Odd Lots - Michael Lewis on Why the World Is Still Reading “Liar’s Poker”

Episode Date: February 10, 2022

The book “Liar's Poker” came out in 1989. Its depiction of Wall Street culture — obnoxious, crude, drunk on risk — may seem very different to today's big bank trading floors. Nonetheless, the book is still a popular read. In some places, interns are even assigned to read it. So why the enduring appeal? And what are the lessons from the book, over 30 years since its release? On this episode, we speak with its author Michael Lewis, who recently recorded an audio version of the book, while also doing a short companion podcast. He reflects on his latest rereading of it, and what it means today.See omnystudio.com/listener for privacy information.

Thanks for listening to Odd Lots. Follow the show on Amazon Music for more future episodes or just ask Alexa, play the podcast, Odd Lots on Amazon Music. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. So Tracy, one topic that we actually don't talk about that much that we have a few times is like Wall Street itself. Like we talk about markets, all different kinds, talk a lot about econs and like. theoretical finance, like actual Wall Street, banking, et cetera, we probably could talk about it more. I feel like we do quite a few market structure episodes, but you're right. We don't get so much into, I guess the experience of actually working in those markets.

No, we don't. And of course, it's an interesting time. I mean, it's always an interesting time, but so many of the banks are doing extraordinarily well. And I feel like for both of us, our career post-grade financial crisis, we like, I think the standard thing is like each year, it's like, oh, bonuses are down at this bank, or trading is down or less. And it feels like that at least right now for the moment, it's a very, a lot of up arrows on Wall Street. But I do feel like there's a weird dichotomy at the moment in the sense that the banking and trading results have been excellent, and it's

Definitely boom times for Wall Street. But on the other hand, a lot of people are expressing unhappiness about the actual job at the moment, right? You have a lot of younger bankers, especially, who just don't seem that into Wall Street at the moment. No. You know, they all want to go work on crypto. They're, you know, they're the probably everyone else is traveling and working from Tulum or something like that. and their bosses are telling them to come into the office and they're not having as much fun. And so, yes, there was a great, our colleague, Max Abelson wrote a great piece recently.

So it's like, everyone's making a lot of money on Wall Street, but no one's having a lot of fun. Yeah, exactly. So today we are going to get into the actual experience of working on Wall Street and how it's changed and why fewer people seem to be enjoying it and why everyone wants to go into crypto, I guess. Yeah. So we have an amazing, the perfect, guest for it. We are going to be speaking with the author Michael Lewis. Of course, he is the author of numerous books, but of course one of his most famous Liars Poker about Wall Street came out in 1989.

The most recent book is The Premonition. He's also has his own podcast against the rules. And he's also, while we're talking about Liar's Poker, done a new audiobook and come out with a new sort of five-episode mini-series podcast sort of that goes along with it. other people's money. So really just a real treat to have him on. Let's get right to it. Michael, thank you so much for coming on, the oddlots. Hey guys. Thanks. Thanks for having me. So why now to revisit Liar's Poker? So two things happened at once. One was the audio rights of the book reverted to me.

They reverted to me at a time when I've been, because of the podcast, I've been talking to my podcast company, Pushkin Industries, about how we would do audio books. informed by what we've learned about podcasts. Like the audiobooks typically are just, you just read them and nothing else is going on. And they really are starting to produce audiobooks. And we were looking for an excuse to do a fun, a more fun audiobook.

And this thing never got done. I mean, never, even back when Lars Pover was published, it was really not a market. There was like, they'd send out these cassettes, you know,

and it was an abridged, very abridged version. So the fact that it hadn't been done that so many more people are kind of, kind of listening than reading. It just seemed like, and the thing still sells. Like, I don't know how many 10, 50,000 copies a year. It's still, so it still was a market for it. But the other thing that happened was my eldest child is a junior in college. And she has now three times said my friend just came back from an internship on Wall Street. And they were made to read Liars Poker to understand

which makes no sense. But the fact that this thing is being now handed out as sort of like a work manual. It interested me. And I just thought, plus, now, the asterisk to all this was, I never read the book again. I mean, I wrote it in, I published it in 1989. I guess I read little bits and pieces when I was on book tour back then. But apart from that, I've never picked it up. And so it's just like I was curious what was in it. And when I started reading it, I had all these reactions. And the reactions led to the little podcast series that's alongside of it. They were just kind of things I wanted to do. Like, go talk to the people who are characters in the book to see what they, you know,

when they look back on their lives, what they saw. So all that's why. There's no, there's like no real reason. There's nothing that just happened on Wall Street that's triggering my interest in my own old book. So I got to say, so I love audiobooks. I'm really looking forward to this. And I really only started listening to them in the past year. So I basically doubled my reading, which is awesome.

