Hey, welcome everyone. Thanks for joining us again on SumZero. This is going to be a really special discussion. I know many of you probably either live in New York or used to live in New York, or have New York interests. But, you know, anyway, I think this will be super relevant.
Quick backstory: Whitney Tilson has been a member of SumZero for a long time. I've known him for at least a decade now. And the other day, I just had the news open, and it turned out there was an article about Whitney running for mayor. So I reached out, and I thought this would be a fun thing for us to do, to have a discussion with him about his thoughts on New York politics and what's in the future for New York. Whitney, as many of you know, is a former hedge fund manager, ran a fund that I think peaked at around $200 million in AUM. He's also been an educator, taught classes regarding investing. And I think, Whitney, your parents were even educators themselves or teachers back in the day.
My parents were the third couple to meet and marry in the Peace Corps in 1962, and when I was born in 1966, they were union teachers in New Haven, Connecticut. So I come from that kind of background.
That's awesome. And David, of course, is a legend in the industry. I read somewhere that he started Greenlight almost 30 years ago now with 900,000 in capital. That's obviously into the billions now. So it will be very interesting to hear David question Whitney. Obviously, David knows Whitney much better than I do, so I'll let David introduce Whitney more properly. But just with that, David, do you want to just give your quick intro and tea up your relationship with Whitney, how you guys maybe first met? And then we can kind of dive into some of the policy stuff that I think folks are looking to hear about. Thank you again for joining us, guys.
Great, and thank you for having me. Exciting to be on here for the Whitney for Mayor opportunity. Whitney, I love the background behind you. You're kind of covering up the "h" and the "t," so it's almost like "Whiny for Mayor" or something exciting like that.
Yeah, the all-white background I think is a little much, so I go with the dark.
I think that's great. Look, I've known Whitney for, I don't know, 25 years. I'm making it up, I don't remember, because it was a long time ago. Whitney's partner in his fund, which was T2—means there were two T's—and the other T was Glenn Tongue. Glenn Tongue was one of the four or five actually civil, decent people that I worked for when I was in my two-year banking program at DLJ.
I'll tell you a quick fun story about Glenn before I work my way over to Whitney. As the new banker, I was 22 years old and I didn't know what my job was or what I was supposed to be doing. But one of the very first projects I worked on was an IPO of a company that was in DLJ's portfolio, which was called Musicland. Musicland was headquartered in Minneapolis, and we had to go do a due diligence trip. So we flew to Minneapolis and we got to the hotel. I was there with Glenn and an associate, and we got to the hotel and they said, "Where's the reservation?" And I said nobody told me I had to make a reservation. The hotel was full, and there was no room for me. So I actually wound up sleeping that night on the chair in Glenn's room, because the associate certainly wasn't going to have me. Glenn took pity on me and didn't make me sleep in the lobby or something such as that.
That's a great story. I'm not sure I've heard that, David.
So that's what a decent person in investment banking is like.
The bar is low, isn't it?
They don't actually tell you to get your own hotel room so you can just do it in advance, or when they book theirs they don't say, "Make sure we get it for everybody." They just kind of let you show up and do the wrong thing and stuff like that. That's why I loved DLJ so much.
But in any case, Glenn was actually a decent guy, and then he went into business at some point and began T2 Partners with Whitney. That's how I really came to know Whitney. If I knew him a little bit before that, I'm not sure, but that was really a long time ago. It was a fund where I spoke with Whitney and Glenn about stocks and stuff like that on a regular basis for many years until eventually they separated ways. Whitney went into the newsletter business, which is now being replaced by Whitney in politics, and what an exciting opportunity that now portends.
Yeah, thank you, David. That's a wonderful introduction. You're a great friend. In addition, we see each other probably most often out on the tennis courts. We're both avid tennis players.
Guys, I didn't know that. I think we should all hit, just as a completely unrelated point.
Yes, exactly. Let me know. You meet the nicest people playing tennis.
David and I have, I would say, almost daily emails back and forth on politics. Both David and I are very interested in political matters and believe it's important to engage. David has vastly more ability to write checks to people, but maybe there's an argument to be made that I have vastly more ability to run for mayor. I don't know. Or maybe—I don't think, David, you're ever going to run for office.
You have infinitely more ability to run for mayor. I would never do such a thing.
Yes, you have wildly more common sense than I do. So let me just give you two minutes, just a little bit of background for those of you who don't know me, and then let's open it up to Q&A.
