Bethany McLean Discusses the Fracking Industry (Podcast)

of the ensuing decade. UM. Bethany is a highly regarded author who has written numerous books, many of which UM have won awards in our and are highly thought of. She's one of my favorite writers. I find her stuff absolutely fascinating, and I think you'll find this conversation fascinating as well. So, with no further adoo my conversation with Bethany McClain. I'm Barry Ritults. You're listening to Master's in Business on Bloomberg Radio. My extra special guest this week

is Bethany McClean. She is a contributing editor at Vanity Fair. She also spent three years in the investment banking department of Goldman sachs Uh, from which she joined Fortune as a reporter. She is known for her books. Probably the most famous one is Smartest Guys in the Room, The Amazing Rise and Scandalous Fall of Enron. Eventually that became

an Academy Award nominated documentary. She also wrote the book Shaky Grounds, The Strange Saga of the US Mortgage Giants and All the Devils Are Here, The Hidden History of the Financial Crisis. Her latest book Saudi America, The Truth about Fracking and how It's changed the World. Bethany McLean, Welcome back to Bloomberg. Thank you so much for having me so. I really enjoyed the book Saudi America. And let's jump right into that because there's some really fascinating things.

I have to start with a quote that really stood out to me. Quote, the most vital ingredient in fracking isn't chemicals, but capital. If it wasn't for historically low interest rates, it's not clear there would even have been a fracking boom. Now, all this time I've been told that it's technology that's driving fracking. You're saying it's not. It's ultra low interest rates. It certainly is technology as well.

Horizontal drilling is a big is a big innovation, So I do want to I do want to give credit to that. But I think most people when they focus on the problems with fracking are the issues. They focus on the environmental issues. Very few people focus on the shaky financial foundation of of the fracking industry. And this is an industry that needs huge amounts of capital. Um need huge amounts of capital are require to drill a well.

And then because the decline rates of the wells are so steep, if you are going to maintain production or grow your production every year, you get on this treadmill of constantly needing more capital. So most shale companies have have an a fair amount of debt, and so if it weren't for record low interest rates, it's unclear that they would have been able to raise all the debt that they needed to get this thing going the way

it did. Let's talk about those decline rates. You cite a study in the book you side a study by the Kansas City Federal Reserve that showed the average well in the Bachan region first year decline of output is six. Within three years it's eight. So what do they have a very short window to squeeze whatever they can out of that well. Yes, and you can make one well can be profitable in a simple return on capital analysis.

But if you're part of a publicly traded company and you need to show growth in production every single year, you're on this treadmill of constantly needing to raise more capital in order to show production growth. And the big question overhanging the shale industry is does that ever come to an end? Is there a point where this industry begins to produce free cash flow? Because right now it doesn't. It depends on the large guess of Wall Street um being willing to fund it. So so let's talk about

that a second. You describe how how fracking developed with thousands of wildcatters. They would go out, they would get these land leases. They were deploying the technology using horizontal drilling, lots of Canadian sands, and all sorts of other surprising things I had no idea about. You're suggesting that these one off drills themselves, these one off wells themselves, they

were profitable for those wildcatters. A one off well can be profitable, yes, not as profitable I think as people think it is I got some numbers for the returns at the wellheads on a bunch of the wells that Aubrey McClendon, who's the most colorful character and this whole story the former CEO of Chesapeake had, And even at the wellhead those returns were at nine percent. That's before

the cost of marketing and transporting that the gas. It's not clear how profitable, but some wills can be profitable. The problem is for publicly traded companies, or for any company that needs to show growth um that they get on this basically the steamroller of needing to raise more capital all the time. So you mentioned Aubrey McLennan. He looms large over both fracking. He's the founder of Chesapeake and really the father of capital. Reason I had no

idea who this person was before reading the book. Tell us a little bit about him and some of his outrageous leverage and some of the things he did. Really a colorful and fascinating person in Saudi America. So I've been fascinated with Aubrey mcclennon going back to two thousand

and ten. A guy I talked to a lot used to tell me with some degree of hyperbole, that McClendon was the most important man in America and really, and what he meant by that was that if McClendon was right and our country could produce immense amounts of cheap natural gas, that really changed the future of of the country. It made us an energy rich place where manufacturing of all kinds would would relocate if McClendon was wrong and this wasn't economic. And this friend of mine and his

partner used to have this debate all the time. The partner would say, the oil and gas were real, and John, my friend John, would say, yeah, but the economics don't work. Um. Aubrey was the guy that the technological development of shale credit goes to somebody else, a guy named George Mitchell, But the father of capital raising was Aubrey McClendon. This guy was one of the best salesman the world has ever seen. He could get anyone to give him money.

Had this great story in the book from an analyst who is at a big investment firm who was very skeptical of McClendon and of Chesapeake, and he said, I'd never let him in the door to talk to our people, because we would have ended up investing, and it wouldn't and it wouldn't have ended well. UM and McClendon had this larger than larger than life personality and life he really sort of remade Oklahoma City. Chesapeake was this extravagant company with daycare on premises and a massage studio. I

mean it was Silicon Valley transported to Oklahoma City. UM and McClendon died essentially bankrupt in a fiery car crash in the spring of two thousand sixteen, right after he had been indicted by the Justice Department, accused of rigging rigging deals to buy land. And when he died, American shail was flat on its back. It looked like this was this was the end. Thanks to UM some of the some of the strategy OPEC pursued, and so McClendon's death was it was as if it underscored the problems

with the American shale industry. There's a stat in the book that really stunned me. From two thousand and one to two thousand and twelve, Chesapeake sold sixteen point four billion dollars worth of stock and fifteen point five billion dollars worth of debt. It's a nice balanced portfolio there, uh, and paid Wall Street more than one point one billion in fees. So when you say capital was the key driver fracking, at least that at Chesapeake, that seems like

an awful lot of money. That is an awful lot of money. And I'd add that that's not the only amount that Chesapeake raised. They raised probably another thirty billion dollars in ways that are a bit more subterranean than public sales of equity and debt. They did these and run esque prepaid deals where they'd sell natural gas forward and get the cash now and not book that as alone, but it essentially is alone, right, and pulling forward forward

revenues to encounting it today. Yeah, and they did over twenty billion of of those kind of deals, and so so even that huge, stunning number actually understates the sheer amount of capital they raised. And with all of that, Chesapeake never before asset sales to soccers. Essentially, Chesapeake never produced free cash flow. And so people would look at that and say, well, that's just Chesapeake. Aubrey McClendon is this, He's the larger than life character that's not emblematic of

