david: in your career you want 18 majors which the most of tobody but many people think be your record is a most impossible. days, the compensation was good but not compared to today. >> i was making as much money selling insurance as i would playing golf. is a concentration, physical ability? jack: i think winning breeds winning. >> would you fix your tie please? david: i don't think people recognize me if it was fixed. ♪

i don't consider much of a journalist and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equities firm. how do you define leadership? what is it that makes somebody tick? let me go back to the beginning with golf. but i was nine, i quit when i was 10. you are pretty famous in golf. it was too frustrating and here's what i couldn't understand. why is it sony people are addicted to something so humiliating and frustrating for so many people. the ball never goes where it's supposed to go. why are people so addicted to it? jack: that's a pretty good question.

never-ending pursuit of unattainable goals is what it is. you can try all you want. nobody has ever mastered the game. most athletes in other sports love to play golf because it's difficult, it's challenging for them and he challenges them at whatever level they play. that's why i enjoyed it. no matter how good i got i could always be better. david: when you were growing up you played many different sports. you recruited to play football at ohio state -- basketball. at the time golf was not your important sport or was it one of the three most? jack: golf was another sport at that time. national lesser national dish all of a sudden those were of the 12 best in the country.

later that year i was right number one and does it may be i'm better at this than i thought i was. i almost won the u.s. open the next year. then i did win the u.s. amateur again the next year. i said, maybe i need to play against the best. so it was a process. david: your father got you into golf initially? jack: yes. david: was he a good golfer himself? jack: he was a decent golfer as a kid. then he quit for 15 years and was a pharmacist. he broke his ankle playing volleyball. he ended up having three operations and had it fused. the doctor said, charlie, he says, if you don't want to end up in a wheelchair, start walking again. we moved out to the suburbs. upper arlington, he joined at a country club and took me along to carry the bag. he couldn't make a game because he couldn't walk very far. that particular year, a fellow named jack grout came that year. and the pga championship came that year. so i got all that in my first

year of playing golf. and it just got me charged up to learn a sport. david: jack grout became your coach for most of your career. jack: he was my coach until he passed in 1989. david: so your father and jack grout were the people who mostly got you on the way in golf, you would say? jack: my dad was my best friend and my idol. i loved my dad. he just did everything with me. he just gave up everything for me. david: in those days it wasn't clear that you could make a big career financially as a professional golfer. so you were thinking of getting a degree as an accountant, or being a pharmacist? jack: i started college. i mean, most kids want to be what their dad was. my dad was a pharmacist. so i went through pre-pharmacy. i hated afternoon labs. [laughter] david: right, so. jack: my dad talked me into doing something else. so i started selling insurance. david: ok. jack: i just loved selling life insurance to my fraternity brothers, they needed it. [laughter]

jack: so i did that for a while, and i did pretty well at it. i was making good money. i got married and had our first child. but i really wanted to play golf. so that is what i did. david: now you -- you got married to barbara. you've been married how many years? jack: 59 next month. david: 59 years. [applause] david: ok. the result is five children and 22 grandchildren? jack: that's right. david: you never forget the name of a grandchild when they come along. you know their names? jack: i know their name. i know 95% of their birthdays. [laughter] david: really? ok. that's pretty impressive. in those days you were thinking of becoming professional. you weren't sure. you met with bob jones. robert jones? david: yep. david: the most famous amateur golfer of them all. how did you actually come to meet him? jack: well, he was a speaker at the banquet of my first u.s. amateur when i was 15 years old. at that time, he had gotten paralyzed as he went on, but he was still walking with canes at that time.

and he saw me play. in the last practice round, he says, young man, i am going to come and watch you play tomorrow. here i am a 15-year-old kid, playing in my first amateur, and the greatest player who ever lived, bob jones, wanted to come and watch me play. he came out in a merely bogey, bogey, double bogey. lost my match, but it was a great experience. he became a good friend. he was great counsel. he was a really, really good man. david: so you decided ultimately to turn professional in the year after you won the second amateur. you won the u.s. amateur twice. jack: yeah. david: you decided you would make a career out of it? jack: i didn't have any more goals to do in amateur golf. and i wanted to be the best i could be at playing golf. so i said, the only way that i could do that is to play against the best. play against the pros. david: in those days, the compensation was good but not compared to today.

jack: i was making as much money selling insurance as playing golf. david: but you did -- jack: i surpassed it. david: so, as you went on, you had a rivalry with arnold palmer a bit. he was the leading golfer when you came into the pros. and then you surpassed him in many ways. what was it like in the early days when you were rising and he was at the top? jack: well, i wasn't real popular, because i started beating arnold. i wasn't popular myself because i was an arnold palmer fan. and arnold was a good guy. we got to be really close friends, our wives got to be close friends. but he was, and he never really seemed to mind that i beat him more than he beat me. i'm sure he probably did inside. but he never let me know it. he took me under his wing. he's 10 years older than i was. he was great to me. so i have nothing but love for arnold palmer. david: in your career, you won 18 majors.

which is the most of anybody. jack: yeah. david: and tiger woods has now come with most recent masters win, 15. but many people think trying to beat your record is impossible. jack: i don't know. tiger is pretty good. [laughter] jack: pretty good. david: so let's see, you won the masters six times. jack: yeah. david: is that your favorite tournament? the masters? jack: probably so. david: in the course of your career, you won more than 100 tournaments. jack: yeah. david: is that right? and 18 majors, and you were the leading money winner 7 times. the leading lowest shot for a tournament for a year seven times. there is no record in golf you haven't achieved. is that right? was there anything left for you? jack: i don't know if there's any record i haven't achieved, but my record is good. but you know, you can always be better. that is the neat thing about the game of golf. no matter how good you get at something, you can be better. david: in terms of being better, it's hard to know how you can do much better than you have done. let's ask you a couple of

things. what is the key to make somebody a great golfer? is it concentration? is it physical ability? is it just a combination of those things? jack: i think your mind is a big part about it. i think you have got to believe in what you can do. i think you have got to learn to play within yourself. i think anybody, in all walks of life, i don't care what business you are in, you need to work within yourself. and then you need to do what you can do, not what somebody else can do. you start believing in that. and i think winning breeds winning. so, i was lucky, my first year i won the u.s. open. i won the biggest tournament in golf my first year out. and i believed that i could play. so all of a sudden, they started coming in a little easier for me. david: so in the first year that you won the u.s. open, was that in a playoff with arnold palmer? jack: i had to fight arnold's gallery a lot, but i never had to fight arnold. he always treated me with respect. he treated me like a fellow competitor. and so i didn't have those

issues. david: one of the most enjoyable tournaments people say to ever have watched, anybody could have ever watched, was the 1986 masters. you were an old, old man of 46. jack: 46, yeah, i was a really old man. it's very young today. david: people -- no one had ever won a major over the age of 42. tiger won the masters now at 43. jack: yeah. david: 46 was considered ready for a golf cart or wheelchair, or something. jack: close. david: you were not leading that tournament until near the end. you were four shots behind with the final nine holes to go. is that right? jack: yeah, the first time i led the tournament was after 71 holes. going to the last hole. david: you were four shots behind at the final nine, did you think you could win? jack: i birdied 9, 10, 11.

i messed up 12 little bit. but then i birdied 13. and then when i eagled 15, and birdied 16 and 17, yeah, i thought i could win. [laughter] jack: because i was in the lead. david: was that the most emotional win you have ever had? jack: well, you know, it is kind of funny. i had really finished playing golf by then. i had won two majors when i was 40 years old. and i really just enjoyed playing golf and i wanted to be part of the game. i just struck lightning in a bottle a little bit that week. and all of a sudden, i got around to the last nine or 10 holes and i remembered how to play. i mean, you get yourself in contention, and all of a sudden, much like what happened to tiger at the masters this year, when i saw the fellow start to fill up the creek at the 12th hole, he took this pretty little shot out, cut it in the middle of the green, i said, tournament is

over. he will remember how to play. i remembered how to play. and i remembered how to finish. that was really fun being able to do that. ♪ david: you have also played a lot of presidents of the united states. jack: i have played with a few. david: which one is the best at playing golf? jack: the ones i have played with, actually, trump is. david: really? jack: trump plays pretty well. he plays a little bit like i do. ♪

david: you early in your career decided that you wanted to be involved in golf course design. and as i now understand it, you have personally designed about 310 courses. and your company has designed over 400 or so. jack: over 400, yeah. david: and about 1000 tournaments have been held on courses, and they are in 46 different countries and 40 different states. so it's pretty impressive. jack: i got into it by following pete dye. pete dye was the premier golf course designer over the last 30 years or so. and pete one day called me. this was mid 1960's. he said, jack, i would like to have you come out and review a course. i said, what do you want me to see? he says, i want you to critique it for me. i said, pete, i don't know anything about design.

he says, you know more than you think you know. i looked through the golf course, he asked me a couple things. i said i don't know anything about that. he says, yeah you do. just tell me what you would like to see. and he did it. it peaked my interest. and i got a call from charles frazier from the pines plantation from arbor town, hilton head island. he said, jack, i would like to have you do our golf course design. i said i don't know anything about that, but i have a young guy i am working with called pete dye, that i would like to work with. i did that. i did that with pete. and about six months before the tournament, they had a heritage golf classic there since 1959. arnold won the first tournament. i loved it. i had a ball. it was just tremendous. david: talking about golf, your favorite course to play of any, other than the ones you might have designed, i assume you like those the most -- jack: absolutely.

it's like, who is your favorite child, the same thing. david: which ones would you say were your favorites to play? jack: well, if i had one round to play, i would probably go to pebble beach. we just left the u.s. open last week -- i love pebble beach. the scene out there, i love the place. i won the u.s. open, three others out there. i just love the place. my two favorite places in the game are probably augusta national, and st. andrews. david: when you finish your professional career, it was in 2005. your last tournament was the british open. was that pretty emotional? jack: yeah. yeah. david: you had your family there. jack: i had my family there. they were all there. my son, steve, caddied for me. we stopped on what is called a civic and bridge across the 18th fairway. we didn't get a decent picture of steve, steve was crying too much. tom watson was crying. they are all emotional. i'm trying to figure out how to finish the golf tournament.

they are out there crying on me. [laughter] so, we had a great time, though. it was fun. i loved it. i did not want to finish on friday, but i did finish on friday. david: so you, your last shot was a birdie? jack: you know, it is kind of funny because i wanted to make the cut that day. after our three-putted, i got to the 18th hole. the ball had not gotten anywhere near the hole all day. and i knew that that putt, the tournament was over. no matter where i hit it, the hole was going to move in front of it. i started my career in major championships in 1957 with a birdie on the first leg played. hole i played. and i finished it on st. andrews with a 14-oot putt, a birdie. david: you didn't think, maybe i should stay longer? jack: i stayed long enough. [laughter] david: ok. so you have played with many prominent individuals over the years and prominent golfers. if you could pick any golfer to be your partner in a twosome, who would you want to have as

your partner? jack: i think i would have to pick tiger today. but through the years, i never got to play with bobby jones. i knew him and really loved the man. i would have loved to play with jones. i would have loved -- i played quite a bit of golf with hogan. hogan was fantastic. david: you have also played with a lot of presidents of the united states. jack: i've played with a few. david: which one is the best? at playing golf? jack: well, the ones i have played with, actually, trump is probably the best player. david: really? jack: trump plays a little bit like i do. he doesn't really ever finish many holes, but he can hit the ball. he goes out and plays and enjoys it. but he has won several club championships. he can play. gerald ford, i played 50 rounds with ford. i used to play with him at the at&t every year. he was about a 13 handicap.

