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0:01:43 – Episode 328.
0:01:45 328 is the country code belonging to Guyana.
0:01:47 In 1928, Mickey Mouse first appeared
0:01:49 in the sound cartoon Steamboat.
0:01:53 Willie, what’s the difference between Disney+ and U-Porn?
0:01:55 Disney+ wants you to hate your stepmother.
0:01:59 Go, go, go!
0:02:10 – Welcome to the 328th episode of The Prop G-Pod.
0:02:12 In today’s episode, we speak with Michael Lewis,
0:02:15 the host of the podcast Against the Rules
0:02:18 and New York Times bestselling author of several books,
0:02:21 including The Fifth Risk, Flash Boys, and The Big Short.
0:02:24 We discussed with Michael the state of sports betting,
0:02:25 the challenges young men face,
0:02:28 and the controversy surrounding the book Going Infinite,
0:02:30 which explores the rise and fall of Sam Bakeman Freed.
0:02:32 I really enjoyed this conversation.
0:02:36 He’s a very, simply put, Michael is a great storyteller
0:02:39 and has written some of the kind of iconic books of our time.
0:02:40 Okay, what’s happening?
0:02:43 Home in London before heading to South Africa
0:02:44 for the holidays.
0:02:46 I’m super excited.
0:02:49 I’m taking my sister and her family.
0:02:51 My sister is turning 50,
0:02:54 which in the Galloway household means she’s turning 40.
0:02:56 And love hanging out.
0:02:57 You know, it’s wonderful.
0:02:59 So my sister and I never lived in the same household.
0:03:02 I was raised by a single immigrant mother.
0:03:05 My dad, that was my dad’s second wife as far as we know.
0:03:05 Pretty sure there was another one
0:03:07 that we don’t know about.
0:03:09 And then he started his third marriage
0:03:13 while he was married to my mother, bad form, bad form.
0:03:16 And he married Linda, who is Ashley’s,
0:03:18 they had a daughter and that was Ashley.
0:03:19 And Ashley and I always got along,
0:03:21 but part of it was we didn’t live together.
0:03:22 So we were just kind of,
0:03:25 you know, just 10 years difference between the two of us.
0:03:28 And as we got older, we became kind of,
0:03:29 it was sort of fun to just sort of wake up
0:03:32 and realize you had a sibling that you got along with
0:03:34 and you still felt that familial bond with
0:03:36 and we had been close siblings.
0:03:41 And so it struck me how many siblings don’t get along.
0:03:43 And I think that’s one of my biggest fears about my boys
0:03:44 is they’re going to grow up
0:03:46 and for whatever reason not be close.
0:03:49 But I found that not living with my sibling
0:03:51 and then waking up and finding out
0:03:52 you had this intelligent, interesting,
0:03:56 you know, nice person who felt a bond with you
0:03:57 was really wonderful.
0:04:00 It’s also been key in helping take care of my father.
0:04:04 Anyways, I’m super excited about going to South Africa.
0:04:05 I love Africa.
0:04:07 This will be my third time.
0:04:10 And people say, they say, don’t say Africa.
0:04:12 That’s like saying North America.
0:04:15 Every part of Africa I’ve been to, I’ve really enjoyed.
0:04:17 Anyways, moving on.
0:04:19 Major shakeup in the advertising world.
0:04:23 Omnicom announced a $13.25 billion all-stock deal
0:04:26 to acquire its rival interpublic group.
0:04:29 The deal would create the world’s largest advertising business
0:04:31 merging the third largest ad buyer Omnicom
0:04:33 with the fourth largest interpublic.
0:04:35 According to 2020 figures,
0:04:37 the combined entity would generate over $25 billion
0:04:39 in annual revenue surpassing competitors,
0:04:41 including WPP and Publixy.
0:04:43 By the numbers, let’s look at it.
0:04:45 WPP registered 19 billion,
0:04:49 Publixy 16, Omnicom 15, and IPG 11.
0:04:53 This is what happens when there’s essentially
0:04:56 a tectonic shift away from your sector.
0:04:58 And that is the first thing that happens is cost cutting.
0:05:01 The second thing that happens is consolidation.
0:05:02 So you can bulk up,
0:05:04 which is effectively a way of cost cutting
0:05:06 ’cause then you only need one headquarters, one CFO,
0:05:08 one admin staff.
0:05:11 The modern kind of ad conglomerate was sort of forged
0:05:15 by Sir Martin Sorrell and it was the following.
0:05:17 These are good businesses or at least they used to be,
0:05:19 the ad agency business or the agency business
0:05:21 where companies would think, all right, we’re Intel,
0:05:22 we’re not that creative.
0:05:24 We get engineers to come work here,
0:05:27 but we’re not about making commercials or designing logos
0:05:29 or putting on conferences or buying keywords or what have you.
0:05:32 So we’re gonna outsource this part of the company
0:05:34 and we need to find really creative people
0:05:36 who see all these types of ideas
0:05:38 and played with the wrong toys or the right toys
0:05:40 and where those people that decorated their desk
0:05:42 and funky shit or you went over to their apartment
0:05:43 and their apartment just seemed cooler than yours
0:05:45 even though they made less money, those people.
0:05:47 And we need to outsource it.
0:05:50 And from 1945 to 1995,
0:05:52 the algorithm for printing money
0:05:54 or creating shareholder value was the following,
0:05:57 mediocre shoes, salty snack or car,
0:05:58 and then wrap brand codes
0:06:00 or these amazing brand codes around it
0:06:02 of masculinity, maternal love,
0:06:05 European elegance, American macho,
0:06:07 whatever it might be to be smart, to be practical,
0:06:08 whatever it was.
0:06:10 And the thing about brand building
0:06:11 was it was the ultimate strategy
0:06:13 because the sword around building a brand
0:06:15 was so incredibly sharp.
0:06:16 It was such a valerian steel
0:06:18 and it was specifically not the creative
0:06:20 but the fact that you could consolidate the market
0:06:24 and reach people with these pieces of creative
0:06:26 that created these intangible associations
0:06:27 wrapped around a mediocre product.
0:06:30 You could find 80% of all of America
0:06:34 in one of three places NBC, ABC or CBS for five hours a day
0:06:35 so we could build these brands.
0:06:37 So essentially the ability to find a mediocre product
0:06:39 and build amazing associations around it
0:06:44 such that it became not $8 of leather and laces
0:06:48 but 140 bucks of being like Mike
0:06:51 or not 20 cents of peanut butter paste
0:06:53 but $2 or $3 of maternal love
0:06:55 because choosy moms choose jiff.
0:06:57 This was the ultimate way to kind of build shareholder value
0:07:01 and you had General Motors, you had P&G, you had Coca-Cola.
0:07:04 I think kind of the beginning of the decline of the brand age
0:07:06 was when Honda introduced a compact car in the US
0:07:09 and said, all right, it’s not all about branding.
0:07:11 It’s just about a better car at a better price.
0:07:15 And then the big, big unlock or kind of the last nail
0:07:19 or what really took the vampire of kind of ad supported
0:07:21 or the brand age down or was sort of the wooden stake
0:07:24 in Don Draper’s heart was the introduction of Google.
0:07:27 And that is no longer needed to defer
0:07:28 to the shorthand of a brand.
0:07:30 And a brand is just diligence, right?
0:07:31 I used to stay at the Mandarin Oriental
0:07:32 with four seasons wherever I’d go.
0:07:34 One, because someone else was paying for it
0:07:35 and two, they was doing a good job.
0:07:39 Now I want to use my social graph, Google AI to find out
0:07:43 that the best gym in Europe or in Berlin is at the warehouse
0:07:46 or that I want to stay at, you know,
0:07:48 which lodge do I want to stay at in Africa?
0:07:50 All of a sudden, I’m no longer deferring
0:07:51 strictly to the brand, right?
0:07:54 I can find, I can do my own homework
0:07:56 and also a big digital unlock, right?
0:07:57 Tesla doesn’t need to advertise as much
0:08:00 because if you can tune up your electric car
0:08:01 over the airwaves, that’s amazing.
0:08:05 Google, Instagram are in fact 10x better products.
0:08:08 So digital innovation has kind of made product cool again.
0:08:11 Brands are now built by supply chain and innovation
0:08:14 and technology that unlocks some sort of product feature.
0:08:16 That leaves ad agencies, quite frankly,
0:08:17 with declining power.
0:08:19 And the problem is it hasn’t been overnight.
0:08:21 It’s kind of like the magazine industry.
0:08:25 The worst thing that can happen to you is to die slowly
0:08:28 because the thing about marketing and ad spending
0:08:30 is that it’s incredibly resilient.
0:08:32 It’s always been about 1.5% of GDP,
0:08:34 but it also doesn’t grow a lot as a whole.
0:08:36 Google hasn’t grown the market.
0:08:39 They’ve just taken tens and now hundreds
0:08:41 of billions of dollars out of the ecosystem.
0:08:44 It is a bit of a zero sum game.
0:08:46 And these guys have been on the wrong end of that.
0:08:49 Now, the merger we’re talking about here
0:08:51 is expected to result in $750 million
0:08:52 in annual cost savings.
0:08:53 Omnicom CEO, John Wren.
0:08:56 I met with John Wren literally 25 years ago
0:08:58 about potentially selling my brand strategy
0:08:58 for a profit to him.
0:09:00 Seemed like a very smart guy.
0:09:01 He’ll lead the new company,
0:09:04 which will keep the Omnicom name, the combined company,
0:09:08 Interpublic IPG CEO, Philip Krakowski,
0:09:11 will serve as the co-chief operating officer, co-officer.
0:09:13 That means he’s on his way out.
0:09:16 Omnicom shareholders will own 60.6% of the combined company
0:09:20 while interpublic shareholders will command 39.4%.
0:09:23 Interpublic shares were up 11% on the news
0:09:24 while Omnicom’s fell 6%.
0:09:26 Typically, the acquiring company who’s on top,
0:09:29 their shares fall because usually people get excited
0:09:32 about building a bigger empire and they overpay.
0:09:34 Only one in three acquisitions works.
0:09:36 Omnicom has tried to do this before.
0:09:39 Back in 2013, Omnicom tried a 35-million dollar merger
0:09:42 with Publixy, but it fell apart due to regulatory issues.
0:09:45 Still, Omnicom CEO, John Wren remains optimistic
0:09:47 and has said the current regulatory environment
0:09:48 is more friendly to business.
0:09:50 It’s not that they’re more friendly to business, John.
0:09:53 It’s just they realize what trouble you’re in
0:09:56 and that you need to bulk up or specifically cut costs.
0:09:58 The notion that they’re gonna get in the way of this
0:10:00 or they’re gonna have some sort of monopoly power
0:10:01 is just insane.
0:10:02 Now, I wouldn’t put it past the DOJ or FTC
0:10:05 ’cause in my mind they do make irrational decisions
0:10:06 every once in a while.
0:10:08 But for God’s sakes, this isn’t about monopoly power,
0:10:11 controlling the media ecosystem.
0:10:15 This is about literally just trying to stay afloat.
0:10:17 In some, if you can’t beat big tech,
0:10:19 you need to consolidate and get bigger yourself.
0:10:22 The deal is expected to close in the second half of 2025.
0:10:25 The big question is, will this integration actually succeed?
0:10:27 This is the right thing to do.
0:10:29 You know, IPG’s on bottom here.
0:10:33 If you’re at headquarters in admin, in middle management,
0:10:34 you’re not client facing,
0:10:38 you’re not ringing the registered IPG, folks,
0:10:40 let’s be clear, you’re on the green mile.
0:10:42 And while John Wren will paint a vision of the future
0:10:43 and how there’ll be a lot of growth
0:10:45 and they don’t have an immediate layoffs plan,
0:10:48 okay, stick around to get the severance, but be clear,
0:10:52 if you’re not directly linked to a client
0:10:55 or a critical mission critical function,
0:10:57 and you’re making a good living,
0:10:58 you’re about to be consolidated.
0:11:02 We’ll be right back for a conversation with Michael Lewis.
0:11:09 The Capital Ideas podcast now features a series
0:11:12 hosted by Capital Group CEO, Mike Gitlin.
0:11:14 Through the words and experiences
0:11:16 of investment professionals, you’ll discover
0:11:19 what differentiates their investment approach,
0:11:22 what learnings have shifted their career trajectories,
0:11:25 and how do they find their next great idea?
0:11:28 Invest 30 minutes in an episode today.
0:11:30 Subscribe wherever you get your podcasts,
0:11:33 published by Capital Client Group, Inc.
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0:11:43 One of the issues is balancing the big innovative ideas
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0:12:46 Support for the show comes from Skims.
0:12:49 Listen, I’m not going to tell you you have to wear underwear.
0:12:51 I say live and let live, all you commandos out there,
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0:14:02 – Welcome back.
0:14:03 Here’s our conversation with Michael Lewis,
0:14:05 New York Times bestselling author
0:14:08 and host of the podcast Against the Rules.
