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How Baseball Explains New York with Joe Torre, Bobby Valentine & Tom Verducci | #SALTNY

Joe Torre was inducted into the Baseball Hall of Fame in Cooperstown, NY on July 27, 2014 and the New York Yankees retired his Number 6 at a ceremony at Yankee Stadium the following month. Joe is currently a consultant to Major League Baseball Commissioner Robert Manfred. Prior to his current role, he served as the Chief Baseball Officer for Major League Baseball. In this capacity, he was responsible for overseeing several areas that included Major League Operations, On-Field Operations, On-Field Discipline and Umpiring. He served as the Office of the Commissioner’s primary liaison to the general managers and field managers of the 30 Major League Clubs regarding all baseball and on-field matters.

Bobby Valentine was born and raised in Stamford, the son of Joseph and Grace. Bobby attended Ryle Elementary, Cloonan Middle School, and Rippowam High School, where he was elected student body president and became the only three-time All-State football player in Connecticut history. Bobby received a scholarship to the University of Southern California and was drafted by the Los Angeles Dodgers in 1968. After 10 seasons as a professional baseball player, Bobby made his major league managerial debut in 1985 with the Texas Rangers. He was the American League Manager of the Year in 1986 and went onto become the winningest manager in Rangers history. Bobby began managing the New York Mets in 1996 and led the team to back-to-back postseasons, including a 2000 World Series appearance. He also won the 2005 Japan Series Championship while managing the Chiba Lotte Marines.

Moderator Tom Verducci is an analyst and reporter for FOX Sports’ Major League Baseball coverage. Joining the network in 2012, Verducci has been a reporter for the MLB Postseason since 2016.

PRESENTED BY

 

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SPEAKERS

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Joe Torre

Special Assistant to the Commissioner

Major League Baseball

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Bobby Valentine

Former Major League Baseball Manager; Candidate for Mayor of Stamford, Connecticut; Inventor of the Wrap

 

MODERATOR

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Tom Verducci

MLB Analyst & Reporter

FOX Sports

 

TIMESTAMPS

EPISODE TRANSCRIPT

Tom Verducci: (00:08)
So anybody that's city field this past weekend?

Bobby Valentine: (00:12)
Woo.

Tom Verducci: (00:13)
Yeah. Talk about how baseball explains New York. That was the cliff notes version on Saturday night, what a moving ceremony on the 20th anniversary of 9 11. You had the Yankees and the Mets standing shoulder to shoulder, not on separate foul lines but interspersed together, unity, solidarity, very moving. The next night, they're at each other's throats because somebody whistled. That's New York, isn't it?

Joe Torre: (00:41)
Yeah, I guess. Yeah, I guess it is. I think everybody really has an open sore because of what happened with Houston a few years ago. And the whistling isn't against the rules based on the fact that they didn't use technology to get information, they were pretty much calling the pitches because what he was doing or what he wasn't doing, Andy Pettitte went through that in game six in the world series in 01 where the diamond backs just beat us up and he was tipping his pitches. So, I mean, that's not illegal to be able to communicate that.

Tom Verducci: (01:28)
Let's talk about the ceremony I mentioned Saturday night, obviously the memories, emotions had to come back to both of you, so involved with the way baseball helped in its own small way for this city, for this country to recover from the nine 11 attacks. Bobby, when you saw the ceremony on the field, what were the strongest emotions and memories that came back to you?

Bobby Valentine: (01:53)
Well, Stanley with Joe on the sideline, watching the men in uniform, hearing the bagpipes walk across the field and the sound of a funeral for all intents and purposes, just brought me back 20 years ago to the funerals that we attended, to the people who were wounded so drastically from those horrific attacks, that we were both shaken, we were touched, and we were moved by the idea that we should never forget.

Tom Verducci: (02:30)
Well, you told me a great story, I had not heard this before. I remember watching Bobby during the national anthem being played September 21, the first game in New York after the attacks, the Mets are playing the Braves. And you guys remember, we weren't sure whether we should be playing baseball at that point. And the national anthem is being played and I see Bobby Valentine with his shoulders back, his chin up, he's smiling, proud. Tell me the story about how you decided to really strike that obvious pose.

Bobby Valentine: (03:06)
Well, if you go back 20 years, we could all get that feeling of fear that we had in our hearts and our minds. We were attacked, we had never experienced before and there was confusion. And the confusion was separated from the fear when I got the message from our commander in chief, who said, "Hey, the bad guys are going to be watching. Make sure when you play this first game in New York city, that they don't see on your knees, they see you standing tall." And even though I was confused a bit and very fearful because we didn't know if it was the biggest bulls-eye that had ever been created by man. We didn't know if there was going to be another attack and we decided to put 40,000 people in a stadium to make it easy for the bad guys. And during the national anthem when I knew we would be on television, and maybe that dude in a cave somewhere across the world was looking, I wanted him to see me standing tall and not crying during our national anthem. And it was a hard thing to do, I'll guarantee you that.

Tom Verducci: (04:22)
Joe, what is it about baseball that people kind of sought inspiration from? Or even if it was comfort at that time? Why baseball?

Joe Torre: (04:33)
Well, what's interesting when it happened that morning, I was home, we had been rained out the night before, Roger Clemens was scheduled to pitch against his former team, the Red Sox, he was going for his 20th win. And I had to be at the charity lunch in the next afternoon, so I didn't even have the TV on up in the bedroom, but I was milling around getting my clothes together and I got a phone call from the car service that was going to pick me up. And they said, "I guess it's canceled." And I said, "What are you talking about?" And I turned on the TV and I saw what all of us were watching. And my mind right away went to my daughter who was five years old, and I know she was down with my wife and I wanted to make sure that she wasn't watching what I was seeing on TV. I went downstairs, my wife was handling that situation.

Joe Torre: (05:30)
It was frightening, as Bobby said. I mean, it scares you because all these attacks always happened on somebody else's turf. And here we are in New York city and it was scary, and I got to be honest and to your question, Tommy, baseball all of a sudden wasn't on my mind, it was what's happening and what do we do? And fast forward a little bit when they decided that baseball was going to resume the following Monday, on a Saturday, because we were home, Bobby's club was on the road at the time it happened. And we went with about four vans to Manhattan, we came here to the Javits Center where it was the staging area for all those first responders, firefighters that came from different parts of the country. That's where they were sleeping and eating and doing what they can, hopefully there was going to be a recovery, but obviously we didn't have any of that.

Joe Torre: (06:44)
And then from there we went to St. Francis hospital, and the sad part about it, there were no victims there, there was some firefighters who were dealing with smoke inhalation. Then we went to the armory, and I was a little hesitant about, going in there because we had a lot of players had gone home, they had got in a car and just started driving, and we went into the armory once somebody checked that it's okay for us to go in because the families were there waiting for DNA results about their loved ones. And I thought it was a very personal thing to intrude upon. But we went in and we sort of stayed around the perimeter of everybody gathered because there were low partitions that separated all the groups. And this woman, we were waved over to this one family and we walked in and Bernie Williams was with me and he goes up to the woman, he says, "I don't know what to say to you," he says, "But you look like you need a hug."

Joe Torre: (08:01)
And with that, he gave her a big hug and it sort of opened the flood gates because other families would come toward us with photos of their lost relatives, wearing Yankee garb, caps or jerseys and jackets and just talking about what big fans they were. And it was really at that point, you asked earlier in the week obviously baseball, it was a game we played. And all of a sudden at that point, I realized that we had something more important to do, and that's try to get in the way of these people's grief that they were dealing with and baseball was our vehicle.

Joe Torre: (08:57)
And the team got together in Chicago, we were going to play the White Sox, that was our first game on a Tuesday because we didn't play on Monday. And I told them, I said, "The NY on our caps guys, it represents New York. Not only the Yankees, but the city of New York." And like Bobby's team, everybody was so determined and dug in. And I think if you're Yankee fans and I was a member of the Yankees, people either love you or hate you, there was no middle ground there at all, okay? And when we went out there in Comiskey park, there were signs, we love New York, we love you and we love you, and it was so unlike going on a road trip normally with the Yankee. So you realize that it was our job as baseball people to try to distract. It's a weak word, distract, but just get in the way of their grief.

Bobby Valentine: (10:07)
And Tom, Joe talks about loving and hating the Yankees. Well, I grew up a Yankee fan, and just because God has a sense of humor I got to play for and then coach and manage the Mets. When I first got to the Mets, Joe was the manager and I really loved him, and then he released me, and then emotion changed. And then we got to do battle from 1996 through 2002. And for whatever it's worth, last night concluded a three-day game set in this subway series. Well, when we first had to understand the undertaking of the Yankees and the Mets playing during the season, and they had us do it six times, three in one stadium and three in the others. And when we played against each other, we would have police motorcade escorts with the guys in uniform, in a bus from our stadium to their stadium or their stadium to our stadium, and check it out during rush hour they closed the highways down. So it was just our buses and the motorcade going down the major deacon and crossing over the Williamsburg bridge.

Bobby Valentine: (11:42)
So it was a crazy situation that we lived through. And by the time 2000 came around and we had played these four years of inner league series games, we said to each other, I remember Joe coming over to me and said, "We got to stop doing this during the season." And I said, "Yeah, maybe we should start doing it after the season." And God was looking down and we got to play a world series against each other in 2000.

Joe Torre: (12:14)
Let me just give you a second here at Tommy. We used to play spring training and in the spring training, the Yankees would play the Mets.

Bobby Valentine: (12:24)
The mayor's trophy game.

Joe Torre: (12:26)
And I know, because I was on both sides, I managed the Mets for a while when we were playing the Yankees in a game, and you had to win, you had to beat the Yankees or you had to beat the Mets. And I remember I was with the Mets, we were playing at the Yankee stadium, Billy Martin was managing the Yankees and as the tie game, okay? All of a sudden the baseball comes over into our dugout, and it rolled toward me, I looked at it and Billy Martin had sent me a note on a baseball. And he said, "Who's going to squeeze? You or me?" Who's going to end this game basically.

Joe Torre: (13:12)
And then when I was managing the Yankees, the first year in 96, we finished spring training with three games against the Mets before we went to Cleveland to opened the season. And George Steinbrenner comes in my office and he says to me, "You got to beat these guys. You got to beat these guys." Well, it doesn't mean anything, it's spring training. And so he says, "You got to beat these guys." I said, "Let me ask you something, George." Now I'm just trying to lighten the mood here. I said, "If you had a choice of beating the Mets two out of three, or beating Cleveland two out of the three, which one would you choose?" George's answer was, "Don't ask me that question."

Joe Torre: (13:57)
So it tells you how important it was against each team. And then we did play in the world series in 2000 and we lose the first game at Shea stadium. George Steinbrenner had all our furniture from Yankee stadium clubhouse moved in to Shea stadium clubhouse to make us feel at home because he saw too many Met logos in our clubhouse. This is for real guys.

Tom Verducci: (14:26)
Well, speaking of George Steinbrenner, your former boss, he used to talk about how he wanted his teams to really represent New York. In New York, he used to say, "You have to fight to get a cab, you have to fight to get a seat on the subway, you have to fight to get space on the sidewalk to walk." So he wanted the Yankees to have that same mindset. So as a manager, did you find that there are some players who he might go, "I don't know if he can play in New York." Is there something too that it takes something a little bit different to play and succeed in New York?

Joe Torre: (15:01)
Yeah, I think there are players, first of all I think new Yorkers realize that you have to have thick skin. And some players don't handle criticism very well. I mean, none of us like it, but you have to understand that it goes with it, this is part of the deal you make. And there are players that you could see weren't the same players that when they played in New York as when they were playing with their previous clubs somewhere else. And again, you don't want to name those players, but they just weren't as comfortable, they were aware. And the biggest mistake you make is making sure, and at that time there were newspapers, that you read all the newspapers and listened to all the radio shows that are telling you how good you are, how bad you were. And if you do that, then you're hooked, you're stuck.

Bobby Valentine: (16:09)
And you're going to have the pleasure to listen to Steve Cohen soon here in this conference, who now owns the New York Mets talking about owners. I don't think he's going to talk about the Mets, he's probably going to talk about how you could be like him when you all grow up. But when I got hired by his predecessor, Fred Wilpon, the one thing that Fred wanted me to do was get the back pages away from the New York Mets. It wasn't about winning the world series. I mean, from the New York Yankees, it was about getting the back pages away from the New York Yankees. So it's all an interesting, crazy world that we live in.

Joe Torre: (16:51)
Aren't you happy you opened this can of worms?

Tom Verducci: (16:53)
It's all the media's fault anyway. When in doubt, just blame the media. But didn't you say when you were hired by the Yankees that you are not going to read the newspapers?

Joe Torre: (17:01)
I did.

Tom Verducci: (17:02)
And you really were able to do that, just shut out all that noise?

Joe Torre: (17:06)
Let's admit it. I was living in Cincinnati at the time, and the reason I was fired the third time.

Bobby Valentine: (17:13)
Oh, I know that feeling.

Joe Torre: (17:14)
Right. I was fired by the St. Louis Cardinals, and I moved to Cincinnati because my wife was pregnant with our daughter and my wife, Allie is from Cincinnati so I thought, let her be surrounded while she's pregnant and let her be surrounded by family when I was out looking for a job. And the first word I got when my name came up as the possible manager to take Buck Showalter's place was "Clueless Joe," that was the headline in the paper, you want a headline, take it. It was clueless Joe. So, the only thing that came to my mind is all well and good, it's all going to come down to how we do. I mean, of course I'd been around long enough, when you get fired three times, I mean, what's the worst thing that could happen to you.

Bobby Valentine: (18:09)
You get fired again.

Joe Torre: (18:09)
You get fired. And I had a special group, there was no question about it, players that just were so resilient and very determined.

Tom Verducci: (18:24)
How about you, Bobby? Did you pay attention to?

Bobby Valentine: (18:26)
I read every newspaper, of course I did. What are you kidding me? Yeah, every one and wanting to respond to every guy, when you came in after writing a bad article, I wanted to make sure that I responded to you.

Tom Verducci: (18:37)
So you did.

Bobby Valentine: (18:37)
Actually Jay Horowitz, our PR director who is spectacular during my tenure with the New York Mets, would give me all of the good clips when I got to the office and made sure that I read them. And then after I read all the good clips, he'd say, "Oh, and by the way, clappage killed you this morning in the post." Or "Verducci really got you in the times." And so I wouldn't read those articles to tell you the truth.

Tom Verducci: (19:07)
Joe, you've had an incredible baseball career in so many different capacities, most recently with major league baseball. The only job you haven't had is commissioner, but I'm going to make you a virtual commissioner because there's a lot of things we all want to see baseball improve upon. So if I could make you commissioner, what do you think maybe the one or two things that you would like to change to have this game be as good as it can be?

Joe Torre: (19:35)
Well, first off the talent out there on the field now is amazing. I mean, these kids, we didn't have any weight training until the middle seventies. I mean, spring training, you used to come down as a player and run until you threw up. I mean, that's how you got in shape. And all of a sudden the players started paying attention to their conditioning, obviously during and even off season. But to me, I think what's missing, and I always try to restrain myself because I'm 81 years old and...

Bobby Valentine: (20:14)
And doesn't he look great?

Joe Torre: (20:15)
Don't do that.

Bobby Valentine: (20:16)
81 years old.

Joe Torre: (20:23)
And... Now what was I saying?

Bobby Valentine: (20:25)
I'm sorry, you were saying about getting in shape. You're the commissioner for the day, you're the commissioner. You've got to change one thing.

Joe Torre: (20:31)
No. I say I'm 81 years old, and I think I've got to restrain myself because I'm looking at it from my perspective. But the game of baseball is so much more than hitting home runs, even though we all love it when it's for your team, but there's more excitement that should be had during the course of the game on the field. And to me, I don't know how you change it Tommy. You've got teams that are teaching things as far as hitting balls out of the ballpark, I think a big part of it is because there's an incentive for players to do this, because they go to arbitration and they get paid because of their statistics. I think we got to find a way to incentivize team play and doing little things in baseball which really contribute to the teams that win because they have to make sure they do little things like moving runners, being able to put the ball in play, different things, and it's boring when you talk about it.

Joe Torre: (21:55)
But trust me, if you're sitting in the dugout with a man at third base and less than two out, you want contact, you want a chance to score a run. And that's really team the team on how you proceed and try to win a ball game. To me, I think we need to make sure that the game is what we're trying to fix and have the players' association and the owners be able to keep that in mind when they negotiate contracts, what's best for the game. And I think we're seeing this, and I'm not a political person other than wearing a Bobby Famayer pin here, everybody's trying to win the day and get the best of somebody instead of trying to do what's best for all of us. And as I say, I'm an old fuddy duddy, but I like the fact that baseball, when you can enjoy defensive plays and base stealing and running first to third, and the fact that you don't have to be big and strong to be able to play our game, I think is important to really have them be a part of successes in our games.

