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Transcript
00:00:00 We are here today with Teresa Gao.
00:00:02 She is the co-founder and managing partner of Acrew Capital and one of the most powerful
00:00:07 women in Silicon Valley.
00:00:08 Teresa, thanks so much for having us.
00:00:11 Thanks for being here.
00:00:12 So Teresa, you sit here as one of the most powerful women in Silicon Valley, arguably
00:00:17 one of the most powerful women in business, but you didn't start out that way.
00:00:21 I think your story is really emblematic of the American dream.
00:00:24 And you gave a TED Talk about the American dream.
00:00:26 Without going into the TED Talk, what does the American dream mean to you and your personal
00:00:31 story?
00:00:32 It's so central to my personal story.
00:00:35 I really believe, I know it sounds maybe corny these days, but I believe in the fundamental
00:00:40 point that with all of our challenges, both as our country, but at the end of the day,
00:00:48 the American dream still lives because it lives in people like my parents and me and
00:00:53 my sister and millions of other immigrants who came to this country to have a chance
00:00:58 at a better life.
00:01:00 And I never thought that I would be here.
00:01:03 I was born in Jakarta, Indonesia and came with my parents when I was a young child and
00:01:08 ended up growing up in a town of 2,000 people outside of Buffalo, New York.
00:01:14 And I never dreamed that I would even be in Silicon Valley.
00:01:17 I honestly probably didn't know what it was.
00:01:19 But it just goes to show you that, look, you also need to have some luck.
00:01:24 But someone once told me that you can improve your chances at luck by working hard, getting
00:01:30 a good education, and then really going for something that you're passionate about.
00:01:35 And I'm truly passionate about startups.
00:01:37 And I've been fortunate to make a really amazing career by combining those things together.
00:01:42 What did you want to be?
00:01:44 What did you imagine would be your career?
00:01:46 So when I was younger, so I've always liked math and science.
00:01:50 So maybe it's not a surprise that I became an engineer.
00:01:53 Although nowadays, I really just spend time backing other engineers.
00:01:56 But that's fun too.
00:01:58 But when I was younger, I was really, really interested in being an astronaut.
00:02:04 Sally Ride was kind of like, you know, it.
00:02:06 Before Sally Ride existed, I was all into reading like the right stuff and fighter pilots.
00:02:11 But I realized that while I could, maybe I was good at math and science, maybe I could
00:02:16 help be part of the engineering teams to design those planes or those aircraft.
00:02:20 I have terrible eyesight and also probably would never make it through, you know, aviation
00:02:25 school.
00:02:26 And so there you go.
00:02:28 Let's design aircraft instead of becoming an astronaut.
00:02:33 So you went to school for engineering?
00:02:34 I did.
00:02:35 I did.
00:02:36 So I ended up getting a degree in material science and engineering, which did a lot of
00:02:41 work on ceramic composites, which are actually critical to spacecraft and aircraft, but particularly
00:02:49 because they are highly resistant to heat and temperature changes.
00:02:52 So it's critical for reentry from the atmosphere.
00:02:56 So a little small part of it, but it did.
00:02:58 There was a through line from the little girl who read the right stuff.
00:03:01 Oh, I love that.
00:03:02 How did you go from that to Silicon Valley, from NASA to Silicon Valley, if you will?
00:03:08 Well, I was never even asked, from being an engineer at like General Motors and British
00:03:12 Petroleum working on these, you know, new generation materials.
00:03:17 So as part of that work, my whole family, they're all in medicine, which was what they
00:03:22 wanted me to do.
00:03:23 And I had different ideas.
00:03:25 So engineering was the next acceptable career to them.
00:03:27 So but all I knew about business was like really big companies.
00:03:30 Like I said, I did an internship at General Motors.
00:03:32 I did an internship at British Petroleum.
00:03:35 But when I was so I didn't even know what startups or Silicon Valley was, but I saw
00:03:38 that the people who were engineers that had the jobs that I thought were more interesting
00:03:43 weren't necessarily the ones doing like sitting in the lab or behind the computers doing CAD
00:03:47 CAM drawings like what I did as an intern.
00:03:50 They were actually the product managers.
00:03:51 So they would take that research and then actually design it into a product.
00:03:56 And all of those people also they had engineering degrees, but then they also had business degrees
00:04:00 because they needed to understand both the consumer demand side of it as well as like
00:04:05 we have to build products that are safe and manufacturable.
00:04:08 So based on that, I decided that I would try to get an MBA because at that time they all
00:04:15 had them and study for my GMATs.
00:04:19 And then out of I was fortunate to get into a bunch of schools, but Stanford was my first
00:04:26 choice because it was in the middle of Silicon Valley.
00:04:28 Again, I still didn't know about startups.
00:04:30 So I wrote about I'm going to become a product manager at like Hewlett Packard or one of
00:04:35 the big companies that existed back in the '90s when I went to business school.
00:04:39 And then really being here, really literally at the cusp of the internet, right, the early
00:04:44 '90s, I remember downloading Mosaic, which is what Netscape became in the computer lab
00:04:51 when I was at business school at Stanford.
00:04:53 And that just kind of opened my eyes to like, oh, well, you can be a product manager at
00:04:58 a big company or there are actually these startups that are raising money from venture
00:05:02 capital.
00:05:03 So that's really - I kind of fell into it that way.
00:05:05 So then I joined a startup with some classmates from Stanford.
00:05:09 We raised some venture capital.
00:05:12 That's how I learned about the venture side of things.
00:05:14 And then eventually, as they say, I joined the dark side and became a venture capitalist
00:05:20 and have been doing that ever since.
00:05:22 Side note, I think that phrase is so funny because it's such an intertwined ecosystem.
00:05:28 Entrepreneurs need funding.
00:05:30 Investors need something to fund.
00:05:31 So I think they're saying it's intertwined, right, because it's like the force, right?
00:05:34 There's the light and the dark.
00:05:35 And in fairness, the entrepreneurs are the light.
00:05:38 They're the ones who are the optimists, who have to see the future and then really try
00:05:43 to build it, right?
00:05:44 And we - I don't think we're the dark side, but the other side, the yin to their yang.
00:05:49 You're right.
00:05:50 I agree.
00:05:51 It's an ecosystem.
00:05:52 Do you remember your first investment?
00:05:53 What was the first company you said, "That, I want to invest in that"?
00:05:56 So the first company that I invested in, so this was 1999.
00:06:02 And actually, it's interesting because there are several big companies right now that are
00:06:07 doing this.
00:06:08 It was in an entrepreneur that I had worked with before.
00:06:13 And he had an idea to build sort of internet software that would allow people to make real-time
00:06:23 credit decisions in order to extend credit, whether that be e-commerce companies or businesses
00:06:30 to other small businesses.
00:06:33 You can think of it in some ways, essentially, and they started out a little bit around the
00:06:37 same time.
00:06:38 And this company still exists.
00:06:39 It's a company called Bill.com.
00:06:41 It's not that different from what Bill.com does today.
00:06:45 But in the whole full circle, so that was about 1999, that company ended up getting
00:06:49 acquired by somebody else, so it wasn't a huge success.
00:06:55 But interestingly, in full circle, Bill.com bought one of our A.Crew portfolio companies
00:07:01 last year.
00:07:03 So it's just kind of really interesting how the lines connect somehow.
00:07:08 That's incredible.
00:07:09 All right, let's talk.
00:07:10 I love full circle moments, and I wanted to talk to you about A.Crew.
00:07:13 You founded A.Crew in 2019.
00:07:15 You were 51 years old, and you very quickly, or maybe it seemed quick to the press, it
00:07:20 probably didn't feel quick to you.
00:07:22 I think your first fund was $250 million debut fund.
00:07:27 Talk to me about how and why you started this.
00:07:31 So I guess the biggest thing I would say is, looking back, co-founding A.Crew with my partners
00:07:41 was the best career decision I've ever made, hands down.
00:07:45 And I know that maybe particularly in these times, but kind of always, the idea of going
00:07:51 out on your own and leaving your firm, whether that's a venture capital firm or a big company,
00:07:57 and starting something on your own can seem really scary.
00:08:00 But now, with the benefit of hindsight, I feel like it's actually the smartest thing
00:08:05 you can do is to bet on yourself.
00:08:07 Because as managers, we choose people to hire, to promote, and/or also as investors, whether
00:08:15 it's projects or companies to fund.
00:08:17 And we do it in large part, especially at the early stage, on the people.
00:08:21 Do I believe you are going to be the right leader for this business?
00:08:25 And calculated risk is what investment's about, risk/reward.
00:08:30 Who do you know better than yourself?
00:08:32 And so betting on yourself sounds scary, but it's actually probably the most informed bet
00:08:38 you'll ever make on a management team.
00:08:40 Who can you know better than yourself?
00:08:41 >>You make it sound so easy.
00:08:42 My mind is blown.
00:08:43 That requires a great deal of self-assuredness.
00:08:50 >>So I will say, I am very fortunate in a couple of ways, right?
00:08:55 So I didn't always have this self-confidence, but sometimes things happen in your career
00:09:01 that seem like they're a big disappointment, and you find yourself being braver and having
00:09:07 more self-confidence to try something new because the path you thought you had in front
00:09:11 of you isn't exactly what you thought it would be.
00:09:14 So I'll be honest, that was part of it.
00:09:16 I'm not sure I would have done it except that there were some disappointments that led me
00:09:21 to sort of rethink what I wanted to do.
00:09:26 I know that I was very lucky that I was able to do this, both from the standpoint of being
00:09:31 at a stage in my career where I had the resources to take a chance on myself, and that I have
00:09:37 amazing support from my family and my partners to do all of these things.
00:09:44 So I want people to think it's easy, but I also want people to understand, I understand
00:09:53 the pragmatic part of it too, and a lot of things have to be in place.
00:09:57 So with that said, I think that it's been, it's turned out to be the greatest thing.
00:10:05 You mentioned the debut fund.
00:10:06 We've been fortunate.
00:10:07 Accru Capital now has, we have over a billion dollars under management.
00:10:11 We launched Accru Diversify Capital Fund, which is the largest venture fund focused
00:10:17 on increasing diversity of stock ownership in tech startups and bringing those people
00:10:24 into the wealth generation and onto the boards of these companies.
00:10:28 So I'm really excited to be able to bring together my professional passion with my personal
00:10:34 passion for better diversity and inclusion in tech.
00:10:38 So I'm super excited and I feel fortunate.
00:10:40 I also think the other big thing is as working moms, we convince ourselves that we need to
00:10:48 take the safer path professionally in order to be more stable for our families.
00:10:55 And notwithstanding everybody's personal circumstances are different, understanding I was fortunate
00:11:00 from that perspective, I have actually found that I'm able to be much more involved and
00:11:06 engaged in my children's lives while also being as excited and probably not good as
00:11:16 my career has actually taken off.
00:11:17 So both things have really taken off.
00:11:20 My relationship with my kids, my ability, because part of it is when you're the boss,
00:11:24 whether it's a venture firm or your own business of whatever sort, I'm pretty sure my partners
00:11:30 would say, "I work just as hard, if not harder, than I did before, but the difference is I
00:11:34 control the timing and the agenda."
00:11:39 And I think everybody on the A-Crew team really appreciates this.
00:11:42 So we have a thing, right, which is like I learned pretty early in my career that if
00:11:47 we give people the flexibility to like, "Hey, we understand it's important to show up at
00:11:52 your kid's soccer game," or if your kid gets sick, then of course you drop everything and
00:11:57 go to the doctor or your parent or whatever.
00:12:01 When you give people that flexibility, I found that people actually work harder and feel
00:12:06 much more aligned and committed to the place where they work.
00:12:10 You hit on a lot of really important points in what you just said.
00:12:13 I want to start with the learning moments, and I want to ask the question this way.
00:12:20 Was there a moment before starting A-Crew that you were looking at your career and you
00:12:25 thought, "I can't do this.
00:12:26 I need to give up.
00:12:27 It's too hard."
00:12:28 You were juggling family, juggling personal goals, juggling this important work.
00:12:31 And if so, what was that moment?
00:12:33 There was.
00:12:34 So I talked about this.
00:12:38 So there was a point where I was having some challenges both at work and it also coincided
00:12:46 with my divorce from my kid's dad.
00:12:49 So as you can imagine, that's a lot of change going on at the same time.
00:12:54 And I thought about, I had been really fortunate that I was in a position where if I didn't
00:13:03 work again, my family would be fine and I could be there 100% for my kids.
00:13:09 Should I just give up venture capital?
00:13:12 But I realized a couple of things.
00:13:16 One was that the setbacks in the career weren't really related to investing or working with
00:13:21 the companies.
00:13:22 It had more to do with the culture of the partnership dynamic.
00:13:25 And I was like, "Well, you know what?
00:13:27 I have a pretty clear idea of what I would like that culture to be."
00:13:33 And I still love working with my companies and I still love meeting new companies and
00:13:37 potentially investing in them.
00:13:39 And I think actually the biggest thing was that I realized during that time that I could
00:13:45 be there for my kids.
00:13:47 My kids were very young then.
00:13:48 So I could do nursery school, drop off and pick up, or volunteer to be a field trip chaperone
00:13:58 for my older kid.
00:14:00 And I could do all of those things and still do what I loved.
00:14:04 And I actually think, probably not the little one, but the older one was kind of like, "You
00:14:09 know what, Mom?
00:14:10 You're like, it's better."
00:14:11 Because they were getting to, the kids are far, far in age, as you know.
00:14:14 So the one that was older was like nine.
00:14:16 It was kind of like, it's really great that you're starting to come to the field trips
00:14:20 and stuff, but you don't need to be here all the time.
00:14:23 So I was like, "Okay, this is a good balance."
00:14:27 Just make yourself available in the moments when they want you.
00:14:29 And now that they're teenagers, now I really understand.
00:14:31 It's like being around, but not being around.
00:14:34 So when they want you.
00:14:35 So it's a long answer, but the short answer is so, I had this epiphany where it was like,
00:14:41 "Look, obviously going through a really hard time for our family.
00:14:44 I'm happy to say we're all like a big, beautiful, modern family, blended family now."
00:14:50 But part of it was like the insight from one of my kids.
00:14:54 And part of it was just like, in talking with many of the entrepreneurs I was fortunate
00:14:59 enough to work with, they were like, "Look, we haven't seen any change."
00:15:01 Because I was like, "Look, I'm going to have to be a little bit like, context switching,
00:15:07 not always as available for these next few months while we figure out the new schedule
00:15:11 and everything else."
00:15:12 But to hear one of them say like, "Look, we've known you for a long time and you seem
00:15:16 happier than ever, despite I don't even know what's going on because you're like, and you're
00:15:21 just still there for us."
00:15:22 And to have your kids say the same thing.
00:15:24 So then I was like, "Okay, maybe I can do this.
00:15:26 There's no, I'm still young.
00:15:27 There's no need to give it all up."
00:15:30 And maybe I think in the long run it was probably better for my kids because I don't think I
00:15:36 am, but I could see how if I was, to put the career in a box and then just focus on the
00:15:42 kids, I could see how I could have become a helicopter mom.
00:15:45 I know that about myself.
00:15:46 - Treat your kids like a portfolio company.
00:15:47 They'd be like, "No, thank you."
00:15:48 - Well, it's actually why the portfolio companies don't want you to just have one, right?
00:15:54 It's good to have five or six because it's like, if you just focus on them all the time,
00:15:58 it's a little too much.
00:16:00 - So it sounds to me, and I've talked to a lot of powerful women about what were the
00:16:03 conditions that allowed them to rise to their position.
00:16:07 It sounds like you're describing a support system, but I don't want to put words in your
00:16:10 mouth.
00:16:11 How would you describe the conditions that allowed you to sit in the seat that you sit
00:16:13 today?
00:16:14 - Yeah, absolutely.
00:16:15 So look, it definitely started, kind of going back to the question about my family and emigrating
00:16:21 here and the importance, definitely starts with my family and the support of my family
00:16:25 early on and sort of telling me that, "Look, school is really important.
00:16:34 Work really hard.
00:16:35 Be very serious about that."
00:16:37 But also even later in life.
00:16:42 My parents live half a mile away from here, and especially when my kids were young, and
00:16:47 even now, even yesterday, when I had to be in two places at once, they helped with everything
00:16:52 from helping the kids.
00:16:54 And it's important because, frankly, now that I have one that's older, I see how strong
00:17:01 the relationship is that they have with their grandparents.
00:17:05 And so it's a wonderful thing.
00:17:07 Not only does it alleviate mommy guilt if you can't be two places at once, but it's
00:17:11 really wonderful to see the relationship, multi-generational relationship amongst the
00:17:16 family.
00:17:17 So it definitely starts with that.
00:17:19 I do think, I don't know whether it's education, but a love of learning.
00:17:23 The thing I love and why I went to the dark side is I get to work with five or six companies
00:17:28 at a time, all building different technologies, different stages of their growth, different
00:17:34 business models, and I get to meet dozens of new companies every month.
00:17:39 And so if you really like learning about new things around business and technology, so
00:17:45 I think it's like having built, creating the right support system around yourself.
00:17:51 And then, frankly, I used to give younger executives, find something that you're really
00:17:57 passionate about because, look, if you're, I used to give this talk to a lot of young
00:18:03 in their career people, right?
00:18:04 It's like, look, you've already, you've done school, maybe grad school, you're clearly
00:18:09 like, you've got the raw materials to be great.
00:18:12 Find something that you really love because if you really love it, then the chances that
00:18:17 you'll be not just good but great increases.
00:18:21 And at the same time, and maybe this goes to like take a chance on yourself, if at any
00:18:24 point in time you're not loving, and I don't mean every day, obviously, no one loves their
00:18:28 job every minute of every day, but if for a long period of time you don't love what
00:18:31 you're doing, don't be afraid to change and do something else because it just increases
00:18:36 the chances that you'll be great at it because it doesn't feel, I mean, it's obviously work
00:18:41 but it doesn't feel as much like work if you're getting enjoyment from it.
00:18:44 >>Now we are sitting here today for the 50 over 50 franchise which celebrates and highlights
00:18:50 women who are stepping into their power over the age of 50 and beyond.
00:18:54 Did you ever imagine your career when you were, say, a teen, did you ever think, "When
00:18:59 I'm 60 years old, I'm going to be doing this"?
00:19:01 What did you picture?
00:19:03 >>So I definitely didn't picture this.
00:19:05 Like I said, I didn't even, when I was a teen, I didn't even know really anything about Silicon
00:19:10 Valley and I didn't, I probably didn't even know how to spell venture capital, right?
00:19:13 So not this for sure.
00:19:15 Honestly, when I was a teen, I would have thought being in my 50s, I was like very old,
00:19:21 I would not have thought that I would be doing anything much.
00:19:25 So I don't know, maybe I thought that I'd be like, you know, an engineer somewhere but
00:19:31 getting close to retirement and honestly like now I feel like, I feel like there's still
00:19:38 so much ahead.
00:19:39 >>Do you feel like being over 50 is an advantage or disadvantage in your line of work?
00:19:45 >>So I think the answer is contextual.
00:19:49 So sometimes it's an advantage and sometimes it's a disadvantage.
00:19:52 A lot of times, so, you know, way back, exciting new entrepreneurs and in many types of companies,
00:19:59 as I'm sure you've read about, many people are starting their companies very young.
00:20:04 So when I started in venture and I was more their age peers, now it's very different.
00:20:08 So I think it can be a disadvantage from the standpoint of the next great 20 something
00:20:12 entrepreneur is not necessarily going to be found by me.
00:20:17 But that's why it helps to have a partnership that truly, like we were fortunate we have
00:20:22 three generations.
00:20:23 So that partner is probably going to be found by my 20 something year old partner.
00:20:29 On the where it can be an advantage though, is what you talked about before in terms of
00:20:32 the fundraising, right?
00:20:33 So like our investors who are, you know, university endowments, family offices, they
00:20:40 tend to appreciate people who have a long track record, who they can see, you know,
00:20:46 investing and returning money to their investors in both good cycles and bad cycles.
00:20:51 So now I have the fortune or good or bad fortune of, you know, having started my career in
00:20:56 the crazy 99, 2000 and then down through 2003 and then also obviously 2008, 2009 and now
00:21:05 the current environment.
00:21:06 So it depends on the context.
00:21:08 I think with certain people who you work with in venture, it's an advantage and with others
00:21:12 it's not.
00:21:13 And then even in working with the companies, you know, being on the board, like it's just,
00:21:17 it is an advantage to have seen, you know, have been through 10 M&A transactions and,
00:21:23 you know, literally hundreds of follow on financing.
00:21:27 And so in that case, you know, now I've kind of like grown into it.
00:21:29 I can be the elder statesman, if you will, on the board, you know, that the entrepreneurs
00:21:34 will turn to like, okay, especially now, how do we think about what to do when the macro
00:21:39 environment is changing not in a good way for us so rapidly?
00:21:43 How do we think about this and find the right balance of, you know, conserving cash, but
00:21:49 still going after the opportunities for new technology and growth that we see?
00:21:54 So I would say on balance, I choose to think of it more as an advantage and in the places
00:22:00 where it's a disadvantage, I think that's why you have partners and colleagues and you
00:22:04 find, you know, you fill in for each other's strengths and weaknesses.
00:22:07 That's a healthy perspective.
00:22:08 We had someone last year for this package tell us that she was told venture is a young
00:22:12 person's game.
00:22:13 Why are you trying to start your own firm?
00:22:15 But it sounds like you've had a different experience and one that allows you to layer
00:22:19 your experience on top of your team's.
00:22:21 Yeah, I look, I had those same questions asked of me when I started my, when I, when I went
00:22:27 out and started my first fund at the right, bold age of my 40s.
00:22:33 So I am, I'm aware of that.
00:22:35 And so again, I think it's, I think it is very much around building a partnership and
00:22:40 build the right partnership, just like some of my partners are really, really amazing
00:22:47 at investing in FinTech companies.
