Bill Ackman: SVB Collapse, Biden vs Trump, How I Lost $400M on Netflix, Bill's 10-Year Long

1. 0:00 – 0:40

   Intro

   1. BABill Ackman0:00

      ... you know, the Biden wealth tax, which is like 25% of the appreciation of things that you own privately, it's gonna bankrupt every startup. No one will ever start a business in America anymore, right? 'Cause you, you know, god forbid someone puts money in your company at a billion-dollar valuation, all of a sudden you owe, you know, if you own half the company, you owe $100 million in taxes that year. You know, those kinds of taxes I think are destructive. You don't wanna have a tax policy that destroys the economy.

   2. HSHarry Stebbings0:23

      Bill, I am so excited for this. I've heard so many great things. I just told you I was matching with Jackie Reses, but heard so many wonderful things. So thank you so much for joining me today.

   3. BABill Ackman0:31

      Well, I'm delighted to be here.

   4. HSHarry Stebbings0:33

      I would love to start, I've listened to many of your interviews before, and bluntly, I wanted to ask different questions. And so I wanna

2. 0:40 – 4:13

   How Bill Raised His First Fund

   1. HSHarry Stebbings0:40

      start with you went to HBS, and then you founded Gotham. How was raising the first fund?

   2. BABill Ackman0:46

      Uh, it was fun. Uh, it was a bit like Blind Dating. (laughs) A lot of blind dates, not much success. Uh, but we had, uh, I think we eventually saw well over 100 people, and we had six people ultimately say yes and give us money, and the six people totaled l- $3.1 million, actually $3 million, and my partner and I put up 100 together.

   3. HSHarry Stebbings1:08

      (laughs) What worked? What didn't work? 100 meetings, there must have been some lessons.

   4. BABill Ackman1:13

      So, uh, well, what's interesting is anyone who knew me as a kid wouldn't give us money. (laughs) So...

   5. HSHarry Stebbings1:20

      (laughs)

   6. BABill Ackman1:20

      And the same went true for my partner, because they thought of me, their 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 Forbes 400 wealthiest people in America. So we went to people who were worth $400 million. We asked them for, like, a half 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, couple, couple of young guys who are entrepreneurs, and I think that was a big part of the connection. And the pitch we made, so we said, "Look, we're not doing venture capital. We're investing in, you know, uh, public companies. Uh, we're doing, you know, a high, detailed due diligence. We have no track record, but we have a strategy that has an excellent track record." You know, we're, you know, Mr., we're Warren Buffet devotees, and we said, "Look, we're putting all of our collective net worths in. We're, you know, missing out on the opportunity to go work at McKinsey or Goldman Sachs to do this."

   7. HSHarry Stebbings2:22

      (laughs)

   8. BABill Ackman2:23

      We'd been successful up to date in everything we've done. You know, we, whatever I did well in high school, went to a good college, did well there. Um, you know, got into Harvard Business School, had success in my job prior to business school. So we, we sold them on track record of life success, no experience, a lot of moxie, and, uh, you know what? If, if we fail, you're not gonna lose all your money, 'cause we don't use leverage, right? We're buying real companies at a discount to what they're worth, you know, reasonably concentrated, and I think the psychic... Uh, actually, one of the interesting things that happened is my partner, David Berkowitz, said, "B- Bill, unless we raise $3 million, I'm not go- going forward with you."

   9. HSHarry Stebbings3:05

      (laughs)

   10. BABill Ackman3:05

       And so we were stubbornly stuck at, like, 2/6, and it's, like, February, and we, and we're like, "Look, if we don't launch by March 1, we're done." And in, when we went to see people, we actually wrote up a number of investment ideas, and, uh, we wrote up four companies. And one of the guys we went to see was the heir of a famous New York City real estate family, and he turned us down. But he invested in all of the ideas. One of them was up 90% between the time we saw him. One was up 50, you know, one, like, doubled, and, like, the short we recommended imploded, and it was, like, an incredible thing. And he calls us up sheepishly, and he says, "Look, I, uh, I invested in your ideas, and, um, I felt it was morally wrong for me not to invest with you guys." (laughs) And he gave us a half million bucks-

   11. HSHarry Stebbings3:55

       Wow.

   12. BABill Ackman3:55

       ... and that was, like, the, the, the increment that got us over, uh, the $3 million mark, and we started.

   13. HSHarry Stebbings4:02

       And we made it to 3.1 with that check. I, I learned a lot from my first partnership. Um, you mentioned David there. What did you learn about great partnerships from that first partnership with David?

3. 4:13 – 6:40

   Bill’s Relationship with David Berkowitz

   1. HSHarry Stebbings4:13

   2. BABill Ackman4:13

      So David was a great partner, and we remain really great, uh, friends. We don't see each other as much as I would like. We, we actually, the very, very beginning, we lived together on kind of a funny story. I had worked for a company called General Atlantic uh, Real Estate, which was a, the real estate, uh, private equity subsidiary of the well-known, you know, kind of venture firm. It's something they disbanded over time. I worked there for the summer, and, uh, I got an apartment. They gave me a good deal on an apartment in a building at, uh, the address was 360 East 88th Street. And, uh, we, we shared the apartment, uh, you know, keeping costs down at the very, very beginning of time. And kind of the funny story is, you know, many, many years later, um, my daughter, my, my youngest, uh, daughter was in the building, uh, with the, with, uh, the nanny on, uh, way to a playdate, and she said, um, you know, she goes, "Here to see..." Uh, it was El- Eloise Ackman here to see some other child in the building. And the, and the doorman said, or the concierge or whatever they called, he said, "Oh, Ackman. There used to be someone named Ackman who lives in this building." You know, like, you know, maybe eight or nine years ago. And, uh, "Is, would it be Bill Ackman?" And she said, "Yeah, Bill Ackman." And the guy laughed and laughed and laughed. "Is he, is he married?" And she said, "Yes." He said, "To a woman?" (laughs) And she said, "Yes." So the two of us living together, they thought we were a couple.

   3. HSHarry Stebbings5:40

      (laughs)

   4. BABill Ackman5:40

      And it, it w- it was because the building didn't allow singles to share apartments, but because I had worked for the landlord, they had made the exception. Anyway, I don't know if it's relevant for your particular podcast, but I thought it was kind of a funny story.

