Crimson Connections: William A. Ackman ’88 and Paul C. Hilal ’88

[Music] i'm samuel zwickle i'm andrew lieg and we're roommates at harvard andrew hurry up sam get out of here right now we don't amount to much so we decided to see what interesting things other pairs of friends have done since leaving cambridge turns out some crimson editors teamed up to help a president win re-election other friends run multi-billion dollar hedge funds together so join us as we chat with these people who are much cooler than we are and this is crimson connections [Music] what's coming back is the humor that paul developed i think sophomore year in college and it never advanced it's as if microsoft was still on basic uh code is that when i see bill i mean i just regress to what i really i just feel like i'm still in college with bill and i just kind of behave like that i don't i don't i'm not this loose with with other people sure you are thinking back to uh to paul's wonderful sense of humor um we'd love to hear about how you guys first met what were your first impressions of each other on harvard's campus and bill we'll start with you uh first impressions um disgust um fear uh you know foul smell um you know just about the most uncomfortable imagine yourself an extremely uh you're in a cave it's cold and damp uh they're you know it's very dangerous you fear your skin is crawling it was like that paul it's uh you know it's it's amazing how over time people get an ever rosier memory of the past it's kind of like a self-preservation thing and this is such an improved recounting versus the recountings you would have had more recent closer to the event so um it was funny it was very odd honestly i i first met bill just kind of incidentally uh freshman year on the on the crew team freshman heavyweights and we just spoke very briefly you know whatever and there were a lot of new people there that were interesting and for whatever reason we just met briefly but we never really had dinner or anything like that and uh and then junior year at lowell house we both ended up going to lowell house i went there with a very nice guy who was my freshman year roommate who was very very nice kind good person really nothing in common with him obviously because he's a nice good person and he's kind but no no but but we really we weren't really like similar people at all but he was a great roommate because he was really clean and just friendly and a good guy one of my high school friends who also went to harvard was dating a very nice girl named marion sills was her name and so i just got to know marion a little bit because she was ian's girlfriend for like a year and she said paul do you know this guy bill ackman and i said bill ackman yeah he was on the freshman crew team yeah i uh i've met him once but i don't really know him and and she goes well you know yeah and i knew he was in lowell houses well look you know you should meet bill and i said you know sure and she's and i said why she says you know she said you know what you two would become best friends that's what she said which is like the oddest thing for anyone to say to anyone else and no one's ever said that to me before since it's kind of odd and i'm like really says yeah you got to meet this guy i'm like okay right and one day i was you know i had gotten into the lowell house dining hall was dinner and i had i got my tray and i was just i i was at that moment where you you've loaded up your tray and then it's like hey now where do i sit right so it's kind of like seeing you know who was around who had an empty chair who i wanted to sit with that and i was just kind of right in that process when when marion pulled me by the arm and i remember this because there was there's a lot of on my tray and and clearly yeah and uh and i'm like whoa okay and it says paw patrol come this way come this way and i didn't know what she was talking about so i followed her to finally sit with mary and and she was seated with bill bill's year-older sister jeannie nice anyway and so marion just just pointed to sit and so i sat and that's that's the moment that i that was the first time i had like a substantive conversation with bill and i really at that moment also got to know his sister gene um which informed my understanding of bill right i mean it's a it's a much more meaningful first meeting with someone when you're getting an impression of them but you also see their sister and you also see how they treat their sister and how their sister treats them i mean it's so very it was a very kind of rich meeting uh of him and uh and i remember it clearly and i was a it was a great experience um it's amazing how different our recollections are when you you heard them and they're not inconsistent by the way it's easy to reconcile these two stories i mean so apart from being in the bat cave um what else did you all do on campus um when you were at harvard so actually the beginning of my relationship with paul we used to argue a lot we used to go to the gym uh and then we'd have arguments about like the physics of weightlifting and stuff like that and every about everything and the thing that disturbed paul is one i always disagreed with him and he always turned out to be wrong and uh because he's laughing now because just like it became psychologically difficult for him to accept this so he he's been in therapy for years and the therapist finally said look just pretend like you were right paul and i think this is how paul has survived a period of time um but there was a moment actually several years into our relationship where paul was right and uh paul had me write it down on a 3m sticky the time and date where i said paul you are correct you know 4 30 p.m you know whatever it was um so i have multiple sheets of paper uh in different vaults in different countries right because there's a value of this and i'm waiting for for bill to get to the peak of his meteoric career for me to cash in one interpretation is that i chose to get those paid those papers written down because it was so rare that it was actually right