Ep. 59 Ken Griffin on Building Citadel, AI & Independent Thinking

Hello and welcome. My name is Joe Katz, Senior Director at S&P Global Ratings and the host and the creator of the Leaders Podcast. So today on this episode, we have Ken Griffin, founder and CEO of Citadel, and Martina Chung, CEO and President of S&P Global. Quick reminder that the views of the external guests are their views alone, and they do not represent the views of S&P Global. Ken and Martina, thank you so much for joining me today.

It is great to be here today.

Ken, I'm going to start with you. Today, Citadel is one of the most powerful forces in global finance. But taking you back to 1990, year one, what was the most brutally hard part of building Citadel?

So in 1990, the toughest challenge was hiring talent. I mean, I was 21 years old, attracting people with experience in trading and investing. That was going to be a pretty tough lift for somebody who was 21. So the focus back in our early years was really about trying to find, from college campuses, people who were extraordinarily commercial and ambitious and bright and who really were excited about a career in finance. So that was the biggest challenge in the early days was really creating the nucleus of talent around me that became the story that was written as Citadel.

Martina, would you be able to kick us off just by talking about your experience growing up? Did you ever think you'd become a CEO? And also, was finance a big part of your childhood generally?

My parents are, they were entrepreneurs. We had a small family business. All the kids worked in the business. And I think growing up, it was very important in terms of lessons in quality and service and focusing on the customer, and really trying to do the right thing by the customer, and my parents held those views very strongly, and I think I have managed to retain all that, and it helps me to be a better leader, I think, today.

Ken, what do you think is the most misunderstood force shaping global markets, say, over the next decade?

The most misunderstood force shaping global markets. I think the... the single greatest question that markets are grappling with today is, what is going to be the impact of generative AI and machine learning? Will this be the salvation for the need for productivity growth in the West, or will this fall short? But the biggest question right now, hands down, the impact of AI on the economy writ large over the next decade.

So Martina, as a CEO of a company who measures risks globally, what's one form of risk that financial systems maybe fail to measure that well?

An obvious one that I hear about all the time from clients in the financial ecosystem would be private markets. Lots of conversation right now around trying to sort of quote-unquote democratize and provide access to the wealth segment, to the retail segment. We get those kinds of things coming in in multiple parts of S&P Global, but one example of the types of conversations that we're having are, can we somehow create an index or an ETF that sort of is a blend of public-private? And the risks that the customers want to understand as we engage in those conversations are interesting. It's like liquidity risk in the form of asset liquidity, but also in the form of redemption liquidity. And so it's really interesting.

Certainly a little bit new. I think we're going to go through some iterations in the market before we have something that really kind of unlocks, you know, and kind of scales very quickly. And then the other area that we're having a lot of conversations about, and it's timely in the sense that the new administration in the U.S. has a deep interest in is around digital currencies. So a couple of years ago we had, I know you're familiar with this, we launched an assessment of stablecoins out of our credit ratings team, and it looks at some nontraditional risk areas to the point that you made. So we look at the governance of stablecoins, we look at the technology integrity, and then we look at other things like liquidity risk, credit risk around them as well.

So those are kind of some of the areas where we're seeing new risks pop up. I wouldn't characterize it as a failure. I would say more it's kind of an opportunity to say, here's how we can get some transparency around the risk.

Ken, we've seen kind of incredible volatility in markets recently. Do you think the worst is over? And also, what's the longer term path forward from where we are right now?

So obviously, this year has been characterized by, I would say, far more volatility than most people expected. And as the president tries to re-architect the terms of trade around the world with America, to protect the interests of American businesses and American workers in doing so, that bold effort is really disrupting the ability for market participants to price assets. And what we'll find over the course of the next, hopefully next several weeks, if not months, is clarity on where we will land on the terms of trade.

Martina, how has S&P Global been impacted by this volatility in markets, uncertainty? What are the clients interested in right now and how are we helping them?

