The Knowledge Project with Shane Parrish - Bill Ackman: The Biggest Fight of His Life

Episode Date: September 29, 2026

Bill Ackman is the founder and CEO of Pershing Square Capital Management, one of the most closely watched investment firms in the world. In this conversation, he breaks down how he tells the difference between real innovation from hype, what he looks for before making a billion-dollar investment, and why he sold Netflix—and later bought it back. He also shares the mistakes that reshaped his investment process and his plan to build a modern-day Berkshire Hathaway. Bill also opens up about something far more personal: his daughter Lucy’s sudden brain hemorrhage, the hours before surgery, and her ongoing recovery. He describes running his business from a hospital room and the institute he and his wife are building to help other families facing similar challenges. Enjoy! ----- Chapters: (00:00) His daughter Lucy's brain hemorrhage and recovery (05:17) Plans for a brain rehabilitation and recovery institute (11:54) Hope for recovery after strokes, brain injuries, and more (15:25) How wearable health data could help identify medical emergencies (16:18) Tools for maintaining mental health in a crisis (17:17) Building a team and culture (24:13) How Bill defines an investment bubble and the role of FOMO (24:43) Bubble-like behavior in venture investing (26:54) Why founders should raise capital carefully (29:01) Weighing the founder more than the original idea (30:57) The businesses that will win the AI-era (39:12) Pershing Square's investment checklist (40:07) The personal and financial costs of short selling (43:53) AI infrastructure, physical assets, and the value of shared human experiences (48:25) Advice for individual investors considering index funds (48:59) Starting young, investing for the long term, and the power of compounding (50:27) Why Pershing Square sold Netflix (53:55) How Howard Hughes emerged from the General Growth restructuring (54:29) The long-term economics of master-planned communities (1:02:14) The key ingredients behind Berkshire Hathaway's long-term success (1:06:48) Bremont watches (1:11:48) Bill's process for identifying and recruiting CEOs ----- Follow Bill Ackman: X: ⁠https://x.com/BillAckman⁠ ----- Newsletter: The Brain Food newsletter delivers actionable insights and thoughtful ideas every Sunday. It takes 5 minutes to read, and it’s completely free. Learn more and sign up at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠fs.blog/newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ------ Follow Shane Parrish: X: ⁠⁠⁠⁠⁠⁠⁠https://x.com/shaneparrish⁠⁠ Insta: ⁠⁠https://www.instagram.com/farnamstreet/⁠⁠ LinkedIn: ⁠⁠https://www.linkedin.com/in/shane-parrish-050a2183/⁠⁠ ----- Thank you to the sponsors for this episode: +Applovin: Launch your first AppLovin campaign and grow your business: ⁠https://applovin.com/shane⁠ +HeyGen is a message-first AI video platform that helps people and AI agents turn ideas into professional video in minutes. Try for free at ⁠https://www.heygen.com/tkp⁠ +Matic: the robot vacuum that does it all—grab yourself a year of free bags here. ⁠http://maticrobots.com/shaneparrish⁠ +LMNT: My go-to zero sugar electrolytes — get a free LMNT Sample Pack here: ⁠https://DrinkLMNT.com/TKP⁠ ----- + Members get the longer, extended version of this conversation, with additional content not included in the public release.Learn more: ⁠https://fs.blog/membership/⁠ ----- Note: ‍Shane and guests may hold positions in assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. Nothing in this conversation should be considered investment advice, financial guidance, or a recommendation to buy or sell any security. Always do your own due diligence or consult with a qualified financial advisor before making investment decisions. Learn more about your ad choices. Visit megaphone.fm/adchoices

So the thing that you need to think through is the risk of disruption. And what AI has done is massively increase the risk of disruptions. You've had a challenging year this year with Lucy. What happened? You know, otherwise healthy child, what happened was she had, unbeknownst to us, a what's called an arterial venous malformation, which is a kind of structure in the brain where the way the doctors describe it as the arteries. Typically blood flows into the arteries and then to the capillaries.

and then to the veins. And when you go from arteries where there's a huge amount of blood flow to capillaries, the blood flow slows down, and then to the veins. So in her case, she had like a bridge that went from the artery directly to the vein. So over time, there was too much pressure

going into these veins in her brain, and one of those veins burst. And then a large amount of blood filled her brain, which is a confined volume. And so it's, you know, It's a bit like a balloon blowing up inside your brain, and that put pressure on the surrounding brain and the skull, and obviously the skull doesn't move,

so the pressure goes downward. It puts pressure on the midbrain. The midbrain is what keeps you breathing, keeps your heart beating. And the really unfortunate thing, we believe this happened around nine in the morning, based on her or her, or her. She lived, you know, a young woman, lives alone in Williamsburg.

And I texted her at four o'clock that day. I had called her another time that day. other family members had done the same, but only when she hadn't picked up her luggage. She was leaving for Abu Dhabi for a wedding. A friend of hers was getting married the following day. And she was picking up her luggage from her mom's house. And she didn't show a couple of, when she was two hours late and no one could reach her that we, I was sleeping at the time, but my oldest daughter went to find her.

And they found her lying, she found her lying on the floor of her apartment, barely breathing. You know, face down on the right side. So, and she thought she was dead. Called 911, she could hear her breathing in a very labored way. And then, I don't sleep next to my cell phone. My daughter doesn't know the landline number from my house. So she was able to call someone in the building, guy in the building knocked on the door, you know, pounded on the door,

and handed me the phone with my daughter on, and then hopped in a cab. The EMT didn't know which hospital would take her because they didn't know what had happened to her. One of the big problems, sometimes, you know, the EMT thinks someone's just drunk, and that's why they fell. And the way you treat a drunk person

is you just let time go by, right? Time going by for a person where the brain hemorrhage is very, the more time the brain's under pressure, the more damage they can take place. Got to the hospital of 1205, and she was just, you know, sitting on a gurney there while they were trying to figure out what she had. Eventually they gave her a CT.

They figured out she had a hemorrhage. They called the surgeon. And what you need to do is you need to release the pressure on the brain as quickly as possible. And the way you do that is remove about 40% of the skull to allow the brain to expand beyond the skull. And we moved her from, you know, Elmhurst Hospital. By the way, very pleased with how they cared for her there. City Hospital in Queens.

We moved her to Mount Sinai where, you know, Neri and I spent some time helping Mount Sinai. So we got, we knew the team there. And they also have very good neurosurgeons and a neuroscience brain. practice. Then, you know, she was on a breathing tube. You know, she was wearing some, she had bandaged, of course, in her head, and it said, no bone, right, to make sure that nurse is nude not to be careful. And that's how we started. And so, you know, the, I basically gave the doctors the, what I call it, the dare to be great speech. I said, you know, let's see what can be achieved by, you know, whatever you need from us, unlimited resources,

let's look at latest and greatest technologies. I mean, they basically told us, you know, look, Bill, we don't know what kind of deficit she's going to have. You know, 19 hours of pressure on the brain. You know, I didn't learn actually until weeks later. They don't normally do the surgery to save someone when it's been more than five hours

because the assumption is brain death, basically. So 19 hours, she's close to death, you know, hours, minutes, I don't know exactly. And so we didn't know what would become of her, but I'm a very optimistic person. And she's regained over time her cognition. She's the same Lucy we knew. She's got the same sense of humor.

It's really kind of remarkable. She, you know, woke up not being able to walk, to speak, and unfortunately to see her walking is coming back. I think she's going to regain her ability to walk. Her speech very slowly is coming back. You know, there's something like 17 vowels beyond the vowels that we were taught. we were taught and she can do about 15 to the 17 now.

