The transcript from this week’s MiB: Glen Kacher, CIO of Light Street Capital, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

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MASTERS IN BUSINESS: Glen Kacher
Founder & Chief Investment Officer, Light Street Capital

Bloomberg Radio — Transcript

ANNOUNCER (00:00:02): Bloomberg Audio Studios. Podcasts. Radio. News.

BARRY RITHOLTZ (00:00:07): This week on the podcast, my extra special guest is Glen Kacher. He is the founder and Chief Investment Officer at Light Street Capital. He’s got really a fascinating background and a great track record. He worked at Julian Robertson’s Tiger Management, eventually ended up at Roger McNamee’s Integral Capital Partners.

He’s put together really a fascinating focus and track record, one of the few hedge funds located right in the middle of Silicon Valley, focused on AI and technology. I found this conversation to be absolutely fascinating, and I think you will also. With no further ado, my conversation with Light Street Capital’s Glen Kacher.

Glen Kacher, welcome to Bloomberg.

GLEN KACHER (00:01:07): Thank you.

BARRY RITHOLTZ (00:01:08): Before we get into Light Street, let’s talk a little bit about your background. You graduate from University of Virginia School of Commerce with a bachelor’s in commerce, and eventually getting an MBA from Stanford. Was investing always the career plan?

GLEN KACHER (00:01:25): It was. I started really looking into that industry. I read a book by Peter Lynch while I was in college, One Up on Wall Street —

BARRY RITHOLTZ (00:01:33): Sure.

GLEN KACHER (00:01:34): — or Beating the Street. It could have been the first book, actually.

And I was just caught by this idea of the search for great companies, great ideas. And the way he told the story of finding these companies and researching them, it was really a journey, and of a detective trying to figure out what would matter in the future. And that really captivated me and my interest in becoming an investor.

BARRY RITHOLTZ (00:02:04): So in between UVA and getting your MBA at Stanford, you work at Julian Robertson’s Tiger Management. How do you get to Tiger at 22?

GLEN KACHER (00:02:17): Oh, very fortunate opportunity. So one of the teachers, or instructors, at McIntire School of Commerce at UVA was a former Tiger Management partner, Michael Bills.

And Michael taught finance, several finance classes there for a couple of years. He had taken some years off from Wall Street after working at Tiger and then before starting a fund of funds business that he has run very successfully. And he suggested that I take a look at it. I certainly knew of Tiger.

Tiger was — it seemed about half of the investment staff, actually, at one point or another attended UVA. And so a lot of the guys there sort of knew what we were capable of as young guys coming out with finance degrees from UVA.

BARRY RITHOLTZ (00:03:11): And Robertson was legendary. In ’93, was he still running the ship?

GLEN KACHER (00:03:16): Oh yeah, very much in charge. Very much in charge, yes. I was there from ’93 to ’96 full time. And then still, when I went to Stanford for a year, I worked for Tiger as well, and Julian would occasionally wake me up with a 6:00 AM phone call when I was in business school.

BARRY RITHOLTZ (00:03:35): 6:00 AM East Coast?

GLEN KACHER (00:03:37): No, 6:00 AM my time. Okay, 9:00 AM his time, just a half hour before the market. So he had some discretion there, but we had some great times.

Learning and talking through the technology industry at the time, investing in companies like Dell, Microsoft, Compaq, and Cisco were some of the —

BARRY RITHOLTZ (00:03:59): So really right out of college, you are full on technology. Did you look at other spaces?

GLEN KACHER (00:04:04): I worked briefly in looking at financial institutions with Rob Pitts there. And we had a great time doing that, but I was certainly more interested in technology. I’d really studied that industry prior to going to New York. And so it was a better fit for me following that industry.

And I think two or three months into the job, I ended up sitting two chairs away from Bill Gates at an analyst meeting, at the sort of after-the-meeting dinner. And at that point I knew I was in the right spot. That was —

BARRY RITHOLTZ (00:04:41): To say the very least. So after Stanford, you end up at Roger McNamee’s Integral Capital, and you stay for 13 years, and you’re really less of a public markets analyst and more of a venture sort of banker. You either lead or co-lead venture investments, and the list is pretty impressive: Agile, ArcSight, Blue Nile, E.piphany, Extensity, Fortify, Interwoven, LogMeIn, OpenTable, Overture, GoTo.com.

What’s the common thread? Is it just, hey, that’s what was hot in the late nineties? Or what tied that list together?

GLEN KACHER (00:05:21): Well, the amazing thing about Roger was he really focused on saying, look, we can’t cover every company in this industry. We were a small team, much like at Tiger, there were two or three of us looking at tech at any one time. And at Integral, even though we were a tech-focused firm, we had four or five people total. But even with that number, you can’t cover the entire industry.

So you have to focus in when you’re investing and say, where is the change really happening most quickly? Where is it most dramatic? That disruption equals opportunity as an investor.

BARRY RITHOLTZ (00:05:57): That’s a theme that comes up over and over in your career.

GLEN KACHER (00:06:00): Yeah.

BARRY RITHOLTZ (00:06:01): Identify the disruption and get in front of it before the existing companies realize what’s coming down the pike.

GLEN KACHER (00:06:09): It’s great to be early, but not too early.

BARRY RITHOLTZ (00:06:11): Right.

GLEN KACHER (00:06:12): I mean, that’s also an important part of it.

BARRY RITHOLTZ (00:06:13): Right. I started on a desk, and early was equal to wrong, at least when you’re trading public equities. Not only do you do all of these privates where you’ve co-led — is this right? About 46 deals, is that right?

GLEN KACHER (00:06:28): 46 deals at Integral over 13 years.

BARRY RITHOLTZ (00:06:30): I read something you had said about that, and you said the takeaway from all these private venture investments is you don’t buy the second or third best company in the space. You always buy the best company. Can you give us a little details on that? What’s the thinking behind it?

GLEN KACHER (00:06:48): Well, experience, right? I mean, you see the movie over and over again, whether it’s private investment or in the public markets. The old saying was, the number one player’s going to get two thirds of the market, number two player might get 20%, 25% tops, and everyone else fights for the scraps, right? And the ability to make higher margins and have the dominant market share is just so dramatic.

And I think in technology, we’ve seen the power of that. The ability to sort of compound that lead is definitely there. Now, you also see in technology that you can get disrupted, right? The real innovation in these disruptive changes tends not to come from the big companies, but the smaller companies. There are exceptions to that, and we can talk through that.

AI is kind of an interesting test case, and the semiconductors behind AI. But there’s real power into compounding that lead.

BARRY RITHOLTZ (00:07:56): So let’s talk about those moats and the winner-take-all situation. Is that primarily a technology phenomenon? Is it a modern-era phenomenon? Or is this companies that develop a unique moat, regardless of the space they’re in, get to capture most of the market share?

GLEN KACHER (00:08:15): Well, I think you’ve seen in mature industries, whether you look back at GE and Coca-Cola, you’ve seen, certainly, there’s advantages to having that dominant distribution and market share. But in technology, I think it’s more a story of getting in front of your competitors and investing more. You have more dollars to invest back in the technology and to grow that lead, and that compounding of advantages, or compounding of innovation, at the early part of a market’s development can be incredibly powerful. And then that gives you the opportunity to put in place other kinds of moats that do kind of block your competitors from coming along.

There’s a lot of discussion today around Nvidia, that a lot of people sort of assume Nvidia’s going to lose their massive market share in AI accelerators, which is roughly 85%. And certainly I think the move to inference is an opportunity for competitors to change what’s going on there. But I think people right now are, for instance, underestimating Nvidia’s opportunity to innovate as well.

BARRY RITHOLTZ (00:09:30): So let’s define some terms for some of the lay people that might be listening: compute and inference. Explain what those are. Explain how they’re investible themes.

GLEN KACHER (00:09:43): Sure. So the training compute, or the chips, the AI accelerator chips — and today Nvidia dominates that still with their graphics processor chips. And those chips originally were made for gaming, for doing very rapid mathematics that have to do with calculating physics and lighting, shading in video games. It turns out that the same kind of mathematics are incredibly well positioned to do the math around AI.

And so you’re training a model, an AI model, that will be able to make judgments. And then when you’re actually using that model to ask questions, or have it solve problems and actually execute those problems, that’s called inferencing, right? And so inferencing can be done on a more simple chip. So people have kind of used a phrase, XPU, to X out the graphics and say, this is the next generation of chips that can be used to actually solve the problems with those models that are built.

BARRY RITHOLTZ (00:11:05): Meaning the compute and the inference are all going to be on the same chip?

GLEN KACHER (00:11:08): They can be done with the same chip, but you can have a more specialized, lower-cost chip, usually in inference with more memory, for instance. And there’s different approaches in software to execute that with a lower-cost chip.

BARRY RITHOLTZ (00:11:23): So it sounds like our alphabetical evolution has been CPUs, then FPUs, GPUs, and now XPUs. What’s beyond that?

GLEN KACHER (00:11:33): Well, I think that’s why we use the term X. There’s TPUs, Google’s version of their AI chip. We’ve got Trainium, et cetera, and other competitors. So there’s lots of flavors. You also saw, for instance, Nvidia buy Groq, which is another approach to inference. So there will be many flavors and many opportunities and ways to innovate in inference, because ultimately that will be a larger market than the training market.

BARRY RITHOLTZ (00:12:08): Hmm. Really, really interesting. So I usually save my mentor question towards the end of our conversation, but your list of people you’ve worked with and worked for is just so incredible, I wanted to get it out early.

In addition to Julian Robertson and Roger McNamee, there was Philippe Laffont, Steve Mandel, Chip Morris, who was, I think, at — Blue Ridge, Alger, Viking, Lone Pine, Impala, Matrix, Coatue. That’s like a murderer’s row of modern investing names. What did all these legends have in common, and how were they each different?

GLEN KACHER (00:12:49): Well, I think the focus for — we had a great team there at Tiger Management, and so many of us went on to start our own firms, and many of them sort of modeled by what we experienced at Tiger and seeing how Julian did it. I think Julian was just such an inspirational leader, and was so values-driven, and really focused on, hey, we want to work with the best people. That doesn’t just mean the people around the table with you on your investment staff. That also means the CEOs that we backed and the CFOs of those companies.

We looked for people that we thought were of high integrity. And if there was any question about the integrity of those CEOs and CFOs, we were out. We just weren’t interested in that company. And then, with Julian, there were no shortcuts, right?

It was, you’ve got to do the work. Explain to me why and how we got to the conclusion that this company is, one, positioned incredibly well, and two, it has a real opportunity. There’s something fundamentally changing in their industry or in their product set that’s going to change their trajectory.

And then the last one was, hey, let’s use our power and success to help other people, right? And so the combination of those principles was very powerful. I think many of us wanted to see if we could do something similar, and that was really powerful. And then I was lucky to go on to work with Roger and John Powell at Integral Capital, and Chip Morris.

All three of those guys came out of T. Rowe Price, and we worked with Kleiner Perkins. We were in their building. So we were surrounded by some other incredible investors that just saw things early and really invested in great entrepreneurs, people like Jeff Bezos and the founders of Google. And I was lucky that I was able to see so many inspirational people and things happen early in my career, and just wanted to try to do it on my own.

BARRY RITHOLTZ (00:14:58): Huh. Really, really fascinating. Coming up, we continue our conversation with Glen Kacher, founder and CIO of Light Street Capital, discussing the firm’s founding and launch. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.

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BARRY RITHOLTZ (00:15:17): I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Glen Kacher. He is founder and Chief Investment Officer of Light Street Capital. The firm is a technology-focused hedge fund and private investment firm located in Palo Alto, which is a good place to start.

You launch in 2010. The great financial crisis is still dominating the news flow. What was the original pitch to investors?

GLEN KACHER (00:15:52): Sure. The original pitch was, look, the game board had kind of been reset in terms of making money. Multiples were low. And we saw the emergence of kind of four things. Mobile, with the smartphone really growing at that point.

It was becoming a dominant platform. Social media — most of it was still private, but we saw Facebook emerging, and Twitter, and really redefining media. Cloud: the development of taking the internet technology and using it for the business, and the ability to propagate applications everywhere that the internet was available was incredibly powerful. And e-commerce, the ability to sell goods anywhere at a very low cost.

And with the back end that Amazon and others had built to get products delivered within a day or two to many locations in the globe, those four things were incredibly powerful. And then ultimately we saw things like the sharing economy come out of that. You couldn’t have had Uber and Lyft and DoorDash without having e-commerce and the mobile phone and the ability to get those companies distributed through the mobile universe. So there was a real emergence of these four powerful things.

Mobile, social, cloud and e-commerce. And it was really redefining what we could do as consumers and business people.

BARRY RITHOLTZ (00:17:31): I love how you described the firm: “We are the Silicon Valley home team, one of the few hedge funds living and working at the center of the technology universe in Palo Alto, 100% focused on tech opportunities.” The first time I read that I was like, that can’t be right. There has to be tons of hedge funds out there. Like, not many hedge funds in the center of the VC universe?

Because all of those successful venture investments eventually go public.

GLEN KACHER (00:18:03): Yeah. There’s a relatively small number of public market managers out there.

BARRY RITHOLTZ (00:18:08): Huh.

GLEN KACHER (00:18:09): And a good number of — you’ve seen Philippe, what he’s done at Coatue has been amazing.

And at Tiger Global, Chase has done incredibly well, and Whale Rock out of Boston with Alex. And so you’ve just seen the success of those guys. So I’m not saying it can’t be done by any means, but there is a real advantage to living and working in the place where the innovation is centered. And I think when you see this fundamental innovation like we’re seeing now with AI, it really draws that advantage of geography back to Silicon Valley. I think there’s a small number of great AI entrepreneurs, and they want to be in the same community with one another.

And so that’s a real advantage for us.

BARRY RITHOLTZ (00:19:01): Yeah, I kept hearing that San Francisco was over, it’s dead, the city is on its last gasp. We were there in the spring, and the city is just — it’s a boomtown. Like, I know there’s a little bit of a boom-and-bust West Coast gold rush mentality, and each new cycle of technology kind of works its way through, but to anybody who steps foot — we were down by the Embarcadero. The city is just absolutely on fire.

What’s it like? Does this feel like the late nineties in terms of the amount of human capital, intellectual capital and actual money sloshing through?

GLEN KACHER (00:19:42): That’s a great question. I’d say more in the mid-nineties, probably. I think that we’re at a point where this is very fundamental, low-level technology. We’ve seen something of a renaissance in the hardware industry.

And that hardware innovation really matters when you’re trying to scale. When you’re trying to scale at the rate —

BARRY RITHOLTZ (00:20:07): Meaning semiconductors, or everything around it, or the —

GLEN KACHER (00:20:11): The whole — semiconductors, networking, down to printed circuit boards. You have to innovate at sort of every level of the stack in order to grow at a 10x, a 100x rate. And the acceleration required in order to provide AI cycles at a competitive price is incredibly challenging. And the amount of demand that’s out there is incredible. So the need to scale is back.

And I think it’s pretty interesting, what we’ve seen. I think in the early 2000s, the semiconductor industry was allowed to consolidate, and the capital was provided to do that. And you saw a company like Avago and Hock Tan really organize the industry and do some horse trading of properties to other semiconductor firms and really rationalize that industry. And so as AI has emerged, what it’s done is it’s really taken advantage of the fact that there are a small number of companies that compete for a massive market.

So AMD and Broadcom and Nvidia, and TSMC, of course, in Taiwan on the back end. And then of course the semiconductor capital equipment companies like ASML. Those companies just have very large market share and have huge demand and huge moats and advantages.

BARRY RITHOLTZ (00:21:55): So let’s talk about the first four companies you mentioned: Taiwan Semi, Nvidia, Broadcom, and AMD. That’s about 40% of the public portion of your portfolio, or at least it was a few filings ago. I know you’re not a big fan of revealing too much of your portfolios, but that’s a fairly concentrated portfolio. Tell us the thinking behind having such a dominant emphasis on those four semiconductor companies.

GLEN KACHER (00:22:25): Sure. Well, it goes back to what I was saying earlier. You want to focus your capital in the place where you see the most innovation. And right now that’s at the core of accelerating computing in order to do AI.

And right now Nvidia’s got 80-plus percent market share in the network GPU market. AMD is certainly coming up in that. And as we move to agentic AI, which is a very important innovation that’s happening in AI and is really driving that next leg of growth, there’s certain advantages that AMD has, because they also are one of the two major players in the CPU market for desktops and servers. So that explains why AMD matters a lot. And Broadcom, what they’ve done with Google, with their TPU over the years, is incredibly impressive, and it’s gotten them now opportunities with OpenAI and some of the other major AI players.

So that’s certainly great exposure. And then TSMC makes the chips for all three of those companies, and the ability to kind of win no matter who wins, and really have a massive oligopoly — monopoly, almost — for TSMC, we certainly want to back that company as well.

BARRY RITHOLTZ (00:23:57): So those four companies plus Microsoft you described in 2024 as the AI Five, and while everybody was focused on the Mag Seven, the AI Five significantly outperformed the Mag Seven that year. Is it still a concentrated holding, all five? And how does that thesis hold up today?

GLEN KACHER (00:24:19): That’s a great question. Yeah, I’d say the company that’s kind of been in and out of our portfolio, mostly out, has been Microsoft, and their early lead with OpenAI. They, in our opinion, kind of fumbled that and —

BARRY RITHOLTZ (00:24:36): And hence giving an opening to Anthropic.

GLEN KACHER (00:24:40): Yes, for sure. And so the uptake of Microsoft’s AI that was somewhat powered by OpenAI really didn’t work that well. And that was a real miss for them. And ultimately they pulled back on their development and funding of their AI efforts.

And I think they’re now back in the game. But at the same time, what we’re seeing now is — for instance, Microsoft is the largest security company in the world, and one of the things that we’ve learned is that AI creates a lot of security vulnerabilities for businesses. So any business is going to need to invest more aggressively in their cybersecurity defenses. And so that will be a big benefit for Microsoft.

So that’s a huge advantage for them. But I think what they’ve done, and the repositioning that they’ve done on the Azure side of their business, has been very impressive. They’ve also rationalized some of the spending that wasn’t going as well in their gaming business, sort of pulling back there. So I think they’re repositioning the company well after they sort of blinked on AI, and it’s back in our portfolio at this —

BARRY RITHOLTZ (00:26:04): So when we talk about agentic and we talk about the major AI players, is this going to be a duopoly? Is this going to be Anthropic and OpenAI, or is it going to be a little more wide open than that?

GLEN KACHER (00:26:18): Yeah, I think this battle’s happening in real time between those two leading companies, and Google’s certainly still a player with Gemini and their advantage in distribution with their massive success, of course, in the search engine business. And now they’re backing Apple’s AI efforts as well. So they have a real distribution advantage. So I wouldn’t count Google out, and they still have great technology.

BARRY RITHOLTZ (00:26:51): By the way, their NotebookLM is outstanding. If you want to upload a giant file, a book or anything, it’s unbelievably accurate and fast. I’ve been really impressed with that.

GLEN KACHER (00:27:04): Yeah, their ability to innovate is stunning. But the real battle that’s emerging today is open source models that, one, are cheaper than the closed Anthropic and OpenAI models, because they’re free — you can download them for free and run them on local hardware, or you can engage with them on other commodity hardware in the sky. And those open source solutions are really battling these more expensive frontier models from the two big companies. So we will see. I think the early signals are that there’s a place for both of these solutions, broadly defined.

There’s also some regulatory questions. Open models you really can’t regulate very well, because you can install them on your own software, you can adjust them to work how you want. So there’s questions about how to make sure these are engaged safely in the wild, but there’s also not a lot of choices around for regulators, too, because those are in the wild.

BARRY RITHOLTZ (00:28:21): So I want to combine what you’ve said about Microsoft and security —

GLEN KACHER (00:28:27): Yes.

BARRY RITHOLTZ (00:28:28): — and open source. Is it fair to say that security-aware enterprises are going to be steering clear of open source because of the various security problems, and the duopoly of Anthropic and OpenAI is going to be where the big players are going to end up, if for no other reason, if there’s a hack, it’s a defendable decision?

GLEN KACHER (00:28:52): Well, there’s two questions. There’s using AI within your four walls and being able to provide the proper controls to make sure that it doesn’t get to your data that is sensitive, and that it doesn’t somehow leak that or distribute that. The second is what a bad actor can do with an open source technology from outside of your firm, trying to break into your firm. So those are the two things that you have to account for with your cybersecurity spend.

And so there’s lots of opportunity for, whether it’s CrowdStrike or Palo Alto, and Microsoft, as we talked about. But you’ve got to protect those. And in addition, when it’s internal to your organization, understanding what the roles are of the user of that technology, or the open source technology, and what they can access as a user — you have to make sure that you honor those restrictions as you’re utilizing the agent system.

BARRY RITHOLTZ (00:30:06): So we’re talking a lot about public companies. Let’s just look at some of the private venture investments Light Street has made over the years, and this is quite a list: Uber, Lyft, Slack, Pinterest, Toast, Harry’s, Everlane, Box, BlackBuck, ezCater. In 2018 at the Ira Sohn Conference, you presented Palo Alto Networks at a far, far cheaper price than where it is today. At a later Sohn conference you presented Farfetch. All of these have become giant winners.

