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Interview With Michael Lewis: Masters in Business (Audio) · Masters in Business

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Speaker 1: America member f D I C. This is Masters in
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Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on
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Speaker 1: the podcast, I have none other than Michael Lewis, and
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Speaker 1: let me tell you I had a blast talking to him.
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Speaker 1: He is just eloquent and charming and full of great stories. Uh.
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Speaker 1: It was if you can imagine how much fun it
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Speaker 1: would be to sit in a room and just chew
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Speaker 1: the fat with Michael Lewis overall his books. Yes, it
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Speaker 1: was that much fun. So rather than me give you
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Speaker 1: a whole song and dance about his background, because you
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Speaker 1: already know his background, you've already read most of his books,
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Speaker 1: I'm just gonna shut up and with no further ado,
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Speaker 1: my conversation with Michael Lewis. This is Masters in Business
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Speaker 1: with Barry Ridholtz on Bloomberg Radio. My special guest this
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Speaker 1: week is none other than Michael Lewis. He is the
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Speaker 1: author of such best selling financial stories as Moneyball, the
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Speaker 1: Big Short Flashboys UH. Most recently he wrote The Undoing Project,
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Speaker 1: a story about UH, Danny Kahneman and Amos Tversky, the
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Speaker 1: people who were essentially invented the field of behavioral economics. UM.
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Speaker 1: I could talk about your resume forever, but let's jump
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Speaker 1: right into this. Michael Lewis welcome to Bloomer. Pleasure to
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Speaker 1: be back here. So let's let's jump right into a
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Speaker 1: little bit about your background. So you you come out
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Speaker 1: of the London School of Economics, you get a job
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Speaker 1: at Solomon Brothers in the nine eighties, markets on fire,
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Speaker 1: Sally's one of the hottest firms on the street, and
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Speaker 1: you just walk away from that. What sort of pushed
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Speaker 1: back did you get from your friends and family about yeah,
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Speaker 1: making a ton of money, but this sort of stuff
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Speaker 1: is not for me. It was a funny situation because
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Speaker 1: through a lot of accident, I had had some success
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Speaker 1: as Solomon Brothers. I got there and UM, I was
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Speaker 1: taking under the wing of a big hedge fund manager
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Speaker 1: in Europe, where where I was based. He did all
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Speaker 1: his business through me, so I looked like a very
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Speaker 1: profitable salesperson. I was. I was a derivatives person at
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Speaker 1: Solomon Brothers. Really yeah, I was the I was the
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Speaker 1: arm of John Merryweather's desk in London, and my job
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Speaker 1: was explain options and futures to everybody because they were
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Speaker 1: new and uh, and dream up new kinds of securities,
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Speaker 1: which I did, and sell whatever I could sell to
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Speaker 1: whoever I talked to. And uh. And that's the guy
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Speaker 1: who eventually writes the big short. That's the guy eventually
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Speaker 1: writes a BA shorn. You know it was? It was
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Speaker 1: UM extremely useful that training in in in coming to
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Speaker 1: grips with collateralized obligations and credit, the fault swaps and
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Speaker 1: all the rest. But what ifs? So what happened was
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Speaker 1: I UM, I knew going in that I wanted to
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Speaker 1: write for a living. I had no idea if it
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Speaker 1: was even possible. I was. I was writing magazine articles
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Speaker 1: while I was at Solomon Brothers. Um the economists published
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Speaker 1: the first I don't know, fifteen or twenty of them
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Speaker 1: and with no byline. But then I'd I'd bundle up
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Speaker 1: the clips and I'd send them off to editors and say,
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Speaker 1: I actually wrote this. You can call this guy and check.
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Speaker 1: And Michael Kinsley, who was the editor of The New Republic,
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Speaker 1: and Amity Schlace, who was then the op ed editor
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Speaker 1: of the Wall Street Journal Europe, encouraged me and and
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Speaker 1: a magazine in England too, so I had several outlets. Uh,
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Speaker 1: and the stuff started getting attention. The stuff with my
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Speaker 1: byline got me in trouble. I mean I wrote a work. Well, yeah,
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Speaker 1: I wrote a piece for the Wall Street Journal that
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Speaker 1: ended up being reprinted in the U. S Journal on
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Speaker 1: the op ed page. That's that argued that investment bankers
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Speaker 1: were overpaid and at the bottom it it's at the bottom,
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Speaker 1: it said. Michael Lewis is an associated Solomon Brothers in London.
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Speaker 1: And when I came in the next day, Uh, the
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Speaker 1: guy who ran Solomon belle As Europe was ashen face
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Speaker 1: sitting at my desk and he and he said, I've
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Speaker 1: been on the phone all night with members of the boards,
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Speaker 1: board of directors that this is the things being reprinted
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Speaker 1: across the country and and we can't have he was pleading.
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Speaker 1: It was it was more in sorrow than an anger.
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Speaker 1: It was you can't go in the Wall Street Journal
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Speaker 1: and say you're with us and that we're overpaid. And
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Speaker 1: I said, and I said, well, it's true, and he
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Speaker 1: said it is true, but you know, you know but
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Speaker 1: and then he said, he said, is there And he said,
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Speaker 1: could you just you gotta stop writing? And I said,
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Speaker 1: I I'm not gonna do that. And he said he
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Speaker 1: was great. Actually was Charlie mcphaz's name. He was wonderful guy.
