1 00:00:15,316 --> 00:00:25,156 Speaker 1: Pushkin. Hey there everyone, it's Michael Lewis. We're about to 2 00:00:25,196 --> 00:00:27,596 Speaker 1: go on a brief holiday break. It against the rules, 3 00:00:28,076 --> 00:00:30,356 Speaker 1: but we have some banger episodes in the works about 4 00:00:30,356 --> 00:00:32,956 Speaker 1: the rise of sports gambling in the United States and 5 00:00:32,996 --> 00:00:35,876 Speaker 1: the ride we might be about to go on. For instance, 6 00:00:35,876 --> 00:00:38,876 Speaker 1: I said to LJ, my producer, to Kansas, where she 7 00:00:38,916 --> 00:00:42,236 Speaker 1: meets up with college students not only drinking while underaged, 8 00:00:42,516 --> 00:00:45,916 Speaker 1: but possibly even gambling on sports. And we take a 9 00:00:45,916 --> 00:00:48,596 Speaker 1: little tour of countries where gambling is even more entrenched 10 00:00:48,636 --> 00:00:51,676 Speaker 1: than it is here, just to see how god forsaken 11 00:00:51,756 --> 00:00:54,996 Speaker 1: things could get here if we really try. And then 12 00:00:55,036 --> 00:00:57,116 Speaker 1: I try to redeem myself by learning a thing or 13 00:00:57,156 --> 00:00:59,636 Speaker 1: two about how we can gird our brains to resist 14 00:00:59,636 --> 00:01:03,836 Speaker 1: the onslaught of addictive temptations. But that's all to come. 15 00:01:04,156 --> 00:01:06,116 Speaker 1: In the meantime, I can offer you a little treat. 16 00:01:06,796 --> 00:01:09,076 Speaker 1: One of the great pleasures I've had while making the season, 17 00:01:09,156 --> 00:01:10,796 Speaker 1: and it is a chance to talk with other folks 18 00:01:10,796 --> 00:01:14,756 Speaker 1: about our reporting. Just recently I spoke with Scott Galloway 19 00:01:14,756 --> 00:01:18,356 Speaker 1: on his podcast. Scott's a professor of marketing at the 20 00:01:18,436 --> 00:01:21,956 Speaker 1: NYU Stern School of Business and a very smart guy. 21 00:01:22,836 --> 00:01:25,116 Speaker 1: We talk about the sports gaming industry, of course, but 22 00:01:25,276 --> 00:01:28,556 Speaker 1: also about a whole bunch of other things. Anyway, here's 23 00:01:28,556 --> 00:01:32,636 Speaker 1: my conversation with Scott Galloway on his show Prof g. 24 00:01:38,236 --> 00:01:39,756 Speaker 2: Michael. Where does this podcast find you? 25 00:01:40,596 --> 00:01:43,876 Speaker 1: Smoke Tree Ranch off the side of Palm Springs, which 26 00:01:43,916 --> 00:01:48,156 Speaker 1: is a gated community created by Walt Disney and some 27 00:01:48,276 --> 00:01:49,756 Speaker 1: of his pals way back when. 28 00:01:50,476 --> 00:01:53,036 Speaker 2: Wow, let's buzz right into it. In the latest season 29 00:01:53,076 --> 00:01:56,156 Speaker 2: of your podcast Against the Rules, you investigate sports betting, 30 00:01:56,156 --> 00:01:57,756 Speaker 2: which we talk a lot about here on the pod, 31 00:01:57,996 --> 00:02:01,396 Speaker 2: which you refer to as a great social experiment. Walk 32 00:02:01,476 --> 00:02:03,756 Speaker 2: us through the state of play of this experience and 33 00:02:03,796 --> 00:02:04,876 Speaker 2: where you think we're headed. 34 00:02:05,516 --> 00:02:10,156 Speaker 1: So in nineteen ninety two, Bill Bradley said, it created 35 00:02:10,596 --> 00:02:14,276 Speaker 1: essentially a federal ban on sports betting. It exempted Nevada, 36 00:02:14,276 --> 00:02:16,356 Speaker 1: but basically it has been against. It was against the law, 37 00:02:16,996 --> 00:02:21,916 Speaker 1: and the Supreme Court repeal that in twenty eighteen, and 38 00:02:22,196 --> 00:02:25,556 Speaker 1: the new law of the land is states can legalize 39 00:02:25,556 --> 00:02:27,596 Speaker 1: it if they want to, and thirty nine states have 40 00:02:28,236 --> 00:02:32,116 Speaker 1: and about two thirds of the American population has access 41 00:02:32,196 --> 00:02:36,516 Speaker 1: to sports betting on their phones. About one third still doesn't. 42 00:02:36,796 --> 00:02:41,116 Speaker 1: And the industry here is dominated by two companies, fan 43 00:02:41,196 --> 00:02:44,996 Speaker 1: duel and draftings. They have a little hard to say exactly, 44 00:02:45,076 --> 00:02:48,836 Speaker 1: but say roughly seventy percent of the market. And they 45 00:02:48,836 --> 00:02:51,156 Speaker 1: were before they were sports gambling companies. They were daily 46 00:02:51,196 --> 00:02:54,316 Speaker 1: fantasy sports companies, which gave the actually was the perfect 47 00:02:54,636 --> 00:02:59,076 Speaker 1: the perfect thing to be before mobile sports gambling is legalized. 48 00:02:59,076 --> 00:03:02,236 Speaker 1: As a daily fantasy sports company, you know all the customers, 49 00:03:02,276 --> 00:03:06,076 Speaker 1: you have data on all the customers. Sports bets in 50 00:03:06,116 --> 00:03:09,996 Speaker 1: America have skyrocket. It's a little again, a little hard 51 00:03:09,996 --> 00:03:11,636 Speaker 1: to say. It is hard to know what numbers to 52 00:03:11,676 --> 00:03:15,396 Speaker 1: trust because there was an illegal market that presumably is 53 00:03:15,436 --> 00:03:16,916 Speaker 1: not quite as big as it used to be, but 54 00:03:17,556 --> 00:03:20,076 Speaker 1: it's gone from the legal market, has gone from a 55 00:03:20,076 --> 00:03:23,756 Speaker 1: few billion to over one hundred billion a year, and 56 00:03:24,276 --> 00:03:30,156 Speaker 1: there's just starting to be some academic research showing the 57 00:03:30,516 --> 00:03:32,956 Speaker 1: social effects of this. I mean, it's kind of cool. 58 00:03:33,076 --> 00:03:35,676 Speaker 1: This the way it's rolled out has created these natural 59 00:03:35,716 --> 00:03:38,236 Speaker 1: experiments that you have because you have states that are 60 00:03:38,236 --> 00:03:40,556 Speaker 1: side by side. One is legalized that one has not 61 00:03:40,676 --> 00:03:42,916 Speaker 1: legalized it, so you can sort of you can sort 62 00:03:42,956 --> 00:03:47,516 Speaker 1: of tease out the effects of legalizing it. But bankruptcies 63 00:03:47,516 --> 00:03:50,756 Speaker 1: are up, savings rates are down. If it follows the 64 00:03:50,796 --> 00:03:52,996 Speaker 1: path that have followed in the United Kingdom and Australia, 65 00:03:53,076 --> 00:03:56,116 Speaker 1: suicide rates will be up, so there's some social costs 66 00:03:56,196 --> 00:03:59,956 Speaker 1: to it all. But I think, like really early days, 67 00:04:00,036 --> 00:04:02,076 Speaker 1: I mean, you know, it's only been legal for six years. 