Martin Shkreli: From Most Hated Man to Optical Computing Visionary – Curiosity & Defiance

19:08James Altucher:Again, they all did their PhDs down really specific areas of optical computing. It might not to have anything to do with what we're talking to them about, but they can talk very well. So you have to keep up and you can't, and you're right. I think it keeps you young. Put it this way. It makes you older when you give up trying to learn. When you say, oh, I can't do it. I'll just let these guys do it. I think that makes you older.

19:29Martin Shkreli:Yeah. Two of my favorite guys like this are, you know, one's a competitor to us and the guy's, you know, 20 years younger than me almost. And, you know, he's, you know, that energy makes up for it. And this other guy is Gavin and Uberdi, who runs a thing called Etched AI. And Gavin dropped out of Harvard to start Etched AI, which is a semiconductor company. And, you know, what do you know about semiconductors a year into Harvard? You know, nothing. You can't. But here's the thing. I mean, really energetic, smart people, they learn. And there's another guy, Sam Zalouf, who made, you know, fabrication equipment, semiconductor fabrication equipment in his garage.

20:04Martin Shkreli:And, you know, just hunting around, like, you know, lab closures and stuff like that. He got really expensive equipment. for very little. And he put it all together in his garage and he had to get zoned for it. It's stuff. And he started a company. So like, that's what it's all about. You know, it's like, can you defy the odds? Can you do that? And then when you meet with your experts, look, it's not like you're trying to outshine them. You know, the goal is that you can ask them smart questions and you're never going to be as smart at thing X, like chemistry, let's say, as like I had a great chemist who worked for the only chemist who won two Nobel prizes.

20:39Martin Shkreli:and he was his postdoc and I'm never beating this guy chemistry, right? But that's okay because I don't need to beat him. I just need to be able to talk to him and on some level where we understand each other. And I think for a business person to do that, you know, it's not a lot more than, you know, a couple of classes.

20:59James Altucher:I mean, it really isn't, you know, a lifetime. I always feel like you kind of have to look at it from what is the 100 ,000 foot view here? So like optical computing. All right, well, semiconductors use electricity. Now imagine if you can make a chip using light instead of electricity. So what do you need now? Now you need to understand the light has to be strong enough to toggle atoms to open up the logic gates. And now you have a chip. And then just going down from that, like starting at 100 ,000-foot level, you could start to understand things in order to see, okay, well, now I need to know how to make such a chip.

21:30James Altucher:And you go from there.

21:32Martin Shkreli:I don't need to know the math of how light works. I'll debate you on this a little bit because it's interesting. There's so many approaches. You articulated one, but there's different ones. And I think you could take a hybrid of a little bit of both. So Karpathy, the AI god, if you will, you know, his approach is very similar to yours, but it's different in some ways. So he thinks you should jump in the deep end. You should read the most complicated paper on the state of the art today and work your way backwards to the fundamentals. Okay. Some people believe you start the fundamentals and work your way forwards because you're going to be lost, you know, try and Karpathy sway.

22:08Martin Shkreli:Now you're a chess master. You know, there's sort of an art of learning there too. And I use the term art of learning because it's Waitzkin's book that was recommended to me many years ago about, you know, how do you become good at things? And Waitzkin famously was, you know, obviously chess prodigy, but he also became a Tai Chi champion. And I think he's trying to do a third thing now. And the point is, like, how do you become excellent at all this stuff? It's really hard. Michael Jordan tried to do baseball. He can do it. So, you know, and then hedge fund guys try to be VC guys. They can't do it.

22:39Martin Shkreli:So there's often, you know, this desire to do something totally different from what you're good at. And the question is, is there this universal roadmap to learning things? I like a hybrid of both. I think you do have to understand the fundamentals, but I think that you can spend your whole life trying to understand fundamentals and go nowhere. So you have to get to the applied practitioner side of things too. And this healthy balance of like, just knowing in your gut when to like, okay, I'm getting too in the weeds here and knowing to like move around. And in chess, it's funny because like some people overstudy the openings, which was a big mistake of mine early on in chess.

23:16Martin Shkreli:And then they underdeveloped their tactics. And then there's people who only develop tactics and they're stuck at 1800 for the rest of their life. And so I'm curious how you went about this and things that you learned, because I think it's probably different for each field. Like there's sort of a known way to get good at chess, but there's many ways. And you see people who are good at chess that try different things.

23:34James Altucher:Yeah, I would say, I'll give a different example. So for six years, every single night, I did stand-up comedy. I even bought a comedy club in New York City and would go there and perform every night. And I would say, okay, I got to be a mediocre comedian at best, but then my public speaking ability shot up a thousand X because I was able to borrow the hours I spent on comedy and bring them into another domain. So for instance, like in the semiconductor example, okay, I've studied computer science and electrical engineering. I know the practical application of semiconductors. I've built a computer.

24:11James Altucher:So I never did anything with optical computing though, but I'm able to borrow hours from my computer science in studying optical computing. So I think, yes, you're right. You have to understand how something's going to be used in practice or else you can't connect it to the real world. But it's good if you could figure out what areas you could borrow from. Like I've even seen you discussing optical computing, which in some ways you've pointed out to me that it resembles biotech in that you're working on something that could save the world, but you won't know until it's done and it's tested. And that's very similar to how biotech works.

24:44James Altucher:You're in a very complicated science, but with the same sort of structure of how the outcomes work. And you're able to borrow that knowledge in terms of running a company in the sector.

24:54Martin Shkreli:And quantum is even more than that, right? Like optical, I think, is going to be a little closer to semiconductors, but quantum is even deeper, right? Where these guys are really looking at 20, 30-year outcomes. And that's worse than biotech, actually. In biotech, you do get an answer. Well, yeah.

25:07James Altucher:In biotech, you know what to do to get your answer. Right, that too. The problem with quantum is that it's actually impossible to understand. It doesn't really exist as a science yet, like fully. It's not a mature science.