0:14:12 Michael, where does this podcast find you?
0:14:15 – Smoke Tree Ranch off the side of Palm Springs,
0:14:19 which is a gated community created by Walt Disney
0:14:22 and some of his pals way back when.
0:14:23 – Wow.
0:14:24 Let’s buzz right into it.
0:14:26 In the latest season of your podcast Against the Rules,
0:14:28 you investigate sports betting,
0:14:29 which we talk a lot about here on the pod,
0:14:33 which you refer to as a great social experiment.
0:14:35 Walk us through the state of play of this experience
0:14:37 and where you think we’re headed.
0:14:40 – So in 1992, Bill Bradley,
0:14:43 then a senator, created essentially a federal ban
0:14:44 on sports betting.
0:14:46 It exempted Nevada,
0:14:48 but basically it was against the law.
0:14:53 And the Supreme Court repealed that in 2018.
0:14:57 And the new law of the land is states can legalize it
0:15:00 if they want to and 39 states have.
0:15:03 And about two thirds of the American population
0:15:07 has access to sports betting on their phones.
0:15:08 About one third still doesn’t.
0:15:12 And the industry here is dominated by two companies,
0:15:14 FanDuel and DraftKings.
0:15:16 They have a little hard to say exactly,
0:15:20 but say roughly 70% of the market.
0:15:22 And they were before they were sports gambling companies,
0:15:24 they were daily fantasy sports companies,
0:15:28 which gave, they actually was the perfect thing to be
0:15:31 before mobile sports gambling is legalized
0:15:32 as a daily fantasy sports company.
0:15:34 You know all the customers,
0:15:36 you have data on all the customers.
0:15:40 Sports bets in America have skyrocket.
0:15:42 It’s a little, again, a little hard to say
0:15:44 ’cause hard to know what numbers to trust
0:15:46 because there was an illegal market
0:15:48 that presumably is not quite as big as it used to be,
0:15:50 but it’s gone from,
0:15:52 the legal market has gone from a few billion
0:15:55 to over a hundred billion a year.
0:16:00 And there’s just starting to be some academic research
0:16:04 showing the social effects of this.
0:16:05 I mean, it’s kind of cool this.
0:16:08 The way it’s rolled out has created these natural experiments
0:16:11 that you have because you have states that are side by side.
0:16:13 One has legalized it, one has not legalized it.
0:16:18 So you can sort of tease out the effects of legalizing it,
0:16:21 but bankruptcies are up, savings rates are down.
0:16:23 If it follows the path that it followed
0:16:25 in the United Kingdom and Australia,
0:16:26 suicide rates will be up.
0:16:29 So there’s some social costs to it all.
0:16:32 But I think like really early days,
0:16:34 I mean, you know, it’s only been legal for six years.
0:16:35 There were companies that really only been up
0:16:38 and running in most states for just a few years.
0:16:41 It’s kind of not hard to make some predictions
0:16:44 about where it’s going, but it’s not there yet.
0:16:47 – So I’m a glass half empty kind of guy,
0:16:49 but you cited some stats.
0:16:52 I’ve seen 20 to 30% increase in bankruptcies
0:16:54 and states illegalize it.
0:16:57 I see young men with kind of less structure in their lives
0:16:58 who are more prone to addiction.
0:17:02 I think six out of seven gambling addicts are men.
0:17:04 My understanding is gambling has the highest suicide rate
0:17:06 because if you’re addicted to meth,
0:17:08 people figure it out and try and intervene.
0:17:10 You can get in way over your skis with gambling
0:17:13 and nobody knows and you decide there’s only one way out.
0:17:14 I’ll use an academic error.
0:17:16 I think this is a fucking disaster, your thoughts.
0:17:18 – Yeah, I’m totally with you.
0:17:21 This is why I was trucked in the subject.
0:17:25 I couldn’t believe, well, look, once it’s legalized,
0:17:28 I’m a little shocked by the insensitivity
0:17:30 of the social, to the public health crisis
0:17:35 is gonna trigger because it’s essentially Wild West
0:17:37 in how you can get to the customer
0:17:40 and they aren’t, you know, the sports gambling companies,
0:17:43 they were mistaken for casino companies
0:17:44 when the people kind of thought,
0:17:46 “Oh, it’s gonna be like a casino business.”
0:17:51 So that the kind of big, what the house takes,
0:17:54 about roughly 5%, it’s always been kind of 5%,
0:17:56 we remain kind of 5%.
0:17:58 This number keeps going up with these companies.
0:18:00 They’re like, it’s like at 15%.
0:18:04 And effectively what they are doing
0:18:08 is mining the entire US population
0:18:11 for people willing to make stupid sports bets.
0:18:14 And they have a finely honed ability
0:18:17 to identify anybody who actually knows what they’re doing,
0:18:18 like the sharp gambler,
0:18:21 someone who actually might have some edge in a sport
0:18:24 and toss them out or limit them to the point
0:18:26 where they’re effectively tossed out.
0:18:28 So that their business is built on people
0:18:30 who don’t know what they’re doing.
0:18:33 And it’s further, in a way that, you know, casinos,
0:18:34 when you’re in a casino course,
0:18:37 it’s manipulating you in all kinds of diabolical ways.
0:18:39 But when the casino’s in your pocket,
0:18:42 it’s like your whole life is in the casino kind of thing.
0:18:46 And they have an ability to sort of like nudge people
0:18:50 in doing stuff that they just wouldn’t think to do.
0:18:52 It is, and it’s making the dumber and dumber bets.
0:18:54 When you kind of think about,
0:18:57 okay, like what’s the disaster going to look like?
0:18:59 It’s not just men, it’s young men.
0:19:03 Young men are the real target.
0:19:06 The Lancet, the British Medical Publication,
0:19:08 just came out with a study that said,
0:19:10 I mean, this number is so high
0:19:13 that I wanted to pause before I say it,
0:19:17 but the 26% of young men who were exposed to gambling
0:19:19 developed some sort of gambling problem.
0:19:23 That seems very high, but even if it’s half that,
0:19:26 it’s like the NCAA,
0:19:28 who’s new president, Charlie Baker,
0:19:30 was just shocked by the gambling activity
0:19:32 he was seeing on campuses,
0:19:34 commissioned to study,
0:19:35 to see how many people were doing this,
0:19:38 and more than 60% of young men on college campuses
0:19:39 are sports gambling.
0:19:40 So you do the math.
0:19:42 It’s just like, we’re like,
0:19:45 it’s almost like we’re creating a pool
0:19:47 of future gambling addicts.
0:19:49 And you’re right, it’s very interesting.
0:19:51 You’re right about like,
0:19:55 when you think about what’s gonna stop this train,
0:19:58 if you compare it to like opioids,
0:20:01 like opioids was able to run for 20 years
0:20:03 before anybody really put a stop to it.
0:20:06 And 750,000 people die.
0:20:10 And it was about as visible and epidemic as you can have.
0:20:12 This, it’s invisible.
0:20:15 You don’t see what’s happening to people until,
0:20:18 so you wonder if it takes 20 years for the society
0:20:21 to get its hands around the opioid industry,
0:20:22 how long is it gonna take it
0:20:24 to get its hands around the gambling industry?
0:20:27 So, yes, I agree with you.
0:20:29 It’s like, how on earth did we let this happen?
0:20:31 But it’s of a piece with other things
0:20:33 that we have let happen.
0:20:34 – I mean, when I think about it,
0:20:36 it’s not only, my fear isn’t only about gambling addiction,
0:20:40 but when you put kind of an on-demand Dopa bag
0:20:41 in young people’s pockets,
0:20:44 just as they’re kind of hardwiring their brain
0:20:47 and learning about life and reward,
0:20:49 that we’re just setting them up
0:20:52 to be just fucking Dopa monsters.
0:20:54 And if they can’t get it from gambling
0:20:55 ’cause they run out of money,
0:20:57 they’re gonna find it somewhere else.
0:20:59 Have you seen any of my thesis
0:21:01 is we are literally unleashing into the economy,
0:21:06 into the world, millions of Dopa monsters
0:21:10 that will are just gonna find whatever way they can,
0:21:14 opiates, sex, porn, online shopping.
0:21:17 They’re just gonna be so hungry for that rush
0:21:20 because their brains will have been wired
0:21:21 to expect that rush.
0:21:24 So it’s gonna have all sorts of ramifications
0:21:25 outside of gambling.
0:21:27 Am I catastrophizing here?
0:21:30 I mean, it doesn’t sound unreasonable to me.
0:21:34 My first thought when you started down that little path
0:21:38 was it’s interesting that sports used to be a place
0:21:40 where you learned the slow rewards
0:21:43 that come from hard– – The lay gratification, yeah.
0:21:45 – Yeah, you learned the opposite thing.
0:21:47 And that we’re turning that this mechanism
0:21:50 that used to take young men
0:21:53 and teach them a certain lesson.
0:21:56 Are you taking it to teach a different lesson?
0:21:58 So it was disturbing enough to me
0:22:02 that my youngest is a 17 year old son.
0:22:04 Like I gave him some money and adult supervision
0:22:08 so he could learn how to navigate this world
0:22:13 because it does feel like not only are we creating a world
0:22:16 of, you know, dopamine addicts,
0:22:20 but the signal you send especially to young men
0:22:22 ’cause they’re so susceptible to this
0:22:24 is the world actually doesn’t give a shit about you.
0:22:27 That it’s out to get you.
0:22:30 When I got into this, when I started working on the story,
0:22:34 what motivated me was the book I wrote about,
0:22:38 stuff I’d learned on the book I’d written about the pandemic.
0:22:40 I got interested in it because the US response
0:22:41 in the beginning was just so appalling.
0:22:44 We had like 20% of the world’s deaths
0:22:47 with 4% of the world’s population in the first six months.
0:22:51 And I learned in the process that this was,
0:22:54 that in the few years leading up to the pandemic,
0:22:58 we’d had experienced a decline of life expectancy
0:22:59 in three straight years.
0:23:01 And that had not happened since 1918.
0:23:03 And I thought, well, the pandemic’s happening
0:23:04 in the context of a society
0:23:07 that’s already not taking care of its people.
0:23:10 That some basic failure is occurring.
0:23:13 And this feels like part of that.
0:23:16 That it’s like, it’s a public health problem.
0:23:19 And that it’s not that hard,
0:23:23 even if you can’t do anything about legalizing sports gambling,
0:23:27 it’s not that hard to do some things to blunt its effects.
0:23:28 So here’s my solution.
0:23:31 I’m trying to work within the constraints of the society.
0:23:34 I don’t think actually me going off about
0:23:38 how diabolical it all is, is gonna help anything.
0:23:41 They’re doing something that I think is kind of interesting,
0:23:44 the company, the sports gambling companies.
0:23:46 They are, ’cause they’re so good
0:23:48 at chucking out of their businesses
0:23:50 anybody who knows what they’re doing.
0:23:53 They’re isolating people who don’t know what they’re doing.
0:23:58 So by definition, if you have an account in good standing
0:23:59 at FanDuel and DraftKings
0:24:01 and you’re doing a lot of sports betting,
0:24:02 you have signals of the world,
0:24:04 you don’t know what you’re doing.
0:24:07 I think that if we get that message out
0:24:09 and that if you say like,
0:24:11 if you’re looking for someone to manage your money,
0:24:12 the first question you should ask them is,
0:24:14 do they have account in good standing at FanDuel and DraftKings?
0:24:17 If they do, you should never give them your money to manage.
0:24:22 Like that if you make it a point of shame
0:24:25 that you’re in good with the industry,
0:24:28 that you might stigmatize it in a way
0:24:30 that makes it less dangerous.
0:24:32 We’ll be right back.
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0:27:46 (upbeat music)
0:27:51 – Your book Going Infant,
0:27:53 you fell under some of what I call the same
0:27:56 texture of criticism as Walter Isaacson’s biography
0:27:57 on Elon Musk and that of us.
0:28:00 You were kind of seen loosely as having a front row seat,
0:28:02 but not seeing what was going on.
0:28:04 – Do you think that’s a fair criticism?
0:28:07 – I didn’t write it until after it all collapsed.
0:28:09 When I sat down to write the first words,
0:28:13 there wasn’t much I didn’t know had happened.
0:28:14 I mean, very little happened, came out in the trial
0:28:17 that wasn’t already kind of known.
0:28:22 But it is true that I was there a fly on the wall
0:28:28 from kind of end of 2021 through the collapse of in November
0:28:32 of 2022.
0:28:35 And if you had said he has the money,
0:28:37 the customer’s money in Alameda,
0:28:39 I would have said you’re insane.
0:28:42 There’s no way that would be so dumb.
0:28:45 So I did poke everybody did this.
0:28:48 Everybody who saw the structure of the business,
0:28:50 he’s got his own private hedge fund on the side,
0:28:54 our trading firm on the side of it in exchange.
0:28:56 And he owns them both.