We are actually a really key resource for our customers. So making sure that we provide all the data that we can, we, within probably 12 to 24 hours of the tariffs being announced in early April, we stood up a new section of our website where we put a lot of our paid-for content in front of the paywall so that our customers could actually access a lot more stuff across all of the divisions from S&P Global, and we've had massive increases in the amount of users accessing that content to help them. But we've also had a huge amount of interest in and use of the products that we have today. So I think for four of our main platforms, we had something like a 23% increase year over year in Q1 usage compared to Q1 last year, which just tells you that they need the information to try to figure out how to make decisions and

That can be supply chain information. It can be pricing reference data for fixing. It can be all kinds of stuff that they're tackling. And I think most importantly, we obviously on a real-time basis are doing things like surveilling credit risk out of the credit rating agency. We're monitoring prices for commodities out of our commodity insights division. So just really, our customers really need us to continue doing what we're doing at the highest level of execution possible. That's really the best thing that we can do to support them. We pay particular attention to making sure that we can do that in times like this as well as in times when things are very benign.

Yes, I mean, it's clearly we're in a moment where people are very focused on re-underwriting their research decisions. Yeah. And having access to timely information is so critical at this moment. And there's much focus on the bond markets and the equity markets, but the commodity markets this year have also been awash in volatility due to both changes with OPEC's policies, changes domestically in terms of the administration's focus on encouraging domestic production, and then, of course, the backdrop of what will GDP be with a trade war unfolding.

Martina, just more broadly, when you think about leading through these kind of uncertain times, what's going to be maybe a differentiator between those who succeed and those who maybe fall short?

Yeah, I'm sure you have a very unique lens on this yourself, Ken. I think generally speaking, very many organizations developed a muscle around leading through a crisis through COVID. For better or worse, it's become something that people have, let's say, more adaptable around, but more flexible. At this moment in time, I think the important thing is it's not just the geopolitical, it's not just the macroeconomic things that are happening. It's also the point that you made, which is the rush and the speed at which the generative AI technology or even quantum is coming down the pike. You can't—you have to really increase the speed at which you move in response. I like to think that we can, on behalf of our customers, skate where the puck is going so we can get there before they get there and we can be ready to help them and inform their path there also.

That requires us as a team to really move as quickly as we can. I think that's the thing for us that will be the key differentiator.

And like you said, the puck is moving quickly. And when the puck moves quickly with matters like generative AI or quantum, I think people view that as part of the advancement of humanity and the advancement of markets. When the puck is getting pushed around by geopolitical changes, that's really disorienting because investment professionals don't view themselves as geopolitical analysts. They generally take policy as given and say, 'Given this policy, what's the right portfolio to own and how do I think about the unfolding impact of AI or quantum?' But this has been a difficult year for most investment professionals because we're seeing moves around the world, not just in America, where geopolitical decisions are having huge ramifications on asset prices.

Sticking on that kind of theme of AI, Ken, how does one preserve true independent thinking in an environment where data consensus and AI models increasingly just converge into a blob?

Well, you know, we spoke earlier about how people are accessing S&P's research now more than ever, and that's because humans are far more able to project future outcomes than AI technologies. Your AI technologies are rooted in the ability to, in some sense, navigate the tree of the history of humanity, right? They read the internet, they read books that have been published, they read work that has been completed, but they're not designed to project the future. And that's where invest professionals really do create value is their ability to forecast what's going to happen. You know, I always tell my colleagues, If you'd asked a generative AI model in 2004 or five, how would mobile impact e-commerce?

Or if you asked a machine learning model to explain the impact of mobile on e-commerce, you would have gotten nothing. And now here we are roughly 20 years later, and if you don't have a robust mobile strategy as a retailer, you're probably out of business. So I think it's a great example to just think about how underlying shifts in how we live our lives transcend the reach or understanding of your machine learning models.

Excellent. Martina, how crucial is high-quality data in financial markets in ensuring that AI doesn't just generate more speed, but also better outcomes?

