Bill Ackman：很多人将损失惨重

Warren Buffett, the most outstanding investor of all time, could not realize the risks associated with the innovations that created the internet. Well, now we have artificial intelligence. We are at the beginning of the Industrial Revolution. This is a much more difficult problem. If you had to guess, in your opinion, how will this take place within the next 18 months?

The pace of improvement is definitely the fastest of all the ones I’ve ever seen. There will come a time when some kind of explosion happens, and people will lose a lot of money.

What is your investment process? For example, how do you move from the state of, “I’m interested in this company,” to the state of, “We’re writing a check for $1 billion”?

Over time, we develop a spider’s web of senses around people. If I look at our most successful investments, they were usually cases when we were doing something that someone had never done before.

What advice can you give to the ordinary person who earns money and wants to invest?

1. The Night His Daughter Nearly Died

So, you had a difficult time this year with Lucy. What happened?

She was another healthy child. What happened to her was, we don’t know—so-called arteriovenous malformation, which is a type of structure in the brain where, as described by doctors, blood flows through the arteries, then to the capillaries, and then to the veins.

When you’re moving from the arteries, where there’s a huge stream of blood, to the capillaries, blood flow slows down, and then it goes to the veins. In her case, she had, so to speak, a bridge that went from the arteries directly to the veins.

Over time, too much pressure arose in these veins of her brain, and one of the veins burst. A large amount of blood filled the brain, which is confined to a limited volume. It’s a bit like a balloon that inflates inside your brain and puts pressure on the surrounding brain and skull. Obviously, the skull doesn’t move, so the pressure goes down and puts pressure on the brainstem.

The brainstem is what makes you breathe and provides your heartbeat. It’s a shame that, by our estimate, it happened around 9:00 a.m. She was a young woman living alone in Williamsburg. I texted her at 4:00 that day. I called her again that day. Other family members did the same thing, but no one became concerned until she didn’t pick up her luggage.

She was going to Abu Dhabi for a wedding. Her friend was getting married the next day, and she was taking her luggage from her mother’s home. When she didn’t appear after being late by 2 hours, and no one could reach her, my eldest daughter left to look for her.

They found her lying on the floor of her apartment, barely breathing, face down on the right side. My daughter thought she had died and called 911. She heard that Lucy was having great difficulty breathing. I was asleep at the time, but my daughter didn’t know my home phone number. She was able to call someone in the building.

A man in the building knocked on the door—he essentially slammed the door—and handed me the phone with my daughter on the line. Then I jumped into a taxi. We didn’t know which hospital to take her to because we didn’t know what had happened to her.

One of the biggest problems is that sometimes a cop thinks someone is just drunk, and that’s why they fell. When you treat a drunk person, you just give them time to recover, right? But the time that passes for a person with a cerebral hemorrhage matters very quickly. The longer the brain is under pressure, the more damage there may be.

I arrived at the hospital at 12:05. She was sitting on a gurney while they tried to find out what was wrong with her. Eventually, she had a CT scan. They found out that she had a hemorrhage. A surgeon was called, and what you need to do is relieve the pressure on the brain as quickly as possible.

This can be done by removing about 40% of the skull, so the brain can expand beyond its boundaries. They transported her from the hospital in Quincy—I was very satisfied with the way they looked after her—to Mount Sinai, where we were close. I had spent some time helping Mount Sinai, so we met with their team. They also have very good neurosurgeons and a strong neurobiological practice focused on the brain.

She was on a breathing tube. She had a headband, and it was written there that there were no bones, to make sure the nurses knew they couldn’t be careful in the usual way. I essentially gave the doctors what I call a “dare to be great” speech. I said, “Let’s see what you can achieve. Tell us what you need from us. Unlimited resources. Let’s look at the newest and best technologies.”

They essentially said, “Bill, we don’t know what the outcome will be. There will be a deficit.” She had endured 19 hours of pressure on the brain. I didn’t actually find out until weeks had passed that they usually don’t perform operations to save someone when more than 5 hours have passed, because they assume brain death. So, at 19 hours, she was as close as possible to death.

We didn’t know what was going to happen, but I’m a very optimistic person. Over time, she restored her cognitive abilities. She was still Lucy—the same sense of humor we knew her to have—and she is really wonderful.

She woke up unable to walk, speak, or see. Her ability to walk is returning. I think she will restore her ability to walk. Her language is returning very slowly. There are something like 17 vowels, excluding the consonants we taught her, and she can make about 15 of the 17 now. She studies almost every day to learn a new consonant.

She can pronounce several words. She understands very well. Her vision has also shown some progress.

I spent a lot of time working with doctors, and my proposal to them was: “Let’s see what we can do for her. Everything we learn for her, we can use to help others.” We are gathering it and making it available for everyone.

After 3 months, I think I was returning from a party for her birthday when a friend called. We talked about Mount Sinai—specifically, the redevelopment of their campus on Fifth Avenue to build a brain institute, some kind of center for the brain. We very much agreed with their idea.

The problem is that it’s probably a 10-year project. It’s extremely difficult, obviously, to dismantle the existing hospital, transport people, and then bring them back. There was a vacant building for biotechnology on the corner of 65th Street and 11th Avenue, 10 blocks from our office.

Within 60 days, we closed on the building. We signed a purchase contract for the remaining plots, with an area of 3.4 acres, and our goal is to build the best brain institute in the world—everything focused on the patient. How can we provide treatment for patients?

A lot of interesting things are happening in technology. Obviously, everyone knows Neuralink. But apparently there are a dozen more companies working on brain-computer interfaces and other ways of receiving data from the brain.

And, of course, AI. We can receive more and more data from the brain, and we can interpret that data better than ever before. I hope Lucy can speak normally and independently; we’re simply working on it. I hope her eyesight will return.

But if she has deficits in these areas, solutions will be found in the relatively short-term future. Imagine a world in which you wear glasses that are actually cameras. The camera fixes the vision and transfers it to your visual cortex, and then you see.

Elon says there will be an elementary way to see within a relatively short period of time—within 5 years. I spoke to almost everyone about this, and he told me that within 5 years, people would have better eyesight than ours. There will be bionic vision.

Dr. Kellner has been Lucy’s supervisor through all of this. Many neurologists, and even neurosurgeons, are nihilists. They don’t believe that patients can achieve really significant recovery, although they can. We’ve heard many interesting stories of recovery, and it’s wonderful to share Lucy’s story.

But we can do a lot more. New York is probably one of the best places for this, and there’s nothing like it. So we’re very happy about this.

What you did in response is simply incredible.

2. His Plan to Rethink Brain Recovery

Yes. The interesting thing is that all the skills, experience, relationships, and resources I developed during my career made me incredibly capable of helping my daughter and other people who have this problem.

I’m the same investor in real estate, right? So I was able to buy a building for a fraction of its value. I’m also married to a very talented architect who will play an important role here. I think we’re going to do something really interesting.

We’ve had an incredible flow of people who want to be a part of this. We love people who write to us and have encountered this on a very personal level—people who have a brother, sister, mother, or parent who suffered, saw the nature of the treatment available today, and want to change it.