00:22:51 And I do a lot of cybersecurity, like, just like in that same way, there's other things,
00:22:55 you know, so it's about building, it's like building a team.
00:22:57 I'm a big, I'm a big sports fan.
00:22:59 So the analogy, and I'm a big, I'm a big Warriors fan.
00:23:02 So the analogy is like, you know, you don't want five players who are all seven feet tall
00:23:08 in play center.
00:23:09 You still need a point guard to bring the ball up.
00:23:11 You know, you literally need like people who compliment each other.
00:23:15 You just alluded to sometimes being the elder statesman in the room to put on that hat.
00:23:20 As you look at women in there who are just starting their career in their 20s, or maybe
00:23:24 in their 30s and are experiencing burnout, we have seen record rates of burnout through
00:23:28 the pandemic and pressures on women.
00:23:31 Uncertain economic environment doesn't help the situation.
00:23:35 What's your advice for women?
00:23:37 Let's start broad, just any, in any sector, in any career right now who might be thinking,
00:23:42 "I can't do it.
00:23:44 I need to take a sabbatical," or "I need to make a change," or "This is just feeling too
00:23:48 hard."
00:23:49 What do you say to them?
00:23:50 First of all, I would say, I think that this has been a very hard environment for a lot
00:23:55 of people.
00:23:56 And I hope that through things like good reporting like yours and elsewhere, people are at least
00:24:03 more aware of the unique, and I'll call them extra challenges that working moms have.
00:24:10 Not that the environment hasn't been challenging for everybody.
00:24:13 My advice would be, if you feel like your current situation isn't sustainable for yourself,
00:24:22 find a place that does sustain you and can still work with your life, your family, as
00:24:28 well as your work.
00:24:30 Now that might be starting something yourself, which could be like going freelance instead
00:24:35 of working for, so you can have more control of your hours.
00:24:40 Or frankly, these days, just finding a company.
00:24:42 Many, many of the companies now allow people to work flexible hours, hours from home.
00:24:49 So now that's assuming you love what you do.
00:24:52 If you don't love what you do, then maybe think about what do you love doing?
00:24:56 And maybe that is like a complete career change, because we've been reading about people who
00:25:00 do that too.
00:25:01 And you brought up sabbatical.
00:25:02 I'm a believer in sabbaticals.
00:25:04 I took a sabbatical when I made my decision to leave my big firm and start my own thing.
00:25:09 So I'm all for sabbaticals.
00:25:12 I think that if you're fortunate enough to have one from your company, you should take
00:25:16 advantage of it.
00:25:17 And if you don't, then you can make your own by just changing things.
00:25:22 So it's really hard to think about what you want to do when you're in it 24/7.
00:25:27 So whether that's a couple-week vacation or an actual sabbatical, depending on what your
00:25:32 personal circumstances are, I highly recommend it gives you a lot more clarity on what's
00:25:37 really important and what do you really like.
00:25:39 But I would just say I'm kind of trying to be an optimist.
00:25:43 So if I take lemonade out of lemons, I think that so many companies are aware of this.
00:25:49 And look, they've had to make some adaptations.
00:25:53 I think there are a lot more options that are a lot more flexible.
00:25:57 I think very few jobs require like 40 hours a week during set hours in a specific location
00:26:05 away from your family and your other responsibilities.
00:26:08 If you're in one of those, then I think there are plenty of other interesting both companies
00:26:12 and careers that are a lot more open.
00:26:15 And what's your advice specifically for entrepreneurs in this uncertain economic environment?
00:26:20 I know there's a lot of nerves out there, for lack of a better word.
00:26:25 So the advice that I give the entrepreneurs that I'm fortunate enough to work with is
00:26:30 the following, which is, so we don't control the macroeconomic environment.
00:26:37 We never have.
00:26:38 So have a lens and understanding of what's happening in the macro, which for entrepreneurs
00:26:45 right now, it's really hard to raise money.
00:26:47 So I don't know when that's going to get better, but I don't think it's going to be any time
00:26:52 real soon.
00:26:53 So then you should think about, well, the money that you have today, what's the best
00:26:57 way that you can invest it?
00:26:59 Whether that's if you're far enough along becoming profitable so that you have control
00:27:04 of your own destiny, as I say, you'll decide if and when you ever raise more money.
00:27:09 Or if that's not possible, finding that right balance of conserving your cash to have it
00:27:15 last as long as possible so you can grow.
00:27:18 The point is still to grow or meet your milestones, but it's a different view.
00:27:23 Whereas last year was sort of like growth at all costs, right?
00:27:26 Now different environment.
00:27:29 What resources do you have today?
00:27:31 And what's the most you can get to with what you've got today?
00:27:34 It will get better.
00:27:35 Even in 2000, because I lived through it, it does get better.
00:27:39 It might be a couple of years, but it'll get better.
00:27:41 How does right now feel compared to 2008 or 2000?
00:27:47 So to me, it feels, for tech anyway, for entrepreneurs in Silicon Valley, I'm afraid I think it feels
00:27:54 a little bit more like 2000 than 2008.
00:27:57 So 2008 was obviously a really significant macroeconomic shock, the Great Recession.
00:28:05 But for tech, a lot of it was focused around financial services, banking, and real estate.
00:28:12 So the return to normalcy for capital raising and just growth for tech companies in Silicon
00:28:18 Valley came back pretty quickly in a couple of quarters.
00:28:22 Whereas in 2000, we were the epicenter, and some might say we are again.
00:28:26 And so huge run up in '99, huge crash in early 2000, and it was probably a good two or three
00:28:33 years before the capital started flowing back to tech startups.
00:28:38 Now realizing the run up wasn't quite as severe, as fast as it was in '99 versus now.
00:28:45 So I think we're going to be somewhere in the middle, meaning I think it's going to
00:28:50 be hard to raise money.
00:28:52 Like we've seen there's very few IPOs, for example, for this year.
00:28:57 And I personally think most of next year, so maybe it'll be about a year and a half
00:29:01 or two years instead of three years.
00:29:04 But on the other hand, the reason for optimism, especially for companies that are in tech
00:29:10 that are earlier stage, is that the size and scale of the market opportunity is so much
00:29:16 larger.
00:29:17 I think when Netscape went public in 1996, the total number of internet, like people
00:29:28 who had access to internet through browsers or computers back then, internet through dial
00:29:34 up or whatever else, was measured in the sort of 60 to 70 million in the whole world.
00:29:41 And in 2020, I think the number, because many people have multiple devices, I'm sure you
00:29:45 do, I know I do, was something like 5 billion.
00:29:49 So if you just think about the scale, and that's not even talking about the fundamental
00:29:52 technology scale, right?
00:29:54 Like cloud computing, machine learning and artificial, like the technology advances.
00:30:00 So I'm medium to long term super optimistic because the technology now, every company
00:30:07 I think is a technology company.
00:30:08 You read about even like car companies now are technology companies, which on the bad
00:30:13 side we found out that was true, right?
00:30:14 With the supply chain crisis and when they didn't have semiconductors.
00:30:18 So technology is just much more integrated into so many parts of the US and global economy.
00:30:25 So that's why I'm medium to long term super excited about being fortunate to be a tech
00:30:30 investor here in Silicon Valley.
00:30:32 In the short term, I think that it's going to continue to be hard to raise money, right?
00:30:37 The Fed keeps raising interest rates.
00:30:41 Capital is getting tighter by design.
00:30:44 And I don't know, I'm not an expert on that.
00:30:47 I don't know when that's going to get better.
00:30:48 But I think the people who are building real businesses, the last couple of downturns,
00:30:53 you talked about 2008, 2009, some great companies have come out of those downturns.
00:30:58 And I think that this current downturn will be the same.
00:31:04 So medium to long term optimistic for tech investors.
00:31:08 What about for women?
00:31:09 We've seen, I've covered the funding statistics year over year over year, and you see a little
00:31:15 bit of progress, a little bit of pullback.
00:31:17 It feels a little bit like two steps forward, one step back.
00:31:20 What's your outlook for women right now?
00:31:24 I'm medium term excited.
00:31:27 I guess I've been following those statistics long enough to see that it's made some meaningful
00:31:32 improvement.
00:31:33 You're right, not in the last couple of years, but I go back to like 2000.
00:31:37 So when at least in terms of the percentage of female founders, as a percentage of companies
00:31:44 receiving some venture capital backing, that number has like doubled.
00:31:49 The dollars have been stubbornly small, and it's still only about 2%.
00:31:54 But the reason why I'm bullish, even in the shorter term, right, two things.
00:32:01 One is when I talk to younger female entrepreneurs, it's a very different mindset than, you know,
00:32:10 even 10 years ago.
00:32:11 Meaning they understand the challenges, but they are much more undaunted and also see
00:32:19 it as a potential area of strength.
00:32:22 Great networks like All Raise, there are networks to support one another and move things forward.
00:32:28 That's one.
00:32:30 And two, I'm excited because as more women become successful executives and entrepreneurs,
00:32:38 they start investing either as an angel investor or as an investor in venture funds like mine
00:32:44 and others, right?
00:32:45 And so the virtuous cycle starts to build.
00:32:49 Like it's long been held, like people say it's true, right?
00:32:53 There's a reason why people have written a lot about the PayPal mafia.
00:32:57 And it's amazing, but there's also a reason why.
00:33:00 How have they been so successful?
00:33:02 Well PayPal was really successful.
00:33:04 A bunch of them leave to go start other things.
00:33:06 They ask their friends to invest in their companies.
00:33:09 And there's nothing nefarious about it, it just becomes a self-reinforcing network.
00:33:13 Why excited?
00:33:14 Because I think we finally have some really amazing self-reinforcing networks of women
00:33:17 entrepreneurs and investors.
00:33:18 So the flywheel is beginning.
00:33:20 I know you've talked about being often the only woman in the room, particularly early
00:33:26 in your career.
00:33:27 And I know that's often framed as a negative thing, a very lonely thing, and it can feel
00:33:31 very lonely.
00:33:32 But I am wondering, were there ever moments that you felt like it was a competitive edge?
00:33:36 Well, you know, I tried to early in my career, because that was the reality all throughout
00:33:42 my 20s and 30s, I realized that it can be positive and it can be an edge.
00:33:47 So I realized that, for example, at conferences or trade shows or even during a fundraising
00:33:55 process, once I realized that I might be the only woman that that entrepreneur or that
00:34:00 entrepreneurial team might meet the entire day at a conference with 30,000 people, and
00:34:07 that they might be fundraising and going to dozens of venture capital firms, and I might
00:34:12 be the only woman that they would meet in that process.
00:34:15 The way I thought of it in my own mind anyway as a potential advantage was, well, if I can
00:34:20 make a good connection with them by asking them a smart question or making a smart comment
00:34:25 about their, if it was at a conference, like about their trade, their demonstration or
00:34:30 in a pitch meeting about their business, that when I wanted to follow up with them and I
00:34:36 sent them an email, since I have a female presenting name, the chances that they would
00:34:44 remember who I was out of the 50 or 100 people that they had met was actually higher.
00:34:49 So I was like, because when you're, especially early in, when you're like, you know, there's
00:34:53 dozens of young associates trying to find like the hot company and like make that impression,
00:34:57 I was like, okay, if I can make a moderately positive to positive impression, I'm more
00:35:03 likely to be remembered than someone who makes a similarly positive impression, because we're
00:35:08 all wearing the same uniforms and everybody had the same first name.
00:35:12 Like I worked at a firm with like more guys named Jim, Joe and John than females.
00:35:19 True fact.
00:35:20 That, that was my advantage.
00:35:22 That's what I told myself was going to be my advantage instead of being focused on the
00:35:26 fact that I was going to be the only woman in the room or the only woman they might meet
00:35:29 in their entire fundraising process.
00:35:31 I like that.
00:35:32 Early in my career, I was a personal finance and markets reporter, so found myself in various
00:35:36 rooms on Wall Street and was very self-conscious of I'm the only person in the room who's wearing
00:35:40 red or the only woman in the room and then I'm also wearing red on top of it.
00:35:45 So I felt like I really stood out and I think it made me shrink back in moments.
00:35:49 But it sounds like you really leaned into it.
00:35:51 I leaned into it from that perspective, but it's funny you talked about the way you dress
00:35:54 because in the 90s, 2000s, you know, the VC uniform back then used to be light blue buttoned
00:36:00 down and some sort of khaki pants.
00:36:03 Now it's like jeans and a hoodie because we want to look like the entrepreneurs.
00:36:06 But anyway, so I never wore dresses.
00:36:09 I literally like copied the uniform because I didn't want to, I was like, I'm obviously
00:36:14 going to stand out as the only woman in the room, so I'm at least going to like try to
00:36:16 look like, look the part.
00:36:18 I should look like a VC.
00:36:19 So I should dress like the other VCs.
00:36:21 That's so interesting.
00:36:22 Well, now other VCs can dress like you.
00:36:25 Yeah, it was a long time until I felt like I could dress like myself.
00:36:29 My work wardrobe and my real wardrobe.
00:36:31 I think that's been an evolution for a lot of women.
00:36:34 Yeah, I think so too.
00:36:36 What do you wish someone had told you about aging or being over 50 that you know now that
00:36:42 you didn't know when you were younger?
00:36:44 One is that I wish someone would have told me that, so on the positive and negative.
00:36:53 So on the positive, I wish someone would have told me that just being more comfortable in
00:37:03 who you are would give you a kind of confidence and self-understanding that would actually
00:37:09 help you in your career as well.
00:37:14 And on the not so positive, I wish someone would have told me that as you get older,
00:37:23 the gray hair needs to be dyed more frequently.
00:37:27 It's a lot of work because I think it's still true that, right, like when if men go salt
00:37:35 and pepper, they're perceived as being more serious, more gravitas.
00:37:42 And I do think in this, to your prior question about like is it an advantage, disadvantage
00:37:47 in venture and in tech to be older.
00:37:50 I think in that case, it can be a disadvantage to be perceived as older, particularly if
00:37:54 you're a female.
00:37:55 Well, Teresa, thank you so much.
00:37:57 Thank you for having me.
00:37:58 It was so fun.
00:38:03 Through a combination of intelligence, talent, and sheer will, Melody Hobson has worked her
00:38:07 way up to the top ranks of American business.
00:38:10 She's the president and co-CEO of Ariel Investments, the nation's oldest black-owned investment
00:38:16 fund.
00:38:17 She also serves on a number of corporate boards, including Starbucks, where she is chair, and
00:38:22 JPMorgan Chase.
00:38:24 Now Hobson's spearheading a new private equity fund alongside industry veteran Leslie Brun
00:38:30 called Project Black.
00:38:31 Its mission, to get more black executives into the upper tiers of the business world
00:38:36 by connecting them with both customers and capital.
00:38:40 So Project Black was an idea that was born really during all of the strife that occurred
00:38:45 after the horrific murder of George Floyd.
00:38:48 I had this idea, what if we could scale large minority businesses?
00:38:53 Because the data is actually stunning.
00:38:55 95% of black and brown businesses in this country have less than $5 million in revenue.
00:39:01 At the time of all the civil unrest with George Floyd's murder, many corporations were pledging
00:39:07 to do more business with black and brown companies.
00:39:10 And one of the things they said was, at that point, they were doing about 2% of their spend,
00:39:14 $125 billion with minority businesses, but a goal of 10% to 15%, which means there's
00:39:20 a trillion dollar opportunity.
00:39:23 But we have this scale challenge because our businesses are so small.
00:39:27 So I said, what if we could actually buy middle market businesses by virtue of our ownership,
00:39:31 my word, minoritize those businesses, bring in black and brown executives, change the
00:39:37 nature of those businesses with their boards, with their leaders, ultimately create businesses
00:39:42 that are the preferred vendors, tier one suppliers.
00:39:48 On February 1st, Ariel Alternatives closed its first Project Black fund with $1.45 billion
00:39:54 in commitments from investors such as former Microsoft CEO Steve Ballmer, Walmart, Salesforce,
00:40:01 and the Qatar Investment Authority.
00:40:04 That's on top of an up to $200 million co-investment commitment JP Morgan made when the fund was
00:40:09 announced.
00:40:11 Hobson's determination to see Project Black deliver largely reflects on her character
00:40:15 and professional reputation.
00:40:18 She grew up the youngest of six to a single mother experiencing financial hardship in
00:40:23 her early years.
00:40:25 But even with the odds of success stacked against her, Hobson was accepted to both Harvard
00:40:30 and Princeton, ultimately choosing the latter.
00:40:34 This is how she came to meet John Rogers, the founder of Ariel Investments.
00:40:40 I was volunteering for the Princeton Schools Committee, which is the committee that are
00:40:45 in local communities where you're trying to make sure that local alumni are interviewing
00:40:49 prospective students.
00:40:51 And I was ultimately vice chairman and then chairman of the schools committee, really
00:40:55 committed to recruiting diverse students to Princeton.
00:40:59 And I met Melody as a prospective student.
00:41:02 She came to all the events I arranged for all students and for minority students.
00:41:06 And you could see right then she was just really special.
00:41:09 She had so much charisma, so much energy.
00:41:12 She was so thoughtful and smart.
00:41:14 You know, she just shined.
00:41:16 In this industry, you're going to have some really big ups and some really big downs.
00:41:19 And you need a business partner who's going to stick with you through those tough times
00:41:23 and be able to not get frightened by the short term pain, make the tough decisions, use your
00:41:28 judgment in the right way.
00:41:30 And so I always say there's no one you'd want more to be in a foxhole with than Melody
00:41:33 Hobson.
00:41:34 In its 40 years, Ariel has certainly gone through tough times.
00:41:39 The 1987 crash, the dot com era and the most harrowing of all, the 2008 global financial
00:41:46 crisis.
00:41:47 To give you an idea, the fund went from $21 billion in assets under management in 2004
00:41:53 to just $3.3 billion in March 2009.
00:41:56 But the fund ultimately rebounded and has managed to continue successfully thanks to
00:42:01 its principles.
00:42:02 These include its contrarian buy and hold approach and reputation for active patients.
00:42:09 With Project Black, there's a particular strategy Hobson is betting on as its keys to success.
00:42:17 When I was growing up through Ariel, John Rogers always used to say to me, the founder
00:42:20 of Ariel, when people talk about black businesses, they talk about access to capital, access
00:42:25 to capital, access to capital.
00:42:28 And John said to me, access to customers may be more important.
00:42:32 Then I went on the board of J.P. Morgan and I was sitting in that boardroom and I realized
00:42:36 very quickly being on the board of the eighth largest bank in the world, the largest bank
00:42:40 in America, if you have a fistful of receivables, they will lend you money.
00:42:45 So I said the customer is actually more important.
00:42:47 The customer becomes the conduit to the capital.
00:42:50 And so we stepped back and said to ourselves, we need to create a situation where the customer
00:42:55 becomes the way to drive the change.
00:42:58 The total committed to Project Black is five times the size of the average first time private
00:43:03 equity fund and brings assets under management at Ariel to just above $16 billion.
00:43:09 Project Black's first investment was made last year when it acquired just over 52 percent
00:43:15 of Utah-based Sorenson Communications at an enterprise value of $1.3 billion.
00:43:21 And already big changes have been made.
00:43:23 The company went from having one person of color in the C-suite and boardroom to 13.
00:43:28 And the new CEO is Jorge Rodriguez, a veteran telecom exec who worked with Mexican billionaire
00:43:34 Carlos Slim.
00:43:36 Over the next three to five years, Project Black plans to buy and expand platforms in
00:43:40 six to 10 other supplier segments, such as financial and professional services, health
00:43:46 care, technology, manufacturing and logistics.
00:43:49 I think it's a very simple call to action is you put your money where your mouth is.
00:43:54 So many people say and state an intention, but coming through is actually financially
00:43:59 doing something about it.
00:44:00 So in corporate America, there's been so much talk about equality and diversity and equity.
00:44:06 Show me the math.
00:44:07 Show me the commitment of the dollars.
00:44:09 Show me the diversity of the C-suite.
00:44:11 Show me the diversity of the board.
00:44:13 And I can tell you who's really serious.
00:44:19 You may think Bitcoin is silly, but it's just as silly as gold.
00:44:23 We have a system in place where we know how to mine it.
00:44:25 We pull it out of the earth.
00:44:26 Yes, it's very dangerous.
00:44:27 Yes, it costs human lives.
00:44:29 But like we care about this shiny metal.
00:44:31 And we've just agreed as a society that this is a store of value.
00:44:35 So at a very basic minimum, when you have a store of value that you can transport out
00:44:39 of a country, if God forbid you're under duress, you can carry this out much more easily than
00:44:46 the gold.
00:44:47 And so here is in the most boring way possible, an argument for why crypto and I mean, in
00:44:53 particular, in this case, Bitcoin is good, is useful and is here to stay.
00:44:59 I'm Alexis Ohanian, probably best known for founding Reddit.
00:45:03 I started the company right out of college 2005.
00:45:07 I returned to the company back in 2014 as the executive chairman for the turnaround.
00:45:12 And then I left for good in 2020.
00:45:18 I was going to be a lawyer and then I walked out of that LSAT.
00:45:21 It's a true story.
00:45:23 Walked the hell out of that LSAT 20 minutes into it because I was like, this is terrible.
00:45:27 I don't want to be here.
00:45:29 Went to the Waffle House on 29 in Charlottesville, Virginia, sat down, got my order and I'm sitting
00:45:33 there and I'm just like, I can't be a lawyer.
00:45:36 And that was where I decided I was like, I can't do this.
00:45:38 I quit.
00:45:39 I was like, I'm not taking any more LSATs.
00:45:41 Like I'm done.
00:45:43 And I went back to my dorm and started convincing my roommate to join me in starting a company.
00:45:48 It took like a year to convince him to join me, but I just knew I had to be an entrepreneur.
00:45:54 These days, I'm doing my life's work at 776, which is a technology company that deploys
00:45:59 venture capital.