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Speaker 1: And he says, well, is there anyway, um you could
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Speaker 1: do it um under a different name so that nobody
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Speaker 1: connects it back to us? And I said fine, And
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Speaker 1: I wrote under the name Diana Bleaker, which was my
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Speaker 1: mother's name, and my my definished the story. I STI,
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Speaker 1: I'm writing under Diana Blinker. And Diana Bleaker publishes something
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Speaker 1: in the New Republic. And I get a call from
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Speaker 1: Chevy Chase's dad, who's an editor at Simon and Schuster,
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Speaker 1: and he says, I figured out you're Diana Bleaker, uh,
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Speaker 1: and you should write a book. And I thought, oh
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Speaker 1: my god, someone will We'll pay me to write a book.
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Speaker 1: And it wasn't much, but that at that moment, I
5:18
Speaker 1: went and I said to the my bosses, I'm out
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Speaker 1: of here. I'm gonna'm gonna be gonna be a writer.
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Speaker 1: And they thought I was insane. That didn't answer your question.
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Speaker 1: They actually tried to talk me off the ledge And
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Speaker 1: it was not really it was not, oh, you can't
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Speaker 1: go write a book about Solomon Brothers. Nobody we even
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Speaker 1: thought about that or even cared. It was more we
5:34
Speaker 1: need you here and I'm we're really worried about your
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Speaker 1: mental health. You're not gonna I mean, you're not gonna
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Speaker 1: be a writer. It was that kind of they were
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Speaker 1: trying to help me. Uh So we had kind of
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Speaker 1: these amount of to a therapy session with the guys
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Speaker 1: who ran the European office. So you're just yuessing them.
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Speaker 1: But I recall reading that you kept a diary most
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Speaker 1: of the time. Was it's the whole four years you
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Speaker 1: had Solomon Brothers. So I wasn't there four years. I
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Speaker 1: was there just shy a three And uh it wasn't
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Speaker 1: a diary in the way that I don't know you
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Speaker 1: might imagine Jane Austin, because I was writing about it.
6:09
Speaker 1: I mean, so yeah, I started taking an interest in
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Speaker 1: the what was specifically going on around me, uh as
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Speaker 1: possible literary material maybe six months before I left, So
6:21
Speaker 1: not the whole time. What I did is I mean,
6:24
Speaker 1: during the training program, I wrote down everything, and so
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Speaker 1: I had all that on all that stuff. Um, I
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Speaker 1: actually the firm. I mean it would just it would.
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Speaker 1: Public relations people of Wall Street firms today would not
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Speaker 1: believe how loose it was. When I left, I called
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Speaker 1: and said, I get some videotapes from the training program,
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Speaker 1: just so I get the dialogue right. And then they
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Speaker 1: were friends. When got me a couple of videos I needed,
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Speaker 1: and uh, and people Louis Ronieri, who ran the mortgage
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Speaker 1: right exactly helped me, uh, you know, kind of come
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Speaker 1: to come to term with what had happened in his department.
7:01
Speaker 1: I went and interviewed all the mortgage traders. Everybody's just
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Speaker 1: nobody said you can't write a we can't write a
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Speaker 1: book about us, you know, nobody said you know, it
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Speaker 1: was no there was no free sty of scandal around it.
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Speaker 1: It was just like, it's kind of cool, you're gonna
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Speaker 1: write a book. But I'm a good luck guy with
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Speaker 1: that right Who wants who cares about a book that?
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Speaker 1: Everybody couldn't be sweeter about it? So you leave an
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Speaker 1: eight eight right now? I got to let me make
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Speaker 1: sure I got the dates right and the book comes
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Speaker 1: out in eighty nine. No, I left what I do.
7:29
Speaker 1: That's right. I left in. I waited the boy, but
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Speaker 1: I actually I waited enough for me. I waited till
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Speaker 1: the bonus hit the bank account in the end of
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Speaker 1: January early February and left. I wrote the book in
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Speaker 1: a year, and so the book was done by early
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Speaker 1: eighty nine. It came at the end of eighty nine. Wow,
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Speaker 1: that's amazing. I'm Barry rid Hults. You're listening to Masters
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Speaker 1: in Business on Bloomberg Radio. My special guest today is
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Speaker 1: one of my favorite authors. His name is Michael Lewis,
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Speaker 1: and you're probably familiar with him from books such as
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Speaker 1: Liars Poker, The Big Short, Moneyball, and more recently The
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Speaker 1: Undoing Project, A Story of two uh is reely psychologist
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Speaker 1: who very much change the way we look at cognition
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Speaker 1: and thinking. A friendship that changed our minds. So let's
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Speaker 1: let's jump right into this, because first of all, I
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Speaker 1: really enjoyed the book. I found it fascinating. We've had
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Speaker 1: Failor and Conomon and other behaviorists on the show, and
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Speaker 1: I love that sort of approach to thinking about thinking.
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Speaker 1: And what I really liked was your introduction in the book.
