Please enjoy this transcript of my interview with Mike Novogratz (@novogratz), the founder and CEO of Galaxy Digital. He was formerly a partner and president of Fortress Investment Group, LLC. Prior to Fortress, Michael spent 11 years at Goldman Sachs, where he was elected partner in 1998. Michael served on the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets from 2012–2015. Michael serves as the chairman of The Bail Project and has made criminal justice reform a focus of his family’s foundation. He also serves as the chairman of Hudson River Park Friends and sits on the boards of NYU Langone Medical Center, Princeton Varsity Club, Jazz Foundation of America, and Artists for Peace and Justice. Michael received an AB in Economics from Princeton University and served as a helicopter pilot in the US Army.
Transcripts may contain a few typos. With some episodes lasting 2+ hours, it can be difficult to catch minor errors.
DUE TO SOME HEADACHES IN THE PAST, PLEASE NOTE LEGAL CONDITIONS:
Tim Ferriss owns the copyright in and to all content in and transcripts of The Tim Ferriss Show podcast, with all rights reserved, as well as his right of publicity.
WHAT YOU’RE WELCOME TO DO: You are welcome to share the below transcript (up to 500 words but not more) in media articles (e.g., The New York Times, LA Times, The Guardian), on your personal website, in a non-commercial article or blog post (e.g., Medium), and/or on a personal social media account for non-commercial purposes, provided that you include attribution to “The Tim Ferriss Show” and link back to the tim.blog/podcast URL. For the sake of clarity, media outlets with advertising models are permitted to use excerpts from the transcript per the above.
WHAT IS NOT ALLOWED: No one is authorized to copy any portion of the podcast content or use Tim Ferriss’ name, image or likeness for any commercial purpose or use, including without limitation inclusion in any books, e-books, book summaries or synopses, or on a commercial website or social media site (e.g., Facebook, Twitter, Instagram, etc.) that offers or promotes your or another’s products or services. For the sake of clarity, media outlets are permitted to use photos of Tim Ferriss from the media room on tim.blog or (obviously) license photos of Tim Ferriss from Getty Images, etc.
This interview was transcribed by Rev.com.
Tim Ferriss: Hello, boys and girls, ladies and germs. This is Tim Ferriss and welcome to another episode of the Tim Ferriss Show, where it is my job to interview world-class performers from all different disciplines. And my guest today is Mike Novogratz, Michael Novogratz, @Novogratz that’s N-O-V-O-G-R-A-T-Z on Twitter is the Founder and CEO of Galaxy Digital, galaxydigital.io. He was formerly a Partner and President of Fortress Investment Group, LLC. Prior to Fortress, Mr. Novogratz spent 11 years at Goldman Sachs where he was elected partner in 1998. Mr. Novogratz served on the New York Federal Reserve’s Investment Advisory Committee on Financial Markets from 2012 to 2015.
Mike also serves as the Chairman of The Bail Project and has made criminal justice reform a focus of his family’s foundation. He serves as the Chairman of Hudson River Park Friends and sits on the boards of NYU Langone, If I’m getting that correct, Medical Center and Princeton Varsity Club, Jazz Foundation of America and Artists for Peace and Justice. Mr. Novogratz received an AB in Economics from Princeton University and served as a helicopter pilot in the US Army. Mike, welcome to the show.
Mike Novogratz: Thanks a lot, Tim.
Tim Ferriss: And this has been a long time coming, I’m excited to have you on the show. You have so many stories, you have an unvarnished personality and you have such a medley of experience that I’m glad that we were finally able to get on the phone to record this for public consumption. So thanks for making the time.
Mike Novogratz: No, I’m excited. I sometimes feel like we were separated at birth, me and you.
Tim Ferriss: Yeah, we have Long Island, we have Princeton, we have wrestling. As you put it, a little bit crazy. Psychedelics meditation, crypto, the list is long, and I thought we could start with a place that might seem like a total non-sequitur, but I have to ask. I was, in preparation for this conversation, reading a really nicely done profile in The New Yorker written by Gary Shteyngart, and there is a phrase that came up multiple times that I have to ask you about, which was Speed Racer pants. He kept on mentioning you’re wearing Speed Racer pants. What are these pants?
Mike Novogratz: I had a pair of white pants with a big right stripe on the side of them. And they looked like the pants Speed Racer used to wear. I bought them in L.A. at Fred Segal one day when I was just bored and I started wearing them around and no one in New York was wearing striped pants and so it was quite the thing for about a year.
Tim Ferriss: And you seem to have a fair amount of lore surrounding you, which certainly became even more clear as I was doing homework for this conversation. And one of them is piloting a helicopter down Prospect Avenue. Now I’d like to know if that’s true and either way, maybe you could explain what Prospect Avenue is, but did that actually happen?
Mike Novogratz: Yeah, unfortunately, it did happen. I’ve had a tendency to drink too much at big parties and Princeton has this reunion celebration every year where all the classes come by and after the P-rade, this is a parade of hundreds and hundreds of people starting with the oldest graduate, who is often 100, 103 years old, all the way to the new grads, everyone migrates to this Prospect Avenue. And one year I had to leave early for an event. And I was like, “Okay, just I’ll show off to my friends a little bit and so I got in a helicopter that was going to be back to New York City and I asked the pilot if I could drive. And we just buzzed Prospect Street, much to the thrill of my friends and probably the dismay of everyone else.
Tim Ferriss: What was your Princeton experience like? we’re going to zoom backwards in time to childhood in just a little bit, but what was your experience like at Princeton?
Mike Novogratz: I was a middle-class kid, so I showed up a little intimidated and I thought I was smart in high school and I showed up to Princeton and I thought, “Gosh, I’m not that smart.” I thought it was a great wrestler in high school and I went to Princeton and got my butt whooped and I was like, “I’m not that good of a wrestler.” And so it started off intimidated in lots of ways. And I look back, I took easier classes than certainly my kids take thinking, how do I get through this place and survive it. And, athletically that flipped my junior year. Socially, it flipped early. And that was probably what the biggest positive. Academically it never really flipped. I never really felt, maybe until I did my thesis, like I was really a good enough student.
Didn’t really feel smart enough until I actually joined the Army and, on a test with 700 other guys, got first place. And I was like, “Dude, I’m actually pretty smart. I learned something.” But I was intimidated most of Princeton. It’s interesting that the positive side was socially I was adept and realize, my first roommate actually was Gloria Vanderbilt’s son, Carter Cooper, who unfortunately tragically committed suicide years later, but he was kind of aristocracy, right? Not just wealthy New Yorker, but the Vanderbilts were aristocracy.
And I went to New York and realized he had his own insecurities as well and he had nice friends and other than them teasing me about having my hair parted in the middle, which I thought was a very cool look back then, but not New York City. I quickly realized that rich guys, middle-class guys, they all use the same toilet to shit. And that part, I think, gave me a lot of confidence in life that I could compete, in essence. Now this the point we were competing mostly for girls, but I could compete with anybody. And that sounds like a small little wind, but it was actually, when I look back, where a lot of kind of confidence started.
Tim Ferriss: And you mentioned athletics. What flipped junior year, if I’m remembering correctly for you in athletics?
Mike Novogratz: I don’t think I reached puberty till I was about 20. I was a decent wrestler and I worked pretty hard at it and I just got good enough to make the varsity. So my first two years I was really on the junior varsity. There was one guy that was better than me at the same weight and he actually took a year off. And so it opened a spot up for me and having that opportunity to wrestle, I just started doing better and better. And I made the Eastern Tournament, then I made the National Tournament. And back then, making the nationals was a huge check plus for you, you felt like you’re a real guy in the wrestling community. And so I came back senior year, ready to be an All- American. So it was a whole shift of my confidence level again, but also I got stronger and I nowadays kids redshirt, they take a year off. I really wish, I was just getting strong and just getting good my senior year. I kind of always needed one more year. It’s probably why I’ve stayed involved with wrestling my whole life.