The question I obviously get asked is, "Why are you running? Why are you doing this? As best we could tell, Whitney, you had a perfectly good life until a month ago." The reason is, I love New York. I think it's the greatest city in the world. It's why Susan and I, after we met at graduate school in Boston, why I followed her back here to New York. She finished law school a year before I finished business school, and we didn't flee to the suburbs when our three daughters were born in the 1990s. We raised our family right here in the city, and it's why our daughters, when they left the city to go to college in Minnesota and North Carolina, they all came back here to launch their careers and soon, under lots of pressure from me, will hopefully be building families of their own.
But here's the thing: I'm really concerned that on almost every metric, our great city is headed in the wrong direction, and it's causing families to flee. Get this: 770,000 people have left New York City just since 2020. That's the second-highest percentage loss of any large city in the country. That's 8% of our population has left in less than four years, and I'll bet you can guess which is the only city that's worse that's lost 10% of its population: San Francisco.
Families are leaving because they can't afford skyrocketing rents, they aren't safe in their neighborhoods, and they're not satisfied with an educational system in which only half the kids are reading at grade level. Since 1970, New York State has lost 13 House seats, and the number one state that New Yorkers flee to, Florida, has gained 13 House seats. It's not just because Florida has got more sun; it's because we're not running things well here in New York, and we can't blame the Republicans. It's all on us.
So while Mayor Adams and the other career politicians running in this race have been pandering to special interests, saddling us with high taxes and poor government services, in the last 31 years I've been building a half-dozen small businesses right here in New York, fighting for better education for children as one of the founders of Teach For America, and more recently risking my life on the front lines in Ukraine providing aid to our allies who are fighting for their freedom. So in summary, I'm the only candidate in the race who isn't a career politician, who doesn't owe anything to anyone, and who's built a business, so I'll always do what's right for the people of New York.
So that's my quick overview. And with that, I don't know, David, if you have any prepared questions or anything you want to launch with, but I already see some questions in the chat. We've got a couple hundred people who I'm sure have plenty of questions, so happy to do Q&A for the remaining 45 minutes.
I always think other people's questions are better than my questions, so if you see questions already, why don't we get at that? And if there's a lull, I will jump in.
You know what, Whitney? I'll start off. Was there a point, just what was the tipping point for you to want to run in the first place?
Yeah. Honestly, I've been super politically active in the Democratic Party. My parents met and married in the Peace Corps, so I grew up in Tanzania, Nicaragua, in a sort of very Lefty household. I'm actually the most conservative in my family, as a business-oriented, Harvard Business School background, investing background, but always strongly believe in the ideals of the Democratic Party. So I was doing that for 20 years. I've been to hundreds and hundreds and hundreds of events supporting politicians, and I always sort of thought, "Gee, what a miserable job. I'd never want to be on the other side." And that was where I was as recently as a month ago.
My dear friend John Petry, those of you may recognize as one of the co-founders of Value Investors Club—he and Joel Greenblatt—and he runs Sessa Capital. He and I were co-founders of Democrats for Education Reform 20 years ago. So he and I have been pushing the Democratic Party to be more centrist, more pragmatic, etc., for 20 years. He texted me out of the blue and said, "Whitney, you should run for mayor." And I was like, "Haha, you must be drunk. You must think I'm your silliest friend." And then he said, "No, I'm serious. Take a look." And so I looked at basically just a handful of things over the course of one week. I decided, going from never having any aspirations to ever run for office to deciding to run.
Number one, I took a look at the statistics around New York City. I had no idea in four years we've lost 700,000 people, how bad that is. I looked at the crime statistics and they're really bad. People are leaving the city because they don't feel safe, and it's not just because the New York Post is running headlines; it's not just a perception problem, it is a reality problem. So it's clear to me that New York is heading the wrong direction, and somebody has got to come in and turn that around.
Then I looked at the current crop of candidates, and you have a completely corrupt and ineffective mayor under five indictments. And then the whole rest of the field, at least on the Democratic side—and that, by the way, is who will win the election. So anybody listening to this who is a Republican and thinks, "I don't want to support a Democrat," whoever wins the Democratic primary on June 24th next year is going to be the next mayor, almost certainly. So my recommendation is support the best Democrat you can, even if you're not a Democrat yourself. So I looked at the field: every single one is a career politician. Not a single one of them spent a day in business in their lives. So none of them, I believe, are going to be able to change the trajectory of this city.
The last two things I looked at: I actually am enjoying the process of campaigning. I like doing things like this, I like meeting new people, I like learning a lot. So I figured the process of campaigning I think I will lean into, and I'm determined to have fun doing it, fighting for causes I believe in, from charter schools to fighting anti-Semitism to improving the business environment, etc. Even if I lose, I'm bringing good ideas that I hope change things. So win or lose, I think it's a win.