The key question I have to ask is, what does investing in VC teach you about public companies, and vice versa? What do you learn about public companies that are useful when evaluating a venture opportunity?

GLEN KACHER (00:30:59): Sure. In the venture companies that we invest in, and even the ones we don’t invest in, there’s real value into understanding what’s happening in the industry. The advantage for us as an investor is that when we meet a CEO or founder of a company, and trying to understand how they’re solving a problem, they’re starting with a blank sheet of paper. They don’t have ties to some incumbent solution and incumbent set of customers that they’ve been trying to keep happy for five, 10 years, usually. So they’re able to be most aggressive in adopting new technology.

And so what we learn, that we can apply in our private investing, in our public investing, is what matters to them. What technologies can solve the problem with no constraints around keeping their long-term customers happy. So that’s a real advantage. And I think in 2022, 2023, as AI was really emerging as a category, when we were talking to some of these early stage firms about, okay, how are you developing your AI solutions, and which semiconductors and infrastructure and service providers are you using?

That gave us a real insight into Nvidia and AMD and Broadcom and Marvell as potential investments for our public side.

BARRY RITHOLTZ (00:32:41): Long before people were talking about it in the mainstream, you’re hearing this directly from these clean-sheet venture startups?

GLEN KACHER (00:32:49): Yeah, I mean, there’s one great story. When I was at Integral, Bill Joy was a partner at Kleiner Perkins for several years —

BARRY RITHOLTZ (00:32:59): Previously at Sun, if I remember correctly, right?

GLEN KACHER (00:33:01): One of the four founders, sure. Yeah. And Bill — I can’t remember the exact year. It was early to mid 2000s.

And he was talking about this group of engineers that he came across, I think it was at Caltech, that were utilizing the GPU to do early AI calculations. And so this was 2005 or ’06 or something like that. And the conclusion of that team and of Bill himself, one of the great pioneers of Silicon Valley, was that GPUs would be the best chip architecture to do AI calculations. So I always had that in the back of my mind.

And over the years when we would visit with Nvidia, we would ask about AI, and Jensen would talk about it, and it was a tiny, tiny product and solution, or end market, for them. And at that time, crypto mattered a heck of a lot more. But it was very fortunate: in the back half of ’22, crypto crashed at the same time as AI was taking off. And so that gave us —

BARRY RITHOLTZ (00:34:13): They just pivoted? Was that simple for them, or —

GLEN KACHER (00:34:16): Well, they were always working on these things, right? And it’s really about market adoption more so than they’re addressing it, right? And it just so happens that these things coincided. The stock market was much more focused on what was happening with crypto, that drove the stock down, and not as focused on this emerging opportunity in AI.

And so as AI took off in the back half of ’22, we were able to build a great position in Nvidia.

BARRY RITHOLTZ (00:34:47): So let’s talk about that run following ’22. You guys had one of the best three-year runs of any hedge fund in recent memory. I’m looking for my exact numbers. ’21 and ’22 — the whole market got whacked in ’22, ’21 was rough. You’re down 26% in ’21, down 54% in ’22, and then come screaming back in ’23, ’24 and ’25: you’re up 46%, 59% and 37%. First of all, how much are you just holding on for dear life?

When you see numbers like that, what’s it like to live through the regular sort of drawdowns that technology goes through? How much beta, how much volatility are you experiencing, and how do you manage around that?

GLEN KACHER (00:35:46): Yeah, it’s very challenging. I mean, I think it was a very frustrating time, obviously, for us, in ’21 and ’22. We came off an incredible 2020 where we played the COVID market incredibly well. We were short going into COVID emerging. Got very short the market and then had a tremendous run backing SaaS and e-commerce through that period of the world being in kind of a quarantine.

And it was a difficult transition coming out of that for us. And so it was a really rough time. Software really got hit in ’22, over a course of a month or two, and we had to reevaluate what we were doing, and that was tough. It was a tough time. And so I think the ability to step back and say, okay, AI is emerging, and these are the incredible companies that are very well positioned for it — and they were trading at what we thought were attractive valuations. And so we’ve just been solving for looking forward over the next 6, 12, 18, 24 months since then.

And it’s been very fortunate that we’ve been in the right place as AI’s emerged.

BARRY RITHOLTZ (00:37:14): So let’s talk a little bit about that philosophical look, and obviously AI and software is a perfect example of what you’ve described as long the disruptor, short the incumbent. And it’s not just SaaS versus AI. You could be long Uber, was an example I saw you discuss once, and short rental car companies. Walk us through those kinds of trades philosophically.

GLEN KACHER (00:37:44): Yeah. Well, we don’t necessarily do paired trades, but if we think there’s a well-positioned solution like Uber at a certain period of time, and think it’s benefiting from this merger of e-commerce, for them, and mobile, and dominant market share, we’ll go long that. And if we see a company out there that’s getting displaced or substituted, there’s short opportunities. We look at them as independent opportunities, frankly.

So I think sometimes the market, or the press around the stock market, tries to simplify things into a this-is-good, this-is-bad war —

BARRY RITHOLTZ (00:38:33): If only it was that easy, right?

GLEN KACHER (00:38:34): Yeah. I think sometimes that leads to things getting overdone. I think software just in the last month or two has really had an incredible bounce back. I think people — the SaaSpocalypse, SaaS apocalypse, if I can say it — that view that software is doomed is sort of a huge simplification, right?

I mean, I think if you look at the history of what happens with incumbent technologies, if they solve a problem really well, they can stick around for a long time. And I think until very recently, many brokerage firms and banks are running mainframe solutions still, because it works. And when you get a new technology, you want to take that new technology and you want to apply it to do new things that really get you an advantage versus your competitors. You don’t want to take a new technology and say, what’s the boring business process that we’ve automated?

And it really works really well, that we can apply this new technology to? No one does that, right? That would be a waste of innovation in a lot of ways. So those core systems don’t tend to get swapped out. So you get these opportunities for bounce backs, and we’re taking advantage of the doom and gloom as well as the excitement about the new things.

And that’s what we have to do.

BARRY RITHOLTZ (00:40:09): Huh. Really, really interesting. Coming up, we continue our conversation with Glen Kacher, founder and Chief Investment Officer at Light Street Capital, discussing the current environment for AI and beyond. I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.

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BARRY RITHOLTZ (00:40:28): I’m Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Glen Kacher, the founder and Chief Investment Officer of Light Street Capital, a technology-focused hedge fund located right in the heart of Silicon Valley in Palo Alto. So I have so many great quotes of yours I want to throw by you. I’m going to start with variant perception.

“We look for a mismatch in perception and reality. Timing matters, but there must be a thesis about when and how the mismatch resolves itself.” Oh, so that sounds pretty easy. That’s all you have to do.

Tell us a little bit about identifying that variant perception.

GLEN KACHER (00:41:16): I started this by talking a little bit about why I got excited to be an investor from the beginning. And part of it is being a detective, right? And going out, talking to people firsthand, working with my team of investors that work at Light Street Capital every day. And we all operate in the same way. As Roger would say, everybody goes out for a pass. And go out, talk to the people that matter, talk to the customers, talk to the suppliers, talk to the innovators themselves.

And that’s how we try to get it done and get the real story. I think we’re in a situation today where AI is now being cast as sort of this evil empire that is going to, one, cost people jobs. And two, it’s crazy, evil people overspending, and it’s going to crash and burn eventually. And that’s really not the story of AI.

The story of AI is that the end users are self-selecting every day in their browser, or now with agent software, or their development tool to build more software. And they’re saying, this is how I can get more done quickly and well with these tools. And that’s what’s driving the demand. That’s creating the capacity build of AI compute.

And so we look at that and say, there’s a mismatch in the way AI is being perceived today, and that will reverse, but you have to figure out when.

BARRY RITHOLTZ (00:43:10): So that’s a productivity story, it’s an efficiency story, and obviously it’s a profitability story.

GLEN KACHER (00:43:16): It’s a demand story.

BARRY RITHOLTZ (00:43:17): Which kind of raises the question: your focus on the core AI players. What about everybody else? Forget the Mag Seven, the next 493 in the S&P 500. What does this mean to the rest of corporate America?

GLEN KACHER (00:43:34): Well, I don’t think you can forget the Mag Seven, but what does it mean — but we will put that aside. What does it mean for the rest of corporate America? I think it’s gotten their attention. It got their attention pretty quickly. And I think if you talk to anyone on the board of directors of a public company, or the CEO and top managers, they’re saying, gosh, we hear about AI, we need to come up with a plan.

We need to figure out how we’re going to harness this tool and make it work for us. And so that’s the task at hand. I think it’s still early to say, well, this company’s doing a great job with AI, so we should buy their stock. That’s not, to me, a great thesis for today for investing.

But I think that everyone that I talk to in corporate America is very focused on, hey, we’ve got to take advantage of this tool.

BARRY RITHOLTZ (00:44:42): You mentioned demand is really surprising everybody. I want to say it was the second quarter, even Jensen Huang at Nvidia was surprised — his expectations for the AI infrastructure spend by 2030, I think he bumped from 1 trillion to 4 trillion. That’s just a 4x, giant set of numbers. Are we running the risk of over-allocating to AI the way we did for things like fiber, and go down the list of every new technology that seems to get over-allocated?

At what point does this become — is this explosive upside demand going to — when does the coyote step off the cliff and not realize he’s gone a little too far?

GLEN KACHER (00:45:25): This is the big question everyone’s battling with today. And I think the Mag Seven we mentioned a minute or two ago, they have really become the key partner. I think if you look at Amazon, you look at Microsoft, Google, those companies are partnering with Anthropic and OpenAI in order to fulfill on building this compute stack and the infrastructure to run AI. And the question is, how far ahead of demand are they planning?

And the reality is they’re not ahead today, they’re behind.

BARRY RITHOLTZ (00:46:23): They’re playing catch-up now.

GLEN KACHER (00:46:25): They’re playing catch-up. The negative doomers are expecting them to overinvest, but today that’s just not happening. I mean, there are bottlenecks, right? There are real bottlenecks, and it’s quite well discussed, that have slowed down the ability to build.

And you’ve got companies that are in control of some of those bottlenecks, whether it’s memory companies, which we like as well, or whether it’s Taiwan Semiconductor. They can only invest so fast. So today, demand is still running way ahead of supply. And so this doomerism that has grown up around AI, in my mind, is misplaced.

BARRY RITHOLTZ (00:47:15): Let’s talk a little bit about the bottlenecks. I use Gemini, I use Notebook, I use Chat, I use Perplexity. But really Claude Pro has become my favorite way to engage.

And I’ve noticed just going from Opus to Fable, like an order of magnitude faster, deeper, better. And these are coming along like every few weeks. It doesn’t feel like there’s much of a bottleneck. When you say bottleneck, what are you referring to?

GLEN KACHER (00:47:48): Well, I think the bottleneck drives the pricing higher than it needs to be today, right? And so, no offense, but you’re probably not paying for your Claude traffic. Bloomberg may be paying for it.

BARRY RITHOLTZ (00:48:05): No, I’m paying. Well, my firm is paying, and it’s 200 a month, and then we just did a whole enterprise thing, and it hasn’t been — like, I keep hearing about people, right, just going crazy on credits and spending a year’s worth of credits in a month.

We’re pretty reasonable and a little aware of our spending, but it’s not like it’s a hundred thousand dollars a month. It’s fairly reasonable for the output you get.

GLEN KACHER (00:48:34): Right. I’ve been surprised. We have our own software product and stack that we have developed on for 15 years, where we run our entire research process. And so we’re constantly improving that. We’re also doing analysis and sentiment tracking, et cetera, of sources of data that we buy.

And it’s not cheap to do that.

BARRY RITHOLTZ (00:49:06): Well, are you spending 50,000 a month? A hundred thousand a month? What does it look like?

What is a typical hedge fund in the tech space — not necessarily yours, but what do you think people are spending? I know I’m only scratching the surface for what I’m doing.

GLEN KACHER (00:49:20): Well, for programmers, it’s not uncommon to spend a hundred dollars a day. So it can get expensive, and that adds up. That can add up quickly.

BARRY RITHOLTZ (00:49:31): Sure. 30 grand a month is not nothing.

GLEN KACHER (00:49:33): Yeah.

BARRY RITHOLTZ (00:49:34): All right.

GLEN KACHER (00:49:35): You can spend a lot more than that, too.

BARRY RITHOLTZ (00:49:36): Well, a couple of months ago there were stories about, wait, we had a whole budget for a year and it’s gone in four weeks. Is that the bottleneck, being able to service the super clients, the hyper users like that?

GLEN KACHER (00:49:49): Well, that’s where this demand for the open source solutions comes in, that are far, far cheaper, right? And so the ability to load it up on your own hardware and have it run, and be able to also adjust the weightings of the model and train it on your own data, those are all very powerful opportunities for investors, or just general, any kind of business. So being able to do more for less is certainly attractive.

BARRY RITHOLTZ (00:50:24): So another quote of yours. You were talking about the AI build-out, and you said, “It’s a 10-year cycle of demand. The bear case is that CapEx gets cut the moment returns disappoint.” Tell us a little bit about why you think this demand cycle is going to go a full decade.

GLEN KACHER (00:50:44): Yeah. Well, I mean, I think we’re changing the entire stack of computing. The only thing that looks like this that we’ve experienced before is the move to the internet architecture from client-server. And these computing cycles happen about every 15 to 25 years.

So since the development of computing — and the way the technology works is completely different. The old school of technology is a search and retrieve, or create, search and then retrieve model, where you stored things in databases. And here in the AI world, the technology is essentially creating a custom solution, custom to your question, custom to your data, every single time you use it. It’s just a much more complex and compute-intensive model.

And the ability to have custom solutions and custom answers every single time you need data is so much more powerful. And if we follow history, these things take 10 to 15 years to become a quarter of the total capacity in the industry. So to say that it’s going to take multiple decades is not much of a stretch.

BARRY RITHOLTZ (00:52:24): So where are we? Are we in year four or five now —

GLEN KACHER (00:52:28): Yeah.

BARRY RITHOLTZ (00:52:29): — of a 10-to-15-year first leg?

GLEN KACHER (00:52:30): Yeah, we’re exactly — we’re kind of a third of the way through the first leg. I mean, if you look at the way technology develops, it sort of goes in three cycles. Your big infrastructure development years take five to 10 years, let’s say. Then year six through 16, let’s say, that’s when your platform or OS really gets developed and put into place. And then the applications kind of come in years 11 through 21.

And applications become the dominant place where businesses invest and the innovation happens. So it’s at least a 15-to-20-year cycle that we’re looking at.

BARRY RITHOLTZ (00:53:18): I’m kind of fascinated by the energy demands and the build-out of these giant data centers. And I’m curious, what are your thoughts to the political pushback to where these are located? A couple of states have already banned them. I never saw the politics against tech morphing this way.

How do you look at that as an investment risk?

GLEN KACHER (00:53:44): It’s a real risk. Any bottleneck that slows down the adoption of your technology is a problem, right? We’re investing in Nvidia or Taiwan Semiconductor saying, okay, here’s what we expect. And in our view, the numbers are still significantly better than Wall Street’s looking for. However, we have to bear in mind, is there an obstacle that’s going to get in that way? Today, it’s, in our view, not a big enough problem, but it’s an emerging problem.

And I think the way, as an industry, we have to get around this is that we have to explain the places that invest most heavily and most aggressively. If you look at Northern Virginia, not far from where I grew up, that is the data center capital of the world. And that opportunity, and what’s happened with tax receipts in those communities that have all these large data centers, and the demand for blue collar work in order to build those data centers, whether it’s electricians and plumbers and construction work, it’s a massive shot in the arm for those economies. And then the tax revenue is an ongoing payment that happens over many years.

So I think it’s a little bit sad that some of these communities are not as positive about the opportunities. I think they’re just not well educated by their elected officials.

BARRY RITHOLTZ (00:55:31): I’m not surprised that it’s in Virginia or New York. I’m enormously surprised when you see pushback in places like Texas, which is big enough that you can stick a data center out wherever there’s juice and nobody has to see it, hear it, be concerned about it. But it keeps raising the question of cost of electricity. And people seem to be concerned: we let a data center in here, our electrical costs are going to go up. How should we, as a tech-savvy nation of investors, respond to that concern about electricity?

GLEN KACHER (00:56:13): Yeah, absolutely. The source of electricity needs to be behind the meter, right? So the firm that creates the data center, if there’s not enough existing energy, then they have to provide the energy.

BARRY RITHOLTZ (00:56:30): So run a gas line, natural gas, set up your own generator, and you’re off the grid.

GLEN KACHER (00:56:35): And look, if it’s close to a residential area — there’s actually a data center that’s being contemplated in San Mateo, California, not far from Palo Alto. And their solution is to put Bloom Energy servers behind, which are powered with natural gas, with almost no emissions. And they’re incredibly quiet, almost no audible sound. And you can put a Bloom Energy fuel cell behind the meter.

And even though that’s the plan, residents have rallied against it because they’ve heard data centers are bad. They’re just not educated on what the solution is and how it will not impact their energy prices. And there will be no emissions and no noise.

BARRY RITHOLTZ (00:57:29): And we have midterms coming up in November. Is this the sort of thing that once we get past the next group of elections, this will fade? Or is this really an ongoing challenge for the industry?

GLEN KACHER (00:57:42): It’s an education challenge. Yeah. We’ve got to — and it’s from local to national, right?

Each project has to explain, this is the decision we’re making around procuring this energy. These are the number of jobs it’s going to create. These are the tax revenues it’s going to generate. Here’s our existing energy situation.

This can go on the grid without much of an impact. Or, we’re bringing our own energy. So it’s both a local and a national solution.

BARRY RITHOLTZ (00:58:14): Huh. Really, really interesting. And the Mag Seven keeps coming up. When we met in the spring in San Francisco, you liked Amazon, Google, and Nvidia. I don’t recall what your thoughts were on Microsoft. You weren’t a big fan of Meta, Tesla and Apple.

How do you see the Mag Seven today? Is that still fairly consistent, or —

GLEN KACHER (00:58:38): That’s fairly consistent, yes. As I said earlier, we’ve put Microsoft back in our portfolio, and so I’d say that they’re back in the good category. The challenge for Apple is to get their AI solutions tuned up and working well for the consumer.

If you think about your mobile phone, it’s in a very unique position. It has both your personal and your business data, to the extent that you’re not a small business person. And the security is there to separate those two things. And so that device has the ability to optimize and recommend actions or solutions to you as a consumer that address both your business life and your personal life.

And that’s a very unique position that Apple’s in. And obviously you carry it around, and it’s on most of the time, if not all the time. And they have a real opportunity to bring AI solutions, to democratize them for consumers, in a very complicated but elegant way. And so if Apple can get things right, that should accelerate their opportunities, or earnings, over the next couple of years.

BARRY RITHOLTZ (01:00:04): They don’t have a great history with it. Siri has been nothing less than a total embarrassment for a decade. I mean, I’m not revealing any secrets here. Everybody knows it’s garbage.

And there was some criticism of Apple for not jumping in with both feet to become a hyperscaler and spend tens of billions of dollars. What they’ve done with Google has worked out great for both companies. Hey, what’s a couple of billion dollars a year to Apple? And to Google, it’s pure profit. Is the same sort of setup teeing up, where it’s a win-win for Apple to integrate Google’s technology into the iPhone?

GLEN KACHER (01:00:47): Potentially. But it’s execution-based.

BARRY RITHOLTZ (01:00:50): Isn’t that always the case?

GLEN KACHER (01:00:52): It is, but their strategy — this is a very consistent strategy, where they were not the first smartphone, right? They waited. They watched what Nokia did, what BlackBerry did, RIM BlackBerry, and then they came out with a more elegant solution after those guys established the market.

BARRY RITHOLTZ (01:01:15): Second mouse gets the cheese. Is that the thinking there?

GLEN KACHER (01:01:20): Well, if you have a big bank account and users that really will wait around till you solve the problem in a better way, then it works.

BARRY RITHOLTZ (01:01:28): Last question before we get to our favorite questions. So I’m not going to ask you about 20 years out or 10 years out, but five years out, what does this technology look like? What’s going to define AI for the consumer and business customer in 2031?

GLEN KACHER (01:01:47): Agents. The ability to have the technology working on problems when you’re not directing it, that is incredibly powerful. It leads to users consuming 5x the tokens that you would consume just directing AI as you would a search engine. And so the ability to have your agent or agents working on your personal life and solving problems as they come into your inbox or into your messaging solutions with your family and friends.

And then on the business side, the same thing. Solving problems for you, solving problems with your coworkers and teammates. It’s incredibly powerful, this technology —

BARRY RITHOLTZ (01:02:44): To say the very least. All right, let’s jump to our favorite questions that we ask all of our guests, starting with — and I already asked, but I’ve got to ask a little more specifically — who were the mentors who shaped your career?

