Taiwan, so this will be, i think, quite a bit more entertaining. And i really myself am excited about it. To celebrate the publication of a new book, the siberian chop siberia job. And were going to learn more about the true story behind it. Now, when a book is embossed with the words based on a true story, the immediate question that every reader has is whats fact and whats fiction. Today, were going to get it from the source. Whats fact and whats fiction. So, john, we were expecting to really know by the time that we leak John Kleinheinz is a person of great importance here at hoover. He is, in fact the chair of the hoover board of overseers and a great supporter of the institution. He graduated from stanford in 1984 with a degree in economics, and john began his career as an investment banker. He worked in tokyo and new york and london and then he moved to texas in 1993, and he was a partner in an Investment Firm where he managed the Russia Value Fund, one of the earliest funds to invest in russia. And he formed the and formed at the inception of the russian stock market following the Voucher Privatization Program in 1994. A lot more to come on this, john is the ceo today of clients capital partners, based in fort worth. His investment activity spans a variety of areas, including japan, u. S. Energy and Technology Markets and private equity. Now hes in conversation with hoover senior fellow stephen kotkin. Steve is a foremost historian and especially a scholar on the soviet union. In fact, steve has written the most highly regarded biography piece of Joseph Stalin and so he is wellsuited to this task. Now to top up Stephen Johns conversation and to entice you to purchase your own copy of the book. After this event, i want to read part of the forward written by the author, josh heyman. Our last disclaimer as regards this book being fiction based on a true story, i dont want to be too specific about whats real and what isnt. Dont assume its the crazy parts. The caspian sea fishing trip, for instance, or the club feud kidnaping that are made up. It was mostly the banal, technical stuff that seemed most likely to get people into trouble. Those bits of borderline absurd ism and many others really happened. Postsoviet russia was, he says, the wild, wild west of the east. Well, i can tell you that i spent a lot of time in postsoviet russia and the wild, wild west. Never thought of being that wild. And so let me turn it to john and steve. Welcome, everybody. Its nice to see so many familiar faces, including familiar faces from russia in the 1990s. Oh, we have two people who join the Hoover Institution relatively recently. One of whom has published the book. And its not me. Its our chair of the board of overseers. So im going to guess that youre annual Performance Review was going to be better than mine this year. Yeah. And im going to have to do better next year. Yeah, well, im not sure the piano on this book is going to be be any good. Well wait the jurys out on that. And we have the possibility to increase it right here as we sit. So lets start from the beginning. How does an upstanding family man from texas with a beautiful young wife go end up in russia in the 1990s . Of all places. Yeah, thats an excellent question. And before i answer, i just want to thank you, steven and condi, for offering to host this event. I know theres been a dozens and hundreds of really impressive fellows and folks on this stage whove whove written fabulous books and well researched books. And i just want to assure you that that this isnt one of them. This is fiction. This is this is entertain me. This is a three hour read. So its it may be the only fictional book thats ever been up here, but. So. So how did how did we get to russia . How did i get to russia . I was running i was a junior partner in a emerging market fund. And i got calls from a number of people that said you have to look at russia. Its interesting, a market as weve never seen the berlin wall had fallen a few years earlier. The economy had the command economy had spun out of control and had basically frozen in by by 1992, the place was just distraught. There were no go to moscow. There were no cars on the street. Theres no no no goods in the shops. Everybody walked around with their head held low and. And then in 94, i went back and i saw a whole different picture. The the the green roots of the green shoots of the free market system had started. People were excited. Everybody had a deal. Investors were showing up from all around the world to look at the assets, assets in russia were trading it one 2 of the value theyd be trading at if they were trading on a western exchange or the u. S. And it was just a very exciting time and it was a really unique opportunity to make money. Yeah. Okay. I was there to and there were some issues that would not have inspired a lot of confidence and not that i had any money to invest, but im not sure i would have had the comfort insight to think that this is a Good Deal Investment opportunity as opposed to, oh my god, whats going on here . This is a bit wild. So what gave you the confidence that the Investment Opportunity was greater than the risks that the upside was was greater than the risk . So good question. So marshall and i actually my my beautiful young wife whos not quite as young anymore, but we were there and she looks pretty young to me there, dude. She she looks great. But, you know, we were there in 92 and we saw it. We saw such a bleak picture. And and then i was there 18 months later and to see the same streets and the same places in 18 months, to be completely transformed. And you just knew something was up. And remember, russia had vast pools of human capital. You know, they beat us into space. In the space race. They gave us a good run in the arms race. My my view was that russia, you know, they had had tons of oil. They were one of the largest owners of oil in the world. My view is that russia just had a bad system. And if they if they used the free market system and and rule of law, that that these investments that were trading at 1 to 2 of of Intrinsic Value would would close the gap with with western Oil Companies and western telecommunications companies. So it wasnt it wasnt a bet that russia was going to become