Founders - #384 Ken Griffin: Founder of Citadel and Citadel Securities

Episode Date: April 1, 2025

Because of the podcast I get to meet a lot of super successful people. I'm always asking them "Who is the smartest person you know" and "Who do you think has the best business?". "Ken Griffin" is a very common answer. I've heard Ken described in two ways: "Winner" and "Killer".  For years I've come across interesting anecdotes about Ken. Like when he appears as a 19 year old kid in Ed Thorp's excellent autobiography A Man For All Markets. Or when John Arnold describe Ken's intense competitive drive following the blowup of Enron. And then consider the fact that I'm obsessed with people who run their business for decades (Ken founded Citadel 35 years ago and Citadel Securities 23 years ago) — and I knew I had to make an episode about his life and work. The only problem was there's no great biography of Ken. So to make this episode I transcribed this talk that Ken gave at Yale. And for additional context I read the book Ken recommends: Hardball: Are You Playing to Play or Playing to Win. ----Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save more. ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----Join my free email newsletter to get my top 10 highlights from every book  ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

There's a book that Ken Griffin recommends reading. It's called Hardball. And the subtitle of that book is, Are You Playing to Play? Are You Playing to Win? It is a book about extreme winners and some of the best operators in business. And there's a line in that book that sounds like it could have been written by any of the almost 400 historically great founders that you and I have studied on this podcast so far. It says, if you have not examined your costs in detail, it is very likely that

there exists lurking somewhere in your cost structure, a major opportunity to improve your profits, weaken your competitors and expand your influence. The first move is to drive down your costs faster than your competitors can and use that savings to upset their strategies. Two weeks ago, I told you about Todd Graves, who owns 90% of his business, over 90% of his business. That is a business that's worth at least $10 billion and is still growing at 30% a year. Todd Graves is obsessed about staying in the details

of his business, just like Ken Griffin is obsessed about staying in the details of his business. And Todd said that one of the most, some of the most successful or all of the most successful people he knows stays in the detail of their business. He mentioned learning from one of the most, some of the most successful or all of the most successful people he knows stays in the detail of their business. He mentioned learning from one of his friends who runs a multi-billion dollar shipping company and how that friend would even pay attention to how much his business was spending on bottled

water. When I read that section, I thought it'd be a lot easier to do that if that shipping company was running on ramp, something a lot of history's greatest founders have in common. They know their business from A to Z and their costs down to the penny. Ramp makes doing this effortless. Ramp gives you easy to use corporate cards for your entire team, automated expense reporting, and cost control. These corporate cards are fully programmable.

You can set limits so the spending of your team never gets out of hand. Most companies only find out about excessive spending after the fact, just like that shipping company with the rampant spending on water. With Ramp, you stop it before it happens. Matt Paulson, who listens to founders and is the founder of this company called Market Beat, recently switched to Ramp,

and this is what he said about it. Ramp is the best. The amount of money you will save from unwanted renewals and employees who think company credit card equals I can buy whatever I want, will far exceed the best credit card rewards program. Matt is talking about the importance of cost control. There is a line in Andrew Carnegie's autobiography

that says cost control became nearly an obsession. All of history's greatest founders were the same way. Ramp helps you make this an obsession. If Andrew Carnegie was alive today, he'd run his business on ramp. Make history's greatest entrepreneurs proud by going to ramp.com and you will see why many of the world's top founders

are running their business on ramp. Go to ramp.com to learn how they can help your business today, that is ramp.com. I had a lot of fun making this episode and I hope you enjoy it. As head trader at Enron when it filed for bankruptcy, I received many calls from firms that were recruiting. I was busy trying to close out the trading book and wanted to take some time to decide my future so I didn't take any meetings. But Citadel was by far

the most aggressive. Other companies set up a few interviews with Enron's senior people. Citadel interviewed everyone in the trading operation at all functions and all levels. Citadel's team called me twice, but I declined to meet. It was apparent to me that their intent was to reverse engineer their business and I wasn't going to help them. They knew that people looking for a job, particularly if they didn't have a fiduciary responsibility to a current employer, would be very free with info. Interview everyone and you get a 360-degree perspective of the industry, how the business makes money, its competitive edge, who the best employees are, etc. Citadel probably interviewed several hundred Enron employees.

Much more importantly, they built the framework for how to enter the energy business, which as Ken has said has been an enormous success. I did eventually talk with Citadel. On their third call to me, they asked if I would talk to Ken directly. I was at that point heading to Aspen for a quick industry event. I didn't know Ken personally but I had great respect for what he had built so I told his rep that he could call me when I got back to Houston the following week. She said great but then she called back a few minutes later with a question. If

Ken flew to Aspen to meet me in person the next day would I? Out of respect I said of course. The next day I had a great meeting with him and later that week he offered me a job as head gas trader. I wanted to fully run an operation and thought there was more upside if I could have my own fund so I declined. I ended up building my own firm starting with traders and hiring deep fundamentals expertise. Citadel started with research, as is their DNA, and built up a trading operation around it. Both models worked fabulously well. I came away from the experience with an even deeper respect for both Ken and Citadel and

remain friends with him to this day. I started with a niche, gas trading, built a niche fund and burnt out after 17 years. Ken started with a niche, Convert Arb, and built one of the most successful financial firms ever and has never tired. That was a tweet written by John Arnold. I came across it a few weeks ago and it further piqued my interest on doing an episode, making an episode about Ken Griffin. There's no biographies, there's no books written about him.

But I keep coming across these little clues that he's a very special person, that tweet being one of them. I want to pick up this book that I read many years ago for the first time, probably five or six years ago. It's by this guy named Ed Thorpe. The last, I've done a few episodes on him, but the one I would recommend listening to is episode 222. Ed Thorpe is a legit genius. He was the person that, he founded the very first quantitative hedge fund.

He built the world's first wearable computer with Claude Shannon. He was the one that came up with the strategy and the process to beat the dealer, the blackjack dealers in Vegas, and wrote a book about it that sold like millions of copies in the 1960s. He his autobiography reads like a thriller, and he constantly pops up in all these important events in financial history. Let me give you an example. He has dinner with Warren Buffett when Warren Buffett's 38 years old. At Dorp, I think it's 35 at the time. He leaves the dinner gets in the car tells his wife, I think that man's going to be the

richest person in America one day. There's also a very interesting thing towards the end of the book that I'm gonna read to you real quick, where a 19-year-old Ken Griffin comes to Ed Thorpe's house. So he had closed down, by this time, Ed had closed down his hedge fund called Princeton Newport Partners. And so he says, you know, if I would have kept going,

how big could have that idea have gotten, right? He's like, there's no really way to know. But there is an interesting anecdote. And I have a story for you. And he says, amazingly enough, a market neutral hedge fund operation was built on the Princeton Newport model, Citadel. It was started in 1990 in Chicago by former hedge fund manager Frank Meyer, when he discovered this young quantitative investment prodigy, Ken Griffin, who was then trading options and convertible bonds from his Harvard dorm room. I met with Frank and Ken, outlining the workings and profit centers of Princeton-Newport Partners,

as well as turning over cartons of documents, outlining in detail the terms and conditions of older outstanding warrants and convertible bonds. These were very valuable because they were no longer available. Citadel grew from a humble start in 1990. And he says, I became its first limited partner. So that adds to, you know, Ed Thorpe's financial lore. It's the first LP in Citadel. He also starts buying Buffett stock at like $600 a share.

