1 00:00:07,000 --> 00:00:09,760 Speaker 1: Hey, this is Trillions presents the e t F Story. 2 00:00:10,240 --> 00:00:13,280 Speaker 1: I'm Joel Weber and I'm the editor of Bloomberg Businessman. 3 00:00:14,320 --> 00:00:16,599 Speaker 1: During the series, we've been tracing the story of the 4 00:00:16,600 --> 00:00:22,800 Speaker 1: exchange traded fund from its origin in the SEC's market 5 00:00:22,840 --> 00:00:26,800 Speaker 1: break report, to building its legal structure to finally bringing 6 00:00:26,840 --> 00:00:31,160 Speaker 1: it to market. Today, it remains the largest GTF with 7 00:00:31,200 --> 00:00:34,960 Speaker 1: two D seventy billion in assets. But when Spy first 8 00:00:35,040 --> 00:00:38,360 Speaker 1: launched in let's just say, it didn't exactly take the 9 00:00:38,400 --> 00:00:43,199 Speaker 1: world by storm. Gary Eisenric is a managing partner at 10 00:00:43,280 --> 00:00:47,400 Speaker 1: fair Field Advisors. At the time of spies launch, he 11 00:00:47,560 --> 00:00:51,479 Speaker 1: was a specialist at spear Leeds and Kellogg tasked with 12 00:00:51,560 --> 00:00:56,120 Speaker 1: providing liquidity as the product's first market maker. A market 13 00:00:56,120 --> 00:00:58,959 Speaker 1: maker is someone who matches buyers and sellers and then 14 00:00:59,000 --> 00:01:02,320 Speaker 1: takes a small cut. On its first day, Spy traded 15 00:01:02,360 --> 00:01:05,200 Speaker 1: about a million shares, and eisen Rick says there was 16 00:01:05,240 --> 00:01:08,200 Speaker 1: a lot of fanfare. There was the big spider, and 17 00:01:08,240 --> 00:01:10,679 Speaker 1: there's all the T shirts and the hats, and a 18 00:01:10,720 --> 00:01:12,720 Speaker 1: lot of dignitaries and a lot of people because it 19 00:01:12,760 --> 00:01:16,039 Speaker 1: was a new issue. And then they put up the 20 00:01:16,080 --> 00:01:18,000 Speaker 1: first print. It was two hundred shares and they had 21 00:01:18,000 --> 00:01:19,880 Speaker 1: it on the ticker tape. I've got a copy of it, 22 00:01:19,920 --> 00:01:22,360 Speaker 1: and they had a few of those, and and so 23 00:01:22,400 --> 00:01:26,080 Speaker 1: I have the initial thing, and then some initial orders happened, 24 00:01:26,080 --> 00:01:31,720 Speaker 1: and then it just sat. Yep, it just sat. Then 25 00:01:31,760 --> 00:01:35,319 Speaker 1: over the next six months that volume went down very 26 00:01:35,440 --> 00:01:38,679 Speaker 1: rapidly to where it was trading eighteen thousand years a day. 27 00:01:38,920 --> 00:01:42,240 Speaker 1: Eric Baltunas and E. T. F analysts with Bluemerican Intelligence 28 00:01:42,240 --> 00:01:46,279 Speaker 1: and our resident historian, says it was disappointing, and rumors 29 00:01:46,280 --> 00:01:49,400 Speaker 1: about whether Spy would live on became spread. So kind 30 00:01:49,400 --> 00:01:52,440 Speaker 1: of had this big hype first day, and but then 31 00:01:52,440 --> 00:01:55,320 Speaker 1: it kind of trailed off, and I don't know if 32 00:01:55,320 --> 00:01:57,000 Speaker 1: they were looking to close it. I heard that, but 33 00:01:57,040 --> 00:01:59,040 Speaker 1: I'm not sure if that's totally true that. In fact, 34 00:01:59,040 --> 00:02:00,640 Speaker 1: I had a number of people say, Gary, are wasting 35 00:02:00,640 --> 00:02:02,960 Speaker 1: your time. It's not gonna make it. But I really 36 00:02:02,960 --> 00:02:04,800 Speaker 1: felt strongly that it was a good enough product. It 37 00:02:04,880 --> 00:02:07,120 Speaker 1: was only twenty five basis points and to be able 38 00:02:07,120 --> 00:02:09,160 Speaker 1: to go in and trade that intra day was great. 