68 00:04:02,116 --> 00:04:04,196 Speaker 1: There were companies that have really only been up and running 69 00:04:04,196 --> 00:04:07,796 Speaker 1: in most states for just a few years. It's kind 70 00:04:07,796 --> 00:04:10,516 Speaker 1: of not hard to make some predictions about where it's going, 71 00:04:10,956 --> 00:04:11,996 Speaker 1: but it's not there yet. 72 00:04:12,916 --> 00:04:15,516 Speaker 2: So I'm a glass half empty kind of guy. But 73 00:04:15,916 --> 00:04:19,436 Speaker 2: you cited some stats. I've seen twenty to thirty percent 74 00:04:19,476 --> 00:04:22,996 Speaker 2: increase in bankruptcys and states illegalize it. I see young 75 00:04:23,036 --> 00:04:25,556 Speaker 2: men with kind of less structure in their lives who 76 00:04:25,556 --> 00:04:27,396 Speaker 2: are more prone to addiction. I think six out of 77 00:04:27,436 --> 00:04:31,796 Speaker 2: seven gambling addicts are men. My understanding is gambling has 78 00:04:31,796 --> 00:04:34,556 Speaker 2: the highest suicide rate because if you're addicted to meths, 79 00:04:34,556 --> 00:04:36,356 Speaker 2: people figure it out and try and intervene. You can 80 00:04:36,396 --> 00:04:38,676 Speaker 2: get in way over your skis with gambling and nobody knows, 81 00:04:38,716 --> 00:04:41,436 Speaker 2: and you decide there's only one way out. I'll use 82 00:04:41,476 --> 00:04:43,516 Speaker 2: an academic. I think this is a fucking disaster. 83 00:04:43,796 --> 00:04:47,516 Speaker 1: Your thoughts, yeah, I'm totally with you. This is why 84 00:04:47,556 --> 00:04:51,196 Speaker 1: I was trucked to the subject. I couldn't believe. Well, look, 85 00:04:51,596 --> 00:04:56,436 Speaker 1: once it's legalized, I'm a little shocked by the insensitivity 86 00:04:56,476 --> 00:04:58,676 Speaker 1: of the social to the public health crisis it's going 87 00:04:58,676 --> 00:05:04,156 Speaker 1: to trigger because it's essentially a wild West in how 88 00:05:04,236 --> 00:05:06,636 Speaker 1: you can get to the customer. And they aren't, you know, 89 00:05:06,676 --> 00:05:10,876 Speaker 1: the sports gambling companies, they were mistake for casino companies 90 00:05:11,676 --> 00:05:13,156 Speaker 1: that people kind of thought, oh, it's going to be 91 00:05:13,196 --> 00:05:17,836 Speaker 1: like a casino business, so that the kind of vague 92 00:05:18,396 --> 00:05:20,916 Speaker 1: with the house takes about roughly five percent. It's always 93 00:05:20,956 --> 00:05:23,836 Speaker 1: been kind of five percent, will remain kind of five percent. 94 00:05:24,196 --> 00:05:27,356 Speaker 1: This number keeps going up with these companies, it's like 95 00:05:27,356 --> 00:05:32,396 Speaker 1: at fifteen percent. And effectively, what they are doing is 96 00:05:32,956 --> 00:05:37,316 Speaker 1: mining the entire US population for people willing to make 97 00:05:37,396 --> 00:05:42,116 Speaker 1: stupid sports bets. And they have a finely honed ability 98 00:05:42,476 --> 00:05:45,756 Speaker 1: to identify anybody who actually knows what they're doing, like 99 00:05:45,836 --> 00:05:48,716 Speaker 1: the sharp gambler, someone who actually might have some edge 100 00:05:48,756 --> 00:05:51,996 Speaker 1: in a sport, and toss them out or limit them 101 00:05:51,996 --> 00:05:54,476 Speaker 1: to the point where they're effectively tossed out, so that 102 00:05:54,716 --> 00:05:57,236 Speaker 1: their business is built on people who don't know what 103 00:05:57,276 --> 00:06:01,596 Speaker 1: they're doing. And it's further in a way that you know, casinos. 104 00:06:01,596 --> 00:06:03,756 Speaker 1: When you're in a casino course is manipulating you in 105 00:06:03,796 --> 00:06:06,716 Speaker 1: all kinds of diabolical ways. But when the casino's in 106 00:06:06,756 --> 00:06:09,476 Speaker 1: your pocket, it's like your whole life is in the 107 00:06:09,516 --> 00:06:13,116 Speaker 1: casino kind of thing. And they have an ability to 108 00:06:13,116 --> 00:06:16,476 Speaker 1: sort of like nudge people into doing stuff that they 109 00:06:16,636 --> 00:06:18,956 Speaker 1: just wouldn't think to do it it is and it's 110 00:06:18,996 --> 00:06:21,316 Speaker 1: making the number and dumber bets and you kind of 111 00:06:21,316 --> 00:06:24,436 Speaker 1: think about, Okay, like what's the disaster going to look like? 112 00:06:25,316 --> 00:06:29,516 Speaker 1: It's not just men, it's young men. Young men are 113 00:06:29,596 --> 00:06:33,916 Speaker 1: the real target. The Lancet of the Medical British Medical 114 00:06:33,956 --> 00:06:37,276 Speaker 1: Publication just came out with a study that said, I mean, 115 00:06:37,316 --> 00:06:39,436 Speaker 1: this number is so high that I want to just 116 00:06:39,756 --> 00:06:43,116 Speaker 1: pause before I say it, but the twenty six percent 117 00:06:43,436 --> 00:06:46,356 Speaker 1: of young men who were exposed to gambling develops some 118 00:06:46,396 --> 00:06:50,356 Speaker 1: sort of gambling problem that seems very high. But even 119 00:06:50,396 --> 00:06:55,236 Speaker 1: if it's half that, It's like the NCAA, whose new president, 120 00:06:55,356 --> 00:06:59,076 Speaker 1: Charlie Baker, was just shocked by the gambling activity he 121 00:06:59,116 --> 00:07:02,556 Speaker 1: was seeing on campuses, commissioned to study to see how 122 00:07:02,596 --> 00:07:05,036 Speaker 1: many people were doing this, and more than sixty percent 123 00:07:05,036 --> 00:07:07,276 Speaker 1: of young men on college campuses is a sports gambling. 124 00:07:07,436 --> 00:07:10,236 Speaker 1: So you do the mad It's like, you got it. 125 00:07:10,236 --> 00:07:13,636 Speaker 1: We're like, it's almost like we're creating a pool of 126 00:07:13,676 --> 00:07:18,116 Speaker 1: future gambling addicts. And you're right, it's very interesting. You're 127 00:07:18,196 --> 00:07:21,196 Speaker 1: right about like when you think about what's going to 128 00:07:21,276 --> 00:07:25,556 Speaker 1: stop this train, if you compare it to like opioids, 129 00:07:26,316 --> 00:07:30,156 Speaker 1: Like opioids was able to run for twenty years before 130 00:07:30,196 --> 00:07:33,316 Speaker 1: anybody really put a stop to it, and and seven 131 00:07:33,356 --> 00:07:35,636 Speaker 1: hundred and fifty thousand people die, and it was about 132 00:07:35,676 --> 00:07:38,836 Speaker 1: as visible an epidemic as you can have. This is 133 00:07:39,236 --> 00:07:43,516 Speaker 1: it's invisible. You don't see what's happening to people until 134 00:07:43,796 --> 00:07:46,036 Speaker 1: So you wonder, if it takes twenty years for the 135 00:07:46,076 --> 00:07:49,716 Speaker 1: society to get its hands around the opioid industry, how 136 00:07:49,756 --> 00:07:50,996 Speaker 1: long is it going to take it to get its 137 00:07:50,996 --> 00:07:54,636 Speaker 1: hands around the gambling industry. So, I yes, I agree 138 00:07:54,676 --> 00:07:56,796 Speaker 1: with you. It's like, how on earth do we let 139 00:07:56,836 --> 00:07:59,476 Speaker 1: this happen? But it's of a piece with other things 140 00:07:59,516 --> 00:08:00,436 Speaker 1: we have let happen. 