The Daily Stoic - William D. Cohan on Power, Ego, and the Imperial CEO

Episode Date: February 25, 2023

Ryan speaks with William D. Cohan about his new book Power Failure: The Rise and Fall of an American Icon, the link between Marcus Aurelius and the “imperial CEO” of General Electric Jack Welch, the legacy of Thomas Edison and GE, the egos of powerful CEOs, and more.William D. Cohan is a business writer and former investigative reporter. He is a graduate of Phillips Academy, Duke University, and Columbia University Journalism and Business schools. Prior to his career as a writer, he worked on Wall street in mergers and acquisitions banker, having spent spent six years at Lazard Frères in New York, then Merrill Lynch, and later at JP Morgan Chase. His books include House of Cards: A Tale of Hubris and Wretched Excess on Wall Street, Four Friends: Promising Lives Cut Short, and The Price of Silence: The Duke Lacrosse Scandal, the Power of the Elite, and the Corruption of Our Great Universities.✉️  Sign up for the Daily Stoic email: https://dailystoic.com/dailyemail🏛 Check out the Daily Stoic Store for Stoic inspired products, signed books, and more.📱 Follow us: Instagram, Twitter, YouTube, TikTok, FacebookSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Hey, prime members, you can listen to the Daily Stoke podcast early and add free on Amazon music. Download the app today. Welcome to the weekend edition of the Daily Stoke. Each weekday, we bring you a meditation inspired by the ancient Stokes. Something to help you live up to those four Stoke virtues of courage, justice, temperance, and wisdom. And then here on the weekend, we take a deeper dive into those same topics. We interview stoic philosophers, we explore at length how these stoic ideas can be applied to our actual lives

and the challenging issues of our time. Here on the weekend, when you have. Here on the weekend when you have a little bit more space when things have slowed down be sure to take some time to think to go for a walk to sit with your journal and most importantly to prepare for what the week ahead may bring. Hey it's Ryan Holiday welcome to another episode of The Daily Stoke Podcast. I remember it quite clearly because it was totally unexpected and very cool, but I was in New York City. I was doing the launch of conspiracy. I met my friend Casey Neistat at Chelsea Pierce, and

we went for like a six or seven mile run up the side of Manhattan to the USS Enterprise, right? That's the one there we turned around. There's a great little run and I could see I was carrying my phone because I had to meet up with them and I didn't want to get lost and blah, blah, blah. I could see stuff was like going off on my phone and I was getting a bunch of texts and messages, but I didn't check them. I try not to check the phone in the morning. I try especially when I am in the midst of a book project or a launch, not to let news in for concern that it could be really bad news that knocks me out of the headspace I want to be or good news that sucks me into a bad place as far as the ego goes or just distracts me.

So I didn't check it. I get back to my hotel and there's a ton of texts from basically everyone I know in publishing because conspiracy had been somewhat unexpectedly reviewed in the New York Times. And it was a crazy review, like a crazy good review. It's very unusual to get a review in the times. It's certainly unusual to get a positive review. And this was just, you know, very unexpected and very amazing. Well, I was reading it and I noticed the name. And then I realized I'd actually read a book

by the author before his name was William Cohen. And he wrote this fascinating book about the fall of Bear Stearns that I'd read called House of Cards, a Tale of Hubert's and Wretched Access on Wall Street in 2009. I think I'd seen about the daily show. This is a long time ago, and ended up reading the book, Found It Fascinating. And then I'd followed his stuff. I would read it every once in a while in Vanity Fair, where he's a staff writer. And so again, just a totally unexpected and very kind review.

And actually, if you look at conspiracy, which is one of the books I'm most proud of, certainly not my most popular book by any measure, but one of the ones I'm most proud of, because it was a challenge to write. He's there on the covers, Blurb is there on the cover, which is very nice. And so when I saw that William had a new book out, I wanted to have him on. Power failure, the rise and fall of an American icon is about the century plus history of GE. It's a lot about Jack Welch and his successors as well. It's fascinating to look about power, about excess, about hubris, about money. And you might not think this would connect to stoicism, but in fact,

he talks about Jack Welch as the Imperial CEO. And William and I talk a lot about this idea of imperialization, which Marcus talks about in meditation. So this ended up being a fascinating philosophical discussion that I think you will really like. William is both a thinker about finance and business, but also had a career in finance and business. So he knows what he's talking about. He's a graduate of Phillips Academy Duke University, Columbia University, Columbia University Journalism School, and Columbia University Business School.

So he's got one hell of a resume. A very smart dude. I think you're really going to like this interview. And as it happens, and you'll see he's a fan of the Stoics. That's probably how he ended up reviewing conspiracy. But nice little full circle moment. And I'm excited to bring you this interview. Check out Power Failure. I think you'll really like his book, of Cards, his book Four Friends, Promising Lives Cut Short, has some real momentum, Mori themes in it. And he also wrote a book about the Duke LeCrosse scandal, which you can check out. It's called The Price of Silence. You can follow him on Twitter at William Cohen, that's C-O-H-A-N. I think

you're going to like this and enjoy. Hi, I'm David Brown, the host of Wunderree's podcast business wars. And in our new season, Walmart must fight off target, the new discounter that's both savvy and fashion forward. Listen to business wars on Amazon music or wherever you get your podcasts. Well, let's do it, You know, I loved the book. I thought it was fascinating. And as I was reading it, I was sort of thinking of your baresturance book from a few years ago.

There's something very Shakespearean about these characters that get so big, so successful, and then life kind of brings them back down to life. Like in the Bear Stearns book, I remember that scene, the guy, he's riding up the elevator in the building that his company owns and built its his legacy, and then he's coming back down and it's worth nothing. Or in the case of the new book, like your Jack Walsh, your billionaire, you run one of the biggest companies in the world.

