The Exchanges

Q I'd love to dive in a little bit on Sam, SBF, FTX. Why don't you just take me through your path of how you got to know him, what you did with him, what you saw along the way?

A So it's very important to describe it as it happened and not to revise it. I think what ends up happening, there's obviously a great aphorism that people remember things the way they need to, not necessarily the way they happen. So I don't want to overly color it or give you my point of view after we've discovered that he's a fraud. I want to go through it chapter and verse and give you at least my feelings at the time, what I was thinking and why we were thinking what we were thinking. I'll take you back to June or July of 2021. First time I met Sam was over Zoom. He was based in Hong Kong. Mutual friend made the introduction. Sam wanted to sponsor the SALT conference. There was no SALT conference in twenty-twenty because of COVID. We couldn't get a SALT conference done in May of twenty-twenty-one. We made the strategic and, frankly, I think the bold decision to do a SALT conference in September of twenty-twenty-one. We had 2000 people at the Javits Center. Sam wanted to sponsor that conference. He had heard great things about it. He was laying out for me on that Zoom call his vision For his exchange. And so FTX wasn't going to be a crypto exchange per se that started as a crypto exchange, but it was going to migrate into being an exchange of everything. And he was explaining to me his vision, eventual tokenization of all types of different securities and trading things over t…

AI assessment note: “I'll take you back to June or July of 2021. First time I met Sam”

Q There's always something interesting going on in your life in addition to all the business stuff. What else is going on outside of Skybridge?

A I've taken a back seat in the political arena. Since I got fired from the White House, I did speak out against President Trump. I felt he was obviously the wrong messenger for the movement of the Republican Party. You've got smarter, younger, more effective people, more confident, less insecure people to take the mantle of leadership in the Republican Party. And you better do it quickly because you're really fracturing that party. You need somebody that can bring that party back together and unify it. I'm taking a back seat there. I just participated in a reality television show, which was a lot of fun for me called Special Forces. I was in the Jordanian desert with 16 celebrities doing a Navy SEAL British SAS survival training course. To make you laugh, one of the directing staff was a former SAS officer. He said, yeah, we casted you because we thought you were some Wall Street pansy ass entitled cream puff. I guess the guy didn't realize I grew up in a blue collar neighborhood. I think I surprised him with how fucking nuts I am. The show was a lot of fun. I'm sure there'll be fun stuff like that, but here's the thing. Some people go on vacation and they go to Hawaii. I go on vacation and do reality shows. It's not like it's taking away from the business. It's just fun for me to do. I'll be writing another book. I wrote a book on Algorand last year. I wrote a book on Bitcoin. …

AI assessment note: “I just participated in a reality television show, which was a lot of fun”

Q What type of investment do you gravitate to like a moth to the flame?

A Oh, I'm going to really embarrass myself now, and I've lost so much money doing this, but I gravitate to young people with bold ideas. Listen, I've made some money doing that as well. If you took the money I lost, and the money I made from these stupid investments that I make, I've probably matched the S&P, because I have had some hits that make up for the losses, but if a group of young people come into my office, and they pitch me on an idea, and they I'm a paid forward type of person. Am I in for two 50, a half a million dollars? Probably. All right, let's see what the hell happens. Some of them end up working here after they blow up. Some of them go on and make great money, and some of them I've invested in two or three times on different ventures together. But yeah, I am a sucker, if you want to call it that. You come to my office with a great idea, I'm in. Although I did miss Uber. Travis came to see me, And I think Uber had a 50 or a hundred million dollar valuation at the time, and I was like, wait, wait, what? This is an unknown black car. It's going to pick up my daughter. It's going to drive her around New York City, and you're saying, we don't know who the person is, and we're going to do it over the app, and it's a new sharing economy. Go fuck yourself. So I probably missed a hundred million dollar action. And in the meantime, if you look at my American Express bil…

AI assessment note: “I gravitate to young people with bold ideas.”

Q How do you marry the relationship side with turnover? You're a big relationship guy. You're investing in managers. A lot of people tend not to turn over their portfolios, and part of that may be they're wedded to the relationship.

