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Podcasts, radio, news.

I'm really jealous that you're taking two weeks off.

Yeah, I'm pretty

checked out, man.

I was going to say that, but I was going to say, you're already pretty tan.

Yeah.

I feel like, so I'm excited to see you after two weeks in the summer.

I'm going to work very rigorously on my talents.

good i mean wear spf please do it responsibly come back i'm gonna be like the color of this table whoa for those can't see the table listening at home it's a it's a handsome mahogany oh

it's plastic it's not real wood it's not real wood maybe it is i don't know what do i know but yeah so i'm out for the next two weeks

i'll be here yeah

enjoy it keep me up to date on the gossip yeah plenty of tea.

I'll keep the tea flowing.

Yeah.

So this episode is coming out this Friday.

We will have a mailbag.

Mailbag.

I'm going to say we're going to have a mailbag the following week.

We're recording it directly after this episode, so it's actually still up in the air.

Wait to see if we'll enjoy it.

Potentially.

But like, probably, we're going to have this episode out on August 8th and the mailbag out on August 15th.

And then on August 22nd, you'll be alone with your thoughts.

Money stuff will go dark, but it'll be okay.

I think we all need that reasoning.

August 22nd?

Yeah.

You know, actually, no one will want.

I won't even be on air that day because it'll be our Jackson Hole.

It's a market special.

Our Jackson Hole special.

So let's all just enjoy Jackson Hole together.

You know, take a look at some central bankers in front of mountaintops, and we don't need to listen to a podcast that day.

But you do need to listen to a podcast today.

And we're going to really try hard to make this one good.

You might.

Hello, and welcome to the Money Stuff Podcast, your weekly podcast where we talk about stuff related to money.

I'm Matt Livian, and I write the Money Stuff column for Bloomberg Opinion.

And I'm Katie Greifeld, a reporter for Bloomberg News and an anchor for Bloomberg Television.

Katie, I feel like I follow Elon Musk's pay more than

he does.

More than

I don't think that's true.

By the way, I follow Elon Musk's pay.

It is rumored that he follows my vacation schedule and schedules his most insane activities for when I'm supposed to be on vacations that I have to write about them.

I don't think this is true.

I don't think he consciously does not.

We're going to find out.

He consciously does it, but we're going to find out.

We're going to test this.

Here I am talking on a podcast about taking two weeks off.

So if Elon does something really egregious in the next two weeks,

you'll know why.

Well, he should be happy.

Er, right now.

He got a.

Well, you think $30 billion makes him happy?

Fine.

It's.

You know, I have to imagine maybe he's not completely happy, but he's a degree happier than he was, perhaps.

So the news is that Tesla's board announced that it's going to give Elon Musk an interim award of

$28 billion worth of, I was going to say, stock options.

Slightly more, it's like restricted stock units with a strike price, but it's stock options, whatever.

They ended up giving him that as basically a good faith payment because, as we've talked about on this pod a lot, he was awarded awarded a bunch of options in 2018.

They were all contingent on him making Tesla a giant company.

He made Tesla a giant company.

He got the options.

They're worth something like $87 billion

today.

And then last year, a Delaware court said, no, those weren't valid.

They go away.

And so now Tesla's in this weird bind.

They're like appealing the decision and stuff.

They're trying to get him back that money.

There are various governance and tax and accounting and legal complications around getting him back that money.

And they're still kind of figuring out how to do it.

But as a good faith down payment on their desire to give him back those options, they gave him back $28 billion of them this week.

So you asked if that made him happy.

One thing I wonder is, was it a surprise?

Because like the previous set of options, like he sort of negotiated with the board, you know, like in 2018.

And like there was obviously like, you know, this is an incentive package that, you know, we're giving you these targets that are super ambitious, but, you know, you think you you can meet them.

So that was like a employment deal that he struck with the board.

Right.

This is like, this could have just been like, surprise, give some of your money back.

It's possible the board did it without him, which would be kind of funny if he just woke up one day and like, you know, had a $28 billion transfer in his bank account.

That'd be pretty cool.

