BLODGET OBLITERATED: James Altucher Interviews Me About Eliot Spitzer's Attack, The Abyss, And Light At The End Of The Tunnel

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About a month ago, the entrepreneur, investor, and writer James Altucher asked if he could interview me about my experiences as a Wall Street analyst during the dotcom bubble — along with Eliot Spitzer’s investigation and everything that followed.
I put James off at first. James is a brilliant writer, and he was there all through the 1990s, so he had some perspective on that period. But I’ve never really talked much about those years — in part because, a decade ago, when they happened, I couldn’t say anything publicly (lawyers’ orders), and, in part, because when I could finally discuss everything more directly, it didn’t seem particularly interesting or appropriate. (I’ve written about what happened a bit since, in posts like this.)

But James was relentless.

(This is his m.o. in life, by the way. And that, combined with his brutal honesty, is why he has done so well. And it’s why he’s one of our most popular contributors.)

James kept hounding me. And, finally, with the caveat that, for legal reasons, I still couldn’t get into the nitty gritty details, I agreed.

So we sat down at the end of last week at our office. And James grilled me for about 30 minutes. The video and transcript follow (I’ve trimmed the latter and added some clarification). James also wrote a post for The Altucher Confidential about why he wanted to interview me here (link repeated at end).


JAMES ALTUCHER: So, what for me would be the worst day of my life, you wake up and you realise that Eliot Spitzer published publicly your emails at Merrill Lynch. I want to say your personal emails at Merrill Lynch, because we always think every email we send is personal, but these were your corporate emails, and Spitzer published these ones particularly with the eye to screw you over, to get you, to kill you. What was your first reaction when you saw that he had done that?

HENRY BLODGET: During the whole process, the reaction was shock. You can’t believe this is happening to you. Sure we were very vivid and informal in email, and certainly anybody that has emailed me with me since can see that that’s still the way I communicate through email, even having had this big lesson. So the whole thing was shocking. When Spitzer’s allegations were published, I got the complaint just like everybody else, and I read through it. First of all, it was a brilliant document — the way it was constructed, it makes such a good case, because this was an expert setting it up — so it was horrifying to look at.

ALTUCHER: Did you look at that and think “oh my God, I committed a crime?”

BLODGET: No. The process had been going on for a long time. The investigation started long before I left the industry, it continued for nine months. The initial theory was that [we had downgraded a stock in retaliation for the company not giving us some banking business. We hadn’t, but there was no way to tell that from the outside]. So why not investigate it? We thought Spitzer would look at it and then find that nothing had happened. [We didn’t realise he would declare the whole structure of the industry to be a fraud.]

[ADDENDUM: The other reason I thought Spitzer would conclude that nothing had happened was because I didn’t think I had done anything wrong. That probably sounds ridiculous given the way everything played out, but a big part of a Wall Street analyst’s job in those days was working with bankers to help raise money for companies. Obviously, that created a potential conflict of interest, and it also occasionally produced tension between bankers, analysts, and managements. But it was the way the industry had worked since long before I got into it. Banking also wasn’t the only source of conflicts and tension for research analysts, by the way — you should hear the way investors scream and threaten when a big-name analyst trashes one of their big holdings. The one hard rule that I set for myself when I became an analyst was that I would never write a word in a research report that I didn’t believe. And I never did.]

ALTUCHER: But you’re sort of saying, “the investigation had been going on a long time,” but you’re forgetting the fact that he aimed a gun at you. He had a picture of you on his wall with a target on it, and he published your emails, and those emails became the poster-child of the bust, and the investigation. So you wake up that morning and everyone’s read the affidavit. What was the first reaction? Who called you, how did your respond? What did you say to your wife?

BLODGET: It’s funny — a lot of people ask me that. I’ve interviewed Eliot Spitzer since then, and I’ve been on his TV show several times. People imagine us punching each other off camera and stuff. But I don’t think what he did with me was personal. I think that he saw the conflicts-of-interest issue, is he is an incredibly aggressive prosecutor, and he went after it. I actually think that it makes sense for regulators to re-examine the rules of the industry, and obviously in the industry at that point there was a lot of interaction between bankers and analysts. It was just the way it was done.