0:29:00 I did ask lots of questions about conflicts of interest,
0:29:01 but what I imagined would be the problem
0:29:03 wasn’t the problem.
0:29:05 I imagine the problem was that his trading firm
0:29:09 would have the same sort of privileged access
0:29:12 to the exchange that high frequency traders get
0:29:13 on the New York Stock Exchange
0:29:16 and privileged access to data and so on.
0:29:18 So front running, whatever.
0:29:20 And that wasn’t the case.
0:29:22 I did not see that like,
0:29:25 oh, yeah, the money’s in the wrong place.
0:29:26 So that’s true.
0:29:31 Did I, in retrospect, think I should have seen it?
0:29:33 Not really, no one else saw it either.
0:29:36 You know, there wasn’t the interesting thing.
0:29:38 There are many interesting things about the story,
0:29:42 but one interesting thing is, yeah, a lot of people said,
0:29:44 I wonder if they’re shady like FTX,
0:29:47 but that’s the in crypto, that’s easy.
0:29:51 Like as a heuristic, if you’re a successful crypto business,
0:29:53 you’re, you know, you’re largely unregulated
0:29:55 and you’re 26 years old
0:29:57 and no one’s paying that much attention.
0:30:00 The specific criticism,
0:30:03 oh, he’s got the customer’s money in his hedge fund.
0:30:06 No one said, zero people said.
0:30:08 So not even any ad, whatever,
0:30:12 a hundred and something professional investors
0:30:14 who owned a piece of them and they didn’t say it.
0:30:15 So I don’t know.
0:30:16 I don’t know.
0:30:17 That would have been very hard.
0:30:20 I don’t know how you would have detected that.
0:30:21 – Well, I have a couple of follow up questions there.
0:30:23 So when I’m sort of, follow the story a little bit
0:30:27 from an adjacent, I actually bought claims against it.
0:30:28 – I know this.
0:30:29 You bought the claims.
0:30:31 – And if I could have, I would have.
0:30:32 – Oh really?
0:30:34 – Oh my God.
0:30:35 I mean, it just seemed pretty obvious
0:30:37 that they weren’t worth 10 cents on the dollar.
0:30:38 – Well, I wasn’t that smart.
0:30:40 I bought them for 23 cents,
0:30:42 but because it’s better to be lucky than good
0:30:43 because of the surge in crypto.
0:30:45 They’re now probably your,
0:30:47 the payouts can be somewhere between 120 cents
0:30:48 on the dollar, 150 cents.
0:30:51 And other than, other than patting myself on the back
0:30:53 for one of the few good investment decisions
0:30:54 I’ve made in the last year,
0:30:56 if everyone gets their money back.
0:30:57 Now granted, he committed fraud.
0:31:00 He, he took customer accounts from people
0:31:02 who thought they were investing, you know,
0:31:04 putting their money in a deposit, not even investing.
0:31:06 And then he used it to take risks
0:31:08 they had not signed up for.
0:31:10 So that’s illegal.
0:31:13 But one, given that everyone’s given their money back, given,
0:31:15 I don’t understand the difference between
0:31:16 what Sam Bankman Freed did
0:31:18 and what John Corzine did at MF Global,
0:31:19 I think it was called.
0:31:20 (laughing)
0:31:23 – You’re taxing my memory there, but yeah.
0:31:24 – You remember that?
0:31:25 – Yeah, yeah, do remember.
0:31:25 – Did the same thing.
0:31:26 – Can I back you up a sec?
0:31:27 I really wanted to ask you about this.
0:31:32 I was, I took a keen interest in the market
0:31:38 in claims on FTX because it seemed really clear to me
0:31:41 that what the bankruptcy people were saying are signaling
0:31:44 that it’s like, it’s this dumpster fire
0:31:45 and there’s nothing there.
0:31:48 And boy, just be incinerated all this money.
0:31:50 That that wasn’t true.
0:31:53 And it was amazing to me how cheaply these things
0:31:54 traded at first.
0:31:59 How did you even think to buy claims?
0:32:02 – I’m fascinated by,
0:32:04 I’ve invested across every asset class,
0:32:06 from angel to venture to growth to public,
0:32:09 and by far the best asset class is distressed,
0:32:10 because similar to biology,
0:32:12 people don’t want to hang around old people.
0:32:14 So the best businesses are businesses
0:32:15 dealing with old people.
0:32:18 And the best asset class is distressed.
0:32:19 So I look at bankruptcy filings.
0:32:20 And I was fascinated by this.
0:32:22 I got the bankruptcy filing from the court.
0:32:23 I read through it.
0:32:27 And in the bankruptcy claim, it listed all their assets,
0:32:29 cash, some Bitcoin, et cetera.
0:32:31 And one of the assets that just popped out to me
0:32:35 is they had invested $500 million in Anthropic.
0:32:38 Anthropic is the number two AI company, LLM.
0:32:40 And I couldn’t find for the life of me
0:32:43 what the valuation was that they invested at,
0:32:45 but I figured it was somewhere between three and five billion.
0:32:48 So I took the most conservative which meant,
0:32:50 number which meant that one of the things
0:32:53 that FTX, the bankruptcy FTX had
0:32:56 that would ultimately be distributed to the claimants
0:33:00 was 10% I assumed of Anthropic.
0:33:05 I valued Anthropic at approximately 40 billion.
0:33:08 So I thought the stake is worth four billion.
0:33:10 Claimants, total claimants nine billion.
0:33:12 So just the stake in Anthropic,
0:33:15 I valued at 44 cents on the dollar.
0:33:17 Claims were selling for 22 cents.
0:33:20 To me, this was the easiest trade I’ve ever met.
0:33:24 And why do you think other people didn’t make that trade?
0:33:25 – Occasionally you find something,
0:33:27 I don’t know, this doesn’t happen to be very long.
0:33:29 I’m like, oh my God, they’ve missed it.
0:33:32 And that is people didn’t see the $500 million number.
0:33:33 They could see the $500 million.
0:33:37 What they couldn’t see was the numerator or the denominator.
0:33:40 And that was the valuation they invested at.
0:33:43 And I thought, there’s no way they don’t own
0:33:45 at least 10% of this thing.
0:33:47 And then you have to value another unknown.
0:33:49 And that is, what is that 10% now?
0:33:52 But I thought it’s worth probably 40 cents,
0:33:53 a minimum of 23 cents.
0:33:56 So all the crypto, all the cash,
0:33:59 everything else was just gonna be gravy.
0:34:01 – To my bewilderment, people weren’t paying attention.
0:34:03 And there was, I mean, what he did,
0:34:05 he didn’t take whatever it was,
0:34:07 $11 billion of customer assets
0:34:11 and spend it on blow and hookers and private jets.
0:34:16 He put five billion of it into venture capital investments.
0:34:17 And this was just one of them.
0:34:19 And yet there was this pile of stuff.
0:34:23 And I keep waiting for some to come and ask the question,
0:34:27 how good of VC was Sam Bankman Freed?
0:34:30 He was doing it, like how well did he perform
0:34:32 compared to his peer group?
0:34:35 Because it wasn’t, he has a piece of,
0:34:36 you may not even know this.
0:34:38 He has a piece of SpaceX in there.
0:34:39 He has it through Michael Keevis.
0:34:40 But so you don’t see it.
0:34:44 But he’s got pieces of some really valuable stuff.
0:34:47 Even if crypto goes to zero
0:34:51 and nevermind all the crypto businesses he bought.
0:34:53 So one last question on this,
0:34:57 ’cause I’m curious ’cause I haven’t,
0:34:58 ’cause I knew you made this trade.
0:35:00 Someone told me about you being in the market
0:35:03 and I thought, well, that’s kind of cool.
0:35:07 Did you worry at all that the bankruptcy process itself
0:35:10 was gonna incinerate your profits?
0:35:13 That it would be so expensive
0:35:15 that you wouldn’t end up seeing,
0:35:16 you should have seen the money,
0:35:18 but in the end it would go in the pockets
0:35:20 of Solomon Cromwell lawyers.
0:35:21 – That’s a great question.
0:35:23 But part of the analysis I did
0:35:24 when I put together the spreadsheet was
0:35:26 it’s the same administrator that handled Amron
0:35:30 and I estimated the cost at about a billion dollars.
0:35:33 And I thought, okay, if just the anthropic stake
0:35:36 is worth four billion, the coins are worth three.
0:35:38 I saw 70 cents on the dollar
0:35:42 and then take out a billion, so 60 cents on the dollar.
0:35:44 And then what it ends up, it looks like the payout.
0:35:45 And a lot of the stakes we’re talking about
0:35:47 have already been sold, but it looks to me
0:35:50 what they’re saying, the court administrator’s saying
0:35:51 that they now think they’re gonna get somewhere
0:35:54 between 120 and 160 cents on the dollar.
0:35:57 A lot of that because crypto has surged.
0:36:00 But the lesson I take away from all of this,
0:36:02 and this is a larger lesson about investing in life,
0:36:04 is the greatest return on invested capital
0:36:07 is inversely correlated to how sexy something is.
0:36:10 This isn’t true of sports, which you know better than me
0:36:11 because there’s no shortage of billionaires
0:36:14 of midlife crises and it’s a regulated monopoly
0:36:15 to control supply.
0:36:17 But generally speaking, outside of sports,
0:36:20 the best asset classes are the least sexy.
0:36:23 And this was a really unsexy investment.
0:36:26 Everybody thought this thing, it had fraud,
0:36:28 it had crypto, which was out of vogue.
0:36:29 This thing was supposedly going to zero.
0:36:34 And any reasonable diligence said, no, this is all upside.
0:36:36 – We did, I didn’t really answer your question
0:36:38 about what was different from between
0:36:40 what he did and what John Corazon did.
0:36:44 And you’ve taxed my memory about what John Corazon did.
0:36:45 But I do think, what do I think?
0:36:49 I think that there’s a kind of misapprehension
0:36:54 in the general tenor of the response to Sam Bankman Freed,
0:36:59 that people still talk about it as if what he did
0:37:04 was intentionally set up a business to steal customer money,
0:37:05 stole the customer money
0:37:07 and the customers don’t have any money now.
0:37:11 And what he actually did was set up a business that was,
0:37:14 I mean, it was jankily set up in the first place,
0:37:18 but it was clearly not start, didn’t start as a fraud,
0:37:21 was in and of itself a successful business
0:37:23 if he’d just not done the idiot things
0:37:25 he’d done with his hedge fund.
0:37:30 And then got himself in a pickle in June of 2022,
0:37:34 when crypto lenders asked for the $10 billion,
0:37:35 they’d lend him back.
0:37:37 And instead of just telling them, I don’t have it,
0:37:39 I put it in VC investments,
0:37:41 use the customer money to fill the hole.
0:37:44 And that was a really stupid thing to do.
0:37:49 It is fraud, but it’s different than like evil person
0:37:51 sets out to do evil.
0:37:53 So how I feel about it, I feel sad about it mainly.
0:37:57 And I think that what is like the vice,
0:37:59 the character flaw, if you will,
0:38:03 or the pattern, it’s more of the pattern in his character
0:38:05 that leads to this behavior,
0:38:09 that was visible in every other aspect of his life.
0:38:13 And it was a pattern of foisting risk
0:38:15 upon other people without their permission.
0:38:17 And he did it over and over.
0:38:18 He did it in his romantic life.
0:38:20 He did it in his friendships.
0:38:23 And he comes by this vice, honestly,
0:38:25 I think he himself is sort of numb to risk
0:38:27 and kind of thinks he’s right all the time anyway.
0:38:31 So he didn’t actually probably completely grok
0:38:34 the risk that he was foisting on others.
0:38:36 I thought this is all gonna work out.
0:38:39 That was stupid and a crime,
0:38:42 but I can understand how he got there.
0:38:46 And I do have a problem with 25 years in jail.
0:38:49 I think like, okay, jail, that makes some sense.
0:38:53 But like, I don’t know how you even measure these things,
0:38:55 but it’s like–
0:38:58 – 25 years for a guy like that is almost a death sentence.
0:38:59 – Yeah, so I just don’t,
0:39:02 I think that’s excessive and I don’t get it,
0:39:04 but people will argue with me.
0:39:06 – But I wanna put forward a thesis
0:39:07 ’cause you’re a storyteller
0:39:10 and just love the way you think through stuff.
0:39:13 I would argue, and I want you to respond to the thesis,
0:39:15 that the difference between playing golf at Centennial
0:39:17 and going to Wimbledon, which I imagine I would be doing
0:39:19 if I were John Corazon right now,
0:39:23 I don’t see a lot of difference in the criminal behavior here.
0:39:26 The difference is brand management.
0:39:28 And that is, what you have with Sam Bankman Freed
0:39:31 is a guy who had this kind of floppy,
0:39:33 guy just rolled out a bad crypto thing.
0:39:36 He purposely set up this organization, The Bahamas,
0:39:38 which felt sketchy.