People say, “Bill, how are you coping with something like that?”

The first thing I had to do was figure out how to help my child. When I made progress in that, this other thing happened. It’s amazing. It makes me feel that something good is coming out of this.

The idea that from each bad thing, something good comes out. This is one of the good things that proceeds from the fact that Lucy has gone through this. It makes me feel good.

You have always been like this. Was it acquired?

I had several cases close to death in business, and in each of these, I ended up financially better afterward. So these are good lessons.

That which doesn’t kill you makes you stronger. That’s certainly true.

And by the way, for my child, for Lucy, I think it will be good for her.

Tell me more about it.

She’s a wonderful, amazing person. If you can recover from something that destructive, it will turn you into something like Superman. She was a wonderful person, and one of the things that helped her recover was that her mother was there every day.

I moved my office to the hospital. The day after moving to the hospital, I conducted 2 IPOs from room 1107—room 1107 on the 11th floor at 11 West at Mount Sinai Hospital. The power of Zoom. I held meetings on Zoom for 45 minutes, then spent 15 minutes with my daughter, and then conducted the following meeting.

My daughter was an inspiration for these 2 IPOs we were working on. They worked, and she was discharged from the hospital on August 8th. She went through rehabilitation in Bridgehampton, then came back to the city for a small procedure.

Then she moved into her own apartment, which we bought for her a few weeks after the incident. We designed it so that it would be the best place for rehabilitation and recovery. Socialization and social interaction are absolutely necessary for someone recovering from something like that.

The emotional support you provide and receive is important, and her friends were amazing. Her friends were with her every day. Every day, 1 or several of them came to talk to her, eat with her, and communicate with her. She’s a very generous person with a bunch of friends. Everyone loves Lucy, and she gets an amazing return from this because her friends come to see her.

All this makes me feel that people can be this amazing.

Yes. You can recover from almost anything.

And by the way, there is much more hope for people who have had strokes, brain injuries, or mild traumatic brain injuries. There are many people in this industry who are very disappointed at how far we have not come. Who wants to be the one who corrects this? What prevented us from moving on? Why don’t we expand the boundaries of this?

The answer is some combination of the insurance industry, economics, and how hospitals work. A neurosurgeon wants to perform surgery and then move on to the next one. Neurosurgeons get high compensation, but they’re paid for conducting operations. They’re not paid for the patient’s recovery afterward.

Each hospital has some rehabilitation program, but in many cases, it’s shamefully inadequate. An insurance company may only pay for 6 weeks of treatment, and then patients are sent home. Their home is not the ideal place, and they need to be in a large facility. What if they were the main breadwinners and were devastated by this? Maybe another member of the family should go to work instead of taking care of them.

One of the most depressing things was told to me by the head of a rehabilitation center at Massachusetts General Hospital, whom we spoke with. He said, “Bill, what Lucy achieved is extraordinary. She received incredible care. For a typical person, first, they would not have surgery. Second, if they did have surgery, the typical patient would be admitted to a nursing home for elderly people after being discharged from the hospital because the family can’t take care of them, and they would die a few months later from pneumonia. The care that can be received at home for the elderly is very depressing.”

This is one of the cases where I was financially unlimited in my ability to help her, and therefore we could maximize her care. Now we’re going to try to figure out at the institute how to do this in such a way that everyone can benefit from this care, and technology is really going to help.

An excellent speech therapist can cost $500 per hour. Insurance will cover a certain percentage of that amount, but only during a certain period of time. People can continue to recover for years. Artificial intelligence can be an excellent speech therapist. There are many ways technology will allow us to help people recover from these injuries.

This is everything we do. We call it a focus on brain rehabilitation, restoration, and longevity. The institute is engaged in brain rehabilitation and recovery, as well as physical restoration. Brain recovery plus physical recovery is fundamentally longevity.

One more thing that hospitals don’t understand very well is food. Food in hospitals is terrible. Someone has a heart attack, and the next morning they’re eating pancakes with syrup and drinking orange juice.

In Lucy’s case, we were cooking food for her every day. At the institute, the food will be great because food is critically important. There are many things we can do, taking advantage of this financial situation, in order to build something optimal and, eventually, self-sufficient.

You are an incredible father. What an amazing reaction to a terrible circumstance.

I would have been one of the most disappointed people in the world if I hadn’t been able to do this. I literally feel like I was created to help her. If I wasn’t able to do everything I could, I don’t know how I would have felt.

You mentioned the ring—the Oura Ring data. What did the data indicate?

3. Could Her Ring Have Raised the Alarm?

I contacted the CEO of Oura. He even wrote to me on Twitter. I think this is possible, of course, with the Apple Watch and hopefully with the Oura Ring.

If you look at her pulse, a very strange thing happened around 9:00: a quick burst of her pulse, and then some kind of fall, which looked somehow unusual. If you combine this surge and fall with someone falling—for example, the Apple Watch has a notification when someone falls—if that happens when there’s a huge surge in their pulse, can you reasonably assume that they had a heart attack or something like that?

These are things that can draw attention. I think the Oura Ring should have the same function, and I think they’re working on it.

How do you support your mental health? What do you do to keep your head in the right place?

4. How He Holds It Together

I play tennis almost every morning or do some physical exercise. I think this is probably the most important thing I do because it’s the only time during the day when I am completely focused on the ball flying toward me, rather than on what is happening.

I think it’s a form of meditation for me. First, I’m fine. I’m getting enough sleep. I’m spending time with my family. Things like that.

Are you still meditating?

I haven’t meditated in a long time. I was meditating during a difficult year, when I was in the middle of a divorce. I was by myself, and it really helped. It’s probably worth finding 20 minutes a day for meditation.

How are you managing everything? I have in mind that you have 4 different public entities. You have this with your daughter, a 7-year-old child, and you want to be a great husband. How do you harmonize all of this?

Pershing Square has come a long way since I started it. When I started, I was something like the main bottle washer. I came up with all the ideas, and I had an analyst who helped me implement them. If there was activism, I was the person doing it.

Over 22 years, we created an amazing team. We work in an industry where the half-life of a person working at a company is short. People get paid, and leading people can move from one place to another and receive huge bonuses—hundreds of millions of dollars for doing that kind of thing. The result is high personnel turnover in the industry.

We have no personnel turnover at Pershing Square. Is this good or bad? Of course we’ve made some mistakes and replaced some people over time. But if you look at the investment team, it has been unchanged for 9 years, with several new employees, and this is actually very good.

If you have a constantly revolving door of new people, you don’t really know whether you can trust them over time. Are they really telling you the truth? Are they telling you about all the risks and benefits of a specific situation?

When you build relationships with people and work with them for 9 years, you develop a culture of transparency and frankness. I don’t doubt for a second what the members of the investment team say to me. They’re frank with me and tell me the truth.

This is a very comfortable place. The answer to your question is that Pershing’s investment process is incredibly well managed by an experienced team in which I play an important role.