ALTUCHER: So why not ask you to re-examine the rules? Why target you, since it was very vague? We know it was vague all the way through, so why not just simply ask you “hey Henry, you’re at the center of this. Why not just help us rewrite the rules?”

BLODGET: That would have been wonderful and I would have been happy to help! I think what Eliot would say, although I don’t want to speak for him, is that that is not what prosecutors do. And Eliot Spitzer was a particularly aggressive prosecutor. [I didn’t agree with his conclusion, and I didn’t like some of his methods.] But I actually admire what he was standing up for which was “let’s make it simpler for the little guy.”

ALTUCHER: Sure, OK, so again, all that abstract stuff about Spitzer aside, that morning, did you cry? Did you turn to your wife and say “holy shit, I’m going to jail.” Did you cry?

BLODGET: I didn’t think I was going to jail, because [I didn’t think I had done anything wrong]. And because it wasn’t a criminal case. Fortunately. It was all civil. As anybody who goes through any proceeding like this knows, it’s incredibly tense, but there’s a huge difference between a civil and a criminal case. In a criminal case, jail is on the table, and is a whole different ballgame. That, I did not think about. I thought my life was over. It was scary and horrifically embarrassing.

ALTUCHER: What do you mean, your life was over?

BLODGET: Professionally, I thought it was over. I’d been on Wall Street for ten years and built up a very good reputation, and in an instant it was completely destroyed. I had no idea that it was possible to come back from that. You have every journalist calling you up thinking you’re this complete scumbag. One of the things that happens in a situation like this is that lawyers immediately forbid you from talking to anybody, because anything you say to anybody becomes evidence. I was somebody who’d been very visible [and open] for years, so not being able to say anything was tough. You see the way your friends look at you, everything that they read convinces them that you’re a scumbag, and you can’t even talk to them about it.

Henry Blodget James Altucher

ALTUCHER: Did you lose friends over this? Did people who were friends before suddenly stop returning your phone calls?

BLODGET:

I didn’t lose any friends. I had lots of acquaintances who wanted to do business with me while things were going well. They disappeared. But friends, no.
ALTUCHER: So that day, that all the affidavits were out, did you take a walk around the block? What did you do? How did you overcome this first feeling of depression when you thought your life was over? Did you feel like you were going to kill yourself because you’d mixed your professional life with your personal life? Did you feel your family would be better off without you? Was there even a moment of that?

BLODGET:

I don’t think I felt that anybody would be better off without me. But I did know that the public thought that no punishment would be too much. And I can understand that, from the way it was portrayed. You read the complaint and you listen to Spitzer’s statements, and it just sounds horrible. So [I felt the weight of that hatred and shame, and it was awful]. There was a period of probably a month or two where there was lots of back and forth with Spitzer’s office. When you’re in that process, it’s incredibly tense. You get very little sleep. You have no control. Prosecutors have unbelievable power in this society — your life is in their hands. Gradually, that worked out, though for me obviously the SEC picked it up, and banned me from the industry.
ALTUCHER: What was the worst case scenario you felt could happen to you?

BLODGET:

Worst case scenario, jail. But fortunately, for me, “criminal” was never on the table, thank goodness. [It was for other people — people I certainly didn’t think of as “criminals”]. There was a banker at Merrill Lynch. Guy could not have been more upstanding within the firm, and he went to jail over Enron. I don’t know the facts in that case, but certainly, when I was interacting with him at Merrill, I never thought “I got to watch out for this guy.” He was a total boy scout, and he went to jail.
ALTUCHER: So that kind of stress, and that kind of worst case scenario, you wake up, you have your kids, you have your wife there, how do you deal with the stress and live a semblance of a normal life?

BLODGET: I don’t think you can live a normal life while you’re going through a process like that. One of the reasons you see settlements is because the psychological and financial pressure and uncertainty is very difficult to deal with. You want to get it over with.

ALTUCHER: So eventually, months later, you did settle, but again during that period, did you just keep yourself occupied with the details of the case, or were there other methods you used to deal with stress. Did you exercise more? Did you sleep more? Did you take medication? What did you do?