And somehow your club not enjoying your retirement is complaining about the guy who came after you. It's like King Lear or something. Yeah, it's, I mean, it seems to happen, right? I mean, these guys, and unfortunately, it's mostly guys, right? Just seem to live in this rarefied world where they expect everybody to cow-tow to them, everybody to bow to them. I mean, I think, frankly, Ryan, it's too much already. I mean, you just look literally

in the last month at what Elon Musk has done. He and his ego have done to Twitter and what our young deity, SPF, has done to his exchange and the million plus customers and the billions of dollars lost. It's enough already. We have to rethink this kind of billionaire's deity concept that we're seeing so infatuated with in this country. It didn't start with Jack Welch obviously, but he was one embodiment of it, and he probably was worthy to some extent of it. But I mean, now it's just gotten completely over the deep end.

You know, you rendered this scene really beautifully at the beginning. You meet with him and his first words out of his mouth are, you know, I fucked up. And he's just ramping about the guy that came after him. The only thing that struck me is kind of disgordinate about the note was like, when you guys left the club, you got in a Jeep Cherokee. And that didn't, it struck me as if you were writing a screenplay of that scene, that's not the car you would have in the end. And well, as I said, I was expecting the other car, his Mercedes convertible. In fact, I was expecting the other car, his Mercedes convertible. In fact, I was a little disappointed

that it wasn't the Mercedes. It wasn't his Mercedes convertible. It was this standard issue cheap jerky, which is, even though it's Catholic, it's sort of New England wasp, essence. I'm Jewish, he's Catholic, but we're probably both two of the most obvious Jews or Catholics, anybody new, both New England, upbringing, Massachusetts.

Yeah, I was wishing I was thinking, well, it'd be much more appropriate for him to be driving what he usually drove around the island, which is Mercedes convertible. But there was his Jeep Cherokee, and then I thought, well, now I'm gonna die because he's driving literally in the middle of the street. But at least when I go out, my obit might say that Jack Welch was driving the car that I died in, so that was okay. He's not driving responsibly,

and there's the pain of the seatbelt indicator not being on. I don't know, both those things kind of felt to me to be a little bit indicative or maybe symbolic about how someone like that, what their relationship is to risk. Yeah, I mean, I even asked him, as I said, to put his seatbelt on, if only to get the beeping to stop. And he had no interest in that. And then by the way, he doesn't strike me as, you know, he's got this, he had this sort of impish kind of quality about him. So it didn't seem like he was doing it to be nefarious or an asshole. He was just like, okay, I'm doing what I want to do,

which is I don't want to wear my seatbelt and I want to drive down the middle of the road and I'm going to. And both of those things struck me as odd based on who I thought he was in our two hour long conversation that we had just ended. I really, I guess maybe it is consistent with the first thing out of his mouth

is I fucked up in the selection of my successor. Maybe they're all just part of a piece that I should have anticipated. But look, you're a writer, you're an observer of human nature, and that's one of the things I love about your books is, you know, this is like for me as an observer of human nature and someone who's going to write this scene up, because it was obvious that I would. I mean, this is just more delicious than I could possibly have anticipated. It's just, it's strange because on the one hand, they're very ordinary people and then

everything about them kind of has this surreal, as you said, like a refined quality. And you can't tell if it's like the Fitzgerald thing where the very rich are different than you and I, or if there's some part of their mentality, one internalizes or one is born with it that allows them to make these sort of billion or trillion dollar decisions that affect millions of people. And they just kind of do it for the same reasons as you saw in the car like I wanted to drive down the middle of the road or my gut was telling me I needed to get out of this business or that business.

It's like, it's almost a general quality. I don't know what you want to call it, but the ability to make decisions for which other people's asses are put on the line. It's not a trait that I think you naturally have or most people have. Well, and certainly Jack Welch was not born anything like that. I mean, he was not only child, his father was essentially a train conductor, you know, on the train line north of Boston to the north shore of Massachusetts that I used to ride on as a kid. And, you know, he grew up right near there and he, like, cattyed at the Jewish club. His mother was a homemaker and, you know, told, you know, just doted on him. I mean, he, I mean, I don't, I think that probably this started

to be his affect. And then around the time he, you know, was the king of Pittsfield, Massachusetts, when he was head of GE plastics and making it very successful business and starting to climb the GE ladder. I'm sure, at that point, he literally had his own fiefdom inside of GE. You know, you maybe use the King enough

and he's like the King of Pittsfield, Massachusetts, but he had his own private jet. His office was in some, you know, Hilton in downtown Pitsfield. And, you know, he would go out with the boys and Karoo, the Karrows around, and never wanted to go to headquarters in Fairfield until he finally realized that if he didn't go to Fairfield, he was never going to have a chance to become CEO. And he wanted that more than he wanted to be the king and nothing. So he wanted to be the king of everything. And I think at that point, he suddenly got very enamored as people does.

I mean, it's not really, it's not really that hard to get enamored of people fawning all over you and sort of the imperial CEO. I mean, you know, that's not really a hard thing to, you know, say to yourself, my God, can I get used to this? And so I think he got quite enamored of it and used to it. And when you're the CEO of GE, I mean, people fall on all over you. I mean, it's an imperial, it's like an imperial presidency. You, you know, the private jets, the multiple private jets, and the, you know, the great surroundings,

and, you know, you get to meet with whoever you want, whenever you want to, and people are like falling over themselves to have access to you. I mean, so, you know, it's no surprise that this only child who was born into severe modesty, relative, I mean, not poverty, but certainly lower middle class got used to the trappings of great wealth and loved people finding all over him.

