WEBVTT - AI Innovations with Joe Lonsdale 0:00:02.440 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:09.560 --> 0:00:15.040 This is Master's in Business with Barry Ridholds on Bloomberg Radio. 0:00:16.480 --> 0:00:19.639 This week on the podcast Wow, this is really so 0:00:19.760 --> 0:00:23.600 exciting to share with you. We hosted a conference out 0:00:23.640 --> 0:00:27.520 in Huntington Beach, California, my firm ridhel Schwap Management along 0:00:27.560 --> 0:00:32.120 with Advisor Circle called future Proof. It's a giant event 0:00:32.479 --> 0:00:35.199 on the beach in Huntington Beach, California. 0:00:35.920 --> 0:00:36.479 Part of the. 0:00:36.440 --> 0:00:40.880 Event is a series of panels and interviews. In fireside chats, 0:00:41.640 --> 0:00:47.199 I got to sit down with Pallenteer co founder Joe Lonsdale. 0:00:48.120 --> 0:00:52.360 He's really a fascinating guy. He's been a serial entrepreneur, 0:00:53.400 --> 0:00:57.760 managing money for Peter Thiel, interning initially at a Whole 0:00:57.800 --> 0:01:03.880 Places PayPal, which he then just one successful company after another. 0:01:05.040 --> 0:01:08.840 Just a fascinating guy. So we spoke for about thirty 0:01:08.880 --> 0:01:12.399 thirty five minutes. I thought the conversation was fascinating. We 0:01:12.520 --> 0:01:17.880 talked not only about Pallenteer and the defense industry and 0:01:17.959 --> 0:01:21.360 how the world of warfare is changing. Lonsdale is a 0:01:21.440 --> 0:01:25.920 serial entrepreneur who has had success after success after success, 0:01:26.560 --> 0:01:29.440 and is still a relatively young guy. And there's more 0:01:29.520 --> 0:01:31.800 fascinating things to come from him. 0:01:32.240 --> 0:01:32.399 Here. 0:01:32.440 --> 0:01:37.760 It is my discussion with palenteers Joe Lonsdale in Huntington 0:01:37.800 --> 0:01:41.360 Beach at future Proof twenty twenty four. So I just 0:01:41.520 --> 0:01:44.800 highlighted a handful of things about your career, but I 0:01:44.840 --> 0:01:49.440 really want to delve into the specifics. You're at Stanford 0:01:50.120 --> 0:01:54.600 studying computer science and somehow you land a job as 0:01:54.640 --> 0:01:56.760 an intern at PayPal. 0:01:57.120 --> 0:01:58.360 Tell us a little bit about that. 0:01:58.800 --> 0:02:01.480 Well, this was a pretty cool place. So Elon Musk 0:02:01.560 --> 0:02:04.080 with his smartest friends started the company back then in 0:02:04.080 --> 0:02:07.080 the nineties called X and Peter Thiel and his smartest 0:02:07.080 --> 0:02:10.560 friends started Confinity, and they were two of eight competitors, 0:02:10.560 --> 0:02:12.920 and they decided rather and destroy each other, to merge. 0:02:13.040 --> 0:02:15.480 It was actually interesting times, like people were working so 0:02:15.520 --> 0:02:17.560 hard that some of the people working for Peter at 0:02:17.560 --> 0:02:19.760 one point had not gotten enough sleep and were suggesting 0:02:19.800 --> 0:02:21.920 ways to bomb the office of the other guys. 0:02:21.919 --> 0:02:23.200 They realized this is betterly bad. 0:02:23.240 --> 0:02:25.840 We should probably stop this, and so the companies merged 0:02:25.840 --> 0:02:27.840 a form PayPal, and a lot of the most talented 0:02:27.840 --> 0:02:29.960 people from stan Aford computer science went there. 0:02:30.000 --> 0:02:32.080 At that time. It was amazing place. 0:02:32.120 --> 0:02:35.200 Elon kept trying to rename PayPal back to x dot com, 0:02:35.240 --> 0:02:36.720 which they didn't let him do, so I guess he 0:02:36.760 --> 0:02:40.320 eventually got his way twenty years later with Twitter. But no, 0:02:40.680 --> 0:02:42.600 it was a really fun place to learn and a 0:02:42.639 --> 0:02:44.720 lot of my friends there, these guys were like ten 0:02:44.760 --> 0:02:46.960 or fifteen years older than me. A lot of people 0:02:47.000 --> 0:02:48.959 who were working there ended up going on to start 0:02:49.360 --> 0:02:53.880 YouTube and Yelp and you know, LinkedIn and all sorts 0:02:53.919 --> 0:02:54.600 of great companies. 