8 Episode results for "Harvard Endowment"

Former Sallie Mae CEO NOW Thinks College Is Too Expensive!

Work Matters With Ken Coleman

07:45 min | 2 months ago

Former Sallie Mae CEO NOW Thinks College Is Too Expensive!

"This is work matters with bestselling author and syndicated talk. Show host. Ken coleman it's wednesday. July twenty eight here is the headline from the wall street journal l. Lord you ever heard of al lord back there in the control room. Nobody's heard of al lord. Oh wait for our lord profited when college tuition rose. He's paying for it. What our lord. The former chief executive of student loan giant sallie mae has a complaint say. It's not so al. He's got a complaint about education higher. Ed the price of college is too high. Thanks al hey al thank you thank you out now. So what do you think. I'm making fun of out. I'm not. I'm saying thank you all. It's a little too late but we'll take it. This is the guy that drove the price of tuition up with his cronies in the government in congress. What spread it down. But first another startling quote from al. He's been paying for his grandchildren's education in recent years and he's appalled at the tuition bills. Direct quote boy. I sure i'm glad we saved for my grandkids college. If the average income is forty thousand and fifty thousand six thousand. i just don't know how you do it. I'll thanks al. thank you. thank you americans. In each of those income brackets are grateful for your empathy by the way. The median family income in the united states. Right now is seventy eight thousand dollars. According to twenty twenty we don't have twenty twenty one Results yet people. Few people had as close a perspective on the cost of college as our lord. Now seventy five. He watched he said with bewilderment. For decades colleges persistently raised their prices faster than inflation. I just wanna make sure you folks here this higher. Ed has been raising their tuition prices faster than inflation. If you weren't paying close attention another quote from lord. He said they raised the tuition. Because they can. And the government facilitates. It facilitates it. He said there was no question in my mind. I knew what was going on. He said in a recent interview staring out the window of an office overlooking a river. Lib remind you what i've said before. This is the dude who knew what was going on. But he was running a for profit company sallie mae higher. Ed cares more about their fortune than your future. Macedo again somebody needs to tweet that. Write it down. Put it out on social media because it's not a popular thing to say but i'm all in higher. Education cares more about their fortune than your future in janis future and suzy's future and everybody else you think they care so deeply about. It's a bunch crab this is the these are the facts from the man's mouth himself. What's the background on. Sallie mae was formed by congress in nineteen seventy two. Is the student loan marketing association and they used taxpayer money to ensure that banks earned enough on the student. Loans your tax payer dollars. Congress is behind this starting to nineteen eighties. College raise tuition at more than double the rate of inflation. That's from the labor department. See there's any other great quotes in this guy before i go off. Yeah nothing else so there it is. Here's the guy. And i've read the whole article in the wall street journal and check it out. We'll give you the summary. So basically congress comes up with this idea and they give sallie mae really sweet guaranteed return guaranteed any losses and higher education said. Hey let's do this. Let's keep going keep going. Keep going and give you an idea. Harvard endowment right now forty billion dollars. Harvard forty billion dollars. We're talking generations of students could go to harvard for free. If and they still wouldn't use the forty billion dollar endowment when are we gonna wake up. I mean here's the guy he's going look. It was big business and he was like a. We figured it out so then we started taking it directly. They bypass congress who congress got him. Started with your tax dollars and in sallie mae was like. Let's let's let's go directly to students. I told you that this was a marketing play. This is big business. Higher education is in the business of making money not making futures. I i'm telling you joe. How long have i been saying this that. There's a wave coming and it's like this is another major domino. This isn't some guy who is in the compliance department of sallie mae. This is the ceo twice. he was. Ceo retired came back. You can dive into the article. The guy turned it into a money making machine three hundred million dollars worth of assets. And now he's going it's out of control. He went to penn state for fifteen hundred dollars. A year worked his way through. Incidentally he's a guy that's going. I don't think we should just wipe away student loans. Thanks al i mean. At what point do we wake up and go. Enough is enough. What are we doing here. It's a status symbol. It's not helping our kids. I wanna bring it all down to be honest with you. I'm just going to say it. I want to reset. I wanna make colleges slash tuition slash their staff sizes. Use some of those endowments to pay those professors. Who just can't freaking get a job anywhere else. I don't care it's about time that we make college and affordable and a relevant training opportunity not a super expensive luxury brand driven. Excuse to drink really hard for five years. I'm not anti education. I'm not anti over inflated college tuition. That's not focused on practical training if you want your kids to read a bunch of liberal arts books and get liberal arts experience and go find those forum. Somebody will create that. I'm all for the liberal arts. I get it. It's wonderful but not in its current packaging. It's to be broken up. Let's grab a pitchfork and charge. The castle shall we agree. Only hear from you. If you like what you're hearing make sure to subscribe and share work matters with a friend for help on your career journey. Listen to the ken. Coleman show podcast part of the ramsey network.

al lord sallie mae Ken coleman al congress the wall street journal Macedo Ed Sallie mae harvard Lib janis suzy department of sallie mae labor department
The Dennis Prager Show 20210617  1 Rare Win

Dennis Prager Podcasts

35:24 min | 4 months ago

The Dennis Prager Show 20210617 1 Rare Win

"Is podcast is a production of the salem podcast network for more podcast like this from courageous voices of conservative reason visit salem podcast network dot com. Well it's a thursday all pleasure to be with you. A unanimous supreme court decision was just handed down. Was it handed down today. I think it's today just handed down and it concerns the catholic adoption agencies. Must they give children who have for adoption to same sex couples or they are. They allowed to only give children to To married opposite sex couples catholic doctrine as the jewish doctrine as the protestant doctrine is that marriage is between a man and a woman one of the things that people hate about religion. Is that the truly religious. Nothi woke actually believe that the religion is right and the new york. Times is wrong for many catholics. Protestants and jews. The new york times is right and their religion is wrong. that's that's an in a nutshell or even more precise perhaps is their hearts are right and their religion. The bible is wrong. Hence the bible warren's probably warns against this more than any other thing not to follow your heart and we live in the heart based society. How do you feel is the the big issue. If there's been a key. There have been a number of consistent in my thirty five years of broadcasting. One of them is warning about a feelings based heart based society. How do you feel about it that cetera. Now i know same sex couples indeed. My wife and i are godparents to a same sex couples. Chill two sons and the kids are terrific and we love the parents the two men nevertheless. i support the decision. I know that if you went to college. What i just said is very very complex. But it isn't one can appreciate the reality on the ground while still holding true to one's beliefs that where possible child should have a mother and father disparage two fathers. It doesn't disparage to mothers. It doesn't disparage single mothers or single fathers if religion does not hold an ideal. What the hell is it useful for. Answer that one. I can't think of a more important purpose of religion than to provide ideals for society. This is the ideal family. This is the ideal way to live a life. That's that's what religion is for people. Think religion is four and i deeply appreciate this or relationship with god. That's lovely but if you have a relationship with god and you don't get your ideals of life from god then. The relationship is not relevant to society for the record. That is the way my religious convictions. Work what does god want from me and for mike. Society are my operate operative questions. Not how was my relationship with him. It's an interesting ultimate issues topic. What do you think. The purpose of religion is very important. Subject so catholic charity says look we have all of these married men and women married men. Two women married women to men who would like to adopt their first on our list. It's not a knock on single. They don't give they. Don't give children to singles to the best of my knowledge heterosexual singles for that matter straight. Heterosexual cisgenders singles. They wanna married man in the woman to have first crack at a baby or child for adoption anti anybody. It is to hold true to a religious ideal which the catholic church has not been doing much especially under this pope who is a child of liberation theology and argentina nevertheless in this case it has held fast to its biblical roots. It astonishing to me to be perfectly honest that the supreme court ruled in favor of catholic charities unanimously only takes the wind out of knocks the wind out of the argument that a conservative court is the problem and then we have to pack it with left-wing judges so was to undo the only institution society. The left doesn't control when you have four liberal left. The judges agreeing here. If if religious conviction if allowing for religious freedom means anything then it means something in this case. You can't tell catholic charities that they have to redefine family If they have a child of course be interesting to see how how is depicted with all these liberal judges signing. What are they going to say. Well let's say they got it and we at the los angeles times washington posts. Cnn new york times. Boston globe and p. p. b. s. c. n. n. I already said cnn. Abc cbs and nbc. We know better people who've not thought this issue through it all. They really believe that the that any adoption agency should be blind to this issue. You are not prepared to say all things being equal obviously if you have a spectacular To the best of your knowledge same sex couple and you have dysfunctional Heterosexual couple okay. We understand we understand. But that's not the issue. The issue is a a wonderful same sex couple and a wonderful opposite. Sex couple is is a catholic charity supposed to take the position. It doesn't matter. My opposition to same-sex matter was exactly on that issue because the argument was It turned out to be right. Unbelievably right what i said. The whole time was their argument is gender. Doesn't matter well ladies and gentlemen now you know what it led to gender not only does gender not matter we have gone from gender does not matter to gender does not exist and by the way it's inevitable if something doesn't matter if the existence of something doesn't matter then maybe it doesn't exist can't you can't matter less than nonexistence. One eight prager seven seven six is the number eight seven seven two four three triple seven six. This is a very very powerful decision on the part of the supreme court and the fact that it is unanimous. I think it's somewhat of a tribute to a man about whom i've had some influence justice roberts chief justice roberts. Well i think what he has what he is done as one that trust fatally liberal slash left of court and has been able to get a number of unanimous decisions which have run in a way that we would identify generally with zeke with the conservatives but it is amazing that this even became an issue if you have a mother and father and you have a couple. We've no father or no mother. Why wouldn't an adoption agency be allowed to. I use the married men and women. The dennis prager show i dennis prager here again with a message for anyone struggling with pain. Of course i want you to know about relief factor. The one hundred percent drug free supplement that tens of thousands or taking every day. I take it every day. I like being out of pain. But i know you may be skeptical. I certainly was then. I kept hearing about all the people including my wife who will no longer in pain so i decided to give it a try in fact. Listen to janna story. How skeptical at first but because of the pain that i was having when i would substitute teach and have to climb stairs i have lower back hip and even knee pain and after about three weeks i found that i could climb stairs pain-free but it wasn't only pain-free i could do it. Step overstep without holding on the railing. I'm really happy it. It makes me feel young again. That's relieffactor dot com or call. Eight hundred five hundred eighty three eighty four eight hundred five hundred eighty three eighty four apropos. The subject that i just been covering the supreme court unanimous decision that catholic charities cannot be forced to give children who they have for adoption to same sex couples. It's a quite Quite an extraordinary story. I'll be very interested to see how they feel with the fact that the liberal justices said that religious freedom was important. Of course they will condemn it but they must be scratching their heads at the new york times where there is absolutely no difference between two members of the same sex and two members of the opposite sex because of the sexist don't exist anyway a very interesting issue arose about actually. It was our resident. Harvard heretic girl. You were mentioning to me of an all girl school. You attended enroll girls school right and your friend is still still at school. My mom yesterday sixteen year old girl. And what do they do if one of the students says i'm a man well they don't ask the student to leave so it's not an all girls school you can't have it both ways either. It's an all girls school and the transgender male must leave or you don't believe the transgender male israeli mail there. There's no third possibility correct. It's all it's all kabuki theatre deal understand. The the whole leftist world is theater. The theater of the absurd really. What do you do a girl at your earl. All girls school has announced that she is not she but she is he. Do you take it seriously. If so you cannot stay enrolled but they allow them to stay in roles so it's not an all girls school that's so either it's ally that she's a boy or its ally that it's an all girl school. This is the absurd that we have entered here that we have to believe in but Now i am reading here. Education department extends title nine protections to transgender students in reversal of the iraqi guidance. By the way Every ground virtually every graham except tweets profoundly miss a man who became a great president donald trump had he won the and there have covert. The amount of rioting would have dwarfed what you saw yen. You would have had close to insurrection. A lot of people voted for joe biden so that they're not be rioting. People don't like to confront education department yesterday announced that it would expand the definition of the federal civil rights statute banning sex-discrimination federally funded education programs to include gender identity amid a national debate over with the weather biological males should be allowed to compete in girls sports. So let me explain how everything in that sentence depict. What is so wrong in society. The moment federally funded. Money is mentioned. Ronald reagan's famous line comes to my mind. It is by the way the line that turned me into republican democrat until he ran for president fact. I voted for jimmy carter. That was my last democratic vote. One might say is my last mistake in voting and the voting arena his famous line. Government is not the solution. It is the problem. People don't understand how truth had is the genocides with one exception in in was it barundi in rwanda burundi in rwanda where it was more tribal all of the mass genocides sudan. The genocides are generally massive. Were taken by governments. Big governments at college learn that more evil was done in the name of religion than anything else and that's only because colleges don't care about truth in fact more was done by secular regimes that in in the same ban of time than any religious regime. That's number one number two. It was done by governments without strong government. You can't rub out a race or ethnicity or a religious group. Back to the united states federally funded. Why why are colleges federally funded at all. You know what the harvard's what is what is the term again what you have all the savings. Yes all this money all this money if they have a thank you. And what is the harvard endowment. How many billions of dollars. Thirty eight billion dollars now the richest but many have billions of dollars and they end. They're still federal money. So you understand the moment that that there is federal money. There's federal control back in a moment. The dennis prager show ladies and gentlemen until you about an interesting supplement. That has made a big deal in my life. I had the pins and needles feeling in my feet of had it for twenty five years quite intense so among the things i did is i had put him which helped because lifted the bone from the nerve and i threw away the inserts last year after i started taking nerve renew read about nerve renew on the internet and so i tried it out and amazingly after about a year doesn't happen overnight. I got rid of the inserts. I had worn for ten years. It's minimal the The pins and needles effect. I have. I'd like you to try it out. Go to nerve. Renew dot com. They offer two week trial of their product. And a one year money-back guarantee it nerve renew dot com or your two week trial now. I asked them to advertise. That's how effective i think. The product is nerve. Renew dot com education department yesterday announced it would expand the definition of the federal civil rights. That you banning sex discrimination in federally funded education programs which means virtually every college to include gender identity. So that means a biological male who declares himself to be female must be allowed to compete in women's sports. Go and now you understand why conservatives fear governmental interference almost always. It never ends the income tax begun one percent that was the income tax they had to pass a an amendment to the constitution to have income tax because it was not considered to be consistent with a free country where you just took away people's income and they passed the amendment one percent well two percent ten percent about twenty twenty percent very low. Let's go to thirty to forty to fifty. I pay more than fifty percent between california and federal other words. Half of my time is given to the government. And it's c- the reason i sleep so well is that it's used wisely. This gives me great. Great peace of mind to know that. I work half the year for california and the united states government barry goldwater opposed civil rights legislation. And right i remind people. Barry goldwater ran for president of the united states deeply. Conservative republican and barry goldwater was from arizona where he helped found the arizona n. Gp he was so committed to civil rights for all races that he was a founder of the nwa cpi in arizona for a few people. Know that because it doesn't comport with the picture they liked to paint of the man. He opposed civil rights legislation. I was very young child and thought he was wrong and he was right and i was wrong as it turns out not because i have any sympathy for discriminating on the basis of race that is pure racism by the way that pure racism is only advocated on the left today that you novak chapman college in california has a black graduation now joining columbia and many other places anyway. I have decided to call columbia university in light of my woke kness indigenous peoples university. If they had any courage of conviction they would drop their name which is named after columbus at columbia university. But they won't they'll drop columbus day. They won't drop columbia university so chapman colleges the latest to have. Did you see the list of graduations. Was they were transgender. Lgbtq Graduation a black graduation and some others. So they do believe discriminating on the basis of race. That's among the many theoretical ironies but goldwater was right. Because he understood. All this will do that. America will will come to realize you don't that not serving a black in a restaurant is is despicable and stupid or stupid and despicable. I'm not sure which which which order it goes and it would have died anyway without government coercion. Because once you let the government in it's like the one percent income tax add metastases perfect word because that's the word used for cancer. That's what has happened it never. It never stops growing now. The government will subsidize. they care. Government will feed your child lunch and breakfast at school. The state will do everything you have to do nothing. You can play video games or whatever you decide to do. Want to to remind you that. I am indeed going israel with you and october. They'll put off a trip. That could be the trip of your lifetime to mention the wonderful people. You'll be with. And my colleague. Mike gallagher and i will be there with you. There's a banner my website stand with israel. Banner talking to you about the government getting involved in everything and now they can tell colleges you have to have biological males who identify as a female compete in girls. Sports as i reported to you. New zealand is probably sending a transgender weightlifter in the heavyweight division in female weightlifting to be olympics. If they take place what is the story. I feel bad for japan. Say eighty percent of the japanese don't want the their own olympics with what they close to eight hundred million in taxes. Well i i always feel for the the competitors. They worked so hard. So i have. I have compassion for the competitors. I can't stand the international olympic committee. It's been sort of mega forest throughout. Its history but I the athletes. It's let let people leave people alone. You don't wanna go to the olympics. Don't go to the olympics. You're scared that you'll drop dead. Don't go i'd go fight mean interesting. The olympics i'd go. I would have gone last year. Some taking ivermectin vitamin d zinc and i drugs clerk. That's right. I put my pills where my mouth is. How's that great saying clearly. Asti six three he who puts his pills where his mouth is seen the light. Company americans can spell ecclesiastes let alone identify. Anyway i would have. I would have gone i did. I did whatever i could. I went to rallies in the middle of the lockdown. I lived in normal life. You know i'm a dad. I've two Two sons and i know that. I think a big part of being a father is because i know this with my own father. May he rest in peace. I'm curious about you can ask the living martyr you know. I never asked to have an answer. I want to hear. I'm curious. I know that consciously and somewhat subconsciously the question. What would my father do. Plays a significant role in my life. Does it in yours see. That's fascinating that is truly fascinating so we the two of us have that and it's a healthy thing to have a lot of people don't have that the they don't respect their father or they don't have a father. Or what have you. And whenever i think of what my father would do. I think it would be the sort of the attitude. Screw him. don't live in china closet famous words to my mother whenever she wanted me to put a jacket on a cold weather wants to get sick. Let him get sick. Basically my view. It's cold air a sweater jacket. Get sick and i. I didn't get sick pretty much. The body knows when it's cold. I didn't want to check government tells you everything now everything. No if you realize no american would have believed ten years ago. Let alone fifty. The government will will stop funding your university. If you do not allow men who identify as women to compete against women. In women's sports. We have entered the realm of the absurd. This is not a rights issue. It's a fairness issue. It's not fair to biological females. So what's going to happen if it happens more and more and the answer is it'll happen more and more. That's what happens. Who's going to report. The girls who have lost their dreams of of winning a scholarship in track. We have a video at prager. You of a girl who the who exactly happened to her. In connecticut where transgender females hold virtually every track record now in high school in connecticut that is males identifying females. They lost when they were males so they decided to win females tanna there. You go these. These people are narcissists. They are the quintessence of selfishness of self-centeredness and they're made out to be paraguayans of human rights virtues. You're a mail identifies a female fine. I've got no issue with you. You have no right to compete against girls however in sports. That's the point but not now not with. This woke administration so jazz of yesterday. Well everything that could go wrong all the controls of the federal government over colleges and now manifested in this manner. I'm dennis prager the dennis prager. Show everybody fred in cleveland. Ohio hello world. Hey does your evidence came from that segregation depending on its own because it took federal and four federal acts of congress to segregation anthony taken two decades three decades ten on. Its own thing. That's two or three decades of people would have been the opportunity to vote. They would deny you cooperative. They would have been denied their part of the american dream. That's a very fair question I don't know how long it would have taken in the south To integrate my my my suspicion is in the light of the way things developed that it was not government coercion in most in most cases in cases it certainly was. I know that anti semitism decreased in the united states dramatically without government intervention. Am i think that the same thing would have held true for anti black sentiment taking a generation or two people what did the denied opportunities fixing the generating. Well if if you're right then laws were necessary. It's a very fair question. I don't think it would have taken thirty years for southerners to sit at the same counter as as a black at a At a restaurant. But it's a very fair question right so all i'm asking which is the great conservative liberal not just conservative left divide we see the price and liberals never asked what is the price never they. Just go forward. This feels right. Let's do it whether it's a lockdown or masks or laws forcing people to do the right thing right away. This is the right thing to end segregation and yet it's the left supported by liberals that has re segregated america. Black graduations are the norm now at left wing universities which is redundant virtually. Every university is left wing. They price was paid. That's all i'm saying. I supported it much of my life. I now see the price paid. The perry goldwater prophetically predicted. The government intrudes everything in life. The government could force colleges forced them to have biological males compete in female. Sports is the logical conclusion. It's the end game in what began as a noble enterprise. For the left. There was no end. there are only beginnings. That's the problem whether it's the one percent income tax or it's anti discrimination laws. it never ends. We shall return. I'm dennis prager the dennis prager show live from the relief. Factor pain-free studio.

dennis prager supreme court Nothi heart based society los angeles times washington Cnn new york times Boston globe roberts chief justice roberts barry goldwater The new york times olympics rwanda janna arizona zeke harvard warren
Finding fraud in a world of fast-moving deals


26:05 min | 2 weeks ago

Finding fraud in a world of fast-moving deals

"This episode is brought to you by seat. Invest deleting equity crowd crowdfunding platform. Raise your next brown with seton fest. Visit rush dot seed invest dot com. Hello and welcome back to equity tech wrenches. Venture capital focus podcast where we unpacked the fraud behind the headlines. My name is alex wilmot. I'm joined today by maps lou. Best friends. I have natasha here. And tasha how are you. I'm doing great. It is pumpkin season. So i'm driving. How many have you had in the last. Thirty six hours zero but trader. Joe's a really good. Pumpkin haute beverage. That whenever i drink something. I like to be called like whenever i go to dinner. Ask for food items danny. You're here too. Are you a food item. Pumpkin fan no. I had a lot of organic this week. I always love those foods that are like cheese product. And i'm like does that mean it's right. He's no it's product by the way by organic foods. Danny drink a lot of french wine over the weekend which technically organic and technically food. It was actually only organic. Biodynamic oh god. Apparently the vineyard i was on Has its own lambs or sheep. That poop all over the vineyard to fertilize in a cycle of life thing is very. It sounded interesting until you realize he thought about. And you're like you wash those grapes before you put them in the firm enter. Yeah well speaking of crap leading to a circle of life. Let's talk about how fraud shows up in the cycle of investment guys that is our theme today and the reason we're talking about fraud is because we have a question. We have seen rising examples of fraud in the last couple of weeks. A couple of months. We want to say it's been a conversation we've had on the equity slack channels and so forth and so we wanted to kind of dig into it today and the question is does the rising amounts of fraud that we've seen in and around the startup community if you will indicate that we are towards the later in the bubble. There's been a traditional view that rising fraud is journalism that you see when a market or an economies overly excited or too hot and we have a couple of ideas about this. But we thought it'd be best to go ahead and start by exploring the question to the lens of a couple of news events the first one of which involves the blockchain space. Nf tees and a company that i actually know reasonably well. It's in the tasha. What happened with open. See yes so open. Sea is a platform that sells nfc's and even for people who don't know enough to is they probably have paid attention to them when they sold for millions within minutes. A lot of attention has gone towards this digital just because of how much money you can make selling them. Obviously open sea popped off over the past year as one of the homes where these iams were being sold and where we recently learned that a top executive at the platform was accused of front running the sales on the platform. Basically purchasing pieces he knew was going to be on the homepage. Before they got there and then pocketing the money that he made as a result. Danny on a scale of one to ten on the fraud meter where well i think. It's good to remember their legal definitions of fraud that are tried either with executive actions through regulatory agencies. Like the sec or in the court system. And then there's sort of like the the gray line of fraud that we are maybe talking about a little bit more here. This is like one of these classic cases where i think this actually happens. More than people realize to a lot of these companies you know the featured startup on certain sites. The speaker tokens the featured. News story. if there's a way to trade the assets as being featured the person's doing the featuring has a lot of impact right like pow. I'm not saying anything about. Let's say apple but there's an app store. Certain apps get focused on there startups. They get back. You could imagine you know that you would need actually quite a bit of regulatory controls to ensure that the app store reviewers didn't have shares in certain companies that they're highlighting on the front page of a major site. It sounds to me having read the story that opens see. there was a guy running the page. There's no controls there's no regulations there's no policies in fact it's very loosey-goosey in the in the crypto world and it seems like he Connected the dots so to speak and realize like. Oh i own these things i can focus on putting the things in the front page of popular site things become more valuable. I make more money. Unfortunately there's some form of market manipulation fraud and just general that i think comes out of that perhaps unsurprisingly to part of the company what two days later. It's a bad look for open seat because it was well on its way to being the platform where and if twos us and a lot of crypto newcomers slash enthusiasts. Were going to do their thing. So you know months earlier opens. He had hit a one point. Five billion valuation in july just a few months ago it had one hundred sixty million in sales so i think having a hit like this. Maybe isn't as its upbringing in the graveyard just yet but i do think a lot of people have had questions about crypto have had questions about how fraud looks in crypto and this just as another data point to it. It's not a great look for the energy market. But i will say so. There was a tweet that i read about this particular issue. Someone was like in the art world. Buying some those from ours. That you knew was going to get a big showing would be kind of like tuesday but then again we don't want to say that crypto should only reach the level of ethics of the modern art world. Because that would be kind of a low bar but if you run a marketplace there's a presumption of not transparency per but just fairness and this goes against that and if you want to attract users which opens he must do it. It's a pretty bad luck denny. While was going to say. I mean i. It's nothing he even as unique to the nfc and crypto world. I mean in the federal reserve just yesterday to federal reserve governors effectively announced their retirements in the aftermath of investigation that show that they had traded investment shares in companies while also knowing. Kind of the fed's buyback program which was going to drive up a lot of the share prices for individual stocks. One said that they were leaving for healthcare reasons. The other for the distraction of the trades from their work. But i think it's one of these things that's intrinsic to a lot of financial markets. Of course again. There's very powerful people. You need a lot of controls. We actually learned about the federal reserve because of transparency rules. And we're still in the wild west in the crypto world. You know in this case. It was a secret wallet. We didn't have any clue it was going on until someone connected the yup and as touch said there's so much money flowing through the space. Of course it's going to be bad actors and so forth just about look for open sea going to show. That fraud is possible. Even amongst companies be anything cool. Now do company who you haven't heard of and you don't think it's cool ozzy spell. I'm not gonna lie before this story popped off and we'll get into what happened in a second. But like i'd heard of ozzy peripherally i don't recall ever touching a piece of their writing. Newsletters videos have you guys ever consumed ozzy content. I haven't but i will say. I felt personally attacked even though i hadn't read any of the material because we have been hyping up this next generation of media companies so much on this show debris debris ever like tennis things but ozzy before we have so many shows. I've yeah okay. I don't think we knew it existed. Yeah yeah because apparently they raise a bunch of money and we're claiming to have simply absolutely astronomical reach. They were talking about having fifty million monthly unique users back between nineteen. They had raised eighty three million dollars and they were this media company kind targeted at the broader millennial space that worked across newsletters and videos and so forth and then there is the twist to the story so the former of buzzfeed writes a column for new york times all about media ben smith and he is a person who can get a scoop and it turns out that ozzy was talking to goldman about a possible investment and one of the co founders of ozzy literally impersonated a youtube. Executive using a voice trends coder type thing to kind of cover up what he actually sounded like to praise ozzy to these bankers and they found out and didn't invest but danny turns out that if you impersonate someone else as a way to possibly drive it investment. You're getting away from the fuzzy line of fraud and more towards the black and white examples of fraud. I think yeah there. There's this sort of nut story. I mean obviously falls into two wire. Fraud would probably be the most likely category possibly securities fraud. But what was nuts is. This wasn't investment meeting. So they were raising tens of millions of dollars from the goldman wealth management group. And you know it was originally on video. So he turned his video off and switch to a phone call to sort of hide. The voice modulating feature and the part. That actually galls me. And the reason we're talking about it even though it hasn't reached that sort of sec. Settlement stage of fraud is the board investigation was like. That's cool. I mean who. What kind of board. Here's a story. Like i heard the story i it like. This is like the intern first week. Freshman year going into sophomore year. And they're like. I didn't know ethics and you have a learning moment at the company. This is a co founder. Coo raising tens of millions of dollars and this is an established company. This is something that you should if this is what they're doing in this meeting you've got to ask what's happening in all the other meetings. What else does a ping impersonated. Like if you have. I don't even know where to get a voice modulator. Yeah i've no idea if. I like the most poetic part of this entire incident. Which is a little off topic is that the co founder is impersonating someone who's last name is piper and now they have to pay the five byrne circle. Yup donald do it. Data the months close to natasha happy. Look what are the bigger parts of the ben mystery. So there's this beautiful scoop like this vignette but then he uses that to open up. A wider conversation of ozzy says they have fifty million emmy us on their on all these different platforms. That they're one of the most popular channels on youtube. They're all of i and a bunch of these categories and yet no one's heard of. Yeah they have fifty one in six. People read it supposedly regularly. We just don't know any of those one in six people which is pretty hard to believe in a in a very interconnected network that is the internet. Yeah i i don't mean to over sussman. I'm i'm online a lot. I read a lot of stuff. I read a lot of bad stuff. I watch a lot of crappy youtube. Like i dunno. I watched like verge videos but are actually great just to keep. That was a terrible connection there so imagine there was a period. They're not as cynical. But i assume broadly. Because i want to be informed about the media landscape. How have i not seen ozzie. And so some of my favorite dishes. That i've seen about the company on twitter and also in the original posts on the times is people that are like they claim to have x. number of subscribers the reason your has twelve likes and i'm like that's a very niche disc but it's a very good one because it just shows i did their fake numbers because there's no engagement right. It's like a million instagram followers. And they get like four legs. You're like oh you bought those tasha. This is the thing we've seen from individuals but less frequently from heavily venture back startups. Yeah i mean. I feel like fraud or at least something like fussing. The numbers are over. Hyping yourself is so obvious. In retrospect but in this case it was goldman sachs. That was like that voice sounds weird. So that's why they got in trouble. Do you think it would have still played out because those things you were saying earlier. Alex that things weren't lining up like cheating of it's inevitable or was it because they tried to trick this bank. That knows a few things. I mean what. I want to bring up. There is the concept of due diligence which we will get to in just a minute but let's talk about our last example from the last couple of weeks which was app annie. This is a company that i have heard of. I have used in fact. I interviewed the ceo back in the day. Four what was then called techcrunch tv app. Annie if you don't know is a platform that aggregrates data about mobile applications for ios for android like house. Popular is natasha's super cool app in thailand on ios tablet devices like they've got this great data set and so as a person who writes about the digital economy. I've used their dinner for years because it's great. It's a great way to get a quick look at how individual applications and companies are performing. So if you want to track how his dance investment service doing versus robin hood. You can do that. it's cool. But then danny they got into a little bit of trouble and by a little bit. I mean a lot. They have settled with the sec. Can you tell us what they did. That was so. Let's say over the line. It is a little complicated. And i tried to be precise so you. Atlantic collects a bunch of confidential information from individual app manufacturers. So if you are at app developer you're going to still app annie's analytics you get those dashboards understand how users work. What they did was they sort of started. Arrogating this information to make their more public metrics more viable and that was actually in violation of the terms of those agreements. That if you would signed an agreement saying i. I'm going to install app and my app. You're not gonna use it for any other reason. It's my own metrics. The county was basically lying to investors and including that information elsewhere. And so to be absolutely precise here at any use non non-aggregated anonymous data to alter its model generating estimates to make them more valuable to sell to trading firms and that's the key last piece and so they actually had to to settle ten million dollars with the sec for securities brought because they essentially argued that they were doing something much better than they really seat invest is the leading equity crowdfunding platforms. they make the fundraising process. Simple enabling entrepreneurs to focus on what's most important building their business begin marketing your fundraising as little as a few weeks and gain access to their network of over five hundred thousand. Investors visit techcrunch invest dot com to get started on the point about trading. It's pretty important. So one of the sec wrote was that they were telling trading firms that they could use this data to make decisions about trades before earnings announcements. Came out. so they were. They were saying that. Look if you look at this you can make pretty good bets when they were using the data in a manner they promise not to. And that's why. I think this was a ten million dollar settlement versus a little bit smaller. Although i will say ten million feels kind of small for this scale of badness it feels almost like a traffic ticket. Like i think it should have added zero to that and really cause some pain i will say i mean if i'm a philosophical perspective you talked to securities attorneys the sec actions are not designed to kill companies. What they do is they want compliance. So what panty will have agreed to as puerto this as they will have better compliance systems in place of oversight and essentially they have control over their head. Like basically if you ever violate this again. You've now proven that you you know supervisions not enough and then the real find cops at and i think generally you know is a pretty cooperative regulatory agency it wants jong markets. It doesn't want to go to court frequently. It wants you to agree to you. Know the non-prosecution agreement or whatever the case may be to get you over the line so in this case you pay a little fee that makes it so it actually registers. You agree to actually fix the problem. Then it goes away in the markets are better. The sec wins. There's no long five year court battle. It's sort of a win win. Win for the markets because the markets are always changing is may not even be relevant by the time the court case you know he's included in a fair and equitable society. I will be fine with that. But we live in america. Where there's pretrial detention there's cash bales and there's prisons and jails like rikers island where people go and die before they even get charged so if app and he's going to get away with keen wrist tap and a five dollar fee. I demand we let all the kids out of jail right. So it's ridiculous to me that this system is set up in this country in this manner it makes me fucking livid if we're going to put the kids in jail at any should be fucked for being this bad for a four year period would other people to commit securities fraud. It's ridiculous blah. It makes me so mad. I feel like the soloist can potentially be found and that they just lost their most valuable asset. Which is trust with their customers on a consistent basis like literally what else does it have agreed. Alex it's not like an outside source teaching them a lesson which would have been maybe more satisfying in some ways. But i do see any now having to put a lot of effort in even trying. I don't know if they can do it if it can try. And build up trust before we move on natasha. We were talking about data quality before we started recording. And you were curious about if we can trust that was include zachary. Yeah like i think the moment. I saw the headlines about app annie getting charged with fraud in any way i was thinking immediately selfishly about credit and we use their data like you said all the time so now after kind cutting it through it seems like the fraud itself was actually not that they made wrong numbers. The numbers were just to write for battle. They were there to accurate. And if you will. Because they shouldn't have been that accurate. Let's move on. I don't want to get shouted again. But we've when you're saudi. I don't i don't know my mom. I listen to the ads. I heard you using profanity on the show. So trying to be an adult. There has been other examples of fraud in recent times. Danny your favorite lockin ended up with one of the more epic cases of fraud in history. But that was a couple years ago. Now yeah it was a couple years ago in london coffee. A chinese brand that at one point was building stores faster than starbucks had overtaken starbucks in terms of number of stores in like eighteen months. You know went all the way down to the ground. It sounds like the as its were resold. And it's actually coming back to life. According to some friends who i just heard from and then we also obviously have the the elizabeth homes trial going on. Live in san francisco district or for theranos. And i believe we're still in arguments. I don't think we've hit the part of that trial release. I haven't seen it pick up and we had nikola the ev company where Trevor milton got hit pretty hard by the sec again on on fraud charges. So i think one of the things. I think there's a couple of observations i would make one is free money. Heavy competition the need for metrics against all odds just comes up again and again and a lot of conversations and so on one hand you have this immense need for folks to actually prove that they're doing great stuff second because it's so competitive for investors to get into these companies. You're seeing less and less diligence. One of the parts of the theranos trial is. Gv's bill morris sent one of the folks who worked gv at the time google ventures to walgreens to try the machine and found out that there were still pulling a quarter of blood like a vampire. Even though you're supposed to only use one dropped. And that's why they chose not a court of blood because that's a lot. There are a lot of quintagle of blood more than a finger. Stick more than say yes but then there are other cases like nikola where i just like. You're sitting here wondering what are people on. Because not that i would want to use that but like it looks like they're having a blast over there spending billions of dollars on a company. That's like blue literally meaning of numbers wholesale. I think what you're saying is like it's a spectrum of fraud on the one end. It's like the fake it till you make it flashy talk your own book and try and convince people on your vision and then there's like kind of cut and dry this is wrong and it's kind of wild that they got so far and i thought the middle part which is probably most cases is the most difficult to figure out and draw a line on the challenge for a lot of services. They evolve right so in the early years. You're in the mvp phase we're just holding panels at disrupt you know in one of the vc's we had on onstage was just like look just discount everything you read for the first two years. All the numbers are too small. Nothing is really valuable like it doesn't bat. It's true like you know why bother trying to make an investment decision with such little data. Anyway the problem is like in the example of any it didn't have a cfo. Or i'm sorry there was an app is actually one of the frauds. We cut the sas company from like what a month ago. There's been so much fraud and we had this episode plan like two weeks ago then like literally because there's so many fry but the sas alex do you remember the name of it. I remember the name but what happened was the was routing all the contracts through him and so he was just kind of cooking the books because no one was going over numbers. This is almost one hundred million. A claim two hundred million airs. Lord knows what the actual the they get council figure that out but unless the point is this should have been a professional company with professional. Cfo following sarbanes oxley all the accounting standards in instead. The ceo is literally like in quickbooks. Like five hundred thousand. Two hundred thousand boom. There's our number you know it. Just it really begs the question. Like why is that professionalization. Knock kicking in and i just think that the tone the tone is coming from a lot of their places for instance pailin tear when when ipo and a covered last year had no cfo until like literally weeks to months before it went public. It was adding board members because it didn't have an independent board it didn't actually follow accounting standards and they actually had an amendment in the s one. That was like you know. Post the ipo. We intend to follow you. Know within the grace period that has offered to get up to speed. I just think that's insane. It's absolutely insane but but going back to what you said any. There's so much money flowing around the private markets in general. There's so much competition to get into. The hottest deals or even medium attractive deals that were seen due diligence. Go down and if you want to know what this looks like in kind of more concrete example think about the housing market today in the us for example people are waving inspections because they want to buy a house and it's very competitive waving inspections in real. Estate is a ken to waving due diligence. And start investing. You're not getting a look at the actual foundation does eve. It's crumbling or if it's made a styrofoam as opposed to concrete and you know while things remain this heated and it appears they're going to stay for some time now. Maybe quarters of more time. We're going to see rising onto fraud and that brings us to our question which is does rising announce a fraud arising fontes of fraud. Does that indicate that we are in a bubble or perhaps towards the end of one. And that's what i want to bring up to you guys because to me. This amount of shenanigans does seem to be indicative of a very overheated market which we would think would eventually come back to reality the talk. Show you i my sense right now is i. Think we're still in a bubble versus nearing the end of something. A lot of venture capital firms have raised a lot of money over the past year. We saw gray lock with their five hundred million dollars seed fund andriessen with four hundred million dollar seed fund. And i think just using those data points. We know that they're going to have to put a lot more money into the ecosystem tests. Spend it so that their lp's are happy. I'm not saying they will be the main perpetrators of startups that are doing the fraud. But i do think that that kind of money in the market means that it has to go somewhere. I think one of the things you have to remember even if you're super excited but startups and you want everything to get fun. Anyone everyone to experiment. Everyone's dreams come true. The reason this these enforcement actions matter is because ultimately you wanna transparent open free marketplace in a fundamentally the securities laws from the nineteen thirties have a very simple theory which is that every investors allowed to take their own risk based on their own appetite. They can do whatever they want but they need to know what they're buying. That's it you have to transparently describe what's going on with the company and what we're finding is that more and more ceo's aren't being transparent with what they're doing with their companies so we don't actually know what you're investing in anymore you know as an example. Vc and i may have mentioned this on equity noted to me that they just did a fifty million dollar like series biercee round in which they had never met the ceo deny look at. The company's books did no due diligence and rather check in forty-eight hours. And i asked like how do you know what the company like that. Any of israel and they're like well. Hopefully the other investors did the work before this is like. I promise this is where it can metastasized like those early. Investors were early stage round where they don't check the numbers so it no one is actually probably check the numbers in the company and it's already raised fifty million plus dollars so i think it just you know it's like checking your footnotes. I mean it's painful to always do the due diligence or double check things and then you find out the company's not even incorporate in the united states. Yeah i it's absolutely terrified and it just goes to show how much things have changed. Because if you go back to when i was learning about public markets and investing and so forth there were like rules of thumb about what you need to go public which was at least one hundred million trailing revenue and three quarters of successively growing profit obviously no longer the case all the rules have changed but at least in the venture world is like the hard rules diligence and ownership targets. We're going to stay in place in both of those have been diluted to the point in which. I don't even know what these do. Aside from wakeup pick three random emails and right three checks explanation of what's going on obviously founders should not commit fraud like i'll say that that said i think are are playing a role hair. That should be talked about more like the fact that they're not doing due diligence and not holding people accountable or at least bolden their own checks and money. Accountable can create this snowball effect when app annie committed fraud competitor app topa basically wrote that they actively did not take shortcuts to scale and they ignored other. I don't know unrealistic board. Vcr market tensions. And i feel like there is something to be said about just how. Vc's consistently not checking their footnotes. As you said. Danny could just like kind of recycle through. Everyone like everyone's lying to each other. I don't know but it's our money to some degree right. Some of this comes from the harvard endowment but it's because from pension funds that are parents will eventually want to leverage and so this isn't just funny money like it's fine to say vc's google. If i don't care. I don't because i don't care but it's not just their own chips. They're playing with and so. There is a immoral element to this. That extends past just being giggly about some vc's putting fifty million dollars company that doesn't have a revenue. You know the last thing. I'll say about fraud. That is complicated and probably too complicated to make a decision on this show is that mental health is linked to it and so is a lot of subject matter like what exactly the product is founder selling and betting their vision on and so i feel like those are two factors maybe future explore in some way but i know we often see in these court cases people talking about mental health as one of the reasons and i don't know if i can say whether that's it or not it but it's part of so as everybody do your due diligence and if you're going to run an entity marketplace don't front run your own auctions because you'll burn all your user trust in the meantime don't control. Sec and gap is a good idea. All right we'll be back on friday five money.