GLEN KACHER (01:02:58): Well, you certainly have to look at Julian Robertson, and the example that he set in how to run an investment business with integrity and intellectual honesty and principles. And so that was incredible. Roger and John at Integral Capital Partners were just great as I got out of business school and was in my early thirties — really those key years of learning, again, how to run a firm and make great investments. And they gave me the opportunity to both succeed and fail in some of those private investments that I made. Those are going to be the key people that really shaped my career.

BARRY RITHOLTZ (01:03:51): You mentioned the two Peter Lynch books, One Up on Wall Street and Beating the Street. I know you read a lot of other research. Any other books worth mentioning these days?

GLEN KACHER (01:04:01): I pulled a book off the shelf recently, Empires of Light, which tells the story of the propagation of electricity and the battle between Edison, General Electric, Tesla, Westinghouse —

BARRY RITHOLTZ (01:04:17): AC and DC.

GLEN KACHER (01:04:18): Yes. And incredible story. And I think at the end of the day it was really interesting that Edison really pushed that AC was dangerous, to the point where he promoted it for the electric chair, because it made AC look bad and dangerous.

BARRY RITHOLTZ (01:04:40): Didn’t one of them electrocute an elephant to show how dangerous it was?

GLEN KACHER (01:04:43): Many different animals. Yeah. And a prisoner, and it didn’t go so well.

Actually, the first electric chair didn’t work extremely well. So, to scare people and say AC is bad — and you look at what’s happening today with AI, and people taking this incredibly powerful technology that is going to change the world, and it’s already starting to change it, and making it this evil empire. It’s pretty fascinating. And I think the other side of that is that, at the end of the day, Westinghouse won out with steady execution and industrialization of the back end.

And you look at the Mag Seven, and the opportunity for Amazon and Microsoft and Google to build that back end. And AWS — AI is an incredible opportunity for AWS, and —

BARRY RITHOLTZ (01:05:42): Which is already the biggest profit center for Amazon.

GLEN KACHER (01:05:45): Yes. And so — if you say Amazon, everyone thinks about e-commerce, and they don’t first think about AWS, but AWS is the more important part of the company.

BARRY RITHOLTZ (01:05:55): Yeah. To say the least. What are you streaming these days?

I know you’re on a plane pretty regularly. What are you listening to or watching to keep yourself entertained?

GLEN KACHER (01:06:06): Well, entertaining — I mean, sure, X is entertaining. All the debate around our industry is pretty fascinating. Friends and Neighbors is a guilty pleasure.

So that’s something I’m streaming regularly.

BARRY RITHOLTZ (01:06:22): Anything Jon Hamm is in is always worth watching. Final two questions. What sort of advice would you give to a recent college grad interested in a career in either investing or technology?

GLEN KACHER (01:06:34): The number one thing that I tell younger folks is, you have all the tools today to make an impact. And so if you want to get into the investment business, one, of course, start investing. But two, do your research, go online, and then publish your research. Put it on X, interact with people like you, people like me. And if you can uncover the story behind a stock and make some great recommendations, you’re trying out for the world in real time.

And if you have the courage to do that and you do it well, it’s a no-brainer to hire that person.

BARRY RITHOLTZ (01:07:21): Our final question: what do you know about the world of investing and technology today that might have been useful back in 1993 when you were first getting started?

GLEN KACHER (01:07:32): Yeah, I think early on, and for investors coming to our market, there’s this perception that things happen very fast, and no doubt they’re changing rapidly, but at the same time, there’s this reality that things do take time. We talked about the emergence of the smartphone. The first smartphone-like device that came out was the Newton, and it didn’t really work that well. And then General Magic had a solution that also didn’t really work that well.

And then Palm created the first thing that actually got some adoption, but it didn’t do any email or messaging, and it certainly wasn’t a phone. And then Palm created the Treo, right? And then, I’d say in some ways RIM was the real first — RIM BlackBerry was the first real working smartphone, but it was somewhat clunky, and some people loved that clunkiness, right?

And loved that keyboard. But then ultimately got to Apple. And so while things happen fast, it also takes years for things to really develop. And so I think if we apply that today, AI can do some incredible things, but it’s going to do way more in a few years. And there are some obstacles, other than the ones we’ve mentioned, to adoption, right?

Data security, and comfort of your coworkers and your superiors in terms of giving access to data to an AI agent. So it will take time in order to see ultimately what it can deliver. And so I think we’re just scratching the surface, even though, as I mentioned, there’s a lot of battles between open source, for instance, and the closed frontier models. But there’s way more to go here.

BARRY RITHOLTZ (01:09:42): Glen, thank you for being so generous with your time. This has been absolutely fascinating. We have been speaking with Glen Kacher. He’s the founder and Chief Investment Officer of Light Street Capital.

If you enjoy this conversation, check out any of the 651 previous discussions we’ve done over the past 12 years. You can find those at Bloomberg, iTunes, Spotify, YouTube, or wherever you get your favorite podcasts. I would be remiss if I didn’t thank the crack team that helps put these conversations together each week. Elizabeth Srin is my video producer. Anna Luke is my podcast producer.

Sean Russo is my researcher. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

~~~

 

 

 

The post Transcript: Glen Kacher, CIO of Light Street Capital appeared first on The Big Picture.

My first day of Autumn reads (Fall Equinox is 8:04 P.M!):

​• How Much Is Being Close to Your Favorite Artist Worth? Superfans Are Reshaping the Concert Industry: Rosalind Adams on fans spending thousands for barricade spots and VIP perks — and how that’s becoming normal. Some admit to spending thousands of dollars for barricade spots and other VIP perks at concerts, which is slowly becoming common (The Guardian)

​• Mohamed El-Erian Walked Away From a Nine-Figure Job After His 10-Year-Old Handed Him a List of Life Events He’d Missed: The PIMCO exit story, retold as nearly half of full-time working parents say they miss their kids’ activities for work. (Moneywise)

• Beyond RMDs: A better way to turn retirement savings into income: As more than 11,000 Americans turn age 65 every day,1 we’re seeing an important financial issue emerge: Most retirees don’t use—or may not know how to use—their retirement savings to generate steady income. (Vanguard)

​• America’s Capital of Homebuying Regret: Business Insider on Austin — where Ryan McPherson bid $20,000 over asking in 2022, wrote the sellers a heartfelt letter, and now watches prices fall. Meet the Texas homeowners who are deep in the red thanks to Austin’s long, painful real estate hangover (Business Insider)

• He spent 11 months inside DOGE. Now he wants to set the record straight. Elizabeth Dwoskin on Tyler Hassen, whose initiation into Musk’s efficiency department started as a series of tests. (Washington Post)

​• ‘Toxic Multitasking’ Is Breaking Your Brain. Here’s How to Take Control: Doing more than one thing at once, especially on screens, can become addictive, which harms the functioning of our brain and nervous system. Jolie Kerr on the always-on default — email during Zoom, Instagram during television — and what it does to the nervous system. (Washington Post)

• Fear Strikes Out, But the Hatred Remains: Europe and Canada reduced dependence on the United States. And Mark Carney, Canada’s Prime Minster, strongly endorsed the idea. Donald Trump predictably, reacted with rage, calling it a “hostile act,” threatening to cut off all trade with Europe. And nobody cared. ​ (Paul Krugman)

• Canada’s Carney embraces tighter ties with E.U. despite Trump warning: Canadian Prime Minister Mark Carney addressed European lawmakers after E.U. officials said Canada could become the bloc’s first “associate member.” (Washington Post)

• The Healthiest Way to Drink Your Coffee, According to a Nutritionist: Coffee and the wellness world have a complicated reputation. You may have heard that it can spike cortisol, disrupt sleep, irritate your stomach, or totally dehydrate you—but that it’s also packed with antioxidants and may offer some real health benefits. So, which is it? Marie Bladt gets the answer. (Vogue)

• What’s Happening to the WNBA Isn’t Normal: Jemele Hill on a league whose unprecedented success has come with unprecedented controversy. Something has to change. (The Atlantic)

Video of the day: Max Verstappen passes 100 karts in just 14 laps in Red Bull’s ‘Max vs 100’.

Be sure to check out our Masters in Business with Glen Kacher, founder and CIO of Light Street Capital. He launched the firm in Palo Alto after stints working with Julian Roberts at Tiger and Roger McNamee at Integral. His Mercury funds returned 45.7% in 2023, 59.4% in 2024, and 37.3% in 2025 — the best three-year stretch of any of the “Tiger Cubs.” He describes the firm as “the Silicon Valley Home Team, 100% focused on tech opportunities.”

 

Earnings growth has been the main driver of equity returns over the past 18 months in all regions

Source: Goldman Sachs

 

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A bonus LIVE episode of Masters in Business:

I spend most of the evening listening to — and laughing — with bestselling author and financial journalist Michael Lewis, live from the Landmark Theater in Port Washington, NY.

Our wide-ranging, 90-minute conversation covered the full arc of his career, from “Liar’s Poker” to “Who is Government.” The informative – and often hilarious – conversation included his experiences turning Moneyball into a film (including on-set hijinks from Brad Pitt), how his career as a writer evolved, and what he is working on next. (His latest book, Blockers, is out on October 6).

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

You DO NOT want to miss this fun, rollicking live episode of Masters in Business.

Transcript below…

 

 

 

 

 

Michael Lewis LIVE Transcript:

 

This is Masters in Business on Bloomberg radio

Barry Ritholtz: Another Masters in Business Live, this time with Michael Lewis.

I’ve been fortunate to interview the poet laureate of finance, I don’t know, maybe a dozen times, 10 times over the years I’ve interviewed him after each of the last few books.

And, I’ve interviewed him live at a couple of conferences and events. I’ve had dinners with him. I’ve gotten drunk with him at a bar late at night. Imagine the greatest storyteller of your generation, and then sitting at a bar and having a couple of drinks with him; it’s every bit as spectacular as you would imagine.

So when I read that his new book was coming out. I said, “Hey, if you’re interested in speaking to a small group at a local theater, I’d be happy to to set that up.” And, his book  PR people said, “Great.”

So at the Main Street Theater in Port Washington to a crowd of just 300 people, he regaled us with stories for 90 minutes. You’ll hear almost no me in this, because my job was just to give him a nudge and then stay the hell out of his way. You could tell the audience loved it. It was so much fun, there were plenty of I had never heard before, listen for the story about Billy Bean and the f-bomb.

It really is special . . .I thought this was a blast, and I think you will also. With no further ado, Michael Lewis on his new book, “Who is government” and his career as a writer.

~~~

Barry Ritholtz: Welcome, Michael.

Michael Lewis: It’s a pleasure. Thank you for having me.

Barry Ritholtz:Welcome to the North Shore of Long Island to Gatsby, Long Island.

Michael Lewis: I’ve seen none of it. It was dark and rainy. Is it?

Barry Ritholtz: Let’s start out, how, how you doing? How’s the book tour going?

Michael Lewis: So it’s called Who is Government?

Barry Ritholtz: Who is government?

Michael Lewis:You said, “What is government?”

Barry Ritholtz: Yeah, the same thing. Who is government?

Michael Lewis:And, it’s an odd, it’s an odd. If we’re gonna be honest here. There are books and there are book-like objects. And this is closer to a book like Object, because I didn’t write the whole thing. I wrote, I wrote a third of it. Mm-hmm. I, I love it. But I, but I got, I am, I have six other writers that I hired to do this with me.

I’m answering this the way I’m answering your question. The book tours, it’s normally my least favorite part of what I do for a living. It’s, and, and I don’t know why that is. I just don’t because it’s a slog. It’s, it’s, I don’t like being on tv. But you gotta do that. I don’t, the the business of presenting yourself this way is so different from the business of writing the book that it’s jarring in, in the first place and then the worst thing happens. 

You start to like it. And, and then you get, you get going back in to like, being a writer book is jarring. But, but the, the thing that is usually a, a problem is that, you know, you’re kind of on the line, you know, it’s your book, it’s just you’re out there alone. Now, if people say it sucks, I can just say it’s the other people who are responsible.

And so I feel it’s kind ofit’s kind of a, it’s kind of a pleasure, this one compared to the others going out and talking about it.

Barry Ritholtz: So I’ve only seen you with some of the other authors once or twice. You were on some show with, Kamua Bell and I don’t think you were, I haven’t seen you with any of the other co-authors.

Michael Lewis:Did you see the, did you see it was Morning Joe with Kamal Bell? (Yeah.) All right, so Kamal be, is a six foot, five inch, 300, 250 pound black man. Right? And, and he shows up at Morning Joe in a sweatshirt that says immigrants aren’t criminals, but the president is one. And, and, and, and, and they say. They say you can’t wear that on tv.

Joe is not there. He’s remote and so they, they try to find something that will fit Kamal, be nothing will fit Kamal be Is that why it was inside out? Is that what he did? No. What he did, no, it gets worse than that. They then tried to get him to flip it around and it looked ridiculous. Then they put it right side, the right side out again and they put black tape over just the bottom part of that.

And then when they, by the time we got, he got finished, we’d lost our segment. They, they, they, they’d run out of time and Joe was heading off to Dr. There’s another hour Joe was headed off to drive his kid to school and they called him and said that we can’t have him on because you know, we can’t figure out what do with the sweatshirt.

And Joe Interceded and said, have him wear the sweatshirt. He can make sure everybody can read it. And put him on and Wow. And what was, but what was really weird about it is that though Joe was comfortable making that statement on his, on his show, n none of the authorities in the actual studio were, and so they frame Kamau, it’s like this giant head and you can’t see anything.

And the whole time he’s talking, he keeps going, he goes, he’s going like this with a sweatshirt. [I saw that}. Did you see that? Yes. Yeah. No, it was, it’s incredibly distracting. I was trying to have a conversation and he’s, this man is doing this thing with his sweatshirt. But yes, mostly it’s been, I mean, I, I’ve done some stuff with some of the co-authors, mostly stage stuff.

So I’ve been on stage one way or another in one city or another with all of them or each of them.  but most of the, most of the other stuff, the TV stuff I’ve had to do on my own.

Barry Ritholtz: So I want to get to this book in a minute, but first I wanna set the stage with the arc of the two prior books [’cause] I that are related to this. Well, exactly. That’s what I’m teeing up.  I’m just trying, don’t get ahead of me. Just trying to help.  So the premonition was how the US really did a mediocre job. During the pandemic, you focused on charity Dean and the pandemic emergency response team and the mess they had to clean up.

I’m curious how that book led to the Fifth Risk, which was the book,  that was the predecessor to this. So I’m gonna have to help you. Go ahead. The fifth risk is before this. Before the, before the premonition. It goes Fifth Risk Premonition this

Barry Ritholtz: Then, withdrawn. Okay.  So, but, so the Fifth Risk is the predecessor book to this.

Michael Lewis:Yes. How did that lead to this book? Yeah, so that, there we go. I’m sorry, I got the order wrong. Yeah, yeah. Sorry about that. And, and your wife, Wendy, is here somewhere in the front row. I’m so sorry you’re feeling poorly, but thanks. Thank you for coming,

Barry Ritholtz: By the way, wouldn’t be the first time you’ve embarrassed me in public and we, we could save that conversation for later. [Okay. But, okay.] How did those books lead to this book?

Michael Lewis: So, this is how it happens. It’s really simple and it is all none. It all seems worthy from a distance. Like I have some great political or social purpose. In fact, it’s all literary opportunism. Trump is elected the first time. Trump fires a day after his election his transition team and enterprise, I didn’t know existed until I read he’d fired it. But it was 550 people that Chris Christie assembled for him to go into the government and receive from the Obama administration, the briefings that a thousand people in the Obama administration had by law, spent six months preparing.

So given it’s Obama, it’s probably like the best academic course in the history of the government, on the government. And, Trump fired the people who were gonna go listen to this. Like they just said, we don’t need. And he told Chris Christie — Chris Christie told me, he said — we’re so smart, that it’ll take us an hour to figure out how the government works. We don’t need that.

And I thought this is like a great comic premise that, that, that I can go and wander around the government, get all these briefings that he didn’t bother to get, and the reader will feel rightly like they know more about the government than the president and the president’s supposed to be running it.

And the, that book, it was, it’s, it was a series again, it was more of a book like object. It was three long Vanity Fair pieces plus a piece, that, so it just happened to work as when you glued ’em all together. But I picked intentionally the departments that nobody paid any attention to. So not state or treasury or anything like that. I picked commerce, agriculture, and energy. Ones where if I turn to my neighbors in Berkeley, all of whom have, are inflicting their political opinions upon me constantly, if I say, what does the Commerce Department do? They, I get a blank stare. They have no idea. And I found in those places one really good material, like all of the places sort of like matter.

There’s stuff going on in each of them that’s really, really, really important.  but unbelievable characters. Can I tell you about one character?

Barry Ritholtz: Sure. but I don’t want before you, [I don’t want you got, your train is on the track and I don’t want to interrupt]. Well, you’re, you’re just skipping the best part of how did you get access to all these people?

You kinda left out if there’s this giant transition team that was supposed to be for the incoming Trump administration and he fired them all,how did, how did you get access to this?

Michael Lewis:He fired the ones who were going in to listen to the briefing. So you just, the briefings were still there in some ways. Like in some places, like the Turkey sandwiches were still moldering and, you know, that they had prepared, they had figured out what drinks they might want. It was all, all set up.

Barry Ritholtz: So you reach out to,who?

Michael Lewis: I reach out to, in the first place,  people inside the energy department, I, I got some names of officials in the energy department, started with the outgoing Obama people, but quickly got into the civil service.

Cause the civil service does the briefings.  I mean, they’re the ones who are. I mean, in the energy department, for example, running a $50 billion cleanup of the nuclear waste left behind in eastern Washington from the building of the atom bomb in the 1940s, it’s still going on. You know, there’s like that thing, there’s, there are all these things.

There’s a nuclear arsenal. I went and I went and met with the people who managed the nuclear arsal arsenal, and they couldn’t tell me the, there was classified stuff, but they could tell me a lot. And their attitude was, we’re so grateful someone’s come to listen. Like, like we did all this work to like explain how it all works.

And, and, and I started with energy, but not I, you know, it could have gone anywhere. But I started with energy because I don’t know if you remember, but Rick Perry was [Oops!] Oops. Was Donald Trump’s pick for Secretary of Energy? ’cause he, ’cause he, I mean, in Trump’s mind it looks like oil Texas, right?

Looks good on television. But Rick Perry had called for the elimination of the energy department when he was running for president. And that’s a little awkward. You’re gonna go be running this place when you said it shouldn’t exist. [Tough first day]. But he had no idea what was in it. And the minute he found out it was in it, he went to the senate, his senate hearings, and said, God, I’m really sorry, con, I like, I was wrong. You shouldn’t get rid of this place.

So I went there because he was, because I just thought this is like, this is the reductio ad  absurdum of this, this ignorance. And the pieces, the pieces really worked. Like they, I mean, the material was so good, but what happened as I crept my way through the obscure parts of the federal government, I kept meeting incredible people — I was not, I did not have a picture in my head of who who the federal employee was.

What I was meeting was very different from what I had imagined. And so the book comes out, it sells half a million copies and it’s glued together, Vanity Fair articles, which told you that there is a interest in a civics lesson. Which is what it was kind of. And I got the problem of having it write it as you will soon have, and afterward to the paperback, it comes out a year later.

And I thought, you know, I kind of, although it’s worked so far, I’m, it bothers me that I’ve not done a deep dive into one of these people. ’cause the people, they’re, they were, they were mission driven, usually very expert in some very narrow thing, completely incapable of telling their own stories.  walled off by political people, so they weren’t allowed to tell their own stories, oblivious to the sense any themselves as characters.

But, but that’s great. Characters don’t know their characters. I mean, the fact that you don’t know you’re a character makes you an even better character. And I thought, I’m just gonna pick one of these people. So who. Now when I had this problem, Trump had then shut down the government. It was, it was the first, it was the government shutdown of 18 and 19, early nine.

It was early 2019, and he had furloughed 60% of the civilian workforce sent them home as ential workers who without pay. So I got, there is an organization in Washington called the Partnership for Public Service that tries and fails over and over to get positive attention shined upon these federal workers and they give an award called the Sammy Award to people who do something good in the civil service.

It’s been going on for, this has been going on for two decades and still no one pays it any attention, but there’ve been lots of nominations for those awards, thousands of them. So I cross referenced like anybody who’s been nominated for a Sammy and that was like 8,000 people or something with who’s been furloughed.

And the list came back and it was like 5,000. It was some huge list. And I thought, what the hell am I gonna do with this? It was alphabetized. I just took the first name on the list. “Arthur A. Allen.” He was the first one on the list, and I found his phone number. I called him up and said, I wanna come talk to you about what you do. And I didn’t really know what he did.

So this is the beginning of this book, because what happens with Arthur A. Allen, I go see him. He is the, the lone oceanographer in the Coast Guard Search and Rescue Division. He’s been at it for 30 something years. And he, he pretty quickly is, tells me that like Americans have this unbelievable ability to get lost at sea, to just like, we just do it better than anybody else.