A I think one of the things that actually indirectly benefited us was our conference, right? So I have spent a lot of time with the top tier managers in the United States, convincing them that whether we're in or out of their fund, it's incumbent upon them to have a very good relationship with us, because we can help them meet other clients. We can set them up on marketing meetings at our conference. We can help avail them to clients outside of our current book of business, and so that's one thing. Another thing is, even though we have this turnover, if you looked at our duration with managers, we're three to seven years, depending on the manager, and so guys look at us as follows. If Troy Gajewski and Ray Nolte are coming into their fund, they're likely going to be there to three to seven years. They go in eyes wide open. We go in eyes wide open. We're not churning The way the reputation of typical fund advisory businesses get accused of, but what we are doing is we are telegraphing to managers what our goals are. You know, as an example, I'm sure he won't mind me saying his name because we're close personal friends. I've had a very close relationship with Dan Loeb over the last 10 years. We have more money with him today than we did a year ago, but a year ago we had way less money with him than we did three years ago, and so we've sort of had a little bit of a M with Dan, and n…

AI assessment note: “what we are doing is we are telegraphing to managers what our goals are.”

Q you would describe your investment management tech, request a demo at ridgeline.ai. And now back to the show. Just some life lessons. You've written a few books. The first called Goodbye, Gordon Gekko, and I think if someone hasn't read it and only knows you from the press, they might be a little surprised by what they find in the books. Why don't you talk a little bit about it?

A How that book came about was I was in Oliver Stone's movie Wall Street II, and he asked me to read his manuscript, and I was thinking about writing a book, and at that time I was really just writing it because I've had this improbable life. You know, I was 45 years old. I said, okay, it's been a very improbable life. I went from this blue-collar family to the World Economic Forum, to Goldman Sachs, to Harvard Law School. I'm building my own business. I literally start with a Rolodex of zero, other than my buds, you know, that are in plumbing and clamming, and they're in auto-collision and auto-glass. I'm, you know, everybody in my family's named Anthony. I just happen to be Anthony Hedge Fund, right? You got Anthony Auto-Glass, Anthony Adeli. I mean, so, you know, because your grandfather's named Anthony, everybody gets named Anthony, so. I'm sitting here with this improbable life. I said, let me write it down. And so I handed the script to Oliver, and then Kelly O'Connor, who was working at Wiley, she said, well, you're in the movie, why don't we write a goodbye Gordon Gekko, how to find your fortune without losing your soul. And so the message of the book is that you can be a blue collar kid, you can be dressed in a hundred percent polyester, which what I was at my first Goldman interview, I mean, I was fully flammable at the first Goldman interview, ok? I had a hundred perce…

AI assessment note: “the message of the book is that you can be a blue collar kid”

Q When you've done the work to buy into this theme, how do you think about it in the context of a portfolio and position sizing and opportunity cost?

A Well, there's a lot of different ways to do that, right? So you could do the, okay, I'm just going to totally protect my business franchise, do nothing, which I think is a mistake, because that would be against my sense for innovation and risk-taking and entrepreneurship. It's a middle ground where you can own a small piece of it, or you can do what we did, which is a 10 to 15% position in the portfolio, which is sizable in a portfolio like ours. And then what we did was we developed crypto products. We have an ETF, we have a unit investment trust, we have a coin fund, which is a diversified coin fund, all of which did very poorly in 2022, but I think are very well set up for 2023. I guess what I would say to you is I needed to size it so that it would have a meaningful impact if we get it right over a three to five year period of time. And of course, if we've got it completely wrong, let's say Warren Buffett and Charlie Munger are right. They beat you on a bet. And so I'm a humble guy. They may be right on this as well. But if it goes to zero, it's not going to knock us out of business and it's not going to be a permanent capital loss. So I think you don't want to oversize it and go above and beyond. I mean, maybe you could max it at 30. I think it did get to 30, but that was really through price appreciation. Buffett does have another great aphorism. I would rather be roughly…

AI assessment note: “what we did, which is a 10 to 15% position in the portfolio”

Q Inside the rabbit hole, it's a lot about entrepreneurship. How do you think about, say, at a hedge fund business, someone starting a hedge fund, how they staff it, and how they make changes?

A So I would say, number one, be very gradual. You know, it's like going to the store and buying shirts and ties. If you go and buy 15 shirts and ties, and suits for that matter, on one day, the chances are you're gonna like three of them. 12 of them you're not gonna really like. Those 12 end up like collecting dust in the closet, and the three that you like. So go and buy one at a time, or maybe two at a time, and so be very gradual about who you're hiring. Uh, second thing is if you've been wrong on who you're hiring, if they don't fit your culture, fire quickly. Okay, so I do admire that about the president, okay, and I've said that. He's had very high turnover, but he's an entrepreneur, so if it's not working, he's firing people very quickly. A lot of people are critical of him because they're comparing him to the other 44 presidents, but if you think about it from an entrepreneur's point of view, in both businesses that I've started, we had very high turnover in the beginning, Until we got the team right, and now, remarkably, we have very low turnover. So, we're 13 years old. We've had hardly any turnover the last eight years. That's not to say that a young kid won't go to business school, or somebody's moving to the West Coast, or a woman is starting a family, or a man is starting a family, and they need to geographically reposition. But, by and large, we're not having mass…

AI assessment note: “So I would say, number one, be very gradual... fire quickly.”

