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An Interview With Arthur Samberg: Masters in Business (Audio) · Masters in Business

• 0:03
  Speaker 1: This is Masters in Business with Barry Ridholds on Bloomberg Radio.
• 0:08
  Speaker 1: This week on our Masters in Business podcast, I actually
• 0:12
  Speaker 1: have a really special guest. I know I said that
• 0:15
  Speaker 1: every week and you guys make fun of me, but
• 0:17
  Speaker 1: this is a really special guest. His name is arts Hamburg.
• 0:22
  Speaker 1: He is a legend amongst both hedge funds and venture
• 0:27
  Speaker 1: capital investors. Uh. He has a phenomenal track record. When
• 0:31
  Speaker 1: he began his hedge fund was one of less than
• 0:35
  Speaker 1: a hundred funds that were in existence, and he briefly
• 0:39
  Speaker 1: he tells the story how he gets a call from
• 0:41
  Speaker 1: the Wolf Street Journal to find out that his hedge
• 0:44
  Speaker 1: funds is apparently George Soros had retired and um Julian
• 0:50
  Speaker 1: Robertson had retired, and suddenly he's running the biggest hedge
• 0:53
  Speaker 1: fund in the world at the time. And not not
• 0:56
  Speaker 1: that that was his designer is focus, but it just
• 0:59
  Speaker 1: kind of happened. He's a fascinating guy. His his literally
• 1:03
  Speaker 1: a rocket scientist, an aeronautical engineer who used to work
• 1:07
  Speaker 1: on on missiles and satellites and things like that before
• 1:10
  Speaker 1: he moved to Wall Street. He tells some of those
• 1:12
  Speaker 1: stories and they're quite fascinating. Our conversation about venture capital
• 1:17
  Speaker 1: investing in the areas he's looking into is really quite amazing.
• 1:23
  Speaker 1: And you know, you guys by now know, I'm not
• 1:26
  Speaker 1: afraid to talk. Most of the time during this conversation,
• 1:30
  Speaker 1: we're just sitting I'm just lobbing questions and listening UM
• 1:34
  Speaker 1: in rapt attentions as to what he said. It wasn't
• 1:37
  Speaker 1: until later in the podcast I actually come out of
• 1:40
  Speaker 1: my shell. But UM, the elephant in the room is
• 1:44
  Speaker 1: you know, it's public knowledge. Uh, there was an SEC investigation,
• 1:49
  Speaker 1: it was started, it finished, it reopened again. Ultimately he
• 1:54
  Speaker 1: ended up settling without admitting or denying. UM, paid a
• 1:58
  Speaker 1: twenty eight million dollar five I think it is, and
• 2:01
  Speaker 1: and as the SEC tends to do, had him sign
• 2:04
  Speaker 1: a non disclosure agreement or or something to that effect.
• 2:08
  Speaker 1: So we really couldn't get into that in great detail. UM,
• 2:12
  Speaker 1: but I did bring it up, and he did respond,
• 2:15
  Speaker 1: I thought, in a rather forthright way, as much as
• 2:19
  Speaker 1: he's allowed to say. He said, UM, really interesting guy,
• 2:24
  Speaker 1: fascinating background, and some of the stories he tells are
• 2:28
  Speaker 1: they're just amazing. So sit back and brace yourself for
• 2:33
  Speaker 1: our couple of hours with Art Samberg. This is Masters
• 2:41
  Speaker 1: in Business with Barry Ridholts on Bloomberg Radio. This week
• 2:45
  Speaker 1: on Masters in Business, I have a very special guest.
• 2:48
  Speaker 1: His name is Art Samberg, and he's been running various
• 2:52
  Speaker 1: hedge funds and venture capital funds for a good couple
• 2:55
  Speaker 1: of decades, posting fairly spectacular returns. I'm only gonna have
• 3:00
  Speaker 1: a short version of your CV because it will take
• 3:03
  Speaker 1: up the whole segment. Otherwise launched a hedge fund. Uh,
• 3:07
  Speaker 1: it was Samberg, Dawson, Samberg, not Dawson and the originally
• 3:11
  Speaker 1: back in eighties six, back when there was fifty hedge
• 3:15
  Speaker 1: funds something. That's the number I made up, but it's
• 3:17
  Speaker 1: under a hundred. It was a small number of hedge funds.
• 3:20
  Speaker 1: Put it returns over the life of his funds of
• 3:23
  Speaker 1: almost And the interesting thing about Mr Sandberg doesn't come
• 3:28
  Speaker 1: from the traditional business economic background. Undergraduate bachelors of science
• 3:35
  Speaker 1: and aeronautics and astronautics from m I T and then
• 3:38
  Speaker 1: a master's degree in those subjects from Stanford, So really
• 3:42
  Speaker 1: you're a rocket science you were rocket science no longer
• 3:45
  Speaker 1: I am, and then you end up getting your NBA
• 3:48
  Speaker 1: from Columbia. We'll talk a little bit about some of
• 3:50
  Speaker 1: your classmates at Columbia. There's some really interesting stories there. Uh.
• 3:55
  Speaker 1: You currently are the chairman of the m I T
• 3:58
  Speaker 1: I'm sorry sits the board of advisors of the m
• 4:01
  Speaker 1: I T Energy and UM Initiative, and you were chairman
• 4:05
  Speaker 1: of the m I T Investment Management Company. I sit
• 4:09
  Speaker 1: on the executive committee UM, and I'm very very involved
• 4:13
  Speaker 1: in the school. There's so many other things and so
• 4:15
  Speaker 1: many other titles you have. You're very active in philanthropy
• 4:18
  Speaker 1: and a variety of other things. We'll get into that
• 4:20
  Speaker 1: as the show goes on. Let me just start by saying,
• 4:23
  Speaker 1: welcome to bloom Buck. It's great to be here. Thank you, Verry.
• 4:26
  Speaker 1: So first I have to ask you were at Lockheed
• 4:32
  Speaker 1: Missile and Space Company in San Francisco, You come to
• 4:35
  Speaker 1: New York, you get your NBA from Colombia, and then
• 4:38
  Speaker 1: you end up working as a security analyst at Kidder Peabody.
• 4:42
  Speaker 1: How do you transition from literally rocket scientists to financial analyst. UM,
• 4:48
  Speaker 1: you gotta follow your passion. You've got to follow your
• 4:50
  Speaker 1: competitive advantage. And UM I quickly found out that I
• 4:54
  Speaker 1: could solve the equations, but I had no idea what
• 4:56
  Speaker 1: was really going on. UM. I worked in missilante aitude
• 5:00
  Speaker 1: control UM. So these were defined. So we were the
• 5:05
  Speaker 1: US launches rockets, UM. Satellites come off of those. I
• 5:09
  Speaker 1: looked down on Russia back then, UM, and they have
• 5:12
  Speaker 1: infrared sensors and they find out where, uh, the Russians
• 5:16
  Speaker 1: are launching rockets, and there's a lot of orbital mechanics.
• 5:20
  Speaker 1: And I could solid equations, but did I really have
• 5:23
  Speaker 1: any clue as to what was actually going on? I
• 5:25
  Speaker 1: quickly found out that I did not. So you go
• 5:27
  Speaker 1: to kid A Peabody, you're covering aerospace and and those sorts.
• 5:31
  Speaker 1: It's so interesting how I made the transition. I I
• 5:34
  Speaker 1: wasn't going to go to graduate school, but Locke would
• 5:37
  Speaker 1: pay for it, so I said, sure, you're gonna pay
• 5:39
  Speaker 1: for it, I'll do it. So I went to Stanford, UH.
• 5:41
  Speaker 1: And it was during the day, and on the way
• 5:42
  Speaker 1: back I would stop off at a brokerage office. And
• 5:44
  Speaker 1: it was the time when comp Compsat went public. That's
• 5:48
  Speaker 1: something I know something about the sties. I got out
• 5:51
  Speaker 1: of m I T and sixty two and I was
• 5:54
  Speaker 1: working as an engineer from sixty two sixty five. Someplace
• 5:57
  Speaker 1: in that time period, comps At law as the company
• 6:00
  Speaker 1: goes public. Uh, and I'm fascinating. It's like, my goodness,
• 6:04
  Speaker 1: all the stuff that I know, I can apply it
• 6:06
  Speaker 1: to I can real money. Um, as opposed to supposed
• 6:10
  Speaker 1: you're working my way up the engineering ladder where I
• 6:13
  Speaker 1: had no illusion that I would ever be great. That
• 6:16
  Speaker 1: was a good middle class job. But you're never going
• 6:18
  Speaker 1: to My dad was an electrician. UM, so you were
• 6:23
  Speaker 1: making more money than your dad when you're so, then
• 6:27
  Speaker 1: how did you go from there to Columbia? Um? Because
• 6:30
  Speaker 1: my wife needed to get a job teaching school in
• 6:35
  Speaker 1: New York any place, and the only place I knew
• 6:37
  Speaker 1: for sure you could get one was back in New
• 6:39
  Speaker 1: York because I people. So you go to Columbia and
• 6:44
  Speaker 1: this is a rumor, and you have to tell me
• 6:46
  Speaker 1: if this is true. Used to car pool to Columbia
• 6:49
  Speaker 1: with two guys named Mario Ga Belly and Lee Cooperman.
• 6:52
  Speaker 1: It's no rumor, it's the actually truth. That's a that's
• 6:55
  Speaker 1: a lot of intellectual firepower. Learned more in the car
• 6:58
  Speaker 1: pool than I did at school. Don't tell, don't tell
• 7:02
  Speaker 1: the school. I said that I cod share the board.
• 7:04
  Speaker 1: By the way, the school that you're you're dissing right now.
• 7:08
  Speaker 1: You made the biggest donation in their history to their
• 7:12
  Speaker 1: to their graduate program. It's been exceeded by a couple
• 7:16
  Speaker 1: of other guys now, but people, it was a large no.
• 7:19
  Speaker 1: I I My my success in life is UM is
• 7:24
  Speaker 1: taking UM a decent expertise in technology and combining with
• 7:29
  Speaker 1: finance and trying to apply those two things to help
• 7:32
  Speaker 1: companies aggregate capital um and grow and create jobs. And
• 7:36
  Speaker 1: so I'm one of those guys who believes in all
• 7:39
  Speaker 1: of that good stuff? Are there many people who don't
• 7:41
  Speaker 1: believe a lot of people who don't. I think people
• 7:44
  Speaker 1: believe it, they just get offended by some of the
• 7:46
  Speaker 1: gross excesses that occasionally erupt. I think they're also jealous
• 7:52
  Speaker 1: UM there's there's possible and possibly that. So so one
• 7:57
  Speaker 1: of the things we've had Lee Cooperman on, I know
• 7:59
  Speaker 1: you guys are friendly. One of the things that Lee
• 8:02
  Speaker 1: talked about was how he developed his deep value framework
• 8:08
  Speaker 1: from Colombia. What was your experience like? UM? My experience
• 8:12
  Speaker 1: was I was the antithesis of deep value. M I
• 8:16
  Speaker 1: remember Mario Lee and I, Uh, well, Mario and I
• 8:21
  Speaker 1: took a course from Roger Murray, who was the guy
• 8:24
  Speaker 1: reinstituted the value investing stuff at Columbia. He got he
• 8:28
  Speaker 1: got one grade higher than I did because it was
• 8:30
  Speaker 1: analysis of a company where it turned out that the
• 8:32
  Speaker 1: really key factor was the old man who found it
• 8:34
  Speaker 1: was going to die and then value would be created,
• 8:37
  Speaker 1: which Mario was fantastic at. I thought that was disgusting.
• 8:41
  Speaker 1: I mean, I really am interested in people who were
• 8:43
  Speaker 1: alive and doing things. You care about the technology you
• 8:46
  Speaker 1: have the physics. I care about solving the world's problems
• 8:51
  Speaker 1: and getting rich while doing it, because I think the
• 8:54
  Speaker 1: two actually do work together well. Many people who have
• 8:57
  Speaker 1: created solutions to pernicious problems have not only helped society
• 9:02
  Speaker 1: but created a tremendous amount of wealth. I think that's
• 9:04
  Speaker 1: the americanay, and I think it's phenomenal. You're listening to
• 9:07
  Speaker 1: Masters in Business on Bloomberg Radio. We're speaking with Art Sandberg.
• 9:11
  Speaker 1: He is the founder of Peaquad Capital Management and now
• 9:15
  Speaker 1: he's running Hawks Financial venture capital and Hawks is a
• 9:21
  Speaker 1: umbrella family office venture capital and stuff. But we do
• 9:25
  Speaker 1: have a fun though that my older son is now
• 9:27
  Speaker 1: the managing partner. We call it a Katia Woods uh
• 9:30
  Speaker 1: and it's increasingly showing up in the holding of some
• 9:33
  Speaker 1: very interesting companies. So that's that's fascinating. Let's talk about UM.
• 9:39
  Speaker 1: We mentioned earlier less than a hundred hedge funds when
• 9:42
  Speaker 1: you launched, and and the fund returned a rather smart
• 9:48
  Speaker 1: by the way, that's very similar to Lee Cooperman's returns seventent.
• 9:53
  Speaker 1: Lee is a great friend. Mine is better. I think
• 9:56
  Speaker 1: you're about half a percent well, And I will say,
• 9:59
  Speaker 1: because you know, I believe that numbers are numbers, and
• 10:02
  Speaker 1: you're full with numbers. I was, you know, I did
• 10:04
  Speaker 1: go to M I T. But my first year I
• 10:06
  Speaker 1: was down. You were down about you were to adjust
• 10:11
  Speaker 1: it like most people have first years when they were
• 10:16
  Speaker 1: and then the money pours in, and then depending on
• 10:19
  Speaker 1: you came in, you might not have even made money
• 10:21
  Speaker 1: with one of these guys with a great record. The
• 10:24
  Speaker 1: not true here. The dollar adjusted returns, not the time
• 10:28
  Speaker 1: weighted returns for a lot of big funds are awful
• 10:32
  Speaker 1: because they were putting up returns with twenty million dollars.
• 10:36
  Speaker 1: Then they're at forty five billion and they lose a third,
• 10:39
  Speaker 1: So net net, over time there are a dollar loser.
• 10:42
  Speaker 1: But percentage wise, UM on a time weighted basis, I've
• 10:46
  Speaker 1: never had the chance to say this before, but that
• 10:49
  Speaker 1: is absolutely not the case of QUI so you with
• 10:53
  Speaker 1: down And one of your quotes that I really like
• 10:57
  Speaker 1: was you learn more from your disappointments then you do
• 11:00
  Speaker 1: from your successes. Success feeds on success, and people are
• 11:06
  Speaker 1: there to tell you how wonderful you are. People don't
• 11:09
  Speaker 1: really unless money attracts. Money is used to and I
• 11:14
  Speaker 1: never understood it until a few years ago, and and
• 11:17
  Speaker 1: and and if you if you do that for a
• 11:19
  Speaker 1: long enough period of time, my belief, um, clearly my
• 11:23
  Speaker 1: belief is that people then want to start to tell
• 11:25
  Speaker 1: your down. They either want to continue to build you
• 11:27
  Speaker 1: up or tell you down, and there become a high
• 11:30
  Speaker 1: profile target. So, um, you're not going to hear a
• 11:33
  Speaker 1: lot of things you believe about what you're doing wrong
• 11:36
  Speaker 1: when you're doing right. Um, but you are doing things wrong.