141 00:08:01,196 --> 00:08:02,756 Speaker 2: I mean, when I think about it, it's not only 142 00:08:02,876 --> 00:08:05,756 Speaker 2: My fear isn't only about gambling addiction. But when you 143 00:08:05,796 --> 00:08:08,476 Speaker 2: put kind of an on demand DOPA bag in young 144 00:08:08,556 --> 00:08:12,476 Speaker 2: people's pockets, just as they're kind of hardwiring their brain 145 00:08:12,676 --> 00:08:17,476 Speaker 2: and learning about life and reward that we're just setting 146 00:08:17,516 --> 00:08:20,916 Speaker 2: them up to be just fucking dopa monsters. And if 147 00:08:20,956 --> 00:08:22,676 Speaker 2: they can't get it from gambling because they run out 148 00:08:22,676 --> 00:08:25,316 Speaker 2: of money, they're going to find it somewhere else. Have 149 00:08:25,396 --> 00:08:27,956 Speaker 2: you seen any of My thesis is we are literally 150 00:08:28,076 --> 00:08:32,996 Speaker 2: unleashing into the economy, into the world, millions of dopa 151 00:08:33,516 --> 00:08:37,076 Speaker 2: monsters that will are just going to find whatever way 152 00:08:37,116 --> 00:08:42,836 Speaker 2: they can opiates sex porn, online shopping. They're just going 153 00:08:42,916 --> 00:08:46,796 Speaker 2: to be so hungry for that rush because their brains 154 00:08:46,796 --> 00:08:50,396 Speaker 2: will have been wired to expect that rush, that it's 155 00:08:50,436 --> 00:08:53,636 Speaker 2: going to have all sorts of ramifications outside of gambling. 156 00:08:53,636 --> 00:08:55,196 Speaker 2: Am I catastrophizing here? 157 00:08:56,276 --> 00:08:59,396 Speaker 1: I mean, it doesn't sound unreasonable to me. My first 158 00:08:59,396 --> 00:09:03,516 Speaker 1: thought when you started down that little path was it's 159 00:09:03,556 --> 00:09:06,636 Speaker 1: interesting that sports used to be a place where you 160 00:09:06,796 --> 00:09:10,356 Speaker 1: learned the slow rewards that come from a modification. 161 00:09:10,556 --> 00:09:10,996 Speaker 2: Yeah. 162 00:09:11,076 --> 00:09:14,756 Speaker 1: Yeah, you learned the opposite thing, and that we're turning 163 00:09:14,996 --> 00:09:17,996 Speaker 1: that this mechanism that used used to take young men 164 00:09:18,636 --> 00:09:22,116 Speaker 1: and teach them a certain lesson, and were you taking 165 00:09:22,116 --> 00:09:25,596 Speaker 1: it to teach a different lesson. So it was disturbing 166 00:09:25,716 --> 00:09:28,436 Speaker 1: enough to me that I have. My youngest is a 167 00:09:28,436 --> 00:09:31,116 Speaker 1: seventeen year old son. Like I gave him some money 168 00:09:31,196 --> 00:09:34,876 Speaker 1: and an adult supervision so he could learn how to 169 00:09:35,036 --> 00:09:39,876 Speaker 1: navigate this world, because it does feel like, not only 170 00:09:39,996 --> 00:09:44,236 Speaker 1: are we creating a world of you know, dopamine addicts, 171 00:09:44,396 --> 00:09:48,716 Speaker 1: but the signal you send, especially to young men because 172 00:09:48,716 --> 00:09:51,516 Speaker 1: it's so susceptible to this, is the world actually doesn't 173 00:09:51,516 --> 00:09:54,876 Speaker 1: give a shit about you, that it's out to get you. 174 00:09:55,396 --> 00:09:57,396 Speaker 1: When I got into this, when I started working on 175 00:09:57,476 --> 00:10:02,396 Speaker 1: the story, what motivated me was the book I wrote 176 00:10:02,436 --> 00:10:04,796 Speaker 1: about stuff I'd learned in the book I'd written about 177 00:10:04,836 --> 00:10:07,516 Speaker 1: the pandemic. I got interested in it because the US 178 00:10:07,596 --> 00:10:10,596 Speaker 1: response in the beginning was just so appalling, and we had, like, 179 00:10:10,676 --> 00:10:12,956 Speaker 1: you know, twenty percent of the world's deaths with four 180 00:10:12,996 --> 00:10:15,516 Speaker 1: percent of the world's population in the first six months. 181 00:10:15,636 --> 00:10:18,516 Speaker 1: And I learned in the in the process that this 182 00:10:18,596 --> 00:10:21,196 Speaker 1: is that in the few years running leading up to 183 00:10:21,236 --> 00:10:25,396 Speaker 1: the pandemic, we'd had experienced the decline of life expectancy 184 00:10:26,116 --> 00:10:28,356 Speaker 1: in three straight years, and that had not happened since 185 00:10:28,436 --> 00:10:31,596 Speaker 1: nineteen eighteen. And I thought, well, the pandemic's happening in 186 00:10:31,596 --> 00:10:33,996 Speaker 1: the context of a society that's already not taking care 187 00:10:34,036 --> 00:10:39,756 Speaker 1: of its people, that some basic failure is occurring, and 188 00:10:39,796 --> 00:10:43,076 Speaker 1: this feels like part of that. That it's like it's 189 00:10:43,076 --> 00:10:47,556 Speaker 1: a public health problem, and that it's not that hard. 190 00:10:47,676 --> 00:10:51,076 Speaker 1: Even if you can't do anything about legalizing sports gambling, 191 00:10:51,916 --> 00:10:53,836 Speaker 1: it's not that hard to do some things to blunt 192 00:10:53,916 --> 00:10:57,476 Speaker 1: its effects. So here's my solution. I'm trying to work 193 00:10:57,516 --> 00:11:00,876 Speaker 1: within the constraints of the society. I don't think actually 194 00:11:01,476 --> 00:11:04,876 Speaker 1: me going off about how diabolical it all is is 195 00:11:04,916 --> 00:11:08,116 Speaker 1: going to help anything. They're doing something that I think 196 00:11:08,196 --> 00:11:11,716 Speaker 1: is kind of interesting the company, the sports gambling companies 197 00:11:12,356 --> 00:11:15,876 Speaker 1: they are because they're so good at chucking out of 198 00:11:15,916 --> 00:11:18,876 Speaker 1: their business as anybody who knows what they're doing. They're 199 00:11:18,916 --> 00:11:22,596 Speaker 1: isolating people who don't know what they're doing. So, by definition, 200 00:11:22,956 --> 00:11:26,916 Speaker 1: if you have an account in good standing at FanDuel 201 00:11:26,916 --> 00:11:28,796 Speaker 1: and DraftKings and you're doing a lot of sports betting, 202 00:11:29,236 --> 00:11:31,276 Speaker 1: you have signals of the world you don't know what 203 00:11:31,316 --> 00:11:34,596 Speaker 1: you're doing. I think that if we get that message 204 00:11:34,636 --> 00:11:37,796 Speaker 1: out and that if you say, like, if you're looking 205 00:11:37,836 --> 00:11:39,756 Speaker 1: for someone to manage your money, the first question you 206 00:11:39,756 --> 00:11:41,716 Speaker 1: should ask them is they have account in good standing 207 00:11:41,716 --> 00:11:43,756 Speaker 1: and FanDuel and DraftKings that they do. You should never 208 00:11:43,756 --> 00:11:47,796 Speaker 1: give them your money to manage that. If you make it, 209 00:11:47,836 --> 00:11:51,316 Speaker 1: if you make it a point of shame that you're 210 00:11:51,636 --> 00:11:55,676 Speaker 1: in good with the industry, that you might stigmatize it 211 00:11:55,756 --> 00:11:57,996 Speaker 1: in a way that makes it less dangerous. 212 00:11:59,756 --> 00:12:09,556 Speaker 2: We'll be right back your book going infant. I'll under 213 00:12:09,596 --> 00:12:12,316 Speaker 2: some of what I call the same texture of criticism 214 00:12:12,356 --> 00:12:15,116 Speaker 2: as Walter Isaacson's biography and Elon Musk and that of us. 215 00:12:15,156 --> 00:12:17,596 Speaker 2: You were kind of seeing lessly as having a front 216 00:12:17,676 --> 00:12:20,196 Speaker 2: row seat, but not seeing what was going on. Do 217 00:12:20,276 --> 00:12:21,996 Speaker 2: you think that's a fair criticism. 