WEBVTT - ESG, TMT, Equality, And Polestar (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.320 at Bloomberg dot com slash podcast. E s G Investing. 0:00:23.440 --> 0:00:26.360 I first started hearing about it maybe ten years ago 0:00:26.440 --> 0:00:30.840 from some of my institutional investor clients in Europe. First 0:00:31.280 --> 0:00:34.800 they roll into it like, is Disney is environmental, social 0:00:34.880 --> 0:00:37.560 and governance? And I said, I think Disney is okay. 0:00:37.600 --> 0:00:39.240 That was my big stock pick of the day back 0:00:39.240 --> 0:00:42.440 in the day. I think it's s d okay. I mean, 0:00:42.600 --> 0:00:44.839 it's Mickey Mouse, right, I mean, how bad could it 0:00:44.880 --> 0:00:46.360 be from the E s G perspective? But a lot 0:00:46.360 --> 0:00:49.760 of pope folks wrong. No, I think I'm okay. I 0:00:49.760 --> 0:00:52.920 think I'm okay. It's Mickey's pretty good. Mickey, Mickey, Mickey's 0:00:52.920 --> 0:00:55.040 pretty good. But a lot of folks it's obviously issue 0:00:55.040 --> 0:00:57.440 has become a major major trend. I think it's gone 0:00:57.480 --> 0:01:00.560 two ways. It's gone. On the one hand, it's it's 0:01:00.760 --> 0:01:04.760 been a good label to use for marketing, right, and 0:01:05.000 --> 0:01:07.920 we've seen that takeoff and really sputter out over the 0:01:08.040 --> 0:01:09.840 last couple of months because E s G E t 0:01:10.040 --> 0:01:12.360 F s have now gone negative and let's look at somebody. 0:01:13.160 --> 0:01:15.040 I was gonna say, it's and the the other way 0:01:15.240 --> 0:01:19.520 it's gone, Um, people who are activists or is activists 0:01:19.560 --> 0:01:23.280 the right term. Maybe people who actually do something with 0:01:23.440 --> 0:01:25.720 their steaks, you know, put their money where their mouth 0:01:25.880 --> 0:01:27.720 is and change the world. We have one of those 0:01:27.720 --> 0:01:30.120 people in the office in the studio right now, Yasmin 0:01:30.200 --> 0:01:31.920 Dia Bilder joins us. She's the head of E t 0:01:32.120 --> 0:01:35.000 F S and managing director at Engine Number one, which 0:01:35.080 --> 0:01:38.600 you know probably from last year's proxy battle that won 0:01:38.720 --> 0:01:41.680 them three spots on the board. So it's been great 0:01:41.680 --> 0:01:43.960 to have you in here. Um, talk to us about 0:01:44.280 --> 0:01:47.000 the first of all, the kind of crash and burn 0:01:47.200 --> 0:01:49.920 of the marketing side of E s G investing, because, 0:01:49.960 --> 0:01:53.400 like I said, E t F flows have gone negative. Now, yeah, 0:01:53.440 --> 0:01:55.600 it's a really interesting trend. You're scene right now, So 0:01:55.680 --> 0:01:57.720 I should say off the bat, we don't see ourselves 0:01:57.840 --> 0:02:00.160 as E s G providers, but let's talk definition. What 0:02:00.360 --> 0:02:03.640 is E s G investing. You mentioned environmental, social, and 0:02:03.720 --> 0:02:06.960 governance data. Ultimately, what most of these strategies are doing 0:02:07.000 --> 0:02:10.519 they're trying to rate companies and rank companies. So ultimately 0:02:10.600 --> 0:02:15.360 they're saying what companies look quote unquote best across environmental, social, 0:02:15.400 --> 0:02:17.799 and governance issues and what look worst? And then many 0:02:17.880 --> 0:02:20.400 strategies are built off the back of it. Um Typically 0:02:20.440 --> 0:02:23.040 what you see is strategies that exclude the worst or 0:02:23.160 --> 0:02:25.680 by the best. The challenge with the space and you're 0:02:25.680 --> 0:02:27.960 seeing it sort of play out real time is first 0:02:28.040 --> 0:02:30.280 and foremost, what is a good company and what's a 0:02:30.320 --> 0:02:33.680 bad company? Right Like, many of these data providers actually 0:02:33.720 --> 0:02:37.600 have no correlation across what where they actually rank companies. 0:02:37.600 --> 0:02:40.560 In fact, Facebook is the best example. Some rank it 0:02:40.680 --> 0:02:43.360 is a top quartel, some rank its bottom quartel. It's 0:02:43.400 --> 0:02:47.160 a very personal discussion, insane. Now you see the performances. 