• 11:40
  Speaker 1: And and then if you just go into a shell
• 11:43
  Speaker 1: and you don't realize and self analyze and you know,
• 11:47
  Speaker 1: really look carefully at what you did and why it failed, um,
• 11:51
  Speaker 1: you will not do well. So after I was down,
• 11:53
  Speaker 1: because that was the crash of eight seven, and it
• 11:56
  Speaker 1: was you had launched what Yes, so you did worse
• 12:01
  Speaker 1: than the crash. Uh. It was one day the market
• 12:06
  Speaker 1: was up almost and ended up returning for the year.
• 12:11
  Speaker 1: That was a big, big down draft, which it was
• 12:13
  Speaker 1: brutal UM. And I remember having because I I when
• 12:17
  Speaker 1: I started the fund it was in small companies that
• 12:20
  Speaker 1: were overlooked that could become big companies. Those are exactly
• 12:24
  Speaker 1: the kind of illiquid positions got creamed and so I
• 12:28
  Speaker 1: ended up having Assuming that I was going to get redemptions,
• 12:31
  Speaker 1: I had a call companies and say, would you buy
• 12:33
  Speaker 1: my stock? Um? That is, if anybody who knows anything
• 12:36
  Speaker 1: about anything, that is not a good way to UH
• 12:39
  Speaker 1: to execute a cell program. But there were no other buyers,
• 12:42
  Speaker 1: so I got smoked UM and I so I was
• 12:46
  Speaker 1: up three percent for my stub period in eighty six
• 12:49
  Speaker 1: and I was down six I can't remember percent in
• 12:53
  Speaker 1: eighty seven, but then it came roaring back. So what
• 12:56
  Speaker 1: was what was the subsequent couple of years? So in
• 12:58
  Speaker 1: other words, you put up eighteen almost eighteen percent a
• 13:02
  Speaker 1: year despite starting from that. So if you were to
• 13:05
  Speaker 1: just do the simple math, it would take it up
• 13:08
  Speaker 1: probably closer if you backed out that over UM the
• 13:13
  Speaker 1: next few years we're up twenty up seventy five it's
• 13:18
  Speaker 1: just you know, crazy numbers right in the late eighties
• 13:21
  Speaker 1: up seventies, starting in back in eighty nine, UM, and
• 13:27
  Speaker 1: then and then I can imagine were just insane. What
• 13:33
  Speaker 1: sort of numbers were you doing those? Yes, you know.
• 13:38
  Speaker 1: But one of the things that did Pequa was to
• 13:41
  Speaker 1: realize that because because I was sort of the first
• 13:44
  Speaker 1: guy to really specialized in technology investing as as a
• 13:48
  Speaker 1: hedge fund. Really yeah, without a doubt, and I sector funds,
• 13:53
  Speaker 1: and I had I had a great partner, Dan Benton,
• 13:57
  Speaker 1: who who then took over the technology she stuff, because
• 14:00
  Speaker 1: I thought I had brought her background in the whole
• 14:03
  Speaker 1: business and I can run the business and everything else.
• 14:05
  Speaker 1: And he had a hundred percent year. I had a
• 14:07
  Speaker 1: healthcare fund that was up that time period. UM, we
• 14:12
  Speaker 1: started an energy fund UM. So we had sector funds,
• 14:15
  Speaker 1: and I devised a way for me to manage increasing
• 14:18
  Speaker 1: amounts of money by using those talents and bringing him
• 14:21
  Speaker 1: into the fund while I'm still doing trying to do
• 14:23
  Speaker 1: research myself. In the early days of the fund, someone
• 14:27
  Speaker 1: had written and I don't remember where I'm quoting this from,
• 14:31
  Speaker 1: that it was over fifteen billion dollars and kept growing
• 14:35
  Speaker 1: and at the time that made it the biggest hedge
• 14:37
  Speaker 1: fund in the world. Is that true? You wake up
• 14:40
  Speaker 1: and and you wake up to unexpected news every once
• 14:43
  Speaker 1: in a while, and that's happened to me more than
• 14:44
  Speaker 1: once in my life. But the unexpected news in this
• 14:47
  Speaker 1: case was in the spring of two thousand. UM, we
• 14:52
  Speaker 1: had a PR firm, and the PR firm calls and says, Um,
• 14:55
  Speaker 1: the Wall Street Journal, UM is going to do a story,
• 14:59
  Speaker 1: uh on hedge funds now that George Soros and Julian
• 15:04
  Speaker 1: Robertson have decided to close down to the outside investors.
• 15:08
  Speaker 1: And they have determined that you were the largest hedge
• 15:10
  Speaker 1: funds in the world and clients at that point, sir
• 15:13
  Speaker 1: and and and they will do the article, UM with
• 15:17
  Speaker 1: or without your input. UM, and we suggest you probably
• 15:20
  Speaker 1: should tell you're in the part of the story. I
• 15:22
  Speaker 1: don't think anybody really, I mean, people on Wall Street
• 15:25
  Speaker 1: knew who peak what was But I I don't like publicity.
• 15:28
  Speaker 1: I like to just live my life, do my thing,
• 15:31
  Speaker 1: give back. I believe I do give back. UM. And
• 15:35
  Speaker 1: I'm not out for self and grand grandizement. And uh
• 15:39
  Speaker 1: So we were unknown and then all of a sudden,
• 15:41
  Speaker 1: on a Monday morning, or Tuesday. Bang, there it was,
• 15:45
  Speaker 1: and my life changed really in what ways? No, nothing positive.
• 15:51
  Speaker 1: So hence the low profile is the better way to go.
• 15:54
  Speaker 1: I've tried to maintain that ever since. And as you know, Barry,
• 15:57
  Speaker 1: that was one of my reluctance is about doing this.
• 15:59
  Speaker 1: I do know and and for listeners, I've been chasing
• 16:02
  Speaker 1: Art down for the better part of a year and
• 16:05
  Speaker 1: Um after our conversation with Lee Cooperman, Lee eventually convinced you, oh,
• 16:10
  Speaker 1: this guy isn't that bad. You should come to so
• 16:13
  Speaker 1: so far, so good. You're listening to Masters in Business
• 16:16
  Speaker 1: on Bloomberg Radio. My guest today is Art Sandberg. He
• 16:20
  Speaker 1: is a former rocket scientist who became an analyst, hedge
• 16:25
  Speaker 1: fund manager, and venture capitalist. Let's talk a little bit
• 16:28
  Speaker 1: about your methodology, because we've already identified you're not a
• 16:32
  Speaker 1: deep value investor like your friends Lee and Mario Um,
• 16:37
  Speaker 1: Lee Cooperman and Mario Gavelli. What is your methodology when
• 16:41
  Speaker 1: you're looking at either a public stock that you're thinking
• 16:44
  Speaker 1: about buying or a private company that you're thinking about
• 16:48
  Speaker 1: investing in. UM, it sort of starts from the same
• 16:54
  Speaker 1: It starts from the same basis, which is what kind
• 16:57
  Speaker 1: of change is possible. What kind of change can you
• 17:01
  Speaker 1: find that is being implemented by smart people? UM. It
• 17:05
  Speaker 1: becomes more difficult obviously as UM a trend goes on
• 17:09
  Speaker 1: and as you become larger in size, you can't you
• 17:11
  Speaker 1: really can't establish those positions. UM. But initially my my
• 17:16
  Speaker 1: my fund was set up to invest in market caps
• 17:18
  Speaker 1: if you can believe this in this day and age.
• 17:20
  Speaker 1: But we're talking thirty years ago now of market caps
• 17:23
  Speaker 1: under under two hundred million dollars, uh, YadA YadA ya.
• 17:26
  Speaker 1: And then of course it changed thirty years ago into
• 17:29
  Speaker 1: two hundred million dollars today. That's still thousands of companies,
• 17:34
  Speaker 1: but they trade by appointment. There's not a lot of
• 17:37
  Speaker 1: liquidity of it, which is the only kind of things
• 17:40
  Speaker 1: that owned my personal account right now. And I won't
• 17:42
  Speaker 1: talk about any of those. But I'm back to back
• 17:47
  Speaker 1: to being able to do what I first did when
• 17:49
  Speaker 1: I UM, when you started the business, UM, you know, UH,
• 17:53
  Speaker 1: creating alpha through that cycle UM becomes difficult. UM. And
• 17:58
  Speaker 1: and so that approach that I described, UM, you have
• 18:02
  Speaker 1: to evolve into a master of markets, as it were,
• 18:06
  Speaker 1: to be able to go short and know how to
• 18:08
  Speaker 1: use derivatives appropriately match. You know the cost of doing
• 18:12
  Speaker 1: that to um the potential upside, and that's become increasingly
• 18:17
  Speaker 1: difficult for practitioners these days. And the results quite honestly
• 18:21
  Speaker 1: have been pretty pretty mediocre. When we look at the
• 18:25
  Speaker 1: small cap there are guys like David Booth of Dimensional Funds.
• 18:28
  Speaker 1: You've created a very nice business focusing on the small
• 18:33
  Speaker 1: cap um advantage. The fact that you actually see out
• 18:37
  Speaker 1: performance from smaller caps UM versus the big well followed.
• 18:43
  Speaker 1: There's an inefficiency amongst small caps that leads to I
• 18:46
  Speaker 1: think there's growing inefficiency UM because we all know what's
• 18:51
  Speaker 1: happened to employment in the brokerage industry, all know how
• 18:53
  Speaker 1: many companies are followed that's declining all the time. The
• 18:57
  Speaker 1: economics aren't there with the regulation um, they're burdens on
• 19:01
  Speaker 1: the company's plus the financial companies to follow them UM.
• 19:04
  Speaker 1: So the value is definitely there. The problem is that
• 19:07
  Speaker 1: nobody knows when you're gonna get paid for that value.
• 19:09
  Speaker 1: If David has managed to harvest some of these, more
• 19:12
  Speaker 1: power to them. But some of the guys now Dimensional Funds,
• 19:18
  Speaker 1: maybe they buy a position to everything, don't they they
• 19:22
  Speaker 1: have a quantitative model. They end up holding these things forever.
• 19:26
  Speaker 1: I wouldn't say everything they run through a number of screens.
• 19:28
  Speaker 1: Oh no, I'm not but detegrating what they do. Basically,
• 19:31
  Speaker 1: it's very different than the model I'm talking about. For sure,
• 19:35
  Speaker 1: I'm trying to identify winners. Um and they're in my experience,
• 19:39
  Speaker 1: like there aren't that many winners. So you mentioned earlier
• 19:43
  Speaker 1: you're running your own assets as opposed to when you
• 19:46
  Speaker 1: were running other people's money. How does that universe difference?
• 19:50
  Speaker 1: What's what's it like running your own money versus what
• 19:52
  Speaker 1: you have to deal with when you have outside of this.
• 19:54
  Speaker 1: It's very simple. You don't have to report, Okay, I
• 19:57
  Speaker 1: do have to report to uh I have to son,
• 20:00
  Speaker 1: so I do it with um and I have a
• 20:02
  Speaker 1: daughter who runs our family foundation. She and my wife.
• 20:05
  Speaker 1: Um So, in our family, the males make the moneys,
• 20:08
  Speaker 1: and the females or social conscience and and and and
• 20:12
  Speaker 1: help us give it back. Um So, my boss is
• 20:15
  Speaker 1: really the women in the Sandburry clan. Okay. They expect
• 20:19
  Speaker 1: that I will always perform, I will perform well, and
• 20:21
  Speaker 1: we will do great, great deeds for the world. Um So,
• 20:25
  Speaker 1: you still like have other other investors to to answer to.
• 20:29
  Speaker 1: But I I can deal with that because they are
• 20:31
  Speaker 1: in my family. So it's a little it's a little easier.
• 20:34
  Speaker 1: It's so easier. So we were talking about the increased
• 20:37
  Speaker 1: regulatory environment and how things have changed from when you
• 20:41
  Speaker 1: launched thirty years ago. Could you launch a fund today?
• 20:44
  Speaker 1: How what let's say, hypothetically you're right out of business
• 20:47
  Speaker 1: school today, what would it be like launching a fund
• 20:50
  Speaker 1: in this environment? Well, I guess in some ways it's easy.
• 20:53
  Speaker 1: Well talking about today today, UM, I don't really know
• 20:58
  Speaker 1: because I haven't been then involved or involved at all.
• 21:01
  Speaker 1: But um, at the peak of my success, it was
• 21:05
  Speaker 1: simple for anybody to raise a fund. I mean, everybody
• 21:07
  Speaker 1: was looking for the next great manager and they throw
• 21:09
  Speaker 1: money at him with fat return you know, return profiles
• 21:13
  Speaker 1: for for the manager. Um. I think that welcome has
• 21:16
  Speaker 1: been worn out. You know, that welcome has been worn out.
• 21:20
  Speaker 1: So now I think, if you don't have a nest egg, um,
• 21:24
  Speaker 1: you're not gonna make it. So you better have made
• 21:26
  Speaker 1: some money um before and put it at risk in
• 21:30
  Speaker 1: doing what you're doing. I certainly did that back when,
• 21:34
  Speaker 1: because if you're down, you can't really pay your bills,
• 21:38
  Speaker 1: so you better you better have something to live on
• 21:40
  Speaker 1: and then decide whether you really want to take the
• 21:42
  Speaker 1: risk for your family and everything. Um going forward. Um,
• 21:46
  Speaker 1: I think you went through a whole generation of people
• 21:49
  Speaker 1: who didn't have that risk. They just we're having money
• 21:52
  Speaker 1: thrown at them. Uh. And now there's a sorting out
• 21:55
  Speaker 1: process going on. So I think it's it's much more
• 21:57
  Speaker 1: difficult right now to sort of fund You're listening a
• 22:00
  Speaker 1: Master's in Business on Bloomberg Radio. My guest this week
• 22:03
  Speaker 1: is Art Sandberg, probably best known for pe Quad Management,
• 22:07
  Speaker 1: although he has been a well regarded venture capitalist and
• 22:12
  Speaker 1: philanthropist over the years. Let's talk about running a business.
• 22:16
  Speaker 1: What it's like to run an investment management business. I
• 22:21
  Speaker 1: some time ago read a speech you had given and
• 22:23
  Speaker 1: you had talked about how challenging it is to find
• 22:28
  Speaker 1: and hire the best people. M what why? Why? How
• 22:33
  Speaker 1: significant is that and why is that such a challenge
• 22:37
  Speaker 1: to an investment firm. Um, it's a challenge because um, uh,
• 22:44
  Speaker 1: there are a lot of smart people out there. UM.
