Latest / Masters in Business / Interview With Gianni Kovacevic: Masters in Business (Audio)

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Interview With Gianni Kovacevic: Masters in Business (Audio) · Masters in Business

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  Speaker 1: Brought to you by B A s F. We create Chemistry.
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  Speaker 1: This is Masters in Business with Barry Ridholds on Bloomberg Radio.
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  Speaker 1: This week on the podcast, I have a guest named
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  Speaker 1: Gianni Kovachevik. It's taken me a while to learn how
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  Speaker 1: to pronounce that precisely. He is the author of My
• 0:22
  Speaker 1: Electrician drives a Porsche, and he is an angel in
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  Speaker 1: venture investor specializing in energy and alternative technologies. UH. He
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  Speaker 1: also just took a Tesla and drove from Toronto to
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  Speaker 1: Boston to Florida, all around the United States, ended up
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  Speaker 1: in California and went to the Tesla plant. That's where
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  Speaker 1: his trip UH finished up, and we chatted about everything
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  Speaker 1: from the new technologies, what's taking place in China, alternative energies,
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  Speaker 1: the rise and continue demand for copper, and why oil
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  Speaker 1: is probably not your best long term investment. If you
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  Speaker 1: are at all interested in automobiles, electricity, venture investing, or
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  Speaker 1: alternative energy, I think you'll find this to be a
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  Speaker 1: fascinating conversation. Without any further ado my chat with Giannikovich Evic.
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  Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
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  Speaker 1: My guest today is Gianni covic Efic. He is the
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  Speaker 1: author of the book My Electrician Drives a Porsche, investing
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  Speaker 1: in the rise of the new spending class. He is
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  Speaker 1: also a venture investor as well as resident of Vancouver, Canada.
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  Speaker 1: Speaks multiple languages, English, German, Italian, Croatian. Just for you're
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  Speaker 1: only stopping it for um Gianni. Welcome to Bloomberg. It's
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  Speaker 1: so nice to be in New York Berry. So so
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  Speaker 1: let's jump right into who you are and what you
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  Speaker 1: do when when people ask you, what do you do?
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  Speaker 1: How do you answer that question? I am a curious investor.
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  Speaker 1: I follow trends. I try to be um. You know,
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  Speaker 1: I can turn myself to be a value investor, so
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  Speaker 1: I'm not really a trader. I want to look at
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  Speaker 1: deep value and effectively. I don't want to invest in
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  Speaker 1: the story on page one is my friend Don Cox
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  Speaker 1: would say that's the efficient market. I want to invest
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  Speaker 1: in the story on page sixteen that's headed to page one.
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  Speaker 1: So I'm trying to make a career out of investing
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  Speaker 1: on page sixteen stories. So, so what's your background? How
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  Speaker 1: did you get into this line of business? I'm from Vancouver, Canada,
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  Speaker 1: and what software is to Seattle is what let's say,
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  Speaker 1: energy commodities, natural resources are to Vancouver, Canada. So a
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  Speaker 1: lot of my friends we grow up and they become stockbrokers,
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  Speaker 1: other ones become geologists, engineers, and just you end up,
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  Speaker 1: you know, entering the workforce and there it is. It's
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  Speaker 1: so important to basically Canada, in that part of our country,
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  Speaker 1: particularly that you're just indoctorate into it, no different than
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  Speaker 1: someone from as I say, Seattle or San Francisco would
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  Speaker 1: get involved in software computers. And for those people who
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  Speaker 1: have never been in Vancouver, one of my favorite cities
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  Speaker 1: in North America and absolutely beautiful. Um So let's talk
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  Speaker 1: a little bit about the entrepreneurial spirit, which very much
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  Speaker 1: colors your book you're writing, what you focus on. How
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  Speaker 1: do you become an entrepreneur in a place like Vancouver.
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  Speaker 1: I know a lot of people up there who ultimately
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  Speaker 1: ended up moving to Seattle, New York, San Francisco, even
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  Speaker 1: Los Angeles. What what's life like in Vancouver for a
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  Speaker 1: entrepreneur who might be more interested in things like software
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  Speaker 1: and technology than as as one friend calls its sticks
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  Speaker 1: and stones, timber and minerals. Well, that's where my heart
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  Speaker 1: beats is supporting these things that I would say that
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  Speaker 1: you don't want to give society what they think they
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  Speaker 1: need or what they think they want. You want to
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  Speaker 1: give them what they do not have and what they
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  Speaker 1: what they don't already know that they want. We've seen
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  Speaker 1: examples from them, from Henry Ford in the car from
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  Speaker 1: the iPhone and Steve Jobs. The old joke is don't
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  Speaker 1: skate to where the puck is, skates where it's going
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  Speaker 1: to be absolutely and so when you're looking at that
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  Speaker 1: as an investor, I'm looking for people that are listening
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  Speaker 1: to the music, They're not getting confused by the noise.
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  Speaker 1: Classic page sixteen story or stories as investors. So entrepreneurial
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  Speaker 1: ship is you know people in groups that want to,
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  Speaker 1: you know, buy into that. You can see it, like
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  Speaker 1: Warren Bufett would say, when something is so obvious you
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  Speaker 1: don't even need a pencil and paper to figure it out.
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  Speaker 1: It's like, you know, we've all heard of those ideas
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  Speaker 1: that even that that Internet protocol or that app or
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  Speaker 1: that gizmo in the past years and just say, wow,
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  Speaker 1: that'll succeed. It's just so intuitive. And I think when
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  Speaker 1: you're creating these visions as an entrepreneur, you're also managing
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  Speaker 1: you know, it's a lot of psychology, a lot of
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  Speaker 1: a lot of sort of relationship building. The bigger and
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  Speaker 1: organization gets you end up managing all these personalities. So
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  Speaker 1: you want to find those mavericks that a create the
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  Speaker 1: product that people want to need in the future and
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  Speaker 1: they have the ability to stick handle that business as
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  Speaker 1: it grows, you know, So how do you how do
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  Speaker 1: you find that? While it takes a long time, I
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  Speaker 1: think you need you know, years and years and years
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  Speaker 1: of experience. You lose money, you win with this guy,
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  Speaker 1: you win with that guy, and and you know, after
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  Speaker 1: maybe fifteen or twenty years of experience, hopefully you can
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  Speaker 1: narrow that down a little bit to have more winners
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  Speaker 1: and losers. Don't don't we run the risk? Let me
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  Speaker 1: push back a little bit on you. Don't. Don't we
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  Speaker 1: run the risk of a little hindsight bias. Um. I
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  Speaker 1: can't begin to tell you how many things that are
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  Speaker 1: wildly successful today and everybody thinks, oh, sure, of course
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  Speaker 1: that was a winner when they were first rolled out.
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  Speaker 1: People look various scans at it. My favorite story is
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  Speaker 1: Fred Smith, the guy who founded FedEx. It was a
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  Speaker 1: graduate school paper and I think you got a d
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  Speaker 1: and the professor said, why would anybody pay a premium
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  Speaker 1: for overnight delivery when you have the post office? So so,
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  Speaker 1: how much of of us looking at these things is obvious?
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  Speaker 1: Is a little bit of hindsight bias as opposed to,
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  Speaker 1: or ask differently, how can we really identify these things
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  Speaker 1: in advance when no one really has a clue what's
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  Speaker 1: gonna catch on or what's not? The answer is the
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  Speaker 1: short answers. As you know, it's difficult. If it was easy,
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  Speaker 1: you know, we'd all be billionaires, you know, And if
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  Speaker 1: it was easy, they would call it snowboarding. You know.
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  Speaker 1: It's something you learn in a few days. It's not.
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  Speaker 1: I don't think when a trend gets underway, let's liken
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  Speaker 1: it to a parade. It's very hard to create a parade.
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  Speaker 1: But when you see it and when it's obvious, you
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  Speaker 1: know you can it's going on. It's you want to
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  Speaker 1: jump into that parade. You don't need to be the
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  Speaker 1: lead float. You need just need to be in it.
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  Speaker 1: You know, you need to understand. And because you have experience,
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  Speaker 1: meaning you've kicked the tires, you don't go one day
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  Speaker 1: to the next and say, oh, you know, um, Uber
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  Speaker 1: is going to be something that's going to be important
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  Speaker 1: to the world. I think if you're you have to
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  Speaker 1: sort of understand how mobile technology evolved, and you don't
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  Speaker 1: come in one day to the next. It happened, you know,
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  Speaker 1: with the iPhone in two thousand seven, apps started to
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  Speaker 1: be developed. So already, hey, you use the first time,
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  Speaker 1: you said, Holy smokes, this this works. I get it.
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  Speaker 1: Uber has of course been a private company, so most
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  Speaker 1: people out there can't investor don't have the ability to
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  Speaker 1: invest in those things, you know, when you can go
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  Speaker 1: on and on and on, and I think we we
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  Speaker 1: talk a little bit about, you know, trend building and
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  Speaker 1: the way people can get themselves versed on this stuff
• 7:29
  Speaker 1: is subscribe to bloggers, newsletter writers, go to really high
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  Speaker 1: quality conferences, get the collective opinion of many people and
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  Speaker 1: their ideas, and you yourself will come up with your
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  Speaker 1: own sort of trends that you can follow. I'm Barry Ridhults.
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  Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My
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  Speaker 1: guest today is Gianni covic Efic. He is the author
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  Speaker 1: of My Electrician Drives a Porsche, which is a look
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  Speaker 1: at investing in the rise of the new spending class.
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  Speaker 1: And let's talk a little bit about driving in cars.
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  Speaker 1: And and you just completed a very interesting trip. You
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  Speaker 1: went across country in a Tesla. How did that come about. Yeah,
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  Speaker 1: the my book has nothing to do with fast cars.
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  Speaker 1: It has everything to do with, as we say in
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  Speaker 1: the subtitle, investing in the rise of the new spending class.
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  Speaker 1: And it's this story about a young electrician and his
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  Speaker 1: family doctor. So it's all about the electricity. It's all
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  Speaker 1: about the electricity. And so so let's let's we're gonna
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  Speaker 1: talk about this in a few moments. Let's talk about
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  Speaker 1: the cross country trip and how that worked powered by electricity. First,
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  Speaker 1: what made you think of doing that? We wanted to
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  Speaker 1: do a special book tour. I wanted to have something
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  Speaker 1: that's not your you know, you go to ten or
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  Speaker 1: twelve cities. So I figured, m I can showcase to
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  Speaker 1: the world. In my opinion, the future is now with
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  Speaker 1: respect to electric cars. So you have to exaggerate these things.
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  Speaker 1: You know, you've got to go from, you know, around
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  Speaker 1: the entire nation. I was also able to visit more cities,
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  Speaker 1: I was able to talk to more people, and I
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  Speaker 1: was able to engage with them. Be it be a government,
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  Speaker 1: be at investors, be at regular society, and show them
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  Speaker 1: physically that the future is now. We can do this. Now,
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  Speaker 1: you can drive an electric car day to day across
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  Speaker 1: the country whatever you wish. So where did you begin?
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  Speaker 1: Let's let's trace your path. And you were tweeting this
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  Speaker 1: out as you were traveling. What what did you Where
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  Speaker 1: did you launch from? We started in Toronto, Canada, at
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  Speaker 1: a major conference. It was one of the focused points
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  Speaker 1: there where people would come and I had all the
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  Speaker 1: sort of decoration on the car and I told them
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  Speaker 1: what I'm going to be doing. And I drove to
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  Speaker 1: Boston with a very skeptical German journalist, I will add,
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  Speaker 1: someone who did not believe this would be so comfortable.
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  Speaker 1: And I went from Boston all the way down to Pennsylol, Florida,
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  Speaker 1: Toronto to Boston. How long did that leg take? It's
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  Speaker 1: six hundred miles, just under six or miles. It took
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  Speaker 1: me ten hours drive drive a couple of hours. How
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  Speaker 1: how let's say you drive two miles about the range
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  Speaker 1: of a Tesla to fifty Yeah, it's really getting between
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  Speaker 1: the superchargers if you're doing cross country travel, so and
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  Speaker 1: they're about between a hundred and fifty twitter and fifty
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  Speaker 1: miles apart all the superchargers connecting all the major cities
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  Speaker 1: today today today, already there. So you were able to
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  Speaker 1: go from Toronto to Boston. So you drove two miles
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  Speaker 1: to the first Buffalo. How long did it take charge
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  Speaker 1: it up to go to the next charger. The computer
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  Speaker 1: tells you how much time you need to get to
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  Speaker 1: the next supercharger with a cushion meaning you have extreme
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  Speaker 1: air conditioning on or extreme heating on or whatever. New traffic,
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  Speaker 1: it's about thirty minutes between you have lunch time, at
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  Speaker 1: the time of breakfast, the time of coffee. Some cities
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  Speaker 1: it's only fifteen minutes because sometimes they're they're sandwich maybe
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  Speaker 1: hundred hundred Toronto, Buffalo and from Buffalo, that's a whole
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  Speaker 1: to Boston from Buffalo, isn't it? You go and do we? Yeah,
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  Speaker 1: you do? You do Albany and just at the Rochester
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  Speaker 1: and uh into So so it's a day from Toronto
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  Speaker 1: to Boston. Well, let's reverse engineer. Because of the German
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  Speaker 1: journalist he I said, we're gonna stop when you're when
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  Speaker 1: you need to use the restroom, when you're hungry, and
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  Speaker 1: by the time we got to Boston, we were not
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  Speaker 1: fifteen minutes inconvenience because you have to stop. You have
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  Speaker 1: to stop, and you got to stop into a restroom.
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  Speaker 1: So now this is curated. The computer tells us where
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  Speaker 1: we're gonna stop, and you have a p of chang
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  Speaker 1: there you have. You know exactly what you're gonna do.
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  Speaker 1: There's no curious where you get off the freeway. Oh,
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  Speaker 1: or eating at you know this fast food joiner, that
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  Speaker 1: fast food joint. You kind of know exactly what you're
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  Speaker 1: up against when you get there. He was shocked from
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  Speaker 1: a German perspective, which there may be a little bit
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  Speaker 1: more skeptical, although they're huge consumers of of alternates, like
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  Speaker 1: wind is all you fly into Germany, half the country
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  Speaker 1: looks like it's covered in wind farms. All right, So Boston,
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  Speaker 1: I actually met you when you went from Boston to
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  Speaker 1: New York and then from New York down to Florida.
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  Speaker 1: Now normally that's a good day and a half drive.
