# Kenneth Griffin - CEO of Citadel  | Podcast | In Good Company | Norges Bank Investment Management

https://www.youtube.com/watch?v=iQt9pgksZ3Y

[00:02] very welcome to the podcast in good company today we are joined by uh Ken Griffin one of the best investors of all time
[00:09] now Ken uh started his journey in finance from his Harvard dorm he founded Citadel which has a great ambition of being the most successful investment firm of all times
[00:22] now that's the kind of ambitions that we like so very welcome Ken great to have you on
[00:27] it is a pleasure to be here today thank you so much for taking the time to do this interview
[00:30] fantastic now what motivated you to go into Finance in the first place
[00:37] so I I've always been interested in the stock market for reasons I don't fully understand and in third grade I wrote a paper where I set forth that I wanted to learn how the stock market works
[00:48] I've been on that Journey now for almost 40 years and I still feel like I'm at the beginning of the learning curve
[00:55] the equity markets around the world are just a wash in interesting and complex problems
[01:00] the intersection of business models.
[01:02] earnings and then the psychology of investors.
[01:05] it's it's really an endless journey of learning trying to appreciate how to Value businesses and how to be a successful investor in the stock market.
[01:14] it is just the most complex game in the world.
[01:17] now when you um started back at your Harvard dorm what was your vision?
[01:19] what do you think this could be?
[01:21] well what's what's interesting is in my college dorm as a freshman I bought two put contracts in Home Shopping Network.
[01:31] and in some sense I owe my career to good journalism.
[01:33] there was an article in Forbes by gret morgenson where she set forth a thesis as to why Home Shopping Network was the meme stock of that moment in time.
[01:42] and I I loved her thesis.
[01:46] I bought these two-p put contracts and fortunately from the perspective of my career the stock Creator shortly thereafter.
[01:52] and ready for this I made a few thousand but great you and I both know when you're when you're a freshman in
[02:01] college if you make $2,000 or $3,000.
[02:04] That's all the money in the world.
[02:07] When I sold those put contracts, the market maker paid me less than their intrinsic value.
[02:12] And that made me very curious about the pricing of derivatives.
[02:15] Because I realized that I got very lucky in buying those puts with an expiration that fell after the stock had cratered.
[02:24] But the market maker made a risk-free profit.
[02:28] And I was very, very interested in trying to learn about the pricing of derivatives.
[02:32] And that took me to understanding the pricing of convertible bonds, which is the area that I started in from my college dorm room when I began my first hedge fund.
[02:42] Do you think there are um as many opportunities in the markets now as they were when you started?
[02:48] I think the opportunity set's different today than when I started.
[02:50] You know, obviously the commodification of the know-how of how to price derivatives, for example, has been has been incredible.
[02:57] You know, there's tremendous number of
[03:01] programs around the world with Masters
[03:03] in PhD and financial engineering so as
[03:06] a society we've really increased our knowhow when it comes to investing but
[03:13] conversely the markets today are much much bigger and they're Global and
[03:17] there's far more product proliferation
[03:20] there will always be Niche opportunities for investors to to gain an Insight with
[03:25] and to have a competitive advantage in trading what were some of the mistakes you made in the beginning which you learned from and have built on
[03:29] I mean i' I've made every mistake you can possibly make and unfortunately I've made some of them two or three times so the key in finance though is to try to learn from both your successes and from your failures and I think that one of the things that people do too too often is they don't study their winners they don't try to learn what did they get right in that winning trade because let's be clear you make you make money in finance when you have
[04:02] winners and we all tend to put way too much emphasis on trying to learn from our losers and not nearly enough emphasis in trying to learn learn from our winners so so what have been your big Winners what I mean what what if you were to try to summarize your your kind of winning strategies what what's been the best things you've done so where we are most successful as investors is where we have a clear competitive advantage in assimilating information processing that information and reacting to that information that's that's where we do best and so we architect The Firm around this principle of we are in we're in the research business and the core of this business is research it's good oldfashioned whether it's stock picking or forecasting the weather to trade Commodities it's a research business first and foremost and trading is simply how we monetize our research it's just that simple when you look at all your data points.
[05:02] and all your research now where is the US economy?
[05:04] so if if I if I look at the mosaic of the data points that we have in the US economy today we're in a very interesting unchartered territory.
[05:12] you and I have have both studied economics our entire life in one form or another.
[05:20] let me just ask you a question would you've ever imagined the United States to be at near full employment with inflation running somewhere around 3 and change percent and yet the government is on a massive spending binge?
[05:33] no I wouldn't have expected that.
