Alison Taylor: Talk to us about what the key elements are of success in this world. There's research, there's strategy. It also seems you need to react very dynamically to events in a way that seizes control of the narrative. But talk to us about how you see this.
Bill Ackman: So investing is about putting out money today in the hope or promise of getting back more in the future. And so it's about predicting the future. And what we do is we find businesses where we believe, with a very high degree of confidence, we know what the business is going to look like over decades. Because decades matter in valuing something. And so it's really an analysis about disruption. What's the risk of two former Stanford students in a garage coming up with something that disrupts a business? So that's the most important part of being a long-term investor, figuring out the durability of the franchise, the barriers to entry, the moat around the business. And then the rest of it is just making sure you're buying that business at a price where you put up money today and you're going to get a lot more back in the future. Very simple.
(Laughter)
AT: Alright. So more recently you've taken this approach to other realms, to social and political realms. So can you talk to us about what is similar in these other realms? You have said, for example, that problem at Harvard is a governance problem, and you work a lot on governance problems and making them better. So tell us how social and political activism is the same as activist investing, and tell us how it's different.
BA: So I'll just correct one thing. So I've been at this for a long time, The social stuff actually. It's just a little more visible in the last kind of six months. But I've had various campaigns over time.
AT: That is very true. But you have now entered the headlines in a new way. So talk to us about that.
BA: Sure, so Harvard is the oldest American corporation. And as a corporation, it has a governance structure. board of directors, certificate of incorporation, bylaws, things like this. And what we do for a living is basically find a great company that's kind of lost its way. And then we help that great business kind of find its way. And sometimes you find the way by making a change in management, sometimes it's a change in governance, sometimes it's a change in strategy, sometimes it's all of the above. And what we find with really great businesses is that they do tend, over time, to lose their way, because the problem of success and greatness becomes hubris. And also in a disruptive world, you have to disrupt yourself, because if you don't, someone else will.
But you know, the problem with the nonprofit model, and again, as someone who spent a lot of time in philanthropy, one of the biggest lessons is that if you can find a for-profit solution to a problem, the probability of success is much greater. But if you think about Harvard, the business model, so when I went to Harvard, and I graduated in 1988, our class had 1,600 people. The Harvard class, now, 36 years later, has about maybe a little bit more than 1,600 people, but not much. So this is supposedly a great corporation, right? I don't know of another great one that has not grown over the last 35 years. Now one thing that has grown is the cost to go to Harvard. That has grown at about an eight percent compounded rate. If you could invest in that, that would have been great. So the way that Harvard has grown its revenues over time is by increasing the price. And the question is, is the service that you're being delivered as good as it was 34 years ago? Is it better? And I think it's worse.
And I think it's worse because universities were designed to be places where people could share controversial ideas, and that's why they developed this thing called tenure. And that was to protect faculty so they could say controversial things and not lose their job. But what's happened is tenure’s actually led to the reduction in the free speech necessary for people to be exposed to ideas. Because what happens is, you're a student, you graduate with loans because it's expensive to go to a place like Harvard, you try to, you know, get your PhD and you want to advance in the university. Well, you've got to appeal to the faculty that ultimately are going to appoint you. And so to the extent an institution has veered in one direction or another, kind of politically, you have to kind of follow that lead, otherwise you're not going to get advanced. So ironically, the system of tenure designed to create a world where controversial ideas could be discussed has actually led to the shutdown of those ideas. And that's led Harvard, you know, despite the massive -- it costs today, 84,000 dollars a year to go to Harvard as a student. I think what you're getting, the education, is not as good as it was. It's gotten worse. So that ultimately is a governance problem. You don't blame the CEO in a case like that. You blame the board that selected the CEO or hasn't helped the CEO. So it's very analogous to what we see in the corporate world.
AT: Alright. So a governance problem, and you've described in a lot of detail the way you feel that the institution has lost its way. But what about this is different from activist investing? Where do the parallels stop? And also maybe more specifically, how do you see your role? You decided to intervene primarily as an alumni, primarily as a donor? How do you see your role in this conversation?