0:02:47.200 --> 0:02:48.840 The other thing though, which is it? It tends to 0:02:48.919 --> 0:02:52.200 be that many of these portfolios are just overweight technology 0:02:52.520 --> 0:02:54.360 and underweight oiling gas and so what are you seeing 0:02:54.400 --> 0:02:57.040 the last couple? Because Exon is clearly a bad company 0:02:57.240 --> 0:02:59.480 right from it. I don't know how they are in 0:02:59.639 --> 0:03:02.799 terms of the social and governance side of things. But 0:03:02.880 --> 0:03:06.000 in terms of environmental you just measure them by you know, 0:03:06.600 --> 0:03:10.120 CEO two emissions. Surely X it's one of the worst 0:03:10.160 --> 0:03:12.880 companies in the world. Right, we'll all talk about our 0:03:12.919 --> 0:03:15.280 campaign and what we were hoping to see for X 0:03:15.360 --> 0:03:17.919 on mobiles. It's the anniversary kind of it's right around 0:03:17.919 --> 0:03:19.959 now is when we had what we were able to 0:03:20.000 --> 0:03:22.720 successfully place three people on the board of directors of Exxon, 0:03:22.840 --> 0:03:25.240 and we did that with owning just two basis points 0:03:25.280 --> 0:03:28.840 in the company. It's very fashion. I mean, if I 0:03:28.919 --> 0:03:30.600 were on that board. But but you know what was 0:03:30.680 --> 0:03:34.359 interesting is we really focused our argument on the shareholder 0:03:34.440 --> 0:03:36.440 argument for what we wanted to talk about, not the 0:03:36.520 --> 0:03:39.760 morality climate argument. And what we were really focusing on 0:03:39.920 --> 0:03:42.160 was a few things. First, it was all about governance. 0:03:42.560 --> 0:03:44.760 It was about the fact that, whether you like it 0:03:44.880 --> 0:03:46.520 or not, whether you believe in climate change or not, 0:03:47.200 --> 0:03:50.680 energy is going through huge transformation, whether it's government regulation 0:03:50.920 --> 0:03:54.200 or shifting consumer preferences, and we felt that the board 0:03:54.480 --> 0:03:58.640 would benefit from additional folks who had real, true transformational 0:03:58.760 --> 0:04:02.760 energy experience. It was also about their capital allocation strategy. 0:04:03.280 --> 0:04:05.200 And so I think the real interesting thing from the 0:04:05.280 --> 0:04:07.520 campaign for me was two fold one was you can 0:04:07.600 --> 0:04:09.720 own a small part of a company, but if you 0:04:09.800 --> 0:04:13.160 focus on the shareholder value argument, you can bring people 0:04:13.200 --> 0:04:15.960 along with you. Um. And the other is that you know, 0:04:16.279 --> 0:04:19.560 moving the conversation from ideology to economics, and that was 0:04:19.600 --> 0:04:23.520 where we had our success. That's key, right, that's super key, 0:04:23.760 --> 0:04:29.400 And in that sense you can easily understand why shareholders 0:04:29.440 --> 0:04:32.120 would want you there. They've got to make this transformation anyway. 0:04:32.520 --> 0:04:35.120 The guys they know on the board are probably a 0:04:35.640 --> 0:04:38.680 all guys and be only know how to put holes 0:04:38.720 --> 0:04:42.000 in the ground and pull out the Earth's precious resources, 0:04:42.080 --> 0:04:44.240 and they need someone to show them the way. How 0:04:44.279 --> 0:04:47.760 does the C suite react, Well, we are an engagement focus. 0:04:47.880 --> 0:04:51.400 From the traditional theory of change in this space is divestment, 0:04:51.480 --> 0:04:53.200 which is if you don't like it, don't own it. 0:04:53.320 --> 0:04:55.000 And when I say this space, I mean broadly. It's 0:04:55.040 --> 0:04:57.880 true for climate, it's true for social issues. A lot 0:04:57.880 --> 0:05:00.800 of times e s g. People just sell you know, tobacco, 0:05:01.360 --> 0:05:05.840 sell oil, sell everything that's bad, probably gunmakers, and that 0:05:05.920 --> 0:05:09.240 doesn't really help, right because someone else just buys those 0:05:09.240 --> 0:05:12.240 steaks and keeps making tobacco, oil and guns. Well, when 0:05:12.279 --> 0:05:16.040 you think about I think carbon decarbonization in general. I 0:05:16.080 --> 0:05:18.279 think there's a real strong case to make for own 0:05:18.360 --> 0:05:20.760 and engage. I mean, energy is one place, but how 0:05:20.760 --> 0:05:26.000 about global greenhouse gas emissions comes from energy, transportation and agriculture. 