• 22:47
  Speaker 1: So if you meet somebody and you talk to him, UM,
• 22:51
  Speaker 1: you know you're not gonna think everybody's smart, but you're
• 22:53
  Speaker 1: gonna think a lot of people are smart. And then
• 22:55
  Speaker 1: trying to distill down those who appear to be smart
• 22:58
  Speaker 1: into those who are gonna be really a fair to
• 23:00
  Speaker 1: be managing money, who are going to be um easy
• 23:03
  Speaker 1: to live with, because you have to live with these people, UM,
• 23:06
  Speaker 1: who aren't the kind of guys who become megalomaniacs. And
• 23:10
  Speaker 1: I think that all the success is due to their
• 23:12
  Speaker 1: efforts and not because of the team's effort. Very very difficult,
• 23:16
  Speaker 1: very difficult. How how soon after you make a key
• 23:19
  Speaker 1: hire do you usually know if you're right or wrong? Um, well,
• 23:23
  Speaker 1: I won't. I won't do anything that the key higher
• 23:26
  Speaker 1: um tells me to do on the first recommendation. Um.
• 23:29
  Speaker 1: I always waiting to see how that works out. Not
• 23:31
  Speaker 1: because I don't believe in it, but I believe it's
• 23:34
  Speaker 1: a it's a it's a far better learning example to
• 23:37
  Speaker 1: pick that one apart about what went wright what went wrong? Um,
• 23:40
  Speaker 1: so objectively with no money at risk, and and and
• 23:45
  Speaker 1: and then and then you you progress from there. But um,
• 23:50
  Speaker 1: the great, the great fortune I had when I started
• 23:53
  Speaker 1: peak was, UM, I hit a hot streak of hiring
• 23:56
  Speaker 1: and UM, you know you like to think it's all
• 23:58
  Speaker 1: because of yourself, but you know I brought in Dan
• 24:01
  Speaker 1: Benton I brought in Mark Bach, I brought in Peter Dartley,
• 24:04
  Speaker 1: I brought in Church and Deel I brought it. The
• 24:06
  Speaker 1: first four hires that I made were spectacular, and then
• 24:11
  Speaker 1: it gets harder because they hire people and you hire
• 24:14
  Speaker 1: other people, and all of a sudden, there's a lot
• 24:16
  Speaker 1: of people, and all of a sudden you're getting bigger,
• 24:18
  Speaker 1: and all of a sudden you have back office issues,
• 24:20
  Speaker 1: and all of a sudden, every client wants to talk
• 24:22
  Speaker 1: to you, and it's just very, very difficult to maintain
• 24:26
  Speaker 1: your focus. But those are those are good problems. Those
• 24:29
  Speaker 1: are success. They're great problems. I'd rather have those problems
• 24:33
  Speaker 1: and not have them. But they are problems, right, Well,
• 24:35
  Speaker 1: they're better problems than why is the fund doing so poorly?
• 24:38
  Speaker 1: Why have five of you employees laughed? Why you know
• 24:40
  Speaker 1: those are bad problems? Yeah, well that's when you get
• 24:42
  Speaker 1: into the point where so much money is coming into
• 24:44
  Speaker 1: the consultant's controlled they as they should. I mean, they
• 24:47
  Speaker 1: have a fiduciary responsibility, but do they I'm not sure
• 24:50
  Speaker 1: if consultants have a fiduciary response. Um, the consultants don't.
• 24:54
  Speaker 1: But the boards in hospitals, the boards that educational institutions
• 24:59
  Speaker 1: whatever they do, and they need the cover of the consultants.
• 25:03
  Speaker 1: Um uh, not covered is gonna sound worse than it
• 25:08
  Speaker 1: that I intended. They need the plausible, uh, somebody to
• 25:12
  Speaker 1: point a finger at when things go wrong. They also
• 25:14
  Speaker 1: need somebody who's gonna do it full time. I mean
• 25:17
  Speaker 1: usually the people who are on these committees are very
• 25:20
  Speaker 1: very busy time. It's not a full time, part time.
• 25:23
  Speaker 1: They've got very active careers that they're very good at,
• 25:26
  Speaker 1: and they have to delegate to somebody. So the infrastructure
• 25:30
  Speaker 1: builds up. Anything that is successful creates either regulators, consultants,
• 25:36
  Speaker 1: an infrastructure around that activity. That. Um, there's a challenge
• 25:41
  Speaker 1: to people who are really say dragged on future returns
• 25:45
  Speaker 1: and operations. It's inevitable. There's no way around that. I
• 25:49
  Speaker 1: didn't know it's inevitable. I just inevitable, okay. Um. One
• 25:56
  Speaker 1: of the themes that we've had in the show I'm
• 25:58
  Speaker 1: Gonna Change Gears on You has been the role of luck,
• 26:01
  Speaker 1: whether it's in business or investing or even careers. Lee
• 26:05
  Speaker 1: talked about this, Clivastness talked about this a number of people.
• 26:09
  Speaker 1: Bill Gross talked about this. What is the role of
• 26:13
  Speaker 1: luck in in building a firm and making investments. How
• 26:17
  Speaker 1: does it affect people's professional careers. I'm sure it's a
• 26:22
  Speaker 1: major Uh, it's it's a major causal effect. But if
• 26:27
  Speaker 1: you think about it, um, that's the biggest mistake you
• 26:30
  Speaker 1: can make. I mean I never thought about, boy, am
• 26:33
  Speaker 1: I lucky? I mean after I had achieved the success,
• 26:37
  Speaker 1: perhaps I thought that that was lucky. But you know, not, not,
• 26:40
  Speaker 1: not while I was doing it. While you're doing it,
• 26:42
  Speaker 1: what are you focused on? Your focus on your core principles?
• 26:45
  Speaker 1: You know? What? What what is it that you bring
• 26:47
  Speaker 1: the table as different than other people? How do you, um,
• 26:51
  Speaker 1: how do you build an organization around you that it
• 26:55
  Speaker 1: amplifies that that competitive advantage? Um? And stay you know,
• 27:00
  Speaker 1: and and continue to learn and and and and and
• 27:03
  Speaker 1: learn from your setbacks all the things we talked about before.
• 27:07
  Speaker 1: But to think that I don't really believe it was
• 27:10
  Speaker 1: because of luck. I think it was because I was
• 27:12
  Speaker 1: I was, I was, I was driven. Um I did
• 27:16
  Speaker 1: I have setbacks? You better have setbacks. But UM, I
• 27:20
  Speaker 1: viewed those of setbacks and and things to overcome, not
• 27:23
  Speaker 1: not like someday I'm gonna get lucky. So I'm gonna
• 27:26
  Speaker 1: keep keep doing this, so you really have more of
• 27:28
  Speaker 1: an engineers approach, which is, here's the formula, we're gonna
• 27:31
  Speaker 1: plug and jug and ultimately you come out with the
• 27:33
  Speaker 1: conclusion on the other end. So we have the pope
• 27:37
  Speaker 1: in town. That makes it appropriate to talk a little
• 27:41
  Speaker 1: bit about charity and giving back. We've we've talked about that, right.
• 27:45
  Speaker 1: You have a number of philanthropic causes, organizations, you have
• 27:50
  Speaker 1: your foundation. Let's let's talk a little bit about about that.
• 27:54
  Speaker 1: First question is what are your philanthropic goals? Um, I
• 28:00
  Speaker 1: don't know what the goals are. You know, to to
• 28:02
  Speaker 1: create a better world yet day Yeah yah, but um,
• 28:05
  Speaker 1: but a lot of this is formed by by by
• 28:07
  Speaker 1: your life experience. So my life experiences that my grandfather
• 28:10
  Speaker 1: came over from Russian Poland UM one one was a tailor.
• 28:15
  Speaker 1: UM my dad, who was very bright guy, was the
• 28:18
  Speaker 1: oldest five. His father lost his job in the depression
• 28:22
  Speaker 1: and he ended up becoming an electrician because he had
• 28:24
  Speaker 1: a support the family. But we you know, it was
• 28:27
  Speaker 1: it was it was a strong family and my parents
• 28:29
  Speaker 1: that everything he could to help me get along. And
• 28:31
  Speaker 1: so I got into m I t um which is
• 28:34
  Speaker 1: the ultimate in a meritocracy. Um, you you you you,
• 28:38
  Speaker 1: you do the work, you do well, you don't do
• 28:40
  Speaker 1: the work. You know. It's I think it's a great institution.
• 28:43
  Speaker 1: I think I wish, I wish America reflected more more
• 28:46
  Speaker 1: of its core values. But I realized that, you know,
• 28:49
  Speaker 1: I got I got to go there and and and
• 28:52
  Speaker 1: all that it was. It was sort of somewhat random,
• 28:54
  Speaker 1: um um. And there are a lot of people born
• 28:57
  Speaker 1: in this world who have the same talents that I had,
• 29:01
  Speaker 1: who are never gonna have that chance. And I got
• 29:03
  Speaker 1: to write that. I can't. I can't. I can't. I
• 29:06
  Speaker 1: can't make the world perfect and create equality across the
• 29:11
  Speaker 1: board for everybody. But but if I can affect the
• 29:13
  Speaker 1: lives of a number of kids who don't have the
• 29:17
  Speaker 1: opportunity I had because of just the way that you know,
• 29:20
  Speaker 1: the their their family circumstances are, um, I want to.
• 29:23
  Speaker 1: I want to make that difference. So how do you
• 29:25
  Speaker 1: express that in terms of of in terms of philanthropy,
• 29:30
  Speaker 1: what do you do with that? We We we do
• 29:32
  Speaker 1: that um by supporting um lots of start up ventured
• 29:38
  Speaker 1: you know, philanthropies that are in the area of education, healthcare,
• 29:44
  Speaker 1: I could name names. Is the Summit Health leads. Um,
• 29:48
  Speaker 1: we were instrumental in getting the two of those started there.
• 29:51
  Speaker 1: They're they're highly respected, UM, and they're My daughter who
• 29:56
  Speaker 1: runs our foundation, will be annoyed at me if I
• 29:58
  Speaker 1: forget all of them. UM, I'll so you know, I'm
• 30:01
  Speaker 1: Jewish and UH believe um, you know, believe in the
• 30:05
  Speaker 1: Jewish people. And so we were original investors in UM
• 30:09
  Speaker 1: Birthright Israel, as was your friendly uh Lee Lee Lee
• 30:15
  Speaker 1: was as an investor in birth Right is Heal. We
• 30:18
  Speaker 1: were one of the fourteen founding families UM uh and
• 30:22
  Speaker 1: and and and a number of other things. So it's
• 30:25
  Speaker 1: um those dual things, you know, giving back to your heritage,
• 30:28
  Speaker 1: giving back to people who don't have the opportunities you had,
• 30:32
  Speaker 1: but certainly have the ability that you had. Um. How
• 30:35
  Speaker 1: does that manifesto itself in terms of scholarships or getting
• 30:39
  Speaker 1: kids who might not otherwise get to a place like
• 30:43
  Speaker 1: m I t to that sort of school. I am
• 30:45
  Speaker 1: told by the school, and I can't say this is
• 30:48
  Speaker 1: true that that the scholarships I've given Um, I've given
• 30:51
  Speaker 1: the largest amount of money in scholarships to m I
• 30:53
  Speaker 1: t Um. I think that's true. My wife is very
• 30:57
  Speaker 1: involved with west Chester Community College and UH, we're big
• 31:02
  Speaker 1: supporters in Westchester Community College UM, UH Columbia Business School,
• 31:07
  Speaker 1: which I co chair with with Henry Cravis. UM. We've
• 31:10
  Speaker 1: got a major campaign going right now to UH build
• 31:14
  Speaker 1: a new business school up in the Manhattanville campus. UM.
• 31:18
  Speaker 1: And I did a matching UM grant um for fellowships
• 31:27
  Speaker 1: at UH UM at at Columbia UM. So it's it's
• 31:31
  Speaker 1: it's it's not it's not per se about buildings. It's
• 31:34
  Speaker 1: about you know, giving to the kids, giving to the professors.
• 31:39
  Speaker 1: We have a program at UH Columbia Presbyterian New York
• 31:43
  Speaker 1: Presbyterian UM where we have a thing called the Samburg
• 31:46
  Speaker 1: Scholars and Pediatrics enabled them to hire a whole bunch
• 31:50
  Speaker 1: more research people and fill in some gaps in there.
• 31:53
  Speaker 1: And so the emphasis is on young people and health UM.
• 31:58
  Speaker 1: And it's a it's a pretty well thought out thing.
• 31:59
  Speaker 1: My my my wife and I UH and our three
• 32:02
  Speaker 1: kids are on the board. UM. We uh, you know,
• 32:06
  Speaker 1: we take it very very seriously. My goal, you know,
• 32:09
  Speaker 1: is to take care of my family. But if I
• 32:11
  Speaker 1: die with out a penny to my name, UM, that
• 32:14
  Speaker 1: would be just that would be ideal. Trying to figure
• 32:17
  Speaker 1: out how you manage that is uh, not the easiest
• 32:20
  Speaker 1: thing in the world. But so if someone wanted to
• 32:22
  Speaker 1: find out more about UM the charities and philanthropies you support,
• 32:26
  Speaker 1: is there a place they could go online to look
• 32:28
  Speaker 1: at that or is this all UM various meetings and
• 32:32
  Speaker 1: committees and what have you. UM we have a website
• 32:35
  Speaker 1: for the sand Rick Family Foundation, which we don't ever
• 32:38
  Speaker 1: talk about the first time I've ever mentioned it. That
• 32:41
  Speaker 1: does not include UM schools that we went to and stuff.
• 32:45
  Speaker 1: So everybody is responsible for their own alma mater. So
• 32:48
  Speaker 1: it does talk to the kind of social things we
• 32:52
  Speaker 1: are trying to do. We as a word of caution,
• 32:54
  Speaker 1: we do not accept incoming inquiries inquiries We only we
• 32:59
  Speaker 1: we do our reach, which can we go out and
• 33:01
  Speaker 1: selectively pick what we want to do. We've been speaking
• 33:04
  Speaker 1: with Art Samberg of Pequod Capital and the Samberg Family Foundation.
• 33:08
  Speaker 1: If you enjoy these conversations, be sure and check out
• 33:12
  Speaker 1: the rest of our chat. You can find that on
• 33:14
  Speaker 1: Bloomberg dot com, SoundCloud and Apple iTunes. Check out my
• 33:18
  Speaker 1: column on Bloomberg View. Uh. Follow me on Twitter at Ridolts.
• 33:22
  Speaker 1: I'm Barry Rihults. You've been listening to Masters in Business
• 33:26
  Speaker 1: on Bloomberg Radio. Okay, welcome back to the podcast. Half Now,
• 33:31
  Speaker 1: I don't have to worry about time that by the way,
• 33:33
  Speaker 1: that's really annoying having like I have three minutes, one minute,
• 33:37
  Speaker 1: thirty seconds, so he's in the back of it's it's
• 33:39
  Speaker 1: such a distraction. So a couple of things I didn't
• 33:43
  Speaker 1: get to during the broadcast portion. Let's let's take up
• 33:46
  Speaker 1: some some loose questions and then we'll we'll focus on
• 33:50
  Speaker 1: some of my favorite questions to ask during the segment.
• 33:53
  Speaker 1: So I see a name like pea Quat, which is
• 33:56
  Speaker 1: an Indian triumbe obviously, how did you come up with
• 33:59
  Speaker 1: a name peaquat capital for that? Well, in hindsight, I
• 34:03
  Speaker 1: wish I hadn't because distinctive it stands out that was
• 34:08
  Speaker 1: and it was a literate of Peaqua partners and it
• 34:10
  Speaker 1: sounded good, it felt good. Um, I had no idea
• 34:13
  Speaker 1: the Peakuad Indians we're going to get a gaming license.
