Michael Ainslie author of A Nose For Trouble

Michael Ainslie author of A Nose For Trouble

Jason Hartman brings on author, Michael Ainslie to discuss his book, A Nose For Trouble. Michael gives us some of his business tactics while helping to grow Sotheby’s in his time with the company.

Jason Hartman 0:00
You’re that kind of person and you’ve got the capital and you’re a great negotiator. You’ve got great people skills. You You could probably be a successful flipper, but it’s like a job. Right? If you’re not flipping, you’re not making money. And that’s why I prefer income property because you just make money every month.

Announcer 0:18
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. On Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:09
Welcome to Episode 1413 1413. Thank you for joining me today. Well, some of you out there have been asking, isn’t there anything else going on in the world? Besides this? What is it called? Oh, Corona virus. That’s it, right? Yes. Most of you have heard of that by a Isn’t it crazy? That I bet? Pretty much the entire planet has heard of this. I mean, there are a few things like that. And this is one of them. But you asked, Hey, can we talk about something else? Okay, today, you’re going to get your wish. We won’t be focusing on the world economy and going into hibernation mode. We won’t be focusing on the recession that we are already in No, we won’t be focusing on the contagion and the exponential growth potential of it. And these ludicrous comparisons that some people are putting on social media to the regular flu and things like that. Okay, fine, fine. We won’t. We got a great show for you today, folks. This interview that I did just maybe just over a week ago, is excellent. And it’s a big guest, former president and CEO of Sotheby’s, former chairman of Lehman Brothers holding company, that means he was responsible for distributing the assets after the collapse of Lehman Brothers. This is a fascinating interview, you’re gonna like it, okay? And it’s not all about that virus thing. Okay. So you get to take a little break from it. Heck, you got enough of that on every other news media out there. Okay. So we’ll take a break from it, but I do want to announce something I want to announce You know, most all of you know, and follow my 10 commandments of successful investing. And of course, somewhat sarcastically, there are actually 21 commandments in the 10 commandments. I know. It’s like government math here, folks, you know, it’s fuzzy math. Anyway, we are about to announce. commandment number 22. drumroll Should I tell you now?

Michael Ainslie 3:30
Should I tell you no. Or can you wait

Jason Hartman 3:32
for commandment number 22? Maybe we’ll talk about it tomorrow. think we’ll keep you in suspense. I think we’ll talk about it tomorrow. Because tomorrow, we’ll probably play one of the interviews where I talk about this. And you know what? It’s actually commandment number 22 to be announced, is actually something that relates to another commission. And it’s in the first 10, by the way it relates to that. But now with the health scare with Cova 19 there is a new reason to think about this. And actually I predicted this and I, I think now this prediction is that kind of an easy one to make. I’m predicting it even more so. And that is this new migration pattern that is going to benefit real estate investors that have been following my plan. migration patterns will change. This event will change the world for at least a generation. Okay. It will change the world for at least a generation and remember coronavirus won’t be the last viral outbreak and we’ve had them before. Fortunately, they weren’t as significant as this one, you know, at least not since the Spanish Flu 100 years ago. But you know, we had h1 n one, we had the bird flu swine flu, right? You know, we’ve had these things, okay. But this one being far more significant. And this one is going to change a lot of habits. And in my first 10 commandments, I unknowingly was recommending a tangential part of commandment number 22. And I think we’ll announce that tomorrow, but this is a this interview does not give me a lot of time to do a big intro today. So look, everything’s in the news. We’re going to be covering more of this stuff. We’re going to have Chris martenson on flashback Friday. He’s been covering the corona virus thing extensively, but we’re going to do a flashback show because he’s been on the show several times peak prosperity Chris martenson. He did the crash course many years ago. And I think you’ll find a flashback Friday interesting as well. But tomorrow, for Wednesday, we will go back into it. We will talk about commandment number 22 and how it’s going to benefit all of you who have been following my investing philosophy. So That is coming tomorrow. But today we got a fantastic interview, you’re really gonna like this interview. So enjoy it as we talk about Sotheby’s as we talked about Lehman Brothers, and we look back on what history just 10 years ago can teach us about what we are going into right now. What we are going into right now is a different flavor for sure, but definitely a global recession. So I think this will be educational to you from a historic perspective for sure. If you need us, reach out to us Jason hartman.com. That’s Jason Hartman calm or one 800 Hartman, get a hold of one of our investment counselors. Have them help you make adjustments to your portfolio so that you can invest properly to not only survive, but thrive in pandemic times. Jason Hartman, calm Okay, let’s go to the interview. It’s my pleasure to welcome Michael Ainslie. He’s the former president and CEO of Sotheby’s and the National Trust for Historic Preservation. He’s former senior director of Lehman Brothers, and then became chairman of the Lehman Brothers holding company or the Lehman Brothers Estate, if he will, and oversaw the sale and disposition of the company’s remaining assets to Barclays. He’s author of a new book a nose for trouble, Sotheby’s Lehman Brothers, and my life of redefining adversity. Michael, welcome. How are you?