I have the right to vote, but I am no longer the one who generates the main ideas. I am the one who generates the minority ideas in the portfolio. So this is useful. And then the business itself, as it is structured, Ben is responsible for managing many business elements at Pershing Square.

This frees me for reflection. It liberates me to work on more strategic things and, from time to time, to come up with ideas. Pershing Square itself is well cared for. We have several public entities and a great team of accountants.

All these public companies do exactly the same thing. There is a management company that receives a commission from the entities we manage. It is Pershing Square Inc., PS ticker. There are 2 funds that trade on the stock exchange and, in fact, own the same portfolio.

We have certain responsibilities regarding the management of these entities, but each has an independent board of directors. Our role is to be a kind of external investment manager. We have great independent directors on both.

Typical independent directors of a closed-end fund are a group of people who are not— I do not want to name anyone I do not know. Let us say BlackRock. I think I read somewhere that they are represented on 86 boards of directors of closed-end funds, and 6 of their directors sit on up to 86 boards of directors. It is hard to do real management when you sit on 86 boards, right?

The typical restriction is 4 boards, according to ISS. We hired real people as directors. We pay them as real directors. They do not sit on 50 other boards, so we have a really good board of directors.

What we do is fundamentally simple. A business manages itself to some extent through delegation, incentives, and consistency. We have the best incentives because no one is paid for individual shares or based on short-term results.

Ultimately, performance will be the biggest driver of our management company, because building assets is what increases our fee revenue. So this is a very agreeable structure. I own about 45% of the company. The team still has, it seems like, 35% of the company.

Then we have a minority block of shares that belongs to the public, as well as some strategic investors who invest in us. If you align incentives correctly, choose the right people, and have some principles written on a stone tablet, and you have been doing this for a while, it works.

But you are extremely competitive.

Of course. I know that I want to be the best investor in the world.

And so it is like one path, and then there is another path that consists of being a dad and a husband.

I would say one thing. Finally, setting up this thing with AI has absorbed a certain part of my mind, as you would expect, during the last 60 or 90 days, because I am putting together a team.

There is a moment that looks a bit like a proxy contest. We took control of the board of directors, and now we need to appoint a new CEO. As soon as we appoint the CEO, the team will be formed and announced, and I will not interfere in the daily operations.

The same will be true for AI. It will again be like a briefcase company in a certain meaning. Although they will offer me a seat on the board of directors, I will preside over the board. But there is a bit of similarity: I do not think I could do much in an AI setting.

AI is the Ackman–Oxman Institute, just for everyone who is listening.

Yes. When you are at your best, do you think?

In fact, often when I am on vacation. Some of my best ideas come when I am literally completely relaxed or in the shower.

You have done a lot of research regarding bubbles. I am wondering how you would explain what a bubble is.

A bubble is when human nature, people making a lot of money, and a great fear of missing out, or FOMO, lead people to want to participate in making money. This leads to more and more money being invested in the trade itself, until there is a reassessment. Then there is a boom, and finally the bubble cracks.

They seem to happen around technological changes like railways, cars, transistors, and the internet.

5. When Easy Money Runs Out

Are we now in one of them?

We are definitely in a transitional period. AI is absolutely transformational. It is the most transformational technology, I think, in all our lives.

There are elements similar to bubbles. In the private venture world, a lot of crazy things are happening, I think. We are starting to invest in some venture-stage businesses.

I met with representatives of one company 2 weeks ago, and they did not need funds. In 2 days, they closed an agreement as if they were ahead of some investor who had invested $50 million at a valuation of $400 million. Then, after 2 weeks, they raised another $50 million at a valuation of $1 billion.

Many people are afraid of losing the future. Therefore, a lot of capital is being invested in venture capital, with a lot of competition and many people trying to get ahead of one another. This leads to very high valuations. I saw a company that raised a Series A round at a valuation of $5 billion.

How do you avoid the fear of missing out?

It depends on what you have and where you are in life. Warren Buffett was outstanding in his discipline during his 60-year career. In fact, what is interesting is that during the last real bubble, the internet bubble, Berkshire shares fell to a historical low because people said that he seemed confused while everyone else was making money. He simply did not participate.

He just kept going. I think this is a question of long-term prospects.

What advice would you give to founders who are trying to attract funds now?

This is a great time for raising capital. If you are raising capital, do not spend it quickly, expecting that the money will be there forever.

This is reminiscent of what happened during the internet bubble. There was an unlimited amount of capital available for quite suspicious business plans. Then there was an article in Barron’s one weekend listing all the internet companies on the public markets and how much cash they had left, depending on their burn rate—how many months remained before they reached zero.

This was probably because a week later, the market imploded. What happens with a private company that has no capital is that it develops a certain discipline related to its own development. Then you raise $50 million or $100 million, or completely change the distribution of capital, betting that when you need money, you can simply use the markets.

The time will come. There will be an explosion, quite a loud one, when people lose a lot of money. This will cause a reboot. I think that companies that are disciplined in spending capital and have years of runway will survive, while those that need to raise money every 3 months will disappear.

6. He Hated the Idea. He Invested.

My advice to founders is to treat every dollar as if it were your own money and spend it very carefully. Do not expect that this kind of freely available capital will exist forever. Raise money now, but hold onto it in the bank. Do not spend it all; spend it reasonably.

How do you see the difference between investing, which you usually do in public markets, and investing in private markets from the point of view of venture projects?

Of course.

On public markets, we invest in what we call super-resilient growth companies: businesses that are the most dominant companies in their relevant areas. They’re highly profitable and have strong balance sheets. A key factor for success is predicting their ability to continue either gaining or retaining market share, while also developing their business and maintaining pricing power.

In public markets, the CEO matters, but we’ve always believed that if we don’t like the CEO, we can find a better one. In venture capital, you’re really in the business of betting on the person, not the business plan. You invest in a company that may not yet have revenue or may be unprofitable. You’re betting on its ability to grow fast enough to eventually move from being a consumer of capital to one that, over time, generates money.

There are some similarities, but it depends much more on the founder, the general director, than in public markets. In the best public companies, if something happens to the general director, you can find another wonderful person who will manage the company. The best private companies, without the founder, you probably write everything off.

How long do you wait for an idea, and how much do you wait for a person?

I’m waiting for the person more than the idea, because often the original idea isn’t the one that turns out to be successful. The founder will encounter obstacles, and the original idea won’t work.

7. Who Actually Profits From AI?

My most successful venture investment was Coupang. I didn’t like the idea. It was Bom Kim, and his business plan consisted of creating Groupon in South Korea. Even at that time, in 2009, I thought Groupon was a very bad business model. But he brought very convincing arguments for why South Korea was a wonderful place to launch an online business, and I liked him.

In the end, he created the Amazon of South Korea, which really had nothing to do with the original business model. To achieve the greatest success, you’re really betting on the founder’s ability to overcome the difficulties that arise and, over time, develop the business model.

How is AI changing the investment profession?

