Bill Ackman — The Creative Side of Investing

Winter 2015

Bill Ackman is the CEO and Portfolio Manager of Pershing Square Capital Management L.P., a concentrated research- intensive fundamental value investor with approximately $19 billion in assets under management. Prior to forming Pershing Square, Mr. Ackman co-founded Gotham Partners Management, an investment fund that managed public and private equity hedge fund portfolios. Mr. Ackman began his career in real estate investment banking at Ackman Brothers & Singer. Mr. Ackman received an MBA from Harvard Business School and a Bachelor of Arts magna cum laude from Harvard College.

Bill Ackman (BA): I started investing in business school. A friend recommended that I read Ben Graham’s The Intelligent Investor and it resonated with me. I decided to go to Harvard Business School and learn how to become an investor.

I got to HBS and unfortunately there were no classes really focused on investing. The first year is a set program — it didn’t have much in the way of choice. I thought the best way to learn is by doing, so I started investing on my own. I found that it fit with what I like to do. The first stock I bought went up. I think if it had gone down I would have become a real estate developer or something. Then, six months later, I roped in a classmate, David Berkowitz, who was in my section — it was a little lonely going back to the dorm room on my own to do this kind of thing. The two of us started looking at investments together toward the end of my first year and the beginning of my second year. At a certain point in time, I said, “What if we did this as a real business?” I figured the worst case, if we failed, is we’d have a lot of very good experiences. And if we’re successful, great.

G&D: Did you have any mentors back then?

BA: I had very few actual mentors in this business because I didn’t really know anyone. I bought Seth Klarman’s book, Margin of Safety, which was published my first year of business school. I called him up and said, “Hey, I’m a business school student and bought a copy of your book.” He said, “You bought a copy of my book?!” I don’t think many people had done that. In a sense, he was a mentor because he had graduated from Harvard Business School ten years earlier and started a hedge fund right out of school. That’s what made it seem possible. I don’t know if he was a mentor per se — a mentor is someone you have more interaction with, but he was certainly someone that I looked up to. Of course, Buffett was a mentor in a sense. He didn’t know me. You can still learn a lot from people without ever meeting them.

G&D: There have been a number of analysts at Pershing Square that have gone on to great success. How do you think about mentorship within Pershing and about developing your team on the investment side over time?

BA: I don’t think we have any particular programmatic way to develop people. The Goldman Sachs’ of the world have real training programs. At Pershing, people on the investment team side are pretty good investment analysts by the time they get here. They’ve already spent three or four years training at investment banks and private equity firms. Some may even have finance experience from their undergraduate programs.

The rest is just working as part of a ten-person team. Our analysts work very closely with me and other members of the team. We learn from each other; not just the older people teaching the younger people, but the younger people teaching the older people. It just sort of happens. We learn new things every day.

G&D: How would you describe the evolution of your investing philosophy from Gotham to Pershing Square?

BA: Gotham was not set up to be an activist hedge fund — it just sort of happened. I don’t remember the moment we decided to intervene in a company. There were a couple of different cases where it seemed obvious what should happen. The basic evolution was this: Version 1.0 was classic value investing, which entailed investing in statistically cheap securities. Version 2.0 was recognizing the difference between businesses of different quality. I think over time we developed more of an appreciation for the value of a quality business. Version 3.0 was understanding the impact of activism. More recently, Version 4.0 is understanding that if you can find a great business, and if you can switch out a mediocre management team for a great one, you can create a lot of value. That was an evolution over 22 years.

G&D: You manage a concentrated portfolio and there are some inherent risks to that. Broadly speaking, how do you think about constructing the portfolio today and how has that changed over time?

BA: I’m a big believer in concentration. But it’s not just analysis that protects you, it’s the nature of the things you invest in. If you invest in super high quality, durable, simple, predictable, free cash flow generating businesses, that should protect you as well.

If you pay a fair to cheap price for businesses of that quality, I think it’s hard to lose a lot of money. The key is you have to be a good analyst in order to determine whether it truly is a great business. You have to really understand what the moats are. You have to understand the risk of technological entrants — the two guys in a California garage working on the next new thing. Buffett would always write about the newspaper business being one of the great businesses, but print has been disintermediated as a result of changes in technology. So we’re concentrated, but we try to invest in businesses where it’s very hard to lose money, particularly at the price we pay.