And so the Coast Guard just rescue is constantly occupied. He figures out some, a few years into his career, he witnesses a tragedy. He’s, he’s out in the field. He’s at the Chesapeake Pace Station. A storm summer storm comes outta nowhere. The Coast Guard is pulling people off the Chesapeake Bay. They discovered that they got everybody, but there’s one boat missing and it’s got a, a woman who was Art’s wife’s age and a little girl who was his daughter’s age.

And they’re, they, they know because they know when the storm kicked up, when the boat likely capsized, they were on a sailboat. And they, so they know and they know where they were when they capsize, kind of. But what they don’t know, presuming that they’re on, on the upside down boat, is how that upside down sailboat drifts at sea. Objects drift differently. Like if you’re in an inner tube, it’s, you’ll move in the ocean differently than if you’re in an upside-down sailboat than you would if you were on a life raft, you know, and so on.

And they find the girl and the mother dead the next morning and Art says, that’s never gonna happen again.

When he is telling me this story, like. What he’s done with his career, a bunch of things. But he has basically invented the science of studying objects drifting at sea. And he’s told me, and at this point in our interactions, I’d been, I was there a couple days before, I said like, why did you even bother to do this?

And he goes over to his bookshelf and he pulls this yellow newspaper article from the Norfolk, whatever, about this mother and child. And he starts to cry. He said that, that could have been my wife, that could have been my child. And when I saw when that happened, I said, it’s never gonna happen again.

So he starts studying how objects drift and throwing them into the Long Island Sound from he lives in Connecticut and he classifies a couple of hundred objects, the results they, and reduces their drift patterns to mathematical formula.

Like 10 days after the Coast Guard gets his formula, 350 pound man, this is a very American thing to do. I remember runs out of his window on a cruise ship in the carnival on a Carnival Cruise line, cruise 80 miles east of Miami and isn’t discovered missing for like several hours. And he does it at night

Because they have cameras on the side of the boat. They know when, when he, they can go back and say, oh, this is when he went off. But Art had studied fat man at sea and

Barry Ritholtz: That’s a thing? Fat guy’s floating at sea?

Michael Lewis: He had a fat, he actually studied large and smaller people and he had fat guy at sea and which will turn out to come turn out to come in very handy in future years.

But this is the first time. Fat guy at sea who goes over off a boat and isn’t discovered missing for a few hours in human history. He’s dead. Like, it’s like finding a person at sea is like finding a soccer ball in the state of Connecticut. You just, it’s, it’s almost impossible. They pluck this dude out of the water like seven hours because he’s fat.

He can live forever. You know? You not, no hypothermia. The risk is someone so’s gonna swallow it, but that’s it. And it’s really a huge advantage to have that fat. And they pluck him out and he’s sort of like, kind of cool. He’s like, like, he’s not panicked or anything. He’s just floating at sea. But they, he, he, they pull him out and there are all these articles about like how great the search and rescue people are who pulled him out of the sea.

No one asks, how’d they find him?

The Coast Guard themselves are shocked, like, how well this worked. And this goes on. I mean, I taught, interviewed another fat guy who fell off another boat in, in, in the Pacific. And I, who was saved miraculously after like eight hours. And I said, like, how do you think they found you? And he said, what, how, what saved you? Or something?

And he says, when I was floating in the ocean, I accepted Jesus Christ as my Lord and Savior, and that’s why I was saved.

And I said, no, no, no, no, no, you’re saved. ’cause of Arthur A. Allen, you know, that’s who saved you. But nobody paid, had paid any attention to this dude and what he had done.

So I spent a few days with him listening to the, I mean, the whole intellectual stuff about how what he did, how he did what he did. It was riveting. But the motive, like this I’m not gonna let another American die because they, we don’t know this. He fixes the problem. Thousands of people are alive today around the world because of what he’s done.

He’s been honored by other countries, Taiwan and Australia. But we pay him no attention. So I gather my stuff to go write my, the end of my book and, and I’m on my way back to the airport.

And he, after I’ve spent the time with him, and he calls cell, this is the moment this book starts, he calls my cell and he says, Hey, you are a writer. And I said, I’ve been there with my notepad. You know, I’ve been like, I’ve been, I know I had said something when I called him, but I said, and he said, he said, man, he said, I was just talking to my son. He says, like, you’ve published books and like one of the books became movie. A movie. And he goes, are you gonna, are you gonna write about this? Are you gonna write about me?

And I said, yeah, Art. I mean, why do you think I flew across country and spent three days interviewing your wife and children and all the rest? He said, I just thought you were really interested in how objects drift.

And, and, and, and, and this is, this, this, this is your One, an inessential worker. Two, your public servant, your civil servant. They have no sense. Like they deserve any kind of attention. The stories that come out of them are amazing. And I thought, man, I should have done it the first time. I should have been diving into these people’s lives. So the next time, if I ever come back, I’m gonna come back focused on the people.

And when I, I was on a hiking trail with David Shipley, who was once until recently, the opinion editor of the Washington Post. And he had space and he had money and his, and he, we could write as long as we wanted in his pages, he said, I said, let me, I’m worried that if I go do this, it’ll just be either, “Oh, this is Michael Lewis’, take on the federal government, or I made it up.”

Or whatever, like, whatever. Whenever people don’t want to hear the message, it’s very easy to come after the writer and try to undermine the whatever’s in the,

Barry Ritholtz: Is that why you picked six other writers? That’s what I did. I said to shield the accusation of bias?

Michael Lewis: also to get a bit, a little bit of a bigger kind of sample, like not gonna tell ’em what to do. I didn’t even tell ’em why I, what, what I was gonna do. And I’ve done two of these big profiles in here and the material is as good as ever.  but I said, we’re just gonna, you just go into federal government and wander around and find a story. And six out of the five out of the six other six did much of what, basically what I did, they found unbelievable character studies, individuals doing things that were just to shock them.

One, he’s, he’s a wonderful writer, John Lanchester, English writer.  decided instead that his character was the consumer price index, which is a challenge.  but he actually makes it work. It’s ’cause it is an amazing achievement. But he, he writes, so he, he went off the reservation a bit.

Barry Ritholtz: I’ll push back on the characterization when we come to that chapter. Right, right. ’cause I have a different spin on that. Oh. But, but let’s talk about some of the chapters in here, starting with Ronald Walters of the National Cemetery. I can’t start with myself.

Michael Lewis:You wanna start that way? I mean, other, other people’s. I edited it, but other people, other people. I give you such a sh I will tell you.

Barry Ritholtz: So you wanna start with the coal mines? Let’s start with No, no, I don’t wanna, I I’ve already muscled you around too much.

Michael Lewis: Feel free to muscle. I’m the fish and you’re the fisherman. Okay. You’re supposed to be landing me.  but it’s, um.  Ronald Walters. So this is the one, the one writer who came to me after I had employed them all and said, is there anything on your cutting room floor that you would like to have written about that you didn’t write?

I said, well, that’s funny you say,  but yes, it’s Ronald Walters. Casey Sepp, who’s a wonderful New Yorker writer. She, she wrote a book about Harper Lee called Furious Hours. And we met because I reviewed that book for the New York Times so favorably she got in touch and sent me toffee boxes of toffee.

But, but when we became friends, Ronald Walters, this I’ll be brief because I didn’t get to know him. You know, I’m just read, I’m reading it like you, but what it intrigued me, Ronald Walters is in the Veterans Administration. I think he’s the only one who still has his job securely, but he, he may be insecure now too, but he took over these National Cemeteries Association, the cemeteries that where we bury veterans.

And there are like 55 of these things around the country, like 4 million veterans are buried in them. They’re burying them. It’s at an astonishing rate and it’s sort of like, it’s a sacred duty. It’s where we bury our war dead. It’s where we bury people who’ve made great sacrifice for the country. And it’s a tribute to the country that we take it seriously, that the Veterans Administration even has this program.

But when he inherited it, it was struggling in its, it’s a weird way to put it, consumer satisfaction. The consumers in this case were the loved ones of the people who were being buried. And he took it from, and we know this because the University of Michigan measures customer satisfaction across the society. It’s all institute big institutions, not just it’s private sector, but also government agencies. And it was kind of like most of the government agencies, kind of high sixties. It was like a mediocre thing.

And in a period of a decade, Ronald Wal Walters took it. To being not just the enterprise in the United States government that had the highest customer satisfaction, but the enterprise in the entire country. More than Costco, more than Amazon or FedEx or the other ones that people like it.

And no one knew his name. No one knew how he did it or why. And I, I had, when I was fiddling around with picking someone to write the, afterward for the Fifth Risk, I’d heard his story. And I almost, I tried calling and actually they didn’t even return my calls. The veteran administration wouldn’t talk to me.

So,  so it was there and I said, go, go find that out, out about that. And so she writes about how he did what he did. It’s an,

Barry Ritholtz: It’s an absolutely beautiful chapter. It actually made me cry. Did it? It’s the only, only chapter in the book that, that brings tears to your eyes. Let’s talk about coal mining and how dangerous it is. Let’s talk about your first chapter.

Michael Lewis:So, so another, so this is. I mean, it, it’s so unusual to find such a rich vein of material that is basically unexplored, that is so predictably yielding gold. And this, so this is, this is number two for me. I’ve done our Allen, I’ve done the, the agencies.

II’m gonna go pick another person. So I went back to, kind of did it the way I did it before. I got a list of the people who were nominated for Sammy’s awards this year or last year. And this list was almost 600 people. And because it’s, they don’t know what they’re doing.  I mean, they know what they’re doing in some ways, but they just don’t know how to create interest in people.

All these, this list of the people who’ve been nominated for the award, it just said their name and what they’d done. And you looked at the accomplishment and they were often amazing. It was like, you know, you know, it, it, but it would, it would never say how they did it, you know, “Cured cancer” but that was it kind of thing. John Smith at the National Institute of Health Cure Cancer, period. End of story.

I was going through this listening. It was all just cold-blooded, you know, it was just like, until I get to Christopher Marx,  solve the problem of coal mine roofs falling in on coal miners, which has killed 50,000 American coal miners in the last century, leading cause of death in the most dangerous occupation in the country.

The occupation is so dangerous that it was more dangerous being in a coal mine than being in the Vietnam War. That’s how, that’s how dangerous it was. But the last sentence said he was a former coal miner. They finally gave me some, something to think about. And so I looked and I thought, man, there has got to be a story here.

I mean, I’m thinking grew up in West Virginia, like Dad was injured or killed, or see, you know, there, there’s some, how this person gets out and does this. So I had spun this whole tale up in my head.  and I find his number, and again, like our ally, he’s lives in Pittsburgh. I call him, I cold call him. In this case, he knew who I was.

He’d read Moneyball and it turned out that he thought of himself as money balling coal mines. But that’s a whole separate thing.  but, but,  he, he, he, I say, I just wanna hear, I just wanna hear your story. Like give me the, the 10 minute version. I’m gonna give you the five minutes of the 10 minute version because it hooked me.

He says, I grew up in Princeton, New Jersey, and my dad was a professor at the university. And I thought, oh, like my whole movie is different, you know, I don’t know what the movie is, but this, this not. And I thought, oh, my interest just went. And then he started to tell me, he says, if you looked at just a little bit, you’d find my dad was kind of famous.

Robert Marks was the name. And Robert Marks had been brought, brought to Princeton without a PhD. To help Princeton. He had devised a mechanism for stress testing. He was stress testing fighter planes for the Navy and the Air Force before they built them. He take the design, build a little model, and he had this, this complicated way of just testing whether or not this design was going to actually work in practice.

And Princeton had brought ’em in to test little nuclear reactors they wanted to build to see if it was gonna crack. And Robert Mark one day was teaching an engineering class at Princeton. When an undergraduate walks in from an art history class and says, this device you have, could you use it to like figure out what’s holding gothic cathedrals up?

Because we just, they just told us that no one understands how these, the roofs of gothic cathedrals don’t collapse. There’s no records left by the builders, then they’re built over a century. No one knows what’s decorative, what’s actually holding the weight. And he said, yeah. And he became famous because he became the guy who figured out how they built the gothic cathedrals and what was keeping them up.

What was keeping the roof up. So that’s Robert, that’s the dad. Chris is telling me this in the first 15 minutes I’m talking to him. He says, so that was my dad. He said, I, I had a problem with my dad’s life. It was the Vietnam War. I got kind of radicalized. I thought I, I saw it wasn’t Princeton kids who were fighting and dying.

And that really bothered me. And he said,  I, he, he said, he started throwing words around the house like bourgeois. And, and pretty soon he said, I’m not, he could go have gone to Harvard or Princeton. I’m not gonna do that. I’m gonna go join the working class. So he breaks with his dad, big break. He goes on the road.

He works in an auto factory, works in the UPS plant, and finally ends up with several fellow radicals in a coal mine in West Virginia. The other three radicals all quit at the end of the first day. It’s that brutal. He finds it interesting. Why he finds it interesting is still a bit of a mystery, but he stays in the mine for a year and almost dies twice that he sees how dangerous it is.

He crawls out of the mine, goes and gets a PhD, an undergraduate and a PhD at Penn State in, in rock engineering, and begins the process of figuring out, he, there’s all this data that the US government has co collected on. They’ve, they’ve observed the problem. It’s a bit like the CDC does with the disease that they’ve observed the problem without actually trying to stop the problem.

So they have all this data on when roofs fell and what the conditions were. He just, he starts to study it. And over a career, a really, really interesting career figures out how to stop this from happening and stops it from happening. So he is telling me this on the phone and,  I did gimme all the details of his work, but, and, and I stop him and I say, oh.

So you rebelled against your dad and then you just went and had your dad’s career. He was, he figured out how to keep the, what was keeping up the rules of gothic cathedrals and you figured out how to keep the rules of coal mines up. And, I mean, this is someone I’ve just started talking to on the phone.

He gets outraged. It’s like bull***, you know, like I’m calling, you know, that has nothing to, I had nothing to do What I did, had nothing to do with my father’s career.  we, we have nothing in common. Completely different thing if that’s your theory, like go away kind of thing. And I said, just seems a natural observation.

So so two things. when I, I went and spent a lot of time with him. We rolled around West Virginia. He took me into coal mines and he doesn’t mention till like the third day that, oh, you know, it was funny. I were, you reconciled. When did, how did you reconcile with your dad? And I asked him, ’cause they had become reconciled before his dad died.

And he said it was gradually, he said, but there was this moment he said, I. The National Cathedral,  the federal government thought the National Cathedral in Washington might be falling down. This was in the year 2000. One of the towers was subsiding faster than the other. And,  they didn’t know why. So they called his dad to test to see how the load was moving through the National Cathedral.

And the dad figured out that his stuff didn’t work because whatever was going on, it wasn’t above ground, it was below ground. So he called his son, and his son had the stuff to go figure out what was going on below ground. And together they wrote a paper about how the National Cathedral, how it was, what was gonna happen.

And we didn’t have to worry about it falling down, but they studied it together and put everybody’s minds to rest. Now, when you have that to navigate too, in a story, you got a story. I mean, it’s just like that. And, and so Art Allen had the Yellow Wing newspaper.  Christopher Marks had the, had the, the dad.

I met, but I gotta say I’ve met lots of people in like the Storm center and the National Weather Service who lost loved ones to tornadoes or that, that this instrument, the federal government is filled with all of all this purpose, all these things that, that it’s where the problems of the private sector doesn’t wanna deal with go, you know, you know, it’s like if there’s no money to be made in it, but we’ve decided as a society we wanna address it.

That’s where the, that’s where we, that’s what we use to address it. Who, who is attracted to these problems? People who have a particular interest in this problem for whatever reason. And that quality, like caring about the problem, it’s outside yourself. I’m gonna fix the problem, tends to come from a deep place.

And that’s where literature comes from. You know, it’s the, the, the motives of the characters are, are,  are in our government. These are rich and interesting people with rich and interesting backstories and, and.  you know, e every time you kind of start scratching at one, you get at this.

BR: So, so let’s address that a bit.  I wanna discuss your process a little bit, which I’m fascinated by. You once said to Malcolm Gladwell at the 92nd Street Y “the subjects choose me. I don’t go looking for books. The stories wander into my life and they get to the point where they can’t not be written. The stories kind of find me, a relationship develops between me and the story.”

ML: I have no choice. That’s true. So, so expound on that a bit. You want the three minute or the five minute version? Whatever you’re comfortable with. Alright. I mean, this goes back to who I am. I mean, I’m basically. I’m a new, I grew up in New Orleans, was raised to be a decorative object. I was raised to, what does that mean?

Not useful. Okay. Like, like nobody around me did anything useful and no one planned to, and hence you end up on Wall Street there. No. Yeah. Well that’s funny. But, but, but there’s a certain charm you acquire on the streets of New Orleans that are very useful when you’re trying to sell a bond.  but it’s that, but yes, so a lot of New Orleans make their way to Wall Street.

They do quite well on Wall Street. You get the gift of gab kind of thing. But,  you learn to tell a story, which is very valuable in the financial markets and also valuable, very valuable to writers but I, I’m basically lazy, like that is true. Um. You know, it’s, it’s it’s core in me. Like the working part of me has been added on somehow.

But the deep me, I would just sit around, scratch myself for the rest of my life.

BR: If, if you, you’ve written 14 books, how is that lazy?

ML: This is, I’m, I’m not lying. This is this. I’m telling you the truth. You’re just gonna have to figure out, you gotta make sense of it. Okay.  this is God’s truth.

My father, when I, from the age of about seven to the age of when I was 18, had me persuaded that there was Latin, we had a coat of arms. Lewis, Lewis, and there was always a Latin under it. He persuaded me that what that Latin said was you translated. Was, do as little as possible. And that unwillingly for it is better to see, receive a slight reprimand than to perform an arduous task.

My father raised me to be lazy, you know? I mean, that, that he was like, don’t try, don’t, don’t sweat it. You’re working too hard. It was the, it was, this is the environment I was raised in and I took to it.  but, but you didn’t, you, but I did. Up to a point. Every book you’ve written, you embed yourself now in unfamiliar places, learn.

It’s also true. You learn. It’s also No, it’s true. It’s, I’m curious. I got that too. I’m actually curious. I see something and I want to know about it and, and it happens a lot. It just happens a lot. And so it’s a, with pleasure, I find I pursue a curiosity. I ask like, curiosity. Why are the Oakland A’s winning baseball games with no money?

Like, how is that possible? That’s a beginning, that’s a curiosity. I, and so I go to the trouble, but most people have that thought and go, eh, who? Who knows? And then fun. And, and you, you spend, you spend weeks and weeks and wait years. Wait, so, so, so, so it is not, it is true that I do the work. It is true. I eventually do the work, but I do from a place of deep laziness.

It’s deep. It’s like that, it is, I get curious. I start to get involved. I realize, oh my God, this is, look at this story. And it is, it is got to, it really does have to rise to the level in my mind that this story is so important and it’s delusional. Like is any story that important? But it’s, the story is so important that I have an obligation to do it.

So now I, now I have to do it because I have an obligation. I make myself feel that way. And when I feel that way, then I’m off.  then, then I forget about the laziness and I do the work.

BR: So you have this incredible knack of finding yourself in the right place at the right time. Before everybody else figures out this is what’s so this is an incredibly lucky thing.

ML: Okay, so I mean, but it’s, I’ll give you that. This one’s Lucky

BR: Liar’s Poker. You’re there early in the rise of Wall Street. It was working. Okay. You were working Moneyball. No one had any idea what was going on with Saber Metrics and how this scrappy little broke team was able to put together a competitive run;

Going Infinite. You embed with FTX and Sam Bankman Fried a year. That was kind of cool. That was a year before, right, but you after, but that was also after the, I didn’t know that was happening. Oh, oh, you didn’t know that was happening. And then the whole Undoing Project with Danny Kahneman, who just coincidentally lived down the street from you.

You have this ridiculous knack to finding yourself at the head of a wave that’s about to crash over society. I mean, once or twice as dumb luck. How do you do it six times in a row? That’s not exactly luck.

ML: I think it is; I mean, in, in that, I, you know, you and I, so he’s just published a book too, “How Not to Invest.” It’s really good. And, and you, you say 18 different ways in the course of this book, how skeptical you are of the ability to predict the future.  [Sure.] I am too. Okay. Everybody wants you to predict the future and you just shouldn’t do it because it’s just, you know, you can’t, who knows where the stock wants, but you’re always skating to where the puck’s gonna be.

BR: Explain that.

ML: It’s maybe, I think the puck is just coming to where I happen to be. That, that it, that. So, so I don’t think I, I really think it. Sam Bankman Freed lands on my front porch after someone asked me to just interview him and evaluate him from, I didn’t go looking for him. He walked up and I said, this is interesting.

I’m gonna follow, I’m just gonna follow him around.  this, I had, I had this nagging sense. That I’ve left all this gold in the mind. I still feel that way. There’s gold in that mind still. And I left the gold in the mind. Let’s go back there and get it and bring some friends and they can have some of the gold too.

And,  the, I mean, I had no idea that Trump was going to do what he’s done to the government. No, none. I, I did have a sense like he didn’t care about it. That he was going to just completely try to gut it. I had no sense.  so in every case I know the, how much accident there was. I will say, if I were trying to make the case that I have, I know something that other people don’t or there’s something about me that leads to being a little ahead of the curve.