that's one interpretation another interpretation is it was so rare for bill to actually realize that he was wrong and i was right and let alone admit that's another interpretation yeah so so you guys spent a lot of time arguing in the gym but uh we assume that you studied a bit as well um tell us did you write theses um did you have favorite classes while you were there we didn't have a lot of overlap in our courses um we didn't really ever study together i can't can't remember that i don't really remember studying very much anyway do you i studied paul took like organic chemistry and ves and visual environmental studies classes we actually had to do stuff but but also i was running a business you remember but i was you know in addition to my studies i was trying to get this software thing going and uh so that was a tremendous amount of work and i did i definitely did schoolwork but we never had a class together but the typical product the only thing they forgot to realize is that the entire addressable market was like 12 neuroscientists it was you know what it was a great learning experience it really was and i i grew a lot my idea at the time was something called facebook yes it gets stupid and he went ahead and did his thing exactly okay facebook lousy idea never going to work social networking waste of time um but bill worked on a thesis and that that actually is uh they asked about theses that's actually kind of actually paul's credit i would not have completed my thesis uh were it not for paul so basically like half of the semester was done the thesis was due like the by the march spring break and paul walks into my i had a single in our in our uh quad whatever it's called and at a certain point in time he comes in with a paper calendar and he puts like you know the the remaining two months left or three he crosses off like two-thirds of it and says okay you know yeah time to failure here is like whatever it is 28 days and each day he would come in around noon and put a black felt tip line through the day that was half gone and then at the end of the day ago put an x through it and so it taught me about the progression of time and uh and it made me realize i didn't have much time left to finish my thesis and i think it was a very helpful device because i was i was a bit of a procrastinator with respect to my thesis yeah bill had a lot going on senior year he was having a lot of fun you were dating a couple of different girls i think uh senior year and only sequentially sequentially it was not in parallel sequential and then it finally i started to get worried i started to get worried because also i knew that he would not want to do a lousy thesis and that it would bother him if he did look at look how much concern uh roommate had here isn't that beautiful yeah look dude you know you bill's been an incredible blessing in my life and his whole family and we love each other like brothers but like i'm looking at this thing i'm like this is a train wreck right yeah i mean because i'm like thinking it's literally gonna be like two days before he's gonna have like 200 pages to write and then at some point he's like oh and then he and then he got very serious and and he wrote a great thesis which actually uh had it's had significance since then right i mean it actually bubbled up 20 years later in the wall street journal effectively uh the subject of what bill wrote about the thesis was called scaling the ivy wall the jewish and asian experience in harvard admissions and it was about uh you know perceived discrimination in the emissions process at harvard which is going to the supreme court as we speak so it's pretty interesting yeah wow so looking you're in senior year right now bill's writing a thesis paul is making bill write a thesis what did you want to do with your life and what were you thinking of after graduation paul did you know what you wanted to do um so my dad was a research scientist i thought i was going to be a research scientist that was kind of my initial trajectory and i was very grateful for the opportunity to study biochemistry to work in a protein chemistry lab a molecular biology lab you know all these things but i realized that it wasn't gonna it wasn't my path um it was a privilege to be able to do it to be fun but it wasn't it wasn't the path for me and i grew increasingly interested in business through the experience of trying to get this little software company going and look it as bill said it was like there were maybe a few hundred customers in the entire country for this thing maybe right and but you know we didn't know better and we learned a lot we tried really really hard we learned a lot and i got a lot out of it but it got me very interested in business and um i was naive to think that science had some kind of special virtue to it uh you know you're advancing knowledge of so romantic etc but i i also came to realize over those years that being someone who helps you know the system work more efficiently and productively through innovation through just providing some service to people reliably was actually massively value creating and very honorable also and noble and is also really hard and challenging in many different ways and what i felt about science was that i i felt i could contribute in science i felt i was pretty good at it but succeeding in science requires only one dimension of one's strength succeeding in business generally challenges one in many many different ways and i like the idea of being challenged in many many different ways not just one and you know i gotta say bill's dad is like a second father to me you know he was an example of kind of in in my mind i think in the mind of everyone who's dealt with him of being a very noble businessman and he created a lot of value for the world and you know bill is a businessman bill was a businessman from the cradle probably and that really resonated with me and so i'd say that you know the confluence of our life paths helped pull me along in this direction that i may have ended up i probably would have ended up anyway