• 34:15
  Speaker 1: And I remember getting letters from European investors about eight
• 34:19
  Speaker 1: ten years into the life of the fund saying are
• 34:22
  Speaker 1: you affiliated with that gambling tribe? No. I was at
• 34:25
  Speaker 1: three fifty four Peak what avenue in south Ford today?
• 34:29
  Speaker 1: Out and it sounded alliterate of it meant nothing. I
• 34:31
  Speaker 1: didn't want anything that suggested, you know, did you predate
• 34:34
  Speaker 1: the casinos? And yeah, absolutely, yeah, absolutely didn't come after you,
• 34:39
  Speaker 1: did they They called me and I said, well, just
• 34:42
  Speaker 1: check the incorporation papers. It was three four Peak what
• 34:45
  Speaker 1: Avenue and that was it. That was it and it works.
• 34:47
  Speaker 1: So now you know Hawks, which is my family office.
• 34:50
  Speaker 1: I live on a street by the name of Hawks.
• 34:53
  Speaker 1: UM Katia Woods or our family venture fund. We live
• 34:57
  Speaker 1: on a Katia Woods Road and uh, north Port, Michigan, UM,
• 35:01
  Speaker 1: which is where I spent my summer. So so you're
• 35:04
  Speaker 1: you're in New York three quarters of the year and
• 35:06
  Speaker 1: you're half the year and you're there a quarter a
• 35:09
  Speaker 1: quarter of the time in Michigan. Yeah. Yeah, so you're
• 35:12
  Speaker 1: they're just over the summer, over the summer beat. Oh
• 35:15
  Speaker 1: that's awesome. We we lived down the beach from Mario Batali,
• 35:20
  Speaker 1: who was a big champion of that area. Um, New
• 35:23
  Speaker 1: Yorkers don't Italian tour it ends up in Northport, Michigan,
• 35:29
  Speaker 1: which is on the tip of a peninsula jetting into
• 35:31
  Speaker 1: Lake Michigan. It's a beautiful, beautiful area. Um. If you're in.
• 35:35
  Speaker 1: If you're in New Yorker, you go to the Hampton's,
• 35:37
  Speaker 1: except if you're me, you go to Michigan. It's bizarre.
• 35:40
  Speaker 1: Mario Batali, the chef for the Okay So, but he's
• 35:45
  Speaker 1: not from the is he from that part now? But
• 35:47
  Speaker 1: his his wife went to University of Michigan and was
• 35:49
  Speaker 1: friendly with with a gal who grew up on that peninsula.
• 35:52
  Speaker 1: And that's and that's where you are right over. And
• 35:56
  Speaker 1: because I do venture capital now and I don't know
• 35:59
  Speaker 1: have to be I don't have to have morning meetings,
• 36:02
  Speaker 1: I don't have to all of the paraphernalia about running
• 36:05
  Speaker 1: a fund um. I can do everything, you know, electronically,
• 36:09
  Speaker 1: take plane trips to where I have to go. How
• 36:11
  Speaker 1: often are you on the West coast California? Eight times
• 36:16
  Speaker 1: a year? So we were just in the beginning of
• 36:18
  Speaker 1: this year. I was in Seattle for a week actually
• 36:22
  Speaker 1: um c F A events. I interviewed Howard Marks at
• 36:27
  Speaker 1: at UM in Seattle, and then we spent a week
• 36:29
  Speaker 1: in Seattle. Seattle is on fire. It's absolutely a city booming.
• 36:34
  Speaker 1: And we just got back a few months ago from
• 36:36
  Speaker 1: a week in San Francisco. It was a conference in
• 36:38
  Speaker 1: Napa and then a week in sanci. San Francisco is
• 36:41
  Speaker 1: on fire. It's San Francisco has been on fire ever
• 36:44
  Speaker 1: since I got out of school in sixty two. Well,
• 36:46
  Speaker 1: it waxes in Waynes but you know, post financial crisis,
• 36:50
  Speaker 1: it was a little tamped down for a year or
• 36:53
  Speaker 1: two and it's just been booming. Ceccality is part of
• 36:58
  Speaker 1: part of the human condition. So how do you But
• 37:01
  Speaker 1: it's also true in Denver we have we started up
• 37:04
  Speaker 1: a real estate development from Denver. Denver is another also
• 37:07
  Speaker 1: booming booming. How much of that is related to the
• 37:10
  Speaker 1: legal marijuana in Denver and how much of it is Well,
• 37:12
  Speaker 1: I'll tell you. The best investment has not been art
• 37:15
  Speaker 1: has not been. It has been buying up old warehouses
• 37:19
  Speaker 1: in Denver because that's where they that's where they store
• 37:23
  Speaker 1: the marijuana they grow it. They're also they need they
• 37:27
  Speaker 1: need they have big warehouses, but they're big new and
• 37:30
  Speaker 1: they need electricity, and they need they need artificial light.
• 37:34
  Speaker 1: But just the crumby old, hundred year old small warehouse
• 37:37
  Speaker 1: just to store I missed it. I missed that play. Yeah,
• 37:42
  Speaker 1: but I know it's true. So you're doing a lot
• 37:46
  Speaker 1: of venture capital wise, how do you deal with the
• 37:49
  Speaker 1: supposed valuation issues these days, all these billion dollar unicorns
• 37:54
  Speaker 1: where I hope that I get into a unicorn. So
• 37:59
  Speaker 1: what sort of stuff do you like to to look
• 38:01
  Speaker 1: at as a as a VC. Yeah, it's it's consistent
• 38:04
  Speaker 1: with with my background. My my older son who I
• 38:07
  Speaker 1: worked with, ran business strategy of people soft. He knows
• 38:11
  Speaker 1: software far better than I do. Um, I'm better at
• 38:14
  Speaker 1: the you know, the physical sciences. Um. We're involved with
• 38:18
  Speaker 1: the fusion company that I really can't talk much about,
• 38:21
  Speaker 1: but people should should should read read the newspapers and
• 38:25
  Speaker 1: fusion in terms of energy generation. Yes, thorium, I hope.
• 38:31
  Speaker 1: Why don't we have thorium reactors? You have a physics?
• 38:33
  Speaker 1: Because we have, we have we have a better approach
• 38:35
  Speaker 1: really yea, because thorium is supposedly and now my physics
• 38:40
  Speaker 1: is thirty years rusty, but supposedly better than uranium, better
• 38:45
  Speaker 1: than plutonium, no waste issues. Tonium is highly radioactive. I
• 38:50
  Speaker 1: can't remember how radioactive storium is. I looked at it
• 38:53
  Speaker 1: a while ago. Well, what we're trying to do is
• 38:56
  Speaker 1: fuse hydrogen and boron, and I won't bore everybody that
• 39:00
  Speaker 1: that results in three helium Adams energy and it's completely
• 39:04
  Speaker 1: not completely, but largely into tronic and you can actually
• 39:08
  Speaker 1: know part neutrons, high energy particles leaving correct and and
• 39:13
  Speaker 1: therefore UM you can build a commercial reactor unlike what's
• 39:17
  Speaker 1: the waste product? Like, Uh, there's very little waste really,
• 39:20
  Speaker 1: so you're not left with there is waste and we've
• 39:22
  Speaker 1: got to take care of Is it radioactive waste? No? No, no,
• 39:26
  Speaker 1: no no, it's non radioactive waste product out of a fusion.
• 39:30
  Speaker 1: It's a major, major project. And you said you're trying
• 39:33
  Speaker 1: to change the world. You really no, No, I am
• 39:35
  Speaker 1: trying to change the world. Plus, I were invested in
• 39:38
  Speaker 1: a and the solar company that uses UM three D
• 39:43
  Speaker 1: bristols and it's a major breakthrough. Uh. And we're going
• 39:48
  Speaker 1: through the last phases of we've seen technology on solar.
• 39:51
  Speaker 1: I just had this conversation with someone not too long
• 39:53
  Speaker 1: ago on solar. All of the gains that we've seen
• 39:57
  Speaker 1: have been so agonizing over thirty years. It's a substantial series,
• 40:03
  Speaker 1: but they've been really incremental and evolutionary. This is not
• 40:07
  Speaker 1: you're talking about a revolutionary talking about When I first
• 40:09
  Speaker 1: met these guys, they were growing three million nana um
• 40:13
  Speaker 1: nickel nano fibers on a substrate per square inch. Doing
• 40:17
  Speaker 1: a flat panel, you're doing three dimensional panel where the
• 40:21
  Speaker 1: photons come in and spiral down the bristles, so you're
• 40:24
  Speaker 1: capturing a lot more of the energy that ends three
• 40:26
  Speaker 1: times this magnitude break. Photons stay in the structure three
• 40:31
  Speaker 1: times as long as if they were to just reflect
• 40:32
  Speaker 1: off of a plane surface. Um. So they stay in
• 40:36
  Speaker 1: and the and the efficiency goes up. It's hard to do,
• 40:39
  Speaker 1: but we're almost there. How much more expensive of these
• 40:42
  Speaker 1: panels than traditional Sure, we're now making them on glass panels.
• 40:48
  Speaker 1: I'll give you the answer to that in the first
• 40:49
  Speaker 1: quarter next year. All right, but none of these are open.
• 40:53
  Speaker 1: This is your now, this is this is you know,
• 40:56
  Speaker 1: I don't believe in share. This is risk uh um.
• 40:59
  Speaker 1: But should just stay tuned and some really interesting things,
• 41:04
  Speaker 1: really interesting things coming along. And that's two of a
• 41:08
  Speaker 1: number of others. So we do software companies. When you
• 41:11
  Speaker 1: when you were running Peaquat, there was a lot of
• 41:14
  Speaker 1: oil energy, natural gas LEAs, things like that. So energy
• 41:19
  Speaker 1: has been an an interest of yours for a long time. Yeah,
• 41:23
  Speaker 1: I had I had a bunch of sector funds as
• 41:25
  Speaker 1: I mentioned, but they were in telecom, they were in technology,
• 41:28
  Speaker 1: they were in healthcare, small cap indessing. The one exception
• 41:32
  Speaker 1: was early on was an energy because I went you know,
• 41:36
  Speaker 1: if you if you lived in the seventies, you went
• 41:37
  Speaker 1: through the oil embargo. I remember as a kid trying
• 41:41
  Speaker 1: to get a gas can filled up to mow the lawn,
• 41:44
  Speaker 1: and I would get the question, you know, what, what
• 41:47
  Speaker 1: is your license plate even or on and have a
• 41:51
  Speaker 1: gas can? Well, I don't have a license, so all right,
• 41:56
  Speaker 1: they should have let the grass grow and give it
• 41:58
  Speaker 1: to me. I mean, I was the adult with little kids.
• 42:00
  Speaker 1: I needed it. I had a mo that's hey, listen.
• 42:02
  Speaker 1: I had earned a living, so delivered papers. Same here
• 42:09
  Speaker 1: I hated. Delivering papers was a terrible tal my. I
• 42:13
  Speaker 1: was so I had. I had a bunch of friends
• 42:15
  Speaker 1: and to two of them head routes. The one the
• 42:17
  Speaker 1: one key guy who I bought a route with, ended
• 42:19
  Speaker 1: up being a sheet metal worker. He took a fifty
• 42:22
  Speaker 1: paper route which we split in half, and he got
• 42:25
  Speaker 1: it up to a hundred a hundred customers. Mine dwindled
• 42:28
  Speaker 1: down to ten because I would sit on the curb
• 42:31
  Speaker 1: and read the newspaper first, and he just took the
• 42:33
  Speaker 1: papers and delivered them. So, you know, the best part
• 42:36
  Speaker 1: about delivering newspapers was Sunday morning, me and a few
• 42:39
  Speaker 1: friends who all had routes would go to the diner
• 42:42
  Speaker 1: and have breakfast at nine o'clock. That was the highlight.
• 42:45
  Speaker 1: I didn't do that that would have been successful. That
• 42:48
  Speaker 1: was the best part of it. Um. So it sounds
• 42:51
  Speaker 1: energy is really in energy is really interesting that, you know.
• 42:55
  Speaker 1: It is my belief that you know, in thirty years
• 42:58
  Speaker 1: all they're all producing countries in the world will be
• 43:00
  Speaker 1: bankrupt meaningless, basically back to managing that sitting on a
• 43:06
  Speaker 1: bunch of sand and rocks. Um. You know, I hope
• 43:10
  Speaker 1: to I hope to help you want to accelerates. Not
• 43:14
  Speaker 1: just not not because I have anything against them, It's
• 43:16
  Speaker 1: just that it's absurd that burning fossil fuels, the burning
• 43:19
  Speaker 1: fossil fuels, they're not really sharing the wealth with the
• 43:22
  Speaker 1: people of their country. When you look at all the
• 43:25
  Speaker 1: problems we've had in the Middle East, I can't help
• 43:27
  Speaker 1: but think if there wasn't oil there and we weren't
• 43:30
  Speaker 1: so dependent on it, people wouldn't really care. We wouldn't
• 43:33
  Speaker 1: have had it could be true. I come at it
• 43:35
  Speaker 1: just from a pure you know, how can myself, How
• 43:38
  Speaker 1: can I help solve the world's problem, which is making
• 43:41
  Speaker 1: energy plentiful and cheap? Goes along? There's no doubt. I mean,
• 43:44
  Speaker 1: you know, I don't even want to get involved in
• 43:47
  Speaker 1: the climate debate. Um, I am what debate of it?
• 43:51
  Speaker 1: You know? Is carbon human generator or whenever? And I
• 43:56
  Speaker 1: hear that this just came up at a dinner the
• 43:58
  Speaker 1: other day. I always tell people, if you don't think
• 44:00
  Speaker 1: you can affect your environment, park your car in your garage,
• 44:04
  Speaker 1: leav the engine running, shut the door, and spend an
• 44:06
  Speaker 1: hour or to that. I'd rather spend my time figuring
• 44:08
  Speaker 1: out how to solve the problem rather than debate the issue.
• 44:11
  Speaker 1: I don't want to either. I just say, park in
• 44:14
  Speaker 1: the car with the park of the garage, with the
• 44:15
  Speaker 1: engine running, and we'll see how little you can affect
• 44:18
  Speaker 1: you there there, that is an argument, um. But I
• 44:22
  Speaker 1: don't get involved in stuff like that. I get involved
• 44:24
  Speaker 1: in what is the problem, What is the solution? Can
• 44:27
  Speaker 1: I affect the solution in a positive way? And that's
• 44:30
  Speaker 1: an engineering approach? So what other from it? What other
• 44:34
  Speaker 1: issues lend themselves to an engineering solution that you can
• 44:39
  Speaker 1: do venture investing with UM. I don't know if it's
• 44:43
  Speaker 1: a problem or what, but UM we we we bought
• 44:45
  Speaker 1: up the UM we bought up all the patents from
• 44:49
  Speaker 1: A T and T in holographics. UM So yeah, storage,
• 44:55
  Speaker 1: you know, data storage is growing a year UM and
• 45:00
  Speaker 1: will continue to grow with those kind of absurd rates
• 45:02
  Speaker 1: for quite some time. UM and UM So I'm involved
• 45:06
  Speaker 1: in in some flash memory companies. I'm involved in UH
• 45:10
  Speaker 1: some new algorithms to to to try and make servers
• 45:14
  Speaker 1: much more efficient there and I don't want to name name.
