Bloomberg Wealth: Citadel's Ken Griffin (w/ David Rubenstein)

What has made Citadel so successful is the incredible talent that comprises this team. I'm obsessed with how do we craft our investment processes to create the greatest competitive advantage. To be one of the greats is going to require sacrifice.

Ken Griffin was a computer nerd back in the '80s, before anyone had ever heard of such a thing.

To be a computer nerd has obviously turned out to be a pretty good place to be in life. It's defined my career and has had a very important role in my life.

He took his love for computers and math and a newfound love of investing to Harvard. One problem, though: he needed data in real time. His solution? 'I put a satellite dish on top of the dorm room so I would have access to real-time stock quotes in managing the portfolio that I manage.' He never looked back. Griffin formed Citadel a little more than a year after graduating from Harvard. His real training was on the job.

I think what's really important to run a successful firm is to have ownership of what has gone wrong and then to embrace what has gone right.

Citadel has had just two annual losses in more than three decades. Its net gains since launch are $50 billion. The secret to our success is distributed decision-making. Griffin's decision in the early 2000s to get into market-making led to the creation of his second dominant business, Citadel Securities, which accounts for about one in four shares that trade hands every day.

Great people want to grow businesses and to make an impact in the world.

In high school, I read that you were a bit of a computer nerd. You're very good at math, but you really were an early person who specialized in computers. Is that fair?

Well, I appreciate the compliment, because to be a computer nerd has obviously turned out to be a pretty good place to be in life. And yes, I was very interested in both mathematics and programming in high school. And it's defined my career and has had a very important role in my life. So where did you want to go to college? You'll love this story. We were in South Florida. My parents wanted me to move away from home to sort of stay on my own two feet. I could go to college anywhere I wanted to as long as it was at least 500 miles from Boca Raton. So when you got into Harvard, what did your parents say? You're going to love this. My parents said, 'Graduate.' That's what my parents said. They were thrilled that I went to Harvard. 'Graduate.'

And part of that was my parents knew I loved business. I had a business in high school that distributed software—a real, real fascination with commercial enterprises. And I think they really wanted me to focus on my studies and then pursue a career. And I was really looking forward to pursuing my career.

Well, there was a young person a few years ahead of you at Harvard who had dropped out of Harvard and started a software company, named Bill Gates. Were your parents afraid you would do the same—drop out and start a company?

Perhaps. And then there was a person a few years after me, Mark Zuckerberg, who did the same. So the key salient lesson is dropping out of Harvard is the most important route to great success in American business. So you ever thought how much even more successful you'd be if you dropped out of Harvard? It's crossed my mind, perhaps, but I'm incredibly fortunate to have had the experience to be at Harvard, to have studied economics and government, to be surrounded by a student body that was just so rich in talents, so engaging, who I learned so much from. So when you graduated from Harvard, how did you come about to start Citadel? After college, I had the chance to come to Chicago to work for a small fund of funds who gave me a managed account to manage with a very simple deal.

You'll manage money for us for a year. If you do well, we'll help you start your own firm. If you flounder, you can go back to graduate school. So it did pretty well, I guess. It went really well for all of us. What year did you start Citadel?

So Citadel officially started in November of 1990. Since that time, I think you have produced for the investors in Citadel a higher amount of profits than any other hedge fund except just one other, which was Bridgewater. So you've produced a staggering amount of profits. Is that fair? It's been a really great 30-some-year run. So I read somewhere that if somebody had invested a million dollars at the beginning, today that would be worth about $235 million. Is that? That's about right. So do you have any people that invested a million at the beginning or still with you?

So I have a handful of capital partners who have been with us for virtually the entire journey.

They must be pretty happy. They're pretty happy. So what is it that you did to make Citadel, the hedge fund, so successful? Are you a specialist in macro or stock picking? What is it that you do?

What has made Citadel so successful for 30-some years is the incredible talent that comprises this team. I've always been comfortable working with people who are gifted in different ways than I am, who are more gifted than I am in many ways in which I am talented. And to have a team of really driven, thoughtful, and brilliant people has been the foundation of our success for 30 years.

