,
but it's recoverable.
We buy from shareholders who are disappointed,
who've lost confidence,
selling at a low price relative to what it's worth if fixed,
and then we try to be helpful in fixing the company.
You said that barriers to entry,
you said a lot of really interesting qualities of companies
very quickly in a sequence of statements
that took less than 10 seconds to say,
but some of them were fascinating,
all of them were fascinating.
So you said barriers to entry.
How do you know if there's a type of moat
protecting the competitors from stepping up to the plate?
The most difficult analysis to do as an investor is that,
is kind of figuring out how wide is the moat,
how much at risk is the business to disruption.
And we're in, I would say,
the greatest period of disruptability in history.
Technology, a couple of 19-year-olds
can leave whatever university,
or maybe they didn't go in the first place.
They can raise millions of dollars.
They can get access to infinite bandwidth storage.
They can contract with engineers
in low-cost markets around the world.
They could build a virtual company,
and they can disrupt businesses
that seem super established over time.
And then on top of that,
you have major companies
with multi-trillion dollar market caps
working to find profits wherever they can.
And so that's a dangerous world in a way to be an investor.
And so you have to find businesses
that it's hard to foresee a world
in which they get disrupted.
And the beauty of the restaurant business,
and we've actually,
our best track record is in restaurants.
We've never lost money.
We've only made a fortune,
interestingly, investing in restaurants.
A big part of it's a really simple business.
And if you get Chipotle right and you're at 100 stores,
it's not so hard to envision getting to 200 stores
and then getting to 500 stores, right?
And the key is maintaining the brand image,
growing intelligently, having the right systems.
And when you go from 100 stores to 3,500 stores,
you have to know what you're doing.
And there's a lot of complexity, right?
If you think about your local restaurant,
the family's working in the business,
they're watching the cash register,
and you can probably open another restaurant across town.
But there are very few restaurant operators
that own more than a few restaurants
and operate them successfully.
And the quick service business is about systems
and building a model that a stranger
who doesn't know the restaurant industry can come in
and enter the business and build a successful franchise.
Now, Chipotle is not a franchise company.
They actually own all their own stores.
But many of the most successful restaurant companies
are franchise models, like a Burger King, a McDonald's,
Tim Hortons, all these various brands, Popeyes.
And there it's about systems.
But the same systems apply whether you own all the stores,
and it's run by a big corporation,
or whether the owners of the restaurants
are sort of franchisees, local entrepreneurs.
So if the restaurant has scaled to a certain number,
that means they've figured out
some kind of system that works.
It's very difficult to develop that kind of system.
So that's a moat.
A moat is you get to a certain scale
and you do it successfully,
and the brand is now understood by the consumer.
What's interesting about Chipotle
is what they've achieved is difficult.
They're not buying frozen hamburgers getting shipped in.
They're buying fresh, sustainably sourced ingredients.
They're preparing food in the store.
That was a first.
The quality of the product at Chipotle is incredible.
It's the highest quality food you can get.
You can get a serious dinner for under 20 bucks
and eat really healthily and very high quality ingredients.
And that's just not available anywhere else.
And it's very hard to replicate
and to build those relationships
with farmers around the country.
It's a lot easier to make a deal
with one of the big, massive food producers
and buy your pork from them
than to buy from a whole bunch of farmers around the country.
And so that is a big moat for Chipotle,
very difficult to replicate.
And by the way, another company
I think you have a stake in is McDonald's?
No, we own a company called Restaurant Brands.
Restaurant Brands owns a number of quick service companies,
one of which is Burger King.
Burger King, okay.
Well, it's been a meme for a while,
but Burger King is great too, Wendy's, whatever.
But usually I go McDonald's.
I'll just eat burger patties.
I don't know if you knew you could do this,
but a burger patty at Burger King can do this.
McDonald's, it's actually way cheaper.
They'll just sell you the pat.
The pat, and it's cheap.
It's like $1.50 or $2 per patty.
And it's about 250 calories and it's just me.
And despite the criticism of memes out there,
that's pretty healthy stuff.
And so when I go,
the healthiest I feel is when I do carnivore.
It doesn't sound healthy, but if I eat only meat,
I feel really good.
I lose weight.
I have all this energy, it's crazy.
And when I'm traveling, the easiest way to get meat is that-
So you go to McDonald's, you order six patties?
Exactly.
So there's this sad meme of me just sitting alone in a car
when I'm traveling, just eating beef patties at McDonald's.
But I love it.
And you got to do what you love, what makes you happy.
And that's what makes me happy.
Okay, we should maybe have Burger King feature in it.
What about flame broiled?
What's with these fried burgers?
We've got to get you to Burger King, grilled burgers.
Wait, is this like fast food trash?
I didn't know, I don't know the details of how they're made.
I'm not, I don't have allegiance to McDonald's.
I think we got a chance to switch you to Burger King.
Great, we'll see.
I'm making so many deals today, it's wonderful.
Okay.
You were talking about most and this kind of reminds me
of Alphabet, the parent company.
Sure, it's a big position for us.
So it's interesting that you think
that maybe Alphabet fits some of these characteristics.
It's tricky to know with everything that's happening
in AI and I'm interviewing Sundar Pichai soon.
It's interesting that you think that there's a mo.
And it's also interesting to analyze it
because the consumer is just a fan of technology.
Why is Google still around?
Like they've been, it's not just the search engine
is doing all the basics of the business of search
really well, but they're doing all these other stuff.
So what's your analysis of Alphabet?
Why are you still positive about it?
Sure, so it's a business we've admired as a firm
for whatever, 15 years, but rarely got to a price
that we felt we could own it because again,
the expectations were so high and price really matters.
Really the sort of AI scare, I would call it.
Microsoft comes out with ChatGPT.
They do an amazing demonstration.
People like this most incredible product.
And Google, which had been working on AI even earlier,
obviously the Microsoft, Microsoft was behind in AI.
That was really their ChatGPT deal
that gave them a kind of a market presence.
And then Google does this fairly disastrous demonstration
of Bard and the world says, oh my God,
Google's fallen behind in AI, AI is the future,
stock gets crushed.
Google gets to a price around 15 times earnings,
which for a business of this quality
is an extremely, extremely low price.
And our view on Google, one way to think about it,
when a business becomes a verb,
that's usually a pretty good sign
about the mode around the business.
So you'd open your computer and you open your search
and very high percentage of the world
starts with a Google page in one line
where you type in your search.
Google advertising search YouTube franchise
is one of the most dominant franchises in the world,
very difficult to disrupt, extremely profitable.
The world is moving from offline advertising
to online advertising and that trend, I think, continues.
Why?
Because you can actually see where your ads work.
You know, they used to say about advertising,
spend a fortune and you just don't know
which 50% of it works, but you just sort of spend the money
because you know ultimately
that's gonna bring in the customer.
And now with online advertising,
you can see with granularity which dollars I'm spending,
when people click on the search term
and end up buying something and I pay,
it's a very high return on investment for the advertiser
and they really dominate that business.
Now AI, of course, is a risk.
If all of a sudden people start searching
or asking questions of chat GPT
and don't start with the Google search bar,
that's a risk to the company.
And so our view, based on work we had done
and talked to industry experts,
is that Google, if anything, had a,
by virtue of the investment they've made,
the time, the energy that people put into it,
we felt their AI capabilities were,
if anything, potentially greater than Microsoft Chat GPT
and that the market had overreacted.
And because Google, you know, is a big company,
global business, regulators scrutinize it
incredibly carefully,
they couldn't take some of the same liberties.
A startup like OpenAI did in releasing a product
and I think Google took a more cautious approach
in releasing an early version of Bard
in terms of its capabilities
and that let them mark the world
to believe that they were behind.
And we ultimately concluded, if any, they're tied or ahead
and you're paying nothing for that potential business
and they also have huge advantages by virtue.
You think of all the data Google has,
like the search data, all the various applications,
email and otherwise, and the Google suite of products,
it's an incredible data set.
So they have more training data
than pretty much any company in the world.
They have incredible engineers,
they have enormous financial resources.
So that was kind of the bet.
And we still think it's probably the cheapest
of the big seven companies in terms of the price
you're paying for the business
relative to its current earnings.
It also is a business that has a lot of potential
for efficiency.
Sometimes when you have this enormously profitable
dominant company, all of the technology companies
in the post March 20 world grew enormously
in terms of their teams and they probably overhired.
And so you've seen some, the Facebooks of the world
and now even Google starting to get a little more efficient
in terms of their operation.
So we paid a low multiple for the business.
One way to think about the value of the business
is the price you pay for the earnings.
Or alternatively, what's the yield?
If you flip over the price over the earnings,
it gives you kind of the yield of the business.
So a 15 multiple is about almost a 7.5% yield
and that earnings yield is growing over time
as the business grows.
That's compared to what you can earn
lending your money to the government, 4%.
That's a very attractive going in yield.
And then there's all kinds of what we call optionality
in all the various businesses and investments they've made
that are losing money.
They've got a cloud business that's growing very rapidly,
but they're investing basically 100% of the profits
from that business in growth.
So you're in that earnings number,
you're not seeing any earnings from the cloud business.
And they're one of the top cloud players.
So very interesting, generally well-managed company
with incredible assets and resources and dominance
and has no debt and it's got a ton of cash.
And so pretty good story.
Is there something fundamentally different about AI
that makes all of this more complicated,
which is the sort of the exponential possibilities
of the kinds of products and impact that AI could create
when you're looking at Meta, Microsoft, Alphabet, Google,
all of these companies, XAI, or maybe startups?
Like is there some more risk introduced
by the possibilities of AI?
Absolutely, that's a great question.
You know, business investing is about finding companies
that can't be disrupted.
AI is the ultimate disruptable asset or technology.
And that's what makes investing treacherous
is that you own a business that's enormously profitable,
management gets, if you will, fat and happy,
and then a new technology emerges
that just takes away all their profitability.
And AI is this incredibly powerful tool,
which is why every business is saying,
how can I use AI in my business to make us more profitable,
more successful, grow faster,
and also disrupt or protect ourself from the,
you know, the incomings.
You know, it's a bit like, you know,
Buffett talks about a great business,
like a castle surrounded by this really wide moat,
but you have all these barbarians trying to get in
and steal the princess.
And it happens, you know, Kodak, for example,
was an amazing, incredibly dominant company
until it disappeared.
Polaroid, you know, this incredible technology.
And that's why we have tended to stay away from companies
that are technology companies,
because technology companies, generally,
the world is such a dynamic place
that someone's always working on a better version.
And, you know, Kodak was caught up
in the analog film world.
And then the world changed.
Well, Google was pretty fat and happy
until tragedy fatigue came out.
How would you rate their ability to wake up,
lose weight, and be less happy
and aggressively rediscover their search for happiness?
I think you've seen a lot of that in the last year.
And I would say some combination of embarrassment and pride
are huge motivators for everyone from Sergey Brin,
you know, to the management of the company.
And Demis Hossab has thrown them into the picture
and all of DeepMind teams and the unification of teams
and like all the shakeups.
It was interesting to watch the chaos.
I love it.
I love it when everybody freaks out.
Like you said, partly embarrassment
and partly that competitive drive
that drives engineers is great.
I can't wait to see what,
they've diminished a lot of improvement in the product.
Let's see where it goes.
You mentioned management.
How do you analyze the governance structure
and the individual humans
that are the managers of a company?
So as I like to say,
incentives drive all human behavior.
And that certainly applies in the business world.
So understanding the people and what drives them
and what the actual financial
and other incentives of a business
are a very important part of the analysis
for investing in a company.
And you can learn a lot.
You know, I mentioned before,
one great way to learn about a business
is go back a decade and read everything
that management has written about the business
and see what they've done over time,
see what they've set.
Conference calls are actually relatively recent.
When I started in the business,
there weren't conference call transcripts.
Now you have a written record
of everything management has said
in response to questions from analysts
at conferences and otherwise.
And so just, you learn a lot about people
by listening to what they say,
how they answer questions,
and ultimately their track record
for doing what they say they're gonna do.
Do they under-promise and over-deliver?
Do they over-promise and under-deliver?
Do they say what they're gonna do?
Do they admit mistakes?
Do they build great teams?
Do people wanna come work for them?
Or are they able to retain their talent?
And then part of it is,
do they, how much are they running the business
for the benefit of the business?
How much are they running the business
for the benefit of themselves?
And that's kind of the analysis you do.
Are we talking about CEO, COO?
What does management mean?
How deep does it go?
Sure, so this very senior management matters enormously.
You know, we use the Chipotle example.
Steve Ells, great entrepreneur,
business got to a scale he really couldn't.
Run it, we recruited a guy named Brian,
helped a company recruit a guy named Brian Nickel,
and he was considered the best person
in the quick service industry.
He came in and completely rebuilt the company.
Actually, we moved the company.
Chipotle was moved to California.
And sometimes one way to redo the culture of a company
is just to move it geographically.
And then you can kind of reboot the business.
But a great leader has great followership.
Over the course of their career,
they'll have a team they've built
that will come follow them into the next opportunity.
But the key is, really,
the top person matters enormously.
Because, and then it's who they recruit.
You know, you recruit an A plus leader,
and they're gonna recruit other A type people.
If you're a B leader,
you're not gonna recruit any great talent beneath them.
You mentioned Warren Buffett.
You said you admire him as an investor.
What do you find most interesting and powerful
about his approach?
What aspects of his approach to investing
do you also practice?
Sure, so most of what I've learned
in the investment business,
I've learned from Warren Buffett.
He's been my great professor of this business.
My first book I read in the business
was the Ben Graham Intelligent Investor.
But fairly quickly, you get to learn about Warren Buffett.
And I started by reading the Berkshire Hathaway
annual reports.
And then I eventually got the Buffett partnership letters
that you can see,
which are an amazing read to go back to the mid 1950s
and read what he wrote to his limited partners
when he first started out
and just follow that trajectory over a long period of time.
So what's remarkable about him is one, duration, right?
He's still at it at 93.
Two, you know, it takes a very long term view.
But a big thing that you learn from him
is investing requires this incredible,
dispassionate, unemotional quality.
You have to be extremely economically rational,
which is not a basic,
it's not something you learn in the jungle.
I don't think it's something that, you know,
if you think about the, you know, surviving the jungle,
you know, the lion shows up, you know,
and everyone starts running, you run with them.
That does not work well in markets.
In fact, you generally have to do the opposite, right?
When the lemmings are running over the cliff,
that's the time where you're facing the other direction
and you're running the other direction,
i.e. you're stepping in,
you're buying stocks at really low prices.
You know, Buffett's been great at that
and great at teaching about what he calls temperament,
which is this sort of emotional kind of,
or unemotional quality that you need
to be able to dispassionately look at the world and say,
okay, is this a real risk?
Are people overreacting?
People tend to get excited about investments
when stocks are going up
and they get depressed when they're going down.
And I think that's just inherently human.
You have to reverse that.
You have to get excited when things get cheaper
and you gotta get concerned when things get more expensive.
You've been a part of some big battles,
some big losses, some big wins.
So it's been a rollercoaster.
So in terms of temperament, psychologically,
how do you not let that break you?
How do you maintain a calm demeanor
and avoid running with the lemmings?
I think it's something you kind of learn over time.
A key success factor is you want to have enough money
in the bank that you're going to survive,
regardless of what's going on with volatility in markets.
You know, people who, one, you shouldn't borrow money.
So if you borrow money, you own stocks on margin,
markets are going down,
and you have your livelihood at risk,
it's very difficult to be rational.
So a key is getting yourself to a place
where you're financially secure.
You're not going to lose your house, right?
That's kind of a key thing.
And then also doing your homework.
You know, stock prices,
stocks can trade at any price in the short term.
And if you know what a business is worth
and you understand the management,
you know it extremely well,
it's not nearly as,
it doesn't bother you when a stock price goes down
or it has much less impact on you,
because you know, again, as Mr. Graham said,
you know, the short term, the market's a voting machine.
You have a bunch of lemmings voting one direction.
That's concerning.
But if it's a great business,
doesn't have a lot of debt,
and people are going to just listen to more music next year
than this year, you know you're going to do well.
So it's a bit,
some combination of being personally secure
and also just knowing what you own.
And over time, you build calluses, I would say.
So psychologically, just as a human being,
speaking of lines and gazelles and all this kind of stuff,
is there some,
is it as simple as just being financially secure?
Is there some just human qualities
that you have to be born with slash develop?
I think so.
I think, no, I'm a pretty emotional person, I would say,
or feel pretty strong emotions, but not in investing.
I'm remarkably immune to kind of volatility.
And that's a big advantage.
And it took some time for me to develop that.
So you weren't born with that, you think?
No.
So being emotional, do you want to respond to volatility?
Yeah, and you just, it's a bit,
again, you can learn a lot from other people's experience.
It's one of the few businesses
where you can learn an enormous amount
by reading about other periods in history,
following Buffett's career, the mistakes he made.
If you're investing a lot of capital,
every one of your mistakes is gonna be big, right?
So we've made big mistakes.
The good news is that the vast majority
of things we've done have worked out really well.
And so that also gives you confidence over time.
But because we make very few investments,
and we own eight things today,
or seven companies of that matter,
if we get one wrong, it's gonna be big news.
And so the other nature of our business
you have to be comfortable with
is a lot of public scrutiny, a lot of public criticism,
and that requires some experience, I'll call it that.
I think we'll talk about some of that.
Financially secure is something I believe also recommend
for even just everyday investors.
Is there some general advice
from the things you've been talking about
that applies to everyday investors?
Sure.
So never invest money you can't afford to lose,
where it would, if you'd lost this money,
you'd lose your house, et cetera.
So having, being in a place where you're investing money
that you don't care about the price in the short term.
It's money for your retirement,
and you take a really long-term view.
I think that's key.
Never investing where you borrow money
against your securities.
You know, the markets offer you the opportunity
to leverage your investment.
And in most worlds, you'll be okay.
Except if, you know, there's a financial crisis,
or a nuclear device gets detonated, God forbid,
somewhere in the world.
Or there's an unexpected war,
or someone kills a leader unexpectedly.
Things happen that can change the course of history,
and markets react very negatively to those kinds of events.
And you can own the greatest business in the world,
trading for $100 a share, and next moment it could be 50.
So as long as you don't borrow against securities,
you own really high-quality businesses,
and it's not money that you need in the short term,
then you can actually be thoughtful about it.
And that is a huge advantage.