And so through my normal reading research that I do for this podcast, I keep coming across all these like anecdotes and these stories of Ken Griffin, and I just couldn't figure out a way to make an episode on them. So I started, I was like, okay, if there's no book, I'm gonna listen to every single interview

or talk that he's given. Most of the talks and interviews that he gives, they're very topical. As you know, like I'm not interested in topical, I'm interested in timeless. And so I was able to find a talk that Ken Griffin gave at Yale about a year or two ago that I feel has timeless principles. He kind of lays out, you know, a very brief overview of his career. And so what I did is I

transcribed that interview and then I went through the transcription just like I go through the books. So underlining, notes, highlights, everything I do. And then I'm gonna jump into that like I go through the books. So underlining notes highlights everything that I do this day. And then I'm going to jump into that right now. But there's another reason that I wanted to cover him. Because of the podcast, I get to meet a lot of wildly successful people. And I always ask them the same questions like who's the smartest person you know, what's the best business you know. And if they're in finance, and

they're talking about people that are still operating, Ken Griffin's name comes up over and over again. And there's two ways that he's been described to me many, many times. And it's funny that these people don't know each other, but they describe him the same way they say winner and they say killer. And one thing that I think is true is if you just listen to the books that people recommend and you read them, you have a kind of a fundamental, a deeper fundamental understanding of how they think.

And so there is in this talk at Yale, he recommends a few books. And one of them is this book that I've heard that he makes people at Citadel, or strongly recommends people at Citadel read. It's called, it's really hard to find, it's out of print, it's called Hardball. Are you playing to play or playing to win? And so in addition to listening to every single interview I could find about Ken, reading everything I could find online about him. I also read this book. I may do a bonus episode in a few days on this. I'm not sure if I have enough material to do an episode.

If I do, obviously release it on this feed. But I do want to just give you an insight into his mindset, which he's going to talk about in this talk through Yale. I think you got the hint when you saw his reaction to the Enron bankruptcy that he was just him and Citadel were by far more relentless. Everybody knew there's valuable information over grads like who went the furthest. This is I'm very interested in these people that play at a different level. It looks like we're all playing the same game.

And essentially the book is talking about like, oh, from the outside, it may seem that we're all playing the same game, the same game. But there's certain companies and certain founders that take it to a completely different level. So I just want to read one paragraph for you from the book Hardball and then I promise I'm going to jump into the rest as all being Ken's words. But it says, this kind of winning through competitive advantage may sound like nothing more than good, serious and sensible business practice. But hardball companies are further distinguished by their attitude and behavior. They play with such a total commitment to the game, such a fierceness of execution and such a relentless drive

to maximize their strengths that they look very different from other companies that have admirable performance and sound business skills. I think of these few sentences when I when I read that tweet, that anecdote, that story from John Arnold. Hardball players play to win in every aspect of the game. It's like, oh yeah, you know, Ken, I'm a big fan. Call me next week. How about I fly to where you are the next day? That's a different level. They always seek decisive victory. Sounds like exactly in that story. They don't want to win two to one

They would prefer a nine to two route. Okay, so that is the book hardball I will leave a link down below if you I think there's a few copies left on Amazon But it is I bought a few for friends as well, but it is sometimes difficult to find Okay, I want to go right into Ken's own words and he he starts to talk, keep in mind, he's being interviewed at Yale, he's talking to a bunch of, you know, college students. And his big thing is like, you need to be seeking risk. Remember last week with Todd Graves, he talked about, you know, that guy owns 90% of a business is worth at least $10 billion. And he's growing at 30% a year. So you know, his net worth is skyrocketing. And his whole point was like, he believes that one, entrepreneurs need to have way higher risk tolerance, that his risk tolerance, and you heard it on the podcast, was sky high.

And this is the advice that Ken is giving to these students at Yale. I tell this to everybody, you should be risk seeking at this point in your life. So keep in mind, Ken started Citadel right out of college. This is a great moment to think about pursuing opportunities that have the maximal personal interest. You should go for it right here and right now because there will come a time where it's going to be harder to take risks. Right now you should absolutely be thinking about what the high risk opportunities that you could pursue are that you will have the greatest experience with. And so he talks about this bunch, you know, you're gonna take risks, you have no idea, there's no way you can possibly predict if you're gonna be successful or not. The important thing is that you're maximizing the speed at which you're learning and then you're following something that you're just completely obsessed with. In fact, I'll start with this. There's a bunch of other talks that I took notes on that just, you

know, in many cases I spent like hours and hours and I pull out like one or two lines. There is something that's interesting that he says later on, I'll just bring it to the front now, and he says this is gonna remind you, there's this idea that you and I have talked about over and over again that I think Jeff Bezos puts it into words better than anybody else that I've come across, and he says that you don't choose your passions your passions choose you and this is what Ken says in a different talk I've always been interested in the stock market for reasons I don't fully understand in third grade I wrote a paper that I

wanted to learn how the stock market works and I've been on that journey now for almost 40 years so he's okay you need to you need to be taking risks. What's the highest risk opportunity that you're actually that you'll have the greatest experience with that you'll learn the most about, right? And that you're just naturally interested in. He says, I started Citadel right out of college, I joined a firm in Chicago, they gave me capital to manage, we had a very simple understanding. If I did well, I'd raise money from outside

investors, I would start a formal firm. If things didn't go so well, I'd go back to graduate school. And I think it, I'm pretty sure I read somewhere or heard somewhere, hopefully I'm right about this, that they seeded them with something like a million dollars. So, you know, a very small commitment. And I think he had like 70% returns on that money. And so he says that was the deal. And then he talks about why he went to Chicago.

I went to Chicago because the two partners that ran the firm that backed me, he talked about the, one thing he's gonna talk about a lot is Ken is a believer in the power of mentorship. So he went to Chicago because he thought the two people that were backing him actually cared about what happened to him. And they took an interest in his career.

In fact, this is something that appears over and over again in the books. It's really, really important. It's really one of the miracles of, you know, founders and entrepreneurs. They may be competing with each other when they're alive, but when they get older, they're always willing. I can't think of another example where they're willing to help the next generation. They're like, oh that I know all the shit that you had to go through, right? I'm deeper down the path. I want to like reach back and help you as much as possible. In fact, I have a book on my desk. This is really important. Another hard to find book. It's called Anatomy of a Merger and it is a book on

Jay Pritzker. Now why was I interested in that? Because Sam Zell was one of the most fascinating entrepreneurs to me. I did his autobiography. I did an episode on his autobiography. Sam Zell listened to that episode, loved it, asked to meet me. Then I got to have a two-hour lunch with Sam Zell that changed my life.

That one conversation really affected and changed my behavior about how I think of things. But Sam talked about it in his book and at lunch that Jay was like 20 years older. Jay Pritzker was like 20 years older than Sam. And in his book, Sam Zell said that Jay was by far the greatest financial mind that he ever came across and that Jay was so helpful and acted like an older brother

and a mentor to him that changed the trajectory of Sam Zell's career. And you know, Sam was a legend. So we have Ken Griffin saying, Hey, you know, I was a 19 year old kid. I moved to Chicago and I did that because the two partners that backed me, they had an interest in me. And he says, one of them would remind you of your high school physics teacher. He was plain spokenly brilliant.