So I'm told that you spend a lot of time recruiting people because you care about talent. So are you recruiting people and competing with other hedge funds or with Google or Facebook or the equivalent? All of the above.

So bright people today have a world of opportunities. And we look for people who have both the talents that we need and, of equal importance, the passion—the passion for solving the types of problems that we need to solve to be successful for our investors.

So who makes the actual trading decisions? Are you the person that makes the final decisions or do other people make them and you kind of approve them? So the secret to our success is distributed decision-making.

There are about 100 different portfolio managers who are each with their teams trying to ascertain opportunities for which we can deploy capital in the financial markets. Now, I have a bird's-eye view of what's taking place across the 100 portfolios, along with my co-CIO, Pablo. And together, the two of us are thinking about how are risks aggregating? Where are we seeing the best opportunities? How do we allocate capital? But really the secret to our success is this distributed decision-making model where people who are closest to the information and who have the deepest expertise are making the calls in real time.

So I always have the impression that hedge fund people are sitting in front of screens. They're afraid to do anything because something might happen. So are you obsessed with sitting in front of screens all the time or you don't have to worry about that so much?

I'm obsessed with how do we craft our investment processes to create the greatest competitive advantage. So whether we're trading commodities or stocks or bonds, what do we, as a firm, need to understand more precisely and more quickly than other market participants to be successful at what we do?

So it hasn't been straight up for the 30 years or so. Sometimes you've had some bumps, I assume. But how bad did it get at some point?

Well, I would describe the 30 years as having had a few speed bumps and then the moment in 2008 where the car basically went off the cliff. And we have all had moments in our careers which are those existential moments of, 'Will we make it through this moment in time?' And '08 for us was that moment in history. But you made it through and haven't looked back, right? You know, our team came together. We got the job that we needed to get done in 2009 and '10 and '11 and '12 and just never looked back. But that doesn't mean the lessons of '08 are not forever part of our ethos, our culture, our history. And we've learned from those lessons. I think what's really important to run a successful firm is to have ownership of what has gone wrong so that you can really take a step back and be objective and learn from the experience.

And then to embrace what has gone right and to try to understand how much of this was a fortunate outcome, how much of this was a particular research process, but what drives your success. So we're always trying to learn here. We're trying to learn from our failures and we're trying to learn from our successes. And we felt in that world our deep heritage in software engineering and in predictive analytics led us to be a market maker of the future.

Ken Griffin built his fame and fortune with his hedge fund, Citadel. Now it's his market maker that is growing that fortune to new heights. Citadel Securities has become a dominant force on Wall Street, and it is responsible for most of Griffin's almost $20 billion increase in wealth over the last three years. Citadel Securities won market share from investment banks after the 2008 financial crisis. Now it has capitalized on a recent rise in retail trading through apps such as Robinhood. Those apps route customer orders to market makers like Citadel Securities in an arrangement known as payment for order flow. The result? Citadel Securities had revenue of $6.7 billion in 2020, almost double its previous high.

And Bloomberg has learned that last year, revenue was even higher. In January, Griffin sold a stake in Citadel Securities to Sequoia and Paradigm, valuing it at almost $22 billion. He now owns roughly 80% of the firm. Most business people who build one big business are pretty happy with it. You built Citadel hedge fund, which is extremely successful. Why did you want to build another business, Citadel Securities? Why did you want to do that and run the risk that you wouldn't be as successful in that business as you were in Citadel hedge fund?

So, David, I think it's first important to recognize that the hedge fund is comprised of a number of different investment strategies that have been built over now 30-some years. And there's a number of strategies that don't exist today that used to exist where we didn't succeed. So we've always been in the business of building businesses, of building something new. For Citadel Securities, we saw this intersection of the advancement of predictive analytics and the rise of the electronification of markets. We were moving from a world where you would call a broker, who would call a floor broker, who would walk to a specialist who would do a trade, to an electronic world of straight-through processing trading.