0:05:26.200 --> 0:05:28.600 Like this is the heart of the transition. When we 0:05:28.680 --> 0:05:31.080 talk about the energy transition, which is, by the way, 0:05:31.080 --> 0:05:33.839 a big investment opportunity for investors. That's where it's happening. 0:05:34.240 --> 0:05:37.200 And our theory of changes um not just that it's 0:05:37.240 --> 0:05:39.760 not just that the small green technology companies are going 0:05:39.800 --> 0:05:41.560 to be the ones driving it, but that actually the 0:05:41.680 --> 0:05:45.840 big traditional incumbents have to transform themselves. So that's the automakers, 0:05:45.960 --> 0:05:48.560 that's the big ad companies, and that's our That's where 0:05:48.560 --> 0:05:51.320 we spend our time. And I will say, um, all 0:05:51.400 --> 0:05:54.480 of our engagements post xcon have been very collaborative because 0:05:54.520 --> 0:05:56.559 we're not the first people to tell the c suite 0:05:56.600 --> 0:05:59.520 of these large companies, Hey, there's a lot of focus 0:05:59.680 --> 0:06:02.640 on decarbonization. You need to have a strategy and so 0:06:02.720 --> 0:06:04.480 in some ways, I think the fact that we approach 0:06:04.560 --> 0:06:07.720 it from a shareholder value perspective allows us to have 0:06:07.839 --> 0:06:11.559 a really good dialogue with companies. What's real quickly thirty seconds, 0:06:11.600 --> 0:06:14.040 what's the next industry that you think is should get 0:06:14.120 --> 0:06:16.080 some of attention from an E s G perspective. I 0:06:16.120 --> 0:06:19.000 think the demand side of decarbonization is interesting. Everyone focused 0:06:19.000 --> 0:06:22.159 on oil and gas, but transportation is a really interesting one, right. 0:06:22.200 --> 0:06:24.359 It's it's a move to all electric vehicles. A lot 0:06:24.440 --> 0:06:26.560 of the market is focused on that, but but you 0:06:26.680 --> 0:06:28.359 have to think more deeply about it. It's what are 0:06:28.400 --> 0:06:31.960 the commodity inputs like lithium and aluminum that are needed 0:06:32.000 --> 0:06:35.280 for that. So it's a really interesting investment opportunity. Good stuff, 0:06:35.320 --> 0:06:37.120 good stuff. Yasmin, thanks so much for coming into our 0:06:37.120 --> 0:06:40.280 Bloomberg Interactor Broker studio. Yasmin daya build your head of 0:06:40.360 --> 0:06:43.000 E T f s and a managing director at a 0:06:43.080 --> 0:06:46.400 really cool firms called Engine Number one. Is probably a 0:06:46.400 --> 0:06:48.960 story behind that name as well. We'll get that, uh 0:06:49.200 --> 0:06:55.840 next time our next guest. In my notes, it says 0:06:56.440 --> 0:06:59.120 it was two point two billion assets under management his fund. 0:06:59.200 --> 0:07:02.400 He now has over nine of the firm's assets in cash, 0:07:02.920 --> 0:07:05.760 with the remaining ten in defensive fixed income. I can 0:07:05.880 --> 0:07:08.120 honestly say I've never seen that before. Let's check in 0:07:08.200 --> 0:07:11.040 with Phil Toes, CEO of Toes Asset Management. Phil, thanks 0:07:11.040 --> 0:07:13.080 so much for joining us really appreciate it. Talk to 0:07:13.200 --> 0:07:15.600 us about your portfolio here and your your cash position. 