From Music to Money: Gene Podsiadlo's Journey.

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Welcome everybody to another
episode of Arthur's Roundtable.

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Super grateful for everybody
being here and paying attention

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and the Family Office Insights
community who has kindly shared

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this with a lot of their
network.

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And so we're really, really
grateful for for you guys

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listening to us here.
Gene and I met at a Park City

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entrepreneur event, Tribe
Angels, I think it was.

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And he's been kind to me in a
variety of ways.

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And he has a very interesting
history and background and

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business.
So I'm super grateful also for

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him to come on and I'm going to
butcher the name, even though I

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just tried it for shade low.
Good.

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Say it, Say it.
Right.

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Right, Todd?
Siadlo is the way we.

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Pronounce it now.
Todd Siadlo. 4 easy syllables

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and it's on.
It's on my LinkedIn where you

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push a little speaker button and
you can hear me say it so.

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That's so cool.
It's like Google Translate.

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Yeah, yeah, yeah.
So Gene, you, you've had a

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storied history in the
traditional finance, finance

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business.
You have interesting.

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I happen to know you have you
like being in the wilderness and

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have have a farm in various
places.

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But let's start with your your
origin story, a little journey.

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How did all all this come about?
Yeah, well it's, it's a

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peripatetic journey that's for
sure.

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A lot of interesting little
chapters and and sub sub

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journeys, but you know the the
basics.

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I was born in upstate New York
and family of six children,

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three boys, 3 girls, and my
father was an early, an early

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memory guy in the computer
industry, you know, back in the

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days of, you know, mainframes
before the PC was even thought

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of.
So, you know, we, we, he

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essentially moved around a lot.
So as children, one of the

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defining elements that's made me
sort of a world traveller now

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and, and not afraid to go sort
of anywhere is every two years

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we moved as children and
sometimes even in the middle of

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the year of the school year.
So I got very used to being the

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new kid.
And, you know, we're joking

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about pronouncing my last name.
But, you know, I remember, I

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remember distinctly moving to
Colorado from New York State

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after we've been Mass or after
we've been in Massachusetts and

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the kids all saying, well, Gee,
and that's a girl's name, right?

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So I thought to myself, well, my
last name was tough enough, but

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now you've got to deal with that
too.

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I got to, I got to deal with my
first name anyway.

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So, you know, essentially I, you
know, grew up.

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My mother was a elementary
school teacher.

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So, you know, education was, was
valued.

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My father was the first of his
family and only to go to college

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Rensselaer Polytechnic Institute
in Troy, NY RPI as an engineer.

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Yeah.
Was a Navy guy for a couple, you

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know, whatever the requirement
was.

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But anyway, you know,
essentially, you know, we grew

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up in a family where with six
kids, especially in the era I

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grew up and you know, you were
pretty much left to your own.

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Your own devices.
Your own, your own desires and

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demons.
I guess.

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I became a, a musician.
So I was a classic, classically

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trained trumpet player.
In fact, that started in

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Colorado, remember?
And you know, then I got into

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guitars and bass guitar and, you
know, the world of rock music.

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So I, I was in a lot of bands as
a young teenager, did pretty

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well.
I never had to have a summer job

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'cause we made money playing all
sorts, sorts sorts of places.

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Nice.
On the East Coast, back in those

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days, you could actually play in
clubs if you were under the age

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of 18 or 21, right?
So I did.

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So I, I became very street
smart, you know, dealing with

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some of these club owners and
bar owners and, and all that

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kind of stuff.
But, you know, I really thought

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music was going to be my thing.
And my, my late mother was a

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little bit of a typecaster and
kind of encouraged it.

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And one day when it was time to
apply for college, this is after

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my older brother, one year
older, who was one of these, one

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of these guys who was a 88800
SAT kid without even studying,

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he got a full ride to Cornell as
a merit scholar.

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And I had no idea where I wanted
to go to college other than, you

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know, I, I was going to go to
music school.

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So I was looking at the Berkeley
School of Music.

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And, you know, all these other
things that my mother said,

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well, why don't you?
The one thing I knew living at

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that point just outside of
Princeton, NJ, in a little farm

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town public high school and my
graduating class was 100 kids.

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I just knew I wanted to get out
of kind of rural life.

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You know, I, I was used to New
York City and, you know, all

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that other stuff.
So my mother said, why don't you

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take a trip down to University
of Pennsylvania?