25:17Martin Shkreli:Yeah, I had a friend who's maybe the top, at least the top three quantum investors in the world. And he said, if you want a good litmus test for how full of it these quantum guys are, just ask them to explain superposition. And he said, I've talked to like every quantum physicist in the world. Nobody can explain why it happens and how it happens. And, you know, we just don't know is the answer, right? We're guessing, we're making, you know, it's like memory, you know, clinical or neuroscientists develop this idea of an engram. but it's just an abstraction for thought. It doesn't mean anything.

25:49Martin Shkreli:And, you know, you say, when's an engram formed? Well, it's just like saying, where's a thought formed? And we don't know. You know, we can't even ponder that question really effectively today. And maybe we will in a hundred years, but we had things like humors, right? That went back before medicine, you know, developed, you know, we just sort of thought there's gotta be something in us that, you know, is kind of like driving things. And there's four humors in Shakespeare's world, right? And so like, I think that, you know, So being humble about, you know, some of the stuff helps a lot because I think you can overborrow.

26:19Martin Shkreli:And I think that, you know, 10 years in biotech, I didn't get good at it till last year. And, you know, arguably, you know, being good at the trade versus being like great at public speaking and management, PR and things like that, you know, they're different things. But just knowing the drugs, you know, it took a long time, you know, because you have to see edge cases. You have to see exceptions to the rule. You have to like get old and grizzled and gray. Software is the same thing. You know, I'm still on a software journey. And it's, I was able to borrow some, you know, things like professionalism, scientific method, you know, and even in computer science and software, less so than biotech.

26:58Martin Shkreli:But people publish, you know, there's Turing Award winners, there's public companies, there's open source or off patent. You know, so there's a lot of analogies and ways you could do things. and certainly plenty of parallels, but ultimately it's this technical, nerdy field. And to me, the thing I see most people stumble on is they're afraid. They're just afraid of math. They're afraid of anything technical. It sounds scary. At first, all of these things sound scary and then you just have to calm down and just train yourself not to get scared. And I think that is the most effective way to do this.

27:32Martin Shkreli:And looking at photonic computing, which could be the next 10 years of my life. But yeah, I think there's, you know, there is like the sacrifice you have to make as an entrepreneur is probably the hardest thing. And you have to convince other people to make that sacrifice too. And that's, you know, it's really, I mean, that's the crazy part of it. And there was a guy, venture capitalist, who said that ayahuasca was actually his biggest risk factor. because when his founders took ayahuasca or went on some other spirit journey or went to Burning Man, they just magically realized like, oh, starting a company is dumb.

28:04Martin Shkreli:You know, this is a waste of time. I should chase love and soul and vibrations and religion. And like it all like melts away. And this like a lot of times when people start companies, they do it out of a deep psychological issue. And this is known thing in hedge funds. And now it's more of a known thing in Silicon Valley, especially after the Musk book came out, where it showed just how tortured this guy was, you know, and how difficult his childhood was. And sometimes it's even an invented thing for some people. But either way, you get this chip on your shoulder and you say, I got to show everybody.

28:36Martin Shkreli:I'm going to show the world. And the more the pain and trauma, the more you have to show the world. And like, you're really looking for these broken people who will literally work 24 hours a day, seven days a week. I'm going to learn, I have 10 photonics textbooks. I'm going to get through every one of them, like it or not. And I'm going to read every nature photonics issue. I'm going to read every patent on the space, just like I did in my last field. And the question is, what's making you do this? Just go play with your kid. I can't explain it. But I think that people like Elon, at some point, the richest man in the world, 10 companies or whatever, what is the drive?

29:12Martin Shkreli:And I don't believe for a second that I'm trying to help humanity. I think that people like to, it's a nice story. It's a nice gloss over it. But I'm going to go with Ayn Rand on this and say it's ego.

29:26James Altucher:But you know, the story, having a nice story, though, keeps you motivated, right? Story is what motivates humanity. And having that umbrella story, I got to get civilization outside of the earth, that motivated$800 billion worth of value. So when you started touring pharmaceuticals, now you get this drug, Dataprim cures this very esoteric diseases very well. And then I'll play devil's advocate like what happened. You took the drug price,$13, brought it up to $750. Obviously when you take a drug from$13 to $750, I don't know how many people this drug cured, not a lot, but everybody was upset at you.

30:10James Altucher:And you didn't budge. There was a chip on your shoulder.

30:14Martin Shkreli:Well, you know, it's interesting. I'm playing devil's advocate. everybody but the patients and the doctors who are involved. So everyone is politicians and journalists, none of whom were customers are taking the medicine. And the people who are taking the medicine saw no difference. You know, drugs, you know, one of the problems is that...

30:33James Altucher:Right, you gave volume discounts. Like, everybody in hospitals guaranteed the drug. Like, you did everything you could to make sure the patients were fine. But then what was the point of raising the price?

30:41Martin Shkreli:Well, I mean, it still netted a big increase in revenue for us. But I think that the optics, no pun intended, were sort of that something at$13 going to something at$750 is a crazy number. And if you're not a super millionaire, on a day-to-day basis, you could think about, well, what's$13 cost? What's something that costs$13? Maybe a pizza pie. And, you know, imagine the price of your pizza going to$750. You'd be a guest, right? I would be furious. But the thing about drugs is that we don't pay for drugs that way. It's just not how it works. You know, insurance pays for drugs and insurance fits the bill.

31:17Martin Shkreli:And people say, well, what about people who don't have insurance? And then we actually give it to you free. And, you know, we never had a patient go without it. And what's even funnier about this, and this is my favorite part of that saga, is that there is a drug that's generic that works as well as our drug. And so, pure methamine or Daraprim, Daro was FDA approved and it worked fine. But Bactrim was this old drug called Trimethoprim, which did the same exact thing chemically. It was an inhibitor of DHFR. It was seen just as effective by everyone who knew anything about this disease. And it was pennies.

31:52Martin Shkreli:There were 25 Indian suppliers of this penny, you know, of this drug. So the media actually did me this great favor because they said, Martin Shkreli raised price of drug, a drug that has no substitute. No one. I was like, that's news to me. So our biggest fear was that people would just rush to backdrug. And about half the people did. The doctors know.