Why 28 billion?

Why not just make it 87 billion?

Part of it is like they're still figuring out what's happening, right?

So this is like a down payment on figuring out the whole answer to this question, right?

If they win the appeal, this award goes away and it's probably easier to have given him less while they're on appeal.

I think it's possible that part of the answer is that,

funny though this is to say, that Tesla's board of directors and the special committee that gave him this award are independent and are thinking about their fiduciary duty.

to Tesla's minority shareholders or outside shareholders and are thinking not only what would be nice for Elon, but also how do we motivate him to maximize the value of the company?

And it's possible that giving him all the options right now is not the answer to that question.

It's possible that like the ultimate structure they'll come to is something like you get $30 billion of this stuff

and a new award with new targets that requires you to do new stuff.

But for now, they gave him this award

and it has essentially two contingencies.

One is that he has to stay there for two years,

which

who knows.

And the other one is that it goes away if they win the appeal.

So if he gets all the previous options back, he doesn't get these options.

The 2018 options.

Yeah.

So if he gets that $87 billion,

this is not additive to that.

So no double dipping.

No double dipping, as they say.

You talk about this a little bit in your column that,

okay, it has these strings attached.

It's contingent on him staying there for two years.

There are very few strings.

Well, like, sure, he has to stay there for two years, but that's like a $14 billion a year payback.

But isn't, I don't know, isn't it a little weird that, okay, you have to stay here another two years, but also this is making good on our promise for things you already...

Yes, I agree with you.

It's a little weird.

If their mentality is truly like, we owe you this and we're giving it to you no matter what, then you're right.

He shouldn't have to stay there for two years.

But I don't think they can really do that.

I think they really have to be like in a posture of like, we are maximizing value for the shareholders and we have to get something going forward from it and if we're just giving Elon Musk $28 billion on his way out the door then that is not a good use of shareholder resources even if it's in some sense fair true also like

it doesn't seem like that big an ask

like to stay there for two years it's like you know his main source of wealth more or less and also like it's not that big an ask in the sense that like

you and I if we got like a great job opportunity we'd have to sadly quit this job to pursue that great job opportunity.

I would never.

That is not a problem for Elon Musk.

He can have as many jobs as he wants.

Like, they're not requiring him to only work at Tesla for two years.

It's just like to have it, you know, have his name on the door for two more years.

Continuously, right?

Intermittently.

Yeah.

On alternate Tuesdays.

So I think it's fine.

I think it's like not a big ass, right?

Like, he can spend 100% of his time elsewhere for two years and still be the CEO of Tesla.

Yeah, which is kind of what

some would argue that's what's been happening already.

Many would argue.

So just a status quo.

And I think, you know, again, like the board, like they're doing two things, right?

They're trying to be fair to Elon, which I think is like a legitimate concern.

Like, I think the board thinks and Elon thinks, and I think they have a real point that he earned this $87 billion of options, and so he should get them.

And just retroactively, he should get them for his prior work, right?

So they're trying to be fair to him, but they're also trying to, you know, do good things for the company and situate the company well going forward.

And so, you know, their announcement is not just like literally like he has to have his name there for two more years.

It's like we need him to focus on building AI and like attracting talent to this company because we're in an arms race for AI and Tesla is an AI company.

You know, Kitty's rolling her eyes.

It's reasonable because like Elon Musk does have an AI company that's not Tesla.

Yeah.

But like Tesla is, you know, it's valued like an AI company.

Right.

It's not valued like a car company that sells as many cars as it sells, right?

It's valued like the future of

life,

robotics, AI, something, something, something.

And so to live up to that valuation, they need to keep him around to be their futurist in resonance.

Yeah.

I anchor a television show with Matt Miller.

Really?

Yeah.

He's a car guy.

So talking about Tesla makes smoke come out of his ears when we talk about the fact that it's a trillion-dollar company.

You add up the market caps of the big three, Stellantis, Ford, and GM, and it comes out to less than $150 billion,

which shocked me.

Actually, I didn't realize it was that low.

So, a trillion dollars.

Yeah.