Michael Ainslie 7:33
Thank you. Very well. Nice to be with you, Jason.

Jason Hartman 7:35
It’s a pleasure to have

Michael Ainslie 7:36
you. Where are you located? I live in Palm Beach, Florida. That’s where I am today.

Jason Hartman 7:40
Well, we’re neighbors because I live in Palm Beach, Florida to a small world. It is. It is a beautiful, beautiful day here, isn’t it? It really is. Good stuff. Boy. I bet you have some stories to tell now. What Sotheby’s was before Lehman, Lehman, I’m guessing right?

Michael Ainslie 7:58
That’s correct. I was CEO Sotheby’s from the mid 80s to the mid 90s.

Jason Hartman 8:02
Fantastic. And when someone says Sotheby’s, most people think of the Auction House nowadays in a retail world, we see the real estate company. Was it sort of those two businesses? Or were I guessing there were even more businesses?

Michael Ainslie 8:16
Well, there was also a finance company, a financial services business. But by far the majority of the business was and still is the auction side of Sotheby’s. That’s a worldwide business in 85 countries and it actually was just bought about two months ago by a Frenchman named Patrick jockey for a very big price. He paid 3.7 billion for some other BS. He’s got a got a job to do to make it worth that.

Jason Hartman 8:43
Uh huh. Wow. So Sotheby’s How did they become such a big player in the art auction and and were they the biggest or was Christie’s ever bigger or how did those two compare and compete?

Michael Ainslie 8:56
Well, it’s a good question. When I got there in the mid 80s. We We’re about even with Christie’s. And we were about 600 million in sales. But I quickly learned that we were really selling mostly to art dealers. We did not sell a lot to private collectors like the art market is today. So we set about changing that and really building a, if you will, a retail business of selling to art collectors directly. And that made a dramatic change in our fortunes. We became much bigger than Christie’s we were about 65% of the market and a few years and we also grew from 600 million up to 3 billion in sales very quickly. So we did it with very simple things staying up on a weekends getting our catalogs out a month earlier. Traveling exhibitions, providing financing to our buyers and sellers, just some good basic business tactics and we had the art expertise so the bees had been around since 17. 42 Believe it or not, that was that that was the year of its founding. It’s one of the oldest businesses still around that have been around for over 250 years.

Jason Hartman 10:10
Amazing, amazing. And, and, you know, we we think Lehman Brothers was old. I mean, I remember at the time commenting on the fiasco of Aaron, you know, that was like 146 years old, I believe. So we all thought Lehman Brothers was an old company, but Sotheby’s was really been around for a while. It’s amazing.

Michael Ainslie 10:28
They had been it was had wonderful traditions and great talent. It just needed a little a little business strategy and, and to be nicer to its clients. I’ve always found that when you are really good to your clients, you communicate well, you have the practices that they want. They reward you with your business, with their business, and that’s what happened with other B’s.