the rest of the industry. But it actually is. Aubrey McClendon is the rest of the industry on steroids much more extreme, but the rest of the industry was cash flow negative as well. There's a data point from the book, and I'm I'm thumbing through my notes to try and find it where you said something like the total investment dollars that the industry drew in was far, far in excess of the total value of the gas they pulled out, or or am I misquoting learn No, it's a number

from David Einhorn. So people you obviously known people on this podcast will probably know Einhorn well, But for those who don't, he's a very well known hedge fund manager who famously called Lehman before the financial crisis of two

thousand and eight. Relevant again, given given where we are right now, we're recording this literally three days before the anniversary of Lehman's collapse, exactly, so in early two thousand fifteen, David Einhorn, there's a lot of skepticism about SAIL for exactly the reasons we're discussing, and Einhorn was the first one to really go public and to put put numbers to this whole thing, and he calculated that um, the shale industry had outspent its outspent its cash flow by

eighty billion dollars. So that's amazing. It's not that they spent eighty and and the time frame for that is oh six, It's not that they spent eighty billion. They spent eighty billion more than the value of the oil and gas they sold. Yes, that's just a start. And you have to remember that that was a period when oil prices were over a hundred dollars a barrel, and it encompasses a period when natural gas prices were over

ten dollars as well. And so it's what the argument of skeptics is that this is an industry that can't make money with super high commodity prices. Forget super low commodity prices. Right, Let's let's talk a little bit about that, because is a quote from an analyst in the book that I really liked. With oil, there's a price that kills supply and there's a price that kills demands. So two questions about that, First x landing exactly what that means,

and then secondly, where are we in that cycle? Well, what he meant by that is that there's a price that's so low that nobody can make money, although meaning people don't explore, they don't drill, they'd rather just sit around away, right, And that actually put that that actually pushes us toward lower cost sources of supply, because if you think about the world, there are places that can get oil out of the ground for a really small

amount of money, namely Saudi Arabia. Their their immense oil field. UM is probably the cheapest place to extract oil in the world. I think they've said their cost is about ten dollars a barrel, although in the book you describe that their own financial situation has changed the world, so they they really need seven or eighty dollars to oil in order to pretty much be break even versus their own infancy. That's because of their public spending on other

things to keep up populous, a restless populus quiet. So, but that's not the actual that's the public spending they've layered on top of it, not the actual cost of of of of the olive oil. But so it is a certain at a certain price, nobody can make money, and so exploration stops. And then at a certain price, um oil is so high that people start to look for substitutes yep. And so that's what this guy meant by there's a price that kills supply and a price

that kills demand. And so the next question is where are we in that cycle? Are we about halfway? What are we about? Yep. So that's UM much lower than people thought oil prices would ever be UM back in two thousand and eleven and two thousand and twelve, when oil prices were over a hundred dollars a barrel, right, and I think it's still not quite high enough for Saudi Arabia to be fiscally stable um UM, and whether it's a price at which US shale can make money

or not remains to be seen. People claim. UM proponents claim that technological improvements and the beginning of fracking in an area of Texas and New Mexico called the Permian which has been an oil field for a century but has turned out to be really prolific with this new technology of fracking, that these things are going to reshape the financial firmament of the industry, and so we're going to start seeing profits from the from the publicly traded UM,

from the publicly traded fracking companies. Skeptics say those decline rates are still bad. All we're doing by getting more oil at the ground more quickly with new technology is emptying the well more quickly. We're not increasing the amount you can get out over over the life of the well,

and this still isn't going to work economically. So the theory is that within the premium basin, even under seventy five dollars a barrel and under five dollars, the linear square foot for the um natural natural gas that that's or is cubic square FI don't remember the measurement, but but it's been three four five dollars recently, premium basin can become profitable at those those certain parts of certain parts of the premium basin. For sure, it can be

profitable at those prices. Whether the whole basin can be profitable because I profile in the in the book a company called eo G that's kind of guarded as the Apple of shale if there is a total counterpoint to Aubrey McClendon's Chesapeake, it's eo G. Highly efficient, very cost conscious, um basically kind of the technocrats of the of of of the shale industry, and they say the CEO V

O G says, all land isn't created equal. The idea that you can drill a well in one place in the Premian basin, and that means you can drill well is everywhere on the Premian basin and produce the same results. It's it's crazy. Geology is really complicated, and so he he believes that some of what we can extract from

the Premian basin is at low prices is overstated. Last question about Aubrey, because you describe in the book how it's not just that he's spending two and five and ten x on land leases versus everybody else but his own personal life. He's all in on everything. There's no safe money, there's no will let me buy my He's just fully leveraged, constantly in every segment of his life. Right. He struck me as a fascinating character because he wasn't

just willing to risk other people's money. He was willing to risk his own money. He risked every bit of money he ever he ever got. There's this great quote from him when an analyst on a conference call said, at one point, when is enough enough? And he said, I can't get enough, and I think that sums up the man. But yeah, he bought the Seattle Sonics, moved

them to Oklahoma City renamed them the Thunder. He had mansions around the country, including around the world, including this extravagant place on Lake Michigani at an antique map collection. And he was best known you'll appreciate this for an incredible collection of wine. Um. Someone who knew him told me that his collection of wine at one point was

actually the best in the in the world. Um. He had a special love for the really big bottles what are those things called the jere boems and the yeah yeah, yeah, so the really rare jarrab bones. I mean, he was a character fascinating. Let's talk a little bit about your writing process and and let me go back to that UM column about and Run, the first piece that was pretty much the first major mainstream piece that called out and Ron for Hey, maybe things are not quite as

rosy there as the company is claiming. Tell us a little bit about that piece and what motivated you to turn it into a book. Well, so that piece actually came about because when I started working at Fortune, I'll give you a little bit of back story. I did a column called companies to watch where I was supposed to pick stocks every week that we're gonna, you know, appreciate thanks task. Well, it was remarkably easy because there were no shortage of people coming by fortune, from portfolio

managers who owned the stock to a company. Management would lay out these great little stories from me, and I'd write them up because I believed I didn't why would you? Why would I doubt them? And I'd watch in horrors. The stock promptly went in the opposite direction. So I started at a pretty early age trying to get to know short sellers because I was just tired of being wrong.