Tom Verducci: (23:33)
Well, I think everybody in this room realizes the world just keeps moving faster and faster, right? I think Bobby cut three Bitcoin deals just while we were waiting to come on stage up here. So Bobby, my question be about baseball, does it succeed because maybe it's a respite from how hurried we are and short attention spans, or will it only succeed if it quickens up its own pace to kind of match the pace of our society?

Bobby Valentine: (23:59)
Interesting. See, I think that essence of baseball that Joe was talking about gets back to that communication between people who are watching the game, and a lot of times we talked about it being the father and the son, the mother and the daughter, the father and the daughter, who would go to a game and share the experience. Part of the experience in our country of watching baseball was the time lapse that you had in between plays for the father and the son, the mother and the daughter, the father and the daughter, to talk about what happened or what's going to happen. And most of that conversation dealt with what Joe's speaking of. The bump that might be or might not be, the squeeze that Mike could or shouldn't could, the stolen base, the way the ball was thrown from the outfield. All the nuances of the game have literally been taken out of the game by the idea that you pay for the statistical value of the individual player, if that makes any sense to you.

Bobby Valentine: (25:09)
So the only thing there we're waiting for is how far the guy's going to hit it, or how fast the guy's going to throw it, and there's no conversation about the game during that time. And that's why it seems like it's such a long game because you're just waiting around for the home run or the hundred mile an hour pitch. And I think we need to get that stuff back. One of the things they deal with today, if you watch baseball is shifts. Hey, everyone shifts and the purest say, "Oh, what are those shifts?" They're all based on the analytics of where ball might be hit. I don't think the shifts are going to go away, I think they're part of the game, but I think that they should limit the number of shifts so that the manager now comes back into play, into that discussion of what he should do for this hitter, should he use a shift or not use a shift in the first inning? He might run out of shifts and not have it in a nice inning when he needs it.

Bobby Valentine: (26:07)
And things like that maybe even require three plays to be executed on offense by the offense. Three plays during a game, a bun, a hit run, a stolen base, something like that. And then you could sit around and figure out when the manager does do those plays and when he should have done those plays and talk about it. I think we've taken the conversation out of the game and I think that's really killed the game.

Tom Verducci: (26:36)
I love baseball conversation. One word you'll hear a lot here, and it's an important word, is leadership. It's hard to define, but it's used a lot. Joe, you were just in Cooperstown, New York last week, Derek Jeter inducted into the hall of fame. I never thought of Derek as a vocal leader, but he certainly was, I thought, the leader. And leadership in the way that people look to how you carry yourself, how you respond, especially in times of adversity. You know him as well as anybody, what made Derek Jeter a leader?

Joe Torre: (27:13)
Well, to me, if you're going to be successful, the first thing you need to understand is you have to deal with failure. You got to be able, instead of saying, "I wish that didn't happen," you realize that it's not going to change it, so you got to move on. Derek was not afraid to fail. I mean, that's the one thing. He had a horrible spring that first year in 96, and there was conversation about sending him back to the minor leagues. And when you looked in his eyes every day, he was the same kid out there getting ready to play, and there was something very special about him, so special. I mean again, leaders, we all probably have a different idea on what leadership is, but leadership to me is the ability to listen, and the fact that you lead by example, you don't tell people what to do, you show people how to do it. And it doesn't mean ability wise, it's effort, preparation, and all that.

Joe Torre: (28:24)
Derek Jeter, by probably August of his rookie year, you had the veteran players looking to him to do something special, because he had earned that trust over the first four or five months of the season that these players trusted him. And he never changed, never changed. He showed up for work every day, he didn't always do well, but he showed up there every day. We had opening day in Toronto one time, and he tried to go from first to third, they had a shift on and he was trying to go from first to third, and the catcher came from behind the plate to cover and wind up putting his knee down and tag Derek, he winds up dislocating his shoulder. I went out there with our trainer obviously, and he's laying on his back, he says, " I'll be in there tomorrow, Mr. T." I said, "Yeah, you will, sure you will."

Joe Torre: (29:35)
But that's who he was, that's who he was. He was a leader on field and off the field. And again, he didn't talk a whole lot, I mean, when George named him captain, that was something that he didn't really want because he didn't want the attention, but he certainly never backed off on who he was and showed, right? Again, last week in Cooperstown, his speech was right on, touched on his teammates who he valued so dearly, because if he walked in the dugout and somebody who was supposed to, every day player wouldn't be in the lineup, and he'd say, "What happened to such and such?" And I'd say, "Well, he didn't feel good," or whatever, he'd just gave me that roll his eyes thing and walked down the other end of the dugout. It wasn't his cup of tea.

Tom Verducci: (30:34)
Bobby, you played in Los Angeles, you've managed in Texas, New York, Boston. When I mentioned that word leadership, who are maybe the one or two guys that came to your mind that you saw that quality in?

Bobby Valentine: (30:49)
Well, Derek Jeter. Joe, you said he failed, how come in seven years that we played against each other he never failed playing against the Mets? I can't figure that one out to tell you the truth. I had a leader on my team, his name was Pete O'Brien. It was really interesting thing, I thought of as a captain of a team when I was first managing, I was a young guy, I was 35 years old, 36 years old, 37 years old. And now after the third year managing at my end of the year meetings, I had the meeting with Pete O'Brien, and I said, "Do you have anything else to say about your year and everything that went on?" And he looked at me and he said, "Yeah, I have something to tell you, Bobby, if that's okay." And I said, "What's that?" He says, "You think and talk about winning too much."

Bobby Valentine: (31:37)
And I thought, this is the leader of my team, and he just told me that I think about winning too much. I better train this guy and get him out of my clubhouse. Luckily it was at the end of the season and I had a long time to think about that. And after thinking about it, I realized that I was talking and thinking about the end of the game, winning too much, and not concentrating on what happens during the game to get to the win. And so that leader who was a young guy at the time taught me how leaders are supposed to lead, and that's by being part of the process that make things happen properly so you get the results that are needed.

Tom Verducci: (32:27)
That's a great point. And I'll leave you with my own observation because I always looked up, and I'm sure you guys did as well, to Vin Scully, the best in the business who remained the best in the business even into his eighties, just an amazing career as a broadcaster with the LA Dodgers. So I asked Vin Scully one day, "How could you possibly be this good for this long?" And he actually borrowed a line from the actor Lawrence Olivier, and he said, "The humility to prepare and the confidence to pull it off." And I thought about that, it makes perfect sense. The humility to prepare means knowing what you don't know, even when you're as accomplished as Vin Scully, to do the work as if you're trying to establish yourself, even when you already are established. And then the confidence to pull it off is something that obviously comes within all of us. We get confidence from people around us, but if you don't have it internally, that external confidence is not going to resonate.

Tom Verducci: (33:24)
So, that really has stuck with me, I think it's a great lesson if you will, or certainly advice from one of the best in the business. And finally, I wanted to thank these two gentlemen here, because when you do talk about leadership and especially in this great city, they're on the short list, Joe Tory, Bobby Valentine, true leaders. Thank you guys so much, we've enjoyed this.

Joe Torre: (33:47)
Thank you, Tommy.

Making the Bucks: The Road to an NBA Title with Marc Lasry | #SALTNY

Making the Bucks: The Road to an NBA Title with Marc Lasry, Chairman, Chief Executive Officer & Co-Founder, Avenue Capital and Co-Owner of the NBA's Milwaukee Bucks.

Moderated by Anthony Scaramucci, Founder & Managing Partner, SkyBridge.

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MODERATOR

SPEAKER

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Marc Lasry

Chairman, Chief Executive Officer & Co-Founder

Avenue Capital

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Anthony Scaramucci

Founder & Managing Partner

SkyBridge

TIMESTAMPS

EPISODE TRANSCRIPT

Anthony Scaramucci: (00:07)
I got to go right to the Milwaukee Bucks, and I want you to set the scene for us seven and a half, eight years ago, you're buying the team. Why are you buying the team? What thoughts are going in your mind about the team? Take us there.

Marc Lasry: (00:27)
So the reason we initially... I'd always wanted to buy a team. The problem was a lack of money.

Anthony Scaramucci: (00:35)
Was it any team? A Major League team, baseball, football.

Marc Lasry: (00:39)
No. It was basketball.

Anthony Scaramucci: (00:40)
Basketball team. Always wanted to buy a basketball.

Marc Lasry: (00:41)
Always basketball. As you can tell, I used to play basketball.

Anthony Scaramucci: (00:46)
Yes. I could tell. You could tell. You could play center on the [inaudible 00:00:49].

Marc Lasry: (00:52)
So originally I had been an investor in the Brooklyn Nets.

Anthony Scaramucci: (00:55)
Right.

Marc Lasry: (00:55)
And then when the Bucks became available, part of it was that when we did the analysis on it, you have one 30th of the league. So whether you were buying in Milwaukee or you're buying in LA, you have one 30th of the TV contract.

Anthony Scaramucci: (01:13)
Right.

Marc Lasry: (01:13)
So we thought at the time, Milwaukee was a great market in the sense that it was the worst team in league. So all you could do was go up. I think there were out of 30 teams, they were 29th or 30th in almost every category, except for [inaudible 00:01:31] sales.

Anthony Scaramucci: (01:32)
It's an important to understand. I didn't understand that. I bought a small piece of the New York Mets in 2011, sold it to Steve Cohen. But we were getting revenues from mlb.com from the, not mlb.com, MLB which included .com and TV other revenue sources from the whole league. What about the jerseys a marker, are they also a one 30th-

Marc Lasry: (01:54)
You get a piece of everything.

Anthony Scaramucci: (01:56)
Everybody's jersey.

Marc Lasry: (01:57)
But for us, the biggest thing we thought at the time was the TV contract was about 900 million and it was coming due you in two years.

Marc Lasry: (02:07)
So we thought it was going to be about double. So we thought the revenue, the team, the national TV contract ends up being about sort of 35%, 40% of your revenue. So we thought that's great, that's going to double, it should be great, and in two years, this will turn out to be a really good deal. The problem was we were paying at the time the most for any NBA franchise. So it was about 550 million. And what we thought went in two years, it should be worth like 700 million.

Anthony Scaramucci: (02:43)
Mm-hmm (affirmative).

Marc Lasry: (02:43)
And the TV contract turned out to be three times what the original one was. So, that's how it turned out to be a great deal.

Anthony Scaramucci: (02:52)
But you also, at that time, correct me if I'm wrong, you were at an older arena.

Marc Lasry: (02:57)
We did.

Anthony Scaramucci: (02:58)
There was some speculation about whether or not you were going to be able to build a new arena in Milwaukee.

Marc Lasry: (03:04)
Yeah. If you had seen it, there was this training facility, which was at a nunnery, they had a basketball court and that was the training facility for the Bucks, and when it rained, you had to put buckets on the court. It was horrible, it really was. So first we had to build a new training facility and then we had to get a land and we had to raise money to build that arena. So we were willing to put up half the money and we wanted to be partners with the state and the city that they would do the other half, and that's what ended up ultimately happening. But we were able to build a new arena within two years and,

Anthony Scaramucci: (03:45)
And the arena, because I've been there, it's a world-class arena.

Marc Lasry: (03:50)
It is.

Anthony Scaramucci: (03:50)
It's probably one of the nicer arenas in the country.

Marc Lasry: (03:52)
Yeah, it is.

Anthony Scaramucci: (03:53)
Because of the design and the location in the city.

Marc Lasry: (03:55)
Yeah, it's been fabulous. So I think we've gotten exceptionally lucky in that we were able to do everything in a pretty short amount of time, and then obviously the two years done extremely well.

Anthony Scaramucci: (04:07)
Seven years. We've had other sports manager, owners appear, Lou Lamoriello. I don't know if you ever know Lou, but he's GM now at the Islanders. He once said that it's nine months for a baby, it's 11 months for an elephant, it's seven years for a championship. Meaning, from the point of ownership to the ability to get it, you hit it literally right on the number. How'd you do it?

Marc Lasry: (04:34)
Well, first we were really lucky in that when we bought the team, Giannis was already on the team.

Anthony Scaramucci: (04:40)
Some people may not know who Giannis is, I obviously do. Obviously an MVP world-class player who's on the team already. So somebody had drafted him.

Marc Lasry: (04:50)
Yep.

Anthony Scaramucci: (04:51)
Then you had him on the team, but he was up for free agency.

Marc Lasry: (04:54)
He was up for free agency last year.

Anthony Scaramucci: (04:57)
Yes.

Marc Lasry: (04:58)
So really all we did was just try to convince him to stay and hope that he was going to stay. And Giannis being the individual that he is, loves Milwaukee and wanted to try to win a championship with the team that we had. I think a lot of that is we're extremely lucky in the person that he is, that he really feels he wants to do it.

Marc Lasry: (05:21)
He didn't want to go to a super team, he felt an obligation to Milwaukee, and that's one of the reasons he stayed. That and the 240 million we gave him.

Anthony Scaramucci: (05:36)
I did assault or we last year, and obviously you were in negotiations at the time, so we finished the assault. And then I, I budged you on the cell phone. And I said, okay, give me the number that you think you're going to have to pay him to keep them kept the private, of course you told me the number I sell down, but you pay them that number.

Marc Lasry: (05:54)
Yeah.

Anthony Scaramucci: (05:54)
Why?

Marc Lasry: (05:55)
Less than max you could pay. So it was literally because the way the NBA works, if somebody is on your team, you have the ability to give them an extra year. So the most any team could offer you on us was four years. We could give him five years.

Marc Lasry: (06:11)
And those five years it ends up being about 230, 240. So you give him the max you're allowed under the rules, which is 35% of the cap. So it was great for him, it's great for us, and then obviously by him staying and sort of us and the GM actually doing a fabulous job, we were able to win a championship.

Anthony Scaramucci: (06:34)
So we're both sports enthusiasts, so we both watched the owner and then the operational dilemma. What's the owner-operational dilemma? The owner wants to be the operator. So they think they know more about XYZ, baseball, hockey. They know more about basketball than the operational people, but it seems like the people that lay off and let the real pros handle it, do the best, is that true?

Marc Lasry: (07:03)
It depends. I think for us, we're pretty involved. You're spending quite a bit of money on players, so the general manager will pick who he thinks is really good and then comes to us to say, here's what I'd like to do. Are you okay with me spending X? Sometimes we are, and sometimes we're not. Some guys will go, let me see your analysis. Let's go through it. Why do you think this player deserves it? The thing about the NBA that's actually fascinating is the two biggest values in the NBA are rookie contracts. Right? I mean, think about it for the first four years we paid Giannis, I would say three million Euros or something like that. And then your max.

Anthony Scaramucci: (07:50)
So they're valuable because you're getting the player in a real price.

Marc Lasry: (07:54)
For four years.

Anthony Scaramucci: (07:55)
Until they go into free agency. And so those are valuable getting them early on.

Marc Lasry: (07:59)
Yeah. And then the max contract, obviously you're going to give someone like Giannis a max contract. Where you get hurt in the MBA is where you'll pay somebody between 10 and 20 million and for whatever reason, they're not worth what you pay. So there's the contract is just, if you're paying somebody 10, you hope he's performing at 20. And what you don't want is, you're paying somebody 20 and he's performing as if it's a $5 million dollar player we do. So there's a lot of analytics involved, and we have to sign off on a lot of these things. And so, you're going to sign off on trades, you're going to sign off on things when you give the GM a lot of discretion, but alternate, at the end day, you've got to say yes or no.

Anthony Scaramucci: (08:47)
You built a great business. How old your business now? [inaudible 00:08:52]

Marc Lasry: (08:52)
How old is it?

Anthony Scaramucci: (08:53)
Avenue Capital

Marc Lasry: (08:55)
We started in 95. So I guess 26, 27 years.

Anthony Scaramucci: (09:01)
And you built a great culture. Tell us about the culture at the Milwaukee Bucks when you got a hold of it and tell us, what are some changes that you made to the culture.

Marc Lasry: (09:11)
So it's a great question. The first challenge you have when you buy a team or you're on a team, is what's the culture you want. And what I mean by that is, if you think about a time when we bought the Bucks, we had the number two draft picks. So we could have picked either Jabari Parker or Joel Embiid, and Joel Embiid is a perennial all-star, could be an MVP KAT player. And the only reason we picked Jabari was because Joel had a broken foot. So part of what we wanted to do was on day one say to everybody, we're here to try and win.

