Speaker 1: This is Master's in Business with Barry Ridholds on Bloomberg Radio.
Speaker 1: This week on the podcast, Liz Hoffman comes in to
Speaker 1: tell us about writing Crash Landing, which I found to
Speaker 1: be a fascinating book about telling the story of the
Speaker 1: pandemic that we all just live through, the economic dislocation,
Speaker 1: the health risks, just the mayhem that took place. But
Speaker 1: from the perspective of a number of corporate CEOs, Bill
Speaker 1: Ackman of Pershing Square Capital, the hedge fund that had
Speaker 1: a couple of amazing trades based on this, the CEO
Speaker 1: of Delta, of Hilton, of Ford, of Goldman Sachs of
Speaker 1: Morgan Stanley of Airbnb. Really a fascinating discussion from a
Speaker 1: perspective that I think you probably are unfamiliar with. You know,
Speaker 1: it feels like we all went through more or less
Speaker 1: the same thing. That turns out not necessarily to be true.
Speaker 1: Some of these people were dealing with inordinate stress, tremendous risk,
Speaker 1: concerned that their businesses and their companies, some of which
Speaker 1: have been around the United States for a century or more,
Speaker 1: we're going to go out of business. And it really
Speaker 1: is a fascinating tale told from a really interesting perspective.
Speaker 1: I really enjoyed it, and I think you will find
Speaker 1: it to be delightful summer reading with no further ado.
Speaker 1: My conversation with Semaphor's Liz Hoffmann discussing Crash Landing.
Speaker 2: Thanks, Arry, it's great to be here.
Speaker 1: I have to tell you I don't always say this.
Speaker 1: I really enjoyed the book. I found it to be
Speaker 1: a fascinating look into an experience we all had and
Speaker 1: thought we shared together, but it turned out a lot
Speaker 1: of people had very, very different experiences. We'll get into
Speaker 1: that in a minute. Let's just start with your background.
Speaker 1: You have a master's degree from the Northwestern School of Journalism.
Speaker 1: Was the plan ways to cover finance? What led you
Speaker 1: into this area?
Speaker 2: No, not at all. I started out as a sports
Speaker 2: reporter in college, really Division three athletics. If that's your
Speaker 2: if that's your thing.
Speaker 1: What the time, That's what My college was, Division three football,
Speaker 1: not exactly a hotbed of not a powerhouse.
Speaker 2: No, but but thought I wanted to cover sports. Actually
Speaker 2: I played sports growing up, and I really liked that
Speaker 2: kind of reporting, which is sort of really beat reporting
Speaker 2: at its at its most basic, right, and then you
Speaker 2: know at some point, well I went to grad school
Speaker 2: because I graduated college in two thousand and eight and was,
Speaker 2: shockingly enough, yeah, having trouble getting a newsroom job. And uh,
Speaker 2: and I said, I'll go get a master's and things
Speaker 2: will be better in two thousand and nine because these
Speaker 2: are one year programs, right. So obviously, I, you know,
Speaker 2: economically minded from the jump, but no, I really wanted
Speaker 2: to be a sports reporter. And then at some point
Speaker 2: it ocourred to me that even if you do that
Speaker 2: and you get to the pinnacle of that career, your
Speaker 2: your reward is to live in Bristol, Connecticut, right orn't
Speaker 2: for ESPN, And you know, it was really, frankly, just
Speaker 2: like beggars couldn't be choosers. I graduated in o nine.
Speaker 2: The first job I had was at a family owned
Speaker 2: media company outside of in the West suburbs of.
Speaker 1: The Wall Street Journal is part of the family army.
Speaker 2: I fought my way back.
Speaker 1: So where did you what was the first place?
Speaker 2: It was called Wednesday Journal, and they ran a bunch
Speaker 2: of weekly newspapers and a monthly parenting magazine called Chicago Parent.
Speaker 2: That was my truly my first job was running their
Speaker 2: web editor. I mean it was grim times and nine.
Speaker 1: How did you get to the Journal?
Speaker 2: I moved to New York in twenty ten working for
Speaker 2: a legal trade pub, a competitor of Bloomberg Law Law
Speaker 2: three sixty, where I was hired. You know, your career
Speaker 2: is just a series of lucky breaks. I was hired
Speaker 2: to cover I think securities litigation or insurance regulation some
Speaker 2: of you like truly, and then my recollection. Anyway, this
Speaker 2: is the myth that I'm going to create. Was that
Speaker 2: my first day they said, actually, we're thinking about launching
Speaker 2: a corporate law vertical. Do you want to cover M
Speaker 2: and A? And I said, I don't know what that is,
Speaker 2: but yes, that sounds better.
Speaker 1: I'm familiar with them, but A is exactly right.
Speaker 2: No idea. But you know, working at a trade pub
Speaker 2: is such a great training ground, right because you've got
Speaker 2: to get really smart fast, and you have to know
Speaker 2: what you don't know and find out you know because
Speaker 2: your the rears are incredibly sophisticated. So anyway, I covered
Speaker 2: M and A for them for about two years and
Speaker 2: then I don't know what God smiled on me, but
Speaker 2: I got hired by the Wall Street Journal in twenty thirteen.
Speaker 1: So you start in twenty thirteen, and then you proceed
Speaker 1: to get some major news stories that you either covered
Speaker 1: intimately or broke. Burger King buys Tim Horton's Bakery using Halliburton,
Speaker 1: merge Delany's EMC. What stands out from that era and
Speaker 1: what was your lucky break that you were very often
Speaker 1: amongst the first reporters breaking this news.
Speaker 2: Well, the journal is an incredible seat from which to
Speaker 2: do that. There's a lot of institutional privilege that you
Speaker 2: bring to the job every day there. You know, when
Speaker 2: I got hired in twenty thirteen, Emina was dead. Part
Speaker 2: of the reason, actually, I think that I got hired
Speaker 2: was that I was covering kind of messy, wonky legally
Speaker 2: complicated em andated had gone sideways. You know, it ended
Speaker 2: up in court, and that was at the time with
Speaker 2: the journal thought was a blind spot for them, which
Speaker 2: they were very good at breaking deals, but didn't totally
Speaker 2: understand them or lost sight of them after they came out.
Speaker 2: And then you know, as it turns out, a switch
Speaker 2: flipped in the market. In twenty fourteen was a record,
Speaker 2: twenty fifteen was a record. None of them still stand right,
Speaker 2: They've been eclipsed by sixteen seventeen and then you know
Speaker 2: again in twenty one, but you know, it was there
Speaker 2: were big deals falling out of the sky, and I
Speaker 2: don't know. I always say it's better to be lucky
Speaker 2: than good, though, if you can be both, that's that's helpful.
Speaker 2: But yeah, some of those were fun. Burger king Tim
Speaker 2: Horton's I remember very clearly, because it was in the
Speaker 2: middle of those waves of kind of tax dodgy, those
Speaker 2: inversion deals.
Speaker 1: But these are two big, legitimate, you know.
Speaker 2: Totally, but they were reincorporating in Canada and there was
Speaker 2: a lot of sensitivity around that, and I remember that
Speaker 2: one came together pretty quick, if I remember, which is
Speaker 2: pretty unusual, but like Friday or Thursday to a Sunday scoop.
Speaker 1: So what about the COVID beat? How did you find
Speaker 1: your way to that space? Were you regularly covering epidemics
Speaker 1: or clearly there's a corporate story there. How did you
Speaker 1: tumble your way into that?
Speaker 2: You know, go back to early twenty twenty, I mean
Speaker 2: every beat was a COVID beat pretty quickly too. Right
Speaker 2: at that point, I'd been covering, as you mentioned, investment
Speaker 2: banking Goldman Sachs for a couple of years and again,
Speaker 2: I'm probably pretty lucky. I had the sense at the
Speaker 2: time that maybe that story was at least that chapter
Speaker 2: of it was a bit played out. You know, that
Speaker 2: February March market started to go. I mean it started
Speaker 2: as a financial story, I guess is the how I
Speaker 2: got involved, which is that markets woke up to it
Speaker 2: very quickly, and things got hairy very fast, and basically
Speaker 2: every reporter at the Wall Street Journal at the time
Speaker 2: was became a COVID reporter.
Speaker 1: That's interesting. So when did you get a sense that, hey,
Speaker 1: this COVID thing isn't just another flu. There's something an
Speaker 1: order of magnitude more significant than what's usually your background story.
Speaker 1: Forty thousand people die from the flu every year in
Speaker 1: the US. Anyway, when what was it clear to you
Speaker 1: as a reporter this wasn't the usual flu.
Speaker 2: I won't say that it was ever clear to me
Speaker 2: from the health perspective. I'm not a health expert, but
Speaker 2: you know, you.
Speaker 1: Would see these heads even from a business perspective, right, So.
Speaker 2: I think really what happened was and I tried We'll
Speaker 2: talk about the book in a bit, but I tried
Speaker 2: to kind of recreate that that slowly and then all
Speaker 2: at once feeling right if you remember, you know a esque. Yeah,
Speaker 2: but you know, markets peaked, you know, would turn out
Speaker 2: to be a peak on I think February eighteenth or nineteenth. Right,
Speaker 2: things are, you're starting to see it a little bit
Speaker 2: in the repo market, You're starting to see commercial paper
Speaker 2: credit get a little rickety, spreads are widening, stocks are
Speaker 2: still kind of hanging on. And then it was really,
Speaker 2: you know, the last couple of days of February and
Speaker 2: the first week of March where I mean, things just
Speaker 2: went crazy. And I remember, you know, to give you
Speaker 2: a sense of you know, the fact that I'm trying
Speaker 2: not to Monday morning quarterback this stuff. I was coming
Speaker 2: back from a family vacation on March eighth in the
Speaker 2: in the Gulf and sitting there not a mask in site.
Speaker 2: I remember my sister in law had stolen some extra
Speaker 2: wet naps from Chick fil A, like wiping down the
Speaker 2: airline seat, feeling a little foolish doing it. And so
Speaker 2: came back to the office on a Monday Wednesday. We
Speaker 2: were told, you know what, we're gonna try and work
Speaker 2: from home on Thursday. This is Thursday, March twelfth. Uh huh,
Speaker 2: never went back.
Speaker 1: Wow, that's unbelievable.
Speaker 2: So I mean, that's how quickly this happened.
Speaker 1: I have a vivid recollection of my sister lives in
Speaker 1: the city. I live in the Burbs, and she was
Speaker 1: out visiting late February and we had gone to Target. Hey,
Speaker 1: as long as you're out here, let's swing by Target.
