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Speaker 1: This is Master's in Business with very rid Holds on

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Speaker 1: Bloomberg Radio.

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Speaker 2: This week on the podcast, I have an extra special guest,

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Speaker 2: Tom Wagner, co founder and portfolio manager at Nighthead Capital.

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Speaker 2: They run about ten billion dollars across all sorts of

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Speaker 2: really fascinating investing lines. Not only do they do distressed

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Speaker 2: investing and deep value investing, but they have an insurance business,

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Speaker 2: they have a sports practice. They really look anywhere and everywhere.

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Speaker 2: Talk about an unconstrained fund that can just find opportunities

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Speaker 2: in all sorts of ways. Not only do they buy

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Speaker 2: sports teams and have been really pushing the envelope in

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Speaker 2: things like buying soccer clubs in the UK, investing in

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Speaker 2: pickle bowl in the United States, investing in endurance racing

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Speaker 2: around the world, but they also run a long short

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Speaker 2: fund and find opportunities and things like HERTZ, which was

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Speaker 2: a deep value bankruptcy investment or PG and E in

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Speaker 2: California post campfire, where there was all sorts of regulatory

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Speaker 2: and litigation risk. Just a fascinating approach to understanding value investing,

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Speaker 2: understanding how to allocate capital and take risks. I thought

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Speaker 2: this was a fascinating conversation, and I think you will

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Speaker 2: also with no further ado, my discussion with Nighthead Capitals.

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Speaker 2: Tom Wagner. Tom Wagner, Welcome to Bloomberg.

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Speaker 1: Thank you, Berry. I appreciate being her.

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Speaker 2: I'm glad to have you. Your background is quite fascinating, and

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Speaker 2: I'm just going to do this chronologically, otherwise I'll reveal

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Speaker 2: all of my personal biases. You start out spending five

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Speaker 2: years that Ernst and Young doing hedge fund accounting, like

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Speaker 2: I didn't even know that is a thing ATY. And

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Speaker 2: why tell us a little bit about how you got started.

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Speaker 1: Yeah, I started as a as a certified public accountant,

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Speaker 1: and one of the early engagements that I was tasked

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Speaker 1: with was in the space of asset management. And I

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Speaker 1: recall doing the audit on Jeffrey Vinnick's very first year

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Speaker 1: as a hedge fund man.

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Speaker 2: Post Fidelity posts Magellan.

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Speaker 1: Funds exactly, and he had a sizeable amount of money

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Speaker 1: under management, and you know, hard closed his vehicle and

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Speaker 1: in his first fourteen months, if I remember correctly, his

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Speaker 1: gross return was one hundred and twenty percent, not too shabby,

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Speaker 1: not too bad.

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Speaker 2: And that's two and twenty right, So there's some upside there.

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Speaker 1: It was indeed, and I said, what is this business

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Speaker 1: that this gentleman is in, and how do I get involved?

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Speaker 2: I am wasting my life as an accountant. I gotta

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Speaker 2: I gotta see a different Working for the man is

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Speaker 2: no good, No.

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Speaker 1: It's it's And you know, it was a great you know,

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Speaker 1: doing accounting and being a CPA had its benefits. You

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Speaker 1: learn the language of business, and you learn how to

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Speaker 1: operate in a business environment. There are a lot of

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Speaker 1: great takeaways from that experience. But I you know, at

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Speaker 1: that point in time, I think I recognized something else

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Speaker 1: was drawing me.

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Speaker 2: I got to think, eleven thousand hedge funds out there,

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Speaker 2: not a lot are run by somebody who spent a

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Speaker 2: big chunk of time really seeing the ins and outs

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Speaker 2: of hedge fund accounting. I mean, you're a pretty rare bird.

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Speaker 1: I think that's probably right. Most guys and gals who

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Speaker 1: get into the business of working at a hedge fund,

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Speaker 1: never mind you know, founding and running one. Yeah. I

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Speaker 1: think there's a pretty typical track where they're finance majors

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Speaker 1: at top schools. They they work at an investment bank

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Speaker 1: or an advisory bank, sometimes at a law firm, and

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Speaker 1: then they make their way into the investing realm. Mine.

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Speaker 1: You know, I started in a much more boring and

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Speaker 1: you know that I ended up in public accounting for

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Speaker 1: a variety of reasons. You know, I started my college

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Speaker 1: career as an engineering major.

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Speaker 2: Right as did I.

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Speaker 1: That's really interesting and I and I got into my

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Speaker 1: junior year and I just really didn't like it. And

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Speaker 1: we had a career day and everybody who came in

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Speaker 1: was miserable in their jobs. And I was like, what

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Speaker 1: am I torturing myself for? My friends are having a

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Speaker 1: blast in college. I'm studying all the time. And I

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Speaker 1: had a bit of an epiphany that that perhaps, you know,

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Speaker 1: if I didn't love it, there was a better path,

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Speaker 1: And so I switched to accounting because the most successful

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Speaker 1: person I knew directly was my uncle, who was a

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Speaker 1: partner in a public accounting firm. And I, you know,

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Speaker 1: I looked at him and said, there's a there's a

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Speaker 1: guy that did well with this. You know, I'll give

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Speaker 1: it a shot.

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Speaker 2: You mentioned business schools. You end up going to Columbia

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Speaker 2: B School, and I know these are two year programs,

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Speaker 2: but explain to me how during your second year Columbia

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Speaker 2: you were also working full time at Credits with first boss,

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Speaker 2: and how can you jo both of those?

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Speaker 1: Well, you know, I think a lot of times in

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Speaker 1: life you're faced with a situation where if you're trying

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Speaker 1: to achieve your objective, that you have to find a

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Speaker 1: path irrespective of what sacrifices you have to make to

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Speaker 1: allow you to attain that objective. And you know, when

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Speaker 1: I was in business school from ninety seven to ninety nine,

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Speaker 1: we had kind of a hiccup in the markets in

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Speaker 1: the fall of ninety eight.

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Speaker 2: That Long Term Capital Management and the Roughs Act default.

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Speaker 1: And it was really you know, when I was an

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Speaker 1: intern at Credit SUITEE, it was a highly volatile environment.

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Speaker 1: We were expecting offers in the fall, and none were

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Speaker 1: really forthcoming in the areas where I wanted to work,

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Speaker 1: which was in the high yield department in the sales

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Speaker 1: and trading desk. And so I had a mentor on

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Speaker 1: the desk who was a few years ahead of me,

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Speaker 1: and said, why don't you start coming in and doing

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Speaker 1: research for me on the side. You know, we'll pay

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Speaker 1: you some nominal sum. I mean, I don't know. It

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Speaker 1: wasn't minimum wage, but it wasn't a lot more than that,

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Speaker 1: and once I was in the door, I was there

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Speaker 1: every moment I wasn't in class, and so I was

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Speaker 1: doing thirty forty hours a week on the desk doing research. One,

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Speaker 1: I needed the money because I was, you know, not

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Speaker 1: in a position where I could rely on outside sources

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Speaker 1: for income. And two, you know, it was direct experience

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Speaker 1: and I was a career changer. I went back to

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Speaker 1: business school to prosecute my path of moving from public

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Speaker 1: accounting into the capital markets. So I needed the degree.

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Speaker 1: I needed the transition period, and you know that that

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Speaker 1: allowed me the ability to gain a lot of experience

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Speaker 1: directly that I felt I needed to have a leg

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Speaker 1: up and ultimately get a job, which which fortunately I did.

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Speaker 2: Was that at Credits was first Boston And how long

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Speaker 2: did you stay there?

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Speaker 1: Yeah, so I was at Credit, Sueese, I guess, you know,

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Speaker 1: you could say I started just after my internship finished,

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Speaker 1: and I was there until the fall of two thousand

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Speaker 1: when I received a call from somebody at Goldman Sachs

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Speaker 1: on their desk that I had met and cajoled me

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Speaker 1: into coming into interview for a spot on the distressed

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Speaker 1: debt trading desk.

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Speaker 2: And you had not done distress debt prior.

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Speaker 1: You know, I was, I was a regular way high

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Speaker 1: yield trader and I was happy at Credit Sweez. I thought,

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Speaker 1: I you know, I had my own trading book. I

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Speaker 1: was thrilled. I love the team that I worked with there.

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Speaker 1: I mean really, to this day, I remained very friendly

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Speaker 1: with a lot of those folks. I felt very fortunate

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Speaker 1: to be on that team. But two things happened. One,

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Speaker 1: Credit Sweee bought DLJ and I had to interview to

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Speaker 1: keep my job, which thankfully I did. And two, you know,

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Speaker 1: I had an opportunity to meet with the folks at

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Speaker 1: Goldman and the distressed debt trading desk at Goldman had

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Speaker 1: a particularly colorful lineage. You know, there was you know,

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Speaker 1: there was a group of people that had had that

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Speaker 1: job and went on to some spectacular success. I mean,

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Speaker 1: you know, the likes of David Tepper and John Colatch

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Speaker 1: and John Savatz, who was there the person that hired me.

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Speaker 1: And it was so it was a really impressive group

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Speaker 1: of people that had run that desk prior to my arrival,

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Speaker 1: and I was it was very alluring to think about

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Speaker 1: trading in companies that were facing their worst moment.

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Speaker 2: So I always think of high yield as sort of

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Speaker 2: the precursor to distress that I don't know if that's

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Speaker 2: sort of oversimplifying it, but it seems like a lot

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Speaker 2: of what we call high yield and used to call junk,

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Speaker 2: and some of it ends up in a decent amount

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Speaker 2: of it ends up in the junk drawer. Tell us

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Speaker 2: a little bit about how you see that transition there.

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Speaker 1: Yeah, most companies that end up in distressed are very

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Speaker 1: levered at the outset, so they have a sub investment

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Speaker 1: grade or junk or high yield rating, depending on what

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Speaker 1: terminology you want to use. And you know, those are

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Speaker 1: the companies that are most likely to face severe financial

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Speaker 1: stress because they have the biggest stock of debt, they

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Speaker 1: have the least financial flexibility. But there are companies, and

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Speaker 1: this was particularly true in the early days of my career,

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Speaker 1: that go from investment grade right into distress. And there

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Speaker 1: are a variety of reasons why that occurred in nearly

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Speaker 1: two thousands, but that for me was an area where

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Speaker 1: I gained exposure to really marquee companies that were priced

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Speaker 1: as if they were going out of business or would liquidate.

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Speaker 1: And as we all know, you know, most companies that

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Speaker 1: go into bankruptcy don't liquidate, they don't go away. They

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Speaker 1: just restructure their balance sheet, and if they're smart, they

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Speaker 1: restructure their operations as well to fix the issues that

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Speaker 1: ultimately led them getting into bankruptcy.

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Speaker 2: So you mentioned the era was the early two thousands.

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Speaker 2: What was the fallout from the dot com enplosion. Did

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Speaker 2: this create a target rich environment or did it just

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Speaker 2: make things more challenging.

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Speaker 1: Well, you know, here's the reality of distressed investing. Whenever

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Speaker 1: there's a period of time in the markets where there's upheaval,

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Speaker 1: it creates opportunity. And for me, you know, I was

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Speaker 1: not somebody that grew up in a financially comfortable environment,

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Speaker 1: and so I think I was drawn to being involved

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Speaker 1: in companies that were experiencing difficulty. There's also the reality

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Speaker 1: of being in that seat on the cell side working

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Speaker 1: for a bank. Is when the markets are really disrupted,

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Speaker 1: is when banks usually lay people off, but not their

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Speaker 1: distress team.

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Speaker 2: That's your glory days, right, the worst the economy, and no.

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Speaker 1: One gets laid off when everything's going well. So I

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Speaker 1: had a lot of job security. So for my early days,

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Speaker 1: it was a risk averse way of being in the

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Speaker 1: capital markets.

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Speaker 2: That's very amusing. How long were you on the desk

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Speaker 2: at Gulman.

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Speaker 1: For just under eight years? So I left in early

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Speaker 1: two thousand and eight. And my experience there, you know,

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Speaker 1: similar to my experience at Credit Suee, was really fantastic

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Speaker 1: and it was driven by the people around me. When

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Speaker 1: we go back and look at the team that we

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Speaker 1: had assembled in the early two thousands in the Goldman

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Speaker 1: Sachs distressed trading desk, an extraordinary number of those folks

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Speaker 1: went on to become partners and founders of very successful

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Speaker 1: multi billion dollar asset management firms. It's a pretty unparalleled

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Speaker 1: track record for a group of professionals that were together

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Speaker 1: at one time, and for me, that was incredibly valuable.

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Speaker 1: I was surrounded by people that were more experienced than I,

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Speaker 1: that were in my mind, smarter than I, and were

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Speaker 1: you know, every bit is motivated, and that's a great

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Speaker 1: environment to become an expert in a particular industry. I

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Speaker 1: very very fortunate to have been able to work in

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Speaker 1: that environment with those people, you know, really enormously talented individuals.

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Speaker 2: So you're there for eight years. What stands out as

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Speaker 2: some really interesting trade, some distressed opportunities? What were some

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Speaker 2: of the memorable moments on the Goldman Sachs distressed debt

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Speaker 2: trading desk.

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Speaker 1: Well, I'll start with sort of my first impression. I get,

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Speaker 1: you know, Credit Sueee. There was a hard working but

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Speaker 1: also a you know, a kind of a collegial, fun

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Speaker 1: loving group of people. And I get to Goldman and

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Speaker 1: I was at that time, you know, I was a

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Speaker 1: subscriber to the When you're the junior person on the

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Speaker 1: desk or the institution, you at first went in. So

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Speaker 1: I'd be at my desk at six forty five in

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Speaker 1: the morning typically, And I remember the first day I'm

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Speaker 1: there and it's it's dark outside because it's you know,

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Speaker 1: it's late, it's mid fall, and I'm like, wow, it's

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Speaker 1: really noisy in here. And I look around and ninety

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Speaker 1: percent of the people are still at their desk at

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Speaker 1: six thirty at night. And I thought to myself, oh boy,

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Speaker 1: I'm in a different environment. And people, you know, they

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Speaker 1: worked hard, and they worked late and in positions where

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Speaker 1: you didn't often see that, meaning a lot of folks

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Speaker 1: on a trading desk get up and walk out, you know,

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Speaker 1: thirties minutes sixty minutes after the market's closed. This was

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Speaker 1: a group of people that were sticking around and continuing

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Speaker 1: to work, and that really resonated with me, and I

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Speaker 1: was like, oh my gosh, this is going to be

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Speaker 1: a whole different experience, and I'm in for a ride.

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Speaker 1: And sure enough it was. You know, we had a

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Speaker 1: lot of a lot of late nights. Equally, I was

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Speaker 1: also trying to become acquainted with the people that were

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Speaker 1: my customers, who are the asset managers, both on mutual funds,

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Speaker 1: insurance companies, hedge funds, private equity firms that were our counterparties,

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Speaker 1: and so I spent a lot of time going out.

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Speaker 1: There was a gentleman who ran sales that literally introduced

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Speaker 1: me to everybody in the industry, and four nights a

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Speaker 1: week we were out to dinner, you know, entertaining customers,

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Speaker 1: getting to know them, talking about the markets. And that

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Speaker 1: was credible education for me. So, in addition to being

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Speaker 1: surrounded by great people at work all day, I'm now

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Speaker 1: out with folks that would become the titans of the

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Speaker 1: credit markets that were in the early days or midway

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Speaker 1: through the founding of their businesses and talking about the markets.

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Speaker 1: It was a really valuable set of experiences. For me,

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Speaker 1: So those things definitely stand out. But I think when

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Speaker 1: I think about the markets at that point in time,

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Speaker 1: there are certainly a couple of things that stand out enormously,

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Speaker 1: the biggest obviously being nine to eleven, and you know,

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Speaker 1: we were on the trading floor and I distinctly recall

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Speaker 1: seeing piece of paper floating by our window at eighty

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Speaker 1: five Broad Street and then turning to my colleagues and saying,

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Speaker 1: some of those pages are singed, and then we all

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Speaker 1: know what transpired thereafter. We had, you know, sadly a

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Speaker 1: front row seat to everything that occurred after the first

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Speaker 1: plane went in, and then the markets afterwards were obviously

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Speaker 1: heavily disrupted. The our country was heavily disrupted. But I

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Speaker 1: remember getting on the phone the first day the market's

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Speaker 1: reopened with the first phone calls from Fidelity and they said,

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Speaker 1: you know, buyers only today, really, yeah, and it was

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Speaker 1: it was sort of a theme across the market that

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Speaker 1: really stands out to me even today, where you know,

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Speaker 1: for the first day, nobody was really unless they had to,

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Speaker 1: no one was selling. And that really really stands out

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Speaker 1: for me because you know, we all lost, you know,

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Speaker 1: a lot of friends that day and so that that

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Speaker 1: was an incredibly memorable moment. I'd say. The other one

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Speaker 1: that really stands out as well was the day that

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Speaker 1: that WorldCom fell as a result of a report that

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Speaker 1: was put out on a competing network, and you know,

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Speaker 1: I had I had been at work early that morning.

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Speaker 1: We traded until you know, normal time, and the news

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Speaker 1: hit just after the close, and I ended up trading

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Speaker 1: until midnight, went home, slept for a couple of hours.

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Speaker 1: I was back at my seat at like three thirty

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Speaker 1: or four o'clock in the morning, and I traded that

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Speaker 1: following night until eight thirty in the evening.

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Speaker 2: Wow.

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Speaker 1: And it was the most profitable day of trading I'd

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Speaker 1: ever had, no kid, and it was it was the

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Speaker 1: busiest day I'd ever had. It was literally, you know,

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Speaker 1: a trading floor with I don't know how many hundreds

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Speaker 1: of people, and because of what had happened, the person

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Speaker 1: trading that name became the center of attention. So everyone

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Speaker 1: was looking at, you know, whether the price of those

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Speaker 1: world combounds going up or down, or who was buying,

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Speaker 1: who was selling, what kind of size was trading. It

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Speaker 1: was an incredibly intense period, but it was probably the

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Speaker 1: most enjoyable. You know, thirty six hours of my professional career,

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Speaker 1: because you know, it was just so exciting.

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Speaker 2: You're in fighter pilot mode. Does you're not even thinking,

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Speaker 2: You're just responding to three sixty input.

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Speaker 1: Yeah, constant, and my second command, if you will to

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Speaker 1: trade on the trading day ask you know it is

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Speaker 1: now a very successful manager of a hedge bond and

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Speaker 1: he and I joke about it to this day and

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Speaker 1: how crazy that day was, and so you know, I,

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Speaker 1: you know, that stands out just because of the enormity

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Speaker 1: of the surprise in the market for a single name,

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Speaker 1: and you know, the bonds in that company fell fifty

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Speaker 1: sixty seventy points depending on which bond flavor it was,

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Speaker 1: meaning which duration bond instantaneously, and you know, you're talking

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Speaker 1: about wiping out billions and billions of dollars of capital,

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Speaker 1: and it was just a huge shock to the market.

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Speaker 1: So you know, those are those are two of many

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Speaker 1: days that really stand out in my mind.

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Speaker 2: And world come perhaps different than on N Run or

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Speaker 2: something like that. Clearly valuable assets just I think that

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Speaker 2: was an accounting from Bernie Ebers and Jack Solomon and

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Speaker 2: all that crazy stuff that took place. So you end

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Speaker 2: up Jack Grugman, who is at Solomon right, I think

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Speaker 2: was the acts on that stock. So you're looking at

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Speaker 2: this saying, hey, you know, at one hundred cents on

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Speaker 2: the dollar, these are disasters, but at thirty cents on

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Speaker 2: the dollar.

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Speaker 1: Ten cents on the dollar are very valuable. The MCI

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Speaker 1: bonds were very valuable, if I remember, they got as

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Speaker 1: low as the twenties or low thirties, and the recoveries

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Speaker 1: were quite high. You know, people say that it was

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Speaker 1: an accounting fraud. It was in the sense that they

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Speaker 1: were misrepresenting the facts. But the information was there, as

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Speaker 1: is the case in many of these situations, if you

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Speaker 1: dug deep enough, you could figure out relatively quickly what

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Speaker 1: was going on. And you know, but there were a

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Speaker 1: lot of companies that were over levered and perhaps over promoted,

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Speaker 1: but where there was real underlying value. You know, Enron

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Speaker 1: as another great example, another you know, huge opportunity at

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Speaker 1: that point in time. Less so with some of the

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Speaker 1: telecom names and so really well, you know, you had

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Speaker 1: a lot of businesses. You know one that you know

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Speaker 1: that stands out. Oh, I'm going to blank on the name.

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Speaker 2: It just gets worse.

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Speaker 1: Get it is. Now there's so many hundreds of names

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Speaker 1: banging around in the small brain of mind.

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Speaker 2: Once that hard drive fills up.

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Speaker 1: Something else has to give way. But what you know,

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Speaker 1: with a lot of the companies in that time, they

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Speaker 1: were building capacity that was unneeded. Technology was advancing to

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Speaker 1: the point where we didn't need as much fiber laid.

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Speaker 2: So you remember metro Media Fiber and Global Crossing, and

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Speaker 2: they were like thousands of dollars per mile laid and sold.

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Speaker 1: For pennies pennies, And you know Metromedia, great example. You know,

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Speaker 1: they had the valuable assets in the cities, but they

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Speaker 1: weren't as valuable as the cost of installation. And it's

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Speaker 1: one of the reasons why I think in distressed investing,

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Speaker 1: one of the worst mistakes you can make is how

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Speaker 1: much money was spent on the assets that you may

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Speaker 1: be acquiring and distressed it's irrelevant. It doesn't matter what

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Speaker 1: is it really worth in the market. Only that matters.

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Speaker 1: How much cash floking gen in the future. That's it.

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Speaker 1: Any investment, that's all that matters. And we can you know,

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Speaker 1: we've I'm sure we'll get into some of the other

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Speaker 1: things we're doing, but at the end of the day,

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Speaker 1: you want to think about what is the inherent value

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Speaker 1: of this business, meaning how much cash flow can this

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Speaker 1: business generate. There are, you know, different ways to value

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Speaker 1: different businesses. You know, luxury assets, as an example, are

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Speaker 1: valued very differently than infrastructure assets or boring, you know,

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Speaker 1: assets in mining, let's say, where the risks are very different,

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Speaker 1: but at the end of the day, there's some basis

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Speaker 1: on you know, how much cash they generate.

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Speaker 2: Dan Gross wrote a book a couple of years ago

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Speaker 2: called Pop Why Bubbles Are Great for the Economy, and

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Speaker 2: his thesis is, yea, let the VC spend all the

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Speaker 2: money laying this fiber when that blows up, and we

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Speaker 2: buy if depending is on the dollar. In the out decades,

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Speaker 2: you get things like YouTube or Facebook or whatever that

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Speaker 2: requires all that bandwidth that no one would want to

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Speaker 2: pay the original money for, but at a thousandth of

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Speaker 2: the price, hey we'll take some bad. Yeah.

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Speaker 1: There's a lot of examples like that over time. And

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Speaker 1: you know, I think there's one thing as it relates

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Speaker 1: to distressed investing, which is a smaller component of what

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Speaker 1: we do now than it was in the early days,

387
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Speaker 1: but this has always resonated with me. Credit Suite had

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Speaker 1: an index for hiyield data, an index for investment grade loans,

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Speaker 1: and one of the industries they had that no one

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Speaker 1: ever really talked about was the distressed debt index. The

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Speaker 1: distressed debt index has a negative long run return, interesting and.