Jason Hartman 10:50
Sure, yeah. Fantastic. So just curious, how’s the art market doing what’s the prognosis for the art market, you know, the economy is going through quite A bit right now, not the least of which is kovat 19. And that scare but what are your thoughts on on the art market is that,

Michael Ainslie 11:07
oh, it’s it’s strong, it’s buoyant. In a way, our success in the 90s, of really making the auction room much more accessible to people, literally from every corner of the world has succeeded to such a degree that you never know today, whether it’s going to be a new wealthy Chinese buyer or a Russian buyer, or an American buyer or a South African buyer. It’s just a global market with great and easy communication through the internet and digital catalogs. So it’s become a place frankly, where wealthy people can get known very quickly. Part of that is a little bit unsettling because it’s become a lot about the ego of the buyer, not so much about the value of the art sometimes,

Jason Hartman 11:56
right right. So when the buyer wins and auction that’s, you know, Maybe the highest price ever paid for a piece that’s good for their brand, right?

Michael Ainslie 12:06
Well, it certainly gives them a high profile instant they become known over overnight around the world. And that unfortunately, it’s leading to a lot of good collectors can’t afford to play in the in the game anymore because these newly wealthy billionaires are buying everything.

Jason Hartman 12:24
Yeah, they just crowd everybody out. Sure. Yeah, that’s, that’s amazing. There’s does that tell us that there’s just a lot of money sloshing around in the world? And when I say a lot, I mean, compared to what it used to be is, is the world getting a lot richer, or is it that the concentration or maybe there’s less concentration really, because there’s more players? It’s obviously more globalized? Just any maybe anecdotal thoughts on that?

Michael Ainslie 12:52
Well, I think there is. there clearly are more wealthy people in developing economies all over Asia. China being the leader, but all over Asia, many, many countries in Eastern Europe now have very wealthy people. And that wasn’t the case 30 years ago, this is a new phenomenon. And again, I say the art market and the purchasing of major works of art has become a way for them to distinguish themselves. So the art market, in a sense has become a proxy for a growth in, in the really wealthy. Mm hmm.

Jason Hartman 13:30
Yeah, really quite interesting. Now, we’ll kind of finish up on the Sotheby’s topic, maybe did you want to talk about the scandal that happened after your departure?

Michael Ainslie 13:39
Well, painfully. I will tell you just a little bit about it. I was brought into southern visa CEO by a man named Alfred todman. A big wealthy developer from Detroit. He passed away about three years ago. Yeah, he was my chairman. And then when I departed after about 10 years, a woman named Ed Brooks was promoted to be the CEO. Unfortunately, the year before I left, she was worldwide Chief Operating Officer and she began an extensive, illegal collusive activity with Christie’s with their CEO. I was completely unaware of this and the courts later on in the Justice Department validated that todman was blamed for making her do it to keep her job. for a lot of reasons which I detail in my book. I do not believe that to be the case. Didi was incredibly strong, willful woman. She literally had her name on 500 pages of illegal agreements document with Christie’s that was turned into the Justice Department. Thompson’s name was not on one of them. So she blamed him conveniently he spent a year in jail for the price fixing. She got a ankle bracelet and did heads and had to plead guilty to a felony. It’s really it was a very sad chapter and So the bees barely survived. It was a nip and tuck, we lost clients, we lost employees, we lost a lot of money.

Jason Hartman 15:07
Yeah, yeah. What’s interesting about that, though, is in something like the art auction business, how do you actually mechanically fix prices? Because all the pieces are

Michael Ainslie 15:18
different. So well, that’s I didn’t fix the price of the art. What they fixed was the price of the Commission’s they agreed. The two houses agreed on a sliding scale of non negotiable commission rates, the Commission’s had always been negotiable. And clients could play one house against the other suddenly, they stopped being able to do that. In one way. That’s what led to the discovery of it because a couple of the clients were so upset with this attitude that they called the Justice Department and they finally got them to take pay attention to this.

Jason Hartman 15:53
Yeah. Interesting. One other question about Sotheby’s and that’s on the real estate side. Tell us a little bit about the real company if you would,

Michael Ainslie 16:02
well, it’s it’s grown to be very successful. When I first got there, we were selling what we called white elephants a lot of very overpriced, very expensive islands and big, big houses. And frankly, it was not making any money. We changed that and went to a much more of a franchise model where there are now hundreds of firms around the world that carry the southern B’s brand. And there are about 15 Sotheby’s owned offices. And it’s now a very successful business and I think provides a unique service because it again, it’s able to reach out globally to people that may be interested in Palm Beach or Berlin or wherever and very quickly, they can find properties. A good friend of mine just rented a beautiful home in Italy for the summer. Through Sotheby’s.