BLODGET:

Lot of exercise, which I in hindsight wish I’d done for my entire Wall Street career. Every day I was on Wall Street, I said “I don’t have time to play tennis.” So I started to do that a lot more. It helps a lot. You exhaust yourself. Many nights, I couldn’t sleep, and got anxiety medicine or whatever it is that you take on planes. And eventually you get through it. One of the things that was very helpful to me was realising that no matter how bad it is for you, for other people it’s vastly worse. There were a couple books I read then that helped. One is “Life and Death in Shanghai,” about this woman who was living in Shanghai during the Cultural Revolution. She’s imprisoned for no reason. Her daughter is murdered by the Communists. She’s in jail for seven years. She finally gets out because there’s just a change in leadership. She’d never done anything wrong. Just a horrific story. And then there’s a story written by a French magazine editor — a book called “The Diving Bell And The Butterfly.” He has a stroke and he gets what is called Locked-in Syndrome where the only thing he can move on his entire body is his left eyelid. And he writes this book, 100 page book, by basically doing Morse code with his left eyelid. He writes about what his days are like and what he dreams about while he’s lying there. These are people who actually have it rough, and hearing their stories was helpful to me. OK, if they can deal with that, I can certainly deal with this.
ALTUCHER: But again, you start off talking in the abstract about the ongoing investigation, Spitzer’s not going after you because it’s personal, and yet you felt potentially the only way to survive this is to look at worst case scenarios where somebody imprisons you or you’re locked in to your body. It was horrible, now what was an example of the worst betrayal where you thought that someone who was a friend really turned around on you?

BLODGET:

I had a lot of people pile on in press. I thought I had been frank with them during the bubble. David Denby, who’s an excellent writer for the New Yorker, a movie critic, who decided he wanted to trade stocks as a sort of adventure. I got to know him a little bit [and I really liked him]. I spent several hours with him, and could not have been more up front about the risks. He later wrote a book about it. I haven’t read it, but I gather it was brutal. Stuff like that, I do feel like “come on, I couldn’t have been more straight with you.”
ALTUCHER: If you ran into him today in the street, what would you do?

BLODGET: I did run into him. I think I said “hello.”

Eliot SpitzerNot a man you want to get a sub-poena from.

ALTUCHER: Now, it’s funny, in terms of the actual case, you went on record saying that most of these internet companies are never going to be profitable. There will only be a handful left. That kind of jibes with those internal emails, and yet you decided to settle for a fairly big amount, four million dollars, why not fight? You had a case. Your public statements went along with your internal statements. I read somewhere you’ve actually put 700K of your own money into internet stocks right before the top. So what, can you make money on yourself in class action suit, what did you actually do wrong? What was the law that they were accusing you of breaking?

BLODGET: The specific allegation was that there were some statements in email that were inconsistent with what I wrote in research reports.

ALTUCHER: And is that against the law?

BLODGET: I didn’t think so. The implication was, “you weren’t telling the truth in the research report.” [From my perspective, there’s a difference between a considered professional opinion and what often goes into emails]. You stick a microphone along a sideline of a football game. You listen to the what the players are talking about all the time: “Ah the coach! What an idiot! We just got screwed” and all that stuff. Those are not professional opinions. What they are are reactions to what’s happening at the time, it’s stream of consciousness. You might say to me “You know what, I think this Infosys is a fraud.” And I’ll say “oh a fraud, really? Why?” and we’ll go back and forth. If you take out an email in that conversation, there may be statements that come out like “Oh it’s totally a fraud.” But then you think about it some more and later you say, “no, we’ve looked into it, it’s fine.” I have a lot of sympathy for anybody that has email that looks terrible out of context. Sometimes it is terrible — no question — but other times it isn’t. So anyway the allegation was that some of the statements in email were inconsistent with the research.

ALTUCHER: So two questions. First there was clearly some arbitrage you worked out where it was going to cost you more than four million dollars to fight this case, because you had a strong case. Your lawyers told you you had a strong case. So why write the check?

