20VC Bill Ackman on The Banking Crisis, What the Fed Should Do, The ThreeTiered Banking System, Why SVB is the Safest, Why Jamie Dimon Should Run For President & Investing Lessons; Losing $400M on Netflix and Making $2.8BN in COVID

In a dynamic conversation on 20 VC, Bill Ackman discusses the precarious state of the banking sector, advocating for a temporary government guarantee on all bank deposits to stabilize the system. He emphasizes the need for updated FDIC insurance to handle larger business accounts and suggests that without such measures, regional banks could face significant challenges. Ackman also touches on political prospects, hinting at a potential future in politics when his current role becomes less engaging. Additionally, he shares personal insights on marriage, parenting in affluence, and his philanthropic approach, favoring business solutions over traditional charity. Ackman's views on taxation call for logical reforms, targeting loopholes and advocating for fairer policies that don't stifle entrepreneurship.

• Jamie Dimont expresses concern over the potential for another bank closure and the ensuing chaos.
• He speculates that Trump would win against Biden in a presidential race.
• Dimont sees a chance for non-politicians to run for office and views himself as a potential candidate.
• He criticizes the Biden wealth tax proposal, fearing it would harm startups and discourage business formation in the U.S.

"We can't have another bank closure. One more and it's going to get messy. If it's Biden, Trump, I think Trump wins." "My favorite version of events is Jamie Dimont." "If you've got the Biden wealth tax, it's going to bankrupt every startup."

• Dimont believes that another bank closure would lead to significant problems and suggests that Trump would have an edge over Biden in an election.
• He expresses interest in the idea of running for office himself.
• The Biden wealth tax is viewed as detrimental to startups and overall business creation in America.

• Bill Ackman is introduced as the guest on the 20 VC podcast, which is highly anticipated.
• The episode will cover topics like the current banking crisis, investing strategies, and other insights.
• Ackman's interview is described as particularly revealing and valuable.

"This 20 VC is one of the most hotly anticipated shows we have ever done." "In one of his most revealing interviews yet, we discussed the current banking crisis, what happens next, investing mindsets, and so much more."

• The podcast episode featuring Bill Ackman is expected to provide deep insights into various topics, including the banking crisis and investment strategies.
• The interview is highlighted as especially candid and informative.

• Secureframe is introduced as an automated security and privacy compliance platform.
• It helps businesses comply with global privacy and security standards quickly.
• Secureframe's platform and expert team promise to make businesses audit-ready in a short timeframe.

"Secureframe is the leading all in one platform for automated security and privacy compliance." "Secureframe simplifies and streamlines the process of getting and staying compliant to the most rigorous global privacy and security standards."

• Secureframe is presented as a solution for businesses needing to meet strict global privacy and security standards.
• The platform is designed to simplify and expedite the compliance process.

• Deal is introduced as an HR platform that can manage global teams.
• It consolidates various types of workers into one platform and evolves with company growth.
• Deal simplifies global team management, payments, and HR compliance.

"Deal does exactly that. It handles all things for global teams." "Simplify global team management, payments and HR so you can hire faster, streamline more processes, and stay compliant always."

• Deal is positioned as a comprehensive HR solution for companies with global workforces.
• The platform aims to make it easier to manage global teams and maintain compliance with local laws.

• Retool is described as a platform for building custom internal software quickly.
• It allows companies like Amazon and DoorDash to create internal tools using JavaScript and SQL in a short amount of time.
• Retool offers startups significant free credits to get started.

"Instead of waiting months, you can now build out five to ten apps in just an afternoon using a bit of JavaScript and SQL." "Retool is free to teams of up to five, and startups now get $25,000 in free credits."

• Retool enables businesses to develop custom internal tools rapidly, which can be a significant advantage.
• The platform is accessible to small teams and offers substantial credits to startups, making it attractive for new businesses.

• Jamie Dimont hints at his interest in running for office as a non-politician.
• He expresses his preference for a scenario where he would be a candidate.

"I think it's a very interesting opportunity for someone who's not inside the political system to run for office."

• Dimont is intrigued by the idea of individuals outside the political system running for office.
• He subtly suggests that he might consider such a move himself.

• Bill Ackman expresses excitement about joining the 20 VC podcast.
• The host shares their anticipation and mentions positive feedback from others about Ackman.

"Bill, I am so excited for this. I've heard so many great things."