   5. HSHarry Stebbings5:54

      I think it's hilarious that the doorman, for probably a year, thought that you and David were romantically involved. So, uh... (laughs)

   6. BABill Ackman6:00

      Yeah. My point is, we spent a lot of time together. (laughs)

   7. HSHarry Stebbings6:03

      Okay. (laughs)

   8. BABill Ackman6:03

      We, we, you know, originally officed out of that little apartment while we were raising money, and then we eventually got a real office.... and the key thing is picking someone that you totally trust. And, uh, David is, you know, one of the, uh, trustees of, or executors of trusts, et cetera, um, and I do the same for his kids. Um, so if you can work together, succeed together, go through some challenging times together, and still want... rely on the other for the most trusted things, that's a pretty good sign. That... So, choose your partners carefully but choose someone you totally trust.

   9. HSHarry Stebbings6:35

      I've had my trust broken before, and it's very damaging and hurtful. Um,

4. 6:40 – 8:27

   How Bill Decides Who to Trust

   1. HSHarry Stebbings6:40

      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?

   2. BABill Ackman6:47

      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 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 lot more carefully.

   3. HSHarry Stebbings7:26

      Do you listen-

   4. BABill Ackman7:27

      By the way, it depends on what you're trusting someone with, right? The degree of trust required for someone to take care of a child, or a parent, versus someone to invest with, a small sum, a large sum, you know, a, a bank, you know, different kinds of fiduciaries. It depends on what kind of trust you need, uh, but, you know, someone you're gonna work with, um, so it, it, it kind of depends. 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.

   5. HSHarry Stebbings8:06

      You know, w- we mentioned trust. I didn't kind of plan on it going this way bluntly, Bill. Uh, my, my father was the one who broke my trust and really hurt me, and so much of that actually shapes what I'm running from, which is him. Uh, I don't wanna be him and I don't wanna be like him in any way. Um, and I guess, I think about it a lot. When you think about what you're running from,

5. 8:27 – 10:26

   What is Bill running from/towards?

   1. HSHarry Stebbings8:27

      what do you think you're running from?

   2. BABill Ackman8:30

      I don't know that I'm running from anything. Uh, I think-

   3. HSHarry Stebbings8:32

      (laughs)

   4. BABill Ackman8:32

      ... I'm running toward things. (laughs) I'd say-

   5. HSHarry Stebbings8:34

      What are you running towards?

   6. BABill Ackman8:36

      Um, you know, greater happiness, self-actualization, you know, great relationships, friendships, uh, and, uh... What am I running away from? Maybe death, disease, uh, you know, so... What do I wanna minimize? The risk of something bad happening. What do I wanna maximize? You know, happiness. And where does that come from? Uh, fulfillment, relationships, uh, self-actualization, achievements, things like this.

   7. HSHarry Stebbings9:07

      Can I be blunt? Do you appreciate happiness when you have it? It's very hard when you're on a treadmill, you look back to sharing that apartment with David, having a $3 million fund. Now, if you could see yourself back then, you'd say, "You have everything I could have dreamed of and more." Do you appreciate that happiness when you have it?

   8. BABill Ackman9:23

      Of course. Of course. And, and by the way, I've been consistently happy, uh, pretty much since birth, so.

   9. HSHarry Stebbings9:31

      (laughs)

   10. BABill Ackman9:32

       I, I've had, I have, I've had volatility in my, uh, career, I've had volatility in my marriage, and now, uh, I'm now married again. Um, I've gone through challenging times, I've experienced sadness and loss and all those things. But I think the underwell- you know, the undergirding support here is, is, is happiness. I've, I, uh, am an optimist, and I'm a happy guy.

   11. HSHarry Stebbings10:00

       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 this trajectory, what was the biggest dip and what did you learn from that specific moment?

   12. BABill Ackman10:16

       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

6. 10:26 – 18:19

   Losing $400M on Netflix

   1. BABill Ackman10:26

      that was when we wrote, or I wrote 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 followed suit, and then all the negative headlines, and then we were forced to wind down, uh, you know, Gotham. It was certainly, as, um, the headline 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 and, and hope to defer forever if I can.

   2. HSHarry Stebbings11:39

      You've 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 in 2015 to 2017 in that patch, when the war's in process, what do you tell yourself?

   3. BABill Ackman11:55

      I tell myself to make progress every day. Um, you know, the, the advice I give friends who, 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 (laughs) during those period of time, and get in really good shape, 'cause 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, in 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, 90, 120, 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 s- You know, there's plenty of capital available for people who've, 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 (laughs) that might be slightly better. That means that, could mean they sold the furniture.

   4. HSHarry Stebbings13:27

      (laughs)

   5. BABill Ackman13:27

      You know, it doesn't mean, it doesn't mean that, that Google bought them out at a, you know, 50X.

   6. HSHarry Stebbings13:32

      Bill, you and I are both tennis players. You're a set down, you're a break down. What do you tell yourself in that moment?

   7. BABill Ackman13:38

      You know, uh, don't let the past disrupt the future, right? Don't be upset that you double-faulted at, you know, 30-40 at, uh, four, five in the set, uh, when you were up with three, you know, uh, set points, 'cause that, you know, if you just focus on that kind of stuff, it will distract you. And just, you know, start with a blank sheet of paper. It's a new set, new opportunity, and rebuild from here.

   8. HSHarry Stebbings14:05

      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?

   9. BABill Ackman14:23

      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 weren't 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 problem with, uh, where, you know, 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 th- of the importance of liquidity, and the mis- You know, that you shouldn't have a, an open-ended fund, like a hedge fund, where people can redeem capital, and with 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 last couple of years, suffer from precisely the same asset-liability mismatch issues that we had back then. And, uh, you know, so we did learn some pretty important and valuable lessons, but th- those lessons were not exported to the rest of the industry because people had to make the same mistakes we made. So I guess, for me, uh, I always like to say experience is making mistakes and learning from them, and I spend a lot of time learning from mistakes. We, and we talk a lot at the firm not just about things where we bought something and went down and lost money. We talk as much about missed opportunity, you know, a situation that, in light of our knowledge, experience, expertise, et cetera, that we should have exploited, uh, and made a fortune on, and perhaps we made only a small fortune or made nothing 'cause we didn't do the work. And so those kinds of mistakes are, can be, certainly in our business, as important. You know, missing, missing Google can be a, you know, as important a mistake, or maybe even a bigger mistake, if you will, than, uh, missing, uh, you know, the next, like some other ... Uh, making a bad investment that doesn't work, I guess, is my point.