And I felt that he would care about my career. And he goes, I think that he would care about my career. And he goes, I think that's really important. Find people that are going to take a vested interest in how you do. So much of your career will come down to mentorship and apprenticeship and can continue. One of the great parts of American culture is the willingness for people, of people, intergenerationally to give to those who are younger. So we see this all the time. You and I see this all the time with older founders They love sharing their knowledge with younger founders

You know think about how much we've benefited from you know you and this usually happens when they're when they're you know Towards the end of their career or maybe even after their career towards the end of their life and they write these Autobiographies think of Sam Walton think of the how influential Sam Walton's autobiography was he wrote it when he was dying He knew he was dying. He knew he was dying. He had cancer, was riddling his body, he was in pain, and yet he took time out, limited time he had left on this earth to summarize all the lessons he learned from building one of the greatest companies the world's ever seen. We benefit so much from this.

This is so important. He says, then he talks about some other mentors before. They were mentors, were the traders and salespeople of Wall Street. So again, I just keep going back to that. I think that story at the very beginning of the blow up of Enron, which he's going to talk about too in this talk, it just gives you an insight. This guy was relentless about seeking information that would be beneficial to his career. So he was mentored by some traders and sales people on Wall Street.

He goes, you have no idea how many hours a day I spent on the phone, like a sponge learning about finance from those who had 15, 20, 25, 30 years of experience. He even mentions this guy goes, Terry O'Connor, Merrill Lynch, Boston. And he in talk, he doesn't have notes in front of him. I watched this many times. He spits out the guy's phone number. He still remembers the guy's phone number. He goes, I could go to Merrill Lynch's office after school

and I'd go there at the end of my school day and stay till midnight. They would let me use their Bloomberg, read the value lines and read all of their research. And so then after Ken is describing his own experience, he gives advice. Take advantage of all the people in whatever firm you join and in whatever community you're part of And so then after Ken is describing his own experience, he gives advice. Take advantage of all the people in whatever firm you join and in whatever community you're

part of to learn from those who simply have more years of experience. Make the most of that. So think about what this is. Founders podcast is exactly this. You know, we're up to what 400, 450 hours, almost 400 books. What are you and I doing every week? Right? We're taking advantage and we're learning from those who simply have many more years

of experience and we're making the most of that. So then he continues telling us about his early career. Oh, this was very fascinating and this is something I see all the time as well. So he says, an acquaintance of mine has started one of the most successful internet companies of all time said to Ken one day that great entrepreneurs have the right toolkit to solve a problem of that particular moment in time. And so Ken is going to talk about the early days of his career. And this is so he doesn't name who this person is the successful internet company founder. You know great entrepreneurs have the right toolkit to solve a problem of that particular time.

You've heard me reference this over and over again on the podcast that this is the right person with the right set of skills at the right time. So he says, for me, that toolkit was an understanding of software engineering, an understanding of mathematics, a background in economics, and a passion for finance. Remember going back to, hey, I was obsessed with this starting in the third grade. I don't even know why. And a belief that you could use quantitative analytics to have a competitive advantage in the financial markets.

This is always fascinating to me. Now an insight that no one else has acted on or no one else has mastered yet, which is exactly what he's talking about, right? Eventually will become completely commoditized. It will be obvious to other people. And so that's what he's going to talk about here. And believe it or not in the 1980s, that was still a reasonably novel thought. One of my earliest hires was a Russian rocket scientist.

And one of my friends in Wall Street called me up and said, you're not trying to put a man on the moon, you're trying to make money. And I'm like, no, no, I believe that this is the future, that those firms that can price derivatives analytically are going to have a real advantage. The guy that called me was a partner at one of the most successful investment banks

that no longer exists. And we at Cit a partner at one of the most successful investment banks that no longer exists. And we at Citadel today are one of the largest market makers in the world. So I had the right toolkit in the right moment in time. And I think my friend is really right. So the friend he's talking about is the one that's saying, Hey, great entrepreneurs have the right toolkit to solve a problem at that particular moment in time. It's thinking about this is such great advice, such great advice. Okay. And I want to go back actually, before I go to the great advice, such great advice. Okay.

And I want to go back actually, before I go to the great advice, there is something where this, this idea that I'm going to tell you what came to mind. This idea where he is trying to, he's applying essentially, if you really think about what he's doing, he's, he's investing in technology. He's applying technology in a way to an existing industry that no one was doing before that there's was doing before that. There's a line that that part when it was surprising enough when I got to that part of this talking of the transcript, I thought of Andrew Carnegie. If you go back and read Andrew Carnegie's autobiography, he was doing the same thing

he's doing in the 1800s. And he was doing it to the steel industry. He would constantly invest in a ton of money in the latest technology that would help him become more efficient, right, and produce higher quality steel at a lower cost. And these, he calls them like old heads, came under the line he says in his autobiography, these older guys in his existing industry did exactly what this guy who called Ken is like, you're not trying to land on the moon, what are you doing here? They would tell young Andrew Carnegie, this is a waste of money.

You shouldn't be doing this. And he knew that the investing in technology was the right one. It was the right move. It made him more efficient. The savings compounded. And then he even says in this autobiography, Carnegie says that in some years that knew if that, that the efficiency he gained from investing technology was the difference between profit and loss. And he was able to make a profit where his old head competitors told him not to do that were making a loss and they rent eventually go out of business.

I just think it's fascinating that human nature just again history doesn't repeat human nature does I love this now let's go to this great advice. It's this excellent. It's thinking about what tools that you have that at this moment unlock problems that just simply didn't exist before? What is your natural skill set that you can apply that maximal, remember take high risk, right? And you can apply that opportunities that you are uniquely suited to solve right now. And you need to act on it right now because what if he had that idea is like, Hey, I think I can get a competitive advantage in the financial markets.

You know, if I can use quantitative analytics and then he waits a decade and a half or a decade or five, maybe five years, maybe even two years that, that edge that he saw that, that novel thought he had, that edge that he thought he could pursue is competed away. So again, he says everything and he talks about this, everything we did in the early nineties is completely commoditized. That's just a profound fact. A huge competitive edge in 1990 is just trivial today. And so this is, again, when I get when I ask

people about Ken, another thing that comes up is what exactly what he's going to talk about here, that he is just a learning machine, and he's constantly seeking out opportunities. And you can see that he's learning, and he's constantly seeking out opportunities. And you can see that he's learning and he's expanding the ways he makes money. He understands that these edge, the edges he has, they may not last forever. He just talked about this. It's ridiculous that everything that he thought he was solving or he did solve. And all the difficulty went through in the eight late eighties and the nineties.

Now you could just literally get for free online. So he says, now the fortuitous part of the story is that over the last 30 years, we've radically improved our business and transformed what we do and how we do things. We continue to build our competitive advantage in the various business in which we choose to compete. That is the essence of running a business. What's the essence of running a business? How do you build your competitive moat?