In other words, type an order on a computer, boom, it's executed in fractions of a second. And we felt in that world, our deep heritage in software engineering and in predictive analytics would lead us to be a market maker of the future. And one of my partners who recently retired, James Yeh, led that charge for years in the origin story of Citadel Securities. And we became one of the largest market makers in U.S. options and U.S. equities. And then under Peng Zhao's leadership over roughly the last seven or eight years, we've really grown to be a global player. Peng has done an incredible job of building a team of incredibly gifted people with software engineering skills, hardware engineering skills.

work in machine learning and AI to allow us to manage 25 percent of the U.S. equity flow every day. And it's an incredible testament to him and his team that they've built so much capability under one roof to be such an important provider of liquidity to retail and institutional investors.

How did you get into that business and why did you want to start another business? Your business in hedge funds was doing pretty well. Why did you need another business?

Well, coming from you who built Carlyle over the years, I find this to be a very entertaining question. I think we're both driven by the pursuit of excellence, by the interest in really having great people around us, and great people want to grow businesses and to make an impact in the world. And with Citadel Securities, you can see that my background in technology and software engineering and mathematics is in some sense brought to life by a team of colleagues under Peng Zhao's leadership who have built one of the great market makers in the world. Because this is what really talented people want to do. They want to make an impact. And Peng and his team have made an incredible impact in building Citadel Securities over the last

decade. So somebody calls their broker and says, 'I want to buy 100 shares of IBM.' Do you really know? Does the person who calls up know who's going to be the securities trader? It doesn't make a difference. In other words, you're trying to get the lowest price possible for your clients, and the person who's buying 100 shares of IBM, how can they be assured they're getting that lowest price?

So the SEC years ago unleashed competition in American financial markets. It frustrates me when Gary Gensler criticizes the U.S. stock market because the SEC did such a great job of making the U.S. markets dominated by price and execution quality so that if you're a retail investor or an institutional investor and you call your broker, they have a duty and obligation to get you the best price. Our market share is driven by being the best price so much of the time each and every hour of each and every trading day. So, for example, in interest rate swaps, which are used by institutional investors, we're the only firm that streams continuous, real-time, executable prices on Bloomberg. We're committed to price transparency, and we are willing to compete on the merits of offering the best price.

That's been the secret sauce to the success of Citadel Securities.

Now, Citadel, the hedge fund, is a firm, fund, I assume you own. You're the principal owner, if not the sole owner of it. And Citadel Securities, you were the principal owner, if not the sole owner of it. But recently, you took some outside capital, which I think is the first time you've taken major outside capital. Is that right?

So I and roughly 50 people own both Citadel Securities and the hedge fund. What makes us different from many partnerships is that virtually the entire firm is owned by people who are here today. So our retired partners over the years, we've bought their interest back to keep the firm owned by those who are active and engaged in the business today. Now, for us, the opportunity to work with Sequoia and to have Sequoia as an anchor investor in Citadel Securities was an incredibly compelling proposition. As you and I both know, Sequoia has backed some of the great success stories in American technology, whether it be Apple or Nvidia or Google. And to have their expertise and wisdom in helping us think about positioning Citadel Securities for the next decade or two decades or three decades has been a really powerful opportunity for us that we availed ourselves of in having them as an investor in the firm.

Sequoia usually, it's a great venture firm for sure, but usually at some point they like to take public or liquidate their investments. So should anybody think that at some point Citadel Securities might go public? I think that's a reasonable assumption.

And one of the ingredients that Sequoia brings to the table is helping my management team really understand, as a public company, what will be different than how we run our business today as a private company. And those differences, as you and I both know, will be—some will be positive, some will be negative. But we need to understand those differences and embrace those differences if we're going to go public down the road.

Now, the other partner that you sold a stake to was Paradigm, which is a cryptocurrency-related investor. You haven't been trading, I think, or making markets in crypto. Do you expect to do that in the future?