• The host welcomes Bill Ackman to the podcast and conveys their enthusiasm.
• Ackman's appearance on the show is met with high expectations due to positive feedback.

• Bill Ackman recounts the experience of raising his first fund with Gotham Partners.
• He describes the fundraising process as challenging, akin to blind dating.
• Ackman and his partner met with over 100 potential investors but only secured six, raising $3.1 million.

"It was fun. It was a bit like blind dating." "What was interesting is anyone who knew me as a kid wouldn't give us money."

• Ackman reflects on the difficulty of raising funds from people who knew him before his professional career.
• He highlights the irony that those who knew him personally were less likely to invest.

• Ackman's initial investment strategy was influenced by Warren Buffett and focused on public companies.
• Despite having no track record, Ackman and his partner convinced investors with their life successes and commitment.
• They experienced an early triumph when a potential investor profited from their investment ideas, leading to a pivotal investment in their fund.

"We were Warren Buffett devotees, and we said, look, we're putting all of our collective net worths in." "One of the guys we went to see was the heir of a famous New York City real estate family."

• Ackman's strategy was to emulate Warren Buffett's investment approach, which helped garner investor confidence.
• The anecdote about the New York City real estate heir illustrates how Ackman's early investment ideas led to significant funding for their venture.

• Ackman emphasizes the importance of trust in a partnership, using his relationship with David Berkowitz as an example.
• He shares a humorous anecdote about their living situation and the misconceptions it caused.
• Trust and reliability are underscored as the foundations of a successful partnership.

"The key thing is picking someone that you totally trust." "Choose your partners carefully, but choose someone you totally trust."

• Ackman stresses the critical role of trust in a partnership, which was a key factor in his successful collaboration with David Berkowitz.
• The story about their living arrangement serves to illustrate the depth of their partnership and the trust they placed in each other.

• Ackman discusses his approach to trust, which involves forming a quick judgment of character.
• He admits to occasional misjudgments but emphasizes the importance of listening to one's instincts.
• The level of trust required varies depending on the responsibilities involved.

"I form a view of a person's character pretty quickly." "The gut is actually part of your brain."

• Ackman trusts his instincts when assessing someone's character, which usually guides him correctly.
• He acknowledges that the gut feeling is an integral part of decision-making and should be heeded.

• Ackman clarifies that he is not running from anything but rather towards goals like happiness and self-actualization.
• He seeks to minimize risks such as death and disease while maximizing positive outcomes in life.

"I think I'm running toward things." "What do I want to maximize happiness."

• Ackman is motivated by the pursuit of happiness and personal growth, rather than by a desire to escape something.
• His goals are focused on achieving fulfillment and maintaining good relationships.

• Ackman reflects on his consistent happiness throughout life despite experiencing challenges.
• He believes in appreciating happiness in the present and acknowledges his fortunate circumstances.

"I've been consistently happy pretty much since birth." "I'm an optimist, and I'm a happy guy."

• Ackman describes himself as an optimist who has maintained a baseline of happiness despite life's ups and downs.
• He emphasizes the importance of recognizing and valuing happiness when it is present.

• Ackman recounts major dips in his career, such as the Gotham Partners crisis and personal challenges.
• He shares how he coped with these difficult periods, emphasizing progress, health, and support from loved ones.

"One of the biggest dips, which seems far away and nothing now, but it was a very significant one, was in the Gotham partners days." "None of these things are really catastrophic versus a serious health challenge, which I've not had and hope to defer forever, if I can."

• Ackman perceives his past business challenges as significant at the time but less so in retrospect, especially compared to potential health issues.
• He offers insight into how he navigated through these difficult times, highlighting the importance of daily progress and personal well-being.

• Ackman advises focusing on making daily progress when dealing with failure.
• He suggests that maintaining physical health and surrounding oneself with supportive people can help overcome challenging times.

"The advice I give who go through similarly challenging moments, and I guarantee you that in life, it's the rare person that doesn't go through a very dark period." "Make sure each day you make progress toward digging yourself out of the mess."

• Ackman provides guidance for coping with failure, which includes staying active, healthy, and progressing toward recovery.
• He acknowledges that most people will face dark periods and stresses the importance of consistent effort to improve one's situation.

• Ackman draws a parallel between tennis and life, emphasizing the importance of not dwelling on past mistakes.
• He advocates for starting anew with each set or situation, focusing on future opportunities.

"Don't let the past disrupt the future." "Start with a blank sheet of paper."