0:07:16.240 --> 0:07:20.040 Where is it? Our our notes correct? Are our notes correct? Yeah? 0:07:20.160 --> 0:07:22.320 So we shifted slightly in the last couple of weeks 0:07:22.400 --> 0:07:24.480 and when they move up in the markets, moved us 0:07:24.920 --> 0:07:29.560 into more of a round a cash position relative to 0:07:29.640 --> 0:07:33.520 our earlier this year. But what what drives us there 0:07:33.640 --> 0:07:36.360 isn't isn't really are thinking about the markets, but rather 0:07:36.480 --> 0:07:40.160 just algorithms that are trend following, algorithms that have the 0:07:40.240 --> 0:07:44.800 ability to attempt to move us into either either fixed 0:07:44.840 --> 0:07:47.720 income or cash instruments. And because fixed income has been 0:07:47.760 --> 0:07:50.600 doing so poorly that we've largely just been in cash. 0:07:50.680 --> 0:07:53.840 But that's been in the position that we've had primarily 0:07:53.920 --> 0:07:56.640 since January thirteenth of this year. So it's been a 0:07:56.720 --> 0:07:59.239 it's been a good thing to just not be playing. 0:07:59.680 --> 0:08:03.520 But it's like, I mean, it reminds me of Pablo Escobar. 0:08:03.720 --> 0:08:06.080 He also held most of his assets in cash, and 0:08:06.760 --> 0:08:09.840 the rats ate about ten percent every year. You have 0:08:09.960 --> 0:08:14.080 the same problem, right, don't you lose money through uh 0:08:14.520 --> 0:08:19.040 just inflation? Yeah. So if if all you're doing is 0:08:19.080 --> 0:08:20.920 putting money in cash and didn't have a plan to 0:08:21.000 --> 0:08:23.200 come back in then then that's exactly what would happened, 0:08:23.240 --> 0:08:25.840 and inflation would eat you. But if you think about 0:08:25.880 --> 0:08:28.240 the way, so to our base cases that this will 0:08:28.320 --> 0:08:31.000 be a continuing bear market, and what we've seen in 0:08:31.040 --> 0:08:34.600 the last couple of weeks is a fair market trap. 0:08:35.280 --> 0:08:37.679 So if that, if that scenario plays out, the way 0:08:37.720 --> 0:08:40.280 the markets tend to work is they move down and 0:08:40.320 --> 0:08:43.240 then they even pick up more volatility. UH. And And 0:08:43.400 --> 0:08:46.520 what happens across our platform, across our different funds in 0:08:46.600 --> 0:08:50.079 EATS is that we have a trend following algorithm and 0:08:50.160 --> 0:08:53.000 just as we exited in the early phase of this decline, 0:08:53.559 --> 0:08:55.679 they would be designed to attempt to re enter in 0:08:55.679 --> 0:08:58.160 the early stage of a rebound. So then via zoom 0:08:58.200 --> 0:08:59.800 out and look at let's let's say this is like 0:08:59.840 --> 0:09:02.360 a typical bear market and it bottoms and somewhere around 0:09:02.400 --> 0:09:06.000 October of this year, UH somewhere around thirty five percent lower. 0:09:06.480 --> 0:09:09.000 At that point, having been in casual of it, it 0:09:09.120 --> 0:09:11.000 would have been a fantastic thing. But then you have 0:09:11.200 --> 0:09:14.559 the possibility for rebound, and that, frankly, is what it's 0:09:14.559 --> 0:09:17.679 all about, which is positioning yourself. You know, it's always 0:09:17.679 --> 0:09:19.560 so amusing to hear people talk about buying the dip, 0:09:19.640 --> 0:09:21.520 and the real question is what are they buying the 0:09:21.600 --> 0:09:24.320 dip with if they remain fully invest in the whole time. 0:09:24.559 --> 0:09:28.719 So yeah, yeah, the idea is to not make a 0:09:28.800 --> 0:09:32.120 market call necessarily, but to position yourselves in a way 0:09:32.280 --> 0:09:34.880 that address was at least the contingency that this bear 0:09:34.960 --> 0:09:39.520 market will continue, and then also positions yourself to potentially 0:09:39.600 --> 0:09:42.319 capture the rebound. And that's you know, this is not 0:09:42.400 --> 0:09:44.720 something new for us. We've been doing this since nineties six. 0:09:44.920 --> 0:09:47.319 We we saw the same kind of thing happened during 0:09:47.400 --> 0:09:50.680 the Internet double burst and the financial crisis, So we're 0:09:51.360 --> 0:09:53.560 we've got a long history of trying of navigated. By 0:09:53.600 --> 0:09:58.000 the way, speaking of bubbles, um, dot com and housing, 0:09:58.840 --> 0:10:01.679 what do you think we're look at today, especially with 0:10:01.840 --> 0:10:03.920 regards to I just bought a house for more money 0:10:03.960 --> 0:10:05.800 than I thought it'd ever spend on any one thing 0:10:05.880 --> 0:10:09.000 in my entire life, and I'm still skeptical that I 0:10:09.080 --> 0:10:12.880 can actually