WEBVTT - How to Invest in Future Unicorn IPOs 0:00:05.559 --> 0:00:06.240 Okner trillions. 0:00:06.240 --> 0:00:07.880 I'm Joe Webber and I'm Eric Belchernas. 0:00:11.920 --> 0:00:14.840 Eric, I'm really excited about today's episode, but you're probably 0:00:14.880 --> 0:00:16.160 even more excited about it. 0:00:16.560 --> 0:00:18.959 Yeah, because I have been writing about this topic for 0:00:19.160 --> 0:00:21.080 like the past month heavily. 0:00:20.920 --> 0:00:22.600 And would you want to tell us what that your 0:00:22.640 --> 0:00:23.160 topic is? 0:00:23.800 --> 0:00:27.520 Ever since SpaceX became like, you know, potential IPO biggest 0:00:27.520 --> 0:00:32.320 ever probably, there's been this really intense interest in okay 0:00:32.320 --> 0:00:36.280 which ETFs hold private companies. And there's one XOVR which 0:00:36.280 --> 0:00:39.159 we've gone over several times, the public privates crossover that 0:00:39.200 --> 0:00:41.760 has a little bit of SpaceX, almost like a little 0:00:41.800 --> 0:00:44.360 copper wire inside an air conditioning unit, gives the whole 0:00:44.640 --> 0:00:48.160 unit value. And all these people have flooded this ETF 0:00:48.320 --> 0:00:51.279 just to get a tiny little piece of SpaceX. And 0:00:51.320 --> 0:00:53.880 that really has shown me that there is intense interest 0:00:53.920 --> 0:00:56.960 to get private companies in the ETF rapper. 0:00:57.040 --> 0:00:58.160 How much SpaceX does it help? 0:00:58.320 --> 0:01:01.000 It started like ten percent, but as more people came 0:01:01.000 --> 0:01:03.960 into the fund and the assets grew, the percentage shrunk 0:01:04.000 --> 0:01:07.240 to late it's like three and so it's I don't 0:01:07.280 --> 0:01:09.440 think it's worth it at this point to buy that. 0:01:10.000 --> 0:01:13.800 So as I was researching other ETFs that had private companies. 0:01:13.840 --> 0:01:17.680 We only found three, but there's tons of mutual funds 0:01:17.720 --> 0:01:21.000 with private companies, and probably the one that's the most 0:01:21.560 --> 0:01:25.399 full of like the coolest hot private companies is the 0:01:25.560 --> 0:01:29.280 ARC Venture Fund, which is from ARC. It was launched 0:01:29.319 --> 0:01:32.400 in twenty twenty two, kind of you know, rate sort 0:01:32.400 --> 0:01:35.000 of on the back end of ARC mania, and this 0:01:35.120 --> 0:01:38.440 has got some of the it's got SpaceX, it's got 0:01:38.480 --> 0:01:44.479 open AI, Neurlink XAI, on and on, and the weightings 0:01:44.480 --> 0:01:48.360 are high, you know, between eight percent, seven percent, six percent. 0:01:49.320 --> 0:01:52.160 The problem is it's a mutual fund. So it's interesting 0:01:52.200 --> 0:01:54.520 to me this fund is outperforming the S and P 0:01:54.560 --> 0:01:57.040 five hundred by forty five percentage points, so it's done 0:01:57.080 --> 0:02:00.920 its job. But it's got five hundred million in assets, 0:02:00.960 --> 0:02:04.280 which isn't nothing. But you know, XOVR has like one 0:02:04.320 --> 0:02:07.640 point five billion and it's got three percent SpaceX ron 0:02:07.680 --> 0:02:10.640 BAARN has some mutual funds which similarly also owns some 0:02:10.720 --> 0:02:14.359 of these private companies, and it has not seen inflows, 0:02:14.400 --> 0:02:17.680 and Fidelity has a couple and it's seen outflows. So 0:02:17.720 --> 0:02:21.200 it's kind of like an interesting moment here where you've 0:02:21.200 --> 0:02:23.679 got ETFs starting to dabble in this. Mutual funds have 0:02:23.760 --> 0:02:26.480 done it traditionally, and to me, ARC is perfectly placed 0:02:26.520 --> 0:02:28.600 because they have the one with the most private companies. 0:02:28.919 --> 0:02:31.520 But they also were experts in ETFs and so I 0:02:31.560 --> 0:02:33.160 just wanted to get their take on this because I 0:02:33.160 --> 0:02:35.600 think there's going to be increasing interest to get ahead 0:02:35.600 --> 0:02:39.760 of some of these IPOs through the ETF format or 0:02:39.840 --> 0:02:42.400 if the mutual funds can make the case through that format. 0:02:42.680 --> 0:02:46.720 So of course ARC is led by CEO and chief 0:02:46.760 --> 0:02:48.760 investment offer to Kathy Woods. She's going to be joining us. 0:02:48.880 --> 0:02:51.400 She's done on the podcast before, but we've never had 0:02:51.480 --> 0:02:54.160 a couple other members of her team, So joining us 0:02:54.200 --> 0:02:57.120 also going to be Brett Winton, who's the chief Future 0:02:57.200 --> 0:03:00.960 Officer at ARC, and Charlie Roberts, who's the chief Investment 0:03:01.000 --> 0:03:04.120 Structures of Private Equity. These three are the brain trusts 0:03:04.120 --> 0:03:07.920 behind the ARC Venture Fund ticker A R and k X, 0:03:10.080 --> 0:03:16.320 this time on Trillions ARC Venture Fund. Kathy, Brett, Charlie, 0:03:16.480 --> 0:03:17.280 Welcome to Trillions. 0:03:17.440 --> 0:03:18.800 Thank you, it's great to be here. 0:03:18.919 --> 0:03:20.880 Yeah, thanks so much for having us. Looking forward to 0:03:20.919 --> 0:03:21.480 the conversation. 0:03:21.960 --> 0:03:26.160 Yeah, very excited to be on your show again. And congratulations. 0:03:26.160 --> 0:03:27.560 I think you're almost ten years old. 0:03:27.639 --> 0:03:29.400 Yeah, there's we're having a debate. 0:03:29.760 --> 0:03:32.440 Look like an. 0:03:31.600 --> 0:03:35.600 Angry married couple that can't keep track of their anniversary. Kathy, 0:03:35.600 --> 0:03:38.720 I want to start with you. ARC is really synonymous 0:03:38.760 --> 0:03:42.320 in my mind with ETFs. So what problem were you 0:03:42.360 --> 0:03:45.720 trying to solve that you know, the ETF structure couldn't 0:03:45.760 --> 0:03:47.640 provide when you dreamed up the venture fund. 0:03:49.400 --> 0:03:53.520 Well, a few things. Early on, we were looking at 0:03:53.720 --> 0:04:00.760 the best way to democratize venture capital for our client base, 0:04:00.960 --> 0:04:04.880 and of course we would have naturally gone to ETFs, 0:04:06.040 --> 0:04:11.040 given that's pretty much all we do. And then we 0:04:11.080 --> 0:04:15.840 examined the structure and a big drawback for us, given 0:04:15.840 --> 0:04:19.640 that we wanted to start a venture capital fund, A 0:04:19.640 --> 0:04:24.320 big drawback was the fifteen percent ill liquidity clause. You 0:04:24.480 --> 0:04:28.640 can't have more than fifteen percent in ill liquid assets, 0:04:28.800 --> 0:04:32.040 and so we just kill an ETF wrapper, and so 0:04:32.080 --> 0:04:35.440 we started casting around. I'm going to give Tom Stout, 0:04:35.440 --> 0:04:38.440 our president and COO, a lot of credit for this. 0:04:39.800 --> 0:04:43.760 We didn't We wanted to provide venture for our client base, 0:04:44.440 --> 0:04:48.240 much of which is not accredited, and we happened upon 0:04:48.360 --> 0:04:51.800 the interval fund structure. So it's not I don't know 0:04:52.160 --> 0:04:54.880 technically it's a mutual fund. I don't think it is. 0:04:54.960 --> 0:04:58.760 I think it's an interval fund. But you know, when 0:04:58.800 --> 0:05:02.760 you're talking about regulation and sometimes you know you've got 0:05:02.760 --> 0:05:06.880 the mutual funds and the ETFs, both forty Act funds. 0:05:07.600 --> 0:05:10.599 The interval fund is a forty Act fund, but I 0:05:10.600 --> 0:05:13.960 don't think it's a mutual fund. In that fund structure, 0:05:14.000 --> 0:05:20.040 we've been able to populate it with on average eighty 0:05:20.080 --> 0:05:26.680 percent private exposure and twenty percent public. We have daily 0:05:26.720 --> 0:05:32.440 inflows minimum five hundred dollars, quarterly outflows up to five 0:05:32.560 --> 0:05:37.520 percent of nav and so we need the public positions 0:05:37.640 --> 0:05:42.160 so that we can provide liquidity if our client's demanded 0:05:42.240 --> 0:05:43.200 at the end of a quarter. 