Bill Ackman: Investing, Financial Battles, Harvard, DEI, X & Free Speech | Lex Fridman Podcast #413
- The only person who cause you more harm than a thief with the 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 Fridman 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 mention 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. You know 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. 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, he said 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 is a weighing machine, you
know, much more accurate. It's gonna tell you
what something's worth. And so if you can define
what something's worth, then you can really take
advantage of the market 'cause it's really here to help you. And that's kinda the message of the book. - In that same way, there's
a kind of difference between speculation and investing. - Yeah, speculation is just, it's a bit like buying
trading crypto, right? - [Lex] Strong words. - (laughs) 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, it's not the
right way to think about love, but it's... Yeah. 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 of called value investing? How do you get to the value of a thing, even like 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, the value is the present value of the cash you can take out of it over its life. So if you think about a bond, a 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 the stock you have
to make predictions about the business. You know how many widgets
are gonna sell this year, how many 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 where with a very high
degree of confidence, we know what those cash flows are gonna be for a very long time. And the very few businesses that you can have a really
high degree of certainty about. And as a result many
investments are speculations 'cause 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 kind of 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 you know, 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, so recorded music business. And it's in the business of owning rights to sort of the music publishing
rights of songwriters. And you know, 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. And so that's a pretty good
backdrop to invest in a company. And the company basically owns a third of the global recorded music, 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 wanna come work for them, but they also have this
incredible library of the Beatles, the Rolling Stones, U2, et cetera. 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 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 and you pay, call it 10, 11 bucks a month for a subscription or
last 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, 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 'cause 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 then 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 with, so do you have to also think about that? Like 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. 'Cause I think the Beatles are forever. I think U2 is forever. I think Rolling Stones are forever. So they had a nice base of
assets that were important and I think will forever be, and forever is a long time. But you know, 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 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 if 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 values really gonna reside in the content owners, and that's really the
artists and the label. - And I actually think
AI is 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 a thousands of years, but musicians and music has been around. Like we actually care to know who's the musician that created it. Just like we wanna know
that who's the artist, human artists that created a piece of art. - I totally agree. And I think if you think about it there's other lots of other technologies and computers that have been used to generate music over time, but no one falls in love with a computer generated track, right? And you know, Taylor Swift, you know 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 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 an influence and there'll be a robot Taylor Swift and it doesn't really matter-- - That's a copyrightable
asset I would think. - [Lex] And then there'll be-- - I'm not sure that's the
world I'm excited about. - Well, that's a different discussion. The world is not gonna ask your permission to become what it's becoming but you could 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. - That's sort of one example. Another example could be
just the restaurant industry. If you can look at businesses
like a McDonald's, right? It's a whatever the company's
like a 1950 vintage business and here we are 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 but
I think the hamburger and fries is probably forever. - The Beetles, the Rolling Stones, the hamburger and fries are forever. I was eating at Chipotle last night as I was preparing these notes (laughs) - Thank you. - And yeah, it is one of
my favorite places to eat. You said it is a place that you eat, well, you obviously also invest in it. What do you get at Chipotle? - I tend to get a double chicken. - Bowl or burrito? - I like the burrito, but I generally try to order
the bowl, cut the carb. - [Lex] For health reasons. Alright. - 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? Like literally like the
process of figuring out what the value of a company is? Like how do you do the research? Is it reading documents? Is it talking to people? How do you do it? - It's all the above. So Chipotle, what attracted us initially is the stock price dropped by about 50%. Great company, great concept, you know 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, it's
such a great concept, but their approach was not, it was far from my deal, but we start with usually
reading the SEC filing. So companies file a 10
k or an annual report, they file these quarterly
reports called 10 Qs. They have a proxy statement which describes kinda the governance, the board structure, conference call transcripts
are publicly available. It's kind of very helpful
to go back five years and kinda learn the story. You know here's how management
describes their business, here's what they say they're gonna do, and you can follow along
to see what they do. It's like a historical record of how competent and truthful they are. 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,
wanna learn more about, try to get a sense. Public filings of companies generally give you a lot of information but not everything you wanna know. And you can learn more
by talking to experts about some of the industry
dynamics, the personalities. You wanna get a sense of management. I like watching 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. (both chuckling) - I'll mention it to the CEO. - Don't make promises you can't keep Bill. - I'm not making, I can't. Brian Nichols a fantastic CEO, he's not gonna spend $1 that he doesn't think its
the company's best interest. - All right. All I want is
free Chipotle, come on now. What was I 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 you know even beyond
the foreseeable distance. Those are the kinda
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 business of 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 kinda lost its way, but it's recoverable. And 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 like 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 play? - The most difficult
analysis to do as an investor 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 disruptive
ability in history, right? Technology, you know, a
couple of 19 year olds can leave whatever university or maybe they didn't even
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 wanna, 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 restaurants. A big part of, it's a
really simple business. And if you get Chipotle right and you're at a hundred 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's 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 Horton's, you know, all
these various brands, Popeye's. 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, you
know, local entrepreneurs. - So if the restaurant has
scaled to a certain number that means they've figured out some kind of system that works and 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. And what's interesting about Chipotle is what they've achieved is difficult, right? They're not buying frozen
hamburgers getting shipped in. They're buying fresh sustainably sourced ingredients, preparing food in the store. That was a first, right? The quality of the product
at Chipotle is incredible, it's the highest quality
food you can get for, you can get a serious
dinner for under 20 bucks and eat really healthfully 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 steak 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? - Yeah. - 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 patty. - The patty and it's cheap. It's like a $1.50 or $2 for per patty and it's about 250 calories
and it's just meat. And despite like the criticism
of memes out there, that's-- - [Bill] Pretty healthy stuff. - It's 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. - Is 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 gotta do what you love, what makes you happy, and that's what makes me happy. - I think we should maybe we'll have Burger King feature in it. What about Flame World? What's with these fried burgers? We gotta 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 don't have allegiance. - 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 moats and this kind of remind 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 moat. And it's also interesting to analyze that, 'cause the consumer is