It wasn't I just I was tired tired of being wrong and tired of having people call me up after a piece ran and basically saying you idiot, like how could you, How could you be writing a puff piece about this insane fraud and so anyway, So through that I got to know Jim Chainos, and Jim I think in the fall of two thousand a fall of two thousand, UM said why don't you take a closer look at Enron? And it happened to be. It's one of those interesting

things in life because I have a weird background. I was a math major um and I went to work at Goldman as an analyst out of college, and so I didn't have a writing background at all, And so it was kind of serendipity of my weird background actually being incredibly helpful, because certainly, at that stage, I still knew how to put together, you know, elaborate spreadsheets on a company's financials. I was pretty fresh out of out of doing that. Eical and and their their financials were

as transparent and easy don't understand as any on the street. Right, So I'd say, over my years in journalism, what's changed as I've become far more obsessed with characters, far more interested in the human story. But I'm still a numbers

girl at heart. And so when numbers are contrary and don't make sense and aren't what everybody else thinks, or how a different picture than what the world thinks is going on, Like with shale, most people think what must be immensely profitable making gobs of money, and no, actually it's not. And so I'm really interested always in those disconnects that numbers can show you. How quickly did you realize something was afoot at en Ron? When you started

delving into the numbers. So I would say I was skeptical, but not skeptical enough. My original piece, I actually think should have won awards for the meekest headline in history because the title was his end Run over priced. Um, yeah, that turned out to be true. Um anything over zero? I just I never would have guessed. Um, I was naive then. I never would have guessed that a company could be so riddled with over statements and outright fraud as as as en Run was. So the piece was skeptical.

It pointed out problems in en Ron's business. Speaking of cash flow, it pointed out en Roun's lack of cash flow and it's burgeoning debtload, and the fact that nobody understood how this company actually made made its money. But if you had asked me at that time that I would end Ron be bankrupt in six months or nine months, I would have said what now? So you were looking at this as an expensive company, not a fraudulent correct, right? And how soon was it clear that it was the

latter and not the former. I think the Enron tail unspoiled in an interesting fashion. In August of two thousand and one, Jeff Skilling abruptly quit is the company's CEO, citing personal reasons, as everybody does. But the idea that the mastermind behind this company, who once that I am en Ron, was suddenly just stepping down was a real sign to people that there were that there were problems.

And then the Wall Street Journal did some great work pointing out these off balance sheet partnerships that the then CFO Andy Fasta was running, and the whole thing began to create her pretty quickly. So let's talk a little bit about your writing process. At what point, obviously, is n one blows up, It's clear, Wow, there's a book here. But some of the other books you've written, you've co authored with various people. Uh, the en Ron book, the

all the all the devils are here. What makes you decide to work with someone else on a book when you've been so successful writing on your own. Well, so the first two books I did were both big books. Um, the en Roun book was I was How old was I when I started that? I don't know, thirty one and I'd been a journalist for a few years. But the longest piece I'd ever written was you know, three thousand words and Fortune magazine. I've never even written a

really long story, let alone written a book. And actually collaborating with Peter el Kind and having my old pal Jonah Sarah edit it was was the best decision. I mean, it's a far better book because of their input and help. I learned a lot about um investigative reporting from Peter, and I learned a lot about writing from from Joe. Joe and I actually co authored All the Devils Are Here, and it was, you know, ten years ago about this day.

We were sitting in my house in Chicago just watching the world go up, and in the financial world go up, go up, in flames, and we were both we both said we have to do a book, and so it really just came about organically. It wasn't any kind of um stra g on on my part. But again, it's a much better book because of because of Joe's collaboration. The other two books I've done have been these mini books for Columbia and this book's Audi America. As a

mini books, that's only words. It's a short, quick read. Yeah, they're They're meant to be quick takes or a slice of a topic, so they're not as all encompassing or as demand. They don't take a commitment of your entire life the way the way these these bigger books on these bigger topics have um too big to read exactly exactly. These are not too big to read um and so they're more manageable. I guess I would say fascinating. We're recording this not too far off from the anniversary of

the collapse of Lehman Brothers. Let's talk about that a little bit. Uh and and during the break we were discussing the issue that infuriates me and so many other people, why nobody went to jail? What? What are your thoughts on this? I do think overall it's harder to send people to jail than is commonly thought, because there's a difference between what is unethical and what is illegal. And sometimes what is unethical is actually worse than what is illegal.

And that's one of the conundrums of our criminal justice situation. Even en Ron wasn't a slam dunk. It was a case that took years to prosecute. It was pretty much a slam I mean it actually it actually wasn't. And Ron went bankrupt in two thousand one. Jeff Skilling wasn't indicted until two thousand three. The trial wasn't until two thousand and six, and I said, I sat through that there was In the end, what Skilling was was indicted for was less sweeping than you might expect. It wasn't

just straight up accounting fraud. No, it was not just straight up accounting fraud. Because the accountants and lawyers can sign off on things that are clearly misrepresentative of economic reality. But once you've gotten accountants and lawyers to sign off on them, the Justice Department can't come in after the fact and say, well, that's illegal. So it's plausible deniability and buyout. And there's some truth to that in the

financial crisis too. But what we were just talking about, which is what mystifies me, is why there were no prosecutions around what seemed to be very clear financial fraud, which was Wall Street's knowledge that the subprime mortgages it was buying did not meet the standards they were promising investors, and yet they continued to buy these subprime mortgages and package them up into securities and misrepresent the quality of

those mortgages to to investors. Sounds it sounds like fraud to me too, And What's what's infuriating and upsetting about this is that the big firms all paid billions of dollars to settle these cases, hundreds of billions of dollars, and I think it's two hundred and the reference in today's columns two hundred forty three billion dollars in fine. But literally, if you read the settlements, you can't tell

what happened. You can't tell if the Justice Department is extorting the firms trying to get money out of them, or if something really bad happened here, because it's all cloaked, it's a settlement. It's all part of what it's all part of what I call the shadow legal system, which is the way big corporations uh settle allegations outside of the public eye. There's no court documents, there's no trial.

And look, my husband is a litigator. I get why this happens, but I think it's really bad for democracy and really bad for people's faith in our system to have so many of these big cases settled in these ways that she had absolutely no light on what actually happened. And now some of these cases were settled with admissions of guilt, but a lot of them were no admission, no, no deny, Just write a check. Just write a check.