Speaker 1: And I never really go to Target post pandemic. It's
Speaker 1: all delivered. But at the time we were walking through Target,
Speaker 1: there's no toilet paper, there's no bleach, there's no this
Speaker 1: is February, this isn't March. And that was my first, Hey,
Speaker 1: something's going on. But it turns out in the book
Speaker 1: lots of companies had a much earlier sort of lead
Speaker 1: on something bad, something wicked. This way comes and it's
Speaker 1: not the usual. Tell us a little bit about that,
Speaker 1: you know.
Speaker 2: I start the book kind of an earnest at Davos
Speaker 2: twenty twenty, which will to me just go down as
Speaker 2: like the most absurd gathering of human beings right in history.
Speaker 2: And you know, it's this private dinner that's actually being
Speaker 2: hosted by my ven employer at Wall Street Journal, though
Speaker 2: I was not invited. They don't let the reporters into
Speaker 2: the fun stuff. But it's a bunch of CEOs with
Speaker 2: Steven Manuchin, the Treasury Secretary, and they're all yacking about this.
Speaker 2: The big theme that year, as it often has been
Speaker 2: since then, was environment esg and they're all talking about
Speaker 2: the kind of corporate babble that you hear at these things.
Speaker 2: And Steven Manuchin, the Treasury Secretary, stands up and says, you, guys,
Speaker 2: like you're looking at the wrong thing. There is a
Speaker 2: city of eleven million people in China that's on lockdown.
Speaker 2: This is the end of January of twenty twenty. And
Speaker 2: I start there because you know, in my reporting, these
Speaker 2: are people who should have had they the best line
Speaker 2: citing the world. They run global businesses, they've got regulators
Speaker 2: and government officials on speed dial. They sometimes are regulators
Speaker 2: and government officials, and they were totally blindsided. And you know,
Speaker 2: there's two ways to look at that. One as like celebrities,
Speaker 2: they're just like us, right, like these guys bumped along
Speaker 2: in the dark, just like the rest of us. The
Speaker 2: other is, I don't know, I found it a little unsettling.
Speaker 2: These are people who really should be able to see
Speaker 2: around corners. They're paid a lot of money to see
Speaker 2: around corners, and most of them didn't.
Speaker 1: Most of them didn't, but a few did. And I'm
Speaker 1: fascinated in the book, and we'll get into the details
Speaker 1: how some companies in different sectors they were able to
Speaker 1: see a little bit around corners. Starting with the airlines,
Speaker 1: they were getting cancelations long before everybody shut down. They
Speaker 1: had a sense, hey, something is a little different here.
Speaker 1: You talk about hotels, Airbnb, and then the banks were
Speaker 1: having people draw down their line of credit weeks and
Speaker 1: weeks before things really got got bit. So that's the question,
Speaker 1: who had the earliest read, who was hip as to
Speaker 1: what was going on? And what was their response.
Speaker 2: In my reporting, Actually, someone you didn't mention I think
Speaker 2: had the earliest beedn That was Bill Ackman.
Speaker 1: That literally next question of Persian Square Capital. Yeah, who
Speaker 1: got very nervous very early. Yeah.
Speaker 2: So Bill a bit of a germophobe, but he you know,
Speaker 2: in mid February, he has been reading. He's a voracious
Speaker 2: consumer of everything's kind of funnel to him and internalizes
Speaker 2: it in these investment vcs, and he is starting to
Speaker 2: get very spooked. In late January, mid February, he goes
Speaker 2: to London School of Economics in mid February, gives this
Speaker 2: talk and is asked about the coronavirus, and as he's
Speaker 2: sort of getting ready to answer, this kid in the
Speaker 2: front row just like very innocently coughs or something and
Speaker 2: Bill kind of like leaves, yeah, jumps and it's one
Speaker 2: of those like dumb little things that we would all
Speaker 2: kind of you know, later you would look back and
Speaker 2: be like, oh, that's what did it for me? And
Speaker 2: he comes back and says, Okay, I think we are
Speaker 2: dramatically underestimating this. And so the key components of any
Speaker 2: investment are like fesis, expression and timing right, and so
Speaker 2: he says, I think the market is not aware of
Speaker 2: the risks here. Okay, how do I express it? And
Speaker 2: most people think of Bill his bread and butter business,
Speaker 2: as activist concentrated stock investing, but he's a bit of
Speaker 2: a background in macro two back from seven oh eight,
Speaker 2: and he actually decides to do this in the credit markets,
Speaker 2: where spreads are incredibly tight, investors are assigning basically no
Speaker 2: risk premiums to corporates at were governments or junk over
Speaker 2: investment grade. And he said, all right, we when things
Speaker 2: get bad, that's where it's going to blow out, and
Speaker 2: he shorts the entire credit market. And it only takes
Speaker 2: about two and a half weeks for people to realize
Speaker 2: that he is right and he's holding an incredibly valuable
Speaker 2: piece of paper. Ends up turning about twenty seven million
Speaker 2: dollars of SWAT premiums into two billion plus and profit.
Speaker 1: I really like the way you tell this tale from
Speaker 1: multiple perspectives, multiple storyline, lots of different leading characters. What
Speaker 1: led to that approach?
Speaker 2: I mean, at heart, I'm a narrative journalist. I like
Speaker 2: to tell stories and collect facts and present them in
Speaker 2: ways that people can understand and grab onto. But really
Speaker 2: the origin story of the book was I had done
Speaker 2: a story for the Wall Street Journal that published the
Speaker 2: first Saturday in April, and it was a TikTok day
Speaker 2: by day of the month of March, and it feeds
Speaker 2: from you know, lots of colleagues around the newsroom, and
Speaker 2: it was day by day from the seat of it
Speaker 2: was the month that the economy shut down. We've never
Speaker 2: seen it before. We thought that was an important story
Speaker 2: to tell, and it's you know, two dozen CEOs, investors,
Speaker 2: policymakers from like all across the economy, and it was
Speaker 2: just incredibly clear coming out of that that that we
Speaker 2: just barely scratched the surface, right, that this was fundamentally
Speaker 2: just like the kind of yarn that reporters dream of,
Speaker 2: which is it's narrative, it's tense, there's a lot of drama,
Speaker 2: there's high stakes. Things really mattered, and so that's I
Speaker 2: think where the germ sort of I've got planted. I
Speaker 2: spent a couple of weeks, you know, talking to you know,
Speaker 2: publishers and agents as one does, and try to write
Speaker 2: a proposal and see if anyone would buy it. And
Speaker 2: then they did. And next thing I knew it was
Speaker 2: you know, summer fall of twenty twenty and I was
Speaker 2: at a book deal.
Speaker 1: Huh. Really really interesting. So so you choose a number
Speaker 1: of specific industries or did you choose them? Did they
Speaker 1: self selected? It's kind of apparent some of these industries
Speaker 1: are going to be the first to really succumb to
Speaker 1: an economy shutting down. How did you decide who were
Speaker 1: the key players to focus on, what sectors to really
Speaker 1: delve into.
Speaker 2: Yeah, this is you know, most reporters who write a book,
Speaker 2: they have a beat and a huge thing happens on
Speaker 2: their beat and they crush it, and then they write
Speaker 2: a book about it, right, think about.
Speaker 1: Whatever your bad blood is bad blood.
Speaker 2: Perfect example, John carry Rout at the Journal crushes the
Speaker 2: there are no story and says, of course I should
Speaker 2: write a book. This was a little different, right, This
Speaker 2: is nobody's beat at the Journal. Elsewhere is every company
Speaker 2: on the planet, in the entire economy. So and in part,
Speaker 2: I think the reas that I thought I was maybe
Speaker 2: in a good position to do it was I thought
Speaker 2: it would be more of a financial story. If you
Speaker 2: remember early on, right, the markets are going crazy. There's
Speaker 2: you know, people are always kind of solving the next
Speaker 2: crisis by looking at the last one, and there's this
Speaker 2: concern that it's going to be two thousand and eight
Speaker 2: all over again. And I thought the banks would be
Speaker 2: aniger piece of it, honestly. Then they it turned out
Speaker 2: really to be a story about a crisis in the
Speaker 2: real economy. So then you know that summer you're looking around,
Speaker 2: you're thinking, okay, like some combination of what is important.
Speaker 2: So some obvious ones there. Airlines obviously important, right, travel
Speaker 2: obviously important, finance important. It was just a little unclear
Speaker 2: then how that would all shake out. I know I
Speaker 2: wanted a big sort of multinational industrial manufacturer, manufacturers, yahure,
Speaker 2: and I wanted people ask me, why is Airbnb in
Speaker 2: the book if you have Hilton, and did you want
Speaker 2: a tech company? And the truth is, at that point
Speaker 2: I really didn't think, and I think it ultimately was
Speaker 2: the right call. I'm not sure that tech had a
Speaker 2: uniquely interesting pandemic. No, despite the reason that we kind
Speaker 2: of all got through it. I'm not sure Apple had
Speaker 2: like an incredibly compelling story.
Speaker 1: Right, if anything of any sector that was able to
Speaker 1: sort of all right, everybody go work from home. You
Speaker 1: all have laptops and high speed connections. Do you have
Speaker 1: to do? They seem to almost take it in stride.
Speaker 2: Tech was the scaffolding on which the pandemic story hung,
Speaker 2: I think, but not to me anyway at the time,
Speaker 2: an important part of it. But I did want a
Speaker 2: company that was in addition to kind of making sure
Speaker 2: that you're checking boxes on sectors and really getting a picture.
Speaker 2: At the end of the day, books are character driven
Speaker 2: these kind anyway, and so you're gonna end up sort
Speaker 2: of essentializing these CEOs into archetypes that are carrying a
Speaker 2: narrative that's sort of you know, buzzing underneath feed the
Speaker 2: story that they're telling.
Speaker 1: And I will have a lot of great characters as
Speaker 1: CEOs and great storylines. David Solomon at Goldman you have
Speaker 1: the CEO of Hilton Delta American Airlines, like work your
Speaker 1: n Airbnb, Brian Tranchesky.
Speaker 2: If I wanted a CEO who was younger, I wanted
Speaker 2: a company that was in a different place in their
Speaker 2: life cycle, and Rbnb was on the verge of going public,
Speaker 2: which is just such a naturally high stakes thing. And
Speaker 2: you know, we can talk about the Airbnb story, but
Speaker 2: I fully thought they were left for dead, which is
Speaker 2: why I'm a journalist and not an investor.
Speaker 1: So when you're selecting these storylines, when you're choosing these characters,
Speaker 1: how obvious are some of these because these are all
Speaker 1: big personalities, big egos. There's no shrinking violets amongst any
Speaker 1: of the people you're writing about. Was that part of
Speaker 1: the reason you selected them? Tell us a little bit
Speaker 1: about the thought process.