just a fan of technology. Why is Google still
around like they've been, it's not just a search engine, it's doing it 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. And really the sort of
AI scare I would call it. You know Microsoft
comes out with Chat GPT, they do an amazing demonstration. People like this most incredible product. And Google, which had been
working on AI even earlier, obviously the Microsoft was behind an AI. It was really their chat
GPT 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 an 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 low price. And our view on Google, one way to think about it when
a business becomes a verb, that's usually 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 and a one line where
you type in your search. You know the 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 whether your ads work. They used to say about advertising spend a fortune and you just don't know which 50% of it's works, but you just sort of spend the money 'cause 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. You know 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 is a big company global business regulators scrutinized 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 led 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. If you think of all the data Google has, like the search data, all
the various applications, you know, email and otherwise the kinda 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 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 bet 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 seven and a half percent yield and that earnings yield
is growing over time as the business grows compare 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 and growth. So you're in that earnings number, you're not seeing any earnings
from the cloud business and you know, they're one
of the top cloud players. So very interesting, generally well-managed company with incredible assets and
resources and dominance, and it has no debt. 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 these companies, xAI or maybe startups, 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 incomings, 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, this incredible technology and that's why we have tended to stay away from companies that are
technology companies. 'Cause technology companies generally the world is such a dynamic place. It's one'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 Chat GPT 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, to the management of the company. - And Demis Hassabis has
thrown 'em into the picture and all of DeepMind teams
and the unification 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 it was great, I can't wait to see what there've been just 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 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 said. 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. 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 the 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? Oh, how deep does it go? - Sure. So this very senior
management matters enormously. We used the Chipotle example, Steve Ell's 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 Nichol. And he was considered the best person in the quick service industry. He came in and completely
rebuild 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, well 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 and then it's who they recruit. You know you recruit an A+ leader and they're gonna recruit
other A type people. You recruit 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
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 and reports. And then I eventually got the
buffet 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 still added it at '93, two, you know, it takes
a very long-term view. But a big thing that you learn from him, investing requires this incredible dispassionate on emotional 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 surviving the jungle the lion shows up 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. Buffet'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 wanna have enough money in the bank that you're gonna survive regardless of what's going on
with volatility in markets. 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 key is getting yourself to a place where you're financially secure, you're not gonna lose your house, right? That's a kind of a key thing. And then also doing your
homework, 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 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 gonna just listen to more music next year than this year, you know you're gonna 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 lions and gazelle
and all this kind of stuff. Is it as simple as just
being financially secure? Is there some just human qualities that you have to be born with/develop? - I think so. I think I'm a pretty emotional person I would say. Or I 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? - [Bill] 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 Buffet's career,
the mistakes he made. If you're investing a lot of capital, every one of your mistakes can be big. 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, 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 a lot of public scrutiny, a lot of public criticism and that requires some experience. I call it that. - I think we'll talk about some of that. Financially secure is something I believe also recommend for even just to 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 and you lose your house, et cetera. Being in a place where
you're investing money that you don't care about
the price in the short term, you know it's money for your retirement and you take a really long
term view, I think that's key. Never investing, 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 there's a financial crisis or a nuclear device gets detonated, God forbid somewhere in the world, or there's a 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 and the downturns get over elated 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. - Yeah, 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, 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 their portfolios are 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's had a great record over
a long period of time. You know, the 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 like 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 diversification come in the first, you
know, 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, you know, 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 know you like Chipotle, you understand why they're successful. You can go there every
week and you can monitor is anything changing? You know, how these new kind of, how's chicken el pastor
is that a good upgrade from the basic chicken, The drink offerings
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're 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. - And 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 all kinds of message
boards and Reddit forums and things where people
are sharing advice. And everyone has their own, you know, 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 like 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 mean 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 notice myself psychologically being affected by the ups
and downs of the market. I want to tune out because
if I'm at all tuned in and 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 sum 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 that's 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. 'Cause 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 announced it publicly, we'd attempt to engage with management. The first activist investment we made at Persian Square was Wendy's. I couldn't get the CEO
to ever return my call. He didn't even return my call. So we actually, in that case, our idea was Wendy's owned a
company called Tim Horton's, which was this coffee donut chain. And you could buy Wendy's
for basically $5 billion and they owned a hundred
percent of Tim Horton's, which itself was worth
more than 5 billion. So you could literally buy Wendy's, separate Tim Horton's 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 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 'em 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 and stakes in companies. The media would pay attention. So the media became a 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 gotta 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. And what we did, and a
lot of the early things that we did were we call it sort of like
investment banking activism where we'd go in and recommend something, a good investment bank
would've 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, a company called General Growth was the first time we took
a board seat on a company. And there it 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. And that by the way, that's the way investing was
done in the Andrew Carnegie, JP Morgan days, 150 years ago, right? You had these iconic business leaders that would own 20% of US steel, and when things would go wrong, they'd replaced 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 would kind of gave their stock to society or their children and multiple generations and there were no longer
kind of controlling owners of businesses were 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 kind of
