Speaker 1: Pushkin. Hey there everyone, it's Michael Lewis. We're about to
Speaker 1: go on a brief holiday break. It against the rules,
Speaker 1: but we have some banger episodes in the works about
Speaker 1: the rise of sports gambling in the United States and
Speaker 1: the ride we might be about to go on. For instance,
Speaker 1: I said to LJ, my producer, to Kansas, where she
Speaker 1: meets up with college students not only drinking while underaged,
Speaker 1: but possibly even gambling on sports. And we take a
Speaker 1: little tour of countries where gambling is even more entrenched
Speaker 1: than it is here, just to see how god forsaken
Speaker 1: things could get here if we really try. And then
Speaker 1: I try to redeem myself by learning a thing or
Speaker 1: two about how we can gird our brains to resist
Speaker 1: the onslaught of addictive temptations. But that's all to come.
Speaker 1: In the meantime, I can offer you a little treat.
Speaker 1: One of the great pleasures I've had while making the season,
Speaker 1: and it is a chance to talk with other folks
Speaker 1: about our reporting. Just recently I spoke with Scott Galloway
Speaker 1: on his podcast. Scott's a professor of marketing at the
Speaker 1: NYU Stern School of Business and a very smart guy.
Speaker 1: We talk about the sports gaming industry, of course, but
Speaker 1: also about a whole bunch of other things. Anyway, here's
Speaker 1: my conversation with Scott Galloway on his show Prof g.
Speaker 2: Michael. Where does this podcast find you?
Speaker 1: Smoke Tree Ranch off the side of Palm Springs, which
Speaker 1: is a gated community created by Walt Disney and some
Speaker 1: of his pals way back when.
Speaker 2: Wow, let's buzz right into it. In the latest season
Speaker 2: of your podcast Against the Rules, you investigate sports betting,
Speaker 2: which we talk a lot about here on the pod,
Speaker 2: which you refer to as a great social experiment. Walk
Speaker 2: us through the state of play of this experience and
Speaker 2: where you think we're headed.
Speaker 1: So in nineteen ninety two, Bill Bradley said, it created
Speaker 1: essentially a federal ban on sports betting. It exempted Nevada,
Speaker 1: but basically it has been against. It was against the law,
Speaker 1: and the Supreme Court repeal that in twenty eighteen, and
Speaker 1: the new law of the land is states can legalize
Speaker 1: it if they want to, and thirty nine states have
Speaker 1: and about two thirds of the American population has access
Speaker 1: to sports betting on their phones. About one third still doesn't.
Speaker 1: And the industry here is dominated by two companies, fan
Speaker 1: duel and draftings. They have a little hard to say exactly,
Speaker 1: but say roughly seventy percent of the market. And they
Speaker 1: were before they were sports gambling companies. They were daily
Speaker 1: fantasy sports companies, which gave the actually was the perfect
Speaker 1: the perfect thing to be before mobile sports gambling is legalized.
Speaker 1: As a daily fantasy sports company, you know all the customers,
Speaker 1: you have data on all the customers. Sports bets in
Speaker 1: America have skyrocket. It's a little again, a little hard
Speaker 1: to say. It is hard to know what numbers to
Speaker 1: trust because there was an illegal market that presumably is
Speaker 1: not quite as big as it used to be, but
Speaker 1: it's gone from the legal market, has gone from a
Speaker 1: few billion to over one hundred billion a year, and
Speaker 1: there's just starting to be some academic research showing the
Speaker 1: social effects of this. I mean, it's kind of cool.
Speaker 1: This the way it's rolled out has created these natural
Speaker 1: experiments that you have because you have states that are
Speaker 1: side by side. One is legalized that one has not
Speaker 1: legalized it, so you can sort of you can sort
Speaker 1: of tease out the effects of legalizing it. But bankruptcies
Speaker 1: are up, savings rates are down. If it follows the
Speaker 1: path that have followed in the United Kingdom and Australia,
Speaker 1: suicide rates will be up, so there's some social costs
Speaker 1: to it all. But I think, like really early days,
Speaker 1: I mean, you know, it's only been legal for six years.
Speaker 1: There were companies that have really only been up and running
Speaker 1: in most states for just a few years. It's kind
Speaker 1: of not hard to make some predictions about where it's going,
Speaker 1: but it's not there yet.