No no, no clear sign of how this happened within a company, of who was responsible, of who actually knew this was taking place, of who benefited from it, just so cloaked that you can't tell from the outside what actually happened. Just write a check and make it go away. So you're with shareholder's money. By the way, since since your numbers, girl, and you spent all that time waiting into the balance sheets of UM and Ron, there's two really interesting things that come out of that. One is

the eventual collapse of Arthur Anderson, their auditor. They were orderer for a bunch of frauds, not just Enron, but World common. I think world uh. Enron was just the last straw. In Jesse Eisinger's book whose title I can't say on the radio, the Chicken Bleep Club, UM basically explains that was the beginning of the end for the Department of Justice. Plus nine eleven moved a ton of forensic accountants to follow the money. UM. But that's really

part of it. The other part of it, I'm convinced was was that the prosecutors had been convinced that if you bring charges, we just bailed out all these banks, you're gonna send us right back into the abyss. They scared the hell out of everybody. I think that's true too, And I think there is a third component as well, which is that when Enron was prosecuted so aggressively, it was those guys down in Texas. They weren't our right,

the bankers and the financial crisis were our crowd. They were the people that the people in Washington no intimately, So there was a preconception that our crowd couldn't have engaged in fraud. They didn't. They they're not actually guilty. They just got caught up in the hype of the moment, whereas when it was those guys down in Texas who who aren't our friends, it was an entirely different issue. Let me push back against you want, okay, So my theory.

So that's oh eight. We had the analyst scandal a few years before that, we had the I p O spinning scandal a few years before that. We had just go down the list of all sorts of fraud. Um I mentioned Lehman brothers. Given your background, REPO one oh five, moving fifty plus billion dollars off the balance sheet every quarter, hiding there from investors. How is that not anything more

than felony fraud? Well, that's my point is that if one of the reasons the Justice Department was as not willing to be as aggressive as they were with Enron is because these guys were people they knew, and so they weren't. Do you, Jane, those brothers, I can understand if you're gonna say the U S attorney for the second District, maybe, and then more more of Hank Pauls and Tim Geitner. They all know each other. It's not it's it's different than it's different than those people down

in Texas, those energy people down in Texas. Again, I think your two reasons are bigger. I think I think that what happened with Arthur Anderson is absolutely part of the explanation um And I think the fear of crushing the very firms you had just rescued is bigger too.

I'd put those among the top two reasons. But I think there also is this sort of interesting component of of it's easier to to aggressively prosecute an outsider than it is an insider do you remember the op ed written by and it was unusual because it was a sitting judge in the Southern District who basically said the d J chickened out, They're absolutely were crimes committed, and

all of the explanations claiming otherwise ring hollow. When was the last time we had a sitting judge who covers wool Street that's his jurisdiction, right and up as saying, why aren't you guys prosecuting? Yeah, I think it. Um, it's a question that will always remain from from this episode, despite the then head of the Southern District trying to distract us all with insider trading charges. So let's talk about another bank that you've written about. Um, what's going

on with Wells Fargo? They were once the model bank for good corporate behavior? How did they go so far off the rails? Oh? My god? And by the way, during this conversation, we've already opened three checking accounts in your name from Wells Fargo, which and an insurance bill, so I wouldn't be surprised. I mean, it's it actually is really disheartening to me because it makes you always have to wonder when a company seems to be so perfect is there's some deep, dark secret lurking under there.

And Wells Fargo is the bank that came through the financial crisis better than other any any other bank. They build themselves as just this goodhearted community bank. The culture is the old Norwest Bank UM, which had merged with Wells Fargo back and I think UM the late nineties. And UM Norwest is a Minneapolis headquartered firm. You know,

it's got that Midwestern sort of goodness to it. And they always in Washington presented themselves as the community bank, you know, was the biggest holding of Warren Buffett for the long We're not like all those other firms out there.

And then it turns out they have this really ugly um sales culture that puts immense amounts of pressure on the people in the system who are least able to deal with it, you know, those at the bottom of the wrong the tellers to meet these utterly horrible sales goals. And we all thought that the problem was confined to the retail bank because Wells Fargo has these three different segments. That's got its community banking segment, it has its corporate

banking segment, and has its investment management segment. But now it turns out that the sales pressure was felt elsewhere too. There were crazy goals in the corporate bank and crazy goals which is what the subject of a couple of recent articles I've done in the investment management division where people were have been given quotas in the same way. So this really intent sales culture had actually spread throughout the entire bank. Where did that sales culture originate? Where

did that come from? So I think it came from Dikovasovich, who was the CEO of Wells Fargo through the financial crisis, and he was the first to start talking about banks as stores where you were supposed to sell things to customers. And he's the one who coined the now infamous phrase eight is great, which is getting every customer at Wells Fargo had to um to have at least eight products with with the firm. That's where it came from. Whether it would have a lot of things from securitization to

Wells Fargo. Sales culture can start in a place that's perfectly okay and then get taken to an extreme and tip over into a place that is so not okay. And whether whether if Kavassovich had stayed at Wells Fargo, whether the sales culture would have tipped over that line or not is a debate that nobody will ever be able to answer. I mean, but obvious, slee it tipped over that line pretty soon after he left. So with these his policies, why did everybody stay with this if

this was such an obviously terrible idea? I think his successor, John Stump, who by all accounts as a lovely man, was not the sort of executive who was going to radically reverse course. And why would you when it appeared to work so well? Wall Street celebrated Wells Fargo. It had the highest p multiple of any bank for a long time because precisely because it did have these amazing

cross cell numbers. And so when the strategy appeared to be working and was winning, you all these plot all these all these all this praise, why would you stop it? Why would you listen to the whistleblowers inside the bank who were saying, this is a real problem. You know. The metaphor that always sticks out in my mind is you could set the track record on the straightaway, but if you can't make the turn and you hit the wall that record shouldn't count. And that's kind of like

Wells Fargos, don't I like that. The thing that really bothers me about Wells Fargoes that it seems to me a perversion of capital is um in this this sense, I have nothing against the people at the top taking a lot of money as long as they also bear all the risk when things go wrong. Wells Fargo managed to put in place a system where the people at the very bottom didn't make much money, and they bore all the risk because they were the ones who had

these horrible sales calls. To me, they were the ones who got fired if they didn't meet them, and they were the ones who got fired if they met them in a way that in a way that was was unethical. And so all the pressure, all the all the all, none of the reward, but all the risk went to the people at the bottom of the pyramid, and that I think is a perversion, to say the least, Can you stick around a bit? I have a ton more questions for you. We have been speaking with Bethany McClain.