[05:36] I mean as economists we are we are just in Uncharted Territory that we are at that PO moment in the cycle where generally you're trying to pay down your government debt you're trying to put your fiscal house in order you're trying to create that capacity to have flexibility when the rainy day inevitably comes and yet right here right now with the US economy pretty much growing at or Beyond capacity the government is still engaged in a massive massive degree of fiscal stimulus that's
[06:04] creating hotter inflation than we would like to see in the economy and it is leaving the United States in a more precarious long-term position and having fewer degrees of freedom to deal with the next the next recession or God forbid depression.
[06:17] you are um a vocal advocate about the fiscal deficit and the dangers of it um why are you so concerned about it.
[06:28] what's what's I mean the the you and I both grew up in the era of fears about crowding out that the scale the government deficits around the world would crowd out private sector access to Capital and of course that's that fear still exists amongst those of us who think about a very long-term process.
[06:46] how do we make sure that we do not crowd out the private sector from propagate government spending but there's a there's another important point which is the matter of of equity.
[06:58] you know there's an incredible Focus around the world today around Equity our is income inequality for example too.
[07:05] High, this is an incredible moment.
[07:08] Just in some sense, um, we're borrowing from the future.
[07:11] We're borrowing from our children, our grandchildren, and our great-grandchildren right here, right now to maintain a standard of living that is not in sync with either productivity or with the culture of work that's emerging across the developed economy.
[07:26] It's just not fair as a matter of equity across generations for us to be engaged in this level of spending in the form that we're spending the money right here, right now in my P, in my opinion.
[07:39] So if you were advising the president or indeed were in charge of the country's finances, what would you do?
[07:46] Look, job number one is we need to improve productivity in the western world.
[07:52] Like there's nothing more important than we need to do than to increase productivity both in Europe and the United States.
[07:59] This is, this is the path to sustain prosperity.
[08:02] Now how do we
[08:05] improve productivity you and I both know
[08:08] we need to improve our education system
[08:10] particularly in the United States K
[08:12] through2 education is leaving our
[08:14] children at a material competitive
[08:16] disadvantage relative to the rest of the
[08:18] world and more importantly in an
[08:21] absolute disadvantage in life they just
[08:23] aren't having the exposure to the ideas
[08:26] and Concepts that will that will give
[08:28] them give them their ability to earn a
[08:32] rewarding and Rich career number two is
[08:35] the work from home phenomena is
[08:37] unquestionably reducing mentorship
[08:40] collaboration leadership development and
[08:43] Innovation and it's time that we bring
[08:45] our people back together to collaborate
[08:48] and to mentor and to develop leaders so
[08:51] that in 20 or 30 years we're not
[08:55] left we're not left in the very
[08:57] frightening predicament of having a
[08:59] leader ership deficit in the western
[09:01] world because of today's work practices
[09:04] and I worry about that so no home no
[09:06] home office in citel uh no we uh we're all back at work.
[09:08] and the wonderful thing is the mental health ramifications are profound.
[09:11] it's it's so great to see my colleagues meaningfully engaged in their work happy in their work and having that separation of personal life and professional life.
[09:15] so education back to office what else do we need to do.
[09:25] so education back to office off thoughtful government regulation that encourages that encourages entrepreneurship that encourages the growth of small and medium Enterprises that creates more competition in our economy that's really important.
[09:43] and the West must continue to engage in trade policies that really bring the benefits of free trade across North America and Europe.
[09:52] so some of the trends towards protectionism between our two continents we really really need to think about push pulling back on and creating greater economic integration now when we look at all these kind of
[10:06] things are we um is the stock market in a bubble or how do you see the stock market?
[10:09] you know it's it's always it's always very hard to know when you're in a bubble because when you're in the middle of the bubble you have the clear justification for why prices are where they are.
[10:19] you know you and I can go back to the dot bubble what were the key things that we were talking about back in the hey the.com bubble do you do you remember some of those conversations?
[10:29] right it was about how e-commerce was going to radically change the way that we secured Goods metrics like eyeballs on pages became the dominant pricing metrics for Securities but we created a whole lingo a whole vocabulary a whole set of Frameworks to justify and rationalize the bubble that was taking place back at the height of the do frenzy.
[10:53] now what's interesting is jump for 20 years and many of the things that we thought were going to happen in the Revolution have actually happened and many of the biggest companies in the world today are actually
[11:07] symbolically the same businesses or similar businesses to what we had all envisioned was going to be the revolution of the dot phenomena.
[11:15] So what's interesting is is we had the right thesis, we had the right ideas, but people just got carried away in valuations for a period of time.
[11:27] And are we carried away now with are we carried away now with the AI evaluations?
[11:31] The AI, the AI, um, frenes is pretty, pretty amazing to watch.
[11:36] What's going to be fascinating is how fast do we see some of the AI wins incorporated into both our daily lives and into how we run our businesses?
[11:48] That speed of adoption, I think, is going to be pretty quick.