Speaker 2: So I'm a glass half empty kind of guy. But
Speaker 2: you cited some stats. I've seen twenty to thirty percent
Speaker 2: increase in bankruptcys and states illegalize it. I see young
Speaker 2: men with kind of less structure in their lives who
Speaker 2: are more prone to addiction. I think six out of
Speaker 2: seven gambling addicts are men. My understanding is gambling has
Speaker 2: the highest suicide rate because if you're addicted to meths,
Speaker 2: people figure it out and try and intervene. You can
Speaker 2: get in way over your skis with gambling and nobody knows,
Speaker 2: and you decide there's only one way out. I'll use
Speaker 2: an academic. I think this is a fucking disaster.
Speaker 1: Your thoughts, yeah, I'm totally with you. This is why
Speaker 1: I was trucked to the subject. I couldn't believe. Well, look,
Speaker 1: once it's legalized, I'm a little shocked by the insensitivity
Speaker 1: of the social to the public health crisis it's going
Speaker 1: to trigger because it's essentially a wild West in how
Speaker 1: you can get to the customer. And they aren't, you know,
Speaker 1: the sports gambling companies, they were mistake for casino companies
Speaker 1: that people kind of thought, oh, it's going to be
Speaker 1: like a casino business, so that the kind of vague
Speaker 1: with the house takes about roughly five percent. It's always
Speaker 1: been kind of five percent, will remain kind of five percent.
Speaker 1: This number keeps going up with these companies, it's like
Speaker 1: at fifteen percent. And effectively, what they are doing is
Speaker 1: mining the entire US population for people willing to make
Speaker 1: stupid sports bets. And they have a finely honed ability
Speaker 1: to identify anybody who actually knows what they're doing, like
Speaker 1: the sharp gambler, someone who actually might have some edge
Speaker 1: in a sport, and toss them out or limit them
Speaker 1: to the point where they're effectively tossed out, so that
Speaker 1: their business is built on people who don't know what
Speaker 1: they're doing. And it's further in a way that you know, casinos.
Speaker 1: When you're in a casino course is manipulating you in
Speaker 1: all kinds of diabolical ways. But when the casino's in
Speaker 1: your pocket, it's like your whole life is in the
Speaker 1: casino kind of thing. And they have an ability to
Speaker 1: sort of like nudge people into doing stuff that they
Speaker 1: just wouldn't think to do it it is and it's
Speaker 1: making the number and dumber bets and you kind of
Speaker 1: think about, Okay, like what's the disaster going to look like?
Speaker 1: It's not just men, it's young men. Young men are
Speaker 1: the real target. The Lancet of the Medical British Medical
Speaker 1: Publication just came out with a study that said, I mean,
Speaker 1: this number is so high that I want to just
Speaker 1: pause before I say it, but the twenty six percent
Speaker 1: of young men who were exposed to gambling develops some
Speaker 1: sort of gambling problem that seems very high. But even
Speaker 1: if it's half that, It's like the NCAA, whose new president,
Speaker 1: Charlie Baker, was just shocked by the gambling activity he
Speaker 1: was seeing on campuses, commissioned to study to see how
Speaker 1: many people were doing this, and more than sixty percent
Speaker 1: of young men on college campuses is a sports gambling.
Speaker 1: So you do the mad It's like, you got it.
Speaker 1: We're like, it's almost like we're creating a pool of
Speaker 1: future gambling addicts. And you're right, it's very interesting. You're
Speaker 1: right about like when you think about what's going to
Speaker 1: stop this train, if you compare it to like opioids,
Speaker 1: Like opioids was able to run for twenty years before
Speaker 1: anybody really put a stop to it, and and seven
Speaker 1: hundred and fifty thousand people die, and it was about
Speaker 1: as visible an epidemic as you can have. This is
Speaker 1: it's invisible. You don't see what's happening to people until
Speaker 1: So you wonder, if it takes twenty years for the
Speaker 1: society to get its hands around the opioid industry, how
Speaker 1: long is it going to take it to get its
Speaker 1: hands around the gambling industry. So, I yes, I agree
Speaker 1: with you. It's like, how on earth do we let
Speaker 1: this happen? But it's of a piece with other things
Speaker 1: we have let happen.