The Imperial CEO is kind of an interesting way to put it there because it does seem to be this class of people, a small group of people who have a ton of power. You know, at least the Imperial president, as they call it, is sort of obligated to the voters or there's some public component of what they do or at least the pretence of it.

But to a generation of CEOs, it feels like this is the school of thought they developed, where it's all about maximizing shareholder value, but without maybe the constraints of the previous generations, the social norms or the governors on what they could or wouldn't do. Yeah, and if you are the CEO who's responsible, already even in 1981, when Jack took over GE, GE was, and by that point, been around for 85 years, for 85 years, it was already highly regarded and highly influential, the creator of the business roundtable in Washington.

But when you're the CEO of a company that when you take it over is worth 12 billion and then under your leadership and tutelage, et cetera, it goes to become worth 650 billion in the most valuable company in the world and the most respected company in the world. And you're the CEO of the century. Then you can imagine what happens to you then. So this was, you know, this is just, I mean, he was truly invincible. And GE was the combination of Apple, Google, Microsoft, sort of all rolled up into one. And Jack was probably even more revered than Steve Jobs was when he was the leader.

Steve Jobs has become more revered in his departure, even though we should really be revering Tim Cook, who's taken Apple from value of 300 billion to 2.5 trillion. He's probably created more shareholder value than any other single person in the history of the world. But you're right, a lot of the foibles that Jack Welch did in his life. He would have probably been canceled as a CEO these days, despite that incredible performance for shareholders. It's weird to think how old GE is as a company. I mean, what do you think Edison would have thought of his legacy, of the people who inherited

what he had made? Because it's interesting he was this creator, he was this brilliant inventor, but he was also a killer. I mean, like in the sense of, is a shark. Like, he knew how to make money, he knew what would make money, he would defend what he did. But he was also, I think, by definition, not one of these educated financial types. I mean, he was a real engineer, not a financial engineer.

He was a doer, not a manager. Well, and one of the things that I learned in the researching and the writing of this book is that there's this huge myth around Thomas Edison and G.E. He actually had much less to do with G.E. creation than the myth makers at G.E. would like you to believe. Like, you know, on the one day that G.E. was cooperating with me in the writing of this book, the one day, literally one day they let me go up to this town outside of Albany where they had their research center. And you go into this research center, very imposing building in beautiful, you know, Niske, Yuna, New York. And like the whole lobby is all about Thomas Edison and his role in creating GE,

and there's his desk, and there's the stock ticker he created, and there are his patents and everything and his famous quotations, et cetera. But what I learned in researching this book is actually Thomas Edison did not want to create this company. He had created something called Edison General Electric, which was a company that made electrical electric power generation.

And then it had to be connected to Grids, which is something else that his company did. But by the time this all came about, which was in 1892, he was no longer the CEO of the company. A guy named Henry Valard had become the CEO and Henry Valard had been a New York banker and then a big railroad tycoon and he had become affiliated with JP Morgan. And JP Morgan, the man, was the money behind Edison General Electric, along with Henry Vellard and Henry Vellard was the CEO. And Edison was basically just pushed out as a shareholder,

a minor shareholder of this company. And then Henry Valard and JP Morgan wanted to merge the company into a company that had been created, that had been bought by a guy named Charles Coffin, who was in the shoe business in Lynn Massachusetts and wanted to get into something sexier like generating electric

power. So he and his venture capitalist in Boston decided to buy Edison General Electric to create General Electric. Thomas Edison was completely against it. Like he tried to stop it repeatedly and could not, because the money men had to have their way, just like they do today, and they did the merger anyway, and soon enough, Thomas Edison was out, OUT, gone sold his stock and moved to New Jersey to create a limestone mining company or something. Yeah, you got into concrete or something like that. He had a weird detour.

Yeah, concrete, total detour. Yeah, that did not work out particularly well. Not many of his things worked out particularly well commercially for him. I mean, now we take many, all of them for granted, but I don't know that he benefited tremendously. I don't think he was a rich guy or anything, not like his money men who did very well, but he didn't want this merger and this first CEO of the company was Charles Kaufman, not Thomas Edison. But it's not a sexiest story to have the shoe manufacturer, Charles Kaufman, be the founder

of GE when it could be Thomas Edison. So voila, instant mythology, we have Thomas Edison as our founder, not true though. But that does make sense then with where it ended up because it was always a company more focused on financial engineering than actual engineering. And it's enormous growth and valuations up from the stuff. It's from how that stuff is valued and packaged, repackaged. It's the people who manage to take the widget,

and turn it into sort of make it something bigger than that, build the PowerPoint presentation, the products around it. That seems to be what made GE become what it became. Yeah, and even so it was founded in 1892, and then in 1893, as I'm sure you will remember, there was a major financial crisis, and GE had, it was a public company from the outset and had 10 million of debt, which proved to be too much debt in 1893 because their revenue fell off a cliff in the second half of the year. And their debt traded down at a discount and what saved the company from bankruptcy was the decision to buy that debt back at a discount.

So talk about financial engineering right from the get go with JP Morgan, the man who was up at his house, you know, whatever, summering in Maine, finally giving the final okay to do that. And then Charles Coffin doing that and then deciding from then on out, he was going to have like a fortress balance sheet, like Jamie Dimon talks about it, JP Morgan, or whether that's true or not remains debatable. But that was the mentality. And the irony of that, of course, is that the balance sheet was not fortress and in 2008, that became a huge problem for GE. There had way too much debt. And they were reliant on the short-term financing markets. So they saved themselves from, you know, from Ignomy, you know, in 1893, but you know, it still ended up there in 2008.

