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Michael Lewis Discusses the Culture of Finance (Podcast) · Masters in Business

• 0:02
  Speaker 1: This is Master's in Business with Barry Ridholts on Boomberg
• 0:06
  Speaker 1: Radio this week on the podcast. I know you guys
• 0:12
  Speaker 1: bust my chops for saying I have an extra special guest,
• 0:15
  Speaker 1: But I have an extra special guest. Michael Lewis sat
• 0:18
  Speaker 1: with me for nine hours. We talked about everything he's
• 0:22
  Speaker 1: ever written since he was nine years old, and it
• 0:25
  Speaker 1: is absolutely spectacular. So, with no further build up or
• 0:29
  Speaker 1: ado my conversation with Michael Lewis, I have an extra
• 0:38
  Speaker 1: special guest today. His name is Michael Lewis. What can
• 0:41
  Speaker 1: I say You know about him? From Liars Poker, The
• 0:44
  Speaker 1: New new Thing money Ball, The Blindside, The Big Short, Uh,
• 0:48
  Speaker 1: The Undoing Project, The Fifth Risk. He has a new project,
• 0:53
  Speaker 1: Against the Rules, a podcast about referees in life and
• 0:58
  Speaker 1: whatever Happened to Fairness, which I have to tell you
• 1:01
  Speaker 1: I found quite fascinating. Michael Lewis, Welcome to Bloomberger. Thanks
• 1:05
  Speaker 1: for having me, my pleasure. We I really enjoyed speaking
• 1:08
  Speaker 1: with you in Florida at the That Giant conference, and
• 1:12
  Speaker 1: I felt we did not have enough time until fully
• 1:15
  Speaker 1: fleshed the reason you felt that way because we did
• 1:18
  Speaker 1: not have enough time. So tonight uh, you'll be free
• 1:20
  Speaker 1: around midnight. You'll get to go downtown and then we'll
• 1:23
  Speaker 1: we'll set you loose. Let's set the table and start.
• 1:27
  Speaker 1: In the nineteen eighties, you're working at one of the
• 1:29
  Speaker 1: hottest bond firms in the world, but you don't care.
• 1:33
  Speaker 1: You had started a diary and had delusions of becoming
• 1:36
  Speaker 1: a writer. Explain what you were thinking about before I
• 1:40
  Speaker 1: went to work for Solomon Brothers. I had started publishing
• 1:43
  Speaker 1: magazine pieces and the decided that's what I wanted to do,
• 1:45
  Speaker 1: to be a writer, but had no sense that you
• 1:47
  Speaker 1: could make a living doing this. You thought it was
• 1:49
  Speaker 1: a hobby. I thought that I didn't know. I just
• 1:52
  Speaker 1: I didn't know it because I was being paid by
• 1:54
  Speaker 1: the Economist magazine ninety dollars for what amounted to three
• 1:58
  Speaker 1: weeks work. I think didn't see how this was going
• 2:00
  Speaker 1: to work out as a living. So I thought I
• 2:04
  Speaker 1: thought I was gonna write. But this job lands in
• 2:07
  Speaker 1: my lap. I go take the job, and it's about
• 2:10
  Speaker 1: six months before I realized that I'm going to write
• 2:14
  Speaker 1: about the job. That it was such an extraory. I
• 2:17
  Speaker 1: was saying, you know, if you think back to where
• 2:20
  Speaker 1: it was, Solomon Brothers is making so much more money
• 2:25
  Speaker 1: than every other Wall Street back. It looks like it's
• 2:27
  Speaker 1: in a different business. Um, I'm i I land as
• 2:32
  Speaker 1: the sales in the sales arm of John Merryweather's derivative
• 2:37
  Speaker 1: his his proprietary trading book. So I'm selling derivatives. Um,
• 2:42
  Speaker 1: that's the stair way to start, sitting sort of sitting
• 2:44
  Speaker 1: right in the middle of the firm and right in
• 2:46
  Speaker 1: the middle of it's new h And you know, it
• 2:49
  Speaker 1: was just it became pretty clear that you know, I
• 2:53
  Speaker 1: say this glibly, but actually pretty clear. I had stories
• 2:57
  Speaker 1: to tell that just just from my experience. I published
• 3:00
  Speaker 1: a few of them while I was there. I had
• 3:03
  Speaker 1: to write under a pseudonym because they caught me writing
• 3:05
  Speaker 1: out of my real name and they let's talk about that.
• 3:08
  Speaker 1: You under your actual name while working at Solomon Brothers,
• 3:12
  Speaker 1: you published a column in the Wall Street Journal essentially
• 3:16
  Speaker 1: calling bankers overpaid babies. And you describe what actually happened,
• 3:22
  Speaker 1: what who called you into the office, and what was
• 3:26
  Speaker 1: So I was in London, uh, and I got to
• 3:29
  Speaker 1: my desk in the morning, and waiting for me at
• 3:32
  Speaker 1: my desk was the head of Solomon Brothers International to
• 3:35
  Speaker 1: say that he had had it just a horrible night
• 3:38
  Speaker 1: because of this piece that I had written in the
• 3:39
  Speaker 1: Wall Street Journal. And I was so pleased I had
• 3:42
  Speaker 1: a piece in the Wall Street Journal. I thought that
• 3:43
  Speaker 1: would be proud of me. But at the bottom of
• 3:45
  Speaker 1: it said Michael Lewis is an associated Solomon Brothers in London.
• 3:48
  Speaker 1: And he said, you don't understand. Michaele said, the board
• 3:52
  Speaker 1: of directors has been meeting on the phone about this piece.
• 3:55
  Speaker 1: And for complicated reasons, well maybe not that complicated reasons,
• 3:58
  Speaker 1: they couldn't fire They didn't work gonna fire me. They
• 4:00
  Speaker 1: were gonna fire me because I was generating a lot
• 4:02
  Speaker 1: of money for the firm I had. I had lucked
• 4:04
  Speaker 1: into a really big customer, so they didn't want to
• 4:06
  Speaker 1: fire me. Uh. They wanted to reach some agreement that
• 4:10
  Speaker 1: would prevent me from doing this again. And he basically
• 4:12
  Speaker 1: said you shouldn't write. And I said, but you don't understand.
• 4:14
  Speaker 1: I'm gonna write. And he was simple, you know Solomon,
• 4:17
  Speaker 1: but was filled with interesting people. He was sympathetic to that.
• 4:19
  Speaker 1: He knew, he understood was like to like to do something. Uh.
• 4:22
  Speaker 1: He said, he said, could you write under a pseudonym?
• 4:25
  Speaker 1: And I said, did that work. I don't care. Nobody
• 4:28
  Speaker 1: knows who I am. Uh. And we decided the pseudonym
• 4:31
  Speaker 1: I should write under it was my mother's maiden name,
• 4:34
  Speaker 1: Diana Bleaker. Uh he and he said, that's great because
• 4:37
  Speaker 1: no one will ever guess that a woman's a man.
• 4:40
  Speaker 1: So you were using You weren't doing Michael Bleaker. You
• 4:42
  Speaker 1: were doing Diana Bleaker. And I published a few pieces,
• 4:45
  Speaker 1: not many under the Diana the name Diana Bleaker, but
• 4:48
  Speaker 1: they got a lot of attention because I because I
• 4:50
  Speaker 1: felt liberated. I could write about what was happened right
• 4:52
  Speaker 1: next to me. Now no one would ever track it
• 4:54
  Speaker 1: back to me. And one evening, uh, this was there.
• 4:59
  Speaker 1: Two years into my Solomon brother's tenure, I got a
• 5:02
  Speaker 1: call from Chevy Chase's father, Ned Chase, who was so
• 5:07
  Speaker 1: Chevy Chase from Saturday U Live and the movies. His
• 5:10
  Speaker 1: dad was a big shot in New York editor, a
• 5:13
  Speaker 1: book editor at Simon and Schuster. And he said, I figured,
• 5:16
  Speaker 1: I found out that Diana Blaker is you. And I
• 5:19
  Speaker 1: read these pieces, and you really have a book in
• 5:22
  Speaker 1: you when you write a book. And I didn't know
• 5:25
  Speaker 1: what they were gonna pay. I didn't have at that
• 5:27
  Speaker 1: moment I realized, I can I can I eke out
• 5:30
  Speaker 1: a living doing this? So at that moment I was
• 5:33
  Speaker 1: out out the door in my head. I had to
• 5:34
  Speaker 1: wait a few months from my bonus to hit the account.
• 5:36
  Speaker 1: But once my bonus, my bonus arrived, I was out
• 5:39
  Speaker 1: the door and I and I and working. But you know,
• 5:41
  Speaker 1: I say that I was going to just write a
• 5:43
  Speaker 1: book about my experience. But the book I sold Liars Poker.
• 5:47
  Speaker 1: I recently saw the proposal. It really was just like
• 5:50
  Speaker 1: a history of Wall Street. I wasn't even in the
• 5:53
  Speaker 1: book proposal that I sold. And then when I started
• 5:56
  Speaker 1: writing it, it was so clear to me that my
• 6:00
  Speaker 1: variance was richer material than all this other stuff I
• 6:03
  Speaker 1: was going to write about. Um, they just took off
• 6:07
  Speaker 1: in that direction, and uh, that's the beginning of my career.
• 6:11
  Speaker 1: How did ned Chase figure out that you were Diana Bleaker? Like?
• 6:16
  Speaker 1: What was his clue? It wasn't. In the end, it
• 6:19
  Speaker 1: wasn't that hard because the piece that had caught his
• 6:22
  Speaker 1: attention was in The New Republic then edited by Mike Kinsley,
• 6:26
  Speaker 1: and Mike Kinsley refused to let me use a pseudonym
• 6:29
  Speaker 1: without saying on the bottom Diana Bleaker is a pseudonym.
• 6:33
  Speaker 1: And uh and so I think he called Kinsley and
• 6:37
  Speaker 1: Kinsley Gate told him he gave me up that. So,
• 6:41
  Speaker 1: so here's the really interesting thing. You're making so much
• 6:44
  Speaker 1: money at Solomon Brothers. Friends and family say he wants
• 6:48
  Speaker 1: to become a writer. We must stage an intervention. What
• 6:51
  Speaker 1: what on earth was that evening? So it wasn't it
• 6:54
  Speaker 1: wasn't even friends and family. It was it was friends
• 6:57
  Speaker 1: and family. But my boss is a Solomon Brothers. When
• 7:01
  Speaker 1: I told him what I was gonna do, hauled me
• 7:03
  Speaker 1: into a room, and they actually they could have cared less.
• 7:06
  Speaker 1: I was gonna go write a book about Wall Street,
• 7:08
  Speaker 1: which sounds naive, right, But they're just like, sure, go
• 7:11
  Speaker 1: write your book about Wall Street. They were worried about
• 7:14
  Speaker 1: my sanity, they thought, they said, look, you made to
• 7:17
  Speaker 1: fifty last year, You're probably gonna make twice that next year,
• 7:21
  Speaker 1: and then from there you're gonna make lots of money. Here, Um,
• 7:25
  Speaker 1: you're crazy to go do this. Don't go do this,
• 7:27
  Speaker 1: do this? Went do this later and my father, who
• 7:31
  Speaker 1: my father said to me the same kind of thing.
• 7:34
  Speaker 1: He said, because my dad's sitting in New Orleans Louisiana
• 7:38
  Speaker 1: had a very nice career as a lawyer, but all
• 7:40
  Speaker 1: of a sudden, his son, at age twenty four is
• 7:41
  Speaker 1: probably making roughly as much money as he is, and he's,
• 7:45
  Speaker 1: what are you doing leaving that job? And he said,
• 7:49
  Speaker 1: and he's never been one to give me advice, but
• 7:51
  Speaker 1: he said, look, just wait, wait ten years. Did did
• 7:54
  Speaker 1: your twenty four was twenty six at that point, Wait
• 7:57
  Speaker 1: ten years, and when you're in your mid thirties, you
• 7:59
  Speaker 1: can go take your million of dollars and go write
• 8:00
  Speaker 1: your novel. And the problem was that, you know, when
• 8:05
  Speaker 1: you're twenty six, thirty six teams ancient. And I looked
• 8:08
  Speaker 1: up to the people who were thirty six at Solivon Brothers,
• 8:10
  Speaker 1: and I could not imagine any of them leaving that
• 8:13
  Speaker 1: you you got so needful of the money and the
• 8:18
  Speaker 1: position in the status. I was afraid I would become
• 8:20
  Speaker 1: that and I wouldn't I lose this desire to do
• 8:23
  Speaker 1: this other thing. So it was I didn't have any trouble.
• 8:26
  Speaker 1: None of these, none of this advice had any effect
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  Speaker 1: on me whatsoever. Uh the golden handcuffs with that obvious
• 8:32
  Speaker 1: people had levered up their mortgages and they were they
• 8:36
  Speaker 1: were living a life that I didn't particularly want to live,
• 8:39
  Speaker 1: but that they were all living that life. They were
• 8:42
  Speaker 1: all living a life that required millions of dollars um
• 8:46
  Speaker 1: and they were in in addition the other, I mean,
• 8:49
  Speaker 1: my other dirty little secret was that it was the
• 8:52
  Speaker 1: job was really interesting for a year year and a
• 8:54
  Speaker 1: half because I was learning so much. But after a
• 8:58
  Speaker 1: year year and a half, you know you're not learning
• 9:00
  Speaker 1: that much. You're doing the same thing over and over
• 9:03
  Speaker 1: and once I sort of got a sense of what
• 9:05
  Speaker 1: this all all was. The idea of coming and doing
• 9:08
  Speaker 1: it again day after day after day was just deadening.
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  Speaker 1: I just I didn't actually believe deep down that if
• 9:14
  Speaker 1: I had stay ten years, i'd have gotten rich, because
• 9:16
  Speaker 1: I thought my disinterest in it would eventually have revealed itself.
• 9:20
  Speaker 1: It makes a lot of sense. I have to ask
• 9:22
  Speaker 1: one more question about Liars Poker before we move on
• 9:25
  Speaker 1: to some of the other books. You've said very specifically
• 9:30
  Speaker 1: that you thought Lars Poker would be an admonition, a
• 9:35
  Speaker 1: warning to people about the evils of Wall Street. It
• 9:39
  Speaker 1: turned out it didn't really happen, So I didn't actually
• 9:41
  Speaker 1: say that you said you said, so what I had
• 9:44
  Speaker 1: a different at it I had. I had a different
• 9:46
  Speaker 1: view of the whole thing. By the way, you and
• 9:48
  Speaker 1: I have had this conversation coming around to your view
• 9:51
  Speaker 1: that what you write may not be what other people read.
• 9:53
  Speaker 1: So I didn't think Wall Street was evil. That wasn't
• 9:56
  Speaker 1: the point. I thought it was preposterous, Okay. I thought
• 9:59
  Speaker 1: that the idea that I was being paid that money
• 10:01
  Speaker 1: to give financial advice was insane. So I thought it
• 10:04
  Speaker 1: was absurd, and the only thing that really disturbed me
• 10:08
  Speaker 1: about it at the time that got me upset. I mean,
• 10:10
  Speaker 1: there were times when I felt a little uncomfortable about
• 10:12
  Speaker 1: what I was expected to do to my customers. But
• 10:16
  Speaker 1: but um, but the thing that made me really queasy
• 10:20
  Speaker 1: was seeing people who cared about other things being drawn
• 10:24
  Speaker 1: into Wall Street just because that's where the money was.
• 10:27
  Speaker 1: I had friends in college who really just like they were.
• 10:30
  Speaker 1: I had a good friend who was like born to
• 10:32
  Speaker 1: be an oceanographer, and oceanography just looked like something he
• 10:36
  Speaker 1: couldn't afford to do when Goldman Sachs is offering him
• 10:39
  Speaker 1: this job coming out out of Princeton, So that I
• 10:42
  Speaker 1: thought what the purpose To the extent I had a
• 10:45
  Speaker 1: social purpose with the book. I thought young people will
• 10:48
  Speaker 1: read it. They'll see what this is. They'll understand it's preposterous.
• 10:51
  Speaker 1: They if they have not got nothing better to do
• 10:53
  Speaker 1: with their lives, they'll go to Wall Street. Or if
• 10:55
  Speaker 1: they have a passion for finance, they'll go to Wall Street.