She's, you know, each day she's almost learning a new consonant. She can say a few words, certainly no, she's quite good at. And then vision, she's even shown some progress there. But I've, you know, I spent a lot of time working with the doctors and, you know, my pitch to them was let's see what we can do for her and everything we learn for her, we can help others. And, you know, Neri and I are going to make this available to everyone. And three months after, I guess, I was coming back from my birthday party, and I got a call from a friend. We were talking to Mount Sinai, actually, about doing a redevelopment of their Fifth Avenue campus to build a brain institute, some kind of brain center.

And if we had very aligned with their idea, the problem with that is probably a tenure project. And super complicated, obviously taking down an existing hospital, moving people, bringing people back. And a vacant biotechnology building became available on 65th and 11th Avenue, 10 blocks from the office. And 60 days later, we closed in the building. We signed a contract that by the rest of the site. It's a 3.4-acre site. And our goal is to build the world's greatest brain institute. You know, everything from a focus on the patient.

How do we get treatments to patients? And there's a ton of interesting things going on in technology. Obviously, everyone knows NeurLink. but there are probably a dozen other companies working on brain computer interfaces and other ways to get data from the brain, right? And, of course, AI. So not only are we able to get more and more data from the brain, we're able to interpret that data better than ever before.

So I'm hoping Lucy can speak normally and on her own, just working at it. I'm hoping her vision returns. But if she has deficits in those areas, there will be solutions in the a relative short intermediate term. You know, envision a world and where you wear a pair of glasses that basically have a camera, and the camera takes in, you know, the vision and kind of ports it to your visual cortex,

and that's how you see. I mean, that will be how, I mean, Elon says, you know, he's going to have a rudimentary way for people to see within a relatively short amount of time. And within five years, actually, I've reached out to pretty much everyone for help on this. And he told me, he said, five years, well, people have better vision than we'll have bionic vision in effect.

The way Dr. Kellner describes it to me is that there's been Lucy's lead on this whole thing. A lot of neurologists and even neurosurgeons are nihilists. They don't believe that the patients can make really material recoveries, and they can. And we've heard a lot of interesting stories of recovery, which are great to share with Lucy. But we're going to be able to do it a lot more. And New York is actually probably one of the best places to do this, and there isn't anything like it. So we're excited about it. What you guys have done in response is just incredible.

Yeah, so what's interesting is that all of the skills, experiences, relationships, resources that I've developed over my career work set me up to be incredibly well positioned to help my daughter and to help other people that have this problem. I'm like a real estate investor, right? So I was able to buy the building at a fraction of a, of what it cost. And architecture, design, also married to a very talented architect who's going to play a pretty important role here.

So I think we're going to do something really interesting. And we've had an incredible outpouring of people who want to be part of this, who in many cases. We love people who write to us who've dealt with this in a very personal level, have a brother, a sister, a mother, a parent who've suffered. And they've seen kind of the nature of the treatment that's available today, and they want to change that.

It's interesting and actually, you know, people say, Bill, how do you deal with something like this? Well, the first thing I had to do is figure out how to help my child. And as I made progress with that, this other thing is an amazing, you know, makes me feel like something good is coming out of. You know, I have this view that you, every bad thing, something good comes from it.

You know, this is among the good that's coming from what she's going through. And that makes me feel good. Did you always have that view or was that learned? I figured that out over time. When? Was there a moment when that? Well, you know, I've had a few near-death experiences in business. And in each one of those cases, I was materially better off after that. So those are kind of, you know, good lessons.

What does not kill you makes me a stronger thing is definitely true. And by the way, for my child, for Lucy, I think this is going to be good for her. Say more about that. Look, she's a wonderful, amazing person, but if you can recover from something as devastating as this, it's gonna make her into like a superhuman person. And she is a wonderful human being. I mean, one of the things that's helping her recover is, you know,

one, her mom has been there every day. You know, I move my office into the hospital. You know, within a day of her moving into the hospital, I did two IPOs, the two Pershing IPOs, I did from room 1107, room 107 on the 11th floor of 11 West at Mount Sinai Hospital, the power of Zoom. So I would do a Zoom meeting for 45 minutes, and then I would go spend 15 minutes with my daughter.

And then I'd do the next meeting. And so I had my daughter as the inspiration, you know, for these two IPOs that we were working on, and we only moved her out of the hospital August 8th, and she's been rehabilitating in Bridge Hampton. And then she's coming back into the city for a little procedure. And then she's moving into her own apartment that we've been, we bought an apartment in our building within a few weeks of the incident.

And we've been designing it to be the best rehab, recovery place for her to live. And, you know, socialization, social interaction is absolutely critical for someone recovering from something like this. The emotional support that you get and everything. and her friends have been amazing. Her friends have been with her every day. Every day, one or more of her friends shows up and talks to her, eats with her, engages with her.

And she's like this super-giving person, a ton of friends. Everyone loves Lucy. And so she's getting an amazing return on that, because her friends are showing up to save her. All of this makes me feel that humans can be so amazing. Yeah, I mean, you can recover from almost anything. Yeah. And by the way, there's a lot more hope for people who've had strokes, brain injuries, military, TBI type stuff.

And there are a number of people in the field that have been really frustrated with, you know, how far we've not gone, who want to be the ones that fix this. What's been preventing us from going further? Like, why haven't we pushed the limits on this stuff? The answer is some combination of the insurance industry and just economics and hospitals, how they work. I mean, a neurosurgeon wants to do their surgery and then move out to the next one. Neurosurgeons are highly compensated, but they get paid for doing surgeries. They don't get paid for the recovery of the patient over time. Rehabilitation, every hospital has some kind of rehabilitation program, but in many cases, it's embarrassingly inadequate.

and the insurance company might pay for only six weeks of care. And then they get sent home. And their home is not the ideal place. And it's in a major, takes a village. What if they're the principal breadwinner and they're devastated by this, maybe the other family of them or has to go out and work as opposed to care for them. You know, one of the most depressing things I was told by the head of rehab at, actually a mass general, we've been talking to, as he said, Bill, you know,

what Lucy's achieved is remarkable. she's had incredible care, the typical person, one, they wouldn't do the surgery. Two, if they do the surgery, the typical patient ends up in a nursing home when they check out of the hospital because the family can't take care of them and they die a few months later from pneumonia because just the care that can be achieved in a nursing home, it's like super depressing. And so, you know, this is one of the cases where, you know, I'm financially unconstrained in my ability to help her. And so we can maximize the care.

Now, what we're going to try to figure out in the institute is how we do this in a way that everyone can have the benefit of the care and technology is going to help a lot. A great speech therapist could be $500 an hour. That insurance will pay for whatever percentage of that, but only for some period of time. But people can keep recovering years and years later. But of course, AI could be an amazing speech therapist. So there are lots of ways that technology are going to enable us to help people recover from these injuries. And by the way, this all, you know, we're calling it the focus is brain rehab recovery and longevity, right? What does a brain rehab recovery institute do?

It focuses on brain recovery and your physical recovery. The brain plus your physical recovery is fundamentally longevity. And the other thing that hospitals aren't very good at is nutrition, right? The food in hospitals is frightening, right? They have someone who has a heart attack. And the next morning, they're having like pancakes with served with orange juice. In Lucy's case, you know, we made full. food for every meal. The Institute's going to have amazing food because nutrition is critical.

So there are a lot of things we can do taking advantage of this financial circumstance. I'm going to use it in a way that will enable us to build something optimal and I think ultimately self-staining. You're an incredible father. What an amazing response to terrible circumstances. You know, I would feel if I couldn't do it, I would be one of the most frustrated people in the world. I literally feel like I was designed to help her, like everything I know how to do. You mentioned the aura ring, the data on the aura ring. What was the data that indicated something when it's...

So I've been in touch with the CEO. I've already reached out on Twitter. And I think you can, certainly with an Apple Watch and hopefully with an aura ring. So what happened was, if you look at her spike actually put it on Twitter at like 9 o'clock or so, there was a very quick spike in her. pulse and then kind of a drop-off that looked, you know, kind of unusual.