sec ozzy natasha alex wilmot federal reserve Danny danny tasha nfc app store goldman wealth management grou youtube goldman techcrunch iams ben smith lou
Ep94: Jenny Rooke

The Long Run

1:11:20 hr | 3 months ago

Ep94: Jenny Rooke

"The long run this a podcast for biotech adventurers. I'm your host luke timmerman. Today's guest is johnny rook. Jenny is the founder and managing partner of san francisco based to genoa ventures. I've been wanting to invite jenny on the podcast for quite a while i wrote about her in two thousand eighteen in an article about nine. Vc's who matter. But you never read about as i wrote then. Vc's take on lots of different types of risk. There's biology risk that something can't be reproduced from mice to humans. There's management risk. Sometimes you back bad executives. There's market risk. Maybe the market won't buy what you're selling at your preferred price there syndicate risk. Your coinvestors might run out of money or lose confidence forcing you to prop portfolio companies if you want to keep them alive until the next milestone what you seldom see. Crv who shoulder a more profound type of risk by starting their own firm and even by starting a firm with an unproven businessman. Jenny did this by starting general through creating the largest life-science syndicate on angel est. Not by going through the usual big pension and endowment funds who typically invest in vc funds. And here's how she described her investment approach. I'm particularly motivated by novel research platforms because of what surprised me about lab work was how manual and slow and low throughput. A lot of available tools were for doing science. So when i see companies that are trying to develop new tools that make warren better data for researchers that gets me excited. And how's it going so far like any early stage visa. It takes a while to build a track record but two of jenny's big investments from the early days of general are emerging emeryville california based zimmerman and industrial biotech company and berkeley california based caribou biosciences company. That uses crisper editing. For self therapy's irish went public in april and now has a market valuation of four billion here biosciences recently filed. Ipo paperwork to raise up to one hundred million. It took a lot of guts and creativity to do. Johnny has done and continues to do like a lot of people. She didn't come down this road and some kind of straight line but here. She is smack dab at a very interesting spot at the intersection of biology and technology before we dive in a word from the sponsor of the long run dna script. The script recently launched the syntax. Sista i ever benchtop enzymatic. Dna printer which uses proprietary enzymatic synthesis technology. The syntax system prince dna blonde demand right in the lab researchers simply import their sequences and within hours the system synthesizes dna alagoas that can be used immediately in molecular biology and genomics workflows. Dna scripts ends a matter dna. Synthesis emulates nature to overcome the drawbacks of chemical based methods traditionally used until now design for fully automated walkaway synthesis. The syntax system takes less than fifteen minutes to set up with no special training to operate with syntax. Researchers can accelerate discovery with dna on demand. More information on dna script. Please visit www dot. Dna script dot com. Now please join me and jenny rook on the long run. Jerry rook welcomes the long run. Thank you so happy to be here. So jenny i i. I've been following your career from afar for many years and i remember once having at a private dinner hosted in san francisco probably ten years ago. I'm not sure you remember this but It's really cool to see someone that you you kind of get to know and follow from a distance and see them take a go on really fascinating trajectory. So i just want to let you know. I'm really excited to hear more about like how you've got to where you are. Thank you so much. Like i have always appreciated the way you make connections in the industry and really have helped build bridges across the different regions and sectors the biotech industry N you reaching out to me for that. Dinner was much appreciated. I was a couple of years into my time at the the gates foundation in seattle which was an incredible experience but also somewhat isolated from the activity in san francisco and boston and so that dinner was very thoughtful and much appreciated. Kind of the magic that you do in our in our industry well. I don't know if i had very much to do with setting you on your course but But thank you So let's just dive right in how Where does your story begin. Where from well. I always have to ask you what they mean by the question. Where you from We moved around quite a lot when i was a child and preteen So where i was born was massachusetts but we moved Before i remember that in then we lived in several places in the south Before i was age eight But the answer short answer would be mostly georgia so we moved to a small town in south georgia when i was eight and then to another small rural town in the greater atlanta area when i was twelve And my my parents and one of my siblings are still there in the in the greater atlanta area. So let's say georgia ish interesting. So what did your parents do for a living. My dad is an aerospace engineer and test pilot and so that was a time of In some cases working with the military and some cases working with a commercial aircraft developers like piper and lockheed really just kind of pursuing interesting roles In that in that industry okay so not exactly an army brat but a part of the kind of the military world as as a contractor a little bit. Yeah so air. Force as a pilot in aerospace engineer with With the air force but the i think the primary or that same sort of Looking for innovation. And and making new things that i i can relate to with these innovative companies that that needed that skill set. Okay now what about your mom so. My mom is an incredibly gifted educator and we children are very fortunate to have had her as our our mother. Our chief development officer are our teacher. Um through through many years she for most of my childhood did not work outside the home. And so i had all of that You know incredible capability pointed at me and my brothers Helping us learn about the world and develop skills and move through our own development interesting. So you know. During this pandemic year. I think a lot of people have had a chance to reflect on some of their upbringing and values. That were instilled Maybe we didn't think that much about For for a number of years have you thought about that experience growing up in kind of what your parents instilled or the communities where you were and how that shaped your journey. Oh yes absolutely. I think i was just so incredibly fortunate to have this amazing duo of parents who had a very different Talents skill set to complementary left brain right brain engineering and math side literature. Music arts on the other and their their willingness to invest in in me and each of my siblings in a enormous and very tailored way I just i never lacked for anything. And so i was really set. Free to focus on learning than figuring things out and experiencing the world so super grateful for such a supportive Family environment where. I got to run at whatever. My interest in passions were kind of schools to do attend. I'm actually quite a sampling of of educational experiences in small public schools. Through grade four Private small private school grades. Five and six home schooled in seventh and eighth grade and then actually went to college after that while so you i guess there has to be a certain versatility. Maybe that comes learning in different environments. I think that's right. I say never learner reader curious. I always want more information more understanding more learning skills and so You know being in those different settings. They weren't always terrific educational settings. I would say small rural grade school in south georgia Not not necessarily setting records for educational excellence in many cases And that's where. I was so fortunate to have again a a mom who frankly one of the best educators i think you could you could meet and and libraries really grateful for libraries. Where now i think. I read every book in the perry georgia public library. Thank goodness for the public library. Can we just say that for a second. Okay so how did you. How did the light bulb. I come on for you about science science and maths. Yeah i was. Broadly interested like i said in in learning and skill acquisition. But i think. I had a particular aptitude for for the quantitative subject so just ripping through math and in those in those home Seventh eighth grade. And that's what led me my mom to look for some other kind of education outside the home on the on the technical side on math front and so she petitioned local small technical college to to to let me in for freshman algebra in what would have been my ninth grade year That went very well so they let me stay for trig in the next quarter and then by the spring quarter i was. I was going full time. So there's some of it was Aptitude some of it was not southern tack. Took took a bet on this in a thirteen year. Old kid that. I wouldn't embarrass them and so that was a very technical engineering math science oriented environment. Didn't really have much of an arts program. So there was a kind of self reinforcing element there to to the path. And and i guess that was one of the biggest. You know drivers there of my direction interesting. So you were home schooled kid at thirteen at that time. Seventh eighth grade starting to do high school level in more vans math. Did you go into classes with adults. I did my dad would Would drop me off at college. On his way to lockheed i would take my two or three classes that day on the rest of the time in the library studying studying other things that maybe weren't you know currently on my class late at the time and then my mom would would pick me up. Maybe in the afternoon. Or i'd stay the whole day and my dad would pick me up on his way home was this. Was this a little bit difficult. Socially 'cause down you know school has that role which we all know and appreciate now right. Yeah i feel really grateful for the way that path decoupled social from educational at development and goals for me it meant that i could optimize for for each objective separately so In school. I could move as quickly as i wanted to have. The right level of challenges Without also navigating. I think some of the release sticky Highschool social issues. Of course i needed to. I get that those needs mets as well. Fortunately at already know established a really loving creative fun social group in those seventh and eighth grade year so we were still living this in place. So i continued to be friends with with those people go to their. Football games are their problems. That have sleepovers with them. And so there was a really nice. I think Separation of of those two issues. I really feel for kids. Generally who are trying to figure out life. I'm in the context of an average. Us high school which a problem with averages. It's probably not the best thing for for any anybody exactly so in that sense. I feel really lucky. that That i was able to do that while. I'm no expert on this. But i do know that you know those middle school years high school years especially hard for for girls science and math in particular like this. Is this when you know. The research says the boys tend to get called on moore and girls tend to do less of that they they. They may show aptitude early but it starts to. I don't know what happens. Sounds like that didn't didn't happen right. I was protected from that. Right i was. I was learning math and physics and computer science in the context of We'll call adult through their eighteen. And nineteen year olds Cougar there because they wanted to be there in were pursuing careers as opposed to in the context of age peers who perhaps were distracted by Finding their place in the world which is also a legitimate pursuit but is confounded by the math problem. Perhaps right right right but you were able to couple it as you say okay. So you're a pretty good student like got good grades and you got good self esteem out of this and and felt like okay. I wanna learn more. Yeah yeah i was I am a student. that's probably my best function. i love to learn. I am self directed in my learning. Nothing i love more than a pop quiz in a chance to make a great great though. So my i guess. My internal drives were pretty well suited for the reward system of a school and and that really worked for need to learn some great skills and prepare for for a career. Okay now where'd you go to college so that that first college was a place called southern tech It was kind of branch of the georgia tech system as it became clear that But i was going to college. Full time it. It didn't make sense to stay at the smaller place transferred to georgia tech. Finished my degree in physics there and then Oh we can. We can talk about the transition from there to to life sciences. Yeah how did you arrive on physics as your focus and then shifting it toward genetics. biology yes. I had been studying math and computer. Science and and physics can broadly at at georgia tech and didn't have a career goal yet. I think the objective was to lay down a foundation for For future career. And so just getting the fundamentals of physics. A seemed like a sensible way to prepare for whatever was next since it was known underlying to to so many other Science and engineering disciplines. So when you're eighteen and you don't really know exactly what you wanna do you. Kind of thought filer physics. I mean this is just. It's it's it's a hard quantitative science and that's a pretty good place to start. I mean grounding in the sciences. Yeah yeah that was kind of the the the idea. We didn't know then that computer science was going to be the field. It has become an so it was a little bit more of a At the time. I did a lot of programming in fortran machine language in basic and and it was. It wasn't engineering discipline. Not a world changing discipline. So i wanted something a little more more fundamental. That would give me give me optionality. Okay so how did you end up going into biology right so i would say i didn't go into biology. It was never really drawn to biology because it was presented as a sort of discipline of description and memorization. It seemed sort of arbitrary pictures and latin names it seemed descriptive as opposed to quantitative. I did take a biology elective. This would have been my junior year at georgia tech. Just kinda round things out and Whatever was doing fine. It was good good to know these things. I hadn't really learned a lot of biology before that but then we got to the two week section on genetics. And i just fell in love. It was here was the quantitative information rich underpinnings of all of life The the genetic code the variations there in the way that was re combined and transmitted from generation to generation man. Iowa's i design you. This i have to have to know everything about this So i've finished the physics degree but crammed as much can genetics and biophysics into that last year as i could and i applied to a genetics pd programs so that i could go immerse myself in this field. I had fallen in love with. So there's a code here. there's there's one hundred. There's a logic to it right at runs across all species on earth house. You're kidding me. Yeah yeah and there's a lot of mystery in it because it's not exactly a plus beak we'll see how far far from it there's a lot to learn as an enormous amount of structure and physical process is The biochemistry that underlies all of that shaping up a code and i was you know had all of the naievety the zeal of a new convert. i was at the time was sort of a genetic determinist. My oh clearly this is this is really what makes any living thing what it is I've i've since recanted as you learn more. We realized biology complicated. I need to have that on bumper stickers or it's not just code actually have been known to yell at hopefully somewhat politely at some of my colleagues Tech investor colleagues have been sort of recent more recently having. I think the same epiphany that i did whatever thirty years ago. Yes it's code in that super exciting but it's also not And and so we must approach it with humility. It's not code in that d- deterministic predictive zero. In one binary way. But okay so you What year was this. That the the epiphany happened the moment. I guess that would have been nineteen ninety. Okay okay so this is genetics. I really kind of at the big bang. Kinda moment for human genome project. Just getting started okay. So you go to yale for graduate school. that's right I applied to now half dozen places. Honestly i think california wasn't on my mental map Having been primarily an east coast child So i applied to places like colombia. Rockfeller cargo But yale was a real draw because there was a dedicated genetics department. Small one of the one of the oldest when the earliest department so terrific tradition of education research there. And so it wasn't a i didn't wanna learn. I didn't wanna biology hd. I wanted a genetics into. That's where i ended up picking on. Who is your adviser Well of course one. One rotates through a few labs but ultimately joined. That was the first graduate student for a tian xu. Who had come through the great tradition of dressage geneticists jerry rubin and spirits On that was a great Model system fruit flies Really nice point on the on the complexity spectrum where it's complex enough to do some really interesting work And and be kind of relevant to humans and other complex life forms but not so complex that you couldn't get in there and manipulate things Get very high numbers as well very quantitative about it. Yeah yeah okay so What were some of the key lessons or takeaways from your time in graduate school boy. Well the first. Couple years or just blissful. Because i was immersed in this this field that i had fallen in love with and so the key takeaways were everything i could possibly Into my brain about the history in the current status of of genetics. It was it was hard. It was very hard to learn to read understand. Primary research and i would say foreshadowing to today The ability to critically look at original data And think about experimental design. What the work with questions. The work is designed to answer what questions the work cannot answer. and where our monkey brains which like to make interpretations published papers might run out in front of of those limitations and so just constantly be developing one's own critical thinking around around science and what scientists telling us. Yeah well it's such a relevant topic for today How we know what we know Did you have a journal club or something like that. Where you hash the stuff out with your your classmates head we did. Did you also experience this very first hand kind of question. I mean i'm not a trained scientist. I'm a journalist But you know there's always people staying up late after. The newspapers gone to bed and asking ourselves these questions about. What did we learn today. And what what are the unanswered questions hot. We know that. Why did that person do that caused it if there is something in common. I say we're constantly questioning. And we operate we operate from a position of uncertainty and doubt and trying to learn new things every day so that maybe this is a but that. That's that's my world your work. How how did you develop that that critical thinking muscle. I guess well now. You're absolutely right about about journal club in one of the didactic traditions of the genetics apartment at yale as every First and second year students. Every wednesday night had journal club Where we would Read critique and discuss one or two papers and the responsibility for Leading the discussion rotated through the group. As in the department says small focused our class. I think had eight students. Which is the largest there ever been and so these were really small intense discussions around original science week after week and that was informally known as pizza class Because we also were allowed to to order in pizza so Very happy times But i in addition i would say just had some some terrific professors. Alan winner in particular comes to mind the way he taught his molecular biology class was very much a critical analysis of seminal papers in the field and so Being required to and then supported through reading and critiquing those papers was probably some of the greatest gills. I was ever todd even our exams in the in that class were. We knew in advance that he was going to pick from a selection of important papers and he was asking us to describe what had been done. What were the methods weaknesses. What were the conclusions And so That's in many ways much more important. I don't remember necessarily You know the paper around How the meeting experiment in e. coli helped us understand the linear nature of chromosomes. I don't remember the exact experience but That that skill set of just being relate critical thoughtful and critical being a positive thing. I realize as they say critical sounds negative but critical being a positive and essential attribute in science. Yeah for sure so valuable. So at what point did you start thinking about your long term career. Goals did did you think about becoming a professor or the standard path. Or how did you think about that. Well had said the the drive to go get it. Genetic speech d. was all about learning are was so hungry just a no this feel And there i had not asked myself what was going to do with it and it. It turned out that the assumption at the time was if you're getting a phd. You're obviously on an academic research track right And so there were as happy as the first couple of years were The next few years were a tough confusing involved. A fair bit of of tension and having to thrash my own own way down a different path. I remember being in the degree room. The cold room i was doing. Dna injections into every fly eggs You know to transform their genomes for experiment and doing things like dissection of imaginable discs for for fluorescent staining. And i remember. There was a moment where i said i'm getting you know got diamond forceps and i'm doing this under a microscope when it's cold and and i thought i'm getting really good at this and i thought i'm getting really good at this. That that is frustrating. Doesn't seem like but rapid pursuit of knowledge and Progress that my pace of learning has afforded me to date and so it really kinda stopped me in my tracks. He said i'm not sure this bench research path is is right for me. I i'd actually gone into school thinking purely quantitative Thesis doing kind of statistical work in the genetics of complex. Disease like schizophrenia. With david paul's and some genetic epidemiology master's equivalent in genetic epidemiology and the faculty said in. Here's a lesson. don't necessarily listen to others at least test their assumptions. The faculty said you'll never get a job. There's very few jobs in just purely quantitative biology. We didn't even really have the word bioinformatics at the time. So you really you have to. You have to get training lab research. That's that's the future. Perhaps if i had not listened i would i would still be an academic on the bioinformatic side and that would have been just fine But because instead. I was at the bench saying this. Just isn't the pace at which I want to get things done. It caused me to look elsewhere for for a career path. You gotta get a j. o. B. at some point. And you just did you think that being on the faculty would your would be more hands off. Because i'm not sure i understand. You're saying that you got good with your hands and thought that this you maybe you could be two hands on and not see radical enough but being a pi would naturally be more theoretical Right that seems right. Although i strongly believe that the that is inextricably between the physical aspect of biological inquiry inquiry and the the theoretical. Maybe this comes back to that. That critical paper reading there the way one asks the question down to details like what. How many replicates are you doing is a ninety six well plate or eppendorf tubes. What is the copy number. How many cycles do the pr machine these. The way the question is asked is part of the answer. I see yeah to be a good theoretician you. You do need to be close to the hands on experimentalism. I think so. I think that that those are highly related but another aspect of it was though again. Just the pace. I could see you know extraordinary research scientists around me There was a there was a young faculty member of jennifer down. A- there who was a was just tearing it up in the world and other great examples of of thought leaders in their field. And i could see that they were on fire to answer a particular question. And we're going to do that to the exclusion of others. And i knew that wasn't my style either that that level of singular focus around a specific sub discipline within the space was going to be dissatisfied. Me so. I also wanted to find a way to learn and contribute. I would say more broadly in the field interesting. So you knew jennifer way back then. Yes she was. One of those Obviously rising stars who when graduates didn't talked about who's lab to join a. It was a very desirable position to get a. She was just had so much energy and and talent for the work. Dna script recently launched the syntax system. I ever benchtop enzymatic. Dna printer which uses proprietary enzymatic synthesis technology. The syntax system prince tiana on demand right in the lab researchers simply import their sequences and within hours the system synthesizes dna alagoas that can be used immediately in molecular biology. Engine nomex workflows. Dna scripts ends of dna. Synthesis emulates nature to overcome the drawbacks of chemical based methods traditionally used until now designed for fully automated walkaway synthesis. The syntech system takes less than fifteen minutes to set up with no special training to operate with syntax. Researchers can accelerate discovery with dna on demand for more information on dna script. Please visit www dot. Dna script dot com. So you you're starting to now explore at this point where what's going to be How did you go about that exploration. Well fortunately as mentioned by Chosen to pursue decree at yale part of that choice. In addition to the the excellent gonna focus genetics program was it was my first exposure to a true university. Georgia tech was incredible education in the math and science. But it's pretty. It is in the name. It's technical so i hadn't really had Access to Broader education people and resources Outside of the technical discipline. So i started really taking advantage of that at aol. I took classes in film. I took classes in economics. Joined the no gilbert and sullivan society. Much to my advisers. I think chagrin. Because i think mostly when people get into the third and fourth year phd. They're super focused on turning out the papers and getting the post doc in it's time to time to buckle down and be focused and i was going in the opposite direction just really casting the net wide Availing myself of the excellence. That was there at yale. Basically in all in all disciplines okay. So you're this is the part of the process the exploring of what we now call you know alternative careers with advanced scientific degree Which was very upsetting to a lot of people they just could not conceive of. Why do i had a colleague who after having this conversation a few times with him at some point he said. Now i get it jenny. I can see why would do something less than the search. And he thought he was finally being. You know supportive now. Now there's just another world out there guys and i see some of it. So how did you end up going into the financial world Well i love my career decisions until the most recent one as you can hear where motivated around knowledge and skill acquisition and so i was a really explored through conversations through career etc A broad range of what do you do if you know science but want to have a different function in the world than making more of it. I was elected patent law. I looked at science writing education. I was fortunate than at the time Mackenzie the management consulting for was recruiting. Pretty heavily from a non mba programs from in particular science programs. The theory being. Hey we need. We need more critical thinkers who are quantity quantitative analytical And then we can then. We can possibly get from the best nba schools. Let's recruit some from science and engineering and we will teach them business. I didn't know what business was it. A note consulting was. I'd never had a non technical job But what it sounded like was oh every three or four months or so. I'm going to be presented with a really hard problem. Have to solve it and in doing so gonna learn a whole lot about something entirely new and you can imagine given given our conversation so far. How appealing that was well. Yeah if you're a self directed oriented learner Yeah you. That's that's great variety. That's right throw throw me in right So that was appealing. I figure it again. Kind of optionality. No matter what i do next i will have been trained in business. Strategy in seen a variety of different kinds of jobs and careers in the clincher. Was going through the incredibly rigorous Interview process multiple rounds of interviews. Just was so impressed with the people. I i wanna be. I want to be my peers. I want to learn from them. I want to be challenged by them. So if i could throw myself into this environment. It's a it's a no regret. Move no matter what happens next. So what kind of companies did you get to know or were these fortune. Five hundred type issues you're dealing with. Yeah is typically more like fortune fifty right so mckinsey as large very established Very high end management consulting and so we be brought in by the c. suite of top ten farmer for example to think about our strategy or One was a biotech strategy. Which it's funny that the that was even the framing. Then of the pharma companies. What should we do about this whole biotech thing. That seems to be seems to be coming along so so mostly very very large pharma. Biotech and that we're thinking about top level global strategic questions. And you enjoy this. I hated it. You hate it so it turns out that very large successful companies are necessarily correlated with speed creativity and innovation in so Loved the work of solving the problems but it it felt it felt slow. It felt weirdly wrapped up in in political issues that had nothing to do with the quality of the science or the nature of the market opportunity. the sort of dynamics that that frankly don't motivate me and i'm not necessarily very good at So that was. That was getting kind of frustrating. This was right around two thousand as well. So the human genome project had been declared complete with clearly going to be the age of the genome Here i was with freshly minted now. Phd in the discipline. Who wasn't really getting to touch all of that change and innovation. It felt very far away from you. Know this tweeted Ten so was that when you went over to investing a couple more steps the the changing moment there really that defining moment. I'm so grateful that i got staffed project. In summer of two thousand consulting to athy metrics see cbo was at the home. The the company was was public very high growth and they called in mckenzie to helping about their growth strategy. Who's a very unusual project for mckinsey. His it was a much smaller up. Incoming technology driven company. The culture was so innovative. The teams seemed really bound together by this common goal. They were moving as fast as they could. Really transform the industry I realized this is what i want for the rest of my career to be in and work with these kinds of companies that are combining technology biology to transform the space With a group of people who have very strong shared sense of purpose toward Cycle so this brought together a number of threads for you because this is the original gene ship company for those who don't recognize it. You know they were selling my Gene expression instruments and And consumables and so you've got like real genetics. So you're drawing on that experience Technology management strategy thinking about markets. Like it's starting to come together for you here right. It's it's all the pieces in. And in addition i think we would call. In retrospect metrics the first olmecs company because their insight was now if you can use conductor technology to miniaturize. The way were interrogating the this case. The transcript Or the genome you can get thousands or millions of data points as opposed to the five or six. I felt like i was getting from artistic. Handcrafted work at the bench. And i thought this is the way it should be done because it is such a complex and and data rich pursuit. And it's much more akin to what drew me to the field in the first place. Which is this sense of. An enormous amount of information crammed into every cell in every organism in every cross every generation will also. This also comes back to something you said earlier about like your your desire to learn more at a faster pace so if you're able to do more automated things in the lab you can ask and answer more questions more quickly gathering information and you put that quantitative brain to work. Give us the data. we don't have time. We don't have time to wait around there so much to learn. We need better tools that sequence genomes than look at individual cells and do that rapidly millions and billions of data points. That was. I feel like a turning point where i said. There's an opportunity here to constantly be looking for the next tools and technologies that can catapult field forward. I do but you're still. This is still mckenzie at the time. It was still mackenzie okay. So if your company lives like efi metrix. That's just kind of small fry. Mackenzie so not really like. You're you're not getting the attention of the big boss. Or whoever and mackenzie or does so like i want to fast forward a little bit here. Jenny how did you get foundation was was one important. Stop before your current one. So what was it about gates foundation that that drew you there. Would you do there. Well let me let me fill in just a couple of skipping stones along the way otherwise it won't quite track left mckinsey because to your point on new that kind of opportunity to drive innovation the happening at the small companies which were not mackenzie client base. So joined a twenty person. Genomics start up in the boston area called yesterday. Nomex did that. For five years in a variety of roles including corporate development and that was my transition to investing. So i got into venture having been a venture. Backed operator in two thousand. Six fidelity by scientists now called f prime capital. I'm just one of the best early stage. Sciences investing teams. There is so that's where he got a investing playbook and training had done that for a couple of years was starting to make investments particularly love looking at tools. When to your point the opportunity spend some time at the gates dacian came up and the draws were several fold one. I had kind of the basic tool kit for being a venture investor. But i recognize that that was a specific kind of of investing or capital deployment. And i thought being at this place that has thirty and forty year time horizons and measures returns in literally in lives saved as opposed to capital back. What does that do to the investor. Playbook how how. Will that affect how i think about investing so i thought that would be an interesting development opportunity but the other was the global nature of the problem set so i had noticed that. Us venture is tend to be pretty focused on us market opportunities for life. Sciences makes sense. That's where you're gonna get the best returns in general but to shift that to where we have the most impact. How many lives can we save in. Malaria versus cholera allies. Can we take in africa versus Southeast asia right. I just i wanted that global exposure to both the the needs the problem set as well as the the people who were trying to tackle it now at this time the gates foundation had. They just started with the equity investing in biotech start-ups as well so you could kind of operate on several fronts. By this point you could know they were done that yet. Now now. I was part of setting that up action. Yeah so what they were. Great at the time was grants making to akademik ngos other Great partners in the space. They were great at corporate partnerships with very large corporates. And they hadn't really built out a tool set for interacting with the start ups that i loved and so i thought here's where i can help so to your point in addition to making a managing grants in engineered biology. Which is what. I what i did on my program role i can also help set up Shape and set up the ability for the foundation to use other capital tools like equity investing and debt and try to build bridges with with the venture world that knew and loved yup well and this is an important shift at the gates foundation. I wrote about at the time When you know because clearly there's a lot of great work in academia and there's places for big companies where only bully big companies can do like a global vaccination campaign but but there's that middle at there's this area where startups are really the right kind of organizational structure to to do to to achieve the technical objective and furthermore once you've established that platform it can be used for a lot of different things if you bring that kind of focus at the gates foundation has so you know. A new antibody drug discovery platform. Say might be good for oncology might also be good for infectious disease exactly right and that sort of dual use of transformational platforms cereals. Sweet spot in the early investing program. There okay okay. So you're there for a few years about four haji get the edge to start your own firm right well so you just said some words music to my ears which are really about a belief in the role of startups in rapid transformational change. I just love what happens. When a group of people with complementary skills in a shared vision take the risk starting a company attaching proprietary technology to Exciting market opportunities. Like that is that is to knee. As far as i know the fastest way to to make change progress in drive science forward It's what works for me. At least it's sort of my metabolic rate. Is that pace. Not large companies not foundations as great as the Foundation is you know it's not moving it start-up pace so i i knew i needed to move back into the the startup. World am decided in two thousand thirteen to move here to the bay area because i also knew this geography was the best place for those biology meets technology in melting pots. Being able to build these teams. That could do something truly different. So this is the suss pretty gutsy jenny. Like you quit and good job at the gates foundation and moved to the bay area just to figure stuff out today the thing now i it i had to do it. I think you know many entrepreneurs will say you know if he's he'll tell them no. That seems really brave. Like i had to do it i did. I remember the colleague. I told him i was leaving the foundation he said. Oh it's where you going next. I don't know if figure that out and he was. You can see the fear on his face but but for me it was. It was the first career move i ever made. That was no longer about acquiring the next set of skills or knowledge. Like okay. i have. I'll always be learning. But i have this set that is That is uniquely suited to this early stage. Work i wanna do. It's time to go figure out how to put that to use. And so. I thought i'd give it a shot. Does quite a bet on yourself now. Were you thinking that you would start a company or start a venture firm or how how. How did you think about this. It was an open question. I love love love building. Companies that that zero to hundred That that journey that got to be on. Us should nomex is just the basque time. Love that So i was open to finding another one of those and starting joining helping build also open to investing became a venture partner once again with f. prime capital also at enteric capital is the world's largest food nag fund. So i was. I was open either way to. What's what drove me. I have to Help these companies thrive and was open to what the role would be. But what i found in first year was at these kinds of companies that i love Still struggle to get that first round of institutional capital because there they fall through the cracks but not biotech and they weren't really being understood and served by the venture landscape tools instruments biology bio the tend to operate behind the scenes. They don't have the big flashy. Ipo's where they didn't but they do. Now we'll get to that but yeah this was just not the hot air. People were looking at therapeutics but by and large diagnostics. hard business But there were people who invest in it research tunceli not mostly live sciences. Investing therapeutics investing. And that still predominantly the case as well. Yup yup so you you're kind of nibbling around the edges. It sounds like for about a year here in the bay area before you really settle on Starting general at the moment was was. I imagine right so i met his virgin founders in sort of late actually mid twenty thirteen spend some time with them as a consultant thinking about fundraising strategy introduced him to investors on the bio side on the tech side eventually said look. I'd like to write you jack. This is ridiculous. It should not be this hard for this transformational company to raise the seat around. This is this is a once in a lifetime opportunity so the there was that moment of. Do i join this team. That i love on this journey that i think is going to be a world changer. Or do i look for the next xijun. Which i think will also need me for some amount of time. We'll also need myself and my colleagues at genoa. Who have the deep science are willing to engage in early scientific technical risk but have an appetite for something beyond traditional biotech of it so that was kind of the moment where i said okay Not going to be an operator. Commit to being the kind of venture investor. That is a partner to these incredible merrick transformational companies. And what was it about designer. Jin that excited do well the few things that the team was what i recall the first second gen. Syn bio company right. They had A couple of them had spent time in amorous had been pursuing syn bio in the commercial setting had deep skills collectively the three pillars. They needed world-class science was act. Server scientific leadership strong practical operations from jet dean and then Again world-class knowledge of top Chemical companies in the chemical industry from From josh from his time at mckinsey serving those clients so they really brought together a unique combination. That was so much greater than the some of the parts. That was going to drive. I believed this new newish discipline of of syn bio into that in many trillion dollar opportunity in the chemical space. And so you decide. You're going to invest. You're not going to join the team. You're gonna make an investment and help these guys out with whatever way you can Technology insight introductions By this time you have pretty good rolodex. i would imagine. So how much money did you did you put in. Was this money come from. Where did it come from. So i wrote a small personal jack. I sold my house seattle and was living off savings in a little bit of side consulting gigs. So i wrote a personal check but it was also the moment at which angel was launching syndicates program where individual lead investor could Fill an allocation in deal by pulling together other individual investors Nanno v. c. Ride i was making my gp commit and Wrote an investment memo and recruited in a sense other individual investors into into the deal. So i did that. That was my first. So it's early. Two thousand fourteen in the emergency did that. Twenty fourteen to twenty seventeen in a series of sbp's kind of deal at a time investments Until it was clear. This was a fulltime job. I was There was more than enough deal. Flow is more than enough need for this early stage. Investing thesis and so it's time to be a grownup about it and institutionalize it as venture firm. Could you talk a little bit about the size of the fund. And how the math. How you thought that might work Were you thinking like hey. This would be great if i could raise fifty million or a hundred million but not five hundred million or you know to do what you wanted to do. Yeah you're quite right so one of the. I was a learnings and frustrations and often. I guess those go hand in hand from being At much larger firms was the phrase. That won't move the needle so seeing terrific extraordinarily science teams at the at the seed stage and the for the company wants to raise a couple million dollars in the six hundred million dollar fund. Can't do that right can't afford to do that. It's not not the best use of their time when they're managing lp money at that scale. So i get it but that really motivated me to build a more sensitive needle a smaller needle. That was really finely tuned to driving great venture returns but at these early stages So i think for me that around fifty million dollars a partner to be able to lead Seed a which is what we primarily do at genoa but in the beginning the only general partner was you right so an e. instead of doing the usual thing with canvassing. Lp's like knocking on the door. Calpers and calstrs all these state. Pensions in harvard endowment et cetera et cetera. You weren't you're specifically not looking there. You're looking at angel list and picking up your funding from like a credited investor individuals who put in How much better time could be smallest. Five thousand dollars could be as much as one hundred thousand dollars so those. Those investments in what are called funds zero wasn't structured as a fun but very much on on the these Genoa those ranged from two hundred fifty k. Two million the largest We pull together with wasn't a million and that was great to be able to offer these. I think pretty exciting. Investing opportunities to individuals really enjoy the way Enjo- last innovative innovated and some ways disrupted the early capital formation landscape. That way so excited to be a part of that that movement But it does have an upper limit and that was mostly disconcerting to me because it limited my ability to be a great partner to these entrepreneurs right debatable. I couldn't say i will lead your seed round with x million dollars. I didn't know if i had access to that kind of capital to go. Ask other people for every time so that was i. Think the motivation to least Institutionalize as a as a fun venture is not perfect. Most companies shouldn't raise venture. There's nothing magic about it but it does have some benefits And it is a well honed tool at this point for For supporting really early stage companies. Now i'm imagining that. The average angel lists member. I mean this is quite a leap of faith. I mean they don't really know you personally. you're kinda hanging out your shingle there. Hi i'm jenny roof. Here's who i am. What i do my training my experience. And here's here's the investment opportunities. I see and you know. Maybe i'm like a wealthy you know. Heart surgeon or something somewhere. And i've got you know a quarter million dollars to invest. I just. I looked at jenny and thank you. Yeah i kind of. I see the the possibility. And i'll put some money with hurt former trust. Yeah it seems crazy when you put it that way. And how did that happen. You know it were very much built it up over time that that i deal in. The enzyme urgency. That was around two hundred fifty k. That was around thirty Individual participants about half of them. I recruited to the platform is it. Hey this is what i'm doing. They did know me ground and then half of them were actively on angel is looking for deals and frankly was pretty differentiated. It was i think the only life sciences of channel at the time. And i think there's something really appealing about this thesis to to Very technical people into operators because it is very much that technology meets biology. And it's very much about building companies that make real real things that have products that go into the market. And so it's i think more relatable to a set of interested investors whether they be angels or lp's larger lp's who are maybe coming through a journey that that mirrors mind descend degree and find this Exciting and more relatable than perhaps the esoteric world of therapeutics development. Well it's It's really interesting to see. Not just the originality in the investment thesis around biology technology but the originality. In like how you collected the fund and there's just multiple levels of risk and uncertainty. Or just you know unorthodox thinking at work here and then to see at work. Well what was the moment when you felt like okay. Maybe this is. This is working. This is getting somewhere. I think it might have been very recently to be honest. I think it might have been our first close on genoa fund to which happened in january. And and i thought oh this is what i'm doing for the rest of my life that's great you know. We had our wonderful l. p. base from flan win at a really happy with with how executing so very supportive coming back again to find too in the sense of having been built from the from the bottom up just having enough to to keep doing this work and and to keep growing the team and the the size of the capital that we have to the able to support companies with but just just knowing that there's a sustainability at this point And i don't have to sell anymore houses to it's fake. Keep supporting my investing of it. I mean this was a long time from twenty. What thirteen fourteen until beginning of twenty one. Where yeah yeah. It was a bit of time like my last real paycheck. Right was they may of of Twenty twelve and so there were some lean years in there to kinda figure it out so it's it's But it was really step by step. Like i think about it in every in every case it was doing the next thing as well as i could and then trying to figure out the the step after that in of course i am. Agend has now gone public. We can all see what that's worth. caribou biosciences than other Berkeley spinout By a rachel horwitz in impressive crisper company. That's in your portfolio. You know. I almost on time janney. But i wonder you know. Do you have any any advice to the entrepreneurs out there whether they're men or women know things you'd like to see more often or you think people could do a little better at that. You know the than they do today. Customer contact is always a good idea at least in the you know the kind of companies i work with. It's less less. Relevant in in their products where market needs are particularly well mapped ads. You don't need to go interview a bunch of patients to find out. They need a better drug. That's more effective with lower side effects but in tools in diagnostics in transformational software in life. sciences in engineering biology act by industrial bio. I think customer and partner contact Is is a great guiding force when when trying to think about how to bring these innovations into marketplace in a successful way so that in order to achieve better understanding of the problem to be solved Yeah what kinds of things do you read regularly to just like. Stay on top of things or of you know. Try to think get ahead of the curve. Or what's in your information diet. I really rely on on entrepreneurs. It would be silly of me to think. I could stay ahead of the sort of entrepreneurs that i'm i'm looking to serve. They are the masters of their field that they are. They are ahead. They know the thought leaders. They know the papers So one of the joys of this job is every day. I get to talk to a company and and ask them. What should i be learning. What's happening in the space. What paper should i read what What conference are you finding most useful as this field feels because it is. It's too broad and too fast. I think to to think that one could somehow stay ahead of all of those trajectories in such a way. And so i really tried. I take cues from From the best entrepreneurs about where. I should be learning. Has your thesis Stayed the same for the second fund like this this nexus between biology and technology or or has it been amended at all. I really has. I think this is a this will last Genoa long after. I'm gone last the field long. After i'm gone. There will always be a need for a better microscope. way will always need New and better ways to see what's going on in biological systems engineer. Manipulate them to solve problems so the technology will keep changing and the understanding of biology will keep changing what the unsolved problems are will hopefully keep changing as we knock a few of them off But they're always be an x one. And so that's that's what i love about. This season's judy rod. Thank you so much for joining me on the long run podcast. It's been a great pleasure. Thank you thanks for listening to the long run. If production of timmerman report itera a of media was a sound editor. Music is from. Da wallich. see you next episode.