Secondly, I mean, you mentioned the idea of Liar's Poker being like the go-to book for people who are interested in finance and economics. And it was certainly one of the first books that I read when I first went into financial journalism. I remember that many, many years ago. But as you said or suggested, Wall Street has changed quite a bit since the 1980s. Why do you think Liars Poker seems to have this enduring legacy or why are people still so interested in it and and still reading it as the first thing, you know, on their reading list when they start thinking about Wall Street. It's really a question because it's bewildering to me.

I thought, you know, when I wrote it, I thought it was going to be dated at any moment. And it was written as kind of like a message in the bottle to people 100 years from now who would never believe what happened on Wall Street in the 1980s. It was like this discreet period of insanity that was coming to an end. So I think that there's two answers to the question. And it's slightly contradictory. The first answer is, when you read the book, as I just did, and it was reminded of all this stuff, I was struck by just how much of what Wall Street became was seated back then.

Like things that were just starting to happen back then were telling you where this place was going. I had no idea, but, you know, in retrospect. So the intellectualization of finance. that all of a sudden, like, we had a Ph.D. in physics on the trading floor, and everybody thought, how bizarre is that? Then there were a few PhDs, and then the PhDs were actually in charge of most of the important trading decisions. I was just talking to someone who graduated not that long ago from MIT in the physics department. And he said, without thinking it was even interesting. He said,

oh, my whole department just went to Wall Street. Everybody in my class. Physics department in MIT, everybody? And he said, I said, don't some of them like become physicists? And he says, physics isn't interesting anymore. It's, it's, so it's just understood that this is the path. And that, I mean, so that starts back then. Finance starts to get sufficiently complicated than it rewards that kind of intellect and drives out a different kind of person. So, like, that's one thing that you can see, it's just starting to happen.

The hold it the place has on the imagination of young people, like it wasn't, if you go back to like the 60s, 50s, 60s, 70s, it wasn't the best in the best. brightest from the best schools who went to Wall Street. It was like the C student from Yale and guys named Vinny from Staten Island. I mean, it was a trade, you know, it paid well, but the status, it didn't have that same status. And then it's persisted, even though the jobs have gotten, I think, probably even more horrible in some ways, it still has this grip on the imagination of young people like it's, if you went to Harvard, the next thing you do that's a similar thing to getting into Harvard is getting into Goldman Sachs.

That's amazing to me, but that was amazing to me then. So there's some things like that. There are other things like that, just the financialization of the economy, which is related to the other two things. That it's finances, you know, it's never stopped growing as a part of, as a sharing the economy. All that's happened. So these megatrends kind of thing, make it feel, make the book feel like, oh, there's

a little relevance here. It's not completely dated. But I think this is this other thing that's going on. And I was when I was reading and I thought, this is why people read it. Wall Street's gotten so dull. I mean, just personally, though. It's essentially, you know, a tech job. You go into one of these places and it's totally silent.

It's people sitting at terminals just in a little, in a bubble. They're better or worse. It's lost a lot of its color. And it's very hard to persuade a young person that this is a fun job. I mean, it's a job that pays you well and it gives you an answer to the question. What are you doing? after you got out of Harvard. It's just like even more soul depleting than it was. And I think the book, you know, I didn't intend for this to happen, but I was having so much fun writing it. And the

experience was there were aspects of it. They were just funny. You know, just it was a lie. People screaming each other on a trading floor. People behaving in ways that were outrageous. It was human and wet. And I think that is part of the reason the book persists. It's like, you can't write anything interesting about it now. It's much harder. I mean, if you look at the books I've written since, they're about Wall Street, big short and Flash Boys, both those books.