And so by this time, when I'm going back to doing the transcript to get ready for this episode, I'd already read Hardball and I just wrote, that's exactly what the book Hardball is about. Are you playing to play? Are you playing to win? It's how do you build your competitive moat? We trade financial assets that involve a research process. We need to understand what moves the prices of assets more thoughtfully and more quickly than our competitors. And then trading is simply

how we monetize our research. That is how he thinks about what he does. We are just researchers. The glory is in the research. As exactly says, he says the glory is in the research. Trading is the monetization of that research. Now he just got done mentioning the fact that his first edge was competed away. And so the advice he's giving is like, you have to, this is just the importance of lifelong continuous learning. It's related to the fact that his first competitive edge, you know, was, was commoditized. For all that you've learned so far at Yale, the vast majority of what will matter in your career, you have yet to

learn. If you look at the people who have been extraordinarily, extraordinarily successful in finance, they are lifetime learners, they are always learning. And so he even talks about the fact that, you know, he was gifted in math at an early age, but eventually he builds a company where he's able to recruit. And there's some crazy numbers. I think it's like a hundred thousand people that applied to work for Ken last year. And so he knows his own skills as he goes from, as he continues to build his company, like he's going to be able to hire people that are better at each individual skill than he is very simple.

Remember the episode I did a few weeks ago, uh, with Jensen Wong. I can't, I can't stop thinking about stop thinking about the way that Jensen looks at his business. So Jensen's point was like, hey, we're going to have all these like super brilliant, smarter than us AI agents. They're going to go out and be able to actually do complete entire jobs for us. You know, people are scared of this. He's like, it's ridiculous to be scared of it because it's my life now. And so what he's talking about, he's like, I have 60 direct reports. Every single one of them is smarter

in their respective part of the business than I am. And yet I am able to manage and direct them and essentially direct their activities. He's like, you're gonna be doing exactly that, but instead of doing it for people, you'd be doing it through AI agents. So when he's talking about the fact like, yeah, you speak good at math,

and then I can hire people that are great at math. And he has a funny way to talk about the story. He says, it's funny. You speak of me as being mathematically literate. There's a conversation that I had inside Citadel that always makes me smile with one of my absolute top guys, we were going through a particular problem. And he looks at me and he goes, and he says this in front of a room full of people. Yeah.

So he looks at Kenny goes, Hey, if you were good at math, this would be much easier to explain. And so he thought that was obviously humorous. of Kennedy goes, hey, if you were good at math, this would be much easier to explain. And so he thought that was obviously humorous. He says, my mentors now are my colleagues that I work with, that I choose to surround myself with. What I see inside of our four walls is my sharpest young colleagues gravitate towards people who invest their time with them. In fact, this is another thing that he says, I'm gonna read to you.

He's asked in another interview that I found, he says, how much, this is gonna sound a lot like Steve Jobs, really all the great entrepreneurs understand that it's just talent over everything. He goes, how much time do you spend on recruitment? I am talking to candidates all the time. Nothing is more important than the talent that we're bringing into our four walls.

And so he goes back and continues to more advice. You need to find yourself in relationships where somebody takes an interest in you. Now an interest in you won't always be, he says, let's be clear. That doesn't necessarily mean it's like this big smiling festival, right? Some of the best people that you will work for, you will find to be just incredibly painful to work for. An interest in you does not necessarily mean like, wow, everything you do is great. Sometimes the best advice you get is here are four things that you need to do better. You want to find somebody who's going to push you. Some people push you in more and more kind way than others, but you

want to find people who are going to push you. So I would say way before I had ever had people, you know, because I had absolutely no network at all, you know, before I started the podcast, I would say, and I think that's true for most people, right? The vast majority are not surrounded. I always talk to some of my friends. It's like, you understand we're in a bubble inside of a bubble inside of a bubble. If you just look at like the vast majority of humanity, just they don't have access to these networks,

then maybe they can access them online, but they definitely can't access them in person. But biographies can do that. At the very beginning, like when I started reading biographies, where he says, hey, you wanna find people that push you. I feel that every time I read a biography, like every single person, in my opinion,

every single person I've studied on founders practice so far is smarter and more productive than I am. And they're constantly stretching what I believe is possible. They're, they're constantly pushing me and realizing like even that story thing about that, maybe you want, you want to win, right? Everybody wants to win. Like how bad do you actually want it? And, and Ken will tell you how about it.

Like actions express priority. Ken actions express party. How bad did Ken want the information that was inside of and Ron's trading department? Like to the point where he's like, Hey, I will come wherever you are and I will get on the plane right now. And he's going to talk about chartering a jet and all this crazy shit that he did to get this information. Then he winds up making like $30 billion, you know, off that information over the, the from then till now. So like, how bad do you want? So again, I do think like, yeah, you can

have people around you that push you. And I definitely now have a network that does that. And at friends that do that. But even before that, these biographies just like, dude, I could be doing so much more, you know, what you thought was possible. There's a great line like, it's mediocrity is always invisible until passion shows up and exposes it. mediocrity is always invisible until passion shows up and exposes it. Mediocrity is always invisible until passion shows up and exposes it. The way that Ken goes around running his life, his business is full of passion. He's showing you how far you can go. So more advice, if you're in an environment where you've been somewhere for six months

and you haven't learned much, do not make it six months in a day. The most valuable equity that you'll create in your lifetime is your career equity that you own. It's really about your education, your skills. It doesn't go up and down with the market. You own that equity and you wanna think about how to maximize your career equity because that toolkit that you develop over your career, that's your ultimate job security.

That's your ultimate ticket to success. Another piece of advice that Ken has here, really, I'm gonna read this Warren Buffett quote that came to mind first. I guess this is exactly what he's talking about. So Warren Buffett says, a rising tide floats all boats. Only when the tide goes out, do you discover who has been swimming naked.

Ken will reference multiple times the fact that Citadel almost went out of business completely during the great financial crisis from, you know, 07 to 08. He says when you're in a firm in difficult moments, you actually see in well managed firms, you see what real leadership looks like, what real leadership teams are actually made up. It's much like when that the rising tide lifts all boats, poorly run firms and great run firms. It's sometimes hard to distinguish between the two. really see the character of the firm. Again, this is why we say that time is the only filter that I trust. There's another great piece of advice that Warren Buffett gives. He's like, listen, I don't really believe in formulas, but I tell all the managers of our wholly owned businesses, it's like a three step formula. It's like make every decision as if you own 100% of your company, as if it's the only asset that your family owns

or will ever own, and then you can't sell it for 100 years. And if you run your decision-making process through that rubric, you're optimizing for long-term survival, right? Time is the only filter that I trust. So what's interesting is the number of people that I know that started their careers

during the 07, 08, 09, and they started them in finance, who have this just incredible perspective. So he is talking about the fact that adversity is an asset and that's something that also Ken has in common with a lot of history's greatest entrepreneurs. So he's like, okay, well, if you started your career then, right, you're, you're going through hell at the very beginning. And he says later on, you know, now we're 13 years later, 15 years later, whatever the time is, the people that had to go and had to survive that adversity, you

know, decade, decade and a half later, they are remarkably wise and well grounded and able to navigate moments of adversity as if it's a walk in the park. Because they've been through a difficult time. First thing that popped to my mind, when I got to that part, it's like, oh, this is like Rockefeller, Rockefeller praised the benefits of adversity all of his life. In fact, he said, what a school, the school of adversity and stress to train a boy in. He's talking about himself.