39 00:02:09,800 --> 00:02:13,120 Speaker 1: So getting it adopted was the hard part. So how 40 00:02:13,120 --> 00:02:15,560 Speaker 1: did they do it? How did Spy go from treating 41 00:02:15,600 --> 00:02:19,240 Speaker 1: eighteen thousand shares a day to being the world's largest ETF. 42 00:02:21,120 --> 00:02:24,799 Speaker 1: Gary Eisenrich was leading these guerilla marketing efforts. He said 43 00:02:24,840 --> 00:02:28,520 Speaker 1: he was able to sell people on spiders structure, and 44 00:02:28,520 --> 00:02:31,000 Speaker 1: when those people had success with it, they ended up 45 00:02:31,040 --> 00:02:33,480 Speaker 1: telling others. Besides, if they have a good experience trading 46 00:02:33,560 --> 00:02:35,920 Speaker 1: hunter shares, they're going to tell the guy that's going 47 00:02:35,960 --> 00:02:39,200 Speaker 1: to trade ten thousand shares. And that's basically how Spiders 48 00:02:39,360 --> 00:02:42,120 Speaker 1: was from word of mouth and and a cheap product, 49 00:02:42,240 --> 00:02:45,760 Speaker 1: and and people that money managers that we didn't want 50 00:02:45,760 --> 00:02:48,040 Speaker 1: to buy an expensive product that had an embedded hundred 51 00:02:48,040 --> 00:02:49,840 Speaker 1: basis points. They wanted to have it at twenty five 52 00:02:49,880 --> 00:02:52,239 Speaker 1: basis points. And it sort of had to be word 53 00:02:52,240 --> 00:02:57,079 Speaker 1: of mouth because brokers had no incentive to sell Spy. 54 00:02:57,240 --> 00:02:59,359 Speaker 1: So he hit the road with people from the American 55 00:02:59,400 --> 00:03:03,280 Speaker 1: stock Angine or am X to talk about Spy and 56 00:03:03,280 --> 00:03:04,880 Speaker 1: and it was a sale on the n X too. 57 00:03:04,919 --> 00:03:07,120 Speaker 1: I mean, it didn't have the best reputation of that, 58 00:03:07,160 --> 00:03:09,720 Speaker 1: you know, and I don't know that that was warranted 59 00:03:10,000 --> 00:03:12,079 Speaker 1: at all. But I would go to people places and 60 00:03:12,120 --> 00:03:13,919 Speaker 1: they say, I'm not trade on the annex. But to 61 00:03:13,960 --> 00:03:16,400 Speaker 1: get that going, and after a while you would talk 62 00:03:16,440 --> 00:03:18,919 Speaker 1: to people and say I will bake you with fair 63 00:03:19,040 --> 00:03:22,799 Speaker 1: market and trade. So it caught on because people were 64 00:03:22,840 --> 00:03:25,880 Speaker 1: happy with the experience, they were happy, they were happy 65 00:03:25,960 --> 00:03:29,560 Speaker 1: with the return that they were getting. Eric says, people 66 00:03:29,760 --> 00:03:34,320 Speaker 1: including Eisenrich, who are advocating for SPY early on were 67 00:03:34,320 --> 00:03:37,480 Speaker 1: true believers in the product, and that got things moving. 68 00:03:37,560 --> 00:03:43,440 Speaker 1: That's important because repetition, guerrilla marketing, that stuff matters. But 69 00:03:43,520 --> 00:03:46,240 Speaker 1: then you need that plus some kind of an outside catalyst. 