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  Speaker 1: How long does it take you to get from New
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  Speaker 1: York to Florida. Well, we took the slow route. I
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  Speaker 1: stopped in all the cities. I was doing book events
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  Speaker 1: about two days per city, so I would come in,
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  Speaker 1: I would the car would be charged before I came
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  Speaker 1: into the city. I have enough range forty miles to
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  Speaker 1: do all my nonsense around the city. Of course, when
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  Speaker 1: I'm sleeping, the car's charging. More and more hotels and
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  Speaker 1: businesses are now catering to people to have these with
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  Speaker 1: the destination chargers, not the super fast ones, but the
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  Speaker 1: ones that charge it around over forty You get each
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  Speaker 1: hour in your park, you get about exactly and you
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  Speaker 1: move on. And this is I liken this to the
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  Speaker 1: charging network system. We can get into some other things
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  Speaker 1: that are happening in the with the incumbents. But it's
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  Speaker 1: really like the Model T was perfected on the assembly
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  Speaker 1: line and started rolling out in October of nine eight,
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  Speaker 1: So it's really like before there was a network of
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  Speaker 1: guests exactly. So we're and we can do things a
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  Speaker 1: lot faster today, and there's an army of people that
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  Speaker 1: will and are doing this. It's not one company, it's
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  Speaker 1: not just Tesla anymore. By the way, did Tesla have
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  Speaker 1: anything to do with your trip or were they just
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  Speaker 1: a lucky beneficiary of your idea? Yeah, I know the
• 12:56
  Speaker 1: We did not ask for permission with Tesla. I bought
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  Speaker 1: the car. I sent Ellen my book, which the title
• 13:02
  Speaker 1: may shock people, but of course the character the doctor
• 13:06
  Speaker 1: in the book buys a Tesla and adopts the Tesla
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  Speaker 1: way of life and what they're now doing with merging
• 13:10
  Speaker 1: or attempting to merge solar city in Tesla, calling it
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  Speaker 1: the Tesla lifestyle. A year and a half ago, I
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  Speaker 1: was already saying that my book, that this is the future.
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  Speaker 1: People want the package. They want that package where they
• 13:21
  Speaker 1: want to be completely independent from grid, from fossil fuels,
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  Speaker 1: call it what you will in their homes for all
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  Speaker 1: their transportation energy. And I'm gonna push back on that
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  Speaker 1: independence claim and that green claim and a little bit sure.
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  Speaker 1: But you ended up at the Tesla factory, right, is
• 13:36
  Speaker 1: that way you finished? Yeah? I ended up on me
• 13:40
  Speaker 1: fourth and one of the I believe founders and directors
• 13:43
  Speaker 1: of Tesla, Ira, Aaron Price, was having his Global Energy
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  Speaker 1: conference that day. Was that part of the plan or
• 13:49
  Speaker 1: just a lucky claim? It was kind of a lucky coincidence.
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  Speaker 1: So I got my factory tour in the day of
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  Speaker 1: the conference, you know, parked my car right there. And
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  Speaker 1: it was really a day of modern energy where a
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  Speaker 1: lot of these people, a lot of these thoughtly ters
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  Speaker 1: were together, and I got my tour of the of
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  Speaker 1: the Tesla factory on that day, and it was it was,
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  Speaker 1: It was incredible. It's a there's a tectonic shift going on.
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  Speaker 1: And until you've you know, really understood this from all angles,
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  Speaker 1: how we create service by sell you know cars in general,
• 14:19
  Speaker 1: make the parts feed into it. Yeah, the world is
• 14:22
  Speaker 1: going through a tectonic shift, in my opinion. How many
• 14:24
  Speaker 1: cities did you work your way through? All told, it
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  Speaker 1: was twenty five official cities, but I stopped in probably
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  Speaker 1: a hundred when you when you count in the lesser towns,
• 14:34
  Speaker 1: and I stopped in a lot of universities, wanted to
• 14:36
  Speaker 1: talk to students and just just park the car. And
• 14:38
  Speaker 1: it's a talking point. What was the network of of
• 14:41
  Speaker 1: charging stations? Like? Did you ever find yourself? How does
• 14:44
  Speaker 1: the car find it? Do you ever find yourself? Do
• 14:46
  Speaker 1: you where am I going to find one of these things?
• 14:48
  Speaker 1: What's that network? Like? Yeah, it's it's comprehensive already, which
• 14:52
  Speaker 1: is actually quite shocking the fact that they only started
• 14:55
  Speaker 1: a few years ago. You tell the computer what two
• 14:57
  Speaker 1: cities you want to connect, and it says exactly where
• 15:00
  Speaker 1: you need to charge and how long. So it's kind
• 15:04
  Speaker 1: of a coup what Tesla has done already. And so
• 15:06
  Speaker 1: that's the city interconnection, the superchargers. His secret sounds like
• 15:09
  Speaker 1: it's the software as well as the network for sure,
• 15:12
  Speaker 1: the GPS. And then you have the destination chargers, which
• 15:15
  Speaker 1: are going to be installed by the millions by people
• 15:19
  Speaker 1: that own businesses. So they're gonna pay Elon Musk cash
• 15:22
  Speaker 1: money for this destination charger, which an electrician can install
• 15:26
  Speaker 1: in three or four or five hours, which means you
• 15:28
  Speaker 1: can connect any lifestyle point lifestyle point A to lifestyle
• 15:32
  Speaker 1: point B in any city, which means they've solved the puzzle.
• 15:35
  Speaker 1: I'm Barry Ridlts. You're listening to Masters in Business on
• 15:38
  Speaker 1: Bloomberg Radio. My guest this week is Gianni Kovia Sevic.
• 15:42
  Speaker 1: He is a investor, entrepreneur, environmentalist, and author of the
• 15:47
  Speaker 1: book My Electrician Drives a Porsche. Uh. Let's talk a
• 15:52
  Speaker 1: little bit about realistic environmentalism. What does it mean to
• 15:56
  Speaker 1: be a realistic environmentalist. A listic environmentalist is someone who
• 16:01
  Speaker 1: is pragmatic I would call I would call them an
• 16:04
  Speaker 1: algebra ist. Algebra is so if we're looking at the
• 16:08
  Speaker 1: challenges that are surrounding energy around the world, where if
• 16:11
  Speaker 1: people want to make changes with the way we create, transfer,
• 16:14
  Speaker 1: and utilize energy, that's fine. You want to make policy,
• 16:17
  Speaker 1: that's also fine. You want to create that investment vehicles,
• 16:19
  Speaker 1: that's great, But you have to look at the other
• 16:21
  Speaker 1: side of the equation, because when you take fossil fuels
• 16:23
  Speaker 1: out of that equation, there has to be something on
• 16:26
  Speaker 1: the other side. You can't just wave your hand around
• 16:28
  Speaker 1: and say, let's not use oil anymore. Let's no, no
• 16:31
  Speaker 1: more coal. So if you understand that a realistic environmentalist
• 16:35
  Speaker 1: is someone who looks at all the variables and he's
• 16:39
  Speaker 1: in the middle. He's neutral, he's a solutionist, or she
• 16:42
  Speaker 1: is a solutionist. So I want to understand support invest
• 16:47
  Speaker 1: in all the elements that factually make that possible. We
• 16:51
  Speaker 1: can call a reduction and CEO two emissions, green gas emissions,
• 16:55
  Speaker 1: whatever it is, and that is a very large arena
• 16:59
  Speaker 1: on on the products, materials, building blocks that factually make
• 17:02
  Speaker 1: a reduction in CEO two emissions possible. So so let's
• 17:05
  Speaker 1: talk a little bit about vehicles like the Tesla um As.
• 17:09
  Speaker 1: As a person who enjoys cars, likes horsepower, is not
• 17:14
  Speaker 1: afraid of internal combustion engines. I always have two issues
• 17:21
  Speaker 1: with with in general, the prius Is and Teslas of
• 17:24
  Speaker 1: the world. And by the way, I love the Tesla.
• 17:26
  Speaker 1: I think it's a beautiful car, really well made, tremendous design.
• 17:30
  Speaker 1: But here are the two issues I have. First, depending
• 17:33
  Speaker 1: on the part of the country you're in, you're charging
• 17:37
  Speaker 1: off the electric grid, and very often that is coal
• 17:40
  Speaker 1: fired electricity, which means you're not spewing junk out of
• 17:46
  Speaker 1: your tailpipe, but you are spewing junk out of the
• 17:50
  Speaker 1: source of the electricity. So why not have you respond
• 17:53
  Speaker 1: to that before I go onto the second one. Yeah,
• 17:55
  Speaker 1: that's an important question, and I liken that too. We
• 17:58
  Speaker 1: don't live in static Ville. Society lives in a place
• 18:01
  Speaker 1: called progress Ville. In two thousand seven, two around of
• 18:07
  Speaker 1: America's primary electricity was generated by coal. Just in the
• 18:11
  Speaker 1: past year, natural gas has surpassed coal as the primary
• 18:15
  Speaker 1: fuel source. So coal is now around thirty and falling
• 18:20
  Speaker 1: by it will be twenty of America's primary electricity. So
• 18:26
  Speaker 1: already it is the minority fuel source natural gas and
• 18:30
  Speaker 1: the others nuclear renewables. What have you are around se
• 18:34
  Speaker 1: America's fuel source and falling. So eventually this will continue
• 18:38
  Speaker 1: to fall. And remember, we're not going to go away
• 18:39
  Speaker 1: from coal because of policy, assets that are deemed on
• 18:43
  Speaker 1: economic or assets that are stranded. We have so much
• 18:46
  Speaker 1: natural gas, massive supply, lots of structure cleaner. And here's
• 18:50
  Speaker 1: the thing that everybody forgets. You run a pipeline to
• 18:54
  Speaker 1: an electrical generation plans and that's it. You're done. There's
• 18:58
  Speaker 1: no trucking, ship ing, there's no think about what it
• 19:02
  Speaker 1: takes to move all that coal by rail by whatever
• 19:05
  Speaker 1: means that's got to be really expensive. That gas is
• 19:08
  Speaker 1: clearly going to be the winner in the electrical generation
• 19:12
  Speaker 1: UM universe, at least for the foreseeable future. And we
• 19:16
  Speaker 1: see that the data recently showed that more people work
• 19:19
  Speaker 1: in solar today than working coal in the United States.
• 19:22
  Speaker 1: That's an amazing stat The second UM criticism I've heard,
• 19:26
  Speaker 1: and I don't know how accurate this is, UH, is
• 19:29
  Speaker 1: that when you look at things like the lithium batteries
• 19:33
  Speaker 1: and all the rare earth metals and unique elements that
• 19:36
  Speaker 1: go into making a car like a Prius or a Tesla. Uh,
• 19:40
  Speaker 1: there's a lot of really if you go all the
• 19:42
  Speaker 1: way upstream in the manufacturing process. There's a lot of
• 19:45
  Speaker 1: really bad manufacturing steps that take place to you know,
• 19:50
  Speaker 1: strip mind and get access this This is from not
• 19:54
  Speaker 1: necessarily very accessible parts of the world. How do how
• 19:58
  Speaker 1: do we respond to to that criticism that hey, this
• 20:01
  Speaker 1: creates as much heavy metal pollution as it saves in carbon. Well,
• 20:06
  Speaker 1: the real math and if you look at the UM
• 20:09
  Speaker 1: the Society of Concerned Scientists, they basically say that the
• 20:13
  Speaker 1: breakthrough or the break even is about nineteen thousand miles,
• 20:16
  Speaker 1: So it is true to create a full electric car,
• 20:19
  Speaker 1: there is some there's a little bit extra CEO two
• 20:21
  Speaker 1: emissions to create the car. According to their math, at
• 20:24
  Speaker 1: the nineteen thousand mile point, it's it's break even, but
• 20:26
  Speaker 1: eighteen months into it more or less something like that.
• 20:28
  Speaker 1: But it's it goes deeper than this because nothing comes
• 20:31
  Speaker 1: for Freeberry, nothing comes for free. People have to make
• 20:33
  Speaker 1: a choice. And that's what it might have of being
• 20:36
  Speaker 1: a realistic environmentalists. Just tell me what you like. You know,
• 20:40
  Speaker 1: what's the policy, what what's the will of the people? Where,
• 20:42
  Speaker 1: where's what's government want? Where where are the investors? Where's
• 20:45
  Speaker 1: the propensity to make this stuff possible? Because nothing comes
• 20:48
  Speaker 1: for free. If you want coal fired electricity, if you
• 20:50
  Speaker 1: want to use gasoline, if you want to keep searching
• 20:53
  Speaker 1: for fossil fuels, move it, refine it, move it again,
• 20:56
  Speaker 1: transport it, sell it, repeat every week. Okay, but that's
• 20:59
  Speaker 1: I don't believe that's where progress spell is. We are
• 21:02
  Speaker 1: going to go on the long course of time because
• 21:04
  Speaker 1: it's it's the future. It's just the smart way to
• 21:06
  Speaker 1: do it. And we should stop focusing on the cars
• 21:09
  Speaker 1: that you drive thirty minutes a day. The cars we
• 21:11
  Speaker 1: need to electrify are the taxis, the FedEx vehicles, the
• 21:15
  Speaker 1: urban buses. We can make them electric and we know
• 21:18
  Speaker 1: that because the world's largest automobile market has accelerated those
• 21:22
  Speaker 1: programs to electrify urban transport. Those are the cars that China.
• 21:27
  Speaker 1: We're talking China. I'm Barry Ridholtz. You're listening to Masters
• 21:31
  Speaker 1: in Business on Bloomberg Radio. My guest today is giannikov Sevic.
• 21:35
  Speaker 1: He's the author of My Electrician Drives a Porsche Investing
• 21:40
  Speaker 1: in the Rise of the New spending class. I was
• 21:43
  Speaker 1: surprised that the book was really more of a parable
• 21:47
  Speaker 1: then your standard nonfiction book. So let's let's start out
• 21:52
  Speaker 1: with the basic premise of that that parable um uh,
• 21:57
  Speaker 1: tell me about Doc Anderson and and who he represents.
• 22:00
  Speaker 1: By the way, which character in the book are you?
• 22:03
  Speaker 1: I would be the electrician that was my guest. So
• 22:07
  Speaker 1: a young electrician goes to his doctor and tell tell
• 22:12
  Speaker 1: the story. It takes place in Seattle. So this world
• 22:16
  Speaker 1: capital of sort of technology, and computers are one of them.