but maybe not as quickly or as naturally right let me just be clear pretty much every decision that paul has ever made i've actually i'm responsible for uh and take credit for it correctly and other than mistakes he's made which were his own doing yeah and also mistakes of yours are also my own doing i think that's probably accurate right what about you bill uh in terms of i paul's correct i was always interested in business i was always entrepreneurial i always wanted to be kind of quote-unquote a businessman um you know graduating my parents are like you know like why don't you apply to law school and i even took the lsat and applied to harvard law school and i just didn't really want to go and i wrote a very very goofy essay which i hope that they didn't save and the admissions person who read it i'm sure decided to immediately reject me which was precisely the right thing to do thank god it cost me it cost me billions of dollars i've been admitted to law school but the the um and then i uh you know i did the sort of interviewing thing on campus and i ended up going to work for my dad actually uh which was which i also learned a lot from my dad ran a firm that arranged financing for real estate developers and entrepreneurs and i learned sort of what i didn't want to do you know i didn't want to be in a sort of service business i wanted to i wanted to be an investor and that and once i decided that i applied to our business school i fortunately they admitted me um i got there and i looked in the course catalog and of course there's not one class on investing so i learned something about investing which is that before you pay the tuition you make your investment you have to actually check and do your due diligence first so it was very valuable so you're talking to a harvard freshman or a harvard sophomore right now um and they're an english major or a biochem major or social studies major what is so fun about investing and why have you sort of made your career and life around it sure so uh i'll give you my perspective i'm sure paul has his own um what i like about it is uh it's a bit you know what is our job our job in a way is predicting the future right if you can predict the future you can be an amazing investor um and so that's sort of a fun thing and it allows you to be a bit of a dilettante because you can be very broad in terms of the universe of things you look at and um it just sort of fits with you know i like learning about businesses i like interacting with people and the way that we've chosen to invest is kind of it's not just sitting in a library reading documents you know there's some of that but there's also some transactional aspects which you know where human relationships and interactions are important which i think i enjoy um and you know built a very small organization we only have 36 people you know pershing relatively speaking it's it's tiny and we run this sort of family oriented uh culture um paul is the one the black sheep because he's left the family uh to go off on his own um but uh you know it's it's fun it's interesting it's profitable and i think it is good for america right i think what we do which is basically you know by a large stake in a company like chipotle going through serious food safety and other problems put directors on the board help them fix their problems recruit a new ceo turn the company back to a path of success i think that process itself is a very healthy one uh for you know the world you know it's not you know i used to think that philanthropy was doing good business was about making money and over time came to believe after being you know and continuing to be very philanthropic that you can move the needle way more with uh you know banking the ball in the for-profit sector and so um so it's been fun it's been rewarding i love the people i work with and it's always interesting right if you think about uh you know the nature of my job you know my job is to read the newspaper stay informed figure out what's going on learn about companies people put the right people in charge of the right companies um it's uh it's a very leveraged uh business a relatively small number of people can do things at very significant scale so those are my those are reasons why i like it so you guys your partners in the gym uh your partners in writing bill's thesis and then you became partners in investments tell us about how that came to be actually if you think about our relationship over time we really both helped each other out over time yeah it's a really good description which is i probably wouldn't have got my thesis done or anything nearly as good as what i turned in without paul you know with the whip you know the whip stuff is separate he's talking about and then paul uh you know also had the sort of investing bug but in the technology world and went off on his you know went went to banking and then went off on his own started you know very small partnership made a series of very successful investments piled up a ton of money you know very very early on but in a bit of a you know if you if you can you guys don't even know about the technology bubble of 2000 probably you may or may not know but it kind of feels a little bit like it does today a little bit of that and then uh paul went through a super challenging period actually to be totally straightforward about it and i was a good landing you know our firm was a good landing place for paul and paul's like look you know i'll hang here for a little bit i'll help you out can't promise i'll stay forever um and we took a little bit of a risk because working so closely together you know uh is can be a risk but we had a great decade together and paul came up with some great investments at pershing and and had a great experience and it was sort of you know time again for you know i think ultimately had a bit of the you know self-actualization bug you know it's not for everyone to work you know at the end of the day i i purging i'm the ultimate decision maker and i think paul itched for a bit to be in that role and it was sort of a