I mean, part of it is a function of where I sit in relation to Wall Street, but both those books depended on kind of outsiders crashing in on the system. It would have been very hard, I felt, and I reported pretty heavily inside the system to have brought the system itself to life. because it felt kind of in funny ways dead, even if it was making a lot of money.

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How much of this sort of more inert Wall Street has to do with, you know, the rise of technology, the fact that it's not as much people necessarily screaming into phones, not as much of a people business? And how much would you say, you know, how much is the last 12 or 13 years and this sort of like, however many, the sort of de-risking of the banking system that occurred after the great financial crisis. So that's part of it. That's definitely part of it, right? That if you are going to, a big bank is no longer the place where you're taking the big interesting risks. So if you're going to take the big interesting risks, you're going to be at a hedge fund, or you're going to be at a venture capital

fund, you're going to be in private equity. And the rewards also have moved outside of the kind of the heart of the system. I mean, the highest paid people on Wall Street, when I was there. I'm trying to think what the, I'm sure that I'm sure this is not completely right, but there were barely hedge funds. You know, they were, there were people, there were people who were effectively doing what hedge funds did. But the compensation was nothing, and the size was nothing was like today. And, you know, John Goodfriend making whatever, $3 million or $5 million was considered just amazing. And then, and, and, and, you know, Milken made a billion dollars, right, inside of the bank. So I think the actions moved outside of the banks, too. So that's happened.

So the other things happen, I mean, is that, and I'm probably partly responsible for this in a small way, is this must, Lyres poker, that arrow must have been the last time that someone like me could roll into a big bank without signing non-disclosure agreements, without having lawyers looking at everything you do, without being terrified, everybody being terrified of every, they put in their emails and all that, where people didn't behave as if they were being watched, where even the bosses kind of thought, I mean, when I walked out, I told them I was writing a book about Wall Street, and they couldn't care less. It was like they worried, they were worried about my sanity in leaving a really lucrative job for what they thought was penury. But they

didn't, you know, go write a book about Wall Street, who cares? Was kind of the attitude. The access to unselfconscious behavior has definitely shrunk. I mean, that's another reason. I think I got, the material was just sort of like the last time it really had a lot of flavor to it and you had total access to it and you could write it up. I mean, there have been other accounts from inside of Wall Street. It's just not as interesting. Were there, do you think there were any benefits to that type of culture? Because nowadays, we're used to looking back at the 1980s as this era of excess.

You know, you describe in the book basically like how much of a nightmare a lot of the traders were. And I remember the trainees like sitting in the back row and throwing things at the speakers and stuff like that. So everyone looks back at that, sexism as well and thinks, wow, this was terrible. But was there any upside to having this sort of unfettered, I guess, culture? I'm going to give you not my answer, but the answer of one of the subjects of the companion podcast, Anne Clark Wolf, who has just started, he started an investment bank that has been dubbed Solomon's sisters. She was that Solomon Brothers when I was at Solomon Brothers. She was there right when the book was coming out, rather. She said to me something that sort of was on the tip of my brain.

And I was asking her, I was trying to get her basically to say how horrible it was for women, right? Because from my point of view, it was appalling. I mean, you will, it's hard for you to believe, but here's a place of work. And it is routine and acceptable to call a stripper in and have her take all her clothes off on the top of a trading desk while everybody cheers. Or to swat women on the rear end as they're walking by your desk. I mean, it was just one thing after another. I mean, it was just outrageous sexual harassment. Nothing subtle about it. And it bothered me, you know, and it's that it bothered me was between the lines of the books in places. And I thought I would get someone on to talk about

this who actually endured it. And instead of saying what I wanted her to say or thought I wanted her to say. She said, now you got it wrong. Now, this is just one woman's perspective, but she said, yeah, there was that kind of stuff. But women could advance. There might be that kind of stuff going on, but at the same time, you got moved up if you were good. And it was very open. There was a kind of openness about it. Like everybody wore their attitudes on their sleeve. Yeah, but they kind of moved past those attitudes. And she said, she found as Wall Street kind of became more sanitized, the difficulty women had moving up got worse. This is her talking not me, but it was an interesting perspective. And she said, you know, one of the things that's happened

is that the male Wall Street person's fear of being in a compromised situation with a female Wall Street has completely eliminated the kind of mentorship that leads to people moving up. And I thought, wow, I mean, I never heard that before. That was completely like novel to me. I thought, well, maybe it's more complicated than I thought. At the time I thought, one of the nice things about this place is that nobody's pretending to be anything but what they are, that there's no, that whatever vices there are here, their virtues and vices, there's very little hypocrisy.