• 22:19
  Speaker 1: And the there's a fifty eight year old doctor, a
• 22:22
  Speaker 1: baby boomer, so I wanted to have that that demographic represented,
• 22:27
  Speaker 1: and a millennial gen x if you will, electrician And
• 22:30
  Speaker 1: he's helping his doctor renovator on a Saturday, and he
• 22:34
  Speaker 1: just asks the doctor, how do you baby boomers think?
• 22:36
  Speaker 1: How do you invest? What are you following? He leaves,
• 22:40
  Speaker 1: The doctor goes outside and his neighbor says, who's that
• 22:42
  Speaker 1: my electrician. The neighbor says, your electrician drives a Porsche.
• 22:46
  Speaker 1: The doctor goes out of his mind. How is this possible?
• 22:49
  Speaker 1: How is this possible? How can this young working class fellow,
• 22:53
  Speaker 1: you know, spend so much money on a lavish gift
• 22:55
  Speaker 1: like that? Comes back next Saturday he says, well, I
• 22:58
  Speaker 1: stop working as electrician about ten years ago. But because
• 23:00
  Speaker 1: of all the building blocks I learned and the trends
• 23:02
  Speaker 1: I followed. I am now an investor full time. I
• 23:07
  Speaker 1: take it seriously and he he reads these things like
• 23:10
  Speaker 1: a financial soap opera daily weekly, He goes to conferences,
• 23:13
  Speaker 1: he meets with people. He wants to be a contrarian investor,
• 23:18
  Speaker 1: so he is searching for page sixteen stories which will
• 23:22
  Speaker 1: become page one. And of course with the subtitle investing
• 23:26
  Speaker 1: in the Rise of the New spending Class, they go
• 23:28
  Speaker 1: and explore this army of new consumers, people that are
• 23:32
  Speaker 1: not rich, they're no longer emerging, they're not poor, and
• 23:36
  Speaker 1: all the implications of how they're changing the world and
• 23:39
  Speaker 1: the opportunity that they represent. So one of the things
• 23:42
  Speaker 1: you discuss is investing in human aspiration. Explain that what
• 23:48
  Speaker 1: that is first, and then how can we invest in
• 23:50
  Speaker 1: human aspiration? We often forget, you know, what it's like
• 23:55
  Speaker 1: to have, you know, salary escalation. I I come from Vancouver, Canada,
• 23:59
  Speaker 1: and I think it's pretty much the same around North America.
• 24:02
  Speaker 1: You have not had more spending power and probably thirty years.
• 24:05
  Speaker 1: You know, yeah, your salary might have went up a
• 24:07
  Speaker 1: little bit, but you factor in ocalation. You know, you're
• 24:10
  Speaker 1: not making a lot of money. When my parents came
• 24:12
  Speaker 1: from Croatian nineteen seventy three. You know that was a
• 24:15
  Speaker 1: very special time. You had rampant salary escalation. I remember
• 24:19
  Speaker 1: seeing these pace slips of my dad nineteen eighty eighty one.
• 24:22
  Speaker 1: He was working in north of Canada. He was making
• 24:23
  Speaker 1: a thousand dollars a week. Back then, Mary, you could
• 24:26
  Speaker 1: buy two Catollact cars every year. You could buy a
• 24:28
  Speaker 1: house for cash money. You cannot do that anymore. People
• 24:33
  Speaker 1: in emerging markets have had rampant salary escalation. Okay again,
• 24:37
  Speaker 1: I'm not I can I can concede they're not wealthy.
• 24:40
  Speaker 1: But someone in China thirty years ago, twenty five years
• 24:42
  Speaker 1: ago might have made two or three thousand U S
• 24:43
  Speaker 1: dollars a year. Well, the averages now in the eastern
• 24:46
  Speaker 1: provinces I speak of Shanghai, Tianjin, Beijing, they're making eighteen
• 24:50
  Speaker 1: twenty thousand dollars a year on average today. That's a
• 24:52
  Speaker 1: huge uptick from where they were. Absolutely, so what does
• 24:55
  Speaker 1: that mean. That means they watch television every day, they
• 24:57
  Speaker 1: have air conditioning, they drive a car, They have almost
• 25:01
  Speaker 1: the same economic footprint you and I have. They have
• 25:04
  Speaker 1: a deluxe diet and so that's coming with ramifications. Now
• 25:09
  Speaker 1: with within that is tremendous opportunity and it always comes
• 25:13
  Speaker 1: back to probably one primary thing energy, the insatiable appetite
• 25:18
  Speaker 1: for that energy. So we need to understand as investors,
• 25:22
  Speaker 1: particularly because of this, you know, propensity to have climate change,
• 25:26
  Speaker 1: how we create, transfer and utilize what I call energy.
• 25:29
  Speaker 1: So let me digress a little bit. Solar has is
• 25:33
  Speaker 1: theoretically a source of infinite energy. How comes solar as
• 25:39
  Speaker 1: a technology has never had that breakthrough that allowed it
• 25:42
  Speaker 1: to be ubiquitous, practically free, or certainly really cheap. That
• 25:47
  Speaker 1: that that's something that I've always found perplexing. Yeah, because
• 25:52
  Speaker 1: it's technology, and it doubles microtrip for example double devery
• 25:56
  Speaker 1: eighteen months. For decades, the learning curve on solar has
• 26:00
  Speaker 1: had seven doublings in fifteen years. We are now at
• 26:04
  Speaker 1: a point where it is commercially viable. Solar works at night.
• 26:09
  Speaker 1: We capture thermal heat through with fluid. That means when
• 26:12
  Speaker 1: the sun goes down, it works at night. We are
• 26:14
  Speaker 1: now able and you're gonna see this. This is gonna
• 26:16
  Speaker 1: bag going through a tectonic shift, by the way and energy,
• 26:18
  Speaker 1: and you'll take a while to articulate that. We don't
• 26:20
  Speaker 1: have the time right now. But you the way we
• 26:22
  Speaker 1: desolinate water typically in the Middle East and the places
• 26:25
  Speaker 1: around the equator, and they used they used fossil fuels
• 26:30
  Speaker 1: to do that. It takes a lot of pressure or
• 26:31
  Speaker 1: a lot of heat. Well, guess what my friends in
• 26:34
  Speaker 1: Germany are working on processes now where you do it
• 26:37
  Speaker 1: with solar power. It has arrived. It is commercially viable.
• 26:41
  Speaker 1: It is now a line item including wind. Wind has
• 26:44
  Speaker 1: had in the past fifteen years, four doublings. So we
• 26:47
  Speaker 1: when you when you look at this and you see
• 26:48
  Speaker 1: how the changes, I mean, where's the big investment happened
• 26:50
  Speaker 1: in the past twenty four months. Not in fossil fuel
• 26:53
  Speaker 1: electricity generation, it's all been on the lion's share is
• 26:56
  Speaker 1: now going into into these renewables across the board. And
• 26:59
  Speaker 1: because there's this army of people working on this, the
• 27:02
  Speaker 1: prize is so big. Then we get into the energy
• 27:05
  Speaker 1: storage and on and on. It's it's we're going through
• 27:09
  Speaker 1: probably a once in a multi generational tectonic shift on
• 27:13
  Speaker 1: how we create energy, which is going to impact that
• 27:16
  Speaker 1: we transfer energy, cause there's only three ways to do that. Pipelines,
• 27:19
  Speaker 1: railroads and ships and electricity, cables or micro grid. Well,
• 27:23
  Speaker 1: the future of energy transfer is going to be with electricity,
• 27:25
  Speaker 1: not with the not with the incumbents, and then the
• 27:27
  Speaker 1: way we utilize it. We're not going to be using
• 27:29
  Speaker 1: fossil fuels to utilize energy. When you look at that,
• 27:33
  Speaker 1: I always tell people oil is energy. Energy without fossil
• 27:37
  Speaker 1: fuels is electricity, and electricity demands what we want to
• 27:42
  Speaker 1: invest in those things. We want to invest in engineering.
• 27:45
  Speaker 1: We want to invest in in the in the in
• 27:47
  Speaker 1: the technique, the techniques, the design, the building blocks, and
• 27:50
  Speaker 1: across the board. So so let's talk about something that
• 27:54
  Speaker 1: a theme that comes up over and over again in
• 27:56
  Speaker 1: the book China Copper. People, you're you're alluding to copper.
• 28:02
  Speaker 1: Tell us about copper and why is it the green metal.
• 28:06
  Speaker 1: There are four major energy commodities. You've got coal, natural gas,
• 28:11
  Speaker 1: and oil. The fourth one is copper. It's always been
• 28:14
  Speaker 1: relevant in the future. And I'm going to suggest something
• 28:17
  Speaker 1: very strong. I don't believe in my opinion, that we
• 28:20
  Speaker 1: are ever going to have another twenty five or increase
• 28:25
  Speaker 1: in demand for oil. We are now at a point
• 28:28
  Speaker 1: we have to start talking about terminal decline. Coal is
• 28:30
  Speaker 1: already finished that in core is already on. It's a
• 28:32
  Speaker 1: twilight industry. Innovation adoption technology are not the friends of
• 28:37
  Speaker 1: the oil industry. You innovate, use less oil, you adopt
• 28:40
  Speaker 1: use no oil technology. The way we extract oil is
• 28:43
  Speaker 1: a game changer. When you look at the fourth commodity,
• 28:46
  Speaker 1: the energy commodity copper, there is conclusively going to be
• 28:51
  Speaker 1: thirty new customer base when you create and utilize greener
• 28:56
  Speaker 1: and cleaner energy Barry. It takes five more cop in
• 29:00
  Speaker 1: the case of offshore wind, a thousand percent more copper,
• 29:04
  Speaker 1: and there's been no fracking moment for the copper industry.
• 29:06
  Speaker 1: The way we extract copper. No one's building copper minds.
• 29:11
  Speaker 1: So we have to choose putting on our algebra hat again,
• 29:13
  Speaker 1: if we're gonna take away fossil fuels, we have to
• 29:15
  Speaker 1: recognize and appreciate the science in this equation. It takes
• 29:20
  Speaker 1: copper to make green energy possible, not by four hundred
• 29:25
  Speaker 1: power of magnitude. So I think that when you look
• 29:29
  Speaker 1: at the winners and losers, people want to follow and
• 29:32
  Speaker 1: understand the copper industry, not for the next three months
• 29:34
  Speaker 1: or six months. Because traditionally copper has been tethered to
• 29:37
  Speaker 1: the price of oil. But we go forward the next
• 29:39
  Speaker 1: to five, seven, ten years, things are going to change
• 29:42
  Speaker 1: tectonic shift. So let's talk a little bit about copper
• 29:46
  Speaker 1: usages and how the technology surrounding its extraction might change. Obviously,
• 29:51
  Speaker 1: anything electric is using copper wiring. I don't even think
• 29:55
  Speaker 1: we're allowed to use aluminum wiring in homes anymore. That
• 29:58
  Speaker 1: used to be an alternati, a cheaper alternative. Um, what
• 30:02
  Speaker 1: is the main application of copper in the the energy grid?
• 30:08
  Speaker 1: It's a good question, and were always got to be careful.
• 30:10
  Speaker 1: I mean I I read this stuff like Harlequin Romance Berry,
• 30:12
  Speaker 1: so you know other people don't. So let me try
• 30:14
  Speaker 1: to make this more interesting for people that know nothing
• 30:17
  Speaker 1: about this stuff. They experts will tell you that if
• 30:20
  Speaker 1: we adopt high efficiency energy systems, we can reduce CEO
• 30:24
  Speaker 1: two emissions by one point to five giga tons. So
• 30:27
  Speaker 1: if I translate that, that's like taking five million cars
• 30:30
  Speaker 1: off the road. So what is a high efficiency energy system? Well,
• 30:33
  Speaker 1: you make motors more efficient. Of America's electricity is consumed
• 30:39
  Speaker 1: by motors from the smallest to the biggest, meaning anything
• 30:42
  Speaker 1: from a vacuum cleaner, air conditioning across the elevators across
• 30:45
  Speaker 1: the board. You know, motors use the bulk of the electricity,
• 30:49
  Speaker 1: so you make them more modern, more efficient by using
• 30:51
  Speaker 1: a copper rotor transformers. You don't use aluminum windings, you
• 30:54
  Speaker 1: use copper windings. There is across society where if we
• 30:58
  Speaker 1: increase we increase the amplitude of copper, you reduce electricity consumption,
• 31:03
  Speaker 1: which means you need to generate less electricity. It's true
• 31:06
  Speaker 1: that aluminium as a substitute in many cases, and it
• 31:08
  Speaker 1: will continue to be part of the solution. You know,
• 31:10
  Speaker 1: copper will not be the be all end all, but
• 31:12
  Speaker 1: we will for efficiency use more copper. We talk about
• 31:16
  Speaker 1: a wind park because now if you're going to build
• 31:17
  Speaker 1: a two hundred megawatt power plant, which is a small
• 31:20
  Speaker 1: coal fired plant, or you say, you know what, let's
• 31:22
  Speaker 1: do a two hundred megawatt wind farm. My friend Rossbaty
• 31:25
  Speaker 1: just installed a two hundred megawatt project in Shannon, Texas.
• 31:29
  Speaker 1: You need sixty five you know, three and a half
• 31:32
  Speaker 1: megawatt wind turbines each head. It's a generator, is what
• 31:36
  Speaker 1: it is. Has almost two thousand pounds of copper. The
• 31:39
  Speaker 1: step up transformer you need to collect all that power
• 31:41
  Speaker 1: to one central location and then send it off, send
• 31:45
  Speaker 1: it off to the grid. You also have to arrest
• 31:47
  Speaker 1: the lightning. You know, it's very deluxe, very expensive, you know,
• 31:52
  Speaker 1: from a copper perspective, electricity to build. But once it's done,
• 31:56
  Speaker 1: you've got energy now for ten twenty thirty years. Now
• 31:59
  Speaker 1: we will address other things like curtailment, which means getting
• 32:02
  Speaker 1: the power out to people that are using it and
• 32:04
  Speaker 1: what have you. But this is early early days and
• 32:07
  Speaker 1: it's only going to get more and more as as
• 32:09
  Speaker 1: a percentage of power generation. So, Gianni, if people want
• 32:12
  Speaker 1: to find your writings, where's the best place for them
• 32:14
  Speaker 1: to to look to learn more about this? Well, my
• 32:18
  Speaker 1: book is it's all at all the US airports and
• 32:20
  Speaker 1: people can find find it on Amazon pretty easily. And
• 32:23
  Speaker 1: I Twitter once in a while, I think I go
• 32:25
  Speaker 1: through periods of being more or less busy. But my
• 32:28
  Speaker 1: Twitter handle is at realistic in viral, and then people
• 32:32
  Speaker 1: can also source that to my personal website, which is
• 32:36
  Speaker 1: Realistic Environmentalist dot com. If you enjoy these conversations, be
• 32:42
  Speaker 1: sure and check out our podcast extras where we continue
• 32:45
  Speaker 1: the conversation. Check out my daily column on Bloomberg dot
• 32:49
  Speaker 1: com or follow me on Twitter at Rid Halts. I'm
• 32:52
  Speaker 1: Barry Rit Halts. You've been listening to Masters in Business
• 32:56
  Speaker 1: on Bloomberg Radio, brought to you by b A SF
• 33:00
  Speaker 1: we create Chemistry. Welcome back to the podcast portion of
• 33:04
  Speaker 1: our show. Gihnni. Thank you so much for doing this.
