Latest / Stress Tested / From Soviet Breadlines to a $90 Billion Empire - Alex Vynokur

Transcript

From Soviet Breadlines to a $90 Billion Empire - Alex Vynokur · Stress Tested

• 0:01
  Speaker 1: A lot of people, of course, thought that I'm mad.
• 0:02
  Speaker 1: I was. If you objectively assess that decision, it is
• 0:06
  Speaker 1: absolute madness. The conventional wisdom is that you have to
• 0:09
  Speaker 1: be wealthy to be an investor. It's actually not true.
• 0:13
  Speaker 1: My first job in Australia was a cleaner. So I
• 0:16
  Speaker 1: was prepared to do anything basically. The one thing that's
• 0:18
  Speaker 1: become a very powerful mission over this time that I
• 0:22
  Speaker 1: have been in business is really to....
• 0:27
  Speaker 2: I'm sitting here with Alex Vinica. He's the CEO of BetaShares,
• 0:31
  Speaker 2: which I believe is a $ 75 billion investment giant at
• 0:35
  Speaker 2: this point in time.
• 0:37
  Speaker 1: Just over 90 now.
• 0:38
  Speaker 2: Just over 90. Wow. It's an incredible amount of money.
• 0:44
  Speaker 2: And you create exchange-traded funds and manage those. Is that correct? Yeah.
• 0:51
  Speaker 1: Yeah. We own the business of managing people's money. but
• 0:58
  Speaker 1: more importantly, we are in the business of empowering Australians
• 1:02
  Speaker 1: to build wealth and to protect their wealth.
• 1:06
  Speaker 2: And we'll get on to exchange-traded funds and what BetaShare
• 1:09
  Speaker 2: does and why so many people are investing in ETFs
• 1:13
  Speaker 2: a bit later in the chat. But I just wanted
• 1:16
  Speaker 2: to get into your story because it's quite interesting from
• 1:20
  Speaker 2: what I understand. You weren't born in Australia, were you?
• 1:25
  Speaker 1: No, no. I was born in Soviet Ukraine and spent
• 1:33
  Speaker 1: a meaningful portion of my childhood there during Soviet Union
• 1:37
  Speaker 1: and immigrated to Australia in the mid-90s with my family.
• 1:42
  Speaker 2: And what was it like growing up in Soviet Ukraine
• 1:45
  Speaker 2: as a kid? Yes, yes.
• 1:48
  Speaker 1: It's a great question. It was quite the experience. It
• 1:50
  Speaker 1: was quite the experience. Look, there's probably a couple of
• 1:55
  Speaker 1: elements to it. First of all, on the family front,
• 1:59
  Speaker 1: I was born into a really tight-knit and very loving family.
• 2:06
  Speaker 1: So I grew up surrounded by lots of love from
• 2:09
  Speaker 1: my parents and my grandparents. I had very close friends.
• 2:17
  Speaker 1: And my childhood was a very happy childhood. despite the
• 2:22
  Speaker 1: fact that we were growing up in Soviet Union, which
• 2:27
  Speaker 1: was a very difficult place, of course, for many reasons.
• 2:30
  Speaker 1: And it was a difficult place for a number of reasons.
• 2:32
  Speaker 1: I mean, first of all, you know, the Soviet Union
• 2:36
  Speaker 1: was really, and then the people were still recovering and
• 2:41
  Speaker 1: still carrying wounds from, you know, World War II, a
• 2:45
  Speaker 1: meaningful part of my family. did not survive, you know,
• 2:50
  Speaker 1: World War II and were killed. And those that did
• 2:54
  Speaker 1: survive had a real appreciation for life. And I'd say,
• 3:00
  Speaker 1: you know, if I reflect back on my class, on
• 3:03
  Speaker 1: my schoolmates, you know, most people, you know, have had
• 3:07
  Speaker 1: family members who did not survive the war. So that
• 3:10
  Speaker 1: trauma basically, you know, is definitely something that was still...
• 3:16
  Speaker 1: you know, that was still there, you know, even though
• 3:18
  Speaker 1: it was many decades after the end of World War II.
• 3:22
  Speaker 1: And of course, the Soviet regime, you know, it was
• 3:25
  Speaker 1: a brutal, you know, difficult regime where people's freedoms, you know,
• 3:31
  Speaker 1: were curbed, access to information, you know, was shut, you know,
• 3:38
  Speaker 1: entrepreneurship was disallowed, and groupthink you know, was encouraged and cultivated.
• 3:48
  Speaker 2: So you didn't have like shops that sold like 50
• 3:50
  Speaker 2: types of shampoo and stuff.
• 3:52
  Speaker 1: Like that, I guess. No, no, you're lucky to get one.
• 3:55
  Speaker 1: You're lucky to get one. I mean, it was, again,
• 3:58
  Speaker 1: you know, Soviet economy and the communist regime is, it
• 4:05
  Speaker 1: was a terrible experiment, basically. It was a terrible experiment.
• 4:08
  Speaker 1: It was a centrally planned economy. Um, and, um, you know, the, the, the,
• 4:15
  Speaker 1: you know, that, that experiment just did not work basically.
• 4:18
  Speaker 1: So you had to line up in the morning. I
• 4:19
  Speaker 1: literally had to line up in the mornings, you know,
• 4:22
  Speaker 1: with my grandmother, for example, you know, sort of to,
• 4:24
  Speaker 1: to be able to buy bread. Um, and if you
• 4:27
  Speaker 1: did not line up, you know, before 7am, uh, you know,
• 4:30
  Speaker 1: if you rock up at 7.30, there may not be bread.