0:39:42 He was sleeping with and doing drugs with his coworkers.
0:39:46 He decided to go on the most ridiculously ill-advised
0:39:49 apology tour, which entirely backfired,
0:39:52 whereas Corazon listened to very smart people
0:39:54 who said, “Shut the fuck up.
0:39:57 “Nobody speaks to anybody but your lawyers.
0:40:00 “Go quiet, act like the victim.
0:40:01 “You didn’t know what was going on.
0:40:02 “Act contrite.
0:40:04 “You were terrible fiduciary.
0:40:05 “You had no idea.”
0:40:09 As opposed to going and speaking to Andrew Ross Sorkin
0:40:14 in cargo shorts, the difference between Corazon,
0:40:17 again, going to Wimbledon and Bankman Freed
0:40:19 with a live sentence, is poor communications
0:40:22 and brand strategy, your thoughts.
0:40:26 – Well, you’re absolutely right that the way he handled it
0:40:29 from the minute it all fell apart was catastrophic.
0:40:34 You gotta remind me what John Corazon actually did,
0:40:36 ’cause I don’t remember.
0:40:39 – MF Global, customer deposits that ends up
0:40:41 were being used to make speculative investments
0:40:42 in the market.
0:40:44 John Corazon, my understanding is,
0:40:47 side interest rates were gonna head one way,
0:40:49 and he claims he didn’t know these deposits
0:40:50 were being commingled.
0:40:52 It was pretty much the exact same crime.
0:40:55 And Corazon got banned from the industry
0:40:57 or paid a fee.
0:40:59 MF Global, I think, went away,
0:41:01 but these things, you know, tomato, tomato,
0:41:04 as far as I can tell, and one guy’s got a live sentence,
0:41:05 and the others are Wimbledon.
0:41:07 I don’t even know if he watches tennis,
0:41:10 but to me, it speaks to the notion of public perception.
0:41:15 – It also speaks to the moment that there’s a frustration
0:41:18 with the ability to get our hands around the necks
0:41:20 of rich people who do bad things.
0:41:22 And when you get a live one now,
0:41:27 the sort of the speed with which the justice system
0:41:30 leaps into action is incredible.
0:41:33 Sam was really easy to prosecute.
0:41:34 You know, he was just like–
0:41:36 – You gave him everything.
0:41:36 – He gave him everything.
0:41:38 So this is, so think about this.
0:41:40 I always stopped myself just short of thinking
0:41:44 he has a death wish because his behavior
0:41:46 kind of suggests it.
0:41:49 And he, even when things were good,
0:41:53 he was always extremely vulnerable,
0:41:56 like no bodyguards, no, you know,
0:41:58 you could sneak into his office any hour of the day.
0:42:00 You could, he really was,
0:42:04 he has a sense that like he doesn’t protect himself
0:42:06 almost willfully.
0:42:08 And so that just extended into what happened
0:42:10 in the legal process.
0:42:12 – So Michael, I love this.
0:42:15 And your fascinating story told us a couple of questions
0:42:16 to wrap up here.
0:42:18 I find one of the most fascinating characters
0:42:21 in all of this was, is it Carolyn Ellison?
0:42:22 Caroline Ellison?
0:42:23 – Carolyn Ellison.
0:42:25 – Any inside, a lot of people didn’t think,
0:42:27 she ended up being what I might describe her.
0:42:29 I think the Southern District called her
0:42:32 the ultimate perfect example,
0:42:34 quintessential government witness,
0:42:35 but they put her in prison.
0:42:37 We know a little bit about Sam.
0:42:38 We know almost nothing about her.
0:42:40 What were your impressions?
0:42:43 Or what was, can you provide us some texture on Ellison?
0:42:47 – She was a math kid who thought of herself.
0:42:48 I think she’s kind of,
0:42:49 there was a bit of a split personality thing
0:42:51 going on with her.
0:42:55 She had a lust for a stable and normal life.
0:42:56 And at the same time thought of herself
0:42:59 as someone who would do radical and crazy things.
0:43:04 And was, she in college joined the Effective Altruist Movement
0:43:07 and seemed to be kind of all in on that.
0:43:11 And I tell you, she was very susceptible
0:43:13 to the charms of Sam Bankman Freed.
0:43:15 Here’s the texture for you.
0:43:17 She told a colleague, this didn’t even make the book,
0:43:22 but she told a colleague that even after
0:43:25 she and Sam had broke off their relationship,
0:43:27 it was worth her having sex with Sam
0:43:30 because it made Sam more efficient.
0:43:32 And making Sam more efficient was the best thing
0:43:34 she could do for mankind.
0:43:36 Because Sam was the person who most likely
0:43:37 to save humanity.
0:43:41 So that gives you an idea of how she is.
0:43:43 – I’m gonna try that on a bar.
0:43:44 Just this, you know this too.
0:43:48 The world will be a better place if I’m more relaxed tonight.
0:43:52 So this will be the last question, I promise.
0:43:57 You have, I look at, I mean, granted, you know,
0:43:58 my idols are different to most people’s,
0:44:01 but I look at you and I think, I wanna be this guy.
0:44:03 You’re just doing cool shit, telling great stories,
0:44:06 writing interesting books, going to movie premieres.
0:44:08 I think you make an exceptional living.
0:44:11 But by all, at least from an exterior perspective,
0:44:13 you’re in a great seat.
0:44:16 We have a lot of young men and women who listen to this podcast.
0:44:19 Can you give us any one or two pieces of advice
0:44:21 for someone who looks at you and thinks, you know,
0:44:23 I’d like to be in that seat.
0:44:26 Were there any things that you wish you’d done more of
0:44:29 or less of, what advice would you have to your younger self?
0:44:32 – Well, first off, I never thought that way
0:44:34 about what seat I wanted to be in.
0:44:36 I never thought I wanna be that person.
0:44:38 I always just wanted to be me.
0:44:40 It’s like the best me.
0:44:45 And there were things that made me feel the best me.
0:44:48 And writing was one of them.
0:44:49 Writing was the big one.
0:44:51 And I just thought, I’ve gotta do this.
0:44:54 So not trying to be someone else
0:44:57 would be one of the first things I would say.
0:45:01 Another thing that led me to like lots of the good things
0:45:04 that have happened in my life, it’s related.
0:45:07 It’s like not paying attention to what you’re supposed
0:45:08 to be paying attention to.
0:45:11 Like what everybody else is paying attention to.
0:45:13 If everybody else is paying attention to it,
0:45:15 it doesn’t need your attention kind of thing.
0:45:18 What needs your attention is the thing that you’re interested
0:45:20 in that no one’s paying attention to.
0:45:22 And no one encourages you to pay attention to.
0:45:24 Like your FTX investment.
0:45:27 It’s like, oh, there’s something here
0:45:29 and I really care about it.
0:45:32 And if you can find that and nobody else is there,
0:45:34 that seems like a lonely place,
0:45:36 but it’s the golden place.
0:45:39 And you gotta like lean into that rather than lean out of it.
0:45:42 Like learn to recognize that moment where God,
0:45:44 I love doing this thing.
0:45:46 No one is saying I should be doing this thing.
0:45:49 No one else is doing this thing.
0:45:49 But I love it.
0:45:51 Go with it.
0:45:52 Go with that feeling.
0:45:53 It’s great for an investor.
0:45:55 It’s great for a writer.
0:45:57 But I think it’s great beyond that.
0:45:59 It’s sort of like you’re arbitraging
0:46:01 your personality against the world.
0:46:05 That you are finding where you are special
0:46:07 in the level of interest you have in something.
0:46:10 And that’s when I find my subject matters
0:46:11 are the most exciting to me.
0:46:13 When nobody, the thing that troubled me most
0:46:15 about Sam Beckman Friede as a subject
0:46:17 is I was genuinely interested in him
0:46:18 right from the moment I met him,
0:46:21 but it worried me that so many other people were.
0:46:23 And the only thing that kept me going
0:46:26 was that I had this privileged view of it.
0:46:28 But what I really like with the subject
0:46:29 is like the Oakland A’s,
0:46:31 where nobody gives a shit about them,
0:46:33 but I see there’s something great there.
0:46:37 And that’s the stuff.
0:46:39 It’s like, that’s when you know you’re in the right place.
0:46:41 It’s like, you’re there for some genuine reasons
0:46:44 ’cause there’s no in genuine reasons to be there.
0:46:45 – Arbitraging your personality
0:46:47 against the rest of the world, I love that.
0:46:51 Michael Lewis is the host of the podcast Against the Rules.
0:46:53 He’s also a New York Times bestselling author
0:46:56 of several books, including The Fifth Risk, Flash Boys,
0:46:57 and The Big Short.
0:47:00 In addition, some of these have been made into great movies,
0:47:03 The Big Short, Money Ball, and The Blind Side,
0:47:05 all nominated for Academy Awards,
0:47:07 grew up in New Orleans and remains deeply interested
0:47:08 and evolved in the city,
0:47:10 but now lives in Berkeley, California,
0:47:12 Alma Mater, Go Bears,
0:47:15 with his wife, Tabitha Soren, and their children.
0:47:17 If I could give my kids any skill, Michael,
0:47:18 it would be your skill.
0:47:21 And that is, you are a fantastic storyteller.
0:47:22 Really appreciate your time.
0:47:24 – Thanks for having me, Scott.
0:47:37 – I’ll derivative happiness, say yes.
0:47:39 I went shooting this weekend.
0:47:41 And when I say shooting, I mean,
0:47:42 out to the British countryside,
0:47:45 where you dress up in this kind of guy-richie-like gear,
0:47:48 stayed in an old kind of interesting castle.
0:47:51 And then in the morning, a bunch of Brits took us out
0:47:53 and seemed like a lot of ’em and a lot of dogs
0:47:55 and we murdered birds.
0:47:57 This is not something I’m into.
0:47:58 Let me be clear.
0:48:00 When someone described this to me,
0:48:03 it sounded like Chinese water torture.
0:48:04 But here’s the thing.
0:48:06 I have some friends in my life that I really like
0:48:08 and are wonderful, interesting people,
0:48:10 and they love it, and they love it.
0:48:12 And you could just tell they wanted to share the experience.
0:48:14 So I said yes.
0:48:16 And when I had to get up at ODAR 100 hours
0:48:18 to put on wellies or whatever they’re called
0:48:20 and then figure out a way to go like fire a rifle,
0:48:22 which I have no desire to do, and animals.
0:48:26 Anyways, my point is that these experiences
0:48:27 really bond you to people.
0:48:28 I know these are good friends,
0:48:30 but we feel even closer to them now
0:48:32 because we got to share in something
0:48:34 that they’re really passionate about.
0:48:38 On the flip side of that, it’s something I didn’t do,
0:48:39 something I was bad at.
0:48:41 I really never developed any hobbies in my 30s and 40s.
0:48:44 I like movies, I like drinking, I like travel.
0:48:45 That’s pretty easy to say.
0:48:49 But I never really developed a passion for anything.
0:48:50 And the thing about being around people
0:48:51 that are passionate about something,
0:48:54 even if it’s kind of Old World Britain and these shoots,
0:48:56 it’s intoxicating.
0:48:59 Just sharing it with them and seeing how into it they were,
0:49:02 the majesty, the detail, the clothes,
0:49:05 the technology, the history.
0:49:08 Say yes, and if you find something you like,
0:49:09 then love it and lean into it.
0:49:11 ‘Cause at some point, you’re gonna get the chance
0:49:13 to share it with people who have no interest in it,
0:49:15 but they’ll be interested in it
0:49:16 because they’re interested in you
0:49:18 and your passion will shine through.
0:49:20 (upbeat music)
0:49:22 This episode was produced by Jennifer Sanchez
0:49:23 and Caroline Shagren.
0:49:25 Jew Burroughs is our technical director.
0:49:26 Thank you for listening to the Prop G Pod
0:49:28 from the Box Media Podcast Network.
0:49:31 We will catch you on Saturday for No Mercy, No Malice,
0:49:33 as read by George Hahn.
0:49:35 And please follow our Prop G Markets Pod
0:49:37 wherever you get your pods for new episodes
0:49:39 coming Monday and Thursday.
0:49:42 (upbeat music)
0:49:47 – Amazon Q Business is the generative AI assistant from AWS
0:49:50 because business can be slow, like wading through the mud.
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0:50:02 Learn what Amazon Q Business can do for you
0:50:05 at aws.com/learnmore.
0:50:09 That’s aws.com/learnmore.
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0:50:33 from medieval falconry to volcanic wine tasting.
0:50:35 Autograph Collection is part of the Marriott-Bonvoy
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0:50:43 Find the unforgettable at autographcollection.com.
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0:01:15 Join Capital Group CEO, Mike Gitlin,
0:01:17 on the Capital Ideas Podcast.
0:01:20 In unscripted conversations with investment professionals,
0:01:24 you’ll hear real stories about successes and lessons learned,
0:01:26 informed by decades of experience.