0:05:43.600 --> 0:05:45.560 That is a good point. This is a non diversified 0:05:45.600 --> 0:05:49.239 closed end management investment company that is an interval fund. 0:05:50.200 --> 0:05:53.120 And that's why like the Fidelity and Baron funds that 0:05:53.200 --> 0:05:57.160 own privates, it's in the fifteen percent that said, if 0:05:57.160 --> 0:05:59.280 it grows beyond, you're allowed to keep it. That's why 0:05:59.400 --> 0:06:02.159 SpaceX is a little more in Ron Baron's fund. But 0:06:02.200 --> 0:06:03.919 the long and short of it is an actual mutual 0:06:03.920 --> 0:06:05.800 fund can't hold more than fifteen percent of liquid or 0:06:05.800 --> 0:06:08.440 an ETF. This fund can hold more as an interval 0:06:08.480 --> 0:06:11.839 closed then fund, and that is why this one kind 0:06:11.839 --> 0:06:13.919 of is the most interesting to me because it's full 0:06:13.960 --> 0:06:17.520 of the companies. So that's a good point, thank you. 0:06:18.440 --> 0:06:21.800 And just critically it's it's closed in, but it prices 0:06:21.839 --> 0:06:24.719 at NAV as in there's some closed in funds that 0:06:24.760 --> 0:06:26.719 are out there. They're like, here's a basket of goods, 0:06:27.000 --> 0:06:29.159 buy it for what you want, and then it gets 0:06:29.200 --> 0:06:32.719 bid up and you're you're paying a dollar to get 0:06:32.800 --> 0:06:35.960 fifteen cents, you know, And that's clearly not a structure 0:06:36.000 --> 0:06:38.360 we were attracted to either, and so you should think 0:06:38.360 --> 0:06:41.680 of even remember back when you were interviewing Kathy and 0:06:41.760 --> 0:06:45.440 we were doing actively managed ETFs, and you know who 0:06:45.520 --> 0:06:48.960 does that. Nobody wants actively managed gts. People want me 0:06:49.000 --> 0:06:51.640 massive ETFs. That's why would you do this? Well, here 0:06:51.960 --> 0:06:54.800 we it would be really nice if we thought we 0:06:54.839 --> 0:06:59.680 could like do real venture exposure in an ETF. But 0:07:00.400 --> 0:07:03.039 we looked around the entire landscape and as Kathy said, 0:07:03.080 --> 0:07:06.760 Tom identified the interval fund structure which was originally intended 0:07:06.839 --> 0:07:10.680 for venture capital but was never used for that, and said, 0:07:10.720 --> 0:07:15.320 this is the right vehicle to provide everybody with access 0:07:15.360 --> 0:07:21.400 to first class venture exposure, including Neuralink, SpaceX Xai, Open Ai, 0:07:22.000 --> 0:07:26.360 Tropic Replet, you know, all of these companies that actually 0:07:26.520 --> 0:07:32.120 for SpaceX's AI compute adventure to work, you need these 0:07:32.120 --> 0:07:34.680 other companies to do very well as well, and so 0:07:34.760 --> 0:07:37.640 it provides you a full suite of exposure to the 0:07:37.680 --> 0:07:39.040 first class venture companies. 0:07:39.640 --> 0:07:43.400 I think the reason it has mutual fund kind of 0:07:43.880 --> 0:07:45.720 it looks like one is the five litter ticker. You know, 0:07:45.720 --> 0:07:47.920 all mutual funds have five litter tickers, Ends and X. 0:07:48.120 --> 0:07:50.720 But I think more than that, it just seems to 0:07:50.760 --> 0:07:53.600 be like in this era, like people generally just want 0:07:53.760 --> 0:07:58.520 everything in an ETF, and there's a lot of people 0:07:58.560 --> 0:08:01.480 who felt maybe burned in mutual funds in the past. 0:08:01.880 --> 0:08:05.400 And clothing funds aren't exactly like stellar reputation either because 0:08:05.440 --> 0:08:08.240 they traded these big discounts. So I think part of 0:08:08.240 --> 0:08:10.480 the challenge for fun like this is being in that 0:08:11.400 --> 0:08:14.240 camp and not being able to use the ETFs halo. 0:08:16.000 --> 0:08:20.640 Can I just correct one thing, Eric, We do not 0:08:20.880 --> 0:08:25.600 trade at a discount or a premium. Ever. We actually 0:08:26.320 --> 0:08:33.080 we sell at nav and end. Our pricing committee really 0:08:33.160 --> 0:08:36.720 is working to price the portfolio every day. If there's 0:08:36.920 --> 0:08:40.800 anything going on in any of the private funds, We're 0:08:40.840 --> 0:08:43.920 all over it in terms of valuation, whether it's on 0:08:43.960 --> 0:08:49.080 the secondary markets or the mutual funds themselves. If we 0:08:49.120 --> 0:08:51.000 look at their marks at the end of a quarter 0:08:51.120 --> 0:08:56.640 and we see we're not aligned, we'll go back and 0:08:56.720 --> 0:09:00.439 do due diligence to either defend our price or or 0:09:00.520 --> 0:09:04.280 change it so we don't sell at a premium or 0:09:04.400 --> 0:09:07.600 a discount. It's a huge selling point for us. 0:09:08.280 --> 0:09:09.920 Charlie, I want to bring you in because we haven't 0:09:10.120 --> 0:09:12.880 heard from you yet. How does a strategist who now 0:09:12.880 --> 0:09:14.560 has an interval fund that you're going to fill with 0:09:14.679 --> 0:09:18.120 VC or P exposure, how do you go figuring out 0:09:18.200 --> 0:09:20.040 how do you go about figuring out what exactly you 0:09:20.080 --> 0:09:21.439 want to put in the fund? 0:09:21.840 --> 0:09:22.160 Sure? 0:09:22.559 --> 0:09:24.600 Well, if I may also just quickly build off a 0:09:24.600 --> 0:09:26.880 couple of the points, one that Kathy made and one 0:09:27.080 --> 0:09:29.400 one that Brett made to Brett's. 0:09:29.400 --> 0:09:31.679 While they're related to Brett's. 0:09:31.280 --> 0:09:34.800 Point, the you know, we don't have these wild swings 0:09:34.800 --> 0:09:38.199 in prices, either to the upside or the downside because 0:09:38.200 --> 0:09:42.360 of the way we do value and price. And a 0:09:42.440 --> 0:09:45.200 critical point there is, of course that what really matters 0:09:45.240 --> 0:09:47.600 on the private side as much as anything, as well 0:09:47.640 --> 0:09:50.679 as doing great research selecting companies. Well, it's all about 0:09:50.679 --> 0:09:53.240 getting into companies. It's not just like you can go 0:09:53.240 --> 0:09:55.480 on in exchange and buy the asset you want right. 0:09:55.840 --> 0:09:59.760 In fact, if anything, that is perhaps the defining skill 0:09:59.800 --> 0:10:03.000 set that actually is required to turn ideas into a portfolio, 0:10:03.440 --> 0:10:06.960 and the companies do not. The portfolio companies, certainly many 0:10:06.960 --> 0:10:09.640 of that we've spoken to do not want to be 0:10:09.920 --> 0:10:12.920 in some sort of a structure which allows their price 0:10:12.960 --> 0:10:15.480 to be dictated by a bid us spread essentially in 0:10:15.520 --> 0:10:17.200 a you know, supplying demand and to be bid up 0:10:17.280 --> 0:10:19.040 or bid down because they don't want to be part 0:10:19.040 --> 0:10:22.920 of the portfolio that's way under and and sort of 0:10:22.920 --> 0:10:25.000 get all the negative halo from that. They also just 0:10:25.000 --> 0:10:25.560 don't want the. 0:10:26.559 --> 0:10:28.000 To be seen. 0:10:28.280 --> 0:10:30.280 They don't want people to try and back into their 0:10:30.320 --> 0:10:32.520 pricing in different ways, and they just don't want that 0:10:32.800 --> 0:10:33.880 volatility and variability. 0:10:33.920 --> 0:10:34.360 So that's what I mean. 0:10:34.360 --> 0:10:36.360 They're private, right, It's like, why why would I want 0:10:36.360 --> 0:10:39.760 the house of the public market exactly. 0:10:39.280 --> 0:10:42.320 It's right all downside for them from their view, sometimes 0:10:42.559 --> 0:10:44.959 depends on the stage of the company. The other thing, 0:10:44.960 --> 0:10:48.120 as well, to Kathy's point, is because we care so 0:10:48.240 --> 0:10:52.400 much about a very good pricing process and evaluation being 0:10:52.520 --> 0:10:56.240 appropriate and correct, and that the true market price at 0:10:56.240 --> 0:11:00.000 the time, factoring in you know, immedia and longer term signals. 0:11:00.559 --> 0:11:03.680 So something I sometimes say to people we're discussing the 0:11:03.679 --> 0:11:05.480 fund that's quite important to bear in mind as well, 0:11:05.559 --> 0:11:08.240 is as well as wanting to do the right thing 0:11:08.280 --> 0:11:12.560 and having the right price, we're obviously absolutely incentivized by 0:11:12.559 --> 0:11:15.640 the market mechanisms around the fund to be right up 0:11:15.679 --> 0:11:17.800 the fair way when it comes to price. What I 0:11:17.800 --> 0:11:20.120 mean by that is, obviously, on one level, it would 0:11:20.120 --> 0:11:21.960 be good for the fund if you were to presume 0:11:21.960 --> 0:11:23.839 that we were just acting out of self interest, it 0:11:23.880 --> 0:11:25.520 would be good for the fund obviously for the price 0:11:25.559 --> 0:11:28.800 to continue or scope go up because the performance looks great. However, 0:11:29.200 --> 0:11:31.960 because we're redeeming and have providing liquidity up to five 0:11:31.960 --> 0:11:34.880 percent of the fund every quarter, the last thing we 0:11:34.920 --> 0:11:37.240 want is to be redeeming against the companies whose price 0:11:37.320 --> 0:11:39.520 we do not believe in and has gone to the upside. 0:11:39.640 --> 0:11:41.679 So it's a really important things to think about that 0:11:41.720 --> 0:11:44.359 mechanism as well, and the fact that we're absolutely incentivized 0:11:44.400 --> 0:11:46.400 for the price to be right, which is why to 0:11:46.480 --> 0:11:49.520 Kathy's point, we spend so much, you know, calories and 0:11:50.080 --> 0:11:52.559 really put in place very good structures which are all 0:11:52.679 --> 0:11:56.480 third party observed and audited to make sure that the 0:11:56.520 --> 0:11:57.959 valuation is correct. 0:11:58.240 --> 0:12:03.200 I'd love to have Brett and Charlie address the real 0:12:03.320 --> 0:12:08.559 secret sauce of how we put this portfolio together. And 0:12:09.320 --> 0:12:12.240 it's a familiar refrain you'll hear from ARC. You hear 0:12:12.240 --> 0:12:17.160 it all the time. Research research, research, research, and our 0:12:17.760 --> 0:12:22.000 analysts on the public equities are the same analysts on 0:12:22.120 --> 0:12:26.679 the private companies. We think these two worlds are coalescing. 