Well, I think it's critical. I mean, it's the key to unlocking the value you have to get accuracy out of the models. And so being able to, we call it sort of like ground the models in the right context, in this case, financial context or commodity markets context, for example, that's really going to be the differentiator in actually getting to something that really delivers value for our users and even for our own employees. And so obviously we're a data, benchmarks, and analytics company. I think we have last count maybe between 950 and 1,000 sort of commercially available data sets. And then it's many more if you look at combinations thereof. So we wanted to think very proactively around this. About six months ago,

which coincided with the launch of the new leadership team when I came in as CEO. We put all of our data together in an enterprise data office with the idea being let's connect it, standardize how we think about it, standardize how we link it, and then let's go to town on applying technology to it. And so we've made some really interesting strides on that. I mean, we're just six months into the journey, but the team has essentially created LLM-ready APIs that are powered by Kensho, which is our internal AI engine. And that's allowing our data to actually get into new ecosystems, such as Microsoft Copilot, for example, where we have our commodity data now. They're also looking at the power of this sort of like financial context, or call it like the S&P Global context.

And so developing what we're calling grounding agents that are smaller, discrete models that are grounded in S&P Global data. It's not just the importance of having the static data available to train the models, but it is as much around how does the technology change the way

a user will actually interface and interact with your data, and so, it's, we're trying to solve for multiple things with it. But early days, but it's really, really exciting. Well, I think I cannot emphasize enough, the access to high-quality data is really important in moments like this. If, if you have a data vendor that doesn't dot the i's and cross the t's when it comes to data quality, and there's a mistake in moments like this, it's actually a huge setback in terms of confidence. And right here is when investment professionals want to feel confident about the bedrock or the foundation from which they're making decisions, because with so many moving parts, if you find out that part of your decision-making is being driven by erroneous information,

It's a huge setback at a moment in time where you're already anxious about what to do.

Yeah, absolutely. So, Ken, how do you think the next generation of market participants will define edge and what will be the most important skills for investors to cultivate?

Look, you know, we still view at the core what we do at Citadel is we engage in research. That's what we do. And when we, through our research, uncover a differentiated view from market consensus, that's where we monetize our research by investing in the markets. I think that many great investors for decades to come will view their core job as being a research job. Now, a handful of people are very gifted at also understanding how markets will incorporate changing information. They're in some sense less research-driven, but they're very agile in incorporating changes in information into changes in asset prices. That's a gift that we find to be very rare, but that will be a gift that will continue to bear fruit for decades to come.

So Ken, I want to take you back to 2013. So you were giving a speech to the Economic Club of Chicago, and one specific section stood out to me, and I'm going to play it now.

We bought the entire portfolio, solved its crisis, which brings me to a quote that describes the ethos of Citadel. Things may come to those who wait, but only those things left by those who hustle.

So things may come to those who wait, but only those things left by those who hustle. What does the quote mean to you, and how has it shaped the culture at Citadel?

So I think it's one of my favorite quotes. Do you happen to know who it's from? Lincoln. It's Abraham Lincoln, right? Would you ever really think that one of the greatest presidents of the United States would have said something with such a commercial bent? But he really was an extraordinary leader. Look, you know, often it's the investment professional that goes the extra mile who comes to the right conclusion. And that's grit, it's perseverance, it's determination, but it's making the effort. And I think that one of the things that really we emphasize amongst our team is: what do you need to do? What extra steps do you need to take to get to the right conclusion faster than those who we compete with?

And if you do hustle, you will find those great investment opportunities. And that's what we've been doing now for 35 years is going that extra step.

Fantastic. So, Martina, what's a moment in your journey when maybe no one was watching that still defines who you are today?