afford it. Yeah, So I think it's really 0:10:13.000 --> 0:10:15.480 fascinating because you get, you know, get conversations like this. 0:10:15.640 --> 0:10:19.080 You have a decent because little rally in the stock market, 0:10:19.080 --> 0:10:21.160 and everyone just thinks, well, we're back to to life 0:10:21.200 --> 0:10:23.960 as normal. But I think we're anything but that. One 0:10:24.000 --> 0:10:26.440 of the most compelling you know, you mentioned housing. One 0:10:26.480 --> 0:10:28.719 of the most compelling data points I've seen in the 0:10:28.840 --> 0:10:33.560 last six months is the you know, the Schiller Housing 0:10:33.679 --> 0:10:37.079 Price Index, which you know, for a hundred years, that 0:10:37.240 --> 0:10:40.000 index range between a hundred and a hundred and twenty 0:10:40.000 --> 0:10:43.959 because it's a real, real prices inflation, justin prices for houses. 0:10:44.520 --> 0:10:47.680 And then we saw that shocking increase of the index 0:10:47.800 --> 0:10:51.960 up to two hundred during the during the two thousand 0:10:52.000 --> 0:10:54.640 seven and then it came back down again. But right 0:10:54.720 --> 0:10:58.360 now we're at two twenty. So in real terms, we're 0:10:58.480 --> 0:11:04.079 higher with these historically, and so that that, you know, 0:11:04.160 --> 0:11:05.880 compare that with the fact that we're in the top 0:11:06.000 --> 0:11:10.920 quintile in stock valuations. But here's the big one. Here's 0:11:10.960 --> 0:11:13.280 the big one, which is that the said has changed 0:11:13.280 --> 0:11:17.079 his motivations and where primarily over the last you know, 0:11:17.120 --> 0:11:20.480 the say, thirteen years, that said has actively tried to 0:11:20.600 --> 0:11:25.439 avoid financial market declines. Now you can actually argue that 0:11:25.520 --> 0:11:29.360 because of demand pull inflation, which effectively means that people 0:11:29.400 --> 0:11:31.880 are buying so much stuff because they have so much money. 0:11:32.880 --> 0:11:35.880 You know, Now the said, you know, maybe implicitly they're 0:11:35.880 --> 0:11:37.360 not coming out and saying that, but they may have 0:11:37.440 --> 0:11:42.319 a motivation to pop the bubble. And so that's a 0:11:42.360 --> 0:11:45.120 completely different scenario, completely different world to live in. So 0:11:45.280 --> 0:11:47.280 instead of it being like fourth quarter of two thousand 0:11:47.280 --> 0:11:52.079 and eighteen where said they're saving the day, now the 0:11:52.160 --> 0:11:56.079 said may uh, you know, have have some kind of 0:11:56.080 --> 0:11:59.520 an incentive to actually see financial asset prices, home prices 0:11:59.559 --> 0:12:03.560 come to more reasonable levels as a way of addressing inflation. Absolutely, 0:12:03.760 --> 0:12:06.160 I feel just third thirty seconds, it feels to me 0:12:06.480 --> 0:12:09.320 like your firm and your strategy tries to time the market. 0:12:09.640 --> 0:12:13.319 Is that right, Well, so we we we do. We 0:12:13.400 --> 0:12:16.160 can't extu the markets. We also use options hedging, but 0:12:16.360 --> 0:12:19.000 we would say no, not really, because most market timers 0:12:19.040 --> 0:12:20.800 are trying to make a market call and predict what's 0:12:20.840 --> 0:12:23.640 going to happen, and that tends to not go well often. 0:12:24.320 --> 0:12:26.160 So instead of doing that, all we're doing is just 0:12:26.400 --> 0:12:29.520 falling trend following algorithms, and so that tends to be 0:12:29.880 --> 0:12:34.000 in our history, a relatively reliable way of doing two things, 0:12:34.040 --> 0:12:35.719 which is getting out of the way of the real 0:12:35.800 --> 0:12:39.560 train wrecks, but also participating in what you know generally 0:12:39.679 --> 0:12:41.959 is just rising markets, and that's what markets do nine 0:12:42.440 --> 0:12:45.120 of the time. So the idea is is not not 0:12:45.320 --> 0:12:47.480 making a market call, which is not market timing, but 0:12:47.559 --> 0:12:51.640 actually positioning yourself in the way address contingencies. All right, 