32:14James Altucher:And your whole point in getting this drug was that it was already off patent. That's why they were so easy to give it to, right?

32:20Martin Shkreli:It was weird. There's this twilight of drugs that are technically off patent, but they don't have any generic competition because it's actually this wonderful cottage industry. If you want to make a fortune in pharma, there's this weird world of drugs that everything's less than around 50 million in annual revenue. and that's a place where pharma is very neglectful of those drugs because what do you care i mean eli lily is going to sell 30 40 billion dollars of a glp you know so for a drug that sells 30 million it's like they don't want it they'd rather disappear honestly and they'll give it to you for practically nothing but you have to traverse the bureaucracy of eli lily but if you make a generic to one of those drugs they're almost thankful because then they can discontinue it and you go get it now.

33:05Martin Shkreli:And you can replace their entire business for a million or$2. You now have a $30 million cash flow asset. So you just have to know where to look and how to look. And so this was one of those types of drugs where it was like neglected, abandoned, orphaned three or four times. And I had this inkling, and I'm not going to try to call this prophetic, but I had this inkling around the time that rare infectious diseases, including rare infectious viruses, were being neglected. And, you know, Daraprim or pyrimethamine was the only DHFR inhibitor approved for toxoplasmosis, which is actually, you know, pretty common disease.

33:43Martin Shkreli:And so, we needed more drugs. Like, just, you don't have to know anything about medicine to say, if you have one thing that can kill this bad bug, and it's been the same thing for 60, 70 years, you know, what happens if that bug changes? You know, what happens if that bug evolves? You're going to be in a really, you don't want to wait until it happens. And one of the nice things about the corporation is that the corporation exists as a steward for the community because it serves in their interest to do so. And pharma does this because it makes sense business-wise so that now there's a company making money on toxoplasmosis.

34:16Martin Shkreli:Bet your bottom dollar we're not going to let there be another bug that goes undefeated. We're going to be all over that. And the way Gilead has been all over HIV for the last 30 years. Nobody has done more for HIV than Gilead. Nobody. And they're just a for-profit company. And they now have, they took their first once-a-day HIV drug and turned it into this once-a-day cocktail, which was the first ever one pill a day, humanizing this disease, making it kind of easy to live with this disease, so to speak. It's not easy, of course, but much easier. And then they made, now they have, I don't know if you've seen this, they have a twice-yearly injection that you could just take two shots a year and you're protected from hiv if you're high at risk or or what have you i mean it's a miracle i'm gonna tell all my needle using friends this is great but you know it's it's it's you know people who engage in risky sexual behavior and things like that they're and also just just people in in high-risk zones like africa you know if you take two shots a year it's almost like a vaccine for hiv and they're i think they're trying to get to once a year.

35:20Martin Shkreli:And this is the kind of thing that's like the profit motive, you know, move heaven and earth. Now, of course, this thing can break down sometimes. Like, for example, Purdue Pharma didn't seem to want to protect the community. You know, there is a case to be made that we do need pain drugs. But unfortunately, their attempt to like oversell pain drugs resulted in now actually doctors paradoxically don't want to write these prescriptions because they don't want to end up in jail. So now people with severe pain actually, you know, oftentimes we're trying to give them like some NSAID or something and they really need an opioid.

35:52Martin Shkreli:But the doctor's like, I can't get you addicted. I don't want to get in trouble. And, you know, Purdue actually really ruined their community in two ways, not just the addiction that they created, but also now the aversion to writing prescriptions. I think you have to be a good steward of the community and it's hard to do in pharma. People just hate drug companies for some reason.

36:11James Altucher:Right. And this was the whole point is that all people looked at was, okay, this guy, Martin Screlly, he took this that was$13 that saves lives and he made it$750. And they didn't understand that a patient up the street, they have insurance in most cases, not in every case, but in most cases. So all those people, the insurance companies pay for it. When the consumer is arguing and yelling at you like, Martin's raising the price 50 times over, it's really the insurance companies that are suffering from that. It's not, you're not helping any consumer by making this argument. And then -

36:43Martin Shkreli:That's funny because there are drugs

36:45James Altucher:that are a million dollars.

36:46Martin Shkreli:Yeah. You know, a lot of people are like, has anybody afford that? I said, what about Serizime? Have you ever heard of Serizime? I said, no. How about Solaris? You ever heard of Solaris? No. Well, those drugs are a million bucks each. So why aren't you yelling at those CEOs? And, you know, immediately shut down, you know, any argument because it's like, well, let me get this straight. You actually don't know much about the drug industry. And people will confess. Like, I just sit with people in park benches and they'd say, how do you make that drug so expensive? Why? What kind of conscience do you have?

37:16Martin Shkreli:the person can't get their medicine. I said, do you know what? PNHs, paroxysmal nocturnal hemoglobinuria, rare disease, drugs a million bucks for the cure. You've never said a word about PNH in your life, right? And of course not. And so, you know, when people come to your industry and try to teach you about it, you know, you're sitting there like, you know, you got to read the, you know, at least take the one-on-one course before you come at me, you know, explaining why what I did was wrong when you don't know the first thing about it.

37:45James Altucher:So your point was that basically everybody who needed the drug got the drug. And the only thing who got hurt was insurance companies. But you made the point that, look, if an Aston Martin was selling for the price of a bicycle, it's okay if you raise the prices. Like, someone's just got to pay for it.

37:59Martin Shkreli:Well, even funnier than that is that we made it illegal in America to not have insurance. So I don't know if you followed this, but one year I got a bill from the IRS because I did not have health insurance. There was an extra surcharge. which Obama, and I kind of like Obamacare, but Obama made it so that either you have employer insurance, Medicare, Medicaid, or he forced you to get insurance to the Obamacare exchange. And the exchange promised to give you affordable insurance. But if you did not do that, you basically had this penalty that you had to pay. Now, some people said, what about undocumented people?