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RM Founder Series - ESG Analytics CEO Qayyum Rajan

Reformed Millennials - Growth Investing Canada

42:05 min | 8 months ago

RM Founder Series - ESG Analytics CEO Qayyum Rajan

"Hello and welcome to the reform podcasts. The show is dedicated to identifying macro waves or trends. That millennials can jump on to better invest their time and money. Our goal is to help improve your life and business by early and right on those trends. Learn more and stay up to date by visiting our website. At reformed millennials dot com or join discussion in our facebook. Group also need to reform welcome podcast listeners. To another episode reform on today's episode. I have a very special guest. I don't think it's appropriate for me to introduce myself. But i wanna start with a quick quote. I've been the last. I don't know ten days kinda doing a little bit of a deep dive into. Es g and i have to admit i was quite the baby going into it. And i still feel like. I'm an idiot now but i a quote that i kind of fallen into an i kept thinking about as i was reading listening to stuff on the subject was from peter drucker which is what you choose to measure then gets measured and improved upon. So the way. I i looked at that. It was it was kind of around this theory of or this understanding of what we choose to focus our money and our attention on tends to be what we invest in and improve upon. And that's where i mean it's the basis of all alpha or performance or change in the world and to me. I mean you'd have to be blind to not see the narrative in the world where we're trying to work towards a cleaner environment to a a more equitable role in on boards and in our society. If you look at our politics it is mashed. All of this stuff and to think that markets wouldn't also represent that would be ignorant so for me that was it was really refreshing. It was also what i think is this is the focus of our entire podcast is a and identification of. I think a future trend. That is not going away and going to get bigger and stronger so q. I'd love for you to tell us a little bit about yourself and roll downhill from there. Yeah hi my name is kim. Most people know me as q. And i'm a finance guy that went into tech in somehow all my world collided into one. With my recent venture is our macri. asthma If a and have been investing. Since i was twelve years old clearly pictures of meat trade in stocks. Look in line for. Ipo's where i grew up in kenya. And yeah. I really got the tech bug. In the early days of the blockchain era where sorry coded more and more learn by data science and had my first startup called comply which was using the blockchain to create new ways to issue additional securities. I really homecraft in product development. The whole full stuck start of game there before moving onto management consultant at ernst and young and then more. Recently i started a company called. Espn living which is using ai. Artificial intelligence and machine learning to automate the east g analysis research in screening process to really target a few issues that we see in the space especially on coverage in timeliness of this information. Which as you mentioned is only game bigger and has been measured in that. We haven't seen or so to me. The most important first question and i think people listening to this podcast tend to be either retail investors or investment managers and be more people interested in investing in general. The what does. Es jeevan stand for yeah good question so espn Environmental social and governance and it's taken many forms over. Its lifetime is a new term. It's been around for a few decades. It started off as corporate social responsibility and then responsible invest in our eyes to see. Sri and now the nomenclature we've kind of settled around is es g and fully what it is today. We measure companies from a financial perspective. So their bouncy through assets there the debt obligations et cetera et cetera. But were really moving into an area where we also take a really hard deep look at non financial metric so their gender diversity there. Harbin emissions their their water. Use all of these different factors. That are apart from the financials and as you mentioned these are starting to have increasingly more important effect on their actual financial bottom line and so issues. This term to encompass all of the different segments and metrics and measures within each of the e. s. n. j. k. So that's a really good breakdown of it so for me. The reason why. I was so excited to to kind of deep dive into this is because there has been an increase in interest from clients and or prospects are just people in general and i look at this industry. I started watching few podcast on this or even some youtube videos and i started to to combine these two things where you have the data side of people that are building. Ats people that are building new ideas to capture upland the future. Or just the future of investing. And then i look at your business. And i feel like there's this great mix however when i think about what's been we're all the flows are going in the efg space. So when i look at the the guts of an ice shares. Etf i start to find this. Disconnect between what is actually true esp or what. I define issues. And then what. They're doing themselves. Like i look at the top twenty holdings of these and none of them to me feel like they're at the forefront of es g so can you kind of give me a little bit of a break down to as to. That is helping. I understand that and then also kind of where your role and your business it comes in. I love that question honestly. That's actually the reason. I got into the space so i love data finance and the more and more again in two more and more. I'm really drawn to the philosophy in the people within it. Where i started though. Is that every time. When i was essentially investments in rb see adam insecurities and all the stuff was coming around. It just felt like fluff. It felt like what people were talking about when organic and free range came to be right. And you'd have different people market in this in this slop label onto it. I saw this one post late. Two thousand eighteen which is the bottom twenty sustain olympics rated stocks which was one of the biggest and as the biggest analysts based issue firm and it was like netflix and amazon and walmart as the bottom twenty stocks. Which finds maybe their bottom like. Ese stocks but my head was like that is not the bottom twenty stocks from east perspective of the world. There's no way. And when. I started the research i started looking at the actually microsoft amazon. All the fang stocks were the makeup of all of the. And i'm like there's something missing here. And the reason that i finally understood like why that was hulk was the coverage and so as dove deep into the etf realized that most them use the same lyrics or mci for the each year. Aden's and msa covers. Eighty five hundred companies stainless covers forty five hundred companies. They do with analysts. And it's a bit of a time lag and when you think about what that means. Companies that are in the world and as a result of investment flows need in big companies to go into. Etf's you end up. Just having this very limited pool of companies that are covered that are now being used to create these funds as kinda shortchanging some people when they think about where their dollars their vote with dollars coin. And that's kind of what we're looking fix at it makes sense. It does analyst by says the size by of course the top rated companies need to be analyzed but where that leaves a small value manager where that leaves in private companies and what. We're looking to use alternative data sedate outside of what companies disclosed in inputs today to really target all the rest of those companies right. There's millions of private companies and other public companies. Do we have around sixty thousand right now. We're really trying to get the rest of them so that we can do more appropriate s seattle analysis right. Yeah that's for me. That all makes so much sense in it also makes sense from like share perspective. Where're they don't really care. They're just trying to sell an idea to brand. They're just they're pushing it out there dipping your toes but and like all new ideas or even trends in markets. It takes time to develop out. What is the expectation. Because it's it's hard to incorporate all of these different things and like anything you need to be able to if you don't have the technology or the data sets or the proper way to sort through them. It's hard to really develop a product. So i for as i go through them. I'm kinda mad at them for pushing this untrue version of s g but then i at the end of the day i kind of understand it so moving forward. Where do you guys pull your data from. I don't wanna give away some of your secret sauce. But i was kind of looking through the provider's routers and bloomberg. Ci and some of the really interesting stuff is coming from. Like carbon disclosure the carbon disclosure project. And i don't know if you've heard about this but like zaza Network can you talk a little bit about the data sets how you guys go about using them and and building them. Oh yeah and so. We're we specifically are a niche player in the what we know as alternative data so using data that's outside of corporate disclosures. We still track company's involvement in sectors like alcohol tobacco pesticides along with renewable energy in all the positive things but the korff of what we do is a lot of natural language processing. So what we've done is we've taken all the big frameworks in the world. You mentioned sassy touch more than in the second. The un scg's is all these different frameworks people using and they all have different commonalities similarities and to what we created was this top level taxonomy for es g and our algorithms able to in the world look at unstructured data meaning the press releases transcripts all of these different piece of media for all of these companies on a real time basis and we can tag and categorize them add factors like sentiment to really tell you what's material to company both positive and negative initiatives and controversies and really almost give you an ese trendline. What's happening within their. You can aggregate this industry. Noggin by company by fund. And this lousy than you look at a company see what's related right like whether it's human rights abuses forced labor and then see the trend and then also keep ongoing monitoring of the company as you go forward. We do other tracking like the carbon emissions. That's done through that. Cdp is one of the people that do that. We also have the disclosures so we aggregate all of those other metrics as well the core is really on using these algorithm scott into world use public data to come back with relevant factors were awash with so much data today to really tiny narrow down from an issue. Context savvy is also a really interesting case here. So there emerging as the lead in framework for es g Reported by and where this is going is machine readable. Es at data so as companies disclose this to organizations like suspi similar to the today. How with sec automated ten k.'s. And things like that. That's where she is going and you can imagine. The data gets that point of view. We're starting to get into like this next level of us and so and where issues going now is what's known as materiality and to your point on the earlier they started off with what's known as Removing oil and gas or pesticides from the pool of investable universes right leaving you with x. number stocks now it's going towards more integration in materiality. So it's not because he just you don't want to say hey. I'm going to exclude the entire oil and gas industry. What you want to see now is okay within oil and gas. What are the material easy. Factors and which companies are performing best those factors. You have a much broader set. And sassy provides this materiality map which we've integrate into the platform as well. Okay all right. So i mean yeah. That's where i kind of was based on ten days ago. I was like what it's an exclusion approach. And now i've kind of come to this realization that it's much much bigger than that and for me. I think that what's really powerful about this idea. Unleashing moving forward is the allegation of capital into this. This nine set a framework as you mentioned and having it deployed and forced upon aboard. Yeah because if you're if you have convinced vanguard and iraq that this is the way the future and it's ingrained in their ability and they now have all of our money because they got what you combine the two ten trillion dollars hyun. That's imagine if that's the case. Think about the pressure that they can put on. All of our major corporations everyone always talks about how capitalism is ignorant or doesn't care about our environment but we're getting at this point in passive investing where i think that's probably shifting where now we have these groups of people that we impress upon them that they need to make these decisions for these boards because we go and you look at the biggest shareholders each one of the biggest five hundred stocks in the united states. I promise you it's very rare to be single individual or anybody other than ira bangor. So if that's the case they can be these like these activists investors and it can be a for everybody. So where do you see that like. Where do you see your data set fitting in. I like to me. It's the way i look at it. Is i think i could easily apply this to a a canvas where i can apply. Datasets be like okay this. This is what i want to exclude. Or these are the companies that i want to include visiting. They're going to benefit. So i can make a custom. Etf for people or their own portfolio. But i think your aspirations are larger than just someone like me. I feel like your aspirations are more institutional more like i dunno on you. Hr or something. Along those lines or harvard endowment so let me know like where do you think it fits. Yeah so where we see. We have a few crickets right. We have the espn analyst and portfolio managers and financial advisers. Who would use this for their clients. Right fines adviser clients to as you say determine what stocks fit credit portfolio able to monitor your Over time and automate that approach portfolio managers and alice. They'll go into more details on the company and do research to see what makes sense with the state for that company and where we wanna go and where we are right now as well is taking our data and develop in what's known as an api data feed for fintech platforms. The robin hoods the better. Men's the wealth management platforms where you can then look at a company you can see. It's talk information all the different data and then have this little widget which shows you the alternative itchy analysis and for the values that you care about you can see what's actually happening in that country or in that company and we cover country as well and a good example is apple which typically has low issue ratings every easy different cried so if you're coming up short the issue rain might be low. But you're seeing that apple has these distinct really negative flags forced labor See data point on maybe that deters you or gives you confirmation for something else right. And that's the power given the data and the other line where we see ourselves going for an institutional perspective is game back to like. The conversation we talked about earlier is having these alternative. He s g index says that will actually represent people's values off easy that they put in right not these not justifying fang. Etf that's redone but really something a bit more dynamic in a bit more niche because our constraints has not gained zero point. Zero five sun on am is providing good data to individuals and institutions. Kind of helps me get an idea of where you're wanting to move yourself and myself also because we've been toying around with these. This customer integration with developing portfolios that. Make a lot of sense for our clients. I mean we work with people that work shell work at and bridge or they work at large companies and include them into work chopper by your client of mine. It's most your net worth tied up shop. I have to pull that out of your portfolio. So that's kind of the base layer and to me. This is just another layer on top of that. That's going to really start to fast forward. This reality of custom indexing and i just can't i can't see how it doesn't become a trend in the future because it helps people released show a the way they view the world and if you like to vote with your feet vote with your dollar invest with your dollars well right and if you can truly do that and do it in a simple manner i can't just. This is so great. I think dead like as you mentioned that. Get people's views like everyone is so different both institutional and retail perspective so really time to go more on your right and get people away from a aaa or six hundred ten and giving them this. Specific data points care of climate or governance or diversity or board equality or really cool initiatives and innovation. You should be able to take your specific values and understand that accompany level as opposed to being told. Hey this is not a because that's where people want to vote and that allows them to take that in really making their own. I think that's where the world is trying to get to where we're trying to help. So i'm gonna kinda start breaking out of this deep dive here and i wanna talk about what people might be surprised about when looking at this data. So what do i mean by that. Let's say there's five hundred companies in the s. and p. five hundred hundred five hundred and five and i ask you okay. Who which twenty companies would fall in the bottom twenty in terms of es g score and if you were to grab a couple of that which ones would you be most. Would most people be surprised by. Yeah i think the one that. I was surprised at the most when we first started in this now says and again it's going to be relative to the individual people so i'm surprised to see that and that's one hundred fifteen companies involved in animal testing in a whole bunch Involvement controversial weapons and suffice finding some of the east. Gts yet even more that. I really like me. Think twice but the company that really stood out when we were first. Doing some of this analysis was boeing aircraft company. And what. I didn't quit two and two together in my head is that they are involved in controversial weapons small arms military contracts. So they're actually one of the most excluded companies from ese etf's because they are involved so much military conflict which is really like. I knew it. But i didn't know at right. And i think some of these small examples make things sticking your head and then the other one came up just randomly like we're literally looking at some of the initial flags you got and dr pepper says comparing. Dr feffer and beverage and monster was like pretty cool. Had like their sentiment was really good and dr pepper. There's like all these like it dips in their. Ese sentiment and it was like all of these lgbt diversity issues that they had all these different things and so yeah just made me think twice about some of the companies that we look at us. Happy to see one of my favorite brands. Which is the umbrella of says casey. There were pretty well known for really good employees policies and gender diversity and buzzy. Tq rights and stuff like that so you never know what you find is. There's more companies that we could. I could ever look at my lifetime every time we'd demo clients to deploy up a company. I'm like oh interesting. I didn't know there were a bad heart musical things but that's just the power right of of giving people the right data. Yeah it's interesting. The more information you people laughlin will shape the way that it'll change exactly. It's never meet your heroes because you end up finding out something you wish you never knew for me. It's just been different. Like going in to what i thought was. Ese and going on this whole pack like my perspective shifted in all the people that are being involved in the company now and the weeping introduced to it just continues to blow my mind like what's going on in the world when you see to from this vantage point. Yeah and you know what for me. I am my job. I believe that the number one thing for me to do is to one get my clients to their goals but then too i need to make money for them and have to be agnostic to these things. Unless they've given me the the mandate to take this as a form of care on their portfolio. So i have to work with that. And i look at. I started doing more of this research. And i look at some of the companies that i have lockheed martin and it's like oh they knew this but like man the scores bad and it's funny because it now starts to terrace your heartstrings in some ways right so lucky really good example of that because i think it's a it's a lot of portfolios and it was in my own before as well and it's not to say there too bad actually laid when we look at them compared to others yes involvement controversial weapons multi contracts. But if that's what you're you care about that's it's going to be excluded but also really good gender and board representation and corporate governance and all those things so depends on the client that that was one of the ones that it always pops up right like. I feel like my example to client every time. It's like a company without any flags. Now let me show you lockheed martin and we can see all the military contracts and people are always pacifists until they're in a foxhole. Wait for that. But i kind of moving on i want to shift away from. Espn and get a little bit of sense for you pre this and i also think that this'll be a really great opportunity for people to understand the the whole scene in canada so you've been very successful in pretty much everything that you've done you've worked in across a whole number of different areas within finance so as you may or may not be an agreement with me but i think currently canada is an inspiring country but to me it's really spinning its wheels in this entrepreneurial space so if you wouldn't mind kind of talking about a few the businesses that you've worked with your experience being in canada and also probably doing some business in the united states and talk about where you're bullish on canada or not and were you think that we could steal from the united states or other countries and kind of incorporated into our approach whether it be from policy perspective for even just human behavior and how we should be looking at the start seeing and investing. That's great point. I mean when i first started there was a lot of things i've been know about the startup ecosystem in canada and a good example. Is i company that we had that. I had barely had no idea on a napkin. Like we're like this is what we're doing here's deck and we have. The team had barely built a product Not even started and we went to investor meetings in like it will take you public. We're like what we'll give you five million dollars we'll take public and we're like interesting really speaks volumes to the issue the canadian eco-system because you get caught from inside the funding government that the kind of side i think if we're to bucket it but in funding side there is not that much angel funded. Excuse me there's not excuse me. There's not much angel funding for startups. There's all these angel groups that take you through ridge process that are honestly more annoying than anything and the lack of seed stage startup funds. There is some later stage funds but in between we have the cac we took stock. Exchange debenture exchange and so almost always. There's all of this quick money looking to get a startup from idea to public very fast. Raise money go public do your thing and so startups just get caught in between these two things whereas i think you have much more patient capital elsewhere. Much more influential capital. That can really help you. As opposed to what. We see here. Which i think is an ecosystem problem because even the money that i phrased for. Ucla the money raised for the company's previously came from outside of canada and it was just by nature of that. So i think that makes things hard for people. But one thing that i think we do have going for us. That our government programs so in canada if you use came employees gable to really tax adopt a lot of your research development costs. There's a lot of government support and things like that. But i guess the corollary to that is sometimes it detracts from actual war and you almost have to balance your startup and you burn with not becoming a government work program. It's always like obama inbetween. But i think it's growing. I think that we're having some more high profile startups in canada right off see slack and others going public by really think beef. Funding ecosystem needs to mature a little bit especially in between latest as companies and companies with just nigeria on an afghan. That's there's a gap that needs to be filled. Which i think is really done well in other place in the world right in the us and all these keebler willing to allocate capital make bets on. Early stage founders. That's what's missing and ones that can actually help founders. Not just money in a cafe will because that doesn't always do anything. Yeah no you did a really good job describing. What i find to be an might the way i look at it as like in canada. We have this obsession with maybe quarter over quarter annual return on on our invested capital. And then you have. Which i define as being this game that we play and then as the us or just even silicon valley more specifically or denver. Whatever in austin where they play these infinite games where they're more than happy to take a longer approach where they it creates this very beneficial cycle and feedback loop of supporting one another whereas in this game. I think canadians play. And as being berta i see it even more. I think when you look at the gas companies. And it's just very difficult to break out of that i think that's i think one of the biggest benefits to americans and their culture is that day or risk takers and in in the way that there are also christians. They feel like there's never an end to their life and they treat their businesses very similarly aleks danko from i think he works in the finance side of Shopper fai wrote a really good piece on this call. The canadian texting doesn't work. Yeah i think. I saw that recently. Right in the games in infinite games in a summary of kind of what the issues are but dumping said. I think one thing i would say is founders. That are stops tanda. That's not that doesn't have to be a market like you can get investment globally. You can go for a global market and if you're lean and scrappy hey you're competing with all the other startups around the world as opposed to. Here's the funding ecosystem in canada or vancouver. That's at least how. I see it. But i think people can get caught in not thinking available when they start here. Yeah no. i hope that that changes. I think with success that changes. I also think it's more ingrained in in more than millennial. Gen z mindset. Where we're more willing to live in the space of maybe play these infinite games whereas perhaps an older generations never had that luxury right and it's funny. You'd mentioned a couple of minutes ago. That talk about. Everybody always wanting to take a company public in canada. Because that's the only place where there's money and it's just a short term win that is like you said there's just not enough it true angel money out there that have had seen success that there's people that are willing to imitate it and it's going to get better because chop is probably minted five hundred millionaires. I can't imagine. I mean maybe there's a hundred that were minted in slack. Ipo and then purchase from salesforce. So i'm very bullish on. I mean ontario's doing fantastic Ottawa and toronto. And i imagine vancouver probably well to totally agree with that. I think one thing that that is being helped is the all the legislation around a credit investor rules crowdfunding so raising the crowdfunding limits and professional busters not just people win specific amounts to invest in private companies. I think that whole funding game is really being changed across the world Which is going to be really cool. Trend keep track off over the next decade. Yeah as somebody who works in that space. Where i find it sad. We don't have access some of the clients that have don't have access to that private investment space because they're either one don't make the didn't hit the required income or net worth or education level. And i think that while it accents in world in which speed and information is readily available in almost an abundance. I think that there can be a workaround or inclusion of these things. And it's clear that it's happening it's just. How do we harness it. How do we utilize it. How do we make sure that we don't hurt. Those that may be were vulnerable and whatnot get believes in the space and i think it's going to continue to evolve and a more communists in private and smaller companies can stay private for longer. There's nothing wrong with clean and sustainable business and everything. That's being unicorn. there's a talk with. I work with a lot of people that are. They run each back. Companies or a garbage spending company i or oil and gas services and they feel the you watch these early sidhu and watching this world where people are turning into being two hundred billion dollars in. That's something that people believe is attainable or should be or like. That's the standard right. And i think that's a really cool post like way way back. Maybe couple years back and not so way back. But it was titled like. Don't be the zebra born and it's talking about all of these smaller companies. That are genuine good cash flow small games and the crane sustainable lifestyles blah blah blah. People have both options. Doesn't like you said you don't have to be returned billion dollars in sixty seconds right. That's not sustainable reachable. i want to think about. I don't know traditionally let's say twenty years ago when you went to your local golf course and there's people driving nice cars. Those people were your h. Back companies and your traditional business operators. They lived a nice life. Nothing wrong with that. Don't have to feel bad. Because you're not alone not scared. So anyway canaan startups right absolutely and that's actually kind of leads into my next next question to you. So you're somebody who has raised capital if you're canadian and you're looking for like where do people start. Where do you find mentorship. Where do you find people willing to invest like a. It's it feels like. Interestingly last week. I had someone asked me like. Where do i even get started doing this. So is there recommend some insert. I think raising capitalism art the science. Well it's people don't ever realize hamas people do want to participate in invest in companies. So when i initially started with a company like we started with wants to get investment documents and stuff. that's a whole different conversation. Abbas actually pretty simple to do once you going and you start reaching out to friends and family and you put it out there because that's where you wanna go first. Are you on your own skin game. You wanna get to your friends and family who believe in you. You'll always find that the energy will start to attract those people in and will come up at dinner. Conversation come these conversations. You'll be surprised at how many people get up in five grand opening ten grand twenty grand in before we'd like your seed round is that's actually to meet twice and is just and both times. I'm like okay. Here's my big list of us. Startup investors in precede funds. And i'm going to go out and do this. And then they start talking to people. They're like oh yeah l. Throwing authoring That's awesome ride. So that's obviously the first place to go and then beyond that it's really looking for people are invested in your sector finding those precede funds seed funds or those angels specific angels may. I'm not a big fan of angel groups but that's for everyone and really just hitting the floor in the floor call in email in going for there but the more putting yourself out there. We actually even talk. You'll always find that people introduce you to people in you get all of these referrals that come in and just becomes this organic process as quite humbling actually is tied to plan on the outset of but when it happens realize people believe in you and they do want to invest in you and the ability that they see. It's pretty big pens. Start if i guess. It's this interesting feedback loop when positively and success in it. It kind of just feeds on itself and the momentum israel and then they'll add is like late at least for me now as you go forward the different work start to coalesce right in from the first charter up to the second there. Is this ever expanded network of people that are just fine across each other and this really helps go along. I think that would be incredibly helpful for a few people that i known that. Listen to this. So i hope that they kinda pull something out end. The one thing i'll add additionally is don't be afraid to reach out to people for help because they're always willing to more often than not. They're willing to give a piece of their time because somebody in the past help them and you pay it forward and and that's a lesson for think. Like congenital absolutely so kind of on the way out. We were talking before this. That markets are absolutely insane. I've gotten another five text messages since we started recording marks going nuts. What's your sentiment around this wall. Street's space crypto. How do you see this working out. Where do you see it kind of evolving into. Is it going to become a monster. Is it gonna die. And what's your take on it. Yeah so traverse because crypto is really near and dear to my heart especially from my first startup where we're building things on. Most people don't have a big theorem tattoo with the banker mountains on my left bicep here. That's it means to me and there were. Bitcoin see like two totally different. Ecosystems bitcoins the store of value. That's really captured the idea of masses and the fact that we don't know who it is is just an incredible story. Obviously the rise has been crazy. But where i wanna draw some perspective or caution like my vantage point. We still talk about things of in terms of bitcoin versi. Us dollar so you measuring bitcoin. At fifty thousand sixty thousand whatever that still means that bitcoin's not a usable real usable state. It means it's your parent value against it. And i think we're at now is people want to have it as an investment to gain the traction from etf in retail audiences wanna hold bitcoins part of oil which is fine but it's not going to be usability perspective and where i think i would happen is when you see a small denomination bitcoins like When you kind of Coke worth three saito. She's at seven eleven. Like that's the dream right. That's totally defense as space. So i think it's on a lot of potential and see small country replacing their currency with something like that. Hey that's maybe where it's gonna take off in a new way that being said i don't know why but over the last few weeks i've been starting to think about how it's being kobe. It's really interesting right like we've all onto this crazy. Markets were printed more money everywhere. Interesting to think about. There's times where we don't necessarily want only centralization. We wanted to build a to in some serb. Some crv tax in some kurban. Some stimulus is kind of human nature. Like let's get ourselves out of her mistake so it does make me question. How long the lead. Time to moving towards a fully. Decentralized face is going to be but that's just interesting perspective an important. I think that's a totally different story. That's right now. It's getting to a point where we can create bank accounts in assets. Ats and seconds at such a low cost at the acid growth in thiam is gonna come from us representing real world securities like bonds and equity and all of this on a theory. And so when you look at the price it will be interesting. And when you look at the assets represented on area. That's going to be a crazy statistic going forward. Yeah i'm a again quite the baby in the space i've been kind of screwing around with it. Since whatever twenty seventeen twenty sixteen and me specifically i find the smart contract feature of of experience to be the most attractive in terms of technology. And what i believe to be the future of the craze and i couldn't agree if you've got the Must in some sense. Believe that too. I find that bitcoin specifically scares me in that exact sense of like you think about a lot of people talk about the the scarcity being the reason for its value and that it's also going to be a currency and to me. There's a failure there in that one of the features of the us dollar in canadian dollar. The currency that we have is that we can create some of it and that having that is actually makes it more robust and it allows for us to develop a system. So i think that while people believe to be the biggest phobic i find that it's probably the biggest down factor in terms of reliability is currency itself. It's interesting perspective Place in the world will feel differently because while that's really great for the us. I mean us the us. Damani is going to destroy economies in other places kenya being a good example in the currency inflation. So yeah i totally agree that the pro and con. But i do think that we're ahead of the curve and we'll see some kind of article. When like do we really need decentralisation. What about being able to try. And that's going to be a whole thing totally so last thing i recently and this is not investment advice bought some dpi which is like this index that incorporate or is a basket that owns all of these defy coins. What's your take on defy is stupid shit. I be doing this. I think is also i mean i hold all of my krypton my celsius wallet which is a custodian back and application right and defies disrespects. Decentralized includes so many things loans in idiot baskets in whatever loan applications and one of the time. Examples of defy the loans that you can get on crypto right At their for example. Like you're able to go out and get twelve percent interest on your end by holding it for stake in world exurbs in interest rates so these interest rates again pretty interesting and there's some things being worked out but yeah i think defies crazy. I mean i think it just has the opportunity to change the way that we think about financial assets like i know there's this thing called token baskets where all these individual people can be like zillow traitors. You can create your own little. Etf basket with a smart contracting like five minutes right like a two times longer half the half area like etf any like. Okay done go. I mean as we if somebody can create that in a few minutes and we now move into like a component Financial architecture for the world where you can create all these interest rates end like lego blocks of finance right for wealth man would for bond issuance for trade in custodians industries. Whatever it is this is going to empower so many new ways of doing things and so i'm looking forward to see what that enables at such a low cost it was can get new financialisation of different things and this way i think defies power really comes in. Yeah it's limited so much friction. I have no idea where the bounds are however. I'm just kind of along for the ride. It's almost at this point. And i think that i have a fairly good understanding finance and it's still just like way over my head and the curve huge but it's exciting at the same time so you know what i have to admit i gotta bring you back on for some sort of crypto Happy because i have so much to learn from you. And i'm just i'm quite i get a lot of questions about it and i'm a pretender trying to help people out in understanding it so i'd love to learn a little bit more. I think when people see like the new like if they're apps it just helps put perspective ride because it's like exactly what today but a little bit different right and just the difference helps shape new ways of things said. That's the cool part. No absolutely i'm gonna cut you off there. I have to have you come back because that would be just way too much for me. I very much appreciate having you on. Yeah i appreciate it. And i want you enjoy the rest of your monday. And we'll definitely be chatting. Hey thanks so much. For listening additional context or interested in any of the people or links we mentioned heterodox. It's performed millennials dot com and click. The podcast it's going to have all of the links for you as long as the show notes. And all the past epa says while you're on the site make sure you subscribe to our weekly newsletter. It's got us summary of all the most popular stories and trends the previous week. By the way this should be common sense but this podcast and our website or for informational purposes only and should not be relied upon for investment decisions. Joel dies worked for golden vestment management and all opinions expressed by him myself or any podcast guests are solely their own and do not reflect the opinion. Gm clients of golden investment management may actually hold positions discussed in. This podcast. have a good neighbor.

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Creating a new venture fund: formation, follow-on strategies & more with Acquired | E1258

This Week in Startups

1:23:50 hr | 2 months ago

Creating a new venture fund: formation, follow-on strategies & more with Acquired | E1258