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It's in Philadelphia and I, I
didn't know a lot about

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Philadelphia.
So I took a train down there and

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I, I love the grittiness of West
Philadelphia and sort of fell in

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love with that campus and
thought, OK, this, this I could

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see working.
So, you know, I applied, some of

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the viewers are going to just
laugh at this.

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And please don't think I'm, I'm,
I'm low IQ for having had this

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attitude as a 17 year old.
But I thought I was going to the

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University of Pennsylvania for
music.

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My mother kind of, you know.
Faked you out right?

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Yes, you faked me out.
And so I get there.

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I'll never forget it.
Quadrangle of University of

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Pennsylvania on Spruce St. and I
get my course list and it's, you

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know, finance and accounting and
well, it turns out I was in the

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Wharton School undergrad, which
was the oldest Wharton School,

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by the way.
We're very sensitive about that.

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The MBA program came much later,
but the original Warden School

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is an undergraduate.
Still is.

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School of Business, many of the
professors are the same.

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And I went to the counselor.
I said, well, no, we're the

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music courses.
They said you could take some

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electives, you know, later on,
but you know, you have to take

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these courses.
So, so I marched off.

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I had no idea about any of this
stuff.

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I'd been I'd been a good student
in high school.

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Well, you, well, you got into
the Wharton School.

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That's like a big deal.
Well, yeah, I mean, today I

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never.
Would yeah, when I look.

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Back on, I remember, I remember
in the interview, the guy was

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very interested in sort of the
business side of me playing

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music and stuff and I, I was
able to talk pretty good about

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that.
I think.

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I think he was sort of impressed
with sort of the

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entrepreneurship of being in a
band and, and a musician.

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So anyway, Long story short is
I, I, you know, got transformed.

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I adhere down to here.
I still got kind of long hair

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and, you know, my whole life
changed.

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Going through four years of the
The Wharton School and

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graduating with a bachelor's in
science and economics.

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Lawrence Klein, one of the Nobel
Prize winners, was my economics

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professor, Jeremy.
Siegel.

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Who's I mean, Siegel still.
Still.

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Yeah.
Making showings on CNBC and

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otherwise.
He.

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He.
Was my finance professor.

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Yeah, crazy.
Anyway.

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So Long story short, as I, you
know, I did that and, you know,

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just to not to, not to drag my
resume out too long here, I'll

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be a little briefer.
But that that was, you know, you

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think of the transformative
events of your life.

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That was certainly probably the
biggest for me because, you

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know, I don't know what would
have happened to me.

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I'd, I'd probably be playing in
some wedding band somewhere

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instead of having been on Wall
Street financial services much

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of my career.
But anyway, I, I, I ended up the

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deal in my family was you, you
got your undergraduate tuition

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paid for.
You had to earn your own

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spending money, but then you
were on your own.

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So I, I sort of shopped around
for the best deal I could find

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for MBA school because I grew,
I'm, I'm dating myself now, but

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I graduated in 1979 from Wharton
undergrad and the economy was

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terrible.
Everybody who's over a certain

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age remembers 18% interest
rates.

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And Reagan and Paul Volcker were
really, you know, not having

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their, their effect quite yet.
So I, you know, I didn't have

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the connections that a lot of my
classmates did.

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You know, I, I, I went to school
with some very sophisticated

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famous kids from New York and LA
and some other places, learned a

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lot from them.
But I decided I had to go

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straight to MBA school.
And so I went to University of

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Maryland at College Park.
One of my best friends.

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By the way, there was none other
than Carly Fiorina name.

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Carly Bartlam was her name.
I'm named in the unauthorized

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biography, which is called
Backfire.

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I think she and I were great
pals.

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Anyway, I was the president of
my class.

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I, I, I, I really sort of
flourished more in a, oh, a

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broader business way.
I was ATA at first.

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That was part of the deal to get
the tuition paid for.

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And, you know, real quick story,
I ran into some engineers who

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were sort of literally at A, at
a local watering hole in College

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Park sort of crying over their
beer about the fact that they

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had just lost a contract or were
going to lose a contract with

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the Federal Express Corporation.
Because they found out that as a

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State University, any research
done through the university,

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through the Office of Sponsored
Programs, because it was a state

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facility, had to be published.
And Federal Express said, no,

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no, no.
You know, if we're going to

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spend a couple $1,000,000 on
what was avionics

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instrumentation for the early
FedEx aircraft.