   10. HSHarry Stebbings16:51

       Ja- Jason on your team told me about Coupang, so at least you hit some winners. (laughs) That's, uh, a-

   11. BABill Ackman16:55

       We've had some good ones. We've had some very good ones.

   12. HSHarry Stebbings16:57

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

   13. BABill Ackman17:02

       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 had called- caused us to question our entire thesis in the company, uh, and, and we exited and took, and promptly lost, you know, $400 million, uh, 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 enabled 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 $10 billion on, on hedging interest rate risk, and instead we made 2.8 billion 'cause we were a little timid. So I, you know, some of the mistakes we've made, where we had a pretty, you know, variant view that we were quite confident in, uh...... but we didn't put enough capital behind our confidence. So, those-

7. 18:19 – 23:35

   Tips for Position-Sizing

   1. BABill Ackman18:19

   2. HSHarry Stebbings18:19

      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.

   3. BABill Ackman18:26

      So, we're-

   4. HSHarry Stebbings18:26

      How do you think about position sizing?

   5. BABill Ackman18:28

      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 ... Y- y- 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 the 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, if we're risking 20 ... let's say the most we could lose in our view on that, not j- uh, 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, uh, the risk of loss is very diminished by virtue of the robustness of the business, the, excuse me, the capital structure of the company. Whereas you're m- buying an interest rate derivative, you know, we bought ... In effect, a 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 18-month term. And, at the time we bought that instrument, uh, two-year rates were at 12 basis points. So it's a bit like buying a call option on a stock, the stock is 12 and the strike price of the call option is 93. It looks massively, massively out of the money. And there's a fixed timeframe, right? So on something like that, the risk of loss is, is high, because just to break even, you've got to cro- you know, the, the yield, if you will, has to go up, you know, whatever, 9X or something, right? 8X, to, to, to get into the breakeven territory. And so something like that, we made quite small. It was less than, it was about a point and a half of our, a little under 2% of our capital. But could it have been 3%? Could have been 4%, for sure. And so when I look back at something like that, I would have been willing to lose more. Um, but we had not been an active participant in the interest rate derivatives market, so we were a little timid. Timidity has held back our, our results, for sure. And I do- I think it was ... What's interesting about those kind of bets is when you find a hedge that will protect you if rates rise, but it's also a really interesting investment on a standalone basis. Like you'd make it even if you didn't own a portfolio, 'cause as you said, look, s- on a standalone basis, the payoff here is massive, right? If our views on rates kind of hold, um, you know, you can make those larger than just a pure hedge. Right? It's a bit like, you know, for ins- you don't want to spend too much money on insurance, or otherwise it's too expensive to live in your home, right? You don't want t- the payoff on your, on your sh- insurance policy, like if you, you know, the storm comes, you collect $10 million for your $2 million home. You can't even do that today, but let's assume you can. But if, if the insurance pol- if you knew that, that there was a storm coming, and the insurance company was still willing to sell you that homeowner's policy at the same price as if there were no storm, you should over-insure. And so I, I think our only mistake there is we could have over-insured a bit more, 'cause we, we knew a storm was coming.

   6. HSHarry Stebbings21:41

      You mentioned Netflix there. And my, my question to you is actually on a persistent mind. You've said before, in The Show With Shane, again, that you're one of the most persistent people in America, and maybe your father might beat you to that. But you're one of the most persistent people. How do you know when to change your mind and when you're wrong?

   7. BABill Ackman21:57

      The answer is, uh, well certainly a clue would be, if new facts emerge which are inconsistent with the original thesis. And I think that's, that's basically what happened with us with Netflix. So-

   8. HSHarry Stebbings22:08

      Does that-

   9. BABill Ackman22:09

      Yeah.

   10. HSHarry Stebbings22:09

       Does that happen often?

   11. BABill Ackman22:10

       No, fortunately not. I mean, I, you know, we are ... We get so much shit, if you will, when we make a mistake, because they're always big, right? We're concentrated, we're managing $15 billion. We're putting 10, 15% of our capital in any one investment. So, if we lose, you know, 25% on something where we have a billion and a half dollars, it's, you know, it's a 400 odd million dollar loss. Um, that will make the headlines, right? So, we're gonna get pummeled for it. So, you know, every article I read recently about us is like s- some investments we win big, some investments we lose big. The reality is, 90% of the investments we've made in the last 20 years have been profitable. In fact, meaningfully profitable. We, we've had a handful, okay, big blunders, big headlines. But they've been a small fraction of, of the, uh, what we've done. Otherwise we wouldn't ... You know, the compounding doesn't work if you're, if like, on, we make a ton on this one, we lose a ton on that one, th- uh, but the, the headlines imply ... Like no one writes a story when we've owned a stock, you know, we paid 12 for it, it's now 60. We've never sold it, so there's no visible gain or loss. That's restaurant brands. Um, but no one writes the story that we've made, you know, billions of dollars res- investing in a company, because there's noth- nothing exciting about it. But if we lose $400 million in three months on Netflix, it's front page news.

   12. HSHarry Stebbings23:28

       Well, also, I think whenever someone's exceptional, they'll always try and bring you down, in, in anything that you do. Uh, one thing though that was very apparent,

8. 23:35 – 26:58

   Why Bill Posts on Twitter

   1. HSHarry Stebbings23:35

      when I tweeted about you coming on the show, Bill, I had some of the most powerful people in finance privately message me and say, "Ask him why he's so public." (laughs) And you said there about, you know, people wanting to bring you down when there is a 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?

   2. BABill Ackman23:57

      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 1% 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, uh, how we effectuated change. So it was very important powerful part of the strategy. And then I al- always had this kind of free speech thing. You know, I- I'm not, I don't wanna copy Elan 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 promptly 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're financially independent, or, you know, an entrepreneur of some kind, or if you've got enough money in the bank can you take the risk of speaking freely. So I- I take advantage of the ability to speak freely.

   3. HSHarry Stebbings25:28

      And even then it's dan- ... Do you worry, though? 'Cause even then it's dangerous. You see people like J.K. Rowling, uh, you know, billionaire in her own right, who has bricks thrown through her window for free speech.

