1 00:00:00,120 --> 00:00:03,199 Speaker 1: Brought to you by Bank of America Merrill Lynch, committed 2 00:00:03,240 --> 00:00:06,280 Speaker 1: to bringing higher finance to lower carbon named the most 3 00:00:06,320 --> 00:00:10,280 Speaker 1: innovative investment bank for climate change and sustainability by the Banker. 4 00:00:10,640 --> 00:00:13,920 Speaker 1: That's the power of Global Connections. Bank of America North 5 00:00:13,960 --> 00:00:19,560 Speaker 1: America member f D I C. This is Masters in 6 00:00:19,640 --> 00:00:24,119 Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on 7 00:00:24,160 --> 00:00:27,480 Speaker 1: the podcast, I have none other than Michael Lewis, and 8 00:00:27,560 --> 00:00:30,840 Speaker 1: let me tell you I had a blast talking to him. 9 00:00:30,880 --> 00:00:35,520 Speaker 1: He is just eloquent and charming and full of great stories. Uh. 10 00:00:35,560 --> 00:00:37,760 Speaker 1: It was if you can imagine how much fun it 11 00:00:37,760 --> 00:00:40,360 Speaker 1: would be to sit in a room and just chew 12 00:00:40,400 --> 00:00:43,599 Speaker 1: the fat with Michael Lewis overall his books. Yes, it 13 00:00:43,680 --> 00:00:46,519 Speaker 1: was that much fun. So rather than me give you 14 00:00:46,560 --> 00:00:49,080 Speaker 1: a whole song and dance about his background, because you 15 00:00:49,159 --> 00:00:52,800 Speaker 1: already know his background, you've already read most of his books, 16 00:00:53,200 --> 00:00:55,880 Speaker 1: I'm just gonna shut up and with no further ado, 17 00:00:56,400 --> 00:01:03,000 Speaker 1: my conversation with Michael Lewis. This is Masters in Business 18 00:01:03,240 --> 00:01:07,160 Speaker 1: with Barry Ridholtz on Bloomberg Radio. My special guest this 19 00:01:07,200 --> 00:01:10,360 Speaker 1: week is none other than Michael Lewis. He is the 20 00:01:10,400 --> 00:01:15,920 Speaker 1: author of such best selling financial stories as Moneyball, the 21 00:01:16,040 --> 00:01:21,959 Speaker 1: Big Short Flashboys UH. Most recently he wrote The Undoing Project, 22 00:01:22,240 --> 00:01:26,319 Speaker 1: a story about UH, Danny Kahneman and Amos Tversky, the 23 00:01:26,400 --> 00:01:33,400 Speaker 1: people who were essentially invented the field of behavioral economics. UM. 24 00:01:33,440 --> 00:01:36,479 Speaker 1: I could talk about your resume forever, but let's jump 25 00:01:36,600 --> 00:01:40,200 Speaker 1: right into this. Michael Lewis welcome to Bloomer. Pleasure to 26 00:01:40,240 --> 00:01:43,520 Speaker 1: be back here. So let's let's jump right into a 27 00:01:43,560 --> 00:01:46,360 Speaker 1: little bit about your background. So you you come out 28 00:01:46,400 --> 00:01:48,560 Speaker 1: of the London School of Economics, you get a job 29 00:01:48,600 --> 00:01:53,240 Speaker 1: at Solomon Brothers in the nine eighties, markets on fire, 30 00:01:53,280 --> 00:01:56,920 Speaker 1: Sally's one of the hottest firms on the street, and 31 00:01:57,160 --> 00:01:59,840 Speaker 1: you just walk away from that. What sort of pushed 32 00:01:59,840 --> 00:02:03,280 Speaker 1: back did you get from your friends and family about yeah, 33 00:02:03,400 --> 00:02:05,320 Speaker 1: making a ton of money, but this sort of stuff 34 00:02:05,400 --> 00:02:08,480 Speaker 1: is not for me. It was a funny situation because 35 00:02:08,560 --> 00:02:11,600 Speaker 1: through a lot of accident, I had had some success 36 00:02:11,600 --> 00:02:14,920 Speaker 1: as Solomon Brothers. I got there and UM, I was 37 00:02:14,960 --> 00:02:17,880 Speaker 1: taking under the wing of a big hedge fund manager 38 00:02:17,880 --> 00:02:20,000 Speaker 1: in Europe, where where I was based. He did all 39 00:02:20,040 --> 00:02:21,760 Speaker 1: his business through me, so I looked like a very 40 00:02:21,800 --> 00:02:25,320 Speaker 1: profitable salesperson. I was. I was a derivatives person at 41 00:02:25,360 --> 00:02:27,680 Speaker 1: Solomon Brothers. Really yeah, I was the I was the 42 00:02:27,760 --> 00:02:31,440 Speaker 1: arm of John Merryweather's desk in London, and my job 43 00:02:31,520 --> 00:02:34,280 Speaker 1: was explain options and futures to everybody because they were 44 00:02:34,320 --> 00:02:37,960 Speaker 1: new and uh, and dream up new kinds of securities, 45 00:02:38,120 --> 00:02:40,720 Speaker 1: which I did, and sell whatever I could sell to 46 00:02:40,760 --> 00:02:43,720 Speaker 1: whoever I talked to. And uh. And that's the guy 47 00:02:43,720 --> 00:02:46,600 Speaker 1: who eventually writes the big short. That's the guy eventually 48 00:02:46,639 --> 00:02:49,240 Speaker 1: writes a BA shorn. You know it was? It was 49 00:02:49,560 --> 00:02:54,120 Speaker 1: UM extremely useful that training in in in coming to 50 00:02:54,320 --> 00:02:57,320 Speaker 1: grips with collateralized obligations and credit, the fault swaps and 51 00:02:57,360 --> 00:02:59,560 Speaker 1: all the rest. But what ifs? So what happened was 52 00:02:59,639 --> 00:03:03,680 Speaker 1: I UM, I knew going in that I wanted to 53 00:03:03,680 --> 00:03:05,680 Speaker 1: write for a living. I had no idea if it 54 00:03:05,720 --> 00:03:08,880 Speaker 1: was even possible. I was. I was writing magazine articles 55 00:03:08,960 --> 00:03:15,240 Speaker 1: while I was at Solomon Brothers. Um the economists published 56 00:03:15,280 --> 00:03:17,440 Speaker 1: the first I don't know, fifteen or twenty of them 57 00:03:17,919 --> 00:03:20,760 Speaker 1: and with no byline. But then I'd I'd bundle up 58 00:03:20,760 --> 00:03:22,800 Speaker 1: the clips and I'd send them off to editors and say, 59 00:03:22,840 --> 00:03:24,880 Speaker 1: I actually wrote this. You can call this guy and check. 60 00:03:25,440 --> 00:03:27,920 Speaker 1: And Michael Kinsley, who was the editor of The New Republic, 61 00:03:28,720 --> 00:03:32,480 Speaker 1: and Amity Schlace, who was then the op ed editor 62 00:03:32,680 --> 00:03:36,040 Speaker 1: of the Wall Street Journal Europe, encouraged me and and 63 00:03:36,320 --> 00:03:39,920 Speaker 1: a magazine in England too, so I had several outlets. Uh, 64 00:03:39,960 --> 00:03:42,320 Speaker 1: and the stuff started getting attention. The stuff with my 65 00:03:42,360 --> 00:03:45,720 Speaker 1: byline got me in trouble. I mean I wrote a work. Well, yeah, 66 00:03:45,760 --> 00:03:47,880 Speaker 1: I wrote a piece for the Wall Street Journal that 67 00:03:48,080 --> 00:03:50,280 Speaker 1: ended up being reprinted in the U. S Journal on 68 00:03:50,280 --> 00:03:53,160 Speaker 1: the op ed page. That's that argued that investment bankers 69 00:03:53,160 --> 00:03:55,760 Speaker 1: were overpaid and at the bottom it it's at the bottom, 70 00:03:55,760 --> 00:03:59,120 Speaker 1: it said. Michael Lewis is an associated Solomon Brothers in London. 71 00:03:59,440 --> 00:04:02,480 Speaker 1: And when I came in the next day, Uh, the 72 00:04:02,520 --> 00:04:05,280 Speaker 1: guy who ran Solomon belle As Europe was ashen face 73 00:04:05,320 --> 00:04:07,920 Speaker 1: sitting at my desk and he and he said, I've 74 00:04:07,960 --> 00:04:10,040 Speaker 1: been on the phone all night with members of the boards, 75 00:04:10,280 --> 00:04:13,000 Speaker 1: board of directors that this is the things being reprinted 76 00:04:13,000 --> 00:04:16,960 Speaker 1: across the country and and we can't have he was pleading. 77 00:04:16,960 --> 00:04:18,919 Speaker 1: It was it was more in sorrow than an anger. 