like the us or europe. It was just a bet that they would make progress toward that goal, because if, if, if, remember, if, if a stock goes from being trading at a one or 2 of value to trading at a 20 of value, youve made ten times your money and so thats what gave me the confidence. Yeah, ten times your money. That would give me confidence too. Its just the murders and other things that would be complex for. Okay, lets, lets accept that that you saw a lot of upside because the valuation, the opening valuation was so low that it couldnt really go any lower. And there were a lot of possibilities inherent in the you know, the people were betting on the system to develop. We werent. Thats all we were doing. So we have this thing called vouchers. Privatization through vouchers. Not Everybody Knows exactly what that might entail. So give us a small tutorial. Youll hear about what the vouchers were and how the privatization and vouchers worked in that 1994 year where they privatized it, 11 time zones through a voucher system. Sure. Sure. So they gave vouchers to every single man, woman and child in russia. And they were they were freely tradable. And what you could do with those vouchers is you could submit them into any any voucher auction. And remember, at the time, russia was auctioning off 80 to 90 of all of their corporations. All the all the oil and gas companies, the fertilizer, steel, aluminum, tobacco, food companies, utilities, everything was was was put up for auction. And what happened is a lot of people took those vouchers and just sold them into the market. And so investors like like our fund could just go out and and buy them and then we could we could submit them into the the various companies voucher auctions that we were interested in. So, so it was it was chaotic, you know, they did it all at once. Theres a lot of debate of whether they should have drawn it out and done it a different way. But but for whatever reason, they decide. 1994 was the year that they auctioned off everything. So they have all these state owned companies. There are no private companies per say at scale. In the soviet period, and theyre all state owned. And so all the state owned property, with some exceptions, is being sold and so this is a vast trans four of property, some of it nominal because its not really worth much, but some of it has a lot of value and youre in your mind and other investors mind sort of transferring this to the private markets and they do it through these pieces of paper that every individual gets or several pieces of paper. And so people are sitting there with this thing called the voucher and theyre living in yoshikazu, la, and theyre living in yaroslavl and theyre living in magadan and i mean, its its very dispersed. Its a gigantic country. And individuals are holding these vouchers and to extract any value from Something Like this, you need a lot of these pieces of paper, right . If you have to vouchers in a company thats worth substantial value, its not going to its not going to move the needle for these people. Yeah. So how is it that you and your partners managed somehow to get your hands on these vouchers that are held in small numbers by massive numbers of individuals across this gigantic space which Whose Community nations and transportation and logistic costs or maybe not. Thats a thats an excellent point. And because a lot of people wouldnt even bother to find out how to submit the voucher into the auction for the company that they may have worked for, they just they would just go down there usually in most of these towns, there was a Street Corner where everybody knew you can sell your voucher and there were those Street Corners in moscow. And so what we would do is we would before i would go over there, we would wire money to a bank that was run by a friend of mine whos in the book, guy named bernie suture. And the money would get there three or four days before us. And then he would turn it all into 100 bills and his people. And sometimes our people, sometimes me would go down to Street Corners with that money and just buy vouchers, and wed take those vouchers and then. Right. So there you are with rolls and rolls of hundred dollar bills on Street Corners in russian. I did that once. I did that one whose names are hard to pronounce. I mean, its just sort of like how capitalism works over here, right . I go to the bank or i go to my friend and i get a suitcase of hundreds all rolled up with a rubber band. And then i go down to the corner there of University Avenue and and ramona and i start asking people if they want to sell their vouchers. And i buy 5 million of them. 8 million of them. And then i own russia. Thats kind of how it worked. I mean, i im not an i mean, your characterizations, a fair characterization. It it was it was. I remember, though, the russian government kept all ownership up of a lot of the bigger companies. They kept some portion, 50 , 60 . So they were really just trying to get the market moving. They were trying to create a stock market with these vouchers. They werent the real the real wealth transfer happened in the loans for share scheme that happened post 1998 after putin got it right. And thats thats where the real wealth was transferred away from the so not a voucher privatization but to the venture privatization started just sort of started the market going thats how i would characterize it. Right. Okay. It i dont know if you can reveal this, but what was your best investment in russia . Where did you do your biggest killing . So thats a poor choice of words here. Were not accusing you of being involved in activities that your partners were involved in. Thank you. Im sorry that that that the other people were involved in the competitors, not your partners. Yeah. So what was your best deal or your best investment at the time . So the investment i thought that worked out the best for us was a Company Called lukoil, and i was friends with a gentleman by the name of robert strauss, who was the Us Ambassador to russia, and he was a he was a partner at akin gump and a very close to bobbys. He gave me a lot of advice, told me, helped us get out of some trouble we had in russia a couple of times. And he lukoil was a customer of akin gump of their law firm. And he told