Q What information do you read that you get a lot out of that other people might not know about?

A Well, I'm a big, Believer in reading outside of your field of learning, and so obviously I've read Continual Body of Finance, and I'm reading the stack of papers that most people in finance got taught to read, like the Wall Street Journal and the New York Times and Barron's and things like that, but away from that, I spent a lot of time reading about history outside of the United States, and I, I've spent the principal amount of time traveling Outside of the United States, so I can not only learn about these other cultures and learn about how they're made up and what the genesis is of these other cultures, but why they are where they are today. And so, I mean, a great book that I just read, uh, was called The China Mission, and it was about George Marshall, who basically went to China for almost a two-year period of time after the Second World War to see if he could stop the civil war that was going on in China. And so that book was written by a fellow at the Council of Foreign Relations. His name was Daniel Kurtz Furman. Uh, great book. It really gives you a lot of context on what was going on in China 70 years ago, what the manifestation of Maoism looked like back then. And then, you know, for me, I think it's very important to understand cultural context. You know, most people in the United States don't know what the Sykes-Picos Treaty is. That's the treaty that was put in p…

AI assessment note: “a great book that I just read, uh, was called The China Mission”

Q What are the key principles as the CEO of Skybridge that you use for the team to impart the message that you want across 60 people?

A I mean, I've got three things in my head. I just think of that as a triangle. Okay, so the first thing is I'm a big believer in delegation. I don't want to be the bottleneck here. And so if there's guys running the SALT conference, men and women, That's their lane. Run the Salk Conference. You guys report back to me. Tell me what you need from me to make it easier for you. How can I make it better? But you stay in your lane. Do your job. You be the CEO, if you will, of the Salk Conference. If you're running capital here, same thing. If you're in production on our television show, same thing. And so, you know, there was a period of time here before I left to join the Trump administration where I was raising capital for the president's campaign. Hosting Wall Street Week was the host and curating the SALT conference, overseeing a 65 person firm and its compliance, and then obviously doing the social media and networking business. So those five things are actually impossible to do unless you have a couple of things in your head about doing them, which is delegation, accountability, ok, and creating an esprit de corps inside the firm where people think that they're working For a higher value. They're working for a bigger deal than just themselves. Ronald Reagan had a great thing in the Oval Office, and I got the plaque over there. I bought it from the Reagan Library. There's no limi…

AI assessment note: “delegation, accountability, ok, and creating an esprit de corps inside the firm”

Q So within the hedge fund space, what does that look like going forward? We've just gone through a rough 10 year period, at least as some people look at in terms of relative returns.

A Yeah. The 10 year period can be explained by the macro dynamic of monetary policy, global monetary policy, and quantitative easing, which is an extra boost To, you know, if you can't get the rates below zero, buy down the curve, you're effectively reducing long-term rates, and so that's what these guys have done, and the ECB is still doing it, although they're now claiming that they'll end by December, but the problem in that sort of environment is that rising tide is going to lift every boat, so if you're a fundamentalist, and you're a security analytical person, you could say, ok, I'm gonna get my longs right. The market goes up 10, your longs go up 13, you look like a genius. And now I'm gonna short things. Well, you're shorting things, but the levitation of the monetary policy is causing everything to go up. Your shorts go up six. So you're up 13 on one side, your shorts are up six, you're up seven, market went up 10, you're underperforming the market, and then you get a nasty article written about you by Fortune Magazine or the Wall Street Journal, and so that's been the case, and so all of this stuff has flood into the ETFs over the 10 years. Everyone does that backward analysis and says, yeah, hedge funds suck, we gotta move into ETFs, but the problem is that just at the inflection point when interest rates are starting to normalize again, Where pressure will be put on v…

AI assessment note: “I think this is our brightest days for the hedge fund industry”

Q gain a decided advantage. That's why customers call it miraculous, game-changing, and an awakening. If that's not how you would describe your investment management tech, request a demo at ridgeline.ai. And now, back to the show. As you look forward from here, crypto blockchain is still an important part of what you're doing. How do you think about what's changed in the risk reward of your investments in the space?