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these enormous companies, all these employees, to go to the Shakespearean level of it, it comes down to like, I'm picking my successor, why am I doing it? Am I judging them properly? Am I blinded by this trade or that trade in them in myself? And then the successor comes in and they're successful for this reason or not this reason. I agree you talked about you on Musk earlier.

It's like one of the largest private transaction in history. And then it's clear that it's really this guy's just like a guy. Like one of your friends is addicted to using the social media platform. He's running the largest social network in the one of the largest social networks in the world. Basically on his personal whim, it's totally unimaginable,

but also, and unrelatable, but also so normal. It's like buying a restaurant down the street because you really like it and running it at the ground because you totally misunderstand how it works. It's fascinating and terrifying of sort of the will,

the power, the interdependence of all things, how much life, current events, pivots on individuals and their personality flaws and virtues and vices. I mean, I mean, the Musk Twitter story is totally, you know, singular. I mean, it's really, you could not dream it up, right? I mean, it would be only possible to happen at all in sort of a world where there are these incredibly wealthy people who we of course lie in eyes. And then there's this pandemic that makes them even richer. Like, like,

I think at the beginning of the pandemic, Musk's net worth was like $30 billion. And then, you know, quote unquote, at the end of the pandemic, it was like $250 billion. And if it was $30 billion, there's no way he would spend $44 billion buying Twitter. So the only reason he could like have the folly of thinking he could actually buy Twitter for $44 billion buying Twitter. So the only reason he could have the folly of thinking he could actually buy Twitter for $44 billion was because he'd had the folly of seeing his net worth going from $30 billion to $250 billion, which is absurd. Yeah, like his net worth went to this enormous level on paper, but it's not really real. And in one sense, it's all this financial engineering.

Yeah, real assets, real estate, et cetera. He had an inflated asset. And I'm sure he knew on some, I mean, it's true. I'm sure he knew on some level that it was funny money because so much of his net worth was tied up in Tesla, which was, you know, absurdly valued at one point worth more than a trillion dollars. And so, you know, what people do often when their net worth is inflated by some sort of crazy valuation metric is that they try to, you know, take some risk off the table by turning it into something else, which we might hold its value like cash or real assets or US treasuries or, as you say, real estate.

And he decided to buy Twitter, which is like theater of the absurd. And then overpay for it. It's a wasting ass, and he's the one wasting it. I mean, it wasn't so great to begin with, but now he's totally wasting it. I don't think, there's never been, as you alluded to at the beginning, a buyout where the equity investor puts in, you know, $31 billion

of equity of which 24 of it comes from him personally. Okay. I don't think there's ever a single individual has ever put $24 billion into a single deal before. Okay, that's Elon Musk. Then he corrals 18 of his buddies to put in another $7 billion. So that's the 31. Then he borrows $13 billion from a group of banks. That's the $44. And then the day this deal closes, that equity is essentially wiped out. And the debt is worth half of 13 billion.

I mean, you can't even imagine any of this. I mean, and then in the middle of all that, before he closes, he wants to get out of the deal, because he's got buyers, remorse, and he comes up with all these bullshit reasons to do it, and takes everybody to court and Delaware, and And then, you know, decides well, you're wrong, gonna lose that. So I better close it. I mean, who, I mean, you couldn't even make this up if you wanted to.

And the thing that's incredible to me is literally that despite all of that equity in the deal, the company is still hugely over leveraged and he could very well go into bankruptcy, as he himself said. And he could just lose control of it as soon as April when he has to make his first interest payment. No, it's weird, as we said, like it's incomprehensible and unreal.

And yet it's somehow kind of exactly what you expect would happen if someone was stretched so thin running all these different companies at the same time. And then they're put in charge of one enormous unwieldy thing that they actually weren't super familiar with outside of their own use, like they didn't do due diligence, they don't have a transition team. It's very human and Shakespearean. It's the stoic said, character is fate. If you put a person with unmanageable, manic energy with a cul-de-personality around them, how it's gone is basically about as bad as I think you'd predict it would go.

I mean, if you were writing a novel, you might write it this way. Yeah, yeah, right. But would you ever expect to see it in real life? IRL, actually happening? No, no. It's madness, total madness. You know, to be charitable though,

I was talking, I was talking to a person who sort of put some actually a significant amount of money in the fund that was purchasing it. They were saying that there's some, they were arguing that it's like not unlike sort of 80s corporate rating, we have these inflated complacent unwieldy big companies. You buy them, you get rid of the stuff that's not profitable, you renegotiate certain deals, you cut off certain expenses or perks. You chop the asset up.

He was basically saying he believed it was a corporate takeover akin to the ones we saw in the 80s. I don't know if that's actually right, but I thought it was at least, I was trying to think of what is a smart take on it that's not my take. And in theory, I buy it as a potential argument, but just watching how it's actually unfolded, it seems way too contradictory, inerratic, and inefficient to possibly be not even adhering to that thesis, for that thesis to be a big part of the motivation. I mean, I'm laughing because you always hear somebody

who's involved in a leverage bio talking about there's a bloat at the company and we can streamline it and make it more efficient and increase margins and pay down the debt and make a fortune for ourselves. That is like textbook, of course they say that. Are you really telling me that, okay, the bloat was more than half the workforce? Are you telling me that these more than half the workforce had no role, no substantive role at this company. And meanwhile, in addition to that, you're pissing off advertisers.