The vast majority of investors, it seems,
tend to be the ones that panic in the downturns,
get over-related when markets are doing well.
So be able to think long-term,
and be sufficiently financially secure
such that you can afford to think long-term.
Now, Buffett is the ultimate long-term thinker.
And just the decisions he makes,
the consistency of the decisions he's made over time,
and fitting into that sort of long-term framework,
is a very educational, let's put it that way,
for learning about this business.
So you mentioned eight companies,
but what do you think about mutual funds
for everyday investors that diversify
across a larger number of companies?
I think there are very few mutual funds.
There are thousands and thousands of mutual funds.
There are very few that earn their keep
in terms of the fees they charge.
They tend to be too diversified and too short-term.
And you're often much better off just buying an index fund.
And many of them perform,
if you look carefully at their portfolios,
they're not so different from the underlying index itself,
and you tend to pay a much higher fee.
Now, all of that being said,
there's some very talented mutual fund managers.
A guy named Will Danoff at Fidelity
has had a great record over a long period of time.
A famous Peter Lynch.
Ron Baron, another great long-term growth stock investor.
So there's some great mutual funds.
But I put them in the handful versus the thousands.
And if you're in the thousands,
I'd rather someone bought just an index fund, basically.
Yeah, index funds.
But what would be the leap for an everyday investor
to go to investing in a small number of companies?
Two, three, four, five companies.
I even recommend for individual investors
to invest in a dozen companies.
You don't get that much more benefit of diversification
going from a dozen to 25, or even 50.
Most of the benefits of diversification come in the first,
call it 10 or 12.
And if you're investing in businesses
that don't have a lot of debt,
they're businesses that you can understand yourself.
You understand, actually individual investors
did a much better job analyzing Tesla
than the so-called professional investors or analysts,
the vast majority of them.
So if it's a business you understand,
if you bought a Tesla, you understand the product
and its appeal to consumers,
it's a good place to start when you're analyzing a company.
So I would invest in things you can understand.
That's kind of a key.
You like Chipotle?
You understand why they're successful.
You can go there every week and you can monitor,
is anything changing?
How these new kind of, how's chicken al pastor?
Is that a good upgrade from the basic chicken?
The drink offering's improving, the store is clean.
I think you should invest in companies
you really understand, simple businesses
where you can predict with a high degree of confidence
what it's gonna look like over time.
And if you do that in a not particularly concentrated
fashion and you don't borrow money against your securities,
you'll probably do much better
than your typical mutual fund.
Yeah, it's interesting.
Consumers that love a thing are actually good analysts
of that thing, or I guess a good starting point.
By the way, there's much more information available today.
When I was first investing, literally we had people
faxing us documents from the SEC filings in Washington, DC.
Now everything's available online.
Conference call transcripts are free.
You have AI, you have unlimited data
and data and all kinds of message boards and Reddit forums
and things where people are sharing advice.
And everyone has their own,
by virtue of their career or experience,
they'll know about an industry or a business.
And that gives them, I would take advantage
of your own competitive advantages.
I'm just afraid if I invest in Chipotle,
I'll be analyzing every little change of menu
from a financial perspective and just be very critical.
If it's gonna affect your experience,
I wouldn't buy the stock.
Yeah, I should also say that I am somebody
that emotionally does respond to volatility,
which is why I've never bought index funds.
And I just noticed myself psychologically being affected
by the ups and downs of the market.
I wanna tune out because if I'm at all tuned in,
it has a negative impact on my life.
Yeah, that's really important.
Can you explain what activist investing is?
You've been talking about investing
and then looking at companies when they're struggling,
stepping in and reconfiguring things within that company
and helping it become great.
So that's part of it, but let's just zoom out.
What's this idea of activist investing?
I think recently, in the last couple of days,
I read an article saying that more than 50%
of the capital in the world today
invest in the stock markets, passive, indexed money.
And that's the most passive form, right?
So if you think about an index fund,
a machine buys a fixed set of securities
in certain proportion.
There's no human judgment at all,
and there's no real person behind it, in a way.
They never take steps to improve a business.
They just quietly own securities.
What we do is we invest our capital in a handful of things.
We get to know them really, really well
because you're gonna put 20% of your assets in something,
you need to know it really well.
But once you become a big holder,
and if you've got some thoughts
on how to make a business more valuable,
you can do more than just be a passive investor.
So our strategy is built upon finding great companies,
in some cases, that have lost their way,
and then helping them succeed.
And we can do that with ideas from outside the boardroom.
Sometimes we take a seat on a board, or more than one,
and we work with the best management teams in the world
to help these businesses succeed.
So when I first went into this business,
no one knew who we were, and we didn't have that much money.
And so to influence what was, to us, a big company,
we had to make a fair bit more noise, right?
So we would buy a stake, we'd announce it publicly,
we'd attempt to engage with management.
The first activist investment we made
at Pershing Square was Wendy's.
I couldn't get the CEO to ever return my call.
Didn't return my call.
So we, actually in that case, our idea was Wendy's
owned a company called Tim Hortons,
which was this coffee donut chain.
And you could buy Wendy's for basically $5 billion,
and they owned 100% of Tim Hortons,
which itself was worth more than $5 billion.
So you could literally buy Wendy's,
separate Tim Hortons, and get Wendy's for negative value.
That seemed like a pretty good opportunity,
even though the business wasn't doing that well.
So we bought the stake, called the CEO,
couldn't get a meeting, nothing.
So we hired actually Blackstone,
which was, at that time, had an investment bank,
and we hired them to do what's called a fairness opinion
of what Wendy's would be worth if they followed our advice.
And they agreed to do it, paid them a fee for it,
and then we mailed in a letter
with a copy of the fairness opinion
saying Wendy's would basically be worth 80% more
if they did what we said,
and six weeks later they did what we said.
So that's activism, at least an early form of activism.
With that kind of under our belt,
we had a little more credibility,
and now we started to take things, stakes in companies.
The media would pay attention,
so the media became kind of an important partner.
And some combination of shame, embarrassment,
and opportunity motivated management teams
to do the right thing.
And then beyond that, there's certain steps you can take
if management's recalcitrant
and the shareholders are on your side.
But it's a bit like running for office.
You've got to get all the constituents
to support you and your ideas,
and if they support you and your ideas,
you can overthrow, if you will, the board of a company,
you bring in new talent
and then take over the management of a business.
And that's the most extreme form of activism.
So that's kind of the early days, what we did.
And a lot of the early things that we did were
call it what we call sort of like
investment banking activism,
where we'd go in and recommend something
a good investment bank would have recommended,
and if they do it, we make a bunch of money,
and then we moved on to the next one.
And then we realized an investment
in a company called General Growth
was the first time we took a board seat on a company.
And there was some financial restructuring
and also an opportunity to improve the operations
of the business, sit on the board of a company,
and that was one of the best investments we ever made.
And we said, okay, we can do more
than just be an outside, the boardroom investor,
and we can get involved in helping select
the right management teams
and helping guide the right management teams.
And then we've done that over years.
And then I would say the last seven years,
we haven't had to be an activist.
An activist is generally someone who's outside,
banging on the door trying to get in.
We've sort of built enough credibility
that they open the door, and they say,
hey, Bill, what ideas do you have?
So welcome, would you like to join the board?
We're treated differently today
than we were in the beginning.
And that is, I would say, some people might just call it
being an engaged owner.
By the way, that's the way investing was done
in the Andrew Carnegie, J.P. Morgan days 150 years ago, right?
You had these iconic business leaders
that would own 20% of U.S. steel,
and when things would go wrong,
they'd replace the board and the management and fix them.
And over time, we went to a world where mutual funds
were created like in the 1920s, 30s,
index funds with Vanguard and others,
and that all these controlling shareholders
gave their stock to society or their children
and multiple generations, and there were no longer
controlling owners of businesses or very few.
And that led to underperformance
and the opportunity for activists over time.
And what activism has done,
and I think we've helped lead this movement,
is it restored the balance of power
between the owners of the business
and the managements of the company.
And that's been a very good thing
for the performance of the U.S. stock market, actually.
So the owners meaning the shareholders.
Yes.
There's a more direct channel of communication
with activists investing between the shareholders
and the people running the company.
Yes, so activists generally never own
more than five or 10% of a business,
so they don't have control.
So the way they get influence
is they have to convince the other,
but they have to get to a majority
of the other shareholders to support them.
And if they can get that kind of support,
they can behave almost like a controlling shareholder,
and that's how it works.
So the running of a company is,
according to Bill Ackland, is more democratic now.
It is, it is.
But you need some thought leaders.
So activists are kind of thought leaders,
because they can spend the time and the money.
A retail investor that owns 1,000 shares
doesn't have the resources or the time.
They got a day job.
Whereas an activist's day job
is finding the handful of things where there are opportunities.
So on average, is it good to have
such an engaged, powerful, influential investor
helping control, direct the direction of a company?
It depends who that investor is,
but generally I think it's a good thing.
And that's why, you know,
one of the problems with being CEO of a company today
and having a very diversified shareholder base
is the kind of short-term, long-term balance.
And you have investors that have all different interests
in terms of what they want to achieve
and when they want it achieved.
And a CEO of a new company,
a new CEO of an old company, let's say,
hasn't had the chance to develop the credibility
to make the kind of longer-term decisions
and can be stuck in a cycle of being judged
on a quarterly basis.
And a business, the best businesses are forever assets.
And decisions you make now have impact
three, four, or five years from now.
In order to make, and sometimes there are decisions you make
that have the effect of reducing the earnings of a company
in the short-term, because in the long-term,
it's gonna make the business much more valuable.
But sometimes it's hard to have that kind of credibility
when you're a new CEO of a company.
So when you have a major owner
that's respected by other shareholders
sitting on the board saying,
hey, the CEO is doing the right thing
and making this expensive investment in a new factory,
we're spending more money on R&D
because we're developing something
that's gonna pay off over time.
That large owner on the board
can help buy the time necessary
for management to behave in a longer-term way.
And that's, I think, good for all the shareholders.
So that's the good story, but can it get bad?
Can you have a CEO who is a visionary
and sees the long-term future of a company
and an investor come in and have very selfish interest
in just making more money in the short-term
and therefore destroy and manipulate
the opinions of the shareholders
and other people on the board
in order to sink the company,
maybe increase the price,
but destroy the possibility of long-term value?
It could theoretically happen.
But again, the activist in your example,
generally doesn't own a lot of stock.
The shareholder bases today,
the biggest shareholders are these index funds
that are forever, right?
The BlackRock, Vanguard, State Street,
their ownership stakes are just, at this point,
only growing because of the inflows of capital
they have from shareholders.
So they have to think, or they should think,
very long-term, and they're gonna be very skeptical
of someone coming in with a short-term idea
that drives the stock price up in the next six months,
but impairs the company's long-term ability to compete.
And basically, that ownership group
prevents this kind of activity from really happening.
So people are generally skeptical
of short-term activist investors.
Yes, and they're very few.
I don't really know any short-term activist investors.
That's a hopeful message.
Not ones with credibility.
You mentioned general growth.
I read somewhere called arguably
one of the best hedge fund trades of all time.
So I guess it went from $60 million to over $3 billion.
It was a good one, but it wasn't a trade.
I wouldn't describe it as a trade.
A trade is something you buy and you flip.
This is something where we made the investment
initially in November of 2008.
And we still own a company we spun off of general growth,
and it's now 15 years later.
So can you describe what went into making that decision
to actually increasing the value of the company?
Sure, so this was at the time of the financial crisis,
circa November 2008.
What, real estate's always been a kind of sector
that I've been interested in.
I began my career in the real estate business
working for my dad actually,
arranging mortgages for real estate developers.
So I have kind of deep ties and interest in the business.
And general growth was the second largest
shopping mall company in the country.
Simon Properties, many people have heard of.
General growth was number two.
They owned some of the best malls in the country.
And at that time, people thought of shopping malls
as these non-disruptible things.
Again, we talk about disruption.
Malls have been disrupted in many ways.
And general growth stock, general growth,
the company, the CFO in particular,
was very aggressive in the way that he borrowed money.
And he borrowed money from a kind of Wall Street,
not long-term mortgages,
but generally relatively short-term mortgages.
It was pretty aggressive.
As the value went up,
he would borrow more and more against the assets,
and that helped the short-term results of the business.
The problem was, during the financial crisis,
the market for what's called CMBS,
commercial mortgage backed securities, basically shut.
And the company, because its debt was relatively short-term,
had a lot of big maturities coming up
that they had no ability to refinance.
And the market said, oh my God,
the lenders are gonna foreclose
and the shareholders are gonna get wiped,
the company's gonna go bankrupt, they're gonna get wiped out.
The stock went from $63 a share to 34 cents.
And there was a family, the Bucks bound family,
owned I think about 25% of the company,
and they had a $5 billion of stock
that was worth $25 million or something
by the time we bought a stake in the business.
And what interested me was,
I thought the assets were worth substantially
more than the liabilities.
The company had $27 billion of debt
and had a $100 million value of the equity,
down from like $20 billion, okay?
And one, that's sort of an interesting place to start
with a stock down 99%.
But the fundamental drivers of the mall business
are occupancy, how occupied are the malls.
Occupancy was up year on year,
between 07 and 08, interestingly.
Net operating income, which is kind of a measure
of cash flow from the malls, that was up year on year.
So kind of the underlying fundamentals were doing fine.
The only problem they had is they had billions of dollars
of debt that they had to repay, they couldn't repay.
And if you kind of examine the bankruptcy code,
it's precisely designed for a situation like this,
where it's kind of this resting place you can go
to kind of restructure your business.
Now, the problem was that every other company
that had gone bankrupt, the shareholders got wiped out.
And so the market's seeing, every previous example,
the shareholders get wiped out,
the assumption is the stock's gonna go to zero.
But that's not what the bankruptcy code says.
What the bankruptcy code says is that the value
gets apportioned based on value.
And if you could prove to a judge that there was,
the assets worth more than the liabilities,
then the shareholders actually get
to keep their investment in the company.
And that was the bet we made.
And so we stepped into the market,
we bought 25% of the company in the open market for,
we had to pay up, it started out at 34 cents.
I think there were 300 million shares.
So it was at $100 million value.
By the time we were done, we paid an average of,
we paid 60 million for 25% of the business.
So about $240 million for the equity of the company.
And then we had to get on the board to convince
the directors the right thing to do.
And the board was in complete panic.
Didn't know what to do.
Spending a ton of money on advisors.
And I was a shareholder activist,
four years into Pershing Square.
And no one had any idea what we were doing.
They thought we were crazy.
Every day we'd go into the market,
we'd buy this penny stock,
and we'd file what's called a 13D,
every 1% increase in our stake.
And people just thought we were crazy.
We're buying stock in a company that's gonna go bankrupt.
Bill, you're gonna lose all your money.
You know, run, okay?
And I said, well wait, Bankruptcy Code says
that if there's more asset value than liabilities,
we should be fine.
And the key moment, if you're looking for fun moments,
is there's a woman named Maddie Buxbaum,
who was from the Buxbaum family.
And her cousin, John, was chairman of the board,
CEO of the company.
And I said, as she calls me,
after we disclose our stake in the company,
she's like, Billy Ackman,
I'm really glad to see you here.
And I met her, like, I don't think it was a date,
but I kind of met her in a social context
when I was like 25 or something.
And she said, look, I'm really glad to see you here,
and if there's anything I can do to help you, call me.
I said, sure.
We kept trying to get on the board of the company.
They wouldn't invite us on.
Couldn't really run a proxy contest,
not with a company going bankrupt.
And their advisors actually were Goldman Sachs,
and they're like, you don't want the fox in the henhouse.
And they were listening to their advisors.
And so I called Maddie up, and I said,
Maddie, I need to get on the board of the company to help.
And she says, you know what?
I will call my cousin, and I'll get it done.
Like, you know, she calls back a few hours later,
you'll be going onto the board.
I don't know what she said to her cousin.
Well, she was convincing.
Next thing you know,
I'm invited to on the board of the company,
and the board is talking about
the old equity of general growth.
Old equity is what you talk about
that the shareholders are getting wiped out.
I said, no, no, no, this board represents
the current equity of the company.
And I'm a major shareholder.
John's a major shareholder.
There's plenty of asset value here.
This company should be able to be restructured
for the benefit of shareholders.
And we led a restructuring for the benefit of shareholders.
And it took, let's say, eight months.
And the company emerged from chapter 11.
We made an incremental investment into the company.
And the shareholders kept
the vast majority of their investment.
All the creditors got their, you know,
face amount of their investment,
par plus accrued interest.
And it was a great outcome.
All the employees kept their jobs.
The mall stayed open.
There was no liquidation.
The bankruptcy system worked the way it should.
You know, I was in court, you know, all the time.
And the first meeting with the judge,
the judge was like, look, this would never have happened
were it not for a financial crisis.
And once the judge said that,
I knew we were gonna be fine
because the company had really
not done anything fundamentally wrong,
maybe a little too aggressive in how they borrowed money.
And stock went from 34 cents to $31 a share.
And actually, fun little anecdote,
we made a lot of people a lot of money
who followed us into it.
I got a lot of nice thank you notes,
which you get on occasion in this business, believe it or not.
And then one day I get a voicemail.
This is when there was something called voicemail,
probably a few years later.
And it's a guy with a very thick Jamaican accent
leaving a message for Bill Ackman.
So, you know, I return all my calls, call the guy back.
He's like, hi, it's Bill Ackman.
I'm just returning your call.
He's like, oh, Mr. Ackman,
thank you so much for calling me.
I said, oh, how can I help?
He says, I wanted to thank you.
I said, what do you mean?
He said, I saw you on CNBC a couple years ago
and you were talking about this general growth.
And the stock, I said, where was the stock at the time?
He said, it's 60 cents or something like this.
And I bought a lot of stock.
And I'm like, well, how much did you invest?
Oh, I invest all of my money in the company.
And he was a New York City taxi driver
and he invested like $50,000 or something like this
at 60 cents a share.
And he was still holding it.
And he went into retirement and he made, you know,
50 times his money.
And, you know, those are the moments
that you feel pretty good about investing.
What gave you confidence through that?
When it's a penny stock and I'm sure you were getting
a lot of naysayers and people saying that this is crazy.
It's the same thing.
You just do the work.
Like we got a lot of pushback from our investors actually,
because we had never invested in a bankrupt company before.
It's a field called distressed investing
and they're dedicated distressed investors.