[11:50] There's a second trend though that's happening right here right now.
[11:53] It's the rise of the importance of your Chief Information or Chief Technology Officer.
[12:00] Once again in the SE suite, in the boardroom, there's a real focus on digitalization and the use of software.
[12:08] and analytics to improve your business.
[12:12] So what's really interesting is when you talk to CEOs, they'll tell you about how their companies embraced AI and how it's making these profound impacts on their business.
[12:20] Now if you peel back the union of most these stories, there's no AI involved at all.
[12:26] But what is involved is an embracing of the use of modern capabilities and digitalization to really improve and enhance American and European businesses.
[12:37] So what's what's I find to be really great is that AI has reopened the dialogue about how to use technology to make our businesses more successful and more effective to delivering goods and value to consumers.
[12:54] And can how do you embrace AI at C?
[12:57] So we use it in a number of ways to enhance productivity day in and day out amongst our team members.
[13:01] In some sense, the way that many of us will use AI over the next two or three years, helping to draft emails, helping to summarize research.
[13:09] pieces helping to understand or how to write uh the introductions to Memos and other documentation that's required in the day-to-day flow of business.
[13:18] we also use it for some very mundane tasks for example to help tag data and then we use it for some very important tasks such as how to help our software Engineers be more productive.
[13:27] so we've had a a Litany of uses of AI within our four walls if we go back to machine learning which in some sense is the tree from Rich AI Sprouts.
[13:38] we've used machine learning for over looking at the the date here on the screen for about eight or nine years here at Citadel and machine learning plays a very important role in how we think about the pricing of assets and has a small role in US thinking about risk management of assets from time to time but pricing of assets machine learning does play an important role here at Citadel.
[14:01] Ken love to go back to when you started Citadel and the vision you had for the firm um so when you set it up what did you think it could be well
[14:11] that's um that's a walk down memory lane.
[14:14] and I'll give you the history that that's not revisionist.
[14:16] 20 years old I had an opportunity to manage a million dollars for a fund of funds that was based in Chicago.
[14:23] and if I did well they'd help me leave start my own business and raised some capital for me so Citadel was started just over a year after I finished College.
[14:34] we raised about 4 A5 million dollar of November of 1990 and we started with one strategy which was the trading of equity link derivatives convertible bonds and warrants as compared to the common stock.
[14:49] so that was that was the Genesis of Citadel.
[14:51] now there was there's a couple of key things that are important in the story.
[14:55] number one is I believed you could use mathematics and software to help to understand these pricing relationships in an area where most of the world was still using paper pencils and rules of thumb and I remember we
[15:12] hired a rocket scientist back in those days to help work on these priceing models and one of my friends from a major Bank literally called me sort of laughing he's like you're not trying to put a man on the moon you're trying to trade bonds now jump forward 30 some years that bank he worked for is no longer in business and Citadel and Citadel Securities are two of the most important firms in the world in the financial markets we did we did manage to in some sense ride the wave of the rise of mathematics in finance which has in some sense long since crested we all take for granted the mathematical Concepts that were really first utilized in the 80s and 90s in our day-to-day work today what's been the challenges in riding this wave so so I think the the largest challenge in riding this wave has been the necessity to create your own Talent so in the early days you had to hire people with very very different
[16:13] backgrounds from the backgrounds.
[16:14] typically found on Wall Street at that point in time.
[16:16] physicists, nuclear engineers, mathematicians.
[16:21] you had to hire people who had a very different background and pedigree than you typically found on a Wall Street trading desk.
[16:27] and you had to teach them about finance and you had to get them engaged in solving how do you value derivatives, how do you value complex securities?
[16:40] and there was a knowledge gap that had to be crossed or bridged between those of us who were committing the capital and those of us who were helping to write the analytics with which we made these decisions.
[16:51] your ability to to innovate and to grow successfully into new areas of finance is quite quite unique to Cel.
[17:00] so why do you think you're being so successful here?
[17:02] look, I think there's something that we do that's very different than most firms.
[17:06] everyone agrees that there is an art to investing, but there's also a science.
[17:12] and when we think about running.
[17:15] This firm day in and day out we really think about the union of the art and the science of investing in how we make our investment decision-making processes work.
[17:24] Number two is I think we bring a rigor and discipline to trying to understand where we create differentiated insights that give us confidence in deploying capital.
[17:35] And then third is is it's experience.
[17:39] It's the it's the price paid in losses and pain that converts into wisdom.
[17:48] My leadership team we've been through a lot of very difficult moments of the markets together.
[17:54] We've learned some very bitter lessons but it makes us much more effective as investors in periods of turmoil and crisis.
[18:00] One other thing which has changed during this period is much more passive capital, much more short-term capital.
[18:07] Now how how do you see that um how do you see that that has changed the world for more long-term?