So crypto has been one of the great, great stories in finance over the course of roughly the last 15 years. And I'll be clear, I've been in the—in the naysayer camp over that 15-year period of time. But the crypto markets today have a market capitalization of about $2 trillion in round numbers, which tells you that I haven't been right on this call over the course of the last 15 years. I still have my skepticism. But there are hundreds of millions of people in this world today who disagree with that. And so, to the extent that we're trying to help institutions and investors solve their portfolio allocation problems, we have to give serious consideration to being a market maker of crypto. And I think it's fair to assume that over the months to come, you will see us engage in making markets in cryptocurrencies.

I think the work-from-home phenomenon is going to be a very big drag to our potential GDP growth.

Let's talk about a whole variety of macro issues. With the Russian invasion of Ukraine, the markets plummeted early in the day that the invasion occurred. And at the end of the day, to the surprise of many people, including me, the markets actually ended up a bit. How could that have happened? Why did the markets gyrate so much?

So people often do not appreciate how forward-looking financial markets are. When a company announces a great quarter and you see the stock price fall, people go, "Well, I mean, how did that happen?" It's because investors had anticipated an even better quarter. Markets are forward-looking by nature. This year, we've seen the market sell off quite a bit up to the date of the invasion of the Ukraine. Anxiety about higher interest rates, worries about the war. As the war broke out, though, the narrative changed. We started to talk about lower interest rates for longer. We started to talk about how different governments were going to react to this vis-à-vis Russia and the scope of the sanctions that would be unfolded.

And the consensus over the course of the trading day was that the worst news was behind us, and the prospect of easier monetary policy, less draconian sanctions than feared, created a relief rally.

And do you expect that this will gyrate—these gyrations will continue for some time as long as Russia is in Ukraine, or you think the markets have basically made their assessment by now?

No, I think we're at a very, very, very volatile inflection point. It will come down to whether or not the Russians will be satisfied by simply extending their effective borders in the Ukraine. Will they take Kyiv? Will they position themselves to reach beyond the borders of the Ukraine? The last is terrifying to markets. Right? They will be adjacent then to much of core Europe if they move their military onto the western border of the Ukraine. And that has the markets concerned. So much will unfold over the days to come or weeks to come as Russia's ambitions become clear.

One of the issues we've been facing recently is very low interest rates. We've kept interest rates very low because of COVID. Now the Fed is likely to increase interest rates. You think the Fed kept interest rates too low for too long? And do you think the Fed should move more quickly than it appears to be moving to increase interest rates?

I think it's a great question and I think historians will answer that question in 30 years. All right. All right. And I'm not trying to evade the question. I think we will not know the answer to that until we understand some other very profound effects that have happened in our economy post-pandemic. First, there's three million fewer Americans working today than pre-pandemic. None of us understand how this is possible. How is it that three million Americans have left the workforce in the course of the last two years? And of note, to the extent that people are out of the workforce, their skills are decaying. They're becoming less employable. This is a huge problem for the United States. And I'm certain that part of the Fed's decision-making process has been lower rates will fuel more growth, which will pull these 3 million Americans back into the workforce.

It's just not happening as fast as any of us had hoped it would happen. And that's a really big problem. The second big issue is the work-from-home phenomenon. We don't know the productivity hit to our economy or productivity gain to our economy from this new work-from-home paradigm. Personally, I think in many parts of our economy it's going to be a material hit. Where there's matters of creativity or mentorship involved, I think the work-from-home phenomenon is going to be a very big drag to our potential GDP growth.

Well, when COVID came, what did you do initially? Were you telling people to trade from home or did you say come in but wear a mask? How did you deal with it in the early days of COVID?

So the early days of COVID were, as you and I both know, very frightening. We were going to see the first pandemic of our lifetime up front in a very personal way. Health of our team came first and foremost in every decision. And on the back of that, we actually leased the Four Seasons in Palm Beach, Florida, hundreds of people there to ride out the first wave of the pandemic. And that worked extraordinarily well. We created a bubble where people were safe from what was unfolding around them, and we could meet the needs of our clients.