Speaker 2: You know, you never know why some I mean this
Speaker 2: is true at a daily journalism job or a book
Speaker 2: you never really know why anyone is talking to you,
Speaker 2: and you know again, because of the way this book
Speaker 2: came together, I had to kind of go out and say,
Speaker 2: here's what I'm trying to do. I think you have
Speaker 2: a good story to tell. By the way that you
Speaker 2: shouldn't assume that any of the people in the book
Speaker 2: spoke to me. Their stories are the ones that I tell.
Speaker 2: But it's a little bit of a kind of layer,
Speaker 2: all right, like one of the important stories where can
Speaker 2: I get people to talk to me? And then you
Speaker 2: kind of throw things overboard where like one or both
Speaker 2: of those isn't quite working.
Speaker 1: So I have to interrupt you here. I assumed you
Speaker 1: spoke to all of these people. It looks like you
Speaker 1: have amazing access people. There's a lot of details that
Speaker 1: are very very specific that someone would say, and it
Speaker 1: keeps coming up to food. Oh, they're out in mon
Speaker 1: talk and they have a lobster role. Or he's stuck
Speaker 1: in a hotel and he's eating the same sort of
Speaker 1: food that comes in every day because it's him and
Speaker 1: a bunch of Saudi's stuck in a DC hotel, those
Speaker 1: sort of things. It looks like these are very specific
Speaker 1: recollections from individuals who appear to have spoken to you.
Speaker 2: Yeah. Look, I mean I think readers can draw their
Speaker 2: own conclusions. I think what I had said when I
Speaker 2: approach people was, you know, here's how I want to
Speaker 2: tell this story, which is very voice of God, very
Speaker 2: fly on the wall. I think, just from a reader,
Speaker 2: that's really what you want. You want to be jumping
Speaker 2: back and forth between live quotes and old things, and
Speaker 2: you're trying to tell a story. And I think that
Speaker 2: gives people the safest space to speak.
Speaker 1: But you did speak to most of these people.
Speaker 2: I certainly everyone in the book had ample opportunity to
Speaker 2: talk to me, and many of them took it.
Speaker 1: Oh that makes a lot, makes a lot of sense.
Speaker 1: Were there any narratives that you want to cover but
Speaker 1: didn't like, Any companies or sectors or space that you thought, oh,
Speaker 1: this could be a great thread and for whatever reason,
Speaker 1: it never came together.
Speaker 2: Yeah, there's two buckets of those. I would say, like
Speaker 2: you will notice and like, I think it's better to
Speaker 2: just address it straight on. There's not a cruise company
Speaker 2: in the book. There's not a meat packing there's not
Speaker 2: like a what we would consider to be like bad
Speaker 2: or at least slightly dubious actors. You at a shock,
Speaker 2: and like, look, I never covered those industries, and a
Speaker 2: challenge of a project like this is you just you
Speaker 2: can't source up at twenty places in six months. It's
Speaker 2: not how journalism works. Took me years to get the
Speaker 2: relationships that I have now. And so yeah, there is
Speaker 2: a little bit of self selection there, which is like
Speaker 2: total fair criticism of the project if you're making one.
Speaker 2: And then there were some that I pursued that ultimately
Speaker 2: just I didn't think we're additive. So Macy's is a
Speaker 2: good example, kind of thought they would have a more
Speaker 2: interesting pandemic than they did. I got to the end
Speaker 2: and we sort of my editor and I kind of
Speaker 2: looked at the storylines, like what are we doing here?
Speaker 2: And we threw one or two overboard.
Speaker 1: Retail just is nothing. Hey, there's no retail order online.
Speaker 2: You know what it was? Honestly, it was yes, And
Speaker 2: I think that story is going to take a couple
Speaker 2: of years to play out, and I don't I couldn't
Speaker 2: say at the time. And that's a hard thing about
Speaker 2: writing a book, particularly when you come from the world
Speaker 2: of journalism, particularly if you come from a place like
Speaker 2: the Wall Street Journal, which is that you're supposed to
Speaker 2: have a point of view on this stuff, and you're
Speaker 2: supposed to be able to say something definitive. And it
Speaker 2: felt too early to me at the time. Yeah, it
Speaker 2: felt too squishy.
Speaker 1: Huh. Really interesting. So let's talk a little bit about
Speaker 1: Bill Ackman. He not only was early in seeing the crisis,
Speaker 1: but that bet he made ended up netting Pershing square
Speaker 1: two billion dollars. That's a hell of a trade. I
Speaker 1: don't know why we haven't heard more about that.
Speaker 2: Look, say what you want about Bill. I mean he's
Speaker 2: a controversial figure and he doesn't always get it right,
Speaker 2: and that is one of the best trades of all time. Yeah,
Speaker 2: that's great, and you know it's it's a pure trade.
Speaker 2: He saw something that people didn't. He was right on
Speaker 2: the thesis. He found a place to express it efficiently, right,
Speaker 2: I mean absolutely nailed the time. I mean you're talking
Speaker 2: about I don't like you could do the math. It's
Speaker 2: got ten thousand percent return in like three weeks. I
Speaker 2: mean it's I mean.
Speaker 1: Really crazy well number. So I love that he reaches
Speaker 1: out to different people like Warren Buffin and Bill Gates.
Speaker 1: Anybody ever get back to him, I don't think so.
Speaker 2: I mean that's The other thing about Bill, which is,
Speaker 2: you know, I can say straight face, like, very impressive
Speaker 2: piece of financial footwork there, but also is a little
Speaker 2: is flailing a little bit, is a little vulnerable is
Speaker 2: you know? The thing about Bill Lackman, and I write
Speaker 2: about this in the book, is he has this tendency
Speaker 2: to take what our investment thesis and turn them into
Speaker 2: holy wars. You'll remember years ago he had a proxy
Speaker 2: fight it Target and I think it was invoking JFK
Speaker 2: and his speech to shareholders.
Speaker 1: It's really target at least the battle with Carl Icon
Speaker 1: over what he describes as a pyramid scheme. You could
Speaker 1: say that's.
Speaker 2: A whole but also even that, you know, tears in
Speaker 2: his eyes talking about taking the battle to the ends
Speaker 2: of the earth like it and you know what, they
Speaker 2: are genuinely felt. These are peces that become He wraps
Speaker 2: himself in the flag of them, and he totally did
Speaker 2: it here, right. He takes to Twitter for the first
Speaker 2: time in you know, year or two and says, mister President,
Speaker 2: like we can solve this right in jets himself right
Speaker 2: in the middle of this thing. Ends up parlaying that
Speaker 2: into a CNBC interview where he.
Speaker 1: Rarely excortiated for even though he had already covered his
Speaker 1: short and moved to.
Speaker 2: The long side exactly right now. In fairness, live television
Speaker 2: is not a place that is super comfortable with a
Speaker 2: lot of nuance, right. But what he did was he
Speaker 2: went on television and said hell is coming, and and
Speaker 2: the stock market went down. And I think Mike Novagrats
Speaker 2: was like, get him off the air, right, I mean
Speaker 2: it was, but you're right, he I think ultimately, and
Speaker 2: I spent a lot of time on this because I
Speaker 2: didn't want to carry anyone's water. He didn't do anything wrong.
Speaker 1: Yeah, No, he really was fascinating.
Speaker 2: He was bullish at that point.
Speaker 1: Yeah, he had pocketed the two billion and said we're
Speaker 1: going to go the other way because I think eventually
Speaker 1: the Fed and the White House will do the right
Speaker 1: thing here.
Speaker 2: Yes, And that's the way he thinks, right. The answer
Speaker 2: to him was so obvious that someone was going to
Speaker 2: do it and rborway the trade that he saw, you know, so.
Speaker 1: He covers the short, goes long, and yet there's a
Speaker 1: ton of criticism that he's talking down the market because
Speaker 1: he's short. He was no longer short.
Speaker 2: Yeah, he just wasn't that's just not true.
Speaker 1: So in the book and my recollection of the period
Speaker 1: is the criticism seemed to be not just unfair but
Speaker 1: very personal. How did he respond to the sort of
Speaker 1: public flaying that he got on Twitter?
Speaker 2: Actually responded pretty responsibly, put out I think two shareholder
Speaker 2: letters about a week apart in late March, and actually
Speaker 2: like did what no portfolio manager usually love doing, which
Speaker 2: is he deconstructed the trade. Right, he said, here's what
Speaker 2: we bought, here's what we bought, here's what we paid.
Speaker 2: Here was my positioning more or less. When I went
Speaker 2: on the air, I thought handled it the right weight.
Speaker 2: Got a little loss in all the noise, and sure,
Speaker 2: you know.
Speaker 1: I mean, at that point, the world is going to hell,
Speaker 1: and who cares about a letter from a hedge fund
Speaker 1: manager explaining why he wasn't joy boning the market down?
Speaker 1: But still a great trade that he never really got
Speaker 1: full credit for, other than the two and twenty, which
Speaker 1: is not a terrible thing.
Speaker 2: And and you know most of the money is his though,
Speaker 2: yeah he's any anymore.
Speaker 1: Right, right? That happens with a lot of hedge funds.
Speaker 1: And so even better than the twenty is the two billion.
Speaker 1: It's not a bad, bad week's work or bad months work. Right.
Speaker 2: The other thing about Bill, I don't know if you
Speaker 2: want to get to this.
Speaker 1: Leep, yeah, no, I love tell more, tell.
Speaker 2: Me you know. He called this thing coming and going right.
Speaker 2: We talked about the coming on the way out back
Speaker 2: before inflation was was really a thing. He does what
Speaker 2: any sort of freshman economic student could do, says, I
Speaker 2: don't know, man, like a lot of pen up demand here,
Speaker 2: a lot of money most people buy and large and
Speaker 2: this is true at kind of every income level. Came
Speaker 2: out of the pandemic wellfare, then they went into it
Speaker 2: and just a total show on the supply side. We're
Speaker 2: going to have massive inflation here. And he put on
Speaker 2: a train. He was a little earlier on that one.
Speaker 2: His actual IRR is not quite as good, but heils
Speaker 2: like another two billion dollarge.
Speaker 1: There really weren't a lot of people who were who
Speaker 1: were correct about that. Jeremy Siegel was one for the
Speaker 1: same reasons, and and Ackman was one.
Speaker 2: So kudos called it coming and going I will note
Speaker 2: that when he went back to doing what he is
Speaker 2: ostensibly paid to do, which is to take deeply researched
Speaker 2: positions in single name stocks. He lost a ton of
Speaker 2: money on Netflix, so.
Speaker 1: Which is which is kind of funny because did he
Speaker 1: lose it on the way up and did he lose
Speaker 1: it on the way down?
Speaker 2: You know, I'd have to go back and look. My
Speaker 2: recollection is that he came out publicly not an activist position.