Jason Hartman 16:50
Yeah. Fantastic. So Lehman Brothers. Now when did you start your tenure as a senior director, and then of course, we all want to hear About the financial crisis and then the happenings there. But how early? You know, before all of that did you start?

Michael Ainslie 17:07
I became a director in 96. And the course the crash occurred about 11 years later. So I was on the board, I knew the company. Well, we had a great business, we had a great company. It really is a huge mistake that Lehman was allowed to go into bankruptcy. A Paulson, Hank Paulson, clearly made the decision. He made the decision, in my opinion, because he was concerned that AIG which was teetering on the verge of bankruptcy at the same time, owed Goldman Sachs a huge amount of money, and had they not, they not paid that Goldman might have been in jeopardy.

Jason Hartman 17:48
Right, right. So Hank Paulson was treasury secretary, and Hank Paulson did it seems as though he did not like dick fold, who was CEO at the time. Is that correct?

Michael Ainslie 18:01
I think that’s an understatement. They did not get along at all. Yeah. Back in the this is really ancient history but there had been a another crisis in 1998 called long term

Jason Hartman 18:12
capital manage. I remember LC tm right. Yeah, they thought they had mathematically discovered that there was no way to lose boys right wrong. They got

Michael Ainslie 18:24
that wrong and they went they basically went under and Paulson led the effort to salvage it. He came to fold and Lehman and asked for a quarter of 1,250,000,000 even back then that was a lot of money. Right and and follow Lehman had not had much to do with In fact, nothing to do with long term capital. It was mainly a Goldman protege or project anyway, he said no. And finally after a lot of beating him up Paulson guiding to say we that Lehman would put in 100 million dollars that lead After a bad taste in Paulson’s mouth, he did not like fold saying no to him. Most of the other banks on Wall Street said yes, at that point. So they had other other run ins. You know, they dealt with each other fairly regularly. We had just taken a great talent away from Goldman named George Walker, who became the head of all asset management for Lehman. So there was a lot of, of rivalry between the two firms.

Jason Hartman 19:26
Wow. Yeah, that’s something and there was I can’t remember I think there was an actual name for this meeting, but there was sort of an emergency meeting, that Paulson convened at the Federal Reserve, right on the brink of the financial crisis,

Michael Ainslie 19:40
Saturday morning, Saturday morning, and

Jason Hartman 19:43
and Lehman was not invited, right.

Michael Ainslie 19:46
Lehman was the was the cadaver on the table. They had the eight top commercial and investment banks and they divided them into two teams, and said, you look at the balance sheet and you look at the evaluation. The assets and see if you can come up. They gave him two hours. Geithner said you have two hours to save Lehman. Well, needless to say, they concluded that they couldn’t. And you could no way you could analyze a $600 billion balance sheet in two hours. So the policy decision was made. And here’s another interesting point, it should have been made by Ben Bernanke, who was chairman of the Federal Reserve. It’s his job to finance banks and institutions. He delegated that and abdicated and gave it to Paulson, who was a political figure and clearly had a long and close relationship with with Goldman Sachs.

Jason Hartman 20:39
Right, right. Well, you he was CEO of Goldman Sachs wasn’t

Michael Ainslie 20:43
until not long before this,

Jason Hartman 20:45
right. Exactly. You know, every everybody in big government finance positions, worked at Goldman at one time

Michael Ainslie 20:51
or another. It seems like he had just sold less than two years earlier. He had just sold his Goldman Sachs stock have he had to to go into that The government which was 480 million dollars of his personal holdings.