70 00:03:46,320 --> 00:03:48,720 Speaker 1: And the outside catalyst was the nineties economy kicked in 71 00:03:48,800 --> 00:03:52,920 Speaker 1: right around and that's just a good year to be 72 00:03:53,040 --> 00:03:56,720 Speaker 1: offering SMP hundred exposure. So you had that outside catalyst 73 00:03:56,800 --> 00:03:59,360 Speaker 1: mixed in with the guerrilla marketing at the bottom from 74 00:03:59,360 --> 00:04:01,840 Speaker 1: true believers, and that's when you started to see the 75 00:04:01,840 --> 00:04:05,080 Speaker 1: assets grow and then from there basically double disassets every 76 00:04:05,160 --> 00:04:08,760 Speaker 1: year for the next whatever decade. Whether it's a happy 77 00:04:08,800 --> 00:04:10,760 Speaker 1: accident or whether it was the hard work of the 78 00:04:10,760 --> 00:04:13,800 Speaker 1: folks at the m X really getting everybody to play 79 00:04:13,840 --> 00:04:17,720 Speaker 1: ball at the same time for their own enlightened self 80 00:04:17,760 --> 00:04:21,760 Speaker 1: interest reasons, it wouldn't have ever worked. Dave Nodded, the 81 00:04:21,880 --> 00:04:25,360 Speaker 1: long time managing director of et F dot Com, says 82 00:04:25,400 --> 00:04:28,839 Speaker 1: there was skepticism lurking in the background. As Spy and 83 00:04:28,920 --> 00:04:32,320 Speaker 1: others moved into the marketplace, the skepticism was around whether 84 00:04:32,400 --> 00:04:34,359 Speaker 1: or not you would ever get both sides of the 85 00:04:34,440 --> 00:04:36,599 Speaker 1: market to participate. And what I mean by that is 86 00:04:36,640 --> 00:04:40,520 Speaker 1: you had to have institutions willing to buy these things, 87 00:04:40,520 --> 00:04:43,760 Speaker 1: willing to buy Spy to get their SMP exposure. But 88 00:04:43,839 --> 00:04:46,479 Speaker 1: at the same time you needed to have people willing 89 00:04:46,560 --> 00:04:50,440 Speaker 1: to be market makers and authorized participants that would arbitrage 90 00:04:50,520 --> 00:04:54,159 Speaker 1: out price discrepancies. And I will admit when I first 91 00:04:54,160 --> 00:04:58,080 Speaker 1: started waiting into this, I was enormously skeptical that that 92 00:04:58,279 --> 00:05:01,120 Speaker 1: second part would show up, because there is a real 93 00:05:01,240 --> 00:05:03,120 Speaker 1: chicken in the egg problem. Right If you only end 94 00:05:03,160 --> 00:05:05,960 Speaker 1: up with one institution that buys fifty million dollars of 95 00:05:06,040 --> 00:05:08,880 Speaker 1: them and then they never trade again, then the second 96 00:05:08,920 --> 00:05:12,080 Speaker 1: side that that ap and market maker side never comes online, 97 00:05:12,400 --> 00:05:15,440 Speaker 1: and the whole thing is a failure. So once Spy 98 00:05:15,640 --> 00:05:18,480 Speaker 1: kind of took off and other people thought to use 99 00:05:18,600 --> 00:05:21,599 Speaker 1: this structure in and track other things, not just the 100 00:05:21,680 --> 00:05:24,960 Speaker 1: SMP five hundred. So one of those things was international, 101 00:05:25,880 --> 00:05:28,599 Speaker 1: and so they had a line of ets from Morgan 102 00:05:28,680 --> 00:05:31,640 Speaker 1: Stanley that came out that were called Webbs, Bob Tole 103 00:05:31,760 --> 00:05:34,920 Speaker 1: began working with Nate Most on this very project from 104 00:05:34,960 --> 00:05:38,640 Speaker 1: Morgan Stanley. So Nate and I start formulating what became 105 00:05:38,680 --> 00:05:41,800 Speaker 1: eventually the filing for WEBS. I have to work with 106 00:05:41,920 --> 00:05:46,320 Speaker 1: Nate because he's so far advanced into thinking compared to 107 00:05:46,360 --> 00:05:51,120 Speaker 1: anybody else at Morgan Stanley. Even so, it's probably October 108 00:05:51,200 --> 00:05:53,360 Speaker 1: ninety three. We get back together right after the summer, 109 00:05:53,640 --> 00:05:56,680 Speaker 1: and we're gonna take and create what we know from 110 00:05:56,680 --> 00:06:01,760 Speaker 1: our commodities world is a receipt. We draft the prospectives, 111 00:06:01,800 --> 00:06:05,159 Speaker 1: We worked with the lawyers from Solomon and Cromwell and 112 00:06:06,040 --> 00:06:09,359 Speaker 1: Lo and Behold, we designed the filing that goes in 113 00:06:09,800 --> 00:06:15,000 Speaker 1: its world equity benchmark shares hence webs. Toll says he 114 00:06:15,080 --> 00:06:19,080 Speaker 1: was very strategic about presenting this new webs product. He 115 00:06:19,200 --> 00:06:22,760 Speaker 1: and Nate Most carefully educated people about what the product 116 00:06:22,839 --> 00:06:25,320 Speaker 1: would really look like. One of the things that was 117 00:06:25,360 --> 00:06:29,279 Speaker 1: so paramount in our thought process was that we wanted 118 00:06:29,440 --> 00:06:32,080 Speaker 1: e t S to be a no fail environment. Even 119 00:06:32,120 --> 00:06:35,360 Speaker 1: though we were trading international securities and packaging them all up. 120 00:06:35,800 --> 00:06:38,960 Speaker 1: We didn't want to fail. Long story short, Spy was 121 00:06:39,000 --> 00:06:41,480 Speaker 1: always known as the Spiders even when M d y 122 00:06:41,600 --> 00:06:43,560 Speaker 1: CA met. That was also sort of the spiders. That 123 00:06:43,640 --> 00:06:46,599 Speaker 1: was just what they called them. So when they Morgan 124 00:06:46,680 --> 00:06:49,600 Speaker 1: Stanley wanted to put out something that used this this structure, 125 00:06:50,360 --> 00:06:53,440 Speaker 1: but they wanted to have it track international markets, you know, 126 00:06:53,520 --> 00:06:56,880 Speaker 1: like Brazil and Mexico and that kind of thing, because 127 00:06:57,200 --> 00:06:59,800 Speaker 1: traders like to trade the whole country at once and 128 00:07:00,120 --> 00:07:03,120 Speaker 1: just pick a stock. When they came out with their 129 00:07:03,440 --> 00:07:07,240 Speaker 1: idea for these international type ETFs, they didn't have They 130 00:07:07,240 --> 00:07:10,000 Speaker 1: couldn't use Spider because that's the state street name. So 131 00:07:10,040 --> 00:07:11,640 Speaker 1: they said, you got to come up with a different 132 00:07:11,840 --> 00:07:15,920 Speaker 1: term so that there's no investor confusion. So the first 133 00:07:16,040 --> 00:07:19,240 Speaker 1: use of the name Exchange Traded Funds is in the 134 00:07:19,240 --> 00:07:22,360 Speaker 1: web perspectives because we had to create something different. And 135 00:07:22,400 --> 00:07:25,240 Speaker 1: so that's what's interesting is that the acronym and the 136 00:07:25,360 --> 00:07:29,640 Speaker 1: name wasn't really put out there until six years after 137 00:07:30,280 --> 00:07:34,520 Speaker 1: bloom and most you know, actually filed for it. WEBBS 138 00:07:34,600 --> 00:07:37,960 Speaker 1: was important because it coined the term exchange traded fund 139 00:07:38,760 --> 00:07:42,160 Speaker 1: but it was also significant because WEBBS was driven by 140 00:07:42,240 --> 00:07:47,800 Speaker 1: client demand, not a says. Unlike Spy, which was innovation driven, 141 00:07:48,280 --> 00:07:54,000 Speaker 1: WEBBS was addressing specific demands. WEBBS was wells far ago 142 00:07:54,080 --> 00:07:58,760 Speaker 1: of Brian Stanley realizing that there was this demand from 143 00:07:58,760 --> 00:08:02,440 Speaker 1: a sophisticated, instance outional trading market that wanted exposure to 144 00:08:02,520 --> 00:08:05,760 Speaker 1: international markets in a way that they couldn't get access. 145 00:08:05,840 --> 00:08:07,520 Speaker 1: And the way the reason they couldn't get access was 146 00:08:07,560 --> 00:08:11,120 Speaker 1: primarily a custody problem. Um, you know, back in those days, 147 00:08:11,160 --> 00:08:14,280 Speaker 1: if you wanted to trade uh, you know Argentina, which 148 00:08:14,360 --> 00:08:16,480 Speaker 1: I think was one of the very first in the 149 00:08:16,520 --> 00:08:19,040 Speaker 1: first ones in the sleeve, you had to have a 150 00:08:19,080 --> 00:08:21,440 Speaker 1: local desk that knew how to trade Argentina. You had 151 00:08:21,480 --> 00:08:23,560 Speaker 1: to have a local bank that was going to custody 152 00:08:23,600 --> 00:08:26,680 Speaker 1: those assets. Maybe you know, Bank of New York might 153 00:08:26,760 --> 00:08:31,160 Speaker 1: have an affiliate relationship with somebody down there, but it 154 00:08:31,240 --> 00:08:33,840 Speaker 1: was it was a pain in the neck to include 155 00:08:34,080 --> 00:08:37,920 Speaker 1: Argentina in your international portfolio. And ms c I was 156 00:08:38,040 --> 00:08:40,120 Speaker 1: really trying to build out where then Morgan Stanley was 157 00:08:40,160 --> 00:08:43,440 Speaker 1: really trying to build out their international chops, if you will. 158 00:08:43,800 --> 00:08:47,160 Speaker 1: And so what they did was solicit from their biggest 159 00:08:47,200 --> 00:08:49,640 Speaker 1: clients where do you want to trade? And so you 160 00:08:49,679 --> 00:08:52,400 Speaker 1: look at that list of the fifteen or sixteen initial 161 00:08:52,440 --> 00:08:57,960 Speaker 1: webs products, it's a bizarre list. Also, this structure, although 162 00:08:57,960 --> 00:09:01,960 Speaker 1: it followed the same rapper concept, spy didn't follow the 163 00:09:02,040 --> 00:09:06,160 Speaker 1: same unit Investment trust or u I T structure. Well, 164 00:09:06,160 --> 00:09:09,319 Speaker 1: the u I T structure is extremely restrictive, right and 165 00:09:09,840 --> 00:09:11,480 Speaker 1: for the SMP five hundred, and makes a ton of 166 00:09:11,520 --> 00:09:14,120 Speaker 1: sense because you're never gonna not own one of the 167 00:09:14,160 --> 00:09:16,679 Speaker 1: five D stocks in the SMP five hundred. They're all liquid. 