78 00:04:19,000 --> 00:04:21,760 Speaker 1: It was you can't go in the Wall Street Journal 79 00:04:22,040 --> 00:04:24,880 Speaker 1: and say you're with us and that we're overpaid. And 80 00:04:24,920 --> 00:04:28,279 Speaker 1: I said, and I said, well, it's true, and he 81 00:04:28,320 --> 00:04:30,760 Speaker 1: said it is true, but you know, you know but 82 00:04:31,240 --> 00:04:33,680 Speaker 1: and then he said, he said, is there And he said, 83 00:04:33,720 --> 00:04:35,599 Speaker 1: could you just you gotta stop writing? And I said, 84 00:04:35,560 --> 00:04:39,039 Speaker 1: I I'm not gonna do that. And he said he 85 00:04:39,120 --> 00:04:42,080 Speaker 1: was great. Actually was Charlie mcphaz's name. He was wonderful guy. 86 00:04:42,160 --> 00:04:45,960 Speaker 1: And he says, well, is there anyway, um you could 87 00:04:45,960 --> 00:04:49,000 Speaker 1: do it um under a different name so that nobody 88 00:04:49,000 --> 00:04:51,640 Speaker 1: connects it back to us? And I said fine, And 89 00:04:51,680 --> 00:04:53,839 Speaker 1: I wrote under the name Diana Bleaker, which was my 90 00:04:53,920 --> 00:04:59,320 Speaker 1: mother's name, and my my definished the story. I STI, 91 00:05:00,000 --> 00:05:03,080 Speaker 1: I'm writing under Diana Blinker. And Diana Bleaker publishes something 92 00:05:03,080 --> 00:05:04,719 Speaker 1: in the New Republic. And I get a call from 93 00:05:05,120 --> 00:05:08,080 Speaker 1: Chevy Chase's dad, who's an editor at Simon and Schuster, 94 00:05:08,120 --> 00:05:10,479 Speaker 1: and he says, I figured out you're Diana Bleaker, uh, 95 00:05:10,640 --> 00:05:12,520 Speaker 1: and you should write a book. And I thought, oh 96 00:05:12,520 --> 00:05:14,760 Speaker 1: my god, someone will We'll pay me to write a book. 97 00:05:14,760 --> 00:05:18,200 Speaker 1: And it wasn't much, but that at that moment, I 98 00:05:18,200 --> 00:05:20,560 Speaker 1: went and I said to the my bosses, I'm out 99 00:05:20,600 --> 00:05:21,960 Speaker 1: of here. I'm gonna'm gonna be gonna be a writer. 100 00:05:22,000 --> 00:05:24,320 Speaker 1: And they thought I was insane. That didn't answer your question. 101 00:05:24,480 --> 00:05:26,080 Speaker 1: They actually tried to talk me off the ledge And 102 00:05:26,160 --> 00:05:29,479 Speaker 1: it was not really it was not, oh, you can't 103 00:05:29,480 --> 00:05:31,440 Speaker 1: go write a book about Solomon Brothers. Nobody we even 104 00:05:31,440 --> 00:05:34,599 Speaker 1: thought about that or even cared. It was more we 105 00:05:34,680 --> 00:05:37,280 Speaker 1: need you here and I'm we're really worried about your 106 00:05:37,279 --> 00:05:39,680 Speaker 1: mental health. You're not gonna I mean, you're not gonna 107 00:05:39,680 --> 00:05:41,760 Speaker 1: be a writer. It was that kind of they were 108 00:05:41,800 --> 00:05:43,960 Speaker 1: trying to help me. Uh So we had kind of 109 00:05:43,960 --> 00:05:46,320 Speaker 1: these amount of to a therapy session with the guys 110 00:05:46,360 --> 00:05:48,880 Speaker 1: who ran the European office. So you're just yuessing them. 111 00:05:49,160 --> 00:05:53,320 Speaker 1: But I recall reading that you kept a diary most 112 00:05:53,360 --> 00:05:55,039 Speaker 1: of the time. Was it's the whole four years you 113 00:05:55,120 --> 00:05:57,159 Speaker 1: had Solomon Brothers. So I wasn't there four years. I 114 00:05:57,200 --> 00:06:01,239 Speaker 1: was there just shy a three And uh it wasn't 115 00:06:01,279 --> 00:06:03,440 Speaker 1: a diary in the way that I don't know you 116 00:06:03,520 --> 00:06:08,960 Speaker 1: might imagine Jane Austin, because I was writing about it. 117 00:06:09,279 --> 00:06:13,239 Speaker 1: I mean, so yeah, I started taking an interest in 118 00:06:13,279 --> 00:06:17,920 Speaker 1: the what was specifically going on around me, uh as 119 00:06:18,000 --> 00:06:21,359 Speaker 1: possible literary material maybe six months before I left, So 120 00:06:21,400 --> 00:06:23,920 Speaker 1: not the whole time. What I did is I mean, 121 00:06:24,000 --> 00:06:27,640 Speaker 1: during the training program, I wrote down everything, and so 122 00:06:27,680 --> 00:06:30,680 Speaker 1: I had all that on all that stuff. Um, I 123 00:06:30,760 --> 00:06:34,400 Speaker 1: actually the firm. I mean it would just it would. 124 00:06:34,839 --> 00:06:37,279 Speaker 1: Public relations people of Wall Street firms today would not 125 00:06:37,360 --> 00:06:40,200 Speaker 1: believe how loose it was. When I left, I called 126 00:06:40,279 --> 00:06:42,359 Speaker 1: and said, I get some videotapes from the training program, 127 00:06:42,400 --> 00:06:44,800 Speaker 1: just so I get the dialogue right. And then they 128 00:06:44,839 --> 00:06:48,600 Speaker 1: were friends. When got me a couple of videos I needed, 129 00:06:49,000 --> 00:06:53,000 Speaker 1: and uh, and people Louis Ronieri, who ran the mortgage 130 00:06:54,640 --> 00:06:58,760 Speaker 1: right exactly helped me, uh, you know, kind of come 131 00:06:58,800 --> 00:07:01,799 Speaker 1: to come to term with what had happened in his department. 132 00:07:01,880 --> 00:07:04,279 Speaker 1: I went and interviewed all the mortgage traders. Everybody's just 133 00:07:04,760 --> 00:07:07,120 Speaker 1: nobody said you can't write a we can't write a 134 00:07:07,120 --> 00:07:09,480 Speaker 1: book about us, you know, nobody said you know, it 135 00:07:09,600 --> 00:07:13,000 Speaker 1: was no there was no free sty of scandal around it. 136 00:07:13,000 --> 00:07:14,760 Speaker 1: It was just like, it's kind of cool, you're gonna 137 00:07:14,760 --> 00:07:16,280 Speaker 1: write a book. But I'm a good luck guy with 138 00:07:16,320 --> 00:07:18,640 Speaker 1: that right Who wants who cares about a book that? 139 00:07:19,640 --> 00:07:22,840 Speaker 1: Everybody couldn't be sweeter about it? So you leave an 140 00:07:22,920 --> 00:07:25,000 Speaker 1: eight eight right now? I got to let me make 141 00:07:25,000 --> 00:07:27,000 Speaker 1: sure I got the dates right and the book comes 142 00:07:27,000 --> 00:07:29,520 Speaker 1: out in eighty nine. No, I left what I do. 143 00:07:29,640 --> 00:07:32,160 Speaker 1: That's right. I left in. I waited the boy, but 144 00:07:32,280 --> 00:07:37,840 Speaker 1: I actually I waited enough for me. I waited till 145 00:07:37,920 --> 00:07:40,360 Speaker 1: the bonus hit the bank account in the end of 146 00:07:40,440 --> 00:07:44,720 Speaker 1: January early February and left. I wrote the book in 147 00:07:44,760 --> 00:07:47,000 Speaker 1: a year, and so the book was done by early 148 00:07:47,040 --> 00:07:48,920 Speaker 1: eighty nine. It came at the end of eighty nine. Wow, 149 00:07:48,960 --> 00:07:52,280 Speaker 1: that's amazing. I'm Barry rid Hults. You're listening to Masters 150 00:07:52,320 --> 00:07:55,600 Speaker 1: in Business on Bloomberg Radio. My special guest today is 151 00:07:55,640 --> 00:07:58,559 Speaker 1: one of my favorite authors. His name is Michael Lewis, 152 00:07:58,600 --> 00:08:01,640 Speaker 1: and you're probably familiar with him from books such as 153 00:08:01,800 --> 00:08:06,400 Speaker 1: Liars Poker, The Big Short, Moneyball, and more recently The 154 00:08:06,480 --> 00:08:11,600 Speaker 1: Undoing Project, A Story of two uh is reely psychologist 155 00:08:11,680 --> 00:08:15,640 Speaker 1: who very much change the way we look at cognition 156 00:08:15,680 --> 00:08:20,560 Speaker 1: and thinking. A friendship that changed our minds. So let's 157 00:08:20,600 --> 00:08:22,480 Speaker 1: let's jump right into this, because first of all, I 158 00:08:22,520 --> 00:08:25,640 Speaker 1: really enjoyed the book. I found it fascinating. We've had 159 00:08:25,960 --> 00:08:29,600 Speaker 1: Failor and Conomon and other behaviorists on the show, and 160 00:08:29,640 --> 00:08:33,800 Speaker 1: I love that sort of approach to thinking about thinking. 