• 4:33
  Speaker 2: And how did you end up in Australia?
• 4:34
  Speaker 1: Yeah. Well, it's a combination of my parents' wisdom and
• 4:41
  Speaker 1: a bit of luck. So my parents wanted to leave
• 4:46
  Speaker 1: for quite some time. They knew for a long time
• 4:52
  Speaker 1: that their regime is very troubled and the regime is
• 4:56
  Speaker 1: obviously very, you know, very difficult and, you know, it's corrupt.
• 5:03
  Speaker 1: And they wanted to leave, but it was not possible
• 5:05
  Speaker 1: to leave. getting out was not possible. You could not
• 5:09
  Speaker 1: just apply. You needed to get permission to leave. And
• 5:13
  Speaker 1: KGB were not in the business of letting people leave.
• 5:19
  Speaker 1: So we had to wait. My parents had to wait.
• 5:22
  Speaker 1: I was a teenager. At the time we immigrated to Australia,
• 5:26
  Speaker 1: I was 15 and a half years old. My parents
• 5:30
  Speaker 1: waited until Soviet Union collapsed. And at that time, You know,
• 5:35
  Speaker 1: there was chaos, you know, in the country. It was
• 5:38
  Speaker 1: a bit of a, you know, it was a bit
• 5:40
  Speaker 1: of a, you know, sort of disorganized state of affairs.
• 5:44
  Speaker 1: And nobody cared basically anymore whether you're there or not.
• 5:49
  Speaker 1: And my parents applied to come to Australia. And, you know,
• 5:53
  Speaker 1: their view was that if you're going to be an immigrant,
• 5:56
  Speaker 1: let's go to the country where there are lots of immigrants, basically.
• 5:59
  Speaker 1: And we were very fortunate to have received permission to
• 6:03
  Speaker 1: come to Australia. And as soon as we received permission
• 6:07
  Speaker 1: to come to Australia, my parents sold everything they had.
• 6:10
  Speaker 1: They bought one-way tickets for our family. And they just
• 6:15
  Speaker 1: had a few hundred dollars left over, basically. And that's
• 6:17
  Speaker 1: how we arrived.
• 6:18
  Speaker 2: And what was it like for you? You say you're 15,
• 6:21
  Speaker 2: just over 15 years old. And you came to Australia.
• 6:24
  Speaker 2: You've come from a background where you have to line
• 6:27
  Speaker 2: up for bread every morning at 7 a.m. And then
• 6:29
  Speaker 2: you come to Australia in, what, maybe the early 1990s?
• 6:31
  Speaker 2: In 1994.
• 6:32
  Speaker 1: That's right. We arrived in March 1994.
• 6:35
  Speaker 2: And what was it like? It must have been a
• 6:37
  Speaker 2: pretty incredible experience to arrive.
• 6:39
  Speaker 1: It was incredible. It was really incredible. I talk to
• 6:43
  Speaker 1: my kids a lot about it now. And, of course,
• 6:46
  Speaker 1: it's very difficult to really explain it if you hadn't
• 6:53
  Speaker 1: experienced it. But it was a complete... sensory overload. Uh,
• 6:57
  Speaker 1: it was a complete, uh, you know, culture shock.
• 7:01
  Speaker 2: Even just the, the weather from Ukraine.
• 7:04
  Speaker 1: Everything. I mean, we, we settled in Bondi basically. I mean, we, uh,
• 7:08
  Speaker 1: cause lots of Soviet immigrants ended up, you know, sort
• 7:10
  Speaker 1: of settling in Bondi. And at the time, I mean,
• 7:12
  Speaker 1: it was a very different Bondi. I mean, today Bondi is,
• 7:15
  Speaker 1: I mean, it's always beautiful, but it was like lots
• 7:17
  Speaker 1: of backpackers and I was, it was totally different vibe
• 7:20
  Speaker 1: basically in Bondi. It was pretty rough and ready. But we,
• 7:24
  Speaker 1: of course, absolutely loved it. You know, sun was shining and,
• 7:29
  Speaker 1: you know, people were smiling. I mean, that's one big
• 7:32
  Speaker 1: thing that I remember. You know, you walk the streets
• 7:35
  Speaker 1: and people smile at you. I mean, in Soviet Union,
• 7:38
  Speaker 1: nobody ever smiled, basically. People thought you were weird if
• 7:40
  Speaker 1: you smiled. There was something wrong with you. I mean,
• 7:43
  Speaker 1: it's just like the basic things, basically, just on the
• 7:45
  Speaker 1: human level. It was so different. And then, of course,
• 7:50
  Speaker 1: you talked about the 10 different types of shampoo. I mean,
• 7:52
  Speaker 1: those were the sorts of examples. You walk into a
• 7:54
  Speaker 1: store and like everything is plentiful. You've got choice of things.
• 7:58
  Speaker 1: I mean, first of all, you know, 80% of what
• 8:01
  Speaker 1: I saw in the supermarket I've never seen in my life.
• 8:03
  Speaker 1: Like I've never seen an avocado in my life. I've
• 8:05
  Speaker 1: never seen a broccoli. We were like staring at it,
• 8:08
  Speaker 1: like wondering, what is this? It was pretty amazing. It's like,
• 8:11
  Speaker 1: it's essentially like almost being a child again. And then
• 8:14
  Speaker 1: of course there's the language because we didn't speak English.