Now, many people are moving because of COVID and other reasons to Florida because their taxes are lower and so forth. Have you ever thought of moving your entire organization to Florida permanently?

So we take great pride in running our global footprint, which means that we will always be in the major cities of the world where talent aggregates. Now, having said that, there's been an incredible pull of talent into Florida over the course of the pandemic. And there's a real shift in mindset of youth about being in South Florida in terms of their careers. So I think it's reasonable to assume that you'll see Citadel have a much larger footprint in Florida over the years to come. People are missing the big picture here. Not only as a matter of principle do we need to care about our children, but as a matter of national security, of economic vitality, we've got to make sure no child is left behind.

My story in the United States represents the American Dream. With the success of Citadel, Griffin has become one of the country's wealthiest investors, and he's invested millions to keep the American Dream alive.

Top of list to me is we provide for our children the opportunities that our parents and that we have had.

Education is top of his list. Griffin gave $150 million to Harvard's financial aid program and $125 million to the University of Chicago. He's given millions more to public schools in Chicago, Miami, and New York City. Griffin's also a significant political donor, contributing more than $27 million to Republicans last year.

I want to support people who want to protect the American Dream and who care deeply about education.

Griffin's giving is also extended to the arts, with major donations made to New York's Museum of Modern Art and the Art Institute of Chicago, where Griffin's $100 million Basquiat canvas hangs. You've been a big supporter of political candidates, probably more Republican than Democratic, candidates who support your views, and that's very common in the United States. Do you feel you've gotten your money's worth by supporting these candidates? Do they listen to you, or they already have the views that you had, and you're just supporting them because they already have those views?

So I think, most importantly, I want to support people who stand for personal freedom, who believe in limited government, who want to protect the American dream, and who care deeply about education. In fact, one of the first significant fundraisers that was done for President Obama was done in the office of Citadel because President Obama came to me and said, "I will be the education president." And there's nothing more important to me than the education of our youth. That's like top of the list to me is we provide for our children the opportunities that our parents and that we have had. Having said that, once people are in office, they're going to, by and large, do what they're going to do.

And I'm pretty consumed with my day job. So when you call somebody you've given a contribution to, do they take the call right away or they just say, "Well, I'm too busy"?

You know, I don't know if it has to do with contributions as much as it has to do with the thought that we are thoughtful partners. So, for example, in the early days of the pandemic, we had a team that was in Wuhan and the United States had arranged for one flight to go to Wuhan to bring Americans out of the city. And I had the opportunity with Secretary Pompeo to really get to the heart of the matter, which is how many Americans are in Wuhan. And we ended up working with the Secretary of State in funding five or six flights that went to Wuhan that brought hundreds of Americans home at the start of the pandemic. With the Trump administration, we were involved in some of the conceptualization of Operation Warp Speed, the importance of the United States supporting vaccine manufacturers and purchasing vaccines of unknown efficacy before they went through the FDA trials, all about accelerating time to market.

And you saw that when the vaccines were finally approved by the FDA, we were able to immunize tens of millions of Americans in the blink of an eye, in retrospect. And that has to go back to the origin of Operation Warp Speed. So having those contacts in Washington can be very important at certain points in time.

So, one of my partners, Glenn Youngkin, who was with our firm for many years, he ran for governor of Virginia and was elected. And I wonder whether you have ever thought about running for office yourself.

So I'm really excited that Glenn is governor of Virginia because he cares about issues that are really important to me. For example, education and public safety. And I really hope that Glenn will be a leader who will lead from the middle, who will take the state to a better place, and will be a roadmap for success in America. I really wish the new governor great success in his new role. Personally, I love my work. I have three young children. I'm not interested in pursuing a career in politics at this moment in time.

Now, the American dream, some people say, doesn't exist so much for some people in our country, people who are in the social underclass, economic underclass. Do you think the American dream is still alive today?