38:33And I said, you know,

38:35Martin Shkreli:I'm running out of like these populations to take care of. Of course, I want undocumented people to get medicine too. but undocumented people can simply go to the ER and get their prescription there. And we actually had to do this once for somebody in the Boston area. They're undocumented. They didn't have Medicaid or Medicare. They don't want Medicaid or Medicare. Because sometimes we'll even help you get insurance. You know, but this was a sticky situation. We said, all right, well, you know, one, give them the other drug, you know, Bactrim. That's 10 cents. But two, if you really need to give them this drug, we found a way that was, you know, arguably not the wisest way to do it, but we got the drug to them.

39:13Martin Shkreli:And again, that's a system issue. You know, people don't want to live within the system, then do I have the responsibility to make sure that they're okay, you know, when they, they're the ones living outside the system. So that was one edge case that was, I mean, there's a lot of undocumented people in America, but, you know, I didn't make them undocumented.

39:45James Altucher:This kind of led to what I'll call the Al Capone effect around you, which is that the government didn't really care about Al Capone's taxes. They cared about him murdering and killing people. But because they couldn't find the law that he was breaking specifically, they got him on taxes. And so then what happened was everybody hated you. And I want to understand, why do you think it was, why you? Like you pointed out, there were these other drugs selling for a million dollars. Was it the fact that you, why didn't they even know about you? And then the second thing, of course, was how did they then get you?

40:19James Altucher:But yeah, the first question is, why did everyone just pick on you? Why were you hated?

40:24Martin Shkreli:I think I took the PR debacle and kind of ran with it, sort of selfishly. In retrospect, I would have done it differently, I think. But the problem with that situation was that if people are tarring and feathering you and you just let them do it, they'll eventually stop. But there is this instinct to fight back. And especially if you grew up in the streets of Brooklyn like me, you know, you don't take punches, you know, you fight back. And, you know, especially when, look, you know, if some doctors upset at me, it's one thing, but like Hillary Clinton, you know, in particular was upset. And my reaction to that was, wait a second, you're basically, the way if our seats were switched and somebody asked me about this, I would simply say, I cannot change the price of a company's product any more than I can tell Tim Cook to change the price of the iPhone.

41:18Martin Shkreli:This has nothing to do with me. I cannot do anything about it. And of course, politicians would not want to say that. But I think that, you know, the implication from Hillary is that she was going to do something about or could do something about it. And that shocked me. That's when it kind of became like, you know, obvious to me that like you want to break like the holy sacrament of business. You want government to be able to control business. And obviously, there are regulated businesses out there. That's not a new idea. but the more government says, actually the prices you charge for your product, whether like imagine Netflix or food or things like that, we're going to make sure that they have like a certain cap or a certain minimum.

41:56Martin Shkreli:And again, utilities are regulated for that reason. But again, prescriptions aren't. And so if the point is, we are going to regulate drugs from now on, the selling of drugs, which have never ever been regulated. Okay, say that. But if you're, you know, the implication was like, oh, this guy's doing something dirty or something like that. And it's like, no, this is not a regulated thing. I can set the price of my medicine to any price I want. One penny earned. For pennies. There was a rival that was generic for pennies. There was no generic to our medicine, of course. It would come later. But, you know, so it was just this like, you know, my refusal to apologize, my refusal to like, you know, bow to people, my willingness to disrespect, say, Congress or presidential candidates was unusual.

42:45Martin Shkreli:A lot of people would not do that for expectation that there would be some repercussion. Again, I'm going back to that naive, aloof optimism. When you're seeing the Pledge of Allegiance in school and the Star Spangled Banner, which we had to do both where I grew up, you sort of believe that, oh, that can't happen. We're in this free country. I have freedom of speech, et cetera. But then you realize, getting to the second part of your question, And like, there's no them in government. There's actual people. So when people say, oh, they got you, you know, I hear this every day. It's actually, you know, it's specific people.

43:19Martin Shkreli:And those people act in best interest. It's like reinforcement learning. Like, they have evolved, as we all have, policies that optimize them. And one of the best policies you could do as a prosecutor is get yourself in front of a podium saying you got the bad guy. And whatever you can do to do that, you do that. That's like the golden rule of a prosecutor. Now, to you and me, if we were prosecutors or policemen, you know, our goal is to protect, I think, the community. But after a while, you start thinking, how can I do something for me? And that's a really terrible thing for a public servant to ever ask.

43:57Martin Shkreli:And the public servant in question here specifically sought out cases that would elevate their profile. And they specifically, in fact, got profiles written about them. And they would exchange information on cases for those profiles. So like, this is dirty, this is a dirty person. Now, again, it's not easy to be a prosecutor. You can sit there and toil in obscurity working on cases nobody cares about, or you can go nab the big bad guy du jour. Well, you know, all else being equal, you know, again, there's probably a child predator out there on loose right now because that guy wanted to get the big bad wolf of the day.

44:33Martin Shkreli:And to me, that's disgusting. You put it in that way. If you put it more, I don't know, different sense, you could say, well, you know, that guy's just looking out for himself. And but again, you know, when you're entrusted to safeguard the community, and again, there's probably somebody dead or something like that because this guy wanted to follow this case for this guy that, you know, had this small hedge fund that in half the cents did very well and the other half cents did not so well. And we had two kinds of investors. We had one half of investors who said, Martin, you made me like five times my money.

45:03Martin Shkreli:I'm thrilled. You know, thank you very much. You know, adios. And then the other half investors who said, I don't care how much money you made me. What I care about is did you follow every dot, every I and cross every T. And in terms of the hedge fund I had, the answer to that was no. It was a very fly-by-night kind of partnership that was just poorly planned, poorly executed. It worked out really well in the end, but it's just not something that I was necessarily proud of or something that was a perfect experience for everyone. But everyone made money. So to me, that's not a crime as much as it is kind of like, that's not a good way to run a business.

45:47Martin Shkreli:And I pivoted from hedge funds to pharma, but that's kind of where I got my start. And I wanted to run a successful hedge fund. I tried. I didn't particularly succeed. But I'm also not unproud of the results. And so when you don't dot I's and cross T's, especially when it comes to securities and funds and things like that, you're breaking the law. And again, I don't feel like I broke the law. I don't feel like I had criminal intent and I was acquitted of most of the charges I faced. But it's very hard in a federal courtroom to win anything. I mean, you could be dead innocent of a crime and still be convicted because the jury says, whispers stuff to each other like, well, we're not here for nothing.