BA: Very analogous in some ways and not in others. So it's analogous in that in my day job, we buy a small percentage of a company, far from control. We might buy five percent or 10 percent. And then -- this is sort of the earlier days of Pershing Square, today we’re less of an activist. But the earlier days, we wanted to influence a big company to make change, to make it a more successful, more valuable company. The only way you can do that with a small position is by advancing your ideas in a public way and getting those ideas adopted from a broad collection of other shareholders.
AT: And that's the taking control of the narrative and then you get momentum and you get people, you bring people along with you.
BA: You know, sometimes you literally have to run for office. But other times just the risk of embarrassment to the director motivates, you know, sort of the decision making. But the good news is, ultimately, you can get to an election in a corporate context, a for-profit corporate context, where if the shareholders are sufficiently dissatisfied with the directors, you can replace them and take control of the corporation and fix it. The problem with Harvard is that the governance structure is set up in such a way that there's the corporation board, which is comprised of about 13 members, is self-appointed. There are no outside shareholders, like, an alum is not a shareholder. You can't call a shareholder meeting and vote out the directors. And it's really, the only way to have influence is to sufficiently, convince the world of the importance of your concerns. So that other people adopt them. And somehow it permeates into the boardroom, and some combination of people saying, "Look, this is correct, we should do this." And some combination of the pressure of embarrassment, of shame, gets people to do the right thing. But there isn't a legal mechanism to barge your way in in the same way there is in a for-profit context.
AT: Right, and so if you are taking a position in the company, the stakes are a lot of money, the future of the company and your own reputation and that of the company. How do you see the stakes in this conversation about Harvard? They seem higher to me. Do you think they're higher?
BA: They're much higher. Because first of all, Harvard is sort of symbolically very important, you know, depending on where you went to school, people will call it in the top -- at least they used to -- in the top universities in our country. And they educate, as a result, some of the most high-performing, most intelligent, motivated people, you would expect that to be the Harvard community. And those people take their place ultimately in society, in media, in government, on the Supreme Court. And so the education of the next generation of leaders is something all of us, you know, have to be concerned about, because that will determine the future.
AT: So this is the pipeline for the next generation of leaders, and you want to have a role in shaping that pipeline.
BA: I think society wants to make sure that that group of leaders is a good group of leaders. Even if they disagree, they're prepared to listen and, you know, perhaps learn something.
AT: Alright. So that you've made lots of arguments during this wider conversation about the future of Harvard. I'd like to spend a little time on one in particular. You've been framed by the press as an anti-DEI activist at this point. And when you first appeared on my social media feed, I saw this this post that said something about your belief and support of diversity. And you seem to be contrasting that with this orthodoxy, as you argue it, that is DEI.
I had a reaction to that. The first thing I did was to go on Pershing Square's website and to look at your own track record, and I have to say, it was not what I expected. So I think what I would love to hear from you is, can you articulate a positive vision, in your opinion, for what good diversity looks like with reference to your own firm and your own investments?
BA: So when I first heard of DEI, I thought diversity, that's a good thing, inherently, I believe. Equity, how can you argue with fairness? That was my understanding of what equity is. And then inclusion, of course, in any organization, whether it's a university or a business, you want people to feel comfortable. That's culture. When I think about my job as a CEO of a company, or when I think of my role on a board, one of the first concerns I have about a business is the culture. Is this an environment where the best people are attracted to come work there, where they can succeed, where they can challenge authority when they think that authority is doing the wrong thing? So these are all, I think, inherently a good thing.
But someone once said to me that you know, first it starts out as a movement, that's good. And then it becomes a business. And then it becomes a racket. And I think it's an accurate description of what happens to things -- I've come to have an aversion to when a movement becomes a three-letter acronym. It seems like that's when they can go a different way.
But in terms of what diversity means to me, it's not simply race and gender. You know, viewpoint diversity is critically important, not just in a university, but in a business. Someone’s socioeconomic background, I think, is a relevant -- if you're running an investment business, you want to have perspective on, you know, you're investing in companies that sell products or services to the country. And the country is very diverse. It's very helpful to have people on your investment team, for example, who might have come from a low-income background. And then just in the spirit of fairness, you know, you want a society where people who grew up on the Upper East Side and you went to a private school and you had SAT tutoring, you know. You’ve had a lot of advantages versus the student, for example, going back to your admissions example, who maybe grew up in Mississippi and didn't go to a very good school, maybe had a single parent. And you would make sort of adjustments there. But also the grit that someone develops, coming from a more challenged background, is something you consider in a business.