• 45:17
  Speaker 1: So there's a hardware approach and a software approach and
• 45:21
  Speaker 1: we're involved in both. And and what you really need
• 45:23
  Speaker 1: is you need vast amounts of data UM on warm
• 45:29
  Speaker 1: what's called warm storage storage. So you know, hot storage
• 45:35
  Speaker 1: is our disk drives. UM and to some degree, flash
• 45:39
  Speaker 1: memory and cold storage are tapes, which are you know,
• 45:43
  Speaker 1: they just run sequentially. It's not random access. It's ancient technology,
• 45:48
  Speaker 1: or it's it's ancient, but it's you know, on a
• 45:50
  Speaker 1: cost effective basis that still makes sense. But you really
• 45:53
  Speaker 1: want something that was that is nearer than tape UM
• 45:57
  Speaker 1: which which will burn out in five to ten years,
• 45:59
  Speaker 1: can have the longer storage life. UM. I mean, our
• 46:02
  Speaker 1: government goes out and has all these drones that are
• 46:04
  Speaker 1: taking pictures of all kinds of stuff god knows what, UM,
• 46:07
  Speaker 1: and they can't even they can't analyze half of it
• 46:09
  Speaker 1: because they there's no way to process it all. And
• 46:13
  Speaker 1: also as you get into genomics and other things, we
• 46:16
  Speaker 1: are just spitting out data. So if you could use
• 46:18
  Speaker 1: holographic memories which would last for for fifty years um
• 46:23
  Speaker 1: uh and uh down to the right price points um
• 46:28
  Speaker 1: at any rate. So we're trying to develop that that
• 46:31
  Speaker 1: is not that is not an area where we can
• 46:33
  Speaker 1: go out and talk to a venture capitalists and get
• 46:35
  Speaker 1: them to you know, go alongside you. UM just won't
• 46:39
  Speaker 1: do it because it's that that area has been death
• 46:42
  Speaker 1: to many many start ups. For my for for for
• 46:46
  Speaker 1: for our family purposes, we can take that risk. UM.
• 46:50
  Speaker 1: It might take a little longer, we can take that risk.
• 46:52
  Speaker 1: So we're trying to solve that problem. We're involved in
• 46:55
  Speaker 1: medical devices and and some some medical uh um, some
• 47:00
  Speaker 1: interesting companies. You were on the board of a New
• 47:03
  Speaker 1: York genomics UM center before we get to that, because
• 47:06
  Speaker 1: that's an area I find absolutely fascinating. Would love to
• 47:09
  Speaker 1: talk about you're buying these patents up from a T
• 47:12
  Speaker 1: and T. Well, it wasn't from a T and T.
• 47:15
  Speaker 1: There was a there were two venture groups that that
• 47:18
  Speaker 1: did that. Uh. What year did these patents? Well, these
• 47:22
  Speaker 1: are these were done in the nineties and um they
• 47:25
  Speaker 1: were expired at this point or there enough because you
• 47:28
  Speaker 1: keep refreshing them, there's enough. We keep improving the basic
• 47:31
  Speaker 1: UM stuff. So we own all the patents. We we
• 47:35
  Speaker 1: we have two patents uh covering both the way you
• 47:39
  Speaker 1: store it and the media you need to produce it.
• 47:43
  Speaker 1: UM and uh to venture firms trying to put part
• 47:48
  Speaker 1: a hundred million dollars into trying to develop this UM
• 47:51
  Speaker 1: and they were getting and we bought. We bought the
• 47:54
  Speaker 1: asset at but hopefully there's a value of plate right
• 47:59
  Speaker 1: if you were if well, anything you buy at a
• 48:01
  Speaker 1: bankruptcy is usually well there's another one that we're involved
• 48:04
  Speaker 1: with which we did help somebody buy a bankruptcy, which
• 48:07
  Speaker 1: is clear, which is at the airports. What is what
• 48:11
  Speaker 1: is clear clear is the a biometric screening technique at
• 48:19
  Speaker 1: airports too. And now they're starting to be in court
• 48:22
  Speaker 1: with the Yankees just um uh started using at the
• 48:25
  Speaker 1: San Francisco at the stadium at the stadium. So when
• 48:28
  Speaker 1: I I assume that everybody else, although they don't assume
• 48:35
  Speaker 1: everybody uses t S A pre so they can whisk
• 48:38
  Speaker 1: through the airport and then when you come back, there's
• 48:40
  Speaker 1: global entry. Will you bypass all the customs and beautiful? Right?
• 48:45
  Speaker 1: So you you take your passport and then you take
• 48:48
  Speaker 1: your hands and you put that on a machine and
• 48:50
  Speaker 1: you're done in thirty seconds. What is clear due relative
• 48:54
  Speaker 1: to that sort of Clear does the same thing, um
• 48:57
  Speaker 1: but biometric biometrics and checks it against the giant database
• 49:01
  Speaker 1: to make sure you're not a Yeah. And so the
• 49:06
  Speaker 1: Yankees are using this, and the San Francisco Giants are
• 49:08
  Speaker 1: using this, and uh increasingly airports are using it. It's
• 49:14
  Speaker 1: it's a company that went bankrupt. Um technology but dead
• 49:19
  Speaker 1: business model and that that was in some ways of
• 49:24
  Speaker 1: value play. But but but the value of play based
• 49:28
  Speaker 1: around superior technology of the bad go to market implementation. UM.
• 49:33
  Speaker 1: So we're involved that. UM tons of things. These are
• 49:37
  Speaker 1: really fascinating venture stuff. What what other areas intrigue you
• 49:41
  Speaker 1: from a venture perspective? Um. So there's alternative energy, there's software.
• 49:47
  Speaker 1: There's one company in Boston, UH that we're involved with that.
• 49:53
  Speaker 1: Uh UM. I'm watching the wheel spin and fig watching
• 50:00
  Speaker 1: you try and figure out what you can and can't
• 50:02
  Speaker 1: say what what subject does the technology cover? Well. The
• 50:06
  Speaker 1: problem that companies like Hewlett Packard or Samsung or a
• 50:10
  Speaker 1: bunch of them have is that the real money in
• 50:14
  Speaker 1: in smartphones and devices these days are in the apps UM.
• 50:19
  Speaker 1: And there are two app platforms, one of course is
• 50:23
  Speaker 1: apples iOS UM uh iOS and and the other is UM.
• 50:31
  Speaker 1: You know, the Android system UM. So if you look
• 50:34
  Speaker 1: were to come out with a new product and not
• 50:35
  Speaker 1: support those apps UM, people won't buy it. So some
• 50:41
  Speaker 1: some products have been introduced that are technically wonderful products,
• 50:46
  Speaker 1: but they don't service the market as it is configured today.
• 50:49
  Speaker 1: If you if you were able to UM, if you
• 50:53
  Speaker 1: were able to solve that problem for manufacturers UM amplify
• 50:58
  Speaker 1: their software or appify. They're there prom and you can emulate.
• 51:04
  Speaker 1: You can emulate those things. But when you emulate, you
• 51:07
  Speaker 1: have another microprocess. It's slow, it's inefficient, it just isn't competitive.
• 51:12
  Speaker 1: If you can do it and what's called native mode
• 51:15
  Speaker 1: using the application control layer, UM, you can I'm looking
• 51:20
  Speaker 1: to see if the word applify is taken because I
• 51:22
  Speaker 1: want to. I think that's a word that I you know,
• 51:25
  Speaker 1: it's all it's all yours, Telly rate. There's a company
• 51:28
  Speaker 1: in Boston that has done that. Um, Samsung is UH incorporating,
• 51:32
  Speaker 1: It's UH and it's ties and z one phone which
• 51:35
  Speaker 1: is introduced into India. And the future looks pretty bright.
• 51:39
  Speaker 1: So there are software applications that are that are that
• 51:42
  Speaker 1: are interesting because they solve problems. They solve problems. Yeah,
• 51:47
  Speaker 1: I like solving problems. So what else? Um? Oh, I
• 51:51
  Speaker 1: see why I keep speaking of problems. I keep searching
• 51:53
  Speaker 1: for this and I keep coming up with an Amazon
• 51:56
  Speaker 1: Applify create the simplest Mac possible, Mac from a show.
• 52:00
  Speaker 1: So somebody else already has the sorry the word apifi.
• 52:04
  Speaker 1: And then there's appify Android apps on Google play at
• 52:08
  Speaker 1: appify on Twitter. So all right, I thought it was
• 52:11
  Speaker 1: a good ours has a different name. I want to
• 52:13
  Speaker 1: even mention, Okay, don't mention. So you don't want to
• 52:16
  Speaker 1: run an emulation because you're reading a whole another layer
• 52:18
  Speaker 1: of software. It slows down, more buggy, more complicated. So
• 52:22
  Speaker 1: but you make it need to do it. If you
• 52:24
  Speaker 1: can do it off of the application control layer, it's
• 52:28
  Speaker 1: completely legit and it's very hard to do. It's very
• 52:31
  Speaker 1: hard to do. So this is a software solution to
• 52:34
  Speaker 1: a programming problem. All right, what are the areas intrigue
• 52:38
  Speaker 1: you in terms of ventures? Right, young guys out of
• 52:41
  Speaker 1: M I T who have come up with an active
• 52:43
  Speaker 1: shock absorber system active shock absorber cars for bicycles or
• 52:49
  Speaker 1: four cars, cars and maybe truck camps. But but right
• 52:55
  Speaker 1: now the emphasis is on cars, um and it's it's truly.
• 53:00
  Speaker 1: So the trick there is to get it to a
• 53:02
  Speaker 1: low enough cost and put it in automobiles. There are
• 53:05
  Speaker 1: many there there, there, there there there. There are systems
• 53:08
  Speaker 1: today which use hydra fluids and the hydraulic that that's
• 53:15
  Speaker 1: pretty old school though. That's old school, and it's very
• 53:18
  Speaker 1: expensive for a wheel. If you can get it down
• 53:20
  Speaker 1: with a simple system, um, so that it would you know,
• 53:23
  Speaker 1: sell for under two thousand dollars per automobile. Um, there's
• 53:27
  Speaker 1: a vast market. And these guys, these guys, I think,
• 53:31
  Speaker 1: have the solution to that. So so I'm on the
• 53:34
  Speaker 1: board of that one. Yeah, that's interesting. So this, you know,
• 53:37
  Speaker 1: there's great stuff out there. So I am not one
• 53:40
  Speaker 1: of these people who believe, oh my god, the world
• 53:42
  Speaker 1: has a million problems. Let's stick our head in the ground.
• 53:45
  Speaker 1: Unless it does have a million problems, but it's got
• 53:47
  Speaker 1: two million solutions. That is, we go to this venture.
• 53:50
  Speaker 1: It's really early stage. An angel conference in San Diego.
• 53:54
  Speaker 1: I can't go every year on my head explodes. I
• 53:56
  Speaker 1: go every other year and you cannot come out of
• 54:00
  Speaker 1: and it's college kids and stuff. You cannot go through
• 54:04
  Speaker 1: an event like that. Well, they've told me. They've told
• 54:07
  Speaker 1: me of an M I T. That um that in
• 54:09
  Speaker 1: the generation or two ago, probably too, the every age
• 54:13
  Speaker 1: of an M I. T. Graduate who started a company
• 54:15
  Speaker 1: was forty two years old. And now, yeah, I find
• 54:20
  Speaker 1: you can't go to one of those events and leave
• 54:23
  Speaker 1: and not be optimistic about the future, no matter how
• 54:26
  Speaker 1: terrible things are. It's like we're pikers. These kids are
• 54:30
  Speaker 1: going to solve all these is that that is what
• 54:33
  Speaker 1: keeps me going. It's amazing. I was at I think
• 54:37
  Speaker 1: I've told this story before. I was at a wedding
• 54:38
  Speaker 1: in Virginia or maybe it's a bar Mitz, but it
• 54:40
  Speaker 1: was a family member and the was it the no, no,
• 54:45
  Speaker 1: it was a wedding because it was the grooms groomsmen,
• 54:50
  Speaker 1: a couple of kids out of I think it was
• 54:52
  Speaker 1: U v a UM down in Richmond, and they one
• 54:57
  Speaker 1: of them had an iPhone. Okay, that had built into it.
• 55:01
  Speaker 1: This sounds idiotic, but it was genius. Had built into
• 55:04
  Speaker 1: it a bottle opener, like built into the things take
• 55:08
  Speaker 1: your phone and and just pop a bottle. And I said, oh,
• 55:11
  Speaker 1: that's hilarious. You know how you guys gonna make that?
• 55:13
  Speaker 1: And they look at me like I have two heads, dude.
• 55:16
  Speaker 1: We're doing twenty thousand units a month we have manufactured
• 55:19
  Speaker 1: in China. These guys are twenty, they're in college. We're
• 55:23
  Speaker 1: selling units. What do you charge with this fourteen? What
• 55:27
  Speaker 1: does it cost you? I don't know? Eight seven shipping
• 55:30
  Speaker 1: is more so when you see kids like that in
• 55:33
  Speaker 1: college who was so I don't I don't understand the
• 55:38
  Speaker 1: consistent pessimism from people about the world is terrible, America
• 55:42
  Speaker 1: is terrible. You you meet some of these kids, that
• 55:45
  Speaker 1: changes present. The people can't really relate to this kind
• 55:49
  Speaker 1: of stuff, really don't like it, and therefore draw their
• 55:52
  Speaker 1: own conclusions. They're not based on anything factual. I mean.
• 55:56
  Speaker 1: The problem the problem with all of this, of course,
• 55:59
  Speaker 1: is the is the income divide between the people who
• 56:01
  Speaker 1: can do what you've just described and the people I've
• 56:03
  Speaker 1: been describing, UM and to help. Yeah, there there is
• 56:09
  Speaker 1: there is a huge there is a huge problem developing.
• 56:12
  Speaker 1: UM well in terms of in terms of income inequality
• 56:16
  Speaker 1: or in terms of opportunity inequality. Maybe well it's both. Um.
• 56:22
  Speaker 1: Some people will never be able to participate in this
• 56:24
  Speaker 1: new world UM given advantages. They just not tech savvy.
• 56:28
  Speaker 1: They lack the skill set for that or the interest,
• 56:31
  Speaker 1: or they might have the interest, but they're not gonna
• 56:35
  Speaker 1: be able to implement. And I, you know, I believe
• 56:37
  Speaker 1: that everybody should given a given a chance to so
• 56:41
  Speaker 1: I will spend as much money as I can to
• 56:43
  Speaker 1: to to try and help that. But you know, you know,
• 56:47
  Speaker 1: there are a lot of people in this world and
• 56:49
  Speaker 1: not everybody can can start these things. So you know
• 56:52
  Speaker 1: that there are real social policy issues about how do
• 56:56
  Speaker 1: you how do you fix that? I'm not a social scientist,
• 56:59
  Speaker 1: so I don't know, UM, but I don't know. One
• 57:03
  Speaker 1: of the reasons that that we have emphasized things like
• 57:07
  Speaker 1: fusion energy, solar things like that are because that they
• 57:12
  Speaker 1: saved they address the basic problem, which is that unless
• 57:17
  Speaker 1: you have cheap electricity or a number of other things
• 57:21
  Speaker 1: you don't grow world income. And if you don't grow
• 57:23
  Speaker 1: world income, everybody fights over the pie. And if everybody
• 57:26
  Speaker 1: fights over the pie, you're gonna have a terrible, a
• 57:30
  Speaker 1: terrible world system. UM. So I want to help people
• 57:34
  Speaker 1: grow the pie. I would like to help in some
• 57:37
  Speaker 1: of this carbon stuff if I can. UM, I'd like
• 57:40
  Speaker 1: to give part of the money back. I would like
• 57:43
  Speaker 1: to keep some of it um to uh, to give
• 57:45
  Speaker 1: everybody the opportunity to participate in that. It is then
• 57:48
  Speaker 1: up to government to figure out the rest of it.