0:12:51.679 --> 0:12:53.920 So great stuff, man, thanks for coming on and really 0:12:53.960 --> 0:12:58.400 appreciate a really interesting kind of you, even behavior and investing, 0:12:58.440 --> 0:12:59.800 which I wanted to get to. So I hope we 0:12:59.840 --> 0:13:01.520 can get you on again, Phil, because I know you 0:13:01.559 --> 0:13:04.719 were a founder of the Behavioral Investing Institute, and I 0:13:04.800 --> 0:13:07.280 think that's that sounds pretty pretty interesting as well as 0:13:07.320 --> 0:13:12.560 released to investing. All Right, I just typed an FB 0:13:12.880 --> 0:13:15.719 equity go into my terminal for the Facebook and I 0:13:15.800 --> 0:13:19.400 got nothing. Nothing. It says it changed it's symbol today 0:13:19.480 --> 0:13:23.439 to meta, so not gonna type in meta equity go 0:13:23.840 --> 0:13:25.439 and I get Okay, there we go. I got my 0:13:25.520 --> 0:13:27.880 ticker there, and all thats two more letters. It used 0:13:27.920 --> 0:13:30.360 to be, dude, You remember when you get smaller, Yes, 0:13:30.480 --> 0:13:32.360 to get down to that, if you had one letter 0:13:32.800 --> 0:13:36.679 that was the most coveted of all tickers, like if 0:13:36.679 --> 0:13:39.520 you were t then people stopped calling you anything else. 0:13:39.559 --> 0:13:42.760 They just called you t right ford, all that kind 0:13:42.760 --> 0:13:44.640 of good stuff. All right, So I'm blaming Matt Bloxham. 0:13:44.760 --> 0:13:46.839 He's a t M T anlost to Bloomberg Intelligence. He's 0:13:46.840 --> 0:13:49.559 based in London, runs all of our t MT stuff 0:13:49.640 --> 0:13:52.880 over there. Uh we snagged him about five years ago, 0:13:54.160 --> 0:13:59.240 don't remember. Uh, telecoms, tech media and technology. That's right, 0:13:59.480 --> 0:14:01.960 that people still use that moniker mat is that still? 0:14:02.160 --> 0:14:04.320 I thought that was a thing from the nineties. They 0:14:04.360 --> 0:14:06.960 still do, but I still every day you get the question, 0:14:07.080 --> 0:14:10.240 what is what's what's that team and the team? That's right? 0:14:10.400 --> 0:14:12.640 So so Matt talk to us about it. Let's just 0:14:12.679 --> 0:14:15.640 start with with Facebook. This is a meta free studio, 0:14:15.679 --> 0:14:19.480 so what we can still call it Facebook is the 0:14:19.760 --> 0:14:23.200 market buying off on this transformation. Then Mr Zuckerberg wants 0:14:23.280 --> 0:14:26.280 to take meta platforms through over the next I don't know, 0:14:26.400 --> 0:14:28.600 five to ten years. Yeah, I guess not. You know, 0:14:28.640 --> 0:14:31.840 when the share prices down over the last twelve months, 0:14:32.080 --> 0:14:35.760 I guess not. Um And I guess you know they've 0:14:35.800 --> 0:14:38.160 got bigger near term issues, you know that. I mean, 0:14:38.200 --> 0:14:40.560 obviously Instagram has been the big growth engine for them, 0:14:40.600 --> 0:14:44.280 and TikTok is adding huge amounts of pressure to the 0:14:44.360 --> 0:14:46.760 ad revenues they can generate from that. So I think 0:14:46.800 --> 0:14:48.840 they need to kind of sort out the current business first. 0:14:48.920 --> 0:14:50.720 And you know, I think that the metaverse, if it 0:14:50.760 --> 0:14:53.200 ever becomes more than just you know, the current kind 0:14:53.240 --> 0:14:56.520 of gaming environment it really is today, UM, then there's 0:14:56.520 --> 0:14:57.720 going to be a lot of rivals for it. And 0:14:57.760 --> 0:15:02.520 I think your historically Facebook UM gained its success by 0:15:02.600 --> 0:15:06.240 acquiring businesses and building them. I guess with the new 0:15:06.320 --> 0:15:09.360 constraints around um M and A, it's a question mark 0:15:09.360 --> 0:15:10.960 about whether they will be able to kind of follow 0:15:11.000 --> 0:15:14.560 that and whether they can successfully execute an organic struct 0:15:14.760 --> 0:15:18.840 in that area. I have questioned Facebook's ability to actually 0:15:18.960 --> 0:15:22.320 be the main player in the metaverse ten twenty years 0:15:22.400 --> 0:15:24.160 