• 10:57
  Speaker 1: But if they've got some other plan, they won't be
• 11:00
  Speaker 1: distracted by the money. That's not That's not how people
• 11:03
  Speaker 1: read it. What happened instead was um two months after
• 11:08
  Speaker 1: the book could come out, I had a stack of
• 11:10
  Speaker 1: letters as high as my nique on the floor from
• 11:12
  Speaker 1: kids at colleges, uh say, and they all read the
• 11:16
  Speaker 1: kind of the same way. Dear Mr Lewis, I loved
• 11:18
  Speaker 1: your book about how to get Ahead on Wall Street.
• 11:20
  Speaker 1: I think I've got all the principles, but I really
• 11:22
  Speaker 1: want to know some things that other people don't know
• 11:24
  Speaker 1: so that I can get there quicker. Is there anything
• 11:26
  Speaker 1: you left out that will help me, like make it
• 11:29
  Speaker 1: on Wall Street? So it became a how to manual.
• 11:32
  Speaker 1: So you and I have had this discussion before. You
• 11:36
  Speaker 1: have made the claim that very often the book you
• 11:39
  Speaker 1: write and set out into the world is very different
• 11:42
  Speaker 1: than the book that people actually read. They bring their
• 11:45
  Speaker 1: own biases and filters and they see things differently than
• 11:49
  Speaker 1: perhaps you expect. I'm really to make even stronger case,
• 11:53
  Speaker 1: and it would be that if a book is any good,
• 11:55
  Speaker 1: it has the capacity to be misunderstood and and and
• 11:59
  Speaker 1: it's and it's for this reason that if I had
• 12:02
  Speaker 1: been all aflame about the evils of Wall Street, um,
• 12:08
  Speaker 1: instead of just kind of funny about it, nobody would
• 12:11
  Speaker 1: have read the book as a how to manual. No
• 12:12
  Speaker 1: one read the book anyway, but they wouldn't have read
• 12:14
  Speaker 1: the book it had been tedious, like who cares what
• 12:17
  Speaker 1: you think? Tell me the story. And if you tell
• 12:20
  Speaker 1: a story and you're telling it kind of honestly, you're
• 12:24
  Speaker 1: leaving room for people to think different things about the story,
• 12:27
  Speaker 1: just as people naturally would about any story. You tell
• 12:30
  Speaker 1: ten people the same story, and they hear ten different stories,
• 12:32
  Speaker 1: they emphasize different things in their minds. You leave, You
• 12:35
  Speaker 1: try to leave holes for the reader to have their
• 12:37
  Speaker 1: own point of view. Now I didn't, I didn't do
• 12:39
  Speaker 1: that intentionally with the first book. But I think the
• 12:42
  Speaker 1: fact that I was feeling kind of detached about Wall Street,
• 12:46
  Speaker 1: you know, I didn't. I wasn't. It wasn't a moralistic
• 12:49
  Speaker 1: diatribe about Wall Street. Um, and the book is very funny,
• 12:53
  Speaker 1: like what I enjoyed with the people in the humor, right,
• 12:56
  Speaker 1: it was that that the characters in the situation was
• 13:00
  Speaker 1: was It was rich and funny and interesting, And I
• 13:02
  Speaker 1: was at some level always grateful that Solomon Brothers gave
• 13:05
  Speaker 1: me a job and at some level always kind of
• 13:07
  Speaker 1: love the place because of how curious it was. It
• 13:09
  Speaker 1: let it, it, let me in, It let all kinds
• 13:11
  Speaker 1: of characters in who wouldn't naturally fit into a more ordinary,
• 13:15
  Speaker 1: corporate kind of environment. How much did that shape what
• 13:20
  Speaker 1: you looked for in future books? Because all of your
• 13:22
  Speaker 1: writing contains interesting, odd bowl quirky characters. Every book has
• 13:28
  Speaker 1: that person as a driver. They all have teachers as drivers.
• 13:31
  Speaker 1: I mean some of them, You're right, some of them
• 13:34
  Speaker 1: are odd, but they all all the all the main
• 13:38
  Speaker 1: characters have the capacity to teach the reader something. I'd say,
• 13:40
  Speaker 1: that's what they have in common. I would say, like
• 13:42
  Speaker 1: Brad Kottsi Yama and Flashboys. As a wildly quirky character. Um,
• 13:46
  Speaker 1: you on the podcast which will get too later, you
• 13:49
  Speaker 1: describe him as this unique bird in the it's he's
• 13:55
  Speaker 1: a completely ordinary Canadian. You put him on Wall Street.
• 13:58
  Speaker 1: He's a freak, right, because they're no completely ordinary Canadians
• 14:01
  Speaker 1: on Wall Street. Uh So that that he was working
• 14:05
  Speaker 1: at Royal Bank of Canada, which is headquartered what in Toronto.
• 14:08
  Speaker 1: I mean, he's kind of in the midst of it.
• 14:11
  Speaker 1: It was he was there, well, he was down here
• 14:13
  Speaker 1: in New York. He was there their U S stock
• 14:15
  Speaker 1: Trader had of US stock trading. But but uh so
• 14:21
  Speaker 1: what Liars Poker. Uh the only one, very specific effect
• 14:29
  Speaker 1: on what I wrote. So subsequently it made it possible
• 14:31
  Speaker 1: for me to write the big short that a lot
• 14:34
  Speaker 1: of the people who were in the middle of the
• 14:36
  Speaker 1: financial crisis, people who made a lot of the bad
• 14:39
  Speaker 1: bets at the banks, I got into the business after
• 14:42
  Speaker 1: reading Liars Poker, so they felt in a connection to
• 14:45
  Speaker 1: me that led them to open up and talk to me,
• 14:48
  Speaker 1: so that it was really important it It really did
• 14:52
  Speaker 1: lead to that book. But other than that, most of
• 14:56
  Speaker 1: Liars Poker's effect on the rest of my writing life
• 14:59
  Speaker 1: has been negati if I just don't want in that
• 15:02
  Speaker 1: and that I don't want to write the same book twice.
• 15:04
  Speaker 1: So I'm not looking for another Liars Poker, just the opposite,
• 15:08
  Speaker 1: looking for something completely different. And and if we just
• 15:11
  Speaker 1: take the course of um, the course of your bibliography, well, well, clearly,
• 15:17
  Speaker 1: um moneyball is something completely different. The new new thing
• 15:21
  Speaker 1: is something totally different. I mean, it's not too hard
• 15:25
  Speaker 1: to see how you go from subject to subject. There's
• 15:28
  Speaker 1: a thread through all of these things that are fairly recognizable,
• 15:34
  Speaker 1: but they're clearly different topics and different approaches and in
• 15:38
  Speaker 1: virtually all the others, with the exception of my little
• 15:41
  Speaker 1: Parenthood book. In the book I did about my high
• 15:43
  Speaker 1: school baseball coach, um, someone else is the main character
• 15:48
  Speaker 1: and not me. Uh, it's fun to have me is
• 15:52
  Speaker 1: the main character. Makes it easy in some ways. But
• 15:54
  Speaker 1: that's what I had in a Liars Poker. I could
• 15:56
  Speaker 1: I myself could stand in for Billy Being or Bradcott's
• 16:00
  Speaker 1: Yama or Jim Clarker. I mean that I could carry
• 16:03
  Speaker 1: the book because I had had that experience. Makes perfect sense.
• 16:07
  Speaker 1: I want to ask you about the fifth risk. What
• 16:10
  Speaker 1: what motivated you too suddenly take on the transition of
• 16:16
  Speaker 1: the newly elected president Rick Perry. In short, when Trump
• 16:21
  Speaker 1: appointed Rick Perry to be Secretary of Energy, I just
• 16:25
  Speaker 1: something clicked in my brain and it was it was well,
• 16:28
  Speaker 1: first the memory of Rick Perry calling for the elimination
• 16:30
  Speaker 1: of the Department of Energy when he was a presidential
• 16:33
  Speaker 1: candidate but not being able to remember its name on
• 16:35
  Speaker 1: stage when he was calling for its elimination, and he
• 16:37
  Speaker 1: did so cavalier, I'm just gonna get rid if I
• 16:39
  Speaker 1: was president, that's I get rid of that. I thought, well,
• 16:42
  Speaker 1: that's curious to pick a guy who says he wants
• 16:44
  Speaker 1: to get rid of the thing to run the thing.
• 16:46
  Speaker 1: He clearly, and then he came Then he came right
• 16:49
  Speaker 1: full circle and said, I just didn't know what the
• 16:51
  Speaker 1: thing did. I'm sorry. I said that. Now I'm glad
• 16:53
  Speaker 1: to be running it. He thought it actually was involved
• 16:55
  Speaker 1: in energy as opposed to nuclear weapons and cleaning up.
• 16:58
  Speaker 1: I didn't know. So I really wise at that point, WHOA,
• 17:01
  Speaker 1: I don't know what the Department of Energy does? What
• 17:03
  Speaker 1: does it do? Like? What do we just hand this
• 17:05
  Speaker 1: guy who doesn't know what it does? And it really
• 17:08
  Speaker 1: should be called the Department of Nuclear Weapons. Uh, it's
• 17:10
  Speaker 1: it's a vast science project that that, among other things,
• 17:15
  Speaker 1: manages the nuclear arsenal. So I so then I thought,
• 17:19
  Speaker 1: what happens in a society, in a government where you're
• 17:23
  Speaker 1: putting people so ill equipped to run the thing into
• 17:26
  Speaker 1: the position of running the thing. Uh. And it led,
• 17:33
  Speaker 1: you know, once I started digging, it led to the
• 17:35
  Speaker 1: story of the transition, which was an incredible story that
• 17:38
  Speaker 1: there essentially wasn't one that that this meant to be, uh,
• 17:43
  Speaker 1: a pretty elaborate hand over the government from one administration
• 17:46
  Speaker 1: to the next, and that the Obama administration had prepared
• 17:50
  Speaker 1: essentially this great course on how the government works. Uh,
• 17:53
  Speaker 1: like a thousand people in the Obama administration and spent
• 17:56
  Speaker 1: six months preparing these books, preparing these talks so that
• 18:00
  Speaker 1: whoever won would come in and they could say, look,
• 18:03
  Speaker 1: this is this is how we dealt with the a
• 18:04
  Speaker 1: bowla virus. This is how you assemble a nuclear weapon,
• 18:07
  Speaker 1: this is these are the loose nukes that were worried
• 18:09
  Speaker 1: about in Eastern Europe. You know, there's lots of practical information. Uh.
• 18:15
  Speaker 1: And that the Trump administration Trump had fired his entire
• 18:18
  Speaker 1: transition team moments after the election. The Trump adminstration had
• 18:21
  Speaker 1: not shown up to get that knowledge. I thought, well, this,
• 18:25
  Speaker 1: it's given me first a device I'm gonna go get.
• 18:27
  Speaker 1: I'm gonna go get these briefings. I'm gonna go hear
• 18:29
  Speaker 1: these things that they didn't bother hearing, and in fact,
• 18:31
  Speaker 1: you're the only person who actually heard some of these
• 18:33
  Speaker 1: many I think, I think the majority of the briefings
• 18:38
  Speaker 1: I heard, I'm the only one who heard them. No,
• 18:41
  Speaker 1: it's more than astonishing. It's like it's and they were boring.
• 18:46
  Speaker 1: You know, you would think government when if you said
• 18:49
  Speaker 1: if we did like a word association game two years ago,
• 18:52
  Speaker 1: and you said government, I'd say boring and actually riveting, riveting,
• 18:59
  Speaker 1: especially riveting when it's in the hands of people who
• 19:02
  Speaker 1: have no idea what it does. But but the the
• 19:05
  Speaker 1: degree what the U. S. Government does in so many
• 19:10
  Speaker 1: different sectors is so incredibly important, including and including places
• 19:14
  Speaker 1: where um, you don't much think the government has a place.
• 19:18
  Speaker 1: Basic science research largely corporate America has a banned in
• 19:22
  Speaker 1: long term scientific research, and so it's moved into the government.
• 19:26
  Speaker 1: And there are mission critical science projects scattered around the
• 19:31
  Speaker 1: government that if we don't do them, you know, we
• 19:34
  Speaker 1: don't have a food supply in thirty years kind of thing.
• 19:36
  Speaker 1: And and it's a data collection. There's data in the census,
• 19:43
  Speaker 1: the weather data, so and so forth, unbelievably valuable. If
• 19:47
  Speaker 1: if we don't have um prescription drug data that the
• 19:50
  Speaker 1: government collects. We probably still don't know there's an opioid epidemic.
• 19:54
  Speaker 1: You've got people, You've got thousands of people dying every year,
• 19:56
  Speaker 1: tens of thousands of people dying every overdose. And the
• 19:59
  Speaker 1: only reason it was found out was the federal government
• 20:04
  Speaker 1: made available all the prescription drug data and geeks started
• 20:08
  Speaker 1: hacking in and said, well, this is a lit law
• 20:09
  Speaker 1: of these pattern the pattern of distribution of of opioid
• 20:13
  Speaker 1: prescriptions doesn't make any sense, like more pills being dispensed
• 20:17
  Speaker 1: in West Virginia than there are West Virginians, and uh
• 20:21
  Speaker 1: so it's the government is like the source of that.
• 20:25
  Speaker 1: Important things are going on there, and so it's that's
• 20:28
  Speaker 1: surprised me. The other thing that surprised me. If you's
• 20:31
  Speaker 1: asked me play that word association game government worker, I
• 20:35
  Speaker 1: just said sleepy, maybe a little ambitious beta. I don't
• 20:42
  Speaker 1: know what. I wouldn't have been flattering terms. The people
• 20:46
  Speaker 1: I met and there was like permanent civil servants were
• 20:49
  Speaker 1: the best people on the planet. They were like if
• 20:52
  Speaker 1: they were mission driven, passionate people go to the weather,
• 20:55
  Speaker 1: the weather if you spent two days and like the
• 20:57
  Speaker 1: storm center at the University of Oklahoma, where they tracked
• 21:00
  Speaker 1: tornadoes with the National Weather Service people there, you will
• 21:04
  Speaker 1: find yourself in a room with like the really smart
• 21:09
  Speaker 1: kid from the fifth grade, who's who's who's Who's Like
• 21:14
  Speaker 1: dog was killed when a tree blew over in a
• 21:17
  Speaker 1: storm that no one warned them about, and became obsessed
• 21:20
  Speaker 1: with predicting weather events, so no one so no one
• 21:23
  Speaker 1: got hurt. And they're they're like, they can make more
• 21:26
  Speaker 1: money twice as much money doing something else, but it's
• 21:29
  Speaker 1: in the National Weather surface where they're where their passion
• 21:33
  Speaker 1: has the biggest consequence in In the book, you write
• 21:36
  Speaker 1: a number of really fascinating factoids, and I'm gonna come
• 21:38
  Speaker 1: to some of them, But on weather prediction, you described
• 21:42
  Speaker 1: this as one of the great unsung achievements of the
• 21:46
  Speaker 1: twentieth century is how far our ability to forecast dangerous
• 21:51
  Speaker 1: storms has has advanced, not just dangerous storms, like whether
• 21:54
  Speaker 1: it's gonna be sunny or rainy five days from now.
• 21:56
  Speaker 1: You're your fifth day forecast now is as good as
• 22:00
  Speaker 1: your one day was like twenty five years ago. It's
• 22:03
  Speaker 1: gotten that much better. And I don't know, I grew
• 22:05
  Speaker 1: up in New Orleans, so you know, hurricanes used to
• 22:07
  Speaker 1: when I was a kid used to like come out
• 22:09
  Speaker 1: of nowhere and you didn't know where they were going
• 22:10
  Speaker 1: to hit, and you just kind of go out with
• 22:11
  Speaker 1: a frisbee and wait until I got two windy that
• 22:14
  Speaker 1: you that was your warning system. But it's the the
• 22:20
  Speaker 1: precision with which these storms now can be tracked. It's
• 22:23
  Speaker 1: a great it's a great intellectual achievement. And it's an
• 22:26
  Speaker 1: achievement maybe more to the point that it's not just
• 22:30
  Speaker 1: the government, but without the government it doesn't happen. The
• 22:33
  Speaker 1: government collects all the data. So so let's talk about
• 22:35
  Speaker 1: that because in the book you describe a congressman who
• 22:39
  Speaker 1: wants to get the government out of the weather forecasting
• 22:43
  Speaker 1: business and turn it all over to one of the
• 22:45
  Speaker 1: private which which uses all of the government data. Yeah,
• 22:51
  Speaker 1: it's like which is like a three billion dollar year.