0:12:27.600 --> 0:12:31.120 So maybe Brett or Charlie, you'd like to go through 0:12:31.160 --> 0:12:32.040 the research angle. 0:12:33.160 --> 0:12:38.320 Sure, you know, we in we co wrote a white 0:12:38.360 --> 0:12:42.040 paper with Coinbase when they were raising their Series B 0:12:42.800 --> 0:12:44.880 and at the time I remember in conversation with them, 0:12:44.880 --> 0:12:46.839 They're like, oh, you should invest, and I was like, well, 0:12:47.280 --> 0:12:49.920 we would love to invest, we just don't have a 0:12:49.960 --> 0:12:54.560 client vehicle that allows us to invest. And so from 0:12:54.600 --> 0:12:58.360 the beginning, because our analysts are focused technology by technology 0:12:58.480 --> 0:13:02.480 rather than bisector and doing the hard work of figuring 0:13:02.480 --> 0:13:04.800 out the cost of clients and the unit economic cases 0:13:04.800 --> 0:13:08.960 for these technologies, they're in conversation with private companies already 0:13:09.000 --> 0:13:11.079 they have to be in order to do their work. 0:13:11.559 --> 0:13:14.520 And so you know, over a decade, we've built up 0:13:14.640 --> 0:13:16.880 a lot of relationships with these companies that are now 0:13:16.920 --> 0:13:21.400 in later stage, including you know, the SpaceX's and of 0:13:21.400 --> 0:13:23.960 course the neuralinks and the Elon companies, but also other 0:13:24.280 --> 0:13:28.640 kind of AI and and all technology platform focused companies. 0:13:29.360 --> 0:13:32.600 And so the a difference between what we do and 0:13:33.040 --> 0:13:35.520 you know, some of the mutual fund structures and certainly 0:13:35.600 --> 0:13:39.920 some of the closed in fund structures is we're direct 0:13:39.920 --> 0:13:43.120 on cap table with the companies. We're in conversation with management. 0:13:43.440 --> 0:13:46.480 We we underwrite the companies in the same way we 0:13:46.520 --> 0:13:48.840 do the public portfolio. So there's been plenty of times 0:13:48.880 --> 0:13:52.439 where we've been like, well, this is interesting, provocative, and 0:13:52.640 --> 0:13:55.040 it doesn't underwrite. Well, so we're not going to participate 0:13:55.080 --> 0:13:58.319 because ultimately, you know, we're operating on behalf of our 0:13:58.400 --> 0:14:01.440 clients to deliver you know, best return possible in these 0:14:01.559 --> 0:14:06.960 venture exposures. And so both the credibility we've established in 0:14:07.600 --> 0:14:11.200 doing innovation research over a decade, the degree to which 0:14:11.200 --> 0:14:13.199 we've shown that we are a founder friendly and we 0:14:13.360 --> 0:14:15.400 back founders to the hilt when we really believe that 0:14:15.800 --> 0:14:19.560 in what they're doing, and kind of our ability to 0:14:19.920 --> 0:14:22.840 assess and give kind of strategic guidance to companies but 0:14:22.880 --> 0:14:25.280 also assess whether or not it's a good exposure for 0:14:25.320 --> 0:14:29.960 our client really shapes the portfolio that we've developed. And then, 0:14:30.040 --> 0:14:32.720 like Charlie said, and he's really the tip of the 0:14:32.760 --> 0:14:35.800 sphere here. Also, you know, making sure that we can 0:14:35.840 --> 0:14:39.880 get into and participate in the rounds that we're interested 0:14:39.880 --> 0:14:42.760 in is a huge, hairy amount of work, and we 0:14:42.840 --> 0:14:48.560 do so almost uniformly cleanly, direct on cap table, with conversations, 0:14:48.600 --> 0:14:52.600 directly with management, access to data room, so that we 0:14:52.640 --> 0:14:57.840 avoid also paying additional fees for SPV exposures or for oh, 0:14:57.880 --> 0:15:00.400 this is an indirect exposure through some kind of forward 0:15:00.600 --> 0:15:03.240 agreement with some employee who says he's going to sell 0:15:03.320 --> 0:15:05.080 us our shares where you don't actually know if it's 0:15:05.120 --> 0:15:08.160 going to come true. And so some of these structures 0:15:08.160 --> 0:15:10.760 it's like, yes, I have exposure to you know, name 0:15:10.880 --> 0:15:13.360 company X, but do you really have exposure You don't 0:15:13.400 --> 0:15:17.440 actually know. So we are very certain of our underlying 0:15:17.440 --> 0:15:18.360 exposures as well. 0:15:18.600 --> 0:15:22.320 That's a really important point, Eric, just that if you 0:15:22.520 --> 0:15:26.200 look at the funds you've mentioned, who hold private not 0:15:26.360 --> 0:15:30.800 ron barons, of course, and I'm not quite sure about 0:15:30.800 --> 0:15:34.000 all of them, but invariably, as we have looked at 0:15:34.360 --> 0:15:39.960 these funds, they are populated, if they own much at all, 0:15:40.440 --> 0:15:45.800 by SPVs, so special purpose vehicles. And so what's happening 0:15:46.040 --> 0:15:50.800 is the clients of those funds are paying fees upon 0:15:50.840 --> 0:15:56.400 fees upon fees. Sometimes they're triple aer SPVs. And I 0:15:56.400 --> 0:16:01.120 will tell you, we know this that the private companies 0:16:01.120 --> 0:16:04.080 in which we're invested, they do not want to be 0:16:04.160 --> 0:16:09.360 part of SPV vehicles. They do not they want to 0:16:09.520 --> 0:16:17.720 know their shareholders. 0:16:18.400 --> 0:16:22.760 So something like XOVR owns the SpaceX SPV. So somewhere 0:16:22.760 --> 0:16:25.600 along the lines, somebody took some of the shares of 0:16:25.600 --> 0:16:29.480 SpaceX that were private and put them into this other vehicle. 0:16:29.800 --> 0:16:33.160 The ETF then buys that on some kind of an exchange. 0:16:33.760 --> 0:16:36.720 You guys go out and you're like almost an actual 0:16:36.840 --> 0:16:40.040 VC investor where you're part of the rounds, so you're 0:16:40.400 --> 0:16:45.560 skipping the SPV. You're direct And just give me a 0:16:45.640 --> 0:16:49.840 little bit of a macro. Look here, if SpaceX has 0:16:50.080 --> 0:16:54.040 x amount of shares out there held by private people 0:16:54.200 --> 0:16:57.400 or help privately, what percentage of them are in SPVs, like, 0:16:57.480 --> 0:17:00.720 is the SPV market big or small? And should you 0:17:00.760 --> 0:17:02.760 avoid it at all costs or is it sometimes the 0:17:02.800 --> 0:17:03.600 only way to do it? 0:17:04.840 --> 0:17:07.800 Can I just before we answer that question, and I 0:17:07.800 --> 0:17:10.600 think you'll be interested in this, Eric, from the ETF 0:17:10.640 --> 0:17:14.719 point of view, we have tried, because we do have 0:17:14.840 --> 0:17:20.639 direct contact with these companies. We have encouraged, you know, 0:17:20.720 --> 0:17:26.280 especially our highest conviction names to become a part of 0:17:26.320 --> 0:17:31.480 our ETFs, and we have close relationships with these companies 0:17:32.600 --> 0:17:36.520 and they have they have refused us, and it is 0:17:36.600 --> 0:17:42.600 why you probably see Fidelity owning private companies in its 0:17:42.760 --> 0:17:47.199 mutual funds, but not ETFs. So I just wanted to 0:17:47.240 --> 0:17:50.000 make that clear in terms of the size of the 0:17:50.160 --> 0:17:54.120 SPV market, it's burgeoning and it's clandestine, I would say, 0:17:54.800 --> 0:17:58.239 to some extent, but maybe Brett or Charlie you have 0:17:58.800 --> 0:18:01.520 a better answer than that. It's smile in the scheme 0:18:01.560 --> 0:18:02.040 of things. 0:18:02.359 --> 0:18:06.600 We have actually seen cases of the companies themselves canceling 0:18:06.960 --> 0:18:09.480 shareholdings two SPVs. So that's one other thing is that 0:18:09.520 --> 0:18:12.440 it's a rocky boat because of things like that. 0:18:12.560 --> 0:18:15.080 They've not there's various aspects they've not liked about it. 0:18:15.119 --> 0:18:18.280 There's some other SPVs that we've come across again, as 0:18:18.320 --> 0:18:20.320 Kathy says, while avoiding them because we're not doing them, 0:18:20.359 --> 0:18:23.720 but that we've heard of where actually the SPV doesn't 0:18:23.720 --> 0:18:26.359 even own the underlying asset and there so there is 0:18:26.400 --> 0:18:28.280 a bit of a wild west. Sometimes not in all 0:18:28.280 --> 0:18:30.520 cases by any means, but that there has been there 0:18:30.560 --> 0:18:33.399 are some examples. I don't think anyone knows exactly what 0:18:33.440 --> 0:18:36.199 proportion of SpaceX is in SPVs, but it's you know, 0:18:36.800 --> 0:18:38.920 as the company grows and all of these large late 0:18:38.920 --> 0:18:41.639 stage private companies, there has been a significant amount of 0:18:42.000 --> 0:18:46.119 SPV activity by and large across the space and but 0:18:46.280 --> 0:18:50.520 companies have been shutting down on making that possible around 0:18:50.680 --> 0:18:53.240 in their cap tables. In fact, many times there are 0:18:53.280 --> 0:18:56.639 specific reps and warranties against that in late stage private deals. 