0:02:54.680 --> 0:02:56.400 So a fun place to learn. 0:02:56.320 --> 0:02:58.320 Right, that was quite a brain trust over there. 0:02:58.480 --> 0:03:01.520 Yeah, your next role is it Peter Teal's hedge fund, 0:03:01.639 --> 0:03:06.200 Clarium Capital. You described that as one of the top 0:03:06.480 --> 0:03:09.400 intellectual think tanks in the world. Tell us a little 0:03:09.400 --> 0:03:12.880 bit about your experience working with Teal at Clarium Capital. 0:03:13.840 --> 0:03:14.120 Yeah. 0:03:14.160 --> 0:03:17.320 Sure, that was a global macro hedge fund, and so 0:03:17.800 --> 0:03:20.040 that's a really fun part of finance where you just 0:03:20.040 --> 0:03:21.960 get to try to figure out at a high level 0:03:22.040 --> 0:03:24.960 what's going on in the world, and lots of arguments 0:03:24.960 --> 0:03:28.200 about politics and economics and history and financial markets, and 0:03:28.240 --> 0:03:30.840 you try to on one hat as quantitative you're modeling 0:03:31.280 --> 0:03:33.840 different things like, you know, the Australian currency versus a 0:03:33.840 --> 0:03:37.280 price of commodities versus you know, what's going on in China, 0:03:37.480 --> 0:03:38.960 and on the other hand, you're kind of just just 0:03:39.000 --> 0:03:41.000 discussing what's going to happen the next five or ten years. 0:03:41.000 --> 0:03:43.480 And we you know, we had a really good ten 0:03:43.520 --> 0:03:45.280 year run. But why I was there. I tried to 0:03:45.360 --> 0:03:47.160 hire a bunch of my smartest friends to help us, 0:03:47.200 --> 0:03:49.640 and they thought finance was boring, and we started a 0:03:49.720 --> 0:03:52.960 project based on how PayPal was going after all the 0:03:52.960 --> 0:03:54.800 bad guys because you know, the child in Russian mafia 0:03:54.800 --> 0:03:56.600 I had been stealing our money at PayPal, and we 0:03:56.680 --> 0:04:00.640 ended up building these investigative tools and create pounder out 0:04:00.640 --> 0:04:01.880 of there. So that's what that's what I ended up 0:04:01.880 --> 0:04:02.440 doing it instead. 0:04:02.480 --> 0:04:04.680 So I just want to put a little flesh on 0:04:04.720 --> 0:04:06.560 the bones. You said you had a pretty good run. 0:04:06.960 --> 0:04:09.840 You ended up with a very nice ten year track record, 0:04:09.880 --> 0:04:12.920 but first two years out of the gate something like 0:04:12.960 --> 0:04:15.120 plus thirty percent and plus fifty percent? 0:04:16.000 --> 0:04:17.520 Am I getting those numbers about right? 0:04:18.000 --> 0:04:18.240 Yeah? 0:04:18.360 --> 0:04:20.360 I mean, if you want to know, this is macrofinance, right, 0:04:20.400 --> 0:04:22.560 So it's a fun area. Like an example of one 0:04:22.600 --> 0:04:24.640 of the best trades we figured out that worked for 0:04:24.680 --> 0:04:29.360 a few years is Greenspan had cut interest rates and 0:04:29.400 --> 0:04:32.919 there is more money than ever before going into the GSS, 0:04:33.000 --> 0:04:34.680 Fanny May and Freddie Mack, and so you had this 0:04:34.800 --> 0:04:37.480 massive amount of money there, and because these guys were 0:04:37.480 --> 0:04:40.480 so big, when they would hedge their mortgage portfolios, it 0:04:40.520 --> 0:04:43.360 would move all the global fixed income. And so what 0:04:43.400 --> 0:04:45.240 happened was, you remember, like late two thousand and two, 0:04:45.320 --> 0:04:49.320 you had like five six percent interest rates and the 0:04:49.360 --> 0:04:52.880 race started to fall, and so people started refinancing their homes. 