The most important thing an investor has to do is assess risk. The value of a business is the present value of the cash flows that it generates over its life. The first years of its life are more important than the later ones, but you need to be able to predict with a high degree of confidence what the business will look like in 10, 20, or 30 years if you want to make illiquid, long-term business investments.

Even when considering liquid investments, you want to invest in something that, if the stock market closed for 10 years, you would be happy to own. It’s good discipline. What you have to take into account is the risk of failure, and what AI has done is significantly increase that risk.

You really need to be thoughtful about businesses. Returning to Warren Buffett, the most outstanding investor of all time, if you go back and read Warren Buffett, he could not have realized the risks of failure created by the Internet. Wikipedia is destroying World Book. Now we have AI. This is a much more difficult problem.

We’re all guaranteed to look foolish with one business or another whose risk of failure due to AI we did not foresee.

What businesses, in your opinion, became more valuable as a result of AI?

Yesterday, I met with one of the founders of Cognition. It’s a very interesting company. Its software, or its AI, allows banks and large financial institutions, for example, which spend a lot of money working with outdated systems through the accumulation of acquisitions they’ve made over time, to rewrite COBOL in modern code and do it in a few days rather than many months.

I think the cost of operating large financial institutions will decrease significantly thanks to AI. Large consumers of technology will be able to capture part of this. They’ll become much more efficient.

The question is whether they’ll be able to keep the profit. If everyone is forced to use the best software to operate their businesses more efficiently, they’ll become much more reliant on AI. The question is whether they’ll be able to preserve that profit, or whether profit margins will be transferred to the client. This depends on the nature of the business and its pricing policy.

The problem with money in general is that it’s a commodity, and banks are engaged in providing money. So this is a difficult question. It depends on the business.

I think AI will allow you to create many businesses that couldn’t have been created before. AI will allow entrepreneurs—people who have never been entrepreneurs before—to become entrepreneurs.

The newest one, as it were, is what Meta just released. I haven’t had opportunities to experiment with it, but the guys in the office talked about how easy it is for them to use. I think it’s called Muse.ai. It’s very easy for people now to create their own agents to do various things for them.

The tempo of improvement is definitely the fastest I’ve ever seen. If you think about Microsoft in the old days—version 1.0 versus 2.0—there might have been a few years or more between updates with significant consequences. Here, you’re receiving updates with significant consequences every few days.

It’s a bit like driving a Tesla. They update the software overnight.

Does this scare you as an investor?

I’m trying not to be scared. “Scared” is probably the wrong word, but I would say that you really need to be thoughtful about the ditches and how wide they actually are.

I think that’s the most difficult question for an investor: how to anticipate the risk of failure. Among the companies that seem most dominant in the world, there will be those that simply disappear.

How do you go from, “I’m interested in this company,” to the point where we write it a check for $1 billion?

Usually, this isn’t a company we’ve just woken up and heard about. We’re looking for the best companies in the world. Over time, we create what we call a library of companies that we follow for a long time.

8. The Rules He Carved in Stone

We may like the business and not have an opportunity to own it because, even if we’ve done a lot of work, we might say, “Look, at this price, at a 35-times multiple of excess profit or something like that, it’s difficult for us to achieve profit margins above 20%, which is our ambition.”

So we do the work and then postpone it, solving the valuation problem later. We wait for the day when something happens—a macro event like COVID—that gives us a chance to buy such a business, or even the apocalypse of SaaS-pop, which led to revaluations of almost everything related to software.

It gave us the opportunity, for example, to buy Microsoft at what we thought was a very attractive valuation, as well as a whole number of other very high-quality businesses.

The process usually looks like this: two team members conduct deep research on the company. Of course, they start with SEC documents—10-Ks, 10-Qs, and conference-call transcripts. Then we collect the key questions we’re trying to understand.

We spend a lot of time with expert networks. We talk with former employees of the company. We talk with other industry-specific experts. We talk with people at competitors to get at the key problems.

Then we create a business model, and we get an estimate of how it pencils out—what profitability it generates at a price we can buy today. Those are some of the elements.

Then this team will prepare a write-up and present it to the group. The two people on that team usually aren’t Ryan or me. Ryan is our IT director. I’m what I would call the briefcase manager.

We conduct our own independent assessment, which gives us enough information to be dangerous and to ask the right questions. Then we have the rest of the team—five more people who weren’t working on the name. That group gets together to discuss the investment.

As a result, they reach a decision to invest in the company, or they can say, “Okay, there are some open questions. Let’s deal with those questions.” Then they go back, do the work, and return to the team.

This is the main process. How are you guys using AI internally in this investment process—to speed up the work or do work that you usually couldn’t do?

Yes. Today, we actually use AI more like a research tool to learn about a certain topic. I would say that it has not penetrated too deeply into our process. We don’t use it for building models.

In a world where everyone has equal access to AI, it’s hard to tell people apart. I think that humanity remains a nonstandard-thinking, creative process—understanding that is obtained from reviewing all the facts—while AI is its own kind of overview of everything that happened before.

If you look at our most successful investments, these were usually cases when we were doing something that someone had never done before. For example, buying credit default swaps before the pandemic, investing in the shares of bankrupt companies, or selling credit protection on AAA companies before the financial crisis. Those were some of our best investments, and you couldn’t find them in the model.

I wouldn’t advise you to do nothing about it. Many investors who deal with stocks showed unsuccessful results after 2010 and 2011, but you did not. Why, in your opinion?

We are constantly increasing our standards for business quality. We want to own the best companies in the world with a very low risk of failure, and I think we’re disciplined enough on this issue.

9. The Trade He Won’t Make Again

We’re not just investors who are oriented only toward long-term stocks. We’re opportunistic. We’ve made a lot of money on several occasions when we had a look at macroeconomic events that differed from the views of others. When you have that kind of view and can find an asymmetric way to make the bet, you can earn a lot of money.

We earned a lot of money starting with COVID because, I would say, we were a week ahead of the world in thinking about what should happen with the global economic shutdown. We earned a lot of money because we said there would be huge inflation, so we bet that rates would rise.

One of the things we did—we already talked about this earlier—was around 2015 and 2016, when we had very big losses. After that experience, I said, “We must take our investment principles and literally engrave them on a stone tablet and put it on the table.”

It’s a very good way. An investment checklist actually isn’t a bad way to avoid mistakes, and we have a good checklist.

What’s included in this checklist?

The nature of the business we invest in: simple, predictable companies that generate free cash flow. The types of management teams we’re looking for. A focus on large, liquid public companies. A reluctance to sell short positions.

That was a good lesson. With asymmetric bets, we’re looking for a case where we have a view that is different from the rest of the world. Then we can express that view by means of an instrument where the payout is very high relative to the amount of capital that we put to work.

But it’s very simple. We’re looking for the best companies in the world with super-resilient growth. We spend a lot of time thinking about moats, and obviously we want them to be led by the best teams in the world. If they’re not managed by the best team in the world, we want to have someone in mind whom we could install if we needed to replace the team.

Why did you stop short selling?

I never liked short selling because there’s an asymmetry in the opposite direction. You can lose an infinite amount, and the amount you can earn is limited.