I wanted to talk a little bit more about the fact that, okay,

if we're talking about this options package, the $30 billion one.

So, Tesla would take an enormous tax hit if this happens.

Well, Elon Musk would take a tax hit, I think.

Elon Musk would take a tax hit.

Tesla would take a hit to their earnings, correct?

Yeah, basically the way it works is that when they granted the options options in 2018, they were, for accounting purposes, kind of worthless because they were at the money, so they were not like a gift of stock that day, and because they had these really aggressive conditions where, you know, it's like a $60 billion company, you would have to grow it into a $650 billion company to get all of the options.

And so you can go to your accountants and say, that's not very likely to happen.

So the value of this grant day one is not very much.

When they do it retroactively now, the value of the grant day one is kind of $28 billion.

But

they apparently, this is in the disclosure, and it's a little unclear why, although I have my assumptions.

They apparently went to their accountants and said, it's very unlikely that he'll get these options and so they're worth nothing.

And the accountants agreed.

And so they say right now that they plan to not incur any expense for the options because it's unlikely that the performance conditions of the options will be met.

But there are no performance conditions.

So we talked about the two conditions, which are one, he has to stay there for two years.

And two,

these go away if he gets back the previous challenge.

Like basically, if they win on appeal in a court case.

The Delaware decision is overturned.

It's overturned, yeah.

And so what I think they're saying is that there is a less than like 25% chance

of both of those conditions being met.

That is, either they're very confident that the Delaware decision will be overturned, or

They're very confident that Elon is going to quit in the next two years, or

they believe like the joint probability of neither of those things happening is very low, right?

Like they think if the decision is not overturned, he'll quit.

Something like that.

So this is a funny little, like, I don't know what those conversations with their accountants were like, but I found it amusing that they would not have a high degree of confidence of him meeting these very limited performance conditions.

But it seems like, I don't know, listening to that, that they seem somewhat confident that the Delaware decision will be.

Well, it's weird to go to your accountant and be like, this 100-page opinion by the Delaware Delaware chancellor is obviously wrong.

And the accountant's going to be like, yeah, it's obviously wrong.

We're going to, that's going to be overturned.

And then, like, you know, I don't think they got a legal opinion saying this is definitely going to be overturned.

Maybe they did.

I don't think it's crazy, by the way.

Like, it's kind of a weird opinion.

It's kind of a weird outcome.

Like,

there's this weird political environment where Delaware is losing companies.

You could imagine it being, there's reasons it would be overturned, but it's not like, oh, it's definitely going to be overturned.

I don't know.

History in real time.

And we are chronicling it.

Not for the next two weeks or not.

That's true.

Who knows?

It doesn't say anything about his political activities.

Like, you think about this

serious overhang over the stock.

No, you're the Tesla board, and you're like, okay, Elon, in order to get your $28 billion of options, you have to not do a list of bad things, right?

Where the list of bad things.

Like, okay, sure, it starts with like enraging customers by doing political activities and then goes on to like Ketamine and like, you know, running seven other companies.

Like, no, he would much rather have his complete freedom to do whatever he wants than $28 billion.

I mean,

I'm speculating there.

I talked to him this morning.

I don't know.

Like,

it's easy for me to say.

I'd rather have the 28 billion.

We're just talking about funny money at this point.

Yeah.

And he's like, like, right.

We are talking about funny money at this point.

Like, he lives in a state in which if he wanted any number of dollars to do anything, he could snap his fingers and it would like magically appear.

So, like,

there is

a sense of fairness.

There is a sense of like, you know, wanting to have a certain ownership of Tesla.

There's all this stuff that goes into him wanting to have tens of billions of dollars of Tesla options.

But like if he needs money to do something, he'll find money to do something.

He's going to be all right, guys.

Pilon's going to be okay.

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How about

corporate access?

How about corporate access?

Bradley Sachs over at Business Insider, Bloomberg alum.

Great peace out.

About like the big hedge funds and corporate access.

I love corporate access because it's like, it makes no sense.

No.

It makes total sense, but it makes people insane.