She is the author, most recently of Saudi America. If you enjoy this conversation, come back and check out the podcast extras. Will we keep the tape rolling and continued discussing all things fracking, fraud and financial crises. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Follow me on Twitter at Rid Halts. You can check out my daily column on Bloomberg dot com. I'm Barry rit Haults. You're listening

to Masters and Business on Bloomberg Radio. Welcome to the podcast, Bethany, Thank you so much for doing this. I have to tell you I sat on the beach a couple of weeks ago UM and read Saudi America. It's such a weird pair of words to say, because I you feel like you're saying it wrong because you are UM. And it really it was a fast and really informed him

and an interesting read. Not just aubury, but the whole concept of money driving cat low cost of capital, driving fracking, changing the world of energy, changing UH, the Middle East, changing the relationship of Russia to Europe. It's really incredibly intricate web and you can help, especially this week, you can't help but draw a line from Alan Greenspan and the post nine eleven pre financial crisis interest rates straight

to the boom and fracking. So the best compliment I could ever get is that one of my books could be considered a beach read. So I'm absolutely beyond it. Literally literally not just a beach read. But it was compelling and in not like I don't get to the beach all that early, from from nine ten o'clock in the morning to to three in the afternoon straight through. It really was a great narrative. There are great characters, and there's some really interesting insights. What motivated you to

to start looking at fracking? Well, so I was always obsessed with Aubrey McClendon being really who couldn't be Is this related to Enron because he's in a similar part of the country. Yes, I have an affinity for these these business these characters in the world of business who come along every so often, who are larger than life, and who really proved the old adage that truth is stranger than fiction, and who could be stars in their

own Shakespearean drama. Whether it's Jeff Skilling, whether it's Mike Pearson, whether it's Aubrey McClendon. I find these characters just fascinating. What what drives them, what makes them tick? Why their excesses? Um? So I? So I was. I was obsessed with Aubrey

for for years. And then there was this um dichotomy between these grand promises of how fracking was reshaping geopolitics, with the fact that it doesn't make money, that there's this deep skepticism about the industry and this heavy short seller interest in it because the companies don't produce free cash flow. And so I thought that is a dichotomy worth exploring, that a business can be changing the world yet not not make any money. And so I thought

that was that was worth digging into. Who first heared you in this direction? Who who said, hey, you should look closely? So do you know John Hampton? I know the name, sure, So John's uh for a long time pall of mine, who lives in Australia runs runs Bronte Capital. And he's the one who used to say that Aubrey McClendon was the most important guy in America, with again some degree of hyperbole. But John was the one who first got me interested in Aubrey and got me focused

on Jessapeake's dire financial condition. So he's an interesting character himself. Speaking of interesting characters, his writing is always quite fascinating. I get his regular missives and they're always, um, it's so refreshing reading something that's just a luloff kilter and certainly well thought out and interesting. So what made you think this was a mini book and not a full

blown Oh boys? So as I got into it, I realized it probably could have and should have been a longer book, because trying to find a path through the fracking story that can be told in thirty words or so was was a huge challenge. Um. My issue is purely a life one to be. To be perfectly honest, every time I've written a big book, it's ended up costing me, I'd say, a good six months to a year of my life where I am just gone. And this isn't that the nature of writing that that is

the nature of writing books. But at this stage of my life, I have kids at an age where I don't want to miss six months of their life, and so it's um so so it's hard, totally totally understandable. In the book, you describe Audrey Aubrey's death. He drives this big suv. He always drives too fast. He's texting while he drives, and he happens to slam into an overpast, leading some people dead instantly, leading some people to think, hey,

he was just indicted. This could be a suicide with no suicide note and therefore full insurance and everything else that comes with it. The police never found anything related to that. What what are your thoughts on this? It's one of those great mysteries that you'll you'll you'll never quite know, along with why it is that Jeff Skilling actually resigned from Enron in the the in the two thousand. Aubrey's death is another of those mysteries. The most many

people believe it must have been suicide. He had just been indicted. His empire was in shambles, although that wasn't the first time his empire had crumbled. No, it was not the first time his empire had crumbled. But but but this with but with the indictment, This was this was a big one because even if even if people view an indictment as being unfair, nobody's going to do business with a guy who just co indicted, right, tough to money. But but there are other people who say,

but this was Aubrey. He drove too fast, he's always texting while he drove. It's possible he was just exhausted and distracted. And so I think the police department was unable to make a ruling either way. There's this quote in my book from the police captain saying, you know, we'll never know what happened. Huh. Quite quite interesting. Who else from the book stood out as a really interesting character to you? So I think, Um, I think e O G. As a company is to be a really

interesting character. It's former CEO Mark Poppa, who has a really nuanced view on the fracking revolution. He isn't a pro fracking as as you might think, um, But e O G. Um well he's he's he's pro fracking, but he's not as sure that it's going to change the energy world forever as as other people are. He has

a nuance to you, um. And so I liked setting up E O G. As a counterpoint to Chesapeake, to tell the other side of the story, because in the end, this isn't a book that says this whole thing is a fraud. It's gonna it's destined for a bad, a bad ending. Um. I couldn't, I couldn't actually get there Um, and so I wanted to tell both sides of the story to leave it a little bit open to the reader's judgment. The one thing for sure about the history of oil overall, in the history of fracking, is that

everybody who ever makes predictions has been wrong. And so i'm i'm, i'm, I'm, I'm not smart enough to to say how it's gonna end. So there's a theme that runs through all of your books. You're you're never going to write the Steve Jobs, you know, hagiography about how you know, successful and innovative. The theme throughout all your books is there's always too much access. There's always elements of fraud. Throughout there are always problems, both legal, personal,

what have you. It's more than just larger than life personalities. It's larger than life personalities who really step in it to say the least? Uh So, from Enron to Fannie and Freddie to Um, the writings should do about wells Fargo. Are you attracted to fraud and nefarious characters or is it just a better story? Oh that makes me sound dark. Indeed, you're by the way, I wish I could when we get a picture later, she's sitting here dressed. I can't

tell if that's black or blue. That's okay, all dressed in black? Care you you are right? Um, I honestly I don't know the answer to that. Actually, I think of I grew up in Minnesota, and I think of myself in many ways as as Minnesota nice. I have a hard time being rude to people. I don't like it's like Canada nice. Yeah, I don't. I don't have that. And I don't actually like confrontation. I don't. I don't particularly like fighting with people. So I'm not quite sure.