218 00:12:22,476 --> 00:12:25,116 Speaker 1: I didn't write it until after it all collapsed. When 219 00:12:25,116 --> 00:12:28,836 Speaker 1: I sat down to write the first words, there wasn't 220 00:12:29,116 --> 00:12:31,276 Speaker 1: much I didn't know had happened. I mean, very little 221 00:12:31,356 --> 00:12:33,796 Speaker 1: happened came out of the trial that wasn't already kind 222 00:12:33,836 --> 00:12:38,476 Speaker 1: of known. But it is true that I was there 223 00:12:38,996 --> 00:12:42,796 Speaker 1: a fly on the wall from kind of end of 224 00:12:42,836 --> 00:12:48,316 Speaker 1: two thousand and twenty one through the collapse of November 225 00:12:48,356 --> 00:12:51,996 Speaker 1: twenty twenty two. And if you'd have said he has 226 00:12:52,196 --> 00:12:56,196 Speaker 1: the money, the customer's money in Alameda, I would have said, 227 00:12:56,436 --> 00:12:59,196 Speaker 1: you're insane. There's no way that would be so dumb. 228 00:12:59,876 --> 00:13:04,356 Speaker 1: So I did poke. Everybody did this, everybody who saw 229 00:13:04,396 --> 00:13:06,756 Speaker 1: the structure of the business. He's got his own private 230 00:13:06,756 --> 00:13:10,636 Speaker 1: hedge fund on our trading on the side of it 231 00:13:10,956 --> 00:13:14,956 Speaker 1: in exchange, and he owns them both. I did ask 232 00:13:15,076 --> 00:13:18,916 Speaker 1: lots of questions about conflicts of interest, but what I imagine 233 00:13:18,796 --> 00:13:21,196 Speaker 1: would be the problem wasn't the problem. I imagine the 234 00:13:21,196 --> 00:13:24,396 Speaker 1: problem was that his trading firm would have the same 235 00:13:24,436 --> 00:13:29,316 Speaker 1: sort of privileged access to the exchange that high frequency 236 00:13:29,316 --> 00:13:32,436 Speaker 1: traders get on the New York Stock Exchange, and privilege 237 00:13:32,796 --> 00:13:35,396 Speaker 1: access to data and so on, so front running whatever, 238 00:13:36,076 --> 00:13:40,996 Speaker 1: and that wasn't the case. I did not see that, like, oh, yeah, 239 00:13:41,036 --> 00:13:44,796 Speaker 1: the money's in the wrong place, so that's true. Did 240 00:13:44,836 --> 00:13:47,756 Speaker 1: I in retrospect think I should have seen it? 241 00:13:48,756 --> 00:13:48,916 Speaker 2: Not? 242 00:13:49,036 --> 00:13:51,876 Speaker 1: Really, no one else saw it either. You know, there 243 00:13:51,956 --> 00:13:55,556 Speaker 1: wasn't the interesting thing. There are many interesting things about 244 00:13:55,556 --> 00:13:58,956 Speaker 1: the story, but one interesting thing is, Yeah, a lot 245 00:13:58,996 --> 00:14:02,276 Speaker 1: of people said, I wonder if they're shady like FTX, 246 00:14:02,476 --> 00:14:06,156 Speaker 1: But that's the in crypto, that's easy. Like as a heuristic, 247 00:14:06,236 --> 00:14:10,156 Speaker 1: if you're a successful crypto business, you're you know, you're 248 00:14:10,236 --> 00:14:13,516 Speaker 1: largely unregulated, and you're twenty six years old and no 249 00:14:13,556 --> 00:14:18,316 Speaker 1: one's paying that much attention the specific criticism, Oh he's 250 00:14:18,356 --> 00:14:22,236 Speaker 1: got the customer's money in his hedge fund. No one said. 251 00:14:22,436 --> 00:14:26,596 Speaker 1: Zero people said so, not even any ad whatever, one 252 00:14:26,636 --> 00:14:31,236 Speaker 1: hundred and something professional investors who owned a piece of them, 253 00:14:31,236 --> 00:14:33,436 Speaker 1: and they didn't say it. So I don't know. I 254 00:14:33,436 --> 00:14:35,716 Speaker 1: don't know. That would have been very hard. I don't 255 00:14:35,756 --> 00:14:37,156 Speaker 1: know how you would have detected that. 256 00:14:37,876 --> 00:14:39,996 Speaker 2: Well A couple follow up questions there, so when I'm 257 00:14:40,036 --> 00:14:41,756 Speaker 2: sort of follow the story a little bit from an 258 00:14:41,756 --> 00:14:44,196 Speaker 2: adjacent I actually bought claims. 259 00:14:43,876 --> 00:14:47,676 Speaker 1: I know this. You bought the claims, and if I 260 00:14:47,676 --> 00:14:51,356 Speaker 1: could have, I would have. Oh right, oh my god. 261 00:14:51,716 --> 00:14:53,996 Speaker 1: I mean it just seemed pretty obvious that they weren't 262 00:14:53,996 --> 00:14:55,236 Speaker 1: worth ten cents on the dollar. 263 00:14:55,516 --> 00:14:57,316 Speaker 2: Well I wasn't that smart. I bought him for twenty 264 00:14:57,356 --> 00:14:59,956 Speaker 2: three cents. But because it's better to be lucky than good, 265 00:14:59,996 --> 00:15:02,796 Speaker 2: because of the surge and crypto, they're now probably the 266 00:15:02,796 --> 00:15:04,556 Speaker 2: payout's going to be somewhere between one hundred and twenty 267 00:15:04,636 --> 00:15:06,276 Speaker 2: cents on the dollar one hundred and fifty cents, and 268 00:15:06,316 --> 00:15:09,236 Speaker 2: other than other than patting myself on the back for 269 00:15:09,316 --> 00:15:11,156 Speaker 2: one of the few good investment decisions I've made in 270 00:15:11,196 --> 00:15:14,156 Speaker 2: the last year, if everyone gets their money back. Now, 271 00:15:14,196 --> 00:15:18,116 Speaker 2: granted he committed fraud. He took customer accounts from people 272 00:15:18,116 --> 00:15:20,836 Speaker 2: who thought they were investing, you know, putting their money 273 00:15:20,876 --> 00:15:23,116 Speaker 2: in a deposit, not even investing, and then he used 274 00:15:23,116 --> 00:15:25,676 Speaker 2: it to take risks they had not signed up for. 275 00:15:26,236 --> 00:15:29,716 Speaker 2: So that's illegal, but one given that everyone's given their 276 00:15:29,756 --> 00:15:32,916 Speaker 2: money back. Given I don't understand the difference between what 277 00:15:33,116 --> 00:15:35,356 Speaker 2: Sam bankman Free did and what John Corzon did at 278 00:15:35,516 --> 00:15:36,196 Speaker 2: MF Global. 279 00:15:36,236 --> 00:15:40,156 Speaker 1: I think it was called you're taxing my memory there? 280 00:15:40,196 --> 00:15:42,556 Speaker 2: But yeah, remember that, Yeah, you do it with the 281 00:15:42,596 --> 00:15:42,996 Speaker 2: same thing. 282 00:15:43,196 --> 00:15:44,676 Speaker 1: Can I back you up a set? Because I really 283 00:15:44,676 --> 00:15:47,996 Speaker 1: wanted to ask you about this. I was I took 284 00:15:48,036 --> 00:15:52,916 Speaker 1: a keen interest in the market in claims on FTX 285 00:15:53,156 --> 00:15:56,596 Speaker 1: because because it seemed really clear to me that what 286 00:15:56,636 --> 00:16:00,756 Speaker 1: the bankruptcy people were saying are signaling. It's like it's 287 00:16:00,796 --> 00:16:03,836 Speaker 1: this dumpster fire and there's nothing there and boy, just 288 00:16:03,916 --> 00:16:08,196 Speaker 1: be incinerated all this money that that wasn't true. And 289 00:16:08,556 --> 00:16:12,116 Speaker 1: it was to me how cheaply these things traded it first, 290 00:16:13,196 --> 00:16:17,436 Speaker 1: how did you even think to buy claims? 291 00:16:18,436 --> 00:16:22,276 Speaker 2: I'm fascinated by I've invested across every asset class from 292 00:16:22,556 --> 00:16:25,596 Speaker 2: Angel to venture to growth the public, and by far 293 00:16:25,716 --> 00:16:28,476 Speaker 2: the best asset class is distressed. Is similar to biology. 