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Speaker 1: You explain how Failor and Cass Sunstein wrote a review
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Speaker 1: of money Ball published in the New Republic, and they
8:46
Speaker 1: kind of call you out for saying, Hey, this is
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Speaker 1: really all about cognition, and how did you ignore the
8:52
Speaker 1: works of the people who created the science and most
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Speaker 1: of Versking and Danny Knoman. So the question is, was
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Speaker 1: this book a little bit of a mia kulpa for
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Speaker 1: that oversight in in money Ball? You know, it wasn't
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Speaker 1: And I wasn't really feeling guilty about it. I felt
9:09
Speaker 1: I felt um, I felt Uh. I was surprised that
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Speaker 1: there there had been working psychology that that explained what
9:20
Speaker 1: was going on in the minds of baseball scouts when
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Speaker 1: they missed judge baseball players and among other things. I
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Speaker 1: was surprised I'd never heard of these guys, because I
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Speaker 1: did do a master's in economics. But it was before
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Speaker 1: that all has happened, you know, And when when did
9:34
Speaker 1: you When I got out of the the LC and
9:38
Speaker 1: so nobody talked about this kind of stuff. You were
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Speaker 1: being taught rational expectation, it was just starting to and um,
9:45
Speaker 1: and then uh, what happens is that I was out
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Speaker 1: drinking with a friend. Uh, I got named dak Or
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Speaker 1: Keltner who was a psychologist of the Berkeley uh in
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Speaker 1: the Berkeley at cal and he's he's like a wonderful
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Speaker 1: guy and it and I told him, I said, you know,
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Speaker 1: it's odd that your field somehow has something to say
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Speaker 1: about this book I wrote. And he said, Danny lives
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Speaker 1: just up the hill. You can go. You can go
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Speaker 1: see him. And he's a friend. I said, really. And
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Speaker 1: it took me. I took me sometime to take him
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Speaker 1: up on that offer. But he introduced me to Danny
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Speaker 1: and when who By the way, he had won the
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Speaker 1: Nobel Prize for his work the year before money Bull comes.
10:22
Speaker 1: That's right, that's right in economics and act. That was weird.
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Speaker 1: You nobody said, how is the psychologist winning the Nobel
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Speaker 1: Prize in economics? This nobody? Nobody. You look at the
10:32
Speaker 1: descriptions of his Nobel Prize and it says, oh, this
10:35
Speaker 1: is normal. It's bizarre. Uh. Well, the underlying premise for
10:39
Speaker 1: all of economics is that humans are are rational, optimized,
10:44
Speaker 1: nothing of the sort. I'm not saying it's not deserved.
10:46
Speaker 1: I'm saying that if you told him when he was
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Speaker 1: doing his work that he's gonna win a Nobel Prize
10:50
Speaker 1: in economics. He looked at you like you had three heads.
10:53
Speaker 1: But uh, what happened? Really it was organic. It's kind
10:56
Speaker 1: of curious. I want to meet a guy who win
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Speaker 1: the Nobel Prize. That was probably the first thought, was
10:59
Speaker 1: I to go meet somebody who won a Nobel Prize.
11:02
Speaker 1: And I didn't go up thinking I'm gonna write a
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Speaker 1: book about him, and I gotten. We just became friends.
11:07
Speaker 1: I started following him. I started I'd see him when
11:09
Speaker 1: he was in town. We go on along walks, uh
11:12
Speaker 1: in the hills, and he would talk about his relationship
11:14
Speaker 1: with Amos. And that's what interested me that I thought
11:18
Speaker 1: these guys had this incredible love affair. I mean, it
11:20
Speaker 1: wasn't there was no sex. The sex was having the ideas,
11:23
Speaker 1: but it was there was a drama to their relationship
11:27
Speaker 1: that got me interested. I called it an intellectual romance
11:31
Speaker 1: in the review you haven't read, um, But since you
11:35
Speaker 1: mentioned Amos, let's let's talk a little bit about him,
11:38
Speaker 1: because there's this really bizarre thing you mentioned in the afterward. So,
11:44
Speaker 1: and I'm not giving away the ending to any of this. So,
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Speaker 1: both Kneman and Tversky talked about the role of luck
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Speaker 1: in people's lives, coincidentally, when you start thinking about doing
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Speaker 1: this book you had previously taught or coached Amos Tversky's son. Well,
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Speaker 1: this gets weird, right, I mean, that's really well. When
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Speaker 1: at some point I can't remember when the penny dropped,
12:09
Speaker 1: I realized I had a kid in the year I
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Speaker 1: taught writing a cow whose last name was Tversky, and
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Speaker 1: he was about my favorite student, and we had a friendship.
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Speaker 1: I'd see him every year for dinner, and he never
12:23
Speaker 1: mentioned anything about his dad. I wouldn't even known who
12:27
Speaker 1: he was anyway, so there would be no reason. Uh.
12:31
Speaker 1: But then I wrote I remember writing or in Diversky notes, saying,
12:34
Speaker 1: is Amos your dad? And he said yeah, yeah, And
12:37
Speaker 1: I said, well, I'm toying with the idea of writing
12:39
Speaker 1: a book about his collaboration with Danny. And he goes,
12:42
Speaker 1: oh really. It was kind of like he said, my mom,
12:45
Speaker 1: I'm sure my mom will be happy to help. It
12:47
Speaker 1: was basically what he said, but but it was it
12:50
Speaker 1: was serendipitous, to say the least. So you you teach
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Speaker 1: Amos Tversky's son, Danny Conuman lives up the street from you.
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Speaker 1: You spend five years softening up Kneman in order to
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Speaker 1: do the book that he was really reluctant. There were
13:06
Speaker 1: two stages of this assault. The first was um getting
13:11
Speaker 1: helping him a little bit, uh right, because his publisher's
13:18
Speaker 1: agent thought it was insane for him to be talking
13:20
Speaker 1: to me about a book before he wrote his, and
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Speaker 1: you're going to steal the idea? Yeah, yeah, I wouldn't.
13:25
Speaker 1: It was so different, it didn't matter to me. But
13:27
Speaker 1: he said, we could you just wait until I'm done
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Speaker 1: with this and so so that that was the first.