00:46:01 So I have always been what I'd like to think is a pragmatic supporter of crypto.
00:46:07 About half of the 776 portfolio is in some way investing in crypto or blockchain technologies.
00:46:15 When 2005, I'm starting Reddit, web2 was the jargony phrase.
00:46:21 What did it mean?
00:46:22 It really just meant that we had some new technology.
00:46:24 Back then it was called Ajax, just some fancy JavaScript that let me design a website where
00:46:29 you could have these up and down arrows and comments that you could click on in real time
00:46:34 and see them change.
00:46:37 Everyone in web2 was in a way following Zuck's lead, right?
00:46:41 I think Facebook had launched maybe a year before us and then Twitter launched a few
00:46:45 years after us, but we were all following the same model, which was grow as fast as
00:46:49 you can and you'll figure it out later, which meant that eventually you'll have enough users
00:46:56 to run ads.
00:46:57 And I was never happy with that.
00:47:00 It never felt good.
00:47:01 We tried our best to build ads that users didn't hate because they could comment on
00:47:05 them and they could vote on them, but it always felt like an ugly hack.
00:47:10 What I realized there was we were early and right in a lot of ways, but we had a deeply
00:47:15 flawed business model, advertising, and web2 allowed for social media, allowed for user
00:47:23 generated content, allowed for anyone to say, Hey, I've got a funny story to tell.
00:47:27 And I think it could be just as funny as anyone else's, even though I didn't go to a journalism
00:47:30 school or didn't go to a writing school or whatever.
00:47:33 And we just didn't figure out a business model that worked for it.
00:47:38 I think having a front row seat to building Reddit as well as building the communities
00:47:42 of Reddit specifically has exercised a lot of muscles around intuition for community.
00:47:48 And as communities grew, we sort of cobbled together ways for businesses to go around
00:47:54 it.
00:47:55 Let's start with the community first.
00:47:56 Let's build technology around that energy.
00:47:58 Let's build a brand around that energy.
00:48:00 And here we go.
00:48:06 So back in 2012, I was working at Y Combinator, which was the same accelerator that first
00:48:12 funded me back in 2005 when I was a CEO starting Reddit.
00:48:16 And I remembered meeting this young man, Brian Armstrong.
00:48:19 He had just left Airbnb.
00:48:21 He was their head of fraud, clearly a very smart guy.
00:48:25 Airbnb was clearly a very successful company.
00:48:28 And he was choosing to leave to start something new, to be the best and safest way to buy
00:48:35 crypto online.
00:48:36 And I thought, okay, someone this smart at a company this successful who still wants
00:48:42 to just step away and build something he believed was going to be his life's work.
00:48:46 That's something I needed to lean in and learn more about.
00:48:49 So I went to the first place you would expect, which is Reddit and visited the r/bitcoin
00:48:54 community to start educating myself and to start seeing, you know, the audience there
00:48:58 on Reddit has always been among the earliest adopters of technology.
00:49:02 And so not everything goes viral, not everything goes mainstream, but here was a community
00:49:07 that was very frustrated because it was very hard to buy this cryptocurrency that they
00:49:11 believed in.
00:49:12 And Brian Armstrong was the first one to really put his hand up and say, I want to do this.
00:49:17 I want to do this above board.
00:49:18 I'm going to put my name on the website and I want people to feel safe buying this asset.
00:49:23 At the time, I thought it'd probably still get shut down by the government at some point.
00:49:27 I'm sitting here reading that white paper thinking, really?
00:49:30 Like people are going to care about this.
00:49:33 But there was just enough because there were enough Redditors who already cared about it
00:49:37 and thought this is powerful.
00:49:39 This is a big deal.
00:49:40 I thought, you know what, the technology is interesting enough.
00:49:43 The white paper is sort of intellectually sound.
00:49:47 And there's a community of very passionate Redditors who believe in this.
00:49:50 And if anyone's going to do it, Brian seemed like the right one.
00:49:53 Just very lucky to have invested that early.
00:50:01 The technology is a medium and I compare it to paper in a way that I think works pretty
00:50:06 well for folks.
00:50:07 Right?
00:50:08 So, 4000 years ago, someone is inventing papyrus, right?
00:50:14 And they're sitting there and he, you're probably more likely she is like, yo, I can take a
00:50:18 thing and write on this and give it to you.
00:50:21 And now it's yours.
00:50:22 Right?
00:50:23 That's pretty cool.
00:50:24 Now, if you were to go back in time right now and explain that today paper is used for
00:50:30 everything from, I mean, you'd have to explain what a script is.
00:50:33 You have to explain what a trading card is.
00:50:35 You have to explain what tissue paper is.
00:50:36 You'd have to explain what you'd have to explain to them that there is a piece of paper here
00:50:41 in the United States that is so important.
00:50:43 We wrote down some words on it a few hundred years ago and it's like a sacred document.
00:50:47 And then there's actually literally a sacred document that's been printed millions of times
00:50:51 all over the world.
00:50:52 And it's the basis of an entire religion that people share.
00:50:55 Like the leaps and bounds of what this simple medium could do could not have been imagined
00:51:01 at that time.
00:51:02 And so now I think in the next few years we'll start to see some really boring applications
00:51:10 for this technology.
00:51:12 Think of it like paper that starts to compound in value and utility for people where again,
00:51:18 they shouldn't need to know the underlying tech, just like they didn't need to know Ajax.
00:51:22 They don't need to know if it's an NFT.
00:51:23 It just needs to work.
00:51:24 It needs to deliver a delightful experience.
00:51:26 And that's it.
00:51:28 If we stick to this metaphor of NFT as paper, then paper can have a cultural value, but
00:51:34 also utility.
00:51:36 The Michael Jordan first basketball game ticket stub is a perfect example of this, right?
00:51:40 It is a piece of paper.
00:51:42 It had utility a few decades ago because you knew which seat your butt went into.
00:51:47 And when you got there, no one else was sitting there, right?
00:51:49 That's clear utility.
00:51:50 Today, it has cultural value because it was Michael Jordan's first game and it's worth
00:51:55 hundreds of thousands of dollars.
00:51:57 And those are the channels where we're going to see the value in NFTs over these next years.
00:52:12 In tech broadly, it's going to be a rocky year.
00:52:16 I wish it weren't the case, but I think it's going to be a rocky year.
00:52:19 And CEOs are going to be looking at a very different scenario for their next fundraise
00:52:28 than ever before, or at least that I've seen.
00:52:30 You know, '08-'09 was probably the best comp.
00:52:32 I was at Y Combinator at the time and watching companies like Stripe and Airbnb get started
00:52:39 in that mess was so inspiring because those CEOs and those companies were so lean and
00:52:46 so mean and had to earn every user and every dollar and were rejected a hundred times by
00:52:52 investors, but it made them so much stronger and so much more formidable.
00:52:56 And so the thing we've been impressing upon our founders, frankly, since the end of last
00:53:00 year is that this is the time to really, really pursue this kind of excellence within your
00:53:08 org.
00:53:09 It's not about squandering money.
00:53:11 It's not about chasing radical valuations.
00:53:15 It's about delighting your users, shipping, building a performance culture in your org.
00:53:21 And the good news is, you know, we're still a young firm ourselves and we're living a
00:53:25 lot of these values ourselves.
00:53:28 The companies in the portfolio are still quite young.
00:53:31 And then the founders we're meeting now, and I really believe in the next year or two,
00:53:34 are going to be hardened in a very different way.
00:53:38 And as much pain as this economic uncertainty is unfortunately going to create, that same
00:53:44 pain will create some tremendous companies to get started.
00:53:49 And I'm hopeful for those because we need those companies.
00:53:51 We need those companies to further push us in space tech and climate tech and software.
00:53:55 And yes, even crypto.
00:53:57 I've lived through a lot of cycles now, a lot of crypto winters and every single winter
00:54:03 I actually relish the chance because you're spending time with real builders who are sober
00:54:11 and focused.
00:54:12 The first time CEO that I meet today, who's 21, fresh out of college, just like I was,
00:54:18 are so much smarter than I was.
00:54:20 And not just in the obvious way that every generation you would hope, right?
00:54:23 Two decades later is much smarter.
00:54:25 They are much more wise because they are the first generation to have grown up in this
00:54:31 era, in this age, using it every day, seeing it, how it affected them in school, seeing
00:54:35 it, how it affected them.
00:54:39 I think every generation feels this.
00:54:41 I think they will undo or at a minimum learn from a lot of mistakes that we made.
00:54:46 And I am here to help them as much as possible.
00:54:51 I feel very fortunate to see now in the last two years, the progress and the success and
00:54:55 all the good fortune we've had just makes me think like, I mean, in a way it makes me
00:54:59 think, gosh, why didn't do this sooner?
00:55:01 But I'm happy to be in the place I'm in right now.
00:55:03 And it's, it's been fun and it's incredibly satisfying.
00:55:06 I have a kid who I promised two years ago when I resigned the way I did in protest from
00:55:13 Reddit that I was going to do everything I could to not just keep doing my best professionally,
00:55:19 but do so in a way that was going to make her proud one day and make her want to, you
00:55:23 know, obviously she's got a mother to be very proud of, but I'm competitive and I want her
00:55:27 to be just as proud of me too.
00:55:30 Folks for years would be like, Hey, Reddit, I love Reddit, Reddit, Reddit.
00:55:34 And then for awhile it was, I love your wife.
00:55:37 They still do that every now and then.
00:55:39 It's like, I love Olympia, which is nice, but a little weird, but it was the first time
00:55:43 a few months ago someone said, Hey, I love angel city FC.
00:55:46 Thank you so much.
00:55:47 And that felt great.
00:55:48 And it would make me so happy if, if that were my legacy, the focus right now is seven,
00:55:55 seven, six angel city happens to be a part of that, but I'm really, I'm in a very fortunate
00:56:01 place right now.
00:56:02 The, the firm's only two years old, but the, the, the success we've had, the tailwinds,
00:56:06 everything has been, it feels like this energy has been compounding in such magnificent ways.
00:56:13 And, and yes, we do early stage investing.
00:56:15 I get to spend a lot of my time building products that helps our team work fully remotely, helps
00:56:20 us support our founders better than anyone in the game.
00:56:24 And you know, I started a foundation.
00:56:26 I didn't call it the Ohanian family foundation cause that was lame.
00:56:28 I called it the seven, seven, six foundation cause it's just, it's a better brand.
00:56:33 And, and started making, you know, started building my philanthropic legacy.
00:56:37 The rest of my life is going to be spent deploying capital, whether it is for profit on the venture
00:56:43 side and we'll do it better than anyone or philanthropically on the foundation side.
00:56:49 And I hope we can do that obviously also better than anyone.
00:56:52 And that's it.
00:56:53 That's what I want the Google search results to be.
00:56:55 And maybe Olympia's dad, that'd be cool too.
00:56:56 Hi everybody.
00:56:57 I'm Diane Brady.
00:56:58 I'm here with my colleague Chase Peterson-Withhorn who is on the wealth team and we're talking
00:57:08 about the billionaire's list.
00:57:09 Hey Chase, who's the richest person in the world?
00:57:13 I was going to say man, shame on me.
00:57:15 That's sexist.
00:57:16 Well, you know, it has only ever been a man.
00:57:19 So so, you know, we'll see.
00:57:21 I think there's still a little bit of time.
00:57:24 Dare to dream.
00:57:25 So the richest person in the world is Bernard Arnault.
00:57:30 It's his first year as the richest person on the Forbes billionaires list.
00:57:34 And it's the first time that a French citizen has been number one on the Forbes billionaires
00:57:38 list.
00:57:39 And so Arnault is the sort of driving force behind LVMH, which is an enormous sort of
00:57:47 fashion retail giant that owns Louis Vuitton, Christie Dore, tons of big brands like that.
00:57:55 Yep.
00:57:56 Well, they've been in this he's been in this battle with Elon Musk for well, he personally
00:58:01 hasn't been in the battle, but we've been watching them trade back and forth for a while.
00:58:05 And so he kind of propelled into that first place.
00:58:08 Was it largely because of Elon dropping so much or did he actually gain a lot of wealth
00:58:15 in the last year?
00:58:16 Yeah, it was a little bit of both.
00:58:19 So it was a very good year for Bernard Arnault.
00:58:23 Shares of LVMH are up quite a bit.
00:58:26 They're near record highs.
00:58:28 Revenues are sort of setting records.
00:58:30 Profits are setting records.
00:58:31 And so he gained more money than anybody else in the world over the past year.
00:58:36 So his net worth increased by 53 billion dollars.
00:58:39 So he's worth two hundred eleven billion dollars now.
00:58:42 But he had a 53 billion dollar year, which is better than anybody else has had.
00:58:47 But that's that alone, you know, will get you a lot of the way toward beating somebody
00:58:51 like Elon Musk.
00:58:52 But he was also helped by the fact that Musk sort of shot himself in the foot over the
00:58:58 past year when he bought Twitter at this huge valuation before tech markets crashed.
00:59:04 And and, you know, a lot of Tesla investors, of course, have been concerned over how much
00:59:08 Tesla stock he sold to fund the purchase and how much time he spent on Twitter and, you
00:59:14 know, running Twitter and trying to fix Twitter and bring money out of Twitter over the past
00:59:19 year.
00:59:20 He's lost around thirty nine billion dollars over the last year.
00:59:23 So I think he lost one hundred billion last year.
00:59:26 Yeah.
00:59:27 Musk had a bad year.
00:59:28 And so that translates to a really great year for Arnaud.
00:59:32 So I want to ask what the rest of this before before we do that.
00:59:36 I know you're not an expert in all things luxury, but you just talked about the fact
00:59:41 that we all know there has been certainly a downturn in tech.
00:59:45 We're seeing headwinds.
00:59:47 We like to call them in the economy.
00:59:50 Why would somebody like Bernard Arnaud gain fifty three billion in wealth?
00:59:54 What what was propelling him?
00:59:56 Do you know by any chance?
00:59:57 Yeah.
00:59:58 Well, I mean, you know, consumers over the past year have definitely continued to buy
01:00:04 stuff.
01:00:05 And despite sort of rising inflation and a lot of fears about recessions, there have
01:00:10 been a lot of people buying stuff.
01:00:11 And of course, there have especially been a lot of really wealthy people buying a lot
01:00:15 of really expensive stuff.
01:00:17 And that's the sort of stuff that Bernard Arnaud sells.
01:00:20 And so, you know, that's why they sort of had a banner year.
01:00:23 That's true.
01:00:24 Maybe a two tier or several tier economy.
01:00:27 So talk about the rest of the top 10.
01:00:30 I would presume, given what's happened in tech, that that's where we saw a lot of the
01:00:35 losses.
01:00:36 Is that fair to say?
01:00:37 And crypto perhaps?
01:00:38 Yeah, tech billionaires were hit pretty hard over the past year.
01:00:42 You know, two hundred and fifty four people dropped off the billionaires list.
01:00:45 And, you know, a lot of them were sort of from the tech world.
01:00:49 And even within the top 10, you know, the very upper ranks of the billionaire ranks,
01:00:55 you know, a couple of notable people dropped off just out of that 10.
01:01:00 And they were the Google founders, Larry Page and Sergey Brin.
01:01:04 And sort of in their place, they were replaced by Michael Bloomberg, the former mayor of
01:01:08 New York, who had a great year for his financial services business.
01:01:14 You know, the terminals that sort of power Wall Street.
01:01:18 And and Carlos Slim, who is a Mexican telecom billionaire and shares of his companies are
01:01:23 doing well.
01:01:24 So also in the media business.
01:01:27 Right.
01:01:28 I said Carlos Slim.
01:01:29 So being in the media is not such a bad business for some people, I guess.
01:01:34 So not necessarily.
01:01:35 But the thing is, with Bloomberg, too, you know, a lot of people who are in media, these
01:01:39 guys who are in media, they're in other things, too.
01:01:41 You know, Bloomberg makes a lot of money, you know, not all about the terminal.
01:01:45 It's true.
01:01:46 It's true.
01:01:47 So so that's the they've just come onto the list.
01:01:50 Is the middle the usual suspects?
01:01:53 Is that pretty stable?
01:01:54 Yeah.
01:01:55 So, you know, so the top 10, you know, definitely is a lot of the usual suspects.
01:02:00 The order is sort of shifted a little bit.
01:02:02 Of course, Arnel overtaking Musk.
01:02:05 But but then, of course, you have, you know, huge, huge names like Musk, but also Jeff
01:02:09 Bezos, Larry Ellison, Warren Buffett is is fifth.
01:02:13 Bill Gates is sixth.
01:02:15 And then you have Mukesh Ambani, who has regained his title as the richest person in Asia in
01:02:20 part, a large part just because Gautam Adani has very famously, you know, in recent months,
01:02:28 sort of been flaming out.
01:02:29 Right.
01:02:30 You know, there have been some questions about, you know, the improprieties sort of in his
01:02:35 in his empire.
01:02:37 You know, what fascinates me is we've seen people like Warren Buffett and Gates be ardent
01:02:43 philanthropists for decades, and yet they still seem to be the richest people in the
01:02:49 world.
01:02:50 And Bill Gates had a divorce.
01:02:53 You know, I guess Microsoft's just having a really, really good year.
01:02:57 But I'm surprised that doesn't really seem to dent him too much from the top tier.
01:03:02 Yeah, well, it's interesting because actually, you know, Microsoft is is not having a great
01:03:07 year, but Gates, there's sort of a couple of things that sort of work in his favor.
01:03:11 One of them is, you know, he's diversified a lot into a ton of other stocks.
01:03:15 You know, of course, he owns a lot of Berkshire Hathaway, but he owns tons of other companies
01:03:20 and private investments.
01:03:21 And, you know, it's it is many, many people's full time job to manage Bill Gates money.
01:03:27 So so that's one part.
01:03:28 But the other part is just that he has so much money that even, you know, you can be
01:03:32 down a lot and you can still be really wealthy.
01:03:34 You know, Jeff Bezos is the third richest person in the world on this list.
01:03:38 He also lost more money than anybody last year.
01:03:42 You know, plus he lost his divorce, $7 billion, and he's still the third richest person in
01:03:46 the world.
01:03:47 So for someone like Gates, you know, it definitely helps to have big numbers to start with.
01:03:51 And so you can go through a divorce like Bezos did, too.
01:03:54 And you can give incredible sums of money away and your net worth, you know, might still
01:03:59 continue to grow just because, you know, having great wealth breeds more wealth.
01:04:03 Now, is it emblematic of what we see on the rest of the list or is the top 10, you know,
01:04:10 kind of a unique collection of characters, many of whom are really dominant in their
01:04:15 home markets, for example, you know, India comes to mind, Mexico for Slim.
01:04:20 But is it emblematic of the kind of, you know, mix that we see in the rest of the list?
01:04:27 It's a massive list.
01:04:28 You know, it definitely is.
01:04:30 I think on the one hand, any billionaire is pretty dominant in whatever market they sort
01:04:37 of operate in just by the nature of that's true, of sort of sort of being this big of
01:04:41 a player.
01:04:42 And and of course, there's nothing normal in a lot of ways about a lot of these people.
01:04:47 You know, they've had outsized success and and to get there, you know, interesting things.
01:04:52 They have interesting perspectives on the world and move in interesting ways.
01:04:57 But but, you know, the top 10 is even among all of these outliers, the top 10 are sort
01:05:04 of huge outliers.
01:05:05 You know, I mean, you talk about the 1 percent and the billionaires are, you know, the 1
01:05:09 percent of the 1 percent and the top 10 on the billionaires list is the 1 percent of
01:05:14 the 1 percent of, you know, sort of thing.
01:05:16 I think it's, you know, these 10 people are worth one point two trillion dollars overall.
01:05:22 That's 10 people who are worth one point two trillion dollars.
01:05:26 I just did the math and it works out to where zero point four percent of the list, 10 people
01:05:32 out of two thousand six hundred and forty billionaires have 10 percent of the wealth
01:05:35 of the entire list.
01:05:36 So even while, you know, there's a lot of income inequality and wealth inequality even
01:05:41 among the super wealthy people.
01:05:45 Some billionaires are bigger than others.
01:05:46 Now I'm this sounds like a bit of an oddball question, but I'm curious about where they're
01:05:53 domiciled.
01:05:54 Like if Arnaud is in France, that famously is has a high sort of it's a let's just call
01:06:02 it a regime where one would get taxed on their wealth.
01:06:05 Is he based in France, even though his business is based in France?
01:06:09 Yeah.
01:06:10 And, you know, some of the you know, there there certainly are billionaires on the list
01:06:14 who have moved around to lower tax places.
01:06:16 You famously in the United States, people like Ken Griffin have moved from Illinois
01:06:20 to Florida, you know, that sort of thing.
01:06:23 And people, of course, have moved different countries as well and have sort of given up
01:06:28 their US citizenship or citizenship of certain countries looking for.
01:06:31 There's a lot of billionaires who live in Monaco, for example.
01:06:35 You know, so there definitely is a good amount of that.
01:06:37 But there really are a pretty high number of billionaires who still live and work and
01:06:42 operate and run their businesses in the countries where they hail from.
01:06:45 And so Arnaud, you know, is in France.
01:06:48 You know, obviously all these big names in the US still live in the US and plenty of
01:06:52 them, you know, even spend a lot of time or live in California and places like that.
01:06:57 So, you know, you know, they there are other strategies, I think, sometimes that these
01:07:01 billionaires employ where they don't necessarily have to leave the country to to maybe lower
01:07:06 their taxes or, you know, or something like that.
01:07:09 That's true.
01:07:10 Of course, you know, they might also want to capital as globe.
01:07:12 There are no borders.
01:07:14 No borders for capital is very true.
01:07:17 So one other question for you, which is you've been doing this for a while.
01:07:22 I don't know if it's whether it's through technology or transparency.
01:07:27 Is it becoming easier or harder to value the wealth of these folks?