   4. BABill Ackman25:38

      Yeah. It's, that- that's a bad thing. I was speaking very freely this weekend, right? On the whole bank thing. I found f- you know, I've kind of been fa- become fascinated by Twitter in the last, I would say, three years. I really was not active on Twitter before that, and p- periodically active, and it's ... What I like about it is it's a way to- to have your views heard and debated and, you know, um, you know, very meaningful number of people who matter in finance, media, e- you know, central banking, whatever, you know, follow me. And so, you know, while Jay Powell probably wouldn't take my call if I called him for, give him advice, because last thing he wants to do is talk to someone who's actively buying and selling securities in a marketplace, not that we are that active buying and selling, but, uh, I think he would certainly think of me as someone like that. I can share my view with Jay Powell directly. I'm quite sure he actually follows me, you know? Uh, not under the- the name Jay Powell, I'm sure.

   5. HSHarry Stebbings26:35

      (laughs)

   6. BABill Ackman26:35

      He's got someone's pseudonym. But it's- my point is, it's an effective way to reach the people that matter in DC and otherwise, uh, about important policy things. And during the financial crisis, I did the same thing with the occasional PowerPoint presentation or- or segment on CNBC, uh, but here I can, you know, from the comfort of my couch, (laughs) okay, you know, share a point of view on something that I think is important. And

9. 26:58 – 42:31

   The SVB Banking Crisis

   1. BABill Ackman26:58

      I, you know, I was, you know, woke up Saturday morning after the events of the week pretty convinced that if the government didn't at a minimum guarantee deposits at Silicon Valley Bank, we'd have a massive run at pretty much every regional bank on Monday, and my advice was, we need to guarantee all deposits, not just, uh, those. And I think unfortunately, the run is continuing. I mean, if you look at the- the- the deposit inflows, uh, at the big banks, if you talk to anyone at JP Morgan who works, uh, at opening accounts, they're working literally round the clock, uh, to take in all the capital that's flowing in. You know, that's not good for the, uh, for our- our banking system and our country, and that was what I was afraid of o- over the weekend, which is why I was so public, if you will.

   2. HSHarry Stebbings27:43

      As someone who's just opened a JPM account and put all of my money there, (laughs) I would certainly agree with you. It was not that easy to get time with them, actually, to be fair.

   3. BABill Ackman27:50

      (laughs)

   4. HSHarry Stebbings27:51

      Um, uh, we're gonna get to that. I- I- I do just have to ask, how much of your shorts on regional banks were driven by logic of social media viral contagion versus, like, fundamental analysis on the assets themselves?

   5. BABill Ackman28:02

      So I'll be super, super clear. We have never been short regional banks, we've never been long regional banks, and we were starting to look at possible investment opportunities, and then I decided on Saturday morning and I sent an email to the team, I said, "Look, we're not gonna invest in any of these banks 'cause I wanna be able to talk about this publicly without being accused of talking my book," right?

   6. HSHarry Stebbings28:23

      (laughs) Yeah.

   7. BABill Ackman28:23

      And the unfortunate thing is, if you go on Twitter, you know, or however many people say, "Oh, he's doing this because he's long this, he's short this," we have n- we have no exposure, certainly no direct exposure. The- but I said, "Well, we have one big conflict, which is we're very long, you know, America," right? If the- the financial system blows up, that's bad for markets, that's bad for the economy, that's bad for real estate, that's bad for, you know, all kinds of things we're exposed to. So my conflict, if you will, is I'm- I'm long, we're long America, or American businesses, but I didn't wanna be conflicted in terms of being short these stocks or not. So I have no-

   8. HSHarry Stebbings28:59

      Uh- uh-

   9. BABill Ackman28:59

      ... be super clear to your listeners-

   10. HSHarry Stebbings29:01

       Right. So- so you've got like a team?

   11. BABill Ackman29:02

       ... no exposure whatsoever to any of these banks or any of the big banks or any, you know, the only financial institutions we own are, uh, Fannie Mae and Freddie Mac, which we've owned for years, which are kind of, if you will, options on a potential restructuring of those institutions years from now.

   12. HSHarry Stebbings29:18

       Bill, then you can help me if you're completely unconflicted. Uh, you came out saying there was real asymmetry in regional banks.

   13. BABill Ackman29:24

       Yes.

   14. HSHarry Stebbings29:24

       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?

   15. BABill Ackman29:31

       So, Silicon Valley Bank was, I would say, s- unique in a 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- has been a 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- in the market. And- and that's because, um, the government has still not given people assurance that every deposit is safe. And- 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 gonna guarantee principle at mutual funds," which is a pretty extraordinary thing to do. But it stopped people from withdrawing their money, you, 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 wouldn't occur. I think basically the same thing has to happen with, with banks. First, you have to get everyone calm. So first thing to do is you guarantee deposits, okay, on a temporary basis, where that temporary guarantee stays in place until they update the FDIC insurance program to have greater than $250,000 guarantees per account, you know, for business accounts, and people wanna keep those kind of balances, uh, in banks. And then they develop, update the regime, they charge for this insurance, and then they can get rid of this temp- temporary guarantee at all banks. But if they don't do that, my expectation is, you know, that people are still gonna be concerned, and people like yourself are gonna move from Silicon Valley Bank to, to the JP Morgan's of the world. And the-

   16. HSHarry Stebbings31:26

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

   17. BABill Ackman31:29

       It is the safest bank. Actually, the irony is, and I, you know, tweeted about it this morning, there's sort of two banks that now have an explicit guarantee regardless of how much money you put into those banks, right? That's Signature and Silicon Valley Bank. They have an explicit guarantee from the U.S. government. Then there's JP Morgan, there's Citi, there's B of A, maybe Wells Fargo, if you will, that are systemically important institutions 'cause they've got, whatever, 250 billion-plus, more like a trillion-plus in, in capital. And those have the implicit backing of the U.S. government 'cause we said, "Look, we're gonna bail out those institutions if we need to, and we're gonna 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 over-capitalized 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, uh, guarantee system, which is very confusing to consumers. And the people who have 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 hear you can lose money with a deposit at a bank, you know, it affects everyone. And there were lines that... People were lining up to take money out of their ATM machine, or you know, going to the branch and get a, get a check to move their money someplace else. I mean, that's... This is not... This is, like, embarrassing for our country.

   18. HSHarry Stebbings32:54

       I was, I was deeply... I saw the, you know, videos on Twitter of people outside certain banks, and it was, it was re- 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?

   19. BABill Ackman33:11

       Uh, hopefully not. And there's 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 moved... 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, 100 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 can be a lot higher at a smaller bank. But I would say, as if not more importantly, a lot of the construction lending and 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 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.

