The Exchanges

Q You've had some very good ones. What was the most recent miss that you've debated as a team?

A Well, at, at Pershing Square, uh, Netflix. You know, so we, we took about a billion dollar position in Netflix after the stock fell about 50%. And then, you know, we're a long term investor, but we learned information within a few months of the initial investment, i.e. the next quarter's results at Colt, caused us to question our entire thesis on the company. Uh, and, and we exited and took, and promptly lost, you know, four hundred million dollars or something along those lines. Um, so that was, that was a more recent one. But I think what's not written about in our letters, uh, but I consider, you know, with respect to COVID, I had a very early view what the economic implications of COVID would be, or enough of an early view, you know, month, two months, not, not, uh, not more than that, uh, that enable us to make a fortune hedging COVID. I had a very similar view about interest rates, and we were completely ahead of the curve, and the mistake was not making that a bigger bet. We should have made ten billion dollars on, on hedging interest rate risk. Instead we made 2.8 billion because we were a little timid. So I, you know, some of the mistakes we've made, we had a pretty, you know, variant view that we were quite confident in, but we didn't put enough capital behind our confidence.

AI assessment note: “Well, at, at Pershing Square, uh, Netflix.”

Q Ok, who do you look up to? Who do you admire? Many look up to you.

A Uh, you know, in my industry, I've, I've been a, uh, Warren Buffett fan from the beginning. There's a guy who likes to remain private, but I'll mention his name, named Joe Steinberg, who, uh, is chairman of Jeffreys, but built a company called Lucadia, who's had a lot of influence over me and over my career. Uh, I have a lot of admiration for my parents. You know, my father was a very important, uh, mentor. Uh, it's someone I learned a lot from and, and, and not always because he's, he, Did the right thing. Sometimes you made mistakes. And I, I was actually, you know, it's a big moment when you realize that, uh, that dad can make a mistake too. And, uh, I, my mom was the real activist in the family, actually. She, she ran a campaign, collected signatures, and ultimately convinced, uh, the governor to give hundreds of millions of dollars to, uh, to redo the rail system to our hometown. So I, I learned activism from mom. Those are, I would say those are a bunch of, uh, T people I've looked up to over time.

AI assessment note: “Those are, I would say those are a bunch of, uh, T people I've looked up to”

Q So how do you think, sorry, I'm fascinated. How do you think about position sizing? You always want more in your winners. You always want nothing in your losers. How do you think about position sizing?

A So the way we think about it is we're willing to risk a certain amount of capital on any one investment. And so if, and we, you know, if you're investing in the world's most dominant music company, Universal Music, it's has very little debt. It has a great market position and you can predict business with a very high degree of confidence and you're buying it at a fair price. You can assess what's the chance of our losing, you know, 25% of our investment, you know, over a several year holding period. And if the answer is very close to zero, which is kind of our assessment, we can make an investment like that quite large, right? If you think about, well, for risking 20, let's say the most we could lose in our view on that, not daily mark-to-market loss, but a permanent impairment. What would have to happen for us to be permanently impaired to lose 25% of our capital in that investment? Something pretty extraordinary. So that kind of investment can be 25% of our assets because it's Something where, ah, the risk of loss is very diminished by virtue of the robustness of the business. Excuse me, the capital structure of the company. Whereas you're buying an interest rate derivative. You know, we bought, in effect, the way to think about it is we bought a call option that paid off when two-year interest rates went above 93 basis points. And we had about an eighteen-month term. And at …

AI assessment note: “So that kind of investment can be 25% of our assets”

Q Is Silicon Valley bank not the safest bank to be at right now?

A It is the safest bank. Actually, the irony is, and I, you know, tweeted about this morning, there's sort of two banks that now have an explicit guarantee, regardless of how much money you put in those banks. Right? That's Signature and Silicon Valley Bank. They have an explicit guarantee from the U.S. government. Then there's J.B. Morgan, there's Citi, there's B of A, maybe Wells Fargo, if you will, that are systemically important institutions because they've got, whatever, two hundred fifty billion plus, more like a trillion plus in, in, in capital. And those have the implicit backing of the U.S. government because we said, look, we're going to bail out those institutions if we need to, and we're going to monitor them more carefully. Uh, so those are probably pretty safe, too. That's why people are putting their money there. Uh, and by the way, they're They tend to be run better, and they're, I would argue, probably overcapitalized today versus certainly where they were before. And then there's the rest of the banks, which don't have, which have 250,000 per account. And so we've created this now three-tier, ah, guarantee system, which is very confusing to consumers. And the people who've been arguing that, oh, you know, moral hazard, capitalism is over. Um, you know, the problem with people losing confidence in deposits Is the details get lost in the headlines, right? Once you…

AI assessment note: “It is the safest bank. Actually, the irony is”

Q So how do you think, sorry, I'm fascinated. How do you think about position sizing? You always want more in your winners. You always want nothing in your losers. How do you think about position sizing?