Lastly, I looked at the New York City campaign finance law. I don't have the ability to self-fund. Mike Bloomberg spent $73 million 23 years ago buying the mayoral seat. But the city is matching not just me, but all the candidates. There's no self-funder like Bloomberg in the race; every single one of us is taking matching money. Which means anyone from New York City on this call—you're all investors—let me show you an instantaneous 800% return on your capital, which is anything you give me from $10 to $250. Just go to whitneyformayor.com, easy to remember. There's a donate link. Anyone around the country can give up to $2,100 per individual, but the key is anyone from New York City up to $250, there's an 8-to-1 match. So you give me $250, my campaign gets $2,250.
And so for a guy who can't afford to self-fund, that was actually a very important factor in my decision to run. But in order to qualify for any matching money, I need a thousand New York City donors, even $10 donors. So one of the things I'm asking everybody on this call, if you're from New York City, if you're not involved in politics, maybe you like somebody else or whatever, click the donate link at whitneyformayor.com and just give me 10 bucks, because that counts toward the thousand that I need to unlock the millions of dollars of matching money that I'm going to qualify for from my friends giving me 250 bucks. But I don't get that money till I get a thousand New York City donors. So I see lots of questions. Go ahead and field them.
Yeah, let's start with the first: "How do you convince anti-business constituents in New York that business experience is worthwhile and not the enemy of the people?" I guess this is true for all political races.
Look, I'm running as an outsider, in many ways against my own party. I am not going to—the teachers union, I was employee number two, one of the founders of Teach For America, I've been on the board of KIPP for 25 years. The teachers union is going to come out against me. There are some unions that I think I can get support from, but basically I am entering without any endorsements from any major politicians, though again, I hope to get some.
Let me explain: the Democratic Party machine in New York is screwing up this city, but they're making it very difficult for any outsider to run. They've scheduled it—the mayoral election is off-year in 2025; the primary is in the middle of the summer, June 24th. If you could pick a date that would reduce turnout, that would be it. And it's a partisan primary, meaning no independents, no Republicans can cross over and vote for me. You must be a registered Democrat. As a result, four years ago only 24% of registered Democrats in the city voted.
So it's not surprising that historically it's been the candidates who pander most to the biggest special interest groups who can deliver the votes when you only have 26% turnout to elect the mayor. And that mayor then in turn is supposed to negotiate with the very people who he or she owes their job to. You can imagine what that negotiation looks like. That's part of the problem.
So my route is think AOC in her first campaign running against an old-guard Democrat, or even think Donald Trump in 2016 running an insurgent outsider campaign, going directly to the voters and pointing out, saying, "If you're not happy with the status quo, if you recognize that your own party and the party bosses are doing a lousy job and sort of screwing you, and you want change, I'm the only change candidate in the race." And in this environment, I think that message can sell.
But first I've got to raise enough money to hire a team. We're hiring a person a day. We're going to have 30 people on my team within a month. The next financial filing deadline is January 15th, and if I can put up a big number—by the way, when you accept matching money, you agree to only spend 7.9 million. But my rough plan is to raise 1.5 million, mostly from New York City residents in $10 to $250 chunks. The city then matches me 6.4 million, roughly speaking, and then I'm at the $7.9 million cap. And then I can spend the last five months before the primary—I don't have to spend one minute raising money.
The next four weeks are key: got to raise the money as much as I can from New York City residents, get as much matching money, and then I can go out and just focus on all the working-class voters in New York who I can tell you are not happy with the direction this city is headed. They want change, and there's basically a very simple choice: you've got a whole bunch of career politicians with no business background who I don't believe offer any prospect of changing the status quo, and me. I think that message sells in this environment.
Sure, I can read a question out of the chat that looks great: "What do you plan to do to reduce violence, improve safety in New York, on the streets and in transport?"
Yeah. We don't have hours, and it really is a complex discussion, but let me give you a little bit of background. I co-chaired Central Synagogue's Criminal Justice Reform Task Force for the better part of 10 years, so I've been deeply involved in the criminal justice system, criminal justice reform, as a reformer.
By the way, you might wonder, Whitney Tilson, what do you mean, Central Synagogue? The answer is, I wasn't lucky to be born into the tribe, but I married into it. I told my wife on our first date we could raise our kids Jewish. By the way, the way I met her is Bill Ackman and I crashed the Harvard Law School orientation booze cruise of Boston Harbor in September 1990. She and Bill grew up in Armonk and Chappaqua in adjacent towns in Westchester and went to the same Hebrew school together as kids. She recognized him, came up, started talking to him. I, as I am wont to do, elbowed my way into the conversation. As I've always been telling my wife since then, she married the wrong hedgie.