I haven't been able to analyze myself enough to know why it is that I have sort of come up with the specialty of writing about business gone wrong. If only you had an outlet to express your outrage. Oh, I know, write a bunch of books about it. I guess it just I guess it just interests me more than stories of of of things going going perfectly. It feels it feels more real somehow, um um, And the analytical part of me loves trying to figure out how

it went wrong. How things are working usually seems to be squishier and all these you know, generic phrases about leadership etcetera, etcetera. Whereas how things went wrong, it's usually very grounded in the in the really gritty specifics, and I like gritty specifics. I have a pet theory which will eventually become a column, and the theory is that everybody's conception of the world is wrong because it's just

examples of survivorship bias. Everything we see means that there are a thousand other things that failed, and so we assume, oh, this works, this pencil. Look it's gotten a racer and it's covered in paint, and it's got a point. Oh isn't that great. You don't see the millions of other devices that were attempted and failed. And so how else can you explain why people keep opening restaurants? Wait, restaurants are a terrible investment. Half of them go out in

six months, the rest go out in two years. It's a terrible idea, and yet people keep opening restaurants. We all have this long view. You like to look at the cd fraudulent underside of things gone awry. I guess that's true. I guess I like. I think you can learn a lot from stories of business gone wrong too, because these, to me, the characters are never as simple as purely bad or purely good. Maybe some of them are Bernie made off, I think is as close as

it gets too purely bad. But most of these stories aren't so much sort of clear cut criminality as they are a mixture of idealism um, arrogance, um, hubris um, a little bit of fraud tossed into the mix, um, a lot of wishful thinking um. And so they're very they're very human stories. And that's that's what draws me to them. I always want to understand. I guess it's a little bit maybe it's a little bit of a

version of the famous line from Anna Kranida. You know, every happy family is happy in the same way, but every unhappy family, that's where you know that is unhappy in a different way. And so every story of business gone right is kind of the same every story of business gone wrong. It's really different and really fascinating. Don't don't we learn more from from the mistakes and business has gone wrong than the success stories. What do you learn from Google? Make the best search engine that and

figure out how to monetize it. There's not a big lesson there, but the disasters there's always lots of lessons. There's so many lessons. I mean, here's a gritty one from Wells Fargo, which which which I find fascinating. Back in two thousand thirteen, the l A Times did a story about all the sales pressure and the terrible impact it was having, and Wells Fargo ignored it because then CEO John Stump said, oh, well, this is only one

percent of our workforce, so we are actually great. Far from criticizing ourselves for this, we should be praising ourselves for this because only one percent of our employees has ever had a problem. And it's a classic example of

using math to um justify your wishful thinking. Because in a retail sales force that had turnover a year, and where that one percent measured the people who got caught, not the people who were pressuring them to engage in this behavior, not the people who quit because they couldn't do it, and not the people who just did it because they got away with it. It was a meaningless figure. And so that's not math, that's rationalization. But so I

love that. I love those kind of lessons, right, And that's so much more interesting to me than how to be a great leader exhibit compassion. I don't know. I'm intrigued that there was a story in in where where was that l A Times? And the company didn't take it seriously. There was, you know, the other bank that more or less came through the crisis pretty well was J. P. Morgan under Jamie Diamond, and they had an automated underwriting

system called Zippy and UM. It was a way to process more mortgages more quickly, so you can move through more through the pipeline. The problem with Zippy was it occasionally would reject a mortgage and so there was an internal document that the mortgage department created called Zippy Tips and Tricks, and it was all the ways you could tweak the inputs to make sure that Zippy would approve it. UM and a local I forgot which one it was. It was a local not as big as the l A. Times,

but not the East Podunk Express. It was somewhere in between. Wrote a story about Zippy tricks and tips, and you know, the company had the exact same answer that Wells Fargo did. Listen, this isn't representative of how we do it. Zippy was set up and it's very effective here in two thousand and six and mortgages are just fine. But it's amazing how people's capacity to rationalize what's in their own self interest.

And back back to your point, it's actually amazing how we don't see what we don't want to see, especially when our salary, to paraphrase up to in Sinclair is based on not seeing are when your political ideology is based on not seeing it. Per little conversation on Twitter the other day, um well, I just found it am using that somebody was man splaining gender neutral pronouns to you. It there is some kind of irony there. Some people

are ironing impaired, especially online. It doesn't come across well. I got into a war of words on this with somebody on Twitter once and it was over Larry Summers and his comments about women in math. And I actually defended Summers. Really, yes, I have a great Summers and the anyway, this this exchange ended with the guy lecturing me about why I was wrong to defend Larry Summers, and I thought this is just the height of irony. Listen here, a little lady, let me explain to you

about how women are. Let me let me explain to you why you should be so offended. You don't obviously don't understand what you're talking about. So let me explain to you why you should be so offended that Larry Summer said women didn't understand what they were talking about. It was very funny. You do you remember the column and the Boston Globe that just shredded the Harvard Endowment. It it basically this it won all sorts of awards.

Not the writer, the editor on it went on to do the article that revealed all of the priest abuse in Boston. So it was that so everyone involved in this article absolutely stroling reputation. I merely linked into it in a column and got a furious phone call from Summers about it, and I asked him about it, and his answer struck me as so disingenuous. I tracked that report down, called her and basically she gave me, no,

that's not true. No. I called him a dozen times. No, he said he was too busy saving the world to pay attention to to this. I was. I was just so every time somebody defends Larry Summers, in the back of my head, I just think, yeah, right, and he's a very public intellectual, and I just decided I'm not going to write about him, and I probably shoudn't even talk about him anymore, but you brought it up, so I had to, um, what else? What else are you

looking at these days that interest you? What? What's the next mini book going to be? Well? Something that got my attention in this book. So, part of what is keeping the chain of financing for fracking going is pension fund money. Because in this era of super low interest rates, it isn't just that fracking companies can raise debt and

have low interest expense given where interest rates are. It's also that, in this world of very low returns elsewhere, particularly in fixed income securities, a lot of pension funds have been putting money in private equity firms. Private equity in turn, has the highest allocation to the energy sector

than they've had in like twenty years. They're shuttling billions of dollars into fracking, into shale companies, and that's part of what's keeping the Okay, this is an overstatement, but the daisy chain of money of money going, and so thinking about this issue and the low returns of pension funds um and given that I live in Chicago, which has massive problems, as does the state of Illinois. Has made me really interested in coming up with a way to explore this. So what's fascinating to me is the

pension side of things. They have moved very heavily into hedge funds and private equity because, for some reason, at least on the hedge fund it's unexplained, there's a higher expected return for private equity um than there is for stocks and buns. I don't know why there's a higher expected return for hedge funds given their terrible performance over

