Skip to main content

tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  March 27, 2019 9:00pm-9:31pm EDT

9:00 pm
♪ david: the legend is you began trading convertible bonds out of your dorm room. ken: when you make a few thousand dollars, you are rich. david: did you say you are going to do this full-time? ken: -- david: how does somebody invest at citadel? ken: we have been closed for a long time. david: your parents must be proud of you. ken: -- david: fishy efforts say, where should i invest -- does she ever say, where should i invest? ken: --
9:01 pm
>> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? start with your beginning. you grew up in florida. ken: i was born in daytona beach. my father worked for the space program. we went to texas for a time, then back to florida. david: you upside to many colleges -- applied to many colleges, and applied to har vard. were you surprised? [laughter] ken: i spent my entire career
9:02 pm
working on probability. , it i applied to college was the same game. i typed out 13 different college applications. david: you applied to 13 colleges? into one ofget them. david: you were president of the math club at high school. ken: i was pretty good at math. david: you got into harvard. did you decide to go right away or see if other schools would accept you? ken: my father's business partner was a princeton graduate. my first choice. my father had a falling out with his business partner. my dad said it would break his heart if i went to princeton. i went to harvard. [laughter] has broken theat heart of the princeton
9:03 pm
development people. [laughter] ken: one of my partners at had the who i have pleasure of working with for two decades served on princeton investment committee's oversight and has done wonders to help princeton feel better. david: the legend is you began trading convertible bonds out of your dorm room. ken: that is true. and i am atyear, bloomberg, so i have to say my gratitude for the press. article sayings the home shopping network was overpriced. low and behold the stock created shortly after i bought these put whens. -- puts when you make a few thousand dollars. as a freshman, you are rich. david: you have never been that
9:04 pm
involved in it before? ken: i never traded a financial asset before then. are doingr classmates other things, not worried about convertible bonds and arbitrage. what did they think about you? ken: i was an anomaly. my classmates and i, we debate politics. we would play soccer in the yard and hope not to run into a tree. and you have your friday night fun. it was a college experience. time at thet of library trying to understand and learn about finance. david: the story is you installed a receiver in your room so you could receive data. is that true or a legend? ken: it is true. this is the early days of harvard saying no to any form of business on campus. buildingvisor of the
9:05 pm
gave me permission to put a satellite dish on top the building so i can have real-time stock quotes. this is before the days of the internet. david: did you have a roommate who said this is not a good thing to do? [laughter] i wouldhose a single so not have a roommate i would annoy every day. david: did you say i will now do this full-time? ken: timing is so important in one's career. , in i started in arbitrage launched in september of 1987. confident as to how this portfolio would behave in a bull market, and uncertain in a bear markets. the mathematics on the way down are more nebulous than on the way up. than myort more stock back of the envelope math would tell me to short. ofonth later, the crash 1987. i became boy genius.
9:06 pm
because was born lucky, i was short. outside investors said this person is a genius. he made money during the crash. that was a defining moment in my of 1987 andcrash being that short gave me a track record early on that was attractive to investors. david: you say i'm going to set up my own company. your family said you are too young this is a good idea? ken: i was fortunate. i father was fourth generation go to college. my grandfather worked on the railroads. my parents also placed importance on education. on my mothers's side, my grandfather was not for it. he did it early borrowed money to started a business and ended up in the fuel oil distribution business. that entrepreneurial bug was
9:07 pm
part of my mom's life. she grew up in a family defined by my grandfather, who was a maverick. the idea i would try to pursue this stream to my parents was very much, go for it. david: who made the trading decisions? colleagues who understood the products and had good judgment. what was most important in my we traded 24y is hours a day from almost day one. we traded bonds in the united states, japanese equity marked in tokyo, and the market in new york. why was this so important? i could only be at work 15 hours a day. i had to learn to delegate. havingcess comes down to learned to trust people, their judgment, to delegate. who holds you someone
9:08 pm
onto to the market until comes to your knowledge and wisdom, or get out? ken: the market is rarely that wrong. the history books are littered with people smarter than the market who lost all the money. when you're in an investment and it is not working out, you need to step back. what don't i understand in this situation? if you think you have resolve all the unknowns, you stay with your position. david: before we went through the great recession, how big wish her company? 2008, we grew to from three people to write people, $25to 1400 billion assets under management. david: the great recession comes , and how did you survive it and how close did you come to not surviving it? ken: survival is the right
9:09 pm
choice of words. he was the only moment in the history of citadel that our existence was in question. i will make it very clear. i would go home on a friday. if morgan stanley did not open on monday, i would be done by wednesday. morgan stanley, the question was with the japanese followthrough on the financing commitment. you quickly come to terms with the fact we may not survive. it may be an exogenous event that causes us to fail. i have to accept that reality. now that i have accepted that reality -- that was the playbook we came to work with every day. we will fight to survive knowing we might fail. david: how do somebody invest with citadel, and is there a minimum? how long should they hold the money with you? [laughter] so, i'm going to be the