0:04:53.080 --> 0:04:55.279 And when people start refinancing their homes, the duration of 0:04:55.320 --> 0:04:58.440 mortgages goes down. So in order to balance the durations, 0:04:58.480 --> 0:05:01.080 Fanny Man and Freddie Mack had to buy huge amounts 0:05:01.080 --> 0:05:02.960 of ten year notes, but they about to buy so 0:05:03.040 --> 0:05:05.480 much that actually made their industrates go lower, which led 0:05:05.480 --> 0:05:07.440 to more refinancing, which led to have them having buying more. 0:05:07.480 --> 0:05:09.600 So was this feedback effect, and you're able to measure 0:05:09.600 --> 0:05:10.279 the feedback effect. 0:05:10.320 --> 0:05:11.279 You got down to like one. 0:05:11.160 --> 0:05:14.919 Year duration three percent ten year notes back then, and 0:05:14.800 --> 0:05:16.560 then all of a sudden it was snapped back really 0:05:16.600 --> 0:05:18.080 quick because all the money was seeing the economy. So 0:05:18.120 --> 0:05:20.080 anyway you can kind of mapped this stuff out, figure 0:05:20.080 --> 0:05:22.360 out how to trade fixed income. You know, it's a fun, 0:05:22.400 --> 0:05:23.520 fun environment. 0:05:23.360 --> 0:05:25.000 That that must have been a fun environment. 0:05:25.279 --> 0:05:29.400 So, so you mentioned Palenteer, I have to mention how 0:05:29.440 --> 0:05:30.160 old were you. 0:05:30.240 --> 0:05:32.280 When you were one of the co founders of Palenteer. 0:05:32.320 --> 0:05:33.080 You were a young guy. 0:05:33.279 --> 0:05:36.440 It's twenty one. I'm forty two now, so it's a 0:05:36.440 --> 0:05:37.040 long time ago. 0:05:37.400 --> 0:05:41.880 And since now we're going to talk about Palenteer. Congratulations 0:05:41.960 --> 0:05:44.080 they're entering the S and P five hundred. 0:05:44.200 --> 0:05:46.800 It's an an awesome milestone. 0:05:46.360 --> 0:05:48.839 At twenty one, did you ever imagine something like that. 0:05:49.040 --> 0:05:51.520 Yeah, I was a pretty obnoxious kid, so you know, actually, 0:05:51.880 --> 0:05:54.880 Palenteer it was great. We gave offers, so we were 0:05:54.880 --> 0:05:57.320 known for having the top engineering culture. Peter was investor 0:05:57.360 --> 0:06:00.000 in Facebook at the time, so our competition was Palenter 0:06:00.120 --> 0:06:02.480 and Facebook for the best engineers. And you really had 0:06:02.480 --> 0:06:03.919 to convince these people this is going to be a 0:06:03.920 --> 0:06:04.720 big upside place. 0:06:04.760 --> 0:06:06.800 And so you give them offers, and you give them 0:06:06.800 --> 0:06:07.400 three options. 0:06:07.440 --> 0:06:10.839 They could have a higher salary but less equity, less stock, 0:06:11.400 --> 0:06:13.440 you know, medium, medium, where you have a lower salary 0:06:13.440 --> 0:06:14.640 but more stock, and. 0:06:14.600 --> 0:06:16.400 I draw up on the option for the first two 0:06:16.440 --> 0:06:17.000 hundred people. 0:06:17.279 --> 0:06:19.000 We'd put a table and we'd say, here's how much 0:06:19.000 --> 0:06:21.960 your stock might be worth. If this company's worth half 0:06:22.000 --> 0:06:25.080 a billion dollars or a billion dollars or five billion dollars. 0:06:25.120 --> 0:06:27.800 I got so much shit for including five billion dollars 0:06:27.839 --> 0:06:28.839 as one of the possibilities. 0:06:28.880 --> 0:06:30.440 People are like, this is a ridiculous show. 0:06:30.520 --> 0:06:33.440 And the market cap today it's about eighty two billion now, 0:06:33.560 --> 0:06:35.799 So it worked out for it's a long time. 0:06:35.640 --> 0:06:38.359 But it worked out twenty years. It for eighty billion dollars. 0:06:38.360 --> 0:06:39.320 It's a well worth trade. 0:06:39.360 --> 0:06:44.839 So when the company launches, it's a big data analytics company. 