[18:16] Filamental investors like us.
[18:19] So what's very interesting is the rise of passive investing plays to the realization that markets are either efficient or semi-efficient.
[18:27] And it's a way for investors to have low-cost exposure to either broad indices to the world as a whole or to specific sectors without having to pay the fees of active management.
[18:43] It's been revolutionary for the world, this embracing of passive investing.
[18:48] But passive investing only works if there's a meaningful community of people involved in fundamental research who are helping to set the pricing of securities.
[19:00] So passive investing requires the existence of capable, successful, and competitive traditional asset managers for the theory that underlies passive investing to actually play out, to actually manifest itself.
[19:16] So the rise.
[19:19] of short-term investors helps to ensure that markets are efficient with respect to news that's rapidly evolving but we should really try to make sure that we take every step possible to make it that traditional asset managers have the ability to have prosperous and successful firms because they are so critical in the price Discovery process that passive investing depends upon so given given all this um if you're an equity investor what what do you think is the best way to make money now look I think it comes down to to where you're situated in the financial Market if you are if you have a full-time job as a lawyer or dentist or as a teacher you should be in a broad-based equity index product or an actively managed pool of capital that's broadly based in its management let's say you were running the Norwegian Sone wealth fund well I I know as a as a factual matter that that you are very thoughtful about indexing a substantial portion of your Capital to indexes that
[20:21] you've developed over the years around
[20:23] the world and that gives you very
[20:25] lowcost exposure to the holistic growth
[20:29] and profitability that we have watched
[20:31] play out around the world in various
[20:33] countries it is a very thoughtful way to
[20:37] deploy the massive quantities of capital
[20:40] that you have to deploy and you're also
[20:42] investing in assets away from equities
[20:44] and then using a variety of either
[20:46] external managers or internal
[20:47] capabilities depending upon what you
[20:49] view to be the relative competitive
[20:52] advantages of the in-house team and the
[20:54] external managers this is how I would
[20:57] recommend any large pool of count
[20:58] Capital to be managed to do what can be
[21:00] done effectively cost effectively
[21:04] inhouse and then to find around the
[21:07] world your best breed managers and the
[21:08] various strategies that give your
[21:10] portfolio diversification very uh I'm
[21:13] very uh thankful for that approval of
[21:16] how we do things there up in uh up in
[21:18] Norway um now to be clear you know part
[21:21] of the reason that I'm sure that you
[21:23] walked away from your career as a very
[21:24] successful hedge fund manager is you
[21:27] believe in the same ethos of how Capital
[21:29] should be deployed absolutely I I so I
[21:31] agree entirely with you there now um 34
[21:35] years after Inception um you know we
[21:37] have the scorecard you've been
[21:39] incredibly successful how do you how do
[21:40] you stay at the top how do you make sure
[21:41] that you are still hungry so there's
[21:43] there's very different questions in that
[21:45] question we're going to unpack it a
[21:47] little bit how does citadel continue to
[21:50] prosper we have an incredible leadership
[21:53] team I have worldclass leaders here at
[21:56] Citadel that are running our very ious
[21:58] businesses and I'm grateful for them
[22:00] being part of this team I'm also
[22:02] constantly engaged with my leadership
[22:04] team on how to improve and strengthen
[22:06] our investment strategies so a constant
[22:09] level of Engagement with my senior
[22:11] leadership team on the core problems of
[22:15] recruiting great
[22:17] talent developing great Risk Takers
[22:20] making sure that we push Capital into
[22:22] the hands of our best Risk Takers when
[22:24] the best opportunities present
[22:26] themselves so there's a huge emphasis on
[22:28] just human capital development and
[22:30] deployment of capital with our best
[22:33] people and then there's a second thread
[22:36] in everything we do how do we build a
[22:38] competitive Advantage how do we gather
[22:41] information better how do we make better
[22:43] decisions one of the things you do is uh
[22:47] to have multi managers and these whole
[22:50] Concepts um how how are the teams
[22:54] structured how do you think about this
[22:56] so we think about the business as a
[22:59] variety of verticals for example a
[23:01] global Commodities business a a long
[23:04] short equities business a variety of
[23:06] credit businesses within each vertical
[23:09] we ask our Business Leaders to act as
[23:11] entrepreneurs and to really to say to
[23:14] yourself I have for all intents and
[23:16] purposes access to unlimited capital
[23:20] from that Vantage Point what's the right
[23:22] team the right strategies and the right
[23:25] competitive advantages to build and