168 00:09:17,080 --> 00:09:20,600 Speaker 1: Everybody obviously wants all that exposure. So instead WEBS used 169 00:09:20,640 --> 00:09:24,240 Speaker 1: mutual funds because mutual funds were less limiting than a 170 00:09:24,360 --> 00:09:27,480 Speaker 1: u I T. When working with international markets, when you 171 00:09:27,559 --> 00:09:30,959 Speaker 1: talk about Argentina, it's a little bit different, and the 172 00:09:31,000 --> 00:09:34,880 Speaker 1: custody issues in some of those countries were in the 173 00:09:34,880 --> 00:09:39,079 Speaker 1: mid nineties still intractable. I mean, I literally remember a 174 00:09:39,520 --> 00:09:43,440 Speaker 1: phone call in the mid nineties with our custodian bank 175 00:09:43,480 --> 00:09:46,600 Speaker 1: in India at Wells Fargo Nico, who was talking about 176 00:09:46,640 --> 00:09:48,320 Speaker 1: the fact that we had to dec a whole bunch 177 00:09:48,320 --> 00:09:50,920 Speaker 1: of trades because the courier got hit by a truck 178 00:09:51,360 --> 00:09:53,120 Speaker 1: and there and all of the trades were on a 179 00:09:53,160 --> 00:09:56,320 Speaker 1: paper in a knapsack going between the brokerage and the 180 00:09:56,320 --> 00:09:59,480 Speaker 1: custody shop. So like that's the kind of stuff we're 181 00:09:59,480 --> 00:10:03,160 Speaker 1: dealing with. In that environment, you had to have some 182 00:10:03,360 --> 00:10:06,160 Speaker 1: latitude again, not that you weren't managing an index fund. 183 00:10:06,160 --> 00:10:08,640 Speaker 1: You were managing an index fund. But um, I think 184 00:10:08,640 --> 00:10:11,160 Speaker 1: there's a misconception that managing an index fund means that 185 00:10:11,240 --> 00:10:14,640 Speaker 1: you own precisely everything exactly when you're supposed to it exactly. 186 00:10:14,679 --> 00:10:17,679 Speaker 1: They're a price and that's just not true unless you're 187 00:10:17,679 --> 00:10:19,640 Speaker 1: a U I T, in which case you have to 188 00:10:19,679 --> 00:10:22,440 Speaker 1: do it that way. Bob Tole says, the managing director 189 00:10:22,440 --> 00:10:25,800 Speaker 1: at Morgan Stanley, didn't think et s would amount to anything, 190 00:10:26,040 --> 00:10:31,240 Speaker 1: so he was happy to unload them. Eventually, Barkley's Global 191 00:10:31,280 --> 00:10:34,719 Speaker 1: Investors bought webs from Morgan Stanley and it was a 192 00:10:34,880 --> 00:10:40,559 Speaker 1: steal a dollar, if I remember correctly, a dollar. Yeah. 193 00:10:40,840 --> 00:10:43,280 Speaker 1: I had to have four phone calls with Bob Diamond, 194 00:10:43,280 --> 00:10:45,480 Speaker 1: who was the president of Barclays in London, who was 195 00:10:45,520 --> 00:10:48,040 Speaker 1: ex Morgan Stanley and a friend of mine. And he 196 00:10:48,120 --> 00:10:50,560 Speaker 1: calls me four times to say, you know, what are 197 00:10:50,559 --> 00:10:53,000 Speaker 1: they trying to do to me? You know, what's where's 198 00:10:53,000 --> 00:10:56,120 Speaker 1: the land mine? Right? And I'm going just by it? 199 00:10:56,480 --> 00:10:59,480 Speaker 1: I said, he goes. I said, what do you want? 200 00:10:59,520 --> 00:11:01,640 Speaker 1: As bark plays, he said, we don't have a retail 201 00:11:01,679 --> 00:11:04,680 Speaker 1: footprint in the United States. The largest capital markets in 202 00:11:04,720 --> 00:11:09,839 Speaker 1: the world, and nobody knows Barclays from IOTA right. B 203 00:11:10,040 --> 00:11:13,560 Speaker 1: g I is named at But if you asked a 204 00:11:13,600 --> 00:11:15,840 Speaker 1: person on the on the street who the heck Barclays 205 00:11:15,880 --> 00:11:18,319 Speaker 1: bank was, they they look at you like, I don't know. 206 00:11:19,280 --> 00:11:24,200 Speaker 1: So here was the golden opportunity for Barclays to develop 207 00:11:24,240 --> 00:11:28,200 Speaker 1: a retail brand in the United