We size things based on how much we think we can make versus how much we think we can lose. We’ll probably be willing to lose 5–6% of our capital in any one investment. With Fannie (FNMA) and Freddie (FMCC), you have highly leveraged companies where the government is effectively taking 100% of the profits forever. There’s legal risk and political risk, and an enormous of amount of uncertainty. We could realistically lose our entire investment. That’s a 2–2.5% position at today’s market price.

In our other investments, it is very hard to lose money. We like to own businesses with dominant competitive positions, such as railroads, industrial gases, and specialty pharmaceuticals. Some of our investments also benefit from undermanaged operations or reported earnings that understate true economic earnings. When we pay a fair price for those situations, we can make it a significant

position.

The biggest investment we ever made was Allergan (AGN), which, at cost, was approximately 27% of our capital. There we were partnering with a strategic acquirer and it had an immediate catalyst to unlock value. It was a very high quality business. We felt it was hard for us to lose a lot of money, so the position could be quite large. Could we lose 20% of our capital? Sure, it was possible, but very unlikely. So in some sense, we think about losing 20% on 27% as risking 5- 6% of our capital.

G&D: You mentioned companies failing to achieve their true earnings potential as possible opportunities. How do you evaluate management teams and what metrics do you consider?

BA: We look at management the same way we judge people we want to hire for Pershing Square. We’re looking for character, intelligence, and energy, but we’re also looking for relevant experience. If you look at Seifi Ghasemi at Air Products (APD), he knows the industrial gas business very well. He spent nearly 20 years with The BOC Group and spent the last 13 years at specialty chemical company Rockwood Holdings (ROC). So he had both disciplines — the qualitative characteristics and the experience. He had been a public company CEO for a meaningful period of time. It was very easy to support him as CEO of the company.

We helped recruit Hunter Harrison to Canadian Pacific Railway (CP). He had turned around two other railroads including a Canadian competitor. If you meet him, you’ll understand his leadership qualities. It’s easy if you’re backing someone who’s already done it before. It’s more difficult when you are taking someone who has not been successful before and betting on their success.

G&D: Do you have examples of bringing in successful CEOs who did not previously have relevant experience?

BA: We focus on candidates with previous experience. You can meaningfully reduce the risk if you can find someone who’s done it before. We have an affection for older CEOs in some sense. With both Seifi and Hunter, they have 50 years of experience. Someone at that stage of their career that has been successful is not really driven by financial considerations. It’s more about legacy and the fun they have.

That’s why we think old CEOs are best.

G&D: Why hasn’t Pershing invested in more businesses outside the US? Certainly there are legal considerations from an activist perspective, but even among the passive holdings, there does not appear to have been many purely international focused businesses in the portfolio.

BA: Passive investments have been placeholders until we find the next activist investment. They’ve also been a way for us to have more liquid investments in case we get redemptions from investors. As our capital base has become more permanent with the launch of a public entity and a fair amount of internal capital, we’re devoting effectively all of our resources to active investments. If you’re going to be active in a situation, it’s very helpful to have it be geographically proximate, operating in the same language, under the same law, where you’re well known and you know the players.

With a strategy where we’re doing two things a year, maybe three, we don’t need to go outside the U.S. or Canada.

We would be open to something international at some point, but it would have to be extremely compelling. We feel like we’ve got plenty of things to do here.

G&D: Let’s talk about a couple of ideas. One that

people love to ask you about is Herbalife (HLF). Do you think the return has been worth it relative to the amount of time and effort you’ve had to expend on this investment?

BA: Probably not. If Carl Icahn had not come in and bought 17 million shares of stock, this would have played out very differently. What made this go a slightly different direction than we had expected was Carl went first in a big way, and that attracted a lot of other participants who viewed this as a trading opportunity to make money on a short squeeze.

I don’t think it affected the ultimate outcome, and I think we’ll make more money as a result, so maybe we were compensated for the extra time by being able to buy a bigger notional short position. We bought a lot of put options in the stock in the $70s and $80s that we could not have economically purchased when we first established the position.

G&D: I’m sure you’ve heard an opposing thesis from any number of smart investors. Is there any compelling piece of evidence that has made you question your conclusions on HLF?