161 00:08:34,800 --> 00:08:39,000 Speaker 1: And what I really liked was your introduction in the book. 162 00:08:39,160 --> 00:08:43,480 Speaker 1: You explain how Failor and Cass Sunstein wrote a review 163 00:08:43,520 --> 00:08:46,800 Speaker 1: of money Ball published in the New Republic, and they 164 00:08:46,920 --> 00:08:49,240 Speaker 1: kind of call you out for saying, Hey, this is 165 00:08:49,280 --> 00:08:52,800 Speaker 1: really all about cognition, and how did you ignore the 166 00:08:52,800 --> 00:08:56,000 Speaker 1: works of the people who created the science and most 167 00:08:56,000 --> 00:08:59,320 Speaker 1: of Versking and Danny Knoman. So the question is, was 168 00:08:59,360 --> 00:09:01,400 Speaker 1: this book a little bit of a mia kulpa for 169 00:09:01,440 --> 00:09:06,000 Speaker 1: that oversight in in money Ball? You know, it wasn't 170 00:09:06,040 --> 00:09:09,360 Speaker 1: And I wasn't really feeling guilty about it. I felt 171 00:09:09,440 --> 00:09:15,200 Speaker 1: I felt um, I felt Uh. I was surprised that 172 00:09:15,320 --> 00:09:20,640 Speaker 1: there there had been working psychology that that explained what 173 00:09:20,720 --> 00:09:22,679 Speaker 1: was going on in the minds of baseball scouts when 174 00:09:22,679 --> 00:09:26,440 Speaker 1: they missed judge baseball players and among other things. I 175 00:09:26,520 --> 00:09:28,920 Speaker 1: was surprised I'd never heard of these guys, because I 176 00:09:28,960 --> 00:09:31,160 Speaker 1: did do a master's in economics. But it was before 177 00:09:31,280 --> 00:09:34,040 Speaker 1: that all has happened, you know, And when when did 178 00:09:34,040 --> 00:09:38,040 Speaker 1: you When I got out of the the LC and 179 00:09:38,080 --> 00:09:40,240 Speaker 1: so nobody talked about this kind of stuff. You were 180 00:09:40,280 --> 00:09:45,640 Speaker 1: being taught rational expectation, it was just starting to and um, 181 00:09:45,679 --> 00:09:49,199 Speaker 1: and then uh, what happens is that I was out 182 00:09:49,240 --> 00:09:51,760 Speaker 1: drinking with a friend. Uh, I got named dak Or 183 00:09:51,840 --> 00:09:55,560 Speaker 1: Keltner who was a psychologist of the Berkeley uh in 184 00:09:55,600 --> 00:09:58,720 Speaker 1: the Berkeley at cal and he's he's like a wonderful 185 00:09:58,760 --> 00:10:01,720 Speaker 1: guy and it and I told him, I said, you know, 186 00:10:01,880 --> 00:10:05,120 Speaker 1: it's odd that your field somehow has something to say 187 00:10:05,160 --> 00:10:07,480 Speaker 1: about this book I wrote. And he said, Danny lives 188 00:10:07,520 --> 00:10:09,360 Speaker 1: just up the hill. You can go. You can go 189 00:10:09,400 --> 00:10:12,400 Speaker 1: see him. And he's a friend. I said, really. And 190 00:10:12,440 --> 00:10:14,520 Speaker 1: it took me. I took me sometime to take him 191 00:10:14,559 --> 00:10:16,840 Speaker 1: up on that offer. But he introduced me to Danny 192 00:10:17,000 --> 00:10:19,440 Speaker 1: and when who By the way, he had won the 193 00:10:19,440 --> 00:10:22,400 Speaker 1: Nobel Prize for his work the year before money Bull comes. 194 00:10:22,440 --> 00:10:25,840 Speaker 1: That's right, that's right in economics and act. That was weird. 195 00:10:25,880 --> 00:10:28,640 Speaker 1: You nobody said, how is the psychologist winning the Nobel 196 00:10:28,679 --> 00:10:32,400 Speaker 1: Prize in economics? This nobody? Nobody. You look at the 197 00:10:32,480 --> 00:10:35,640 Speaker 1: descriptions of his Nobel Prize and it says, oh, this 198 00:10:35,760 --> 00:10:39,719 Speaker 1: is normal. It's bizarre. Uh. Well, the underlying premise for 199 00:10:39,800 --> 00:10:43,800 Speaker 1: all of economics is that humans are are rational, optimized, 200 00:10:44,320 --> 00:10:46,960 Speaker 1: nothing of the sort. I'm not saying it's not deserved. 201 00:10:46,960 --> 00:10:48,840 Speaker 1: I'm saying that if you told him when he was 202 00:10:48,880 --> 00:10:50,760 Speaker 1: doing his work that he's gonna win a Nobel Prize 203 00:10:50,760 --> 00:10:53,120 Speaker 1: in economics. He looked at you like you had three heads. 204 00:10:53,160 --> 00:10:56,320 Speaker 1: But uh, what happened? Really it was organic. It's kind 205 00:10:56,320 --> 00:10:57,400 Speaker 1: of curious. I want to meet a guy who win 206 00:10:57,440 --> 00:10:59,720 Speaker 1: the Nobel Prize. That was probably the first thought, was 207 00:10:59,760 --> 00:11:02,400 Speaker 1: I to go meet somebody who won a Nobel Prize. 208 00:11:02,480 --> 00:11:03,920 Speaker 1: And I didn't go up thinking I'm gonna write a 209 00:11:03,920 --> 00:11:07,600 Speaker 1: book about him, and I gotten. We just became friends. 210 00:11:07,640 --> 00:11:09,440 Speaker 1: I started following him. I started I'd see him when 211 00:11:09,440 --> 00:11:12,040 Speaker 1: he was in town. We go on along walks, uh 212 00:11:12,080 --> 00:11:14,920 Speaker 1: in the hills, and he would talk about his relationship 213 00:11:14,920 --> 00:11:17,800 Speaker 1: with Amos. And that's what interested me that I thought 214 00:11:18,040 --> 00:11:20,320 Speaker 1: these guys had this incredible love affair. I mean, it 215 00:11:20,360 --> 00:11:22,800 Speaker 1: wasn't there was no sex. The sex was having the ideas, 216 00:11:23,640 --> 00:11:27,479 Speaker 1: but it was there was a drama to their relationship 217 00:11:27,600 --> 00:11:30,960 Speaker 1: that got me interested. I called it an intellectual romance 218 00:11:31,320 --> 00:11:35,200 Speaker 1: in the review you haven't read, um, But since you 219 00:11:35,240 --> 00:11:38,400 Speaker 1: mentioned Amos, let's let's talk a little bit about him, 220 00:11:38,480 --> 00:11:44,120 Speaker 1: because there's this really bizarre thing you mentioned in the afterward. So, 221 00:11:44,280 --> 00:11:46,920 Speaker 1: and I'm not giving away the ending to any of this. So, 222 00:11:47,160 --> 00:11:50,560 Speaker 1: both Kneman and Tversky talked about the role of luck 223 00:11:50,640 --> 00:11:55,520 Speaker 1: in people's lives, coincidentally, when you start thinking about doing 224 00:11:55,559 --> 00:12:02,880 Speaker 1: this book you had previously taught or coached Amos Tversky's son. Well, 225 00:12:02,880 --> 00:12:07,080 Speaker 1: this gets weird, right, I mean, that's really well. When 226 00:12:07,440 --> 00:12:09,800 Speaker 1: at some point I can't remember when the penny dropped, 227 00:12:09,840 --> 00:12:12,480 Speaker 1: I realized I had a kid in the year I 228 00:12:12,559 --> 00:12:17,720 Speaker 1: taught writing a cow whose last name was Tversky, and 229 00:12:18,160 --> 00:12:21,480 Speaker 1: he was about my favorite student, and we had a friendship. 230 00:12:21,520 --> 00:12:23,720 Speaker 1: I'd see him every year for dinner, and he never 231 00:12:23,800 --> 00:12:27,600 Speaker 1: mentioned anything about his dad. I wouldn't even known who 232 00:12:27,600 --> 00:12:30,439 Speaker 1: he was anyway, so there would be no reason. Uh. 233 00:12:31,440 --> 00:12:34,679 Speaker 1: But then I wrote I remember writing or in Diversky notes, saying, 234 00:12:34,920 --> 00:12:37,440 Speaker 1: is Amos your dad? And he said yeah, yeah, And 235 00:12:37,480 --> 00:12:39,680 Speaker 1: I said, well, I'm toying with the idea of writing 236 00:12:39,679 --> 00:12:42,000 Speaker 1: a book about his collaboration with Danny. And he goes, 237 00:12:42,040 --> 00:12:45,240 Speaker 1: oh really. It was kind of like he said, my mom, 238 00:12:45,240 --> 00:12:47,000 Speaker 1: I'm sure my mom will be happy to help. It 239 00:12:47,000 --> 00:12:50,439 Speaker 1: was basically what he said, but but it was it 240 00:12:50,520 --> 00:12:54,199 Speaker 1: was serendipitous, to say the least. So you you teach 241 00:12:54,280 --> 00:12:59,400 Speaker 1: Amos Tversky's son, Danny Conuman lives up the street from you. 242 00:12:59,400 --> 00:13:04,120 Speaker 1: You spend five years softening up Kneman in order to 243 00:13:04,200 --> 00:13:06,520 Speaker 1: do the book that he was really reluctant. There were 244 00:13:06,520 --> 00:13:11,080 Speaker 1: two stages of this assault. The first was um getting 245 00:13:11,320 --> 00:13:18,600 Speaker 1: helping him a little bit, uh right, because his publisher's 246 00:13:18,640 --> 00:13:20,679 Speaker 1: agent thought it was insane for him to be talking 247 00:13:20,679 --> 00:13:22,960 Speaker 1: to me about a book before he wrote his, and 248 00:13:23,240 --> 00:13:25,480 Speaker 1: you're going to steal the idea? Yeah, yeah, I wouldn't. 249 00:13:25,520 --> 00:13:27,400 Speaker 1: It was so different, it didn't matter to me. But 250 00:13:27,440 --> 00:13:29,080 Speaker 1: he said, we could you just wait until I'm done 251 00:13:29,080 --> 00:13:31,880 Speaker 1: with this and so so that that was the first. 