   20. HSHarry Stebbings34:17

       Do you believe LPs are wrong then in pressurizing managers to move to the big four? I'm obviously a manager. I have several hundred million dollars under management. I have all of the big institutions who are saying, "Harry, move the fuck to JPM today."

   21. BABill Ackman34:31

       So, the way you can manage this risk, one, firstly, I don't think you should keep a few hundred million dollars sitting in a bank account ever. I don't care what bank it is. Um, you know, the discipline we've followed from the beginning of time, if you remember I... You know, I, we were betting against the creditworthiness of triple-A-rated institutions beginning in 2002, right? So I've been bearish on the rating agencies' ability to assess creditworthiness for a long time. So the approach we take here is, other than cash we need for daily needs, we keep that number pretty small, um, everything else is in a U.S. Treasury money market account or we own U.S. Treasury bills directly. So we're not taking bank risks, we're, we're just facing the U.S. sovereign. And then the cash we keep on hand, we, we do keep at a JP Morgan or at our prime broker, Goldman Sachs and UBS. And we monitor those institutions kind of very carefully. But actually, there's a case to be made for going back to Silicon Valley Bank now, okay? Because they're... They got a full faith and credit guarantee on deposits, and they're actually trying to... You know, apparently they're saying they're open for business, they're making loans, they're doing whatever. Um, but it's a, it's a bit of a, uh, it's now a quasi-governmental institution. I mean, I think the right thing to do there is just to recap that institution. Again, we need, we need a sys- you know, a system-wide, uh, deposit guarantee. And then we need FDIC insurance with appropriate premiums so that these smaller banks can, can operate. That network of banks is important, you know, for the farmer in Iowa as much as it is, as it is for the venture capitalists in, in Silicon Valley.

   22. HSHarry Stebbings36:09

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

   23. BABill Ackman36:19

       So again, we need a temporary government guarantee because we don't have a non-governmental insurance system to support it. All right. The FDIC system...It's not a government guarantee of deposits. It's, well, it's a government guarantee in exchange for appropriate premiums, right? The, the FDIC has $125 billion 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 account is very small, right? Rela- small, not small for your average American's checking account, for sure, takes care of that. But it doesn't take care of a, 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 creditworthiness of banks on a regular basis. And by the way, the creditworthiness can change dramatically. You know, Silicon Valley Bank was a very sel- solvent bank until rates moved a lot in 12 months.

   24. HSHarry Stebbings37:20

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

   25. BABill Ackman37:24

       I would call my colleagues at the FDIC (laughs) and the Treasury, I would say, "Let's put in, let's put in place a 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." It shouldn't take a lot of time, right? W- we already have a regime for $250,000 deposits, we just need to ra- you know, increase the, uh, the amount of deposit guarantees that are available. We gotta 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, US interest rate stability. So once you go solve that problem. Now, Mr. Powell has an upcoming meeting where he's gotta make a decision on interest rates. And each move of, 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 emerge. 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 what? We've, we're not raising rates. We, we're witnessing," uh, you know, again, if they can stable, like, I haven't checked the news for the last couple of hours, but if even the four... Here's an unusual thing. Sheila Bair is like, was an FDIC chair in Bush administration or what, actually a while ago, maybe even, even Obama, um, Republican. Uh, sh- you know, she's qu- in effect, criticizing the FDIC for not having selective deposit guarantees instead of putting in a temporary guarantee redoing the system. She's making my argument in today's FT that we need that to happen. Because if that doesn't happen, all these deposits drain out of these regional banks, they're gonna stop lending. If they stop lending, the ecom- the economy's gonna come to a halt, right? It's gonna slow the economy very aggressively. So I'd be very wary about raising rates until we've solved this regional bank problem. And it's not just regional banks, it's people are gonna start thinking about their small community banks and how solvent they are. If there's a run in the... We can't have another bank closure. We have one more and it's like, and, you know, it's gonna get messy.

   26. HSHarry Stebbings39:36

       What happens if interest rates go to 6% to quell inflation? Where do we invest then?

   27. BABill Ackman39:40

       I don't think the Fed has to raise rates that much more. You're at a level today where certainly short rates are above or just above a kind of underlying inflation. So we're getting closer to the financial policy slowing, uh, slowing the economy. M- my favorite approach, actually, you know, the big problem we have is we've got, and that Powell's focused on, is, I hate to us call it even a problem, is we have full employment, very full employment, and we have rising wages. Well, those are starting to temper. The best way to solve that problem is to open up immigration, right? W- why, why force people out of work to slow the economy to get rid of inflation? Why not increase the supply of workers, uh, so that, um, you know, we temper the increases in wages? Um, I just think it's a better answer.

   28. HSHarry Stebbings40:29

       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?

   29. BABill Ackman40:41

       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

   30. HSHarry Stebbings41:03

       Pleased to meet you.
10. 42:31 – 45:58

    Bill’s Relationship to Money

    1. HSHarry Stebbings42:31

       In terms of money, I, I oscillate on my relationship to money. It's a weird one for me. How do you analyze your relationship to money today?

    2. BABill Ackman42:39

       ... I don't really think about it. (laughs) So...

    3. HSHarry Stebbings42:42

       You don't?

    4. BABill Ackman42:42

       Like, what do you mean? What do you mean by relationship to me?

    5. HSHarry Stebbings42:45

       Like, I used to think it was everything and like when I had 10 million, I'd be happy. Or when I had 20, I'd be happy, or when I had whatever it was, that would be good enough, and then I would feel happy with that. And then I would be free. I wouldn't have to any of this shit because I'd have enough money to not worry. And then it didn't happen.

    6. BABill Ackman43:04

       So what-

    7. HSHarry Stebbings43:04

       I equated money to self-worth, money to power, conversation, people listen to you because you have money. Do you see what I mean?

    8. BABill Ackman43:13

       Okay, so what's your question?