"This week in startups is brought to you by squarespace. Turn your idea into a new website. Go to squarespace dot com for a free trial when you're ready to launch use offer code twists to save ten percent off your first purchase of a website or domain. Our crowd helps you invest early in pre ipo companies alongside professional. Vc's if you're interested in investing you can join our crowd for free at oh are cro. Wd dot com slash twist and vanda compliance and security. Shouldn't be a dealbreaker for startups to win. New vantage makes it easy for companies to get a sock to report fast. Twist listeners can get one thousand dollars off for a limited time advantage dot com slash. Twist everybody welcome to another episode of this week in startups. It's our cross over episode with our friends at the acquired. Podcasts ben gilbert and david rosenthal with us again. They co-host acquire dot fm. Ben of course is the co founder of pioneer square labs. Ps l. a. ventures and day rosenthal is an independent angel investor startup advisor boys. Welcome back to the program. Thanks actually been. You've been browbeaten me so much over the past year have a small small little angel fund. Now i'm launch following in your footsteps nicely done. Is this a rolling fund. May i ask no. it's not. It's a traditional fund. I thought about the rolling fund where we i think we discussed this last time decided to start small. Okay what is the Footprint of the fund is trying gopher tan or twenty or five. What are you thinking micro might might very much so a couple of million bucks a couple million bucks perfect and show that you want to try to do thirty. Investments of twenty five fifty k. One hundred k. Something in that range. Yeah like a hundred thirty and you gotta hit thirty. Investments is at the portfolio content. Twenty to forty twenty to forty at one hundred nine year no reserves. She goes got it so this is like my first preschool toys areas mythos recorded exactly where college which is actually what are you calling it. The the name is kindergarten ventures perfect There this is gonna be your tests now. The problem with such a small fund historically is that you david are not going to have a lot of fees to live off of even if you got three percent on three million dollars only ninety k. year so how are you gonna survive In terms of fees were thinking of fee shrugs. Well that's why. It's a good thing that i have the acquired podcast with ben. Got an My partner in this in kindergarten Nap manning is the. Coo company called kettle so he's all time founder fiction and so this is spur deal flow on the side. love it. this is a great way to start off. You have other revenue sources. People know My first fund. I just did a twenty percent kerry and no fees. We're not these. It's because we didn't tickets right because we're both fulltime on other things and balcony because like what. What are we going to do anyway. But you should any legal fees or accounting or something you can put against it. But you're not taking management fees. And that's i did that on my first one as well and that had calm and Robinhood in it so having heard -gratulations by the way i think that fund. Yeah it's it's you don't be for yesterday. You know in a way. Except i don't plan on selling robinhood cherish for a decade. Personally i will distribute the shares at some point to our lp's when our lockups up. But i don't see a case for me wanting to sell those shares when the company's only were thirty billion it's got twenty two million active users. Under how you y'all say you're not like feeling a take the win you know. Lock it in heck. No i mean think about the last double up. The last two double ups in this game are so material on acquired all the time. This is the mistake zips. Coil learned with their apple investment. They sold their apple. Investment for six million dollars. Total made like twenty percent of the company makes no sense. You wanna ride your winners as we've been saying on the all in podcast a bunch and it's time in market timing the market i. I could see another sounds crazy. To folks i could see some of this cohort that came out in the last group of Deca corns coin base Because i do then. Crypto is going to be around for a while. I could see coin based airbnb uber jordache. I could've seen slack and certainly robin hood. I could see all of those having a ten to twenty accident. There's a great while this is perfect for the the theme the the media the episode in a little bit that will get into it is actually i just look at that. Covert bad number of ben. What do you think of david's plant in. I mean a good plan. What advice do you have for him. Well there's so much opportunity. Just in the like acquired slack alone from people picking him and like painting both of us being like hey. I'm starting to start up. What do you think. I really liked the pod that you know it's it's a shame and hasn't had firepower until now to take advantage of it so i love the strategy. I also love. i'm a. I'm a proud investor myself five fifty and there maybe a little sub that early on the journey but I asked commitments to make. What can you promise me like. what's you know what. What kind of reporting are you gonna send me. What's my portfolio -struction gonna look like and portfolio construction gonna look like and you know what what stage you play gat and he just laughed at me and he was like yeah. I mean i'll let you know when there's returns so i like the light lift that he's got going on. I like that as well now to be in alpena fund. I do think there's too you know putting aside returns we. We're going to be pretty sure. Dave is going to get good returns. His got great deal flow. He's established in the industry. Anybody who's a startup that wants to get twenty five fifty k. Would be you know wise to take his money. I think that's a no brainer or even one hundred. You're gonna add a lot to it. But i do think thinking about when you're an lpn. If i'm in twenty funds. Or so i can't be in anymore but i am thinking about being in this one and the way i would think about it is Are you going to let us know about the deals in real time as you do. Them in. One of these microphones david. Yeah so the plan is yes or still just getting up and running. I been thinking about setting up a private channel in the acquired slack four and just putting all kindergarten folks in their. Lp's our founders. You do it for that. Put in twenty five if you if you do great slack channel. Well i already have. Accesses lecture moncus jason bevacqua. But i'm thinking if you do a deal and you're putting twenty five and maybe that's just a good signal for me for a downstream syndicate investment. Great downstream or current. Right like a car. Sure but you know. I'm gonna assume some of those rounds might be closing up quickly and maybe i don't get into them but you know. So that's what i was thinking is like yeah things going on. We post about it in the psych k. And there with the founders in there and the are probably the largest group of. lp's is gps other venture firms And my folks in there. That was marjon's plan. He was in our first fund. He was in my first founded. He came out of nowhere. And it's like oh. I heard you're raising. I was like what you're that guy you know. I'm mark andreessen. And he's got fifty k. And and then I kicked him out of the second fund did invite him back because i invited him on the podcast. And he's like Yeah no. I'm not gonna make it in that. His pr people are like. Oh well you can have all these other podcast. And i was like no mark. Should come do a keynote at the event and then martin was like do i have to be on your podcast and come to your events and do keynotes in order to be in business with your word. Yes what you wanna be on my podcast. While i was just like you know you're being a jerk if for no reason and you're on everybody else's podcast. You're on panda. Which trashing you constantly. You know like if you're panda dot com or whatever like come on my pockets like it's a question for you is where that's where all the acrimony country with me mark. What is the origin of the twists name. This week in startups show. I was on this week intact with deport. Yup i he. I asked him. Hey can i use the name to do this week in startups. Because i was only able to be on. It was very hard to get a slot on this week intact and i would be on one out of every four or five episodes trying to be on more because trying to be my profile but it was the site kevin rose was on and you know all these famous people were on at the time and I was like hey you know. I want to talk about start ups more. 'cause it was this week in was more about the new iphone and whatever and he was like. Yeah go for it. And then i started doing other this weekend's that kinda pissed him off a little bit but we worked it out we hashed it out. nice 'cause i was wondering about and i are actually talking about. Why at this point. Shouldn't you just call this. Jason kalpana show one hundred percent. Yeah i mean at some point. But you know i kinda like my legacy of this week in startups. But it yeah. I'm doing a four days a week five days a week. So it's kinda the jason. Valentine show I guess i'll take that under advisement. And it's i go to get my you know direct drip jason. Because what i'm listening to all in you know your boys are kinda trashing you a little bit. They're taking the mike there run with it. That the talk too long. And then you try and talk and someone's like oh. Pass the ball the ball. Why can't you learn to pass the ball. So it's nice to have the street the street stuff. Thank you for that. It's a cot has actually made it easier now that i'm doing four or five days a week on this show. You know when. I'm doing an interview with somebody. I don't need to interject as much because people got their. Fill of jason from when i do the news upfront and then i do the interview on most episodes and then on that on all at i'm just i'm just the point guard how to shoot of just a pass first point guard. And if i get some reps and fine but you know you're going to get enough of me from that from websites and online stores to marketing tools and analytics squarespace the all in one platform to build a beautiful online presence and run your business. Blogger published content promote your business announce upcoming events or special projects and sell products and services of all kinds and more. They also have powerful ecommerce functionality. And everything is optimized for mobile right out of the box so no matter what you're using and i've had a surface iphone an android phone doesn't matter all these beautiful templates just work and of course it's got built in seo free insecure hosting and twenty four seven award winning customer support We we did remote demo day. In two thousand twenty we were suffering through the pandemic. We're confused how are these startups going to get funded. I said you know what. Throw a squarespace site. it's a project. Maybe it turns into a business and boy did it. Ever we have now funded over a dozen companies over fourteen million dollars in funding and this all from setting up a symbol squarespace website. Weeding it. just go to squarespace dot com slash. Twist for a free trial squarespace dot com slash twist for a free trial. When you're ready to launch us the offer code twist and save ten percent off your first purchase of a website or domain congratulations for the team going. Public by direct listing on painting teeth. What an amazing journey. It's been congratulations again. Okay let's get back to this amazing episode so what other advice you have for david mess road and tries to make the small bits. Which did he do with his pro rata. Should he fight to get harada deals now. Should he do follow on now. I don't think that. I i i think Getting pro rata in writing for a fund of that size. Seems a little bit silly to me. I think having like handshake agreements with the founders. Where you stay really close with them. You legitimately helped the company during that round. And then you're there when the next round comes together for if it's an investment out of this phone during sp be or whatever like it seems to make way more sense to me than Especially for checks at assize. I am going to somewhat agree somewhat disagree. I agree that with the small chance. You're going to have a hard time in twenty twenty one getting pro rata for twenty five fifty k. Check most of the time that's going to happen at what to fifty in a seed round. You'll get pro rata two hundred fifty you'd be a major investor in one or two yeah But i only do. Deals have pro rata. That's my i would say. Ninety nine out of one hundred now we have. It very allege much larger funding. Your initial Right bigger check sizes. Yeah yeah and do you always actually get it like even if it's in the doctor does do people ask you to wave it at a future financing i am of the i tell everybody up front the founders we plan on taking it forever and we plan on keeping our board seat forever if we own over five or ten percent of the company. And how you're you're doing this at a way different scale. You know what. I started exactly your scale so i would anticipate you would be doing it at my scale in five years Then you should actually be preparing for that reality and so you know if you do get fifty k. Into the next. You know robin hood. You i think asking for the priroda in a nice way if they will give you a side letter with it is well worth your time. I would ask every time and if you get one out of three and the way i would signal it to to the founders is i just wanna be able to play a bigger down the road with my syndicate and my lp's and we will pop up so you have an suv strategy for this yet. david explained it. That's the whole strategy is to what is that for for. Follow on's when when it's a great ball on opportunity in the founder wants that we do that's people. He's not out of the fund funds to small perfect so that is the model. I pioneered And you should totally work on. Because and where are you going to do those. Spd's using shore using each a-list angel list. They're managing the fund. Oh they're managing the fund. What does that cost. One hundred grand to set up a fund No no upfront cost. it's One percent or i think it's one percent or either twenty or twenty five k. A year whichever is smaller. Oh that's a nice way to do it. She one percent or twenty five k. Which in a three million dollar fund would be best. Save bang so for ten years thirty k. A year would be three hundred thousand if the firm exists that long if the funding their services are a hundred k. I think tank eight year or so being about the same just. It was just easy. Dsp come for free with that I believe they do. You're doing individual p. I think angel is what like eight ten k. S sp but there's only ten k. And spca and then five k. in wiring fees Blue sky fees is the potential on top of that. So i think it's very interesting the way you're constructing it using angel. This is a great way to do it Yeah question for you. I would love actually your advice on this specific piece of So i'm thinking we're we're going to do a lotta seed and i've been doing most pelly half of what i've been doing over the past year year and a half as an angel has been seed But you know we have. We have set greek companies and folks on the pod and in the ecosystem I've also been doing some as bs. Cs small checks personally participating I'm thinking well some great opportunities for that for the fund to take d- what do you do when you see stuff like that. Well we are. Doing increasingly serious as in series is when we can get into them And so we'll do a fifty. We'll do a new investment fifty to two hundred million dollar round. it has happened That's not our bread and butter though. I think what. I learned over my tenure journey which you're basically starting exactly where i started Which as you've got a podcast you got the audience. You got the brand What i quickly realized was the amount of work it takes to put in. Twenty five or fifty k. Is the same. Amount of work is putting a three million and the amount of work you're going to put into it over. Time is going to be the same so the quicker you can get to a larger dollar amount put in and to ten to twenty percent ownership in the winners the better you're going to do. And when i went out with my second fund third fund to beat with the top top. Top top top top. Lp's in the world. Literally the top endowments. I got meetings with every single one in their office with the top person right. Because i got a good brand and it was able to get those intros etc the thing they obsessed over with my ownership percentage of me being solo pain and i told them i well. I'm going to be a solar gpa. So if you don't like that what if you get hit by a car. I'm like the fun wraps up. That's it and you know. A lot of people passed most people past obviously and they couldn't get their head around the solar g. p. thing and i was like that's fine. I don't need you what. What does this This should be twenty sixteen really not. Yeah I was just a weird beast. They could understand. And diane era. I think is the right. Okay sure not to say like if you were. Yeah of course like for me like you know. It's not for me to say but sure. Yeah we'll say both say no never buys me at the scene in. Get them to the greek where they're like calling brad's character. Like you know it's like she's like yeah. You know. I sort of was going for with this. African child music video in the steam album. Like jesus like an electric geez. It's not for me to say. I'm jesus christ no self awareness as a rockstar. pretty great But that was my big learning and then they were like what you're all they wanted to know about was pro rata follow on etc. These are the large institutional. Lp's and the reason they're asking. That ben is what. Why are they asking that question. Well at the end of the day this is not just a hits driven business. This is like a grand slam driven business. And so to the extent that you are in one of the few companies that will matter this decade on an enduring global scale. It's about owning as much of those companies as you possibly can one hundred percent correct. They believe they don't believe in spray. And pray they believe in hitting an outline the grand slam of grand slams and taxing on that. So that's how they make money is when they get into an uber whatsapp or whatever. They're in a fund that gets into one of those with a meaningful percentage that actually moves to deal with so much capital. you know. You're the harvard endowment. You got fifty billion under management like you need a lot to move the needle i think a lot of them are moving to a minimum of fifty million dollar check size for funds. That's like their tiny. I was doing a forty four million dollar. I did a forty four million dollar fund for a third fund. And then i realized that i don't really need them anymore because i can email my syndicate with a three hundred dollars and have whatever twenty thirty. Forty million dollar fund popped up without doing any meetings. And then every time we do a syndicate deal it five times whatever. The funds investment was so we did twelve syndicate deals june. Were on track to do one. Hundred fifty investments this year and put over one hundred million to work even though i have a forty four million dollar fun. I'm actually putting one hundred million to work. Which is sort of like being. Gp with a three hundred dollars you are you leading in most things that you do. Most leading co leading is probably the big facing. that's the at. That's the big question i have. We're gonna have to see things evolve. I've been i was an institutional bc for over a decade. All i did was lead. And it's been so nice not leading and following and so the strategy here's follow and we'll see how that goes. What you really want to do is hit one. And then offer it to your l. Get a bigger allocation in all cases. So you find when you love. You're putting fifty k. And ask them if they would be okay with you syndicating to your top. Lp's friends Another two fifty and see what they say I did that for come at exactly. Those numbers it was. The first deal at angel is from a syndicate was known and i was my first syndicate and fifty k. In syndication for three hundred. Twenty eight thousand dollars hog seventy eight thousand dollars but six percent of com two billion plus return so one hundred twenty billion dollar position. It's the biggest for We did a little pro rata But we actually were able to sell some in secondary twice a long journey to books of wind so we still have eighty percent of her shares. And it's the biggest return in the history of angeles although because angel list and i don't have a good relationship anymore. They never talk about that. I think but i have the number one syndicate in the world no longer angeles and the number one return in the history of angeles. No return comes anywhere close to come. We're not saying jesus but not for a big not for me to say but and you should get on the train immediately. And say if i could come up with you know. Twenty more people who put it in twenty k. Would you be up for that. And just start that now. 'cause you're eventually going to get there and everybody's gonna want you to put more money in and you know david rosenthal is a brand. They're going to want you to have more on the cap table. Just give the founders. But they want to give up what they want. And what happens if you have a common. You put fifty k. In from your fund great he goes four hundred actually becomes a twenty million dollar position. Whatever it is fantastic but you could have put the other right three hundred twenty eight thousand in dako four hundred x and then you've got another hundred million behind it in returns marin like insight. You're going for here. We had ho nam from altos ventures on for like a special episode. I'm acquired what two months ago. David and ho has this perspective where altos is unique in this way. His comment is seat. Investing is the greatest discovery mechanism of all time high. They really like it's not a secret but really their strategy is actually there are growth investor. But they only growth invest in their own fund and they're their seed fund their early stage. I check exists as a discovery mechanism to be able to better evaluate and better underwrite companies than the market could. So they know when to pile the huge dollars in reds information advantage. Oh a hundred percent. You cannot trade on insider information in public markets. And that's all we trade on in progress cracks like literally. Everything is insider trading in a private market. It's so and you know the funny thing about the altos story and howen and his partners his. You would think like it's so smart. And it's what we do and you would think the institutional p community would love it. It took them decades to get the institutional lp community comfortable with what they're doing to your point. Jason developed like. They're even if something mayors and it's logical if it's different than the way things are classically done. It's very difficult to get people on board. Because it's it's new it's unproven. It might be better. But i do know the other thing works. Maybe not perfectly but it works. So i'm going to keep doing the other thing all around. The world. tech companies are innovating and driving returns for investors well. Our crowd analyzes tech companies across the global private market selects the ones with the greatest growth potential and they bring them to you from personalized medicine to cybersecurity to robotics quantum computing and more in state of the art lab. Startup garages or anywhere in between our crowd is identifying innovators. So you can invest when growth potential is greatest early just like me are crowds. Accredited investors have already invested over one billion dollars ingrowing tech companies and many of their members have benefited from their forty six. Ipo's or exits. Now you can truly diversify your portfolio by investing early in innovative. Private companies are crowd. Joined the fastest growing venture capital investment community at dot com slash twist. That's our crowd dot com slash. Twit to sign up for free more. I watched what's happened. I realized i came to this realization the other day. Because i was like i spent so much time. These lp's and they don't appreciate me. They don't understand what i'm doing. They don't appreciate me. And then i've you know at the time i had whatever eight hundred people in my syndicate. When i left angel i wrote the book. Now it's at eighty three hundred so it's text and i'm doing twelve deals a month a i'm doing more deals. Are your little tiger global over here. Well you know what happens is to exactly your point about ho nam at Altos we have sixty five of our three hundred twenty five portfolio companies raising money right now. I literally had to take emmy award winning producer. Jackie off of the accelerator. And i said i know you wanna do former more accelerated classes. You're doing one. And that's been the rest of the time working with the sixty five companies in our portfolio actively raising. Wow sixty five. I mean think about the scale of this then we we would normally have a dozen companies. And you know what happens when you're companies are raising. They need introductions or yeah. That's actually the biggest choke point for a firm is that when companies are so. Okay let me take a step back. Vc's can be valuable in lots of ways the way in which they are. The most valuable is helping you raise your next round in the best way possible from the best investors with the best terms in the shortest time frame or at least a timeframe that is reasonable to help the company go back to building perfectly said so when sixty five hundred companies are doing that concurrently. I don't know how you also do a podcast because oh my god. You're stretched thin. I mean we literally had to say to everybody. Tell us fill out this form. If you're raising essentially. And then i just had to put jackie on it for eighty percent of our time to just. I told her every day. Check in with twenty of the sixty. Five where's your fundraising. So you know literally monday. Check in with fifteen twenty. Tuesday checking went down fifty. And let's keep this conversation going with them because some of them are going to fail and then some of them want us to lead in some cases. We wanna lead. So thanks david the tip. I'll give you is. We require a monthly update on our side letter. Which i'm not going to give any. There was a profile written about being maybe some of the controversial terms on my side letter. I'm not giving any juicier because it was so poorly written guys read it. I'm sure and the there were a couple of controversial things one was that i require a monthly update. We require a monthly update. We've never sued a founder for not sending one and we're happy to get for a year what we do is we take the data. We put it into a spreadsheet. Might team tells me. hey jake al. These three companies tripled doubled revenue last four months. What do you think. I go to those companies and say. Hey would you like a million dollars. At a twenty million dollar valuation. We'll do a syndicate fund will put in one hundred fifty k. Will we syndicated fifty. We're done and so that is the big tep is you have that information. Davantage given unsolicited offer. You know where. I got that i had been thinking about this. I i i know this well. Sequoias started yes with what's app. Yep the unsolicited offer. was the sequoia patient. So yup three times. So here's a thing. I think that was three additional fundraising. Nobody else was on the table. Which means then sequoia own whatever percent thirty percent hundred know which means they wound up owning. If that was ten percent was out. Did they get fifteen percent facebook. We kinda jim gets to our pool here. He added just regret. So here's the thing. I've learned from like i've been thinking about this particular issue. I've watched a few great venture firms do it recently in companies that we've been involved with at pioneer square labs. And let's say like let's let's take a very negative view of it from moment. These guys are just trying to come in at a cheap price and buy up their ownership before there's a competitive market for this equity. They're not quite giving them the next valuation price. You know this sharkey. However what you're actually doing is is pulling forward the time that they could raise and basically saying if you don't want to do the work whatever great you can take my term. She like. I'm happy. Because i get my ownership. You're happy because you get more money in the door on the other hand the worst case quote unquote worst case. Scenario is it gets shopped. And then suddenly there's a frenzy to fund this company that you're already a shareholder just ways it's value created for you. It's value to win win. When i gave these offers I'll tell you the companies. I gave them to fit. Bob lead. i q neighbourly Who else was in her portfolio. That i gave them to anyway. Those were a handful of them. All of them set of the four the first four times. I tried this a grand. I did it with grin. Two of them said okay. Take immediately the other two said no. It's too low one-sentence to once at want to raise money. The one that said it's too low. I said okay. Great take it shopping. It have an internal offer and then come back. She hits the league. If you wanna get a great external around on these days you gotta do that. You got us my insiders more on fighting them off exactly so i did that. And it was only a million on fifteen and the founder came back and said you know what i did. Four or five meetings. It was really annoying. And i don't want to change the governance of the company and they were having a hard time getting to your number or slightly more than it. And y'all just do this. There's no paperwork. Nothing really has to change in the governor note. Governance stays the same. We just give you a million dollars done. And so three out of four took the fourth was fit bod they really are like pakistan. They're kind of like calm. They don't raise money. They just make money and the cash balance building. And then eventually i got them to take two million in was added. Four times more than my original offer about they. They therefore x. revenue so or three revenue over some period of time. But that's the power move. I think david for you is to watch like a hawk and have that system where you can than jump been asked for a pro rata. Even you could ask for super pro rata which is a little bit polarizing but you could say hey can i put fifty k. And now and get to fifty in the next round or whatever now you you have to have the ammunition for that we should. What's you managed amunition. Because you don't always this point. You got a pretty good idea that you're syndicates going to be there for when you call on him. It's critically important that you have track right where you're in some predictability in the beginning. It was really difficult. Because i would tell founders. We'll do two hundred and six hundred or one hundred. Come in right and i told them we listen after. I did the first coupla as i have no idea what's going to come in if you wanna do this. It's a process. It takes six weeks soup to nuts. And that's obviously a liability. Now the amount of time it takes so we've got time down to three weeks or four weeks but it's still a process you have to write a deal memo you have to circulate it. The good news now is we just Did for a very high profile founder. Who gave me a million dollar. Allocation we emailed the syndicate said. This is super oversubscribed. Sequoias in the deal. This other person's in the as a favor they gave me a million dollar allocation. We're going to allow putting two fifty and from the fund seven fifty from the syndicate. It's going to be one hundred people. Five thousand six million dollars in demand. That's seven fifty. I think it was easy to follow david until you're squeeze by these ridiculous. Six hundred of the eighty three hundred members ask for allocation in the first forty eight hours. I'd never seen any lighten and many of them. Were asking for seventy five k. Fifty can i just say you can request whatever you want. But it's going to be a hundred and fifty people at five each. So that's the level. I've gotten to now basically hosting a lottery got it. That sounds stressful. Though see this is the whole one kept this smaller. Ten times the money but i was like i want. I don't want that you do trust me. You want to be able to own ten percent. Fifteen percent of a unicorn. I've never. I've only five percent of a unicorn which was calm. I've i to this day. Ione five to fifteen percent in many companies twenty percent many companies that broke the hundred million barrier at. I'm starting to watch those now. That becomes like a totally different ballgame because we own fifteen percent of the company. Now that's worth three hundred. I'm like oh my god. That's forty five million opposition on the two biggest positions ever had. were calm. an uber and those both broke one hundred million. And i'm like wait a second. This company's not worth anywhere near com or ubers valuation. But we own so much of it percents times three hundred if they just get to a billion. I'm going to have a hundred fifty million dollar position in this one billion dollar company. It gets pretty exciting. You know so. There's two ways to win. You can hit like literally the sniper shot which is what your fund is designed to do or you know you can get the shotgun or you know whatever you you can. You can hit the five percent ownership. You gotta get to five percent ownership in your winters. I think to really move the ball forward in you know the winners so why let other firms take it from you. David i hear ya. I hear you and they want you. They don't want these other firms. They want with me you could you could cause they have you as a small owner on the cap table if you're thrown an fifty k. In a in a deal. But you're out like their board member and the next time that they're going to go raise around and it's going to be a ten million dollar round like do they wanna bring on some unknown or do they want you to step up and be the more member. I don't know if you're interested in that. But the there's a lot or david david. How old are you about to be thirty seven okay. This is your prime earning window third and seven to fifty seven. This is when you can make bank. Put your head down. Say yes to everything. That's great founder. And do not worry about time or life work balance. Ben has no life. he's never had a life. He is drinking a lot of work to this podcast. You put of the year five. No i mean here's the thing about your pockets. You know when you have top you guys are top ten tack podcasts consistently when you're in the top ten like that and you have the deal flow we have you can offer something dear founders now to you know it's it's not just the feeder system that is a base level thinking why everybody copied me as a blogger and as a not say jesus rarely but when i climbed up put me on the cruise to face and they stabbed me in whatever i think. You're not jesus you're g you're moses you got but no here's the thing you Everybody thinks like a feeder system. That's like base level. One thinking and i understand that with then you realize is then you get to do the victory. Lap with your founders. The fact that you have to include them on the pockets have you had your investments on the podcast yet. Not yet we talk about him okay. So here's what you have to do because our format you know. We do like the case study so that we can always do an extra one. You should just take two of your founders. Each do a special episode. You have all four of them on and you each. Ask them a couple of questions. How the business going how. You came to invest in a company. It's editorial goes gold for the audience. We started doing with paki. And mario we not going to say it wasn't inspired by all in gonna say it wasn't. Yeah we do once a month we do. We call it the idea dinner where we get together. We talk are. It's great. It's great and listen to a lot of people copying the all informat now of just four rows for sisters or brothers. Whatever just getting together. And i think it's a great idea. Pay everybody. I thought i would bring christina cassiopeia i pronounced a correct. I'm hoping christianity. Yes all right. You're the founder advanta. People have been hearing your ads on the pod for the last year. And i thought it'd be fun to have you on and you to explain why you create advanta and what socked to is and why it's important people get it right so let's start with what is sucked to for people who are just realizing they have to become sock component for sure so suck to is a title. It's sort of a customer asking you to prove your security so if you've heard about one at probably come you're probably a bb company and you're you're doing sales and somebody asks you can talk to report or you know. Hey can you go through security review or they usually don't phrase it like this but hey i'm gonna put a bunch of data in your product and i want to know if you're actually going to be secure leak over the internet so the ask you to get a to report. We know it's twenty thousand. Fifty thousand maybe even one hundred thousand if you roll your own you do it manually. What does the average fanta customs fund. Yes average van fanta. Customer spends less so kind of ten thousand on up from there but then even in terms of the cost savings. It's a ton of time savings so rather than giving up an engineer to for a year which is just super painful. No matter how large your company is it cuts down can be twenty forty hours on the low end fantastic. Well thanks so much for coming on and you've been very nice to our audience giving them a thousand dollars off which is really significant and generous offer. Good advantage dot com twist v. a. n. t. a. dot com slash vis. Two thousand dollars. Off your sock. Thanks christina appreciate it. Thank you so much. It is interesting so like autumn meta level. Just to talk about all. In for a second. I've been trying to dissect it in terms of like why it's working so well and obviously your personalities are fantastic. Y'all have inside not a sec. Inside but you know inside inside inside baseball really interesting dynamics going on the poker story yesterday ways but here's the thing that you guys overcame which is typically four voices too many on a podcast especially for male voices because the audience typically gets confused each of you already had your own persona in creating the supergroup it. It became something different and in the format that you do. You've done it at such a fast pace where it's like it's aggressive. It's like it's moving at a quick clip. There's like everyone's giving each other that like you're absorbing knowledge that you can't get anywhere else because it's a very unique set of knowledge that you possess but you're having so much fun along the way that i think it's the the number of people who could adopt that format successfully is very low. I think that's right. Here's the thing. I always tell people. Because i was getting recruited during that shark tank era to be on a lot of the shows like planet. The apps offer to be on declined on that one. I did a show with nbc. I did a pilot with the weinstein company that didn't make it on air. Thank god could have been really bad and You know a lot of those shows. I was gonna do really the big problem. We had was credibility. If you didn't x y matrix on really three your credibility your ability to entertain and speak publicly then your desire to do so and if you take those three factors and you look at you know trauma off. He is highly credible. He's got that success. He's really good at speaking publicly and he wants to do it because he said to be the origin of all in was podcast with you and then you go to the next the next the next you know saks great public speaker very credible and wants to be on. Then you have friedberg. Who is very successful kind of wants to be on but had to push them a little bit and then in terms of public speaking i also had to push a little bit in coach him to hebron he brings a lotta magic to the pod. Absolutely i mean the episode. We did without him this week. I was almost going to throw it away. I mean it was good but not great either in my mind without him and i think the any of the three of us on. It's good not great but each year. exactly right. Then you look at somebody like the professor cole takes you know. He's not credible. He's not credible. He wants to be on tv You know and hero cass. Speak any any can entertain her speak. I guess it's cringe-worthy entertainment. Obviously pre sexist and misogynistic and gross wrong to and no. That's what anybody credibility so you. A lot of the tv shows are like we don't care. That prophecy is wrong. He's taking shirt off. He's entertaining he talks about his e. D you know. But the thing i don't like about him is that him saying sheryl sandberg only has her job of she's a pretty faced and that misogynistic kinda stuff which i think is i. You know he's terrible predictions but you can be entertaining and terrible and that. I think that's what i learned about media because they're all those. Tv shows would put people on had no credibility but really were loud voices And that was the problem you know they. They were putting on all these celebrities on planet of the apps. And so on the tablets here again at the last piece in the in the talent. For me Yeah how do you think about your jake cale portfolio allocation of. You said. you're still. You're also in the prime of your own. Encourage you get your head down. Fifty five The media activities the investing activities. Yeah so the media. I do 'cause i love And it literally is no effort for me to sit here and talk to you or to host all in. Obviously that's like a that's my superpower whereas business for you right. Well yeah. I mean i think all i think right now this week in startups is doing three million a year in revenue and sold out four days. A week you'll be sold out five this week soon And we saw it out every year. So you know it's sold out for seven years in a row in yourselves out. We add more so it's great And it pays for the team But for me. I just love doing it this time with you guys. I'm writing down notes and it will give me inspiration for things in my day. Job and then in terms of investing Right now my goal is to get to to get the syndicate to you know over. Ten thousand members was always the goal to do one hundred dollars a year and we already surpassed that so now. I'm setting a goal of two hundred dollars a year and twenty thousand members and to be able to put two hundred fifty million to work a year. Which under do it for ten years. We would put two point five billion dollars to work the syndicate as a solo. Gp there's never been a solar gpa was put to quit five billion dollars to work and so for people who are like. He's the dumbest guy on the podcasts. That is that is. i'm afraid. Correct and actually if he's just competition. If you think about any venture firm purge ep if you divide total undermanaged by by by number of gp's yeah probably on average five. Has there ever been that much capital put together at that pace under one. Gp no. i don't think so. I'm trying to think maybe would be actually the example of somebody who's much to work how many how many. Gps does the vision fund. Have i don't know about a lot a lot. It doesn't i would guess a dozen. I guess something knows. Respond probably hits that They probably have six partners out of in time. Yeah five or six and there are a lot of capital. Sr they have a billion two billion dollars six probably one hundred fifty per front per person they raise a fund. You find every twenty four months. Thirty six months hanger net okay. So let's say two hundred million per partner you do five funds a decade. That's a billion dollars to play important. I think that's possible. Actually two and a half billion but you know whatever i think i could sustain it and enjoy it it just people have to get used to the fact that i am not the only person at the fund which people are starting to get used to like so when i go on vacation this time i literally told. The people were in the middle of raising. Schalke will manage the raise with you and heidi whoever over the next. Whatever two weeks when. I'm on vacation and you know i could jump in if you need but oh now we're into an area that i'm extremely passionate about his leverage on time. So what are what are the areas where you're like. Oh this is great. I can figure out a way to really scale this and get more leverage and have great people work with the company. Our work with the media. And what are the things where you're like. This actually is a core. Jason activity that i cannot outsource The survey question. I think when a founder is at crossroads where something is going really badly like the company's imploding. the company's getting bought or they have a founder crisis with co founder. That's when you gotta call affects her. There's no substitute for me coming in and guiding them through that storm so i would say you know the storms. I'm mini-storm no problem. But the which about serious you know. The the boats flipped and you know the pink passengers in the water. Yeah you're gonna need me to get on the helicopter. Get out there and coast guard at whatever the thing i've done in terms of leverage which you know i think is something people i discovered accidentally was. I started doing like an office hours type thing. And then i made it open to more and more people than having a slack. So i do Thing where. I just got off it before this call. Which is why i was ten minutes late. Sorry i have had about ten founders on two founders pitched me. They're three year model they said. Here's our three year model. Here's what we're thinking. Our three year plan so i realized because doug leoni told me you know jay said hope is not a plan. I would rather have plan for the company and just literally burned to my brain. Like w ona's like super manch. He speaks you. Listen yeah. I mean doug leoni has my phone number and he calls me sometime and i see doug because my phone at literally. My heart rate goes Hold on to. That doesn't happen with anybody anymore. And i i know group but he got propensity to just call people on the phone and have a two minute conversation with you and this has happened twenty times in my life more or less code called. Ceo one of my angel investments on a sunday a year ago. This is our moves just calls in your psych yonis from high dog. You know and sometimes it's something completely random and sometime. It's something completely life-changing where he's like. Oh this lp would like to meet you and would you be open to that. And yes mr leoni anyway. He when he told me that. Then i started doing this with my companies. And you know if you are going to the three year plan and eight. Other people are listening nine. Other people are listening. And then you say hey what are you what does the other nine founders thing. So those kind of group settings. I am not the only person but i'm leading the discussion. So critically and asking the probing questions man is that a game changer for founders. And for me you know. So that that's how i scaled myself and i'm going to continue to those kind of events and then do doing four days a week. I told my team. Give me the list of the highest revenue companies in our portfolio having been on the podcast and lead iq fit bod and gran dedicated episodes with those three companies in the last week or two. And i'm just going down the portfolio. And that's how i'm going to do it from now. On when the company said ten million five to ten million in revenue. I'm going to join the boards. When they're under that amount of the team you know be bored observers. Basically on those. So that's that's a. That's another ho nam. A very similar to what. He does where he says. Once you hit a ten million dollars run rate. Even if you're one of my a partners investments now you have my attention and now i start evaluating to figure out if we should be the growth investor in this company. Perfect i mean. I think it makes total sensors a. There's a clear benchmark of where get to seventeen managing partners and partners not include maas mri of softbank's investment team according to our quick research vision fund ten managing partners including moscow so hammock sense So yeah you would be deploying more. I think so. Yeah i mean. Also i think the syndicate is turning into more of a platform than you know vis-a-vis republic you know as opposed to a single person syndicate so we did two deals this past year. That were consensus deals so we started this remote demo day. And i'm in your feedback on this where we said. Hey here seven companies. Which ones do you want to invest in. When they broke to fifty or five hundred. I think we just said hey. World due diligence on the syndicated. It's not necessarily jason's deal syndicate voted collectively. That's something i've got sloshing around in my brain as hey if the syndicate wants to invest in this company and hundred members wanna put in ten each a million dollars. Who am i to stay. In their way. We could just process it for them and take the carry due diligence and manage the investment for them. So tell me more about What it means to for the syndicate to vote is it simple majority because rumor were at Do consensus driven industry. Well if a hundred people out of eighty three hundred wanted to put skin in the game Five hundred care more. It's such a small bad and it's such a small amount per person. I think you can be pretty Liberal promiscuous saturday at the word here. You can be pretty aggressive. Unaddressed was probably the best word was five million. You really do want to have somebody. Who's the lead right. So i think when you're making these two fifty five hundred k. Bats and it's a hundred people at twenty five hundred dollars or five thousand if you look at it like an experiment. Yup it's almost like a kickstarter you know kind of like a small bat. So the twenty five k. Back him advice jason. Do so. I think you need to. I think you need tonight. Some people within the syndicate to be smart money to basically say you are signal creators. Because otherwise i mean you have literally written the book on how to become an angel investor. So you're going to attract every doctor and lawyer out there eventually and so you gotta make sure some of them are going to be really get angel investors in so starting the vast majority bottom up. Yeah i love this idea by the way deputising people. I've also thinking about the scout programs. Who's the who did the indie thing that failed and he did the whole rice. Got a good idea. Bryson's i was a little critical of bryce coat with the idea. I was like this is stupid. Like why would you give foundress back their money. Talk about putting a stake in the ground. The burning unicorn head. i loved it. I think it was good. I i was like this is dumb. Because you're basically are going against the the basic concept of venture capital which is defined by your outliers. And you're saying you don't want liars. I was like thank you. I will send you all the people we say no to. In can you please send me the unicorns. He didn't appreciate had. They invited him on the product. He he doesn't like me with good reason. I was to practice but he did get something very right with scout program. Which was he opened it up to anybody. He had an incredibly diverse set so he took sequoias like you know doing the management team companies invested in people in their orbit and he just said hey. I'm opening wide open. And then he offered them a five thousand dollar cash payment if they made the investment has most carry. That could come down the road house on brilliant just cash so if you were some twenty five year old you're in your relentless that's a lot to you does create a signal though to get a deal across the line like it does create a strong incentive for ages scout. The deal. it's up to then bracing for me. You did to then and shepherd the deal. They're just giving it to you. They're putting on. Your plate sang hong. I found this company. You know it's it's gonna be trading for free with millennials nap the end and so i'm i'm gonna steal that idea from bryant setting that's a really good idea because it's symmetrically to fund your forty million dollar fund who gives five k. Whatever that'd be great well. I was thinking of doing time games. A lot i was thinking of doing. Let me see if you like this idea. Ten day zero carry five k. Five percent of our carey so one of twenty points or zero cash and two points carry ten percent of our kerry just for skyrocket and filling out like a basic deal mental feels like and then they wouldn't be officially scouts. I gotta come up with another name for it where they just are the they're like talks about this The radar network the radar now. They're just affiliates like they're just saying. Hey here it is. But i'm not going to be on the board. I'm not going to shepherd the company. I don't even need to you know. Yeah i don't even need to be an official scout. So that's my theory is i. Don't want people running around. I had somebody who heard that we because we do. We do a carrier twitter bio becomes jason. Cowley kennison's crucial. That's what happened. Somebody literally did that. They said they were scouting for me. And i'll say who told him his okay and one person might team was like well. I told them we had a carry share. But i didn't tell them they were scout but they you scout like at a lower charming. This person literally put their lincoln scaffold jason calcutta's and then somebody's like about your personal customer. Jackie ashley did this. I will work for us to like know anybody know anything about this. People started searching their emails. Like founded our bed. Pretty crazy when think about it. Well we had a really great idea for this episode and it wasn't fun formation and innovating not capital but here. We are And we were going to do our mount rushmore venture capital under call an audible here and say let's do this for the next episode And we will pick our mount rushmore of venture capitalists and we should tee it up now so let's thi this up for the next up. I like it so teed up. Mount rushmore as a device means the top. Four of all time. You've seen this on sports shows where people say. Here's my mount rushmore. It's lebron it's jordan blanket blank and then you have this great vibrant debate. We're gonna do this for vc's and we need to pick the criteria into two episodes because we can have a healthy debate here on like just. How would you decide who should go on mount rushmore. 'cause she was one way would be historical returns and obvious one so that would be through the lp lands. But that's not. The only lens is at ben. We're no you could also take the founder lens and say if i could take a check from anyone all other terms being equal who has the greatest four people that i would want on my board right can even say live dead right because you could say. Hey listen you. Have somebody like don valentine who founded sequoia oracle cisco. I mean kind of hard to even atari. Yeah i mean how do you even like. Put don valentine in perspective here ito compared to trough or tax. But you don valentine rest in peace is not going to be able to be on your board today so i guess you have to make some allotment here when you're doing your four of historical today and everything in between either. I think we should. I think we should say all of them in their prime. Okay in their prime. Okay i think that's That's a nice way to starting a company in nineteen eighty two. And you know that. So if i'm taking don. Valentine it's like the eighties don valentine got it so if we're talking about jordan. We're talking about jordan's prime. We're not putting a fifty year old jordan against a thirty six year old note. No wizards here. No wizards jordan were saying jordan prime versus because some people are kind of retiring. Yup yup that makes total sense. So i think i think they're actually three though potential vectors. Ah vectors and we should. I think we should decide on one of them. One is the l. p. perspective. Yeah just straight up return trenton. One is the founder perspective that bensaid which is who do. it's a competitive round. I could have anybody who tunes always helpful. And i do want to add one caveat to this. It's not the most founder friendly. Vc it is the vc who will help me create the biggest win for everyone can right right right right. They're going to. Yes so we're talking about two thousand seven bill gurley in his prime doing hoover and you know every other credible company dan during that time. Got it right because otherwise you could have someone who's just going to like roll over on every decision and be your have your proxy which is like. That's that's not really what we're getting at here right okay. So those are. I think the third potential is your you are starting a five person mentor. Capital firm. You are one of the five. Tv's gp's you want how that's a powerful end. So you're saying i'm building my own fund from scratch. That's kind of. That's building all star team. That's the best one. Actually because it takes everything into account it takes the founder into account and it takes the alpine. Either you unlock david. So this is basically. I'm starting a five person venture firm. I'm one david swann benz. We're starting a new venture firm haussa beta delta. Whatever i don't who has to be the beta in this group or the alphabet are we starting with sorority some coming with generic dance. We're starting elm. And whatever pick another tree gilbert and rosenthal what are you gilbert person law firm hundred bucks an hour we need a retainer here but i like that we each pick who we want in our new venture firm to build around. I do like this one because it does take the others into account. The question is do we care. How these characters interplay with each other like. Can we pick water hammer street. They work with noon author. Are you going to four. Alpha's maybe they can't work together. It's definitely something to think about You know like hey listen keith. Boys a heck of a visa but putting boy and trauma in the same firm happens. If you have roy and trauma from the same monday morning meeting and they're trying to decide on investing in a company and key tells tremendous in idiot and jemaah tells keith. He's an idiot and these are the most successful guys. That's i love that. That's having kobe. Kobe or kobe in jordan on the same team. There's only one basketball chaos eighteen. I'm a the dungeons and dragons like when you're building. Your character chaotic. Good like i'm chaotic evil. Yeah oh great. So i i would love chaos. This'll be like alerting janice rodman and who the guy who would say. Baldoni lie. Rasheed wallace draymond. Green rodman nari is absolutely going to get technical in the first five minutes of the game. Who even jackson. Ron artest mouth. Here's my this is my team. Ron arch rasheed wallace. Dray walgreen dead. Ovalles god me. Those four guys in bunkered literally the four of them are absolutely getting technicals in getting two of them are kicked out of the game. We're playing three versus five. Oh my lord. But yeah stephen jackson's the only one who actually can i think he's the only guy who actually beat up a fan nasseri of our test choked to fan. I think i wasn't that as the coach. Oh you talking about spree. well i'll free wellspring choked. Pj are listening. But from what i understand. Pj carlesimo said something This is the inside story in the nba. That nobody knows. I don't know if there's ever come out. But i know people may i just say. Pj car lissa may have said something that was choke worthy who to a flyer. Yeah they'll do it. I don't know that that's true. But the people i know in the nba. Said you know the listen. I stand spray. I'm just leaving at that. Sim for spree. Great with our test retains his name to metta world peace. Absolutely that's right. yeah. I mean all right. So let's give everybody a cheese tees and and maybe this'll be good because then people can tell us to if they feel like we're forgetting people that they would want us to include in the in the discussion all right. So here's what. I think would be a good idea. We each do one pick today. But let's read down the list just a scratch list here just a starting list. Don valentine obvious ban. Read the next. One john doerr. That's lab day. They're it's that's an obvious one. Bill gurley obvious one. Peter thiel emmy facebook twitter. Leo pailin tear can are you. We're to go to the east coast for this next on. Fred wilson representing york city twitter. Tom going base. Who need the question on this one. I was are we talking bond capital kleiner perkins but mary meeker and the question is when when was she in her prime. Well you know. She was not an investor in was an analyst but she was a great analyst. he's only been doing venture for a decade. I think we can say we could. We could get her. During her morgan stanley days as a who say that would be a wildcard. She eventually did move to dc but if she had left in her prime she was playing the wrong sport. You know she should have been at a. Vc firm probably she was she the lead analyst on amazon for their ipo. I think. I think that was really so woman. What what what. I as she. Everything probably yahoo and all those kind of companies during that time Blue mountain arts mountain are forgotten. Okay so then got jeff jordan. From adjacent horowitz. Be so far and david night. Just finished our two part. Andriessen horowitz Back to back five hour extravaganza on acquired are they not sons point eight billion management. I think in terms of the numbered early stage funds there on either seven or eight right now. But they've got bio- they've got crypto. They've got growth. They've got the cultural leadership leadership fund. But jason i noticed here. I don't see andriessen. Or horowitz. On here i just see jeff jordan on this list. Whatever i got beef with injuries and horowitz wouldn't come on the pod their pr people who is the woman who runs all their pr. margaret fantastic. We we gotta talk. Jeff dan her. I find incredibly annoying. Jeff joel jeff tab. May she's the one who jerk me around. They want all the partners on and have an to talk to her constantly. No offense but you know. Listen i'm jason. Kao candidate only talk to the pr person. I got more contracts my p. and then you're putting on your pr person to like beg for scraps and try to convince them and then they're like she tried to horse trade with a whole bunch. You have this person on the pod. Maybe we'll have him in our so you know what i'm out you don't sound beyond this like i'm done with you guys like in gals it's enough like i don't want to negotiate. Do you ever send them deals or you. Just don't one hundred percent. I do the opposite. And i told the how well the other thing that happened was i. This is the thing that really pissed me off. There was i was moderately pissed off about them. Jerking me around about coming to a conference. Coming on the podcast. Talk about uber series b. I think we should the second. So i'll just say that that to me was like just super annoying. And they were super knowing about it and it was disrespectful. I sell to me. Because i work really hard to put on these events. Free for founders in. You're showing up at everything else and the second was then market or margaret. Whatever her name is like jerking me around and trying to horse trade with me to get their other partners. And they're terrible books that nobody reads by ten thousand copies of to put on the list. Unless again i'm out But the thing that really got my goat was i. Status company sent us companies. This is when they had their first fund said come. I sent three companies two of them. Mark gives the founders over bateson switch the founders were mark replied to the founders instead super nice things to founders farmers get excited dose founders flew in for meetings mark. Didn't show for the beatings. junior partners. Whatever show up in both cases they said the meeting was incredibly short. The founder the parts were rude disinterested. They felt like they had to take the meeting. Couldn't end it fast enough and that to me was that was it. I was like what. If i'm gonna have this batter an experience. My founders of experience. At i told mark i'm taking every company. That's a unicorn. I'm bringing the ball down court. I'm sending it to sequoia to let them. No i did. And i was like listen. Bill gurley shows up for me on the podcast. Sarah comes on the podcast. Anybody i ask at benchmark sequoia comes on the pocket so they come to the events my god some of them even sponsored the events. When i was getting started. I needed help. And then in. Recent horowitz was just persnickety with me and then they treated the founders badly and i i don't need to have you on my fund you said it directly to me mark that you don't want to come to my events and you don't wanna have to be if you don't come to my or show up for me on the podcast Then you can't be on my phone yes. I just decided right at that moment. That i don't need to have this level of i mean who's mark injuries and give me a break you know like i'm sorry like you're not that important. Ben horowitz is not that important. You're not a successful s equator benchmark. Your returns are much lower than there's a so like you're the fifteenth. I mean in terms of capital under management their incredible in terms of performance. They're far behind everybody else right. Municipality learned we did the math now they they're they're still second returns they for a long time but they returned eleven billion dollars on coin based and we'll show the base case that we came up with. Dave is it. Okay if i spoil better for spoiler to sign up. So they've raised almost nineteen billion in funds Really can only do analysis on the first like eight billion raised because the rest is recent or bio or stuff that we weren't in the bottom of the j curve. Yup makes sense so of like stuff. They could be liquid on. We don't know if they've actually distributed but on stuff they could they returned at least and he's our estimates twenty five billion from that eight with a three for like ten to twenty more okay so they'd be a four x fund that puts them in the top twenty percent of funds top tier with a lot of as we were talking about earlier with just like a lot of this is just from his his book. Three x fund. That's fine. i mean. I returned on my again. I'm saying their absolute worst case scenario. These are the returns from their top. Ten companies so no sequoia benchmark just on a i on. This is what i would say on. Ira yep if you're an lp and you could put money into only one firm sequoia benchmark. Jason who would do it in that order. It depends how much money i have to put to work. If it's a lot of money i'm putting talk insignia. Put ten million or a hundred million. Okay yes you're debating. Sequoia versus benchmark right benchmark is smaller sequoias beggar. Do we carry multiple or do we care about cash okay. Just let's play the p. Game here for a second. we're all. Lp's here's your choices in their prime sequoia benchmark. Fred wilson injuries. Whose last and we're assuming all them are are doing the same deal with me on kerry same deal on carey in their prime separate. Listen you you mean. Usps fun fun. yes you would. You would pick it in the order of what we're talking about benchmarks. Sequoia fred wilson union square right. I'll just union square jason horowitz. And we're talking about today. Are we last who we all know. Who's last on that list. The peace dead last on that list is in recent horowitz. We all who's i it's sequoia so then we're debating two and three correct the number of times on our injuries and episode that we use the If you're gonna come at the king you best. Not miss line about sequoia they missed but anyway let's do it. Let's do it right now. You listen you guys don't have to worry about your relationship in recent because you did your show already in all honesty. Who do you pick as your number one. In the firm's primes in their primes you can be an aloe. is that There's a reasonable chance. I'd wanna say. Andriessen horowitz today because i think their prime is the next fifteen years. Okay fine let's take it as in the last decade who you're making your bat on like if web threes thing then they're going to be the best. They are best positioned. Unfortunately crypto is total giant. Scam there's no place out of nfc so actually gonna blow up in their lap. And it's going to result in a tunnel lawsuits. That's my best. I think they're all the crypto. Investments are going to be you know side from coin base which is a legit company operating. I think a lot of those projects are just never gonna actually materials. That's my my gut. It's gonna be a. I think it's gonna be like the thing. What was the big investment. At khosla did and he just got demolished. Athem also yeah. He does ethanol phones. Whatever or that. The kleiner green stuff but who would be in that four will be your one two three four. Let's say this way. If you'd be an alpine only to what are you picking. I mean the whatever the two thousand seven eight nine benchmark fund for sure. I mean that in their prime wasn't that fun to twelve you're going go sequoia and benchmark that's basically it i think and frightened very close interest of us fund swith airbnb and the like my ended up being. What's app youtube. What's editor but but yeah sequoias definitely number one. But let's go down the restless trashing address. It's twenty five x gross benchmarks. Twenty eleven fund twenty-five x cash gashing. You're sitting here talking about injuries and horowitz's three x four x worst case scenario like that's the joke of all this this increase in harwich spend all this time doing marketing themselves in markets out there creating clubhouse groups and their news side sogang jason. Because before dave which we talk about and jason show today i was thinking like it'd be fun to kind of like the What jason is doing as the pioneer. What in injuries. And horowitz doing now this combination media empire venture investors and. I'm not sour. That they're copying me. you moses. You got the tablets watery. What i do take offense to that. They didn't show up for being treated my founders poorly useful. Yeah and i also think they blocked me from clubhouse which thank you for saving me money. But i really wanted to be that deal at the time. I think they were like we talked about that on our first episode. Ever invite me into any deals they never show up for and they treated my poorly. And then i look get sequoia i look at this other firms are i always bringing up. I'm so sorry. Let's keep going down the list. After jeff jordan. We've got send sequoia china china. You guys you guys read. Alfred lin sequoia early stage. us q. Back two days back. Ipo's with insta- cart endured ash being being jordache. Yes it's like a remember. The tomah manzke instructional videos on espn and the ninety s. Back to back back national shares. Yeah that's crazy. Then we got best tomasz best he say which has venture investments here. Well certainly good. I would do. I think maybe you've got the inside info info maybe cal his non venture investments even better than his call on amazon his call on bitcoin. His call on tesla. I think that's why he wanted to create a firm that was not limited early stage venture. Yeah yeah mer slack. Box virgin galactic. Well good all great. Yeah belgrade This idea of a crossover fund where he can just put money into anything he thinks is going to go up. I think that's why you know when they talk about blowing up social capital or rebooting it. I think it was very much like he was doing. The traditional venture thing needs what. i think. There's something that i would enjoy more. Which is this. And i don't want to fit myself into you. Guys think i could work in a big firm like a you think any of the big firms would like to have me as a bar. Obviously some wouldn't. It's too hard once you've done your own thing to touch it doesn't work halen's castle interest jamaa by the way i do want to say like today's his prime so if you're pick them off to to be a part of your your five-man firm that's that's today tim of exactly ailing lay cowboy ventures grit yup forerunner amazing yep vinod khosla of obviously khosla. I mean i think he was the most successful venture investment. Ever juniper at one point in time yup kleiner he he was it was vinod and john doerr at a climbing. They were just killing it. But i'm juniper investment juniper networks from what i understand was at the time an sick hit like crazy but three pulse data for next time on on that one who obviously your boy david sacks by the way i also think would be today like i. I think that's part of the magic. Also of all in is all of you are currently on your own rising stars so it's not like you're pulling any anyone from david's angels. Folio pre unreal awkward unreal on a lot of them were the series bees though in addition to angel. So keep that in mind. We'd still jesus being done talking. We just got done talking about all that matters is getting into the binary. Companies have our decades. I'm just saying song competition. But yeah keith boy key host. Jason obviously is putting in there Along with math and Let's see any lamont her. She's lesser known but co commending director co-founder of of oak. Hce which was open. Yeah great great healthcare and fintech investor. Chris sokha who i think may have had the best multiple on a solo g. p. fund of all time with his investments in in twitter twitter and uber out of the same small fund that twitter uber and instagram and that fund. And saying that it it was an eight million dollar fund. I think he only deployed six or seven. And i make it became worth a billion so it was like one hundred x fund which my first fund was one hundred x to you look at my scouts. Six hundred fifty thousand invested turned into one hundred ten million. So it's so weird. I don't see each the named jason calcutta's on you know because it was small dollars. You know like if it had been deployed would have hit. That told nick we we wanted jake. I i don't think i would be on this list right now. Be totally honest. I think it's you know my best days are ahead of time what we got last in the original list sticking in the angel investment category though g the original super angel ron conway i mean i think that makes sense. I don't know the numbers from what i understand. He had such a small amount of google. It actually wasn't material but the facebook was material. Think that's the you never know this back channel but it was like i think he had ten thousand google or something so depending on how long you held it you know still was one hundred k. Track of the angel round of google and then are to a gym brier from excel. Because i think like peter thiel gets a lot of glory from that. Facebook investment excel had probably the single best venture investment of all time in there. I don't know what that resulted in today's dollars. I mean that's the thing i'm thinking about. All these investments is. I'm starting to think two decades now In all my mustang ten six to twelve years as private companies and then ten to twenty years as public market companies is my current thinking of how to hold these. I mean if you're going to end up with a facebook. Amazon apple microsoft. Google caliber company. Never sell coming. You can't companies are growing faster today than the hat in the last decade. Absolutely brier lead. Facebook's twelve point seven million at a ninety eight million dollar valuation percent pretty wild and it's worth trillion our. What what does facebook. yeah. I don't know that's the thing. I wanna do. Some research on his. What excels liquidation in from. Facebook was or at least their distribution or. I'm going to have lunch with you. Were talking about the best. Did this happen publicly on twitter. No i just literally dmt him slid into winner. While you guys mentioned him. I was like i don't know this guy and i just wrote lunch question mark short. This is my jason's been so this episode. He's been deeming the whole time. No i'm not actually engaged. What's this new theme music. Let's listen to your new day that we added jamie episode. We got jim gets we forget. Gotta have another to have. Should we have young spielberg. Might taylor play out this episode. We have john. I this coming on the show and we will do in. Two weeks are venture investing Mount rushmore building. A new firm us plus four five percent firm. Who do you put on it. Supergroup ventures super adventures when. I'm back from my trip here. We go taking us out young spielberg. Who got the truth. Who got a you got the truth. Was you say trade story all new. Got everybody's talking. Nobody's listening these days lost. Everybody thank me. Don't know what's going on. Biggest small gone need to know who got the truth is a you as a you. Who got the truth. Is he say story. All got got to not air for the cheats. They flip flop like a saw. Not free he's now a world. See what we saw. People wanted to do feel good by the candidate. The truth down so much to lose need to know who is he who is a you got the truth is he has to say this story all new got truth.