BLODGET: Somebody else I was talking to recently is now in that situation — where they feel like they did nothing wrong so how could they possibly ever settle. The way I explained it and the way I thought about it then — and it’s not a happy scenario — is “you are in a terrible situation. You have lots of bad options. You have to take the least-bad option.” And what was horrifying to me was, if you settle this case, everyone’s going to think you’re guilty. There’s no admission of wrongdoing in SEC settlements, so you can at least fall back on that personally. But everyone obviously thinks you’re guilty. So then it becomes “what’s the amount of time, what’s the amount of money?” and then there’s the years of stress and uncertainty if you choose to fight it. You don’t know what’s going to happen, and there’s always the threat of additional litigation. So at that time, it seemed like the right decision, and I think it was.

ALTCUHER: When you settled, did you worry you’d go broke because, let’s say, no potential jobs were coming in because you admitted to no wrongdoing but there were issues, and it was a lot of money. Were you scared?

BLODGET: I was terrified. And I was relatively young. What we’re talking about happened almost ten years ago, a full quarter of my life ago. So there was a lot of professional life left, and I certainly didn’t ever expect that I would be looking forward to the second half of my career having such a huge black mark on the earlier part of it.

ALTUCHER: Let’s go back to the origins. So you’re an analyst at Oppenheimer in 1998, you’re nobody (so to speak), and this is three years after Netscape went public, so everybody already knew the internet was in a bubble, at some point it might end, at some point it might not. And you say Amazon’s going to go up 100%, not an unusual recommendation back then. It does, and suddenly there’s this magic behind it and you become the poster child of the internet bubble. What was going through your head then? Were you excited? Did you buy a new house? What happened? And then, did you screw Oppenheimer? You suddenly left for Merrill a few months later. Were they upset?

BLODGET: The interesting thing about being an analyst then is that it wasn’t until the late 1990s that investing went mainstream. Prior to that, what most analysts did on Wall Street is talk to institutional clients like Fidelity and Janus and so forth. It wasn’t necessarily that the public couldn’t read the reports, but that’s certainly not who they were written for. So the first couple of years that I was an analyst, I was building up relationships on the institutional side, and doing well.

ALTUCHER: Before you made the Amazon call, what were you ranked as an analyst, around 1997?

BLODGET: [I was moving up in the rankings.] I picked up Yahoo, and some of the other companies in 1997, and then I wrote a big report about them. I was on the right side of the stocks at that point. Same with Amazon, and Amazon was a very controversial stock. A lot of people said it was worth zero, a lot of people said it was going to be huge. I looked at it and said “OK there are things that people don’t understand about it, as to why it could be big. And in my initial report, I said you know what, it could be worth $US500 per share.” That was way back, and so I remember having a sales force come to me and say “you come out, and you say it could be worth $US500 per share, and yet your price target is 20% above the current price. We’re not going to jump in on that. What do you really think this stock could do?” So I said “yep, fine — I’m going to tell them what I really think it could do.” So I wrote that report, $US400 a share or whatever. I had no idea that that call was going to suddenly be picked up by the press, because while I had my head down working, I wasn’t really paying attention to what was going on in terms of suddenly everyone getting into investing and day trading. So I was shocked that that caught people’s attention, because as you said, at that point, it’s like taking a $US20 stock and saying it’s going to $US40. But it hit the zeitgeist. I was young, and people said “Wow, he’s bullish on this thing that everybody wants everybody to be bullish on because everybody’s making money.” And yet it’s very controversial, it’s making a lot of people outraged, so they’re writing about it. So in hindsight, it was a good stock to pick for that. Very controversial. And obviously, I had the fortune of actually being right. [Adjusted for splits, Amazon’s trading at $US1,100 now]

ALTUCHER: So then Merrill calls you a few weeks later, and then what happens? How did they get you away from Oppenheimer?

BLODGET: Merrill was just a great opportunity. Oppenheimer’s a great firm, but Merrill was just a much bigger opportunity.

ALTUCHER: Oppenheimer wouldn’t meet what Merrill wanted to pay? What was the discrepancy?