me that lukoil wanted to become a Major International oil company, just like exxon. And so when youre when when all these companies are available, you dont know what to look for. And you hear Something Like that from somebody you respect, you just that company automatically went to the top of my list and we we bought the stock with the vouchers and a 300 million valuation. This is a company that at the time did almost 2 Million Barrels of oil of production a day, which many of you might not know, might not mean much to many of you, but thats about the size of exxon. Its a much exxon produces. So 300 million. Its i think that when when the stock market stopped trading, when russia invaded the ukraine, it had a 60 billion market cap. So it was 200, 200 times. So you bought the equivalent of exxon for 300 million. Thats a stand in on the Street Corners. This guy is a lot smarter than i thought. Yeah, lets just. Lets just say that right . So, you know, its like many things. If i had held on to it, it would have been great. I sold it after, you know, way too soon. Youre still alive to talk about it. So selling sometimes can have advantages beyond the monetary point. So. All right. So were were now heavily invested in russia. Now were making serious money because things are undervalued. And you and your partners are perceiving value. And that value is coming into being over the course of the nineties. And you manage the logistics of mastering this fact. Youre privatized. So here we are, 30 years later and now we have a book. So where the book come from . What motivated you to do the book and why now do we have the book . Since these are events from 30 years ago . Excellent question. So i have always wanted to write this book. Its its really other than what i was doing in russia, everything in my life has been relatively boring and routine, but but its the one thing i constantly go back to and think, wow, i cant believe that that really happened. And so its its you know, everybody has a book in them just about two little over two years ago, i was sitting in front of my bloomberg machine. I saw a title go across that thing that my partner in the book, peter kellner, had been killed in a helicopter ski accident and and it sort of you know, when your friends die, you know, and peter and i were in class. We stayed close for a few years after i left russia. But but, you know, when people like that who are important, your life died and changes you a little bit and i so okay, im going to write that book. So, you know, i do what you know when i dont know how to do something, the first thing i do is i go call somebody and i call somebody whos done it and and i dont know if tom jenks or carol are here. Back there. Oh, there they are. Theyre so i called i called my good friends, tom and carol. Toms around a publishing company, and i said, ive got this story, tom. How do i do it . And and he put me in touch with a great literary agent in new york named warren frazier. And warren helped me look for authors to help write it because, you know, writing, doing creative writing is not in my wheelhouse. Its not my skill set. So warren helped me find a great young author. And then we we a guy named josh gelernter. And josh and i started interviewing people who had been involved with this project. And we called around and to our surprise, literally everybody we talked to about it said, yeah, i want to help. And so we, we set up shop in the bahamas and brought people in and did interviews and came up with this with this somewhat true story. My writing process is different. Ill just say that ive never even been to the bahamas, but im thinking, what kind of book maybe could come out of a trip like that . Ill ill be talking to the director after this about that. Okay. So all right. So so we launched the project. Josh gelernter helps you tell this story. I mean, its your story. You relate the story, its captured, its transmitted. Well, why did we choose fiction as opposed to non fiction or fiction thats close to reality, but its not nonfiction all the same. Yeah, good question. I mean, it happened so long ago, it was just difficult to remember the the specifics and the, you know, the sequencing and who was involved and and then the when you really look at what we did going out, you know, we talk a little bit about the gazprom auction because thats what the storys about. I dont think it would have been as interesting if it was told as a nonfiction work. I just i think it would have bogged down in the details. And josh, you know, almost everything in the book is true. Whats whats not true is how everything fits together. And josh just did a very good and creative job taking all these different anecdotes and all these stories that he heard from the people we interviewed and he he he he was true to the storyline, but the, the way everything fit together was made up and made up in a way that makes it a very readable book. So youre in the book and the characterization of you struck me as close to who you are and what you did. Yeah. Your friend peter kellner, the czech businessman who did the voucher privatization and Czech Republic before the the russian one. Hes in the book and there are a bunch of characters that seem to be based on bernie sucha or bob strauss that would have been a good person for me to know as well. And so you have a cast of characters thats based on all based on real people who who did the the story and what about some of the other characters . Theres this endearing prostitute character. Im sorry, its russia in the nineties. I dont mean to cast aspersions, but theres this very endearing prostitute character who ends up being the wife of your partner about stuff like that. So so first of all, with the characters, some of them are compilations. I mean, my character, mike, mike character is not entirely me. Its i had a partner in texas and i had a friend at Merrill Lynch who who was involved. And so but it was mostly me. The peter character is actually two different peters and one of thems one of them still alive and one of them participated. Both peters were close friends, but but there were two people. Anna, the wife of peter. Thats a completely thats the one character in the book thats completely fictional. And i identified with