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Speaker 2: It meaning that the ones that go out of business

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Speaker 2: lose more capital than the ones that recover.

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Speaker 1: Yeah, or or put slightly differently, when a company becomes distressed,

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Speaker 1: let's say that that's the line of demarcation is say

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Speaker 1: seventy cents in the dollar around the debt from that

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Speaker 1: date forward, on average, the ultimate value of that security

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Speaker 1: is lower. That makes sense, and what it tells you

399
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Speaker 1: is that when companies start to run in problems, that

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Speaker 1: isn't necessarily the low. And there's two types of businesses

401
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Speaker 1: that run into distress. There are businesses that are that

402
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Speaker 1: are over levered or mismanaged at a point in time,

403
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Speaker 1: and then there are companies that have a flawed business

404
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Speaker 1: model or are somehow on the wrong side of secular change.

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Speaker 1: Those last two categories are really dangerous, really dangerous.

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Speaker 2: Not the first time that someone who's been on a

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Speaker 2: trading desk has told me that, you know, patience is

408
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Speaker 2: a key attribute to making these investments. If you jump

409
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Speaker 2: into a First Republic bank a little early, Yeah, well

410
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Speaker 2: you're early is the same as.

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Speaker 1: Wrong, yes, one hundred percent, and you know it's it's

412
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Speaker 1: you know your your total return is what matters, and ultimately,

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Speaker 1: you know, buying right is half of the game. That

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Speaker 1: the half that no one ever talks about is selling

415
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Speaker 1: right right, Which is why I always tell people. People

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Speaker 1: come to me and say, which, you know what, that's

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Speaker 1: your great idea right now? I'm like, I don't give

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Speaker 1: out ideas, and they think that I'm withholding something, not

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Speaker 1: withholding anything. But I got to remember to call you

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Speaker 1: back when it's time to sell. And that's a hard thing.

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Speaker 1: So whenever you're taking a tip from somebody, it's not

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Speaker 1: just a tip to buy. You need a tip on

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Speaker 1: when to sell, and particularly if it's not your idea.

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Speaker 1: And so I think that's one of the things that

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Speaker 1: is often lost on the non professional investing public is

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Speaker 1: buying is half of it. And you can buy right,

427
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Speaker 1: but I've seen lots and lots and lots of examples

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Speaker 1: of buying right where it looks good for a period

429
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Speaker 1: of time and ultimately fails because you didn't sell right.

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Speaker 2: I could not agree more it's so true. It's the

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Speaker 2: cocktail party chatter. Yes, is just a lose lose.

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Speaker 1: Yeah, there are a few assets that persistently appreciate for

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Speaker 1: a long period of time. You know, the very very

434
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Speaker 1: best companies, if you buy them, you know consistently. You

435
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Speaker 1: know this whole idea of of you know, your retirement

436
00:23:48,080 --> 00:23:51,119
Speaker 1: account right where you're buying every month. That's great, that

437
00:23:51,119 --> 00:23:53,720
Speaker 1: that will work for you. You'll learn a very solid

438
00:23:53,800 --> 00:23:57,760
Speaker 1: return because you're not selling until you're presumably much older.

439
00:23:58,000 --> 00:24:02,399
Speaker 1: But for an idea raid a moment in time, you

440
00:24:02,440 --> 00:24:03,359
Speaker 1: got to know when to sell.

441
00:24:03,840 --> 00:24:07,639
Speaker 2: So here you are on the Goldman Distress Asset desk,

442
00:24:08,520 --> 00:24:12,760
Speaker 2: working with these future legends, getting a first class education,

443
00:24:13,040 --> 00:24:16,879
Speaker 2: really baptism of fire, and then some what led to

444
00:24:16,920 --> 00:24:20,000
Speaker 2: the thought to hey, maybe it's time to graduate from

445
00:24:20,040 --> 00:24:23,800
Speaker 2: Goldman and launch my own fund. How did you get

446
00:24:23,840 --> 00:24:24,480
Speaker 2: to that point?

447
00:24:24,720 --> 00:24:27,400
Speaker 1: You know, there are a number of things that occurred.

448
00:24:27,640 --> 00:24:31,919
Speaker 1: I would say I had another unique advantage, which is

449
00:24:31,960 --> 00:24:35,040
Speaker 1: that my wife was in the business as well and

450
00:24:35,080 --> 00:24:38,800
Speaker 1: had an incredibly successful career, and so I always joked

451
00:24:38,800 --> 00:24:42,119
Speaker 1: that I had a really valuable backstop at home, meaning

452
00:24:42,119 --> 00:24:45,720
Speaker 1: that I had the ability to take some risk where

453
00:24:46,800 --> 00:24:51,320
Speaker 1: personal bankruptcy was maybe less likely, and so that's a

454
00:24:51,400 --> 00:24:54,200
Speaker 1: huge advantage and not to be understated. And having somebody

455
00:24:54,560 --> 00:24:57,440
Speaker 1: in your corner that's very supportive, whether it's a spouse

456
00:24:57,560 --> 00:25:01,080
Speaker 1: or a significant other or friend, parent, that's an important

457
00:25:01,080 --> 00:25:05,480
Speaker 1: element of achieving success in any new venture. But I think,

458
00:25:05,600 --> 00:25:08,080
Speaker 1: you know, a couple of things really stand out to me.

459
00:25:08,200 --> 00:25:11,320
Speaker 1: One I was managing or co managing. I had a

460
00:25:11,359 --> 00:25:14,880
Speaker 1: co head of my last business that I ran at Goldman,

461
00:25:15,720 --> 00:25:18,640
Speaker 1: a team of twenty one people. We had about four

462
00:25:18,680 --> 00:25:24,800
Speaker 1: billion in capital across everything that was non investment grade rated,

463
00:25:24,840 --> 00:25:28,160
Speaker 1: so all junk rated instruments other than bank loans, so

464
00:25:28,400 --> 00:25:34,919
Speaker 1: every bond, CDs, contract, convertible, bond, preferred equity, kind of

465
00:25:34,920 --> 00:25:38,679
Speaker 1: the whole gamut was positioned on our one desk. We

466
00:25:38,720 --> 00:25:41,119
Speaker 1: crossed over between equity and fixed income, which meant I

467
00:25:41,200 --> 00:25:44,760
Speaker 1: reported to people in both divisions, which was challenging to

468
00:25:44,760 --> 00:25:48,159
Speaker 1: say the least. But I sat back one day and recognized, well,

469
00:25:48,200 --> 00:25:50,399
Speaker 1: if I were doing this on my own and I

470
00:25:50,440 --> 00:25:52,640
Speaker 1: had this many people and I had this much capital,

471
00:25:53,040 --> 00:25:55,760
Speaker 1: my paceco would be very different. And so that's a

472
00:25:55,760 --> 00:26:01,600
Speaker 1: pretty significant motivator. And you know, I felt that that

473
00:26:01,600 --> 00:26:03,679
Speaker 1: that I would be capable of doing that, So that

474
00:26:03,840 --> 00:26:08,000
Speaker 1: was one, you know, that was one of the big reasons. Secondly,

475
00:26:08,040 --> 00:26:11,040
Speaker 1: I think I always wanted to be an entrepreneur. I've

476
00:26:11,080 --> 00:26:16,080
Speaker 1: always been a little bit taken with entrepreneurs. I'm fascinated

477
00:26:16,080 --> 00:26:18,480
Speaker 1: by them. There's a lot of great entrepreneurs in the

478
00:26:18,520 --> 00:26:21,119
Speaker 1: world today that are doing amazing things, and I'm always

479
00:26:21,119 --> 00:26:24,720
Speaker 1: fascinated by how they've achieved success, particularly those that I

480
00:26:24,720 --> 00:26:28,080
Speaker 1: think are really changing the world. So I think, you know,

481
00:26:28,280 --> 00:26:32,359
Speaker 1: those are the things that pushed me there. A conversation

482
00:26:32,480 --> 00:26:35,960
Speaker 1: I had with my dad really stands out in my mind.

483
00:26:36,000 --> 00:26:36,199
Speaker 2: You know.

484
00:26:36,280 --> 00:26:40,359
Speaker 1: I was like talking through with him how the fund

485
00:26:40,400 --> 00:26:42,840
Speaker 1: economics worked and what the upside was. And I'm like,

486
00:26:42,880 --> 00:26:44,800
Speaker 1: you know, if we raise X dollars a capital and

487
00:26:44,840 --> 00:26:47,560
Speaker 1: we put up a y returned, the pay is Z

488
00:26:47,880 --> 00:26:50,879
Speaker 1: and here's all things that can go right. And he said, well,

489
00:26:50,920 --> 00:26:54,440
Speaker 1: what if it doesn't go that way? And I said, well,

490
00:26:54,480 --> 00:26:56,439
Speaker 1: you know, I get kind of ped off. I'm like,

491
00:26:56,560 --> 00:26:58,840
Speaker 1: what do you mean, Like, you know this is what's

492
00:26:58,840 --> 00:27:00,119
Speaker 1: going to happen, so well what if it does? And

493
00:27:00,640 --> 00:27:03,080
Speaker 1: I said, well, then everything will fail and I'll lose

494
00:27:03,160 --> 00:27:04,920
Speaker 1: some money and I'll have to go out and find

495
00:27:04,920 --> 00:27:08,280
Speaker 1: a job, and you know, but that's like, that's okay.

496
00:27:08,560 --> 00:27:11,080
Speaker 1: I'm like, you know, geez, Dad, like, don't you think

497
00:27:11,400 --> 00:27:14,159
Speaker 1: like I can do this? And he said to me,

498
00:27:14,960 --> 00:27:17,200
Speaker 1: he goes, I'm not asking you because I don't think

499
00:27:17,240 --> 00:27:19,640
Speaker 1: you can do it. I'm asking you to make sure

500
00:27:19,680 --> 00:27:23,840
Speaker 1: you'll be okay if it doesn't. And you know, striking

501
00:27:23,960 --> 00:27:26,760
Speaker 1: moment where I was like, Wow, how lucky am I

502
00:27:26,840 --> 00:27:29,399
Speaker 1: to have a father who didn't grow up in this

503
00:27:29,480 --> 00:27:32,240
Speaker 1: industry and certainly wasn't an expert in it in any way,

504
00:27:32,400 --> 00:27:35,000
Speaker 1: but was definitely an expert in the things you have

505
00:27:35,040 --> 00:27:38,159
Speaker 1: to consider. You know. At that time was I was married,

506
00:27:38,200 --> 00:27:40,440
Speaker 1: I had two kids, and you know, I was taking

507
00:27:40,440 --> 00:27:43,240
Speaker 1: a substantial risk, and he just wanted to be sure

508
00:27:43,240 --> 00:27:45,440
Speaker 1: that if it didn't go well, that I'd be all right.

509
00:27:45,680 --> 00:27:48,080
Speaker 2: And if the worst case scenario is, hey I got

510
00:27:48,080 --> 00:27:50,840
Speaker 2: to go get another gig at some other firm, that's

511
00:27:50,880 --> 00:27:52,080
Speaker 2: not such a terrible dance.

512
00:27:52,280 --> 00:27:54,160
Speaker 1: That's what I thought. The worst case scenario was. Then

513
00:27:54,160 --> 00:27:57,200
Speaker 1: we get to mid October two thousand and eight, and oh,

514
00:27:57,240 --> 00:28:00,040
Speaker 1: you launched right into launched right into the disaster I

515
00:28:00,359 --> 00:28:03,240
Speaker 1: June second eight, So we just passed our fifteen year anniversary.

516
00:28:03,240 --> 00:28:07,040
Speaker 1: So we launch and you know, the world comes to

517
00:28:07,119 --> 00:28:10,119
Speaker 1: an end virtually. You know, a few months later.

518
00:28:10,359 --> 00:28:13,560
Speaker 2: If only you were investing in distress ask eight.

519
00:28:13,760 --> 00:28:15,600
Speaker 1: If I had a little luck. It was great in

520
00:28:15,640 --> 00:28:17,800
Speaker 1: that regard, but that there was one very scary day,

521
00:28:17,840 --> 00:28:21,480
Speaker 1: which is the day that Goldman stock So it's kind

522
00:28:21,480 --> 00:28:25,159
Speaker 1: of all time post IPO low and we you know,

523
00:28:25,200 --> 00:28:29,320
Speaker 1: we're a new fund. We weren't that large. We had

524
00:28:30,000 --> 00:28:32,119
Speaker 1: I think we launched with four hundred and thirteen million

525
00:28:32,200 --> 00:28:35,320
Speaker 1: a capital, so it was a fine launch. We had

526
00:28:35,400 --> 00:28:37,840
Speaker 1: a billion and change in commitments a few months earlier

527
00:28:37,880 --> 00:28:41,360
Speaker 1: before the Bear Stearns unwind. It changed the world. We

528
00:28:41,440 --> 00:28:43,640
Speaker 1: launched with far less than what we thought we'd launched with.

529
00:28:44,400 --> 00:28:46,160
Speaker 1: And as a result of being new, you know, you

530
00:28:46,200 --> 00:28:49,160
Speaker 1: don't you don't have multiple prime brokers, you don't have

531
00:28:49,240 --> 00:28:53,200
Speaker 1: multiple relationships. So our only prime was Goldman. I still

532
00:28:53,280 --> 00:28:56,600
Speaker 1: had Goldman stock. My wife was a Goldman mdch at

533
00:28:56,640 --> 00:29:00,400
Speaker 1: Goldman stock. We both had our cash at Goldman Funds.

534
00:29:00,480 --> 00:29:03,440
Speaker 1: Cash was at Goldman. And it hit me that if

535
00:29:03,440 --> 00:29:06,840
Speaker 1: Goldman went the way of Leman, that I would probably

536
00:29:07,480 --> 00:29:08,680
Speaker 1: you know, be wiped out.

537
00:29:09,080 --> 00:29:12,160
Speaker 2: So I have to focus on this for a second. Please,

538
00:29:12,280 --> 00:29:16,480
Speaker 2: I'm ready to move into the next conversation. But it's

539
00:29:16,520 --> 00:29:19,520
Speaker 2: hard to imagine for the people who were listening, who

540
00:29:19,680 --> 00:29:24,080
Speaker 2: weren't of age, actively trading working during eight or nine.

541
00:29:25,320 --> 00:29:28,920
Speaker 2: It sounds ridiculous today that Goldman would go the way

542
00:29:29,040 --> 00:29:32,920
Speaker 2: Lehman brothers, But in the fall of eight that really

543
00:29:33,000 --> 00:29:34,000
Speaker 2: wasn't unthinkable.

544
00:29:34,320 --> 00:29:38,200
Speaker 1: No, it was. It wasn't because there was something wrong

545
00:29:38,760 --> 00:29:40,880
Speaker 1: with Goldman or any other bank. It was just that

546
00:29:40,880 --> 00:29:45,120
Speaker 1: if confidence failed, there would have been it would have

547
00:29:45,120 --> 00:29:48,720
Speaker 1: been very, very difficult for Goldman or almost any other

548
00:29:48,760 --> 00:29:51,640
Speaker 1: bank to survive. And you know, we've put in place

549
00:29:51,720 --> 00:29:55,120
Speaker 1: measures now to help protect against that, but ultimately no

550
00:29:55,280 --> 00:29:58,320
Speaker 1: bank is really protected against a fallen confidence. We just

551
00:29:58,400 --> 00:30:01,560
Speaker 1: built barriers around them to to ensure that the confidence remains high.

552
00:30:01,600 --> 00:30:05,000
Speaker 1: And ultimately that's what our fractional banking system and ultimately

553
00:30:05,040 --> 00:30:08,080
Speaker 1: capitalism is based on. And I'm a big believer in it.

554
00:30:08,160 --> 00:30:10,520
Speaker 1: But for the people out you know they're listening and

555
00:30:10,600 --> 00:30:13,640
Speaker 1: thinking about this. If you think that going out and

556
00:30:13,640 --> 00:30:16,560
Speaker 1: starting a hedge fund is a zero risk proposition, you're

557
00:30:16,720 --> 00:30:19,520
Speaker 1: just wrong. It's not. And if you want to achieve

558
00:30:19,560 --> 00:30:21,920
Speaker 1: great success, whether it's in the investing world, or the

559
00:30:21,960 --> 00:30:27,000
Speaker 1: hedge fund world, or in any venture. Ultimately, it's rare

560
00:30:27,040 --> 00:30:29,280
Speaker 1: to achieve great success without putting it all on the line.

561
00:30:29,800 --> 00:30:31,840
Speaker 1: And I didn't really think I'd put it all on

562
00:30:31,880 --> 00:30:35,360
Speaker 1: the line, but ultimately I did. And you know, I'll

563
00:30:35,360 --> 00:30:41,480
Speaker 1: tell you it's really motivating. We did really well on

564
00:30:41,520 --> 00:30:44,080
Speaker 1: a relative basis in two thousand and eight, and exceptionally

565
00:30:44,120 --> 00:30:48,400
Speaker 1: well in two thousand and nine, and so, you know,

566
00:30:48,480 --> 00:30:51,880
Speaker 1: I think it was incumbent on us to recognize the

567
00:30:51,920 --> 00:30:53,960
Speaker 1: moment in time we were facing and be willing to

568
00:30:54,000 --> 00:30:55,840
Speaker 1: take that much risk. You know, It's sort of like

569
00:30:56,280 --> 00:31:01,120
Speaker 1: if you you know people people today get frustrated when

570
00:31:01,120 --> 00:31:04,120
Speaker 1: we see great wealth, okay, but you have to stop

571
00:31:04,160 --> 00:31:06,320
Speaker 1: and think about the risks that we're taken to attain that.

572
00:31:06,800 --> 00:31:10,360
Speaker 1: Perhaps the best example today is Elon Musk, who achieved

573
00:31:10,440 --> 00:31:13,640
Speaker 1: multi generational wealth in the sale of his first his

574
00:31:13,640 --> 00:31:17,280
Speaker 1: first big win PayPal and PayPal, and then risked every

575
00:31:17,320 --> 00:31:21,960
Speaker 1: single penny to build Ultimate three three different companies. And

576
00:31:22,000 --> 00:31:24,120
Speaker 1: whether you give him all the credit or some of

577
00:31:24,160 --> 00:31:26,880
Speaker 1: the credit is irrelevant. He took the most risks.

578
00:31:26,960 --> 00:31:30,440
Speaker 2: He rolled the dice, and at one point in time,

579
00:31:31,760 --> 00:31:34,960
Speaker 2: if Tesla hadn't worked out, he would have been completely

580
00:31:35,000 --> 00:31:39,000
Speaker 2: bustled out. Shocking to think about someone having such a

581
00:31:39,040 --> 00:31:41,600
Speaker 2: massive success yeah, and then saying no, no, let's put

582
00:31:41,640 --> 00:31:43,080
Speaker 2: it all on red and spin the wheel and see

583
00:31:43,120 --> 00:31:43,520
Speaker 2: what happened.

584
00:31:43,760 --> 00:31:47,640
Speaker 1: An enormous conviction. And I have to say that, having

585
00:31:48,320 --> 00:31:51,880
Speaker 1: you know, done business directly with Elon by way of

586
00:31:51,920 --> 00:31:57,240
Speaker 1: our investment in hurts, you know, I have an incredible

587
00:31:57,240 --> 00:32:00,000
Speaker 1: amount of respect for his conviction as a business person,

588
00:32:00,920 --> 00:32:05,960
Speaker 1: and I think that's probably informed some of his views generally,

589
00:32:06,560 --> 00:32:12,920
Speaker 1: and ultimately, I just believe that that kind of disposition

590
00:32:13,080 --> 00:32:17,240
Speaker 1: is important in society, and it's important, and particularly in

591
00:32:17,280 --> 00:32:22,040
Speaker 1: a capitalistic society to have risk takers and have people

592
00:32:22,080 --> 00:32:24,280
Speaker 1: that are willing to really stick their necks out, because

593
00:32:24,280 --> 00:32:26,880
Speaker 1: if you don't take risk, you're not going to achieve reward.

594
00:32:27,040 --> 00:32:29,680
Speaker 1: It just there's no two ways around it. And you

595
00:32:29,720 --> 00:32:32,440
Speaker 1: need the incentive structure to be set up such that

596
00:32:32,480 --> 00:32:36,520
Speaker 1: people are willing to take those risks. And interestingly, you know,

597
00:32:36,960 --> 00:32:40,080
Speaker 1: you have a guy in Elon that doesn't really own

598
00:32:40,240 --> 00:32:43,600
Speaker 1: anything other than his companies. He is not an acquirer

599
00:32:43,760 --> 00:32:47,080
Speaker 1: of things. He's a builder of businesses, and that's all

600
00:32:47,120 --> 00:32:51,360
Speaker 1: his focus is. And that for the markets in general.

601
00:32:51,760 --> 00:32:56,120
Speaker 1: Folks like that are good. They deploy capital, they grow businesses,

602
00:32:56,160 --> 00:32:59,720
Speaker 1: they create jobs. Ultimately, if you take a step back

603
00:32:59,720 --> 00:33:02,840
Speaker 1: and think about what he's doing with his three major companies,

604
00:33:02,880 --> 00:33:08,240
Speaker 1: it's pretty astounding. You know. In in Tesla, it's leading

605
00:33:08,360 --> 00:33:12,560
Speaker 1: the revolution evs, and and we believe enormously in the

606
00:33:12,600 --> 00:33:16,560
Speaker 1: value of evs, not simply because they're good environmentally, which

607
00:33:16,640 --> 00:33:19,880
Speaker 1: which they are, although I think there there's a there's

608
00:33:19,920 --> 00:33:23,720
Speaker 1: a good solid debate around just how beneficial they are environment.

609
00:33:23,440 --> 00:33:26,120
Speaker 2: Well, the whole minerals, rare are things in the astraction

610
00:33:26,480 --> 00:33:28,520
Speaker 2: and if those are problematic.

611
00:33:27,920 --> 00:33:29,520
Speaker 1: That's right. And what you do with the batteries at

612
00:33:29,520 --> 00:33:31,280
Speaker 1: the end of life and making sure you recycle them,

613
00:33:31,280 --> 00:33:34,760
Speaker 1: those things are all incredibly important. And how we generate

614
00:33:34,800 --> 00:33:37,200
Speaker 1: the electricity, the charges of vehicles, all of those things

615
00:33:37,240 --> 00:33:39,560
Speaker 1: need to be considered. But ultimately, the cost of running

616
00:33:39,840 --> 00:33:42,640
Speaker 1: an EV over a long period of time is demonstrably

617
00:33:42,680 --> 00:33:46,000
Speaker 1: lower than an ice car. Meaning an internal about it.

618
00:33:46,080 --> 00:33:50,560
Speaker 2: And as a car guy, I am would be lying

619
00:33:50,600 --> 00:33:54,320
Speaker 2: if I didn't say it's a superior propulsion system. When

620
00:33:54,360 --> 00:33:57,440
Speaker 2: you step on the gas on a high step on

621
00:33:57,480 --> 00:34:00,120
Speaker 2: the gas. Look at how I stuck in when you

622
00:34:00,200 --> 00:34:04,800
Speaker 2: mashed down the accelerator in an ev ice, engines just

623
00:34:04,920 --> 00:34:07,840
Speaker 2: can't match that comp And it's a fraction of the cost.