• 8:18
  Speaker 1: so we had to learn and we had to, you know,
• 8:21
  Speaker 1: sort of figure out basically, you know, how everything works.
• 8:25
  Speaker 2: Was that tough going into school and starting afresh almost
• 8:30
  Speaker 2: at 15 years old and learning a new language?
• 8:32
  Speaker 1: Look, you know, it's kind of easy on the one
• 8:35
  Speaker 1: hand for me now to say, yes, it has been tough,
• 8:38
  Speaker 1: but I actually never felt, I never felt, you know,
• 8:42
  Speaker 1: difficulty and I never felt adversity at the time. I
• 8:45
  Speaker 1: just felt that there's nothing else to do. Like you
• 8:47
  Speaker 1: kind of, gets run into the deep end and you've
• 8:50
  Speaker 1: got to sink or swim and you've just got to
• 8:51
  Speaker 1: get on with it. I mean, we were so, so
• 8:55
  Speaker 1: grateful for being in Australia and we loved everything. Like
• 9:00
  Speaker 1: from the first minute, you know, we, we, you know,
• 9:02
  Speaker 1: we landed here. Um, you know, I loved this country basically,
• 9:06
  Speaker 1: and I still do. And I'm a very passionate, uh,
• 9:08
  Speaker 1: and very proud, uh, Australian. And, you know, this country
• 9:12
  Speaker 1: is just amazing. So we just embraced everything that Australia
• 9:16
  Speaker 1: had to offer basically. And really from the first minute
• 9:19
  Speaker 1: wanted to be part of this incredible society. And I
• 9:23
  Speaker 1: would say from my pretty early days, I had fascination.
• 9:28
  Speaker 1: I had a fascination with building a business and entrepreneurship.
• 9:31
  Speaker 1: And I was just amazed that it's all possible here
• 9:35
  Speaker 1: in Australia.
• 9:36
  Speaker 2: So what were your first steps into your career? What
• 9:39
  Speaker 2: did you do after school?
• 9:41
  Speaker 1: I mean, I studied. My first job out of university
• 9:45
  Speaker 1: was as a lawyer. I didn't know what I want
• 9:48
  Speaker 1: to do. You know, so by the time I enrolled
• 9:50
  Speaker 1: in university, I was only a couple of years into
• 9:52
  Speaker 1: the country. I was just able to explain myself, you know,
• 9:55
  Speaker 1: with the basics. Um, and you know, I worked as
• 9:59
  Speaker 1: a lawyer. Um, I was very fortunate again, I got
• 10:02
  Speaker 1: a job in, you know, in a pretty, um, uh,
• 10:06
  Speaker 1: large international law firm and my parents were like, oh,
• 10:10
  Speaker 1: this is great. He's going to be a lawyer. And, um,
• 10:14
  Speaker 1: and yeah, about a year into, into my job, I
• 10:17
  Speaker 1: kind of figured out that this is not for me.
• 10:20
  Speaker 1: Because great lawyers are people who are excellent in taking
• 10:24
  Speaker 1: instructions from their clients. They're great at translating those instructions
• 10:28
  Speaker 1: into action. And I think I was probably too impatient,
• 10:34
  Speaker 1: too opinionated to be taking instructions from people. And my
• 10:39
  Speaker 1: boss at the time also reminded me a few times
• 10:41
  Speaker 1: that I'm probably a little bit too impatient and too opinionated.
• 10:45
  Speaker 1: But it kind of felt... that a career as a
• 10:49
  Speaker 1: lawyer is probably not one for me. So I went
• 10:53
  Speaker 1: and talked to my parents back then, and I said
• 10:56
  Speaker 1: that I'm going to quit law. And they're like, what
• 10:58
  Speaker 1: do you mean? You're a lawyer. That's the best job.
• 11:03
  Speaker 1: But they were very, very supportive, and I never looked back.
• 11:10
  Speaker 2: And so what did you do after that? Did you
• 11:12
  Speaker 2: work for Malcolm Turnbull?
• 11:13
  Speaker 1: I did. I did work for him. Yes, I did. Yes, yes.
• 11:17
  Speaker 1: So I met him whilst I was a lawyer, basically,
• 11:21
  Speaker 1: when I was working for Baker McKenzie, this international law firm.
• 11:26
  Speaker 1: And yeah, I think we kind of struck up sort
• 11:30
  Speaker 1: of a relationship. I think for whatever reason, he respected
• 11:37
  Speaker 1: what I had to say at the time. And I
• 11:39
  Speaker 1: was given this incredible opportunity. You know, he was coming out,
• 11:44
  Speaker 1: you know, of his sort of time at Goldman Sachs.
• 11:50
  Speaker 1: And I was just this young kid, basically just young
• 11:52
  Speaker 1: immigrant who was just like, you know, hungry for opportunity
• 11:56
  Speaker 1: and just like, you know, just willing to have a
• 12:00
  Speaker 1: go at anything. I mean, that was obviously, I mean,
• 12:02
  Speaker 1: he was a very, you know, very smart and very
• 12:07
  Speaker 1: accomplished businessman at the time. I mean, that was well
• 12:10
  Speaker 1: before he entered politics. So he wasn't like a high
• 12:13
  Speaker 1: profile figure that he's become, you know, subsequently. But again,
• 12:18
  Speaker 1: I was just very lucky to be given that opportunity. Honestly,
• 12:21
  Speaker 1: I was doing everything. Listen, my first job in Australia
• 12:24
  Speaker 1: was a cleaner. So I was prepared to do anything, basically.