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Speaker 1: So there was not even possibility of doing the thing
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Speaker 1: until after he was done with that. And then he
13:37
Speaker 1: never really ever said no, you're not going to write
13:39
Speaker 1: a book about us, But he expressed extreme skepticism and
13:44
Speaker 1: uh and and concern whenever I'd kind of bring it up,
13:49
Speaker 1: and he was UM. I wanted him to want to
13:52
Speaker 1: do it, and I never got him there. I never
13:55
Speaker 1: got him there at best. And so but I got
13:58
Speaker 1: him to the point where he would answer my question
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Speaker 1: and uh, and he was um. He was wonderful about
14:05
Speaker 1: it in the end, But it did. Yes, if I
14:07
Speaker 1: would say five years, I went and saw him an
14:09
Speaker 1: O seven. It was about two thousand twelve when it
14:13
Speaker 1: became very earnest. So here's where I'm going to call
14:15
Speaker 1: you out for a little bs in the book. And
14:18
Speaker 1: you write, you know, the book didn't require a writer
14:21
Speaker 1: as much as a stenographer, And based on everything we've
14:24
Speaker 1: just said, that line is pure nonsense because it's clear
14:29
Speaker 1: from everything you just said, and I'm not blowing smoke,
14:33
Speaker 1: nobody else could have done this book except you because
14:36
Speaker 1: of your relationship with Orange Diversity and your friendship with Danny.
14:41
Speaker 1: Who else could have put these pieces together the way
14:44
Speaker 1: you did. Well. When I said that it required a stenographer,
14:47
Speaker 1: what I meant was the people I was interviewing, these
14:51
Speaker 1: these seventy five year old, eighty year old Israeli people, intellectuals.
14:56
Speaker 1: What was coming out of their mouths was it was
14:59
Speaker 1: all I want to do it. I didn't. I don't
15:01
Speaker 1: use a tape recorder. Every one of them had a
15:04
Speaker 1: chilling war story, women and men. Everything was everybody had
15:08
Speaker 1: almost died many times in the most dramatic ways, and
15:11
Speaker 1: all of them had exquisite ideas and observations about my
15:15
Speaker 1: main characters. So what I meant was they did a
15:17
Speaker 1: lot of the work for me, and that work normally
15:20
Speaker 1: I would have to do insight into the characters. It
15:23
Speaker 1: had been done for me and by by intellectual bulldozers. However,
15:28
Speaker 1: your point is well taken that I was positioned to
15:30
Speaker 1: do it, and when I finally I some The last
15:35
Speaker 1: little hurdle I had to get over was in my
15:36
Speaker 1: own mind. I was afraid of the material because I
15:39
Speaker 1: didn't know I well, I didn't know anyth about psychology.
15:41
Speaker 1: I didn't know much about Israel. I was walking into
15:43
Speaker 1: a really new territory for me, and I thought, I
15:47
Speaker 1: kept thinking, who who should write this book? And maybe
15:50
Speaker 1: Malcolm got Gladwall should write this book. You'd do a
15:52
Speaker 1: great job. He's got uh, he's really facile with complicated ideas.
15:58
Speaker 1: He's he'd be perfect for it. Didn't see it didn't
16:01
Speaker 1: seem like my book. And then I realized that it's
16:04
Speaker 1: got to be my book, because the only way you
16:05
Speaker 1: tell the stories if you're inside these people, and no
16:08
Speaker 1: one else is going to get inside these people. Brought
16:10
Speaker 1: to you by Bank of America Merrill Lynch. Seeing what
16:13
Speaker 1: others have seen, but uncovering what others may not. Global
16:17
Speaker 1: Research that helps you Harness disruption voted top global research
16:20
Speaker 1: firm five years running. Merrill Lynch Pierce, Fenner and Smith Incorporated.
16:25
Speaker 1: I'm Barry Hults. You're listening to Masters in Business on
16:28
Speaker 1: Bloomberg Radio. My special guest today is Michael Lewis. He
16:33
Speaker 1: is the Poet Laureate of Financial nonfiction UH and Wall
16:36
Speaker 1: Street related narratives. Uh. Let's jump right into some of
16:40
Speaker 1: the really interesting books you've written in the past and
16:44
Speaker 1: and some of the responses to them. Um. I was
16:47
Speaker 1: watching UH sixty minutes when you were talking about Flashboys,
16:51
Speaker 1: and you came out and said the markets were rigged
16:54
Speaker 1: and all hell breaks loose? What what was the pushback
16:57
Speaker 1: like to that? Wait? Was funny because it didn't even
17:00
Speaker 1: occur to me I was saying anything controversial. I thought
17:02
Speaker 1: everybody knew it. The writ and they pretty much always
17:05
Speaker 1: be read and but the way they it was just
17:07
Speaker 1: the way they're rigged has changed. And uh, really it's
17:11
Speaker 1: it's so if you sit with the people who at
17:14
Speaker 1: I X, the the exchange I was writing about, and
17:17
Speaker 1: have them show you in real time kind of what's
17:19
Speaker 1: going on in the market, you say, well, that's rigged. Uh.
17:23
Speaker 1: So I didn't think it was a kind of surprised
17:25
Speaker 1: that it generated the response it did. But the blowback.
17:29
Speaker 1: It's the book that was the most unpleasant to publish. Really, Yes,
17:34
Speaker 1: in that, by the way, fascinating book. I love the
17:36
Speaker 1: opening about the line of sight with running the fiber
17:40
Speaker 1: optic cables and and how milliseconds make a difference. So
17:43
Speaker 1: the the it was the most unpleasant to publish because
17:47
Speaker 1: it made so many people so angry, who were angry,
17:50
Speaker 1: who who were going to try to do something about it,
17:53
Speaker 1: And the reason was It took me about a moment
17:55
Speaker 1: to realize that what the reason was. It's the first
17:57
Speaker 1: time and the only time I've written a book that
17:59
Speaker 1: was going to take money away from Wall Street people
18:01
Speaker 1: that that that it was. It was it came as news, uh,
18:05
Speaker 1: to some extent the story I told the guys who
18:08
Speaker 1: were my main characters had news in their hands that
18:11
Speaker 1: they didn't hadn't given anybody else. And unlike the big
18:15
Speaker 1: short liars poker um, the money hadn't all been made.