States for a dollar 208 00:11:28,800 --> 00:11:32,959 Speaker 1: and get paid for doing it. Webbs eventually became I 209 00:11:33,120 --> 00:11:37,040 Speaker 1: Shares after the Barclay's acquisition, and Noddix says, this is 210 00:11:37,080 --> 00:11:39,880 Speaker 1: when the brand really started to change. And one of 211 00:11:39,920 --> 00:11:42,280 Speaker 1: the consultants working in that process was a guy named 212 00:11:42,360 --> 00:11:45,200 Speaker 1: Lee Cranefis. He was a consultant as part of that process, 213 00:11:45,280 --> 00:11:47,920 Speaker 1: working with Patty Dunn, who would later become the head 214 00:11:48,000 --> 00:11:51,720 Speaker 1: of b G I. And you know, he, I think 215 00:11:51,760 --> 00:11:54,000 Speaker 1: recognized even more than me or any of the people 216 00:11:54,040 --> 00:11:57,400 Speaker 1: who were in the business at the time, that these 217 00:11:57,400 --> 00:12:02,079 Speaker 1: products were actually a solution not just for those big institutions, uh, 218 00:12:02,120 --> 00:12:05,000 Speaker 1: and not just for people who needed to equitize cash, 219 00:12:05,080 --> 00:12:08,520 Speaker 1: but but they were products that could solve real long 220 00:12:08,640 --> 00:12:13,120 Speaker 1: term asset allocation investment needs for clients. And was really 221 00:12:13,120 --> 00:12:15,920 Speaker 1: the guy who pushed for the rebranding of those into 222 00:12:15,960 --> 00:12:19,520 Speaker 1: what is inarguably a more retail brand, I Shares Toll 223 00:12:19,600 --> 00:12:21,560 Speaker 1: says Lee Craned. This was lucky to be in the 224 00:12:21,559 --> 00:12:25,120 Speaker 1: position he was in as I Shares became more retail focused. 225 00:12:25,440 --> 00:12:27,680 Speaker 1: But he wasn't the only reason for its success. It 226 00:12:27,800 --> 00:12:31,600 Speaker 1: was the money that the AMEX kept telling him to spend. Right, 227 00:12:31,920 --> 00:12:34,480 Speaker 1: and so what's Lee do? He tries a couple of things. 228 00:12:34,559 --> 00:12:38,120 Speaker 1: If you remember, at one point every bus stop in 229 00:12:38,200 --> 00:12:42,719 Speaker 1: Lower Manhattan from n y U South had an EYE 230 00:12:42,760 --> 00:12:45,760 Speaker 1: Shares sign on it, and people kept saying, what does 231 00:12:45,800 --> 00:12:49,360 Speaker 1: I Shares? Right? Then they started sponsoring circus sole events 232 00:12:49,400 --> 00:12:53,080 Speaker 1: and then they so they were targeting. In my opinion, 233 00:12:53,480 --> 00:12:56,360 Speaker 1: League got the luck of the draw. The real brains 234 00:12:56,640 --> 00:13:01,160 Speaker 1: who I think deserves tremendous amount of credit is Bruce Levine, 235 00:13:01,679 --> 00:13:06,040 Speaker 1: Jim Polison, Craig Friedman. All of those guys saw the 236 00:13:06,160 --> 00:13:11,680 Speaker 1: vision of how to convert basically an institutional money manager, 237 00:13:11,720 --> 00:13:15,240 Speaker 1: which was the old Wells Fargo Investment Advisors, into a 238 00:13:15,320 --> 00:13:19,560 Speaker 1: retail brand name. Today, I Shares, which is now owned 239 00:13:19,559 --> 00:13:22,480 Speaker 1: by black Rock, is the largest et F brand not 240 00:13:22,679 --> 00:13:25,600 Speaker 1: exaists when you step back and think about it. Spy 241 00:13:25,840 --> 00:13:28,280 Speaker 1: paved the way for I shares. If Spy had come 242 00:13:28,280 --> 00:13:31,040 Speaker 1: out and continued to fail and not gotten any traction, 243 00:13:31,120 --> 00:13:33,160 Speaker 1: I don't think there would have been a lot of 244 00:13:33,280 --> 00:13:36,920 Speaker 1: move to to push webbs forward. Even so, it's a 245 00:13:36,960 --> 00:13:39,400 Speaker 1: little bit of a miracle to me that Webbs ever launched. 