And if you combine that spike and a drop-off with someone falling, like the Apple Watch has an alert when someone falls. Right. Well, if that happens, and it happens when there's a huge spike and they're, you can reasonably assume. You can say, you know, did they have a heart attack? Did they have a whatever? You know, the easiest of things you can look at. And I think Or a ring should have the same capability.

And I think they're working on it. How do you keep your mind in a healthy place? Like, what do you do to keep your head right? I play tennis almost every morning or do some form of exercise. I think that's probably the most important thing I do. Because it's the one thing I do of the course of the day where I'm completely focused on the ball that's coming at me as opposed to whatever else is going on.

So I think that is a really important form of meditation for me. That's one. I've got a good night's sleep. I spend time with my family, things like that. Do you still meditate? I haven't in a while. I did for this challenging year, and I was middle of divorce. I was kind of on my own, and it really helped.

And I probably should find 20 minutes a day to meditate. How do you manage it all? I mean, you have four effective public entities. You have this with your daughter. You have a seven-year-old. You want to be a great husband. How do you harmonize all of these things? So Persian Square has come a long way from when I started it.

When I started it, I was sort of the chief bottle washer guy, and I would come up with all the ideas and I have an analyst that would help me prosecute them. And there was activism, I was the guy, etc. Over 22 years, we built an amazing team. We're in an industry where the half-life of someone who works for a firm, you know, people are paying, you know, the top people can move from one place to another and get huge, you know, $100 million bonuses for showing up, things like this. And the result is a lot of turnover in the industry. we have no turnover at Persian Square. Is that good or bad? Well, if there's someone that we've, you know, we've had no turnover.

Obviously, we've made some mistakes and we've replaced some people over time. But if you look at the investment team, the investment team has been the same team for now nine years with a couple of new additions. And that's actually a really good thing. You know, if you have a constant revolving to work new people, you don't really know that you can trust people over time. You know, are they really telling you the truth? They're really telling you all the risks and rewards of a particular situation. When you've built a relationship with people and you work with them from nine years, and you have this culture of transparency and candidness,

I don't for a second ever question anything that's being told to me by a member of the investment team. They're telling me the flat, you know, candid truth. That's a very comfortable place. So the answer to your question is, the Persian investment process is incredibly well run by a very experienced team. that I play an important role in, at the ultimate say, but I am no longer the guy that generates the bulk of the ideas. I'm someone that generates a minority of the ideas in the portfolio,

so that's helpful. And then the business itself, you know, the way it's structured is, you know, Ben is responsible for running a lot of the business elements of Pershing Square. So that frees me up to think. It frees me up to work on more strategic stuff. And it frees me up to come up with the occasional, you know, kind of idea. So Pershing kind of takes care of itself. Well, we have a number of public entities.

We have an amazing accounting team. And those public companies all sort of do the same thing. They're really just, you know, there's the management company that earns fees from the entities run. That's Pershing Square Ink. P.S. Ticker. There are two funds that are publicly traded that own effectively the same portfolio. You know, there's certain governance responsibilities we have for those entities. But they're really, actually each of them have independent boards of directors.

So our role there is as the kind of external investment manager. We have excellent boards at both of those. You know, the typical closed-end fund board is a bit of an embarrassment. I don't know how closely you follow the space, but, you know, you've seen Boas Weinstein going into proxy con. The typical closed-end fund board is a group of people who, not to make any, let's say BlackRock for the moment. I think I read somewhere that, you know, they sit on 86, the same six,

six directors sit on 86 closed-end fund boards. It's hard to do real governance when you sit on 86 boards of directors, right? The typical limitation is four, you know, by ISS. We hired actually real directors. We pay them like real directors. They're not serving on multiple, you know, 50 other so we have really good boards. And what we do is fundamentally simple. So Persian kind of runs itself to some degree just because of delegation, incentives, alignment. You know, we have the best in alignment because no one's paid on individual stocks, so based on performance, at the end of the day, performance

is going to be the biggest driver of our management company because the compounding of the underlying assets is what grows our fee stream. So it's just a very aligned entity. I own about 45% of the company. The team owns another, I think 35% of the company. And then we have a minority interest held by the public and some strategic investors that invest with us.

So if you get the alignment right, you get the people right, and you've got, you know, some principles written on a stone tablet, and you've been doing it for a while. But you're super competitive. Sure. I know you want to be the best investor in the world. Sure.

And so you're, this is like one path, and then there's another path that's like dad and husband. Sure. And I would say the one thing, I would say in the last, you know, the setup of this AOI thing has consumed some mine share of mine, as you would expect, over the last 60 or 90 days, because I'm assembling the team. Just like with, you know, there's a moment,

It's a bit like we ran a proxy contest, we took control of a board of directors, now we got to bring in a new CEO. Once we bring in the CEO and the teams in place and announced and everything else, I don't get involved in the day-to-day operations. And the same thing's going to be true for the AI. It's going to be like another portfolio company in some sense.

Although we're up going to sit on the board. You know, I'm going to chair the board. But there is a, you know, it is similar to, I don't think I could be doing setting up the AOI and we had a proxy contest underway at the same time. AOI is the Ackman-Oxman Institute, just for everybody listening. Yes. Every few years, a new platform earns its place at the top of every smart advertisers media plan.

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so you don't need to become a full-time content creator. 30 million people already use it, from financial advisors and real estate agents to 85% of the portion 100. Your first three videos are free at hagen.com slash tkp. That's h-e-y-g-en.com slash tkp. When do you do your best thinking? Often when I'm on vacation, actually. Some of my best ideas are ones where I'm literally totally relaxed or I'm in the shower.

You've done a lot of research about bubbles. I'm curious, like, how would you explain what a bubble is? A bubble is when human nature, when a lot of money is being made, and people have a lot of FOMO, and they want to participate in having money being made, and it leads more and more money going into the same trade, if you will, until overvaluation takes place, and then, you know, a bullions, and then eventually the bubble bursts. They seem to happen around these technological changes, like railroads, automobiles, transistors, the internet.

Sure. Are we in one now? Well, we're certainly in a transition. You could say AI is absolutely transformational. It's the most transformational technology, I think, of all of our respective lifetimes. There are bubble-like elements. There's a lot of crazy stuff going on, you know, in the private world of venture, I think. We're starting to invest in some, you talk about a bubble.

We're Pershing and now investing in some venture-stage businesses, you know, met with a company, let's say two weeks ago and they weren't raising money. Two days later, they close around. They were preempted by some investor who put $50 million at a $400 billion valuation. And then two weeks later, they raised another $50 million at a billion dollar valuation. So there's a lot of people fearing, missing out on the future. And so a lot of capital going into venture, a lot of competition, and a lot of preempting and leading to very high valuations.

I saw a company, you know, Series A round at a $5 billion pre-money. How do you avoid that foam out? It depends on where you are in life. Warren Buffett was remarkable for his discipline over a 60-year career. And actually, interestingly, in the last real bubble, the internet bubble, that's when Berkshire stock hit like an all-time low. Because people said he's kind of lost it. While all these other people are making money, he just didn't participate. But he just shouldered on.

I think it's a question of the short-term versus long-term perspective. What advice would you give founders right now who might be trying to raise? It's a great time to raise capital. And assuming you raise the capital, don't spend it so quickly expecting money will be there forever. What this is reminiscent of is in the internet bubble. There was effectively unlimited amount of capital available for kind of suspect business plans. And then there was a piece in Barron's one weekend. And it listed all of the internet companies in the public markets and how much cash they had left based on kind of their burn rate, how many months to go before they went to zero.