624
00:34:08,120 --> 00:34:10,520
Speaker 2: What used to cost a million dollars for a thousand

625
00:34:10,520 --> 00:34:13,560
Speaker 2: horse power you could pick up for twenty percent of that,

626
00:34:13,680 --> 00:34:18,680
Speaker 2: and it's a shocking change. I give a lot of credit,

627
00:34:18,760 --> 00:34:22,840
Speaker 2: not just to Elon, but I'm pretty convinced that Jeff

628
00:34:22,840 --> 00:34:28,160
Speaker 2: Bezos deserves some credit because after Amazon demolished so much

629
00:34:28,200 --> 00:34:30,279
Speaker 2: of retail and yeah, America was over retailed. In this

630
00:34:30,640 --> 00:34:34,319
Speaker 2: whole other conversation there, I got the sense that the

631
00:34:34,520 --> 00:34:39,560
Speaker 2: entire legacy automaker world looked at Elon and said, Hey,

632
00:34:39,760 --> 00:34:42,840
Speaker 2: we can't let this guy do to us what Bezos

633
00:34:42,840 --> 00:34:45,560
Speaker 2: did to retail. We got to step it up absolutely.

634
00:34:45,600 --> 00:34:49,719
Speaker 1: And I think that, look, you've got some other great executives.

635
00:34:49,760 --> 00:34:53,000
Speaker 1: You know what Mary Barr is doing at GM and

636
00:34:53,040 --> 00:34:55,160
Speaker 1: some of the products they have coming out. Yes, they're

637
00:34:55,239 --> 00:34:58,080
Speaker 1: behind Tesla. I don't think that I'm saying anything that's controversial.

638
00:34:58,080 --> 00:35:01,719
Speaker 1: They're they're spectacular products. Yeah, I think that Ford is

639
00:35:01,760 --> 00:35:05,440
Speaker 1: the world's largest commercial vehicle manufacturer. We'll find its footing

640
00:35:05,440 --> 00:35:08,040
Speaker 1: and evs and come up with some pretty spectacular.

641
00:35:07,520 --> 00:35:09,960
Speaker 2: They've been crushing it. When you look at not just

642
00:35:10,040 --> 00:35:14,240
Speaker 2: the Mustang Mocky, but the one Lightning. Have you driven

643
00:35:14,280 --> 00:35:14,719
Speaker 2: that pick up?

644
00:35:14,840 --> 00:35:15,400
Speaker 1: It's amazing.

645
00:35:15,719 --> 00:35:18,840
Speaker 2: No vehicle that large has any business being that fast.

646
00:35:19,239 --> 00:35:19,840
Speaker 2: It's shocking.

647
00:35:19,920 --> 00:35:23,239
Speaker 1: It is shocking. And and you know, I'm Farley's a

648
00:35:23,239 --> 00:35:27,040
Speaker 1: big motorsport guy, and so I'm I've got a you know,

649
00:35:27,520 --> 00:35:31,799
Speaker 1: uh soft spot for that. And obviously Mary's you know,

650
00:35:31,880 --> 00:35:35,040
Speaker 1: move into endurance racing with Cadillac is pretty interesting. So

651
00:35:35,280 --> 00:35:37,319
Speaker 1: there's a lot of exciting things going on. But I

652
00:35:37,320 --> 00:35:39,640
Speaker 1: think when you when you look at what you know

653
00:35:39,719 --> 00:35:42,520
Speaker 1: Elon did and kind of kicking off that revolution, it's

654
00:35:42,680 --> 00:35:45,960
Speaker 1: it's a good thing, uh, for the Market's a good

655
00:35:46,000 --> 00:35:48,959
Speaker 1: thing for society. Ultimately, we've got we've got some things

656
00:35:48,960 --> 00:35:51,080
Speaker 1: we need to get right as it relates to power generation,

657
00:35:51,200 --> 00:35:54,480
Speaker 1: but that's good SpaceX and what that will do for

658
00:35:54,560 --> 00:35:59,640
Speaker 1: the cost of lift is with this new the largest rocket,

659
00:35:59,640 --> 00:36:02,560
Speaker 1: I'm blanding on the name, but you know that's going

660
00:36:02,640 --> 00:36:05,560
Speaker 1: to be an unbelievable reduction and lift costs. I think

661
00:36:05,600 --> 00:36:09,080
Speaker 1: it's ninety percent cheaper than the Apollo program, which is astounding.

662
00:36:09,840 --> 00:36:15,680
Speaker 1: And then finally with with the satellite business, and you

663
00:36:15,680 --> 00:36:19,120
Speaker 1: know what we can do for telecommunications. You know how

664
00:36:20,120 --> 00:36:23,360
Speaker 1: it's difficult to assess without getting into a kind of

665
00:36:23,400 --> 00:36:25,759
Speaker 1: a deep rabbit hole, how valuable it is to have

666
00:36:25,840 --> 00:36:31,200
Speaker 1: thousands of satellites that are really hardened against strategic attacks

667
00:36:31,719 --> 00:36:36,640
Speaker 1: and can serve the entire planet and provide fast communication

668
00:36:36,760 --> 00:36:42,640
Speaker 1: and data. Is an unbelievable resource for humanity.

669
00:36:42,440 --> 00:36:50,480
Speaker 2: Especially for the non industrialized countries that skipped over landlines

670
00:36:50,520 --> 00:36:54,040
Speaker 2: and stringing copper, attached the dead trees and went right

671
00:36:54,120 --> 00:36:58,360
Speaker 2: to mobile. This is data, voice communications, no matter what

672
00:36:58,440 --> 00:36:59,200
Speaker 2: you want on the globe.

673
00:36:59,200 --> 00:37:01,640
Speaker 1: It's amazing and those things, those you know, those are

674
00:37:01,640 --> 00:37:05,080
Speaker 1: going to have an extraordinary impact on humanity. I'm a

675
00:37:05,080 --> 00:37:09,440
Speaker 1: big believer in the power of humanity. When we, you know,

676
00:37:09,480 --> 00:37:14,200
Speaker 1: provide people with opportunity, I think, all things being equal,

677
00:37:14,200 --> 00:37:15,560
Speaker 1: they tend to respond really well.

678
00:37:15,800 --> 00:37:18,640
Speaker 2: And we're recording this at the end of June, and

679
00:37:18,920 --> 00:37:22,920
Speaker 2: the news broke very recently that Tesla cut a deal

680
00:37:23,000 --> 00:37:26,960
Speaker 2: with GM and Ford to make their massive network of

681
00:37:27,400 --> 00:37:34,160
Speaker 2: chargers available to GM and fod evs. That's potentially a

682
00:37:34,200 --> 00:37:38,520
Speaker 2: game changer, and it's potentially a revenue source for Tesla

683
00:37:38,800 --> 00:37:41,280
Speaker 2: that looks out years and years and years.

684
00:37:41,360 --> 00:37:45,320
Speaker 1: Absolutely, and what it does is it begins to reduce

685
00:37:45,400 --> 00:37:48,640
Speaker 1: the range anxiety that people ultimately feel. Look, you know,

686
00:37:48,640 --> 00:37:50,840
Speaker 1: one of the things that we looked at It Hurts,

687
00:37:51,000 --> 00:37:53,840
Speaker 1: and I have to credit Steven Share, our CEO, for

688
00:37:53,920 --> 00:37:59,160
Speaker 1: being really unbelievable in his pursuit of the objective of

689
00:37:59,440 --> 00:38:02,480
Speaker 1: electrifying more of the fleet. But one of the things

690
00:38:02,480 --> 00:38:05,040
Speaker 1: that his team looked at was the percentage of trips

691
00:38:05,640 --> 00:38:08,880
Speaker 1: that are greater than two hundred miles and ninety single

692
00:38:10,080 --> 00:38:13,640
Speaker 1: It's a very low percentage. Most rental days are less

693
00:38:13,640 --> 00:38:18,000
Speaker 1: than two hundred miles, Most total rental experiences over a

694
00:38:18,040 --> 00:38:20,160
Speaker 1: multi day period lesson two hundred miles. So this idea

695
00:38:20,200 --> 00:38:23,240
Speaker 1: of range anxiety accounts for very small percentage of trips

696
00:38:23,239 --> 00:38:25,680
Speaker 1: that people ultimately take. And as we have access to

697
00:38:25,719 --> 00:38:30,239
Speaker 1: more charging, and particularly charging in places where cars reside

698
00:38:30,320 --> 00:38:36,800
Speaker 1: at rest so restaurants, hotels, office buildings, homes, that's critically important.

699
00:38:36,880 --> 00:38:38,960
Speaker 1: And I think one of the big initiatives that I

700
00:38:39,120 --> 00:38:43,240
Speaker 1: love that Steven's pursuing It Hurts is to bring charging

701
00:38:43,320 --> 00:38:47,360
Speaker 1: infrastructure into underserved communities and that's something that he's working

702
00:38:47,400 --> 00:38:51,880
Speaker 1: on with British Petroleum and Uber and state and city

703
00:38:52,000 --> 00:38:55,839
Speaker 1: municipalities and kind of bringing that opportunity to areas where

704
00:38:55,840 --> 00:38:58,880
Speaker 1: it's a little tougher, you know, to have charging infrastructure

705
00:38:58,920 --> 00:39:01,719
Speaker 1: in the home. So that's all of this is spurned by,

706
00:39:02,840 --> 00:39:06,480
Speaker 1: you know, the initial foray of of Tesla and Evs,

707
00:39:06,560 --> 00:39:08,840
Speaker 1: and then ultimately these other great companies following.

708
00:39:09,160 --> 00:39:12,839
Speaker 2: Huh really quite quite fascinating. Let's talk a little bit

709
00:39:12,960 --> 00:39:19,719
Speaker 2: about investing in sports. Tom Brady, Tom Brady, how does

710
00:39:19,800 --> 00:39:20,320
Speaker 2: this happen?

711
00:39:20,760 --> 00:39:22,440
Speaker 1: Well, Tom, Tom and I have known each other for

712
00:39:22,520 --> 00:39:27,160
Speaker 1: a long time, and we met through some mutual friends

713
00:39:27,160 --> 00:39:31,600
Speaker 1: and our boys. Actually, his eldest son and my son

714
00:39:32,040 --> 00:39:36,239
Speaker 1: were classmates for a number of years together at the

715
00:39:36,280 --> 00:39:39,200
Speaker 1: school here in New York City, and so we get

716
00:39:39,200 --> 00:39:42,799
Speaker 1: to know each other and then became friendly, and then

717
00:39:42,840 --> 00:39:46,480
Speaker 1: opportunities arose where we saw some pretty interesting things to

718
00:39:46,560 --> 00:39:48,800
Speaker 1: do in sport. And you know, if you're going to

719
00:39:48,880 --> 00:39:52,359
Speaker 1: invest in sport, you know, why not do it with

720
00:39:52,400 --> 00:39:58,080
Speaker 1: somebody who has had unparalleled success in sport, not simply

721
00:39:58,840 --> 00:40:02,919
Speaker 1: in so far as winning or winning percentages or statistics,

722
00:40:02,960 --> 00:40:07,120
Speaker 1: but in the persistent performance at the highest level over

723
00:40:07,160 --> 00:40:09,799
Speaker 1: an incredibly long period of time in a sport that

724
00:40:09,920 --> 00:40:12,080
Speaker 1: is absolutely not known for longevity.

725
00:40:12,640 --> 00:40:15,040
Speaker 2: Yeah, to say, to say, what's the average NFL three

726
00:40:15,040 --> 00:40:18,799
Speaker 2: of three years, although very quarterbacks are do a little

727
00:40:18,800 --> 00:40:22,320
Speaker 2: better than that. But he played at New England for decades.

728
00:40:22,400 --> 00:40:24,959
Speaker 1: Yeah, in twenty three year career and you know, set

729
00:40:25,080 --> 00:40:27,239
Speaker 1: just about every record that could possibly be set, and

730
00:40:27,760 --> 00:40:32,359
Speaker 1: I think did it in a way that you know,

731
00:40:32,480 --> 00:40:36,080
Speaker 1: left his legacy unlikely to be paralleled. And what I

732
00:40:36,120 --> 00:40:39,520
Speaker 1: mean by that is, you know, he brought others up.

733
00:40:39,920 --> 00:40:42,879
Speaker 1: If you look at the performance of his teammates when

734
00:40:42,880 --> 00:40:45,520
Speaker 1: they were with him vis a vis their performance elsewhere,

735
00:40:45,600 --> 00:40:47,399
Speaker 1: or the teams when he was with them versus when

736
00:40:47,440 --> 00:40:50,759
Speaker 1: he wasn't, it's pretty clear that, you know, he is

737
00:40:51,040 --> 00:40:53,520
Speaker 1: a key component of success. So you know, we wanted

738
00:40:53,560 --> 00:40:55,480
Speaker 1: to understand that and tap into it. And I think

739
00:40:55,480 --> 00:40:57,880
Speaker 1: a lot of it has to do with nutrition and

740
00:40:57,960 --> 00:41:01,920
Speaker 1: recovery and that's a big area of Tom's focus. And

741
00:41:02,000 --> 00:41:04,480
Speaker 1: so you know, we've looked at investments where we can

742
00:41:04,480 --> 00:41:07,840
Speaker 1: partner together and bring some of that to bear. Also

743
00:41:08,080 --> 00:41:13,160
Speaker 1: where we can use you know, his his fame as

744
00:41:13,200 --> 00:41:16,440
Speaker 1: a as a springboard to bring attention to a sport

745
00:41:16,520 --> 00:41:18,960
Speaker 1: or an opportunity. So we've we've done a handful of

746
00:41:18,960 --> 00:41:20,640
Speaker 1: things together, and I think there'll be more to come.

747
00:41:21,200 --> 00:41:24,239
Speaker 2: I love the concept of those rare players who make

748
00:41:24,320 --> 00:41:29,000
Speaker 2: everyone around them better, whether it's Tom Brady or Michael Jordan,

749
00:41:29,160 --> 00:41:31,719
Speaker 2: or Derek Jeter or go down the list. There's something

750
00:41:31,760 --> 00:41:36,400
Speaker 2: really interesting about it. I also love this headline, this

751
00:41:36,440 --> 00:41:39,440
Speaker 2: Bloomberg headline, why a hedge fund manager is betting on

752
00:41:39,800 --> 00:41:45,480
Speaker 2: pickleball with Tom Brady and former number one ranked world

753
00:41:45,800 --> 00:41:50,200
Speaker 2: tennis player Kim Kleisters tell us about pickleball. I'm a

754
00:41:50,239 --> 00:41:53,279
Speaker 2: tennis player, and I'm terrified of pickleball because I don't

755
00:41:53,280 --> 00:41:54,719
Speaker 2: want to affect my swing.

756
00:41:55,400 --> 00:41:57,720
Speaker 1: Well, I don't think that pickleball would have would would

757
00:41:57,800 --> 00:42:00,279
Speaker 1: damage in any way your swing, I think. But we

758
00:42:00,360 --> 00:42:04,239
Speaker 1: found interesting about pickleball is the enormous explosion of popularity

759
00:42:04,680 --> 00:42:05,080
Speaker 1: in the.

760
00:42:05,080 --> 00:42:07,680
Speaker 2: US fastest growing sports growing sport.

761
00:42:08,719 --> 00:42:13,279
Speaker 1: We liked the idea of a league with teams that

762
00:42:13,320 --> 00:42:15,919
Speaker 1: are based in or connected to cities, so you bring

763
00:42:15,960 --> 00:42:18,480
Speaker 1: in a tribalism element to it, which has proven very

764
00:42:18,480 --> 00:42:22,799
Speaker 1: successful in sport over the years. We liked, you know,

765
00:42:22,840 --> 00:42:24,800
Speaker 1: the idea that this would be something that would continue

766
00:42:24,800 --> 00:42:27,360
Speaker 1: to grow. It's a it's an early early stage investment.

767
00:42:27,360 --> 00:42:29,840
Speaker 1: It was it was not a particularly large investment, but

768
00:42:29,880 --> 00:42:32,120
Speaker 1: it was something that we were excited about. And you know,

769
00:42:32,200 --> 00:42:36,040
Speaker 1: Tom and I have played pickleball and enjoy playing pickleball.

770
00:42:36,120 --> 00:42:39,680
Speaker 1: And is he any good? He's very good. You know,

771
00:42:40,120 --> 00:42:42,880
Speaker 1: people forget by the way, you know his athleticism. Is

772
00:42:42,920 --> 00:42:45,520
Speaker 1: a guy that was drafted in two different sports, right,

773
00:42:46,200 --> 00:42:48,879
Speaker 1: and so he and he's a super competitive human.

774
00:42:49,000 --> 00:42:51,000
Speaker 2: That's the thing I was thinking of. It's like Michael

775
00:42:51,080 --> 00:42:54,759
Speaker 2: Jordan and golf. It doesn't matter what his skill level is,

776
00:42:54,840 --> 00:42:56,000
Speaker 2: he is not going to back down.

777
00:42:56,080 --> 00:42:58,160
Speaker 1: No, No, I think there's a level of you know,

778
00:42:58,160 --> 00:43:00,160
Speaker 1: when you run into anybody who was incredibly success us

779
00:43:00,160 --> 00:43:02,680
Speaker 1: will in a given profession. They tend to be hyper competitive.

780
00:43:02,680 --> 00:43:05,799
Speaker 1: And so you know, I think we we saw the

781
00:43:05,800 --> 00:43:08,799
Speaker 1: demographics and were attracted to it and and are quite

782
00:43:08,800 --> 00:43:11,000
Speaker 1: excited about that opportunity. I think there's a long way

783
00:43:11,000 --> 00:43:12,919
Speaker 1: to go to to get the league to the point

784
00:43:12,960 --> 00:43:15,520
Speaker 1: where it's where it's you know, really connecting on a

785
00:43:15,520 --> 00:43:17,920
Speaker 1: commercial level. But I you know, we we think that

786
00:43:17,960 --> 00:43:19,279
Speaker 1: there's a great tale in there.

787
00:43:19,760 --> 00:43:23,480
Speaker 2: Let's discuss another sports investment. We're recording this at the

788
00:43:23,600 --> 00:43:26,839
Speaker 2: end of June. By the time as broadcast, you will

789
00:43:26,880 --> 00:43:31,040
Speaker 2: have closed the deal to purchase Birmingham City FC in

790
00:43:31,080 --> 00:43:34,879
Speaker 2: the English Football League. Why a soccer club, What what

791
00:43:34,920 --> 00:43:38,719
Speaker 2: motivates this and why the UK that that seems to

792
00:43:38,719 --> 00:43:40,520
Speaker 2: be a little off the beaten path.

793
00:43:40,800 --> 00:43:45,480
Speaker 1: Well, we were really really excited about the prospect of

794
00:43:45,600 --> 00:43:50,279
Speaker 1: investing in Birmingham. There were a few things that drew

795
00:43:50,360 --> 00:43:54,160
Speaker 1: us to that particular opportunity that were unique to Birmingham.

796
00:43:54,200 --> 00:43:58,320
Speaker 1: So first, it's it's England's second city. It's we understand

797
00:43:58,320 --> 00:44:01,680
Speaker 1: it to be the youngest city in Europe, it's one

798
00:44:01,719 --> 00:44:06,640
Speaker 1: of the fastest growing cities in Europe, youngest professional population

799
00:44:06,880 --> 00:44:11,799
Speaker 1: in Europe, very very diverse population, and a city that

800
00:44:11,880 --> 00:44:14,320
Speaker 1: is going through what I would characterize as sort of

801
00:44:14,440 --> 00:44:18,040
Speaker 1: urban renewal, where a lot of investment is coming in alongside,

802
00:44:18,200 --> 00:44:19,799
Speaker 1: you know, and not a lot of a lot of

803
00:44:19,800 --> 00:44:21,880
Speaker 1: new folks that are moving into the city. And so

804
00:44:22,040 --> 00:44:24,719
Speaker 1: all of those demographics were really really interesting to us.

805
00:44:24,760 --> 00:44:28,120
Speaker 1: Then you have the named team in the city that

806
00:44:28,280 --> 00:44:32,719
Speaker 1: had been under invested in and had gotten a lot

807
00:44:32,760 --> 00:44:35,760
Speaker 1: of things wrong in our opinion, in the preceding years,

808
00:44:35,760 --> 00:44:40,799
Speaker 1: the fan experience was really subpar and candidly not fair

809
00:44:41,280 --> 00:44:45,520
Speaker 1: relative to the incredibly passionate fan base that Birmingham City has.

810
00:44:45,600 --> 00:44:50,120
Speaker 1: We just you go there and you spend time with

811
00:44:50,239 --> 00:44:52,360
Speaker 1: these folks and you talk to them. They are just

812
00:44:52,560 --> 00:44:57,400
Speaker 1: amazing people. And you know, we felt that one there

813
00:44:57,440 --> 00:44:59,760
Speaker 1: was an opportunity where we could turn the team around.

814
00:45:00,040 --> 00:45:02,640
Speaker 1: Can talk a little bit about that, and two where

815
00:45:02,640 --> 00:45:06,280
Speaker 1: we could connect with the folks that are so passionate

816
00:45:06,320 --> 00:45:10,719
Speaker 1: about this and effectively partner with them to make this

817
00:45:10,760 --> 00:45:14,680
Speaker 1: a much better experience and hopefully a much more successful team.

818
00:45:15,280 --> 00:45:18,279
Speaker 2: So let's talk a little bit about that. What are

819
00:45:18,320 --> 00:45:21,720
Speaker 2: you guys doing to turn around the team and also

820
00:45:21,880 --> 00:45:24,920
Speaker 2: to kind of bring the stadium up to speed. It

821
00:45:24,960 --> 00:45:28,000
Speaker 2: seemed to be a little neglected prior to your investment.

822
00:45:28,200 --> 00:45:32,240
Speaker 1: Yeah, you know, for a recent past, almost a third

823
00:45:32,280 --> 00:45:34,920
Speaker 1: of the seats in the stadium were not fit for

824
00:45:35,040 --> 00:45:39,399
Speaker 1: use because of some structural issues in the stadium that's

825
00:45:39,440 --> 00:45:46,319
Speaker 1: being remediated. The pitch was in disrepair, the concessions, the

826
00:45:46,440 --> 00:45:49,560
Speaker 1: quality of the seats, the overall look of the stadium,

827
00:45:49,880 --> 00:45:54,319
Speaker 1: the electronics, Wi Fi, everything was was either not there,

828
00:45:54,480 --> 00:45:57,719
Speaker 1: not working, or you know, in a state of disrepair.

829
00:45:58,200 --> 00:46:00,759
Speaker 1: And so I think improving all of those things and

830
00:46:00,840 --> 00:46:04,440
Speaker 1: more will really improve the fan experience. And that's important, right,

831
00:46:04,480 --> 00:46:06,680
Speaker 1: It's not simply what's going on in the pitch. It's

832
00:46:06,719 --> 00:46:09,880
Speaker 1: the overall experience, particularly if you're if you're going with

833
00:46:09,960 --> 00:46:12,040
Speaker 1: friends or family or what have you. You know, we

834
00:46:12,120 --> 00:46:16,080
Speaker 1: need to make that experience commensurate with the legacy of

835
00:46:16,120 --> 00:46:18,960
Speaker 1: the team. The second thing is obviously the competitiveness on

836
00:46:19,000 --> 00:46:23,359
Speaker 1: the field. That is something that is constrained by the

837
00:46:23,719 --> 00:46:26,960
Speaker 1: English Football League rules which require that you not spend

838
00:46:27,000 --> 00:46:29,520
Speaker 1: more than the revenue that you make. So you can't

839
00:46:29,520 --> 00:46:30,960
Speaker 1: just go out and say I'm going to spend an

840
00:46:31,040 --> 00:46:32,040
Speaker 1: ungodly sum of money.