So when you look at Pershing Square today, a very high percentage of our employees came from, I would say, quite a modest economic background. We have enormous diversity in terms of political views, like, who should be president, things like this. And we occasionally discuss these things. But people respect each other, and they share different points of view. And they come from, some are, you know, our investment team is comprised of, you know, a Muslim from Pakistan, a Hindu from India, a refugee from Iran, a Mexican whose grandmother picked cotton in California, a Canadian, whose family had a private business. But we selected them not because of their particular backgrounds, but we selected them for their excellence. And the fact that they came from different backgrounds has made us a more successful kind of organization. That, in my mind, is a very appealing way to think about diversity. As opposed to saying, let’s look at the percentage of various groups of different ethnic groups in the country, and then let's force design and organization so we match that collection.
AT: For sure you hear that sort of Noah's Ark frame that if we have a certain set of a certain type, then our problems will be solved, which does not necessarily seem to be the case. But you see this really, the benefits being dynamism, better decision-making, a better reflection of what society looks like within businesses.
BA: And also, there is a fairness component.
AT: A fairness component.
BA: My point is, I like, I like a world in which someone who started out with disadvantages gets a closer look than someone who had everything sort of handed to them. That seems right to me.
AT: So I think it's so fascinating, you've just articulated very well what the benefits are. So how do you feel about being framed and these headlines saying that you're an anti-DEI activist?
BA: You know, the short-form description of me is never really an accurate one, I would say. I'm more nuanced. Look, I think I certainly want to be perceived the way that I actually am, as opposed to some caricature of myself. And also, I think the ideas are important. And if you want to challenge them, I'm always up for the debate. But, you know, we are in a world today where, if you challenge conventional wisdom or you take on sensitive topics, where you're at risk of being "canceled," you know, you can be accused of being a racist. You can be accused of lots of things. And I think that's led to a shutdown of kind of, free speech generally, which I think is a big negative, you know, for society.
AT: So, yeah, it does seem a factor of our current era that arguments get sort of flattened and oversimplified and made more vicious and polarized. And so how do you feel about your arguments being treated like that? Do you feel that's OK, as long as I get the job done, as long as I get my goals met, at Harvard or any future campaign, or does this bother you? Does it bother you to be oversimplified in the press like this?
BA: Of course. But I'm a big boy, it's OK. And also, I think, you know, I'm a very fortunate person in many ways, but one of them is I don't have to worry about my employment. And, you know, today, if you work for a company and you are unhappy with, you know, you want to comment about something in politics, for example, and you do it on Twitter, you can end up losing your job for expressing your views. And I think the world is a better place where all views can be heard, can be assessed, can be debated. But where, you know, you're not shouted down or canceled or worse. You become unemployed because you have a controversial opinion about gender or whatever the topic.
(Applause)
AT: It's true that more of us have the opportunity to have a voice and make our views heard, but that's not proportionate, right? Some people's voices are boosted more than others. So how do you think about your voice and your power and maybe your responsibility in this realm, and how you use your voice? Especially given what we’ve been talking about, about how it may become distorted and your arguments may become more flattened and reduced to something that they were not.
BA: So one of the criticisms of me during the Harvard campaign as some professor from Yale said, "Oh, you shouldn't listen to him simply because he's a rich guy." And I totally agree with that. I shouldn’t have more voice by virtue of net worth. But I don’t think that I do. You know, my Harvard campaign was not a disinvestment or you know, I never said anything about making or not making a donation to Harvard. I don't think they should listen to me more or less, whether I have been a contributor or not. I think what's given me voice and followers, if you will, is just my willingness to share points of view on ideas. And if people think those ideas are interesting, I get followership. If they weren't concerned with what I had to say, they would not follow me. But I don't think I have more voice. Maybe I'm naive by this, but I think the reason, you know, plenty of other people in my industry, of similar economic circumstance have very little voice because they've not put themselves out there and they've not shared their views. And I've done that in some depth. I've been criticized for writing the longest posts in history.
(Laughter)
But at least you know what I feel with particularity, I guess.