And we weren't considered one of them.
So Bill, what are you doing?
You don't know anything about distressed investing.
You don't know anything about bankruptcy investing.
But I can read.
I can read.
And he learned.
And I learned.
And sometimes it's very helpful not to be a practitioner,
an expert in something,
because you get used to the conventional wisdom.
And so we just, you know,
abstractly read the step back and look at the facts.
And it was just a really interesting setup
for one of the best investments we ever made.
How hard is it to learn some of the legal aspects of this?
Like you mentioned bankruptcy code.
Like I imagine it's very sort of dense language
and dense ideas and the loopholes
and all that kind of stuff.
Like if you're just stepping in
and you've never done distressed investing,
how hard is it to figure out?
It's not that hard.
No, it's not that hard.
Okay.
I mean, I literally read a book on distressed investing.
Okay.
Ben Branch or something, something on distressed invest.
So you were able to pick up the intuition from that,
just all the basic skills involved,
the basic facts to know, all that kind of stuff.
Most of the world's knowledge
is already been written somewhere.
You just got to read the right books.
And also had great lawyers.
You know, built up some great relationships.
We work with Sullivan and Cromwell
and the lawyer there named Joe Schenker,
who I met earlier in my career.
Pershing Square is actually my second act
in the hedge fund business.
I started a fund called Gotham Partners when I was 26.
One of my early investments
was a company called Rockefeller Center Properties
that was heading for bankruptcy.
And the lawyer on the other side representing Goldman Sachs
was a guy named Joe Schenker.
So he was like an obvious phone call
because he had yet another real estate bankruptcy.
And that one, we did very well,
but I missed the big opportunity.
And I suffered severe psychological torture
every time I walked by Rockefeller Center
because we could have made,
we knew more about that property than anyone else,
but I knew less about deal making
and didn't have the resources.
And I was 28 years old or 27.
And they hired a better lawyer than we did.
And they outsmarted us on that one in a way.
So I said, okay, I'm gonna go hire this guy
the next time around.
Okay, we'll probably talk about Rockefeller Center
and some failures.
But first you said Fox in the henhouse,
something that the board and the chairman
were worried about.
Why would they call you a Fox?
So you keep saying activist investing
is nothing to worry about.
It's always good, mostly good.
But that expression applied in this context,
they were still worried about that.
And so maybe there's a million questions here,
first of all, what is the process
of getting on the board look like?
So a board can always admit a member at any time
in their discretion for a US company.
Maybe there's some jurisdiction
where you need to shareholder vote,
but in most cases, a board can vote on any director
that they want.
If the board doesn't invite you to the party,
you have to apply to be a member in effect.
And that process is called,
basically it's the process of ultimately running
a slate for a meeting where you propose a number,
any shareholder can propose to be on a board of a company
if they own one share of stock in the business.
And getting your name in the company's,
in the materials they send to shareholders,
those rules were written in a way
that were very unfavorable and very difficult
to get in the door.
And those rules have been changed very recently
where the company now has to include a candidate,
really all the candidates in the materials
they send to shareholders
so the shareholders pick the best ones.
When we applied, or when we applied,
when we ran proxy contests in the past,
that was not the case.
And so you have to spend a lot of money,
mostly mailing fees and all kinds of other legal
and other expenses to let everyone know you're running,
like running a political campaign.
And then you gotta run around and meet
with the big shareholders,
fly around the country, explain your case to them.
And then there's a shareholder meeting.
And if you get a majority of the votes, you get on.
What's this proxy contest slash battle idea?
The battle comes when they don't want you gone.
And a lot of that has to do with, I would say, pride.
Normal human kind of stuff.
A lot of times, a board of an underperforming company
doesn't want to admit that they've underperformed.
And boards of directors 20 years ago
when we started Pershing Square were pretty cushy jobs.
Sit on a board of a company,
play golf with the CEO at nice golf courses.
You make a few hundred thousand dollars a year
to go to four meetings.
It was kind of a rubber stamp world where boards,
at the end of the day, the CEO really ran the show.
Once shareholders could actually dislodge board members
and they could lose their seats,
and that's really the rise of shareholder activism,
boards started taking their responsibilities
much more seriously because directors are typically,
in many cases, they're retired CEOs.
This is kind of how they're making a living
in the later part of their career.
They sit on four boards.
They collect a million, a million and a half dollars a year
in director's fees.
If they get thrown off the board by the shareholders,
that's embarrassing, obviously,
and it affects their ability to get on other boards.
So again, incentives, as I said earlier,
drive all human behavior.
The incentives, directors,
they want to preserve their board seats.
So if you have a director,
now the directors on boards serve in various roles.
Some of the most vulnerable ones are ones who, for example,
chair a compensation committee,
and if they put in a bad plan or they overpaid management,
they're subject to attack by shareholders.
But these contests are not dissimilar to political contests,
where there's mudslinging
and the other side puts out false information about you,
you have to respond,
and they're spending the shareholders' money,
so they have sort of unlimited resources,
and you're spending your and your investors' money
when you're a small firm, finite resources,
so they can outspend you, they can sue you,
they can try to jigger the mechanics
in such a way that you're gonna lose.
There's some unfortunate stuff that's happened in the past,
manipulative stuff.
So also some stuff that's public,
like in the press and all this kind of stuff?
Oh, of course, there'll be articles about Campbell,
the dirty days where they would go through your trash
and make sure that you're not sleeping around
and things like this, but that's okay.
I'm subject to, I can survive extreme scrutiny
because I've been through this for a long time.
So you're saying the fat and happy hens
can get very wolf-like when the fox is trying to break in?
Is this how we extend the metaphor?
Well, the fox is a threat to the hens.
Yeah, but you've just,
the charismatic fox just explained to me
why the fox is good for everybody in the henhouse.
At the end of the day, it's actually very good on a board
to have someone, there are many examples over time
and some handful of high-profile ones
where the board fought tooth and nail
to keep the activists off the board.
And then once the activists got on the board,
and they said, you know, the guy's not so bad after all,
the shareholders voted him on, he's got some decent ideas,
and let's all work together to have this work out.
And so there are very few cases where after the contest,
when the, and by the way,
sometimes you have to replace the entire board.
We've done that, but in most cases,
you get a couple of seats on the board,
and it's just, you know, you wanna build a board
comprised of diverse points of view,
and that's how you get to the truth.
What was the most dramatic battle for the board
that you have been a part of?
The Canadian Pacific proxy contest.
So Canadian Pacific was like,
considered the most iconic company in Canada.
It literally built the country,
because the rail that got built over Canada
is what united the various provinces into a country.
And then over time, because the railroad business
is a pretty good business, they built a ton of hotels,
they owned a lot of real estate,
and it became this massive conglomerate,
but it was horribly mismanaged for decades.
By the time we got involved,
it was by far the worst-run railroad in North America.
They had the lowest profit margins,
they had the lowest growth rate.
Every quarter management would make excuses,
generally about the weather,
as to why they underperform, versus,
and there there's a direct competitor,
a company called Canadian National,
as the rail goes right across the country.
And Canadian Pacific would constantly be complaining
about the weather.
Basically, you know, same country, same regions,
tracks weren't that far apart.
But it was a really important company,
and being on this board was like an honorary thing.
And everyone on the board was an icon of Canada.
You know, the chairman of the Royal Bank of Canada,
you know, the head of the most important grain,
privately-held grain company,
the, you know, sort of an important collection of,
you know, big-time Canadian executives.
Here we were, you know, this is probably about 13 years ago,
and, you know, still maybe 44-year-old from New York,
not Canadian, basically saying,
this is the worst-run railroad in North America.
And we bought 12% of the railroad at a really low price,
and we brought with us, to our first meeting,
the greatest railroader ever,
a guy named Hunter Harrison,
who had turned around Canadian National.
So we'd like, okay, we've got a great asset,
we've got the greatest railroad CEO of all time,
he's come out of retirement to step in and run the railroad,
and we brought him to the first meeting,
and they wouldn't even meet with him.
And they wouldn't, certainly wouldn't consider hiring him.
And that led us to a proxy contest.
And this is where the engine starts churning,
just to figure out how this contest could be won.
So what's involved in a...
Well, the key is we had to, one,
come up with a group of directors
who would be willing to step into a battle.
And we didn't want a bunch of New York directors,
or even American directors, we wanted Canadians.
The problem was this was the most iconic company in Canada,
and we wanted high-profile people.
So we talked to all the high-profile people in Canada.
Every one of them would say, Bill, you're entirely right.
This thing is the worst railroad, it needs to be fixed.
But I see John at the club.
I see him at the Toronto club.
I can't do this, but you're totally right.
And we had to, and that was the concern,
because you have to file your materials by a certain day,
you got to put together a slate.
We needed a big slate, because we knew
that we had to replace basically all the directors.
And then one, I spoke to a guy
who was one of the wealthiest guys in Canada,
who was on the board at one point in time.
And he said, Bill, I have an idea for you.
There's this woman, Rebecca McDonald.
Why don't you give her a call?
And I called Rebecca, and she was the first woman
to take a company public in Canada as CEO.
And she was a kind of anti-establishment,
not afraid to take on anything kind of person.
And I called her, we had a great conversation.
And she was in the Dominican Republic at her house,
and I flew down to see her.
And she said, yeah, I'm all in.
And actually, once we got her,
that enabled us to get others.
And then we put together our slate.
And we had some pretty interesting dialogue with the company.
They tried to embarrass us all the time.
In the press, publicly, what are we talking about?
Press, publicly.
At one point, I wrote an email saying,
look, let's come to peace on this thing.
But if we don't, you're really forcing my hand,
and we're gonna have to rent the largest hall in Toronto
and invite all the shareholders,
and it's gonna be embarrassing for management.
And I made reference to some nuclear winter,
let's not have it be a nuclear winter.
And they thought they'd embarrass me by releasing the email,
but it only inspired us.
And we rented the largest hall in Canada,
and we put up a presentation walking through,
here's Canadian National, here's Canadian Pacific,
here's what they said, here's what they did.
And we had Hunter get up,
who's this incredibly charismatic guy from Tennessee,
and amazing, you know, he's like a lion, okay?
Incredibly deep voice, unbelievable track record,
incredibly respected guy.
It's like getting Michael Jordan to come out of retirement
and come and run the company.
And Hunter was incredible, and other, Paul Al,
other members of my team were, you know, super engaged.
And the board, you know, Canadians are known to be nice.
So one of the problems we had
is shareholders would never tell management
or the board that they were losing.
It was not until the night before the meeting
when the vote came in that management realized they lost.
We got 99% of the vote, and they offered us a deal.
When they begged us to take a deal,
they said, look, we'll resign tonight
so that we don't have to come to the meeting tomorrow.
That's how embarrassed they were.
That was kind of an interesting one.
So in both this proxy battle and the company itself,
this was one of your more successful investments.
It was.
I mean, the stock's up about 10 times,
and it's an industrial company.
It's a railroad.
It's not like a growth, like it's not Google.
So it's a great story.
And the company's now run by a guy named Keith Creel.
And Keith, it was Hunter's protege,
and in many ways, he's actually better than Hunter.
He's doing an incredible job.
And we're, the sad part here is we made it,
we did very well.
We tripled our money over several years,
and then I went through a very challenging period
because of a couple bad investments,
and we had to sell our Canadian Pacific
to pay, to raise capital,
to pay for investors who were leaving.
But we had another opportunity to buy it back
in the last couple of years.
And so we're now, again, a major owner of the company.
But had we held on to original stock,
it would have been epic, if you will.
So on this one, you were right.
Yes.
And I read an article by you,
and there's many articles about you.
I read an article that said, Bill is often right,
but you approach it with a scorched earth approach
that can often do more, sort of, can do damage.
I haven't read the often right article,
but the good news is we are often right.
And I say we because we're a team.
A small team, but a fortunately very successful one.
So our batting average as investors is extremely high.
And the good news is our record's totally public.
You can see everything we've ever done.
But the press doesn't generally write
about the success stories.
They write about the failures.
And so we've had some epic failures, big losses.
Good news is they've been a tiny minority of the cases.
Now, no one likes to lose money.
It's even worse to lose other people's money.
And I've done that occasionally.
The good news is if you stuck with us,
you've done very well over a long time.
On a small tangent since we were talking about boards,
did you get a chance to see what happened
with the OpenAI board?
I'm talking to Sam Waltman soon.
Is there any insight you have,
just maybe lessons you draw from these kinds of events,
especially with an AI technology company,
such dramatic things happening?
Yeah, that was an incredible story.
Look, governance really matters.
And the governance structure of OpenAI,
I think, leaves something to be desired.
I think Sam's point was this, and maybe Elon Musk's point,
originally set up as a nonprofit.
And it reminds me, actually, I invested in a nonprofit
run by a former Facebook founder
where he was gonna create a Facebook-like entity
for nonprofits to promote goodness in the world.
And the problem was he couldn't hire the talent he wanted
because he couldn't grant stock options.
He couldn't pay market salaries.
And ultimately, he ended up selling the business
to a for-profit.
So it taught me, for-profit solutions to problems
are much better than nonprofits.
And here you had kind of a blend, right?
It was set up as a nonprofit,
but I think they found the same thing.
They couldn't hire the talent they wanted
without having a for-profit subsidiary.
But the nonprofit entity, as I understand it,
owns a big chunk of OpenAI,
and the investors own sort of a capped interest
where their upside is capped,
and they don't have representation on the board.
And I think that was a setup for a problem,
and that's clearly what happened here.
And there's, I guess, some kind of complexity
in the governance.
I mean, because of this nonprofit and capped-profit thing,
it seems like there's a bunch of complexity
and non-standard aspects to it
that perhaps also contributed to the problem.
Yeah, governance really matters.
Boards of directors really matter.
Giving the shareholders the right to have input
at least once a year on the structure
of the governance of companies is really important.
And private, venture-backed boards are also not ideal.
I'm an active investor in ventures,
and there are some complicated issues
that emerge in private,
as sort of venture-stage companies,
where board members have somewhat divergent incentives
from the long-term owners of a business.
And what you see a lot in venture boards
is they're presided over generally
by venture capital investors
who are big investors in the company.
And oftentimes, it's more important to them
to have the public perception that they're good directors,
so they get the next best deal.
If they have a reputation
for taking on management too aggressively,
word will get out in the small community of founders,
and they'll miss the next Google.
And so their interests are not just
in that particular company.
That's also one of the problems.
Again, it all comes back to incentives.
Can you explain to me the difference
between venture-backed VCs and shareholders?
So this means before the company goes public?
Yeah, so private venture-backed companies,
the boards tend to be very small,
could be a handful of the venture investors in management.
They're often rarely independent directors.
It's just not an ideal structure.
Oh, I see, you want independent.
It's beneficial to have people
who have an economic interest in the business,
and they care only about the success of that company,
as opposed to someone who,
if you think about the venture business,
getting into the best deals
is more important than any one deal,
and you see cases where the boards go along with,
in some cases, bad behavior on the part of management
because they want a reputation
for being a founder-friendly director.
That's kind of problematic.
You don't have the same issue in public company boards.
So we talked about some of the big wins
and your track record,
but you said there were some big losses.
So what's the biggest loss of your career?
Biggest loss of my career
is a company called Valiant Pharmaceuticals.
We made an investment in a business
that didn't meet our core principles.
The problem in the pharmaceutical industry,
and there are many problems, as I've learned,
is it's a very volatile business.
It's based on drug discovery.
It's based on predicting the future revenues of a drug
before it goes off patent, lots of complexities,
and we thought we had founded
a pharmaceutical company we could own
because of a very unusual founder
and the way he approached this business.
It was a company where another activist
was on the board of directors of the company
and kind of governing and overseeing the day-to-day decisions
and we ended up making a passive investment in the company.
And up until this point in time,
we really didn't make passive investments.
And the company made a series of decisions
that were disastrous,
and then we stepped in to try to solve the problem.
It was the first time I ever joined a board
and the mess was much larger
than I realized from the outside,
and then I was kind of stuck.
And it was very much a confidence-sensitive strategy
because they built their business
by acquiring pharmaceutical assets
and they often issued stock when they acquired targets.
And so once the market lost confidence in management,
the stock price got crushed and it impaired their ability
to continue to acquire low-costs, you know, drugs,
and we lost $4 billion.
4 billion.
Yeah, how's that for a big loss?
It's up there.
I'm just waiting this whole conversation,
both the wins and the losses and the stakes involved.
And by the way, that loss catalyzed other,
what I call mark-to-market losses.
So very high profile, huge number, disastrous press.
Then people said, okay, Bill's gonna go out of business,
so we're gonna bet against everything he's doing.
And we know his entire portfolio
because we only own 10 things.
And we were short a company called Herbalife very famously.
We've only really shorted two companies.
The first one, there's a book.
The second one, there's a movie.
We no longer short companies,
but so people pushed up the price of Herbalife,
which is when you're a short seller, that's catastrophic.
I can explain that.
And then they also shorted the other stocks that we owned.
And so that valiant loss led to an overall more than 30% loss
in the value of our portfolio.
The valiant loss was real and was crystallized.
So you end up selling the position, taking that loss.
Most of the other losses were what I would call
mark-to-market losses that were temporary.
But many people go out of business
because as I mentioned before, large move in a price,
if investors are redeeming or you have leverage,
it can put you out of business.
And if people assumed if we got put out of business,
we'd have to sell everything or cover our short position,
and that would make the losses even worse.
So Wall Street is kind of ruthless.
So they can make money off of that whole thing.
Absolutely.
So they use the opportunity of valiant
to try to destroy your reputation financially
and then capitalize and make money off of that.
Yes.
Well, that's a terrifying spot to be in.
What was the like going through that?
That was pretty grim.
It was, it's actually much worse than that
because I had a lot of stuff going on personally as well.
So, and these things tend to be correlated.
The valiant mistake came at a time
where I was contemplating my marriage.
And I was also, you know,
the problem with the hedge fund business
is when you get to a certain scale,
the CEO becomes like the chief marketing officer
of the business.
And I'm really an investor as opposed to a marketing guy.
But when you have investors who give you
a few hundred million dollars, they want to see you,
you know, once a year, Bill,
I'd love to see you for an hour.
But if you've got a couple hundred of those,
you find yourself on a plane to the Middle East, to Asia,
flying around the country, this is pre-Zoom.
And that takes you away from the investment process.
You have to delegate more.
That was a contributor to the valiant mistake.