but he played to a 13 handicap. clinton, i never knew what he might do. clinton, he might play to a 10 or play to a 30. but he had a nice golf swing. all these guys enjoy playing golf. i don't think any one of them really were very serious about the game, but they all enjoyed playing. it's good for the game of golf to have a president of the united states, this is my game. david: when you are playing in those kinds of matches, and the ball is 10 feet away from the hole, why do people not say, putt it out as opposed to you can have it? why is that done so much? jack: i think that is a little bit of politics. david: courtesy, or? jack: i think that is a little bit of politics, too. [laughter] jack: you give me mine and i'll give you yours. that kind of routine, which is not golf. david: you have a grandson who recently at a masters par 3 tournament got a hole in one. is that a fairly emotional thing, to see your grandson get a hole in one? jack: that's pretty good. it was a funny story.

his name is gt. gary thomas after his father. he is a junior. we went out to play nine holes. i always ask the kids if they would caddy for me every year. the masters tournament, i said, do you want to hit a ball? he says, well none of my cousins have gotten it on the green. i said, ok. he says i would love to hit a ball. i said, you might as well hit a hole in one. he says, ok. he says papaw, i'm papaw, thinks i will make a hole in one. he says, really? darn it if the next day he knocks it right in the hole. gary was jumping all over the place. my son gary. -- who my son gary is named after. he was such a great role model. gary was jumping all over the place. tom watson was jumping all over the place. ♪ david: i'd like to talk about

how you and your wife have decided to focus your philanthropy on children's hospitals. jack: to see what has happened with these kids, i'm going to tell you one thing, it is far more important than a four foot putt. ♪

david: so, when players are playing golf in a tournament, say you are paired with somebody, do you actually talk during when you're walking down the fairway? jack: sure. david: i thought they didn't even talk to each other. jack: the guys are good friends. arnold and i had a fierce rivalry. and we blew more tournaments

ourselves trying to beat each other than worrying about the field. but we would get off the golf course, and we would look at it and say, we did it again. we both shot 75 while everybody else shot 65. but just the two of us tried to beat each other. we would shake hands and ask, where are you going to dinner tonight? i love the golf kids today. i love watching when gary woodland finished. i don't know if you saw on television, but you saw four or five of the other players congratulated him after. when justin thomas won the pga two years ago, ricky fowler and jordan spieth were waiting for him when he finished. the guys really support each other. and they've got enough money. they are not worried about the money. they know it's a game. those guys are their friends and they enjoy it. david: in recent years, tiger woods has struggled a bit. he went 10 years between winning a major tournament. do you think today that your record of 18 majors can be broken by tiger? or by anybody?

jack: i think so. the way brooks koepka is going, he could do it before tiger. i remember, the last one that tiger won before this was torrey pines in san diego. tiger hit it off over the place and he won the tournament. he had not had a back fusion. his swing is much better now than it was then. he has learned not to hit it hard because he doesn't want to hurt himself. and tiger's short game is fantastic. tiger is going to win a lot more tournaments. whether he is going to win three or four more major tournaments, i don't know, but tiger he's 43, and in the game of golf today, that is not really old. david: let's talk about philanthropy. i'd like to talk about how how you and your wife focused your philanthropy on children's hospitals. jack: well, we started, david, back in 1966. our daughter was 11 months old. and she started choking.

and we couldn't understand why. we thought we would get her to the doctor and she would be fine. finally the doctor says, we need to get her down to the children's hospital. we went down to columbus children's hospital, now nationwide children's hospital. they found a crayon in her windpipe. and they didn't have -- i don't know what they did, but they did not have a pediatric broncoscope. they had an adult broncoscope. broke the crayon, dropped it into her lungs. she got pneumonia. for about six days she was touch and go. and as barbara and i were sitting, waiting, we said, if we ever are in a position to help others, we want it to be children. and then 15 years ago, the honda tournament moved up from fort lauderdale to the palm beach area. a fellow named fred millsaps came to me, he ran charities, and he said, jack, what do you think of this area for children's charities? i looked at barbara and said, do you want to go for it? she said, go for it.

so we started our foundation. we have been the main beneficiary, honda, several other events. and we haven't really done anything large. but we have raised a little over $100 million in the past 15 years. david: that is pretty impressive. jack: that is pretty good. [applause] david: the miami city children's hospital has been renamed in your honor. jack: miami was miami children's, and we made in association with miami children's. after a couple years, they said, we would like to be a global hospital. so we would like to use the nicklaus name. and it's fantastic. to see what has happened with these kids, i want to tell you one thing, it is far more important than a four-foot putt. and i enjoy it a lot more. david: you enjoy it -- in other words, the satisfaction of winning the masters. jack: it's fantastic. david: but the satisfaction of saving a child's life is -- jack: it's unbelievable. david: it's been a great life and a great inspiration for so many americans and for those around the world. thank you for everything you've done for the golf world and for

our country, and for philanthropy. thank you. jack: well, david, thank you for having me. i appreciate it. david: thank you very much. jack: thanks. [applause] ♪

>> honestly, i got incredibly lucky immune from more mental illness than any other sector of our society >> you encourage your players to involved in social media. these are multi-dimensional people. adam: people wouldn't recognize me.

all right. ♪ consider myself a journalist. nobody else would consider myself a journalist. avid: i began to take on the life of being an interviewer even though i have a day job of private equity firm. leadership?efine makes somebody tick? david: you have been the commissioner since 2014, and spent 22 years as the nba office before that, and before that you were a graduate two best schools to go to in combination, duke university university of austin, to go which you happened to as well, so you can't do any better than in a. let's start with the nba today and how it's doing, and you've been the commissioner, the revenues are are up, the les owners keep value of their teams up about three times. so are you adequately paid for

doing, do you think? itsy the nba seems to be at peak. right now it's very popular all over the world. hy do you think it is that nba basketball is so popular around the world, whereas our major professionalll and football isn't quite as global a sport? adam: i think part of the reason that it's an olympic sport since the 1930s. that's made a big difference. it's a sport that has been played around the world. by actually invented christian missionaries. ames naysmith was a christian missionary, and the game was shortly after it was invented in springfield, massachusetts, to china, and so it's been global since its early i think when you think of the two most popular global sports, i don't think that both ident involve round balls. one you kick, and one you shoot, hands.ur i think there's almost something

evolutionary about it, about and i think most people, even if you're not a whether l player, you're balling up paper and shooting it into a garbage can a little kid -- i have a young daughter. picks it up or tloelz a ball. avid: are there any more franchises for sale? adam: not that i'm aware of. david: some of the people that franchises these have done extremely well. $300 were bought for million, $400 million. and steve balmer came in paid $2 billion for the clippers, were all the other owners happy because it made teams look more valuable or not? yes, they were happy. and since then, two teams have sold for more than they paid. the houston rockets and the

brooklyn nets. david: one of the most difficult hings you have to do after you became the commissioner was to, in effect, ban the then owner of lchl a. clippers. was that a tough decision for you? yes. i think people may not realize he is the only owner who has ever permanently been banned from a sport. because i, in essence, work for the owners. work for the owners collectively. i don't work for any one owner, but any job is to work for the of the league, and people here may remember that the teams that came out and the for which he was banned came out, and in the middle of the night l.a.-time, new york, so i didn't hear it until saturday orning, and he was banned on tuesday, so, i mean, we've seen nba style due process, but i in most walks of life, people, you know, just think dwink to end it was four days was rshgable.

i think he paid less than $100 million when he bought the team. it was san diego then. adam: i know that's the way you look at it, where like he made a big profit. i don't think, frankly, from his standpoint, he is an extraordinarily wealthy guy, and i don't think his reaction was look how much money i just made. the team was worth that -- rdless david: he didn't call up and say thank you for doing that? adam: no. how you erstand that's look at it. david: private equity. things he controversial in college basketball has been the so-called one and done situation where college -- or go to hool players and then r one year get drafted in the nba. are you in fare of continuing that one and done policy, and would you change it to if you did? adam: when i first became commissioner five years ago, i that i thought the minimum age for entering the nba instead of 19. roughly, 11 years ago we changed

to 19. 18 that happened to be collectively bargained with our players association. where i don't make unilateral right to a decision. once i became more aware of how the one and done situation and how the recruiting worked, very here's probably some criminal le proceedings around sort of college sports right now, and then in the middle of that, mark the head of the ncaa appointed a commission that chaired by t was condoleezza rice to lock at lots f issues involving college sports, but particularly to focus on the one and done situation. ultimately, condoleezza rice and her commission recommended to and our players association that we return to

age, and ir-old entry would say that had a huge impact on me. together with a better nderstanding of what is happening to these top players. tournament is over, i changed my position to 18. he players association has historically been that it should be 18, but there are a bunch of issues that need to be worked hrough between us and the players association. it's something we're in active ask youings about. away? a couple of years away. it's a few years also, if we were to mainike the change, the first season could be 2022. that's he current class just, in essence, it finished their freshman year in high is prettyh the cohort well known. lots of these young men may move know, tenth projected on pick to third projected pick, but there aren't that many cohort, and so if there was no longer an issue

of eligibility because, of ncaa now because regulation, we can't be involved with that group of players right now. if the rule were to change, we usa our players association, basketball, others would work much more directly with those players to prepare them for the nba. david: after they finish the they're not nt, finishing their classes? adam aem i don't want to say that's the case for all schools, but it's the case for in of them. understandably, because the look, i think that's the whole hypocrisy in a way of the one and done program. those top players are being recruited by those schools as the best path to being a top in the nba, so once collegiate their career after one season, they are fully focused on preparing nba draft, so whether or not they're still going to some just to and, remember, put it in context or a player

-- a top player coming into the nba, let's say a top ten pick that's going to year's draft, school now, and assuming the nba continues to prosper and assuming the player stays healthy and plays around the expectation that player will play, that player just in salary alone is going to $200 million. david: let's talk about that. to the -- it's hard. i think if you were that parent to that an to say player it's more important that up go to three more classes as a osed to preparing for such critically important decision i think -- and i think that's hypocrisy lies. david: would you like to own a piece of the betting profits in the league? adam: not the profits. our proposal is -- i mean, it's a bit controversial, but we've proposed that we receive called an hat i've integrity fee.

david your referees are in pretty good shape. they're not 20 years old, but they seem to be -- do you require them to exercise a lot? pot-bellied.eem they seem to be in really good shape. adam: i hope that's not the can say about them.