841
00:46:32,280 --> 00:46:34,480
Speaker 2: Waite, So let me let me get up dispute on

842
00:46:34,520 --> 00:46:38,719
Speaker 2: this because I don't know those rules. This isn't like

843
00:46:38,760 --> 00:46:41,640
Speaker 2: a salary cap like Major League Baseball has with a

844
00:46:41,719 --> 00:46:45,160
Speaker 2: penalty if you go over. It's hey, whatever you generate

845
00:46:45,239 --> 00:46:49,080
Speaker 2: is how much you can spend. You would think people

846
00:46:49,120 --> 00:46:51,560
Speaker 2: would do whatever they could to get more butts in

847
00:46:51,600 --> 00:46:53,040
Speaker 2: the seats to generate more revenue.

848
00:46:53,080 --> 00:46:55,319
Speaker 1: Yeah, you have to have and that's why I say

849
00:46:55,320 --> 00:46:57,840
Speaker 1: it has to be a partnership with the with the fans.

850
00:46:57,880 --> 00:47:00,960
Speaker 1: You have to create an experience where people want to

851
00:47:01,000 --> 00:47:03,840
Speaker 1: support the team, and then ultimately you have to be

852
00:47:03,960 --> 00:47:09,480
Speaker 1: prudent in allocating those pounds to the players that will

853
00:47:09,520 --> 00:47:11,960
Speaker 1: perform in the field, and that's obviously incumbent on our

854
00:47:12,000 --> 00:47:15,839
Speaker 1: team to get that right. But it's not one thing, Barry,

855
00:47:15,880 --> 00:47:18,880
Speaker 1: it's everything. We have to work on every element of

856
00:47:18,920 --> 00:47:21,920
Speaker 1: this and turn around every element to the team. It's

857
00:47:21,960 --> 00:47:27,120
Speaker 1: different sponsors, it's different partners, it's different oversight, it's different management,

858
00:47:27,120 --> 00:47:29,960
Speaker 1: it's different talent acquisition. All of it has to be changed,

859
00:47:29,960 --> 00:47:32,080
Speaker 1: and certainly we won't be able to do that overnight,

860
00:47:32,320 --> 00:47:35,120
Speaker 1: but we're going to start the process immediately and get

861
00:47:35,120 --> 00:47:37,680
Speaker 1: to a place where our hope is to field an

862
00:47:37,719 --> 00:47:41,399
Speaker 1: immediately competitive team and then ultimately, you know, do all

863
00:47:41,440 --> 00:47:43,160
Speaker 1: of the things that we need to do to make

864
00:47:43,160 --> 00:47:44,240
Speaker 1: it permanently competitive.

865
00:47:44,360 --> 00:47:47,239
Speaker 2: So is this a fun investment or is this Hey,

866
00:47:47,239 --> 00:47:49,600
Speaker 2: we're looking for this sort of ROI and this sort

867
00:47:49,600 --> 00:47:53,800
Speaker 2: of return over time. How do you? Because I think

868
00:47:53,840 --> 00:47:57,799
Speaker 2: of Steve Cohen's acquisition in New York Mets, which, by

869
00:47:57,840 --> 00:48:01,799
Speaker 2: the way, you go to City fel Field, the whole

870
00:48:01,840 --> 00:48:04,560
Speaker 2: experiences next level compared to what it was like in

871
00:48:04,600 --> 00:48:07,319
Speaker 2: the I grew up with Say Stadium and was a

872
00:48:07,320 --> 00:48:12,680
Speaker 2: little bit of a sad compared to Yankee Stadium. Now

873
00:48:13,440 --> 00:48:15,920
Speaker 2: I don't know if this is blasphemy. City Field is

874
00:48:16,000 --> 00:48:19,839
Speaker 2: nicer than the New Yankee Stadium. It's amazing. So so

875
00:48:19,920 --> 00:48:22,080
Speaker 2: tell us a little bit about the thought thought process

876
00:48:22,080 --> 00:48:22,560
Speaker 2: on Well.

877
00:48:22,440 --> 00:48:24,120
Speaker 1: I think you've touched on something, right. I grew up

878
00:48:24,239 --> 00:48:27,720
Speaker 1: outside of Boston and I was a Red Sox supporter

879
00:48:27,760 --> 00:48:29,799
Speaker 1: and I go to Fenway and that experience in the

880
00:48:29,800 --> 00:48:33,000
Speaker 1: seventies is very different than when you have today. You know,

881
00:48:33,040 --> 00:48:35,960
Speaker 1: it's much better, same stadium, but a much better, much

882
00:48:35,960 --> 00:48:38,880
Speaker 1: different experience, more engaging for the fans, particularly on the

883
00:48:38,920 --> 00:48:40,920
Speaker 1: weekends when you have a lot of family activities. And

884
00:48:41,000 --> 00:48:44,120
Speaker 1: so I think the whole fan engagement needs to change.

885
00:48:44,160 --> 00:48:47,640
Speaker 1: And you know, some of what we're doing in Birmingham

886
00:48:47,719 --> 00:48:52,160
Speaker 1: is bringing in different sponsors that bring an element of

887
00:48:54,040 --> 00:48:57,120
Speaker 1: cool for lack of a better word, to the team. Right,

888
00:48:57,160 --> 00:48:59,600
Speaker 1: this is a team that should be viewed differently than

889
00:48:59,640 --> 00:49:02,239
Speaker 1: it has been, and we're trying to demonstrate by way

890
00:49:02,239 --> 00:49:05,279
Speaker 1: of drawing sponsors in that have never been associated with

891
00:49:06,200 --> 00:49:10,480
Speaker 1: being attached to a particular sports franchise into the realm

892
00:49:11,160 --> 00:49:15,160
Speaker 1: to raise the profile. All of those things matter in

893
00:49:15,160 --> 00:49:18,520
Speaker 1: the context of helping to improve the overall performance of

894
00:49:18,560 --> 00:49:21,040
Speaker 1: the team because it helps to improve your overall revenue.

895
00:49:21,280 --> 00:49:23,560
Speaker 1: So those are all things that we're working on. But

896
00:49:23,600 --> 00:49:27,720
Speaker 1: when you ask the question about perspective returns, look, sports

897
00:49:27,760 --> 00:49:33,320
Speaker 1: franchises have proven to be pretty consistently appreciating assets over time,

898
00:49:33,480 --> 00:49:36,040
Speaker 1: and there's a variety of reasons for that. We don't

899
00:49:36,080 --> 00:49:39,040
Speaker 1: think that that changes in the near or intermediate term.

900
00:49:39,360 --> 00:49:43,000
Speaker 1: So from that perspective, we believe there's a tailwind there. However,

901
00:49:43,400 --> 00:49:46,239
Speaker 1: what we see in Birmingham is a unique opportunity to

902
00:49:46,360 --> 00:49:49,520
Speaker 1: fix some things that have been done correctly, to invest

903
00:49:49,800 --> 00:49:54,360
Speaker 1: appropriately in the infrastructure, and to position the team to

904
00:49:54,719 --> 00:49:57,280
Speaker 1: achieve the level of success was that it had had

905
00:49:57,360 --> 00:49:59,359
Speaker 1: looking back a couple of decades ago. If we get

906
00:49:59,400 --> 00:50:02,040
Speaker 1: all those things right, obviously we've created a lot of

907
00:50:02,080 --> 00:50:04,120
Speaker 1: value for our investors. And I think we have the

908
00:50:04,200 --> 00:50:06,120
Speaker 1: right team of people to help us do that, both

909
00:50:06,120 --> 00:50:10,200
Speaker 1: internally and externally. So I think our focus in Birmingham

910
00:50:10,320 --> 00:50:13,120
Speaker 1: is let's not worry about how much money we make.

911
00:50:13,239 --> 00:50:16,360
Speaker 1: Let's worry about getting it right, making the right decisions.

912
00:50:16,400 --> 00:50:18,759
Speaker 1: The success will follow. And I think that's the case

913
00:50:18,800 --> 00:50:22,360
Speaker 1: in any turnaround investment. Don't say I need to do

914
00:50:22,680 --> 00:50:25,920
Speaker 1: X so I can make why. In return, focus on

915
00:50:26,880 --> 00:50:29,440
Speaker 1: making the changes you need to make to allow the

916
00:50:29,480 --> 00:50:32,480
Speaker 1: business to be more successful that the returns will follow.

917
00:50:33,160 --> 00:50:35,960
Speaker 2: I'm fascinated by the idea of the revenue cap. Does

918
00:50:36,000 --> 00:50:38,640
Speaker 2: that apply to the team or the stadium? Like if

919
00:50:39,080 --> 00:50:42,319
Speaker 2: Taylor Swift comes in and does a show and you

920
00:50:42,400 --> 00:50:46,000
Speaker 2: capture some revenue for hosting that, can you apply that

921
00:50:46,200 --> 00:50:49,200
Speaker 2: to the team or is that the stadium a separate

922
00:50:49,360 --> 00:50:50,760
Speaker 2: revenue its venue.

923
00:50:50,840 --> 00:50:53,080
Speaker 1: It's all part of the calculation. So we if the

924
00:50:53,120 --> 00:50:55,200
Speaker 1: two are owned in the same enity, which ours will

925
00:50:55,200 --> 00:50:56,840
Speaker 1: be the team in our stake and the team and

926
00:50:57,520 --> 00:51:00,880
Speaker 1: our ownership of the stadium will all be in the

927
00:51:00,920 --> 00:51:04,480
Speaker 1: same entity. So we're focused on doing all kinds of

928
00:51:04,520 --> 00:51:07,960
Speaker 1: things that that will lead to additional revenue generation. But

929
00:51:08,000 --> 00:51:10,920
Speaker 1: taking a step back from that for a moment, it's

930
00:51:10,960 --> 00:51:19,439
Speaker 1: about creating a culture of success around that organization, and

931
00:51:19,640 --> 00:51:23,600
Speaker 1: that goes beyond the bottom line, if you will. It's

932
00:51:23,640 --> 00:51:26,839
Speaker 1: it's about creating the right types of events that draw

933
00:51:26,920 --> 00:51:29,759
Speaker 1: the community in. So this becomes a focal point for

934
00:51:29,800 --> 00:51:34,280
Speaker 1: the community, cultural center, and if you think about English football,

935
00:51:35,280 --> 00:51:38,880
Speaker 1: it is in many respects for a substantial part of

936
00:51:38,880 --> 00:51:43,279
Speaker 1: the population, the cultural hub of the community. A lot

937
00:51:43,320 --> 00:51:45,640
Speaker 1: and if you can make that a better experience, not

938
00:51:45,800 --> 00:51:49,400
Speaker 1: just on match day but beyond that and bring the

939
00:51:49,400 --> 00:51:53,520
Speaker 1: community into the organization. Now you've really charted started to

940
00:51:53,560 --> 00:51:56,200
Speaker 1: achieve success. And one of the things that we love

941
00:51:56,440 --> 00:51:59,560
Speaker 1: about Birmingham is it sits in the middle of the country.

942
00:51:59,600 --> 00:52:02,160
Speaker 1: It'll be a hub of the new high speed rail

943
00:52:02,239 --> 00:52:06,080
Speaker 1: system in the sense that eighty percent of the English

944
00:52:06,120 --> 00:52:10,000
Speaker 1: population will be within a one hour train ride of Birmingham. Really,

945
00:52:10,239 --> 00:52:13,200
Speaker 1: when HS two or high speed Rail two is completed,

946
00:52:13,600 --> 00:52:16,160
Speaker 1: you know, looking out eight ten years from now, that's

947
00:52:16,200 --> 00:52:19,880
Speaker 1: an extraordinary thing. You know, Birmingham could end up being

948
00:52:20,719 --> 00:52:26,520
Speaker 1: a location that folks visit for football matches, concerts, other

949
00:52:26,560 --> 00:52:29,360
Speaker 1: sporting events, you know, whether it's whether it's football or

950
00:52:29,440 --> 00:52:31,920
Speaker 1: rugby or what have you, motorsport. There could be a

951
00:52:31,920 --> 00:52:34,279
Speaker 1: whole series of things that could occur in Birmingham. And

952
00:52:34,360 --> 00:52:37,480
Speaker 1: quite frankly, if not Birmingham, then why anywhere else. It's

953
00:52:37,600 --> 00:52:40,160
Speaker 1: it will be so accessible to so many people, such

954
00:52:40,160 --> 00:52:44,000
Speaker 1: a huge percentage of the population that why not make

955
00:52:44,040 --> 00:52:45,040
Speaker 1: it a center for sport.

956
00:52:45,120 --> 00:52:48,000
Speaker 2: How many seats does the stadium hold and how far

957
00:52:48,040 --> 00:52:49,080
Speaker 2: can that be expanded?

958
00:52:49,120 --> 00:52:50,879
Speaker 1: It's about twenty nine thousands, so.

959
00:52:50,840 --> 00:52:52,600
Speaker 2: That's a real that's a substanti good.

960
00:52:52,400 --> 00:52:55,919
Speaker 1: Statu it's good size. I think, you know, we've got

961
00:52:55,920 --> 00:52:59,160
Speaker 1: to look at the infrastructure there and decide what's best

962
00:52:59,200 --> 00:53:01,960
Speaker 1: for the long term needs of the team and the community.

963
00:53:02,000 --> 00:53:05,480
Speaker 1: And so, you know, we're early days and so all

964
00:53:05,520 --> 00:53:07,640
Speaker 1: those things will be looked at. I think for us,

965
00:53:07,680 --> 00:53:11,640
Speaker 1: the immediate focus is let's make this more fun for

966
00:53:11,719 --> 00:53:12,160
Speaker 1: the fans.

967
00:53:12,560 --> 00:53:17,840
Speaker 2: You mentioned motorsports again relatively new breaking news. Ryan Reynolds

968
00:53:17,880 --> 00:53:22,120
Speaker 2: and Rob mcclhaney just bought twenty five stake in the

969
00:53:22,160 --> 00:53:27,880
Speaker 2: Alpine F one team. Tell us about motorsports any aspirations

970
00:53:27,880 --> 00:53:28,680
Speaker 2: in that area.

971
00:53:28,800 --> 00:53:32,279
Speaker 1: Well, we have an investment in motorsport. We own a

972
00:53:32,280 --> 00:53:36,879
Speaker 1: World Endurance Championship racing team. So endurance racing is think

973
00:53:37,640 --> 00:53:40,160
Speaker 1: twenty four hours of Lama, twenty four hours of Daytona.

974
00:53:41,160 --> 00:53:45,200
Speaker 1: We have the only private team in the the WEC

975
00:53:45,360 --> 00:53:49,200
Speaker 1: or World Endurance Championship race this season. That that is

976
00:53:49,560 --> 00:53:53,120
Speaker 1: a series that has run one race in the US

977
00:53:53,160 --> 00:53:57,920
Speaker 1: and a series throughout Europe, Middle East, in Asia, and

978
00:53:58,360 --> 00:54:01,040
Speaker 1: we're quite excited about it. You know, we'd endurance racing

979
00:54:01,920 --> 00:54:04,320
Speaker 1: used to be more popular than F one. If you

980
00:54:04,360 --> 00:54:07,399
Speaker 1: go back into the sixties and seventies and has has

981
00:54:07,440 --> 00:54:09,920
Speaker 1: re emerged with a new class of hyper cars that

982
00:54:09,920 --> 00:54:13,319
Speaker 1: were introduced, and you've got all these luxury brands getting

983
00:54:13,360 --> 00:54:16,600
Speaker 1: into it. So Porsche, which manufactures the car that we're racing,

984
00:54:16,719 --> 00:54:20,839
Speaker 1: and we're thrilled to the car. It's actually a nine

985
00:54:20,880 --> 00:54:23,319
Speaker 1: to sixty three, so it's a purpose built car for

986
00:54:23,400 --> 00:54:26,480
Speaker 1: endurance racing. It looks like an F one car with

987
00:54:26,560 --> 00:54:29,680
Speaker 1: an enclosure over the driver because they're in some cases

988
00:54:29,719 --> 00:54:32,200
Speaker 1: driving the team of drivers is driving for twenty four

989
00:54:32,239 --> 00:54:37,520
Speaker 1: hours in any weather condition. And so Porsches involved. We've

990
00:54:37,560 --> 00:54:42,399
Speaker 1: got Ferrari, Lamborghini's entering next year. BMW is entering next year,

991
00:54:42,520 --> 00:54:46,680
Speaker 1: Alpines coming in Cadillac, you know, has a very competitive

992
00:54:46,719 --> 00:54:49,200
Speaker 1: team Poujo. So there's if you look at all these

993
00:54:49,239 --> 00:54:53,600
Speaker 1: great manufacturers are getting back into endurance racing. It's really exciting.

994
00:54:54,080 --> 00:54:56,880
Speaker 1: We are tickled to be involved with it, and so

995
00:54:57,000 --> 00:55:01,960
Speaker 1: we've brought in some of our partners. Brand not surprisingly

996
00:55:02,040 --> 00:55:06,360
Speaker 1: is involved with the team. A couple of other companies

997
00:55:06,360 --> 00:55:10,239
Speaker 1: that were invested in, one being Singer Vehicle Design was

998
00:55:10,280 --> 00:55:12,920
Speaker 1: responsible for putting together the livery or the paint scheme

999
00:55:12,960 --> 00:55:15,439
Speaker 1: on the car. As a sponsor as well, so we're

1000
00:55:15,440 --> 00:55:18,560
Speaker 1: really excited about that. We're looking at other opportunities in

1001
00:55:18,640 --> 00:55:22,359
Speaker 1: motorsport or expanding our existing investment and trying to think

1002
00:55:22,400 --> 00:55:24,960
Speaker 1: about how it fits within the ecosystem of investments we

1003
00:55:25,000 --> 00:55:27,440
Speaker 1: have in the portfolio. Anything that we do in sport,

1004
00:55:27,520 --> 00:55:29,960
Speaker 1: we try to think about how does it fit within

1005
00:55:30,160 --> 00:55:35,080
Speaker 1: other investments in our longer term thesis around a given

1006
00:55:35,080 --> 00:55:35,840
Speaker 1: industry or sector.

1007
00:55:36,200 --> 00:55:40,080
Speaker 2: It's interesting you mentioned the older days of endurance racing.

1008
00:55:40,600 --> 00:55:44,359
Speaker 2: It really was launched as a way for companies to show, look,

1009
00:55:44,400 --> 00:55:47,120
Speaker 2: how solidly built and reliable our vehicles are, we can

1010
00:55:47,200 --> 00:55:50,239
Speaker 2: run them flat out. I was just watching something on

1011
00:55:50,280 --> 00:55:55,480
Speaker 2: the Millimiglia in Italy and I think it was it Sterling.

1012
00:55:56,840 --> 00:55:59,239
Speaker 2: I'm trying to remember who set the record over one

1013
00:55:59,239 --> 00:56:02,680
Speaker 2: thousand miles averaged one hundred miles per hour, which is

1014
00:56:02,680 --> 00:56:06,680
Speaker 2: insane because you're just going through towns and that record

1015
00:56:06,719 --> 00:56:09,480
Speaker 2: has has never been beat. But when you do that,

1016
00:56:09,680 --> 00:56:11,680
Speaker 2: and I think that was in a Mercedes back in

1017
00:56:11,719 --> 00:56:14,879
Speaker 2: the fifties or sixties, When you do that, hey, the

1018
00:56:14,920 --> 00:56:20,960
Speaker 2: brand's reputation for liability hard to top. I know Porsche

1019
00:56:21,000 --> 00:56:25,360
Speaker 2: put out this was it as a car racer, which

1020
00:56:25,400 --> 00:56:30,440
Speaker 2: is based on their actual racing vehicle, and then Lamborghini

1021
00:56:30,600 --> 00:56:32,480
Speaker 2: just took I think it's a hurricane that they turned

1022
00:56:32,520 --> 00:56:36,400
Speaker 2: into an off road vehicle, which looks looks ridiculous, And

1023
00:56:36,440 --> 00:56:40,320
Speaker 2: of course everything Singer touches is just gorgeous. So having

1024
00:56:40,360 --> 00:56:44,040
Speaker 2: them do the do the the paint and the interior

1025
00:56:44,160 --> 00:56:46,560
Speaker 2: is I'm sure that is going to be spectacular.

1026
00:56:46,800 --> 00:56:52,160
Speaker 1: No, it's it's it's an area where there's a distinct

1027
00:56:53,000 --> 00:56:56,160
Speaker 1: business case for the manufacturers to be involved in endurance racing.

1028
00:56:56,600 --> 00:56:59,600
Speaker 1: It does showcase exactly the things that you're that you're

1029
00:56:59,600 --> 00:57:02,520
Speaker 1: speaking to. You know, each of these manufacturers is going

1030
00:57:02,560 --> 00:57:05,239
Speaker 1: to develop a motor and a drive train. They're all

1031
00:57:05,320 --> 00:57:08,520
Speaker 1: hybrid cars, which which we love. But if you look

1032
00:57:08,520 --> 00:57:11,160
Speaker 1: at the Endurance Series, you know you've always had GT

1033
00:57:11,200 --> 00:57:13,839
Speaker 1: cars in there. Although I think for next year, because

1034
00:57:13,840 --> 00:57:16,000
Speaker 1: of the number of hypercars that will be in the class,

1035
00:57:16,320 --> 00:57:19,840
Speaker 1: race is like like LAMA won't have a GT race.

1036
00:57:19,920 --> 00:57:21,480
Speaker 1: At the same time, I think could just be too

1037
00:57:21,480 --> 00:57:24,680
Speaker 1: many of these supercars you know, in track to do that.

1038
00:57:24,760 --> 00:57:29,600
Speaker 1: But nonetheless, the expansion to include other luxury brands is

1039
00:57:29,640 --> 00:57:33,920
Speaker 1: really interesting and I have to say, having attended LAMA

1040
00:57:33,960 --> 00:57:37,920
Speaker 1: this year, it is an unbelievable event to have twenty

1041
00:57:37,920 --> 00:57:40,400
Speaker 1: four hour long race. You know, there's all kinds of

1042
00:57:40,440 --> 00:57:42,920
Speaker 1: things that happened. You know, you've you're always going to

1043
00:57:43,040 --> 00:57:46,480
Speaker 1: experience problems. It's a fascinating thing to watch.

1044
00:57:46,400 --> 00:57:50,440
Speaker 2: Really quite quite fascinating. So let's talk a little bit

1045
00:57:50,600 --> 00:57:56,480
Speaker 2: about distressed investing. Your firm runs private credit, commercial real estate,

1046
00:57:56,920 --> 00:58:01,080
Speaker 2: long short real estate, and ensure currants, as well as

1047
00:58:01,080 --> 00:58:04,960
Speaker 2: an asset management shop and some of the sports investing

1048
00:58:05,000 --> 00:58:10,160
Speaker 2: we've talked about previously. How to all these separate businesses

1049
00:58:10,520 --> 00:58:13,760
Speaker 2: and approaches. Do they work together or are they all

1050
00:58:13,760 --> 00:58:17,400
Speaker 2: separately siloed? What's the to use a dirty word, synergy

1051
00:58:17,720 --> 00:58:19,400
Speaker 2: between all these different divisions.