• 57:51
  Speaker 1: And I see absolutely no movement towards coming up with
• 57:55
  Speaker 1: any logical solutions to that. Well, but that's along the
• 57:58
  Speaker 1: government discussion. That's easy. That's long arc and eventually government,
• 58:03
  Speaker 1: well what I mean by easy is over the next
• 58:05
  Speaker 1: ten or twenty years. My guess is that government in competence, incompetency,
• 58:11
  Speaker 1: especially partisan incompetency, collapses under its own weight, and eventually,
• 58:17
  Speaker 1: eventually we're replaced with I don't think the Republican and
• 58:21
  Speaker 1: the Democratic Party are infinite in lifespan and here forever.
• 58:27
  Speaker 1: I think these parties are slowly losing, slowly losing um membership,
• 58:34
  Speaker 1: and you're gonna end up with more and more people
• 58:37
  Speaker 1: as independents, and that's how you end up with somebody
• 58:40
  Speaker 1: like Donald Trump, who really are hard to define by
• 58:44
  Speaker 1: traditional party politics. Not not a coincidence that what's going
• 58:51
  Speaker 1: on today in the Republican party, the appeal is the
• 58:54
  Speaker 1: guy who's the least associated with with the party, And
• 58:59
  Speaker 1: the same thing is happening on the Democratic side. The
• 59:02
  Speaker 1: Bernie Sanders is not a traditional Democrat, and suddenly there's
• 59:06
  Speaker 1: all this So you have Trump and Sanders. The appeal
• 59:10
  Speaker 1: isn't what they're specific politics are. The appeal is that
• 59:16
  Speaker 1: they're not traditional partisan players. I agree, and I agree
• 59:21
  Speaker 1: with your conclusion. So I hopefully hope it happens as
• 59:23
  Speaker 1: you go through that process or fragment. It's very painful. Yeah,
• 59:27
  Speaker 1: that that's gonna So now let me let's talk a
• 59:30
  Speaker 1: little politics and and let me force you to stop
• 59:33
  Speaker 1: dancing around the carbon issue. You'll never you'll never be
• 59:36
  Speaker 1: able to force me to stop. So global warming real,
• 59:41
  Speaker 1: I have no idea. Get out of here. Come on,
• 59:44
  Speaker 1: how can you say that Because you're a physicist, you're
• 59:46
  Speaker 1: investing in film strategy, you're an engineer, you have a
• 59:50
  Speaker 1: ton of physics, you understand the scientific process, you know
• 59:54
  Speaker 1: when of scientists say something, you don't think that Bible
• 1:00:00
  Speaker 1: warming is a genuine climate change. I think the fact
• 1:00:05
  Speaker 1: that there's so much carbon diox on the atmosphere is
• 1:00:07
  Speaker 1: a really really bad thing. How did it get there?
• 1:00:09
  Speaker 1: How did it get their sun spot? I don't know.
• 1:00:13
  Speaker 1: I don't carbon probably okay, alright, But I don't know
• 1:00:17
  Speaker 1: if it's solely because of that. I I I know
• 1:00:20
  Speaker 1: nothing is solely because of anything. I have friends who
• 1:00:22
  Speaker 1: are on either side of this one, and I read
• 1:00:25
  Speaker 1: it all, and I sit on this m I T
• 1:00:27
  Speaker 1: Energy Initiative Board UM. At m I T. They have
• 1:00:30
  Speaker 1: this guy, Richard Lindson, who is a world acclaimed UM
• 1:00:34
  Speaker 1: climate scientist who doesn't believe it. UM. There are many
• 1:00:37
  Speaker 1: others like he's a he's a very responsible guy, UM,
• 1:00:43
  Speaker 1: and they're responsible on the other side. I don't know.
• 1:00:46
  Speaker 1: I mean, there are plenty of people arguing that you
• 1:00:48
  Speaker 1: know that that matter. All I know is I think
• 1:00:51
  Speaker 1: that I can support you guys who have a solution
• 1:00:55
  Speaker 1: to it. I'd rather waste my brain cycles and energy
• 1:00:58
  Speaker 1: and money on that rather than the debate. The argument
• 1:01:02
  Speaker 1: is just wasted energy. Anyway, You're never got People aren't
• 1:01:05
  Speaker 1: gonna convince each other. By the way, when I say
• 1:01:08
  Speaker 1: I think, when I say I think that burning carbon
• 1:01:12
  Speaker 1: and eating red meat for that matter, contribute to global warming,
• 1:01:16
  Speaker 1: I'm not saying that you shouldn't burn carbon and you
• 1:01:19
  Speaker 1: shouldn't eat red meat. I have too many cars and boats.
• 1:01:21
  Speaker 1: I eat lots of red meat. So I'm not I'm
• 1:01:24
  Speaker 1: not let No, I'm fine. I'm not lecturing people, Hey,
• 1:01:27
  Speaker 1: change your life. But I think it's hypocritical for people
• 1:01:31
  Speaker 1: who know better to say, oh, just because we have
• 1:01:34
  Speaker 1: a cold company and we fund signed research that says
• 1:01:37
  Speaker 1: this has no impact. I'm not. I object to the
• 1:01:41
  Speaker 1: hypocrisy of that. I'm not telling people change your life. Hey,
• 1:01:45
  Speaker 1: you're affecting the world. Let's accept it and move on.
• 1:01:47
  Speaker 1: I like your solution, which is to try and come
• 1:01:50
  Speaker 1: up with a solution rather than digress into the debate too.
• 1:01:53
  Speaker 1: It's all too complicated, and you're never, as you said,
• 1:01:56
  Speaker 1: you will never change people's minds about this because it's
• 1:02:00
  Speaker 1: become a religious fight. Not know, five million people a
• 1:02:05
  Speaker 1: year die from burning wood. I mean, so, what do
• 1:02:08
  Speaker 1: you mean in terms of the or or what we
• 1:02:13
  Speaker 1: see every winter where people take a carosene heat or
• 1:02:16
  Speaker 1: in the fumes. You know, a joke about the garage,
• 1:02:19
  Speaker 1: but learning stuff releases all sorts of noxious fun. That's terrific.
• 1:02:23
  Speaker 1: It's terrific. And so you know, um, the people who
• 1:02:28
  Speaker 1: believe that you should you know, like like so the
• 1:02:31
  Speaker 1: Union of Concerned Scientists which was born about thirty years
• 1:02:35
  Speaker 1: ago and opposial nuclear weapons, right well, an opposition to
• 1:02:40
  Speaker 1: nuclear weapons, but also you know nuclear power plants because
• 1:02:43
  Speaker 1: they were sort of hand in hand. Um. They just
• 1:02:47
  Speaker 1: about two months ago reversed their position and said, you know,
• 1:02:51
  Speaker 1: nuclear energy is the solution because there's no there's no
• 1:02:56
  Speaker 1: carbon dioxide. So you know, if you live long enough,
• 1:02:59
  Speaker 1: you watch all these convoluting everything comes around. Um and uh,
• 1:03:05
  Speaker 1: you know, it depends on what the priority is and
• 1:03:08
  Speaker 1: what the new religious zeal is. UM. So advanced nuclear
• 1:03:14
  Speaker 1: is legitimately back on the table, thank god, and much
• 1:03:19
  Speaker 1: lower radioactive waste product. And no, that's the traditional way
• 1:03:24
  Speaker 1: of doing it. Um and and and so we actually
• 1:03:28
  Speaker 1: another company we helped get started is a nuclear remediation
• 1:03:32
  Speaker 1: It's called Curion ku r I. And what do they do.
• 1:03:35
  Speaker 1: They they they try and vitrify the the waste product
• 1:03:41
  Speaker 1: from nuclear fission plants. And um, that enables you to
• 1:03:47
  Speaker 1: bury it in the store. It We're not all the
• 1:03:49
  Speaker 1: way there yet, but in the process, we we we
• 1:03:52
  Speaker 1: we developed a media that will enable to take caes
• 1:03:55
  Speaker 1: the amount of water and um that radioactive very negative
• 1:03:59
  Speaker 1: and and we came a huge problem with Fukujima. Uh
• 1:04:03
  Speaker 1: so we as a small startup company were the only
• 1:04:06
  Speaker 1: ones who were able to get into Fukushima and help.
• 1:04:08
  Speaker 1: Really and so something that was going to be like
• 1:04:11
  Speaker 1: you know, growing very slowly at first, just grew in size.
• 1:04:15
  Speaker 1: So we've added other capabilities and uh it's fascinating. So
• 1:04:19
  Speaker 1: curium like with a K like madame k you are
• 1:04:21
  Speaker 1: io n C. And so this removes radioactive season um
• 1:04:26
  Speaker 1: from water in order to clean up that's the big
• 1:04:30
  Speaker 1: problem right now. It's not that people are dying and
• 1:04:33
  Speaker 1: all that kind of no, but you you have potentially
• 1:04:36
  Speaker 1: dangerous water. You can't put it into and you can't
• 1:04:39
  Speaker 1: stop it. Water finds its own level and it's really
• 1:04:42
  Speaker 1: a problem. But we, you know, we have been helping
• 1:04:45
  Speaker 1: them fix that problem. And this company is removing radioactive
• 1:04:49
  Speaker 1: season um from water in Japan today today has been
• 1:04:53
  Speaker 1: for three years now. Really, wow, that's fast. It was
• 1:04:56
  Speaker 1: a startup that was met him. You know, three people
• 1:04:59
  Speaker 1: back in and now what's going on there? That's a
• 1:05:02
  Speaker 1: good question. Um, you're an investor in this company, and
• 1:05:08
  Speaker 1: how is it growing? Is it home run? What's the
• 1:05:13
  Speaker 1: exit strategy for a company like that? Um, that's a
• 1:05:16
  Speaker 1: good question. I'll tell you next time we talk. Okay,
• 1:05:19
  Speaker 1: well we'll we'll, We'll have to we'll have to revisit
• 1:05:21
  Speaker 1: that any other VC stuff that's interesting before we move on.
• 1:05:25
  Speaker 1: Probably probably I probably said I've said too much, and
• 1:05:29
  Speaker 1: I've probably caused too many eyes to glaze. All right, No, no,
• 1:05:32
  Speaker 1: I well I can't tell you about other eyes, but
• 1:05:34
  Speaker 1: I glazing over. But I find this sort of stuff,
• 1:05:37
  Speaker 1: this stuff fascinating. There's a show on the Science Channel.
• 1:05:41
  Speaker 1: So my background was applied mathematics and physics until my
• 1:05:46
  Speaker 1: senior year in college. And I figured out that if
• 1:05:48
  Speaker 1: I switched to polyscien philosophy, I can drink beer and
• 1:05:52
  Speaker 1: chase girls and not have double labs for three times
• 1:05:56
  Speaker 1: a week. And so I have enough physics and math
• 1:05:59
  Speaker 1: to be dangerous to my my My, my best friend
• 1:06:01
  Speaker 1: uh as an undergraduate, was a brilliant guy who ended
• 1:06:04
  Speaker 1: up being chairman of the Biomedical Engineering department at Hopkins
• 1:06:06
  Speaker 1: for seventeen years. What worlding now and uh? And he
• 1:06:09
  Speaker 1: helped me get through. You truly helped me get through UH.
• 1:06:12
  Speaker 1: And whenever I would say I was really a very
• 1:06:15
  Speaker 1: mediocre student in M I T he'd say, oh no,
• 1:06:18
  Speaker 1: but when you know later on, when you started taking
• 1:06:20
  Speaker 1: religion and political science, you can help me. You really,
• 1:06:23
  Speaker 1: you really knocked the ball out of the park. And
• 1:06:26
  Speaker 1: I said, I don't think. I don't think that's what
• 1:06:28
  Speaker 1: M I T is. All that comparative religious studies in
• 1:06:32
  Speaker 1: M I not. It was a great It was a great.
• 1:06:34
  Speaker 1: Houston Smith was a professor. He was he was world
• 1:06:37
  Speaker 1: now and I mean I has got great but you know,
• 1:06:41
  Speaker 1: but that was not but it was it was you know.
• 1:06:44
  Speaker 1: But but but I learned so much from going there
• 1:06:47
  Speaker 1: about applying yourself, overcoming obstacles. It's not an easy place,
• 1:06:52
  Speaker 1: but no, no, it's a very competitive place, very competitive,
• 1:06:55
  Speaker 1: which I think is a great preparation for life, to
• 1:06:58
  Speaker 1: say the least. What I was gonna mentioned, there's a
• 1:07:01
  Speaker 1: show on the Science Channel called How the Universe Works,
• 1:07:05
  Speaker 1: and essentially it's really complex astrophysics with great digital graphics.
• 1:07:13
  Speaker 1: So I don't know if that's what the inside of
• 1:07:17
  Speaker 1: a neutron star looks like. But okay, that's close enough.
• 1:07:20
  Speaker 1: It's a little more scientific than industrial light and magic shows.
• 1:07:24
  Speaker 1: You on Star Wars, you know that stuff is is fascinating. So,
• 1:07:28
  Speaker 1: speaking of of saying too much, let's talk a little
• 1:07:31
  Speaker 1: bit about Um, the SEC, and I know this is
• 1:07:35
  Speaker 1: a an area I want to tread lightly. Let me
• 1:07:39
  Speaker 1: let me bring up another guest. I had Mark Cuban
• 1:07:42
  Speaker 1: on some time ago, and well, let's let's let's talk
• 1:07:48
  Speaker 1: about that a little bit. But Mark went off on
• 1:07:51
  Speaker 1: an absolute jihad about the SEC and he talked about
• 1:07:57
  Speaker 1: how they're miss misfocused, misguided on fair. He went off
• 1:08:02
  Speaker 1: and after the conversation was like, are you sure you
• 1:08:04
  Speaker 1: want to say this? He's like, no, we just won
• 1:08:06
  Speaker 1: in court. We're done with them. They they you know,
• 1:08:09
  Speaker 1: they had to put their tail between their legs and
• 1:08:10
  Speaker 1: walk away. Um, you had a not especially pleasant experience
• 1:08:15
  Speaker 1: with the SEC. What do you think about what Mark
• 1:08:18
  Speaker 1: had to say? Um? I know Mark, before Mark made
• 1:08:23
  Speaker 1: his first fortune, we worked together on a private investment
• 1:08:26
  Speaker 1: I made. UM. He's a very smart guy. He's obviously
• 1:08:28
  Speaker 1: where you're outspoken guy, very colorful guy. Um, he was
• 1:08:32
  Speaker 1: managing his own personal money. He didn't have the responsibility
• 1:08:35
  Speaker 1: of managing money for you know, for fiduciaries and have
• 1:08:40
  Speaker 1: a lot of employees and everything. So I obviously I'm
• 1:08:43
  Speaker 1: gonna approach this in a far different way. I did not.
