Michael Sonnenfeldt. Post-Liquidity Ultimate Wisdom.

39:32Entrepreneurs, as you say, very often can't be introspective while they're in the act of working 60 hours or 80 hours a week. The indignity of having to wait online to get your own coffee after you've had a thousand people working for you and the fact that there's nobody laughing at your jokes anymore. because you don't have any employees is both frightening for some, but an extraordinary opportunity for others. People who did it successfully in the sense that they ended up building a fulfilling life for themselves and making meaningful impact in the world. Do you see any patterns, what it is they did that others didn't that brought them there?

40:19Sometimes you hear people say, well, I'm not very philanthropic because I had such an impact employing people or providing products and services. But I think impact also has to do with gratitude, which is such a key part of a person evolving, for lack of a better way of saying it. I think there's a difference between somebody making a fortune, providing even excellent quality services and employing people, but keeping all the benefits of that for themselves. That's different than the same exact example where somebody takes those financial benefits and tries to make a philanthropic impact out of a sense of gratitude and wanting to give back.

41:12You know, there is this interesting idea in the ancient Indian Vedic scriptures that we can only judge a person based on that person's intentions, never based on the results of that person's actions, because that's out of that person's control. So to me, for example, when I think about impact, I usually use that mental model because I think, okay, if someone goes into business with the intention to solve an important problem, and it's a big problem, and they do it through business because that's their skill. That's how they can make the most impact. For me personally, it's good enough. I don't need them to necessarily achieve a purely philanthropic result.

42:02And some of these people I noticed, they also end up working on venture philanthropy, which I think is quite a big trend now, which I think is quite interesting. This is how these people try to combine philanthropy with business. I'd love to talk to you about this because I'm also very actively looking into that venture philanthropy as an activity. I have a particular interest in the intersection of politics, philanthropy and investment. And what I mean is that in the 90s, I was interested in international security as a way to educate myself and philanthropically support some activities. And I led peacekeeping inspection teams around to 28 different war zones as I was also doing some shuttle diplomacy back channel in the Middle East.

43:01So I make no judgment about people who have entrepreneurial success in one sphere and then are philanthropic in another. But after 9-11, I started thinking that I hadn't been as successful with my Middle East diplomacy as I had wanted. So I decided a few years later to tackle something a little easier, which was climate change. What I'll call my climate portfolio, I run a venture fund for climate. in the last year we last couple years we created or funded the Yale Environmental Law Clinic the Environmental Protection Clinic at the Yale Law School and funded the creation of this School of Sustainability and Climate Change at Ben-Gurion University in the Middle East in Israel the third initiative would be at MIT where I'm the co-chairman of the Climate Pathways Project.

44:11And politically, I've been involved with campaigns around climate as well. We're going to have to rewire the planet over the next years if we're going to solve climate. We'll spend more money rewiring the energy complex and turning it into an electric distribution system. you could do in medicine you could imagine people investing in new age drugs funding research at universities and figuring out what policies are most conducive I'm not unique but I'm lucky enough to be part of a group of people who are pursuing these three initiatives and trying to make one plus one plus one equals five or something.

45:01So basically you choose to do venture philanthropy as opposed to impact investing, which is much more common. I think another term which is used is concessionary finance. There are some people who will take low market returns in investments because of the impact those investments will have. I found that to be a slippery slope because when you're harnessing people to make investments, if you're not trying to figure out how to maximize return within a legal framework, I'm not talking about theft or pollution, I'm saying within a framework, then the best power of a capitalist system to have the best players who perform the best rise to the top can be lost.

45:57So I had owned a solar lighting business and tried to do just what you were saying, which is to give our solar lights in an emergency setting. I was running a business and I was trying a business model that said, let me sort of pay it forward. I'll make these contributions and maybe that'll motivate our employees to feel elevated. And maybe it will bring aid agencies to understand the power of what we're doing and order more lights, more solar lights. It didn't work. My observation was in many companies that have a large working class population, people's concerns were putting food on the table and shelter.

46:53And some of these broader concerns were not as uplifting to some of our employees, understandably, because they had much more immediate concerns. but I didn't get a sense that this lofty purpose I was trying to imbue in the company was being translated into any superior performance. Ideally, you'd like a greater purpose to motivate people, but in the climate business, we're not willing to accept sub-market returns. It may happen, but we don't invest because in order to attract capital, we have to have returns that will allow capital to come. Sometimes I say, who am I kidding? Because I pretend I'm not into concessionary finance.

