Legends Live @Citi with Larry Fink, Chairman and CEO of BlackRock

Welcome, everyone, for another special session of Legends Live at Citi. We are thrilled to be here today for what promises to be, I think, a fantastic conversation. And we're honored to host a real titan, someone who has been a visionary in terms of the asset management business, but whose impact on global business has been simply immeasurable. This is not just financial services. Larry is so much broader than that. He's the Co-founder, Chairman, and Chief Executive Officer of BlackRock, the world's largest asset manager. Please join me in giving a warm welcome to Larry Fink.

Larry, what a pleasure to have you here today for so many reasons. You need notes? I need a few notes, but not many, as you'll see, because as Jane knows, I tend to go off script a lot. I've known Larry for a long time. Our paths initially crossed at First Boston Corporation on the trading floor, where I sat outside his office as he supervised my work in what was then called interest rate swaps. Today it's called derivatives. And for what it's worth, Larry used to come in at 6 a.m., so therefore I was in at 5:45. I had to get there ahead of him. And I recall when Larry began the phenomenal business of BlackRock, he had a meeting with an advisory firm called Greenwich Associates. And as I remember, what their advice was, as was told to me afterwards, was the world doesn't need another fixed income investment firm. Go back to your office. Go back to your office. Now, by the way, he'd already left the office, so there was no going back. What a testament to his conviction and foresight. And for those of you that don't know, the name BlackRock actually comes from his original investment from Blackstone, which was an incredibly cheap deal from that standpoint here right now. But what a fascinating bit of history. the largest asset manager in the world, and a very, very significant private placement and equity manager in the form of Blackstone. Unbelievable. Larry was the youngest managing director at First Boston, which was a clear indication of the trajectory that he was on. Today, he's named as one of Time's 100 most influential folks in the world. And he's here to share his unique perspectives in terms of leadership, his career themes, and the incredible journey that he has gone through to create what I saw yesterday in your earnings was $12.5 trillion under management, which is just a stunning number to think about in terms of the zeros. At the end of the conversation today, please submit your questions on Slido, but let's get into it here right now because this is a very, very special person that we have here today, and we're privileged to have you here, Larry.

Let's start out. You grew up in L.A., and you were the son of an English professor and a shoe store owner. Great origins. But how did this upbringing from your standpoint impact your early worldview and ultimately your approach to problem-solving and risk-taking, which you have become preeminent from a world standpoint?

Well, it's great to be here at Citi. Thank you for our partnership. Your partnership has been vital for our growth since we started 37 years ago. I would say the history between BlackRock and Citi, BlackRock and Salomon Brothers was pretty pivotal. And so, you know, you are a part of our roots and the strength of our organization is because of the relationship we've had with Citi all these years. Thank you. I had wonderful parents. They were socialists. They were very progressively minded. They focused on a couple of key characteristics. Academics was important there. They were quite frustrated with me versus my siblings who were more academically inclined at the younger ages. But more importantly, they really pushed personal responsibility. They were always about taking your own personal responsibility. Don't rely on other people. And importantly, my mother kept on saying, if your adult life is messed up, don't blame your parents. It's on you. You've got to take that personal responsibility. And my parents were helpful on that journey of personal responsibility. But they were worried about me, unlike they were worried about my siblings. And so I was asked to work at the shoe store from 10 years old on. And that actually created an incredible journey of how to connect and relate to your clients. So you learned really early on how to communicate, how to sell something. And you know today it's I think for young kids they didn't work that young anymore they don't work that and I think it was a very good journey and I was, you know, quite immature for my age so I needed that type of, I guess stability and pathway. I would I would say if my parents were here they would say I finally got my sh*t in order, you know, probably when I was about 15. It took that long for me to really try to develop a more purposeful life.

And then you went on and you got an MBA at UCLA. But you took that MBA and you came when you and I first met in what I would have called a stodgy white shoe Wall Street firm at the time, the First Boston Corporation. How did that sort of West Coast academic background help you as you transformed yourself into a leader in a very, very old line firm?

Well, the first time I ever saw snowfall was it being, it was an interview in New York in January of 1976. I was a true West Coast kid, turquoise jewelry, long hair, kind of mostly brown suits. And, but I was attracted to First Boston among all the different firms that I interviewed with. They offered a more personalized training program for me. And I really felt connected to a couple of the leaders on the trading floor who I interviewed with. And they wanted me to go right into trading. It was one of the few people then that when I started the organization, I had a pathway already determined. And it was not going through the true training program. And let's be clear now. The incoming class at First Boston in 1976 was 14 people. I mean, people really don't understand the context of what Wall Street was then. The sum of all the capital, and I'm talking about Goldman Sachs, Loeb Rhoades, Kuhn Loeb, Lehman Brothers, Whitewell, Merrill Lynch, the sum of all, and I'm not talking about the bank, so the sum of all the Wall Street firms was probably, capital-wise, $200 million. I mean, people just have no idea how cottage industry, the investment banking side, because historically, they really took no risk. Having a large balance sheet was not necessary until really starting in '76 and '80, where the balance sheets just blossomed and bloomed. But I felt connected to the people. So it wasn't a matter whether it was white shoes, stodgy, which it certainly was. But I felt connected to the people. It was very clear that they believed in a meritocracy and I was attracted to that and I remember even the first month, first two months on the job on the trading floor it was very clear to me that I could do this. It was something that I became very excited about. But, and then, you know, right after the training program was over, they asked me to go into the mortgage department. And the mortgage security department then was three people. And so, but being there at the genesis of what became one of the largest markets in the world was really.