Corporate access sense is like investors, largely big institutional investors, hedge funds and like mutual fund managers, investors like to meet with the companies whose shares they own and the companies whose shares they're considering buying, and they will sit down with the CEO and be like, so how's business?

And they learn things in these meetings.

Theoretically.

No, theoretically, they don't, right?

Because

the U.S.

has rules saying that regulation FD says that companies can't disclose material non-public information to some investors without disclosing it publicly to everyone.

And yet these meetings happen.

And you know that they learn something because one, they keep doing the meetings, right?

That's true.

You know, people don't waste their time for no reason, right?

Like they think they're learning something.

And then two, you know, it's like a little hard to study, but there are some empirical studies where academics like look at these meetings and they find that investors who have meetings with management then make more informed trading decisions than they do if they don't have the meetings.

So it's clear that these meetings have some value.

Yeah.

And, you know, it's like this gray intermediate area between they can't get material non-public information.

Like the company can't be like, oh, our earnings are going to be really good next quarter if they haven't already given guidance on the earnings.

They can't be like, oh, we're getting acquired next week.

They can't give like big material information.

But they can talk about how they think about the business.

They can

talk through the model.

They can do a lot of helpful stuff for the investors where the investors come away learning something without being spoon-fed next quarter's earnings.

The thing that people always say about this to make themselves feel better is that the investors can get a read on the executive's tone and body language.

Which

is like on its face absurd.

Yes.

But people keep saying it.

They're like, oh, yeah.

They don't say anything that they haven't already said, but the body language tells you something.

So I feel like

it probably lost its edge during the pandemic when we were all on Zoom and it's a lot harder to see.

That's an interesting question.

I feel like there are studies, and I don't know them, because, like,

that would tell you something, right?

Yeah.

If it, in fact, lost its edge in the pandemic, then that would tell you that tone and body language mattered a lot.

Yeah.

And when people were only getting Zoom calls, they got less information.

Whereas my thesis is that, in fact, they're being told information, and tone and body language is just a euphemism.

And so, in the pandemic, if you get on a Zoom call and you're like, so walk me through how you're thinking about strategy, and the executive tells you, they're like still informative.

Yeah.

Someone should do that.

Probably someone has to.

I guess I come at it from a skeptical lens as a journalist who talks to a lot of CEOs, not to besmirch any CEOs, but a lot of them just follow the script.

And I mean, you listen to them speak at conferences, and

it's hard to get new news out of someone in the C-suite.

Maybe three answers to that.

One,

you don't own 5% of their stock.

It's possible that a conversation with an investor is a different framework from a conversation at a conference with a journalist, right?

Like they're media trained, but they're trained differently to talk to investors, right?

Two, you do not have CIA interrogators to understand their body language, which apparently some hedge ones do.

And then,

wait, did I have a third point?

You said you had three.

So

you got to think of something.

Okay.

I'm reading your body language right now, and it seems like you're really trying to think of something.

I have two points.

Okay.

The third point is like

you could imagine the investors asking different questions because they're not trying to make news that's like

they're trying to make very incremental news, right?

They're trying to find out like

update their model.

Well, that was part of the piece.

Bradley wrote about how one of the complaints is that the questions that are being asked are like becoming so niche to the point that they're not useful anymore.

Oh, I know what my third point was.

Okay.

My third point was that actually in this piece, several investors complain that, in fact, they have the same complaint you do, which is that the CEOs are now so scripted that these meetings have become less useful than they used to be.

Not just because the questions are very granular, which is like their questions are granular because hedge funds are competing to add extremely granular information to the information set.

And so they have very detailed questions, which sometimes annoy CEOs who want to talk about the big picture.

The big picture, come on, here's my strategy.

Isn't it great?

Right.

I mean, the thesis, like the point of this piece and what I wrote about it is that, like, in my world, you think of like the prestige and importance of investment firms.

And like right now, the big four multi-strategy hedge funds, like the Citadel, Millennium, 0.72, Valeasnes of the world, are really on the ascendant.

They're really prestigious.

