Speaker 1: Welcome to Chilliance. I'm Joel Webber and I'm Eric. I'll
Speaker 1: tunis Eric. You're in a different location than usual, and
Speaker 1: you've tested positive. I did, yeah, and finally got you.
Speaker 1: How you doing? I held out longer than most. I
Speaker 1: had a good run, Joel Um. A lot of people
Speaker 1: around me got it, and I, in fact, the team
Speaker 1: called me the COVID dodger for a while because I
Speaker 1: had come close to it and never gotten it. But
Speaker 1: it just shows you cannot outrun it for forever, and
Speaker 1: so stem I am the COVID dodger and still COVID free. Yeah,
Speaker 1: I'll give it to you. You're you're the chosen one, Okay.
Speaker 1: So Eric, we've long talked about e s G on
Speaker 1: the program Environmental Social Governance. It's it's a space that
Speaker 1: you've expressed caution about a business week. We've done a
Speaker 1: lot of reporting about it, both on the positive and
Speaker 1: the negative, and we've got a couple of interesting guests today,
Speaker 1: the Vague Ramis Swami and Anson Fraris, who the VIK
Speaker 1: has written a book called Woke Inc. That came out
Speaker 1: last year. But the two of them have a new
Speaker 1: uh financial company called Strive that's coming out. How did
Speaker 1: you find out about them? Yeah, just through some people
Speaker 1: in the industry. I've got a conversation UM with the
Speaker 1: VEC and um, this is a fascinating situation. This is
Speaker 1: a part of how I think the stock market and
Speaker 1: companies have become sort of a battleground for the cultural wars.
Speaker 1: And as you know, I my whole thing about E
Speaker 1: s G is not so much the virtue signaling, although
Speaker 1: there's a lot there, but more just I don't want
Speaker 1: investors to have a nasty surprise. Um. We all, that's
Speaker 1: our whole mission is just to avoid investors buying something
Speaker 1: they don't realize they're buying. And I think this year
Speaker 1: we saw E s G. Clearly people are now seeing
Speaker 1: that it's overweight tech and underweight oil and it's underperforming.
Speaker 1: And that was That's been my main mission overall. Although
Speaker 1: I think in E s G s k is it
Speaker 1: becomes weird when you put your values into the stock
Speaker 1: market and everybody's values are different, So how do you
Speaker 1: standardize that. It's just a it's a really complicated space
Speaker 1: full of inconsistencies. But then on the other side you've
Speaker 1: got black Rock and Vanguard now have seven percent ownership
Speaker 1: of the stock market, of all stocks, they have a
Speaker 1: lot of power concentrated in a small number of people.
Speaker 1: And Elon Musk was just on Twitter talking about this.
Speaker 1: I'm gonna go into the details. He got a few
Speaker 1: things wrong, but one thing he did say, and I
Speaker 1: think he's right, is you know, have somebody like Larry
Speaker 1: Fink who probably owns point o one percent of all
Speaker 1: these stocks, yet he has voting power that is seven
Speaker 1: percent um, And so how much power are we going
Speaker 1: to put. It's concentrated into certain people. And because they've
Speaker 1: come out a little bit on the E. S. G
Speaker 1: front um, there's been a little bit of a pushback,
Speaker 1: and today we're we're going to talk to somebody who
Speaker 1: has a plan to push back, this time on brilliants
Speaker 1: but g backlash the vic ants and woke neutrillians. Thank you,
Speaker 1: Thanks guys. Okay, can you explain what you're up to
Speaker 1: because this is gonna be kind of a surprise for
Speaker 1: a lot of people that you want to take on
Speaker 1: black rock. Yeah. So, so thanks for the opportunity. And
Speaker 1: this is the beginning of a long journey. We see
Speaker 1: that eyes wide open. We're addressing what I see as
Speaker 1: a fiduciary breach in the asset management industry where the
Speaker 1: three largest asset managers in the world, and it's Black Rock,
Speaker 1: but it's State Street in Vanguard too. What they're doing
Speaker 1: today is they're using the money of everyday citizens of
Speaker 1: their clients to advocate for policies in corporate America that
Speaker 1: most of their clients disapprove of. That is a fiduciary breach.
Speaker 1: It is not representing the best interests of their clients.
Speaker 1: And it's happening on a systematic scale. Where here's the problem.
Speaker 1: It's not happening at a small scale. These largest terms
Speaker 1: in the world have so much concentrated power that they're
Speaker 1: only representing one viewpoint in the boardroom. That that's also
Speaker 1: verging on what the Arizona Attorney General actually is recently
Speaker 1: called the largest antitrust violation in history. Those were his words.