Well, you were a pioneer in that market, along with a very famous alumnus of Citi, Lew Ranieri. And you were there to create the mortgage-backed market. This was the exact beginning of that time. What did that experience tell you about your understanding of finance and risk? Because it was the early securitizations. This was the infancy of the business.

Well, what really transformed Wall Street was having a personal computer on your desk. Before that, you had a Monroe calculator or you had an HP-12C. Right, okay? That's all you had. Um, but in in 1983, we, the mortgage department was able to get a couple pieces on the desk and having our own, you know, very modest technology by any standards today, uh, we were able then to type, you know, think about how can you take this, these pools of different mortgages, and then how can you recalculate the cash flow characteristics of those pools? And that began the whole securitization process by having the ability to take large data at that time and then reorient the cash flows. Without a lot of computing power, because a lot of it works like nothing. As you remember, we were doing things by hand with a piece of paper. But also the interest rate swap, the whole area, derivatives, was created because you started having technology on the trading floor. And that really transformed Wall Street. And let's be clear, the sell side was so much more advanced than the buy side. And that's really a major genesis of BlackRock.

Which we'll come back to because you raised a very important point that I was about to touch on. And that is you've openly spoken about your $100 million loss at First Boston as a pivotal moment in your career, and you just talked about the capital in the business. I remember it very well as a young kid there. What were the most unexpected lessons that you took out of it? And there was the obvious lesson of risk management and all the rest of it, but what insights came out of that that you really didn't expect that actually probably shaped your leadership at BlackRock? Because it was pivotal for you.

So let's just go to the pathway. You mentioned that I became the youngest managing director in the firm. That was at 27 years old. Correct. At 31, I was in the ex-co of the firm. And at 34, I became an executive. And that was the path. That was a bad moment, yeah. That was the path. Probably the most important thing for me was, you know, they spoke about it's all about the team. And you're part of the team when you make a lot of money. And we probably should have been fired for the amount of money we made because the amount of risk we took to make that money. So as you know, in '84 and '85, we were the most profitable department in the firm. First quarter, we made even a record amount of money. In the second quarter, 1986, we lost 100 million bucks. And so a bunch of lessons. I knew the way the firm treated me and the team. I knew right in there I was going to leave. It took then a year and a half later to decide what I was going to do. But it broke the connectivity between me and the firm where I, it wasn't about team. It was about, you know, I did not feel I had the support of 80% of the firm when we lost money. And this whole concept of partnership and team really broke down in my mind. But two, the greatest lesson learned was as much as I thought we knew what we were doing, as much as I believe I had the right group of investors, we did not evolve our thoughts with the markets and assumptions that we made was as you said the relationship we had with Salomon then and our competitive nature with Lew and Salomon Brothers we got ahead of ourselves in ego on trying to build market share one quarter First Boston was the leader in in in the securitization process next was Salomon Brothers and back and forth Lew fired a year before right over the same nonsense and there was another good example I didn't learn my lesson about what happened to Lew but I never forgave myself not you know once again taking personal responsibility, I never was comfortable with my actions and I blamed myself that we did not adapt and grow our risk management tools and I should have been pounding the table that we can't take on these positions I can't take the firm's capital the firm said here's more capital you did so well take more capital and the firm had no idea the risk we were taking nor did nor did we because we did not have the proper risk tools and and and and I would say the ashes of my failure at First Boston, was a fertilizer of BlackRock.

What that really gets into, because you then ended up making what, in hindsight, is one of the most entrepreneurial moves of the last 40 years, in fairness. What drove you to actually say, you know what, we can do this? I still remember the partners that you took with you. You took the core group of people. Actually, we're sitting two offices down. You all got together, and that was it. What drove you to say this is going to work, especially given the skepticism and what you'd gone through on a personal basis?