her. We shes a great character, but shes completely i thought i could meet or now that i could, but yeah, right. Yeah. You need that you need you need a female character to connect and not just in books. Okay. Okay. All right. So so we got this incredible story. It reads in one sitting. Yeah, i know. Because thats how i read it in a single sitting. And its its gripping. Its true to the the nineties is experienced some things happened that that seem improbable but those are the things that are true and the stuff thats less probable those are the things that youre you guys made up. Thats right. But lets get a little taste of it, if you wouldnt mind. Okay. Lets have a reading. So of a passage. Go ahead and set it up. Im going to read a chapter, a whole chapter. But its a short chapter, chapter eight. And just to set it up, we had submitted a lot of vouchers in various voucher auctions and we were starting to get results and remember, with the vouchers, the you want, its theres a game theory here. You want other people not to submit vouchers. So the more vouchers that are submitted, the higher price everybody gets. A few people submit, you do really well and you can get a big percentage of the company with fewer vouchers. So we just learn that we had gotten a big percentage of a Company Called curse tobacco and we were we were going in to get our shares placed on the company register, which is something that you need to do after the voucher auctions in these smaller companies. The board room of curse tobacco looked like every other nice office john had seen so far in russia wood, veneer and soviet deco wall clock. It was in a nice Office Building not far from the kremlin. John and peter were sitting on one side of a long table. On the other side was a solemn, looking, slightly overweight russian man. Gentleman, he said in english, i understand you wish to exert some control over the operations of the company. Yes, said peter. That is, of course youre right. As Majority Shareholders, we werent Majority Shareholders, or at least it will be your right as Majority Shareholder once you sign our investiture documents. But the minority shareholders wish to make something clear to you before you do. Who are the more minority shareholders . Said peter. They wish to remain anonymous. So the man. But you may think of them as brought brashear brought. You said john. Literally it means brothers, said peter, who is looking slightly uncomfortable. What does it mean . Not literally, said john. It means mafia, said peter. John nodded. And for a moment, one said, no one said anything. Are you trying to keep us from registering our shares in the company . Said john. Finally. No, said the man. In fact, we can see many advantages to your being. Am i Majority Shareholder of kursk . But they wish first for you to understand the responsibilities that will go with your ownership, which are, said john, after a pause. Will kursk is an unusual Business Model. You will be legally liable for it. Not that there is any cause for concern. What is the Business Model . Said peter. Its generally understood that kursk manufacturers and distributes cigarets. He paused, and after a moment, peter said, okay, but it does not only manufacture kursk cigarets i dont follow, said john. Kursk also manufactures marlboroughs camels lucky strike parliament pall mall newport winston kursk manufacturers may be one in three of the western cigarets sold in eastern russia and central asia. You make counterfeit cigarets john and now you do too, said the curse. Jesus, said john, are you saying thats how you generate your revenue . Fake name brand cigarets . No, said the first man. Not at all. Kursk is a legitimately a very profitable business and illegitimately, a much, much more profitable business. But heres the issue. We do not intend to modify our Business Plan with westerners, whether theyre czechs. If that counts to not only running the business, your partners believe it could help to expand these operations to new markets are mutually beneficial. Everyone earns, she earns, you see. But as i said, you will be liable to russian courts if you do not wish to participate. Participate in this Business Model, your partners will then buy you out the choice of your is yours, john and peter looked at each other each saw the other was at a loss. Peter turned back to the kursk. Man buy us out for how much . The kursk man produced a billfold from which he removed a bank check. He slid it across the table. Peter picked it up. 1,000 . Yes, said the kursk man. As i say, youre new partners. Feel either choice will be satisfactory to them. But assuming you do not wish to remain their partners, they do not wish to overpay. Sir john. And if we offered to sell to a third party as a lawyer for kursk, i can tell you that we will handle these matters of stock strictly in accordance with russian law. The stock is not publicly negotiable. So if you attempt to sell it to a third party, it would simply remand to the company. Sir john so what shall i say, gentlemen . Said the kursk man holding up his hands, welcome or for farewell, john and peter looked at each other. Then john turned back to the kursk. Man obviously, were going to need a little time to think about this, of course, said the kursk. Men take 24 hours. Yeah, so that was my impression of privatization in the had. And just to let you know every chapter is like that. But in the book there are what we would call ethical dilemmas that arise here in addition to calculate actions that normal investors would have to make. Yeah. So so you so youre youre an owner of substantial assets in russia along with partners who are your coinvestors. Do you get out . Do you stay in . Do you transition . What happens . So 94, 95 then whats next after that. So so we had an interesting dilemma. Our, our Global Emerging Markets fund put, put 15 to 20 of its money into the russian voucher auctions. And in six months, we made eight, ten, 12 times our money on almost everything normal or a normal six month return. So we saw this in our Global Emerging Markets fund was was 80 invested in russia and no risk profile low risk profile in our and a lot of our investors were saying, gosh, thats great. You know, the returns were were outstanding. But but they didnt