1052
00:58:19,560 --> 00:58:23,160
Speaker 1: I think at our core we're value investors, So we're

1053
00:58:23,160 --> 00:58:28,440
Speaker 1: looking for situations where we believe in virtually any scenario

1054
00:58:29,000 --> 00:58:34,920
Speaker 1: we have no or a very very low risk of impairment,

1055
00:58:35,280 --> 00:58:38,960
Speaker 1: meaning we won't lose money. That's the goal. And whether

1056
00:58:39,040 --> 00:58:43,120
Speaker 1: it's a turnaround situation or a private loan, or even

1057
00:58:43,120 --> 00:58:48,360
Speaker 1: a private equity situation or growth capital for a smaller company.

1058
00:58:48,440 --> 00:58:50,280
Speaker 1: In each of those situations, we're trying to structure the

1059
00:58:50,320 --> 00:58:53,400
Speaker 1: investment where we believe that if our thesis is wrong

1060
00:58:54,040 --> 00:58:57,160
Speaker 1: that we won't lose money. And the way that these

1061
00:58:57,200 --> 00:58:59,680
Speaker 1: all fit together is that the duration of capital that

1062
00:58:59,720 --> 00:59:02,720
Speaker 1: we make it is quite long. So the most of

1063
00:59:02,760 --> 00:59:07,080
Speaker 1: our capital is either permanent capital, meaning we are the

1064
00:59:07,120 --> 00:59:10,840
Speaker 1: manager of it forever, or it's very long dated in

1065
00:59:10,840 --> 00:59:13,439
Speaker 1: the case of a closed end fund, where we have five,

1066
00:59:13,560 --> 00:59:16,360
Speaker 1: seven or ten years to invest the capital, and that

1067
00:59:16,440 --> 00:59:20,240
Speaker 1: affords us an advantage versus a number of other firms,

1068
00:59:20,280 --> 00:59:22,440
Speaker 1: and that we can take a long term view, or

1069
00:59:22,440 --> 00:59:25,760
Speaker 1: we can make a commitment that requires a long term

1070
00:59:25,800 --> 00:59:28,480
Speaker 1: time horizon, and there's a lot of extra return to

1071
00:59:28,520 --> 00:59:31,280
Speaker 1: be had if you're willing to take a longer view.

1072
00:59:31,960 --> 00:59:34,600
Speaker 1: There's still a huge premium on liquidity in the market today,

1073
00:59:34,640 --> 00:59:37,560
Speaker 1: there has been since the Global financial crisis. I think

1074
00:59:37,920 --> 00:59:40,520
Speaker 1: the premium for ill liquidity today is as high as

1075
00:59:40,760 --> 00:59:43,160
Speaker 1: I've ever seen in my career. So I think in

1076
00:59:43,200 --> 00:59:48,920
Speaker 1: those investments the common thread is value. In our real

1077
00:59:49,040 --> 00:59:51,520
Speaker 1: estate lending business, that's a function of what we do

1078
00:59:51,560 --> 00:59:55,320
Speaker 1: on behalf of the insurance company that we manage assets for,

1079
00:59:55,360 --> 00:59:59,360
Speaker 1: which is a related entity. In real estate lending, that's

1080
00:59:59,440 --> 01:00:01,960
Speaker 1: all about avoiding loss. It's just super conservative.

1081
01:00:02,280 --> 01:00:05,840
Speaker 2: Let's talk about taking a long term view. In the

1082
01:00:05,840 --> 01:00:08,360
Speaker 2: middle of twenty twenty one, we're right in the middle

1083
01:00:08,360 --> 01:00:14,240
Speaker 2: of the pandemic COVID lockdown, travel and tourism just collapse.

1084
01:00:14,920 --> 01:00:17,200
Speaker 2: You guys say, hey, I know we should do. Let's

1085
01:00:17,240 --> 01:00:21,600
Speaker 2: launch a billion and a half dollar fund, distressed travel

1086
01:00:21,800 --> 01:00:26,080
Speaker 2: and tourism fund with with people at Sataris Management. Tell

1087
01:00:26,160 --> 01:00:29,080
Speaker 2: us a little bit about the c K Opportunities Fund.

1088
01:00:29,240 --> 01:00:32,840
Speaker 1: You know, the thought process there on that fund, which

1089
01:00:32,920 --> 01:00:36,920
Speaker 1: is you know closed now, was to raise money to

1090
01:00:36,960 --> 01:00:41,640
Speaker 1: pursue opportunities in travel, leisure, and hospitality.

1091
01:00:42,040 --> 01:00:45,480
Speaker 2: All of which, by the way, have come back gangbusters.

1092
01:00:45,640 --> 01:00:48,320
Speaker 1: Most yes, most of it has a business travel still

1093
01:00:48,400 --> 01:00:53,520
Speaker 1: lagging pretty significantly, but certainly personal travel is up dramatically,

1094
01:00:54,720 --> 01:00:57,960
Speaker 1: you know, even Visa v twenty nineteen. And the thesis was,

1095
01:00:58,600 --> 01:01:00,560
Speaker 1: you know, this isn't a permanent thing that we were

1096
01:01:00,560 --> 01:01:03,200
Speaker 1: experiencing in twenty twenty would be temporary. The challenge was

1097
01:01:03,480 --> 01:01:07,040
Speaker 1: going out and raising capital with two asset managers that

1098
01:01:07,080 --> 01:01:10,720
Speaker 1: hadn't worked together before, and doing that capital raise entirely

1099
01:01:11,040 --> 01:01:15,000
Speaker 1: over Zoom. That was new, but we did. I don't

1100
01:01:15,040 --> 01:01:18,120
Speaker 1: think we had more than one or two in person

1101
01:01:18,160 --> 01:01:20,600
Speaker 1: meetings for that capital raise. So it was a very

1102
01:01:20,600 --> 01:01:21,360
Speaker 1: interesting time.

1103
01:01:22,360 --> 01:01:24,600
Speaker 2: Did people say, Tom, what the hell are you doing?

1104
01:01:24,640 --> 01:01:28,240
Speaker 2: You're nuts these businesses are or did people get it right.

1105
01:01:28,120 --> 01:01:30,400
Speaker 1: Away now they said, you know, how do you know

1106
01:01:30,400 --> 01:01:33,000
Speaker 1: it won't get worse? And if it does get worse,

1107
01:01:33,080 --> 01:01:36,040
Speaker 1: you know, we lose money. I think everyone sort of

1108
01:01:36,080 --> 01:01:41,640
Speaker 1: acknowledged that if travel was dead forever, we had much

1109
01:01:41,680 --> 01:01:42,360
Speaker 1: bigger problems.

1110
01:01:42,440 --> 01:01:42,680
Speaker 2: Yeah.

1111
01:01:42,800 --> 01:01:45,680
Speaker 1: Right, And so the general view was, if I'm going

1112
01:01:45,720 --> 01:01:47,040
Speaker 1: to take a risk, I may as well take it

1113
01:01:47,040 --> 01:01:49,040
Speaker 1: in an area that is more likely than not to rebound.

1114
01:01:49,080 --> 01:01:51,400
Speaker 1: And so what was in common on us is finding

1115
01:01:51,440 --> 01:01:53,640
Speaker 1: the opportunities where we could say with a straight face,

1116
01:01:53,680 --> 01:01:55,240
Speaker 1: we don't think we can lose money. We think we

1117
01:01:55,280 --> 01:01:57,840
Speaker 1: have a lot of upside, and so that's what we

1118
01:01:58,200 --> 01:01:59,520
Speaker 1: endeavored to pursue.

1119
01:01:59,600 --> 01:02:01,760
Speaker 2: So it's all only been two years. Is this a

1120
01:02:01,800 --> 01:02:03,360
Speaker 2: seven year fund or a five year fund?

1121
01:02:03,440 --> 01:02:05,680
Speaker 1: Well, the goal is to is to have you know,

1122
01:02:05,720 --> 01:02:09,439
Speaker 1: begin returning capital in kind of use years two and three,

1123
01:02:09,520 --> 01:02:12,680
Speaker 1: and ultimately have the average duration of that fund between

1124
01:02:12,680 --> 01:02:16,880
Speaker 1: three and five years. So some of us, some investments

1125
01:02:16,880 --> 01:02:20,120
Speaker 1: will ultimately go a bit longer, some will hopefully pay

1126
01:02:20,120 --> 01:02:23,320
Speaker 1: out more quickly, but with the average sort of in

1127
01:02:23,360 --> 01:02:25,680
Speaker 1: that you know, mid single digit zip code or less.

1128
01:02:25,800 --> 01:02:28,800
Speaker 2: So two years post launch, how's it going.

1129
01:02:29,160 --> 01:02:32,400
Speaker 1: It's it's it's gone very well. Our returns have been

1130
01:02:32,640 --> 01:02:35,920
Speaker 1: well above what we had you know, what we had

1131
01:02:35,920 --> 01:02:39,000
Speaker 1: targeted when we when we spoke with r LPs about it,

1132
01:02:39,040 --> 01:02:42,200
Speaker 1: and so we're excited. We love the portfolio, We love

1133
01:02:42,240 --> 01:02:45,640
Speaker 1: the forward on the portfolio, very very constructive on each

1134
01:02:45,680 --> 01:02:48,080
Speaker 1: of the names and in the portfolio. I don't really regret,

1135
01:02:48,520 --> 01:02:51,280
Speaker 1: you know, any of the investments. I think we'll have

1136
01:02:51,360 --> 01:02:53,280
Speaker 1: some that are better than others. But you know, we're

1137
01:02:53,320 --> 01:02:54,240
Speaker 1: we're quite excited about it.

1138
01:02:54,480 --> 01:03:00,120
Speaker 2: Let's talk about another sort of contrarian distressed investing play.

1139
01:03:00,160 --> 01:03:05,440
Speaker 2: Had this horrific and infamous California fire called the Campfire.

1140
01:03:06,880 --> 01:03:10,840
Speaker 2: Soon after PG and E, the giant power provider there,

1141
01:03:11,320 --> 01:03:15,400
Speaker 2: ends up filing for bankruptcy. They were blamed as one

1142
01:03:15,440 --> 01:03:19,640
Speaker 2: of the possible causes of the wildfire. Who looks at

1143
01:03:19,680 --> 01:03:23,080
Speaker 2: that and says, hey, this is an amazing opportunity. The biggest,

1144
01:03:23,320 --> 01:03:26,600
Speaker 2: one of the biggest power producers in the country has

1145
01:03:26,600 --> 01:03:28,960
Speaker 2: gone belly up. How do I get me some of that?

1146
01:03:29,520 --> 01:03:33,200
Speaker 2: And did you look at that from the bonds pre

1147
01:03:33,280 --> 01:03:35,600
Speaker 2: bankruptcy or equity post bankruptcy.

1148
01:03:35,600 --> 01:03:39,000
Speaker 1: We looked at it as at the equity little bit

1149
01:03:39,040 --> 01:03:43,240
Speaker 1: pre bankruptcy, and then grew our position following the bankruptcy.

1150
01:03:43,760 --> 01:03:46,440
Speaker 1: And the thesis was that there would be a way

1151
01:03:46,560 --> 01:03:52,959
Speaker 1: to ensure that the victims received fair compensation but still

1152
01:03:53,000 --> 01:03:57,920
Speaker 1: allowed for the equity to have some upside. And you know,

1153
01:03:57,960 --> 01:04:02,960
Speaker 1: the thesis was, let's let's strike deal with the victims attorneys,

1154
01:04:03,000 --> 01:04:07,360
Speaker 1: and let's strike deals with the regulators and the government,

1155
01:04:07,360 --> 01:04:09,880
Speaker 1: and strike deals with the bondholders and move the company

1156
01:04:09,880 --> 01:04:14,000
Speaker 1: through bankruptcy. So very very contentious negotiation, I can imagine,

1157
01:04:14,400 --> 01:04:17,920
Speaker 1: and particularly given that it moved into the spring of

1158
01:04:17,920 --> 01:04:20,160
Speaker 1: twenty twenty, so we were, you know, we were trying

1159
01:04:20,160 --> 01:04:22,520
Speaker 1: to get that restructuring done in the depths of COVID.

1160
01:04:23,040 --> 01:04:24,840
Speaker 1: It ultimately worked, It was a it was a good

1161
01:04:24,840 --> 01:04:27,800
Speaker 1: investment for us where you know, we monetized that and

1162
01:04:28,320 --> 01:04:31,600
Speaker 1: redeployed the capital elsewhere. You know, our goal was in

1163
01:04:31,640 --> 01:04:34,240
Speaker 1: that case to sort of fix what we could fix

1164
01:04:34,280 --> 01:04:37,160
Speaker 1: and then and then move on. And so I think,

1165
01:04:37,280 --> 01:04:41,040
Speaker 1: you know, we're quite proud of of the work that

1166
01:04:41,120 --> 01:04:44,240
Speaker 1: went into that and ultimately think that you know, each

1167
01:04:44,280 --> 01:04:47,160
Speaker 1: of the stakeholder groups came away satisfied, or at least

1168
01:04:47,200 --> 01:04:49,080
Speaker 1: that's what they represented to us.

1169
01:04:49,480 --> 01:04:55,480
Speaker 2: Let's talk about another investment that you referenced earlier. Hurts,

1170
01:04:55,520 --> 01:04:59,840
Speaker 2: a former Fortune five hundred company files for bankruptcy pretty

1171
01:05:00,040 --> 01:05:04,439
Speaker 2: early in the pandemic May twenty twenty. Subsequently, they sell

1172
01:05:04,480 --> 01:05:07,080
Speaker 2: off their fleet to cars because we're just not getting

1173
01:05:07,120 --> 01:05:11,680
Speaker 2: new cars. What made you think, oh, this dumpster fire

1174
01:05:11,880 --> 01:05:13,000
Speaker 2: is a great opportunity.

1175
01:05:13,440 --> 01:05:18,040
Speaker 1: Yeah, that one was really predicated on three key tenants.

1176
01:05:18,120 --> 01:05:20,600
Speaker 1: One was that there was an opportunity to electrify a

1177
01:05:20,600 --> 01:05:23,560
Speaker 1: big chunk of the fleet, which required us, you know,

1178
01:05:23,600 --> 01:05:26,440
Speaker 1: cutting deals with major OEMs to get access to that supply.

1179
01:05:27,080 --> 01:05:31,400
Speaker 1: The second was in pursuing a new, if you will,

1180
01:05:31,800 --> 01:05:35,400
Speaker 1: line of business for the company in providing cars to

1181
01:05:36,560 --> 01:05:39,440
Speaker 1: ride hail drivers. And then the third would be a

1182
01:05:39,480 --> 01:05:42,040
Speaker 1: more effective way of disposing of the vehicles when you

1183
01:05:42,080 --> 01:05:44,040
Speaker 1: come to the end of their life, and that required

1184
01:05:44,080 --> 01:05:47,240
Speaker 1: cutting a deal with Carvana. All of those initiatives are

1185
01:05:47,240 --> 01:05:49,880
Speaker 1: well underway. We're really happy with all of them. Our partners,

1186
01:05:50,200 --> 01:05:55,440
Speaker 1: you know, in Carvana and Uber, Tesla, GM, Pollstar are

1187
01:05:55,480 --> 01:05:59,000
Speaker 1: all going really really well, and we have a great

1188
01:05:59,080 --> 01:06:02,120
Speaker 1: leadership team that's Steven Share is running. That's doing an

1189
01:06:02,120 --> 01:06:06,200
Speaker 1: exceptional job and in prosecuting that business plan, and so

1190
01:06:06,520 --> 01:06:10,280
Speaker 1: you know that was really predicated on those three core tenants.

1191
01:06:10,320 --> 01:06:13,440
Speaker 1: Now what happened was a bit of luck, and the

1192
01:06:13,520 --> 01:06:16,960
Speaker 1: luck was that we had a massive chip shortage and

1193
01:06:17,000 --> 01:06:20,320
Speaker 1: so the price the new cars became unavailable, use cars

1194
01:06:20,480 --> 01:06:23,840
Speaker 1: rocketed up in values, so we over earned for a

1195
01:06:23,840 --> 01:06:26,800
Speaker 1: period of a couple of years, really were able to

1196
01:06:26,880 --> 01:06:29,800
Speaker 1: de risk the investment. So the you know, our this

1197
01:06:29,920 --> 01:06:33,120
Speaker 1: is all public. Our our ownership of the company immediately

1198
01:06:33,160 --> 01:06:36,680
Speaker 1: following the ip I was about thirty seven percent. We

1199
01:06:36,680 --> 01:06:40,480
Speaker 1: we announced a large buyback and and you know today

1200
01:06:40,520 --> 01:06:43,200
Speaker 1: our ownership stands in the in the high fifties percent

1201
01:06:43,240 --> 01:06:47,720
Speaker 1: if I remember correctly. So you know, that's that's a

1202
01:06:47,880 --> 01:06:50,000
Speaker 1: you know, an ability where we didn't you know, we

1203
01:06:50,040 --> 01:06:52,280
Speaker 1: didn't have to put new dollars to work. We were

1204
01:06:52,320 --> 01:06:56,320
Speaker 1: simply reinvesting the cash flow of the company, and all

1205
01:06:56,360 --> 01:06:59,120
Speaker 1: all shareholders that held you know, have benefited by owning

1206
01:06:59,120 --> 01:07:01,800
Speaker 1: a larger percentage the company without having to put any

1207
01:07:01,840 --> 01:07:04,880
Speaker 1: more capital to work. So you know, I think, you know,

1208
01:07:04,920 --> 01:07:08,200
Speaker 1: we're really pleased about the forward on that one. We're

1209
01:07:08,240 --> 01:07:11,040
Speaker 1: excited about the prospects of the business to continue growing

1210
01:07:11,400 --> 01:07:14,480
Speaker 1: and these new lines of business and ultimately I think

1211
01:07:14,520 --> 01:07:15,680
Speaker 1: it will pay enormous dividends.

1212
01:07:15,880 --> 01:07:18,240
Speaker 2: Let me talk about a space that is a little

1213
01:07:18,280 --> 01:07:22,120
Speaker 2: off the beaten path for you guys, long short, evergreen

1214
01:07:22,160 --> 01:07:26,520
Speaker 2: fund that just seems so separate and different from what

1215
01:07:26,560 --> 01:07:30,200
Speaker 2: you guys have done with distressed assets.

1216
01:07:30,640 --> 01:07:33,800
Speaker 1: Yeah, you know, our legacy hedge fund is a long

1217
01:07:33,840 --> 01:07:38,560
Speaker 1: short vehicle. It's hedged. The rationale there is that not

1218
01:07:38,680 --> 01:07:42,760
Speaker 1: every investor wants a long only set of assets that

1219
01:07:42,840 --> 01:07:45,400
Speaker 1: has more volatility and down markets. So the hedge fund

1220
01:07:45,440 --> 01:07:47,360
Speaker 1: has less volatility, but obviously you have a cost of

1221
01:07:47,400 --> 01:07:51,000
Speaker 1: hedging associated with it, and there are certain investors for

1222
01:07:51,040 --> 01:07:54,320
Speaker 1: whom that is exactly the right product. And so it's

1223
01:07:54,400 --> 01:07:57,120
Speaker 1: a part of the business that we will always pursue

1224
01:07:57,160 --> 01:07:59,680
Speaker 1: because we can still do some of the some of

1225
01:07:59,680 --> 01:08:01,800
Speaker 1: the same things on the event and alongside that we

1226
01:08:01,880 --> 01:08:04,200
Speaker 1: do in our and our closed end funds and our

1227
01:08:04,200 --> 01:08:07,280
Speaker 1: permanent capitol vehicles, but on a more hedge basis.

1228
01:08:07,560 --> 01:08:11,160
Speaker 2: Huh really quite quite fascinating. So first, you know, we

1229
01:08:11,240 --> 01:08:13,880
Speaker 2: talked a little bit about you being a CPA at

1230
01:08:13,960 --> 01:08:17,320
Speaker 2: Ernst and Young in Massachusetts, but I also noticed you

1231
01:08:17,360 --> 01:08:20,040
Speaker 2: were a CPA at one of my favorite places in

1232
01:08:20,080 --> 01:08:24,400
Speaker 2: the world, the Cayman Islands. Was that just to service

1233
01:08:24,479 --> 01:08:26,920
Speaker 2: offshore hedge funds? Or how did that come about?

1234
01:08:27,160 --> 01:08:30,640
Speaker 1: It's a it's a kind of a funny story. I was.

1235
01:08:30,800 --> 01:08:33,599
Speaker 1: I was based out of the Boston office working for

1236
01:08:33,600 --> 01:08:36,839
Speaker 1: Instant Young and I came to New York. I shouldn't

1237
01:08:36,840 --> 01:08:38,840
Speaker 1: say it can New York. I was. I was asked

1238
01:08:38,920 --> 01:08:41,599
Speaker 1: quote unquote meaning I was told to come to New York,

1239
01:08:41,640 --> 01:08:44,240
Speaker 1: go to New York work on a project there. And

1240
01:08:44,640 --> 01:08:46,880
Speaker 1: that project was at an investment bank and taking a

1241
01:08:46,920 --> 01:08:51,200
Speaker 1: look at their internal controls around derivative products. And what

1242
01:08:51,280 --> 01:08:54,360
Speaker 1: you was this around was this would have been ninety four,

1243
01:08:54,520 --> 01:08:55,920
Speaker 1: ninety five, and that's.

1244
01:08:55,720 --> 01:08:59,360
Speaker 2: It, So derivative products there still were exits it back.

1245
01:08:59,240 --> 01:09:02,800
Speaker 1: In the exactly early days. And I had had some

1246
01:09:02,880 --> 01:09:06,320
Speaker 1: experience in valuing derivative contracts on an earlier project I

1247
01:09:06,400 --> 01:09:11,200
Speaker 1: worked on. So I was sort of a unique individual

1248
01:09:11,200 --> 01:09:12,880
Speaker 1: in the sense that I was a CPA who had

1249
01:09:12,920 --> 01:09:15,280
Speaker 1: some of that experience back then. And so I came

1250
01:09:15,320 --> 01:09:17,479
Speaker 1: to New York and it was my first exposure to

1251
01:09:17,880 --> 01:09:21,200
Speaker 1: investment banks and trading floor. And I walked on to

1252
01:09:21,880 --> 01:09:24,120
Speaker 1: the trading floor and I was like, I don't even

1253
01:09:24,120 --> 01:09:25,920
Speaker 1: know what's going on either, but I have to do this.