01:07:31 I know you can if somebody has publicly traded shares, you can look at the share price and
01:07:37 that's a major factor.
01:07:38 But there are many other things that go into valuing wealth.
01:07:41 And I'm curious, is it the same as it's always always been?
01:07:46 Are you finding it's changing how easily is to?
01:07:50 That's a great question.
01:07:52 I would say that it's largely the same difficult task that it's been.
01:07:59 But the reasons for that are always changing.
01:08:01 And in some ways it's getting easier.
01:08:02 You know, of course, private markets over the last decade plus, especially, you know,
01:08:07 that I've been working on this have started to resemble public markets in certain ways.
01:08:12 You know, you have a lot of companies staying private for longer, but they raise money and
01:08:15 they're marked by institutional funds.
01:08:17 And, you know, there are a lot of, you know, you can look at secondary market sales.
01:08:22 Right.
01:08:23 To the point now where, you know, a lot of private sort of unicorns are operating and
01:08:27 trading shares, you know, pretty frequently like a public company.
01:08:30 So in that sense, you know, there's you know, that's that makes things a little bit easier
01:08:34 to track.
01:08:36 But on the other hand, you know, these billionaires often don't want you to look under the hood
01:08:44 and they're constantly finding clever ways and different ways to shelter their money,
01:08:51 move it around, try to hide it or, you know, just coming up with just new, you know, tax
01:08:57 strategies to lower their tax bill and new sort of holding companies and sort of trust
01:09:02 structures and things like that that are just sort of constantly changing.
01:09:06 And so so I don't know that I would say that it's gotten harder or easier.
01:09:10 I think it's sort of it's a difficult task and it's a huge investigative project that
01:09:14 our team does.
01:09:16 And and I think that, you know, of course, as we do it more and more, you know, you get
01:09:21 better and better at it and you learn more stuff and build more sources and, you know,
01:09:25 all of that.
01:09:26 But, you know, it's hard to to keep up with with billionaires and all of the people that
01:09:31 they employ to.
01:09:33 That's true.
01:09:34 It takes a village, literally.
01:09:38 Anything else you'd want to say in terms of what struck you, surprised you about this
01:09:41 list?
01:09:42 Anything but, you know, it must help you see around the corner somewhat when you're looking
01:09:45 at some of the bets they're taking as well.
01:09:47 Yeah, definitely.
01:09:48 You know, I think sort of the biggest takeaways are really just that, you know, there are
01:09:54 fewer billionaires this year than there were last year and they're worth less than they
01:09:57 were last year.
01:09:59 So, you know, the billionaires, we found two thousand six hundred and forty of them in
01:10:03 two thousand six hundred and sixty eight last year and they're worth five hundred billion
01:10:06 dollars less than they were worth last year.
01:10:09 And it's in last year was a down year, too.
01:10:11 And so it's pretty rare to have two down years in a row for billionaires.
01:10:16 There's a lot of sort of inertia that wealthy people, you know, you know, money, broody
01:10:21 money and the rich getting richer.
01:10:22 There's a lot of truth to that.
01:10:23 And so when you have a couple of down years in a row, it does sort of strike you that,
01:10:28 you know, markets really aren't as enthusiastic maybe as they were a couple of years ago.
01:10:33 And billionaires are maybe more conservative than they were a couple of years ago.
01:10:37 And you know, you see fears of recessions and things like that.
01:10:40 And, you know, it definitely is notable when you see even even the wealthy are sort of,
01:10:46 you know, I don't want to say running for the hills, but they're certainly the biggest
01:10:49 canaries, the biggest canaries in the coal mine, you know, as much as they can, I guess,
01:10:54 you know, a little bit more than they were a couple of years ago, for sure.
01:10:57 Great.
01:10:58 Well, that as it should be.
01:10:59 So we will watch them to see where the economy is going.
01:11:02 And always good to talk to you, Chase.
01:11:06 Congratulations on another big project.
01:11:07 Yeah, thanks.
01:11:08 Thanks so much for having me.
01:11:15 The heavy hitters.
01:11:17 And we've got we've got one of the great ones from Kenya.
01:11:21 Julius, thanks for coming.
01:11:23 Thank you.
01:11:25 All right.
01:11:26 So there's, you know, at Forbes, we do three kinds of kind of when you have kind of those
01:11:31 rags to riches sagas, we kind of, you know, sometimes we have like the orphan stories
01:11:36 of orphans.
01:11:37 Other times, maybe it's somebody they were, you know, they were poor or homeless, or they
01:11:43 were a refugee or an immigrant.
01:11:46 But you know, you're like all of those things, which is very, you know, which makes your
01:11:51 rise even more impressive.
01:11:52 So how much.
01:11:53 Thank you.
01:11:54 Thank you.
01:11:55 Yes.
01:11:56 Maybe take us on again on your journey, because it's a true it's a real, real inspiring story.
01:12:00 And by the way, wherever you come from, I want to preface this, you can be super successful
01:12:05 because we have somebody like that right here.
01:12:07 But maybe.
01:12:08 Thank you.
01:12:09 Give us a walk.
01:12:10 Thank you.
01:12:11 Thank you so much, Randall.
01:12:13 And I'm delighted to be here with the Forbes Africa event, you know, under 30 Summit.
01:12:18 Yeah, thank you, Excellency, the President and the First Lady for hosting us.
01:12:22 Your Excellency, the First Lady of Guinea-Bissau.
01:12:25 Yeah, my abo, his Excellency, the Deputy President of Kenya is with us here, the President of
01:12:32 Namibia, Minister for Nigeria, very much the entire delegation for Forbes for coming here.
01:12:39 Yeah.
01:12:40 And I grew up in Kenya.
01:12:42 I grew up in Kenya on the western part of Kenya, near Lake Victoria.
01:12:48 And I went to school and went to college.
01:12:53 I went to military there in Kenya.
01:12:54 I was in the Air Force.
01:12:56 And then I went to America.
01:12:57 Yeah.
01:12:58 So when I went to America, it was 9/11.
01:13:06 And during 9/11, September 11 happened and there was issue with security.
01:13:12 There was a financial issue.
01:13:13 And I came up with a technology.
01:13:14 I think I should get, excuse me, excuse me.
01:13:15 Yeah, mic check, mic check.
01:13:16 Yeah.
01:13:17 We need a new technology.
01:13:18 Exactly.
01:13:19 Yeah.
01:13:20 So I invented, so I invented, I invented a technology that was a biometric technology.
01:13:39 And I was a pioneer in the world for biometrics.
01:13:43 So I invented biometric technology used to secure online transactions, you know, in the
01:13:50 banks in the United States.
01:13:52 Yeah.
01:13:53 And when I did that, you know, I built my company.
01:13:55 Our company name was SBA Technologies.
01:13:57 Yeah.
01:13:58 So it was built up.
01:13:59 And of course, it became one of the largest biometric companies in the world.
01:14:03 Yeah.
01:14:04 So we expanded our technology in over the world.
01:14:06 And by the end of the decade, by 2008, our company had grown into a multi-billion dollar
01:14:12 company in America.
01:14:13 Yeah.
01:14:14 So we decided, we said, hey, you know, I grew up in Africa.
01:14:18 I grew up in Kenya.
01:14:20 I want to go back and give back to a community in Kenya, give back to the community in Africa.
01:14:25 Yeah.
01:14:26 So we took $4 million invested into a feasibility study with a U.S. company, a big U.S. company.
01:14:34 We wanted to invest in our community in western Kenya, you know, to be able to grow it, yeah,
01:14:40 you know, up.
01:14:41 So we spent about $2 billion.
01:14:44 So feasibility showed that we needed a $2 billion city, a medical and technology city
01:14:50 that will be able to stop people in Africa from going to India every year for medical
01:14:56 treatment.
01:14:57 And so we built up, you know, Mwali Medical and Technology City.
01:15:00 Yeah.
01:15:01 It's built around 5,000 capacity.
01:15:03 Yeah.
01:15:04 It has a medical complex.
01:15:05 Yeah.
01:15:06 It has a power plant.
01:15:07 Yeah.
01:15:08 You know, it has shopping and dining, has an innovation park.
01:15:11 Yeah.
01:15:12 You know, and integrated, you know, within the community.
01:15:14 So it's an integrated community.
01:15:15 >> On the level of that, when you say you built the city, like, was there a small city
01:15:19 that, was this from scratch or did you take a kind of a city that was kind of small and
01:15:24 made it big or?
01:15:25 >> Exactly.
01:15:26 So this village, this is a village in western Kenya.
01:15:29 And so what we did in this village with our IP, we went in this village.
01:15:34 And then, you know, we took, you know, an African village and then, of course, you know,
01:15:38 be able to upgrade its infrastructure system.
01:15:41 Yeah.
01:15:42 So we put in roads.
01:15:43 We did about 150 kilometers of tarmac roads, you know, in this village area.
01:15:48 Yeah.
01:15:49 We did over 3,000 solar street lights, you know, in the city.
01:15:52 And then we took the community that was there.
01:15:54 It's in a county called Kakamega County.
01:15:57 So we took the community that was there and upgraded their homes.
01:16:01 Yeah.
01:16:02 So there are 35,000 people living in that area.
01:16:05 So we upgraded their homes and they partnered with us in the city.
01:16:09 And then, you know, they became, you know, landlords for the workers of our city.
01:16:13 So we never moved them out.
01:16:14 So the price of land grew from about $1,500 an acre to now over $100,000 an acre for these
01:16:21 families.
01:16:22 So you know, they became the new African middle class.
01:16:26 Thank you.
01:16:28 Kind of going back, you know, it feels like where you came from is driving what you're
01:16:37 doing now.
01:16:38 When you first were an entrepreneur, because I want to talk about the city, but I want
01:16:42 to talk about in the context of kind of philosophically why you do it.
01:16:47 I mean, you know, one thing, you know, and I think it's worth, you know, when you were,
01:16:51 you know, an entrepreneur in America, but again, you were an immigrant, you didn't have
01:16:54 like a big network or anything.
01:16:55 You had to just do...
01:16:57 What was, how were you able to start something so big when you didn't have, you know, you
01:17:02 didn't have money, you didn't have, you know, no resources, no connections.
01:17:07 So for anybody out there who's like, well, I want to be, you know, I want to be like
01:17:10 Julius, but I'm just me.
01:17:14 You know, how do you do that?
01:17:15 How do you make that leap?
01:17:16 Yes.
01:17:17 So what I did is...
01:17:18 Excuse me.
01:17:19 Hello.
01:17:20 Hello.
01:17:21 Number three.
01:17:22 Hello.
01:17:23 Hello.
01:17:24 Hello.
01:17:25 Fixed.
01:17:26 That's what entrepreneurs do, they fix things.
01:17:29 So what I did is that I decided, you know, I was, first of all, it didn't tell us I was
01:17:34 homeless person in New York City when I went there initially.
01:17:38 So I was living in a homeless shelter in New York City.
01:17:40 And you know, when 9/11 happened, I was in this homeless shelter and I saw the Twin Towers
01:17:44 come down.
01:17:46 And so when I left the shelter, you know, I started, you know, coming up with research.
01:17:51 This is only 20 years ago.
01:17:52 Exactly.
01:17:53 This is about 22 years ago.
01:17:54 22 years ago.
01:17:55 So you're homeless in a shelter on 9/11 in New York.
01:18:01 Yes.
01:18:02 Yes.
01:18:03 Exactly.
01:18:04 And so the idea comes to me.
01:18:06 You know, the towers are coming down and, you know, there's a political upheaval in
01:18:10 New York and, you know, every business is living in the city.
01:18:13 And they were like, you know, the financial system of the city is going to get under attack.
01:18:17 And you know, someone has to do something about it.
01:18:20 Yeah.
01:18:21 So I made a proposal to the local senator, you know, for New York.
01:18:25 The name was Hillary Clinton at the time.
01:18:28 And you know, the proposal was that, you know, we can protect our financial system by having
01:18:34 two levels of authentication.
01:18:36 So we could have the username and password.
01:18:39 And then we could have a second level where you have an image, a picture, or you can have,
01:18:43 you know, a biometric.
01:18:44 And mine was biometric.
01:18:46 Yeah.
01:18:47 So the senator took the proposal to Congress.
01:18:49 Yeah.
01:18:50 And it was passed in Congress in 2004.
01:18:54 And it became effective as law in the United States in 2006.
01:18:56 And my technology, yeah, became the golden standard, yeah, for multi-factor authentication
01:19:02 in America.
01:19:03 What I love about that is that, so you were, and you had an engineering background.
01:19:11 Yes, yes, yes.
01:19:12 Is that you, what your resources were, well, in between your ears here, you had the idea.
01:19:17 Yes.
01:19:18 You'd had the training.
01:19:19 Exactly.
01:19:20 You'd had the resources, but you had the idea and you were able to, you know, and then 20
01:19:23 years later, here we are.
01:19:24 Exactly.
01:19:25 So that, I think that's my takeaway from your story, which is that if you have the smarts
01:19:30 and you have the training, you can find a way and you did find a way.
01:19:34 Exactly.
01:19:35 So then with that, so that, you know, so then when you say, okay, well, I'm going to come
01:19:38 back to Kenya.
01:19:39 First, why, why come back to Kenya?
01:19:41 I mean, here you are being incredibly successful in America, the American dream.
01:19:46 Yeah, yeah.
01:19:47 You're an immigrant and you make it in America.
01:19:50 Why come back to Kenya?
01:19:51 Exactly.
01:19:52 So, so I was born in Kenya and I was born in Africa and, you know, we want to, we see
01:19:56 ourselves as the leaders for the future and I'm a business leader.
01:19:59 I'm one of the global business leaders in Africa.
01:20:02 So I was like, you know, let me go back to my community.
01:20:05 Yeah.
01:20:06 Give people an opportunity, give people an opportunity to be able to get the same opportunities
01:20:10 that I've gotten, you know, within, you know, my training and within my career.
01:20:15 And so I decided to basically kind of do this feasibility study, put $2 billion to build
01:20:21 this city.
01:20:22 So we put $2 billion to build the city.
01:20:24 The city opened in 2019 and we have this big hospital there that is treating patients from
01:20:30 the county.
01:20:31 The county is 2 million people.
01:20:32 Yeah, 2 million people in this county.
01:20:34 We're treating them without paying any co-pay or any money to get treated in our hospital.
01:20:40 If they have a system that our vice president has done, it's called the National Hospital
01:20:45 Insurance Fund.
01:20:46 So if they have National Hospital Insurance Fund, they get free treatment.
01:20:51 So they come to a hospital, they get treated for free.
01:20:53 I have my head of that system, Patricia, you know, sitting here in the crowd.
01:20:58 Yeah.
01:20:59 And, you know, these are Kenyans born and raised in Western Kenya and they're the ones
01:21:03 running, yeah, this system, yeah, you know, to be able to do that.
01:21:09 So what's the goal of the city?
01:21:11 What's your long-term vision?
01:21:12 Yeah, long-term vision.
01:21:13 So if you look at Africa and you look at Kenya, so we have this continental free trade agreement.
01:21:19 And what we need to grow Africa, we need what we call IP, intellectual property.
01:21:23 So this city is an integrated master development plan.
01:21:26 So what it did is that it integrated the local community, yeah, into the entire city, into
01:21:32 the entire plan that we've done.
01:21:34 And so what we've done here is that we want to take this to the continent.
01:21:37 So we've taken it so far to Democratic Republic of Congo, Cameroon, you know, Ghana, Sierra
01:21:43 Leone, Zambia, and now we're doing Mozambique.
01:21:46 So there are 18 locations in 12 cities in Africa that, you know, we have, you know,
01:21:51 about 5 million acres of land under now our management and control in Africa that we're
01:21:57 expanding this project and this city, yeah, you know, all over the continent.
01:22:01 So it's a scale model.
01:22:03 Exactly.
01:22:04 It's a scale model.
01:22:05 And we're looking at, you know, from the World Bank data, about 100 million Africans are
01:22:09 going to be out of extreme poverty by 2035 with a free trade agreement.
01:22:14 And for those 70 million of those will be new jobs, spending about a half a trillion
01:22:19 dollars in income that is going to come in with Africa free trade agreement.
01:22:23 And we are very, very proud to be here in Botswana, Your Excellency, and we want to
01:22:27 get started with a new city here, a new medical and technology in Botswana.
01:22:31 That's exciting.
01:22:35 By the way, if you're as successful here as you are, you know, your city in Kenya,
01:22:40 you have 2 million people in the oil and free health care.
01:22:42 That's the entire country of Botswana.
01:22:44 So, you know, that is scale.
01:22:47 That's scale.
01:22:48 How do you, you know, you mentioned, you mentioned impact, like, and I'm going to ask a similar
01:22:53 question to Moduji, which is, you know, do you see, how do you balance how you create
01:22:59 now what you're doing is, you know, your city is a, it's not philanthropy, it's a business
01:23:05 project.
01:23:06 Exactly, exactly.
01:23:07 But yet you're creating incredible, you know, good outcomes.
01:23:10 How do you weigh philanthropy versus kind of impact business?
01:23:14 Exactly.
01:23:15 So integrated business in Africa, you know, the model.
01:23:17 So what we do is that we let people that live within the county, these are 2 million people.
01:23:24 So if you come in for treatment and you have that card, which is the National Hospital
01:23:28 Insurance Fund, issued by government, you get free treatment.
01:23:31 But the bigger part of that business is medical tourism.
01:23:35 So you know, we are bringing in medical tourists from the entire East African region.
01:23:39 And we came to draw people from here in Botswana, you know, to be able to come there for treatment.
01:23:42 Yeah, so we're getting 400 million people in this region for East Africa that used to
01:23:48 go to India for medical treatment.
01:23:50 And there were about 180,000 of these people going to India every year, spending billions
01:23:55 and billions of shillings.
01:23:57 And so we've ended, you know, that overflow of people going for treatment in India.
01:24:02 So they're going to come and get treatment, you know, within the area.
01:24:05 And we're expanding this, you know, hospital to 82 new locations through telehealth.
01:24:10 Yeah, so we're working on telehealth with big American partners, you know, to expand
01:24:15 it, you know, in Kenya and then outside of Kenya to African continent to make sure that
01:24:19 Africa, because this is going to be the largest hospital in the world, in the world, you know,
01:24:23 here in Africa, employing, you know, 2,000 doctors, 5,000 nurses, and, you know, about
01:24:30 12,000 support staff.
01:24:32 So this is a big investment in health care, making Kenya and making Africa to become,
01:24:36 you know, health care, you know, maker in medical city.
01:24:39 Yeah, you know it in the world.
01:24:41 Right.
01:24:42 And it has to be.
01:24:44 I mean, anybody who's been to China, you see the scale.
01:24:47 I mean, there's no such thing as one building.
01:24:48 When they build one building, it's like, let's do five exactly like it next to each other,
01:24:52 because, you know, they've got about the same population as the continent of Africa.
01:24:54 But if we're going to solve these problems, you have to think big like that.
01:24:57 All right, so let's go 20 years ago, you're a homeless, you know, homeless shelter.
01:25:02 And now 20 years later, you're building cities across Africa.
01:25:05 Where do you see 20 years from now what you're doing?
01:25:08 Yeah, 20 years from now.
01:25:09 So we see Africa has about, is going to have about a quarter of the global population.
01:25:15 It's a population will double by 2050.
01:25:18 And where we see ourselves, you know, in 2050, yeah, we see ourselves being able to move
01:25:22 about 800 million people on this continent out of poverty.
01:25:27 800 million people in Africa out of poverty by creating, you know, jobs, you know, over
01:25:31 the continent.
01:25:32 And look at the opportunities we have in Africa today.
01:25:35 Yeah, so we have the Africa Free Trade Agreement.
01:25:38 And this Free Trade Agreement, what it's done is that, you know, it's worked in three phases
01:25:42 of implementation.
01:25:43 So we have trade and goods.
01:25:45 And the second phase is the IP, intellectual property.
01:25:48 And that's where we have expertise.
01:25:49 We are taking the IP of our city and then expanding this IP, you know, all over the
01:25:54 continent.
01:25:55 And the third will be e-commerce.
01:25:56 So when we get there by 2043, the implementation of that, we're expecting, you know, this continent
01:26:02 to be the leading continent in the world in population, in development, and in growth.
01:26:08 And we are in the driver's seat leading that now.
01:26:10 And we want the Forbes team and the entire continent of Africa and the world, you know,
01:26:14 to be able to join us into that.
01:26:16 All right.
01:26:17 Can we do that 20 years from now?
01:26:18 Let's do it.
01:26:19 Last question.
01:26:20 We're out of time.
01:26:21 You know, listen, I met your children.
01:26:23 Yes.
01:26:24 They're unbelievable.
01:26:25 You've got five brilliant kids.
01:26:26 Thank you.
01:26:27 They're brilliant.
01:26:28 Thank you.
01:26:29 What, you know, we got a lot of brilliant, you know, younger entrepreneurs here.
01:26:31 What, you know, if you had to kind of give them one lesson, because if they look up and
01:26:35 say, well, how do I, you know, how do I become that?
01:26:37 What's the one lesson?
01:26:40 One big lesson, you know, if you're studying something or you want to be able to develop
01:26:44 something in Africa or the world, it's you have to have a vision.
01:26:48 You have to look into the vision and look into the future.
01:26:51 And then, you know, you focus on the vision and you get it through, you see it through
01:26:55 with, you know, building around the community, building around a cause that supports, you
01:27:00 know, the entire population in the world, not just your own cause.
01:27:03 For example, you know, people ask me, I saw you with Mohammed here talking about how your
01:27:08 billions and Forbes does billion list and all that.
01:27:11 If Forbes put me on a billion list, I'll sue Forbes, I'll take him, you know, to jail
01:27:15 to be able to do that.
01:27:16 My wealth is how many people are moving out of poverty.
01:27:19 Like, you know, that's my billion, how many people are moving out of poverty, not how
01:27:23 many billions I have in the bank and all that.