david rosenthal david ben gilbert Ben of course pioneer square labs day rosenthal Nap manning ben jason jason bevacqua
Meb Faber: A Framework for Outperformance

Adventures in Finance: A Real Vision Podcast

1:46:17 hr | 4 months ago

Meb Faber: A Framework for Outperformance

"Are you good with people. Maybe you're organized or have a knack for numbers. While the chances are you've got skills that could lead to a new career. A google career certificate can help you get a foot in the door with top employers in fast growing fields like it support project management data analytics and user experience design. It's professional level training developed in top glue employees. And it's all online so you can learn around your schedule. Put your skills to work. Go to grow dot google slash certificates. We've got a real treat for you today on real vision. Jason buck is interviewing favor of cambria investments. It's a long interview almost two hours long in fact so because of that we wanna let you know the first twenty to twenty five minutes is focused on maps background and the founding of cambridge at from that point on jason and really get into the weeds on asset allocation risk management volatility targeting. The just wanted to give you a quick heads up with that enjoy. Welcome real vision audience. I'm delighted to introduce med favor. Founder of cambria investments in the wildly popular. Med paper podcast mu. I'm going to probably start off with a difficult question. You know. I actually love that to me. What permeates through everything you do. As a sense of practice you really liked the scratch. Your niche you explore. Solve your own problems so may start off with. I see your books in the background Why do you hate amazon man. We already going down this rabbit hole. You know. I emailed jeff the other day and He's seems to have cleaned up part of the problem. We'll see if it's finished. You know amazon. The challenge publishing is they. Don't assign a single skewed to every item on there and so you have books if you're author listening this go type in your own book or your favorite author and you'll see ten twenty thirty variants of the book None of which happened to be from the correct publisher published in the correct year. So i complain about it. Nothing seems to change much but hopefully they they get their act together the nice takeaways. All my books are now free to download because we just had enough and said look you. Can you can download the submitters. Please don't go pay hundred. Two hundred dollars for my books on amazon from some seller in the philippines When you can just download them for free great and you've been doing your podcast for a long time. What year did you start your podcast. and roughly. How many episodes have you guys done. So far man was three hundred. And maybe if i had to guess three four five years ago we were sort of the second wave. Not sort of the rogin ritholtz era but Kinda the the second wave and ironically enough. We'd consider doing video in the beginning back then. Videos was a lot tougher than it is now and real vision you guys. Such an awesome job it But we started out with audio so maybe three or four. Five years started out with blogs and academic papers and books and now the era of everything else in between. I'm curious about when you started. Where where people saying podcasting fad. Did it feel like. There's too many podcasts out there. Why start a podcast. No it was It was actually immediately obvious as a consumer of podcast that is going to make a lot of sense Most people tend to consume it while doing something else right where they're walking the dog exercising driving whatever it may be. Hopefully they can listen to this You know i speak a little slow one and a half two x three speeds so he can get through interviewing like ten minutes. But i think people It's one of those obvious mediums that they took to immediately speaking of scratching. Your own itch like podcasts. You've done a great job of trying to solve search ability or weekly putting out your favorite podcast like do you think that's getting any better for trying to like to be a aggregate or trying to find the best podcast in sift through those in help search ability in general one of the topics been talking a lot about for over a decade is curation on so many different topics where it's just a flood of information. It's getting worse right every day with your own Across not just the platforms but real vision is competing with cnn. Which is competing with the wall street journal paper which is competing with tiktok right. It's all this competing for attention and the struggle is so much of. It's just noise. We'd struggled with paul curation which information curation general so we actually pay we hired pay someone In part jobs literally just to listen to podcasts. Into to rate the top two three four each week and You know that sounds crazy but if you think about all the time you know you spend ways wasting listening to poor content Or things that you've been an hour on said man. I wish i had that our back. It's frustrating so. I think there's probably a lot more machine learning. Ai that that will assist there. But in general so weird most most podcasts apps. they don't even have ratings. I've lived in a lot of places in my life. But as a longtime listening to your podcast. You amazing job when anybody says like whether zooming in from or recording the podcasts. It always seems like you live there at one point in your life. So let's start back like where did you actually grow up a little bit of a mutt born in colorado spent some time in north carolina. As well you can hear a little bit of the southern draw. I retain college in virginia out to san francisco. Ski bum in lake. Tahoe down los angeles start. Cambria pre financial crisis. The last one in Been here ever since ten years plus now twelve thirteen fourteen and Kind of got sucked into the beach lifestyle. So if anybody's listening is near manhattan. Mostly beach elsa gun to come say hello and what did you study when uva nerd engineer Biotech biomedical engineering. This was in the late nineties. So for those who are new to investing and crypto and mania z- You know that was me twenty. Plus years ago. I was trading stocks in class and in the nice part about looking back on that time which was very instructive. Is you know. I can see myself and so many people today you know not just young people older people too but the names were different but the story was the same For us it was e-trade rather than robin hood it was also attack in dot coms As well as biotechs and genomic stocks lot of similarities today man twenty years later we had professors that were trading stocks during class. Checking stock quotes Exciting time you know bubbles are super fun in so I was able to focus in graduate. Of course with all that was going on but I kind of had a hands in both sides of the bubble. You know i. I was An engineer in biotech biotech also Rip roaring because of the human genome project That was going on right down the road at celera as well as With the government. And so i used to go sit in on the fda meetings Not too far away and and ended up in grad school at hopkins which is also right right in the midst of all that biotech and then managed to time it perfectly and graduated in two thousand so You know that that was the absolute peak for both of those bubbles in the biotech career. I started out by tech equity analyst and so kind of the career became the hobby and vice versa. Not really focused on biotech as much anymore. have kind of gravitated more to the quantum side of the world partially because of all the pain and frustration of losing all your money a traitor in learning. What not to do you know hopefully When people you listen to many of the great traders we in our podcast with you know what's been your most memorable investment in most people Have been around for a while. It's often a scar in many of us who've been around long enough. Have many scars and so that that period was certainly Losing lessons In the dozens if not hundreds rather than just one or two so That color a lot of you know our our investment methodologies and ideas that we implement today twenty years later. Yeah i appreciate because we're roughly the same age. And it's amazing. How many people like to talk disparagingly about the young yellowing trading now but like we can easily remember when we were in the same thing in the late nineties whereas like tag biotech even figuring out options on trade is more complex than in. We didn't have all these. You know youtube tutorial seen as you know short-squeezes in buying call options. But it's like you said it was really fun time but more importantly the money you lose their people are going to stick around and learn the game and so it's it's incentivizing that emotionality to actually learn the game. I always think about a lot of people. Either learn Initially through buffet. So they end up being you know value investors or other. People start with like the market wizards and the best part of the market wizards. Did you find. Actually there's a lot of different ways to train. You figure out the one that works for your personality as a quant was there more of like a a seminal piece to you than than different than buffet or the market wizards. Yeah you know buffet and others talk about this sort of inoculation where minium just get it from an early age. I think i took the opposite approach. Where i just tried everything that didn't work in eventually dislike stumbled upon Learning all the things that that didn't work for me and that's part of the investing to is that You mentioned eluded to. There's many different approaches. That worked just fine for for different styles and strategies and it comes down to personality in my realizations through making a lot of mistakes You mentioned you know trading tech stocks and for me. It was options options on biotech stocks and But that colored informed that. I had all the behavioral biases that people talk about literature. Today you know the conman versus sorta. Hey you know. Look at this crazy way. People were overconfident. And you can just go down the list. And i have just check check. Check james montier as a great book on the topic as do others and being honest about and saying. Hey i'm this way with with money and investments so let's put up some guardrails and that's kind of what pushed me towards this sort of quant World strategy in quant doesn't have to mean high frequency and Super complicated can means something as simple as just having some basic rules in guardrails. Keep you from doing dumb stuff. Which is you know the number one. Take away with this whole game as avoiding doing the really dumb stuff you know. That sounds super technical. I know but As as seen with the recent family office that just blew up thirty billion dollars like not doing the basics of really dumb things. even even the super smart Nobel laureates people get get caught up in it and so making the mistakes learning the problems that i had as a human that were Coded into into my genome a biotech guy that that resonated with me and understanding why we do the things we do and so that started me down this road and process so as far as inspirations i mean there's a laundry list of Books and white papers. We we have article On my blog that's Long lines of like the learning to invest in the number one investing book and it was interesting because we pulled the audience. We said if you were to give you know a high school student or someone graduating college. That wasn't familiar with investing so maybe a liberal arts degree they wanna learn about investing. What one book would you give them. And we got something like three hundred different responses. You know there's no one book really that stands out so even if you look at the top ten you know some people would answer. Things like security analysis. Say my god. You're going to give someone that book like. There's zero chance they finish it. Are you kidding me. it's also a hundred years old but You know there are a number of books in that sort of top ten. That i think would be would be seminal and if you read the top five you're probably further along than ninety percent of the people out there but but modern day like you mentioned like the podcast in. We have a spotify playlist from each year. That has some of the best the best podcast episodes and listening to those. Would you crank out in a month. You know puts you probably ahead of ninety nine percent of mba's listening to the real vision video. Same thing puts you Leagues ahead of of anything. You probably probably learned in school so i can't point to any one in particular That i think stands out. I can tell you my favorite book. Currently if you add me about investing is trying for the optimus that we can probably get into that in a little bit but That's like one hundred and fifty dollar books listeners. Seeing pick up the The book at a library or used bookstore but they also have a free version called the global investment returns yearbook. Let's put out each year in partnership with credit suisse and you can find Many of those online for free. Yeah we're gonna get to triumph of the optimists. It's always hard would recommend recommended book. It'd be like recommending clarkson's book that's thousands of dollars if you could find it kind of thing. That's always sad and part of that story is we'll talk about investor education later and and you know the dearth of investor education or what we can potentially do about it One part. i didn't wanna skip though is you. You talked about an interlude in tahoe there. So i wanna give a shout out to our mutual friend. Brian chaplin. We used to be a ski bum with you back in the day but brian told me you style so i have screens up there. So we're you still day trading those days or you're trying to be the next glenn blake. Yeah Both in failed. It failed at both equally in as spectacularly But i did time a year and tahoe was like a record. Snow year so It was you know. I i worked for a start up. C. t. a. and There was based out of san francisco on the opened an office in an income village. Incline village what people the locals called it. 'cause you know half of tahoe's in nevada so there's a lot of tax benefits to being on the east side and some of the quietly best skiing in the sierras is in a local mountain. Mount rose shoots there But chappy shout out Yeah you know. I so i worked at the start up c. ta which is Now defunct but certainly would go to work at six. Am in my bibs and snow gear many day to try to Get out of there at two pm to get a few hours in and and then had to gar woods As well but you know the some of the work i did. There certainly informs the starting of cambria You know a couple years later in particular Some of the early ideas on trend following as well as futures markets you know studying a lot of what many of the great traders had been doing for. I don't know four decades that point the turtles the jerry parkers the world That was the foundation for a lot of the work that we then eventually implemented Here's well when you started cambria were you starting with the idea Did you start off with you. Start off a white paper. I believe right before the. Gfc isn't that correct. You know this would have been circa two thousand six in so we had no idea what we want to be. We grew up. You know. I'm late twenties at this point Been a ski bomb. Broke ski bum in tahoe and started this company with a partner who came from a vc banking backgrounds and neither is the started in asset manager in so started out from zero. I mean we're talking. You know bootstrapped. Nothing i account i'd written an op ed. In like the la times or something. Which i've never done before. Since don't even ask me. Why did it was something about pension funds and I wrote an article. Maybe it's a letter to the editor. I can't remember sorry first. Investor literally came in through that venue And i'd never been a writer right engineer. You guys know how engineers right it's the most Dry and boring possible content. There is so I happened to write an academic paper which also was an unintentional production. Because it was to try to get a certification right at the same ti- program and so had to submit it because it was expiring at the end of the year so wrote my first academic paper Which at the time was called a quantum approach to market timing or the case for market timing or something and literally. No one would read it. send it to a bunch of people i respected in the investing world. Luminaries thought leaders got back some really nasty responses nobel laureate scott axon thoughtful responses as well and i'm now great friends with some of those people but that paper came out in the journal wealth management. Let's call it two thousand seven and at the time started writing blog and in some books as well but that one piece of content which was unintentional Really kind of pave the way for the whole business now. Part of that was luck and timing know. The paper sailed through the financial crisis that the basic model Did just fine. And so it certainly got some attention. But from from a young engineer doing a startup. Who still still to this day. Writes like an engineer It was kind of the basics for the company so to private funds separate accounts we transitioned as people started. Getting interested in are investing ideas. They were kind from all over Not just in the us but global as well and here today i think we have almost one hundred thousand investors around the world so a far cry from the la times. Op ed but We started doing public funds versus of advisory on our own starting in two thousand thirteen We have a dozen funds now probably will settle in that mid teens. Twenty range probably probably no more than that but it's it certainly is certainly grown from the The days of A couple of screens tahoe. That's for sure exactly doesn't funds now looking to do more. How many tickers though do you actually own. You know you don't own the tickers. You can reserve them from a couple years with an exchange and You know we're not trying to just Reserve hundreds we want the ones that we have an intention to use for our funds but it is certainly fun to to to pick out some memorable tickers maybe two dozen probably But you know we're a bit different. When we think about funds and launches in his probably instructive dimension this real quick you know the they're sort of four criteria we think about in a world of ten thousand plus funds. And you know this better than anyone is. Why do we need any more. You know why it is Someone had the audacity to think that they can beat vanguard and blackrock and launch a new fund in the reality is we try to only launch funds that either a don't exist so it's totally a new fund or strategy that that there is not well represented or we think we can do it much better much cheaper and cheaper. It's rare twenty. Twenty one right but All of our funds are cheaper than the category average in summer. The single cheapest in the category which were proud of A to is. It has to be something where there's a fair amount of academic or practitioner research so many of these phone companies. Just throw whatever they have against the wall. You know the the hot whatever. The hot strategy of the day is and to me. I want something that goes back Preferably decades maybe century of research and the two big pillars. We really stand upon value on one side so the ben graham buffet but also momentum in trend but it also goes back hundred years. Time of charles dow An endowed theory and probably even before that certainly to the time of ricardo But then is it something. I would put my own money into as you know. Most mutual fund managers have nothing invested in their own fun which is sad. Sorry state of affairs so we want to have some skin in the game last when actually won it which is a problem for us because we have a lot of pretty wonky ideas that no one in the planet would actually want and so you know that sort of informed what we've ended up launching to this point and we have a handful of ideas. Hopefully we'll put them out of a few more this year but usually it's usually about one or two per year. Try to presell like to your audience. Those new ideas. Like how do you kind of vet the market like now. You've got one hundred thousand bastards. You've got pretty good email this like how do you vet to launch something or not. What the audience response is going to be. Hey guys it's ashburton host of the real vision daily briefing. Today's episode is brought to you by blankets. Blankets is really cool. App for your smartphone that lets you consume books in fifteen minutes or less. How does it work well. Blankets divides the book into a series of blinks each of which is very short summary of a key section or idea in the book you can either read the blanks or listen to it. Like a podcast. It's incredibly cool. And i'm enjoying my experiment with it immensely. I'm obviously very interested in books about entrepreneurship. Finance and business and blinking has a wide selection of all of those topics. Let me tell you about two books. That i listen to on blinking. Recently the first is one of the popular bestsellers. Richard branson's the virgin way. I've always been intrigued. By richard branson and the book is filled with brands insights about the world and business. I specially found his thoughts about the culture and ethos of great organizations fascinating. The second book is an old favorite of mine from about five years ago. That addresses many of the same issues as brandon does but from a very different angle. It's a book by steven press. 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Real vision tried for seven days and save twenty five percent off your new subscription. That's blankets spelled b. l. i. n. k. I s. t. blinking dot com slash. Real vision to start your seven day free trial and you can also save twenty five percent but only when you sign up at blankets dot com slash real vision. We did a hourlong podcasts. Of west gray of al architects on this topic of How to launch an etf Because we get this question if not on the daily certainly every week where people wanna launched an etf right. They have a great idea. The see the pot of gold at the end of the rainbow and we kind walk through all the process involved in launching a fun The biggest takeaway for the people that want to do it is managing money in the business of managing money or two totally separate things. And i think people see like the show billions and they want to drive the ferrari and Trade is exciting and But the reality of the asset manager you know is is certainly a lot more boring There's a lot of forms design compliance to deal with chats with the sec who we love all those sort of things right and so Trying to combine that you. There are a number of different ways to do it. So the best in the easiest courses to have a seed to have a partner that wants to put in a bunch of money or funds that you're cannibalizing. You're starting to see the slot with mutual funds in the active mutual fund space starting to cannibalize itself and move to. Etf's is seen that with dfa Since starting to see that with a number of different structures so if you have ten fifty one hundred billion dollars the you want to move into the fun. That's the easiest right. You've seen this with financial advisors asset managers. Starting to say look. I have a thousand clients that are in the stratagems gonna wrap it up and put it into an etf. It'll be more tax efficient or easier to run as one account rather than say You know a thousand separate accounts that's the easiest way to do it Harder courses to launch. Something and let it marinate incubated and hope the world comes round to your idea or your performance That's doable. it's gonna cost you a couple of hundred grand a year probably just to keep it out there. So the big shops do this all the time. There's a stat. i think over a ten year period. Roughly half of mutual funds started a period close or merge. So you think about that. Amount of Turnover right how many of these phone companies you're partnering with are gonna be around. Are they really doing it. Because they're launching a product they believe in or they doing it because they want to launch a product they can sell and I think that's an honest question that it's easy to answer in most cases actually Mid-eighties phone complexes are willing to just throw everything out there And then closed it if it doesn't work and keep the ones that are open so We try to launch products that we're going to keep out for a decade. Many people can't really Are it's not can't are not willing to commit to that amount of period so And then even then it's hard right you launch a strategy or product in you know people used to come to me at cocktail parties when we had those In the real world or coffees in a mob. I you know. I i invested in your fund It's not doing so great. You know. I've been in it for three months. I'm going to give it six months. How how does how long should i give it. What do you think. And i said. Well i i used to say Ten years and they would kinda awkwardly laugh. assuming i'm gonna follow it up and be kidding and now actually say because any investing strategy asset class. People don't like to hear this. They hate hearing this by the way but any asset class or strategy goes through periods of underperformance. And if you look at the history of the best performing asset managers Ten twenty year period in look at the percentage of time they're in the bottom core tile or they have years of underperformance in some cases like buffet. It's like can go on five ten years in a row and but still be viable buffet example. I love to give us back to ninety nine. You know. he's outperformed like ninety nine percent of mutual funds but has underperformed the vast majority of those years and certainly at length in so The challenge launching any strategy. You can be stuck in a regime example. I like to get people say well. No that's crazy There's a institutional survey that said something like ninety percent of institutions. When asked how long they'll give a manager before they'll tolerate underperformance and ninety percents at three years which is everything that's wrong. Asset management just summed up in one very simple pole. And that's not. He will love to look down retail dunk on the the robin hood Wall street bets crowd. But let's be clear institutions are as bad if not worse about this process and so Thinking in terms of a decade to decade long period and people say. Well i you know. I just i need to find a manager. Maybe that's you. But i need to find a a manager that will be more consistent outperform every year and i say look. What's what's the single most widely held belief in all finance and investing every investment book. You'll read every course one on one level taught in college. We don't teach Investing in k. Through twelve which is natural tragedy. We can get that later. But let's say we did. what would they. What would it be the single thing they would teach. They would teach the stocks outperform bonds. There's i don't know a single person that does not believe that do you. I don't know anyone and most people expect that though that they want that certainty on a yearly timeframe this year whatever day week month quarter but normally a timeframe maybe two to three years and i said how long do you think stocks can go under performing bonds. Most people save years five years. I said there's been plenty of times in history. They ten years twenty years thirty years as you want a good example in two thousand twenty. This isn't the great depression. This isn't twenty. Twenty stocks have the same performance as long bonds for the last forty years forty forty years. That's a long time to wait for stocks outperform bonds. But here you are complaining about a manager that's underperforming. Six months starved for this long winded answer. Not even an answer but just rattled diatribe as people think about an investing approaches in committing capital. I mean going back to the old robert. Kirby coffee can portfolio you know setting up a realistic timeframe on how to think about allocating but more importantly nine nine percent of the time people spend is on the by decision. What should i buy gold. Good bye should i. What about the fed. How much allocate. Us stocks or foreign stocks expensive and almost never. Does anyone established sell rules when they implement the by you ask. People on. twitter is like ninety five percent. People don't have any cell rule when they put the by and plays in. So why does that create problems. Going back to the beginning of the discussion with You know the behavioral side is people are just going to wing it in so unless you have some parameters what are you gonna do if it underperformed you're going sell it If it outperforms you'll leave it and keeping maybe add more right And that's honestly probably backwards the way it should be ignoring all the red flags in reasons to actually sell but try writing it down you know listeners for not only just allocation your manager your stock pick whatever it may be then that's important because Looking back at times in history when you start to panic. What's going on that that's when the fractures creep in in bad performance Really starts to take hold in the really bad cases When the entire goes down the drain so thinking about these. What happens when you think about twenty year. Time horizons right you can. You can talk eloquently about them. And i think you brought it up. I think about it often is wish we call them investments that we call him savings because that's what they are right and we concentrate to get rich whether it's our our business our employment and then we diversify to stay rich and that's our savings that we've accumulated that we need their need them to be there when you need them and i wonder if we're by calling them investments everybody thinks about the buy side like i just want to buy something that's gonna make me even richer instead of thinking about. I need these savings to grow prudently over time. I think tony didn't send it recently as great as portfolio managers We should think about it more as a practice. A medical practice and we need to have the clients what they need not necessarily what they want. And i thought that was an elegant way of looking at it but part of that is by having your dozens of your doesn't eat. Yes you get to see. The flow is going in and out is it. Just mind boggling saying how much people are moving in and out of your eds. I would like to think that our investors are somewhat We for the greater part of the twelve years this firm's been around we've had no sales team We just hired some this year So so most of the people that have come to us come from some of the content or pre-selected based on our ideas right. It's not someone you know them over a steak dinner. Hey should buy these funds. It's usually people reading something Coming to the conclusion on their own. So you know. I love to think my investors will be well behaved in and do the right thing but But i think it's a struggle for all of us you know and and we often ask people. Do you have a written. Investing approach policy portfolio to fifty pages like yale or harvard endowment would be maybe it can be one page maybe. It's hey i got sixty. Forty rebalancing once a year. that's it. God bless you but do you have an approach. Is it something that you can share with your neighbor. We talked to people about this concept of like zero budgeting zero budget portfolio. Where right down your ideal portfolio. Is that what you currently have. And almost never is people have what we call sort of this like mutual funds salad where they've Thinking about your garage right all these things you've inherited over the years if you went home drove home tonight pulling your garage. Would you buy all those things tomorrow. Of course not i mean. There's like a old aquarium. That's been sitting there for twenty years. Like would you buy that. Off drags us know. You'd probably by none of it. But you have a psychological attachment these investments and so this sorta spring cleaning. It's a good time. We're recording this as a chance to say if i wipe the slate clean. How to blink portfolio would it look like and then can i come up with rules of how i'm going to behave. What interest rates go to twenty percent. What if they go negative. What if gold goes to ten thousand. What if a gold goes to one hundred. What if crypto goes on and on and on. How would i adapt and and going back to comment. You made that. I think is really important. Is this concept of wealth preservation in so we did an article four part series. This past year called get portfolio the stay rich portfolio Investing in a time of of crony virus. And lastly was how i invest my own money in detailing specifically what i do with my money which really should be irrelevant to most people but people like to lee see voyeur. In on how people think about it i think is instructive. But the but zooming in on the stay rich portfolio Mean looking at the family office. That just blew up this this past couple weeks so many wealthy people and you go down the list My favorite up till now is battista in south america also worth. I think. Thirty billion this concept of concentration or leverage Applies to so many people is is the portfolio that often gets you to be. Wealthy is not really necessarily the same portfolio. You should have when you have thirty billion dollars. You don't need to be leveraging five to one Because the worst thing that can happen in our world. It's the same thing into casino. Is your you blow up. You lose all your money because then you can't bet you have no stack. You can't play the kick you out maybe get a free buffet ticket. But that's about it and so it's interesting because this narratives taken hold in a new place this year which i hadn't expected but we had written this article about stay rich portfolio because most people if you ask them. We love doing these twitter polls Illustrates how most people think 'cause they can be honest in anonymous is we said you know how big have the drawdown so peak to trough loss on bond's been historically and most people in in t-bills included most people said you know zero to five ten percent after inflation by the way and the answer for bonds over fifty percents. You lost over fifty percent at some point holding what most people consider to be the single safest investment. And so i said let's do a thought experiment. Is there a way to construct a safer protection against inflation and losses based on a couple of metrics biggest draw down volatility one year loss in it turns out that if you invest in what we call the global market portfolio not too different from sixty forty but basically invest some and stocks and real assets in bonds. It's actually a much safer wealth preservation tool so it has a two three percent higher return than just bonds or cash but it actually has lower volatility lower drawdowns Lower one year loss which is crazy for people to expect. And so no in. The right mind is going to go. Invest their safe-money And this applies to corporate treasuries to and so what this has been co opted by the crypto crowd. Right there saying no. You don't want to put your money in in Cashing bonds because the fed and inflation lose money therefore you should put it in crypto which is interesting and good. That people are thinking about reservation. Might take away as a little more Unconventional than historical. But not quite as quite as much as micro strategy in sailor on it. But i said look you have to invest in a in a portfolio and at least the historical evidence is irrefutable. It's a safer or folio Anyway in neither cases it you should be There's all william bernstein quote Where he's like you know you don't have to keep playing the game once you've won in so many people make this mistake of being wealthy having money and then continuing to risk it all for some elusive goal and having to think back about. What's the point of money in the first place. Right it is it's not just to accumulate as much as possible as my mom used to always say can't take it with you right so Why is it there in the first point. And then how do you protected and so anyway. blot the commonly held beliefs. The first one we touched on stocks outperform bonds but also that bonds are safe or cash is safe i think is is the safest investments is a truism that people repeat but it's actually pretty dangerous and i know you agree with me on this. I've been talking about it for a while now. It's like. I think that i want to go back to like a pre nineteen eighty s era. Where you know. Or or pre the last twenty years where people can't look at their portfolio on their phone ten times a day. I want him to go back to having a safe portfolio for their savings and forgetting about checking their portfolio to go back to their daily lives and enjoy their family their hobbies their business and forget about the saving side. We we've co-opted this as a form of entertainment where people are checking their account ten times a day in. It's just really. It's really sad at the end of the day for me. we did. Another article called The best way to add yield your portfolio. And we kind of demonstrate. We walk through. At how much do make per hour. How much time do you spend on investments per week. Here's how much alpha you have to generate to make up for that and the takeaway was basically you should spend zero time on your investments. Look it's a hobby. It's what you enjoy doing that. Separate but for the vast majority of people vast majority of institutions. They should set up an investing approach in. Just let it let it were in the background. Spend no time on it or very little time on. in fact we're like look if you spend amount of time improving yourself you know continuing education getting a better job of applying or running aside hall How much you save and invest trump's what you invest in over the long period is not even close to start to save and invest in your twenties or younger That has infinite better outcomes than you know your alpha quest to get an extra one two three four five percent. People don't like that because that's the boring blocking and tackling But setting up guardrails for yourself. You know i joke. That vanguard has a user experience that god. Awful i mean. It's they're there for a multi trillion dollar company. You haven't account vanguard you're like this looks like it was built in the eighties. This is horrific in part of me is like this might be intentional. They want you to not come back like they're never gonna have confetti when you make a trade right They're gonna make this kind of joke. The most alpha average generated in my career as i was transferring account to or from vanguard it took like three months during the market downturn so it was because of vanguard so antiquated but coming up with this concept of you know the coffee can There's the modern equivalent like betterment. Has this robo advisor did they. They try to nudge in the correct direction. You know if you wanna make change your allocation or trade. They'll do pop up and be like hey f y you're gonna have to pay some taxes on this and they say a lot of people abandoned their fuel hey paying taxes right So i think there's a thoughtful way to eventually push people in the right direction and behave I don't have any easy answers on what that looks like yet but but again coming up with that written guidelines. I think can be a good start. I think you've you've changed your mind over the years on different train. Liquidity illiquidity where you always want liquidity. But then you've seen the maybe the benefits of that illiquidity premium those guard rails and making it slightly difficult. I think we had a brief discussion in fort. Lauderdale once about you. I know you're working on like how could you apply like p. Style illiquidity is. Make sure you put guardrails on people's behavioral bias. I always wondered if people held like a basket of your etf at like interactive brokers per se and then Used at like an e lock. So you're saying just be fully invested and using the equity line of credit that you can get that pass through liable for with interactive brokers. Does that allow people to then. Just hold that notional portfolio value. And just take little you know. A few percentage points here and there for any sort of a annual needs. Is that a way to solve that. Or have you come up with some better ideas about trying to keep people fully invested for the long term. So much of this comes down to psychology. You know. I'm of the belief that i'm happy. Investing all of my savings and checking his account right with with exception of day to day expenses on a monthly basis. But going back to that what we talked about earlier on. What's the safest account. I actually think that's quote safer is gonna have higher returns than than cash only Not a lot of people believe that but but i do and so coming up with a structure that that again had tipped betterment. But there's plenty that are just fine. I i've invested in over two hundred and fifty private companies at this point in the beauty that is once you invest in them in startups. Like you can't sell it like there's no exit until they get murdered or choir start paying dividends in. I love it because you know as you started thinking about investments If you look at the. Us stock market. Most of the research has shown that five percent maybe ten percent of stocks deliver all the returns the mcdonalds the amazons. The walmarts google's the apple's you have this huge power law Outlier to the upside. And that's why the basics of indexing works going back to the seventies you know you do a market cap weighted index. You're guaranteed on these winners in historically that gives you that eight percent return right Two thirds of stocks underperformed abroad index. About half have no return over their lifetime in about a quarter straight up go to zero Which is one of the reasons. Stock picking is hard active management's tough and so this basics market cap weighed indexing and passive in indexing gives you guaranteed on the over time and we can get into the problems with that of course but So you you definitely own the winners. But what most people do when they're investing in stocks. You gotta stock and it doubles hallelujah. I mean you're excited. You're thinking about the case you're gonna take your thinking about the house you're gonna by going to the club pop bottles right But often if you look at it there's a couple of great books One is by mayer on one hundred baggers and there's a much older book on the same topic and the path company takes to being a a a double but attacks making ten times your money. I mean that's equivalent of bitcoin. To six hundred grand right at the world would would ignite has stocks all the time not just ten x eight hundred x right Hundred times or money and so looking at these hundred baggers over time. What's the biggest criteria while it takes like a decade. You know these compounders unit. It's twenty fifty percent a year. it takes a long time but the problem is most people. Jerry parker of the old turtles fame had a great quote. He's far may murder. Sorry jerry but it was basically like People are hopeful with losses in basically afraid with gains. Like they'll book the gains very quickly. And if you have a stock. The doubles You take it out right. And then it goes on to to five ten fifty one hundred x. That's where all the money gets made and it's really hard to do. It's really hard. Because comes a bigger and bigger part of your portfolio. And so the hack that you reference on being private and the illiquid nature people understand this with housing every single person listening. My parents bought a house for fifty grand. Now it's worth five hundred grand. This is why you make money on housing over time in the modern equivalent is i bought a house for million dollars now worth to over the last year you know. La my god It's tough to watch as a as a local renter But you know it's the same thing with stocks in so the private side forces you into that illiquidity and so having a private mindset. I think is important but how many of us are willing to give something. Twenty years amazon. Perfect example how much is the media like saying. Hey look you just bought this at ipo. You're now worth one hundred million dollars or something but neglects the fact that you had to sit through multiple ninety percent drawdowns including i think ninety five percent down on its way to multi trillion so It's hard but for me at least saying. Hey i'm going to do this in private. Startups is actually big tax benefit to listeners. We don't need to go down this. But google s b s is essentially a massive tax benefit to start investors investing in companies less than fifty million Market capper gross assets You you can essentially pay no taxes on that investment which is incredible improbably. Probably i think the most impactful tax legislation the last ten years. The no one knows about but But it also has the beauty of you're stuck in it so It's it's a way to so much of this comes down to framing. How do you think about it because once you think of in terms of i can't sell it you don't spend any time thinking about it. There's no there's no mental space in your head. That's getting taken up by something. You can't do anything about. Yeah when you said the amazon only four people have held amazon jeff his parents and his ex wife and i think that helped through that timeframe. I always wonder now about like you're seeing housing was this people don't realize there was a forest saving mechanism and i have friends that are working on all these tech startups to like. Fractional is homeownership. And all these things like. I'm afraid we just remove that entire historical precedents when we make this more. Financial is liquid fraction is market. You have any thoughts on that. I agree you know Look at the the hard part in the motivation is we want everyone to be an investor like there's no greater way to increase your wealth over time that investing in businesses or investing in assets that produce cash flows like real estate. We talk a lot on our podcast about farmland We come from a farming family in the mid west and so Things that pay you. People love to think in terms of passive income. Right they. they picture themselves on the beach sipping claudia's and just getting checks in the mail But the reality is that's true. You know the talmud we wrote about this in our global asset allocation book looking at portfolio allocations. And they were talking about this. Two thousand years ago said let every man invested third and business a third and land and the third keeping reserve and the modern equivalent to me is stocks bonds and real assets like commodity companies in real estate. But that's a pretty damn good allocation and it's outperformed the vast majority of allegations over time But having that longtime horizon in kind of sticking with it is You know there's a couple of areas that i think real estate for some reason generates a weird Thought process that doesn't translate into other areas. I think people get it when it comes to real estate. You know because real estate's not particularly like that fantastic of an investment in and of itself. You know it's fine on a sorta nominal basis. It keeps up with bonds. If you rent out it keeps up with stocks maybe over time but the whole key is forces you to pay that mortgage right. That's that's the equation that matters. It's not the you're so smart to buy a house and a great location and God forbid you have termites and black mold and and other problems in costs. But it's that you would spent that money. Otherwise morgan house has a great quote is says most people want to be millionaires But that's not actually what they want. They wanna spend a million dollars in. That's the exact opposite of what it takes to be a millionaire which is to save and invest and thinking about that in terms of housing. Really anything you know stock investing to know you put money in the market. We were Talking to us giving a speech in ireland at trinity college and was talking some students and pre pandemic. And i said you know. I think it was around spring break time and i said you know many of you are considering going to. I don't know visa Mediterranean whatever it is referring break. And you know there's a cost to that. Maybe your backpacking. Let's say it's thousand dollars two thousand dollars as a or you know you hang out here and You know not spend that money and put it in investing account and in twenty five years that taxes in fifty years in hundred axes and would you like to have two hundred grand at retirement like that'd be pretty awesome right. Can you have empathy with your future self. Can you lock it away that long. I said now the correct answer is probably go to visa. You may meet your future mate. Probably a lifetime of memories but thinking in terms of how do i one hundred x my money just by putting it away and locks In letting it sit and just compound you know is is a hard task. But that's what builds the wealth overtime it shows. How much. I i like and enjoy reading your blog. Post is that i know you brought up black mold because you have personal experience with that but i want to know about your blog. Post though too is like you're too soon. Yeah you're transparency and also skin in the game so my understanding is like you bill your tail. Etf for your specific needs. Is that fair and tell me about the tail. Etf you know. I put all my public assets or funds in my goal in launching these funds. Are there things. I want to invest in and we manage about little over billion dollars across the fund lineup and But going back to the earlier criteria you know there's plenty of other categories were vanguard is just fine and You know we're honest about that and say we'll use funds from. I think we funds from over a dozen different companies so tale We wrote a paper called Worried about the market. Maybe it's time for the strategy or something a number of years ago and the thesis was we were looking at A publicly traded fund. That would be something like an inverse or tail hedge and You weren't