• 12:27
  Speaker 1: I mean, I didn't have to do any cleaning, you know,
• 12:29
  Speaker 1: sort of working for, you know, working for Turnbull. But, but,
• 12:33
  Speaker 1: I just, I did everything.
• 12:35
  Speaker 2: So do you want to take me through how Beta
• 12:36
  Speaker 2: Shares came to be?
• 12:38
  Speaker 1: Yeah.
• 12:39
  Speaker 2: What was the spark, the inspiration?
• 12:41
  Speaker 1: Yeah. It was really a combination. And it's really interesting
• 12:47
  Speaker 1: kind of trying to reflect on that because I'm obviously
• 12:51
  Speaker 1: still so involved in this business and I love this business.
• 12:54
  Speaker 1: And so I kind of find it quite an interesting
• 12:58
  Speaker 1: exercise to try to be reflective whilst I'm still kind
• 13:01
  Speaker 1: of in the middle of building. But the early days
• 13:05
  Speaker 1: were definitely interesting. Look, the one thing I observed with
• 13:09
  Speaker 1: a bit of experience that I've had by that time
• 13:13
  Speaker 1: working in the financial services industry is that, first of all,
• 13:18
  Speaker 1: investing is really a mystery for the average Australian, for
• 13:22
  Speaker 1: the vast majority. I grew up with no money. The
• 13:26
  Speaker 1: vast majority of us have grown up with no money.
• 13:30
  Speaker 1: The vast majority of us are not investment professionals And
• 13:33
  Speaker 1: it's bloody complicated. It is complicated. And the industry has
• 13:38
  Speaker 1: traditionally made it complicated. And the industry has traditionally used
• 13:45
  Speaker 1: the complexity to overcharge, used the complexity sort of to
• 13:53
  Speaker 1: obfuscate the detail. And I thought there's a better way
• 14:00
  Speaker 1: and there's got to be a fairer way of making
• 14:04
  Speaker 1: investments available. But also very importantly, the one thing I've
• 14:08
  Speaker 1: realized when I was, again, when I was a young
• 14:12
  Speaker 1: person growing up here in Australia, is that the conventional
• 14:17
  Speaker 1: wisdom is that you have to be wealthy to be
• 14:21
  Speaker 1: an investor is actually not true. Everybody deserves an opportunity
• 14:28
  Speaker 1: and everybody should have an opportunity to grow whatever savings
• 14:32
  Speaker 1: they have. It doesn't matter whether you start with millions
• 14:36
  Speaker 1: of dollars or whether you start just with a few
• 14:39
  Speaker 1: hundred dollars. Everybody who's working hard and who's making savings
• 14:45
  Speaker 1: and who's saving money, they deserve the opportunity to be
• 14:50
  Speaker 1: smarter with their money. They deserve the opportunity to have
• 14:53
  Speaker 1: that money work for them whilst they themselves are working
• 14:59
  Speaker 1: and doing more. And those were the original ideas behind BetaShares.
• 15:03
  Speaker 1: And I kind of felt really motivated from very early
• 15:07
  Speaker 1: days to build a business that is going to be
• 15:13
  Speaker 1: a meaningful way to improve the way Australians build wealth
• 15:19
  Speaker 1: and they invest.
• 15:20
  Speaker 2: So you saw a gap in the market, basically. You
• 15:23
  Speaker 2: saw that fund managers were dropping the ball, not getting
• 15:27
  Speaker 2: as good returns. as index funds and you wanted to
• 15:31
  Speaker 2: help Australians access products like that, that could help them
• 15:35
  Speaker 2: grow their wealth. And how did you make it? Like,
• 15:38
  Speaker 2: how did you make beta shares, like actually take off? Like,
• 15:41
  Speaker 2: what did you need to do?
• 15:42
  Speaker 1: Oh, look, it's a really, really look, the first thing
• 15:46
  Speaker 1: I'll say is just luck. Basically, you've got to have
• 15:48
  Speaker 1: a lot of luck in life. Of course, there's like,
• 15:51
  Speaker 1: you know, good timing, lots of hard work for sure. Like,
• 15:54
  Speaker 1: you know, those things are necessary ingredients. but you have
• 15:58
  Speaker 1: to have a bit of luck. Where I was lucky
• 16:00
  Speaker 1: is that, yes, I had, I had an intuition that
• 16:03
  Speaker 1: building this business at that time, um, you know, was
• 16:07
  Speaker 1: the right business to be building. And it's the right,
• 16:10
  Speaker 1: you know, aligning myself and aligning our business with the
• 16:14
  Speaker 1: interest of the customer. I mean, it seems bloody obvious
• 16:16
  Speaker 1: basically right now. It's like, you know, align yourself with
• 16:19
  Speaker 1: a customer, but that was kind of like not the
• 16:21
  Speaker 1: done thing basically. Um, And I just went with my
• 16:25
  Speaker 1: intuition and I thought you can't go wrong basically doing
• 16:27
  Speaker 1: the right thing by the customer. You can never go wrong,
• 16:30
  Speaker 1: you know? So yes, we struggled in early days for, for,
• 16:33
  Speaker 1: for quite some time. You know, I had to mortgage
• 16:37
  Speaker 1: my house, basically. And, you know, my wife was thankfully
• 16:40
  Speaker 1: very supportive of that initiative. We had young kids.