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They need to own it, yeah.
Yeah, they, they need Ndas.

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They it's got to be
confidential.

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And that wasn't allowed.
So I innocently said to these

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guys, well, why don't you just
start a company, right?

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And they said, well, these were,
these are, these are

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aeronautical engineers.
You're like, well, how do you do

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that?
I said, you know, I'm a, I'm a

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business student.
I went to the Wharton School.

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I, I know how to do that.
And next thing you know, not

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only did we form a company, it
was called, it was originally

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called Flight Research Group
because the billing client was

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FedEx.
I met Fred Smith and Carter who

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was later head of the FAA.
Essentially what we did was

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create a private company and
ironically enough, there was

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excess office space on the
University of Maryland campus.

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So we actually entered into a
commercial lease to rent space

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on campus.
So we were a private corporation

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on campus, so all the professors
could just walk across the

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street to our offices and do
their thing.

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And very quickly other people we
ran into throughout the

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university had the same issue.
So we ended up, Long story

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short, we ended up naming it
University Research Group.

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And you know, we, we had dozens
of contracts from different

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areas of the university, you
know, where there was the same

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issue.
They needed a private contract,

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you know things.
So in a way, it was an early.

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Form of an incubator.
Right.

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Yeah, kind of a technology
transfer, early incubator

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concept.
And you know, things went really

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great.
I managed all the money which

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kind of led to the next portion
of my career.

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But what I'm really proud of is
the we ended up transferring the

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company because I sort of lost
interest after a while.

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It it two of the five O 1C3
foundation, which was called the

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University of Maryland
Foundation.

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So it's now called University
Research Foundation in

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Greenbelt, MD.
It's still there and it still

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does exactly the same thing.
It's, and it's a multi

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$1,000,000, you know, contract
letting enterprise with, with

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the same model.
It is off campus now, but it's

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the same model.
So that, but that was a

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formative experience as well
because I, I, I started my own

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business and I, I was not afraid
going forward to be an

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entrepreneur.
So anyway, Long story short, I,

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I ended up going to work for
the, the firm where I, I used

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00:13:15,960 --> 00:13:18,560
all their money market funds to
manage the cash of the

225
00:13:18,560 --> 00:13:21,360
corporation.
It's a company called Calvert

226
00:13:21,360 --> 00:13:27,120
Group down in Bethesda, MD and
had a had a nice little query

227
00:13:27,120 --> 00:13:28,640
there.
Then it got recruited up to

228
00:13:28,640 --> 00:13:35,320
Citicorp, went to New York into
one of their associate programs.

229
00:13:35,680 --> 00:13:41,320
You know, real quick, I ended up
running a, a division or two of

230
00:13:41,320 --> 00:13:48,240
Citicorp brokerage and launching
several investment products for

231
00:13:48,240 --> 00:13:50,840
the bank because all the banks
were starting to do that.

232
00:13:52,920 --> 00:13:57,480
And then I, I had, I had a huge
staff, huge responsibility.

233
00:13:57,760 --> 00:14:00,960
Banks didn't pay anything like
traditional Wall Street.

234
00:14:00,960 --> 00:14:03,600
This was the John Reed days.
For those of you who remember

235
00:14:04,360 --> 00:14:12,080
the former CEO before, you know
the whole the whole Wall Street

236
00:14:12,400 --> 00:14:16,440
City Bank.
So I decided to leave and I was

237
00:14:16,440 --> 00:14:21,120
actually going to take a job in
Pittsburgh with PNC Bank, much

238
00:14:21,120 --> 00:14:23,120
bigger job.
And at the last second I got a

239
00:14:23,120 --> 00:14:25,680
call from a head headhunter.
And by the way, I was always

240
00:14:25,680 --> 00:14:30,200
starting these little companies.
Some of them failed or got got

241
00:14:30,200 --> 00:14:33,480
nowhere, but a couple of them
had some fraction and I would

242
00:14:33,960 --> 00:14:36,840
make a little bit of money
selling them off all in New York

243
00:14:36,840 --> 00:14:40,440
City.
And at the last second I got I

244
00:14:40,440 --> 00:14:43,480
got a call from a headhunter who
said, hey, do you know the

245
00:14:43,480 --> 00:14:45,440
venture capital firm Warburg
Pincus?