good time for him to exit there was an opportunity that he could pursue that we couldn't pursue for you know various uh technical reasons and so he left to pursue that opportunity and he did a great job with it and and you know launched his firm um and so we're now you know in the same business in slightly different form uh being very fortunate is that an a plus answer poll or is that a b-plus no it's a great it's a great answer and you know i'm trying to i'm trying to you know answer it more abstractly um you know like why you know why did we um partner or why why were we doing so much together right why were we choosing to go to the gym together why were we choosing to do uh you know you know purging together and other things that we worked on and uh look it's just kind of a it's a natural i mean on my end it's a natural affinity for bill so i'm someone who if i if if there's someone who i like very much and i respect in their capabilities and in their character i enjoy winning together right and and enjoy doing things together i'm kind of this is kind of a big part of my nature um that uh i've always been someone i've never really had interest in individual performance sports what gets me excited is being part of the team and the team winning and i get more utils which is an economic term i get more satisfaction from doing something great with my friends than this than defeating someone or whatever so bill and i kind of had this um in my mind a very strong kind of social compatibility plus he was really smart which you know i enjoy really smart people uh i learn a lot from them and i enjoy it and i was used to it honestly from my family and then from i was lucky enough to go to horace mann who had really you know a lot of searingly brilliant people at the time and then going to harvard just insanely intelligent people so so i just enjoyed it and i think that you know look i learned from bill i you know i i'm not someone who would have you know i didn't know about buffett until bill told me about buffett right and you know i got um i think that that my my no you know bill basically went before me in uh into investing and i think that seeing how him and his really terrific and brilliant partner david berkowitz who they co-founded gotham together seeing what they did got me very interested and excited about investing and it led to some reading that i did on my own and studying and so that's how that's how i ended up going into investing and then um you know the opportunity to work with bill uh you know it's just too good to pass up you know the chance to work with someone that you that you care for that you respect that that's interested in the same things i mean you don't turn down that opportunity when you're very close to someone you know you affect each person's evolution and i don't know how i don't know whether bill on your side there's anything like that i'm not sure i'm sure i've influenced you in some way i can't put my finger on it maybe you're aware of it but i'm sure i've influenced you some you've definitely influenced me and for the better and i think that you know you guys are roommates you know you're going to learn from each other you're going to follow each other's careers and you're it's going to shape your views it's going to shape what you're excited about and if you stay in touch there's a good chance you might be doing things together and that's so much more gratifying than doing it alone if you were to talk to yourself as a 20 year old what would you say what what advice would you offer my number one thing would be to floss regularly that's i think that's probably the most important thing that i could add to this class i'm not sure if there's anything else bill do you have something to contribute sure so the piece of advice i give to uh when i have the chance to speak to uh young people um particularly young people go to schools like harvard is the problem with where you are in life right now is that in order to get to harvard you probably have not made many mistakes on your path here meaning you probably graduated something close to the top of your class in high school you probably did really well on your sats you probably you know had some great summer interesting experiences you've got great recommendations um you had to live a pretty you know uh successful path and then you go to harvard uh and you know and you're surrounded by that group of people and you're on your way to the next thing and the the problem with that experience set is that success depends on how principally how you deal with failure uh and you've had very little experience and failure and you know the lesson i think sort of my words are what is experience and experience is making mistakes and learning from them so you have to come to learn to treasure mistakes and also you have to come to learn that you are going to experience a series of unfortunate events over the course of your life it's a certainty right at some point your parents one or more will pass away you may have your your own health issue or someone close to you uh you know you relationships work and and some fail marriages work and some don't uh and you'll take a job and maybe it's even the first job out of school and you'll up okay and maybe you get fired uh and you look at the list of successful people you know i think just thinking i'm i'm my bloomberg screen is up on up just to the left of the zoom call you know mike bloomer was fired from solomon brothers right and that firing catalyzed him to build a company but anytime something really bad happens you have to figure out why it's good uh and um you know and it's always the case that bad turns into into good my first investment firm ultimately i was i had to shut it down uh which is not it was a fairly ignominious end to something that we were on a very very good path on for a meaningful period of time but that was good why because it allowed me to start purging square allowed me to start person square and with all the experience i had at my first fund and interestingly investors were extremely interested