A So the way we think about it is we're willing to risk a certain amount of capital on any one investment. And so if, and we, you know, if you're investing in the world's most dominant music company, Universal Music, it's has very little debt. It has a great market position and you can predict business with a very high degree of confidence and you're buying it at a fair price. You can assess what's the chance of our losing, you know, 25% of our investment, you know, over a several year holding period. And if the answer is very close to zero, which is kind of our assessment, we can make an investment like that quite large, right? If you think about, well, for risking 20, let's say the most we could lose in our view on that, not daily mark-to-market loss, but a permanent impairment. What would have to happen for us to be permanently impaired to lose 25% of our capital in that investment? Something pretty extraordinary. So that kind of investment can be 25% of our assets because it's Something where, ah, the risk of loss is very diminished by virtue of the robustness of the business. Excuse me, the capital structure of the company. Whereas you're buying an interest rate derivative. You know, we bought, in effect, the way to think about it is we bought a call option that paid off when two-year interest rates went above 93 basis points. And we had about an eighteen-month term. And at …

AI assessment note: “the way we think about it is we're willing to risk a certain amount of capital”

Q Bill, I spoke to many of our mutual friends, and they said what a wonderful marriage that you have today. I wanted to ask, what have been your biggest lessons on what it takes to make a marriage work so well? Teach me.

A Sure. So it starts with finding the right person, I would say. That's, that's about 98%. You can have, you can, you can choose the wrong person, and you can do all the right things, and it's not going to make for a great marriage. So I would say, it's, it's a lot in the selection, the mutual selection that comes from finding the right person. I just kind of come to believe, you know, this, all these notions of opposites attract. Eh. I'm not a big believer in that. Um, you know, Neri and I, uh, have a lot of commonality on, you know, everything from drive, ambition, what makes us happy, you know, values, thoughts on kids, parents, family, what's important in the world. And physical tractions, obviously key. Um, you know, so we're just like super physically, intellectually, uh, compatible. And, and we're, we're, I mean, we're, if you met her, you would say, okay, she's very different from you, Bill. But in very fundamental ways, we're, we're pretty similar. So I think getting the match right is really, really important. You know, finding a authentic, super high quality, high integrity, Interesting, attractive, uh, person, um, I think is, is almost, and then beyond that, it's making sure that your daily life doesn't take over, distract you so much. You don't have time for each other, you know, and that's a risk when you have two motivated people trying to accomplish a lot.

AI assessment note: “So it starts with finding the right person, I would say.”

Q So, what's the trend that most investors are not seeing or ignoring?

A That there will be persistent, it's not a one-word answer, but, um, the world is a structurally different place than it was Uh, for the last 20 odd years, and you're going to see persistent levels of inflation, you know, three to four percent inflation for the foreseeable future. I think that, that's certainly being missed based on the pricing of Wong Kar Bonsk. You can buy it. You can buy it. You can get it only about a 3.6% yield. I haven't checked my screens. It's probably so volatile. I don't know what it is today, but 3.6% yield for committing to the government. You know, the government's only gonna, it's gonna borrow money, the government's borrowing money for 30 years at 3.6%. That can't make sense in a world where inflation is three and a half percent.

AI assessment note: “you're going to see persistent levels of inflation, you know, three to four percent”

Q Bill, I spoke to many of our mutual friends, and they said what a wonderful marriage that you have today. I wanted to ask, what have been your biggest lessons on what it takes to make a marriage work so well? Teach me.

A Sure. So it starts with finding the right person, I would say. That's, that's about 98%. You can have, you can, you can choose the wrong person, and you can do all the right things, and it's not going to make for a great marriage. So I would say, it's, it's a lot in the selection, the mutual selection that comes from finding the right person. I just kind of come to believe, you know, this, all these notions of opposites attract. Eh. I'm not a big believer in that. Um, you know, Neri and I, uh, have a lot of commonality on, you know, everything from drive, ambition, what makes us happy, you know, values, thoughts on kids, parents, family, what's important in the world. And physical tractions, obviously key. Um, you know, so we're just like super physically, intellectually, uh, compatible. And, and we're, we're, I mean, we're, if you met her, you would say, okay, she's very different from you, Bill. But in very fundamental ways, we're, we're pretty similar. So I think getting the match right is really, really important. You know, finding a authentic, super high quality, high integrity, Interesting, attractive, uh, person, um, I think is, is almost, and then beyond that, it's making sure that your daily life doesn't take over, distract you so much. You don't have time for each other, you know, and that's a risk when you have two motivated people trying to accomplish a lot.