BLODGET: It was big. They might’ve been able to, but over the long haul, it was a good move for me.

ALTUCHER: It seems to me like Merrill Lynch didn’t really pay you to analyse internet stocks. They paid you to basically be a bull on internet stocks, and I’ll give you my own personal experience with you from that time. So, early 2000 I think it was, Merrill Lynch bankers visited me at a company I started in the wireless software space, and these bankers are all lined up, and they say, and it’s even on a page, “Henry Blodget will be the analyst for this.” And a question came up, “well the guy does internet consumer stuff, why would he do enterprise software as well?” So clearly Merrill Lynch was throwing your name all over the place to get banking business, so you could’ve been fired if you said any of these internet companies were frauds.

BLODGET: Actually, no, I wouldn’t have been. I think that that has been totally blown out of proportion. I think the thing that’s missing is that, in that period, we were pitched ten times as many IPOs as we actually took public. Everybody and their brother had an internet company those days, and they wanted somebody to take it public. So, the bankers shot tons of possibilities that could’ve gone public. I as an analyst shot many that were brought to me. So even though there were lots of IPOs, it was a tiny subset of the companies that could have gone public. And as to the idea that an analyst couldn’t have been negative because it would have destroyed their career…there’s no question that throughout the 1990s, when people were negative, they had a very finite amount of time that they could be negative before their career would be destroyed. But the reason that their career was destroyed was not because they were negative. It was because they were wrong. We saw this with many value investors through the 1990s. We’re talking all-stars who had been stars for fifteen years. They quit or got fired because their performance sucked and money was flowing out the door. So it wasn’t the “you’ve got to be positive for the banking business.” It was “you’ve got a finite window that you can be negative and wrong.” By the way it’s the same thing now, it’s just not quite as high profile. Nobody likes a bear. Everybody’s making money when things are going up. If you’re going to make a bearish call, you’ve got to be right quickly. But, that said, if I had pulled the plug when in hindsight I wish I had, I would have gotten it right on both sides — and I’d have been a hero. I wish I had.

ALTUCHER: Again, you did say that only a handful of these guys are going to survive. And you mentioned ones like Amazon, eBay, Yahoo.

BLODGET: Right, and so I got the general picture right. When I look back on that period, I’m happy about that. I was very upfront in saying “Look, it looks like a bubble, and what happens in bubbles is that a few companies come through it, and the rest of them all get destroyed. So just buy the best ones and only put a little bit of your capital into it — only your high risk capital.” So I got that right. Of course, I didn’t think that the good ones would also go down 90% in the bust, which is what happened to Yahoo, and Amazon went down 90% or something. A better call would have been, “You know what? The internet is changing the world. It’s totally profound, and some of these companies are going to go through and they’re going to do great. But before that happens, there’s going to be this huge disaster that will crush everything and create a good time to jump in.” That said, in my defence, I hadn’t been through a full market cycle before. There’s a lot of wisdom that comes from simply having the experience of going through a full cycle, of the tremendous bull cycle and then the bear. In 1999, I was fully focused on the downside possibility, but I had never seen a bear market before. And I didn’t see how we would get from utopia to Armageddon.

ALTUCHER: Even when companies started trading for 100-200x revenues?

BLODGET: Again, in hindsight, it was ludicrous. And it even seemed silly at the time. But if company B with weak financials is trading for 100x revenue, company A with the superior fundamentals is trading for 150x revenue, so you get this whole relative valuation game. And then the other problem was that lots of the bubble signs had been there since 1995. When Netscape went public, it looked crazy. Everyone said it’s obviously a bubble. They’re wrong and after the next year, they’re gone. 1996, 1997, Amazon goes public, and everyone says that’s obviously crazy. Then it quadruples or dectuples or whatever. So for five years, anybody who had said, it’s “obviously crazy,” had been wrong. I was very cognisant of that, and I didn’t want to be one of those guys. But I also didn’t want to miss the turn, which I did.

ALTUCHER: So it’s all over, it’s all settled, 2003 comes and goes and you pay your money. What do you say then? You’re walking down the street, somebody comes up to you and says “Hey, you’re Henry Blodget, I bought all those stocks and then I lost all my money. You owe me. I can’t stand you.” What do you say to a guy like that?