Speaker 2: I mean, when I think about it, it's not only
Speaker 2: My fear isn't only about gambling addiction. But when you
Speaker 2: put kind of an on demand DOPA bag in young
Speaker 2: people's pockets, just as they're kind of hardwiring their brain
Speaker 2: and learning about life and reward that we're just setting
Speaker 2: them up to be just fucking dopa monsters. And if
Speaker 2: they can't get it from gambling because they run out
Speaker 2: of money, they're going to find it somewhere else. Have
Speaker 2: you seen any of My thesis is we are literally
Speaker 2: unleashing into the economy, into the world, millions of dopa
Speaker 2: monsters that will are just going to find whatever way
Speaker 2: they can opiates sex porn, online shopping. They're just going
Speaker 2: to be so hungry for that rush because their brains
Speaker 2: will have been wired to expect that rush, that it's
Speaker 2: going to have all sorts of ramifications outside of gambling.
Speaker 2: Am I catastrophizing here?
Speaker 1: I mean, it doesn't sound unreasonable to me. My first
Speaker 1: thought when you started down that little path was it's
Speaker 1: interesting that sports used to be a place where you
Speaker 1: learned the slow rewards that come from a modification.
Speaker 2: Yeah.
Speaker 1: Yeah, you learned the opposite thing, and that we're turning
Speaker 1: that this mechanism that used used to take young men
Speaker 1: and teach them a certain lesson, and were you taking
Speaker 1: it to teach a different lesson. So it was disturbing
Speaker 1: enough to me that I have. My youngest is a
Speaker 1: seventeen year old son. Like I gave him some money
Speaker 1: and an adult supervision so he could learn how to
Speaker 1: navigate this world, because it does feel like, not only
Speaker 1: are we creating a world of you know, dopamine addicts,
Speaker 1: but the signal you send, especially to young men because
Speaker 1: it's so susceptible to this, is the world actually doesn't
Speaker 1: give a shit about you, that it's out to get you.
Speaker 1: When I got into this, when I started working on
Speaker 1: the story, what motivated me was the book I wrote
Speaker 1: about stuff I'd learned in the book I'd written about
Speaker 1: the pandemic. I got interested in it because the US
Speaker 1: response in the beginning was just so appalling, and we had, like,
Speaker 1: you know, twenty percent of the world's deaths with four
Speaker 1: percent of the world's population in the first six months.
Speaker 1: And I learned in the in the process that this
Speaker 1: is that in the few years running leading up to
Speaker 1: the pandemic, we'd had experienced the decline of life expectancy
Speaker 1: in three straight years, and that had not happened since
Speaker 1: nineteen eighteen. And I thought, well, the pandemic's happening in
Speaker 1: the context of a society that's already not taking care
Speaker 1: of its people, that some basic failure is occurring, and
Speaker 1: this feels like part of that. That it's like it's
Speaker 1: a public health problem, and that it's not that hard.
Speaker 1: Even if you can't do anything about legalizing sports gambling,
Speaker 1: it's not that hard to do some things to blunt
Speaker 1: its effects. So here's my solution. I'm trying to work
Speaker 1: within the constraints of the society. I don't think actually
Speaker 1: me going off about how diabolical it all is is
Speaker 1: going to help anything. They're doing something that I think
Speaker 1: is kind of interesting the company, the sports gambling companies
Speaker 1: they are because they're so good at chucking out of
Speaker 1: their business as anybody who knows what they're doing. They're
Speaker 1: isolating people who don't know what they're doing. So, by definition,
Speaker 1: if you have an account in good standing at FanDuel
Speaker 1: and DraftKings and you're doing a lot of sports betting,
Speaker 1: you have signals of the world you don't know what
Speaker 1: you're doing. I think that if we get that message
Speaker 1: out and that if you say, like, if you're looking
Speaker 1: for someone to manage your money, the first question you
Speaker 1: should ask them is they have account in good standing
Speaker 1: and FanDuel and DraftKings that they do. You should never
Speaker 1: give them your money to manage that. If you make it,
Speaker 1: if you make it a point of shame that you're
Speaker 1: in good with the industry, that you might stigmatize it
Speaker 1: in a way that makes it less dangerous.
Speaker 2: We'll be right back your book going infant. I'll under
Speaker 2: some of what I call the same texture of criticism
Speaker 2: as Walter Isaacson's biography and Elon Musk and that of us.
Speaker 2: You were kind of seeing lessly as having a front
Speaker 2: row seat, but not seeing what was going on. Do
Speaker 2: you think that's a fair criticism.
