I figured if I want to raise $10 million, why not go to the richest people in the world and ask them for a really small amount of money?
When you think of Bill Ackman, you think of someone who is one of the most influential investors of all time. But a decade ago, Bill's hedge fund Pershing Square looked like it might be on the brink of collapse. Ackman faced almost $4 billion in losses from one investment, and everything nearly spun out of control.
This was a failure of due diligence on my part.
Bill managed a historic turnaround of his hedge fund, and today he's a leading voice on Wall Street who is worth over $8 billion.
You don't want to be a lemming in markets. You want to be the person looking the other direction.
He's also amassed a huge online presence with 2.7 million followers, where he candidly shares his sometimes very controversial beliefs on business, politics, and culture.
Some people like, well, I'm not going to open a Trump account for my child because I don't like that it's called Trump account. Okay, that's stupid.
I'm Allison Chantel, and this is Fortune 500 Titans and Disruptors of Industry. We'll be back after a short message from our sponsors.
Fortune spoke with Deloitte U.S. CEO Jason Gersadis on how organizations are using AI to move beyond automation toward human-led value creation.
Leading organizations are using AI in a multitude of ways, but the focus is also beyond just deploying AI for the purposes of automation. The real challenge, and I think the opportunity for leading organizations, is how do you create altogether different outcomes, different levels of value for customers, for employees, for other stakeholders, in order to increase the speed of decision making, the level of differentiation in the market, beyond just automation. So it's really opening up new areas of value creation, new opportunities for employee experience and empowerment, and really cultural transformation for organizations, led through the power of AI.
Many CEOs are focused on deploying AI as they should, and I think all leading organizations and CEOs are on an AI journey. But what may be missing is understanding the real power of the human side of AI capabilities and organizational change. And so, leading organizations are thinking about human-led AI-powered solutions and moving enterprise and the entirety of their workforce to be equipped and enabled to leverage AI in all of its form and fashions.
Certainly, success is defined at least today in large part by automation and productivity. But really, the real question around defining success for CEOs around the use of AI is: Is it changing the way your business competes, is the basis of value creation, of customer success, and the overall value that the organization is creating being enabled, or differentiated, or changed by the use of AI. That's the real question.
Fortune 500 Titans and Disruptors of Industry episodes are produced by Fortune's editorial team. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte or its personnel. Nor does Deloitte advocate or endorse any individuals or entities featured on the episodes.
Bill Ackman, it's a pleasure to be here with you today. Thank you for spending the time.
The first thing I'd love to hear from you is your market update. What are you looking at? What's interesting? What's going on? And some of the risks you're seeing.
So, I guess markets are always interesting, but it seems like a particularly interesting time in history, midst of a couple of important wars at the same time. You know, major technological change. AI, I think, is the story of the moment, of really the next many, many years, and thinking about implications for business, for the economy, for companies, for employees. I think AI is really the story.
In terms of markets, it's a time where people are — fair amount of speculation. So on the, you might say, negative side, we think about the growth of one-day options, these very kind of levered ETFs, all the money being spent, if you will, betting on sports. Speculation increases. That's a time I would say be a little more cautious.
At the same time, you know, if you look at market indices, people point out that multiples are higher, but the S&P is a market cap weighted index, which means the biggest companies have the biggest impact on valuations, and the biggest companies are really amazing businesses that have much higher growth trajectories than businesses of even a decade ago, 20, 30 years ago. So it's a different market today than one that you would look at sort of average multiples, and we're finding cheap stocks.
In fact, some of the best-called durable growth companies in the world are available at prices that we find compelling, because they're not at the cutting edge and they're not dead center on the demand for cheap or memory, or even land and real estate for data centers.
Yeah, as you said, the new thing seems to be energy, of course, fueling this whole economy. But the chips and semiconductors and people are pouring into there. Some of the recent big tech stocks you just bought: Uber, Microsoft, Amazon, Meta. I'm curious for your strategy there, and I have to admit, as someone who looks at the AI landscape a lot, those wouldn't necessarily be where I would put my AI bets because I think you sold some Alphabet, which to me seems like that's a pretty good company to own.