• Ackman's approach to tennis reflects his mentality in life: to move past setbacks and look forward to new chances.
• He suggests that one should not be hindered by previous failures but instead should reset and rebuild from scratch.

• Ackman shares that he doesn't conduct a formal post-mortem but learns lessons from experiences.
• He discusses the structural issues with Gotham Partners and how those lessons influenced the creation of Pershing Square.

"I don't know if I do a formal post mortem, but certainly there are a lot of lessons learned." "The lesson from the Gotham experience was of the importance of liquidity."

• Ackman reflects on past experiences to derive lessons, particularly the importance of maintaining liquidity in a fund.
• He applies these lessons to his subsequent ventures, ensuring better alignment with investment strategies and fund structures.

• Asset-liability mismatch issues have been prevalent in the finance industry.
• Jamie Dimont reflects on how these issues affected his firm in the past.
• Lessons learned from their experiences were not widely adopted across the industry.
• Other firms had to undergo similar issues to learn the same lessons.

"I watched the rest of the industry, or many people in our industry, particularly in the last couple of years, suffer from precisely the same asset liability mismatch issues that we had back then."

This quote highlights the cyclical nature of financial challenges within the industry, emphasizing the specific issue of asset-liability mismatches that Jamie Dimont's firm faced and later observed in others.

• Jamie Dimont emphasizes the importance of learning from both mistakes and missed opportunities.
• Discusses the concept of missed opportunities being as critical, if not more, than actual losses.
• Reflects on instances where potential profits were not maximized due to inaction or insufficient research.

"I always like to say experience is making mistakes and learning from them."

Jamie Dimont encapsulates his philosophy on the value of experience, suggesting that it is derived from making mistakes and the subsequent learning process.

• Jamie Dimont talks about Pershing Square's investment in Netflix following a significant drop in stock price.
• Shares that new information led to a reevaluation of their investment thesis and a decision to exit the position, resulting in a substantial loss.
• The firm's earlier success in hedging Covid is contrasted with their more conservative approach to hedging interest rate risk, which Dimont considers a missed opportunity for greater profits.

"Netflix. So we took about a billion dollar position in Netflix after the stock fell about 50%."

This quote details a specific investment decision made by Pershing Square, highlighting the risks involved in market timing and the impact of subsequent performance on their position.

• Jamie Dimont explains Pershing Square's approach to position sizing based on risk assessment.
• Investments with low risk of loss and strong market positions can constitute a larger portion of the portfolio.
• Riskier bets, such as interest rate derivatives, are allocated a smaller percentage of capital.
• Reflects on the balance between being cautious and the potential regret of not allocating more capital to confident positions.

"We're willing to risk a certain amount of capital on any one investment."

This quote outlines Pershing Square's measured approach to risk management, illustrating how they determine the size of an investment based on the potential for loss.

• Jamie Dimont discusses the importance of persistence in investment strategies.
• Acknowledges the need to change one's mind when new facts contradict the original investment thesis, as was the case with Netflix.

"If new facts emerge which are inconsistent with original thesis. And I think that's basically what happened with us with Netflix."

This quote highlights the critical thinking and adaptability required in investment management, demonstrating how new information can necessitate a shift in strategy.

• Jamie Dimont reflects on the public nature of their investment wins and losses.
• Notes that while most of their investments have been profitable, the few large losses receive disproportionate media attention.
• Discusses the impact of public perception on their reputation and the reality of their track record.

"We get so much shit, if you will, when we make a mistake, because they're always big."

This quote conveys the intense scrutiny faced by investment firms like Pershing Square, especially when large losses occur, despite a predominantly successful investment history.

• Jamie Dimont justifies his public presence as a strategic tool for influencing change in large companies.
• He emphasizes the value of free speech and the ability to express views without financial repercussions.
• Reflects on the current state of free speech in the United States and his privilege to speak freely due to financial independence.

"So I would say originally it was a very important part of the strategy."

This quote explains the rationale behind Jamie Dimont's public persona, linking it to the strategic objectives of Pershing Square in its early days.

• Jamie Dimont shares his use of Twitter as a platform to reach influential figures and debate important issues.
• Discusses how social media allows him to share his views directly with policymakers and the public.
• Highlights the effectiveness of social media in influencing policy and financial discussions.

"What I like about it is it's a way to have your views heard and debated."