AI assessment note: “So it starts with finding the right person, I would say. That's, that's about 98%.”

Q So that's when the match is in progress. When the match is over, and say, you know, Gotham's wound down, you know, um, I've beaten you in a tennis game, which is very unlikely, but take a hypothetical scenario, um, do you do a post-mortem process? How do you learn from that process, and what does that look like?

A Sure. So, I, I don't know if I do a formal post-mortem, but I certainly, there were a lot of lessons learned, uh, about the structure Of, of Gotham Partners, of our first fund, and, and, uh, I learned some pretty valuable lessons that remarkably were learned by others. You know, so Gotham, we started out investing in liquid public securities, and then we went back to investors, and we got the mandate to invest up to a third of our portfolio in privates, venture capital, real estate, et cetera, and a structure, a so-called side pocket type structure that enabled that, uh, approach, and then Inevitably, the asset liability mismatch is what caused us to wind down because we had a problem when, uh, we're, you know, I blame MVIA for intervening in a court case, but ultimately a merger that was critical to our success ended up getting held up on appeal or held up by a judge, ultimately reversed on appeal, but that was sort of, you know, sort of too late. And so the lesson from the Gotham experience was of the importance of liquidity and, you know, that you shouldn't have a An open-ended fund, like a hedge fund where people can redeem capital and liquid assets. And so we built Pershing Square to invest only in, you know, liquid large cap public companies and it's served us really well. Meanwhile, I've watched the rest of the industry or many people in our industry, particularly in the…

AI assessment note: “I don't know if I do a formal post-mortem, but I certainly, there were a lot of lessons learned”

Q What worked? What didn't work? A hundred meetings. There must have been some lessons.

A So, uh, what was interesting is anyone who knew me as a kid wouldn't give us money. And the same went true for my partner because they thought of me, the perspective was me as a high school kid or a elementary school kid or whatever. So I had no success with anyone I knew. Um, but of the original six, four of the six were in the four, 400 wealthiest people in America. So we went to people who were worth four hundred million dollars. We asked them for like a half a million bucks. And that was a good strategy, actually. And what was interesting is the people who were entrepreneurs really liked the idea of backing a couple of young guy, a couple of young guys who were entrepreneurs. And I think that was a big part of the connection. And the pitch we made, she said, look, we're not doing venture capital. We're investing in, you know, uh, public companies. Uh, we're doing, you know, detailed due diligence. We have no track record. But we have a strategy that is an excellent track record. You know, we're, you know, Mr. We're Warren Buffett devotees. And we said, look, we're putting all of our collective networks in. We're, you know, missing out on the opportunity to go work at McKinsey or Goldman Sachs to do this. We've been successful up to date in everything we've done. You know, we've, whatever, I did well in high school, went to a good college, did well there. Um, you know, got i…

AI assessment note: “anyone who knew me as a kid wouldn't give us money”

Q I had some of the most powerful people in finance privately message me and say, ask him why he's so public. And you said there about, you know, people wanting to bring you down when there is an occasional loss. I would say that it's because you are very public, where maybe there are others in your case who aren't as public. Why do you choose to be so public?

A So I would say originally it was a very important part of the strategy. You know, we were a tiny fund trying to influence these really big companies and we were using the power of persuasion, uh, to influence them. And we couldn't influence them with the fact that we own one percent of company ABC, but we could, if we corralled the other, you know, substantial majority of other shareholders to our views and therefore having The, uh, the platform, if you will, uh, or the mouthpiece was how we effectuated change. So it was a very important, powerful part of the strategy. And then I always had this kind of free speech thing. You know, I'm not, I don't want to copy a lawn or anything, but big believer in free speech. And if I think about like the most important drivers in my life, I would say independence was always one of them. Uh, I did not like the fact that my parents could control me And you know, that motivated me to have lots of summer jobs. So I had my own spending money and that also motivated me to be, you know, financially independent as properly as possible. But one of the sad things about our country right now is I think free speech has been crushed to a great extent. Other than if you were, you know, if, if you can say something, if you could express a political view and get fired today, which is definitely a very real possibility. Only if you are financially independ…

AI assessment note: “So I would say originally it was a very important part of the strategy.”

Q I was, I was deeply, I saw the, you know, videos on Twitter of people outside certain banks, and it was, it was really unnerving. I've never seen this living in London. Um, what does banking look like in five years time? Do we just see the centralization of power to the four key banks, and the big four become more and more powerful?