They're really sort of top employers in the asset management business.

But

when you think about what a CEO wants, They don't want to meet with those guys.

They want to meet with Fidelity and Wellington.

They want to meet with long-only managers for a number of reasons.

One of which is that the long-only managers have longer tenure, both like they hold the stock for decades and also like they employ portfolio managers for decades.

Whereas like, you know, the big hedge funds, they're constantly churning through portfolio managers and they're constantly churning through stocks.

And so like if you talk to Citadel, because they own your stock this week, they may not own it next week or it may be a different person.

But there are other reasons, one of which is that the hedge funds have these really granular questions.

Like they're really interested in like what's going to drive the stock in the next couple of weeks.

And so they're not going to ask you about your strategy.

And if you're the CEO and you want a pontificate about the big picture for a while, you'd much rather talk to a long-term, long-only investor than to a hedge fund who has very specific questions about margins.

And then the other reason is that they're all 27 and wearing t-shirts and the people at Fidelity know how to dress to meet with the CEO.

Just amazing.

Yeah, it's like literally true that like 0.72 now mandates blazers because like

they were having trouble booking meetings because they had to be too many 27 year olds and whatever.

Yeah, that was a a fun tidbit i also and this was partly addressed in the article and in your column i feel like part of the reason that these meetings are in such high demand is just because

time is finite you know and anything that's scarce is going to be valued and time is scarce and time with these ceos is scarce yeah so even if it doesn't add that much of an edge you still have it

right i think there's an enormous culture in in finance and business generally of like if you think that doing a thing has a 1% chance of adding 1% to your returns, you're just like hardcore and you do it anyway.

I gotta get it.

Right.

Like, I have transcended that.

But, like, you know, you're in that seat because you work really hard and like sort of do everything you possibly can to get edge.

And so, even though the meeting will probably be worthless, you'll go to it anyway.

But the other thing about scarcity is that at these firms, you know, like the big hedge funds will have multiple teams trading the same sector.

And so,

you know, if you're the CEO and you book a meeting with Citadel, there's like five PMs at Citadel who are fighting each other tooth and nail to be the one in the meeting or like the two in the meeting, you know?

Honestly, it reminded me so much of working in a large newsroom.

I know.

I was going to say,

like, it's very,

you have a beat and you're pretty protective of your beat.

And it's funny to read about it becoming like part of a recruiting perk is that you're the only person covering this.

You don't have to fight for your lane.

This is only your lane.

Or it's even worse.

It's like Bradley Sachs writes that like the most tenured PMs will often get the best meetings.

Like, you know, if Citadel has a meeting with a company, they'll be like, the guy who's been here the longest and like does the best work gets to have the meeting.

But like sometimes they'll hire someone and like the new guy gets the meeting because that's like a recruiting perk.

And then the long tenured person doesn't get to go to the meeting.

And it's it's just like...

There's a lot of parallels.

Right, no, no, right.

Like I've been in meetings with like many other journalists where one, it's competitive to get into the meeting, and then two, everyone's like, you know, it's competitive to get your question answered.

Yeah.

And it seems similar in this case.

God, it's so funny.

The other thing I wanted to say is I wrote about this.

And I wrote about,

broadly speaking, CEOs would rather meet with like Fidelity or Wellington than with $7.72.

And then as a throwaway, I was like, and they probably won't meet with, you know, if you own 100 shares and you're a retail investor, they probably won't meet with you.

And I found an academic paper I wrote about Wednesday where they basically tested that out by sending cold emails to a lot of investor relations departments.

And the cold emails, some of them were from like a yahoo.com email address.

Like, hi, I'm an individual investor.

I'd like to buy your stock.

Could you meet with me?

And some of them are from fake investment firms.

Amazing.

I work at Blue Willow Capital, and I'd like to meet with you.

Sounds right.

Yeah.

They found...

First of all, that about 16% of these messages resulted in meetings,

which is higher than I would would have thought.

It's not bad.

Right.

And second of all, there's no distinction between retail investor and bluewill capital.

Like, retail people could get the meetings just as easily as bluewillow.