0:01:29 It’s your look inside one of the world’s most experienced
0:01:31 active investment managers.
0:01:34 Invest 30 minutes in an episode today.
0:01:36 Subscribe wherever you get your podcasts.
0:01:39 Published by Capital Client Group, Inc.
0:01:43 – Episode 328.
0:01:45 328 is the country code belonging to Guyana.
0:01:47 In 1928, Mickey Mouse first appeared
0:01:49 in the sound cartoon Steamboat.
0:01:53 Willie, what’s the difference between Disney+ and U-Porn?
0:01:55 Disney+ wants you to hate your stepmother.
0:01:59 Go, go, go!
0:02:10 – Welcome to the 328th episode of The Prop G-Pod.
0:02:12 In today’s episode, we speak with Michael Lewis,
0:02:15 the host of the podcast Against the Rules
0:02:18 and New York Times bestselling author of several books,
0:02:21 including The Fifth Risk, Flash Boys, and The Big Short.
0:02:24 We discussed with Michael the state of sports betting,
0:02:25 the challenges young men face,
0:02:28 and the controversy surrounding the book Going Infinite,
0:02:30 which explores the rise and fall of Sam Bakeman Freed.
0:02:32 I really enjoyed this conversation.
0:02:36 He’s a very, simply put, Michael is a great storyteller
0:02:39 and has written some of the kind of iconic books of our time.
0:02:40 Okay, what’s happening?
0:02:43 Home in London before heading to South Africa
0:02:44 for the holidays.
0:02:46 I’m super excited.
0:02:49 I’m taking my sister and her family.
0:02:51 My sister is turning 50,
0:02:54 which in the Galloway household means she’s turning 40.
0:02:56 And love hanging out.
0:02:57 You know, it’s wonderful.
0:02:59 So my sister and I never lived in the same household.
0:03:02 I was raised by a single immigrant mother.
0:03:05 My dad, that was my dad’s second wife as far as we know.
0:03:05 Pretty sure there was another one
0:03:07 that we don’t know about.
0:03:09 And then he started his third marriage
0:03:13 while he was married to my mother, bad form, bad form.
0:03:16 And he married Linda, who is Ashley’s,
0:03:18 they had a daughter and that was Ashley.
0:03:19 And Ashley and I always got along,
0:03:21 but part of it was we didn’t live together.
0:03:22 So we were just kind of,
0:03:25 you know, just 10 years difference between the two of us.
0:03:28 And as we got older, we became kind of,
0:03:29 it was sort of fun to just sort of wake up
0:03:32 and realize you had a sibling that you got along with
0:03:34 and you still felt that familial bond with
0:03:36 and we had been close siblings.
0:03:41 And so it struck me how many siblings don’t get along.
0:03:43 And I think that’s one of my biggest fears about my boys
0:03:44 is they’re going to grow up
0:03:46 and for whatever reason not be close.
0:03:49 But I found that not living with my sibling
0:03:51 and then waking up and finding out
0:03:52 you had this intelligent, interesting,
0:03:56 you know, nice person who felt a bond with you
0:03:57 was really wonderful.
0:04:00 It’s also been key in helping take care of my father.
0:04:04 Anyways, I’m super excited about going to South Africa.
0:04:05 I love Africa.
0:04:07 This will be my third time.
0:04:10 And people say, they say, don’t say Africa.
0:04:12 That’s like saying North America.
0:04:15 Every part of Africa I’ve been to, I’ve really enjoyed.
0:04:17 Anyways, moving on.
0:04:19 Major shakeup in the advertising world.
0:04:23 Omnicom announced a $13.25 billion all-stock deal
0:04:26 to acquire its rival interpublic group.
0:04:29 The deal would create the world’s largest advertising business
0:04:31 merging the third largest ad buyer Omnicom
0:04:33 with the fourth largest interpublic.
0:04:35 According to 2020 figures,
0:04:37 the combined entity would generate over $25 billion
0:04:39 in annual revenue surpassing competitors,
0:04:41 including WPP and Publixy.
0:04:43 By the numbers, let’s look at it.
0:04:45 WPP registered 19 billion,
0:04:49 Publixy 16, Omnicom 15, and IPG 11.
0:04:53 This is what happens when there’s essentially
0:04:56 a tectonic shift away from your sector.
0:04:58 And that is the first thing that happens is cost cutting.
0:05:01 The second thing that happens is consolidation.
0:05:02 So you can bulk up,
0:05:04 which is effectively a way of cost cutting
0:05:06 ’cause then you only need one headquarters, one CFO,
0:05:08 one admin staff.
0:05:11 The modern kind of ad conglomerate was sort of forged
0:05:15 by Sir Martin Sorrell and it was the following.
0:05:17 These are good businesses or at least they used to be,
0:05:19 the ad agency business or the agency business
0:05:21 where companies would think, all right, we’re Intel,
0:05:22 we’re not that creative.
0:05:24 We get engineers to come work here,
0:05:27 but we’re not about making commercials or designing logos
0:05:29 or putting on conferences or buying keywords or what have you.
0:05:32 So we’re gonna outsource this part of the company
0:05:34 and we need to find really creative people
0:05:36 who see all these types of ideas
0:05:38 and played with the wrong toys or the right toys
0:05:40 and where those people that decorated their desk
0:05:42 and funky shit or you went over to their apartment
0:05:43 and their apartment just seemed cooler than yours
0:05:45 even though they made less money, those people.
0:05:47 And we need to outsource it.
0:05:50 And from 1945 to 1995,
0:05:52 the algorithm for printing money
0:05:54 or creating shareholder value was the following,
0:05:57 mediocre shoes, salty snack or car,
0:05:58 and then wrap brand codes
0:06:00 or these amazing brand codes around it
0:06:02 of masculinity, maternal love,
0:06:05 European elegance, American macho,
0:06:07 whatever it might be to be smart, to be practical,
0:06:08 whatever it was.
0:06:10 And the thing about brand building
0:06:11 was it was the ultimate strategy
0:06:13 because the sword around building a brand
0:06:15 was so incredibly sharp.
0:06:16 It was such a valerian steel
0:06:18 and it was specifically not the creative
0:06:20 but the fact that you could consolidate the market
0:06:24 and reach people with these pieces of creative
0:06:26 that created these intangible associations
0:06:27 wrapped around a mediocre product.
0:06:30 You could find 80% of all of America
0:06:34 in one of three places NBC, ABC or CBS for five hours a day
0:06:35 so we could build these brands.
0:06:37 So essentially the ability to find a mediocre product
0:06:39 and build amazing associations around it
0:06:44 such that it became not $8 of leather and laces
0:06:48 but 140 bucks of being like Mike
0:06:51 or not 20 cents of peanut butter paste
0:06:53 but $2 or $3 of maternal love
0:06:55 because choosy moms choose jiff.
0:06:57 This was the ultimate way to kind of build shareholder value
0:07:01 and you had General Motors, you had P&G, you had Coca-Cola.
0:07:04 I think kind of the beginning of the decline of the brand age
0:07:06 was when Honda introduced a compact car in the US
0:07:09 and said, all right, it’s not all about branding.
0:07:11 It’s just about a better car at a better price.
0:07:15 And then the big, big unlock or kind of the last nail
0:07:19 or what really took the vampire of kind of ad supported
0:07:21 or the brand age down or was sort of the wooden stake
0:07:24 in Don Draper’s heart was the introduction of Google.
0:07:27 And that is no longer needed to defer
0:07:28 to the shorthand of a brand.
0:07:30 And a brand is just diligence, right?
0:07:31 I used to stay at the Mandarin Oriental
0:07:32 with four seasons wherever I’d go.
0:07:34 One, because someone else was paying for it
0:07:35 and two, they was doing a good job.
0:07:39 Now I want to use my social graph, Google AI to find out
0:07:43 that the best gym in Europe or in Berlin is at the warehouse
0:07:46 or that I want to stay at, you know,
0:07:48 which lodge do I want to stay at in Africa?
0:07:50 All of a sudden, I’m no longer deferring
0:07:51 strictly to the brand, right?
0:07:54 I can find, I can do my own homework
0:07:56 and also a big digital unlock, right?
0:07:57 Tesla doesn’t need to advertise as much
0:08:00 because if you can tune up your electric car
0:08:01 over the airwaves, that’s amazing.
0:08:05 Google, Instagram are in fact 10x better products.
0:08:08 So digital innovation has kind of made product cool again.
0:08:11 Brands are now built by supply chain and innovation
0:08:14 and technology that unlocks some sort of product feature.
0:08:16 That leaves ad agencies, quite frankly,
0:08:17 with declining power.
0:08:19 And the problem is it hasn’t been overnight.
0:08:21 It’s kind of like the magazine industry.
0:08:25 The worst thing that can happen to you is to die slowly
0:08:28 because the thing about marketing and ad spending
0:08:30 is that it’s incredibly resilient.
0:08:32 It’s always been about 1.5% of GDP,
0:08:34 but it also doesn’t grow a lot as a whole.
0:08:36 Google hasn’t grown the market.
0:08:39 They’ve just taken tens and now hundreds
0:08:41 of billions of dollars out of the ecosystem.
0:08:44 It is a bit of a zero sum game.
0:08:46 And these guys have been on the wrong end of that.
0:08:49 Now, the merger we’re talking about here
0:08:51 is expected to result in $750 million
0:08:52 in annual cost savings.
0:08:53 Omnicom CEO, John Wren.
0:08:56 I met with John Wren literally 25 years ago
0:08:58 about potentially selling my brand strategy
0:08:58 for a profit to him.
0:09:00 Seemed like a very smart guy.
0:09:01 He’ll lead the new company,
0:09:04 which will keep the Omnicom name, the combined company,
0:09:08 Interpublic IPG CEO, Philip Krakowski,
0:09:11 will serve as the co-chief operating officer, co-officer.
0:09:13 That means he’s on his way out.
0:09:16 Omnicom shareholders will own 60.6% of the combined company
0:09:20 while interpublic shareholders will command 39.4%.
0:09:23 Interpublic shares were up 11% on the news
0:09:24 while Omnicom’s fell 6%.
0:09:26 Typically, the acquiring company who’s on top,
0:09:29 their shares fall because usually people get excited
0:09:32 about building a bigger empire and they overpay.
0:09:34 Only one in three acquisitions works.
0:09:36 Omnicom has tried to do this before.
0:09:39 Back in 2013, Omnicom tried a 35-million dollar merger
0:09:42 with Publixy, but it fell apart due to regulatory issues.
0:09:45 Still, Omnicom CEO, John Wren remains optimistic
0:09:47 and has said the current regulatory environment
0:09:48 is more friendly to business.
0:09:50 It’s not that they’re more friendly to business, John.
0:09:53 It’s just they realize what trouble you’re in
0:09:56 and that you need to bulk up or specifically cut costs.
0:09:58 The notion that they’re gonna get in the way of this
0:10:00 or they’re gonna have some sort of monopoly power
0:10:01 is just insane.
0:10:02 Now, I wouldn’t put it past the DOJ or FTC
0:10:05 ’cause in my mind they do make irrational decisions
0:10:06 every once in a while.
0:10:08 But for God’s sakes, this isn’t about monopoly power,
0:10:11 controlling the media ecosystem.
0:10:15 This is about literally just trying to stay afloat.
0:10:17 In some, if you can’t beat big tech,
0:10:19 you need to consolidate and get bigger yourself.
0:10:22 The deal is expected to close in the second half of 2025.
0:10:25 The big question is, will this integration actually succeed?
0:10:27 This is the right thing to do.
0:10:29 You know, IPG’s on bottom here.
0:10:33 If you’re at headquarters in admin, in middle management,
0:10:34 you’re not client facing,
0:10:38 you’re not ringing the registered IPG, folks,
0:10:40 let’s be clear, you’re on the green mile.
0:10:42 And while John Wren will paint a vision of the future
0:10:43 and how there’ll be a lot of growth
0:10:45 and they don’t have an immediate layoffs plan,
0:10:48 okay, stick around to get the severance, but be clear,
0:10:52 if you’re not directly linked to a client
0:10:55 or a critical mission critical function,
0:10:57 and you’re making a good living,
0:10:58 you’re about to be consolidated.
0:11:02 We’ll be right back for a conversation with Michael Lewis.
0:11:09 The Capital Ideas podcast now features a series
0:11:12 hosted by Capital Group CEO, Mike Gitlin.
0:11:14 Through the words and experiences
0:11:16 of investment professionals, you’ll discover
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0:11:28 Invest 30 minutes in an episode today.
0:11:30 Subscribe wherever you get your podcasts,
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0:13:50 (upbeat music)
0:14:02 – Welcome back.
0:14:03 Here’s our conversation with Michael Lewis,
0:14:05 New York Times bestselling author
0:14:08 and host of the podcast Against the Rules.
0:14:12 Michael, where does this podcast find you?