A Uh, hopefully not. And there's a very, very, there's a reason why a lot of people bank with these sort of smaller banks. And, you know, I'm in a venture capital fund and, you know, the, uh, GP was asking my advice on what to do. And he opened an account at, you know, one of the big banks and he was saying they don't know how to bank a venture fund, you know, that makes a capital call and takes in, you know, a hundred wires and then, you know, needs to, uh, send wires here and there that just, he found it very cumbersome already. So that's one important reason why we need these other banks. You know, the service level could be a lot higher at a smaller bank. But I would say, as if not more importantly, a lot of the construction lending, real estate lending, and small business lending is done by these smaller banks. Um, you know, the big money center banks are not good at real estate lending. They've kind of gotten out of that business. But, you know, commercial real estate is a major part of our, uh, economy. And you have these big banks that don't have a core competency in making those kind of loans to developers, et cetera. And that will cause a meaningful slowdown if these banks lose all their capital and deposits.

AI assessment note: “Uh, hopefully not. And there's a very, very, there's a reason why”

Q I've had my trust broken before, and it's very damaging and hurtful. Um, can I ask you, do you start from full trust, and it's there to be lost, or do you start from none, and it's there to be gained?

A Uh, probably, probably neither, um, but I, I would say I form a view of a person's, um, character pretty quickly, and the vast majority of the time I've been right, uh, with only a few disappointments, I would say. And the disappointments have been cases, in most cases, and there haven't been many, where my spidey sense Had a little bit of concern, but I chose to ignore the, the, the gut instinct, right? The gut is actually part of your brain, uh, as we've come to learn, I think, over time, and I think it's important to, to listen to it, and I've learned to listen to it a little more carefully, but, and by the way, it depends on what you're trusting someone with, right? Degree of trust required for someone to take care of a child or a parent versus someone to invest with a small sum of A large sum, you know, a bank, you know, different kinds of fiduciaries, or it depends on what kind of trust you need. Um, but you know, someone you're going to work with, um, so it, it, it kind of depends. Uh, but David is someone I was in the classroom with at HBS for basically a full year and then spent a lot of time with him the second year. I had a pretty good understanding of who he was by the time we went into business together, and I wasn't surprised by anything.

AI assessment note: “probably, probably neither, um, but I, I would say I form a view”

Q I had some of the most powerful people in finance privately message me and say, ask him why he's so public. And you said there about, you know, people wanting to bring you down when there is an occasional loss. I would say that it's because you are very public, where maybe there are others in your case who aren't as public. Why do you choose to be so public?

A So I would say originally it was a very important part of the strategy. You know, we were a tiny fund trying to influence these really big companies and we were using the power of persuasion, uh, to influence them. And we couldn't influence them with the fact that we own one percent of company ABC, but we could, if we corralled the other, you know, substantial majority of other shareholders to our views and therefore having The, uh, the platform, if you will, uh, or the mouthpiece was how we effectuated change. So it was a very important, powerful part of the strategy. And then I always had this kind of free speech thing. You know, I'm not, I don't want to copy a lawn or anything, but big believer in free speech. And if I think about like the most important drivers in my life, I would say independence was always one of them. Uh, I did not like the fact that my parents could control me And you know, that motivated me to have lots of summer jobs. So I had my own spending money and that also motivated me to be, you know, financially independent as properly as possible. But one of the sad things about our country right now is I think free speech has been crushed to a great extent. Other than if you were, you know, if, if you can say something, if you could express a political view and get fired today, which is definitely a very real possibility. Only if you are financially independ…

AI assessment note: “originally it was a very important part of the strategy.”

Q I was, I was deeply, I saw the, you know, videos on Twitter of people outside certain banks, and it was, it was really unnerving. I've never seen this living in London. Um, what does banking look like in five years time? Do we just see the centralization of power to the four key banks, and the big four become more and more powerful?

A Uh, hopefully not. And there's a very, very, there's a reason why a lot of people bank with these sort of smaller banks. And, you know, I'm in a venture capital fund and, you know, the, uh, GP was asking my advice on what to do. And he opened an account at, you know, one of the big banks and he was saying they don't know how to bank a venture fund, you know, that makes a capital call and takes in, you know, a hundred wires and then, you know, needs to, uh, send wires here and there that just, he found it very cumbersome already. So that's one important reason why we need these other banks. You know, the service level could be a lot higher at a smaller bank. But I would say, as if not more importantly, a lot of the construction lending, real estate lending, and small business lending is done by these smaller banks. Um, you know, the big money center banks are not good at real estate lending. They've kind of gotten out of that business. But, you know, commercial real estate is a major part of our, uh, economy. And you have these big banks that don't have a core competency in making those kind of loans to developers, et cetera. And that will cause a meaningful slowdown if these banks lose all their capital and deposits.