• 33:06
  Speaker 1: There's so much stuff I missed that we really have
• 33:09
  Speaker 1: to go back to some of our early questions and
• 33:13
  Speaker 1: uh and and plow through it before I get to
• 33:15
  Speaker 1: my favorite questions. Um and and we'll also talk cars
• 33:19
  Speaker 1: a little bit. Um. It's funny. Your electrician drives a Porsche.
• 33:24
  Speaker 1: My butcher drives a Porsche. I was picking up some
• 33:28
  Speaker 1: stuff for a barbecue, and I wasn't thinking. I put
• 33:32
  Speaker 1: the keys down on the and I have far too
• 33:35
  Speaker 1: many keys and far too many cars. And he sees
• 33:37
  Speaker 1: the little he sees the little automobile shaped key, and
• 33:41
  Speaker 1: he goes, oh, well, I have the same car. Oh really,
• 33:45
  Speaker 1: what do you? What do you have? I have a Panamera.
• 33:47
  Speaker 1: I'm like, oh, that's that's interesting. I drove one up
• 33:49
  Speaker 1: at Monisanlo Race. Wayne. I love the car. He says,
• 33:52
  Speaker 1: he just couldn't stop braving it. So, your electrician drives
• 33:55
  Speaker 1: a Porsche. My Butcher drives a Porsche, which I think
• 33:59
  Speaker 1: is is pretty pretty hilarious. Um, let's talk a little
• 34:02
  Speaker 1: bit about Tesla. Um, you've had the car for how long?
• 34:08
  Speaker 1: I bought the car in December, and and what what's
• 34:11
  Speaker 1: your take on it? What? What do you love? What
• 34:13
  Speaker 1: do you what do you think they need to do better.
• 34:16
  Speaker 1: I've owned a lot of cars in my in my time,
• 34:18
  Speaker 1: and I've had multiple Porschas. I had a Ferrari three sixty,
• 34:21
  Speaker 1: a BMW M three, and I recently just sold my
• 34:25
  Speaker 1: eight l and it is the best car I've ever owned.
• 34:29
  Speaker 1: An that's what consumer reports said, although I will tell
• 34:32
  Speaker 1: you that M three is really a fun car. Different
• 34:37
  Speaker 1: horses for different courses, you know. So it depends on
• 34:40
  Speaker 1: what you're doing, you know. But if you were to
• 34:42
  Speaker 1: have and I asked this question, So I'm I'm off
• 34:44
  Speaker 1: to Europe tomorrow and I'm going to be with my
• 34:45
  Speaker 1: friend who lives in Monaco. He has fifteen cars, doesn't
• 34:49
  Speaker 1: own a Tesla. But then you have a tough question.
• 34:51
  Speaker 1: I said, yeah, but hold on a second. If you
• 34:53
  Speaker 1: could only have one car, it had to take your
• 34:56
  Speaker 1: kids to school, had to be fast, had to be comfortable.
• 34:59
  Speaker 1: I had to that look good. It's a pretty good
• 35:02
  Speaker 1: single car to have. I mean, it covers all the bases.
• 35:04
  Speaker 1: You're not gonna go hunting to Wyoming with it, but
• 35:06
  Speaker 1: other than that, it pretty much covers everything. I thought
• 35:09
  Speaker 1: when they released the ninety s D with Insanity Mode,
• 35:14
  Speaker 1: I thought that was a game changer because it essentially said, look,
• 35:19
  Speaker 1: nobody's going to be drag racing against Ferraris and Lamborghinis.
• 35:22
  Speaker 1: Although go to YouTube and if you could find Tesla's
• 35:25
  Speaker 1: beating them, um, but it basically said to me, the
• 35:30
  Speaker 1: technology now exists that whatever automobile application you want to
• 35:35
  Speaker 1: try and and use this technology towards, there's nothing this
• 35:40
  Speaker 1: doesn't do. This can be to Ferrari and speed, it's
• 35:43
  Speaker 1: comparable to an suv and in terms of comfort and
• 35:47
  Speaker 1: space and it that really shifted my perspective about electric
• 35:54
  Speaker 1: cars because it was no longer sort of a hobbyist gadget.
• 35:57
  Speaker 1: It's oh no, this is technology and we could tune
• 36:00
  Speaker 1: it to all different applications. I know they originally started
• 36:03
  Speaker 1: with their sort of Lotus adapted version, but that Insanity
• 36:10
  Speaker 1: mode made me think, well, why not skin of Tesla
• 36:14
  Speaker 1: with a really sexy looking body and compete with the Ferraris,
• 36:18
  Speaker 1: Lamborghinis and and even the four Gts of the world.
• 36:21
  Speaker 1: I think there's an audience for that, is that in
• 36:24
  Speaker 1: the future of Tesla in any way, shape or form.
• 36:28
  Speaker 1: They've got an offering right now which is coming out
• 36:30
  Speaker 1: with we all know what they have already. They go.
• 36:32
  Speaker 1: So they have the ninety, which is the sedan, the
• 36:37
  Speaker 1: AX which is the suv, which is really by the way,
• 36:40
  Speaker 1: the X is really interesting looking. There's someone in my
• 36:43
  Speaker 1: neighborhood has it. It's this sort of woody allen sleeper,
• 36:47
  Speaker 1: bulbous thing, but it's interesting looking. It's not like what
• 36:51
  Speaker 1: the hell is at it's oh, that's kind of interesting.
• 36:54
  Speaker 1: And of course the doors, which their core. What what
• 36:59
  Speaker 1: do they rename the doors? It's not the gull wing doors,
• 37:02
  Speaker 1: it's the or something like that. They're really an interesting
• 37:07
  Speaker 1: little gimmick, but it's an enormous expanse of space inside. Yeah, I'm,
• 37:14
  Speaker 1: I'm what they've done to rattle this industry. Let's pretend
• 37:19
  Speaker 1: were the incumbent automotive manufacturers for a moment, and if
• 37:22
  Speaker 1: you go back a few years, they do, you know, say, well,
• 37:24
  Speaker 1: no one's gonna want to buy these things. And then
• 37:25
  Speaker 1: there's no very dismissive, there's no there's no infrastructure. You know,
• 37:28
  Speaker 1: it'll take forever to do the infrastructure. This what was
• 37:31
  Speaker 1: a little company was able to build an infrastructure network
• 37:33
  Speaker 1: in less than three years. That's I mean, shame on you.
• 37:36
  Speaker 1: I say to all the incumbents, how could you be
• 37:38
  Speaker 1: so lazy? And now it's going to affect their businesses
• 37:41
  Speaker 1: now they all have been rolling out their own internal
• 37:45
  Speaker 1: electrical division v e v vly but carefully, because their
• 37:50
  Speaker 1: problem is their beholden to what is a franchise network.
• 37:54
  Speaker 1: It's very different space to cannibalize your own business. It's
• 37:58
  Speaker 1: the baby that's going to chew. They need to start
• 38:01
  Speaker 1: like other technology companies have done. They don't want to
• 38:03
  Speaker 1: become Blockbuster Video or Codac Film. We know that, and
• 38:07
  Speaker 1: we know people really has done a great job of
• 38:09
  Speaker 1: letting each new technology. You can't really buy a new
• 38:12
  Speaker 1: iPod anymore because the technology of the st chips. Now,
• 38:17
  Speaker 1: what used to be a five hundred dollar iPod with
• 38:20
  Speaker 1: a hundred megs of or a hundred whatever it is
• 38:23
  Speaker 1: gigs of storage, you can now buy a chip for
• 38:26
  Speaker 1: twelve dollars and you can put all that music on
• 38:27
  Speaker 1: a chip, and most the new cars you could just
• 38:30
  Speaker 1: plug in that s D and you don't need that anymore.
• 38:33
  Speaker 1: But up until that point, they were very good at
• 38:35
  Speaker 1: cannibalizing themselves. Each new version was faster, smaller, and more
• 38:40
  Speaker 1: storage and cheaper. The automobile companies don't think like that,
• 38:44
  Speaker 1: do they. There they have to put a siren on
• 38:46
  Speaker 1: these programs, and I believe they do a siren meaning
• 38:50
  Speaker 1: real quick. They don't have ten years. Because here's here's
• 38:53
  Speaker 1: how I see this playing out. And I follow this
• 38:55
  Speaker 1: for a long time, and I know some of the
• 38:57
  Speaker 1: companies a little bit more intimately because I know some
• 38:59
  Speaker 1: of the larger shareholders and such. And we've seen now
• 39:02
  Speaker 1: the front page story, of course is folkswagon. They've had
• 39:04
  Speaker 1: the so called settlement with the e P A fourteen
• 39:06
  Speaker 1: point seven billion dollars comes in multiple tiers, not the
• 39:10
  Speaker 1: least of which is a two billion dollar investment in
• 39:12
  Speaker 1: this infrastructure that can be used by other people. What
• 39:15
  Speaker 1: what is a few billion dollars amongst friends? Fifteen billion exactly?
• 39:20
  Speaker 1: And then these shot fines don't even shock people anymore.
• 39:24
  Speaker 1: But but the business is going to shock people because
• 39:27
  Speaker 1: what I've seen happen. Remember that the incumbents have this
• 39:30
  Speaker 1: franchise e system, the parts that feed into this car,
• 39:34
  Speaker 1: which is of course then serviced for ten or fifteen
• 39:36
  Speaker 1: years afterwards. The average and storm combustion engine car has
• 39:40
  Speaker 1: eighty parts. The average electric car has twenty. So what
• 39:43
  Speaker 1: have we seen happen? What keeps eking its ugly head up?
• 39:46
  Speaker 1: The plug in hybrid? Berry, you get a bit of
• 39:49
  Speaker 1: range range anxiety. People think they oh, just to comfort you.
• 39:54
  Speaker 1: Now you have a hundred major components in the car.
• 39:57
  Speaker 1: So four or five, six, seven years later to I
• 40:00
  Speaker 1: want to be servicing a plug in hybrid? No, thank you,
• 40:03
  Speaker 1: But hold on, isn't that a transitional technology? I mean,
• 40:06
  Speaker 1: I mean it's range anxiety, which is a fear for
• 40:08
  Speaker 1: the consumer. But that's temporary, which doesn't exist. I drove
• 40:13
  Speaker 1: across America. I have more experienced than probably you know,
• 40:17
  Speaker 1: almost everyone. Weekend, day, night, village, city, the city. You
• 40:21
  Speaker 1: don't need it, you can get anxiety. Isn't that just
• 40:24
  Speaker 1: a until people understand the technology, until they become familiar
• 40:28
  Speaker 1: with it. Look, the reality is I I drive three
• 40:32
  Speaker 1: miles to the train station in the morning, and I
• 40:34
  Speaker 1: drive not three minutes to the train station the morning,
• 40:36
  Speaker 1: three minutes home. On the weekend. Occasionally I go out
• 40:39
  Speaker 1: to the Hampton's it's seventy five miles each way, a
• 40:42
  Speaker 1: hundred miles each way. Occasionally I'll go upstate or I
• 40:46
  Speaker 1: can't remember the last time I got in the car,
• 40:48
  Speaker 1: and I actually can't remember, right, I hadn't had an
• 40:51
  Speaker 1: event up at Cornell, which I don't think is two
• 40:54
  Speaker 1: hundred miles from here, and if and if it is,
• 40:57
  Speaker 1: it's pretty close, so maybe I would to stop for
• 41:00
  Speaker 1: launch and charge up for a little bit. But most
• 41:03
  Speaker 1: people's driving the range anxiety is a artificial fear, and
• 41:09
  Speaker 1: it just takes a little experience and a little to
• 41:12
  Speaker 1: get by. That couldn't agree more, which is why, in
• 41:15
  Speaker 1: my opinion, the whole plug in hybrid thing, all this
• 41:19
  Speaker 1: engineering towards it and all this build out is going
• 41:21
  Speaker 1: to blow up in all their faces, is it? But
• 41:24
  Speaker 1: I always think these companies, like GMS original Vaults with
• 41:29
  Speaker 1: the plug in hybrid technology was a transitional technology, and
• 41:32
  Speaker 1: now their new car, the Bolt, is really the first
• 41:36
  Speaker 1: low cost, mass produced all electric that's gonna be out.
• 41:40
  Speaker 1: It's actually gonna beat the Tesla Model three to market.
• 41:43
  Speaker 1: It's supposed to be out this summer and reasonable thirty
• 41:46
  Speaker 1: something thousand dollars. That's also a game changer. But who's
• 41:51
  Speaker 1: gonna be Who's who are the new people in town?
• 41:53
  Speaker 1: The technologically advanced companies that are going to be coming
• 41:56
  Speaker 1: out with their own electric car. It's pretty hard for
• 42:00
  Speaker 1: you know, other companies to sort of um disrupt any
• 42:03
  Speaker 1: more technologies. So I believe the automotive industry is getting disrupted.
• 42:07
  Speaker 1: They're not going to make a hybrid car. They're gonna
• 42:09
  Speaker 1: make a believe this the most technologically advanced vehicle which
• 42:12
  Speaker 1: will be electric. When you get into whole rides share,
• 42:14
  Speaker 1: I think those cars have to be electric for purposes
• 42:16
  Speaker 1: of servicing. And what do you mean like the cars
• 42:19
  Speaker 1: that are owned by a big corporation. They might have
• 42:22
  Speaker 1: two thousand, three thousand all over the city and you
• 42:24
  Speaker 1: just rented per the minute, and that is going to
• 42:28
  Speaker 1: be increasingly I think more electric as as we as
• 42:31
  Speaker 1: we arrive. What about the Ubers of the future, Uber
• 42:34
  Speaker 1: the future self driving cars? I mean that that's something
• 42:37
  Speaker 1: that we will tackle five, t fifteen years down the road.