18:19
Speaker 1: I wasn't I wasn't writing something retrospectively. I was writing
18:22
Speaker 1: something that was going on that if it was shut down,
18:24
Speaker 1: would cost people billions of dollars and it and all
18:27
Speaker 1: of a sudden, people are furious. They're hiring lobbyists to
18:30
Speaker 1: go to Washington and spread stuff on the internet, and
18:33
Speaker 1: it was like being on the receiving end of a
18:35
Speaker 1: political campaign. Very it was. It was a crude and
18:40
Speaker 1: kind of if you knew anything about the subject, and
18:42
Speaker 1: kind of intellectually embarrassing one. But nevertheless it was it
18:46
Speaker 1: was just weird have people so hostile. So you you
18:49
Speaker 1: go on TV, you get into a debate with the
18:51
Speaker 1: CEO of the Bats exchange. He says a bunch of
18:54
Speaker 1: things that turned out to be not so true. Ultimately
18:58
Speaker 1: he steps down from the vision. I said, you essentially
19:03
Speaker 1: are to blame for him getting fired. What other crazy
19:06
Speaker 1: sort of stuff came out of that book? We know.
19:11
Speaker 1: Brad Katayama was a guest on the show and was
19:14
Speaker 1: quite delightful. The main character of the book was on
19:17
Speaker 1: that CNBC show with me, and he's the reason the
19:21
Speaker 1: guy from Bat Bats he called him out. He called
19:23
Speaker 1: him out, and he had he had ability to call
19:24
Speaker 1: h out in a way I did not, because once
19:26
Speaker 1: you get into the weeds of the subject that unless
19:29
Speaker 1: you are the world's authority defending yourself again against whatever,
19:34
Speaker 1: he has the world's authority absolutely and so um, what
19:39
Speaker 1: other stuff. It's mainly like calls from lawyers, yeahs or
19:44
Speaker 1: hey Mike Needle, lawyer. But also um, just just the
19:49
Speaker 1: idea that people are being hired, people have now jobs
19:53
Speaker 1: to attack a book. That that just was weird and
19:57
Speaker 1: grease balls. I mean people you just would not really
20:00
Speaker 1: you wouldn't think anybody would want on their side who
20:03
Speaker 1: are I mean transparently kind of like making it up
20:07
Speaker 1: as they go along. Uh. That that was just an
20:10
Speaker 1: odd experience. I've never had anything like that. I mean
20:12
Speaker 1: you would think maybe Solomon Brothers would have done something
20:14
Speaker 1: like that after Liar's Poker, but nothing, nothing, They were
20:16
Speaker 1: great kind of I mean there was people were upset,
20:19
Speaker 1: some people, but they did they would have done something
20:22
Speaker 1: like that. It felt the world of big shot Wall
20:26
Speaker 1: Street people has become much more um sneaky and manipulative
20:32
Speaker 1: and and dark in the sense that brad cotts the
20:34
Speaker 1: other points us out. He says, it's amazing how people
20:37
Speaker 1: think it's just the done thing to create a propaganda
20:41
Speaker 1: campaign filled lies, because the lies travel so fast and
20:45
Speaker 1: the truth is complicated, and so you can just you
20:47
Speaker 1: can just paper the paper the internet with with all
20:51
Speaker 1: this nonsense and nobody knows the difference between this this
20:55
Speaker 1: this statement and this statement. Well, thank thank goodness, something
20:57
Speaker 1: like that would never happen in a political So, you know,
21:01
Speaker 1: Matt was my experience of seeing I've always ten assume
21:05
Speaker 1: that like most people would look and say, well, clearly
21:07
Speaker 1: he's lying. Clearly he's been hired to say this credit
21:10
Speaker 1: and uh, that's not how it works. Uh. It's people
21:14
Speaker 1: to say, oh, it must be two stories there, the
21:16
Speaker 1: classic false equivalence, Well, the Earth is around, the Earth
21:19
Speaker 1: is flat. They both made yes, yes, and and uh.
21:23
Speaker 1: On the other hand, Joe says the Earth is flat
21:26
Speaker 1: and you could see it's flat. You know, you can't
21:28
Speaker 1: really see any curvature. It is flat. Yeah, So that's
21:31
Speaker 1: but that is how that's how it felt. And I
21:34
Speaker 1: thought at some point, I thought, you know, unless I
21:35
Speaker 1: devote my life full time to to waging a counter campaign,
21:40
Speaker 1: which I don't have the time or inclination to do
21:43
Speaker 1: or interest now that it's just it was that, thank
21:47
Speaker 1: god that I had characters who had a big interest
21:51
Speaker 1: in doing so that if I X wasn't around and
21:54
Speaker 1: with serious backers, I mean, all of this would have
21:57
Speaker 1: just I look like I look like a quack. I
22:00
Speaker 1: look like a crank who wrote this. Um, so you've
22:04
Speaker 1: written enough really interesting things about unusual circumstances that I
22:08
Speaker 1: think most people give you the benefit of the doubt.