This quote underscores the value Jamie Dimont places on social media as a means of engaging with a broader audience and influencing discussions in finance and policy.

• Jamie Dimont expresses concerns about the stability of regional banks and the government's response.
• Advocates for temporary government guarantees to restore confidence in the banking system.
• Suggests that without such measures, the risk of bank runs and financial instability remains high.

"If the government didn't, at a minimum, guarantee deposits at Silicon Valley bank, we'd have a massive run at pretty much every regional bank on Monday."

This quote reveals Jamie Dimont's perspective on the urgent need for government intervention to prevent widespread panic and ensure the stability of the banking sector.

• Jamie Dimont and Bill Ackman discuss the potential centralization of power in banking to the big four banks.
• Smaller banks' importance due to their specialized services, such as venture capital banking and real estate lending, is highlighted.
• The big money center banks' lack of core competency in real estate lending could lead to economic slowdown if smaller banks fail.

"But commercial real estate is a major part of our economy. And you have these big banks that don't have a core competency making those kind of loans to developers, et cetera."

The quote emphasizes the role of smaller banks in providing specialized lending services, which larger banks may not offer, and the potential economic impact if these smaller banks were to disappear.

• Jamie Dimont discusses the importance of not keeping large sums of money in a single bank account.
• The strategy of keeping funds in U.S. Treasury money market accounts or owning U.S. Treasury bills directly is mentioned as a way to avoid bank risk.
• The need for a system-wide deposit guarantee and FDIC insurance with appropriate premiums to support smaller banks is discussed.

"So we're not taking bank risk, we're just facing the US sovereign."

This quote explains the risk management strategy of avoiding bank-specific risks by investing in government-backed securities instead.

• The necessity of a temporary government guarantee for deposits due to the lack of a non-governmental insurance system is discussed.
• Jamie Dimont criticizes the current FDIC insurance levels as insufficient for businesses and suggests that a temporary guarantee would support small business operations.

"We need a temporary government guarantee because we don't have a non-governmental insurance system to support it."

The quote expresses the need for a government intervention to provide stability in the banking system, particularly for businesses that exceed the current FDIC insurance limits.

• Jamie Dimont suggests that the Federal Reserve should prioritize financial stability and be cautious with interest rate hikes amidst banking instability.
• He proposes announcing a temporary deposit guarantee and quickly creating greater insurance levels for deposits.

"The Federal Reserve's principal job is financial stability."

This quote highlights the Federal Reserve's responsibility to ensure the overall stability of the financial system, which is a prerequisite for other forms of stability.

• Jamie Dimont debates whether further interest rate increases are necessary given the current economic conditions.
• He suggests that opening up immigration could be a solution to temper wage increases and address inflation.

"I don't think the Fed has to raise rates that much more."

The quote suggests skepticism over the need for significant further interest rate hikes by the Federal Reserve.

• The potential return of Donald Trump to power and the implications for immigration policy are discussed.
• Jamie Dimont sees an opportunity for a non-political figure to run for office and potentially win against Trump.

"My favorite version of events is Jamie Dimot, actually, believe it or not, a banker."

This quote reflects Jamie Dimont's preference for a business leader with a global perspective and understanding of the economy to run for political office.

• Jamie Dimont talks about his personal relationship with money, emphasizing independence and the ability to speak freely.
• He believes that happiness comes from helping others and that money provides the ability to have a global impact on problems.

"Independence, again, big driver, and I think financial resources give you independence."

The quote underlines the value Jamie Dimont places on financial independence and its role in enabling free speech and impactful actions.

• Jamie Dimont shares his views on what makes a successful marriage, emphasizing the importance of compatibility and making time for each other.
• He acknowledges the challenges of managing time, especially in a city environment, and the importance of date nights and shared experiences.

"So I think getting the match right is really important."

This quote underscores the significance of choosing the right partner as the foundational element of a successful marriage.

• Jamie Dimont addresses the challenge of raising children with financial privilege while instilling drive and ambition.
• He reflects on his own upbringing and the importance of the lessons parents teach about money and work ethic.

"I think it's all on the parents and kind of the lessons they teach about money."

The quote points to the critical role of parenting in shaping children's attitudes toward money and privilege, regardless of the family's wealth level.

• Jamie Dimont highlights a trend of persistent inflation levels that investors are overlooking.
• Inflation rates are expected to be around 3 to 4% for the foreseeable future.
• The current yield on long-term government bonds is approximately 3.6%, which is considered too low in a high-inflation environment.