• 42:39
  Speaker 1: I think away a lot of counties, towns, cities, states
• 42:43
  Speaker 1: are gonna say, you know what you did it. You
• 42:44
  Speaker 1: still have to have a driver in the car, you know,
• 42:46
  Speaker 1: we just for for that. Who knows, either for jobs
• 42:49
  Speaker 1: or for safety, it's you're still gonna have to have
• 42:51
  Speaker 1: a driver. There busses and different things, I think, or
• 42:54
  Speaker 1: maybe a little bit different. I take the plane to
• 42:55
  Speaker 1: the train to go to JFK. That is a robotic tran,
• 42:59
  Speaker 1: a eletric tram from Jamaica to JFK Airport. There's nobody
• 43:03
  Speaker 1: driving those. They're fully automated. The track right on its
• 43:07
  Speaker 1: own track. But there's a series of them. They go
• 43:10
  Speaker 1: to the airport, they circle the airport, they come back.
• 43:13
  Speaker 1: There is six stops along the way. It's fully automated.
• 43:17
  Speaker 1: That looks like that's the future of transportation. The question
• 43:22
  Speaker 1: becomes how soon can Tesla produce a fairly self driving car? Well,
• 43:30
  Speaker 1: self driving is something that I just don't right now.
• 43:34
  Speaker 1: I'm not losing any sleep over that. It's not going
• 43:35
  Speaker 1: to impact me as an investor. What is more important,
• 43:38
  Speaker 1: I think for the general investor out there is to
• 43:40
  Speaker 1: understand a lot of the incumbents are going to make
• 43:43
  Speaker 1: a product that I liken it to forgive me Canada
• 43:45
  Speaker 1: a BlackBerry, they redesign it but no one buys it.
• 43:48
  Speaker 1: No one's gonna buy this plug in hybrid because the
• 43:51
  Speaker 1: offering they have by the more progressive companies is far
• 43:54
  Speaker 1: more as far more cool factor, far more futuristic factor
• 43:58
  Speaker 1: being all electric. And when you look at the if
• 44:02
  Speaker 1: we open the book a little bit deeper, how who's
• 44:03
  Speaker 1: because who's going to impact Barry the winners and losers
• 44:06
  Speaker 1: in this industry? Well, who wants the most real estate
• 44:09
  Speaker 1: with with respect to the car manufacturers? Which parts? Who
• 44:13
  Speaker 1: makes only mufflers? Are only radiators? On the other side,
• 44:17
  Speaker 1: who's going to be making this stuff that's that's more
• 44:19
  Speaker 1: technologically advanced? You know, people have to look at that.
• 44:22
  Speaker 1: If you're an investor, would be it an a dominant foundation? Whoever?
• 44:26
  Speaker 1: Get your analysts to really dig deep on this stuff
• 44:28
  Speaker 1: because it's I think this is going through a a
• 44:31
  Speaker 1: tectonic shift. And then of course we get to the
• 44:34
  Speaker 1: how do you electrify our fuel these things? Because that
• 44:36
  Speaker 1: also is going to have a dramatic impact with efficiencies.
• 44:39
  Speaker 1: So let's let's last few questions on Tesla. How do
• 44:42
  Speaker 1: you enjoy the automatic software updates? Which and how significant
• 44:47
  Speaker 1: are those changes to the car itself? For those that
• 44:50
  Speaker 1: are not familiar with how Tesla services their cars. If
• 44:53
  Speaker 1: it's not a mechanical problem. What they do. You have
• 44:56
  Speaker 1: full time internet in the car. While you're sleeping, you
• 44:59
  Speaker 1: get a down node of the new software, the operating system,
• 45:03
  Speaker 1: gizmore or whatever gadget that they've added to the car.
• 45:07
  Speaker 1: It happens remotely. It's incredible. They'll just wake up in
• 45:11
  Speaker 1: the morning and you've got you've got this update, and
• 45:14
  Speaker 1: it tells you exactly what you got. And also with
• 45:18
  Speaker 1: the respect of the car I have, which is auto,
• 45:19
  Speaker 1: has autopilot. So it's one of these ones that when
• 45:21
  Speaker 1: you get on the freeway and you're you're doing a
• 45:23
  Speaker 1: long trip. Let's say you're driving from we're going from
• 45:25
  Speaker 1: here to Washington, d C. Once we're on the freeway,
• 45:28
  Speaker 1: I put it into autopilot, I tell it how many
• 45:30
  Speaker 1: cars of safety I would like, and it just drives
• 45:33
  Speaker 1: your your hands free, your pedal free, so you have
• 45:36
  Speaker 1: a lot less. So it's when you're stopping driving, going,
• 45:39
  Speaker 1: stopping going, and steering on everything including stopping go traffic.
• 45:43
  Speaker 1: If you end up in a jam, it'll stop. It'll
• 45:45
  Speaker 1: just keep you know, inching along with traffic. It'll and
• 45:47
  Speaker 1: it'll ramp up to speed and you get there, you're
• 45:50
  Speaker 1: way less fatigued. But more importantly, it's space safer, the
• 45:54
  Speaker 1: ability if you know, God forbid that you end up
• 45:57
  Speaker 1: rerending someone, which is it happens in the world. That's
• 45:59
  Speaker 1: what Those are the most common accidents that should pretty
• 46:02
  Speaker 1: much go away if you've engaged this autopilot features the
• 46:05
  Speaker 1: normal the normal distractions that lead to a person to
• 46:09
  Speaker 1: I just saw one to look at the radio, they
• 46:13
  Speaker 1: dropped their whatever. This now can can do this pretty
• 46:19
  Speaker 1: much on highways. How far is it before this can
• 46:23
  Speaker 1: do this like the Google cars anywhere, Well, it works
• 46:27
  Speaker 1: even in the city. What it what it doesn't do
• 46:29
  Speaker 1: right now is to leave a parking space, navigate red
• 46:32
  Speaker 1: lights and turn you know, all that kind of stuff,
• 46:34
  Speaker 1: and and arrived to another parking space. That's what is
• 46:37
  Speaker 1: going to be the full autonomous driving. That's the next wave.
• 46:40
  Speaker 1: Which it doesn't keep me up at night. I'm not
• 46:42
  Speaker 1: even really too concerned about that. It's something that's for
• 46:45
  Speaker 1: you know, speaking from an investor, I mean, what is
• 46:48
  Speaker 1: it five seven, ten years down the road. Maybe it's
• 46:51
  Speaker 1: not going to impact my my portfolio decisions today. Interesting alright,
• 46:55
  Speaker 1: So beyond Tesla. Let's talk a little bit about some
• 46:59
  Speaker 1: of the questions we we didn't get to um the
• 47:05
  Speaker 1: charging stations, the network of charging stations. How how was
• 47:11
  Speaker 1: that put into place so quickly, so effectively, And what
• 47:16
  Speaker 1: are the costs to the Tesla owners for for doing
• 47:20
  Speaker 1: these chargings. For the first generation of US Tesla buyers,
• 47:25
  Speaker 1: it's free life of the car. So Tesla Corporation has
• 47:28
  Speaker 1: baked that into the price of the car. And they
• 47:31
  Speaker 1: effectively built this network of superchargers, which is a reasonable
• 47:35
  Speaker 1: distance connecting all the major cities in America today and
• 47:39
  Speaker 1: it works with these UM a white box. It's about
• 47:42
  Speaker 1: five ft tall, about a foot wide, and it's made
• 47:46
  Speaker 1: in a central factory. They ship them out to electrical
• 47:48
  Speaker 1: contractors around the nation. They procure real estate at shopping
• 47:52
  Speaker 1: centers or restaurants or what have you between all these cities,
• 47:56
  Speaker 1: and they implement the charging system. They wire them up,
• 47:59
  Speaker 1: and they're doing at a very quick rate. There's some
• 48:02
  Speaker 1: many thousands of them already. These are the superchargers or
• 48:06
  Speaker 1: the regular the superchargers, and the supercharger enables you to
• 48:09
  Speaker 1: top up the car to about in thirty minutes, which
• 48:14
  Speaker 1: is all you need because if you're going from city
• 48:16
  Speaker 1: to city. You just need to make it to the
• 48:18
  Speaker 1: next supercharger with a bit of a buffer if if
• 48:21
  Speaker 1: the carts to be cool, cool or heated, and that's
• 48:24
  Speaker 1: all you care about. And it does this flawlessly. I
• 48:27
  Speaker 1: went the entire trip. I did not have one issue.
• 48:30
  Speaker 1: California has a little bit of traffic though sometimes you
• 48:32
  Speaker 1: can see these stations full of Tesla's people. They're charging
• 48:35
  Speaker 1: their car, but it's easy to do, actually wait for
• 48:38
  Speaker 1: a charger. I never waited, but you could see that
• 48:41
  Speaker 1: they're full. The good news is the Electricians of America
• 48:44
  Speaker 1: can keep building out these things. If you have a
• 48:46
  Speaker 1: particularly busy station, more chargers. What's the software like? Does
• 48:50
  Speaker 1: it tells you where it is? Does it tell you, hey,
• 48:52
  Speaker 1: this is full? Is it? Is it that advanced? Or
• 48:55
  Speaker 1: it just says, here's the next charger and here you
• 48:57
  Speaker 1: have enough juice to get there. Oh, it's it's that advanced.
• 48:59
  Speaker 1: It tells you exactly what you have, what kind of
• 49:01
  Speaker 1: what kind of services are there? Maybe you want to
• 49:03
  Speaker 1: go to a different one because it has the restaurant
• 49:05
  Speaker 1: or coffee shop that you like. It tells you if
• 49:07
  Speaker 1: it's full all these things. It tells you the amount
• 49:10
  Speaker 1: of miles to get there, how much juice you're gonna
• 49:13
  Speaker 1: have left when you arrive, and of course the next destination,
• 49:16
  Speaker 1: because sometimes you don't have to wait thirty minutes, might
• 49:17
  Speaker 1: only be ten minutes, so you can get to your
• 49:19
  Speaker 1: destination and then charge there. So that is the superchargers.
• 49:23
  Speaker 1: But then people probably also want to know what about
• 49:25
  Speaker 1: when I'm not traveling city to city. Let's say I'm
• 49:28
  Speaker 1: just I drive twenty miles a day. I live in Raleigh,
• 49:31
  Speaker 1: North Carolina, and I commute around the city. How does
• 49:35
  Speaker 1: that change? Well, how often do you drive more than
• 49:38
  Speaker 1: two it fifty miles in a day in your own city? Almost?
• 49:40
  Speaker 1: I don't. I don't know many people that do that.
• 49:42
  Speaker 1: This is a this is a very rare or less
• 49:45
  Speaker 1: than one percent of the population. Do you sleep every day?
• 49:48
  Speaker 1: Of course so do I fantastic I do the charging
• 49:50
  Speaker 1: while I'm sleeping. And if you live in a dual
• 49:53
  Speaker 1: tariff area, meaning electricity is cheap at night when you're sleeping,
• 49:58
  Speaker 1: and it's expensive at five o'clock, well I'm not going
• 50:00
  Speaker 1: to charge my car at five o'clock when everyone's cooking dinner.
• 50:03
  Speaker 1: Because the utility says it's half price if you do
• 50:06
  Speaker 1: it at ten o'clock. In my program, the charger to
• 50:09
  Speaker 1: say charge charges from two to four in the morning
• 50:12
  Speaker 1: or whatever. It is absolutely, absolutely and there comes a
• 50:15
  Speaker 1: whole another level of infrastructure, of software, of convenience, of
• 50:20
  Speaker 1: design with making the charging lifestyle better location wise. You
• 50:26
  Speaker 1: know you're gonna be everywhere you go now because I
• 50:28
  Speaker 1: keep telling people you you already can connect lifestyle point
• 50:31
  Speaker 1: A to b. You know almost every city in America.
• 50:35
  Speaker 1: So if you go to the gym, you go to
• 50:36
  Speaker 1: the grocery store, you're going to Long Island, where wherever,
• 50:38
  Speaker 1: to the Hampton's. Whatever you're doing when you drive sixty
• 50:41
  Speaker 1: or seventy miles, you can now replace that because the
• 50:46
  Speaker 1: quicker destination chargers are at a rate of about forty
• 50:50
  Speaker 1: seven miles for each hour that you're charging. That's that's
• 50:54
  Speaker 1: that's what you get tanking up if you will. So
• 50:57
  Speaker 1: it um So these destination charge is there how many
• 51:00
  Speaker 1: of these out and about, although there are probably in
• 51:04
  Speaker 1: the millions already that many. They used to cost fifteen
• 51:07
  Speaker 1: hundred dollars. Now they cost five dollars. You go to Tesla,
• 51:11
  Speaker 1: they'll sell it to you and it takes an electrician
• 51:14
  Speaker 1: three or four or five hours to install. That sounds
• 51:17
  Speaker 1: like a lot. I would imagine it's even less than that.
• 51:19
  Speaker 1: These days you usually put it close to the electrical
• 51:22
  Speaker 1: service box. And so I tell people that there are
• 51:25
  Speaker 1: about a million electricians in America. If they each installed
• 51:29
  Speaker 1: you know, ten in a year, can we do that? Yeah,
• 51:32
  Speaker 1: well that's ten million destination chargers in one year. Who's
• 51:36
  Speaker 1: paying the five grand for that? And who pays for
• 51:38
  Speaker 1: the electricity? Well? Those are different. Because now if you're
• 51:41
  Speaker 1: a business, if you own a chain of hotels, I
• 51:44
  Speaker 1: would say you must have destination charging? Is it too?
• 51:48
  Speaker 1: Is it? Four? Is it ten? Will see how busy
• 51:49
  Speaker 1: you're it gets for your business, but we you won't
• 51:53
  Speaker 1: even be asking for it. If you don't have it,
• 51:55
  Speaker 1: you're going to become a relic. You'll you'll lose that audience,
• 51:59
  Speaker 1: at least you'll lose that today exactly. And that's the
• 52:02
  Speaker 1: small investment. Small investment. It's no different than a hotel
• 52:05
  Speaker 1: offering internet. You know twenty years ago you thought about it.
• 52:08
  Speaker 1: Today it's an automatic and it will be every business.