    9. HSHarry Stebbings43:15

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

    10. BABill Ackman43:27

        Sure. So what I would say is, getting back to my free speech speech, I, 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-

    11. HSHarry Stebbings43:41

        (laughs)

    12. BABill Ackman43:42

        ... would, you know, would... "I appreciate if you, before you tweet," (laughs) please, please say something to me. So, so compliance is a little restrained on free speech. But, you know, look, I, I feel incredibly fortunate. You know, I was a... M- 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, I do, uh, on philanthropic stuff. But I learned, we've probably given away over $600 million in the last, uh, 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 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, you know, it's like my day job of making hopefully good investments and compounding the, the assets of Pershing Square for the benefit of our kind of shareholders and investors, which, you know, hopefully improves their lives, and then, you know, the profits that come from that, uh, you know, I certainly haven't more than enough to, uh, live my daily life. So I, I think about how do I relo- allocate those funds? Often by investments, whether it's for-profit or non-profit investments that, um... You know, my favorite investments are ones that are solving important problem and they're profitable. You know, the, the Pershing Square Foundation has actually made venture capital investments where we made like 15X, and the guy came to see us, was trying to solve a societal problem in Mexico, you know, uh, things like this. So I would say, I feel really fortunate. Independence, again, big driver, uh, and I think financial resources give you independence.

    13. HSHarry Stebbings45:45

        Uh-huh.

    14. BABill Ackman45:45

        And I think if you have interesting things to say and interesting ideas, you have a voice. I, I don't know that it's driven by just having a pile of money.

    15. HSHarry Stebbings45:53

        Bill, I spoke to many of our mutual friends, and they said what a wonderful marriage that you have today. I

11. 45:58 – 49:26

    Tips for a Happy Marriage

    1. HSHarry Stebbings45:58

       wanted to ask, what been your biggest lessons on what it takes to make a marriage work so well? Teach me.

    2. BABill Ackman46:04

       Sure. So it starts with finding the right person, I would say. That's, that's about 98% (laughs) . You can have, you can, you can choose the wrong person and you could do all the right things, and it's not gonna make for a great marriage. So I would say it, it's, it's a lot in the selection, the mutual selection that comes from finding, uh, the right person. I've just kind of come to believe, you know, this, all these notions of opposites attract, eh.

    3. HSHarry Stebbings46:28

       (laughs)

    4. BABill Ackman46:29

       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 attraction's 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. I'm... And that's a risk when you have two motivated people trying to accomplish a lot.

    5. HSHarry Stebbings47:37

       And yours doesn't? I mean, no offense. It seems from the outside that yours would do. (laughs)

    6. BABill Ackman47:41

       Well, no, I would say that's the biggest risk. And so we have to constantly make time for each other and find those quiet...

    7. HSHarry Stebbings47:49

       Do you do date night? Do you do Sunday evening walks? What's your thing?

    8. BABill Ackman47:53

       So, uh, I think date night is a really important thing. And, and we need a more official implementation of it. You know, we, we got married, and then we had COVID. And COVID was pretty amazing for marriage. Like, we lived in the same house. She worked upstairs in office, I worked down. We met for lunch. We'd play with the baby. Uh, and at night, we would go on these four or five-mile walks down the beach, uh, even in the winter, with a flashlight, and it was a really cool, you know, way to kind of get through COVID. And, and, uh, hopefully, this summer, we'll go back to that. We- we've not been doing that in the city, so I miss those kind of late night, uh, late night walks. And there was not much socialization, which is good, and that if... You spend an enormous time with each other. But when you get back to, you know, city life, and, you know, you, you get... you wanna be supportive of the people, and you wanna see friends and everything else. I think it's, it's, it's a massive time management problem. And so...... you know, Nary is building a... Yeah, she, she'd be quite an interesting person for you to talk to. She's building an incredible company. Hired, I would say, I don't know, maybe 17 or 18, you know, brilliant scientists, uh, engineers, roboticists, biologists, um, and, uh-

    9. HSHarry Stebbings49:03

       I think we should do like an all-star Mr. and Mrs. I think that'd be a really fun-

    10. BABill Ackman49:07

        (laughs) .

    11. HSHarry Stebbings49:07

        ... style of show. Uh- (laughs)

    12. BABill Ackman49:08

        Could be cool. But she's, you know, that's a pretty involved thing, and we've got, you know, an almost four-year-old child, who means everything to, to, of course, both of us, but he's nearly his only child. It's what, what... So, it, yeah, it's tough, but, um, you just have to find time. You can't just-

    13. HSHarry Stebbings49:23

        How do you-

    14. BABill Ackman49:24

        ... look up your life, no.

    15. HSHarry Stebbings49:25

        C- can that be

12. 49:26 – 51:50

    Tips for Raising Kids as a Rich Person

    1. HSHarry Stebbings49:26

       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?

    2. BABill Ackman49:39

       I think it's a very good question. Uh, 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, it's all sort of 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, had a, a nice house. Uh, I don't know that it matters so much whether you live in a $300,000 house or a $2 million house or a $20 million house or whether your parents drive a Toyota. You know, I think the, the major differences are do 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 kinda 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, was my, what my dads 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 in kind of the, the, uh, lessons they teach about money. You know, I never got an allowance, I had to work. You know, I had, I had, uh... If I wanted to have money to buy a Sony Walkman, you know, I had... I waxed cars, you know, that's what I did.

    3. HSHarry Stebbings51:12

       (laughs)

    4. BABill Ackman51:13

       You know, I, I... My dad said, "You wanna make some money? Okay, dig that ditch." And I... My first job, I got paid per hour and said, "This is kinda dumb." Next time, I said, "Okay, how much do you want for me to do it, dig the ditch?" I'll do it (laughs) probably as far as possible, but I didn't wanna get paid by the hour. So you learn some pretty interesting lessons about, about money. But I, I would say it's, it's in the parents. If the parents are kind of spoiled and wasteful and obnoxious, the kids will be, too.

    5. HSHarry Stebbings51:39

       Sony Walkman (laughs) . I remember getting a jog proof one, the, the height of luxury. Um, uh, listen, we're gonna do a quick fire round. So I say a short statement and you give me your immediate thoughts. Does that sound okay?

    6. BABill Ackman51:49

       Sure.

13. 51:50 – 52:48

    The Trend Most Investors Are Missing

    1. BABill Ackman51:50

    2. HSHarry Stebbings51:50

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

    3. BABill Ackman51:54

       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 gonna see persistent levels of inflation, you know, 3 to 4% inflation for the foreseeable future. Think that, that's certainly being missed based on the pricing of longer bonds. You can buy a-

    4. HSHarry Stebbings52:18

       What's-

    5. BABill Ackman52:18

       You can buy a... You can get a... Only about a 3.6% yield, I haven't checked my screens, it probably is so volatile, I don't know what it is today. But a 3.6% yield for committing to the government, you know, the government's only gonna, it's gonna borrow money... Government's borrowing money for 30 years at 3.6%. That can't make sense in a world where inflation is 3.5%.