"And you're going to see persistent levels of inflation. Three to 4% inflation for the foreseeable future. That's certainly being missed."

This quote emphasizes Dimont's view that the market is underestimating future inflation, which is a critical point for investors to consider when evaluating long-term bonds.

• Jamie Dimont identifies time management as the hardest element of his role.

"Time management."

The brevity of this quote underscores the significance of time management as a challenge in Dimont's professional life.

• According to Jamie Dimont, all business models are viable when interest rates are at zero.

"Everything works in a zero interest rate world."

This quote suggests that a zero-interest rate environment creates favorable conditions for a wide range of business models to succeed.

• Jamie Dimont expresses admiration for Warren Buffett and Joe Steinberg.
• He also acknowledges the influence of his parents, learning from both their successes and mistakes.
• Dimont's mother's activism, particularly her successful campaign to improve rail systems, taught him the value of activism.

"I've been a Warren Buffett fan from the beginning... I have a lot of admiration for my parents... My mom was with a real activist in the family, actually."

This quote highlights the various individuals who have impacted Dimont's life and career, illustrating the importance of mentorship and role models.

• Dimont favors Universal Music Group as a long-term investment due to the certainty of increased music subscriptions and streaming globally.
• He identifies it as a capital-light business, which is attractive for long-term investment.

"You got to own Universal Music group... it's a very capital light business."

This quote reveals Dimont's investment strategy and confidence in the growth of the music streaming industry.

• Jamie Dimont suggests shorting companies that will likely be disrupted by blockchain technology.
• He refrains from naming specific companies but indicates they are seen as monopolistic and outdated.

"There are businesses that are guaranteed to be disrupted by blockchain and that are old fashioned old businesses that everyone hates because they're monopolists."

This quote indicates Dimont's belief in the disruptive potential of blockchain technology and its impact on certain business models.

• Dimont reflects on a failed SPAC transaction with Universal Music, attributing the failure to technical reasons rather than substantive issues.
• He criticizes principle-based regulation, suggesting a focus on the bigger picture would prevent such outcomes.

"Sometimes government regulators focus on the technical details as opposed to high level principles."

The quote expresses Dimont's perspective on regulation, advocating for a more principle-based approach that could lead to more efficient and effective outcomes.

• Jamie Dimont acknowledges wealth inequality as a significant issue.
• He proposes solutions such as promoting home ownership and creating investment accounts for newborns to help address wealth disparities.
• Dimont emphasizes the power of compounding and the need for early financial investment to build wealth.

"Compounding is this very powerful thing... you give every baby that's born in America, whatever, $7,000 account... it's a million dollars."

This quote suggests a proactive approach to reducing wealth inequality by giving everyone a stake in the economy's success from birth.

• Jamie Dimont criticizes certain tax policies, such as like-kind exchanges and the ability to offset income through real estate depreciation.
• He proposes taxing certain types of borrowing that are effectively equivalent to sales.

"If you're Elon Musk... I think the distribution from that kind of borrowing should be taxable because it's really tantamount to a sale."

Dimont's quote provides insight into his view of fair tax policy, arguing for changes that would prevent wealthy individuals from avoiding taxes through borrowing against assets.

• Dimont expresses concern over various geopolitical and economic challenges, including North Korea, Russia-Ukraine, China's regional ambitions, and domestic financial instability.
• He calls for principle-based regulation and a focus on rebuilding strategic reserves and defense stockpiles.
• Dimont also discusses the need for social media platforms that promote unity rather than divisiveness.

"We've got the north korean situation. We have Ukraine, Russia... We have Chairman Powell... We have real serious inflation in our country and we have financial instability."

This quote outlines Dimont's concerns about current global and domestic issues affecting the economy and the need for strategic responses.

• Jamie Dimont expresses optimism about America's future, hoping for positive outcomes from current conflicts and improved leadership.

"I have to say stronger because I'm an optimist... Good will come from this war with Russia, for sure."

The quote reflects Dimont's optimistic outlook on America's resilience and potential for positive change despite current challenges.

• When asked about his future, Dimont hopes to improve based on lessons learned and does not rule out a role in politics.

"Hopefully a better, more improved version. Who's learned from whatever mistakes I made in the previous five years?"

This quote conveys Dimont's forward-looking mindset and openness to growth and potential new opportunities, including political involvement.