(Laughter)
AT: And you certainly invite disagreement. You invite debate.
BA: Yeah, I actually put ideas out there to learn, not because I'm trying to impose my will on others. I actually read the comments, even the mean ones, because I think it's -- and actually my approach to X, I should call it X, is I follow people on both extremes of many important debates, and I try to follow the most articulate, seemingly intelligent ones. And that's how I find the truth, right? You know, just following people that support my beliefs, I don't feel like I'm going to learn very much. Again, going back to the importance of viewpoint diversity at universities, if you're not hearing, you know, if you're 18 years old and you show up on the Harvard campus, you want to hear the full spectrum of views, from progressive to the most conservative to find truth. That's what education is, about finding the truth. How can you find the truth if there's a limit to what speech is acceptable?
(Applause)
AT: So you will put a provocative position out there, and then you will ask to be challenged, ask to be corrected, and you will look for information that challenges what you thought already.
BA: I don't necessarily think it's provocative, right? I try to put out my points of view on things. Other people may find them provocative, but I certainly welcome criticism. And, you know, an alternative point of view. That's how I learn.
AT: Alright, so let's go back to this topic of influence. You said you don't think you have disproportionate influence. Certainly something I hear and read about and that is a big topic in current discourse is the excessive influence of wealthy people on our democracy, on technology. You know, the speculation goes on. Do you think this is a legitimate source of concern, and if so, are you part of this problem or not?
BA: Yeah, so let me sort of address that two ways. One, I think the notion that you can spend an unlimited amount of money on political campaigns, in effect, through PACs and otherwise, and you can even do it anonymously, I think is a disaster.
(Applause)
So that's wrong. I do think wealthy people can have more influence. Absolutely. The point I was making was, I think the influence I've had has not come from because I spent a lot of money on you know, an XYZ campaign, but rather because I put out an idea that had impact. You know, the tweet I wrote on DEI, which is, you know, 5,200 words or whatever, has been viewed 36 million times. You know, it's probably the most viewed long tweet. Maybe the only long tweet, but it's had an impact. I happened to bump into a governor who said it had an impact on changes in policy they made. But I think it had nothing to do with, you know, how many stocks I own or anything like that.
AT: I didn't hear an answer to the question. Do you think this excessive influence of rich people in society is a genuine problem, or is it exaggerated?
BA: Look, I think the notion that someone can spend, several hundred million dollars on, you know, various campaigns at state levels and otherwise and impact, you know, the politics of attorneys general around the country, I think is not a good thing. The democratic process should be democratic, right? In order for it to be democratic, you know, it's kind of one man, one vote.
Now, all that being said, people look at the Elon Musks of the world and the fact that he had the resources that, you know, profits he made from PayPal is what enabled him to launch Tesla, you know, and SpaceX. No venture capitalist would have put up the capital to launch Tesla. It was the 100 million from Elon that made that happen. I think, you know, Jeff Bezos and Blue Origin. You know, Avi [Loeb]’s talking about, you know, what could be accomplished with four trillion dollars. The fact that people who have 100-something billion dollars are prepared to invest that on space exploration, I think is a very positive thing for society. It does have influence and otherwise. What I worry about is, you know, the political stuff. I think that Supreme Court decision needs to be reversed.
AT: Alright.
(Applause)
BA: Ironically, it was Citizens United, is the decision right? And it's disunited the citizens.
AT: So voices, legitimate within reason, we need to have --
BA: No, voices legitimate without reason, right? You know, free speech, share your views, and let the most powerful ideas capture the minds.
AT: OK, and you believe that is happening?
BA: Actually, I'm a big fan of X. I think it really is an open, free-speech platform. And I’ve learned a lot. And it’s affected my views, my politics, my insights. And I think it’s one of the few places you can go and have a true free-speech platform. You know, the negative is, of course, you're going to confront hate speech and vile speech and things that are the detritus of free speech. But I still think it's a very, very good thing. I no longer rely on, you know, just the Financial Times, The Wall Street Journal, The New York Times and The Economist. You know, and CNN or whatever, Fox News, whatever media you follow. And I think being able to kind of custom-select interesting insights is good for humanity.
AT: Amazing. We need to wrap up, thank you so much.
(Applause)