Literally, no joke, on our first date I told her we could raise our kids Jewish, a man of my word. So I'm very involved in Central Synagogue for over 20 years, very involved in Israel, anti-Semitism, etc. It's something very personal to me. So I digress a little bit here into crime, but that's how I got involved. I'm a very active member of Central Synagogue, and criminal justice reform was an area that I got involved with.
So if I were to characterize a 10-year campaign, our idea was to make New York's criminal justice system more fair. There were all sorts of terrible inequities and injustices and a very high degree in some pockets of over-incarceration. So we fought for things like Raise the Age, bail reform, close Rikers, a bunch of things which I can go into detail. But here's what happened: we went too far. And not we, not me, but as a very simple example, the single worst piece of legislation that has contributed to a sharply rising crime rate and people fleeing New York City over the last four years was the bail reform law.
Very simply, we pushed for a law that got rid of bail that Governor Cuomo signed, but New York State was—to this day is—the only state in the country that does not allow judges to consider a defendant's dangerousness when making a decision whether to let them go out onto the street or, for example, hold them at Rikers until their trial date or their plea bargain occurs. Dating back to 1971, in some burst of insanity, a law was passed saying judges can only consider whether a defendant is likely to flee the country or something; they can't consider someone's dangerousness. That's obviously insane.
You had a bail system that judges were using to effectively keep dangerous people behind bars. As a simple example, a guy who beat the hell out of his wife and has threatened to kill her is arrested. You do not want to let him back out because he'll probably kill her, right? But a judge wasn't allowed to consider that, so he would just set bail high enough to keep the guy behind bars, and that protected us. It was a crude and unfair system, but it sort of worked.
Well, we said it's a crude and unfair system, let's get rid of bail. And I said great, but you have to give judges dangerousness. There has to be a mechanism by which judges can use their judgment to protect us all from dangerous people who should not be out onto the streets. Well, in the middle of the night, the way things work in Albany, the legislation got passed, and the Lefty activists in my coalition and the legislators in Albany passed a law that got rid of bail and didn't give judges dangerousness.
Over the next year, 100,000 people statewide who would have been held under the old law were instead released. And is it any surprise that the murder rate in New York City that year, 2020, the year the law went into effect January 1st, 2020, the murder rate went up 47% in a single year and still has not come down to pre-pandemic levels? So that is one of at least a half-dozen major things that need to be addressed, because right now what we have is totally unacceptable. Washington Square Park is an open-air drug market. In what universe are we allowing that to happen?
What are the things you can do as mayor to get at those problems? Are these problems that are there to change legislation? Do you change how police are operating? What do you actually do as mayor, once you've identified all the problems we can talk about, to actually fix them?
Fortunately, we have a strong mayoral system, so there's quite a bit. I'll get to exactly what I would do as mayor, but also realistically, I'm going to have to be a clever politician and get the City Council to change or modify a couple things. I'm going to have to go spend some time in Albany, make nice with people, and point out the mayhem that some of these laws that I was part of advocating for, but that went too far. I'm not advocating going back to the old bail system, but we better give judges dangerousness like 49 other states in the federal system.
As mayor, I control a $112 billion budget and 306,000 employees, including all the police officers. So I can certainly increase the budget in selective areas for the police so that they can better police our subways, so that they can go in. Part of it is a funding issue, part of it is legislative things need to change, and also I can just be a powerful advocate. I will show up in Washington Square Park as mayor, towing NY1 and media behind me, saying, "Hey, this is going to stop. This is not acceptable," and not just Washington Square Park. So I would have as mayor a lot of power in the bully pulpit as well.
Whitney, you set this up at the top that over 700,000 people have left the city. One of the reasons that crime may be part of that, but also tax is a big topic of conversation, especially amongst younger folks or people who maybe are in their 20s or 30s contemplating having children. When you add the local tax on top of the state tax on top of healthcare costs in New York, on top of education costs in New York, on top of just parking your car, it is an avalanche of expenses.
What are your views on just the New York City tax setup, cost of living? Inflation was obviously a huge topic of conversation at the federal level; it certainly affects New Yorkers. I'm just curious what your thoughts are on that in terms of creating a more efficient city that doesn't need to rely on extracting every last penny from its citizens.