Well, no, I lost a lot of self-confidence over that whole process. That being said, as I said, it took a year and a half for me to move my career forward. And I had offers to become partners at different various Wall Street firms. And it just felt, it did not feel like that was the right pathway for me. I did not want to repeat and do the same thing. And I started investigating the whole concept of going on the buy side. But quite frankly, I had two very important clients who was going to fund me to start the company. And I did not have the confidence in doing it myself. And, you know, I started talking to Steve Schwarzman then. Do you remember? First Boston was a firm that raised Blackstone. Right. Do you remember that? We did Blackstone One. Blackstone One, $525 million or $545 million. Correct, which I think caused some people to be totally shocked that he was able to do it. Yep, but I helped raise, I mean, because of the relationship we had with all the savings and loan. A good part of the capital came from the savings and loan. And so I got to know Steve and Pete through the process when Bruce Wasserstein said, he's a friend, can you help raise money? And he sent me over there to go clean up. Yes, yes. So we did that, and I started talking to Steve, and they were very intrigued. And actually, Steve had more confidence in me than I did. And I became the fourth partner of the Blackstone Group to start this idea. And as you said, I was able to bring the weekend after I resigned, I had an open house at my house. And I don't know, about 60, 70 people came over. Most of them wanted to understand what was my next venture. And I was able to pick and choose who should be part of it. And quite frankly, I told a few people, you're the solution with my leave, you should stay on, your career is going to get better without me here.

Well, the firm actually fractured at the time, some people going one place, some people staying behind, but it was pretty profound because you think about what you went through, which was, you know, when you think about the capital of the firm was a big deal. In fact, I think we had to sell the one building to recoup part of the capital base, Tower 49.

You had a front row seat, though, as we go years later. You became the preeminent risk manager in the world. And you went through a variety of different areas where you were the one people turned to. So let's go on to the financial crisis. You and BlackRock had a very significant role advising the U.S. government and the financial crisis. BlackRock advised on the TARP program, on the rescue of Bear Stearns and the AIG restructuring. What factors kind of led to you being the one picked? Was Aladdin technology an important part of it because you were way early in that?

100%. No, I mean, as I said, when we started the firm with eight people, two of the people, so two of the people were technologists. And another change in technology for $25,000, which was a lot of money back then, we were able to buy one Sun Sparc workstation. And it was just the Sun Sparc workstation was just released in 1988. I mean, and so and that was infinitely more powerful than any any PC at that time. And it's, but but having that allowed us then to start developing our own risk tools at BlackRock. And so the whole foundation of the organization was was the building tools that help us navigate clients portfolios and it became an integral part, I would say the culture of BlackRock is so embedded in this risk technology and so the whole foundation of the firm from day one was to develop the risk tools because I said I will I'm not going to live my life again like that.

So that was part of the lesson that was imprinted in your brain.

Yeah. You didn't have those tools.

Right. And then in 1994, when a firm called Kidder Peabody was blowing up that was owned entirely by GE, and GE was a big relationship that we've had. I had it when I was at First Boston. And I went to Jack Welch then, who was the CEO, and Dennis Dammerman, who was the CFO, and said, we could help you navigate this. And I think everybody assumed Goldman was going to get that assignment because they were so connected to GE. But, I mean, the big validation for Aladdin was that GE assignment. So we were hired to liquidate the bad assets that were the remnants of Kidder Peabody. The good part of Kidder Peabody went to Paine Webber. Right. And the bad part stayed at the balance sheet of GE. And really, at that time, Jack Welch was this legendary CEO. But his career was being threatened by this loss. Sure. And over a period of time, we were able to earn them. You know, they made money on that portfolio at the end. And I was so confident in our abilities at that time. I said to Jack and to Dennis, and we're going to charge you no fees. And all I just want is the ability, if we do a good job at the end of it, the completion of it, we could sit down and get a success fee. That was it. And it worked. And it worked. And it was the highest fee ever paid to BlackRock. And it was profound for GE at the time. But from that moment on, we were then, and then another pivotal point in 1997, we started offering Aladdin to third-party clients. And our first client was Freddie Mac, one of my former employees, one of Salomon's former employees. Greg Parseghian became the CIO of Freddie Mac, and he knew what Aladdin could do, and he said, I need Aladdin at Freddie Mac. And then in 2004, we made a pivotal decision that Aladdin could be used by anybody, all our clients, but also all our competitors. And I made a statement there saying I want my investment team to be able to stand on their own success and their own abilities but I want Aladdin to have the ability to compete with anybody and win. So these are just really important pivot points and so we were able to really grow Aladdin and I'll get into it in a second how big it is. And so we developed these risk tools that I still believe there is no other organization can do what Aladdin does today.