• 16:43
  Speaker 2: How did that conversation go?
• 16:44
  Speaker 1: Look, it was pretty good. So, my wife's actually also
• 16:46
  Speaker 1: an immigrant from Ukraine. And we met at UNSW, basically, here.
• 16:51
  Speaker 2: Oh, right.
• 16:52
  Speaker 1: And it's just incredible. I mean, she didn't have much
• 16:53
  Speaker 1: to choose from. There weren't many Ukrainian, you know …
• 16:59
  Speaker 1: speaking people at UNSW at the time. But jokes aside,
• 17:03
  Speaker 1: she was always very supportive and we kind of made
• 17:06
  Speaker 1: this decision as a family. Our son was born in
• 17:10
  Speaker 1: December 2008. In 2009, I started sort of putting some
• 17:14
  Speaker 1: plans in place for beta shares. In December 2010, we
• 17:17
  Speaker 1: launched our first funds. In March 2011, our daughter was born.
• 17:20
  Speaker 1: We had... We had like the whole thing going on basically.
• 17:28
  Speaker 2: So you remortgage your house.
• 17:30
  Speaker 1: Yeah.
• 17:31
  Speaker 2: Just shortly after the birth.
• 17:32
  Speaker 1: Yeah.
• 17:34
  Speaker 2: That's a huge gamble, isn't it? Yeah.
• 17:35
  Speaker 1: Well, look, it was, it didn't feel, um, it didn't
• 17:39
  Speaker 1: feel like a gamble. I actually had, I had quiet
• 17:44
  Speaker 1: conviction that what we're doing is worthwhile. And my wife
• 17:49
  Speaker 1: was supportive. Um, I mean, a lot of people of
• 17:52
  Speaker 1: course thought that I'm mad, uh, for sure. And I was.
• 17:55
  Speaker 1: I mean, you know, if you objectively assess that decision,
• 17:59
  Speaker 1: it is madness, basically. It is absolute madness. But I
• 18:04
  Speaker 1: never felt uncertain about the fact that this is the
• 18:09
  Speaker 1: right thing to do. But early days were hard. You know,
• 18:13
  Speaker 1: early days were hard because, you know, beta shares is
• 18:17
  Speaker 1: in the business of managing people's money. And, you know,
• 18:21
  Speaker 1: when you're in the business of managing people's money, this
• 18:24
  Speaker 1: is first and foremost the business of trust. Like, people
• 18:27
  Speaker 1: have to trust you. And trust is something that takes
• 18:31
  Speaker 1: a long time to earn. And in fact, you know,
• 18:34
  Speaker 1: we've now been in the business for over 15 years.
• 18:37
  Speaker 1: You know, in December this year, it's coming up to
• 18:40
  Speaker 1: 16 years since we launched our first funds. You never
• 18:43
  Speaker 1: stop earning trust. You have to earn trust every single day.
• 18:47
  Speaker 2: You can lose it pretty quickly too.
• 18:48
  Speaker 1: You can lose it. You know, the day you take
• 18:51
  Speaker 1: trust for granted, you... have lost that trust. And I'm
• 18:56
  Speaker 1: never going to forget that. And I talk to my
• 18:59
  Speaker 1: team about that every opportunity I get, it's really, really
• 19:03
  Speaker 1: crucial to never forget that. So in the early days,
• 19:07
  Speaker 1: here we are, there's like Alex and, you know, a
• 19:09
  Speaker 1: few other, you know, a few other people, and they've
• 19:12
  Speaker 1: got this business beta shares, and nobody's ever heard of it. And,
• 19:16
  Speaker 1: you know, we've got these, you know, investment solutions, which
• 19:19
  Speaker 1: seem pretty smart. But like, you know, why would I
• 19:22
  Speaker 1: trust you with my money? And fair enough. Like, why
• 19:26
  Speaker 1: would anybody trust us with their money, right? So, you know,
• 19:30
  Speaker 1: in early days, we just, you know, like the thing
• 19:32
  Speaker 1: that I really believed in is that we have to
• 19:36
  Speaker 1: always under promise and over deliver. The only way, you know,
• 19:41
  Speaker 1: you build trust is by delivering. You know, I never
• 19:44
  Speaker 1: believed in talking a big game. It's just not how
• 19:47
  Speaker 1: I grew up. We grew up in pretty modest family.
• 19:51
  Speaker 1: We grew up with a pretty strong moral compass of
• 19:54
  Speaker 1: always doing the right thing and always keeping your feet
• 19:59
  Speaker 1: sort of on the ground. And so the ethos of
• 20:02
  Speaker 1: BetaShares from day one was always under promise and over deliver,
• 20:07
  Speaker 1: always do the right thing. Never take trust for granted
• 20:11
  Speaker 1: and let your actions do the talking rather than stand
• 20:14
  Speaker 1: on the pedestal and kind of talk a big game
• 20:17
  Speaker 1: or talk down, you know, sort of the system or
• 20:20
  Speaker 1: the competitors. So that's essentially how we went about it basically.
• 20:26
  Speaker 1: And it's been a step-by-step journey since then.
• 20:28
  Speaker 2: Yeah. It's become an absolute giant, hasn't it? As you
• 20:31
  Speaker 2: said before, over $ 90 billion.
• 20:32
  Speaker 1: Yeah. Yeah.