294 00:16:28,516 --> 00:16:30,276 Speaker 2: People don't want to hang around old people, so the 295 00:16:30,316 --> 00:16:33,796 Speaker 2: best businesses are businesses dealing with old people, and the 296 00:16:33,796 --> 00:16:36,796 Speaker 2: best asset class is distressed. So I look at bankruptcy 297 00:16:36,796 --> 00:16:38,796 Speaker 2: filings and I was fascinated by this. I got the 298 00:16:38,796 --> 00:16:41,596 Speaker 2: bankruptcy filing from the court. I read through it, and 299 00:16:41,676 --> 00:16:45,276 Speaker 2: in the bankruptcy claim it listed all their assets cash, 300 00:16:45,556 --> 00:16:47,716 Speaker 2: some bitcoin, et cetera. And one of the assets that 301 00:16:47,836 --> 00:16:50,556 Speaker 2: just popped out to me is they had invested five 302 00:16:50,596 --> 00:16:54,796 Speaker 2: hundred million dollars in Anthropic. Anthropic is the number two 303 00:16:55,116 --> 00:16:58,156 Speaker 2: AI company LM, and I couldn't find for the life 304 00:16:58,156 --> 00:17:01,116 Speaker 2: of me what evaluation was that they invested at, but 305 00:17:01,196 --> 00:17:03,356 Speaker 2: I figured it was somewhere between three and five billions. 306 00:17:03,396 --> 00:17:06,036 Speaker 2: So I took the most conservative, which meant a number, 307 00:17:06,076 --> 00:17:09,716 Speaker 2: which meant that one of the things that the that FDx, 308 00:17:09,756 --> 00:17:13,556 Speaker 2: a bankrupt FDx had that wouldultimately be distributed to the 309 00:17:13,636 --> 00:17:18,396 Speaker 2: claimants was ten percent I assumed of Anthropic. I valued 310 00:17:18,436 --> 00:17:24,076 Speaker 2: Anthropic at four at approximately approximately forty billion, So I 311 00:17:24,076 --> 00:17:27,596 Speaker 2: thought the steak is worth four billion claimants. Total claimants 312 00:17:27,676 --> 00:17:30,716 Speaker 2: nine billions. So just they at stake and anthropic I 313 00:17:30,836 --> 00:17:33,436 Speaker 2: valued at forty four cents on the dollar, claims were 314 00:17:33,436 --> 00:17:36,276 Speaker 2: selling for twenty two cents. To me, this was the 315 00:17:36,276 --> 00:17:36,956 Speaker 2: easiest trade I. 316 00:17:36,916 --> 00:17:40,316 Speaker 1: Ever made, And why do you think other people didn't 317 00:17:40,356 --> 00:17:41,076 Speaker 1: make that trade? 318 00:17:41,676 --> 00:17:44,516 Speaker 2: Occasionally you find something I don't know. This doesn't happen 319 00:17:44,556 --> 00:17:46,236 Speaker 2: to be very long. I'm like, oh my god, they've 320 00:17:46,276 --> 00:17:48,716 Speaker 2: missed it. And that is people didn't see the five 321 00:17:48,796 --> 00:17:50,916 Speaker 2: hundred million dollar number. They could see the five hundred 322 00:17:50,916 --> 00:17:53,996 Speaker 2: million dollars. What they couldn't see was the numerator of 323 00:17:54,036 --> 00:17:56,476 Speaker 2: the denominator, and that was the valuation they invest that 324 00:17:56,636 --> 00:17:59,956 Speaker 2: they invested at. And I thought, there's no way they 325 00:17:59,996 --> 00:18:03,316 Speaker 2: don't own at least ten percent of this thing. And 326 00:18:03,356 --> 00:18:05,516 Speaker 2: then you have to value another unknown and that is 327 00:18:05,556 --> 00:18:07,756 Speaker 2: what is that ten percent now? But I thought it's 328 00:18:07,796 --> 00:18:11,636 Speaker 2: worth probably forty sense a minimum of twenty three cents. 329 00:18:11,636 --> 00:18:14,756 Speaker 2: So all the crypto, all the cash, everything else was 330 00:18:14,796 --> 00:18:15,756 Speaker 2: just gonna be gravy. 331 00:18:16,756 --> 00:18:20,036 Speaker 1: To my bewilderment. People weren't paying attention it was. I mean, 332 00:18:20,076 --> 00:18:23,196 Speaker 1: what he did. He didn't take whatever it was, eleven 333 00:18:23,236 --> 00:18:26,276 Speaker 1: billion dollars of customer assets and spend it on you know, 334 00:18:27,316 --> 00:18:30,796 Speaker 1: blow and hookers and private jets. He put five billion 335 00:18:30,836 --> 00:18:34,436 Speaker 1: of it into into venture capital investments and this was 336 00:18:34,516 --> 00:18:37,596 Speaker 1: just one of them. And there was this pile of stuff. 337 00:18:37,636 --> 00:18:39,916 Speaker 1: And I keep waiting for someone to come and ask 338 00:18:39,956 --> 00:18:44,396 Speaker 1: the question, how good a VC was? Sam Bankman Free 339 00:18:44,756 --> 00:18:47,076 Speaker 1: he was doing it it Listen, he was, you know, like, 340 00:18:47,116 --> 00:18:49,676 Speaker 1: how how well did he perform compared to his peer group? 341 00:18:49,996 --> 00:18:53,076 Speaker 1: Because it wasn't He has a piece of You may 342 00:18:53,076 --> 00:18:54,876 Speaker 1: not even know this. He's a piece of space X 343 00:18:54,956 --> 00:18:57,516 Speaker 1: in there. He has it through Michael Kievs, but so 344 00:18:57,596 --> 00:19:00,116 Speaker 1: you don't see it. But he's got he's got pieces 345 00:19:00,156 --> 00:19:04,116 Speaker 1: of some really valuable stuff, even if even if crypto 346 00:19:04,276 --> 00:19:07,316 Speaker 1: goes to zero, and and never mind all the crypto 347 00:19:07,356 --> 00:19:11,556 Speaker 1: businesses he bought. So so so one last question is 348 00:19:11,596 --> 00:19:15,476 Speaker 1: because I'm just I'm curious, because I haven't because I 349 00:19:15,556 --> 00:19:17,556 Speaker 1: knew you made this trade. Someone told me about you 350 00:19:17,596 --> 00:19:19,236 Speaker 1: being in the market, and I thought, well, that's kind 351 00:19:19,236 --> 00:19:21,916 Speaker 1: of that's kind of cool. Did you worry at all 352 00:19:22,436 --> 00:19:27,756 Speaker 1: that the bankruptcy process itself was going to incinerate your profits, 353 00:19:28,276 --> 00:19:30,756 Speaker 1: that it was so expensive, it would be so expensive 354 00:19:30,796 --> 00:19:33,076 Speaker 1: that you would just you wouldn't end up seeing you 355 00:19:33,116 --> 00:19:34,876 Speaker 1: should have seen the money, but in the end it 356 00:19:34,916 --> 00:19:37,196 Speaker 1: would go in the pockets of Solo them and Cromwell lawyers. 357 00:19:38,316 --> 00:19:40,436 Speaker 2: That's that's a great question. But part of the analysis 358 00:19:40,436 --> 00:19:42,276 Speaker 2: I did want to put together the spreadsheet was it's 359 00:19:42,316 --> 00:19:45,196 Speaker 2: the same administrator that handled Enron, and I estimated the 360 00:19:45,196 --> 00:19:48,836 Speaker 2: cost at about a billion dollars and I thought, okay, 361 00:19:48,916 --> 00:19:52,516 Speaker 2: if if just the anthropic steak is where it's four billion, 362 00:19:52,596 --> 00:19:55,876 Speaker 2: the coins are worth three I saw seventy cents on 363 00:19:55,916 --> 00:19:58,156 Speaker 2: the dollar, and then take out a billion, so sixty 364 00:19:58,196 --> 00:20:00,796 Speaker 2: cents on the dollar. And then what it ends up. 365 00:20:00,836 --> 00:20:02,236 Speaker 2: It looks like the payout and a lot of the 366 00:20:02,276 --> 00:20:04,956 Speaker 2: stakes were talking about have already been sold. But it 367 00:20:04,996 --> 00:20:07,836 Speaker 2: looks to me what they're saying, the court administrator saying 368 00:20:07,916 --> 00:20:09,636 Speaker 2: that they now think they're going to I get somewhere 369 00:20:09,636 --> 00:20:11,676 Speaker 2: between one hundred and twenty one hundred and sixty cents 370 00:20:11,676 --> 00:20:14,236 Speaker 2: on the dollar. A lot of that because crypto has surged. 