Another great line, D. Hawk, the founder of Visa, has this great maxim. He says, the wise make great use of adversity. The foolish whine about it. And so Ken's going to keep talking about that. And he says, I say at Citadel, we forge talent. That implies a concept of pressure. The world also forges talent. And those difficult moments give people almost extraordinary opportunities to make decisions

in the most difficult of times and to have a very fast rate of development and growth. And then he talks about the opposite. When times are good, what happens? It makes you soft. And so he's about the opposite when times are good, what happens? It makes you soft. And so he's talking about it on a country level. And again, so many, I think the benefit of watching the interview, then obviously transcribing and reading it at the same time I read Hardball, you see how the way he thinks is connected. There's ideas, you could see why he recommends that book, I guess is what I'm saying. So he's talking about, hey, you know, in the United States, we have a really

big problem. We've been after post World War Two, we United States really had no competitors that has shifted in the last 15 years. And he talks about this report that really bothered him when he was reading it, he says this report was published in Australia. There was a survey of roughly 45 of the most important emerging technologies from quantum computing to solar power cells to various areas in biotechnology. and the Chinese led in 30 of these areas. That is really frightening now in the United States. The United States is so entrenched in this unshakable belief that we cannot be challenged in technology, oblivious to the fact that not only are we being challenged, we're being beaten. And so if you read Hardball,

there's a great line that I just sent to a friend of mine who's dealing with this with a massive organization. And from what there's a line from Hardball says when an organization, Ken's talking about it could be a company, obviously in the example he just gave it could be a country. When an organization achieves advantage, it develops a tendency to continue operating with the same strategy that produced the advantage It is the leaders main role to keep alive the quest for Advantage and so then we get to the part where Ken talks about almost going out of business He says there's a little saying a little quip that I like to make history is written by the winners So the wonderful history of Citadel is how we are the most profitable hedge fund of all

time. The chapter of how we were of how we were on the verge of going out of business in oh eight is now a footnote in that book. But it is a very important note. It has not been an easy march to success. I think I have the most interesting position in life. I've probably lost and my team has probably lost more money than any other firm in existence. We just happen to have made more money than almost any other firm in existence and it's the net that everyone talks

about. There are years where our losses are hundreds of billions of dollars. I don't know if it's hundreds, but it's over a hundred. The number is incomprehensible. It's also why it's really important, like who's interviewing the person or who gets to ask the questions. There's so many times during this, it's like if I was the one talking to Ken, I'd be like, wait, pause, pause, pause. Can you explain that? How did you lose a hundred billion dollars in a year? And

No disrespect to the guy, you know, asking the questions There's multiple times where I'm like, no, no, like I just think I could do a better job I guess that's what I'm saying. No disrespect to him, but I Want to know more about what? Like how the hell do you lose a hundred billion dollars in a year says the numbers are incomprehensible But this is the main point I didn't mean to distract our conversation. All of my losses are my tuition and I have the most expensive education in American history. If every time you lost money, you got depressed and angry

and you couldn't deal with it, you'd have a very short career. So you need to be able to take a step back and go, it's a tuition bill I paid. This doesn't mean that you don't think very long and hard about what went wrong. But you have to keep it in perspective. In 2008, that tuition pill bill almost became getting expelled from school

because we lost half our equity in 16 weeks in a firm that had never had a double digit drawdown in 20 years. Now this is another example. He says he always going to like the scene of the crime, I think is how he puts this. I actually love the fact that he did this. The principal reason that we survived is that when long-term capital management failed in 1998.

So 1998 Ken would be 30 when he's doing what he's about to describe here. In 2008 when he almost goes out of business, he's 40. Okay. So he's like, this is the reason that we will survive 10 years later. Because back in 1998, I went and met with a number of the senior people that worked at long term capital management. And why did I do this? What was my agenda? I wanted to understand how does a firm that loses 90% of its equity in a levered financial

service industry still stay in business, they lost 90% of its equity in a levered financial service industry still stay in business. They lost 90% of their equity before they lost control of their business and much of what we learned from how they survived was actually fundamentally and existentially important to our ability to withstand the turmoil of 2008. So there's a very important lesson here, which is not only do you want to learn from your mistakes, you really want to learn from the other guys

and the other people's mistakes too, because they're much cheaper tuition bills. So a few episodes ago, I think it's episode 380, on Buffett and Munger, it's 400 pages of Buffett and Munger in their own words, they said this exact same thing. In fact, they quoted Patton. I think Buffett's someone that said this. He says, the best thing to do is learn from the other guy's mistakes. George Patton used to say, it's an honor to die for your country.

Make sure the other guy gets the honor. And so this is another great idea that Ken has here. I spent over my lifetime a lot of time at the proverbial scene of accidents where other firms have gone awry and so now he's going to talk about what we talked about the very beginning when unrun filed for bankruptcy and run was the largest energy trading firm in the united states and they blew apart spectacularly in 2001 they day so that means around this time that ken would have been around 33 years old when he's doing this. So that story we told at the beginning.

The day they filed for bankruptcy, I chartered a Gulfstream jet and put 16 people on it straight to Houston. And all we did was interview people at Enron for several days. The day, not the day after, not a week, let's wait a month. He says the day I chartered a jet, got and went down there. Again, hardball. He's playing, it's very obvious that Ken plays, he's wait a month. He says the day I chartered a jet got and went down there again hardball He's playing it's very obvious that Ken plays that he's not playing to play. He's playing to win and he wants a landslide All we did was interview people at Enron for several days what worked what didn't work how they made money how they're in the Business what their competitive advantage was now the great part of this story is I hired the entire leadership

Team of the quantitative research effort at Enron all the people who actually knew how the place worked. And we've made $30 billion in commodities since then. So he calls this being on the ground. That's about being on the ground. That that's about understanding where the business actually created value. That's about extracting the right people from that moment in time and surrounding them with the right leadership team, the right investment professionals, the right software engineers, and building what is today one of the most important commodity businesses in the world. So going back to our 2008

experience, the first point is when, this is hilarious, is when you are walking through hell, just put one foot in front of the other just keep going I was praying that we would find our way out of the fire and he goes why do I use this fire analogy I called Lloyd Blankfein who ran Goldman Sachs at the time and I said Lloyd when is this going to end and he goes a forest fire ends when there's nothing left to burn he said that did not make me feel very a lot better. But we never gave up during that period of time. And so when you're going through hell, he has a piece of vice for you.

Make sure you push your decision making to those who are mentally in the game in the right way. Because some people just if it's their first adversity, they're like the proverbial deer in the headlights. So I was thinking about this where adversity is an asset, he's gonna talk about the importance of reps later on. He's seen so much in his 40-year career in finance. So when he's talking about this like, you know, people are going through hell, there's some people who are just like completely

freaked out and some people are cool and calm and collected. You have to push the decision-making to those who are mentally in the game in the right way. This is where who you surround yourself really matters because when you surround yourself with the right team, you will buttress each other on your darkest days. And he talks about some people just are gonna struggle with stress and adversity. Other people are going to prosper. In fact, one of my favorite lines I've ever heard

of any founder ever, and I think it's the right mentality, is Herb Kelleher was the founder of Southwest Airlines. Didn't start Southwest. He was like in his mid thirties, I think he was like 35. And he winds up for the next 40 years, just completely kicking all his competitors asses. And he was asked by an interviewer one time, you undergo a lot of stress all the time. How do you handle it? And Herb's answer was perfect.