they don't have pot bellies. david: for guys their age, they seem to be in really good shape. referees?women adam: absolutely. we have three female referees ight now, and i think it's an area where i've acknowledged that i'm not sure how it was remained so male-dominated for so long because it's an area of the game where -- that physically certainly there's no benefit to opposed a woman when it comes to refereeing. of the last terms group of referee that is we hired into the league, and they came from our development league called our g-league, two of the last five officials that women, and the goal is going forward to be 50-50 of officials entering the league. about one s talk serious issue. you said that players have melancholy and they feel isolated.

can you explain somebody that's making $50 million a year, they seem to be, you know, well-respected by everybody. depressed and o isolated? adam: well, in all seriousness, is that when i -- in talking about our players, i more immune from mental illness than any other our society, and i think -- i'm sure people in this room know families firsthand how much dless of money you're making or your or your family, that in some cases it's chemical and in some cases it's environmentalal, but that it all across, you know, socioeconomic groups. what's changing in our league, think it's i wonderful that players are now willing to talk about these things. e have two high-profile players, demar did he rosen when he was still with the raptors, and kevin love on the cleveland out publiclyo came and said they were suffering

issues ression and have with anxiety. i know firsthand they weren't league t players in our suffering with issues like those, but they were certainly the first players while they players in the nba to talk about it, and i think i personally heard from so many mental health professional that is it really goes to the heart of your question. when people who are perceived as aving everything and then especially in something in professional sports where here's in certain machoism associated with it and a certain perceived toughness, and i think has beena historically suck it up, right, and you're withough if you're dealing something that's not physical, says where, you know, originally programsr bodybuilding were literally just about basketball. elbow in and shoot this way and how you play defense, and then we morphed physical more about fitness and basketball skills. now in the last years we've

a mental wellness component. by been well-received people throughout the country. you know from the letters we get from the mental health professionals we work with that kids are now coming in and saying, wow, this nba player is able to, you know, raise their i'm and say, you know, suffering. i need help. you know, regular kids feel doing that as well. david: the supreme court has said that sports betting is more or less going to be legal. legal.ally, it's are you worried that in the 950s and so on in college sports we had sports betting, were because the odds blatant, the points spread. are you worried about that in the nba? always worried that we could have a scandal of any kind. certainly one involving sports betting. i think that we are better off regulated betting framework than keeping it all

underground and illegal, and i firsthand in the league that with the supreme court decision within the last year, eight something like states have now legalized sports betting. our preference would be that in a consistent federal framework. you are a league and you are dealing with 50 different states and all their different requirements, it becomes a huge burden for the business, and a race to thet of bottom sometimes from a regular la ter standpoint, but putting in termdz of our concern, that, like any public market, just think of the nasdaq and the new york stock exchange. ability to ferret out illegal activity is from when hythms that show there's deviations, that cause know, computers to, you issue red flags and say omething abhorational is happening here. other than having tipping services and relationships, we can't know those things. i think it's better that it be

transparent, regulated, you and controlled, and authenticated. this way also people are betting with their credit cards. are, and it's hey been not only legal in nevada decadesng time, but for in europe, and i learned a lot leagueounter port soccer because they worked and lived in regulated betting frameworks for a long time, and they have much of them.ntrol >> would you like to owes every own a peefs the betting profits in the league? adam: not the profits. i think our proposal is -- i mean, it's been a bit controversial, but we've proposed that we receive omething that i've called an integrity fee, and some people that's a you've fa michl for you getting a royalty. his year the nba will spend roughly $8 billion creating the nba. we'll generate around $9 about $8 , and we spend about is that and my feeling the creators of the intellectual

property. the burden of regulation has imposed on us by the state. again, the supreme court did are it did, and now states doing what they're doing legalizing sports betting. imposing a set of requirements on us in terms of how they expect us to protect integrity of the product, my view is we should get a fee not off the profit, because i don't want anyone to that we're way incentiveized for a particular to go win or for a game or for a particular score or for games and seven, six games or anything else. we l, as a business matter, proceeds.are in the david: i think he retired when he was, like, 72. 66, 67, 68, s 65, 69, 70, did you say, david, ready?'m did you ever give him a push?

adam: never never.

> how do you get to be the nba commissioner? did you grow up saying i want to be nba commissioner? adam: i didn't grow up wanting commissioner. i don't think i had any sense of what it was. david: but you did not go to uke on a basketball scholarship? adam: i definitely didn't, and even when i went to law school, i -- if somebody asked me what the nba would have did, i said he hands out rings and kept schedule. i wouldn't have even understood

the job. a federal orked for judge and then went to a well then wall street firm, and how did you go from there to the nba? a lot of young lawyers would work for the commissioner of the nba? lucky.i got incredibly i had worked there for about two that i was decided working -- at the time one of the clients was time warner, and working on a lot of media cases and at that time for hbo in particular, and i fascinated with the media business. hile i was working on a particular litigation, i was following what was happening in and the move of sports to cable television really, you know -- it was ted turner, in essence, who was that charge. david stern then the commissioner was at the movement, and at

david stern had worked in new ork for the same law firm that my father had worked at, and i didn't know david, but i wrote him, you er and asked know, can you give me some dvice about transitioning from law into a media job. at the time having written a even thinking about working at the nba or understanding what -- that this do at the ng i could nba -- to make a long story -- this gave me -- he is pre-email. i wrote him an old-fashioned letter. assistant said he could see you on whatever date. i met with him for a half hour. i gave me some advice, which didn't follow, and then about a month later he called me and said what are you occupy to? he said i have an idea. after a series of meetings, he assistant. his david dade if you got a letter from a young lawyer today, what would be your advice? it to our hr s department. was a david stern spectacular commissioner by everybody's account.

he did it for 30 years. was, nk he retired when he like, 72. were you -- when he was 65, 66, 68, 69, 70, did you say, dade, maybe i'm ready? did you ever give him a little push? how did that happen? adam: never, never, never. this is my sixth job at the nba, and so for five of those jobs i worked districtly for david, and he gave me enormous opportunity. he is a brilliant guy. entity up running an called "nba entertainment." i was interested in the television became the d then internet arm of the nba. many years later i became the commissioner of the nba. ultimately, david could recommend me, but it required owners voting me. that's how the commissioners determined. sort of set his own timeline for when he was going to step down, and i think also i was league tunate that the was in great shape at that moment. there could have been a scenario aren't going so well. again, i owe a lot to david, and

i was very fortunate to be in job. >> what do you think is the leadership trait that you had enables davis to think you to be the commissioner. adam: i think, you know, nothing to me.rily so unique i was willing to work very hard, and i do work very hard over the years. the sport of basketball. i think that much of my job now spent on media as the primary revenue source for the nba. fact that i developed -- was very important, and i think, being a lawyer isn't a prewez recollect quiz it of the nba xhirgs. different than being a lawyer in your job. i think you would say the same thing. law school, o learning those skills, that's been very beneficial. to be part of my job is a professional negotiator, whether it's collegive bargaining or commercial elationship that is we enter into. i think it was also skills.

david: a lot of your media contrast, this is a social media. you encourage your players to be involved in social media. you encourage lebron james, best to be really not controversial and to have public views. why do you do that? nba?s it helpful to the adam: i don't encourage them to be controversial. encourage them to be genuine and ernest about their views, and they know within certain frankly, i think there's still more around the issues of decency and not ypically political speech, but i want them to know they should feel safe as nba players, and i business it's in our interest to demonstrate to our fans in the greater community, hese are multi-dimensional people. early on in my career, one of the biggest issues as a league, nd this is before there was that opportunity with social media for players to have that who they are w directly to fans. they were pour tlaid trade in many cases as being one-dimensional people. they were ball players.

people didn't understand where they were from and what they what their other interests were or if they were from our countries. china.re just from there was no sense. big plays. they were from beijing, and this is what they --s and this is how they grew up, and i think social edia, it dmimts traditional media, and it allows them to show who they really are, and i think it helps to engage fans. david: who is the best player in the nba? adam: there are many great players in the nba, david. now, you have recently married a couple of years ago. adam: four years ago. now you have a baby who is 2 years old. adam: a little older. david: is she interested in basketball? adam: absolutely. have to make sure the wnba prospers. my wife is tall. i'm tall. i may get some tips from our other coach k here in the i would love to coach her one day. she loves the game. you're going to go stay

in this position for the foreseeable future? adam: no plans to go anywhere. dade thank you very much. interesting conversation. adam: thank you. [ dramatic music ]

this holiday... ahhhhh!!! -ahhhhh!!! a distant friend returns... elliott. you came back! and while lots of things have changed... wooooah! -woah! it's called the internet. some things haven't. get ready for a reunion

3 million light years in the making. woohoo! -yeah! david: why do you think some such think there is no thing as climate change? >> i don't know. met with president trump, you could convince him to paris, or is that beyond your that?ilities to do bill: someone else should do that. david: are you worried about the a.i. to disrupt our put people out of work? bill: the increased productivity create dilemmas.

david: people wouldn't recognize me. all right. david: i don't consider myself a journalist. nobody else would consider please a journalist. take on the life of being an interviewer even though day job of running a firm.e equity how do you define leadership? that makes somebody tick? or about 20 years or so you've been the wealthiest man in the world, but because you've given so much money recently, jeff basos became wealthier. you had stayed in college and gotten your mean, you gree -- i don't feel inadequate now ecause you are the second wealthiest man in the world, right? i haven't a sign that given money away fast enough to

drop out of the top ten, and the market has been strong. up 35% this oft is year, so to what do you attribute that? company, you know, is doing super well. is a great ceo. it was a whole drome of the importance of software that's true. come the five most valuable companies technology are companies. microsoft, you know, has the good share of that. to spend about one-sixth time over at microsoft. david: recently you've said the made t mistake you professionally was that have had the an joy technology. why was that the biggest mistake? of : we were in the field going operating systems for computer system. would the mobile phone be very popular. windowsing what we call

mobile. system by operating very tiny amounts. we didn't assign people to do the work. it's the biggest mistake i made in terms of something that would set.ly be within our skill we were clearly the company that achieved that. main areas of focus. recently you decided to make another effort. ot necessarily for your foundation, but through break-through energy to try to climate ing about change. why are you so worried about change? bill: well, the climate change is the problem that gets worse you year, and yet, what have to do is t on a global dramatic in eshaping the entire physical

economy that we have. it's a very complex problem, and that is where i see my value added, which is looking at something through the innovation. not just the r & d part, but the reation of products and the deployment of products. helping to educate people about, the sources of how greenhouse gases and do you get on a yoin vegas so you can get global adoption and emissions down drama scli. david: is that part of your foundation, or are you doing this outside of your foundation? bill: the part where you itigate and you help the poor countries with better seeds and through licies, partly development aid, that is through the foundation. that mitigation part. invent new re you fuel, making electricity, cement, steel, that done directly by me with a

lot of investmented. group rough venture is a that i asemled a group of 22 money into t companies that are trying to commercialize. david: you put in $250 million. can $1 billion really make that much of a difference? billion, it's actually been very catalitic. year we'll probably aise another billion to $1.5 billion. this is all about innovation. premium, if you had said you have to make steel with notice emissions, that four times cost you what steel does today. would more c bill han double if we just take the technology we have today.