1254
01:09:26,400 --> 01:09:29,280
Speaker 1: And I remember walking back down to the room where

1255
01:09:29,280 --> 01:09:32,080
Speaker 1: all the consultants and accounts were and I said, what

1256
01:09:32,160 --> 01:09:35,559
Speaker 1: exactly doing up there? And guy explained, you know, sales trading,

1257
01:09:35,600 --> 01:09:37,160
Speaker 1: and I said, I need to be a trader, That's

1258
01:09:37,200 --> 01:09:38,840
Speaker 1: what I got to do. And the guy literally burst

1259
01:09:38,880 --> 01:09:40,920
Speaker 1: out laughing. Right, He's like, you're never going to be

1260
01:09:40,960 --> 01:09:43,479
Speaker 1: a trader on he said, your background's all wrong. You're

1261
01:09:43,479 --> 01:09:45,840
Speaker 1: a CPA. You know, you didn't go to the right

1262
01:09:45,840 --> 01:09:47,799
Speaker 1: Ivy League school. You didn't go to an Ivy League school.

1263
01:09:48,240 --> 01:09:50,519
Speaker 1: And so I met up with a friend and said,

1264
01:09:50,520 --> 01:09:52,840
Speaker 1: how do I become a trader? And this person was

1265
01:09:53,160 --> 01:09:55,280
Speaker 1: doing recruiting at one of the big banks, and she's like, well,

1266
01:09:55,280 --> 01:09:57,640
Speaker 1: you need some interesting experience. You got to get into

1267
01:09:57,680 --> 01:09:59,040
Speaker 1: a top business school and then you got to do

1268
01:09:59,080 --> 01:10:01,360
Speaker 1: an internship and then you can be a trader. And

1269
01:10:01,400 --> 01:10:02,880
Speaker 1: so I'm like, oh my gosh, that's gonna take like

1270
01:10:02,880 --> 01:10:06,160
Speaker 1: five years. Okay, I'm going to do that. So I

1271
01:10:06,280 --> 01:10:08,800
Speaker 1: endeavored to, you know, find the right opportunity. So I'm

1272
01:10:08,840 --> 01:10:11,120
Speaker 1: looking around. I can't really find anything, but I meet

1273
01:10:11,160 --> 01:10:12,880
Speaker 1: a guy in this project who is from our Cayman

1274
01:10:12,920 --> 01:10:15,879
Speaker 1: Island's office. So I go back, you know, to Boston.

1275
01:10:15,920 --> 01:10:17,880
Speaker 1: I'm working in the office and I'll never forget this.

1276
01:10:18,000 --> 01:10:21,160
Speaker 1: I'm I'm at my parents' house with their closest friends

1277
01:10:21,160 --> 01:10:23,280
Speaker 1: on a Sunday afternoon, and I'm kind of bummed out

1278
01:10:23,920 --> 01:10:25,840
Speaker 1: and my dad's best friend looks at me and he goes,

1279
01:10:25,840 --> 01:10:29,080
Speaker 1: what's problem And I said, well, I'm unhappy with everything

1280
01:10:29,520 --> 01:10:33,080
Speaker 1: in my life right now, like everything sucks. And he's like, well,

1281
01:10:33,160 --> 01:10:35,519
Speaker 1: what do you want? And I'm like, ah, I can't happen.

1282
01:10:35,600 --> 01:10:37,160
Speaker 1: He's like, no, you have to be able to say it.

1283
01:10:37,200 --> 01:10:38,720
Speaker 1: What do you want? I said, Okay, want to know

1284
01:10:38,720 --> 01:10:40,639
Speaker 1: what I want. I want to make this much money

1285
01:10:40,800 --> 01:10:43,400
Speaker 1: X dollars, I want to live on the beach. I

1286
01:10:43,439 --> 01:10:44,840
Speaker 1: want to own a boat, and I want to be

1287
01:10:44,880 --> 01:10:46,479
Speaker 1: able to drive a jeep to work every day. That's

1288
01:10:46,479 --> 01:10:48,760
Speaker 1: what I want, okay. And I was like, you know,

1289
01:10:48,800 --> 01:10:51,200
Speaker 1: being the smartass and young man, and I thought, like,

1290
01:10:51,280 --> 01:10:53,640
Speaker 1: you know, there, I kind of told him, and so

1291
01:10:53,720 --> 01:10:55,680
Speaker 1: he just looked at me and didn't say anything, and

1292
01:10:55,720 --> 01:10:58,360
Speaker 1: he goes, well, he goes, that door will be it

1293
01:10:58,479 --> 01:11:02,040
Speaker 1: will be open or presented to you because the question

1294
01:11:02,160 --> 01:11:03,439
Speaker 1: is do you have the guts to open it?

1295
01:11:03,720 --> 01:11:04,080
Speaker 2: Wow?

1296
01:11:04,640 --> 01:11:06,880
Speaker 1: And so I was like, what is he talking about? Right?

1297
01:11:07,000 --> 01:11:10,160
Speaker 1: And so six months later, the opportunity arose to go

1298
01:11:10,200 --> 01:11:11,760
Speaker 1: to work in the Cayman Islands. And this is pre

1299
01:11:11,840 --> 01:11:13,479
Speaker 1: internet days, so I had to go down to the

1300
01:11:13,520 --> 01:11:16,439
Speaker 1: local travel agent and pick up brochures that came in

1301
01:11:16,439 --> 01:11:18,360
Speaker 1: out it just so I have some idea of where

1302
01:11:18,400 --> 01:11:21,439
Speaker 1: it was, what it looked like sight unseen. I grabbed

1303
01:11:21,439 --> 01:11:24,120
Speaker 1: my bags and I literally moved there. And within a

1304
01:11:24,160 --> 01:11:26,000
Speaker 1: month of getting there, I had bought a jeep to

1305
01:11:26,040 --> 01:11:27,640
Speaker 1: drive to work. I bought a little boat to me

1306
01:11:27,680 --> 01:11:30,639
Speaker 1: no no top ye except in the summer it rained

1307
01:11:30,640 --> 01:11:32,439
Speaker 1: all the time. You know, I lived on the beach

1308
01:11:32,479 --> 01:11:34,439
Speaker 1: and I and I had a job that was paying me.

1309
01:11:34,640 --> 01:11:36,920
Speaker 1: You know, what I felt was my you know that

1310
01:11:37,000 --> 01:11:40,000
Speaker 1: my target pay back when I was a kid, and

1311
01:11:40,000 --> 01:11:42,719
Speaker 1: and had I not done that, it wouldn't have led

1312
01:11:42,760 --> 01:11:45,479
Speaker 1: to me getting the unique experience that ultimately allowed me

1313
01:11:45,520 --> 01:11:47,720
Speaker 1: to get into Columbia Business School. And so it was

1314
01:11:47,720 --> 01:11:50,840
Speaker 1: a life changing moment. But you know, my my dad's

1315
01:11:50,880 --> 01:11:53,320
Speaker 1: friend was was exactly right, like that was not an

1316
01:11:53,360 --> 01:11:55,240
Speaker 1: easy door to open because I had to take a

1317
01:11:55,320 --> 01:11:58,400
Speaker 1: leap of faith that was pretty extraordinary back in that time.

1318
01:11:58,439 --> 01:12:01,240
Speaker 1: Yet I didn't. I literally had no idea. There was

1319
01:12:01,280 --> 01:12:03,280
Speaker 1: no ability to go on and look at trip Advisor

1320
01:12:03,320 --> 01:12:05,479
Speaker 1: and see, you know where the restaurants were. I had

1321
01:12:05,479 --> 01:12:06,680
Speaker 1: to go down their site on scene. I had a

1322
01:12:06,680 --> 01:12:08,760
Speaker 1: couple of phone calls with folks that work down there,

1323
01:12:09,200 --> 01:12:12,200
Speaker 1: and so it was a life changing set of experiences

1324
01:12:12,200 --> 01:12:13,040
Speaker 1: for many reasons.

1325
01:12:13,520 --> 01:12:16,639
Speaker 2: I got so many questions for you. So first, if

1326
01:12:16,680 --> 01:12:20,360
Speaker 2: you didn't have that conversation with your dad's friends when

1327
01:12:20,400 --> 01:12:23,559
Speaker 2: the opportunity came along, might it have passed you by?

1328
01:12:23,760 --> 01:12:26,640
Speaker 2: Or did his words resonate over your head and you

1329
01:12:26,800 --> 01:12:29,000
Speaker 2: just jumped at it because of that they resonated.

1330
01:12:29,040 --> 01:12:31,240
Speaker 1: I mean, you know, I think in life, you know,

1331
01:12:31,280 --> 01:12:33,840
Speaker 1: when I when I look at those key experiences, like

1332
01:12:33,920 --> 01:12:37,680
Speaker 1: you know, we spoke earlier about my dad and the

1333
01:12:37,760 --> 01:12:39,719
Speaker 1: question he asked me when I started my hedge fund,

1334
01:12:39,800 --> 01:12:42,000
Speaker 1: or my dad's friend when he when he challenged me

1335
01:12:42,040 --> 01:12:44,519
Speaker 1: to take the opportunity when it presented himself and he

1336
01:12:44,560 --> 01:12:46,559
Speaker 1: had no idea what would be presented to me, nor

1337
01:12:46,600 --> 01:12:48,960
Speaker 1: did I at that time, or or looking at my

1338
01:12:49,080 --> 01:12:53,040
Speaker 1: uncle and his success in accounting. You know, those are

1339
01:12:53,439 --> 01:12:56,680
Speaker 1: all small but incredibly important things in the sense that

1340
01:12:56,760 --> 01:13:00,920
Speaker 1: they position you for success. Now, the question every young

1341
01:13:00,960 --> 01:13:02,800
Speaker 1: person or person starting out has to ask is are

1342
01:13:02,800 --> 01:13:05,040
Speaker 1: you willing to do what it takes? Then when you're

1343
01:13:05,080 --> 01:13:07,719
Speaker 1: when you're you know, you set the path in motion

1344
01:13:08,240 --> 01:13:11,360
Speaker 1: that the easy part is taken the first step. The

1345
01:13:11,400 --> 01:13:13,280
Speaker 1: hard part is taking the steps in the middle of

1346
01:13:13,320 --> 01:13:16,040
Speaker 1: the night, when you're up late working you haven't you know,

1347
01:13:16,200 --> 01:13:18,880
Speaker 1: you haven't slept in two days and you're working on

1348
01:13:18,920 --> 01:13:20,439
Speaker 1: a big project because you're trying to make a name

1349
01:13:20,479 --> 01:13:22,760
Speaker 1: for yourself. Or the things that no one likes to

1350
01:13:22,800 --> 01:13:26,840
Speaker 1: talk about, the miss golf trips with friends, the forgiven vacations,

1351
01:13:26,880 --> 01:13:30,120
Speaker 1: the canceled trips you know, the missed birthday party for

1352
01:13:30,200 --> 01:13:35,400
Speaker 1: a kid. You know, those are all the little, uh

1353
01:13:35,640 --> 01:13:39,200
Speaker 1: sacrifices we make to achieve some level of success. I

1354
01:13:39,200 --> 01:13:42,960
Speaker 1: think the goal is to minimize those things, or or

1355
01:13:43,000 --> 01:13:46,400
Speaker 1: to focus your sacrifices in areas that aren't really that important.

1356
01:13:46,720 --> 01:13:50,040
Speaker 2: So let me push back a little bit on your

1357
01:13:50,720 --> 01:13:55,200
Speaker 2: characterization of your father's friend as a small thing that

1358
01:13:55,360 --> 01:14:00,679
Speaker 2: was a giant attitude shift, that was a philosophical Well, hey,

1359
01:14:00,760 --> 01:14:03,080
Speaker 2: there are opportunities in life that come along and you

1360
01:14:03,120 --> 01:14:06,240
Speaker 2: have to grab the ring when it presents itself and

1361
01:14:06,280 --> 01:14:09,200
Speaker 2: not sort of sit back and say, well, I'll wait

1362
01:14:09,240 --> 01:14:11,559
Speaker 2: for the next train to come home along. That's a

1363
01:14:11,680 --> 01:14:13,240
Speaker 2: huge philosophical change.

1364
01:14:13,320 --> 01:14:16,759
Speaker 1: It was a small moment in time and a huge

1365
01:14:17,520 --> 01:14:21,640
Speaker 1: shift in the course of my life. And you know,

1366
01:14:21,720 --> 01:14:25,880
Speaker 1: I think I was always very motivated to work. I

1367
01:14:25,920 --> 01:14:28,360
Speaker 1: was not always very motivated to study or do homework,

1368
01:14:29,400 --> 01:14:31,080
Speaker 1: but I really like to work. And I worked a

1369
01:14:31,160 --> 01:14:33,320
Speaker 1: lot in high school. I worked a lot in college.

1370
01:14:33,360 --> 01:14:36,200
Speaker 1: I worked a lot after college and business school. I liked,

1371
01:14:36,320 --> 01:14:39,439
Speaker 1: you know, working. I liked making money because it afforded

1372
01:14:39,479 --> 01:14:43,320
Speaker 1: me freedoms that I didn't otherwise have. And so what

1373
01:14:43,479 --> 01:14:47,040
Speaker 1: that question did was caused me to think to myself

1374
01:14:47,080 --> 01:14:50,800
Speaker 1: about what risks I would have to take to get

1375
01:14:50,840 --> 01:14:52,519
Speaker 1: to where I wanted to be. And it was a

1376
01:14:52,640 --> 01:14:56,040
Speaker 1: very important lesson that ultimately resonated when it was time

1377
01:14:56,080 --> 01:14:57,719
Speaker 1: for me to think about starting my own business.

1378
01:14:58,120 --> 01:15:01,160
Speaker 2: So you were in the cane means in the mid

1379
01:15:01,240 --> 01:15:02,599
Speaker 2: nineties for for how long.

1380
01:15:02,520 --> 01:15:06,880
Speaker 1: Will you there? Two years? And I would say that

1381
01:15:06,960 --> 01:15:10,880
Speaker 1: it sounds better and more exciting and in practice, you know,

1382
01:15:10,960 --> 01:15:13,000
Speaker 1: in in theory than it is in practice.

1383
01:15:13,520 --> 01:15:15,360
Speaker 2: Come on, is it is there a better burger in

1384
01:15:15,400 --> 01:15:16,960
Speaker 2: the world than the Sunshine Grill.

1385
01:15:17,960 --> 01:15:20,519
Speaker 1: No, there are some pretty spectacular places to go in there,

1386
01:15:20,760 --> 01:15:22,880
Speaker 1: and it was it was enormous fun. You know, you

1387
01:15:22,920 --> 01:15:25,080
Speaker 1: have to kind of settle into whatever routine is best

1388
01:15:25,080 --> 01:15:27,880
Speaker 1: for you. I was, you know that, I you know,

1389
01:15:27,960 --> 01:15:29,479
Speaker 1: you can only kind of go out every night in

1390
01:15:29,479 --> 01:15:32,200
Speaker 1: the week for for so long. And you know, some people,

1391
01:15:32,200 --> 01:15:34,200
Speaker 1: I guess can do that forever. I was not wanted.

1392
01:15:34,000 --> 01:15:37,040
Speaker 2: Nobody can do it, but eventually, eventually, right.

1393
01:15:37,120 --> 01:15:39,400
Speaker 1: Yeah, but I I got really into scuba diving, I

1394
01:15:39,439 --> 01:15:42,680
Speaker 1: got I got really into martial arts, and those were

1395
01:15:42,760 --> 01:15:46,280
Speaker 1: things that helped me, you know, create some balance in

1396
01:15:46,280 --> 01:15:49,320
Speaker 1: my life at that time. I haven't. You know, those

1397
01:15:49,320 --> 01:15:51,720
Speaker 1: are things that I that I don't still participate in

1398
01:15:51,760 --> 01:15:54,360
Speaker 1: today for a variety of reasons. You know, showing up

1399
01:15:54,400 --> 01:15:56,760
Speaker 1: to work with cracked ribs is not super comfortable. But

1400
01:15:57,080 --> 01:16:00,240
Speaker 1: you know, I think the you know, the the ability

1401
01:16:00,280 --> 01:16:02,799
Speaker 1: to to branch out and experience and try new things

1402
01:16:03,280 --> 01:16:05,880
Speaker 1: in any doesn't matter where you live, those are great

1403
01:16:05,880 --> 01:16:08,360
Speaker 1: things to do. And living in a place that is

1404
01:16:08,479 --> 01:16:11,360
Speaker 1: very culturally different than what you experienced and I was

1405
01:16:11,840 --> 01:16:15,160
Speaker 1: definitively a minority in every way. There were very few

1406
01:16:15,160 --> 01:16:15,800
Speaker 1: Americans there.

1407
01:16:15,800 --> 01:16:17,360
Speaker 2: A lot of Canadians, tons.

1408
01:16:17,080 --> 01:16:19,880
Speaker 1: Of Canadians, lots of lots of you know Brits, right,

1409
01:16:19,960 --> 01:16:21,320
Speaker 1: so you know meaning.

1410
01:16:21,880 --> 01:16:25,320
Speaker 2: I mean it's a British territory. I think it's independent,

1411
01:16:25,600 --> 01:16:27,520
Speaker 2: but there are photos of the Queen.

1412
01:16:28,760 --> 01:16:32,320
Speaker 1: Governor. You know they're disappointed by now the king and

1413
01:16:33,320 --> 01:16:35,280
Speaker 1: you know it's it's a it's a very interesting, very

1414
01:16:35,280 --> 01:16:38,400
Speaker 1: close ties to the UK. And so you know, it

1415
01:16:38,400 --> 01:16:41,040
Speaker 1: was it was a really fascinating place not only to

1416
01:16:41,160 --> 01:16:43,839
Speaker 1: work and to recreate, but also to be part of society.

1417
01:16:43,880 --> 01:16:47,160
Speaker 1: I learned a lot some incredible lessons taken from my

1418
01:16:47,280 --> 01:16:49,440
Speaker 1: time there. So it was a great two years and

1419
01:16:49,439 --> 01:16:52,799
Speaker 1: and I you know, truly life changing period.

1420
01:16:53,280 --> 01:16:56,080
Speaker 2: I have a bunch of friends who were in finance

1421
01:16:56,120 --> 01:16:58,960
Speaker 2: and banking from Canada and they go down there for

1422
01:16:59,000 --> 01:17:02,080
Speaker 2: a spell and they never leave. So not only is

1423
01:17:02,360 --> 01:17:05,560
Speaker 2: the Grand Cayman's the first place I've ever had poutine,

1424
01:17:05,600 --> 01:17:11,160
Speaker 2: but hold that aside. Over the past twenty years, the

1425
01:17:11,200 --> 01:17:15,120
Speaker 2: island has just completely transformed. You have the Dart family

1426
01:17:16,400 --> 01:17:20,240
Speaker 2: that it flip over a styrofoam cup, it says dark.

1427
01:17:20,360 --> 01:17:24,360
Speaker 2: It's that that family that have just invested literally billions

1428
01:17:24,360 --> 01:17:30,120
Speaker 2: and billions of dollars. The island is practically South Florida.

1429
01:17:30,120 --> 01:17:34,040
Speaker 2: I mean it's very modern, very contemporary and beautiful, and

1430
01:17:34,080 --> 01:17:40,040
Speaker 2: every time I think about buying something down there, it's

1431
01:17:40,040 --> 01:17:43,439
Speaker 2: an island is the only problem. So getting anything there

1432
01:17:44,760 --> 01:17:47,840
Speaker 2: do they still have like a fifty or tax on

1433
01:17:48,400 --> 01:17:52,639
Speaker 2: bringing even like an old clunker jeep, you're gonna pay

1434
01:17:52,760 --> 01:17:53,760
Speaker 2: double the price.

1435
01:17:53,560 --> 01:17:56,880
Speaker 1: Big big tax on vehicles. There no income tax though,

1436
01:17:57,120 --> 01:18:00,840
Speaker 1: so for for US citizens you have a limit. But

1437
01:18:01,200 --> 01:18:04,759
Speaker 1: in most other countries they're not taxing their worldwide income.

1438
01:18:04,840 --> 01:18:07,400
Speaker 1: So if your UK s is in or Australian, or

1439
01:18:07,400 --> 01:18:09,720
Speaker 1: South African or Canadian which constituted a lot of the

1440
01:18:10,240 --> 01:18:12,960
Speaker 1: employees there, you know you're running tax free income forever.

1441
01:18:13,040 --> 01:18:17,480
Speaker 1: Now you pay effectively your taxes through consumption.

1442
01:18:17,160 --> 01:18:20,840
Speaker 2: Taxes plus the stamp tax to purchase property is another thing.

1443
01:18:21,120 --> 01:18:24,719
Speaker 2: Turks and Caicos has a very similar sort of financial setup.

1444
01:18:24,800 --> 01:18:28,639
Speaker 2: By the way, two of the most beautiful areas when

1445
01:18:28,680 --> 01:18:31,719
Speaker 2: you look at whether it's sailing or snorkeling or scuba diving,

1446
01:18:32,400 --> 01:18:34,720
Speaker 2: second to none, and maybe the Great Barrier Reef is

1447
01:18:35,000 --> 01:18:35,640
Speaker 2: the closest thing.

1448
01:18:35,880 --> 01:18:38,720
Speaker 1: Camman's amazing in that regard. Now, what they've also done

1449
01:18:38,800 --> 01:18:40,599
Speaker 1: is they've they've worked really hard to build a real

1450
01:18:40,640 --> 01:18:43,639
Speaker 1: financial services sector there. So our insurance company is actually

1451
01:18:43,680 --> 01:18:47,400
Speaker 1: based there, our employees are there. We have a prime

1452
01:18:47,439 --> 01:18:49,599
Speaker 1: you know, a primate. It's not a reinsurance subsidiary. It's

1453
01:18:49,600 --> 01:18:52,080
Speaker 1: a real primary insurer that's located and came out and

1454
01:18:52,560 --> 01:18:55,360
Speaker 1: and we, you know, ultimately became comfortable with that jurisdiction

1455
01:18:55,439 --> 01:18:57,840
Speaker 1: because I had contacts there and we're able to you know,

1456
01:18:58,040 --> 01:19:01,120
Speaker 1: people I maintained contact with from my time there. That

1457
01:19:01,200 --> 01:19:03,000
Speaker 1: gave us great comfort in what they were doing and

1458
01:19:03,000 --> 01:19:06,000
Speaker 1: building out the insurance industry. And it's been a fantastic jurisdiction.

1459
01:19:06,040 --> 01:19:08,880
Speaker 1: And I always say when people ask you your insurance

1460
01:19:08,880 --> 01:19:10,599
Speaker 1: company is based on the Cayman Islands, I said, listen,

1461
01:19:10,640 --> 01:19:12,240
Speaker 1: if I put a blindfold on you and I take

1462
01:19:12,280 --> 01:19:14,400
Speaker 1: you there, and I removed the blindfold outside our office,

1463
01:19:14,439 --> 01:19:16,880
Speaker 1: you will swear you're in coconut growth, right like you

1464
01:19:16,920 --> 01:19:19,280
Speaker 1: won't for a second think that you're not in South Florida.

1465
01:19:19,680 --> 01:19:23,160
Speaker 1: And it's become very much a first world financial hub.

1466
01:19:23,240 --> 01:19:25,760
Speaker 1: And you know, I would not be surprised to see

1467
01:19:25,800 --> 01:19:29,120
Speaker 1: its growth continue unabated for the next couple decades.