01:27:26 And that's my focus being a man of God.
01:27:28 I want young people to have a vision.
01:27:31 Anybody with a vision, whether you're young and old, you focus on that vision, you'll
01:27:35 be able to build the world.
01:27:36 Well, let's do it.
01:27:37 We got a thousand young entrepreneurs here.
01:27:38 Yeah.
01:27:39 And if each of you can do what Julius has done, you've solved everything here.
01:27:45 So that's it.
01:27:46 Think big and have that vision.
01:27:49 We have a visionary here, Julius Malawi.
01:27:51 Thank you for sharing.
01:27:52 Thank you so much.
01:27:53 Thanks so much.
01:27:54 Thanks so much.
01:27:55 I think it's obviously important to have ability and talent, but I give more weight to determination,
01:28:06 ambition and obsession in what you do.
01:28:09 My name is Toto Wolf and I'm the CEO and team principal of the Mercedes-AMG Petronas Formula
01:28:15 One team.
01:28:19 Toto Wolf is one of the most successful figures in auto racing, but before he was in auto
01:28:23 racing, he was an entrepreneur.
01:28:26 When Toto Wolf founded March 15, he had no money.
01:28:29 And ultimately his way of building the business was he would go to these small burgeoning
01:28:34 internet companies and basically say, "Hey, I'll find you financing and in exchange, give
01:28:39 me equity."
01:28:41 He did that with a number of companies and scored some pretty big wins, like SMS provider
01:28:45 UCP and game publisher, Jowood.
01:28:49 After that, he returned to his first love, racing.
01:28:52 And also he started managing junior drivers.
01:28:55 And this got him connected with a company called HWA-AG, which was an engine provider
01:28:59 for Mercedes' lower level racing teams.
01:29:02 And eventually he got involved, bought 49% and helped take them public in what ended
01:29:07 up being a 175 million IPO.
01:29:12 I was born and raised in Vienna, Austria, and I wanted to be a racing driver.
01:29:19 Formula One race is all about speed and performance.
01:29:22 And what I love in the sport is that the stopwatch never lies.
01:29:25 You know immediately when I've done a good enough job.
01:29:28 And I learned my most important business lessons in racing when I was competing at the age
01:29:33 of 18.
01:29:34 Without having funds, you need to raise sponsorship and that was pretty difficult.
01:29:39 So when I progressed into Formula One as a team owner in Williams, I understood how important
01:29:44 it was as a private team to raise the necessary funds to be competitive and eventually win
01:29:51 races.
01:29:52 I think being a racing driver is also about fitting in the car.
01:29:57 And since I've grown very tall in my early 20s, quite late, it wouldn't have been any
01:30:01 way easy to race in Formula One because the cars are so small.
01:30:13 I became team principal of Mercedes with a weird coincidence because I was a co-owner
01:30:19 of the Williams Formula One team.
01:30:21 And it was going quite well.
01:30:22 We won a race in 2012.
01:30:24 Sport management at Mercedes asked me to assess why their team wasn't going that well.
01:30:29 And I tried to assess to the best of my ability and they offered me the job.
01:30:33 That was a huge honor to run the Mercedes motorsport activities.
01:30:37 But I said to them that I've always been an entrepreneur and I have a stake in Williams.
01:30:42 So they gave him an opportunity to invest in the team that was originally set to be
01:30:45 40%.
01:30:46 Ultimately, it ended up being 30%.
01:30:49 And Niki Lauda ended up investing 10% as well.
01:30:52 And later on, he raised the stake to 33%.
01:30:56 We've won eight consecutive championships in Formula One, but probably the proudest
01:31:00 moment that I had was in 2014 when we finished first and second and the other team, Williams,
01:31:06 where I was still a shareholder, finished third and fourth.
01:31:09 And that was the track where I started racing with no money.
01:31:13 And finding myself 25 years later, winning and placing the cars in the top four position
01:31:19 was a super important moment and made me really happy.
01:31:24 I think if you work in Formula One, you need to cope with pressure.
01:31:26 And for me personally, it's almost like my comfort zone.
01:31:30 I like the intensity of the race weekend and of the whole season.
01:31:35 Whether it's investment banking or racing, it's highly competitive.
01:31:38 And therefore, you need to try to understand as good as you can and then perform to your
01:31:42 best levels.
01:31:43 [MUSIC PLAYING]
01:31:54 When you meet Toto Wolff, one of the first things that stands out is how magnetic he
01:31:58 is.
01:31:59 He seems to command attention when he enters a room.
01:32:02 And also, he's extremely, extremely charismatic.
01:32:05 He's obsessed with perfection, and he's also really precise, which even spills over into
01:32:10 his daily life.
01:32:13 I'm traveling to 24 races a year with more than 500 hours of flying.
01:32:16 So I need to stay disciplined in terms of sleep, nutrition, and my life pattern.
01:32:23 So I'm always eating the same things for breakfast, for lunch, and in the evening, trying not
01:32:27 to upset my system.
01:32:29 And wherever I am, I'm eating the same things.
01:32:31 And for breakfast, it's a pumpernickel bread, two slices, heavily toasted so it's like a
01:32:36 cracker, butter, a slice of ham and a tomato on top, and all of that with a cappuccino
01:32:41 and a sparkling water.
01:32:45 When he believes something, he says it, and he's not afraid to own his failures or take
01:32:50 credit for his successes.
01:32:52 I think what made us successful and sustainably successful over the last 10 years was our
01:32:58 culture and our values.
01:33:00 We are brutally honest with each other, whilst having created a safe environment where you
01:33:04 can speak up, where you can point to inefficiencies and improve.
01:33:08 It is all about integrity and honesty, and I'd rather give up a championship than failing
01:33:13 to these values.
01:33:17 Formula One has always been the largest global sport that races every single year.
01:33:22 Real success for me is to have a happy family, have a great marriage and three wonderful
01:33:27 children.
01:33:28 And that is the cornerstone of me being.
01:33:31 So long thereafter comes my professional life, and that is being successful with the racing
01:33:35 team, winning world championships and creating a structure and a team that is sustainably
01:33:40 successful.
01:33:50 One of the things that's really helped me a lot is I love solving problems, and I believe
01:33:54 in engineering you can always solve a problem, and I think that's actually true in business
01:33:58 as well.
01:33:59 My name is Lisa Su, and I'm CEO of AMD.
01:34:04 Lisa Su is the CEO of AMD.
01:34:07 She's an MIT PhD, she's a Taiwanese immigrant, and she really saved this historic Silicon
01:34:13 Valley company, bringing it back from the dead and making it one of the most important
01:34:17 chip companies in the industry.
01:34:19 I was born in Taiwan, and I came to the US when I was two with my parents.
01:34:24 And growing up, my father used to quiz me with math tables at the dining room table,
01:34:28 so that's how I first got into math.
01:34:31 And when I was young, I liked to actually take things apart.
01:34:34 My brother had a toy remote-controlled car, and it stopped working, and I was wondering
01:34:38 why did it stop working?
01:34:40 And so I opened it up, tried to see what was going on, and there was like a wire that was
01:34:44 loose and we were able to get it back working again by putting it back together.
01:34:49 I went to the Bronx High School of Science in New York, and I was surrounded by people
01:34:54 who loved math and science and technology.
01:34:56 I will say there was a part of me that wanted to be a concert pianist, but I don't think
01:35:00 I was good enough to do that, so I ended up being an engineer.
01:35:03 What I was really inspired by when I was a freshman at MIT is I went into a semiconductor
01:35:09 line for the first time, and I saw how you made chips, and that was just so cool to me.
01:35:14 That's really how I ended up being in semiconductors, having a summer job when I was a first-year
01:35:19 college student.
01:35:24 I was at IBM in the mid-90s.
01:35:27 We were working at the forefront of semiconductor devices.
01:35:32 Semiconductors were so interesting to me.
01:35:33 I mean, I loved the idea that you could really make something that works, all of these transistors,
01:35:39 these tiny little things that you could really put together in a chip.
01:35:42 And so we worked on some of the newest innovations, things like copper interconnects and new ways
01:35:47 to make devices faster and less power and denser.
01:35:54 In those days, people always said, "Is Moore's Law ending?
01:35:57 Are we not going to be able to make devices smaller?"
01:36:01 And so much of the challenge was how could we keep increasing performance and increasing
01:36:05 capability while also making these devices smaller so we could put more transistors on
01:36:10 a single chip.
01:36:11 So that was the key thing, and we had a great team that was working on that.
01:36:16 I joined AMD in 2012.
01:36:18 I always knew about AMD as an important company in the industry, and it was an opportunity
01:36:23 to work on a bigger platform.
01:36:24 So I was very interested in joining AMD.
01:36:27 There were a lot of things happening at that point in time.
01:36:29 There was this whole revolution of where were PCs going, what was happening in mobile phones,
01:36:35 what was going to be the next big tech going on.
01:36:37 So I wanted to be at a company that really would work at the bleeding edge of technology.
01:36:44 When Sue came into the role, she had this really gargantuan task ahead of her.
01:36:48 The company's stock had plummeted, a quarter of the workforce had been laid off, and she's
01:36:52 really been able to pull off one of the greatest turnarounds in Silicon Valley history.
01:36:59 Sue really boiled down her turnaround strategy to three things.
01:37:03 Building great products, focusing on customer relations, and the third thing is simplifying
01:37:07 the company.
01:37:08 So focusing on strengths like PC chips and data centers.
01:37:12 In the early days when I joined AMD, it was actually about getting customers and large
01:37:16 partners to trust us and trust that we could develop the best technology in the world and
01:37:22 that they could trust their roadmaps and their business with our technology.
01:37:28 What I would say is, look, it's going to take us five years, but we will be best in class
01:37:32 in the industry and we're going to do it in these three steps with our new Zen architecture
01:37:36 and our new microprocessors.
01:37:38 And so it really is about a track record and doing what you say you're going to do and
01:37:42 ensuring that we meet our commitments.
01:37:54 The people who know her also point to this unique mix of technical ability and people
01:38:00 skills and that's kind of what's driven her success.
01:38:04 Being able to bring people together, problem solve, and focus on more than just the business.
01:38:11 What I've really enjoyed about being an engineer is really building products.
01:38:15 That's what I love in life.
01:38:16 It's really, you know, how do you build great products?
01:38:18 How do you see where your products go and, you know, really make the world a better place?
01:38:22 And the role of a CEO, you know, that's one piece of it.
01:38:25 That's not all pieces of it.
01:38:26 We have many stakeholders.
01:38:28 We have our employees, we have our board, our shareholders, our partners.
01:38:32 And so it's really balancing not just the technology, but also balancing and ensuring
01:38:37 that we are really meeting all of our stakeholders' expectations.
01:38:44 The thing about semiconductors and developing chips is you really do have to make bets three
01:38:50 to five years in advance.
01:38:52 And you have to think about, okay, where is the industry going and how are we going to
01:38:56 bring, you know, sort of new ideas to an industry that really has lots and lots of great companies
01:39:01 and lots of smart people.
01:39:02 So, you know, at AMD, we spend a lot of time thinking about where is technology going in
01:39:06 the future?
01:39:07 What's going to be really important?
01:39:08 What are the limiting factors?
01:39:10 And how do we do something that nobody else can do?
01:39:15 I've been in the semiconductor industry for the last, you know, 30 years.
01:39:18 And, you know, sort of in the beginning, people didn't really understand what semiconductors
01:39:22 were for.
01:39:23 They were kind of like underneath the surface.
01:39:24 You know, you knew something about chips and something about computers, but not exactly,
01:39:29 you know, why they were important.
01:39:31 I think what's been amazing over the last few decades, and especially even over the
01:39:35 last three or four years, people now understand that semiconductors are essential.
01:39:39 Like you need chips in everything that you do, in every part of your life, in every part
01:39:43 of the business, in every part of how we deliver, you know, great health care and, you know,
01:39:48 great technology and great capabilities.
01:39:50 And I think that's what makes it cool is that, you know, semiconductors are now something
01:39:54 that everyone thinks about as being super important for our daily lives.
01:40:01 We love seeing our products and technologies really make a difference in everyone's lives.
01:40:05 I'm not sure I'm ready to talk about legacy.
01:40:07 I think we have a lot to do right now to continue pushing the envelope on technology.
01:40:11 Touching billions of people with AMD technology would be a wonderful thing.
01:40:16 >> Well, thank you very much.
01:40:19 And we've got a very distinguished guest here this morning.
01:40:23 Ray Dalio is one of those individuals who's not only one of the greatest investors of
01:40:27 our time, but he also is an individual who also realized, and we're going to discuss
01:40:34 it, that what Mark Twain said was right.
01:40:38 Mark Twain once said, "History may not repeat itself, but it rhymes."
01:40:43 And Ray, why don't you start off?
01:40:45 You have always been interested in investing, but then in 1971, you were a clerk at the
01:40:52 exchange.
01:40:54 Nixon goes on TV on Sunday.
01:40:57 Tell us what happened then and what you learned.
01:41:00 >> Okay.
01:41:02 Well, I'm clerking on the floor of the exchange, 1971.
01:41:09 President Nixon announces to the world that the United States is defaulting on its obligation
01:41:15 to take that paper that they have, which was like checks in a checkbook, and give them
01:41:20 the gold.
01:41:21 >> Close the gold window.
01:41:23 >> Close the gold window.
01:41:25 So he defaulted on the obligation to pay the money because the gold was running down.
01:41:31 They didn't have enough, and it was like a bank run.
01:41:34 So I walk onto the exchange floor expecting --
01:41:38 >> You went early because you thought --
01:41:39 >> Yeah.
01:41:41 I expect that there's going to be a chaos and things would be bad, and the stock market
01:41:46 went up the most in decades, and I didn't understand it.
01:41:53 And that's because that was the first time a devaluation happened.
01:41:57 I never went through one of those.
01:42:00 And I studied history, and I found the exact same thing happened on March 5, 1933, except
01:42:07 it was with Roosevelt and a radio rather than a TV, the exact same thing, and the stock
01:42:14 market went up a lot.
01:42:17 And so what I learned, and I had this repeatedly in my life, that things that surprised me
01:42:23 often surprised me because they didn't happen in my lifetime, but they happened many times
01:42:29 in history.
01:42:31 So for example, by studying that 19 -- the 1920s to the 1945 period, I saw that the same
01:42:41 -- I understood the nature of the 2008 financial crisis when we anticipated the 2008 financial
01:42:49 crisis because what happens when you have a lot of debt and interest rates at zero?
01:42:55 How does that work?
01:42:56 And that dynamic is what happened in 2008.
01:43:00 And so it's very much emphasized in my mind how in order to understand things that never
01:43:08 happened in my lifetime, I have to study history.
01:43:11 And there were three major things.
01:43:13 There are three major things that are now happening in our lifetime that didn't happen
01:43:21 other than you'd have to go back in history.
01:43:23 Those three things are we're producing an enormous amount of debt, particularly government
01:43:28 debt, but a lot of debt and monetizing that in amounts that you would have to go back
01:43:34 to the 1930 to '45 period.
01:43:38 Number two, we have a level of internal conflict.
01:43:45 The largest wealth gaps since back then, the largest internal conflict and populism of
01:43:52 the left and the right in our country and at war.
01:43:55 And a populist is an individual who will not accept losing.
01:43:59 They'll win at all costs.
01:44:00 So that dynamic is new.
01:44:03 You have to go back really to the '30s around the world or before.
01:44:07 And the third is the great power conflict.
01:44:10 In other words, the rise of a great power in the form of China that is a comparable
01:44:15 power in the world and that dynamic.
01:44:18 So in order to see that, I needed to then study the past 500 years of history.
01:44:23 Now I know people think it's odd because here I am, I'm just trying to make money in the
01:44:27 markets.
01:44:28 I'm a practical guy dealing with that.
01:44:30 But we would not understand that.
01:44:32 And the picture of the world is a very different picture than we have grown used to because
01:44:39 of the nature of these longer term cycles.
01:44:42 >> So you studied ten empires, four in particular, of particular relevance to us, the Dutch,
01:44:49 the British, the U.S. and China.
01:44:52 And you have come to the conclusion that there are -- these empires or great powers go through
01:44:59 cycles.
01:45:01 And as you say, even though times and circumstances have changed, the cycles don't.
01:45:06 And be prepared, even though it has not happened in your lifetime, big disruptive things can
01:45:12 happen.
01:45:13 >> Well, I think it's not adequate to just assume that because it happened in the past
01:45:17 that it's going to happen over the cycles.
01:45:19 What the cycles do is they shine light on the cause-effect relationship.
01:45:23 So let's take a basic dynamic.
01:45:26 If you have a financial crisis, and there's -- we can get into what causes it, at the
01:45:33 same time as you have large wealth gaps and therefore big disagreements, you are likely
01:45:41 to have populism.
01:45:44 And if you have those two things coming together, it's an explosive combination.
01:45:49 It was said in the earlier session, for example, capitalism.
01:45:54 What about capitalism?
01:45:56 It's becoming unpopular.
01:45:57 Now imagine a bad situation with capitalism, and then there's -- and that's played out
01:46:03 through history for good reasons.
01:46:05 If you combine that with the external conflict, the war, the external -- when I say war, it
01:46:13 is a reality that there are measures of health in an economy rising and declining.
01:46:22 And so when you have that geopolitical conflict and you put that on top, you have a dangerous
01:46:29 set of circumstances.
01:46:31 In doing that examination of those periods, I found also that there were two other big
01:46:37 factors that mattered.
01:46:39 Those were, interestingly, acts of nature, droughts, floods, and pandemics killed more
01:46:47 people and toppled more of the civilizations than the first three I mentioned.
01:46:51 >> And inventiveness.
01:46:53 >> And then number five is inventiveness, which then takes technology.
01:47:00 So when I look at these, all of these five coming together, I think we're going to go
01:47:05 through -- it'll be almost like a time warp that we're going to go through that over the
01:47:13 next five to ten years, the world is going to be very, very different than it is today.
01:47:20 >> So let's quickly touch on -- you talk about the rise of a power, an empire.
01:47:27 It peaks and then it declines.
01:47:30 Walk us -- pick the Dutch or any empire.
01:47:33 Walk us through those kinds of phases and what we can expect.
01:47:38 >> Okay.
01:47:40 An order, when I say a world order or a domestic order, is the way you're operating the system
01:47:44 that you're operating on.
01:47:45 >> How people work with each other.
01:47:47 >> Well, in other words, 1945 would begin a new world order.
01:47:52 Or in some countries, they change their domestic order.
01:47:54 They have a revolution.
01:47:55 But there's always a war at the beginning, some kind of conflict at the beginning, and
01:47:59 the system changes.
01:48:01 Okay, 1945, we have a war.
01:48:04 There are new winners of the war.
01:48:06 Whether that's domestic or internally, there's a war, and now the new folks are in charge.
01:48:11 And they then determine what's going to happen.
01:48:14 They set the rules.
01:48:15 The United States, since '45, we've been the American world order.
01:48:19 The reason the United Nations, IMF, World Bank are in the United States --
01:48:24 >> The old Bretton Woods system.
01:48:25 >> The reason the dollar is the world's reserve currency is because of that.
01:48:29 They set the rules.
01:48:30 Over that period of time, then you don't go into a war.
01:48:33 You have a period of rebuilding and then usually a period of prosperity because nobody wants
01:48:39 to go into war again.
01:48:41 And then they -- so you begin this cycle.
01:48:44 And that cycle then -- to take you through very quickly, that has higher levels of productivity
01:48:51 and so on.
01:48:52 Basics matter.
01:48:54 Things like education.
01:48:56 And when I say education -- >> Well, just for the audience's sake, Ray's
01:49:00 come up with 18 metrics of measuring health, eight particular very important ones.
01:49:06 You mentioned education.
01:49:07 I just want you to touch quickly on -- it's not just knowledge and learning, but also
01:49:12 you talk about character and other aspects.
01:49:14 Define that for us.
01:49:16 That's very important.
01:49:18 >> Education, of course, of the abilities, do your reading, rhythm, tick, and all of
01:49:26 that.
01:49:27 But it also is character development.
01:49:29 In other words, you build certain types of people who are capable and also understand
01:49:37 character, the ability to get themselves through the difficult things and to work in a community
01:49:43 for a better purpose.
01:49:46 That is a fundamental ability.
01:49:48 So all of these early stages have those elements.
01:49:52 And then they have capital markets.
01:49:54 In the early stages, always it's a great benefit if you can put resources in the hands of those
01:50:02 who are capable and make those things happen.
01:50:06 But over that period of time, debt rises relative to GDP.
01:50:10 And there's a mindset change from a mindset of conservatism, you know, those who went
01:50:17 through the war or my dad who went through the depression was not going to be a quick
01:50:22 and easy speculator in the stock market.
01:50:25 And then they get paid and you get rewarded because the environment improves.
01:50:31 And then you become a world's reserve currency.
01:50:34 Because when you're dominant in the world in trade, let's say the United States had
01:50:39 the highest percentage of trade, it was half the world's economy, half world GDP, and it
01:50:44 dominated trade.
01:50:46 So through all of these cases, they bring their currency along.
01:50:51 And that becomes the vehicle that others want to save it.
01:50:55 And when they save in that currency, then of course they are lending you money.
01:51:02 And so that compounds.
01:51:04 In other words, when a foreigner buys a bond, what they're doing is lending you money.
01:51:10 And so the debt tends to compound over a period of time.
01:51:14 And then new powers come along.
01:51:16 They learn from the great power.
01:51:19 You know, the British learn from the Dutch how to build ships that would take them all
01:51:25 around the world.
01:51:26 So that learning and that rise in their capabilities produces competitors in the world.
01:51:32 And so you start to see the new empire becoming more competitive and also having that -- those
01:51:38 aspects.
01:51:39 >> So the British also learned capital markets when William of Orange became king of England
01:51:45 and the Bank of England.