371 00:20:15,036 --> 00:20:17,156 Speaker 2: But the lesson I take away from all of this, 372 00:20:18,116 --> 00:20:20,316 Speaker 2: and this is a larger lesson about investing in life, 373 00:20:20,436 --> 00:20:23,676 Speaker 2: is the greatest return on invested capital is inversely for 374 00:20:23,756 --> 00:20:26,636 Speaker 2: related to how sexy something is. This isn't true of sports, 375 00:20:26,636 --> 00:20:28,796 Speaker 2: which you know better than me, because there's no shortage 376 00:20:28,836 --> 00:20:31,676 Speaker 2: of billionaires with midlife crises, and it's a regulated monopoly 377 00:20:31,716 --> 00:20:35,436 Speaker 2: the control supply. But generally speaking, outside of sports, the 378 00:20:35,436 --> 00:20:39,116 Speaker 2: best asset classes are the least sexy, and this was 379 00:20:39,276 --> 00:20:43,116 Speaker 2: a really unsexy investment. Everybody thought this thing it had fraud, 380 00:20:43,796 --> 00:20:46,156 Speaker 2: it had crypto, which was out of vogue. This thing 381 00:20:46,196 --> 00:20:50,076 Speaker 2: was supuzzedly going to zero, and any reasonable diligence said, no, 382 00:20:50,316 --> 00:20:52,316 Speaker 2: this is this is all upside. 383 00:20:53,116 --> 00:20:55,236 Speaker 1: I didn't really answer your question about what was different 384 00:20:55,236 --> 00:20:57,756 Speaker 1: from between what he did andto what John Corzin did, 385 00:20:58,076 --> 00:21:01,876 Speaker 1: and you've taxed my memory about what John Corzin did. 386 00:21:01,916 --> 00:21:03,996 Speaker 1: But I do think, what do I think? I think 387 00:21:04,036 --> 00:21:08,236 Speaker 1: that there's a kind of misapprehension in the general tenor 388 00:21:08,396 --> 00:21:13,556 Speaker 1: of the response to Sam Bankman freed that people still 389 00:21:13,596 --> 00:21:18,876 Speaker 1: talk about it as if what he did was intentionally 390 00:21:18,916 --> 00:21:22,516 Speaker 1: set up a business to steal customer money, stole the 391 00:21:22,516 --> 00:21:25,076 Speaker 1: customer money, and the customers don't have any money now. 392 00:21:25,596 --> 00:21:28,756 Speaker 1: And what he actually did was set up a business 393 00:21:28,756 --> 00:21:30,996 Speaker 1: that was I mean, it was jenkinitly set up in 394 00:21:30,996 --> 00:21:34,236 Speaker 1: the first place, but it was clearly not start. It 395 00:21:34,316 --> 00:21:38,156 Speaker 1: didn't start as a fraud was in and of itself, 396 00:21:38,276 --> 00:21:40,916 Speaker 1: a successful business if he'd just not done the idiot 397 00:21:40,916 --> 00:21:44,276 Speaker 1: things he'd done with his edge fund and then got 398 00:21:44,356 --> 00:21:48,396 Speaker 1: himself in a pickle in June of twenty twenty two 399 00:21:48,556 --> 00:21:52,116 Speaker 1: when crypto lenders asked for the ten billion dollars they'd 400 00:21:52,156 --> 00:21:54,356 Speaker 1: lent him back, and instead of just telling them I 401 00:21:54,396 --> 00:21:56,996 Speaker 1: don't have it, I put it in VC Investments used 402 00:21:56,996 --> 00:21:59,796 Speaker 1: the customer money to fill the hole. And that was 403 00:21:59,836 --> 00:22:03,596 Speaker 1: a really stupid thing to do. It is fraud, but 404 00:22:03,636 --> 00:22:07,396 Speaker 1: it's it's just it's different than like evil person sets 405 00:22:07,396 --> 00:22:10,236 Speaker 1: out to do evil. I feel boat. I feel sad 406 00:22:10,236 --> 00:22:12,996 Speaker 1: about him mainly, and I think that what it is 407 00:22:12,996 --> 00:22:17,076 Speaker 1: is like the vice, the character flaw, if you will, 408 00:22:17,676 --> 00:22:20,236 Speaker 1: or the pattern. It's more the pattern in his character 409 00:22:20,756 --> 00:22:25,316 Speaker 1: that leads to this behavior. It was that was visible 410 00:22:25,756 --> 00:22:27,876 Speaker 1: in every other aspect of his life, and it was 411 00:22:28,236 --> 00:22:32,676 Speaker 1: a pattern of foisting risk upon other people without their permission. 412 00:22:33,116 --> 00:22:34,636 Speaker 1: And he did it. He does it. He did it 413 00:22:34,676 --> 00:22:36,436 Speaker 1: over and over. He did it in his romantic life, 414 00:22:36,476 --> 00:22:39,236 Speaker 1: he did it in his friendships. And he comes by 415 00:22:39,356 --> 00:22:41,876 Speaker 1: this vice. Honestly, I think he himself has sort of 416 00:22:41,996 --> 00:22:44,116 Speaker 1: numbed to risk and kind of thinks he's right all 417 00:22:44,156 --> 00:22:48,756 Speaker 1: the time anyway, so he didn't actually probably completely grow 418 00:22:49,356 --> 00:22:52,236 Speaker 1: the risk that he was foisting on others. I thought 419 00:22:52,236 --> 00:22:55,236 Speaker 1: this is all going to work out. That was stupid 420 00:22:55,556 --> 00:22:59,676 Speaker 1: and a crime, but I can understand how he got there. 421 00:23:00,116 --> 00:23:03,116 Speaker 1: And I do have a problem with twenty five years 422 00:23:03,156 --> 00:23:06,996 Speaker 1: in jail. I think, like, okay, jail, that makes some sense, 423 00:23:07,396 --> 00:23:11,476 Speaker 1: but like, I don't know how you even measure these things, 424 00:23:11,476 --> 00:23:12,156 Speaker 1: but it's like. 425 00:23:13,996 --> 00:23:16,316 Speaker 2: Twenty five years for like that is almost a death sentence. 426 00:23:16,476 --> 00:23:18,956 Speaker 1: Yeah, so I just don't I think that's excessive and 427 00:23:19,156 --> 00:23:21,996 Speaker 1: I don't get it. But people will argue with me. 428 00:23:22,316 --> 00:23:24,196 Speaker 2: But I want to put forward a thesis because you're 429 00:23:24,236 --> 00:23:28,076 Speaker 2: a storyteller and just love the way you think through stuff. 430 00:23:28,196 --> 00:23:30,076 Speaker 2: I would argue, and I want you to respond to 431 00:23:30,116 --> 00:23:33,076 Speaker 2: the thesis that the difference between playing golf at Centennial 432 00:23:33,076 --> 00:23:35,236 Speaker 2: and going to Wimbledon, which I imagine I would be 433 00:23:35,276 --> 00:23:37,636 Speaker 2: doing if I were John Corzon right now, I don't 434 00:23:37,636 --> 00:23:40,436 Speaker 2: see a lot of difference in the criminal behavior here. 435 00:23:40,996 --> 00:23:45,196 Speaker 2: The difference is is brand management, and that is what 436 00:23:45,316 --> 00:23:47,916 Speaker 2: you have with Sam bankmin Fried is a guy who 437 00:23:48,036 --> 00:23:49,876 Speaker 2: had this kind of floppy I just rolled out of 438 00:23:49,916 --> 00:23:53,756 Speaker 2: bed crypto thing. He's purposely set up this organization of 439 00:23:53,756 --> 00:23:57,196 Speaker 2: the Bahamas, which felt sketchy. He was sleeping with and 440 00:23:57,236 --> 00:24:00,876 Speaker 2: doing drugs with his coworkers. He decided to go on 441 00:24:00,996 --> 00:24:06,676 Speaker 2: the most ridiculously ill advised apology tour, which entirely backfired. 