Have you looked at Twitter lately? Do you see what they're advertising? They're advertising like vegetable pealers. I mean, I feel like, you know, the Popeye, Ron Popeye, has taken over Twitter. I mean, it's truly embarrassing now. And so, just stepping back from it, I don't care how they make their money or anything. I don't even care if this whole thing disappears. The world will not mourn the loss of Twitter, but as a story, as a journalistic observer

to this, this is just incredible. He is literally, he's driving, he's doing everything wrong, operationally. He did everything wrong financially. He's supposed to be the smartest guy in the world, supposedly the richest guy in the world, he is literally potentially going to lose in six months' time $44 billion and the control of this company. Is that just what happens? Eventually the tide goes out or eventually the person over reaches. Is that just how it goes or did something happen?

It's something break in his brain. It's endlessly fascinating to me from an ego perspective. How does a person who was so talented and skilled and seemingly disciplined, how did this happen? Or was it an emperor has no clothes situation? Now you see it from another angle and you realize it was never what you thought it was. Well, I mean, again, it's part of this problem

we have in this country of lionizing these people so that they think that their shit doesn't stink. He didn't create Tesla. He bought, he infused Tesla with capital at a time when the company was sort of on its knees and money that he had made from PayPal. He may, he's not, you know, he may have financed SpaceX, but I mean, obviously he's not running SpaceX. You know, I mean, no, it doesn't have to be this way. I mean, look at Tim Cook, right? I mean, Tim Cook, who basically nobody really knows. I mean, I mean, I've never met him or talked to him.

I mean, we don't, we're not obsessed about Tim Cook every day. All he's done, you know, he doesn't make a nuisance of himself or draw attention to himself. All we know about Tim Cook is that he's taken over Apple when this heroic iconic CEO, Steve Jobs, who was fired and then comes back and makes it this incredible company with all these interesting products and it's worth 300 billion. And then I was taking it to $2.5 trillion in value. And so that's another way to go, right? Or you could go the Elon Musk way or the SBF way or the Bob Chapic, Bob Eiger way.

I mean, you don't have to be a narcissistic, egotistical jerk, you know, but why in the world do we lionize these people and envy and look up to these people who are these narcissistic jerks? And it's not just in business, it's obviously, we saw it with Donald Trump too. Why or why would Americans elect this guy who's got no basis for anything. He's not a successful businessman. He's not a successful TV personality.

He's a pathetic politician. He's the opposite of inspiring. And he's not even gone yet. Now we have to worry about him coming back. What is going on here? It is interesting. There is a passage in meditations where Mark is really writing to himself because you have to worry, you have to be careful and guard yourself against being imperialized.

He says, beware of imperialization. Don't be c-serified, died in purple. Like when you're talking about the imperial CEO, he says you have to be careful not to let that position change who you are. The Emperor's cloak was purple. And so he's saying, you can't be stained purple by the job. And you have to remember, like he's saying that the purple and the cape comes from dried shellfish blood. He was talking about how they get the colored purple back then. He was trying to remind himself, not that special and not that important. There's this statue, which is right outside Budapest that I think he would have liked, to statue the emperor and it has Marcus's head on it, but they notice the head is removable.

Like the emperor is worshiped, but instead of putting this whole statue together for each new emperor, does it one point there's one year where they have five of them? They just get tired and so they're like, look, let's just put on a new head, we'll keep the body. You can only be in this space for so long for something happens to you. You can only be exposed to so much radiation to be exposed to radiation for so long. It does seem you can only have the Imperial CEO like live in that rarefied air,

have that power for so long, for something happens to you. Like, I don't know, is the clock ticking on Tim Cook? He could blow up tomorrow, and we'd see the whole story differently, but it does seem like the longer you're in it, the more publicity you seek out. I don't know, like,

Tim Cook doesn't seem to be cultivating being in the headlines, being controversial, being seen places. And maybe that's insulating him a little bit. Like maybe if you do seek out those things as musk and inevitably, or invariably did, it accelerates that clock or it exaggerates the stress or gravity that's operating on you? Yeah, as you know, I mean, in the media, we love to build somebody up and then we love to tear them down, you know, and constantly and that transcends business politics, Hollywood, whatever it is. business politics, Hollywood, whatever it is, that's that arc of that narrative is something so American that we love to do that.

And we love nothing better than to build them up and put SBF on the cover of Fortune and Forbes and compare them to Warren Buffett. The next Warren Buffett, just 60 years younger. And then a month later, now he's what now what prison is he going to? Is he going to butner or lumpic or where is he off to? So part, I mean, if we didn't build these people up so much, then we wouldn't have to tear them down. I mean, again, I think I point to Tim Cook, who sort of avoids the limelight even though he's certainly entitled to it.

I mean, he's CEO of the biggest richest company, most valuable company on the planet. But he is clever enough to not make it about him, to make it about the company, but these other people are not so clever. They can't resist the limelight. The media is very compelling. It's very tantalizing. It's very tantalizing. It's very seductive. You probably know to us any author with a book, any writer with a book.

It's very hard to say no. I mean, part of you wants a double segment on 60, so that you can sell books. And part of you knows that you should be repulsed by that desire. And then you get mad when you don't get it. And then you don't get mad when you angry, when you don't get, or someone else gets it. I remember when I was a banker on Wall Street,

and we were getting wildly overpaid. I remember when I was a banker on Wall Street and you know, we were getting wildly overpaid. And then, you'd hear that somebody else got $250,000 more in a bonus than you did. And of course, they did nothing to deserve it, but just were better at sucking up or whatever it was. And then they'd be infuriated for the next six months. And instead of stepping back and saying, Jesus, I'm getting so much more than I could have ever hoped it or dreamed

of getting paid for taking no risk at all. You know, so it's a very, just so distressing. The whole cycle just annoys me just tremendously. The whole cycle, that narrative arc of building them up, tearing them down, and then the shot and Freud of enjoying both sides of that equation. I was trying to tell this friend who'd invested the money in the deal. I was like, I got to tell you, the American apparel spiral, I saw it and I see a lot of similarities here. I saw Charney go that way. Yes, you did. And what's so interesting about it is changing how I see things, which I remember, like in these various spirals, there's this human side of it. How did he get George Shoros