9:10 pm
bearer of bad news, we have been closed for a long time. we are not actively soliciting new investment. david: even from interviews, you would not take any money? ok. [laughter] ♪
9:11 pm
9:12 pm
to yourow you have no business up in the hedge fund world to what size level now? ken: $30 billion. we have been there the last four years. david: do you delegate investment decisions to your various professionals? ken: we have then here about 40 minutes. 20%.ll trade about make my decisions we colleagues are making. i want thelieve
9:13 pm
individual closest to the information who has good judgment to make the call. is no way from my seat i be able generally speaking to make a better decision than my amgent who has covered for a decade. david: it fits said you spend a fair amount of time recruiting good investment specials. is that a date part of your job, recruiting others to come to citadel? ken: i have interviewed 10,000 people in my career. i will leave today and do two interviews today, two tomorrow. i am always looking for talent. david: if somebody is watching and saying i will be interviewed by ken griffin, what should they do in the interview to make you like them? ken: what is interesting is make you like them is a cognitive
9:14 pm
bias in interviewing people. you want to avoid that trap. i am looking for two key drivers in a candidate. i'm looking for their passion. do they love what they do? they love the problems they work on? there was a young woman who worked for us 16 years ago, a year or two out of ivy league school, and her boss says, she would leave. she is incredibly talented. she wants to go to medical school. you need to convince her to stay. walks said the minute she in my office i will offer to write her letter of recommendation. , thee wants to be a doctor world needs another great doctor , and i want to make that happen. what is the passion of the individual in this field? that passion is what drives our success. the second is clear accomplishment, individuals that
9:15 pm
have a demonstrated track record of having made good decisions and accomplished in their life. david: how does somebody invest with citadel? is there a minimum or rate of return that person should reasonably expect? and how long should they hold the money with you? [laughter] ken: so, i am going to be the error of bad news, we have been closed for a long time. we are not actively soliciting new investment. david: even from interviewers, you would not take any money? [laughter] ken: you fall into one of my idol categories. heroes i will figure out how to solve for. that is an important success. statement. your success is an important story that helps to encourage the next generation with
9:16 pm
passion. leave that aside. we are closed to new investment. david: your wealth has created opportunities for many things, including philanthropy. how do you decide which are philanthropic gifts will be? ken: michael bloomberg's gift to jon hopkins makes mine seem immaterial. >> congratulations for setting a new bar to focus on. there is nothing more important. it starts preschool and goes through our greatest universities. i have done a lot of work in k-12 education. the numbers involved are staggering. a city like chicago will spend $5 billion a year in k-12 education. here is what is incredibly regrettable. , wenow how to educate youth just choose not to do it. it is heartbreaking.
9:17 pm
and that arena, i spend more time on the political front because it is our body politic letting our kids down. it is inexcusable. he creates so many problems we face today. i wish elizabeth warren had 1% passion to fix k-12 education as she has to attack those who have been successful. on the issue of higher education , america leads the world. this is not a given that we have the greatest universities in the world. i want to support ex-fiance in american education. david: you have been very and fall through art institutions. what is the appeal of art collecting to you, and where do you keep most of your art? [laughter] ken: i have a painting at home that i did. it is so profoundly ugly that it is beyond imagination. i have zero artistic skill. my love for art may be reflects
9:18 pm
my admiration for talent i am lacking in. it started two decades ago in new york. off anre auctioning iconic sculpture. she is so determined, she will not be put in her place. it healed to me so much. that was the pivotal moment that started my interest in art, that work. outbid.record, i was i tried to buy it. hammer went down. i wasn't going to go that far. i have never been so frustrated in my life. david: you've probably never been outbid again. ken: i have been outbid again. i offered more money to the fire the next day. that was my start of my passion in art. art is one area where
9:19 pm
we can find common ground as a society, appreciation that brings us together. in the artection is institute in chicago. david: are you going to have your own museum? are you thinking about that? ken: no. [laughter] ken: i am not. for me, 700,000 to one million see art, i o will have great satisfaction in that. david: what is your view on political matters and freedom? ken: it is important that we as a country in brace freedom of speech, freedom of opportunity, freedom of what our founding fathers put their lives on the line for. that is important to me. so candidates that really support personal rights and on all causes,y,
9:20 pm
are important to me. ♪
9:21 pm
thed: so you have bought most expensive apartment ever in new york city and maybe in the united states. you have bought a lot of property in palm beach other places, london. you can't live in all these places, so what his behind it? ken: you and i would probably be an competition for hours spent on the plane. i think i spend 800 hours a year on a plane. i am actually in new york every single week. we have hundreds of employees here. we pay the new york investment bank's roughly $1 billion a year in revenues. this is my second home in some sense.