They did find racial discrimination, though.

Oh, yeah.

Don't love that.

This

reminds me, we were talking about him's and hers earnings on air this week, and the him's and hers CEO has made sort of a big show of like giving questions in the earnings call to retail investors.

Yeah, right.

Like, like my perception of it being hard for retail is kind of an old school perception.

And now with like meme stocks, stocks, it's a different game.

Yeah.

Also, somewhat related to this, I was talking to a CEO who reported earnings this week.

And the CEO said that,

okay,

if you report in the afternoon, then you do the earnings call.

But then the CEO was

answering questions from analysts until like 10 p.m.

that night.

Like you have the earnings call, and they ask the questions, and the transcript goes out, and you can see it as public, but then like the real questions come after the earnings call.

So you have the earnings call, and and then you have all your individual calls.

And this is the thing that people naively think Regulation FD prevents, right?

It's like everything has to be public, but no.

And you see it in like public earnings call transcripts.

You know, people ask questions and the CFO will be like, follow up with me afterwards and we'll walk through that.

Right.

And like, you know, like it's obviously the case that companies talk to analysts and investors outside of the, you know, one-hour public earnings call.

And it seems to be obviously the case that those conversations are useful, but they exist in this weird regulatory limbo.

I find that frustrating because, as a journalist, I'm not allowed to sit in on those one-on-one meetings.

Yeah.

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Should we check in on the state of on-cycle recruiting?

Let's check in.

Bank of America.

Yeah.

Well, Bank of America, the news came out this week, written by Catherine Doherty, that their junior bankers face reassignment if they accept other jobs.

Just the latest in a string of the big banks pushing back against on-cycle recruiting.

Right.

It's been a busy summer.

One thing I wonder about is like, why are they pushing back?

Why are they pushing back in general?

Like the dynamics here are like JPMorgan led the charge of saying we're not going to allow on-cycle recruiting.

We're mad about it.

We'll fire you.

And then a number of big private equity firms announced they would wait to do on-cycle recruiting.

Led by Apollo, it feels like.

Most banks did not join in saying we're going to fire you.

And most private equity firms did not announce, we're not going to do on-cycle recruiting for two years.

But also, it didn't happen.

Like

everyone is like quietly, tacitly going along with this process started by JP Morgan.

And it's like a two-sided process.

Like the banks and the private equity firms, everybody seems like to have, there's like a possibly fragile equilibrium where they're not doing the recruiting.

And so there's not really a need, I don't think, for the banks to say, we'll fire you if you do it because it's not happening.

But, you know, you got to get ahead of it.

So some of the banks are joining in.

And so this week, Bank of America said, if you accept an offer elsewhere, you'll be reassigned, which is very ominous because they don't say where.

And like,

and they can say,

well, Bank of America has tellers

a lot of possibilities.

Yeah, that was more dire than I was thinking.

I do.

They don't say.

Yeah.

And it's, you know, like the idea of on-cycle recruiting is so strange, right?

But essentially, it's

you will, at the beginning of your investment-banking analyst job, accept an offer at a private equity job.

But that private equity job is contingent on you spending two years being an investment banking analyst because you do need to learn the stuff that you do as an investment banking analyst to be an effective private equity

associate.

And so you have two years of working in an industry group or an M ⁇ A group or a Lev Finn group at a bank where you learn enough.

to become a useful associate at a PE firm.

And if you get fired at your bank, the PE firm will probably rescind your offer because you haven't done the training that they require.

And if you get reassigned to being a teller, then like also not the training they would have wanted.

Yeah, you can kind of feel for these analysts because also they're probably not having a lot of fun in general.

Oh, sure.

And like one thing reassigned could mean is like if you work in the tech group and

you get a job at like a tech-focused private equity firm, then Bank of America America will say, okay, we're going to reassign you because there's conflict of interest there.

So we're going to move you to like the natural resources group.

Like that would be like a fairly benign interpretation of this.

One doesn't get the sense that's what's happening, right?

You get the sense that it's like a punitive reassignment.