BLODGET: I say “I’m very sorry you lost money.” I say “I hope you’ve read all of my work, which was very clear about what we talked about before [only putting high risk capital in bubble internet companies].” I will also occasionally point out that I had my money where my mouth was. I put a lot of money into Internet stocks in early 2000, and I lost almost all of it. In hindsight I look back on that and think I was just a moron. But that’s what I was recommending that people do. So, I understand the pain and I say “I’m sorry I didn’t get it right. I wish I had.”

ALTUCHER: Did you have confidence in 2003 when this had all started to settle down? Did you have confidence coming out of this that you would be able to rebuild somehow? You started writing for Slate, you started getting more into financial journalism. Did you feel like it was somehow going to work out, or were you still nervous?

BLODGET: What I didn’t want to do was just disappear. That was one option: You go out in disgrace, and gradually everyone forgets about you. I didn’t want to go out that way.

ALTUCHER: So back then you’re Henry Blodget, why didn’t you just buy a chain of gas stations and rebuild somewhere else, or move out of the city? You were probably running into people who you didn’t want to run into? Why did you stick through it?

BLODGET: I didn’t want to go out that way. Lots and lots of people trusted me in the 1990s and listened to me, and that was a huge privilege. Based on the allegations, most of those people felt completely betrayed. I wanted to try to earn back that trust for whoever would give me the chance to do it. Fortunately, lots of people gave me that chance. And over the last decade, a lot more people have given me that chance. I am grateful to every one of them for doing it.

ALTUCHER: So in Slate, you did an article on smart money and CNBC where you basically trashed stock-market journalism. And then what do you next? You start a blog, internetoutsider.com, in which one of your first articles analysed Google, analyse Microsoft, and you’re back into financially analysing companies. That evolved into Business Insider, so aren’t you in the exact space you were before?

BLODGET: Absolutely, but I’m also being crystal clear about how I think casual investors should invest. I wrote a book called “The Wall Street Self-Defence Manual” in which I made it clear that I do not think casual investors should trade stocks or buy individual stocks. I think doing that is insane, but it takes a while to convince a smart person of that because they feel like they have some edge. The idea that an individual sitting at home, watching TV, getting a tip, doing a little bit of work, reading a financial prospectus, could ever out-trade Fidelity or SAC Capital is just ludicrous. And by the way, you have to out-trade them to win — it’s a zero-sum game. So I think without question, the best advice for individual investors is “Never ever pick stocks. Don’t try to time the market. Own a diversified basket of index funds, and re-balance when something gets out of whack.” I’ve been very consistent about that since then. That said, there are people that are professionals paid to analyse stocks like Google. So, trying to contribute to the analysis of that stock and make the market smarter on it is perfectly worthwhile. I read a lot of Wall Street research now, and a lot of it is excellent. Both from the Buy side and the Sell side.

Business insider

ALTUCHER: Business Insider — is it journalism or entertainment?

BLODGET:

I hope it’s both. I hope it’s analysis too. We have a wonderful opportunity, in that most people are sitting at their desks all day with a big broadband connection. They have minutes between their work where they want to catch up on what’s going on. They want to check in and they want to be smarter about the news. And they want to be entertained, and if there are funny pictures, or if somebody said something funny, and we can bring that together so that people are excited to come to the site, great. We’re thrilled to have them.
ALTUCHER: So you had an article earlier today, for instance an article about the girl who thought she was too beautiful to be a banker.

BLODGET:

I loved that one. This woman writes into the Financial Times, saying “Here I am in banking, and I hate to tell you but I’m so good looking that men don’t take me seriously in meetings. They just hit on me. What should I do?” The FT woman flayed her, saying “I’m so sorry, Miss Supermodel. We mere mortals can hardly imagine the travails that you must go through in your business career.” So anyway, that was a great 30 seconds for me, reading that article, and I hope a lot of our readers felt the same way.
ALTUCHER: That’s interesting because I feel like the FT wouldn’t do an article like that, so what separates you from traditional mainstream media? What do you think is the difference?