9:22 pm
this is home away from home. i have three little kids. my ex-wife and i debated do we make new york home. the apartment represents the possibility this might be home for me and citadel might be headquartered in new york one day. i am frustrated by the political winds in the city. amazon opting out of new york is heartbreaking. it is heartbreaking. when you bring a firm that has such a great user of technology into your city, it is not just about the success story of amazon, it is about the fact you have that talent magnet that creates an entire ecosystem of success stories plant the seeds of other success stories. a successfule businessman, philanthropist, art collector. your parents must be proud of you. do they call you tell you how great you are, still give you advice? ken: i am sure my mom is proud of me.
9:23 pm
we are all proud of our children. i saw my mom yesterday. i was at a conference in boca raton. we had a quick drink together. i got parenting advice. how to be a better parent. we talked about raising children. i have three little kids. going through in high school here is how i thought about trying to encourage your interests. david: does she ever say, where are the markets going? where should i invest? fishy invest with citadel or do her own thing? ken: mom is all set. [laughter] ken: mom does not need to worry about it. david: let me ask a couple of final questions. you have been involved in the political world. as a donor to republican causes often, conservative causes. can you state your view on political matters and freedom and things related to that? ken: i have supported candidates
9:24 pm
on both sides of the aisle. i do live in illinois. i get to pick who i think is a democrat will be the most business-friendly, education-from the candidate i can find. know this, ibably was an early supporter of president obama because he came to me to be the education president. you want my vote, my support? that is the issue. you come to me and say i will fight for education in america, i got your back. that is number one. number two is freedom. in our country, a government that can take care of all needs also has left us with no freedom. it is important that we as a country embrace freedom of speech, freedom of opportunity, freedom of what our founding fathers put their lives on the line for. that is important to me,
9:25 pm
candidates that really support personal rights, personal liberty on all causes are important to me. david: will you ever be a candidate for office yourself? ken: i don't know. we live in a post-altered reality in politics today. fax no longer seem to matter. that is hard to understand how i would be a candidate. if i was a candidate, it would be on the substance of how america would be successful, how we have our individual rights protected. i don't do well in the debate untethered to fax. david: have you ever thought what you would like your legacy to be as you got older? ken: david, i am 50. david: i know, young, but bill gates retired almost at 50. john d rockefeller retired in his late 40's. you haven't thought of retiring at a young age, like 50? ken: we will live much longer
9:26 pm
and much healthier lives. i really hope to contribute to society for decades to come, whether in the business from, the self-help realm, i want to be relevant to society. i am fortunate to know how to build teams and make things happen. that was not a gift given to me. that is a lot of learning. if you look at citadel, we are so successful. we are far more than the sum of the parts. when you can put together the right team with the right mission, you can accomplish great things. of is howmost proud we have reshaped financial markets around the world with citadel securities. interest rate swaps, for example , we have helped to create a .ompetitive dynamic that is money that goes right into the bottom line of pension plans, corporate treasuries, and
9:27 pm
other parts of society, and not into the wall street value chain. by bringing competition into the value securities markets, we have created huge value for end-users. david: i want to thank you for an interesting conversation. if you open up your fund again, which you let me know? ken: absolutely. [laughter] ken: thank you all. ♪
9:28 pm
9:29 pm
9:30 pm
♪ campari is a major player. started in 1860. its drinks are now sold in 190 countries. its products have become staples around the world. today on "leaders with lacqua,"


info Stream Only

Uploaded by TV Archive on