{"id":11053,"date":"2025-07-02T17:35:03","date_gmt":"2025-07-02T21:35:03","guid":{"rendered":"https:\/\/parmaks.com\/Resources\/john-arnold-with-dr-peter-attia-the-greatest-energy-trader-of-all-time-on-lessons-learned-walking-away-from-wall-street-and-reinventing-philanthropy-818\/"},"modified":"2025-07-02T17:35:03","modified_gmt":"2025-07-02T21:35:03","slug":"john-arnold-with-dr-peter-attia-the-greatest-energy-trader-of-all-time-on-lessons-learned-walking-away-from-wall-street-and-reinventing-philanthropy-818","status":"publish","type":"post","link":"https:\/\/parmaks.com\/Resources\/john-arnold-with-dr-peter-attia-the-greatest-energy-trader-of-all-time-on-lessons-learned-walking-away-from-wall-street-and-reinventing-philanthropy-818\/","title":{"rendered":"John Arnold with Dr. Peter Attia \u2014 The Greatest Energy Trader of All Time on Lessons Learned, Walking Away from Wall Street, and Reinventing Philanthropy (#818)"},"content":{"rendered":"<p> <a href=\"https:\/\/hop.clickbank.net\/?affiliate=infohatch&amp;vendor=J1R2C\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-10614 aligncenter\" src=\"http:\/\/parmaks.com\/Resources\/wp-content\/uploads\/2025\/05\/profit-gen400px.png\" alt=\"Profit Gen\" width=\"400\" height=\"217\" srcset=\"https:\/\/parmaks.com\/Resources\/wp-content\/uploads\/2025\/05\/profit-gen400px.png 400w, https:\/\/parmaks.com\/Resources\/wp-content\/uploads\/2025\/05\/profit-gen400px-300x163.png 300w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><\/a><br \/>\n<\/p>\n<div>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" data-recalc-dims=\"1\" decoding=\"async\" width=\"600\" height=\"400\" alt=\"\" class=\"wp-image-110216\" srcset=\"https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=1024%2C683&amp;ssl=1 1024w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=300%2C200&amp;ssl=1 300w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=768%2C512&amp;ssl=1 768w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=1536%2C1024&amp;ssl=1 1536w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=360%2C240&amp;ssl=1 360w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?w=1944&amp;ssl=1 1944w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?w=1200&amp;ssl=1 1200w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?w=1800&amp;ssl=1 1800w\" data-lazy-sizes=\"(max-width: 767px) 90vw, 600px\" src=\"https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=600%2C400&amp;ssl=1\"\/><noscript><img loading=\"lazy\" data-recalc-dims=\"1\" decoding=\"async\" width=\"600\" height=\"400\" src=\"https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=600%2C400&amp;ssl=1\" alt=\"\" class=\"wp-image-110216\" srcset=\"https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=1024%2C683&amp;ssl=1 1024w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=300%2C200&amp;ssl=1 300w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=768%2C512&amp;ssl=1 768w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=1536%2C1024&amp;ssl=1 1536w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?resize=360%2C240&amp;ssl=1 360w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?w=1944&amp;ssl=1 1944w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?w=1200&amp;ssl=1 1200w, https:\/\/i0.wp.com\/tim.blog\/wp-content\/uploads\/2025\/07\/image-29.png?w=1800&amp;ssl=1 1800w\" sizes=\"auto, (max-width: 767px) 90vw, 600px\"\/><\/noscript><figcaption class=\"wp-element-caption\">Donna Newman; Courtesy Laura and John Arnold Foundation<\/figcaption><\/figure>\n<p>In this special episode, my friend\u2014and fan-favorite guest\u2014<a href=\"https:\/\/peterattiamd.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Dr. Peter Attia<\/strong><\/a>\u00a0takes the mic as guest host. Peter sits down with legendary trader\u00a0<a href=\"https:\/\/www.arnoldventures.org\/people\/laura-arnold-john-arnold\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>John Arnold<\/strong><\/a>, widely considered the greatest energy trader of all time. Today, through his foundation\u00a0<a href=\"https:\/\/www.arnoldventures.org\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Arnold Ventures<\/strong><\/a>, John applies the same rigorous thinking to some of America\u2019s toughest social challenges\u2014criminal justice reform, healthcare policy, and K\u201312 education, to name just a few. <\/p>\n<p>This interview originally aired on Peter\u2019s excellent podcast\u00a0<a href=\"https:\/\/peterattiamd.com\/podcast\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><em>The Drive<\/em><\/strong><\/a>. You can check it out at\u00a0<a href=\"https:\/\/peterattiamd.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">PeterAttiaMD.com<\/a>, or subscribe to\u00a0<em>The Drive<\/em>\u00a0wherever you get your podcasts.<\/p>\n<p>Please enjoy!<\/p>\n<p><strong>Listen to the episode on\u00a0<a target=\"_blank\" href=\"https:\/\/podcasts.apple.com\/us\/podcast\/818-john-arnold-with-dr-peter-attia-the-greatest\/id863897795?i=1000715334945\">Apple Podcasts<\/a>,\u00a0<a target=\"_blank\" href=\"https:\/\/open.spotify.com\/episode\/1IDBJiU6RWESRyV8aWrSNi?si=L4eR07UcT2-hsJRLFe2Dgg\">Spotify<\/a>,\u00a0<a href=\"https:\/\/overcast.fm\/+AAKebte-S-I\" target=\"_blank\" rel=\"noreferrer noopener\">Overcast<\/a>,\u00a0<a href=\"https:\/\/podcastaddict.com\/podcast\/2031148#\" target=\"_blank\" rel=\"noreferrer noopener\">Podcast Addict<\/a>,\u00a0<a href=\"https:\/\/pca.st\/timferriss\" target=\"_blank\" rel=\"noreferrer noopener\">Pocket Casts<\/a>,\u00a0<a href=\"https:\/\/castbox.fm\/channel\/id1059468?country=us\" target=\"_blank\" rel=\"noreferrer noopener\">Castbox<\/a>,\u00a0<a target=\"_blank\" href=\"https:\/\/music.youtube.com\/playlist?list=PLuu6fDad2eJyWPm9dQfuorm2uuYHBZDCB\">YouTube Music<\/a>,\u00a0<a href=\"https:\/\/music.amazon.com\/podcasts\/9814f3cc-1dc5-4003-b816-44a8eb6bf666\/the-tim-ferriss-show\" target=\"_blank\" rel=\"noreferrer noopener\">Amazon Music<\/a>,\u00a0<a href=\"https:\/\/www.audible.com\/podcast\/The-Tim-Ferriss-Show\/B08K58QX5W\" target=\"_blank\" rel=\"noreferrer noopener\">Audible<\/a>, or on your favorite podcast platform. <\/strong><\/p>\n<p><strong>This episode is brought to you by<\/strong> <a href=\"https:\/\/vanta.com\/tim\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Vanta<\/strong><\/a><strong>\u00a0trusted compliance and security platform<\/strong>; <a href=\"https:\/\/www.eightsleep.com\/tim\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Eight Sleep Pod Cover 5<\/strong><\/a><strong>\u00a0sleeping solution for dynamic cooling and heating; and <\/strong><a href=\"https:\/\/wealthfront.com\/Tim\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Wealthfront<\/strong><\/a><strong>\u00a0high-yield cash account<\/strong>.<\/p>\n<div class=\"wp-block-tim-podcast-link-main podcast-block wp-embed-aspect-16-9 wp-has-aspect-ratio\"><a class=\"podcast-block__link\" target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/podcasts.apple.com\/us\/podcast\/818-john-arnold-with-dr-peter-attia-the-greatest\/id863897795?i=1000715334945\"><img data-recalc-dims=\"1\" decoding=\"async\" class=\"podcast-block__link-icon\" src=\"https:\/\/i0.wp.com\/tim.blog\/wp-content\/themes\/timferriss\/inc\/blocks\/podcast-link\/images\/apple-podcast.png?w=600&amp;ssl=1\"\/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/tim.blog\/wp-content\/themes\/timferriss\/inc\/blocks\/podcast-link\/images\/apple-podcast.png?w=600&amp;ssl=1\" class=\"podcast-block__link-icon\"\/><\/noscript><span class=\"podcast-block__link-text-top\">Listen on<\/span><span class=\"podcast-block__link-text\">Apple Podcasts<\/span><\/a><\/div>\n<div class=\"wp-block-tim-podcast-link-main podcast-block wp-embed-aspect-16-9 wp-has-aspect-ratio\"><a class=\"podcast-block__link\" target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/open.spotify.com\/episode\/1IDBJiU6RWESRyV8aWrSNi?si=L4eR07UcT2-hsJRLFe2Dgg\"><img loading=\"lazy\" width=\"167\" height=\"167\" decoding=\"async\" class=\"podcast-block__link-icon\" src=\"https:\/\/tim.blog\/wp-content\/themes\/timferriss\/inc\/blocks\/podcast-link\/images\/spotify.svg\"\/><noscript><img loading=\"lazy\" width=\"167\" height=\"167\" decoding=\"async\" src=\"https:\/\/tim.blog\/wp-content\/themes\/timferriss\/inc\/blocks\/podcast-link\/images\/spotify.svg\" class=\"podcast-block__link-icon\"\/><\/noscript><span class=\"podcast-block__link-text-top\">Listen on<\/span><span class=\"podcast-block__link-text\">Spotify<\/span><\/a><\/div>\n<div class=\"wp-block-tim-podcast-link-main podcast-block wp-embed-aspect-16-9 wp-has-aspect-ratio\"><a class=\"podcast-block__link\" target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/overcast.fm\/+AAKebte-S-I\"><img loading=\"lazy\" width=\"1000\" height=\"1000\" decoding=\"async\" class=\"podcast-block__link-icon\" src=\"https:\/\/tim.blog\/wp-content\/themes\/timferriss\/inc\/blocks\/podcast-link\/images\/overcast.svg\"\/><noscript><img loading=\"lazy\" width=\"1000\" height=\"1000\" decoding=\"async\" src=\"https:\/\/tim.blog\/wp-content\/themes\/timferriss\/inc\/blocks\/podcast-link\/images\/overcast.svg\" class=\"podcast-block__link-icon\"\/><\/noscript><span class=\"podcast-block__link-text-top\">Listen on<\/span><span class=\"podcast-block__link-text\">Overcast<\/span><\/a><\/div>\n<div class=\"podcast-player\">\n<div class=\"podcast-player-inner-wrap\">\n<p>John Arnold with Dr. Peter Attia \u2014 The Greatest Energy Trader of All Time on Lessons Learned, Walking Away from Wall Street, and Reinventing Philanthropy<\/p>\n<p><noscript><iframe src=\"https:\/\/www.art19.com\/shows\/58dacbdc-646e-4585-9914-19c3de11d1ba\/episodes\/7b9c53ad-4d4e-41e6-90f2-50d66996b35f\/embed?type=micro\" style=\"width: 100%; height: 30px; border: 0 none;\" scrolling=\"no\"><\/iframe><\/noscript><\/div>\n<\/div>\n<p><strong>This episode is brought to you by <a target=\"_blank\" href=\"http:\/\/vanta.com\/tim\">Vanta<\/a>! <\/strong>Vanta automates compliance for frameworks like SOC 2, ISO 27001, and HIPAA, making it simple and <em>fast<\/em> to get enterprise-grade compliant. Just like 10,000+ other companies that rely on Vanta, my friends at Duolingo and Ramp (a sponsor of this podcast and an ultra-fast growing company) both <strong><a target=\"_blank\" href=\"http:\/\/vanta.com\/tim\">use Vanta to handle security compliance<\/a><\/strong>.