Jason Hartman 21:05
Wow, that’s something else. So let me ask you to speculate on on two different things. And, you know, I’ll just tell you where I’m coming from, like, philosophically, I didn’t agree with any of these bailouts. You know, now, maybe practically, that was a bad idea. But, you know, it kind of felt like corporate socialism, it felt like the big guys were getting bailed out. Why should we do that? And then Goldman, you know, that the same year, they paid themselves all their big bonuses, and everybody was mad about that. But let’s just assume that none of the bailouts happened. Yeah. And maybe, maybe I’m not using the correct word. Maybe you don’t even want to call them bailouts. That’s what I call them. But But let’s say they didn’t do any of that. What would have happened with the world economy have just ground to a halt and then so much worse. Like, just what would that would that have been just a death march. I mean,

Michael Ainslie 22:00
What would that be? We would it would have made the 1929 crash look like a Popcorn Party, it would not have been pretty at all. We actually the Lehman board considered not declaring bankruptcy. But we knew that if we did not declare bankruptcy that night, and the Fed had refused to lend to us the next morning, there would have been chaos in the world. There would have been many bankruptcies. Goldman Sachs was not far behind Morgan Stanley and Merrill Lynch were very close to the limit. Look, this all stems back to a lot of bad judgments that were made about the housing market. Sure. The government wanted to see more middle and lower income people buy houses. Yeah. And so they made a huge push to get more and more financing going to those buyers.

Jason Hartman 22:56
And are you referring to the community reinvestment act when you say that or Generally talking sort of generally about it.

Michael Ainslie 23:02
I’m talking generally not the CRA know that that had some good qualities to it. This was more of the use of Fannie Mae and Freddie Mac and the basically subsidizing mortgages getting getting more and more people to buy houses with, frankly, mortgages that they couldn’t afford. And that that ended up with what became what’s called the subprime crisis. Sure, Lehman was not even a big player in subprime. We were, we our big problem was, was quality real estate. We bought art stone, a big provider of of luxury apartments right before the crash for 22 billion, and then couldn’t liquidate it couldn’t sell it off. That was one of our problems. If your scenario had played out, let me tell you, we’d all be doing something else and living in Palm Beach.

Jason Hartman 23:50
Okay, sir. Well, but what would that have meant to the common man or woman on the street like, you know, what would that have meant? To the middle class, what would have happened? How would they have? I mean, we all know what happened because we were there. But if there were no bailouts, what would that have looked like?

Michael Ainslie 24:10
Well, let me tell you one fact that there’s a really good book out there that I urge your readers and you to look at. The professor, head of economics at Johns Hopkins is a very bright economist named Lawrence ball. Larry ball, in his book is called the Fed and Lehman Brothers. And he looks at it in great depth much more depth than anyone else has. Sure. He also has taken a 10 year after Lehman’s bankruptcy look at all of the countries of the OECD, the European community, right. He concluded that the growth rate in those countries because of the Lehman bankruptcy, principally the crisis of the oh eight, that the growth rate in those countries is eight percentage points lower than it would have been. In other words, those are economies have never recovered 12 years later. So you asked what would have happened? Huge unemployment, huge disinflation values of everything would have dropped.

Jason Hartman 25:12
Is that because financing would have seized up even more than it did? I mean, we felt like it seized up to a large extent, but would it have been more so

Michael Ainslie 25:22
it would have I mean, look at Japan, Japan has had 20 years of negative growth or no growth. They their financial institutions never dealt with reality. I’m just using that as an example of what would have happened in

Jason Hartman 25:37
Japan. It’s really been more

Michael Ainslie 25:38
than 20 years. Right. I guess it started in 1990. Because that was the year their art market collapse. So yes, it’s almost 30 years. Yeah, right. But I think let me give you one other argument why I don’t call them bailouts. Did you know that the 88 billion that the government ended up financing AIG with was fully paid back, plus A $22 billion profit. Did you know that Fannie Mae and Freddie Mac are both producing literally hundreds of billions of profit for the government for saving them from going under? So these institutions which are supposed to be financed by the government? Let me one one, the mayor culpa, the they were all too much. There was too much leverage. There was too much debt.

Jason Hartman 26:28
Too much financialization. Yes.

