Interview with BlackRock CEO Larry Fink: AI and Asset Tokenization Will Reshape the Future of Investing
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Interview with BlackRock CEO Larry Fink: AI and Asset Tokenization Will Reshape the Future of Investing
What truly changed Wall Street was the personal computer.
Navigating Web3 tides with focused insightsGuest: Larry Fink, Co-Founder, Chairman and CEO of BlackRock
Host: Leon Kalvaria, Global Head of Banking at Citigroup
Compiled & Translated: LenaXin, ChainCatcher
Editor's Summary
This article compiles the latest episode of "Conversations with Legends" hosted by Citigroup, where Leon Kalvaria, Global Head of Banking at Citigroup, interviews Larry Fink, Co-Founder, Chairman and CEO of BlackRock. At the time of video release, BlackRock managed $12.5 trillion in assets. How did Larry achieve this?
In this session, Larry shares his unique insights on leadership, key themes from his career, and experiences that shaped his remarkable journey.
ChainCatcher has compiled and translated the discussion.
Key Insights Summary:
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The real game-changer for Wall Street was the personal computer.
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Profound lessons: First, believing we had a top-tier team and market insight but failing to evolve our thinking with the market; second, being blinded by ambition to gain market share when competing with Salomon Brothers.
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The foundation of the company is risk tools—BlackRock’s culture is deeply rooted in risk technology.
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Artificial intelligence and tokenization of financial assets will reshape the future of investing and asset management.
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The essence of the asset management industry is results-driven.
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Investors must seek information not yet fully recognized by the market—old news can no longer generate excess returns.
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If active investing truly worked, ETFs would never have risen.
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If U.S. economic growth cannot sustainably reach 3%, the deficit issue will cripple the nation.
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As long as balance sheets are matched and deleveraging occurs, losses won’t spread into systemic crises.
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Bitcoin is precisely a hedge against an uncertain future.
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Only through full, continuous engagement can one maintain dialogue rights and industry influence.
(1) How Did Larry’s Upbringing Shape His Leadership?
Leon Kalvaria: How did your family background shape your unique worldview and risk decision-making ability, ultimately leading to excellence with a global perspective?
Larry Fink: My parents were wonderful people. They were socialists, very progressive, and emphasized two things above all: academic achievement and personal responsibility. They always told me: “If you’re unhappy as an adult, don’t blame your parents—it’s your own responsibility.”
This teaching instilled independence early. Starting at age 10, I worked in a shoe store, which taught me how to communicate with customers and build relationships. While kids today rarely work so young, those experiences matured me early and taught responsibility. It wasn't until age 15 that I began seriously planning a more purposeful life.
Leon Kalvaria: How did your West Coast academic background help you transition into leadership within traditional firms?
Larry Fink: In January 1976, I saw snow for the first time during a New York job interview. I was a typical West Coast kid—wearing turquoise jewelry, long hair, and often brown suits. First Boston stood out among firms because they offered personalized training programs, and several leaders on the trading floor felt approachable. They directly placed me into trading—an unusual move at the time.
Wall Street then was vastly different. In 1976, First Boston hired only 14 people. The total capital of all Wall Street investment banks combined—including Goldman Sachs, Loeb Rhoades, Kuhn Loeb, Lehman Brothers, White Weld, Merrill Lynch (excluding commercial banks)—was about $200 million.
Investment banks operated like family workshops, taking almost no risk. Balance sheet expansion only began after 1976.
Within my first month on the trading floor, I knew I could succeed. After training, I was assigned to a three-person mortgage and securitization group—a thrilling opportunity.
(2) Larry’s Entrepreneurial Journey
Leon Kalvaria: What fundamental new understandings about finance and risk did your early experience with securitization give you?
Larry Fink: The real game-changer for Wall Street was the personal computer. Before that, we only had Monroe calculators or HP-12Cs. In 1983, our mortgage department acquired several computers—primitive by today’s standards—but they allowed us to rethink how to pool mortgages and calculate cash flow characteristics.
Reconstructing cash flows using real-time data launched the securitization era. Much calculation was still manual, but derivatives like interest rate swaps emerged due to technological advances on the trading floor. Wall Street was transformed forever.
A key catalyst for founding BlackRock was that sell-side technology consistently led buy-side capabilities.