0:18:56.640 --> 0:18:58.480 So that that's another thing, is it's a there's a 0:18:58.480 --> 0:19:00.160 bit of a race to the bottom aspect to it. 0:19:00.440 --> 0:19:06.600 Many times the companies do not know how many layers 0:19:06.280 --> 0:19:11.840 of SPVs there are. Uh, and I think they're they're 0:19:11.840 --> 0:19:15.320 onto this now, so they're clamping down more and more 0:19:15.760 --> 0:19:16.800 on this activity. 0:19:17.960 --> 0:19:23.119 Okay, Charlie, I'm guessing that you get the job of 0:19:23.200 --> 0:19:27.439 approaching and flirting and saying, hey, private company, you're really 0:19:27.560 --> 0:19:30.160 cute and you know we've got a bag of money 0:19:30.160 --> 0:19:33.000 over here. Can you tell me how that pitch actually 0:19:33.000 --> 0:19:36.360 goes down? Clearly, there's a lot of legwork that you've 0:19:36.400 --> 0:19:39.280 all have established through years of doing the research, But 0:19:39.680 --> 0:19:41.439 when it actually comes down to like how do we 0:19:41.640 --> 0:19:43.960 how do we get in on the series X y Z, 0:19:44.840 --> 0:19:47.240 what's the pitch actually look like? Coming from from you? 0:19:48.480 --> 0:19:51.400 Absolutely, you're reminding me of a quote I once heard, 0:19:51.440 --> 0:19:54.040 I can't remember from whom it was, saying that the 0:19:54.040 --> 0:19:56.120 best training for being an entrepreneur was to have dated 0:19:56.160 --> 0:19:59.360 for several years before getting married. So maybe maybe there's 0:19:59.400 --> 0:20:03.040 a bit of that in this case. Yes, So I 0:20:03.080 --> 0:20:05.760 think the first thing is this picks up on an 0:20:05.760 --> 0:20:08.199 earlier question that I didn't quite get to answering. But 0:20:09.200 --> 0:20:13.520 one is, as Kathy's mentioned, we are absolutely research oriented, 0:20:13.560 --> 0:20:16.040 and so we know ahead of time we're pre studying 0:20:16.080 --> 0:20:19.720 these companies, and so we have a long research wish list, 0:20:19.760 --> 0:20:22.080 which gets narrowed down into a short list, which gets 0:20:22.160 --> 0:20:25.960 narrowed down into diligence lists. So because by and large 0:20:26.000 --> 0:20:28.760 we are not going I mean, in some cases we 0:20:28.800 --> 0:20:30.640 have actually done companies that are sort of in their 0:20:30.680 --> 0:20:32.640 process of coming out of stealth. In fact, we did 0:20:32.640 --> 0:20:36.840 the first external round for Xai because we're particularly close 0:20:36.880 --> 0:20:38.440 to that group for instance, and you know, there have 0:20:38.560 --> 0:20:41.679 been other examples, but typically we're going to companies that 0:20:41.760 --> 0:20:44.040 have got a bit further along, they have a bit 0:20:44.080 --> 0:20:48.159 of traction. We know that the company exists, so you know, 0:20:48.440 --> 0:20:50.840 usually we're investing post series A, sometimes that Series A, 0:20:50.880 --> 0:20:55.159 but typically BCD plus and pre IPO, et cetera. So 0:20:55.200 --> 0:20:57.280 that's the first thing to note. So we have enough 0:20:58.320 --> 0:21:00.520 grist for the mill of researchers where and we have 0:21:00.600 --> 0:21:03.000 something we can study. Typically we have some level of 0:21:03.040 --> 0:21:06.080 traction metrics, we can begin to look at the the 0:21:06.160 --> 0:21:09.080 growth and the traction and things like this that matter, 0:21:09.200 --> 0:21:11.800 and and and very often we're also looking at talent 0:21:11.920 --> 0:21:14.280 and talent flows in our app that's very a big, 0:21:14.320 --> 0:21:16.199 big factor for it, as as it is on the 0:21:16.320 --> 0:21:18.080 on the public side or a big market for us. 0:21:18.960 --> 0:21:21.840 So so so that's the first thing to know. The 0:21:21.880 --> 0:21:25.159 next thing maybe to say, is on top of the 0:21:25.640 --> 0:21:28.199 then the research and the firm view and quite a 0:21:28.200 --> 0:21:31.240 lot of you know, deep research based conviction or not. 0:21:31.960 --> 0:21:34.119 We then asset in what is the best if we 0:21:34.119 --> 0:21:36.000 want to have a conversation with this company, So we've 0:21:36.040 --> 0:21:38.199 prediscerned out quite a lot of companies. But if we 0:21:38.200 --> 0:21:40.320 want to then have a conversation to try and understand 0:21:40.600 --> 0:21:43.560 support what we believe or refute it, we will then 0:21:43.600 --> 0:21:45.679 reach out to the company. Now, either we'll go direct. 0:21:46.000 --> 0:21:50.960 We often have good founder and leadership relationships. Increasingly so 0:21:51.200 --> 0:21:54.159 we're also going via co investors. And this kind of 0:21:54.160 --> 0:21:57.000 comes to your question about why would co investors want 0:21:57.080 --> 0:21:59.440 us in. I think there's a really important point here. 0:21:59.480 --> 0:22:01.879 We we've thought a lot about this because we're not 0:22:02.000 --> 0:22:04.640 leading rounds and taking board seats, which is often how 0:22:04.800 --> 0:22:08.840 vcs add value or occasionally destroy value. 0:22:08.880 --> 0:22:12.600 We have Yeah, we. 0:22:14.200 --> 0:22:17.600 Definitely have decided well, as a predominantly passive investor, we 0:22:17.640 --> 0:22:19.080 want to be supportive in other ways. 0:22:19.119 --> 0:22:19.359 Now. 0:22:19.640 --> 0:22:21.680 The other ways can be follow on funding, for sure, 0:22:21.720 --> 0:22:23.640 and you know whether we're doing that ourselves or also 0:22:23.720 --> 0:22:26.320 helping companies get follow on funding. So there's lots of 0:22:26.400 --> 0:22:29.479 examples where we maintain a rich, broad and deep network 0:22:29.520 --> 0:22:31.439 of follow and investors so we can call on for 0:22:31.560 --> 0:22:33.320 our companies when they need to raise again. So that's 0:22:33.440 --> 0:22:35.240 one kind of obvious one, but a lot of people do, 0:22:35.320 --> 0:22:37.960 but we hope that's becoming a superpower or is a 0:22:37.960 --> 0:22:42.040 superpower of it, and our own check sizes are going 0:22:42.119 --> 0:22:44.200 up through time as the fund grows. So as you said, 0:22:44.240 --> 0:22:46.240 at the start, we're around five hundred million a UM, 0:22:46.280 --> 0:22:48.600 but already that's out of date because the fund's growing 0:22:48.600 --> 0:22:50.639 so fast. We're now five twenty one as of today, 0:22:51.000 --> 0:22:54.159 and actually we've been adding. Flows are around ten to 0:22:54.200 --> 0:22:57.800 twenty million a week at the moment, so the fund 0:22:57.840 --> 0:23:01.600 is growing fast and we're looking at soon unlocking lots 0:23:01.600 --> 0:23:04.119 of the folks like the wirehouses and others who have 0:23:04.240 --> 0:23:09.080 aarm and length of time track record thresholds, so a 0:23:09.080 --> 0:23:11.480 lot of those are kicking in. So we add value 0:23:11.520 --> 0:23:14.520 also ourselves through doing pro rut and super pro utter rounds, 0:23:14.520 --> 0:23:16.880 and typically if we have conviction, we build into these 0:23:16.920 --> 0:23:19.320 companies and obviously found doesn't leaders love that because it's 0:23:19.320 --> 0:23:22.280 a good signal, but it's also more capital. We also 0:23:22.320 --> 0:23:26.080 help in other ways. So other ones I can sort 0:23:26.080 --> 0:23:29.080 of quickly highlight are things like enterprise intros, where we 0:23:29.119 --> 0:23:32.040 have a fair superpower because we have obviously a lot 0:23:32.640 --> 0:23:35.920 a network obviously from over ten years of public investing, 0:23:36.320 --> 0:23:38.199 So there are many cases where we've been able to 0:23:38.240 --> 0:23:41.879 bring about an introduction between a twenty five person Series 0:23:41.920 --> 0:23:44.800 A startup and the C suite of one hundred billion 0:23:44.800 --> 0:23:48.840 plus dollar enterprise company. And obviously that's you know, pretty 0:23:48.840 --> 0:23:51.639 asymmetric and can be very useful, and in many cases 0:23:51.640 --> 0:23:55.399 that's led to revenue making collaborations and deal relationships and 0:23:55.440 --> 0:24:02.320 other things. So follower investors, enterprise introductions, other introductions, and 0:24:02.359 --> 0:24:04.160 then it also comes back to where it begins, which 0:24:04.200 --> 0:24:06.800 is with research and the open research ecosystem. So we 0:24:06.920 --> 0:24:10.240 love to tell companies to help companies tell their story 0:24:11.320 --> 0:24:15.480 and help with them think what is the best means 0:24:15.800 --> 0:24:18.720 of both make clarifying the story and then also telling it. 0:24:18.800 --> 0:24:20.960 So we've done that in a very tactical sense with 0:24:21.000 --> 0:24:24.080 webinars and blogs and things we focus a lot. And 0:24:24.119 --> 0:24:25.639 maybe it's a good time I can hand the MC 0:24:25.680 --> 0:24:28.720 back to Brett on market sizing, both top down and 0:24:28.760 --> 0:24:32.160 bottom up research. And one thing that we've consistently seen 0:24:32.760 --> 0:24:35.760 when we do go for these introductions, often via these 0:24:35.760 --> 0:24:39.240 top desk rvcs, we tend to co invest with. Honestly, 0:24:39.320 --> 0:24:41.600 very often we see that like a Series A or 0:24:41.680 --> 0:24:46.320 B company or whatever has used our market sizing or 0:24:46.359 --> 0:24:49.760 other slides from our research in their own decks, so 0:24:49.760 --> 0:24:51.560 we're getting to see those sort of played back to 0:24:51.640 --> 0:24:54.879 us as it were. So anyway, maybe that's a good 0:24:54.920 --> 0:24:57.000 time to hand back to Brett on the research driven 0:24:57.119 --> 0:24:58.840 side and where we get there in the first place. 