yes, supporting those companies drawing other investors in. investing didn't go very well in the first round, and so the field that might evaporate, to some degree. to bring a depth of understanding to these things, not only have they been able to invers, but the first $1 billion will be fully committed within but we have other investors. that's gone quite well, and the they only invest in companies who have a chance f reducing greenhouse gas emissions by a half a percent. you know, theyd, found 20, and i'm sure they'll find another 20. smallest investor at this point. am i going to get my money back, make a return? say? do you bill: i say of the things you in, it's probably one of

the high her risk things. commercial done on a basis, and we're likely to have a few significant success. it's not feeling profit in the way that you can deduct it, but time frame of the return and the risk of return is apparently high. we do expect to make a profit that. >> why do you think some people do not believe that there is thing as climate change. what is propelling them to say there no climate change? is it scientific evidence or some other political reason? i won't mention anybody, but here are some people who don't think that there is climate change. they must you know, not have taken enough science or something. i don't know. complex issue, and just understanding how you

do the abatement requires a lot study.epth in the united states it's become partisan issue, which is unfortunate. you know, it might make it achieve this type of here in the need united states, but, you know, we have two problems. we have the people who have then we havee, and the people who think that it's helpto sol, and we need to educate both of those groups. avid: in the history of human civilization is there any evidence that people will do things that will affect their great, great-grandchildren, but see the benefit from? bill: well, the united states actually of all the governments willing to take on very difficult problems like cancer make gigantic investments knowing that the real pay-off decades down the road. that was first being pushed, you know, people are

saying, hey, this is important. change is like that where you have got to take a long-term perspective, and government is at its best when that long-term perspective and funding the basic rnd and the policy that is to scaled deployment. there'so you worry that too much power and too much data in the hands of these companies? bill: technology has become more the government has to think what does that mean about elections?

david: the electricity grid is so. or bill: exactly. david: 24% comes from forestry.e and hy is that creating such an increase in carbon? bill: it's a variety of things. land, you are taking the trees or plants there, and you are releasing all that. like burning the land, say, in for palm oil plantations. cows and ing is that

other grass-eating species have digestion system that emits methane, and methane is the very powerful greenhouse gas, and so for about 6% ount emissions. we need to change -- good cows alone. we going to do that? bill: actually, of all the categories the one that has gone etter than i who have expected to years ago is this work make -- part of artificial means. you look out and people like means, bothor beyond of which i invested in. like it as well? >> absolutely. you can go to burger king and burger.impossible is it healthier for you. >> it's slightly healthier for less terms of cholesterol.

it, of course, dramatically emissions.n methane cruelty., animal and the pressure that comes on land use. cars?: what about electric do you think that's a solution? bill: absolutely. look at the transport sector -- david: 14% of -- -- passenger cars with about another factor of two on to three in battery improvement, which is possible. the mainframe for passenger cars become electric trit trick. you have to make that transition. you have to scale it up. you have to make sure emission.ty is zero for fronts and claims u there's lmost no chance the batteries will be good enough and so they will still be ble to see liquid fuel with electricity some some

way. the energy density of at, ine -- if you look like, a container ship that ocean, having your fuel be 30 times lessee 90% ofnt would mean that that wage you are carrying would of the atteries instead cargo. it's unbliblg s, e likely to work in those places. to make fuel that zero carbon. david: do they roll their eyes do they want a selfie with you? what are you trying to get heads do?state to bill: in the paris climate conference, one thing that was rnd, g was the focus on yes, tually, france said,

we want that to be for the first cost a real issue hat -- what we call mission innovation. prime minister modi. of idea, the commitment over 30 governments to double a ir energy rnd was significant milestone that came out of that conference. to get that commitment, i had to make a commitment that there would be break-through that would take things out and help get them into the marketplace. been some progress. climate is complicated enough know, you don't want -- you want a broad set of in the government to understand the complexity, and of the rnd, unless the u.s. is equally engaged, it's happen because so much of the world capacity to do is here in the

united states. david: the united states pulled out more or less of the paris accord. not technically so for another year or so. is that of concern to you, and do you think this is going to the effort to change climate change around the world? huge step it's a backwards. you meet all the current commitments in that climate you are still way over, and most countries are behind made.mmitments they those commitments were a set would take care of there's5 emissions, and a little bit about the -- the of coal to natural gas is a lot of that, and, yet, the short, and so ng to have people like the united states say, okay, that's not important. it just shows how daunting this is going to be. there's no way we'll get there ithout the u.s. coming back in

in a strong way. if you met with president trump do you think you could convince him to get back beyond your t capabilities to do that? should do ne else that. david: the largest companies in the world are technology companies. apple, facebook, google, microsoft, so forth. you worry that there's too much power and too much data in the technology se companies, and are you surprised that government hasn't done something more than they have done today about this? bill: well, technology has become so central that government has to think. okay, what does that mean about elections? what does it mean about bullying? mean about wire capping authorities that let you what's going on inancially or drug money laundering, things like that? needs to getrnment

involved. at microsoft i bragged to people that i didn't have an office in washington d.c. i regretted that statement. t was kind of almost like taunting washington d.c., and companies, nology partially because of microsoft. of course, they could have seen at&t or ibm hrough or kodak or a lot of innovators well. they're very engaged. there will be more regulation of the tech sector. privacy.ke i'm sure -- and there should be at some point regulations that that.e to the fact that now this is the ay people consume media has really brought it into a realm that, you know, we need to shape so that the benefits outweigh the negatives. you have three children. seem to be well-adjusted, and you have kept them out of the newspapers and so forth. how do you avoid spoiling kids

like that? bill: i think that's a huge problem.

. david: what area would you want new company in? bill: this is a great time to be doing innovation because the of innovation are so much better. there are lots of things in biology that are very interesting. there are lots of things in energy that are. given my background, i would

an ai company that we said would keep computers how to read they can absorb and understand all the written knowledge of the world. area where ai has yet to make progress, and it will be uite profound when we achieve that goal. >> are you worried about the power of ai to disrupt our people out and put of work, those kind of things? >> the increased productivity will come from ai will create dilemmas about what do with that extra time? nd you've got to consider that a good thing even though it will be an interesting set of have to take at place? > do you assess the two urgent issues were health in the less developed areas and -- how did you pick those two? any regrets? have you made progress on either of those? well, global health is our

biggest area, and there the really has been unbelievable. not just because of our work, our partners that include government spending. european donors have really the health issues. one of the areas of importance is the number of children in the the age of e before 5. when we got started in the year $10 million as over a year. $5 million a t year. people d-blowing, and ren't as aware as you would like them to be. because of getting out vaccines and understanding a bit more nutrition, so now the goal half again by in 2030.

drop-out rate, math, and verbal achievement. have moved s essentially not at all. u.s. is spending spend byurce on it, we far more than any country in the results areyet, our quite a bit worse than almost all the other written countries, some middle income countries. us vietnam now is passing results.of their math there the field as a whole is not having the impact we hoped for. to you all ple come for money.

how do you resist? do you have a person that says no for you? do you do that? bill: many people. dade david many people say no. you pick what e you care about, somebody has something that can make a global health, we're super interested, and we staff of 1,500 and those people come out and talk through whatever your ini don't he vegas with d how we can partner you on that. we are going to be very interested in it. fortunately, you can say no the foekts is key. jackie kennedy says if you mess p raising your kids, nothing else matters. you have three children. seem to be well adjusted and you have kept them out of the and so forth.

how do you avoid spoiling kids like that? that's a huge problem. obviously, our kids have great ed from having a education and an opportunity to very lucky iny're that sense. making sure that the visibility treat them is le not unnatural, there are some that.enges that come with so far they have found that as well. one who certainly credit for the kids so far doing very well. you know, our kids, woef said to know, the money is going to the foundation, and think of n't themselves as sort of aristocratic. what do they say when you tell them that? bit.: they'll get a little david: how much has your foundation given away today? $40 billion.

we're giving $6 billion a year. david: finally, if people are say, all ow and they right, i want to do something about climate change, but i'm just one person. i don't have the resources of gates. what can any average person do o have some impact on climate change in your view? certainly, they can take meat products w electricity, and scalean help drive up the of the solutions. the most important thing is their political voice. going to be a need to resources into this effort, and, you know, a bipartisan solution send the right signal. if you just win one year and at all.sn't help

the key is to let people see the over the next e 30 years on a consistent basis. that means it's a much higher just a one-time victory.

david: in the last recession, your firm performed extremely well. are you anticipating a recession now? ray: in 2007, it was pretty easy i think to calculate that there debts that were going to come through. when i go through those calculations, it is not the same. david: bridgewater would not be said to be an easy place to work. ray: people love it or hate it. david: in high school were you interested in academics? were you a good student? ray: i would cut classes to go surfing. >> would you fix your tie please? david: people wouldn't recognize me if my tie was fixed, but ok. just leave it this way.

♪ david: i don't consider myself a journalist. nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? you are seen as somebody who has said there might be a chance of a recession at some point. do you see any chance of a recession in 2019 or 2020? ray: i am big on principles. i think it is important to understand how the economic machine works and so when i am looking at that i want to take a , few minutes and get into the important things that pertain to a recession. a recession, there are

two negative quarters of gdp, we will be hovering fairly close to that level, and there is a certain variation around it. but the bigger things are a combination of the absence of effectiveness of central bank policies. so i hope we can talk about those. gap,her with the wealth the large wealth gap so when the , next downturn comes, what that will look like socially, politically and so on. the elections, which is an issue between let's say, capitalists and socialists, or the rich and the poor, and then the emergence of china in relationship to the united states. those four factors are factors that have not existed since the 1930's. i think they are unique and so when we get into the question of the recession, i think it is how

that will affect those other things and those things affect it. david: in the investment world, your firm was well known for quite some time before the last recession, a very successful firm before, but in the last recession, your firm performed extremely well. maybe better than any other major hedge fund. so as i recall, you were up 28% or something like that during the worst year. are you anticipating a recession now? and are you changing your investment approaches or are you not quite where you were in 2007? ray: in 2007, it was pretty easy i think to calculate that there were these debts that were going to come due. and, there was not an adequate amount of funding. so that sort of debt crisis was something we anticipated and we were positioned well for. when i go through those calculations, it is not the same. in other words, the amount of

maturing debt and that problem doesn't look the same. it looks more like a gradual squeeze having to do with quite a lot of debt of a certain type. but with that, also pension liabilities and health care, particularly, as that produces a greater squeeze. we have large deficits. so the amount of promises we have are large, but they are going to be coming at us at a more gradual pace and i think that is going to produce a squeeze. that, iselated to important, is when you don't have monetary policy, being able to be effective, what kind of monetary policy we will have. we will have more than likely a lot of debt monetization. david: on fiscal policy, there's no room for additional tax cuts. do you agree? because we already have such a

big deficit you couldn't really , cut taxes anymore. or do you not agree with that? ray: i believe in terms of spending, the probably there will be increases in spending that probably will not be well-funded. when you ask about that, i think we have a political question which is relevant to the market. between now and the elections, we are probably going to have very different policies, policies may be more on the left or more in the right more , extreme policies and greater polarity and the choice will be greater. and, how those are made will be important not only to the size of the deficit but the nature of , taxation. so, i think that when i'm looking at the presidential candidates, what i do is i look at what their policies are, stated policies are in terms of -- any of their various policies. i look at that as a