• 52:10
  Speaker 1: It'll be across the board, and it won't be a
• 52:12
  Speaker 1: shopping center. It won't be two of them. You're going
• 52:14
  Speaker 1: to see a bank of you know, thirty fifty of
• 52:16
  Speaker 1: these chargers that cater to all the electric cars that
• 52:19
  Speaker 1: are coming. So let's talk a little bit about some
• 52:22
  Speaker 1: other other things that we missed before. Tell me about
• 52:26
  Speaker 1: the new spending class. What is the new spending class.
• 52:31
  Speaker 1: The new spending class is an army of consumers that
• 52:36
  Speaker 1: they're not so called USA middle class wealthy. You know,
• 52:40
  Speaker 1: they don't make fifty dollars a year, but they have
• 52:42
  Speaker 1: the same economic footprint that you and I have. So
• 52:45
  Speaker 1: they basically they watch television every day, they drive a car,
• 52:48
  Speaker 1: they have air conditioning, they eat deluxe meals, which means
• 52:51
  Speaker 1: those meals need to be grown and delivered, and they
• 52:55
  Speaker 1: outnumber us by a margin. We all heard the term
• 52:59
  Speaker 1: emerging mark it's well, twenty five years later, more people
• 53:03
  Speaker 1: have emerged than those that are still left so called emerging.
• 53:07
  Speaker 1: But what do we call them? We don't have a
• 53:08
  Speaker 1: phrase for these people. I call them the new spending class.
• 53:11
  Speaker 1: So they're not rich, they're not poor, but we have
• 53:13
  Speaker 1: to follow their spending patterns. And of course, the biggest group,
• 53:17
  Speaker 1: which is the biggest demographic group in the world, which
• 53:20
  Speaker 1: is that massive population of China. I use that as
• 53:24
  Speaker 1: the example that weaves its way through my book over
• 53:27
  Speaker 1: and over and over, and we look at them the
• 53:30
  Speaker 1: demographics of China and four major blocks, and the biggest one,
• 53:34
  Speaker 1: of course, with the most impact and the most future
• 53:37
  Speaker 1: are the millennials of China. Four hundred and fifteen million people.
• 53:41
  Speaker 1: That's amazing. That's a hundred and fifty of the total
• 53:44
  Speaker 1: population of the US exactly, and it's it's their wants
• 53:49
  Speaker 1: and their needs. They have far higher expectations than the
• 53:52
  Speaker 1: generations before them. I know this. Look at the level
• 53:56
  Speaker 1: of enlightenment. The people that run China are those the
• 53:59
  Speaker 1: children of the Cultu real Revolution. They're sort of fifty
• 54:01
  Speaker 1: five to maybe seventy hundred and sixty million people in
• 54:05
  Speaker 1: that demographic block, but only one million graduated university. That's amazing,
• 54:09
  Speaker 1: less than one percent, less than one percent. These millennials
• 54:12
  Speaker 1: I talk about this, four and fifty million, over a
• 54:14
  Speaker 1: hundred million have already graduated university, typically in science, science, technology, engineering,
• 54:19
  Speaker 1: and math stem fields. These way higher expectations. The majority
• 54:24
  Speaker 1: of these young people were born rural, the majority now
• 54:27
  Speaker 1: live urban. And what do they want? They want everything
• 54:31
  Speaker 1: you and I have. In fact, they know how the
• 54:33
  Speaker 1: world works. They have an Internet connection. I mean, these
• 54:36
  Speaker 1: people are not ignorant to the to the comfort convenience
• 54:38
  Speaker 1: communication that everyone wants and everyone is taking for granted.
• 54:43
  Speaker 1: And we've seen this in their in their spending patterns,
• 54:45
  Speaker 1: and in how they're future is changing. And it's happening
• 54:50
  Speaker 1: so fast. It's not even five year blocks. You have
• 54:53
  Speaker 1: to be aware of the hyper aware of this stuff.
• 54:55
  Speaker 1: In sort of two year blocks, it's being turned up
• 54:57
  Speaker 1: top to bottom. So you've you've spent quite a bit
• 54:59
  Speaker 1: of time in China. What what cities have you spend
• 55:03
  Speaker 1: time in over there? I traveled I've been to China
• 55:06
  Speaker 1: a couple of times, and I traveled the country by train,
• 55:10
  Speaker 1: so rather than fly city to city, I thought it
• 55:12
  Speaker 1: was important to sort of see the landscape and understand
• 55:15
  Speaker 1: how what does it look like? And although I've seen
• 55:19
  Speaker 1: a lot of China, I've I've you know, visit a
• 55:21
  Speaker 1: lot of the country. I've been there a couple of times,
• 55:23
  Speaker 1: what have I seen a bit nothing? I mean, it's
• 55:24
  Speaker 1: the same size as America, right, So to really understand
• 55:28
  Speaker 1: it and go to all the those those other places,
• 55:31
  Speaker 1: it'll take me a lot longer. I'm gonna be going
• 55:33
  Speaker 1: again due to the book. We're taking the book into
• 55:35
  Speaker 1: the Chinese language. But the one thing that I will
• 55:38
  Speaker 1: tell you is that the Chinese population, they are optimists,
• 55:44
  Speaker 1: they're speculators, and by disposition, what what do these people?
• 55:49
  Speaker 1: I think that the future is going to be better.
• 55:52
  Speaker 1: They're not pessimistic. They don't have this you know, you know,
• 55:56
  Speaker 1: beaten down sort of like a salary stagnation that we've
• 55:59
  Speaker 1: had in Europe in the West, and it's it's just
• 56:03
  Speaker 1: incredible to the human potential of what's going on, not
• 56:07
  Speaker 1: just in China but in emerging markets in general, is
• 56:10
  Speaker 1: just a staggering sort of Um well, they're closer to
• 56:13
  Speaker 1: that zero bound level than they are to the we've
• 56:17
  Speaker 1: peaked and we've gone plateaued. So to them, the direction
• 56:22
  Speaker 1: is it's heading in the right right way. People who
• 56:26
  Speaker 1: experience that peak in plateau, you can see why there's
• 56:29
  Speaker 1: a little concern and worry. Hey, how come Although it
• 56:33
  Speaker 1: does seem to be very cyclical. We we had that
• 56:36
  Speaker 1: in the seventies and eighties, and now we're having it
• 56:39
  Speaker 1: again in the two thousand's. We'll see if this goes
• 56:41
  Speaker 1: away and comes back. Um in another twenty years. Tell
• 56:45
  Speaker 1: us about the ghost cities of China and why do
• 56:48
  Speaker 1: you think, uh, there was a big sixty minutes, pets
• 56:50
  Speaker 1: and a number of other things. Why do you think
• 56:53
  Speaker 1: that concern is unnecessary? Well, it is important. We can't
• 57:01
  Speaker 1: you know, just dismiss it for nothing. But China has
• 57:04
  Speaker 1: many different tiers of big cities. So you've got the
• 57:07
  Speaker 1: Tier one cities, which are the big you know, twenty
• 57:09
  Speaker 1: million people living in them, Tier two, which might be
• 57:12
  Speaker 1: five to ten million, and then we have the Tier
• 57:14
  Speaker 1: three and Tier four cities. This is there's been some
• 57:17
  Speaker 1: situations of ghost cities which which do exist. If you
• 57:20
  Speaker 1: build it, they will come. This is we have to
• 57:21
  Speaker 1: forget that China is a planned economy. Are there examples
• 57:25
  Speaker 1: in the country of China where they've built a city
• 57:27
  Speaker 1: that should house a million people for their distant future
• 57:30
  Speaker 1: and maybe it's not full yet. Yeah, I I would
• 57:33
  Speaker 1: imagine that there. That's what they're doing. I look at
• 57:36
  Speaker 1: this four fifteen million millennials. They're all under the age
• 57:39
  Speaker 1: of thirty five. By most of these people do not yet,
• 57:42
  Speaker 1: you know, have their own home that's coming. Where are
• 57:45
  Speaker 1: they all going to live? You know? This this will
• 57:48
  Speaker 1: get take. This will get resolved in the course of time.
• 57:51
  Speaker 1: And a lot of it is function of price. These
• 57:53
  Speaker 1: things are a lot cheaper, they're discounted. But if you
• 57:56
  Speaker 1: speak to people that own, you know, vast real estate
• 57:59
  Speaker 1: portfolios and China. Know, the richest man in China the
• 58:02
  Speaker 1: Dailine Wanda Group, which has the biggest balance sheet, if
• 58:05
  Speaker 1: you will, he looks at the debt levels, governmental debt levels,
• 58:08
  Speaker 1: and tier one tier two city debt levels. He is
• 58:11
  Speaker 1: not concerned. Okay, lives in China and he's not going
• 58:14
  Speaker 1: to sit there and bash the system and bash the government.
• 58:16
  Speaker 1: But you know, he is concerned a little bit about
• 58:18
  Speaker 1: Tier three and tier four cities has to get work
• 58:20
  Speaker 1: to the system. Will the if I liken it to America,
• 58:24
  Speaker 1: will the Kalamazoos and the Tallahassees of China bring down
• 58:28
  Speaker 1: the system? That's the question investors have to ask. In
• 58:31
  Speaker 1: the short term, anything can happen. And when I follow
• 58:34
  Speaker 1: this stuff, which I follow China like a financial soap opera,
• 58:37
  Speaker 1: I'm not necessarily continuing, you know, to read the people
• 58:40
  Speaker 1: that agree with me. I read the Kyle Basses, I
• 58:42
  Speaker 1: read the Jim Chainos of the world. What am I
• 58:44
  Speaker 1: missing anything can happen in the short term. I just
• 58:48
  Speaker 1: I am not concerned about the Chinese economy in the
• 58:51
  Speaker 1: medium to long run. I just am not. Facts can
• 58:55
  Speaker 1: change and we'll see what happens. We have to liken
• 58:58
  Speaker 1: the the economy to the stock market, and it is
• 59:01
  Speaker 1: becoming overwhelmingly a consumer society based on services. So let
• 59:07
  Speaker 1: me shift gears up a little bit on you. Um,
• 59:10
  Speaker 1: you talk about you're the founder of the CEO two
• 59:14
  Speaker 1: Master Solutions Partnership. What is that? This was a think
• 59:20
  Speaker 1: tank of a group of guys that I that I
• 59:23
  Speaker 1: associate with and deal with about looking at these challenges
• 59:27
  Speaker 1: and opportunities burning a lot of shoe leather. We have
• 59:32
  Speaker 1: been talking with endowments and foundations, and now it's becoming
• 59:36
  Speaker 1: a vehicle for us to invest in all the elements
• 59:41
  Speaker 1: that factually make the reduction and CEO two emissions possible.
• 59:44
  Speaker 1: What does that include, Well, this has to be a
• 59:47
  Speaker 1: strategy that's a lot that's ambivalent. So it basically if
• 59:50
  Speaker 1: you look at a typical portfolio construction. First, I will
• 59:54
  Speaker 1: I will preface it by saying we've always followed these things.
• 59:57
  Speaker 1: The things I'm gonna talk about now, we're not getting
• 59:59
  Speaker 1: into this because it's popular or themic. You know, we've
• 1:00:01
  Speaker 1: done you know, I've got twenty years of experience. My partner,
• 1:00:04
  Speaker 1: Matt Sublowski has got fifteen years of experience looking at
• 1:00:08
  Speaker 1: these things. So let's look at a typical portfolio construction,
• 1:00:10
  Speaker 1: subliminal ideas for people to look at within reduction of
• 1:00:13
  Speaker 1: CEO two emissions. Well, first of all, it's the building
• 1:00:16
  Speaker 1: blocks that make it possible, right, So we look at that.
• 1:00:18
  Speaker 1: We're not going to invest in coal and oil, but
• 1:00:20
  Speaker 1: we are going to look at things like copper. That's
• 1:00:23
  Speaker 1: important the fabrication of it. We're gonna look at the
• 1:00:25
  Speaker 1: automotive industry. You know, there's basically the winners and losers there.
• 1:00:29
  Speaker 1: So there's there's the lazy incumbents and then there's the
• 1:00:31
  Speaker 1: progressive incumbents. You look at a country like Germany, all
• 1:00:34
  Speaker 1: the people that feed into the parts that feed into
• 1:00:36
  Speaker 1: the automotive industry. How's that going to change? You've got
• 1:00:40
  Speaker 1: dozens of private and public companies that make cranks, pistons, radiators, valves, mufflers.
• 1:00:46
  Speaker 1: That industry is changing. We look at the technologies that
• 1:00:50
  Speaker 1: make this future energy economy possible, right, and that's people
• 1:00:54
  Speaker 1: that look at how how do you charge a car,
• 1:00:56
  Speaker 1: how do you manufacture them, how we're gonna sell them.
• 1:00:58
  Speaker 1: We look at the creation trans utilization of energy in general.
• 1:01:02
  Speaker 1: It's changing so far deeper than just investing in a
• 1:01:05
  Speaker 1: solar company or in a wind company. Let's look at
• 1:01:07
  Speaker 1: the gizmos, products in fabrication, the gearing that makes that
• 1:01:11
  Speaker 1: stuff possible, because there if they're gonna be busier, it's good.
• 1:01:14
  Speaker 1: How do we desalinate water? Who's going to do it?
• 1:01:16
  Speaker 1: What are the components made to make that possible? The
• 1:01:20
  Speaker 1: static ville, which is the vast network of pipelines, railroads
• 1:01:25
  Speaker 1: and distribution of electricity, tectonic shift again, tectonic shift, So
• 1:01:30
  Speaker 1: we're looking at all the components that make that possible.
• 1:01:33
  Speaker 1: And of course we get into the just a general
• 1:01:35
  Speaker 1: utilization of energy. So it's it's a vast sort of
• 1:01:39
  Speaker 1: arena that we're looking at, understanding and investing in. So
• 1:01:43
  Speaker 1: it's more than just the thing tank. It's a private
• 1:01:46
  Speaker 1: investment partnership that you are looking to take advantage of
• 1:01:51
  Speaker 1: client of the changes that are taking place in the
• 1:01:53
  Speaker 1: global uh climate, global world and basically global world. Is
• 1:01:58
  Speaker 1: that a phrase in the global environmental world and make
• 1:02:05
  Speaker 1: informed investments based on what you see as the next
• 1:02:09
  Speaker 1: coming trends. Yeah, as I call the algebra in the
• 1:02:12
  Speaker 1: this shift in energy away from fossil fuels. We understand
• 1:02:16
  Speaker 1: fossil fuels are important, but there is a shift happening.