AI assessment note: “hopefully not. And there's a very, very, there's a reason why”

Q So, what's the trend that most investors are not seeing or ignoring?

A That there will be persistent, it's not a one-word answer, but, um, the world is a structurally different place than it was Uh, for the last 20 odd years, and you're going to see persistent levels of inflation, you know, three to four percent inflation for the foreseeable future. I think that, that's certainly being missed based on the pricing of Wong Kar Bonsk. You can buy it. You can buy it. You can get it only about a 3.6% yield. I haven't checked my screens. It's probably so volatile. I don't know what it is today, but 3.6% yield for committing to the government. You know, the government's only gonna, it's gonna borrow money, the government's borrowing money for 30 years at 3.6%. That can't make sense in a world where inflation is three and a half percent.

AI assessment note: “you're going to see persistent levels of inflation, you know, three to four percent”

Q What was the biggest takeaway? This one's from Jackie Reese's. She said, what was the biggest takeaway from the SPAC that didn't happen?

A I would say I was very surprised. So we did a transaction with probably the best company that about any of them that were from the SPAC, Universal Music. It was a super predictable, high quality business. We buy at a very attractive valuation. We gave up our warrants, which were the only Uh, sponsor economics we received due to the transaction. We committed a billion, six hundred million dollars alongside, uh, the public shareholders. And the transaction had some complexity because we had to accommodate, you know, tax and other issues of, of the counterparty who was, who was selling their, their interest in the company. And despite it being great for the shareholders, despite our having exactly the same alignment With other shareholders, every other SPAC there was founder stock and all kinds of other instruments. The SEC turned down the transaction for highly technical reasons, which substantively should be precisely the kind of transaction they're going to approve. And I think that I guess the takeaway from that is sometimes, you know, a lot government regulators focus on the technical details as opposed to high level principles. And I think they could, you know, you look at Silicon Valley bank just to close the circle, right? They made one of the most basic mistakes a bank could make, right? We had something called the S&L crisis in the eighties, right? Why? Because banks had…

AI assessment note: “the takeaway from that is sometimes, you know, a lot government regulators focus on the technical details”

Q Is Silicon Valley bank not the safest bank to be at right now?

A It is the safest bank. Actually, the irony is, and I, you know, tweeted about this morning, there's sort of two banks that now have an explicit guarantee, regardless of how much money you put in those banks. Right? That's Signature and Silicon Valley Bank. They have an explicit guarantee from the U.S. government. Then there's J.B. Morgan, there's Citi, there's B of A, maybe Wells Fargo, if you will, that are systemically important institutions because they've got, whatever, two hundred fifty billion plus, more like a trillion plus in, in, in capital. And those have the implicit backing of the U.S. government because we said, look, we're going to bail out those institutions if we need to, and we're going to monitor them more carefully. Uh, so those are probably pretty safe, too. That's why people are putting their money there. Uh, and by the way, they're They tend to be run better, and they're, I would argue, probably overcapitalized today versus certainly where they were before. And then there's the rest of the banks, which don't have, which have 250,000 per account. And so we've created this now three-tier, ah, guarantee system, which is very confusing to consumers. And the people who've been arguing that, oh, you know, moral hazard, capitalism is over. Um, you know, the problem with people losing confidence in deposits Is the details get lost in the headlines, right? Once you…

AI assessment note: “It is the safest bank. Actually, the irony is”

Q Bill, if you were sitting in charge of the Fed, what would you do today?

A I would call my colleagues at the FDIC and the Treasury. I would say, let's put them, let's put them in place of temporary. Let's announce to the world a temporary deposit guarantee on all deposits. Let's get busy quickly to up to, you know, create greater insurance levels, and let's get that system announced and launched quickly. Shouldn't take a lot of time, right? We already have a regime for 200,000 dollar deposits. We just need to rate, you know, increase the, uh, the amount of deposit guarantees That are available. We've got to first stabilize the banking system, and the federal reserve's principal job is, you know, financial stability. Without financial stability, we don't have any kind of stability, let alone, you know, US dollar or US interest rate stability. So once you go solve that problem. Now, Mr. Powell has an upcoming meeting where he's got to make a decision on interest rates. And each move of the lever, if you will, or the crank, each crank of the, uh, you know, cranking, uh, up rates, uh, you know, Puts pressure on the system and cracks a verge. And we've seen more of that crack. We've seen glass breaking. And so I think he's gotta be very, very thoughtful about whether we raise rates here or whether we pause. And so I think there's a decent chance Powell says, you know, we've, we're not raising rates. We were witnessing, uh, you know, again, if they can stab…

AI assessment note: “I would call my colleagues at the FDIC and the Treasury.”