46:28Martin Shkreli:The FBI didn't just pick this guy up off the street. They must know something. And you have this trust in the process that the guys with the U.S. flag on their lapel and the big, you know, the huge flags with the, you know, with the eagle standing next to the judge who's presiding over this majestic courtroom, you know, we're here. This imposing thing is all meant to convict this guy who's sitting there. And, you know, it's a very pomp and circumstance thing where almost, like, key facts are often discarded by the judge or whatever it is. And I have so many examples of that, but going through that experience was actually really enlightening.

47:04Martin Shkreli:I can't say it was enjoyable, but the process itself was somewhat fascinating. And it was almost worth the front court seat to how it works because you see that like trials are much less fact-finding as they are procedural and almost designed to convict because the rules are sort of written by the people that want to convict. And I think that -

47:29James Altucher:Just to mention to your earlier point that look, it's hard to cross. I've run a hedge fund, and it is hard to cross every T and dot every I. And Warren Buffett even has come out and said, if you follow anybody for 100 miles when they're driving their car on the highway, they're going to break the speeding law or some law at some point. Like, if you follow anybody, you're going to arrest them.

47:48Martin Shkreli:In Snowball, Alice Schroeder's book about Buffett, around halfway through the books, Buffett meets with the SEC, and he thinks he's getting indicted. Yeah, in the 70s, actually, he did actually manipulate penny stock crisis.

48:00James Altucher:Blue Chip and Chip,

48:01Martin Shkreli:he manipulated those prices. I'm recusing myself of that, but I think that I'm not co-signing that one, but I do know in the book he is very clear that the SEC investigated him and it was very clear to him that it was all, you know, it was all going to come crashing down. He had a too elaborate of a corporate structure, basically, and they viewed it as he must be doing something wrong. Jack, my favorite other story about fraud that is palpable that we, you know, just don't care about because of success is Jack Ma. So Jack Ma, is out raising money for Alibaba. And I just read about this in prison because I just read hundreds of biographies and things like that.

48:39Martin Shkreli:So Jack Mahat is in China, starting Alibaba. He's trying to raise seed money. And in his pitch deck, there's a quote from Bill Gates that says, Alibaba is like a great Chinese company or something like that. Alibaba is a Chinese Microsoft. And somebody confronted him and said, you don't know Bill Gates. He never said that. And he said, you misunderstand. understand, this is what Bill Gates would say if he knew about Alibaba. And, you know, it was this, like, if you go through every billionaire, and this is the Balzac, you know, famous quote, you know, behind every fortune lies a great crime. Now, you know, I don't necessarily believe that.

49:13Martin Shkreli:All I'm saying is that, to your point, business and crime seem to be bedfellows. And part of that, like, look at Sam Bankman. You know, I actually think Sam Bankman should be in jail. I don't necessarily condone what he did. And I'm not saying he didn't commit a crime. But I think that 25 years for this guy doesn't make a lot of sense. And to me, he ran what he thought was an investment bank. And he basically used the company's balance sheet, which in any bank, the company's balance sheet is customer's money. And he invested with it. He ran a prop desk. Makes sense. He ran a VC. Banks do that too.

49:45Martin Shkreli:And when his customers wanted money, he gave it to them. But he had a run in the bank. Now, he wasn't really supposed to use that money, but he was making so much money that he didn't segregate the assets right and this and that. Well, guess what? There's 80 banks that I can name right now that did that too. And not a single one of their guys went to jail. So we pick on this kid because again, he's like you said, it's Al Capone effect. He's the big bad wolf. And if you're a prosecutor, that's a good big bad wolf. Like he was a really good wolf. And, you know, Elizabeth Holmes, same thing. You know, again, nobody really knows the true story of these people.

50:19Martin Shkreli:And that's the funniest part is that the media wrote that story. and the media people, they don't necessarily want to give a fair shake, right? They want to write the story that's the most interesting and the anecdotes that are the most interesting. One anecdote of mine was that everybody made money in my fraud. So it was kind of like, you know, it's a tough one, but of all places, Bloomberg actually gave me a fair shake on this. They gave me a lot of bad shakes on this in general, but they wrote something like, well, how could he be in trial? That doesn't make sense. And somebody said, they quoted like a law professor said, it's as if Martin stole your car, took it for a joyride, but it came back souped up, sparkling clean, oil changed, you know, hubcaps replaced in perfect condition, better condition than he did it.

51:07Martin Shkreli:He still stole your car. But, you know, it's a weird one. It's never, in fact, in the history of finance, we don't think we could find another time somebody got criminally charged for that. But again, that's like you said, the obvious thing here is the big bad wolf. It's somebody that you're in the news. We can put the case on him. Let's put the case on him. And again, we almost won. You know, but it's hard to win.

51:30James Altucher:And the moment you got like, you were guilty and you got sent. Okay, by the way, then you fanned the flames a little bit. In between the time of being guilty and being sentenced, if I have the story correctly, you then posted on Twitter, you offered$5 ,000 for a strand of Hillary Clinton's hair. Like you definitely fanned the flames a little bit. If you wanted to be the big bad guy, you continued to do that.

51:54Martin Shkreli:Yes. And I got addicted to it in some ways. And I feel like I became this, like, I had this fight with media and this fight with, you know, all these institutions that, you know, there's this wonderful PR person named Lulu Chang. Lulu is just a simple, down-to-earth PR person. And her career trajectory is amazing. She joins the board of Activision. Activision is going to this PR crisis. and she says, you know, who better than Lulu to join the board? But she's a young woman. Most boards of directors don't hire women and they generally don't hire young people. They're always retired 70, 80-year-old people, especially Fortune 500 like Activision.