Speaker 1: I didn't write it until after it all collapsed. When
Speaker 1: I sat down to write the first words, there wasn't
Speaker 1: much I didn't know had happened. I mean, very little
Speaker 1: happened came out of the trial that wasn't already kind
Speaker 1: of known. But it is true that I was there
Speaker 1: a fly on the wall from kind of end of
Speaker 1: two thousand and twenty one through the collapse of November
Speaker 1: twenty twenty two. And if you'd have said he has
Speaker 1: the money, the customer's money in Alameda, I would have said,
Speaker 1: you're insane. There's no way that would be so dumb.
Speaker 1: So I did poke. Everybody did this, everybody who saw
Speaker 1: the structure of the business. He's got his own private
Speaker 1: hedge fund on our trading on the side of it
Speaker 1: in exchange, and he owns them both. I did ask
Speaker 1: lots of questions about conflicts of interest, but what I imagine
Speaker 1: would be the problem wasn't the problem. I imagine the
Speaker 1: problem was that his trading firm would have the same
Speaker 1: sort of privileged access to the exchange that high frequency
Speaker 1: traders get on the New York Stock Exchange, and privilege
Speaker 1: access to data and so on, so front running whatever,
Speaker 1: and that wasn't the case. I did not see that, like, oh, yeah,
Speaker 1: the money's in the wrong place, so that's true. Did
Speaker 1: I in retrospect think I should have seen it?
Speaker 2: Not?
Speaker 1: Really, no one else saw it either. You know, there
Speaker 1: wasn't the interesting thing. There are many interesting things about
Speaker 1: the story, but one interesting thing is, Yeah, a lot
Speaker 1: of people said, I wonder if they're shady like FTX,
Speaker 1: But that's the in crypto, that's easy. Like as a heuristic,
Speaker 1: if you're a successful crypto business, you're you know, you're
Speaker 1: largely unregulated, and you're twenty six years old and no
Speaker 1: one's paying that much attention the specific criticism, Oh he's
Speaker 1: got the customer's money in his hedge fund. No one said.
Speaker 1: Zero people said so, not even any ad whatever, one
Speaker 1: hundred and something professional investors who owned a piece of them,
Speaker 1: and they didn't say it. So I don't know. I
Speaker 1: don't know. That would have been very hard. I don't
Speaker 1: know how you would have detected that.
Speaker 2: Well A couple follow up questions there, so when I'm
Speaker 2: sort of follow the story a little bit from an
Speaker 2: adjacent I actually bought claims.
Speaker 1: I know this. You bought the claims, and if I
Speaker 1: could have, I would have. Oh right, oh my god.
Speaker 1: I mean it just seemed pretty obvious that they weren't
Speaker 1: worth ten cents on the dollar.
Speaker 2: Well I wasn't that smart. I bought him for twenty
Speaker 2: three cents. But because it's better to be lucky than good,
Speaker 2: because of the surge and crypto, they're now probably the
Speaker 2: payout's going to be somewhere between one hundred and twenty
Speaker 2: cents on the dollar one hundred and fifty cents, and
Speaker 2: other than other than patting myself on the back for
Speaker 2: one of the few good investment decisions I've made in
Speaker 2: the last year, if everyone gets their money back. Now,
Speaker 2: granted he committed fraud. He took customer accounts from people
Speaker 2: who thought they were investing, you know, putting their money
Speaker 2: in a deposit, not even investing, and then he used
Speaker 2: it to take risks they had not signed up for.
Speaker 2: So that's illegal, but one given that everyone's given their
Speaker 2: money back. Given I don't understand the difference between what
Speaker 2: Sam bankman Free did and what John Corzon did at
Speaker 2: MF Global.
Speaker 1: I think it was called you're taxing my memory there?
Speaker 2: But yeah, remember that, Yeah, you do it with the
Speaker 2: same thing.
Speaker 1: Can I back you up a set? Because I really
Speaker 1: wanted to ask you about this. I was I took
Speaker 1: a keen interest in the market in claims on FTX
Speaker 1: because because it seemed really clear to me that what
Speaker 1: the bankruptcy people were saying are signaling. It's like it's
Speaker 1: this dumpster fire and there's nothing there and boy, just
Speaker 1: be incinerated all this money that that wasn't true. And
Speaker 1: it was to me how cheaply these things traded it first,
Speaker 1: how did you even think to buy claims?
Speaker 2: I'm fascinated by I've invested across every asset class from
Speaker 2: Angel to venture to growth the public, and by far
Speaker 2: the best asset class is distressed. Is similar to biology.