Marc Lasry: (09:48)
We're not here to try to keep moving up on the lottery and try to get better draft picks. The goal is we're here to win. We're here to get to the playoffs and build a culture around winning. And, it's hard because you've got to do that. Whereas I think some teams who are looking at it and say, well, I'm going to keep on trying to get a lottery picks and I'll get better, but I'll get better in five years. We want it to get better right away and you have to get lucky. And we did, but I think we built a culture and everybody knew from day one that the goal was, we're going to try to win a championship. We're going to try to do everything we can, and we're going to try to bring it, bring in all the best GM, the coach, and do things that are going to help you get there.

Anthony Scaramucci: (10:37)
Okay, so you grew up modestly. Your life story, you are to me the American dream in so many different ways, you built a business, raised a family and now won an NBA championship. So that was a little bit of the outlier there, but you done all these great things, but there you were as a kid and you're idealizing your life. Did you ever buy the sports illustrated posters as a kid. Cause I had one,

Marc Lasry: (11:02)
Yeah.

Anthony Scaramucci: (11:02)
I had one of them at one of Lew Alcindor with the Milwaukee Bucks Jersey on, he was making the hoop shot, you have that one?

Marc Lasry: (11:09)
Yeah, we do.

Anthony Scaramucci: (11:12)
It was on my mother's Carol Brady 1971 paneling, the Walnut paneling, the sheet rock.

Marc Lasry: (11:20)
The fake wood?

Anthony Scaramucci: (11:22)
And I taped it up with scotch tape. Who else did you have in the bedroom?

Marc Lasry: (11:27)
Oh God, for me, I loved, you thought you were a great guard. So I loved Jerry West.

Anthony Scaramucci: (11:36)
Maravich.

Marc Lasry: (11:37)
Maravich, he just thought he was fabulous because he could pass, do everything. I just loved basketball, I lived it, I practiced every day. You got to play in school. I think like everybody else, you dream one day you'd play in the NBA, other than you quickly find out you're six feet tall and you have no talent. Other than those little details, it gets kind of hard. But it was fun, it was a lot of fun.

Anthony Scaramucci: (12:08)
How'd you get Jrue Holiday?

Marc Lasry: (12:10)
So I think our general manager had been talking to The Pelicans for quite some time. At the time Jrue was probably, everybody wanted him. You knew the Pelicans were going to train them. So the question was, what are you willing to give up for them? And I think we gave him a lot or we did. For Jrue, we gave up five draft picks and we decided to go all in. So we gave three first round draft picks, and you do every other year, cause the NBA doesn't allow you to do it for a year. And then we gave two swaps, which meant that if, out of 30 teams, we were the 12th worst and The Pelicans were the 18th worse, they would have our pick if they were 12 and we were 18, they would have their pick.

Marc Lasry: (13:05)
Right? So we [inaudible 00:13:07]

Anthony Scaramucci: (13:06)
That's an interesting trait, I like that.

Marc Lasry: (13:08)
Yeah. So did we give up a lot? Yes. And the hope was, Jrue was going to bring us over the top and that with Jrue, we should be able to win. It was a big decision because the GM recommended it, we spent a lot of time on it. The problem was if, if it didn't work, you had just given up your future.

Anthony Scaramucci: (13:30)
Right.

Marc Lasry: (13:31)
Which is the future of the NBA, or of your team, is your draft picks. So we wouldn't be able to draft anybody. And if it worked, it was great. The fact that it worked was a brilliant move, but that's how everything is.

Anthony Scaramucci: (13:47)
Well, that's it, they're always brilliant. After the fact, they don't know that, or it's a disaster after the fact, you get tarred and feathered the fans, the Milwaukee fans. I love these fans by the way, because it reminded me of Met fans. They're super passionate, they're locked into the team. You go to Milwaukee, they watch every minute of the game.

Marc Lasry: (14:06)
They do.

Anthony Scaramucci: (14:06)
And they'll tell you every play and every foul and the bad ref call and so forth.

Marc Lasry: (14:12)
Yeah, they're fabulous. The part that's funny is, when you buy a team, you're in Milwaukee, so imagine you're just in the stadium and people literally will come up to me and go, listen, I got a great idea, here's who you got to trade for. And people will come up to you and talk to you. I remember one fan comes up to me and goes, listen, if you want to win this league, here's the trade you got to do. I'm like, sure, what do you think we should do? He goes, you got to get LeBron and you got to get Steph Curry. Get those two guys, we're going to be good. Wow, whoa, you think so? And he goes yeah, absolutely, no, trust me on this one. I'm like, okay, let me tell my GM. That's a great idea. It's amazing the stuff you hear, it really is.

Anthony Scaramucci: (15:05)
You have a Twitter account?

Marc Lasry: (15:09)
No, I do not have a Twitter account.

Anthony Scaramucci: (15:11)
Our mutual friend, Steve Cohen, confirmed yesterday that that's him on Twitter. So you don't tweet.

Marc Lasry: (15:18)
I don't tweet. I don't do anything. I'm so scared of tweeting. So I don't go on Twitter. I feel it's easier people text me.

Anthony Scaramucci: (15:27)
Right.

Marc Lasry: (15:27)
Yeah. I don't want the world knowing everything I'm doing, but I know you have one.

Anthony Scaramucci: (15:32)
I do have a Twitter down on somewhat, somewhat, somewhat, and use it a lot. During elections, I use it more actually.

Marc Lasry: (15:40)
I know. Who doesn't?

Anthony Scaramucci: (15:42)
So let me ask you this. David Star, went to school with one of his sons. I knew David, the late great David Star. I knew him for many, many years. And when I was at Tufts, I went to see him at his office. I actually interviewed him for the Tufts sports spectrum. I was probably 20 years old and he talked about the NBA and he looked me straight in the face. It was 1983. He said, they'll never be gambling in this sport.

Anthony Scaramucci: (16:09)
We will never have a franchise in Las Vegas, and we don't want people betting on these games in the United States. And here we are today, it's 2021. And tell us about that evolution and tell us how it's impacting the sport, if at all. Is it good for the sport? Is it bad for the sport?

Marc Lasry: (16:27)
I think it's great for the sport. I mean, people love to gamble.

Anthony Scaramucci: (16:31)
They do.

Marc Lasry: (16:33)
Right. The fear was, that in essence you'd have issues with players.

Anthony Scaramucci: (16:39)
Meaning that God forbid the player got hooked into a bad crowd and they threw a game or something like that. All the coaches got that.

Marc Lasry: (16:48)
And I think that fear has gone away. I'm not saying it's not fully gone, but you can bet now the over-under on a quarter, you could bet while the person's at the free-throw line, is he going to make it? There's all these different things you can bet on. It's part of the game. I mean, people do it. So I think part of what we want to do is get involved in more and, and get a benefit from that. I think that'll happen. Do I think a franchise will be in Vegas? I wouldn't see why not.

Anthony Scaramucci: (17:24)
The NFL also said they wouldn't have read as a Vegas and there we go. So there's been an explosion in franchise value and there're companies like Guile Capital that are trying to find ways to factionalize and to allow people to have an owner experience in a smaller way,

Marc Lasry: (17:44)
Right.

Anthony Scaramucci: (17:44)
Which will probably lead to higher evaluations and franchises.

Marc Lasry: (17:46)
I hope so.

Anthony Scaramucci: (17:47)
Yeah, me too, but more so for you, obviously. What really happens five years from now, or 10 years from now?

Marc Lasry: (17:58)
I think evaluations keep moving up because sports is one of the few things you can't record, I mean, you can record it, we all have a phone. Some of you have two phones, you may have three phones. So imagine you record and you say I want to see the game later on. Well, you got to put your phone away, because you get automatic updates. So I think that recording a sporting event is really hard. I'm not saying people don't do it, but it's got to be less than 1%. So is the one that you have to see live, is the one thing you want to see live. It's a huge content that people want, and I would tell you our new contract comes up or a new media contract comes up. I assume it'll be higher than the previous one. I think you're just going to find valuations continuing to grow, it should be good.

Anthony Scaramucci: (18:59)
So, the feeling of being handed the trophy, describe that feeling. I was watching you on TV when you accepted that trophy, how was the feeling?

Marc Lasry: (19:15)
I would tell you, in the beginning, it's actually funny. There's this massive amount of relief because it takes you so long to get there and then you finally get there and then you've got jubilation. You're thrilled. The hard part for you probably wouldn't have been as big a deal for me. They give you the trophy and they tell you, you can only speak for 10 seconds. And they're like, oh, I have so much to say

Anthony Scaramucci: (19:43)
I'd like to thank the academy and my mom and dad

Marc Lasry: (19:45)
You're on national TV, so you actually would like to say more than 10 or 15 seconds, but they're pretty strict about that. And then they go and we're going to give you the trophy, I'm like, great. And I've never lifted it or I've never taken it and you go and it's in this box and you go to lift and you realize, oh my God, it's heavy.

Anthony Scaramucci: (20:04)
I saw it in your office.

Marc Lasry: (20:05)
Yeah, it's really heavy. And now you got to lift it over your head, but you realize you haven't really worked out. The one thing you don't want to ever do is,

Anthony Scaramucci: (20:16)
Oh my God.

Marc Lasry: (20:17)
Could you imagine if I lift it up and it's like [inaudible 00:20:20] and then you drop it on national TV. It's kind of embarrassing, as I was lifting it, I'm like, oh wow. So now you're going slow. And literally, I get friends of mine texting me.

Anthony Scaramucci: (20:36)
This is going crazy.

Marc Lasry: (20:37)
And they're going, Hey, look like you were having a hard time lifting that thing off. I was like, yeah, it was fine. It was just heavy. The funny part is after the game, after we win, Giannis takes the trophy and he's got the MVP trophy and he's doing all the media things. So I go up to him, I'm like, Hey, y'all I just want the trophy to take a couple pictures. He goes, my trophy. He goes no. And so it's actually been a bit surreal. It was actually the first time. Imagine, it's how many people watch this. Within a, I would say a 24 hour period I got a call from president Clinton saying congratulations, president Obama saying congratulations, and president Biden calling and saying congrats and we want you to come to the White House to celebrate. It's very surreal, you get all these unknown numbers, you don't know whether to pick it up punk.

Marc Lasry: (21:36)
It was good.

Anthony Scaramucci: (21:38)
That's an apex moment. We all know that, but you're such a good guy, Mark. There had to be an apex moment for you with a person or a place or a charity over this Odyssey of ownership that you just walked out of there and felt great. What was that?

Marc Lasry: (21:58)
Oh, I would tell you. A lot of is, you're doing all these engagements in Milwaukee where you're speaking and you quickly find out, you're talking about owning a team, you don't really own it. I think you're custodian because you quickly find out the passion and the love that people have. We bring a bunch of the players to one of the hospitals in Milwaukee to help kids who have cancer. And you see that you're able to bring about a lot of change and you're trying to do things for the community.

Marc Lasry: (22:37)
And it's really, really cool. I know that's probably an overused word, but you find out that you can actually really effectuate change and how passionate people are about sports. If you come with any of the players, it is amazing, the impact, and you can see the impact we had on the city. You had literally 60, 70,000 people outside. It really unified the city, brought people together. I think it's been an incredible experience.

Anthony Scaramucci: (23:12)
And congratulations again, you were future. I watched the Michael Jordan, ESPN doc. I know you watched it, probably watched it twice. And it's very hard to repeat. It's very hard to put the chemistry. They were both statistics, bumps. We know the averages. So what are we doing to get back there?

Marc Lasry: (23:36)
You're going to do everything that you can, I think. What you quickly find out. And I think it's the same in life. You got to do a tremendous amount of hard work to get there. I think we're there. Then you got to stay healthy. That's big. I think the chemistry on our team is pretty unique. I think all the players know their roles. They know what they're doing and everybody gets along exceptionally. Well, we just had a team trip where we all went to Greece, the vast majority of the players went. I think we'll, if we stay healthy, we should hopefully get to the Eastern conference finals, and then we'll see what happens. I think the teams we've got are obviously worried about Brooklyn. Brooklyn is exceptionally talented and then we'll see on the west, they'll probably be the Lakers or the other teams, but I think we have as good a shot as anybody, but it's hard. You're absolutely right, it's very hard.

Anthony Scaramucci: (24:37)
Ladies and gentlemen, Marc Lasry, Avenue Capital, NBA championship owner of the Milwaukee Bucks. Thank you so much.

Ray Dalio on Changing World Order: Current Economic & Geopolitical Challenges | #SALTNY

Ray Dalio of Bridgewater Associates sits down with Andrew Ross Sorkin of CNBC to discuss Changing World Order: Current Economic & Geopolitical Challenges.

Ray started Bridgewater out of his two-bedroom apartment in New York in 1975 and over the course of its 43-year history has grown it into the 5th most important company in the U.S. according to Fortune Magazine. For his innovative work, Ray has been called the “Steve Jobs of Investing” by aiCIO Magazine and named one of the 100 Most Influential People in the World by TIME Magazine.

Ray is the author of New York Times #1 Bestseller Principles as well as the author of Principles for Success, a distilled and easy-to-read illustrated novel of the bestseller, and Principles for Navigating Big Debt Crises. Ray has also published several studies his economic views, including “Why and How Capitalism Needs to be Reformed” and “The Changing World Order.” Both are available on LinkedIn and the latter will be published as a standalone book later this year.

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MODERATOR

SPEAKER

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Ray Dalio

Founder, Co-Chairman & Co-Chief Investment Officer

Bridgewater Associates

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Andrew Ross Sorkin

Co-Anchor

Squawk Box, CNBC

TIMESTAMPS

EPISODE TRANSCRIPT

Andrew Ross Sorkin: (00:06)
It is a privilege for me to be here with Ray Dalio, who needs no real introduction at all to this room. I'm hoping over the next 40 minutes, we can spend some time trying to make sense of where we are in the, 'real economy' but also in the markets. And I think one of the things that you've done so uniquely, especially over the last 18 months during this pandemic, was really spend a lot of time studying and thinking about the history of markets and economies. Literally not just in the most recent period but over 500 years as we've discussed. And you've also thought a lot about the, 'economic machine', a concept that you've developed. Help us understand where you think we are in the arc, if you will.

Ray Dalio: (00:57)
Well, maybe I just briefly describe the arc and then I'll tell you where I think we are. Yeah. About two years ago, I saw three things happening that did not happen in my lifetime before but happened in the 1930 to 45 period. And there's things I really want to talk about. Then we have the fourth thing, a pandemic. They all happened before. The first is the going to zero interest rates, the creation of a lot of debt and the printing of a lot of money to monetize that debt and seeing that cycle happen. That happened 1933, that happened 2008. Very interesting. How does that money flow matter to markets and everything?

Ray Dalio: (01:45)
The second is large wealth and opportunity gaps causing a great internal conflict of value. If I looked at the statistics, I like to look at statistics, like you say, the mechanics, I saw not only the wealth gap but the political gap and all of that operating at a level. And it has an effect, right. It has an effect on tax policy. It has an effect on that but I had to go back to the 1930s and actually before to see such gaps. And the third was the rise of a great power to challenge an existing great power. The United States, China rising to challenge the United States in that changing world order because a world order is a system for operating. Our last one began in 1945 at the end of World War II. There's a war and then there's a new system and it was the American system and that's being challenged.

Ray Dalio: (02:40)
And those three things individually and collectively did not happen before that. And then when I studied it, I wanted to study the rise in declines, not only of empires but reserve currencies because we're printing a lot of money. And what does that mean? And so I needed to study the Dutch, the British and the American and that cycle. And what I saw, was the same thing would happen over and over again. And if you want me, I'll take a minute on what that looks like or you direct me.

Andrew Ross Sorkin: (03:12)
What happened? What did you learn?

Ray Dalio: (03:14)
Well, I learned that when there is bad finances, and we have bad finances.

Andrew Ross Sorkin: (03:27)
Right now.

Ray Dalio: (03:29)
Bad finances, if you're spending more than you're earning and you have a balance sheet that has a liabilities, more liabilities than it has assets, that's bad finances. You can fill that in by printing of money and continue to create debt but that's not sound finances. Central banks have the ability to do that. And when they do that, that's a no. When you have let's say, bad finances ... And by the way, that's happened repeatedly in history, we can see how that's worked and the consequences of it and we have to understand the mechanics of it. When you have bad finances and you have large internal conflicts, that is a risky situation, particularly if you have a downturn because the rich and the poorer and so on, the left and the right, those with different ideologies have greater internal conflict. And the internal conflict has a risk politically. And it has a risk in terms of the effectiveness. When people are working well together to be productive, that's great but if ...