\u00a0<\/p>\n<p>It all adds up to impressive results: companies save up to 85% of costs, get compliant in weeks instead of months, and complete security questionnaires up to 5 times faster. <strong>So check out <a target=\"_blank\" href=\"http:\/\/vanta.com\/tim\">Vanta.com\/Tim<\/a> to see how Vanta can help you level up your security program. My listeners, that\u2019s you, can get $1,000 off.<\/strong><\/p>\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n<p><strong>This episode is brought to you by Wealthfront!<\/strong> Wealthfront is a financial services platform that offers services to help you save and invest your money. Right now, you can earn 4.00% APY\u2014that\u2019s the Annual Percentage Yield\u2014with the\u00a0<a href=\"http:\/\/wealthfront.com\/Tim\" target=\"_blank\" rel=\"noreferrer noopener\">Wealthfront Brokerage Cash Accoount<\/a>. That\u2019s nearly 10x more interest than if you left your money in a savings account at the average bank, with savings rates at 0.42%, according to FDIC.gov, as of 05\/19\/2025. It takes just a few minutes to sign up, and then you\u2019ll immediately start earning 4.00% APY from program\u00a0 banks on your uninvested cash. <strong>And when new clients open an account today, they\u2019ll get\u00a0<a href=\"http:\/\/wealthfront.com\/Tim\" target=\"_blank\" rel=\"noreferrer noopener\">an extra $50 bonus<\/a>\u00a0with a deposit of $500 or more. Terms and Conditions apply.\u00a0 Visit\u00a0<a href=\"http:\/\/wealthfront.com\/Tim\" target=\"_blank\" rel=\"noreferrer noopener\">Wealthfront.com\/Tim<\/a>\u00a0to get started. <\/strong><\/p>\n<p><em>Cash Account offered by Wealthfront Brokerage LLC, member FINRA\/SIPC. Wealthfront is not a bank. The APY on cash deposits as of 04\/30\/2025, is representative, subject to change, and requires no minimum. Funds in the Cash Account are swept to program\u00a0banks, where they earn a variable APY. Tim receives cash compensation from Wealthfront Brokerage for advertising and holds a non-controlling equity interest in the corporate parent of Wealthfront Brokerage. Tim and Wealthfront Brokerage have no other affiliation. Tim reflects his own opinions and Wealthfront does not endorse, sponsor, or promote them.\u00a0See full disclosures\u00a0<a href=\"https:\/\/cash.wealthfront.com\/tim?utm_medium=podcast&amp;utm_source=timferrissshow&amp;utm_campaign=podcast_cash_50incentive\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.<\/em><\/p>\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n<p><strong>This episode is brought to you by <\/strong><a href=\"http:\/\/eightsleep.com\/Tim\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Eight Sleep<\/strong><\/a><strong>. <\/strong>Temperature is one of the main causes of poor sleep, and heat is my personal nemesis. I\u2019ve suffered for decades, tossing and turning, throwing blankets off, pulling them back on, and repeating ad nauseam. But a few years ago, I started using the Pod Cover, and it has transformed my sleep. <strong><a target=\"_blank\" href=\"http:\/\/eightsleep.com\/Tim\">Eight Sleep has launched their newest generation of the Pod: Pod 5 Ultra<\/a>.<\/strong> It cools, it heats, and now it elevates, automatically. With the best temperature performance to date, Pod 5 Ultra ensures you and your partner stay cool in the heat and cozy warm in the cold. Plus, it automatically tracks your sleep time, snoring, sleep stages, and HRV, all with high precision. For example, their heart rate tracking is at an incredible 99% accuracy.<\/p>\n<p>Pod 5 Ultra also introduces an adjustable Base that fits between your mattress and your bed frame to add custom positions for the best sleeping experience. It also automatically reduces your snoring when detected. Add it easily to any bed.\u00a0And for full coverage, you can include the Blanket, which uses the same technology as the Pod\u2019s Cover to extend temperature regulation over your entire body.<\/p>\n<p><strong>And now, listeners of <em>The Tim Ferriss Show<\/em> can <a target=\"_blank\" href=\"http:\/\/eightsleep.com\/Tim\">get $350 off<\/a> of the Pod 5 Ultra for a limited time! <a target=\"_blank\" href=\"http:\/\/eightsleep.com\/Tim\">Click here to claim this deal and unlock your full potential through optimal sleep<\/a>.<\/strong><\/p>\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n<p><strong>What was your favorite quote or lesson from this episode? Please let me know <a href=\"https:\/\/tim.blog\/2025\/07\/01\/john-arnold\/#respond\">in the comments<\/a>.<\/strong><\/p>\n<p><span id=\"more-110213\"\/><\/p>\n<h3 class=\"wp-block-heading\"><strong>Timestamps<\/strong> (Credit to Peter Attia\u2019s team)<\/h3>\n<p>[00:00:00] Start.<br \/>[00:05:37] Peter Attia\u2019s intro: who is John Arnold?<br \/>[00:08:38] John\u2019s background, upbringing, and early entrepreneurial tendencies.<br \/>[00:21:16] John\u2019s time and rise at Enron.<br \/>[00:33:40] Characteristics that made John an exceptional natural gas trader and how they translate to his philanthropic work.<br \/>[00:41:10] The collapse of Enron.<br \/>[00:46:46] The success of John\u2019s hedge fund, and his early interest in philanthropy.<br \/>[01:02:03] The infamous 2006 trade that brought down Amaranth Advisors.<br \/>[01:08:28] John\u2019s analytical prowess and emphasis on fundamentals.<br \/>[01:15:13] The decision to become a full-time philanthropist and the founding of Arnold Ventures.<br \/>[01:25:03] Education \u2014 John\u2019s quest to fundamentally change K-12 education.<br \/>[01:30:36] Strategic philanthropy \u2014 preventing problems by attacking root causes and creating structural change.<br \/>[01:37:50] The criminal justice system \u2014 structural changes needed to address mass incarceration, policing practices, and recidivism.<br \/>[01:55:07] Re-imagining prisons to reduce recidivism.<br \/>[02:02:27] US health care policy \u2014 John\u2019s focus on drug prices, and the severe consequences of not making system changes.<br \/>[02:20:00] Climate change \u2014 the bipartisan role of John\u2019s foundation.<br \/>[02:23:52] Advice for young adults interested in philanthropy.<br \/>[02:30:52] Parting thoughts.<\/p>\n<h2 class=\"wp-block-heading\">Show Notes \u2014 Created by Peter Attia\u2019s Team <\/h2>\n<h2 class=\"wp-block-heading\">John\u2019s background, upbringing, and early entrepreneurial tendencies <\/h2>\n<p><strong>Who is John?<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>He\u2019s an \u201c<em>equal opportunity special interest pot stirrer<\/em>\u201d<\/li>\n<li>John and his\u00a0<a href=\"https:\/\/www.arnoldventures.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">foundation<\/a>\u00a0get major flack from both the left and the right politically (Therefore, the issues he attempts to zoom in to are ones where the l<em>eft and the right are starting to come together)<\/em><\/li>\n<li>Prior to the foundation, John made his fortune as a natural gas trader<\/li>\n<\/ul>\n<p><strong>Arnold Ventures<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.arnoldventures.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">Arnold Ventures<\/a>, the foundation founded by John and his wife\u00a0<a href=\"https:\/\/www.arnoldventures.org\/people\/laura-arnold-john-arnold\" target=\"_blank\" rel=\"noreferrer noopener\">Laura<\/a>, is currently focusing mostly on health policy, public finance platforms, and criminal justice<\/li>\n<li>Foundation gives about 400 million away each year<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cOur philanthropic intent is to give away the vast majority of our money during our lifetime.\u201d<\/p>\n<\/blockquote>\n<p><strong>An entrepreneur from a young age<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>John was an entrepreneur and an aspiring businessman starting as a young kid<\/li>\n<li>At 12 he mowed lawns but realized not much money and too much competition<\/li>\n<li>Started selling sports cards at age 14<\/li>\n<li>With the trading card work, he basically figured out geographical areas of arbitrage within the trading card industry and created a business out of it<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cI ended up spending a couple summers just full time on this baseball card, really geographic arbitrage and information arbitrage, that I would have a sense of who the best buyer was for every product.\u201d<\/p>\n<\/blockquote>\n<p><em>Defining arbitrage\u2014<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>\u201cI would describe arbitrage as taking advantage of price differences with little to no risk.\u201d<\/li>\n<li>Today with the internet, a lot of that arbitrage and pricing inefficiencies have gone away or have been, what\u2019s called in the trade, \u201cArbed out\u201d<\/li>\n<\/ul>\n<p><strong>What he wanted to do after college<\/strong><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cI was the guy that was trying to get out of there and into the game as quickly as possible. Every day I was at college, it was one less day that I had to be in the game.\u201d<\/p>\n<\/blockquote>\n<ul class=\"wp-block-list\">\n<li>From a young age, John knew he wanted to be in Wall Street<\/li>\n<li>He didn\u2019t know much about it, but he felt like it was the \u201cbiggest game around\u201d<\/li>\n<li>The books\u00a0<a href=\"https:\/\/www.amazon.com\/Liars-Poker-Mchael-Lews\/dp\/B003B12P62\/ref=sr_1_2?dchild=1&amp;keywords=liar%27s+poker+1989&amp;qid=1598130318&amp;s=books&amp;sr=1-2\" target=\"_blank\" rel=\"noreferrer noopener\">Liar\u2019s Poker<\/a>\u00a0as well as\u00a0<a href=\"https:\/\/www.amazon.com\/Barbarians-Gate-Fall-RJR-Nabisco\/dp\/0099545837\/ref=tmm_pap_swatch_0?