I'm less interested in kind of the frontier. I'm interested intellectually in frontier kind of AI companies and models, but we try to find businesses that we can predict with a very high degree of confidence what they're going to look like over time. That becomes increasingly difficult when there's major technological change. But certain businesses have kind of a market position where we think it's very difficult to be disrupted.
So Uber is kind of an amazing business. If you look at the cash flow metrics, the growth, the earnings trajectory, the revenue growth — I would say even the mind share. Right, Uber. When a company becomes a verb, that's a pretty good sign that it's in a very kind of dominant position. But Uber stock is extremely cheap for a business of this quality. Why? Because people are nervous that Tesla, the Tesla taxi, if you will, is going to completely take over sort of the autonomous vehicle and the entire market for mobility.
Uber's both a mobility company and also a food delivery business. They're just closing a transaction now that's going to make them even a more dominant company in that kind of space. But our view is that you're going to want to go to your Uber app to decide how you get from one place to another, as opposed to your Tesla app or your Waymo app or your other self-driving company app to find a ride.
You want to ride in the shortest period of time at the lowest cost, and you want a brand that you can trust. You don't want to have to put all your information in a bunch of different sites and scroll through them. So we think their position is very, very strong. We want to own a business at a price that meaningfully discounts the future. Microsoft, Meta, Amazon, the Ubers of the world are cheap today because the eyes are drawn to Micron or some of the semiconductor companies.
So in the Uber situation, it almost sounds like you're focused on it as a platform as opposed to the autonomy or autonomous vehicle.
I mean, we think they're a big beneficiary. You know, autonomous driving is going to reduce the cost of getting from one place to another. These can reduce insurance costs, and that will of course drive more demand. Yeah, as the price comes down. I think learning how to drive will be something for people who are interested in cars — a hobby. People won't. It's a hobby.
Wild. So there's all these trillion-dollar IPOs. Well, I don't want to say all. There's three, really. It's SpaceX. We expect Anthropic on the horizon. Expect OpenAI on the horizon. How should investors be thinking about that? And then I also want your bigger take on what's going on the private markets because valuations just seem like insane by the time companies are going public.
So the way investors should think about any IPO is: Is the price I'm paying makes sense in light of the future of the business? Very often around IPOs, there can be a lot of hype and excitement, and that's something you have to be cautious about. But an IPO can be a way to become an investor in a company early on in its trajectory. That's really traditionally what an IPO has been.
Now, once you get to a trillion dollars, the question is: Are you early on in the trajectory of the business? SpaceX is an amazing company. I'm a big Elon fan. I'm conflicted a bit, and then I indirectly became a SpaceX shareholder. I was an investor in xAI. I was a small investor in SpaceX, so now I have actually a decent size personal investment in the company. I don't invest personally in public companies, but so I'm stuck investing in the private ones, which is kind of fun and important to see what's coming.
I think sort of the unfortunate thing is when Amazon went public, it was a relatively tiny market cap, and so the public retail shareholders had the opportunity, those who invested over time, to make a fortune with Amazon. I think it's harder to make a fortune when you start at a trillion and a half kind of market cap.
Now, all that being said, SpaceX is going after markets that are massive, right? Space as a market, they have an incredibly dominant advantage, and really uniquely more so than almost any company in terms of their position in bringing large amounts of stuff to space at very low costs. That positions them extremely well. And right, Starlink is an amazing product. I use it. Actually, I have a little Starlink kit. Sometimes I take it when I go. So it changes flying. Even like United's Wi-Fi has never been better. It's amazing. You can actually be productive on an airplane flight, which — and they're in an incredibly again dominant position there.
AI, I would say they're a little farther behind, but from an AI infrastructure perspective, there's no one better at building infrastructure more quickly at lower cost than Elon Musk. So amazing business, and then you just get to price, and there you have to — it's a little more complicated. It's a business which is, I would say, you have to make assumptions about the future. And I wouldn't bet against Elon.