47:46So I work like a dog to maximize returns, but then I give away a lot of money. And if you combine the two, you effectively have concessionary finance. We don't have access to capital that I'm aware of that is willing to take a lower return. So we have to be pretty disciplined about what we'll invest in. You know, if I think about it as a person who is considering investing into one of those funds, I would really want to see that it's a sustainable business because I wouldn't want it to disappear tomorrow. At what point in your life did you discover philanthropy and why? What triggered it? My father was the chief interpreter of the Nuremberg trials after World War II for the American prosecution at the age of 23.

48:39Incredible. It's an incredible story. And in a sense, he did that as a public servant. one of the things that happened is I was very lucky to be successful in my 20s and when I went around the world I started traveling quite a bit I noticed that in certain countries people were not as surprised by my success as they were that there was a country where a young man could achieve so much success. My philanthropic activity really came about because I was profoundly aware of how lucky I had been. It didn't mean I didn't deserve the success. It was more important for me to establish my identity as someone giving back.

49:37I've not been immune to acquiring wealth, but I'm actually more interested in starting things the act of creativity and that's been much more important to me psychologically than any particular amount of money that I've created and I found that when I was thinking about my identity I really wanted to give back in a way that not only reflected the success that I had achieved, but also gave me another outlet to be creative in thinking about creative acts of philanthropy, of being a venture philanthropist, starting new philanthropic activities and watching them sprout and have an impact as well. So today, your identity is linked to your philanthropy more than anything else?

50:41Just like you don't see the foundation of a building when you look at a beautiful building, and yet it's as important as the part above the ground. A lot of my philanthropic activity is sort of foundational to who I want to be. So would it be correct to say that for you today, it's very important to keep doing what you love, which is being actively creative, right? Including through your beautiful art, which I can't wait to talk about. But at the same time, to feel that you are giving to others. My father grew up in Germany and Europe has a more socialist bent than the United States. In the world he grew up in, being a good citizen meant you obeyed the law and paid your taxes.

51:35but the state created the museums the state created the hospitals so first of all we grew up in a different time and a different place I've had the good fortune to have the resources to do that because but there are many people who volunteer and do incredible things with their volunteering I'm just trying to figure out where a certain amount of energy and a certain of dollars can have the biggest impact so in that sense uh i am on a search for impact that's different than when you use the word impact investing which has a lot of that but just to be vital and to be uh impacting the world i'm indifferent right now at this point in my life between philanthropic activities and money-making activities other than that i have a fiduciary responsibility both to myself and to my partners to be very mindful of the dollars that we risk but emotionally there are times where I feel I've had an even bigger impact in the philanthropic world.

52:45Do you give money away to charity organizations? Every day. How do you think about it comparing to your own philanthropic activities? Because some people are saying we only want to do it ourselves and I think part of it just comes from the fact that most of us entrepreneurs are control freaks by nature and we simply don't trust somebody else do it for us. In many cases I'm donating to organizations that I'm involved with personally and have a deep connection to the people running it or the board or whatever. So there are times where your donation is either anonymous or one of many, where collectively you're achieving something with others that you can't achieve on your own.

53:37And some people are content with that type of philanthropy. And others, for good or bad reasons, want to be more in control. When I say good or bad reasons. There are times where somebody can spend a small amount of money and have an extraordinary impact because of their entrepreneurial skills. But frankly, there are also times where people's egos have them believe that by doing it on their own, they'll be more effective and the money would have been much better spent in collaboration with others through an existing institution. And there's no rule. It's a case-by-case analysis. But there's no question that in some cases, people are starting their own philanthropic activities more out of ego than an assessment.

54:31But in other cases, because they did that, they've made a huge outsized difference. So it could go either way. You mentioned before that you think an exited entrepreneurs should take two three years to do some introspection to understand themselves and the world and i also know that you've traveled a lot around the world would would you recommend those people to go and see other countries and experience other cultures well i always recommend And seeing other cultures because the more global the world has become, the more necessary it is to appreciate the breadth of the world. Very few people really have a sense of the breadth of the world.