1468
01:19:29,200 --> 01:19:33,000
Speaker 2: First World healthcare, first world Internet, first world financials network

1469
01:19:33,280 --> 01:19:36,760
Speaker 2: hard to be. Since you mentioned the insurance company, I

1470
01:19:36,800 --> 01:19:39,720
Speaker 2: got to ask, you're running a hedge fund. Why an

1471
01:19:39,760 --> 01:19:42,720
Speaker 2: insurance business. Is it the float to play with the

1472
01:19:42,760 --> 01:19:46,960
Speaker 2: way Buffett does with Geico, or how does this interlate

1473
01:19:47,000 --> 01:19:48,000
Speaker 2: with the rest of the business.

1474
01:19:48,040 --> 01:19:51,360
Speaker 1: So it's an annuity business, so unlike property and casualty

1475
01:19:51,360 --> 01:19:56,000
Speaker 1: were the key is, you know, making money by underwriting

1476
01:19:56,520 --> 01:20:00,200
Speaker 1: your risk very very efficiently and earning a profit. You're

1477
01:20:00,240 --> 01:20:03,679
Speaker 1: underwriting in an annuity business. It's a it's a spread business.

1478
01:20:03,760 --> 01:20:07,360
Speaker 1: So we're taking capital in, we're investing it. We owe

1479
01:20:07,720 --> 01:20:11,960
Speaker 1: our annuity holders a fixed return, so we have to

1480
01:20:12,400 --> 01:20:15,519
Speaker 1: manage to make a higher return on our diversefied pool

1481
01:20:15,560 --> 01:20:17,960
Speaker 1: of assets than what we are required to pay out

1482
01:20:18,000 --> 01:20:20,679
Speaker 1: to the annuity holder. That's the whole game, and that

1483
01:20:20,680 --> 01:20:24,280
Speaker 1: that comports very well with our strategy of deep value

1484
01:20:24,360 --> 01:20:28,799
Speaker 1: investing and looking for opportunities where we can preserve capital

1485
01:20:28,880 --> 01:20:30,760
Speaker 1: not lose money. You know, again comes back to that

1486
01:20:30,800 --> 01:20:35,840
Speaker 1: same that same core thesis. So the draw initially was

1487
01:20:35,920 --> 01:20:38,479
Speaker 1: the duration of the capital you start an insurance company,

1488
01:20:39,080 --> 01:20:41,759
Speaker 1: so long as you you know, maintain control of the assets,

1489
01:20:41,800 --> 01:20:45,120
Speaker 1: you know they're effectively permanent assets, right, and and again

1490
01:20:45,200 --> 01:20:48,040
Speaker 1: going back to that point about the excess return that

1491
01:20:48,080 --> 01:20:50,760
Speaker 1: you can earn by having long data capital, it's really

1492
01:20:50,800 --> 01:20:55,960
Speaker 1: an extraordinary pickup in total yield. And so we you know,

1493
01:20:56,040 --> 01:20:58,080
Speaker 1: this is the most exciting thing we do, but we're

1494
01:20:58,120 --> 01:20:58,720
Speaker 1: thrilled about it.

1495
01:20:58,760 --> 01:21:00,439
Speaker 2: I would never have guessed that. I have to ask

1496
01:21:00,520 --> 01:21:04,040
Speaker 2: the obvious question, since we've seen a five hundred basis

1497
01:21:04,040 --> 01:21:08,800
Speaker 2: point bump in rates, what do higher rates do for

1498
01:21:08,960 --> 01:21:10,200
Speaker 2: running an insurance book.

1499
01:21:10,280 --> 01:21:14,479
Speaker 1: Yeah, for the annuity business, it's the spread between the

1500
01:21:14,479 --> 01:21:16,639
Speaker 1: assets that we're buying and the annuity rates. So while

1501
01:21:16,640 --> 01:21:18,360
Speaker 1: the annuity rates have gone up by quite a bit,

1502
01:21:18,960 --> 01:21:21,360
Speaker 1: the yield and the assets we're buying has gone up

1503
01:21:21,360 --> 01:21:24,559
Speaker 1: by slightly more. So our total return to the equity

1504
01:21:24,600 --> 01:21:27,840
Speaker 1: has increased. So I would say that this environment is

1505
01:21:27,920 --> 01:21:29,840
Speaker 1: just about perfect for the insurance business.

1506
01:21:30,040 --> 01:21:32,839
Speaker 2: Huh. All right, So let's talk about a different business

1507
01:21:32,840 --> 01:21:35,519
Speaker 2: line that I'm kind of fascinated by. Ever since the

1508
01:21:35,600 --> 01:21:39,920
Speaker 2: pandemic ends, it looks like commercial real estate has been

1509
01:21:40,000 --> 01:21:46,080
Speaker 2: poised on the brink of disaster, especially offices. How do

1510
01:21:46,120 --> 01:21:49,920
Speaker 2: you look at CRE and what sort of opportunities are

1511
01:21:50,400 --> 01:21:52,320
Speaker 2: are there in the world of real estate.

1512
01:21:52,520 --> 01:21:57,000
Speaker 1: Yeah, you know, we will definitely be heavily involved there

1513
01:21:57,040 --> 01:22:01,160
Speaker 1: if the sector or if individual opportunities become distracts. I

1514
01:22:01,200 --> 01:22:04,400
Speaker 1: think we're taking a wait and see and very patient

1515
01:22:04,439 --> 01:22:09,439
Speaker 1: approach right now. We're trying to sort out what work

1516
01:22:09,479 --> 01:22:13,120
Speaker 1: from home means for a demand for office space. It's

1517
01:22:13,160 --> 01:22:15,760
Speaker 1: just challenging, right It's not as if people working three

1518
01:22:15,800 --> 01:22:17,479
Speaker 1: days a week, you still need the same amount office

1519
01:22:17,520 --> 01:22:20,000
Speaker 1: if they're all there at the same time. So, you know,

1520
01:22:20,520 --> 01:22:23,639
Speaker 1: what it means is utilization has shifted. We may need

1521
01:22:23,680 --> 01:22:26,160
Speaker 1: to change the way that we use offices. We're spending

1522
01:22:26,200 --> 01:22:27,880
Speaker 1: a lot of time thinking about that. We need to

1523
01:22:27,960 --> 01:22:30,600
Speaker 1: change the places where we have offices. So we have

1524
01:22:31,280 --> 01:22:35,320
Speaker 1: more people working outside of New York now than ever before,

1525
01:22:36,120 --> 01:22:39,880
Speaker 1: and we're perfectly comfortable with that. We provide greater flexibility

1526
01:22:40,600 --> 01:22:43,320
Speaker 1: and where people work from. But I think as it

1527
01:22:43,360 --> 01:22:46,040
Speaker 1: relates to CIRE, you know, the two big components are

1528
01:22:46,080 --> 01:22:48,439
Speaker 1: answering that first question around aggregate demand, and then the

1529
01:22:48,479 --> 01:22:53,719
Speaker 1: second is answering questions around you know, are some cities

1530
01:22:53,760 --> 01:22:56,760
Speaker 1: and jurisdictions poised for more success than others, will some

1531
01:22:56,840 --> 01:23:00,559
Speaker 1: be more permanently challenged? Those are the big unknown You know,

1532
01:23:00,800 --> 01:23:03,920
Speaker 1: we need some real restructuring in some of our major

1533
01:23:04,000 --> 01:23:06,840
Speaker 1: cities to make them attractive for business again.

1534
01:23:06,960 --> 01:23:09,719
Speaker 2: Yah San Francisco and Saint Louis stand out is two

1535
01:23:10,280 --> 01:23:13,200
Speaker 2: real basket cases. New York seems to be coming back.

1536
01:23:13,880 --> 01:23:16,639
Speaker 2: Raises the question of those that if you're there three

1537
01:23:16,760 --> 01:23:19,639
Speaker 2: days a week, can you do the sort of hot

1538
01:23:19,720 --> 01:23:23,160
Speaker 2: desk that allows you to use half the space? Hey,

1539
01:23:23,479 --> 01:23:27,720
Speaker 2: your Monday, Wednesday, Friday. This person is Tuesday Thursday and

1540
01:23:27,840 --> 01:23:32,320
Speaker 2: everybody is in pick a day Wednesday. Do you really need,

1541
01:23:32,880 --> 01:23:35,240
Speaker 2: you know, a thousand desks for a thousand employees or

1542
01:23:35,240 --> 01:23:36,920
Speaker 2: can you get away with six hundred desks?

1543
01:23:37,240 --> 01:23:38,840
Speaker 1: If you have everybody in that one day a week,

1544
01:23:38,960 --> 01:23:41,120
Speaker 1: you need the thousand desks. The question is do you

1545
01:23:41,160 --> 01:23:44,839
Speaker 1: need as many offices? Do you need as many conference rooms?

1546
01:23:44,160 --> 01:23:48,719
Speaker 1: That's an unknown and I think we're all every business.

1547
01:23:48,760 --> 01:23:51,160
Speaker 1: It's not just the commercial real estate companies that are

1548
01:23:51,160 --> 01:23:53,559
Speaker 1: thinking about it. We're all thinking about it because either

1549
01:23:53,600 --> 01:23:56,000
Speaker 1: you're a provider of that capacity or a user of

1550
01:23:56,000 --> 01:23:58,400
Speaker 1: that capacity, and both sides of the equation have to

1551
01:23:58,760 --> 01:24:01,680
Speaker 1: make a determination as to what the appropriate level of

1552
01:24:03,920 --> 01:24:07,840
Speaker 1: space is. And we're in that boat with everybody else.

1553
01:24:07,880 --> 01:24:10,680
Speaker 1: So I think for us in commercial real estate, we

1554
01:24:10,720 --> 01:24:13,320
Speaker 1: haven't seen any opportunities that have really caught our eye yet,

1555
01:24:14,000 --> 01:24:15,759
Speaker 1: but it's definitely an area to watch.

1556
01:24:16,280 --> 01:24:19,160
Speaker 2: No doubt about it. I'm kind of fascinated that return

1557
01:24:19,200 --> 01:24:22,400
Speaker 2: to office at least in the metropolitan areas are fifty

1558
01:24:22,400 --> 01:24:25,280
Speaker 2: five to sixty percent in the US, but Europe is

1559
01:24:25,360 --> 01:24:29,639
Speaker 2: running ninety ninety five percent. Whether that's better mass transit,

1560
01:24:29,680 --> 01:24:33,280
Speaker 2: shorter commutes, or smaller houses where you can't just set

1561
01:24:33,320 --> 01:24:35,519
Speaker 2: up a home office as easily as we do here.

1562
01:24:35,320 --> 01:24:36,880
Speaker 1: Well, it's a good point. I think it's I think

1563
01:24:36,880 --> 01:24:42,080
Speaker 1: it's probably a combination of those factors. Also some societal

1564
01:24:42,200 --> 01:24:44,840
Speaker 1: differences as it relates to what's accepted. I mean, if

1565
01:24:44,880 --> 01:24:47,240
Speaker 1: you if you go to London, there are a few

1566
01:24:47,240 --> 01:24:52,360
Speaker 1: things that really stand out. One that this casual address

1567
01:24:52,960 --> 01:24:56,040
Speaker 1: is not something that's been as fully adopted. Oh really, no,

1568
01:24:56,200 --> 01:24:56,839
Speaker 1: it's it's.

1569
01:24:56,800 --> 01:24:58,599
Speaker 2: I mean, just for the record, you and I are

1570
01:24:58,720 --> 01:25:04,080
Speaker 2: both in white shirts, yeah, darker blue blazers. I'm wearing jeans,

1571
01:25:04,080 --> 01:25:08,320
Speaker 2: you're wearing khakis. But would do either us really ever

1572
01:25:08,360 --> 01:25:11,599
Speaker 2: wear a tie unless we're presenting at some event where

1573
01:25:11,600 --> 01:25:12,679
Speaker 2: it says suit and tie.

1574
01:25:12,840 --> 01:25:14,840
Speaker 1: Yeah? No, And if you go to London and you're

1575
01:25:14,880 --> 01:25:17,799
Speaker 1: in you know, in the center of in this London city,

1576
01:25:18,120 --> 01:25:20,360
Speaker 1: you'll see a lot of people in suits, more than

1577
01:25:20,400 --> 01:25:23,599
Speaker 1: you see in New York and so there's a level

1578
01:25:23,640 --> 01:25:28,040
Speaker 1: of formality perhaps that exists there. It's also an incredibly

1579
01:25:28,240 --> 01:25:32,280
Speaker 1: vibrant place to city centers in the UK are you know,

1580
01:25:32,520 --> 01:25:36,960
Speaker 1: fully back relative to to pre pandemic. So you know,

1581
01:25:37,000 --> 01:25:39,960
Speaker 1: we've got to think about whether or not we're doing

1582
01:25:40,439 --> 01:25:44,920
Speaker 1: our broader community a favor or a disservice by not

1583
01:25:45,000 --> 01:25:48,040
Speaker 1: being in our city centers as much as we were

1584
01:25:48,080 --> 01:25:51,599
Speaker 1: a pre pandemic. And that goes beyond simply what's best

1585
01:25:51,600 --> 01:25:53,720
Speaker 1: for work and can you get the work done? No,

1586
01:25:53,840 --> 01:25:56,880
Speaker 1: it's can you develop the young talent? Right? Are you

1587
01:25:57,000 --> 01:26:00,840
Speaker 1: supporting your metropolitan area? Meaning all of those businesses that

1588
01:26:00,880 --> 01:26:03,360
Speaker 1: rely on the people coming in and out. All of

1589
01:26:03,360 --> 01:26:06,439
Speaker 1: these things are really important and it can't just flip

1590
01:26:06,439 --> 01:26:08,640
Speaker 1: a light switch and make it all change instantaneously. If

1591
01:26:08,640 --> 01:26:10,960
Speaker 1: you're going to shift the way those things happen, you

1592
01:26:11,000 --> 01:26:12,240
Speaker 1: have to plan for it. You have to think about

1593
01:26:12,280 --> 01:26:13,680
Speaker 1: how you're going to train your young people. You have

1594
01:26:13,720 --> 01:26:16,719
Speaker 1: to think about how businesses can move from city centers

1595
01:26:16,760 --> 01:26:18,920
Speaker 1: out to the local communities where people will spend an

1596
01:26:18,920 --> 01:26:23,000
Speaker 1: increasing period of time. So I believe that we will

1597
01:26:23,000 --> 01:26:28,280
Speaker 1: see some level of deurbanization over time, deurbanization, and I

1598
01:26:28,280 --> 01:26:31,519
Speaker 1: think it's there's a variety of reasons for it. A

1599
01:26:31,560 --> 01:26:34,040
Speaker 1: lot of it's based on our views on mobility. I

1600
01:26:34,080 --> 01:26:37,360
Speaker 1: think that you know, as we see greater levels of automation,

1601
01:26:37,479 --> 01:26:40,080
Speaker 1: as we see greater levels of electrification, which are tied

1602
01:26:40,160 --> 01:26:44,040
Speaker 1: hand in hand, it'll become easier to travel, it's not

1603
01:26:44,120 --> 01:26:46,280
Speaker 1: as much of a burden. People will be able to

1604
01:26:46,360 --> 01:26:49,360
Speaker 1: live and commute more, particularly if they're not commuting five

1605
01:26:49,400 --> 01:26:51,519
Speaker 1: days a week. So there's a lot of big changes

1606
01:26:51,560 --> 01:26:52,960
Speaker 1: that I think will occur over the next ten or

1607
01:26:53,000 --> 01:26:56,080
Speaker 1: fifteen years. The worst thing we can do is try

1608
01:26:56,080 --> 01:26:58,320
Speaker 1: to force those changes in twelve or twenty four months

1609
01:26:58,400 --> 01:26:58,840
Speaker 1: too fast.

1610
01:26:58,880 --> 01:27:02,840
Speaker 2: Professor Scott Galloway it and while you Stern talks about

1611
01:27:03,000 --> 01:27:07,280
Speaker 2: the disservice we do to the youngest employees who need

1612
01:27:07,360 --> 01:27:10,559
Speaker 2: to come in, learn the ropes, be mentored, actually have

1613
01:27:10,640 --> 01:27:14,439
Speaker 2: some FaceTime. You know, if you're old folks like us

1614
01:27:14,479 --> 01:27:16,479
Speaker 2: and you've been doing this for a number of decades,

1615
01:27:16,880 --> 01:27:18,679
Speaker 2: you don't have to be in the office five days

1616
01:27:18,720 --> 01:27:20,800
Speaker 2: a week, two or three days as plenty. But if

1617
01:27:20,840 --> 01:27:23,040
Speaker 2: you're early in your career and you talked about what

1618
01:27:23,040 --> 01:27:26,120
Speaker 2: it was like at Credit Swiss and at Goldman, that's

1619
01:27:26,160 --> 01:27:28,479
Speaker 2: a loss. For people who are not there every day.

1620
01:27:28,400 --> 01:27:32,000
Speaker 1: It's a massive loss. If you're learning from your more

1621
01:27:32,080 --> 01:27:36,759
Speaker 1: experienced co workers and you're only there three days a week,

1622
01:27:37,439 --> 01:27:39,800
Speaker 1: there's some forty percent of your time is without the

1623
01:27:39,840 --> 01:27:41,959
Speaker 1: direct contact, and so there's going to be some diminution

1624
01:27:42,040 --> 01:27:44,200
Speaker 1: in your ability to ramp up. I don't know whether

1625
01:27:44,240 --> 01:27:46,519
Speaker 1: it's a forty percent or whether it's a fraction of

1626
01:27:46,560 --> 01:27:47,880
Speaker 1: forty percent not zero.

1627
01:27:48,080 --> 01:27:51,280
Speaker 2: It's a real chunce, all right. So before we get

1628
01:27:51,320 --> 01:27:54,520
Speaker 2: to our favorite questions, I got to throw you one curveball.

1629
01:27:55,120 --> 01:27:57,600
Speaker 2: You sit on a number of different boards, including the

1630
01:27:57,600 --> 01:28:01,200
Speaker 2: board of trustees at Villanova, but you're also a board

1631
01:28:01,240 --> 01:28:05,080
Speaker 2: member of the Navy Seal Foundation. How does this come about?

1632
01:28:05,120 --> 01:28:07,280
Speaker 2: Tell us a little bit about that experience.

1633
01:28:07,360 --> 01:28:10,280
Speaker 1: Yeah, the last person that I hired at Goldman was

1634
01:28:10,320 --> 01:28:13,880
Speaker 1: a seven year veteran of the Seal teams and was

1635
01:28:13,960 --> 01:28:17,280
Speaker 1: one of the early board members at the Seal Foundation

1636
01:28:17,360 --> 01:28:20,560
Speaker 1: and introduced me to the organization. And so for the

1637
01:28:20,680 --> 01:28:25,120
Speaker 1: last ten twelve years I've been involved as a as

1638
01:28:25,200 --> 01:28:28,360
Speaker 1: a supporter and host of their New York City gala,

1639
01:28:29,200 --> 01:28:31,639
Speaker 1: and then earlier this year I was asked to join

1640
01:28:31,680 --> 01:28:38,479
Speaker 1: the board, which is an unbelievable honor for me. It's

1641
01:28:38,520 --> 01:28:42,559
Speaker 1: a way to support folks that I have a great

1642
01:28:42,560 --> 01:28:46,639
Speaker 1: deal of respect for for a whole variety of reasons,

1643
01:28:46,680 --> 01:28:50,400
Speaker 1: but you know, it was at its core a way

1644
01:28:50,520 --> 01:28:54,920
Speaker 1: for me to get involved with a community that took

1645
01:28:54,960 --> 01:28:58,599
Speaker 1: action following nine to eleven, which had, you know, as

1646
01:28:58,600 --> 01:29:02,080
Speaker 1: we mentioned early, a profound impact on me and and

1647
01:29:02,160 --> 01:29:05,000
Speaker 1: folks that frankly, as I got to know, I came

1648
01:29:05,080 --> 01:29:09,200
Speaker 1: to really like they're not what I think the average

1649
01:29:09,240 --> 01:29:13,120
Speaker 1: person views them to be. These these are very much

1650
01:29:13,400 --> 01:29:16,720
Speaker 1: the the you know, the guy next door, You know

1651
01:29:16,840 --> 01:29:19,280
Speaker 1: that that young person that you knew growing up that

1652
01:29:19,479 --> 01:29:22,200
Speaker 1: was kind of always doing the right thing and was

1653
01:29:22,320 --> 01:29:26,200
Speaker 1: very steadfast in their views and and and unwavering in

1654
01:29:26,240 --> 01:29:28,880
Speaker 1: their commitment. That that seems to be a common thread

1655
01:29:28,880 --> 01:29:31,000
Speaker 1: that I found with some of those, these these men

1656
01:29:31,040 --> 01:29:32,720
Speaker 1: and the teams professionals.

1657
01:29:32,960 --> 01:29:35,960
Speaker 2: Yes, so when I was on the trading desk, the

1658
01:29:36,000 --> 01:29:40,000
Speaker 2: head trader was a former Marine jungle combat instructor. The

1659
01:29:40,040 --> 01:29:41,920
Speaker 2: guy I left was a seal, The guy next to

1660
01:29:42,000 --> 01:29:42,839
Speaker 2: him was a ranger.

1661
01:29:43,000 --> 01:29:43,200
Speaker 1: Yep.

1662
01:29:43,320 --> 01:29:46,840
Speaker 2: So the four of we would go out for drinks afterwards,

1663
01:29:46,840 --> 01:29:48,679
Speaker 2: and I could be a wise ass at aar because

1664
01:29:49,360 --> 01:29:51,320
Speaker 2: no people would look at us, and they'd look at

1665
01:29:51,320 --> 01:29:53,759
Speaker 2: me like that guy's a wisess. I should slap him,

1666
01:29:53,800 --> 01:29:55,080
Speaker 2: and then they look at you the saw of me.

1667
01:29:55,760 --> 01:29:58,400
Speaker 2: Maybe best to not get involved in them. Yeah, yeah,

1668
01:29:58,439 --> 01:30:01,240
Speaker 2: I got away with a lot of But the word

1669
01:30:01,520 --> 01:30:05,400
Speaker 2: that always stood out is these were just consummate professionals.

1670
01:30:05,400 --> 01:30:07,400
Speaker 2: They had a task to do, they knew how to

1671
01:30:07,439 --> 01:30:10,640
Speaker 2: go about doing it. And there are some fascinating parallels

1672
01:30:11,360 --> 01:30:16,240
Speaker 2: between those services and traded about going and prepared thinking

1673
01:30:16,280 --> 01:30:20,519
Speaker 2: about plan b's, being able to make decisions under pressure.

1674
01:30:21,720 --> 01:30:23,880
Speaker 2: It's really quite fascinating, though it is. That must be

1675
01:30:23,920 --> 01:30:25,519
Speaker 2: an amazing experience working with them.

1676
01:30:25,600 --> 01:30:28,920
Speaker 1: It is, and you know, it's it just that's the

1677
01:30:28,960 --> 01:30:32,040
Speaker 1: community that I became connected to. There are lots of

1678
01:30:33,160 --> 01:30:36,960
Speaker 1: service members across our different branches that are equally worthy

1679
01:30:37,000 --> 01:30:41,200
Speaker 1: of our respect, And you know, I think it was

1680
01:30:41,240 --> 01:30:44,400
Speaker 1: my way, as I said, of doing something to serve

1681
01:30:44,479 --> 01:30:46,680
Speaker 1: people who so selflessly serve all of us.