0:06:44.880 --> 0:06:50.000 Today the focus is defense, commercial and government. Was this 0:06:50.160 --> 0:06:53.800 a natural evolution or was there a pivot somewhere alonger No, we. 0:06:53.760 --> 0:06:56.039 Started the company to kill the bad guys. Yeah, let's 0:06:56.040 --> 0:06:57.920 be clear. I don't know they're supposed to say. I 0:06:57.920 --> 0:06:59.480 don't work there anymore, so I can say it now. 0:06:59.600 --> 0:07:01.520 We started company after nine to eleven to kill the 0:07:01.520 --> 0:07:03.839 bad guys and stop attacks. And we ended up helping 0:07:03.920 --> 0:07:06.400 run the targeting systems in forty alted countries and wiping 0:07:06.440 --> 0:07:08.320 out over ten thousand terrorists, including a lot of the 0:07:08.320 --> 0:07:09.120 most important ones. 0:07:09.200 --> 0:07:11.320 So, and it protects celebrities too. But let's get the 0:07:11.320 --> 0:07:11.800 bad guys. 0:07:11.920 --> 0:07:16.120 Yeah, And it turns out the hard data problems you 0:07:16.200 --> 0:07:19.440 solve when you run the infrastructure could be used for 0:07:19.440 --> 0:07:21.640 a lot of other things. You're basically building ontologies of 0:07:21.680 --> 0:07:24.800 information and workflows and organizing all the data the government 0:07:24.920 --> 0:07:26.520 And when we start a palenter, the government at the 0:07:26.520 --> 0:07:30.200 time spent like thirty eight billion dollars gathering data, So 0:07:30.360 --> 0:07:32.040 I don't even know what it spends now, but massive 0:07:32.040 --> 0:07:35.400 amounts of information and tens of thousands of databases. How 0:07:35.400 --> 0:07:36.720 to hell do you make all this stuff talk to 0:07:36.720 --> 0:07:39.040 each other? And so by solving those problems to kind 0:07:39.040 --> 0:07:41.480 of organize that, it turns out you now how the 0:07:41.560 --> 0:07:42.040 data in a. 0:07:42.120 --> 0:07:44.560 Form where AI can be used really easily. 0:07:44.600 --> 0:07:47.560 So today polunteers really caught the AI wave because it 0:07:47.680 --> 0:07:49.600 enables AI workflows no one else can. 0:07:50.000 --> 0:07:54.240 And am I correct in saying During COVID, plunteer helped 0:07:54.280 --> 0:07:57.440 governments figure out how to monitor, how to track, how 0:07:57.440 --> 0:08:01.240 to roll out vaccines. What was Pallenteer's role during the pandemic. 0:08:02.240 --> 0:08:04.960 Yeah, I mean it's it's it's used by the armed 0:08:05.000 --> 0:08:07.800 forces to organize all their logiosis and supplies and everything. 0:08:07.840 --> 0:08:09.320 So it's a very similar problem. 0:08:09.960 --> 0:08:12.239 How do you use all the data coming in about 0:08:12.240 --> 0:08:14.720 how to prioritize things in a pandemic? Because you're coordinating 0:08:14.760 --> 0:08:17.560 just massive numbers of things and production and all sorts 0:08:17.600 --> 0:08:19.600 of stuff. I mean, you have a lot of fortunate 0:08:19.640 --> 0:08:21.840 y funder companies using it to manage all of their 0:08:22.160 --> 0:08:22.920 and optimize all. 0:08:22.880 --> 0:08:25.200 Of their production and distribution. So obviously it works very 0:08:25.200 --> 0:08:25.560 well for that. 0:08:25.560 --> 0:08:27.440 For the pandemic, I think, I think like thirty six 0:08:27.520 --> 0:08:29.440 countries used it for that too, So it's good. 0:08:29.720 --> 0:08:33.560 So it's a proven technology today. What was it like 0:08:33.920 --> 0:08:38.880 getting governments to recognize the value of this in the 0:08:38.920 --> 0:08:40.880 early two thousands, they would distress It. 0:08:41.160 --> 0:08:43.920 Was almost as difficult as it was to get Arias 0:08:43.960 --> 0:08:48.520 to take auta par seriously the first five years. So no, 0:08:48.720 --> 0:08:52.520 it's uh, it's actually very funny. You do you think 0:08:52.559 --> 0:08:54.720 you think after a punteer, we were like, oh, this 0:08:54.760 --> 0:08:57.559 is going to be easy. No, it's it's listen, governments. 