22:11
Speaker 1: Um not most people of the sec not most people
22:15
Speaker 1: who are paid not to give me the benefit of
22:17
Speaker 1: the doubt. So I think that, uh that the if
22:20
Speaker 1: that public policy would not have had any would would
22:23
Speaker 1: not have responded at all to the story if it
22:26
Speaker 1: were even if it were completely true, unless there were
22:30
Speaker 1: an agent out there, namely I X pushing and pushing
22:33
Speaker 1: and pushing and pushing and uh so, so it's just disturbing.
22:37
Speaker 1: It just think you think the truth will set you free,
22:40
Speaker 1: and it's really clear what's true, and nobody, you know,
22:44
Speaker 1: it doesn't get to people in the way that you
22:46
Speaker 1: would think. Um, that's that's unbelievable. So that's that was
22:49
Speaker 1: my That was my That was the most it was
22:52
Speaker 1: the most disturbing publishing experience. I'm Barry Hults. You're listening
22:56
Speaker 1: to Master's in Business on Bloomberg Radio. My special guest
22:59
Speaker 1: today is author Michael Lewis. Most recently he wrote the
23:03
Speaker 1: book The Undoing Project, The Friendship That Changed Our Minds,
23:07
Speaker 1: but he's also written such classic Wall Street Books as Liars, Poker, Moneyball,
23:13
Speaker 1: The Blindside, Flashboys, The Big Short. You did a book
23:16
Speaker 1: on the election right after The Losers. It's that wasn't
23:21
Speaker 1: the original That's that wasn't my title. I want to
23:25
Speaker 1: call it loses because I followed all the people who lost.
23:28
Speaker 1: By the way, was there an original title for The
23:29
Speaker 1: Big Short? Or was it always always the Big Short? Alright,
23:32
Speaker 1: I'll share something with you later that I think you'll appreciate.
23:35
Speaker 1: So let's talk a little bit about your writing process.
23:38
Speaker 1: So where do you begin? I know you have an
23:41
Speaker 1: office at home with a desk and a computer. Do
23:44
Speaker 1: you just sit down and say, let me start banging
23:46
Speaker 1: something out? How do these ideas German social interaction in
23:50
Speaker 1: the beginning? Really? Yeah? So I don't. I'm not a novelist,
23:54
Speaker 1: and my material is not just in my head. It's
23:56
Speaker 1: out there in the world. And so I spent I
23:58
Speaker 1: spend three times in much time I'm gathering the material
24:02
Speaker 1: as I do actually writing it. So typical book takes
24:05
Speaker 1: a year and a half to report and research, maybe
24:08
Speaker 1: a bit more and six months to write. Is it
24:10
Speaker 1: research right? Research right? Or research research research right right? Right?
24:14
Speaker 1: It's nothing but research for a long time, and when
24:17
Speaker 1: I start writing, I'm usually still doing bits and pieces
24:19
Speaker 1: of research, and in the end I'm doing no research
24:22
Speaker 1: and of just writing. So it's the writing of it is.
24:25
Speaker 1: I don't want to say it's an afterthought, but by
24:27
Speaker 1: the time that's right, I'm constantly thinking about how the
24:30
Speaker 1: story goes, and by the time I sit down to
24:33
Speaker 1: actually start a book, I at least think I know
24:35
Speaker 1: exactly where it ends. Like I had the last sentence
24:38
Speaker 1: to this book in my head pretty much, and I
24:40
Speaker 1: usually have a title. Sometimes I don't, and it like
24:43
Speaker 1: drives me crazy because I think that it crystallizes for
24:46
Speaker 1: you with the books about to have the title. There's
24:48
Speaker 1: a buzz in my head that bothers me if I
24:50
Speaker 1: don't have the title in my head, So it takes
24:52
Speaker 1: sometimes it takes a while to find that title, but
24:54
Speaker 1: usually I have that. So at the blind side, I
24:56
Speaker 1: had the big short The Undoing Project came pretty early
24:59
Speaker 1: as a as a title undoing what we previously thought
25:02
Speaker 1: about cognition, Yes, and it was also what they were
25:04
Speaker 1: working on when they broke up. They had a project
25:06
Speaker 1: they had tentatively titled the Undoing Project. And so and
25:09
Speaker 1: I like the phrase. So anyway, the and then when
25:13
Speaker 1: the writing starts always goes in slightly different ways than
25:16
Speaker 1: I imagine. Things drop that I thought were important you
25:18
Speaker 1: see in print, and they no longer resonate the word
25:20
Speaker 1: I don't even get him into print. I get to
25:22
Speaker 1: the point in the story where I thought they belong.
25:24
Speaker 1: I realized, as it did boring, this is unnecessary. So
25:27
Speaker 1: things fall away. Is a lot of that numb and
25:30
Speaker 1: and sometimes internally things swell all of a sudden, things
25:34
Speaker 1: I thought were words on the page, we're end up
25:37
Speaker 1: being eight thousand words on the page. And it's this
25:40
Speaker 1: book surprised me that way that things everything that I
25:44
Speaker 1: whole sections did fall away, and things that I thought
25:48
Speaker 1: were short ended up being long. So that's a that
25:50
Speaker 1: raises a really interesting point when when you're playing with
25:53
Speaker 1: an idea, do you know from the beginning this is
25:57
Speaker 1: a Bloomberg View post, this is a long Younger magazine story. Oh,
26:02
Speaker 1: this is a full blown book. At what point do
26:05
Speaker 1: you have a sense that, hey, there's legs here. A
26:09
Speaker 1: column of the length of the Bloomberg View thing is
26:12
Speaker 1: always just a columns an opinion. It's preciually a humorous
26:17
Speaker 1: take on something, and uh, I've never had one of
26:19
Speaker 1: those become something I didn't think it was. But magazine
26:22
Speaker 1: pieces sometimes blow up and get much much bigger. Moneyball
26:25
Speaker 1: started as a magazine piece because I just had a
26:28
Speaker 1: question for the Oakland A's like, how are you winning?