Ray Dalio: (04:41)
If you have bad finances and you have large gaps and you have the rise of a great power challenging an existing great power, and those things happen simultaneously, that's a risky set of circumstances. I can get into the statistics of that, how many times a rising power ... You take that and then what are the mechanics of that? For example, so what does it mean to markets? For example, if you look at every one of those movements, when they immediately print money and do that, you want to buy financial assets. I'll just take another minute, a lesson that I learned.

Ray Dalio: (05:24)
I was clerking on the floor of the New York Stock Exchange in 1971. This was year after college and before business school on a summer job and it on it was August, 1971. I followed the markets a lot and president Nixon on August 15th, 1971, gets on the television. And he says basically, "That monetary system that we used to have and what money was, we're not going to have that anymore. It will not be ... You can't get the gold."

Ray Dalio: (05:59)
At that time, it used to be that money was like checks in a checkbook. They had no value. They would just get you the gold and then you'd have the gold and we're not going to do that anymore. And I figured, "Okay, now I walk on the floor of the New York stock exchange."

Ray Dalio: (06:12)
The next morning, got there early, figure we're going to have some pandemonium. And the pandemonium that we had, I thought it was a crisis. And the pandemonium I had was the stock market up the most in decades. And I went back and ... I didn't understand that. And I went back and I found out that the exact same thing happened on March 5th, 1933. It wasn't on TV, it was on the radio. And Roosevelt did the same thing and the stock market and gold and all of those assets went up again for the exact same mechanical reasons. I learned two things. I learned first of all, that I better study things that didn't happen in my lifetime before because as they might happen again, that's what helped us anticipate the 2008 financial crisis but I also learned that dynamic that when you print money and create that, that's a hell of a stimulant but it also means ... It means you don't want cash. It means that you want those other assets. That dynamic is the nature of what we're going through.

Andrew Ross Sorkin: (07:22)
Do you want financial assets though?

Ray Dalio: (07:25)
It depends, financial assets are different things. You don't want bonds, cash is a financial asset. You want cash, you don't want a bond. It's going to have a negative real return. Who wants bonds? You're going to have a negative real return. You want that, okay. And you're not probably going to get the price appreciation through the bond. You have two ways you can make money. It goes up or it gives you a good yield. It's not going to give you a good yield, negative real yield and it's not going to go up much more when you get down to that. You don't want the bonds.

Ray Dalio: (07:55)
Stocks have an asset. They're a reflation asset throughout history. There are things that you want. You want stocks, you want gold, you want tangible assets. You want real estate. You want the things that are basically anti-money and you particularly want those when there's a large portfolio of those. Think about it right now. Through history, what we accumulate are a lot of financial assets. And the only purpose of those financial assets is to take those and convert them into buying things.

Andrew Ross Sorkin: (08:30)
Yeah.

Ray Dalio: (08:31)
And when there's a lot of financial assets and we produce a lot more financial assets, then they're all claims for those other things and if you just went through the calculations and you were to say, "Okay, how much financial assets do you have relative to real assets? Or how much are there?"

Ray Dalio: (08:48)
There's too many relative to real assets. And so you want to get into those things that have more of those intrinsic values, a company is. And throughout history, you see that happen.

Andrew Ross Sorkin: (09:01)
Okay, let me throw a new wrinkle in, which was not in any of the history though. And I wonder, we can even ask this room, how many people in this room are holding some form of cryptocurrency right now? And I know you own some Bitcoin. Actually, let's do that. How many people here have some, any cryptocurrency at all? What do you think that is? 80%. It's a lot. Okay, so crypto arguably wouldn't it have been a tangible asset historically. Where does that fit in the realm, this?

Ray Dalio: (09:36)
Yeah. Crypto is like a lot of historic currencies. There are some that have intrinsic value. It doesn't have intrinsic value but it has a limited supply. And as long as it's accepted for payments and so on and has a limited supply, if the demand grows more than the supply grows, it goes up and it serves that purpose. And it's done a heck of a job of programming, stood the test of time, meaning it hasn't been hacked and so on. And so it's a viable alternative. And I think that probably ... I think most of the people ... There are different reasons for owning it but I think most of the people would say, "Is it a store hold of wealth that's limited in supply and maybe not controlled? And is it a viable alternative to a Fiat currency?"

Ray Dalio: (10:34)
Don't trust the Fiat currency. How does it compare to Fiat currency? And so is it an alternative gold kind of thing? There's probably an attraction in there and it has an attraction for me in there but then there's the question of it. And how many in the audience, let's ask the question, how many in the audience have some in gold? I'm curious.

Andrew Ross Sorkin: (10:55)
Let's do that. How many people have some gold?

Ray Dalio: (11:00)
A lesser percent.

Andrew Ross Sorkin: (11:01)
Lesser percent. I'm going to go 50% or less, 40 even maybe. Yeah.

Ray Dalio: (11:05)
Yeah. That becomes an interesting question. For me, I don't have a huge amount but I have more gold than I have crypto.

Andrew Ross Sorkin: (11:15)
Okay.

Ray Dalio: (11:15)
And my basic thing is, rather than make it crypto or rather than make it Bitcoin or the other, I would say diversification is a good thing. We could get into the merits of the one versus the other, I don't where you want to go with this but in any case, let me tell you that either one of those ... Crypto can go like that, meaning governments can regulate it, outlaw it or it can be traced and certain other things. Diversification is something I would emphasize.

Andrew Ross Sorkin: (11:50)
Part of the argument though on crypto, when it comes to the regulatory regime, is or would be that it's already reached escape velocity, that it's at a level now that there's so much value around the globe, that it'll be almost impossible to shut down. It's a little bit like Uber. I oftentimes think about it like Uber because when Uber started, people thought regulators were going to shut it down but they grew so fast so quickly that all of a sudden, regulators didn't really have a choice. They just had to figure out a way to deal with it.

Ray Dalio: (12:22)
Yeah, okay. There are a couple of things in that. First of all, no, I think that it's easier to do deal with now. If you didn't ... Let's step back. Governments don't want alternative currencies, okay because throughout history, we see that. They want control over the currencies for all of the various things.

Andrew Ross Sorkin: (12:47)
Especially when you have a successful currency but if you have a lousy currency, like El Salvador ...

Ray Dalio: (12:52)
That's what I mean. Since 1700, there have been about 750 currencies. Only 20% of those are still in existence. And all of those have been significantly devalued at one point another.

Andrew Ross Sorkin: (13:08)
Okay.

Ray Dalio: (13:09)
We don't have to pick El Salvador. We can pick the German, we can go through history and pick the most credible ones. It's the norm, right. And so in any case, what I'm saying is that you don't want ... If you're holding a currency, it's an awfully good way to print money and get the money around, which is going to devalue because what is a debt that you're holding? Currency equals a debt.

Andrew Ross Sorkin: (13:35)
Right.

Ray Dalio: (13:36)
And it means that you receive something and now you have no interest rate on it and they're producing a lot of it.

Andrew Ross Sorkin: (13:42)
Right.

Ray Dalio: (13:42)
Okay. And so it's the way out. It's ultimately the way out because when ...

Andrew Ross Sorkin: (13:48)
Cash is the [inaudible 00:13:49].

Ray Dalio: (13:49)
If you keep it hard, you have a big debt crisis. And if you don't keep it hard, you don't keep it hard. History's always been the devaluation. There's a point of that and they want that because if you look at history, if they don't have that ... But think about that dilemma, just the fact that we're talking about the possibility of that dilemma means that you're going to want something else. And I don't see why one has to be ... There's not even enough choices of those types of things. We could take Bitcoin or you could take older, you could take ... The advantage of both of those is they're money. You easily transfer it, it's very different than real estate let's say, or equities.

Andrew Ross Sorkin: (14:31)
Right.

Ray Dalio: (14:31)
Now, equities are in a sense, pretty portable.

Andrew Ross Sorkin: (14:35)
[inaudible 00:14:35].

Ray Dalio: (14:36)
Okay. And that's real value, okay. It has the same attributes, as long as it's going to be real value and when inflation changes and so on, its value can change along those lines. Equities are a very viable alternative.

Andrew Ross Sorkin: (14:49)
Right.

Ray Dalio: (14:50)
They're a good alternative but you think of this category of things that can't be devalued. The equity bull market that we're having is an extension of that. It's the same thing, don't differentiate it. What did you think happened? We distribute a lot more credit and a lot more money. There's a flow of funds. There's a mechanics to it. You have a lot more money. You get the money and then you buy things. An investor who gets the money, when there's an intervention, when the central bank buys, they buy a bond from an investor and the investor gets cash and what do they do? They invest it someplace else.

Ray Dalio: (15:26)
And all through that process, there's the mechanical part of that. And that's what you're getting. I don't think we even have to split hairs in terms of the one or another, just to make sure you have enough of a diversified portfolio of that and know what kind of an environment we're in. And we're talking now about the money and credit part of that. We also should be talking about the wealth gap part of that because that affects it, because there has to be a transfer of wealth, okay. That's going to affect investors, how they transfer taxes and those things are going to take place. And then you have to take a global view of these things, which includes China and other countries. It's all of those things [inaudible 00:16:05] together.

Andrew Ross Sorkin: (16:05)
I want to dig into the second two pillars in just a moment but I have just two follow ups. One, when we talk about escape velocity of Bitcoin, one of the things you have also said though, is that if it becomes too successful, governments will, you believe, ultimately shut it down. And so therefore, if you're right, you want to own it to a certain point of success and you don't want to own it after that.

Ray Dalio: (16:30)
Yeah.

Andrew Ross Sorkin: (16:30)
How would you define that? Cathie Wood, she was on the stage with me on Monday night, said that she believes ... I believe her base case five years from now, is that Bitcoin will be worth 10 times what it is today.

Ray Dalio: (16:41)
See, that doesn't make any sense to me because of the following reason. Look, I'm no expert in this but look, there is approximately ... Let's say, if you use gold as an example and you make the comparison, there's a certain amount of reflation, certain amount of those kinds of things going up to make a price increase. And then there's a certain market share that gold will have, that Bitcoin will have and other things might have. If roughly speaking, there's about ... If you take gold and you take central banks' ownership of gold, I don't think they're going to be owned by ... Central banks are not going to own Bitcoin, for various reasons. I don't believe so but if you take jewelry out of it and central banks, there's about 5 trillion in gold.

Andrew Ross Sorkin: (17:37)
Right.

Ray Dalio: (17:38)
If you take it for Bitcoin, there's a bit less than a trillion dollars.

Andrew Ross Sorkin: (17:42)
Right.

Ray Dalio: (17:43)
If you were to say, "I'm just going to have a portfolio of those two things."

Ray Dalio: (17:46)
Right now, about 20% of that portfolio, if you were to say, "The supply is there."

Ray Dalio: (17:51)
And you say, "Well, what's the right amount of that mix?"

Ray Dalio: (17:55)
That's going to be something like, "Okay, it's 20%."

Ray Dalio: (17:58)
And given the volatility and the total attribute, I don't imagine that the market share is going to be much greater. And so the question is, does that market share rise or where do you think the market share is going to go of that because ...

Andrew Ross Sorkin: (18:11)
Right.

Ray Dalio: (18:11)
You see what I'm saying, because if it was to go 10 times as much, then what'll happen is somehow Bitcoin not only will have to be greater than the total amount of money that's held in that non Fiat currency kind of thing, which seems like a stretch too far in terms of that but it could happen if you have a problem with Fiat currency as ... And as a percentage of one's own portfolio, that those things rise more perhaps but it's very much a stretch. And so when I'm looking at it, I'm saying ... I think, shouldn't we all pay attention to those not Fiat currencies or those things where you can take them from one place to another and that they're accepted around the world and that they're not debt and so on? It's that category that I think is a more interesting conversation. And do you have a diversified portfolio of those things? And what is good balance? That's the more interesting question, I think.

Andrew Ross Sorkin: (19:12)
And then the other question I think, relates to where we are in the cycle if you will, given that you've now studied these periods. How difficult is it to actually ascertain where we actually are and also how it ends? Usually, leverage can be a great thing until it's not. And we are now in another levered moment. And the question is where we are in that moment.

Ray Dalio: (19:39)
Well, we know we are in the late cycle phase of the cycle in which there's a lot ...

Andrew Ross Sorkin: (19:48)
Well, you and I probably would've said that four years ago.

Ray Dalio: (19:51)
Oh, yeah. No but that's ... And we're just advancing in that. I don't mean much of the differences in that type of thing and you could tell the increment. All I'm saying is there are three ... There's a cycle. There are three types of monetary policy and you could almost judge it. First, monetary policy one I call it, interest rate policy. You move the interest rates up and down. Then when you hit zero interest rate, you don't have that anymore. The next policy that you have is what I call monetary policy two, which is also called quantitative easing, where a central bank buys bonds from investors. And then it goes in the hands of investors. The money goes to other investments and investments go up. And those who have investments do well and so on but it doesn't trickle down in the same way.

Andrew Ross Sorkin: (20:36)
Right.

Ray Dalio: (20:37)
Okay. That's monetary policy ...

Andrew Ross Sorkin: (20:38)
We're in number two right now.

Ray Dalio: (20:39)
No, we're in number three right now.

Andrew Ross Sorkin: (20:41)
Okay.

Ray Dalio: (20:41)
Monetary policy three, is when there needs to be a redistribution of wealth. And the way that works is that only the federal government can determine where the money goes. Federal government gets to determine how much I tax and where I distribute it. And the central bank gets to determine how much there is of it, how much money there is of it. And so when the central bank works together with the central government to direct money, to give it to others in that way, which increasingly then bypasses investors to some extent and gets money into the checks that we sent the money around to, to be able ...

Andrew Ross Sorkin: (21:21)
Right.

Ray Dalio: (21:21)
And so we're in monetary policy three, where there's a coordination of monetary and fiscal policy to redistribute wealth, to redistribute money in that way. We're in that monetary policy three. And then you could judge the size of the deficits and how they're being met. And so the debt problem is not a debt problem like we're not going to pay you off those debts because at the end of the day, they don't choose to pay them, they don't choose to have a debt crisis. At the end of the day, it's just a question of how long it takes them to print more money to monetize those things. In 1929 to '32, and '32 was when they printed the money, then stocks went up and everything went up. 1929 to '32 took a long time, 2008 took a lot less time. One took two and a half years, one took maybe nine months, this time took like that. And so the next time along those lines, that's what you're going to experience when you have that kind of devaluation.

Ray Dalio: (22:27)
You can see that's where we are in the cycle. Each of the stimulants has been greater than the one before. If you start in let's say, 1980 and every interest rate increase and every interest rate decrease has brought the interest rates to a lower level, every peak, every trough and interest rates down to hit zero. And then when you hit zero, every QE has been larger than the one before.

Andrew Ross Sorkin: (22:55)
Is there a way out of the cycle then?

Ray Dalio: (22:57)
Well, it's like asking, "What do you do with ... What do you do with the debts?"

Ray Dalio: (23:01)
The mechanics of it is yes. The mechanics of it is, have an interest rate that is below the nominal growth rate and below the inflation rate. You must have an interest rate that way because think of it this way, if nominal growth in the economy, in other words, inflation plus real growth, let's say it was three and three or two and two, and that's four or five or six, and you kept interest rates at zero, then you are going to reduce your debt to GDP right, because you reduce debt service.

Ray Dalio: (23:40)
If you look at the times that it's been most stretched in history, the World Wars would've been the most. If you look at the amount of debt creation and the monetization, you would go back into the '30 to '45 period and you would see how that operates. They hold the interest rate down because what you have is the central bank becomes the owner and the central bank, when they become the buyer, they can tolerate whatever the central bank wants. If free market goes away and the central bank wants it, that they could hold it. And they hold that interest rate while inflation rate rises. And then what you do is you see your loss of purchasing power, such as we're seeing, if you hold it in debt. And that's one of the ways you deal with debt.

Andrew Ross Sorkin: (24:26)
Let's talk about the second pillar for a second, because one of the things you also talk about is the politics of this moment and the politics that you've seen historically, especially when we've seen the inequality that we have and what it ultimately does to taxes and therefore, what it ultimately does to the economy. Lay it out for us.

Ray Dalio: (24:41)
Yeah. Well, the issue is really most importantly, a conflict and a productivity issue. If you have conflict that becomes dysfunctional in operating, historically sometimes that's the case.

Andrew Ross Sorkin: (25:02)
And do you think we're at that point? Is this what dysfunctional looks like?

Ray Dalio: (25:08)
I think we're not ... No, no, no. We're not at that point.