Speaker 2: People don't want to hang around old people, so the
Speaker 2: best businesses are businesses dealing with old people, and the
Speaker 2: best asset class is distressed. So I look at bankruptcy
Speaker 2: filings and I was fascinated by this. I got the
Speaker 2: bankruptcy filing from the court. I read through it, and
Speaker 2: in the bankruptcy claim it listed all their assets cash,
Speaker 2: some bitcoin, et cetera. And one of the assets that
Speaker 2: just popped out to me is they had invested five
Speaker 2: hundred million dollars in Anthropic. Anthropic is the number two
Speaker 2: AI company LM, and I couldn't find for the life
Speaker 2: of me what evaluation was that they invested at, but
Speaker 2: I figured it was somewhere between three and five billions.
Speaker 2: So I took the most conservative, which meant a number,
Speaker 2: which meant that one of the things that the that FDx,
Speaker 2: a bankrupt FDx had that wouldultimately be distributed to the
Speaker 2: claimants was ten percent I assumed of Anthropic. I valued
Speaker 2: Anthropic at four at approximately approximately forty billion, So I
Speaker 2: thought the steak is worth four billion claimants. Total claimants
Speaker 2: nine billions. So just they at stake and anthropic I
Speaker 2: valued at forty four cents on the dollar, claims were
Speaker 2: selling for twenty two cents. To me, this was the
Speaker 2: easiest trade I.
Speaker 1: Ever made, And why do you think other people didn't
Speaker 1: make that trade?
Speaker 2: Occasionally you find something I don't know. This doesn't happen
Speaker 2: to be very long. I'm like, oh my god, they've
Speaker 2: missed it. And that is people didn't see the five
Speaker 2: hundred million dollar number. They could see the five hundred
Speaker 2: million dollars. What they couldn't see was the numerator of
Speaker 2: the denominator, and that was the valuation they invest that
Speaker 2: they invested at. And I thought, there's no way they
Speaker 2: don't own at least ten percent of this thing. And
Speaker 2: then you have to value another unknown and that is
Speaker 2: what is that ten percent now? But I thought it's
Speaker 2: worth probably forty sense a minimum of twenty three cents.
Speaker 2: So all the crypto, all the cash, everything else was
Speaker 2: just gonna be gravy.
Speaker 1: To my bewilderment. People weren't paying attention it was. I mean,
Speaker 1: what he did. He didn't take whatever it was, eleven
Speaker 1: billion dollars of customer assets and spend it on you know,
Speaker 1: blow and hookers and private jets. He put five billion
Speaker 1: of it into into venture capital investments and this was
Speaker 1: just one of them. And there was this pile of stuff.
Speaker 1: And I keep waiting for someone to come and ask
Speaker 1: the question, how good a VC was? Sam Bankman Free
Speaker 1: he was doing it it Listen, he was, you know, like,
Speaker 1: how how well did he perform compared to his peer group?
Speaker 1: Because it wasn't He has a piece of You may
Speaker 1: not even know this. He's a piece of space X
Speaker 1: in there. He has it through Michael Kievs, but so
Speaker 1: you don't see it. But he's got he's got pieces
Speaker 1: of some really valuable stuff, even if even if crypto
Speaker 1: goes to zero, and and never mind all the crypto
Speaker 1: businesses he bought. So so so one last question is
Speaker 1: because I'm just I'm curious, because I haven't because I
Speaker 1: knew you made this trade. Someone told me about you
Speaker 1: being in the market, and I thought, well, that's kind
Speaker 1: of that's kind of cool. Did you worry at all
Speaker 1: that the bankruptcy process itself was going to incinerate your profits,
Speaker 1: that it was so expensive, it would be so expensive
Speaker 1: that you would just you wouldn't end up seeing you
Speaker 1: should have seen the money, but in the end it
Speaker 1: would go in the pockets of Solo them and Cromwell lawyers.
Speaker 2: That's that's a great question. But part of the analysis
Speaker 2: I did want to put together the spreadsheet was it's
Speaker 2: the same administrator that handled Enron, and I estimated the
Speaker 2: cost at about a billion dollars and I thought, okay,
Speaker 2: if if just the anthropic steak is where it's four billion,
Speaker 2: the coins are worth three I saw seventy cents on
Speaker 2: the dollar, and then take out a billion, so sixty
Speaker 2: cents on the dollar. And then what it ends up.