Yeah, going by what the story said, this is according to people familiar with the matter.

Junior bankers are being asked by their managers to divulge whether they have a new employment opportunity.

And if future offers are accepted, those individuals will likely be moved to another area within the bank.

So searching for detail there.

But they have a week.

Apparently, those who fail to disclose accepted offers within a week would be deemed in violation.

It's interesting to see how different banks are approaching this.

Apparently, Goldman has you.

Right, Goldman has the carrot approach where they're like...

Well, sorry, they do have...

Well, you have to restate your loyalty every three months or something.

Yeah, every three months you have to say you haven't taken a job elsewhere.

Yeah.

But they also have like, you know, there's like three tiers of prestige, right?

There's like private equity and then there's investment banking and then there's like operations, back office, tellers, right?

And Goldman says, if you stay here for two years, we're going to try to move you into our own,

I was going to say private equity division.

Yeah.

Their own like alts division, which is private equity-ish.

And then Bank of America says, if you don't stay here for two years, we're going to move you into being a teller.

Gosh.

Yeah.

So Jamie Dimon, it feels like he started this all off a couple months ago.

I do wonder, like, if it had been Wells Fargo who led the charge, would we be seeing this cascade of other banks lining up and saying, we're also not okay with this, this is what we're going to do?

Or is it uniquely like Jamie Dimon and J.P.

Morgan are doing this, and all the other big banks feel pressure to follow?

I think Jamie Dimon has a lot of moral leadership.

I don't even know about the other banks feeling pressure to follow.

Yeah.

The other banks feel cover to follow, right?

Because

this is a competitive market.

And if one bank says, and this has happened before, if one bank says, we're going to fire you if you take a private equity job too early, and no other bank says that, then

people won't go work at that bank because they'll want their private equity job.

But if JP Morgan says, Jamie Morgan's pretty big, and so you have cover.

But the other thing is, like, also, like, the people who run private equity firms care about what Jamie Dimon thinks.

Yeah.

Not even as a markets and competitive matter, just as like, oh, yeah, they respect that guy.

And so when he says it, they're like, oh, yeah, he's right.

Everyone knows he's right.

Like, it's not super controversial.

Like, no one's glad upset about it.

And I think if you like, like, if you talk to the private equity people, they are not

thrilled with the current process.

The current process

does not do a good job.

The old process, the process where they interview before people started banks, does not do a good job of finding people who are knowledgeable.

It does not do a good job of finding people who are really motivated because you don't know anything yet.

They haven't worked as bankers yet.

They're just a baby.

Yeah.

If you interview them after a year and a half in banking and they're like dead-eyed and have built a thousand models, Like it's easier to find out who really wants to be there, who's really interested, who's like learned a lot.

And so it's a better system for them.

And then the other thing is we live in a very uncertain world about the hiring needs of private equity firms two years out.

That's true.

Robots are coming.

Robots are coming.

The death of the universe.

The deal flow situation is

there's less need for associates right now than people might have predicted two years ago.

And so

why predict two years out?

You can just wait.

And if everyone can wait then everyone can wait so you called it the old system and that

the system as of as of six months ago yeah right well i was gonna ask do you think that this changes anything like have we seen the end of this cycle is this a lasting fragile what did you call it i liked that fragile equilibrium i think that

between

the ai stuff and the relative slowdown pe

no one is

desperate to hire the best possible 22-year-olds to start in two years.

Those are separate points from Jamie Dunman's moral authority.

I think

in five years, in two years, if private equity is booming and they're desperate for people to do deals and the AI thing was just the hype

and they think, how do I get the best possible 40 bodies and seats?

They'll be interviewing earlier.

These things always break down, but

they'll break down because of competitive pressures, right?

And if there are no competitive pressures for them to break down, they won't break down.

So I don't know when that'll be.

So watch this space.

All right, goodbye.

Okay.

All right, Matt.

Bye.

And that was the Money Stuff Podcast.

I'm Matt Livian.

And I'm Katie Greifeld.

You can find my work by subscribing to the Money Stuff newsletter on Bloomberg.com.

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