probabilistic basis. i think when we have to answer that, we can't -- you might get after the election. you might get taxes raised on the wealthy or you have corporations and you can reverse those tax policies and you will probably get an increase in spending. david: let's talk for a moment how you came to be, let's say, one of the most respected commentators on economic and financial policy, which is starting your firm. you grew up in long island. were you from a wealthy family? ray: no. my dad was a jazz musician. lower middle class. david: when you were a young boy, were you interested in the financial world? what were you most interested in growing up on long island? ray: i got hooked on the markets when i was 12. because i used to caddy and i would take my money and put it in the markets. everyone was chatting about the markets. david: how did you do? ray: the first stock i bought , i bought because it was the

only company i ever heard of that was selling for less than five dollars a share. i figured i could buy more shares, so if it went up, i would make more money. that was my strategy. david: did it work? ray: and it worked. it worked because the company was about to go broke and someone came along and acquired it, and luckily, it went up and i said this game is easy and i , decided i would be involved in the markets. this game is anything but easy. david: in high school, were you interested in academics? were you a good student? ray: no, i hated high school. david: did you go to high school? did you cut classes or what did you do? ray: i cut classes a fair amount. i cut classes to go surfing. david: did you have a hard time getting into a good college? ray: i got into c.w. post college on probation. david: on probation. ray: on probation. david: ok. but, you did well there? ray: i loved college. i loved college because besides mixing all the fun that college

gives you, what i liked is that i could pick the subjects i was interested in and so i loved college. david: you must've done reasonably well because you got into harvard business school. ray: i got great grades. david: let's suppose i am a young college graduate and i want to go to bridgewater and make money and learn. what is it that you look for? ray: when i look at people, i look at them in three dimensions of a person. ♪

♪ david: when you graduated, what did you do? ray: in my two years -- it is a two-year school. in my summer, i liked to trade commodities. i got into trading commodities. this was now the summer of 1972. nobody ever from harvard business school ever went into the commodity division. but, i went to merrill lynch's commodity division. i said hey, can you give me a job? the director of commodities that summer gave me a job to help him around. in 1973, we have the oil shock, bear market in stocks, commodities is the hottest thing. i was hired as the director of commodities at dominic and dominic having never done anything in the director of commodities, but i was hired. david: you left that eventually

to set up your own firm? ray: yes. that was 1973, 1974, big bear market in stocks. dominic and dominic went broke. i went to what was sandy wallace, hayden stone at the time. it did all of those mergers. i became in charge of institutional commodities hedging of all different things. , that put me with all different futures markets. then we got into the environment where -- 1974, 1975 -- you got into this environment where interest rates, tightening of monetary policy, all of those things were driving the markets. that got me hooked on those markets. anyway, i got fired from there because i was a bit rowdy. david: did you punch your boss in the face or something? ray: yes, i punched my boss in the face.

david: that's not a good way to get promoted. ray: but that was -- it was new year's eve. we got drunk on new year's eve. david: couldn't you punch somebody other than your boss? or you did not think of that? ray: anyway. [laughter] ray: it did not last long. that is how i started the firm. because i was -- the clients still wanted to do business with me. david: what year was that? ray: 1975. david: it grew from one or two employees to how many? ray: in 1982, i think there were eight employees. david: and at one point -- ray: and then i had a terrible 1982. then, it came down to one employee. 1983 or so was just me. david: did you have to borrow money from your father? ray: yeah, let me tell you about the moment. 1979, 1980, 1981, i calculated that american banks had lent a lot more money to emerging countries than those countries were going to pay back.

i anticipated there would be a debt crisis, and with that, an economic crisis. so that was my thinking. in august 1982, mexico defaulted on its debt and a number of countries followed. and so because i said that, i got a lot of attention about that. and i thought that was going to be producing a bear market in stocks and i could not have been more wrong. august 1982 ways the exact bottom of the stock market and i was wrong. as a result, i took my eight employees and i had to let them go. i lost money for myself. i lost money for -- i had to borrow $4000 from my dad. it was one of the most painful experiences, but one of the best experiences that ever happened to me in my life because it changed my perspective about decision-making. it gave me the humility i needed

and fear of being wrong in my decisions while i was able to maintain my aggressiveness. so it changed my whole approach to decision-making. david: you paid your father back with equity in bridgewater? or just interest? ray: without interest and a big hug. [laughter] david: ok. from that time on, you began to rely a lot more on arithmetic or algorithms and other things? ray: no, the big thing was, and this is the biggest message that i want to get across and try to convey in principles and so on. so many people have opinions in their heads that might be wrong and they are too attached to them. if you know how to operate with a certain amount of uncertainty, stress test your opinions in a different way, you get away from your ego, get away from all that

and you can learn a lot about , raising your probabilities of being right. what it made me want to do is find the smartest people i could find who disagreed with me. then i could have conversations with them and only after i found the smartest people that i could find who disagreed with me would i be able to make a decision. in addition, to know how to improve my return to risk ratio by being able to diversify well. i wanted all of the upside. but i wanted to be able to control the downside. and so i would say that there are a number of lessons that i would like to sort of pass along. first of all, the value of painful mistakes and learning and reflecting on them has been a big thing. finding the smartest people who can work with you, that is what created an idea of meritocracy at bridgewater. it is that back-and-forth in terms of the thoughtful disagreement. and then also raising your

probabilities of being right in those ways. that humility and fear of being wrong combined with the audacity to go for the great results and how to do that well is really the most important thing i learned. david: but, you now use a lot of computer-related algorithms to help you navigate the market? ray: algorithms are what we call them today. equations is what we used to call them. you would write that down. what i learned is, by being clear, i can tell how that decision would have worked in the past in all different environments. so, it gave me a lot of perspective on making that decision. i could test it through the great depression and so on. find -- i usedd that same algorithm i could take data and have the computer make decisions in parallel with me. this is what i recommend for everybody. i recommend they write down their principles and realize that almost any of those principles can be converted into algorithms. and so the computer was making decisions in parallel with me

making decisions. that type of partnership between me and the computer and also , expressing the algorithms was invaluable, not only in the quality of the decision-making, but also the quality of relationships that i had with the people i worked with. david: today the greatest , pleasure of your life is your family, your financial success, giving away money? what do you most enjoy? ray: financial success has never been -- it is an inadvertent thing that came largely because i like to play a game, that if you play the game well, you get the money. ♪

♪ bridgewater would not be said to be an easy place to work. is that fair? ray: that is fair. david: that is fair. many people say it is an intense environment and some don't survive. presumably those who do are adopting your principles. ray: people love it or hate it. david: you have a big attrition rate from young people coming in? ray: i would say the first 18 months, probably about 30%. we have protocols. you have to understand your weaknesses as well as your strengths. so people coming to that are almost of two types. there are the people who say come i ame all , excited about that. they are excited about that because they said yes, i would like to know my weaknesses as well as my strengths. i would like to be able to talk about anything and have it thrashed out. that is who it works for. but, it takes getting used to.

because when you're really talking about the strengths, weaknesses, and differences in ideas, our brains have been programmed in a certain way, partially because of genetics and partially because of our environments in which disagreement is thought of as producing a fighting type of reaction or weaknesses are something that becomes a challenge for people to look at. that is the essence. david: let's suppose i am a young college graduate. i want to go to bridgewater. make money and learn. what would be the qualities you would look for in me to make it likely that i would succeed? do you want someone that is the first in the class, a student body president, an athlete -- what is it that you look for? ray: when i look at people, i look at them in three dimensions of a person -- values, abilities, and skills. most companies hire for skills. i believe it should be the other way around.

i look at their values. values means like what are the , motivations and missions? skills is least important. then, you look at abilities. abilities is the way of thinking. is somebody a big picture thinker, is somebody creative? i want to put together a mix of those right people. skills -- can you program, do you know those things -- are important, but it is the least important. so what i look for really is character. character is number one. and to be on a mission. and then it applies to the , particular job they have. when i am referring to values, i'm referring to, is this a person of good character? number one. david: over your 30 years as an investor at bridgewater, what is your track record? every year, you have made money virtually for your investors? ray: 18 out of the last 18 years we have made money. david: 18 out of the last 18. ray: yes. david: that is not too bad.

is it too late to invest with you? [laughter] david: who can invest with you? anybody? any credit investor? you are not taking any? ray: we are closed to new investments in that pure alpha strategy. our clients are all large institutions. david: you have two basic strategies that you provide investors. ray: that's right. i think that will be helpful for people to understand the nature of that. there is a strategic asset allocation mix. what is your best diversified portfolio? if you had no idea what was going to happen, what would you hold? that is what we call our all-weather strategy. it is a portfolio of assets. then we have what we call our pure alpha strategy. there is a separation between alpha and beta. most investors make the mistake of separating those two and think they will make money in the market. in this zero-sum game, they will probably lose money from making

those bets. the strategic asset allocation all-weather beta piece, and then there is the alpha. in other words, now i think it is a good time to move this way or that way. that is the alpha strategy. david: it is too late for friends and family to get into your fund, right? there is no opening? you are not going to open anytime soon? ray: no. david: ok. an important part of your life has been transcendental meditation. you do this twice a day. when did you start and why's it -- why is it so important to you? ray: i started in 1969 because the beatles did it. [laughter] ray: i learned about it. it is a very important thing. i would say it is the greatest gift i think i can give anyone. it gives a combination of

an equanimity, a calmness. no the matter what is coming at you, you can approach it with that sort of calmness. it gives someone creativity because it is a process of going into your subconscious mind and relaxing, so it has been very helpful. david: now, you are one of the wealthiest people in the united states. one of the most successful investors. you have a fair amount of wealth to give away. you were one of the original signers of the giving pledge. what are the philanthropic interests that are most appealing to you? ray: my interests are, i guess i would say two big interests. i'm really thrilled about ocean exploration. this is something that is big deal to me. we donate to many different things. an important thing for my wife and for me has to do with the education of what are called disengaged and disconnected students, those who would not get through high school.

david: when you have the kind of platform you have now by virtue as -- virtue of your success as an investor, do you find it easier to meet with heads of state, finance ministers, heads of countries and do you find that to be appealing to do that and give them your views on these subjects? ray: we find it mutually appealing, yes. i think from my point of view, i'm very interested in the subject matter, but i'm also interested in being able to have an impact and being able to help. sometimes in policies, it has had a big effect in ecb policy or other policies. david: if someone came and said i would like you to be the chairman of the fed or the secretary of the treasury, would you ever go into government or , is that not for you? ray: that is not for me. david: the greatest pleasure of your life is your family, your financial success, giving away money? what do you most enjoy? ray: the financial success is an inadvertent thing that came largely because i liked to play

a game that if you played the game well, you get the money. the financial success has never been -- yes, taking care of my family and living adequately has been a nice thing to have. but, no. for me, the most important thing in terms of saving has really been relationships. meaningful work and meaningful relationships. these are the most important things. i'm on a mission to have a passion to work with people i like, to understand the subject well. i love my game because it forces me to understand macroeconomics of the world and to bet on it in relationship to other people. it tests whether i have that knowledge. i love that and i am glad that i've taken it to a certain point. and then, there are the things i savor even more than that above all else, at 70 years old, is the relationships, the quality of the relationships, that sense of community. that is what i treasure more than anything. david: thank you very much for

an interesting conversation. and it is a terrific read. i highly recommend it. thanks for writing it. ray: thank you for having me. [applause] ♪