Speaker 2: It looks like the payout and a lot of the
Speaker 2: stakes were talking about have already been sold. But it
Speaker 2: looks to me what they're saying, the court administrator saying
Speaker 2: that they now think they're going to I get somewhere
Speaker 2: between one hundred and twenty one hundred and sixty cents
Speaker 2: on the dollar. A lot of that because crypto has surged.
Speaker 2: But the lesson I take away from all of this,
Speaker 2: and this is a larger lesson about investing in life,
Speaker 2: is the greatest return on invested capital is inversely for
Speaker 2: related to how sexy something is. This isn't true of sports,
Speaker 2: which you know better than me, because there's no shortage
Speaker 2: of billionaires with midlife crises, and it's a regulated monopoly
Speaker 2: the control supply. But generally speaking, outside of sports, the
Speaker 2: best asset classes are the least sexy, and this was
Speaker 2: a really unsexy investment. Everybody thought this thing it had fraud,
Speaker 2: it had crypto, which was out of vogue. This thing
Speaker 2: was supuzzedly going to zero, and any reasonable diligence said, no,
Speaker 2: this is this is all upside.
Speaker 1: I didn't really answer your question about what was different
Speaker 1: from between what he did andto what John Corzin did,
Speaker 1: and you've taxed my memory about what John Corzin did.
Speaker 1: But I do think, what do I think? I think
Speaker 1: that there's a kind of misapprehension in the general tenor
Speaker 1: of the response to Sam Bankman freed that people still
Speaker 1: talk about it as if what he did was intentionally
Speaker 1: set up a business to steal customer money, stole the
Speaker 1: customer money, and the customers don't have any money now.
Speaker 1: And what he actually did was set up a business
Speaker 1: that was I mean, it was jenkinitly set up in
Speaker 1: the first place, but it was clearly not start. It
Speaker 1: didn't start as a fraud was in and of itself,
Speaker 1: a successful business if he'd just not done the idiot
Speaker 1: things he'd done with his edge fund and then got
Speaker 1: himself in a pickle in June of twenty twenty two
Speaker 1: when crypto lenders asked for the ten billion dollars they'd
Speaker 1: lent him back, and instead of just telling them I
Speaker 1: don't have it, I put it in VC Investments used
Speaker 1: the customer money to fill the hole. And that was
Speaker 1: a really stupid thing to do. It is fraud, but
Speaker 1: it's it's just it's different than like evil person sets
Speaker 1: out to do evil. I feel boat. I feel sad
Speaker 1: about him mainly, and I think that what it is
Speaker 1: is like the vice, the character flaw, if you will,
Speaker 1: or the pattern. It's more the pattern in his character
Speaker 1: that leads to this behavior. It was that was visible
Speaker 1: in every other aspect of his life, and it was
Speaker 1: a pattern of foisting risk upon other people without their permission.
Speaker 1: And he did it. He does it. He did it
Speaker 1: over and over. He did it in his romantic life,
Speaker 1: he did it in his friendships. And he comes by
Speaker 1: this vice. Honestly, I think he himself has sort of
Speaker 1: numbed to risk and kind of thinks he's right all
Speaker 1: the time anyway, so he didn't actually probably completely grow
Speaker 1: the risk that he was foisting on others. I thought
Speaker 1: this is all going to work out. That was stupid
Speaker 1: and a crime, but I can understand how he got there.
Speaker 1: And I do have a problem with twenty five years
Speaker 1: in jail. I think, like, okay, jail, that makes some sense,
Speaker 1: but like, I don't know how you even measure these things,
Speaker 1: but it's like.
Speaker 2: Twenty five years for like that is almost a death sentence.
Speaker 1: Yeah, so I just don't I think that's excessive and
Speaker 1: I don't get it. But people will argue with me.
Speaker 2: But I want to put forward a thesis because you're
Speaker 2: a storyteller and just love the way you think through stuff.
Speaker 2: I would argue, and I want you to respond to
Speaker 2: the thesis that the difference between playing golf at Centennial
Speaker 2: and going to Wimbledon, which I imagine I would be
Speaker 2: doing if I were John Corzon right now, I don't
Speaker 2: see a lot of difference in the criminal behavior here.
Speaker 2: The difference is is brand management, and that is what
Speaker 2: you have with Sam bankmin Fried is a guy who
Speaker 2: had this kind of floppy I just rolled out of
Speaker 2: bed crypto thing. He's purposely set up this organization of
Speaker 2: the Bahamas, which felt sketchy. He was sleeping with and
Speaker 2: doing drugs with his coworkers. He decided to go on
Speaker 2: the most ridiculously ill advised apology tour, which entirely backfired.