What's fascinating about Anthropic is I've never seen a business grow this quickly ever. So the revenue chart is like — and apparently they are EBITDA positive, if that's true, which I think bodes very well for this company, if they're growing that quickly and they can do so profitably.
My question about OpenAI — and again, I don't have any inside information on OpenAI's, just what I read in Fortune magazine or on the web — the business model has them losing a lot of money and consuming a lot of capital, in the many tens of billions, perhaps hundreds of billions over the next several years, and I think query how long markets will be willing to fund that.
I think the single biggest risk, I would say both in the private markets and public markets, is I don't love businesses where you put capital in and you're going to have to keep funding, putting more and more money over time. I like businesses where yes, it can require a large amount of capital up front, but there's a very clear — I mean, look at Uber. Uber burned enormous amounts of cash, and credit to Dara for what he's achieved since he took over running the business, and now pumps out enormous amounts of capital.
So yes, you can invest in a company losing a lot of money, burning a lot of cash, as long as there is a point where the lines cross and they start becoming materially cash flow positive. You know, at various times in history, the market's willing to let companies lose money for extended periods of time, and sometimes they wake up and decide they're not willing to do that. And I think that's the risk. And when the numbers become extremely large, I think that's the question I have about an OpenAI. But again, I don't have the detail to know.
In addition to building an influential investment empire, Bill has cultivated an audience of about 2.7 million followers on X, giving him a platform that rivals many traditional media outlets, and he is not afraid to speak his mind. In recent years, Bill has weighed in on everything from investing to politics to social issues, many times taking stands that ignite public debate, and it's made him an influential and sometimes polarizing figure in American business.
You obviously are not just a big investor. You also have a huge following, and you don't use it to just talk about business. We mentioned sometimes it's polarizing topics. I actually listened to your Lex Fridman conversation twice. You said, 'You know, I'm attacking — this was a few years ago — I'm attacking the president, DEI, and elite universities. I'm going to make some enemies.' As you think about the impact that your words have and that your followership has, how do you decide where to weigh in? Especially knowing that you have an opinion, but a lot of other people totally disagree, and how that will impact the world.
So it's not strategic. I just get either interested in an issue or I come to some insight and like, why isn't everyone talking about this? And often there are reasons for that. I mean, each of those issues, there's a lot of pushback, and I feel like I'm in a bit of a unique position where I can say exactly — I'm not going to lose my job, and I can say exactly what I think.
I think Elon Musk will be remembered for many things, but actually, his purchase of X and making it an open platform — some people hate it for its openness in some sense — but it is a place where you can share views in a very broad way. And yes, and hear the other side of the argument. I read the comments, right?
The good, the bad, the ugly.
Yeah, I mean, the ad hominem ones, I don't spend much time on, but if someone thinks I'm wrong, that's how I learn.
Getting back to your point about boards, I always wanted people on my board who would tell me I'm wrong, and the same thing's true at Pershing. We want — we have this environment of extreme candor, and you want people who are prepared to challenge the accepted kind of norms, or go back to the emperor's new clothes. You want the kids saying that the emperor has no clothes.
And on some of these issues, what might have been initially a well-intended notion, perhaps DEI being one of them, became something that actually, in my view, increased racism and led to discrimination, and things that were not either legal or in the best interests of the country, and no one was talking about it.
But I assume there's people close to you that feel both ways. Some send you thank you notes, and some are like, 'Bill, how absolutely could you?'
You know what's interesting is when I walk down the street, including today, every day someone will thank me. It's rare that I get the opposite, but yes, some people don't like me, and many people disagree. But that's okay. I'm focused on what I believe to be the truth, and I'm very happy to hear your argument if you think I'm wrong, and I'll course correct if you convince me I'm wrong.