    6. HSHarry Stebbings52:36

       What's the hardest element of your role today, Bill?

    7. BABill Ackman52:38

       Time management.

    8. HSHarry Stebbings52:39

       What business models do not work in a zero interest rate world?

    9. BABill Ackman52:43

       Everything works in a zero interest rate world (laughs) .

    10. HSHarry Stebbings52:47

        (laughs) Okay.

14. 52:48 – 53:50

    Who Bill Most Admires

    1. HSHarry Stebbings52:48

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

    2. BABill Ackman52:52

       Uh, you know, in my industry, I've, I've been a 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 at Jefferies, but built a company called Leucadia, 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, someone I learned a lot from, and, and, and not always because he's, he did the right thing. Sometimes, he 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, my, 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, uh, redo the rail system to her hometown. So I, I've learned activism from Mom. Those are, I would say those are a bunch of, uh, key people I've looked up to over time.

15. 53:50 – 55:08

    Bill’s Favorite 10-Year Long & Short

    1. BABill Ackman53:50

    2. HSHarry Stebbings53:50

       What's your favorite 10-year long?

    3. BABill Ackman53:52

       If I can own a business for a decade, you're saying?

    4. HSHarry Stebbings53:55

       Yeah.

    5. BABill Ackman53:56

       Well, I would say, of the businesses we own (clicks tongue) , I would say, in an uncertain world, you gotta own Universal Music Company, Universal Music Group. Uh, because the one thing I'm confident about, is more people will have music subscriptions or be streaming music from whatever device, and lots of different devices, with different u- use cases, uh, on a global basis a decade from now. And I think that's a certainty, um, and it's a very capital-light, uh, business. And so, I think that's a good place to put money for a decade.

    6. HSHarry Stebbings54:29

       What's your favorite 10-year short?

    7. BABill Ackman54:34

       Um... Ah. What's the name of that company? Probably shouldn't mention the name of the company. Ah, forgetting the names, so I'm saving them. I probably w- don't wanna out a public company, but there are businesses that are guaranteed to be disrupted by blockchain that are old-fashioned, old mold- you know, businesses that everyone hates because they're monopolists.... and you can disrupt them with, with blockchain technology. So I would be short those companies.

    8. HSHarry Stebbings55:01

       What was the biggest takeaway? This one's from Jackie Reeses. She said, "What was the biggest takeaway from this SPAC that didn't happen?"

    9. BABill Ackman55:07

       I would say,

16. 55:08 – 57:26

    Why Bill’s SPAC Failed

    1. BABill Ackman55:08

       uh, uh, I was very surpris- so we did a transaction with probably the best company that of uh, any of them that merged with a SPAC, uh, Universal Music. It was a s- 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 to do the transaction. We committed a billion 600 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 when substantively it should be precisely the kind of transaction they're gonna approve. And I think, 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 SNL crisis in the '80s, right? Why? Because banks had a bunch of fixed rate mortgages and, uh, they had floating rate liabilities. And rates went up and a whole bunch of banks became insolvent. And so since that time, banks have learned to kind of have match funding, right? Have floating rate, they have floating rate liabilities, so they should have either floating rate assets or they should hedge their fixed rate assets for floating rate assets, or they should sell their floating rate assets as they create them. And here you had a bank that violated all the basic rules, and they're regulated by however many different Comptroller of the Currency, FDIC, make your list of government regulators. And this is like one of the simplest high level things that you should check about a bank and - and somehow that was ignored by, by the regulators, and they had to be focused on a bunch of technical stuff. So I think, I think the long answer to the story is if we had principle-based regulation where people focused on the big picture, um, we'd be way more efficient and I think we'd have way fewer bad accidents.

    2. HSHarry Stebbings57:24

       Penultimate one. I'm wondering about

17. 57:26 – 1:00:42

    Bill’s Idea to Fix Income Inequality

    1. HSHarry Stebbings57:26

       wealth terrorism. We hear about like climate terrorism, you know, the climate terrorists. I'm worried that actually, you know, people will start shooting down private jets style, and like the inequality of wealth will be violent. Do you share that concern?

    2. BABill Ackman57:40

       So I think wealth and equality is a big problem. I think there are ways to address it and I think the, the key is, it's a bit... The analogy I would make is one of the things the US has done very, very well is promote home ownership. In fact, they did it a little too well going into the crisis. But in general, it's been a good thing and our system of 30-year fixed rate mortgages has enabled home ownership for, for a lot of people. And that's also created a lot of, a lot of wealth and the, uh, sort of the middle classes and homeowners, uh, you know, up through the financial crisis while their wages weren't keeping pace, uh, you know, as with, uh, upper income strata, they were making a lot of money in their homes. And then the financial crisis and over leveraging wiped out people's, uh, sort of home equity. And I, I sort of view that as kind of the fulcrum moment when the wealth inequality issues really started to build, um, and I think the key is people need to own a piece. And by the way that, well, that- that started to rebuild in the last, you know, since the financial crisis. A lot of people bought homes, recapitalized, and they built wealth, uh, in their homes. But the piece that a lot of people are missing out on is they're missing out on participating in the growth. You know, that's the Tom Picketty thing, which is that, you know, wages have not compounded at the same rate as assets. You know, asset compounding is- has vastly... So if you're someone who has assets that you, you can, you have beyond what you need for your daily needs and you can invest capital, you can build wealth. We need to give that to every American. And, you know, compounding is this very powerful thing. So my, you know, The New York Times, uh, did a piece on like favorite ideas to help solve problems and my idea was you give every baby that's born in America, you know, whatever, like a $7,000 account. Uh, just sort of making up a number, or $6,500, uh, when they're born. And they can't remove money from that account and it's tax exempt, and it compounds, and it gets invested in like an index fund that earns, you know, historic rates of returns in markets. By the time you're 65 it's m- it's a million dollars. But it gives someone a minimum stake in the success of the country of capitalism. It makes them a c- an owner, right? By the way, that would cost 20 billion a year to do that. I was like, the math that we, which is- seems like a tiny little number today, just take the number of babies times whatever, seven or $8,000. It's like a nothing thing, but I think it would, it- it would start to give everyone in this country, uh, a piece of the success of the country. So I think we need these sort of savings accounts, uh, and we can't wait until people start creating an IRA when they're... Or 401 (k) by the time they're, you know, 25 or 30 or 35. You wanna start when they're a baby just because the laws of compounding. That extra 25 years is- is very, very material. So I think that's a key, uh, key device to help address, uh, the problem. And I-I think we need smart tax policy, um, and there are lots of things we can do, uh-

    3. HSHarry Stebbings1:00:40

       What is smart tax policy,

18. 1:00:42 – 1:03:35

    Problems with the Tax Code Today

    1. HSHarry Stebbings1:00:42

       Bill?