And it was refreshing. And it was filled, so this is related to this, the diversity of the characters, which made the book work much better, it wasn't all the same person. There were a lot, there was a huge variety of personality, character types. It was sort of like a pool, a random pool of talent. So that's kind of an appealing trait in a place, the tolerance of a range of kinds of people. That's an argument for how it used to be. I'd say the one other argument, this is kind of like what was ending when I was there,

is there was this wet relationship between the firm and its employees. It wasn't just a corporate relationship. There was a residue of the partnership and the spirit of the partnership, the idea that, you know, yeah, you worked in the mailroom, but if your wife got sick and you couldn't afford to pay the hospital bill, some partner just came in and paid them because that was just how you did it. That glue was loosening. while I was there because it didn't cease to be a partnership and become a

corporation and it was becoming what it would become a kind of a much a much less kind of wet and cohesive place and much more corporate but that old that old feeling of like an emotional connection I bet people miss that I bet I bet people who work on wall street now just miss that there's no pretense that you have like a love of the firm and the firm doesn't love you so there's there things to be said about that era probably more things to be set against it, but the set of things to be said for it. You kind of anticipated my next question, but this idea like Wall Street banks becoming more like corporate or maybe interchangeable, where an executive at a major bank could leave

and go work at Google or Nike or FedEx or something like that. Why did that happen? I mean, like, it feels like that. And, you know, obviously in the intro, we talked about, yeah, they're making a ton of money, but they, but it seems like they're having less. fund or they're certainly not having a lot of fun these days. Like, why did, why do these banks, why are they just sort of corporations in a way that they didn't use to be? Well, because they weren't corporations, right? So, I mean, that's the, that was the thing that was happening. You know, again, it's like it gets back to why this book still gets read. Part of it is just like the moment in financial history it captured. I walked into a firm that was the first big investment bank

to turn itself, to go public. And it was regarded as a great active betrayal when it did to the, to old partners, to the idea of the firm. There was a lot of anger in the air, even inside the firm when I was there. And this had happened. But what that does is it changes the relationship of the employee to the place. The employees, the people who run it are much less likely to be exposed to its failure in a big way. They're much less likely to be, it's not a stickier relationship. People, more of their wealth comes in the form of just their annual bonus and less in the ownership of the firm. So people just didn't stay as long.

And so what you had happened was free agency. That was the period where you started to get the free agent trader, guys, you know, leaving from Errol Lynch for $3 million. And that was regarded, it was interesting. That would not, no one bat an eye at that now, right? If some, if you're a Goldman and Morgan Stanley offers you twice as much money, everyone going, probably just says, well, you should just take it, you know, or vice versa. At the time, it was regarded as a betrayal. It was regarded that people were treated as if they were traders,

if they left the firm for a more, a higher-paid job somewhere else. What you were saying there was the residue of the partnership ethic. And there are firms on Wall Street that are still, you know, Brown brothers. There are little firms that have kind of kept the old structure. And it really works for what it does. It creates a lot of stability. It doesn't work for big risk-taking, much better to be playing with other people's money. So this is a very, I guess, zeitgeisty question. But, you know, we're talking about culture.

And you mentioned this idea of Wall Street firms having much more cohesiveness during this era. You called it wetness. And I guess nowadays there's this big push on Wall Street to get everyone back into the office. Everyone went to work from home during the pandemic. And I guess two things here. Why do you think it's such a big deal for a lot of the banks to have people in the office? And then secondly, is there a tension between a work from home model and a business like trading? Do you have to actually be physically present talking to, you know, your peers, your colleagues, in order to make it work? Or is it something that can be done remotely nowadays?