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 US stock market actually. - So the owners meaning the shareholders? - [Bill] Yes. - And so 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 sort of 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's according to Bill Ackman
is more democratic now? - It is, it is. But you need some thought leaders. So activists are kind of thought leaders 'cause they can spend
the time and the money. You know, a retail investor
that owns a thousand shares doesn't have the resources or
the time, they got a day job. Whereas an activist 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 the
direction of a company? - It depends who that investor is, but generally I think it's a good thing. And that's why 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 who
have all different interests in terms of what they want achieve and when they wanted it achieved. And CEO of a new company hasn't had... A new CEO of an old company, let's say, hasn't had the chance to
develop the credibility to make the kinda 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. And sometimes there are decisions we 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 it's 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's 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 'cause 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, short-term activist investors? - Yes, and they're very few. I don't really know any
short-term activist investors. 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 then we still own a company we spun off of General Growth and it's now 15 years later. - 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 ranging 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-disruptively things. Again, we talk about disruption. Malls have been disrupted in many ways. And 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 'cause 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. There was a family, the
bucks bound family owned I think about 25% of the company and they had 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 hundred million dollars value of the equity down from like 20 billion. And one that, you know, sort of an interesting place
to start with a stock down 99%. But the fundamental drivers, 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 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 that 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 assumptions is this
stocks 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 and we bought 25% of the
company in the open market. We had to pay up. It started out at 34 cents, I think there were 300 million shares. So it was at a hundred
million dollars 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 you know, 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 stock. Every day we'd go into the market and we'd buy this penny stock and we'd file what's called a 13 D, 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. And I said, well wait, you
know, bankruptcy code says that it was 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 Bucksbaum 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 hen house. And they were listening to their advisors. 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 the 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 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
face amount of their investment par plus accruede interest. And it was a great outcome. All the employees kept their jobs. The mall stayed open,
there's no liquidation. The bankruptcy system
worked the way it should. You know, I was in court 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 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, I said, "Hi, it's Bill Ackman, I'm
just returning your call". He says, "Oh Mr. Ackman, thank
you so much for calling me". And 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 as money. And you know, those are the moments that you feel pretty good about investing. - What gave you confidence through that. Went to 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. 'Cause 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 are you doing? You don't know anything
about distressed investing. You don't know anything
about bankruptcy investing. But I can read. - And you learned. - And I learned and it
sometimes it's very helpful not to be a practitioner,
an expert in something, 'cause you get used to
the conventional wisdom. And so we just, you know, abstractly read the step back and looked 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 is 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. I mean, I literally read a
book on distressed investing. Ben Branch or something, something on distressed investing. - 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 gotta read the right books. And also had great lawyers, built up some great relationships. We worked with Sullivan and Cromwell and the lawyer there named Joe Schenker, who I met earlier in my career. Pershing Score 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 'cause we 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've 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, there's nothing to worry about. It's always good, mostly good. But you know, that expression
applied in this context, they were still worried about that. And so, I mean, there's
a million questions here, but 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 that maybe there's some jurisdiction where you need a 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 a one share
of stock in the business. And getting your name in the company's, you know, in the materials
they sent 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 and the materials they
sent 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, you know, 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/battle idea? What's-- - The battle comes when they
don't want you to get on. And a lot of that has to
do with, I would say pride, normal human kind of stuff. You know, a lot of times a board of an underperforming
company doesn't wanna 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, you play golf with a 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, you know, 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, you know, there are many
cases they're retired CEOs, this is kind of how
they're making a living in the later part of their career. They'll sit on four boards, they collect a million 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 wanna preserve their board seats. Now the directors on board
serve in various roles. 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 you know, these
contests are not dissimilar to political contests. Whereas Mudslinging and other side puts out
false information about you and 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, you know, when you're a small
firm, finite resources. So they can outspend you, they
can sue you, they can try to, you know, jigger the
mechanics in such a way that you're gonna lose, there's some unfortunate stuff
that's happened in the past, you know manipulative stuff. - So also some stuff that's public, like in the press and
all this kind of stuff. - Oh, of course. You know,
there'll be articles about 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, I can
survive extreme scrutiny 'cause 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 do we extend this metaphor? - Well, the fox is a threat to the hens. - Yeah. But the charismatic fox just explain 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, you know, 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 the guy's
not so bad after all the shareholders voted them on, it'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, and by the way, sometimes you have to replace the entire board. We've done that. But in most cases you got a
couple of seats on the board and it's just 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, 'cause the railroad business
is 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. The 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 has a rail goes right across the country and Canadian Pacific would constantly be complaining about the weather. And basically 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, the chairman of the Royal Bank of Canada, the head of the most important grain, privately held grain company. The sort of an important collection of big time Canadian executives. Here we were, you know, this
is probably about 13 years ago and still maybe 44-year-old
from New York, not a 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 outta 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 weren't gonna consider hiring him and that led us to a proxy contest. - And this is where the
engine starts churning to figure out how this contest can 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 run
railroad, it needs to be fixed. But you know, 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 you have to file your
materials by a certain day, you gotta put together a slate. We needed a big slate 'cause 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's, "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. You know, 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 then we had Hunter get up, who's this incredibly
charismatic guy from Tennessee, an amazing, 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 Ell, other members of my
team were super engaged. And the board, 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 that 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. But that was kind of a interesting one. - So for in both this proxy battle and the company itself, this was a 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 some many ways he's