from now, And I got a lot of pushback on 0:15:24.200 --> 0:15:26.200 Twitter from people who said, you know what, they have 0:15:26.280 --> 0:15:29.680 invested a ton you know, they bought Oculus Rift, which 0:15:29.840 --> 0:15:33.320 was the VR headset. You know, they've done stuff, and 0:15:33.360 --> 0:15:36.800 they're spending money UM to be a major player. Do 0:15:36.840 --> 0:15:39.360 you agree, UM? I mean, I agree that they've been 0:15:39.360 --> 0:15:41.120 spending a ton of money, But then yeah, a lot 0:15:41.160 --> 0:15:42.800 of other people are spending a ton of money too, 0:15:42.880 --> 0:15:45.760 and it's you know, completely open field UM. And I 0:15:45.800 --> 0:15:48.640 think we've seen with every big technology wave, it's been 0:15:48.680 --> 0:15:51.840 a new player that nobody saw coming that's ended up 0:15:51.920 --> 0:15:54.280 being the big player. I mean that that's essentially what 0:15:54.400 --> 0:15:57.440 Facebook is. You know, it was the current the current 0:15:57.960 --> 0:16:00.400 king of the last technology cycle. I mean, I think 0:16:00.440 --> 0:16:02.360 what's going to be interesting for the metaverse as a 0:16:02.440 --> 0:16:04.960 whole is what Apple does with this kind of room 0:16:05.000 --> 0:16:07.040 with a r VR headset. And if it comes out 0:16:07.120 --> 0:16:09.640 next year, you know Apple's weight. You know, we'll create 0:16:09.760 --> 0:16:13.280 this I think so called halo effect for everybody. So 0:16:13.800 --> 0:16:15.880 maybe that will help Facebook, but you know they're going 0:16:15.920 --> 0:16:19.920 to face a lot of UM current and non existent 0:16:20.360 --> 0:16:22.960 UM competitors, you know, even the next three to five years. 0:16:23.160 --> 0:16:27.200 Think there's also I think I think there's a conception 0:16:27.280 --> 0:16:30.800 of what the metaverse is that requires you to put 0:16:30.880 --> 0:16:34.200 on a headset and something that blocks out the rest 0:16:34.240 --> 0:16:37.480 of the world. But I feel like we've already gone 0:16:37.560 --> 0:16:40.440 beyond dipping our toe into the pool of metaverse. Like 0:16:40.760 --> 0:16:44.000 if you spend all day working from home, you're on Zoom, 0:16:44.280 --> 0:16:48.400 you're on Slack or whatever, and then you spend your evenings, um, 0:16:48.560 --> 0:16:51.360 you know, shooting people on call of duty, and all 0:16:51.400 --> 0:16:54.600 of your frends are from forums You're watching other people 0:16:54.800 --> 0:16:57.960 shoot people on call of duty, Like aren't we already 0:16:58.120 --> 0:17:00.520 in a sense living in the metaverse. I think there 0:17:00.560 --> 0:17:04.280 are multiple meta verses essentially in another areas dating. You know, 0:17:04.280 --> 0:17:06.600 a lot of the big dating platforms are moving into 0:17:06.640 --> 0:17:10.440 a kind of VR environment. Yeah, you don't even have 0:17:10.640 --> 0:17:13.520 to go out of your house, and neither does she 0:17:14.040 --> 0:17:17.679 or he or whatever the person identifies as. You can 0:17:17.760 --> 0:17:21.760 spend some money on virtual gifts as you know. Crazy. 0:17:22.000 --> 0:17:24.200 All right, I'm honest with you. I'm done with this 0:17:24.240 --> 0:17:27.840 whole conversation. Let's talk music. Spotify. How to Capital Markets? 0:17:27.920 --> 0:17:29.960 Day said they got their analysts, they got their investors 0:17:30.080 --> 0:17:33.159 coming in. There's another stock. You know, you talk to 0:17:33.240 --> 0:17:37.240 these high flying technology names. It's all fifty percent this year. 0:17:38.440 --> 0:17:40.600 What's the story with Spotify? I mean, I thought the 0:17:40.680 --> 0:17:43.320 future of music was kind of renting this stuff. Yeah, 0:17:43.359 --> 0:17:44.879 and you know, I think it's I guess one of 0:17:44.920 --> 0:17:48.080 the near term worreas that people have had is that, 0:17:48.320 --> 0:17:52.040 in the wake of the whole Netflix subscribe by growth 0:17:52.119 --> 0:17:55.399 slowing um that perhaps Spotify is a similar kind of 0:17:55.440 --> 0:17:58.880 platform where there's going to be um a challenge there. 