Speaker 2: So we think this is a great company and literally
Speaker 2: did it right at like peak streaming, Like the next
Speaker 2: quarter Netflix announce it's like first subscriber either slowing growth
Speaker 2: or loss, I don't remember, uh, and sort of kicked
Speaker 2: off this now two year kind of slow bleed of peak.
Speaker 1: Streaming happens, Hey happens. You can't You can't bat a
Speaker 1: thousand in this business, right, You make two billion dollars
Speaker 1: on the pandemic, you make two billion dollars on the
Speaker 1: inflation call at.
Speaker 2: A cost of about two hundred million if I remember right, right.
Speaker 1: And so then you lose a couple of bucks on Netflix.
Speaker 1: You know this too shall pass? Yes, So wh let's
Speaker 1: talk a little bit about Yolo. You only live once.
Speaker 1: That means go out and buy the crappiest meme based
Speaker 1: companies there are discuss.
Speaker 2: I mean no, it's it's such an important part of
Speaker 2: the pandemic story because I think, I mean, it's just
Speaker 2: so fueled by it, right, like all of the very
Speaker 2: normal human behaviors came to an end, and there's that
Speaker 2: a a lot of money. As we've discussed, these these
Speaker 2: Stimmius stimulus checks and just this like you can't go
Speaker 2: to sports game bat.
Speaker 1: On sports, no betting, no casino.
Speaker 2: Stock market becomes a casino like most you know, stock
Speaker 2: markets are largely momentum driven, which is weird if you
Speaker 2: think about it, right, Like a stock goes up, it's
Speaker 2: presumably a little more overvalued than it was before it did.
Speaker 2: You should sell it, right, say, if it goes down,
Speaker 2: and instead you end up having these waves that fuel
Speaker 2: themselves and you know, your professional wealth manager, you chuck
Speaker 2: to investors, they will say that underpinning it is some
Speaker 2: basic fundamentals of you know, corporate analysis and management. Not
Speaker 2: really and actually the meme stock stuff just didn't even pretend, right,
Speaker 2: it was so nakedly goofy. And as you know, Spencer
Speaker 2: wrote this great book. Certainly some people made some money,
Speaker 2: but like ultimately a giant cell phone by that entire community, right.
Speaker 1: Right, no doubt about it. And it all started with
Speaker 1: game Stop and read it and Wall Street bets and
Speaker 1: that became like a self fulfilling prophecy of a small
Speaker 1: company with a huge excess short position in it, which
Speaker 1: meant it was primed for a squeeze. And then these
Speaker 1: people discovered Gamma trades. Hey, we can buy out of
Speaker 1: the money call options and force these people to cover
Speaker 1: their shorts and you know, to take a let's be honest,
Speaker 1: it's a junk company, right. Wait, you're selling video games
Speaker 1: in retail shops in malls. Who cares to take that
Speaker 1: from single digits to multi triple digits. That's a hell
Speaker 1: of an orchestrated short squeeze.
Speaker 2: And it was interesting too because you know, retail had
Speaker 2: just been getting less and less relevant as a market force.
Speaker 2: Go pass it totally, like you have a remember IPOs
Speaker 2: back in the day, And that's some things used to
Speaker 2: win them by saying we've got retail right, give us
Speaker 2: that allocation doesn't matter at all anymore, and you know,
Speaker 2: trying to see sort of retail reassert themselves. And I
Speaker 2: think it also I don't know whether they were both
Speaker 2: just riding the same wave or one fuel the other,
Speaker 2: but had that the same sort of populous political establishment, right, right,
Speaker 2: sort of putting your thumb in the eye of the
Speaker 2: political establishment. Same thing in the financial establishment, and.
Speaker 1: Ironically ironically right, it's like, wait, you're gonna all this
Speaker 1: Robinhood is a public company. They're The way they make
Speaker 1: money with their free trades is they sell it. Payment
Speaker 1: for order flow is what it's called. So if you
Speaker 1: don't like the big hedge funds like Citadel or Millennial,
Speaker 1: you're putting money in their pocket.
Speaker 2: Yeah, what's funny about And I'm not an expert on
Speaker 2: payment for or flow, but you know, there's the way
Speaker 2: that I think people commonly look at it is like
Speaker 2: your trades are being sold and people are trading ahead
Speaker 2: of you. That's not really why people buy order flow.
Speaker 2: They do it because it's random and actually uninformed. The
Speaker 2: sense is that retail doesn't know anything that Citadel doesn't,
Speaker 2: so they want that flow to kind of balance stuff out,
Speaker 2: and just well it's val.
Speaker 1: Right, it's volume. If you're getting a cent a share
Speaker 1: on billions of shares, that adds up totally.
Speaker 2: I mean just to say that the deck isn't in
Speaker 2: many ways stacked against retail, But I don't think it's
Speaker 2: some kind of like all it's nonsuming conspiracy. Ken Griffin
Speaker 2: is direct from Miami Beach or whatever.
Speaker 1: Right, if you discovered that the deck is stacked against
Speaker 1: the individual investor in twenty twenty, you're a century late
Speaker 1: to the part.
Speaker 2: But in some ways, actually, it's never been friendlier really,
Speaker 2: So you're talking about, you know, if you want to
Speaker 2: have a basic if you want access to basic investment products,
Speaker 2: it's never been friendly or cheaper, easier.
Speaker 1: Free to trade. You could buy the S and P
Speaker 1: five hundred for four basis points totally. And so the
Speaker 1: best way to beat people at their game is don't
Speaker 1: play their game. Play a different game.
Speaker 2: And they made up this insane game and then somehow
Speaker 2: won it and then lost at it. Everyone seemed to
Speaker 2: lose yours. But no, but I think it was I mean,
Speaker 2: it wasn't strictly a pandemic story, except that, you know,
Speaker 2: if you were sitting in March of twenty twenty and
Speaker 2: you're watching the Dow go from thirty to twenty two
Speaker 2: right in the course of a couple of weeks, the
Speaker 2: idea that it would be hitting fresh highs again like
Speaker 2: by the end of the year seemed insane. And it
Speaker 2: was just such a good reminder that like there was
Speaker 2: no ability to forecast this.
Speaker 1: I thought this was totally a pandemic story. People are
Speaker 1: stuck at home, they don't have the usual outlets, a
Speaker 1: lot of pent up energy, a lot of pent up cash,
Speaker 1: and suddenly this comes along. I loved Investor TikTok because
Speaker 1: there was not a bigger collection of people that you
Speaker 1: you could see the train crash coming, like get out
Speaker 1: of the way, and they didn't want to hear. People
Speaker 1: literally said to them, you guys don't understand what you're
Speaker 1: doing and you're going to get hurt. And your old
Speaker 1: school was the pushback, and then all of those people,
Speaker 1: with very few exceptions got demolished.
Speaker 2: Well, I think it's a pandemic story in two ways.
Speaker 2: Right to your point, people are bored. They are they
Speaker 2: have a lot of cash sitting around, but they could
Speaker 2: have bought the fortune fifty with it.
Speaker 1: They did not.
Speaker 2: For yeah, well, but even more than that, they were angry,
Speaker 2: and there was a lot of angst and they wanted
Speaker 2: they were they were fed up with authority. I mean,
Speaker 2: a huge story coming out of the pandemic is, you know,
Speaker 2: I think fueled by it is this declining trust in
Speaker 2: institutions like why by the S and P fifty when
Speaker 2: you can resurrect you know, some dead retail store from
Speaker 2: your youth. I mean, there was a real political edge
Speaker 2: to it.
Speaker 1: I think that traces back decades or certainly at least
Speaker 1: to the financial crisis, and institutions have been seeing a
Speaker 1: decline and in fact, you know, we'll talk a little
Speaker 1: bit about the Trump administration later, but they very much
Speaker 1: captivated on the hell with the man. I'm anti establishment,
Speaker 1: Vote for me, no doubt about it. But let's talk
Speaker 1: about something else that was very related the Great Resignation.
Speaker 1: I have a pet theory. People stuck at home with
Speaker 1: cash cares act cash in industries they weren't happy about
Speaker 1: took the opportunity to upskill, to look for new jobs,
Speaker 1: to start their own businesses. New business formation in twenty
Speaker 1: twenty and twenty one were huge. What happened during the
Speaker 1: Great Resignation?
Speaker 2: I think it's two things. Like, to your point, yes,
Speaker 2: people we had all as cash. They also, like frankly,
Speaker 2: because they were spending more time with family, in part
Speaker 2: because a lot of people died. You start to kind
Speaker 2: of reassess what you care about in life and if
Speaker 2: you can afford it. Given the stimulus payments, then you
Speaker 2: might do that, But that's not the whole story because
Speaker 2: like those stimulus payments, a lot of estimates out there,
Speaker 2: it seems like probably two to two and a half
Speaker 2: trillion dollars of excess savings during the pandemic. Half of
Speaker 2: that maybe two thirds has been spent down. So like,
Speaker 2: if that's the whole story, then we'll see people go
Speaker 2: back to work very soon, you know, which ultimately wouldn't
Speaker 2: be the worst thing for the economy given where the
Speaker 2: labor work it is. But I think it's actually just
Speaker 2: like a little more complicated than that, which is and
Speaker 2: this is an economic book. I'm not a psychologist, but
Speaker 2: the pandemic was so weird and it was just such
Speaker 2: a reset for a lot of people.
Speaker 1: That's a great word. I've used that phrase. It was
Speaker 1: a great reset where people they rethought their jobs, they
Speaker 1: rethought their relationship between their work life balance, they rethought
Speaker 1: they're commute. Let's talk about hybrid working and the return
Speaker 1: to office.
Speaker 2: I think that's the most lasting change to come out
Speaker 2: of this. I mean people have talked about, you know,
Speaker 2: the digitization of the economy. Actually a lot of that
Speaker 2: to me is overblown. Like if you look at for example,
Speaker 2: years years old totally and I think the pandemic pulled
Speaker 2: forward stuff more than anything else. If you look at
Speaker 2: like exactly retail, e commerce is a percent of retail,
Speaker 2: like it's soreed during the pandemic, but now is basically
Speaker 2: back on the trend line that it would which.
Speaker 1: Was which is dramatically since the late nineties. But you know,
Speaker 1: but the idea that.
Speaker 2: That was like a total stratosphere change, I think is
Speaker 2: not true. The thing that I think is really lasting
Speaker 2: is the relationship between between capital and labor, right between
Speaker 2: management and their employees. You know, I do tell this
Speaker 2: story in the book. You referenced it early on. And
Speaker 2: you've got the CEO Goldman Saxe, who's out in the
Speaker 2: Hampton's on a Friday. Uh, I don't think he was
Speaker 2: using that trip, but I don't have access to the schedule.
Speaker 2: But you know, is waiting in the line at I
Speaker 2: think it's at the Montac Lobster Club. Jury.