252 00:13:31,920 --> 00:13:33,920 Speaker 1: So there was not even possibility of doing the thing 253 00:13:34,000 --> 00:13:36,920 Speaker 1: until after he was done with that. And then he 254 00:13:37,040 --> 00:13:39,360 Speaker 1: never really ever said no, you're not going to write 255 00:13:39,360 --> 00:13:44,360 Speaker 1: a book about us, But he expressed extreme skepticism and 256 00:13:44,840 --> 00:13:49,680 Speaker 1: uh and and concern whenever I'd kind of bring it up, 257 00:13:49,720 --> 00:13:52,440 Speaker 1: and he was UM. I wanted him to want to 258 00:13:52,480 --> 00:13:55,319 Speaker 1: do it, and I never got him there. I never 259 00:13:55,320 --> 00:13:58,199 Speaker 1: got him there at best. And so but I got 260 00:13:58,240 --> 00:13:59,959 Speaker 1: him to the point where he would answer my question 261 00:14:00,760 --> 00:14:05,480 Speaker 1: and uh, and he was um. He was wonderful about 262 00:14:05,520 --> 00:14:07,480 Speaker 1: it in the end, But it did. Yes, if I 263 00:14:07,480 --> 00:14:09,320 Speaker 1: would say five years, I went and saw him an 264 00:14:09,320 --> 00:14:12,920 Speaker 1: O seven. It was about two thousand twelve when it 265 00:14:13,000 --> 00:14:15,679 Speaker 1: became very earnest. So here's where I'm going to call 266 00:14:15,760 --> 00:14:18,040 Speaker 1: you out for a little bs in the book. And 267 00:14:18,080 --> 00:14:21,400 Speaker 1: you write, you know, the book didn't require a writer 268 00:14:21,520 --> 00:14:24,920 Speaker 1: as much as a stenographer, And based on everything we've 269 00:14:24,960 --> 00:14:29,400 Speaker 1: just said, that line is pure nonsense because it's clear 270 00:14:29,520 --> 00:14:32,680 Speaker 1: from everything you just said, and I'm not blowing smoke, 271 00:14:33,320 --> 00:14:36,840 Speaker 1: nobody else could have done this book except you because 272 00:14:36,880 --> 00:14:41,280 Speaker 1: of your relationship with Orange Diversity and your friendship with Danny. 273 00:14:41,360 --> 00:14:44,080 Speaker 1: Who else could have put these pieces together the way 274 00:14:44,120 --> 00:14:47,760 Speaker 1: you did. Well. When I said that it required a stenographer, 275 00:14:47,840 --> 00:14:50,720 Speaker 1: what I meant was the people I was interviewing, these 276 00:14:51,280 --> 00:14:55,560 Speaker 1: these seventy five year old, eighty year old Israeli people, intellectuals. 277 00:14:56,160 --> 00:14:59,520 Speaker 1: What was coming out of their mouths was it was 278 00:14:59,560 --> 00:15:00,960 Speaker 1: all I want to do it. I didn't. I don't 279 00:15:01,000 --> 00:15:04,320 Speaker 1: use a tape recorder. Every one of them had a 280 00:15:04,440 --> 00:15:08,040 Speaker 1: chilling war story, women and men. Everything was everybody had 281 00:15:08,080 --> 00:15:11,600 Speaker 1: almost died many times in the most dramatic ways, and 282 00:15:11,800 --> 00:15:15,240 Speaker 1: all of them had exquisite ideas and observations about my 283 00:15:15,280 --> 00:15:17,800 Speaker 1: main characters. So what I meant was they did a 284 00:15:17,840 --> 00:15:20,280 Speaker 1: lot of the work for me, and that work normally 285 00:15:20,320 --> 00:15:23,320 Speaker 1: I would have to do insight into the characters. It 286 00:15:23,440 --> 00:15:28,120 Speaker 1: had been done for me and by by intellectual bulldozers. However, 287 00:15:28,240 --> 00:15:30,800 Speaker 1: your point is well taken that I was positioned to 288 00:15:30,840 --> 00:15:35,000 Speaker 1: do it, and when I finally I some The last 289 00:15:35,040 --> 00:15:36,640 Speaker 1: little hurdle I had to get over was in my 290 00:15:36,680 --> 00:15:38,960 Speaker 1: own mind. I was afraid of the material because I 291 00:15:39,000 --> 00:15:41,360 Speaker 1: didn't know I well, I didn't know anyth about psychology. 292 00:15:41,400 --> 00:15:43,520 Speaker 1: I didn't know much about Israel. I was walking into 293 00:15:43,520 --> 00:15:46,920 Speaker 1: a really new territory for me, and I thought, I 294 00:15:47,000 --> 00:15:50,320 Speaker 1: kept thinking, who who should write this book? And maybe 295 00:15:50,360 --> 00:15:52,440 Speaker 1: Malcolm got Gladwall should write this book. You'd do a 296 00:15:52,480 --> 00:15:57,920 Speaker 1: great job. He's got uh, he's really facile with complicated ideas. 297 00:15:58,280 --> 00:16:01,000 Speaker 1: He's he'd be perfect for it. Didn't see it didn't 298 00:16:01,000 --> 00:16:04,280 Speaker 1: seem like my book. And then I realized that it's 299 00:16:04,320 --> 00:16:05,680 Speaker 1: got to be my book, because the only way you 300 00:16:05,680 --> 00:16:08,320 Speaker 1: tell the stories if you're inside these people, and no 301 00:16:08,360 --> 00:16:10,480 Speaker 1: one else is going to get inside these people. Brought 302 00:16:10,520 --> 00:16:13,320 Speaker 1: to you by Bank of America Merrill Lynch. Seeing what 303 00:16:13,440 --> 00:16:17,080 Speaker 1: others have seen, but uncovering what others may not. Global 304 00:16:17,120 --> 00:16:20,760 Speaker 1: Research that helps you Harness disruption voted top global research 305 00:16:20,800 --> 00:16:25,000 Speaker 1: firm five years running. Merrill Lynch Pierce, Fenner and Smith Incorporated. 306 00:16:25,680 --> 00:16:28,840 Speaker 1: I'm Barry Hults. You're listening to Masters in Business on 307 00:16:28,880 --> 00:16:32,960 Speaker 1: Bloomberg Radio. My special guest today is Michael Lewis. He 308 00:16:33,120 --> 00:16:36,880 Speaker 1: is the Poet Laureate of Financial nonfiction UH and Wall 309 00:16:36,920 --> 00:16:40,760 Speaker 1: Street related narratives. Uh. Let's jump right into some of 310 00:16:40,800 --> 00:16:44,280 Speaker 1: the really interesting books you've written in the past and 311 00:16:44,280 --> 00:16:47,080 Speaker 1: and some of the responses to them. Um. I was 312 00:16:47,120 --> 00:16:51,160 Speaker 1: watching UH sixty minutes when you were talking about Flashboys, 313 00:16:51,240 --> 00:16:54,240 Speaker 1: and you came out and said the markets were rigged 314 00:16:54,720 --> 00:16:57,920 Speaker 1: and all hell breaks loose? What what was the pushback 315 00:16:57,960 --> 00:17:00,680 Speaker 1: like to that? Wait? Was funny because it didn't even 316 00:17:00,680 --> 00:17:02,600 Speaker 1: occur to me I was saying anything controversial. I thought 317 00:17:02,600 --> 00:17:05,480 Speaker 1: everybody knew it. The writ and they pretty much always 318 00:17:05,480 --> 00:17:07,760 Speaker 1: be read and but the way they it was just 319 00:17:07,880 --> 00:17:10,960 Speaker 1: the way they're rigged has changed. And uh, really it's 320 00:17:11,040 --> 00:17:14,160 Speaker 1: it's so if you sit with the people who at 321 00:17:14,160 --> 00:17:17,159 Speaker 1: I X, the the exchange I was writing about, and 322 00:17:17,200 --> 00:17:19,720 Speaker 1: have them show you in real time kind of what's 323 00:17:19,720 --> 00:17:22,840 Speaker 1: going on in the market, you say, well, that's rigged. Uh. 324 00:17:23,119 --> 00:17:25,159 Speaker 1: So I didn't think it was a kind of surprised 325 00:17:25,160 --> 00:17:28,320 Speaker 1: that it generated the response it did. But the blowback. 