Speaker 1: Where if you if you run through this thought experiment,
Speaker 1: and you imagine the CEOs of Exxon and Shell and Conical,
Speaker 1: Phillips and Chevron getting together in a room and deciding,
Speaker 1: for example, that they wanted to cut gas production and
Speaker 1: gas prices spike as a result. That would be the
Speaker 1: stuff of movies, right you see handcuffs, you see antitrust violations,
Speaker 1: price fixing allegations. Yet when the largest owners of those
Speaker 1: competing firms effectively mandate them to do the same thing,
Speaker 1: somehow we as a culture have come to celebrate that
Speaker 1: as E S G. And our mission is to restore
Speaker 1: the voice of what we see as the every day
Speaker 1: So it is in the actual client, the firefighter, the nurse,
Speaker 1: the doctor, the business owner whose money Black Rock is
Speaker 1: investing to say that we bring a different message to
Speaker 1: Corporate America's boardrooms that those citizens and those clients actually
Speaker 1: want us to deliver, which is to pursue product excellence
Speaker 1: over politics. That's our message. Okay. So, and the plan
Speaker 1: essentially is to offer sort of replica E T f
Speaker 1: s that would you know, Engine number one is a
Speaker 1: firm that you almost remind me of the inverse of them.
Speaker 1: They're a firm that is small putting out. They have
Speaker 1: a beta product called vote. It's just basically the S
Speaker 1: and P or you know, market beta large cap something
Speaker 1: like that, five basis points. It's basically like I VV,
Speaker 1: except they are going to vote in a very E.
Speaker 1: S G. Activist kind of way. So they're saying put
Speaker 1: your money with us and we'll go do this. You're
Speaker 1: almost the opposite saying we're going to do these replica products,
Speaker 1: but give us your money and we will vote. So
Speaker 1: the companies just act like themselves and will keep all
Speaker 1: the will separate church and state completely. Is that? Do
Speaker 1: I have that right? And you're going to actually have
Speaker 1: a full line of products that are sort of, um,
Speaker 1: very similar to Black Rocks. But promise this new voting
Speaker 1: a way of a way of voting that is a
Speaker 1: little more I guess, um, not anti E s G,
Speaker 1: but just more focused on profits. Yes, So, Eric, what
Speaker 1: We're entering the registration process soon and so I'm not
Speaker 1: going to talk specifically about product about product details here,
Speaker 1: but what I will say is that yes, we will
Speaker 1: be launching E T F S. Yes, as we said
Speaker 1: in the press release, the first one is coming the
Speaker 1: third quarter of the year. But the key hallmark difference
Speaker 1: of our firm and everything that we do well, the
Speaker 1: key differentiator for our mission is bringing a different voice
Speaker 1: and vote to corporate America's boardrooms, bringing a vote, a
Speaker 1: pro excellence voice that is distinguished from the stakeholder capitalism
Speaker 1: voice represented by the Big Three, including Black Rock today,
Speaker 1: and no one is bringing that voice to the table.
Speaker 1: And it's not just focusing on profits, right, That's that's
Speaker 1: a Melton freemnite phrasing of the problem. One of the
Speaker 1: things that I think shareholder capitalism as a philosophy lacked
Speaker 1: was any guidance to companies on how they are actually
Speaker 1: supposed to go about this task of maximizing value for shareholders.
Speaker 1: And so we we phraise it. More precisely, we stand
Speaker 1: for this movement that we call excellence capitalism as a
Speaker 1: counterpart the stakeholder capitalism, where what excellence capitalism says is
Speaker 1: focus exclusively on delivering excellent products and services to your
Speaker 1: customers above all other agendas, including political and social agendas.
Speaker 1: And that's different than stakeholder capitalism, which says you're supposed
Speaker 1: to take into account twelve or twenty stakeholders at the
Speaker 1: same time. Which stakeholders, you might ask, No one knows
Speaker 1: the answer. It seems to be what Larry Fink or
Speaker 1: the CEOs of Van Garden State Street decide on a
Speaker 1: given day. That's the problem we're addressing. Okay, so wait, excellence,
Speaker 1: how do you define excellence? Then? Yeah, and so this
Speaker 1: is gonna be you know, we're gonna have our own
Speaker 1: voting guidelines. We're gonna have our own statement of unpacking
Speaker 1: what excellence capitalism means. Yeah, I could do that here,
Speaker 1: but we could go on for hours. But mission orientation,
Speaker 1: for example, is something that's very high on that list.
Speaker 1: Having a clear mission, staying true to that mission in
Speaker 1: a way that doesn't deviate from that mission. I'll give
Speaker 1: you an example. Excen's mission stated mission I'm gonna get
Speaker 1: this almost right. For the last number of years, for
Speaker 1: the last number of decades, has been to be a
Speaker 1: successful oil and gas company. Black Rock, in their letters
Speaker 1: to Corporate America's CEOs, think about the presumption embedded in this.
Speaker 1: By the way, one asset manager writing an annual letter
Speaker 1: to America's CEO s just that this the hubrist break
Speaker 1: into that as a separate conversation altogether. But in that
Speaker 1: letter he says, pursue your purpose, but in the same
Speaker 1: letter will tell them all of the ways in which
Speaker 1: effectively they need to change their purpose to not be
Speaker 1: an oil and gas company to meet these carbon emation caps,
Speaker 1: to meet the standards of the Sustainability Accounting Standards Board.