That was probably the week before the market blew up. What happens to a private company that has no capital is a certain discipline associated with bootstrapping yourself. And then you take in $50 million or $100 million and you completely change the way you deploy capital. Betting that there will, anytime you need money, you could just tap the markets. There will come a time. There'll be some form of a blowup, a pretty high profile one where people lose a whole bunch of money. And that will cause a reset. And I think the companies that are disciplined and how they spend the capital, so they have years of runway will be the survivors.

And the ones that have to raise money in three months will be gone. My advice to founders is treat every dollar as if it's your own money and spend it really carefully. And don't expect the kind of a bullion, freely available capital thing to exist forever. So raise money now, but keeping the bank, don't spend it. or spend it judiciously. How do you see the difference between investing, which is what you've typically done in the public markets versus private markets in terms of ventures? Sure, it's public markets we're investing in what we call super durable growth companies,

you know, businesses that are the most dominant companies, their respective spaces, they're highly profitable, they have strong balance sheets. And the key sort of success factor is predicting kind of their ability to continue to, you know, either gain or maintain market share and grow their business. and have pricing power. In the public markets, you know, yes, the CEO matters, but we've always had to view, well, if we don't like the CEO, we can find a better one.

In venture, you're really betting on the person and more than the business plan. And you're investing in a company that is, you know, maybe pre-revenue or it's losing money. You're betting on their ability to grow at a fast enough rate that ultimately they go from being a capital consumer to one that's going to generate cash over time. So it has some similar elements, but it's much more founder-dependent, CEO-dependent, than the public markets. You know, the best public market companies, something happens to CEO, you can find another great person to run it. The best private companies, you know, without the CEO, it's, you know, you probably write it off. How much are you waiting sort of the idea versus the person?

I wait the person more than the idea, because often the original idea is not the idea that turns out to be the success. And the founder is going to hit a roadblock, original idea doesn't work. My most successful venture investment, I didn't like the idea. This was Kupon, which was Baum Kim, and his business plan was to create the Groupon of South Korea. Even at that time, which was 2009, I thought Groupon was a really bad business bottle. But he made a very powerful case for why South Korea was a great pace to launch an internet business. And I liked him. And ultimately, he built the Amazon of South Korea, really nothing to do with, with, you know, with the original business model.

So the most successful, you're really betting on their ability to manage through the challenges that emerge and figure out a business model over time. How is AI changing the investment profession? The most important thing an investor has to do is assess the risk. I mean, the value of businesses, the present value of the cash generates over its life. And its life, you know, the early years of the life matter more than the later years. But you need to predict with a pretty high degree of confidence what a business is going to look like 10 years out, 20 years out, 30 years out, if you want to make a illiquid long-term investment

in the business. And we look at even liquid investments that way. You want to invest in something that, you know, if the stock market were to shut for 10 years, you're happy to own it. It's good discipline. So the thing that you need to think through is the risk of disruption. And what AI has done is massively increase the risk of disruption. So you've got to be very, very thoughtful about, you know, the businesses.

You know, businesses, you go back to Warren Buffett. If you go back and read Warren Buffett, the greatest investor of all time, he was not able to perceive the risk of disruption created by the Internet, for example. Wikipedia disrupting World Book. Well, now we have AI. It's a much more complicated problem. All of us are guaranteed to look foolish with one business or another that we didn't anticipate the risk of disruption because of AI. What businesses do you think become more valuable as a result of AI? I actually met with one of the founders of Cognition yesterday, very interesting company.

And their software or their AI, in effect, enables banks, you know, big financial institutions, for example, that spend a ton of money on, you know, dealing with legacy systems because of an agglomeration of acquisitions they did over time. They can kind of rewrite the cobal into, you know, modern code and do it in a matter of days as opposed to many months. And I think the cost to run big financial institutions is going to come down meaningfully because of AI. Big spenders, if you will, and tech are going to bring some of that. They're going to become a lot more efficient. Now, the question is, are they going to be able to keep the profit? If everyone is going to be forced to use the best software to run their business, more efficiently become more AI-native.

And the question is whether they get to keep that profit or with the profit or the margin gets passed on to the customer. And that's a function of the nature of the business and pricing power. You know, the problem with money generally is its commodity and banks from the business of providing money. So it's a complicated question. It depends on the business. I think AI will enable the creation of many businesses that heretofore cannot be created before. And AI will enable entrepreneurs, people to become entrepreneurs who have never been entrepreneurs before.

Just even the most recent, like overnight release of meta, I haven't had a chance to play around with it. But guys in the office were talking about how easy it is to use, I think it's Muse, whatever. Yeah, Muse study, yeah. Yeah, how easy it is for people to now create their own agents to do stuff for them. The pace of improvement is by far the fastest of anything I've ever seen. You know, if you think about Microsoft in the old days, you know, 1.0 versus 2.0. It might be, you know, a couple of years or more between updates of consequence. You know, here you get an update of consequence in days.

It's a bit like driving a Tesla and they're, you know, overnight, they're updating this software. Does that scare you as an investor? I'm generally not frightened. So scare is probably the wrong word, but I would say you have to be very thoughtful about the moats and how why they really are. And it's the most complicated question for an investor. How to predict the risk of disruption? Businesses that seem like the most dominant businesses in the world, there will be some that will just disappear. Let me tell you about the best new product that I've used in the past five years. It's thematic vacuum. This thing vacuums, it mops, Maddick does everything. Other robots bump into things, but the Maddoch sees things.

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That's drinklm-M-N-T dot com slash TKP. How do you go from I'm interested in this company to now we're writing a check for a billion dollars into it? Usually it's not a company we just woke up and heard of. So we're looking for the best businesses in the world. So over time we kind of build this, you know, call it a library. of companies that we've followed for a long period of time. We've liked the business. And we haven't had a chance to own it because, you know, we may have done a lot of work,

but we said, look, at this price, at 35 times earnings or whatever, it's hard for us to get to a 20 plus percent rate of return, which is our ambition. So we do the work and then put it aside on valuation concerns. And then we wait for the day that either some macro event happens, COVID, it gives us a chance to buy that kind of a business, or even, you know, the SaaS public, Apocalypse. Yeah, SASPOPPABELPS. Which caused pretty much everything to do with software to get repriced.

That gave us an opportunity, for example, to buy Microsoft in our view at a very attractive valuation and a host of other really high-quality businesses. But the process is we typically have two members of the team do a deep dive on a company. They'll start obviously with kind of the SEC filings, 10Ks, 10Qs, conference called transcripts. Then we'll kind of assemble what the key issues are that we're trying to understand. understand. We spent a fair amount of time on expert networks. We'll talk to former employees of a company. We'll talk to other industry experts. We'll talk to people at competitors to kind of get to, you know, the underlying issues. And then we kind of build a model of the business

and kind of get an assessment of, you know, how does this pencil? What kind of return does this generate at the price we can buy it for today? You know, those are some of the elements. Then that team will put together like a deck and they'll present to the group. Now, That two-person team is usually not Ryan or myself. Ryan's our CIO, I guess I call it the portfolio manager, and we do our own sort of independent assessment, which gives us enough information to be dangerous to ask the right questions. And then we have the balance of the team, another five people

who haven't done the work in the name. And that group comes together to discuss an investment. And out of that meeting may come a decision to make an investment in the company, or may say, okay, there's still some open issues. Let's get to the bottom of this concern. And then they'll go back and do the work and come back to the team. That's the basic process. How are you guys using AI internally in that investment process to either speed up the work

or do work that you normally couldn't do? Yeah, today we're really using AI more as a research tool to learn about a certain subject that's relevant. It hasn't, I would say, crept too deeply into a process. We're not using it to build models. In a world where everyone has the same access to AI, it's hard to be differentiated. I think they're, you know, what's left to humanity is kind of the outside the box thinking, the creative process, the insight that's gleaned from looking at all the facts, whereas AI is a bit of a review of everything that happened before. If you look at our most successful investments, they've usually been cases where we've done something that someone hasn't done before.