We shorted insurers’ bonds before the financial crisis.

It was MBIA?

Yes. But most of the money that we earned, we earned on credit default swaps, not on short sales of shares.

Then we did nothing. Then someone said I was a fraud and that it was a pyramid scheme. Then we did the work and said, “This is a fraudulent pyramid scheme.” We thought, “How can we lose money by selling a pyramid scheme short and then providing the FTC with a detailed analysis? They’ll have to investigate, and the people who have been harmed are the most disadvantaged groups in the population.”

So we thought this was a great scheme. It felt like investing with the wind blowing at our backs. We said, “Look, the wind is blowing at our backs. We’re helping the disadvantaged group protect themselves. This is an evil company. It should work.”

We underestimated market risk. For example, Carl Icahn appeared, bought shares, and invested capital so that it worked against us. It reminded us that this was a really terrible business.

10. Why He Consults “Dr. Claude”

The company you sold short—we won’t call it by name—but this caused these huge attacks against you. There were websites against you. There was a famous CNBC segment, which I think originated as a result of this.

What about the personal costs for you when you’re ready to express the opposite opinion?

It’s much easier to be an investor in companies. You find many more friends. You buy shares, other people join you, the price rises, and everyone wins.

When you’re selling stocks short, in such a case we were, by an overwhelming majority, those who had a short interest. So everyone else was on the other side.

Then you had the company we were working against, which faced an existential threat. They were ready to use everything. They attacked us through criticism, the media, and the law. They created a lot of infrastructure to pursue their critics, so they were well prepared to pursue us.

Then it became something like a short-squeeze trade: “Where should we squeeze Bill?” It was the unpleasant part when, in a sense, the industry thought, “Okay, these boys overdid it. We can squeeze them out.” That was not the most pleasant experience.

You were relatively quiet, I would say, in public life compared to who you were before. In the last few years, you’ve become much louder. Why now?

I have always been a supporter of freedom of speech. Let’s go back to my school yearbook. They called me “the most eloquent,” and my epithet in the yearbook was, “A closed mouth doesn’t get fed.” So I was known for expressing my point of view.

One of the important driving forces of my life was that I always wanted to have the opportunity to speak about what I believed in. As the number of my subscribers on Twitter grew and I got a little older, I had more influence.

Since I’m concerned with different questions, I wanted to help advance the narrative, so I became more public about this. I was rewarded by seeing that it works. Starting with little things, you really can influence an administration and move stories with the help of a tweet. That’s actually pretty incredible.

A lot of evil can happen if nobody wants to say that the emperor doesn’t wear clothes, or worse.

I want to go back for a second to the topic of AI before we move on. How do you personally use it?

I use it much more often. My daughter had a serious health incident, and AI was a great help in making medical decisions regarding my child. It’s an incredibly powerful tool.

I think every doctor must check their work with Claude or your favorite AI.

Do you think companies like Brookfield become more valuable when something tangible, almost like infrastructure, becomes more valuable in the world of AI?

There’s one more bet I’d like to hear your reaction to: Thrive is starting to buy sports teams, assuming that we have this barbell. On the one hand, we have artificial intelligence, and on the other hand, tangible experiences will become more and more significant for people, and they will probably pay more for them.

Brookfield is an incredibly well-managed company. They’re very knowledgeable about infrastructure, financing, and construction. Think about data centers and power. The demand for computing is essentially endless.

They are very well positioned, so I think Brookfield is certainly a winner in the field of artificial intelligence. They will provide a significant part of the spine—power and more.

I’m a big Josh Kushner fan. I don’t know whether some of the recent investments in baseball are related to Thrive or are personal. I don’t completely understand, but I think a lot of people are sitting at home and feeling solitude.

But when you go to a big sporting event—

You know, that feeling at a Knicks game? Maybe at the end of the game half of the audience is dissatisfied, but while it lasts, it’s a very human experience of exaltation.

I don’t know whether baseball teams are valued the way I’m thinking about the valuation of most assets. I think they’re appreciated more as a creation of art than as a financial enterprise.

11. Waiting for a Cheaper Market?

A huge number of sports teams, as far as I know, don’t earn money. It’s not that there aren’t enough of them. The owner doesn’t expect that they will generate huge amounts of money. Today they receive a small profit based on the expectation that it will bring much more money in the future.

I think most owners of sports franchises are prepared to spend every dollar they’re allowed to spend on expanding the franchise.

Are you going to buy a sports team?

No.

You’ve come a long way from being an occasionally loud activist to attempting to implement changes behind the scenes. Why these changes, and is this more effective?

This is because we were able to implement changes behind the scenes, although we didn’t have them to begin with.

Yes. When we started this business, there was no trust and no reputation. We weren't on the boards of directors. I was 20, you know, 20 and a half years younger. In a world where you have limited financial resources and limited reputational resources, you can buy 5% of companies, and you need to win through the power of an idea.

To get the support of large institutions, you may have to compete with trusted people. Twenty years later, I had served on several boards of directors, as had other team members. We had experience successfully investing in companies and being long-term investors. At first, they said, “Oh, you're just a short-term investor.” Over time, we were able to prove that our interests were really aligned with the interests of long-term business owners.

Here we are today: we buy a stake in companies, and we literally get letters from CEOs. Recently, we made a series of new investments, and in three out of five or six cases, we received letters from CEOs that said, “Great, thanks for investing in our company. I read your letter for the second quarter. You think about the business the same way we do. Let us know when we can meet.” If we have ideas for them, I'm sure they'll accept them.

We don't belong in a world where we need to be activists.

Do you think that if you're going to become an activist, you must keep your positions for a certain period of time?

12. Netflix: Why He Changed His Mind

I don't think it has to be legally required, but I think activism is a more direct answer to a question focused on causing share-price growth in the short term. Causing long-term damage to the company obviously doesn't make sense.

You know, sharply reducing expenses and underinvesting so that you can report a more profitable quarter will not lead to a good result. Or raiding the company to wind it down and return capital to shareholders. The most extreme option was greenmail, which was largely forbidden. But you can combine certain types of activism in a form that is almost greenmail: “Let's benefit the short-term owners at the expense of the people who are stuck owning the shares,” and the board of directors is supposedly there to stop this.

I think that shareholders today—Vanguard, BlackRock, and index-fund holders—are owners forever. They are not going to support a short-term initiative that will cause long-term negative consequences.

You talked a little about index funds. What advice can you give to an ordinary person who earns money and wants to invest?

If you want to be an investor, you need to devote real time. You need to study and study. You have to do your homework on companies. This is a decision. If you just want access to the stock market, I believe index funds are a very good approach. They have outperformed most active investors over long periods of time.

How would you do it? Would you dollar-cost average every month, or would you say something like, “Oh, now it's high, so I'll wait”? What do you think about that?

I think the key is to start at a young age. The sooner you start saving money that can be invested over the long term, the better it is for your pension. You know, the power of compounding. I wouldn't sit on the sidelines holding cash because you think the market is expensive.