26:30
Speaker 1: And I thought, well, that would be a cute little story.
26:32
Speaker 1: Actually it wasn't even be a long magazine piece. And
26:34
Speaker 1: after a day with the front office and I went,
26:36
Speaker 1: oh my god, this is something big here. I don't
26:39
Speaker 1: know what it is, but it's not a short magazine piece.
26:42
Speaker 1: It took me six weeks to figure out what it
26:43
Speaker 1: was and just talking to him, and then now the
26:46
Speaker 1: year to report it. I gotta assume. So if people
26:48
Speaker 1: who are not familiar with the story, Oakland a is
26:51
Speaker 1: one of the smallest budgets in the entire baseball league,
26:55
Speaker 1: and suddenly they start a new approach to let's throw
26:58
Speaker 1: away the old nonsense of evaluating players, so they didn't
27:01
Speaker 1: talk about any of that. You all you saw as
27:03
Speaker 1: a fan where wow, they look a little strange. They
27:06
Speaker 1: look like a Beer league softball team. They're all these
27:08
Speaker 1: kind of fat guys who hit home runs and can't
27:10
Speaker 1: catch the ball, and they're winning all these games? How's
27:12
Speaker 1: this happening? And uh? And then you when you see
27:15
Speaker 1: the budgets, like they're paying for their players a fifth
27:18
Speaker 1: of what the Yankees are and they're winning as many games.
27:20
Speaker 1: If the market's efficient, that makes no sense that you
27:24
Speaker 1: should buy all the best players and just beat the A's.
27:25
Speaker 1: So what's going on there? And it was a market
27:28
Speaker 1: efficiency story. It's like something's wrong there. And I thought
27:31
Speaker 1: there would be an easy explanation. I didn't know what
27:34
Speaker 1: it was gonna be. And the explanation was very involved.
27:37
Speaker 1: And and the big thing was the A's front office
27:40
Speaker 1: had never been asked the question because of the sports
27:43
Speaker 1: journalists were not at all focused on this on the
27:45
Speaker 1: money side of things. They you know, some have some money,
27:48
Speaker 1: someone don't have some money. But they didn't think in
27:50
Speaker 1: terms of like market efficiency. And so Billy Bean, who
27:53
Speaker 1: ran the Oakland A's, had never had a chance to
27:55
Speaker 1: download on anybody all these thoughts he had about the
27:58
Speaker 1: how screwed up the evaluations? So I had, so it
28:01
Speaker 1: was completely fresh material. He said to me. No one's
28:03
Speaker 1: asked that question. Where the sports journalists drinking from the
28:06
Speaker 1: same kool aid as everybody else? They just didn't think
28:08
Speaker 1: it was interesting. You know, it really is a matter
28:10
Speaker 1: of what you find interesting. What was interesting is who
28:12
Speaker 1: they traded for or whether they went last night or
28:15
Speaker 1: who had not. Here's a giant philosophical shift in the
28:18
Speaker 1: way baseball team should be assembled that we don't care about. That.
28:21
Speaker 1: Tell me about your new second basement. In fairness, wasn't
28:24
Speaker 1: as if the Oakland front office was trying to tell
28:26
Speaker 1: their story. They just no one asked them for it,
28:28
Speaker 1: and they had not been approached by anybody saying I
28:31
Speaker 1: want to know what you're doing here, because something's going on.
28:34
Speaker 1: Except the owner of the Boston Red Sox, the new
28:36
Speaker 1: owner of the Boston Red Sox, who was trying to yeah,
28:39
Speaker 1: he he knew something was He was a financial guy.
28:42
Speaker 1: Something's going on there, and and so he was already
28:45
Speaker 1: sniffing around a little bit. So not a coincidence that
28:48
Speaker 1: a financial ride recognized. So that's statistical side of this,
28:52
Speaker 1: And a quantz running another baseball team said hey, there's
28:55
Speaker 1: some something here that's right. That's that that's not a coincidence,
28:58
Speaker 1: And the a's were it was atharctic for them to
29:01
Speaker 1: just talk have someone to talk to you about it,
29:03
Speaker 1: because it was what they thought about all the time
29:05
Speaker 1: is how you make your resources go further, how you
29:08
Speaker 1: find bargains in baseball, what's going on in the mind
29:11
Speaker 1: of baseball scouts, what's wrong with old fashioned baseball strategies?
29:14
Speaker 1: All they were rethinking the game. So money Ball became
29:17
Speaker 1: Billy Bean's confessional to you. It wasn't so much a
29:19
Speaker 1: confessional because that implies that he feels no. No, it
29:23
Speaker 1: was it was Billy be but it was Moneyball becomes
29:28
Speaker 1: story outlet for Billy to kind of get things off
29:30
Speaker 1: his chest about what he's seen. Yes, he tells the story.