I’d only say that. The best, the closest thing to the best way to predict the future is just pay attention to the present. That you pay closer attention to the present than other people are. You. You see, it’s the, the, the future is there. And so it is,  I, I do pay attention to the present. I observe. And, and, and I also, so this gets back to the laziness,  that, that when you’re lazy, it’s an actor.

It’s not necessarily a bad thing to be a little lazy. Amos Tversky, my character in the Undoing project had a great line, which I, which, which I tell every kid who asked for advice, I just repeat it. He says, “People waste years of their lives not being willing to waste hours of their lives,” that people get so worked up about making, being busy, moving their career up.

They don’t let anything, they don’t let things in. They, they, they’re like always achieving. And if you just back away and let the world come into you,  it, it’s, that’s a helpful approach to a writer also. If, if you’re a little lazy, like you would rather basically not be doing anything,  it takes a level of interest to move you.

Like I know a lot of writers who just go, they can always find something to write about because they know, they feel like they have to be writing, so they just force it.  before I sit down and bother to put a word on the page, I’ve gotten. So I’ve had to get so excited about it to offset the natural tendency not to do anything.

And so that it, it’s, it’s like the material is leaping over higher hurdles mm-hmm. To get to the place with me that I wanna write about it.

So maybe that’s, that has something to do with this.

BR: Can, can I float a theory to you?

ML: Sure. I think it’s gonna be bulls***. You can do it.

BR: Malcolm Gladwell’s Grand Unified theory of Michael Lewis books is biblical allegories.

ML: Right. That’s bullshit.

BR: Yeah. That is bullshit, right? Daniel And the Lions then is Liars Poker. The Blindside is Good. Samaritan David and Goliath. Moneyball. Like, you’re not doing biblical allegories.

ML: No, I mean you can, the truth is you can find almost any, you can map almost any story onto the Bible.

BR: Right? Right. But, but here’s what’s not: Every Michael Lewis book features a character and the archetype, Michael Lewis character, quirky outsiders pushing against the grain ’cause they’ve discovered some interesting insight or truth or previously unknown thing that is against the consensus. And then they apply that to their field and either they make a lot of money shorting stocks or they save fat guys who’ve fallen off of cruise ships.

ML: Yeah. That’s, those are the same characters, but every, who’s that character and liar’s poker?

BR: You!

ML: You think that’s me?

BR: Well, you show flashes of you. Yeah. It was your first book. Yeah. So yeah. We’ll cut you a little slack. Yeah, but you know, in fact, let, let’s talk about Liar’s Poker.

Yeah. So, so, so we, we, we did a podcast on the 30th anniversary. [Right.] You had to go reread it, not just reread the book, but read it out loud for the audio version.

ML: Yeah. I hadn’t reread it since I wrote it.

BR: So, so first, what was that experience like?

ML: Awful. I mean, I don’t know if you’ve ever gone back and, I was 26 when I wrote that, and I’d never written anything. I mean, I’d written letters to my mother and a few articles in The Economist and I mean, it was a, I was just work,  I was really raw. And I,

BR: but still there are flashes of the future. Michael Lewis, the writer throughout, Hey, listen, first of all, for a first time book, it was great,

ML: but you know what’s funny?

BR:  And you were 26 so you could cut yourself some slack.

ML: So there were some things, some things I noticed. One is there was just general infelicity, but I noticed that whenever I thought I was being funny, I wasn’t funny. And whenever I didn’t, I was like, oh, that’s funny. But I didn’t know it was funny, you know, it was embarrassing, you know, there was, I was, I thought I, there were lines that were clearly like, designed to get people to laugh and then I shouldn’t have been doing it.

that, and there were structure. I, so it was, I, but, but yeah, I, I mean, I’m feel finally towards it, it got my, it launched my career.

BR: I’m going back and let me also, now I’m back.

ML: I’m still stuck on your theory,

BR: So, but let me just point out that you wrote that book while you were working full-time at Solomon Brothers, you were doing this nights and weekends, right? At least that’s when you started sketching this, this wasn’t Michael Lewis the full-time writer, correct?

ML: Right.

BR: So when you look back at that, you gotta give yourself a little slack, not bad for a first attempt.

ML: No, no, no. I, no, it wasn’t, it’s fine. It’s not bad for a first book. I agree. It’s not bad for a first book, but the, I, when I think about when your description of what of my books, the quirky outsider the line.

I think of it this way. Because they’re not like Billy Bean’s, not quirky. Billy Bean’s like the coolest guy in the room when he walks into a room. He is, yes. He’s got, we’re all quirky, like underneath. We all have little things, things going on that are, we’re all above average. All we’re all neurotic or a little, we all have stuff.

BR: But,  your characters have a lot of stuff, Mike.

ML: Sometimes they’d have a lot of stuff, but they, the,  the thing, what I think of, I think of it as more as I get excited by someone who could teach me. Mm-hmm. And all my characters are, are teaching me something about the world. And now the kind of person who’s teaching you something, something about the world often is someone who has been challenging the world.

So that’s true too. They’re often in kind of conflict with the world. But what’s attracting me to them, I never think, oh, quirky great. Or I never think that Brad Tama is not quirky. He’s a nice Canadian boy. Mm-hmm. And Flash boys. Flash boys that he is. The least quirky person who ever carried a book, he is normal.

He’s like as normal as they, they get. And there’s some stuff there with what there is, is nice Canadian boy collides with Wall Street and, and is upset when he sees what’s going on.

BR: But he figures out a way around and, and figures out, yes, figures out that the, he’s the least quirky of all your characters, but let, let’s stick with Moneyball.

But, but how, how did you gain access to the A’s? How did they, you know, grant you keys to the kingdom?

ML: This often happens too, that you have a question. And the question is equally interesting to the subject. So I called Billy Bean, went and go see him. I said, I just look, it doesn’t make any sense. You’re spending one fifth with the Yankees are spending, how can you be competing if this market is efficient? The Yankees should be buying all the best baseball players and you would just lose all the time.

And he said, “No one has asked me that question.”

It’s what I think about all the time. The sports, he’s just covered by sports writers and the sports. The baseball writers at the time paid no attention to the financial disparities. They weren’t thinking of the money on the field. And that’s all they thought about was the front office, was the money on the field. So he was interested in the question in the first place. And also, I didn’t tell him I was writing a book. I told him I thought I didn’t know what I was gonna write. Maybe a little magazine piece, maybe nothing.

And it got more and more interesting and I disguised how interesting I was. And when I just divulged, you know, two months into it that I was thinking about writing a book. It was too late. He couldn’t get rid of me. I knew too much.  but, but there was, and, and I had found ways to insinuate myself into, into their lives.

I mean. You, you, this is like, how do you make yourself, how you,

BR: How do you get them to let you hang around?

ML: That’s the important thing. You’ve gotta hang around. You gotta be kind of in the, you know, just, just they, they forget you’re there. Kind of hang around. So that was the trick there. Did I  ever tell, have I told you when that book became a book?

BR: No.

ML: Like when I came home at late at night and I said, wrote my publisher and said, this is gonna freak you out, but I’m gonna write a sports book.  I was, I was, I was in the locker room of the Oakland A’s interviewing, telling the players. I was interviewing the players one by one and telling them what the, why they were, they were playing first base or why they were the lead off hitter.

They, they, they had no idea front office, no idea. The, a front office regarded it as a science experiment and they were the lab rats and it just confused their lab rats if you told them what the experiment was. And they told me like, don’t talk to ’em about it. They just thought they won’t handle it well. And, but the players were really interested.

So I was, they, I was welcome in the clubhouse and, and they were coming out of the showers. I was waiting for my guy to talk to him and I, for the first time I saw the Oakland A’s naked, and it was such a disgusting sight. It was, it was, it was like, it was just, I mean, not,

BR: not ripped professional athletes.

ML: It was like they had cankles and they had, they were all fat. They look a beer league team. They looked like, and I had the thought, which I relayed to the front office. It was like, if you line those naked bodies up against a wall and asked anybody what they did for a living, nobody would guess professional athletes that they, they would guess like, you know, wall Street guys, they could, they could be Wall Street guys, they could be accountants, they could be flight attendants, they could be, but not, not professional athletes.

And the front office said, “It’s funny you say that because we are aware of how unattractive they are without their clothes on. ” that, that, that, that they, they said that. And the, and there’s a, that “We get excited. When they’re unattractive without their clothes on. And they don’t look, when they don’t look right because the market, we, we are evaluating them blind. It’s just we’re valuing, we are looking for performance statistics. And when we find the player whose statistics are, are promising, but they look wrong, we know why the market’s misvaluation them. They’re misbeing mis-valued because of the way they look.”

And I remember, I just, it blew my mind. I remember going, driving home and thinking, oh my God, this is when you have a duty to write it. Like never mind baseball. Think of this as a corporation, and they got these employees, they’ve been doing the same thing for a hundred years. Millions of people are watching them stats attached to every move they make on the job. If those people can be misvalued because of the misvalued, because of the way they look, who can’t be? Everybody can be.

So this is a universal story. It’s that feeling like this is a universal story. And,  and so I got very excited and I wrote my publisher note and said, sorry, here it comes. I’m gonna be writing a book called Moneyball.

And now the flip side of this is, none of my subjects ever know what I’m doing. They really don’t. They know I’m hanging around, but they, I mean, Oakland saw me. I spent a week with the Blue Jays. I spent days with the Rangers, I spent days with the Mariners. I spent fifth time with the Red Sox, and I had to do that to know that they were special, like, know that nobody else was doing this. And  and so, but, so from their point of view, it was like, what’s he doing? Like Billy,

ML: And when, so when Billy Bean got the book, and my subjects only get the book when everybody else gets the book, you know, I, I don’t want him, I don’t want him bothering me.  and he got the book. He was furious. It was like

BR:  He was angry because you let out the secret.

ML: Two things, two things. One was like, since when am I, the main character could have told me. You know, it’s that kind of thing. It’s like, I, I’m not, I was not, I didn’t sign up for this kind of thing. But, but second thing he says, I thought he was gonna be pissed off because I, I had revealed their secrets.

That’s what I was worried. I was worried that was the betrayal. He says he’s, he’s on the phone, he’s like, incoherent. And I said, what is bothering you? And he said, you have me saying all the time. And I said, you do say all the time. What am I supposed to do there? And he said, “You don’t understand. My mother’s gonna be so upset.”

And, and, and, and I said, you’re mom, you know, like, really, it’s like a sigh of relief if that’s what we’re worried about here. Low level problem. And, and turned out not to be a low level problem. She was furious. She, she is still furious and she’s angry at me.  she’s still angry at me. I swear to God. She’s angry about it.

And,  but. But I said to Billy, I said, I started laughing. I started said like, if I was so worried you were gonna be angry with me for, for, for stitching together this narrative that revealed all your secrets. I found out as much as I could and I put as much of it in the book as I could, and it’s gonna blow your competitive advantage. I thought that’s what you were angry about.

And this is pause on the end, other end of the line. And he says, “You don’t think anybody in baseball is gonna read your book?” He says, he’s like, they’re always gonna read your book. They don’t, they don’t know how to read. He said, but he said like, we’ve been doing this for years. Nobody’s asked a question and  [wow]. And he was kind of right. He was right about that. It was too narrow. He was right that nobody ever reads a book who thinks they know what they’re doing and changes their mind. Like no GM at the time was gonna say, oh, I learned something from this book, or, oh, we’ve been doing it the wrong way.

BR: Well, didn’t the GM of Red Sox eventually come?

ML: Well, at no. While I was working on the book, John Henry had just bought the Red Sox, [the hedge fund manager], and he was saying, he actually said, what do I gotta do to prevent you from writing this book? Because he said, we’re about to do this here. And he wanted to hire Billy.

And I became, it was kind of fun. I remember doing this on payphones in the airport. I became, they weren’t allowed to negotiate [talk, right]. So they negotiate through me. So I, I, I helped organize Billy’s contract with the Red Sox and  and Billy was gonna go and then change his mind last minute I and Theo Epstein becomes the GM of the Red Sox.

Mm-hmm. See, Theo was trying to hire Billy too. He was part of the group inside, and, but the rest is history. And Theo leads the Red Sox to Victory, and Billy Bean has written out of that story but the, the Red Sox were about to do it. New owner, like new owner who had background in finance. So he gets this, he gets statistics and data and all that.

What happened was other owners read the book, like the head of Goldman Sachs at the time I know, talked to the, the owner of the Mets and said, “You’re being ripped off by your own management.” Like they don’t know what they’re doing. And o at the ownership level, they started to change things. So that, that’s, that was how the change happened.

It would’ve happened anyway. What would’ve happened if I hadn’t read the written the book is the Red Sox would’ve done this. They would’ve won the World Series using. Sabremetrics or statistics mm-hmm. They would’ve gotten total credit for revolutionizing the sport. And no one and Billy Bean would’ve been a footnote. Hmm.  that, that’s, that’s what would’ve happened.

BR: Of, of all your books, that became a movie. That’s probably my favorite film version. [Is it?] what was that process like watching? Do you just essentially sign the papers and that’s it? Or did they retain you for script consulting or anything like that?

ML: So what happens is, what happens is, for sure the movie people would rather the author be dead. There’s no question. Like, all you can do from their point of view is cause trouble like complain or give advice.

And I was aware of this quite early. Like, I know they, they don’t care what, I think it was really clear they didn’t care, but they were trying to pretend like they’d sort of cared. And this was Blindside actually was the first one.

And I thought. It, but they wouldn’t leave me alone. Like it, I couldn’t just say, here, really? Just give me the money. I’ll give you the book and whatever you do. No. Whatever you do [See at the opening!] Yeah. See at the opening. And if it just, just make it don’t suck. And,  and, and it’s on you. If it does.

’cause it’s your, it’s gonna be, it’s not my movie. It’s your movie. And they refuse to accept that blunt relationship, I think. ’cause they don’t believe that. I actually think that. And so what happens is they pretend to be interested.

BR: They don’t know you’re lazy.

ML: They don’t know I’m lazy. I really, they’re like, they pretend to be interested in what I think I have to pretend to be, believe they’re interested in what I think we have this false interaction where I give them advice and they ignore it all.

And, but out of this, some really lovely friendships have sprung like it’s a social relationship. So I’m friends with all the directors who’ve made the movies really friends. And some of the actors are still in my life. And like Jonah Hill will just call me up outta the blue and say, “I got a problem. I’m gonna just talk this through” and that kind of thing.

And. And that that is gr That’s been great. Can I tell you a story about the Moneyball movie? Sure. It’s, it’s the Moneyball movie. Was this sort of,

BR:  You guys wanna hear a story about Moneyball, right? [Yeah]

ML: So the Moneyball movie. So Billy being, in addition to being pissed off at me because I had him saying all the time he was, he was put, I really admire the guy.

He was put in a really difficult position. The book puts him in opposition to his industry. He knows something everybody else does, and all the other GMs hate him. All of a sudden, when he is, he didn’t deserve this. And he, but he, instead of, instead of throwing me under the bus, he just fought. He said, there’s not nothing in the book that’s not true.

So you wanna, you wanna fight about it, come fight. And he’s brave. He’s basically a very brave person. However, it was so unpleasant. The book I. A among, among the most un, maybe the most unpleasant publication in that it all of baseball was angry, really angry. And, he said, he called me one day, he says like, Sony Pictures is trying to buy my life rights to make a movie. And I says, I just wanna tell you I’m not doing this. Like, I, I didn’t want the book. I don’t want a movie. I don’t need this.

I said,” Billy, you don’t understand. They never make the movie. They just give you money for your rights that I’ve sold. I dunno, a dozen magazine articles, five books, money just comes outta Hollywood and they never make anything.”

‘Cause they hadn’t made anything at that point.

And I, when I gave the list of like the amounts I’d raked in from Hollywood for doing absolutely nothing, he sort of said like, this is free. And I said, yeah, it’s free. And so he took a bunch of money for his life rights. It was an option that renewed every 18 months and every 18 months he called me, he goes, “You’re a genius. Like, this is unbelievable. You’re right. They’re not gonna make this movie.” It goes on for years, you know, like seven years.

But, and, and then one day he calls me up and says, you, he said, he said, Brad Pitt just called me and he says he’s coming over to the house and my wife is putting on makeup and the babysitter’s going home to get a dress.

And, and it was like he said, “You said this wouldn’t happen” I remember he was like, you said this wouldn’t happen. And I said, I don’t know what to tell you. Like I’m, I’m a little shocked this is happening.

Flash forward, I don’t know, a year, six months, they’re shooting in the Oakland Coliseum. And,  I’d gone to a set, the set a couple of times.

This was the cool thing I brought my kids because they had 8,000 extras in the Oakland Coss and they’d gotten body doubles for the 2002 Kansas City Royals and Oakland A’s. So like Barty Zito looked more than like Barry Zito, than Barry Zito. And they’re replaying this game and they’re moving the 8,000 people around the Colise to make it look like it’s full, and it’s a great drama.

Before I go over,  to see this, they call me and say, Sony calls me and says “Billy Bean is refusing to have anything to do with anybody. Like, he’s not visited the set. He let Brad Pitt come to his house once, and that was it. And that he’s like, everybody’s worried. He’s just angry about this. Could you get him down? His office is at the stadium. Could he just walk down and shake a couple of hands and make everybody feel good?”

And so I, I called him, I said, Billy, like, it’s not that big a deal. Just come on over. And he said, “Are you gonna be there?”

And I said, yeah. He says, okay, then I’ll come, I’ll come and I just spend 10 minutes.

I don’t want them to think I’m into it though. So it was like, okay, they know you’re not into it. Come on over. Shakes some hands. So we get there, I’m there on the field,  and he comes walking out and this production, young male production assistant comes running outta left field and he’s got the headgear and he’s got a, he’s got a notepad and he comes running up to Billy and says, Mr. Bean, Mr. Bean, you, “You’ve been my hero ever since I read your book. I just want, I won’t tell you how you changed my life.” And Billy’s like, it’s not my book. He, he wrote the book, he points to me, he goes, no, this is your book the guy’s. So it’s like weird. He says, will you just please sign my book?

And Billy says, alright, I’ll sign your book.

And so he opens the notepad and there were two Billy beans in the major leagues at the same time. Wow. And they both played at, in the same outfield on the Tigers. And I think the twins, that was weird. They were both there on the field at the same time. And the other Billy Bean was gay, and he came out of the closet and wrote a memoir and it called like “Hitting from the other side of the plate.”

And so this guy has, has the gay Billy Bean’s memoir. And, and Billy, the, the straight Billy Bean is, he’s like, there’s nothing good is happening right now. It’s like, he’s like, “What do I say? What do I do?” I’m not, you don’t say I’m not gay. You don’t say you don’t, there’s nothing you can do in this situation.

And I look over and in the a’s dugout Brad Pitt’s rolling around, he set the whole thing up. He had Sony pictures call me to talk Billy to come into the field so he could play this. He had thought of this joke and so he could play this joke on Billy, on Billy Bean and it worked. It really worked.

BR: So that is a great story.

Before we open this up for questions, I want to ask one or two more questions, including another story you told about a name confusion when you had spent some time in Israel, with Danny Kahneman.

ML: Oh, that’s funny. And you, you, similar story you go to wasn’t nearly as good a story is this. So Danny Kahneman, the great Israeli psychologist who’s one of the main characters of the Undoing Project,

BR: One of the two main characters.

ML: Yeah. He was one of the two main characters. And he and Amos both had done a lot of work with the Israeli military. He had, he had Moneyballed Israeli, Israeli troops to determine who should be a,  an officer. And you devise whole these, these metrics so you can measure it rather than just do it by an interview.

So he was there very early. The reason I even wrote that book is I came back to that book after Moneyball. ’cause when Moneyball comes out, Richard Thaler economist, Cass Sunstein, his writing partner, reviewed it and said. “Michael Lewis has written a really interesting story, but he doesn’t know what it’s about.”

And he, they said “It’s a case study in the work of Kahneman & Tversky. That’s how I even heard that these guys existed. Anyway, I go to Israel, we’re going to the military base where Danny did that money balling work for the, for the Israeli army. And we get, we get there and they are 400 of the best looking young women I’ve ever seen. And what, just waiting for us, like waiting in a mob behind the gates when we come through and they look at us and they just kinda like melt away.

And at first I thought, wow, Danny’s got it going on, you know, I mean it’s like what he, they’re here for Danny and it turns out there’s an Israeli underwear model model named Michael Lewis.

And, and he’s got like, he’s got like unbelievable abs. And so they, they’d seen Danny Kahneman coming with Michael Lewis and they thought it was the underwear model.

BR: Unbelievable. So, so there’s  a question I want to, I’ve been wanting to ask you for a while and I just never. Get to it, so I’m gonna force it early.

You, you have, I know you have all these stories that are half told and all these things that are future projects. I’m always curious if there was a loose thread in a story that you said, I really wanna pull that and see what happens in some of the books you’ve published, but you haven’t gotten to

ML: What do you mean?