[23:28] utilize in today's world in today's
[23:31] environment that's that's how we run our
[23:33] businesses it's very much a mindset of
[23:36] clean sheet of paper what should we be
[23:38] doing today to be one of the most
[23:42] effective deployers of capital in the
[23:44] world's financial markets does each team
[23:47] decide their investment strategy so the
[23:49] investment strategies are decide are are
[23:51] are hone between the portfolio managers
[23:55] the business heads and myself so it's
[23:58] it's the three three of us will come
[23:59] together depending upon the nature of
[24:01] the problem and work together to try to
[24:04] make sure that we've really thought
[24:05] through how to create the most
[24:07] successful investment strategies that we
[24:09] can possibly create so now you give me
[24:12] um $100 million I work for
[24:14] you uh how how do you look at my
[24:17] mistakes well I mean first of all um
[24:20] we'd like to give you a lot more than
[24:21] $100 million to manage okay um thank for
[24:24] thank you all right and and part of this
[24:25] is you know we're bringing really great
[24:28] people here we want them to have access
[24:32] to sufficient Capital to have both the
[24:35] revenues and the profitability to
[24:38] support superlative teams around them we
[24:41] really view investing as the undertaking
[24:44] of worldclass teams because within teams
[24:48] you have a much healthier debate and
[24:50] dialogue that helps one uncover the
[24:53] truth to uncover the real essence of the
[24:57] debate that's at Play and that's so
[24:59] important to how we run our business so
[25:02] when we would hire you as a portfolio
[25:03] manager we'd really spend a lot of time
[25:06] to understand number one what team do we
[25:08] put around you and how to recruit the
[25:10] best and brightest to be on your team
[25:13] and then number two is we want to be
[25:15] very engaged with you in making sure
[25:17] that you have an investment process
[25:19] that's repeatable that you learn from
[25:21] and you learn from both again your
[25:23] successes and your failures and that you
[25:25] can teach this process to your team
[25:27] members to to create operating leverage
[25:29] for yourself so those are some of the
[25:31] things that we think about when you join
[25:34] the firm as a new portfolio manager when
[25:36] do you sack me well let's be clear we
[25:39] don't want to sack you we want to see
[25:41] you have an incredibly successful career
[25:44] why do people's careers derail why do
[25:47] people run into tough tough predicaments
[25:49] there's a couple of reasons number one
[25:51] is some people just to be blunt they're
[25:53] just not good Risk Takers you can put
[25:56] the facts right in front of their face
[25:59] you have a portfolio that is
[26:01] extraordinar highly
[26:03] concentrated your large positions you
[26:05] cannot demonstrate a clear and concise
[26:07] competitive advantage in why you own
[26:09] those positions if these go Ary we don't
[26:12] have a basis to work together and there
[26:14] are some people that just with full
[26:17] information are unable to help
[26:19] themselves and get to a better portfolio
[26:21] construction you talk about information
[26:24] um many times and um you are one of the
[26:26] really great users of alternative data
[26:28] tell us about some of the type of
[26:30] alternative data sources that you use
[26:33] what what types of alternative data do
[26:35] we use yeah so it really depends upon
[26:38] the nature of where we're investing if
[26:40] you're investing in Airlines you're very
[26:42] interested in prevailing airfares if
[26:43] you're trying to forecast inflation
[26:46] you're literally breaking down every
[26:48] element of what the BLS looks for in the
[26:50] United States and producing their
[26:52] inflation forecast if you are um
[26:56] involved in the Commodities markets you
[26:58] might be running a worldclass
[26:59] meteorology effort to try to predict
[27:01] short-term weather patterns or a
[27:03] dispersion of short-term weather
[27:04] patterns so you're going to focus your
[27:09] use of data and alternative data to the
[27:12] nature of the problem at hand so we're
[27:14] always trying to peel back the onion and
[27:19] understand what information is important
[27:22] to driving the revenues of a business or
[27:25] the demand for a commodity and how do we
[27:27] secure that information in an
[27:29] appropriate way process it quickly and
[27:32] make good decisions with it changing tax
[27:34] up here um you mentioned that already
[27:37] back at uh at University you were um you
[27:40] were uh fascinated by market makers and
[27:43] then now you made Citadel Securities
[27:46] which is one of the world's most
[27:47] sophisticated market makers so first of
[27:49] all just for the for the people who who
[27:51] listen to who don't know what is the
[27:53] role of a market maker in finance why is
[27:55] this important so a market maker
[27:59] is a firm that provides liquidity to
[28:03] buyers and sellers who are not
[28:05] contemporar contemporar meeting each
[28:07] other Marketplace which means that when
[28:10] you go to sell $50 million of a
[28:13] stock if there's not a buyer in the
[28:15] Market at the exact same instant you're