55:22But, you know, there are some people who choose not to travel and they can lead perfectly healthy lives. But I think the act of seeing other countries and other cultures and trying to place your country and your culture in a context, a global context, is a really mind -expanding, healthy thing. Tell me about your art, your photography and fashion. I've been interested in photography pretty much my whole life. My father was into photography. It's not a coincidence that I'm into photography. I was the photo editor of my high school newspaper. In my 20s, late teens and 20s, I spent a lot of time behind the camera just at family events and so forth.

56:17and I got married and one day I was at a family event and realized that I was hiding behind the camera and put my cameras down for many years. I didn't really pick up photography in any meaningful way until my older son started playing first hockey and then lacrosse and he was a champion lacrosse player at Princeton. In the United States, all college sports is regulated, so parents are not allowed on the playing field. The only exception is if the parent is an officer of the university, meaning a coach or something. So Princeton was kind enough to name me the official volunteer photographer of the lacrosse team, allowing me to be on the team and for those four years I filmed every game and then ultimately produced four books from it and it was you know that expression of 10 ,000 hours of doing something when I think of the confidence I had by the end of those four years compared to I had never been really a sports photographer at the beginning was just a personal journey and a delight but that morphed into an interest in collecting photography and over the last decade I've been building a large photographic archive that now has sort of blossomed into activities.

58:07I'm here in London. I'll be, I have a show right now going on in Madrid with one of our artists, Deborah Turbeville, and we just have a new book that we've published that the book party is in Paris in November. The photo work that I do now has a particular passion for a gap in the photo world, what happens to estates of important photographers after they pass on. And for a very, very, very small number of the very, very best photographers, their work is of such immense value that it can support a foundation like the Richard Avedon Foundation or a few of the other great photographers. But just below that, you have many great photographers who might not have been great business people.

59:05And when they die, their entire estate is in limbo and their family doesn't know what to do with it. And museums no longer have the budgets to be able to acquire or manage those estates. And so we've created an archive that acquires estates of photographers. It took until just now for us to be able to begin a series of shows and books because it took that long to really disentangle what was just a hornet's nest of materials that are now organized into a professional archive. Would you say art is your source of fulfillment in life I wish I could but I would say that the philanthropic activity and the acts of creativity that I talked about more touch something fundamental for me that's more exciting to me than collecting something and I love collecting but being able to create something speaks a little bit more to my passion because when we first met after maybe two minutes you were talking about your art and and showing me how you created it and it was beautiful to watch your eyes lit up and I was really impressed I was hoping it was in response to a question you asked me rather than just blurting it out.

1:00:41No, no, no. It felt very natural and organic. But I had watched quite a lot of videos with you before I met you. And my impression was of a very serious investor and businessman. And then I meet you in real life and you are this amazing artist who has beautiful stories and incredible... I think I was comparing my outfit to the beautiful outfit you were wearing. Probably. Yours was better, I'm sure. much more interesting so what is your plan for your art do you have a plan to turn it into a business as well absolutely not um i can i've i know how to lose money in businesses but i don't want to start an art business and lose even more money my greatest pleasure is when I'm able to create in the area of clothes something that another person that I like will wear.

1:01:42A number of Japanese artists whose work I collect wear some of my shirts, which gives me extreme pleasure. I'm sure lots of people would love to wear things made by you, but you're not really sharing. Yeah. Not yet. Okay. I would love us to talk about the loneliness that exited founders often feel after they exit. And a few years ago, you published a book called Think Bigger, which I thought was incredible. And in that book, you're talking about how relationships are affected deeply when somebody has a singular success in their social group. and nobody else has that success. I'd love to hear more about it.

1:02:34You know, success and wealth, particularly created wealth, can be very isolating. You're thrust into a world that you are not familiar with. Most people who have entrepreneurial success don't really fully enjoy the benefits of the wealth they've created because it's not free and available. It's tied up in the business until there's a sale. And then all of a sudden, possibilities open up. And it's very hard to exactly find the right balance, even in terms of what you want to spend or do with your capital. But all of a sudden, it's sort of like a horse pulling a head in a race and very often leaving the other horses behind.