BR: What characters, what lines of, of thought that you kind of briefly go over and sort of say in the back of your head, gee, I should really circle back to that. That looks really interesting, but just haven’t gotten around to, from any of your books. ’cause I know you have dozens and dozens of things that you’ve started, new. You have all your research and folders and stuff, right? Is there any

ML: You mean what do I have on the back burner that might go on the front burner? No.

BR: Well that’s another question. It’s, it’s what kinda loose thread has been out and about from some of the books you’ve written that you just,

ML: You thinking something?

BR:  No, nothing in particular. This is, this was,  literally a,  a Twitter question. I said, gimme some questions for, oh, this was the only one that I thought was half decent.

ML: I thought you were asking me about, I was wrong. No, no, no. But it’s funny because I don’t, no, I have books that I, I they, they’re books that I started and stopped ’cause they didn’t work.

There’s book, a book that got away that would’ve been a shot at a masterpiece. But the subject tossed me out ’cause I made the mistake of writing something in a magazine about him before I wrote the book.

BR:  What was that?

ML: George Soros? It was 1990. And Soros was interested in me for a bunch of reasons. He, I had. Soros had somebody he really admired as a money manager. Like he was Soros. As Soros. His name was Neils Taub. He ran Jacob Rothschild’s money in London and he was, he was, he’s the smartest person I’ve ever met in the financial markets about the financial markets he had. Just that he had, you know how Soros has those jungle instincts?

He had them times two and older guy, he took me under his wing when I was at Solomon Brothers, I cold called him and I said, basically, I know you’re, I know that there’s no reason you wanna talk to me. I’ve just arrived. I’m 24. I said, I’m a new guy here. Can I take you out to breakfast? And something about the interaction caused him to say, sure, you can take me out to breakfast.

And we went out to breakfast and he said, you’re not gonna try to, if as long as you don’t try to tell me anything, sell me anything. Pretend you know something, I’ll do my business through you. And for the next two years. Over the next two years, he became the second biggest customer at Solomon Brothers. And I didn’t never have to do anything. I just picked up the phone

I would describe to him like what I’m seeing on the trading floor. I describe what I was seeing in the markets, but I never said, you should do this ’cause it would’ve been folly. And he appreciated that.

And he told Soros about me when I left to write “Liars Poker.” And so Soros was very receptive to me. And he took me on a private trip, you know, when the Berlin Wall fell, he built all these institutes for democracy around Eastern Europe. He took me on a private trip through the, the, these places. And there was a book to do about both his fear about the threats to democracy, which seem very prescient right now.

And, like this isn’t forever. These places don’t, they have to learn democracy and we have to help them. And what he was doing in his, in the financial markets and he was gonna let me write about both and like an idiot. I then I wrote, because I was at the New Republic, I wrote for the New Republic, a piece about the trip.

And it was not rude about him. It was, what I thought of him. But I did make fun of his writing, like the all the theories. He has all these theories about why, how markets work, [Reflexivity?] yeah. All that. This intellectualizing, which is, it’s, he’s a jungle animal. And it’s like, he layers on top of it a complicated explanation. And he was so vain about his philosophy that he was really irritated when someone didn’t take it seriously.

And that was, it didn’t wanna see me again. And that was the, that was the one huge one. I’ll never make that a mistake again. It was gold, the material, and no one else was gonna get it. And no one did. No one wrote the book, the book never got written.  And that book could be a, could have been a very valuable book.

But I have that, I have those kind of things. I don’t have, and I have, I think I, I’m not gonna talk about what they are, but I think I know what the next two books are. I think I know what I’m about to go do. Um. But I don’t have anything. I don’t have anything where I think, oh, oh, I wished I’d written, if I wanted to do it, I’d go do it. You know?  I sold Moneyball as two books. I thought the second book was going to be about the kids they drafted that year using algorithms. And I spent two years in the minor leagues chasing around after these guys.

BR: No, go.

ML: I, two years I was in uniform as a midland rock hound in Midland, Texas, and kept shagging fly balls before the game. Like I put a no go, it’s just all notes in a under my office. Yeah. No, go.

BR: So, you know, I always come with like four hours worth of questions. Yep. But what I’d like to tell how many did, how many, how many did we not get to

ML: Oh, three quarters.

BR: Yeah. But it doesn’t matter. I wanna bring the house lights up.

ML: You never expect me to talk so much.

BR: My job’s to give you a nudge and get out of the way. Okay. So I, I think I, I mostly accomplish what I wanted to. Yep. Why don’t we bring up the house lights are up and let’s see. If there are any questions from the audience, one back here.

Yeah. I’m not gonna,  just say, say your name and it’s, it’s hard to see you. So listen. And where are you from? We’ll, because Michael’s from California. We’ll, we’ll give him,  a Long Island geography lesson. Go ahead.

Audience: hi,  Mr. Lewis.  my name’s Andrew Ucci, huge fan of yours.  all your books and your podcast against the rules as well. I’m from just up the street, so very, very convenient commute.  I have a question for you,  related to “Losers, the road to any place, but the White House”, one of your, I believe, criminally underrated books.

Can you expand upon your relationship with John McCain as well as,  what you think he means to American politics?

ML: What a question. Great question. I never get asked about John McCain, but if you ask me what the most influential thing I ever wrote was. Yeah, I might say the first thing I wrote about John McCain.

I met John McCain. I, so I was co I was assigned to cover the 96 Presidential campaign for the New Republic.

I was learning my craft. I’d written Liar’s Poker, but I had not, I mean, I’d not, I’d never written for a school newspaper, no English teacher ever thought I was worth more than a C, you know, I was just like, there was no, I had no background for this. And the New Republic at the time was filled with the most talented collection of writers I’ve ever seen in one place. And editors.

And the editor at the time was Andrew Sullivan and Andrews ship me off to just go do what I would do on the road. And I got in a car and I never got out of it. I was all over the country for the next nine months. And, It quickly became clear that the 96 presidential campaign was the most boring presidential campaign in human history. And around Bob Dole and Bill Clinton were armies of communications people who were gonna make sure you never saw anything interesting and

So I just started writing about what was interesting rather than what I was supposed to write about. And I, and I started to pick up characters who resonated with me and with, in small groups of voters.

So I made the, I flipped it, I made minor characters, the main characters, and put Dole and Clinton in the background. And it really worked as a series in the New Republic. And then I, it brought out as a book.

But in the course of this, I was in a air, you know, a terminal in Spartanburg, South Carolina at 11 o’clock at night told the Dole campaign was gonna land to pick me up.

And the question was why would they do that? And why they would do that was McCain was in the same terminal. And I recognized him, vaguely, it was just the two of us. And they came over to, said “Hi.” And we started talking and he was at that time disgraced. He was part of the, one of the Keating five, he’d been involved in the, in the savings and loan scandal. He had barely won his reelection.

He was just different than any politician I met. He was like real, and I just started getting interested in him. And then I learned his story about how he had been in, he’d been held in prison and his limbs had been broken during the Vietnam War and that they were torturing him. This was the amazing thing.

The Vietnamese were torturing John McCain to get him to accept early release. They were trying to let him go, because his father was an admiral and they thought they could undermine the morale of the American troops if they started letting in the fancy people’s kids out of prisoner of war camp.

And he, and so he got beat up over and over because he refused to go home before the people who had been, who had been captured before him. Now it, so the piece that create, I. I found it by just, I was just hanging with him. ’cause I was interested in him. I didn’t know where it was gonna lead. He didn’t really belong in a book about the nine six presidential campaign, except he was dole’s most popular surrogate.

But hold that was, that to one side.

He lets slip that he has this relationship and it was, it came, came out very naturally. This guy, I was coming over to his office. This other guy was coming over to his office named David Ihin. And David Ipshin was a Vietnam War protestor who went with Jane Fonda to Hanoi and piped anti-war propaganda into John McCain’s cell.

And Ipshin had later in life,  things had changed since that time. And McCain had been celebrated for his war heroism and Ipshin had become kind of blacklisted by American politics because of his involvement, even though McCain kind of admired his conviction. And McCain saw,

Ipshin ends up going to work for Clinton. And then I. If someone came out with a story about how Ian had done this with Jane Fonda and Clinton was about to kind of release him, and McCain got involved and told Clinton, like, “You keep him on and I’m gonna get up and give a speech about this guy on the, on the senate floor about he’s my friend.”

They developed a relationship. And so I wrote the story about the, this relationship between the war protestor and the war hero. And, it was 3000 words in the New Republic, which ends up in this book, “Losers” and McCain at that moment was sort of like untouchable by the journalist. Nobody paid was paying much attention, and he was a little disgraced

Overnight, everybody wanted to write the same story and, and he got his relationship to the rest of the world, to the media in Washington just changed. He would, he, we, we became friends and he, he let me in on this process.

He was like, “That piece changed my life.” And, and it made it possible for him to go become the candidate he became.

It was an, it was amazing watching what a little piece of journalism can do. And it was very mo a very moving story. The, the wrinkle to it was, when I wrote the story, Chen was dying. He was dying of cancer. He was on his deathbed. So Chen was telling me about how what John McCain had done from him, from, for him, from his deathbed.

and it was just powerful. And so, I, I dunno what to say about this except that I found in spending time with him that even in politics, you could find these pockets of authenticity and if you, and if you respected them,  that they, they, they generated a different kind of response than most political writing.

And I also found that like, if you found what was good in someone in the political process, the readership wanted to hear it. Like they, they were so used to the kind of distance, the critical distance, which. Ends up being kind of antiseptic. You don’t ever really know the person. And McCain, he wasn’t really running for anything at the time.

He certainly wasn’t a presidential candidate. I could get, let the reader get close to him. And the reader really enjoyed that.  and they, when he ran for president, you know, he almost knocked off Bush the first time. And I mean, they, they started out really well. But that campaign,  he called me before and he said,  I want you to come with me.

Just be with me wherever. You don’t have to write about it. If you don’t wanna write about it, but I want you to, I want you to watch. I wanna see you watch this process up close, like in the middle of a campaign. And I said, how close can I get? And he said, you have the other bedroom in my place in, in Washington.

We’ll just, we’ll actually live together and you just go wherever you, and we had just had our first child and I could not go to my wife and say, guess what? I’m going off of John McCain for the next year. And he being old school, being a man of his generation, did not understand it. It was like, what? It’s a kid, you know, he is a military guy too, like right.

They, they would breed and then go off on a ship for the next five years. And so he, he was just bewildered by the fact that I was not gonna ride shotgun on his first presidential campaign because I had had this child.  so, and that ended up being kind of the end. I mean, I, at that point I became a little more distant friend, like, like, but I, it would’ve been fun to watch it.

BR: For sure. Let’s get another question.

Audience: I saw you today on Nicole Wallace’s program on today

ML: Could you Believe I got here? I that’s see, yes. I couldn’t believe,

Audience: I was wondering if it would be canceled. Yeah. But you said one thing that had me fascinated. You said that most people don’t know what government does, and you said nobody knows what the Department of Commerce does. What does it do?

ML: Well, there’s a book called The Fifth Risk, and there’s a chapter in that book by me that explains it. But, but what it does, you know, I, when you ask people who don’t know, they kind of say commerce, business. Business of course. So 80% of the budget is the National Oceanographic Administrator,

BR: NOAA

ML: And, and 75% of that budget is the weather surface. So what they do, weather prediction is a, is at the center of the Department of Commerce, which is a little odd. But I mean, the, the names one of our problems in explaining our federal government is the names of the places don’t actually describe the places,  energy commerce.

Agriculture should be Department of Rural. Mm-hmm. It’s rural. It keeps rural America afloat. Commerce should be the Department of Weather. That would be good. I didn’t really oppose this idea of turning the Department of Defense into the Department of War that’s a little more on the nose.

BR: Wasn’t it the Department of War way back when Energy is the Department of Science and Technology.

ML: That’s what it is. It’s a, it’s, it’s amazing what is in the energy. But all the national labs in,

BR: I the fifth risk, you tell the story that they wanna privatize the Commerce Department, all the energy reporting. And then once you do that, who, where are you getting the data for all these people saying, well, I get the weather on my app.

I don’t, we don’t this, they get it from AccuWeather, but AccuWeather gets it from the National Weather Service. Right? That’s right. So it was, they, the accu, what they Trump tried to do the first time around is give the Department of Commerce to the AccuWeather, CEO and let him have his way with it. And what would’ve happened was he would’ve, he would’ve created preferential access.

Probably to his own, so his own app would’ve gotten more. Now. And you also describe in the book how much more accurate weather forecasting has gotten tornado warnings.

ML: So, so it’s like, this is the thing about government, it’s, it’s like when it does something right, people just, it’s like, it’s the way you treat your parents when they’re good parents. You don’t even notice. They get no credit. It’s when they screw up. You notice. And that’s the relationship we have with our government. We’re like a 14-year-old boy and our government is our mother. That that’s sort of the, the, the how mature our relationship is. And,

But the national weather, what they have done, if you go back and talk to a weatherman who’s been doing it for 50 years, he, he kind of say like, you know, I, what I used to do is like, wake up in the morning, go outside and say “Sunny! Could be sunny for a while” you know, that they could do almost nothing, you know, out a day or two kind of thing. These accurate forecasts out seven days. The, the, you know, being able to figure out where, which way a hurricane’s going, getting better, tornado prediction, all this stuff is huge achievement with huge effects. Like, it really makes all our lives and, and it has a big effect on commerce too, right? On business.

Your plane, did you remember when you were flying as a kid and the plane was just always bumping around? Again, it’s not doing that nearly as much. It’s because the airlines have better data about, from the National Weather Service about what’s going on up in the, with the, with the currents. So,

That happens and nobody says, “Wow, cool. They did that. It’s all taken for granted.” It’s all, it’s all taken for granted now. What, what hap pens but the dystopia is like, it gets privatized and, and. And Barry gets the, the premi gold or platin or whatever it is, tornado forecast. And I get the, I get the silver forecast.

So my, I’m in my house when it comes through and you aren’t, you know, that, that it’s, it becomes a, I mean, a real matter of equity. It if we’re seeing if we’re getting different, I mean it seems like that should be a public good.

BR: Makes plenty of sense. Let’s,  balcony, let’s get a question up top. Here we are. Fire away.

Audience: Hi.  so first of all, you talked about the 96 campaign and just so you know, I listened to some of your podcasts from that as well. You are this American life as well. I don’t know if you remember that.

ML: Back in nine. Oh, it so that’s funny.  IRA Glass was just starting this American Life when I was doing that, and he called and said, could you just, I mean, this was back when there were pretty low budget.  I would just go as an episode, go read the New Republic stuff.

So I’m like, four or five of these things are early episodes of this American life. And he became a good close friend through that. But yes, so I I’ve never listened to them, but I remember, yeah, they’re, you did a phenomenal job.

Audience: You should listen to them again and maybe compile them. They were great. You talked about, besides from,  McCain, that story you relayed, you did something about,  some,  you did a lot about Dole and you also did something about, I don’t know, some other guy in business who, it was a, it was a proto-Trump. It was, his name was Maury Taylor. Right. And he was the businessman who was running to make government [put up his own money] put up that guy.

He spent $7 million getting 7,000 votes in New Hampshire and Iowa. And he was in many ways the most reasonable candidate.  he was like, when you gave everybody what he stood for, everybody kind of agreed and then they saw him and freaked — ’cause he did none of the artifice of the, of the politician. But he was great fun. I remember him this well.

So this is another moment, the the New Republic for a moment thought, what the hell is he doing? He’s turning Maury Taylor into the main character of our ’96 presidential campaign coverage. And I did, he was the main character of that story

I went out with him,  just to see what the hell was going on. He was in Iowa and he had three r three huge RVs with speakers on the front. And he had Blair Bruce Springsteen as he went into town and he had kegs of beer on the back and he’d get, he’d throw a party in every town. But the day, the morning I was with him, he rolls into this, the, the biggest public school in Iowa, I can’t remember where, where it was Ames or somewhere.

And it’s, and they’ve rolled out, they’ve made all the students. Go to the local, the auditorium it’s huge to hear the presidential candidate. And Morey’s been a presidential candidate for about, at that point, like four weeks. And before that he was the CEO was the same time, CEO of Titan Tire and Wheel, Midwestern Tire Company.

And had no experience or knowledge of politics. He didn’t know anything.  but he, except he knew about life. He was, and he, he was like your, he was like a great dad, but he didn’t know anything.

And so he gets up, I don’t know what they’re expecting, but it’s sort of like the civics lesson for the day. And they’re, they’re a thousand kids out there and they’re all asleep ’cause it’s eight in the morning and he comes bursting through the doors and, and he looks up and he says, and the first thing he goes is like, kid in the pink hair, my day we used to get rid of the weirdos.

And, and, and, and, and, and the kid goes, “Oh,” you know, and they’re all alert. And he goes, and then he says, I want someone here tell me what the most important thing in life is. And you could see all the teachers, getting a little uncomfortable, but you’re, they’re hoping he’s gonna say, you know, love family country something. And they’re guessing these things and they’re, they’re guessing what they think a presidential candidate would say.

And it’s, nah, nah, that’s not the, i, you guys don’t know anything. And he reaches into his pocket and he pulls out a huge wad of a hundred dollars bills “Money! This is the most important thing in life.”

And you can see all the teachers going, oh my God. And he had me! At that moment, he had me, I said, wherever this guy goes, I wanna see what happens.

BR: $7 million for 7,000 votes.

ML:Yeah. And he still bothers me. I mean, he still calls me all the time to tell me why I need to love Trump. He loves Trump,  to tell me why I, I’m wrong. Like this thing drives him crazy. It’s like, government doesn’t do anything good.

BR: You know? He is like, he’s that kind of Republican. Well, you know, there are a lot of people who have that sort of philosophy ingrained. In them since, you know, Reagan.  what makes this book so interesting is how you’re not taking a partisan side left or right. No, you’re, you’re not talking politics. It’s here are the people who do the people’s business with your taxpayer dollars.

Yeah. I love the story about the guy who is the tax collector. There’s, there’s a line in the book that stuns me. There’s 6 million people who are entitled to a, the earned tax credit that don’t apply. And then there’s something like 25,000 people who’ve made more than a million dollars that haven’t filed their taxes since 2017. How come we’re not trying to help the people who are owed this scredit and collect from the people who can’t be bothered to pay taxes? That doesn’t seem partisan. That just seems administratively competent.

ML: That’s right. No, no, I, the, the whole point it, we, I, if you’d asked me what the point of the thing was when, when we started, it was just, I know they’re great stories and I’m going to use these writers to demonstrate, It isn’t me, It’s like these stories are there and they should be told that was it

After the fact, there is a purpose to it, and the purpose is you can have your prejudice about the government. You can have you, you can hold the stereotype of the lazy, indolent nine to five, doesn’t care about anything milking. You waste, fraud, abuse, deep state, whatever it is, you think, but you’re not allowed to have it without knowing this.

If you want to read these stories and still think that, okay, but you gotta know, you gotta hear these stories. And if you hear these stories, some part of you will think, I shouldn’t really think that that’s, that’s dumb. It’s, it’s more complicated than that.

Sure. There are problems with the government. Sure. There are things that need to be fixed. Sure. And a lot of it is like the way we administer the situation, we put them in. But there are unbelievable people here. They are in many ways the best among us. They’re here, they’re there to serve, and they found some purpose. And in that purpose, they found a purpose in life. They’ve learned how to lead their lives in a very meaningful way, and for us to go after them as if they’re enemies is it’s very damning about us, and that that’s. That’s the kind of what we’re trying to get across.