246
00:14:45,440 --> 00:14:47,680
And I said, you know.
You were in New York, of course

247
00:14:47,760 --> 00:14:49,320
I.
Presented, I presented to them

248
00:14:49,920 --> 00:14:52,640
with one of my ideas because
that was back in the day when

249
00:14:52,640 --> 00:14:55,200
they really weren't such a P/E
firm as they are today.

250
00:14:55,880 --> 00:14:58,760
They, they, they still did early
stage stuff back in those days.

251
00:14:59,440 --> 00:15:03,360
And I, I went and interviewed
with Lionel Pincus, who is

252
00:15:03,360 --> 00:15:07,920
again, probably one of the most
influential people in my life,

253
00:15:07,920 --> 00:15:12,560
who based on a handshake, said,
Hey, I have a little asset

254
00:15:12,560 --> 00:15:15,720
management business that sits
next to the venture capital

255
00:15:15,720 --> 00:15:19,960
business where we, we manage
public equities for the likes of

256
00:15:19,960 --> 00:15:22,920
Doris Duke and some of the
institutions and foundations who

257
00:15:22,920 --> 00:15:26,240
are in the, the venture capital
partnerships.

258
00:15:26,240 --> 00:15:28,960
And I it, it, it's not making
money.

259
00:15:28,960 --> 00:15:31,200
I'd like somebody to see if they
can do something.

260
00:15:31,200 --> 00:15:33,680
I said, oh, I, I know what we
could do with it.

261
00:15:33,680 --> 00:15:36,240
And he said, really?
And I said, yeah, I, I know

262
00:15:36,240 --> 00:15:37,920
exactly what I'd do.
And he goes, well, could you

263
00:15:37,920 --> 00:15:40,400
write, don't spend too much time
on it, but over the weekend,

264
00:15:40,400 --> 00:15:43,160
could you write a little couple
pager on what you'd do?

265
00:15:43,160 --> 00:15:47,360
And I did and a little rocked
out budget and I presented it to

266
00:15:47,360 --> 00:15:48,240
him.
He loved it.

267
00:15:49,000 --> 00:15:54,800
And essentially, my idea was to
form the Warburg Pincus funds,

268
00:15:55,680 --> 00:16:00,680
mutual funds.
This is 1989, yeah.

269
00:16:00,920 --> 00:16:03,960
Like Kodiak funds?
Odiak Funds.

270
00:16:04,360 --> 00:16:07,040
Yeah.
My whole concept was I, I, I

271
00:16:07,040 --> 00:16:11,000
learned this at Citibank.
A Citibank was infiltrated

272
00:16:11,680 --> 00:16:16,240
before the Wall Street crew
showed up in the John Reed days.

273
00:16:16,240 --> 00:16:20,680
They were infiltrated by the
likes of Rick Braddock, who went

274
00:16:20,680 --> 00:16:24,640
on to be done better things in
the travel industry and some

275
00:16:24,640 --> 00:16:26,960
other things.
But they all came from General

276
00:16:26,960 --> 00:16:30,640
Foods.
And I learned a ton about the

277
00:16:30,640 --> 00:16:36,360
consumer product, you know,
marketing elements that could be

278
00:16:36,360 --> 00:16:39,040
applied to financial services.
In fact, I remember one of my

279
00:16:39,440 --> 00:16:44,760
one of my second or third bosses
at Citibank was the former Alpo

280
00:16:44,760 --> 00:16:49,480
dog food product made and I had
to explain what a basis point

281
00:16:49,480 --> 00:16:53,080
was.
And anyway, Long story short,

282
00:16:53,120 --> 00:16:55,640
you know, we, I created the
Warburg Pincus funds on the

283
00:16:55,640 --> 00:16:58,520
theory that we could, I showed
Lionel Pincus.

284
00:16:58,520 --> 00:17:02,440
Did spending just a little bit
of money put you virtually in

285
00:17:02,440 --> 00:17:05,640
the top 10 advertisers in the
mutual fund world?

286
00:17:05,640 --> 00:17:08,640
Because back in those days,
Fidelity and T Rowe Price did

287
00:17:08,640 --> 00:17:10,880
it.
There weren't a lot of others.