And so then we had the financial crisis again. And just because we were, you know, our relationships with the U.S. government, with the Secretary of Treasury, with the New York Fed presidents, we got hired in doing all this with the same idea. Actually, on the Bear Stearns weekend, we were actually hired by J.P. Morgan to analyze the Bear Stearns portfolio. And, you know, so on that Friday and Saturday, we were engaged in helping J.P. to rapidly understand what would be their liability and cost. And it was constantly I had the I had the the buyer's approval that I could talk to the U.S. government. So I'm going back and forth to Hank and Tim and then it's Sunday morning at six in the morning Tim calls me said I need you now and I said well I can't work for you I gotta I'm working for Jamie and I said call up Jamie and release us and then you know to expedite the transaction will get hired by the U.S. government, and that's what happened, and then we went down to the Fed, and probably the most pivotal moment was because a lot of the assets that Jamie did not want was going to be on the back of the U.S. government, and in the midst of this whole conversation, I mean, we're just talking about minutes, so everything's trying to happen. We were trying to get this done before the market opened in Asia on that Sunday night, and then I I was formally asked by the Secretary of the Treasury, will the US taxpayers lose money on this portfolio? And I had to ask a very simple question on a fairness opinion. Can I include P&I? Because we marked down the assets so much. I mean, even if there was a gap of a couple billion dollars of what we really think, we knew with a, you know, because it was marked down so much, the interest levels were so darn high that the U.S. taxpayers probably will get their money back. And so we were able to do that. But through that moment, then, we were hired on the AIG moment. And then we were hired by the U.K. government, the Dutch government, the German government, the Swiss government, the Canadian government.

Well, we're going to come back to world leaders in a minute. But let me take that and pivot it to in 2012, you began to write a chairman's letter. I think it was that date. And let me ask you a question, because it's become almost a companion to Warren Buffett's letter in some ways. And I've read all of them over the years. You update investors. But what was your philosophy behind these letters? What was your thinking as you tried to? Were you trying to go through pivotal moments or were you trying to be informative to investors or were you trying to make statements?

No, I was never trying to make statements, other than a couple of general themes, I guess. A, I mean, I would not have been writing these letters unless we did BGI in 2009. We became the largest index player in the world. And importantly then, we were responsible for a lot of equity ownership, and the only power we had then was the vote. We can't sell. And I remember having a conversation with Warren on this, this whole concept. And the real key that I was trying to promote, if you look at the first few letters, was really about the whole concept of long-termism. And so it was really just finally thinking about long-term trends for long-term investors so that was a and it became very, very important as people looked at them every year to see what pearls of wisdom. Yeah, I mean, and down and and it became it became harder and harder and it became harder to write. Yeah.

But now let's go into the future because as we sit here today, um, what are some of the mega trends that you think, one or two mega trends that you think that are going to reshape investing, asset management as you look forward? If you were to think about it from your perspective.

I mean, there's two, but they're all interconnected, and that's going to be AI and tokenization of financial assets. So digital assets, those are the two megatrends that are going to totally reshape financial services. I had a lunch today with a very prominent former finance minister, central bank, very prominent guy. And we were talking about, and he wrote a big paper on tokenization and stablecoin, and he would say he couldn't say it in his former role but he would say it today as a private citizen the banking system is is being left behind in so many ways through technology and you see what like Nubank is doing in Brazil. So, I mean, extraordinary company, what they're doing, and now they're trying to do it in Mexico. Trade Republic in Germany. I mean, I could go on all these digital platforms that are really reshaping. But also, you know, but if you intersect how AI is going to reshape, how we think about, you know, big data, big data analytics. You know, BlackRock started an AI lab, that's what we called it in 2017 at Stanford University. We have eight or nine professors spend one day a week at BlackRock helping us and coming up with better algorithms and models to streamline, you know, getting back to the whole idea that we are responsible for $12.5 trillion. That means we do a lot of trading. And so how do you think it's going to, do you think it could impact your edge? In other words, these are tools that a lot of people, they're going to be available to a lot of people. How do we make sure you have transparency, accountability, but also have the BlackRock edge?

I actually think in the early years, scale operators are going to have a bigger edge. And this is what I'm worried about for society across the board. You see the scale operators who are able to afford AI, afford all this, are going to be the leading. But as we democratize AI, which is probably the second generation, that's when you have to start worrying about your edge. But I would say BlackRock's edge today is bigger today than it was a year ago and much bigger than it was five years ago. The amount of money that we're spending related to technology, obviously we need to do it for Aladdin. And the scale of Aladdin now is so enormous that everything we have to do is based on technology. But just even the processing of the trades, the streamlining of everything we do, doing all these mergers we've done over the years, having one technology platform, you know, the scale of the technology at the firm is probably not appreciated by so many people.

Yeah, and it's become a critical edge, but it also, to me, Larry, it ties in to your profound moves over the last year in terms of private markets, because you've made three significant acquisitions between Preqin, HBS, and our old friend Bio, and those have put you firmly into a leadership position in private assets. How do you think that's going to reshape investor portfolios in the private markets? Because that is one of your biggest moves that you've made in many, many years.