So I think you have put forth a question that is incredibly timely and important. Because to me, the American dream is achieved by having the on-ramp to education. And unfortunately, we've put a detour on that on-ramp in many parts of our country where the interests of the public sector unions dominate the rights of the children. And I think we need to think—we don't have to think about, we need to remove the detour. I've been involved in public education in Chicago for nearly 20 years. I went to a public high school in Florida myself. Teachers, teachers who took an interest in me helped write my life story. We need teachers like that in the classrooms, not only in Greenwich, Connecticut, or Boca Raton, Florida.

We need more of them on the South Side of Chicago and the West Side of Chicago who are still passionate and engaged in teaching. And too often, the teachers' unions are there to serve the interest of protecting a class of teachers who've lost that fire, who've lost that passion. And no child should be on the losing side of that equation. We need to end this if we want to protect the American dream.

You've put a fair amount of money into public education. Do you think the public education system can actually be fixed in the United States, or is it beyond repair?

It all comes down to commitment from our political class. It comes down to whether or not the voters will make education a priority. And when you go to vote and you think about your retirement, if we don't have a well-educated workforce coming through our schools today, your entire retirement is in jeopardy. People are missing the big picture here. Not only as a matter of principle do we need to care about our children, but as a matter of national security, of economic vitality, we've got to make sure no child is left behind. We need to rise to the meaning of those words and address in our schools: why is it that kids cannot get a chance to get ahead? I'll give you a simple example. In Chicago, there's rules, there's union rules about what teachers can teach what classes.

This means that in certain schools, the opportunity to be in advanced math classes is just not available to the children because of these union rules. And it breaks my heart when I hear about parents in these socioeconomically challenged environments having to leave work to pick their kids up from School A, to drive them to a different school, to take a single math class, wait for them, and then drive them back to School A again. Why are we letting this happen? Why aren't we trying to give every child the opportunity that you and I have enjoyed in life by having the benefit of a real education? The American dream is what the Constitution provides for. So to have a chance to be a steward of such an important part of our country's history is really important to me.

In 2007, I bought a rare copy of the Magna Carta, the only one in private hands. I thought it was important to keep this copy in the United States because it was the inspiration for our Declaration of Independence. I put it on permanent loan to the National Archives. Since that time, I've bought other rare copies of the Declaration of Independence, the Emancipation Proclamation, the 13th Amendment, and the Bill of Rights. In all cases, I put them on display so Americans can learn more about history and our traditions. Recently, I was trying to buy another copy of a rare document, the U.S. Constitution, but I found it had some real competition. This time, a group of cryptocurrency investors came together under the name of ConstitutionDAO, and they were prepared to pay $40 million.

But they didn't win. In the end, they were outbid by Ken Griffin. Recently, a very rare copy of the United States Constitution came up for sale, and you were the winning bidder, paying a record price for that Constitution. You had not been a buyer of historic documents before. Why did you buy that, and why did you pay such a high price?

So, David, I'm actually then in your territory, because I know you've an incredible collection of American and, frankly, global historical documents. As you know, I'm a big art collector. And to me, collecting art is about collecting works of humanity where people have really broken the mold. They've gone to an unconventional place. Our Founding Fathers broke the mold of governance in the Constitution. In that document are so many values and principles that are just dearly important to me. You know, my story in the United States represents the American Dream, and the American Dream is what the Constitution provides for. So to have a chance to be a steward of such an important part of our country's history is really important to me.

And I hope that by sharing the Constitution across the country in various museums over the rest of my life, I will help other people really think about the greatness of the accomplishment of our Founding Fathers in creating a system of government that we call democracy. And at this moment in time where the very ethos of democracy gets challenged routinely in the popular press, I think it's very important for us to take a step back and to think about how remarkable it is that we, as a people, write our own destiny.

So you don't see this as an investment; you see this as a testament of your faith in our country? This is a testament of my faith in our country and my belief in America.

You know, over time, it may or may not be an investment that that yields returns.

It just wasn't that important to me. So when you were bidding for this document, there was a lot of competition, and it was said that you were competing against a group of cryptocurrency people who had come together to either team with you or compete with you. Did you ever consider teaming with them?