Speaker 1: Yeah, remember this, it's always food and cracked me up.
Speaker 1: I noticed that on regular basis.
Speaker 2: I to check that instinct to myself. But and he
Speaker 2: was waiting for a table and a young woman comes
Speaker 2: up to him and says, mister Solomon, I work for you,
Speaker 2: an analystic goldman and me and like six of my
Speaker 2: colleagues points over to some table. We all took the
Speaker 2: day off and came to the beach.
Speaker 1: And some of that is mark smart thing to say
Speaker 1: to the CEO of he was infuriated.
Speaker 2: I tell that story because I think it like sets
Speaker 2: the table for this fight that we are somehow now
Speaker 2: two years later, still having I am. I would say
Speaker 2: the risk of being called like a capitalist show, I'm
Speaker 2: somewhat sympathetic to CEOs here who for a lot of
Speaker 2: the pandemic, especially in places like New York, are walking
Speaker 2: around the city on the weekends and seeing the bars
Speaker 2: packed and then seeing their office is empty on Monday.
Speaker 2: So like the it's not safe for us to come in,
Speaker 2: you are making us risk our lives, like was certainly
Speaker 2: true in the beginning, and you'll remember an outbreak on
Speaker 2: the I think equity trading floor, Morgan, Yeah, where genuinely
Speaker 2: like there were places that were not safe, and I
Speaker 2: talk in the book a lot about the New York
Speaker 2: Stock Exchange for that reason, But at some point that
Speaker 2: just wasn't true anymore. And you know, you talked about
Speaker 2: flexibility and reassessing your priorities, and that's totally fine to
Speaker 2: a point, but there's clearly some professional self indulgence that
Speaker 2: was baked in.
Speaker 1: Here's my pushback to that. Right, the US return to
Speaker 1: office is sixty percent, except in big metropolitan areas where
Speaker 1: it's fifty percent. In Europe it's almost ninety five percent.
Speaker 1: Why is that Their mass transit is much better, their
Speaker 1: cost of housing is much lower. You could live much
Speaker 1: closer to your work. My big takeaway from the pandemic
Speaker 1: is that commuting in America sucks, and sucks in a
Speaker 1: way that, oh my god, I'm not going to do
Speaker 1: this anymore unless I have to. And a lot of
Speaker 1: people decided. You know, it's amazing how we get used
Speaker 1: to something and you just don't question it. Lots of
Speaker 1: people have a two hour community to the office because
Speaker 1: they can afford a place in Rockland, or in Suffolk
Speaker 1: County or in mid New Jersey. Coming into New York
Speaker 1: as an example, and suddenly recapturing three four five hours
Speaker 1: a day, Hey, I don't care if I have to
Speaker 1: make twenty percent less, I'm not doing that.
Speaker 2: I think that I totally agree, though I'm not sure
Speaker 2: that that's a trade most people are willing to make
Speaker 2: right more than Stanley. You imagine, like lot of people
Speaker 2: maybe I'll have to be here, but we're going to
Speaker 2: pay you for where you live, and people like lost
Speaker 2: their minds about it. You know, there was a study
Speaker 2: a couple of months ago. I'd have to go pull it,
Speaker 2: but that I think I found that Americans has got
Speaker 2: like ninety three minutes back or something from work from
Speaker 2: home a day a day, and it you know, spent it.
Speaker 2: I think it was a little bit of a gender split,
Speaker 2: but like spent it, you know, a third to third
Speaker 2: to third on like work, personal life and caregiving and
Speaker 2: some other things. Right, And I don't remember the numbers.
Speaker 2: You could check me in Europe, but they were lower,
Speaker 2: and then in Asia they were like one hundred and
Speaker 2: twenty minutes. So there's some I'd be curious to see
Speaker 2: what happens if you overlay that. But I think there's
Speaker 2: this frog boiling thing, which is you're commute. As your
Speaker 2: life gets more complicated, to get older, you get wealthier,
Speaker 2: kind of just expands and it doesn't occur to you
Speaker 2: that that's weird to spend three hours every day because
Speaker 2: everybody does it, and then you don't do it anymore,
Speaker 2: and you realize this is great thing.
Speaker 1: That the thing that I found so amusing in the
Speaker 1: first on a couple of quarters of the pandemic, the
Speaker 1: productivity numbers go through the roof. People are working longer hours,
Speaker 1: and they just seem to be doing a better job
Speaker 1: at first.
Speaker 2: Yes, but then they start to And I think it
Speaker 2: was Jamie Diamond last year who said, you know, as
Speaker 2: you can imagine, we keep quite close tabs in our
Speaker 2: employees and we noticed that productivity on Fridays is really
Speaker 2: love right, which like maybe we should have a four
Speaker 2: day work week. That's a totally note, so far over
Speaker 2: and totally not far off. There's actually a lot of pilots,
Speaker 2: mostly in Europe that are really interesting about this.
Speaker 1: I love the stories about the people who didn't take
Speaker 1: Fridays off. They took two jobs, and we're doing two
Speaker 1: full jobs, time jobs at once, and nobody knew a
Speaker 1: company figured out.
Speaker 2: Yeah yeah no. But I think to your point, journalism
Speaker 2: is an apprentice business, right. I learned how to do
Speaker 2: it by sitting next to people who are really good
Speaker 2: at it.
Speaker 1: The job is like that, right, but it's like very
Speaker 1: fair issue.
Speaker 2: A lot of businesses like that, right, Like you I
Speaker 2: would hear senior reporters on the phone, like learning how
Speaker 2: to talk to a source, you follow someone to a meeting,
Speaker 2: you know, you learn how to deal with a client.
Speaker 2: That stuff is soft and is really hard to do remotely.
Speaker 2: And I think, you know, I think what young people
Speaker 2: actually want is I think they're mostly okay going in,
Speaker 2: but they want real value. They don't Taco Tuesday. They
Speaker 2: want to say, if I'm here, I need to go
Speaker 2: to that meeting, right.
Speaker 1: Like collaboration, mentorship, training, trail.
Speaker 2: Places that you're seeing the most turnover with still some
Speaker 2: data on this. The other day are the why am
Speaker 2: I here? Jobs? Right, which is the ones where people
Speaker 2: never left or have to go in. They work an
Speaker 2: assembly line, they got to physically be there.
Speaker 1: They get that.
Speaker 2: And then the ones where people understand that they can
Speaker 2: be remote. I'm I'm often remote because I'm out meeting
Speaker 2: sources or traveling or working at home or whatever. It's
Speaker 2: the ones in the middle where they're like, why am
Speaker 2: I here? This is a job that I could very
Speaker 2: much do from home and I'm not getting any additional
Speaker 2: support or mentorship or encouragement, those the people who are quitting.
Speaker 1: My favorite story of that era was in the Washington
Speaker 1: Post about companies making people come into the office to do.
Speaker 2: Zoom calls well and right, because there's this sort of
Speaker 2: equity belief right that there's some and by the way,
Speaker 2: I think a lot of this where we're said, after
Speaker 2: the first promotion cycle, when people realize that there's a
Speaker 2: huge advantage and it's actually unfortunate. I think if you
Speaker 2: track these cohorts, because the people for whom flexibility is
Speaker 2: deemed to be the most valuable are frankly like women
Speaker 2: with kids, you know, minorities who have like much further
Speaker 2: commutes and tougher personal situations that they need more time
Speaker 2: to deal with. But I actually think it's going to
Speaker 2: work against them, which is that the people who can afford,
Speaker 2: you know, for a bunch of reasons to come in
Speaker 2: every day and see the boss and slap some backs,
Speaker 2: you're going to get going to get over promoted. And
Speaker 2: we're starting to see it now. We'll see how it
Speaker 2: shakes out in the commercial real estate market. But companies
Speaker 2: are upgrading their space but needing less of it, so
Speaker 2: trying to figure out how to actually right size your
Speaker 2: footprint and have an office to people want to be in.
Speaker 1: Yeah, that's absolutely true. It's fascinating. So I'm in the
Speaker 1: office yesterday and we have this new division that we launched,
Speaker 1: and we have people in from around the country, and
Speaker 1: it's like, wow, I forgot what was like to have
Speaker 1: twenty thirty people in an office that normally holds twenty people,
Speaker 1: but the past year has been eight, ten, twelve people.
Speaker 1: It's like everything's popping. We bring in lunch, it's this
Speaker 1: and that. Wow, this is kind of fun. I forgot
Speaker 1: how much fun it can be when you've an office
Speaker 1: full of people. We're more startup than established entity, so
Speaker 1: not everybody has that ability. I'm not sure how much
Speaker 1: i'd buy into the you must be here for culture.
Speaker 1: I've been hearing a lot of that lately. But the FaceTime,
Speaker 1: the collaboration, the mentorship, just the learning how companies operate,
Speaker 1: that's got to be a huge, huge aspect of this
Speaker 1: whole thing.
Speaker 2: I completely agree. And I mean, look, it's every generation
Speaker 2: kind of shakes their fists the next one. So these
Speaker 2: kids have no respect, they don't know how anything works.
Speaker 2: But I do think like losing two years of that
Speaker 2: if you were in your twenties starting out, like, yeah,
Speaker 2: there's a lot of just sort of like passive osmosis
Speaker 2: that happens.
Speaker 1: That you miss out on when you're remote. And you know,
Speaker 1: whenever we see like a zoom call with twenty thirty
Speaker 1: forty people on it, it's usually one person, maybe two
Speaker 1: people speaking, and it's wait, I have to give you
Speaker 1: my full attention for an hour. That seems like a
Speaker 1: lot for very little in return in terms of what
Speaker 1: you're learning the like that could be a if it's
Speaker 1: a half a page memo instead of fifty people spending
Speaker 1: an hour, isn't it more efficient to say important read
Speaker 1: this as opposed to.
Speaker 2: That's the old joke, right, this meeting could have been
Speaker 2: an email. This email could have been a slack. The
Speaker 2: slack could have not existed, Like whenever there's some inflation
Speaker 2: that happens, and I think it's good that some of
Speaker 2: that got dispensed with. But and look, maybe I'll be
Speaker 2: wrong about that, but like ar VR, it doesn't seem
Speaker 2: like a replacement to me, Like the replacement seem bad.
Speaker 2: Like if you don't want to have a meeting, don't
Speaker 2: have a meeting. We don't have a fake meeting, right.
Speaker 1: I'm with you on it. By the way, what you said.
Speaker 1: My colleague Mike Batnik had a hilarious tweet which was,
Speaker 1: most books should be magazine articles, most magazine articles should
Speaker 1: be tweets, and most tweets should be deleted, which I
Speaker 1: find to be I hope not this one. I hope
Speaker 1: this one justified. So just so you know, what I
Speaker 1: found so interesting about the book is it reads so
Speaker 1: we all went through this pandemic together. We all more
Speaker 1: or less experienced maybe eighty percent of the same stuff.