One of the areas where you made a call loudly was on President Trump. It was shortly after his assassination attempt, after Elon Musk endorsed him. You said, 'You know, look, I've looked at empirical data, and he's pro-business, and I'm going for Trump.' It doesn't mean you agreed with everything he's ever historically done and continues to do. But what is your relationship like with the president these days? And how would you rate his presidency so far?
I have an excellent relationship with the president, and I think part of that is I always tell him the truth. I think when you're in his role, you can find yourself surrounded by people who tell you what you want to hear, and I think he respects people who tell him the truth. And I think he's done a lot right, but like all of us, he's made some mistakes. But I think he's generally done a very good job, and even on things where there's nothing he can do where he's not going to get enormous criticism from half the country.
We think the execution of the Iran war has been — I mean, if you look at each of these military operations, they've been the best executed military operations I've seen maybe under any presidency.
One of the biggest challenges we have in our country is almost half the country is not participating in the growth in values created by capitalism, i.e. stock market. Either they don't have 401k plans, they don't own stocks in the market, and you've seen a move towards the success of socialism and socialist — publicly pronounced socialist candidates winning the mayoralty in New York City, and I think part of that is due to the fact that people are being left behind. Wages cannot compound as quickly as stocks, so everyone needs to participate in the stock market in order to believe in capitalism.
And one of — a couple of initiatives, and I don't want to take credit for them because I don't know what the initial genesis was, but a number of years ago I came up with this idea that every baby in America should have $6,500 in their account, which compounds to a million dollars in a birthright account.
In 2020, I believe, you wrote an op-ed in the New York Times.
Yes, and the president has done basically that — these Trump baby accounts. And now there's the Trump Savings Plan.
Did you talk to him about that?
I didn't talk to him about the baby accounts, but I did give him the pitch on what is now the Trump Savings Plan, which I think is going to be very important. It's basically a 401k plan for every American. So you're an Uber driver, restaurant worker. Your company doesn't have some kind of stock, 401k or other tax-exempt plan. Well, now you can set one up very easily, and the government's going to provide a match.
Australia, actually, even Mexico has a pension system now, where you're required to put aside a meaningful percentage of your earnings in an account that compounds and saves your retirement, and now the average Australian has multiples of the savings of the average American because of the power of compounding. Compounding solves many, many problems, and we've got to get every American to, from the time they're born — which, by the way, there's some people like, well, I'm not going to open a Trump account for my child because I don't like that it's called Trump account. Okay, that's stupid. And so I think he's done some very, very good things.
What if they don't have the disposable income to do it either?
You put aside less money, and you certainly take — there's a $1,000 match, but I just think you have to start putting money away for your retirement. If they can do it in Mexico, where wages are vastly lower, and there actually is a requirement to put aside an even bigger percentage, we can do it. We can do it here.
One of the quotes you said to us in a recent story we did was that significance in life is ultimately measured by how you positively affect the largest number of people, and I think you can do that just by being a capitalist. I agree with you. I mean, at Fortune, we think capitalism, when done well, can solve a lot of problems. But then you look at the wealth divide, and it's clear why people are mad. I mean, the affordability is awful, and the wealth divide has never been greater. So why does it often not feel good to working Americans when we're in a capitalistic society?
Let's use New York City as a microcosm. Let's talk about affordability. We start with rent, the cost of housing. Why is the cost of housing so high in New York City? Because, unfortunately, left-wing mayors have made it very difficult for developers to build in New York City, and Mandami, when he freezes rents, he's just going to make the problem worse.
There are buildings in New York City, many, many buildings in New York City, where half the tenants, plus or minus, are rent-stabilized apartments, and so their rent is frozen, and the other half are free market. And so, what does the landlord do in order to generate enough cash flow to cover his interest expense? Well, he's going to raise rents on the part of — because he can't raise them on half the apartments. So there's bad policy that's led to a big part of the affordability problem.