So I had not considered teaming with them during the auction itself. And to be clear, you could see in the days before the auction the stunning amount of money they raised to pursue the Constitution of the United States. There's that moment of, take a deep breath, this is gonna cost a lot, but it was really important to me to have the Constitution in a collection where it would be shared with Americans and where that stewardship would exist. For me, the DAO brought up some real concerns around governance. First of all, kudos to everybody who made that happen. I mean, what an incredible story to raise $40 million in just a few days to pursue buying the Constitution. But after the auction, we actually reached out to the DAO about, for example, would you want an NFT for everybody who contributed, a token or symbol of what you accomplished together as a community?

They couldn't even make that decision. And so, I'm really relieved that I ended up having bought the Constitution because I know that the stewardship will be there. And a DAO, decentralized by its very nature—would we have had the stewardship that we want for such an important part of our nation's history?

Now, as somebody who's bought some historic documents myself, am I now going to have a new competitor in this world?

I don't think so. And I know some of the great documents that you own, and I admire your passion in the field. This, for me, is such a pinnacle of the American story. It's one that grabbed me and motivated me in a way that will be hard to replicate with other documents. So I don't think you'll see me as a competitor down the road. I am really excited, though, that at Crystal Bridges, where this will be displayed first, they are being so thoughtful about the experience that people will have in understanding American history.

Talking about freedom of expression, when you think about it, what an artist is doing when he or she is painting something is expressing themselves. You've been very supportive of a lot of artists and supported their careers, and you've bought a fair amount of art, and you've put it on display in many places around the world. What is it that appeals to you about art?

To me, art represents an element of humanity that, it's our creativity. It's our ability to, great artists transcend the conception of what is art. They change the very definition of the field. So, for example, the American abstract artists of the 1950s radically redefined art, or the Impressionists in the 1880s did the same. And I'm so fascinated by the men and women who choose to go outside of the lanes of tradition to do something radically new that changes our conception of beauty.

Now, you have bought a fair amount of art recently that is painted by African American artists. Basquiat is one of them, and you have put one of his works of art, one of his most famous works of art, at the Art Institute. Have you focused on African American artists recently because of the problems we have in race in the United States, or is there some other reason?

No, I have a significant collection of art, and I have an incredible collection of art by African American artists, which I started building years ago for one simple reason. It's great art. I mean, Mark Bradford is so talented, and to have a chance to live with his works is such a privilege. Basquiat is one of the greatest artists in American history. I mean, he went so outside the boundaries of conventional art. He really transformed our very conception of what art even means. And so to have a chance, again, to own art by these individuals who were just in their field, they were leaders, they were the game changers, they were to art what Steve Jobs was to music or to a phone. And I just have great admiration for people who are willing to extend the creative boundaries of humanity.

Probably the best investment advice that I never received but that I've lived my whole life around is surround yourself with really good people.

So as you look back on your career, what would you say is the best investment advice you've ever received?

Probably the best investment advice that I never received but that I've lived my whole life around is surround yourself with really good people. I thought about it just today, like I do many times, what makes a great investor? A great investment firm is comprised of people who are optimists and pessimists and realists, because in the intersection of the debates that go across that wide range of personalities is where you find truth. It's part of the reason I'm so focused on freedom of expression. I see it in my own four walls, the robust and fulsome debates around how we commit our capital, what defines a good idea, what businesses to build or pursue. That's what drives the success at Citadel.

And I've been very fortunate in life to have always had a group of friends who really push me, who make me better. And here, I get to work with 3,500 colleagues who in their ways make me better each and every day. And collectively, as a team, we've had the opportunity to have an incredible impact on the financial landscape around the world.

So as you watch investors around the world, great investors, average investors, what do you think is the most common mistake that investors make when they are doing things like investing?