Tim Ferriss: What did wrestling give you? That’s a leading question. I should probably just ask what impact it had on you, but having wrestled myself, you wrestled longer than I did. But I’d love to hear in your words, what part wrestling has played in your life, aside from the involvement that you had later with Beat The Streets and The Olympics and so on.
Mike Novogratz: Listen, I think it’s a sport that almost like no other sport, beats the hell out of you. I mean, it is so tough from cutting weight to going out on the mat by yourself and just getting crushed. And so you learn to pick yourself up after you get crushed. And you’re like, “Okay, I got crushed that match. I don’t need to get crushed the next match. And I’ve got to work a little harder.” And so it’s resilience. If anything, the trait it builds and people is grit or resilience. When I started Beat The Streets, we looked a lot at wrestling and essentially 14 of the 44 Presidents of the United States had wrestling in their background. There’s no other sport with that many. Abe Lincoln used to go from town to town to wrestle for money. Teddy Roosevelt was a wrestler and often that toughness and grit ends up in leadership. And so you’ll see a lot of wrestlers that move on in life into leadership positions.
Tim Ferriss: So let’s talk about the resilience, because when I polled a number of my friends and asked them what they would most like me to discuss with you, it came back to resilience in some form or another. And in The New Yorker piece, there’s one line, which we could also dissect if we wanted, but it’s, “Princeton, like Wall Street where Novogratz has made at least three fortunes and lost at least two, is full of stories about him.” So you have this incredibly powerful and public hero’s journey that you’ve traveled more than once. And I want to read from a speech. This is the commencement speech in Iowa. I don’t even know the story of how this came to be, but we can get to that.
So as it relates to grit. So you say, “As I’ve gotten older,” this is in the middle of the commencement speech, “As I have gotten older, I have realized that we have two missions on this earth: to know thyself — or as my wife would say, to sort our shit out — and to walk each other home. Most people I have met don’t start this journey until they have really screwed up. They’ve lost a job, ruined a marriage, abused drugs or alcohol, destroyed friendships, or just can’t get out of bed. I started my journey at 33 when I had done most of the above. I was a rising star at Goldman Sachs, I was a partner, a president, a respected man in the Wall Street community — and then I wasn’t. Right after I resigned from Goldman, I literally thought my life was over. I had ruined it.”
Okay. So this is get winding its way to a question. So that’s a little bit of back story for people who don’t have familiarity. And the question is when that happened, when you have what you might consider a public experience like that, how do you work your way through it? Like psychologically and emotionally? What do you tell yourself? What helps? I’m very curious to know how you dust yourself off and what you did that helped you out or something?
Mike Novogratz: That was my kind of first public humiliation failure, personal failure, failed the people I worked with and it was painful, there’s no two ways around it. It was helpful that I had a supportive family that were just letting me be. I went into depression and it took a while to kind of work out. I had this narrative: I had ruined my life, and I would never get it back. And I remember, there was lots of little pieces of advice. First, I had one lawyer. I was worried about what everyone thought about me, and this lawyer said, “Dude, do me a favor, write down on a piece of paper the people that you think will be at your funeral when you die at 80. Worry about what those people think. All those other people, they don’t really think about you that much.”
That was kind of liberating because as a partner at Goldman Sachs, every partner that had left Goldman Sachs, when you left, you got this beautiful little memo about all you had done, Goldman was a bit of a cult, and there was a very nice way they exited partners and I just disappeared. I was not spoken about, so I kept worrying that I was going to run into my ex-partners on the street and be so embarrassed. And so first he helped me get over that, just think about it. But in the long run, I ended up going up to a rehab in Arizona. And you know, I kind of got snookered in a little bit. I had this therapist, I’d never had a therapist before, and he said, “Dude, you talk so much. You’ve got to go somewhere where you can tell your stories and have a safe space.”
And there’s this beautiful holistic place in the middle of Phoenix or Tucson called Sierra Tucson. And I looked on the pamphlets, it looks so nice. And so I went out there and on day one, and I hadn’t had a drink or a drug or got any trouble for three, four, five months at the time. But so I flew out there and you check yourself into a mental health facility. And you’re like, “What the F just went on here?” And my first roommate was in the throes of trying to kick heroin and he was not having a good time of it. And I’m like, “How in God’s name did I end up at this place?” But it was probably my first experience with really digging in and trying to sort out like, “What are the patterns of my life that led to this?”
It was kind of traumatic in that the thesis that a lot of rehab centers use, and addiction specialists use, is that there are these deep, emotional scars, either big T traumas or little t traumas, that people have a hard time dealing with and they start using some substance. It might be sex or alcohol or drugs or control of your food to medicate those feelings. And that medication, all of a sudden, has you end up doing more stupid things and you need more of the medication and it’s this cycle of — and so that if you could get to those core issues, it would really help in your journey. And you’re sitting around a circle with people and one guy, his father had kicked him in the spleen, he’d lost his spleen when he was 12 and almost all the women that were bulemic or anorexic had suffered incest.
And I’m sitting, thinking here, I had nice parents, I had a pretty nice — and it was traumatizing not having the big trauma. And one of my insights was sometimes the little trauma, 10 years, 20 years, 30 years later can have just as much psychological duress as big trauma. And so one man’s pain is no different 10 years later. It’s just pain or fear and so starting a search to find that out was unbelievably helpful. It also really started building an underdeveloped empathy muscle. I remember I met one woman who had been the Teacher of the Year in Florida for like nine straight years, and she was probably 45 years old and had a relationship, maybe it’s 30, 40 years old, had a relationship with a senior and it wasn’t even sexual, but it was close to sexual.
Got caught, and next thing you know, she was the pariah of the town and got thrown out of teaching and everyone wanted to shoot her. And as you met her, she was one of the nicest women I had met and she had a story. She had been abused by her both father and then stepfather, and had developed a relationship addiction, which unfortunately then had her having a relationship with a senior at our school. But instead of being angry or wanting to lynch her, you wanted to hug her. And so that process of trying to understand where people’s mistakes came from allowed me to start kind of forgiving myself a little bit. And then since I didn’t really get to that holistic place, I realized that maybe this is the trick of how to get started again: I just needed to create a new narrative.
And some of the narrative was: I fucked up. I want to try to understand how I fucked up. I haven’t solved it all, but I’m starting over. And it wasn’t till 9/11 happened. I was trying to figure out what to do, and when 9/11 happened, my brother called me and he was in one of the big buildings right next to the Twin Towers. And he’s like, “Dude, a plane just hit, what am I supposed to do?” And I was like, “Buy Eurodollars.” And he was like, “What the fuck are you talking about?” I was like, “Buy short, dated treasury contracts.” And I was like, “Oh, no, get out of the building.”
And I was like, okay, the brain’s kind of screwed up. And then I was with my young son who was like two at the time, and I was looking on the TV and I was like, “We’ve got to go help.” So I go, wanting to run down towards the Trade Center to see what was going on. And he started crying and I was like, “Okay, that’s not helping.” So we ran back and watched it on TV. But I had my Army side of me wanted to participate and there was no real room for volunteers. And I felt like I’ve got to go do something. And I realized I hadn’t fulfilled kind of my Wall Street journey.
And so I literally, it was a 9/11 insight, and I went back to work at Fortress and luckily had a lot of good luck and good, great partners. Five or six years later, not even six years later, we rang the bell at the stock market and we were all billionaires and it was just kind of a heady experience because the journey from walking out of Goldman Sachs and having one of the senior partners say, “Well, maybe you’ll work again some time.” I’m thinking to myself, “Geez, it wasn’t that bad,” but really feeling like you might never work again until six years later, you feel like you’re on top of the world. It was kind of a heady ride.