Q I had Dara from Uber on the show the other day, and he said his biggest concern is that actually the realization that Trump might actually get back into power, speaking of immigration. Um, do you think that's likely?

A Um, if it's Biden, Trump, I think, I think Trump wins. But I think if it's Biden, if Biden runs again, which sounds like it's approaching a certainty, I think it's a very interesting opportunity for someone who's not inside the political system. Uh, to run for office on the Democratic side. My favorite version of events is, is Jamie Dimon actually, believe it or not, a banker. Um, you know, I, I'd like a globally recognized, respected, talented business builder, um, that understands the economy, that understands geopolitics, that has, um, relationships with business leaders, kind of globally. I think that kind of person, uh, And also has a, you know, a track record for caring about broad ranges of, of, uh, of our, our citizens. I think that kind of person would make for an excellent candidate. So I'd love for a, we're not going to see someone, some Senator or Governor compete with the, you know, with President Biden. I'd like a better version of Trump, a better business leader, uh, to run for office. And, uh, and I think they can absolutely get the Democratic nominee And against Trump, they'll get the, um, you know, the center and center right part of the Republican Party and can win.

AI assessment note: “if it's Biden, Trump, I think, I think Trump wins.”

Q You said before that success is defined by how you deal with the failure. When you look back to say, you know, that fall from grace, so to speak, with Gotham in that time, and 2015 to 2017 in that patch, when the war's in process, what do you tell yourself?

A I tell myself to make progress every day. Um, you know, the, the, the advice I give friends who go through similarly challenging moments, and I guarantee you that, you know, in life, it's the rare person that doesn't go through a very, uh, dark, uh, period is, well, number one, you know, adequate sleep, proper nutrition, exercise is a huge, uh, help during, you know, build muscle during those periods of time. And get in really good shape, because that, I think, psychologically is a boost. Surround yourself with people who love you, and then make sure each day you make progress toward digging yourself out of the mess. And that, and that kind of progress, uh, physical, mental, business compounds, uh, and it compounds at a pretty high rate, and it's not long before you look back, 60, 9020, 180 days, and you've made massive progress. And, and One of the great things about America is, and, uh, you know, I know you, uh, deal with lots of startups and venture capitalists is that, you know, failure is something that's, uh, can be, you know, a lot of talented, uh, some of the most successful investors in the world are, are ones that the first one didn't work and that you can, you know, there's plenty of capital available for people who, who are, are, uh, second time founders and the first one was not a successful exit. You know, they, they quote unquote sold their company, but that, tha…

AI assessment note: “I tell myself to make progress every day.”

Q Bill, if you were sitting in charge of the Fed, what would you do today?

A I would call my colleagues at the FDIC and the Treasury. I would say, let's put them, let's put them in place of temporary. Let's announce to the world a temporary deposit guarantee on all deposits. Let's get busy quickly to up to, you know, create greater insurance levels, and let's get that system announced and launched quickly. Shouldn't take a lot of time, right? We already have a regime for 200,000 dollar deposits. We just need to rate, you know, increase the, uh, the amount of deposit guarantees That are available. We've got to first stabilize the banking system, and the federal reserve's principal job is, you know, financial stability. Without financial stability, we don't have any kind of stability, let alone, you know, US dollar or US interest rate stability. So once you go solve that problem. Now, Mr. Powell has an upcoming meeting where he's got to make a decision on interest rates. And each move of the lever, if you will, or the crank, each crank of the, uh, you know, cranking, uh, up rates, uh, you know, Puts pressure on the system and cracks a verge. And we've seen more of that crack. We've seen glass breaking. And so I think he's gotta be very, very thoughtful about whether we raise rates here or whether we pause. And so I think there's a decent chance Powell says, you know, we've, we're not raising rates. We were witnessing, uh, you know, again, if they can stab…

AI assessment note: “Let's announce to the world a temporary deposit guarantee on all deposits.”

Q How do you think about yours today? Do you tie money to, to power, to freedom of speech, to presence and aura?