You mentioned stock options earlier. I want to go back to this. How do you relate to stock options from a mature-company point of view, such as Meta or Microsoft, where they could easily pay cash but use options or restricted shares?

As a form of compensation, I think the advantage of restricted stock or options is that they give you some ability to retain talent in a way that simply paying someone cash every year doesn't. I think this is still a very useful tool. It also creates greater alignment. People actually care about the stock price, which, in my opinion, is an important discipline for employees.

Pershing Square, the management company, which we own together with the partnership, does not intend to issue any significant amount of options or restricted shares. We have a base of employees who have already been here as a team. We have distributed shares very widely throughout the company. About 80% of the shares or so belong to the team.

We are lucky not to have to issue shares or options for a very long time. But maybe in 20 years we'll have a new generation that doesn't have any shares in the company. Then it could be a useful tool. I was very happy that the market gave me the opportunity to purchase part of this when it became available. It dropped to about $23 or so.

Yes, I bought some too. I want to talk about Netflix. You bought it, sold it approximately a month later, and then bought it again. What influenced that decision? You were wrong, and now you're right. How did you change your mind?

13. Howard Hughes and The Assets Nobody Wanted

Netflix is one of the companies, if you will, in the library that we have worked on for a long time. What created this opportunity, at least the first time we thought about it, was that they didn't reach the forecast increase in subscribers. The stock fell, and we thought Netflix was an amazing business with a very dominant position. We bought a significant stake in the company.

Then we met with management and shared our detailed presentation with them. They fully agreed with our thesis about the company, so we felt perfectly aligned with management. We talked about things like, “Why wouldn't you apply an advertising model, a model with smaller expenses?” They said, “We will never do this.”

In about 3 or 4 weeks, they announced earnings. If you go back and review the earnings report, management looked shocked. They had again missed the number of subscribers. They looked very surprised by this. They talked about how they would have to adapt and launch an advertising model. Literally 3 weeks before that, they had said they would never do this.

My conclusion was that when you invest in a company and then learn new information that contradicts your initial thesis, you either need to buy much more because the shares have become cheaper and you think the new information is insignificant, or you need to go out because the thesis has been violated. We decided to come out based on the thesis being broken.

In the letter we wrote to our investors, we said, “Listen, we are selling for these reasons. We believe that management will be able to solve this problem. But Pershing Square invests in companies with the utmost confidence in the world, and we believe that the spread of outcomes here has increased sharply. They can do this right and it could be a home run, but there is also a much larger probability that they will not do this right. They know nothing about advertising models, and whether it will be successful is uncertain.”

14. What If You Owned a City?

With a wide dispersion of outcomes, we had a better place to deploy capital. We took the money and bought Google, or Alphabet. We don't need to make the money back in the same way we lost it. We can always take tax losses that have a certain value for us and redistribute the money into something else where we have higher confidence.

If you look at the Pershing Square portfolio, we own companies with the highest confidence and predictability in the world. We lost that element of confidence, at least in our minds.

What happened to Netflix after that?

They built a very successful advertising model. They became even more dominant as a company. They became much more cash-flow-generative. The streaming wars—they won. Disney and Paramount were pushed into the background.

Netflix—you must be turning off the light practically before you turn off Netflix. They are incredibly well positioned for innovation. They are the place where you contact any creative person to sell or create your content.

The shares, because they worked very hard, went back to a very high multiple and became uninteresting. Then, relatively recently, the shares declined by half again. So now we had a business with high confidence, which we thought we owned, trading at a price that made sense. We bought it back.

The business you became involved with, and which I think people know least about, is Howard Hughes. How did you get involved in this, and why are you so excited about it?

Of course. Howard Hughes was the organization we created after another successful investment. We invested in a company called General Growth Properties. We bought shares during the financial crisis, and the shares had fallen by 99%, to half a percent of their prior value. We bought 25% of the company.

We did it a few months before the company filed for Chapter 11. In fact, we insisted that the board of directors file for Chapter 11. They tried to avoid it, but it was a case where it was inevitable. We thought we could engineer a restructuring in which shareholders could keep their investments in the company, perhaps with some dilution.

That's why I joined the board of directors. We managed the restructuring.

What made General Growth so complex compared with its direct competitor, a company called Simon Property Group, which is still quite successful? What did they have, besides Class A shopping centers? A lot of land, and they were very involved in the development business they purchased from Rouse.

They owned these so-called MPCs, or small cities, and the market hated this business. So we said, “Look, let’s make General Growth look exactly like Simon by removing all these businesses, all this land, these MPCs, and everything else that didn’t look like a Simon shopping center.” We took all the non-core assets and put them into Howard Hughes.

This was the first time I had ever seen something unusual: when you spin out a company from another company, the share price of the company being spun out falls by the value of what you separate, because it’s something like a dividend. In this case, we spun out Howard Hughes, and the shares of General Growth increased. The market capitalization increased as well.

David Simon called it a “shitty company.” He made a competing bid. The restructuring we perfected with Brookfield consisted of creating this organization, which we named Howard Hughes. He called it a “sewing company,” but in reality it was just a collection of assets that no one wanted, so to speak.

Then we hired what I thought was a very good team of entrepreneurs, David Weinreb and Grant Herlist, and they eventually processed these assets. Over the last 5 or 6 years, the business has become focused entirely on residential communities, or MPCs. We said, “Look, the market will finally understand why this is a really good business.”

MPC stands for master-planned communities. At the moment, these are small towns. We own The Woodlands in Houston, which is a small town with a population of about 150,000 people, with high-rise office towers, shopping centers, schools, and churches.

I describe this business a bit like the game SimCity, where we act as the benevolent owner of these communities. What does that mean for us? It means that we own all the commercial land and all the residential land. We sell the residential land to developers. We don’t sell the commercial land; we use it to construct everything the community needs.

If you take a very long-term perspective—many decades—this business generates a huge amount of money. We have a number of these small towns. But after 14 years, when Wall Street wanted nothing to do with this business, we said, “Look, it’s time for us to transform Howard Hughes into something else.”

The reason Wall Street doesn’t like the main Howard Hughes business is that land and buildings have a bad long-term reputation. Our land is very different from any other land. Imagine that you owned New York, all the free commercial land, and all the free residential land, and you owned it for 100 years. You could do absolutely anything with it. You could literally earn trillions of dollars. That is a real possibility.

The land we own is located in places where people are moving: Texas, Las Vegas, and Hawaii. But as public companies, we always trade at a significant discount to the value of our assets. Over time, we bought a significant share of the company. Now we own 47% of it, and we’ve transformed it into what we call a modern Berkshire Hathaway.

What did Buffett do? He started with textile production, which was declining. Over time, he eliminated textile production and reinvested the capital in insurance, banking, confectionery companies, and other enterprises. Eventually, he created a conglomerate that accumulated capital at a very high pace over a long period of time. He did it without issuing very many shares.

From the moment we invested in the company, from the moment I became executive chairman, and from the moment Ryan became their director of information technology, we began building this structure. We bought an insurance company called Vantage Holdings, a specialty insurance and reinsurance company that issues property and casualty insurance.