Speaker 1: And our message to Exxon will be different if you're
Speaker 1: an oil company, be an excellent oil company. We will
Speaker 1: not tell you not to be an oil company. Be
Speaker 1: an excellent oil company. And guess what. If there's a
Speaker 1: different company that's a solar company, our message to you
Speaker 1: will be equally equally powerful. Be an excellent solar company.
Speaker 1: We will not tell you not to be a solar company,
Speaker 1: but we will not tell oil companies not to be
Speaker 1: oil companies. Disney, let's just take Disney, a company that's
Speaker 1: been in the news recently. I think it bears mentioned.
Speaker 1: It's it's a top of mind for me. Frankly, I
Speaker 1: bring up Disney several times, even in the book that
Speaker 1: I wrote last year. And you know, Disney is a
Speaker 1: company that I think has veered from its mission in
Speaker 1: the near term. It has veered from its mission of
Speaker 1: serving its customers, where it took political stances in recent
Speaker 1: weeks that survey data suggest over sixty percent of its
Speaker 1: customers were alienated by. If we're a shareholder of Disney
Speaker 1: in the future, our message to Bob Chatpick would be
Speaker 1: clear three words, knock it off and focus on serving
Speaker 1: your customers today his top three shareholders, as I understand it,
Speaker 1: or black Rock State Street in Vanguard, they're not delivering
Speaker 1: that message. If anything, if you lead read through their language.
Speaker 1: If anything, they're delivering the opposite message to engage on
Speaker 1: political issues like the contingents ones that he's engaged in.
Speaker 1: So so that gives you some sense of the difference
Speaker 1: of what our pro excellence message stands for. And so, Mum,
Speaker 1: I got a copy of your book late last week.
Speaker 1: I read through some of it. It's a UM, it's
Speaker 1: very well written. Um. And the stuff about you know,
Speaker 1: you're growing up and stuff I think was really interesting. Um.
Speaker 1: Some of the stuff you talk about here does resonate
Speaker 1: with me a little bit. We've had we've had E
Speaker 1: S G Debate podcasts, probably three of them in the
Speaker 1: past couple of years, and sometimes I bring up this
Speaker 1: hipoc or the issue, which is that people will buy
Speaker 1: an E. S G. T F and they won't own
Speaker 1: Amazon and x On. Yet they're going to take five
Speaker 1: vacations that year. Uh, they're gonna still shop at Amazon.
Speaker 1: And this interesting. It's this interesting I guess difference between
Speaker 1: how someone acts in their own life and how they
Speaker 1: sort of present themselves. And I think E. S G.
Speaker 1: T s almost in a way let them off the hook.
Speaker 1: And in your book you talk about how some of
Speaker 1: these CEO s um in the Goldman Sacks and some
Speaker 1: of these big companies, by by taking these virtuous stances,
Speaker 1: they're able to sort of like cover up or keep
Speaker 1: the light off of the things they do that might
Speaker 1: not be be in conflict with that. You bring up
Speaker 1: State Street and the Fearless Girl, which is the statue
Speaker 1: for she and yet they had lawsuits about not paying
Speaker 1: female employees as much, and you go through several examples,
Speaker 1: and that's one of my other problems with E s
Speaker 1: G in general. I feel there and the and the
Speaker 1: virtue virtuousness of some of the eos is there is
Speaker 1: hypocrisy in almost every case UM, and I think that
Speaker 1: does not pass. I think people sense that. UM. On
Speaker 1: the flip side, I think people want companies to to
Speaker 1: do good things too. So I don't know, I just
Speaker 1: want to throw that out there and see what you
Speaker 1: have to say about that. Yeah, I think your spot on.
Speaker 1: And first of all, I want to congratulate you guys
Speaker 1: on actually opening up the E s G debate because
Speaker 1: I think I think that's one of the things that's
Speaker 1: been lacking, is just debate in the public square, small
Speaker 1: personal funny story of mine that might have subconsciously led
Speaker 1: me to this mission. A couple of years ago the
Speaker 1: Manhattan Institute might have been a year and a half ago.
Speaker 1: Manhattan Institute invited Larry Think and I to have an
Speaker 1: open debate on stakeholder capitalism. I tend to think that
Speaker 1: debate is a good thing. Agree or not. Let's get
Speaker 1: the ideas out in the open, and we're a better
Speaker 1: society for it, I accepted, He declined. I think that's
Speaker 1: part of for me, the motivation of putting this to
Speaker 1: the market, to actually let the market decide and let
Speaker 1: the actual participants in that market be able to have
Speaker 1: that debate in the marketplace of ideas. Now to your
Speaker 1: question hypocrisy, I think your spot on, and I think
Speaker 1: one of the things that I would encourage you to
Speaker 1: ask every E s G linked asset manager in the
Speaker 1: US is how they're implementing those same policies, say in
Speaker 1: China or via their Chinese funds. You take the Xon
Speaker 1: example that we talked about before. I am willing to
Speaker 1: wager a bet that most of those projects are proceeding
Speaker 1: the ones that they're talking about dropping off the coast
Speaker 1: of Mozambique or elsewhere, which are expensive, expensive projects, right,
Speaker 1: I mean, like, just to stay with this for a second,
Speaker 1: this idea of excellence, Like you're gonna drop billions of
Speaker 1: dollars on a project that you might not see a
Speaker 1: return on that investment for years and in that time,
Speaker 1: like you know, you mentioned solar before, the cost of
Speaker 1: solar has only come down, Like is that going to
Speaker 1: be the best use of excellence? Yeah? And and by
Speaker 1: the way, if you just take take a look at
Speaker 1: where we are today, if Exon had stuck to its
Speaker 1: plan of increasing oil production, with oil prices being what
Speaker 1: they are, there's no doubt that both x IN and
Speaker 1: the externalities for the U S would have been better off.