Michael Ainslie 26:31
And I think Dodd Frank has done a good job of making these financial institutions much less leveraged. And thus, they’ve got much more resilience to the next crash. Yeah,

Jason Hartman 26:41
yeah. Yeah, I agree that the, at least on the real estate side, you know, the banks have been pretty conservative. You know, it doesn’t seem like the next fiasco is going to be at least real estate lead. I can, you know, I can say that hopefully with some comfort. Now, the other hypothetical I’d like to ask you is what What would have happened? Had they helped Lehman Brothers, like they did with everybody else, you know, they help Bear Stearns. They help Goldman they helped AIG, you know, but they let Lehman Brothers fail. What would have happened? Have they helped that would it have been a much softer landing

Michael Ainslie 27:15
dramatically softer. When Lehman went under it had 1,300,000 derivative contracts in place. Those contracts went haywire because they were guaranteed by the parent of Lehman, that cost the shareholders and the debt holders of Lehman, literally hundreds of billions, not millions, billions of dollars. I don’t think Paulson and Bernanke, he understood that the interconnectedness of all these institutions, because those contracts were held by other banks, all of whom came in and tried to get it put in huge claims after the bankruptcy. That was one of the more interesting parts of my time as Chair of the bank. You know, the Lehman estate was trying to adjudicate all of these claims that came in from Chase and Citibank and Goldman and all these people. It was they were feeding at the trough level.

Jason Hartman 28:13
Yeah. Right. So it had Lehman been bailed out. Would we have had a great recession at all or, I mean, we were still having bank failures of retail banks. I mean, Washington Mutual, describe how that would have looked at Lehman been saved.

Michael Ainslie 28:29
I think that we would have had a much softer recession. Clearly, assets were overpriced, there was too much leverage in the system. And there would have been a lot of other failures. But what happened is banks stopped trusting each other banks, you know, there is such a daily interplay between all of these organizations. Let me give you one other example, on the Tuesday before our bankruptcy, jamie diamond from Chase and Chase was Lehman’s main Clearinghouse bank clearing bank, they provided our overnight financing. Diamond had a meeting with both Bernanke and Paulson. We don’t know what was said in that meeting. But clearly he was given some indication that Lehman was not going to be supported, because he called up default, and demanded 8.6 billion of additional cash collateral for us to continue operating that week. Well, we’re not that big. I mean, they point 6 billion was about 20 or 25% of our liquidity. And once that happened, then other people started calling in claim so you know, there was a lot of ugliness that never got told. We sued Chase. And apparently under the fine print of their loan agreement, they had the right to do that. They won that lawsuit about four years later. I think Lehman got about 1.5 billion back but they didn’t get the 8.6 that Chase took. So it was very, it was very personal. It’s very competitive.

Jason Hartman 30:06
That’s just something you know, what’s most interesting about hearing you speak about this is that this really is just like every other part of life, a game of friendships while friends and enemies. And there’s a lot of good I think the way the typical person looks at, you know, the big wall street game is it’s all numbers and it’s scientific and financial. But you know, it’s a rivalry like Hank, Hank Paulson, you know, didn’t like dick fold, Dick folded like hank paulson that determines the destiny of a giant, you know, 150 year old company,

Michael Ainslie 30:44
right? As my grandmother used to say, Be careful on your way up to make good friends because you might need them on the way down. Yeah.

Jason Hartman 30:52
Well, that’s an old thing. That’s a good one. Um, I got to ask you about the derivatives market for just a moment because you mentioned it, but For and just the general question I’d like to ask you, I mean, there are signs of real trouble in the economy globally, before we even talk about Corona virus, right? There’s the repo market. There’s a lot of goings on that people have, you know, Chinese bank failures, some seemingly pretty serious issues is the economy over financialized. Now, we both seem to agree that the banks have been conservative underwriting real estate deals, at least in comparison to the way they were before. But you know, we’ve got this giant derivatives market, which is what, like three quarters of a trillion dollars or, or no, it’s more than that.

Michael Ainslie 31:42
Much more than that. I yeah. I don’t know the scale of it today, but it’s

Jason Hartman 31:46
a trillion wasn’t trillions of dollars. Is it over financialized now, or do we have a good balance between what I’ll call the real economy and the financial economy?

Michael Ainslie 31:56
No, I think we have some serious issues to me. biggest one is is the underfunded pension liabilities of our major cities and states. And countries don’t forget, and countries and countries, our own included. We are not addressing politically, we have just kicked the can down the road. And we have to address these. And in my opinion, there’s going to be some very serious problems with some of these states in the northeast and the Midwest, as they fail to deal with this, particularly if rates start to go up at some point right now. They can refinance and borrow these deficits at very, very low rates, but that that someday will end I don’t know when.