Speaker 1: The concern about what's going to happen with my job,
Speaker 1: what's gonna happen with the economy? Am I going to
Speaker 1: get sick? I'll never forget walking the dog around the
Speaker 1: block and watching a guy spray a package that was
Speaker 1: delivered with light sool? How long did we idiotically wash
Speaker 1: down our groceries like? There was a lot of confusion
Speaker 1: as to what was going on, So most of us
Speaker 1: had a very similar experience. What I really found entrancing
Speaker 1: about the book is, oh, there were a lot of
Speaker 1: people that had an incredibly more stressful, more at risk,
Speaker 1: higher level real economic catastrophe experience. Than I had, and
Speaker 1: you use their storylines and the characters of the CEO
Speaker 1: of Delta and American Airline and Airbnb and Ford and
Speaker 1: Hilton then on and on and Goldman Sachs to tell
Speaker 1: a story. I feel like I got to look behind
Speaker 1: the curtain of stuff that we all kind of suspected
Speaker 1: was going on during the pandemic, but most of us
Speaker 1: had no idea. And that's what made the book so
Speaker 1: interesting to me. It's like, oh, there was some serious
Speaker 1: ish going down as it's all unfolded.
Speaker 2: I mean, first all, thank you.
Speaker 1: Is that a fair description of the book?
Speaker 2: I hope.
Speaker 1: So.
Speaker 2: I mean, at some point you get so close to
Speaker 2: these projects you kind of can't see them. So it's
Speaker 2: always nice to hear it from readers. But you know,
Speaker 2: I think, well, just a high level one thing that
Speaker 2: I kind of wasn't aware of at the time was like,
Speaker 2: just how close it came to being really worse, right,
Speaker 2: really really bad? And in some respects, I just think
Speaker 2: the economic toll would have been worse if the pandemic
Speaker 2: itself was not quite as bad. Right, There is a
Speaker 2: sort of a thought experiment that you can do. We're like, okay,
Speaker 2: we've a pandemic that's half as bad, right, I'm not
Speaker 2: sure it generates the same reaction reaction same. You don't
Speaker 2: get six trillion dollars, you don't, you know, you get
Speaker 2: real divergence and outcomes, which ultimately I'll tell you a
Speaker 2: funny story that at some point the sub head of
Speaker 2: the subtitle of the book I think was fortune and
Speaker 2: Failure and Fortune and the pandemic Economy or something like that.
Speaker 2: At some point, I don't know, late it's twenty twenty one.
Speaker 2: Talking to my publisher, I was like, you know, Paul, like,
Speaker 2: not a lot of failure at the end of the day, right.
Speaker 2: I think corporate bankruptcies were like an all time low
Speaker 2: in twenty twenty.
Speaker 1: You had a handful of retailers, and a lot of
Speaker 1: it was mostly local, local restaurants and dry cleaners and
Speaker 1: things like that. But it wasn't the big company, no, right.
Speaker 2: And I think had the pandemic been just not as bad,
Speaker 2: you wouldn't have seen that incredible geyser of financial support.
Speaker 1: I have a vivid recollection of early twenty twenty of
Speaker 1: a Congress that was so divided that a bill was
Speaker 1: introduced to rename a library and they couldn't move it forward.
Speaker 1: And then the pandemic hits, and the biggest fiscal stimulus
Speaker 1: in history Cares. Act One passes. It's ten percent of GDP,
Speaker 1: It's over two trillion dollars. How did this massive fiscal
Speaker 1: stimulus come together in such a short period of time.
Speaker 2: On the economic side, I think the government did quite well.
Speaker 2: I actually think I'm sort of an undersung here on
Speaker 2: all this. To Steven Minichen, I think really deserves a
Speaker 2: lot of credit. And frankly, you know, before the pandemic,
Speaker 2: when he became Treasury secretary, he had obviously worked on
Speaker 2: Waltreet to come out of Goldman sacks. He ask people
Speaker 2: that there was like super high confidence that he was
Speaker 2: going to make his mark, and you know, a lot
Speaker 2: of jobs and Treasury remained unfilled. I mean, the administration
Speaker 2: was very chaotic.
Speaker 1: Very slow to fill across the whole board. Every every
Speaker 1: department was totally.
Speaker 2: And so this was like an understaffed financial regulatory apparatus
Speaker 2: run by someone pretty unknown that I'm not sure the
Speaker 2: Street specifically had a ton of confidence in, and I
Speaker 2: think really nailed it. So there's two pieces of this, right,
Speaker 2: There's the fiscal stimulus side, Congress, and look, nothing brings
Speaker 2: people together like a crisis. They are you know this.
Speaker 2: That's the other thing too, is that I tried to
Speaker 2: kind of get back in the book. You gotta remember
Speaker 2: early pandemic. It became this terrible, toxic, sludged Groundhog's Day forever.
Speaker 2: But it didn't start that way. It started out as
Speaker 2: as kind of a unifying, weirdly earnest moment of.
Speaker 1: Like genuine threat gineet.
Speaker 2: It was obviously important at the moment, and it felt
Speaker 2: that way, which is unusual, and I kind of wanted
Speaker 2: to try to bring people back to that moment that
Speaker 2: now sort of seems sort of sacharine and stupid that
Speaker 2: we banged pots out of windows, and you know.
Speaker 1: At the time it didn't see.
Speaker 2: Congress like on the steps. I mean, the whole thing
Speaker 2: was goofy.
Speaker 1: So you you have a little bit of criticis you
Speaker 1: both compliment and criticize the Trump administration, And we're talking
Speaker 1: about the key players. On the one hand, you have
Speaker 1: the Treasury Department, which really seems to be doing its
Speaker 1: best to hold things together. On the other hand, there's
Speaker 1: the White House and the CDC. How did both those
Speaker 1: groups do?
Speaker 2: Look, I don't think this is a partisan a political statement.
Speaker 2: But the White House did not cover themselves in glory here,
Speaker 2: and neither did the CDC, which, by you know, it's
Speaker 2: not an overly political organization. Right. Just the science was bad,
Speaker 2: and I don't think it was certainly not a conspiracy.
Speaker 1: The communication was bad. Also, it was very confused, right, yeah, exactly.
Speaker 1: I always like to tell people if you don't think
Speaker 1: you should wear a mask whenever you have surgery, tell
Speaker 1: everybody in the operating room don't bother with the masks.
Speaker 1: They don't do anything, right.
Speaker 2: Yeah, yeah, Look, I mean there were plenty of great
Speaker 2: books written about the Trump White House, and to Washington
Speaker 2: Post reporters wrote a great book about the health response itself.
Speaker 2: Schulie read looking at sort of the world that I know.
Speaker 2: The economic side, I think did a really good job
Speaker 2: with a couple of important caveats, the first one of
Speaker 2: which is the spicket was open too wide for too long.
Speaker 2: That last round of stimulus AID in was it April
Speaker 2: of twenty one pretty clearly unnecessary both from like a
Speaker 2: household wealth perspective and actually, just the other day I
Speaker 2: did a story looking back at the airline AID and
Speaker 2: very clearly that last round of aid totally unnecessary. The
Speaker 2: first one very clearly necessary and well done. You could
Speaker 2: argue about the second one, which is at the end
Speaker 2: of twenty twenty.
Speaker 1: So let me ask you. That leads to an obvious question.
Speaker 1: The airlines as an industry got this giant package. Most
Speaker 1: other industries did not see the same. So the hotel
Speaker 1: industry didn't get that. The restaurant industry didn't get that.
Speaker 1: There were a lot, real detail, there were a lot
Speaker 1: of industries that the pandemic really tore a swath through
Speaker 1: that did not seem to have the same sort of
Speaker 1: luck in getting Congress to How do you explain that
Speaker 1: you're right good lobbyists or right parts right time, partly
Speaker 1: good lobbying, but fundamentally airlines and actually banks too, which
Speaker 1: is why those tend to be the industries that we
Speaker 1: have to bail out every so often.
Speaker 2: Are national resources in private hands. Planes are national resources.
Speaker 2: We need to have them, and we decided that we'd
Speaker 2: rather have the private sector manage them than the government
Speaker 2: for I don't know, customer serves reasons, I don't.
Speaker 1: Know, but like, but those big things bad no matter who.
Speaker 2: Doesn't it you know it is a and actually I
Speaker 2: think the first time we meet in an airline ceo
Speaker 2: in the book, it's it's Ed Bastion from Delta and
Speaker 2: he's at the Consumer Electronic Show in Las Vegas in
Speaker 2: January of twenty twenty giving a keynote, which is a
Speaker 2: weird place for an airline CEO to be. This is
Speaker 2: a gadget show, right, and he's talking about, you know,
Speaker 2: the seepback entertainment should be a streaming platform, right. They're
Speaker 2: they're gonna have this bionic software that shows you your
Speaker 2: itinerary when you look at a screen. I mean, really
Speaker 2: like next level stuff. And I tell that story as
Speaker 2: a reminder that, like, airlines are an incredibly capital intensive
Speaker 2: business that involve flying really expensive hunks of metal around
Speaker 2: and every like ten to fifteen years something bad happens,
Speaker 2: and they had forgotten that. I think that industry had
Speaker 2: really thought they had escaped that boom and bus cycle.
Speaker 2: So plenty of arrogance coming into this. Plenty of people
Speaker 2: have rightly pointed out that they spent something like ninety
Speaker 2: six percent of their free cash flow on stock buybacks totally,
Speaker 2: but like, had they spent eighty percent, that wouldn't have
Speaker 2: saved them either.
Speaker 1: Right, unless they didn't know stock buybacks.
Speaker 2: Well, you can have a company that is one hundred
Speaker 2: percent cash, but like that CEO won't have a job
Speaker 2: for very long because some investors are going to come
Speaker 2: in saying, what are you doing? Right, there's an optimal
Speaker 2: capital structure, but there's not an optimal capital structure for
Speaker 2: a pandemic. And so look, and especially if the government
Speaker 2: is saying it's not just the market telling you we
Speaker 2: don't want to fly, it's a government in a lot
Speaker 2: of cases saying you cannot fly. Right, we're shutting down
Speaker 2: your business, which is a wild thing to do in
Speaker 2: a capitalist society. And so look, ultimately, like I didn't
Speaker 2: accounting of this recently for someophore And the bill comes
Speaker 2: to something like sixty two billion dollars out the door,
Speaker 2: of which less than a third is designed to be repaid.
Speaker 2: And that's sort of the math. There's some interest ration
Speaker 2: warrants getting out there that are somehow still underwater three
Speaker 2: years later should tell you something about the markets.
Speaker 1: But like, even though good luck booking a flight, everything.