Speaker 1: If anything, Russia's collecting higher oil and gas revenue with
Speaker 1: the recent oil and gas spike because of the lack
Speaker 1: of US reliance and the reliance of S companies and
Speaker 1: being able to self sustain on energy production. But the
Speaker 1: point I was gonna bring up in response to Eric's
Speaker 1: remark was, guess who gets to pick up those projects? Now?
Speaker 1: It's firms like petro China, and then guests who also
Speaker 1: owns approximately seven percent of petro China. Some of the
Speaker 1: same E s G kings who are proclaiming that ex
Speaker 1: Son should actually get out of the oil and gas business,
Speaker 1: and so that hypocrisy E s G for the China.
Speaker 1: For me, that's not a hypocrisy that I think we
Speaker 1: can abide. And I think we see that regularly with
Speaker 1: these firms doing what they need to do to be
Speaker 1: able to capture profit for themselves at their parent company
Speaker 1: by expanding into the Chinese market, but leaving even the
Speaker 1: US holders, their clients, of some of their U S
Speaker 1: funds holding the bag as a consequence. And I think
Speaker 1: that those are conflicts of interests that run really, really deep,
Speaker 1: and the hypocrisy is something that it's really worth paying
Speaker 1: attention to here because in many cases, these firms aren't
Speaker 1: even doing what they say they're supposed to do. I
Speaker 1: don't even know what s G means today. Nine weeks ago,
Speaker 1: weapons manufacturers didn't count as E s G. Somebody decided
Speaker 1: nine weeks ago, in the last few weeks that should
Speaker 1: the definition immediately changes. Our main objection is that it
Speaker 1: should not be a concentrated group of monarchs, really European
Speaker 1: style monarchs on American soil deciding what does and doesn't
Speaker 1: count as the moral thing to do. We should sort
Speaker 1: those questions out as citizens through free speech and open debate.
Speaker 1: But if you're using client capital do it you better
Speaker 1: darn well represent the interests of those clients in your
Speaker 1: shareholder advocacy efforts and in your shareholder voting. That's what
Speaker 1: we're setting out to do. Well, you know, you brought
Speaker 1: up the idea of the shareholder capital, the stakeholder capital,
Speaker 1: that being I think that conversation has taken place in
Speaker 1: the public square, and where it landed was, you know
Speaker 1: what we have over indexed on on appeasing shareholders at
Speaker 1: the expense of stakeholders, right, and and that is you know,
Speaker 1: I think E. S. G sort of in the current
Speaker 1: form rose out of this way of like how do
Speaker 1: we attempt to validate some of these other stakeholders? Right?
Speaker 1: So I'm curious, like, in your in your version of
Speaker 1: excellence here, how much stakeholder capitalism do you think is
Speaker 1: appropriate for any business to account for? Because this could
Speaker 1: come at the expensive employees. We're in a tight la
Speaker 1: labor market. We're seeing what how how powerful labor labor
Speaker 1: is all of a sudden, right, Yes, so I think
Speaker 1: you make some valid points. I think that it was
Speaker 1: in the aftermath of the two thousand eight financial crisis,
Speaker 1: and I write about this extensively in the book. It
Speaker 1: was in the aftermath of the eight crisis that there
Speaker 1: was a demand for a new look for American capitalism. E.
Speaker 1: S G and stakeholder capitalism filled that void. However, I
Speaker 1: don't think that debate took place amongst the everyday citizens.
Speaker 1: It took place amongst a handful of c e O
Speaker 1: s and asset managers in cloistered corner offices, some of
Speaker 1: whom approached that in very well intentioned ways. But even
Speaker 1: those well intentioned acts, I think I've had adverse consequences
Speaker 1: by using the actual client capital, the firefighters, the nurses
Speaker 1: of small business owners, as a tool to implement an
Speaker 1: agenda that most of those end users of capital disagree with.