Speaker 2: Whereas Corson listened very smart people who said, shut the
Speaker 2: fuck up. Nobody speaks to anybody but your lawyers go quiet.
Speaker 2: Act like the victim. You didn't know what was going on.
Speaker 2: Act contrite. You were terrible fiduciary. You had no idea
Speaker 2: as opposed to going and speaking to Andrew Ross Sorkin
Speaker 2: in cargo shorts in crypto. The difference between Corsine again
Speaker 2: going to Wimbledon and Bankment freed with a life sentence
Speaker 2: is poor communications and brand strategy.
Speaker 1: Your thoughts, well, you're absolutely right that the way he
Speaker 1: handled it from the minute it all fell apart was catastrophic. Uh,
Speaker 1: You've got to remind me what John Corzine actually did,
Speaker 1: because I don't remember.
Speaker 2: MF Global customer deposits. It ends up were being used
Speaker 2: to expect alative investments in the market. John Corzine, My
Speaker 2: understanding is sid interest rates were gonna head one way,
Speaker 2: and he claims he didn't know these deposits were being
Speaker 2: co mingled. It was pretty much the exact same crime.
Speaker 2: And Corzon got banned from the industry or you know,
Speaker 2: paid a fee MF Global I think went away. But
Speaker 2: these things, you know, tomato tomato, as far as I
Speaker 2: can tell, and one guy's got a life sentence and
Speaker 2: the others at Wimbledon, I don't I don't even know
Speaker 2: if who watches tennis, But to me, it speaks to
Speaker 2: the notion of public perception.
Speaker 1: It also speaks to the moment, to the moment that
Speaker 1: there's a frustration with the ability to get our hands
Speaker 1: around the necks of rich people who do bad things.
Speaker 1: And when you get alive, when now the sort of
Speaker 1: the speed with which the justice system leaps into action
Speaker 1: is incredible. Sam was really easy to prosecute, you know,
Speaker 1: he was just like anything he gave me everything is
Speaker 1: so think about this. I always stop myself just short
Speaker 1: of thinking he has a death wish, because his behavior
Speaker 1: kind of suggests it. And he even when things were good,
Speaker 1: he was always extremely vulnerable, like no bodyguards, no, you know,
Speaker 1: you could sneak into his office any hour of the day.
Speaker 1: You could he really was? He was. He has a
Speaker 1: sense that like he doesn't protect himself almost willfully, and
Speaker 1: so that just extended into what happened in the legal process.
Speaker 2: So, Michael, I love this and I'm you're fascinating storyteller.
Speaker 2: Just a couple questions to wrap up here. I find
Speaker 2: one of the most fascinating characters in all of us.
Speaker 2: Was is it Caroline Ellison? Caroline Ellison any any inside?
Speaker 2: A lot of people didn't think that she ended up
Speaker 2: being what a my description or I think the Southern
Speaker 2: District called her the ultimate perfect example, quintessential government witness,
Speaker 2: but they put her in prison. We know a little
Speaker 2: bit about Sam, we know almost nothing about her. What
Speaker 2: were your impressions or what can you provide us some
Speaker 2: texture on Allison?
Speaker 1: She was a math kid who thought of herself. I
Speaker 1: think she's kind of there was a bit of a
Speaker 1: split personality thing going on with her. She had a
Speaker 1: loss for a stable and normal life and at the
Speaker 1: same time thought of herself as someone who would do
Speaker 1: radical and crazy things. And was she in college, joined
Speaker 1: the effective altruist movement and seemed to be kind of
Speaker 1: all in on that. And I tell you she was
Speaker 1: very susceptible to the charms of Sam Bank and Freed.
Speaker 1: Here's a texture for you. She told a colleague. This
Speaker 1: didn't even make the book, but she told a colleague
Speaker 1: that even after she and Sam had broke off their relationship,
Speaker 1: it was worth her having sex with Sam because it
Speaker 1: made Sam more efficient, and making Sam more efficient was
Speaker 1: the best thing she could do for mankind, because Sam
Speaker 1: was the person who most likely to save humanity. So
Speaker 1: that gives you an idea of how.
Speaker 2: She had I'm going to try that at a bar.
Speaker 2: Just the world to be a better place if I'm
Speaker 2: more relaxed, and I so this this will be the
Speaker 2: last question.