326 00:17:29,040 --> 00:17:33,720 Speaker 1: It's the book that was the most unpleasant to publish. Really, Yes, 327 00:17:34,160 --> 00:17:36,800 Speaker 1: in that, by the way, fascinating book. I love the 328 00:17:36,840 --> 00:17:40,040 Speaker 1: opening about the line of sight with running the fiber 329 00:17:40,080 --> 00:17:43,640 Speaker 1: optic cables and and how milliseconds make a difference. So 330 00:17:43,800 --> 00:17:47,400 Speaker 1: the the it was the most unpleasant to publish because 331 00:17:47,400 --> 00:17:50,280 Speaker 1: it made so many people so angry, who were angry, 332 00:17:50,280 --> 00:17:52,840 Speaker 1: who who were going to try to do something about it, 333 00:17:53,080 --> 00:17:54,960 Speaker 1: And the reason was It took me about a moment 334 00:17:55,000 --> 00:17:57,000 Speaker 1: to realize that what the reason was. It's the first 335 00:17:57,040 --> 00:17:59,119 Speaker 1: time and the only time I've written a book that 336 00:17:59,160 --> 00:18:01,119 Speaker 1: was going to take money away from Wall Street people 337 00:18:01,640 --> 00:18:05,840 Speaker 1: that that that it was. It was it came as news, uh, 338 00:18:05,920 --> 00:18:08,120 Speaker 1: to some extent the story I told the guys who 339 00:18:08,119 --> 00:18:11,119 Speaker 1: were my main characters had news in their hands that 340 00:18:11,119 --> 00:18:15,000 Speaker 1: they didn't hadn't given anybody else. And unlike the big 341 00:18:15,040 --> 00:18:19,359 Speaker 1: short liars poker um, the money hadn't all been made. 342 00:18:19,880 --> 00:18:22,600 Speaker 1: I wasn't I wasn't writing something retrospectively. I was writing 343 00:18:22,640 --> 00:18:24,880 Speaker 1: something that was going on that if it was shut down, 344 00:18:24,920 --> 00:18:27,800 Speaker 1: would cost people billions of dollars and it and all 345 00:18:27,840 --> 00:18:30,560 Speaker 1: of a sudden, people are furious. They're hiring lobbyists to 346 00:18:30,560 --> 00:18:33,600 Speaker 1: go to Washington and spread stuff on the internet, and 347 00:18:33,840 --> 00:18:35,320 Speaker 1: it was like being on the receiving end of a 348 00:18:35,320 --> 00:18:40,000 Speaker 1: political campaign. Very it was. It was a crude and 349 00:18:40,160 --> 00:18:42,480 Speaker 1: kind of if you knew anything about the subject, and 350 00:18:42,760 --> 00:18:46,520 Speaker 1: kind of intellectually embarrassing one. But nevertheless it was it 351 00:18:46,560 --> 00:18:49,080 Speaker 1: was just weird have people so hostile. So you you 352 00:18:49,119 --> 00:18:51,480 Speaker 1: go on TV, you get into a debate with the 353 00:18:51,520 --> 00:18:54,639 Speaker 1: CEO of the Bats exchange. He says a bunch of 354 00:18:54,680 --> 00:18:57,840 Speaker 1: things that turned out to be not so true. Ultimately 355 00:18:58,359 --> 00:19:03,080 Speaker 1: he steps down from the vision. I said, you essentially 356 00:19:03,560 --> 00:19:06,880 Speaker 1: are to blame for him getting fired. What other crazy 357 00:19:06,920 --> 00:19:10,280 Speaker 1: sort of stuff came out of that book? We know. 358 00:19:11,040 --> 00:19:14,240 Speaker 1: Brad Katayama was a guest on the show and was 359 00:19:14,359 --> 00:19:17,280 Speaker 1: quite delightful. The main character of the book was on 360 00:19:17,320 --> 00:19:20,960 Speaker 1: that CNBC show with me, and he's the reason the 361 00:19:21,000 --> 00:19:23,120 Speaker 1: guy from Bat Bats he called him out. He called 362 00:19:23,160 --> 00:19:24,800 Speaker 1: him out, and he had he had ability to call 363 00:19:24,840 --> 00:19:26,760 Speaker 1: h out in a way I did not, because once 364 00:19:26,800 --> 00:19:29,800 Speaker 1: you get into the weeds of the subject that unless 365 00:19:29,880 --> 00:19:33,879 Speaker 1: you are the world's authority defending yourself again against whatever, 366 00:19:34,560 --> 00:19:39,080 Speaker 1: he has the world's authority absolutely and so um, what 367 00:19:39,200 --> 00:19:44,119 Speaker 1: other stuff. It's mainly like calls from lawyers, yeahs or 368 00:19:44,400 --> 00:19:49,119 Speaker 1: hey Mike Needle, lawyer. But also um, just just the 369 00:19:49,200 --> 00:19:53,080 Speaker 1: idea that people are being hired, people have now jobs 370 00:19:53,400 --> 00:19:56,760 Speaker 1: to attack a book. That that just was weird and 371 00:19:57,880 --> 00:20:00,400 Speaker 1: grease balls. I mean people you just would not really 372 00:20:00,480 --> 00:20:03,480 Speaker 1: you wouldn't think anybody would want on their side who 373 00:20:03,560 --> 00:20:07,240 Speaker 1: are I mean transparently kind of like making it up 374 00:20:07,240 --> 00:20:10,600 Speaker 1: as they go along. Uh. That that was just an 375 00:20:10,600 --> 00:20:12,480 Speaker 1: odd experience. I've never had anything like that. I mean 376 00:20:12,520 --> 00:20:14,440 Speaker 1: you would think maybe Solomon Brothers would have done something 377 00:20:14,480 --> 00:20:16,840 Speaker 1: like that after Liar's Poker, but nothing, nothing, They were 378 00:20:16,880 --> 00:20:19,040 Speaker 1: great kind of I mean there was people were upset, 379 00:20:19,280 --> 00:20:22,760 Speaker 1: some people, but they did they would have done something 380 00:20:22,800 --> 00:20:26,480 Speaker 1: like that. It felt the world of big shot Wall 381 00:20:26,480 --> 00:20:31,960 Speaker 1: Street people has become much more um sneaky and manipulative 382 00:20:32,000 --> 00:20:34,919 Speaker 1: and and dark in the sense that brad cotts the 383 00:20:34,920 --> 00:20:37,840 Speaker 1: other points us out. He says, it's amazing how people 384 00:20:37,840 --> 00:20:41,240 Speaker 1: think it's just the done thing to create a propaganda 385 00:20:41,280 --> 00:20:44,960 Speaker 1: campaign filled lies, because the lies travel so fast and 386 00:20:45,000 --> 00:20:47,480 Speaker 1: the truth is complicated, and so you can just you 387 00:20:47,480 --> 00:20:51,760 Speaker 1: can just paper the paper the internet with with all 388 00:20:51,840 --> 00:20:55,560 Speaker 1: this nonsense and nobody knows the difference between this this 389 00:20:55,560 --> 00:20:57,960 Speaker 1: this statement and this statement. Well, thank thank goodness, something 390 00:20:57,960 --> 00:21:01,439 Speaker 1: like that would never happen in a political So, you know, 391 00:21:01,880 --> 00:21:05,560 Speaker 1: Matt was my experience of seeing I've always ten assume 392 00:21:05,600 --> 00:21:07,480 Speaker 1: that like most people would look and say, well, clearly 393 00:21:07,480 --> 00:21:09,959 Speaker 1: he's lying. Clearly he's been hired to say this credit 394 00:21:10,359 --> 00:21:14,919 Speaker 1: and uh, that's not how it works. Uh. It's people 395 00:21:14,960 --> 00:21:16,720 Speaker 1: to say, oh, it must be two stories there, the 396 00:21:16,760 --> 00:21:19,640 Speaker 1: classic false equivalence, Well, the Earth is around, the Earth 397 00:21:19,720 --> 00:21:22,760 Speaker 1: is flat. They both made yes, yes, and and uh. 398 00:21:23,000 --> 00:21:25,840 Speaker 1: On the other hand, Joe says the Earth is flat 399 00:21:26,280 --> 00:21:28,520 Speaker 1: and you could see it's flat. You know, you can't 400 00:21:28,560 --> 00:21:31,520 Speaker 1: really see any curvature. It is flat. Yeah, So that's 401 00:21:31,600 --> 00:21:34,080 Speaker 1: but that is how that's how it felt. And I 402 00:21:34,080 --> 00:21:35,879 Speaker 1: thought at some point, I thought, you know, unless I 403 00:21:35,920 --> 00:21:40,600 Speaker 1: devote my life full time to to waging a counter campaign, 404 00:21:40,800 --> 00:21:42,919 Speaker 1: which I don't have the time or inclination to do 405 00:21:43,960 --> 00:21:47,800 Speaker 1: or interest now that it's just it was that, thank 406 00:21:47,880 --> 00:21:51,520 Speaker 1: god that I had characters who had a big interest 407 00:21:51,560 --> 00:21:54,560 Speaker 1: in doing so that if I X wasn't around and 408 00:21:54,600 --> 00:21:57,080 Speaker 1: with serious backers, I mean, all of this would have 409 00:21:57,119 --> 00:22:00,879 Speaker 1: just I look like I look like a quack. I 410 00:22:00,960 --> 00:22:04,320 Speaker 1: look like a crank who wrote this. Um, so you've 411 00:22:04,359 --> 00:22:08,240 Speaker 1: written enough really interesting things about unusual circumstances that I 412 00:22:08,280 --> 00:22:10,760 Speaker 1: think most people give you the benefit of the doubt. 