So I did my town hall today, the day after earnings with all our employees today, and I talked about the need to evolve and change continuously. And I cited even yesterday in our earnings announcement that in 2009, when we acquired BGI and iShares the market threw up on the transaction, they hated it. And I, we said the marriage between passive and active is going to be real, focusing on a whole portfolio is going to be the key condition to really help navigate our clients' business and the naysayers were obviously clearly wrong. When we bought iShares, which was part of BGI, it had $340 billion in assets, and we're pretty close to $5 trillion now. So I guess that worked. And in 2023, we were growing our private markets quite a bit. We went from $0 to $50 billion in infrastructure. Our private debt side, private credit side was growing rapidly. But what we saw from our clients was as fast as we're growing, we're falling further behind. It was very clear that we had to do something inorganic and that was the conclusion. And what we are seeing, just like we saw this whole convergence of passive and active, we're seeing a convergence now because it'd be based on technology, which we'll get in a second, the convergence of private and public. And it's just, you know, with better technology investors are going to be able to pivot around the spectrum of public and privates and that's going to be across the spectrum of just institutional, but it will, you know, there's a lot of rumors there's going to be executive order by the president to allow it in our 401ks. You're going to see that whole spectrum of public and privates across wealth too. And so it was very clear that as as much as we thought we were growing, we felt that the opportunity in the markets was far greater and bigger, and we needed to bulk up scale. We made a strategic study of who's out there. We only approached one firm in infrastructure and one firm in private credit. We did not, you know, and if we could not do it, I don't know what we would have done. But we went to two firms where the first two months of our conversations had nothing to do with valuation. It was all about culture. And can we connect and fit? And what are the ambitions of both sides? And to me, that is the most important characteristics because we're really just buying a bunch of people. Okay. We're not buying a machine that does all this stuff. We're buying, you know, really highly qualified human beings who are going to be good at this. And in both cases, we mentioned our old friend, Bio, who worked with us at First Boston, and Bayer went on to run investment banking at Credit Suisse. Scott Kapnick ran investment banking at Goldman Sachs and became a pivotal leader at JP Morgan. So culturally, these organizations came from large firms, just like we did at the founders of BlackRock, but also they had the same type of vision. Both firms were in the process of thinking about going public and HBS was further along but they really did but neither firm really wanted to go public but but they wanted to have some transformational moment and and in both cases, um, ultimately they did not, you know, Bio never talked to another firm I know and and and a lot of people were knocking on Scott's door but but let's get back to the the little thing called Preqin. So we believe that if we are going to make the seamless transition to blending both public and private market securities and assets into a portfolio, once again, it's all based on analytics and data. It's very clear that we made this view but we needed to really bulk up the analytics we have in making sure that the blending of public and privates are there in a risk analytical way. And so the Preqin transaction, which was about a third of the cost of these other transactions in terms of how much we spent, probably is going to turn out to be the most pivotal of the transactions. We already bought something called eFront, which was the analytical engine that most people use for private markets, but now controlling the data, which with Preqin foundational success, and now with the success that Aladdin has with all public markets, having that capability of blending all that together in a comprehensive way, in a whole portfolio way, will allow us to have broader, deeper conversation with more clients.

And it ties in. You've spoken a lot, Larry, and I've listened to you as we face it, sooner or later, about the future of retirement. Right. And as you think about it, you know, private markets may necessarily not fit into that, but depending on people's time. Firstly, what is the current state of retirement?

So let me just say one fact. I mean, everybody in this room should know it because it's just compounding. But if you could add 50 basis points to a retirement portfolio over 30 years, 50 basis points. I mean, private markets are, you know, you're going to, over a long horizon, you're going to earn more than that, or the liquidity risk is not worth it. So if you're going to earn 50 basis points over a 30-year horizon, that adds 18% to the corpus. Imagine that. An average retirement plan, if they could do that over 30 years, has 18% larger pool of assets. More Americans can live their life in retirement with dignity and less fear. Retirement is something that no one wants to talk about because it's not a today problem. But we better start as a society, and start focusing on how are we going to help young people starting in their careers, the preparedness, that it starts today. It starts when you're young to build this retirement. And as a country, we refuse to have a conversation about it. BlackRock, four months ago, did a big retirement summit in Washington. And we had a dinner before that. And quite frankly, we had 50 members of Congress come to the dinner. And we had the Speaker of the House. We had many different people. And so we're trying to make this an issue. We are the manager of the Federal Thrift Fund, which is the retirement plan for the federal government. So, you know, this is something important. 50% of the assets of the $12.5 trillion are in some form of retirement.

So as those leaders came to you, I'm sure they were looking to you for personal advice on what to do, but let me pivot even broader than that. Almost every global leader in the world, in my opinion, who has access to you comes to you for advice, or to BlackRock, but to you personally, because you do a lot of this personally, whether it's in the Ukraine or in areas that are not as severely impacted, how do you advise these folks when it comes to issues that are financial, but how do you take into account the geopolitics? Because it's a much broader role that you have when you're talking to those people. It's not just their retirement program. What's your view?