Why is energy cost so high in New York State? It's because we've shut down nuclear power, and it takes 15 years to get a power line approved, a pipeline. We shut down fracking in New York State, and the result is that we're importing natural gas from Pennsylvania. Just bad policy. And so we can fix a lot of these problems with much better policy.
You look at Florida. Florida is an incredibly well-managed state. They're talking about eliminating — I think they voted recently to eliminate real estate taxes, right? How are they able to do that? Just good policy. Austin, Texas, rents have come way down. Why? Because they made it really easy to build.
You make it really hard to build in a city where people want to live, or they're moving to, and then you don't allow landlords to recover the cost to renovate their units, they're going to pull them off the market. So what's happened in New York? We had like some 60,000 units that are off the market because the cost to renovate them cannot be recovered under the rent regulations.
You want the Ken Griffins of the world to locate Citadel here, you want him to spend $250 million on an apartment. Why? Because that $250 million purchase made that building economically viable. That construction of that building created how many jobs? How many rich people moved into that building who are going to pay taxes? The system can work very well.
You want people at the very top who are — a very small percentage of the population is paying a big — it's something like the top 10 percent generate 70 percent of the revenues. That doesn't sound like a particularly unfair — you want to have the Elon Musks of the world, but you don't want to discourage Elon Musk from locating his business here.
I mean, look at what's happening in California right now. The United States made it such that a 5% wealth tax in California, which they say is one time — first of all, it's never one time. Income taxes were de minimis, and they only applied to a small percentage.
Well, they say it'll be one time, but you're worried it'll come back for more.
It's a certainty. It's a certainty. So we have two big problems: we have enormous waste and fraud in government, and we have bad policy — bad economic policy, bad tax policy. And by the way, there are many things that are unfair about tax policy that can be fixed. But the answer is not socialism. Socialism is a disaster. Watch — if Mandami is successful in implementing these plans, watch what happens to New York City.
I agree. There's a lot of policy that can be done to fix unaffordability. As both a CEO and a billionaire, is there more that people like you running big companies or big operations can be doing to help their employees make it more palatable or more tolerable?
You don't have to worry about any of the Pershing Square employees because we run this super profitable business and we've got a very small team. But we have impact well beyond just the 40 people we're here because we're important shareholders of large numbers of companies.
And my point about capitalism is, I've spent a fair amount of time on philanthropy, and it's vastly less efficient at solving problems than capitalism. You're going to create a lot more jobs with capitalism than you are with philanthropy. And when you have businesses where you're effectively using other people's money that don't have best-in-class governance and oversight, it can end badly, and that's a description, unfortunately, of many nonprofits.
Many nonprofits do not have the disciplines that come with running a for-profit enterprise, and as a result, they're less motivated. It's harder for them to hire the best people. There are no equity incentives. There's no market pressures. There's no M&A activity. So you've got to be careful with philanthropy. You can waste a lot of money, and these organizations can be taken over and become political vehicles, as opposed to — they can go off mission from what they were originally set up to do.
And you say this as someone who's had a philanthropy for 20 years, and you've given a billion in grants and investments. Jeff Bezos recently gave an interview saying, if I do my job well, I can create tremendous economic lift and value for people with just Amazon. Not saying he wouldn't do philanthropy as well. I'm curious as you look at your legacy and what you want to build. I know you've said you plan to give away a significant portion of your wealth, but how do you think about deploying it in the most impactful way? Given that there are shortcomings clearly with capitalism right now and with philanthropy right now.
Our recent big initiative — today being an important day — is we're launching this kind of, I would call it, brain research rehabilitation institute. It's funded initially with nonprofit capital, but it's going to have for-profit elements to it. It's going to focus on the patient and solving brain-related, longevity-related issues.
That will lead to devices and molecules and techniques that become the basis for launching businesses that will transfer that technology and deliver it to patients over time. And the goal is to put a bunch of philanthropic capital to launch, build this into something that becomes sustainable using sort of for-profit capitalistic principles.