BA: No. We’ve yet to hear one fact from investors that own the stock or any bull case that caused us to think Herbalife (HLF) was a stock you should buy as opposed to one you should sell. The quality of work done by the people that own this stock is really poor. If they continue to own it, they will lose 100% of their investment. 13-Fs are coming out on Monday for this name (Editors’ Note: this interview was conducted in November 2014). I will be amazed. I’m always looking forward to find out who bought it. There seems to be a new victim each quarter. Statistically, it screens really cheap. It’s trading at 7–8x earnings. That sounds cheap, but it’s based on projected earnings. We think earnings projections are going to come down meaningfully and they’ve already begun to. Ultimately, we think earnings will go negative.

G&D: Do you have a set process to keep yourself intellectually honest in terms of assessing the counterview to what your thesis is?

BA: We’re always open to a contrary point of view, particularly if it’s someone who’s smart with a good record that’s on the other side of something we own or something we’re short. We want to hear it and we’re going to listen to it. With Valeant (VRX), there are some well- known short sellers, Jim Chanos in particular. I don’t know if he’s still involved, but he was publicly short the stock. I wanted to hear all of his arguments. I called him, and he was very charitable in sharing them. I appreciated him doing that.

One of the best ways to get confidence in an idea is to find a smart person who has the opposing view and listen to all of their arguments. If they have a case that you haven’t considered, then you should get out. But they can also help give you more conviction. If what I’ve heard are the best arguments that can be made against being short Herbalife, then I want to be short more.

G&D: Why do you think it’s been so difficult for the market to wrap their head around your Herbalife thesis?

BA: Why was Bernie Madoff in business for 37 years? I don’t know, it seems so obvious. Herbalife’s been around for 34 years. It’s on the New York Stock Exchange. It has a market cap of $8 billion. Yet if you go to L.A. and ask people about Herbalife, they go, “Oh, that pyramid scheme?” They’ve had that thought for 20 years. I think the company has done a very good job at creating the perception of legitimacy by surrounding themselves with legitimate people. Madeleine Albright is a consultant to the company. They have a Nobel Laureate on their scientific advisory board. They brought on the former surgeon general in the last year. They sponsor soccer stars, such as David Beckham, and the L.A. Galaxy. It’s a brilliant scheme.

Also, the general public is just not interested or comfortable with short selling. Most

Americans find it a fancy thing that you don’t do at home.

They think there must be something shady about it.

G&D: You mentioned you only invested in two new positions this year. Can you tell us about an idea that you spent a lot of time on, but ultimately decided to pass?

BA: We did a lot of work on McGraw-Hill (MHFI) a few years ago. It is a conglomerate with several businesses and products. One of them is the S&P franchise, which we think is one of the best businesses in the world. Capital IQ is another McGraw-Hill product that we use and like. It’s a great and valuable asset. The company on the whole looked undervalued and interesting.

Ultimately, we couldn’t get comfortable with the potential liability associated with being in the bond rating business. We had a pretty negative view on how the ratings agencies had managed the crisis. We had big short positions in bond insurers that had AAA ratings. I met with the ratings agencies many times to try to convince them that their ratings were just ridiculous to no avail. We felt that MHFI had real liability and the potential losses they may face from litigation were unknowable considering the amount of bonds that were purchased and the amount of money that was lost relying on those ratings. With our strategy, we must be willing to put 15–20% of capital into a particular idea. We can’t invest in a security where it is possible that you wake up tomorrow and it’s worth 50% or 80% less than what you paid. So that was something we passed on even though we thought it was unlikely that there would be a claim that wipes out the value of the company.

We saw this as different from Fannie (FNMA) and Freddie (FMCC) because we thought MHFI was a potential double, while we think we can make 25x our money in Fannie and Freddie. A small investment in Fannie and Freddie can still be very material in terms of profits for the firm, yet if something happens and we lose our entire investment, we won’t really notice. For MHFI to be a meaningful contributor, it would have to be a big investment.

G&D: Buffett uses the concept of owner earnings. Are there any particular metrics you find helpful?

BA: I think the job of the security analyst is to take the reported GAAP earnings of a business and translate them into what Buffett calls owner earnings. I call them economic earnings. The next step is to assess and understand the durability of those earnings.