0:24:58.840 --> 0:25:02.040 But to summarize, we add value in various different ways. 0:25:02.040 --> 0:25:02.240 Sorry. 0:25:02.280 --> 0:25:04.000 The final thing I'll say before handing the mic is 0:25:04.680 --> 0:25:10.800 increasingly we're also looking at magnifying and benefiting companies from 0:25:10.920 --> 0:25:14.439 our large You can think about this fun directionally, we 0:25:14.560 --> 0:25:16.520 hope and believe. I mean, it's already got many, many 0:25:16.520 --> 0:25:19.320 tens of thousands of small LPs essentially through the apps, 0:25:19.359 --> 0:25:21.840 in some cases some with tiny account sizes like five 0:25:21.920 --> 0:25:23.960 hundred dollars like ath you said, some with five million, 0:25:24.000 --> 0:25:26.639 and you know, increasingly we're seeing more institutional and RIA 0:25:26.720 --> 0:25:30.280 is coming as well. But directionally, maybe we have a 0:25:30.320 --> 0:25:34.840 million plus LPs essentially, and that's an audience of allies 0:25:35.320 --> 0:25:37.920 akin to what Elon, for instance, is seen with Tesla, 0:25:37.920 --> 0:25:40.119 where you have people who own a model hy and 0:25:40.160 --> 0:25:42.280 they also have TEESL stock, and you know, you get 0:25:42.280 --> 0:25:46.000 this feedback loop between the product and the ally and 0:25:46.040 --> 0:25:48.359 the stock. And so I think we're beginning to already 0:25:48.359 --> 0:25:50.040 see the first green shoots of that kind of thing, 0:25:50.080 --> 0:25:52.879 and we're beginning to industrialize that with things like talent 0:25:52.960 --> 0:25:55.879 marketplaces where we can repost the jobs to our pretty 0:25:55.960 --> 0:25:58.400 large audience that the firm has in Kathias. 0:26:00.440 --> 0:26:03.440 And just on the research side, one thing, you covered 0:26:03.480 --> 0:26:06.160 it very well, Charlie, in terms of the whole suite 0:26:06.200 --> 0:26:08.720 of things that we offer. And I'll circle back to 0:26:08.760 --> 0:26:11.600 the SPV point. If somebody, you know, we have the 0:26:11.640 --> 0:26:15.399 top down research and the analysts do really good underwriting 0:26:15.480 --> 0:26:18.680 of the underlying asset. When we started ARC, I expected 0:26:18.680 --> 0:26:20.480 that the work we would do would be very similar 0:26:20.520 --> 0:26:24.560 to venture capitalists. But as it turns out, many venture 0:26:24.600 --> 0:26:28.359 capitalists never open a spreadsheet, whereas our analysts, you know, 0:26:28.400 --> 0:26:31.280 spend all of their time forecasting and modeling. And if 0:26:31.280 --> 0:26:35.000 somebody invests in an SPV, that's a big blinking signal 0:26:35.880 --> 0:26:39.680 that they actually haven't had access to the underlying information 0:26:39.720 --> 0:26:42.199 of what's going on in the company to typically the 0:26:42.240 --> 0:26:44.360 SPV sponsor of saying, hey, this is what we hear 0:26:44.440 --> 0:26:46.879 is happening, and they're receiving it like a game of telephone. 0:26:46.920 --> 0:26:50.679 So there's no real effective way to do actually an 0:26:50.760 --> 0:26:54.479 underwrite of a position. And you know from I remember 0:26:54.520 --> 0:26:58.080 when Uber had its late stage private round and it 0:26:58.160 --> 0:27:02.879 basically priced at saturation, you know, it pr you know, 0:27:02.960 --> 0:27:05.320 it was given out to Morgan Stanley Advisors who didn't 0:27:05.359 --> 0:27:08.720 have information rights and iPod and I think it was 0:27:08.800 --> 0:27:11.919 dead money for three years on that round. And so 0:27:13.040 --> 0:27:16.320 you know, we pride ourselves on actually, you know, holding 0:27:16.320 --> 0:27:19.440 ourselves to an underwriting standard that delivers what we think 0:27:19.560 --> 0:27:23.240 is a great return for end clients and so and 0:27:23.480 --> 0:27:26.320 that can be helpful for companies as well, to say, listen, 0:27:26.560 --> 0:27:28.879 we're we're also the person that needs to hold your 0:27:28.920 --> 0:27:31.760 hand into the public markets, and this is how we're 0:27:31.760 --> 0:27:34.680 going to underwrite the position. So you know you should 0:27:34.760 --> 0:27:37.240 not you can do. A company can do damage to 0:27:37.320 --> 0:27:40.359 itself by raising it too high of evaluation at the 0:27:40.400 --> 0:27:43.119 wrong time, because it then doesn't set them up to 0:27:43.320 --> 0:27:46.000 kind of like bring more people onto the boat over time. 0:27:46.040 --> 0:27:47.840 And so that guidance can be important as well. 0:27:56.240 --> 0:28:00.439 So let me ask about the private nature this. So 0:28:01.119 --> 0:28:03.240 this fund is up I think one hundred and fifty 0:28:03.240 --> 0:28:05.639 percent since it came out. Obviously that's based on a 0:28:05.760 --> 0:28:09.520 nav that you give us. You calculate the NAV You 0:28:09.520 --> 0:28:11.720 obviously need the pricing of the holdings to do that. 0:28:12.119 --> 0:28:14.440 How do you price this stuff because like there was 0:28:14.480 --> 0:28:17.399 some controversy on XOVR, which is the ETF that holds it, 0:28:18.119 --> 0:28:21.720 which is he never marked to market the SPV that 0:28:21.880 --> 0:28:25.359 held SpaceX, but everybody knows it's worth like four x 0:28:25.400 --> 0:28:27.480 what he bought it for, but it's still marked at 0:28:27.520 --> 0:28:29.160 the old price, which is why I think he had 0:28:29.200 --> 0:28:31.600 some people coming in almost like buying something in a discount. 0:28:32.119 --> 0:28:35.679 How do you price the privates as time goes on 0:28:36.560 --> 0:28:39.520 and can you make a profit without them going public? 0:28:41.440 --> 0:28:47.760 I'll start and hand it off. So as I mentioned before, 0:28:47.960 --> 0:28:54.120 we have a pricing committee and it is monitoring constantly 0:28:54.200 --> 0:28:58.760 every day secondary markets to see what pricing is is 0:28:58.920 --> 0:29:02.320 like on the secondary markets, often selling at a discount 0:29:02.320 --> 0:29:06.080 if it's an employee stock and so forth. As I 0:29:06.160 --> 0:29:11.160 mentioned other companies we respect, like the Fidelities and the 0:29:11.200 --> 0:29:14.720 t Rows who have private arms, and our marketing we 0:29:14.800 --> 0:29:18.160 can see those on a quarterly basis. We also are 0:29:18.160 --> 0:29:22.360 looking at public markets and you know, if the market's 0:29:22.400 --> 0:29:26.160 going through a severe down round, we're probably going to 0:29:26.240 --> 0:29:34.640 be marking down many of our holdings because other competitors 0:29:34.960 --> 0:29:40.760 or counterparts are are being priced down in the public markets, 0:29:41.280 --> 0:29:46.840 so I think. And of course our audit committee and 0:29:46.920 --> 0:29:50.640 our trust board, they've been with us from day one 0:29:50.720 --> 0:29:54.760 with the ETFs. They they probably focus on this question 0:29:54.840 --> 0:29:57.440 more than any other when it comes to this fund. 0:29:57.520 --> 0:30:00.719 It is such an important question because we want to 0:30:00.760 --> 0:30:05.600 get nav right. When people are redeeming at the end 0:30:05.640 --> 0:30:08.760 of the quarter, we want to make sure that we're 0:30:08.760 --> 0:30:12.000 as close to the mark as we possibly can be, 0:30:12.120 --> 0:30:15.240 and we think we are because we don't want to 0:30:15.280 --> 0:30:18.960 be either giving it away or you know, or or 0:30:19.400 --> 0:30:23.960 selling it or don't want the person who's redeeming to receive, 0:30:24.560 --> 0:30:27.840 you know, the equivalent of a discount when there shouldn't 0:30:27.880 --> 0:30:32.040 be one. So we are maniacal. We have a committee 0:30:32.120 --> 0:30:35.920 away from this team. This team is not involved in 0:30:36.040 --> 0:30:42.120 pricing at all. It's completely separate and distinct and highly 0:30:42.760 --> 0:30:46.320 disciplined and highly audited. I would say as well. 0:30:47.000 --> 0:30:51.440 Yeah, And mechanically, how it works is a company raises 0:30:51.480 --> 0:30:54.560 a primary round, Well, that's raising x amount of dollars 0:30:54.600 --> 0:30:57.160 at this valuation. That's a strong signal that that's the 0:30:57.280 --> 0:31:01.520 valuation and kind of so that sets a mark and 0:31:01.560 --> 0:31:04.880 then over time as the company does not come back, 0:31:05.120 --> 0:31:09.800 then it calibrates over to secondary market activity or calibration 0:31:10.000 --> 0:31:14.960 with public companies whose price to sales ratio is or 0:31:15.200 --> 0:31:19.960 is it's Mark two that are drifting or pricing down 0:31:20.680 --> 0:31:24.160 and so, and you know that's essentially the full suite. 