Leon Kalvaria: What was the most unexpected lesson you learned? What insights did it give you that may have shaped your later leadership at BlackRock?
Larry Fink: Let me reflect on my career path: youngest managing director at 27, joined the executive committee at 31, but by 34, I had become insufferably arrogant.
The “team” mentality only worked during profitable periods. From 1984–85, we became the firm’s most profitable group, even setting quarterly records. But in Q2 1986, we suddenly lost $100 million. This revealed a harsh truth: when profitable, you're hailed as a hero; when losing, 80% turn away—the so-called team spirit vanishes.
I learned two profound lessons: first, despite believing we had a top team and market insight, we failed to evolve our thinking with the market; second, while competing with Salomon Brothers, we were blinded by the ambition to capture market share. Lou was fired a year earlier for similar mistakes, yet I didn’t learn from it.
I’ve never forgiven myself for not strongly opposing the blind addition of capital. We lacked risk management tools yet took on risks no one understood. This failure ultimately became fertile ground for BlackRock’s growth.
Leon Kalvaria: What kept you believing in entrepreneurial success despite widespread skepticism and personal setbacks?
Larry Fink: That period certainly damaged my confidence. Though it took a year and a half to rebuild, I received partnership offers from multiple Wall Street firms, but felt repeating the old path wasn’t right. So I began exploring possibilities on the buy side.
Two major clients were willing to fund my startup, but I lacked confidence going solo, so I reached out to Steve Schwarzman. First Boston had helped raise Blackstone’s first fund (~$545M), and through our relationships with savings institutions, I contributed to part of that fundraising.
Introduced by Bruce Wasserstein, I met Steve and Pete. They found my idea compelling—in fact, Steve believed in me more than I believed in myself. I became Blackstone’s fourth partner.
The weekend after resigning, I held an open house at home—60–70 people attended to discuss my new plan. I told some directly: “After I leave, you’ll actually do better.” The firm eventually dissolved—some left, others stayed—but this honesty helped everyone find better paths.
(3) Development and Importance of Aladdin Technology
Leon Kalvaria: During the financial crisis, what were the main factors behind BlackRock being selected to advise the U.S. government? Did early development of Aladdin technology provide a decisive advantage?
Larry Fink: Two of our eight founders were technologists. We invested $25,000 in SunSpark workstations, newly released in 1988, enabling us to independently develop risk tools at BlackRock.
From day one, the company was built on developing risk tools—BlackRock’s culture is deeply rooted in risk technology.
When Kidder Peabody, owned by GE, collapsed in 1994, we proactively approached CEO Jack Welch and CFO Dennis Damerman due to our longstanding relationship. Most expected Goldman Sachs to be hired, but we won the mandate via the Aladdin system to liquidate their bad assets.
I insisted on no upfront fees—payment only upon success. After nine months, the portfolio turned profitable, and GE paid the highest consulting fee in history.
I wanted my investment team to stand on their own merits, and for Aladdin to compete and win against anyone. We decided to open Aladdin to all clients—and even competitors.
In 2003, we faced another crisis. Leveraging trust with U.S. government and regulators, we participated similarly in multiple rescues. Over the Bear Stearns weekend, JP Morgan hired us to analyze its portfolio. As we urgently assessed risks Friday and Saturday, I coordinated simultaneously with Treasury’s Hack and the Fed’s Tim.
Sunday at 6 a.m., Tim called requesting support. I responded that I needed Jamie, JP Morgan’s CEO, to approve transitioning to government service. To speed things up, we were directly hired by the U.S. government.
The Treasury Secretary asked, “Will U.S. taxpayers lose money on these assets?” I replied that including principal and interest—given deep write-downs and high rates—taxpayers were likely to recover funds.
Since then, we’ve been hired to handle AIG restructuring and crisis responses for governments in the UK, Netherlands, Germany, Switzerland, and Canada.
(Note: American International Group, abbreviated as AIG)
(4) Purpose Behind the Annual Letter to Shareholders
Leon Kalvaria: What is the core philosophy behind your annual letter to shareholders since 2012? Is it meant to document pivotal moments, convey insights to investors, or issue strategic declarations?
Larry Fink: Except for a few central themes, I never intended these letters as declarations. I wouldn’t have written them at all if not for acquiring BGI in 2009, making us the world’s largest index manager. Then, we held significant equity stewardship responsibilities but only voting rights, not disposal rights.