Most recently, we secured what I think is the best management team in the insurance industry. We’re going to scale this small insurance company into a large one over time, and this very talented team will underwrite the risks we take on ourselves. Then Pershing Square will manage the assets.

What Buffett made unique was that he managed the insurance operation. At first, he wasn’t very good at managing insurance operations. It took him time to learn how to run them. But he invested the assets not just in a portfolio of highly rated fixed-income securities, which is the typical approach for an insurer.

He took almost all the free cash flow received from the insurance operation and put that money in short-term Treasury bills, so that there was enough capital to pay insurance claims. Then he took the rest of the insurer’s assets and bought common stocks. Buffett was a very good investor in common stocks, as we know.

15. Berkshire’s Most Overlooked Advantage

The insurer eventually made money on the liabilities side by generating an underwriting profit—collecting more premiums than it paid out in claims. Then it earned attractive returns on its assets. When you earn attractive returns on assets and have a negative cost of capital, you can manage an insurance company that generates a 20% or higher annual rate of return.

That’s exactly what we’re now doing at Howard Hughes. Nobody notices this, and no one cares. Why? Because it’s another real estate company, and people hate real estate. But the nature of the main Howard Hughes business is that, at times, it self-liquidates.

Every year, we sell hundreds of millions of dollars of land. Over time, our land assets will disappear. Every year, we sell hundreds of millions of dollars of condominiums in Hawaii. We have $4 billion of condominiums under contract that are in the process of being delivered. We generate about $300 million in net operating income from our real estate assets.

Historically, we took all the funds we received and reinvested them in real estate. For example, we bought another MPC in Phoenix. We’re no longer going to do that. We’re going to reinvest the capital necessary to ensure that these small towns continue to be great places to live and are always regarded as some of the best places to live in the country.

Besides this, we’re going to generate billions of dollars of capital, which we will first direct toward insurance. When you have surplus capital in a joint-stock insurance company, it allows you to write more premiums and invest the share capital. This becomes capital.

We’ve already invested $300 million of additional capital in Vantage since purchasing the company. As we generate more money from our real estate operations, we’re considering how we can accelerate the conversion from a real estate company into an insurance holding company.

Buffett had a large stake in his business. He owned half of it. We own 47%. That allowed him to think long term, and we apply the same long-term approach. We secured a very talented team, so I think we have the liabilities side set up to do smart things in insurance. We’re also going to manage the assets well.

The term “modern Berkshire Hathaway” is often used. What does it mean to you?

It means that we’re going to do the same thing Buffett did in terms of insurance. The driving force of Berkshire Hathaway’s value eventually became its insurance operation. When Buffett spoke about buying Coca-Cola, American Express, or other companies, those were assets acquired with the insurance company’s capital.

So we’re taking a long-term view of how we manage the insurance operation. We’re going to develop the business without issuing a lot of ordinary shares. The number of shares in circulation is limited.

The beauty of insurance is that it’s a very profitable business. Over the next few years, you’ll see a transformation of the business. Today, it’s probably 70% real estate and maybe 30% insurance capital. Over the next 5 years, the business may move to something like 70% or 75% insurance and 25% real estate, unless we find a way to do it more quickly.

If you list the keys to Berkshire’s success, looking back, Buffett had control, so he could take a long-term perspective. He wasn’t inclined to make short-term changes to satisfy his shareholders. He had permanent capital. He didn’t pay dividends; he kept all the capital generated by the business.

He was very talented at investing in common stocks. He was able to attract talented people to manage the various businesses within Berkshire Hathaway. He also didn’t dilute his shareholders by issuing a lot of stock options or issuing shares to buy other companies.

Why don’t more people copy this? It sounds so simple.

I think a big part of the reason people don’t do that is that it’s hard to get a 47% stake in a public company. Usually, that doesn’t happen. It’s a kind of historical accident.

Do you think a lot of Berkshire’s success boils down to the fact that Buffett could have paid himself $2.5 billion at some point, but he took a modest salary, effectively increasing his capital together with shareholders? How different would Berkshire’s success look if he took $2.5 billion? Not that you do it, but what about the briefcase? I think it’s him.

His willingness to work for free was essentially very useful for the ethos around Berkshire. It probably made compensation negotiations with other employees easier. Buffett managed the partnership, where he received something like 25% of the profit over 6%, with the partnership’s expenses covered. When he left the business, I think he had about $100 million under management, of which $25 million was his and $75 million belonged to other investors.

16. From Watch Buyer to Company Owner

But I think he realized that if he continued to work in this partnership format, first of all, he wouldn’t have permanent capital. He was tired of dealing with investors who gave him money and then took their money back, which affected his results. He probably thought, “Look, by the power of compounding capital, if I own half of this little Berkshire Hathaway and receive 20% of the profits until the end of my life, I’ll find myself in a very good position, and marginal advancement isn’t that important for me.”

By the way, he was able to manage the investment operations as a one-person team, which I think also allowed him to do that. I remember once talking to Charlie Munger about this. I asked him what aspect of Berkshire Hathaway’s success was the most underestimated, and what people talked about the least. He said that circumstances almost never forced us to decide. Therefore, we always had options.

How are you thinking about this? What’s your reaction to it?

We built our business around this. The uniqueness of Pershing Square consists of the fact that, if you look at the different companies, we manage an offshore structure called Pershing Square Holdings. Employees own 28% of this company. We also manage Howard Hughes, which is owned directly and indirectly by approximately the same proportion of employees, as well as by Pershing Square funds.

Then we listed a structure on the stock exchange called Pershing Square USA, and employees invested about $500 million in it. What’s unusual for us is that we have anchor positions in each of the public funds that we manage. Each of them is effectively a permanent-capital fund. This means that if the market panics and people want liquidity, they can sell shares in each of these companies, but the capital remains in the fund, which allows us to buy shares during a COVID crisis or a financial crisis.

I think one of the very clever things Buffett did was that, at a certain age, he decided how he wanted to live his life. He didn’t want to constantly deal with money that needed to be raised if you work in the hedge-fund business.

In the hedge-fund business, when things are going very well, institutional investors take money from you because you’re becoming too large a percentage of their portfolio. When you have a bad period, people take money from you because you’re having a bad period. You have to keep going, and you really can’t close, because if you don’t open up, people won’t conduct the proper due diligence the next time you need to attract capital. That is a process that takes many months, so people can learn about your business again.

You spend all your time engaging with capital. When you get bigger and bigger, it absorbs a huge amount of your time. I explain our largest investment mistake by saying that I was distracted by the need to be on the road, attract capital, and try to support the stability of the capital base.

We just decided to get out of the money-management business, where the money can leave, like in open-ended funds. If you look at Pershing Square today, if we had simply compounded at something close to our historical rates, we would be managing $1 trillion 20 years from now. That’s enough. It’s a good business.

Let’s talk about Bremont. How did you start cooperating with the watch company?