A Sure. So what I would say is getting back to my free speech speech, I, it is important to me. I like the fact that I don't have to worry about keeping my job and I can say what I think. Although my compliance person Every once in a while, you know, I appreciate if you, before you tweet, please, please say something to me. So, so compliance is a little restraint on free speech, but you know, look, I, I feel incredibly fortunate. You know, I was a, my ambition when I was 18, I was like, okay, I'm gonna, I'm gonna be really good at this business thing. I'm gonna make a pile of money and I'm gonna reallocate it the way I think makes sense. I've spent a fair bit of time and I still, I do, uh, on philanthropic stuff, but I learned We've probably given away over six hundred million dollars in the last decade. And what I've learned from that is that philanthropy is, is often not the solution to many problems and that, um, you know, business and for-profit business models are much more effective solutions to problems, most problems. And so, you know, I, I think, I think you get happiness. I think I've learned this over time. Happiness comes from helping other people. And I've spent my life, good part of my life finding people Spouses and jobs and introducing people to each other. And what money has given me is the ability to have, you know, sometimes global impact on, on problems. And, …

AI assessment note: “what money has given me is the ability to have, you know, sometimes global impact”

Q Can I be a really tough one? How do you bring up children in a world of, you know, financial privilege, but also teach them to have the same drive, hunger, ambition that one would want any child to have growing up?

A I think it's a very good question. I don't know the precise answer. Um, you know, a lot of people would say I grew up in a very privileged, uh, background, you know, closer relative, but I, I grew up in a town called Chappaqua. Um, we had a very good school system. Um, you know, my dad was a successful mortgage broker, you know, uh, we went on nice vacations, a nice house. Uh, I don't know that it matters so much whether you live in a 300,000 dollar house Or a two million dollar house, or a twenty million dollar house, or whether your parents drive a Toyota. You know, I think that the major differences are, you have access to a good education. Do you have food on the table? Uh, do you have financial security? Um, I don't, I don't know that it has to matter. I, what's interesting is, I remember kind of growing up, and I felt very, uh, you know, sort of fortunate with my upbringing. My parents told me they would be paying for my college education. But no more. So my, what my dad's always sort of told me. And then we had actually some relatives who, or people close to the family who had a lot less than we did, and their kids were horribly spoiled. And I really think it's just the way the parents, you know, uh, raised the children. Um, so I think it's, it's all on the parents and kind of the, the, uh, the lessons they teach about money. You know, I never got an allowance. I had to …

AI assessment note: “I never got an allowance. I had to work, you know, I had”

Q My question was, don't they have the same risk if interest rates go up further on the mark-to-market value of their assets?

A So, Silicon Valley Bank was, I would say, unique in, uh, the disproportionate amount of exposure they had to, kind of, long-duration fixed-income assets versus other banks. You know, we've looked at, um, First Republic Bank, which, you know, has, has been an underperformer, if you will, but its balance sheet, its loan portfolio, its business model looks very, very different from Silicon Valley Bank, but it's still getting shot, if you will, uh, in, in the market, and, and that's because, um, the government has still not given people assurance that every deposit is safe, and my point is, you know, my overarching point is we need to Get everyone calm. It's a bit like there were runs on mutual funds. I don't know if you remember during the financial crisis, one of the mutual funds broke the buck, if you will, like a money market mutual fund. People were redeeming and they, and they couldn't give people the dollar par and that was causing a run on every mutual fund. Basically the treasury fed came in and said, look, we're going to guarantee principal at mutual funds, which is a pretty extraordinary thing to do, but it stopped people from withdrawing their money, you know, so they could be comfortable. And then they put in new regulations about what Money market mutual funds could hold so the same problem would occur. I think basically the same thing has to happen with, with banks. …

AI assessment note: “Silicon Valley Bank was, I would say, unique in... disproportionate amount of exposure”

Q You mentioned on your interview with Shane Parrish, I was just listening to it on the run. You said about kind of nothing ever being a straight line up. When you think about like your line, so to speak, in terms of the trajectory, what was the biggest dip and what did you learn from that specific moment?

A So I had a few dips, uh, one of the biggest dips, which seems far away and like nothing now, but it was a very significant one was in the Gotham partners days. And that was when we wrote, or I wrote it in this case, a white paper on, uh, it was called is MBIA AAA, where I questioned the AAA, uh, credit rating of a, of a bond insurer. This is about five years in advance of the credit crisis. And then I found myself, uh, you know, never before had I taken on a politically powerful, influential big company, and, uh, I found myself under the gun, ultimately under investigation by Eliot Spitzer, uh, then the SEC fall suit, and then all the negative headlines, and then we were forced to wind down, uh, you know, Gotham. It was certainly, as the headlines at the time, called it a fall from grace. Uh, so that was, I would say big challenge number one. I would say big challenge number two business-wise was certainly the, the period beginning late, 2015 through late, 2017. And then in the midst of that, uh, you know, ending a marriage, um, you know, so I've had a few like that, but I've been very fortunate. You know, none of these things are really catastrophic versus a serious, you know, health challenge, which I've, which I've not had in And hope to defer forever if I can.