It's a super complex question, and I'm not known for concise answers, but I'm going to try. Let's start with the fact that New York City is unbelievably wealthy. We have 2.5% of the US population and we're 4.6% of US GDP. Stop and think about that: New York City, not the tri-state area, not New York State, New York City alone is almost 5% of US GDP, and we have the highest marginal tax rate of any major city, which means there's a huge city budget.
I do not have experience managing a $112 billion entity with 306,000 employees, but I know a lot of people who do. Like I said, it's a strong mayor system. The mayor appoints 155 people basically unilaterally, doesn't require City Council confirmation or whatever. One of the things I'd like to think I bring to the table is I'd like to think I'm honest and smart, but I also have some humility. I know what I'm good at, I know what I'm not good at. I could never run a system that big, but I don't think I'm the smartest guy in the room. My goal is to hire 155 people, every single one of whom is smarter than I am in fighting crime, building affordable housing, filling potholes, operating parks, operating our subway system, etc.
My message to them is twofold, and this gets to your question about the budget and taxes: Message number one is only 24% of New Yorkers think the city government is providing good or excellent services, and they're right, it's not. Despite much higher spending, our municipal spending per capita is by far higher than any other major city in the country. The second-highest spending city is Chicago. We spend 36% more than Chicago. We're at $13,400 per citizen; Chicago is under 10,000, and every other city is half or one-third our spending. So the problem isn't that we don't have the money—a super rich city with a super high tax rate, so we've got loads of money—it's just not being spent very efficiently.
Number one, my message to all those people I hire is twofold: number one, do a better job providing better services—cut crime, make our parks cleaner, fill more potholes, etc. Number two, find me all the fraud and waste and inefficiency. We can't raise taxes, but we need more money for the mentally ill and drug-addicted homeless people that we see out there on the streets every day. The solution is not to lock them up at Rikers. It is not a crime to be homeless. Some of them are out there committing mayhem and crimes, and absolutely there should not be a revolving door that's endangering all of us. But the vast majority of them are suffering. They are mentally ill, they suffer from addictions. It costs a lot of money to help people like that.
Where are we going to get that money? I can look at the top-level numbers of how much we're spending, and I can talk to everybody in the system bottom-up, and I can tell you there's lots of fat in there. But I'm not coming in with some DOGE from people outside the system. My second message to the people inside the system is: go in there and find the fat and cut that fat, and give me money back that we can reallocate for things we need, but don't cut the bone and the muscle. That's why it has to be done by experts inside each agency. You can't just parachute in from outside and claim that we're going to save $2 trillion when you don't know jack about the actual system. I believe in good government, but good, efficient government.
Once they've found me—in a $112 billion budget, when we're spending this much more than anybody else, I cannot believe that you can't get me 10% savings across the system. That's $10 billion that maybe we can selectively lower some excessive taxes that are driving businesses to close, etc. I think what Portugal did recently, where they cut the tax rate for people under age 30 selectively—up to €30,000 a year of income, young people in Portugal are paying less. I want to make New York—young people in this country are doing worse than any other group of young people in history. They're not doing as well as their parents. They're suffering from off-the-charts rates of anxiety, depression, not holding jobs, still living at home, not getting married or having kids. So I'd like to do something there.
I'd like to channel more money into the highest-crime pockets of the city, to flood those areas with more drug and alcohol counseling, fix the streetlights, etc., not just police, because you've got to comprehensively address these problems. So I'm not out there promising huge tax cuts across the board in New York; I don't think that's very likely. But I think we can find a lot of savings, and we can make New York a heck of a lot more livable than it is right now.
And by the way, the single biggest issue on affordability is housing. If you'll give me 30 seconds to digress on that: we've lost 770,000 people in New York in the last four years, and the vacancy rate in New York right now is 1.4%. Now, I'm probably the only candidate in the race who understands basic supply and demand. We need people coming back to New York. What happens when more people come? There's no place to live. That's just going to jam prices higher.
We need to build a lot more housing in this city, and we've had zoning rules dating back to the 1960s that make it virtually impossible to build new housing in this city. So it's not surprising housing costs just skyrocket every year. The City Council just passed a watered-down bill—the far Lefties, the NIMBY types—that's going to be 80,000 new units of housing in 15 years, and that is less than 10% of what we need. I want to be the person that lifts all these horrible zoning laws, regulations, restrictions. Ask anyone who tries to build and operate housing in New York versus any other city in the country, and they just start laughing, they hold their head in their hands. A two-week environmental review in Nashville is a two-year environmental review in New York. We're just punching ourselves in the face.
I've got to ask the oppo research question: what will oppo research dig up on Whitney Tilson?