• 22:54
  Speaker 1: The congressman said to the head of NOAH and the
• 22:57
  Speaker 1: National Oceanic and Atmospheric Administration and here ring UH and
• 23:01
  Speaker 1: the weather services inside of NOAH, said why do I
• 23:04
  Speaker 1: need you. I can get my weather from ACU weather.
• 23:07
  Speaker 1: And she said, you know where do you think ACU
• 23:09
  Speaker 1: weather gets its weather? It gets it from us. You
• 23:12
  Speaker 1: know that without us ACU Weather can't make a forecast.
• 23:15
  Speaker 1: They don't have the booty data. They'll have the satellite data,
• 23:18
  Speaker 1: they don't have the radar data. Plus the weather models
• 23:21
  Speaker 1: all originate out of the National Weather Service. Now that's
• 23:24
  Speaker 1: true that each of these private weather companies now has
• 23:27
  Speaker 1: his own little wrinkle on weather prediction, But the bulk
• 23:30
  Speaker 1: of the both both the information you need to make
• 23:32
  Speaker 1: the prediction and the intellectual work about how to handle
• 23:35
  Speaker 1: that information came out of the government. So it's it's
• 23:38
  Speaker 1: insane to say you give it over to the private sector.
• 23:41
  Speaker 1: The private sector wouldn't in the first place collect the data.
• 23:45
  Speaker 1: Now having said that, um, it's also true that the
• 23:48
  Speaker 1: private sectors has made contributions. It's important, and the government
• 23:52
  Speaker 1: encourages this partnership. It opens it gives all this data
• 23:55
  Speaker 1: everywhere for free. Hack away at it. If you can
• 23:57
  Speaker 1: find a better way to predict, like when the tornado
• 23:59
  Speaker 1: is gonna happen, we're all ears, um. But it's a
• 24:03
  Speaker 1: kind of like an open source thing that everybody has
• 24:05
  Speaker 1: to have access to this and into the position of
• 24:09
  Speaker 1: running this operation, Trump is appointed the see the former
• 24:13
  Speaker 1: CEO of VACU Weather, who has campaigned for twenty years
• 24:17
  Speaker 1: to essentially prevent the National Weather Service from communicating with
• 24:21
  Speaker 1: the American people on the grounds that if you can
• 24:25
  Speaker 1: make money with this in the private sector, the government
• 24:28
  Speaker 1: shouldn't be competing with you. Uh, which is I mean nuts.
• 24:34
  Speaker 1: The American taxpayers paid for all of his data. How
• 24:36
  Speaker 1: much have we paid for all that data? Uh? It's
• 24:41
  Speaker 1: I mean several billion dollars a year. It's a running cost,
• 24:44
  Speaker 1: it's uh, it's it's close to half the budget of
• 24:48
  Speaker 1: the Department of Commerce. This weather collect data collection. And
• 24:53
  Speaker 1: the idea that the Weather Service, like he prevented them
• 24:56
  Speaker 1: from having an appu, but that they should They shouldn't
• 24:59
  Speaker 1: have a website, they shouldn't have it. It It is insane. Um.
• 25:02
  Speaker 1: And if you restrict the access to the data uh
• 25:06
  Speaker 1: to a handful of companies that happen to have an
• 25:08
  Speaker 1: inside track right now, the Weather Channel or Acue, whether
• 25:10
  Speaker 1: whoever it is, you prevent the next smart geek in
• 25:14
  Speaker 1: his basement from finding new patterns in the data that
• 25:17
  Speaker 1: they help us predict the weather. Um. So it's a
• 25:21
  Speaker 1: it is a there's a public enterprise side to this,
• 25:24
  Speaker 1: just like there's a a public good side to this.
• 25:27
  Speaker 1: And that's like there's a public good side to long
• 25:29
  Speaker 1: term scientific research, and it isn't that offers a natural
• 25:34
  Speaker 1: role for the government, And that attracts some really interesting people.
• 25:37
  Speaker 1: And that's which surprised me, you know, And I think
• 25:40
  Speaker 1: I I had the felt I had the luxury of
• 25:43
  Speaker 1: not paying much attention to it because it seemed to
• 25:45
  Speaker 1: like kind of run itself badly or well, and whatever
• 25:48
  Speaker 1: I thought or said about the government wasn't gonna have
• 25:50
  Speaker 1: any effect. But now all of a sudden, it feels
• 25:52
  Speaker 1: like it is at risk of being seriously disabled. So
• 25:54
  Speaker 1: all of a sudden, it's gotten to be kind of
• 25:56
  Speaker 1: interesting material. So some of the some of the specific
• 26:00
  Speaker 1: factoids you bring up in the book, I just pulled
• 26:03
  Speaker 1: five or six aside because I were just fascinated by these.
• 26:07
  Speaker 1: There are two million federal employees, seventy of whom work
• 26:12
  Speaker 1: in national security. That's a mind blowing stat I assumed
• 26:16
  Speaker 1: there were all these bureaucrats and pencil pushers. Most of
• 26:20
  Speaker 1: the government spends their time working and personnel working to
• 26:24
  Speaker 1: keep everybody else. Say, that's the basic function of the government. Uh.
• 26:28
  Speaker 1: And and it's also it's also you know, another kind
• 26:32
  Speaker 1: of misunderstanding is that like the federal workforce is just
• 26:36
  Speaker 1: out of control. There fewer federal workers per capita than
• 26:41
  Speaker 1: they were thirty years ago. The thing that's really alarming
• 26:44
  Speaker 1: about the federal workforce is how it's aged, uh that
• 26:48
  Speaker 1: young people don't want to go work there anymore. And
• 26:50
  Speaker 1: you've got so you've got um in information technology alone
• 26:55
  Speaker 1: in the federal in the in the federal government, five
• 26:58
  Speaker 1: times more people uh over the age of sixty than
• 27:01
  Speaker 1: under the age of thirty. So you know, no tech
• 27:04
  Speaker 1: company could function that way. And so this is when
• 27:07
  Speaker 1: you look at what's what's happening is we're kind of
• 27:09
  Speaker 1: living on borrowed time with the federal government running on fumes.
• 27:13
  Speaker 1: And it's all a consequence of this enterprise being basically
• 27:17
  Speaker 1: demonized and a lot of decades now and a lot
• 27:20
  Speaker 1: and and and allowed, partly by Congress UH to atrophy.
• 27:25
  Speaker 1: I mean, it's it's just too hard to hire and
• 27:27
  Speaker 1: fire people. It's too who wants to go work for
• 27:30
  Speaker 1: a place where the only thing, the only time you
• 27:33
  Speaker 1: ever recognized is if you do screw up, and if
• 27:35
  Speaker 1: you screw up, you're in the front page of the
• 27:37
  Speaker 1: Washington Post. But but but you do something great like
• 27:40
  Speaker 1: who's nobody pays any attention. Uh, you're actually gonna get rich.
• 27:44
  Speaker 1: Uh So it's it's why why can't we find out more?
• 27:49
  Speaker 1: Short of the next Michael Lewis book, why aren't more?
• 27:52
  Speaker 1: Of a perfect example, I didn't know until I read
• 27:56
  Speaker 1: the book that fracking, the technology for fracking which has
• 28:00
  Speaker 1: brought out so much gas and natural gas and and
• 28:04
  Speaker 1: crude oil and allowed the United States to effectively become
• 28:08
  Speaker 1: energy independent, that was the brainchild of the Department of
• 28:11
  Speaker 1: Energy Research. Yes, how is that not known by people
• 28:15
  Speaker 1: or people or that, or that the entire solar power
• 28:20
  Speaker 1: industry begins with funding from the Department of Energy, or
• 28:24
  Speaker 1: that the Tesla factory that makes cars in Fremont, California
• 28:28
  Speaker 1: starts with a loan from the Department of Energy. That
• 28:31
  Speaker 1: they're they're both big loan guarantee programs and essentially of
• 28:36
  Speaker 1: essentially a venture capital fund run by really smart people
• 28:40
  Speaker 1: who come in and out from industry, from universities to
• 28:43
  Speaker 1: fund kind of very long term ideas that aren't going
• 28:48
  Speaker 1: to pay off for the wrong term. I mean, that's
• 28:50
  Speaker 1: the gap in the market. Right if if if there's
• 28:53
  Speaker 1: research that will pay in two or three years, the
• 28:55
  Speaker 1: corporations will fund it, but if there's research that that
• 28:58
  Speaker 1: may not pay off for the tow years. Uh, there's
• 29:02
  Speaker 1: no there's you know, there used to be more of
• 29:04
  Speaker 1: that in corporate America, Bell Labs or Xerox park or,
• 29:07
  Speaker 1: but the markets have encouraged are discouraged long term that
• 29:11
  Speaker 1: kind of long term investment would be. The government is
• 29:13
  Speaker 1: even more important. Um, China isn't hesitating to make No,
• 29:17
  Speaker 1: that's exactly right, This is exactly right. I think. So
• 29:22
  Speaker 1: here's what I think. I think we're an inflection point.
• 29:24
  Speaker 1: I think that the society, if it's going to succeed,
• 29:27
  Speaker 1: can't be hostile to its own government. We're bizarre in
• 29:30
  Speaker 1: this way. And there isn't another democracy where people think
• 29:32
  Speaker 1: the government is evil or or the problem. Uh. Now,
• 29:37
  Speaker 1: people in Europe might say, the French might say, or
• 29:40
  Speaker 1: the British might say, the European government's a problem. But
• 29:43
  Speaker 1: but but that of kind of turning your ire are
• 29:48
  Speaker 1: on your own government, it's it's like self defeating. I
• 29:52
  Speaker 1: think someone is going to emerge who can sell the government.
• 29:56
  Speaker 1: I think politicians going to emerge, because it's not that
• 29:58
  Speaker 1: hard to sell once you start, once start explaining people
• 30:00
  Speaker 1: what it does, and we once you trot out some
• 30:03
  Speaker 1: of the people who are doing what they're doing this,
• 30:06
  Speaker 1: it's a it's an inspiring place in many ways. So
• 30:09
  Speaker 1: like a Mayor Pete or I think I think Mayor
• 30:13
  Speaker 1: Pete might be the ideal person to do this. So yes,
• 30:17
  Speaker 1: for me, I'm just an opportunist. I'm looking for stories.
• 30:20
  Speaker 1: I'm I'm looking for stories to tell that's surprise and
• 30:23
  Speaker 1: interests me that might surprise an interest to reader. And
• 30:27
  Speaker 1: Trump was a gift because his willingness to entirely neglect
• 30:34
  Speaker 1: this enterprise, two million person enterprise he's tasked to run,
• 30:39
  Speaker 1: left an opening, uh to go learn about it. Huh.
• 30:42
  Speaker 1: So last three bullet points from the fifth risk that
• 30:45
  Speaker 1: I'm fascinated by either Tech or A and M. So
• 30:49
  Speaker 1: anytime you see Texas A and M or Virginia Tech.
• 30:52
  Speaker 1: All these colleges were formed on the basis of US
• 30:55
  Speaker 1: land grants. Yes, back in the mid nineteenth century, the
• 30:59
  Speaker 1: same legist body of legislation that created the part of
• 31:03
  Speaker 1: agriculture creates these these schools. And it's it's Lincoln's observation.
• 31:09
  Speaker 1: I think that we need to make uh, we need
• 31:14
  Speaker 1: to bring science to agriculture and let's talk about that
• 31:19
  Speaker 1: because again from your book, in eighteen seventy two, the
• 31:23
  Speaker 1: average farmer fed four people, and due to the AGG
• 31:27
  Speaker 1: colleges and the A and M colleges, the average farmer
• 31:31
  Speaker 1: now feeds a hundred and fifty five people. Yes, so
• 31:34
  Speaker 1: think about that. What that does is it enables a
• 31:36
  Speaker 1: modern life that you free people from the farms and
• 31:38
  Speaker 1: the burden of having to grow stuff and they can
• 31:40
  Speaker 1: do other things. So of the labor pool used to
• 31:44
  Speaker 1: be farm based and now it's single low, single digits tiny.
• 31:48
  Speaker 1: It's amazing. And then the last one I just have
• 31:50
  Speaker 1: to ask you about disposable diapers invented by NASA, is Yeah,
• 31:57
  Speaker 1: that was a throwaway line, that's right. One of the
• 31:59
  Speaker 1: care archers in the book is Kathy Sullivan, who ran
• 32:02
  Speaker 1: who was the head of the National Oceanic and Atmospheric
• 32:05
  Speaker 1: Administration and so ran the National Weather Service under it,
• 32:08
  Speaker 1: and she was before that, uh, the first she was
• 32:12
  Speaker 1: an astronaut, and she was the first American woman to
• 32:14
  Speaker 1: walk in space. Uh. Extraordinary characters. But this is in
• 32:19
  Speaker 1: an illustration of my general point that you'd be amazed
• 32:22
  Speaker 1: who you find in government when you start banging on
• 32:24
  Speaker 1: the doors quite fascinating. His latest project, for reasons unfathomable
• 32:30
  Speaker 1: to me, a podcast by the name of Against the Rules.
• 32:35
  Speaker 1: You're you're a writer, You're you're an author. Why dabbling
• 32:39
  Speaker 1: in this podcasting? You're not feeling threatened, are you? Yeah,
• 32:42
  Speaker 1: that's what I'm This is a competitive concern. By the way,
• 32:46
  Speaker 1: I've listened to your whole first season, except for episode six,
• 32:50
  Speaker 1: which wasn't ready for me. It's great. I really love it.
• 32:54
  Speaker 1: It's totally your voice. I mean, I don't mean you speaking,
• 32:57
  Speaker 1: which is also takes place, but it's so Michael Lewisy.
• 33:01
  Speaker 1: It's just infused throughout that each one of these segments,
• 33:05
  Speaker 1: each one of these podcasts are like a chapter in
• 33:08
  Speaker 1: a Michael Lewis book, which kind of raises the question,
• 33:11
  Speaker 1: why not a book. It's a really good question. And
• 33:15
  Speaker 1: the answer is that, so there's some kind of material
• 33:18
  Speaker 1: that seemed to be very naturally a book. Narrative material
• 33:20
  Speaker 1: is what I really prefer, and that's where you have
• 33:23
  Speaker 1: a character that you can follow from beginning to end.
• 33:25
  Speaker 1: And that's most of the real books I've done that
• 33:27
  Speaker 1: there's a it's the structure is not all that different
• 33:31
  Speaker 1: from a novel. This was an idea, and the idea
• 33:34
  Speaker 1: was referees in American life. It's it's people whose job
• 33:38
  Speaker 1: is to maximize fairness, enforce the rules. Uh, not just
• 33:43
  Speaker 1: sports referees, but judges and government regulators. And I mean
• 33:46
  Speaker 1: we kind of wander with the idea. But each this
• 33:51
  Speaker 1: was essay material. This wasn't narrative material. Um each chapter
• 33:56
  Speaker 1: and they have seven episodes, so there's seven chapters in
• 33:59
  Speaker 1: a book. They all go together, but you wouldn't feel
• 34:02
  Speaker 1: like you were reading exactly the same story. There's a
• 34:05
  Speaker 1: theme that connects everything. Every they're all distincts. They're all distincts.
• 34:09
  Speaker 1: It's like a bunch of short stories around set in
• 34:11
  Speaker 1: the same place. Um, well not always. Some of its
• 34:15
  Speaker 1: New Jersey, some of it's Berkeley. But but it's right.
• 34:18
  Speaker 1: But but I thought that this material. I've wondered about
• 34:23
  Speaker 1: your medium. I've wondered about you know where that could
• 34:26
  Speaker 1: pull off a podcast. It's a very lazy medium to
• 34:29
  Speaker 1: do what I do, which is conn people to come
• 34:31
  Speaker 1: in here and have a conversation with me. So I
• 34:34
  Speaker 1: have it easy. Yours is a very well, it's narrative.
• 34:37
  Speaker 1: It's narrative, but it's it's it's like it's a series
• 34:39
  Speaker 1: of short stories that are essays that are strung together.