This aligned with ideas discussed with Warren. The original letters aimed solely to promote “long-termism”—thinking about long-term trends for long-term investors. That was the entire intent.
(Note: Leon Kalvaria joked that Larry Fink’s shareholder letters are in some ways sister pieces to Warren Buffett’s letters.)
(5) Major Trends Reshaping Asset Management
Leon Kalvaria: From your perspective, what major trends will reshape future investing and asset management?
Larry Fink: Artificial intelligence and tokenization of financial assets. At lunch today with someone who served as both treasury secretary and central banker, he privately admitted that banking is already lagging behind technology in many areas.
Innovations like Brazil’s New Bank expanding into Mexico, and German digital platforms like Trade Republic disrupting traditional models, demonstrate tech’s transformative power. Combined with AI revolutionizing big data analytics, the disruption becomes clear—for example, BlackRock established an AI lab at Stanford in 2017, hiring professor teams to develop optimization algorithms. Managing $12.5 trillion involves massive transactions, and technological innovation is helping us return to our core responsibilities.
Leon Kalvaria: As these tools go mainstream, how do you ensure transparency and accountability while maintaining BlackRock’s edge?
Larry Fink: Early scale operators will have greater advantages, which worries me for society—large institutions that can afford AI costs will dominate.
But once second-generation AI spreads widely, competitive advantages will be challenged. BlackRock’s current advantage is far greater than just one or five years ago. Our technology investments have created massive scale—all operations are built on technical architecture, including trade processing, workflow optimization, M&A integration, and unified platforms, far beyond public perception.
Leon Kalvaria: How do the three major private asset acquisitions (Prequin/HBS/Bio) reshape investor allocation in private markets?
Larry Fink: Today’s earnings call reaffirmed the importance of continuous transformation. The 2009 acquisition of BGI (including iShares), though initially questioned, validated our strategy of “passive + active + whole portfolio focus”—iShares grew from $340 billion to nearly $5 trillion.
In 2023, BlackRock’s private markets business grew significantly—infrastructure investments surged from zero to $50 billion, private credit expanded rapidly. Surging client demand drove innovation—public and private markets are accelerating convergence. Technological advances will enable free allocation between public and private assets, impacting all institutional investors and even 401k plans.
The Prequin acquisition cost only one-third of peers’ prices but was a critical move: integrating E-Front’s private market analytics with Aladdin’s public market system creates end-to-end risk control across public and private assets, enhancing portfolio integration and client dialogue.
Leon Kalvaria: What is the current state of retirement funding?
Larry Fink: If you can earn 50 basis points over 30 years in private markets, your returns will exceed that number—otherwise, liquidity risk isn’t worth it. Overall, your portfolio gains 18%.
Four months ago, BlackRock hosted a retirement summit in Washington with 50 members of Congress and the Speaker of the House attending dinner. As managers of the federal retirement plan, we oversee half of the $12.5 trillion in retirement-related assets.
(6) Relationships with Global Leaders and Strategic Impact
Leon Kalvaria: When global leaders seek your personal advice on finance and geopolitics, how do you integrate investment insights with geopolitical risk assessment?
Larry Fink: Building trust is foundational. Since 2008, central bank governors and finance ministers have grown accustomed to deep conversations with me—all discussions remain strictly within my office. Though no formal confidentiality agreements exist, trust works like my talks with CEOs: nothing leaves the room. These dialogues always center on substantive issues. I’m not always right, but views are grounded in history and facts.
Leon Kalvaria: You’ve long mentored many leaders—this communication channel is exceptionally rare.
Larry Fink: The asset management industry is fundamentally results-oriented. We don’t profit from turnover or transaction volume—we succeed based on outcomes. We’re deeply involved in global retirement systems (third-largest retirement manager in Mexico, largest foreign manager in Japan, largest retirement fund manager in the UK), so we naturally focus on long-term issues.
This influence can’t be replicated—it’s built over years of trust. I proactively meet incoming national leaders (like Claudia in Mexico, Scholz in Germany) before they take office to ensure smooth communication—that’s our unique value.
Leon Kalvaria: Looking back on your recent career, who were your mentors and influencers?