0:08:58.120 --> 0:09:01.400 Governments are very funny. They they want to use things 0:09:01.400 --> 0:09:03.079 that are new and innovative, but they want to use 0:09:03.120 --> 0:09:05.600 things that everyone else is already using. So breaking in 0:09:05.760 --> 0:09:07.959 is a very chicken and egg problem. That's very hard. 0:09:08.320 --> 0:09:12.040 It turns out that there's a lot of money in 0:09:12.040 --> 0:09:15.920 the special forces and special operations units who frankly their 0:09:15.960 --> 0:09:17.360 lives are a lot more on the line than almost 0:09:17.400 --> 0:09:20.480 anyone else because they're they're constantly doing really dangerous missions 0:09:20.480 --> 0:09:22.120 around the world, and then they're running a lot of 0:09:22.120 --> 0:09:24.560 the most important things that our armed forces do. And 0:09:24.640 --> 0:09:27.760 those groups have such bold and such confident people that 0:09:27.800 --> 0:09:30.760 we're able to break in work with them, get them 0:09:30.760 --> 0:09:32.320 to prove that it worked, and then that kind of 0:09:32.360 --> 0:09:34.360 set the precedent for other parts of government to then 0:09:34.360 --> 0:09:34.800 work with us. 0:09:34.800 --> 0:09:36.760 So thank thank goodness for our special obsc groups. 0:09:36.880 --> 0:09:39.600 So wasn't DARPA that first started with you or would 0:09:39.600 --> 0:09:40.800 did you have any work with them? 0:09:41.280 --> 0:09:43.200 I think DARPA was helpful a little bit, but it 0:09:43.240 --> 0:09:45.599 really the thing that really matters is people using it 0:09:45.679 --> 0:09:47.959 on the ground where lives are on the line. You want, 0:09:48.000 --> 0:09:49.679 if you have something that's the best you want to 0:09:50.559 --> 0:09:52.920 it's going to break in because people need it because 0:09:52.920 --> 0:09:55.360 there because something something is existential where they're going to 0:09:55.440 --> 0:09:56.679 die if they don't have it. They're not gonna be 0:09:56.679 --> 0:09:57.960 able to the mission if they don't have it. So 0:09:58.240 --> 0:10:00.760 DARPA is more of an academic thing. That's smart, but 0:10:00.800 --> 0:10:02.679 I'd much rather work with the people whose lives are 0:10:02.720 --> 0:10:04.440 on the line, and that that's how you really break 0:10:04.480 --> 0:10:06.120 in with the best things you. 0:10:06.120 --> 0:10:09.160 Mentioned at a par and Ai. 0:10:09.559 --> 0:10:12.120 Just so you know, chat GBT is what told me 0:10:12.160 --> 0:10:13.760 it was five trillion dollars. 0:10:14.000 --> 0:10:16.120 Well, nachieven, chat GBT is behind. 0:10:16.679 --> 0:10:20.400 So so you found the company in two thousand and nine. 0:10:20.480 --> 0:10:21.680 Today you're the chairman. 0:10:22.160 --> 0:10:26.239 It began life as a cloud based software platform specializing 0:10:26.280 --> 0:10:31.280 in data aggregation, analytics, and reporting of portfolios. 0:10:32.000 --> 0:10:33.840 What was the original business model? 0:10:34.160 --> 0:10:37.040 Well, you know, I had my family office at first, 0:10:37.200 --> 0:10:39.120 right around then it was a smaller family office, and 0:10:39.120 --> 0:10:41.280 then I had a lot of friends and people I 0:10:41.400 --> 0:10:44.400 talked to who ran family offices, who ran rias. There 0:10:44.400 --> 0:10:47.080 were new groups on the West Coast like Iconic and 0:10:47.120 --> 0:10:50.520 others building these firms around the tech world on raa Land, 0:10:51.120 --> 0:10:54.680 and everyone hated their software. And I looked at it 0:10:54.720 --> 0:10:56.320 and it was like, this is a mess, and there's 0:10:56.360 --> 0:10:58.360 not a really good solution here. And you know, we 0:10:58.360 --> 0:11:00.400 were mapping out there's a lot of new possibility thanks 0:11:00.440 --> 0:11:02.080 to the cloud, thanks to what you could do with data. 0:11:02.120 --> 0:11:04.800 So we said, let's build something that's better. And I 0:11:04.920 --> 0:11:07.240 naively thought we would have something that was significantly better 0:11:07.240 --> 0:11:09.439 within a year or two. It turned out it took 0:11:09.480 --> 0:11:11.920 us hundreds of millions of dollars in several years. But 0:11:11.960 --> 0:11:13.680 I am quite confidence the best at this point. 