Fundamentally, what you’re looking for is how much cash the business can generate on a recurring basis over a very long period of time. That’s what we do. GAAP accounting is an imprecise, imperfect language that works for very simple businesses. For a widget company that grows 10% a year, GAAP earnings are really good at approximating economic earnings. For Valeant Pharmaceuticals (VRX), for example, a company that’s been very acquisitive, GAAP accounting is not a very good way to think about that business.

G&D: One area that’s been difficult for Pershing in the past has been retail. What has made that sector so difficult relative to some of your other areas of focus?

BA: I think retail has become much more difficult. A big part of that is Jeff Bezos and Amazon (AMZN), a large company that does nearly $75 billion in revenue growing faster than 25% annually. They are reinvesting 100%, maybe more, of their profits to improve the customer experience, expand their reach, and so on. I think it’s an incredibly formidable competitor that gets stronger every year. When you grow at those rates, that revenue is coming from somewhere. He’s got a better mousetrap. He’s got the support from his investors to invest a huge amount of capital in the business. That’s a very difficult competitor for the retail industry.

Aside from that, there is a story with respect to each of our failed retail investments. And there are retail investments where we made a lot of money — Sears (SHLD) in 2004, Sears Canada (SCC), and food retail businesses would be examples. But I think retail is a very difficult business, particularly fashion retail. That’s a tough category.

G&D: Are there other industries that you’d say are too challenging?

BA: We have generally avoided technology as well as commodity-sensitive businesses. With commodity businesses, it’s very difficult to predict the future price of the commodity — this year being a good example. If you asked people at the beginning of the year, I don’t know how many would say that WTI would be below $76. So we avoid a few sectors, but we try to stay open-minded. For example, healthcare was something I would have put on that list a year ago. Right now, we have two healthcare investments comprising 40% of the portfolio. In every sector there are businesses that can meet our standard, but most won’t, and that’s why we haven’t spent a lot of time looking in some of these areas.

G&D: Would you be willing to share your thesis on Zoetis (ZTS) and what the playbook is going to be there?

BA: I think it’s a great business. It has a dominant position as the largest company in animal health. There are very good trends supporting the growth of the company. Rising income levels and increasing demand for protein in people’s diets benefit the company. The companion animal health segment of their business should also benefit from rising incomes. With more affluent cultures, people have more pets, but also care for them more. It meets our standard for a high quality business. It’s also a spinoff, which can create interesting opportunities. I don’t think we are ready for comment beyond that.

G&D: How do you typically source ideas? Is there one method in particular that’s had a lot of success?

BA: Interestingly, Allergan (AGN) and Air Products (APD) were brought to us. That’s a good way to get ideas. We have a reputation for being a good, proactive investor.

Canadian Pacific (CP) came from an unhappy CP shareholder. Air Products came from a happy CP shareholder who made a lot of money with us and said, “Hey, this is the other dog in my portfolio, maybe you can help.” Allergan came to us through Valeant because they were looking for someone who could help increase the probability of their success.

We’re looking for big things. Today we have $19 billion in capital. We want to put 10% or more in an investment so we prefer companies with market caps above $25 or even $50 billion. We are looking for high business quality and opportunities to make the business much more valuable. Some of our sourcing comes from reading the newspaper and just looking for companies that meet that very simple model. Where is there a super high quality business you can buy for a discount where there’s an opportunity for optimization?

G&D: Many respected investors have publicly praised your investment creativity. It seems to be one of the defining qualities of Pershing Square. How do you cultivate that creativity? Is there a way for someone to develop that ability?

BA: Someone once pointed out that almost everything we’ve done has been unprecedented. We shorted a company and announced to the entire world that it is a pyramid scheme. With General Growth Properties (GGP), we bought 25% of the equity of a company on the brink of bankruptcy, convinced them to file for bankruptcy, and helped them restructure. We started a company from scratch with Howard Hughes (HHC). That was a collection of assets we spun out of GGP and replaced the management team. We’ve had two successful investments in SPACs during a period in which these vehicles were out of favor in the investment community. Our Allergan activist campaign was somewhat unprecedented as well.

I don’t think it’s as much creativity as it is a willingness to consider opportunities that are unconventional and outside the box. What’s required is that you have to have a basic understanding of what’s right, what’s legal, and what’s possible, and not limit the universe to things that no one else has done before.

We are absolutely going to consider things that haven’t been done before. We don’t need a precedent. We’re just interested in things that create value and we’re going to look at them objectively. To execute the strategy, you have to be willing to do things without caring what other people think. You need thick skin. In this strategy, not everyone’s beloved, particularly on the activist short side. You’re not going to make many friends in that business except for the first person who took your advice and got out.