First of all, you've got to develop a personal relationship. So it has to be there, a relationship, a trust, a relationship. And I think this started with me even back in 2008. I mean, all the central bankers and finance ministers felt like they could have a deep conversation with me, and it stayed in my office. It did not leave my office. So there was, you know, and, you know, we didn't, you know, technically we should have signed the confidential agreements. I don't think I ever did. It was just a, it was really no different that I have a conversation with the CEO to CEO. I mean, the amount of conversations I have with different CEOs about their careers and all that stuff, and so many CEOs who I've been mentoring also. But the whole foundational relationship is based on trust and conversations that are not BS. They're conversations that are based on substantive issues. And I'm not presenting that I'm always right, but you have to have an opinion. It has to be based on some semblance of history and facts.

But you've been a mentor to many people over the years in your career. I mean, frankly, I still remember some of the comments you gave me on reviews. But given this access that you have, which I think is almost unique, I mean, when you actually think...

Because we're not a bank, and I really do believe because of the role of, you know, the beauty of the asset management business, it's all outcome oriented. Right. Okay? It's not about the trade. It's not the velocity of money. We don't make money on velocity of money. We make money on outcomes. And I think that sets us apart just because the business model is so dramatically different. I mean, they talk to a lot of people, but I do believe because of the business model of who and what we are, our reach, we're heavily involved in most countries' retirement, whether it's in Mexico, we're the largest third non-Mexican, non-A4A retirement manager. We're the largest retirement manager non-Japanese in Japan. You know, we're the largest retirement manager in the UK, including the domestics. And so having that position, it's all about long-term issues, but it's things that you can't replicate because it's based on years of relationships and trust and whether it is, and then I do go out of my way when there's somebody who's new in their role, a new prime minister. I will spend time, generally what I try to do is spend time before they win and meet the candidates. So whether it's in Mexico, spending time with Claudia before she won, or spending time with Keir Starmer. It's just spending time with them and just saying you have access to whatever information you need.

But given all that, Larry, who has done this for you? I mean, when you think back over your career more recently, who's been a mentor, an influencer for you? Because that was sort of a unique role for you.

Yeah, so I was really blessed. We went public in 1999. And we were able to track board members who were, you know, in most cases you can't imagine. I mean, we went public at a $700 million market cap, okay? And we were able to attract some very senior people who were like, so like Dave Komansky is the CEO of Merrill Lynch, Dennis Dammerman at GE, who was, if he didn't have cancer, he would have probably been Jack's replacement instead of Jeff Immelt. And, you know, so we had, so I relied on my board extensively, and I still do, but we have I you know, I've had an amazing set of board members who I relied on. I mean, when when we bought Merrill Lynch Investment Management and we went from a fixed income US-based manager without a couple offices overseas to a firm that was global, it was in 40 different countries, you know, I mean, I remember having conversations, I singularly went out with each board member. And I do remember having conversations with Dennis, how GE managed the matrix. So does a country manager leader have the 51% vote or the product manager? I mean, all the things we all have to face. Who has? So I relied on the board considerably in my early years of running the firm. And that's continued on from your state. Yeah. I mean, I need less advice today. But, I mean, you know, we have Chuck Robbins who runs Cisco. So we get a lot of advice on technology through Chuck and a few other board members. We had Fabrizio, he's still on the board, but Fabrizio Freda who ran Estée Lauder. I mean, he knows more about marketing. I mean, he used to sell La Mer, which was like, what, $400 bucks, ladies? You know, $400 bucks for something that probably cost 25 cents. I have no idea. That's good merchandising. But so we, you know, we have a really great blend of former CEOs, current CEOs who have expertise way beyond mine in other areas. And it really allows us to have, you know, so I still grow relying on my board a lot. It's important.

Larry, before we turn to the audience, any sort of last commentary on the Citi, BlackRock partnership from your vantage point?

On the what now?

The Citi, BlackRock.

Oh, Citi, BlackRock. I mean, we've been together a long time. Yeah, look at, we want to do more. We need to do more. You know, we were proud of our relationship, you know, based on the trading side, but it has expanded way beyond that now. We're very excited about opportunities we have with wealth. But we were also very excited about, you know, Citi has become one of our largest custodial banks. And I think we played a pivotal role in making sure. I remember having conversations with Mike Corbat and with Jane related to, okay, we need you. What can we do to make sure that you, you know, take over a trillion dollars of custodial assets? And, you know, and so we need partners. And unlike some of the other buy-side firms, we want you to make a lot of money off us. We thank you, but in a proper partnerly way. We don't want to just, you know, do trading where, you know, you're doing loss-leading business. It is a partnership that, you know, we have a role, we got to be a fiduciary in making sure we get best execution. You have a role and making sure, but, you know, I think because we came from the sell side, we all, you know, I ran a trading desk there. We understand how we could have a unique partnership. And the last thing I would say, getting back to the roots of the Salomon Brothers, I mean, in the year 1990, two-year-old firm, it was the president of the Salomon Brothers who agreed to have BlackRock start and working with Fannie Mae and Freddie Mac to offer a mortgage-backed securities fund and overseas, and we were the first manager ever to create a Fannie Mae fund and a Freddie Mac fund. And Salomon was the distribution shop in both of that, and it was a transformational moment. They gave us the trust as a two-year-old firm that we could do this. Well, part of that heritage still sits inside this firm.