• 1:02:19
  Speaker 1: You can argue is that happening faster slow? But it
• 1:02:21
  Speaker 1: is happening, and we're looking at the other side of
• 1:02:23
  Speaker 1: that algebraic equation, and we want to understand and support
• 1:02:26
  Speaker 1: and of course invest in those products, materials and building blocks.
• 1:02:32
  Speaker 1: It makes sense. So let's jump into our favorite questions
• 1:02:36
  Speaker 1: that we ask all of our guests. Um, we went
• 1:02:38
  Speaker 1: over your background. Uh, tell me a little bit about
• 1:02:41
  Speaker 1: some of your early mentors, Who who influenced your thought process,
• 1:02:46
  Speaker 1: Who who led you to this career path. Yeah. I
• 1:02:50
  Speaker 1: was a very curious person and I always surrounded myself
• 1:02:54
  Speaker 1: with you know, father figure types of guys. And we're
• 1:02:57
  Speaker 1: very lucky in Vancouver. There's a lot of UM influential
• 1:03:02
  Speaker 1: sort of UM guru types in the themes that I
• 1:03:05
  Speaker 1: follow and unlike, and I may like in this to
• 1:03:09
  Speaker 1: the software industry, where it's hard to get access to
• 1:03:11
  Speaker 1: the CEOs. Let's say it's hard to get access to
• 1:03:14
  Speaker 1: Larry Ellison or or Elon Musk in our industry in Vancouver.
• 1:03:18
  Speaker 1: It's actually you can actually rub shoulders with these guys.
• 1:03:21
  Speaker 1: And if you I was a young guy that was
• 1:03:24
  Speaker 1: very curious and I put a lot of effort into it,
• 1:03:26
  Speaker 1: and I was able to sort of surround myself with
• 1:03:28
  Speaker 1: these people like in these industries, and then we would
• 1:03:32
  Speaker 1: travel together, we would go to conferences, and you know,
• 1:03:35
  Speaker 1: ten years of dinners later, you you consider yourself friends
• 1:03:38
  Speaker 1: and mentors and and sort of you take their collective
• 1:03:41
  Speaker 1: experience and you put it into your own sort of path.
• 1:03:45
  Speaker 1: And now that I'm a forty one years old now,
• 1:03:47
  Speaker 1: so I'm sort of starting to mentor some younger people myself.
• 1:03:50
  Speaker 1: So what about investors out there who have tread the
• 1:03:55
  Speaker 1: path before you? What investors did you find influential to
• 1:03:59
  Speaker 1: your uh thought process? I always love the wisdom of
• 1:04:04
  Speaker 1: Warren Buffett. You can you can lose yourself and Warren
• 1:04:07
  Speaker 1: Buffett sort of readings and videos and such, and a
• 1:04:10
  Speaker 1: lot of people have followed him, of course, because he
• 1:04:12
  Speaker 1: he's just he's able to tell a story in such
• 1:04:15
  Speaker 1: plain English, you know. So I think you can still
• 1:04:17
  Speaker 1: for those that have not enjoyed his wisdom. I mean,
• 1:04:20
  Speaker 1: just go to YouTube and you can lose yourself for
• 1:04:22
  Speaker 1: hours and sort of his his philosophies. Reading some of
• 1:04:25
  Speaker 1: the books from before that you know, like Ben Graham
• 1:04:28
  Speaker 1: of course, the famous Value Investor, and sort of just
• 1:04:30
  Speaker 1: that plain street common sense you know that works, and
• 1:04:34
  Speaker 1: Napoleon Hill and those books that they're they're just how
• 1:04:37
  Speaker 1: to think and grow rich? Is that right? Yeah? Yeah,
• 1:04:39
  Speaker 1: they're they're just timeless, They're just totally they're absolutely So
• 1:04:41
  Speaker 1: I'm gonna ask you, let's let's jump into the next question.
• 1:04:44
  Speaker 1: What are some of your favorite books? And that could
• 1:04:46
  Speaker 1: be fiction nonfiction, and within the nonfiction it could either
• 1:04:50
  Speaker 1: be technology or investment related or anything else. I don't
• 1:04:53
  Speaker 1: want you to feel constrained. Tell me about what what
• 1:04:56
  Speaker 1: books you found most influential. Let's talk about Napoleon Hill. Um,
• 1:05:00
  Speaker 1: what did you What was your takeaway from Think and
• 1:05:02
  Speaker 1: Grow Rich? Well, I think the that is I said
• 1:05:06
  Speaker 1: already that that common that that street common sense. You
• 1:05:10
  Speaker 1: know where you have to and you you also factor
• 1:05:11
  Speaker 1: in psychology and and just basic practices that help your business.
• 1:05:17
  Speaker 1: And the book is a is a quick read for
• 1:05:19
  Speaker 1: anyone that hasn't read it yet, very very fast, and
• 1:05:22
  Speaker 1: you can reread it probably every couple of years on
• 1:05:23
  Speaker 1: summer vacation. Right now, this is my summer read this
• 1:05:27
  Speaker 1: year is going to be a book by Mr McCullough,
• 1:05:29
  Speaker 1: which is um, The Right Brothers, not that when I'm
• 1:05:32
  Speaker 1: reading an older one. That's my next one. But it's
• 1:05:34
  Speaker 1: The Mornings on Mornings, Mornings on Horseback, which is the
• 1:05:37
  Speaker 1: book on the young Teddy Roosevelt, who is an incredible character.
• 1:05:41
  Speaker 1: I don't know anyone who has read one of the
• 1:05:44
  Speaker 1: mccaulla biographies and doesn't come away just wow. This was
• 1:05:48
  Speaker 1: a fantastic research, the research, the storytelling. And I'm just
• 1:05:52
  Speaker 1: breaking that one and I'm really looking forward to that
• 1:05:55
  Speaker 1: and I'll probably have that read in the first three
• 1:05:57
  Speaker 1: or four days of my vacation. Coming up. A book
• 1:05:59
  Speaker 1: I all so recently read was was a Walter Isaacs
• 1:06:02
  Speaker 1: and Steve Jobs, which is now the best selling biography
• 1:06:06
  Speaker 1: I think in history. Is that true? I had no
• 1:06:08
  Speaker 1: idea what a book, what a book, the storytelling. I
• 1:06:11
  Speaker 1: actually met Walter Isaacson when he came to Vancouver in
• 1:06:13
  Speaker 1: his book series My Friend that was sponsored it, so
• 1:06:16
  Speaker 1: we were able to enjoy a dinner with him talking
• 1:06:19
  Speaker 1: about some of the stories around making that book. Ye
• 1:06:23
  Speaker 1: Jobs reached out to him and said, I listen, I
• 1:06:26
  Speaker 1: want you to write my biography. Who does something like that.
• 1:06:30
  Speaker 1: He originally was a little reluctant. It's a great book
• 1:06:33
  Speaker 1: for anyone that wants to understand that that iconic you know, Americana,
• 1:06:37
  Speaker 1: which is Apple and all that the history and a
• 1:06:39
  Speaker 1: lot of the characters that were involved. One of my friends,
• 1:06:42
  Speaker 1: Robert Friedland, is featured in the book. He was the
• 1:06:44
  Speaker 1: guy with the apple farm in Oregon, and he was
• 1:06:47
  Speaker 1: the guy that Walter Isaacson would say they taught or
• 1:06:51
  Speaker 1: showed Steve Jobs that reality distortion field. And if anyone
• 1:06:55
  Speaker 1: has seen Robert Friedland give a talk, you see it.
• 1:06:58
  Speaker 1: I mean's just a captivating public speaker and amazing storyteller.
• 1:07:02
  Speaker 1: And then which is the same with with Steve Jobs
• 1:07:04
  Speaker 1: and so of what he was able to do. When
• 1:07:07
  Speaker 1: I was almost finished the book, Barry, I saved the
• 1:07:10
  Speaker 1: last forty pages and it took me three months. I
• 1:07:12
  Speaker 1: put it on the shelf and I just waited, and
• 1:07:15
  Speaker 1: you know, I read that last forty pages. It was
• 1:07:18
  Speaker 1: just again I I just don't want that book to end.
• 1:07:22
  Speaker 1: It was it was really interesting. There were a number
• 1:07:24
  Speaker 1: of books that have come out since then sort of
• 1:07:28
  Speaker 1: telling telling a different version of the story, including a
• 1:07:31
  Speaker 1: few Apple authorized biographies. I thought the book was harsh
• 1:07:37
  Speaker 1: but fair is that? Is that a good way to
• 1:07:39
  Speaker 1: describe it. He's a mercurial, different, difficult character, but it
• 1:07:44
  Speaker 1: seemed like he it was a very fair conversation. If
• 1:07:47
  Speaker 1: there was any criticism. It's a little technology light. It's
• 1:07:51
  Speaker 1: about Steve Jobs, the person that Steve Jobs, the technologist,
• 1:07:55
  Speaker 1: which is is kind of interesting. Give me one more book?
• 1:07:58
  Speaker 1: What else? What else have you read that really was
• 1:08:01
  Speaker 1: influential to you when I was around twenty years old
• 1:08:05
  Speaker 1: and probably the reason I wrote my book the way
• 1:08:08
  Speaker 1: it is. There's a Canadian book was written by David Chilton.
• 1:08:11
  Speaker 1: It's called The Wealthy Barber. That book sold two million
• 1:08:15
  Speaker 1: copies in Canada. To give you is it a good book? Well?
• 1:08:17
  Speaker 1: Two million? Healthy and it's it's a it's a simple
• 1:08:21
  Speaker 1: book about a barber who's wealthy and his pay. His
• 1:08:25
  Speaker 1: clients come in to cut their hair and he gives
• 1:08:27
  Speaker 1: them investment advice, just plane plane, straight common sense stuff. Now,
• 1:08:34
  Speaker 1: the book was around the days of eight and teen
• 1:08:36
  Speaker 1: percent interest, so those days are gone. You can't just
• 1:08:38
  Speaker 1: do that. The power of compound interest doesn't work anymore
• 1:08:41
  Speaker 1: in this interest rate environment, which is a different discussion
• 1:08:43
  Speaker 1: for a different day. But the but the way that
• 1:08:45
  Speaker 1: book is written, I think it's fun and it was
• 1:08:48
  Speaker 1: one of those early personal finance books that I read
• 1:08:51
  Speaker 1: that I just love and I recommended to any young person,
• 1:08:54
  Speaker 1: any millennial out there, you want to read that book
• 1:08:56
  Speaker 1: because it gives you a good foundation. There are a
• 1:08:58
  Speaker 1: run of parable books like that. The Wealthy Barber Um
• 1:09:02
  Speaker 1: The Richest Man in Babylon is another similar book, and
• 1:09:05
  Speaker 1: there's one other. I'm trying to remember the most recent
• 1:09:09
  Speaker 1: UM version of that sort of paradox that I have
• 1:09:13
  Speaker 1: it out there. I read it recently. I'm trying to
• 1:09:15
  Speaker 1: remember the title. I'll dig it up UM. Alright, So,
• 1:09:19
  Speaker 1: so beyond books, what what has changed since you've become
• 1:09:25
  Speaker 1: a venture investor? What do you think is is the
• 1:09:28
  Speaker 1: most significant positive and negative changes that that you've witnessed
• 1:09:33
  Speaker 1: over the past decade. It's harder to be a stockpicker,
• 1:09:37
  Speaker 1: you know, if we look at all the click trading
• 1:09:39
  Speaker 1: that takes place in the world, people buy ETF s
• 1:09:42
  Speaker 1: now Berry. You know, you look at the graph on
• 1:09:44
  Speaker 1: who used to be their own personal stock picker and
• 1:09:47
  Speaker 1: what was an et F. I mean, you know, you
• 1:09:49
  Speaker 1: interviewed the king of ETFs yourself, and it's all it's
• 1:09:52
  Speaker 1: went now to basically people buy e t F. So
• 1:09:55
  Speaker 1: you get volatility with that because with click trading, you
• 1:09:58
  Speaker 1: you dump positions. You know, we're just just sporadically. So
• 1:10:02
  Speaker 1: it's it's a lot harder an t F and you're
• 1:10:04
  Speaker 1: essentially dumping a hundred stocks exactly, and and then people
• 1:10:08
  Speaker 1: do it. The psychology the market comes in, you get
• 1:10:10
  Speaker 1: the greed, and greed very powerful emotion. We've seen the
• 1:10:14
  Speaker 1: Dow came off a thousand points here, you know, just
• 1:10:16
  Speaker 1: after the Brexit, you know, and that's it's a fear trade.
• 1:10:19
  Speaker 1: And so I think it's harder to be a stock picker,
• 1:10:23
  Speaker 1: you know, to to find deep value and to have
• 1:10:27
  Speaker 1: disproportionate benefit. So you need to be is a money manager.
• 1:10:31
  Speaker 1: I think you need to be long and short. It's
• 1:10:33
  Speaker 1: very hard to be long only. And one of my
• 1:10:36
  Speaker 1: one of my mentors in Germany told me says, when
• 1:10:38
  Speaker 1: me and traditionally I'm a value investor, so I am
• 1:10:40
  Speaker 1: long only, and he says the difference between people like
• 1:10:42
  Speaker 1: you and me. He says, I make money every day.
• 1:10:45
  Speaker 1: I don't care if the market's going up or down.
• 1:10:47
  Speaker 1: I just I just need to be right more times
• 1:10:49
  Speaker 1: that I'm wrong. And he says, you you have you
• 1:10:51
  Speaker 1: wait and wait, and I said, the way my heart beats,
• 1:10:54
  Speaker 1: I'm okay with that. I want to find deep value.
• 1:10:56
  Speaker 1: I want to get behind I have conviction as long
• 1:10:58
  Speaker 1: as I'm not wrong. Because you a SOO have to
• 1:11:00
  Speaker 1: admit when the facts change, so should you. If you're wrong,
• 1:11:04
  Speaker 1: get off the trade, you know. But typically I have
• 1:11:06
  Speaker 1: a window of maybe one to five years. I want
• 1:11:08
  Speaker 1: to get behind a theme and uh and ride that
• 1:11:11
  Speaker 1: pony all the way. So what do you see as
• 1:11:14
  Speaker 1: some of the next major shifts taking place in in
• 1:11:17
  Speaker 1: that space, either in in public markets or venture investment. Well,
• 1:11:22
  Speaker 1: let's talk about the the largest traded commodity in the world.