• 34:43
  Speaker 1: And I had the feeling that if we did it
• 34:45
  Speaker 1: this way, it would feel more like one story because
• 34:48
  Speaker 1: you have that person's voice there all the time, and
• 34:52
  Speaker 1: it was just it was material. I never would have
• 34:53
  Speaker 1: written a book about it. I never would have written
• 34:55
  Speaker 1: a book about So let's start with the first episode
• 34:57
  Speaker 1: about referees, which is kind of interesting. And referees in
• 35:01
  Speaker 1: the nba UM I have found it amusing you bringing
• 35:05
  Speaker 1: your son in, who who seems to not be thrilled
• 35:08
  Speaker 1: with with the officiating in in his uh place. For
• 35:11
  Speaker 1: he played, he's moved on. He played for a Japanese
• 35:14
  Speaker 1: Buddhist temple in the Japanese Buddhist Temple League, and he
• 35:17
  Speaker 1: was getting thrown out of games. I mean, you got
• 35:20
  Speaker 1: to get booted from fouling up. But he come out
• 35:22
  Speaker 1: and he beat steam. ConA is here to be screaming
• 35:24
  Speaker 1: at the referee ten years old or eleven years old,
• 35:27
  Speaker 1: but he picked it up from the Warriors. That's where
• 35:29
  Speaker 1: he got. That's where he watch. He's watching, He's watching
• 35:31
  Speaker 1: Steph and Clay and Durant, and they're screaming at the
• 35:34
  Speaker 1: refs too, and uh, and so you know, that was
• 35:39
  Speaker 1: one of the things that got me interested because he's otherwise.
• 35:42
  Speaker 1: My son is actually very mild mannered, kind of sweet
• 35:45
  Speaker 1: and detached, and but reffs drive him nuts and he's
• 35:48
  Speaker 1: always sure he's a victim, like he's they're they're all
• 35:51
  Speaker 1: it's always against him, which which is preposterous. The guy
• 35:54
  Speaker 1: on the court's like a Buddhist, He's not against anybody,
• 35:58
  Speaker 1: and it makes no sense. So so um, you tell
• 36:03
  Speaker 1: the story about the replay center in New Jersey, which
• 36:07
  Speaker 1: was mind blowing. So there's a bigger point. The bigger
• 36:09
  Speaker 1: point is there's more friction now between especially the star players,
• 36:14
  Speaker 1: but the players on the court and the coaches and
• 36:16
  Speaker 1: the NBA reffs than there's ever been that it's regard
• 36:20
  Speaker 1: the NBA is starting to regard this as a kind
• 36:22
  Speaker 1: of crisis, like this problem, that this conflict, And of
• 36:25
  Speaker 1: course this bleeds into the way the fans treat the reffs,
• 36:28
  Speaker 1: the way the weffs are treated on the street. They
• 36:30
  Speaker 1: need bodyguards to go back and forth to their hotels.
• 36:32
  Speaker 1: It's insane. But you also point out that the officiating
• 36:35
  Speaker 1: has never been better. There's no question I mean, this
• 36:38
  Speaker 1: is no question if you back away from it. Um.
• 36:42
  Speaker 1: It used to be a handful of kind of dumpy
• 36:45
  Speaker 1: white guys, a lot of whom went to the same
• 36:47
  Speaker 1: high school, who were not who were there because they
• 36:49
  Speaker 1: were part of a club, who didn't get any particular training.
• 36:53
  Speaker 1: Who who who? Uh? Those are the refs, and they
• 36:57
  Speaker 1: were not checked, really checked in any way. We have
• 37:00
  Speaker 1: now a highly professional, highly trained workforce that has video
• 37:04
  Speaker 1: replay to go to to fix its some of its
• 37:06
  Speaker 1: mistakes when it makes mistakes, acknowledges it makes mistakes. Uh,
• 37:10
  Speaker 1: so we'll fix them. Has to review any era it
• 37:14
  Speaker 1: makes after the games, so they're you know, they're told
• 37:17
  Speaker 1: where you made mistakes. In addition, they've been studied every
• 37:20
  Speaker 1: which way for racial bias, for home court bias, for
• 37:23
  Speaker 1: all these and they've been informed about their various biases.
• 37:26
  Speaker 1: There's no way that referee is not more accurate than
• 37:30
  Speaker 1: the referee of twenty thirty years. The home court bias
• 37:32
  Speaker 1: was a real thing, much less so today than it
• 37:35
  Speaker 1: once was. That's a really good example that it's a
• 37:38
  Speaker 1: it's a good example of of why you want good
• 37:41
  Speaker 1: independent refs. It's a good example of how independence gets
• 37:45
  Speaker 1: undermined home court. A large part of home court advantage
• 37:49
  Speaker 1: was simply the ref's favoring the home team. And they
• 37:52
  Speaker 1: do that because if you don't, you get screamed at, right,
• 37:58
  Speaker 1: That's it's human behavior. They now do it much less.
• 38:03
  Speaker 1: There is less of a home court advantage in the NBA.
• 38:06
  Speaker 1: The home team is not as likely to win as
• 38:08
  Speaker 1: a as it used to be, and the rests are
• 38:12
  Speaker 1: mercilessly treated by the by the crowds. So, so let's
• 38:14
  Speaker 1: talk about another segment because I could talk about that.
• 38:17
  Speaker 1: We'll come back to basketball later. So you talk to
• 38:20
  Speaker 1: a woman who has an issue with her student loan.
• 38:23
  Speaker 1: She's a teacher, and she believes she's qualified to get
• 38:26
  Speaker 1: a waiver after ten years of the band. There's a program,
• 38:30
  Speaker 1: so Congress creative program in two thousand seven to relieve
• 38:33
  Speaker 1: the student debt of public servants, so public teachers, firemen, policeman, soldiers,
• 38:39
  Speaker 1: and UH and set up you know, the criteria for
• 38:42
  Speaker 1: qualifying for this program. And this is a woman who
• 38:46
  Speaker 1: did in fact qualify for the program. UH. Whose servicer
• 38:51
  Speaker 1: navigant Um, a publicly traded, publicly traded company whose interest
• 38:57
  Speaker 1: is keeping her in her student loan they get paid
• 38:59
  Speaker 1: for thing here there. Um made it verstly impossible for
• 39:04
  Speaker 1: her to get into the program. And and this program
• 39:06
  Speaker 1: that was created, people have applied to it and should
• 39:10
  Speaker 1: that they're probably another there's probably another another thirty thousand
• 39:14
  Speaker 1: who are eligible who never even heard of it. Nineties
• 39:17
  Speaker 1: six people have qualified for the program. And the broader
• 39:22
  Speaker 1: story was, this is a story about the Consumer Financial
• 39:25
  Speaker 1: Protection Bureau. It's it's like, who should referee this space
• 39:30
  Speaker 1: between big finance and ordinary Americans who are dealing with
• 39:34
  Speaker 1: big finance and this it seems to me very obvious
• 39:39
  Speaker 1: that this space needs a referee. In every other aspect
• 39:43
  Speaker 1: of our consumer lives as a referee, there's a consumer
• 39:46
  Speaker 1: UH Product Safety Commission. Your toaster doesn't blow up because
• 39:50
  Speaker 1: because because you've got people who are there who will
• 39:53
  Speaker 1: pull it off the market if it does. Um And
• 39:56
  Speaker 1: and the Consumer Financial Protection Bureau was created on the
• 40:00
  Speaker 1: back into the financial crisis to essentially be a referee.
• 40:03
  Speaker 1: And the story, I think the story of the Consumer
• 40:05
  Speaker 1: Financial Production Bureau is how hard it is to create
• 40:07
  Speaker 1: a referee in this world, even when it's obvious that
• 40:10
  Speaker 1: you need one. Because what's been happening the last two
• 40:12
  Speaker 1: years this Trump has been gutting it. Uh. And they
• 40:15
  Speaker 1: even tried to rename rename it the Bureau of something,
• 40:19
  Speaker 1: just like a multimillion dollar project to waste money doing that,
• 40:24
  Speaker 1: to make it less attractive to the consumer out there. Right,
• 40:28
  Speaker 1: you talk about that, it's it's yeah. And by the way,
• 40:31
  Speaker 1: the theme in all of this, which kind of is
• 40:34
  Speaker 1: a theme in in In the Big Short, it's a
• 40:37
  Speaker 1: theme in money Ball, It's certainly a theme and Flashboys,
• 40:41
  Speaker 1: is how unfair so much of this life is. And
• 40:45
  Speaker 1: here's a person who just wants to make it right.
• 40:48
  Speaker 1: That that is absolutely consistent throughout all of against the
• 40:53
  Speaker 1: Rules and so many of your books. Or do you disagree? No?
• 40:57
  Speaker 1: I agree? I agree in the curiously about the podcast
• 41:01
  Speaker 1: was You've got? It's about that. It's the story of
• 41:04
  Speaker 1: this character, the referee, who's under attack at a time
• 41:09
  Speaker 1: when when issues of fairness seemed to be more heated
• 41:13
  Speaker 1: than they've ever been in American life. I mean, maybe
• 41:15
  Speaker 1: not since since like a century ago, that the national politics,
• 41:19
  Speaker 1: the political campaigns that gained traction, the Sanders Bernie Sanders campaign,
• 41:24
  Speaker 1: of the Trump campaign. We're all all got their energy
• 41:27
  Speaker 1: from anger about unfairness. Uh. And that in this environment,
• 41:32
  Speaker 1: we're making it hard for referees. It's perplexing. I think
• 41:36
  Speaker 1: there's an answer, there's a reason, But what's thesis. My
• 41:40
  Speaker 1: pet thesis is referees have a harder time the more
• 41:43
  Speaker 1: unequal the environment there. Refereing is so if you have
• 41:47
  Speaker 1: two people who are just who are basically the same power,
• 41:50
  Speaker 1: money and so on, it's easy to ref that situation
• 41:54
  Speaker 1: compared to having Lebron James versus bench Warmer and and
• 41:59
  Speaker 1: I think it's a the pressure on One of the
• 42:01
  Speaker 1: sources of pressure on referees is is inequality in the society.
• 42:07
  Speaker 1: Another source of pressure is technology. I mean that that
• 42:11
  Speaker 1: when they screw up now it's all over the it's
• 42:14
  Speaker 1: all over the internet, and and people who are upset
• 42:17
  Speaker 1: by whatever the mistake was can gather together to cause
• 42:20
  Speaker 1: more trouble for the resure. Look what happened pre Supable
• 42:23
  Speaker 1: with the blown call. It's a really good example, right
• 42:27
  Speaker 1: that those kind of calls have probably happened all the
• 42:31
  Speaker 1: time in the NFL. But we've gotten the forces that
• 42:35
  Speaker 1: are there to assault the referee have gotten stronger and
• 42:38
  Speaker 1: stronger and stronger, and there's no there's no counterbalancing force.
• 42:42
  Speaker 1: To protect the referee. So you have the city of
• 42:45
  Speaker 1: New Orleans out on the streets during the Super Bowl
• 42:48
  Speaker 1: instead of watching the boycotting. That just wouldn't you know
• 42:51
  Speaker 1: if that if a similar sort of injustice had taken
• 42:54
  Speaker 1: place twenty years ago, it would have been people have
• 42:56
  Speaker 1: been angry for a moment and forgot about it. So
• 42:58
  Speaker 1: what was your experience like doing the podcast? Did you
• 43:01
  Speaker 1: enjoy it? Was it fun? Was it more work than
• 43:04
  Speaker 1: you expected? Shall we expect another seven episodes next year?
• 43:08
  Speaker 1: To tell us about that? That experience you had creating this?
• 43:12
  Speaker 1: It was? It was both more work and more fun
• 43:16
  Speaker 1: than I thought it was gonna big. I got into
• 43:18
  Speaker 1: it because my two friends Jacob Weisberg and Malcolm Gladwell,
• 43:21
  Speaker 1: who've created podcasting. Basically, it will be a lot of
• 43:27
  Speaker 1: fun and it's not that big. It's not that hard.
• 43:29
  Speaker 1: In fact, you know this, this crap that you and
• 43:31
  Speaker 1: I are doing, this is easy. This is I. I
• 43:34
  Speaker 1: live a a gentry, gentrified life. What you did that
• 43:38
  Speaker 1: serious production writing? Like there's you could tell a boatload
• 43:43
  Speaker 1: of work one a lot of work. We didn't do it. Um,
• 43:45
  Speaker 1: So I don't know if I'm going to do another season.
• 43:49
  Speaker 1: It will be. That decision will be driven entirely by
• 43:52
  Speaker 1: the reception to this one. If people were if I
• 43:55
  Speaker 1: can get to people in this medium, I'll try again.
• 44:00
  Speaker 1: But if I can't, pointless to try again, because it
• 44:03
  Speaker 1: really was a lot of work. So I could tell
• 44:05
  Speaker 1: you so far you have an audience of one like
• 44:07
  Speaker 1: I really enjoyed it. But to be fair, I listened
• 44:12
  Speaker 1: to it a few weeks after our conversation in Miami
• 44:15
  Speaker 1: in a I'm sorry, a few weeks after our conversation
• 44:18
  Speaker 1: in Hollywood, Florida, and in anticipation of this, so I
• 44:22
  Speaker 1: kind of crash course it. But I I really enjoyed it.
• 44:26
  Speaker 1: Your your pal Malcolm Gladwell is doing a revisionist history.
• 44:31
  Speaker 1: I've heard that he could not tell you it wasn't
• 44:34
  Speaker 1: a lot of work, because that sounds like a lot
• 44:37
  Speaker 1: of work. Also, you know, he said afterwards that maybe
• 44:39
  Speaker 1: he'd underestimated the amount of work involved. Right, I'm serious.
• 44:44
  Speaker 1: This is fun for me. This is easy I put
• 44:46
  Speaker 1: to I read all your books, I put some questions together.
• 44:49
  Speaker 1: You do all the heavy lifting. My job is to
• 44:51
  Speaker 1: just get out of your way creatively. It's an interesting
• 44:53
  Speaker 1: experience though that it's different from writing a book in
• 44:57
  Speaker 1: a bunch of ways, but and bunch of little ways,
• 45:00
  Speaker 1: and Biggs. One of the big ways is what when
• 45:03
  Speaker 1: you can hear the voices of the characters. When I
• 45:06
  Speaker 1: write the voice of the character, you know it's just
• 45:09
  Speaker 1: quoting them. You don't really hear the voice. You don't
• 45:12
  Speaker 1: hear that how what it sounds like. When you hear
• 45:15
  Speaker 1: what someone sounds like, you learn a lot. You know,
• 45:18
  Speaker 1: you hear the woman whose student loans have crushed her life.
• 45:22
  Speaker 1: Her teeth are falling out of falling her heads. You
• 45:24
  Speaker 1: have three little kids, and she's a public school teacher,
• 45:26
  Speaker 1: and she's grinding her teeth and they're falling out of
• 45:29
  Speaker 1: her head. And you don't think that person's a fraud.
• 45:35
  Speaker 1: You don't think that person is lazy. You don't think
• 45:37
  Speaker 1: that person is anything but in a sad state that
• 45:42
  Speaker 1: no one should be in. It's an unfair situation. But
• 45:45
  Speaker 1: in a way I could never get across in print
• 45:49
  Speaker 1: because you just wouldn't believe me, But you believe her.
• 45:53
  Speaker 1: So there's something about those voices that enable you to
• 45:58
  Speaker 1: cut through prejudice are preconceived ideas that it's harder to
• 46:03
  Speaker 1: do as an author. A lot of what I do
• 46:05
  Speaker 1: as an author in a funny way. Is is preached
• 46:07
  Speaker 1: to converted. I don't know how many minds I change
• 46:10
  Speaker 1: when I am writing. Um, I think I think this
• 46:15
  Speaker 1: form can change minds. Well, I have to tell you
• 46:18
  Speaker 1: I really enjoyed it. I hope you bring it back
• 46:20
  Speaker 1: for a second season. I am looking forward to hearing
• 46:23
  Speaker 1: the finished product. What I heard was like three quarters done. Um,
• 46:27
  Speaker 1: I can easily I can strongly recommend it. It It was
• 46:30
  Speaker 1: really interesting. Can you stick around a little bit. I
• 46:32
  Speaker 1: have some more questions for you. We have been speaking
• 46:35
  Speaker 1: to Michael Lewis. He is the author of you know
• 46:38
  Speaker 1: his books and his new upcoming podcast is Against the Rules.