01:51:46 >> Right.
01:51:47 Each one of these empires then has the financial center.
01:51:51 So the Dutch had the world's financial center.
01:51:53 They had the world's reserve currency.
01:51:55 They had the best education system.
01:51:56 They had these elements.
01:51:57 >> And then the stock exchange.
01:51:58 >> Then the British.
01:51:59 >> First stock company.
01:52:00 >> Then London.
01:52:01 So Amsterdam was the world's stock market.
01:52:04 >> Yeah.
01:52:05 >> Financial hub.
01:52:06 Then in the British Empire, London was.
01:52:09 Then in the United States Empire, New York was or still is.
01:52:13 And then now what you're having is a change in that dynamic, of course, where there's
01:52:18 then that competition, the great power competition.
01:52:21 When those things operate in line together, that's important.
01:52:25 So now this is a bigger cycle.
01:52:27 Within that bigger cycle, there's a shorter cycle.
01:52:30 Okay.
01:52:31 Look.
01:52:32 We all know what the classic business short-term debt cycle is because there have been 12 since
01:52:38 1945.
01:52:40 We're now 12 and a half cycles into them.
01:52:42 They're the ones, you know, you have a recession, high unemployment, low inflation, central
01:52:48 banks produce a lot of money in credit.
01:52:51 You have that improvement, productivity, it's the sweet spot of the cycle.
01:52:56 Then you get past the sweet spot, you produce inflation.
01:52:59 Then they tighten monetary policy.
01:53:02 And then with the tightening of monetary policy, they pull the money, and then things slow
01:53:08 up and then you have the downturn and you do that over and over again.
01:53:11 So we know where we are in this cycle.
01:53:13 We are in 12 and a half cycles into this.
01:53:17 We're about halfway through this cycle.
01:53:19 So we're in the part of the cycle where the central banks have tightened monetary policy,
01:53:26 probably close to enough, but in my opinion, not that term structure of interest rates
01:53:32 has too much of an easing built into it where there will need to be interest rates will
01:53:38 need to stay higher for a longer period of time.
01:53:41 Putting that in perspective, let's say, if we use some -- that with that level of tightness,
01:53:52 you have to have a real rate which is high enough for the creditor without having a real
01:53:59 rate that's too high for the debtor.
01:54:03 So if you take about a 1% real rate, which is -- I would say that at a rule of thumb,
01:54:10 it should be in that -- probably that vicinity, 1% real rate, and then you take a core -- if
01:54:17 you're lucky, you get the 3.5%, probably 4% inflation.
01:54:20 I think it's going to be sticky and it's going to come down very slowly in an orderly cyclical
01:54:25 fashion.
01:54:27 Then you're looking at a 4.5% or 5% interest rate.
01:54:32 You have that close to that in the short end of the yield curve, but you have a big build
01:54:37 and you have a bond yield which seems too low.
01:54:40 So I think you're going to keep relatively high interest rates.
01:54:43 That is if there's a normal supply-demand condition.
01:54:48 But there's also a risk.
01:54:49 Okay.
01:54:50 What's the risk of the two -- just let me get this last punchline point out because
01:54:53 I think it's important.
01:54:56 What is the risk of too much debt?
01:54:58 How does that work?
01:54:59 Well, mechanistically, the more debt you have, the more debt service you have to pay, and
01:55:07 it starts to encroach on your other spending.
01:55:11 Like in Singapore, 20% of the income of the government comes from net savings that they
01:55:17 have and it earns.
01:55:18 In the United States, it's about 20% goes the other way.
01:55:21 We have to pay it.
01:55:22 That increases.
01:55:23 But the big risk and the risk that we have to watch out for is when the holder of that
01:55:29 debt doesn't want to hold that debt anymore or let's say the supply-demand balance.
01:55:35 So for example, right now, we have to sell a lot of debt.
01:55:41 And the holders of that debt globally are holding a lot of government debt.
01:55:48 So the bottom line is when the potential buyers decide they don't want to buy, government
01:55:53 has two choices at the central bank.
01:55:55 Either raise the interest rate to bring the buyers in, which is going to hurt the domestic
01:55:59 economy, or print the money.
01:56:01 They always go for printing the money.
01:56:03 Now in terms of these metrics that you have, the US, you'd make the case, is a declining
01:56:09 power.
01:56:10 China is a rising power.
01:56:12 But you have spent a lot of time in China.
01:56:14 You've spent a lot of time talking to leaders there and around the world.
01:56:18 You said you believe that US and China are on the brink of war and beyond the ability
01:56:24 to speak.
01:56:25 Beyond the ability to speak is crucial because in the Soviet Union Cold War days, we had
01:56:30 mechanisms in place where if something went wrong, you could make sure this thing didn't
01:56:34 spin out of control, as it almost did in 1962.
01:56:38 Today in terms of two kinds of wars, one is economic sanctions war and the military.
01:56:44 On the economic sanctions war, we tend to think, oh well, that's just a few tariffs
01:56:48 and things like that.
01:56:49 Talk about how this can spin out of control, starting with micron technology, which China's
01:56:54 threatened with destruction.
01:56:55 >> OK.
01:56:56 Let me first make clear.
01:56:57 I'm just describing what has happened.
01:57:01 The relative position of the United States has declined.
01:57:04 The relative situation in China has risen.
01:57:08 They are now comparable powers.
01:57:10 I am not saying that the Chinese are going to win over the Americans or anything like
01:57:15 that.
01:57:16 I'm just trying-- I don't know how this game is.
01:57:18 They're going to be comparable powers in a conflict and those conflicts are multidimensional.
01:57:28 They're about Taiwan, chips, Russia, capital flows.
01:57:33 >> These are red lines.
01:57:34 >> These are red lines.
01:57:35 We are now at a spot in that relationship where they're at close to each other's red
01:57:43 lines and they recognize that almost talking is counterproductive because there's so much
01:57:55 blaming and trying to untangle how we got here that it-- talking.
01:58:00 So they are at the red lines, they're at the brinks and talking is a problem.
01:58:06 Both sides are very concerned about the possibility of war, different types of war.
01:58:12 Economic war, certainly a chips war and economic war is a very big risk.
01:58:19 And that that is happening at a time of-- that probably conditions might get more contentious
01:58:26 because of the political season we're in.
01:58:29 So in other words, between now and two years from now when the new administration comes
01:58:34 in, you're going to have-- there are a lot of hawks that want to push those lines too.
01:58:41 And so there's that edge.
01:58:43 I'm saying simply that that is a highly risky situation and on many things you will see
01:58:49 a tough game being played because there's-- in world affairs, there's not a judge and
01:58:54 jury that you plead your case to in resolution.
01:58:57 It's purely a matter of brinksmanship and pushing each other.
01:59:01 So that that issue is an important issue.
01:59:04 It's an existential economic issue.
01:59:07 I mean, if we start to think where do-- where would a chips war lead or where-- those--
01:59:15 even in good times, it's a big issue because of the fact that supply line changes.
01:59:22 We're no longer in a world in which producing most efficiently wherever it can be done is
01:59:28 the primary goal.
01:59:30 It's instead self-sufficiency to prepare for war and that has an inflationary consequence.
01:59:37 It has an economic consequence.
01:59:39 So we're kind of very close to that.
01:59:41 I want to just-- in closing because I know we're about to run out, I just want to emphasize
01:59:46 that the-- something particularly that Mary Erdo said.
01:59:51 I think when you throw in the new technologies, I'm deeply involved with generative AI technologies
02:00:05 and so on.
02:00:06 And if you move that forward and you start to-- the world is going to change in ways
02:00:13 that we cannot anticipate and going to be-- it's going to be a different world.
02:00:18 And the emphasis of a few points that I-- were made and I want to reemphasize is a few
02:00:25 things.
02:00:26 First, that diversification, to understand how you can diversify well without reducing
02:00:34 your returns.
02:00:35 Because if you buy equally good things that are not correlated and then you can do that,
02:00:40 you can reduce your return-- your risks by about 80% if you can know how to do that.
02:00:45 So diversification and knowing how to do that and looking globally in terms of the differences
02:00:52 is very, very important.
02:00:54 I would also say that I think the new toxic debt is government debt.
02:00:59 So if we look at that and where we're looking at, what are the bank-- what's the real problem
02:01:05 with the bank?
02:01:06 The real problem with the banks is the same as the problem with the Federal Reserve.
02:01:11 If the Federal Reserve was a commercial bank, it would be in the same position because it's
02:01:16 lost a lot of money in its bonds and its short-term liabilities.
02:01:20 And that's true in Europe.
02:01:22 That's true around the world.
02:01:25 So these are certain things I know we're running out of-- we're over time.
02:01:29 So I just want to make sure I got those things out.
02:01:32 >> Well, when you make-- study histories, you have and made so much-- created wealth
02:01:38 for clients, you have earned extra time.
02:01:44 And you can go economicprinciples.com to get to raise constant insights.
02:01:51 >> I think it's Doc@Ward, but I'm not sure.
02:01:53 >> I think it's-- I think it's comp.
02:01:54 But anyway, we're not-- I'm not--
02:01:55 >> You're probably right.
02:01:56 >> I'm not going to argue with you.
02:02:00 You're on the Forbes list.
02:02:01 I'm not.
02:02:02 But in terms of the investing, Dave talks about quads.
02:02:13 You can look it up whether it's a high inflation, low inflation, high growth, low growth.
02:02:18 If you go around the quads that you talk about, you can have an all-weather portfolio which
02:02:23 has been one of your hallmarks.
02:02:25 But also too, in terms of the future, while there's a very real chance of a war, economic
02:02:31 war or a bad military war, it's not as David-- I mean, Ray makes very clear in his writings,
02:02:38 not inevitable, but patterns of the past should caution you because it hasn't happened before,
02:02:44 it does not mean it won't happen.
02:02:46 >> Yeah, I just-- and echoing that, in part of the book I wrote, read from 1900 to 1950
02:02:54 what it was like and just make some comparisons today and that might have implications for
02:03:02 the future.
02:03:03 I'm just trying to pass that along.
02:03:07 >> Today's guest is everything from a Grammy nominated artist to a financial literacy guru.
02:03:13 I'm Rose Marie Miller here with Ryan Leslie who will talk all about the music industry
02:03:18 and how to manage our money.
02:03:21 Thank you so much for joining me today, Ryan.
02:03:22 >> Thanks for having me.
02:03:23 >> Absolutely.
02:03:24 So we are all trying to make some money, save some money, make our money, make some money.
02:03:29 And you have a wealth plan which is what, a financial literacy club?
02:03:34 >> Yes.
02:03:35 >> What gave you the idea to create--
02:03:36 >> It's a club, you know.
02:03:37 I feel as though really when we grow up, we are taught almost culturally that finances
02:03:45 are-- and there's actually a moniker for it, personal finance, right?
02:03:49 And so we're caught-- we are caught in between should we share what's happening with our
02:03:54 finances, should we keep it a secret?
02:03:56 I know for me growing up, it was, hey, you don't talk about how much you make, you don't
02:04:00 talk about how much you have invested, how much you have saved.
02:04:04 What I found though is that when you can make the journey, a collective journey, the pathway
02:04:10 to let's call it understanding of what's actually happening, the ability to have a sounding
02:04:15 board where you have a community of folks that are concerned and have some care and
02:04:21 consideration for your financial well-being, this can really make a massive difference
02:04:26 in the achievement of let's call it exponential compounding.
02:04:31 So that's really what the premise of Wealth Plan was all about is the fact that I-- when
02:04:37 I decided I wanted to learn finances, I wanted to not rent a Bruce Lee movie and teach myself
02:04:44 karate, I wanted to learn directly from someone who actually did it the right way.
02:04:50 And so Wealth Plan is exactly that.
02:04:54 It allows me to, based on what I've been able to achieve, now be able to give back in a
02:05:00 way that allows me to be a one-on-one mentor and hopefully make an impact that's not just
02:05:06 going to be for the person I'm mentoring, but for a family, for a generation as well.
02:05:12 So speaking of generations, how can someone who-- you know, you got no generational wealth.
02:05:17 How can they get to that point?
02:05:20 Yeah.
02:05:21 To get to generational wealth, so much has been said about it, right?
02:05:26 It's such a simple concept.
02:05:29 It's the eighth wonder of the world.
02:05:30 It is compounding.
02:05:32 And you can start-- it's really just about starting.
02:05:36 So listen, when you think about compounding, you think about it over time, the wealthiest
02:05:42 investors or maybe the most well-known wealthiest investors, the ones that are on the Forbes
02:05:48 list, the ones that have done it in the financial markets, those investors are those who started
02:05:54 small and just consistently compounded over time.
02:05:58 Now I know that there are so many, let's call it apprehensions when it comes to the stock
02:06:03 market.
02:06:04 It's a very sort of-- it could be a very sort of opaque, scary place to be, right?
02:06:13 And when we look at statistics, when we're able to actually remove the human tendencies
02:06:19 that will make an investor lose money, when we're able to remove those human tendencies
02:06:24 from our decision making, we're actually able to have smooth sailing when it comes to compounding.
02:06:31 So what does that mean?
02:06:32 It means that we should be able to drive our decision making with data and statistics.
02:06:38 The best data around a company that you want to own is just the fundamental data of how
02:06:43 the business is actually performing.
02:06:47 And the beauty of the public markets in the United States of America is that every three
02:06:51 months you can get a very, very clear earnings report from every single company that's publicly
02:06:57 traded.
02:06:58 And if you want to actually, let's call it, reduce your risk and volatility, you can just
02:07:09 invest in an index.
02:07:10 And the S&P 500, we hear it talked about all the time.
02:07:13 But the reason we hear about it all the time is because when you look at the historical
02:07:18 statistical data of being invested in the S&P, a time horizon of 20 years or more means
02:07:26 that you have a 0% chance of loss.
02:07:30 So if you can take losses out of investing in the stock market, how much more at ease
02:07:36 can we be when taking our first steps?
02:07:39 And so when we think about generational wealth, and that's the question you're asking, it's
02:07:43 about getting started as early as possible.
02:07:46 And that means that even if you're starting later, let's say you're starting in 30s, 40s,
02:07:51 you know someone in your family, could be a son, daughter, niece or nephew, that once
02:07:58 you've acquired this knowledge, each one teach one.
02:08:01 And it's the ability to actually show how your money is working for you to those who
02:08:08 are coming up after you.
02:08:09 And once they can, let's call it, develop, but not just develop, but master a sense of
02:08:16 how to actually navigate the financial markets, you find that starting earlier delivers exponential
02:08:23 results over time when it comes to compounding.
02:08:26 And what's compounding?
02:08:27 It's just incremental gains, 100,000 or even 10,000 or 1,000 that grows by 10%.
02:08:35 That percentage is equal for everyone across the board.
02:08:39 So if you stay invested for a year, you've got $1,000 and you get a 10% return, you're
02:08:45 going to make $100 on that 1,000.
02:08:48 Learning -- yeah, yeah, go ahead.
02:08:49 >> What would you tell someone who, I don't know, they're 70 years old, they're doing
02:08:54 their thing all that time.
02:08:55 >> Yes.
02:08:56 >> What would you tell that person?
02:08:58 >> So you're saying someone who's starting much, much later.
02:09:00 >> Much later.
02:09:01 >> Right.
02:09:02 >> Yeah.
02:09:03 >> Really, the -- there really is no difference to the strategy, right?
02:09:08 Because obviously starting at 70 is much later than let's say someone learning at 24 or 25.
02:09:15 >> Right.
02:09:16 >> Right?
02:09:17 The vehicles into which you can invest remain the same.
02:09:20 So the S&P 500 has been around for 70 years.
02:09:24 You have to get started.
02:09:25 They say the best time to start investing was 20 years ago.
02:09:28 The next best time is today.
02:09:31 >> Yeah.
02:09:32 Okay.
02:09:33 So eliminating losses, if there's a way to do that, why isn't everybody doing it?
02:09:38 >> I would say, you know, amongst the folks that are actually a part of my Wealth Plan
02:09:44 Club, really the reasons that I hear for folks who haven't done it is because they were never
02:09:52 introduced to this concept.
02:09:54 And even though the concepts are very, very simple, they require no more than middle school
02:09:57 math to understand, if we look at our educational journey from the time we're in middle school
02:10:03 to when we get to high school to when we get to college, most of our education and training
02:10:08 is really focused on making us dependent on the capitalist system in which we live.
02:10:15 Living paycheck to paycheck.
02:10:17 Deciding that we want to go out and actually, you know, go take on a large amount of debt
02:10:21 which is collateralized by a home, the American dream.
02:10:25 The difference, though, is when you look at stories of folks that have really made it,
02:10:30 and I'm talking about multibillionaire status, they got started very early and they got started
02:10:36 in a different way.
02:10:38 And what they did was actual real ownership without having to leverage debt to acquire
02:10:46 the ownership.
02:10:47 What does that mean?
02:10:48 If you've got $100,000, you can actually put $100,000 down on, let's say, a $400,000 house,
02:10:54 right?
02:10:55 You're actually taking on $300,000 in debt.
02:10:59 On the flip side, if you have $100,000 and you invest it, let's say, in Apple, this isn't
02:11:03 financial advice, but if you were to invest that $100,000 in Apple, the difference there
02:11:08 is based on the actual brokerage system that we have in the United States, not only do
02:11:15 you actually own outright the piece of the business that you bought when you spent $100,000
02:11:21 on Apple, the brokerage system will actually allow you to be your own bank, which means
02:11:26 that if you've got $100,000 in Apple, because it's been such a well-performing company,
02:11:34 the brokerage will actually allow you to borrow against that asset and it's collateralized
02:11:42 by the asset.
02:11:43 So in some cases, I've worked with folks who have got $100,000 in Apple, but they might
02:11:47 need $70,000 to start a business.
02:11:49 Well, they're able to actually leverage $50,000 of that $100,000, start the business and pay
02:11:55 themselves back, all the while they never had to sell any of their Apple stock.
02:12:00 So while they spent a year, two years, three years developing that business, growing that
02:12:05 $50,000 investment, hopefully into a quarter million, Apple stock that they own for that
02:12:09 $100,000 is working in the background over those three years as well.
02:12:13 If we look at just what's happened this year in Apple stock, it has actually achieved new
02:12:18 all-time highs.
02:12:20 And that is really the byproduct of excellent leadership, excellent product, excellent services.
02:12:26 You find that those businesses, productive assets that we own, they are going to outperform
02:12:32 over time.
02:12:33 So in your opinion, what's one thing that sets a good investor from a great investor
02:12:39 apart?
02:12:40 Yeah, so a good investor from a great investor.
02:12:43 I know there's so much that's been written about this, but I would say that it's really
02:12:48 just about automating and removing emotion from your investment decisions.
02:12:56 I would say that really there are three human tendencies that I come across in working with
02:13:02 the folks that come to join our Wealth Plan Club, and that's fear, greed, and ego.
02:13:09 So fear, very, very simple.
02:13:12 There's two sides of the coin.
02:13:13 Fear of missing out.
02:13:15 Oh my goodness, I see.
02:13:16 Let's go back to Apple stock.
02:13:17 It's at all-time highs.
02:13:18 Oh my gosh, I need to buy, buy, buy, buy, buy right now.
02:13:21 And there is, let's call it a disconnect about how the stock market works.
02:13:28 When a company is running up, up, up, up, up, it doesn't mean that it's always just
02:13:32 going to be a straight line up.
02:13:34 There will be times where investors may take some profits off of the table.
02:13:39 So fear of missing out may cause an investor to overpay for an investment, right?
02:13:44 Because they're chasing a concept or an idea.
02:13:47 But also fear of losing money.
02:13:49 So maybe because of their fear of missing out, they might buy a company at 300 or 400
02:13:56 a share, and that company might come all the way down to 250 or 225.
02:14:00 And that fear of losing money will cause them to sell, as opposed to actually allowing the
02:14:04 company the time to actually grow and develop as a great investment.
02:14:09 So fear, greed, which kind of drives the American capitalist system in general.
02:14:14 And so our desire to retire earlier, to make more money faster, that sort of feeds into
02:14:22 this frenzy in some cases that we may find in the markets.
02:14:26 And then also ego.
02:14:27 There are a number of folks who may all of a sudden say, "Well, I've watched all the
02:14:30 YouTube videos.
02:14:31 I've looked at all of the interviews that Rosemary's ever done.
02:14:35 I've read all the books, and I know, I just know where the market is going to go."
02:14:39 And as Warren Buffett has said so aptly, the markets can remain irrational longer than
02:14:46 most investors, or really any investor, can remain solvent.
02:14:50 So even if you do actually know, and you feel like you know, and you're like, "There's
02:14:54 no way that this company can keep going down and down and down and down.
02:14:58 I'm just going to keep buying.
02:14:59 I'm just going to keep holding on."
02:15:01 What Warren is really saying is that the markets can remain irrational longer than you can
02:15:06 continue to buy into that investment.
02:15:08 So really, for investors that are just getting started, my recommendation, and once again,
02:15:16 not financial advice, but what I've seen work very, very well over decades and decades,
02:15:22 is just creating an automated way out of every paycheck or any time you get paid to actually
02:15:28 own as much of the American financial ecosystem as possible.
02:15:33 And if you don't have an idea of what exact companies to pick, just buy a basket of 500
02:15:39 great companies like the S&P, or buy a basket of the top 100 technology companies.
02:15:45 If you feel like, "Hey, technology is transforming the way that we live and interact," we can
02:15:49 buy the NASDAQ 100.
02:15:51 It's not very, very expensive, and you can do so by just automating it.
02:15:55 The beauty of index funds is that they actually are set up in such a way that you don't have
02:16:04 to do the buying and selling.
02:16:05 So when a company is no longer worthy of being in the S&P, the index will automatically rebalance.
02:16:13 It will allow a different company to come in so that you're always really in the best
02:16:18 investments, the best vehicles for your capital.
02:16:22 So I'm curious.