Yes, Bremont. The story is this: I was at a board meeting for Howard Hughes in Dallas, and our office at that time was in a mixed-use complex with a shopping center. During the lunch break, I went to the mall and passed by a watch store. There was a very good young salesman, and he told me about Bremont watches. I had never heard of the brand before, and I eventually bought a watch.

Somehow, over time, I lost it. I had a watch safe, and it seemed to have disappeared in the safe. Years later, I was going to London for reasons related to Pershing Square. A friend told me that he wore a nice Patek Philippe watch while walking down the street in London, and it was stolen. He said, “Bill, you’re not here anymore. You can’t wear a nice watch in London, because at best they’ll steal it, and at worst, you could suffer.”

So I asked myself, “What watch can I wear and worry less about losing, or what unknown brand would a thief want?” I opened the drawer with my watches and found this Bremont. I thought, “This is a super-cool watch.” So I put it on.

I was staying in Mayfair, and the next day, when I arrived in London, I walked down the street and passed by the Bremont store. I went in. I really liked the watches, and as a result, I bought 8 Bremont watches, in fact as gifts.

That evening, I had dinner with the chairman of Pershing Square Holdings, and I gave him my Bremont watch. I also wrote him a small note. When I came out of the store, they had given me a free Bremont watch that I could hang on the wall. I asked, “Who owns this company?” They replied, “Two British brothers, English brothers.”

17. How He Judges CEOs in an Hour

So I wrote them a small note saying, “Dear Sirs, if you’re ever interested in finding a partner, I would be interested in becoming that partner. Maybe I could help you develop your company.” My father always taught me to love watches. It’s something like a parent-child interaction.

They sent me an email, and I had a meeting with them on Zoom. They said that they had a long-time owner who was interested in selling his share. Eventually, I bought a small minority stake in the company.

Time passed, and the thesis at the time was that we had a really nice growth strategy. We were going to open all these boutiques, and our boutiques were profitable. Well, it didn’t work. They spent capital quite quickly.

But I consider this investment a bit like a hobby investment. I didn’t invest a lot of resources in it. It was something like a Warren Buffett-style investment, where I didn’t conduct proper due diligence. I just assessed the character of the people with whom I was dealing.

My only participation in the business that was helpful was setting up a new CEO, a guy named David Serrato. In any case, things between David and the board of directors did not go well. Disagreements arose on the board about the company’s direction.

I stood on David’s side. I thought he was making all the right decisions. He had significantly improved the quality of the watches. He’s a watch-design groupie, and I liked that direction.

But the old guard, which had worked at the company for 20 years, thought there were too many changes happening too quickly. We even had a new logo. They asked, “Are we losing the spirit of the brand?” There was a small dispute with the board of directors.

Being a little activist, I became more involved and ultimately invested even more capital by buying effective control of the company. I joined the board of directors as non-executive chairman. I brought my nephew there to help everyone fix things.

They’ve made amazing progress over the last year or so. It’s been enough fun. Other people from my industry buy sports teams. I own this little watch company, and it’s super cool.

I have to buy one.

This one is going to fly to the Moon. It’s called Supernova. One of the coolest things is that the dial has all this luminous material, so it’s fully illuminated at night. It looks like solar panels in space.

It has a ceramic bezel, surprisingly, but it’s a Swiss movement—one of the Swiss movements of the highest quality. It has phenomenal design, and we have a lot of fans. I think people like me like to wear a watch when nobody knows how much I paid for it.

Yes, but I mean, maybe when we get to this point, it’s good for the brand. Tell me about hiring a new CEO. This is one of the things you did as an activist, and you did it again here. What process do you use to find the best person in the world for the position? How do you do this, and why are you so good at it?

We’ve done this in several different ways over time. For Pershing, we usually use our experience and search for someone who has done it before, with the lowest risk and the highest profit potential.

Chipotle faced crazy food-safety issues, and we needed someone. The name Brian Nikola kept coming up. Then we used our expert networks to speak with people who had worked for Brian or competed with him. You can learn a lot from that kind of 360-degree assessment.

We received very enthusiastic recommendations, and then we met the guy. I would say this is one of my best skills, although it hasn’t been perfect. I’ve made a few mistakes.

Over time, I became very good at understanding people. You need people who are extremely passionate about their work, have a lot of ability and energy, and have honesty, character, and so on.

I want to change the topic a little and talk about you as a person. What are the biggest mistakes people make about you?

You know, I’ve had this experience in life where people said, “Bill, I had a completely different impression of you based on what I read in the media. When I met you personally, you were really a very pleasant guy.”

Yes, you are much more pleasant.

Maybe some of my facial expressions on Twitter force people to think that I’m irritable or something like that, but I’m not a hostile person. I’m just someone who’s trying to reach the truth.

18. What’s Left to Achieve at 60?

I think the media positions people in this way, right? Some people, for some reason, because of your activism, find themselves in that situation, and then false ideas are formed about them.

I actually think that the story of Herbalife has, over time, harmed my reputation somewhat because it exposed me as a short seller. The general public just thinks that being a short seller is something bad.

Therefore, I think that’s important to consider. The Herbalife short position was around the end of 2012. It was a long time ago.

Believe it or not, we haven’t made an activist investment in over 10 years. The last activist investment was in 2016.

Will you ever do this again?

I don’t think we should have to be activists in the traditional form. We will be actively involved in the activities of companies in which we take a position. If we had a big share in a company, we felt that they were doing something wrong, and we thought it was worth the effort, we would get involved.

I don’t know if we’ll ever have to hold another proxy contest. I don’t think you want to run a proxy contest against someone who has 3 million subscribers on Twitter. I think that’s a bad end for management.

I think we have enough influence to reach the right answers through dialogue. That’s what I think. Therefore, I don’t think we need to be activists.

Activism is when you’re outside the boardroom and they won’t invite you there. Today, I think any company in which we are a shareholder, if we wanted to have representation on the board of directors, they would give it to us because we are a big shareholder, we have a good reputation, we’re long-term investors, and we’re going to do what’s needed for the business.

We always finish with the same question: What is success for you?

My definition of success for Pershing Square is that I want investors to have a very attractive, viable investment that can change their lives from the moment of entry until they retire. They could do what they want, pay for the education of their children, or buy the house in which they want to retire.

For me, my definition of success is tied to this moment. I celebrated my 60th birthday in May.

Wait. Delve into this moment. What does this mean?

I think about every year. I like summer; it’s one of my favorite seasons. Summer is passing by so fast. Most healthy people live to be 80 years old. I’m 60, so that means I have 20 to 25 years left.

I hope that artificial intelligence and better drugs will allow me to live a lot longer. I have a grandmother who lived to almost 106 years old, and she smoked and drank. I don’t know if that helped her longevity.

But I want, at the time when there is no more time, to have lived a meaningful life. I’ve always decided that I wanted to have the biggest beneficial effect on as many people as possible.

Of course, you start with family, friends, and so on, but I actually think that this initiative will become a way by which I can have a huge impact. It was really necessary.

So success for me is having lived a meaningful life.