A Well, ironically, they're probably less risky because of the downside volatility that we've experienced. I think we've flushed out a lot of selling. So if you said to me, okay, listen, you're gonna make your first Bitcoin investment at 17,000. You're expecting regulation to be positive. Turns out that it's not positive, or at least the country's waiting to regulate. You've got cash ETFs for Bitcoin in Canada. You have ETPs in Europe, but you're not going to have a cash ETF in the U.S., And they're going to wait on regulation. In addition to that, there will be a boom bust cycle inducted by the Fed's monetary policy. Bitcoin's going to go to 68 or 69,000. But then there's going to be a long term capital management moment for your younger people. That was a hedge fund in 1998 that collapsed. They probably had a four billion dollar balance sheet and notional value of one and a quarter trillion dollars through their derivative exposure. And so when they got something wrong, it unraveled the entire firm. Causing mini economic crisis. The Fed had to step in and get all the banks to bail out long-term capital management. And so you have a situation in the blockchain where there's a crisis. People are over levered. They're over exuberant. You and I are old enough now to know that there's no new stories. They're all remixes of old stories. So the long-term capital management, Bernard Ma…

AI assessment note: “they're probably less risky because of the downside volatility that we've experienced.”

Q Which two people have had the biggest impact on your professional life?

A My parents have had a big impact on my life, and I've had mentors in college, but I would say the two people that have had the biggest impact on my life, And you're going to be mad at me now, but I am Italian, so I'm going to say three people, because, you know, I'm not going to just say two people, but I would say the holy trinity for me in my career are Ken Langone, Dick Grasso, and Vinny Viola. Three very different people. They're all very close friends of mine, and they're close friends with each other. And just two minutes on each, Langone, the former founder of Home Depot, he's 87, Years young now. I grew up in his hometown. Can't say that he grew up in my hometown, and he was a legend in our town. I got to meet him when I was 16 or 17 years old. I had acne on my face and my polyester suit. He's in the same office. Ken said something to me, which I tell young people. Hey, my father gave me my last name clean. You never do anything to dishonor your dad. My dad worked on a crane, hot and cold weather, 42 years. When I got my job at Goldman, my dad was like, hey man, I don't want you ever complaining about that job. I'm like, why, Pop? Because, well, you're indoors, you're out of direct sunlight, and there's no heavy lifting. Recognize where you got. That's Kenny. Dick Grosso, same level of integrity, but I think what I got from Dick is warmth. I don't mean warmth by the hea…

AI assessment note: “the holy trinity for me in my career are Ken Langone, Dick Grasso, and Vinny Viola”

Q How have you thought about price? Sort of a general term, but particularly thinking about the Skybridge business that you almost sold before you went into the White House, and then this transaction with Sam.

A I think about price as an intersection of fairness. Probably the best meeting of my career was in Hong Kong. I was with Lee Ka-Shing or Ka-Shing Lee, Superman, the property tycoon. He's now in his nineties. I sat in his office and he was 70 at the time. I was 35. I'll never forget this meeting, Ted. He, Comes in. He had just gotten done playing golf. He was sitting in his office. It was a Sunday morning. He was having a cup of tea. He says to me, Anthony, what do you think of the US stock market? I'm 35 years old. I'm like, if I'm talking in this meeting, I'm the stupidest person that I know. I said, you know, Mr. Lee, the market could go up or down. I said, but I'm 35. You're 70. I said, I need to talk to you about your life and what I can take from your life for the second half of my life. What could you tell me that I could learn from? And he regaled me in stories of making plastic flowers and then making a decision in 1968 when Mao was thinking about seizing the island of Hong Kong. The property prices went down, he bought into that panic, and he began the process of becoming a tycoon. But he said something to me that I'll never forget. He says, Anthony, leave money on the table for your partners. He goes, ultimately, that's been the secret of my success. He said, when I cut a deal, I'm not looking for the last dollar. I'm looking to leave money on the table for my partners…

AI assessment note: “I think about price as an intersection of fairness.”

Q That's great. Anthony, I'm going to ask you a couple of closing questions and we'll wrap it up. What is your favorite hobby or activity outside of work and family?