1:03:25all of a sudden you can afford things that nobody else that you know can afford. Now, obviously different communities have different comparative wealth. So if you created your wealth on Wall Street, you probably are one of many who've created similar wealth. And the act of wealth creation is very different because you're sort of in the same cohort before and after. But if you grew up in an isolated town and you're the one person who started a business that became phenomenally successful, it's not only isolating, but you have to engage in behaviors that, while being sensitive to your other friends, means you're not going on the trips that you could afford unless you're paying for other friends.

1:04:21to do it because you don't want to make them uncomfortable. It's very difficult to find the balance of how do you enjoy the wealth that you've created without alienating friends and family who are in a different situation. So what's the solution? Being sensitive to the fact that when you have different resources than other people do, it's not exactly possible. In other words, if you come to my apartment, obviously the apartment I live in is different than the apartment I would be living in if I didn't have the success that we've had. But there's a way to include people in your wealth where they feel embraced.

1:05:00So sometimes it means being the host for a trip that friends or family couldn't take on their own. It's very circumstantial. But clearly, it starts with some sensibility about your good fortune and not wanting to make others feel uncomfortable because of it. I've observed that when we build our businesses, we tend to want more and more of everything, more money, more success, more attention, more people. Once we've sold the business, a shift happens and we often want less. We become very picky with whom we want to spend time with, how we spend our energy, what we invest in. Is it your observation as well?

1:05:53When you're so focused, as many, but not all, but many people are, on creating success, you don't want to be distracted both for the good and bad by things that might be getting in the way of your success unfortunately sometimes marriages fail children's relationships are put on hold relationships with parents brothers and sisters friends friends health physical health mental health, all of these things in variations can be subordinated to the singular goal of success. But once you've had the sale, you now have time to be looking at all of those. And that may seem very picky, but it also could be discerning.

1:06:46So there's two different sides to the same coin. But, you know, people naturally can be spoiled and can have unrealistic expectations. And when you have great wealth, sometimes you can indulge those unrealistic expectations without realizing how far afield you've come. But do you think that also when we satisfy our desires, especially for material things, we just stop enjoying them anymore? So I think it's a sort of an issue of personal evolution of what's important. As people become more successful, a lucky few realize their time is worth more than their money. But most of us are tyrannized by the fact that our money is worth more than our time.

1:07:45particularly with people who've been very successful who might have come from much more modest beginnings sometimes it's hard for them to spend money on things that in the scheme of things if they spent the money they might be able to spend a day with their children but you know it can all be a trap as well. My point is that very often when you're single-mindedly focused on creating wealth, the meaning of it and the ways in which you might spend it, you're not spending a lot of time thinking about. And as you begin thinking about it, what you realize is for many, the creation of wealth was an illusion that is shattered not because you don't have the money but because the money isn't buying you any more fulfillment or happiness.

1:08:43So when we find ourselves more successful in monetary terms than our family and friends we inevitably start getting requests from them for money and investments and you know in the tiger community it's one of the most common question how do you say no without damaging the religion actually that's the reason we created tiger so that you can say to your family member my group won't let me invest i didn't know that in a trading business sometimes young traders are giving given money that they're likely to lose but the learning from it will make them better traders later on. It's very difficult, particularly in family matters, but each family is different, when one person is incredibly successful to understand what your responsibility or obligation is to the rest of your family.

1:09:45And there's no absolute because different societies have completely different rules. So envy is almost one of the most basic human emotions. I would be inhuman and lying to you if I denied that I was envious of some others. and I would be blind if I didn't see that some people are envious of me. And it's very easy to blind yourself to both of those realities. And when you can appreciate both of them, it allows you to be a little more realistic in your assessments of relationships and responsibilities. responsibilities if my success is luck do I deserve it and can I keep it or do I have to share it because I was the one who got the luck on behalf of my family if I believe that my success is only because of my hard work and I deserve every penny of it whatever that means some people become very constricted and parsimonious.

1:11:10Others would say, well, even if it was because I earned it, I was still lucky to have had the skills that allowed me to be able to earn it and are more willing to share. But this issue is constantly evolving. It's very difficult to exactly find the right balance. I think the people who think about these issues are trying to balance, even when they want to be generous, with when is certain types of support enabling bad behavior because it can breed a kind of dependency. And how do you balance your desire to be generous without wanting to somehow enable bad behavior. It's a very difficult balance to find.