BR: It’s, it’s 9:05. Is that, is that a spot where we should  I think that’s where we say goodbye. Let, let’s wrap it up. Thank you so much, everybody. Let’s hear it. Thank you so much, Michael Lewis!

~~~

That was my conversation with Michael Lewis. We went out to dinner afterwards. he had an early morning TV hit, so we literally, he had dinner at 9:30 — 10:15. He had to run back to the hotel. But, oh my goodness, that was just so much fun. And you can imagine just sitting down with him to dinner afterwards. It, it’s just every bit as magical as, as you would imagine, every time he comes into town and I have an opportunity to sit down and interview him.

I jump at it.  I hope you enjoyed this one as much as I do. Special thanks to the folks at the Main Street Theater in Port Washington,  especially Karen, for,  allowing me to put this together. It was really a great time.

 

The post From “Liar’s Poker” to Today: An Evening with Michael Lewis appeared first on The Big Picture.

My Yom Kippur morning reads:

​• Weeks Before the Midterms, Almost Everything Is Getting More Expensive: David Uberti and Justin Lahart on mortgage rates near 7%, gas at its highest since 2022, and the Fed’s first hike in three years. The price of eating out and buying a house keeps rising, while higher interest rates add to borrowing costs (Wall Street Journal)

​• Jonathan Swift v. AI: Dónal Gill on Gulliver’s Travels and the Engine at the Grand Academy of Lagado, which let “the most ignorant person write books… without the least assistance from genius or study” — in 1726. Three hundred years ago, the satirist warned of a world in which reading and writing are replaced by the flashy simulation of human knowledge. Can he help us fix it? (The Dial) see also Zombie iPocalypse The New Dark Ages: ​Anthony Gottlieb reviews The New Dark Ages — noting that the rumored demise of books has produced plenty of books, from Postman’s Amusing Ourselves to Death onward. The End of Reading and the Dawn of the Post-Literate Society (Literary Review)

• The Market Has a Rule of Its Own: Before the Fed reads the long end as a message, it should identify who is speaking. ​The latest from Yes, I Give a Fig. (Yes, I Give a Fig)

• Fight intensifies over the fate of homes falling into the sea: California homeowners are building a costly rock wall to hold back the ocean, escalating a battle over private property and what to do about years-long beach erosion amid storm damage and higher tides. ​Hannah Knowles from Dana Point’s Beach Road, where some houses have already collapsed and neighbors are scrambling to keep theirs from going next. (Washington Post)

• How to Tell Whether a Plunging Stock Will Keep Plunging: One of the oldest pieces of Wall Street wisdom is not to try catching a falling knife—a stock that’s plunging. They can keep going longer and more violently than investors expect. But what if you already own it? The oldest Wall Street wisdom says don’t catch a falling knife — but what if you already own it? (Wall Street Journal)

• A Stealth Startup Thinks It Just Hacked the Memory Shortage: Lauren Goode on Kepler Computing, the San Jose chip startup that spent seven-plus years quietly redesigning computer memory architecture — and just came out of stealth into a global shortage. It’s new approach to chip design—and a proprietary material—can help end the supply bottlenecks that have sent memory prices surging. (Wired)

•  Flock cameras are riddled with security vulnerabilities and hard-coded credentials: (Micah Lee) see also Boston dumps Flock, says it shared data nationwide in violation of contract. City: Flock enabled “nationwide lookup” despite contract requiring it to be disabled. (Ars Technica)

• NYC deploys robotoilets. The public bathrooms have a strict 10-minute time limit. A suite of high-tech public restrooms has started to land in New York City as part of a push by the mayor’s office to make it easier for people to find a place to go while they’re on the go. (Gothamist)

• The Three Dreaded Words No One Wants to Hear: What’s for Dinner? Americans spend more time cooking than they have in two decades, but hectic schedules and rising costs make it a key pain point. Mayor Mamdani unveils the first two of 17 modular Throne Labs restrooms. (Gothamist)

​• He Interviewed Tom Cruise for GQ. We Interviewed Him About How It Went.: Geoff Edgers on Cruise’s first deep chat in years — “It was… really something.” Cruise’s on-camera interview was pitched as his first deep chat in years. It was … really something. (Washington Post)

Video of the day: Jimmy Kimmel’s Interview with James Talarico That the FCC Doesn’t Want You To See

Be sure to check out our Masters in Business with Glen Kacher, founder and CIO of Light Street Capital. He launched the firm in Palo Alto after stints working with Julian Roberts at Tiger and Roger McNamee at Integral. His Mercury funds returned 45.7% in 2023, 59.4% in 2024, and 37.3% in 2025 — the best three-year stretch of any of the “Tiger Cubs.” He describes the firm as “the Silicon Valley Home Team, 100% focused on tech opportunities.”

 

From a Savings Glut to a Savings Shortage

Source: Apollo

 

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The weekend is here! Pour yourself a mug of Danish Blend coffee, grab a seat outside, and get ready for our longer-form weekend reads:

• How Three Brothers Built an AI Slop Empire by Buying Legitimate News Sites and Turning Them Into Zombie Content Farms That They Say Get 50 Million Page Views per Month: Brown Brothers Media is the biggest media company you’ve never heard of — powered by AI, fake writers, and plagiarism. When we started asking questions, it started deleting massive amounts of content. ​Futurism on the operation claiming 50 million page views a month — started by a man who warned writers to be “scared right now” about AI. (Futurism)

• Medical AI has a proof problem: The technology’s advances have not yet translated into big improvements in real-life care. Sarah Neville on the sepsis-alert algorithm that scanned patient records every 15 minutes — and the young doctor whose first AI encounter was pure frustration. (Financial Times) see also The AI Bubble Fault Line May Run Through SoftBank’s Balance Sheet: And How Athene Quietly Bet 50% of its Surplus on Softbank’s OpenAI stake. Rod Dubitsky opens with Masayoshi Son writing Jack Ma a $20 million check six minutes into their first meeting — and asks where the leverage sits this time. And How Athene Quietly Bet 50% of its Surplus on Softbank’s OpenAI stake. (Rod’s Substack)

• Making pensions corrupt again: the U.S. Securities and Exchange Commission (SEC) made a quiet announcement: the commission, which oversees Wall Street, is proposing to rescind a 16-year-old rule enacted to prevent “pay-to-play” schemes involving investment advisers and pension funds for public employees. Noel Sims on the SEC’s quiet proposal to rescind the 16-year-old pay-to-play rule protecting public-employee pension funds. (Popular Information)

• Chatbots made the internet worse: this might be a rant. proceed with caution. Sean Monahan on the downstream effect of chatbot adoption — the total destruction of Google. (8Ball)

• They hacked a TikTok user’s camera, with help from free AI: Powerful artificial intelligence software that is given away free is making cybercrime easier to carry out. Gerrit De Vynck on how this plays out. (Washington Post)

• Iran Blockade Costs Are Draining America’s Global Military Power. As US President Donald Trump tries to force Iran into submission, a naval blockade is proving to be his tool of choice. But the operation is testing the limits of the American military, exhausting personnel and weakening Washington’s position elsewhere in the world. (Bloomberg free)

​• A New Startup Lets You Freeze Your Eggs For Free. But Is Anything Ever Free?: Precision-targeted Instagram ads that found a 24-year-old conservatory-trained viola player. Maia Hibbett on Cofertility manages the costs of egg freezing and storage, in exchange for half the batch. One young client became suspicious of the arrangement—and started to investigate. (Wired)

​• Trump’s Minnesota Surge Threatened Democracy, Judge Warns: Mattathias Schwartz on Judge Patrick Schiltz — a former Scalia clerk with no appetite for standoffs — and the nearly 100 court orders ICE violated. In a rare interview, Patrick Schiltz, who served as the federal court’s chief judge last winter, called the administration’s actions “a grave threat to the rule of law.” (New York Times)

• The Kennedy Center is empty and in peril. Its community is in anguish. The fiasco of this week’s closure reveals the truth of President Donald Trump’s motivations — and what the arts community stands to lose. (Washington Post)

• The Sydney Sweeney advert and what it says about the marketing of women in sport: It is an advert that sells sports betting and uses female sexualised content to appeal to men. The Athletic on the Novig prediction-market ad — never about women’s sport, just a woman’s body selling sports betting to men. The sports gambling advert featuring actress Sydney Sweeney was never about women’s sport. (The Athletic).

Video of the day: AAAA

Be sure to check out our Masters in Business this weekend with Glen Kacher, founder and CIO of Light Street Capital. He launched the firm in Palo Alto after stints working with Julian Roberts at Tiger and Roger McNamee at Integral. His Mercury funds returned 45.7% in 2023, 59.4% in 2024, and 37.3% in 2025 — the best three-year stretch of any of the “Tiger Cubs.” He describes the firm as “the Silicon Valley Home Team, 100% focused on tech opportunities.”

 

Changes over past year, in dollars per barrel (42 gallons)

Source: Paul Krugman

 

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This week, I speak with Glen Kacher, Managing Director and CIO of Light Street Capital. We discuss his tenure at Integral Capital Partners, as well as his start at Tiger Management under founder Julian Robertson.

We talka bout why he launched a hedge fund surrounded by venture capital in Silicon Valley, and what it takes to embrace the “speed of tech.”

We also discuss the polarization of data centers and what AI will look like five years from now.

He is currently re-reading “Empires of Light: Edison, Tesla, Westinghouse, and the Race to Electrify the World” by Jill Jonnes; A transcript of our conversation is available here Tuesday.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Adam Frank, Head of Wealth Planning and Advice at JPM, responsible for $1.3 trillion in client assets. Previously, he was head of Wealth Management for JP Morgan Securities. JPM’s combined total assets, including global, institutional, private bank, wealth, and retail, are over $7.7 trillion.

 

Current Reading/Favorite Books

 

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The weekend is here! Pour yourself a mug of Danish Blend coffee, grab a seat outside, and get ready for our longer-form weekend reads:

​• Red and Blue America Have Found Something to Agree on: Flock Cameras Must Go: Liberal Asheville and conservative Oconee County both voted to drop the AI license-plate readers — more than 100 local governments have paused or ended contracts this year. A national backlash against AI-enabled license-plate readers is uniting Trump country and progressive strongholds alike. ‘Nobody wants to be surveilled…doesn’t matter what your political leaning is.’ (Wall Street Journal)

​• Was Silicon Valley Always Like This?: Nitish Pahwa revisits Paulina Borsook’s Cyberselfish and the forgotten voices who warned of impending trouble amid the 1990s internet optimism. As A.I. doomerism takes off, I tracked down the author of Cyberselfish to chat through her decades-old critiques of tech bros. (Slate)  see also A brief history of AI executives calling for regulation: The industry is in a panic, but it’s been claiming to want legal guardrails for years — with few meaningful results. (The Verge)

• The day Warren Buffett saved Salomon Brothers ‘Our name was rat poison’  When Buffett arrived at Salomon that morning he faced three sets of overlapping and intertwining problems: Find out the true nature and cause of the crises; convince regulators to let Salomon keep doing business; and figure out who would run the bank, after its CEO, president, and vice-chair had all resigned in the last 48 hours. Richard Dewey on Sunday, August 18, 1991 — Buffett with a firm to rescue. (Financial Times)

• The surprising new way to find friends and true love? Your Costco card: USA Today on the warehouse club as community and dating scene. (USA Today)

• There Are Over 1 Million N.Y.C. Street Signs. Here’s How They Are Made:. From Cornelia Street to the Brooklyn-Queens Expressway, the 46 workers in this Queens building bring to life the words and symbols that guide the city. (New York Times)

• Rules of relevance: we explore how such “learned blindness” can become a major source of market risk in periods of rapid technological and geopolitical change. It may not be changes in the data that trigger market volatility ahead, but a change in the lens through which investors interpret that data. (Carlyle) PDF

• “There is no such thing as a ‘sense of humor’ in the Criminal Code”: Russian stand-up comedians on surviving war and censorship: Russian stand-up comedy has changed dramatically over the past four and a half years of full-scale war. In early 2026, a Russian court sentenced comedian Artemy Ostanin to five years and nine months in prison for a joke about a legless Jesus. Within the stand-up community, the case was seen as a warning: anything said onstage can lead to very real trouble. Venues now ask performers in advance to keep their shows “apolitical,” while comedians themselves remove potentially risky material from acts or hide it behind hints and innuendo. Some comedians left Russia during the mobilization but later returned after finding that they could not afford to remain in exile. The Insider spoke to stand-up comedians who live and perform in Russia. They described what can be joked about today, how fear and self-censorship have changed the scene, and why even audiences are no longer always interested in political humor.. (The Insider)

​• The Quaalude Comeback: A Once ‘Extinct’ Drug From the 70s Makes a Resurgence: Mattha Busby on the return of “ludes” — whose 1984 elimination was the one unequivocal success of the war on drugs. (The Guardian)

​• The Most Crucial Step to Better Sleep Is Also the Most Straightforward: Smart mattresses and sleep trackers aside, experts say that the key to feeling well-rested is to simply stick to your bedtime. Michele Ross on the metric the mattress upgrades and sleep scores overlook — when you actually go to bed and wake up. (GQ)

​• Impossibility Is a Myth: The Fence goes long on the proposition. Sacha Jafri sold an artwork for $62 million dollars in 2021 at an auction. But the money never changed hands. What happened? (The Fence)

Video of the day: The Apple Ad That Broke Microsoft

Be sure to check out our Masters in Business this weekend with Glen Kacher, founder and CIO of Light Street Capital. He launched the firm in Palo Alto after stints working with Julian Roberts at Tiger and Roger McNamee at Integral. His Mercury funds returned 45.7% in 2023, 59.4% in 2024, and 37.3% in 2025 — the best three-year stretch of any of the “Tiger Cubs.” He describes the firm as “the Silicon Valley Home Team, 100% focused on tech opportunities.”

 

Joining the dots between big AI

Source: Financial Times

 

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Note: This guest essay was written by someone who works for a regulated entity and is not authorized to speak publicly on corporate or market issues. They have been closely following the evolution of the mass surveillance situation since early 2025. 

 

Why Jessica Burbank’s Flock investigation deserved consideration for an Investigative Documentary Emmy

There are two ways for an investigative journalist to be first. One is to publish a story before another reporter does. The rarer kind is to recognize that something is an important story before everyone else sees its importance.

Jessica Burbank did the latter.

In August 2025, Burbank produced an hour-long documentary investigating Flock Safety, the rapidly expanding provider of automated license-plate readers and other surveillance technology. Her starting point was hardly the stuff of national headlines: a municipal contract in the affluent village of Scarsdale, New York.

What Burbank found there became a window into something much larger.

That matters because the National Academy of Television Arts & Sciences has an Emmy category almost tailor-made for this kind of work. NATAS describes Outstanding Investigative Documentary as films that expose “wrongdoing, corruption or hidden truths through deep reporting and original access.”

In other words, work that holds powerful institutions accountable and brings new evidence or revelations to light. Measured against that standard, Burbank deserved serious consideration for an Emmy.

On April 8, 2025, Scarsdale’s Village Board approved its Flock contract. The resolution had not appeared on the published agenda. After a presentation and executive session, the Board amended its agenda and approved the contract 6–1. The procedural portion took mere seconds.

Burbank’s documentary reconstructs what preceded that vote and what residents hadn’t been told.

Using records obtained under New York’s Freedom of Information Law, she established that Village officials had been communicating with Flock for months before the public presentation. The incoming police chief was invited to meet with the company the day after his selection and before formally taking office. On March 31, he emailed that “the map is approved,” referring to proposed camera locations—before the public presentation, contract approval, or funding.

That alone is solid accountability journalism.

But Burbank didn’t stop there.

A records request seeking market research and analysis of competing vendors produced only a sole-source justification signed by Flock’s CEO. Burbank searched elsewhere and found versions of similar Flock documents in government records around the country. She then identified communities where Flock contracts had followed strikingly similar low-visibility paths.

In Lucas County, Ohio, commissioners approved a $250,000 Flock agreement among a group of routine items, only to attempt to rescind it a week later after a commissioner reconsidered what they had authorized.

This is the machinery of investigative journalism: find an anomaly, obtain the records, test the official explanation, search for a pattern, and confront the subject with what you find.

Burbank did that last part, too. She interviewed Flock’s national communications director and questioned the company about its contracting practices and the similarities she had uncovered among municipalities. The film does not simply present critics of Flock; it puts Burbank’s findings directly to Flock and gives the company an opportunity to answer them.

Then the investigation makes its most important leap.

Scarsdale isn’t really the story. The network is.

The documentary explains that Flock’s distinguishing feature isn’t simply its cameras. It is the ability, where agencies participate in sharing, to connect searches across jurisdictions. Burbank examines a Texas sheriff’s investigation involving a woman who traveled across state lines for an abortion and gets Flock itself to acknowledge that searching cameras in other participating localities is a capability of its system.

From there emerges the film’s central insight: a national surveillance infrastructure doesn’t necessarily arise from an act of Congress or a presidential directive. It can emerge incrementally—one police department, one salesperson, one municipal contract and sometimes one barely noticed local vote at a time.

As Burbank puts it near the film’s conclusion, one might imagine that creation of a national camera network would require “high-profile debate on the nightly news” and congressional action. Instead, she observes, it can take little more than seconds at a town-board meeting and a police chief’s signature.

That observation looks considerably more important today than it did when Burbank made it.

There was also unusually immediate evidence of impact. Her written investigation was published August 2, 2025. On August 4, Scarsdale’s police chief sent the Village Board a memorandum concerning the Flock contract. On August 6, the Village canceled it. Burbank carefully stops short of claiming that her reporting caused the reversal, suggesting instead that journalism and sustained public participation “might” have mattered.

That restraint is important. Investigative journalism should establish what the evidence supports, not claim credit it cannot prove.

But the strongest argument for Burbank’s work may be one that only became fully visible afterward. She was early. The national controversy she identified in 2025 did not fade. It grew.

Flock and interconnected ALPR networks subsequently became subjects of far broader scrutiny over privacy, immigration enforcement, abortion investigations, police misuse and the extraordinary power created when thousands of local cameras become searchable beyond the communities that purchased them.

In other words, Burbank didn’t simply get to the Flock story early. She identified why it was going to become a national story. That distinction matters.

There are investigations that expose misconduct everyone already understands to be important. They can be extraordinary journalism. But there is another, rarer form of investigative reporting: finding something that appears small, recognizing the system concealed inside it and showing the audience why it will matter before conventional wisdom catches up.

Burbank began with a 37-second vote in a suburban village and found the architecture of a national controversy.

Her documentary ends with a sentence that now sounds remarkably prescient:

“The story of mass surveillance and Flock Safety is one I’m just beginning to tell.”

She was right.

None of this means Burbank was owed an Emmy. NATAS’s documentary categories encompass extraordinary work from some of the best-resourced documentary organizations in the world, and an independent production should be judged by the same standard of excellence.

But that is precisely why Burbank’s accomplishment deserves attention. NATAS says an Outstanding Investigative Documentary should uncover hidden truths through deep reporting and original access, hold powerful actors accountable, and bring new evidence or revelations to light.

Burbank did those things.

And she did one more: she recognized the significance of the story before much of the country did. That isn’t merely good timing. It’s one of the hallmarks of great investigative journalism.

 

 

Sources:
Video: You’re Being Watched: The Company Behind America’s Mass Surveillance Takeover

Millions in Public Funds, Zero Public Input: Flock’s Surveillance System Might Already Be Overseeing Your Community
The $7.5 billion surveillance company Flock Safety is operating in 49 states and over 5,000 communities, but the residents of Scarsdale, NY, are fighting back.
Jessica Burbank
Dropsite. Aug 02, 2025

 

 

The post She Saw the Flock Story Coming… appeared first on The Big Picture.

My back in NY morning reads:

​• Why Are Valuations Falling in a Bull Market?: Ben Carlson runs the year’s tape — mortgages from 6% to 7%, the 10-year from 4% to 5%, inflation from 2.4% to 3.4%, oil from under $60 to over $100. (A Wealth of Common Sense)

​​• Muni Bonds Are Yielding 5%. They Rival Stocks Now.: With yields comparable to long-term Treasuries and strong credit quality across the $4 trillion tax-exempt market, a tax-advantaged 5% could stack up well versus equities in the coming years. (Barron’s) see also T-Bills and Chill? Try Munis & Chill Instead. Land an A-round and a real salary? Great! Start putting some of your newfound cash flow aside as a good savings habit in an all-equity 401(k). It is a hedge against your start-up failing to beat the odds and eventually finding an exit. (The Big Picture)

• The Next Great AI Trade Is Everything That Isn’t AI: Market Sentiment on the hard half of investing — finding the trend early is easy compared to knowing when the thesis has become consensus. (Market Sentiment)

​• The iShares Graveyard: David Snowball’s archaeological dig through BlackRock’s full list of liquidated ETFs, prompted by eight more closures. “You think I went down a rabbit hole. I prefer to consider it an archaeological dig.” (Mutual Fund Observer)

• Trump Has Made More Trades Than All of Congress Combined: Bloomberg finds the president has traded more securities than every member of Congress combined since returning to office — while backing a lawmaker stock-trading ban that doesn’t apply to him.  Most Americans support a ban on lawmaker stock trading. Trump is in favor of a prohibition that doesn’t apply to him. (Bloomberg free)

​• The World Economy Is Becoming Wary of the U.S.: Global investors balking at Treasuries, louder talk of the dollar’s dwindling power, foreign governments hauling their gold out of American vaults. America’s position of global economic stability is starting to look shakier as the Trump administration piles on debt and doubles down on sanctions. (New York Times) see also The American Age Is Over: The Atlantic on the post-WWII order — bound to end eventually, shocking in how suddenly the moment arrived. A period of global dominance has ended in plain sight. (The Atlantic)

​• We Bought a $500 Counterfeit Luxury Watch. Nobody Could Spot the Difference: Alistair Charlton inside the Reddit QC-post subculture of superfake Rolexes — so good even Rolex didn’t spot it. The replica watch industry is in its “super clone” era. Following tips from murky internet forums, we bought three budget fakes that were good enough to pass as real—but ultimately disposable. (Wired)

• ‘Flock City PD:’ The Fake Flock-Owned ‘Police Department’ That Searched Real Cameras for Real People: Jason Koebler Jason Koebler · Sep 17, 2026 at 2:07 PM Flock ran searches for “coexist bumper sticker,” “white truck with a trump sticker,” and “Star of David,” apparently to demonstrate what cops shouldn’t search for. (404)

​• Can We Be Certain That Time Really Exists?: Ethan Siegel on what counts as real — the measurable, observable, and quantifiable — and the questions that hand back pathological nonsense, like dividing by zero. We experience time as real. But what if it’s only an illusion: an illusion that’s inherently relative? Does time fundamentally even exist? (Starts With A Bang)

• “Where Am I Going? And What’s Next?”: Nicole Kidman Is Keeping Her Heart Open: The long-awaited sequel to a fan-favourite movie; a newly single life to ponder; the Euro Summer to end them all: has Nicole Kidman ever been more spellbinding? Giles Hattersley meets the legend in London to talk power moves, mega fashion and the art of a fresh start. Photographs by Venetia Scott. Styling by Poppy Kain. (British Vogue)

Video of the day: The Greatest Scam of Our Childhood 8 CDs for a Penny!

Be sure to check out our Masters in Business this weekend with Glen Kacher, founder and CIO of Light Street Capital. He launched the firm in Palo Alto after stints working with Julian Roberts at Tiger and Roger McNamee at Integral. His Mercury funds returned 45.7% in 2023, 59.4% in 2024, and 37.3% in 2025 — the best three-year stretch of any of the “Tiger Cubs.” He describes the firm as “the Silicon Valley Home Team, 100% focused on tech opportunities.”

 

Home price growth has already begun to cool again

Source: Calculated Risk

 

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I had a very interesting conversation with Michael Monaghan of Founder’s Fund about HNTI; here is the description:

Barry Ritholtz explains why getting rich through investing is simpler than most people think, why market forecasts are so often wrong, and why your own behavior may be the biggest threat to long-term investment success.

Michael Monaghan sits down with Barry Ritholtz, Chairman and Chief Investment Officer of Ritholtz Wealth Management, host of Masters in Business, and author of How Not to Invest, for a wide-ranging conversation on stock market investing, compounding, index funds, active management, investor psychology, financial media, market predictions, and building wealth over time.

Barry explains why investors should focus on getting rich slowly, why humans are psychologically wired to make poor decisions in volatile markets, and why the most confident market forecasts can often be the least reliable.

They discuss why so few active managers outperform over long periods, what Barry learned from Warren Buffett, Ray Dalio, Howard Marks, and Daniel Kahneman, and why he believes most investors should keep the core of their portfolio simple. Barry also shares his “cowboy account” strategy for investors who still want to pick stocks, including how he thinks about Nvidia and speculative investments without putting long-term wealth at risk.

The conversation also explores what financial advisors actually add beyond investment performance, direct indexing and tax-loss harvesting, and why Barry believes the purpose of money is not simply to accumulate a bigger number.

 

The post How to Get Rich Slowly appeared first on The Big Picture.

My morning reads:

• Here’s Who Trump Should Blame for the Rate Hike He’s Raging About:He promised lower prices and lower interest rates. His policies delivered renewed inflation and a rate hike. (The Bulwark)

• Gas Prices Could Cost Republicans the Midterms: Gas is up 37 percent in a year, home-heating oil 52 percent, diesel a staggering 69 percent — and none of it improves while the Iran war drags on. Many voters understand that the president isn’t directly responsible for the price of oil. Except this time, he is. (The Atlantic) 

​• More Money Than They Ever Imagined — and No Clue How to Spend It: Bay Area AI workers are too busy to embrace the fruits of the boom — maybe a custom bike trip through Italy, if they can spare the time off. Share sales at OpenAI and Anthropic minted hundreds of millionaires. They’re splurging on computer hardware and espresso machines. (Wall Street Journal)

• Hollywood fears an AI future. China is already living it: China’s film and video industry is in the midst of an AI revolution, and at ground zero are the micro dramas that play out on millions of smartphones. The AI trends upending China’s entertainment industry may be a harbinger for what’s to come in Hollywood. ​Actor Chen Yilong signed a contract in August licensing his face to a production studio — his role now is to sit before a camera making expressions on command. A neutral stare. An angry glare. (Los Angeles Times)

• It’s Time to Raise the Rates (No, Not Those Ones). Reaganism broke U.S. tax brackets. It’s time to fix them. I’ve always been struck by the fact that the income floor for the top tax rate in America is $640,600. Why should someone making $700,000 pay the same rate as someone making $70 million? In a new report, the Roosevelt Institute policy fellow Samarth Gupta argues that this is actually a historical anomaly. From 1916 to 1986, the tax code had, on average, more than 27 different federal income brackets each year; today, it has just seven. Fixing that, he argues, wouldn’t just make the tax system fairer; it could also help us pay down the national debt. (The Bully Pulpit with Bharat Ramamurti)

• A Severe Misalignment of AI in Mathematics. We are witnessing a general threat to intellectual work, with misalignment between the outcome of the use of AI and its initial purpose. In many fields and activities, years of training have traditionally served not only to produce a final answer or product, but also to develop understanding and the ability to formulate new questions and ideas. Terence Tao on the threat to intellectual work — years of training were never just about producing the final answer, but about developing the ability to formulate new questions. (Terry Tao)

• Pennsylvania’s Measles Outbreak Is Enormous: The two latest deaths suggest that the true number of infections is much larger than reported. Four deaths in the state since mid-August have made America’s measles crisis undeniable — and harder for anti-vaccine activists to explain away. (The Atlantic)

• Kennedy Center Leaders Warn It’ll Collapse Without Trump’s Name: Hafiz Rashid on the president’s allies claiming the historic theater could close immediately unless the renaming sticks. (New Republic)

​• Shot Into the Sky at 700 MPH: Inside the Secret Fraternity of Ejection Survivors: Ron Bath hit a bird at nearly 700 mph in his RF-4 Phantom — the WSJ on the tie club whose membership requirement is pulling the handle. People who live through the harrowing experience join a little-known fraternity where members get silk ties and $5,000 watches (Wall Street Journal)

•  ‘It’s the Bayeux tapestry of TV!’ After six decades, the seminal series bows out with 70 Up. The ‘hugely important artefact’ that’s followed 14 children since they were seven is set to air its final instalment. The now-septuagenarians and director Asif Kapadia talk about breaking new ground for 63 years – and changing TV for ever. The Up series — checking in on the same Britons every seven years since 1964 — comes to its close. (The Guardian)

Video of the day: The Professor Who Taught People How To Think

Be sure to check out our Masters in Business next week with Glen Kacher, founder and CIO of Light Street Capital. He launched the firm in Palo Alto after stints working with Julian Roberts at Tiger and Roger McNamee at Integral. His Mercury funds returned 45.7% in 2023, 59.4% in 2024, and 37.3% in 2025 — the best three-year stretch of any of the “Tiger Cubs.” He describes the firm as “the Silicon Valley Home Team, 100% focused on tech opportunities.”

 

Four Stages of YTD Global Equity Returns

Source: Fisher Investments

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At The Money: At The Money: Investing in Founder-Led Companies Michael Monahan (September 16, 2026)

How can ordinary investors access funds of companies led by founders? Enter the Founders 100 ETF (FFF).

Full transcript below.