to give him millions of dollars or Ron Berkall to give him millions of dollars? These are some of the smartest people in the world. All right, so they say, and like, that was clearly nuts. And even if he's not nuts, you know, probably it's going to be more trouble than it's worth. And yet, people kept going back to it. And when I see the Mustang, I also think of the Trump thing and like, people who should telling themselves they're going to be the adult in the room, but it never works out that way. They're like, you know, even though it went terribly for these other people who

went into this deal, it's going to be different for me. Those are the magic words. It's different this time. It's different for me. It's the bad boyfriend scenario. Like, you know, my wife always tells me about the bad boyfriend. Oh, well, I'll, you know, I'm attracted to the bad boyfriend because he's so much fun and, you know, sexier, whatever. And he won't treat me badly, you know, even though he's treated everybody else badly. But, you know, what does he do? You know, why does scorpion sting? That's what scorpions do, you know, and it's no different with these assholes. And I look at, I mean, just look at the words

around what these supposedly brilliant investors said when they were investing in FTX. You know, that's a quiet crowd, just couldn't get enough of it fast enough. Even though, you know, Sam Bankman Fried was playing a video game on a Zoom during their interview. I mean, didn't even,

didn't get dressed up, didn't even show up in person, you know, it was playing a video game and they still couldn't throw money out of fast enough. Or look at, you know, this one really is the total headscratcher for me. And I just love it because I think Mark Andreessen gets angry and angrier as I pointed out, you know, to invest $350 million in Adam Newman's new stupid company after we worked,

that we worked to back all is extraordinary. If I were, and I never will be and thank God for it. If I were a limited partner in Andreson Horowitz or as they cheekily call themselves A16Z, I would be ripshit if he had invested my money in a new Adam Newman project. And yet, $350 million, short, largest investment that Andreson Horowitz has ever made was an Adam Newman's new company after the we worked to back. So what is that? Because I remember you and I connected

over Peter Teo. You wrote a review of conspiracy at the times, which is a real treat for me. But I remember I was sitting in at Peter Teo's office and it was like the day after he made his first Trump donation and he's coming off the gocker thing. It was this huge coup. People still thought really highly of him.

He was this genius. He was known for being a picker of talent. Smart people got things done. And he makes this kind of counterintuitive Trump pet, which paid off and that Trump is elected. But obviously it ends in catastrophe as Teal Now admits was very likely. But I remember listening to his logic and it wasn't like,

well, I know all the reasons I shouldn't blah, blah, blah. It was kind of this casual off-handed thing like like multiple people think X. So I'm going to think the opposite of X like this instinctive hunting program. And so I'm just gonna do that again. You go to Mark Andreessen, who puts 350 million into a due

to just catastrophically blew up. That is crazy. Is it that they're so smart that convinced themselves to do something that is obviously not smart? Well, I'm sure somebody like Mark Andreessen thinks that, you know, he has to be the smartest guy always in every room all the time. And so if he is investing $350 million in Adam Newman's new venture,

and it's the biggest investment in recent Horowitz is ever made in its history, then therefore it's pre-Mafasia evidence of brilliance. You know, therefore, you know, it's a self-fulfilling prophecy. I think that's a little different than maybe what Peter Teal did with Trump or, you know, another version of that is what Steve Mnuchin who became the Treasury Secretary did with Trump and he's explained this to me. It was like, you know, a free option was on the ground and I picked it up. Everybody loves a free option. It's like way out of the money option. So it's not going to cost me a lot of money.

It's like what hedge fund guys do try to do all the time. It's like a way out of the money option, ace, you know, ace symmetrical risk that's very cheap to own. And then if it pays off, like in the financial crisis, the people who bet that the mortgage market with fall, John Paulson, it was very cheap to buy the credit to fall swaps that enabled that to happen or Bill Ackman when he bet that at the start of the pandemic that the debt markets would, the yields would spike up when the economy shut down and then the Fed would come along and rescue the financial markets yet again. And so that making that bet was very inexpensive because everybody thought he was crazy. John Paulson making his out of the money bet on the mortgage market. Everybody

thought he was crazy. And so maybe, you know, and of course Warren Buffett famously, you know, makes bets when everybody else is running for the hills and he's made, you know, a fortune and is revered the world over. So there are people who fancy themselves as Warren Buffett, not fake Warren Buffett, it's like Sam Bakeman-Free, but who really think of themselves as good investors who are always looking for sort of these free options that are lying on the ground that they can just pick up. You never hear about it if it doesn't work out.

So I mean, probably the performance of the time these things don't work out. But when they do pay off, and they pay off big time, like Bill Ackman, in that trade, in three weeks, he turned $27 million into $3.5 billion. That's like the greatest trade on an IRR basis of all time. And I'm still sort of marvel at that. You know, think about that. You know, it's incredible. But, you know, who has $27 million lying around

that they can conceive of this trade and then put it up? Obviously it's part their money, part other people's money. You know, with Andreessen Harwitz, what is that? That's like, you know, their limited partner is money. That's why I'd say, you know, I'd be really pissed if I were a limited partner that he's doing this.

But you know, he has to prove on a daily basis how fricking smart he is. And you know, what the SBF situation or the investing in the equity of Twitter going private shows you is that these guys are not that smart. I mean, unless you're like, you know, Larry Ellison, you have 70 billion and you don't mind blowing a billion dollars on a crazy bet on Elon Musk. I mean, my favorite is just quickly one more second on this is Prince Al-Wa'lid in Saudi Arabia. I wrote a profile of him in Vanity Fair,

maybe 10 years ago, and it was quite exciting for a lot of reasons, but whatever. Then he found himself in the, you know, the Ritz Carlton with MBS put him there for whatever it's six months. So he's not quite the same guy he was. But, you know, he was an early investor in Twitter, right?