[28:18] not pushing that stock price unduly the
[28:21] market maker will use their Capital to
[28:23] facilitate your trade and then we'll
[28:27] hope to find
[28:29] the eventual buyer of your stock at some
[28:31] point in the
[28:33] future and we do this in a in a massive
[28:36] scale around the world in fixed income
[28:38] and Equity products you know for example
[28:40] massive how massive in the United States
[28:42] we trade almost
[28:44] 25% of all the equity that trades every
[28:46] day big numbers huh $400 billion dollar
[28:49] daily turnover across all asset classes
[28:52] here at Citadel Securities what do you
[28:54] think Citadel Securities would look like
[28:56] in 5 to 10 years time look I think it's
[28:58] going to look very similar to how we
[29:00] look
[29:01] today but we'll deepen across more
[29:04] products we'll rich and will'll expand
[29:07] its reach across more trading partners
[29:10] and we offer a variety of other services
[29:13] that investors really value such as
[29:15] corporate access access to new issuance
[29:18] it will broaden its scale and scope over
[29:20] the years to come as we continue to Sol
[29:23] seek to solve the challenges and
[29:25] problems that are are and
[29:28] um clients face well for sure really
[29:31] really
[29:32] impressive um now moving on to uh the
[29:36] bigger picture just what do you make out
[29:39] of today's geopolitical situation you
[29:42] know you and I have been very fortunate
[29:43] we have really grown up through an era
[29:46] of peace until the last until the last
[29:49] two and change years and it's it's
[29:52] heartbreaking to watch the war play out
[29:54] in the Ukraine this is this is one of
[29:56] the you know would you ever thought
[29:59] there'd be a war in Europe in your
[30:00] lifetime again no all right and and
[30:03] we're watching that happen right here
[30:04] right now and the horrible loss of life
[30:07] and the devastating impact of the
[30:09] Ukrainian people and the economy with
[30:11] this war that they're entangled with
[30:13] with the Russians it's it's really it's
[30:14] heartbreaking and then of course just a
[30:17] few days ago we saw the Iranians take a
[30:19] strike at Israel Israel has been under
[30:21] great duress the Middle East probably
[30:23] not as much of a surprise as the war in
[30:25] the Ukraine the Middle East has always
[30:27] been more susceptible to to geopolitical
[30:31] challenges but nonetheless the events of
[30:33] of October of last year the war in Gaza
[30:37] this is a this has been a very
[30:39] heartbreaking moment for Humanity across
[30:42] these two fronts so um Ken Griffin if
[30:45] you were asked to um take over the
[30:47] finances of the United States would you
[30:49] do that look if if we had a financial
[30:52] challenge in America and I could be of
[30:53] helped to this country of course I'd do
[30:55] that K moving on to um corer culture you
[30:59] you've talked quite a bit about uh
[31:00] talent and the of course the importance
[31:02] of having talent and so on how much time
[31:04] do you spend on recruitment so I am
[31:07] talking to candidates all the
[31:10] time nothing's more important than the
[31:13] talent that we bring into our four walls
[31:15] that we develop within our four walls
[31:18] and that leads this firm both in the
[31:21] deployment of capital and the building
[31:22] of businesses and you have like a you
[31:24] have like a wall of applications right I
[31:26] mean I thought you know we have like
[31:28] 1,500 applications for like three
[31:30] positions now in New York but you got
[31:32] like 100,000 applications we do we have
[31:35] about a 100,000 applicants from colleges
[31:37] and universities around the world wow
[31:40] and let me let me tell you what makes me
[31:42] smile the most about that everybody
[31:44] around the world knows that we work 5
[31:46] days a week in an
[31:47] office this tells you that there are an
[31:51] enormous number of of young adults
[31:53] around this world that want to be in an
[31:56] environment which will be a washing
[31:58] mentorship a washing leadership
[32:00] development where they're going to have
[32:02] careers like that makes me very
[32:05] optimistic about the future and I hope
[32:07] that those of us who run businesses
[32:08] around the world meet these students in
[32:11] the middle and give them that experience
[32:13] that will let them have great careers so
[32:16] now I'm one of the 100,000 people I
[32:18] managed to get an interview with you I'm
[32:20] of course uh a bit nervous but uh
[32:23] because uh you know you're a very famous
[32:25] person but uh what what would you ask me
[32:28] what would I ask you so I'm not I'm
[32:31] going to be the fourth person to meet
[32:33] you so I'm going to have a really great
[32:35] set of questions to pose to you let me
[32:37] tell you what I look for I look for
[32:40] ambition I want people at Citadel who
[32:43] really want to change the world of
[32:44] Finance they want to have a life that is
[32:47] full of impact they want to make a
[32:49] difference in this world I look for
[32:51] strong communication skills I think the
[32:54] ability to convey an idea is
[32:56] extraordinarily important