AI assessment note: “one of the biggest dips, which seems far away and like nothing now”

Q We don't know. The joy of being a pre-seed and seed investor, my friend. Um, is America stronger or weaker in 10 years time?

A I mean, I have to say stronger because I'm an optimist. You know, everything bad, good will come from it. Uh, good will come from this war with Russia, for sure. It's already, some good has come. Uh, good will come from the wake-up call we've had with Silicon Valley Bank. Um, and, uh, you know, hopefully someone's motivated to run against, uh, Biden and Trump that's, uh, you know, we need some more white swans. We've had too many black swans. And, or a good black swan would be, we resolve Ukraine, Russia in some form. Russia just backs off, or there is a peace resolution there. Uh, and we elect an outstanding leader that there's common appreciation for that, that kind of brings us together. I, I'd love to see that happen.

AI assessment note: “I mean, I have to say stronger because I'm an optimist.”

Q Can I be a really tough one? How do you bring up children in a world of, you know, financial privilege, but also teach them to have the same drive, hunger, ambition that one would want any child to have growing up?

A I think it's a very good question. I don't know the precise answer. Um, you know, a lot of people would say I grew up in a very privileged, uh, background, you know, closer relative, but I, I grew up in a town called Chappaqua. Um, we had a very good school system. Um, you know, my dad was a successful mortgage broker, you know, uh, we went on nice vacations, a nice house. Uh, I don't know that it matters so much whether you live in a 300,000 dollar house Or a two million dollar house, or a twenty million dollar house, or whether your parents drive a Toyota. You know, I think that the major differences are, you have access to a good education. Do you have food on the table? Uh, do you have financial security? Um, I don't, I don't know that it has to matter. I, what's interesting is, I remember kind of growing up, and I felt very, uh, you know, sort of fortunate with my upbringing. My parents told me they would be paying for my college education. But no more. So my, what my dad's always sort of told me. And then we had actually some relatives who, or people close to the family who had a lot less than we did, and their kids were horribly spoiled. And I really think it's just the way the parents, you know, uh, raised the children. Um, so I think it's, it's all on the parents and kind of the, the, uh, the lessons they teach about money. You know, I never got an allowance. I had to …

AI assessment note: “it's all on the parents and kind of the, the lessons they teach about money.”

Q How do you think about yours today? Do you tie money to, to power, to freedom of speech, to presence and aura?

A Sure. So what I would say is getting back to my free speech speech, I, it is important to me. I like the fact that I don't have to worry about keeping my job and I can say what I think. Although my compliance person Every once in a while, you know, I appreciate if you, before you tweet, please, please say something to me. So, so compliance is a little restraint on free speech, but you know, look, I, I feel incredibly fortunate. You know, I was a, my ambition when I was 18, I was like, okay, I'm gonna, I'm gonna be really good at this business thing. I'm gonna make a pile of money and I'm gonna reallocate it the way I think makes sense. I've spent a fair bit of time and I still, I do, uh, on philanthropic stuff, but I learned We've probably given away over six hundred million dollars in the last decade. And what I've learned from that is that philanthropy is, is often not the solution to many problems and that, um, you know, business and for-profit business models are much more effective solutions to problems, most problems. And so, you know, I, I think, I think you get happiness. I think I've learned this over time. Happiness comes from helping other people. And I've spent my life, good part of my life finding people Spouses and jobs and introducing people to each other. And what money has given me is the ability to have, you know, sometimes global impact on, on problems. And, …

AI assessment note: “what money has given me is the ability to have, you know, sometimes global impact”

Q Does kind of, ah, wall to wall guarantees on deposits, not just allow for constraints to be removed and bad performance and behavior to be allowed?

A So again, we need a temporary government guarantee because we don't have a non-governmental insurance system to support it, right? The FDIC system is not a government guarantee of deposits. It's, well, it's a government guarantee in exchange for appropriate premiums, right? The The FDIC has a hundred and twenty five billion dollars of, of premiums. It's collected sitting in an account that to be, to, uh, backstop, you know, insurance on deposits. It's a good system. The problem is that the, the amount of insurance available per accounts is very small, right? Well, small, not small for your average American's checking account for sure takes care of that, but it doesn't take care of any kind of decent sized business. That has to have money on hand for payroll or working capital or otherwise. And you can't have, you know, millions of small businesses trying to assess the credit worthiness of banks on a regular basis. And by the way, the credit worthiness can change dramatically. You know, Silicon Valley bank was a very self solvent bank until rates moved a lot in 12 months.

AI assessment note: “you can't have, you know, millions of small businesses trying to assess the credit worthiness”