happy with the publicly traded choices out there in so we wrote a paper with this thesis and was let's say you have a great portfolio You know what are the steps most people own. us stocks. What are the steps to start to diversify away from that in protect when that biggest risk which the vast majority of investors have in the. Us have you talk about their allocation. It's mostly stocks even if it sixty forty stock risk dominates portfolio So the volatility everything is determined like ninety percent by the stock allocation and of the stock allocation. They usually put about eighty percent in the us so the foreign irrelevant. So it's basically your portfolio's us stocks. How do you diversify that and kind of walk through. The way is in the common sense methods. The first one is If you have too much of a risk you don't have to take that risk. I mean the supplies anything. One hundred percents portfolio in crypto. And you can't sleep. Don't own hundred percent crypto right and so if you have one hundred percent stocks and it's too much it's giving you night sweats. Because you know that. They've declined eighty five percent in the past And it might happen again while. Don't much that simple people don't like hearing that You can diversify into other asset classes foreign stocks real assets bonds You can invest in certain strategies value or moment momentum in trend and do all these things. however let's say you still want to heads that stock allocation and we can get into this. Why of particularly now is probably A really thoughtful time to be doing that. This is well known by almost everyone seems to be at this point. Almost a game musical chairs where Every big shot out there says this is probably the worst opportunity set for sixty forty in history bonds. You know bonds. You can with certainty. Say they're going to do about two percent for the next ten years on a nominal basis. I'm rounding up. i'm generous. I'm an optimist In stocks probably about the same. Unfortunately we're at a long-term pe ratio. i love using cape ratio. Everyone loves to dunk on that. So pick your poison of any fifty other indicators on valuation most of which are at an all time high You know sentiment etcetera. And so we're we're looking at low single digits for us. Stocks ratio is more modest than most of them by the way. But it's it thirty six. Maybe thirty seven. I think we hit an all time. High for reference. The high and ninety s. When i was in college was forty five. So i'm ready for that to be taken out. But it's a little bit as low as five in history and on average around seventeen but other countries have gone crazier. You've had indian china or in the forty s and sixty s and the mid two thousand other countries japan. My favorite bubble. It almost a hundred in the eighties And that was no just like tiny economy. That wasn't like it's like you know. Greece or something. I mean in japan was the biggest stock market in the world at the time and is still a top three economy so sixty forty looking at this and saying look. We're the first thing you can do. Is they look diversified. Do all these other things. Move your expectations low. Take your medicine. swallow advil. Celebrate your gains. Which by the way for. Us stocks is not normal. If you look at decades going back to one thousand nine hundred us stocks versus the rest of the world the us beat everything and beat the average in the twenty Teens it happened also in the nineties but before that it hasn't happened since nineteen ten's so for the people that are planning on projecting. Us stock dominance forever Take take a look at history. That's that's a Not normal getting back to tail risk so once you have these risks and understand them and say look okay. Maybe i wanna heads this. What are my choices and if you look at all the asset classes when. Us stocks have a haymaker bad day month. Quarter down twenty. Which is certainly happened many times in the past what has helped and the things you expect not to help don't foreign stocks help. Real estate doesn't help commodities. Doesn't help the things you expect to help. Bonds they help on average not a ton but they help kamata gold. Like you're crazy. Cousin helps sometimes doesn't help. Sometimes but on average it helps and then trend helps but then something like tail rhys. You can't guarantee no world but is almost guaranteed to help because you're literally puts in the way sorry the way we outlined in the paper with something as simple as You're you're buying a ladder of puts on enrolling on the stock market so just like insurance right life insurance car insurance. It's a. it's a monthly premium until it gets whacked and then and then it helps so in the paper. We paired it with bonds and showed on average this. This is something that Could be very useful either as tactical investment as an all the time behavioral. Hack so think back to last year when you're watching the futures overnight and they're down seven percent and everything's read on your screen. Does it help you get to the finish line by at least having something that's green and not panicking and selling everything if that's part of your plan that we referenced earlier right you're written plan but the really interesting takeaway for me is presumably a lot of people listening. This are also involved in the asset management financial world and so we said in the appendix which no-one probably got to we said if you look at your personal exposure as a financial adviser. Let's say your financial advisor at morgan stanley. You don't know you're probably four times leverage the stock market you own stocks in your own accounts. Retirement your family's us stocks Your is directly tied to the stock market because your client portfolios. They go down fifty percent. Your revenue went down. Fifty percent clients often panic when times are bad so they leave and market bottoms. Which case your revenue goes down more and if you don't own company you have the risk of getting fired because the stock market and buying hold is heavily tied to the reward economy so recessions You know unemployment going up. It's all highly correlated so you can make an argument that the average financial professionals should know. Us stocks in fact. They should hedge them. The same way of corporation would have like a jet airline company mayhem. The cost of of oil jet fuel a food company may hedge the cost of their inputs. Whether it's or soy or corn everyone else. Does this in corporate america asset managers doll in financial planners. Don't we do going back to the early part of this discussion on corporations talking about their balance sheet. We own a big slug of this tale refund in On our corporate balance sheets. I honored is a huge portion of my own personal investments for that same reason and so no one else really agrees with this. Sorta way thanking a half talked to a couple of big asset managers that have implemented a similar concept. So were we're a bit odd balls here but if you think about it to me it it makes a lotta sense because again the whole point of this entire investing world is disdained. The game In so having money when it hits the fan whenever that may be But twenty twenty is a good example. Does it help you survive. Does it help you sleep at night. Does it help you get to the promise land to me. That's that's the whole point. Yeah the best compliment we'd ever get is is survivorship brain is just surviving i actually linked to your your quad leverage paper to financial advisers all the time i don't they really wanna see that the other way we like to talk about is my partner taylor. Pearsons coined the term entrepreneurial put option with using tail risk because like i like to talk to financial advisers about their clients if they're an entrepreneur business owner than they also own a house they owned cars collectibles quadruple leverage too. Long gdp which is stocked beta. So why are you adding more leverage to the stock market for them. You should be thinking about that. Tail risk hedging when you're talking about you're combining with the bonds kraivong things like eighty five percent seven to ten year bonds like why did included the bonds. Is that because you had include something in the eightieth and that seemed the most prudent allocation or so the way we do it. Look there's infinite permutations people ask us all the time. Why do you so in the t.f. We do a ladder of puts from three to fifteen months. We wrote every month. We target about a percent of assets under management each month that has an added benefit of when volatility super expensive think in march two thousand when vix is like eighty. You're buying a lot less puts than when it's fifteen like it is today To me that seems a little bit like commonsense and What's the money -ness of until we tends to be sort of zero to ten percent out of the money so And then we just let it float and so you know the the profile is that you should roughly expect a one to negative one return stream in the bad time so if the market went down ten percent tomorrow we'd roughly expect this fun to be up ten and you wanna lose less when when times are Are good which is point like you wanna be losing money on this on most of the time. Because that means stocks are ripping in roaring in so we actually just launched a foreign version of it as well so we have tail and fail and we may have bail in jail if we ever get to the bond portions as bond yields. Go up But you know thinking about it as as the bond exposure you people ask us all the time say well. why don't you us long bonds zero coupon. Why didn't use gold. There's a million different ways to do it. You know and this applies to all funds. Why do you own one hundred stocks instead of fifty and so you know you have to settle on something for me. It's always like what do i wanna do like. What do i wouldn't put my own money into and my okay with it. Does it check the box for me. A lot of it is is it simple. Can i understand it. Is it our narrative that's just basic and make sense I'm not trying to optimize on an uncertain outcome and so we settled on ten year bonds. Look with thirty. Define t-bills be fine with they. Were all probably be fine with tips. Be fine bonds. Historically again have helped when it hits the fan usually they moved to bonds in. You've seen the opposite over. The since march right bond yields have gone up which is good in a way because i think it helps reset these sort of Capital gains possibilities when it does hit the fan but again going back to the house insurance life. Insurance best possible thing is our house. Doesn't burn down like you don't want your house to burn down if it does. You certainly want that insurance so to me. It's it's so much time we spend in our world optimizing on a. Hey what's like the efficient frontier. Like what is the best investments. How do we optimize for the best return and to me is the vast majority of individuals. Susan's i talked to. They may say they want that. But it's not what they really want right. They want something That probably is a little bit smoother as a little bit lower volatility and drawdown losses. Because people don't really freak out ten percent down in their portfolio. They're grumpy twenty percent in. It's it is exponential kink right. It's a power law every ten percent after that twenty percent. You're probably fired. They moved to someone else And then on down. Thirty forty fifty. You can't really find an asset allocation that that doesn't lose a third at some point in history sixty forty in every country around the world has lost two-thirds by the way listeners. So that's your base rate You know So sixty three percent breath liang in the one thousand nine hundred sixty zero that. Yeah so if you're if you survive and lose only a quarter or a third at some point. God bless you. You've done you've done better than most and i think about. This isn't like you said there's a thousand per mutations and we can talk about an ad nauseam so it's not second guessing what you created. I just want to point out a few of the pros and cons of like of your put ladders closer. You are to the money the higher the believe it's gonna be understandably with a lot of a lot of Fixed bend for tail risk which is great like you're saying if while we're in risk on It gets cheaper and cheaper right before the crash was fantastic but if we have a second or third leg down it's hard to get adequate coverage so i'm just curious like how you mentally went through those calculations when you're creating exactly what you wanted. I'd spent like six months building. Options database On my own by scratch trying to implement infinite variance and then realize we could get ninety percent of the way there with some like published cebu indices so that was a wasted. Summer could have been better spent serving in skiing. I dunno but to me again. Like i'll be the first to tell you like this isn't a good investment strategy. You know you don't want to buy this fund and hold for the longtime because eventually you'll you'll lose all your money and that's an odd statement from from someone as the fund manager. But but it's the truth you know. And so hey you wanna short this fund and get short bond exposure and you short puts That's fine with me too. And but understanding any asset class any strategy over time has its day in the sun and in its day in the shade and so if we did this interview admit to thousands. What are we talking about. We'd be talking about emerging markets and the bricks and real state just crushing it. Us stocks would be laughing about. What a joke you know they they popped and ninety nine two thousand and and it's been a decade and nothing If you noted japan and we're having some beers and chatting with japanese investors they'd be saying who and best buy and hold. That's not even a thing. It's been thirty years Ironically their markets breaking out and doing great over the last couple of years but thirty years that bubble where most of their assets went down eighty percent you know in or more so Thinking about the sort of tail risk off you know to me it's It's so easy to optimize in our world of quantum in history and data. But the reality is you're trying to come up with something that is survivable somewhere in the middle. So yeah We eventually settled on sort of that portfolio. But look there's there's plenty of variance that are probably just fine for the state of goals. Yeah like you said they get that structure negative correlation so almost push back a little bit on what you said. But i think you're right that like if you just how that you know you're gonna bleed during risk on yours quite substantially but it's about the peering with a structurally negative correlated with with your stock portfolio and that rebalanced over time can help compound your wealth but more importantly it's providing a convex cash position. When you need it the most. They don't make any stupid behavioral mistakes. So how do you think about like the pairing of like kind of those. Those two opposites. Hi i'm abington host of the real vision daily briefing. You're listening to real vision podcast. Today's episode is sponsored by monday. Dot com the business world constantly changing which means business owners and managers must continually evolve to the only things not keeping pace are the apps and the software. We use to work until now monday. Dot com work. Oh s is a flexible platform. That's built for the way teams work. 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We did a presentation this past year. We were talking about as the. Us market is kind of melting up and for perspective Listeners by the way we talk a lot about valuations not so much yet today but For reference the us market we have it as a forty five countries that the second most expensive in the world again. It's not as bad as nineties. But it's it's not good over. Forty is where we start in my opinion pure bubble territory like you. You start to consider Really dialing down hedging it but but it's yellow light in my mind. Red light is when the trend rolls over. We'll get to that in a minute but just for reference foreign developed is totally reasonable is trading it. I think a long-term pe ratio in the low twenty s for emerging is downright cheap down around fifteen In the cheapest bucket twelve countries The cheapest in the world is down around thirteen in many countries. Like u k which is historically zigzagged with the us Is it like fourteen so you have one of the biggest valuation spreads history. Us versus foreign in particularly the cheap stuff and people say well. No there's a million reasons why. Us is allowed to be expensive. They say it's had evaluation premium. We have better companies rule law stable geopolitics all the way down the list But the reality is that there's been no historical valuation premium in the us. We asked people. What do you think it is. And they'd come twenty percents fifty percent whatever Going back last forty years for example. There is none. It's the same valuation as as foreign developed with surprise a lot of people but they oscillate right the horses trading places And sometimes foreign does its coin. Flip in give near fifty fifty foreign versus the us now the us has outperformed over the past seventy one hundred years but what surprises people. You say how much that has come since the financial crisis right you've had this massive valuation multiple expansion everything was trading sort of the low teen valuations in two thousand nine. The difference is the. us's ripped all the way up to thirty seven where we are today. The world hasn't so much it hasn't caught up. So how much of that outperformance of us versus the rest world comes in the answers all of which is crazy to think about the Seventy years that's a lifetime For for most people all the performance of the us and its cherry picking a little bit. But it's come the last ten years so so giving pause but that's just some reference points. What was the original question. I've already moved on. I've already forgotten where we talk about. How do i get into evaluation. Yeah this thing that actually about like how you know like you said we're we're getting into bubblicious territory. Unlike the us stock market but having something like a tail or tail risk or till etf helps you comfortably sleep at night while still holding more maybe portion to equities than you normally should instead of dialing back. Which would be more appropriate if you're still going to yolo. Equities at these valuations. You probably need something like tail risk. That has a strong correlation in quebec city paired with right so i forgot what i was gonna say. My presentation we did was called a tale of two tales. Like most people want focus on the left tail and in protecting the bad side. But you the whole point of the long term is you want the right tail you want be investing in businesses great stocks over time. That'll help you compound And that's the whole point of this game but you have to stay in the game and so we said look if you want exposure to the right tail. The us is melting up a better place to be in the surprises. Lots of people I think over the last year had sort of three inflection points. There was the bottom in march. You had interest rates in the us Bottom i think summertime in the election so you can pick your inflection point but i think the regime has changed you've seen small caps start to outperform you've seen value really outperform you've seen foreign outperformed the dollar on commodities rip up so. I think you've seen the regime change already but my point was on the right side. If if we are gonna have melted. Upper things are going to consider going up. Consider foreign stocks because there are a lot cheaper. Consider the cheapest countries in the world. My favorite trifecta is cheap. Hated in an uptrend. And so you see that. I mean look at europe eastern europe some of my favourite countries czech republic even the old pigs. Russia has been outperforming the us over the last five years. A lot of people don't know that And they're in a single digit. Pe ratio in so my exposure on the right side is i want global stocks and a lot of people. Don't understand this. Us is only half world market cap all the us investors listening that's put eighty percent in in the us and as a percentage of global gdp. It's only a quarter so you can make the argument that you could or should have fifty seventy five percent in in foreign fifty percents the vanguard starting point of global index. So if you have eighty you have a massive overweight. Us stocks so getting to fifty seventy five percent. I think is totally reasonable on top of that if your market cap weighted investor you're putting most of your money in the second most expensive stock market and the second most expensive. It's ever been in history. Does that check the common sense box. I don't think so Templeton wrote about this one hundred years. Not quite a hundred years ago but said look as valuations. Go up just have less than stocks. You know move from eighty percents to sixty to forty two thousand. That's incredibly sound. So you want exposure. The right side in my mind is much better. Informed emerging the cheapest countries on the flip side to get their yes hedge hedge. Your left side heads the out The tail events We haven't gotten into trend following. I think that's another great way to go about that. But but yes the tail to me. It covers both bases the tail and the left tail because if we know anything about markets is that normal market returns are extreme. you know they. They don't sit there and return eight percent per year. It's plus twenty zero minus twenty up sixty. You know it's all over the place. And so i think that's a way to go about a vast majority of people though are only exposed to one outcome. Yeah that's a perfect segue you actually three or four things actually segue perfectly into talking about like the trinity and so i you know a lot of family and friends when i first me. And they're they're newbie. Investors the first place. I send him actually as the trinity white paper just to learn about like proper diversification. But maybe we can start with that with what you alluded at the very beginning. Your favorite book is triumph of the optimistic. What does that tell us about like different asset classes over time. Let's get you some more billionaire friends. I'm ready for some more flows. You know as you think about the history of markets it's like watching game of thrones. It is a history of crazy things happening. I think to be a good investor. You have to have an appreciation for history to at give you a base case. They look there's markets that have straight up gone zero china russia closer capital markets. That thank you very much Cultural revolution bolshevik community. There's been times the average country has gone through two-thirds loss eighty percent ninety percent. That's normal you have Various outcomes if you look back in history the us has been one of the positive outliers but a bit. It's a bit anomalous. You know went from fifteen percent world market cap in eighteen ninety nine to fifty five percent today but other countries went from twenty five percent. Fifteen percent to you. Know if we're betting in eighteen ninety nine and you know you. And i were in a coffee shop in london. We'd probably be betting on argentina that has been an absolute basketcase austria one of the worst performing countries in the world. And i i think the best off the update it south africa was up there but obviously a much smaller market. So looking at the the beauty of history. There's a lot of other takeaways. I love the five to one rule after inflation stocks have roughly returned five percent bonds around two and i'm rounding up and bills around one You could probably in in today's interest rate world. Call that maybe. Five one zero five zero zero. But that's sort of expectation and then going back to what we talked about earlier mixed in with periods where stocks can go an entire lifetime underperforming ponds when we talk about trinity. The background is the starting point. We always tell. People is the global market portfolio. If you were to go out and buy all the assets in the world what is your portfolio. Look like it's roughly half stocks half bonds in of that half. You ask have foreign Class in the world the us investors don't have exposure to his foreign bonds. I don't know hardly. i don't know really any investors that have exploded to form bonds. But that's roughly the world in and that's been a great portfolio over time What's the problems with that The problems with that is that it's Market cap weighted. So if you go back to the seventies the biggest the big beauty benefit market cap weighting as allowed people to invest. Because you don't do anything for almost no cost. So vanguard is now a multi trillion dollar asset manager because they figure this out and it's a good portfolio but the problem with market cap weighting is it has no tether to fundamentals whatsoever. It's it's trend. Portfolio which we love trend fine right is as a stock goes up you and more and more of it as it goes down you unless so you're guaranteed on the winners and more of them but there's no tether to fundamentals and so you can do any other weighting methodology and come up with a percent better returns. Equal weight could valuate. You could invest based on you know as a ceo wearing a hat or not So it doesn't matter that should outperform market kept waiting for the big invention was low-cost anyway. I digress this global market portfolio in twenty twenty one. It's amazing time to be an investor because you can get zero zero four basis points or something as an etf in short lending that's probably negative. I mean unbelievable right like that's that's incredible. The problem with that though is is buying hold is is tough investors as you mentioned earlier like that portfolios correlated to your life your human capital gdp to everything to unemployment that portfolio does poorly when everything else is hitting the fan and so That's hard it's hard for a lot of people to watch go down as it will and have normal losses and drawdowns ten twenty percent and maybe fifty percent at some point but the problem is you're losing the money when you don't want to be losing it which is when you're probably unemployed Great depressions when times are really bad. Think back to last year you know feels like ten years ago but during the pandemic when things written the fan your portfolio getting smacked too so investment strategy we love. I mean you can do things to help within that you could tilt towards value. That'll add returns. You can tell towards momentum but none of that is going to protect against the the problems so there's another investing strategy going back to the beginning of conversation coming full circle talking about trend following in our first white paper acquaint approach to tactical asset allocation outlined a very simple traveling approach on world assets and it was simply invested in them as they're going up You exited the safety of cash and bonds. When they're going down doesn't even matter what indicator us us use the ten month moving average us two hundred a you could use breakouts on and on and on we published a companion paper during the pandemic that. No one's read crypto. Friends will love it because the name of it is is investing all time highs of good idea. No it's a great idea and so we walked through investing markets over time that is literally the dumbest in simplest investing methodology. Which is you invest in a market of. It's an all time high. I think within five or ten percent. I can't even remember In if if it's not an all time high. You're in cash in it creams by old in every single asset class. Better if use a twelve month look back. Is it a twelve tie yes. I'm invested if not your cash again with a five percent. Tolerance ban creams by an old in every single asset class. Literally the dumbest simplest asset class but people hate all-time highs right like it's very uncomfortable to buy something an all time high anyway. Trend following the whole point of trend following is that you want exposure to the big moves as things are going up and you want to exit in not be invested in something as it goes down. Twenty forty sixty eighty. It's probably not gonna miss the five ten. Maybe even twenty percent moves down. You want to be out as it goes down something you wanna voice something going down eighty ninety percent and why is that important because drawdowns get exponentially worse the worst. They get so ten percents. Not that bad. that's where the kinks starts to happen. You know you go down twenty. You can own fifty if on fifty. It's not a fifty percent gain to get back. The one hundred seventy five. It's three hundred percent so avoiding the big losses. Historically the research shows turn following You lower volatility your lower. Draw down by using this approach. What's the problem with that. Why doesn't everyone do trim following while it has its own unique problems the main one. Is you look different year. neighbors making. Hey and the stock market Yellowing in the calls in jimmy and everything else and You're not so that's hard for many people The challenge of having multiple losers or having a low batting average people like certainty. They want to win with like ninety percent of their trades but historically trend following has a lower batting average. But it has big winners. And a lot of little caesars. So the problem is both investing approaches difficult. Buy and hold his tough trend long tough now. The good news is they tend to be a yin and yang. They tend to Trend following if you look back twenty twenty first quarter he say my god god trend following because the world looks like it's going to zero in. Why do i have money buying hold fast for the rest of your thank god for buying hold markets. Rip right back up and and falling probably lagged and so to me this concept which we call trinity Combines the two. I did a poll on twitter yesterday. Said do you have any exposure to trend following and travelling can mean a thousand different permutations there's managed futures. There's long short. There's people that trade one hundred markets around the world there's people to trade only five the big takeaway is you. You have some sort of exit in in In many cases you can short to. And i asked people i said. Do you have exposure. Following is like eighty percent said essentially zero or or am diminish amount and the funny thing about trent falling. You plug it in any blind asset allocation simulator. And you're going to end up with like twenty forty fifty percent in trend falling. There's a paper. I think it was goldman. Who did a historical simulation. it's at. How much did you put in chen. Fawing in the answer always was like half and they're like well we have to correct the simulator because we have to constrain this. Because obviously that's crazy. No one's going to do that. I said what are you talking about. You can't look back at the data it just 'cause you don't like it and say that's that's not right but it but it is right in the sense that so much in. Our world is driven by career risk. And what alligators gonna put half in trend falling. That's crazy well we do. We're probably the biggest outlier. I think the entire country where half of our base allocations in trend following strategies in both the etf and we manage accounts to do it and I think that's totally normal sensible but but for most that's the craziest thing in the world so And we have some funds purely do it in print falling. You know like anything. It's gone through its periods. I mean it really shined during the financial crisis But for most of the past decade has been kinda average two sub subpar. It's doing great again right now. Is as bonds have been taking most turned fars or short bond long commodities Doing well again. But you know that's investing approach goes back hundreds of years in There's even a a book that takes a eight hundred year back test. Catherine kaminsky On the topic so it makes sense to us. But that's That's nutshell thinking about. You're holding the global liquid asset classes and stocks bonds around the globe. You know buying whole trend following. And i think it was in the original paper. Maybe it was one of the supplements. Because i know you're a big fan of like farmland. How do you think about like real assets in combination with that if you were able to buy farmland or even commodity trend following. How do you think about that proportion so in the global market for foyer there's a couple asset classes that are not presented because there's not a lot of public choices available The to be. Our farmland farmland historically has been dominated by individuals families family offices into a more modern extent private funds and institutions like harvard yale. But there's not a lot of public options. I think there's like to read smaby the do it. But it's notoriously. I mean it's it's one of the all time best asset classes because it's not correlated to any of the other assets An attack great returns. So that's not representative. Single family housing around the globe is probably another one. There's there's more and more reads that have come up with with exposure to that but in general that's a massive asset class that is harder to allocate to but certainly more than farmland. It wasn't in the paper but it was in probably the article. On how invest my money. Where i'd say you know mine is modeled after this sort of talmud a third in businesses startups. So for me. That's been these two hundred plus startups a third in sort of what i consider to be a reserve which most people would be bonds. But for me is trinity. I going back to the safest portfolio. I think that's actually much safer than cash. And then lastly is the real assets in for me in the beauty of this for everyone. Listening is that asset allocation. Investing is very personal. You know in many people have investments. Think about your house for me. It's farmland where it's not a sharp ratio optimization for me it's a connection to my heritage in my family. It's fun to drive around the tractor at wheat harvest. Time if anybody be in western. Kansas hit me up in june You know you sort of have that family yes. It's a great investment but really. It's checked some other boxes to now. It also checks the pain in the ass boxes. You know we talked about a few years ago. We had a combine catch fire and burn down the entire crop like the it happens. Same thing with the house. The black mold know there's headaches and so there's very real argument to to minimize those headaches but So that side to me is i would love to be more. And we've done like half a dozen farmland investing podcasts On the topic. And then there's getting to be more choices out there but But i love that that part of the world as well So some there's some things you can include in the public markets or or not you know in a way that i think is is challenging and the crypto listeners. People love asking me. Say how do you think about this in in the global market portfolio. Where i say. The simple answer is just allocators. Percentage of the global market portfolio will probably up to maybe one percents now so put in one present position at sounds comically low for most Most out there but you know If it goes up ten x lucia now you have ten percent and and if it goes down it's no No skin off. So i think it's totally fine. As a percentage of the market portfolios as well one of my favorite papers. You wrote actually showing like if you have a global asset allocation portfolio both liquid illiquid trying to create all those things your actual portfolio weights. Don't matter as much as people think they do whether it's know made permanent portfolio risk parody. Ib portfolio down the portfolio. All of them are roughly the same over time all of them end up having a twenty five percent. draw down. so it's like don't stress yourself out too much to try to get broad exposure and rebalance over time. Is that fair. Yeah that was in the global asset allocation book and. We did sort of a fun horse tests where we said look. There's everyone on the media all the time. Here's what i think your allocation should be for buffet. It's ninety percent stocks ten percent t-bills for You know the permanent portfolio of harry brown fame. It's a quarter each stocks bonds real assets in gold or something. I'm blanking on it But we took does a dozen two dozen portfolios the most famous gurus. You know David swinson vail. Robert research affiliates Muhammed area and everyone knows it. How do they do back to the seventy s. You can take it back to the twenty to an the takeaway was what you just mentioned. Is they zig zagged. All over the place in the average spread between best and worst portfolio any given years like thirty percent which is why people talk about it. Right risk parity getting hammered this year but endowment doing amazing yada yada right. That's something to talk about. What's the fed doing what about gold. What about bond stocks route but over the full period You know the the asset classes are like a shotgun blast on the wrist return but if you zero in on the portfolios it's like a rifle sharpshooter to where they're within about one percent spread on cager over time i mean it's unbelievable like there's there's essentially no difference you know and again some do better in the seventy s and other some do better in the nineties than others but over time it really doesn't matters. This goes back to the concept of how much you save an invest. How you implement it. Taxes are one of the biggest things that people absolutely totally neglect fees. Another one But once you optimize optimize for all those ideas at the actual portfolio doesn't make any difference and we walked through in the book we said fire to give you a crystal ball and jason go back to the nineteen seventies And say you can implement this. You can pick out the single best portfolio but you have to do with. The average mutual fund cost that period. And that would have taken the best performing allocation with perfect foresight in made it almost as bad as the worst. So the the entire discussion of what people spend all their time worrying about the actual allegation over time for a buying whole portfolio again this very specific divine hold matters much less than people think. That's that's a boring sad takeaway. But it's the it's the reality of of of prudence. There's always boring. I guess at the end of the day but also to me. It helps people not stress out so much. So maybe that's the that's the the happy takeaway. But i want to touch on a few quick things. We wrap up is even outside of financial markets. Some of the other interesting things you do that. I really enjoy one. You reference twitter polls earlier and one the ones i want to thank you for that. I love during covid. You put out a poll. I think it was every week or every bi weekly do you or somebody very close to have covid and then every week that poll you would see like the percentage like slightly growing over time it does a great sentiment indicator versus like all the noise around us that so i just want to thank you. I'm casey van any takeaways from running. That poll you know in the depths of corona. We did oppose ambassador can go it up in march is said investing in a time of cronin and we said look. It's scary people losing their minds. you're probably locked in your house reading this but as a student as an investing takeaways a student of history you have to at least consider the bull in the bear case and i described a scenario that laid out like to a t. Here's the bear case is hospitals are ill-equipped their overrun vaccine is not developed in time. emerging countries are massively impact. The world goes into a tailspin assets. You know decline you. Get a brief respite in the summer. And then a second wave hits in the fall assets go down eighty percent like a total armageddon's which is what it felt like by the way in march. I said but at the same time you have to at least consider the bulk. Ace science prevails. Vaccines developed Politicians do a great job of coordinated global response In markets are hitting new highs by year end and people. Like that's crazy man. That will never happen. And here we are and so part of the polls you know in sentiment sentiments notoriously squishy at extremes and my favorite example is a i Poll that asked investors in already bullish. Stocks you bear stocks or you neutral and it's getting pretty pretty bubbly right now. It's not all time high. The all time high most bullish people were on stocks was in december of nineteen ninety nine these single worst month in the entire history of the us stock market to be bullish stocks because it was at the highest valuation. That's when people wanted. The most doctors absolutely insane when we're people most bearish march two thousand nine like you can't make up a more ridiculous outcome to the survey nailing it to exact moment and so the problem with sentiment of course is you know The magazine cover indicators. Everything else but so is is a bit of it was to try to just take the pulse of what's going on in the world and we have a a pin twitter twitter thread right now that i'm just adding all the signs of like the bubbly parts of markets right now and it's it's kind of difficult to read that thread and not want to sell your stocks and and You know hide out but But that's the thing about senate but the thing with markets you always have to consider both sides so many people Spend a lotta time. When they have an investment you have that psychological attachment to going back to your garage discussion and they only look for confirming evidence all day. Hey if you're tesla bowl what are you gonna read all day articles about how tesla's is a go to market cap your test bear exact same thing but the opposite but to be a great ambassador what you should be doing is looking for the opposite looking for holes in your thesis or holes in in what can happen and so part of part of that polls in ten Was to kind of see where we were and think about the possible various future outcomes. I mean there's a old kenneth galbraith's quote is talking about forecasters and he's like. There's there's the ones that Can't predict the future in the ones that don't know they can't predict the future like there's only two types and most people. We always say that the people would be much better. David they wanna be know saddam strike. They want to predict the future all day in twitter. This is what's going to happen. Here's what's gonna it doesn't matter is crypto stocks on and on But we always say they'd be better being fan winkle you know investing forgetting about it waking up in ten years and not mucking around with it but but that's the allure of it but at least consider the the various outcomes because that's what history is right. It's it's a constant surprise of good bad so this is going to be very rude but for all the content you put out on portfolio construction. All the great work you've done. Probably my favorite piece though was when you aggregate the best recipes around the world. And that's what i probably share them with people. The most says a foodie. I'm really appreciative of that. You know why did you like. Was that just figuring out your own cookbook. Are you gonna publish a cookbook with those those top recipes. Or i'm a qualm man and you know If you take recipes at its core and let's ignore noma let's ignore You know the the top one percent of restaurants but the vast majority It's just a formula. And if i give you a basic recipe you should be able to replicate it. If you're you know a reasonable cook and My point was in again going back to the curation topic all the top ten recipe sites. They may have ratings but they don't even let you sort by ratings they don't let us sort by Stars and so. I paid a guy in poland. Five hundred bucks in. I'd should've been fifty bucks because he didn't like ten minutes but scrape all the sites And give me a sort -able ranking of you know. It's like the rotten tomatoes is. I just want food. That is a chance of its ninety. Five percent five star ratings and there's ten ten thousand ratings it's probably chances pretty good versus the one that's one star in zero ratings and so you know We went through it and we came up with what we call the best recipes in the world. Maybe it should be cookbook listeners. If you wanna do it hit me up. i'm happy to to assist and fund that project and we went through and cook them and it's a lot of crowd pleasers lasagna chocolate chip cookies. That sorta stuff. You're never gonna get probably supersede salmon with a with a you know loose foam but You will get south that probably everyone be happy with but again it goes back that curation topic. I like someone else to do it i. It's too much work but I i love. I love cooking. So it's a. It's a fun distraction. I can't wait for the. Hey we're going to get on this one especially on real vision and twitter. But you and i both been philosophically pro bitcoin for a long time. We both owned bitcoin and other cryptos. But just like you. It always seems to be an a or b argument. There's a either extremely bullish and in vitriol side or extremely bearish right. It's either going to millionaires going to zero. But you and i have this idea of what about option c you know one of its kind of middling and quite frankly it's it's boring. It's not worth talking about. So you know how hard you deal with the world where you don't wanna talk about the thing everybody wants to talk about because you find it as a very frankly a boring topic you know. I'm a supporter of the crypto. Space like you mentioned. We have the whole ticker i would love to launch a crypto. Etf for twenty five basis points disrupt that whole space but As he sees not adamant about getting out anytime soon you often don't find in the world. The loudest voices are at the extremes politics religion. Anything and You know you find a lot of opinions in the middle is often. There's nothing to argue about. We actually talked about this and asset allocation investing. We say vast majority of people probably ninety percent of the big muscle movements. What we talked about earlier savings living within our means investing in businesses on and on paying not a ton of the governments who taxes. Most people can agree with that. Like those are the. So what are we. Spend our time arguing about. It's like the final five percent. One percent like is greece cheaper than the us things. That probably aren't going to have a massive impact and and it's the same sort of thing and the crypto world. You know we talk about a lot approaches like again. The trend following an all time highs stuff is applies wonderfully to the crypto space. So i i. I enjoy the roller coaster. I enjoy watching You know to me i. It's a portion of my asset allocation because it checks the bezos bucket of regret minimization. You know i. I wanna i wanna be there if it goes to a million But but to me ninety nine times out of one hundred one hundred times out of one hundred investing in startups in following that world. I love telling people even if you don't have any money goes sign up for angel Particular we funder in. Follow all the syndicates on there 'cause you'll see thousands of companies over the course of five years you'll see you know the pitches in worst case as you get ideas owned companies Ideas to implement in your own life. It's such an optimistic world versus public. Markets is defined by sort of negativity and to see these world changing biotech aerospace companies. I mean like invested in the company is doing the first commercial space station to me. That's what like gets my juices flowing. Or potential cures for cancer an m. r. a. or startups that are tackling inequality and and opportunity in emerging markets to me. I get really excited about that. So but each their own you know Whatever whatever floats your boat some people would say what we do is is boring too so who knows. Yeah exactly. And that's why. I i do want to highlight. I really enjoyed talking about all your private. Investments in those hundreds of investments in want to highlight what you said about. You've been great cheerleader for bs. I really recommend people go. Look that up. And that gives you a lot of optimism. Just looking at all those entrepreneurs creating amazing businesses but last question. You've you put it out there publicly that you would love to run calpers with low low low cost. Have you have any feedback any traction that anybody at calpers reached out to you. I applied i through the application. And i have to check. I'll look it up. That responded last. I check very publicly. I've said this on on twitter. Many times i said look the vast majority of institutions having needlessly complex allocation setup. Calpers is my god Probably the worst where they have hundreds if not thousands of employees. They're doing this neely louis. Ck online that said should calpers be managed by a robot the just showed that calpers basically owns the global market portfolio. so twenty twenty. You can do that for free right. They you can buy basket. You have some be done and so this applies listeners. If you are a big institution this The offer stands. I will manage portfolio. I will charge zero dollars. I'll put it in a basket of etf's in once a year we can do a committee meeting We'll have some beers. We'll talk about it or said. And that's it and you can fire your entire staff. You can Streamline operations in probably save hundreds of millions of dollars we actually have a asset asset allocation. Etf at the time we launched it was the first etf with zero percent management fee. So it's a fun to fund so it's like thirty something basis points And that ignores short lending rebates. What's actually cheaper. And that fund will i will say confidently here outperform. The vast majority of institutions. Over time. you quote. You can quote me on that one over the next ten years so That's a great Benchmark the investable endowment in Institutional world calpers risen. Hit me up please do. We'll buy appreciate your time. Hopefully next time we talk on vision it'll say cio of calpers. But thanks again for coming on. It's great to be back. Look forward to seeing you in the real world. Soon fingers crossed.