• 46:43
  Speaker 1: If you enjoy this conversation, we'll be sure and come
• 46:45
  Speaker 1: back for the podcast extras, where we keep the tape
• 46:47
  Speaker 1: rolling and continue discussing all things Michael Lewis related. You
• 46:52
  Speaker 1: can find that at iTunes, Overcast, SoundCloud, Bloomberg, uh, Stitcher,
• 46:58
  Speaker 1: wherever your finer podcast sold. We love your comments, feedback
• 47:02
  Speaker 1: and suggestions right to us at m IB podcast at
• 47:06
  Speaker 1: Bloomberg dot net. Check out my daily column at Bloomberg
• 47:09
  Speaker 1: dot com slash Opinion. You can follow me on Twitter
• 47:13
  Speaker 1: at Rit Halts chant on my daily column at Bloomberg
• 47:16
  Speaker 1: dot com slash Opinion. Follow me on Twitter at Rit Halts.
• 47:21
  Speaker 1: I'm Barry Riholts. You're listening to Master's in Business. I'm
• 47:24
  Speaker 1: Bloomberg Radio. Welcome to the podcast, Michael, Thank you so
• 47:41
  Speaker 1: much for doing this. I have to share a funny
• 47:43
  Speaker 1: story with you, UM about the referee segment in UH
• 47:51
  Speaker 1: in against the Rules, UH the NBA referee segment, and
• 47:54
  Speaker 1: you're the perfect person to tell this. Here's here's a
• 47:57
  Speaker 1: little bit of NBA fish creating and behavioral economics all
• 48:02
  Speaker 1: wrapped up in one. So I'm a long suffering Nick fan.
• 48:05
  Speaker 1: During the Ewing Patrick Ewing, Charles Oakley, John Stark's Anthony
• 48:10
  Speaker 1: Mason Era, I lived a few blocks from the garden,
• 48:13
  Speaker 1: I had season tickets. I would go all the time.
• 48:15
  Speaker 1: The officiating made me crazy. You mentioned in the podcast
• 48:20
  Speaker 1: you mentioned Larry Bird. Really, Michael Jordan was the guy
• 48:23
  Speaker 1: who had his own set of rules unofficially, and and
• 48:27
  Speaker 1: he got away with everything. He was constantly tormenting the Knicks.
• 48:31
  Speaker 1: And then a few years later upcomes this monstrosity Shaquille O'Neal,
• 48:36
  Speaker 1: and he's Patrick Ewing is a big guy Shaquille O'Neill
• 48:40
  Speaker 1: is constantly bodying him, hitting him, fouling him, no calls,
• 48:44
  Speaker 1: and I just couldn't understand how completely unfair and terrible
• 48:49
  Speaker 1: the officiating is. Put a pin in that. A second,
• 48:52
  Speaker 1: A buddy of mine invites me to an n i
• 48:55
  Speaker 1: T Invitational game at the Garden. This next hear of
• 48:59
  Speaker 1: col Ledge players below the march madness. Uh, you know,
• 49:05
  Speaker 1: I'm not a crazy college basketball fan, but they're on
• 49:08
  Speaker 1: the floor. I'll go big. Joe Bessaker of Emerald Asset Management.
• 49:13
  Speaker 1: He's six five, he's three hundred pounds, and his team
• 49:16
  Speaker 1: is in in this this game. So we're sitting there courtside.
• 49:20
  Speaker 1: You can't miss him. He's a mountain of a man.
• 49:23
  Speaker 1: And I'm watching the game and I have no vested
• 49:26
  Speaker 1: interest in the outcome. I could not care less who
• 49:29
  Speaker 1: wins losers. But these are fantastic seats. The players are great.
• 49:33
  Speaker 1: I have a front row. Wow, this is awesome. I've
• 49:36
  Speaker 1: never seen a game. I was up in sections two
• 49:38
  Speaker 1: oh five normally courtside. Awesome, except for the fact that
• 49:42
  Speaker 1: Joe Besker screaming at the ref cons relf. You're walking, Joe.
• 49:47
  Speaker 1: That's one and a half stuff, that's a foul. What
• 49:49
  Speaker 1: do you do it? No, Joe, the ball is part
• 49:51
  Speaker 1: of the hand. It's that and every and he's pulling
• 49:53
  Speaker 1: his hair and and said, oh my god, this is
• 49:55
  Speaker 1: the worst. And all of a sudden, I just had this,
• 49:57
  Speaker 1: like fifteen years ago. I have a realization. You were
• 50:00
  Speaker 1: that guy. I was that guy. That's subjective lack of
• 50:05
  Speaker 1: ability to pull out my rooting for my team for
• 50:09
  Speaker 1: any objective ability to evaluate the game. So take your
• 50:13
  Speaker 1: son to a game with two other teams that he
• 50:15
  Speaker 1: doesn't care about and see what he says about the officiator.
• 50:18
  Speaker 1: That's exactly right. No one ever has a problem if
• 50:20
  Speaker 1: they don't have a root. If it's not your team,
• 50:22
  Speaker 1: you you know, why is it that the officials suck
• 50:25
  Speaker 1: with your team? But with the rest of the league
• 50:27
  Speaker 1: where your teams that involved? And and why isn't it
• 50:29
  Speaker 1: Both sides think the ref suck. Both sides think the
• 50:32
  Speaker 1: refs have screwed them in some way. That's not possible.
• 50:35
  Speaker 1: If somebody got screwed, the other person is the beneficiary
• 50:38
  Speaker 1: of it. Uh, it's zero sum one. What's think right,
• 50:41
  Speaker 1: It's it's amazing. So we think for everybody who's upset
• 50:44
  Speaker 1: with the ref. There'd be someone on the other side
• 50:45
  Speaker 1: who's happy with the ref. But that's not the way
• 50:47
  Speaker 1: it works. So as I listened to the first episode
• 50:50
  Speaker 1: of Against the Rules, all I can think of was
• 50:53
  Speaker 1: Big Joe Bessica screaming and me saying, you know, there's
• 50:56
  Speaker 1: a subjectivity and a lack of of ability to separate
• 51:00
  Speaker 1: yourself from your desires and goals. And so then throw
• 51:04
  Speaker 1: into that in addition to that, um the idea that
• 51:08
  Speaker 1: you're making the rest are actually getting better, that they're
• 51:10
  Speaker 1: actually making more accurate calls. Who's going to be furious
• 51:14
  Speaker 1: when that happens. People who are used to getting the
• 51:16
  Speaker 1: Bennett who used to getting calls. So the problem now
• 51:18
  Speaker 1: in the Superstars are furious because they're not getting as
• 51:22
  Speaker 1: many calls as they used to get and they expect them.
• 51:24
  Speaker 1: Uh So you describe in and you we we kinda
• 51:28
  Speaker 1: passed by this too quickly before you describe in the
• 51:31
  Speaker 1: podcast the Replay Center that every time there's a basketball game,
• 51:37
  Speaker 1: not too far from where the high frequency co Located
• 51:39
  Speaker 1: Traders servers are is a giant warehouse filled with hundreds
• 51:44
  Speaker 1: and hundreds of screens, hundred and ten television screens and
• 51:47
  Speaker 1: nothing on them but direct feeds fib optic. There's fiber
• 51:50
  Speaker 1: optic cable from that replay center in secaucas to the
• 51:53
  Speaker 1: twenty nine arenas in the NBA where they play, and
• 51:57
  Speaker 1: and the pictures on the screen are nothing but the
• 52:01
  Speaker 1: cameras the angles of the court. So you don't get
• 52:04
  Speaker 1: you don't get the scores, you don't you don't even
• 52:05
  Speaker 1: you don't even know who's no commercials, it's whatever is
• 52:09
  Speaker 1: happening in that arena. So if you went and dance
• 52:12
  Speaker 1: naked in the middle of the floor in the you
• 52:14
  Speaker 1: know on someday when they see Jersey, Uh, no matter
• 52:19
  Speaker 1: when you did. It's just constant. And so that center
• 52:22
  Speaker 1: was built to defend referees from this growing chorus of outrage.
• 52:28
  Speaker 1: Uh the reason, I mean fifteen million bucks it costs
• 52:33
  Speaker 1: to build that center. And they only changed two calls
• 52:34
  Speaker 1: a game, uh two calls. But it's to create it's
• 52:39
  Speaker 1: just a weapon that to try to defend the refs
• 52:43
  Speaker 1: from these growing attacks. That's that's what you need it
• 52:46
  Speaker 1: because if you don't have it, the refs. The refs
• 52:50
  Speaker 1: are doing a pretty good job anyway, and they only
• 52:53
  Speaker 1: turned changing two calls a game here. Um, but it's
• 52:57
  Speaker 1: it's it's like it's needed in order to assure you're
• 53:00
  Speaker 1: everybody that there that they know stuff you don't, that
• 53:04
  Speaker 1: someone objectively is looking at this over and over and
• 53:07
  Speaker 1: giving you the right answer. Because they don't. Nobody trusts
• 53:09
  Speaker 1: the rests anymore. So, So let's stay with basketball, and
• 53:12
  Speaker 1: the shift gears on you away from the podcast and
• 53:15
  Speaker 1: back towards the Undoing Project. You tell the story in
• 53:18
  Speaker 1: the beginning about essentially the Billy being of the NBA,
• 53:23
  Speaker 1: UM Daryl Daryl Morey Millam of the Houston Rockets. So
• 53:27
  Speaker 1: so again there's a theme that seems to run consistently
• 53:31
  Speaker 1: through your work, which is he was a really interesting
• 53:34
  Speaker 1: guy in a challenging job who wants to approach it
• 53:38
  Speaker 1: very very differently. Tell us a little bit about how
• 53:41
  Speaker 1: you discovered him and how that got worked into the
• 53:44
  Speaker 1: Undoing Project. So he got in touch with me after Moneyball,
• 53:48
  Speaker 1: came out to thank me because he thought the book
• 53:52
  Speaker 1: was responsible for him getting hired to run a basketball team. Really,
• 53:57
  Speaker 1: because the owner of the Rockets had read the book
• 53:59
  Speaker 1: and said, and nobody is using data in the NBA
• 54:03
  Speaker 1: as well as it could be used. Uh, and there
• 54:07
  Speaker 1: will be inefficiencies that we can exploit to And Daryl
• 54:10
  Speaker 1: was part of the business side of the Boston Celtics,
• 54:13
  Speaker 1: of the of the ownership group that had bought the
• 54:17
  Speaker 1: Boston Celtics, and I guess he the owner heard about
• 54:20
  Speaker 1: him and said, you know about these analytics, come here,
• 54:24
  Speaker 1: and he gave him the job, so Daryl, and so
• 54:27
  Speaker 1: from that moment, I started paying more attention to what
• 54:29
  Speaker 1: Daryl was doing in the Houston Rockets. And it's been
• 54:32
  Speaker 1: riven ng because it's for him, it's like one big
• 54:36
  Speaker 1: lab experiment. I mean, he's trying to win, but he's
• 54:38
  Speaker 1: also trying to learn. He's trying to just kind of
• 54:40
  Speaker 1: create new basketball knowledge. And where he came into the
• 54:44
  Speaker 1: Undoing Project was here was a person who was sort
• 54:49
  Speaker 1: of state of the art in in both both analytics
• 54:55
  Speaker 1: and in sort of being aware of the mistakes people
• 55:00
  Speaker 1: make when they're making judgments about basketball or basketball players. UM.
• 55:04
  Speaker 1: And then, by the way, the parallel back and forth
• 55:07
  Speaker 1: between UM money Ball and the Undoing Project, what some
• 55:12
  Speaker 1: of the scouts said in in money Ball is he
• 55:16
  Speaker 1: doesn't have a player's body. He's got an ugly girlfriend
• 55:19
  Speaker 1: like the cliches, and and prejudices were absurd. But there
• 55:24
  Speaker 1: are different set of cliches with the basketball players, right
• 55:27
  Speaker 1: and so, but it interested in me. Was here as
• 55:30
  Speaker 1: a person. He'd been running by the time I walked
• 55:31
  Speaker 1: into his life to write that chapter in the Undoing Project.
• 55:34
  Speaker 1: I mean, he'd been on the job for seven or
• 55:36
  Speaker 1: eight years, and he had purged the operation of the
• 55:41
  Speaker 1: kind of dumb scouting approach. To give us some some
• 55:44
  Speaker 1: example and well, I mean he nicknames, yeah, we no
• 55:48
  Speaker 1: so so. But but even in his scouting, even with
• 55:51
  Speaker 1: all smart people he had around the table, they had
• 55:54
  Speaker 1: an incredible difficulty keeping the mistakes that the human makes
• 56:01
  Speaker 1: when it's making judgments out of the room, and he
• 56:04
  Speaker 1: had to be They built they would they built in
• 56:07
  Speaker 1: kind of rules to try to guard against errors and judgments.
• 56:10
  Speaker 1: So for example, they made when they saw when they
• 56:13
  Speaker 1: made a mistake, he would analyze the mistake. And when
• 56:15
  Speaker 1: they made a mistake, they had opportunity to draft uh
• 56:19
  Speaker 1: Mark Gasol, Paul Gasol's little brother of future NBA All
• 56:22
  Speaker 1: Star um and one of the scouts pulled up a
• 56:26
  Speaker 1: picture of Gasol on the Internet and he was without
• 56:29
  Speaker 1: a shirt on and he had man boobs fleshy flabby boobs,
• 56:34
  Speaker 1: and the scout gave whenever he was referred to. From
• 56:37
  Speaker 1: then on, he was referred to as man Boobs, and
• 56:39
  Speaker 1: they didn't draft him. And you think that's why he thinks,
• 56:43
  Speaker 1: there's no question in the fact that they gave him
• 56:45
  Speaker 1: a nickname distorted everybody's judgment. From the moment he was
• 56:47
  Speaker 1: called man boobs, there was no way they were going
• 56:49
  Speaker 1: to draft. So he banned nicknames, said, no nicknames, it
• 56:53
  Speaker 1: distorts our judgment of the person. Another example, he um
• 56:57
  Speaker 1: he noticed that when UH scouts were arguing for a player,
• 57:02
  Speaker 1: they draw analogies. They'd say, he looks like Michael Jordan's
• 57:06
  Speaker 1: he reminds me of magic, or you know, he looks
• 57:09
  Speaker 1: like Shaquille O'Neal, or whoever it is. Invariably, he noticed,
• 57:15
  Speaker 1: Um the analogies were within the same race. Black guys
• 57:20
  Speaker 1: always reminded people of black guys, and white guys arts
• 57:22
  Speaker 1: mander people of white guys, and UH nobody thought, oh,
• 57:27
  Speaker 1: a black eye reminded him of Larry Bird, or a
• 57:29
  Speaker 1: white guy reminded of the Magic, and he thought that,
• 57:34
  Speaker 1: he said, he banned right analogy analogies within race, so
• 57:39
  Speaker 1: you can compare a player to another player and say, oh,
• 57:41
  Speaker 1: he plays a lot like X if the guy is
• 57:43
  Speaker 1: a different race. And he said, at that moment, it
• 57:46
  Speaker 1: just stopped. It just stopped. So I actually love my
• 57:50
  Speaker 1: favorite part of the genesis story of the book came
• 57:54
  Speaker 1: about because you you write the you right? Um? Was
• 58:00
  Speaker 1: it money Ball or the Big Short? That Taylor and
• 58:03
  Speaker 1: Sunstein right and say, hey, you guys love there's Moneyball.
• 58:06
  Speaker 1: So they they that I had written Moneyball, and you know,
• 58:09
  Speaker 1: I knew. I thought I knew what that book was about.
• 58:11
  Speaker 1: And it was about this this front office. It found
• 58:16
  Speaker 1: using data better ways to value baseball players and baseball
• 58:19
  Speaker 1: strategies and reveal that markets make huge misjudgments when they
• 58:23
  Speaker 1: value people. When the book came out, UH, Richard Thaylor
• 58:27
  Speaker 1: and Cass Sunstein Um wrote a review in The New
• 58:30
  Speaker 1: Republic basically saying that I didn't know what my own
• 58:32
  Speaker 1: book was about, and that what it really was was
• 58:35
  Speaker 1: a case study and of Conomen and diverse Key's work.