Tim Ferriss: Hmm. And what did your self-care program, if it existed, look like between rehab and ringing the bell? Did anything change noticeably? Any type of habits or routines or anything that helped during that period?
Mike Novogratz: So I gave up drinking for 13 months and I have been a man who loves parties, who loves drinking, who doesn’t drink at home, but a very social drinker my whole life. And that was difficult was trying to be able to be social, not with a glass of wine or a beer or Jack Daniels in my hand, was tough. And I gave up recreational drugs. And 14 months later I did something which I think was important, I ran this thing called The Marathon of the Sands, which was six marathons in a row across the Sahara. It was one of the early, original adventure races. 700 people from a hundred countries and you literally run across the damn desert and it would get to 130 degrees during the day and freeze at night. And about halfway into it, I was like, “Ah, it’s good to be alive.”
And it just felt like, “What the F are you complaining about? You’re alive in these beautiful settings and you’re meeting new people,” and that was really the big trigger. And so staying fit, at that age, I ran a lot, but it was that push yourself into the uncomfort zone physically even, and realize, “You’re still alive, dude, you’re not dead.” And so that was right before the 9/11 happened. That was the June before September. But that was really the turning point, now that you ask the question, where I felt like, okay, I can go back to work. And then at Goldman Sachs, I’m sorry, at Fortress, there was a lot of stress at work because I felt like, even though I thought I had made some big breakthroughs, there were parts of my story I hadn’t sorted out.
One is why I carried all this pressure all the time. That stopped it from being joyful. And so exercise, I still wasn’t really into meditation until probably 2006, 2007. So early on it was just exercise. But my core issues were pressure. When I made partner at Goldman Sachs, I felt relieved. I remember Lloyd Blankfein called me up, he said, “Don’t tell my wife it was one of the most joyful days of my life — even more than my wedding!” And I’m thinking to myself, I’m thinking — I shouldn’t have said that; Lloyd’s going to come yell at me — I didn’t feel that. I felt relieved. Like, ah, I checked that box and I was thinking back on it and I was like, “Well, that’s kind of shitty that he felt that much pressure to be a partner at Goldman Sachs’ who the hell really cares?”
I lost most of the great big wrestling matches in my life because I felt so much pressure to win that when I knew it was an important match, I wouldn’t wrestle as well and so I got a lot of second places. And I would remember walking out on the mat feeling exhausted beforehand. And it took me a while. Matter of fact, I remember that moment where I had my first insight. The year before I had been at this investor conference called Lyford Cay and Byron Wien used to run it, he was a legend from Morgan Stanley. And this was the first legendary investor conference that you had to be a legend to be there and you had to share ideas. And I got invited in 2006, probably, maybe 2005, and it was such an honor to be there. I was one of the young guys and you had to give your three stories, stocks, or ideas. And it came to me and the guy before me had used one of mine and I just panicked. I literally was like, I’m sweating. And it was one of the most miserable five minutes of my life, so much so the guy next to me was like, “Dude, that wasn’t that bad, but I’ve got a plane leaving soon if you want to go.” I remember feeling all this stress about, and I was telling my wife, I was like, “This is so much stress. I’m not having fun. I should just do something else in my life,” and she was like, “Dude, you hired all these people. You just hired one of your best friends and he left his firm to work for you. Sort it out.” As luck would have it, I have this life where I’ve stolen mentorship or found it, or been gifted it in strange places. One of my investors suggested I have lunch with Ehud Barak, who had been the Prime Minister of Israel and one of their great generals, and he allegedly had the highest IQ in the Israeli Army.
I was sitting with him, and he was a charming, charming guy, later became a friend. He looked at me. He said, “Novogratz, I think I figured you out. You’re not very smart.” I was like, “Thank you.” He said, “But you’re lucky. You’re lucky.” Then he said, “Don’t worry about it. Louis Bacon, who is one of the macro legends, one of the best investors of all time and Bruce Kovner, they remind me, they think they’re smart, but they’re mostly lucky.” I’m looking at him, and then he gave me a quote in French. Of course, I don’t speak French, and I was like, “Translate. I’m not so smart.” It was from Napoleon. “I don’t hire smart generals, I hire lucky generals.” It was about intuition, and that Napoleon’s thought was these generals know where to be on the battlefield at the right time. They can pattern recognize the thing. They have a certain intuition and we don’t have a word for it, therefore, we call it luck.
The moment he said that, the way my brain functioned as an investor, the way I operated in life, it clicked. I was like, “That’s what I do. I realized I didn’t need — once I knew what I needed to make investments, to make decisions, I didn’t need to fulfill what you think I needed.” I remember being so worried when I was at Lyford Cay that someone was going to ask me who the Finance Minister of Russia was because I was telling him I owned all these Russian rubles and I forgot the guy’s name. Well, I didn’t really need to know the guy’s name for my investment confidence. Other people might. And that was liberating. And from the moment that happened, I could tell the story of how I made investment decisions and had so much more confidence.
My hedge fund went from 300 million to two billion in six months. The returns went up. But most importantly, the joy showed up. It was more fun. And the confidence came. I was like, “I know I can always, if I need to, sit in front of a screen and sort out markets and make money from it.” And so one of the great breakthroughs really was from this guy who was a famous Jewish general, Israeli general. I seem to have gotten sidetracked from your question, but —
Tim Ferriss: Oh no, this show is all about sidetracks. Those are usually where the interesting alleys have all sorts of tidbits. So let’s dig into intuition because this seems to show up again and again in your life. And I’d be very curious to know. Let’s just say in that six-month period where you go vertical, basically, in assets under management. How have you learned if you have to discern intuition and pattern recognition from, say, overconfidence or irrational confidence in a position or a trade or something like that? How have you learned to wield and discern what is what?
Mike Novogratz: That’s a great question. And listen, the world’s best speculators or macro traders have two things in common. They have this pattern recognition intuition, I put that in one bucket, and then they have discipline. And I said the three things, and then they have an unbelievable competitive spirit. And I look at guys like Stan Druckenmiller and Paul Jones and Louis Bacon. And to be honest, they’ve done better than I have. And it wasn’t because — because I spoke to them enough to understand — of their understanding of markets or intuition. Their discipline was just better. It was kind of like, “Why are they so much more disciplined than I? I think partly they’re just more disciplined than I.” But they’re more competitive. They just cared more. It was interesting. I couldn’t tell if that was in life, a strength or a weakness, you watch that Michael Jordan documentary and the one thing that every single person who watches it comes out as he cared.
So he was the most competitive man I think I’ve ever seen in anything, Michael Jordan. The great speculators are very competitive like that. And shockingly, I’m just not as competitive. And listen, I’ve done very well by almost any standard, but not of the legends’ standard. I know who the legends are because I’ve been around them. And so I think about that a lot and I’m trying to figure out that’s not all terrible. You’d like some more discipline. And I think it has allowed me to have a more diverse life and some of my peers. But I think about that. The only way you end up trusting your intuition to get to your question is to have some set of rules that you manage your risk by, your life by, because you’re still right.
We’re learning to trust ourselves. So, “I think I’m right.” Or this is, “I think,” not that, “I know.” You really think like, “This lines up. I’m almost positive Bitcoin’s going to go up right now.” But if it doesn’t, you’ve got to have some circuit breaker that says, “I could have been wrong.” No one’s right a hundred percent of the time. No one’s right 80 percent of the time in markets. And so you need a circuit breaker. And so that’s a series of rules that you manage your portfolio by, manage your life by lots of ways. And that’s where discipline really helps. And that’s where I often let myself down a little bit and that’s sometimes just trying to do too many things, sometimes just not being tough enough on myself, but that’s the challenge of anyone who goes into my business.