• 20:36
  Speaker 2: Do you want to just explain to our listeners, some
• 20:38
  Speaker 2: of them might not know what an exchange-traded fund is.
• 20:42
  Speaker 2: What is it and why do so many people invest
• 20:45
  Speaker 2: in them?
• 20:45
  Speaker 1: Yeah, now we have millions, millions of Australians, but around
• 20:50
  Speaker 1: the world, there are tens and tens and tens of
• 20:54
  Speaker 1: millions of investors that invest in exchange-traded funds as a
• 21:03
  Speaker 1: way to build lower cost, more diversified, more robust long-term
• 21:11
  Speaker 1: investment portfolios. So exchange-traded funds really combine two great features, basically,
• 21:20
  Speaker 1: that are important in investing. One, exchange-traded funds tend to
• 21:26
  Speaker 1: be quite diversified. They index funds. They track a variety
• 21:31
  Speaker 1: of indices and Some would be very well-known indices, such as, say,
• 21:36
  Speaker 1: the Bidashare's NASDAQ 100 ETF, which tracks the NASDAQ 100 index.
• 21:42
  Speaker 1: You've got companies like Amazon and Tesla and Microsoft, lots
• 21:46
  Speaker 1: of famous companies that we all hear about. So NASDAQ
• 21:51
  Speaker 1: 100 is an example of an index. And you can
• 21:54
  Speaker 1: buy the second feature, is the accessibility. You can buy
• 21:59
  Speaker 1: and sell that investment as easily as as buying or
• 22:03
  Speaker 1: selling a share. So it trades on an exchange. It's
• 22:07
  Speaker 1: very easy to buy. It's very easy to sell. The minimums, importantly,
• 22:12
  Speaker 1: are very low. You can invest as little as $ 5.
• 22:16
  Speaker 1: So you can get started as an investor without the
• 22:20
  Speaker 1: barriers that we previously had in the industry where you
• 22:23
  Speaker 1: had to be rich to be an investor or to
• 22:26
  Speaker 1: have a portfolio of 100 stocks, for example, the NASDAQ
• 22:29
  Speaker 1: 100 companies. You know, you had to have thousands of dollars, basically,
• 22:33
  Speaker 1: in order to buy a little slice of each of
• 22:35
  Speaker 1: those companies and have a diversified portfolio. Now you can
• 22:39
  Speaker 1: just buy that in one trade in as little, say,
• 22:41
  Speaker 1: as $ 5. And ETFs come in different flavors. You can
• 22:46
  Speaker 1: buy Australian income funds. You can buy gold and lots
• 22:51
  Speaker 1: of different exposures. So exchange-traded funds have really just busted
• 22:57
  Speaker 1: open the mystery of investing. It, you know, some people
• 23:03
  Speaker 1: use the term democratized investing. It made investing accessible to everyone.
• 23:10
  Speaker 1: But what's really important also is the technology to make
• 23:15
  Speaker 1: investments easy and to make investments accessible to everyone. And
• 23:21
  Speaker 1: that really led to the second, you know, which is
• 23:30
  Speaker 1: really the launch of BetaShares Direct, which is our technology platform,
• 23:35
  Speaker 1: an investment platform, which now allows Australian investors to create
• 23:41
  Speaker 1: an account in a matter of minutes, deposit money instantaneously,
• 23:49
  Speaker 1: and be able to invest brokerage-free and invest for long-term
• 23:56
  Speaker 1: compounding of returns. The one thing I have learned over
• 24:00
  Speaker 1: the years as an investor and as somebody who's been
• 24:05
  Speaker 1: building this business now for over 15 years is that
• 24:08
  Speaker 1: compounding is one of the absolute magical forces in investing.
• 24:14
  Speaker 1: And we, as Australians, often underappreciate the power of compounding.
• 24:21
  Speaker 1: I think Einstein called it one of the greatest wonders
• 24:23
  Speaker 1: of the world, which most people don't understand. And it
• 24:27
  Speaker 1: is true. you know, compounding of returns as an investor
• 24:31
  Speaker 1: is real magic.
• 24:32
  Speaker 2: And when you talk about compounding, that's like growth on
• 24:35
  Speaker 2: top of growth.
• 24:36
  Speaker 1: Exactly. Exactly. It's growth on top of growth.
• 24:39
  Speaker 2: Which becomes almost exponential.
• 24:41
  Speaker 1: It becomes, yes, compounded growth is absolute magic. And it's
• 24:47
  Speaker 1: really powerful. And frankly, the other dimension to this, Ben,
• 24:52
  Speaker 1: as well, is that when I look at Australia today,
• 24:55
  Speaker 1: and again, I'm a passionate and a proud Australian, and
• 24:58
  Speaker 1: this country has done so much for me. Everything I
• 25:01
  Speaker 1: have today is because of Australia and what it's done
• 25:04
  Speaker 1: for me. I look at the future generation of Australians
• 25:09
  Speaker 1: and I think about how do they get ahead? How
• 25:12
  Speaker 1: do my children get ahead of life? How do people
• 25:16
  Speaker 1: in their 20s and 30s today build a future for themselves?