You know, buying a credit default swaps before, you know, a pandemic, for example, or investing in the stock of a bankrupt company or shorting the credit of a AAA company. before the financial crisis. Those are among our best investments, and they were, you couldn't have found it in a model. You know, AI would not have told you to do any of those things. A lot of value investors have underperformed sort of like post-2010, 2011, but you haven't. Why do you think that is?

We've been very good about continually sort of increasing our standards for business quality. We want to own the best businesses in the world that have a very low risk of disruption, and I think we're quite disciplined And the other thing is that we're not just a long-only equity investor. We have opportunistically made a pile of money in a couple of cases when we've had a view about macro events that's different from others.

And when you have that, and you can find an asymmetric way to make that bad, you can make a lot of money. So we made a lot of money kind of going into COVID because we, I would say, we're weeks ahead of the world and of a few that there would have to be a global economic shutdown. And we made a lot of money because we said there has to be massive inflation. So we bet that raids would rise. One of the things we did that, you know, we've talked about it before, but we had this very large loss, circa 2015, 2016.

And after that experience, I said we've got to take our investment principles and literally engrave them on a stone tablet and put them on our desk. It's a very good way. Having a checklist is actually not a bad way to make sure you avoid mistakes. And we have a good checklist. What's on that checklist? The nature of the businesses we're investing in, simple, predictable, free cash flow generative companies,

the kinds of management teams that we're looking for, focus on large cap, kind of liquid public companies, an aversion to short selling. That was something, a good lesson. And on the asymmetric side, we're looking for a case where we have a view that's different from the rest of the world. And then we can express that view with an instrument

where the payoff is very large relative to the amount of capital that we put to work. But it's a very simple, we're looking for the best super durable growth companies the world. We spend a lot of time thinking about moats and obviously we want them run by the best teams in the world or if it's not run by the best team in the world we want to have someone in mind that we could install if we need to replace the team.

Why did you stop short selling? I never actually liked short selling because it's asymmetry in reverse, right? You can lose infinity and your amount you can make as finite. But I was, we shorted the bond insurers going into the financial crisis and that was a very That was the MBAA one. Yeah, but most of the money we made, we made on the credit default swaps as opposed to shorting stock, and then we did nothing. And then someone pitched me on a fraudulent pyramid scheme.

And then we did the work and said, it's a fraudulent pyramid scheme. And we said, how can we lose money shorting a fraudulent pyramid scheme and then delivering to the FTC, you know, detailed analysis? You know, they'll have to investigate and the people being harmed are the most disadvantaged people in society. So we thought it was an amazing setup. We like to make investments where the wind is at our back. And we said, look, the wind's at our back.

We're helping a group of disadvantaged people who are being taken advantage of. It's an evil company. This has to work. And we underestimated the risk of market dynamics, I.E. Carl, icon, showing up, buying the stock, putting capital to work against us. And it just reminded us that it's a really shady business. The company that you were, they're shorting the pyramid scheme. Well, won't mention the name. But that generated this huge attacks against you.

There was websites against you. There was a famous CNBC segment that I think came as a result of that. Was that? What about the personal cost to you when you're willing to put out a contrary opinion like that? Well, it's much easier to be a investor in companies. You make a lot more friends, right? You buy a stock, other people pile in with you. It goes up.

Everyone wins. You short a stock, and in that case, we were the vast majority, the short interest. So everyone else was sort of on the other side. Then you had a company that we were an existential. threat to. They were willing to use whatever. They had been attacked over time by critics, by media, by otherwise. They built up a lot of infrastructure to go after the critics. So they were kind of well prepared to going to go after us. And then it became a bit of a hedge fund trade where let's go squeeze bill. That was kind of the unfortunate part of it where, you know,

in some sense, the industry is like, okay, these guys are over their skis. We can squeeze them out. And that was not the fun part. You were relatively quiet, I would say, from a public life point of view, compared to what you were before. And now, in the last few years, you've been a lot more vocal. Why now?

I've always been kind of a free speech kind of thing. Go back to my high school yearbook. I was listed as most verbose, and my yearbook epithet was a closed mouth, Gathers No Foot. So I was sort of known for being expressive about my point of view, you know, one of my important drivers in life was I always wanted to be able to say what I believed.

You know, as my follower count grew on Twitter, it gave me on the margin more influence. And as I cared about various issues, you know, I wanted to help advance a narrative. And that's why I've been more public about it. And I've been rewarded by it working, you know, beginning with smaller things. And you can actually influence the administration, the course of history with a tweet, which is pretty cool. A lot of evil can go by if no one's willing to say the emperor's not wearing clothes or more. I want to come back just one second to the AI thing for we move on from it. Like, how are you using that personally?

I'm using it a lot more recently. You know, my daughter's had a major health incident. And AI is amazing at vetting, helping you make medical decisions for a child. It's an incredibly powerful tool. And I think every doctor should actually be checking their work with, you know, Dr. Claude or pick your favorite website, my favorite AI. Do you think companies like Brookfield get more valuable,

where it's like a tangible almost infrastructure, becomes more valuable in a world of AI? And there's another bet, and I'd love to hear your reaction to this, which is, you know, sort of thrive as starting to buy these sports teams under the assumption that we have this barbell, right? We have AI in one hand. On the other hand, these tangible experiences are going to become more and more meaningful to people.

and presumably they'll pay more for those experiences. So on Brookfield, I think it's an incredibly well-run, amazing company. They're very good at infrastructure, and they're very good at financing. They're very good at building things. So think data centers, think power. There's effectively infinite demand for compute,

and they're very well positioned. So I think Brookfield is an AI winner for sure. They'll provide a lot of the backbone, power and otherwise. Yeah, I'm a big Josh Kushner fan. You know, I don't know how much of the recent baseball investment is thrive-related or personal. I'm not quite clear to me, but I do think that there's a lot of people sitting home being lonely, but you go to a big sport event, you know, the feeling that you have at a Knicks game, maybe at the end of the game, half the crowd is unhappy.

But while it's underway, it's sort of a very human... elation type experience. Now, I don't know that baseball teams are, you know, they're not valued in a way that I think about valuing most assets. I think they're valued more like an artwork than a financial enterprise. You know, the vast number of sports teams as far as I know, if they make money, it's not a lot. And it's not like the owners expecting them to generate massive cash. You know, they're taking a small return today on the that's going to generate a lot more cashful in the future. I would think the vast majority of sports owners is prepared to spend every dollar that they're allowed to, you know, in expanding the franchise. Are you going to buy a sports team? No.

You went from being an occasionally allowed activist to trying to enact change behind the scenes. Why the change, and is it more effective this way? It's because we were able to effectuate change behind the scenes when we weren't when we started. When we went into the business, we didn't have credibility or reputation. We hadn't been in the boardroom.

I was 20, you know, 20 plus years younger. And in that world, you have limited financial resources, you have limited reputational resources. You can buy 5% of a company, and you have to win on the power of the idea. To get the big institutions to support you, you might have to end up in a proxy contest, et cetera. 20 years later, I've been on multiple boards,

as I have other members of the team. We have a track record of success of investing in a company. being a long-term investor. In the early days, they would say, oh, you're just a short-term investor. Over time, we've been able to prove that we're actually our interests

or the interests of the long-term holders of the business. And so today, we buy a stake in the company. We literally get letters from the CEO. Recently, we made a number of new investments. And in a couple of the cases, we actually got very nice. Three of the five or six cases, we got letters from the CEO saying, you know, thank you so much for investing in our company.

You know, I read your second quarter letter. You think about the business and the way we do. you know, let us know when we can come see you. And if we have any ideas for them, I'm sure they'll be very receptive in taking them. In that world, we don't have to be an activist. Do you think if you're going to go activist, you should have to hold your shares for a certain period of time?