actually better than Hunter. He's doing an incredible job. 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 of bad investments and we had to sell our Canadian Pacific 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 onto original stock, it would've been epic, if you will. - So on this one, you were right. - [Bill] Yes. - And I read an article about 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 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, small team, but a fortunately
very successful one. You know, 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've 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 Open AI board? Because 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 open AI I think leaves something to be desired. You know, I think Sam's point
was this and maybe Musk, Elon Musk 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 'cause 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 or a big chunk of Open AI 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 cap 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. You know, 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 give the, to have the public perception that they're good directors so they get the next best deal, right? If they have a reputation
for kind of 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, you know,
one of the problems. Again, it all comes back to incentives. - Can you explain to me the difference a venture backed like
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 and management. They're often very 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 sense cases bad behavior
on the part of management because they want a
reputation for being kind of a founder friendly director. You know 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 you're a track record, but you said there were some big losses. So what's the biggest loss of your career? - Biggest loss in my career is a company called Vion Pharmaceuticals. We made an investment in business that didn't meet our core principles, problem in the pharmaceutical industry and there are many
problems, as I've learned, is it's a very volatile business, right? It's based on drug discovery, it's based on predicting
kinda the future revenues of a drug before it goes off patent. You know lots of complexities. And we thought we had found a pharmaceutical company we could own 'cause of a very unusual founder in 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, 'cause 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 drugs. And we lost $4 billion. - $4 billion? - Yeah. How's that for a big loss? - [Lex] That's-- - It's up there. - I'm sweating this whole conversation, both the wins and the losses
and the stakes involved. - And by the way, that
loss catalyzed other, what I call market to market losses. So very high profile, huge
number, disastrous press. Then people said, okay, Bill's
gonna go outta business, so we're gonna bet against
everything he's doing and we know his entire portfolio 'cause 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. Okay, we no longer short companies, 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. We ended up selling the
position taking that loss. Most of the other losses
were what I would call market to market losses
that were temporary. But many people go outta business because as I mentioned
before, large move in a price. If investors are redeeming
or you have leverage, you know, can put you outta business. And people assumed if we
got put outta 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? - [Bill] Absolutely. - So they use the opportunity of Valiant to try to destroy you, reputation, financially, and then capitalize on, make money off of that? - [Bill] Yes. - Well, that's a terrifying spot to be in. What was it like going through that? - I was pretty grim. It's actually much worse than that because I had a lot of stuff
going on personally as well and these things tend to be correlated. The valiant mistake came at a time where I was contemplating my marriage and I was also... 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 wanna 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 wanna 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 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, estimate your net worth at X, "but don't worry, we only want a third". But X was 3X so a third was
a hundred percent (laughs) 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 problem with hedge funds is people can take their
money out every quarter. What Buffet has is a company where people wanna 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. You know, like by kind of mid 2017, we've got litigation underway and another activist investor, a firm called Elliot 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, you know, our public company was
trading at a discount to what all the securities 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 sort of... So I thought this was gonna 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 outta business. And I had met Neri Oxman
right around this time, and I'd 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 'cause 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 to 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 gave 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 it's a handshake bank and they bet that I would succeed. And I took that money to buy enough stock in my public company that I 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 when 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's Paul Singer's son who runs their London
part of their business. And he's like, "Bill, was
that you buying that block?" I said, yes. And he's like, "Fuck". (both laughing) - 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 that 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' 10 commandments". We're gonna chisel em and 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 had the best six years
in the history of the firm. - So refocus on the fundamentals-- - And love helps.
- Hell of a story. - Love helps. I literally met
Neri at the absolute bottom. Our first date was September 7th, 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 get a call from Neri and 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. I'm like, okay, now Neri and I were like, we would WhatsApp all day every day, we talk throughout the day. Brad Pitt shows up at the
media lab at 10 o'clock. I talk to her in the morning. I kind of text her to
see how things are going. Don't hear back. And on WhatsApp you can see like whether the other person's read it or not. - Yeah, yeah. Okay. - No response. A couple hours later, send
her another text, no response. Six o'clock, no response. Eight o'clock, no response. 10 o'clock, no response. And you know she finally calls me at 10:30 and tells me how great Brad Pitt is. So I had this scenario, okay, a judge is gonna find me, we're gonna lose to the judge. All my assets will disappear. And then Brad Pitt's
gonna take my girlfriend. - Brad Pitt's your
competition. This is great. - So it was like a moment. That was sort of the bottom. And then sort of the motivational thing. I didn't wanna lose to an activist, didn't wanna lose my
girl to some other guy. - 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 is there a, like what are you doing
at night by yourself? - That was a hard time. Hard time 'cause I was separated
from my wife and my kids. I was living in not
the greatest apartment, I had a beautiful home and so I had to go find
like a bachelor place and I didn't wanna 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 bar We call 'em a bar that, not the elephant. He's a black Labradoodle. He was supposed to be a mini, but he's not so 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 a 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, you know, 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, 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 you're like, oh, okay. Like you can't look up at the mountaintop where you used to be 'cause 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. I'm okay. I don't look up. Just keep making progress,
progress, progress and progress really does compound. And one day you wake up and 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 you know, good friends and family, I had, you know, go take a walk with a friend every night, and a sister who loves me and parents who were 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 (laughs) 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 kinda like the American story. America, you know, 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 of 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 a
hundred, it goes to zero, you loose a hundred dollars, right? Per share. You buy one share of a hundred. You shortest stock at a hundred 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 and 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 a hundred
dollars each today. You pay 'em interest while
you're borrowing them. And then you go sell 'em in the market for a hundred dollars. 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 'em back to your friend. Your friend is complete fine. You borrowed 10, you gave him 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 a hundred to a thousand, now you're gonna have to go buy them back and you gotta pay whatever,
$10,000 to buy back coins. You know that you sold for 500, you're gonna lose $9,500. And there's no limit, right? To how high a stock price can go. Companies go to $3
trillion in value, right? Tesla, a lot of people