[32:58] no matter what commercial undertaking
[33:00] you seek in life you've got to be able
[33:02] to express an idea we're always trying
[33:05] to debate within our four walls the
[33:09] merits of our ideas to get to the truth
[33:12] so I look for ambition I look for
[33:14] communication skills I look for an
[33:17] ability to to reason and to rationalize
[33:21] across a broad array of problems like I
[33:23] want people who are really good thinkers
[33:27] because problem solving is so inherent
[33:29] in what we do in our work day in and day
[33:32] out and people who are good problem
[33:34] solvers are people who Prosper here at
[33:36] Citadel can you see any of this from the
[33:37] CV or do you need to meet people oh you
[33:39] need to meet people I mean let's be
[33:42] clear people know how to write CVS
[33:45] today to hit the sweet spot of the
[33:49] employer they're seeking an employment
[33:51] at how do you find out whether I'm a
[33:52] good Problem Solver well what problems
[33:54] have you solved and every every student
[33:58] is going to have stories of how they've
[34:00] solved problems whether it's the whether
[34:03] it's the laundry service they launched
[34:05] or whether it's a a prior summer job
[34:08] they had whether it's a thesis they
[34:10] wrote there's there's just a Litany of
[34:12] opportunities for students to
[34:13] demonstrate that they're really good
[34:15] problem solvers what's the most
[34:17] difficult problem you have solved H well
[34:20] the most difficult problems have yet to
[34:21] be
[34:22] solved but what is that uh you know
[34:25] there's a there's a lot of work that
[34:27] gets it's done a multi-period
[34:28] optimization that's tough to solve
[34:31] multi-period optimization is I have a
[34:33] view as to how a stock is going to move
[34:34] over the next day over the next week
[34:37] over the next month over the next year
[34:39] how do I create the optimal portfolio at
[34:42] this moment giving these different views
[34:44] I may have with respect to time and this
[34:47] comes into play in in just a variety of
[34:48] ways in which we have to to make Capital
[34:51] deployment decisions so that's a that's
[34:53] an interesting fast a problem that we've
[34:55] yet to really fully solve here at
[34:57] Citadel very
[34:59] interesting um now I read somewhere that
[35:02] you said that um if you wired to enjoy
[35:04] being a good competitor you love working
[35:06] here what does that mean look we we're
[35:09] we're Shameless we want to hire people
[35:12] who really enjoy winning and the
[35:15] financial markets give you a scorecard
[35:17] each and every day as to how you're
[35:18] doing as a
[35:20] competitor and what we find is that
[35:22] people that that that like to compete
[35:26] that like to win
[35:28] love being here because they like to see
[35:31] the real-time feedback that goes with
[35:33] being at one of the world's leading
[35:35] financial institutions and seeing the
[35:38] success of their research bear fruit in
[35:42] the portfolios that they build and
[35:43] construct when you look at leadership
[35:46] what is good leadership for you look
[35:49] great leadership comes down to dealing
[35:52] with the realities of the situation at
[35:55] hand like great leaders are just very
[35:58] matter of fact about the problems issues
[36:01] and opportunities that they face and the
[36:03] decision making that they make around
[36:06] the problems the opportunities and the
[36:09] challenges that they face like they're
[36:11] they're just very centered in the
[36:13] reality of a situation they don't suffer
[36:16] from Sun cost fallacy they don't suffer
[36:18] from undo hope when a situation is not
[36:21] hopeful they make good rational
[36:25] decisions all the time do
[36:28] you uh most of the time you ask what
[36:32] great leadership looks like you know
[36:35] absolutely how how important is speed is
[36:37] in decision making um speeds there
[36:40] there's an element you know in one axis
[36:42] there's accuracy the other axis is speed
[36:45] what's important to understand at any
[36:47] point in time is what's the trade-off
[36:49] between the two axises that you want to
[36:50] be on sometimes it's more important to
[36:53] be nearly right and quick than it is to
[36:54] be absolutely right and slow you know if
[36:57] you think about it you want to think
[36:59] about the cost of changing your mind as
[37:02] a key determinant of how fast you want
[37:04] to be if you're going to if you're going
[37:06] to make an investment in a real estate
[37:07] development project that's going to take
[37:09] 40 years to play out you don't need to
[37:11] be quick you need to be thorough because
[37:13] once you start that Journey that's a
[37:15] very long journey to be on whereas if
[37:18] you buy $500 million of apple and you
[37:22] rise the next day that you missed a
[37:23] Salient fact you can move quickly to get
[37:26] back out of that trade
[37:28] how do you balance um analysis with
[37:30] gutfield
[37:31] so gutfield
[37:33] the best gutfield is actually almost
[37:37] like subconscious analysis yeah all
[37:39] right so when people tell me like just
[37:42] in my gut I believe X I'm trying to
[37:44] think about is that their subconscious
[37:47] playing out they've had many at bats in