It’s really hard to learn that you’re actually good at it because it’s not a skill that — how do you say, “I’ve got good intuition?” It takes a long time for you to trust yourself. And then how do you hold steady to really having your portfolio constantly being a collection of your guesses? It sounds like it should be a tautology. “I’m bullish, therefore I’m long.” But I would tell you that 19 out of 20 people that try to be traders, that sentence isn’t consistent with them 90 percent of the time. They’re —
Tim Ferriss: Could you elaborate on that?
Mike Novogratz: Yeah. So if someone is bullish, they say, “I think the stock market’s going up, but I’m not going to buy it yet.” “I think the stock market’s going up, but I’m going to buy a little bit, but I’m going to sell calls on it,” so it goes up, they barely make any money. Stan Druckenmiller, you hear him on TV and he says, “I think the market’s going up,” you can better believe he’s long.
Tim Ferriss: And just for people who are not in the investing world, so long, meaning he is, I suppose, in the simplest iteration, buying things with the expectation they will appreciate in value.
Mike Novogratz: Yeah. Apologies. I sometimes forget the audience.
Tim Ferriss: You’re good.
Mike Novogratz: And so that’s the battle of being a speculator, but that translates into the battle being life. And listen to even, I guess if you’re investing in movies, you have some algorithm in your head or a written algorithm of what you think makes for a good bet. And so you invest, you invest, you invest. At one point, your track record, your wins versus losses, are going to tell you: are you good at this? But really taking the time to understand what that algorithm is. How do you make decisions in investing in movies or investing in small businesses, if you’re a venture capitalist, or investing in markets. And so one of my insights was always in any one of those processes, you take in information, you process it through an algorithm and you have to then manage it, manage the risk of it somehow.
And so I use that process in lots of things, and not every job, certainly not every investing job is based on intuition. Quite frankly, very few are because the more intuition-based the investing is, the more anxiety there is. If you’re an arbitrageur, you buy something for $8 on one market and sell it for $10 on another. There’s not a whole lot of risk. And so that is just being commercial. And so I always tell people that you got to try to understand yourself and figure out where your DNA, where your personality type fits it into the space.
Tim Ferriss: Let’s come back to one of the names you mentioned, and that’s Paul Jones or Paul Tudor Jones, who has hit the news quite widely in the last few weeks because of his extensive discussion of Bitcoin, specifically in one of his memos. I’m not sure if he refers to them as memos or letters or something else, but nonetheless, this has made the rounds that Paul Tudor Jones has de-risked Bitcoin for institutional investors, here comes Wall Street, et cetera. You’ve referred to yourself as the Forrest Gump of Bitcoin. So I’ll give you two questions and you can choose which one you want to tackle first. So one is, why are you the Forrest Gump of Bitcoin? And then the second is, how are you different from Paul Tudor Jones? I know you know each other quite well. How are you most different or most similar?
Mike Novogratz: So that’s a great question. So the Forrest Gump of Bitcoin was kind of a shtick. I was the first institutional-grade investor that started talking about it, for better or worse. Back when it was trading around a hundred, I was on. I promised my partners, quite frankly, that we wouldn’t talk about crypto because Fortress was a real asset company and weren’t going to talk about these digital assets. And I was at some conference, I didn’t know the press was there. I made some witty comments about Bitcoin and the next day I was on the cover of the Financial Times. And then I got sucked into Bitcoin because everyone would call me and ask me what I thought. And at that point I didn’t really understand how it worked that much. I understood that it was the thing that was going to go higher, but partly by being forced to publicly speak about it, I got asked to speak at the Oxford Union and I really had to study and try to understand how the damned thing worked. And so I became kind of an unofficial spokesperson, or one of the unofficial spokespersons, for it.
Paul and I are as close in terms of what we have done. We ran similar businesses, his was bigger and a little bit better. He’s been a role model in philanthropy, in spirit. If I had an older brother, 10 years would differ, and my parents didn’t tell me about it, it would be Paul. And so it’s fun to see him getting involved in Bitcoin, for me personally. It’s important because I said I was pretty damn good, but Paul is one of those legends. There are literally, honestly, three or four guys of his stature in the whole macro space in the last 30 years. And so for him to get involved, it basically says this is a real macro instrument. There’s no more debate on, is Bitcoin — it might not always go up. It might go up and down. You might not put it in your portfolio, but there’s no shame in being involved with the space anymore.
And that’s a big deal because for stores of value, and Bitcoin is really becoming a store of value, they only become stores of value when people believe they are. And so it’s a belief system. Bitcoin is not just the code. It’s really the social construct. I say it’s this, you say it’s this, therefore it is this. And so we already have Jack Dorsey, whose Twitter handle says “Bitcoin,” and Abby Johnson from Fidelity and Pete Briger from Fortress that all bought it personally, or have their businesses involved with it. Wences Casares, Micky Melker—I mean, these are kind of legends in their space. Paul’s the first kind of legend in the hedge fund space that didn’t just buy it personally, but he bought it in his fund. And so it opens up a whole new avenue of potential participants in that community, which I think is really, really significant.
Tim Ferriss: So if we had to put on the hat of forecaster or Nostradamus, what do you predict, if you’re comfortable going for it, with Bitcoin, cryptocurrency, et cetera, in the next, let’s just call it 12 months? It’s currently May 18th, when we record this, 2020.
Mike Novogratz: Mark it down and write it down. We’re trading roughly $9,600 per Bitcoin right now. I think we’ll take out $10,000 soon and end the year closer to $20,000, the old highs. Once these store values start building momentum, there’s not a lot of supply. We’ve had this thing called the halvening, where there’s half the supply being mined than there was even a week ago. But mostly, the story’s finally catching broader adoption. And it’s not just hedge funds that are going to be able to buy it. You’re going to see wealth managers start selling it to their clients through products. We have a Bitcoin fund that’s targeted to the 50- to 80-year-olds in America that make their investment decisions through TD Ameritrade or Charles Schwab or Goldman Sachs, our registered investment advisors.
Bitcoin has been a young man’s game. It’s been Gen Z and the millennials, it’s been bought on Coinbase app or Square or Robinhood, those things aren’t going away. Quite frankly, there are going to be more of them. Facebook’s Collibra is going to allow you buy Bitcoin. And that’ll be 2,000, 3,000 people using that wallet. And so there are so many more avenues of access. I always tell people if it was easy to buy, the price would be far higher already. Bitcoin’s been hard to buy and a year from now, it’s going to be that much easier.
Tim Ferriss: Thank you.
Mike Novogratz: I’m really bullish. And listen, I’m always careful when I say “Really,” because these things are recorded and you come back later and people are like, “Damn, that guy was stupid.” It doesn’t work. And so you’re cautious to be that bullish publicly, but I haven’t seen things line up as well in a long time.
Tim Ferriss: Let’s rewind the clock as promised. It feels like probably an hour or so ago, maybe a little bit less, to family. And I know this is a little bit like Memento as in how nonlinear this is, but you grew up in a big family, it seems like, with no shortage of strong personalities. Could you describe for folks what your family was like, what your childhood was like growing up?
Mike Novogratz: Sure. So for people of my age that used to watch John Hughes movies, like Pretty in Pink and Sixteen Candles, that was pretty much the neighborhood I grew up in. We were straight up the suburban middle class, all-American family. My dad was an Army officer. So he was a major, he went to Vietnam twice when I was very young, a major, then a lieutenant colonel for my growing up years. I went to public high school. We had seven of us, seven of us at a house that had two bathrooms, one for my parents and one for the rest of us. And we fought over the brush and the blow dryer because back then you blew dry your hair if you were a cool dude. My mother didn’t go to college. She got married when she was 18 to my dad. They just had their 60th anniversary, or 19, she got married, 60th anniversary.