I don't think you should be legally required, but I think, yes, I think activism, more direct answer you to question that is focused on causing the stock price to go up in the short term, but causing the company long-term harm obviously makes no sense. you know, cut your expenses dramatically, i.e., and underinvested so that we can report a more profitable quarter, that's not going to be lead to a good outcome. Or, you know what, lever up the company and return the capital to shareholders. You know, the most extreme version was green mail, which has

largely been outlawed. But you can view certain kinds of activism as a form of almost green mail. You know, let's benefit the short-term holders at the expense of people who are stuck owning the stock, and the board's job is to kind of shut that stuff down. And I think shareholders, you know, the Vanguard Black Rock, you know, the index fund owners are not going to be, they're forever owners. They're not going to support some kind of short-term initiative that will cause long-term negative consequences. You talked about index funds there for a second.

What advice do you have for the ordinary person who's like making a paycheck and wants to invest? So if you want to be an investor, it's something you've got to allocate real-time to. It's something you have to study and learn. You've got to do your homework on companies. So that's a decision. If you just want to have exposure to the stock market, I do think index funds are a very good approach.

And they've beaten most active investors over long periods of time. How would you do that? Would you do dollar cost averaging on a monthly basis? Would you be like, oh, it's high now, so I'll hold off? Like, how do you think about it? I think the key is to one start young. So the sooner you can start putting aside money that you can invest for the long term, the better for your retirement, you know, the power of compounding.

I wouldn't sit around holding cash because you think the market's expensive. You mentioned stock options earlier. I want to come back to that. How do you think about stock options from a mature company perspective, or let's say meta or Microsoft or an example like that, where they could pay cash easily to, but they use options? Where they use restricted stock as some form. The benefit of some form of restricted stock or options

is the vesting. It gives you some ability to retain talent in a way that just paying someone cash every year doesn't. So I think it's still a very useful. A tool, it's also obviously creates more alignment. People actually care about the share price, which I think is an important discipline for employees. Now, Pershing Square, the management company, which was the gift we gave with purchase, we don't

intend to issue any meaningful amount of options or restricted stock. We have an employee base that already owns, we spread equity very widely throughout the firm. So 80% of the stock or so is held by the team. So we're in the fortunate position of not having to issue equity or options for a very long time. But maybe 20 years from now, we have a new generation that doesn't have any equity in the company. We may choose. It can be a useful tool. I was very happy the market gave me an opportunity to purchase some of that when it came out.

It went down to like $23 or something. Yeah, I bought some too. I want to talk about Netflix for a second. You bought this. You sold it like a month later. And then now you've re-bought it. What went into that decision? You were wrong.

Now you're right. How did you change your mind? Netflix is one of the companies, if you will, in the library that we had done a lot of work on over time. And what created the opportunity, at least the first time as we thought about it, was they had missed subscriber growth guidance. Stock got crushed. And we think Netflix is an amazing business with a very dominant position. And we bought a meaningful stake in the company. We then met with management.

and we shared our detailed deck with them. They completely agree with our thesis on the company, so we felt we were kind of super aligned with management. We talked about things like why Netflix isn't. We said, why don't you take have an advertising model, lower cost advertising model? They said, we're never going to do it. About three or four weeks later, they announced earnings.

And if you go back and review the earnings call, management seemed like shell-shocked. They were, you know, they missed this. number again. They seemed very surprised by this. They talked, but we're going to have to adapt, we're going to have to launch an advertising model, literally three weeks before they said they would never do it. And, you know, my takeaway was you make an investment in a company, and then you learn new information that's inconsistent with the original thesis. You either have to buy a lot more because the stock's gotten cheap and you believe that the new information is not material,

or you have to exit because the thesis is broken. And we made the decision. to exit on the thesis, if you will, being broken. Now, the letter we wrote to our investors, we said, look, we're selling for this reason. We think management is going to be able to work through this problem. But what Pershing Square invests in the highest certainty companies in the world, and we think the dispersion of outcomes here has widened dramatically.

They may get it right and may be a home run, but there's a much greater probability that they don't get a right. They don't know anything about advertising models and whether that's going to be successful or not. And so with the wide, dispersion of outcomes, we have a better place to deploy the capital. We took the money we bought Google, Alphabet. Because, again, for us, it's not, we don't need to make it back the same way we lost the money, right?

We can always take a tax loss, which has some value to us, and redeploy it in something else, which is higher certainty. And again, if you look at the Pergings Square portfolio, we own the highest certainty predictable companies in the world. This lost its certainty element, at least in our mind. Now, what's happened since? They executed extremely well. They built a very successful advertising model.

They became an even more dominant company. They became a much more cash flow generative business. And the streaming wars, they won. You know, the Disney's of the world, the power months of the world, you know, have kind of been pushed aside. Netflix, you probably turn off the lights practically before you turn off your Netflix. And they're incredibly well positioned to innovate. They're the place you go with any creative person to sell your content or to produce your content. And then, but the stock, because they executed really well,

went back to a very high multiple and not interesting. And then relatively recently, the stock cut in half again. So now we had the high certainty business we thought we owned, they proved themselves, at a price that made sense, we bought it back. The business that you're involved with that I think people know the least about is Howard Hughes, how did you get involved in that? And why are you so excited by it? Sure.

So Howard Hughes was an entity we created to make another investment successful. So we invested in a company called General Growth. We bought the stock during the financial crisis. We paid the stock was down 99.5%. We bought 25% of the company. And we did so a few months before it filed for Chapter 11. And it was actually we were pushing the board to file for Chapter 11. They were trying to avoid it.

It was a case where it was inevitable. But our view is we could run a restructuring where the shareholders could keep their investment in the company, maybe with some dilution. And that's, I joined the board of the company. We led that restructuring. What created complexity in general growth versus its direct. competitor which was a company called Simon Properties which is still quite successful. Today was they had addition to Class A shopping malls. They owned a lot of land, a lot of

and they did a lot of development and a business that they had acquired from Rouse. They own these so-called MPCs or small cities and the market hated that business. So we said, look, let's make general growth look exactly like Simon by taking all of those business, all these kind of land these MPCs out of the company and anything else that didn't look like a Class A Mall. We took all the non-core stuff and stock couldn't Howard Hughes on the theory that, and by the way, it's the first time that I've ever seen. Normally when you spin off a company from another company, the spinning company stock price drops by the value of the thing you spin off because it's kind of like a dividend.

In this case, we spun off Howard Hughes and General Gross stock went up, like the overhang from this. So it was David Simon called it Schittco. He was putting in a competitive bid, our structure, which a deal we did with Brookfield, was to create this entity. We called it Howard Hughes. He called it, he was making fun a bid by calling it shit co. But it was really sort of shit go because it was just everything that we thought.

The assets nobody wanted, so to speak. And then we hired a, I thought of quite a very good entrepreneurial team, David Wine Room and Grant Hurlis to kind of work through these assets over time until the portfolio was quite focused in the last five or six years to just MPCs. We said, look, the market. markets finally going to understand why this is a really good business. And MPCs are master plan communities? They're small cities at this point.

So we own the woodlands in Houston, which is, you know, a small city, 150,000 people, something like this, with, you know, high-rise office towers and shopping centers and, you know, schools and churches. I described the business a bit like SimCity the game, where we act as kind of the benign owner of these communities. And what's in it for us is we own all of the commercial lands. and all the residential land. We sell the residential land to home builders. We don't sell the commercial land. We use it to build whatever the community needs.

And if you take a very long, multi-decade view, this is a business that over time generates a huge amount of cash. And we have a series of these small cities. But after 14 years of Wall Street wanting nothing to do with the business, we said, look, it's time for us to re kind of transform Howard Hughes into something else. And the reason why Wall Street doesn't like the core Howard Hughes business is is, you know, land and development sort of have a bad long-term track record.