52:35Martin Shkreli:So she goes in there. They want her to be an executive. She becomes an executive, a C-suite, and they sell the business, of course, to Microsoft. And she plays a big role in that. And then I don't think Lulu is even 40 years old yet. And she's now on the board of Shopify, you know, which is not Fortune 500. It's like Fortune 50. And so her trajectory here is incredible. And I talked to her about some of this stuff and she said, you're a real turning point in corporate culture where most CEOs wanted to be anonymous. They didn't want a brand. They didn't want to stick out. Their boards didn't want them to stick out, especially.

53:06Martin Shkreli:And if you started to stick out, your board started to say, I don't know if our drug company should be defined by Martin. And now things have gone 180 where the story CEO, the personality, it actually matters more than ever to a lot of these companies that have this definitive guy that the shareholders trust. and it can lead to things like Palantir or Tesla where some of the stock price value has to be explained by the faith in management and the faith that the management is going to come up with tricks out of the hat that is going to increase shareholder value because if you just take the book value, the Graham Dodd value of the company, it doesn't quite add up, but it shouldn't necessarily, it didn't add up before either because ultimately you can't model that, oh, Elon's going to come out with robotics.

53:54Martin Shkreli:Like, how could you have even, you know, conjured that in your model? Like, he's just going to come up with a trillion dollar business out of his hat. And, you know, it's hard to do gram dot investing when you have a CEO like that. And people are drawn to CEOs like that. They look for people like that. In fact, VCs would rather lose their money chasing a CEO that could be like that than buying into some trad boring business. You know, they want the most salient, outstanding, good and bad CEOs. and I think that's something that's, that's, I'm glad it's come back and she even credits me as like playing a small part in making that comeback and other people seeing, oh, this guy's really like, you know, he's really willing to go out on a limb and, you know, other people started said, maybe, maybe the water's not so bad and I'll, I'll do it too, but, you know, obviously you have to be careful about, you know, just how much lightning you attract, but my favorite thing is Palmer Luckey who, you know, is extremely successful guy, obviously, and somebody was criticizing him for running what's basically, you know, a defense company.

54:54Martin Shkreli:There's always been criticism for defense companies like Lockheed Martin and so forth. So somebody criticizes him and he replies with a South Park gif of Mr. Garrison ringing a triangle and it says retard alert. And like, this would get you so beyond fire 10 years ago or 15 years ago. And if I played even a small role of like moving the Overton window to like allowing stuff like that to happen, I think it's a great thing because CEOs are human. And if you expect them to be faceless, nameless people, you really ask them to go against their human nature. And humans have opinions. You know, it's okay.

55:30Martin Shkreli:I started tweeting before almost any publicly traded CEO. My board hated it. You know, and I think it resulted in this like acrimony and then it resulted in this arrest, which they sort of orchestrated, which again, you know, it's a long time ago. I don't really care. But it's just this funny thing where like just being yourself can be so dangerous and i think i'm not saying that i it's because of me but i'm certainly happy that people feel as ceos that they could be themselves a little bit more than than they could yesterday

56:12James Altucher:the moment you were actually sentenced and you realize okay i'm going to prison was this like terrifying to you because you ultimately you didn't get into this business thinking that this was a possibility and now here it is it's reality i think that like

56:26Martin Shkreli:Like, today I got arrested. I think that was certainly... You felt fear. Fear is a word. I mean, you know, of course you feel a little bit of that. But I think it's this, like, realization. For me, it's disappointment that, like, everything the cynics told you about the system and how it's out to get you and how you got to hide from the system. The biggest one growing up was when Steve Cohen famously, you know, in the early 2000s, late 90s on Wall Street, there's this famous old idea that Steve Cohen didn't want his photo taken and that, you know, he would buy up anybody's, you know, taking photos of him.

57:00Martin Shkreli:And I sort of sat there as a young trader saying, that's insane. You know, why would somebody be so secretive and all that stuff? And a lot of people would say, Martin, you don't understand. You're too naive. They're going to, you know, the more people know about Steve, the more they're going to scrutinize him and maybe get him in trouble. And so he's smart, laying low and kind of behind the scenes. I said, if he's not doing anything wrong, what's the problem? And again, they said, ho ho Martin, such a naive kid, it doesn't matter whether you're doing something wrong or they're still going to get you.

57:31Martin Shkreli:And I, my whole life I said, that's just cynical bullshit, you know? And then when I got arrested, I said, they were right. These cynics sort of have a point, you know, that, you know, if, you know, I have this joke I sometimes tell about trading. I say, what's the definition of arbitrage to an interview candidate or something like that? Of course, this is good answers like strong form arbitrage and weak form arbitrage and arbitrage is a, you know, simultaneous profit opportunity, et cetera. I say, wrong, wrong, wrong, wrong, wrong. The correct answer is arbitrage is whatever is going to be made illegal next year.

58:07Martin Shkreli:And, you know, in a lot of ways, that's sort of true because, you know, whatever you think is arbitrage, say high frequency trading, the law is going to look at it and say unfair advantage, you know, or whatever the case is. And slowly but surely, like Reg FD was the ultimate arbitrage where information itself was asymmetrical. And now, I mean, I personally think quant trading and HFT-type trading is going to go through some changes where these guys are making a lot of money. It's in the newspaper how much money these guys are making. I don't fault them. I think they're all brilliant. Friends with a lot of them.

58:39Martin Shkreli:But what do you think the reaction is going to be? The SEC is going to say, I'm going to architect whatever it is that makes your business go to zero, we're going to have to implement that. Because you're just making money from who? the common person. And of course, their reaction, and it's a good defense mechanism, is saying, we're providing the liquidity, we're making the markets. And the reaction back from the SEC, again, I'm not saying this is something I endorse, but a simple reaction would be, okay, we don't have to have liquidity. Maybe the call option on Beyond Meat expiring three days from now shouldn't be that liquid.

59:13Martin Shkreli:And I think that that type of arbitrage has lasted a really long time and it may never close. But I think slowly but surely, like these little loopholes that are on the precipice of legality will close. And in my case, you know, it wasn't really a loophole or an arbitrage, but the point remains that like, you know, getting arrested just confirmed like this like cynical view of the world that, you know, prosecutors will do what it takes to sort of prosecute a case, even if it's extremely weak. You can't win, which is another cynical take, but the math bears it out. The Southern District convicts 99 % of the time, and that's at trial, which is only 1 % of people don't plead guilty because they know what's good for them, and they take the guilty plea.