shorted Tesla saying, oh, it's overvalued, he's never gonna be able to
make a successful electric car. Well, I'm sure they're people
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 NBIA
was a very successful short. - It was, 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 and make a fortune. Whereas short selling is
you kind of 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. You didn't have enough debt outstanding to be able to implement it. You had to short the stock in order to make it as successful to bet against the company. And the more work I did in the company, the more I was like, oh my God, this thing's an incredible scam. You know, that 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 multi-level marketing, 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 you 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 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 the FTC is
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 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 HerbalLife 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. I 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 Carl icon. - Oh, that's very well done. - Yeah. So definitely a iconic investor. - So 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 in a public company. It's another long story. - 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 Harwood Realty Partners, which was a company that
owned real estate assets and it was worth a lot
more than we was trading, but it needed an activist
to really unlock the value. And we were in fact going outta business and didn't have the time or
the resources to pursue it. So I sold it to Carl Icahn, and I sold it to him at a premium to where the stock was trading. I think the stock was like 66, I sold it 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. And I had another deal at a higher price without Schmuck Insurance. When I deal with Carl at a lower price with Schmuck Insurance and the way the Schmuck Insurance went, he said, look, "Bill, if I sell the stock "in the next three
years for a higher price "I'll give you 50% of my profit". That's a pretty good deal. So we made that deal and 'cause I was dealing with Carl Icahn who had a reputation for being difficult. I was very focused on the agreement and we didn't want him
to be able to be cute. So the agreement said if he sells or otherwise transfers his shares. And we came up with a definition to include every version of sale. Okay. 'cause you know, it's Carl. Well, he then buys the stake and then makes a bid for the company. And 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 bid to 125, and then 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 lawyers never like you to put like a arithmetic example. I put like a formula like out of a math book in the document 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 called Carl, I'm like, "Carl, congratulations on
her on the Hal Realty". Thanks Bill. I said, "Carl, I just wanna 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 said, "What do you mean
I didn't sell my shares?" I said, "Do you still have the shares?" He says, "No". I said, "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
gonna have to sue you". He said, "Sue me, I'm gonna 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 it 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 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? - Just 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, right? These are the people
backed me at 26 years old. I was right outta 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 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? - (laughs) 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
investors money they owed. And 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 to kind of straight line up, we were up 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 is 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. - [Bill] 100%. - Is there a part of
you that regrets saying fuck you on that phone call to Carl Icahn? - No. (both laughing) 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 you know, every action has a reaction. You know 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 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 outta 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're a pyramid scheme but the government
ultimately settled with Carl 'cause 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've made a bunch of money. 'cause 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 or
whatever that's called-- - Covered. We closed it out. well we sold Valiant,
we covered Herbalife. That was the resetting
moment for the firm. 'Cause it would just psychologically, and you know, the beauty of investing is you don't need to make
it back the way you lost it you can just take your loss, by the way, losses are valuable and 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 at the Hall Wood one, he took me out for dinner to his favorite Italian restaurant. - [Lex] Really? - Yeah. We were in the
middle of the litigation to see if he could resolve it. And he offered 10 million
in my favorite charity. The problem was that it wasn't my money, it was my investors' 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 you know, 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 and 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
on there to present awards. And again, I have to say
I kinda liked the guy, but I didn't like him much during this. - 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 of 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
ever been a story about it. And the stock's up almost 10 times from the time
we hired Brian Nichols, 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, you 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 investing that your life is about,
especially recently. Lemme 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 can have
such barbaric terrorism and yeah, just a reminder of that. - So there's several
things I can ask here. First on the, your views on the prospects of the Middle East, but
also on the reaction to this war and in the United States, especially on university campuses. So first lemme 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?" You know, what about Palestinian lives? And I was pretty early in my life, a guy named Marty Parrott,
who's been important to me over the course of my life, a professor, or first investor in my
fund introduced me to Neri, asked me when I right outta school to join this nonprofit called
the Jerusalem Foundation, which was a charitable foundation that supported Teddy Collick
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, I 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, as chairman of the Jerusalem Foundation I would go into Arab communities and I would meet the
families in their homes. You know, 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 that'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 know, you see these training videos of kindergartners
indoctrinating them into hating Jews and Israel. And of course you don't like to see Palestinians celebrating
some of those early videos of October 7th with dead
buddies in the back of trucks and people cheering. So it's a really unfortunate situation. But I think about a
Palestinian life is important and as valuable as a Jewish
life, as a American life. And you know, what do people really want? They want a place, they want a home. They wanna 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, you know,
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. You know, 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. You know, 40 billion or
so has gone into Gaza 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. - [Lex] So not just peace but-- - Peace comes with prosperity. You know, 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. If you think about I have
the opportunity to spend call it an hour with Henry Kissinger, a few months before he passed away, we were talking about Gaza or in the early stage of the war. He said, look, you know, this is not, you could think about Gaza as a test of a two state solution. It's not looking good. These were his words. So the next time round 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. - [Bill] Governance matters, you know, going back to what we talked about before. - And you know that kind of approach can give the people a chance to-- - a hundred percent
- Flourish. - A hundred percent. 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 the topic of
protests on college campuses, protests that call for the
genocide of Jewish people and the university presidents, maybe you could 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, you know,
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 protest and the university does nothing. You know, 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 recently 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, in 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, love to share. And I got the Heisman, 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, you know, I'm kind of an
activist when you push me, it reminded me of 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, a woman by the name of Penny Pritzker, who I knew from on a business
school, a 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 dared to be great speech. This is your opportunity you can fix this, this
could be your legacy. I emailed it to the president and the board members whose