0:17:59.000 --> 0:18:03.080 I think Spotify is a bit different because unlike video 0:18:03.320 --> 0:18:06.600 subscription services, where essential you've got exclusive, unique content and 0:18:06.680 --> 0:18:09.320 you've spent tons of months to build it. Essence, you 0:18:09.400 --> 0:18:12.360 can get most music across all platforms. So if it's 0:18:12.400 --> 0:18:15.040 more about the user interface and the kind of platform itself, 0:18:15.320 --> 0:18:19.040 and your Spotify is a very strong, compelling platform. So 0:18:19.080 --> 0:18:21.800 I think they don't face the same kind of stagnation 0:18:21.960 --> 0:18:26.160 risks that we've seen with Netflix, and yesterday they were 0:18:26.240 --> 0:18:29.200 incredibly bullish on the mid term. They've got, you know, 0:18:29.560 --> 0:18:31.880 give or take half a billion users today and want 0:18:31.920 --> 0:18:34.440 to get that to a billion over the long term. 0:18:34.720 --> 0:18:36.320 I think you're one of the One of the bigger 0:18:36.400 --> 0:18:39.600 issues that they've had recently is the drag on profits 0:18:39.720 --> 0:18:43.560 from there for a into podcasts. They're not even making 0:18:43.600 --> 0:18:46.640 a gross margin on that today, and they were trying 0:18:46.680 --> 0:18:48.560 to reassure people that they'll get to some kind of 0:18:48.600 --> 0:18:51.800 gross margin in the next year or two. Um. You know, 0:18:51.840 --> 0:18:54.119 I think that the shares moved a little bit possibly yesterday, 0:18:54.160 --> 0:18:55.400 but you know, I think there's still a long way 0:18:55.440 --> 0:18:58.480 for them to go. To the podcasting business everybody in 0:18:58.560 --> 0:19:03.560 their Jack introduced a new podcast yesterday, Dak Shepherd of 0:19:03.880 --> 0:19:05.720 you Know, Armchair Expert, which is arguably one of the 0:19:05.760 --> 0:19:10.119 best podcasts that there is with his wife Kristen bell Um, 0:19:10.240 --> 0:19:15.080 the actress famous for Frozen among other things. Um, and 0:19:15.080 --> 0:19:17.720 they're going to give relationship advice and do I pay 0:19:17.800 --> 0:19:19.399 for this? Is just all that support you have to 0:19:19.440 --> 0:19:22.359 be on Spotify together, that's the idea, right, And Armchair 0:19:22.400 --> 0:19:25.920 Expert moved to Spotify. I think Obama is. I guess 0:19:25.960 --> 0:19:28.280 he was on Armchair Expert, but he's also got a 0:19:28.359 --> 0:19:31.000 deal with Spotify and he has a lot on there 0:19:31.080 --> 0:19:34.000 beyond just music, right, yeah, exactly. But it's it's a 0:19:34.119 --> 0:19:36.320 very different model where we can with the music. There's 0:19:36.359 --> 0:19:39.800 that they have a pay away to the music platforms, 0:19:39.880 --> 0:19:42.040 so there's kind of less risk around it, whereas you know, 0:19:42.400 --> 0:19:46.760 the podcast taken them into purchase a kind of content acquisition, 0:19:46.800 --> 0:19:48.920 if you like, so a bit more like a PATV platform, 0:19:49.320 --> 0:19:52.320 and you're kind of risking, you know, hundreds of millions 0:19:52.359 --> 0:19:54.960 of dollars essentially just to try and kind of generate 0:19:55.119 --> 0:19:58.679 more users and keep people on the platform. So it's 0:19:58.760 --> 0:20:01.119 quite a different business model, and I guess it's spook 0:20:01.200 --> 0:20:03.440 people a bit, you know that that it's a drag 0:20:03.560 --> 0:20:08.560 on earnings podcasting in general. How big is it is 0:20:08.600 --> 0:20:11.960 that profitable business? Is it? Something that Um, well, I 0:20:12.000 --> 0:20:15.480 think it is for some of the podcasters, right, made 0:20:15.800 --> 0:20:17.560 a lot of money, and that's what pushed a lot. 0:20:17.600 --> 0:20:19.240 In fact, I think, actually, this is what I was 0:20:19.280 --> 0:20:22.520 thinking of. Obama has a deal with Spotify, but they're 0:20:22.640 --> 0:20:25.600 ending it now because of Neil Young and all these 0:20:25.640 --> 0:20:27.960 people who are mad about Joe Rogan saying like you 0:20:28.080 --> 0:20:33.560