So now we lose a ton of money on valiant.
My ex-wife and I were talking about separating,
getting divorced.
I put that on hold so I didn't want to make a decision
in the middle of this crisis.
And things just kept getting worse.
We were also sued.
When you lose a lot of money,
we didn't get sued by our investors,
but we got sued by a shareholder
because when the stock price goes down, shareholders sue.
We'd done nothing wrong other than make a big mistake.
So you have litigation.
Your investors are taking their money out.
I'm in the middle of a divorce.
The divorce starts to proceed.
My ex-wife's lawyer's expectations of what my net worth was
was about three times what it actually was.
And it was going lower, right in the middle of this.
And I remember the lawyer saying,
look, Bill, invest them in your net worth at X,
but don't worry, we only want a third.
But X was three X, so a third was 100%.
And then I had litigation.
And actually never before publicly disclosed,
and I'll share it with you now.
We had a public company that owned
about a third of our portfolio
that was called our version of Berkshire Hathaway.
I tried to learn from Mr. Buffett over time.
And it was, so to speak, permanent capital.
The beauty of, the problem with hedge funds,
is that people can take their money out every quarter.
What Buffett has is a company
where people want to take their money out,
they sell the stock, but the money stays.
So we set up a similar structure in October of 2014.
And then a year later, valiant happens.
And then a year later, we're in the middle of the mess.
And we're still in the mess.
Like by kind of mid-2017, we've got litigation underway.
And another activist investor,
a firm called Elley Associates,
which is run by a guy named Paul Singer,
took a big position in our public company
that was the bulk of our capital.
And they shorted all the stocks that we owned,
and they went long the short,
probably went long the short that we were short,
and they were making a bet that we'd be forced to liquidate.
And then they would make money on,
our public company was trading at a discount
to what all the securities were worth.
So they bought the public company,
they shorted the securities.
And then they came to see us
and to try to be activists and force us to liquidate.
And that's sort of,
so I thought this was going to be,
I envisioned an end where the divorce
takes all of my resources.
The permanent capital vehicle ends up getting liquidated.
And another activist in my industry
puts me out of business.
And I had met Neri Oxman right around this time.
And I had fallen completely in love with her.
And I was envisioning a world where
I was bankrupt, a judge found me guilty of whatever.
He sends me off to jail, or not that judge,
because he was a civil judge,
but another judge sues the SEC, Department of Justice.
And I find myself in this incredible mess.
And I decided I didn't want things to end that way.
So I did something I'd never done before.
I talked all before about you don't borrow money,
I borrowed money.
And I borrowed $300 million
from JP Morgan in the middle of this mess.
And I give JP Morgan enormous credit in seeing through it.
And also, I had been a good client
over a long period of time,
and it's like a handshake bank.
And they bet that I would succeed.
And I took that money to buy enough stock
in my public company that could prevent
an activist from taking over,
and effectively buy control of our little public company.
And I got that done.
And that, I knew, was the moment, the turning point.
And I resolved my divorce.
And divorces get easier to resolve
and things are going badly.
I was able to resolve that.
We settled the litigation.
I was buying blocks of our stock in the market.
I remember a day I bought a big block of stock in the market.
And I get a call from Gordon Singer,
who is Paul Singer's son,
who runs their London part of their business.
He's like, Bill, was that you buying that block?
I said, yes.
He's like, fuck.
So he knew.
He knew that once I got that,
they were not gonna be able to succeed.
And they went away.
And that was the bottom.
And we've had an incredible run since then.
And there you were able to protect your reputation
from the valiant failure still?
I mean, this is a business
where you're gonna make some mistakes.
It was a big one.
It was very reputationally damaging.
The press was a total disaster.
But I'm not a quitter.
And actually, the key moments for us,
we'd never taken our core investment principles
and actually really written them down.
Something we talked about at meetings,
kind of our investment team meetings.
I had a member of the team.
I said, look, go find a big piece of granite and a chisel.
And let's take those core principles.
I want them like Moses's 10 Commandments.
Okay, we're gonna chisel them.
Then we're gonna put it up on the wall.
And once we produce those,
we put one on everyone's desk.
I said, look, if we ever again veer
from the core principles,
hit me with a baseball bat.
And that was the bottom.
And ever since then, we've done,
we've had the best six years in the history of the firm.
So refocus on the fundamentals.
That helps the story.
Love helps.
I literally met Nari at the absolute bottom.
Our first date was September 7th of 2017.
That was very close to the bottom.
Actually, there's one other element to the story.
So this went on for a few months after I met her.
The other element is that one day I got a call from Nari.
She's like, Bill, guess what?
I'm like, what?
Brad Pitt is coming to the Media Lab.
He wants to see my work.
I'm like, that's beautiful, sweetheart.
I didn't know Brad Pitt was interested in your work.
As a man, that's a difficult phone call to take.
And apparently he's really interested in architecture.
Okay.
Now Nari and I were like,
we would WhatsApp all day, every day.
We'd talk throughout the day.
Brad Pitt shows up at the Media Lab at 10 o'clock.
I talked to her in the morning.
I'd kind of text her to see how things are going.
Don't hear back.
On WhatsApp, you can see whether
the other person's read it or not, okay?
No response.
Couple hours later, send her the text.
No response.
Six o'clock, no response.
Eight o'clock, no response.
10 o'clock, no response.
And, you know, finally calls me at 10.30,
tells me how great Brad Pitt is.
So I had this scenario, okay,
a judge is going to find me.
We're going to lose to the judge.
All my assets will disappear.
And then Brad Pitt's going to take my girlfriend.
Yeah, Brad Pitt's your competition.
This is great.
So it was like a moment.
That was sort of the bottom.
And then sort of, you know, the motivational thing.
I didn't want to lose to an activist.
Didn't want to lose my girl to some other guy, so.
Brad Pitt, and you emerged from all that,
the winner on all fronts.
I'm a very fortunate guy, very fortunate, and lucky.
You talked about some of the technical aspects of that,
but psychologically, just, is there a,
what are you doing at night by yourself?
That was a hard time.
Hard time, because I was separated
from my wife and my kids.
I was living in, you know, not the greatest apartment.
You know, I had a beautiful home,
and so I had to go find like a bachelor place.
And I was, I didn't want to be away from my kids.
I moved like 10 blocks away,
and I wasn't seeing them, and they didn't like it.
So I ended up buying an apartment I didn't like
in the same building as my kids,
like with a different entrance,
so I could be near them.
But I was home alone.
I got a dog.
That was a Babar, you can call him Babar,
not the elephant.
He's a black labradoodle.
He was supposed to be a mini, but he's not as mini.
But I got him at six weeks old,
and he would keep me company.
And I started meditating, actually.
And a friend recommended TM,
and I would meditate 20 minutes in the morning,
20 minutes in the evening.
And I also, big believer in exercise and weightlifting,
and I played tennis.
And I had been, this is not my first proximity to disaster.
I had another moment in my career, like 2002,
and I learned this method for dealing with
these kind of moments, which is
you just make a little progress every day.
So today, I'm gonna wake up.
I'm gonna make progress.
You know, I'll make progress on the litigation.
I'll make progress on the portfolio.
I'll make progress with my life.
And progress compounds, a bit like money compounds.
You don't see a lot of progress in the first few weeks,
but like 30 days in, like, oh, okay.
You can't look up at the mountaintop where you used to be,
because then you'll give up, right?
But you just, okay, just make step by step by step.
And then 90 days in, you're like,
okay, I was way down there.
Okay, I'm not, okay, I don't look up.
Just keep making progress, progress, progress.
And progress really does compound.
And one day you wake up, I'm like, wow,
it's amazing how far I've come.
And if you look at a chart of Pershing Square,
our company, you can see the absolute bottom.
You can see where we were, you can see the drop,
and you can see where we are now.
And that huge drop that felt like
a complete unbelievable disaster
looks like a little bump on the curve.
And it really gives you perspective on these things.
You just have to power through.
And I think the key is, I've always been fortunate,
like from a mental health point of view,
and nutrition, sleep, exercise,
and a little progress every day.
That's it.
And good friends and family.
Go take a walk with a friend every night.
A sister who loves me, and parents who are supportive.
But they were all worried about their son, their brother.
It was a moment.
And also, by the way, the other thing to think about
is when you recover from something like this,
you really appreciate it.
And also, as much of the media loves, okay,
when some successful person falls.
They love writing the story of success.
They love even more the story of failure.
But when you recover from that,
it's kind of like the American story, right?
America, you think of the great entrepreneurs,
and how many failures they had before they succeeded.
How many rocket launches did SpaceX have explode on the pad?
And then you look at success.
I mean, that's why Musk is so admired.
You mentioned Herbalife.
Can you take me through the saga of that?
It's historic.
So we, at Pershing Square, short a very few stocks.
And the reason for that is short selling
is just inherently treacherous.
So if you buy a stock, it's called going long, right?
You're buying something.
Your worst case scenario is you lose your whole investment.
You buy a stock for 100, it goes to zero,
you lose $100, right, per share.
You buy one share, you lose 100.
You short a stock at 100.
What it means is you borrow the security from someone else.
The analogy I gave that made it easy for people
to understand, it's a bit like you think
silver coins are gonna go down in value.
And you have a friend who's got a whole pile
of these 1880 silver US dollars,
and you think they're gonna go down in value.
You say, hey, can I borrow 10 of those dollars from you?
He's like, sure, but what are you gonna pay me to borrow?
I'll pay you interest on the value of the dollars today.
So you borrow the dollars that are worth $100 each today.
You pay them interest while you're borrowing them.
And then you go sell them in the market for $100.
That's what they're worth.
And then they go down in price to 50.
You go back in, you buy the silver dollars back at $50,
and you give them back to your friend.
Your friend is fine.
You borrowed 10, you gave them the 10 back,
and he got interest in the meantime.
He's happy, he made money on his coin collection.
You, however, made $50 times the 10 coins.
You made 500 bucks, that's pretty good.
The problem with that is what if you sell them
and they go from 100 to 1,000?
Now you're gonna have to go buy them back.
And you're gonna pay, you know, whatever,
$10,000 to buy back coins that you sold for 500.
You're gonna lose $9,500.
And there's no limit to how high a stock price can go.
Companies go to $3 trillion in value.
Tesla, a lot of people short at Tesla,
saying, oh, it's overvalued.
He's never gonna be able to make a successful electric car.
Well, I'm sure there are people
who went bankrupt shorting Tesla.
That's why we didn't short stocks.
But I was presented with this actual reporter
that covered the other short investment we made
early in the career, a company called MBIA,
came to me and said, Bill, I found this incredible company.
You gotta take a look at it.
It's a total fraud, and they're scamming poor people.
And we should say that MBIA was a very successful short.
It was.
A big part of it was that we used
a different kind of instrument to short it,
where we reversed that sort of,
we made the investment asymmetric in our favor,
meaning put up a small amount of money.
If it works, we make a fortune.
Whereas short selling is you kinda sell something
and you have to buy it back at a higher price.
Herbalife didn't have the, what's called credit default swaps
that you could purchase.
Not a big enough company,
didn't have enough debt outstanding
to be able to implement it.
You had to short the stock in order to make it a successful,
to bet against the company.
And the more work I did on the company,
the more I was like, oh my God,
this thing's an incredible scam.
You know, they purport to sell weight loss shakes.
But in reality, they're selling kind of a fake business plan
and the people that adopt it lose money
and they go after poor people.
They go after, actually, in many cases,
undocumented immigrants who are pitched
on the American dream opportunity.
And because they have few other options,
because they can't get legal employment,
they become Herbalife distributors.
And it's a business where you,
so-called multi-level marketing or peer,
multi-level marketing is sort of the name
for a legitimate company like this.
Or it's a pyramid scheme where basically your sales
are really only coming from people who are,
you're convinced to buy the product
by getting them into the business.
That's precisely what this company is.
And like, okay, shorting a pyramid scheme
seems like one, we'll make a bunch of money,
but you know, two, the world will be behind us
because they're harming poor people.
You know, regulators will get interested
in a company like this.
And we thought, you know,
the FTC's gonna shut this thing down.
And we did a ton of work
and I gave this sort of epic presentation,
laying out all the facts.
Stock got completely crushed and we were on our way.
And the government actually got interested early on,
launched an investigation pretty early,
SEC and other otherwise.
But then a guy named Carl Icahn showed up
and we have a little bit of a backstory,
but his motivations here were not really principally driven
by thinking Herbalife was a good company.
He thought it was a good way to hurt me.
So he basically bought a bunch of stock
and said it was a really great company.
And you know, Carl, at least at the time,
threw his weight around a bit.
He was a credible investor, had a lot of resources.
And that began the saga.
So he was, we should say, a legendary investor himself.
I'd say legendary in a sense, yes, for sure.
An iconic.
Iconic.
Carl Icahn.
Oh, that's very well done.
Yeah, so definitely a iconic investor.
What was the backstory between the two of you?
So I mentioned that I had another period of time
where significant business challenges.
This was my first fund called Gotham Partners.
And we had a court stop a transaction
between a private company we owned and a public company.
It's another long story.
If you want to go there.
I would love to hear it as well.
But it was really my deciding to wind up my former fund.
And we owned a big stake in a company
called Hallwood Realty Partners,
which was a company that owned real estate assets.
And it was worth a lot more than where it was trading.
But it needed an activist to really unlock the value.
And we were, in fact, going out of business
and didn't have the time or the resources to pursue it.
So I sold it to Carl Icahn.
But, and I sold it to him at a premium
to where the stock was trading.
I think the stock was like 66.
I sold to him for 80.
But it was worth about 150.
And I said, look, and part of the deal was Carl's like,
look, I'll give you schmuck insurance.
You know, I'll make you sure you don't look bad.
I had another deal at a higher price
without schmuck insurance.
When I deal with Carl at a lower price for schmuck insurance
and the way the schmuck insurance went,
he said, look, Bill, if I sell the stock
in the next three years, you know, for a higher price,
I'll give you 50% of my profit.
Well, that's a pretty good deal.
So we made that deal.
And, because I was dealing with Carl Icahn,
who had a reputation for, you know, being difficult.
I was, you know, very focused on the agreement.
And we didn't want him to be able to be cute.
So the agreement said, if we sell,
if he sells or otherwise transfers his shares,
we came up with a definition,
include every version of sale, okay?
Because, you know, it's Carl.
Well, he then buys the stake
and then makes a bid for the company.
And, you know, plan is for him to get the company.
And he bids like 120 a share.
And the company hires Morgan Stanley to sell itself.
And he raises his bid to 125 and the 130.
Eventually gets sold, I don't remember the exact price,
let's say $145 a share.
And Carl's not the winning bidder.
And he sells his stock, or he loses,
or transfers his shares for $145 a share.
So he owes actually our investors
the difference between 145 and 80 times 50%.
And I had like, you know, lawyers never like you
to put like a arithmetic example.
I put like a formula, you know,
like out of a math book in the documents
so there can be no confusion.
It was only an eight page really simple agreement.
So the deal closes and he's supposed to pay us
in two business days or three business days.
I wait a few business days, no money comes in.
I call Carl.
I'm like, Carl, congratulations on the Hallward Realty.
Thanks, Bill.
I said, Carl, I just want to remind you,
I know it's been a few years,
but you know, we have this agreement.
Remember the Schmuck Insurance?
He's like, yeah.
I said, well, you owe us our Schmuck Insurance.
He says, what do you mean?
I didn't sell my shares.
I said, do you still have the shares?
He says, no.
I said, well, what happened to them?
Well, the company did a merger for cash
and they took away my shares, but I didn't sell them.
Do you understand what happened?
So I said, Carl, I'm going to have to sue you.
He said, sue me?
I'm going to sue you.
He says.
So I sued him.
And the legal system in America can take some time.
And what he would do is we sued
and then we won in the whatever, New York Supreme Court.
And then he appealed.
And you can appeal like six months after the case.
We waited to the 179th day and then he would appeal.
And then we fought at the next level
and then he would appeal.
And he appealed all the way to the Supreme Court.
Of course, the Supreme Court wouldn't take the case.
It took years.
Now we had, as part of our agreement,
we got 9% interest on the money that he owed us.
So I viewed it as my Carl Icahn money market account
with a much higher interest rate.
And eventually I won.
What was the amount?
Tiny.
Now, it was material to my investors.
So my first fund, I wound it down,
but I wanted to maximize everything from my investors.
These were the people who backed me at 26 years old.
I was right out of business school, had no experience.
And they supported me.
So I'm gonna go to the end of the earth for them.
And four and a half million relative to our fund
at the end was maybe 400 million.
So it wasn't a huge number,
but it was a big percentage of what was left
after I sold all our liquid security.
So I was fighting for it.
So we got four and a half million plus interest
for eight years or something.
That's how long the litigation took.
So we got about double.
So he owed me $9 million,
which to Carl Icahn, who had probably a $20 billion net worth
at the time, this was nothing.
But to me, it was like, okay, this is my investor's money.
I'm gonna get it back.
And so, you know, eventually we won.
Eventually he paid.
And then he called me.
He said, Bill, congratulations.
Now we can be friends and we can invest,
do some investing together.
I'm like, Carl, fuck you.
You actually said, fuck you?
Yes, and I'm not that kind of person generally,
but, you know, he made eight years to pay me,
not me, even me, my investor's money they owed.
And so I, yeah.
So he probably didn't like that.
So he kind of hung around in the weeds
waiting for an opportunity.
And then from there, I started Pershing.
We had a kind of straight line up.
You know, we were up in the first 12 years,
we could do nothing wrong.
Then Valiant, Herbalife, right?
He sees an opportunity and he buys the stock.
He figures he's gonna run me off the road.
And so that was the beginning of that.
And kind of the moment, and I think it's the,
I'm told by CNBC, it's the most watched segment
in business television history.
They're interviewing me about the Herbalife investment
on CNBC, and then Carl Icahn calls into the show.
And we have kind of a interesting conversation
where he calls me all kinds of names and stuff.
So it was a moment.
It was a moment in my life.
It wasn't public information that he was long on Herbalife?
He didn't yet disclose he had a stake.
But he was just telling me how stupid I was
to be short this company.
So for him, it wasn't about the fundamentals of the company,
it was about, it was just personal.
100%.
Is there a part of you that regrets saying
fuck you on that phone call to Carl Icahn?
No.
No.
I generally have no regrets
because I'm very happy with where I am now.