_encoding=UTF8&amp;qid=&amp;sr=\" target=\"_blank\" rel=\"noreferrer noopener\">Barbarians at the Gate<\/a>\u00a0intensified his interest<\/li>\n<li>During college, he was focused on getting out of there and into the game as quickly as possible<\/li>\n<li>Despite not being recruited heavily, he talked his way into an interview at Enron and was offered an analyst position<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">John\u2019s time and rise at Enron<\/h2>\n<ul class=\"wp-block-list\">\n<li>John arrived at\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Enron\" target=\"_blank\" rel=\"noreferrer noopener\">Enron<\/a>\u00a0in 1995, before it was all that well-known<\/li>\n<li>Historically, Enron was a pipeline company<\/li>\n<li>The natural gas industry was regulated heavily until 1992 when it became deregulated\u00a0<\/li>\n<\/ul>\n<p><em>What that meant to the industry<\/em>:<\/p>\n<ul class=\"wp-block-list\">\n<li>Previous to 1992, the pipeline was responsible for providing the merchant services to the buyer and seller<\/li>\n<li>So the producer of gas would sell to the pipeline\u00a0<\/li>\n<li>And then the pipeline would transport the gas and sell it to the customer<\/li>\n<li>It was viewed that this was negative because pipelines are natural monopolies frequently, and so the services and the cost of those services were too high<\/li>\n<li>So in 1992, they deregulate it and here is Enron as the gas merchant<\/li>\n<\/ul>\n<p>In 1995, there were 2 aspects to Enron\u2019s business:<\/p>\n<p>1 \u2013 The historical pipeline business\u00a0<\/p>\n<p>2 \u2013 A new \u201cinvestment bank\u201d side<\/p>\n<ul class=\"wp-block-list\">\n<li>Around that time was when the decision was made to promote\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Jeffrey_Skilling\" target=\"_blank\" rel=\"noreferrer noopener\">Jeff Skilling<\/a>\u00a0to the #2 position of the company<\/li>\n<li>This made sense because the company was looking to move towards the investment bank\/trading business as, generally speaking, the return on equity is higher if you have fewer assets (sort of the direction of corporate America at the time)<\/li>\n<\/ul>\n<p><strong>John first job at Enron<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>First job was as an analyst on the trading floor \u2013 very rare for first position<\/li>\n<li>He wasn\u2019t trading right away, more just running spreadsheets and analytical work<\/li>\n<li>He was able to learn the business up close<\/li>\n<li>John quickly realized that a trading career was directly in line with his skillset<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cI found the perfect job for my skill set as my first job. And I think that\u2019s pretty rare, and it happened by accident. I could have very easily ended up a mergers and acquisition investment banker at Merrill Lynch, but I ended up trading commodities at a relative upstart of a company that was just the perfect spot for my skill set.\u201d\u00a0<\/p>\n<\/blockquote>\n<p><strong>How John rose so quickly through Enron<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>All new hires were supposed to do four 6-month rotations in different sides of the business then they go back to business school<\/li>\n<li>But they made an exception for John as he was really well liked in the natural gas group<\/li>\n<li>However, one of the traders made a big mistake on the trading floor and the group had to be dissolved<\/li>\n<li>John had the choice to go to the UK or go downstairs and work in the\u00a0<strong>natural gas trading grou<\/strong>p<\/li>\n<li>While tempted to go overseas,<em>\u00a0John knew the natural gas group was the future at Enron\u00a0<\/em>so he chose that route<\/li>\n<\/ul>\n<p><strong>Winter of 1996\u2014\u201c<\/strong><strong><em>A whole new game<\/em><\/strong><strong>\u201d<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>This is when the natural gas prices \u201cblew out\u201d John says\u2014It was an extremely cold winter and all the historical relationships that gas had just completely changed<\/li>\n<li>People who had spent their entire career in gas weren\u2019t sure if they knew anything about gas anymore<\/li>\n<li>\u201c<strong><em>It was a whole new game.<\/em><\/strong>\u201d<\/li>\n<li><em>First job within the natural gas division<\/em>: They put John as an assistant trader with a gentleman who had the expertise on the physical side of the business and they were told to \u201cgo figure this out\u201d<\/li>\n<li>Around this time is when Enron became a \u201cdarling\u201d in the industry<\/li>\n<li>The mid-level guys were being poached by competitive companies making Enron a unique environment for a smart and responsible young person to rise quickly<\/li>\n<li>By the time John was 25, he was the\u00a0<strong>head natural gas trader at the largest natural gas trading company in the industry<\/strong><\/li>\n<li>While John benefited greatly from this \u201cmerit-based\u201d system of promotion, he suspects the company gave out too much responsibility and didn\u2019t have enough control\u2014<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201c<em>I think it ended up being the downfall of the company as well, as there just wasn\u2019t the controls on people who were given too much responsibility, too much of the company\u2019s balance sheet to use without their adequate controls on it.<\/em>\u201d<\/p>\n<\/blockquote>\n<h2 class=\"wp-block-heading\">Characteristics that made John an exceptional natural gas trader and how they translate to his philanthropic work<\/h2>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThe stress level was intense. I think I\u2019m very good at handling stress, but the stress level was intense to a point of not being healthy.\u201d<\/p>\n<\/blockquote>\n<ul class=\"wp-block-list\">\n<li>In a given day, John was trading\u00a0<strong>billions of dollars<\/strong>\u00a0of notional value of gas<\/li>\n<li>Much of it was trying to buy at $2 and trying to sell it at $2 and a half penny for enormous volumes<\/li>\n<li>From the moment you sat down in the morning until about 4pm, it was just nonstop trading<\/li>\n<li>Food was delivered to your desk, and bathroom breaks meant running back and forth<\/li>\n<li>This non-stop stress is why traders generally have short trading careers<\/li>\n<\/ul>\n<p><em>How do many traders destress?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Destressing for traders usually meant drinking, partying, gambling, etc.\u00a0<\/li>\n<li>In his 20s, he gained weight and was just not at all healthy especially compared to him now\u00a0<\/li>\n<li>John gravitated away from that lifestyle in his 30s when he matured, got married, kids, etc.<\/li>\n<\/ul>\n<p><em>Did John experience an \u201caddiction\u201d to the \u201chigh\u201d of trading?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>It\u2019s not uncommon for traders to be addicted to the rush, the high, the physiologic response that they get to a good trade<\/li>\n<li>John says he knows the feeling and saw many traders afflicted by this<\/li>\n<li>However, he felt like he wasn\u2019t addicted to it<\/li>\n<\/ul>\n<p><strong><em>What made John such an exceptional trader?<\/em><\/strong><em>\u00a0<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>John credits his success to two traits:\n<ul class=\"wp-block-list\">\n<li>1-His ability to not let emotions impact his decision making process<\/li>\n<li>2-He fell perfectly on the confidence spectrum (confident but not too arrogant)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><em>Regarding\u00a0<\/em><strong><em>emotional detachmen<\/em><\/strong><strong>t<\/strong>\u2014<\/p>\n<ul class=\"wp-block-list\">\n<li>Whether he was having a great day or the worst day, you couldn\u2019t tell by looking at him<\/li>\n<li>He instead was just \u201c<strong><em>100% focused on executing the process<\/em><\/strong>\u201d<\/li>\n<\/ul>\n<p>\u21d2 There\u2019s a saying in the investment world, \u201c<em>Fear and greed drives a lot of price trends in financial assets.<\/em>\u201d\u00a0<\/p>\n<ul class=\"wp-block-list\">\n<li>This phrase refers to the fact that many traders are either greedy or fearful and that\u2019s driving your behavior<\/li>\n<li>The more you can eliminate those fear and greed from the trading process, the better you get<\/li>\n<\/ul>\n<p><em>The\u00a0<\/em><strong><em>confidence spectrum<\/em><\/strong>\u2014<\/p>\n<ul class=\"wp-block-list\">\n<li>John says he fell perfectly on the confidence spectrum<\/li>\n<li>Confidence is key, but you can\u2019t be too arrogant\u2014arrogance has been the \u201c<em>destroyer of many trading careers<\/em>\u201d<\/li>\n<li>The right way to think is, \u201c<strong><em>I\u2019m confident in my view on this, but I know I might be wrong.<\/em><\/strong>\u201d<\/li>\n<\/ul>\n<p><strong><em>How did these traits translate into John\u2019s philanthropy work?<\/em><\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>John says these traits translated very well<\/li>\n<li>With his foundation they come up with plenty of theories on how to solve a complex issue<\/li>\n<li>You must have confidence in that theory, however, you must not be wedded to it because you know you could be wrong\u00a0<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cEverything we\u2019re doing in the foundation is evidence-based, but the evidence is never perfect.\u201d<\/p>\n<\/blockquote>\n<h2 class=\"wp-block-heading\">The collapse of Enron <\/h2>\n<p>Book about the fall of Enron:\u00a0<a href=\"https:\/\/www.amazon.com\/Smartest-Guys-Room-Amazing-Scandalous\/dp\/1591840538\" target=\"_blank\" rel=\"noreferrer noopener\">The Smartest Guys in the Room<\/a>\u00a0<\/p>\n<p><em>Preceding Enron\u2019s collapse\u2026<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>John\u2019s trading group was wildly successful<\/li>\n<li>Yet, Enron was soon to be bankrupt<\/li>\n<li>John was so singularly focused on his job that he didn\u2019t have much of a sense as to what was going so wrong in other divisions<\/li>\n<li>Enron, like most companies at the time, was\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Disintermediation\" target=\"_blank\" rel=\"noreferrer noopener\">disintermediating<\/a>\u00a0their business chain<\/li>\n<\/ul>\n<p>Bad decisions\u2014<\/p>\n<ul class=\"wp-block-list\">\n<li>There were some bad decisions being made in those other sectors that were leading to the downfall<\/li>\n<li>In parallel, there was a culture of\u00a0<strong>never being able to admit failure<\/strong>\u00a0<\/li>\n<li>Enron had morphed into a financial business which is completely contingent upon having the faith of your creditors (i.e., Wall Street)<\/li>\n<li>Once Wall Street loses faith in you and refuses to fund you, \u201c<em>the business is toast<\/em>\u201d \u2014 And that\u2019s what happened to Enron<\/li>\n<\/ul>\n<p><em>When did John realize his career at Enron was going to be cut short?