Speaker 1: And that's created a new negative externality as a consequence,
Speaker 1: which is political division, which is rampant institutional mistrust, especially
Speaker 1: when they look at the hypocrisy of some of those
Speaker 1: same actors. And I think that might be one of
Speaker 1: our greatest social crises of all, is that institutional mistrust,
Speaker 1: that political divide, that partisan divide, that we see tearing
Speaker 1: our country apart. That's a big part of what we're
Speaker 1: setting out to fix by now taking this in the
Speaker 1: new decade in a new direction, to de politicize the
Speaker 1: private sector so that it's actually a place where we
Speaker 1: can come together in transacting in that private sector, whether
Speaker 1: or not we're black or white, whether or not we're
Speaker 1: Democrat or Republican, and a political private sector can actually
Speaker 1: solve that problem created by stakeholder capitalism by bringing us
Speaker 1: all together again. And to answer your question very specifically,
Speaker 1: we have a theory of the case here. Okay, I'm
Speaker 1: not saying that this should be the only theory in
Speaker 1: the public square, but this is the theory that we
Speaker 1: believe in and that we want to represent, and we
Speaker 1: think a lot of clients agree with us too. Is
Speaker 1: how do you sort out the debate about who which
Speaker 1: stakeholders interests to prioritize. That's a tough question. I'm empathetic
Speaker 1: to that decision. I've been a CEO before for seven years.
Speaker 1: I understand that that's a tough seat to be in.
Speaker 1: I had to make some of these decisions about what
Speaker 1: I said after the George Floyd incidents back I'm really
Speaker 1: empathetic to how you trade these factors off. Our theory
Speaker 1: at Strive and with our theory of excellence capitalism is
Speaker 1: that the number one stakeholder is the customer, and you
Speaker 1: focus exclusively on delivering excellency in products and services to
Speaker 1: your customer. Now, of course, do you need great employees
Speaker 1: to be able to achieve that goal. Of course you do.
Speaker 1: That goes without saying, but maybe it bears bears mentioned too.
Speaker 1: But that's that's our theory, and we think that's more useful.
Speaker 1: We also think it's more unifying. Unifying companies with their
Speaker 1: customers is also something that actually we think is going
Speaker 1: to do a better job of unifying companies with their
Speaker 1: workers too. I'll tell you one of the things that
Speaker 1: we hear is the workers are demanding. This is something
Speaker 1: that you'll frequently hear from CEOs who make proclamations. The workers,
Speaker 1: like the customers and citizens of this country, are not
Speaker 1: a monolithic body. In fact, they're often very representative of
Speaker 1: their customer base. The workers you hear on social media
Speaker 1: and on Twitter are not necessarily representative of the actual
Speaker 1: true workforce or the actual true customer base. And I
Speaker 1: think that's why when you look at this Twitter disconnect
Speaker 1: between how the Disney issue got adjudicated versus an actual
Speaker 1: survey of Disney's customers. You get the results of where
Speaker 1: most of the citizens, customers, and workers really are. We
Speaker 1: think we're actually gonna be better representing those views through
Speaker 1: our mission at Strive. Yeah, it's interesting. So we actually
Speaker 1: had a note saying that, um, we encourage Vanguard and
Speaker 1: black Rock to democratize the voting. We had a note
Speaker 1: that said, not all your investors live in Williamsburg, UM.
Speaker 1: And this because the loudest voices in E. S G
Speaker 1: and the media are in New York City and they
Speaker 1: tend to think similarly. And that's fine, but there this
Speaker 1: is a company that has investors all over the country.
Speaker 1: So we showed this huge map and they have thirty
Speaker 1: million investors. I think at least Vanguard does, UM and
Speaker 1: there's so I want to get your take on two things.
Speaker 1: One is just this idea of instead of doing what
Speaker 1: you're doing, what about if they were to somehow democratize
Speaker 1: the voting process. Now a lot of the votes are
Speaker 1: boring and administrative and people could care less, but maybe
Speaker 1: they pull the investors to find out where their heads
Speaker 1: are at you know, just capital uh, which is Paul
Speaker 1: Tutor Jones company did this and the polling brings up
Speaker 1: some interesting things. It puts UM worker pay number one. Basically,
Speaker 1: all the top things are, hey, CEO should get paid less,
Speaker 1: workers should get paid more. Then like number five or
Speaker 1: six is climate change stuff. And I guess I would
Speaker 1: be curious if your take on UM just what if
Speaker 1: these companies tomorrow said we're gonna pull and we're going
Speaker 1: to get the consciousness of our base and we're gonna
Speaker 1: vote accordingly. Would you like shut down immediately or you
Speaker 1: think that that wouldn't solve the problem? Well, look, I
Speaker 1: think that would be forward progress and I would applaud
Speaker 1: it if it happened. I think that voting and focusing
Speaker 1: on the shareholder vote alone, though, is in some ways
Speaker 1: a fall slightening rod because most of the change that
Speaker 1: these firms are driving are not through proposals that necessarily
Speaker 1: make it to the ballot. It's through soft influence. It's
Speaker 1: what the corporate governance firms of these big three firms
Speaker 1: call engagement. That's the new word of the day, and
Speaker 1: I think that it's the combination of why we talk
Speaker 1: about a voice and a vote. Here's the other thing
Speaker 1: about shareholder voting is one of the solutions that I contemplated,
Speaker 1: and I've been on this journey for two years really
Speaker 1: thinking about the right way to solve this problem. Was
Speaker 1: it to advocate for giving the vote to every shareholder.