0:11:14.000 --> 0:11:16.680 So the genesis was, Hey, I have to manage my 0:11:16.760 --> 0:11:19.880 own capital and the tools aren't good, I'm going to 0:11:20.000 --> 0:11:22.560 create it. Or was the original plan. I have an 0:11:22.600 --> 0:11:24.120 idea and everybody should be using it. 0:11:23.880 --> 0:11:26.880 It was a business I think in general, in general, 0:11:26.880 --> 0:11:29.560 when you have like some area that you realize is 0:11:29.559 --> 0:11:32.040 broken for you and for people you know, rather than 0:11:32.040 --> 0:11:33.679 just build it for yourself, I think it's like it's 0:11:33.679 --> 0:11:35.319 a good excuse to build a business around it. So 0:11:35.440 --> 0:11:37.680 I was actually CEO full time for a few years 0:11:37.720 --> 0:11:40.240 getting us off the ground. Eric Poryer, who's running for 0:11:40.320 --> 0:11:42.560 over ten years now, is a much better CEO than me. 0:11:42.600 --> 0:11:44.640 So I'm a proud chairman now. But no, we built 0:11:44.679 --> 0:11:47.760 it as a business. I mean, listen, you guys. When 0:11:47.760 --> 0:11:50.080 we first took there's seven thousand custodians in the US, 0:11:50.240 --> 0:11:52.720 and so we first hooked up data. The biggest custodians 0:11:52.760 --> 0:11:55.720 are people like Fidelity and Schwab and others. And we 0:11:55.760 --> 0:11:57.280 get this all set up. We spent, like you know, 0:11:57.320 --> 0:11:59.360 a bunch of time on the first year. We hook 0:11:59.440 --> 0:12:01.840 up the live day we're getting going and it's all wrong. 0:12:02.360 --> 0:12:04.240 They're like, oh, what do we do wrong? And you know, 0:12:04.280 --> 0:12:06.920 and it turns out even those custodians just how bad 0:12:07.000 --> 0:12:09.560 data this is. The space is a message that shows 0:12:09.559 --> 0:12:11.760 out there's lots of hard problems to solve to make 0:12:11.800 --> 0:12:13.720 this stuff all work right together. So it's it is 0:12:14.000 --> 0:12:17.160 and everyone wants to customizing differently. Every ria has their 0:12:17.200 --> 0:12:19.480 own way of doing things, their own way of showing things, 0:12:19.520 --> 0:12:20.760 and so which it. 0:12:20.679 --> 0:12:22.360 Turned out it took us several more years to get 0:12:22.360 --> 0:12:22.679 it right. 0:12:22.960 --> 0:12:26.319 So so seven trillion dollars, you have some very large 0:12:26.440 --> 0:12:29.520 rias on it, you have broker dealers like Morgan standing 0:12:29.600 --> 0:12:32.719 on it. How big can at a par scale? 0:12:33.200 --> 0:12:36.320 Well, I think there's about two hundred and fifty trillion 0:12:36.360 --> 0:12:39.000 dollars globally that's addressable. Maybe only one hundred and fifty to 0:12:39.040 --> 0:12:41.840 two hundred of that would use a resolution. So even 0:12:41.840 --> 0:12:43.720 though we're going really quickly now I think we're growing 0:12:43.840 --> 0:12:46.600 like over thirty percent a year, still are still probably 0:12:46.600 --> 0:12:48.720 at least an our decade of fast growth. 0:12:48.800 --> 0:12:50.880 I mean, this is a giant market, and you know, 0:12:50.880 --> 0:12:51.600 we're still learning. 0:12:51.600 --> 0:12:53.800 I think I think they're still learning every every week 0:12:53.800 --> 0:12:56.360 from clients about how to serve them better. There's there's 0:12:56.480 --> 0:12:58.599 I think about twelve hundred firms or so give or 0:12:58.640 --> 0:13:01.040 take on the platform now, and and you know, I'd 0:13:01.040 --> 0:13:03.080 love to see them triple out over the next over 0:13:03.120 --> 0:13:04.280 the next few years. 