email addresses I had, I posted it on Twitter. 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 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 Habad, a guy named Rabbi Hershey, and we were putting the film up on campus and I thought 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'd 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, come see the film, I'll fly you down. That was rejected. And then she testified. And I watched a good percentage, 80% of the testimony
of all three presidents and it was an embarrassment
to the country, embarrassment to the universities, 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 protestors are 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 on the genocide to the university have
the right to intervene. And the thing that perhaps
bothered me the most was the incredible hypocrisy, 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 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 in
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, the Harvard, Yale campuses of the world and the president of Harvard's, then president of Harvard's
explanation for why 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 haircut. And I had a guy on my team send me the three minute section. I said, 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 110 million views. And everyone looked at this and said, what is wrong with university campuses and their leadership and
their governance by the way. You know, in a way this
whole conversation's been about governance. Harvard has disastrous
governance structure, which is why we have the problem we have. - And just to linger on the testimony and you mentioned smirks
and this kind of stuff and you mentioned dare to be great, I myself am kind of a
sucker for great leadership. And 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 of Harvard
had a huge opportunity 'cause 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 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 like give a speech of a lifetime. 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, there's a serious issue going on here. It's an opportunity to
speak on free speech and on genocide, both. 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 other resources. The only thing I did here was wrote. 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 tweets. 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, you know, 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. 'Cause that would've sent a
message about the importance of leadership, you know,
failure to stop a emergence of antisemitism on campus. And you know, 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. 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. You know, that kind of
speech is generally, and again, it's pretty technical, but as people feel like
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 this calling for genocide against the Jews violate your free speech policies, she says it's calling for
genocide against the Jews, violate your policies
on bullying harassment. And I think everyone looked at this when they said it depends on the context. And they said, look, if you replaced Jews with some other ethnic group, students have been, who've
used the N word, for example, have been thrown off
campus, were suspended. Students who've hate speech
directed at LGBTQ people has led to disciplinary action. But attacking, spitting on Jewish students or you know, kind of
roughing them up a bit, seemed like we're calling
for their elimination didn't seem to violate the policy. 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 protests. Students asked me when I went up there, what would you do if
you're a Harvard president? I said, 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 this 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 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 its 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. You know, 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 'em 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 dissident directors on the board, we're only gonna allow, we're gonna 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, you know, 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. And 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 and again, this wasn't an election, this was just to put
the names on the slate. So the only candidates on the slate are the ones selected
by the existing members. And so it's 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, otherwise. So that's governance. And 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' 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? You know, 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 you know, 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 you know, 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 parquet. I'm like, okay, this is a
super dangerous ideology. And so I wrote like,
questioning post about this, like, here's what I'm hearing, is this right? Then I had someone, a
friend of mine sent me a Christopher Rufos 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 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 it 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 kind of thought leaders, this guy named Mark Esques and others built this
framework kind of an approach, look, if we're gonna be successful can't be a violent movement, number one. 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, and 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's really is no such
thing as free speech on campus. And that there was a survey done, I dunno, a year or so ago
of the Harvard faculty and only 2% of the faculty admitted, even in an anonymous
survey admitted to being, 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 this, 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 offices 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 a diversity is a very good thing for organizations and that equity fairness
isn't really important. And having an inclusive
culture is critical for a functioning of organization. So here I was someone who was like, okay, DEI, sounds good to me, at least in the small D,
small EI version of events. But this DEIO ideology
is really problematic. - So what's a 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, - 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 a hundred times. But I literally get
hundreds of emails, letters, texts, handwritten letters, type letters from people
the ages of 25 to 85 saying, Bill, this is so important. Thanks for speaking out on 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 racist. It's happened to me already. 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. 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. You know, 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, right? 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 a thousand, okay? That's a meaningful percentage
of the campus perhaps that ultimately respond. Now, a 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 leader. You know, 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 isn't that many of these people
who graduate end up with, you know, 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 is 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 governance structure as we've been talking about. - Well, it's two things. I think it's governance structure. I also think universities
they're not selecting leaders. You know, 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. 'Cause you know, 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. And once the departments tip, there's sort of a
tipping point politically where if once they tip in one direction, the faculty recruit more
people like themselves. And so the departments come
more and more progressive, if you will, with the passage of time and they only advance candidates that meet their political objectives. It's not a great way to build an institution which allows for-- - Small D diversity - 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 you know, when I am at the computing building starter and the new one politics doesn't infiltrate or I haven't seen it infiltrate quite as deep place elsewhere. - It's in the biology
department at Harvard. 'Cause the biology is controversial now. - [Lex] Yes, yes, - 'Cause biology and
gender 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 made the argument
that there are basically 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 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? There's no way to do a calculus. - Can you explain the nature of this plagiarism from what you remember? - So Aaron Sibarium and Christopher Rufo, one from the free beacon and Chris, surfaced some allegations or identified some
plagiarism in the issues that I would say the
initial examples were, use of the same words
with proper attribution, some missing 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 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. One indicia plagiarism
is a missing footnote that could also be a clerical error. And so when a professor's
accused of plagiarism university does sort of a deep dive. They have these administrative boards and it can take six months, nine months, a year to evaluate intent matters with this intentional theft of another person's idea
that's academic fraud. Or was this sloppy, 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, words matter more, right? If you're taking Shakespeare and presenting it as your own words, if you're writing about ideas, 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
academic's life's work before AI, everyone's gonna have missing quotation marks and footnotes. I remember writing my own thesis, there were books you couldn't