And she was beautiful. And I think she had this fascination with the Kennedys because she named my sister Jackie and my brother Bobby. And we’ve got a John John. And my dad was a handsome football player, a football star at West Point. And my mother thought we should be them. Why not us? And so she was the one that kind of drove the pressure to succeed, not in a really harsh way, just in a — we used to complain about kids and she says, “Well, if that girl would jump off a bridge, would you jump off a bridge?” The same old saying that most suburban parents used. But there was a pressure my mom put of excellence, that we could rise. And in the background, my father had been the Lineman of the Year in college football.
He never has once mentioned a thing. He’s the least braggadocio guy, very humble, but he didn’t have to say much because my mom would say it all for him. But we had this sense of excellence from my dad, that he had been this star football player. We also had a sense of service. My mom used to always say, “You’re giving so much. You got to give back.” And I looked back, I’m like, “Well, we had seven kids fighting over one brush.” But it was a Catholic family. There was lots of love involved. We come from a big, extended family as well. And so we felt special. It was special to be a Novogratz. My mother made it special to be a Novogratz. And so we ran for office at the student elections and I didn’t always win, actually lost most of the time, but even the confidence to be the third-grader running for class president came from, I think, parents that made you feel special.
My dad was tough. He was a military guy and he grew up in an Austrian immigrant family. And so we got whacked around a lot, my brother and I. We always complained that by the time my little brothers and sisters who — there was a seven-year gap between the top three and the bottom four came around — my parents were soft. I look at this big family all the time. And the one thing that I’m sure that came out of that was you’re willing to take more risk in life when you know if you screw up, there’s people that are going to catch you, there’s brothers and sisters that will love you anyway.
And they also, on the flip side, when you’re doing really well, they don’t buy that shtick either. They’re appreciative of it. They applaud. But you’re not more special just because you made a bunch of money or got this award. And so it’s humbling. It’s safety on the downside and it’s humbling on the upside. And listen, we’ve all drafted off of each other. I always laughed. It’s a pain in the ass to have such a famous sister because wherever I go, everyone knows my sister because she’s always trying to save the world.
Tim Ferriss: You should say a few words about that because people may not recognize Jackie equals Jacqueline, Jacqueline Novogratz. Just a few words about — could you say a few words about her?
Mike Novogratz: So my sister is one of the unique souls that from age five, decided she wanted to change the world. And so she was a Brownie then a Girl Scout. And she started this organization, the Acumen Fund, which was really kind of the father of venture philanthropy or impact investing, and has spent her whole life trying to figure out how to change systems, how to invest in the poorest of the citizens on this planet to build permanent structures around housing and water and education, and really to change the conversation, to start with a conversation of dignity. And she’s developed a huge following in that development world and in the conference world, she’s got branches all over the world now of young acolytes that want to be like her. And so it’s interesting, what I notice about her and I notice about some other leaders, but not many, is that she’s never not known true north, and most people and myself included, I try to be a pretty good guy and I do a lot of good stuff, but my compass gets out of kilter plenty of times, gets out of kilter for my own desires. It feels pretty good. It gets out of kilter because I get excited about something and I lose my own focus. And I put my sister in a special bucket. Bryan Stevenson’s one of my heroes from the Equal Justice Initiative who’s really one of our great civil rights leaders and you meet with him and you’re like, after just a few hours with him, you’re like, he’s probably never not known true north. And so listen, it’s inspiring to be around those people. It’s sometimes humbling and frustrating because you’re like, “Ugh!” But it’s good to have them around because it grounds you a little bit.
Tim Ferriss: So you spoke earlier of feeling immense pressure, say, going out on the wrestling mat or at the investment conference coming up to your five minutes and so on. You have a large family, many high achievers in that family. Do you think any part of that comes from a pressure or expectation to succeed that was made explicit or implicitly clear from your parents? And I know that’s a very binary question, but I’m just curious. Yeah.
Mike Novogratz: I mean, it’s a big yes. And I don’t know if it was, I think it was more implicitly. My mother was very good at making us all feel like we were the special one. And for whatever reason, from kindergarten on, my teachers treated me better than everybody else, my parents. And so I literally remember if I didn’t get an A in first grade, on the way home, taking the paper, crumpling it up, and throwing it in the sewer. And I’m thinking to myself now that I’ve had young kids, it’s incomprehensible for me to think that a five- or six- or seven-year-old would throw a paper away if he didn’t get an A. Who thinks like that?
So somehow at that very young age, I said in that article with Gary Shteyngart, when I was at rehab, I had to come blame my mother, because everybody’s got to blame their parents. I said, “You put so much pressure on me,” because she used to tell everybody, because I talked all the time, that I was going to be a Senator. And my mother was very quick on her feet, said, “Yeah. He did all right. I should have said he should have been the President.” You’re a little kid, you pick up cues that my parents never meant to put pressure on their kids, I don’t think in that kind of way, but you pick up cues and they become your operating system. And I operated with that system. I probably still have a little bit of it in me for so long, a period of time that I needed to be perfect.
So I remember cheating. And then I was like, “Why am I cheating on a high school test when I’m the smartest guy in the goddamn class?” because I didn’t know the answer. I’m not going to get an A. That pressure was irrational. And of course my fricking dad never told a lie in his life. He’s another choir boy. They’re not going to condone cheating on a high school test. My mother wouldn’t condone it.
And so it’s interesting when I talked earlier about big T trauma and little t trauma, the little t trauma of picking up some story, for me was just as powerful as you know, unfortunately for us, other people haven’t gotten beaten up. And so that I think, again, I have a loving mom and dad and interesting about them as they’ve gotten nicer and nicer with each year. So my dad’s 83, my mom’s 79 and you literally, it’s just fun to see parents grow and change. And so I’ve got nothing but great things to say, but I do think, and I said that in that speech I wrote, that everyone’s journey is to kind of figure out their parental issues and how their parents impacted them. And then to understand it, to let it go and love their parents. And it took me a long time to figure out where that pressure came from. And again, I don’t blame anybody for it, but it certainly was there.
Tim Ferriss: So let’s come back to that speech because this might be related to what I’m about to ask. So you have, I would not call it a small tattoo on your forearm. Can you describe this tattoo for people, please?
Mike Novogratz: I have a forearm length jaguar/puma. I call it a puma, but you might think of it as a jaguar, a big black puma tattoo that goes from basically the whole length of my right forearm that I got literally — my brother had given me a tattoo for Christmas a few years earlier and after my first ayahuasca experience where I literally on day three, transformed into a puma. I was going to call it black panther, but the movie had already come out, so I was like, “I’m a puma. I’m not a panther.” and growled and crawled around the floor two nights in a row and was so moved by the whole beauty of that experience, I decided I would get a small tattoo and I walked into this famous tattoo parlor called Smith Street Tattoos where my brother had got me the appointment and set it up. And I told the guy I would get this tattoo and I was going to get a small one on my shoulder and the guy looked at me and he was like, “Dude, with all respect, you’re old as fuck and you’re going to get a tattoo that people can see.”
I was like, that was such genius. I was like, “That guy’s a genius.” It’s just you know when you hear the truth, so I put my forearm down there and I walked home with this giant, eight-inch tattoo of a jaguar/puma on my right arm. I love it. I have to say, I love it. It gives me power. I realize your forearms don’t get flabby. It’s like the one part of your body that stays fit.
Tim Ferriss: You mentioned ayahuasca and this experience minus the puma in this commencement address. Why did you decide to include that?
Mike Novogratz: It was my first commencement address and I worked hard on it and the thesis was “know thyself,” and there’s so many ways one can learn about themselves. And that journey that I went on in Costa Rica was unbelievably powerful and I ended up getting different things from it than I thought I would, but afterwards I was trying to convince my sister and brother-in-law that they should do this. And I really then started thinking, barring people that have bipolar or mental health issues, would an ayahuasca trip not benefit someone? As much as it might be tough and scary, should we put every politician in the world through that experience before they’re allowed to serve? And I kept coming up with yes. And so I was like, if you’re a young college student and you’re physically okay to do this, is there anything bad? And I couldn’t come up with it.