Larry Fink: At IPO in 1999, BlackRock’s market cap was just $700 million. We attracted seasoned directors like Dave Komansky, CEO of Merrill Lynch, and Dennis Damerman of GE. The board has always been our core pillar. When acquiring Merrill Lynch Investment Management, we transformed from a U.S. fixed-income firm into a global player operating in 40 countries. Throughout, I repeatedly consulted the board on management approaches.
The board remains vital today—Chuck Robbins, CEO of Cisco, provides tech insights; Fabrizio Freda, former CEO of Estée Lauder, contributes marketing wisdom. These cross-industry experts keep me reliant on the board for growth.
(7) Audience Q&A
Q: How will artificial intelligence reshape future investment paradigms? How will different strategies (individual vs. institutional investors) evolve? Where is the trend heading?
Larry Fink: Every investor must seek information not yet fully priced by the market—traditional information (old news) can no longer generate excess returns. AI generates unique insights by analyzing differentiated datasets. Our systematic equities team has outperformed the market for 12 consecutive years, using AI-driven, big-data thematic strategies that beat 95% of fundamental stock pickers over the past decade.
But like baseball, maintaining a .300 batting average is extremely hard—doing it for five straight years is rare. Only a few investors sustain outperformance. Most fundamental investors deliver poor net-of-fee returns, which explains why active management is shrinking. If active investing truly worked, ETFs would never have risen.
Traditional asset managers have depressed valuations—many peers that went public in 2004 now have market caps of only $5–20 billion, versus BlackRock’s $170 billion—because they couldn’t invest in tech upgrades. The gap between us and traditional agents will keep widening.
Leon Kalvaria: What is the most underestimated black swan risk in today’s market? If U.S. GDP growth cannot sustain 3% (even with controlled inflation), what systemic crises might emerge?
Larry Fink: If U.S. economic growth cannot sustainably reach 3%, the deficit problem will crush the nation.
The deficit rose from $8 trillion in 2000 to $36 trillion 25 years later—and keeps worsening. Only sustained 3% growth can stabilize debt-to-GDP ratios. But markets doubt this. Deeper risks include:
1. 20% of U.S. Treasuries are held by foreigners—if tariff policies fuel isolationism, dollar holdings may decline;
2. Countries building local capital markets (e.g., BlackRock raising $2B in India, Saudi launching MBS business) retain domestic savings locally, weakening U.S. Treasury appeal;
3. Stablecoins and digital currencies may reduce the dollar’s global role.
Solutions lie in unleashing private capital and streamlining approvals. Japan, Italy, and others face similar deficit crises due to low growth.
Though private credit may harbor black swan events, higher matching rates mean systemic risk in capital markets is currently lower than in prior years. As long as balance sheets are matched and deleveraging continues, losses won’t escalate into systemic crises.
(8) Why Has Larry Changed His View on Digital Assets?
Leon Kalvaria: What key factors drove your evolving stance on digital assets—especially stablecoins? Did other institutions embracing the space faster than expected shift your view?
Larry Fink: I once harshly criticized Bitcoin alongside Jamie Dimon, calling it “money for laundering and theft”—that was my 2017 view.
But pandemic-era reflection and research changed my mind: an Afghan woman used Bitcoin to pay female workers banned by the Taliban from receiving salaries. The banking system was frozen—crypto became the lifeline.
I gradually realized blockchain technology behind Bitcoin holds irreplaceable value. It’s not currency—it’s a “fear asset” against systemic risk. People hold it due to concerns over national security and currency devaluation—20% of Bitcoin holders are Chinese, though holding it is illegal there.
If you don’t believe assets will appreciate over the next 20–30 years, why invest at all?
Bitcoin is a hedge against an uncertain future. High-risk, fast-changing environments demand continuous learning.
(9) Larry’s Leadership Principles
Q: What are your core leadership principles? Especially during industry upheaval requiring strategic flexibility, how do you maintain consistent leadership?
Larry Fink: You must commit to learning every day—stagnation means falling behind. Leading a large enterprise has no “pause button”—only full commitment. To stay at the top, you must constantly challenge yourself and hold your team to the same standard. After 50 years in the industry, I still strive to make every day my best.
In the end, only full, passionate engagement allows you to continuously maintain dialogue rights and industry influence. This privilege must be earned daily through performance—never taken for granted.
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