I don't want people to have to sacrifice what — they have to make an economic sacrifice to come work here at what we're calling the AOI. So one of the things we're going to do is we're going to share the equity value that's created from the businesses that come out of the institute with the people who work there in a very broad way, in the same way that we've done at Pershing Square.
So hopefully the best of a nonprofit model. There's certain things you can achieve if you're a nonprofit that if you were a for-profit, you might not be able to hire certain people, or you may not be able to interact with certain institutions that will only interact with a nonprofit, as opposed to — if it's a for-profit, it might make it more challenging.
So I've learned over 20 years of philanthropy what works, what doesn't work. I'm sure there's still more lessons to learn, but the goal is to focus on things where there's a gap in the capital markets, where there isn't yet a for-profit solution to a problem, and there has not yet been invested effectively enough in helping people deal with traumatic brain issues or strokes.
And I've been very close to that issue in the last almost six months, and so this is something — historically, Buffett says diversification is protection against ignorance, and so if you look at the Pershing Square Foundation, we were extremely diversified. Certainly in the earlier years, we started focusing more on scientific research in the last period, and part of that is that's an area where we've seen a gap in the capital markets.
While there is venture money available for startups in healthcare, a lot of the basic science research is too far away from revenue or a company for it to be funded by a venture capitalist. So it either has to be government funding or philanthropy. So that's an area we've focused on. But in doing that, we've learned a fair bit. We've built a couple scientific advisory boards. We learned some of the good and bad, and we're going to apply all those learnings to this institute.
I mentioned today because we actually today just closed on the building that will be the initial building for the institute.
Bill's career has been defined by conviction. Raised in an accomplished entrepreneurial family, he learned from a young age the value of earning his own way. That drive carried him from Harvard to launching his first hedge fund, partially funded by cold calling some of America's wealthiest investors. It all culminated in Pershing Square, an influential investment firm with major stakes in Amazon, Uber, and Microsoft, where Bill and his small team pick only a dozen or so companies to back. He's a Warren Buffett devotee, and has bold ambitions to eventually best Buffett's 60-year investment career.
Before we get into all of what Pershing Square is, I want to have people understand how you became the person that you are a little bit, and kind of going back into the archives of Bill Ackman. So even going back to your upbringing, there were a couple things in my research that stood out about you. One is that your dad instilled in you, you're not going to get a penny of my inheritance, so you better earn your own money. That was one thing that stood out, and you set these ambitious milestones for yourself financially that you actually wound up hitting, partly as a result, I assume.
And Mather was a yearbook quote, I think, one where you were called very verbose, and two, your friend said, 'Closed mouth gathers no foot.' And so clearly never shy and never afraid to speak your mind. And so I'm curious when you think about your foundational upbringing, what created the Bill Ackman today?
I think my parents obviously played a very important role, and I don't want to undermention Mom. My mom was an activist. I grew up in Chappaqua, New York. We had diesel locomotives from the 1950s that took Dad back and forth to work. We weren't allowed to start dinner until Dad got home, and very often he'd get home after 8 o'clock because the train was delayed.
And Mom ended up joining this grassroots organization called the Upper Harlem Line Commuter Council. She became head of it. She ran a petition drive, and they redid the railroads to our hometown, which massively accelerated the time Dad got home for dinner. So I certainly saw activism at work with my mother. I counted the signatures on the petition drive. I was supposed to go through all the signatures and count them, and Mom delivered them to Albany. So I would say that was a significant moment.
And then Dad was in the real estate mortgage brokerage business, kind of an eat-what-you-kill business. And I watched him have some very successful years. And there were periods of time he went a couple years without making money, which I was not really closely aware of. But Dad was very big on — Bill, you need to stand on your own two feet, and I never got an allowance. And if you want to make money, start a business. Had a little car waxing business. I had various kinds of businesses, and I did various projects around the house, or lawn care, tree care, ditch digging, things like this, which was great.
And so then, when you were a teenager, you said to your dad, 'I'm going to be a millionaire by 30, have $100 million by 40, and a billion dollars by 50.'