442 00:24:07,116 --> 00:24:10,996 Speaker 2: Whereas Corson listened very smart people who said, shut the 443 00:24:11,036 --> 00:24:15,876 Speaker 2: fuck up. Nobody speaks to anybody but your lawyers go quiet. 444 00:24:16,876 --> 00:24:18,796 Speaker 2: Act like the victim. You didn't know what was going on. 445 00:24:19,036 --> 00:24:22,676 Speaker 2: Act contrite. You were terrible fiduciary. You had no idea 446 00:24:23,316 --> 00:24:26,316 Speaker 2: as opposed to going and speaking to Andrew Ross Sorkin 447 00:24:27,316 --> 00:24:33,356 Speaker 2: in cargo shorts in crypto. The difference between Corsine again 448 00:24:33,436 --> 00:24:36,116 Speaker 2: going to Wimbledon and Bankment freed with a life sentence 449 00:24:36,276 --> 00:24:38,596 Speaker 2: is poor communications and brand strategy. 450 00:24:38,716 --> 00:24:43,356 Speaker 1: Your thoughts, well, you're absolutely right that the way he 451 00:24:43,476 --> 00:24:49,036 Speaker 1: handled it from the minute it all fell apart was catastrophic. Uh, 452 00:24:49,356 --> 00:24:52,156 Speaker 1: You've got to remind me what John Corzine actually did, 453 00:24:52,476 --> 00:24:54,036 Speaker 1: because I don't remember. 454 00:24:54,316 --> 00:24:58,036 Speaker 2: MF Global customer deposits. It ends up were being used 455 00:24:58,036 --> 00:25:01,396 Speaker 2: to expect alative investments in the market. John Corzine, My 456 00:25:01,476 --> 00:25:03,836 Speaker 2: understanding is sid interest rates were gonna head one way, 457 00:25:04,716 --> 00:25:07,116 Speaker 2: and he claims he didn't know these deposits were being 458 00:25:07,116 --> 00:25:09,756 Speaker 2: co mingled. It was pretty much the exact same crime. 459 00:25:10,636 --> 00:25:13,676 Speaker 2: And Corzon got banned from the industry or you know, 460 00:25:13,956 --> 00:25:17,196 Speaker 2: paid a fee MF Global I think went away. But 461 00:25:17,316 --> 00:25:19,676 Speaker 2: these things, you know, tomato tomato, as far as I 462 00:25:19,716 --> 00:25:22,316 Speaker 2: can tell, and one guy's got a life sentence and 463 00:25:22,356 --> 00:25:24,356 Speaker 2: the others at Wimbledon, I don't I don't even know 464 00:25:24,356 --> 00:25:26,316 Speaker 2: if who watches tennis, But to me, it speaks to 465 00:25:26,356 --> 00:25:27,836 Speaker 2: the notion of public perception. 466 00:25:28,476 --> 00:25:30,636 Speaker 1: It also speaks to the moment, to the moment that 467 00:25:31,596 --> 00:25:34,916 Speaker 1: there's a frustration with the ability to get our hands 468 00:25:34,956 --> 00:25:37,916 Speaker 1: around the necks of rich people who do bad things. 469 00:25:38,156 --> 00:25:41,876 Speaker 1: And when you get alive, when now the sort of 470 00:25:42,236 --> 00:25:46,036 Speaker 1: the speed with which the justice system leaps into action 471 00:25:46,596 --> 00:25:50,796 Speaker 1: is incredible. Sam was really easy to prosecute, you know, 472 00:25:50,916 --> 00:25:54,756 Speaker 1: he was just like anything he gave me everything is 473 00:25:54,876 --> 00:25:57,956 Speaker 1: so think about this. I always stop myself just short 474 00:25:57,956 --> 00:26:01,596 Speaker 1: of thinking he has a death wish, because his behavior 475 00:26:02,556 --> 00:26:06,676 Speaker 1: kind of suggests it. And he even when things were good, 476 00:26:08,316 --> 00:26:13,636 Speaker 1: he was always extremely vulnerable, like no bodyguards, no, you know, 477 00:26:13,676 --> 00:26:15,996 Speaker 1: you could sneak into his office any hour of the day. 478 00:26:16,116 --> 00:26:19,036 Speaker 1: You could he really was? He was. He has a 479 00:26:19,116 --> 00:26:24,156 Speaker 1: sense that like he doesn't protect himself almost willfully, and 480 00:26:24,196 --> 00:26:27,356 Speaker 1: so that just extended into what happened in the legal process. 481 00:26:28,316 --> 00:26:31,516 Speaker 2: So, Michael, I love this and I'm you're fascinating storyteller. 482 00:26:31,556 --> 00:26:34,756 Speaker 2: Just a couple questions to wrap up here. I find 483 00:26:34,756 --> 00:26:36,836 Speaker 2: one of the most fascinating characters in all of us. 484 00:26:37,196 --> 00:26:42,156 Speaker 2: Was is it Caroline Ellison? Caroline Ellison any any inside? 485 00:26:42,276 --> 00:26:44,036 Speaker 2: A lot of people didn't think that she ended up 486 00:26:44,076 --> 00:26:46,156 Speaker 2: being what a my description or I think the Southern 487 00:26:46,156 --> 00:26:51,756 Speaker 2: District called her the ultimate perfect example, quintessential government witness, 488 00:26:51,836 --> 00:26:54,196 Speaker 2: but they put her in prison. We know a little 489 00:26:54,236 --> 00:26:56,596 Speaker 2: bit about Sam, we know almost nothing about her. What 490 00:26:56,636 --> 00:26:59,276 Speaker 2: were your impressions or what can you provide us some 491 00:26:59,316 --> 00:27:00,316 Speaker 2: texture on Allison? 492 00:27:00,716 --> 00:27:05,116 Speaker 1: She was a math kid who thought of herself. I 493 00:27:05,156 --> 00:27:06,476 Speaker 1: think she's kind of there was a bit of a 494 00:27:06,476 --> 00:27:10,116 Speaker 1: split personality thing going on with her. She had a 495 00:27:10,196 --> 00:27:13,196 Speaker 1: loss for a stable and normal life and at the 496 00:27:13,236 --> 00:27:15,476 Speaker 1: same time thought of herself as someone who would do 497 00:27:15,556 --> 00:27:20,356 Speaker 1: radical and crazy things. And was she in college, joined 498 00:27:20,356 --> 00:27:24,156 Speaker 1: the effective altruist movement and seemed to be kind of 499 00:27:24,276 --> 00:27:27,236 Speaker 1: all in on that. And I tell you she was 500 00:27:27,356 --> 00:27:30,996 Speaker 1: very susceptible to the charms of Sam Bank and Freed. 501 00:27:31,356 --> 00:27:34,516 Speaker 1: Here's a texture for you. She told a colleague. This 502 00:27:34,556 --> 00:27:36,716 Speaker 1: didn't even make the book, but she told a colleague 503 00:27:37,356 --> 00:27:42,156 Speaker 1: that even after she and Sam had broke off their relationship, 504 00:27:42,796 --> 00:27:45,996 Speaker 1: it was worth her having sex with Sam because it 505 00:27:46,116 --> 00:27:49,756 Speaker 1: made Sam more efficient, and making Sam more efficient was 506 00:27:49,796 --> 00:27:52,556 Speaker 1: the best thing she could do for mankind, because Sam 507 00:27:52,636 --> 00:27:55,876 Speaker 1: was the person who most likely to save humanity. So 508 00:27:56,996 --> 00:27:58,916 Speaker 1: that gives you an idea of how. 509 00:27:58,796 --> 00:28:00,676 Speaker 2: She had I'm going to try that at a bar. 510 00:28:01,036 --> 00:28:04,836 Speaker 2: Just the world to be a better place if I'm 511 00:28:04,836 --> 00:28:07,996 Speaker 2: more relaxed, and I so this this will be the 512 00:28:08,076 --> 00:28:08,956 Speaker 2: last question. 