    2. BABill Ackman1:00:42

       So there are a lot of things that make no sense to me. So for example, if you own real estate or certain other kinds of assets, you can do what are called like kind exchanges where you can sell, uh, s- sell an asset, i. e. at, or, I mean, and you pay taxes, or you can exchange it for another asset, right? And you don't pay any taxes. It's a total joke, (laughs) it's like a gimmick. It's a complete giveaway to people in real estate. There's so many-... uh, if you're a dedicated real estate investor, you can pass through, like Mr. Trump, President Trump, you can pass through the depreciation on those real estate assets and offset your other income, which is why D- Donald Trump didn't pay taxes pretty much his entire life, for things like that, that are easily fixable. Here's another one. So, if you're Elon Musk, right? Um, I'm not a believer in wealth taxes, but if you're borrowing five billion dollars against your Tesla stock, and you've borrowed more than your basis of the Te- Tesla stock, I think the distribution from that kind of borrowing, uh, should be taxable, 'cause it's really tantamount to a sale. You're getting back more than the money that you invested. That should be... When you refinance a piece of real estate, commercial real estate, if you go buy an apartment complex for 100 million and it goes in value 200 million and you refinance the mortgage and you take out 50 million of proceeds, I think those proceeds and excess, uh, you know, the, should be treated as a taxable, uh, fru- frustration.

    3. HSHarry Stebbings1:02:04

       Uh, so this is, this is highly logical and very much in vogue of kind of leftist regimes which are in power. Why do they not do it?

    4. BABill Ackman1:02:11

       I don't... These are, by the way, I think these, I think the Elon Musks of the world, uh, you know, uh, I, I think would support this kind of tax. It makes sense. The problem with the wealth tax, if you've got a, you know, the Biden wealth tax, which is, like, 25% of the appreciation of things that you own privately, it's gonna bankrupt every startup. No one will ever start a business in America anymore, right? 'Cause you, no one will be able... What do you do? You sell a, as the, you know, God forbid, someone puts money in your company at a billion dollar valuation. All of a sudden, you owe, you know, if you own half the company, you owe $100 million in taxes that year. You know, those kinds of taxes, I think, are, um, you know, just destructive. You don't wanna t- y- you don't wanna have a tax policy that destroys the economy, right? You wanna have a tax policy that makes sense. But there's certain things that are just wrong and unfair, and they just persist. Like, by the way, carried interest, which I've said my piece on for a long time, um, you know, it... Certain, giving someone a disproportionate share of gain is a very, uh, powerful thing to drive economic behavior. But I think differently about the real estate entrepreneur or the oil and gas entrepreneur, you know, building a business than us folks in the asset management industry. I don't think we need that extra tax advantage, uh, carried interest, when you're managing assets, um, to motivate our economic, uh, behavior.

    5. HSHarry Stebbings1:03:34

       Are you scared

19. 1:03:35 – 1:05:40

    What scares Bill Ackman about the economy?

    1. HSHarry Stebbings1:03:35

       of anything you see in the economy today?

    2. BABill Ackman1:03:37

       Am I scared of?

    3. HSHarry Stebbings1:03:38

       Anything you see in the economy today?

    4. BABill Ackman1:03:41

       Sure. I mean, it's, I don't use the word scared, but I would say there are many reasons to be of concern, right? We've got, we've got the North Korean situation. We have Ukraine, Russia. We have, uh, China brokering, uh, Saudi, uh, uh, Iranian, uh, rapprochement. And now China's becoming, uh... Th- that stuff the United States used to do, right? We have Russia crashing, um, you know, their planes into our drones. Um, we have China with its eyes on, uh, Taiwan. We have, uh, the United States draining its strategic petroleum reserve and, um, draining its weapon resources when it's doing the right thing in supporting Ukraine, but it's, it should be giving, you know, our defense department should be giving orders to all of our defense companies to rebuild our weapon stocks so that we're not, uh, out of inventory in, uh, in a highly uncertain world. We have, you know, Chairman Powell, Mr. Powell has got one of the tough... His job has become a lot more complicated in the last four days, right? He's got to... We have real, serious inflation in our country, and we have, you know, financial instability. And he's gotta work with his colleagues at Treasury and the FDIC to stabilize, stabilize the banking system. And I have a really simple solution. I- I've kinda laid it out a bunch of times (laughs) , and, uh, hopefully my laying it out won't discourage them from doing it. But we, you know, we've gotten a lot of... And then we have, you know, the political divisiveness and then, and then social media companies that, uh, can generate more attention by driving us to the left and to the right, right? So these are... So what we need is we need a, a Facebook that, uh, motivates us to love each other instead of hate each other. That would be a good... Someone should build that company.

    5. HSHarry Stebbings1:05:30

       I've invested in it. (laughs) It's still in Berlin.

    6. BABill Ackman1:05:34

       (laughs) Is it one of the, is it one of your losers or winners? We don't know yet.

    7. HSHarry Stebbings1:05:37

       We don't know. The joy of being a pre-seed and seed investor, my friend.

20. 1:05:40 – 1:06:55

    Will America be stronger or weaker in 10 years?

    1. HSHarry Stebbings1:05:40

       Um, is America stronger or weaker in 10 years time?

    2. BABill Ackman1:05:44

       I'm, 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 a, and a, 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 kinda brings us together. I- I'd love to see that happen.

    3. HSHarry Stebbings1:06:30

       Final one, Bill. We do this again in 2028, so five years time. Where's Bill then?

    4. BABill Ackman1:06:35

       Uh, hopefully a better, more improved version who's learned from his, whatever mistakes I made in the previous (laughs) five years.

    5. HSHarry Stebbings1:06:42

       Is Bill in politics then?

    6. BABill Ackman1:06:44

       Well, who knows where the world takes us? I have no idea.

    7. HSHarry Stebbings1:06:47

       (laughs) Listen, I've loved doing this. Thank you so much for putting up with my prying questions. You've been amazing and I really appreciate it.

Episode duration: 1:06:55