02:16:24 What are your thoughts on cryptocurrency?
02:16:26 My thoughts on cryptocurrency.
02:16:27 Well, I've had an incredible journey with crypto.
02:16:32 If you check my Twitter, all the way back, I'll say 2013, I said, "Pay me in Bitcoin."
02:16:37 All the way back.
02:16:38 We're talking 10 years ago now.
02:16:40 And there was a time where all of my royalties, all of my revenue, I was making sure that
02:16:49 people were actually paying me in Bitcoin all the way back then.
02:16:52 So when I was earning the bulk of my revenue in Bitcoin, it was really trading at about
02:16:58 $125 a coin.
02:17:00 Fast forward to now, it's about $30,000 a coin as of today.
02:17:04 And so I've had an incredible journey there, but I've mostly stayed invested in the flagship
02:17:09 cryptocurrency, which is Bitcoin.
02:17:11 So do you ever suggest cryptocurrency to any of your clients?
02:17:14 Well, I actually never suggest an investment.
02:17:17 What I mostly do is just teach them about all of the different vehicles.
02:17:21 And we're talking about even complex derivatives in some cases, how to buy and sell promises
02:17:28 in the stock market to earn more on your capital.
02:17:31 I just want to make sure that I educate and really just provide a framework, let's call
02:17:38 it a framework through which they can view their investing journey.
02:17:43 So you mentioned you wanted to be paid in Bitcoin for your royalties.
02:17:46 So I'm not sure if you saw, but Snoop Dogg recently had a big issue with the streaming
02:17:52 industry for musicians.
02:17:56 Could you talk about that?
02:17:57 I want to know how are artists getting paid with streaming?
02:18:01 Yeah, I mean, it's pretty simple.
02:18:04 You can really just do a Google search and say, how much do I get per stream?
02:18:08 And it's going to tell you it's about maybe 0.005 cents, if we want to call it.
02:18:17 So like half a penny or so on every single stream.
02:18:22 So when you think about how streaming is actually working, where you can release a song and
02:18:27 get millions and millions of streams, you just multiply those millions of streams by
02:18:32 that percentage of a penny that you get for every stream.
02:18:36 Now, the bottom line is that the music industry has needed to evolve.
02:18:41 We don't have physical CDs.
02:18:44 Maybe if you're a collector, you still have some physical vinyl.
02:18:47 But at the end of the day, really, we want to have the entire library of all recorded
02:18:51 music right in our pocket on our mobile device.
02:18:56 And so companies like Spotify, and you can buy Spotify, you can own Spotify, if you believe
02:19:01 in that, companies like Apple Music, they provide those platforms, Jay-Z's title, provide
02:19:06 those platforms so that you actually can make your playlist.
02:19:11 If you have a running playlist, you have a playlist for romance, you have a playlist
02:19:15 for a wedding, a party, you have the ability to do it.
02:19:18 I want to know, is streaming better or worse than going to a record label for artists?
02:19:24 Well, record companies, they actually are streaming their artists as well, right?
02:19:29 So the bottom line is that whether you're signed to a major or you're releasing independently,
02:19:35 you have the same opportunity to distribute your music globally through the streaming
02:19:41 platforms.
02:19:42 There are a number of aggregators.
02:19:43 One of my favorites is Steve Stout's United Masters.
02:19:47 You don't have to be signed to a major label.
02:19:49 The major label is really to have some infrastructure and to have some capital behind your release.
02:19:54 But if you've got your own infrastructure and capital, you can literally press two buttons,
02:19:58 go to an aggregator, go to a distributor, and literally within one week, your music
02:20:03 is available globally.
02:20:05 Are you at all afraid of AI's disruption in the music industry?
02:20:11 It has its pros, but it definitely has its cons.
02:20:16 Is it going to put some people out of business?
02:20:18 I believe that technology is already transforming really every single aspect of our lives.
02:20:25 I always have approached technology from a place of embracing the technology, understanding
02:20:31 the technology, and understanding the ways that human intelligence is differentiated
02:20:37 from artificial intelligence.
02:20:39 In so doing, obviously we're the ones that came up with AI.
02:20:43 In so doing, we can understand how we can remain valuable as the landscape changes.
02:20:50 When you look at the headlines, I think I've seen in some of the Forbes headlines recently
02:20:54 that if you can be a great prompter for Chats GPT, you can be earning six, seven figures
02:21:01 per year.
02:21:02 And so it is about understanding where the opportunity is.
02:21:05 And that opportunity is really in embracing the technology, understanding the technology,
02:21:11 mastering the technology so that you can actually benefit from it.
02:21:15 And I believe that that goes for any industry that may want to put new and emerging technology
02:21:21 at arm's length.
02:21:23 What I found is that great companies that lean into research and development, they find
02:21:28 that they're able to accelerate their place in the future of what our economy and what
02:21:35 our world is going to look like.
02:21:36 So that sounds like skills-based learning.
02:21:38 That's a skill, learning how to do a prompt.
02:21:41 And I know you're a Harvard man and you're all about education, but what do you think
02:21:45 the value of a college degree will be in the near future?
02:21:49 For me, when I think about my time at Harvard, man, some of the buddies that I have there,
02:21:54 my buddy Taj Clayton, my boy Mark Price, my brothers Diallo and Bashir, folks that I met
02:22:01 during Harvard, my other buddy Lex, these are all folks or people that I met through
02:22:08 colleagues at Harvard.
02:22:09 One of my longtime partners, Rashid Richmond, his sister was at school with me, his sister
02:22:13 Afra, I believe that being in that ecosystem with high-performance critical thinkers is
02:22:20 the true value of that college experience.
02:22:23 So anyone that you ask, whether they've gone to Cornell or whether they've gone to USC,
02:22:28 whether they've gone like my sister at Cal Berkeley, there are relationships that are
02:22:32 built there in the formative years of our lives where you find potential business partners,
02:22:38 potential collaborators, lifetime and lifelong friends.
02:22:42 And I believe that that's really sort of a priceless exchange for the tuition that we
02:22:47 pay.
02:22:48 Now, the other reason why I'm never really worried about tuition is because when you
02:22:52 can master what we were talking about at the beginning of this conversation, you can take
02:22:57 a very small amount of capital and over time compound that capital to cover whatever expenses
02:23:03 you may have accrued in student loan debt, et cetera.
02:23:07 And I think a lot of what I've found is people necessarily either A, just don't want to learn
02:23:15 it, B, they have maybe somebody in their family lost some money in the stock market, says,
02:23:20 "I don't want to touch that at all."
02:23:22 But what we find is that being uninvested is actually losing you money, right?
02:23:28 Because all of the headlines, at least the current headlines, are very, very focused
02:23:33 around inflation.
02:23:34 The cost of goods and services are going higher.
02:23:37 So that means that a dollar today is actually really retains less purchasing power.
02:23:43 So you've got to find some way to crack the whip on that money and make it do some somersault
02:23:47 and make it work for you.
02:23:49 Otherwise, what you'll find is the same $10 that you wanted to spend on a quick run to
02:23:54 one of the bodegas uptown, that $10 is buying you less and less and less.
02:24:00 So that means that you need to make sure that whether it's with our Wealth Plan Club or
02:24:05 just on your own or with someone that you trust, you have to figure out how to actually
02:24:10 make the money that you earn and work so hard for, you have to figure out a way to actually
02:24:15 make that money work for you.
02:24:17 And that's what we do at Wealth Plan.
02:24:18 So other than Wealth Plan, what's next for Ryan Leslie?
02:24:22 Listen, this I think for me has really become a, I think it will be a part of my legacy,
02:24:29 what I'm doing at Wealth Plan.
02:24:34 It's tremendously rewarding to unlock a financial future that someone may have almost completely
02:24:44 overlooked.
02:24:45 And the way that we work at Wealth Plan is it's very individualized and tailored.
02:24:50 So it's one-on-one and it's for folks that actually, like me, when I first was seeking
02:24:55 out a mentor, they want that personalized attention.
02:24:58 They understand it's called personal finance for a reason and they want to actually have
02:25:02 someone to show them the way in a real way, one-on-one, step-by-step, hand-in-hand.
02:25:08 So that's what I've been doing.
02:25:10 I'm not a financial advisor.
02:25:11 I'm not a stockbroker.
02:25:14 All I can do is show folks what has made a multi-million dollar difference in the returns
02:25:18 in my portfolio.
02:25:20 And because of those returns, it gives me the latitude, it gives me the opportunity
02:25:25 outside of obviously running my venture-backed company, SuperPhone, which is about technology.
02:25:31 We can talk about that a little bit more.
02:25:33 Outside of doing that, it provides a very, very rewarding aspect to my life because what's
02:25:39 the use of being wealthy on your own?
02:25:41 You want to have folks around you who once, let's say we can turn 100 people into millionaires.
02:25:48 Well, that's $100 million of financial power that we can put behind the initiatives, the
02:25:55 change that we want to see in the world.
02:25:57 So I believe for me, this is a piece of everything I'll be doing for the rest of my life is teaching
02:26:06 in this way.
02:26:07 But on the flip side, I've always sort of had this concept of being of service.
02:26:12 So when I was in the music business, the first jobs that I had, even though I wanted to be
02:26:17 in front of the cameras, was to actually be behind the scenes as the producer.
02:26:22 And so for me, it was about providing the highest level of service.
02:26:25 I needed three song ideas and give them nine.
02:26:28 And then once I was able to get in front of the cameras and was starting the tour, I would
02:26:33 listen to feedback from audiences, especially when I was overseas.
02:26:36 And they said, "Well, artists will come from overseas and they'll get on stage and they'll
02:26:41 do a backing track and they'll be out of here in 30 minutes."
02:26:44 Like it's God's gift to mankind that they got on a plane to come over and perform for
02:26:49 us.
02:26:50 And so for me, in that spirit of service, I spent the extra money to bring the band out
02:26:55 and we would play two hour, three hour, in some cases, marathon, six hour sets.
02:27:00 And so people could understand Ryan's about delivering a higher level of service.
02:27:05 And so I started to get a lot of folks that would say, "Hey, Ryan, I want to make it in
02:27:08 the music business."
02:27:10 And the music business is really sort of tied to, let's say, just a little bit of serendipity.
02:27:15 You're not able to just say, "If I make a song and I put this much money behind it,
02:27:20 it's going to go."
02:27:21 If that was the case, everybody would have a hit.
02:27:23 So the way that I can give back in a way that is objectively valuable is really twofold.
02:27:30 Number one, success really happens at the speed of communication.
02:27:34 So what we do at SuperPhone is we put a layer of technology on text messaging and a layer
02:27:42 of technology over our phones, which allows me, currently I'm on text with more than 130,000
02:27:48 people.
02:27:49 I've had those conversations, but it's not just about the text.
02:27:52 It's also about the ability to layer that on a phone system and to do it personally.
02:27:57 We've all heard about call centers.
02:27:59 You call up Delta Airlines or you call up somewhere, there's call centers and they're
02:28:03 redirecting your call somewhere, or you're talking to a robot.
02:28:07 My belief and the belief that we have at SuperPhone and the reason why we have a patent on some
02:28:12 of the technology that we're building for automated digital conversation management
02:28:17 is because my belief is that when we can unlock ... Like if I was to ask you right now, "How
02:28:22 many contacts do you have in your phone?"
02:28:24 You might not know offhand, but if I gave you your phone and you scrolled all the way
02:28:28 to the bottom and you said, "Oh, well I've got 300 contacts, 500 contacts, 750, 1,000
02:28:34 contacts," the reality is you're likely only engaging with maybe 3% of those contacts,
02:28:40 because we like to keep our circle small.
02:28:43 So what I'm doing at SuperPhone is my way of being of service, not subjectively, because
02:28:49 if someone doesn't like my music, then I can't really serve them.
02:28:51 Being of service.
02:28:52 Go ahead.
02:28:53 Yes.
02:28:54 That's what's next.
02:28:55 That's what you're going to continue doing.
02:28:56 That's what drives what I'm doing.
02:28:57 Absolutely.
02:28:58 Thank you so much for joining me today, Ryan.
02:28:59 Thanks, Rosemary.
02:29:00 Appreciate you.
02:29:01 Absolutely.
02:29:02 We're rolling, so we'll start at this clock and let's get a good go.
02:29:09 Thanks, Mark, for taking time to talk to Forbes.
02:29:11 Happy to.
02:29:13 What is the biggest technological innovation of your lifetime?
02:29:17 I think if I had to pick to date, it would probably be mobile, giving everyone the ability
02:29:23 to connect.
02:29:24 But I think going forwards, the two that I'm the most excited about are AI is obviously
02:29:31 just having a huge moment right now.
02:29:33 There have been awesome breakthroughs in the last year on this.
02:29:36 I just think that this is going to transform all of the different products that we have
02:29:41 and everything across the industry.
02:29:44 My own view is that there isn't going to be one big central super intelligence.
02:29:48 I think that there are going to be a lot of different AIs that people interact with for
02:29:52 different things and that we interact with throughout our day.
02:29:56 I'm really excited to try to help make that happen.
02:29:59 The other one that I think is going to be very exciting over time is the metaverse,
02:30:06 the ability for people to basically feel physically present with another person, no matter where
02:30:13 you actually are in the world.
02:30:14 In the near term, we get that with VR, where you can jump in and you can be embodied as
02:30:19 an avatar and just feel like you're right there with another person.
02:30:21 There's something that's sort of magical about that, that you don't get in any other kind
02:30:25 of screen or technology that we use.
02:30:28 Nothing really replaces the feeling of being there with another person.
02:30:30 But in the long term, I think we're going to get that through a pair of normal looking
02:30:35 glasses where we could be having this conversation in the future and one of us could just be
02:30:38 a hologram sitting here and having a normal full interaction, feeling like we're physically
02:30:43 there with each other.
02:30:44 I think that that's going to be really, really just a huge deal.
02:30:49 At Meta, the main thing that I'm focused on is we talk about building the future of human
02:30:54 connection.
02:30:55 I think those two areas really blend together to be that, for giving people the ability
02:31:02 to feel present with another person no matter where they are.
02:31:06 Then also over the long term, giving people the ability to interact not just with people,
02:31:10 but also AIs and businesses that they care about in different ways is just all part of
02:31:15 the future of making the world more connected.
02:31:17 So I think it's super exciting.
02:31:18 I mean, this idea of putting on glasses and then you could be a hologram or I could be
02:31:23 a hologram, is that a decade or more away?
02:31:26 No, I hope not.
02:31:28 Less?
02:31:29 Really?
02:31:30 Yeah, less.
02:31:31 Well, first of all, you are going to be able to do it and you can do it with Quest Pro
02:31:33 today.
02:31:35 And when Quest 3 comes out, you'll be able to do it with mixed reality.
02:31:38 The first headsets that we made were virtual reality, which basically meant that you were
02:31:43 fully immersed in a world around you.
02:31:45 Now you put on the headset and by default, you're in your living room or you see the
02:31:50 physical world around you and you see digital objects overlaid on that.
02:31:54 And I think that that's...
02:31:55 So we're starting to get that.
02:31:56 I think over the coming years, we'll get to the zone where the digital world isn't just
02:32:04 something that we access through phones or screens.
02:32:06 It'll be more and more just kind of blended into the world around us.
02:32:11 A lot of the art or the games or media or screens, it's actually an interesting thought
02:32:17 experiment just to think about how much of the stuff around you could be a hologram.
02:32:21 Your chair can't be because you need to physically sit on it.
02:32:23 Food can't be because you need to physically eat it.
02:32:26 But most of the other things around us actually probably could be holograms over time.
02:32:32 And that's going to open up a lot of interesting opportunities too.
02:32:36 So you're getting that with these kind of headsets like Quest already that millions
02:32:40 of people have access to.
02:32:42 And then my hope is that over the next several years, we'll also get increasingly powerful
02:32:46 glasses.
02:32:47 But that's a very hard tech problem because you're basically fitting the equivalent of
02:32:52 a supercomputer into a pair of normal looking glasses.
02:32:55 So making things small is hard.
02:33:01 I think that's why I was thinking it would take a decade because thinking about the difference
02:33:03 in size between the Quest 3 and the Ray-Ban Stories is that are pretty different.
02:33:10 And it's not necessarily that you're going to be able to do the same thing with both.
02:33:13 Just like a computer might have more power on your desk than your phone, but you could
02:33:19 still do a lot of awesome stuff with your phone.
02:33:22 My guess is that glasses will walk around throughout the day with them.
02:33:26 They won't be quite as powerful as what you'll be able to do with a full headset.
02:33:30 So maybe if you're sitting down to work on something or if you're a surgeon and you're
02:33:35 going to do a remote surgery, then you probably want a more powerful VR headset, not just
02:33:39 a small pair of glasses, but for mobile use cases, walking around in places where you're
02:33:44 going to be interacting with a lot of other people live where you want to see people around
02:33:49 you, not just have a headset on.
02:33:52 That's going to be super useful.
02:33:53 So yeah, I think it's going to be this decade.
02:33:55 What would you say is the hardest part of running Meta?
02:33:59 Well, I think the hardest, this may just be for me because of the way that I'm oriented,
02:34:08 but it's a big company and I think getting the people right and the culture right is
02:34:17 the thing that both matters the most and is sort of the hardest to dial, especially as
02:34:24 a company scales.
02:34:26 And one of the things that I've found over time is we've gone through these different
02:34:31 periods as a company where sometimes people think we're awesome, sometimes people think
02:34:35 we're terrible, sometimes people think we're just like everything we do is going to be
02:34:39 a winner and sometimes people think we're like the gang that can't shoot straight and
02:34:45 just nothing that we do is going to work.
02:34:46 But regardless of what people are saying externally, I've found that if you can keep sort of a
02:34:53 good amount of internal cohesion, you can get anything done.
02:34:58 Whereas even when sometimes people are very excited about the company, if people internally
02:35:04 aren't actually aligned to what we need to go do, then it's very hard to get things
02:35:07 done.
02:35:08 So for me, I mean, it's maybe somewhat of a trite thing to say, but I think this is
02:35:15 all about getting people right and getting the right people involved and building great
02:35:22 teams of awesome people to be able to build new things that are super impressive for a
02:35:29 lot of people.
02:35:30 So that to me is probably what I spend the most time focused on and it's probably the
02:35:35 most important part of running a company.
02:35:37 That sounds, I think that sounds fair to me.
02:35:40 Who is your biggest rival and how are you competing against them?
02:35:47 Well, we have a lot of competitors in pretty much everything we do from social media to
02:35:53 devices to advertising to like all the different areas.
02:35:57 But I don't know, I guess one philosophy that I've always had is I actually think
02:36:04 your biggest, the thing that determines your destiny is not a competitor, it's how you
02:36:10 execute.
02:36:12 And I think most companies probably focus too much on competitors and maybe even focus
02:36:22 too much on ideas.
02:36:24 And I think at the end of the day, a lot of what makes great companies great is the ability
02:36:29 to just like relentlessly execute and efficiently execute and do that rigorously and just get
02:36:34 better and better at it all the time.
02:36:35 And that's one of the things that we've really focused on.
02:36:38 So I don't know, maybe it's like, it's sort of like a very, I don't know, like martial
02:36:43 arts view of the world or something that you, it's like when you go into a competition,
02:36:48 it's not, you're not fighting another person, you're fighting yourself.
02:36:51 And you're just trying to be a better version of yourself and make the company better and
02:36:55 able to better execute every day.
02:36:57 But I always tell our company that whenever I've gotten asked that question, like a lot
02:37:02 of times over time and it's always just, no, like we don't control our competitors, but
02:37:07 we do control what we do and we can get better at it.
02:37:10 And that's how we build better things for the world.
02:37:12 And you're okay, obviously, mimicking features at other competitors and trying to roll them
02:37:18 out here, right?
02:37:19 I mean, I've certainly seen that.
02:37:20 Well, I think you want to learn from what people in the world are enjoying and finding
02:37:25 useful, right?
02:37:26 And yeah, I think you want to be humble about it, right?
02:37:29 It's, you know, not every great idea is going to come from us.
02:37:31 You know, I like to think that, you know, we invent a lot of things, but no, I think
02:37:38 that the idea that like we would create everything that people want to use is ridiculous, right?
02:37:42 So yeah, of course we want to be looking around and seeing what people find useful and trying
02:37:47 to do our own take on those things and make them even better.
02:37:51 And I think that that kind of natural competition is how these ideas get honed and things get
02:37:58 better in the world.
02:37:59 If you're in a match with Elon and he uses the heel hook move, how do you defend against
02:38:04 it?
02:38:05 Well, I don't think that fight's going to happen.
02:38:09 But look, I mean, I love the stuff.
02:38:11 I like competing.
02:38:12 I like doing it with friends.
02:38:13 It's like an important part of my daily workout.
02:38:17 But I like competing too.
02:38:18 I started doing jujitsu competitions earlier this year.
02:38:22 I want to do an MMA competition or do kind of a formal fight sometime in the next year.
02:38:27 So I'm looking forward to that.
02:38:29 I'm probably going to do it with someone who takes the sport really seriously and does
02:38:32 it competitively or as a professional.
02:38:35 So I'm training hard and looking forward to it.
02:38:39 But no, to your question about the heel hook, that's a relatively high level jujitsu move.
02:38:44 So I think the person would have to be pretty serious and experienced in order to be even
02:38:48 attempting that.
02:38:50 Fanciful promises and self-salesmanship made Vivek Ramaswamy a billionaire by age 38.
02:38:56 That same playbook has fueled his early rise in presidential politics.
02:39:00 Win or lose in 2024, he'll emerge richer and more powerful than ever.
02:39:05 Just how he planned it.
02:39:06 Hi, everybody.
02:39:08 I'm Brittany Lewis with Forbes Breaking News.
02:39:11 Joining me now is senior wealth reporter John Hyatt.
02:39:14 John, thanks so much for joining me.
02:39:17 Always good to see you, Brittany.