• 25:22
  Speaker 1: You know, the traditional way of creating wealth in Australia
• 25:27
  Speaker 1: has really been all through housing, right? Everybody that you
• 25:30
  Speaker 1: talk to that's been able to build a nest egg
• 25:34
  Speaker 1: in Australia has done that through owning a property. I mean,
• 25:39
  Speaker 1: property affordability is woeful today in Australia. It's very different
• 25:44
  Speaker 1: to what it was back in the 90s when we
• 25:47
  Speaker 1: arrived in Australia, and it's only getting worse. So, you know,
• 25:53
  Speaker 1: I would not wish to bring politics into this because
• 25:56
  Speaker 1: this is not a political issue. This is just the
• 25:59
  Speaker 1: reality that property prices are continuing to climb and they're
• 26:05
  Speaker 1: continuing to outstrip our ability to afford them, basically. Every
• 26:10
  Speaker 1: time you feel like you've just saved up to buy
• 26:12
  Speaker 1: a place, you know, the price keeps going up or
• 26:15
  Speaker 1: your rent has gone up and your cost of living
• 26:18
  Speaker 1: as a result is going up. So the one thing
• 26:21
  Speaker 1: that's become a very powerful mission, basically, um, you know, over,
• 26:26
  Speaker 1: over this time that I have been in business, uh,
• 26:29
  Speaker 1: is really to allow every Australian to get ahead in life.
• 26:33
  Speaker 1: And you do not have to be, you do not
• 26:35
  Speaker 1: have to be a property owner. You do not have
• 26:38
  Speaker 1: to be a property owner to make your money work
• 26:41
  Speaker 1: harder for you. Um, and this is where our industry,
• 26:45
  Speaker 1: this is where beta shares has really, um, has really, um, um,
• 26:50
  Speaker 1: connected with Australians. And that's where it's really resonated with Australians,
• 26:55
  Speaker 1: because we started really doubling down on providing opportunities for
• 26:59
  Speaker 1: people to grow their wealth and to be able to
• 27:02
  Speaker 1: get ahead in life, basically, without having to be a
• 27:05
  Speaker 1: property owner. Because the truth of the matter is, no
• 27:08
  Speaker 1: matter how many government announcements, how many policies the governments
• 27:13
  Speaker 1: try to put in place, whether it's Labor government or Liberal, again,
• 27:16
  Speaker 1: it's not a political thing. The reality is that property
• 27:19
  Speaker 1: is expensive. And the reality is that cost of living
• 27:22
  Speaker 1: in Australia is only going up, especially in capital cities.
• 27:27
  Speaker 1: And as a result, we have to be smarter with
• 27:31
  Speaker 1: our money. We have to be smarter with our money.
• 27:34
  Speaker 1: And this is going to be more and more of
• 27:37
  Speaker 1: an issue, basically, as we go forward.
• 27:41
  Speaker 2: I suppose the elephant in the room is tax changes
• 27:45
  Speaker 2: and what's happened recently, it's obviously going to sort of
• 27:49
  Speaker 2: shift the landscape, isn't it, in terms of ETFs and
• 27:53
  Speaker 2: people buying direct shares, it might be. I've heard people
• 27:56
  Speaker 2: like Chris Brakey have said that ETFs are one of
• 27:59
  Speaker 2: the big winners out of this.
• 28:01
  Speaker 1: Yes, yes. Look, it is true. And I don't feel
• 28:05
  Speaker 1: very good. I think people's after-tax earnings, after-income tax earnings,
• 28:11
  Speaker 1: need to work for them, basically. That's why they work hard.
• 28:13
  Speaker 1: So you want to encourage, I think we, as a system,
• 28:18
  Speaker 1: we want to encourage people to have a go. We
• 28:22
  Speaker 1: want to encourage people to work hard, to save up
• 28:25
  Speaker 1: money where you can. Often saving up money involves a
• 28:28
  Speaker 1: sacrifice because that means that you don't spend, basically. So
• 28:31
  Speaker 1: if you're going to make those sacrifices to save up,
• 28:35
  Speaker 1: the system should encourage the compounding of returns, you know,
• 28:40
  Speaker 1: sort of to be with as minimal return um, you know,
• 28:44
  Speaker 1: sort of taxation basically as possible, uh, instead of, um,
• 28:49
  Speaker 1: you know, sort of trying to tax, um, you know, those,
• 28:51
  Speaker 1: those savings more.
• 28:52
  Speaker 2: And if people are more self-reliant and they don't have
• 28:55
  Speaker 2: to rely as much on tax money.
• 28:57
  Speaker 1: Exactly. Exactly. Exactly. Look, I grew up in a society
• 29:02
  Speaker 1: where everybody relied on government handouts. Um, you know, there
• 29:06
  Speaker 1: is time and place, you know, we, we occasionally go
• 29:10
  Speaker 1: through adversity and that nobody even dreams of, like COVID.
• 29:15
  Speaker 1: The government policy during COVID was about maintaining the, keeping
• 29:21
  Speaker 1: the lights on, basically, in the economy. We had devastation
• 29:24
  Speaker 1: in the country, right? We had people losing jobs everywhere.
• 29:29
  Speaker 1: That was the time of national emergency where it was
• 29:35
  Speaker 1: absolutely crucial to keep the economy going, to keep people
• 29:40
  Speaker 1: in jobs where possible, and to keep people supported. I'm
• 29:45
  Speaker 1: a very big believer when the time is right, we
• 29:48
  Speaker 1: have to step up. But at the same time, you know,
• 29:54
  Speaker 1: if the country becomes conditioned– on government handouts, basically, that's
• 30:01
  Speaker 1: not Australia, frankly. I mean, Australia is built by young people,
• 30:07
  Speaker 1: older people having a go, people building their career, taking
• 30:12
  Speaker 1: a risk, working hard, saving up. This is what Australia
• 30:16
  Speaker 1: is about. I mean, we today have a very low
• 30:20
  Speaker 1: rate of unemployment. The vast majority of us are hard workers.