in investing because i made mistakes and because therefore i had experience and i think that's really super important lesson so don't be afraid of failure um you know america in particular love second acts you know in the in the venture-backed world people really like entrepreneurs who've you know fallen dust themselves off gotten up figured it out but i think the most successful people in the world have had to overcome i mean think about reid hastings you know his business was mailing you three cds okay and you know he's competing against blockbuster and he tried to sell his company to blockbuster for 50 million and they turned him down right think about that as an as a because he was trying to make it work and he could barely make it work and he was afraid of this you know multi-billion dollar competitor but he failed to sell it to blockbuster and now you know what's that business worth today hundreds of billions of dollars so uh just look at every failure as an opportunity and if you do that uh and you don't get discouraged you're going to succeed i think i think that's great advice i mean it's not as good as flossing but you know as a second bit of advice it's good actually well it's a paul's point let me actually take paul's very humorous comment and turn it into something serious which is you cannot succeed unless you're healthy and the time to start being healthy is when you're 22. and that's you know the keys to healthiness are nutrition exercise sleep uh and also not doing stupid which is what young people do like you know driving drunk doing you know just dumb stuff uh we where the laws of probability occasionally mean that you're gonna die doing it even if the chances of your dying are only 1 in 20 whatever whatever kind of stupid risks people take you know one one formulation of one of bill's points was that sometimes you that the most successful people are the least accustomed and comfortable with failure they're the least accustomed to failure and so they're the least comfortable with it and that creates a fragility uh because of the fear of failure that they have because they've just succeeded in everything they've ever tried and that leads to a sub-optimal risk aversion right and one of the things that i've said to people is show me someone who's succeeded at everything they've ever done you know that that person might say well do you people say wow what a winner wow the person wins at everything they ever do i say show me someone who succeeded everything they've ever done and i'll show you someone who hasn't reached farm because the only way you know what you're capable of is to reach for something that you don't know whether you can do and then sometimes you surprise when you surprise yourself and that's how you stretch and that's how you really explore your boundaries but one of the things that um i think is endemic to our classmates is that many of them would take steps would only take steps where their probability of success was really high because they were they didn't have the experience of failing and then learning wow i can fall on my face and pick myself back up and go and this is a very powerful lesson that bill has learned i mean bill has the resilience to do it but he also learned the lesson of it which which enabled him to try things that other people wouldn't try and much more thoroughly explore his boundaries right and life is much more resilient and forgiving than you realize provided that your failure isn't because of character if your failures mix of character it's a whole different world right if your failure is like hey look tried something really ambitious it didn't work so be it if you fail because you did something wrong that's a hard one right and even so you can recover from it you know yeah look at mike milken right people forget now that mike milken at one point was sent to jail for 10 years and had to pay like a billion dollar fine the sentence was later reduced to you know whatever two years um but i think the guy's made an unbelievable recovery i think he's extremely widely respectful he's done a ton of great work in medical research cancer research prostate etc so you can even recover from that but to paul's point um the interesting thing about character versus even business success is everyone can have exemplary character it's just a choice some of this other stuff you know requires some kind of acumen or hard work or whatever but character is just a choice um and then the only other thing i would add is in college you have you don't realize in college how complicated life becomes once you have a career once you have family once you have kids right all of a sudden your free time implodes right i mean i have i feel like i have no time to just like hang with bill or or do anything other than try and build this business and take care of my family i i like nothing right uh for right that's that's where your priorities go and for good reason right but now in college you guys got a ton of unstructured time and it's an incredible opportunity to focus on yourselves but also to focus on building relationships with special people if i met bill you know mid-career um we we would never have had a chance to have the life experiences that build the connection that we have so um i guess what i would say is uh uh it's important to do your studies that's important but it's also important to invest in in the relationships with the special people around you it's really a golden time that uh and you'll you'll appreciate how rare it is once you get older so that's that's another small piece of advice so uh so thank you thank you everybody and thank you bill for a great third of a century which is what we've had together

Channel: TheHarvardCrimson

Views: 17,076

Rating: 4.814672 out of 5

Keywords: Harvard, University, Harvard Crimson, Bill Ackman, Paul Hilal, Pershing Capital, Investing, Harvard Alumni, Harvard College., Impact Investing, William Ackman, CEO of Pershing Capital, Crimson Connections

Id: OnXsFvxCaX8

Length: 34min 21sec (2061 seconds)

Published: Wed Apr 07 2021