take out a 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 remember 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 and you forget to put quotation marks. Just the humanity, you know,
the human fallibility of it. So it's not academic fraud to have human fail ability, 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 Harvard
stepped on over plagiarism versus over refusing to say that the calls for genocide are wrong? - Again, I think it would've
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's 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 is not surfaced publicly. So a guy named Larry Backhoe was the previous president of Harvard. Larry Backhoe 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 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 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 pick Larry Backhoe off the board, off the search committee to
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. 'Cause there was a big
disappointment to the DEI office, if you will, and I would say
to the community at large that the 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. - Yeah, for sure. When a company fails, most people blame the CEO, I generally blame the board, right? 'Cause 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 enormously helpful to
me in my life I'm sure. My sister also went to Harvard and the experiences, learnings, friendships, relationships. Again, 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 number of my closest friends who I still really keep
in touch with, I met them. 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 1600 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. So I heard Peter Thiel
speak at one point in time and he is like, what great
institution do you know that's truly great that hasn't
grown in a hundred years. And you know, 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 many new members. But the fact that the population has grown of the country 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 some were 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 shaping dialogue and the next generation
of Supreme Court justices. The members of government politicians. So yes, it's critically important, but it's not doing the
job it should be doing. - Neri 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 for work and of her as a human being. Looks like you're a fan of hers as well. - Yes. - What do you love about Neri? 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, 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 life time with her ever since I
met her six years ago. - So she's been a help to you through some of the rough
moments you 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 ying 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, we come from very similar
places in the world. You know, there are
times where we feel like we've known each other for centuries. You know, I met her
parents for the first time 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, dad,
what's 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 to 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, she loves my friends, I love hers. We love doing the same kind of things, we're attracted to 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 is just fire everywhere. - You know, that hasn't really
been the case for a while. I've had relative peace for a long time 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 Neri? - So I did not actually surface
the plagiarism allegations against President Gay
that surfaced by 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
a hundred percent 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. 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. And so we were just at
the end of a vacation for Christmas break and I was early in the
morning for a 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 mark. 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 like the slow internet. And you know, 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 many other times and wrote her several paragraph section of her thesis acknowledging his work. And none of these were like
important parts of her thesis. But she acknowledged her mistake and she said, you know,
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 came before me and looking to advance work. We sort of thought it was over, we head home. In flight on the way home,
although we didn't realize this till 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. Oh, 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 and 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 the next day at 5:19 PM I remember the timeline pretty well. An email was sent to Fran McGill saying, 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 tonight. The email they sent to us was 6,900 words. It was 12 pages, it was
practically indecipherable. You couldn't even read it in an hour. And we didn't have some of the documents that were referring to. And I'm like, now you know what? I'm gonna do it. 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 has enabled this. I put out a tweet basically saying that, and we're doing a test run now because 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, Neri 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. 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, that's a
pretty good batting average. But you know, they can't,
this is wrong, right? This is not academic fraud. These are inadvertent mistakes. And the Wikipedia entries, Neri 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, 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, 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 were for 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 an 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. 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 in a footnote. That's not a theft of idea, right? And so I'm like, this is crazy. And so this has gotta stop. And so I reach out to a guy I knew who 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? - Sure. - I don't know, there's a
lot of things I wanna 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 wanna make it clear, it really hurt me that the internet, whatever's happening, could
go after a great scientist. 'Cause 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 Inside or whatever, social media, mass hysteria,
whatever is happening. Like we need the great
scientists of the world. 'Cause that's like the
future depends on them. And so we need to celebrate
them and protect them and let them flourish and
let their do their thing and like keep them out of
this whatever shit storm that we're doing to get clicks
and advertisements and drama and all this kind, we
need to protect them. So I just wanna say there's nobody I know and I'm 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 like, I just wanna
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 'cause it distracts from the
fundamentals that is broken. It's becomes like 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? - [Lex] Because you wanna be precise. - Well, it's not even that. I mean, yes, I have said that we're gonna 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 make reference to 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 escalated this thing to Henry Blot, the Chairman
of Business Insider, to the CEO of Axle 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 Center went public after they said Neri committed
academic fraud and plagiarism and said, we didn't challenge any, the facts remain
undisputed in the article. So it's basically Neri committed
plagiarism that story won, Neri 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, Neri admits to plagiarism, apologizes for plagiarism. That's incredibly damning. And by the way, we're
doing an investigation 'cause we're concerned
that there might have been inappropriate process, but the facts of the story have not been disputed by
Neri 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 stay tuned. - So you are, at least for
now, moving forward with-- - It's a certainty we're moving forward. There's this 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're. - 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 much in this world, but journalists aren't
supposed to do that. - Now we're gonna surface all
this stuff publicly ultimately the email was not to Neri saying there was plagiarism in her work. The email came from a
reporter named Katherine Long, and 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 a short seller, the Herbalife battle went on for years, they tried to do everything
to destroy my reputation. So they're already gone through my trash. They already done all that work. So anything they could possibly find, and I've always lived a
very clean life, okay? Thankfully. And if you're
gonna be an activist, short sell, you better 'cause they're gonna find
out dirt on if it exists. And so they were like, how
can we really hurt Bill? And 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 like prove to us she's no longer on the MIT faculty 'cause they wanted to get her fired. And by the way, malice is one of the important factors in determining whether defamation is taking place. And this was a malice driven, this was not about news. And the unfortunate
thing about journalism, this businesses 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. It was on the front page
of the Financial Times. Okay, so this, and she's
building a business and you know 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,
has heard of Neri 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 outta stealth mode, you're gonna 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. 'Cause everyone's gonna