0:31:24.240 --> 0:31:26.800 But if a company says, hey, we're raising around, even 0:31:26.840 --> 0:31:28.800 if it appears in pitchbook, we're raising around at this 0:31:28.920 --> 0:31:32.800 valuation this amount, you know, we need to get confirmation 0:31:32.920 --> 0:31:35.160 that actually it's really going to go through in the 0:31:35.160 --> 0:31:37.320 way that it's going to. And so then from the 0:31:37.320 --> 0:31:40.320 research and investing side, we also provide information to the 0:31:40.320 --> 0:31:42.840 pricing committee. It's like, you know, they just came to 0:31:42.920 --> 0:31:45.000 us and this is what they're raising, and this is 0:31:45.040 --> 0:31:45.680 what they said. 0:31:45.800 --> 0:31:46.520 Is kind of like. 0:31:47.040 --> 0:31:49.720 How far they are through the raise, and and then 0:31:49.760 --> 0:31:52.960 that's fed into that team, but it is totally separate 0:31:53.000 --> 0:31:55.680 from the investing team. And we use you know, a 0:31:55.680 --> 0:31:58.080 Big four auditor to audit the fund, as well as 0:31:58.160 --> 0:32:04.040 third party private valuation experts that are also from one 0:32:04.080 --> 0:32:06.840 of those big firms. When there are tricky cases where 0:32:06.840 --> 0:32:09.080 we have to put together are they the pricing committee 0:32:09.080 --> 0:32:11.200 puts together a full document and this is how we're 0:32:11.200 --> 0:32:14.240 doing it, and how we're pricing it based on this information. 0:32:14.120 --> 0:32:19.920 Eric, can I give you one example of how involved 0:32:19.920 --> 0:32:24.600 this is. We invested in a private company when I 0:32:24.600 --> 0:32:28.280 believe the valuation was two point seven billion dollars sometime 0:32:28.320 --> 0:32:35.120 in twenty four. It in twenty five was basically said 0:32:35.120 --> 0:32:37.800 we're going to do another round at thirty nine forty billion, 0:32:38.440 --> 0:32:43.240 and our research did not support that valuation. That was 0:32:43.280 --> 0:32:48.600 the first thing, and so we actually went to the 0:32:49.120 --> 0:32:51.760 firm and said, look, if you can get this done 0:32:51.800 --> 0:32:55.040 at that price, we'll sell you some because of course 0:32:55.040 --> 0:33:00.280 this would have taken that particular equity to you know, 0:33:00.480 --> 0:33:04.960 close to twenty percent of the portfolio, and so we 0:33:04.960 --> 0:33:08.200 were again this is where research comes in. It turns 0:33:08.240 --> 0:33:12.360 out they were not able to do all of the deal. 0:33:12.440 --> 0:33:14.560 They did roughly half of it. I think I've got 0:33:14.560 --> 0:33:18.960 that right, bred or Charlie. And we never priced it 0:33:19.040 --> 0:33:23.600 in our portfolio at that forty billion dollar valuation. I 0:33:23.640 --> 0:33:26.920 think we went to twenty billion because they were able 0:33:27.000 --> 0:33:32.920 to get half of the offering placed. 0:33:33.640 --> 0:33:35.120 One of the things I just wanted to bring it 0:33:35.120 --> 0:33:37.800 back to in twenty twenty six is, you know you've 0:33:37.920 --> 0:33:40.680 had the exposure to these companies for a long time, 0:33:40.720 --> 0:33:43.160 but the goal for some of these companies is eventually 0:33:43.200 --> 0:33:45.360 to go public. And if I think through some of 0:33:45.440 --> 0:33:47.680 these names that you all have in the portfolio, SpaceX, 0:33:47.720 --> 0:33:52.360 open a, AI, and Thropic, these are potential like huge 0:33:52.720 --> 0:33:57.400 IPOs A what experience have you had with any company 0:33:57.400 --> 0:34:01.360 I appealing from this fund and be what impact is 0:34:01.360 --> 0:34:04.720 that going to have for your payoff? With the payoff 0:34:04.840 --> 0:34:07.400 look like for you and investors, going. 0:34:07.520 --> 0:34:12.160 Public is obviously a key liquidity event in a private 0:34:12.360 --> 0:34:16.560 company's life. What's nice about our funds is they are 0:34:16.680 --> 0:34:21.240 evergreen if we want to continue holding, unlike venture where 0:34:21.280 --> 0:34:25.920 they basically start selling out. If we think this company 0:34:25.920 --> 0:34:30.640 has miles to go, and with SpaceX and data centers 0:34:30.680 --> 0:34:35.120 in space, we've done some early estimates that would suggest 0:34:35.360 --> 0:34:39.759 that would add handsomely to its valuation, we can continue 0:34:39.760 --> 0:34:43.880 to hold it and we will. So we don't really 0:34:43.960 --> 0:34:48.560 think of okay, if it goes public, you know, what 0:34:48.600 --> 0:34:50.759 do you do? Then you're on to the next thing. 0:34:50.800 --> 0:34:54.600 We have a wish list of private companies, and of 0:34:54.680 --> 0:34:58.360 course we'd probably take profits as we normally do in 0:34:58.400 --> 0:35:03.480 the public markets when there is a big valuation upgrade, 0:35:04.800 --> 0:35:07.200 just sensible to take profits, but we don't have to 0:35:07.280 --> 0:35:11.920 sell out. And in terms of companies going public, I 0:35:12.040 --> 0:35:16.080 know that, well, Kodiak has just gone public. That's an 0:35:16.120 --> 0:35:20.680 autonomous trucking company and it is still in the fund 0:35:20.880 --> 0:35:24.960 and we've started adding it to our ETFs. So you know, 0:35:25.000 --> 0:35:29.400 our ETFs are you know, great outlets for some of 0:35:29.440 --> 0:35:33.799 these companies going public because they're all about innovation. That's 0:35:33.800 --> 0:35:34.439 all we do. 0:35:35.400 --> 0:35:37.480 Yeah, Kathy, I think Kathy said it well, So it's 0:35:37.520 --> 0:35:40.360 CoDIAK Is and that was Q three ish last year. 0:35:41.080 --> 0:35:43.400 We've had other so we've had some M and A. 0:35:43.600 --> 0:35:46.000 So we've had things like Mosaic mL which was around 0:35:46.000 --> 0:35:48.680 a five x return into data grigstock, which has since 0:35:48.719 --> 0:35:52.640 accumulated multiple significantly, and we're excited about that company. But 0:35:52.680 --> 0:35:55.440 I think that makes a good example of the illustrates 0:35:55.480 --> 0:35:58.239 what Kathy said, which is it's all about conviction, and 0:35:58.280 --> 0:36:01.040 if we have conviction at the price and continue to 0:36:01.040 --> 0:36:03.320 win the leadership in the company prospects at the point 0:36:03.360 --> 0:36:06.080 of going public, then we could hold or continue to 0:36:06.080 --> 0:36:09.400 build into whether it's from this fund or the ETFs. 0:36:10.239 --> 0:36:12.640 And of course there are many many examples, including within 0:36:12.680 --> 0:36:15.120 the mag seven where it would have been exactly the 0:36:15.160 --> 0:36:17.680 wrong thing to do to sell the moment your lockup 0:36:17.719 --> 0:36:20.160 came off. Yet many vcs were forced to do that, 0:36:20.600 --> 0:36:23.680 even knowing that the biggest part of the jacob was 0:36:23.760 --> 0:36:26.040 yet to come. In those cases, you know, whereas in 0:36:26.080 --> 0:36:28.760 other cases, for sure there's been you know, the biggest 0:36:28.840 --> 0:36:30.960 multiple has definitely occurred on the private side, it would 0:36:30.960 --> 0:36:32.560 have been exactly the right thing to do to sell 0:36:32.600 --> 0:36:35.480 their IPO. And of course no one knows exactly. There's 0:36:35.520 --> 0:36:38.000 no crystal balls, but it all comes down to research 0:36:38.040 --> 0:36:39.560 and conviction at the end of the day. But the 0:36:39.640 --> 0:36:42.800 key thing about this fund is it gives us flexibility 0:36:43.400 --> 0:36:46.080 to do what we believe at that point, given the conviction, 0:36:46.239 --> 0:36:48.040 is the right thing to do. And this is actually 0:36:48.080 --> 0:36:49.520 another point that we haven't touched on. But it also 0:36:49.600 --> 0:36:52.640 gives us flexibility to take account of public private valuation 0:36:52.760 --> 0:36:56.280 arbitrage that often occurs in different sectors at different times, 0:36:56.320 --> 0:36:59.960 like recently since the fund was launched, the historic number 0:37:00.360 --> 0:37:03.560 of negative ev biotechs which occurred on the public markets 0:37:03.600 --> 0:37:06.440 while the private valuations stayed quite robust if a company 0:37:06.440 --> 0:37:08.120 got flundered at all, So we