So with that, I'm going to turn to the audience for questions and also take some off Slido that I've already looked at. So there are microphones around. If you could just raise your hand and... I can see everybody. Oh, now we can... And briefly say who you are. That would be wonderful. There's someone right over there for you. What do we have? Someone over there? Just looking here right now. We can't face it. Someone all the way at the back? Yeah, there's two hands over there. If you could give the mic to the first person, thank you.

Thank, hi guys, this is Albert Hu from equity research. So you guys mentioned AI as a mega trend. So just curious, what's your thought, Larry, on the puts and takes of AI for the future of investing when it comes to let's say the fundamental analysis versus the FinTech of the world? Where do you see the trajectory going? And then how do individual investors or, you know, different styles of investing have its place in the world? And where does the trajectory go? Thanks.

Oh, I would just say every investor needs to find something that is not in the ethos of the markets. That's old news. It's very hard to make money on old news. And so it is my view the role of AI is getting different sets of data and then using that different sets of data to come up with different insights. Our systematic equity team has had, like, 12 years of spectacular performance, very different than fundamental. As I said, we have this AI lab that we're using, developing algorithms and the synthesizing of big data blocks to make large-scale investments on different themes. And over the last, as I said, 10 years, it's proven to outperform almost any, you know, 95% of all fundamental stock pickers. And that being said, you know, there are, it's just like baseball. It's, you know, you think about it, it's very hard to be a 300%, you know, percent, the 300 batting average from a hitter. It's even harder to do that five and 10 years in a row. And and and so. But there are these rock star investors who can anticipate and have views, but they're far and few. I mean, the reality is most fundamental equity investors have failed. When you look at their returns after expenses, it's been a disaster. And this is what's ripping apart the asset management industry. Everyone thinks it's ETFs that are ripping it apart. ETFs would have failed if active investing worked. But the reality is active investing other than a number of superstars. And unfortunately, BlackRock has one. Alister Hibbert, who runs about a $12 billion hedge fund, he doesn't want it any bigger, he's outperformed the S&P by 500 basis points for 12 years. But he barely takes any new money, but he's able to do that. But it is rare over a five-year cycle that traditional stock pickers are able to, after fees, by the way, after fees, are able to outperform. And so this is the fundamental issue that's facing the investment management world. And this is why so many traditional asset managers are so small in market cap. When I look at some of our competitors who were publicly traded in 2004, most of them were much larger than BlackRock. And most of them are sitting with market caps at $20 billion to $5 billion. And we're sitting at, what, $170 billion. And they can't afford to invest in the technology. They're not investing in the technology. That's getting back to my role. I mean, I think we're gapping even further ahead of most of the traditional managers. And that'll continue.

Let me go to Slido for one question because it kind of ties in, and we've had a number of people ask the same question. What's the biggest significant black swan risk sitting out there that investors are not adequately considering in this market? Forget how to protect your portfolio. Let's just talk about what you think is the risk that's sitting out there that could be significant.

If we cannot grow our economy by 3%, now I'm talking about the U.S. base for a second. If we cannot grow at 3%, which is really hard, and this is what I've been telling the president and the administration, if we cannot grow at 3%, the deficits are going to overwhelm this country. Now both parties are guilty. In 2000, in the year 2000, after our country had its 223rd anniversary, the U.S. deficit was $8 trillion. 25 years later, our deficit is at $36 trillion, $25 trillion more, twenty-seven. And it's only getting worse. But if we grow at 3% for the next five, 10 years, the debt to GDP would be manageable and we'll be able to move forward. But the market does not appreciate that. The other thing is 20% of our U.S. Treasury are owned by foreigners. And a lot of the ownership is because of the position the U.S. has been. And if we become more in isolationist through tariffs, I truly believe the outcome will be less dollar ownership. If you also then juxtapose

This whole concept that I said earlier, that I think more and more countries are focused on their own domestic capital markets, which is great for BlackRock. You know, the thing we just raised, $2 billion in India. Or starting that mortgage-backed securities business in Saudi Arabia, the opportunity to expand in the capital markets in every country means more domestic savings in these various countries are going to stay within country. And so the whole threat of having this 20% ownership of U.S. treasuries by foreigners is going to be threatened.