• 30:25
  Speaker 1: This is not a generation of bludgers. This is not
• 30:27
  Speaker 1: a country where people are even thinking about relying on
• 30:32
  Speaker 1: government handouts. This is a country of achievers, basically. And
• 30:35
  Speaker 1: this is what makes me so proud, obviously, of being
• 30:39
  Speaker 1: Australian and very passionate. So for me, we've got so
• 30:44
  Speaker 1: much great stuff that's going on in this country. And
• 30:50
  Speaker 1: I'm a very optimistic person, and I am very optimistic
• 30:53
  Speaker 1: about the future of this country. For me, what we
• 30:57
  Speaker 1: really need, and I'm not just talking about it, we're
• 31:02
  Speaker 1: definitely hard at work every single day, is just creating
• 31:05
  Speaker 1: more and more opportunities for Australians, basically. This is what
• 31:08
  Speaker 1: we need, and this is what I'm very passionate about,
• 31:10
  Speaker 1: and this is what motivates me.
• 31:12
  Speaker 2: Just looking back, you've had quite an incredible life, really,
• 31:16
  Speaker 2: coming to Australia as a teenager and betting your house
• 31:21
  Speaker 2: on this huge empire that it's become now. How do
• 31:26
  Speaker 2: you think those lessons earlier in your life have shaped
• 31:29
  Speaker 2: what you've done and what you've achieved?
• 31:31
  Speaker 1: I would say probably one of the biggest lessons is
• 31:37
  Speaker 1: just resilience.
• 31:40
  Speaker 2: I had to.
• 31:44
  Speaker 1: I had to learn resilience pretty early on. I, you know,
• 31:48
  Speaker 1: sort of both in terms of my upbringing as a
• 31:51
  Speaker 1: child in Soviet Ukraine, coming to Australia and being immersed
• 31:59
  Speaker 1: in this new society, a new language, a new way
• 32:03
  Speaker 1: of life. But resilience is actually not just something that
• 32:09
  Speaker 1: immigrants experience. I mean, I look around our country and,
• 32:15
  Speaker 1: you know, we all, you know, we all bloody resilient.
• 32:19
  Speaker 1: You know, yes, again, some people criticize, like, you know,
• 32:22
  Speaker 1: the young generation say, oh, people are entitled. That's actually
• 32:25
  Speaker 1: not true. I mean, I'm surrounded by young colleagues, basically,
• 32:28
  Speaker 1: in my business. I talk to young Australians all the time.
• 32:31
  Speaker 1: I mean, we are resilient as a nation. We had
• 32:33
  Speaker 1: to deal with COVID a few years ago. I mean,
• 32:36
  Speaker 1: you know, if that's not, you know, resilience, I don't
• 32:38
  Speaker 1: know what is, basically. So, yeah, I would say the
• 32:41
  Speaker 1: big lesson is definitely be resilient and, you know, take,
• 32:45
  Speaker 1: take setbacks on your chin basically, and get up and go, uh,
• 32:49
  Speaker 1: you know, don't give up. Um, you know, keep going, um,
• 32:53
  Speaker 1: you know, have conviction, have conviction and be prepared, uh,
• 32:57
  Speaker 1: you know, to deal with, with adversity and be prepared
• 33:00
  Speaker 1: to deal with, you know, people disagreeing with you. I
• 33:03
  Speaker 1: think that's okay. Um, look, the big one for me is,
• 33:06
  Speaker 1: is really about dreaming big, uh, as well. I think, um, Again,
• 33:10
  Speaker 1: I've never known any other way, but dreaming big is
• 33:15
  Speaker 1: actually really cool. You know, imagining the future and imagining
• 33:20
  Speaker 1: what things could be is really fun. It's actually really fun. And,
• 33:28
  Speaker 1: you know, we live in an incredible society here in
• 33:31
  Speaker 1: Australia where everything is possible. A lot of things are possible. Yes,
• 33:34
  Speaker 1: we have challenges, and, you know, I certainly would not,
• 33:37
  Speaker 1: you know, deny those. We have real challenges and cost
• 33:39
  Speaker 1: of living issues. I referred to before, is definitely a
• 33:42
  Speaker 1: great example of one. But this is still a country
• 33:46
  Speaker 1: where having a go is possible. And dreaming big is incredible.
• 33:52
  Speaker 1: And I'm a huge fan of this country. I'm a
• 33:57
  Speaker 1: huge fan of the opportunities that it's offering. And it
• 34:01
  Speaker 1: will offer to generations of people from here. And I
• 34:07
  Speaker 1: really want to make sure that I do my bit
• 34:09
  Speaker 1: to keep it that way.
• 34:11
  Speaker 2: Well, I think you're a living and breathing example of
• 34:13
  Speaker 2: how you can turn that opportunity into something special. So
• 34:16
  Speaker 2: thanks a lot for joining us on the podcast today.
• 34:19
  Speaker 2: It's been a fascinating chat. Thanks, Alex.
• 34:21
  Speaker 1: Thank you, Ben.
• 34:22
  Speaker 2: Don't forget to subscribe to Stress Tested on YouTube or
• 34:25
  Speaker 2: your podcast platform of choice. It helps us grow the
• 34:27
  Speaker 2: show and get even bigger guests.