were able to again 0:37:08.640 --> 0:37:10.640 make good use of that because of the flexibility in 0:37:10.680 --> 0:37:11.040 this fund. 0:37:11.840 --> 0:37:14.760 So you know, again, this is fascinating to me because 0:37:14.840 --> 0:37:18.200 unlike the fidelity funds that own a little, they are 0:37:18.239 --> 0:37:21.279 a mutual fund, and that's not the greatest rapper right now. 0:37:21.320 --> 0:37:24.319 People just shun that they want stuff and you can 0:37:24.320 --> 0:37:28.399 see XOVR, which again that's a ton of money that's 0:37:28.440 --> 0:37:30.719 three times with this fund has just because it has 0:37:30.760 --> 0:37:33.919 a tiny dose of SpaceX SPV, even it's not even 0:37:33.960 --> 0:37:37.279 like real SpaceX. So here's my question. I'm looking at 0:37:37.280 --> 0:37:39.319 this fund. I open it up on a screen. Let's 0:37:39.320 --> 0:37:42.480 say it's Yahoo or Bloomberg Terminal. Okay, first thing is 0:37:42.520 --> 0:37:44.920 that the fee is two point seventy five. That could 0:37:44.960 --> 0:37:48.279 scare some people, it's the five letter ticker. But then 0:37:48.280 --> 0:37:50.160 you look at the holdings and you're like, oh my god, 0:37:50.200 --> 0:37:52.759 this has like the all the hot companies that you 0:37:52.840 --> 0:37:56.359 read about, Like the sexy factor is high here, and 0:37:56.440 --> 0:37:59.640 I just feel like I just can't believe it doesn't 0:38:00.080 --> 0:38:03.439 raise more assets given that, Like what do you think 0:38:03.440 --> 0:38:03.799 it is? 0:38:03.800 --> 0:38:04.239 Is it just? 0:38:05.080 --> 0:38:08.440 Is it just that ETFs are just so everybody just 0:38:08.520 --> 0:38:11.279 trusts them at this point. They trust the fees, they 0:38:11.320 --> 0:38:14.600 trust the performance, and like you just can't get a 0:38:14.640 --> 0:38:19.320 five letter ticker over into somebody's portfolio anymore? Or is 0:38:19.400 --> 0:38:22.000 it the fee? I mean, these fees are probably so eric. 0:38:22.200 --> 0:38:26.480 You'll remember in the early days of our active equity ETFs, 0:38:26.600 --> 0:38:30.120 people were trying to understand us right that that now 0:38:30.200 --> 0:38:33.319 it was an ETF structure. What is happening here is 0:38:33.360 --> 0:38:40.280 the interval fund structure requires infrastructure build out right, and 0:38:40.920 --> 0:38:45.600 so so far was willing to build out infrastructure. Titan 0:38:45.760 --> 0:38:51.760 our first distributor. Now other platforms are beginning to see 0:38:52.000 --> 0:38:57.360 the merit of this interval fund structure and our starting 0:38:57.880 --> 0:39:03.399 are starting to vet us. We do have gatekeepers all 0:39:03.440 --> 0:39:07.120 of the wirehouses. You know they need five hundred million 0:39:07.160 --> 0:39:09.919 plus three years. Okay, now we have that, so we're 0:39:10.000 --> 0:39:13.440 beginning to speak with them. So we're not on any 0:39:13.520 --> 0:39:21.560 wirehouse platform, although advisors can can buy us if they're 0:39:21.640 --> 0:39:26.960 working through Charles Schwab or Pershing for example, But the 0:39:27.000 --> 0:39:30.600 wirehouses have now in terms of the fund, the fund 0:39:30.640 --> 0:39:34.440 fee that two point seventy five percent. We've been very 0:39:34.480 --> 0:39:38.360 deliberate about this. We charge no carry. That is why 0:39:38.800 --> 0:39:43.239 we can have unaccredited investors. That's just the SEC's way 0:39:43.280 --> 0:39:47.440 of looking at it. So no carry and we've done 0:39:47.880 --> 0:39:52.000 an analysis and Charlie probably can speak in more depth 0:39:52.040 --> 0:39:56.040 to this, but of the two point seventy five versus 0:39:57.120 --> 0:40:00.480 what you would pay if you were in you know, 0:40:00.840 --> 0:40:04.320 some of the best venture funds over a ten year period, 0:40:05.160 --> 0:40:07.839 and we would be at a discount to that if 0:40:07.840 --> 0:40:12.040 you include the fact that they charge Kerry and we 0:40:12.120 --> 0:40:12.400 do not. 0:40:14.080 --> 0:40:17.800 Okay, just real quick, now, I get that, and I 0:40:18.280 --> 0:40:20.799 think in my opinion, this probably will grow over time. 0:40:20.840 --> 0:40:23.080 It just it's almost like there's an you have to 0:40:23.080 --> 0:40:25.359 push harder. It just seems like because the ETF kind 0:40:25.360 --> 0:40:28.400 of sells itself to a degree. Here's my question for you. 0:40:28.880 --> 0:40:30.840 It's interesting to me that you've gone to these companies 0:40:30.920 --> 0:40:34.080 you have relationships with good relationships with and talked about, 0:40:34.080 --> 0:40:35.920 hey can you put a little bit this of this 0:40:36.040 --> 0:40:39.480 in RG or RW and they are not into it. 0:40:40.160 --> 0:40:42.479 But I feel as though now that we've got there's 0:40:42.480 --> 0:40:45.160 three ETFs now that have a little private and I 0:40:45.160 --> 0:40:47.920 think Ron's is a Series E, it's not a SPV. 0:40:48.719 --> 0:40:51.960 But as we go forward, JP Morgan, there's a lot 0:40:52.000 --> 0:40:55.920 of firms that have relationships with private companies who realize 0:40:55.920 --> 0:40:59.440 the potential in the ETF. Do you think that you 0:40:59.520 --> 0:41:02.719 guys ap Morgan Blackrock are going to start to lean 0:41:02.880 --> 0:41:06.480 on the private companies, even along with Apollo, who's interested 0:41:06.520 --> 0:41:09.920 to get some of this democratized, and we will eventually 0:41:09.960 --> 0:41:12.400 see some of this come up in that fifteen percent 0:41:12.760 --> 0:41:15.480 illiquidity window for ETFs in the future. 0:41:16.760 --> 0:41:20.040 You know, we're always advocating for our ETFs, but we 0:41:20.160 --> 0:41:24.960 also are listening to these management teams and are a 0:41:25.000 --> 0:41:29.480 little fearful of what the impact of you know, ETFs 0:41:29.520 --> 0:41:32.440 that can be traded every day, all day long, what 0:41:32.560 --> 0:41:37.000 the impact of that in various market situations will be 0:41:37.880 --> 0:41:44.160 on them and those who hold their equities. So you know, again, 0:41:44.200 --> 0:41:50.680 as I said, we're listening, and we've just gone once 0:41:50.719 --> 0:41:54.160 again and said, look, we really have such high conviction 0:41:54.880 --> 0:41:59.279 in you company X that we want to put this 0:41:59.440 --> 0:42:02.880 into our our ETFs, which are all about innovation, and 0:42:02.920 --> 0:42:06.080 the people investing in them are investing in nothing but innovation. 0:42:07.160 --> 0:42:11.040 And still there's that reticence. So if they open up, 0:42:11.760 --> 0:42:14.960 we will open up, you know, but we will not 0:42:15.040 --> 0:42:15.840 do SPVs. 0:42:16.880 --> 0:42:17.080 Yeah. 0:42:17.120 --> 0:42:19.719 I think that's the part of the reason people do 0:42:19.880 --> 0:42:21.759 SPVs is because then they don't have to ask the 0:42:21.760 --> 0:42:24.920 company's permission to do it, which then exposes them to 0:42:25.000 --> 0:42:28.000 some liability. They're not actually buying shares in the company. 0:42:28.120 --> 0:42:31.720 They're buying shares in an LLC that's making a claim 0:42:32.040 --> 0:42:35.399 that it has maybe shares in another LLC that's also 0:42:35.480 --> 0:42:38.160 making a claim that it also maybe has shares in 0:42:38.200 --> 0:42:41.359 another LLC which is making a claim that it has 0:42:41.360 --> 0:42:42.680 shares in the underlying company. 0:42:42.719 --> 0:42:46.160 And they're all charging fees on thee Yeah. 0:42:46.040 --> 0:42:50.160 Right, and so but I think over time it is likely, 0:42:50.280 --> 0:42:52.760 just as in mutual funds, you can buy the Fidelity 0:42:52.840 --> 0:42:55.840 mutual fund as like a little like four percent wedge 0:42:55.880 --> 0:42:59.080 in like zero point five percent chunks of little privates 0:42:59.640 --> 0:43:02.520 that tfs will kind of take on some of that 0:43:02.560 --> 0:43:06.040 private exposure. There's on the order of seven trillion dollars 0:43:06.120 --> 0:43:10.319 in market cap in unicorns at least, maybe not mark 0:43:10.360 --> 0:43:14.960 to market, but ostensibly out there. And I think this 0:43:15.120 --> 0:43:18.160 cycle there is going to be you know, there was 0:43:18.200 --> 0:43:21.160 this private companies aren't going public. Private companies are going 0:43:21.200 --> 0:43:23.520 to go public over the next couple of years. I mean, 0:43:23.640 --> 0:43:25.160 we think we have a few of them. There's the 0:43:25.239 --> 0:43:28.600 SpaceX rumor there, there's plenty of noise in the market 0:43:28.880 --> 0:43:30.840 that kind of the AI companies are going to go 0:43:30.880 --> 0:43:35.480 public because they're so cash consumptive to invest in the 0:43:35.560 --> 0:43:39.000 AI compute, to build the next generation of models, and 0:43:39.239 --> 0:43:44.719 because getting onto that public stage is important for kind 0:43:44.760 --> 0:43:50.799 of the support and engenders across you know, the entire population. 