want to a lot of people didnt want to have that much money invested in russia. So what we did is we set up the Russia Value Fund and we took 80 of our holdings and put it in the Russia Value Fund and went out and raised money from people who wanted to get into russia. So we turned this little trade into a whole new business that became, you know, a very, very big part of the a big part of the company that i was a partner and and raised a bunch of money from because we had custody of these stocks and we had we knew what to own. And we had a great portfolio and and people were trying to get into russia in late 1994 and 95, early 95. And so we had we had exactly the product to sell and the product became real big and successful. And my, my, i was the 25 i was a junior partner in the company and i had a 75 partner. And he decided he wanted to run the russia business. And there wasnt enough room in there. And so i went in and founded my own company in 1996. So i pretty much was out of russia by 96 and 97 and missed the big financial collapse that happened in 98. God, what a shame. Yeah, you got out before the whole thing blew up. You know, id rather be lucky than smart. Im so sorry for you. All right . Everyone else had new wallpaper for their offices in wall street, known as russian bonds. It was a it was a terrible trade. You know, Long Term Capital Management got put out of business. And my my former partner was put out of business. It was it was was a brutal cash. And the atm machines in moscow didnt work. It was a tough time. I was there. Okay, so lets ask the question thats on everybodys mind. Bill browder. Bill, is a well known investor in russia. In the nineties, things didnt turn out so well for bill. He had his lets just say he had many more issues than you had as an investor in russia. How does your story and your experience compare to what happened to bill browder . And of course, bill has a book also the red notice, which is remarkable read just like yours is. Give us a little bit of insight into how you and bill align or dont align. So bill is a very close friend of mine. Bill and i were friends in london. We were both bankers in london before the berlin wall wall fell down. And and then we were both there in russia. As i said, there were hundreds of people who were showing up in russia. And 94 and bill was one of them. And bill and i did business together. He was at salomon brothers. Hes hes a great guy, bill. Bill made a you know, when he set up his fund, it was all russia. When i set up my fund, it was global macro. So the big difference is bill committed to russia. And i did not commit to russia. So that that that was the the main difference. And then and then bill you know bill stirred things up. Bill pointed out things that were being done by Companies Like gazprom and that the management didnt want people to know about. And he he would call attention and write these Long Research reports. And he he really upset people and finally, they made a number of people mad enough where they wouldnt let him into the country. He was at the time. He was the largest foreign investor in russia with five or 6 billion. And they literally showed up at the airport in moscow. They wouldnt let him in. And, you know, bill, then they then they arrested, you know, his his tax accountant who later died in prison is, you know, his book is is is a is a wonderfully written book. Its compelling. Its nonfiction. Its tragic. And its a great book. I think i think bill told me he sold 3 million copies. So, you know, i have a great deal of respect for bill. I just i didnt commit my life to russia the way bill did. Thankfully. Right. He had some family ties that you didnt have. Thats right. His dad and everything else. But but so not everybody. Some people made money in the nineties and some people got out with their money and then other people made money and didnt get out. And were not in the nineties anymore. So give us a little bit of insight into russia since the time that you were an investor and whether its gone in a direction that maybe you sensed a little bit or maybe it surprised you or maybe the other people who didnt get out, didnt know the direction russia was going and they were surprised because people wouldnt think today that russia was an Investment Opportunity. Yeah, i think i think what really surprised me about russia, you know, putin was Prime Minister in 1998 and then he took over for Boris Yeltsin right at the end of 99. And in the first couple of years, putin was was president. I thought he was an absolute boy scout. He was a big proponent of of reform westernized financial markets, free markets was he was doing all the right things. He was the first world leader at the site of 911 with George W Bush in the stock market, responded. I mean, the stock market went up 20 times from when putin over as president to, you know, mid, you know, 2004, 2005. Something happened in there. And, you know, im not sure what exactly was, you know, naito enlargement or oil going to 120 a barrel or, you know, russia getting back on its feet. But the security apparatus, the kgb and all those people started to insinuate themselves into all these companies. And and it just the system just got dirtier and dirtier and less and less throughout the 2005, 26, 28 and finally, western investors just, you know, really began to ignore it. And they and russia was hit very badly in the great, great financial crisis by the worst hit market during that that period. Is there a kind of alumni of people who experienced russia in the nineties or in social network of people who maybe dont publish books about it but nonetheless share their war stories and you were there together and you talk about what you achieved and what went wrong or yeah, its an Informal Group and its a big group. I mean, i dont know if its mike mcfaul here today. I thought mike was going to come mike mike knows a lot of folks who were in that group. I would id say theres a theres a collective sense of discipline meant in that group. Russia was off to such a good start in the mid nineties and they they were behaving acting by the rules they understood how the stock markets work. They were buying stocks. They were listening to their financial advisors. And then and then the