~~~

About this week’s guest:

Michael Monahan is a partner and portfolio manager of the Founders 100 ETF (FFF). He’s been a Wall Street analyst, a private market investor, a tech startup CEO, and a public equity portfolio manager.

For more info, see:

Personal Bio

Professional/Personal website

LinkedIn

~~~

 

Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

 

 

 

Transcript: At the Money: Michael Monaghan

 

BARRY RITHOLTZ: Should you invest in companies led by founders? Peter Thiel’s VC Founders Fund has over $20 billion and produced excellent returns. How can ordinary investors get access to funds of companies headed by founders? To help us unpack all of this and what it might mean for your portfolio, let’s bring in Michael Monaghan. He is a partner and portfolio manager of the Founders 100 ETF, stock symbol FFF. He’s also been a Wall Street analyst, a private market investor, a tech startup CEO, and a public equity portfolio manager in his career. So, Michael, let’s just start with the basics. What’s the central thesis behind the Founders 100 ETF? Why should founder-led companies outperform even after they’ve become large public companies?

MICHAEL MONAGHAN: Barry, thanks for having me. The data shows that founders outperform by about 3X. We looked at 11,000 stocks over 30 years, and on average, founder-led companies grow 4% greater than the S&P.

BARRY RITHOLTZ: Wow. So let’s stay focused on that 3X. I believe that was Bain research, that founder-led companies tend to outperform other companies. What is it that drives that three times outperformance? Is it that founder-led companies tend to be heavily represented in the technology sector? Is it a function of age or size, or is this just survivorship bias?

MICHAEL MONAGHAN: We’ve got companies led by founders all across the economy, so it’s not just a concentration in technology, although there are a lot of technology companies that are led by founders. We don’t think it’s survivorship bias. We think that founders bring something really unique. They have the vision to see where to go. They have the execution to execute that plan they’ve envisioned. They have the charisma to build a big team around them, and they’ve got the grit to get through the hard times, combined with the fact that they think in decades, where a board-hired CEO is just trying to make the next quarter and the next PowerPoint presentation for the board.

BARRY RITHOLTZ: How much of this is due to the fact that, hey, if you’re going to start a new company from scratch, by definition you’re a risk-taker. How much of the outperformance of founder-led companies is simply just embracing that higher tolerance for risk?

MICHAEL MONAGHAN: I don’t know if that’s the factor that’s showing it. I think if you dig in, a lot of these guys are successful because they de-risk all along the path, right? So if you listen to, say, a Marc Andreessen, he talks about at the zero stage and the one stage and the two stage, it’s all about de-risking the problem as you move along. So I would gently say that I think founders de-risk their business even more than non-founders.

BARRY RITHOLTZ: Really interesting. And you yourself are a founder. Your startup was Beartooth Radio. It didn’t necessarily find an exit, but I’m curious, how did that experience of standing up a company from scratch affect your view of founder-led firms?

MICHAEL MONAGHAN: I think it completely reframed how I think about building a company. I had spent the first 15 years of my life working for great companies. I worked at Goldman Sachs, I worked at Sanford Bernstein. But there’s a big difference between working at a world-class organization where you fit into their system, and building your own system from zero to one. I was fortunate enough to get exposure to some of these really good technology founders, and just saw how differently they thought, how passionate they were, how they brought vision that corporate managers didn’t have.

BARRY RITHOLTZ: So let’s zoom in on that. How do you define a founder? Must the individual have actually started the original enterprise, or do you include anyone who perhaps acquired or reinvented or merged with or effectively refounded an already existing company?

MICHAEL MONAGHAN: So we define founder-led as the original founder — that’s the person who started the company — still running it, most often as the chief executive officer. Occasionally it’ll be the chief technology officer, or in the case of a medical or scientific company, it could be the chief medical or chief scientific officer. So it’s the chief officer running the company day-to-day. We looked at the data. Board member doesn’t have the efficacy we want. Chairman doesn’t have the efficacy. It’s only if the founder’s sitting in the seat every day running the company.

BARRY RITHOLTZ: And some classifications are really straightforward. Obviously Michael Dell founded Dell Computers, Zuckerberg at Facebook. What do you do with the more ambiguous cases? And I think probably the biggest one is Elon Musk, who was an investor, not an original founder of Tesla. There are debates about the merger with PayPal. We could talk about SpaceX. How do you draw the lines there? You’re really less interested in the technical founding issue than the driving animus of the company. Is that a good way to distinguish it?

MICHAEL MONAGHAN: I think that’s fair. We have a rigorous process to decide, and you and I can hit a couple of edge cases. But we look to see who the original founder is. Most of the time it’s clear-cut. Sometimes it’s not, and then we have to dig in. We have to say, who does the company define as the founder? Elon’s a great one to examine, because for some reason there’s controversy as to whether he’s the actual founder. We dug in and did the hard work. The company defines him as the founder, and in fact it was either 2012 or 2014, there was a court case where this was actually settled, and Elon Musk is one of the five original founders of the Tesla Motor Company.

BARRY RITHOLTZ: I would modify that to say Elon wasn’t the original founder, but once he took over, he so totally revamped the company that it looks nothing like the prior enterprise. So is there any reason to split hairs with that? But same sort of thing with PayPal or SpaceX. How do you think about those two?

MICHAEL MONAGHAN: So I think SpaceX, he clearly was the founder. I don’t think anyone else lays claim to it, right? PayPal was the merger of a couple of entities. It was the original X entity that Elon was building merged into Peter Thiel’s company. But there are edge cases. Berkshire Hathaway is a great example. I don’t think anyone would doubt that Mr. Buffett was the founder of Berkshire, but he bought a failing textile company as part of a massive acquisition, and that company that acquired that and many other things — he’s the founder of. And Monster Beverage is kind of the same way. They acquired a juice company, but it was really the energy drink company and the other acquisitions they made that is the founding of the Monster Beverage company.

BARRY RITHOLTZ: Yeah, that makes a whole lot of sense. So amongst your current holdings, you have founders like Alex Karp of Palantir, Larry Fink at BlackRock, Marc Rowan at Apollo. Each of those companies had multiple co-founders. How relevant must the individual who remains be to the company, to its strategic vision — to really be its dominant force?

MICHAEL MONAGHAN: You know, our test is: were they an original co-founder? And we often look to the company to define it. Most of the companies in their origin story or their history will list who the original co-founders are. As long as at least one remains as an executive, that meets our test.

BARRY RITHOLTZ: So now we take the list of however many founder-led companies there are — I think it was 11,000. You’re going to break that down to a list of 100. What are the underlying criteria that determine which of those thousands and thousands of founder-led companies end up in the 100 that are in FFF?

MICHAEL MONAGHAN: Really great question. So we looked at 11,000 stocks over 30 years, and during that 30-year time period, there are about 800 founder-led stocks at any one time. So in the current market, there are about 800 founder-led stocks. From there, we look at the 200 largest by market capitalization. And then my co-founder and I come from a fundamental background, especially her. She’s a classically trained Columbia Business School value investor. We build a valuation model, using some factors, to pick what we then believe are the 100 best out of the 200 largest.

BARRY RITHOLTZ: Interesting. And I’m looking at your largest holdings: Meta, Nvidia, Oracle, Palantir, Dell, Arista, and CrowdStrike. A lot of this is a heavy overlap with technology, AI, high growth, big cap companies. Why go with a founders fund instead of just a simple Nasdaq 100?

MICHAEL MONAGHAN: We have very different exposures than the Nasdaq 100. We’ve got about 80% active share versus the Nasdaq 100. We’ve got much higher exposure to founders — 100% founders versus about 20% of the Nasdaq 100 — and it’s a different portfolio construction. The Nasdaq 100 is limited to only Nasdaq stocks, and there’s obviously incredibly high growth in tech and out-of-tech stocks on the NYSE. And we feel like we’ve got a little better spread across the economy. Right now, the Nasdaq 100 is 30% exposed to semiconductors, the S&P at 20, and we’re only at 10. So we do have exposure to technology, but we really are bent across the entire curve. We’re not substantially overweight versus, say, the S&P. We are slightly overweight, but I don’t think we’re massively overweight versus the S&P.

BARRY RITHOLTZ: Yeah, I was looking through your holdings and I saw a lot of industrials and energy and financials, which you don’t necessarily see in the Nasdaq 100. But I’m glad you mentioned the 80% active share. So many ETFs I look at end up being closet indexers. This is really a very concentrated portfolio, with the top 10 holdings really accounting for a big chunk of your exposure. How much of what drives the performance of this is really just a conviction strategy — a concentrated portfolio with a long tail of sub-1% holdings? Tell us about the concentration, and also tell us, why do you have the rest of these small holdings? They’re almost like placekeepers to keep an eye on.

MICHAEL MONAGHAN: So we run a modified market cap weighting. That is, we take the market cap and we allow that to define how much position size we’re going to take for each position. The reason we modify it is we put a hard cap of 7.5%. So we rebalance quarterly — every quarter we reset the portfolio. We don’t take any single position more than 7.5%, because we want to have some diversification in the portfolio. That’s where we come up with the weightings. And the reason we end up with some of these smaller weights at the bottom, it’s just defined by where they are on a free float market cap.

What I would tell you, Barry, it’s really interesting. There’ll be days I wake up, I look at our portfolio, our top holdings are down, and the portfolio’s actually up, because those other 75 to 80 stocks that make up the balance — 50% — they drive sometimes when the big guys aren’t working. So it’s sort of just — we allow the market capitalization to set our position sizes.

BARRY RITHOLTZ: All right, so now we know the criteria for selection, the criteria for weighting. Let’s talk about the most challenging aspect of managing a portfolio: the sell discipline. What leads you to taking a company out of the portfolio? Is it just something as simple as the founder leaving, or do you also run through operating parameters and other fundamentals? And when suddenly you’re starting to think, “Hey, this company doesn’t have the growth prospects we were hoping for,” is that a basis for ejecting them, or is it a variety of things?

MICHAEL MONAGHAN: The main reason we would sell a stock is if the founder leaves. So in the prospectus, we state that if a founder announces their resignation, we will sell within 90 days of that announcement. So we don’t wait for them to actually leave — we would sell on the announcement. The second way a stock would get sold is if the fundamental overlay flags a condition that says to sell the stock. One of the ways we like to describe the fundamental overlay — it was built by my partner — it’s really looking for what she calls burnt pizza crust. We think all of our founders can make great pizza. We don’t want to tell them whether to make pepperoni or margherita. The factor looks and it says, are one of these crusts getting burnt? And if so, we’ll slide it out and bring in the next best company.

BARRY RITHOLTZ: Really interesting. So to wrap up: if you’re interested in a venture fund like Peter Thiel’s Founders Fund, but you don’t have a quarter billion dollars to gain access to it, consider the Founders 100 ETF, stock symbol FFF. Be aware of the fact that this is a concentrated portfolio with a high active share, and it may not perform similarly to the S&P 500 or the Nasdaq, but it is concentrated, and it focuses on companies being led by the original founders.

I’m Barry Ritholtz. You’re listening to Bloomberg’s At the Money.

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My mid-week morning reads:

​• Costly Medicine: Claudia Sahm on Fed Week — the FOMC is highly likely to hike a quarter point Wednesday, and the Middle East and AI headlines stealing attention are the same stories driving the inflation risk. (Claudia Sahm)

• The Unlikely Political Bedfellows on A.I. Regulation: David Sacks and Lina Khan? Bernie Sanders and Steve Bannon? The debate on artificial intelligence limits is creating unlikely alliances. (Dealbook) see also Here’s why it’s so hard to keep AI agents from going rogue: The techniques that made chatbots more capable can also bake in a tendency to hack, cheat and evade human oversight. Gerrit De Vynck on the gap between January’s optimism — alignment “increasingly looks solvable” — and what the technology is learning about cheating and hacking. (Washington Post)

​• Americans Don’t Understand Who’s Rich: Terry Taylor is worth about $2 billion, doesn’t put his name on the car dealerships he buys, and attends conferences only if nobody announces who he is. The Atlantic on the invisible rich and the tax code built around not seeing them. (The Atlantic)

• Stocks pop when the Trump administration invests, but the gains often fade fast: Stocks in other companies that have struck a deal with the Trump administration have tended to move in the opposite direction, often following a common trajectory: a significant bump around the formal announcement, high volatility afterward, and then gains often given back almost as quickly as they came. (Yahoo)

• American Businesses Have No Idea How to Set Prices Right Now: Diesel crosses $6 a gallon for the first time, and firms can’t tell whether to raise prices or wait it out. Businesses of all stripes are struggling to predict how long high energy costs will last.  (Wall Street Journal)

• Catastrophe Bond Fund Landscape: These products promise higher returns by assuming the risk of catastrophic events. The trade-offs are capacity constraints, limited liquidity, and higher fees. (Morningstar)

​• Oil Executives Say the Great Fuel Crisis Is Here: Chevron’s Mike Wirth and others warn global supplies are running low with no respite in sight — while Trump officials insist the disruption is temporary. (Wall Street Journal) see also Rising Fuel Prices Set Off Anger and Protests Around the World: From Indonesia to Guatemala to Syria, shortages are producing protests and blackouts. (New York Times)

• The U.S. Was Never Going to Win the “War on Terror” Robin Wright on twenty-five years of military campaigns against extremism, almost a million deaths — and the question of what it accomplished. In the twenty-five years since 9/11, the U.S. has waged several military campaigns against extremism around the world, resulting in the deaths of almost a million people. What has it accomplished? (New Yorker)

​• For the Love of God, Please Put on Headphones: “Loudcasting” — using speakerphone to watch videos and take phone calls — is turning public spaces into open-air podcasts. A writer begs for silence.   (Wall Street Journal).

​• 50 Parting Thoughts From the 2026 U.S. Open: Elena Rybakina and Alexander Zverev took home the hardware, while influencers and high ticket prices dominated the conversation at Flushing Meadows. (Sports Illustrated)

Video of the day: Japan’s Toyota Blows Up The Entire Car Market With This BIG announcement

Be sure to check out our Masters in Business with Seth Bernstein, CEO of AllianceBernstein and Head of Asset Management of Equitable Holdings, the 69% owner AB. The firm manages $905.5B. Previously, he spent 32 years at JPMorgan Chase, where he eventually became the Global Head of Managed Solutions & Strategy at JPAM, responsible for all discretionary assets for Private Banking clients, and Global Head of Fixed Income & Currency. He eventually became CFO of JPM’s Investment Management & Private Banking division.

 

Millionaires Everywhere

Source: A Wealth of Common Sense

 

 

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