0:43:51.080 --> 0:43:53.759 We're trying to provide them with that support through the 0:43:53.760 --> 0:43:56.400 interval fund. But like you say, it's still small. You 0:43:56.440 --> 0:43:58.719 have to go on so far to get it if 0:43:58.760 --> 0:44:01.360 you're the average person, and or go through Fidelity or 0:44:01.360 --> 0:44:04.359 talk to it an advisor. I think over time, this 0:44:04.520 --> 0:44:08.359 vehicle because it's really good for venture. You know, this 0:44:08.440 --> 0:44:12.400 is a Tier one venture portfolio that's actually extraordinarily fee efficient, 0:44:13.760 --> 0:44:17.879 that this vehicle will open up the interval fund market 0:44:17.920 --> 0:44:20.400 because people are going to recognize, hey, this is actually 0:44:20.480 --> 0:44:22.960 the right way to do this kind of exposure for 0:44:22.960 --> 0:44:26.239 for not only the everyday investor, but for high net 0:44:26.239 --> 0:44:30.400 worth as well. And I think that you know, the 0:44:30.600 --> 0:44:34.920 public ETF vehicles are super important. We love our ETFs 0:44:34.960 --> 0:44:38.440 and and of course we you know, as this is 0:44:38.680 --> 0:44:40.360 going to be a mix of innovation, we stick in 0:44:41.440 --> 0:44:42.280 as it's available. 0:44:42.360 --> 0:44:44.440 Is there a point where you could feed the ETF 0:44:44.520 --> 0:44:47.640 investors a little like let's say SpaceX does announce the IPO, 0:44:47.840 --> 0:44:50.719 it's getting closer, Can you like move a little bit 0:44:50.840 --> 0:44:53.960 over to one of the ETFs so that they get 0:44:53.960 --> 0:44:56.319 a taste of it before the I pod? Could that 0:44:56.440 --> 0:44:59.080 happen after the private company is kind of like over 0:44:59.120 --> 0:45:02.279 the fact that Okay, like they're at that point, they're 0:45:02.280 --> 0:45:04.719 probably not that worried about the pricing because everybody knows 0:45:04.719 --> 0:45:07.040 they're going public. Like, is there a point the ETF 0:45:07.080 --> 0:45:09.120 could get hooked up by ourc venture? 0:45:10.719 --> 0:45:13.000 I think we have to be very careful in answering 0:45:13.040 --> 0:45:18.239 that question. Uh you know if oh, yes, yes, I 0:45:18.239 --> 0:45:22.520 mean I I I've know a lot about what happened 0:45:22.520 --> 0:45:28.320 when hedge funds were choosing or managers who were choosing 0:45:28.360 --> 0:45:32.560 between their hedge fund and their mutual fund chose the 0:45:32.640 --> 0:45:35.680 higher fee. Uh, this would be the opposite of that, 0:45:35.920 --> 0:45:38.960 I understand. But nonetheless, this is a hot topic in 0:45:39.040 --> 0:45:42.480 the SEC. We'd have to be buy the book, and uh, 0:45:43.040 --> 0:45:47.160 you know, even even today in our ETFs, if you know, 0:45:47.200 --> 0:45:50.960 we have a more specialized ETF that wants to sell 0:45:51.000 --> 0:45:53.759 a little bit of something we're buying in the let's 0:45:53.760 --> 0:45:58.000 say broader based ETFs, we don't do that. We do 0:45:58.080 --> 0:46:00.319 not do that because we do not want to be 0:46:00.320 --> 0:46:05.840 anywhere near you know, this cross dealing controversy. So we 0:46:06.440 --> 0:46:11.200 would be working very carefully with our compliance team to 0:46:11.280 --> 0:46:14.880 do that. You know, the ETF is set up for 0:46:14.880 --> 0:46:17.680 for public for the public. If the price, if it 0:46:17.719 --> 0:46:21.120 was already priced at the IPO price, we'd probably wait 0:46:21.200 --> 0:46:21.520 for it. 0:46:22.480 --> 0:46:25.680 Yeah, And and there's you know, as Kathy describes, there 0:46:25.680 --> 0:46:29.920 would be allocation kind of allocation procedures we need to follow. 0:46:30.880 --> 0:46:35.600 The venture fund. Being a participant in these primary rounds 0:46:35.640 --> 0:46:40.680 clearly opens up some optionality to discuss with the private companies. 0:46:40.680 --> 0:46:40.879 Hey. 0:46:41.000 --> 0:46:43.920 Actually, and there could be you know, we could split 0:46:43.960 --> 0:46:47.000 this allocation in an appropriate way between vehicles, just like 0:46:47.040 --> 0:46:49.480 we have we have you know, a European vehicle this 0:46:49.560 --> 0:46:51.480 venture fund as well that we have to do allocation 0:46:51.560 --> 0:46:55.760 decisions too. And so I do think that that's possible 0:46:55.760 --> 0:46:58.719 over time. But as Kathy said, it's like you know, 0:46:58.920 --> 0:47:03.279 allocated pro rata appropriate to the investment, you know, prospectus 0:47:03.280 --> 0:47:06.239 of the underlying fund and kind of like what's appropriate 0:47:06.280 --> 0:47:07.800 for that fund and. 0:47:07.600 --> 0:47:10.279 Its objectives if I may as well. 0:47:10.920 --> 0:47:13.840 Notwithstanding that the points made just now about our ETFs 0:47:13.880 --> 0:47:17.200 and the and SpaceX, I think as you look and 0:47:17.239 --> 0:47:20.279 compare the interval fund against various other types of products. Right, 0:47:20.280 --> 0:47:23.040 it's kind of sitting here in the middle between venture 0:47:23.239 --> 0:47:24.280 and ETFs. 0:47:24.360 --> 0:47:25.640 Let's just say or I mute funds. 0:47:26.440 --> 0:47:30.800 The the ETFs that exist and that may be built 0:47:31.560 --> 0:47:34.279 that have some small private allocation quite aside from the 0:47:34.280 --> 0:47:34.600 problem of. 0:47:34.680 --> 0:47:35.800 Stvs, which you talked about. 0:47:35.800 --> 0:47:38.280 But if you have ten or fifteen percent private allocation, 0:47:38.760 --> 0:47:41.239 it's almost you have to sort of ask yourself what's 0:47:41.280 --> 0:47:43.960 the real benefit of that. You've got some maybe you 0:47:44.000 --> 0:47:46.879 get some additional alpha from that private sleeve, but it's 0:47:46.880 --> 0:47:50.120 so diluted across the whole ETF, right, So that's an issue, 0:47:50.160 --> 0:47:52.520 whereas in ours it's the other way around. It's to 0:47:52.560 --> 0:47:55.960 eighty five percent private, So that's the you know, that's 0:47:56.000 --> 0:47:57.400 the private alpha you're getting. 0:47:57.640 --> 0:47:58.840 Yeah, and that sort. 0:47:58.640 --> 0:47:59.839 Of Yeah, I get it. 0:48:00.360 --> 0:48:03.120 I'm just telling you, as somebody who's been covering ETFs, 0:48:04.880 --> 0:48:09.480 that's people want it that way, and that you know, 0:48:10.480 --> 0:48:13.200 there's a couple like you could argue Vick's future shouldn't 0:48:13.200 --> 0:48:15.600 be in an ETF, like they've put everything in the 0:48:15.640 --> 0:48:19.120 ETF they possibly can, because that's just how people like it. 0:48:19.840 --> 0:48:22.480 And it's almost like Spotify and here's sitting here trying 0:48:22.480 --> 0:48:24.920 to sell a compact disc. But you're like, the music's 0:48:25.000 --> 0:48:27.600 really good, and that's sort of I think the challenge. 0:48:27.640 --> 0:48:29.920 And but it is what it is. You've you've definitely 0:48:30.000 --> 0:48:32.000 made the case and explain why it has to be 0:48:32.080 --> 0:48:34.960 this way. But I think that's all. That's what I 0:48:35.000 --> 0:48:39.000 see is the ETF demand is so great that the 0:48:39.040 --> 0:48:42.080 marketplace is now trying to deal with Well, they want 0:48:42.120 --> 0:48:44.600 it this way, but you can't really do it. So 0:48:44.760 --> 0:48:46.839 do we do it half assed? Or do we use 0:48:46.880 --> 0:48:49.960 these vehicles? And this is gonna be an interesting thing 0:48:50.000 --> 0:48:51.880 to play out for a while. And I think this 0:48:52.000 --> 0:48:54.200 is way more interesting than private credit. I think private 0:48:54.239 --> 0:48:56.680 credit doesn't really move the needle much. People don't care 0:48:56.719 --> 0:48:59.959 that much. But these companies, Neurallink, these are world changing 0:49:00.120 --> 0:49:02.759 companies and people know that you're getting in ahead of 0:49:02.760 --> 0:49:05.440 the IPOs major they just happen to want it in 0:49:05.480 --> 0:49:09.160 the ETF. And I think that's this is the crossroads 0:49:09.160 --> 0:49:10.960 we're at, kind of the tension. I guess that that's 0:49:11.000 --> 0:49:11.480 out there. 0:49:11.360 --> 0:49:13.440 Found a way, So anyway, we're gonna leave it there. 0:49:13.560 --> 0:49:17.240 Kathy Brett, Charlie, thanks your time, Thank you. 0:49:17.360 --> 0:49:18.680 Thank you, thank you, all. 0:49:24.520 --> 0:49:27.120 Thanks for listening to Trillions until next time. You can 0:49:27.120 --> 0:49:31.480 find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, 0:49:32.080 --> 0:49:34.120 or wherever else you'd like to listen. We'd love to 0:49:34.120 --> 0:49:36.239 hear from you. Hit us up on social I'm at 0:49:36.320 --> 0:49:39.840 Joel Weber Show, He's at Eric Balchina's. Trillions is produced 0:49:39.840 --> 0:49:40.800 by Magnus Hendrickson.