413 00:22:11,720 --> 00:22:15,320 Speaker 1: Um not most people of the sec not most people 414 00:22:15,320 --> 00:22:17,080 Speaker 1: who are paid not to give me the benefit of 415 00:22:17,119 --> 00:22:20,720 Speaker 1: the doubt. So I think that, uh that the if 416 00:22:20,880 --> 00:22:23,720 Speaker 1: that public policy would not have had any would would 417 00:22:23,720 --> 00:22:26,399 Speaker 1: not have responded at all to the story if it 418 00:22:26,440 --> 00:22:29,719 Speaker 1: were even if it were completely true, unless there were 419 00:22:30,200 --> 00:22:33,639 Speaker 1: an agent out there, namely I X pushing and pushing 420 00:22:33,640 --> 00:22:37,160 Speaker 1: and pushing and pushing and uh so, so it's just disturbing. 421 00:22:37,440 --> 00:22:39,600 Speaker 1: It just think you think the truth will set you free, 422 00:22:40,160 --> 00:22:44,159 Speaker 1: and it's really clear what's true, and nobody, you know, 423 00:22:44,400 --> 00:22:46,159 Speaker 1: it doesn't get to people in the way that you 424 00:22:46,200 --> 00:22:49,480 Speaker 1: would think. Um, that's that's unbelievable. So that's that was 425 00:22:49,560 --> 00:22:52,399 Speaker 1: my That was my That was the most it was 426 00:22:52,480 --> 00:22:56,480 Speaker 1: the most disturbing publishing experience. I'm Barry Hults. You're listening 427 00:22:56,520 --> 00:22:59,680 Speaker 1: to Master's in Business on Bloomberg Radio. My special guest 428 00:22:59,720 --> 00:23:03,600 Speaker 1: today is author Michael Lewis. Most recently he wrote the 429 00:23:03,600 --> 00:23:07,159 Speaker 1: book The Undoing Project, The Friendship That Changed Our Minds, 430 00:23:07,520 --> 00:23:12,880 Speaker 1: but he's also written such classic Wall Street Books as Liars, Poker, Moneyball, 431 00:23:13,200 --> 00:23:16,920 Speaker 1: The Blindside, Flashboys, The Big Short. You did a book 432 00:23:16,960 --> 00:23:21,520 Speaker 1: on the election right after The Losers. It's that wasn't 433 00:23:21,520 --> 00:23:25,240 Speaker 1: the original That's that wasn't my title. I want to 434 00:23:25,280 --> 00:23:27,040 Speaker 1: call it loses because I followed all the people who lost. 435 00:23:28,040 --> 00:23:29,840 Speaker 1: By the way, was there an original title for The 436 00:23:29,840 --> 00:23:32,520 Speaker 1: Big Short? Or was it always always the Big Short? Alright, 437 00:23:32,640 --> 00:23:35,400 Speaker 1: I'll share something with you later that I think you'll appreciate. 438 00:23:35,600 --> 00:23:38,480 Speaker 1: So let's talk a little bit about your writing process. 439 00:23:38,760 --> 00:23:41,439 Speaker 1: So where do you begin? I know you have an 440 00:23:41,480 --> 00:23:44,399 Speaker 1: office at home with a desk and a computer. Do 441 00:23:44,440 --> 00:23:46,679 Speaker 1: you just sit down and say, let me start banging 442 00:23:46,720 --> 00:23:50,720 Speaker 1: something out? How do these ideas German social interaction in 443 00:23:50,760 --> 00:23:54,119 Speaker 1: the beginning? Really? Yeah? So I don't. I'm not a novelist, 444 00:23:54,400 --> 00:23:56,320 Speaker 1: and my material is not just in my head. It's 445 00:23:56,320 --> 00:23:58,359 Speaker 1: out there in the world. And so I spent I 446 00:23:58,440 --> 00:24:01,800 Speaker 1: spend three times in much time I'm gathering the material 447 00:24:02,200 --> 00:24:04,840 Speaker 1: as I do actually writing it. So typical book takes 448 00:24:05,160 --> 00:24:08,200 Speaker 1: a year and a half to report and research, maybe 449 00:24:08,200 --> 00:24:10,720 Speaker 1: a bit more and six months to write. Is it 450 00:24:10,840 --> 00:24:14,080 Speaker 1: research right? Research right? Or research research research right right? Right? 451 00:24:14,119 --> 00:24:17,600 Speaker 1: It's nothing but research for a long time, and when 452 00:24:17,600 --> 00:24:19,879 Speaker 1: I start writing, I'm usually still doing bits and pieces 453 00:24:19,880 --> 00:24:21,959 Speaker 1: of research, and in the end I'm doing no research 454 00:24:22,000 --> 00:24:25,199 Speaker 1: and of just writing. So it's the writing of it is. 455 00:24:25,560 --> 00:24:27,200 Speaker 1: I don't want to say it's an afterthought, but by 456 00:24:27,200 --> 00:24:30,520 Speaker 1: the time that's right, I'm constantly thinking about how the 457 00:24:30,560 --> 00:24:33,280 Speaker 1: story goes, and by the time I sit down to 458 00:24:33,320 --> 00:24:35,640 Speaker 1: actually start a book, I at least think I know 459 00:24:35,840 --> 00:24:38,159 Speaker 1: exactly where it ends. Like I had the last sentence 460 00:24:38,240 --> 00:24:40,800 Speaker 1: to this book in my head pretty much, and I 461 00:24:40,880 --> 00:24:43,439 Speaker 1: usually have a title. Sometimes I don't, and it like 462 00:24:43,560 --> 00:24:46,480 Speaker 1: drives me crazy because I think that it crystallizes for 463 00:24:46,520 --> 00:24:48,760 Speaker 1: you with the books about to have the title. There's 464 00:24:48,800 --> 00:24:50,639 Speaker 1: a buzz in my head that bothers me if I 465 00:24:50,640 --> 00:24:52,560 Speaker 1: don't have the title in my head, So it takes 466 00:24:52,560 --> 00:24:54,760 Speaker 1: sometimes it takes a while to find that title, but 467 00:24:54,880 --> 00:24:56,879 Speaker 1: usually I have that. So at the blind side, I 468 00:24:56,880 --> 00:24:59,280 Speaker 1: had the big short The Undoing Project came pretty early 469 00:24:59,320 --> 00:25:02,080 Speaker 1: as a as a title undoing what we previously thought 470 00:25:02,080 --> 00:25:04,400 Speaker 1: about cognition, Yes, and it was also what they were 471 00:25:04,400 --> 00:25:06,720 Speaker 1: working on when they broke up. They had a project 472 00:25:06,720 --> 00:25:09,919 Speaker 1: they had tentatively titled the Undoing Project. And so and 473 00:25:09,960 --> 00:25:13,199 Speaker 1: I like the phrase. So anyway, the and then when 474 00:25:13,200 --> 00:25:16,080 Speaker 1: the writing starts always goes in slightly different ways than 475 00:25:16,080 --> 00:25:18,639 Speaker 1: I imagine. Things drop that I thought were important you 476 00:25:18,680 --> 00:25:20,680 Speaker 1: see in print, and they no longer resonate the word 477 00:25:20,680 --> 00:25:22,399 Speaker 1: I don't even get him into print. I get to 478 00:25:22,400 --> 00:25:23,960 Speaker 1: the point in the story where I thought they belong. 479 00:25:24,080 --> 00:25:26,919 Speaker 1: I realized, as it did boring, this is unnecessary. So 480 00:25:27,160 --> 00:25:30,320 Speaker 1: things fall away. Is a lot of that numb and 481 00:25:30,320 --> 00:25:34,280 Speaker 1: and sometimes internally things swell all of a sudden, things 482 00:25:34,320 --> 00:25:37,159 Speaker 1: I thought were words on the page, we're end up 483 00:25:37,200 --> 00:25:40,880 Speaker 1: being eight thousand words on the page. And it's this 484 00:25:40,920 --> 00:25:44,199 Speaker 1: book surprised me that way that things everything that I 485 00:25:44,359 --> 00:25:48,160 Speaker 1: whole sections did fall away, and things that I thought 486 00:25:48,160 --> 00:25:50,560 Speaker 1: were short ended up being long. So that's a that 487 00:25:50,640 --> 00:25:53,280 Speaker 1: raises a really interesting point when when you're playing with 488 00:25:53,320 --> 00:25:57,600 Speaker 1: an idea, do you know from the beginning this is 489 00:25:57,960 --> 00:26:02,160 Speaker 1: a Bloomberg View post, this is a long Younger magazine story. Oh, 490 00:26:02,280 --> 00:26:05,760 Speaker 1: this is a full blown book. At what point do 491 00:26:05,840 --> 00:26:09,680 Speaker 1: you have a sense that, hey, there's legs here. A 492 00:26:09,680 --> 00:26:12,600 Speaker 1: column of the length of the Bloomberg View thing is 493 00:26:12,640 --> 00:26:16,960 Speaker 1: always just a columns an opinion. It's preciually a humorous 494 00:26:17,000 --> 00:26:19,760 Speaker 1: take on something, and uh, I've never had one of 495 00:26:19,800 --> 00:26:22,480 Speaker 1: those become something I didn't think it was. But magazine 496 00:26:22,480 --> 00:26:25,760 Speaker 1: pieces sometimes blow up and get much much bigger. Moneyball 497 00:26:25,880 --> 00:26:28,159 Speaker 1: started as a magazine piece because I just had a 498 00:26:28,240 --> 00:26:30,040 Speaker 1: question for the Oakland A's like, how are you winning? 