Andrew Ross Sorkin: (25:13)
Okay.

Ray Dalio: (25:13)
We are going there. We're drifting there okay, that the conflict ... There's a certain amount of ... And that has a political implication. And there's a range of possibilities but I think that the system is going to change greatly because there are irreconcilable differences in some way about how do you deal with the money, wealth distribution kind of thing? And there's a battle. And right now, that battle has been diminished because a lot of people have received checks and it's not as contentious if all the money goes and we're all now feeling pretty good. It's okay. It's when it happens in 2022 and 2024, if we start to look at 2022 midterm elections or 2024. And that's also the part of the cycle where it's so easy when you give it a good stimulant and everybody's high and it's great, okay. It's a different thing. When that wears off and that stimulant will wear off and it'll produce some other consequences, and you get farther towards 2022 and 2024 and so on, it's going to be a somewhat different picture, okay. A little bit more ...

Ray Dalio: (26:36)
And then the politics around that in terms of the polarity depends how bad it gets. For example, there's talk about the possibility ... There's talk about the possibility that elections would be contested. And if you can't go by the rules of who gets to sit in the seat, you have to resolve that kind of thing. Then you take the '24 election. Now, in the meantime, you're also having other things going on in the world. For example, China in this case, is having its political changes in November.

Andrew Ross Sorkin: (27:10)
Yeah.

Ray Dalio: (27:10)
It's going to have its political changes, not probably Xi but the Politburo and the other political jobs and so on. Those things are going on. And so that clock continues to move. And as we start or to imagine it over two, three, four or five years as investors, we should think about beyond the immediate. We have to think two, three, four, five years ahead, I think.

Andrew Ross Sorkin: (27:35)
You've long argued that the critics of China misunderstand China, especially I think the investor class recently that has looked at a lot of the regulatory crackdown and said, "We can't be in here. We can't be here anymore."

Ray Dalio: (27:46)
Yeah., I think ... I've been going to China since 1920, since 1984. And for the first 20 years of going there, I didn't do any business. I went there because I was curious and then because I liked the people. And then it was an exciting place in terms of the things that were happening. And I got to know from the lowliest people to other people, senior people, what the thing is. And I think it's not understood and it's understandably not understood, meaning I think you have to answer the riddle. If you could answer this riddle, you could understand China. The riddle is, "How is it possible for a communist, Marxist economy to be capitalist, have the second largest capitalist, produce billionaires and create the capital markets?"

Ray Dalio: (28:46)
That's not a new thing, that's been something going on since 1978, so you better have resolved that. And if you can't resolve that and understand why that is, then you don't understand China if you can't give the answer to that riddle. And the answer to that riddle was made clear by [inaudible 00:29:05] and so on, when in 1978 ... And like he said, "It doesn't matter if it's a white cat or a black cat, just as long as it catches mice."

Ray Dalio: (29:15)
And what he means by that, is get rich. He said also, "It's glorious to be rich."

Ray Dalio: (29:20)
To raise the living standards and then to redistribute wealth simultaneously to make them both operate together. And if you look at Marxism, it's dialectical materialism. What is dialectical materialism? Dialectical means two things that seem inconsistent and are at odds and when they are in ... That produces product, that produces progress. And so what it means is ... Okay, here it is. Marxism and capitalism and then they're very practical people. And so to understand that it's not your grandfather's communism in that same way, it's something that's been going on there. And so where it is in terms of that evolution, if you take any measures of capitalism in China and I use a lot of measures. How much is wealth distribution? What are the tax rates? And so on and so forth. And you take capitalism and use equal measures across countries, what you have is about the same amount of capitalism going on in China as you have in the United States and way more than is going on in Europe or is going on in other places.

Ray Dalio: (30:32)
I think it's important to understand them. In other words, what would they say and what are they doing? And I think that you're getting a move toward ... There are a number of things going on. We could talk about data management and so on, depending on how long you want to talk about it but one of the things is the broadening of the benefits, the move to the left. And the move to the left is like a move to the left here. If you were to look at let's say, their move to the left, I don't think is going to be a Bernie Sanders move to the left or those types of things but there is a movement to redistribute or to deal with that kind of issue in various ways, without knocking that over. Don't mistake it for what might be a return to something else, certainly onto Xi because if you follow Xi and you follow the policy and you know the policy makers around Xi, that's not what's happening.

Ray Dalio: (31:31)
Now, you also have to understand that there's a whole different way about regulation. One of the leaders described it as that in the United States, he was saying ... And this is not ideologically, just matter of factly, is saying, "In the United States, it's a country of individuals and individualism."

Ray Dalio: (31:55)
And that's of paramount importance. And so it's a bottom up type of place. In China, it's an extension of the family and the hierarchy. And it goes back to confusion and it's very much a top down type of thing. And so it's much more regulated. And so when you see things like let's say, do they regulate how much time your kids will be on video games? We would say, "Okay, that's really a parental decision."

Ray Dalio: (32:22)
A lot of people would. Some parents might say, "I would rather the government do that than me try to have a struggle with my kids all the time."

Ray Dalio: (32:29)
... but anyway. You have to understand the approaches. Different people can have different approaches but that's basically what's going on. And then the question is, when I'm thinking as an investor ... I admire their thinking, the quality of the thinking. There were the choices that each makes and there were pros and cons. The main thing is that each country, our country, is it going to be strong? Is it going to be capable? And there are basics of what that means. Do you educate your children well? Is there civil behavior and so on? That's what we have to focus on. I think if we have a diversification of a portfolio, it's dangerous to be in any one place. You want certain chips there, certain chips there and some other chips elsewhere.

Andrew Ross Sorkin: (33:16)
What do you say to the China critics who say China represents an almost existential threat to the United States? And that actually, anyone here in the United States shouldn't be doing anything to help them get to that place?

Ray Dalio: (33:32)
Well, I think that China could be an existential threat to the United States and the United States could be an existential threat to China and so on. And I think that the more we move in that direction and don't understand and don't have contact and don't have interrelationships, the more likely that's going to be an existential risk.

Andrew Ross Sorkin: (34:01)
We only have about five more minutes. And I wanted to actually talk to you a little personally because one of the things that I've been fascinated about during this pandemic and even before then, you had published a book called Principles, which I've written about but in addition to that book ... And we talked a lot about the culture inside Bridgewater and the idea of radical transparency. You've tried to take that radical transparency concept and bring it outside the four walls of Bridgewater to the public if you will. There's software, you can now ... Anybody in the room can go do it, where some of the same technology they use inside Bridgewater is now available to the public to use on Zooms, to effectively rate or judge other people on the Zooms. I'm curious, in the post COVID world, I don't know if ... Hopefully we're past it or getting past it, what the last 18 months has made you think about in terms of that culture that you've been trying to create and what it means elsewhere?

Ray Dalio: (35:05)
Well, I'm at a stage in my life ... I'm 72 years old. I'm at a stage in my life where my goal is not anymore to be more successful myself but just to try to pass along and then I'll do that for a year or two and then I'm done. I'm basically [inaudible 00:35:19].

Andrew Ross Sorkin: (35:19)
You're done in a year or two.

Ray Dalio: (35:20)
Yeah, basically...

Andrew Ross Sorkin: (35:22)
What are you doing in a year or two?

Ray Dalio: (35:24)
Go quiet, do the things I like to do and so on. I think that there's a life arc. There's a natural with transitions. In the first third of your life, you're dependent on others, you're going to school, your parents are there. Second phase of your life, others are dependent on you. You work, you try to be successful. And then your third phase of your life, the natural thing is to help other people be successful and try to pass along the things that are worthwhile. And I'm in that particular transition phase. And so one of the things was that ... And our culture, which is ... Say it in one sentence, it's a long sentence. An idea of meritocracy. In other words, the best ideas went out without hierarchy, an idea meritocracy in which the goals are meaningful work and meaningful relationships through radical truthfulness and radical transparency. And that's worked for me.

Ray Dalio: (36:21)
In other words, if you can be honest with people and you realize that there's both the great relationships but you can be truthful, radically truthful, you could talk about things in that way, then you can know what's true because if you don't know what's true in everybody's head and you have the politics, not only is that inefficient but it also undermines trust. If you can have that trust and you can also use data, collect data so that you could speak up about what's important to you and you can collect the data, that helps you make an idea meritocracy. Anyway, there was those things that work. I won't go explain it all. And so what I wanted to do was to pass that along. And so yes, I've passed along two things.

Ray Dalio: (37:06)
On Zoom, there's now the Dot Collector, a way that people can pass along their thoughts and also collect information data so that let's say, if you go into an annual review, rather an annual review, you have a daily review and so on and you learn. And bosses should be doing that all the time with their people in an honest basis or vice versa. People who work for somebody should do it with their bosses, I think. That process has worked for me and I believe it works very well. And then I put out also ... I found that personality file tests are really great, things like Myers-Briggs and so on. About 20 years ago, I started doing these. I had four or five that I would use and then I decided I wanted to make one. And I wanted to ... That's a simpler [inaudible 00:37:55] all the information. I put out one called PrinciplesYou. It's available for everybody. It helps people understand themselves and others. You took it.

Andrew Ross Sorkin: (38:05)
I did.

Ray Dalio: (38:05)
Your wife took it, a lot of people take it and so on. I just made it available for everybody for free. And then there's a component of that PrinciplesYou if you want to take it, it's online. And then there's a part that it also, if you put in yours with somebody else's or even your whole team's, it'll tell you about the group dynamic, PrinciplesUs. And that's why, knowing what you're like and knowing what others are like allows people to play to their strengths and avoid their weaknesses rather than to try to cover them up with politics.

Andrew Ross Sorkin: (38:37)
What do you think of Zoom life? And the reason I ask, is because I know you tried to create a specific unique culture at Bridgewater, how much easier or harder you think it is? Maybe it's actually easier because you used to always film meetings. That was always part of it. Now we all film our meetings.

Ray Dalio: (38:56)
Well, I think what ... I don't know that I have unique reviews but I do think that there's pros and cons and that it's a great alternative. The capacity to then make conscious choices of whether you're doing things on Zoom and then do you collect data or not? And that's a real benefit, time benefits and so on. I think we're going to a world where then the in person will be part of that but it'll be more tailored to in person and we'll now have a more tailored mix for everybody and they'll pick their tailored mix.

Andrew Ross Sorkin: (39:28)
And the other thing that you have coming up is this new book, that you have coming up in November.

Ray Dalio: (39:33)
Now, this is the ...

Andrew Ross Sorkin: (39:33)
The Changing World Order.

Ray Dalio: (39:34)
Oh, okay. Yeah, you can order it if you want. You can order it. That's the study that I needed to do to understand where we were. And then because it was completed as a study and I want to pass things along, that's it, The Changing World Order. And it's a study of last 500 years, it brings it right up to the moment and it shows the patterns.

Andrew Ross Sorkin: (39:59)
Ray Dalio, everybody. Thank you for the conversation.

Ray Dalio: (40:02)
Thank you.

Andrew Ross Sorkin: (40:02)
Appreciate it.

Ray Dalio: (40:03)
Thank you.

The Hedge Fund Comeback: Steve Cohen, Ilana Weinstein, Dmitry Balyasny & Mike Rockefeller | #SALTNY

The hedge fund comeback with Steve Cohen the Founder of Point72. Ilana Weinstein the Founder & Chief Executive Officer of The IDW Group. Dmitry Balyasny the Managing Partner & Chief Investment Officer of Balyasny Asset Management. Mike Rockefeller the Co-Chief Investment Officer of Woodline Partners.

Moderated by Barry Ritholtz the Founder & Chief Investment Officer of Ritholtz Wealth Management.

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SPEAKERS

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Steve Cohen

Founder

Point72

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Ilana Weinstein

Founder & Chief Executive Officer

The IDW Group

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Dmitry Balyasny

Managing Partner & Chief Investment Officer

Balyasny Asset Management

Michael Rockefeller

Co-Chief Investment Officer

Woodline Partners

 

MODERATOR

Barry Ritholtz.png

Barry Ritholtz

Founder & Chief Investment Officer

Ritholtz Wealth Management

 

TIMESTAMPS

EPISODE TRANSCRIPT

Barry Ritholtz: (00:00)
All right, so this is really a fascinating crowd, and I think I have the easiest job of the whole three day event, because this is quite an illustrious panel and I know they all have a lot to discuss. When we look at the state of the hedge fund industry since the Great Financial Crisis, the performance has been a little lackluster, and there have been lots of conversations about what's going on in the hedge fund world, and are we ever going to see the sort of uptick that we saw pre-crisis. And I think the past two years has brought that question to the fore where we've seen tremendous performance, tremendous alpha and a lot of attraction of assets. And to talk about the question, "Is the hedge fund industry back?" is the panel, and let me introduce everybody very briefly.

Barry Ritholtz: (01:03)
Steven Cohen is the founder of Point72. He is a legendary hedge fund investor as well as proud new owner of the New York Mets. Dmitry Balyasny runs one of the more interesting hedge funds in the world. They manage about $9 billion, returned more than 30% last year. Ilana Weinstein is the founder of the IDW Group, one of the hedge fund industry's leading headhunters, and she knows all about talents and what it takes to get on top and stay on top. And at the end of our panel is Mike Rockefeller. He's the founder of Woodline, which was one of 2019's biggest hedge fund launches, in less than two years has eclipsed more than $5 billion in assets under management. And so let's start with a question for everybody. Are hedge funds back? Is the industry in a better place than it was before the pandemic lockdown? Let's start with Steve.

Steven Cohen: (02:08)
I mean, I don't know, have they ever left? I mean, hedge funds have been around for a long time. I mean, there are ups and downs. Listen, the markets have obviously been pretty good since March of last year, and there's been a lot of interesting... There have been sparks, and there have been new companies that have been IPOed and so there's a lot of stuff going on underneath the surface, a lot of rotations in the markets. And so lots of opportunities to create alpha. And I think the performance has been good, I don't think it's been extraordinary, and so usually, in up markets there's an opportunity to... We all tend to look okay, and we'll see what it looks like when the world changes.

Barry Ritholtz: (03:02)
Anyone else want to jump in?

Ilana Weinstein: (03:03)
I do think we're in a better place, but I think part of that is because there was a real calling of the industry from 2015 to 2018. As much as we've seen these fantastic headlines tuning the resurgence of hedge funds in the past year and change, there were all these headlines if you remember also predicting their demise back then and doomsayers about the industry. And we saw a lot of funds go out of business, big funds that once upon a time were brand name funds like Eton Park, and Blue Ridge, and Convexity and Pine River and Blue Mountain, and the list is honestly too long to recount. These were not two-bit players, these were real funds that just couldn't make it. And I do think where we are now is in a better place because like any industry that matures, and we are maturing, we're still young but we're maturing, there is a weeding out of weaker players.

Ilana Weinstein: (04:00)
And I think a healthier set of funds remain, and yes, COVID like Steve suggested that the opportunity set was great for funds, there was a lot of volatility, fundamentals came to the fore, great sector themes were accelerated, but there's also a path dependency to investing and you can take more risk when you're up, and buy at the bottom with both arms. And I think the fact that we do have now and this is continuing to evolve, we'll see more funds go out of business and new ones thrive, but the fact that there is a stronger set of funds today, I do think has helped in lifting returns.

Barry Ritholtz: (04:40)
Dmitry, what are your thoughts? What's the state of the industry today?

Dmitry Balyasny: (04:43)
Yeah, I agree with that. I think it's stronger. I also agree some capacity came out of the industry which was helpful. I mean, there is a little bit of cyclicality to the strategies, so if you look at just overall long short returns and equities from '16, '17, '18, they weren't that great, so we got a little bit of a bounce back from that same thing with macro had pretty slow period with very low volatility. We're getting a little bit of a bounce back from that. And I think in general, hedge funds do well when there's some sort of significant change in the markets that lead to more durable flows for some period of time, which we definitely got last year. We've gotten kind of bits and pieces of that this year, so there's a decent amount to do.

Barry Ritholtz: (05:32)
And, Mike, you come from a very different perspective, your fund launched much later than these gentlemen. You're 2019, you're West Coast based and most of us are East Coast based. How do you see the world of hedge funds today? What does it look like from your perspective?

Mike Rockefeller: (05:50)
There's no question 2019 and 2020 were strong years for hedge funds and long-short equity funds, but I'm going to give you a headline, Barry, that you haven't heard, and that is for equity long-short, 2021 is shaping up to be one of the worst years for the industry. And so you say, "How can that be?" On an absolute basis, hedge funds and equity long-short are up 8%. That is true, but from an alpha perspective, when you look at the prime broker data from Morgan Stanley and others, alpha generated is actually down 7%. So I think it's important to see, okay, where are those returns coming from? Is it driven by the major equity markets being up double digits, S&P almost 20%? Is there anything beyond what's going on besides the data and factors in the market? The data would suggest No. That being said, I am optimistic for the industry. Those are averages, and there are funds that are generating alpha, and I think LPs are as smart as ever in being able to understand what's driving returns, and so I think this will be a great year when it's over to see who those funds actually are.