And I feel like it's a bit like you step on
the butterfly in the forest and the world changes
because every action has a reaction.
If you're happy with who you are, where you are in life,
every decision you've made, good or bad,
over the course of your life got you
to precisely where you are.
I wouldn't change anything.
He said you lost money on Herbalife.
So what, so he did the long-term battle.
What he did is he got on the board of the company
and used the company's financial resources
plus his stake in the business to squeeze us.
And a squeeze in short selling is where you
restrict the supply of the securities
so that there's a scarcity.
And then you encourage people to buy the stock
and you drive the stock up.
And as I explained before, you short those coins
at 10, they go to 100.
You can lose theoretically an unlimited amount of money.
And that's scary.
That's why we don't short stocks.
That's why I didn't short stocks before this.
But this was, unfortunately,
I had to have the personal lesson.
So how much was, for him, personal
versus part of sort of the game of investing?
Well, he thought he could make money doing this.
He wouldn't have done it if he did otherwise.
He thought his bully pulpit,
his ability to create a short squeeze,
his control over the company,
would enable him to achieve this.
And he made a billion, we lost a billion.
So you think it was a financial decision, not a personal?
It was a personal decision to pursue it,
but he was waiting for an opportunity
where he could make money at our expense,
and it was kind of a brilliant opportunity for him.
Now the irony is, well, first of all,
the FTC found a few interesting facts.
So one, the government launched an investigation.
They ended up settling with the company,
and the company paid $220 million in fines.
I met a professor from Berkeley a couple years ago
who told me that he had been hired by the government
as their expert on Herbalife,
and he got access to all their data,
was able to prove that they were a pyramid scheme,
but the government ultimately settled with Carl
because they were afraid they could possibly lose in court,
so they settled with him.
But if you look at the stock,
if we'd been able to stay short the entire time,
we would have made a bunch of money,
because the stock had a $6 billion market cap,
and we shorted it today as probably a billion,
a billion and a half.
So you left the short position,
or whatever that's called, closed.
Covered, closed it out.
Yeah.
We sold Valiant, we covered Herbalife.
That was the resetting moment for the firm,
because it would just psychologically,
and the beauty of investing is you don't need
to make it back the way you lost it, right?
You can just take your loss.
By the way, losses are valuable
in that the government allows you to take a tax loss,
and that can shelter other gains,
and we just refocused.
Can you say one thing you really like about Carl Icahn,
and one thing you really don't like about him?
Sure.
So he's a very charming guy.
So in the midst of all this,
the Hallwood one, he took me out for dinner
to his favorite Italian restaurant.
Really?
Yeah.
We were in the middle of the litigation
to see if he could resolve it,
and he offered 10 million to my favorite charity.
The problem was that it wasn't my money,
it was my investor's money,
so I couldn't settle with him on that basis.
But I had the chance to spend real time with him at dinner.
He's funny, he's charismatic, he's got incredible stories,
and actually I made peace with him over time.
We had a little hug out on CNBC,
even had him to my house, believe it or not.
I hosted something called the Finance Cup,
which is a tennis tournament between people
in finance in Europe and the US,
and we had the event at my house,
and one guy thought to invite Carl Icahn,
and so we had Carl Icahn there to present awards.
And again, I have to say, I kind of liked the guy.
But I didn't like him much during this.
Is there, because at least from the outsider perspective,
there's a bit of a personal vengeance here,
or anger can build up.
Do you ever worry the personal attacks
between powerful investors can cloud your judgment,
or what is the right financial decision?
I think it's possible, but again,
I try to be extremely economically rational,
and actually the last seven years have been quite peaceful.
I really have not been an activist
in the old form for many years,
and the vast majority of even our activist investments
historically were very polite, respectful cases.
The press, of course, focuses on the more interesting ones.
Like Chipotle was one of the best investments we ever made.
We got four of eight board seats,
and we worked with management, and it was a great outcome.
I don't think there's ever been a story about it,
and the stock's up almost 10 times
from the time we hired Brian Nicholas, CEO,
but it's not interesting, because there was no battle,
whereas Herbalife, of course, was like an epic battle,
even Canadian Pacific, so for a period there,
most people, when they meet me in person,
they're like, wow, Bill, you seem like a really nice guy,
but I thought, you know, so,
but things have been pretty calm for the last seven years.
Of course, there's more than just the investing
that your life is about, especially recently.
Let me just ask you about what's going on in the world first.
What was your reaction,
and what is your reaction and thoughts
with respect to the October 7th attacks by Hamas on Israel?
You know, it's a sad world that we live in,
that one, we have terrorists,
and two, that we could have such barbaric terrorism,
and yeah, it's just a reminder of that.
So there's several things I can ask here.
First, your views on the prospects of the Middle East,
but also on the reaction to this war,
in the United States, especially on university campuses.
So first, let me just ask,
you've said that you're pro-Palestinian.
Can you explain what you mean by that?
You know, with all of my posts about Israel,
I'm obviously very supportive of the country of Israel,
Israel's right to exist, Israel's right to defend itself.
My Arab friends, my Palestinian friends,
were kind of saying, hey, Bill, where are you?
What about Palestinian lives?
And I was, pretty early in my life,
a guy named Marty Peretz, who's been important to me
over the course of my life, a professor,
a first investor in my fund, introduced me to Neri,
asked me when I was right out of school
to join this nonprofit called the Jerusalem Foundation,
which was a charitable foundation
that supported Teddy colic when he was mayor of Jerusalem.
I ended up becoming the youngest chairman
of the Jerusalem Foundation in my 30s,
and I spent some time in Israel.
And the early philanthropic stuff I did
with the Jerusalem Foundation,
the thing I was most interested in
was kind of the Palestinian, the plight of the Palestinians
and kind of peaceful coexistence.
And so I had kind of an early kind of perspective,
and as chairman of the Jerusalem Foundation,
I would go into Arab communities,
I would meet with families in their homes.
You get a sense of the humanity of a people,
and I care about humanity.
I generally take the side of people
who've been disadvantaged.
Almost all of our philanthropic work
has been in that capacity,
so it's sort of my natural perspective.
But I don't take the side of terrorists ever, obviously.
And the whole thing is just a tragedy.
So to you, this is about Hamas, not about Palestine.
Yes, I mean, the problem, of course,
is when Hamas controls, for the last almost 20 years,
has controlled Gaza, including the education system,
they're educating, you see these training videos
of kindergartners indoctrinating them
into hating Jews in Israel.
So it's, of course, you don't like to see
Palestinians celebrating some of those early videos
of October 7th with dead bodies in the back of trucks
and people cheering.
So it's a really unfortunate situation.
But I think about a Palestinian life as important
and as valuable as a Jewish life, as an American life.
And what do people really want?
They want a place, they want a home.
They want to be able to feed their family.
They want a job that generates the resources
to feed their family.
They want their kids to have a better life than they've had.
They want peace.
I think these are basic human things.
I'm sure the vast majority of Palestinians
share these views.
But it's such an embedded situation with hatred
and, as I say, indoctrination.
And then, going back to incentives,
terrorists generate their resources by committing terrorism.
And that's how they get funding.
And there's a lot of graft.
It's a plutocracy, right?
The top of the terrorist pyramid.
If you accept the numbers that are in the press,
the top leaders have billions of dollars.
40 billion or so has gone into Gaza over the last,
and the West Bank over the last 30 years,
a number like that.
And a lot of it's disappeared into some combination
of corruption or tunnels or weapons.
And the tragedy is, you look at what Singapore has achieved
in the last 30 years, right?
Do you think that's still possible,
if we look into the future of 10, 20, 50 years from now?
Absolutely.
So not just peace, but...
Peace comes with prosperity.
People are under the leadership of terrorists.
You're not gonna have prosperity,
and you're not gonna have peace.
And I think the Israelis withdrew in 2005,
and fairly quickly Hamas took control of the situation.
That should never have been allowed to happen.
And I think, if you think about,
I had the opportunity to spend,
well, call it an hour with Henry Kissinger
a few months before he passed away.
And we were talking about Gaza,
or in the early stage of the war,
he said, look, this is not...
You can think about Gaza as a test of a two-state solution.
It's not looking good.
These were his words.
So the next time around,
look, the Palestinian people should have their own state,
but it can't be a state where 40 billion resources goes in
and is spent on weaponry and missiles
and rockets going into Israel.
And I do think a consortium of the Gulf states,
the Saudis and others,
have to ultimately oversee the governance of this region.
I think if that can happen,
I think you can have peace, you can have prosperity,
and I'm fundamentally an optimist.
So a coalition of governance.
Governance matters,
going back to what we talked about before.
And that kind of approach can give the people a chance
to flourish. 100%, 100%.
I mean, look at what Dubai has accomplished
with nomads in the desert, right?
And that's become a major...
It's a tourist destination.
Gaza could have been a tourist destination.
Take me through the saga of university presidents
testifying on this topic,
on the topic of protests on college campuses,
protests that call for the genocide of Jewish people
and the university presidents.
Maybe you can describe it more precisely,
but they fail to denounce the calls for genocide.
So it begins on October 8th, probably.
And you can do a compare and contrast
with how Dartmouth managed the events of October 7th
and the aftermath and how Harvard did.
And on October 8th, or shortly thereafter,
the Dartmouth president who had been in her job
for precisely the same number of months
that the Harvard president had been in her job,
the first thing she did
is she got the most important professors
of Middle East studies who were Arab and who were Jews
and they convened them and held an open session, Q&A,
for students to talk about what's going on
in the Middle East and began an opportunity
for common understanding among the student body.
And Dartmouth has been a relatively benign environment
on this issue and students are able to do work
and there aren't disruptive protests
with people with bullhorns walking into classrooms
interfering with, people pay today $82,000 a year,
which itself is crazy to go to Harvard,
but imagine your family borrows the money
or you borrow the money as a student
and your learning is disrupted by constant protests
and the university does nothing.
When George Floyd died, the Harvard president wrote
a very strong letter denouncing what had taken place
and calling this an important moment in American history
and took it incredibly seriously.
Her first letter about October 7th was not that,
let's put it that way.
And then her second letter was not that.
And then ultimately, she was sort of forced by the board
or the pressure to make a more public statement,
but it was clear that it was hard for her
to come to an understanding of this terrorist act.
And then the protests erupted on campus
and they started out reasonably benign.
And then the protesters got more and more aggressive
in terms of violating university rules
on things like bullying and the university did nothing.
And that obviously for the Jewish students,
the Israeli students, the Israeli faculty, Jewish faculty,
created an incredibly uncomfortable environment
and the president seemed indifferent.
And I went up to campus and I met with hundreds of students
in small groups and larger groups and they're like,
Bill, why is the president doing nothing?
Why is the administration doing nothing?
And that was really the beginning.
And I reached out to the president,
reached out to the board of Harvard.
I said, look, this thing is headed in the wrong direction
and you need to fix it.
And I have some ideas I'd love to share.
And I got the heistman, as they say.
They just kept pushing off the opportunity
for me to meet with the president and meet with the board.
And a certain point in time I pushed.
I'm kind of a activist when you push me.
It reminded me of the early days of activism
where I couldn't get the CEO of Wendy's to return my call.
I couldn't get the CEO of Harvard to take a meeting
and then finally I spoke to the chairman of the board,
woman by the name of Penny Pritzker,
who I knew from on a business school board with her.
And it was, as I described,
one of the more disappointing conversations in my life
and it did not seem, she seemed a bit like,
if you will, deer in the headlights.
They couldn't do this, they couldn't do that.
The law was preventing them from doing various things.
And that led to my first letter to the university
and I sort of ended the letter,
sort of giving this president of Harvard
a dare to be great speech, this is your opportunity,
you can fix this, this could be your legacy.
And I sent it to the, I emailed it to the president
and the board members whose email addresses I had.
I posted it on Twitter and I got no response,
no acknowledgement, nothing.
And in fact, the open dialogue I had
with a couple of people on the board
basically got shut down after that.
And that led to letter number two.
And then when the Congress, led by Elise Stefanik,
announced an investigation of antisemitism on campus
and concern about violations of law,
the president was called to testify
along with two other, the president of MIT,
the president of University of Pennsylvania,
who were having similar issues on campus,
I reached out to the president of Harvard and said,
well, one, the Israeli government had gotten in touch
and offered the opportunity for me to see the Hamas,
if you will, GoPro film.
And I said, you know what, I'd love to show it at Harvard
and they thought that would be a great idea.
And so I partnered with the head of Harvard Chabad,
guy named Rabbi Hershey,
and we were putting the film up on campus
and I thought, you know, if the president were to see this,
it would give her a lot of perspective on what happened
and she should see it before her testimony.
And so I reached out to her,
or actually Rabbi Hershey did,
and he was told she would be out of town
and couldn't see it.
And then I reached out to her again,
said, look, I'll facilitate your attendance
in the Congress, you know, come see the film,
I'll fly you down, that was rejected,
and then she testified.
And I watched, you know, a good percentage,
80% of the testimony of all three presidents,
and it was an embarrassment to the country,
embarrassment to the universities,
you know, they were evasive, they didn't answer questions,
they were rude, they smirked,
you know, they looked very disrespectful to our Congress.
And then of course there was that several minutes
where finally, at least Stefanik
was not getting answers to her questions,
and she said, you know, let me be kind of clear.
What if protesters were calling for genocide for the Jews,
does that violate your rules on bullying and harassment?
And the three of them basically gave the same answer,
you know, it depends on the context.
And not until they actually executed it on the genocide,
does the university have the right to intervene.
And the thing that perhaps bothered me the most
was the incredible hypocrisy.
You know, Harvard was, you know,
each of these universities are ranked
by this entity called FIRE,
which is a nonprofit that focuses on free speech on campus.
And Harvard, it's been in the bottom quartile
for the last five years,
and dropped to last before October 7th out of like 250.
I should mention briefly that I've interviewed
on this podcast the founder of FIRE
and the current head of FIRE,
we've discussed this at length,
including running for the board of Harvard
and the whole procedure of all that.
It's quite a fascinating investigation of free speech.
For people who care about free speech absolutism,
that's a good episode to listen to
because those folks kind of fight for this idea.
It's a difficult idea actually to internalize
what does free speech on college campuses look like.
Harvard has become a place where free speech
is not tolerated on campus,
or at least free speech that's not part
of the accepted dialogue.
Or, you know, this whole notion of speech codes
and microaggressions really emerged on the elite,
you know, the Harvard-Yale campuses of the world.
And, you know, the president of Harvard's,
then president of Harvard's explanation for why,
you know, you could call for the genocide
of the Jewish people on campus
was Harvard's commitment to free expression.
And, you know, one of the more hypocritical statements
of all time, and you really can't have it both ways.
Either Harvard has to be a place where it's a free speech,
she basically said we're a free speech absolutist place,
which is why we have to allow this.
And Harvard could not be further from that.
And so that was a big part of it.
And I was in the barber chair, if you will, getting a haircut
and I had a guy on my team send me the three-minute section.
I said, yeah, cut that line of questioning.
And I put out a little tweet on that
and I call it my greatest hits of posts.
It's got something like 110 million views.
And, you know, everyone looked at this and said,
what is wrong with, you know, university campuses
and their leadership and their governance, by the way.
You know, in a way this whole conversation
has been about governance.
Harvard has a disastrous governance structure,
which is why we have the problem we have.
And just to linger on the testimony,
you mentioned, you know, smirks and this kind of stuff.
And you mentioned dare to be great.
I myself am kind of a sucker for great leadership
in those moments, you mentioned Churchill or so on,
even great speeches.
People talk down on speeches like it's maybe just words,
but I think speeches can define a culture
and define a place, define a people that can inspire.
And I think actually the testimony before Congress
could have been an opportunity to redefine what Harvard is,
dare to be great for, dare to be a great leader.
President Harvard had a huge opportunity
because she went third, right?
The first two gave the world's most disastrous answers
to the question.
And she literally just copied their answer,
which is itself, you know, kind of ironic
in light of ultimately what happened.
It's tough because you can get busy as a president,
as a leader and so on.
There's these meetings and so you think Congress,
maybe you're smirking at the ridiculousness of the meeting.
You need to remember that many of these are opportunities
to give a speech of a lifetime.
Sure.
Like that if there is principles
which you want to see an institution become and embody
in the next several decades,
there's opportunities to do that.
And you as a great leader also need to have a sense
of when is the opportunity to do that.
And October 7th really woke up the world
on all sides, honestly.
Like there is serious issue going on here.
And then the protests woke up the university
to there's a serious issue going on here.
It's an opportunity to speak on free speech
and on genocide, both.
Yes.
Do you see the criticism that you are a billionaire donor
and you sort of used your power and financial influence
unfairly to affect the governing structure of Harvard
in this case?
First of all, I never threatened
to use financial or other resources.
The only thing I did here was I wrote public letters.
I spoke privately to a couple members of the board.
I spoke for 45 minutes to the chairman.
None of those conversations were effective
or went anywhere as far as I could tell.
I think my public letters and then some of the posts I did.
And that little three minute video excerpt had an impact.
But it wasn't about, I mean, you can criticize me
for being a billionaire, but that had,
it was really the words.
It's a bit like, again, going back to the corporate analogy,
it's not the fact that you own 5% of the company
that causes people to vote in your favor.
It's the fact that your ideas are right.
And I think, I was disappointed
after the congressional testimony, the board of Harvard
said that they were 100% behind,
unanimously 100% behind President Gay.
And so clearly I was ineffective.
And ultimately what took her down was other,
I would say activists who identified issues
with academic integrity.
And then she lost the confidence of the faculty.
And once that happens, it's hard to stay.
And I wanted her to be fired basically,
or be forced to resign because of failures of leadership.
Because that would have sent a message
about the importance of leadership,
failure to stop a emergence of anti-Semitism on campus.
And there's some news today,
the protests are getting worse.
Is there some tension between free speech
on college campuses and disciplining students
for calls of genocide?
Yes, there's certainly a tension.
And I think, first of all,
I think free speech is incredibly important.
And I'm on the side, I'm a lot closer to absolutism
on free speech than otherwise.
The issue I had was the hypocrisy, right?
They were restricting other kinds of speech on campus,
principally conservative speech, conservative views.
So it wasn't a free speech absolutist campus.
And the protests were actually quite threatening
to students, and there are limits
to even absolutist free speech.
And they begin where people feel intimidation,
harassment, and threat to bodily harm, et cetera.