288
00:17:11,359 --> 00:17:16,440
And then as luck would have it
is I was early to say, you know,

289
00:17:16,440 --> 00:17:19,960
there's a shortage of actively
managed international equity

290
00:17:19,960 --> 00:17:22,440
funds.
There were hardly any.

291
00:17:22,480 --> 00:17:27,119
And so I recruited some people.
We, we had one guy in house who

292
00:17:27,119 --> 00:17:30,960
was quite talented.
We, we formed to see a suite of

293
00:17:30,960 --> 00:17:34,960
those funds.
And then the, we were one of the

294
00:17:34,960 --> 00:17:40,800
1st 10 mutual funds on the
Schwab platform of the so-called

295
00:17:40,800 --> 00:17:44,800
supermarket era of mutual funds
distribution.

296
00:17:44,960 --> 00:17:47,880
Fidelity did it shortly
thereafter, but we were early

297
00:17:48,400 --> 00:17:52,400
and in the early days you really
you had to be sort of picked or

298
00:17:52,400 --> 00:17:55,240
somehow otherwise get yourself
onto the list.

299
00:17:55,280 --> 00:17:57,160
It's pretty much an automatic
now.

300
00:17:57,240 --> 00:18:01,000
You just have to pay up an
ongoing fee to those

301
00:18:01,000 --> 00:18:04,720
marketplaces that, that by the
way, I'll, I'll get to that

302
00:18:04,720 --> 00:18:06,600
later.
That's going away with ETFs.

303
00:18:06,600 --> 00:18:09,680
But in the traditional mutual
fund business, it quickly became

304
00:18:09,680 --> 00:18:13,360
very important to get on those
marketplaces for both retail.

305
00:18:13,960 --> 00:18:17,880
And then very quickly, as
everybody on this call I'm sure

306
00:18:17,880 --> 00:18:22,400
knows, Schwab and Fidelity along
with Pershing and some other

307
00:18:22,400 --> 00:18:27,680
later entrants became the
oligopoly, if you will, of RAA

308
00:18:27,680 --> 00:18:30,560
custodianship.
So registered investment

309
00:18:30,560 --> 00:18:34,480
advisors to this day, Schwab,
Fidelity.

310
00:18:34,680 --> 00:18:38,080
Pershing.
TD Ameritrade So, so we, we were

311
00:18:38,080 --> 00:18:42,400
early and it was worth it was
worth billions of dollars in

312
00:18:42,440 --> 00:18:44,520
AUM.
Going back to my reference to

313
00:18:44,680 --> 00:18:47,800
not being afraid to travel and
live places, I wanted to prove

314
00:18:47,800 --> 00:18:51,760
that I could, We got to $10
billion in AUM and I wanted to

315
00:18:51,760 --> 00:18:54,080
prove that I could do it
anywhere.

316
00:18:54,080 --> 00:18:58,480
So we, we had a really great
Japanese equity guy, a Brit

317
00:18:58,480 --> 00:19:00,720
actually, who spoke fluent
Japanese.

318
00:19:00,720 --> 00:19:05,640
And I said, let's go to Tokyo.
And I've been reading about some

319
00:19:05,640 --> 00:19:08,560
bank deregulation coming up
where instead of just the

320
00:19:08,560 --> 00:19:14,000
brokerage firm selling funds,
banks in Japan were going to be

321
00:19:14,000 --> 00:19:19,400
able to sell funds.
So it was a sort of a, a long

322
00:19:19,440 --> 00:19:23,480
and and interesting slog to get
the regulatory stuff set up.

323
00:19:23,480 --> 00:19:28,200
But ironically, I went over
there to Tokyo.

324
00:19:28,200 --> 00:19:31,440
We were right across from the
Imperial Palace with Chip K,

325
00:19:31,440 --> 00:19:34,880
who's the current CEO now of
Warburg Pincus Ventures.

326
00:19:35,520 --> 00:19:39,200
And I basically replicated
everything I did in the United

327
00:19:39,200 --> 00:19:41,960
States in in Japan, only in
Japanese.

328
00:19:42,080 --> 00:19:44,800
I hired a bunch of.
West Wild E, right?

329
00:19:45,200 --> 00:19:49,120
Yeah, yeah.
And you know, I had I had

330
00:19:49,200 --> 00:19:52,760
pictures of our portfolio
manager with all the Japanese

331
00:19:52,760 --> 00:19:55,720
words underneath in all the
subway stations.