1:12:08How to not spoil children with wealth? Love them. When wealth is a substitute for loving involvement with children, many parents think by showering kids with gifts or toys or cars or clothes or trips, that that makes them a good parent. In the end, most kids want contact with their parents. And I think that if parents create an environment in which kids can flourish and feel that their parents are a meaningful part of that flourishing, that the wealth aspects are relatively less important. That doesn't mean children who have, obviously children at any economic level can have loving, involved parents, and at any economic level, those children that have loving, involved parents on average will do better than those who do not.

1:13:20One of the really amazing things one Tiger member said was, I'm not giving my kids anything. And I thought, oh my God, here comes another story about how hard it was for me to earn money. And I want to make it just as hard for my kids, because otherwise they won't ever fulfill themselves. But as I was thinking about that in my mind, he said, no, you don't understand. I'm not going to give my kids anything, but I'll invest everything in them. And I think while it's not a perfect way to think about it, the notion of investing in children's futures is very different than just allowing them to be part of the lucky sperm club that inherited this extraordinary wealth.

1:14:15And I think also imbuing in kids a sense that if they inherited wealth, it comes with responsibility, not just to manage it, but to give back to society from which the wealth was created. I think those are important aspects of a healthy relationship with kids and money. So there seems to be two popular school of thoughts on the subject. One is to get the children involved as early as possible, prepare them for the inheritance, and the other one is actually not even telling them that they have money, so they don't expect anything. What's your view? Just anecdotally, about 70 % of Tiger members tend to want to be less disclosing with their children for fear that if their children knew the extent of their wealth, it would demotivate them and they wouldn't have the chance to struggle and succeed.

1:15:21and about 30 % believe that if there's significant wealth, the sooner you start teaching kids to be prudent stewards of the wealth that they will inherit, the longer you have to work with them to transfer skills and knowledge and to prepare them for the responsibilities that wealth creates. I'm in the latter category, not the former, but I respect both views. How do you select people you want to surround yourself with? So no human is an angel. And even the biblical figures were deeply flawed. There were liars and adulterers and who knows what. Some people are not value-driven per se, and they hang out with people who they just have an attraction to for some reason or another.

1:16:24I happen to admire creativity, number one. I would like to think I'm more rather than less attracted to people who've done some kind of personal work to understand purpose and meaning. I'm not attracted to people who say one thing and do the other if you're too discriminating you'll have no friends because nobody can meet any standard that you set there's no perfect human being everybody has shortcomings and if you're interested in surrounding yourself with people of high quality, high morals, what you'll find is everybody's made a mistake, including me. I'm a curious student of the human condition.

1:17:29I've been in a situation where people who I have the absolute highest regard for because of their philanthropic activity, the type of parents they are, the type of community members they are, the type of leaders they are. Every once in a while, I find that they've done something that either is shocking to me or surprising to me. And you have to say they're human. What came out of it? But if you're not trying to be discerning about people, you're just going to hang around with a bunch of creeps. I would say that I'm aware of the qualities and I'm interested in the qualities of most of my friends.

1:18:13They're very different. I probably have more entrepreneurs as friends simply because the journey that we share of the kind of risks and rewards are different than others but on average I'm more attracted to people who want to make a difference I like nice people I probably am more attracted to people who are nice even though nice was not the in the lexicon of what I grew up you know I grew up in a world where nice guys finish last That was the expression. And very often, you know, if somebody would say, are you happy? Like happy, what the hell is being happy? But fulfilled is a form of happiness.

1:19:03And within some bound, I'd like to judge people less, not more. I think most of the people that I spend most of my time with are people of very high character who want to give back to society and do it in immensely creative ways. But it also sounds like you've become more forgiving and accepting of other people over time. You probably have to ask my wife or family members whether that's in fact the case. but that's what I feel. So you mentioned meaning and purpose. What do these words mean to you? You know I like both of those words. I'd like to live a life of meaning and purpose. Like to make a difference but I also would like to like life.