And so I thought, I’ll talk about it publicly. And part of this was in a chapter or a part of the speech about de-stigmatizing mental health. I think one of the things we need to do as a society is to allow that people have mental health issues, that depression is real, and that people have shit to work through, and that we should help them work through that. And both psilocybin and ayahuasca are, I just think, two things in that tool kit, powerful things in that tool kit of how one can process trauma, one can learn about themselves, one can dig into places that they haven’t understood before. And it’s funny, once you see it, you can’t unsee it.
Tim Ferriss: Yeah, that’s true.
Mike Novogratz: So I have a sister. I shouldn’t tell her story, but I will, that went down, after I did it, to the same place. And I was laughing about being a puma and she’s like, “God damn it.” Next thing you know, her hands were becoming kind of furry and like a cat, and she hates cats. She’s like, “I hate cats. I hate cats. I can’t believe I’d become a cat.” And next thing you know, she climbed up this ladder and she’s looking at it and it brought her back to this high school, not high school, I’m sorry, little school theater where she was the Cheshire Cat looking out on the audience. And she tells me the story, I remembered. I was the older brother sitting there. She was probably five or six at the time and she was the cutest kid in the play. Of course, she was my sister. And after the play, I remember telling her she stole the show, she stole the show. She was so great. I mean, she probably had three lines, but she was the Cheshire Cat in Alice in Wonderland.
And for her, coming off what she saw in this ayahuasca trip was all the other girls being mean to her, because she was getting all the attention and interestingly enough, her whole life, she never put her head up again. She always has been unbelievably supportive of everyone. She is literally our support system in our family. And as she came out of that trip and she was like, “I didn’t put my head up because of those six-year-old girls that I didn’t remember.” And so again, once you see it, now she’s got her own podcast and she’s putting her head up. And so I find that’s a sweet story to tell, because it’s not so damningly personal, but there’s so many opportunities like that that I figured it’s time at least to broaden the conversation. Now listen, University of Iowa to the Teacher’s College might not have been the exact right place, but it was where I was invited to speak.
Tim Ferriss: I’d love to highlight two lines from that speech. And one is in the middle of a paragraph. So I’ll just highlight verbally one portion of it really, but it’s discussing your time at that holistic health center in the desert of Arizona, 28-day rehab center. And it says, “The 28 days didn’t fix me or change me. No, it just gave me a start at understanding who I was, what forces controlled me.” And then here’s the part that really jumped out at me, “What stories in my life were so strong, I didn’t even realize they were stories,” right? So now I’m zooming out because many of the stories we have are narratives about ourselves and the world may not be stories were aware are stories, they’re just our reality. And they’re often stories that were given to us inadvertently or purposefully, and we’re not aware that we’ve absorbed them.
So my question relates to the next line and that is coming back to the ayahuasca. “The lesson I learned in my last ceremony was that this medicine, this process, was meeting me where I was and that was gentleness. You must start by being gentle yourself.” So like you, I think you’ve competed at a much higher level in many, many arenas, but I’ve always been very, very, very, very competitive. And to the extent where being second place has often for me been worse than being 15th place, right? It’s kind of like second place is first loser type mentality. So I’ve been very mean to myself in the same way that those six-year-old girls were to your sister, right? And so that has been kind of internalized. And I’d be curious to know what has helped you to be gentle or more gentle with yourself. Gentler, I guess it’d be one of the two. Yeah, you’d think as a writer, I would have this English figured out, but what has helped when a lot of people would view competitiveness as your superpower, right? And it’s such a driver, how have you learned to be better at that?
Mike Novogratz: Well, it’s a work in progress. I remember before going down there, I’m an easy-going guy and I don’t lose my temper a lot, so I think I’m a nice boss. And I don’t yell at people that often and I told my lawyer, who’s been with me for 10 years, I said, “Of course I’m an easy boss.” And she was like, “Dude, you’re absolutely not a fucking easy boss. You are such a tough boss.” She said, “You’re nice, but you’re tough.” And I was, “What do you mean?” She says, “You never give a compliment. You’re like, ‘Oh, that’s pretty good, but…’ We’re having the best party. You’re like, ‘Oh, if we only…’ and they’re like, ‘You know how disheartening that is?'” I was like, ‘Awww!’ It made me feel terrible.
And it was when I was on that ayahuasca thing I realized, you can’t be nice to people until you’re nice to yourself. And I never thought I was tough on myself. Why? Because I let myself get away with the stuff that sent me to rehab, drinking or drugs, or breaking the rules. I’ve been a rule-breaker my whole life. And so I thought, well, if you could do that, you’re not really being tough on yourself. Those are two different subject matters. And I did the rest of that stuff because I was so tough on myself. And that was the interesting part. I was like, “Oh, you should have. If only.” And that internal angst, I think some of it was just getting older and I think with success, there’s a little less pressure and some of it is now just try to have awareness of it and say, “It’s not that important,” but I think I polled my employees, they’d say, “You changed a little, but not a lot yet.” And so it’s certainly a work in progress.
I do notice it with my father. My father was this great-looking guy, football star, spent his time in the Army, always was nice to people, went to Vietnam twice. And in lots of ways, became a colonel, but didn’t make general. And I remember when he didn’t make general, it was painful in our family because of course you want your dad to succeed. And the military, it’s like not making partner at Goldman Sachs. There’s a hierarchy and either you get it or you don’t. And it was painful for my parents, for my mother, who had done all of that. And there was some scandal behind that and there’s always some backstory.
But I remember thinking 20 years later, looking at my father at 70, now he’s 83, and thinking, do you think he gives a rat’s ass that he didn’t make general anymore? His priorities had shifted. He was so happy to be around his family, the work he was doing at church and how we were all doing, that ego piece, he just let it go. And he didn’t act like he let it go — he let it go. And so I think there’s something about aging gracefully where you let that shit go because it just doesn’t really matter nearly as much as you think it does at the time. And I think seeing that has helped. “Act like Dad, don’t act like a jackass” is kind of my internal koan mantra.
But for me, let’s say it’s a work in progress. Because like you, it’s kind of built into the DNA of wanting to do things right. When I throw a party, I want it to be a great party. And my poor assistant once bought a tent that was too big and I literally thought I was going to, it was like I died a thousand deaths. I saw this tent, I knew we had 200 people coming to the party, we had a tent big enough for 300, and all the energy would be diffused. “Get over it. Have fun in the big tent, jackass.” But I’m trying to learn that, but that’s a process.
Tim Ferriss: What advice do you think your older self, 10, 20 years older, would give to your current self?
Mike Novogratz: To say “You’re okay. You’re doing fine. You’re doing great. It’s fine.” I have a shrink, my wife calls him the greatest enabler of all time. His whole mission is to say, “That’s great.” I’ll make some confession. He’s like, “Oh, that’s great.” That it’s like, “Well, I’m not going to get in trouble?” That it’s just to accept yourself.
I have a funny story. There’s a friend. He’s not really a friend of mine. I’ve only met him three times, but I had a great time with him every time I met him. But he’s a dear friend of Paul Jones, a guy by the name of Pete Egoscue. Pete has a famous business where he was a posture expert and then it was movement and he had come back from the Vietnam War and healed himself. And that he has literally healed thousands and thousands of people, celebrities, athletes. The Egoscue Method, it’s called. And when you meet him, you go through his process. He gives you a menu of exercises how to get your back — and his philosophy is if your body’s in alignment, you’ll be in alignment. Your emotions will be in alignment.