29:34
Speaker 1: It took him a little while to get comfortable telling
29:36
Speaker 1: me a story, but not that long. You're pretty good
29:39
Speaker 1: at ingratiating yourself with people to get them to to
29:42
Speaker 1: come out and speak with you. You know. I try
29:44
Speaker 1: to let him get to know me a bit so
29:46
Speaker 1: they feel more comfortable. And the truth is that if
29:49
Speaker 1: I'm going to do a long thing, a long piece
29:51
Speaker 1: of writing about someone, I have to genuinely feel basically
29:54
Speaker 1: positively disposed to them. That if I actually thought he
29:57
Speaker 1: was a creep or dishonest or whatever, I just I
30:00
Speaker 1: wouldn't want to spend the time with him necessary for
30:01
Speaker 1: the book. So it becomes a kind of easy relationship
30:05
Speaker 1: because he senses I basically like him, and he says
30:07
Speaker 1: that I'm basically a sane person, and he says I
30:10
Speaker 1: might do anything really creepy, and so there's a trust develops,
30:14
Speaker 1: and it's just a very broad trust. I don't want
30:16
Speaker 1: anybody see what I write about them or anything. But
30:18
Speaker 1: at some points starts to feel comfortable with me, and
30:20
Speaker 1: I'm gonna tell my story. Somebody might as well be him.
30:22
Speaker 1: That's what you're gunning for. Nobody's ever gonna feel completely
30:25
Speaker 1: comfortable with it. You just say someone's gonna get this story,
30:27
Speaker 1: might as well be him. Let's stay with the idea
30:29
Speaker 1: of a magazine story that would have or could have
30:33
Speaker 1: become a book. In the Sunday New York Times magazine,
30:38
Speaker 1: you published How the egg Heads Cracked. It's a nine
30:42
Speaker 1: thousand word opus about long term capital management. My former boss.
30:47
Speaker 1: Oh really, John Merryweather, That's that's right. So the question is,
30:52
Speaker 1: and with all due respect to Roger Lowenstein, I love
30:55
Speaker 1: when when Genius failed he was a guest on the show,
30:58
Speaker 1: But really you could have it in that book as well. Yes,
31:01
Speaker 1: why didn't that become a book. Because when I went back,
31:05
Speaker 1: when I'm researching this and I'm looking at that, my
31:07
Speaker 1: head of research says, hey, check out this article. I'm like, wow,
31:10
Speaker 1: this could easily have been a Michael Lewis book. I
31:12
Speaker 1: turned the question on his head. Why even bothered it?
31:15
Speaker 1: Right that? Because I really thought I was done writing
31:17
Speaker 1: about Wall Street in a big way, and you never
31:20
Speaker 1: want to write the same book twice. And while that's
31:22
Speaker 1: just too close in time, Yeah, yeah, it was a decade,
31:26
Speaker 1: but I just thought, been there, done that. The question
31:29
Speaker 1: that I actually asked was is this worth doing? And
31:31
Speaker 1: I thought, well, you know, these guys are being demonized
31:35
Speaker 1: in the press. Nobody really understands what they did. I
31:38
Speaker 1: kind of understand what they did, and they can explain
31:40
Speaker 1: it to me in a way I can explain to people.
31:42
Speaker 1: So it just like takes some of the weirdness out
31:45
Speaker 1: of the environment around them. So I just thought it
31:47
Speaker 1: would be it would be useful for me to go
31:50
Speaker 1: in have them explain it to me, and then explain
31:52
Speaker 1: it to a broader audience. And they didn't exactly trust
31:55
Speaker 1: me because I had written Liars Poker. I mean, that's
31:58
Speaker 1: that's trust is they they were. Some of them were
32:01
Speaker 1: irritated about that. Really, not a lot of the solid guys. Yeah,
32:05
Speaker 1: well they were. They were in my immediate colleagues, Hans
32:07
Speaker 1: hoffen Schmidt, hushmid Humid. So I gotta ask you about that.
32:11
Speaker 1: So he became your frame of reference for did I
32:15
Speaker 1: do the right thing? Leaving Sally was early. Well, we
32:20
Speaker 1: kind of tracked through the training program together, right, and
32:22
Speaker 1: we ended up kind of in a similar sort of role.
32:25
Speaker 1: He was in the foreign exchange department. I was with
32:27
Speaker 1: John Merryweather's a group, and we're kind of getting paid
32:29
Speaker 1: the same amount of money. And I did kind of think, well,
32:31
Speaker 1: if I'd stayed at Solomon Brothers, I'd kind of done
32:34
Speaker 1: how Hans did. And he killed and he made a
32:37
Speaker 1: ton of money, put it into the longtime capital. He
32:39
Speaker 1: was putting fifty million dollar bonuses, and then it all
32:42
Speaker 1: up to that point I thought, Jesus, did did I
32:44
Speaker 1: make a mistake becoming a writer? I never really felt
32:47
Speaker 1: that way, but it was like he was my measure
32:49
Speaker 1: of the opportunity cost. So the line in when the
32:53
Speaker 1: heads cracked after LTCM blows up and he's tens of
32:57
Speaker 1: millions of dollars go to zero. You're tracking this and
33:00
Speaker 1: you say, I once again was satisfied to be paid
33:03
Speaker 1: by the word do you. I don't remember writing it,
33:06
Speaker 1: but it's absolutely try. I felt that way. Thank God.
33:09
Speaker 1: I'm a camera writer, so financially sound decision. For people
33:13
Speaker 1: who would like to find more Michael Lewis, you can
33:16
Speaker 1: go to either his website, which is Michael Lewis. I
33:19
Speaker 1: don't have a website. Michael Lewis rights some my publisher
33:23
Speaker 1: has a website for you. But bonds and normal Amazon,
33:27
Speaker 1: wherever fine books are sold, you can find the works
33:30
Speaker 1: of Michael Lewis. You can check out my daily column
33:32
Speaker 1: on Bloomberg View dot com or follow me on Twitter
33:35
Speaker 1: at rid Halts. I'm Barry rid Halts. You're listening to
33:39
Speaker 1: Masters in Business on Bloomberg Radio, brought to you by
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