0:14:15 – Smoke Tree Ranch off the side of Palm Springs,
0:14:19 which is a gated community created by Walt Disney
0:14:22 and some of his pals way back when.
0:14:23 – Wow.
0:14:24 Let’s buzz right into it.
0:14:26 In the latest season of your podcast Against the Rules,
0:14:28 you investigate sports betting,
0:14:29 which we talk a lot about here on the pod,
0:14:33 which you refer to as a great social experiment.
0:14:35 Walk us through the state of play of this experience
0:14:37 and where you think we’re headed.
0:14:40 – So in 1992, Bill Bradley,
0:14:43 then a senator, created essentially a federal ban
0:14:44 on sports betting.
0:14:46 It exempted Nevada,
0:14:48 but basically it was against the law.
0:14:53 And the Supreme Court repealed that in 2018.
0:14:57 And the new law of the land is states can legalize it
0:15:00 if they want to and 39 states have.
0:15:03 And about two thirds of the American population
0:15:07 has access to sports betting on their phones.
0:15:08 About one third still doesn’t.
0:15:12 And the industry here is dominated by two companies,
0:15:14 FanDuel and DraftKings.
0:15:16 They have a little hard to say exactly,
0:15:20 but say roughly 70% of the market.
0:15:22 And they were before they were sports gambling companies,
0:15:24 they were daily fantasy sports companies,
0:15:28 which gave, they actually was the perfect thing to be
0:15:31 before mobile sports gambling is legalized
0:15:32 as a daily fantasy sports company.
0:15:34 You know all the customers,
0:15:36 you have data on all the customers.
0:15:40 Sports bets in America have skyrocket.
0:15:42 It’s a little, again, a little hard to say
0:15:44 ’cause hard to know what numbers to trust
0:15:46 because there was an illegal market
0:15:48 that presumably is not quite as big as it used to be,
0:15:50 but it’s gone from,
0:15:52 the legal market has gone from a few billion
0:15:55 to over a hundred billion a year.
0:16:00 And there’s just starting to be some academic research
0:16:04 showing the social effects of this.
0:16:05 I mean, it’s kind of cool this.
0:16:08 The way it’s rolled out has created these natural experiments
0:16:11 that you have because you have states that are side by side.
0:16:13 One has legalized it, one has not legalized it.
0:16:18 So you can sort of tease out the effects of legalizing it,
0:16:21 but bankruptcies are up, savings rates are down.
0:16:23 If it follows the path that it followed
0:16:25 in the United Kingdom and Australia,
0:16:26 suicide rates will be up.
0:16:29 So there’s some social costs to it all.
0:16:32 But I think like really early days,
0:16:34 I mean, you know, it’s only been legal for six years.
0:16:35 There were companies that really only been up
0:16:38 and running in most states for just a few years.
0:16:41 It’s kind of not hard to make some predictions
0:16:44 about where it’s going, but it’s not there yet.
0:16:47 – So I’m a glass half empty kind of guy,
0:16:49 but you cited some stats.
0:16:52 I’ve seen 20 to 30% increase in bankruptcies
0:16:54 and states illegalize it.
0:16:57 I see young men with kind of less structure in their lives
0:16:58 who are more prone to addiction.
0:17:02 I think six out of seven gambling addicts are men.
0:17:04 My understanding is gambling has the highest suicide rate
0:17:06 because if you’re addicted to meth,
0:17:08 people figure it out and try and intervene.
0:17:10 You can get in way over your skis with gambling
0:17:13 and nobody knows and you decide there’s only one way out.
0:17:14 I’ll use an academic error.
0:17:16 I think this is a fucking disaster, your thoughts.
0:17:18 – Yeah, I’m totally with you.
0:17:21 This is why I was trucked in the subject.
0:17:25 I couldn’t believe, well, look, once it’s legalized,
0:17:28 I’m a little shocked by the insensitivity
0:17:30 of the social, to the public health crisis
0:17:35 is gonna trigger because it’s essentially Wild West
0:17:37 in how you can get to the customer
0:17:40 and they aren’t, you know, the sports gambling companies,
0:17:43 they were mistaken for casino companies
0:17:44 when the people kind of thought,
0:17:46 “Oh, it’s gonna be like a casino business.”
0:17:51 So that the kind of big, what the house takes,
0:17:54 about roughly 5%, it’s always been kind of 5%,
0:17:56 we remain kind of 5%.
0:17:58 This number keeps going up with these companies.
0:18:00 They’re like, it’s like at 15%.
0:18:04 And effectively what they are doing
0:18:08 is mining the entire US population
0:18:11 for people willing to make stupid sports bets.
0:18:14 And they have a finely honed ability
0:18:17 to identify anybody who actually knows what they’re doing,
0:18:18 like the sharp gambler,
0:18:21 someone who actually might have some edge in a sport
0:18:24 and toss them out or limit them to the point
0:18:26 where they’re effectively tossed out.
0:18:28 So that their business is built on people
0:18:30 who don’t know what they’re doing.
0:18:33 And it’s further, in a way that, you know, casinos,
0:18:34 when you’re in a casino course,
0:18:37 it’s manipulating you in all kinds of diabolical ways.
0:18:39 But when the casino’s in your pocket,
0:18:42 it’s like your whole life is in the casino kind of thing.
0:18:46 And they have an ability to sort of like nudge people
0:18:50 in doing stuff that they just wouldn’t think to do.
0:18:52 It is, and it’s making the dumber and dumber bets.
0:18:54 When you kind of think about,
0:18:57 okay, like what’s the disaster going to look like?
0:18:59 It’s not just men, it’s young men.
0:19:03 Young men are the real target.
0:19:06 The Lancet, the British Medical Publication,
0:19:08 just came out with a study that said,
0:19:10 I mean, this number is so high
0:19:13 that I wanted to pause before I say it,
0:19:17 but the 26% of young men who were exposed to gambling
0:19:19 developed some sort of gambling problem.
0:19:23 That seems very high, but even if it’s half that,
0:19:26 it’s like the NCAA,
0:19:28 who’s new president, Charlie Baker,
0:19:30 was just shocked by the gambling activity
0:19:32 he was seeing on campuses,
0:19:34 commissioned to study,
0:19:35 to see how many people were doing this,
0:19:38 and more than 60% of young men on college campuses
0:19:39 are sports gambling.
0:19:40 So you do the math.
0:19:42 It’s just like, we’re like,
0:19:45 it’s almost like we’re creating a pool
0:19:47 of future gambling addicts.
0:19:49 And you’re right, it’s very interesting.
0:19:51 You’re right about like,
0:19:55 when you think about what’s gonna stop this train,
0:19:58 if you compare it to like opioids,
0:20:01 like opioids was able to run for 20 years
0:20:03 before anybody really put a stop to it.
0:20:06 And 750,000 people die.
0:20:10 And it was about as visible and epidemic as you can have.
0:20:12 This, it’s invisible.
0:20:15 You don’t see what’s happening to people until,
0:20:18 so you wonder if it takes 20 years for the society
0:20:21 to get its hands around the opioid industry,
0:20:22 how long is it gonna take it
0:20:24 to get its hands around the gambling industry?
0:20:27 So, yes, I agree with you.
0:20:29 It’s like, how on earth did we let this happen?
0:20:31 But it’s of a piece with other things
0:20:33 that we have let happen.
0:20:34 – I mean, when I think about it,
0:20:36 it’s not only, my fear isn’t only about gambling addiction,
0:20:40 but when you put kind of an on-demand Dopa bag
0:20:41 in young people’s pockets,
0:20:44 just as they’re kind of hardwiring their brain
0:20:47 and learning about life and reward,
0:20:49 that we’re just setting them up
0:20:52 to be just fucking Dopa monsters.
0:20:54 And if they can’t get it from gambling
0:20:55 ’cause they run out of money,
0:20:57 they’re gonna find it somewhere else.
0:20:59 Have you seen any of my thesis
0:21:01 is we are literally unleashing into the economy,
0:21:06 into the world, millions of Dopa monsters
0:21:10 that will are just gonna find whatever way they can,
0:21:14 opiates, sex, porn, online shopping.
0:21:17 They’re just gonna be so hungry for that rush
0:21:20 because their brains will have been wired
0:21:21 to expect that rush.
0:21:24 So it’s gonna have all sorts of ramifications
0:21:25 outside of gambling.
0:21:27 Am I catastrophizing here?
0:21:30 I mean, it doesn’t sound unreasonable to me.
0:21:34 My first thought when you started down that little path
0:21:38 was it’s interesting that sports used to be a place
0:21:40 where you learned the slow rewards
0:21:43 that come from hard– – The lay gratification, yeah.
0:21:45 – Yeah, you learned the opposite thing.
0:21:47 And that we’re turning that this mechanism
0:21:50 that used to take young men
0:21:53 and teach them a certain lesson.
0:21:56 Are you taking it to teach a different lesson?
0:21:58 So it was disturbing enough to me
0:22:02 that my youngest is a 17 year old son.
0:22:04 Like I gave him some money and adult supervision
0:22:08 so he could learn how to navigate this world
0:22:13 because it does feel like not only are we creating a world
0:22:16 of, you know, dopamine addicts,
0:22:20 but the signal you send especially to young men
0:22:22 ’cause they’re so susceptible to this
0:22:24 is the world actually doesn’t give a shit about you.
0:22:27 That it’s out to get you.
0:22:30 When I got into this, when I started working on the story,
0:22:34 what motivated me was the book I wrote about,
0:22:38 stuff I’d learned on the book I’d written about the pandemic.
0:22:40 I got interested in it because the US response
0:22:41 in the beginning was just so appalling.
0:22:44 We had like 20% of the world’s deaths
0:22:47 with 4% of the world’s population in the first six months.
0:22:51 And I learned in the process that this was,
0:22:54 that in the few years leading up to the pandemic,
0:22:58 we’d had experienced a decline of life expectancy
0:22:59 in three straight years.
0:23:01 And that had not happened since 1918.
0:23:03 And I thought, well, the pandemic’s happening
0:23:04 in the context of a society
0:23:07 that’s already not taking care of its people.
0:23:10 That some basic failure is occurring.
0:23:13 And this feels like part of that.
0:23:16 That it’s like, it’s a public health problem.
0:23:19 And that it’s not that hard,
0:23:23 even if you can’t do anything about legalizing sports gambling,
0:23:27 it’s not that hard to do some things to blunt its effects.
0:23:28 So here’s my solution.
0:23:31 I’m trying to work within the constraints of the society.
0:23:34 I don’t think actually me going off about
0:23:38 how diabolical it all is, is gonna help anything.
0:23:41 They’re doing something that I think is kind of interesting,
0:23:44 the company, the sports gambling companies.
0:23:46 They are, ’cause they’re so good
0:23:48 at chucking out of their businesses
0:23:50 anybody who knows what they’re doing.
0:23:53 They’re isolating people who don’t know what they’re doing.
0:23:58 So by definition, if you have an account in good standing
0:23:59 at FanDuel and DraftKings
0:24:01 and you’re doing a lot of sports betting,
0:24:02 you have signals of the world,
0:24:04 you don’t know what you’re doing.
0:24:07 I think that if we get that message out
0:24:09 and that if you say like,
0:24:11 if you’re looking for someone to manage your money,
0:24:12 the first question you should ask them is,
0:24:14 do they have account in good standing at FanDuel and DraftKings?
0:24:17 If they do, you should never give them your money to manage.
0:24:22 Like that if you make it a point of shame
0:24:25 that you’re in good with the industry,
0:24:28 that you might stigmatize it in a way
0:24:30 that makes it less dangerous.
0:24:32 We’ll be right back.
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0:24:43 Go look at the S&P 500.
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0:24:51 producing billions of dollars in profit in the process.
0:24:53 The hard truth, however, is that the biggest venture funds
0:24:56 are almost entirely funded by institutional investors.
0:24:59 So unless you knew a guy who knew a guy,
0:25:01 you and 99.9% of individual investors
0:25:04 did not get to participate in the pre-IPO growth
0:25:05 of any of those blue chip companies.
0:25:08 The Fundrise Innovation Fund is finally changing that.
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0:27:46 (upbeat music)
0:27:51 – Your book Going Infant,
0:27:53 you fell under some of what I call the same
0:27:56 texture of criticism as Walter Isaacson’s biography
0:27:57 on Elon Musk and that of us.
0:28:00 You were kind of seen loosely as having a front row seat,
0:28:02 but not seeing what was going on.
0:28:04 – Do you think that’s a fair criticism?
0:28:07 – I didn’t write it until after it all collapsed.
0:28:09 When I sat down to write the first words,
0:28:13 there wasn’t much I didn’t know had happened.
0:28:14 I mean, very little happened, came out in the trial
0:28:17 that wasn’t already kind of known.
0:28:22 But it is true that I was there a fly on the wall
0:28:28 from kind of end of 2021 through the collapse of in November
0:28:32 of 2022.