Well, you probably know the answer to this better than I do. But my sense is that there's much less reason to actually have to be there. It would have been bizarre not to be there in 1988. You couldn't have functioned. Everything was happening there. And it was personal interaction that was driving a lot of the decisions. And you were watching the markets when you were watching the traders. That's not true anymore. I'm trying to think of what couldn't be done. remotely that's important that would force people into the office. I mean, for a lot of this, you don't even need really people. You need algorithms. The New York Stock Exchange used to be people. It's now servers in New Jersey. There are people on the New York Stock Exchange, but they're essentially a television set. They're not doing anything important. I think the way finance has evolved, I can see why there's pressure to not go back to the office, because you don't really need to be there. I think, I get the sense, I could be wrong about this. I get the sense that like bosses are much more interested in having their employees there than the employees

are interested in being there. And so there's some like status stuff probably going on where it's, you know, nice. You probably feel like and you probably feel like you can monitor your employees better if they're physically present. But I'm not even sure that's true. So, no, I can't see any reason. I don't know why you need a trading floor now. Why it can't be distributed.

Even back then, there are people who did real well sitting in a room by themselves. They weren't, you know, not people who work for the banks, but people, traders, hedge fund types. In fact, if you want to make the argument, you know, what succeeds in the financial markets, you know, independent thinking, taking a view that's slightly apart from the crowd, all that, may be easier to do if you aren't in a room full with other people who are all doing the same thing. So to answer, so I would, I would have thought that it's going to be hard to get everybody back because you're not going to, you're not going to be any better with everybody back. It's not going to give you a huge competitive advantage.

The exception is that when you're dealing with, you actually have face-to-face interactions with clients. People are more persuaded by personal encounters. And so there's still slices of the business like that. I mean, I bet it would be hard to be a, I don't know, M&A advisor without being able to be with people. But those people are not your colleagues. Those people are like some CEO somewhere.

So you think that's wrong? I could be wrong. Do you think, what's the, give me the argument for why you would go back to work. I don't know, Tracy. I hate doing this because I'm on the record as a big work from home fan, but it's culture and spontaneous cooperation, the kind of spontaneous cooperation and synergies you get from running into someone. How often does that happen to you, actually?

Well, it does occasionally, I have to say, like, it does occasionally. You do run into people and say, oh, hey, what are you working on? and maybe they ask you for help or something like that. But I do think nowadays there are a lot of spontaneous interactions that can happen just through, you know, instant messaging and stuff like that. I just want to, I totally agree and I, you know, I love most of the interactions I have in the world are clearly digital. I really like this sort of like three or four people that sit in proximity with me in the office.

And I really genuinely enjoy coming in and just sort of chatting verbally or So I would miss it. I like the newsroom energy and just sort of joking around and talking news with the people who sit near me. So I'm a little bit more of a sympathetic, perhaps, than Tracy is. Speaking of Zite, guys, you think, so literally, it's every time some crazy story happens in the crypto world, I see people like, I can't wait to read the Michael Lewis book about this event. And of course, there's going to be a Michael Lewis crypto book at some point. There has to be, right? There's a chance. You know, it's funny. I've been told by a lot by a lot of people I need to write such a book. And that's not persuasive, but the, it is what I think it's true is if you asked, like, what's the version of Liars Poker now? Where is the Liars Poker like story happening? It's the, it's crypto. It's, it's, it's, it's, that's where there is, there's shocking and unprecedented behavior, and event. and people trying to make sense of something that's completely new, or feels completely new,

where massive disruption is occurring. I mean, what Solomon Brothers Trading Floor and Michael Milken's Drexel Bond department, were really like turning the financial world on his head at that time. And that was part of the excitement of the story. So the same may be true of crypto. The problem with crypto so far for me is, I'm going to get slave for this, but taking it seriously. So I had this encounter, and it's like it's a little parable.

It's a microcosm of a bunch of similar encounters I've had. I got to call it. This is like six years ago. So kind of early in the whole thing. Bitcoin is like, people are starting to look like, hmm, they were smart to own some Bitcoin. And there were like the great and the good of Bitcoin I was told. We're gathering in a house in Silicon Valley, and I should come down and just meet them.

And the guy who asked me actually said, if you come down, you'll meet Satoshi. And I thought, well, I don't really care all that much, but I'm curious. So I drove down, I got my car, I drove all the way to Palo Alto. And I could smell the weed from like two blocks away. You know, it was just like the weed was coming out of the chimney. And I, and it was a funny scene. It was like 12 rooms and sleeping bags and all the rooms and some of the people actually there were there were future billionaires in that house.