I don't handle it. I like it. Entrepreneurs are seeking stress. You're seeking challenge. You're seeking problems that you can solve that no one else can solve. And if you can't deal with stress and you just can't do this job, what Ken's about to say here, I think he has a common with a lot of history's greatest entrepreneurs is their, their main sources of stress are not external.

It's the pressure and expectations they put on themselves. It comes from within. He says, my biggest stressor, that's me. I'm always trying to figure out how I can be better, how I can do better. I might be demanding of the people that work for me, but I'm no less demanding of myself. And so one of my favorite stories to ever tell, as I'm watching this interview with Kobe Bryant, and Ahmad Rashad asked him, like like how do you deal with fans expectations and before Ahmad could even finish his sentence Kobe makes the stanky face he's

just like oh just like complete disgust comes a look at disgust comes over takes over his entire face he immediately interrupts Ahmad Rashad and he says their expectations will never be higher than my own. Never, never, never. And this is exactly what Ken says. I think, again, I think a lot of history's greatest. It's like, if other people's expectations of you are higher than your own, you're probably, again, not in the right job.

And so one reason that entrepreneurship is full of stress, I love this idea that Mark Andreessen said one time that you only ever feel two emotions you only ever feel two emotions, euphoria and terror and nothing in between. And part of the reason that there's a lot of terror and uncertainty and, you know, it's stress and discomfort. And I loved Herb Kelleher's perspective that you should just think of that as good thing.

It was like, I don't manage it. I like it. I don't handle it. I like it is you're constantly making decisions under uncertainty. Like that is the job. And so he's going to talk a lot about that. Um, you have to get used to, and you have to understand that you're constantly making decisions under uncertainty. Like that is the job. And so he's going to talk a lot about that. Um, you have to get used to, and you have to understand that you're part of the job is making decisions under uncertainty.

He says, good leadership is about acknowledging that I'm going to make decisions under uncertainty and people who are very good at business are very good at understanding the processes of what matters. Do I make decisions with a well-framed and thought out process? People get in trouble when they start to become reductionists. Like if I do X, Y is going to happen. Very little in business is actually that straightforward. So he gives an example.

Well, the fact that you're working in this constantly evolving and changing environment. You can't survive over, Citadel was founded, what was that, 40 years ago? Citadel Securities, I think 25 years ago. So, you know, he's seen a lot in that time. And his example is like, okay, well how many retailers had a mobile strategy in 2004 before the iPhone? He said no one. The world around you is going to be constantly changing and by, and you need to leave yourself in a position to be more psychologically flexible and to be clear financially flexible to deal with evolving change. If you do that you have a much higher chance of being a survivor so you have to leave yourself to be psychologically flexible and financially flexible to deal with evolving change there's a great line and as far as like the changing technology.

There's a great line. And as far as like the changing technology, there's this interview that Steve Jobs does in this book called In the Company of Giants. I think it's episode 208, where these Stanford MBA students interview like 16 or 17, I think 16 technology company leaders at the time. So like Michael Dell's in there, Steve Jobs, Bill Gates, all these other people as well.

And Steve's point was like, I don't, they're like, I don't, he's like, I don't know. Remember he's saying this in 97. He goes, I don't, they're like, I don't, he's like, I don't know. I remember saying this in 97. He goes, I don't know what the next big thing is. I just know there will be a next big thing. And so he is, he was psychologically and financially flexible to deal with that. But the greatest example of this that came to mind when, when I read, uh, what Ken was saying here comes from Henry Singleton, you know, Henry Singleton, Charlie Munger

said Henry Singleton was the smartest person he ever met. Buffett says that it's a crime that more business schools don't study him, that he put up one of the greatest records in American business history. One of Singleton's main ideas was like, hey, I'm just gonna, I'm gonna maintain Flex Building, I'm gonna steer the boat a little bit every single day. And so he says, once criticized

for not having a business plan, Henry replied that he knew a lot of people running companies that had very definitive plans that they followed assiduously. But we're so this is direct quote from Henry now, but we're subject to a great number of outside influences on our business. And most of them cannot be predicted. So my plan is to stay flexible. My only plan is to keep coming to work every day.

I like to steer the boat each day rather than plan way ahead into the future. So back to Ken. You have a much higher chance of being a survivor if you're financially and psychologically flexible. And then he gives us an example that should terrify you. You do not want to wind up like these people. I keep going back to this main point that in my 50s and even my 40s, I would have friends or contemporaries who you saw got off the learning treadmill and life just passed them by. And it doesn't pass them by in 20 years, it passes them by in five or 10. They

stopped learning, they lost their edge. It's really important if you're not finding yourself learning and growing as a leader and as a domain expert in your field that you pursue, you've got to move on. The other thing I would say is that if the field that you chose to pursue ultimately inspires no passion, you need to move on also, because if you're not passionate about the field you're engaged in, you won't have the grit or perseverance to compete with those who are. And does that not repeat over and over again in these biographies that you and

I go over? You could say passion. I definitely think that's a word. Another way to think about that too, which I think is very similar is, um, Munger has this, Charlie Munger has this quote that he says, another thing that I've found is that intense interest in any subject is indispensable if you're going to excel in it.

So think about that. It's like, you know, if you don't have this in the field that you're engaged in, you're just, you're not gonna have the grit or perseverance to compete with those who are. Think about Todd Grace, go back to, you know, built a $10 billion company. And one of the greatest things about that episode

that I did a week or two ago was the fact that he's asked. Like, you know, he's in his case, he's competing with a lot in his industry, he's competing with a lot of such corporate owned companies. There's no founder led companies that he's competing with. And so that's why he's just trouncing them all. One of the reasons he's trouncing them. And he says, I don't fear the big corporate guys.

I'm not worried that McDonald's is gonna come in and destroy me. What I'm worried about is the young guy that has the same hunger that I had that is wants to compete head to head with me. But then he makes this this warning, we're like, that's fine. But understand that I love compete. He goes, and I'm on this day and night. Are you? That's an interesting question to ask yourself. And again, I have tried to maneuver my myself into position where I don't think there's anybody in the planet that is more passionate, more interested in working harder on what I am on this exact thing.

I don't care about anything else, but I will collect more information and I will keep doing this on history's greatest entrepreneurs than anybody else in the world. And I'm glad if somebody wants to jump in, but like I'm on this day and night. I told you in the Todd Graves episode, I was laughing to myself when I was preparing for the episode and I looked at the clock, it was Saturday night at nine Oh five PM. I didn't want to do anything else. I didn't want to go out. I want to work on this podcast and the people that I respect and admire the most and people try to learn from is like, they're that they're like, I'm on this that whatever I am interested in, I am more interested in it than almost

anybody else in the world. And certainly more than anybody else that I know of. I think that's a great line. Again, let's go back to that. Like I'm on this day and night. Are you go back to that idea? If you're not really, if you don't have this intense interest in what you're working on, right? You're not going to have the grit or perseverance to compete with those who are think about the very beginning, that story he told. And I'm pretty like this guy's was wildly successful, but he's like, listen, I started with a niche fund and I burnt out after 17 years Ken started with a niche but one of the most successful financial firms ever and he's never tired. He's still on it All right. So let's go back to this. So Ken says this is very fascinating to success is elusive

However, you climb success is probably twice as far. That was told to me by one of our friends who's one of the most successful people in the history of finance. When he's asked what is success, his answer is, it's twice what I've accomplished. That is a pretty daunting concept. And he noticed another thing

about the most successful people that he knows, and it's definitely true for him. It's really important that you hit the ground running and you run really hard early in life. You know, there's great stories where Ken had convinced, uh, Harvard to install like a satellite dish. And I think it was the first person ever on his dorm. So he can get real-time information.