I'm realizing I had to hustle. I wouldn't have phrased it that way, but now that I think about it, that's what it was. So I had been in the U.S. for a year. I'm from Ireland, originally, and was around the dot-com bust. And I was a strategy consultant with Accenture, which I think was around the time that it was changing its name to, or Andersen Consulting, then Accenture. And the work was kind of drying up and people were getting laid off. And if I got laid off, I would have lost my visa and I didn't want to go back to Ireland. And so I basically trained myself in, you know, a whole bunch of areas of tech, not to necessarily to be an engineer in coding, but you know, more like tech strategy, architecture, process re-engineering, you name it.

I went deep on like late nights, early mornings, all in the interest of having skills so that if my name came up, I wasn't going to be on the bench. I could be staffed on a project. And I went through the entire crisis time period, like over 100% allocated in terms of, you know, in terms of being staffed and ended up, you know, picking up skills that I would never have really thought about had it not been for, you know, necessity, sheer necessity being the mother of invention.

But I do love the hustle, right? And like you said, when there was a consulting opportunity that came in, you hustled. You had the skills to do the job. And somebody else who hadn't worked as hard, who hadn't created those skills, well, they were in the back bench waiting.

I love those kind of stories.

Yeah, Ken, I basically always try and shoehorn in at least one question about soccer—because I love it—into the podcast. And I know that you're actually a fan and also an ex-player, a midfielder from what I've read. So a couple of questions. Are you looking forward to the World Cup next year? Who do you support? And crucially for me, have you ever heard of West Ham United?

So, first of all, I played soccer for about—and you would call it football—35 years. And, you know, one of the highlights of my life was all the time I've spent on the field. And I think that team sports are really critical to the development of our youth because it puts you in a position where you have to learn to play to your strengths, accept your weaknesses, and play to the strengths of your fellow teammates. And if I think of the story of Citadel and our success, it's been our ability for us as a leadership team to know each other's relative strengths and weaknesses and to put the best players on the field in the best position to win every day. So I think team sports are really critical in teaching our youth really important life skills.

Love playing for 35 years. I probably played beyond my skills. I've had several knee surgeries. So I'm off the field these days most of the time. A bit of a fan, let's be clear. World Cup, some of the games will be in Miami. The United States is thrilled to be a host country for the World Cup. Miami will be a great city for the World Cup. And I'll be wearing one jersey, one jersey only. That's Team USA.

Great. Martina, any football allegiances from your side?

Yeah, well, I grew up with three older brothers and a father, all of whom were obsessed with soccer, football. And we used to joke, actually, that my dad would be cursing at the TV in Chinese when there were soccer matches on, if it was a team he didn't like. In Chinese? Yeah, he's from Hong Kong. So he did not particularly like Man United. He liked shaking his fist at the TV. So his team was Arsenal and it was sort of like two of my older brothers and he used to go to matches and stuff like that. So I have a six-year-old who's playing soccer at the weekends and I got him some of the new Arsenal kit last weekend. Got him in his kit that Paul would love. So yeah, we're Arsenal fans overall, I would say.

I've got my daughters—I've got two daughters, Leonor and Christa, who are eight and three, and I got them, uh, West Ham tops, and they kind of wore them for a photo, and they've never been worn again. Just a polite kind of, 'Thanks, Dad,' and then that was it. Great. Uh, Ken, if you could recommend just one book for those guys who are starting out in their careers, what would it be? Uh, Jim Collins' Good to Great.

You know, it's a number of really important vignettes that one must understand in running a business. So, for example, one of the key parts of the book is around building your team. Going back to that very first question, getting the right people on the bus. Getting the wrong people off the bus. Once you've got the right people around you, you can take that bus anywhere. And he's got a number of very important, readily digestible vignettes that I think help people to understand the essence of what it takes to build a great business. Great. And then the second thing I would say is what book should you read? You should read books that speak to the domain knowledge of the job you have. Like you spoke about in your early days at Accenture, you self-taught yourself a number of skills to make yourself more valuable, more important.