That kind of speech is generally,
and it's pretty technical,
but as people feel that they're in imminent harm
by virtue of the protest,
that speech is at risk of not meeting the standards
for free speech.
But Harvard is a private corporation.
And as a private corporation,
they can put on what restrictions they want.
And Harvard had introduced only a few months
before bullying and harassment policies.
And that's why Representative Stefanik focused on,
it's not like she said,
just calling for genocide against the Jews
violate your free speech policy.
She says, just calling for genocide against the Jews
violate your policies on bullying and harassment.
And I think everyone looked at this when they said,
it depends on the context,
and they said, look,
if you replace Jews with some other ethnic group,
students who've used the N word, for example,
have been thrown off campus or suspended.
Students who've hate speech directed at LGBTQ people
has led to disciplinary action.
But attacking, spitting on Jewish students,
or kind of roughing them up a bit,
seemed like we're calling for their elimination,
didn't seem to violate the policy.
So it's, look, I think a university should be a place
where you have broad views and open viewpoints
and broad discussion.
But it should also be a place
where students don't feel threatened going to class,
where their learning is not interrupted,
when final exams are not interrupted
by people coming in and with loud protest.
Students asked me when I went up there,
what would you do if you're a Harvard president?
And this was before I knew what was happening
on the Dartmouth campus.
I said, I would convene everyone together.
This is Harvard.
We have access to the best minds in the world.
Let's have a better understanding of the history.
Let's understand the backdrop.
Let's focus on solutions.
Let's bring Arab and Jewish and Israeli students together.
Let's form groups to create communication.
That's how you solve this kind of problem.
And none of that stuff has been done.
It's not that hard.
Do you think this reveals a deeper problem
in terms of ideology and the governance of Harvard
in maybe the culture of Harvard?
Yes, so on governance,
the governance structure is a disaster.
So the way it works today is Harvard has two principal boards.
There's the board of the corporation,
the so-called fellows of Harvard.
It's a board of I think 12 independent directors
and the president.
There's no shareholder vote.
There's no proxy system.
It's really a self-perpetuating board
that effectively elects its own members.
So once the balance tips politically one way or another,
it can be kept that way forever.
There's no kind of rebalancing system.
If a US corporation goes off the rails, so to speak,
the shareholders can get together
and vote off the directors.
There's no ability to vote off the directors.
Then there's the board of overseers,
which is I think 32 directors.
And there a few years ago,
if you could put together 600 signatures,
you could run for that board
and put up a bunch of candidates
and about five or six get elected each year.
And a group did exactly that.
And it was an oil and gas kind of disinvestment group.
They got the signatures.
A couple of them got elected
and Harvard then changed the rules.
And they said, now we need 3,200 signatures.
And by the way,
if there are these dissonant directors on the board,
we're only going to allow,
we're going to cap them at five.
So if three were elected in the oil and gas thing,
now they're only two seats available.
And then a group of former students,
kind of younger alums,
one of whom I knew,
approached me and said, look, Bill,
we should run for the board.
And they decided this pretty late,
only a few weeks before the signatures were due
and love your support.
I took a look at their platform.
I thought it looked great.
I said, look, happy to support.
And I posted about them,
did a Zoom with them
and they got thousands of signatures.
Collectively, the four got whatever,
12,000 signatures or something like this.
And they missed by about 10% the threshold.
What did Harvard do in the middle of the election?
They made it very, very difficult to sign up for a vote.
And it just makes them look terrible.
And they've got now thousands of alums upset that,
and again, this wasn't an election.
This was just to put the names on the slate.
So the only candidates in the slate
are the ones selected by the existing members.
And so businesses fail because of governance failures.
Universities fail because of governance failures.
It's not really the president's fault
because the job of the board is to hire and fire
the president and help guide the institution
academically and otherwise.
So that's governance.
An ideology, I was like, how can this be?
October 7th, the event that woke me up
was 30 student organizations came out
with a public letter on October 8th,
literally the morning after this letter was created,
and said, Israel is solely responsible
for Hamas's violent acts.
Again, Israel had not even mounted a defense at this point.
And there were still terrorists running around
in the southern part of Israel.
And I'm like, Harvard students?
34 Harvard student organizations signed this letter,
and I'm like, what is going on?
WTF, right?
And that's when I went up on campus
and I started talking to the faculty.
And that's when I started hearing about,
actually, Bill, it's this DEI ideology.
I'm like, what?
Like, diversity, equity, inclusion?
Obviously, I'm familiar with these words,
and I see this in the corporate context.
And they say, yeah, and they started talking to me
about this oppressor, oppressed framework,
which is effectively taught on campus
and represents the backdrop for many of the courses
that are offered and the various,
some of the studies and other degree offerings.
I'm like, I had not even heard of this.
And I'm a pretty aware person,
but I was completely unaware.
And basically, they're like, look,
Israel is deemed an oppressor,
and the Palestinians are deemed the oppressed.
And you take the side of the oppressed
and any acts of the oppressed to dislodge the oppressor,
regardless of how vile or barbaric or okay.
I'm like, okay, this is a super dangerous ideology.
And so I wrote a questioning post about this.
Like, here's what I'm hearing.
Is this right?
Then I had someone, a friend of mine sent me
Christopher Rufo's book, America's Cultural Revolution,
which is sort of a sociological study
of the origins of the DEI movement
and critical race theory.
And I found it actually one of the more important books
I've read and also found it quite concerning.
And really, it's sort of a, ultimately,
DEI comes out of a kind of a Marxist socialist backdrop.
Way to look at the world.
And so I think there are a lot of issues with it,
but unfortunately, it's advancing.
I ultimately concluded racism as opposed to fighting it,
which is what I thought it was ultimately about.
So maybe you can speak to that book a little bit.
So there's a history that traces back across decades
and then that infiltrated college campuses.
So basically, what Rufo argues is that
the Black Power movement of the 60s really failed.
It was a very violent movement
and many of the protagonists ended up in jail.
And out of that movement, a number of thought leaders,
this guy named Marcuse and others,
built this framework, kind of an approach.
Said, look, if we're gonna be successful,
can't be a violent movement, number one.
And number two, we need to infiltrate, if you will,
the universities.
And we need to become part of the faculty
and we need to teach the students.
And then once we take over the universities
with this ideology, then we can go into government
and then we can go into corporations
and we can change the world.
So I thought important book and the more I dug in,
the more I felt there was credibility to this,
not just the kind of sociological backdrop,
but to what it meant on campus.
And faculty, Harvard faculty, were telling me
that there really is no such thing as free speech on campus
and that there was a survey done a year or so ago
of the Harvard faculty and only 2% of the faculty admitted,
even in an anonymous survey,
admitted to having a conservative point of view.
So we have a campus that's 98%, non-conservative,
liberal, progressive, that's adopted this DEI construct.
And then I learned from a member of the search committee
for the Harvard president that they were restricted
in looking at candidates,
only those who met the DEI office's criteria.
And I shared this in one of my postings
and I was accused of being a racist.
And that's someone who believes in diversity
is a very good thing for organizations
and that equity and fairness is really important
and having an inclusive culture is critical
for a functioning of an organization.
So here I was, someone who was like,
okay, DEI sounds good to me,
at least in the small D, small E, I version of events,
but this DEI ideology is really problematic.
So what's the way to fix this in the next few years?
The infiltration of DEI
with the uppercase version of universities
and the things that have troubled you,
the things you saw at Harvard and elsewhere.
In the same way this was an eye-opening event for me,
it has been for a very broad range of other people.
I've never gotten, I mentioned general growth,
I got a lot of nice letters from people
for making money on a stock that went up 100 times.
But I literally get hundreds of emails, letters,
texts, handwritten letters, typed letters from people
the ages of 25 to 85 saying, Bill, this is so important.
Thanks for speaking out in this.
You were saying what so many of us believe
but have been afraid to say.
I described it as almost a McCarthy-esque kind of movement
and that if you challenge the DEI construct,
people accuse you of being a racist.
It's happened to me already.
I'm perhaps, I'm much less vulnerable
than a university professor who can get
shouted off campus, canceled.
I'm sort of difficult to cancel.
But that doesn't mean people aren't gonna try.
And I've been the victim of a couple of interesting articles
in the last few days, or at least one in particular
in the Washington Post, written by what I thought
was a well-meaning reporter.
But it's just clear that I've taken on some big parts
of at least the progressive establishment, DEI.
I'm also a believer that Biden should have stepped aside
a long time ago and it's only getting worse.
So I'm attacking the president, DEI, elite universities.
And you make some enemies doing that.
But I should say, I'm still at MIT and I love MIT
and I believe in the power of great universities
to explore ideas, to inspire young people to think,
to inspire young people to lead.
Let me ask, okay, how can you explore how to think
when you're only shared a certain point of view?
How can you learn about leadership when the governance
and leadership of the institution is broken
and exposure to ideas, if you're limited
in the ideas that you're exposed to?
So I think university is at risk.
I mean, the concerning thing is if 34 student organizations
that each have, I don't know, 30 members or maybe more,
right, that's 1,000, okay, that's a meaningful percentage
of the campus, perhaps, that ultimately respond.
Now, 10 or so of the 30 withdrew the statement
once many of the members realized what they had written.
So I don't think, it seems like the statement was signed
by the leadership and not necessarily supported
by all the various students that were members.
But if the university teaches people these precepts,
this is the next generation of leaders.
Normally, if you think about, I wrote my college thesis
on university admissions.
The reason why controlling the gates
of the Harvard institution, the admissions office
is important is that many of these people who graduate
end up with the top jobs in government
and ultimately become judges.
They permeate through society,
and so it really matters what they learn.
And if they're limited to one side of the political aisle
and they're not open to a broad array of views,
and this represents some of the most elite institutions
in our country, I think it's very problematic
for the country long-term.
Yeah, I 100% agree.
And I also felt like the leadership wasn't even part
of the problem as much as they were almost out of touch,
like unaware that this is an important moment,
it's an important crisis, it's an important opportunity
to step up as a leader and define the future
of an institution.
So I don't even know where the source of the problem is.
It could be literally government structure,
as we've been talking about.
Well, it's two things.
I think it's government structure.
I also think universities are selecting,
they're not selecting leaders.
It's not clear to me that universities
should necessarily be run by academics.
The dean of a university, the person who helps,
there's sort of the business of the university,
and then there's the academics of the university,
and having, I would argue, having a business leader
run these institutions, and then having a board
that has itself diverse viewpoints,
and by the way, permanently structured
to have diverse viewpoints,
is a much better way to run a university
than picking an academic that the faculty supports,
because one of the things I learned
about how faculty get hired at universities,
ultimately it's signed off by the board,
but the new faculty are chosen
by each of the various departments.
Once the departments tip,
there's sort of a tipping point politically,
where once they tip in one direction,
the faculty recruit more people like themselves,
and so the departments become more and more progressive,
if you will, with the passage of time,
and they only advance candidates
that match their, that meet their political objectives.
It's not a great way to build an institution
which allows for...
Small D, diversity.
It allows for, yeah, diversity,
and diversity, by the way, is not just race and gender,
and that's also something I feel very strongly about.
Well, luckily, engineering, robotics,
is touched last by this.
It is touched, but when I am at the computing building,
Stata and the new one, politics doesn't infiltrate,
or I haven't seen it infiltrate
quite as deeply as elsewhere, but...
It's in the biology department at Harvard,
because biology is controversial now.
Yes, yes, yes.
Because biology and gender,
you know, there are faculty,
there's a woman at Harvard who was
literally canceled from the faculty as a member,
I think she was at the med school,
and she was, you know, she made the argument
that there are basically, you know,
two genders determined by biology.
She wasn't allowed to stay.
That's another topic for another time.
That's another topic.
You should do a show on that one.
That'd be an interesting one.
So as you said, technically, Claudine Gay,
the president of Harvard, resigned over plagiarism,
not over the thing that you were initially troubled by.
It's hard to really know, right?
It's not like a provable fact.
I would say at a certain point in time,
she lost the confidence of the faculty,
and that was ultimately the catalyst.
And whether that was,
how much of that was the plagiarism issue,
and how much of that was some of the things
that preceded it, or was it all of these issues
in their entirety, we don't really,
there's no way to do a calculus.
Can you explain the nature of this plagiarism,
from what you remember?
So Aaron Cerbarium and Christopher Rufo,
one from the Free Beacon, and Chris, you know,
surfaced some allegations on,
or identified some plagiarism issues
that I would say the initial examples were, you know,
use of the same words with proper attribution,
some missing, quote, you know, footnotes.
And then over time, with I guess more digging,
they released, I think ultimately,
something like 76 examples of what they call plagiarism
in I think eight of 11 of her articles.
And one of the other things that came forth here
is as president of the university,
she had sort of the thinnest transcript academically
of any previous president.
You know, very small, relatively small body of work,
and then when you couple that
with the amount of plagiarism that was pervasive,
and then I guess some of the other examples that surfaced
were not missing quotation marks,
where the authors of the work
felt that their ideas had been stolen.
And really, plagiarism is academic fraud.
There are indicia,
one indicia of plagiarism is a missing footnote.
That could also be a clerical error.
And so when a professor's accused of plagiarism,
the university does sort of a deep dive.
They have these administrative boards,
and it can take six months, nine months, a year
to evaluate, you know, intent matters.
Was this intentional theft of another person's idea?
That's academic fraud.
Or was this sloppy, you know, you missed,
or just humanity, right?
You miss a footnote here or there.
And I think once it got to a place where people felt
it was theft of someone else's intellectual property,
that's when it became intolerable
for her to stay as president of Harvard.
So is there a spectrum for you
between different kinds of plagiarism,
maybe plagiarizing words and plagiarizing ideas
and plagiarizing novel ideas?
Of course.
The common understanding of plagiarism,
if you look in the dictionary, it's about theft.
Theft requires a intent.
Did the person intentionally take someone else's ideas
or words?
Now, if you're writing a novel, right,
words matter more, right?
If you're taking Shakespeare
and presenting it as your own words.
If you're, you know, writing about ideas,
you know, ideas matter, but you're not supposed
to take someone else's words
without properly acknowledging them,
whether it's quotation marks or otherwise.
But in the context of a academic's life's work before AI,
everyone's gonna have missing quotation marks and footnotes.
I remember writing my own thesis.
You know, I would write, I would take books
you couldn't take out of Widener Library,
so I'd have index cards and I'd write stuff on index cards
and I'd put a little citation to make sure
I remembered to cite it properly.
And, you know, scrambling to do your thesis,
get it in on time, what's the chances you forget
at what point, what are your words versus the author's words
when you forget to put quotation marks?
Just the humanity, you know, the human fallibility of it.
So, you know, you don't get, it's not academic fraud
to have human fallibility, but it's academic fraud
if you take someone else's ideas
that are an integral part of your work.
Is there a part of you that regrets that,
at least from the perception of it,
the president of Harvard stepped on over plagiarism
versus over refusing to say that the calls
for genocide are wrong?
Again, I think it would have sent a better message
if a leader fails as a leader,
and that's the reason for their resignation or dismissal,
then she gets, if you will,
caught on a technical violation
that had nothing to do with failed leadership,
because I don't know what lesson that,
you know, what lesson that teaches the board
about selecting the next candidate.
I mean, the future of Harvard,
a lot of it's gonna depend on who they pick
as the next leader.
Here's an interesting anecdote
that I think has not surfaced publicly.
So a guy named Larry Bacow
was the previous president of Harvard.
Larry Bacow was on the search committee,
and they were looking for a new president.
And what was strange was they picked an old white guy
to be president of Harvard when there was, you know,
a call for a more diverse president.
And what I learned was Harvard actually ran a process,
had a diverse new president of Harvard,
and in the due diligence on that candidate
shortly before the announcement of the new president,
they found out that the president,
that presidential candidate had a plagiarism problem.
And the search had gone on long enough
they couldn't restart a search to find another candidate,
so they picked Larry Bacow off the board,
off the search committee,
to be the next president of Harvard
as kind of an interim solution.
And then there was that much more pressure
to have a more diverse candidate this time around,
because it was a big disappointment
to the DEI office, if you will,
and I would say to the community at large,
that Harvard, of all places,
couldn't have a racially diverse president.
It sent an important message.
So the strange thing is that they didn't do due diligence
on President Gay,
and that it was a relatively quick process.
So the whole thing, I think,
is worthy of further exploration.
So this goes deeper than just the president?
Yes, for sure.
When a company fails, most people blame the CEO.
I generally blame the board, right?
Because the board's job is to make sure
the right person's running the company,
and if they're failing, help the person.
If they can't help the person, make a change.
That's not what's happened here.
The board's hand was sort of forced from the outside,
whereas they should have made their own decision
from the inside.
Do you still love Harvard?
Sure.
It's a 400-odd-year institution.
It's enormously helpful to me in my life, I'm sure.
My sister also went to Harvard,
and the experiences, learnings, friendships, relationships.
I'm very happy with my life.
Harvard was an important part of my life.
I went there for both undergrad and business school.
I learned a ton, met a lot of faculty,
a lot from a number of my closest friends,
who I still really keep in touch with.
I made then.
So yeah, it's a great place, but it needs a reboot.
Yeah, I still have hope.
I think universities are really important institutions.
You know, when I went to Harvard,
there were 1,600 people in my class.
I think today's class is about the same size,
and their online education
really has not sort of taken off, right?
So I heard Peter Thiel speak at one point in time,
and he's like, what great institution do you know
that's truly great that hasn't grown in 100 years, right?
And the incentives, in some sense, of the alums
are for it, it's a bit like a club.
If you're proud of the elitism of the club,
you don't want that many new members,
but the fact that the population has grown of the country
is so, you know, significantly,
since certainly I was a student in 1984,
and the fact that Harvard recruits people
from all over the world, it's really serving
a smaller and smaller percentage of the population today.
And you know, some of our most talented
and successful entrepreneurs, anyway.
You know, it's a token of success
that they didn't make it through their undergraduate years.
You know, they left as a freshman,
or they didn't attend at all.
For entrepreneurs, yes, but it's still a place.
Very important for research,
very important for advancing ideas,
and yes, in shaping dialogue
and the next generation of Supreme Court justices,
and you know, members of government, politicians.
So yes, it's critically important,
but it's not doing the job it should be doing.
Nari Oxman, somebody you mentioned
several times throughout this podcast,
somebody I had a wonderful conversation with,
a friendship with, I've known, looked up to her,
admired her, I've been a fan of hers for a long time,
of her work, and of her as a human being.