0:13:04.679 --> 0:13:07.160 So the most of what out of part focuses on 0:13:07.200 --> 0:13:11.520 our private our public markets, stops, bonds, mutual funds, ETFs. 0:13:11.960 --> 0:13:15.160 But you also said, hey, this private market thingy is 0:13:15.160 --> 0:13:16.200 going to get big one day. 0:13:16.360 --> 0:13:18.800 Well, being able to report on every possible thing someone 0:13:18.840 --> 0:13:20.280 owns its key for out of part, but out of 0:13:20.280 --> 0:13:22.400 by out of part itself doesn't help people access the 0:13:22.400 --> 0:13:23.040 private markets. 0:13:23.280 --> 0:13:27.560 So let's talk a little bit about opto and that platform. 0:13:27.760 --> 0:13:31.360 The idea behind opto and your chairman of Opto Investments 0:13:31.760 --> 0:13:34.720 is to focus on private markets. Tell us what you 0:13:34.760 --> 0:13:38.320 see in that space. Well, what I saw is that 0:13:38.480 --> 0:13:40.000 the way people tend to come to you. 0:13:40.080 --> 0:13:41.960 So so obviously I run an investment firm, A lot 0:13:41.960 --> 0:13:43.480 of my friends run investment firms, have a lot of 0:13:43.520 --> 0:13:46.280 strong opinions about private markets, right, and this is this 0:13:46.320 --> 0:13:49.120 is an area where in the nineteen nineties there is 0:13:49.200 --> 0:13:51.120 a lot more public companies. There's a small number of 0:13:51.160 --> 0:13:55.160 private companies today, you have more private companies and public companies, 0:13:55.200 --> 0:13:57.679 and frankly, a lot of my smartest friends, people doing 0:13:57.760 --> 0:14:00.439 things that are changing how the world works, are mostly 0:14:00.480 --> 0:14:03.120 doing that within private companies. And so today, if you're 0:14:03.120 --> 0:14:06.480 not accessing private markets, you're going to get left way 0:14:06.520 --> 0:14:09.040 behind your returns. I think, especially the next ten years, 0:14:09.440 --> 0:14:12.960 given how AI is changing productivity in so many parts 0:14:12.960 --> 0:14:15.440 of our economy, we could talk about it's very clear 0:14:15.480 --> 0:14:17.920 you get left behind, and that it's messed up that 0:14:18.200 --> 0:14:20.080 a lot of people don't have access to what's clearly 0:14:20.080 --> 0:14:22.800 the higher returning areas if if they're done right. And 0:14:22.840 --> 0:14:24.800 what I saw is the way people were trying to 0:14:24.880 --> 0:14:28.440 sell people on private market stuff is basically purely a 0:14:28.480 --> 0:14:30.520 brokerage model where they come to your firm and they say, 0:14:30.520 --> 0:14:33.120 we're going to make money by selling you kind of 0:14:33.120 --> 0:14:36.400 mediocre crap. That's how a lot of these things operate. 0:14:36.440 --> 0:14:39.400 And I think that's actually frankly discussing it's not it's 0:14:39.440 --> 0:14:41.240 just not. It's just misaligned, Like it's not how any 0:14:41.280 --> 0:14:43.560 of us would do business normally. Is that you you 0:14:43.600 --> 0:14:45.400 don't want to put money into the things that you're 0:14:45.400 --> 0:14:47.280 getting paid to put money in, so you want to 0:14:47.640 --> 0:14:49.160 you want to have an aligned model where we all 0:14:49.200 --> 0:14:51.680 make money together by accessing the best things. And private 0:14:51.720 --> 0:14:54.920 market is especially venture capital, but frankly, certain parts of PE, 0:14:55.080 --> 0:14:57.920 certain parts of all credit, all these other things, they 0:14:57.960 --> 0:14:59.880 have a very high disparity. You really want to get 0:15:00.080 --> 0:15:02.960 in the top decile, top quartile stuff and you're gonna 0:15:03.000 --> 0:15:05.080 do great and if you get into mediocre stuff, you're 0:15:05.120 --> 0:15:07.800 gonna have mediocre results. And so so just the whole 0:15:07.800 --> 0:15:10.200 spaces seemed misaligned to me. And then on top of that, 0:15:10.800 --> 0:15:12.920 it's really stressful for a lot of people to get 0:15:12.960 --> 0:15:14.840 all their clients into these things because they're just lots 0:15:14.880 --> 0:15:19.080 more paperwork, lots of messes, lots of legal stuff, and like, 0:15:19.120 --> 0:15:21.920 why not make it as close as possible to doing 0:15:21.920 --> 0:15:24.240 something in the public markets to do something in private markets? 