When it went public, and when it was private, and it went public, and I think he invested 300 million. And at $54.20 a share, his original investment was basically worth a billion nine, $1.9 billion. He could have taken that out in cash at the end of October. Instead, he agreed to roll it over into the equity of the new Twitter, the private Twitter. And now it's probably a zero. Except for the option value that somehow

Elon Musk is some sort of genius and is going to actually do something with Twitter that looks like he's not going to do. So Prince Al Waleed had a $1.6 billion profit, and he's now a zero a month later. Yeah, the perilous part of the victory, the the the purest nature of it is that when you're right, right, like you pick up the free option, you know, a million dollars on Trump's campaign after the Hollywood, the Axis Hollywood tape that he becomes president, you just bought it very cheap, but what you, you just bought Axis very cheap, but what you also bought, not intentionally, was the hubris, or the default view

that you actually did the right thing in that moment, when actuality you made this sort of pretty reprehensible bet on a totally unpredictable person, who has no business being president. And now that shapes how you see yourself and enabling you to do pretty much whatever you want, you walk through these, you walk thoughtlessly into these future moments, the seeds are our zone

when you picked up this posively free option. It was very expensive. I mean, look, look, look, it's Steve Venuchin, right? I mean, he, he, he, you know, makes a bet on Trump. Nobody else, everybody thinks he's crazy on Wall Street. He becomes his like co-financed chairman. Trump wins, he becomes Treasury Secretary. Oh my God, I'm Treasury Secretary.

I'm like this guy who got flushed out of Goldman Sachs, you know, who made a lot of bad bets in Hollywood, wasn't that great, a junk bond investor that I had fun. Now I'm Treasury Secretary, and I'm there for all four years, and I've completely, I mean, my own family is mad at me, my father, my brother. I didn't do anything to mitigate Trump's behavior. I never stood up to him.

All I did was, you know, help facilitate getting the corporate tax rate going from 35 to 21. And then I come out of that and I, you know, have my new private equity firm where I've gotten whatever a billion or two billion dollars, just like Jared Kushner from the Saudis. That's who I am now. Yeah, it shows, again, I keep using this word how she experienced it is about it. You know, you make these bargains. You know, Seneca's Tudor ring Nero.

He's the powerful rich guy in the Roman Empire as a result. He makes these big loans to the colony of Britain. But by the time you realize, hey, this guy is insane. I need to get out and you're like, hey, that's not how it works. You know, it's easy to get in, easy to pick up the free option, but then you can't. I was just writing up about writing something about this. There's this speech about Kato and he's talking about people who are dealing with Caesar and he says, you put this guy in her shoulders. And there's going to come a time when you can't keep carrying him, but also you don't have the strength to put him down.

The point is you get stuck, you can't get out, and that seems to be where muskets with Twitter, you know, people are with Trump. You make these deals, you think you're getting the better of it, but actually, you know, you're selling the most expensive thing that there is. You're your reputation. You're, you know, it takes a lifetime to build a reputation and a nanosecond to lose it is, I think Will Rogers said, or, you know, the truth is, you know, can't get out of bed before a lie gets around the world. You know, I don't know how these people live with themselves.

And I never could figure out, Ryan, Donald Trump was a product of New York City, first Queens, then Manhattan. New York City is like the media capital of the country, right? So, I mean, and people have written lots of stories about Donald Trump and what a fricking buffoon he was. I'd written two stories about him, one of Vanity Fair, one of the Atlantic,

about what a total buffoon he was. And yet, somehow, we could not convey beyond the Hudson how pathetic and dangerous this guy was. how pathetic and dangerous this guy was. He did lose the popular vote, obviously, but that's not the way, but not only by little, but that's of course that's irrelevant because that's not the way we elect our presidents. And he exploited whatever hatred or divisions

that we have in this country to his own political benefit. And that was bad enough. And then he governed like a totally cynically for four years and is still, you know, pushing his bullshit. And people are still not had enough of him. I don't understand. I mean, I may be, I don't understand my country anymore. I understand half of the country, but not the other half. Yeah, yeah.

I thought the interesting quote in your book to go back to GE, maybe it's hopefully I have a last defense against this sort of tragic things. We're talking about it. You have those words from Welch's predecessor, they sort of mumbled off before he dies. He says, leadership requires ethics, morals, and values. And I think you see that people were talking about a lot of ambition, a lot of skill, sort of financial acumen, brilliance, they're great on all these things,

but eventually where they get into trouble or over commit or get in these scandals is when they, where they lack in the ethics, morals, and values. Could a strong set of values and morals, like, couldn't that be a last line of defense against some of this stuff, or maybe it's naive?