1:20:02In other words when I'm a meditator I meditate in the morning, most mornings, not every morning. I'm not sure there's any quote meaning or purpose to meditation, but it clears my head and gives me a perspective and accesses a part of my brain that sometimes I lose touch with. Very similar to people getting idea in the shower, You know, because the water and the hot water and being alone allows things to pop into people's heads. I'm not in any way a religious person. But I do have a sense that every person has potential that is mostly unfulfilled. And that the arc of life is to try and understand what that potential is.

1:20:58So when you talk about meaning and purpose, it's very easy to be quite narrow-minded and not take the time to look at the broader context. So what looks like meaning and purpose through one lens, when you zoom out a little, could have a little different context. clearly those people who are trying to have more meaning and purpose are more likely to find it or enjoy it than people for whom that's not a motivator. To me, meaning is about this sense of self-realization, doing something that you were designed to do in this world. And discovering this is quite a long journey, but purpose is more about what you give to others.

1:21:58Many years ago, we had a member at Tiger who did his portfolio defense, and he was very successful and very wealthy. And he described himself in a way that said, I have so many children. This is what I'm doing. I've had my liquidity event. I'm an incredibly generous person. This is what I'm doing, da-da-da-da, and going through it. And when he said, I'm an incredibly generous person, an alarm bell went off just because I've sat through a lot of portfolio defenses. and when I saw the amount of money he was giving away in relation to his wealth it seemed like an incredibly small amount of money and yet he characterized himself as an incredibly generous person and I'm not there people don't join Tiger to be judged my purpose was not to judge him so I had the discipline I thank my lucky stars to say you know I'm just curious you mentioned that you're incredibly generous so I'm using your words I'm not characterizing can you relate the amount of money that you give away to your definition of incredible generosity and he said oh sure I give away more every year than my parents gave away in their lifetime it's an amazing amazing conception I said well just for what it's worth looking at your financial situation given that you want to be an incredibly generous person I'm simply observing you have a lot of financial capacity to give more based on your circumstances He didn't say much.

1:23:51A year later, he came back for his portfolio defense, and he brought the picture of a building that was now under construction at his alma mater because he had given in that year a commitment of I don't remember how many millions of dollars that were 10 or 20 times what he was giving away annually. My point is, I'm not sure that my life's purpose is to have been fulfilled by that single act. But when I think about the meaning of the impact that organizations like Tiger can have on its members, that's one of 20 examples I could give you where by creating an environment where people can explore issues of identity and purpose and meaning, they can realize potential that they didn't know they had.

1:24:53Is it how you envisioned a tiger when you just created it? Nobody plants a seed of a tree they're not familiar with. It's one thing if you take an acorn from an acorn tree and you see the tree and you plant the acorn in the same tree, some variation. but if somebody sent you a pack of seeds from a far away place and you planted a seed and you had no idea exactly what it was that you were planting but you knew it was a seed of a tree and it would grow and you would nurture it in some sense it would be unimaginable 25 years ago to think of all of the collective creativity that's come out of the team and our members to create this kind of self-creating organism that would be just impossible to have predicted.

1:25:53So many random things have happened. But on the other hand, the vision which permeates it all is the power of peers to learn from one another, and that when peers can share in a trusting environment, extraordinary things can happen. So that part is what I envisioned, the details I had no idea of. I'm very curious about your marriage. And I wonder what it is you learned from your marriage and through all the different experiences that you have had in life and staying in this union and partnership with your wife. So I'm married 47 years. I think that's a statistical anomaly. I've had the good fortune to have someone who supports me and partners with me and in her own right is a beautiful person.

1:26:55and it's a bit of opposites attract because we're very different people and yet life is dramatically better because of the different things. At least I hope she feels the same way. You know, we have four kids and my wife was a much more natural mother than I was a father. She grew up in a family, I like to say from the neck down, it was all heart. I grew up in a family from the neck up, it was all head. Our children's connection to us more closely follows in the line of her connection to her parents. We're, in many respects, incredible partners.

1:27:54and to put up with me for 47 years probably is an act of kindness but you learn to accommodate over 47 years. There's something that clearly people might learn when they've had failed relationships that they can try better the next time and see if it works but there's also something that happens in a 47-year marriage of melding and accommodating to one another that's quite different than serial relationships would afford how do you want to be remembered

1:28:44what popped into my head would be an epitaph of he gave a damn that would be enough wonderful Michael thank you so much for being with me today and for sharing all the wisdom my pleasure