Looks like you're a fan of hers as well.
Yes.
What do you love about Nari?
What do you admire about her as a scientist,
artist, human being?
I think she's the most beautiful person I've ever met,
and I mean that from like the center of her soul.
She's the most caring, warm, considerate,
you know, thoughtful person I've ever met,
and she couples those remarkable qualities
with brilliance, incredible creativity,
beauty, elegance, grace.
Yeah, I'm talking about my wife,
but I'm talking incredibly dispassionately.
But I mean what I say.
She's the most remarkable person I've ever met,
and I've met a lot of remarkable people,
and I'm incredibly fortunate to spend
a very high percentage of my lifetime with her
ever since I met her, you know, six years ago.
So she's been a help to you
through some of the rough moments you've described?
For sure, I mean I met her at the bottom,
which is not a bad place to meet someone if it works out.
Is there some degree of yin and yang
with the two personalities you have?
You have described yourself as emotional and so on,
but it does seem the two of you
have slightly different styles
about how you approach the world.
Well, interestingly, we have a lot of like,
you know, we come from very similar places in the world.
You know, there are times where you feel like
we've known each other for centuries.
You know, I've met her parents for the first time,
you know, a long time ago, almost six years ago as well.
And I knew her parents were from Eastern Europe originally,
so I asked her father like what, you know,
what city did her family come from originally?
And I called my father and asked him,
you know, Dad, what's, you know, Grandpa Abraham,
what's the name of the city?
And then I put the two cities into Google Maps
and they were 52 miles apart, which I thought was pretty cool.
Then of course, at some point we did genetic testing,
make sure we weren't related, which we were not.
But we share incredible commonality on values.
We are attracted to the same kind of people.
You know, she loves my friends, I love hers.
We love doing the same kind of things.
We're attracted to, you know,
we like spending time the same ways.
And she has, yes, more emotion, more elegance.
She doesn't like battles, but she's very strong.
But she's more sensitive than I am.
Yeah, you are constantly in multiple battles
at the same time and there's often the media,
social media, it's just fire everywhere.
You know, that hasn't really been the case for a while.
I've had relative peace for a long time
because as I stopped being,
as I haven't had to be the kind of activist
I was earlier in my career, I think since October 7th,
yes, I do feel like I've been in a war.
Can you tell me the saga of the accusations against Nary?
So I did not actually surface the plagiarism allegations
against President Gay that surfaced by, you know,
Aaron and maybe Christopher Rufo as well,
or maybe Chris helped promote what Aaron
and some anonymous person identified.
But I certainly, it was a point in time
where the board had said we're 100% behind her
and unanimously, and I really felt she had to go.
So it didn't bother me at all
that they had identified problems with her work.
So I shared, I reposted those posts
and then when the board, she ultimately resigned
and she got a $900,000 a year professorship
continuing at Harvard, I said, look,
in light of her limited academic record
and these plagiarism allegations, she had to go.
I knew when I did so, I assumed,
I was actually a bit paranoid
about that thesis I had written.
I only had one academic work,
but I hadn't checked it for plagiarism
and I thought that's gonna happen.
Actually, I had someone, I did not have a copy on hand,
so I got a copy of my thesis and I remember writing it.
Harvard at the time was pretty,
they kind of gave you a lecture about making sure
you have all your footnotes and quotation marks.
I learned later that apparently they had a copy
of my thesis at the New York Public Library
and a member of the media told me he was there online
with a dozen other members of the media,
all trying to get a copy of my thesis
to run it through some AI.
They had to first do optical character recognition
to convert the paper document into digital,
but fortunately, through a miracle, I didn't have an issue.
I didn't think about Neri, of course,
who has whatever, 130 academic works.
We were just at the end of a vacation for Christmas break
and it was early in the morning for vacation time
and all of a sudden, I hear my phone ringing
in the other room or vibrating in the other room
multiple times, I'm like, hmm.
I pick up the phone, it's our communication guy, Fran McGill
and he's like, Bill, Business Insider has apparently
identified a number of instances of plagiarism
in Neri's dissertation, let me send you this email.
He sent me the email and they had identified four paragraphs
in her 330 page dissertation where she had cited the author
but she had used the vast majority of the words
and that those paragraphs were from the author
and she should have used quotation marks
and then there was one case where she paraphrased correctly
an author but did not footnote that it was from his work
and so we were presented with this
and told they're gonna publish in a few hours
and we're like, well, can we get to the next day?
We're just about to head home and they're like, no,
we're publishing by noon, we need an answer by noon
and so we downloaded the copy of her thesis
on the slow internet and Neri checked it out
and she said, you know what, looks like they're right
and I said, look, you should just admit your mistake
and she wrote a very simple, gracious, yes,
I should have used quotation marks
and on the author, I failed to cite.
She pointed out that she cited them eight other times
and wrote a several paragraph section of her thesis
acknowledging his work and none of these were important
parts of her thesis but she acknowledged her mistake
and she said, I apologize for my mistake
and I apologize to the author who I failed to cite
and I stand on the shoulders of all the people
who came before me and looking to advance work
and we sort of thought it was over.
We head home.
In flight on the way home, although we didn't realize this
until we got back the following day,
Business Insider published another article
and said, Neri Oxman admits to plagiarism.
Plagiarism, of course, is academic fraud
and this thing goes crazy viral.
The title is Bill Ackman's Wife, Celebrity Academic,
Neri Oxman and they use the term celebrity
because there are limits to what legitimate media
can go after but you know, celebrities,
there's a lot more leeway in the media
in what they can say so that's why they call her a celebrity.
First time ever she'd been called a celebrity
and they basically, she's admitting to academic fraud
and then they said, and then the next day
at 5.19 p.m., I remember the timeline pretty well,
an email was sent to Fran McGill saying,
you know, we've identified two dozen other instances
of plagiarism in her work, 15 of which are Wikipedia entries
where she copied definitions and the others were mostly
software, hardware, manuals for various devices
or software she used in her work,
most of which were in footnotes where she described
a nozzle for a 3D printer or something like this
and they said, we're publishing, you know, tonight.
The email they sent to us was 6,900 words, it was 12 pages,
it's practically indecipherable,
you couldn't even read it in an hour
and we didn't have some of the documents
they were referring to and I'm like,
now you know what I'm gonna do?
I think it'll be useful to provide context here.
I'm gonna do a review of every MIT professor's dissertations
every published paper, AI's enabled this
and so that was, I put out a tweet basically saying that
and we're doing a test run now, we have to get it right
and I think it'll be a useful exercise,
provide some context if you will
and then this thing goes crazy viral
and you know, Mary is a pretty sensitive person,
pretty emotional person and someone who's a perfectionist
and having everyone in the world thinking you committed
academic fraud is a pretty damning thing.
Now they did say they did a thorough review
of all of her work and this is what they found
and I'm like, sweetheart, that's remarkable,
I did 130 works, 73 of which were peer reviewed,
blah, blah, blah and she's published in Nature Science
and all these different publications.
That's actually, it's a pretty good batting average
but you know, they can't, this is wrong, right?
This is not academic fraud, okay,
these are inadvertent mistakes
and the Wikipedia entries,
Mary actually used Wikipedia as a dictionary,
this is the early days of Wikipedia
and they also referred to the MIT handbook
which has a whole section on plagiarism, academic handbook
and if you read it, which I ultimately did,
they make clear a few things.
Number one, there's plagiarism, academic fraud
and there's what they call inadvertent plagiarism
which is clerical errors where you make a mistake
and it depends on intent
and there's a link that you can go to
which is a section on if you get investigated at MIT,
what happens, what's the procedure,
what's the initial stage, what's the investigative stage,
what's the procedure, if they identify it
and they make very clear that academic fraud is,
and they list plagiarism, you know,
research, theft, a few other things
but it does not include honest errors.
Honest errors are not plagiarism under MIT's own policies
and in the handbook, they also have a big section
on what they call common knowledge
and common knowledge depends on
who you're writing your thesis for
and so if it's a fact that is known by your audience,
you're not required to quote or cite
and so all those Wikipedia entries
refer things like sustainable design, computer-aided design.
She just took a definition from Wikipedia,
common knowledge to her readers,
no obligation under the handbook, totally exempt.
On the using the same words,
she referred to like, whatever, some kind of 3D printer.
She was the Stratasys 3D printer
and she quoted from the manual.
Right away, Stratasys is a company you consulted for,
they're very, you don't need to,
that's not something, you're not stealing your ideas.
You're describing a nozzle for a device
you use in your work and a footnote.
That's not a theft of idea, right?
And so I'm like, this is crazy
and so this has got to stop
and so I reach out to a guy I knew
was on the board of Business Insider, the chairman
and his name is gonna come public shortly.
I committed to that time to keep his name confidential.
It's now surfaced publicly in the press.
Can I just pause real quick here?
Just to, I don't know,
there's a lot of things I want to say
but you made it pretty clear
but just as a member of the community,
there's also like a common sense test.
I think you're more precisely like legal
and looking at, but there's just like a bullshit test
and like nothing that Neri did is plagiarism
in the bad meaning of the word.
Plagiarism right now is becoming another ism
like racism or so on, using as an attack word.
I don't care what the meaning of it is
but there's the bad academic fraud like theft.
Theft of an idea and maybe you can say a lot of definitions
and this kind of stuff
but then there's just a basic bullshit test
where everyone knows this is a thief
and this is definitely not a thief
and there's nothing about anything that Neri did,
anything in her thesis or in her life,
everyone that knows her, she's a rock star, right?
I just want to make it clear,
it really hurt me that the internet,
whatever is happening could go after,
could go after a great scientist
because I love science
and I love celebrating great scientists
and it's just really messed up
that whatever the machine,
we could talk about business insight or whatever,
social media, mass hysteria, whatever is happening,
we need the great scientists of the world
because that's like the future depends on them
and so we need to celebrate them and protect them
and let them flourish and let them do their thing
and keep them out of this whatever shitstorm
that we're doing to get clips and advertisements
and drama and all this, we need to protect them.
So I just want to say there's nobody I know
and a million friends that are scientists,
world-class scientists, Nobel Prize winners,
they all love Neri, they all respect Neri,
she did zero wrong.
And then the rest of the conversation
we can have about how broken journalism is and so on
but I just want to say that there's nothing
that Neri did wrong, it's not a gray area or so on.
I also personally don't love that Claudine Gay
is a discussion about plagiarism
because it distracts from the fundamentals that is broken.
This becomes some weird technical discussion
but in case of Neri, did nothing wrong,
great scientist, great engineer at MIT and beyond,
she's doing a cool thing now, so anyway.
Could not have said it better myself.
Now obviously I'm focused on the technical part.
Right, because you want to be precise here.
Well it's not even that, I mean yes,
I have said that we're going to sue Business Insider
and in 35 years of my career of someone
who has not every article has been a favorable one,
not every article has been an accurate one,
I've never threatened to sue the media
and I've never sued the media but this is so egregious.
It's not just that she did nothing wrong
but they accused her of academic fraud,
they did it knowing, they referenced MIT's own handbook
so they had to read all the same stuff
that I read in the handbook, they did that work.
Then after I escalated this thing to Henry Blodgett,
the chairman of Business Insider,
to the CEO of Axel Springer,
I even reached out to Henry Kravis
at a certain point in time,
one of the controlling shareholders of the company
through KKR, laying out the factual errors in the article
Business Insider went public
after they said Nery committed academic fraud and plagiarism
and said we didn't challenge any,
the facts remain undisputed in the article.
So it's basically Nery committed plagiarism,
that's story one, Nery admits to plagiarism,
she admits to plagiarism,
she admitted to making a few clerical errors,
that's the only thing she admitted to
and she graciously apologized,
so they said Nery admits to plagiarism,
apologizes for plagiarism, that's incredibly damning.
And by the way, we're doing an investigation
because we're concerned
that there might have been inappropriate process,
but the facts of the story have not been disputed
by Nery Oxman or Bill Ackman and that was totally false.
I had done it privately, I'd done it publicly,
on Twitter, on X, I laid out,
I have a whole tech stream, a WhatsApp stream
with the CEO of the company and they doubled down
and they doubled down again
and so I don't sue people lightly and you have to stay tuned.
So you're, at least for now, moving forward with.
It's a certainty we're moving forward.
There's a step we can take prior to suing them
where we basically send them a letter demanding
they make a series of corrections,
that if they don't make those corrections,
the next step is litigation.
I hope we can avoid the next step
and I'm just making sure that when we present the demand
to Business Insider and ultimately to Axel Springer,
that it's incredibly clear how they defamed her,
the factual mistakes in her stories
and what they need to do to fix it.
And if we can fix it there,
we can move on from this episode
and hopefully avoid litigation.
So that's where we are.
I don't know, you're smarter than me,
there's technical stuff, there's legal stuff,
there's journalistic stuff,
but just fuck you Business Insider for doing this.
I don't know, I don't know much in this world,
but journalists aren't supposed to do that.
No, look, we're gonna surface
all of this stuff publicly, ultimately.
The email was not to Neri
saying there was plagiarism at her work.
The email came from a reporter named Catherine Long.
The headline was, your wife committed plagiarism.
Shouldn't she be fired from MIT?
Just like you caused Claudine Gay
to be fired from Harvard.
It was a political agenda.
She doesn't like me, okay?
And she was trying to hurt me
and they couldn't find plagiarism in my thesis.
And being the subject of short,
being a short seller,
the Herbalife battle went on for years,
they tried to do everything to destroy my reputation.
So they've already gone through my trash,
they've already done all that work.
So anything they could possibly find,
I've always lived a very clean life, thankfully.
And if you're gonna be an activist, short sell you better,
because they're gonna find out dirt on you if it exists.
And so they're like, how can we really hurt Bill?
By the way, Neri had left MIT years earlier.
When the reporter found out
she was no longer a member of the MIT faculty,
they were enraged, they didn't believe us.
They made us prove to us
she should no longer be on the MIT faculty
because they wanted to get her fired.
And by the way, malice is one of the important factors
in determining whether defamation's taken place.
And this was a malice driven,
this was not about news.
And the unfortunate thing about journalism
is business insider made a fortune from this.
This story was published and republished
by thousands of media organizations around the world.
It was the number one trending thing on Twitter
for like two days.
Every newspaper, it was on the front page
of every Israeli newspaper,
was on the front page of the Financial Times.
Okay, so this, and she's building a business.
And if you're CEO of a science company
and you committed academic fraud,
that's incredibly damaging.
But I ultimately convinced her that this was good.
I said, sweetheart, you're amazing, you're incredible,
you're incredibly talented,
but you're mostly known in the design world.
Now, everyone in the universe, okay,
has heard of Nary Oxman, okay?
We're gonna get this thing cleared up.
You're gonna be doing an event in six months
where you're gonna tell the world,
you're gonna go out of stealth mode,
you can tell the world about all the incredible things
that you're building and you're designing
and you're creating.
And it's gonna be like the iPhone launch
because everyone's gonna be paying attention
and they're gonna wanna see your work.
And that's how I try to cheer up, but I think it's true.
It is true, and your job is a good part
in seeing the silver lining of all this.
How is, just from observing her,
how did she stay strong through all of this psychologically?
Because at least I know she's pushing ahead with the work.
Oh, she's full speed ahead in her work.
She's built an amazing team.
She's hired 30 scientists, roboticists,
people who, biologists, plant specialists,
material scientists, engineers, really incredible crew.
She's built this 36,000 square foot lab in New York City
that's one of a kind.
It's still, they're working out of it.
It's still under construction
while they're working out of it.
And so she's gonna do amazing things.
But as I said, she's an extremely sensitive person.
She's a perfectionist.
Imagine thinking that the entire world thinks
you've committed academic fraud.
And so that was very hard for her.
She's a very positive person,
but I saw her in, I would say,
her darkest emotional period, for sure.
She's doing much better now.
But you can kill someone.
You can kill someone by destroying the reputation.
People commit suicide.
People go into these deep, dark, depression.
Well, my worry, primarily,
when I saw what Business Insider was doing,
is that they might dim the light
of a truly special scientist and creator.
It's not gonna happen.
But I also worry about others like Neri,
young Neris, that this sends a signal to
that might scare them.
And journalism shouldn't scare aspiring young scientists.
The problem is the defamation law in the US
is so favorable to the publisher, to the media,
and so unfavorable to the victim.
And the incentives are all wrong.
When you went from paper version of journalism to digital,
and you could track how many people click.
And it's a medium that advertising drives the economics.
And if you can show an advertiser more clicks,
you can make more money.
So a journalist is incentivized to write a story
that will generate more clicks.
How do you write a story that generate more clicks?
You get a billionaire guy, and then you go after his wife,
and you make a sensationalist story,
and you give them no time to respond.
Look at the timing here.
On the first story, they gave us three hours.
On the second one, the following day, 519 p.m.,
the email comes in, not to Neri, not to her firm,
but to my communications person,
who tracks us down by 530, 10 minutes later.
And they published their story 92 minutes after,
and they sent us,
we're gonna surface all these documents in our demand.
Read the email they sent,
whether you could even decipher it.
And by the way, there's a reason why academic institutions,
when a professor's accused of plagiarism,
is why they have these very careful processes
with multiple stages,
and they can take a year or more,
because it depends on intent.
Was this intentional?
In order to be a crime, an academic crime,
you gotta prove that they intentionally stole.
Look, in some cases, it's obvious.
In some cases, it's very subtle,
and they take this stuff super seriously.
But they basically accused Neri of academic crime,
and then 92 minutes later,
they said she committed an academic crime,
and that should be a crime,
and that should be punishable with litigation,
and there should be a real cost.
And we're gonna make sure there's a real cost,
reputationally and otherwise, to Business Insider,
and to Axel Springer,
because ultimately, you gotta look to the controlling owner.
They're responsible.
I'll just say that you, in this regard,
are inspiring to me
for facing, basically,
an institution that's whole purpose
is to write articles.
So you're like going into the fire.
My kid's school, the epithet for the school, or the saying,
is go forth unafraid.
I think it's a good way to live.
And again, words can't harm me.
The power of X, and we do owe Elon enormous thanks for this,
is now, so for example,
the Washington Post wrote a story about me
a couple days ago,
and I didn't think the story was a fair story.
So within a few hours of the story being written,
I'm able to put out a response to the story
and send it to a million 200,000 people,
and it gets read and reread.
I haven't checked,
but probably five million people saw my response.