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>John was likely the most profitable person at Enron<\/li>\n<li>But it became clear that the company was in trouble<\/li>\n<li>Enron eventually reached a deal with a JV partner (a New York bank) but John had different view on how the business should proceed and he decided to leave<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">The success of John\u2019s hedge fund, and his early interest in philanthropy <\/h2>\n<p><em>When John was still at Enron\u2026<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Many people were calling John saying they wanted to invest with him if he did his \u201cown thing\u201d<\/li>\n<li>When John knew Enron was collapsing, he started a fund, hired people, bought equipment, etc.<\/li>\n<li>John had plans to raise $50 million for his fund and would\u2019ve easily had the investors to do so<\/li>\n<li>But then BOOM\u2014the investigating into Enron breaks open and nobody knows if john was a fraud or if he was going to prison<\/li>\n<li>John started\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/John_D._Arnold#Centaurus\" target=\"_blank\" rel=\"noreferrer noopener\">Centaurus<\/a>\u00a0(hedge fund) but had to settle for only $8 mil initial funding (his money plus 2 investors)<\/li>\n<\/ul>\n<p><strong>How John grew\u00a0<\/strong><a href=\"https:\/\/en.wikipedia.org\/wiki\/John_D._Arnold#Centaurus\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Centaurus<\/strong><\/a><strong>\u00a0so successfully<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>After Enron scandal, about half the pipeline and electric utility merchant\/trading businesses were out of business because that industry fell out of favor with Wall Street<\/li>\n<li>The market became\u00a0<strong>incredibly inefficient\u00a0<\/strong>and there was a great need for\u00a0<strong>risk intermediation\/risk warehousing<\/strong><\/li>\n<li>It was very low risk for arbitrage type trades that shouldn\u2019t exist in a\u00a0<em>normally<\/em>\u00a0functioning market that existed for that next year just because the market players had been so decimated<\/li>\n<li>This low-risk model resulted in John\u2019s fund making $3 million in the first month, and was up 150% in 3 months<\/li>\n<li>With that success, investors became interested again which helped increase his\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Assets_under_management\" target=\"_blank\" rel=\"noreferrer noopener\">AUM<\/a><\/li>\n<\/ul>\n<p><strong>The synergy of market arbitrage plus speculative trading<\/strong>:<\/p>\n<p><em>The two strands of John\u2019s hedge fund<\/em>\u2014<\/p>\n<p>\u00a01) Providing liquidity and getting paid for the service of warehousing some risks, and\u00a0<\/p>\n<p>\u00a02) Speculative trading \u2013 Trying to make a call on where natural gas prices were going next<\/p>\n<ul class=\"wp-block-list\">\n<li>In the first few years, his business was mostly doing the low risk stuff to create the base and an upward trend in profitability<\/li>\n<li>But on top of that line of business, John started doing more and more speculative trading<\/li>\n<li>This worked well because if he was ever wrong on a market call, he wouldn\u2019t be decimated since he was still making money on the arbitrage side of the business<\/li>\n<li>The inefficiency in the market, which created the low-risk arbitrage, made it the \u201c<strong><em>perfect time to be in natural gas<\/em><\/strong>\u201d<\/li>\n<\/ul>\n<p><strong>The moment John realized he\u2019d never have to worry about money again:<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>In 2002\/2003, the demand was high and supply wasn\u2019t keeping up<\/li>\n<li>John wasn\u2019t the only trader that recognized this, however, the\u00a0<strong>risk\/reward was being very misvalued<\/strong><\/li>\n<li>John recognized that if they were to have a very cold winter in 2002 or 2003, the gas market could experience some significant shortages and there would be corresponding price spikes<\/li>\n<li>This cold weather event was perhaps a\u00a0<strong>1 in 5 probability<\/strong>, but the bets were pricing them as if it was\u00a0<strong>1 in 50<\/strong><\/li>\n<li>There ended up being a 2-day stretch in late February 2003 which sent prices to one of the three highest gas prices in the last 20 years<\/li>\n<li>The fund\u00a0<strong>more than doubled<\/strong>\u00a0in those two days in terms of total assets<\/li>\n<li>Afterwards, he called his mom to say, \u201c<strong><em>We\u2019re set. We have financial security now forever regardless of what happens<\/em><\/strong><em>.<\/em>\u201d<\/li>\n<\/ul>\n<p><strong>When did John first start thinking about philanthropy?<\/strong><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cI always recognized the limited social value of trading. I think there is a need for someone to provide risk warehousing and liquidity to markets, but trying to tell the story about how I was adding value or contributing to society was hard. And that always bothered me.\u201d<\/p>\n<\/blockquote>\n<ul class=\"wp-block-list\">\n<li>John began thinking about trading in his early Enron days (He was getting paid well \u2014 100k bonus checks)<\/li>\n<li>His charitable interest gravitated towards\u00a0<strong>K-12 education<\/strong><\/li>\n<li>He found\u00a0<a href=\"https:\/\/www.kipp.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">KIPP Charter Schools<\/a>\u00a0and gave them a\u00a0<em>5-figure donation<\/em><\/li>\n<li>This was the start of his very long journey, thinking about K-12 education in the country<\/li>\n<li>But in 2002\/2003, after his massive early success with his hedge fund, he was only thinking about philanthropy about 1% of the time.<\/li>\n<\/ul>\n<p><strong>When John\u2019s hedge fund started gaining major attention<\/strong>:<\/p>\n<ul class=\"wp-block-list\">\n<li>At some point a magazine published the top 100 traders and listed john at top 5 in making money<\/li>\n<li>This sort of broadcast to the rest of the industry that something was going on in natural gas<\/li>\n<li>This naturally brought in a bunch of new entrants in the gas market<\/li>\n<li>John made a deliberate decision keep the focus of the business narrow\u2014Didn\u2019t want to trade oil,\u00a0 didn\u2019t want to trade natural gas stocks or natural gas bonds, didn\u2019t want to trade agriculture<\/li>\n<li>\u201c<strong><em>I wanted to be the best in the world at North American natural gas and power trading<\/em><\/strong>.\u201d<\/li>\n<li>This was a strategic move to put a natural limit as to the amount of assets that they could manage<\/li>\n<li>John\u2019s assets under management (AUM) peaked around\u00a0<strong>$6 billion<\/strong>\u2014This was bordering on too big because you may be spreading yourself too thin into areas that you don\u2019t have the deepest domain expertise<\/li>\n<\/ul>\n<p><em>John business was\u00a0<\/em><strong><em>all about return<\/em><\/strong><em>\u00a0(not fees from investors)\u2014<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>John wasn\u2019t in it to make fees from investors<\/li>\n<li>John was personally the largest investor in the fund\u00a0<\/li>\n<li>So he was in it for the\u00a0<strong>return on the money<\/strong>\u00a0and that\u2019s how he pitch it to potential investors<\/li>\n<li>It was always driven by:\u00a0<em>How do I want my money managed?<\/em><\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">The infamous 2006 trade that brought down Amaranth Advisors <\/h2>\n<p><strong>Background<\/strong><\/p>\n<p>After 2005, two things happened in the industry\u2014<\/p>\n<ol class=\"wp-block-list\">\n<li>A belief that the increasing frequency and intensity of hurricanes would damage the structure of the energy sector and natural gas sector<\/li>\n<li>There would be a great fear amongst any trader to be\u00a0<strong>short<\/strong>\u00a0during that time period (the hurricane season)<\/li>\n<\/ol>\n<p><strong>Amaranth\u2019s position in 2006<\/strong>\u2014<\/p>\n<ul class=\"wp-block-list\">\n<li>In 2005, Brian Hunter, the head trader at\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Amaranth_Advisors\" target=\"_blank\" rel=\"noreferrer noopener\">Amaranth<\/a>, was in the\u00a0<strong>long position<\/strong>\u00a0and made tons of money when gas prices spiked after Hurricane Katrina caused massive shortages in supply<\/li>\n<li>Brian thought something similar would happen (or at least a big scare would happen) in 2006 causing the same type of move in gas prices<\/li>\n<li>However, the 2005 Katrina event sent the signal to every producer to\u00a0<strong>increase supplies<\/strong><\/li>\n<li>John, who had a 25% opposite position of Brian, could see that supplies were ramping up in 2006<\/li>\n<li>Despite this increase in supply, Brian continued buying more and more\u2014so much that he distorted the relative values in that market<\/li>\n<li>The story is often told like it was\u00a0<em>Brian vs. John<\/em>\u00a0(John had a 25% opposite position)\u00a0<\/li>\n<li>Reality is that it was the\u00a0<em>whole market (including John) versus Brian<\/em>, because Brian was such a large long position in this<\/li>\n<\/ul>\n<p><em>So what happened in 2006?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>There was no hurricane in 2006, and prices collapsed<\/li>\n<li>Brian couldn\u2019t hold up the prices any longer and it destroyed Amaranth<\/li>\n<li>The story is framed as if Brian and John had competing bets as to\u00a0<strong>what the\u00a0<\/strong><strong><em>weather<\/em><\/strong><strong>\u00a0was going to do<\/strong>\u00a0<\/li>\n<li>However, it was actually taking a position on the more important question\u2013<strong><em>supply<\/em><\/strong><\/li>\n<li>John felt like even if they WERE hit with a demand shock from a weather event, the market was much better prepared to absorb the hit compared to 2005<\/li>\n<\/ul>\n<p><em>How John thought about the situation<\/em>:<\/p>\n<ul class=\"wp-block-list\">\n<li>\u201cYou had this probability distribution function of the possible outcomes. And then think about, under each outcome, \u2018how would I think about what fair value is of the commodity at that time?\u2019\u201d<\/li>\n<li><strong>The mistake Brian made was<\/strong>\u2014The market was already so mispriced to expected value that even had you had the supply shock happen, what was the upside? \u201cWe\u2019re already priced for that.\u201d<\/li>\n<li>Peter adds, \u201c<em>You realize that it was probably a bit more of an error in hubris as well, which goes back to your point about maybe being a little too confident in your ability to predict what\u2019s going to happen.