And while our land is very different from just any land, it's literally, imagine you owned New York City and you owned all the vacant commercial land and all the vacant residential land, and you owned it over a 100-year period of time, right? You could make an absolute, you literally make trillions of dollars. That's really the opportunity. And actually, the land that we own is in places where people are moving to, Texas, Las Vegas, Hawaii. as a public stock, it's always traded a big discount to the value of its assets. So over time,

we've bought a significant stake in the company. We now own 47% of the company, and we're transforming it into what we call a modern-day Berkshire Hathaway. What did Buffett do? He started with a dying textile operation. Over time, he liquidated the textile operation. He reinvested the capital in insurance and banking and a candy company and other businesses over time. And he built a conglomerate ultimately, but a conglomerate that compounded its capital at a very high rate over a long period of time, and it did so without issuing very little stock. So what we've done since we've made our investment in the company, since I became executive

chair, since Ryan became their CIO, is we acquired an insurance company called Vantage Holdings, a PNC specialty insurer and reinsurer. Most recently we recruited, I believe, the best management team in the insurance industry, and we're going to build this little insurer into a big insurer over time. very talented team underwriting the risks that we take on. And then Pershing Square is managing the assets. What Buffett did that was unique is he ran an insurance operation. And actually in the beginning he didn't, he didn't do a very good job with that. It took him time to learn how to run an insurance operation. But he managed the assets, not in just a portfolio of fixed income securities,

which is the typical approach for insurer. But he took basically all of the float generated from writing insurance, and he put that money in short-term treasury so that there was plenty of capital available to pay claims. Then he took the balance of the assets, the insurer and he bought common stocks. Buffett was a very good common stock investor, as we know. And so the insurer ultimately over time made money on the liability side by making a profit writing business, collecting more premiums than it paid in claims. And then it earned an attractive return on its assets. And when you earn an attractive return on assets and you have basically negative cost liabilities, you can run an insurer that generates a 20% or more annual rate of return. And that's

what we're underway to do at Howard Hughes. Now, no one notices and no one cares. Why? Because it's still a real estate company that people hate. But the nature of Howard Hughes's core business is over time, it self-liquidates. So each year we sell hundreds of millions of dollars of land. Over time, our land assets will go away. Each year, we sell, you know, hundreds of millions of condominiums in Hawaii. We've got four billion of condominiums under contract in the process of being delivered. We generate something approaching 300 million. of net operating income from the real estate assets. So historically, we took all of the cash,

we generated and reinvest in real estate. We bought another MPC in Phoenix, for example. We're no longer going to do that. We're going to reinvest whatever capital is necessary to make these small cities continue to be amazing places to live. And they're always highly ranked as among the best places to live in the country. But beyond that, we're going to generate billions of capital

that we're going to deploy initially in insurance. And when you mean deploy, that goes into the equity component of sort of the insurance company, which allows you to write more premiums, but allows you to invest sort of the equity. That will become capital. We've already put $300 million of additional capital advantage since we bought the company. And over time, well, as we generate, and over time as we generate more cash from the real estate operation, and we're looking at things we can do to accelerate the transformation from a real estate company to an insurance holding company. But what Buffett

had was he had a big stake in the business. He owned half. We owned 47%. that allowed him to think long-term. So we're taking the long-term approach. We've recruited a very, very talented team. And so I think we have the liability side set up for us to be doing smart things in insurance. And we're going to do a good job managing the assets. I have so many questions about this. So modern-day Berkshire Hathaway, that term gets thrown around a lot.

What does that mean to you? It means we're going to operate much the same way Buffett did in terms of insurance, will be that, I mean, the driver of the value of Berkshire Hathaway over time is its insurance operation. When Buffett talked about buying Coca-Cola or other American Express or other companies, those are assets purchased in the insurance company. So we're going to take a long-term view on the way we manage this insurance operation, and we're going to grow the business without issuing a lot of common stock.

All right. So there are a finite number of shares outstanding, and the beauty of insurance, it's actually a very cash-generative business. So what you're going to see over the next several years is the business transforming. Today, it's probably 70% real estate and maybe 30% insurance by capital. And then it will migrate over the next five years to something, maybe 70% or 75% insurance, 25% real estate unless we figure out a way to do that more quickly. So if you were to list the keys to Berkshire success, sort of like looking back, he had control

so he could make... Take a long-term view. He wasn't exposed to the short-term wins of his shareholders. He had permanent capital. He didn't pay dividends. He retained all the capital of the business generated. He had a talent for investing in common stocks, and he was able to recruit talented people

to run the various businesses of Berkshire Hathaway. And he also didn't dilute his shareholders by issuing a lot of stock options or by issuing stock and acquisitions. Why don't more people copy that? It sounds so simple. It's not sexy to be in the investment operation of insurance company. I think that's a big part of the reason why people don't do this.

Now, it's difficult to get to a 47% stake of a public company. Usually doesn't happen. This is sort of a creature of history. Do you think a lot of Berkshire success, though, boils down to the fact that, I mean, Buffett could have been paid two and 20 at some point, but he took this modest salary and sort of grew his wealth alongside the shareholders? Like, how different would the success of Berkshire look, had he taken two and 20, not that you're doing that, but like on the portfolio.

I think his willingness to work for free, in effect, was a very helpful thing to the ethos around Berkshire, probably made negotiations around compensation for other employees easier. Look, Buffett ran a partnership where he got something like 25% of the profits over a 6% return and the cost recovered by the partnership. And by the time he retired from that business, they get 100 million under management, of which $25 million was his and that $75 million was held by other investors. But I think he figured out that if I keep running in this partnership format, I want to have permanent capital.

He was getting tired of dealing with investors who were giving him money, taking him money that were affecting his results. He probably did the math and said, look at the power of compounding. If I own half of this little Berkshire Hathaway thing and I generated 20% return for the rest of my life, I'll end up in a very good place. and the marginal promote is not that important to me.

And by the way, he was able to run the investment operation as a one-man band, which I think also enabled him to do this. I remember talking to Charlie Munger one night about, and I asked him what the most underrated aspect of Berkshire Hathaway's success has been, the part that people don't talk about the most, and he said we were almost never forced to make decisions by circumstances. So we always had options. How do you think about that?

What's your reaction to that? We've designed our business around that. The unique thing about Pershing Square is, if you look at the various, so we manage an offshore entity called Persian Square Holdings, employees on 28% of that company. We manage Howard Hughes at its own directly and indirectly about the same by employees plus the Pershing Square funds. And then we just took public an entity called Pershing Square USA,

and employees invested $500-something million in the entity. So what's unusual about us is, we have sort of these anchor stakes in each of the public vehicles we run, and each of them is sort of a permanent capital entity, which means that if there's a panic in the market and people want liquidity, they can sell the stock of each of these various companies, but the capital stays in the vehicle, which enable us to buy stock during the COVID crash or to buy stock, you know,

during the financial crisis. I think one of the very smart things Buffett did is he decided at a certain age that, you know, how he wanted to live his life, and he didn't want to live a life dealing with constantly raising money, which is what you have to do if you're in the hedge fund business. The hedge fund business, when you do really well, institutional allocators take money away from you because you come up too big a percentage of their portfolio. When you have a bad period, people take money away from you because you're having a bad period.