I can't tell you, we hire endless numbers of really bright undergraduates. Some of them have this belief that when you graduate from college, you're done reading textbooks and nothing can be further from the truth. Like it's really important to always, always be immersing yourself in the literature, whether it's published literature on the academic networks you get access to through Google Scholar. I can't tell you how many S&P Global books I've read over the years and how to think about credit risk because we've invested in credit for 35 years. It's always just trying to stay current in the body of knowledge that represents the career you've chosen. And by the way, if it's not interesting to you, you pick the wrong career.

Like, it's that simple. So if you're early in your career and you find yourself not interested in reading the books about the domain you're in, you know what? Pick a new career. And in America in particular, that's totally fine. Like, no one will judge you for going from one career to a radically different field throughout your 20s.

Great. Martina, was there, or have you experienced kind of a mic drop moment from early on in your career? So something that maybe accelerated your growth or just set you apart as a leader?

I'm not sure if it set me apart as a leader, but it was definitely a mic-drop moment, which I think grew me by virtue of the situation. So I was in my mid-twenties, I think I'd been in the US maybe three years, something like that, mid-to-late twenties. And I was consulting for a very large American bank, and I had a particular skill going back. This was a reason why I had been staffed on a particular project. And the news had gone to the COO of this bank that there was a woman on the project team who could brief him on this particular topic. This bank wanted to invest in B2C consumer financial portals, which at the time, if you remember, was very popular. And I got a call saying, 'Right, you're going to have to get on the jet.'

He's going out to the West Coast, and you can brief him on the way. And I thought, 'My God, I have arrived in America. This is incredible. I can't believe it.' You know, so that was definitely a mic-drop moment. But it's sort of like the power of it goes back to like the power of that that you're saying about just immersing yourself in subject matter and how important it is to, you know, to be the person who's got like access to the facts. You know, it's so critical.

And I'll make one more point. You didn't ask what your schedule was. You're like, 'I will be on that plane.' Right? And that goes back to the hustle point, right? Like, the worst thing you could have done is, like, 'Well, you know, I've got a commitment with friends,' or this or that.

You step into it.

You just step right into it.

Yeah, yeah, absolutely.

And there are moments where you have to just step into the moment. And these are very important moments for one's career because they often open new doors, they establish those relationships where people realize, like, 'If I have an issue, I have a problem, I have a challenge, I can rely upon... I can rely on you to get the job done.' And those are really important moments to step up your game.

Martina, if you could share just one piece of career advice to young people watching, listening, what would that be?

Collect experiences, not promotions. It's a bit of a weird catchphrase, but I do think that there's a little bit too much pressure to have this sort of like ladder kind of upward trajectory and for that to be kind of a measure of success. And I've often thought that the moves that I made that were more about building horizontally and strengthening either my expertise in an area or my leadership capabilities, those were the things that were as valuable as anything else, quite frankly. And so I sort of think of it—it's not so much a sort of a ladder. I think of it as more of almost like a rock wall or something. You may have to kind of, you know, angle one direction or another, but, you know, you get better.

And if upward momentum or trajectory is what you want, you'll get there as well. But I think it's going to be a better outcome.

Well, maybe we can reframe it. It's that the experiences that one needs to lead a global business are experiences you're not likely to gather if you're in one narrow vertical your whole career.

That's a great way to frame this.

Right? So when you go abroad, when you switch to a different area, you need to learn new skills. Those are really important moments that you demonstrate to those who make decisions about who will be in leadership roles, that you have the agility and flexibility to take on new challenges and new problems.

That's a great way to put it.

Ken, last question for you. If the 19-year-old Ken Griffin trading in his Harvard dorm room with the satellite dish story could see the life you've built today, what do you hope would surprise him the most?

What? Well, I would be most surprised I didn't do private equity because when I was in my dorm room and I was 19 years old, like Henry Kravis was my icon and I wanted to do private equity. And I have yet to get there in my journey.

Fantastic. Well, that's it. Thank you so much, Ken and Martine, for joining me today on The Leaders Podcast. For everyone watching, everyone listening, see you next time on The Leaders Podcast.

Great. Thanks, Joe.

Thank you, Joe. Thank you so much.

Thank you.