wheels kind of came off in 98 and and, you know, when when the banking crisis hit and in an after that, the russians reverted to their old ways, their you know, their corrupt ways, bribing, corruption, you know, threatening force, threatening violence because their Court Systems dont work. And thats how you resolve business disputes, is by threatening violence. So, you know, but its disappointing that russia didnt didnt follow that initial path that that looks so good. You know, i wrote this essay when i was younger called trash can a stamp, and it was not an ethnic term. It was a political term about state capture, corrupt elites, absence of a judiciary, absence of a civil service. And it was about how the institutions werent there. And so it was an individually determined individual run system or patronage group run system, and it wouldnt end well. And i was at a conference, we wont name the person who ran it but resembles Michael Milken down in la. And i was a stage like this with not with you, but with the browder types and Boris Berezovsky and the rest of them. And i described this trash can a stand problem. They were invested in russia. Milken was at the head table of everyone who he had created through junk bonds, was right in front of him. So Rupert Murdoch was sitting there and many other really successful people, and it was a ballroom in Beverly Hills three times the size of this. And and after i gave the presentation about cannot stand this is not going to end well and we have some institutional issues here. They came up to me at the end and they said, oh my god, youre a specialist on emerging markets. Can we hire you . And i thought, but wait a minute, this is trash can a stand. And the general this is emerging markets. So i thought, okay, ill become an expert on emerging markets. And from that day i had a consulting and my consulting business was to say id be cautious about this person. I think this person has a lot of contract murderers, his rap sheet and and they would say, yeah, but look at the valuations. You know, this thing is pumping 2 Million Barrels and worth nothing on the stock exchange. And even if it only anyway, the the the logic that you would understand. Well and it did despite some setbacks. We had the stuff as you know, with mikhail khodorkovsky, who was here not long ago at stanford, where his company was expropriated. He had privatized it in the fashion that you had described, the loans for. And by the way, we had a chocolate company. He had took our shares in the chocolate company. Oh, yeah. I remember that. Well, that was a good company. Yeah. And that wasnt the only chocolate that he put his hands in. I got to say. But yeah. Okay. So there was a bit of a disconnect in some ways between the investor class, which saw the numbers and saw the opportunity, which was real. I mean, obviously it was real. Youre the board chair of the mover oversee is right now was more than real but at the same time there were there were indications that there was this disconnect on the institute or legal political side. Right. And others besides me were witnesses to that. Im looking over at our director who had a front row seat to all of this and met the principals. Condi rice, former sec, former National Security advisor and secretary of state. So but but now if we project forward right and now everything thats happened and russia is where it is and we have this criminal aggression against ukraine and we have the essentially destruction of russias business reputation and not just the decline of it, not just the lets see, scandalizing of it here and there, but really the selfdestruction of it. So do you see some possible way forward, some elements in russia that you previously saw that we might focus on for a different russia or a russia that more resemble the hopeful russia that you saw in the nineties. Thats a thats a tough question. Its not easy to see that, because what what you need in a place like russia is you need most of the people to obey the law and to do things the right way and to not use bribes and to not use threats of visit physical violence. And if you have 15 or 20 of the the Business People that are behaving that way, then then the rest of the Business People incentivized to to behave that way. And so, you know, you need you the you need the courts, you need the rule of law. And its just hard for me to to see a russia that that where behaves again. But it you know its you know and this this is where you and i would probably disagree is is i think there will be an opportunity to buy the russian stock market again at, you know, 5 to 10 of what its worth because they could make progress. And when you make progress, you dont have to get to 100 . You can just make some progress and the stock market will go up. So there may be an opportunity to invest in russian stocks again, but not for you. Not for you. If i had money to invest, which is another conversation, im going to talk to our director about, there were other opportunities that i see where the risk profile is different in terms of physical risk. Thats not in terms of financial risk because im not the kind of analyst that you are that can see that anyway. Okay. On the note that there may be to invest in russia again in the future, i think thats an important point. Well now open it up to our audience. Many of you were there, some of you were investors there. Please ask a question related to the book and the experience of russia in the nineties to our board chair. John kleinheinz. Please wait for a microphone before you ask the question. Thank you for being a better than i am. No surprise there by the way, im honorary kline heights. Hes a real nice but im the kline hines senior fellow at the Hoover Institution. So we have we have two kline heights or maybe one and a half. Kline heights is on the stage right now. But whos going have the courage for the first question so that i dont have to call on somebody. We might actually have some stanford students in the audience. And i was struck by your opportunity came from who you know new as much or more than what you knew. And and if i was to give advice to students today beyond your basic skills as an investment banker, how much importance do you place on the relationships you established