• 1:11:25
  Speaker 1: Let's talk about oil, which is a huge market and
• 1:11:29
  Speaker 1: it's going through a tectonic shift. And let me just
• 1:11:31
  Speaker 1: give people some anecdotal information for those that are not
• 1:11:34
  Speaker 1: energy experts. We use today nine s million barrels a
• 1:11:38
  Speaker 1: day demand. And if you look at the prognosticators and
• 1:11:42
  Speaker 1: you ask them fifteen years ago or ten years ago.
• 1:11:45
  Speaker 1: How much oil are we going to use in the future.
• 1:11:47
  Speaker 1: All the charts end up going into the future to
• 1:11:49
  Speaker 1: about a hundred twenty million barrels a day. Hundred in
• 1:11:52
  Speaker 1: the future maybe not. The way we use oil is
• 1:11:57
  Speaker 1: so fundamentally changed. We are now things that you consume
• 1:12:01
  Speaker 1: of this ninety six million barrels a day, there are
• 1:12:03
  Speaker 1: there are applications that are going to go to zero
• 1:12:05
  Speaker 1: oil consumption, zero adoption. Five million barrels a day is
• 1:12:09
  Speaker 1: used to make electricity on islands around the world. You
• 1:12:12
  Speaker 1: look at the fines that were levied three weeks ago
• 1:12:15
  Speaker 1: by the European Union of all the Lorry, the semi
• 1:12:18
  Speaker 1: truck manufacturers billions of dollars because their efficiencies did not
• 1:12:23
  Speaker 1: go down in twenty five years. In four years, Barry,
• 1:12:27
  Speaker 1: they're going to use less fuel? Is that? What is
• 1:12:32
  Speaker 1: the is the key fact? It's a two prong effect.
• 1:12:34
  Speaker 1: For they're making them change the shape of the trucks
• 1:12:36
  Speaker 1: so they're gonna be aerodynamic European semi trucks, as everyone
• 1:12:39
  Speaker 1: knows how that big square, very un aerodynamic shape that
• 1:12:42
  Speaker 1: will that will go to be an aerodynamic shape, which
• 1:12:45
  Speaker 1: will have We've we've seen a lot of adaptations to
• 1:12:48
  Speaker 1: here here we have it. Not in Europe though, really not.
• 1:12:50
  Speaker 1: You would think that gasoline is so much more expensive
• 1:12:53
  Speaker 1: there that would be a being automatic. I'm actually looking
• 1:12:57
  Speaker 1: for something right now as we're as we're talking about it,
• 1:13:00
  Speaker 1: but I'm not so that's going to change. And then
• 1:13:03
  Speaker 1: we look at the the the automobiles that are used
• 1:13:05
  Speaker 1: eighteen hours a day, which is not not you and
• 1:13:08
  Speaker 1: I taxis the urban transports, buses, the world's largest automobile market,
• 1:13:12
  Speaker 1: which is China. Boy, this that industry is changing in
• 1:13:15
  Speaker 1: the next four or five years. It's a line item.
• 1:13:18
  Speaker 1: So conclusively, we're gonna use less oil. If people talk
• 1:13:22
  Speaker 1: about the fracking revolution in the United States, so we
• 1:13:25
  Speaker 1: know that the drill rigs went from about two D
• 1:13:28
  Speaker 1: six hundred and four years and what happened is we
• 1:13:31
  Speaker 1: ended up having almost six million barrels of new production.
• 1:13:35
  Speaker 1: This is unprecedented. And then you look at it, well,
• 1:13:37
  Speaker 1: what about the demand side, because the world's growing and
• 1:13:40
  Speaker 1: there's India and all these other places. Let's look at
• 1:13:42
  Speaker 1: the fastest growing energy market in history, China. It took
• 1:13:46
  Speaker 1: them fifteen years to have five million barrels of new demand.
• 1:13:51
  Speaker 1: So this this revolution of how we extract oil. It's
• 1:13:55
  Speaker 1: it's it's not offset by demand. It's slowing down. We
• 1:13:59
  Speaker 1: used to grow three four percent a year annual oil demand.
• 1:14:03
  Speaker 1: We're coming in it's it's barely growing, it's maybe a percent.
• 1:14:07
  Speaker 1: What about the concept and I'm trying to remember which
• 1:14:10
  Speaker 1: Saudi king said this um and the quote is you
• 1:14:14
  Speaker 1: know you Americans waste oil using it as a fuel,
• 1:14:18
  Speaker 1: meaning it's real value is in the materials world and
• 1:14:21
  Speaker 1: as a basis for plastics and polymers and what have you.
• 1:14:25
  Speaker 1: How much of a demand for oil exists on not
• 1:14:29
  Speaker 1: on the energy side, but on the material side. And
• 1:14:32
  Speaker 1: what does that mean going going forward? Yeah, that's gonna
• 1:14:36
  Speaker 1: there is demand for that obviously to make plastics and
• 1:14:38
  Speaker 1: in certain products we we use petroleum, you know, the
• 1:14:41
  Speaker 1: petroleum industry, But that's not the lion's share of where
• 1:14:44
  Speaker 1: oil is consumed. Oil is consumed in mode of transportation,
• 1:14:48
  Speaker 1: and it's changing. And we saw the oil price collapse
• 1:14:51
  Speaker 1: in the past eighteen months because of a two million
• 1:14:54
  Speaker 1: barrel a day shifted displacement too much supply. So if
• 1:15:00
  Speaker 1: I'm talking about all these things I just talked about,
• 1:15:02
  Speaker 1: I'm talking about a displacement of two three five million
• 1:15:05
  Speaker 1: barrels a day in the next two five fifteen years. Well,
• 1:15:10
  Speaker 1: and at the same time you can extract more oil.
• 1:15:12
  Speaker 1: I like to tell people that of the six or
• 1:15:14
  Speaker 1: seven factors that can influence the price of oil, I
• 1:15:18
  Speaker 1: think that that industry, the oil industry, relies overweight now
• 1:15:22
  Speaker 1: on toxic geopolitics, because there's always it could be maybe
• 1:15:27
  Speaker 1: forty of politics in a barrel of oil. If things
• 1:15:31
  Speaker 1: go awry in a really sensitive oil environment, you should
• 1:15:35
  Speaker 1: have or you could have an increase in oil prices.
• 1:15:38
  Speaker 1: It does not rely on fundamentals anymore because across the
• 1:15:41
  Speaker 1: board innovation, adoption, technology we are going to use in
• 1:15:45
  Speaker 1: the future less oil. My friend Gary Shilling has a
• 1:15:49
  Speaker 1: ten dollar a barrel price target. I don't I don't
• 1:15:51
  Speaker 1: really do price targets, but that certainly gets your attention.
• 1:15:56
  Speaker 1: Long term, he's in the same camp as you. Hey,
• 1:15:59
  Speaker 1: this as an energy source, it's certainly if it's not
• 1:16:04
  Speaker 1: a twilight industry, it certainly has peaked. And as we
• 1:16:07
  Speaker 1: see more tesla's and more electrical adaptation, there's going to
• 1:16:12
  Speaker 1: be less and less UH oil consumption. Even if we
• 1:16:16
  Speaker 1: continue using gasoline powered cars as they become autonomous. They're
• 1:16:21
  Speaker 1: gonna become so much more fuel efficient than us humans
• 1:16:25
  Speaker 1: are are driving. It's gotta take a huge bite out
• 1:16:30
  Speaker 1: of the total demand that's out there. Yeah, they're gonna
• 1:16:32
  Speaker 1: they're gonna be electric. Even if let's let's assume right
• 1:16:35
  Speaker 1: now we don't sell one an electric car. We're gonna
• 1:16:38
  Speaker 1: we're gonna sell more cars in the future, more people
• 1:16:40
  Speaker 1: consuming more things. We can all agree to that. But
• 1:16:42
  Speaker 1: cars are mandated here in the United States to go
• 1:16:44
  Speaker 1: from miles a gallon to fifty four miles a gallon.
• 1:16:48
  Speaker 1: By that's the fleet sales for all of GM, all
• 1:16:52
  Speaker 1: of Mercedes, all of Toyota, their entire fleet has that average.
• 1:16:56
  Speaker 1: You use more or less oil in that atmosphere. Clearly,
• 1:16:59
  Speaker 1: my less thank you. If the lorry manufacturers of Europe
• 1:17:03
  Speaker 1: are going to have to have more efficiency between now
• 1:17:05
  Speaker 1: and are they going to use more or less oil
• 1:17:07
  Speaker 1: in that atmosphere? If we if half the islands around
• 1:17:11
  Speaker 1: the world that make electricity from bunker start using being diesel,
• 1:17:16
  Speaker 1: cheap diesel to make electricity, or we're gonna you know,
• 1:17:19
  Speaker 1: it's it's basic arithmetic. The ships around the world are
• 1:17:22
  Speaker 1: becoming more efficient. I mean just in the past twelve years, Barry,
• 1:17:25
  Speaker 1: the average airplane and car is about more fuel efficient.
• 1:17:29
  Speaker 1: Now the trucks are coming next, because the number they
• 1:17:31
  Speaker 1: just got the wrist slapped that three weeks ago that
• 1:17:33
  Speaker 1: these charge collusion charges have went went against them, which
• 1:17:36
  Speaker 1: is why they too have a siren on that program.
• 1:17:40
  Speaker 1: And then of course the grandaddy of them all urban
• 1:17:43
  Speaker 1: transport buses that operates six eighteen hours a day going electric.
• 1:17:48
  Speaker 1: Now we'd have to focus about the small markets that
• 1:17:51
  Speaker 1: are that aren't approaching this from a progressive point of view.
• 1:17:55
  Speaker 1: We have to go to the world's largest market, which
• 1:17:57
  Speaker 1: is doing this very quickly. So our fall anal two questions,
• 1:18:01
  Speaker 1: our favorite questions. First, if a millennial or recent college
• 1:18:05
  Speaker 1: graduate came up to you and ask for some career advice,
• 1:18:08
  Speaker 1: what would you tell them, Well, let's let's pretend there
• 1:18:12
  Speaker 1: are my brother's children, so I really, I really admire
• 1:18:17
  Speaker 1: this millennial I'm talking to. I would take them by
• 1:18:20
  Speaker 1: the hand, and I would sit down and I would
• 1:18:22
  Speaker 1: really explain fundamentally how energy is the umbilical court of
• 1:18:27
  Speaker 1: human progress, how it's changing, how we create, transfer, and
• 1:18:30
  Speaker 1: utilize that energy. Of course they'll come to the conclusion
• 1:18:33
  Speaker 1: that it's all electricity, and I would say, open up
• 1:18:36
  Speaker 1: your mind. Maybe it's electrical design, maybe it's engineering, maybe
• 1:18:40
  Speaker 1: it's the software technology. But you need to embrace that.
• 1:18:44
  Speaker 1: You need to have you need to know the fundamentals.
• 1:18:46
  Speaker 1: If you cut all this stuff in half, this green
• 1:18:49
  Speaker 1: energy that so many young people want, if you cut
• 1:18:52
  Speaker 1: it in half, you need to know how it works,
• 1:18:54
  Speaker 1: how it functions, how can you make it better? And maybe,
• 1:18:58
  Speaker 1: just maybe those people can change the world. We need
• 1:19:00
  Speaker 1: to inspire a generation of young people berry to go
• 1:19:04
  Speaker 1: to university with pride and take science, technology, engineering, and
• 1:19:07
  Speaker 1: math like so many other people around the world. That's
• 1:19:10
  Speaker 1: the advice I would give a millennial. And our final question,
• 1:19:13
  Speaker 1: what is it that you know about technology, energy, venture
• 1:19:17
  Speaker 1: investing today that you wish you knew fifteen years ago?
• 1:19:22
  Speaker 1: I wish I had a degree in psychology because it
• 1:19:25
  Speaker 1: makes you understand markets so much more. You know these
• 1:19:29
  Speaker 1: emotions of fear and greed. You know this this euphoria
• 1:19:32
  Speaker 1: that hits markets when you think you're a genius because
• 1:19:35
  Speaker 1: you're making money in the stocks you chose are all
• 1:19:37
  Speaker 1: going higher. Now, if you understood psychology, you you you
• 1:19:41
  Speaker 1: it's going to help you as an investor. So if
• 1:19:44
  Speaker 1: I if I knew more, and I do study this
• 1:19:47
  Speaker 1: stuff now just as a passive sort of fan of
• 1:19:50
  Speaker 1: of how markets are. So I don't want to use
• 1:19:54
  Speaker 1: the word manipulated, but move driven, driven by by emotion.
• 1:19:59
  Speaker 1: If you understand that better you're gonna have, you're gonna
• 1:20:01
  Speaker 1: add a few percentage points to your performance every year. Giohnny,
• 1:20:05
  Speaker 1: this has been terrific. Thank you for being so generous
• 1:20:07
  Speaker 1: with your time. We have been speaking with Giohnny Kovachevik,
• 1:20:12
  Speaker 1: author of My Electrician Drives a Porsche, investing in the
• 1:20:16
  Speaker 1: rise of the new spending class. If you enjoyed this conversation,
• 1:20:21
  Speaker 1: be sure and look up an inch or down an
• 1:20:23
  Speaker 1: inch and you could see any of the other nineties
• 1:20:25
  Speaker 1: seven or so. Uh, such conversations we've had. I know
• 1:20:30
  Speaker 1: this sounds like a conversation just between two people, but
• 1:20:34
  Speaker 1: a team of folks helped put this together. Uh. Taylor
• 1:20:38
  Speaker 1: Riggs is our scheduler slash booker, Charlie Vollmer is our producer,
• 1:20:43
  Speaker 1: Mark is our recording engineer. Mike Batnick is the head
• 1:20:47
  Speaker 1: of research. And you're gonna actually I need you to
• 1:20:50
  Speaker 1: sign this book to Mike Batnick, who gave you a
• 1:20:53
  Speaker 1: fantastic review on Amazon. Um, so before I forget, I
• 1:20:58
  Speaker 1: have to have you sign a book for him. Uh.
• 1:21:01
  Speaker 1: Thank you for everybody for helping make this program such
• 1:21:05
  Speaker 1: a delight to do and to listen to. I'm Barry Ridolts.
• 1:21:08
  Speaker 1: You've been listening to Masters in Business on Bloomberg Radio,
• 1:21:15
  Speaker 1: brought to you by B A s F. We create chemistry.