♪ david: you went to harvard business school. steve: yes. david: did you enjoy harvard business school? steve: no. david: did you want to drop out? steve: yes. david: you went out to raise a fund, was that easy to do? steve: i sort of looked at that and went omg, we are going to fail. david: in 2007, you decide maybe i should take the firm public. steve: i took it public for a lot of different reasons. i had a sixth sense that something terrible was going to happen in the environment. >> would you fix your tie, please? david: well, people would not recognize me if my tie was fixed. but, ok. just leave it this way. alright. ♪

david: i don't consider myself a journalist. nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? before we get into blackstone, i would like to talk about a couple other things. you grew up in a middle-class environment in philadelphia, and now you are one of the wealthiest men in the world and one of the biggest philanthropists in the world. you are an advisor to presidents, the last three presidents have asked your advice on various things and you , are very close to president trump. when you were growing up in philadelphia, did you ever in your wildest dreams imagine this could possibly happen? steve: no. dave: do you pinch yourself every day when you think about where you have achieved your , status in life?

steve: frankly, every day is an adventure, and every day is a privilege. david: you have come to know president trump quite well in recent years, since he has been president. did you know him before he was president or know him very well , then? steve: i knew him before he was president. david: so when he told you i am thinking of running for president, did you tell him he had a good chance or that is a , tough thing to do? steve: i told him it was an -- it was a veritable impossibility. david: when he got elected, did he say steve, you are wrong, why don't you serve in the administration? steve: i can't tell you exactly what he said, but it was very funny. i did not want to be a part of the government. i have a wonderful life as it is. i did not want to disrupt that. david: you have been an advisor off and on from the beginning of the administration, to the president. he has asked you to do a number of assignments. i have never seen him tweet anything unfavorable about you. you have managed to stay on his good side. what is the secret to staying on

his good side? steve: you tell people the truth. i don't work for the administration. i am an independent person. i give my views. i find that he likes to listen. that is, i think, a good thing. david: let us suppose he is reelected and said, i would like you to be secretary of state, secretary of treasury, would you ever consider that? steve: when i was younger, i would do that. i am at a point in my life where that is not where i want to spend my time. david: you have spent some time recently writing a new book. steve schwarzman, what it takes, lessons in the pursuit of excellence. i read the book, and it is quite fascinating. i know you quite well, but i did not know a lot about your background, which i found quite interesting. why don't we start with your background and take you through the creation of blackstone. so you grew up in the philadelphia suburbs is that , right? steve: that's right. david: you are from a middle-class family. your father had a curtain store. steve: yeah, a curtain store. it would have been a bed, bath &

beyond type of store. david: it was started by his father. steve: that's right. david: so he came into the business. did they say, you are the oldest of the three sons, now, it is time for you to come into the business? steve: that was sort of expected. i found that standing up and waiting on people buying linen handkerchiefs was perhaps not my highest and best use. david: but you told your father , according to the book, that maybe he should expand and do more than one store. maybe become bed, bath & beyond. what did he say to that advice? steve: he said steve, that is interesting. i don't feel like doing that. i said, dad, why don't you want to do it? we have lots of people in the store, and i haven't seen another store like this and i think we could be national. david: he just said not for him? steve: he just said, i'm not interested. i said, why don't we open stores all over pennsylvania? because i was from philadelphia.

he said i don't want to do that. , so then i had a third option, which is why don't we open , stores all over philadelphia? he said, i don't want to do that either. i said, dad, why don't you want to do this? he said, i am happy the way i am. i have a house. i have two cars. i have enough money to send you and your brothers to college and that is really all i want. i shook my head, and i went, i don't understand that. i just saw the opportunity to open stores all over the country. he just did not want to do it. what was surprising to me is he was very, very intelligent. david: you say in your book that he was far more intelligent than you -- that might be an exaggeration -- but he obviously was a smart person. steve: that was not an exaggeration. because i would talk to him when i was starting my career on things. no matter what i was working on,

he could always find the weakness in the argument or the deal. david: what about your mother? what did she do? steve: she was just aggressive. she was a housewife. it was the 1950's and 1960's. i have twin brothers. the three of us were a handful. that was the paradigm at that time. david: as i said, i have known you for quite a while but until i read the book i did not realize you were a track star. were there a lot of white jewish boys on the track team? or were you a minority in that regard? steve: i was a minority of one. david: you say in the book that you did something that was quite audacious. you applied to harvard, yale, and i think princeton. harvard did not accept you. so you then got out some coins and called the director of admissions at harvard and said you made a mistake. , what was that like? steve: that was frightening. we did not have cell phones then.

so i got some quarters, and i found the phone number for the admissions office in some document. the payphone was outside the gym. and i stood there and put those quarters in and you could hear the ringing when they dropped down. i asked for the dean of admissions and i was put right through. he picks up the phone and i said , hi, i am steve schwarzman from avington high school in pennsylvania. i am on the waiting list. and i would really like to go to harvard. why don't you take me off the waiting list? he said, how in the world did you get through to me? he said you are not allowed to , talk to me. i don't talk to applicants. and i said, but we are talking. he said yes. ,he said you sound like a very , nice young man, but unfortunately, we are not going

to be taking anyone from the waiting list this year. our yield was higher than we thought. where else were you accepted? i said, i was accepted at yale. he said you will have a very , good time at yale, and you will enjoy it. i said i am sure that i would but that was not my objective for the phone call. he said, i understand that. i am just so sorry. david: did you ever see him? or hear from him again? steve: ironically, it is really a great story. the ceo of mckinsey was in my office 25 years later. he was on the harvard corporation. i told him the story. he asked what year. that dean of admissions was a close friend of his. he said, do you mind if i told him that i ran into you? i said, no, that is fine.

i got a letter two weeks later from that former dean of admissions. he said, i remember getting that phone call in 1964. he said, every time i see you in a newspaper, i realize that i blew it. i wish i made all the right decisions, but as i told you at the time, there were no beds at the inn. david: you interviewed with a number of firms and the one you decided to go with was lehman brothers. steve: yes. the people were fascinating. you had ex cia agents and people who had worked on oil rigs. ♪

david: you then went to harvard business school. steve: yes. david: did you enjoy harvard business school? steve: no. david: did you want to drop out? steve: yes. david: what kept you from dropping out? steve: i wrote a letter -- there was no internet -- i wrote a letter to the president of the firm which is where i worked a bit right after i graduated and before went into the army. i said, dick, it is cold up here. the classes are highly repetitive.

i would like to come back to work. if you don't want me i will do , something else. what do you think? he wrote me a six-page letter that said that is just the way i , felt in december of my first year. going to transfer to the economic school to get a phd. i did not drop out and neither should you. you should complete what you are doing. and i was so dumbfounded that he was so kind and thoughtful and had similar feelings and basically said, don't you do that. it's the wrong decision. that i just listened to him and stayed. david: use stayed. -- you stayed. you must've done well because you had lots of offers afterwards. steve: yes. david: you interviewed with a number of firms. the one you decided to go with was lehman brothers. steve: yes. david: why did you go with lehman brothers? steve: it was the most interesting cast of characters. that was before mbas went to

wall street. they just hired at random. this was the first class of mbas that lehman was going to hire. and the people were fascinating. you had ex-cia agents. you had people who had worked on oil rigs, had all kinds of unusual people working at the firm. i thought, for whatever reason that it was the right , personality fit for me. david: you became a partner at an early age, i think 31. steve: 31. david: so at 31 years old you are a partner at lehman brothers, and life is going well. then there was a problem, lehman brothers was sold. is that right? steve: that is right. i sold it to american express. the problem was that in the trading side of the firm, there was a position taken that really went wrong. david: you decided to join someone who had previously been the president of lehman brothers. he was eased out. that was pete peterson. previously also the secretary of commerce in the nixon

administration. you and he decided to start a new firm in 1985. is that right? steve: that is right. david: the firm's name was? blackstone. 1985, blackstone starts. two people. you and pete peterson. where did you get the money for the firm? steve: it did not require much. it was an advisory business. you talk and people give you money. david: you each put in $200,000. steve: the strategic plan for the business which we announced in a letter to everyone we knew, was first the m&a advisory business. because it required no capital. the second was going into the private equity business. david: you had never been a private equity investor before. pete said, since we haven't, we will go out and raise a small fund, a $50 million fund. you said, let's raise $1 billion. that is fairly audacious. where were you going to get $1 billion? steve: we went to our top 18 prospects.

everyone said no except metropolitan life and new york life. one said i will give you $50 million and one said $25 million. but, i do not be a big part of things. you have to raise at least $500 million or our commitment is worthless. we had already gone to everybody we knew who were the best targets. i looked at that, and i went, "omg, we are going to fail." and we just met one more company. it was called prudential life insurance company, which was the number one financier in those days. we were over at newark on a friday having lunch with the chief investment officer. he was having tuna on white bread cut across. i am busy pitching this private equity fund, and you can share part of our advisory profits as a merchant bank.

he keeps chewing, and his adam's apple is going up and down. i keep doing my thing. he finishes the first half of the sandwich. he gets through the other half halfway and he looks over at me and he says, i think that is a good idea. put me down for 100. i can still remember that moment. did he actually say he is going to give us $100 million? the number one investor in the world. if he gives us money, other people will follow him. i realized somehow, in newark, on some dreary friday, he gave us the money. i just did not want him to choke on the rest of the sandwich. david: make sure he lived to give you the money. steve: exactly. david: you did pretty well and your advisory business was booming. you decided to get into other businesses? steve: the first one ended up as

blackrock with larry fink. larry brought people over and they were called blackstone financial. david: blackstone financial. so you actually own the firm or part of the firm? steve: 50-50. david: 50-50. ok. so you own 50-50. now blackstone financial is now blackrock, which is managing $6 trillion or something like that. steve: $6.5 trillion. david: $6.5 trillion, ok. how did they escape from blackstone? steve: they did not really escape. we set up an economic arrangement that ended up being inappropriate for a business that was growing as rapidly and needed to add as many people. i made a mistake. i took the original agreement and i did not want to change it. it was advantageous for my side. the blackrock people, blackstone financial people were frustrated with that.

that was the judgment of an amateur me. , david: the real estate market crumbled right after the deal was done. how did you survive with that deal? steve: just buying $39 billion of real estate i thought was dangerous. ♪

david: in 2007, you decide maybe if you take the firm public -- it was a private company. why did you take the firm

public? steve: i took it public for a lot of different reasons. i had a sixth sense that something terrible was going to happen in the environment. money was so available. money was cheap. everybody was doing things. prices were crazy. i just had a sense this was going to come to a bad ending. and we should have a lot of capital to make sure that we were bombproof. that was one reason. a second reason is i thought it would be a great branding event for the firm on a global basis. everybody would know who we were and that would make it easier to raise money as well as to have people sell us companies and other assets. david: ultimately, what happened was, the chinese sovereign wealth fund was in the process of being created and they heard about you going public. through and intermarry -- intermediary, somebody working for you they said, can we buy a , big stake in the ipo and you ultimately decided to let them do that. steve: the ipo was going to be $4 billion. they offered to invest $3 billion. we did not even ask them. i had not been to china since