[37:49] this kind of problem they they know
[37:52] roughly what the answer is they haven't
[37:54] put it down on paper yet but their guts
[37:57] really more of a reflection of an
[37:59] intrinsic ability to analyze a problem
[38:01] and tell you what to do some people's
[38:03] gut feel just seems to be you know what
[38:07] coffee did they have that morning and I
[38:08] should be long you know S&S because like
[38:11] it was a good day for coffee that
[38:13] doesn't work here at Citadel gutfield
[38:15] Citadel is people whose gut really is a
[38:18] reflection of the analyst analysis
[38:20] taking place in their minds that may be
[38:22] not fully formed or fully manifested yet
[38:25] what would happen to citel if you step
[38:26] down that's a great question and and the
[38:30] good news is I've got a number of people
[38:31] here who would very successfully run the
[38:34] business without me I don't I don't want
[38:36] to step down I enjoy my job I love the
[38:38] people I work with this really is a
[38:40] passion for me in life so I i' like to
[38:43] not cross that bridge but God forbid if
[38:45] I had to I've got great Partners who'd
[38:48] run this firm if I had to step down now
[38:50] if you if you step if you had to go back
[38:53] to University what would you study
[38:55] wow so like 20 years old again or am I
[38:59] at this age in life no no you are you
[39:01] are the age you are I'd probably go back
[39:03] to University and study a bit more in in
[39:06] the realm of philosophy and
[39:08] government those have been problems that
[39:10] have always interested me good
[39:11] governance is important and having a
[39:14] solid underpinning philosophy I think
[39:16] helps to better policy
[39:18] decisions I'd probably also take a bit
[39:20] of time to study mathematics and
[39:21] computer science and understand the
[39:23] state-of-the-art today better it's been
[39:25] a long time since I was in a class
[39:27] classroom studying mathematics or
[39:28] computer science it'd be interesting to
[39:30] see where's the world today in those
[39:32] fields what are you the most curious
[39:34] about just know I would say my curiosity
[39:37] ranges from Innovations in in
[39:41] biotechnology to computer science so
[39:44] stem is is my area of curiosity I'm I'm
[39:47] really interested in the developments
[39:49] that are taking place in stem around the
[39:51] world from nuclear fision nuclear fusion
[39:55] microprocessors to to genetic
[39:58] I I'd say I have a just a insatiable
[40:00] thirst to understand more about problems
[40:03] and developments and Fields as as broad
[40:05] as that and when you don't spend time on
[40:08] that how do you how do you relax I mean
[40:10] I can see out of the window here you're
[40:12] in Miami sun is
[40:14] shining uh what do you do outside office
[40:17] so I I I love to bike we've got great
[40:20] biking here in Miami and I'm very
[40:21] fortunate I have three young kids who
[40:23] are all roughly teenagers so most of the
[40:26] time most time when I'm not at work I'm
[40:28] I'm having three kids basically um
[40:32] basically consuming all my free time and
[40:34] talking of um young people we have
[40:37] thousands and thousands of young people
[40:39] um listening to this what is your advice
[40:41] to young people now you know my my
[40:43] advice hasn't changed much over over
[40:45] three
[40:46] decades pursue what you're passionate
[40:49] about to really exell something you're
[40:52] going to have to be passionate about the
[40:53] work if you're not passionate you're not
[40:55] going to be great at it you're not going
[40:57] to be satisfied with your career you
[40:59] need to pursue areas that really just
[41:01] you wake up and you want to go do X it
[41:05] might be being a doctor it might be
[41:07] being a lawyer it might be picking
[41:09] stocks but you've got to find like what
[41:12] wakes what do you wake up in the morning
[41:14] and want to do what's this intrinsically
[41:16] motivating to you if you're driven by
[41:19] extrinsic motivation you will find life
[41:21] to be very shallow you need to find
[41:24] what's your intrinsic calling in life
[41:27] remember there was a a young woman here
[41:28] this is almost 30 years ago she was so
[41:30] talented on the investment team and she
[41:33] was with us for about a year and a half
[41:34] two years and her and her her manager
[41:38] walked in and said she's thinking of
[41:40] going to medical school and I need you
[41:42] to convince her to stay here at
[41:44] Citadel I said well here's the problem
[41:47] the minute she walks in my office I'm
[41:49] going to offer to write her a letter of
[41:52] recommendation the world desperately
[41:54] needs another great doctor and if that's
[41:56] what she wants to be I want to help her
[41:58] make her dream come true well that's a a
[42:02] very nice place to end it for sure seems
[42:04] like you have um managed to get your
[42:06] dreams to come through uh and that you
[42:07] are on your way to make Citadel the most
[42:11] successful investment firm of all time
[42:12] so I just have to really congratulate
[42:14] you and uh big thank you for being on
[42:17] here today you are most welcome thank
[42:19] you so much
[42:21] [Music]