<\/em>\u201d<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">John\u2019s analytical prowess and emphasis on fundamentals <\/h2>\n<p><strong>John has a \u201cthird superpower\u201d\u2014an insatiable, bordering on pathological, obsession for knowing everything<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Peter knows the feeling<\/li>\n<li>John says his appetite for knowledge has served him well in trading and philanthropy<\/li>\n<\/ul>\n<p><em>In his trading days\u2026<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>By being a hedge fund and not being in the physical business (dealing with customers, etc.), John says they were at an \u201cinformation disadvantage\u201d<\/li>\n<li>So when a counterparty put up an opposite trade of John\u2019s position, he was always thinking about:\n<ul class=\"wp-block-list\">\n<li><em>What are they thinking?\u00a0<\/em><\/li>\n<li><em>What do they know?<\/em><\/li>\n<li>Can I replicate as best I can, the knowledge that they have so that I can make an educated and confident decision?<\/li>\n<\/ul>\n<\/li>\n<li>John\u2019s team was at an information handicap (compared to say,\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/BP\" target=\"_blank\" rel=\"noreferrer noopener\">BP<\/a>)\u00a0<\/li>\n<\/ul>\n<p><em>How did John make up for this informational disadvantage?<\/em>\u00a0<\/p>\n<ul class=\"wp-block-list\">\n<li><strong>1) Better analysis<\/strong>\u2014knowing where to get third party information, having better analysis, and crafting better models that described what the past was and thus what the future is going to be<\/li>\n<li><strong>2) The biggest fundamental research department<\/strong>\u00a0 \u2014 i.e., count the molecules, try to count as many molecules as you can\u2014Where did it come from? Where did it travel? How was it consumed?<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cOur advantage was that we\u2019re going to invest in the fundamentals more than anybody else is and then overlay that with some good trading.\u201d<\/p>\n<\/blockquote>\n<p><strong>3 main reasons why trading natural gas was \u201ceasier\u201d than oil:<\/strong><\/p>\n<p>\u00a01)\u00a0<strong>It was this closed system<\/strong>\u00a0\u2014the molecules, for the most part, just stayed in North America<\/p>\n<p>\u00a02)\u00a0<strong>Deregulation got the pipelines out of the business of trading<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>The pipelines, which had the most fundamental information about where the gas came from and where it was going, now had to publish all this information publicly and they couldn\u2019t trade on it\u00a0<\/li>\n<li>Compare that versus oil, Exxon can own the oil platform in the Gulf of Mexico, stick it on an Exxon ship, take it to an Exxon owned refinery and put it in Exxon gas stations. And so as an outsider, trying to figure out and track those molecules, it\u2019s impossible.<\/li>\n<li>That\u2019s why the best, most profitable oil traders have to be in the physical business<\/li>\n<\/ul>\n<p>\u00a03)\u00a0<strong>Twice a year, there was a mechanism to get you back close to fair value<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Because nat. gas was a seasonal product, you store it during the summer getting ready for the peak winter demand which created a window of what it should be when you exit the winter<\/li>\n<li>Compare that to a tech stock today\u2014 there\u2019s no forcing mechanism that necessarily has to get that tech stock back to one\u2019s belief of fair value<\/li>\n<li>So with nat gas\u2026 while price could deviate from fundamental value for parts of the time of the year, twice a year, it kind of had to go back to that fair value, which was\u00a0<strong>great as a fundamental trader<\/strong><\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">The decision to become a full-time philanthropist and the founding of Arnold Ventures <\/h2>\n<p><strong>Deciding to focus on philanthropy<\/strong><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cI started thinking more about giving the money away than making more of it. That was really the signal to me that I want to be spending my time on the other side of the table and I\u2019m physically and mentally, emotionally exhausted with trading natural gas.\u201d\u00a0<\/p>\n<\/blockquote>\n<ul class=\"wp-block-list\">\n<li>Met his wife, Laura, in early 2006 and got married not long after\u00a0<\/li>\n<li>They both started to really think about \u2018<strong><em>what should we do with our lives now?<\/em><\/strong>\u2019<\/li>\n<li>In 2006, 3% of his focus on philanthropy<\/li>\n<li>But by 2008, John and Laura had founded\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Arnold_Ventures_LLC\" target=\"_blank\" rel=\"noreferrer noopener\">Arnold Ventures<\/a>\u00a0and John was putting about my 10-15% of his energy into the foundation<\/li>\n<li>This became an issue because\u00a0<strong>trading takes 100% laser focus<\/strong>\u00a0in order stay above the competition<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>In 2012, John decided it\u2019s time to\u00a0<strong>shut down his hedge fund<\/strong><\/li>\n<li>This was more than a decade living and breathing nothing but natural gas<\/li>\n<\/ul>\n<p><strong>A hard decision<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>It was a hard decision to make, says John, but it got easier because\u00a0<em>things had changed in the market\u2014<\/em>\n<ul class=\"wp-block-list\">\n<li>The shale revolution increased supply greatly<\/li>\n<li>The market went from being very volatile with booms and busts, to one that was in perpetual oversupply and kind of bouncing around marginal cost to produce<\/li>\n<\/ul>\n<\/li>\n<li>John had to give billions of dollars back to investors because the market opportunity was no longer there to the same degree<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cWhen you\u2019ve been playing in Vegas with the $25 table to go back down to the $5 table. It\u2019s just not as emotionally interesting.\u201d<\/p>\n<\/blockquote>\n<p><em>Summary of factors leading to the shutdown of his hedge fund\u2014<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Got married, had kids<\/li>\n<li>New regulations put into the business (largely due to the Brian Hunter\/Amaranth episodes)<\/li>\n<li>Arbitrage and opportunity in the market became harder to find<\/li>\n<li>John began to lose the focus as his interest in the foundation was increasing<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThese things came together and it still took me two years to make that call, that it\u2019s time, it\u2019s time to close this up and go find happiness somewhere else.\u201d<\/p>\n<\/blockquote>\n<p><strong>Skills in trading that translated to philanthropy:<\/strong><\/p>\n<p>\u00a0\u00a01-<strong>Emotional temperament<\/strong>\u2014not letting your feelings get in the way of what you\u2019re doing<\/p>\n<p>\u00a0\u00a02-Having the\u00a0<strong>right amount of confidence<\/strong>\u00a0<\/p>\n<ul class=\"wp-block-list\">\n<li>You have to be able to say, \u201cYeah, this is a huge and hard problem, but we should go after it.\u201d<\/li>\n<li>But maybe not too much confidence to say, \u201cWe\u2019re going to solve this problem no matter what.\u201d<\/li>\n<\/ul>\n<p>\u00a0\u00a03-An ability to\u00a0<strong>become an expert<\/strong>\u00a0in something in a relatively short period of time<\/p>\n<h2 class=\"wp-block-heading\">Education\u2014John\u2019s quest to fundamentally change K-12 education<\/h2>\n<p><strong>K-12 education \u2014 the first problem the foundation looked at deeply<\/strong><\/p>\n<p>The questions John had about K-12 education:<\/p>\n<ul class=\"wp-block-list\">\n<li>Why does one school have different results from a school down the street serving a very similar population of kids?<\/li>\n<li>How do you take what the best individual schools are doing and scale that?<\/li>\n<li>What makes a school better?\n<ul class=\"wp-block-list\">\n<li>Is it small schools?\u00a0<\/li>\n<li>Is it better principals?\u00a0<\/li>\n<li>Is it better teachers?\u00a0<\/li>\n<li>Is it the curriculum?\u00a0<\/li>\n<li>Is it technology?\u00a0<\/li>\n<\/ul>\n<\/li>\n<li>What\u2019s the idea that\u00a0<strong>scales<\/strong>\u00a0and creates\u00a0<strong>structural change<\/strong>?<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201c[K-12] is just the most fundamental issue facing long-term health and viability of this country.\u201d<\/p>\n<\/blockquote>\n<p><strong>The theory of change that drives John\u2019s work in K-12:<\/strong><\/p>\n<p><em>The theory<\/em>: Strong and robust systems of any kind have the attributes of biological evolution<\/p>\n<ul class=\"wp-block-list\">\n<li>In living organisms you have,\n<ul class=\"wp-block-list\">\n<li>Variance amongst the organisms with the differential fitness<\/li>\n<li>There\u2019s a different rate of survival and reproduction<\/li>\n<li>And then inheritability of fitness<\/li>\n<\/ul>\n<\/li>\n<li>You need to have a\u00a0<strong>strong and robust system and that\u2019s getting better over time<\/strong>\n<ul class=\"wp-block-list\">\n<li>Education, generally speaking, is not that (e.g., same curriculum, the same process, the same way of hiring, of training, of trying to develop teachers)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><em>In public education\u2014<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>For the good ideas, there\u2019s no natural mechanism for that to grow\u00a0<\/li>\n<li>For the bad\/outdated idea, there\u2019s no mechanism for them to stop and go away<\/li>\n<li>In order to have the heritability of traits, you need the learning aspect\u2014but public schools (or really any government monopoly) is not good at quality control and innovation in order to provide the necessary variance<\/li>\n<\/ul>\n<p>Arnold Foundation\u2019s theory is that\u2026<\/p>\n<ul class=\"wp-block-list\">\n<li>i) the school system needs to become a system of schools, and\u00a0<\/li>\n<li>ii) the natural role for government is not to be the service provider, but to be the\u00a0<em>regulator\u00a0<\/em>\n<ul class=\"wp-block-list\">\n<li>Currently, the government is filling both roles which is a problem because \u201c<strong><em>no system can regulate itself<\/em><\/strong><strong>\u201d<\/strong>)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><em>If this theory works\u2026<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>The parents and kids will have real choice in what type of model they want<\/li>\n<li>An immersion program<\/li>\n<li>High discipline or regular discipline,\u00a0<\/li>\n<li>An art school or other specialty, etc.