Barry Ritholtz: (07:18)
So let's stay with that concept of alpha, and I have to ask the question, why are so few funds persistently successful? Why does it seem that alpha is so fleeting and such a small group of outlier funds have consistently come up with a process for managing a business generating above average returns and doing so persistently over long periods of time? For anyone who wants to jump on that?

Steven Cohen: (07:46)
Well, listen, I think there are a number of reasons. I mean, I think a lot of funds tend to be very focused on particular sectors, and sectors could go in and out of favor, and sometimes it's hard to generate alpha when things aren't going well in sectors. And in multi-manager platforms that I run, Dmitry runs, we can sort of move money around and take advantage of where the action is. We at Point72, we're providing our portfolio managers and our analysts with tons of resources, tons of new tools, and so our people have advantages as far as what they can use, and what they're offered as opposed to a smaller fund, that just doesn't have the resources that they need or would want or could afford to compete against the bigger funds. We're very talent oriented, and so we're constantly regenerating our talent, and they're always trying to hire the best and brightest. And so, it's sort of... I mean, smaller funds they lose one important person, it's hard to recreate that person again.

Barry Ritholtz: (09:13)
So let's stay with the concept of talents, and go to Ilana who runs a talent recruitment firm. How do you identify the best talents in the hedge fund space? How do you recruit them? And more importantly, how do you retain them once you get these people in the door?

Ilana Weinstein: (09:31)
We need like a whole panel on that topic, at least.

Steven Cohen: (09:35)
You can take the next 35 minutes.

Ilana Weinstein: (09:38)
All right. I think everyone's here more to hear what you have to say.

Steven Cohen: (09:42)
No, I rather hear you.

Ilana Weinstein: (09:43)
So, if you remember nothing else, talent is everything. It is everything. And this industry is much about human capital, as it is about managing capital. You can forget about alpha if you cannot attract and retain a winning team. And I think part of it all comes down to first defining what excellence is. people bandy about the term analyst and PM and head of business and founder, but they often mean different things, depending on the fund that we're talking about. So I think it's useful to focus on the skill set. With an analyst, we're really looking for somebody who is fantastic at identifying and systematizing opportunities, acquiring information, looking for patterns to figure out what's important and what's not, and velocity of ideas.

Ilana Weinstein: (10:46)
With a PM, we're looking for more of a risk gene, and somebody who can commit capital, and knows when to lean in and when to lean out, can be flexible, has the ability to construct a portfolio with diversification, and has a sense of how to really pull the levers of sizing and positioning. And I think a head of a business depending again, on what we're talking about, if it's somebody who sits at Point72 or Balyasny at a top multi manager, then we're talking about somebody who's almost like the coach of a all star basketball team, or maybe owner of a baseball team, who has a group of all star players, and really understands how to bring the best out of them without micromanaging them too much, and can really press on the nexus of ambition, youth and potential.

Ilana Weinstein: (11:52)
And ultimately, once you've identified what you're after, you have to provide something that the person isn't getting where they are today. And our industry, I don't think structurally, lends itself for the most part to evolution, because most funds, most of these 12,000 funds are small funds. There is a founder at the top who is the committer of capital, and when you get to a point or even if they're big funds, it may or may not surprise you. You could be a $30 billion single manager fund, and when you peel back the curtain, the investing team is maybe 10 individuals who matter. So if you want to move into running a business and committing capital, you have to leave, by its very nature you have to leave and either start your own thing, or go to a multi manager which will give you the autonomy and the tools to be successful.

Ilana Weinstein: (12:48)
But ultimately, this industry is about wanting to be treated fairly, having agency and being empowered, and the things that lend themselves to that or a funds approach to compensation, how much autonomy people are given and the skills that they're learning. I think in today's environment, which has become more and more complex, whether it's because of Reddit and melting ice cube shorts, or just the amount of data that everyone has access to in the industry, you need an infrastructure that's going to help you pair great ideas with superior risk management. And there are only so many funds that can teach you to do that. So that's also a big selling point for why people would leave.

Barry Ritholtz: (13:39)
So let me follow up that question and it's open for everybody. If you have a repeatable process, and you have a team in place that you have confidence in, through the changes in markets like WallStreetBets and Reddit and things like that, do they make any difference? Or can your team just adapt and adjust to whatever comes his way? Let's open up to anybody.

Dmitry Balyasny: (14:03)
Oh, I think it depends on what your strategy is. I think like the Reddit situation makes it tougher to run a concentrated portfolio, particularly on the short side. And so if you have a fun with a significant amount of AUM, and a relatively small number of short positions, you really have to adapt your strategy. For diversified platforms, I don't really think it makes much of a difference if we have thousands and thousands of short positions and pretty tight concentration limits, particularly on anything with high short interest. But if I could also step back on your previous question to why there's so few firms that are persistently successful, I think in addition to resources, which I totally agree with.

Dmitry Balyasny: (14:49)
I think the basic issue is markets are pretty efficient, and the amount of alpha spread that you can make consistently on levered basis, it's pretty small, right? A good long-short team, they can make 3, 4 or 5% a year over five years on GMV unlevered. That's pretty good, right? One year they might make 10, next year they might be at zero, but over time if they're hitting 4 or 5%, that's pretty good if you're neutralizing factors. So if you have a fund where you got a couple of groups of these guys, like it's just not enough return, you really need to lever it, and in order to lever it, you need to have a lot of people otherwise you have a lot of risk with a few positions or a few people getting cold. So now you're in a completely different business. Instead of just managing investments. you're managing a lot of people and people management's not easy, right?

Steven Cohen: (15:40)
No. People are no problem.

Dmitry Balyasny: (15:44)
Yeah.

Steven Cohen: (15:45)
So if you have people, you have problems, pure and simple.

Barry Ritholtz: (15:50)
So you better off with with a smaller startup firm where it's the manager, a small team and their portfolio? Do you feel like you have an advantage, Mike, against these guys, because you're not managing 1600 employees?

Mike Rockefeller: (16:07)
I think certainly being smaller is is an advantage, but I think scale is also an advantage. And in order to attract and retain the talent, you do need scale because if you think about what people want, and there's a lot written on this, there's a book by Daniel Pink called Drive and he talks about what motivates people, what do they really want. They they need all of the tools and resources to be the best at what they do, and that's the scale part because you can't offer them that unless you have a larger firm. They want autonomy, they want to be able to live and die by the decisions that they make. I think the multi-manager multi-PM model lends itself to that.

Mike Rockefeller: (17:00)
The last piece is kind of soft, but I believe in it 100% is purpose. People want purpose. And there's a lot of money in this industry, and of course, people want to make money but we have real evidence at Woodline and I think, I've heard Ilana speak on this as well, money isn't the only thing. At a certain point, people want more than that, they want partnership, they want to work with great people. They're willing to sacrifice short term compensation for long term wealth creation. And so if you can offer that to people, those three elements, I think those are what's going to drive retention and ultimately what we were talking about, sustainable returns for LPs.

Ilana Weinstein: (17:46)
Yeah. It's really not about the number. I know you and I joke about this, whether it's about the number, but it's about the approach to compensation, which I alluded to earlier. People want to be treated fairly, they don't want to be netted. They don't want to feel... They're fine not to get paid if they didn't perform, but if they did, they don't want their compensation going to subsidize the rest of the team that didn't do particularly well. And I think this goes back to your question before about why so few funds are persistently successful?

Ilana Weinstein: (18:29)
In recruiting talent, you can't be that transactional. And what I mean by that is even though this is a transactional industry, we raise money, we charge fees, we do well, we succeed, we eventually go out of business. It's very clear. When you hire people, there are always pivot points. I don't care if it's the same role, they're going to a new fund, there are nuances that they're going to have to learn, be it the nets, the approach to risk management, concentration, diversification, they may need to understand how to now build and hire a team if they have a more expansive remit, and they need more infrastructure underneath them.

Ilana Weinstein: (19:14)
And you need to give people room to fail and to learn, otherwise, you're not really collecting any ROI on all of the effort that you went through to get these great people and talent is scarce through the door in the first place. And then the flip side of that is, there does come a point where you have to pull the plug, and founders can't be afraid to do that because the number one corrupting thing out of fund is a lot of deadwood because then people again, they can't get paid the way that they would want to, and at the end of the day, if you are continually and again this may come as a surprise it may not. That $30 billion fund with a team of 10 that matters, they're not all A pluses, you peel back the curtain, it tends to be the same one or two people driving returns year after year. And it's fun to be the smartest guy in the room up to a point, but after a while you start questioning whether you're in the right room.

Barry Ritholtz: (20:15)
So so let's bring in the LPs into this conversation. I used to think that LPs were looking at performance and not a whole lot more than that, but you guys are confirming what I've sort of evolved into noticing, which is LPs are looking at a whole lot more than just past performance. They're looking for the ability to manage a team, they're looking for process. Tell us a little bit about how you perceive what limited partners look for when they interview a hedge fund as a possible investment.

Dmitry Balyasny: (20:52)
I mean, I think they're looking at the odds of persistent alpha generation. So in order to just the same way that we interview a PM and try to figure out, is this person persistently going to generate alpha for us, they're looking at the overall fund asking the same question, and then that goes back to what's your edge in various areas? Whether it's recruiting, developing people, it's just as important as recruiting. The vast majority of our PMs, they weren't super senior PMs when they started with us. And helping to develop them, helping to develop their analysts, people look at that they look at your risk management.

Dmitry Balyasny: (21:29)
It's like all the things that you evaluate to see okay, I'll con... In order to get in the door, your past returns have to be pretty decent, otherwise, nobody's interested. But to figure out if somebody wants to invest, like you're trying to figure out what are the odds that those returns are gonna sustain, and then it's evaluating all these different pieces that lead to that.

Barry Ritholtz: (21:49)
Steve, you want to jump in on that?

Steven Cohen: (21:51)
Yeah, I don't know. I mean, I think LPs are looking for a stability return, they're looking for... They're not looking for any surprises, they want an infrastructure operations where they can depend on their... You're not going to find out something wasn't handled correctly, or something financially was wrong, as far as accountingwise or anything of that nature. They want sustainability, they're thinking long term, they want to be involved in a fund not just for the next year. They want to be involved in the fund for five to 10 years. And they want to believe that a fund has sustainability, they're developing talent. They're thinking about the world not just the way it is today, but the way it is going forward, that the firm's adaptable. As far as I'm concerned, I'm always thinking about new businesses, new ideas. And you know the world is constantly changing, so what worked yesterday may not work tomorrow. And if I am an LP, I want to hear that. I want to hear that somebody is engaged thinking about the world, thinking about where it's going.

Barry Ritholtz: (23:03)
Mike, you don't have the same length of track record that some of the other funds have. How do you deal with LPs and what they're looking for as a relatively new fund? Is there any advantage to having been around a little less?

Mike Rockefeller: (23:22)
Well, I think there's certainly an advantage to be able to learn from Dmitry and Steve and my partner, Karl Kroeker and I came from Citadel, so we see what it takes to actually create a business and it was interesting. Before we actually launched Woodline, Carl and I we went out and interviewed a lot of top fund managers and LPs, and asked, "Okay, what do we need? What do we need to do first?" And the answer was somewhat surprising. It was, "Go and hire yourself a rockstar Chief Operating Officer." And so, we went out and did that, and couldn't have gotten anyone better than Matt Hooker. But why is that? Well, it's to Steve's point, these are businesses. And Carl and myself and our team, we know about investing, but we don't know how to run a business. And the complexities in today's world of managing a hedge fund are pretty immense, between the technology, the risk management, legal compliance, cybersecurity is a big issue. You need a fully built out operations team to ensure that this business is going to be sustainable for a long period of time.

Barry Ritholtz: (24:41)
And how did you deal with that during the pandemic and lockdown and work from home, I think that caught a lot of places unprepared, what was your experience like?

Mike Rockefeller: (24:53)
Well, fortunately, a lot of our systems were cloud based, so 10 years ago it would have been a different story, but because we were a newer launch, we already had a lot of the systems in place, and we were able to transition to work from home like a lot of funds that thrived through through the pandemic.

Ilana Weinstein: (25:13)
You know people underestimate the transition from analysts to PM to head of business to founder, and what Mike is talking about in terms of having to, they think they're just going to kind of go out, hopefully raise money, and the other stuff will fall into place because they have capital. There's so much complexity that goes into running a business. We have a guy in play now as a candidate, who is it almost two billion, and he raised it relatively quickly during COVID in the last two years. And the reason he's a candidate is because his operating team, his non-business team is a disaster. And he's spending so much time on non-investing issues, and he either has to sort of restructure his whole fund or what he's learning is about himself, he doesn't want that headache, he'd rather sit someplace that's going to give him resources and give him capital. You're not gonna have to also... It's not like you raise it, and you're done, you're constantly out there speaking to LPs. He doesn't really enjoy that aspect of it.

Ilana Weinstein: (26:20)
And I do think that that people underestimate how difficult that is, not even just raising the money, but actually manning the ship. On the point of new funds, Mike launched with what? Two billion, two and a half billion, something like that. It's so unusual, and I think it speaks to, you ask what do LPs want? For a new fund, what's really important to them is the DNA of where the person is coming from. So it's you being you, it's the success you had at Citadel and it's the fact that you came from Citadel. And that's a bet that LPs are willing to make. There's more predictive success, a higher degree, rather of predictive success around Mike than somebody who comes from a fund that kind of had a merit track record. And the idea that this person's going to do something different than the funded did, is you know, that's a bigger risk to take.

Ilana Weinstein: (27:24)
I had my team poll the biggest launches in the last two years, so defined as let's call it a billion or greater or got to a billion quickly, and there's only about for all the hundreds of funds that have "launched," there are only about 10 to 12 in that category for each year. And almost every single one of them came from either a top multi-manager or a fund with great pedigree like Viking. Viking alone has had five launches including this year in the last 24 months.

Barry Ritholtz: (28:00)
So is there an inherent tension with a firm like Viking between scalability and persistence of returns? Are people launching because at a certain point you begin to top out? What's the tension?

Steven Cohen: (28:16)
Let's say you hire great people, and there's going to be a percentage of people that are eventually going to want to be me or be... Mike worked for Ken and he wanted to go out on his own, right? I worked for somebody at some point, and I went out on my own. And if someone's got a bug to do that, you can't stop it. Okay, they have to go out and do it. Now, they may succeed, they may fail. And so when someone comes into my firm, they want to start their own firm, I say, "Thank you. Thanks for..." Relationships don't have to end, they can evolve and change. But if someone's got a bug to start their own firm, there's nothing you can do about it.

Barry Ritholtz: (28:57)
If you smell someone is got a foot out the door, but you think they're talented do you want to stake them? Do you want to push them out and say, "Hey, let's continue this relationship but go out on your own."?

Steven Cohen: (29:09)
Well, it's case by case. One of the problems with staking people outside your firm is you really can't control what they do outside your firm, and sometimes they start doing things and they start drifting. And so it's possible I might do it and possible I won't.

Barry Ritholtz: (29:28)
Mm, interesting. I want to shift gears a little bit because time is tight. We mentioned work from home and all you have to do is pick up the Wall Street Journal. Goldman Sachs wants people back in the office, Jamie Dimon is pounding the table to have people back in the office, but there's a sense of a hybrid model as being a little more flexible and a little more attractive to very top talent. What are your thoughts on this space? Is everyone going to end up back in the office or are we going to end up with some different model?

Steven Cohen: (30:02)
I mean, my view is I'm open to a hybrid model. I mean, I like working at home. I actually like it. I don't feel I have to be in the office five days a week. I can run my firm from wherever I am. I mean, Dmitry, you were in Jackson Hole.

Dmitry Balyasny: (30:21)
Yeah, I mean, it's like in Chicago, thinking how many PMs we had in the office there, I think we have like three or four PMs in Chicago pre-COVID. Most of our PMS are in New York in London, and so everybody spread out anyway. So we got like 10 offices around the world, so wherever you are you're seeing some portion of your people, but usually a small portion anyhow. So yeah, we're definitely doing hybrid. I think, the sort of pillars that we're trying to go to they're like, one is you have to be with your team some percentage of the time on a regular basis, right? That's gonna vary team to team, but it can't be like, "Oh, we never see each other, and it's going to be great." So you have to get you have to get together on a regular basis, whether that's in the office or the office, some combination of the two.