• 58:39
  Speaker 1: And I went who, I didn't know who they were? Uh,
• 58:42
  Speaker 1: And this was Danny Kneman and Amos Diverseky and Kneman
• 58:45
  Speaker 1: had won the Nobel Prize in Economics the year I
• 58:47
  Speaker 1: wrote Moneyball. Um, you have to be alive to win
• 58:50
  Speaker 1: the prize to Versky had passed away or that's right,
• 58:53
  Speaker 1: and uh and you, by the way, so I'm an
• 58:56
  Speaker 1: interject here. You were uniquely situated to write this book
• 59:00
  Speaker 1: for a number of reasons. And you you you've pushed
• 59:05
  Speaker 1: back about this, but you're wrong. And I want to
• 59:07
  Speaker 1: get you to project because first of all, you had
• 59:13
  Speaker 1: written money Ball, which was effectively case study in their works,
• 59:17
  Speaker 1: sort of like because what they had done is classify
• 59:20
  Speaker 1: all the mistakes that the Oakland A's were exploiting. But
• 59:23
  Speaker 1: but more importantly, you had a relationship with Kneman or
• 59:28
  Speaker 1: at least his family that you were barely even so
• 59:32
  Speaker 1: in some ways, before I write a book, I do
• 59:37
  Speaker 1: like to tell myself a story about why I'm the
• 59:39
  Speaker 1: one who should be writing this book. And usually the
• 59:42
  Speaker 1: story holds up pretty well in my mind. In this case,
• 59:45
  Speaker 1: the story I told before the undoing project was Yes,
• 59:49
  Speaker 1: it's got a connection to Moneyball. Yes, I know the
• 59:52
  Speaker 1: Tversky family. Yes, Danny Knoman lives up the hill from
• 59:56
  Speaker 1: me in Berkeley. But where I hit up, where I
• 1:00:00
  Speaker 1: where I hit a roadblock, was No, I don't know
• 1:00:03
  Speaker 1: a thing about the field. Of psychology and um and no,
• 1:00:08
  Speaker 1: I don't know a thing about the origins of the
• 1:00:11
  Speaker 1: state of Israel and and the Hebrew University department in
• 1:00:15
  Speaker 1: which all of this stuff got cooked up. And now
• 1:00:18
  Speaker 1: with most things I read, most books, I mean, part
• 1:00:22
  Speaker 1: of the joy writing the book is having to learn
• 1:00:23
  Speaker 1: new things. So that's not you know, of itself, that's
• 1:00:27
  Speaker 1: not the problem. The big problem was I did have
• 1:00:29
  Speaker 1: a sense, with these two characters condom in Diversity that
• 1:00:32
  Speaker 1: I was I was writing about people who were so
• 1:00:34
  Speaker 1: much smarter than I was, that I was never going
• 1:00:37
  Speaker 1: to be able to get my mind around them. That
• 1:00:39
  Speaker 1: that that was that it was gonna always feel like
• 1:00:41
  Speaker 1: the B student writing about the A student. And that
• 1:00:45
  Speaker 1: caused me to hesitate for years writing the book. Had
• 1:00:50
  Speaker 1: I spent I mean normally from the moment I just
• 1:00:53
  Speaker 1: get a get like a Jones for a subject, to
• 1:00:56
  Speaker 1: the moment I got a book out, it's like three years,
• 1:00:59
  Speaker 1: and in this case it was nine, and I shoved
• 1:01:03
  Speaker 1: it aside and said I wasn't going to do it
• 1:01:05
  Speaker 1: four or five times. So so what made you finally
• 1:01:07
  Speaker 1: pull the trigger and say? People started to die? The
• 1:01:11
  Speaker 1: people who were helping, the people who were helping me
• 1:01:13
  Speaker 1: with the book. I mean, their colleagues there. The story
• 1:01:15
  Speaker 1: was dying, and I looked around and I asked myself, well,
• 1:01:20
  Speaker 1: who else is going to write this? And it became
• 1:01:22
  Speaker 1: quite clear no one else is gonna write it. And
• 1:01:24
  Speaker 1: it's effectively a love story, isn't it is? It's a
• 1:01:26
  Speaker 1: love story between the It's a platonic love story. There
• 1:01:32
  Speaker 1: were these two guys, each of who each of them
• 1:01:35
  Speaker 1: is a great literary character, and together it's this combustible,
• 1:01:38
  Speaker 1: wonderful force, and it's it's about that relationship and how
• 1:01:43
  Speaker 1: that relationship, you know. I framed the book in my
• 1:01:45
  Speaker 1: mind lots of different ways and lots of different moments.
• 1:01:48
  Speaker 1: But one of the ways I framed it for a
• 1:01:49
  Speaker 1: while was it's just about the power of collaboration, to
• 1:01:52
  Speaker 1: which two minds can do together when they really fit together.
• 1:01:54
  Speaker 1: It's just so different from what mind one mind will
• 1:01:57
  Speaker 1: do on its own. One plus one is three. Was
• 1:02:00
  Speaker 1: that feeling, you know, And and you really bring it
• 1:02:02
  Speaker 1: so so richly to life, the story of them being
• 1:02:05
  Speaker 1: behind closed doors and just peals of laughter hours and
• 1:02:09
  Speaker 1: hours at a time, and everybody wondering what the hell
• 1:02:11
  Speaker 1: is going on? And also but it's a Israel makes
• 1:02:16
  Speaker 1: academics much more interesting than most other places because the
• 1:02:20
  Speaker 1: academics are forced to interact with the society. Everybody's gonna
• 1:02:23
  Speaker 1: be useful, everybody's got to be in the army. So
• 1:02:25
  Speaker 1: they were drawing there their insights from rich interactions with
• 1:02:31
  Speaker 1: the world around them, and that that helped bring I mean,
• 1:02:35
  Speaker 1: what was would otherwise be a kind of a dusty
• 1:02:37
  Speaker 1: academic story to life. Well, the whole thing with Tversky
• 1:02:41
  Speaker 1: and the fighter pilots and the reversion to the mean
• 1:02:45
  Speaker 1: like too, there's there's still a giant leap that gets
• 1:02:48
  Speaker 1: made from when you're yelling at a um enlisted or
• 1:02:53
  Speaker 1: pilot or what have you. Well, if they're underperforming, they
• 1:02:56
  Speaker 1: will eventually mean revert, and if they're overperforming, they'll mean reverts.
• 1:03:00
  Speaker 1: So praise doesn't help, and yelling at them seems to work. Yes,
• 1:03:04
  Speaker 1: that that this is conomans insight, that that life has
• 1:03:08
  Speaker 1: this horrible feedback loop. This lesson. It teaches us that
• 1:03:12
  Speaker 1: we get response to our punishment but not to our praise,
• 1:03:16
  Speaker 1: because because you're praising someone when they're naturally performing better
• 1:03:19
  Speaker 1: than usual, and you're punishing them or criticized them when
• 1:03:23
  Speaker 1: they're naturally performing worse than usual, and mean reversion will
• 1:03:26
  Speaker 1: make will tend to make them better after you've criticized them,
• 1:03:30
  Speaker 1: and tend to make them worse after you've praised them.
• 1:03:32
  Speaker 1: So so I took, I actually took. When I learned
• 1:03:35
  Speaker 1: that from him, I changed the way I coached little kids.
• 1:03:39
  Speaker 1: I basically stopped. I stopped with a criticism except except
• 1:03:43
  Speaker 1: when it was really lathered in and when it almost
• 1:03:47
  Speaker 1: sounded like praise. And what was the result when you
• 1:03:49
  Speaker 1: as much of the happier environment? Sure anything I said
• 1:03:52
  Speaker 1: ever had any effect, but everybody was happier. That that
• 1:03:55
  Speaker 1: makes That makes a whole lot of sense. Let last
• 1:03:57
  Speaker 1: question on Knomen and Tversky. Um, they describe the role
• 1:04:03
  Speaker 1: of luck in life, and they really emphasize it a lot.
• 1:04:07
  Speaker 1: Tell us a little bit about about that part of um,
• 1:04:12
  Speaker 1: their beliefs, their writings. How important is luck to who
• 1:04:16
  Speaker 1: we are and how successful we become? You know? They
• 1:04:20
  Speaker 1: they I think the way they would put it as
• 1:04:23
  Speaker 1: that people people have extraordinary pattern recognition abilities, and they
• 1:04:28
  Speaker 1: see patterns even in randomness. Uh So they don't They're
• 1:04:33
  Speaker 1: not good at seeing randomness and understanding what randomness means. Um.
• 1:04:39
  Speaker 1: I mean you saw this with the that was that
• 1:04:42
  Speaker 1: was sort of one of the themes that ran through
• 1:04:46
  Speaker 1: the Moneyball story that one of the things that Oakland
• 1:04:48
  Speaker 1: A's front office was able to do was exploit other
• 1:04:51
  Speaker 1: people's misunderstanding of randomness. That if a picture pitched a
• 1:04:56
  Speaker 1: few innings and pitched them really well, uh, they start
• 1:04:59
  Speaker 1: to get over valued a very small sample with lots
• 1:05:03
  Speaker 1: of randomness baked into it, um, and they could sell
• 1:05:06
  Speaker 1: them from more than he was worth. Conversely, someone who
• 1:05:09
  Speaker 1: had a short bad streak would start to get undervalued. UM.
• 1:05:15
  Speaker 1: But the so so that the general idea that that
• 1:05:22
  Speaker 1: Diversky econom and do play with a bit is is
• 1:05:25
  Speaker 1: it people are mistaking a random event for a meaningful
• 1:05:30
  Speaker 1: event and vice versa. Um. The broader thing that interests
• 1:05:35
  Speaker 1: me is the way people dismiss it in their lives.
• 1:05:38
  Speaker 1: I mean, there's so much luck in life, and people
• 1:05:42
  Speaker 1: after the fact are really good at telling a story
• 1:05:45
  Speaker 1: about how it was inevitably so um. Kind of. Traversky
• 1:05:50
  Speaker 1: had this wonderful line that, um, that life isn't a point,
• 1:05:54
  Speaker 1: it's a cloud of possibilities, and that that at any
• 1:05:58
  Speaker 1: given time, there's anything would have happened and just because
• 1:06:02
  Speaker 1: it did happen didn't mean it had to have happened.
• 1:06:04
  Speaker 1: So we we we we we're sort of like deterministic
• 1:06:07
  Speaker 1: machines in a probabilistic world. There's there are certainly elements
• 1:06:11
  Speaker 1: of that, but there's also a whole lot of ego
• 1:06:13
  Speaker 1: that if it's luck, then it wasn't my genius and
• 1:06:16
  Speaker 1: my hard work and I made this happen. If you're
• 1:06:18
  Speaker 1: gonna say it's lucky, you're taking my accomplishment away from me.
• 1:06:22
  Speaker 1: Or so some people seem to behave absolutely I mean
• 1:06:26
  Speaker 1: it's a really flattering successful people are people who feel successful,
• 1:06:31
  Speaker 1: don't are I think, probably less likely to acknowledge the
• 1:06:34
  Speaker 1: role of chance in their lives. Right. Uh, I don't
• 1:06:38
  Speaker 1: completely get this because it's I'm not sure it actually
• 1:06:41
  Speaker 1: leads to happiness to ignore the role of chance in
• 1:06:45
  Speaker 1: your life. I think that I think that a great
• 1:06:48
  Speaker 1: source of happiness is gratitude, and if you just think
• 1:06:51
  Speaker 1: you did it all yourself, you have nothing to be
• 1:06:53
  Speaker 1: grateful for. Uh, it's um And I think like seeing
• 1:06:58
  Speaker 1: just how many different ways the ball could have bounced
• 1:07:02
  Speaker 1: does leave you more grateful when it bounces your way,
• 1:07:06
  Speaker 1: and that leads to better happiness. I can tell you
• 1:07:08
  Speaker 1: from experience sitting in this chair, I'm shocked at the
• 1:07:12
  Speaker 1: number of really successful people have brought up the concept of,
• 1:07:16
  Speaker 1: you know, you gotta get lucky. Sometimes you get you
• 1:07:19
  Speaker 1: get a lucky bounce or a good call, and it's
• 1:07:22
  Speaker 1: life changing. And it's nice to see certain people recognize that.
• 1:07:27
  Speaker 1: And the converse is also true. Unluckiness can have you know,
• 1:07:31
  Speaker 1: oh died in fact for sure. So let me ask
• 1:07:35
  Speaker 1: you about a book you did not write. Right. You
• 1:07:38
  Speaker 1: did this giant article on long term capital management and
• 1:07:42
  Speaker 1: with all due respect to Roger Lowenstein When Genius Failed,
• 1:07:46
  Speaker 1: which is one of my favorite books. You that article
• 1:07:50
  Speaker 1: you did for I don't remember who was the New
• 1:07:52
  Speaker 1: York Times magazine it well, okay, that was a monster piece.
• 1:07:55
  Speaker 1: I I very specifically remember that that could have easily
• 1:08:00
  Speaker 1: you become that sort of book. What Why did you
• 1:08:03
  Speaker 1: not go down that rabbit ale? Um? I think I
• 1:08:09
  Speaker 1: had an aversion of going back to Wall Street from
• 1:08:12
  Speaker 1: for yet another book at that time. Was it too soon?
• 1:08:15
  Speaker 1: It was too soon? And um I also felt like
• 1:08:19
  Speaker 1: a magazine article. In a magazine article, I had said
• 1:08:22
  Speaker 1: everything I really wanted to say about it. Uh, And
• 1:08:25
  Speaker 1: didn't have that much more interest. You know, often I
• 1:08:29
  Speaker 1: start out, almost always the book start out as magazine pieces.
• 1:08:33
  Speaker 1: You don't think, oh, I'm going to write a book
• 1:08:34
  Speaker 1: about that. You you think, oh, that's interesting, or write
• 1:08:36
  Speaker 1: a little something about it, and then it gets even
• 1:08:38
  Speaker 1: more interesting. So it's three words mushrooms, and all all
• 1:08:41
  Speaker 1: of a sudden you realize I've written ten thousand words,
• 1:08:43
  Speaker 1: but really I wish I could write eighty. And that
• 1:08:45
  Speaker 1: didn't happen with that subject. I had already written a
• 1:08:48
  Speaker 1: bunch of it in Liars Poker, the stuff that might
• 1:08:52
  Speaker 1: have fleshed it out into a book, And it was
• 1:08:55
  Speaker 1: about this very narrow, peculiar thing that happened to those
• 1:08:58
  Speaker 1: guys at Long Term Capital, and I just thought it
• 1:09:01
  Speaker 1: would be useful to try to explain it to a
• 1:09:03
  Speaker 1: lay audience in a way that it wasn't being explained.
• 1:09:06
  Speaker 1: And a lot of those players from Solomon, right, they
• 1:09:08
  Speaker 1: were my colleagues. I knew them quite well. Um, I
• 1:09:13
  Speaker 1: mean really, there were people I talked to you every day.
• 1:09:15
  Speaker 1: So yes, uh, if I had one of the alternative
• 1:09:19
  Speaker 1: paths in my life, if I had stayed at Solomon
• 1:09:21
  Speaker 1: Brothers and managed to remain interested and actually continue to
• 1:09:25
  Speaker 1: do well. I'd have been there. I'd have been there.
• 1:09:28
  Speaker 1: I wouldn't have been that one would ever let me
• 1:09:29
  Speaker 1: trade anything, but I would have been I would have
• 1:09:32
  Speaker 1: been their sales arm uh, because my that's where my
• 1:09:35
  Speaker 1: boss was. Um, that's amazing. That's what you could have
• 1:09:38
  Speaker 1: been ltcms uh institutional sales right. Yes, that's that's a
• 1:09:43
  Speaker 1: different career path, different career path, and it would have been.
• 1:09:46
  Speaker 1: It would have been, you know, as interesting a life
• 1:09:49
  Speaker 1: in the financial sector as you could have had, very
• 1:09:53
  Speaker 1: lucrative until it all went to zoo and then all
• 1:09:54
  Speaker 1: of a sudden. Yes, they didn't make the turn at
• 1:09:58
  Speaker 1: the end. They sent the record on the straighta way,
• 1:10:00
  Speaker 1: but they So I have a question for you. My
• 1:10:02
  Speaker 1: question for you is, I mean, so I'm now and
• 1:10:05
  Speaker 1: I'm just an interloper in on Wall Street. I when
• 1:10:07
  Speaker 1: I I dip back in every now and then when
• 1:10:10
  Speaker 1: it seems to be a story to write, and then
• 1:10:12
  Speaker 1: got to educate myself all over again about what's going
• 1:10:15
  Speaker 1: on because they don't follow it that closely day to day.