Maybe no amount of morals can stand the temptation of potentially billions of dollars or access or power, whatever. I don't know. Well, I think to some extent our culture has changed, you know, and I've thought about this a lot. And I, you know Basically, in my whole lifetime, it's been a series of weird disappointments,

certainly politically. I was born in 1960, so I was barely conscious, but I sort of traced it back to November 22nd, 1963. I think the Kennedy assassination sort of set the tone politically for what happened in my whole lifetime. I mean, it just deteriorated from there whether it was Vietnam and getting deeper in there

and lying about what we were doing there and secret bombing and protests to watergate to, I mean, to somebody like Gerald Ford pardoning Nixon and then, you know, to end up with Trump, I mean, it's just, this is this sort of my, the whole arc of my lifetime has been sort of one, you know, political disappointment after another. And to the point now where, you know, we can have, And after another, to the point now where we can have Mitch McConnell bo-guarding a Supreme Court appointment for a year, and then thinking nothing of it, just like, that's fine, that's what we're here to do. And then remaking the Supreme Court in this right wing conservative basis that is repealing our rights,

it's just beyond what I can, I guess maybe it's a good Massachusetts liberal, I can get my mind around it, it is so mind blowing on a continuous basis. And social media just compounds it all. I mean, it's like, I don't even know who I am or where, you know, I fit in anymore. And maybe it's okay, because I'm just like

a old white guy, and maybe I don't fit in anymore. But, you know, it's not certainly not the country that I thought I was a grow up in, or that I was, you know, gonna inherit or be part of as an adult. Yeah, I mean, I think about your story, you know, can people withstand the limitation of money, but you know, to do the right thing, but whatever I mean reading about your history,

you're making a fortune and leverage bouts in the 80s. If you kept going in finance, I imagine your net worth would be a little higher now than this is a writer. As wonderful as your books are, as prestigious as the outlets are you? You've written for, I mean, maybe we end on this hopeful note, which is, I talked to you about that multimillion dollar decision. What it meant to you?

Like, I know if I'm a young person, like whether I should go work at Twitter right now or crypto or do something else, like, what should I be thinking about? Well, sometimes decisions get forced upon you. You know, when I graduated from business school and then started at G Capital Financing Leverage Biodes, the last thing I ever expected was that I would become a writer 18 years later, go back to writing. So if I hadn't been fired by my ass holic colleagues at JP Morgan Chase in 2004,

who fired me because I wasn't in the room where they were making the decisions to fire people, I never would have gone back to being a writer, I would have kept on being a banker, and you're right. My bank account would be larger. My impact, I mean, I don't know that I have any impact on the world, but I mean, my control over my life would be very different. I have, you know, basically total control over what I do in my life and that's very satisfying. You know, writing these books as you know, Ryan is very hard, but it is also very satisfying.

And, you know, I'd much rather be known as a best-selling author than an investment banker. So, you know, all that is very, very satisfying, but also extremely serendipitous, because, you know, if a little cabal hadn't formed at JP Morgan Chase to get rid of me, which was easy enough for them to do, it was either them or me, then this would never have happened. So when I see these people,

who obviously are very sheepish around me now because they know what they did, I thank them. I thank them for firing me and allowing me to be forced into a totally different life and using a different skill set and different part of my brain. I'm glad I did that for 17 years, believe me. It's given me great expertise to do the writing I do and to not endure the bullshit that usually comes out of the mouths of people on Wall Street when they're talking to journalists and

writers. So I know what I'm talking about, and I think it gives me more gravitas and what I'm writing and more expertise. And so that is just sort of like a fabulous, serendipitous thing, but I never would have thought it was even remotely possible when in January 2004, I got called in and was sent on my way. Yeah, I mean, it's weird to think about, but one of the things that's been helpful to me is like when I sort of meet these extremely wealthy people, is that the first thing they wanted to do is talk about writing, is that they'd almost as a rule rather be doing anything other than the

thing they actually do that makes a lot of money. They all love books. They all fancy. They could do it and they want some way to do it without having given up what they've done. I don't know if you watch Yellowstone, but the first episode, he says, remember, if somebody had all the money in the world, this is what they buy, like the thing they have, right? And you meet successful people and all they want to do is write books. Yeah, they want to be a writer. They want to have their kid not hate them or any number of things. And that's not what their life is. And they could have had it much more cheaply than they think, of course. That would mean giving up the rare thing we're talking about though, like the jet, the power in 20-hour work week. Yeah, it's, I mean, and some of them reach out to me and ask me if I will ghost right there, their books, and, you know, that is, that's not a good combination of skills. You know, I'm not a ghost writer. I need to write things the way I discover them to be and research them to be.

I don't want to write things the way somebody wishes they were. So I'm not a good match for that, but I do get asked. That's not good. But it's funny how they all want to put down their lessons learned or their memoirs or here's the wisdom that I can impart to you. And if they would just let somebody tell their story the way it really happened is opposed to, you know, the, the, the, hadgeographic way they'd like it to be. It would be a much better story and they'd have a much better impact, but you can't possibly tell them how to, that, that that's the way they should go.

They won't listen to you. Yeah, that's true. Ghostwriting is tricky. I've done a fair amount of it. I always told myself that one of the reasons you do it is, it's one of the few situations where it's not that I don't care how the books do but if I'm going to write about an obscure school of ancient philosophy, it helps not necessarily have to depend on that to make the bills. Well, you've got your bookstore. It's not a huge money-making venture as you can imagine. Yes, I bet. Well, just saying that selling your

books alone must, you know, make you a fortune. I don't know about fortune, but it does all right. Yeah. It's actually not been a giant disaster that I thought it was going into. It's been fun. Still a lot of work to write and research and write a book, a lot of work. Of course, no, no. You have to deal with people who are alive.

Alive is troublesome. Lots of documents, I'm sure. How long you say it took three years? Three years, which is about 50% longer than it's taken me to write my other books, because this was such a complicated story. And right from the get-go, this was a complicated, complex company to write about.

Well, I can imagine and look, I love the Bear Stearns book. Thank you. What's it called? House of cards. House of cards. The Bear Stearns. Yeah, that book was amazing. Well, it was great to chat.

Thanks for coming up. And great to chat. Thank you. Appreciate it. Thank you. Thanks so much for listening. If you could rate this podcast and leave a review on iTunes, that would mean so much to us and it would really help the show. We appreciate it and I'll see you next episode. Hey, Prime Members!

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