Speaker 2: Is can you imagine that? So the travel hell that
Speaker 2: we went through in twenty twenty one, twenty two. Can
Speaker 2: you imagine how much worse that would have been if
Speaker 2: you'd had hundreds of thousands of people kicked off of payrolls.
Speaker 2: They lose their training, right, This is an incredibly regulated industry.
Speaker 2: At the same time that a lot of airlines were
Speaker 2: modernizing their their fleets, so having to retrain pilots on
Speaker 2: new planes, I mean, they just would have been a disaster.
Speaker 2: And by the way, like fire them. The government page
Speaker 2: for them anyway on unemployment, which is less efficient.
Speaker 1: So let's talk about Ford. You know, we haven't really
Speaker 1: brought them up. The CEO of Ford has a big
Speaker 1: role in here. Like they did during World War Two,
Speaker 1: where they built bombers and tanks and things like that,
Speaker 1: they start making respiratory devices, they start making masks, respirators.
Speaker 1: Ford really stepped up to the plate. Tell us a
Speaker 1: little bit about the CEO of Ford.
Speaker 2: C Ford is a guy named Jim Hackett, and he
Speaker 2: was hired just a couple of years before the pandemic.
Speaker 2: It's kind of an odd choice, and actually it's a
Speaker 2: little bit of an odd duck, Like really came was
Speaker 2: running one of the biggest office furniture companies in the
Speaker 2: world before that. Really cerebrobally thoughtful, kind of wonky, a
Speaker 2: little hard to follow for the kind of like go left,
Speaker 2: go right crew that are you know, the engineers that
Speaker 2: work in a place like Ford. And so Ford had
Speaker 2: had a tough couple of years. They'd come into the
Speaker 2: pandemic incredibly leveraged, huge amounts of debt. They lose their
Speaker 2: investment grade credit rating pretty early on. I got to
Speaker 2: cut their dividend. I mean, is a company that is
Speaker 2: in mortal trouble because every piece of its supply chain
Speaker 2: and its business doesn't work right. You can't have people
Speaker 2: making cars. No one's gonna buy. No one's gonna buy
Speaker 2: a car. And even if they wanted to, the idea
Speaker 2: that they would go into a dealership and sit in
Speaker 2: a car that someone else had just tested her and
Speaker 2: got yeah, you got to remember like it wasn't gonna work.
Speaker 2: And then this whole huge finance business that is just
Speaker 2: massively at the mercy of credit markets and rates that was,
Speaker 2: you know, really high wire act. And so you know,
Speaker 2: I think the story of Ford that I tell is
Speaker 2: sort of in two pieces. One is that which is
Speaker 2: they almost failed. Of all the companies that I looked at,
Speaker 2: I think became the closest and ultimately were saved by
Speaker 2: a pretty interesting bit of diplomacy, which is that you
Speaker 2: remember in the spring of twenty twenty, and we talked
Speaker 2: a little bit earlier about the government's response, which is
Speaker 2: that they did in about six weeks when it took
Speaker 2: them six or nine months to do in O eight
Speaker 2: just stand up a lot of these backstop facilities, figure
Speaker 2: out where the pain is, what they should buy, what
Speaker 2: they should put a floor under, and they start to
Speaker 2: buy corporate bonds, which is a pretty dramatic step to take.
Speaker 2: I mean, that's really government's picking winners and losers, which
Speaker 2: is very un American. And but do you have to
Speaker 2: be an investment grade to have your bonds be eligible
Speaker 2: for this facility that the Fed and the Treasury is
Speaker 2: standing up and Ford had lost it. And Jim Hackett,
Speaker 2: who spent a lot of time in Washington, I think
Speaker 2: he was on the board of Fifth Third for a while.
Speaker 2: So like, no, it's pretty well connected in finance, calls
Speaker 2: Larry Fink Blackrock and says who's who's doing the bond
Speaker 2: buying for the government, says, listen, I don't want to
Speaker 2: put you in a weird spot. I'm not trying to
Speaker 2: be inappropriate, but like Ford is the kind of we're
Speaker 2: acting the way that you guys want companies to act, Like,
Speaker 2: we're not laying we got a union contract, we're trying
Speaker 2: to be responsible, we're trying to be thoughtful. But when
Speaker 2: we come out on the back of this, like do
Speaker 2: you want a thriving industrial heartland sector or not? And
Speaker 2: very quietly there's a change made to that program, which
Speaker 2: is that if you had been investment grade I think
Speaker 2: back in the pre pandemic, your bonds are eligible. And
Speaker 2: on the back of that, Ford launches the largest JUNGK
Speaker 2: fond offering in history, massively over subscribed, ends up at
Speaker 2: I think eight and a half billion, I don't remember,
Speaker 2: which really saves it. So you take away from that
Speaker 2: anecdote what you want.
Speaker 1: But it helps to know people.
Speaker 2: It helps to know people. Also, I think I think
Speaker 2: it was the right move. Like Ford obviously a strong,
Speaker 2: important company and was waylaid by this. But the other
Speaker 2: story that that you're talking about is it's a company
Speaker 2: and again, like I understand now that it will people
Speaker 2: will roll their eyes, but at the time there was
Speaker 2: a real it's a big deal. It was a big deal,
Speaker 2: and it was. There was a real earnestness when you.
Speaker 1: See surgeons come out wearing garbage bags because they don't
Speaker 1: have gowns, they don't have gloves, they don't have masks. Hey,
Speaker 1: something's gone terribly wrong.
Speaker 2: Totally, and the fact that it ended up on the
Speaker 2: private sector to solve it is insane. But that's where
Speaker 2: it was. And Ford is a company that that bleeds
Speaker 2: American right. They made bombers during World War Two, they
Speaker 2: made iron lungs for polio patients, and and and it's
Speaker 2: a little bit of I think this sort of faded
Speaker 2: corporate titan trying to reinsert itself in the national narrative.
Speaker 2: It was a little bit of that, but but.
Speaker 1: It was also the right thing.
Speaker 2: But it was the right thing to do, and I
Speaker 2: think they deserve a lot of credit for it. I mean, ultimately,
Speaker 2: the not a ton of respirator turns out that they're
Speaker 2: very complicated to made. But they made these. If you remember,
Speaker 2: one of the real concerns was that healthcare workers themselves
Speaker 2: were getting.
Speaker 1: Sick, didn't have masks, didn't have masks.
Speaker 2: And so they made these kind of like hoods like
Speaker 2: respirators that actually just cleaned, yeah, exactly, and so and
Speaker 2: they I think they used it was the fan belt
Speaker 2: from like a Ford F one fifty because it was
Speaker 2: a They called it Project Apollo because you remember that
Speaker 2: scene in Apollo third right that they dump everything they
Speaker 2: have on the table and say, what can we build
Speaker 2: with this? And so they used I think the rest
Speaker 2: the fan blower from the truck. They used to walt
Speaker 2: power tool.
Speaker 1: Batteries, right, that's on the assembly line.
Speaker 2: Because again, there's so much like grimness baked into these decisions,
Speaker 2: because the concern was that we were going to be
Speaker 2: standing up field hospitals, right, and you don't have electricity,
Speaker 2: so you have to find things that run on battery
Speaker 2: packs or pneumatic power. I mean, just really dark stop,
Speaker 2: really really interesting Tingency planning here was brutal.
Speaker 1: So you talk about Treasury did great, the White House
Speaker 1: not so much. What about the Federal Reserve? Did they
Speaker 1: have much of a role here? I mean rates were
Speaker 1: cheap anyway, what's the difference between one percent and zero
Speaker 1: percent at that point?
Speaker 2: I mean there's two places where you can be fairly
Speaker 2: critical of the FED. One was before all of this,
Speaker 2: which is they had a really hard time turning off
Speaker 2: the tap in the twenty tens.
Speaker 1: Getting through could not they could not.
Speaker 2: Get interest rates up, which meant that they didn't have
Speaker 2: a lot of wiggle room. To your point, you know,
Speaker 2: crisis hits, the first thing you do, obviously is large registrates,
Speaker 2: and they did, and that's fine, but it would have
Speaker 2: been a lot better if they were starting, say where
Speaker 2: we are today at four or five and going to
Speaker 2: one or two.
Speaker 1: And the second thing.
Speaker 2: The second thing is they were massed. They were way
Speaker 2: behind the curve.
Speaker 1: On inflation on the way out, no doubt about it.
Speaker 2: You really thought it would be temporary, and it wasn't.
Speaker 2: And then by the way they.
Speaker 1: Well it transitory just is taking longer than expected. If
Speaker 1: you go back and look at CPI in March twenty
Speaker 1: twenty one, that crossed through abruptly their two percent target,
Speaker 1: and they sit on their hands for a full year
Speaker 1: after it goes through two percent and continues to go higher.
Speaker 1: I can't explain that. I don't understand that other than
Speaker 1: the fact that historically they're always late to the party.
Speaker 2: I think that's right. But I think you saw like
Speaker 2: a diverging playbook, which is anything on the fiscal side.
Speaker 2: They overdid it right, and on the monetary side they underdid.
Speaker 1: It, and until they panicked and overreacted and raise rates
Speaker 1: so fast they began to break things.
Speaker 2: One hundred percent. And I would say probably the reason
Speaker 2: that Congress overdid it is that they are lectible. Right,
Speaker 2: people like getting checked right.
Speaker 1: Nobody doesn't get reelected because the fiscal stimulus was too big.
Speaker 2: No, and like maybe someone at the Fed doesn't get reappointed.
Speaker 2: But that's such like an arcane, just like a different discussion.
Speaker 2: There's lesson at stake there. Clearly they were late. I
Speaker 2: would say probably by two meetings, maybe three to six months,
Speaker 2: depending on how you do it. They should have started
Speaker 2: in the fall of twenty.
Speaker 1: I would say summer of twenty one. But we're just
Speaker 1: nitpicking at this point. All right, So we talk about
Speaker 1: White House, the CDC, the FED, Treasury, let's talk about
Speaker 1: a couple of states. Because you don't really get into
Speaker 1: this very deeply in the book, but you briefly touch
Speaker 1: upon it. Hold aside his other woes, but there seemed
Speaker 1: to be a void coming out of the White House,
Speaker 1: and into that vacuum steps Governor Andrew Cuomo with a
Speaker 1: daily briefing that felt like, oh, someone's talking to us honestly,
Speaker 1: like we're adults. It was a breath of fresh air.
Speaker 2: You hit it. So one thing that I think is
Speaker 2: is true, and I might take in a different direction,
Speaker 2: which to this huge vacuum of public sector leadership coming
Speaker 2: out of Washington at a time that it was badly needed.