So he could trade all these options and all these financial instruments that he was trading, you know, he starts Citadel at 19, he's going to Ed Dorp's house and pulling out boxes and boxes of data from Prince and Newport Partners. And his whole point is just like, all the stuff that you're doing, yeah, life might be long, but it compounds. The skill set and the knowledge you have, like, don't like, oh, I have time, like, no, just work as fast as possible. There's no doubt that in your

20s and 30s, your rate of learning is astronomically high. There's a much stronger focus. He's talking about the issue of something he brings up over and over again, then I'm kind of skipping over, but I'll just kind of fill in for you. He's very concerned about American competitiveness, and that we're not working as hard as we the young people not working as hard. He young people are not working as hard.

He says there's a much stronger focus on gratification in the here and now and great anything, great companies, great anything. It takes time. Now, perfect example, Citadel was founded 35 years ago. Citadel Securities was founded 23 years ago. His best and most profitable years have come in the last like three to four. So 25 years into his fund is the most successful years. Same thing with, we see this over and over again, this is something that Peter Thiel realized that

the problem a lot of technology company entrepreneurs is they optimize for growth at the expense of durability. But if you actually look at when these companies make the most money, it's like 10, 20, 30 years into the future. So that takeaway was like, you don't want to optimize for growth at the expense of durability because you want to be around two, three, four decades from now to reap all those rewards that are so much greater than the ones you'll

get early in your career. And so it's like, you can't just be like, oh, I have to be really, really rich in like a year or two, because highly likely what you think is really, really rich, right? Will seem like a drop in the bucket. If your company is successful, and you're still running it three or four decades from now. In fact, a friend of mine was showing me revenue numbers. He was texting me this last night in 2017. I think his company did 8 million in revenue. And this year will do close to 200 million. And one of my texts back to him is something that I've noticed.

It's very obvious if you read all these biographies, like things grow in mysterious ways. Your job is to get into a great business and stay there. That's exactly what Ken did. So I'm all over the map. Let me go back to this on hitting the ground, running and running hard. Okay. So great companies, great anything, take time.

It's not clear to me how this is going to play out because what I see is that people that had really intense careers early on just tend to go so much farther over the ensuing 20 or 30 years. This idea of late bloomers in careers, yeah it happens but I think it's pretty infrequent. I think it's important to hit the ground running and to run pretty hard. So there's a bunch of founders that I've profiled that got their break or their, their big break later in life. So Estee Lauder, Sam Walton, Ray Kroc, but I think Ken is dead right about this. If you look at what they were doing when they're in their twenties, they weren't

just like sitting around waiting for inspiration, they were honing their skills. They just were waiting for the right opportunity. So Estee Lauder, you know, she started her company as a 40 year old stay-at-home mom. But for 25 years before that she was obsessed with making these potions and essentially she was running her business with before running her business. She was making these the skincare, these beauty routines and giving it away for free and bothering all the people around her. Her sister, her mom, everywhere she ran into. She was doing the job before she had the job.

Same thing with Sam Walton, same thing with Ray Kroc. They just needed, they were hitting the ground, they were running, they just didn't unlock their greatest opportunity for a decade or two. If the work isn't really satisfying, go find somewhere else to run. That is a great line. Go find somewhere else to run. Because if you're not running and it's not satisfying, where do you think you're going to be in 20 years? Where are you going to be? You're going to be miserable and unhappy is where you're going to be. So again, this is another the Todd Graves episode on raising canes I did, you know, very well received. A lot of people are listening to it was interesting. Like these guys get some random comments online, like, I can't believe

this guy dedicated his life mission to, you know, making the best chicken fingers. And as if that was a bad thing. And my response is like, most people never even find a mission in life. What are you talking about? I'm just glad he had, I don't care what other people's mission is. I'm just glad he has one. The vast majority of people that have ever lived and died never even had a mission. And the pursuit of that mission is going to be difficult. It's going to cause stress. But I

think it is fundamental. Like the humans with missions, even if they have to go through a lot of stress and adversity, will be much more satisfied when they're looking back on their life. In fact, there's a great line. I found this biography. It's really hard to find. It's on Bugatti and the founder of Bugatti, his daughter writes the book. I think it's published in 1960. I want to pull this line up because she's quoting somebody else, but I, it's on Bugatti. And the founder of Bugatti, his daughter, writes the book. I think it's published in 1960. I want to pull this line up because she's quoting somebody else, but I think it's excellent. It's really talking about the fact that she's trying to find work that's satisfying,

that you can do for a long time. And this is a description of Bugatti's passed away at the time that his daughter's writing this book. And she finds this quote, and it sounds to her like what her father was. Says, a human life by its very nature has to be devoted to something or other, to a glorious or humble enterprise, an illustrious or obscure destiny. This is the strange but inexorable condition of things. So I think it's exactly what he's saying.

Because listen, if you're not running and you're not satisfying, where do you think you're going to be in 20 years? Where are you going to be? You're going to be. Because listen, if you're not running and you're not satisfying, where do you think you're going to be in 20 years? Where are you going to be? You're going to be miserable and unhappy is where you're going to be. I read the biography of George Lucas, which is remarkable. It's by Brian J. Jones. It's called George Lucas, A Life.

What's remarkable about that is how much struggle, everybody knows, oh yeah, this guy sold his company for $5 billion. He went to Star Wars and all that stuff. You didn't see that he was obsessed with building a life that he was in charge of, that was dedicated to a mission and all the struggle, the debt that he had to go into. He was in credit card debt, he was borrowing money from friends, and even when he was doing this,

he was talking about the contrast between the path that he's pursuing in life and how most people would just, they wouldn't even take the risk, they'll just sit there in jobs they fucking hate. And this is what George Lucas said in 1971, people would give anything to quit their jobs. All they have to do is do it. They're people in cages with open doors.

Let's go back to what Ken is saying here. If your work is actually engaging and exciting, you're gonna look back on the first 10 years of that journey and say, you know what, I worked really hard but we did some really amazing things and I'm really proud of it. I think doing work that you're proud of is really really important to the satisfaction that we're gonna draw out of life. Now we're going back into this idea that great takes time, things grow in you know mysterious ways. Citadel founded 35 years ago, Citadel

Securities founded 23 years ago and yet you know there are 23 founded 35 years ago, Citadel Securities founded 23 years ago, and yet, you know, 23 and 35 years into his business, we have a hundred thousand applicants for positions this year. We've never had so many people looking to work at our firm. So at this point in the talk he starts taking questions from audience members. One of these questions was, okay, you know, you have to, there's these unknown, unknowable and highly uncertain future that we all have to navigate. Many of the decisions we're making, we, they're decisions based on judgment rather than facts.