332
00:19:55,720 --> 00:20:00,320
And you know, we, we did lots of
advertising and publicity and,

333
00:20:00,320 --> 00:20:03,320
and tons of Rd. shows to banks
and, and many of the banks were

334
00:20:03,320 --> 00:20:07,240
very anxious to get something
different than what the, you

335
00:20:07,240 --> 00:20:11,040
know, the Nico's and the other
the die was had.

336
00:20:11,760 --> 00:20:13,200
So we, we made a pretty big
splash.

337
00:20:13,200 --> 00:20:17,240
So we, we grew fairly quickly.
And Credit Suisse saw all this.

338
00:20:17,240 --> 00:20:20,040
They were over there and they
had had a mutual fund business,

339
00:20:20,040 --> 00:20:22,880
a a bigger private wealth
business, but a, a mutual fund

340
00:20:22,880 --> 00:20:24,760
business that hadn't grown as
fast.

341
00:20:24,760 --> 00:20:27,880
And they basically.
You know, couldn't figure out

342
00:20:27,880 --> 00:20:31,440
how we did this and they, they
approached me and said, you

343
00:20:31,440 --> 00:20:36,480
know, would you consider doing a
joint venture with us in Tokyo?

344
00:20:36,480 --> 00:20:39,440
So I said sure.
So I I still have the the

345
00:20:39,440 --> 00:20:43,160
magazine or the newspaper
announcement somewhere where I

346
00:20:43,160 --> 00:20:46,960
became Co CEO of a joint venture
with Credit Suisse in Tokyo.

347
00:20:47,280 --> 00:20:51,880
Wild.
And you know, I I had some

348
00:20:51,880 --> 00:20:55,080
success with them, but very
quickly they so liked the

349
00:20:55,080 --> 00:20:59,240
overall business that we had
both in the US and I had

350
00:20:59,360 --> 00:21:03,080
simultaneously done a group of
you sits in Dublin and what

351
00:21:03,080 --> 00:21:06,920
we've done in Tokyo that it just
so happened that it was right

352
00:21:06,920 --> 00:21:09,760
around the time that Lionel
Pincus had reached an age where

353
00:21:10,240 --> 00:21:15,000
I think he wanted to retire.
So Credit Suisse actually

354
00:21:15,000 --> 00:21:19,400
approached Lionel Pincus and
asked if he would consider

355
00:21:19,400 --> 00:21:22,680
selling the asset management
division and some portion of the

356
00:21:22,680 --> 00:21:25,040
venture business.
So at

357
00:21:25,040 --> 00:21:31,080
virtuallythepeakbefore.com,
the.com collapse that is

358
00:21:31,080 --> 00:21:38,960
December of 1999, we signed A
and LOI and term sheet to sell

359
00:21:38,960 --> 00:21:41,400
Warburg Pincus Asset Management
to Credit Suisse.

360
00:21:41,400 --> 00:21:43,920
And I was the sort of Fair
haired boy running back and

361
00:21:43,920 --> 00:21:49,080
forth to to to Zurich.
Lucas Muleman was the CEO of

362
00:21:49,440 --> 00:21:51,000
Credit Suisse back in those
days.

363
00:21:51,960 --> 00:21:54,200
Ironically there was a big
breakup fee.

364
00:21:54,200 --> 00:21:58,680
Of course, ironically the deal
closed on April 30th and of

365
00:21:58,680 --> 00:22:04,560
course that was after the the
great April 15th of the NASDAQ

366
00:22:04,560 --> 00:22:09,040
collapse in 2000.
But they went ahead.

367
00:22:09,040 --> 00:22:11,040
We had an earn out that was
indexed.

368
00:22:11,040 --> 00:22:15,760
We ended up negotiating A1 time
buyout, but it was a fantastic

369
00:22:15,760 --> 00:22:21,960
deal because that was probably
the peak of both free fee

370
00:22:21,960 --> 00:22:24,320
compression in the mutual fund
business.