that enabled you to make those huge wins in russia . You know, thats an excellent observation because what allowed us to do so well is that i showed up on the in moscow with a notebook full of people that could be trusted that had already checked out that people had already given me their names. And so i didnt have to just use the the people that were there. I immediately had trusted people on the ground and so those relationships are absolutely vital. Do you maintain some of those relationships chips to this day or. Yeah, yeah. Mean i, i dont theyre not real. Theyre not real active from a business standpoint, but theyre friendly relations shops. And i spend time with these people. Okay. All right. Whos next . We have one all the way down on the front on your left. My right. This. Sorry. Excuse. Thank you so much for your observations and the book discussion. And i think its awesome. So i have two questions. The first question is. Who will come after putin . Thats the first question that youre studying. And the second question is, so i know i know that youve spoken before about the golden bridge. So how do you what do you see as the golden bridge. As me . Yeah. You wrote the book. Yeah, but youre going to answer that question. So. Russia is in decline and has been in decline for some time. Russias capabilities dont match its aspirations the soviet union over reached it imploded as a result partly because we had the correct policy which was to stand up to them in a cold war, not to engage them in a hot war, but to stand up to them and a cold war and to ensure that we kept pressure on that system. That was a bipartisan policy across both democratic and republican administrations, although reagan gave a significant boost, i would argue to that policy. And so russia imploded it. They couldnt match us. We wanted to match us. And it couldnt. That was what Ronald Reagan as president and George Shultz as secretary of state and many other people in that administration understood. And then the collapse continued. After 1991. It wasnt like the soviet collapse ended. And then called reform and transition began immediately. The next day, institutionally on january 1st, 1992, when Boris Yeltsin woke up as the president of independent russia, he had 250,000 people in the kgb, and he had 7000 judges. And so that was the stuff to build a new russia and it was even weaker and weaker and weaker and got weaker. Putin came along and did arrest the decline there was a strengthening of the russian state coherence introduced privatization of land, which is a critical aspect. Macroeconomic stability, getting inflation under control and being a probusiness first term for putin, which meant that it russian entrepreneur could get rewards for their hard work and their imagination through that process hit a wall. Part of it was the security stuff where putin from, and part of it was that the gap from russia to richer western countries didnt close. It kept getting bigger. And this resentment at, the gap between russians aspirations and capabilities of russias standing vis a vis the west, this resentment roiling resentment produced the kind of revanche in the system to try to close that gap or at least manage that gap. And we got the the putin that we know today, but its only gotten weaker in to strengthen russia again in trying to make russia able to match western power. American power. Hes only further weakened in everything hes done has made his strategic situation worse. And so russia is in potentially terminal decline as a great power on the earth. And so its hard to say what comes after him. He may have very good doctors. You can survive a lost war, even if youre unpopular, as long as you suppress all political alternatives. He could fall. There could be circumstances that we dont see now. You know, all coups are invisible or failures until they succeed. Kind of comes out of nowhere. So we cant preclude it. But we have to be ready for him staying a long time and furthering this russian weakness and russian decline. You have to see his actions, including the criminal aggression against ukraine, as deriving from weakness, not from strength. And thats a secular trend. Ukraine is paying the price in a really big way right here as we speak. Russia is also the price of this misrule and this attempt, this at the weakness, an attempt to overcome the weakness we could well find ourselves in a situation where managed an angry resentful and yet still capable. Russia is a global problem, a very significant order, and we could well find ourselves ironically asking the chinese to help us manage this russian problem. A lot of our government officials have been working hard to break russia off from china to use russia as an instrument to manage china because china is seen as the the more difficult task, the peer competitor. China has a stake in the International System. It is also seeking to change the International System more to its favor. But it has a stake in a way that russia doesnt have a stake. And when you dont have a stake and youre weak and angry, but you have capabilities like blowing up a dam, god forbid, blowing up a Nuclear Power plant, poisoning water supplies, cutting undersea cables. And i could go on with the kind of spoliation that could happen because youve got nothing to lose. Youre out. Youre going down. Right . What was gorbachevs great achievement . He allowed the thing to go down and didnt take the rest the world down with it. Were going to need to manage this in a way where we dont have gorbachev there. We got somebody else there. And it could be that hes replaced and we get up a person who is wants to reengage and reenter and get a stake in the International Order and transform russian domestic institutions and not threaten its neighbors. And that could happen. It cant be precluded. Were not on that pathway right now, but it could surprise us. But we could find ourselves in a situation where were imploring the chinese to get the russians to stop doing some of the nasty things theyre doing, including this ukraine situation. And so its very troubling the path that russia is on. Very troubling. Lets remember that the us in the 1940s after World War Two provided opportunities domestically to its entire population there was a middle