They invest in areas outside of their expertise. They assume that because they can do something well, they can do something else really well. And it's just not that simple. You know, it's like sort of saying, like, Michael Jordan could have been a great football player. He's not going to be to football what he was to basketball. And a lot of people that get in trouble in their careers investing extrapolate from their success in one area to another. You and I are both in the world of finance. But Carlyle's success story was written around private equity. It's a very different investment strategy than being in public markets. The skills are not readily transferable. You and I have both seen firms that look like ours wander into different investment strategies and different asset classes and often have a very difficult time because it's not the same skills.

The nuances matter. Somebody is watching this and says, "I want to be Ken Griffin. I want to grow up to be Ken Griffin, a successful businessperson, philanthropist, art owner, and a person well-respected for his views on public policy." What is the key to being the next Ken Griffin? Be a problem solver.

First and foremost, be a problem solver. Firms that solve problems are firms that are successful. We're successful because we meet the needs of our capital partners. They have important missions, whether it's research institutions searching for cures to cancer, or research institutions trying to understand the origins of the universe, us managing their capital helps to fuel their mission. We solve a problem for them. In our market-making business, we solve problems for institutional and retail investors around the world by being able to provide more liquidity at a lower price than, bluntly, any other firm in the world. In the pandemic, we solved the problem of how to protect our employees and yet have resiliency in the conditions of a pandemic—the Four Seasons of Palm Beach.

First and foremost, learn to be a problem solver. Software engineering, mathematics—really important. It's also really important to learn how to be a good communicator. Going back to education, my ninth-grade English teacher, at the end of one of the school days early in my ninth grade, took me aside and she said, "I've heard from some of the other teachers you're really gifted at mathematics. But if you want to go somewhere in life, you need to learn how to write."

And have you ever called that teacher up and said, "Actually, I learned how to write"? No, she taught me how to write.

And she said, "You will tutor my daughter in math, and I will tutor you in how to write." And it changed my life, because having the ability to communicate is so important in so much of what I do day in and day out.

So if somebody watches you and watches this interview, they'll say, "He has everything. He's got wealth. He's got fame. He's got a great art collection. He's got philanthropy." Can you just make people feel that everything isn't perfect? Is there some regret you have? Is there anything that hasn't worked out as well as you would like? We don't have enough time to answer that question today, David.

I mean, it's just life is full of disappointments, of speed bumps, of challenges. I've had my fair share. I think the important thing is to get back up on your feet. I think resiliency is really important. We spoke about 2008 for a brief moment. One of my competitors put his list out of the five firms most likely to go bankrupt. I was on that list of five. Now, 15 years later, it's in the dustbins of history. We're one of the most successful hedge funds of all time, one of the most successful securities dealers in the world. But it took a lot of resiliency to get back on our feet after that moment in time when the whole world thought we were basically finished.

So, final question: If one of your three children, or all of your three children, said, "Dad, I want to build my own hedge fund," what would you say to them? It goes back to...

I think two very important issues. Number one is, are you willing to surround yourself with people who are just extraordinary, who are going to push you in ways that you may not be comfortable with? Again, that's been the success story at Citadel—has been the dynamic across our leadership team and up and down the organization. The second is, is—and people don't always realize this—we're competing globally with the best investors around the world. So whether you work at Citadel or another great firm, the demands of the job are not the demands imposed upon you by myself and my colleagues. It's the demands imposed upon you by the markets themselves. If you're not willing to rise to be a great competitor and to make the sacrifices that go with that, you're not going to be successful—not in this career.

It's 24/7, 365, and every day you've got to be forward-leaning in how you view the world and assembling the information that drives your decisions and then acting rationally. And that's just a very different career than many other jobs.

And it's not as easy as it might appear to be, and you have to really be committed to this, right? Look, excellence in any career is not easy to come by.

Just so we're perfectly clear, you want to be one of the world's best chip designers, you want to be one of the world's great neurosurgeons—to be one of the great is going to require sacrifice. And so I really hope that with my children, I teach them the importance of grit and perseverance and hard work, because I want my children, who are very talented, to excel in life. And I really think that the skill—I've worked with many incredibly gifted people who just don't have grit and determination, and not much comes of that. You need to be willing to put in the effort.