246 00:13:39,520 --> 00:13:42,640 Speaker 1: It wasn't something that I recall at the time. There 247 00:13:42,720 --> 00:13:45,960 Speaker 1: was a tremendous amount of management enthusiasm and excitement about 248 00:13:46,360 --> 00:13:48,080 Speaker 1: it was seen as sort of a bit of a 249 00:13:48,120 --> 00:13:50,720 Speaker 1: flyer that we were doing to service a bunch of 250 00:13:50,840 --> 00:13:53,760 Speaker 1: very high end customers. Not says it took a while 251 00:13:53,800 --> 00:13:56,640 Speaker 1: for these products to start catching on, but they did, 252 00:13:57,000 --> 00:13:59,280 Speaker 1: and there was a massive shift in how people started 253 00:13:59,280 --> 00:14:02,520 Speaker 1: thinking about and it wouldn't be, honestly, I think until 254 00:14:02,720 --> 00:14:07,920 Speaker 1: the early two thousands where most people started realizing, holy cats, 255 00:14:08,000 --> 00:14:12,239 Speaker 1: these things really can change how we think about investing. 256 00:14:12,400 --> 00:14:14,920 Speaker 1: He says. The same goes for him personally. He was 257 00:14:14,960 --> 00:14:17,800 Speaker 1: on those original marketing teams for I Shares, but it 258 00:14:17,840 --> 00:14:20,320 Speaker 1: wasn't until he actually used in e t F himself 259 00:14:20,760 --> 00:14:22,560 Speaker 1: that he got it. I was not one of those 260 00:14:22,560 --> 00:14:24,920 Speaker 1: guys that recognized greatness and jumped in. I'm not going 261 00:14:24,960 --> 00:14:27,640 Speaker 1: to claim any of that. It wasn't until I was 262 00:14:27,720 --> 00:14:29,560 Speaker 1: sitting on a trading desk, and all of a sudden, 263 00:14:29,560 --> 00:14:31,680 Speaker 1: I could like hit a button and get a million 264 00:14:31,680 --> 00:14:38,520 Speaker 1: dollar exposure to the cues. I was all in. Next 265 00:14:38,560 --> 00:14:41,400 Speaker 1: time on Troyon's Presents, The E t F keeps getting 266 00:14:41,440 --> 00:14:44,760 Speaker 1: bigger and bigger and bigger. It got to a billion 267 00:14:44,760 --> 00:14:47,040 Speaker 1: dollars in three days. That's a record. As you know. 268 00:14:47,120 --> 00:14:50,240 Speaker 1: It's that I called the Joe DiMaggio hitting Still the 269 00:14:50,280 --> 00:14:53,240 Speaker 1: standing record easily, is it? You know what number two is? 270 00:14:53,280 --> 00:14:58,280 Speaker 1: Can you guess? Bnd? Yeah, that's true nerd nerds him 271 00:14:58,320 --> 00:15:01,560 Speaker 1: right there. Hardly anybody knows that. Thanks for listening to 272 00:15:01,560 --> 00:15:03,640 Speaker 1: The E t F Story Until next time. You can 273 00:15:03,640 --> 00:15:08,119 Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, 274 00:15:08,600 --> 00:15:10,640 Speaker 1: and wherever else you like to listen. The et F 275 00:15:10,720 --> 00:15:13,880 Speaker 1: Story is produced by Jordan Bell, with some production help 276 00:15:14,080 --> 00:15:17,960 Speaker 1: by Magnus Hendrickson. Francesca Levy is the head of Bloomberg Podcasts.