Speaker 1: You have.
Speaker 2: I look at I mean, granted, you know my idols
Speaker 2: are different to most people's, but I look at you
Speaker 2: and I think I want to be this guy. You're
Speaker 2: just doing cool shit, telling great stories, writing interesting books,
Speaker 2: going to movie premieres. I think you make an exceptional living.
Speaker 2: But by all, at least from an exterior perspective, you're
Speaker 2: in a great seat. We have a lot of young
Speaker 2: men and women who listen to this podcast. Can you
Speaker 2: give us any one or two pieces of advice for
Speaker 2: someone who looks at you and thinks you know, I'd
Speaker 2: like to be in that seat where there any things
Speaker 2: that you wish you'd done more or less of. What
Speaker 2: advice would you have to your younger self.
Speaker 1: Well, first off, I never thought that way about what
Speaker 1: seat I wanted to be in. I never thought I
Speaker 1: want to be that person. I always just wanted to
Speaker 1: be me. It's like the best me. And there were
Speaker 1: things that made me feel the best me and I
Speaker 1: could and writing was writing was one of them. Writing
Speaker 1: was the big one, and I just thought, I've got
Speaker 1: to do this, So not trying to be someone else
Speaker 1: would be the would be one of the first things
Speaker 1: I would say. Another thing that led me to like
Speaker 1: lots of the good things that have happened in my life.
Speaker 1: It's related. It's like not paying attention to what you're
Speaker 1: supposed to be paying attention to, Like what everybody else
Speaker 1: is paying attention to. If everybody else is paying attention
Speaker 1: to it, it doesn't need your attention kind of thing.
Speaker 1: What needs your attention is the thing that you're interested
Speaker 1: in that no one's paying attention to and no one
Speaker 1: encourages you to pay attention to, like your FTX investment
Speaker 1: that it's like, oh, there's something here and I really
Speaker 1: care about it. And if you can find that and
Speaker 1: nobody else is there, that seems like a lonely place,
Speaker 1: but it's it's the golden place. And you've got to
Speaker 1: like lean into that rather than lean out of it,
Speaker 1: Like learn to recognize that moment where God, I love
Speaker 1: doing this thing. No one is saying I should be
Speaker 1: doing this thing. No one else is doing this thing,
Speaker 1: but I love it. Go with it with that feeling.
Speaker 1: It's great for an investor, it's great for a writer,
Speaker 1: but I think it's great beyond that. It's sort of
Speaker 1: like you're arbitraging your personality against the world that you
Speaker 1: are finding where you are special in the level of
Speaker 1: interest you have in something. And that's when I find
Speaker 1: my subject matters are the most exciting to me when
Speaker 1: nobody The thing that troubled me most about Sam Bankmanfried
Speaker 1: is a subject is I was genuinely interested in him
Speaker 1: right from the moment I met him, But it worried
Speaker 1: me that so many other people were uh and and
Speaker 1: the only thing that kept me going was that I
Speaker 1: had this privileged view of it. But what I really
Speaker 1: like with the subject is like the Oakland A's when
Speaker 1: nobody gives a shit about them. But I see there's
Speaker 1: something great there and that that's the that's the stuff.
Speaker 1: It's like, that's when you know you're in the right place.
Speaker 1: It's like you're there for some genuine reasons, because there's
Speaker 1: no ingenuine reasons to be there.
Speaker 2: Arbitrage in your personality against the rest of the world.
Speaker 2: I love that. Michael Lewis is the host of the
Speaker 2: podcast Against the Rules, also a New York Times bestselling
Speaker 2: author of several books, including The Fifth Risk, Flashboys, and
Speaker 2: The Big Short. In addition, some of these have been
Speaker 2: made into great movies, The Big Short, Moneyball, and The
Speaker 2: blind Side, all nominated for Academy Awards. Grew up in
Speaker 2: New Orleans and remains deeply interested and involved in the city,
Speaker 2: but now lives in Berkeley, California, Alma mater Gobars with
Speaker 2: his wife, Tabitha Soren, and their children. If I could
Speaker 2: give my kids any skill, Michael, it would be your skill,
Speaker 2: and that is you are a fantastic storyteller. Really appreciate
Speaker 2: your time.
Speaker 1: Thanks for having me, Scott. Thank you so much to
Speaker 1: Scott Galloway for having me on a show. You can
Speaker 1: go and subscribe to the proft G Pod, wherever you
Speaker 1: get your podcasts,