the past ten years. Somebody else was it? Simon Lack said the financial crisis wiped out all the gains of the entire hedge fund industry for the prior twenty years. That is a stunning That is a stunning anyway. But I don't know what I'll end up That's that's a that's a really interesting figure. I don't know what I'll end up doing with this. Because of Fannie and Freddie were an un sexy subject. I think pensions might be

one step worse. So I'm going to tell you the problem with Fannie and Freddie are all the crazy anti GSC people. It adds, it injects the level of insanity to it that makes it tedious. But if you look at let me man explain to you what your next bush. If you I appreciate all ideas, whether they come from men or otherwise. If you look at Charlie Ellis's book on the retirement crisis send his and and Jack Bogel, there have been you know, these are legendary folks writing

people aren't saving enough. The other side of that issue, I'm gonna I'm not gonna give you another idea and encourage you to do that idea, the idea that pension funds are highly leveraged, highly exposed to alternatives, are looking for a much greater return than we should perhaps reasonably expect given current valuations. That's setting itself up for a disaster down the road. That to me, maybe I'm wonky, but that's fascinating stuff. I think it's fascinating too. I

think it's fascinating to it. Just there are these words that, for whatever reason, just lack intrinsic appeal. Pension is one of those words. Mortgage is actually another word Fannie and Freddie. It's like that it's subprime. Sub Prime was kind of fascinating. It got to be fascinating after it caused the financial crisis. But I think part of the reason that it didn't that that that nobody saw it coming was because mortgages, some prime mortgages. I mean, I don't know. It's like

eat your spinach. It's just such an unappealing concept to think about. Agree to disagree. Um, do you, by the way, do you find it? I just was talking to a couple of other people about this recently. Do you find it a slog or do you enjoy doing the circuit if it's a reasonable period of time, So I'd say I'd say it's a mixture. I'm always happy when anybody wants to talk to me about something I've written, because it means it resonated somewhere, So I'm grateful for any

attention it it gets. I'd say I have less of a worry of a slog than I always have when I've published something. My predominant emotion isn't excitement and look at me. It's fear that I've gotten something wrong, that I've made a mistake somewhere. It's um and it's and it's sort of agony in within me because I always see the ways in which it could have been better. After it's too late to do anything. It's never done though, Isn't that true for anything you write that you could

always there's always another draft waiting time you can. Books are pretty set in stone at a certain point. Um. And so that's so I have trouble being as enthusiastic and excited as I as I should be, because my my initial reaction isn't look at me, it's let me dock. So you're you're expecting to be told you were wrong.

You know what I already have then, I mean, I did this op ed for the New York Times, um, and they put a pretty incendiary headline that was that headline had nothing, it did not um and I got the next financial crisis looks underground. I got a lot of flaming on Twitter for that. So for the record, can I inform listeners that writers don't get to write their own headlines. It's the editors who write that. The Times actually has a policy of not allowing people to

look everywhere. Yeah it's and it's and it's fine. Actually there the headline they put on it got attention. And in today's world where everything is drowned out by by news of Trump. You know what, I I'm not going to complain, all right, that that's fair enough. So so let's some let's jump into our speed round. These are the ten questions I ask everybody, and we'll we'll plow through them. Tell us the most important thing people don't

know about your background? M hmm. Let's see. I guess it's probably that I grew up in a mining town called Hibbing, which is in northern Minnesota. And if you know it, it's probably because you're a Bob Dylan fan, because that's where Bob's Emmerman also grew up. And Hibbing has the two distinctions of being often the coldest spot in the United States and of having the world's largest pit open eye, world's largest open pit iron ore mine interesting.

Tell us about some of your early mentors who helped you along with your career. Let's see. So I had two great teachers in high school who were brothers, Dan and Matt bergen Um. Dan was English teacher and Matt was a math teacher. And Dan taught me to write, and Matt made me believe that I was far better at math than I actually am, enough so that I managed to get through a college major UM in it,

and then I guess that Fortune. I think the real, the real mentor I had was was really Jonah Sarah who UM, who really helped me learn how to tell a story? UM? When I got to Fortune, the knock on me was, she's debatably smart, but totally unable to write. And I like to blame my perfect tire. Maybe she's smart but hard. I was a fact checker from my initial years. I was really good at checking facts. It was fine. But if if I've learned to write at all,

it's probably because of Joe Well. I have to tell you you clearly have learned to write, and and I really enjoyed Uh America. UM. Who influenced your approach to investigative journalism? UM? I would say probably. I learned the most from Peter el Kind, who was the my co author and smartest guys in the room. When I began to work with Peter, I thought I was going to learn the shortcuts for doing this, and I quickly learned there are no shortcuts. You talked to everybody, You call everybody,

You call them back. If they don't call you, you back. You read every document, you go through the footnotes, of every document, but you leave no stone unturned, and you go down a lot of rabbit holes because you never know if at the bottom of the rabbit hole you're going to find something that becomes the threat of your book. Are just sort of a vast black hole, and you find a lot of the vast black holes. But but I think Peter Peter made me realize that it's just

work in persistence. Tell us about some of your favorite books, be they fiction, non fiction, fraud related, or something else. So my list is always changing, but i'd say right now, the books I've been thinking about a lot our Team of Rivals by Doris Karns Goodwin. And the reason I think about that book a lot is that it took a well known period and look through a different lens, you know, through the lens of these rivals, who nonetheless

became an incredibly effective cabinet. And I love that Lincoln Lincoln, and I love that that that is a sort of lesson for writing about how you can take something that's well known and see it through a different slant and make people learn and understand it in a in a whole different way. It doesn't have to be this fresh thing that nobody has ever heard of before, you know, Abraham Lincoln's presidency. But but but I love that. I

think that's very instructive. And then my favorite fiction book of late was a book called Homegoing U Homegoing, which is about um, two sisters born in Africa, one stays there, one is taken away as a slave in the United States, and about It's about the different trajectories of these two um,

these two families. And I'd say the reason I liked it so much is that it's a book that kind of excavates your own still still deeply held prejudices, and we all have some of them, and it's a book that really changes minds and souls, I think on a very deep level. That's two. You have a third one. What's the last thing? You God, I've been rereading because my kids are reading it. And I will always love Lord of the Rings just for the sheer scope, the

sheer scope of Tolkien's imagination. And even though I know, and this whole conversation has been about how good and bad aren't always so simple, man, is there something so satisfying about a world where good as good and bad as bad? That's right. Starting with the hobbit and then straight straight Absolutely. As a kid, I used to reread those over the summer, and then at a certain age you kind of say, all right, I have to stop doing this, But they were fine. I just started again.