513 00:28:10,476 --> 00:28:10,796 Speaker 1: You have. 514 00:28:12,356 --> 00:28:15,516 Speaker 2: I look at I mean, granted, you know my idols 515 00:28:15,516 --> 00:28:17,156 Speaker 2: are different to most people's, but I look at you 516 00:28:17,156 --> 00:28:19,236 Speaker 2: and I think I want to be this guy. You're 517 00:28:19,276 --> 00:28:22,676 Speaker 2: just doing cool shit, telling great stories, writing interesting books, 518 00:28:22,716 --> 00:28:25,636 Speaker 2: going to movie premieres. I think you make an exceptional living. 519 00:28:26,436 --> 00:28:29,636 Speaker 2: But by all, at least from an exterior perspective, you're 520 00:28:29,636 --> 00:28:32,076 Speaker 2: in a great seat. We have a lot of young 521 00:28:32,116 --> 00:28:34,556 Speaker 2: men and women who listen to this podcast. Can you 522 00:28:34,596 --> 00:28:37,316 Speaker 2: give us any one or two pieces of advice for 523 00:28:37,436 --> 00:28:39,716 Speaker 2: someone who looks at you and thinks you know, I'd 524 00:28:39,796 --> 00:28:42,236 Speaker 2: like to be in that seat where there any things 525 00:28:42,876 --> 00:28:44,796 Speaker 2: that you wish you'd done more or less of. What 526 00:28:44,836 --> 00:28:46,716 Speaker 2: advice would you have to your younger self. 527 00:28:47,276 --> 00:28:50,356 Speaker 1: Well, first off, I never thought that way about what 528 00:28:50,556 --> 00:28:52,836 Speaker 1: seat I wanted to be in. I never thought I 529 00:28:52,876 --> 00:28:55,476 Speaker 1: want to be that person. I always just wanted to 530 00:28:55,516 --> 00:28:59,756 Speaker 1: be me. It's like the best me. And there were 531 00:28:59,836 --> 00:29:03,196 Speaker 1: things that made me feel the best me and I 532 00:29:03,196 --> 00:29:06,476 Speaker 1: could and writing was writing was one of them. Writing 533 00:29:06,596 --> 00:29:08,476 Speaker 1: was the big one, and I just thought, I've got 534 00:29:08,476 --> 00:29:11,396 Speaker 1: to do this, So not trying to be someone else 535 00:29:11,876 --> 00:29:13,876 Speaker 1: would be the would be one of the first things 536 00:29:13,916 --> 00:29:17,636 Speaker 1: I would say. Another thing that led me to like 537 00:29:17,756 --> 00:29:19,996 Speaker 1: lots of the good things that have happened in my life. 538 00:29:20,796 --> 00:29:24,276 Speaker 1: It's related. It's like not paying attention to what you're 539 00:29:24,356 --> 00:29:27,916 Speaker 1: supposed to be paying attention to, Like what everybody else 540 00:29:27,996 --> 00:29:30,676 Speaker 1: is paying attention to. If everybody else is paying attention 541 00:29:30,716 --> 00:29:32,956 Speaker 1: to it, it doesn't need your attention kind of thing. 542 00:29:33,676 --> 00:29:35,956 Speaker 1: What needs your attention is the thing that you're interested 543 00:29:35,996 --> 00:29:38,476 Speaker 1: in that no one's paying attention to and no one 544 00:29:38,596 --> 00:29:41,716 Speaker 1: encourages you to pay attention to, like your FTX investment 545 00:29:42,756 --> 00:29:45,916 Speaker 1: that it's like, oh, there's something here and I really 546 00:29:45,956 --> 00:29:48,556 Speaker 1: care about it. And if you can find that and 547 00:29:48,596 --> 00:29:51,916 Speaker 1: nobody else is there, that seems like a lonely place, 548 00:29:52,236 --> 00:29:55,156 Speaker 1: but it's it's the golden place. And you've got to 549 00:29:55,236 --> 00:29:57,156 Speaker 1: like lean into that rather than lean out of it, 550 00:29:57,316 --> 00:30:00,916 Speaker 1: Like learn to recognize that moment where God, I love 551 00:30:01,036 --> 00:30:04,036 Speaker 1: doing this thing. No one is saying I should be 552 00:30:04,036 --> 00:30:06,156 Speaker 1: doing this thing. No one else is doing this thing, 553 00:30:06,716 --> 00:30:09,836 Speaker 1: but I love it. Go with it with that feeling. 554 00:30:09,996 --> 00:30:12,036 Speaker 1: It's great for an investor, it's great for a writer, 555 00:30:13,076 --> 00:30:15,596 Speaker 1: but I think it's great beyond that. It's sort of 556 00:30:15,636 --> 00:30:19,916 Speaker 1: like you're arbitraging your personality against the world that you 557 00:30:19,996 --> 00:30:23,636 Speaker 1: are finding where you are special in the level of 558 00:30:23,676 --> 00:30:27,676 Speaker 1: interest you have in something. And that's when I find 559 00:30:27,756 --> 00:30:29,796 Speaker 1: my subject matters are the most exciting to me when 560 00:30:29,876 --> 00:30:32,556 Speaker 1: nobody The thing that troubled me most about Sam Bankmanfried 561 00:30:32,676 --> 00:30:35,356 Speaker 1: is a subject is I was genuinely interested in him 562 00:30:35,396 --> 00:30:36,796 Speaker 1: right from the moment I met him, But it worried 563 00:30:36,836 --> 00:30:39,996 Speaker 1: me that so many other people were uh and and 564 00:30:40,036 --> 00:30:41,636 Speaker 1: the only thing that kept me going was that I 565 00:30:41,756 --> 00:30:45,236 Speaker 1: had this privileged view of it. But what I really 566 00:30:45,276 --> 00:30:47,556 Speaker 1: like with the subject is like the Oakland A's when 567 00:30:47,556 --> 00:30:49,716 Speaker 1: nobody gives a shit about them. But I see there's 568 00:30:49,716 --> 00:30:54,356 Speaker 1: something great there and that that's the that's the stuff. 569 00:30:54,636 --> 00:30:56,836 Speaker 1: It's like, that's when you know you're in the right place. 570 00:30:56,836 --> 00:30:59,076 Speaker 1: It's like you're there for some genuine reasons, because there's 571 00:30:59,076 --> 00:31:00,956 Speaker 1: no ingenuine reasons to be there. 572 00:31:01,916 --> 00:31:04,676 Speaker 2: Arbitrage in your personality against the rest of the world. 573 00:31:04,716 --> 00:31:06,836 Speaker 2: I love that. Michael Lewis is the host of the 574 00:31:06,876 --> 00:31:10,356 Speaker 2: podcast Against the Rules, also a New York Times bestselling 575 00:31:10,356 --> 00:31:14,076 Speaker 2: author of several books, including The Fifth Risk, Flashboys, and 576 00:31:14,116 --> 00:31:17,396 Speaker 2: The Big Short. In addition, some of these have been 577 00:31:17,436 --> 00:31:19,996 Speaker 2: made into great movies, The Big Short, Moneyball, and The 578 00:31:19,996 --> 00:31:23,196 Speaker 2: blind Side, all nominated for Academy Awards. Grew up in 579 00:31:23,196 --> 00:31:26,196 Speaker 2: New Orleans and remains deeply interested and involved in the city, 580 00:31:26,236 --> 00:31:30,356 Speaker 2: but now lives in Berkeley, California, Alma mater Gobars with 581 00:31:30,476 --> 00:31:33,276 Speaker 2: his wife, Tabitha Soren, and their children. If I could 582 00:31:33,316 --> 00:31:36,476 Speaker 2: give my kids any skill, Michael, it would be your skill, 583 00:31:36,556 --> 00:31:39,596 Speaker 2: and that is you are a fantastic storyteller. Really appreciate 584 00:31:39,636 --> 00:31:40,036 Speaker 2: your time. 585 00:31:40,276 --> 00:31:46,236 Speaker 1: Thanks for having me, Scott. Thank you so much to 586 00:31:46,276 --> 00:31:49,156 Speaker 1: Scott Galloway for having me on a show. You can 587 00:31:49,196 --> 00:31:52,396 Speaker 1: go and subscribe to the proft G Pod, wherever you 588 00:31:52,436 --> 00:31:53,916 Speaker 1: get your podcasts,