Like at what point in your career did you feel you were able to develop the ability to comfortably make those judgments? And Ken has a great line here. He goes, it was the quantity of decisions made. Steve Jobs said something very similar when everybody talked about how great his taste was. And he said taste was a byproduct of the number of decisions he made. Again, he gave this interview with Michael Moritz. It's on the Steve Jobs archive website, which if you haven't checked out, it's run by Steve's

widow. It's excellent. He says, this Steve says things get more refined as you make mistakes. I've just had a chance to make a lot of mistakes. Your aesthetics get better as you make mistakes. So Ken says it's the quantity of decisions made and to be clear, the more decisions of a similar nature you can make, the better at those decisions you become. So when we think about business activities far away from our core, I get much more anxious. Decisions within our core, I think we make pretty easily and pretty fluidly. It is repetition of the type of decision.

Reps matter. If you go through my notes, you'll see I'm constantly in the notes and the highlights that I accumulate through the research for the podcast. I see that over and over again. The shorthand I have is reps, for the podcast. I see that over and over again. I just, the shorthand I have is reps, reps, reps. You see this over and over again. Quantity reps matter.

It's the repetition of the type of decision. So then he's asked how he decides which new businesses to pursue. He says total addressable market matters. Why does it matter? Because the odds that you get everything right to launch a successful product, those odds are not high. So when it all comes together, you want there to be something at the end of the rainbow. Think about the total addressable market of the product or business that you're going to pursue. The markets that we're in are deep liquid markets. That means that when we do our research right, we can monetize it because we can get

the liquidity to express that view. We want to be in deep liquid markets. And then in the middle of this, answer this question, I think he gives one of the most important pieces of advice during this entire talk, or really more important, most important pieces of advice that, uh, that anybody can give is that entrepreneurship is sales and you better damn well get comfortable selling. Says you're always selling. When the guy that backed me out of college retired from Chicago, he said I could have

whatever I wanted from his office. I took a plaque that probably cost $9.99 and that plaque said, if we're gonna eat, someone's got to sell. That is a great line. If we're gonna eat, somebody's got to sell. That is the story of being an entrepreneur. And that is the story of being a CEO.

If we're all going to eat, somebody's got to sell. Every CEO is a salesperson. They've got to sell a venture capital firm. They've got to sell customer. They have to sell an employee. You were always selling. And if you don't like to sell, here's my advice. Get over it.

I had no interest in selling when I was 20 years old. This is hilarious. So he's 20 years old. He's trying to raise money for his fund, right? He says, I was in a conference room in 1994 in Switzerland trying to raise money. Let me tell you about this bad trip. I show up for lunch and the guy I meet with goes, you're not John Griffin. And I said, no, I'm Ken Griffin.

And he goes, I thought you were John Griffin. John Griffin was at Blue Ridge at the time. He goes, I thought you were John Griffin. I need to go. Well, great. I just flew all the way to Switzerland to have my lunch walk out on me. Then I get to another meeting later that day, and we were doing convertible bond arbitrage.

And in 1994, that was a tough space to be in. And I'm in this beautiful office in Switzerland, and this guy is just smoking his cigar. Puff, puff, puff. So Ken does his pitch. At the end, the guy goes, so sad. Such a bright young man picked the wrong career. My point is, you've got to be able to play through these moments. And then the last comment he has, this is where he's recommending all these books. He's talking about the importance of playing hardball, about playing to win. And he's talking about really having the ability, like going through this experience in life.

And this is really what Founders Podcast is doing. This is like, you want to learn not just from your competition, not just from inside your business, but you can grab all these ideas from businesses and industries that are far afield of where you are. And he gives a great example of this. So first, he's talking about all these books that he likes and he goes, another book that's out of print is Hardball. It's really fun to read. Hardball is just great. In business, you don't play to win. You play to win by a landslide. If you don't win by a landslide, then your competitors come back. So, come back and

beat you. Again, when I think of this, this is the way Ken thinks, but Jeff Bezos has a line that's almost exactly like this. Jeff says, when it comes to competition, being one of the best is not good enough. That is how I would describe it's almost like a one sentence summary of hardball. Being one of the best is not good enough. You want to be the best. So it says when it comes to competition, being one of the best is not good enough. Do you really want to plan for a future in which you might have to fight with somebody who is just as good as you are?

I wouldn't. That's Bezos. Think about how Bezos built Amazon. Right? He played hardball just like Ken Griffin. Ken gives another example of somebody playing hardball. He talks about Michael Dell, says Michael Dell of Dell Computer. He manufactured computers in America and won. Think about how well he ran the

business to do that. The next episode is actually going to be on Michael Dell. Michael Dell sent me the greatest DM I've ever gotten in my life. He DMed me and he says, your podcasts are A++ and a bunch of trophy emojis. It's just incredible, I couldn't believe it. But I've read two books on Michael Dell and I'm gonna do an episode,

the next episode's gonna be on a second autobiography, which is fantastic. If you wanna start reading that now, I highly recommend. And he reads the audiobook too, which I've listened to like three times, excellent. So he says, think about how hard, or how well he ran the business to do that. He says, you're going to do this for the rest of your life.

So you want to study successful businesses, even if they're far a field of what you do. And so he says, I have a, I have a story that you'll love. You'll love this. We built a risk wall in Chicago at the headquarters of Citadel. Okay. Before we built this risk wall, it was written that we had a B quality risk management.

So everything you've heard about Ken so far, he's not going to be accepted. He's not going to find getting a B on something acceptable. Okay. So decide to build a risk wall. What is a risk wall? It's this giant screen in their headquarters. It's 30 feet long, 10 feet high, and they rendered all the risk information in one place

in this giant visual, and then put it where everybody has to see it, right? And so he says, we went from getting a B to being an industry leader. He says, packaging matters. Where did the idea for the risk wall come from? It came because he went to Saudi Aramco's headquarters in Saudi Arabia. He says this is where they oversee their production from their oil fields.

They have this giant wall on all the important data of their businesses, what he's telling us here. They oversee their production from their oil fields, the output from their power plants, the ships on the open sea. And looking at that visualization and seeing how powerful that was, and I said, you know what? What if I render all of our risk numbers that same way? You always need to think like an entrepreneur. You always need to think, how do you create advantages and how do you learn not just from your competitors,

but from businesses far afield from where you are. And when you do this, a lot of interesting and fun things happen that you can learn from and incorporate. And that is where I'll leave it. I will leave a link down below for the, if you want to watch the full talk, I will also leave a link down below in case you want to grab that book that he recommends called Hardball. If you haven't yet joined my personal email list, make sure you do that. That link will be down below. And it's also available at davidcenter.com. I email the top 10 highlights from every single book that I read. That is 384 down, 1,000 to go, and I'll talk to you again soon.

Real quick before you go, I need to tell you the update to Founder's Notes. There is now a monthly option, and I brought back the lifetime option by popular request. If you subscribe to Founder's Notes, you'll get access to all of my notes and highlights. That's over 20,000 notes and highlights on history's greatest founders. You can search through all of them by keyword or you can have the AI assistant that I built for Founders Notes, which is called Sage, read everything and summarize it for you.

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