• 1:08:46
  Speaker 1: He has to be less circumspect than than you must,
• 1:08:48
  Speaker 1: for sure. And um I I did one of those
• 1:08:53
  Speaker 1: settlement things with the SEC neither admitting nor denying guilt.
• 1:08:57
  Speaker 1: Um uh. And that was that was that was after
• 1:09:02
  Speaker 1: the case was reopened. People well, like I think they
• 1:09:08
  Speaker 1: walked in and three or O four and it didn't
• 1:09:11
  Speaker 1: get resolved until O nine. It was resolved once where
• 1:09:14
  Speaker 1: they they dropped it and and there was a congressional
• 1:09:18
  Speaker 1: hearing and they actually made their notes available their their
• 1:09:22
  Speaker 1: closing document, which is an internal thing. And I'm told
• 1:09:24
  Speaker 1: by the lawyer's this first time ever. And then it
• 1:09:26
  Speaker 1: got reopened and and and it sort of got reopened
• 1:09:29
  Speaker 1: right when Nate Off happened. So you can you can
• 1:09:32
  Speaker 1: come you can go to you can come to your
• 1:09:34
  Speaker 1: own conclusions. Is to you know, what what what was
• 1:09:37
  Speaker 1: going on? Um the case had to do with Microsoft,
• 1:09:40
  Speaker 1: which is the most um widely followed company in the world.
• 1:09:45
  Speaker 1: Um and uh. You know, there's really not much to
• 1:09:50
  Speaker 1: say about it other than what I said at the time,
• 1:09:52
  Speaker 1: which is, UM, this is too distracting, And that actually
• 1:09:58
  Speaker 1: was a factual statement. It was stremely distracting. There were
• 1:10:01
  Speaker 1: many things I thought I could do with my life.
• 1:10:03
  Speaker 1: I was sixty eight years old. To fight from that
• 1:10:06
  Speaker 1: point I would have taken another three to five years.
• 1:10:09
  Speaker 1: And so if I had one who's going to give money,
• 1:10:11
  Speaker 1: a hedge fund guy who's in his early seventies, it
• 1:10:14
  Speaker 1: was just it was a ludicrous battle to fight, um
• 1:10:18
  Speaker 1: and uh and and I thought, how more interesting things
• 1:10:22
  Speaker 1: to do with my life. And it sounds like you
• 1:10:23
  Speaker 1: certainly have been focusing on a lot. I'm very happy
• 1:10:26
  Speaker 1: about the decision I made. It. It's nothing you like
• 1:10:28
  Speaker 1: to go to your grave with you know UM and
• 1:10:31
  Speaker 1: have your grandkids google UM and find out you know
• 1:10:36
  Speaker 1: UM about But UM. I was convinced at the time
• 1:10:40
  Speaker 1: it was the right decision, and I'm convinced still convinced.
• 1:10:43
  Speaker 1: And it sounds like you have not, um lost a
• 1:10:47
  Speaker 1: step in terms of what you're focusing on after that.
• 1:10:50
  Speaker 1: Success in life is just keep moving forward, moving forward,
• 1:10:54
  Speaker 1: moving forward, like a shark. If you stop swimming. It's well.
• 1:10:57
  Speaker 1: I client for my fifty ninth birthday, I claimed coleman
• 1:11:01
  Speaker 1: Jaro and really yeah, and the locals have this expression pole,
• 1:11:05
  Speaker 1: which means slow, slow, slow, slow, one foot in front
• 1:11:09
  Speaker 1: of the other and keep moving forward. Count So you're
• 1:11:15
  Speaker 1: still in the upper upper reaches of that. There's still elevation,
• 1:11:21
  Speaker 1: sickness and terrible way weather. I know Everest is twenty
• 1:11:25
  Speaker 1: six something. That's supposed that's a technical claim, right, people,
• 1:11:29
  Speaker 1: Supposedly the last five thousand feet of that are are
• 1:11:33
  Speaker 1: hallucinating and what's terrible? Yeah, no, I didn't want to
• 1:11:36
  Speaker 1: be miserable, but this, this was this was not quite miserable.
• 1:11:40
  Speaker 1: But how long did it take to this is news
• 1:11:42
  Speaker 1: to me. By the way, this doesn't show up in
• 1:11:44
  Speaker 1: any of our research about you. Um, how long did
• 1:11:47
  Speaker 1: it take to get to the top of how long
• 1:11:50
  Speaker 1: there are? We prepped for six months? But really that's amazing. Yeah,
• 1:11:56
  Speaker 1: it wasn't strenuous prepping, but it was trapping. But there
• 1:12:00
  Speaker 1: are two days ago. You can go and I've forgotten
• 1:12:01
  Speaker 1: the names of the trails. You can go straight up
• 1:12:03
  Speaker 1: the spine of the mountain. You can loop around, you
• 1:12:06
  Speaker 1: can Yeah, which way did you the ladder because at
• 1:12:11
  Speaker 1: nine I wanted to acclimate as slowly as possible. How
• 1:12:14
  Speaker 1: long did it take to get to the top three days?
• 1:12:16
  Speaker 1: Three days and then back down? Well that's the interesting thing.
• 1:12:19
  Speaker 1: But the last day you wake up at ten eleven
• 1:12:22
  Speaker 1: at night. I can't remember exactly when, because you want
• 1:12:24
  Speaker 1: to walk up the glacial rain while it's frozen so
• 1:12:27
  Speaker 1: you don't slide back. You get to the peak at
• 1:12:30
  Speaker 1: six thirty in the morning when the sun's just spectacular
• 1:12:34
  Speaker 1: you then you go back down to the camp that
• 1:12:37
  Speaker 1: you just straight down or it's you have a hard
• 1:12:41
  Speaker 1: time lifting your legs at this point, I mean, the
• 1:12:44
  Speaker 1: quads are just a um and uh. So you stop
• 1:12:47
  Speaker 1: at fifteen thousand feet where you were the night before,
• 1:12:49
  Speaker 1: you sleep for two hours, and then you go down
• 1:12:51
  Speaker 1: to twelve or ten I can't remember, just to acclimate
• 1:12:54
  Speaker 1: the pressure, to get it all over with um and
• 1:12:59
  Speaker 1: and uh. It's an exhilaration to believe you can do that.
• 1:13:04
  Speaker 1: You're looking down on the clouds. It's uh, you know.
• 1:13:07
  Speaker 1: But being being a hedge fun guy, I of course
• 1:13:09
  Speaker 1: had my satellite phone and at the top of the
• 1:13:11
  Speaker 1: mountain I had a call in to get quotes you
• 1:13:14
  Speaker 1: were trading. From the top of it. I didn't. I
• 1:13:16
  Speaker 1: didn't trust my judgment off but but I certainly wanted
• 1:13:19
  Speaker 1: to be in touch. Well, you had enough of your
• 1:13:21
  Speaker 1: wits about you to know that you were not to
• 1:13:23
  Speaker 1: be trust trust. I had a friend who once went
• 1:13:26
  Speaker 1: to Africa for two weeks, came back and the crash
• 1:13:29
  Speaker 1: of eighty seven had occurred, and he knew nothing about
• 1:13:32
  Speaker 1: it during the whole really, and that that memory stayed
• 1:13:35
  Speaker 1: with me. It's like, you cannot you cannot do what
• 1:13:37
  Speaker 1: I do and be removed from the world for the
• 1:13:41
  Speaker 1: missed the You know. My one of my favorite eighty
• 1:13:45
  Speaker 1: seven stories is David Rosenberg's first day of work. He
• 1:13:49
  Speaker 1: had been a government economist and he went to work
• 1:13:51
  Speaker 1: for not Mary Lynch. Was the job before that? His
• 1:13:54
  Speaker 1: first day in the job was nice. Was the black Monday?
• 1:13:57
  Speaker 1: Is that right? Yeah? That was the first day. You
• 1:13:59
  Speaker 1: guys talked about autism by five. So this guy is
• 1:14:02
  Speaker 1: running a hedge fund. He goes to Africa in he
• 1:14:05
  Speaker 1: he didn't have a hedge funt. He's running money. He
• 1:14:09
  Speaker 1: goes in October and he comes back and what the
• 1:14:12
  Speaker 1: hell happen? And he calls from the airport and I
• 1:14:13
  Speaker 1: Robi and they tell him and where the markets are
• 1:14:16
  Speaker 1: and don't don't joke with me, right, this is too serious.
• 1:14:21
  Speaker 1: This is where things are. Yeah, the flash crash in
• 1:14:25
  Speaker 1: two thousand ten, I took off from I think it
• 1:14:28
  Speaker 1: was Dallas at like nine in the morning, New York time,
• 1:14:32
  Speaker 1: and this was there was no WiFi on the flight
• 1:14:35
  Speaker 1: because it was a short flight, and I land in
• 1:14:38
  Speaker 1: maybe a Chicago and land in in uh Laguardi, and
• 1:14:41
  Speaker 1: it was what the hell happened? Is? Wait, we're down
• 1:14:44
  Speaker 1: a thousand points and now we're only down what like
• 1:14:48
  Speaker 1: I'm like, soun's wrong with I called somebody, Son's wrong
• 1:14:50
  Speaker 1: my phone? It's shown, No, you don't stand It was
• 1:14:52
  Speaker 1: two thirty two three. Just just absolutely insane. All right.
• 1:14:57
  Speaker 1: So let's um, let's get to some of my favorite questions.
• 1:15:00
  Speaker 1: I know you, Um, you have to have other places
• 1:15:04
  Speaker 1: to go, that's right. UM. So who are your early mentors?
• 1:15:10
  Speaker 1: Who who really uh put the love of investing and
• 1:15:14
  Speaker 1: and both technology venture investing and asset management into you? Um?
• 1:15:20
  Speaker 1: Good question. UM, I mean we're talking to ancient history now. UM.
• 1:15:27
  Speaker 1: I got out of Columbia and UH interviewed around and
• 1:15:30
  Speaker 1: I interviewed a Kidder. So what you mentioned was the
• 1:15:33
  Speaker 1: first job. There was a guy at Kidder at the time,
• 1:15:35
  Speaker 1: Tom Folder, who was an M I. T. Graand UM,
• 1:15:39
  Speaker 1: who was director of research. He had hired about six
• 1:15:42
  Speaker 1: months earlier, guy Bob Johnson to follow computers M I T.
• 1:15:46
  Speaker 1: Harvard Business School. Uh. And he hired me and we
• 1:15:49
  Speaker 1: formed the first sort of group group. Um. It was
• 1:15:53
  Speaker 1: unheard of back in sixty seven, sixty sixty nine. UM.
• 1:15:57
  Speaker 1: And that that that was a kick. So you know,
• 1:16:00
  Speaker 1: if I had gotten you recruited to follow the energy industry,
• 1:16:05
  Speaker 1: I probably would have become a deep value energy buyers.
• 1:16:08
  Speaker 1: I don't know, but I got in with these guys
• 1:16:09
  Speaker 1: who who had a similar mindset, similar approach um. Uh.
• 1:16:15
  Speaker 1: And so I would say that that that influenced me.
• 1:16:17
  Speaker 1: And then I, uh, I've always worked for a smaller firm.
• 1:16:21
  Speaker 1: You are what you are. So you know, my first
• 1:16:23
  Speaker 1: job out of college was Lockheed, which not exactly a
• 1:16:26
  Speaker 1: small phone, exactly a small firm. Then then then I
• 1:16:29
  Speaker 1: go down to Wall Street, uh, and I joined Kidder,
• 1:16:31
  Speaker 1: which was a substantial firm at that time. And Kidder
• 1:16:34
  Speaker 1: eventually became whatever or Dean Winder. No, No, didn't didn't
• 1:16:40
  Speaker 1: buy it. I don't remember. I think Gee bought it
• 1:16:43
  Speaker 1: and then hold it UM. But it disappeared. It was
• 1:16:46
  Speaker 1: a great firm, but it disappeared. UM. I went from
• 1:16:49
  Speaker 1: kidder uh to a small a small firm by the
• 1:16:52
  Speaker 1: name of Lombard by Tallis Pagan, Ducy and Nelson, which
• 1:16:55
  Speaker 1: doesn't appear in any of bio stuff any longer. Was
• 1:16:57
  Speaker 1: there for for all of one year, and the wise
• 1:17:00
  Speaker 1: peg were was starting up a complete startup. That's a
• 1:17:03
  Speaker 1: that's now a decent sized farm. They sold out to
• 1:17:07
  Speaker 1: a Dutch bank, but um, I was the first. I
• 1:17:10
  Speaker 1: was the first higher after the partners opened the doors.
• 1:17:14
  Speaker 1: UM stay there for fifteen years, managed firm capital, had
• 1:17:17
  Speaker 1: a pretty good record UM for five years, and went
• 1:17:20
  Speaker 1: out and started the funds. So the investing part of
• 1:17:23
  Speaker 1: it was, you know, a combination of my first job
• 1:17:27
  Speaker 1: and then the venture experience at weiss Peck and managing money.
• 1:17:32
  Speaker 1: And I learned a lot about money management and cycles
• 1:17:34
  Speaker 1: and money management, and I learned a lot UM and
• 1:17:38
  Speaker 1: I learned a lot by managing partners Capital and anybody
• 1:17:41
  Speaker 1: standing out at WISPEC as all my uh. I don't
• 1:17:46
  Speaker 1: know if you'd say mentor but but influence influence. So
• 1:17:49
  Speaker 1: Byron Ween was and and Byron has been an investor,
• 1:17:53
  Speaker 1: and I was an investor when I had funds. UM
• 1:17:56
  Speaker 1: from the very beginning we had offices next to each other.
• 1:18:00
  Speaker 1: Um eventually came to work for Peaquad as the chief
• 1:18:03
  Speaker 1: strategist when he left Morgan Stanley's now with of course
• 1:18:06
  Speaker 1: at Blackstone UM. So Byron was one of them. There's
• 1:18:10
  Speaker 1: unfortunately a fellow just passed away. But then Mickey Straus,
• 1:18:13
  Speaker 1: who who I worked with there, So it was really
• 1:18:16
  Speaker 1: more my colleagues than it was you know, and and
• 1:18:19
  Speaker 1: sometimes you learn as much from colleagues as you do
• 1:18:22
  Speaker 1: from Biman was on the show. He's now in his
• 1:18:26
  Speaker 1: early eight he still maintains a relentless travel schedule. I
• 1:18:32
  Speaker 1: think he's crazy. He flies to China all the time.
• 1:18:34
  Speaker 1: He's like, I know people my age and younger who
• 1:18:38
  Speaker 1: are like, oh, I can't travel that much. He's on
• 1:18:40
  Speaker 1: the road a week or two a month. Like he's
• 1:18:43
  Speaker 1: twenty six right out of school. I don't think he's
• 1:18:46
  Speaker 1: like twenty six out of school, but he's uh but yeah, no,
• 1:18:49
  Speaker 1: he's he's an amazing He's a warrior. He's a warrior.