<\/li>\n<li>Giving real choice to parents\/kids is the \u201c<strong>best quality control that can happen<\/strong>\u201d<\/li>\n<li>The government, as the regulator, needs to make sure that all kids are served, but is largely out of the business of providing the service of education<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Strategic philanthropy\u2014preventing problems by attacking root causes and creating structural change <\/h2>\n<p><strong>What\u2019s the role of philanthropy?\u00a0<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Currently, only about 1% of the economy is philanthropy for social services or social goods<\/li>\n<li>A big question John and his foundation think about is:\u00a0<strong><em>What\u2019s the best use of that?\u00a0<\/em><\/strong><\/li>\n<li>It can either\u2014\n<ul class=\"wp-block-list\">\n<li>1)\u00a0<strong>Supplement government services<\/strong>\u00a0(typically described as charity, i.e., trying to solve today\u2019s problems)\n<ul class=\"wp-block-list\">\n<li>E.g., Giving money to existing programs like a food bank<\/li>\n<\/ul>\n<\/li>\n<li>2)\u00a0<strong>Try to get to the root cause of problems<\/strong>\u00a0with\u00a0<em>strategic<\/em>\u00a0philanthropy, i.e.,\u00a0<strong>prevent<\/strong>\u00a0those problems from developing tomorrow<\/li>\n<\/ul>\n<\/li>\n<li>Both are important, but John gravitates towards the latter<\/li>\n<li>The latter allows for exploring\u2026\n<ul class=\"wp-block-list\">\n<li><em>How does the philanthropic money compliment government services to make them better?<\/em><\/li>\n<li><em>What is the market failure as to why government programs are not working as well as they should?<\/em><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>Role for \u201cstrategic\u201d philanthropy<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Most of the existing social non-profits are so focused on simply providing the day-to-day that they have no bandwidth for experimentation or innovation<\/li>\n<li>Strategic philanthropy can come in to explore, \u201cHow can these actors in these systems perform better?\u201d<\/li>\n<li>Arnold Foundation spends more of it\u2019s time looking at structural changes to the system b\/c it\u2019s scalable in a way that just providing another dollar for a program largely is not<\/li>\n<li>Strategic philanthropy requires experts and manpower to explore new ideas, old ideas, theoretical frameworks, potential second order effects of structural changes, etc.<\/li>\n<\/ul>\n<p><em>How challenging is doing this kind of strategic philanthropy?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Arnold Foundation has about 120 employees \u2014 \u201c<em>We had no desire or interest to have 120 employees 10 years ago. That was not by design. We thought giving would be easy.<\/em>\u201d<\/li>\n<li>At the beginning, John was sifting through the literature<\/li>\n<\/ul>\n<p><em>Example, the topic like preschool:<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>You see three papers that say preschool is amazing, it generates all these outcomes later in life<\/li>\n<li>Then you see one evaluation of the\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Head_Start_(program)\" target=\"_blank\" rel=\"noreferrer noopener\">Head Start program<\/a>\u00a0that shows it doesn\u2019t really have an effect<\/li>\n<li>As you dig deeper, you see\u00a0<strong>huge arguments<\/strong>\u00a0within this research sector about what the evidence really shows<\/li>\n<\/ul>\n<p><em>In every area that John has researched, he finds the same thing\u2014<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>The first scan through it appears that everything works, it\u2019s all great, writing checks there is a great way to invest money<\/li>\n<li>But as you dig deeper, it gets very frustrating because\u00a0<strong>the more you study, the less you know<\/strong>\u00a0about what worked and what didn\u2019t<\/li>\n<\/ul>\n<p><strong>*One main insight from doing the deep digging:<\/strong><\/p>\n<ol class=\"wp-block-list\">\n<li>Very few new programs worked<\/li>\n<li>And the things that DO work are generally already part of the fabric of society, e.g., K-12 education<\/li>\n<\/ol>\n<p>The question for the foundation became:<em>\u00a0What\u2019s our role? Where could our dollars be most helpful?<\/em><\/p>\n<p>John\u2019s frustration with trying to find the \u201cright program\u201d to fund really led him and the foundation down the path of\u2014<em>How do you change and improve the system and the incentives and the rules of a system rather than what\u2019s the next program we can fund?<\/em><\/p>\n<h2 class=\"wp-block-heading\">The criminal justice system\u2014structural changes needed to address mass incarceration, policing practices, and recidivism <\/h2>\n<p><strong>When the criminal justice system got on John\u2019s radar:<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Laura had a legal background and gave her a perspective on it \u2014 one of the first organizations they gave money to was the\u00a0<a href=\"https:\/\/www.innocenceproject.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">Innocence Project<\/a>\u00a0by\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Barry_Scheck\" target=\"_blank\" rel=\"noreferrer noopener\">Barry Scheck<\/a>\u00a0which got innocent men off of death row<\/li>\n<li>This got them thinking more strategically\u2014<em>How do we change the system so that the wrongful convictions don\u2019t happen in the first place?<\/em><\/li>\n<li>They realized that\u00a0<strong>changing the system and policies<\/strong>\u00a0is where they wanted to spend the time\u2014\n<ul class=\"wp-block-list\">\n<li>Higher potential reward<\/li>\n<li>It is harder work and the chance of success is lower<\/li>\n<li>But the impact, if successful, is so much higher if you can improve how the system works<\/li>\n<\/ul>\n<\/li>\n<li>The foundation spent an\u00a0<strong>entire year<\/strong>\u00a0just thinking about all the ways the inefficiencies in the system was leading to bad outcomes<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThere is this natural impatience. But I think we\u2019ve been smart enough to realize that it\u2019s smarter to invest wisely tomorrow than do something that\u2019s unlikely to have an impact today.\u201d<\/p>\n<\/blockquote>\n<p><strong>How criminal justice system is broken:<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Peter points out three clear issues with the criminal justice system:\n<ul class=\"wp-block-list\">\n<li>1-There seems to be an enormous racial disparity<\/li>\n<li>2-There are great difficulties in appealing, even in the presence of evidence that the first trial may not have been a great trial<\/li>\n<li>3-Coercion is a real problem which results in people pleading guilty to something they did not do<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><em>John\u2019s take on how we got to the current state of the criminal just system:\u00a0<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Increasing violent crime which peaked in the late 80s\/early 90s<\/li>\n<li>This scary trend created a bipartisan response \u2014 crime was really destroying communities<\/li>\n<li>Everyone came together to start this\u00a0<strong>tough on crime<\/strong>\u00a0mantra<\/li>\n<li>The foundation of that was to intensify the \u201cwar on drugs\u201d \u2014 which ended up having second and third order effects\u00a0<\/li>\n<li>Crime ended up peaking in the early \u201990s<\/li>\n<li>Some of it was because of some of the policies passed, but\u00a0<strong>a lot of it wasn\u2019t<\/strong><\/li>\n<li>John says the drop in crime was relatively\u00a0<strong>independent of when communities adopted the new policies<\/strong>\u00a0(across America as well as globally)<\/li>\n<li>The significant drop in crime over the past 30 years is still a bit of a mystery, says John<\/li>\n<\/ul>\n<p><em>Fast forward to today\u2014<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Times have clearly changed, but we still have policies that were a reaction to an environment that was very different than today<\/li>\n<li>We\u2019ve now seen the negative impact of those policies neighborhoods, the financial costs of those policies, and the trade offs associated with some of those policies<\/li>\n<li>We arrived at a point where both Republicans and Democrats have come together trying to rethink the right way to structure all aspects of the criminal justice system\u2014from policing and courts and prisons and recidivism<\/li>\n<\/ul>\n<p><strong>Speculating on what accounted for the reduction is crime starting in the mid-90s<\/strong><\/p>\n<p><em>What other factors could have accounted for the reduction in crime if not the increase in incarceration?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>John says the best thing he\u2019s seen on this is a\u00a0<a href=\"https:\/\/www.brennancenter.org\/our-work\/research-reports\/what-caused-crime-decline\" target=\"_blank\" rel=\"noreferrer noopener\">report from the Brennan Center<\/a><\/li>\n<li>The summary is that it\u2019s hard to see any one of them being really\u00a0<strong>causal<\/strong>\u00a0in the shifting crime<\/li>\n<li>Plus the same downward trends were happening globally (without the \u201ctough on crime\u201d policies)<\/li>\n<li>John says \u201c<em>I\u2019m not sure we\u2019ll ever know<\/em>\u201d what the main driver of reduced crime was<\/li>\n<\/ul>\n<p><em>Of all the mechanisms or tactics that would lead to an increase in incarceration, which of those were perhaps the\u00a0<\/em><strong><em>most responsible<\/em><\/strong><em>\u00a0for mass incarceration?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>John thinks part of it has been longer sentences and part of it has been the conviction rates<\/li>\n<li>The system is built to demand a plea bargain<\/li>\n<li>The reality is that we just don\u2019t have the court resources (the defense attorneys, the prosecutors, the judges, etc.) to hear a vast majority of cases<\/li>\n<li>In fact,\u00a0<a href=\"https:\/\/www.pewresearch.org\/fact-tank\/2019\/06\/11\/only-2-of-federal-criminal-defendants-go-to-trial-and-most-who-do-are-found-guilty\/\" target=\"_blank\" rel=\"noreferrer noopener\">less than 5% of cases actually go in front of a judge<\/a>, most of them just get pled out<\/li>\n<\/ul>\n<p><strong>How do we solve this problem?