1682
01:30:47,040 --> 01:30:50,000
Speaker 2: Huh, really really great stuff. So I know I only

1683
01:30:50,040 --> 01:30:53,040
Speaker 2: have you for a finite amount of time. Let's jump

1684
01:30:53,200 --> 01:30:56,639
Speaker 2: to our favorite questions that we ask all of our guests,

1685
01:30:56,720 --> 01:30:59,839
Speaker 2: starting with tell us what you've been watching or listening

1686
01:30:59,840 --> 01:31:04,559
Speaker 2: to lately? What kept you entertain since the pandemic on

1687
01:31:04,640 --> 01:31:08,679
Speaker 2: either Netflix or Amazon or whatever the fam is enjoying?

1688
01:31:09,040 --> 01:31:11,880
Speaker 1: Yeah, you know, it's funny, of course, you know a

1689
01:31:11,920 --> 01:31:17,000
Speaker 1: lot of the very popular shows we've we've watched and

1690
01:31:17,080 --> 01:31:19,479
Speaker 1: you know, I think, you know, shows like ted Lasso

1691
01:31:20,040 --> 01:31:23,280
Speaker 1: or Funny, you know some good lessons in there that

1692
01:31:23,280 --> 01:31:26,479
Speaker 1: that one's been very enjoyable. The ones that I've watched

1693
01:31:26,479 --> 01:31:29,520
Speaker 1: more recently that I think are great, or the prequels

1694
01:31:29,560 --> 01:31:32,400
Speaker 1: to Yellowstone, I really.

1695
01:31:32,240 --> 01:31:37,439
Speaker 2: Sixty three, eighteen eighty three and Early is the same

1696
01:31:37,479 --> 01:31:38,040
Speaker 2: as wrong.

1697
01:31:38,080 --> 01:31:40,439
Speaker 1: Yes, nineteen twenty three, I think is the other one,

1698
01:31:41,200 --> 01:31:43,960
Speaker 1: And you know they I'm a big fan of the

1699
01:31:43,960 --> 01:31:46,320
Speaker 1: American West, a Mountain West. I spent a lot of

1700
01:31:46,320 --> 01:31:51,000
Speaker 1: time in Montana, and so those really resonated with me.

1701
01:31:51,120 --> 01:31:54,000
Speaker 1: And what I liked about the prequels is, you know,

1702
01:31:54,120 --> 01:31:57,320
Speaker 1: while you know, a story told in a Hollywood sense,

1703
01:31:57,400 --> 01:32:01,120
Speaker 1: they give some insight into just how difficult and different

1704
01:32:01,200 --> 01:32:04,519
Speaker 1: time was then, particularly in that part of our country,

1705
01:32:04,520 --> 01:32:07,759
Speaker 1: how hard it was and I just think the stories

1706
01:32:07,760 --> 01:32:11,000
Speaker 1: are fascinating. So that's you know, I've really enjoyed those

1707
01:32:11,680 --> 01:32:15,680
Speaker 1: those programs and and look forward to the next installments

1708
01:32:15,720 --> 01:32:16,120
Speaker 1: coming out.

1709
01:32:16,760 --> 01:32:20,599
Speaker 2: Sounds like one we should put on our list. Let's

1710
01:32:20,600 --> 01:32:23,719
Speaker 2: talk about your early mentors who helped shape your career.

1711
01:32:24,600 --> 01:32:31,400
Speaker 1: Yeah, you know, I never really had official mentors. It

1712
01:32:31,520 --> 01:32:35,400
Speaker 1: wasn't really the way the businesses that I operated in worked,

1713
01:32:35,439 --> 01:32:39,439
Speaker 1: but I but there were people that I was able

1714
01:32:39,479 --> 01:32:45,000
Speaker 1: to observe that had, you know, just had achieved such

1715
01:32:45,080 --> 01:32:48,360
Speaker 1: incredible success and we're so good. And one that really

1716
01:32:48,400 --> 01:32:52,200
Speaker 1: stands out, I think is David Tepper, who you know,

1717
01:32:52,240 --> 01:32:55,759
Speaker 1: of all the individuals with whom I interacted over the years,

1718
01:32:55,960 --> 01:33:00,760
Speaker 1: is absolutely the best investor of the bunch. And David's

1719
01:33:01,240 --> 01:33:04,880
Speaker 1: two things stand out. One is incredible conviction and two

1720
01:33:05,040 --> 01:33:07,960
Speaker 1: his ability to take a very complicated situation and to

1721
01:33:08,000 --> 01:33:10,479
Speaker 1: still it down to very simple terms, which is a

1722
01:33:10,479 --> 01:33:16,240
Speaker 1: mark of true genius. And I think his prosecution of

1723
01:33:16,280 --> 01:33:20,080
Speaker 1: his commitment and his strategy, you know, starting in distress

1724
01:33:20,120 --> 01:33:22,719
Speaker 1: corporate and then you know a lot of macro type

1725
01:33:22,720 --> 01:33:25,200
Speaker 1: investing in addition to what he does at his core

1726
01:33:25,800 --> 01:33:28,960
Speaker 1: is incredibly impressive. And so you know, I think looking

1727
01:33:29,000 --> 01:33:33,960
Speaker 1: at the way that he approached, you know, being committed

1728
01:33:34,000 --> 01:33:39,519
Speaker 1: to a position and unwavering in many cases despite others

1729
01:33:39,560 --> 01:33:42,200
Speaker 1: maybe having a different view is something that I've always

1730
01:33:42,240 --> 01:33:42,919
Speaker 1: really respected.

1731
01:33:43,040 --> 01:33:45,599
Speaker 2: Tepa's fund is appalousa capital.

1732
01:33:45,680 --> 01:33:46,000
Speaker 1: That's right.

1733
01:33:46,280 --> 01:33:49,240
Speaker 2: Yes, he He's put up pretty pretty amazing them.

1734
01:33:49,400 --> 01:33:51,040
Speaker 1: It's unbelievable vable.

1735
01:33:51,120 --> 01:33:54,640
Speaker 2: So let's talk about everybody's favorite question books. What are

1736
01:33:54,680 --> 01:33:56,599
Speaker 2: some of your favorites? What are you reading right now?

1737
01:33:56,920 --> 01:33:58,320
Speaker 1: So I don't know how I get into this, but

1738
01:33:58,439 --> 01:34:00,799
Speaker 1: right now I'm reading this book called One's Second After,

1739
01:34:01,400 --> 01:34:04,800
Speaker 1: which is about life in the United States, you know,

1740
01:34:04,880 --> 01:34:11,040
Speaker 1: immediately following an emp or electromagic pulse attack. Is is

1741
01:34:11,080 --> 01:34:15,400
Speaker 1: a rather disturbing book, but it's really pretty fascinating. It

1742
01:34:16,040 --> 01:34:19,360
Speaker 1: goes to, you know, some of the risks that we

1743
01:34:19,479 --> 01:34:23,479
Speaker 1: face as a modern society and how quickly things can

1744
01:34:23,560 --> 01:34:27,160
Speaker 1: change if the right set of kind of really negative

1745
01:34:27,200 --> 01:34:31,160
Speaker 1: and horrible circumstances arise. And I've always been sort of

1746
01:34:31,200 --> 01:34:34,879
Speaker 1: fascinated by the risks that we as a modern society

1747
01:34:34,880 --> 01:34:36,960
Speaker 1: face that aren't often thought about, and the ways that

1748
01:34:37,000 --> 01:34:39,360
Speaker 1: we can protect against them. That's a big one that

1749
01:34:39,479 --> 01:34:41,960
Speaker 1: in our electrical grid, I think you know, particularly in

1750
01:34:42,000 --> 01:34:45,759
Speaker 1: our urban areas, we are uniquely exposed to a loss

1751
01:34:45,800 --> 01:34:50,080
Speaker 1: of power. And so, you know, I think the Copple

1752
01:34:50,120 --> 01:34:52,519
Speaker 1: book Lights Out that was written a while ago as

1753
01:34:52,560 --> 01:34:56,559
Speaker 1: another sort of must read. It's something that we really

1754
01:34:56,560 --> 01:34:59,760
Speaker 1: should be paying much more attention to. You know, there's

1755
01:34:59,760 --> 01:35:01,960
Speaker 1: a lot of great initiatives that as a country were

1756
01:35:02,000 --> 01:35:06,760
Speaker 1: pursuing for noble reasons, but my personal view is that

1757
01:35:07,439 --> 01:35:11,760
Speaker 1: the making our electric grid more robust should really be

1758
01:35:11,800 --> 01:35:12,679
Speaker 1: at the top of our list.

1759
01:35:12,960 --> 01:35:16,200
Speaker 2: There's some funds in the Infrastructure Bill that go to

1760
01:35:16,880 --> 01:35:21,240
Speaker 2: hardening the electric grid. I don't know what your experience

1761
01:35:21,400 --> 01:35:23,720
Speaker 2: was during Sandy in the New York area, we had

1762
01:35:23,720 --> 01:35:28,559
Speaker 2: no electricity for thirteen days, and when we subsequently moved

1763
01:35:28,560 --> 01:35:32,439
Speaker 2: to a new house that was this close to getting

1764
01:35:32,600 --> 01:35:35,719
Speaker 2: that gas as soon as it became available, the first

1765
01:35:35,720 --> 01:35:37,920
Speaker 2: thing I did was putting in a giant generator and say,

1766
01:35:38,200 --> 01:35:40,320
Speaker 2: I don't care what happens. I am never going through

1767
01:35:40,320 --> 01:35:45,720
Speaker 2: that nonsense, right, And it's really quite astonishing how frequently

1768
01:35:46,800 --> 01:35:50,320
Speaker 2: modern society, like the US, there's some website that shows

1769
01:35:50,360 --> 01:35:55,160
Speaker 2: you all of the outages for the electrical grid. It's

1770
01:35:55,280 --> 01:35:59,120
Speaker 2: kind of creaking and outdated and very vulnerable, not just

1771
01:35:59,160 --> 01:36:02,679
Speaker 2: the hacking, but silly things like trees falling. Yeah, takes

1772
01:36:02,720 --> 01:36:05,160
Speaker 2: out a whole neighborhood for a week. It's kind of

1773
01:36:05,200 --> 01:36:06,839
Speaker 2: a it's kind of shocking.

1774
01:36:06,920 --> 01:36:10,040
Speaker 1: Yeah, it's there's no question that we need to be

1775
01:36:11,439 --> 01:36:15,639
Speaker 1: modernizing our you know, our electric distribution system. And it's

1776
01:36:15,680 --> 01:36:18,160
Speaker 1: not just at the industrial scale level but also right

1777
01:36:18,160 --> 01:36:21,600
Speaker 1: down to the home, so you know, greater levels of

1778
01:36:21,800 --> 01:36:25,080
Speaker 1: battery backup and solar power, but things that are protected

1779
01:36:25,120 --> 01:36:29,960
Speaker 1: against you know, small scale emp A results which wol

1780
01:36:29,960 --> 01:36:32,439
Speaker 1: like a lightning strike, and large scale if we ever

1781
01:36:32,479 --> 01:36:36,280
Speaker 1: were attacked, you know, it's it's a real risk to society.

1782
01:36:36,400 --> 01:36:39,559
Speaker 1: So I think, you know, those are those are things

1783
01:36:39,600 --> 01:36:42,440
Speaker 1: that I've always been fascinated about, the big giant problems.

1784
01:36:42,800 --> 01:36:44,160
Speaker 1: That's exactly the kind of thing you want to be

1785
01:36:44,240 --> 01:36:46,439
Speaker 1: reading before bed at night, you know. But how do

1786
01:36:46,479 --> 01:36:48,240
Speaker 1: we how do we think about those and how should

1787
01:36:48,240 --> 01:36:50,600
Speaker 1: that be worked into our national priorities.

1788
01:36:50,920 --> 01:36:53,559
Speaker 2: My sister lived in a town that was one of

1789
01:36:53,600 --> 01:36:59,240
Speaker 2: the few rare towns that have underground electrical well originally

1790
01:36:59,240 --> 01:37:02,080
Speaker 2: started as how do we avoid the visual blight of

1791
01:37:02,200 --> 01:37:05,720
Speaker 2: copper wire strung between dead trees, and instead they put

1792
01:37:05,760 --> 01:37:08,439
Speaker 2: it all on the ground and Sandy I have a

1793
01:37:08,520 --> 01:37:11,720
Speaker 2: vivid recollection of her saying it was really inconvenient. The

1794
01:37:11,800 --> 01:37:14,360
Speaker 2: cable went out for a couple of hours and that was.

1795
01:37:14,320 --> 01:37:15,960
Speaker 1: Her entire experience.

1796
01:37:16,120 --> 01:37:18,760
Speaker 2: Yeah, could be the greatest shower I ever took in

1797
01:37:18,760 --> 01:37:21,920
Speaker 2: my life. Was the fifth day of Gee this, we're

1798
01:37:21,920 --> 01:37:25,880
Speaker 2: not getting electricity back anytime soon. Yeah. So, and to

1799
01:37:26,360 --> 01:37:28,880
Speaker 2: move everything on the ground with costs billions, but at

1800
01:37:28,880 --> 01:37:31,400
Speaker 2: the very least to make things a little more resilient

1801
01:37:31,479 --> 01:37:33,400
Speaker 2: and a little more hardened, Yeah, got to be a

1802
01:37:33,479 --> 01:37:34,200
Speaker 2: top priority.

1803
01:37:34,280 --> 01:37:38,320
Speaker 1: Yeah. Or micro generation, that's that's you know, smaller scale

1804
01:37:39,000 --> 01:37:39,880
Speaker 1: you could work as well.

1805
01:37:40,240 --> 01:37:42,839
Speaker 2: So if you have solar or winds and the ability

1806
01:37:42,880 --> 01:37:46,000
Speaker 2: to store it for a couple of days, you're okay,

1807
01:37:46,080 --> 01:37:47,520
Speaker 2: even better lose.

1808
01:37:47,280 --> 01:37:50,719
Speaker 1: Ah, that's right. Yeah, yea. It depends on your location.

1809
01:37:51,800 --> 01:37:54,680
Speaker 1: So but you know, it's a big giant investment that

1810
01:37:54,720 --> 01:37:57,080
Speaker 1: we should really take seriously across our country, you know,

1811
01:37:57,120 --> 01:38:00,800
Speaker 1: hardening the grid and distributing the power generator, you know,

1812
01:38:00,880 --> 01:38:03,240
Speaker 1: more solar, more renewable, all of it.

1813
01:38:03,560 --> 01:38:06,280
Speaker 2: To circle back to the Caymans or the way I

1814
01:38:06,320 --> 01:38:08,880
Speaker 2: love the way the locals pronounce it k man Man

1815
01:38:09,120 --> 01:38:15,519
Speaker 2: is they had this setup where between the local power company,

1816
01:38:15,640 --> 01:38:19,599
Speaker 2: the local government and the UK government you could get

1817
01:38:19,720 --> 01:38:23,040
Speaker 2: pretty much one hundred percent funding for solar. Or they

1818
01:38:23,040 --> 01:38:26,800
Speaker 2: were really big on geothermal that you would drop sink

1819
01:38:26,840 --> 01:38:29,440
Speaker 2: a geothermal line and you have heat and air conditioning

1820
01:38:29,960 --> 01:38:32,080
Speaker 2: year round at essentially no cost.

1821
01:38:32,200 --> 01:38:35,960
Speaker 1: That's right. I mean GEO is like, you know, I've

1822
01:38:35,960 --> 01:38:38,760
Speaker 1: always done geo. Well, you know, solar is tough in

1823
01:38:38,840 --> 01:38:42,680
Speaker 1: certain jurisdictions, but I think the combination, if you can

1824
01:38:42,720 --> 01:38:45,080
Speaker 1: do combo of solar and geo, you're really in a

1825
01:38:45,320 --> 01:38:48,200
Speaker 1: you know, you've got a lot of energy independence and

1826
01:38:48,800 --> 01:38:51,479
Speaker 1: much cleaner. It's well worth the investment in most places.

1827
01:38:51,520 --> 01:38:55,280
Speaker 1: And and you know, particularly in an island where you

1828
01:38:55,320 --> 01:38:57,920
Speaker 1: can put GEO in, you know, you're really just getting

1829
01:38:57,960 --> 01:39:03,120
Speaker 1: down below the coral. It's an incredibly efficient way of

1830
01:39:03,680 --> 01:39:05,080
Speaker 1: managing your electric costs.

1831
01:39:05,200 --> 01:39:08,040
Speaker 2: Yeah, drops everything in half. And because it's so expensive

1832
01:39:08,080 --> 01:39:08,800
Speaker 2: to import.

1833
01:39:08,520 --> 01:39:09,559
Speaker 1: Everything, oh massively.

1834
01:39:10,000 --> 01:39:12,200
Speaker 2: But they seem to have plenty of sunshine now they

1835
01:39:12,200 --> 01:39:14,760
Speaker 2: do think that's the big one. So let's jump to

1836
01:39:14,800 --> 01:39:17,519
Speaker 2: our last two questions that we ask all of our guests,

1837
01:39:17,920 --> 01:39:20,680
Speaker 2: Starting with what sort of advice would you give to

1838
01:39:20,720 --> 01:39:24,519
Speaker 2: a recent college grad interested in a career in either

1839
01:39:25,240 --> 01:39:27,360
Speaker 2: investing or distressed assets.

1840
01:39:28,880 --> 01:39:31,639
Speaker 1: I think it's I think irrespective of what you're looking

1841
01:39:31,680 --> 01:39:33,960
Speaker 1: to do, the advice is the same, which is that

1842
01:39:34,080 --> 01:39:36,280
Speaker 1: make sure you find something that you love. And it

1843
01:39:36,439 --> 01:39:40,080
Speaker 1: sounds so trite you hear it from everyone, but it

1844
01:39:40,160 --> 01:39:44,960
Speaker 1: really is a critical piece of advice. Investing in distress

1845
01:39:45,080 --> 01:39:48,360
Speaker 1: is not for everyone. You know, it's not an easy

1846
01:39:48,360 --> 01:39:51,360
Speaker 1: way to make money. You know, they're definitely better ways

1847
01:39:51,400 --> 01:39:53,000
Speaker 1: of doing it. I think, you know, if I could

1848
01:39:53,360 --> 01:39:55,519
Speaker 1: tell my kids to go into a type of investing,

1849
01:39:55,560 --> 01:39:57,639
Speaker 1: I'd probably tell them to do VC or something else.

1850
01:39:58,320 --> 01:40:02,800
Speaker 1: But I do think that you have to ensure that

1851
01:40:02,880 --> 01:40:05,040
Speaker 1: the career you're pursuing is something that you can be

1852
01:40:05,040 --> 01:40:07,000
Speaker 1: committed to for a long time, so that you're in

1853
01:40:07,040 --> 01:40:09,559
Speaker 1: it long enough to become an expert. I think that's

1854
01:40:10,040 --> 01:40:13,519
Speaker 1: perhaps the crucial element if you want to achieve great success.

1855
01:40:14,080 --> 01:40:16,479
Speaker 1: Make sure you stay committed to something long enough that

1856
01:40:16,520 --> 01:40:17,640
Speaker 1: you can become an expert.

1857
01:40:17,400 --> 01:40:21,200
Speaker 2: At really interesting and our final question, what do you

1858
01:40:21,240 --> 01:40:23,479
Speaker 2: know about the world of investing today? You wish you

1859
01:40:23,520 --> 01:40:26,280
Speaker 2: knew back in the early nineties when you were first

1860
01:40:26,320 --> 01:40:28,040
Speaker 2: getting started everything.

1861
01:40:28,479 --> 01:40:31,439
Speaker 1: I mean, I wish I knew you know gosh, I

1862
01:40:31,439 --> 01:40:33,000
Speaker 1: wish I knew everything. I guess the one if I

1863
01:40:33,000 --> 01:40:36,400
Speaker 1: could say, one big giant lesson that I've learned over

1864
01:40:36,400 --> 01:40:40,400
Speaker 1: the years is, you know, watch out for secular change.

1865
01:40:40,800 --> 01:40:43,080
Speaker 1: It's the killer. You can't be on the wrong side

1866
01:40:43,080 --> 01:40:45,360
Speaker 1: of secular change. So, you know, being on the wrong

1867
01:40:45,400 --> 01:40:48,519
Speaker 1: side of secular change the killer. You know, one example

1868
01:40:48,520 --> 01:40:51,880
Speaker 1: would be the long term decline of commodity prices. Right

1869
01:40:51,960 --> 01:40:54,919
Speaker 1: over a long period of time to generally speaking, commodity

1870
01:40:55,160 --> 01:40:58,920
Speaker 1: prices are trending down, particularly after adjusting for inflation, and

1871
01:40:59,000 --> 01:41:01,000
Speaker 1: so you know, it's one of many, you know, the

1872
01:41:01,000 --> 01:41:05,400
Speaker 1: wrong set of technological change or adoption of new technologies.

1873
01:41:05,600 --> 01:41:08,280
Speaker 1: You've got to be really careful about that, and you

1874
01:41:08,360 --> 01:41:11,559
Speaker 1: have to have a thesis that looks out if you're

1875
01:41:11,600 --> 01:41:14,160
Speaker 1: making a long term investment. So, you know, I think

1876
01:41:14,200 --> 01:41:17,200
Speaker 1: that that that's probably the most important lesson that I

1877
01:41:17,320 --> 01:41:19,800
Speaker 1: learned in my last you know, thirty years or so.

1878
01:41:19,880 --> 01:41:22,160
Speaker 1: That wasn't entirely self evident when I started.

1879
01:41:22,520 --> 01:41:25,960
Speaker 2: Huh, really, really very fascinating stuff. Tom, Thank you for

1880
01:41:26,040 --> 01:41:29,559
Speaker 2: being so generous with your time. We have been speaking

1881
01:41:29,600 --> 01:41:33,760
Speaker 2: with Tom Wagner, co portfolio manager and co founder of

1882
01:41:33,920 --> 01:41:38,160
Speaker 2: Nighthead Capital If you enjoy this conversation, well, check out

1883
01:41:38,160 --> 01:41:41,080
Speaker 2: any of the previous five hundred or so we've held

1884
01:41:41,479 --> 01:41:47,720
Speaker 2: over the past eight years. You can find those at iTunes, Spotify, YouTube,

1885
01:41:47,840 --> 01:41:51,400
Speaker 2: wherever you find your favorite podcasts. Sign up for my

1886
01:41:51,479 --> 01:41:54,240
Speaker 2: daily reading list at ridults dot com. Follow me on

1887
01:41:54,280 --> 01:41:57,960
Speaker 2: Twitter at ritults, follow all of the fine family of

1888
01:41:58,000 --> 01:42:02,479
Speaker 2: Bloomberg podcasts at podcast I would be remiss if I

1889
01:42:02,520 --> 01:42:04,720
Speaker 2: did not thank the crack team that helps put these

1890
01:42:04,760 --> 01:42:09,519
Speaker 2: conversations together each week. Sarah Livesey is my audio engineer.

1891
01:42:09,600 --> 01:42:14,080
Speaker 2: Attika Vaalbrun is my project manager. Jorn Russo is my researcher.

1892
01:42:14,520 --> 01:42:19,320
Speaker 2: Pariswald is my producer. I'm Barry Rudolts. You've been listening

1893
01:42:19,360 --> 01:42:35,720
Speaker 2: to Masters in Business on Bloomberg Radio.