0:15:24.360 --> 0:15:26.920 And really technology and AI can solve that. So opto 0:15:27.120 --> 0:15:30.240 it's about making people aligned is having one platform. 0:15:29.960 --> 0:15:30.800 Where you do everything. 0:15:30.840 --> 0:15:33.040 And frankly, it's about using my network and my friends 0:15:33.120 --> 0:15:35.480 networks to put what we think is the very best 0:15:35.480 --> 0:15:37.000 stuff on it that my family office is doing, and 0:15:37.080 --> 0:15:38.120 let's share that with others. 0:15:38.640 --> 0:15:42.480 So at this event, we have over two thousand rias 0:15:44.200 --> 0:15:48.040 of these some of them are single practice, small small operations. 0:15:48.040 --> 0:15:51.360 Some are really big firms with tens of billions, hundreds 0:15:51.360 --> 0:15:55.680 of billions of dollars on them. How can large and 0:15:55.680 --> 0:15:59.000 small firms integrate opto into their practice? 0:15:59.120 --> 0:15:59.960 Yeah, I mean they go. 0:16:00.200 --> 0:16:03.200 There are both lots of small firms and some very 0:16:03.280 --> 0:16:04.640 large firms now on opto. 0:16:04.720 --> 0:16:06.400 The goals that it makes it as. 0:16:06.240 --> 0:16:09.400 Easy as possible, similar to Adapar, which has obviously been 0:16:09.440 --> 0:16:11.800 around longer and as a giant, giant company. Now, I mean, 0:16:11.880 --> 0:16:13.840 opto is growing very quickly and we want to learn 0:16:14.080 --> 0:16:16.760 from rias like what about this could be easier for 0:16:17.080 --> 0:16:19.480 you to use it? But we have dozens of firms 0:16:19.480 --> 0:16:22.040 that have that have created custom funds on it for 0:16:22.160 --> 0:16:24.440 their clients and access things that I think otherwise they 0:16:24.440 --> 0:16:26.560 never would have accessed, and made it really easy for 0:16:26.600 --> 0:16:27.040 them to do it. 0:16:27.080 --> 0:16:29.240 So I would love people's feedback on what we're doing. 0:16:29.240 --> 0:16:31.920 Here is a younger company but growing really fast, and 0:16:32.040 --> 0:16:34.160 I'm really proud to kind of get people the best 0:16:34.200 --> 0:16:36.200 access in the alt world. I think it's such a fun, 0:16:36.200 --> 0:16:38.480 interesting world that a lot of people don't know how 0:16:38.520 --> 0:16:40.520 to approach if they know, if they haven't been doing 0:16:40.560 --> 0:16:42.160 it in the past, or if they have been doing 0:16:42.240 --> 0:16:44.840 some but maybe they would have certain expertise in other areas. 0:16:44.840 --> 0:16:47.440 Sometimes for our custom funds, like they'll choose certain areas, 0:16:47.640 --> 0:16:50.040 certain managers they know, but they will compliment it and 0:16:50.080 --> 0:16:51.880 help them do that with other areas they haven't studied 0:16:51.880 --> 0:16:52.320 as much. 0:16:52.560 --> 0:16:54.600 And so you know, we'll love people's feedback. 0:16:54.840 --> 0:16:57.040 So you wear a lot of hats, you're chairmen of 0:16:57.080 --> 0:17:00.680 out of par you're deeply involved in, opto tell us 0:17:00.720 --> 0:17:01.800 about your day job. 0:17:01.920 --> 0:17:04.359 Eight VC a venture capital front. 0:17:04.920 --> 0:17:05.960 Yeah, I know. At the end of the day, I 0:17:05.960 --> 0:17:06.600 went an entrepreneur. 0:17:06.640 --> 0:17:08.920 I like to build things, and a lot of a 0:17:08.960 --> 0:17:12.960 lot of the people from from palent here from Adapar 0:17:13.359 --> 0:17:15.840