499 00:26:30,600 --> 00:26:32,360 Speaker 1: And I thought, well, that would be a cute little story. 500 00:26:32,400 --> 00:26:34,600 Speaker 1: Actually it wasn't even be a long magazine piece. And 501 00:26:34,640 --> 00:26:36,520 Speaker 1: after a day with the front office and I went, 502 00:26:36,560 --> 00:26:39,400 Speaker 1: oh my god, this is something big here. I don't 503 00:26:39,400 --> 00:26:41,680 Speaker 1: know what it is, but it's not a short magazine piece. 504 00:26:42,040 --> 00:26:43,800 Speaker 1: It took me six weeks to figure out what it 505 00:26:43,880 --> 00:26:46,320 Speaker 1: was and just talking to him, and then now the 506 00:26:46,400 --> 00:26:48,800 Speaker 1: year to report it. I gotta assume. So if people 507 00:26:48,800 --> 00:26:51,399 Speaker 1: who are not familiar with the story, Oakland a is 508 00:26:51,400 --> 00:26:55,160 Speaker 1: one of the smallest budgets in the entire baseball league, 509 00:26:55,520 --> 00:26:58,800 Speaker 1: and suddenly they start a new approach to let's throw 510 00:26:58,800 --> 00:27:01,560 Speaker 1: away the old nonsense of evaluating players, so they didn't 511 00:27:01,600 --> 00:27:03,560 Speaker 1: talk about any of that. You all you saw as 512 00:27:03,600 --> 00:27:06,159 Speaker 1: a fan where wow, they look a little strange. They 513 00:27:06,160 --> 00:27:08,439 Speaker 1: look like a Beer league softball team. They're all these 514 00:27:08,520 --> 00:27:10,240 Speaker 1: kind of fat guys who hit home runs and can't 515 00:27:10,280 --> 00:27:12,560 Speaker 1: catch the ball, and they're winning all these games? How's 516 00:27:12,600 --> 00:27:15,760 Speaker 1: this happening? And uh? And then you when you see 517 00:27:15,800 --> 00:27:18,440 Speaker 1: the budgets, like they're paying for their players a fifth 518 00:27:18,440 --> 00:27:20,600 Speaker 1: of what the Yankees are and they're winning as many games. 519 00:27:20,960 --> 00:27:24,040 Speaker 1: If the market's efficient, that makes no sense that you 520 00:27:24,040 --> 00:27:25,800 Speaker 1: should buy all the best players and just beat the A's. 521 00:27:25,960 --> 00:27:28,440 Speaker 1: So what's going on there? And it was a market 522 00:27:28,440 --> 00:27:31,800 Speaker 1: efficiency story. It's like something's wrong there. And I thought 523 00:27:31,800 --> 00:27:34,280 Speaker 1: there would be an easy explanation. I didn't know what 524 00:27:34,320 --> 00:27:37,040 Speaker 1: it was gonna be. And the explanation was very involved. 525 00:27:37,359 --> 00:27:40,439 Speaker 1: And and the big thing was the A's front office 526 00:27:40,720 --> 00:27:42,919 Speaker 1: had never been asked the question because of the sports 527 00:27:43,000 --> 00:27:45,800 Speaker 1: journalists were not at all focused on this on the 528 00:27:45,840 --> 00:27:48,480 Speaker 1: money side of things. They you know, some have some money, 529 00:27:48,520 --> 00:27:50,040 Speaker 1: someone don't have some money. But they didn't think in 530 00:27:50,160 --> 00:27:53,000 Speaker 1: terms of like market efficiency. And so Billy Bean, who 531 00:27:53,119 --> 00:27:55,080 Speaker 1: ran the Oakland A's, had never had a chance to 532 00:27:55,160 --> 00:27:57,960 Speaker 1: download on anybody all these thoughts he had about the 533 00:27:58,240 --> 00:28:01,399 Speaker 1: how screwed up the evaluations? So I had, so it 534 00:28:01,480 --> 00:28:03,880 Speaker 1: was completely fresh material. He said to me. No one's 535 00:28:03,880 --> 00:28:06,800 Speaker 1: asked that question. Where the sports journalists drinking from the 536 00:28:06,840 --> 00:28:08,880 Speaker 1: same kool aid as everybody else? They just didn't think 537 00:28:08,880 --> 00:28:10,400 Speaker 1: it was interesting. You know, it really is a matter 538 00:28:10,400 --> 00:28:12,840 Speaker 1: of what you find interesting. What was interesting is who 539 00:28:12,840 --> 00:28:15,760 Speaker 1: they traded for or whether they went last night or 540 00:28:15,760 --> 00:28:18,199 Speaker 1: who had not. Here's a giant philosophical shift in the 541 00:28:18,200 --> 00:28:21,040 Speaker 1: way baseball team should be assembled that we don't care about. That. 542 00:28:21,080 --> 00:28:24,160 Speaker 1: Tell me about your new second basement. In fairness, wasn't 543 00:28:24,240 --> 00:28:26,160 Speaker 1: as if the Oakland front office was trying to tell 544 00:28:26,200 --> 00:28:28,800 Speaker 1: their story. They just no one asked them for it, 545 00:28:28,920 --> 00:28:31,399 Speaker 1: and they had not been approached by anybody saying I 546 00:28:31,440 --> 00:28:33,720 Speaker 1: want to know what you're doing here, because something's going on. 547 00:28:34,240 --> 00:28:36,800 Speaker 1: Except the owner of the Boston Red Sox, the new 548 00:28:36,840 --> 00:28:39,520 Speaker 1: owner of the Boston Red Sox, who was trying to yeah, 549 00:28:39,560 --> 00:28:42,200 Speaker 1: he he knew something was He was a financial guy. 550 00:28:42,840 --> 00:28:45,720 Speaker 1: Something's going on there, and and so he was already 551 00:28:45,720 --> 00:28:48,160 Speaker 1: sniffing around a little bit. So not a coincidence that 552 00:28:48,360 --> 00:28:52,600 Speaker 1: a financial ride recognized. So that's statistical side of this, 553 00:28:52,680 --> 00:28:55,560 Speaker 1: And a quantz running another baseball team said hey, there's 554 00:28:55,600 --> 00:28:58,520 Speaker 1: some something here that's right. That's that that's not a coincidence, 555 00:28:58,560 --> 00:29:00,840 Speaker 1: And the a's were it was atharctic for them to 556 00:29:01,000 --> 00:29:03,000 Speaker 1: just talk have someone to talk to you about it, 557 00:29:03,120 --> 00:29:05,200 Speaker 1: because it was what they thought about all the time 558 00:29:05,600 --> 00:29:08,440 Speaker 1: is how you make your resources go further, how you 559 00:29:08,480 --> 00:29:11,280 Speaker 1: find bargains in baseball, what's going on in the mind 560 00:29:11,280 --> 00:29:14,760 Speaker 1: of baseball scouts, what's wrong with old fashioned baseball strategies? 561 00:29:14,800 --> 00:29:17,280 Speaker 1: All they were rethinking the game. So money Ball became 562 00:29:17,320 --> 00:29:19,720 Speaker 1: Billy Bean's confessional to you. It wasn't so much a 563 00:29:19,760 --> 00:29:23,560 Speaker 1: confessional because that implies that he feels no. No, it 564 00:29:23,640 --> 00:29:27,080 Speaker 1: was it was Billy be but it was Moneyball becomes 565 00:29:28,040 --> 00:29:30,680 Speaker 1: story outlet for Billy to kind of get things off 566 00:29:30,720 --> 00:29:34,240 Speaker 1: his chest about what he's seen. Yes, he tells the story. 