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18 - The Silver Lining with Andy Schectman

Heads Up

2:02:19 hr | 3 months ago

18 - The Silver Lining with Andy Schectman

"Episode number eighteen with andy kaufman. Welcome to in it to win it. This is steve. B and dan. Dan gee what what do you think of our new Intro music there sir. Considering i kind of picked it i don't know it was up. The cop was the first thing. I can think about so good a little little rob zombie or white zombie. It's probably both white zombie. The ban rob zombies lake. The dude. I don't know it's like so it'd be words disliked in college like drunk music guy. Talk abro on that white zombie this week. we've got anti shekhtman He's the owner of miles franklin precious metals one of twenty-seven authorized dealers to deal directly with the mets Which is pretty cool He He took a look at some of his prices. Were recording this. A couple of days after we We interviewed him but Yeah very exciting that that man knows so much crazy. Any deals with all the man's the man the austrian man. Auster ho stralia South africa canada. Us uk is uk. As well i think it might have been even the german What was it. I can't remember the name of it but anyhow Just a wealth of knowledge really really good interview and Yeah me a little bit going toward silver silver more than gold. I am too. I really like his argument about you. Know the ratios really good right now. What's it normalizes than you can really trade these in for gold. So i think that's kind of cool playing the game. Which is all in. There is gonna be in there and everything. I thought that was really cool. Playing that little ratio game. Yeah yeah but Anyhow oh so airbnb. A little update our nicaraguan airbnb We have our first customer. Bam did it gifts slightly proven not totally proven yet but it does work. So that's good. Yeah it's good to be worried about that one. I was like well. It's been like we could happen. We haven't had even a message something software and it's terrible. What an idiot. I don't wanna do something. I forget to check one box. And it's just listing or yeah. You know granted. Steve you gotta remember also like it is extremely hard to get in the country for any tur- is but we know that i'm not really gonna be coming around until born likely november. Know there's a lot of variables there. Obviously you know most. We did this together. This kind of attest in our country so but everything is great. You know i'm more than happy with. Just you know getting that first booking out of the way kinda breaks the ice a little bit and yeah just gonna kinda kinda exciting as it's all going to work work out over there. You know the house your columbian airbnb going. Well it's good good gave. The pros outweigh the cons. But yeah there are definitely since. There's not a lot of tourists again in that her but there is a lot of people still so we're going into the busy season Coming up in a couple of months. So i'm that's good after september that'll become it's still busy though But you just have to realize when you the international stuff on a lot of third world country. People just aren't is savvy with the app. You know ask there's just you gotta you gotta long-term guy though right yet a mind. Yeah get a term which is great which he still might extend out and now he's actually there for medical reasons so that was pretty cool so so yeah it's But i did find out a really interesting piece. This is like to share with everybody else's well. I learned on that when you have longer stays that your utilities can go up a abo- interesting point. Yeah there there are a lot more often yes so there are just. I'm just leaving for a little while. It's gonna leave that air conditioning on all night while i'm gone to keep the parbat nice and cool when i'm not there exactly exactly personally. I went to lights on when i come home. You know no one to be afraid of the dark. Nowhere that dripping faucet ever just a drip a so so just keep that in. Mind that something that i have to take into account when doing Yet long-term veer versus the short term. You know so. There's there's a few variables either way but if you know. It's a busy time you know you gotta make a decision. So how did how did your The manager work for airbnb. And in your santa barbara house loaded question in an yeah. Let's just say i survived. I'm just happy. I got some five star reviews. Liz okay. good and how. How many spoons. Did you come home to well. That's a that's an interesting. I'm yeah so when. I came back from nicaragua i'm mike hake mandates coffee. Obviously you need to spend disturbs him. Stuff right that's how it works So i go in. I go to my drawer and emily. Where's all my spins. nothing else. Everything is intact spins on. So i don't either. Someone was sitting posted a party with with spoons. Before this right now we absolutely. Yeah i give them to all my friends. They can take a couple of home with them. I just came home. Two zero spins when everything was intact. I'm like you know more forks knives. Everything just only spins gone so they go to the girl. I'm not going to name her name of tampa blast. But i'm like hey Any seen any spoons around here is like oh no what's up. She's like yeah. You know there's there are none. There used to be others. None not even. Yeah not one. I literally had to go back to like a back shed that i have some boxes. Find one you know. Oh this is the spoon. I've found in the dirt when i was eight. This'll work exactly so she's like. Oh wall all bias on hold. I'm like well. Did you do something strange with them. You like plugging baking soda and cocaine arm or something going on here. I don't know about some weird shit. So yeah our her culinary skills. I'm sure she was a good cook user Negative numbers yeah. I know there was. There was a zero cleaning going on. Well yeah yeah. I was a little. They don't tell you about the downsides of airbnb. But i'm here i'm here to clarify that all up for you so look it all. It all ended up working out. You know it's like you know moneywise yet. Everything covered everything. And that's great but yeah you just gotta be really you think you know somebody and you really don't you don't so yeah it was fun but Fun of his agreed to leave. Wasn't she like smoking cigarettes in the room or something man. Don't get me started. Yeah there was like kind of made this thing on my cable you know. Pt arab this all and you. She was incumbent between places. But you know very kind of like yoga grounded clean at least before i don't know about now. Obviously there's something going on But she said hey. Will you know when it come back. You can just stay to the. I i just be nice okay. Let's work a deal here and Well he so she had moved into the back airbnb area and i kind kinda passed by windy. And i'm kinda like holy shit going on in their bomb. That went off yes. Some wilder beast lives in there. I think just a bulletin china show. I mean you know. Steve how i keep everything. You're very very meticulous clean. I mean yeah to the point where it's like it's like i might have to go see somebody. They make atarot for that. Yes so y- y you know. She knows how hard they worked to get. This whole thing and going and i might your Like just keep clean like there was like you couldn't even walk through the place. While yahoo close and crap every is cigarette but where there were empty bottle of hendrix. Hendrick's gin I gave her a big giant bottles. Because i had some friends. State from slovakia's gave me some big bottle of a grey goose hidden in spice. I said hey you can have the vodka. Well it was gone but she left the bottle there for you right. Yeah of course. Why would you throw that away. You're probably going to save it for something. Yeah i'm surprised it wasn't like a candle on it or something sitting on the toilet. Yeah and i you know. I don't mind what you do. I don't care you know. Just just do you need help cleaning. He's like no. I'm gonna i understand. I'm gonna get to do. Yeah that's all. I asked you know. Just try to keep things clean. I even help you. I'm going home depot. You need some boxes. Let me help you move. I did i offered. Yeah i offered to help clean. Just now just kept it the whole time. Just just a hot mess on this really hot mess. So yeah oh the best was. Oh yeah we should This is really working really well with us in dig. Maybe we should think about. Maybe we should think about being. You know. Like kind of rumors and stuff and i was like Yeah that's probably not a great idea. She's like you can let me stay here for free. And then you can't airbnb your place because i'll be living in that. Yeah that sounds good deal. Yeah absolutely. I was just thinking that myself. I mentioned this all right now. I mean it's free rent for her and you get her mazing company on it cook to anti clean. So yeah exactly. What more does the guy one. Yeah let me push your stroller for. Yeah i was say you have a baby. So i can put your stroller for you to. I'm gonna start that instagram. Feed by the way. Because i didn't even realize it started digging notice to all the men. Push no offence. guys. I love you. But even my best friends push strollers. But it's a thing. Yeah thing do strollers carrying the diaper bag diaper bag. Yeah that's a big one. The big one the diaper bag. So yup i like right on. Well should we. Bring in andy chapman. Yeah man let's do it. You guys are excited man. He's god guy cat so much. I just can't wait to do another. Show guy me too me too. Let's talk some precious metals. Shall we andy thank you for coming on the show. it is. My pleasure guides. Happy to be here. Happy holidays to july fourth. Yes yes happy fourth of july. So you're a owner of precious metals dealer miles franklin dot com. You can find them online You ever really interesting story with you and your dad. Can you just take a two minutes and kind of tell how you got into the business three decades ago with your father and and where you are now. Yeah yeah we you know when. I think back about where we've come from is it. It blows me away. I don't think i'd have the energy or the resolve or maybe even the ability to do it again So you know we're kind of the embodiment of the american dream. And i say that with all sincerity. We come from nothing I'll give you kinda while the genesis of nineteen eighty-three. Both my parents lost their jobs. I was thirteen years old and in the middle of the recession and Were were about as close to bankruptcy as one could get their account oldham they ought to do it My father out of desperation took the job at a company in minneapolis that still around called investment rarities precious metals company out of desperation He said he would have rather had a hole in his had been. Take that job. But when you can't put food on the table what are you gonna do. So he does takes it. He was a history major And this is a commission job selling precious metals the only commissioner omen feast or famine while in sometimes desperation breeds success and he learned real quick that the key to sell precious. Metals was not to speak of profit. But to talk about why you need needed candlelight. Picking out the make make the model of car is fun. Come to grips with spending. The money is is the part that you have to get over and so really quickly. He he took to kind of like a fish to water and a that that's where he began A couple of years later actually he was a also taught was teaching all their incoming brokers and speaking around the world on behalf of. That's rarities at conferences where he was approached by some gentlemen in zurich wanted to bring the concept of swiss immunities to the united states. And he you know had only pretty much been alva bankrupt year and a half before. This was a big a big. Ask to leave a job that you finally found some security in and start something new I was nineteen years old with aspirations of playing baseball university of minnesota. That didn't last long. When i tore up my knee and coinciding with him. Crossing this this this bridge or this rubicon of Was massive life decision and he decided to do so so my parents sold their life insurance policies. I left college My dad borrowed sixty thousand dollars from his best friend from high school. Middle name was franklin. My dad's militias miles. We started in a one room office literally on a wing and a prayer company that that worked on swiss investments until this day we still work swiss annuities with the company. We started with our called consulting zurich. We represented the swiss insurance industry Back in the ninety really the only contact point in the united states back then and it was a big thing. Swiss annuities were being endorsed and promoted by a lot of financial newsletter writers. Very quickly we realized that the same person who bought swiss francs precious metals father rekindled some relationships in the industry and really the rest is history from selling life insurance policies to fund the company enviro in sixty grand from a friend we recently after thirty one years eclipse six billion dollars in transactions without a customer plant or one of only twenty seven. I appreciate that it's the biggest achievement of my career. You know i've always learned that a problem is nothing but an opportunity to strengthen a relationship. That's not to say we haven't messed up. But we make it right when we do or one of only twenty seven. Us men authorized resellers in the world. We have some worldwide exclusive with brings. And we've done it the right way. old school. I guess you could say. We've resisted the online path. We had an online portal and experience. What i would tell you would be hollywood movie style fraud on and I mean i could tell you. Stories would absolutely blow your mind and your listeners minds the pinnacle was identity theft. Someone stole someone's title heidelberg. That sold the house. It wasn't even for sale. A quick claim deed invented notary and Entitled company that the person was the person and received sad them send a wire to us in the identity And in the stolen identities name for house. It wasn't even for sale about seven hundred thousand dollars worth of gold and off white. We learned that while the fbi that That there is. There was at the time a eastern european state-sponsored epidemic in financial services industries. Where not just precious metals companies but brokerages and everything were experiencing hacking and identity theft. And at that point we shut down our online store now. We are considering building a new website. It's almost done. It will have limited capability. But i have always believed whether it be the roots in which we came from thirty one years ago my own personal conviction or or just the crazy digital complex sophisticated worldly in that. Something's belong old school. Some things belong off the grid completely agree. There's a lot to be said format and so here. We are thirty one years later. And i pinch myself guys. I can't believe that. I'm fifty years old over half my life. I've dedicated to this company in this industry and while i'm no genius obscene a lot been around a lot and i think we are in a place right now that people will look back on and and look at this as a as a seminal moment in history and and i think precious metals need to be part of people's portfolio but before we even start that west of the questions of the interview. Just simply know that when. I look at precious metals when i started with my father thirty one years ago. He said to me andy. There will be one rule. And only one rule. Or i'll fire you mentioned should years old. I'm like all right. What's one rule. It says you'll buy something. Every two weeks period i said by can deal where silver buy. Gold is to them. I get paid everything and so for thirty one years. I've honored that i am. The president. owner of the company is still still kinda my partner. he's not gonna fire me anymore but hand for thirty one years of accumulated some every two weeks and so the premise. From which i'd like these questions to spring from is that to me. Gold and silver are anything but an investment now. They may perform as one but to me their wealth and its wealth fed. I hope i never need to use if i do. I'm damn glad. I have it and it's not just burn emergency. It could be an opportunity. But if not i give it to my kids and i think in a world of uncertainty and craziness i look at golden solar as wealth just as kings and queens and emperors farrell's thousand years ago so from that psyched to be here. I'm really glad you guys found me an answer all your questions. Yeah yeah. I think andy. I think you brought of a very very good point. This is something that stephen myself really kind of clued in on the learning experience in you know. Look how look at gold and silver. You know as wealth you know doesn't have a yield we get it But i think that point speaks volumes. Y- you're right. it doesn't have a yield attributes. The hell out of a negative yield when you at the tenure treasury paying one hundred sixty basis points against bogus. cpi numbers but even still transitory. Whatever you wanna call her. Just be us. Numbers just came out at five percent. So you're talking. Three hundred and forty basis points or three point. Four percent negative yield year-over-year compounded on a ten year treasury versus something. That doesn't pay. You'll stick with league. The inanimate objects of for for my preference and you brought up another really good point the bogus. Cpi mike moloney caused the ep lie. That's true. I think it will be good for you. Guys to Interview john williams. Kind of a legend in the industry he His website is called shadow. Stats dot com. And all john does is calculate numbers. Come out of the bureau of labor statistics like inflation the cpi and doing it calculating the way that it used to be calculated under breach administrations before they've continued to alter the metrics to fit an agenda. That keeps us all. Thank you yeah keeps us. All in the dark and john williams would be a guy in fact i just did an interview with john williams and on another on john john claude beyond mystic the three of us did an interview and he said inflation right now is twelve percent. I know that we are on the heels of hyper inflation. Not there yet. But i'm gonna goals of it. No you're right you're absolutely right. I bought some on a regular products. See we're just talking about this. We just came back from a trip out in central america and literally. It's it's about twelve percent. Everything's up about twelve percents. Some stuff stuff is up to twenty. I mean but just regular stupid goods. You buy toothpaste or whatever you know. Deodorant maybe even more troubling and people keep trying to justify and get them white where i wanna cry bullshit home. You know for example We've we left minneapolis. We moved here. May i To florida and but we began the process in february when we put an offer on this house and we bought furniture in april only have about forty percent of our furniture send and we ordered it all from restoration hardware in april and the point of it is dead. I got a client. Who's a big house. Builder in texas told me. He disclosed on just finished enclosed a four million dollar house. He built a dormitory refrigerator in the kitchen because they couldn't get refrigerators in the bank went. Let impels about one you know when we talk about price inflation you understand to he affected is having. Were you have much more money chasing fewer goods and services because for so long now people have been paid to be unproductive. My big one of my biggest clients in detroit owns a blackout company and can't get anyone to work for him so he has done nothing but but cancel and turned down business because people are making more money on burning the earning that the care subsidy and the unemployment earning more money than they are working fulltime. Which is which is Eviscerating the small business more than it already has adam. Yeah so when you talk about inflation you have all of this money that has been created nowhere. Yeah and you have fewer people creating stuff so he got more money chasing fewer things or less less stuff you got inflation price inflation and it's and i think it's gonna get worse guy out worse andy. I'm everything that you're you're preaching we've been we've been on the same exact boat for quite some time now so we we get it. We're we're we're there. Yeah i am so glad that i found golden silver and i. I'm trying to remember how. Even i think it was you daniel that you said that you had some silver bars and you ask you called me one day and you said Oh silver just shot up to like thirty six dollars or something in a day for some reason. I'm wondering if i should sell these items for fifteen bucks and i'm like you have metal with metal and then i went down a rabbit hole in the next thing you know. We got you on the show and jordan roy. Burn it all these guys and a golden chance. After six months. I can't imagine three decades in the business at the point. You're at you know what i mean like. It's this is. It's such a good bet on the other side to to what's going on right now with the monetary system. I think no no question about it. No question about her okay so for listener. Can you describe what so daniel read. the big silver short by By around chris. Marcus chapter ten of that interview earth at that book. And i've i've listened to it twice. And i still don't quite get how. How and who is shorting this basically to suppress the price like. Why can't it get above twenty nine bucks. It hits like twenty nine fifty and then it just shoots down to two twenty five and then it creeps up there and then it just does it again like. How does that process work. I don't quite grasp that there was one more point there andy elsewhere. You would suppressing the price and you talked about j. p. morgan in just and it just going on what steve with saying You know making everything. Basically you were also talking. How everything or round You know the price is precious metals crypto-currencies in all these you know stock market. Everything's going up but keeping the price. Low like suppressing the price steve was saying. Am it just process there that you were explaining. We're trying to get a grasp on it so well let's take the long. Let's take the long answer that. Because i think it will help set the stage. So there is a term and economics called gibson's paradox and gibson's paradox is the the explanation of the inverse relationship between real interest rates and goal in other words. Like you said at the very onset of this interview. Bowl doesn't pay its. There's no interest paid on gold. And so if you have really high interest rates people would buy treasuries with safety versus buying something that pays no interest if you have really low interest rates or even negative interest rates. One would think all should do very very well. I would submit to you guys that the real manipulation of everything is less about practice. Answer the question and more about interest rates oh it has been the manipulation of interest rates that has created the wealth effect when you have very low interest rates you have no incentive to own fixed income and so you are forced to speculate the end of things like equities and into things like real estate. When i started in this industry they used to be that. Stocks and bonds were inversely related. They were risk on and risk stop. You might stocks when you work on transition to risk off as you retire. That's bonds There's a group called ibbotson which is now owned by morningstar. Their mutual radio agency and they basically were task applying Finding alternatives to the us stock market and they basically came back and they said because interstates had been manipulated so low that the inverse relationship between stocks and bonds are gone and agree In fact they are positively correlated for the first time ever and you can throw you can throw real estate on top of that as well if interest rates rise the whole thing collapses but it has been the manipulation of interest rates that has created the wealth effect and kept the bond markets. Wrong and Stabilized everything so. Let's keep that first and foremost in mind as we answered the question we go back to Clinton and robert rubin and lawrence summers under their strong dollar policy so they had to. They had to understand if they were going to keep interest rates low and tell the world they have a strong dollar which was a joke but to keep interest rates low they had to kill the canary in the mineshaft. Now it's interesting to note that lawrence summers who when the very first lawsuit was levied by by Maybe it was reg. How i don't remember who left lawsuit against all these guys for manipulating gold. Lawrence summers was named in lawrence. Summers was an adviser. I robert rubin the i Administration under clinton and then he became the treasury secretary after he's been an adviser to every president on on a fiscal monetary policy since two up through obama lawrence summers when he was believe it was when he was the The dean of harvard. Pretty sure this was or at harvard. He wrote a report with a man from michigan. State in economists named barsky and the report was entitled. Gibson's paradox revisited. So let's us understand that you're dealing with the duty wonder Understood you had to kill the canary in the gold. Mine if you're gonna keep interest rates low and this is where it all started so we go back to the nineties and you had a policy. Where the western central banks would all go to the commercial banks and they would say. Here's what you're going to do. We're going to lease. You are gold at less than one percent. Let's call it one half of one percent and you're gonna take that gold you have to obligations first obligation salad immediately to the market and you drive the price down short the market. Drive it down and the second thing you do with the proceeds you buy treasures. Now we're at least a few and a half cent sell it. You are going to drive the price down guarantee you make money on that train with the proceeds you buy treasuries earning whatever you keep the spread between the interest on the least gold and the The what you make it on the bonds you'll meta gazillion allergies. Everyone's happy because it just rates. Low the selling gold depresses the gold price. Act of taking. The proceeds in buying treasuries lowers interest rates raise. The bond market a creates the wealth of facts. Everybody is happy. Everybody wins and the western central bank search site because all of this low interest rates spurs loans and investment. She everybody wins. And so by two thousand and one you had four commercial banks that held the largest short position in the history of the codemax. Smart all of a sudden you get nine eleven. You get afghanistan who get iraq and things began to change in two thousand and seven. I believe it's one that really changed and allow the way that i think what shaped in two thousand seven. I was speaking at a convention. David morgan july. Maybe seven and When it was somewhere in that neighborhood forgive me it's been a while but anyways the price of silver goes from twenty one to nine. So it's what been two thousand eight i think and and gold goes from one thousand seven hundred and in any environment where you buy an investment and you see the price fall by sixty and thirty percent respectively. Will you don't need to be a phd in economics to understand that there's probably no demand do investments in fact it's the opposite someone selling it right well within within two weeks of that happening I'll never forget having this discussion with david. What the hell just happened. You know silver silver just fell by sixty percent in literally a day and a half two days. What what's going on within two days of that happening three days of that happening. Every major mint in the world was sold out a problem. Every major refinery was sold out of product dealers. Were going belly up. I remember the us. Mint shut down eight times in the canadian and the austrian meant were working three shifts twenty four hours a day where eight to twelve weeks backward the perth in australia for the first time Ever shut down in august. The rand meant for the whole year. They did the rand. Men sold never happened before ran out of product. Altogether every man was sold out of product and so in an environment when the price went down so in an environment where you would think there is nothing but a plethora a delus- of supply Where you could just have your pick quite the contrary in fact the whole second half awake. You couldn't find anything to save your life. And i thought i was going out of business. Why truly did and so what we saw there was shorting on paper to drive down the price and It it certainly worked. But here's where it gets a little bit more interesting out of nowhere. There comes four more banks on the comex market a four big players that you see on the commitment traders report at one from four to eight. A lot of people think that might have been the chinese basically saying we see what you're doing. We're gonna do it to do anything about it because we own we own the treasury's from that point forward. I think it went from a position after all of the things that happen with you. Know the the war in afghanistan and iraq nine eleven and all of these things it went from a an effort to maintain in illusion of western currency strength to one of repositioning one of accumulation of assets and If you see what the the banks have been doing when we talk about j. p. morgan in the book the big short There is a an interview with bart chilton. The former head of the. Who told a story to chris. Never set it. Before or africa's he died maybe a week after which a lot of people. A lot of people get freaked out by the happy. Because you just ned. Any spoke up against j. p. morgan. He said what had happened. Was that bear. Stearns when silver goes to twenty bucks an ounce Goes bankrupt it at bankruptcy them and they had the largest short position over and that was part of the reason they went bankrupt and bar. Shelton says that jamie diamond is called in with paulsen paulsen and whoever else i am the president whatever and they work out a deal and the deal is you're going to take over. Paris turns sharp position And jamie diamond says well that will put us in violation of position limits when measured against our chore position. Which isn't very big but we will be in severe violation of position them and so they were given a certain period of time. I don't remember what it was. Maybe ninety days or whatever to pare down those short positions and to get in line with commodity law well at the end of that period of time. Chilton goes to superiors. Says jp morgan. In fact hasn't decreased their position limits. Like they were instructed to in fact they've increased them and he was told to stand down. It was a political decision. So you have the largest volume commercial bank in the world who was intending to short the price of precious metals. Here's where it gets even more interesting. It is believed as ted butler has done a masterful job of documenting that j. p. morgan through all of the Suppression in fact. Admitting to it here a year ago and paying nine hundred twenty million dollar fine to the justice department for manipulating the price of gold and silver as accumulated one billion ounces of physical silver and thirty five million ounces of gold. This is the single largest physical position of metal. The world has ever seen so. Here's where i would ask you the question. Take it a step further Jamie diamond and blythe masters light masters used to run their best both publicly admitted on film. That it's not there at the metal humilate is for a client. So let me ask you this. Who's got a that kind of money and be that kind of clout where entries. They are being. They are telling the head of the commodity futures trading commission but police basically the commodity. Police stand down so it's either one or two groups either at the chinese said. You're going to do this for us. You're gonna let us accumulate. The metal where we see what you've been doing and we won't dump are treasuries arts the us government one or the other that has basically said just go ahead and accumulate this fatigue pile for us and we will use the misdirection of price as our tool mallets. Fast forward and talk about to your point. I kind of laid a foundation started with gibson's paradox. The inverse relationship between golden interest rates. You're going to have low interest rates to spur You know your equity markets and to keep industry slow. You gotta kill the gold. Mine are the canarian. The goal then it goes to i think a defensive position into one of accumulation and holding down the price of metal through levered futures contracts so that they can accumulate it. Don't look here. It's the no look pass basketball. It's it's misdirection any game. You've ever played there's misdirection whether you're playing football or or Chess or backgammon. I don't care what game of spanish g you're playing. There's always misdirection than the same thing as prevalent the book. The art of war is todd in every major business school in the world on corporate hierarchy. It's taught and almost every law school on warm relating arguments. it's mandatory reading at aids mandatory reading at west point. Bill belichick uses formulate game plan and on and and on misdirection as prevalent. So they've been misdirecting but let's look to your point so let's go bring it home real close to home and we'll go to february of this year I was living in minnesota. I decided to take a vacation to florida on a on a on a whim. Family member had rented a house wasn't feeling so well said you guys wanna have the house current florida where going back home. I said yes Waller down here. It's like the last few days in january. We get this crazy red. It silver squeeze missile. Daniel told me about it. And i was like. Oh yeah metal this crazy over here. We're in florida for ten days. The only thing. I did the only time i left. The house was to come across the state to buy this house that i'm in right now but for for fourteen days did not leave the hose. I worked eighteen to twenty hours a day. My kids were outside the old time. I didn't even step foot in the beach. It was insanity. It was the craziest thing i've ever seen. I'm getting hundreds and hundreds and hundreds of phone calls. I'm on all sorts of podcast and livestream things might phone is blowing up my brokers working all night. There's more silver going into the us. Lv silver trust that day in the next than had ever gone in the history of the account ever that typically. I'm going somewhere with this. You'll see where i'm going. But typically so when we talk about how gold trades gold trades around the clock twenty four seven except friday at like five thirty eastern. It closes it goes to sleep and awakes. Backup in asia Sunday at six. Pm eastern opens up in asia. So we every all our inventories hedged. I don't wanna get too deep into it but let's just say that i own five thousand. Ounces of gold physically. I sell five thousand ounces comex market so that if the price goes up on one it goes down on the other men's right. I'm always market neutral to the to my inventory. I'm not speculating with my inventory. But on friday when the market closes. If i want to transact business. I have to find a way to hedge whatever i sell so typically on a friday. My head trader will ask me. Do you have any interviews any kind of like what we're doing right now is. I didn't think i need to be the aware of so. I know how to position for the weekend so that particular friday. We all understand that this was something significant but we didn't know how significant so my my head trader bought eleven comex on friday at the close eleven million with concert coma contract silver. Each contract is five thousand ounces of silver so let that meant was we were fifty five thousand dollars as law. Meaning i can sell fifty five thousand houses over the weekend and be totally hedged. Now what would be the risk of that. You don't sell any in the price drops and now you. You have a long contract against a price at stop. You hold it until the price comes back up with her. But this is how you have to do business in this industry. If you want to do business over the weekend period there is no other way hedge. Protect yourself so fifty. Five thousand ounces long. The phones are ringing off the hook that emails are hundreds and hundreds and hundreds s. lvn getting pummeled with new New purchases the more so than than they've ever seen craziness everywhere. Where silver squeezed insanity. Right so saturday late friday night as mind. Some of these podcasts with arcadia whatever their starts could come word that the online companies have all run out of product. And that's the way it looked when you when you went online it see. That's what it looked like. But i would submit that at. That's not what it was. And here's what it was. And i'm i'm getting to the punchline to all of this but what it was was that they all sold more than they had hedged. Saturday morning comes around. And i got a call my trader at five thirty in the morning. florida done and he says to me and he lives in north dakota. So it's reeler. It's four thirty in the morning and says andy. Do you realize that you guys sold ninety thousand ounces. Last night is your thirty. Five thousand ounces. Make it exposed to the open sunday night and i'm like shut it down for the first time in thirty one years closed our company over the weekend because i mean people are at this point on saturday morning are talking about the market gaping up ten bucks so in that in that example. Ten times fifty. Five thousand Do the math are are thirty. Five thousand do the math. I that will cost me three hundred fifty thousand dollars that puts people out of business. Those kind of moves. That's why futures can be very dangerous. But so i said close close it would take a no new orders until after the market opens and you can hedge the minute the market open. He was able to get it by about a dollar fifty gap pyre still cost forty five thousand dollars but this is first of all i say all this so you wonder. Stand the demand okay. So now it's it's saturday or sunday And the phones are still ringing. Were hedged. I'm doing more live podcast. It's craziness the market is now open in asia and as the market leaves asia. It moves to london and then it. It stays in london and in the transition period between london and new york. We've all that the access market. Now here's the answer to your question. How do they keep the price up. In the access market. Some shit drops one point five billion with a b. ounces of silver into the access market all at once at the height of the craziest demand you've ever seen and the price immediately falls by four dollars now one point five billion ounces of silver silver is thirty dollars is forty five billion dollars. Silver first thing. I'd like to say who the hell's got forty five billion silver second thing i'd like to say is in the real world if someone did that they would be fired and shot and maybe not in that order because because if you have that kind of demand and that kind of supply and people are begging to get it where the point where all the companies in north america are shutdown was there so much demand where s. l. a. n. g. l. d. r. Flush with new coming more so than they've ever had since the inception new purchases. Who does that or the price falls by over four dollars. How about bleeding it out over several hours or days or weeks to maximize your return instead of immediately drop in the price from thirty to twenty six and so when you talk about what was dropped on the market there wasn't one person who sold announce a silver to any company in this country. I'm telling you we didn't do antibi- that's we were scrambling to get product and someone dumps. Almost two years of global mind supply. We mind roughly eight hundred million ounces a year almost two years of mine supply in the access market which is the thinnest theme of thin so the hits new york collapses in price and this was done specifically to freak out all the new read it people all the new johnny-come-latelies everyone who was trying to squeeze silver differences simply this. It's much easier to screw with hedge fund whose way short than it is to with a bunch of bullion banks like goldman and jason and they basically said to jay they in back and they dump all of this silver now. Here's where he gets a little bit more gross. Whoever than over the next couple of weeks as that happened goldman sachs back doored ninety million ounces of silver as an authorized participant s. Lv so follow the logic you all the orders in the midst of all of this they come out and they basically say by the way we just changed the expect us and we may not have as much silver as we've sold in terms of shares issued which is stupid but that's they did change the perspectives but so they they authorized participants. Sell the metal drive the price up to thirty. And then and maybe they didn't even because they changed it prospectus and they dumped the their paper contracts and back door real physical silver. They have the ability to do that. They back door real physical silver out of the trust ninety millions ounce. And so when you talk about what's happening how do they do it. This is exactly how they do it. They sell what is called Unallocated synthetic pay future contracts to drive down the price and create a perception of reality. They do that by manipulating the paper price and never being called on the carpet but things are beginning to slightly change in twenty twenty one of the things that we saw that was most relevant to me is the amount of deliveries up olmecs. And you're seeing the biggest private money in the world take massive delivery off a comex and so as the price is being held down massive money. Huge money is taking possession deliveries. We saw as much silver delivered last year off a comex as we saw in the ten years combined previous over three hundred almost three hundred and fifty million ounces and that's all going to the sovereign wealth funds and family offices. Do you think they know something that we don't. I don't know them behind it. It's happening again this year too. Same thing Already in the june contract that just went off the board over thirty eight or thirty nine million ounces were delivered here and fifty or sixty in the last one. i mean. we're already on pace to beat last year. So the biggest money in the world in a very roundabout answer to your question is being is using the misdirected price of by leverage futures contracts to create a perception of reality that keeps everyone looking elsewhere and is allowed them at subsidised prices companies. Kp morgan who Chilton tells you this happen and then dies They they pay a nine hundred twenty million dollar settlement with the justice department and they went allowed to keep what is in essence ten times with strive to to buy one thousand nine hundred eighty and when put together with their gold the single largest physical position of metals the world has ever seen and yet they they pay nine hundred twenty million dollar fine with the justice department. Their metals desk in the same year made one billion dollars so they made eighty million dollars on top. This is a company that makes a billion dollars a month and it was a slap in the face to all of us hope for something greater but the admission of all of these things the admission by bart chilton via mission to the justice department. That this stuff is happening. That's one piece of the puzzle but the bigger question is why. And it's not just for shits and giggles they're doing it to reposition I'm going to just take the liberty of backing up one more second and say but why are they position. Well i'll tell you the reposition. Let's go back to two thousand seventeen for a moment and to me. This is central to everything that we need to talk about. And i know you have questions. I just want people to know that. I said the same thing last year and a half because what i see coming is linear progression of events to me. Is all that matters in two thousand seventeen out of nowhere as essential banks are selling bowl. They're not buying it. They're all selling it. The german wounded bank said to the new york federal reserve. Give us back our goal that you've been holding for about eight years now we want. We want it back by twenty twenty within a few months of that happening. The bank of austria banca turkey the bagel poll in the bank. Hungry dutch national bank. They all said the same thing. Give us back our goal. Not only to the new york said but to the bank of england the following year after being net sellers goal that same group. They bought more gold group than they did in the sixty years previously by the next year in two thousand one thousand nine hundred number was up almost one hundred percent and then the single biggest event. My career to that point was the basel. Three reclassification of bold is the world's only other tier one reserve ass. Let me just say that one more time the only of their cheer one reserve asset in the world they levied gold to their dollars. And there's gold. What is a tier one asset. It's a riskless asset if you have a million dollars in liabilities and you have a million dollars in cash against it in a bank. You have zero risks. They have now levey goal to the only other tier one reserve asset in the world. The only other who was the bank of international settlements to central bankers central bank. And you have the most powerful bang people in the world telling you. That goal is now the only other tier one but remember what happened the two years before all the banks that give us back our goal and then they started massively accumulating so i'd stoop thousand nineteen twenty twenty year of kobe. They're all buying gold again. But then you see the rise of this new group on the comex exchange. This new group called the others so normally the report that the comex publishes only shows the commercial banks and envy hedge funds. And that's the it's called the commitment of traders report that shows the positioning of the biggest traders on the comex market commodity exchange. But all of a sudden last year. You have this group called the others comes out of nowhere there's a third reportable group. No seen it before. These are the sovereign wealth funds who had been systematically draining the comex market since twenty twenty of all of their gold and silver taking massive amounts way bigger than anything anyone's ever seen so let's stop there for a moment. I you have the central banks that give us back our shit then you have them buying more gold nowhere hundred and eighty degrees from what they done the years before. Then you have. The central bankers central bank reclassify goal is the world's other tier one reservist. Then you'll have are they. Their friends savon dwelled funds in the family on people that know the people who start taking massive deliveries off a comex and then you have the international monetary fund which is one hundred ninety five countries from our that was established at britain would come out publicly that we want a new retinoids. Then have the world bank said the global reset. The point of it is that you have all of these things that are progressing winner in a linear fashion that all center around valorization and taking possession of metals and if the biggest money in the world wants to reposition and take possession of medals to de-dollarize. Do you think they're gonna make it easy for the rest of us to understand that you think that they're going to misdirect the no look. Pass the fake hand off to the left in the screen pass to the right. They are misdirecting all of us through price so that the biggest money in the world can reposition out of dollars and into cannibals and and. I really do believe that that is happening and you have to. I think trust your gut more than your eyes. Your eyes are lying to your gut won't and that's kind of the long answer in that. The banks are able to use leverage futures contracts to create a perception of reality. Now we can talk a little bit more about the reserve requirements basel. Three that just happened in europe in are going to happen to the uk and the us at the end of the air. We can talk about what i believe is the biggest event in all of our lives. China's belt road railway initiative. We can talk about a lot of things. But i will simply say this to you. It is unequivocally a positive in my mind that for the past four years the biggest money in the world has used price to misdirect all of us and our relating ridiculous amounts of and silver all of the central banks are all of the sovereign wealth funds and all of these big commercial banks. They're using shorted futures prices to To create a reality that allows them to do so it this kind of brings up something that temp tell me if this tracks And as far as i believe there's going to be a new monetary system and let me for our listeners. Just kind of give a thirty second. Recap of the last one hundred fifty years or so of the four different monetary systems that we had from the late eighteen hundreds to thousand fourteen with the classical gold standard where you can take a piece of currency. That's a twenty two thousand dollars on it and it would be a receipt for a twenty dollar gold piece and then after world war one where we put a lot of that on a on a creek that didn't work anymore So from nineteen fourteen to nineteen forty four. We went to the gold exchange standard where you'd have to give them a fifty dollar piece of paper currency to get a twenty dollar gold piece owes forty percent ratio and then after that we went to the brenton wood system after world war two because the us had all the gold and europe had none and the rest of the country had to share a third of it in the us. Two thirds so we said okay well. Every currency on the planet is going to be backed by the us dollar and every thirty five us dollars will be backed by one ounce of goal. Well other we continued to print and thirty five dollars so it's not quite the ratio that should be anymore and other countries realized. You know what we'll take gold instead of instead he's worthless paper dollars right so nixon realized this and he just happened to be the guy in the hot seat at the time and he said okay. This isn't going to work anymore or else. The whole monetary system will collapse. And so we're going to go to the global dollar standard and now every currency on the planet with the exception of a few Will be backed by the us dollar and the us dollar is backed by nothing. So we've been on that system now since nineteen seventy-one for all three of our lives. And i believe that we're now entering another monetary system. Some something is coming next. And during times of that when you follow each one of these currency conversions golden silver kind of do an accounting. And and if you have some Gold and silver When you move to the new monetary system you can start trading these at the right time for whatever that new currency is going to be and where do unique time in history now that no no no throughout the planet's history has every single country been on a fake haber. Fiat currency is this tracking any. Yeah and then you know when you talk about those who who held. I have a bunch of artwork that we used to make i. I ended up loving it so much kept most of it. Which shows the twenty dollar. I'm looking at right now. A twenty dollar gold