A I guess my real, real hobby, aside from trying to get in the gym once a day, is reading. I have a new podcast that I'm about to launch called An Open Book. What is the podcast about? It's about books and authors, so I've interviewed people like Robert Greene, 40 Laws of Power, Daniel Silva, Maggie Haberman on her new Trump book, a whole cavalcade of different authors, high-profile authors, because I like reading, and what I would say to you about a book, think about the time and energy of you writing your book, or me writing a book. So you have a dedicated author that's doing a tremendous amount of research. It could be a fiction, so it's historical research, or it's a fiction about people, so they have to learn psychology, or think about a book about history. All the research that goes into a book, and so here's a gift to you. Someone's giving you a three to 10 hour experience with Where they've distilled months of their writing and months of their research and great editors to provide you with something that you can enrich your life from or learn from. My podcast, An Open Book, is a 45 minute interview with an author, but also I'm an open book. I like being open about shit. People ask me questions, I tell them exactly what I think, whether they like it or not.

AI assessment note: “my real, real hobby, aside from trying to get in the gym once a day, is reading.”

Q So when you come back to Skybridge, what's changed?

A I would say not a lot has changed. If anything, for me, the whole experience that I had Was like a combination that George Bailey and Ebenezer Scrooge had a baby that happened to be me. And so I'm come back to Skybridge now, having been burnt up in the political world, and I didn't do anything dishonest or Scrooge-like, because I think I'm a generous person, you can ask the people around here, but I had the feeling of, oh my God, thank God I'm waking up from this bad dream, and I could return back to my business. And then the flip side is like George Bailey, I've been encouraged and very gratified by the number of friends I have in the industry that have gone out of their way to help me. And so, you know, if you want a friend, think about it the way Benjamin Franklin once thought about it. If you want a friend, ask somebody for a favor. And so literally when I returned to Skybridge, I picked up the phone and started calling all my friends in the industry and said, hey, I need a favor. I need you to help me. I need more money in the door. I need more ability to allocate to you if you're a hedge fund manager. I need you to make a commitment that you're going to come to the SALT conference next year and Et cetera, et cetera, et cetera, and so, so to me, that's been very, very gratifying, and I'm sitting here with you very blessed and very grateful that I'm back here, and then, you…

AI assessment note: “I would say not a lot has changed.”

Q Let's turn a little bit to just talking about investing. Do you go about the hedge fund business with a particular philosophy in mind?

A I've never been an investor per se. It's not to say that I haven't made a lot of money investing, but I'm really, I've always viewed myself as more of a team captain who can spot talent and delegate a lot of responsibility to that talent, and I've really spent most of my time on branding, communication, creating the right culture, and then obviously the most important thing, and I tell everybody this, compliance is first at SkyBridge. Client service and investment performance are a close second, and so if you get the compliance right, you're protecting everybody, you're protecting the employees and their jobs and their families, you're protecting your customers, and ultimately, it leaves your investment management team unfettered to worry about nonsense, and so, uh, those are my jobs inside the firm, but when you really think about an investment philosophy that I've anchored my life to, it's basically a value investment philosophy. It's a, Analytical philosophy based on fundamentals. It's less macro in its orientation, and it's less technical. Some people use charts and technical analysis. Other people use macro analysis. This has always been a bottoms-up shop. Not saying that we don't have a top-down view. Like, we'll look at the world. We'll look at the economy. We'll look at the economic dashboard. We'll get some sense of where rates are going to be, and where GDP is going t…

AI assessment note: “when you really think about an investment philosophy that I've anchored my life to”

Q Oh, please. So I think a lot of the people listening probably don't know your full story. So why don't you just start at the beginning?

A Well, let's talk about why they wouldn't know my full story, right? The reason why they wouldn't know my full story is that I was in the White House for 11 days, not 10. I explode out of the White House. I get fired by Kelly. I obviously made a stupid comment to a reporter who recorded it and ran over to CNN. It's a bunch of nonsense, but I own the mistake. And then the excoriation and dunking process takes place, and then Washington's hoping that I go away, which of course, that's not my personality. And so now, I'm known as the former communications director for Trump, shortest serving communications director, but I'm actually not, because Jason Miller is the shortest serving communications director. He served for one day. Nobody reports that, but it's totally fine. Jason and I love each other, so the combined 12 days of Christmas, me and Jason Miller. But the point being is that the dunking and the excoriation starts. Then you have all of this robotic technology and social media, and they're trying to define people like me because adversaries of the president, somebody like me that has a high profile, that's still loyal to the president. There's three or four comments that are made by the robots. Your 15 minute of fame is up. Don't give him any more airtime. He's not worth the airtime. He only spent 11 days in the White House, so why should we pay attention to him? Those are…

AI assessment note: “I'm happy to talk about my career if you want. You know, I grew up on Long Island”