Speaker 1: That sounds elegant. The reality I found is that it's
Speaker 1: it's it's harder than it sounds, and it's less desirable
Speaker 1: than it sounds, because there could be tens of thousands
Speaker 1: of votes that a shareholder, an individual is burdened with
Speaker 1: over the course of years of holding a broad portfolio
Speaker 1: of et f and index funds and securities that they're
Speaker 1: just not going to be equipped to be able to
Speaker 1: vote on well. I then came to the conclusions the
Speaker 1: right solution, and that's what we've set out on here
Speaker 1: and strive to bring to the table, is competition in
Speaker 1: the marketplace of ideas. And so the structural change that
Speaker 1: I think we're gonna see and we should see in
Speaker 1: the asset management industry is a slightly different one. It's
Speaker 1: one were investment advisors and other fiduciaries in the middle,
Speaker 1: the intermediaries like state treasurers, like pension fund boards that
Speaker 1: look at capital allocation, and they look at attributes like
Speaker 1: risk and diversification and sector exposure. They're going to have
Speaker 1: to add voting exposure and advocacy exposure too, and make
Speaker 1: sure that their clients and constituents views and the true
Speaker 1: diversity of those views are represented in the true diversity
Speaker 1: and diversification of that capital allocation too. And black Bart,
Speaker 1: black Rock, and Vanguard, let's say they did go to
Speaker 1: serving their clients, they have to keep in mind the
Speaker 1: clients are not the pension fund necessarily, they're the next client.
Speaker 1: We view the client as the ultimate client, the citizen
Speaker 1: of the fiduciaries as intermediaries in that chain too, And
Speaker 1: so in some ways our critique here is not just
Speaker 1: directed or even principally directed at black Rocker Vangard, State Street,
Speaker 1: but to a system that allocates their client's capital to
Speaker 1: firms that are known to advocate in ways that the
Speaker 1: end user client absolutely disagrees with in most cases. So
Speaker 1: our focus is on how do we restore the voice
Speaker 1: of that end user client, not just the quote unquote
Speaker 1: clients who are intermediaries in that system. And we think
Speaker 1: that this is going to be a structural change. We
Speaker 1: see in asset management where acid allocators registered investment advisors
Speaker 1: across the country. Pension fund board members, state treasurers are
Speaker 1: going to have to start thinking about not just risk
Speaker 1: and diversification and sector exposure, but voting an advocacy exposure
Speaker 1: to representing the true diversity of the underlying views of
Speaker 1: the constituents capital that they represent. Okay, I think I
Speaker 1: have an understanding of how the vague plays into strives
Speaker 1: business plan, But Anson, what do you do? Yes to myself.
Speaker 1: So so it's a quick background vivicul I. We've known
Speaker 1: each other since high school, which is great, and we
Speaker 1: had very similar backgrounds by backgrounds in private equity at
Speaker 1: a school for a couple of years and to the
Speaker 1: last eleven years Mark at Anahzzar Bush. And one of
Speaker 1: the things that really drew me to come back to
Speaker 1: work with him is I had the absolute privilege and
Speaker 1: honor of selling some of the most iconic American brands
Speaker 1: that were out there, things like bud Wise, which sold
Speaker 1: the American dream really in a bottle, things like Nikoloboltrup
Speaker 1: which this work hard, play hard type of brand. We
Speaker 1: had a lot of craft brewers that's really the entrepreneur
Speaker 1: spirit of America, and I was really excited about taking
Speaker 1: that message to a broader audience and to more to
Speaker 1: more companies that frankly had maybe lost the way a
Speaker 1: little bit in terms of using their brands to advance
Speaker 1: through the universal type of principles. So for VIC and myself,
Speaker 1: Vivic is going to be doing a lot of the
Speaker 1: thought leadership, and for myself, I'm building the team kind
Speaker 1: of on the day to day basis. So right now,
Speaker 1: we're based in Columbus, Ohio, we're fast growing, we have
Speaker 1: a lot of people that are very hungry to spread
Speaker 1: this message. But then also we're building the team. So
Speaker 1: it's putting a lot of the processes, putting a lot
Speaker 1: of the right controls, putting on a lot of the
Speaker 1: right compliance, but actually building the company to make sure
Speaker 1: this is a company that's gonna be built to last
Speaker 1: for a hundred years. Because that's really what we're doing,
Speaker 1: to build the foundation and make sure that we're doing
Speaker 1: this the right way. Okay, so you've gotta have money
Speaker 1: to do that. What kind of backing do you have? Yeah,
Speaker 1: So we've started with our seed round of over twenty
Speaker 1: million dollars that included some of the backers that you
Speaker 1: guys are familiar with, that were, by the way, a
Speaker 1: politically diverse base of well known backers. That's just the
Speaker 1: seed round that more than well capitalized us to the
Speaker 1: point of getting to our early product launches. But we
Speaker 1: expect to, you know, build as ants and said, well,
Speaker 1: a company, it's gonna last for a hundred years and
Speaker 1: then some and that's going to be a long journey
Speaker 1: and and and you know, I would not be surprised
Speaker 1: if that takes a lot more capital, a lot more
Speaker 1: human resources, a lot more of every resource along the way. Well,
Speaker 1: you had some big names, Peter Teele, Bill Ackman. How
Speaker 1: did those conversations go? So a lot of these folks
Speaker 1: have become I would say, if not friends, allies in
Speaker 1: thinking about how to revive the soul of both American
Speaker 1: capitalism and democracy. I think a lot of the writing
Speaker 1: I've done in the pages of the Wall Street Journal,
Speaker 1: in my book, etcetera. Started an intellectual current that culminated
Speaker 1: in the creation of this company. One of the things
Speaker 1: I'm proud of is how ideologically diverse, from in the
Speaker 1: partisan sentence, at least ideologically diverse, our base of backers
Speaker 1: is they're all unified in our mission. There's no diversity
Speaker 1: on that, but there's a lot of diversity on whether
Speaker 1: you identify as a Democratic, Republican or none of the above.