<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Incentives that have been built into the system almost coerce people to plead guilty to crimes that they may not have committed. \u2013 i.e., plea is 6 months and trial plus conviction is 20 years<\/li>\n<li>It\u2019s really hard to see how you solve that problem without a\u00a0<strong>massive infusion of resources<\/strong>\u00a0into the courts, prosecutors, &amp; defense attorneys)\u00a0<em>which is not where we want to be spending money<\/em>\u00a0<\/li>\n<li>The solution is more likely to come from spending money on\u00a0<strong>preventing crime<\/strong>\u00a0(such as on certain social services)<\/li>\n<li>The goal would be trying to figure out how to get rid of this culture where the system can\u2019t handle everybody going to trial<\/li>\n<\/ul>\n<p><strong>Is the role for philanthropy to try to address the questions of racism within law enforcement?<\/strong><\/p>\n<p>For a long time, the focus has been on reducing crime rates with no regard for the\u00a0<strong>secondary effects<\/strong>\u00a0that the criminal justice system causes on these communities and families<\/p>\n<ul class=\"wp-block-list\">\n<li><em>\u2018Family\u2019 example<\/em>\u2014a disproportionate number of black men that go to prison leaving children without a father<\/li>\n<li><em>Psychological effects<\/em>\u2014Being a black man in America, especially in a low income neighborhood, comes with a psychological effect which is only worsened by an overly-aggressive police force in that community<\/li>\n<\/ul>\n<p><strong>A big dilemma<\/strong>: Minority communities have felt both\u00a0<strong>over-policed<\/strong>\u00a0and\u00a0<strong>under policed<\/strong>\u00a0at the same time.<\/p>\n<ul class=\"wp-block-list\">\n<li>But violent crime is still a big problem and a huge cost to a community<\/li>\n<li>But most crime is committed within one\u2019s own community<\/li>\n<li>So nobody in the community wants the police to leave entirely, there still has to be that function of deterrence\u00a0<\/li>\n<\/ul>\n<p><em>Addressing the problem<\/em>:<\/p>\n<ul class=\"wp-block-list\">\n<li>The problem doesn\u2019t get solved just by passing one new policy<\/li>\n<li>This is an issue that has developed over decades of policing techniques, and centuries of disinvestment in these communities.\u00a0<\/li>\n<li>The question is being considered:\u00a0<strong><em>How do you both provide the public safety while not causing the damage that some policing techniques cause today?<\/em><\/strong><\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Re-imagining prisons to reduce recidivism <\/h2>\n<p><strong>Peter\u2019s take on the prison system:<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Peter had a profound experience when visiting a prison (See\u00a0<a target=\"_blank\" href=\"https:\/\/peterattiamd.com\/coreymccarthy\/\">episode of The Drive with former inmate Corey McCarthy<\/a>)<\/li>\n<li>From that experience, Peter points out the reasons to put somebody in prison:\n<ul class=\"wp-block-list\">\n<li>1-To protect the public from them.<\/li>\n<li>2-To punish them for something they have done<\/li>\n<li>3-To provide them with a set of skills to reintegrate into society in a better way\n<ul class=\"wp-block-list\">\n<li>Peter says there was virtually no effort into the rehabilitative part which virtually guarantees recidivism<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>Peter wonders:\u00a0<em>Is there an opportunity for strategic philanthropy to play a role in the rehabilitative side of incarceration?<\/em><\/li>\n<\/ul>\n<p><em>John\u2019s response<\/em>:<\/p>\n<ul class=\"wp-block-list\">\n<li>It\u2019s very hard to design effective recidivism programs AFTER someone\u2019s come out<\/li>\n<li>The evidence is very poor that after-prison programs actually work<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cThe nature of prisons has to change. If you wait until the days someone\u2019s released, that\u2019s way too late.\u201d<\/p>\n<\/blockquote>\n<p><strong>The foundation\u2019s work on re-imagining prisons<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>They have a couple projects trying to reimagine prisons\u00a0<\/li>\n<li>They are thinking through,\u00a0<em>What\u2019s the role of prisons?\u00a0<\/em><\/li>\n<li>The struggle is that states and counties that fund this are often constrained financially\u2014\n<ul class=\"wp-block-list\">\n<li>They are trying to figure out how to meet\u00a0<em>today\u2019s problem<\/em>\u00a0which\u00a0<strong>too many people in prison\u00a0<\/strong><\/li>\n<li>And there\u2019s very little bandwidth and money going towards improving outcomes over the long term when they HAVE to meet\u00a0<em>today\u2019s<\/em>\u00a0needs<\/li>\n<\/ul>\n<\/li>\n<li>The foundation is exploring questions like\u2026\n<ul class=\"wp-block-list\">\n<li>W<em>hat should prisoners be doing with their day<\/em>?\u00a0<\/li>\n<li>H<em>ow can we try to maximize the percent chance that they don\u2019t come back here when they\u2019re released<\/em>?\u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><em>The ROI case<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>You could certainly make an ROI case that if you invest more now you\u2019ll save much more tomorrow<\/li>\n<li>The problem is that the pay off may not be for 5+ years<\/li>\n<li>In the private sector, they would make that investment every day<\/li>\n<li>But in the public sector, it\u2019s on a cash accounting basis \u2014 i.e., you have to balance the books this year &amp; you have a fixed amount of money<\/li>\n<li>That\u2019s where the philanthropic sector can be an active player in this system is by providing the funds to experiment with different ideas and programs and then funding the high quality evaluation to see the potential ROI<\/li>\n<\/ul>\n<p><em>The values case<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>Another part of the foundations work is more about values\u00a0<\/li>\n<li>Questions like: Should we keep someone detained in jail before they\u2019ve gone to their court date because they don\u2019t have the money to pay bail?\u00a0<\/li>\n<li>The broader question being explored:\u00a0<em>How do we fix it so it more closely represents American values while minimizing any potential second order effects, negative second order effects?<\/em><\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">US health care policy\u2014John\u2019s focus on drug prices, and the severe consequences of not making system changes <\/h2>\n<p><em>How is John thinking about health policy in America?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>John comments that this is just such a big, complex issue: \u201cThe number of things that one could work on in health policy is immense.\u201d<\/li>\n<\/ul>\n<p><strong>So where is John trying to apply his resources?<\/strong><\/p>\n<p>The first area John wants to address is\u00a0<strong>drug prices\u00a0<\/strong>because it\u2019s a topic with:<\/p>\n<ol class=\"wp-block-list\">\n<li>Very obvious flaws in the existing system<\/li>\n<li>There were ideas that were one could conceive of being enacted on how to fix it<\/li>\n<li>And the political window might open\u00a0<em>in the future<\/em>\u00a0such that there was demand by the public and thus by politicians to actually adopt some of this stuff<\/li>\n<\/ol>\n<p>The foundation is focused on creating a more rational system to price pharmaceuticals that\u2014\u00a0<\/p>\n<ol class=\"wp-block-list\">\n<li>Balances interest and balances incentives that are necessary for the private sector to do the innovation<\/li>\n<li>Balances the financial interests of the state and the federal government that\u2019s largely paying for a lot of this stuff, and<\/li>\n<li>That maximizes access for the patient<\/li>\n<\/ol>\n<p><em>The political window<\/em>:<\/p>\n<ul class=\"wp-block-list\">\n<li>The foundation focuses on finding issues where a political window going to open up in the future<\/li>\n<li>So when the window opens, they can have evidence-based ideas that we could present to policymakers\u00a0<\/li>\n<\/ul>\n<p>For politicians to consider health care policies\u2014<\/p>\n<ul class=\"wp-block-list\">\n<li>You need ideas to present to them and say, \u201cHere are the three things you need to do.\u201d\u00a0<\/li>\n<li>The reality is, the health care system is so complex, it really has 20+ problems<\/li>\n<li>But \u201cyou start to lose policymakers when you hit number four\u201d, so you really want to narrow it down as best as you can (i.e., focusing on drug pricing)<\/li>\n<\/ul>\n<p><strong>Peter\u2019s rant on the US health care:<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>Our taxes disproportionately subsidize 2 things in the world, and one is military spend, and the other is healthcare spend<\/li>\n<li>For example, we pay so much more for drugs here than our neighbors do that we in effect subsidize the cost of R&amp;D\u00a0<\/li>\n<li>The United States is 3% of the world\u2019s population, yet we pay 50% of the pharmaceutical revenues of the world<\/li>\n<li>The inflated prices that Americans are paying is helping and creating incentive for more medicines to be made here that then other countries get the benefit from.\u00a0<\/li>\n<li>The NIH, for example, spends so much money on the basic science that\u2019s required to get these drugs started, and in return, the pharmaceutical companies charge us 2x-3x the prices of other countries<\/li>\n<li>You could argue that we should be getting a discount because the United States taxpayers are funding much of the basic science and the cost of developing these drugs<\/li>\n<\/ul>\n<p>\u21d2 For more on the health care system and issues with drugs, see Peter\u2019s interviews with\u00a0<a target=\"_blank\" href=\"https:\/\/peterattiamd.com\/martymakary\/\">Marty Makary<\/a>\u00a0and\u00a0<a target=\"_blank\" href=\"https:\/\/peterattiamd.com\/katherineeban\/\">Katherine Eban<\/a>\u00a0<\/p>\n<p><strong>Enormous health care spending\u2014how can we change this?