G&D: Given that we’re in this “golden age of activism,” there are lots of investors and capital focused on activism. Have you found it more difficult to find ideas to add to your portfolio as a result?

BA: No. First of all, it depends on what you count. In terms of dedicated activist funds, there is something like $150 billion. That’s a still a small number in the context of the size of the market. We are one of the largest at $19 billion. We are also one of the most concentrated activists. A combination of concentration and scale means we’re doing very big investments and these are very big companies. Every company we’ve invested in, we were the first activist who bought a stake.

Generally this is fertile ground. I would say there’s more activism happening in small and mid-cap companies, so I don’t think it has affected us. I do think companies are trying to fix themselves before an activist shows up, and that’s a threat. As businesses become better managed and boards of directors replace weak CEOs, there’s less for us to do.

G&D: You mentioned some of the benefits of having permanent capital on your ability to do more activism on the long side. Are you going to spend less time on shorts as that shift continues?

BA: After the MBIA (MBI) short where we made our thesis public, I was asked by our investors if we were going to do this again. I told them it was going to be a long time before I did another one of these big public shorts. It was five years between MBIA and Herbalife (HLF). Although, if this in fact goes to zero, perhaps all we need to do the next time is just say, “We’re short company XYZ” and it will go straight to zero and we won’t even have to make a presentation. We hope it works that way. Short selling is inherently less rewarding. We like shorting credit as opposed to shorting equities. If we could find a big leveraged company that had a lot of CDS outstanding, I would be much more inclined to do that than having to borrow stock to go short and risk the stock price rising.

G&D: What are you trying to accomplish with the creation of Pershing Square Holdings (PSH)?

BA: In 1957, Buffett formed the Buffett Partnership. Eleven years later, after buying control of Berkshire Hathaway (BRK), he gave investors a choice of cash if they wanted to exit the partnership, or stock if they wanted to merge their shares into Berkshire Hathaway. Buffett gave up the advantage of $100 million and the right to collect 25% of the profits. He left that to be CEO for $100,000 a year with a public textile company which I think had a market cap of $30-$40 million.

Why would he do that? I think the answer is that if you are a control-oriented investor, you recognize that the stability of your capital base has a huge impact on your returns over time. The Buffett Partnership had no corporate level tax. At Berkshire Hathaway he had to work for $100,000 a year with no stock options, and pay corporate level tax. This tells me that he viewed the permanency of the capital base as much more material than these other features.

That’s basically what inspired us to create a public entity. We didn’t want to pay corporate level tax so we didn’t want to merge with a corporation. While PSH is structured as an offshore closed-end fund, we think of it like an investment holding company. We have these subsidiary companies which we have a lot of influence over. We’re often on the board of directors and we own them for years. We add one or two new businesses each year. Our goal is to compound at a high rate of return over a long period of time. This is different from Berkshire Hathaway. Buffett is not an activist anymore. His past investments with Dempster Mill Manufacturing and Sanborn Maps had an activist bent though.

The key for us was how do we get to permanent capital in a way that’s investor-friendly so we can do it in scale? We have what I think is a closed-end fund with the biggest market value — it’s $6.6 billion. Why did we do that instead of reinsurance? Because I don’t know anything about reinsurance, and I didn’t want to mix investment risk with property casualty risk. It’s too complicated.

G&D: From an investor perspective, when they invest in a public entity, they’re paying lower fees, they have more liquidity. Do you think PSH will impact the hedge fund part of Pershing Square?

BA: Most of our investors in the hedge fund part of Pershing Square don’t invest in publicly traded things. I think it’s good for everyone that we welcome investors in whatever form they want to invest.

G&D: You must have an incredibly busy schedule. How do you allocate your time?

BA: Not as well as I should. It’s the single biggest thing I need to work on. I have a tough time saying no. I need to say no more. It’s hard for me.

G&D: What about allocation of time within investments — what portion of your time is spent generating ideas versus analyzing companies versus engaging in activism?