0:28:35 And if you had said he has the money,
0:28:37 the customer’s money in Alameda,
0:28:39 I would have said you’re insane.
0:28:42 There’s no way that would be so dumb.
0:28:45 So I did poke everybody did this.
0:28:48 Everybody who saw the structure of the business,
0:28:50 he’s got his own private hedge fund on the side,
0:28:54 our trading firm on the side of it in exchange.
0:28:56 And he owns them both.
0:29:00 I did ask lots of questions about conflicts of interest,
0:29:01 but what I imagined would be the problem
0:29:03 wasn’t the problem.
0:29:05 I imagine the problem was that his trading firm
0:29:09 would have the same sort of privileged access
0:29:12 to the exchange that high frequency traders get
0:29:13 on the New York Stock Exchange
0:29:16 and privileged access to data and so on.
0:29:18 So front running, whatever.
0:29:20 And that wasn’t the case.
0:29:22 I did not see that like,
0:29:25 oh, yeah, the money’s in the wrong place.
0:29:26 So that’s true.
0:29:31 Did I, in retrospect, think I should have seen it?
0:29:33 Not really, no one else saw it either.
0:29:36 You know, there wasn’t the interesting thing.
0:29:38 There are many interesting things about the story,
0:29:42 but one interesting thing is, yeah, a lot of people said,
0:29:44 I wonder if they’re shady like FTX,
0:29:47 but that’s the in crypto, that’s easy.
0:29:51 Like as a heuristic, if you’re a successful crypto business,
0:29:53 you’re, you know, you’re largely unregulated
0:29:55 and you’re 26 years old
0:29:57 and no one’s paying that much attention.
0:30:00 The specific criticism,
0:30:03 oh, he’s got the customer’s money in his hedge fund.
0:30:06 No one said, zero people said.
0:30:08 So not even any ad, whatever,
0:30:12 a hundred and something professional investors
0:30:14 who owned a piece of them and they didn’t say it.
0:30:15 So I don’t know.
0:30:16 I don’t know.
0:30:17 That would have been very hard.
0:30:20 I don’t know how you would have detected that.
0:30:21 – Well, I have a couple of follow up questions there.
0:30:23 So when I’m sort of, follow the story a little bit
0:30:27 from an adjacent, I actually bought claims against it.
0:30:28 – I know this.
0:30:29 You bought the claims.
0:30:31 – And if I could have, I would have.
0:30:32 – Oh really?
0:30:34 – Oh my God.
0:30:35 I mean, it just seemed pretty obvious
0:30:37 that they weren’t worth 10 cents on the dollar.
0:30:38 – Well, I wasn’t that smart.
0:30:40 I bought them for 23 cents,
0:30:42 but because it’s better to be lucky than good
0:30:43 because of the surge in crypto.
0:30:45 They’re now probably your,
0:30:47 the payouts can be somewhere between 120 cents
0:30:48 on the dollar, 150 cents.
0:30:51 And other than, other than patting myself on the back
0:30:53 for one of the few good investment decisions
0:30:54 I’ve made in the last year,
0:30:56 if everyone gets their money back.
0:30:57 Now granted, he committed fraud.
0:31:00 He, he took customer accounts from people
0:31:02 who thought they were investing, you know,
0:31:04 putting their money in a deposit, not even investing.
0:31:06 And then he used it to take risks
0:31:08 they had not signed up for.
0:31:10 So that’s illegal.
0:31:13 But one, given that everyone’s given their money back, given,
0:31:15 I don’t understand the difference between
0:31:16 what Sam Bankman Freed did
0:31:18 and what John Corzine did at MF Global,
0:31:19 I think it was called.
0:31:20 (laughing)
0:31:23 – You’re taxing my memory there, but yeah.
0:31:24 – You remember that?
0:31:25 – Yeah, yeah, do remember.
0:31:25 – Did the same thing.
0:31:26 – Can I back you up a sec?
0:31:27 I really wanted to ask you about this.
0:31:32 I was, I took a keen interest in the market
0:31:38 in claims on FTX because it seemed really clear to me
0:31:41 that what the bankruptcy people were saying are signaling
0:31:44 that it’s like, it’s this dumpster fire
0:31:45 and there’s nothing there.
0:31:48 And boy, just be incinerated all this money.
0:31:50 That that wasn’t true.
0:31:53 And it was amazing to me how cheaply these things
0:31:54 traded at first.
0:31:59 How did you even think to buy claims?
0:32:02 – I’m fascinated by,
0:32:04 I’ve invested across every asset class,
0:32:06 from angel to venture to growth to public,
0:32:09 and by far the best asset class is distressed,
0:32:10 because similar to biology,
0:32:12 people don’t want to hang around old people.
0:32:14 So the best businesses are businesses
0:32:15 dealing with old people.
0:32:18 And the best asset class is distressed.
0:32:19 So I look at bankruptcy filings.
0:32:20 And I was fascinated by this.
0:32:22 I got the bankruptcy filing from the court.
0:32:23 I read through it.
0:32:27 And in the bankruptcy claim, it listed all their assets,
0:32:29 cash, some Bitcoin, et cetera.
0:32:31 And one of the assets that just popped out to me
0:32:35 is they had invested $500 million in Anthropic.
0:32:38 Anthropic is the number two AI company, LLM.
0:32:40 And I couldn’t find for the life of me
0:32:43 what the valuation was that they invested at,
0:32:45 but I figured it was somewhere between three and five billion.
0:32:48 So I took the most conservative which meant,
0:32:50 number which meant that one of the things
0:32:53 that FTX, the bankruptcy FTX had
0:32:56 that would ultimately be distributed to the claimants
0:33:00 was 10% I assumed of Anthropic.
0:33:05 I valued Anthropic at approximately 40 billion.
0:33:08 So I thought the stake is worth four billion.
0:33:10 Claimants, total claimants nine billion.
0:33:12 So just the stake in Anthropic,
0:33:15 I valued at 44 cents on the dollar.
0:33:17 Claims were selling for 22 cents.
0:33:20 To me, this was the easiest trade I’ve ever met.
0:33:24 And why do you think other people didn’t make that trade?
0:33:25 – Occasionally you find something,
0:33:27 I don’t know, this doesn’t happen to be very long.
0:33:29 I’m like, oh my God, they’ve missed it.
0:33:32 And that is people didn’t see the $500 million number.
0:33:33 They could see the $500 million.
0:33:37 What they couldn’t see was the numerator or the denominator.
0:33:40 And that was the valuation they invested at.
0:33:43 And I thought, there’s no way they don’t own
0:33:45 at least 10% of this thing.
0:33:47 And then you have to value another unknown.
0:33:49 And that is, what is that 10% now?
0:33:52 But I thought it’s worth probably 40 cents,
0:33:53 a minimum of 23 cents.
0:33:56 So all the crypto, all the cash,
0:33:59 everything else was just gonna be gravy.
0:34:01 – To my bewilderment, people weren’t paying attention.
0:34:03 And there was, I mean, what he did,
0:34:05 he didn’t take whatever it was,
0:34:07 $11 billion of customer assets
0:34:11 and spend it on blow and hookers and private jets.
0:34:16 He put five billion of it into venture capital investments.
0:34:17 And this was just one of them.
0:34:19 And yet there was this pile of stuff.
0:34:23 And I keep waiting for some to come and ask the question,
0:34:27 how good of VC was Sam Bankman Freed?
0:34:30 He was doing it, like how well did he perform
0:34:32 compared to his peer group?
0:34:35 Because it wasn’t, he has a piece of,
0:34:36 you may not even know this.
0:34:38 He has a piece of SpaceX in there.
0:34:39 He has it through Michael Keevis.
0:34:40 But so you don’t see it.
0:34:44 But he’s got pieces of some really valuable stuff.
0:34:47 Even if crypto goes to zero
0:34:51 and nevermind all the crypto businesses he bought.
0:34:53 So one last question on this,
0:34:57 ’cause I’m curious ’cause I haven’t,
0:34:58 ’cause I knew you made this trade.
0:35:00 Someone told me about you being in the market
0:35:03 and I thought, well, that’s kind of cool.
0:35:07 Did you worry at all that the bankruptcy process itself
0:35:10 was gonna incinerate your profits?
0:35:13 That it would be so expensive
0:35:15 that you wouldn’t end up seeing,
0:35:16 you should have seen the money,
0:35:18 but in the end it would go in the pockets
0:35:20 of Solomon Cromwell lawyers.
0:35:21 – That’s a great question.
0:35:23 But part of the analysis I did
0:35:24 when I put together the spreadsheet was
0:35:26 it’s the same administrator that handled Amron
0:35:30 and I estimated the cost at about a billion dollars.
0:35:33 And I thought, okay, if just the anthropic stake
0:35:36 is worth four billion, the coins are worth three.
0:35:38 I saw 70 cents on the dollar
0:35:42 and then take out a billion, so 60 cents on the dollar.
0:35:44 And then what it ends up, it looks like the payout.
0:35:45 And a lot of the stakes we’re talking about
0:35:47 have already been sold, but it looks to me
0:35:50 what they’re saying, the court administrator’s saying
0:35:51 that they now think they’re gonna get somewhere
0:35:54 between 120 and 160 cents on the dollar.
0:35:57 A lot of that because crypto has surged.
0:36:00 But the lesson I take away from all of this,
0:36:02 and this is a larger lesson about investing in life,
0:36:04 is the greatest return on invested capital
0:36:07 is inversely correlated to how sexy something is.
0:36:10 This isn’t true of sports, which you know better than me
0:36:11 because there’s no shortage of billionaires
0:36:14 of midlife crises and it’s a regulated monopoly
0:36:15 to control supply.
0:36:17 But generally speaking, outside of sports,
0:36:20 the best asset classes are the least sexy.
0:36:23 And this was a really unsexy investment.
0:36:26 Everybody thought this thing, it had fraud,
0:36:28 it had crypto, which was out of vogue.
0:36:29 This thing was supposedly going to zero.
0:36:34 And any reasonable diligence said, no, this is all upside.
0:36:36 – We did, I didn’t really answer your question
0:36:38 about what was different from between
0:36:40 what he did and what John Corazon did.
0:36:44 And you’ve taxed my memory about what John Corazon did.
0:36:45 But I do think, what do I think?
0:36:49 I think that there’s a kind of misapprehension
0:36:54 in the general tenor of the response to Sam Bankman Freed,
0:36:59 that people still talk about it as if what he did
0:37:04 was intentionally set up a business to steal customer money,
0:37:05 stole the customer money
0:37:07 and the customers don’t have any money now.
0:37:11 And what he actually did was set up a business that was,
0:37:14 I mean, it was jankily set up in the first place,
0:37:18 but it was clearly not start, didn’t start as a fraud,
0:37:21 was in and of itself a successful business
0:37:23 if he’d just not done the idiot things
0:37:25 he’d done with his hedge fund.
0:37:30 And then got himself in a pickle in June of 2022,
0:37:34 when crypto lenders asked for the $10 billion,
0:37:35 they’d lend him back.
0:37:37 And instead of just telling them, I don’t have it,
0:37:39 I put it in VC investments,
0:37:41 use the customer money to fill the hole.
0:37:44 And that was a really stupid thing to do.
0:37:49 It is fraud, but it’s different than like evil person
0:37:51 sets out to do evil.
0:37:53 So how I feel about it, I feel sad about it mainly.
0:37:57 And I think that what is like the vice,
0:37:59 the character flaw, if you will,
0:38:03 or the pattern, it’s more of the pattern in his character
0:38:05 that leads to this behavior,
0:38:09 that was visible in every other aspect of his life.
0:38:13 And it was a pattern of foisting risk
0:38:15 upon other people without their permission.
0:38:17 And he did it over and over.
0:38:18 He did it in his romantic life.
0:38:20 He did it in his friendships.
0:38:23 And he comes by this vice, honestly,
0:38:25 I think he himself is sort of numb to risk
0:38:27 and kind of thinks he’s right all the time anyway.
0:38:31 So he didn’t actually probably completely grok
0:38:34 the risk that he was foisting on others.
0:38:36 I thought this is all gonna work out.
0:38:39 That was stupid and a crime,
0:38:42 but I can understand how he got there.
0:38:46 And I do have a problem with 25 years in jail.
0:38:49 I think like, okay, jail, that makes some sense.
0:38:53 But like, I don’t know how you even measure these things,
0:38:55 but it’s like–
0:38:58 – 25 years for a guy like that is almost a death sentence.
0:38:59 – Yeah, so I just don’t,
0:39:02 I think that’s excessive and I don’t get it,
0:39:04 but people will argue with me.
0:39:06 – But I wanna put forward a thesis
0:39:07 ’cause you’re a storyteller
0:39:10 and just love the way you think through stuff.
0:39:13 I would argue, and I want you to respond to the thesis,
0:39:15 that the difference between playing golf at Centennial
0:39:17 and going to Wimbledon, which I imagine I would be doing
0:39:19 if I were John Corazon right now,
0:39:23 I don’t see a lot of difference in the criminal behavior here.