1990. this was shocking because china had not invested in another public company since it was founded in 1949. this was a complete paradigm shift for china. and we were chosen by them. it was pretty heady stuff. david: it worked out. ultimately, you did the ipo and the chinese invested. after you did the ipo, let me mention two deals that you did. one was the biggest real estate deal in history. eop, real estate company built by sam zell. you did a $40 billion buyout of josh buyout, in effect? buyout, in effect? steve: $39 billion, actually. david: $39 billion. it was a bidding war, you won the bidding war. but the real estate market crumbled right after the deal was done.

how did you survive with that deal? steve: we worried. the same reason we were going public, i sensed that we were in market top for real estate. so, just buying $39 billion of real estate, i thought was dangerous because you had to pay a pretty good price to get it. it was competitive. as soon as we decided we were going to actually raise our price enough to be the winner, there were two or three of us sitting around saying this deal is potentially dangerous. we have to reduce the leverage, and we have to take advantage of the crazy prices people are paying. we decided to sell half of what we bought. -- half of what we bought the same day we bought it. when i told people that, they looked at me and said, same day? i said, i don't want to take any risk.

that the world is going to change, and we are going to be stuck with this. we basically had every conference room at the firm back to buying and then we broke it up into all of these pieces. dave: if you had not done that, you would have lost all of your money? steve: i think that is probably the case. david: the real estate market cratered the next day. steve: most of the people that bought from us basically got into enormous financial trouble or went insolvent. and so after we did that and closed, everybody went home. they had been sleepless. three days later, they came back and we said, let's sell half of what we have left now and be even more conservative. everybody went back to work, and we ended up with one quarter of what we bought, very conservatively priced so that we could survive any kind of

nuclear winter. we ended up making three times our money buying this giant thing at the top. there has never been more than $10 billion bought or sold by a group. we did $70 billion. david: you also bought another company before the recession really hit. that was called hilton. that was a leveraged buyout. some people might say at the top of the market. that deal went down in terms of the debt and maybe the equity, but you ultimately did things that made it the most profitable buyout in the history of buyouts. what did you do? steve: that was pretty easy actually. it looked hard. hilton had not integrated. they were running four different headquarters. it was fairly easy. it was a huge modernization and cost take-out. david: ultimately you sold it at about a $14 billion profit. steve: yes, if we had held it

longer, it would have been over $20 billion. it was a good day. that is $14 billion. david: in recent years, you have become one of the nation's biggest philanthropists. you gave $350 million to m.i.t. for a computing center relating to artificial intelligence. you never went to m.i.t. you had no connection there. how did that come about? steve: that was really fascinating. i am not a technologist. i had met the president of m.i.t. and we started talking. we were concerned that the u.s. was just not investing enough in these technologies. i said, do you have any interesting ideas? he came back with, let's double the computer science faculty. let's establish a new department, in effect, a new school -- called it a college -- that is going to be the m.i.t.

schwarzman college of computing. let's connect the ai of all the other departments at m.i.t., so m.i.t. will become the first ai enabled university in the world. i said, that is a vision i could buy in on. david: final question i would like to ask you. it deals with this. if somebody is watching or reading your book and they want to be a leader, a leader in business, philanthropy or government, what do you think is the key quality to be a leader? what have you seen as a key quality that enabled you to be a leader? steve: i think to be a leader, you have to be a really good listener. you have to understand what is going on around you. you have to be measured and you have to realize that everything you do is amplified in the minds of the people who are listening to you. so care, nuance, kindness. a culture is what a

leader does. david: steve, thank you for this time. i appreciate it. steve: thanks, david. ♪

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david: why is it that wall street doesn't value airlines as much as you think they should? ed: our largest investor is warren buffett. he said, you guys are the chicago cubs of the business world. david: you not only had a bad decade, you had a bad century. initially, you went to frito-lay? is that right? ed: i have always considered to this day my trading at pepsico, , the seven years and there, as postgraduate work. david: what percentage of people actually lose their luggage? ed: we never lose. we call it mishandled. david: mishandled. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪

david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? ♪ david: people say running an airline is not an easy thing to do. you have weather to deal with, energy prices to deal with, lots of employees but you grew up in , a family of nine children, so what is easier? [laughter] david: growing up in a family of nine children, or running an airline? ed: running an airline, certainly. [laughter] ed: our family was great. i am the oldest of nine. i was sharing with david earlier that when i was five years old, we already had six kids in the house, nine kids sharing three bedrooms. 1.5 baths. my dad was a dentist, he had his

practice inside our house. and my mom worked for him. david: wasn't that busy a practice at times, i guess -- [laughter] ed: he must have had some gaps in his schedule. the interesting thing about it, growing up, i didn't afford an airplane until i was 25. david: really? ed: we could not afford it. too many of us, and it just wasn't who we were. i always recall one of my visions from my childhood, we went on a family trip a year. my dad would get us all in the station wagon. apologies to our safety friends and regulators in the audience, but no seat belts, no car seats. there were nine of us, my mom, my dad, my grandmother in the station wagon, all piled in. we were allowed to put whatever we could fit in our pillowcase. we brought it for two weeks. and that was our family trip. i must have figured somewhere in my unconscious that there has to be a better way to travel.

[laughter] ed: i am still pursuing that mission to this day. david: your mother must be proud that her son, her oldest son is the ceo of delta airlines, the largest u.s. air carrier. ed: the largest in the world. david: does she ever call you with ideas or complaints? ed: all the time. she gives me her ideas. i always ask her when she is traveling not to tell anybody who she is. that never lasts. people have told me she applauds at the end of the safety announcement that i do at the front end of the plane so it is kind of cute. [laughter] david: you travel on delta yourself, so you fly coach? ed: often. i find it more interesting back there. david: what about the legroom? ed: the legroom is fine. [laughter] ed: what you find when you're flying coach is that it's more entertaining, so you don't worry about your legroom. you see what else is going on.

that is where the real people are. that is where the party is. david: let's talk about running an airline generally. to be honest, there are a lot of people that say, if you want to run an airline or a good business, go to a business school or work your way up to be a management expert, and so forth, but you were trained as an accountant, which is a great profession, but some people would say that the best managers are not cpas. ed: one of the things about accountants that i think they get a bad rap is that they all are all about the numbers, very introverted, very into their analysis. what you learn as an accountant is the numbers are actually the language and the vocabulary of business. david: for some reason, wall street does not value airline companies as much as you say they should. why is it that wall street does not value airlines as much as you think they should? ed: well, we are moving in that direction. we are still not there. our largest investor is warren buffett. he now owns 11% of delta. and warren, after years of having sworn off the industry, had a saying which i love -- he

said you guys are the chicago , cubs of the business world. you not only had a bad decade, you had a bad century. [laughter] ed: so we got our bad century out of the way. and we are now in a place where we have really fixed the business. david: you changed his mind, because he used to say, "if a capitalist had been at kitty hawk seeing the wright brothers take off, he would've shot them down," because there were no profits made in the airline industry for 100 years when you compare the profits versus the losses. but it has changed a bit now? ed: it has changed. he wouldn't say that today. this year will be the fifth year in a row our profits have been in excess of $5 billion. david: and your revenues are -- what percentage in the u.s., what percentage outside? ed: two thirds u.s., one third international. david: international, is that more profitable than u.s. generally because of the longer flights? ed: no, no. generally it is just the opposite. international is more difficult to get to. the planes are bigger, the fuel costs more, the service levels are substantially higher, and

ticket prices, because there is a lot of competition internationally, are more suppressed. we actually make about 80% of our profits in the u.s. closer to home. david: you make a lot of profits by owning your own refinery. why do you need your own refinery? you don't trust other people to get gasoline to you? ed: we do. and we certainly use a lot of refineries. but about six or seven years ago, as refineries up and down the east coast were being closed when oil prices and crude prices were well north of $100, we saw that our cost of jet fuel was escalating. we were in fact paying another $25 a barrel on top of the crude prices to get jet fuel. because we are the most price-insensitive consumers of that product. we don't decide each day whether we will fuel up planes or not. we tell them six months out that we are coming, so any of the costs refiners have were being pushed onto the airlines. so we needed to break that curve and to get more supply in the market. we have got a great refinery outside of philadelphia that we acquired. we opened it -- it was closed for about a year -- we put a whole community back to work.

and it was a great story. to this day, it has been very profitable. we have earned our returns on that many fold. david: in the 1970's, there was a big push for airline deregulation. prices had been set by the icc. ed: that's right. david: we then probably had 10 or 12 major domestic airlines. now we have more or less three or four. has deregulation really worked for the american people or not? ed: it has absolutely worked. one of the changes that has happened in the industry that caused problems for years, was seeing just as a commodity. price was almost the sole determinant of what airline you took. we have changed that paradigm where we are now competing on quality, service and people. david: suppose i say i want a cheap price but i want some good food. is food a big deal to people who fly these days? ed: food is important. we have brought a lot of food back. the industry 15 years ago wound up getting rid of food, getting

rid of basically anything and wound up charging fees galore. we have come full circle. we have reintroduced main cabin food services on a significant number of our aircraft. and in international, really improving the overall quality of the experience. david: suppose i say i want a cheap fare -- i don't care about food. can you bring your own food on? ed: you can bring your own food on. david: bring my own food on, and i just want to make sure my luggage is not lost. what percentage of people actually lose their luggage? ed: we never lose. we call them mishandled. david: mishandled. [laughter] [applause] david: what percentage? ed: we always know where it is, it just takes us a little longer to get to sometimes. [laughter] david: when you are an airline executive, you basically have two companies you can buy planes from. more or less. ed: two, not more or less. david: more or less -- i was trying to be polite, but more or less. you have boeing and you have airbus.

you fly a lot of boeings. in fact, your longest flight is from atlanta to johannesburg, 17 hours? ed: that's right. david: and that's a boeing 777? ed: that's right. david: but you chose not to buy the 737 max, for reasons unrelated to what later became a problem. is that an advantage to you now, because you have the airbus 321 and that has given you more capacity than some of your competitors, and do you take credit for that decision or was that luck? ed: i put that solely in the rather be lucky than smart category. we are big fans of boeing, and we're hoping to see the max fly quickly into the skies, but safety was never part of the consideration set in making that decision. david: while you are in bankruptcy, u.s. air said, we want to take you over. was that considered a friendly offer at the time? ed: everybody assumed that was going to be a foregone conclusion. the people of the company stood and they said, that is not going to happen. ♪