567 00:29:34,600 --> 00:29:36,960 Speaker 1: It took him a little while to get comfortable telling 568 00:29:36,960 --> 00:29:39,080 Speaker 1: me a story, but not that long. You're pretty good 569 00:29:39,080 --> 00:29:42,120 Speaker 1: at ingratiating yourself with people to get them to to 570 00:29:42,200 --> 00:29:44,760 Speaker 1: come out and speak with you. You know. I try 571 00:29:44,800 --> 00:29:46,680 Speaker 1: to let him get to know me a bit so 572 00:29:46,720 --> 00:29:49,440 Speaker 1: they feel more comfortable. And the truth is that if 573 00:29:49,440 --> 00:29:51,520 Speaker 1: I'm going to do a long thing, a long piece 574 00:29:51,560 --> 00:29:54,440 Speaker 1: of writing about someone, I have to genuinely feel basically 575 00:29:54,480 --> 00:29:57,080 Speaker 1: positively disposed to them. That if I actually thought he 576 00:29:57,160 --> 00:30:00,160 Speaker 1: was a creep or dishonest or whatever, I just I 577 00:30:00,160 --> 00:30:01,920 Speaker 1: wouldn't want to spend the time with him necessary for 578 00:30:01,960 --> 00:30:05,080 Speaker 1: the book. So it becomes a kind of easy relationship 579 00:30:05,080 --> 00:30:07,280 Speaker 1: because he senses I basically like him, and he says 580 00:30:07,280 --> 00:30:10,560 Speaker 1: that I'm basically a sane person, and he says I 581 00:30:10,600 --> 00:30:14,360 Speaker 1: might do anything really creepy, and so there's a trust develops, 582 00:30:14,360 --> 00:30:16,000 Speaker 1: and it's just a very broad trust. I don't want 583 00:30:16,000 --> 00:30:17,800 Speaker 1: anybody see what I write about them or anything. But 584 00:30:18,080 --> 00:30:20,040 Speaker 1: at some points starts to feel comfortable with me, and 585 00:30:20,200 --> 00:30:22,240 Speaker 1: I'm gonna tell my story. Somebody might as well be him. 586 00:30:22,360 --> 00:30:25,000 Speaker 1: That's what you're gunning for. Nobody's ever gonna feel completely 587 00:30:25,040 --> 00:30:27,480 Speaker 1: comfortable with it. You just say someone's gonna get this story, 588 00:30:27,560 --> 00:30:29,280 Speaker 1: might as well be him. Let's stay with the idea 589 00:30:29,320 --> 00:30:33,120 Speaker 1: of a magazine story that would have or could have 590 00:30:33,200 --> 00:30:38,040 Speaker 1: become a book. In the Sunday New York Times magazine, 591 00:30:38,640 --> 00:30:42,680 Speaker 1: you published How the egg Heads Cracked. It's a nine 592 00:30:42,720 --> 00:30:47,440 Speaker 1: thousand word opus about long term capital management. My former boss. 593 00:30:47,920 --> 00:30:52,280 Speaker 1: Oh really, John Merryweather, That's that's right. So the question is, 594 00:30:52,320 --> 00:30:55,560 Speaker 1: and with all due respect to Roger Lowenstein, I love 595 00:30:55,640 --> 00:30:57,960 Speaker 1: when when Genius failed he was a guest on the show, 596 00:30:58,240 --> 00:31:01,600 Speaker 1: But really you could have it in that book as well. Yes, 597 00:31:01,840 --> 00:31:05,160 Speaker 1: why didn't that become a book. Because when I went back, 598 00:31:05,200 --> 00:31:07,520 Speaker 1: when I'm researching this and I'm looking at that, my 599 00:31:07,560 --> 00:31:10,680 Speaker 1: head of research says, hey, check out this article. I'm like, wow, 600 00:31:10,720 --> 00:31:12,920 Speaker 1: this could easily have been a Michael Lewis book. I 601 00:31:12,960 --> 00:31:15,200 Speaker 1: turned the question on his head. Why even bothered it? 602 00:31:15,320 --> 00:31:17,880 Speaker 1: Right that? Because I really thought I was done writing 603 00:31:17,880 --> 00:31:20,160 Speaker 1: about Wall Street in a big way, and you never 604 00:31:20,160 --> 00:31:22,360 Speaker 1: want to write the same book twice. And while that's 605 00:31:22,400 --> 00:31:26,000 Speaker 1: just too close in time, Yeah, yeah, it was a decade, 606 00:31:26,000 --> 00:31:29,240 Speaker 1: but I just thought, been there, done that. The question 607 00:31:29,400 --> 00:31:31,719 Speaker 1: that I actually asked was is this worth doing? And 608 00:31:31,760 --> 00:31:35,000 Speaker 1: I thought, well, you know, these guys are being demonized 609 00:31:35,080 --> 00:31:38,040 Speaker 1: in the press. Nobody really understands what they did. I 610 00:31:38,120 --> 00:31:40,320 Speaker 1: kind of understand what they did, and they can explain 611 00:31:40,360 --> 00:31:42,080 Speaker 1: it to me in a way I can explain to people. 612 00:31:42,240 --> 00:31:45,240 Speaker 1: So it just like takes some of the weirdness out 613 00:31:45,240 --> 00:31:47,440 Speaker 1: of the environment around them. So I just thought it 614 00:31:47,480 --> 00:31:50,239 Speaker 1: would be it would be useful for me to go 615 00:31:50,320 --> 00:31:52,520 Speaker 1: in have them explain it to me, and then explain 616 00:31:52,560 --> 00:31:55,800 Speaker 1: it to a broader audience. And they didn't exactly trust 617 00:31:55,880 --> 00:31:58,720 Speaker 1: me because I had written Liars Poker. I mean, that's 618 00:31:58,760 --> 00:32:00,960 Speaker 1: that's trust is they they were. Some of them were 619 00:32:01,080 --> 00:32:04,960 Speaker 1: irritated about that. Really, not a lot of the solid guys. Yeah, 620 00:32:05,040 --> 00:32:07,760 Speaker 1: well they were. They were in my immediate colleagues, Hans 621 00:32:07,800 --> 00:32:11,400 Speaker 1: hoffen Schmidt, hushmid Humid. So I gotta ask you about that. 622 00:32:11,520 --> 00:32:15,520 Speaker 1: So he became your frame of reference for did I 623 00:32:15,600 --> 00:32:20,080 Speaker 1: do the right thing? Leaving Sally was early. Well, we 624 00:32:20,320 --> 00:32:22,840 Speaker 1: kind of tracked through the training program together, right, and 625 00:32:22,840 --> 00:32:24,920 Speaker 1: we ended up kind of in a similar sort of role. 626 00:32:25,000 --> 00:32:26,960 Speaker 1: He was in the foreign exchange department. I was with 627 00:32:27,040 --> 00:32:29,680 Speaker 1: John Merryweather's a group, and we're kind of getting paid 628 00:32:29,720 --> 00:32:31,760 Speaker 1: the same amount of money. And I did kind of think, well, 629 00:32:31,800 --> 00:32:34,360 Speaker 1: if I'd stayed at Solomon Brothers, I'd kind of done 630 00:32:34,400 --> 00:32:37,320 Speaker 1: how Hans did. And he killed and he made a 631 00:32:37,320 --> 00:32:39,560 Speaker 1: ton of money, put it into the longtime capital. He 632 00:32:39,600 --> 00:32:42,040 Speaker 1: was putting fifty million dollar bonuses, and then it all 633 00:32:42,720 --> 00:32:44,600 Speaker 1: up to that point I thought, Jesus, did did I 634 00:32:44,640 --> 00:32:47,520 Speaker 1: make a mistake becoming a writer? I never really felt 635 00:32:47,560 --> 00:32:49,640 Speaker 1: that way, but it was like he was my measure 636 00:32:49,640 --> 00:32:53,080 Speaker 1: of the opportunity cost. So the line in when the 637 00:32:53,320 --> 00:32:57,280 Speaker 1: heads cracked after LTCM blows up and he's tens of 638 00:32:57,320 --> 00:33:00,040 Speaker 1: millions of dollars go to zero. You're tracking this and 639 00:33:00,160 --> 00:33:03,120 Speaker 1: you say, I once again was satisfied to be paid 640 00:33:03,160 --> 00:33:06,760 Speaker 1: by the word do you. I don't remember writing it, 641 00:33:06,800 --> 00:33:09,680 Speaker 1: but it's absolutely try. I felt that way. Thank God. 642 00:33:09,680 --> 00:33:13,120 Speaker 1: I'm a camera writer, so financially sound decision. For people 643 00:33:13,120 --> 00:33:16,160 Speaker 1: who would like to find more Michael Lewis, you can 644 00:33:16,200 --> 00:33:19,720 Speaker 1: go to either his website, which is Michael Lewis. I 645 00:33:19,720 --> 00:33:23,760 Speaker 1: don't have a website. Michael Lewis rights some my publisher 646 00:33:23,760 --> 00:33:26,920 Speaker 1: has a website for you. But bonds and normal Amazon, 647 00:33:27,080 --> 00:33:30,160 Speaker 1: wherever fine books are sold, you can find the works 648 00:33:30,320 --> 00:33:32,960 Speaker 1: of Michael Lewis. You can check out my daily column 649 00:33:32,960 --> 00:33:35,680 Speaker 1: on Bloomberg View dot com or follow me on Twitter 650 00:33:35,840 --> 00:33:39,280 Speaker 1: at rid Halts. I'm Barry rid Halts. You're listening to 651 00:33:39,440 --> 00:33:42,840 Speaker 1: Masters in Business on Bloomberg Radio, brought to you by 652 00:33:42,880 --> 00:33:46,440 Speaker 1: Bank of America Merrill Lynch committed to bringing higher finance 653 00:33:46,520 --> 00:33:49,560 Speaker 1: to lower carbon named the most innovative investment bank for 654 00:33:49,600 --> 00:33:53,320 Speaker 1: climate change and sustainability by the Banker. That's the power 655 00:33:53,320 --> 00:33:57,000 Speaker 1: of global connections. Bank of America, North America. Remember F 656 00:33:57,120 --> 00:33:57,480 Speaker 1: D I C