Speaker 1: And by the way, the same thing goes for our
Speaker 1: employee base too. That's something I'm proud of too. Is
Speaker 1: our mission to restore a pro excellence voice in corporate
Speaker 1: America and to better represent the citizens of this country
Speaker 1: is something that rises above the otherwise partisan divides and currents.
Speaker 1: And you know, we were I was very important to
Speaker 1: me see that reflected in our investor base. It's very
Speaker 1: important for me to see that reflected in our employee base.
Speaker 1: True diversity is a big part of our mission, bringing
Speaker 1: a true diversity of voices back to the table. And
Speaker 1: so yeah, there are some big names there, but more
Speaker 1: important than the big names to me is also the
Speaker 1: thoughtfulness and even the diversity of perspectives that they bring
Speaker 1: to this mission. Here's two things I think you're up against.
Speaker 1: Number one is apathy. I just wrote a book um
Speaker 1: about a lot of vanguard basically, and one section looks
Speaker 1: at voting and a lot of the advisers I I interviewed,
Speaker 1: they said, you know, none of my clients care how
Speaker 1: vanguard votes and I don't even care. And I found
Speaker 1: that there was largely apathy. Not everybody, but the majority
Speaker 1: were apathetic, but they just wanted low fees and you know,
Speaker 1: returns to the market. That's one. Number Two. Black Rock
Speaker 1: has some of the most liquid, low cost famous popular
Speaker 1: e t f s and an army of wholesalers. Um,
Speaker 1: you know, Europe against apathy and black Rock, which are
Speaker 1: two massive hurdles. And what's your plan to sort of
Speaker 1: break through and try to get through that with this message? Yeah?
Speaker 1: So I agree with you on the second. The second
Speaker 1: is a tall mountain to climb. I disagree with you
Speaker 1: respectfully on the first. And I think that, yes, I
Speaker 1: think there's a history of apathy with respect to shareholder
Speaker 1: voting of end user clients. I think something changed in
Speaker 1: the last five years. Right when black Rock achieved the
Speaker 1: scale that it did, it only started weighing in on
Speaker 1: the E and the S as opposed to the G.
Speaker 1: The G is classical shareold rewarding, staggered board stuff. You're right,
Speaker 1: everyday citizens could care less, even many registered investment advisors
Speaker 1: could care less. But in the last five years something
Speaker 1: has changed, and the votes that they're casting on these
Speaker 1: environmental and so called social issues are actually at odds
Speaker 1: with their end user clients in a way that look.
Speaker 1: I've traveled the country over the last couple of years.
Speaker 1: I have been shocked. I've been overwhelmed by how moved
Speaker 1: people are by the idea that their voice isn't represented,
Speaker 1: especially when you're using their money to do it. I
Speaker 1: will tell you, in the last forty eight hours, I
Speaker 1: have been overwhelmed by the flood. And it it has been
Speaker 1: nothing sort of a flood we've received since the Walster
Speaker 1: Journal first broke the story. It was a little earlier
Speaker 1: than we expected that they broke the story. We I mean,
Speaker 1: including people from black Rock, from Vanguard, from State Street,
Speaker 1: from the world's largest asset managers telling us these are
Speaker 1: their words, not mine. They're fed up with the nonsense.
Speaker 1: I didn't expect to see that from the employee base.
Speaker 1: I expected to see it from the eventual end client base.