Jason Hartman 32:42
Okay, so the question over financialized The answer is yes. Over financialized. But biggest problem being the pensions, which is a little different than it’s a little differentiation, yeah. Okay. All right. Good. Hey, anything else you want to say about your book or the posse foundation that you I think you found it that right Well, I didn’t find out

Michael Ainslie 33:01
fine. I wasn’t the founder, but I was the founding chairman. Let me just say a word about posse. The posse foundation started about 30 years ago when a brilliant young woman named Debbie Beale, who was the founder. I was talking to a bunch of kids who had dropped out of college and one said, If I’d had my posse with me, I would have been fine. Well, she called up Vanderbilt University where I’m an alumnus and a board member. And she asked them if they would take a gamble on six kids from New York City, who would not measure up on their essay T’s but would be strong leaders on their campus. Fortunately, Vanderbilt said yes, those six kids came to Vanderbilt and really changed the campus. One of them went on to be get her PhD at Duke. She was the daughter of a Dominican cab driver. She was became winning the academic life and she became the Dean of the College at Middlebury and today she is president of Ithaca College. It’s 45 years old. She is an unmarked, remarkable woman. And that began a whole process today. posse sins, teams of kids from public high schools, these are young leaders from urban schools. Not all of them low income, but but many are. We’ve now sent 9200 kids to college in, they go to the most elite universities, University of Chicago, Vanderbilt, Brandeis, Pomona, Claremont, on and on 57 University, take a posse now because these kids come in, and they just do amazing things on campus, and 90% of them graduate. So that’s been my passion. I’ve been the chairman for 15 years. I’m now just a board member, but chair Emeritus and policy has gotten these kids over one and a half billion dollars of scholarships over the last 30 years.

Jason Hartman 34:56
Yeah, fantastic. Good stuff. Anything else about the book Just any final comments you want to share? Yeah, I didn’t ask you.

Michael Ainslie 35:05
Well, the real reason I wrote the book is for these posse kids. I also have five children, my own and eight grandkids. And I really wanted them to know that life is not easy. there every day there’s something challenging and difficult whether the ethical, health wise I almost died when I was in high school, I got an autoimmune disease, called Addison’s disease. It changed my whole life because I went from being a strong athlete and basketball player and I had to give that up. So I tell a lot of stories in the book about bad things that happened to me near bankruptcy when I was in my first company back in Hilton Head down in South Carolina in real estate, all of the challenges at Sotheby’s and Lehman Brothers, but you know, you learn from these things, you move forward, you you, you figure out a way to do it better than Next time and not make the same mistakes and you try and be ethical, you try and do the right thing all the time. And my belief is people will rally around you and support you and, and one can succeed even in spite of these kinds of adversities. Yeah,

Jason Hartman 36:17
yeah, I couldn’t, I couldn’t agree more, you know, people who haven’t experienced hardships, they haven’t tried anything. They haven’t gone out on a limb, they haven’t taken a risk. Life is a challenge. It’s not easy, but you know, every time you overcome a challenge, you become a better stronger person, and no question about it. And I love how you point out that some of the challenges aren’t like challenges in the way many people think of the Michael, their challenges in, you know, do I sort of sell my soul to the devil? Do I do the unethical, more expedient thing? Or do I do the thing that’s the right thing to do and the longer the long game, the longer strategy right the delayed gratification strategy. And you know, we’re faced with those decisions all day long, all of us. So it’s hard to choose the right one a lot of times, isn’t it?

Michael Ainslie 37:08
Well, I think it is. But most people really do know the right the right way to go and when they stand up and and do the right thing. I’m a great believer that then people get excited about, about working with you and following your lead. So that’s really the purpose of my book is to is to say those things to a lot of young people and people our age,

Jason Hartman 37:32
I couldn’t agree more. And your website is a nose for troubled calm, is that correct?

Michael Ainslie 37:39
That’s correct.

Jason Hartman 37:40
Excellent. Well, the books available in all the usual places looks great. And a nose for trouble calm. Michael, thank you so much for joining us. Thank you. I really enjoyed the conversation. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes, be sure to check out the show’s specific website. sight and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

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