• 1:10:18
  Speaker 1: If you were to dropped me anywhere now into the
• 1:10:21
  Speaker 1: financial sector to write stories, where would you drop me? Wow,
• 1:10:25
  Speaker 1: that's a really interesting question, Um, stories that you're interested in,
• 1:10:29
  Speaker 1: Our stories that you're interested in. Well, first, you know,
• 1:10:33
  Speaker 1: I'm a giant behavioral finance junkie, so you've already covered
• 1:10:37
  Speaker 1: that space and in two or three books. UM. So
• 1:10:40
  Speaker 1: there's three or four things that are are kind of intriguing.
• 1:10:43
  Speaker 1: Let me let me take them off. I'm fascinated by
• 1:10:46
  Speaker 1: people who have a fundamental flaw in their model of
• 1:10:50
  Speaker 1: the universe, and for whatever reason, they become gold blow bugs,
• 1:10:55
  Speaker 1: they become bitcoin fanatics, they become short sellers. Not that
• 1:11:00
  Speaker 1: each of those groups are delusional, um as a as
• 1:11:05
  Speaker 1: any individual can be rational and like gold or rational
• 1:11:08
  Speaker 1: and by bitcoin or whatever. But but these like little society,
• 1:11:13
  Speaker 1: these little communities grow up around these concepts that like,
• 1:11:19
  Speaker 1: if you think about bitcoin as no government and we're
• 1:11:22
  Speaker 1: gonna well, when the government really goes to hell and
• 1:11:25
  Speaker 1: there's no electricity and running water, good luck getting that
• 1:11:28
  Speaker 1: little thumb drive to buy you you know the the
• 1:11:31
  Speaker 1: you know what I mean, the there's no the rationality
• 1:11:35
  Speaker 1: sort of fades at a certain point. So that's one
• 1:11:37
  Speaker 1: area I'm fascinated about. It's um And there was a
• 1:11:40
  Speaker 1: book called The Heretics written by an Australian and it
• 1:11:44
  Speaker 1: had a different name in the US. I'm drawing a
• 1:11:46
  Speaker 1: blank on it. But all these people flat earthers and
• 1:11:50
  Speaker 1: and Holocaust deniers and like just you know, really crazy.
• 1:11:56
  Speaker 1: Turns out they're not crazy. There's just something wrong with
• 1:11:58
  Speaker 1: their basic model of the universe, and everything built on
• 1:12:01
  Speaker 1: top of it is jana that's gonna collapse. So that's
• 1:12:05
  Speaker 1: one area. Um. The other area that's really fascinating is
• 1:12:12
  Speaker 1: so there's parts of Wall Street that's incredibly successful, the
• 1:12:15
  Speaker 1: rise of indexing, the rise of ETFs UM, the move
• 1:12:19
  Speaker 1: towards lower cost, and everybody in those spaces are petrified
• 1:12:24
  Speaker 1: that they're going to be made obsolete, even though they're
• 1:12:28
  Speaker 1: the drivers of this. So we're replaced by robots. Yes
• 1:12:33
  Speaker 1: and no maybe, I mean there's this I'll give you
• 1:12:36
  Speaker 1: another thing, and you you I don't understand that. Why
• 1:12:39
  Speaker 1: if it's if indexing is obviously a huge success, etf
• 1:12:43
  Speaker 1: a huge stess, why what are they worried about? So
• 1:12:46
  Speaker 1: so if we just wiped out or or if we
• 1:12:49
  Speaker 1: fill in the blank indexers, passive e t f UM manufacturers,
• 1:12:55
  Speaker 1: low cost advocates, if we just completely disrupted the old guard,
• 1:13:00
  Speaker 1: then clearly the acyclical, who's going to come along and
• 1:13:03
  Speaker 1: disrupt us? And then the third area that I would
• 1:13:06
  Speaker 1: drop you into the issue of income inequality and wealth
• 1:13:11
  Speaker 1: inequality that hearkens back to the pre nine crash days,
• 1:13:18
  Speaker 1: is very much tied into what you you're writing about
• 1:13:21
  Speaker 1: fairness and what you're seeing in about government. And we're
• 1:13:25
  Speaker 1: in an alternative timeline. We've kind of jumped our timeline.
• 1:13:28
  Speaker 1: We're on a different track. And like you, if you
• 1:13:32
  Speaker 1: were a Star Trek fan, you remember the bearded Spock
• 1:13:35
  Speaker 1: in the Alternative University. So I kind of feel that
• 1:13:39
  Speaker 1: we've jumped the timeline and this is in our universe.
• 1:13:41
  Speaker 1: We we need to get back to the timeline where
• 1:13:45
  Speaker 1: the United States is the country that defeated the Nazis,
• 1:13:48
  Speaker 1: and that we haven't demonized government, and that my goddamn
• 1:13:52
  Speaker 1: street can be isn't filled with potholes because Grover Norquist
• 1:13:56
  Speaker 1: hasn't demonized the idea of how dare government pave the roads?
• 1:14:01
  Speaker 1: What are you doing? It's confiscation wanting to have an infrastructure,
• 1:14:04
  Speaker 1: how dare you? Like I think everybody should take blown
• 1:14:08
  Speaker 1: out tires and broken axles and dump them on Grover
• 1:14:11
  Speaker 1: Norquist's front lawn, so it looks like a junkyard a
• 1:14:14
  Speaker 1: thousand feet high of broken car parts. And but hold
• 1:14:19
  Speaker 1: hold that pet peeve aside the the income inequality, the
• 1:14:22
  Speaker 1: wealthy inequality. There's this fantastic chart I'll email it to
• 1:14:26
  Speaker 1: you that you ask people how badly they think the
• 1:14:31
  Speaker 1: wealth distribution is and how much does the top of
• 1:14:35
  Speaker 1: the top ten percent, of the top one percent, top
• 1:14:38
  Speaker 1: tenth of one percent owned relative And they lay out
• 1:14:41
  Speaker 1: this this picture of this really unequal society, and they're
• 1:14:45
  Speaker 1: off by like a factor of a hundred. It's much
• 1:14:48
  Speaker 1: worse than people really believe. It's astonishing if people knew
• 1:14:52
  Speaker 1: how bad it was, right, And I would drop you
• 1:14:55
  Speaker 1: if if you're gonna say, tell me what next book
• 1:14:57
  Speaker 1: to write. But I don't know if that's so much
• 1:15:00
  Speaker 1: Michael Lewis book as something that would color a Michael
• 1:15:03
  Speaker 1: Lewis book. That's right, that's right. No, I think I'm
• 1:15:07
  Speaker 1: the whole. I think inequality is going to be the
• 1:15:10
  Speaker 1: backdrop of the next thing I do. I haven't figure
• 1:15:13
  Speaker 1: out what it is, but it does seem the subject
• 1:15:15
  Speaker 1: of our time. It does seem, it does seem a
• 1:15:18
  Speaker 1: subject that infects everything else. You name the topic climate
• 1:15:22
  Speaker 1: change the books at the moment, uh that our ability
• 1:15:27
  Speaker 1: to grapple with it is hamstrung by inequality. Uh now,
• 1:15:31
  Speaker 1: now drove the Venn diagram of inequality and then drove
• 1:15:35
  Speaker 1: the Venn diagram of all the cognitive eras and behavioral
• 1:15:39
  Speaker 1: issues that condamin In Tavarsky you have written about. And
• 1:15:44
  Speaker 1: maybe you can explain to me why people don't understand
• 1:15:47
  Speaker 1: what's in their own best interest, why they consistently are
• 1:15:52
  Speaker 1: bamboozled by politicians. And I'm not picking one side of
• 1:15:55
  Speaker 1: the other, but it's pretty clear that most of America,
• 1:15:58
  Speaker 1: or at least tansent hand, some millions of Americans every
• 1:16:02
  Speaker 1: election vote against their own interests. There an economic their
• 1:16:05
  Speaker 1: own economic interests, right and and so what what matters more?
• 1:16:09
  Speaker 1: Some gen d up you know, social divisional issue that
• 1:16:13
  Speaker 1: so if so, my issue tribal identity matters a lot
• 1:16:19
  Speaker 1: I gotta do is go to SEC football game, for sure.
• 1:16:23
  Speaker 1: But but there's a difference between going with a football
• 1:16:26
  Speaker 1: game and saying, look at West Virginia and the cold people,
• 1:16:30
  Speaker 1: we're gonna bring back Cole No, you're not that ship
• 1:16:34
  Speaker 1: as sale. Wouldn't you be better off if we brought
• 1:16:36
  Speaker 1: you solar jobs or some other retraining or is everybody
• 1:16:41
  Speaker 1: is p t bottom right? Is everybody a soccer? Enough
• 1:16:45
  Speaker 1: enough far enough far that that's quite shocking. Now we're
• 1:16:49
  Speaker 1: getting into depressing. So so, but there is a giant
• 1:16:54
  Speaker 1: overlap between your interest and behavior stuff and unfairness and
• 1:17:00
  Speaker 1: how it manifests itself in society. So what can be
• 1:17:02
  Speaker 1: done to fix that? I'm that that's the next book.
• 1:17:05
  Speaker 1: Go Mike, go fix it? Right, go fix it? Can
• 1:17:08
  Speaker 1: you fix us? We need some help? Don alright? So
• 1:17:11
  Speaker 1: that'll be uh in So all right, now that we've
• 1:17:15
  Speaker 1: depressed the hell out of everybody, let's get to our
• 1:17:18
  Speaker 1: speed round, our favorite um that you refuse to I
• 1:17:22
  Speaker 1: didn't want to see the question. You wanted to be
• 1:17:23
  Speaker 1: kept objective, objective. I used to want to have to
• 1:17:26
  Speaker 1: steal surprise. All right? What was the first car you have?
• 1:17:30
  Speaker 1: Our own? Make earin model? It was a nineteen seventy
• 1:17:35
  Speaker 1: five c J five jeep right yellow. Interesting? Um, So,
• 1:17:42
  Speaker 1: I don't know if you can answer this question. What's
• 1:17:44
  Speaker 1: the most important thing we don't know about you? I
• 1:17:46
  Speaker 1: kind of feel like you're an open book. What don't
• 1:17:49
  Speaker 1: we know about you? I am? I am an insane
• 1:17:54
  Speaker 1: sports dad. Yeah, you kind of wrote a book about that. No, no, no,
• 1:17:58
  Speaker 1: I didn't really write about that. No, no, you kept
• 1:18:01
  Speaker 1: a lot out of that. My peak insanity is when
• 1:18:04
  Speaker 1: I'm watching my kids play sports. That is peak insanity.
• 1:18:07
  Speaker 1: And it's the refs make you crazy. No, it's not
• 1:18:09
  Speaker 1: the ref not no, no, no, it's not the refs.
• 1:18:11
  Speaker 1: It's my kids. You want them to do better. Yes,
• 1:18:16
  Speaker 1: I'm just too invested, so so I try to hide it,
• 1:18:19
  Speaker 1: try to hide it. I'm not I'm not doing anything embarrassing,
• 1:18:22
  Speaker 1: but I am pacing. I'll walk, I have my fitbit.
• 1:18:25
  Speaker 1: I'll do twenty thousand steps in the outfield during a
• 1:18:27
  Speaker 1: football game because I can't be near anybody. It's peak insanity. Really,
• 1:18:32
  Speaker 1: that's quite that's quite fascinating. Um, your mentors who mentored
• 1:18:36
  Speaker 1: the way you thought about finance writing. So the people
• 1:18:42
  Speaker 1: who were most influential were when I was a little kid.
• 1:18:44
  Speaker 1: My dad easily is the most and then after that
• 1:18:48
  Speaker 1: the baseball coach I wrote about, Billy Fitzgerald just kind
• 1:18:51
  Speaker 1: of like spirit how you approach life. When when I
• 1:18:54
  Speaker 1: finally got to putting words on a page for a living,
• 1:18:57
  Speaker 1: the first editor who really got inside my head was
• 1:19:00
  Speaker 1: Michael Kinsley, the editor of the New Really yes, uh,
• 1:19:04
  Speaker 1: and it was. And the message he delivered was a
• 1:19:06
  Speaker 1: really simple message, is like, what are you trying to say?
• 1:19:09
  Speaker 1: Like kind of get rid of the fancy stuff? Does
• 1:19:11
  Speaker 1: tell me what is it? Does that make any sense? Uh?
• 1:19:15
  Speaker 1: And just he taught me a certain ruthlessness towards my
• 1:19:18
  Speaker 1: own pros. That's interesting. Tell us how you invest your
• 1:19:22
  Speaker 1: own money, very very simply. I mean, I do think
• 1:19:26
  Speaker 1: that I do like to spend as little time as
• 1:19:30
  Speaker 1: possible thinking about money. So so it's so it's it's
• 1:19:34
  Speaker 1: making some broad decision about asset allocation, meaning the proportion
• 1:19:39
  Speaker 1: of it's sort of like I've been I have in
• 1:19:43
  Speaker 1: the stock market, so and then probably ten in California
• 1:19:49
  Speaker 1: mun Muni bonds and the rest and kind of cash
• 1:19:53
  Speaker 1: at any given time bonds just cash. So uh. And
• 1:19:57
  Speaker 1: the stock market stuff is either index funds or Berkshire Hathaway.
• 1:20:01
  Speaker 1: Now that's kind of interesting because you used to kind
• 1:20:03
  Speaker 1: of dunk on Warren Buffett. I dunked once on Warren Buffett,
• 1:20:06
  Speaker 1: but it made me famous because no one else would
• 1:20:08
  Speaker 1: do it when I did it. Um, I'm invested in
• 1:20:12
  Speaker 1: him for the same reason I dunked on him, and
• 1:20:15
  Speaker 1: that was that is he's got he's got special deals.
• 1:20:18
  Speaker 1: His capital gets a special treatment in the market, So
• 1:20:22
  Speaker 1: you want to be on that side for free. Uh
• 1:20:25
  Speaker 1: So you know, And and I quite admire him and
• 1:20:27
  Speaker 1: like him and uh and like the idea of him,
• 1:20:31
  Speaker 1: and I think his model of the business is going
• 1:20:33
  Speaker 1: to survive him. I think, oh, I think they've kind
• 1:20:35
  Speaker 1: of got it right. Yeah, They've put together a great
• 1:20:37
  Speaker 1: team there, and their capital will continue to be highly valued.
• 1:20:42
  Speaker 1: So so anyway, he's my when that's when I'm feeling
• 1:20:44
  Speaker 1: sexy and I don't want to buy just an index fund.
• 1:20:47
  Speaker 1: I'd buy some Berkshire Hathaway. So tell us about your
• 1:20:51
  Speaker 1: favorite books. This is everybody's favorite question. Non Michael Lewis books.
• 1:20:57
  Speaker 1: So these aren't the best books, they're favorite the books
• 1:21:00
  Speaker 1: that have hit me at a time in my life
• 1:21:02
  Speaker 1: where they just stuck with me. Huckleberry Finn when I
• 1:21:04
  Speaker 1: was seventeen years old, Confederacy of Dunces when I was
• 1:21:09
  Speaker 1: eighteen or nineteen, The Movie Goer by Walker Percy when
• 1:21:13
  Speaker 1: I was seventeen or eighteen, George Orwell's Collected Essays when
• 1:21:17
  Speaker 1: I was maybe one Tom Wolfe's Radical Chic and Mao Mauting,
• 1:21:22
  Speaker 1: the Flatcatchers, and then the Right Stuff when they came
• 1:21:25
  Speaker 1: out basically when when I was a teenager, All all
• 1:21:28
  Speaker 1: of it, almost all of it is stuff that hit
• 1:21:30
  Speaker 1: me between the ages of fourteen, fifteen and four since
• 1:21:36
  Speaker 1: since I became a writer. Um, I just read more critically.
• 1:21:40
  Speaker 1: It's hard for starter for stuff to get in quite
• 1:21:42
  Speaker 1: as deeply the stuff I love when I read it.