Speaker 1: I think that we are on a cultural tidal wave
Speaker 1: where I think I think, if you think about talking
Speaker 1: about every day Americans across this country, you don't mess
Speaker 1: with two things. That that better, there's you don't mess
Speaker 1: with their kids. You saw a lot about that last
Speaker 1: year and what played out in the school boards in
Speaker 1: this country. But the thing is, you don't mess with
Speaker 1: their money, and you don't mess with their money to
Speaker 1: weaponize back against them. The things that they're donating to,
Speaker 1: the organizations they're volunteering for, the place, the ways they're
Speaker 1: raising their children. You don't use their own money to
Speaker 1: implement policies through the back door, using corporate voting or
Speaker 1: corporate advocacy to do it. Once they wake up to
Speaker 1: that fact, this is a genie that you will not
Speaker 1: be able to put no one will be able to
Speaker 1: put back in the bottle. And your question of how
Speaker 1: we're going to be able to compete, look, there's a
Speaker 1: vestiges of lobbying that favor the incumbent. Black Rock and
Speaker 1: other firms have been masterful at lobbying, at carving distribution channels,
Speaker 1: at being exclusionary in their business practices. As I said earlier,
Speaker 1: a lot of even Arizona attorney generals talked about antitrust
Speaker 1: violations for these large e SG link managers. But the
Speaker 1: one thing we have going for us is the desire
Speaker 1: of the everyday citizen to be heard and to make
Speaker 1: sure that their capital is not weaponized back against the
Speaker 1: values that they hold most dear in their heart. And
Speaker 1: I think that's going to be the competitive advantage that
Speaker 1: matters most in the end. And if we're doing our
Speaker 1: jobs right, we're fixing a lot of those structural obstacles
Speaker 1: along the way. And if we fail to do that,
Speaker 1: it's not going to be for because of the failure
Speaker 1: of the demand. It's's going to be because we fail
Speaker 1: to do our job in fixing a broken system. That's
Speaker 1: the job we're taken on its strive. But the everyday
Speaker 1: citizens voice is every there, every bit there. There's a
Speaker 1: damn waiting to break for them to actually be heard
Speaker 1: in our economy and our corporate boardrooms. Again. Wow, yeah,
Speaker 1: I mean it's really if I've been covering ets for
Speaker 1: fifteen nearly twenty years, and I remember when everything was like,
Speaker 1: oh whichevery e t F is cheaper, I'll pick that,
Speaker 1: it'd be It's gonna be interesting to see if now
Speaker 1: e t F s are now picked, because the cost
Speaker 1: will be all else equel, the holdings all else equel,
Speaker 1: which is how they vote. Um, it's going to be
Speaker 1: fascinating to watch. This is a droll This is going
Speaker 1: to be uh, one really interesting experiment to see play out. Yeah,
Speaker 1: and so just to bring him back to E t
Speaker 1: F S, what are we gonna expect to see from you?
Speaker 1: So so at a high level, what you said is
Speaker 1: our our products are launching in the third quarter of
Speaker 1: the year as a firm, and we'll say more about
Speaker 1: that at the right point in time. That as a firm,
Speaker 1: our mission is about restoring that everyday voice of the
Speaker 1: citizen in the boardroom, and we're gonna be launching this
Speaker 1: as a movement. Think about this as as movement marketing,
Speaker 1: not E T F marketing. Okay, the movement we're marketing
Speaker 1: is excellence capitalism in the American economy. This new idea
Speaker 1: that the stakeholder you put first is the customer, and
Speaker 1: it is not just the apologetic pursuit of excellence, because
Speaker 1: I think that's a lot of what's behind this three
Speaker 1: letter achronymized capitalism. Pick your three letter acronym of choice.
Speaker 1: It's about apologizing for the pursuit of excellence. The thing
Speaker 1: that's different about Strive is that we strive for excellence unapologetically,
Speaker 1: and we will encourage every major company in America to
Speaker 1: do the same thing. That isn't a company. That is
Speaker 1: a movement, and we're building that movement. And we think
Speaker 1: that not all, but most of the citizens of this
Speaker 1: country are gonna behind us. And I have a message
Speaker 1: for those of us, for those who disagree with us too,
Speaker 1: It's that we respect their decisions to go in a
Speaker 1: different direction. It is okay for someone to say that
Speaker 1: they want to embrace the stakeholder capitalism agenda. There should
Speaker 1: be a choice for everyone. We just think we're building
Speaker 1: a choice that's the right choice for what we believe
Speaker 1: will be most Americans. And as Eric said, it's it's
Speaker 1: it's time will tell as we as we run this
Speaker 1: experiment over the course of the next year. Okay, closing
Speaker 1: question that we always ask on trillions, what's your favorite
Speaker 1: ticker other than your own? You don't have one yet,
Speaker 1: but like, what's your favorite et F ticker? I like, actually,
Speaker 1: you know, I'm gonna give you uh answer here that
Speaker 1: maybe a little surprising. I like the name the O
Speaker 1: T E vote. I think that it stands for something powerful.
Speaker 1: And you know what, we can all agree or disagree
Speaker 1: on underlying merits, but if we can all come back
Speaker 1: together and agree that it's important to represent the views
Speaker 1: of citizens in the boardroom. That's a mission I'm going
Speaker 1: to be behind, not one that I would have expected,
Speaker 1: but also expected expected and on it also at the
Speaker 1: same time, yes, exactly, yes, all right, the veg Anson
Speaker 1: thanks for joining us on Trillions. Thanks guys, thank you,
Speaker 1: thanks for listening to Trillions. Until next time. You can
Speaker 1: find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcast, Spotify,
Speaker 1: and wherever else you'd like to listen. We'd love to
Speaker 1: hear from you. We're on Twitter, I'm at Joel Webber Show.
Speaker 1: He's at Eric Baltunas. This episode of trans was produced
Speaker 1: by Magnus Hendrickson. Frincessica Levy is the head of Bloomberg
Speaker 1: Podcast by h