And so I went to meet him the first time and it was supposed to be an hour meeting and we spent three hours talking and I’m waiting for my menu. Where’s my menu? My menu. And at the very end, he said, “No, no, no. You need to strip down naked, stand in front of your mirror every day for 15 minutes, and just accept yourself.” And I was like, “Well, that’s my fucking menu.” So I remember getting back and calling Paul Jones and he laughed hysterically. “You didn’t even get a menu.” And so I think that my 20 years from now, hopefully might tell you, “Just accept yourself.” That was a little bit the tattoo. I was like, “I am a fucking puma. And so put it on your arm and remember that’s part of who you are.”
Tim Ferriss: So I have to ask, did you try the 15 minutes in front of the mirror?
Mike Novogratz: I did it twice. I got embarrassed by my body type. I literally didn’t have the patience. I did try it a few times, but I didn’t follow through like he needed me to.
Tim Ferriss: Well, a work in progress as we all are, like you said. Let’s chat about criminal justice reform. I know this is incredibly important to you. I don’t know the genesis story. I don’t know how this became important to you. So I’d love to hear you describe how that came to be.
Mike Novogratz: It’s funny. I guess if I’m metaphysical about it, I go back and I think, “Well, my parents talk.” I remember my mother bringing me to Head Start when I was four or five years old and this idea of philanthropy being part of our family. But the more practical side was I saw Bryan Stevenson speak once, and was wildly impressed at TED. He gave his kind of seminal speech. And so that was in the back of my head. And then my daughter, Anna, got a job at a thing called The Bronx Defenders where she was a 20-year-old summer intern. And she was trouncing around the Bronx, collecting evidence for her lawyer’s cases. And I’m like, “You’re actually the evidence collector? How do you know?” She’s getting video from bodegas and I’m like, “You’re the defense team?” And so I was A, impressed with the work she did. And I was like, “Wow, that’s what public defense is.”
I had made this movie with Nate Parker. And when I say made, I didn’t do anything other than invest. Nate Parker was a good friend of mine. He was a wrestler and he had this dream of making this movie called Birth of a Nation. And literally after 15 Jack Daniels, he convinced me to invest, because I really didn’t want to invest in an independent movie, just thinking I’d lose all my money. But Nate was very persuasive and he’s a winner and so I bet on him and it won every award at Sundance and it sold for more money than any independent film ever to this day, still, right. We sold for $18 million, an independent movie.
It’s a painful and beautiful movie, but there’s a big lynching scene in it. And I saw Bryan Stevenson, who was building a lynching museum, and so I said, “I’m going to take my profits or some of my profits and give it to Bryan.” But I said, “Bryan, you’ve got to come and have breakfast at my house.” And so he came and of course my daughter hijacked the breakfast, but we had breakfast and really heard his story personally and asked a bunch of questions about the criminal justice system, and I just started getting angry.
And then there was a thing called audacious. You know, the year cryptocurrency went much higher. I made a whole lot of money on this thing called Ethereum and to some of you, it felt like Wampum. We had bought Wampum, it went way up in price, and I sold it and it was a, kind of a breathtaking amount of money. And I wanted to do something fun for myself and I wanted to kind of — so I didn’t feel so guilty because I kind of thought it would have been karmic justice to give an equal amount to something else. So I bought a G 550. I never had a jet, which was extreme, but I decided to take the similar amount of money and I heard this story about cash bail, unaffordable cash bail, that Robin Steinberg told. And it’s a really simple story. There are half a million people that go to bed every night in jail cells solely because they can’t afford to pay bail.
And the average bail we pay is somewhere close to $1,800. Most people in America don’t have $500. Most people that are getting arrested don’t have access to $500. So they stay in jail. They’re seven times more likely to plead guilty if they’re in jail than if they’re not in jail. When we bail them out, 50 percent of the time, the DA drops the charges. When you’re in jail, 40 percent of all prison death and prison rape happens in the first 14 days you’re there, and it has horrific long-term consequences for the person and the city. And it just felt so stupidly unjust that I impulsively said, “I will donate a bunch of money and share this thing, The Bail Project.” And then I woke up and I was like, “Well, The Bail Project is going to be the biggest bail fund by a factor of 30 or more in the country. You’d better understand the criminal justice landscape.”
And so I hired, I got Billy Watterson, who’s been an A+ and a small team, and we started mapping out, having activists come in, formerly incarcerated people come in, visiting prisons and jails. And with every rock we looked under, you just get more and more pissed off. You get infuriated. It is a system of stupidity. It is a system of spite and meanness. There is nothing rehabilitative at all. It’s racially oppressive. It’s literally, “Let’s figure out how we can strip people of their dignity. Oh, let’s make them shit in public. That’s a very nice — ” The whole system is just bizarre and it doesn’t have to be that way. We participated on a trip where we took 35 people to Norway and to Germany. And you look at the German prisons and you would give them a 95 out of a hundred and you’d give Norway a 99 out of a hundred.
And we’re not a 60 out of a hundred. We’re a 14, we’re that bad. And so it just got me angry. Fairness has always been a thing in my life. I think growing up middle-class, you thought it was not fair that rich kids had a better start than I did. And talk about not fair middle-class to rich kids, the prison system is just absolutely unfair and it preys on communities that are already in duress. I think about women in prison. How about this statistic? 95 percent of women in prison have been raped. So we’re taking people that have been traumatized and putting them into a trauma machine. Who in the fuck thinks that’s a good idea? And so anyway, I get angry thinking about it, but so we’ve gotten involved. I think — I’m on the board of this thing called the Reform Alliance, which has been fun, because we’re doing great work around probation and parole and that’s Jay-Z and Meek Mill and Robert Kraft. And we have participated and funded or partially funded, probably 15, 20 different organizations. And really it’s been a big part of my life.
I still am a novice, to be fair, on less than three years in. And so I’m a good enough storyteller that I can kind of tell the story, other people’s stories and hear them, but we need a complete overhaul. And the only optimism I see is that when I started, even, there was only a hundred million dollars in philanthropy coming into the space. And four years later, there’s $600 million or more. It feels like the ball’s starting to roll downhill. This COVID thing has really shined the light on just how horribly we treat the most vulnerable people. I would tell you, it’s interesting,
I looked before I came on, there are 15 countries that have decarcerated by 18 percent. Italy, Iran of all places, France, right? They’re like, “Okay, shouldn’t keep people in prison when they’re going to die because of this damn virus.” The US is about two and a half percent. And so while that’s a lot of people, right, and they’ve all come out of jails, not prisons. So for those who don’t know, jail is one year and under and often pretrial, and prison is one year and longer. And so we just haven’t gotten around to saying, “We need to fix this.” And we’re way off. Our sentences are three times longer than Germany’s for the same crime, just mean.
Tim Ferriss: And for people who would like to learn more about this, are there any starting points you would recommend?
Mike Novogratz: Sure so —
Tim Ferriss: A TED talk or a website or anything else?
Mike Novogratz: Bryan Stevenson’s TED talk is spectacular because it really gives a framework of where this all started, right? It started with slavery and we’ve never really dealt with the trauma of slavery. Robin Steinberg gave a TED talk that’s fantastic about bail and The Bail Project. And Phillip Goff, Phillip Atiba Goff, did one about policing. And so we’re not anti-police to be fair, we’re like, “Okay, how do you help the police department actually have data so they can be fair in how they place?” And so that’s a controversial one because people are like, “Screw the police, they’re — ” You’ve got to have people all engaged, all parties have to be engaged and try to say, “Hey, we need to make a better system.” And I do feel some optimism, even Trump, as much as I dislike Trump and would love him at a cage match, criminal justice, because Jared Kushner’s father spent time in jail, criminal justice is one of the few things that the Trump Administration has been okay on. Not great, but it was certainly okay, the first step back was a great start, and they’ve been helpful.