• 1:18:52
  Speaker 1: He's eighty's something. He's a warrior. There's another guy who
• 1:18:56
  Speaker 1: just loves what he does and nothing's going to stop him.
• 1:18:59
  Speaker 1: And we're stiver close. I'm gonna ask about a book
• 1:19:03
  Speaker 1: that I suspect you've read, and if you haven't, I'm
• 1:19:05
  Speaker 1: going to recommend it. James Glicks The Information not the
• 1:19:10
  Speaker 1: History of Information and Theory and and that put that
• 1:19:14
  Speaker 1: right on the top of your list because you read
• 1:19:16
  Speaker 1: enough interesting, eclectic stuff about both history and science. This
• 1:19:21
  Speaker 1: he's a brilliant writer. He's done the book Chaos about
• 1:19:25
  Speaker 1: chaos theory. That's him and this book is this should
• 1:19:30
  Speaker 1: have won the Pulitz or if it didn't, it may have.
• 1:19:33
  Speaker 1: Just a brilliant If you like that sort of stuff,
• 1:19:37
  Speaker 1: suspect you do, you're gonna you're gonna find that that fascinating.
• 1:19:40
  Speaker 1: So so let's talk a little bit about what's changed
• 1:19:44
  Speaker 1: during in the industry over the course of your career.
• 1:19:47
  Speaker 1: What do you think, whether it's venture capital or traditional investing,
• 1:19:52
  Speaker 1: everything everything, what's what's the more? When you know I
• 1:19:56
  Speaker 1: came down to Wall Street in seven and um, you
• 1:20:01
  Speaker 1: know there was the Lost generation. Nobody came down to
• 1:20:03
  Speaker 1: Wall Street in the thirties, forties to two people started.
• 1:20:08
  Speaker 1: You know, so is that luck or is that I followed?
• 1:20:11
  Speaker 1: What what what I thought my passion was. I don't know.
• 1:20:14
  Speaker 1: I mean, I guess there's an element of luck to it.
• 1:20:16
  Speaker 1: But so I got there at the beginning of the cycle,
• 1:20:19
  Speaker 1: beginning of the bear market. It was also the beginning
• 1:20:22
  Speaker 1: of market. Yeah. So there was a bear market, as
• 1:20:25
  Speaker 1: you know, from seventies seventy one to eighty three. Um.
• 1:20:30
  Speaker 1: And uh, the time period I like to use is
• 1:20:33
  Speaker 1: the Dow kissed the thousand in nineteen sixty eight. It
• 1:20:36
  Speaker 1: did not eclipse that in nineteen sixty six until eighty two.
• 1:20:43
  Speaker 1: So it's a full sixteen years and those are my
• 1:20:45
  Speaker 1: formative years. So now you know, you come in, the
• 1:20:48
  Speaker 1: FED keeps interustrates at zero assets getting fled to go
• 1:20:52
  Speaker 1: up though, doesn't it. But a lot of people come
• 1:20:55
  Speaker 1: in and you know what one of my mentor there
• 1:20:58
  Speaker 1: was a mentor um that I forgot to mention, but said,
• 1:21:02
  Speaker 1: you know, I had the expression, which others have had,
• 1:21:04
  Speaker 1: don't confuse brains with the market. Um. I really believe that.
• 1:21:08
  Speaker 1: But you know so, um, but back then, UM, you
• 1:21:12
  Speaker 1: didn't just come into the market, and you know, the
• 1:21:15
  Speaker 1: averages went up because the government decided they should go
• 1:21:17
  Speaker 1: up or whatever is going on right now. Um, back
• 1:21:20
  Speaker 1: then you had fifteen years of nothing and you had
• 1:21:23
  Speaker 1: to survive. And that's that's nominal in real inflation, it
• 1:21:27
  Speaker 1: was a big loser. Inflation was high, of course, so
• 1:21:31
  Speaker 1: you know, um that that was my baptism. Um, well,
• 1:21:35
  Speaker 1: what was it like in the early seventies? What what sucked?
• 1:21:38
  Speaker 1: It sucked? That's that's an understatement. Obviously, the bond side
• 1:21:43
  Speaker 1: was paying huge, yes, huge again nominal yields. But on
• 1:21:48
  Speaker 1: the equity side, who's buying stocks? There weren't that many.
• 1:21:53
  Speaker 1: But you know, and that was all I did. I mean,
• 1:21:55
  Speaker 1: you know, I've never met a bond I like, um,
• 1:22:00
  Speaker 1: which is not true, but um, but you can put
• 1:22:04
  Speaker 1: well if I haven't, you know, I knew the play.
• 1:22:06
  Speaker 1: You know, when the rates were up, you know, at
• 1:22:09
  Speaker 1: the end of that period, and you know, we've had
• 1:22:12
  Speaker 1: the biggest bond bullmarket ever from two to You could
• 1:22:18
  Speaker 1: have bought zero coupons and paid no interest and made
• 1:22:21
  Speaker 1: a fortune, but um, you know, but I didn't do that,
• 1:22:24
  Speaker 1: So I stuck with the stock thing. Um, And you
• 1:22:27
  Speaker 1: know that that's worked out. It's worked out enormously well.
• 1:22:31
  Speaker 1: But it also means that I was a late bloomer
• 1:22:34
  Speaker 1: because you know, I put in seventeen years before I
• 1:22:38
  Speaker 1: started getting really paid back for credit ship. I paid
• 1:22:41
  Speaker 1: my dues. But I did it. When I did it,
• 1:22:43
  Speaker 1: I did it because I loved it. And now I
• 1:22:45
  Speaker 1: think people come in because they think you're gonna get rich. Well,
• 1:22:49
  Speaker 1: that's always the wrong way to yeah, right, If you're
• 1:22:52
  Speaker 1: doing it for the money, then everything that's not putting
• 1:22:55
  Speaker 1: money in your pocket is a misery. Right. If you're
• 1:22:57
  Speaker 1: doing it because you love it, Well, I'm not making money,
• 1:22:59
  Speaker 1: but I'm having fun. So you know, I like, I
• 1:23:01
  Speaker 1: like I like obviously I like engineering enough, you know,
• 1:23:04
  Speaker 1: but I like the discipline of it, in the logic
• 1:23:07
  Speaker 1: of it. Um. But when you added to that the
• 1:23:10
  Speaker 1: market and the uncertainty and the ability to try and
• 1:23:12
  Speaker 1: outcuss other people along with data, um, that became really exciting. Um.
• 1:23:20
  Speaker 1: It wasn't. It wasn't because I you know, my dad
• 1:23:22
  Speaker 1: wasn't eluctrician, and I wanted to become a billionaire or something,
• 1:23:25
  Speaker 1: and there was a farthest thing from my mind. It
• 1:23:29
  Speaker 1: was just it just happened. It happened, truly, just happened
• 1:23:33
  Speaker 1: one of the one of those things. So maybe you
• 1:23:35
  Speaker 1: said before, I don't really think about a lot about luck.
• 1:23:38
  Speaker 1: How much of what happened was just serendipitous word. Yeah, No,
• 1:23:44
  Speaker 1: that that I agree with. All right, So you're slicing
• 1:23:47
  Speaker 1: the luck factor a little more right place, right time,
• 1:23:52
  Speaker 1: and no doubt. Okay, So so there's an element of
• 1:23:54
  Speaker 1: luck to that. True. No, that part is luck, I agree.
• 1:23:57
  Speaker 1: But individual things I did or whatever, and that was
• 1:24:01
  Speaker 1: a combination I believe I created that. That's a combination
• 1:24:05
  Speaker 1: of smarts and hard work and an application. So. Um,
• 1:24:10
  Speaker 1: so we know lots and lots of stuff has changed
• 1:24:13
  Speaker 1: in the past. What are some of the next shifts
• 1:24:16
  Speaker 1: that you see in these industries? From your vantage point
• 1:24:20
  Speaker 1: looking at technology and looking at the rate of change
• 1:24:24
  Speaker 1: which just seems to keep accelerating. Yeah, I think you're
• 1:24:27
  Speaker 1: in this fascinating Um. I mean one of the reasons
• 1:24:30
  Speaker 1: I drifted to venture capital is because um um uh
• 1:24:36
  Speaker 1: markets of the economy is is matured. Um we have right,
• 1:24:42
  Speaker 1: so we have huge amounts of social security UM, pension funds,
• 1:24:48
  Speaker 1: UH savings plans, uh iras four O one foundations, trust
• 1:24:55
  Speaker 1: and and anybody is that we're just a washing liquidity
• 1:24:58
  Speaker 1: um and so it's got a go someplace. So um,
• 1:25:02
  Speaker 1: it needs a big engine solution to how do you
• 1:25:06
  Speaker 1: intelligently manage all these assets plus corporations um uh In
• 1:25:11
  Speaker 1: the US at least, um. The one good thing about
• 1:25:14
  Speaker 1: activism and all the other stuff is it's formed forced
• 1:25:17
  Speaker 1: productivity that keep increasing in the United States, which has
• 1:25:20
  Speaker 1: not been happening in the rest of the world. Even
• 1:25:22
  Speaker 1: though the measures of productivity in the US or are
• 1:25:25
  Speaker 1: softer than a lot of people say that problem or
• 1:25:29
  Speaker 1: do we still have good productivity? Yet? I think we
• 1:25:32
  Speaker 1: have good productivity. I think the economy is changing rapidly.
• 1:25:35
  Speaker 1: And the productivity in the areas that generate growth, I
• 1:25:39
  Speaker 1: think the productivity is good. And then and then in
• 1:25:41
  Speaker 1: the areas that don't produce growth, capital is being returned um.
• 1:25:45
  Speaker 1: So so the capital part is more productive. So there
• 1:25:50
  Speaker 1: where washing liquidity um and uh. There's no worldwide, there's
• 1:25:55
  Speaker 1: not a lot of growth in the US. The growth
• 1:25:57
  Speaker 1: is obviously much slower than it used to be. So
• 1:26:00
  Speaker 1: somebody has to manage all of that money. And you're
• 1:26:03
  Speaker 1: not going to manage it by giving it to a
• 1:26:04
  Speaker 1: guy like May back thirty years ago, who's going to
• 1:26:07
  Speaker 1: buy market capps under two hundred millions? So you know,
• 1:26:10
  Speaker 1: you go to you know, Ray Dally has got a
• 1:26:13
  Speaker 1: you know, a great engine, and other people have great engines.
• 1:26:16
  Speaker 1: So you go to these algorithmic kind of things that
• 1:26:19
  Speaker 1: that are more formulaic than than what I ever used
• 1:26:23
  Speaker 1: to do. UM. So you know, when you say what's
• 1:26:26
  Speaker 1: going to go on in the future, I think that
• 1:26:29
  Speaker 1: those trends are going to continue. I think this this,
• 1:26:33
  Speaker 1: this UM, this innovation that we're seeing is um is
• 1:26:37
  Speaker 1: there's no stopping it. And Ure's notion. And what does
• 1:26:43
  Speaker 1: that mean in terms of of US growth, the change
• 1:26:48
  Speaker 1: of technology and for the rest of the world economy. UM.
• 1:26:53
  Speaker 1: I think it means, UM, don't bet against it. Well,
• 1:26:57
  Speaker 1: for sure, you don't bet against it, and you should
• 1:26:58
  Speaker 1: bet with it. And they're gonna be superior returns for
• 1:27:02
  Speaker 1: people who fully understand it. UM. Right now, it's uh,
• 1:27:06
  Speaker 1: the jealous or the envy factors has worked in and
• 1:27:09
  Speaker 1: so you're seeing all these comments on the unicorns and
• 1:27:12
  Speaker 1: all that kind of stuff. You know, tem per cent
• 1:27:16
  Speaker 1: of the unicorns will work, but they'll be monster companies
• 1:27:19
  Speaker 1: and and and I think that's the wrong focus. These trends.
• 1:27:23
  Speaker 1: There is no there, there there, there's there's no changing
• 1:27:27
  Speaker 1: these trends. Um so that the amount of accority in
• 1:27:30
  Speaker 1: the system is going to continue increase, the amount of
• 1:27:32
  Speaker 1: growth is gonna diminish. The growth is gonna shift from
• 1:27:35
  Speaker 1: old ways of doing things in new ways of doing things. Uh.
• 1:27:38
  Speaker 1: And there's huge opportunities for me um in what I
• 1:27:41
  Speaker 1: now do. God knows if there would be any opportunities
• 1:27:44
  Speaker 1: and what I used to do. Okay, so we're running
• 1:27:47
  Speaker 1: out of time. Let me get to the last two questions.
• 1:27:49
  Speaker 1: These are my my favorite questions. First, what sort of
• 1:27:53
  Speaker 1: advice would you give to a millennial or a college
• 1:27:55
  Speaker 1: graduate today if they were interested in going into either
• 1:27:59
  Speaker 1: at some management or a venture capital Get a job, really, yeah,
• 1:28:06
  Speaker 1: just just find some related job and get some get
• 1:28:10
  Speaker 1: a job in an industry. I would not come into
• 1:28:13
  Speaker 1: this industry fresh out. I didn't. I went and work
• 1:28:16
  Speaker 1: in the aerospace industry for three years. So get some
• 1:28:18
  Speaker 1: other sort of experience and then use that. And then
• 1:28:22
  Speaker 1: last question, what do you know about the world of
• 1:28:25
  Speaker 1: investing today that you wish you knew when you began
• 1:28:29
  Speaker 1: forty years ago? Oh? Well, that's I knew nothing forty
• 1:28:35
  Speaker 1: years ago. I mean I was, you know, was I was.
• 1:28:38
  Speaker 1: I was a wet behind the years, ex college student
• 1:28:42
  Speaker 1: aeronautical engineer, gotten a car pool with Cavelly and Cooperman,
• 1:28:47
  Speaker 1: got fascinated by markets, which I had been a little
• 1:28:50
  Speaker 1: bit interested in before, but I didn't know diad lely. Um,
• 1:28:54
  Speaker 1: so everything everything you know today? Everything all right? Thank
• 1:28:58
  Speaker 1: you so much for being so interest with your time.
• 1:29:01
  Speaker 1: This has really been a fascinating conversation, UM, and I
• 1:29:05
  Speaker 1: really appreciate UM you're spending so much time with I
• 1:29:08
  Speaker 1: appreciate the opportunity to tell the story. You've been listening
• 1:29:11
  Speaker 1: to Masters in Business. I want to thank our our
• 1:29:14
  Speaker 1: engineer Can, my producer Charlie, and my head of research
• 1:29:19
  Speaker 1: Mike bat Nick. If you enjoy this conversation, look up
• 1:29:23
  Speaker 1: an Inch or down an Inch on iTunes and you
• 1:29:25
  Speaker 1: could see the other sixty such conversations we've had. Be
• 1:29:30
  Speaker 1: sure and check out my daily column on Bloomberg View
• 1:29:33
  Speaker 1: dot com or The Big Picture at Dholtz dot com.
• 1:29:36
  Speaker 1: Follow me on Twitter at rid Holts. I'm Barry Hults.
• 1:29:41
  Speaker 1: You've been listening to Masters in Business on Bloomberg Radio