But they were trying to persuade me that this was. the money of the future. And it did feel like when I came to understand what this money was, that if this had been the money of the present and someone invented actual dollar bills, people would say, wow, this is a fantastic revolution. And they took me, so I said, I just don't believe, I just don't believe this is money. I don't believe this is going to work. I think the kind of things you need to do to make this money are going to undermine the things you love the most about it. And they said, no, no, come on with us. We're going to show you that you can see. spend this already. And we walked into Palo Alto and there was a coffee shop. And sure enough,

it said, we accept Bitcoin. And we sat there for, I don't know, 20 minutes trying to pay for a cup of coffee with Bitcoin until fine, and they couldn't do it. I finally pull out a $5 bill and it worked just beautifully. And I just, you know, the first problem, like what this is, apart from a speculative instrument, put me off. Now, of course, there's, now everybody has a Now everybody has a smarter story. The smartest story is it's the new gold. It's better gold. It's not a currency.

It's a better gold. You know, I mean, it's a better argument. You don't have to store it really. It's cheaper to store. Easier to lose. But gold has this like millennium of faith behind it. And like you're asking people to believe that people believe in Bitcoin the way they believe in gold.

And I just don't, maybe that happens. Maybe it doesn't. I think it's a funny end game. where in the end there is no Bitcoin because all of it's lost. There's so much of this stuff is already lost. It's a matter of time before the last, you know, Bitcoin key is gone. It's inconvenient in many ways, but the cultural stuff, what interests me the most about it is just like the cultural disruption it causes.

The fact you have people who randomly have three or four billion dollars now because they bought some Bitcoin. The fact that you've got people who've lost half a billion dollars of Bitcoin and can't find their key. What people are doing with the wealth that kind of like landed in their lap. So anyway, it interests me. It all interests me for me to have something that is worthy of a book. It requires what I had in Liars Poker and Flash Boys and the big short of the financial books, people I wanted to be with. If I find a character who can walk me the reader through that world in an interesting way and teach us all what it is and give us the place.

pleasure, kind of pleasure of fiction that you get from a character, that would draw me to the subject. It's got the, you're right, it's got the ingredients. It's got like stuff. But I just, I didn't, I didn't buy the original argument for why I should be interested. And I haven't really found the character. So I guess you didn't meet Satoshi in Palo Alto, right? No, it was, that was, that was a ruse. Maybe I did meet him. You know, it's possibly he was there and he took one look at me and said he's not worthy. Sort of on a related note, but what do you think is the attraction for people who are in finance or have been in finance who are making the transition to crypto? Is it purely a money-making exercise? Is it just the next big speculative asset that they see kind of, you know,

a bubble inflating in front of them and they can get in, make their money and get out? Or do you think there's a genuine adherence to some of the belief systems and culture and systems around crypto? I think it's a mix. I think I've met both kinds. I haven't done that much work in this area, but I've met both kinds. I've met people who were attracted to the libertarian utopia and who are there for those sort of reasons. But those, my sense is that was there at the beginning. And as Bitcoin became more and more of an attractive speculative asset, it attracted a different kind of person. And I think there's like any goal rush. Why do people, why do people come out and mine, it come out to San Francisco during the gold rush.

Well, there were some people who were here who were like, add a better idea about where to find the gold and they went and found gold and got rich. There were some people who were just there because everybody else was there and they thought they'd get lucky and it didn't work out. But there was a whole class of people who made blue jeans and sold them to the miners. And I think that's that class of person is now, the whole crypto world's gotten so big, there is that kind of person who's figured out how to be the blue gene salesman. And actually is kind of agnostic on the sub-exam.

objective crypto, doesn't believe in it or disbelieve in it, doesn't care one way or the other, just as long as people are trading it. I don't think, I think we're kind of past the point where people think there's easy money just buying Bitcoin. I don't think that exists anymore. I mean, it feels pretty scary. Hello, I'm Michelle Hussain, and for more than 20 years, I was at the BBC. But all the time I was delivering the headlines, I was wanted to go further than the news of the day, to spend more time with the people shaping our world. And that's what I'm doing here on this podcast, speaking to people from Nigel Farage.