It's never too late. How older you kids, I've got a nine year old and a six year old. So let me let me jump ahead and ask a different question. Um, what do you do for fun out of the office? Oh? Fun? What do you do to stay mentally or physically fit? So, so I read a lot. I'm a big yoga person, and I've done a kind of yoga called the Shtunga, which is which is a self practice for one years now, so I usually pretty ripped. So I usually because I work at home, I usually just do my stronger practice

at home. And you've been doing that for twenty years. So what has changed since you became a writer? What do you think is the biggest difference these days? Oh? So much. I mean that the whole firmament has changed. You know. It used to be that if you were going to be a writer, well then you worked at a magazine and you were a journalist. And now some of the best, most interesting writing comes from people who aren't journalists, who are publishing on blogs and and elsewhere.

So in some ways it's incredibly freeing and that you don't have to be a full time journalist to get hurt and to to to be to be a journalist. Um, but it's of course the other changes in the business have just undermined the whole financial foundation of journalism, and

so it's it's really different. If you could have told me when I started working at Time Inc. Back in Time Inc. Was in the time built in life building and Rockefeller say enter that Time would be long gone from there and the magazines would be being sold piecemeal. I would never have believed that what are these blogs you refer to? What I mean yours? You know, people people people, people are really smart, great things to say, and are really good writers. Don't have to be writing

for Fortune magazine. Now, that's reason. And I wasn't fishing for anything there. I just that's a good thing about tell us what you're really excited about in the world of journalism or books were writing? Well, I guess when everything is getting ripped apart, comes opportunity, right, And so the world of journalism is getting ripped apart, right, right now,

and it's it's not getting any better. But out of that, I think comes new opportunities for storytelling, whether it's these little books that Columbia is doing, like Saudi America, whether it's podcasts like like you're doing, but new opportunities to create content in ways that are relevant to people. And so it's still story telling at the end of the day, and communicating. And so I guess I'm trying to believe that where there's disruption, there's also opportunity. That's that's pretty fair.

Tell us about a time you failed and what you learned from the experience. Oh so, let's see, I could do two of those. I really struggled through my math major in college. Math was easy, easy, easy from me until I hit the really upper level theoretical stuff where all of a sudden, it was like a black wall

came down in front of my eyes. I would I would sit doing We would have these math exams that were forty take home exams, and they would be proofs and I would look at them and I wouldn't even be able to start, and I would hear people around me scratching away. They just had the insight, And I would say persevering through my math major was a really good, really good lesson um even though I mean I fought

for a sea in one class. That's what I've never gotten to see in my life, learning learning that you're not very good at something, um um um. So that was. But I learned more from sticking through that than I did from all the things I was I was good at. And then I'd say I probably failed in my first job. I was a terrible analyst at Goldman. You were there for three years. For three years, I ended up, Um, I ended up sticking it out. But I think I learned.

I learned a lot from that about importance to detail, detail, about committing to where you are instead of if you're going to be there at all, instead of having a bad don't half asset right um. If you're there, then just do it and and and and behave um Instead, Why were you were you misbehaving at Goldman in terms of I mean, in terms of the work I think I acted. I think I acted like I didn't want to be there, I think, And it took them three

years to pick that up. I thought they're the smartest guy. I pulled it together after after my first year. But um, that was that was a lesson to me because failing in your first job is a hard is a hard thing. When you get very negative feedback from people, yeah, it

crushes your confidence. So I would imagine, Um, so if a millennial came up to you or recent college grad said they're thinking about becoming a film in the blank writer, book author, journalist, what sort of advice would you give them? I would tell them to start writing and to write a lot, because the only way you get to be a better writer is by writing a lot. And you can get to be a better writer, you have to have some innate skill at it, I guess, but you

can learn, and you will learn. It's a craft. And that's why people call writing a craft, because a craft is something that you can get better at. You can get better, and so I think that's the most important one.

But I would say also that, especially given how uncertain financially this life is right now, um, that you have to really really be deeply curious and not be able to rest unless you've explored your curiosity, because that's the thing that makes it makes it worth doing right to me, wonky as it may be, but getting to spend a year thinking about Aubrey McClendon and fracking. I was deeply curious about this, and I would not have been able to rest if I hadn't eventually done something about that.

And that's what makes it all worthwhile to me. Sometimes you have an introducer, and I think if you don't have that, if you're more practically minded in some ways, that maybe this isn't especially right now, the right the right place. So you're a little obsessive about the topics you cover, do you do you impart that on on the college grads and say you have to be all in or what? Because that that's similar to the failure

answer as well. I say you have to be all in because otherwise you won't make that additional phone call. You won't. You'll do what you have to do or what you think you have to do, but you won't pursue that loose, dangling end that may may end up becoming the most important piece of information that that that you got. And so you have to be just really

really deeply passionate, passionately curious, quite fascinating. And our final question, would you know today about writing and investigative journalism and book authoring that you wish you knew back in when you first started twenty plus years ago. I think what I wish I had known about writing is that being

a good student isn't always helpful. And what I mean by that is that when you're a good student, you think you have to show everybody everything that you've learned, because God forbid, the teacher thinks you didn't you miss this little nuance, right, So you're gonna throw everything at the reader in order to show them that you've mastered this. And I think it's actually sometimes hard for good students to be good writers because you need to let go

of that. You need to learn to tell a story, and you need to step back from all of your facts. Somebody said to me once that facts are like lights on a Christmas tree. You actually can have too many, um, and I thought that was a great, a great line. And you need to tell a story that communicates with people, not try to impress people by how much with how much you know. Quite interesting. We have been speaking with

Bethany McClaine. She is the author of Saudi America, as well as Smartest Guys in the Room and numerous other books. If you enjoyed this conversation, we'll be showing look up an inch or down an Inch on Apple iTunes, and you could see any of the other two hundred plus interviews we've recorded. You can find that on Apple iTunes, Stitcher, overcast, Bloomberg dot com, wherever final podcasts are sold. We love your comments, feedback and suggestions right to us at m

IB podcast at Bloomberg dot net. I would be remiss if I did not thank the crack staff who helps put together these conversations each week. Attica val Bron is our project manager, Medina Parwana is our audio engineer. Slash producer Taylor Riggs is our booker producer. Michael bat Nick is our head of research. I'm Barry Ritolts. You've been listening to Masters and Business on Bloomberg Radio p