1:00:00Martin Shkreli:But if you're bold enough to say I'm not guilty, you still have a 1 % chance of winning. So it's a 1%. How would your sentence have changed if you had pled guilty? Oh, it would have been a while less. Like two years versus seven or? Yeah. Yeah, two years and probably no monetary penalty. I probably would have saved 20, 30 million. But at the end of the day, like, you know, if there is an avenue to exoneration and you really believe it, guilty people don't go to trial. It's something that's so stupid to do if you're guilty or not. Like doing it is just like a real message because it's hugely emotionally draining, financially draining.

1:00:43and, you know, it's going to end up the same.

1:00:47James Altucher:When you get out of jail, are people reluctant to work with you? Like, how did you start things up again for yourself like when you got out of jail?

1:00:55Martin Shkreli:I was very lucky. I think, again, holding my ground helped a lot because people would see videos that I did or something like that. And they'd be like, this guy's like a nice guy. And, you know, I made all these videos of the stuff I knew, like about finance and things like that on YouTube. and people recommended them. And they said, yeah, Martin's not that bad. You know, I think he got caught up in some railroaded thing. And when I came out, there was this huge enthusiasm. And part of it was like, I came out and I did this Twitter space. Twitter just rolled out spaces and the whole clubhouse, Twitter space, like live sort of experience was a thing.

1:01:32And, you know,

1:01:33Martin Shkreli:it was a very popular space. And I was talking about crypto, which I studied in prison quite a bit. And I was just frank about like the good parts, the bad parts, etc. And people were just asking me tons of questions. And they're, they're some of the most famous investors and people in the world joined the space and listened in. And a lot of their reactions were like, how does this guy know so much about our field? And he's been in jail for last five years and, and other fields. And the answer is just sitting and reading. And, you know, I think that's a big difference between somebody like me and I don't know, pick your favorite, you know, Wolf of Wall Street or Billy McFarlane or or something like that.

1:02:09Martin Shkreli:There's a real success in my past. That first drug company I started is worth$3 or$4 billion, and my new software startup's doing quite well. And the quantum thing we're doing together is, I think, going to go really, really well. Probably going to be the most successful thing I ever do. I think that a lot of people also say, I have a friend who's actually in the DOJ now, which is kind of crazy. Talk about strange bedfellows. He was an activist attorney defending January 6th rioters, if you want to call them that. And he would take their cases pro bono and defend them. And I see him at some party and I say, hey, how's it going?

1:02:44Martin Shkreli:And he says, I'm with the DOJ now. And I said, so kidding. And I said, I don't like guys like you. And we were laughing about that. But he said, Martin, you're like, of all the people I met that had gone to prison, you're like the most indefatigable, you know, just like, you just didn't let it affect you. And I said, you know, it looks that way. I mean, of course it affected me. And, you know, I try to keep, never let them see you sweat type of, you know, attitude. But I have bad dreams about prison. I have like, you know, fear of like going outside and things like that because they confine you so much.

1:03:14Martin Shkreli:But at the end of the day, I think you still have to live your life and you have to do the things you like. And people always say, oh, you lost four years of your life. And I said, no, I didn't. What are you talking about? You know, did I have a different four years? Yes. But I wouldn't say I lost them because, you know, like I said, I got to do some of the things I never really got to do. I got to get very close to my late father, who, as a jet-setting zillionaire businessman, I get to see him once or twice a year. And then I'm in prison, no responsibilities, nothing to do. Talk to my dad all day long.

1:03:47Martin Shkreli:I was able to talk to him in a way that I never could before in my life. But for prison, I'm not sure I'd ever have that moment. And he passed away relatively young because of heart problems that probably would have been there whether you know, I went to prison or not. So there are some blessings like that. And again, you know, the ability to get to know who your real friends are, you know, there are things like that, that, you know, you know, uh, the time to reflect, you know, I think I, how did you find out who

1:04:13James Altucher:your real friends were? Like who, who were your real friends after this, when this was happening?

1:04:18Martin Shkreli:That's a really good question. Um, I think that I'm not sure I ever kept a huge friend group to begin with. But one thing you certainly remember or get reminded of is your family, is your closest friend. There's nothing like family. And I think a lot of people don't necessarily remember that or see that. And I had this great lawyer whose brother was a U.S. senator. And he defended me on some case, but he got to spend the whole day at prison, even though we only needed to do an hour for law. We got to sit in a room for the whole day just BSing because the prison would give him like day allotments.

1:04:56Martin Shkreli:And we got to know each other so well and have all these wistful, you know, discussions. And he said, you know, at the end of the day, family's the only people that give a shit. And it's a bit of a cynical take. But the idea that you can have true friendship is a little bit difficult. Like, for example, we've gotten to know each other, but it's over the scheme of the syntax of a company that we're helping guide, that's not, I would argue, not true friendship. Now, we may become very close friends. We may not. But I think that there's this innocence of friendship that we expect to continue forever.

1:05:31As we get older, the best you could do, and for

1:05:33Martin Shkreli:some people, unfortunately, they can't even manage this, is your significant other, like my partner, Chelsea. But oftentimes, marriages don't last. And you can't even call that person your friend, which is scary. I hope that never happens to me. And then, of course, families still don't have that friendship. So I think I certainly have and had some true friends. But when you're really radioactive and somebody thinks, well, can I go to jail for knowing this person? That's a fear that enters your head. Then I can't blame somebody for saying, well, I got to take a break. You know, I don't want to go to jail.

1:06:08James Altucher:Different people, as they get to know you, do you often sense that that might be in their head?