So you have to be, and you really can't close because what happened, if you're not open, people don't do diligence on you so that the next time you need to raise capital, It's a many-month process for people to learn about your business again. And you're spending all your time, like raising capital. As you get bigger and bigger, it consumes a huge amount of your time. And I attribute our biggest investment mistake to my being distracted by having to be on the road to some extent, raising capital, trying to keep the capital-based staple. And we made a decision to just get out of the business of managing money where the money could leave,

you know, the sort of open-ended funds. And if you look at Pershing Square today, if we just compounded anything close to historic rates, We'll be managing a trillion dollars in 20 years, and that's plenty. You know, that's a good business. Let's talk about Braymont. How did you get involved with the watch company? Yeah, Braymond. So the story here is I was at Howard Hughes Board meeting, and it was in Dallas, and it was,

our office at the time was in a mixed-use complex with the shopping center. And during a lunch break, I went down to the mall, and I walked by a watch store. And there was a very good young salesman, and he talked to me about a Vermont watch. I never heard of the brand before, and I ended up buying a watch. And I somehow lost it over time. I have like a watch safe, and it got buried in the watch safe. And years later, I was heading to London for actually Pershing Square-related reasons. And a friend had just told me that he was wearing a nice Batik-Philippe watch walking down the street in London.

and it was stolen. And actually, he's like, Bill, you cannot wear a nice watch in London anymore because you're gonna get, you know, at best they're gonna steal it, at worst, you can get hurt. So I literally said, oh, what watch can I wear that I can, we're a little less concerned about losing it and or it's not a recognized brand that a thief is gonna go after.

I'm like looking through my watch drawer and I found this Burma watch. I was a super cool watch, so I put it on. And I was staying in Mayfair, and I was walking down the same thing. and I walked by the Bremont store like literally like the day the next day I got to London so I walked in I really liked the watches and I ended buying eight Bremont watches for basically his for gifts and that night I had dinner with the chair of Pershing Square

holdings and I gave him a I gave him a Bremont a watch and and oh I wrote a little note when I left the shop they gave me like a free Bermont clock that I could put on the wall. And I said, you know, who owns this company? And they said, oh, two British brothers, the English brothers. And so I wrote them a little note. And I said, you know, dear Mr. and Mr. English, if at some point you are interested in having a partner,

I would be interested in potentially being that partner. And perhaps I could help you grow your company. I've always kind of, my father kind of taught me to like watches. You know, it was a bit of a father-son thing. And they emailed me back. emailed me back, I did a Zoom, and they said, actually, we have a longtime holder that's interested in selling their interest, and ended up buying a smaller minority stake in the company.

And time went on, and the thesis at the time was, we have this really good growth strategy, we're gonna open all these boutiques, you know, our boutiques are profitable, well, it didn't work out. And they burned through the capital pretty quickly, But I view these investments a bit like hobby investments. So it's not like something I put a lot of resources in and doing.

It was a bit of a Warren Buffett-style investment where I didn't do due diligence. I just assessed the character of the people I was dealing with Shook Hands. The only involvement I had was helping recruit a new CEO, a guy named Davideh Gherato. Anyway, the things weren't working out between Davy Day and the board.

And the board had a disagreement with him about the direction of the company. And I sided with Dobidae. I thought he was making all the right decisions. He dramatically improved the quality of the watches. He's a phenomenal watch designer. I love the direction. But sort of the old guard, who had been with the company for 20 years,

felt it was too much change, it was coming too quickly. We even have a new logo. Are we losing the ethos of the brand? And there was a bit of a board fight. And being a bit of an activist, I was, you sort of got a little more and ended up putting in a chunk more capital, buying effective control of the company. I joined the board as non-executive chair.

My nephew, I inserted it as kind of to help fix things. And they've made amazing progress in the last, I would say, a year or so. And it's been kind of a fun, you know, other people in my industry by sports teams. I own this little watch company, and it's super cool. And this is a watch that's going to go to the moon. I got to get one of this.

Yeah. This is called the Supernova. And the one of the things that's cool, the face has all of these phosphorescent. The face lights up completely at night. It looks like these solar arrays in space. You know, it's a ceramic, you know, you've got a ceramic bezel. It's a Swiss movement, you know, one of the highest quality Swiss movements. And, you know, it's phenomenal design.

And we've got a lot of fans out there. And I think people like, I like wearing a watch where the guy doesn't, you know, doesn't know what I paid for. Yeah. And also, because they're less well-known, the thieves don't chop off your wrist for them yet. I mean, maybe that's, when we get to that point, maybe that's good for the brand. Talk to me about recruiting a new CEO.

That's one of the things that you've done as an activist, and you sort of did it here again. What is the process that you undertake to find the best person in the world for that position? Like, how do you do that? Why are you so good at that? So we've done it a couple of different ways over time. For Pershing, the way we've generally done it is, in our experience, finding someone who's done it before is the lowest risk, highest return potential. So Chipotle went through crazy food safety issues, and we needed someone, in Brian Nichols' name, kept coming up. And then we used these sort of expert networks to talk to people who used to work for Brian or compete against Brian.

And you can learn a lot by the kind of 360 views. You know, just had kind of glowing references, and then we meet the guy. I would say one of my best skills, though it's not been perfect, I've made a few mistakes. You know, over time, become a very good judge of people. You know, what do you need? You are super passionate about the job, a lot of capability, a lot of energy, and, you know, honesty, character, et cetera. And you can assess that, I think, in an hour. I want to switch gears a little bit and talk about you as a person.

And what are other people's biggest misconceptions about you? You know, I had this experience over the course of my life where people would say, Bill, I had a completely different impression of you based on what I read in the media than when I meet you in person. Bill, you seem like a really nice guy. Yeah, you're much nicer. And perhaps some of my Twitter expressions make people think I'm just a firebrand or whatever. But I'm not a hostile kind of person. I'm just someone trying to get to the truth.

I think media like positions people in this way, right? Like certain people for whatever reason, through your activism, you kind of get positioned in this. And then people form these misconceptions. I actually think that we, you know, the herbal life thing did do some reputational damage over time because they sort of called me out. You know, being a short-sellerist, I would say the general populace just thinks that's like an evil, bad thing. And so I think having that be very much in the rearview mirror, you know, the herbal life short was like the end of 2012. That was a long time ago.

Believe it or not, we'd not made an activist investment for more than a decade. Wow. The last activist investment was in 2016. Would you ever do it again? I don't think we'd have to be an activist in any kind of traditional form. We will get quite involved in the companies were involved in. And I guess if we were at a big stake in a company, we felt they were doing the wrong thing. and we thought it was worth the energy.

And I don't know that we're ever going to have to run another proxy contest. I don't think you run a proxy contest against someone with 3 million Twitter followers. I think it ends badly for management. I think we have a sufficient amount of influence that we can get to the right answer with dialogue. That's what I think. So I don't think we have to be an activist. Activism is when you're outside the boardroom and you're not going to get invited in. Today, I think any company that we're a shareholder in, if we wanted board representation,

they would give it to us because we're a major shareholder. We've got a good reputation. We're a long-term investor. We're going to do the right thing for the business. We always end with the same question, which is, what is success for you? My definition of success for, you know, obviously, Persian Square is, you know,

I want the investors, obviously, you can measure it. You have a very attractive, you know, life-changing, make a life-changing investment with us so that by the time they retire, they can do the things they want to do, they can pay for education for their kids, so they can buy the house they want to retire in. You know, for me, my definition of, you know, 60 is like a moment for me. I celebrated my 60th birthday in May.

Go deeper on that, a moment for you. What does that mean? I sort of think about each year, like I love the summer. It's one of my favorite times a year. And the summer goes by so quickly. And, you know, most people live, you know, healthy people live to their 80s. I'm 60. So that's 20 to 25 years from now.

And I'm hoping to AI and doing a better job enables me to live to meaningfully more than that. I have a grandmother who lived almost 106 and she smoked and drank. I don't know if that was contributing to her longevity. But, you know, I want to, by the time I have no more time, I want to have had a significant life. And my definition has always been I want to have the greatest beneficent impact on the largest number of people. you know, obviously you start with you family and friends and so on, but, and actually, I think this institute is going to be a way I'm going to be able to have a huge impact and something that's really needed. So success for me is getting, is having a significant life.