And the last thing I would say that is shocking to me, as we move faster towards stablecoin and the digitization of currency, the role of the dollar is not going to be as important globally, alright? And these are the black swans, these are big macro things. And so the key is, we've got to unlock private capital. I wrote this in an editorial in FT a few weeks back, we've got to unlock private capital. We need to streamline permitting. And then I think we can grow because of the expertise of the United States. I think we have the potential of growing at 3%. And this is what I've just been pushing everybody. And I was in Japan last week. That was my message to the leadership of Japan. If you don't start growing at 2%, your deficits are going to be overwhelming you. And I can go to every country from Italy and on. And this is a problem in so many countries. And we'll see. We'll see how this all plays out. But these are the big black swans that it's going to be harder for us. But I actually believe, related to our capital markets, I think there's less systemic risk in our capital markets today than they've been in years and years and years. We're matching more. I know there's some people who think the private credit is a potential black swan. But in most cases, we're matching assets and liabilities. That doesn't mean we can't have a big credit event in private markets, which I'm sure we will. There are going to be losses, but as long as you match assets and liabilities, they're not leveraged. It means losses, okay? We have losses, but it's not systemic.

But that ties in, Larry. You mentioned stablecoin, and your stance on digital assets, which, again, there's a number of questions that have come up here, has shifted a little bit over time, at least as we've looked at it. And what has adjusted your view here over time? And do you see other firms embracing the whole digital asset arena in a way that we wouldn't have thought about three or four years ago?

Well, one of my most quoted that are repeated the most, I was on a panel in Washington with Jamie Dimon, and he was ******* all over Bitcoin. And I piled on and said, Bitcoin is the currency for money launderers and thieves. So I did say that in 2017. But during COVID, when I had more free time to think about, I actually went on a journey, and I talked to a lot of people who were true believers. I met this woman from Afghanistan who uses Bitcoin to pay women workers in Afghanistan. And the Taliban forbids women to work, and the banking system is controlled by the Taliban, but she was using Bitcoin to reward women. And I was just learning all the different applications, and I came to the view that there's a lot of legitimacy with Bitcoin, certainly the technology around the blockchain around Bitcoin was pretty unrivaled, and it still is. And I became a believer in, you know, not like it's going to be a currency, but I believe that there's a role for it, like, like digital gold. And since most of BlackRock's business is based on long-termism, and I always raise the question, why would anybody invest in a 20- or 30-year outcome unless you believe the 20- or 30-year outcome is going to be good? Because if you didn't believe over a 20-30-year horizon that those long-term investments would be better, you would keep all your money in a bank account or in a mattress. And so all our business is based on hope. And I said, you know what, Bitcoin is a currency of fear. You own Bitcoin because you're frightened of your security in your country. You own Bitcoin because you're frightened of the debasement of your currency. And, you know, what an interesting, despite that it's illegal for Chinese to own Bitcoin, 20% of all Bitcoin ownership is Chinese. Exactly. But you want to make sure no one hacks your wallet. Yeah, I guess so. But so it's an evolution. And I'm proud of admitting that, okay, I was wrong. And now, to me, this is the experience. You grow and learn and you make mistakes.

Well, I've got a closing question here, and I know I've taken a lot of them from Slido because it ties into how you've ended here, Larry. This is a fast-moving environment that we're in. It's high stakes. As you talked about, some of the asset managers that maybe you looked up to 20 years ago have got tiny fractions of market cap that you do. What are your leadership principles that guide you in this kind of environment? Because you just went through one of them, which is you've adjusted your view on certain aspects of digital currencies. What are your key leadership principles?

You know, I said this in my town hall. You have to be a student every day. You have to grow every day. The day you pause for a moment, someone's passing you by. And this is what I tell everybody. I mean, if you're going to be in the game, you've got to play the game every day. You've got to be relentless. And if there's a moment where I'm saying, you know, I'm tired, someone else should become the CEO of BlackRock. And to me, you know, to run a large-scale company or to have a fast, thriving career, there's no, there's only a single button, and it's called ON-OFF. There's no modulator, you can't dial it up or down. And for those who really believe that you can work from home, dial it down, and still do your job, you're lying to yourself. You're truly lying to yourself. And this is my message to all of BlackRock's employees too. It is, if you're going to be the top of your game, if that's what you choose, a lot of people don't care about that. I always wanted to be the top of my game. I always want to challenge myself. I still want to, you know, next year I'll be working in financial services for 50 years, and I still have this desire to be the top of my game every day. And it means I can't pause, I can't dial it down. And that's what I expect from everybody at BlackRock, especially the leadership under me.

Yes, it's just... but it's fun. Let me just end it. Learning something every day is a joy, and having the conversations that I'm accorded to and I'm afforded to have is a joy and an honor. And I, you got to respect it and earn it every day. And if you don't earn it every day, they're going to find somebody else to talk to. I mean, it's a great place to end on. I think, you know, firstly, that message, I think, is actually the most critical message. There's only one gear, and it's full. It's full contact. And I think that, you know, your excitement, Larry, is infectious, and I think everyone feels it that way. And I think we're blessed to have you in the job. I want to thank you very much. It's just amazing to have had you here. It was inspirational, and we very much appreciate the partnership we have here. I do, too. Thank you very much. Thank you, everyone.