02:39:18 GOP presidential contender Vivek Ramaswamy went from a relatively unknown candidate to
02:39:23 part of the national conversation really overnight, starting in that August debate.
02:39:28 So to kick things off, can you tell us who is Vivek Ramaswamy?
02:39:33 Vivek Ramaswamy is a businessman.
02:39:36 He made his fortune first in hedge fund investing and then by starting a biotech company called
02:39:43 Roy Vance Sciences.
02:39:45 That's R-O-I Vance Sciences.
02:39:48 And you know, Vivek is somebody who is always thinking about ROI, whether it's in business,
02:39:54 whether it's in politics, whether it's in the friendships he pursues.
02:39:59 And his obsession with getting his own personal return on investment and maximizing that has
02:40:05 driven him to the billionaire ranks.
02:40:07 He became a billionaire a few months ago when Roy Vance stock was at its peak.
02:40:14 It's since dipped a little bit, but he still boasts a very impressive $930 million net
02:40:19 worth as of yesterday's market close.
02:40:22 And you know, he also owns a Strive Asset Management.
02:40:27 They're an investment firm that he founded just before entering the presidential race.
02:40:32 So you know, he's somebody with his hands in multiple hats, so to say.
02:40:38 He's got his biotech empire.
02:40:40 He's got his Strive Asset Management firm, which sells ETFs to retail investors and boasts
02:40:46 an anti-woke ideology.
02:40:49 And now he's entered politics and he's done a very interesting job of sort of marrying
02:40:54 those interests.
02:40:56 Before we kick things off and discuss his obsession with the return on investment, he
02:41:01 has some Midwestern roots.
02:41:03 Can you explain where he's from and the importance of that?
02:41:06 Vivek grew up outside of Cincinnati.
02:41:09 He's a first generation son of two parents who left India to pursue a better life in
02:41:18 the United States.
02:41:19 He went to an elite Catholic boys school where he graduated as valedictorian.
02:41:25 And from there he got accepted into Harvard and he's been on the rise ever since.
02:41:31 You mentioned that he has this sort of anti-woke ideology.
02:41:35 What was the catalyst to really propel Vivek Ramaswamy to run for president?
02:41:40 And what are some of those main issues that he's really championing?
02:41:44 It's a good question.
02:41:45 Why is he running for president?
02:41:46 This is a millennial finance guy who has no political experience.
02:41:52 He didn't vote in numerous presidential elections during his 20s.
02:41:57 So you know, I think we can trace Vivek's sort of political awakening back to 2020.
02:42:03 You know, he's always been, you know, conservative.
02:42:08 And you know, at Harvard he, you know, was affiliated with the Republican Club there.
02:42:13 When he was at Yale Law School, he made friends with people like future U.S. Senator J.D.
02:42:18 Vance, who was a classmate of his.
02:42:21 He met Peter Thiel at Yale.
02:42:22 So he's always been somebody who's, you know, been conservative and right leaning.
02:42:27 But in 2020, there was, of course, we all know 2020, it was, you know, early COVID.
02:42:35 There were protests after the murder of George Floyd.
02:42:39 Black Lives Matter was front and center.
02:42:42 And Vivek had, Vivek was faced by employees at Roivant who wanted him to speak out on
02:42:49 behalf of the Black Lives Matter protests.
02:42:51 And Vivek didn't want to do that.
02:42:54 And that was sort of his first tussling with political issues was in the business context.
02:43:00 So you know, flash forward a year or so, he's been writing op-eds for the Wall Street Journal.
02:43:05 He's appearing in Fox News.
02:43:07 He steps down from Roivant as CEO to focus on this stuff full time.
02:43:11 And he writes his first book, "Woke, Inc."
02:43:14 Becomes a New York Times bestseller.
02:43:16 All of a sudden, he's kind of, as the New Yorker christened him, the godfather of anti-woke-ism.
02:43:23 And so, you know, from there, he founded Strive Asset Management.
02:43:26 He found a way to monetize the anti-woke gospel that he's preaching.
02:43:31 And by running for president, he's essentially found a new platform or a new way for him
02:43:37 to get his message out there and to build his own profile and to build the profile of
02:43:42 Strive as well.
02:43:43 In your reporting, you discussed his obsession with return on investment.
02:43:48 You were actually with him on the campaign trail, both in New Hampshire and then Iowa.
02:43:53 So how did you see that playing out as you reported on him?
02:43:57 You know, it's interesting because his focus on ROI, we can trace that back to his hedge
02:44:02 fund days and his days as a biotech entrepreneur founding ROI Vant Sciences.
02:44:08 So it's sort of a long-held worldview that Rameswamy operates under.
02:44:14 But it's completely different in retail politicking, in Iowa diners, in New Hampshire restaurants,
02:44:20 right?
02:44:21 It's a whole different environment that he's operating in.
02:44:24 Yet he remains the hyper-analytical, always listening, always calculating guy that he
02:44:31 was in business.
02:44:32 And we see this through just the way he responds to people's questions.
02:44:37 He's very good at reading a room.
02:44:39 He knows how to whip a crowd up, as you've seen yourself in Iowa.
02:44:43 And you know, sometimes, you know, we see it by him sort of mucking about in some of
02:44:48 the more conspiratorial QAnon-themed ideas that some of these GOP primary voters are
02:44:55 asking about.
02:44:57 For example, in New Hampshire, one woman asked about, you know, the epidemic of child sex
02:45:03 trafficking in the United States.
02:45:06 And he immediately referenced Sound of Freedom.
02:45:08 That's a movie that's been embraced by QAnon adherents.
02:45:12 And you see the results when he sort of name-drops these ideas or these concepts.
02:45:17 People clap.
02:45:18 People like it.
02:45:19 They see that he understands the issues that they care about and that they are thinking
02:45:22 about.
02:45:23 But you know, his ROI also extends to powerful folks in society who can help his campaign.
02:45:31 When I was trailing him in Iowa, he, you know, casually name-dropped Elon Musk as an adviser
02:45:37 that he would want if he were to be elected president.
02:45:40 Sure enough, that generated news stories, people saying, "Ramaswamy says he'll appoint
02:45:44 Elon Musk an adviser."
02:45:47 You know, sort of overlooked in that, though, too, was that Ramaswamy has praised Elon Musk
02:45:52 for gutting Twitter's workforce by 75 percent, saying that he wants to model his own dismantling
02:45:59 of the federal bureaucracy on Elon Musk.
02:46:03 And sure enough, two days later, after those comments, Elon Musk, on his platform X, endorsed
02:46:08 Ramaswamy for the vice presidential slot.
02:46:11 So you know, the VEIC is always eyeing opportunities, whether it's to win over the retail voter
02:46:17 or to win over another backer like Musk.
02:46:21 You know, he's always calculating.
02:46:23 Something that you said that I can second is that he can really work a crowd.
02:46:28 And something I noticed in Iowa, I was able to see most of the candidates, and he was
02:46:32 able to get his points across very succinctly.
02:46:35 He has those 10 truths that are succinct.
02:46:39 They hit on a host of different issues, a lot of red meat issues.
02:46:43 And I want to talk about his retail politicking a little bit.
02:46:45 You wrote this in your story.
02:46:47 Donald Trump campaigns like Donald Trump operates business, but you wrote Vivek Ramaswamy campaigns
02:46:52 like Vivek Ramaswamy.
02:46:53 First, can you explain that a little bit?
02:46:55 And second, how is he doing on the campaign trail?
02:46:58 Yeah.
02:46:59 So, I mean, who is Vivek Ramaswamy?
02:47:01 Right.
02:47:02 That's kind of a fundamental question of understanding how he operates.
02:47:06 And you know, folks I spoke with who worked with him in business say that he is nonstop.
02:47:12 Few people have as much energy as he has.
02:47:14 The guy eats three or four meals at a single meal is what his longtime friend and Strive
02:47:19 co-founder Anson Frerichs told me.
02:47:22 And so on the campaign trail, you know, you see a guy who is essentially just nonstop.
02:47:28 He's event after event.
02:47:30 He answers questions.
02:47:32 He smiles with people.
02:47:35 He's always alert.
02:47:36 He's not somebody who sort of, you know, slips into, you know, automaton mode and, you know,
02:47:42 just reads off a teleprompter.
02:47:43 He doesn't use a teleprompter.
02:47:45 He basically extemporizes all of his speeches.
02:47:50 And you know, he's always seeing ahead of what his audience is thinking in a way.
02:47:57 He knows, he knows sort of how they think.
02:48:02 He knows the issues that they care about.
02:48:04 And he's always playing on them.
02:48:06 One of the defining moments in August's debate was him and Nikki Haley, the former UN ambassador,
02:48:12 clashing over foreign policy.
02:48:15 That led to people saying he might not be experienced to be the president, but we haven't
02:48:20 seen him really embroiled in any major controversies on the trail so far.
02:48:25 But in his private life, what are the controversies he's faced there?
02:48:30 You know, Vivek Ramaswamy hasn't, you know, he's not like a Trump type who has faced all
02:48:35 these accusations of fraud and, you know, wrongdoing.
02:48:39 Like I think the biggest controversy he's faced is, you know, one of his companies,
02:48:44 Axovant.
02:48:45 This was the company he created and took public in a massive $3 billion IPO.
02:48:52 And its only asset was an Alzheimer's drug that had already failed four clinical trials,
02:48:59 but he purchased it for $5 million.
02:49:02 And you know, his claim and those that he was working with was that this drug was overlooked,
02:49:08 that it actually was going to be this big cure for Alzheimer's.
02:49:11 And so, you know, this was right when he founded Roivant.
02:49:14 This was sort of the first big test case for Roivant, which was rescuing drugs shelved
02:49:19 by big pharma.
02:49:21 And you know, they took it public in this big IPO.
02:49:24 He built out Roivant and, you know, two years later, the drug flopped its fifth trial.
02:49:29 Today that company, Axovant, is in the process of being liquidated.
02:49:33 And so it was a massive failure.
02:49:35 And you know, Vivek has recognized that it was a massive failure.
02:49:39 But you know, ultimately, he didn't lose from it.
02:49:41 He did fine.
02:49:42 You know, Roivant continued to grow before Axovant flopped.
02:49:48 And you know, Roivant is an interesting company because it's a biotech company, but essentially
02:49:53 it's a venture capital portfolio company.
02:49:56 It buys up all these different drugs.
02:49:58 Some of them don't work and some of them do.
02:50:01 And the company has never turned a profit.
02:50:03 So it's kind of ironic that the big return on investment, you know, themed company has
02:50:09 never made a profit.
02:50:10 So I think there's some controversy there.
02:50:13 But I think more recently on the campaign trail, he's been stirring up controversy with
02:50:17 a lot of his provocative, you know, pledges, whether it's dismantling the federal bureaucracy
02:50:22 by laying off 75 percent of the workforce, whether it's cutting off aid to Ukraine.
02:50:27 You know, these are not statements he makes offhanded.
02:50:31 These are intentional.
02:50:33 He knows that they're going to drive press and earned media is a big part of his campaign
02:50:38 strategy.
02:50:40 So you know, he's finding ways to drive ROI in politics through stoking controversy.
02:50:46 You were able to join him on the campaign trail a few times, once in New Hampshire and
02:50:50 then in Iowa directly after that first debate in August.
02:50:54 So can you give us a feeling of what your personal impression of Vivek Ramaswamy was?
02:51:01 Super analytical, very numbers focused, very intense, always alert, always somebody who's
02:51:08 thinking ahead, very online savvy.
02:51:12 You know, he's constantly on X or on Instagram, posting videos of himself talking or, you
02:51:19 know, coming out with snarky tweets.
02:51:21 He's nonstop.
02:51:22 He's somebody who is in campaign mode 100 percent of the time.
02:51:25 And he tells me that, you know, the only time he's not in campaign mode is when he's, you
02:51:30 know, at home with his wife and two children in Columbus, Ohio.
02:51:34 But I mean, the guy's campaigning nonstop.
02:51:36 So it's not like that's a ton of his time.
02:51:38 So those tweets are Vivek, not a social media team?
02:51:42 I didn't see any social media team drafting tweets on his behalf.
02:51:46 I'm sure he has people who will do that.
02:51:49 But a lot of his tweets are are him tweeting on the fly.
02:51:52 He even interrupted one of our interviews to send out a tweet.
02:51:57 Do you know what the tweet was?
02:51:58 Yeah, it was.
02:51:59 So we were driving across New Hampshire and, you know, I was in the car with him and there
02:52:05 were two other journalists there.
02:52:06 And in the course of the interview, he kind of stopped because one of his advisers had
02:52:10 texted him something that Al Sharpton had said.
02:52:14 And he said, oh, I know I know what I'm going to say here.
02:52:17 And so he drafted a tweet basically mocking Al Sharpton.
02:52:22 And I think it got like over a million impressions or something.
02:52:25 So and it was quick.
02:52:26 You know, he didn't give it much thought.
02:52:28 It was, you know, boom, there's a tweet.
02:52:30 OK, back to the interview.
02:52:31 Like, here we go.
02:52:32 He's nonstop.
02:52:34 You were with him and now he is part of the major dialogue when it comes to this twenty
02:52:38 twenty four election.
02:52:39 Do you think there's anything missing when it comes to Vivek Ramaswamy in the national
02:52:43 conversation?
02:52:45 I think that there is a general lack of understanding of his business interests and how his ongoing
02:52:53 business interests continue to inform the way he politics and the way he sees the world.
02:53:00 I mean, he told me, look, I've stepped down from my boards.
02:53:02 I'm not involved in my businesses, but he remains the controlling shareholder of Strive
02:53:08 Asset Management.
02:53:09 So he's ultimately the ones who makes any sort of big decision that, you know, strive
02:53:15 that strive has to do.
02:53:17 I mean, even his own campaign disclosures still list him as the executive chairman of
02:53:22 Strive.
02:53:23 That's a position that he said he stepped down from.
02:53:25 And we never got a good explanation for why his own campaign disclosures still say he's
02:53:29 executive chairman.
02:53:31 So I think in general, you know, there's sort of a lack of understanding of how Roy Vant
02:53:35 works, but also that, you know, this is a guy who is still operating his businesses,
02:53:41 who's still, you know, has a lot financially to gain from running for president.
02:53:46 And that's what I hope our piece in Forbes explores.
02:53:49 Don, we're a couple months from the first primary election.
02:53:53 What do you see next for Vivek Ramaswamy?
02:53:55 I think he's going to lose to Trump.
02:53:57 I think they're all going to lose to Trump.
02:53:59 And I think the Vate is smart enough to understand this.
02:54:02 There have been rumors that he would be a good vice president for Trump.
02:54:08 He's mostly swatted those rumors aside.
02:54:09 He told me I don't do well as a number two.
02:54:11 He doesn't want to be vice president.
02:54:14 But look, who knows?
02:54:15 Maybe he'll change his tune.
02:54:17 We've seen him change his tune on various issues in politics.
02:54:21 So who's to say he won't again?
02:54:23 But the way he's engineered his political profile is that he can't lose.
02:54:29 He's only getting more attention for himself.
02:54:31 He's become part of the mega pantheon.
02:54:34 And he has a business that directly aligns with his political persona.
02:54:38 So that company, Strive, stands to do well, too.
02:54:42 So wherever Ramaswamy goes next, he's probably going to emerge a winner.
02:54:48 In August, you reported he is a self-made billionaire.
02:54:51 So financially speaking, is this run for president good for Vague?
02:54:56 Yes, it certainly seems to be.
02:54:59 I mean, he has put his own money into his campaign, to be fair.
02:55:03 As of June 30th, he'd sunk about $16 million into his campaign, $15 million of which was
02:55:10 booked as a loan.
02:55:11 But as we write in our piece, you could also view that as a marketing expense for Strive.
02:55:16 He's gained access to millions of viewers through his endless hits on Fox News, through
02:55:23 the debates.
02:55:24 This is somebody who is now a national figure.
02:55:27 Six months ago, that wasn't the case.
02:55:29 Yeah, and we're talking about him now on Forbes Talks.
02:55:32 Indeed.
02:55:33 And don't forget, he's only 38 years old.
02:55:34 So he's going to be with us for decades to come.
02:55:37 Jon Hyatt, thanks for your reporting.
02:55:39 Thanks, Brittany.
02:55:40 Since leaving Google as chairman, Eric Schmidt has wielded a $20 billion fortune to build
02:55:46 an ecosystem of influence.
02:55:48 And for the past two years, the 68-year-old committed at least $100 million to a startup
02:55:53 accelerator called Steel Perleau, which he leads as executive chairman with CEO Michelle
02:56:00 Ritter, a 29-year-old entrepreneur who he has been dating.
02:56:05 Hi, everyone.
02:56:08 I'm Rosemary Miller here with David Jeans, a senior writer here at Forbes.
02:56:13 Thank you so much for joining me today, David.
02:56:15 Thanks.
02:56:16 So David, for starters, who is Eric Schmidt?
02:56:21 So Eric Schmidt was the longtime CEO of Google.
02:56:26 And then he went on to become the chairman before leaving a few years ago.
02:56:30 In recent years, he's crafted this image of himself as a Silicon Valley statesman and
02:56:37 also an influential person in government in terms of advising on policy around tech and
02:56:43 AI and national security.
02:56:46 And he's done this by building an immense portfolio of companies and funds and philanthropic
02:56:52 ventures that he's backed with his family fortune.
02:56:59 So especially as the debate around AI has heated up this year, he's become an even more
02:57:05 consequential figure.
02:57:06 And we've seen him do a lot of work to especially build out more of these businesses.
02:57:13 So David, what do we know about Steel Perleau?
02:57:17 And could you tell me who is Michelle Ritter?
02:57:19 So Steel Perleau is a company that Eric Schmidt started in 2021 with a woman that he was dating
02:57:26 at the time called Michelle Ritter.
02:57:28 She was an entrepreneur and a graduate of Columbia Law School.
02:57:34 And together they launched this company with the idea that they could invest in AI companies,
02:57:42 build companies and incubate them, kind of like Y Combinator.
02:57:48 And also they saw it as a way to build a talent network of really smart, intelligent people
02:57:55 where they could perhaps foster innovation and create new ventures, whether that be new
02:58:03 philanthropic arms or whether that be creating a virtual reality company or something to
02:58:09 address banking issues.
02:58:10 It was supposed to be like an ideas hub where they could do this.
02:58:14 But the major thing about Steel Perleau was that Eric, as we reported, went to commit
02:58:21 at least $100 million to this venture.
02:58:25 $100 million.
02:58:26 Well, you also spoke with Michelle Ritter, right?
02:58:29 Could you tell us a little bit about that conversation you had with her?
02:58:32 Yeah.
02:58:33 So the thing that we set out to do with this story was to try and understand what exactly
02:58:37 it was that Steel Perleau is and does and what its purpose was and more broadly how
02:58:43 it fit into the ecosystem of Schmidt companies and entities that he oversees.
02:58:52 And so as part of that, it was important for us to talk to Michelle in her role as CEO
02:58:57 of the company, what the goal of the company was, how it was financed and how they made
02:59:02 decisions on investments.
02:59:05 It was also important for us to understand whether or how the dynamic around the fact
02:59:10 that they had been dating and while also leading a company with dozens of employees and how
02:59:18 that dynamic played out.
02:59:22 When I spoke to Michelle, she shared a lot about her background, some of the work that
02:59:30 she'd done, the ideas that she had.
02:59:32 She talked about this one venture that she'd come up with called StarX, which was a fan
02:59:38 engagement platform that she had been working on since college.
02:59:42 And she mentioned to me that that was a program that now is in a beta testing with FIFA.
02:59:49 She also had mentioned to me that there was a wealth management and asset management platform
02:59:57 that she was overseeing at Steel Perleau and that it was managing about $450 million.
03:00:05 However, we later found out upon when we wanted to get more details about this asset management
03:00:11 platform, Michelle later clarified to us that actually the money that she said she'd been
03:00:18 managing, it was only committed via letter of intent, which means that the money wasn't
03:00:25 currently being managed by Steel Perleau.
03:00:28 So there were some specifics around that that we just had to iron out through the reporting
03:00:32 process and that was the result of having extensive conversations with her about how
03:00:39 she was leading the company.
03:00:41 What did the employees have to say about the company?
03:00:44 So we did speak to quite a few employees to try and understand how the company was run
03:00:55 or if it was successful and what it had set out to do.
03:00:58 Some of the feedback that we did receive, that revolved around the fact that it was
03:01:04 often hard to understand what some of the business ventures were and whether they were
03:01:12 successful.
03:01:13 There was quite a high turnover rate and some of the employees said that often the CEO,
03:01:20 Michelle, had said that there was influential people like Jeff Bezos or Michael Bloomberg
03:01:26 that had been committed or involved in the company.
03:01:30 And later when we asked Michelle about that, she said that there was no formal partnerships.
03:01:39 There was also, I think that there was one quote that we included in the story and that
03:01:44 was that one employee told us that they felt that they had entered Steel Perleau thinking
03:01:52 that it was an opportunity to work with Eric Schmidt and his concept of fund the future,
03:01:58 but they left with a feeling that in fact they'd been working for more or less a vanity
03:02:02 project.
03:02:03 Wow.
03:02:04 And does Schmidt typically mix business with pleasure?
03:02:09 What was significant about this to us was the fact that this appeared to be the first
03:02:14 time that he had launched a major business venture with someone that he was reported
03:02:20 to have been dating.
03:02:21 And how long had they been dating?
03:02:23 Well, both parties did not comment on the relationship or any personal relationship
03:02:29 between them.
03:02:31 It was reported in 2021 that they had been dating and since then it was more or less
03:02:38 understood that they had somewhat of a relationship.
03:02:43 And it's not entirely clear what the current status is or how it applies to the business
03:02:49 currently.
03:02:50 Well, thank you so much for joining me today, David.
03:02:53 Thank you.
03:02:53 Thank you.
03:02:58 [END]

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