This is a lot of you trying ever saw. Russian needs to be taught a lesson. To tech journalist Karaswisher. And the tech industry is running wild. You know, they've gotten what they wanted and they've seen a huge run-up in their stock prices. This will be a place where every weekend you can count on one essential conversation. to help make sense of the world. So please join me, listen and subscribe to the Michelle Hussein show from Bloomberg Weekend,

wherever you get your podcast. You certainly ask interesting questions. So, you know, we just have a couple of minutes left. But there's actually, I kind of want to sort of pivot a little bit. You mentioned San Francisco. And you've been talking about the three Wall Street books. We also wrote a tech book in 1999, the new, new thing talking about, James Clark, whom among other things,

Netscape co-founder, that obviously came out very close to the peak of the dot-com bubble and then felt like, you know, they've captured everyone's attention. So I feel like Silicon Valley went dormant for a few years. And now, obviously, it's just everything. I'm curious, you know,

how your perception of tech right now feels compared to 99, because obviously we've had this little sell-off in techs. stocks lately, people wonder how it's different, how it's similar. Does it feel like there was a bubble that has to cool at some point? Like, how does it, how does tech look to you right now versus when you wrote that book? It's a much more thoroughly developed and articulated religion. What was happening in 1999, the world didn't have its, this world didn't have its story completely

straight. Look at that. Look what's happened since then. Jim Clark, the hero of, my book, the new new thing, who I put at the center because he had been this constant disruptive force and was in the middle of the internet bubble too with Netscape. Jim Clark, who lived for innovation, who knew as much about Silicon Valley in the tech world as anybody, at the end of that book, he flees California and gets out of tech and venture capital because it's all gotten too insane because Kleiner Perkins has given $25 million to this startup called Google, which he is sure is just nonsense. Now, he sees like, for him that was the sign that bubbles about to burst. I mean, we're now sitting here with the biggest corporations in the world, having grown out of

that period, they create their own dynamic, barring a concerted government effort to like bust them up. You know, it's very hard to imagine how there's not just a bubble there, obviously, right? There's a lot else going on. The religion's gotten, I mean, it's just many more people have come to accept that we live in a world that's defined by constant innovation and their wealth is innovation and the financial sector has reconfigured itself around this idea so that there's huge amounts of capital thrown at people who will innovate, that it's a buyer's market if you were an innovator. And I don't really see that changing because at the bottom of it is something that is true. It is that wealth and innovation are very closely linked, that we get richer as a society

as we innovate, and that it pays us to, it pays everybody to encourage this kind of behavior, to encourage total constant disruption. It feels a lot less, it felt kind of thin back then. There are a lot of companies that just, you know, they just didn't, you really couldn't see how they're going to work. But everybody said they're going to work, and then they didn't work. It doesn't feel quite like that to me. I mean, of course, it's frothy right now. But do I think it would be smart to, like, pull out a venture capital right now? No.

Do I think it might be smart to get out of some stocks in the stock market? Maybe for a while. But it doesn't, it feels like there's more of a solid foundation under it all to me. You mentioned at the beginning of this conversation that you went back and you read Liars Poker as part of this project. And I tried to do the same thing before this conversation. And there was one bit in it about Paul Volker sort of inadvertently giving birth to the big bond business of the 1980s by allowing interest rates to float.

And that introduced price volatility into the market. And that was kind of surprising to me because nowadays you think Paul Volker and you kind of think Volker rule and that he, you know, essentially castrated the big swinging dicks of the era. And it was all because of him. As you were rereading, was there anything that surprised you or that seemed unexpected or ironic with the benefit of hindsight? Well, the first thing was a big chunk of the book that's about the creation of the

mortgage bond market. Even I at that moment have no sense that this is, that Frankenstein's monster is being created, that this, that the way risk was going to be allocated would create problems. I saw nothing but good in that. I thought, and it was a very, at the moment it seemed great. It was like you were opening up, you were knocking down a wall between capital and home buyers. And it was going to make buying a home cheaper for everybody, give everybody cheaper access to capital. It would seem like a great efficiency.

But the complexity of the instruments was going to make something possible that I never would have imagined coming. So that was one thing. It was like, huh, it didn't go so well. It went well in the beginning, but it didn't go. In the end, it didn't go so well. So it was my own naive at the time basic approval of financial innovation. I was doing it. I thought it was cool.