0:39:26 The difference is brand management.
0:39:28 And that is, what you have with Sam Bankman Freed
0:39:31 is a guy who had this kind of floppy,
0:39:33 guy just rolled out a bad crypto thing.
0:39:36 He purposely set up this organization, The Bahamas,
0:39:38 which felt sketchy.
0:39:42 He was sleeping with and doing drugs with his coworkers.
0:39:46 He decided to go on the most ridiculously ill-advised
0:39:49 apology tour, which entirely backfired,
0:39:52 whereas Corazon listened to very smart people
0:39:54 who said, “Shut the fuck up.
0:39:57 “Nobody speaks to anybody but your lawyers.
0:40:00 “Go quiet, act like the victim.
0:40:01 “You didn’t know what was going on.
0:40:02 “Act contrite.
0:40:04 “You were terrible fiduciary.
0:40:05 “You had no idea.”
0:40:09 As opposed to going and speaking to Andrew Ross Sorkin
0:40:14 in cargo shorts, the difference between Corazon,
0:40:17 again, going to Wimbledon and Bankman Freed
0:40:19 with a live sentence, is poor communications
0:40:22 and brand strategy, your thoughts.
0:40:26 – Well, you’re absolutely right that the way he handled it
0:40:29 from the minute it all fell apart was catastrophic.
0:40:34 You gotta remind me what John Corazon actually did,
0:40:36 ’cause I don’t remember.
0:40:39 – MF Global, customer deposits that ends up
0:40:41 were being used to make speculative investments
0:40:42 in the market.
0:40:44 John Corazon, my understanding is,
0:40:47 side interest rates were gonna head one way,
0:40:49 and he claims he didn’t know these deposits
0:40:50 were being commingled.
0:40:52 It was pretty much the exact same crime.
0:40:55 And Corazon got banned from the industry
0:40:57 or paid a fee.
0:40:59 MF Global, I think, went away,
0:41:01 but these things, you know, tomato, tomato,
0:41:04 as far as I can tell, and one guy’s got a live sentence,
0:41:05 and the others are Wimbledon.
0:41:07 I don’t even know if he watches tennis,
0:41:10 but to me, it speaks to the notion of public perception.
0:41:15 – It also speaks to the moment that there’s a frustration
0:41:18 with the ability to get our hands around the necks
0:41:20 of rich people who do bad things.
0:41:22 And when you get a live one now,
0:41:27 the sort of the speed with which the justice system
0:41:30 leaps into action is incredible.
0:41:33 Sam was really easy to prosecute.
0:41:34 You know, he was just like–
0:41:36 – You gave him everything.
0:41:36 – He gave him everything.
0:41:38 So this is, so think about this.
0:41:40 I always stopped myself just short of thinking
0:41:44 he has a death wish because his behavior
0:41:46 kind of suggests it.
0:41:49 And he, even when things were good,
0:41:53 he was always extremely vulnerable,
0:41:56 like no bodyguards, no, you know,
0:41:58 you could sneak into his office any hour of the day.
0:42:00 You could, he really was,
0:42:04 he has a sense that like he doesn’t protect himself
0:42:06 almost willfully.
0:42:08 And so that just extended into what happened
0:42:10 in the legal process.
0:42:12 – So Michael, I love this.
0:42:15 And your fascinating story told us a couple of questions
0:42:16 to wrap up here.
0:42:18 I find one of the most fascinating characters
0:42:21 in all of this was, is it Carolyn Ellison?
0:42:22 Caroline Ellison?
0:42:23 – Carolyn Ellison.
0:42:25 – Any inside, a lot of people didn’t think,
0:42:27 she ended up being what I might describe her.
0:42:29 I think the Southern District called her
0:42:32 the ultimate perfect example,
0:42:34 quintessential government witness,
0:42:35 but they put her in prison.
0:42:37 We know a little bit about Sam.
0:42:38 We know almost nothing about her.
0:42:40 What were your impressions?
0:42:43 Or what was, can you provide us some texture on Ellison?
0:42:47 – She was a math kid who thought of herself.
0:42:48 I think she’s kind of,
0:42:49 there was a bit of a split personality thing
0:42:51 going on with her.
0:42:55 She had a lust for a stable and normal life.
0:42:56 And at the same time thought of herself
0:42:59 as someone who would do radical and crazy things.
0:43:04 And was, she in college joined the Effective Altruist Movement
0:43:07 and seemed to be kind of all in on that.
0:43:11 And I tell you, she was very susceptible
0:43:13 to the charms of Sam Bankman Freed.
0:43:15 Here’s the texture for you.
0:43:17 She told a colleague, this didn’t even make the book,
0:43:22 but she told a colleague that even after
0:43:25 she and Sam had broke off their relationship,
0:43:27 it was worth her having sex with Sam
0:43:30 because it made Sam more efficient.
0:43:32 And making Sam more efficient was the best thing
0:43:34 she could do for mankind.
0:43:36 Because Sam was the person who most likely
0:43:37 to save humanity.
0:43:41 So that gives you an idea of how she is.
0:43:43 – I’m gonna try that on a bar.
0:43:44 Just this, you know this too.
0:43:48 The world will be a better place if I’m more relaxed tonight.
0:43:52 So this will be the last question, I promise.
0:43:57 You have, I look at, I mean, granted, you know,
0:43:58 my idols are different to most people’s,
0:44:01 but I look at you and I think, I wanna be this guy.
0:44:03 You’re just doing cool shit, telling great stories,
0:44:06 writing interesting books, going to movie premieres.
0:44:08 I think you make an exceptional living.
0:44:11 But by all, at least from an exterior perspective,
0:44:13 you’re in a great seat.
0:44:16 We have a lot of young men and women who listen to this podcast.
0:44:19 Can you give us any one or two pieces of advice
0:44:21 for someone who looks at you and thinks, you know,
0:44:23 I’d like to be in that seat.
0:44:26 Were there any things that you wish you’d done more of
0:44:29 or less of, what advice would you have to your younger self?
0:44:32 – Well, first off, I never thought that way
0:44:34 about what seat I wanted to be in.
0:44:36 I never thought I wanna be that person.
0:44:38 I always just wanted to be me.
0:44:40 It’s like the best me.
0:44:45 And there were things that made me feel the best me.
0:44:48 And writing was one of them.
0:44:49 Writing was the big one.
0:44:51 And I just thought, I’ve gotta do this.
0:44:54 So not trying to be someone else
0:44:57 would be one of the first things I would say.
0:45:01 Another thing that led me to like lots of the good things
0:45:04 that have happened in my life, it’s related.
0:45:07 It’s like not paying attention to what you’re supposed
0:45:08 to be paying attention to.
0:45:11 Like what everybody else is paying attention to.
0:45:13 If everybody else is paying attention to it,
0:45:15 it doesn’t need your attention kind of thing.
0:45:18 What needs your attention is the thing that you’re interested
0:45:20 in that no one’s paying attention to.
0:45:22 And no one encourages you to pay attention to.
0:45:24 Like your FTX investment.
0:45:27 It’s like, oh, there’s something here
0:45:29 and I really care about it.
0:45:32 And if you can find that and nobody else is there,
0:45:34 that seems like a lonely place,
0:45:36 but it’s the golden place.
0:45:39 And you gotta like lean into that rather than lean out of it.
0:45:42 Like learn to recognize that moment where God,
0:45:44 I love doing this thing.
0:45:46 No one is saying I should be doing this thing.
0:45:49 No one else is doing this thing.
0:45:49 But I love it.
0:45:51 Go with it.
0:45:52 Go with that feeling.
0:45:53 It’s great for an investor.
0:45:55 It’s great for a writer.
0:45:57 But I think it’s great beyond that.
0:45:59 It’s sort of like you’re arbitraging
0:46:01 your personality against the world.
0:46:05 That you are finding where you are special
0:46:07 in the level of interest you have in something.
0:46:10 And that’s when I find my subject matters
0:46:11 are the most exciting to me.
0:46:13 When nobody, the thing that troubled me most
0:46:15 about Sam Beckman Friede as a subject
0:46:17 is I was genuinely interested in him
0:46:18 right from the moment I met him,
0:46:21 but it worried me that so many other people were.
0:46:23 And the only thing that kept me going
0:46:26 was that I had this privileged view of it.
0:46:28 But what I really like with the subject
0:46:29 is like the Oakland A’s,
0:46:31 where nobody gives a shit about them,
0:46:33 but I see there’s something great there.
0:46:37 And that’s the stuff.
0:46:39 It’s like, that’s when you know you’re in the right place.
0:46:41 It’s like, you’re there for some genuine reasons
0:46:44 ’cause there’s no in genuine reasons to be there.
0:46:45 – Arbitraging your personality
0:46:47 against the rest of the world, I love that.
0:46:51 Michael Lewis is the host of the podcast Against the Rules.
0:46:53 He’s also a New York Times bestselling author
0:46:56 of several books, including The Fifth Risk, Flash Boys,
0:46:57 and The Big Short.
0:47:00 In addition, some of these have been made into great movies,
0:47:03 The Big Short, Money Ball, and The Blind Side,
0:47:05 all nominated for Academy Awards,
0:47:07 grew up in New Orleans and remains deeply interested
0:47:08 and evolved in the city,
0:47:10 but now lives in Berkeley, California,
0:47:12 Alma Mater, Go Bears,
0:47:15 with his wife, Tabitha Soren, and their children.
0:47:17 If I could give my kids any skill, Michael,
0:47:18 it would be your skill.
0:47:21 And that is, you are a fantastic storyteller.
0:47:22 Really appreciate your time.
0:47:24 – Thanks for having me, Scott.
0:47:37 – I’ll derivative happiness, say yes.
0:47:39 I went shooting this weekend.
0:47:41 And when I say shooting, I mean,
0:47:42 out to the British countryside,
0:47:45 where you dress up in this kind of guy-richie-like gear,
0:47:48 stayed in an old kind of interesting castle.
0:47:51 And then in the morning, a bunch of Brits took us out
0:47:53 and seemed like a lot of ’em and a lot of dogs
0:47:55 and we murdered birds.
0:47:57 This is not something I’m into.
0:47:58 Let me be clear.
0:48:00 When someone described this to me,
0:48:03 it sounded like Chinese water torture.
0:48:04 But here’s the thing.
0:48:06 I have some friends in my life that I really like
0:48:08 and are wonderful, interesting people,
0:48:10 and they love it, and they love it.
0:48:12 And you could just tell they wanted to share the experience.
0:48:14 So I said yes.
0:48:16 And when I had to get up at ODAR 100 hours
0:48:18 to put on wellies or whatever they’re called
0:48:20 and then figure out a way to go like fire a rifle,
0:48:22 which I have no desire to do, and animals.
0:48:26 Anyways, my point is that these experiences
0:48:27 really bond you to people.
0:48:28 I know these are good friends,
0:48:30 but we feel even closer to them now
0:48:32 because we got to share in something
0:48:34 that they’re really passionate about.
0:48:38 On the flip side of that, it’s something I didn’t do,
0:48:39 something I was bad at.
0:48:41 I really never developed any hobbies in my 30s and 40s.
0:48:44 I like movies, I like drinking, I like travel.
0:48:45 That’s pretty easy to say.
0:48:49 But I never really developed a passion for anything.
0:48:50 And the thing about being around people
0:48:51 that are passionate about something,
0:48:54 even if it’s kind of Old World Britain and these shoots,
0:48:56 it’s intoxicating.
0:48:59 Just sharing it with them and seeing how into it they were,
0:49:02 the majesty, the detail, the clothes,
0:49:05 the technology, the history.
0:49:08 Say yes, and if you find something you like,
0:49:09 then love it and lean into it.
0:49:11 ‘Cause at some point, you’re gonna get the chance
0:49:13 to share it with people who have no interest in it,
0:49:15 but they’ll be interested in it
0:49:16 because they’re interested in you
0:49:18 and your passion will shine through.
0:49:20 (upbeat music)
0:49:22 This episode was produced by Jennifer Sanchez
0:49:23 and Caroline Shagren.
0:49:25 Jew Burroughs is our technical director.
0:49:26 Thank you for listening to the Prop G Pod
0:49:28 from the Box Media Podcast Network.
0:49:31 We will catch you on Saturday for No Mercy, No Malice,
0:49:33 as read by George Hahn.
0:49:35 And please follow our Prop G Markets Pod
0:49:37 wherever you get your pods for new episodes
0:49:39 coming Monday and Thursday.
0:49:42 (upbeat music)
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0:50:45 (upbeat music)
Michael Lewis, a New York Times bestselling author and the host of the podcast Against the Rules, joins Scott to discuss the state of sports betting, the challenges young men face, and the controversy surrounding his book, Going Infinite, which explores the rise and fall of Sam Bankman Fried.
Scott opens with his thoughts on the Omnicom-Interpublic merger.
Algebra of happiness: say yes.
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