Dmitry Balyasny: (31:13)
And outside of your team, you have to show up once in a while, even if it works well with your team. You have to show up in the office on a regular basis, whatever it is, two days a week or four days a week, that depends on the person, but you need that to just have some connectivity with people who you're not going to just normally talk to because you're not going to talk to the guy if you know you're trading healthcare and the guy's trading industrials, you're not necessarily going to talk to him, but you run into him in office, and it might be a very interesting conversation that leads to a thought you wouldn't have had, right?

Steven Cohen: (31:46)
Dmitry, the reality is, we have offices.

Dmitry Balyasny: (31:48)
Yeah, exactly.

Steven Cohen: (31:49)
And you do too everywhere. Okay, I'm in New York twice a month. I mean, I have hundreds of people there that I don't see anyway, and they don't see me. So really what you got to do is you got to set up communication, and there's so many different ways to communicate today, Zoom or IM or chat or whatever the case may be that you can be very effective in communicating, and it feels like you there but you're not there. So it works. That was the big surprise of work from home, that we all thought it would be like what would be like being out of the office, the amount of time we're out of the office, and the big surprise and the big learning was we can do this regardless of where we are.

Ilana Weinstein: (32:40)
I mean, this has been like a huge experiment, let's all work from home for a year and see what happens. And in fact, the industry has had some of its best returns; long-short, equity, alpha notwithstanding this year.

Steven Cohen: (32:52)
That's also a bull market too.

Ilana Weinstein: (32:53)
Yeah, it was a bull market, but it was also a market for which we had never had a playbook, we'd never experienced COVID. We never experienced anything like this before. I don't think Steve and Dmitry necessarily need to be in the office 24/7, but I do think it is important for analysts in particular, to be close to their PMs. They can't be trained, otherwise, as effectively you need this for collaboration, you need this for creativity, you need this for spree décor. I will tell you, and maybe I shouldn't say this, but I'll say it. In some ways, my job has become a lot easier in the last couple of years.

Steven Cohen: (33:31)
But you're charging the same amount.

Ilana Weinstein: (33:35)
And you're still getting great candidates. So what I mean by that is people have a step back perspective. They can say to themselves, if they were sort of on the fence of should I leave or shouldn't I, now they're working from home, they can more clearly see what their value add is versus other people who are maybe just benefiting from being in the room with other smart people, and the stickiness to some extent, I think gets eroded when you're just not there. I'm all for flexibility, but I think as a founder you do want your people there enough of the time where... People have good days they have bad days but if they're there, there is sort of this almost psychological smoothing effect I think goes on, they just sort of get used to it. It's for better or worse, the devil known and they start risk weighting all the things that could go wrong if they left versus staying put. It's economic loss-aversion theory of play with talent.

Ilana Weinstein: (34:33)
But when you're working remotely, that's not as much of a barrier to entry. And this year, we have had, which I've never had before, people that we have gone after for years calling us telling us they're ready to leave. And maybe it's coincidence, but I'm not sure.

Barry Ritholtz: (34:50)
What about the flip side of this. From the employee side, "Hey, it's convenient. I don't have to leave my house to three days a week." What about what Jamie Dimon talks about with building a corporate culture, making sure all the members of the team are pulling in the same direction. How challenging is it to manage when everybody is in far flung locations?

Steven Cohen: (35:14)
[crosstalk 00:35:14]

Dmitry Balyasny: (35:14)
You definitely got to work at it, but I think you had to work at it before. To Steve's point, if you got offices all over the place anyway, you have the same problem. How do you get connectivity with your guys in Europe or Asia?

Steven Cohen: (35:24)
I mean, Jamie is sitting in New York, he's got offices everywhere. He's got the same issue. Okay, the real issue is how do you communicate in a way with... He's got a million people who work for him. We have 1000 or whatever, 1500 or whatever the case may be. There's still the same issues. How can you be effective as a leader communicating what you need to communicate across your platform? And can you get your message across in an effective way? And I think you can, and I think it has to be some combination. Listen, people want to be together. They want to feel like they're part of the firm. That's why I think a few days a week makes sense. There's some people who want to be in five days. They can be in five days, I'm not saying they can't be in five days, but I do think we have to be flexible. And if people want to do it differently, and as long as they're doing what they're supposed to do, and they're being part of the firm and communicating, I'm okay with that, I'm flexible.

Dmitry Balyasny: (36:37)
Yeah, I think it's also a bit of a recruiting advantage if you can give people flexibility, right? It's a competitive talent market out there, so our two fastest growing offices are in Austin and Miami.

Ilana Weinstein: (36:47)
Yeah, you can not be flexible. Just the stigma of saying I want to work from home on a Friday or a Monday I don't think exists anymore. and wanting to work in other cities is something that founders have absolutely accommodated. This is not really a work from home issue, the issue of developing and managing people, it's not just about being in the same office. I don't think this industry as a whole, we have a bigger issue, which is this industry as a whole does not do a great job of it.

Steven Cohen: (37:18)
No, speak for yourself.

Ilana Weinstein: (37:22)
There are exceptions to, pardon me, every rule, but as a general rule, the hedge fund managers are great investors, they're not great managers of people. And I think that day in and day out, PMs are drinking from or founders are drinking from a fire hose of information, they're making a ton of risk decisions simultaneously, they may be overseeing hundreds of positions, and you layer on top of that having to motivate, empower, and engage your people. It's tough, but we as an industry have to get better at this because the analysts are coming and telling us that their founders and PMs are giving the minimal attention, and they have to pitch and pound the table to get their ideas in a book in the portfolio, and they don't have a lot of clarity as to why some ideas make it and some don't.

Ilana Weinstein: (38:20)
And so it really speaks to needing to drive mentorship and learning because young people have more options, certainly than when I was coming out of business school, right? The two portholes were really investment banking and consulting and maybe also private equity. Now there's VC, you could join a fin tech company, you can trade crypto, you can go to outer space. I mean, literally the sky's the limit. And so if we want to do a better job of getting the brain trust coming out of school into our industry, we have to get better at this. And I've seen the numbers coming out of HBS to hedge funds and they are going down.

Barry Ritholtz: (38:56)
So let me stay with you, Ilana on a question that you and I have talked about. In general, the financial industry, speaking broadly, has had difficulty recruiting women and people of color. And as bad as the finance industry is, hedge funds lag even that, when you're talking about being a broad manager, how can the industry address that?

Ilana Weinstein: (39:22)
Well, first off, this isn't just hedge funds. I mean, this has been pervasive. When I pre-starting my firm, which was 18 years ago, I was in finance. I was an analyst at a bank. I went to business school when it was barely 30% women. I worked in consulting. I did a whole bunch of things, and I absolutely dealt with my share of sexism, misogyny, and bad behavior. And I am thrilled that when my son goes into the workforce and your daughters go into the workforce, that kind of overt, those bad actors, there's going to be a zero tolerance for. That is a big change from when I was just sort of cutting my teeth. Vis-a-vis, but we're still a young industry and it has to start at the bottom. There's never been more heightened awareness. Sitters and allocators are deploying to women and minority owned funds, LPs are serving their managers as to the diversity, leadership and ownership of their workforce, and heads of talent are being mandated to really focus on recruiting more women and minorities. But at the end of the day, these guys have to have a robust class of diversity candidates to pull from the ranks of Goldman and JP Morgan and fill in the blank bank so that those people can then be trained properly and develop at one of the hedge funds that matter.

Ilana Weinstein: (41:04)
And I say it that way because to our previous discussion, so few funds really control the AUM in this industry. It's not just about joining a hedge fund, it's about joining a winning fund and being trained properly and having a chance to be one of these guys, eventually. But we're still early on. We look at where medical school is, now it's over 50% women, law school's over 50% women. I just saw Wharton's class is now 52% women, so it's going to take time. From the beginning... Let me just say one more thing. From the beginning of when I started my firm, I have always had founders stress the importance of bringing more diversity candidates to the table and asking if there's any way for the successful candidate to please be a person of color or a woman. We don't have where to pull from. So that's when I talk about coming through the ranks and evolving, by the time we get involved, which is at a very senior level, we need a deep bench. Another important point is it's about a desire for racial and gender equality, but it's also a desire for founders we work with, for a diversity of background and thought, because having everybody think the same, having everyone grew up in Virginia, went to Princeton and UVA is a surefire way to drive down returns. You want divergence in terms of points of view.

Barry Ritholtz: (42:43)
So we're down to our very last question the last few moments we have. And I'm going to ask everybody this, and I want to open this. We'll start with Mike. All of you run successful businesses, what's been the biggest surprise running your firm?

Mike Rockefeller: (42:59)
I'll keep it quick here. There's no question, it's the compounding effect of great teams, and what you can do with lots of great people working together.

Barry Ritholtz: (43:12)
Dmitry.

Dmitry Balyasny: (43:13)
I think the scale that you need to be successful, if somebody even, not 20 years ago when we started, but even 10 years ago would have told me we'd have 1000 people to run $12 billion, I'd be like, "That's a lot." Right? But that's kind of what you need these days.

Barry Ritholtz: (43:29)
Go ahead, Ilana.

Steven Cohen: (43:29)
Yeah, Ilana you want to go?

Ilana Weinstein: (43:33)
Just how much I've learned from these guys, I really didn't anticipate how energized, how much we would develop because of all of the information that we get from dealing with the best founders and the best people in this business. We're just so much smarter for it.

Barry Ritholtz: (43:50)
Steve.

Steven Cohen: (43:51)
I mean, it's a people business, and you just have to treat people really well. You have to care about them. If you don't care about them and you treat them like just somebody who you're just gonna plug in, they're going to pick up on that and they're not going to be happy.

Barry Ritholtz: (44:05)
Well, Mike, Dmitry, Ilana, Steve, thank you so much for an informative panel. Let's hear it for our panelists.

From Reality Star to Business Titan: A Conversation with Paris Hilton & Carter Reum | #SALTNY

Paris Hilton is one of today’s most recognizable entrepreneurs and international influencers, Paris Hilton is a pioneer in television, podcasting and NFTs and an innovator in building businesses, social media and celebrity branding. With annual press valued at $702M in media spend equivalency, 28B monthly PR impressions, 130,000 press mentions over the last year alone and a global audience of over 54M across all socials, Hilton continues to solidify herself as a prominent tastemaker and powerful business leader.

Since starring in “The Simple Life,” Hilton has built a global empire as a businesswoman, influencer, activist, DJ, designer, investor, recording artist, philanthropist, host, actress, chef, model and author. In 2006, she created Paris Hilton Entertainment (now known as 11:11 Media), a multi-billion-dollar company that started with 45 branded stores and 19 product lines surpassing $4 billion in revenue. Today, 11:11 Media is a full-stop, integrated media and product company with verticals covering TV (Slivington Manor Entertainment), podcasts (London Audio), digital (11:11 Digital), licensing, NFTs, music, impact and more. Always attuned to emerging trends and opportunities, Hilton continues to expand 11:11 Media and use her platform to inspire, empower and create lasting positive impact.

Hilton has also solidified herself as an NFT leader as was recently seen by her being named #7 on Forbes’ NFT 50 most influential people in NFTs and through being awarded “Winner of Best Charity NFT” at the 2020 NFT Awards. In staying true to her goal of fostering empowerment and in collaboration with Sevens Foundation, Paris curated and launched “Empowered By Paris: Empowered Women Empower Women Exhibition”, which is an NFT exhibit dedicated to showcasing and equipping female artists with a platform to succeed.

Moderator Carter Reum is a Partner and Co-Founder of M13, a venture capital platform that invests in and incubates cutting edge consumer technology businesses. M13 now has two top decile funds and recently launched a $400MM Fund III - M13 now has AUM of over $750MM and is currently launching its 10th incubated business.

PRESENTED BY

 

Powered by RedCircle

 

MODERATOR

SPEAKER

Headshot - Hilton, Paris - Cropped.jpeg

Paris Hilton

Chief Executive Officer

Paris Hilton Entertainment

Headshot - Reum, Carter - Cropped.jpeg

Carter Reum

Partner & Co-Founder

M13

TIMESTAMPS

EPISODE TRANSCRIPT

Carter Reum: (00:07)
All right. Well, we're going to try to have a little fun here. Just in case there's any skeptics in the crowd that are trying to figure out why Paris Hilton is on stage as a keynote for lunch, let me just run through a few stats. I am going to warn you, they take a few seconds, because she's accomplished a lot, but let's just run through a few things. She has 19 product lines that have done over four billion in revenue the last decade globally. She's the highest-paid female DJ in the world. If any of you are having a birthday party, a bar mitzvah, wedding, she likes seven figures the most when she DJs. She has a social audience globally of over 65 million people, and her #thatshot hashtag on TikTok has been viewed over five billion times. Your PR reach the last 12 months makes you one of the largest 25 advertisers effectively in the country, bigger than Coca-Cola, Citigroup, and Adidas.

Carter Reum: (01:12)
I wish I could tell you I'm close to the end of this list, but I'm still about a third of the way through the list, but I'll try to speed it up a little bit. Your documentary, This Is Paris, was viewed 25 million times globally, you had 175,000 people sign your change.org petition, as a result of your documentary. This is easier though than dancing for 23 seconds on the jumbotron at the US Open on Friday, right? You've launched an audio company with iHeart during the last year, with three podcasts. You launched a production company with three TV shows already with Warner Brothers. You recently were number six on Fortune's top 50 Power Players of the NFT space. You have an investment portfolio with unicorns like Viome, Daily Harvest, things like Podz, and [inaudible 00:02:04]. I'm almost done, you're credited with being the first one to do reality TV, the original influencer, and even created the selfie, and last but not least importantly, you are marrying me this fall. Is that correct? Did I miss anything? Yeah. All right.

Paris Hilton: (02:24)
Thank you.

Carter Reum: (02:24)
Did anyone time that? Was that longer than the 23 seconds of the jumbotron at the Open on Friday? Go ahead, Paris. Did I miss anything?

Paris Hilton: (02:32)
Yes, but I think we'd be here all day if you had to list them all, but I just want to say thank you guys so much. I am so honored to be here today with so many people that I look up to and respect. I want to thank our friend, Anthony Scaramucci, for having me here today, and so many other friends in the room. Mike Novogratz, Dan Loeb, Congressman Ro Khanna, and many others. So thank you all for being here today, and I look forward to doing this with you, mister.

Carter Reum: (03:02)
All right. This is the first time we've ever done this in person, so this is definitely a special moment. Let's start with the easy but important stuff. Let's talk about your documentary, This is Paris. It launched last September. It had the equivalent of 150 million opening box office weekend. As a result of that, seven state laws have changed. The world saw a side of you I don't think they were expecting, very authentic and real, and you opened up about some stuff you never thought you'd talk about. Was that the original intention of the movie, or what was the original intention of the documentary when you were filming it?

Paris Hilton: (03:36)
With my documentary This is Paris, the original intention was just to show the true person I am, the businesswoman I am, how much I've accomplished. I feel that being in this industry for the past two decades, I was playing a character, so there's a lot of misunderstanding about me being underestimated, and I just wanted to show everything that I was very proud of. And then I ended up just getting very close with the director and started opening up to her about things I'd never discussed in my life publicly, and because of that film, it's now changed state laws in seven states, and next, I'm going to be going to Washington, D.C. in October to take this to federal legislation. So it really just shows the power of telling the truth and turning my pain into a purpose, and I'm very proud of using my voice to speak up for others.

Carter Reum: (04:33)
And for those of you who haven't got to watch the documentary yet, I expect you'll be watching it this weekend in between that and Cooking With Paris, which we'll talk about, but she talks about these schools she went to in Utah where children are sent, and physically, emotionally abused, sometimes sexually, thankfully, not in her case, but all kinds of kind of awful schools. And I have to say, it's been pretty awesome. I remember before the documentary launch, you said, "This is going to be great. It's going to shine a light on these awful schools and effectively hopefully encourage change," but I'll never forget, two weeks after the movie came out, you and I sat in our house and you read, I don't know, a thousand letters that had come in, and people just saying how much it had meant to you that you had shared your truth, and whether their truth was similar or something different, how it inspired them. And did you think a year later you would have helped pass seven state laws regulating the industry, and be on your way to D.C. in October? What's it meant to you?

Paris Hilton: (05:35)
This means the world to me, and I'm just so proud just to stand up for others and children, and make that the abuse that happened to myself and so many others no longer happens.

Carter Reum: (05:47)
That's awesome. Maybe one quick round of applause for that.