BLODGET:

I think the difference is that print publications are very limited in the amount of content that they can deliver. They only have a few pages and each page has to have a certain number of ads or they can’t create the content. I think that if the FT could print several thousand pages a day with stuff for everybody, not just stuff for the really serious financial readers, I think they’d do it. The FT’s site is a different story, though. When you say, “Why are you different than the Wall Street Journal?” I don’t think the WSJ would have constructed itself in the same way if it were constructing itself for the Internet. I think you have the ability online to do a lot bigger range of stuff vs. a print publication, because you’re not constrained by the paper-based delivery.
ALTUCHER: Right now, what do you enjoy better, running Business Insider, or in the heyday (1999), being an analyst at Merrill Lynch?

BLODGET:

The late 1990s was an extraordinary period, but it was also a bizarre period in financial history. I had never seen anything like it, and my career moved incredibly quickly. It was like trying to stay on a surf board in a tidal wave. I felt like I did that pretty well, and then I suddenly crashed into the rocks at the end. But when I left Wall Street — which was before the allegations — I was done with it, and was going to go into other things. What we do now is wonderful, and it’s wonderful not to have the restrictions that you have writing as an analyst on Wall Street.
ALTUCHER: You still have some restrictions — you can’t buy stocks or front run stocks that you write about.

BLODGET:

I don’t trade stocks at all, because I don’t think it’s smart for individuals to trade stocks. So that’s not an issue. But what I mean is, there are very strict rules on Wall Street about the kind of language you can use in research reports. I would write for example, “Most internet stocks are going to be roadkill.” The report would come right back to me saying “You can’t say roadkill. We have to phrase it in a way so it sounds like only the better companies are going to survive.” So, that’s frustrating to me. I like to use words like “roadkill.” In Business Insider we can use those words all day long. We can have headlines that say “Crappy economic numbers” and so forth. [Or you can say some CEO is an idiot.] You can talk in vernacular that you can’t use in a research report, and that is wonderful and liberating.
ALTUCHER: Do you see Business Insider surviving on its own through the ages, or do you see it taking the HuffPo route at some point? Do you have incoming calls right now given the HuffPo’s valuation?

BLODGET:

Everybody’s talking to everybody. I do think that we are building a publication that is a viable digital publication. And I think that the bigger we get, the better work we will be able to do. One of the frustrations of a lot of people is “What is the world going to do when the New York Times has to lay off a few more journalists?” I think what’s happening at HuffPo, Gawker Media, and other such publications, is that you’re seeing new models arising that will support really good journalism. It’s not going to be the same as the New York Times, exactly, and it’s going to be a long time before companies like that get to the level of revenue and profitability that the New York Times has, but journalism is alive and well. And the bigger we get, the more we can afford to do. Some people like long, hard-hitting magazine pieces, and we can do some of those now, but we can do relatively few of them. But the bigger we get, the more we’ll be able to do. So the idea is to build a viable, standalone publication that gets better every day.
ALTUCHER: To close this off, you’re kind of at the best point in your career, then the absolute worst point that could happen to anybody’s career, and now you’re at a good point. What would you say is the single most important thing to be able to come back from the dead? You refer to yourself as being “dead” in 2002 and 2003. How do you come back from the dead, which I think a lot of people had to deal with in 2008, or 2001 to 2002, etc.

BLODGET:

I think you just keep taking steps forward. I don’t mean to keep going back to the physical analogies, but there are so many stories about people who’ve been put in these incredibly difficult physical situations where they’re paralysed or what have you, and their initial reaction is just utter despair. They think, it’s over, how can I come back from that? Then they go on a live incredibly productive lives and discover all these things that they never knew they could do. Fortunately, my situation was nothing like that, but those stories were very inspiring to me. The idea is that if you keep taking another step and keep moving forward and try to get better every day, good things happen. Certainly, I feel like there’s a long way to go for Business Insider, and for me, and I’ll just keep continuing to try to do that.
James Altucher writes The Altucher Confidential, a blog about business and life. James wrote a post about why he wanted to interview Henry Blodget here.

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