<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>One could argue that the US health care spending is not sustainable<\/li>\n<li>We\u2019re currently spending 15+% of GDP per year and it\u2019s probably increasing at 5% per year in relative growth<\/li>\n<\/ul>\n<p>Without the greatest sovereign default on debt,\u00a0<strong><em>what is it going to take to change this?<\/em><\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>At the state level,\n<ul class=\"wp-block-list\">\n<li>The\u00a0<strong>downsides<\/strong>\u00a0of the state having to balance a budget every year is that it can\u2019t make the high ROI investments that it should<\/li>\n<li>The\u00a0<strong>upside<\/strong>\u00a0is that it forces the states to consider trade offs\u2014they have to decide where\u2019s the highest value, and they look to save money\u00a0<\/li>\n<\/ul>\n<\/li>\n<li>The\u00a0<strong>federal government<\/strong>, on the other hand, without that budgetary constraint, doesn\u2019t have to make those trade offs\n<ul class=\"wp-block-list\">\n<li>So what happens is that any proposed legislation where somebody gets harmed will not pass, because no hard decisions want to get made<\/li>\n<li>The ramification of that is enormous budget deficits today and a potential default on a debt in the future<\/li>\n<li>But perhaps the most concerning part is the possibility of severe\u00a0<a href=\"https:\/\/en.wikipedia.org\/wiki\/Inflation\" target=\"_blank\" rel=\"noreferrer noopener\">inflation<\/a><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><em>The severe consequences of inflation<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>We seem to have a fiscal or monetary response to every problem, but the one problem you can\u2019t solve from fiscal and monetary tools is inflation<\/li>\n<li>John is particularly concerned about inflation because that\u2019s when you have to be\u00a0<strong>cutting fiscal spending and increasing interest rates<\/strong>\u00a0to try to combat inflation<\/li>\n<li>The negative repercussions of that is enormous because we are so levered with debt at household level, at the business level, at cities and states, at the federal level<\/li>\n<li>Inflation is less of a problem as long as GDP is growing faster than real inflation<\/li>\n<li>The US debt is increasing much faster than real GDP, and so the real debt is increasing and we never pay it off<\/li>\n<li>Bad things happen if interest rates rise to just 5%, much less double digits which we\u2019ve seen before in this country<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cI want to help the world, I want to solve problems, but if the answer is just shovel more money at it, that\u2019s not a sustainable answer in my mind.\u201d<\/p>\n<\/blockquote>\n<p>John\u2019s foundation is working on:\u00a0<strong><em>How do we improve the system without spending more money?<\/em><\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>If you believe that there are no trade offs with how we spend our resources, then pharma prices are fine (in fact, double them, triple them)<\/li>\n<li>But that\u2019s not what John believes, \u201c<em>I believe there is a trade off and that a dollar put into pharma innovation is a dollar less for everything else<\/em>.\u201d<\/li>\n<li>Other things like,\n<ul class=\"wp-block-list\">\n<li>Other healthcare innovation (or health care services)<\/li>\n<li>Education<\/li>\n<li>Less recidivism<\/li>\n<li>Etc.<\/li>\n<\/ul>\n<\/li>\n<li>The pharma system has just been able to create this island where they don\u2019t have to compete with anybody\n<ul class=\"wp-block-list\">\n<li>They got their own rules, and it\u2019s a messed up set of rules that incentivizes the wrong thing.\u00a0<\/li>\n<li>So even within that, we\u2019re not getting the drugs that we should be getting<\/li>\n<li>We\u2019re getting things like marginal oncology drugs\u00a0<\/li>\n<li>We\u2019re not investing in the antibiotics and vaccines, because the financial incentive isn\u2019t there\u00a0<\/li>\n<\/ul>\n<\/li>\n<li>\u201c<em>So we\u2019re spending tons of money as a society and not even getting good returns for it.<\/em>\u201d<\/li>\n<\/ul>\n<p><strong>Optimistic about the future \u2014 Change happens slowly, then very quickly<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>John remains optimistic that real changing is coming<\/li>\n<li>But admits that this process is \u201cemotionally frustrating\u201d\u2026 to be banging on a problem for years with little perceptible progress<\/li>\n<li>Peter compares change like this to a stone mason hitting a rock over and over\u2014\n<ul class=\"wp-block-list\">\n<li>There\u2019s a bunch of tiny imperceptible cracks and then there\u2019s one hit that splits in open<\/li>\n<li>But it wasn\u2019t that one hit that did it, it was the many many that came before it<\/li>\n<\/ul>\n<\/li>\n<li>Citing two real world examples \u2013\n<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cYou just don\u2019t have that feedback mechanism in this work that you had in the [natural gas] market and the complete opposite end of the spectrum\u201d\u00a0<\/p>\n<\/blockquote>\n<h2 class=\"wp-block-heading\">Climate change\u2014the bipartisan role of John\u2019s foundation<\/h2>\n<p><strong>John\u2019s high level thoughts on climate change<\/strong><\/p>\n<ul class=\"wp-block-list\">\n<li>It\u2019s a problem where the downside possibilities are so enormous that it makes sense as a society for us to make the investments today to try to decrease the probability of those downside scenarios.\u00a0<\/li>\n<li>John admits that he does not know the probability of some of the truly catastrophic scenarios, but \u201cit\u2019s greater than zero. . .and less than 100%\u201d<\/li>\n<li>John says that the downside is so great that society needs to make that investment<\/li>\n<\/ul>\n<p><em>How will John\u2019s foundation work on climate change?<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>The foundation typically looks at issues and areas where there\u2019s not much philanthropic focus<\/li>\n<li>And the climate field already has very thoughtful philanthropists who are working on this today<\/li>\n<\/ul>\n<p><em>Where John thinks they can add value<\/em>:<\/p>\n<ul class=\"wp-block-list\">\n<li>In the climate change realm, most of the researchers, advocates, and funders come from the left (politically)<\/li>\n<li>But John believes this can only be solved with a bipartisan effort<\/li>\n<li>John says the democrats aren\u2019t doing a very good job of bringing the republicans into the conversation when they do things like \u201cput the whole Democratic platform into a climate change bill\u201d<\/li>\n<li>John thinks the role of his foundation is to try to bring the both parties into the discussion by supporting organizations and politicians that are\u00a0<em>on the right<\/em>\u00a0who want to start taking steps<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Advice for young adults interested in philanthropy <\/h2>\n<p><em>Regarding his own kids\u2014<\/em><\/p>\n<ul class=\"wp-block-list\">\n<li>He doesn\u2019t want their lives to be defined by their parents, bur rather for them to have their own life experiences and create their own life<\/li>\n<li>He is discouraging them from working at the Arnold Foundation<\/li>\n<\/ul>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cWhenever you have that checkbook, people look at you differently, and treat you differently. . .because there is always something that they want funded. . .If somebody\u2019s growing up in their teens and their 20s, and is looked at by the rest of the world as a checkbook first, I think that\u2019s a very damaging way to grow up.\u201d<\/p>\n<\/blockquote>\n<p><strong>Advice to young adults with an interest in philanthropy<\/strong>:<\/p>\n<ul class=\"wp-block-list\">\n<li>As a society, we benefit when our community around us is stronger<\/li>\n<li>Whenever we have the needs of our family taken care of, it\u2019s human nature to start thinking about your community<\/li>\n<li>John\u2019s general advice about giving money is to try to do it strategically and intelligently<\/li>\n<li>And by giving to your community, you are likely making a more informed gift since you have a better sense of what the needs are of your own community<\/li>\n<\/ul>\n<p><h3 class=\"jp-relatedposts-headline\"><em>Related<\/em><\/h3>\n<\/p>\n<p><em><a href=\"https:\/\/tim.blog\/podcast\"><strong>The Tim Ferriss Show<\/strong><\/a> <\/em><span>is one <\/span>of the most popular podcasts in the world with more than one billion downloads. It has been selected for &#8220;Best of Apple Podcasts&#8221; three times, it is often the #1 interview podcast across all of Apple Podcasts, and it&#8217;s been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out <strong><a href=\"https:\/\/tim.blog\/podcast\">this page<\/a><\/strong>.<\/p>\n<\/p><\/div>\n<p><a href=\"https:\/\/hop.clickbank.net\/?affiliate=infohatch&amp;vendor=J1R2C\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-10614 aligncenter\" src=\"http:\/\/parmaks.com\/Resources\/wp-content\/uploads\/2025\/05\/profit-gen400px.png\" alt=\"Profit Gen\" width=\"400\" height=\"217\" srcset=\"https:\/\/parmaks.com\/Resources\/wp-content\/uploads\/2025\/05\/profit-gen400px.png 400w, https:\/\/parmaks.com\/Resources\/wp-content\/uploads\/2025\/05\/profit-gen400px-300x163.png 300w\" sizes=\"auto, (max-width: 400px) 100vw, 400px\" \/><\/a><br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Donna Newman; Courtesy Laura and John Arnold Foundation In this special episode, my friend\u2014and fan-favorite guest\u2014Dr. Peter Attia\u00a0takes the mic as guest host. Peter sits [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":11054,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-11053","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-growth"],"_links":{"self":[{"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/posts\/11053","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/comments?post=11053"}],"version-history":[{"count":0,"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/posts\/11053\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/media\/11054"}],"wp:attachment":[{"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/media?parent=11053"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/categories?post=11053"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/parmaks.com\/Resources\/wp-json\/wp\/v2\/tags?post=11053"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}