♪ david: you grew up in poughkeepsie? ed: poughkeepsie, new york. david: you went to college at? ed: saint bonaventure university. david: you got your accounting degree? so you are minding your business, you are an accountant at price waterhouse. so what were you doing at frito-lay? ed: i was fortunate at price waterhouse, i moved quickly through the ranks there, made

partner, probably made partner too early in age when i was already 32, 33 years old. at that point, in that profession, that was kind of the pinnacle of success. i said, well, if i am in a company where the pinnacle of success is 32, i need to go someplace to learn more and continue to develop. i got a call from a friend that said pepsi was hiring, and introduced me to a person in frito-lay down in texas. i moved down to dallas at frito-lay. i don't have a graduate degree. i just went to an undergrad at saint bonaventure. i always considered to this day my training my seven years at , pepsico as my postgraduate work because it is a fascinating company. david: you are at frito-lay and then a headhunter called you and said, how about delta airlines? ed: yeah. yeah. i was an active business traveler. i was traveling probably 80% of my time, a lot internationally. so i thought i already knew how the airlines worked. i knew the things that needed to be fixed about the airlines to make it better.

of course, i get there and you actually take a peek behind the curtains and see how complex it is. well, i never understood what actually went into it, but it was an industry that was fascinating to me because i was a big consumer of it. david: so you became a senior vice president for finance eventually then you became the , chief financial officer. ed: chief financial officer. david: then you became the president, then you became the ceo in may of 2016, right? ed: that's correct. david: you had some problems before you became the ceo and ultimately, delta filed for bankruptcy in 2005. why did you have to file for bankruptcy? ed: well, it was -- the aftermath, really, of a series of events which 9/11 triggered. we lost our international business almost overnight. the competition in the u.s. was so competitive, with so many airlines trying to take each other's share, pushing prices lower and lower. almost all the airlines wound up filing. david: while you are in bankruptcy, usair said they want to take you over. was that considered a friendly offer at the time.

ed: doug parker will never live that down. no, we had a pretty hostile takeover battle. interesting story, we were bankrupt, we weren't worth anything at the time. usair came in and offered $10 billion to buy delta for a company that is not worth anything. so everyone assumed, well, that's going to be a foregone conclusion. the people of the company stood, and they said, it is not going to happen. we have a better idea, we have a better business plan. we are able to convince the creditors through the restructuring process to stay with delta, and as a result of that you see what we have been able to do. david: as part of that, what happened is, you said to the employees and colleagues we will give you 10% of the profits, is that more or less right? ed: when we went through the restructuring, people took a lot of pay cuts. benefit losses, a lot of change. we made a commitment to the employees then at that point that once we became profitable, 15% of the profits would go back to the people, which we honor to this day. we still do. david: so how much did that produce, let's say, last year

for employees? ed: last year, we paid $1.3 billion to our people in profit sharing. david: does that mean your stock price would be higher if you did not pay it to them, or you have happier employees? ed: i think our stock price would be lower if we didn't pay it. david: is internet available on all your planes? ed: it is available on almost all of our planes. our smallest regional jets do not have them but wi-fi is on all of them. david: you charge for it? ed: we do charge for it. not for a good reason. i am a firm believer that we need to make wi-fi free across all of our services, and we are working towards that. [applause] david: you are the ceo. so you presumably have some influence. [laughter] ed: well, i do have influence. they have heard me a hundred times on this, including gogo, which is our service provider. i always tease them. i call them nogo. they have made a lot of progress, now slowgo, and they will eventually get to gogo. [laughter] ed: one of the reasons why -- you don't pay for internet practically anywhere else is that planes do not have the technical capacity and

capability that if we made it for free, the system would crash. so once it gets about above a 10% take rate on board, the performance starts to erode. and if you turned it on for free, which we have tested many times, it is still not at the level it needs to be. so we are investing heavily in the technical capacity in terms of the satellite spectrum. david: you mean that we can fly to the moon and back, and we can't have everybody using the internet on the plane at the same time? ed: that's exactly -- you sound like me, david. one of the things i tell people is we are closer to the satellite in the sky, why shouldn't it move faster? but as they remind me, we are not traveling 500 miles per hour as we are sitting at home with our wi-fi broadband. david: now, there was a proposal a while ago for airlines to let people talk on their cell phones on airplanes, but that was voted down i think by the fcc. a lot of people that like it. ed: that was voted down by me. i will never allow that on delta. whether they allow it or not, we are not allowing it. [applause] david: ok. all right.

now, we haven't built a new airport in this country of any size since, i think 22 or 23 years in denver. now, laguardia is being redone and so forth. why is the airline industry -- you are responsible for helping to build the airports or not? ed: we are actually building new airports ourselves. we got tired of waiting for the government partnerships out there that are trying to crack that code. so we have massively improved the flight experience, the onboard experience. the next thing is the airports themselves. the airports in our country were built for the 1960's. david: but you are building airports where? ed: we are building airports everywhere. we are building the new laguardia airport, delta on its own balance sheet, building that. it is going to take a few years. airport construction is the most difficult construction that is done because you have to build it, live, and operate it at the same time. we are building a new airport in lax. we are building a new airport in salt lake city.

we are building a new airport in seattle, a new international facility. we modernized atlanta. david: speaking of government support, you have been an advocate for not allowing airlines that have government subsidies to compete against you. is that a problem? ed: it is a big problem. and i have to give the trump administration great credit for recognizing that and reaching agreements with the uae and qatar last year to draw attention to it and stop it, or at least freezing where it's at. david: are they doing anything about it? what is going to happen? ed: i think they absolutely are being responsive to the administration. today in the persian gulf, there are 30 airplanes a day that fly between the persian gulf and the united states, not one of those by a u.s. airline. they are all middle eastern airlines. if there was a fair playing field, which is what the open sky agreements require, there is no question that the u.s. airlines would be operating, but we can't, because those fares are subsidized, and the costs are paid for by the government. david: of the air traffic control systems, some people say that it was invented in the

1950's and 1960's and they have not modernized much. is it really out of date? ed: that's true. absolutely. david: what are you doing about that? what can you do? ed: it is absolutely safe, but unfortunately, it is radar based. many cars have better gps than we do in terms of what we are able to access in our airplanes. the opportunities to improve the air traffic control system are not only speed for the customers, but it is the efficiency, sustainability of the environment, the opportunity to make a difference. government dysfunction has been one of the reasons why the air traffic control system --because we've got the faa on a five-year leash. you can't change out the air traffic control systems with our current funding models. that is why we have been advocating for different models. actually go after long-term technology project and do well. most countries around the world have better air traffic control systems than the u.s. does. ♪ david: you have a pattern of meeting with employees fairly regularly called the velvet program. ed: so when we went through our hard times, we did not have a lot of cash. we decided the only way we would

ever be successful again -- because delta has a proud history -- was that we were going to have to reconnect with our people. ♪

♪ david: so today, what do you do for outside activities there? this is a full-time job, obviously, but do you have time for anything else? ed: i love to golf. i don't get much time and i am not very good at it, but i do enjoy that. we do serious work. we do hard work. and i think it's important for myself to remind myself while i might do serious things, not to take myself too seriously. and it is kind of a reminder to stay light on my feet, to remember the importance of human interaction.

[laughter] ed: i did also run the new york marathon last year. that actually helped as well. david: two hours and -- ed: that was the first few miles. [laughter] david: but you finished. ed: i finished. i'm here. david: did you have a thing, delta ceo logo on you? ed: i wore my delta colors loud and proud. raised $2 million for cancer research for children. [applause] ed: thank you. i don't think i would be doing another one of those. i am still feeling the effects. david: i haven't done a marathon -- i would fly a marathon. i would fly 26 miles. [laughter] david: you have a pattern of meeting with employees fairly regularly. you call it the velvet program. can you explain what that is? ed: yeah. so, when we went through our hard times back in the bankruptcy era, we did not have a lot of cash. we didn't have anything. people were actually taking pay cuts. we decided the only way we would ever be successful again -- delta has a proud history -- was that we would have to reconnect with our people and get

something to catch their attention. so our people were downtrodden. years of pay cuts and job losses, and all the difficult things we remember from almost 20 years ago. so in downtown atlanta, there was an abandoned macy's building, and we decided to take out a couple floors in this abandoned building. i am not sure we ever even paid for it. i think we just squatted. i don't even know if they knew we were in there. we would bring our employees, we brought all our employees, 600 to 700 at a time for a day, a day and half, an opportunity to talk about the airline. we had no power points. we had no slides. we deliberately kept it from being as uncorporate as possible. we had couches, chairs, curtains, we had low lights as people were walking in. people would come into the room and see some of our people dancing around and trying to lighten up -- no wonder we were bankrupt, they probably thought. we have a crisis on our hands and these people are dancing in this abandoned macy's building. what it did is it got their

attention to focus on what was important. our people wanted to know it wasn't their fault that we went through the hard times. i think so often, when companies go through difficult times, employees are made to feel they are the reason. that they are too expensive, not productive enough. that they are a costs when , really they are the very best asset you have. and we do these meetings to this day. we can afford to actually pay for our own space and do hotel lobbies and other venues, but we have a dozen of them a year all around the u.s. where we bring people from different disciplines together and we talk about the future. and i still lead every one of those, as i did 15 years ago, because that engagement is so critical in what we do. david: so how do you grow the value of your airline? you just make it more profitable by flying more miles? can you make more acquisitions? anything left to buy in this business? ed: the airlines are thought to be a mature industry. after all, there is not new places in the u.s. left to fly

to. we are building bigger airports, bigger airplanes, but not new destinations. so global expansion is certainly something that is very important to us. we are doing that through our partnerships and delta flying many parts of the world. first of all, i think people are more aware of the world than ever before. people want to travel. they want to experience. and again, interesting, because we are living in probably as divisive a time as we can recall for many years. you would think this would hurt airline travel, but technology and social media and instagram, and pictures, people want to go and explore and see for themselves something they may have read about. now they feel that is affordable. opportunities not only for the millennials and young generation that want to experience, but also baby boomers and others. david: i would focus on the baby boomers' bucket list because they are going to have to do those sooner than the millennials' bucket list, right? [laughter] ed: we are investing in both. david: suppose the president of united states said, i watched

this interview, you are an impressive person. you've done a great job, why don't you come in government and help us in some way? what would you say? ed: i am happy to advise, but i am not sure i am -- i got my work cut out for me. david: suppose i am a college graduate or a young business school graduate, why should i want to work in an airline or delta? what is the advantage? ed: free travel. [laughter] ed: everybody likes free travel for not only themselves but their partner. if you love people, it is a great business because you are out in the public eye every single day. we do not have desk jobs. you know, our desk jobs in the sky. every day, your work environment is different. and you've got different people coming through and you have to adapt. you think about why people travel. people travel for all reasons. for happy reasons, sad reasons, for business, for pleasure, to go explore, to meet their grandchild for the first time, and there is all this emotion in this tube of roughly 200 people all sitting within 40 yards of

one another, so it is a social experience as well. and people that want to actually make the world better get into travel. ♪ what are you doing back there, junior?

since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy...

the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. ♪ emily: while the me too movement has rocked the worlds of entertainment, media and politics, it got a head start in the tech industry. in early 2017, a young engineer named susan fowler published a scathing memo about sexual harassment at uber that kicked off a deluge reports about men behaving badly across silicon valley. the revelations lit a fire in the hearts of women in te