class economic boom between the end of World War Two and the 1970s. Our family was a beneficiary. My father worked in a Embroidery Factory and bought a house. In that time period, we provide an opportunity to our allies, not just to the marshall plan. And we provided opportunities to our enemies, to japan and germany. It was an extraordinary act. We pulled off the the opportunity domestically and globally, including to those that we had just fought a war with, that remarkable history needs to be remembered now as we go forward and we need to manage in a way that we managed before. It may be different. There may be ways in which russia is not recoverable the way germany and japan were they defeated in existential wars and willing to accept American Leadership and transform the occupation and transformation . Its not going to be identical, but we have a big problem here to manage. And putin is only part of that problem. It could get better and it could actually get worse without him, or it could get worse with him. It could become a kind of north korea, really massive scale, which is worrisome. And so managing the relationship with china, which is very important for everything in which is not part of the book and were not talking about the that piece, but well have a russia component for better or for worse. So i make no predictions about the future. If i could predict the future, i would be in that seat and be an investor and john would be in this seat and hed be the half clintonites and id be the full client. I, i think, steve, thats exactly how i would answer that question. Do. Lets lets see who who else we got. We got one in the front row here on on your on the right side and our left. Thanks you. So in every great bit of fiction, you have to, as they say, kill your darlings, right . So if thats 100,000 words or so, there had to be some extension of it that you wish that you could have put in the book, but it had to be chopped. So im really curious as to what was the most compelling story that you just desperately wanted to tell, but the editor was like, not today. The directors. Cut. The director was right. He hasnt even read the book yet. So anyone its the director. So there is there actually is a good story, a great so there was just a lot of theres a lot of research, a lot of talking, a lot of stories that came up. And theres this great story about the refuseniks and the refuseniks of these group of russian who wanted to emigrate, usually to israel. And the russians wouldnt let them out because they they held positions of power or they did something important a lot of times because they were very wealthy and they wanted to make sure they left with nothing on themselves. So they would be followed around for long periods and and anyway, one of these refuseniks finally got out, the kgb guy that was guarding him, walked him to the airport, was absolutely sure he was leaving with nothing. He gets to israel a couple of years later, the wall falls down. Hes back in moscow and he bumps into the kgb guy. And this refusenik is obviously very wealthy and some somehow managed to get the money out. And and the kgb guy said, how did you do it . And he said, he said the night before i left moscow, i invited i had a big party in my my large apartment and and invited five people from the u. S. Embassy. And i took them into my my office. They had a big wood burning fireplace. And i had the whole office was full of of 100 bills that i had accumulated. And i showed them all the hundred dollar bills, and they looked at the serial numbers and examine them all. And then i burned all we burned all 100 bills. And apparently theres regulation in u. S. Treasury code where if you destroy currency and you can prove with affidavits from u. S. Officials that its been destroyed, they will you. So he got out. He got off the plane in israel, went to washington, dc and got of this money back. Yeah. You know, why didnt i think of that . Im half jewish. Maybe i needed to be 100 in order to think that that clearly. Yeah. Im sorry. Thats not in the book, but thank you for asking that question. But were going to have a book signing on the john as graciously agreed to sign books that are for sale just outside after. So well take one more question and then well well wrap up and head for the book signing. Yeah, i was curious, you said putin was a boy scout when he first took over. Do you think he really was and hes changed. And if so, what changed him . Or do you think hes always been the putin we know today . Well, i can only answer the first part of that question. And he really was a boy scout when he got in there. He he was handed a whole he had the russian markets were in total disarray. The banks were insolvent. He was handed a whole list of problems. And he he approached them in a very free market, reformist style. And and as i said, he was the first Global Leader at the 911 with George W Bush after the attack. I dont again, i dont know whether he was a bad guy who is pretending to be good or not. And frankly, i think you know, thats going to be a question for historians for the next hundred years to what why putin went so bad and that thumb turned over to the half clean hands. Joe stalin was choirboy. He went to church every day. He did, you know, acts of charity and good deeds and wrote poetry, pretty good poetry and his native georgian language. He then went on to murder. 18 to 20 million people. And so people can surprise you. Lets just put it at that. I, i dont have the same insight into president putin that our director has who could answer the question much better than anybody in this room about what he was like and what him and why. But people have different dimensions in them and some of them recede and others rise to the fore. Theres stuff in there. Its kind of all in there. But other things bring it out or suppress certain types of behavior here and values, but. But you cant blame this on us. We didnt do this to him. He did this. Hes doing it to ukraine. Hes doing it to the russian people. And we have to remember that nobody has done more damage to russia and to russian interests in our lifetime times than Vladimir Putin has. Okay. Okay. Its time to buy some books. Lets give it up for John Kleinheinz. Stephen, thanks. Thank you very