Speaker 2: My takeaway from that is, actually the CEO has kind
Speaker 2: of stepped in, and I think part of the reason that,
Speaker 2: you know, I think they kind of frankly wish they hadn't,
Speaker 2: because really put themselves squarely in what I would now
Speaker 2: kind of call the culture wars.
Speaker 1: Right, Yeah, how dare you try and say, fellow Americans
Speaker 1: from dying, who do you think.
Speaker 2: You how dare you try to do anything that doesn't
Speaker 2: have to do with running your business day to day,
Speaker 2: which is what a lot of the sort of pandemic
Speaker 2: leadership involved.
Speaker 1: Before we let you go, we're going to get to
Speaker 1: our favorite questions that we ask all of our guests,
Speaker 1: starting with tell us what you're streaming these days? What
Speaker 1: are you watching listening to? What's what's keeping you entertained?
Speaker 1: What kept you entertained during the lockdown?
Speaker 2: Well, I about a year ago quit my job at
Speaker 2: the wall Stree Journal and joined a startup. So I
Speaker 2: know this sounds terrible. I should don't have that. It's
Speaker 2: called Semaphore. I can sign up.
Speaker 1: Actually get you daily Flagshriffic. Yes, I get Flagship and
Speaker 1: it's great.
Speaker 2: I'll also sign you up for business before we leave.
Speaker 2: But uh, but so I actually tragically like have less
Speaker 2: time for television than I used to. But I'm obviously
Speaker 2: watching succession. I just watched The Diplomat on that FLI
Speaker 2: I love that.
Speaker 1: We're in episode seven. It's great. It's very good, really
Speaker 1: well written, like almost believable in a strange way.
Speaker 2: It's like if The Americans was a rom com. That's
Speaker 2: why I enjoyed it. But like, but one thing that
Speaker 2: I did like genuinely love about the pandemic, and obviously
Speaker 2: with all the caveats around that that belong there, one
Speaker 2: thing that I genuinely loved about some of the darkest
Speaker 2: days of the pandemic were just these the way these
Speaker 2: things become cultural phenomenons, like something we're just hit. So
Speaker 2: Tiger King, just like all An.
Speaker 1: Was watchable, but I love people loved it.
Speaker 2: Right. I'm not a reality television person at all, but
Speaker 2: got sucked into Love is Blind because it was so
Speaker 2: insane and everyone was talking about it. These things kind of.
Speaker 1: Became Did you watch John Krakinski's weekly.
Speaker 2: Video, How Delightful? And it's one of those things that
Speaker 2: now you look at it and you're like, god, it
Speaker 2: feels saccharin and sort of chanting, really corporate sponsored and
Speaker 2: was all. But at the time it was like, really
Speaker 2: was genuinely.
Speaker 1: Fun and you know you loved him already. It's like, oh, no,
Speaker 1: wonder Emily Blunt married.
Speaker 2: He's delightful, delightful. They were all delightful. No, there was something.
Speaker 2: There's some I'm not a culture reporter, and culture reporter
Speaker 2: I would say it better, but there was something like
Speaker 2: some weird earnest monoculture that was kind of simmering during
Speaker 2: a lot of the pandemic that I miss a little bit.
Speaker 1: Actually, you know, when you go back to World War
Speaker 1: One and the popular entertainment of the day, it doesn't
Speaker 1: look sacherin and every now and then, even during World
Speaker 1: War Two, some of the Hollywood movies are a little
Speaker 1: jingoistic and a little We just saw some movie with
Speaker 1: Carrie Grant and I'm trying to remember who it was
Speaker 1: where she's married to a German who turns out to
Speaker 1: be an Austrian who turns out to be a Nazi,
Speaker 1: and he's trying to get her out of Europe and
Speaker 1: it's like there's just a time and she gives her
Speaker 1: passport to the maid in Poland who's Jewish, Like it
Speaker 1: wasn't jingoistic. I can't remember the name of it, something Honeymoon,
Speaker 1: something like that.
Speaker 2: But I'm actually surprised at how little pandemic media there was.
Speaker 2: Not a lot of movies have come out. There's one
Speaker 2: like Anne Hathaway and what's his name? That was kind
Speaker 2: of interesting, but I actually think we just haven't really
Speaker 2: grappled with it as a culture.
Speaker 1: Bo Burnham is the closest terrific, that's the closest thing
Speaker 1: to a pandemic popular culture thing that that was really
Speaker 1: really quite fascinating. Yeah, sorry, Next question, tell us about
Speaker 1: your mentors who helped shape your career.
Speaker 2: You know, when I first joined the Wall Street Journal,
Speaker 2: I sat right behind Dana Simaluca, who was then the
Speaker 2: deputy M and A editor has now been the M
Speaker 2: and A editor for a long time, and he was
Speaker 2: the first person who really taught me about kind of
Speaker 2: the dark art of some kinds of journalism, and it
Speaker 2: was just really learned how to m and A is
Speaker 2: a funny beat because most stories are basically one fact,
Speaker 2: but that fact absolutely has to be right, and it's
Speaker 2: sort of unique in that way. I think, and learned
Speaker 2: a lot from him about how to handle really sensitive
Speaker 2: stuff and you know, a little bit a little of
Speaker 2: black magic that goes on in certain beats, So I
Speaker 2: really I learned a lot from him. Then my boss
Speaker 2: after that was Marie Boudette, a totally different kind of editor.
Speaker 2: Never really was a beat reporter in the traditional sense,
Speaker 2: but had incredibly good instincts about stories and really great
Speaker 2: judgment and encourage me to be more authoritative and ambitious
Speaker 2: in the stories that I was telling. And I've only
Speaker 2: been working for him for less than a year, but
Speaker 2: you know, I've learned a lot from from Ben Smith,
Speaker 2: who's our editor in chief, and I was really trying
Speaker 2: to trying to build a new kind of journalism and
Speaker 2: we're having a lot of fun doing it.
Speaker 1: Really really interesting. Let's talk about books. What are some
Speaker 1: of your favorite and what have you been reading recently.
Speaker 2: I am, perhaps disappointingly like I read a lot of
Speaker 2: non I read almost exclusively nonfiction. I read a lot
Speaker 2: of nonfiction. I'm like, I can escape my job.
Speaker 1: In my very time. I got this is business nonfiction.
Speaker 2: I wrote the kind of book that I like to read. Really,
Speaker 2: you know. I had COVID actually for the first time
Speaker 2: around Christmas of last.
Speaker 1: Year, and I re read November for Yeah, it's.
Speaker 2: Funny if you if you get the audio book which
Speaker 2: I recorded, I did it that week between Christmas and
Speaker 2: New Year's because it takes a couple of days and
Speaker 2: I have a full time job, and I had COVID,
Speaker 2: and so you can kind of hear it. But actually
Speaker 2: I re read like, uh, Barbarians at the Gate Den
Speaker 2: of Thieves, like those old those old really great yarns
Speaker 2: us a great and then there's a new generation to them.
Speaker 2: That I really loved that that friends and colleagues and
Speaker 2: competitors of mine have written. Trip Michael had a great
Speaker 2: book come out last year about Apple. He was my
Speaker 2: colleague at the Wall book He's Gonna Kill Me. It's
Speaker 2: called After Steve, which I really love. Another former colleague,
Speaker 2: Eric Schwartzel, wrote this great book called Red Carpet about
Speaker 2: Hollywood and China and soft power and business and commerce.
Speaker 2: That's fantastic. And again he's going to think I'm just
Speaker 2: buttering him up. But my boss Ben had a great
Speaker 2: book come out a couple of weeks ago, really fortuitously time,
Speaker 2: but about this era of viral digital media that has
Speaker 2: just now completely come crashing to an end. I thought
Speaker 2: that was a great called Traffic.
Speaker 1: Traffic really really intriguing. Our final two questions, what sort
Speaker 1: of advice would you give to a recent college grad
Speaker 1: interested in a career in journalism.
Speaker 2: People have been talking about the death of journalism for
Speaker 2: a long time, and it's extremely true in local journalism,
Speaker 2: which is where I really kind of wanted to go.
Speaker 2: I wanted to apply to newspapers in Boulder and Topeka,
Speaker 2: and it was right at the sort of the start
Speaker 2: of the end for them. This was two thousand and eight.
Speaker 2: You know, Facebook was and Craigslists were just killing their
Speaker 2: ad business and they hadn't totally been hollowed out yet,
Speaker 2: but they were getting there. I feel like there will
Speaker 2: always be demand for smart people to make sense of
Speaker 2: an incredibly complicated world. Just sort of be agnostic about
Speaker 2: where that is.
Speaker 1: You know.
Speaker 2: Again, first, I've had four jobs basically in journalism. One
Speaker 2: was again at a parenting magazine in the Midwest, at
Speaker 2: a legal trade publication in New York, at the Wall
Speaker 2: Street Journal, and then a thing that didn't exist a
Speaker 2: year ago. So you know, you pick up skills at
Speaker 2: every one of them.
Speaker 1: Really interesting and our final question, what do you know
Speaker 1: about the world of journalism and investigative reporting today you
Speaker 1: wish you knew ten fifteen years ago when you were
Speaker 1: first getting started.
Speaker 2: It's better to be lucky than good. If you can
Speaker 2: be both, that's great, And I look, I think you
Speaker 2: put yourself in a position to get lucky, but I
Speaker 2: don't know. My one piece of advice I spiascit he
Speaker 2: is always take the meeting. Just you literally never know.
Speaker 1: And always take the meeting.
Speaker 2: There's this eighty twenty rule in journalism people talk about,
Speaker 2: which is that eighty percent of tips come from twenty
Speaker 2: percent of sources. These are like professional sources who know
Speaker 2: what the deal is. But I will tell you that
Speaker 2: long tail is really long and you get really interesting
Speaker 2: stuff if you're willing to spend some time on it.
Speaker 1: Huh, really quite fascinating. Liz, thank you for being so
Speaker 1: generous with your time. We have been speaking with Liz Hoffman.
Speaker 1: She is now the Business and Finance editor at Semaphore
Speaker 1: and the author of crash Landing, the inside story of
Speaker 1: how the world's biggest companies survived the pandemic. If you
Speaker 1: enjoy this conversation, well, be sure and check out any
Speaker 1: of our previous four hundred and ninety seven that we've
Speaker 1: done over the past eight and a half years. You
Speaker 1: can find those at iTunes, Spotify, YouTube, or wherever you
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Speaker 1: podcast I would be remiss if I did not thank
Speaker 1: the crack team that helps put these conversations together each week.
Speaker 1: My audio engineer is Sarah Livesley. Paris Wald is my producer.
Speaker 1: Sean Russo is my head of research at Teko of
Speaker 1: al bron is our project manager. I'm Barry Ridholtz. You've
Speaker 1: been listening to Masters in Business on Bloomberg Radio.