certificate and at the bottom instead of sending in god we trust it says payable in gold coin to the bear on demand. And and it's got a picture of roosevelt. His executive order that he issued In april of nineteen thirty three april fifth nineteen thirty three twenty dollar gold coin and how they were interchangeable at twenty dollar coin with golda called melt but like you said those who had rolled if you realize most of the very wealthy people back then people in the know shipped all their goal off to the banks in europe And before the executive order but those that had all they they received twenty dollars and thirty three cents. Or whatever from the government figured. Hey we'll get an extra thirty three cents out of the deal. But then they revealed thirty-five barnes for him here right and so bald certainly is is going to be. I believe part of the next system. And i say that to you first and foremost because ask yourself if if the dollar has been the only tier one reserve wine not make it like s special drawing rights or why not make it a basket of currencies as tier one. Why choose goal after eighty years basically of it being a tier three asset. This is one of the reasons that i could never understand why the central banks were selling their gold back in the day. And here's the reason. It was a tier three asset. And what that means. Only fifty percent of its value was calculated on a balance sheet. So when you get the new college kids come in and taken over for the grey hairs at the central banks. They'd say what the hell do we want this stuff for. It pays no interest. It costs money to store. And because we're taking a n it's unpredictable. And because we're taking a fifty percent haircut on the balance sheet at denigrates our ability to sell bonds and transact business sell it and buy dredges and that fit right into the westerns plans where the cure three status would would keep people or banks from really wanting to have a big position in well The fact that it was revalued to tier one. Ask yourself. why the hell would that happen. Why would the most powerful in the world quietly. And i say quietly because you would think something as big as that would get sixty minute sir. Yes already evening news. Well is it that the wealthiest people in the world reclassified gold is the only other cheer one asset after they've front ran two years of acquisition and repatriation. And you're continuing to see it. The bank of thailand spot ninety tonnes the other day I mean and and they're gobbling up. All of the central banks are gobbling it up. Why why why does no one no. it's tier one. Why would they do that. Why why would they do. If it wasn't going to be central to what comes next. Now let me tell you where. I think we are going. Which brings us to the biggest event of my life. i think and my career ultimately. In retrospect i believe we will say that and that is the chinese belt footing rail initiative. Are you guys familiar with. Oh steve knows i'm a. I'm a big huge watcher. Everything china going on so just go for it. I love china. I haven't heard of this can you can. Can you know this is big. This is huge. Oh i think you can tell your kids. Mandarin wouldn't be the worst thing ever did. Because here's the deal. What they have embarked upon and they've already started yet. They being the chinese is the largest and most ambitious infrastructure project in human history puts the panama canal that they are connecting asia and africa the to massive landmasses that comprise seventy percent of human population and forty five percent global. Gdp and you have to realize that majority of that area is vast nothingness. So you're gonna industrialize and connect with bridges railways and roads and maritime channels and digitally. And when you talk digitally connecting seventy percent of human relation you think scores important but they are going to connect these two landmasses Which it is the most ambitious infrastructure project ever but there. There's one piece of the puzzle that i have yet to hear really anyone talk about an i keep talking about it nonstop because in my heart i believe it is where we are going See the chinese. I think in terms of decades in terms of days. Look at the ghost cities. They've built look at the infrastructure they built. They built twelve new airports a year. They have modern. Bridges and modern high-speed trains and they. They're way more advanced with us in terms of infrastructure than we could be Under the most ambitious infrastructure program that biden wants to lay out there. They are way more and then they are now building external infrastructure in connecting africa. I'm gonna tell you what the key wall that is in a minute. But before i even tell you what he is. Let's go back a couple of years. What did they do. They built a system that is almost identical to the swift system and they got all the bricks nations to sign onto a brazil. Russia india south africa and a lot of european banks are signing onto a two after like we imposed a four billion dollar sanction against one of the french banks. Were working with iran. How do they do that. They lacked the swift system. So now all of these countries also a work around the second thing they did. They built the shanghai gold exchange. Shanghai gold exchange has delivered ninety times more. Goldman the comex tell you why in a minute and it's a largely cash and carry market in other words. It's it's a very small futures component. But it's largely you pay you get And it's a lot bigger than the comex. The third thing they did is they built. The chinese petro your one bon chinese. Petro yuan bond is what enables china to buy oil from iran and by natural gas from russia men. Pay them usurping the dollar in energy settlement. Pay them in the bond nominated you want but in you want but the thing of it is why they delivered ninety times more goldman the comex because that bond is immediately convertible into gold on the shanghai goal exchange so the iranians well the iranians will sell them their oil. Get the chinese petrie one bond and then covertly it into gold antidote. So now you see the infrastructure. They're building now. Here's the key to it. All all of these contracts that they are all of these contracts that they are selling and implementing across asia and africa settling in the new chinese digital yuan. And so you have stephanie. Percents human population slowly being indoctrinated into a new currency that when you talk about the dollar supremacy in everything from energy to to any contracts like the settling doubts not anymore so you have three quarters of the world using a new currency. But let's take it one step further. It is a digital currency right distributed legend technology while the chinese are the largest importers gold in the world. they are the largest producers of all in the world. they took sixty tonnes last month or fifty forty. The mainland china tend to hong kong Alastair macleod came out the other day. He believes they own. Thirty eight Sturdy eight million tonnes weight that right three thousand tonnes thirty eight thousand tons of gold. We supposedly own eighty five hundred tonnes where supposedly the largest in the world. He believes that the state owns thousand tons of china And that the people own eighteen where they are being a prided and promoted by the government on the back of busses and billboards five gold and he believes that an alistair is one of the smartest foods i've ever seen in this industry and he talks about them having early eight thousand tons which would be five times what the largest holders of bold in the world do they have been mining gold. That is uneconomical for years using our trade surplus to buy into mind gold that that was uneconomical. They don't care. They think in terms of decades so what is the whole the whole is at one dollars starts to spiral down inflationary drain. What are the chinese do now. They don't wanna do it yet because they still own. Three trillion are assets. But how about they say to the world. we have decided to be forthright. As we haven't updated are old numbers of years to tell you we have thirty eight thousand tons of gold and we are going to pay our new chinese digital one which we've been using for years in the belt wrote initiative to gold and when that overnight people understand why the hell they own gold and silver because the dollar will overnight be challenged for singular will reserve status and it will go from currency that has debt based to one that is asset based. And ask yourself. Would you rather be currency. That is backed by something with a distributed ledger. Even if you don't trust who who is running or administrating. The currency if distributed ledger and it's held in swiss vaults and wherever it is and it's all validated Very quickly the dollar is what is to be challenged overnight and And i think that's the whole in. I guess we will see at some point. The chinese will try to peg their digitally wanda gold. They're already planning it. And then and then everything and if you look at things from that perspective You know if you go back to my podcast march last year. I said they won. I heard nancy pelosi say That kobe can live on currency. So we want a new digital fed token and now you have last week or two weeks ago. Fed chairman false powell saying. They're experimenting with distributed ledger technology. Now it's were. We're so close to being a cashless society. It's ridiculous but if you realize that a digital currency still fiat. Unless it's backed by something if you screw the pooch so bad like the. Us has done and is doing at some point. If you don't say fine okay. We're we're everyone's going say screw up and that's why you see the rise in cryptocurrencies because people are sick and tired of being lied to by governments and and and having the value of their currency being destroyed by the printing press trillion seconds ago was thirty one thousand six hundred eighty eight years ago. That's a trillion seconds we've printed nine trillion in the past eighteen months. Yeah i know. I know i know this. The guy the printing machine only guy Well now you make a i concur. You know i've been reading studying this stuff myself for a while. And it's that the great belt initiative that scares me on this day scares me as you gotta listen to guys like you and me and who the hell are we you know. Why don't we hear this. Why aren't we being told what's important don't you think it's important. When one hundred ninety countries that were formulated in at bretton-woods which anointed the dollar world reserve. What all of the countries that that formulate the think it should be front and center news that ink that these countries want a new standard. I mean don't you think it should be front and center news when when the largest bank in the united states pays one hundred Number one hundred twenty million dollar flying for suppressing the mark. I mean all of these things that we have to dig and report is alternative media near case the scariest things i saw all less is the amount of censorship and all of the people that i talked to have been taken off of youtube and I mean it's so important. What you guys are doing. And i ought modern art it in to chat with you and i get impassioned by it because it's like i wish more people knew about this stuff and because it really. This is the biggest event in my in. If i had to guess what will ultimately biggest event in my life. I i have a feeling it is what is the groundwork that is being laid right now. China and they are attempting to slowly. You can see it. Infrastructure internal infrastructure external in terms of assets. Gold they're doing it with oil and oil production and everything copper zinc everything there They own all the rare earth metals the metals they own the majority of them and those are the metals needed for through batteries. All of these things in a real world game used to play risk. When you're a little kid were again. It's who's got the real good. It's all it's it has nothing to do with how much money you have if your money doesn't buy you anything in a global world before it One one case. I want to get your perspective on is a i guess. Maybe a little bit more short term as far as Silver by short term. I mean maybe a decade or so. Okay the gold silver ratio right now. Last time i checked it was about one to sixty eight something like that now. I've heard a couple of different numbers. The rate that they're pulling it out of the ground is something like seven to one seven two one seven seven ounces of silver for one ounce of gold so right there anyone that can fog a mirror can see that okay. Well this it would seem like it should be priced the same right now The what what is it called the geologic ratio relationship. Okay is is about sixteen to one hundred fifteen to one and that is how else silver is in the earth and how much gold is in the earth ratio of about fifteen to one something like that. Well okay yes. I mean you answered it. Yes note. Originally for thousands of years it was sixteen. One fifteen point. Five as what i was always told silver. Found in nature in epa thermal. Which means it's very close to the surface and so the biggest deposits in the world were found decades ago. My frankie's give new. Meyer frankie new. Meyer is the the ceo of first majestic and he's the one who's publicly saying seven to one in december. It was eight one. We did an interview together now bringing it down to seven to one. So we'll talk about that in a second. But what. I basically take away from that. As you're right it was fifteen point five or sixteen to one for thousands of years and now it's actually seven to one so it's depleted because it's found very close to the surface the big deposits. Here's where it gets even crazier There's about eight hundred million ounces. Mind year right only thirty percent and the reason. There's this is the reason. There's only a handful of big silver companies. There only a few of them right and and it's because the pack only thirty percent of all the silver that comes to market comes from primary silver miners. Now the words of eight hundred million five hundred sixty million of the eight hundred million from other companies mining other metals. And they like oh we found some silver lining copper and byproducts gonna throw away the silver that they find so they right and so. Because it's so una bundle. What he's saying is is that it's actually decreasing and depleting in nature now. There is a branch of the. Us government the geologic Ranch the government of two years ago came out and said because of the depletion and silver. Emma needs ford industrially that they would expect it to be the first element struck from the periodic table of elements. That's no show and so so it's needed in nature. So maybe is this why you're seeing massive front running off the comex taken huge deliveries holding the price down delivering it. See the prices the tool of misdirection. And you know and it's like saying high prices are inflation. No high prices are the are the symptom of inflation inflation increase in the money supply. So you know when we when we talk about low prices. No it's not low. Prices are low prices because it's being manipulated but why is the biggest. Money is taking possession of entering the market in physical product and using the price as a tool to do it in a in a really a scam of a of a of a price setting mechanism it. It's it's a last ditch attempt. I think to corner the market in physicals before things disappear. So yeah if you have a seven to one real time ratio but that's seven to one. Let's talk about that for a minute. Look at all of the things right. Now that are that have come along lately that you need silver for so all of the new green solar panel all the batteries for us. Mars yet smartphones. That have just been invented in the last ten years or so on. That's the thing so you know it takes a long time to change thousands of years worth of conventional wisdom so you have all of these applications that need silver no matter what it's a depleted asset coming out of the ground at seven one price at sixty eight to one. The biggest bully on bank in the world has accumulated one billion ounces and paid a nearly a one billion dollar dollar fine for doing so and they don't care you can see. This is what i'm getting at is at prices. Bullshit right now look at what the biggest money in the world is doing and the length of which they are going to do it. And so when you see seven to one ratio what i see or a seven to one ratio and a seventy two one price. Nearly is the buying opportunity of generation. And i'm also going to say one other thing and there are some some of my silver buddies may not like to hear this but i ultimately believe you wanna be in gold. Why why else did they reclassified as tier one. When the wealthiest most influential well-funded well informed traders on globe make it the only other tier one asset in the world. That's all you need to know. But what's silver does offer you right now is a pathway to a lot more gold because if you buy it at seventy two one and it goes to seven to one that gets to its geologic ratio. Well that means that you could trade it back and ended up with ten times the amount of do but otherwise by today so it gives you the ability to it's called playing the ratio. You had one hundred thousand dollars and you wanted to buy gold or silver. You buy all silver at seventy two one and then no matter what the price so like. For example in two thousand ten eighty five to one. That was one of the two or three times. It's ever gotten matt that high of human history. And i was all over the place over. Switch the silver within seven months. Two thousand eleven. You had thirty seven to one with fifty dollars. Silver and Nine thousand nine hundred twenty dollar gold. Seventy-one anyone seven months earlier that were traded their silver to gold at eighty five to one or the gold silver rather and then swap back. At thirty seven to one you would walk. They would walked away with over twice the amount of gold. They traded seven months earlier. No matter what the price that it didn't matter it's the relationship between the two and if you realize that over the last one hundred fifty years that that relationship has been about forty two to one since the industrial revolution about forty two to one house coming out of the ground at seven to one. But it's price seventy two one and all the big money's accumulating it and taking it off or comex and j. p. morgan as the biggest stash ever. And you see the potential that this offers this is the buying opportunity. Alba generation and the price is meaningless. Price is is it's maddening and it makes people say this is ridiculous allred but in the end the wolf comes at the end of the story a little boy cries wolf and you can see it setting up for this and i think this is a very high stakes game where it's not going to happen the way we all say we will wake up one day and will see the price wickedly higher but i have said in every interview. I've done the last year that it is my one hundred percent belief that this market will be defined in two ways one from people who own it. they'll think it's really extensive Excuse me from people who don't own it. they will think it's really expensive. And they miss their chance from people who do own it and want to buy more. They'll be like damn it. I should have bought marcus now. It's impossible to find. And i ask it'll be defined by an inability to source product. It has been a constant challenge of mine for the last year and a half. I have two employees working twenty four hours a day literally dealing with men's all around the globe in refineries and hopefully because we've been around for so long and we know so many people and we pay very quickly. We don't cause trouble we're able to source product really fast top of the food chain. If you're a day late you miss out in other words. The there's one ounce silver bars that i love that the mexican called dragon bars last year we were able to get about twenty percent of the entire limited allocation. This year we were twenty minutes late and couldn't get any and i mean that's how crazy it is and normally back in the day. If someone wanted ten million dollars worth a anything i call any of the distributors inhabit on a truck in to my office in forty eight hours now with distributors. You need to buy two to three months in advance. You need to pay fully in advance. You need to hedge your position before you even have the metal you to pay high premiums and you need to hope that you get stuff because it's been that crazy now. It's assumed that total allocation the precious metals across the entire matrix from joe. Six pack to the harvard endowment fund is one half of one percent. In other words taking cumulatively people have five hundred hundred thousand in prejudiced metals. Well in in one thousand nine hundred when you had eight to last time you had eight hundred dollar dow and Eight hundred dollars. Eight hundred dollars. Gold one to one ratio at one saw that it was an eight percent allocation. So what if we went back to an eight percent allocation that'd be a sixteen fold increase in demand in the market. That could not handle even a two or three four from where it is right now so i guess all i'm simply saying to. You is all of this stuff about the product about manipulation It's all real and it just won't play out in manifest in a logical fashion the way we would think it would because it's too high stakes and it's being coveted by too big of a people who are doing all they can to blur the trucks and i think you know. I used to feel embarrassed. Talking about these conspiracies. No when you see bart chilton the former head of the commodity commit that. Cftc commodity police validate everything we said. And then dial a week later It just made it just. It was like a ton of bricks. Left it off because you can see it now. Very clearly what they're doing and and it's less about what and more about why and that's the part where takes a little bit of a little bit of razor if you will never you got to just try to find the most logical explanation but i do believe their actions are superseding or certainly telling a different story than the words and the price. Yeah it Talking about the price manipulation if we were to play a game of Would you rather would you rather stick your face in a in a in a beehive or would you rather by g. l. d. s. l. v. Those are two that daniel. And i have talked about that. We are not investing in their paper gold and silver. A few that that we don't necessarily make recommendations on the show but Some that we personally have got are the spot. You mentioned rick rule We've gotten which is about sixty percent Silver and forty percent gold. And then we've gotten p. h. y. s. Which is a gold Physical gold and we've also gotten. Pslv are you into like funds like that or do you strictly just like bullying well. I've had a relationship with rick role in his firm for twenty years even before he was sprott. He was global resource and i've worked with their brokers. I consider it really the crowning achievement of my career The one goal company that will be speaking at his conference here in two weeks always do only one their their brokers run business through my firm i all him and the sprott name in the highest of regards I'm honored to be associated with them and everything they do now with that beach said let's talk reality To the most of various products ever made. I'll give sixty seconds on that if you own it sheller and if you don't download the perspectives in read pages. Six through twelve title. The risk factors. Sit down with a glass of wine or a cup of coffee made the whole bottle. It man really read it. Read it once or twice there. Are things in there that say things like the custodian has the right to do this from memory so did got a couple of them. The custodian has the right to employ sub castilians but the Custodian does not have the authority to visit the premises. The custodian is not responsible for heirs and oral missions of the sub custodians in other words if the bull bars supposedly. Pete did our lead bars. Clean all it's not. They're not they're not and and and so if you go through a new read this perspective. It's it's really. I once did a speech geel. You're the real thing. And i broke down the prospectus. It was really you realize quickly. Why prospectus attorneys are paid five thousand bucks an hour. Whatever it is. Because i mean it's a very nefarious program. And not only that believe that it is one of the tools for manipulation where as we spoke about earlier that goldman sachs in the end the authorized participants those being the big banks funded supposedly are allowed to back door ninety million ounces of physical silver and it's not then listed on the commodity exchange they do it invisible. It's called share redemption and only authorized participants can do it so they suck in all the silver and then they pull out the real thing and so it's they're bad when we talked about a phd in pslv first of all their way better than geo sub for one main reason. And that's because geo dns alvear what's called eds. Pslv are closed. On's and without getting too deep into that it just far more beneficial on taxation sell gio your s. l. v. you pay the twenty eight percent capital gains collectible rate when you sell. Pslv Or you pay the regular capital gains right now. Biden wants to raise that like forty percent or whatever self That may be a moot point. But just from a standpoint of taxation. They're better they're also better in the respected. Eric sprott is a very honorable man. and when you realize that j. p. morgan company that just paid nine hundred twenty million dollars. Fine for manipulating the silver market. Who is owns one. Billion is the largest position. The world's ever seen off book Is also the custodian was allowed to beat the custodian of the largest silver. Trust in the world That being sob. Do you not see a problem with this. Like the fox guarding the hen house. And so the you know you don't want to be associated there and so where i the real difference you know. Snl piazza are backed by real metal but the redemption process is is is pretty much unrealistic in that p. h. yes to redeem mental. Out of it you have to take four hundred ounce gold bar. Now you're talking to gold bar worth eight hundred thousand dollars that once you somehow get it delivered you buy drinks. You will never be able to do anything with put it in your car and drive somewhere because he couldn't send that my precious metals company that does over a half a billion a year in sales. Most we can put in the boxes. One hundred fifty thousand insured per box in some. What are your new at the bar. That's eight hundred thousand and ups laugh. You yeah so so you know. It's and then in terms of redemption I believe it's thousand ounce bars. And i think you have to take five of 'em i'm not positive on that on. Pslv it's backed by where the real difference is in the premium. The premium potential. I guess i break it down this way and say you know if things really got bad would you want a boxer frosted flakes stock and kellogg's in your stock may do well but i i would rather have the real thing. The frosted flakes for me. And here when you talk about premium. What's happened in this industry. Where because of supply and demand the premium on all of these coins has gotten much higher. You don't get that with. You're only getting so. Let's let's go back to that example. I told you in two thousand eight when the price of silver one from twenty one to nine but with when that happened everyone was out of product. Us meant was shut down. Eight times the random. It ran out of product for the first time ever the perth mint shutdown austria and canada. Were working twenty four hours a day with twelve weeks backward when they finally came back online with silver at nine dollars after being twenty one. You could not find a silver anywhere anywhere anywhere for under eighteen bucks. One hundred percent premium this last march when silver fell to twelve dollars. You could not find an ounce of silver north america for under twenty bucks period anywhere. And so you're pslv would have been nine bucks a share and the real thing which would have been priced to reality not based upon a share price or a comex bs price is reflective of what real supply and demand isn't and one of the things that i am concerned about is the comex market losing its price setting mechanism. Let's talk about that for one second. So i told you that. At the end of june contractor up delays ago at like thirty eight or thirty nine million ounces where delivered and the comex is very adept at whittling down the open interest through driving the price down to raising margin limits but with five days left in trading last league the june twenty fourth or there was two hundred twenty million ounces in open interest on the comex market for the june contract which goes off the board the end of june and can be delivered. I july so two hundred twenty million open interest means that there were two hundred and twenty million ounces in contracts that if people said we want delivered they would be obliged to deliver against a registered physician meaning. How many bars could be delivered of one. Hundred ten million outs. Do you see a problem here where there is twice. The amount of open interest as there are bars could be delivered. That's exactly what the hunt brothers saw. Nineteen eighty they saw their way. More contract center are bars against it and everyone stands for delivery. It goes boom so you see how all these things are happening. You gotta put them all together. And you know there's the that term called the fallacy of composition which basically says that individually. The pieces are not worth as much as the whole thing. Put together when you see all of the things that are being put together ranging from the central banks to the commercial banks to the sovereign wealth funds to the commitment of traders report to the. Im bank of international settlements to the reclassification of gold all the central banks. Would you see how it's all there. Their repositioning and the biggest money in the world is freaking out. What's happening whereby we're so close to things going nuts that with five trading days left on the on the price setting mechanism of the globe for commodities. There's twice as many open. Interest contract ounces as there are also has to be delivered and they whittled down a lot of times. What they'll do is they'll go to these people and say we'll pay up four dollar premium per ounce to cash subtle and so there okay. Fine i'll take that free money and they do it all day long Or those or they'll raise margin limits and then they'll drive and then they'll short the market to drive the price down so people get margin all him put any more money so they got to cover. I mean all of these things happen but they're all not just happening vacuum. They're happening because shit's getting real. And i think you're getting down to the end of kenji based system that's consumption yet versus a system that is being built to the east upon equity and upon and upon commodities and upon infrastructure building. Twelve airports this year per year and air like air aircraft carriers to those on the point and their you and and you know what the ultimate irony of it is the ultimate irony of it. All is that so the chinese used to they were the biggest buyer of our treasuries. And now they're really not buying them anymore in fact or not even rolling them over and they're selling them and so the all of the money that we've given the chinese and they take that money and they buy our treasuries and earn interest so they own our debt but instead of rolling them over there now taking that back catching them out and all of that money. They're receiving in dollars. Point to fund our ultimate demise. Which is the building of this new infrastructure and they are eat. Seventy percent of the world is being connected by china and none of it has anything to do with us out. And that is why. I say to you that everything else is just noise. And that is all you need to see is. The reclassification of goal is here one the acquisition by the biggest money in the world and now what is happening in asia. And what that really means to me. Those are the pieces that show that something. Big is common. I don't know what it is. It is yeah. I totally agree. Did you see the classification antion. I know gold is tier one now but on silver Correct me no. It's not it. I don't know what classification it is. It's too much of an industrial metal to last one. Okay here's the thing about it. Think about this. Ask yourself this question. What other commodity can you think that has such massive demand in two different areas in other words. Gold is all monetary copper is all industrial for the most a. You have an asset. That is very unique. In fact there's a chart that your listeners would be wise it looking at. And i don't know exactly how to find it but Gentleman i respect. His name is steve san angelo and he has a website s r s rocco and his Srs rack would com and his focus is mostly on energy and how it impacts investment and his very very smart but basically what he showed the other day. That's a couple of weeks ago yet. A chart that. I've found extraordinary and and i would concur with at least from my own opinion my own experience and it was that he showed a chart of all of the silver that was mined for the last twenty years and the chart had bars to colors. Is the bar. The orange and blue and the blue was industrial in the orange was monetary and it basically said that. And you can see that. We've we've been trending down for the last few years. In global nine years ago we are mining a billion and a half ounces than a year. now it's down to about eight hundred million but that for the last twenty years about eighty percent of all the silver mind went to industrial application. So this was before batteries and and green and all this stuff so it basically showed that twenty percent went to monetary. But what's really interesting. I hit this chart on his website. Look you'll find it He's shown any takes these numbers from the silver institute in from you know from very credible sources basically showed that these numbers have flipflop so over the last year and a half including this year. The majority of demand has come monetarily. Now you know. I become friendly with the The wall street Guys the silver rettig guys and they've got over one hundred thousand subscribers since february The amount of interest globally in silver from a monetary standpoint has exploded because what other asset class is half of what it was placed at one thousand nine hundred eighty. Basically you know everything is at all time high. So people bogan to the value monetarily and silver. And because that's flip-flop look the supercharge potential where one day You know what's his name Guys named from tesla. What's his loan must on weights. Upset you guys we better go. Buy a billion dollars worth of silver or we can't guarantee production. Look how hard it's getting to get and then apples as we gotta do it. In samson says we got to hedge from guys say jump in jump in and and and it will become a battle between the industrials and the investors because there are no other assets or commodities that are duly bracketed in demand and the interesting thing about that is at both areas are exploding. Monetary demand is exploding globally an awakening silver potential and value at the same time. This whole world is going fixated on bowling green and and digital and so the need for silver which is depleted another five hundred ounces of silver of every tomahawk cruise missiles needed in everything from military to water purification solar panels digital to everything he said centered announces. So five of my hundred ounce englehards is in one missile in the tip of every time you google that you'll see and they'll tell you mike in kilograms and it comes down to almost five hundred. So and and here's the difference between gold and silver and this is why silver this is why the us government would say it would be crystalline structures in that. You could argue that. Probably eighty ninety percent of all the goal. Deborah mind since genesis is still on the surface of the earth even if it were in shipwrecks point of is that you have pays to recycle anything. That's used an industry with old and gold is not used predominantly industry. But even if it is it's it's it's recycled because of its value but silver. If you think about all the things you guys have touched two little boys. The first hand held mattel. Football game ever played or or that the first cellphone. The first calculated the first hairdryer to black and white. Tv anything you've ever touched has a tiny silver and where whereas all that stuff landfill landfill and and it doesn't make sense to pull an eighth of an ounce silver out of a black and white tv when silver back then was valued at three bucks an ounce and just to pull it out of the mother or a hundred announced out of an iphone doesn't sell all of that silver over the past seventy five years in anything that you that's gone and so silver is depleted and it is becoming war depleted whether it being blown up in bombs or used in industry it's not recycled and so this is when we talk about the supercharge potential of silver. I mean it's so logical to me. It's ridiculous and the hard part of it. All is a wise said. The wolf comes at the end of the story is because i am a little boy. I am the little boy cried wolf. Because i mean look i. I remember when silva was two and a half or three dollars when i first started in this industry. So in retrospect most people don't realize that since two thousand bold has outperformed the s. p. five hundred by almost two hundred percent because it's a tortoise versus the hair. So the thing of it is that we've all grown accustomed over the last few years to believing that investments are supposed parabolic immediately like bitcoin and like tesla. But they're not and it. This is a long game. Where the wealthiest people in. The world are accumulating but they're using the price in holding the price down in order to do it. Some people would say well. Why don't the chinese bitch about it. Why do you think they're the largest accumulators of it in the world is fixing. I'm in until it gets to the point where there's no bid in other words. No one in the west is willing to sell it but china's will then say okay. We're gonna start quoting the price on the shanghai gold exchange and if you don't like it too bad so i mean there's a lot of things that if you look at the big picture if you know people worry about what's happening tonight they worry about what's happening in fifteen years from tonight. I made a really good point with that too. I always preached people. China doesn't think in days in years they think in decades. So yeah you. Can you just like how to our listeners. How what's the process. What we do. I mean we gotta cited her to do we contact you as far as so far. Website is being rebuild and our web store is inoperative so when people see items on there it has no reflection of what we have normally. What i tell people to do is email us at info at miles franklin info at miles franklin and and and put the name of your show in the subject line and ask for a Any questions you have worn an inventory or bowls and we will email you back with update or inventoried all the time. Our prices will be as good or better than anyone in the united states for And and we will give your listeners I promise you as good of a price on anything they want in the country is you can find our personal service. Everyone of my broker's as as basically either been with me for decades or are some of my oldest best friends gentleman here who runs our breaks. Division is my best friend since second grade. Have dan who works out of minneapolis. Who's been oppressed readily. I've tried lance and david to my best friend since high school These are our relationships that are all centered around trust. We've done this for thirty one years. And i only work with people who might trust and people who i care about and it it shows in the way we treat our clients also. We are the only licensed bonded major company in the united states. That i know of so anyways Insult miles franklin will stand up an inventory. I won't answer questions and Is that in a pdf format or is it just like an ill. Okay is a pdf so like even for myself. I'm gonna do this. We sold before we started talking. Yeah yeah we're we're all like all right. We'll look so we get an email gathered price sheet and we can just call. And i'm even saying there's more for stephen myself because you're getting couple customers so you you guys you guys. Steve knows steve knows how to get a hold of meat. Knows myself on. And i made the mistake on big swears Channel twenty twenty and right when all craziness hit to give out my cell phone. And i literally i mean when i tell you twenty twenty. I worked eighteen hours eight days a week. I honest to god. I'm not lying and and i and i do talk to a lot of my clients. Accessibility is very important to us. So someone will get back with your many cases it will be And we're world school but were very professional. I love that you yet. We'll get back to. You will answer your questions and and less than thirty seconds placing an order for people who don't know how it it's the easiest thing in the world all right some calls and says i want to buy gold. We answer all the questions or questions you have. There's a words here's about product your prices. Let's talk economics stopping geopolitical okay. One actually placed order now. Great so i want x. amount of all the next month silver. i want the eagles. I want the pain to roose. Bolton we lock it in now when we lock it in your own it. Because as we've done muttering i have to hedge so we hedge it you own it. I do things on a verbal handshake. A lot of companies won't do that. They'll try to buy stock on your word without money on your health and see what they say doesn't work so all i ever ask of people is that i am a man of my word always have been never had a customer complaint in thirty one years all i ask. Is that when we lock in an order. The questions have been answered. we lock it. We sent an email for verification of the order. That's an invoice for your records. There are three ways to pay with practicality four ways one personal or bank jeff to a bank wire three in. Ach which is in each actor personal checking in ach through us. Bank takes seven business days for us to release days a wire. We would ship within forty eight hours and the fourth way to pay and this is not an endorsement but it is reality. We also take bitcoin and the reason we are able to take. Bitcoin is that it has hedged. We can hedge it on the comex market Since there are so many people that have bitcoin. We will immediately through bit pay. You just download a bit pay wallet. We will send you a bit pay link. We can hedge our exposure to point and bitcoin ship immediately. So those are the four. Easy way is everything gets shipped primarily through. Ups insured and one last ten some the insurance which is really nice. If you have a package that's valued at ten thousand dollars. We will ensure it through. Ups for a hundred fifty bucks and put adult signature required. Now you may be thinking. Well what good does that do me if it's lost and that is because we work with who has a a tracking software that meshes with ups's software and puts the other nine thousand eight hundred fifty insurance on it so the ups beiber does come to your host and say to your wife. Jeeze lady when he got here. Gold thrive so that they just know it's got a little bit of value and then they take it outside the amazon stream and give it some care but it's insured from door to door and that's it that's about as difficult as it is wa. I know i'm gonna put an order in this week. And i just want to test the process so i can come back on the show and be like. Hey i did this. Yeah okay now. You mentioned The if we buy buy rounds we can get them at Four fifty or four nine thousand nine above spot so while The particular coins that i sent you earlier where the twenty twenty one noah's ark points and you know normally there six major minutes of the world. There's us canada austria australia united kingdom in south africa. This is actually issued a by the government of armenia. And they're twenty twenty one but they are produced by the geiger mint in germany which In all the years that i have sold in and owned coins and bars they may be the highest quality. I've ever seen. They make the most unbelievable a hundred graham in ten out. Silver bars you've ever seen at and so on behalf of the armenian government they Produce these noah's are coins. They are twenty twenty one. They are ours in fifty cents over. That's on par with what everyone in the country of selling generic rounds or it's an amazing deal and then we have on all the pre nineteen eight ninety seven and earlier circulated extra fine grade ten and twenty dollar gold pieces. These are the coins that people were spending when roosevelt confiscated. Like you were saying a three. These were in someone's pocket one hundred years ago but they're really nice condition and at one hundred twenty nine over. Not only i believe is the finest twice in the country. It's on par with what you would buy. Bullion points like eagles in may in fact the eagles are so expensive right now is probably sixty to eighty bucks cheaper than eagle but few bucks more than a maple or a kangaroo but the cool thing about it is that on relative basis. I don't know that i've ever seen him this. This inexpensive in their relation to gold bullion in in two thousand eight when obama took office and everyone thought was not confiscated. These same extra fine. Twenty dollar liberties i would have paid you. Many as you'd sell me fourteen hundred and fifty bucks with a thousand dollar golds five christ for forty five percent premium and. That's the kind of potential you get plus no dealer reporting safety station. So they're really amazing and we got several hundred of them so between the twenty dollar a ten dollar gold piece which is half the size and half the weight which were legal tender gold coins prior to thirty well in this case prior to nineteen eight Along with the silver coins. I think your listeners will see. It's the best value in both Over that they can find and make sure. They mentioned that they came from you. And we'll We'll take extra special decker awesome. Thank you yes and we've got to have you back on man you got you gotta just too much information up here Andy thank you very much for coming on. So if you guys are interested in getting some physical like daniel and i are just let Info at miles. Franklin dot com. We'll put lincoln the show notes. Let them know you heard it on in it to win it and you'll get the special price and yeah andy kaufman. Coal guy. i. I really like this Precious metals network. group The people you can Scamper up the spiderweb and start revenue elbows with people who know what the hell. They're talking about very quickly. i I dig it. If you are interested in precious metals like daniel. i are Shoot them an email info at miles. Franklin dot com. That'd be a link in the show notes if you put in the subject title in twin it the show will get a little kickback Andy oh hook us. Up with a little kickback from your purchase So that helps out the show. Appreciate it and you will get to secure yourself a safe and hopefully very prosperous future Worked from i'd say a year and a half to ten years from now long-term bit Ask for the Pdf in your email. And they'll shoot you their inventory list Also include any questions. You have include your phone number. They'll typically call you back within Every time i've left an email they've they've called back within a few hours and left one on the weekend and he called me back at seven. Am monday morning so they're on. Let's see any questions you have. If you're i'm looking at the At the inventory sheet right. now it's very it's You know says how many they have. They have seventy nine of these bars They have fifty thousand of these coins. The you know it's If you have any questions on it you can shoot me. An email steep art money at gmail.com Go to our website. steep money dot com. And you can listen to. Past episodes please. Rate and reviews on i tunes Give us a little thumbs up on youtube. We're going to start coming out with video format of this show as well so it'll be auditory like you're listening now and video soon on youtube So that'll be fun. Thank you for being there and Thank you for telling a friend and thank you for tuning in here. Is your weekly motivational speech. There was one gift are craters given us what is it. What is the one power that you have right now in. This moment could change everything. The scorn singular individual the can change anything in our life. regardless of what's happened to us. And i know you know the answer. The answer the power of choice. The one thing we have in this world is we can't control the events where we can choose what to focus on the can choose what things me and we can choose what to do and enterprising person is one who sees opportunity in all areas of life to consistently take advantage of the opportunity that you've created to be aware could face life with your eyes and ears open to the possibilities that may be just around the corner. Attitude can have a greater impact on your success in your acute. You can be extremely talented. Have incredible potential. But you don't have the right attitude. Keep you from rising. We stand all kinds of time and money making sure the outside looks good eating ride working out and that's all fine but too often. We're not spending any time on the inside. Their only eight six thousand on its seconds day. And you've got to not only operated. You've got his quick quick. You're going to hurry because there's somebody else who's on the same track you on somebody else on the same path that you want. Is somebody else just like in china. And sometimes they're working just as hard as you're working. The point is much. This is much cheer. Just jim just got into a fasten. Quicken listen if you have a scarcity mindset and you just have your hand closed in trying to hold onto what you've got because it's only thing that you got. No one wants to have it. He said every time an opportunity goes by that close and you missed the opportunity. Figures you're holding onto what you half. That's so important that you're not willing to let go and see something that could be bigger better and we just. We just need to be handed. A lot of us never accomplish our mission because we will not be honest about our motives. We'll say what we think we should want. And that's why we never get anywhere and while we never get anywhere self awareness since he cannot change the frequency of can jane and change what we do what you have at the moment attracted by the person because if you looked at everything will change. You don't have to change without side you've got to change what's inside to have more you simply have to become more. Then he said don't wish it was easier if you were better. Don't wish for less problem wished for more skills. Start working on yourself. Making these personal changes all team.

andy john williams Dan gee miles franklin Auster ho stralia lawrence summers Liz okay mike hake andy chapman jamie diamond zurich steve morgan mike moloney