But again, to put it in perspective, we have 2.3 million people in jail or prison and having a whole lot of analysis on this, I think that should be 800,000. And that’s a big difference. We have five million people that go to prison every year. It’s like a jail every year. It’s like a revolving door. They stay in an average of 45 days. Two and a half million of them are going there just for violating parole, which is bizarre. We should have nobody on parole. And so we have a long way to go and I fear you pass one or two acts, you declare victory, and the numbers never change. And so we’re working on trying to get a scoreboard, so the whole country can say, “All right, this is where we think we need to get, have people agree to it and then work to get there.”
Tim Ferriss: I want to shift gears just a little bit to a few questions I like to ask a lot of my guests and if any of them are dead ends, we can scrap. But I’m curious to know what, if any, are books that you’ve given often as gifts? Are there any books that you’ve given often as gifts?
Mike Novogratz: There’s one book that I’ve given 40 copies away probably. And it’s called Reminiscence of a Stock Operator. And for anyone who wants to be a trader or an investor, this is the Bible. It was written in 1932 by a guy who was, at that time, maybe the world’s greatest speculator. Jesse Livermore is the fictional character. And what’s crazy about it is you can read it today in 2020, and it literally is still the Bible. And so every great trader annotates it, tears pages out of it. I used to be able to tell when people would come to interview to work and they’d say, “I really, all I care about is trading.” And I was like, “Well, tell me two books you’ve read about trading.” “Oh, I haven’t read any books.” And I was like, “Okay, here’s a book. Go read it and come back when you’ve read it. But you’re not getting a job, because you lied. Because you lied to me because you really didn’t care that much about trading if you’ve never read a book on it.”
But that’s the book. And there’s a terrible anecdote or afterword to it is that two years after he wrote the book, the guy committed suicide because he just couldn’t take the — he lost his fortune yet again. But he put every rule that you need to — you know, the discipline side of it is all in that book. And it’s a quick read; you can read it in three hours.
Tim Ferriss: I want to ask about, because you mentioned earlier that you’ve run into certain people who seem to have a finely honed true north, that they’ve had age eight, right? Someone like your sister or some of the names that you mentioned. When you feel unfocused or overwhelmed, scattered, filling your adjective, even temporarily, what do you do, you personally? If you’re feeling like you’ve committed to too many things or just not sure how focused your energies are, is there anything you do to refocus?
Mike Novogratz: Yeah, I think saying no, for me saying no has been the hardest thing, you didn’t want to disappoint people, right? Comes from my mother wanted me to be a Senator. And so learning how to say no and draw a boundary has been really important to me. And it’s hard for me. I’ve got to call back three phone calls and finally say no. And so by cutting a couple things out, I think it helps me. And actually the other thing is writing it all on a whiteboard. So it takes it out of my stress zone onto the whiteboard and I’m like, “Okay, I see it all. It might be a fuck load of stuff, but at least it’s up there on the board. I can put boxes around it, I can start attacking it.”
And so I think that’s probably the most powerful is literally getting it all out of my head and putting it — and I’m a very visual person. And so it’s different for me to do a whiteboard or a big piece of paper is different than writing notes, because I put little boxes and I say, “Okay, here’s my criminal justice stuff I want to work on. Here’s my — ” And like what are the stress points?
Tim Ferriss: Yeah. Doug McMillon of Walmart uses a whiteboard very similarly. I need to get a whiteboard I think, this is saying to me other than my envelopes and diary of a madman scraps of paper, I think I need something —
Mike Novogratz: Yeah, a lot of my whiteboards are metaphoric. They’re the back of a back of a piece of paper, but they function the same way.
Tim Ferriss: Do you have any quotes that you live your life by or think of often? I mean, are there any that come to mind for you?
Mike Novogratz: One of my favorite quotes is from Saint Augustine, it’s, “Lord give me chastity and continence, but not just yet.” I remembered leaving rehab and that was my joke, but yeah, we were at a big circle and everyone’s banging the floor and you had to give a story. And I was like, “What?” Part of that is that tension, always, between doing what you’re supposed to do and you know you’re supposed to do and what you want to do. And so I do think I laugh at that quote, but I do hold that tension in my hands. Part of being alive is being impulsive and breaking rules. I take personality tests and I just, I’m 37 out of 40 as a rule-breaker. And so I have a son that won’t break a rule. Tell him to keep off the grass, he keeps off the grass. He doesn’t drink because he’s not old enough to drink. Every high school kid drinks other than my one son, Nacho, who’s the sweetest kid around.
And I was thinking to myself, it’s just different brain chemistry, because it’s just — part of it’s nature and nurture, but part of it’s nurturing but so much I think it’s also brain chemistry because his brothers and sisters, we have a whole family of social and we did pressure the guy to drink a little bit here and there, but he’s like, “No.” And I’m so impressed at how confident he is with his ability to put up boundaries and just say no. And then be like, “Dad, you’re going past the — you’re going 90 miles an hour, and the speed limit’s 60.” And I’m like, “Oops, sorry.” And so for me, that quote’s important because it holds those things in tension.
Tim Ferriss: Well just a few more questions. This is one on investing, but it’s a little broader than financial instruments, it could be. But what is the best or most worthwhile personal investment you’ve made or just one of your better investments? That could be an investment of money, time, energy, or other resources. Does anything come to mind? It could be a trade.
Mike Novogratz: Cheeky! I bought Ethereum when it was one and it went to 1,300 and I bought a jet and lots of other things. But I don’t think that really, because that kind of felt a little bit lucky and I was already rich. I actually think investing in friendships. Partly, I’m a hyper-social guy and so it came natural to me. But when I think about my life and what gives it joy, it is the circles of friendships I have. My highlight to my life is this party I throw every two to four years, depending on how I’m financially doing, where 300-odd people, 350 people from my universe get together and we play sports and listen to music and drink too much.
And it’s a three-day event that takes a huge amount of effort to put on. But I feel like most complete in some ways. This is my exclamation point on the world on how I want to live. And so for me, it’s friendships. There are high school friendships, there’s college friendships, work friendships, friendships — people I meet at conferences and they’re not all — and they need to be invested in. Otherwise, if you don’t have new shared experiences, they kind of go away. And so —
Tim Ferriss: Well, it comes back to what you mentioned earlier in a way, which was the advice you received of looking at who’s at your funeral, right? And worrying about those people and no one else. Well, Mike, this has been extremely fun. Is there anything else you’d like to add? Anything else you’d like to discuss or mention before we wrap up?
Mike Novogratz: I think you covered a broad range of my life. I don’t want to bore your listeners. I think that was great. I think it was great. I remember meeting you fricking probably 12, 13 years ago when you were an up and comer and it’s been awesome. And just because you went to Princeton and you wrestled, I took a special interest…But I’ve been amazed at the following you’ve built, the adventures you’ve been on. I still go back to the — I was telling you this, your first book, the testosterone chapter, and the orgasm chapter are required reading I think for everybody. And so I, just proud to be your friend and love that I got to get on your show and congrats on all the success.
Tim Ferriss: Thanks so much, Mike. Yeah. The 4-Hour Body, the chapters with so many vagina illustrations that it got yanked from Costco, that’s my claim to fame. And it’s been nice to get to know you and —
Mike Novogratz: Adults should give all their teenage boys that chapter and they will have happier boys and happier girlfriends.
Tim Ferriss: Well, Mike, thank you again for taking the time, and to everybody listening, you can find Mike on Twitter @novogratz. You can learn more about the Galaxy Digital at galaxydigital.io. I’ll put links to everything in the show notes, all the books, TED talks, organizations that we’ve discussed. And until next time, thanks for listening.
The Tim Ferriss Show is one of the most popular podcasts in the world with more than 800 million downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.