BA: It depends. This year I spent a lot of my time on Allergan (AGN), the IPO of Pershing Square Holdings (PSH), and a little bit of time on Zoetis (ZTS). But we’ve got a very capable team focused on a few major things. It’s much more of a team approach and strategy than a typical investment firm. Usually you have a back office and an investment team. At Pershing, we are totally integrated in everything we do — public presentations, legal analysis, compliance, and so on.

G&D: In terms of putting together Pershing Square, what would you say are the key values for the firm? What do you look for in the people you have as part of your team?

BA: We are very, very careful about who we bring on to the team. I call our culture a functional family culture. This is a very high quality, very smart, capable, motivated team. For the most part, we all like each other, which is unusual in a business context. I interview everyone — every person who works at the reception desk, who cleans the offices, who works on the investment team. I think I’m a pretty good judge of character. What we’re looking for are fundamentally good human beings, people that you want to spend your day with, because you’re going to. That is a key success factor. It depends on the role in terms of what we’re looking for, but we like hard working, honest, smart people who are fun to spend time with.

We have very little turnover at Pershing Square, even at the reception desk.

G&D: You mentioned some of the larger private equity firms

as being places where you look for talent. Do you have a preference for people who have looked at businesses on the private side?

BA: This year we’ve made two investments — Allergan at beginning of the year and Zoetis at the end of year. That’s a very different pace of investment when compared with your typical long-only hedge fund or mutual fund firm. We have to find people who are comfortable spending a lot of time researching and analyzing, looking for the one thing out of many that’s going to be interesting. At many hedge funds, people are idea junkies. It’s the idea of the week. That’s why private equity tends to be a better background for us. A private equity investor might spend a whole year working on a deal and if they are not the high bidder, they don’t get it. Whereas here, you might spend a lot of time working on something, but if we want to make the investment, we can. We have to pay the market price, but we don’t have to be the high bidder per se. For a person with a private equity background, it’s a very easy transition. We’ve never really hired anyone from a hedge fund. Effectively, our approach is private equity without buying control.

G&D: You’ve been extraordinarily generous to Columbia Business School over a long period of time. Why is philanthropy important to you?

BA: One of my colleagues, Paul Hilal, got us involved at Columbia and came up with this idea of an investment class that’s become Applied Security Analysis and the Pershing Square Challenge. But I would say Columbia is on the smaller side in terms of what we've done philanthropically. We've given away more than

$250 million over the last six years. What's interesting is I've come to believe that I can make a much greater contribution in my for-profit life than my not-for-profit life. I'm working to figure out how to get a higher return on investments in the not-for- profit activity.

G&D: How have you decided which areas to get involved in philanthropically?

BA: We're trying to address problems. I think there are lots of different ways to do that. My first choice is to find a for- profit solution. There are some problems that do not appear to have for-profit solutions, or at least someone hasn't thought of one yet, and then we help fund not-for- profit solutions to these problems.

In terms of things we get involved with, usually it's driven more by the person running it. There are lots of important problems – it's very hard to rank them. Criminal justice reform is something we're interested in. We're also interested in economic development and education. We've done some things for New York City on the cultural side. We helped start something at Harvard called Foundations for Human Behavior, which is basically behavioral economics integrated with psychology and biology. We have a pretty broad, eclectic range of philanthropic endeavors. There's not an overarching strategic plan. We're experimenting.

G&D: Before we close, do you have any advice for students who are interested in potentially starting their own fund or going into investment management after they graduate?

BA: You should only work with someone that you like, trust, and admire. You should be smart about who you choose to work for. In terms of starting something right out of business school, it's something that I did a long time ago. I was fortunate to be able to have a 2.0 – Gotham in some ways was a training ground for Pershing Square. I think I was much more successful at Pershing Square because of the experience I had at Gotham. You can have that kind of experience working for someone else. It wasn't really my nature to go work for someone else which is why I didn't do it, but you can learn a lot that way. I wouldn't worry very much about how much money you make. I'd worry much less about compensation than I would about what you can learn. I also think that in order to be a great investor, it's very helpful to understand business and how to run a business. I think it's a really interesting time because it's so easy to start a business today, relatively speaking. Start up costs are much lower due to the ease of access to the Amazon Cloud and other development resources. I think I would be starting a company today as opposed to managing money. You can always manage money. In fact, if you do well in whatever you do, you're going to have to manage your money anyway. It's good to learn the skills. I think we have enough people in the investment business. We want some more start-ups.

G&D: Thank you for taking the time to sit down with us.