I thought it was making everything more efficient. It didn't occur to me at the time that complexity was the new opacity, that no matter how supposedly transparent these businesses were and you knock down the wood panel walls and put up glass walls and everybody could see what everybody else was doing. If it was complicated enough, people would be able to do all kinds of nefarious stuff because other people wouldn't understand. And I didn't completely see that. And when I'm reading the book, I can tell I didn't see that. I mean, I was kind of on the side of the innovator.

So that's the most obvious thing that leaps to mind. The other thing reading the book that was just shocking to me was me. I mean, 27-year-old me was, I mean, I guess I could have stood to have a drink with that person, but I wouldn't want to stay for dinner. My appetite for my own company with my own 27-year-old me was much more limited than I thought it would be. It was like, was I really this insufferable? It was there was that.

But I think that's kind of true. And we explore this in the little podcast. So like when you go back to stuff you did when you were young, it's jarring. Michael, I think that's a great place to leave it. This is a real treat. Very excited about checking out the new. audiobook and the new podcast series. And thank you so much for coming on, Adla. Thanks for having me. See you guys. That was really fun, Tracy. I feel that was a real treat

getting to chat with Satcha, a legend in our industry. Totally. And I mean, like I said, I remember reading Liar's Poker as one of the first things before I joined the Financial Times, or even, I think, before the interview, something like that. So really great to actually meet Michael in person and speak to him. So first of all, he has to do a crypto book, right? Of course. He's got it. Yeah. But secondly, I know we were talking a lot about how much has changed on Wall Street, but I kept going back to the idea that a couple of things haven't really changed. And one is the bond market, I guess it's not quite like it was in the 1980s, but we've discussed this on the podcast. It's still not standardized.

There's still no price transparency, and so you can still make a lot of money from trading debt. Yeah, no, that's true. Like, that is one area that is still, like, on some level, pretty chaotic. I think it was, like, really cool. Like, there aren't many people with his perspective, and I'm thinking also, like, obviously both Liars Poker, but also his cover, you know, writing about tech in 99 with the new, new thing, who have seen these, like, huge industries that, like, can sort of look at it with both ends. Like, how many people do we talk to?

Like, huge arcs of history. And so I thought, and, you know, hearing him that last answer, and I thought that was a great question you asked, like, the fact, you know, he wrote a book is like, oh, this is cool, the mortgage bond market. And, like, the beginning. And so being able to, like, look back and obviously have no idea that I guess essentially literally, I guess, 20 years later, that would be. be at the heart of this major international financial blowup. Yeah. But again, it's funny how, you know, things kind of change, but they also stay the same because I mentioned that I was rereading it or trying to before this recording. But there's a bit in there about Henry Kaufman talking about like the financialization of the

economy and how the U.S. is borrowing so much money and debt's going to be an issue. and this was, you know, in the late 1980s, and fast forward 30 years, and we're still kind of having the same conversation, it feels like. Yeah, and I thought that was interesting, like your point, like Volker these days, known for like the Volker rule and sort of like this like, but like his era, like the era when he was like, this is where it all came from. Like that was it. So that is interesting.

Anyway, I really enjoyed that conversation. Totally. And yeah, I enjoyed getting an excuse to reread Liar's Poker, especially because I'm now in New York. It's a very good, like, New York book. Welcome, welcome back to New York, Tracy. This is very exciting. It is great, great to have you here. I'm excited about all the recordings we're going to do all the same time zone.

Yeah, I feel like this was an auspicious start to the New York era. Although, I should just say for any odd lots listeners, this is not going to be our permanent audio setup. It's going to get better. But yeah, talking to Michael Lewis about Wall Street in the 1980s and Lyers Poker is a great way to begin the new Alldots era. Sounds good. I like it. We're back. Can we leave it there? Let's leave it there. All right.

This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Allaway. And I'm Joe Wisenthall. You can follow me on Twitter at the stalwart. Follow our producer, Laura Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, at Francesca Today,

and check out all of our podcasts at Bloomberg under the handle at podcasts. Thanks for listening. On April 4, 23, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder. of Cash app. From Bloomberg Podcasts,

this is Foundering, the Killing of Bob Lee, beginning April 16.