be paying attention and they're gonna wanna see your work. And you know, that's
how I try to cheer up. But I think it's true. - It is true, and you're doing your job as a good partner in seeing the silver lining of all this. Just from observing her, how did she stay strong through all
of this psychologically? 'Cause 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 a 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. Okay? Imagine thinking that the entire world thinks you committed academic fraud. And so that was very hard for her. She's a very positive person. But I saw her, and I would say
her darkest emotional period for sure, she's doing much better now. But you can kill someone, you can kill someone with by
destroying their 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 you know, 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. You know when you went from a 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'll 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, 5:19 PM the email comes in, not to Neri, not to her firm, but to
my communications person who tracks us down by 5:30,
you know, 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 professors accused of plagiarism, why they have these very careful processes with multiple stages and they take, 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 and reputationally and
otherwise to Business Insider and to Axel Springer 'cause ultimately you gotta
look to the controlling owner, you know, they're responsible. - I'll just say that you in this regard are inspiring to me for facing basically an institution that whole purpose is to write articles. So you're like going into the fire. - My kid's school, the
epithet of the school, or the saying is go forth unafraid. I think it's a good way to live. And again, the words can't harm me. You know 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 1,000,200 thousand people. And it gets read and reread. I haven't checked, but probably 5 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 a 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 deming article and you point out factual errors and then like two months later they bury a little
correction on page whatever by then the person was fired or their life was destroyed or the reputation's damaged. You know, it was with Warren
Buffet talking about media. And it's something he, a
business he really loves. He says, you know what Bill? He said, a thief with a dagger. The only person who 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? - A hundred percent. 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. Or I post on a topic and I
get to hear the other side. I read the replies. And the truth is something that people have had a lot of question about, particularly in the last, I would say five years. You know, 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 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, the Hunter Biden laptop
story in the New York Post that then Twitter made difficult for people to share and to read. COVID, you know, the Jay
Bhattacharya of the world questioning the government's response, questioning long-term lockdowns, questioning keeping kids outta 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 towed the line in many extents
to the government's action. 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 a lot of pushback. You know, the SpaceXs
and Teslas of the world are experiencing a lot of government questions and investigations. And even the president of
the United States came out and said, look, he needs
to be investigated. 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 what you find on Twitter. - You mentioned Trump, I have
to talk to you about politics. 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. And I made my case for why I thought he could be a good president. - So what was the case back then? 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? - 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 kinda lost its way. And with the right
leadership, we can fix it. And if you think about the business of the United States today you've got $32 trillion worth of debt. So it's over leveraged
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 was
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. I said, 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 you know, I think
the country's economy accelerated dramatically. And that, by the way, you know, the capitalist system helps
the people at the bottom best when the system does well and when the economy does well. You know, the black unemployment
rate was 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 this stuff you can object to, but you know, 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 the 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. 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, you know, 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 the best of defense of Trump. You know, just 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're the
greatest person in the world when he hired them and they're 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 'cause for failure to, as
they sought to do their job. He stepped in way too late to stop that. He could have stopped it early. You know, many of his words
I think inspired people, Some of whom with mal intent 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. You know, 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, this November 4th, whatever, 2024. And you still haven't
figured out who to vote for. 'Cause 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, 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. 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, 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 it
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 where 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? - Yes. - 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 the landslide, has been reelected twice, moved up the ranks in the Congress, respected by his fellow
members of Congress, advance some important
legislation during COVID on senior roles on various
foreign policy committees. Centrist, you know, 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
get 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 'cause he challenged the king, right? And so, but he was willing to
give up his political career 'cause what he thought
was best for the country. He tried to get other people to run who were higher profile, had more name recognition. None would, no one wants
to challenge Biden. If they wanna 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 weeks and he's gotta be on TV there. That's expensive. So we'll see. - So he has to increase name recognition all that kind of stuff. Also, as should mention, he's young. - Yeah, he's 55, but he's a young 55. You see him play hockey. - I mean, 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 is 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 hit 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. You talk to people, I was in Europe, I was in London a few days ago, and people are 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, 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? - A hundred percent. 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 a 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 independence. 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 or he's the only choice we have. He'll attract from the center, he'll attract from Republicans
who won't vote for Trump, in 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. - I gotten 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 and Netanyahu, with world leaders and have some of the most
historic conversations, agreements, negotiations. And I just don't see Biden doing that. And not for any reason, but sadly age. - Yeah, I mean, think about it this way. When Biden's in present
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. Imagine how bad it is for real. - It's not good. - Really bad for America. And I'm upset with him
and upset with his family. I'm upset with his wife. You know, 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. 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, like 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 like us to talk about new funds
that we're launching that we filed with the SEC. 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 of it's gonna depend upon the next leader of the country. So we're kind of right back there. You know 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 it's time. 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, 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 is post. I've actually bought
stuff on some ads in X. I don't remember the last time I responded to a direct response advertising. You know, in terms of my business, I have an incredible team. It's tiny. We're one of the smallest firms relative to the assets we manage. It's a bit like the Navy Seals, you know, 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 said I'd like to have a record as good as Warren Buffet'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. You know, 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. You know, today you make, 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. You know 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 have hope, even for Harvard, it's generally hard to break 400 year old things. - Well, I share your hope and you are 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 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.