1:06:13Martin Shkreli:it's pretty rare, especially, you know, at this point. I think that, you know, if there's, you know, people that, you know, could potentially, you know, I mean, I think those types of things happen when, you know, somebody's talking about, you know, criminality. I think in my case, I want to talk about science. And I think, you know, there are people who are really just genuinely afraid of ever getting in trouble. And I think that's fine. But the circles I'm in, you know, swashbuckling venture capitalists and, I mean, hedge funds, it's literally an occupational hazard. Prison is like 5 % of petron people making this stuff.

1:06:46Martin Shkreli:But like, it's like a lot of the hedge funds I know have been shut down by the government and often with the accompanying prison sentences. So, you know, it's part of the industry, sadly. But I think that it makes sense to be careful. But if you're so careful in life, like, for example, in my case, they amazingly arrested my lawyer as well. And part of the is egregious. And I'm sure he'll get a pardon. But I think that the idea is like, well, if you surround yourself with lawyers, there's no way you can get in trouble, right? And the government simply said, well, in this case, your lawyers are criminals too.

1:07:19Martin Shkreli:And, you know, I think it's like, you can be so, if you listen to lawyers, you'll literally sit in bed all day and never cross the street because it's too dangerous. You ultimately do have to take risks in life. And I think that, you know, part of what the government, and when I say the government, again, it's part of like specific people. Part of what they want to do is enforce this idea that they're very powerful. and that they don't want you to take certain kinds of risks because they'll come and get you. But if you take the risks anyway, you're implicitly saying you're not as powerful as you think you are.

1:07:48Martin Shkreli:And if you keep neutering that power, that's all they got. And so the media is a really good example of this. When the media would ask me for a quote, and I would say something, quite frankly, I would say something like a really indignant and often unprintable. And they would say, how could a guy react like this to the New York Times? We've never had somebody say, you know, Elon said something about the SEC. He acronymed the SEC a different way. You know, the reaction is much, much worse because they now say, if I let this happen, then me as the New York Times or me as the SEC, and not me individually, but just us, we're meaningless.

1:08:27Martin Shkreli:If a guy like Martin can say, F you, New York Times, or Elon can say what he said about the SEC, then it's like, well, what? The first reaction is, I'm going to put your paper in the front page. I'm going to put your name, you know, I'm going to... And you say, I don't care. I like it. Go ahead. And they say, I took this job to be powerful, not for the money, but so I could write, you know, 10 million people can see this newspaper and see your name on it. You're neutering me of that. And you're going to go on Twitter and you're going to reach more people on your Twitter than I'm going to reach with my New York Times.

1:09:00Martin Shkreli:And you really don't care. And now it means nothing to be at the New York Times. Before I held the person's life in the palm of my hand. I can make you the best guy in the world or the worst guy in the world. Be careful talking to me because I have that power. Now you don't. And I think that's a really scary thing. If you're in New York Times, it's a really scary thing if you're the SEC. Now the SEC has, you know, they have the court system that they, you know, that they're involved in. So they have power to be clear. Well, it's almost a more powerful court system in a way because there's no regulation of that court system.

1:09:31Martin Shkreli:And it used to be even more powerful, but it's come so far backwards, I actually think it's a bad thing because there are people who are bad people who the media will write about and their reaction is, can't trust the media. Look what they said about Trump. And people say, it's true.

1:09:46James Altucher:It's like, wait a second. I mean, to that point, let's look at the math. Think of every single article ever written about you. And I could, again, to a much lesser extent, say this about me too. Every article ever written about you, what percentage of those articles contained at least one lie, a purposeful lie? That's a good question.

1:10:04Martin Shkreli:It depends on how you define lie and purposeful and things like that. All right, let's not say purposeful. Let's take purposeful out of it. Listen, I mean, how many of them are misleading? Probably all. Yeah, 100%. That's what we're getting at, yeah.

1:10:15James Altucher:That's the problem with the media. You can't try, if you know that's true about you,

1:10:17Martin Shkreli:it's probably true about every single article ever written. But again, you know, when they do find a bad apple and they do like, some journalists are great. They do a deep investigation to a guy who's like, you know, pretend it's a guy like Epstein. And they put him in the journal. that guy should not be allowed to say oh well they're lying like they lied about trump and people say ah but he's right because ultimately if that's how flow our institutions have sunk like the media does serve a purpose like that right i mean they're the they're the old truth to power right that's what they're supposed to do and whenever i didn't confront a journalist who was lying about me i'd say you know you're supposed to speak truth to power but it feels

1:10:57James Altucher:awfully like you're the power and it's let's again i'll play that was having it again let's look at the flip side because you did fan flames a lot like tell tell me the wu-tang story it's a

1:11:08Martin Shkreli:long one but this is a really good example of like the actor martin screlly you know and the intentions they have you know would totally get perverted so like i'm just a music fan uh like all kinds of music, especially like rock music. And there was this opportunity to basically buy this album for millions of dollars. And I had no special love for the Wu-Tang. You know, I knew they existed. I love the Wu-Tang. Listen, you know, it was a 90s rap group that, you know, basically fell out of favor, always had this cultural relevance, but never could, you know, get back the pizzazz of the 90s in that old school rap era.

1:11:49Martin Shkreli:But Nevertheless, it was an ability to like make the message about music that music is really valuable. It's just as valuable as fine art, like paintings. And so I bought it. And my goal was to make people think differently about the value of music. And again, the reaction was like really insane and fun to play with. Because you bought it with and you said you're not going to release it. So here's this. Well, yeah, that was a longer story because in fact, the Wu-Tang put that stipulation on it. But.

1:12:17James Altucher:Oh, interesting. I didn't know that.

1:12:19Martin Shkreli:Yeah, yeah, yeah. But again, it's one of these things where the media, that was a really good story. People love the Wu-Tang, as you know, and so they could do no wrong. So if somebody couldn't hear it, it must have been my fault. And the details, who cares who put the stipulation on? So it was very much like, because I was ready to play it, and then I got a message from the Wu-Tang, hey, whoa, what are you doing? It's not a very polished album. I think they maybe didn't want their work to be seen in that condition. So in any event, it's a crazy story. And yeah, life has gone all over the place for me, but I'm looking forward to this new thing we're doing together and hopefully will be a really big thing.

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