Paris Hilton: (05:50)
Thank you.

Carter Reum: (05:56)
So just switching gears a little bit here. So obviously, at M13, we kind of invest behind kind of leading consumer tech brands. We try to think about what consumers are going to be doing 10 years into the future, and invest behind the technologies that power that change. Obviously, no one has been two steps ahead of the game more than you, when we talk about things like reality TV, things like the selfie, things like social media. What trend are you most excited about in the future? I have a good feeling you might talk about NFTs, but what are you excited about?

Paris Hilton: (06:30)
There's just so many things that I'm excited about, especially all these virtual worlds and metaverses, and everything I've been doing in the NFT space, something that has just been a huge passion of mine. Back in 2018, I released a documentary called The American Meme, where I basically created this virtual world with avatars where people can come and meet, and now today in 2021, to see all of that really coming to life. So just doing things like that and being involved, and always being an innovator and someone who sees into the future, so that's something I've always been very proud of.

Carter Reum: (07:09)
And just to fill in the gaps for people, when did you do your first NFT and how'd you get to be number six on the list on Fortune?

Paris Hilton: (07:16)
Way before the whole NFT craze started, so I did my first NFT in March of 2020, where 100% of the proceeds went to charity.

Carter Reum: (07:25)
Yeah. I think one of the things that you always tell me what you love about NFTs is it just makes too much sense not to be a technology of the future, and for you, you have the unique ability to think about NFTs. I don't think I said it on my list, but you did set the largest female auction comp of an NFT. If anyone has any digital currencies burning a hole in their wallet, she sold her [inaudible 00:07:49] for 1.2 million. So, but she'll have some drops coming up, but I think it just does make too much sense for you around collectibles, music, the creator economy, kind of all these different things, so it's fun to watch you tackle it.

Carter Reum: (08:03)
Obviously, a big topic of conversation the last two days here has been crypto. People like Michael Saylor and the Winklevosses, and many others were very excited when you changed your Twitter profile about six months ago to you with laser eyes. Some people on Twitter immediately said, "Oh, here she is jumping on the bandwagon," but then a lot of other people on Twitter immediately came due to your defense and pointed out how long you'd been talking about digital currencies. Can you fill in the gaps for us in terms of kind of how you got excited about Bitcoin, and Ethereum, and the different digital currencies?

Paris Hilton: (08:40)
Yes. I have been involved and interested in this since 2016, when I had dinner with the founders of Ethereum when I was in Berlin, and just hearing about it, I just thought it was the future, and now to see today just how it's blown up, is something very exciting. So I'm very grateful that I invested back then.

Carter Reum: (09:02)
Yeah. So just to set the record straight, she was talking about metaverses in 2018, so well before Zuckerberg started talking about them two weeks ago, and she was buying digital currencies in 2016. So if you guys could Tweet that out to set the record straight, that would mean a lot to everybody.

Carter Reum: (09:20)
All right, all right. We're going to insert some light questions along the way too. Let's talk about brand evolution. One of the things people talk about when it comes to you, Paris, is no one understood brand like you did, coming out of The Simple Life. I think some people have said, "She's famous for being famous," but the ones who know you correctly point out that you were famous for being the first one to understand you were a billboard 24/7, and you could be a brand, not just a traditional brand. This year, it was fun to watch you during COVID, you made me lasagna, you put it out on YouTube, the world went nuts for it. Two months later, you had sold a deal with Netflix, and it launched to a lot of fanfare, two weeks, I guess, two or three weeks ago. But what is it that gives you the ability in one second to be cooking lasagna, in the other second to be going to D.C. and introducing federal legislation, in the next minute DJing? How do you think about kind of experimenting or being one step ahead?

Paris Hilton: (10:23)
I just feel very blessed that I get to do so many things that I love and that I'm passionate about, and I feel that I have this ability and this power to really elevate things and share my platform with so many. And even though it's constant, it's 24/7, and travel and working, it doesn't even feel like work because I really love what I'm doing, and I love inspiring and empowering others. And right now, just building my new media company, which is very exciting. So yeah, that's my next focus right now.

Carter Reum: (10:54)
Are you trying to steal my talking points? That's the next question, Paris. We talked about this, don't steal my thunder.

Paris Hilton: (11:00)
I'm psychic. I told you.

Carter Reum: (11:00)
In all seriousness, okay. So most people think you were the first creator. For VCs like me, all we talk about is the golden age of the creator. One or two stats, so far in 2021, 3.3 billion has been invested in creator economy technologies, sponsored influencers are worth about $8 billion today, meaning payments going to creators, and they think that number will be 15 billion by 2022. You just kind of teased it out, but obviously, you've been building a media company. I know your partner, Bruce Gersh is here today. You've hired 10 people during COVID. Why are you going from what you've been doing previously, which was just building on your own, to now building out a media company?

Paris Hilton: (11:46)
I just feel that I'm ready to take this to the next level, and what we're doing is something that's very innovative and exciting, and just seeing people like LeBron, who's built SpringHill, and also Reese Witherspoon who built Hello Sunshine, which was sold for 900 million, I feel that I have the same ability to do the same thing, and that's what we're doing right now. And I want to thank you, Bruce Gersh, so much. You are incredible, and I love having you as a partner and founder with me, and I'm so excited for what we're doing together in the future, so thank you.

Carter Reum: (12:17)
And I'll take the clap. I appreciated that, a little golf clap. Yeah, no, I appreciate that. Yeah, exactly. It's the lunch session, people. We got to keep it light here. Now, I do think it's a really interesting time in the creator economy from where we sit. You kind of have a diverge of kind of of two different types of creators, right? We've never lived in an era where your son or daughter who's kind of funny on TikTok, can somehow figure out how to monetize his influence. So on one hand, you have all these great tools that VCs like me are investing behind on the creator economy. On the other hand, people like Paris, Kevin Durant, Reese Witherspoon, LeBron are building these big media companies, because why should a media company be anchored by a news publication, versus somebody like Paris? I think what's fun to watch is how you can be the heartbeat of that media company, but make it so much bigger than you. All right, let's keep it light here. Which one of my light questions? All right. What is one thing nobody knows about you?

Paris Hilton: (13:13)
There's a lot people don't know about me. Well, one, I'm an undercover nerd. People don't know that. I am a huge tomboy. I love to go fishing, and surfing, skydiving. I was on my high school ice hockey team.

Carter Reum: (13:32)
And that's a true story. If anybody wants to Google that, you will enjoy the photo. It's one of those photos where you're like, "Who doesn't belong in the high school ice hockey team?" Keep going, Paris.

Paris Hilton: (13:45)
Yeah, there's there's lots, but we'll talk about it now in a second.

Carter Reum: (13:49)
I think the one thing that people don't know about you that I always tell people, is it is very well documented that Paris Hilton loves shopping, right? I think everyone knows that. What people don't realize is her favorite store, does anyone know what her favorite store is? Has anyone heard her talk about it? The Hudson Books in the airports. This girl will buy 8, 10, 15 business books. We have a carry-on that we take everywhere with us, just with those books, and I'm like, "Hey, maybe we just bring one or two books. Do we really need all 15?" She goes, "Well, I don't know which business book I'm going to feel like reading today." So everywhere around the world we go, we take that small carry-on with all the business books. All right. Let's do another fun one to keep it light here. Again, this is the lunch session. If you were a weather forecast, what would you be?

Paris Hilton: (14:40)
Hot and sunny.

Carter Reum: (14:43)
Hot and sunny, you heard it here first. It'll probably be on page six tomorrow. All right. Let's keep going on audio and podcasting. So you formed a partnership with Bob Pittman and iHeartRadio, obviously the industry leader in podcasting. You launched This is Paris, your podcast, you have a second podcast, which you can talk to the audience about what that is, and you have a third that will be both a podcast and a television show. Let's just talk about audio, and I'll prompt you along the way. What got you excited about audio and podcasting?

Paris Hilton: (15:17)
I got excited when we had dinner with Bob Pittman and we were talking just about the power of audio, and during the pandemic was the first time I ever even listened to a podcast, and I really loved how you could not only be listening to it, but you could be doing other things at the same time, and I also loved that I could have my own podcasting company. So when Bruce came up with that idea, I was like, "This is genius." So launching my podcast was so much fun because I've been interviewed like a billion times, so I love being able to turn the tables and be the one who gets to ask the questions, and make a really safe space for my friends to come and talk about anything they want, and also being able to control my narrative, because I feel like for so many years, the media has controlled my story, and I want to be able to tell the truth, and when things come out in the media that aren't true, I'm able just to go right on there.

Paris Hilton: (16:10)
And I invented something called Podposts, so it's basically more short form where I can talk about anything that's happening and literally have it up within an hour. And we've been doing a lot of that and correcting a lot of the information, and also being able to share my platform with others. We just launched another podcast with Cindy Eckert who sold her company for a billion dollars, and that one is called DOMINATED, and we are about to launch another one with a TV show along with it, and that is going to be about the social advocacy work and the troubled teen industry. And then some more coming up soon, which I can't announce yet.

Carter Reum: (16:49)
Just so people know whether they should go to your podcast tomorrow, will you be doing a Podpost on the SALT Conference and Anthony?

Paris Hilton: (16:55)
100%.

Carter Reum: (16:57)
All right. Quick show of hands, who's going to download it? Every download counts. Can I count on you? Okay, yep. A little over here. Oh, okay. All right. Every podcast counts, every download counts. All right. Let's switch gears a little bit from audio. I Googled it, because I wanted to see. You have five words in the Urban Dictionary. You actually hold the record from the time you first said a word to the time it showed up in the Urban Dictionary, I think it was two weeks, but you have famous catch phrases like, "That's hot." Actually, funny enough, my cousin Chloe was telling me she read a case study at Georgetown Law School about how you sued Hallmark and won, for infringing on your trademark. You obviously have catch phrases like, "Loves it," and "sliving." why come up with these catch phrases? Is it just that you're really good at creating them, or how did you think about it?

Paris Hilton: (17:48)
I just, I think I'm really good at coming up with words, and I just think it's important, I feel like every brand, they have their slogans and what people remember them for, and I don't know, sometimes when I just say something it catches on, and I think that's just what about being an influencer and a trendsetter is about.

Carter Reum: (18:08)
Cool. Just one thing I wanted to put you on the spot on while I have all my friends here at the lunch session, it was kind of news to me, but when you went on Fallon the other day, you said you have 10 dresses you had custom made for the wedding. Is that right? I thought you promised me this was going to be a low-key affair.

Paris Hilton: (18:25)
Well, it is a three day event, and I do love my outfit changes, so 10 or maybe more.

Carter Reum: (18:31)
So how many tuxes should I be thinking about?

Paris Hilton: (18:33)
Not 10.

Carter Reum: (18:34)
Okay, less than 10. All right, everyone heard it here first. Let's talk about your TV production company, because obviously, you're doing something leading up to the wedding, but you just launched Cooking with Paris on Netflix. For those of you who think she's going to teach you how to cook, you're going to be sorely disappointed. She mostly makes you laugh, with a side of teaching you how to cook. Things like Unicornoli, things like caviar and French toast with Frosted Flakes, so very cooking light. It's been recently in the press that you launched Paris in Love, leading up to the wedding, with NBC Peacock. Can you talk about Paris in Love and that show, and what's it going to kind of chronicle, and why did you decide to launch a production company with Warner Brothers?

Paris Hilton: (19:19)
Well, yes, I'm so excited for my new production company with Warner Brothers called Slivington Manor Entertainment, and to partner with Mike Darnell. He was the one who started out my career with The Simple Life, and being the OG who started reality television, I just thought it was the perfect next step to own my own production company and really just make content not only that I'm in, but also where I can be behind the camera and produce, and really just put out empowering, and inspiring, and thought-provoking content. And Paris in Love, I'm having so much fun. We've been filming it the past few months, every single day, so it's a lot of work. So just the whole lead-up to the wedding, which being a bride is already stressful enough as it is planning a wedding, but having a camera crew follow the whole time makes it even more stressful, but it's going to be a very interesting show, and very excited to partner with Peacock on this, and that will be out in the next few months, so stay tuned.

Carter Reum: (20:19)
Cool. And talk about, because I've heard you mention it plenty of times, why a TV production company now? You obviously had the opportunity to do it over the last 20 years. I know you mentioned just kind of the proliferation of streaming content, but just talk through why now, in terms of why the production company?

Paris Hilton: (20:36)
I just have so many things on my plate. I'm doing so many things and there's not enough time for me to be on camera all the time, so that's why I wanted to really do this so I could create, so that other people I could share my platform with, and really put out content that I think is going to be entertaining and fun, and really part of my brand.

Carter Reum: (20:56)
Cool. One thing that I had written down here to keep it light, let's let's ladder back to The Simple Life. Well before I knew you, I remember seeing a trailer for The Simple Life, and there's this cute little scene that put The Simple Life on the map, when I think you're probably in Arkansas or somewhere nearby, the family you're staying with, they're talking about Walmart, and you say in your cute cartoon, fake voice, "Do they sell walls there?"

Paris Hilton: (21:25)
I said that.

Carter Reum: (21:25)
Did you really not know what they sold at Walmart? Just clear the air for everybody here.

Paris Hilton: (21:31)
I say nothing by mistake. I'm not a dumb blonde, I'm just very good at pretending to be one.

Carter Reum: (21:38)
And for those of you... Okay, I like it. Yeah, yeah. Okay. And we do spend a lot of time. We don't have a Walmart near us, but we do spend a lot of time at Target. So I know that you knew what was Walmart.

Paris Hilton: (21:52)
Yeah, I like Walmart. It's fun.

Carter Reum: (21:54)
All right. Let's talk about investing. Obviously, it's what I spend my day job doing at M13. You've obviously, as I mentioned, you've invested behind great companies like Viome around gut health, Genies around avatar, the unicorn Daily Harvest, and a lot of others, and I think we'll see a lot more of it in the future. In the crypto space, you've been involved with things like Origin Protocol. Why get excited about investing, or how do you think about investing?

Paris Hilton: (22:22)
Well, I have you to thank for that, because you really got me involved in this whole world of investing. I have just been so blown away with everything you guys have done at M13, and just everything that you have ever told me about has always been a winner, so I trust everything that you say.

Carter Reum: (22:38)
No pressure, no pressure. To be fair, the first thing I had her invest in, she hit 18 times her money in four months, and now she said, "That can happen every time, right?" I was like, "Well, not exactly." We have two top decile funds, but that's going to be tough to beat.

Paris Hilton: (22:54)
But yeah, I love investing behind entrepreneurs that I really believe in, especially female entrepreneurs, just because being in this industry for so long, it took a while for people to take me seriously. So that's something that's always been a huge focus of me, and I just love to be involved in things that are innovative and the future, and just projects that again, I want to share my platform with, and that I want to help promote all around the world and get the word out there, and I have the power to do it, so I do it.

Carter Reum: (23:24)
Cool. I think what's been fun for me to watch the last year is the power of your platform is so big, so global. It ranges from teenagers who sing your songs, to adults who grew up watching The Simple Life, and everything in between. But now, I think what is going to make you so powerful the next decade is the fact that you've realized you can use your platform to influence your own companies, you can use your platform to influence companies you invest in, and in this particular case, obviously Congressman Ro Khanna I know is somewhere in the building, but he and others are very excited to see you take your federal legislation to D.C., and see if you can affect change the there.

Carter Reum: (24:04)
So it is really fun for me. I can tell you very proud for me is that people accost us everywhere and say, "Hi," and take a selfie and want to talk to Paris, and a year ago it would be like, "Oh my gosh, I love you, Paris Hilton. Can I take a photo?" And now it's just inspiring to see how many people come up to you and say, "I love what you're doing. I love that you're making the world a better place." So as your future husband and fiancé, I want to tell you I'm extremely proud of you, so I love you.

Paris Hilton: (24:33)
I love you too. Thank you.

Carter Reum: (24:38)
All right. Probably the last two or three minutes here, and maybe even shorter. So we've talked about a lot. We've gone through everything. I do want people to be able to eat their lunch a little bit here. Anything that I didn't talk about? Anything on the horizon or anything you're thinking about for the future?

Paris Hilton: (24:55)
Yes. You know me, I never stop, I keep going, and I'm going to continue to do what I'm doing to expand my brand and my empire all around the world, and my goal is the next time that I'm speaking at this conference, that I'm here to talk about selling my media company for a billion.

Carter Reum: (25:12)
All right. You heard it here first. Thank you.

Paris Hilton: (25:16)
Thank you all. Thank you so much.

Carter Reum: (25:20)
All right, thanks.

Paris Hilton: (25:21)
That was fun.