Ken Griffin on US-China Tensions and AI

**Ken Griffin** (0:05)
You'll never manage a portfolio for every possible tail of it, but you should stay very focused on, like, what is the worst case scenario? Can I tolerate that loss?
And monitor and maintain your exposures. Suck that loss is a tolerable loss. It may be an extreme loss, but it's still tolerable.

**Raj Mahajan** (0:23)
Welcome to another episode of Goldman Sachs Exchanges, Great Investors. I'm Raj Mahajan. I recently got the chance to catch up with Ken Griffin, the founder and CEO of Citadel at Goldman Sachs APEX Symposium. Ken and I discussed the implications of AI, his approach to hedging portfolios, and the competitive landscape for the hedge fund industry. We hope you enjoy this conversation.
Welcome back to Goldman Sachs, Ken.

**Ken Griffin** (0:51)
It is great to be here today.

**Raj Mahajan** (0:53)
This is our third public conversation in the past seven years.
I know you well enough to know, you think way beyond the numbers, and you're a student of leadership. So the first question I want to ask you is, beyond the numbers for the past seven years, what are you most proud of as a leader in running Citadel?

**Ken Griffin** (1:13)
So two things jump out with that question. The first is we were extremely early to bring everybody back to work. And in some sense, it was almost counter-cultural to demand your team to come back to an office five days a week. And yet, I think that was an incredibly important part, not only of the success that you spoke of, but more importantly, of continuing to develop our human capital. I think as a country, the amount of human talent that has been underdeveloped because of working remotely has had a significant damaging impact on our economy. And recently, the Fed published a paper where they looked at factors that have caused reduced employment amongst those under the age of 30 And people would say, well, how much of this is the AI story? Well, it turns out that remote working is a more important factor to diminished employment opportunities for young Americans than AI.
And so I'd say one of the things that I'm really proud of has been not only did we bring our team back to work, we publicly extolled what we thought were the strengths and virtues of doing so, and I think that history will be on our side. Humans are social creatures, we learn through apprenticeship, mentors are really critical to our personal development and growth, and bringing people back into our four walls aggressively early, both drove results for our limited partners, but more importantly, helped maintain the strength of our human talent at Citadel. That's one. The second is that during the start of the pandemic, actually literally as the first cases were happening in America, I was called by one of our former partners who is the COO of a major New York hospital system, Dan Wodowski. And Dan called and said, we cannot get FDA approvals for drug trials in intensive care with those who are on ventilators who are facing imminent demise from COVID. I'm like, okay, Dan, why are you calling me?
And he says, because there's no one else who I think can actually make this happen.

**Raj Mahajan** (3:21)
Was it Warp Speed?

**Ken Griffin** (3:22)
Actually, Warp Speed was the second part of this chapter. We moved in about 72 hours to get the FDA to approve experimental drug trials for those with COVID here in the United States.

**Raj Mahajan** (3:33)
Amazing.

**Ken Griffin** (3:34)
And I'm really proud of my team that has worked hand in hand with government for decades to be able to rally resources around this existential moment in American history to help bring the full power of America's medical prowess to bear against a dreaded disease. Another dimension of this was the idea of Operation Warp Speed, which I discussed at length with Jared Kushner, and that program saved ballpark half a million American lives and understanding incentives, understanding how to minimize distances and supply chains. So with Operation Warp Speed, the key insight was pay Big Pharma to produce vaccines before they have the FDA results.
You get a positive result from the FDA, the vaccine works, your time to market is going to be measured in days. Not first do your studies, wait for the FDA results, then move to manufacturing and lose three to six months.

**Raj Mahajan** (4:34)
That was an incentives problem?

**Ken Griffin** (4:36)
That's an incentives problem, right? Because how do you get Big Pharma to spend potentially billions of dollars on producing vaccines who ultimately may not work and therefore will be literally flushed down a sewer system. So this was all about the US government taking the risk to fund the manufacturing of vaccines the efficacy of which was not known. We spent a few billion dollars as a country, we saved a few trillion dollars in GDP, we saved roughly half a million American lives.