Now, those are the people on X.
It's not everyone in the world.
There's a disconnection between the X world
and the offline world.
But reputation in my business is basically all you have.
And as they say,
you can take a lifetime to build reputation
and take five minutes to have it disappear,
and the media plays a very important role,
and they can destroy people.
At least we now have some ability to fight back.
We have a platform we can surface our views.
The typical old days,
they write an incredibly damning article,
and you point out factual errors,
and then two months later,
they bury a little correction on page whatever.
By then, the person was fired,
or their life was destroyed,
or their reputation's damaged.
You know, I was with Warren Buffett talking about media,
and it's something, a business he really loves.
He says, you know what, Bill?
He said, a thief with a dagger.
The only person who can cause you more harm
than a thief with a dagger is a journalist with a pen.
And those were very powerful words.
So you think X,
formerly known as Twitter,
is a kind of neutralizing force to that?
To the power of centralized journalistic institutions?
100%, and I think it's a really important one,
and it's really been eye-opening for me
to see how stories get covered in mainstream media.
And then you actually,
what I do on X is I follow people
on multiple sides of an issue.
And you can, or I post on a topic,
and I get to hear the other side.
You know, I read the replies.
And you know, the truth is something
that people have had a lot of question about,
particularly in the last, I would say, five years,
beginning with Trump's talking about fake news.
And a lot of what Trump said about fake news is true.
You know, the world, a big part of the world hated Trump
and did everything they could to discredit him, destroy him.
And you know, he did a lot of things,
perhaps deserving of being discredited,
used by a very imperfect, in some cases harmful, leader.
But, you know, everything from pre-election,
you know, the Hunter Biden laptop story in the New York Post
that, you know, then Twitter, you know,
made it difficult for people to share and to read,
you know, COVID.
You know, the Jay Bhattacharas of the world
questioning the government's response,
questioning, you know, long-term lockdowns,
questioning keeping kids out of school,
questions about masks, about vaccines,
which are still not definitively answered,
no counterbalance to the power of the government
when the government can shut down avenues for free speech
and where the mainstream media has kind of toe the line
in many extents to the government's actions.
So having a independently owned powerful platform
is very important for truth, for free speech,
for hearing the other side of the story,
for counterbalancing the power of the government.
Elon is getting, you know, a lot of pushback.
You know, the SpaceXes and Teslas of the world
are experiencing a lot of government,
you know, questions and investigations.
And, you know, even the president of the United States
came out and said, look, he needs to be investigated.
You know, I'm getting my own version of that
in terms of some negative media articles.
I don't know what's next.
But yeah, if you stick your neck out in today's world
and you go against the establishment
or at least the existing administration,
you can find yourself in a very challenged place.
And that discourages people from sharing stuff.
And that's why anonymous speech is important,
some of which you find on Twitter.
You mentioned Trump.
I have to talk to you about politics.
Sure.
Amongst all the other battles,
you've also been a part of that one.
Maybe you can correct me on this,
but you've been a big supporter
of various Democratic candidates over the years.
But you did say a lot of nice things about Donald Trump
in 2016, I believe.
So I was interviewed by Andrew Sorkin
a week after Trump won the election.
Yes.
And I made my case for why I thought
he could be a good president.
Yes.
So what was the case back then
and to which degree did that turn out to be true
and to which degree did it not?
To which degree was he a good president?
To which degree was he not a good president?
Look, I think what I said at the time
was the United States is actually a huge business.
And it reminds me a bit of the type of activist investments
we've taken on over time,
where this really, really great business
has kind of lost its way.
And with the right leadership, we can fix it.
And if you think about the business of the United States
you've got $32 trillion worth of debt.
So it's over leveraged and or it's highly leveraged
and the leverage is only increasing.
We're losing money, i.e. revenues aren't covering expenses.
The cost of our debt is going up
as interest rates have gone up
and the debt has to be rolled over.
We have enormous administrative bloat in the country.
The regulatory regime is incredibly complicated
and burdensome and impeding growth.
Our relations with our competitor nations
and our friendly nations are far from ideal.
And those conditions were present in 2020 as well.
They're just, I would say worse now.
And I said, look, it's a great thing
that we have a businessman as president.
And in my lifetime, it's really the first businessman
as opposed to, I mean, maybe Bush to some degree
was a business person, but I thought, okay.
I always wanted the CEO to be CEO of America
and now we have Trump.
Look, he's got some personal qualities that seem less ideal,
but he's gonna be president of the United States.
He's gonna rise to the occasion.
This is gonna be his legacy.
And he knows how to make deals.
And he's gonna recruit some great people
into his administration, I hoped.
And growth can solve a lot of our problems.
So if we can get rid of a bunch of regulations
that are holding back the country,
we can have a president.
Obama was a, I would say, not a pro-business president.
He did not love the business community.
He did not love successful people.
And having a president who just changed the tone
on being a pro-business president,
I thought would be good for the country.
And that's basically what I said.
And I would say Trump did a lot of good things.
And a lot of people, you can get criticized
for acknowledging that.
But I think the country's economy accelerated dramatically.
And that, by the way, the capitalist system
helps the people at the bottom best
when the system does well and when the economy does well.
The black unemployment rate was the lowest in history
when Trump was president.
And that's true for other minority groups.
So he was good for the economy.
And he recognized some of the challenges
and issues and threats of China early.
He kind of woke up NATO.
Now, again, the way he did all of this stuff,
you can object to.
But NATO actually started spending more money on defense
in the early part of Trump's presidency
because of his threats, which turned out to be a good thing
in light of ultimately the Russia-Ukraine war.
And I think if you analyze Trump objectively
based on policies, he did a lot of good for the country.
I think what's bad is he did some harm as well.
The, I do think civility disappeared in America
with Trump as president.
A lot of that's his personal style.
And how important is civility?
I do think it's important.
I do think he was attacked very aggressively by the left,
by the media that made him paranoid.
It probably interfered with his ability to be successful.
He had the Russian collusion investigation overhang.
And when someone's attacked,
they're not gonna be at their best,
particularly if they're paranoid.
I think there's some degree of that.
But I'm giving kind of a best of defense to Trump.
You look at how he managed his team, right?
Very few people made it through the Trump administration
without getting fired or quitting.
And he would say they were the greatest person in the world
when he hired them, and they're a total disaster
when he fired them.
It's not an inspiring way to be a leader
and to attract really talented people.
I think the events surrounding the election,
I think January 6th, he could have done a lot more
to stop a riot.
I don't consider it an insurrection,
but a riot that takes place in our Capitol
and where police officers are killed or die,
commit suicide for failure as they sought to do their job.
He stepped in way too late to stop that.
He could have stopped it early.
Many of his words, I think, inspired people,
some of whom with malintent, to go in there and cause harm
and literally to shut down the government.
There were some evil people, unfortunately, there.
So he's been a very imperfect president
and also, I think, contributed to the extreme amount
of divisiveness in our country.
So I was ultimately disappointed by the note of optimism.
And again, I always support the president.
I trust the people ultimately to select our next leader.
It's a bit like who wants to be a millionaire.
When you go to the crowd and the crowd says a certain thing,
you gotta trust the crowd.
But usually in who wants to be a millionaire,
it's a landslide in one direction,
so you know which letter to pick.
Here we had an incredibly close election,
which itself is a problem.
So my dream and what I've tried a little bit,
played politics in the last little period
to support some alternatives to Trump
so that we have a president.
I use the example, imagine you woke up in the morning,
it's election day, whatever it is,
November 4th, whatever, 2024,
and you still haven't figured out who to vote for
because the candidates are so appealing
that you don't know which lever to pull
because it's a tough call.
That's the choice we should be making as Americans.
It shouldn't be I'm a member of this party
and I'm only gonna vote this way.
I'm a member of that party and I'm gonna vote the other way
and I hate the other side.
And that's where we've been, unfortunately, for too long.
Or you might be torn because both candidates are not good.
Yeah.
So you wanna, I love a future where I'm torn
because the choices are so amazing.
The problem is the party system is so screwed up
and the parties are self-interested
and there's another governance problem,
right, an incentive problem.
Michael Porter, who was one of my professors
at Harvard Business School, wrote a brilliant piece
on the American political system
and all the incentives and market dynamics
and what he called a competitive analysis.
And it's a must read.
I should dig it up and send it around on X.
But it explains how the parties and the incentives
of these sort of self-sustaining entities
that were the people involved are not incentivized
to do what's best for the country.
It's a problem.
You've been a supporter of Dean Phillips
for the 2024 US presidential race.
What do you like about Dean?
I think he's a honest, smart, motivated,
capable, proven guy as a business leader.
And I think in six, almost in his three terms in Congress,
he ran when Trump was elected.
He said his kids cried, his daughters cried,
inspired him to run for office,
ran in a Republican district in Minnesota
for the last 60 years, was elected in a landslide,
has been reelected twice,
moved up the ranks in the Congress,
respected by his fellow members of Congress,
advanced some important legislation during COVID,
senior roles on various foreign policy committees,
centrist, considered I think the second most bipartisan
member of the Congress.
I'd love to have a bipartisan president.
That's the only way to kind of go forward.
But we'd enormously benefit if we had a president
that chose policies on the basis of what's best
for the country, as opposed to what his party wanted.
What I like about him is he's financially independent.
He's not a billionaire, but he doesn't need the job.
The party hates him now,
because he challenged the king, right?
And so, but he's willing to give up his political career
because what he thought was best for the country.
He tried to get other people to run
who were of higher profile, had more name recognition.
None would.
No one wants to challenge Biden.
If they want to be, have a chance to stay in office
or run in the future, but he's very principled.
I think he would be a great president,
but he needs, his shot is Michigan,
but he needs to raise money in order to,
he's only got a couple of weeks
and he's got to be on TV there.
That's expensive.
So we'll see.
So he has to increase name recognition
and all that kind of stuff.
Also, as you mentioned, he's young.
Yeah, he's 55, but he's a young 55.
You see him play hockey.
I guess 55, no matter what, is a pretty young age.
I'm 57, I feel young.
I can do more pull-ups today than I could as a kid.
So that's a standard.
You're at the top of your tennis game.
I'm at the top of my tennis game, for sure.
Maybe there's someone that would disagree with that.
And by the way, the other thing to point out here is,
and I have been pointing this out as have others,
Biden is, I think he's done.
I mean, it's embarrassing.
It's embarrassing for the country,
having him as a presidential candidate,
let alone the president of the country.
It's crazy.
And it's just gonna get worse and worse.
And he should, you know, the worst of his legacy
is his ego that prevents him from stepping aside.
And that's it.
It's his ego.
And it is so wrong and so bad and so embarrassing.
We talked to people, I was in Europe,
I was in London a few days ago, and people were like,
Bill, how can this guy be a president?
And it's a bit like, again,
I go back to my business analogy.
Being a CEO is like a full contact sport.
Being president of the United States is like some combination
of wrestling, marathon running, you know,
try being a triathlete.
I mean, you gotta be at the serious physical shape
and at the top of your game to represent this country.
And he is a far cry from that.
And it's just getting worse.
And it's embarrassing.
And he cannot be, and by the way, every day he waits,
he's handing the election to Trump
because it's harder and harder
for an alternative candidate to surface.
Now, Dean is the only candidate left on the Democratic side
that can still win delegates.
He's on the ballot in 42 states.
And the best way for Biden to step aside
is for Dean to show well in Michigan.
And so you think there is a path with the delegates
and all that kind of stuff?
100%.
So what has to happen is New Hampshire,
he went from zero to 20% of the vote
and 10 weeks with no name recognition.
I helped a little bit, Elon helped.
We did spaces for him.
We had 350,000 people on the spaces,
some originally 40,000 live or something,
and then the rest after.
And then he was on the ground in New Hampshire.
And New Hampshire is one of the states
where you don't need to be registered to a party
to vote for the candidate.
So it's like jump ball.
And he got 20%.
And that's with a lot of independents
and Democrats voting for Haley.
Haley, who I like and who I've supported,
does not look like she's gonna make it.
Trump is really kind of running the table.
And so vote for Haley as an independent Michigan,
maybe throw away your vote.
I think it increases the likelihood
that Dean can get those independent votes.
If he could theoretically, again, he needs money.
He could beat Biden in Michigan.
Biden's doing very poorly in Michigan.
His polls are terrible.
The Muslim community is not happy with him.
And he really has spent no time there.
And so if he's embarrassed in Michigan,
it could be a catalyst for him withdrawing,
then Dean will get funding.
If he wins Michigan or shows well in Michigan
and people say he's viable, he's the only choice we have,
he'll attract from the center,
he'll attract from people,
Republicans who won't vote for Trump,
which they're a big percentage.
Could be 60% or more.
It could be 70% won't vote for Trump.
And also from the Democrats.
So I think he's a really interesting candidate,
but we gotta get the word out.
Yeah, I got a chance to chat with Dean.
I really like him.
I really like him.
And I think the next president of the United States
is gonna have to meet and speak regularly
with Zelensky, Putin, Netanyahu with world leaders
and have some of the most historic conversations,
agreements, negotiations.
And I just don't see Biden doing that.
No.
And not for any reason, but sadly, age.
Think about it this way.
When Biden's president now,
you saw his recent impromptu press conference,
which he did after the special prosecutor report,
basically saying the guy was way past his prime.
And then he confused the president of Mexico
and the president of Egypt.
So they're very careful when they roll him out.
And he's scripted and he's always reading from a lectern.
Imagine the care they have in exposing him.
And when they expose him, it's terrible.
Okay, imagine how bad it is for real.
It's not good.
No, really bad for America.
And I'm upset with him and upset with his family.
I'm upset with his wife.
This is the time where the people closest to you
have to put their arms around you and say,
dad, honey, you've done your thing.
This is gonna be your legacy
and it's not gonna be a good one.
Great leaders should also know when to step down.
Yeah, and one of the best tests of a leader
is succession planning.
This is a massive failure of succession planning.
Outside of politics, let me look to the future.
First, in terms of the financial world.
What are you looking forward to in the next couple of years?
You have a new fund.
What are you thinking about in terms of investment,
your own and the entire economy,
and maybe even the economy of the world?
Sure, so the SEC doesn't allow,
doesn't like us to talk about new funds
that we're launching that we filed with the SEC.
Sure.
But I would say I do, and by the way,
if anyone's ever interested in a fund,
they should always read the prospectus carefully,
including the risk factors.
That's very, very important.
But I like the idea of democratizing access
to good investors, and I think that's an interesting trend,
so we wanna be part of that trend.
In terms of financial markets, generally the economy,
a lot is gonna depend upon the next leader of the country,
so we're kind of right back there.
The leadership of the United States
is important for the US economy,
it's important for the global economy,
it's important for global peace,
and we've gone through a really difficult period,
and we need a break.
But look, I think the United States
is an incredibly resilient country.
We have some incredible moats.
Among them, we have the Atlantic and the Pacific,
and we have peaceful neighbors to the north and the south.
We're an enormously rich country.
Capitalism still works effectively here.
I get optimistic about the world
when I talk to my friends who are either venture capitalists
or my hobby of backing these young entrepreneurs.
I talk to a founder of a startup
if you wanna get optimistic about the world,
so I think technology is gonna save us.
I think AI, of course,
has its frightening terminator-like scenarios,
but I'm gonna take the opposite view,
that this is gonna be a huge enabler of productivity,
scientific discovery, drug discovery,
and it's gonna make us healthier, happier, and better.
So I do think the internet revolution had a lot of good,
it's obviously some bad.
I think the AI revolution's gonna be similar,
but we're at this other really interesting juncture
in the world with technology,
and we're gonna have to use it for our good.
On the media front, I'm happy about X,
and I think Elon's gonna be successful here.
I think advertisers will realize
it's a really good platform.
The best way to reach me,
if you wanna sell something to me,
I've actually bought stuff on some ads in X.
I don't remember the last time I responded
to direct response advertising.
In terms of my business, I have an incredible team.
It's tiny, and we're one of the smallest firms
relative to the assets we manage.
It's a bit like the Navy Seals, not the US Army.
We have only 40 people at Persian Square,
so it's a tight team.
I think we'll do great things.
I think we're early on.
My ambitions, investment-wise, I've always wanted to,
I've always said I'd like to have a record
as good as Warren Buffett's.
The problem is each year he adds on another year.
He's now in his 93rd year, so I've got 36 more years
to just get where he is,
and I think he's gonna add a lot more years.
I'm excited about seeing what Neri's gonna produce.
She's building an incredible company.
They're trying to solve a lot of problems
with respect to products and buildings
and their impact on the environment.
Her vision is how do we design products
that by virtue of the product's existence,
the world is a better place?
Today, her world is a world where the existence
of the new car actually is better for the environment
than if the new car hadn't existed,
and think about that in every product scale.
That's what she's working on.
I don't wanna give away too much,
but you're gonna see some early examples
of what she's working on.
So again, I get excited about the future.
And crises are sort of a terrible thing to waste,
and we've had a number of these here.
I think this disaster in the Middle East,
my prediction is the next few months,
this war will largely be over
in terms of getting rid of Hamas.
I think I can envision a world in which Saudi Arabia,
some of the other Gulf states come together,
take over the governance and reconstruction of Gaza.
Security guarantees are put in place.
The Abraham Accords continue to grow.
A deal is made.
Terrorists are ostracized.
That this October 7th experience on the Harvard,
Penn, MIT, Columbia, unfortunately other campuses,
is a wake-up call for universities generally.
People see the problems with DEI,
but understand the importance of diversity and inclusion,
but not as a political movement,
but as a way that we return to a meritocratic world
where someone's background is relevant
in understanding their contribution.
But it's not, we don't have race quotas
and things that were made illegal years ago
actually being implemented in organizations on campus.
So I think there's, if we can go through a corrective phase,
and I'm an optimist, and I hope we get there.
So you have hope for the entirety of it, even for Harvard.
I hope even for Harvard.
It's generally hard to break 400-year-old things.
Well, I share your hope,
and you're a fascinating mind, a brilliant mind,
persistent, as you like to say, and fearless.
The fearless part is truly inspiring,
and this was an incredible conversation.
Thank you.
Thank you for talking today, Bill.
Thank you, Lex.
Thanks for listening to this conversation with Bill Ackman.
To support this podcast,
please check out our sponsors in the description.
And now, let me leave you with some words
from Jonathan Swift.
A wise person should have money in their head,
but not in their heart.
Thank you for listening, and hope to see you next time.