• 1:21:44
  Speaker 1: But it just doesn't. It didn't infect doesn't infect me
• 1:21:48
  Speaker 1: in the same way. Quite quite interesting? Tell us about
• 1:21:52
  Speaker 1: you say quite interesting? Does that mean it's not interesting? No,
• 1:21:54
  Speaker 1: it's just a verbal tick to move on to the
• 1:21:57
  Speaker 1: next question, as opposed to saying nothing and move on,
• 1:22:00
  Speaker 1: which is what someone who is professional would do. But
• 1:22:03
  Speaker 1: after two hundred and fifty of these, I have now
• 1:22:06
  Speaker 1: worked my way up to mediocre. I'm at that point
• 1:22:08
  Speaker 1: in the Dunning Krueger curve. Okay, Um, tell us about
• 1:22:13
  Speaker 1: a time you failed and what you learned from the experience.
• 1:22:16
  Speaker 1: By the way, I just get by on witt and
• 1:22:18
  Speaker 1: charm and actual skills are nowhere to be found. A
• 1:22:22
  Speaker 1: time I failed and what I learned from the experience? Um,
• 1:22:28
  Speaker 1: I mean there, there's lots to choose from. Pick one, um,
• 1:22:33
  Speaker 1: all right, I'll pick one. In the first grade. In
• 1:22:36
  Speaker 1: the first grade, we walked over to the library every
• 1:22:39
  Speaker 1: every day for a library period. In the library had
• 1:22:42
  Speaker 1: these chairs that kind of holes in the back, you know,
• 1:22:44
  Speaker 1: cut out back where you're back on a lower back.
• 1:22:47
  Speaker 1: And I spent the whole library period wondering if I
• 1:22:51
  Speaker 1: could climb out of my chair through the hole rather
• 1:22:53
  Speaker 1: than just normally getting up out of it. And at
• 1:22:56
  Speaker 1: the end of library I dove through the hole and
• 1:22:59
  Speaker 1: got so that not only the whole class have to
• 1:23:02
  Speaker 1: file out past me as I'm wearing this chair, but
• 1:23:05
  Speaker 1: the janitor to come with like a hack stack and
• 1:23:08
  Speaker 1: cut the chair off me because they couldn't pull it
• 1:23:10
  Speaker 1: off me. And I'd say, what I learned from that is,
• 1:23:14
  Speaker 1: if you're gonna do something really radical and different, do
• 1:23:17
  Speaker 1: it alone in your home, and don't do it in
• 1:23:19
  Speaker 1: front of a big crowd. But that's the first time,
• 1:23:22
  Speaker 1: that's right, that's a sample set of one. So if
• 1:23:24
  Speaker 1: you were successful, you would have been the hero and
• 1:23:26
  Speaker 1: every would have been talking about. I think the upside
• 1:23:28
  Speaker 1: of success in that case, it's probably pretty trivial compared
• 1:23:32
  Speaker 1: to the downside of failure. It was just mortifying. It
• 1:23:34
  Speaker 1: was mortifying. So I know what you do for fun,
• 1:23:38
  Speaker 1: which is basically coach your kids and and do some travel.
• 1:23:41
  Speaker 1: But what what else do you do for fun outside
• 1:23:45
  Speaker 1: of that? Um? I hike. I do. It's endless, endless
• 1:23:54
  Speaker 1: kind of activity. Play tennis. Um, I write, I ride
• 1:24:00
  Speaker 1: bikes with friends. I don't know. I live in just
• 1:24:03
  Speaker 1: like the best place to do this kind of stuff,
• 1:24:04
  Speaker 1: to Bay Area. Uh so, my my work life is
• 1:24:09
  Speaker 1: so sedentary, you know, it's sitting there writing. I can't
• 1:24:13
  Speaker 1: run and right, so, uh, everything else tends to be
• 1:24:17
  Speaker 1: just like active. I go off for a week every
• 1:24:20
  Speaker 1: year with five guy friends into the woods. Uh. We
• 1:24:24
  Speaker 1: have this annual trip that we've been doing for six
• 1:24:26
  Speaker 1: or seven years, like the best week of the year,
• 1:24:30
  Speaker 1: just hiking and biking in the wilderness. Um, that sort
• 1:24:34
  Speaker 1: of thing. Simple. I'm not I don't have hobbies. I've
• 1:24:38
  Speaker 1: never had. Hobbies. Is a hobby that kind of I
• 1:24:41
  Speaker 1: like to do this stuff I like to do, but
• 1:24:43
  Speaker 1: I don't really have I only have hobbies. I don't
• 1:24:45
  Speaker 1: collect anything. I don't collect stamps. I don't I don't don't.
• 1:24:49
  Speaker 1: I don't know. You know, I don't collect books. I don't.
• 1:24:51
  Speaker 1: I read a lot, but I don't know. I'm not
• 1:24:54
  Speaker 1: interested in cars, stuff like stuff doesn't interest me. All
• 1:24:58
  Speaker 1: that experiences over. That's exactly right, right, That's Thomas Gilovich
• 1:25:03
  Speaker 1: and Alan Krueger both said, if you want happiness, spend
• 1:25:06
  Speaker 1: your money on experiences. Don't you spend your money on junk?
• 1:25:09
  Speaker 1: And I think that life experience bears that out. It
• 1:25:14
  Speaker 1: makes me happier. Stuff doesn't make me happy. So a
• 1:25:17
  Speaker 1: millennial comes to you and says, I'm thinking about a
• 1:25:20
  Speaker 1: career in either finance or writing. What sort of advice
• 1:25:23
  Speaker 1: would you give them? Um? If someone put it that way,
• 1:25:29
  Speaker 1: I'm thinking about a career in writing when they're young,
• 1:25:32
  Speaker 1: I'd worry about them as opposed to I really love
• 1:25:35
  Speaker 1: to write, I really love to write. What do I do? Um?
• 1:25:40
  Speaker 1: And I tell you why? Because so many young people
• 1:25:44
  Speaker 1: who have come to me saying, more or less I
• 1:25:46
  Speaker 1: want a career as a writer. More or less they've said,
• 1:25:49
  Speaker 1: how do I get to have your life? Uh? I
• 1:25:52
  Speaker 1: asked them, do you do you actually want to write?
• 1:25:55
  Speaker 1: Or do you want to be a writer? And most
• 1:25:57
  Speaker 1: of them want to be a writer. They don't act,
• 1:26:00
  Speaker 1: have some romantic size notion about what it is all about,
• 1:26:02
  Speaker 1: and you get to go on TV and talk about
• 1:26:04
  Speaker 1: your books and you know all that stuff writers do.
• 1:26:08
  Speaker 1: But so if you actually love to write, you're just
• 1:26:13
  Speaker 1: gonna write. And uh, just then I tell that person, Uh,
• 1:26:17
  Speaker 1: go do something to interest you and write about it.
• 1:26:20
  Speaker 1: Let's start there. Uh. The in finance, I don't know
• 1:26:24
  Speaker 1: what to tell people because it's so moved on from
• 1:26:27
  Speaker 1: where I was when I was coming in. It doesn't
• 1:26:31
  Speaker 1: it's not an obviously joyful industry. There was quite a
• 1:26:36
  Speaker 1: bit of joy in it when I rolled. I was
• 1:26:37
  Speaker 1: gonna say, there are periods where it's more joyful and periods,
• 1:26:40
  Speaker 1: and that's on where you are in it. I mean
• 1:26:43
  Speaker 1: venture capital world, some of the hedge funal world, some
• 1:26:46
  Speaker 1: of the private equity world that seems kind of fun um,
• 1:26:49
  Speaker 1: working for a big Wall Street bank that seems freaking miserable.
• 1:26:53
  Speaker 1: Well it was fun back in the day. But but
• 1:26:56
  Speaker 1: you know, people wrote books like mine and they shut
• 1:26:58
  Speaker 1: down the fund. Uh because it's you. It's partly my fault.
• 1:27:03
  Speaker 1: It's just like just generally working in corporate publicly traded
• 1:27:07
  Speaker 1: corporate America does not my idea of fun except for
• 1:27:12
  Speaker 1: those stock options. People can make real money with that,
• 1:27:15
  Speaker 1: but that's different from fun for sure. So so I
• 1:27:18
  Speaker 1: wouldn't I guess if I were if like my son
• 1:27:21
  Speaker 1: said to me, Daddy, I really want to be a
• 1:27:25
  Speaker 1: Wall Street person, I would say, I try to ship
• 1:27:28
  Speaker 1: him down to Silicon Valley into a venture capital firm
• 1:27:31
  Speaker 1: and see if he could be useful there. I think
• 1:27:32
  Speaker 1: something like that, What do you know about the world
• 1:27:35
  Speaker 1: of finance, trading, investing, and writing today you wish you
• 1:27:39
  Speaker 1: knew thirty years ago when you were first starting out. Um,
• 1:27:45
  Speaker 1: ask the question again. Let me think about it while
• 1:27:47
  Speaker 1: you asked that question again, What what do I wish
• 1:27:50
  Speaker 1: I knew? So this isn't I wish I knew to
• 1:27:53
  Speaker 1: buy Amazon at a dollar? It's what knowledge do you
• 1:27:57
  Speaker 1: wish you had when you began your career year in
• 1:28:00
  Speaker 1: finance that would have been helpful along the thirty five
• 1:28:05
  Speaker 1: years that perhaps you learned much later down the path.
• 1:28:11
  Speaker 1: You know that even the smart people on Wall Street
• 1:28:13
  Speaker 1: didn't really know what they were doing. I took the
• 1:28:17
  Speaker 1: biggest mistake I had in my head when I left
• 1:28:21
  Speaker 1: Solomon Brothers was that the people at the top of
• 1:28:24
  Speaker 1: Solomon Brothers, the people that the people in the middle
• 1:28:28
  Speaker 1: of the trading had some mystical knowledge that I lacked.
• 1:28:34
  Speaker 1: And I mean, the thing that shocked me the most
• 1:28:38
  Speaker 1: about the financial crisis with it was that these firms
• 1:28:41
  Speaker 1: made these stupid, stupid bets that in these you know,
• 1:28:45
  Speaker 1: these zero sum bets, that they were all long one
• 1:28:48
  Speaker 1: way or another the subprime mortgage market. Um, it would
• 1:28:52
  Speaker 1: have been there had been some interesting writing to do
• 1:28:56
  Speaker 1: about those firms between the time I left the time
• 1:29:00
  Speaker 1: I came back for the financial crisis, if I had
• 1:29:02
  Speaker 1: appreciated just how moronic the the moronically they were managed. Uh.
• 1:29:09
  Speaker 1: What's what's interesting is though many of those same people
• 1:29:12
  Speaker 1: came to you and tried to convince you to stay
• 1:29:14
  Speaker 1: in finance, and you had enough confidence in your own
• 1:29:20
  Speaker 1: understanding of the world to say, thanks, but I got
• 1:29:23
  Speaker 1: other stuff to do, you guys, But I always had
• 1:29:25
  Speaker 1: other stuff to do. That was my so for me.
• 1:29:28
  Speaker 1: For me, it was a really lucky detour uh into
• 1:29:32
  Speaker 1: Wall Street because it gave me material, But it was
• 1:29:35
  Speaker 1: always a detour. I mean, I could just as easily
• 1:29:38
  Speaker 1: have gotten I don't know, uh, job selling insurance. I
• 1:29:41
  Speaker 1: mean I was going to need a job doing something
• 1:29:44
  Speaker 1: and it just was really lucky I ended up in
• 1:29:46
  Speaker 1: Wall Street. I didn't have any particular passion for Wall Street. Um,
• 1:29:51
  Speaker 1: it just worked out that this worked out that way,
• 1:29:53
  Speaker 1: and so so, but there's no like, is there any
• 1:29:58
  Speaker 1: great I feel like, Um, my ignorance has been a
• 1:30:04
  Speaker 1: huge advantage to me. So knowing more starting out would
• 1:30:09
  Speaker 1: have been a disadvantage because it forced you to go
• 1:30:11
  Speaker 1: do the homework, and that homework each each of that
• 1:30:15
  Speaker 1: homework segments became a book. Yes, that's right. So, UM,
• 1:30:21
  Speaker 1: I don't I don't actually honestly wish for some prior
• 1:30:25
  Speaker 1: knowledge of any of the stuff that, especially in finance.
• 1:30:31
  Speaker 1: So last question about Solomon Brothers. It was a gentleman
• 1:30:35
  Speaker 1: in the training program with you, named Hans huff Schmidt.
• 1:30:40
  Speaker 1: You both left the same training program in New York,
• 1:30:43
  Speaker 1: you went to the same London training floor. You're both
• 1:30:46
  Speaker 1: supervised by John Merryweather. And you had written that over
• 1:30:51
  Speaker 1: the years you tracked your progress by how well you
• 1:30:56
  Speaker 1: were doing relative to what Hans huff Schmid was doing,
• 1:31:00
  Speaker 1: and you frequently felt, God, if I would have stayed there,
• 1:31:02
  Speaker 1: Look how much money he's doing. So he's doing so well.
• 1:31:05
  Speaker 1: And then one day, long term capital management blows up.
• 1:31:08
  Speaker 1: He ended up there where you said you would have gone,
• 1:31:11
  Speaker 1: And now his salary and and net worth plummets to zero,
• 1:31:17
  Speaker 1: and you wrote, I was once again satisfied to be
• 1:31:21
  Speaker 1: paid by the word. Do you remember writing that? I
• 1:31:25
  Speaker 1: do remember writing that, and I don't want your audience
• 1:31:28
  Speaker 1: to think that. I was actually like stalking Hans Hofschman,
• 1:31:31
  Speaker 1: wondering how much money he made each year. I would
• 1:31:33
  Speaker 1: just every now and then here that did you hear
• 1:31:35
  Speaker 1: that Hans Hoshman is now worth fifty million dollars? And
• 1:31:38
  Speaker 1: I think, what the hell you want? That was because
• 1:31:42
  Speaker 1: that was my alternate, that was my thro the path
• 1:31:45
  Speaker 1: I would have maybe had. And I never actually thought
• 1:31:50
  Speaker 1: I wished I had done that, because I loved what
• 1:31:52
  Speaker 1: I was doing. It wasn't quite that, but it was like,
• 1:31:54
  Speaker 1: that's the opportunity cost. The opportunity cost of being a
• 1:31:57
  Speaker 1: writer is that I don't have Hans Hashman's fifty million dollars,
• 1:32:00
  Speaker 1: and when that went to zero, it made being a
• 1:32:02
  Speaker 1: writer feel even better. Now I think the truth is
• 1:32:06
  Speaker 1: since then hams Har Harshman has gone and remade his fortune,
• 1:32:09
  Speaker 1: so I probably am still. I'm still finishing second here
• 1:32:13
  Speaker 1: right I gotta I gotta get some cash over to
• 1:32:14
  Speaker 1: Hans because he seems to know what the hell he's
• 1:32:16
  Speaker 1: doing with capital. Michael Lewis, thank you for being so
• 1:32:20
  Speaker 1: generous with your time. We have been speaking with author
• 1:32:24
  Speaker 1: and podcaster extraordinaire Michael Lewis. If you enjoy this conversation,
• 1:32:29
  Speaker 1: We'll be sure to look up an inch or down
• 1:32:31
  Speaker 1: an inch on Apple, iTunes, Stitcher, Overcast, Bloomberg dot com
• 1:32:35
  Speaker 1: and you could see any of the other two hundred
• 1:32:38
  Speaker 1: and fifty or so of these conversations that we have had.
• 1:32:42
  Speaker 1: Um we love your comments, feedback and suggestions right to
• 1:32:46
  Speaker 1: us at m IB podcast at Bloomberg dot net. I
• 1:32:50
  Speaker 1: would be remiss if I did not thank the crack
• 1:32:52
  Speaker 1: staff that helps put together these podcasts each week. Modina
• 1:32:57
  Speaker 1: Parwana is my producer slash audio engineer. Our bookers are
• 1:33:01
  Speaker 1: Taylor Riggs and Michael Boyle uh A. Tica val Brun
• 1:33:05
  Speaker 1: is our project manager. Michael bat Nick is our head
• 1:33:08
  Speaker 1: of research. I'm Barry Ritolts. You've been listening to Masters
• 1:33:12
  Speaker 1: in Business on Bloomberg Radio.