371
00:22:24,320 --> 00:22:26,920
Even though we were quite
competitive, I really believed

372
00:22:26,920 --> 00:22:34,080
in being on the lower end of
active fund management fees, you

373
00:22:34,080 --> 00:22:39,280
know, but essentially Credit
Suisse, you know, acquired 100%

374
00:22:39,280 --> 00:22:41,240
of work because asset
management, they acquired a

375
00:22:41,240 --> 00:22:46,720
small piece of ventures and, you
know, the rest was sort of

376
00:22:46,720 --> 00:22:49,840
history.
I stayed on two years with the

377
00:22:49,840 --> 00:22:55,560
executive committee of Credit
Suisse, but I I quickly disliked

378
00:22:55,720 --> 00:23:00,480
the bureaucracy of Credit Swiss
compared to the private

379
00:23:00,480 --> 00:23:03,680
partnership that we were at, at
Warburg Pincus.

380
00:23:04,880 --> 00:23:09,400
So I, I, I left and Long story
short, I went with a firm who

381
00:23:09,400 --> 00:23:12,440
had tried to recruit me called
Wasatch Global, which is how I

382
00:23:12,440 --> 00:23:15,680
got to Utah.
They're a, they're an

383
00:23:15,680 --> 00:23:19,080
institutional and mutual fund
manager in Salt Lake City.

384
00:23:19,080 --> 00:23:24,240
And one of the partners whom you
know, Arthur Carrie Barker.

385
00:23:24,480 --> 00:23:32,280
Yeah, a 30 year now she had the
she had the foresightafter.com

386
00:23:32,280 --> 00:23:41,760
between Reg FD and the Spitzer
Accords and you know, all, all

387
00:23:41,760 --> 00:23:43,480
the regulation that that came
out.

388
00:23:43,480 --> 00:23:49,640
She, her hypothesis way back
then and, you know, sort of O1O2

389
00:23:50,280 --> 00:23:52,840
was that private companies would
stay private longer.

390
00:23:52,840 --> 00:23:56,840
And, you know, when she gives
her stump speech now, she, she

391
00:23:56,840 --> 00:24:01,120
talks about that and she said, I
had no idea how correct I would

392
00:24:01,120 --> 00:24:06,760
be because of course companies
do stay private, if not for a

393
00:24:06,760 --> 00:24:09,120
long time, some in some cases
forever.

394
00:24:09,120 --> 00:24:12,960
They don't want to go public.
Some of it was just the friction

395
00:24:12,960 --> 00:24:15,040
of all that regulation, the
cost.

396
00:24:15,040 --> 00:24:17,640
And the other thing that
happened was, you know, there

397
00:24:17,640 --> 00:24:20,120
was a lot of money in the world
and a lot of it.

398
00:24:20,160 --> 00:24:23,680
What do you, what do you want to
thank Dave Swenson at Yale or

399
00:24:23,680 --> 00:24:28,480
whatever there was, you know, a
big shift in pie charts to

400
00:24:28,480 --> 00:24:32,080
Private Securities and
alternatives, whether it was

401
00:24:32,080 --> 00:24:33,760
venture capital or private
equity.

402
00:24:33,840 --> 00:24:38,320
There's so many more categories
now, Of course, everybody

403
00:24:38,320 --> 00:24:43,200
anyway, we we formed a Dave firm
called Cross Creek Cross Creek

404
00:24:43,200 --> 00:24:46,960
venture capital, which the
websites Cross Creek dot VC and

405
00:24:46,960 --> 00:24:50,240
today it's a it's it's still a
boutique, but carries

406
00:24:50,240 --> 00:24:54,160
specialties late stage VC.
Some people would call it pre

407
00:24:54,160 --> 00:24:57,680
IPO when IP OS were happening
more often.

408
00:24:58,200 --> 00:25:02,400
But as many people on this call
know, much of the alpha creation

409
00:25:02,400 --> 00:25:05,000
that occurs with companies now
happens before.

410
00:25:05,520 --> 00:25:08,720
For the IPO?
So if, if, if you don't have an

411
00:25:08,720 --> 00:25:12,840
allocation, if you're just
investing in small cap publicly

412
00:25:12,840 --> 00:25:16,040
traded companies or micro cap
for that matter, you're probably

413
00:25:16,040 --> 00:25:20,920
missing, you know, a huge piece
of the hockey stick valuation

414
00:25:21,400 --> 00:25:23,200
run up for the successful
companies.

415
00:25:23,680 --> 00:25:27,120
We saw that with SAS.
We saw that with, you know, all

416
00:25:27,120 --> 00:25:31,720
sorts of different verticals.
So Acari is a, a great business

417
00:25:31,720 --> 00:25:34,560
and I was an advisor there for
several years.

418
00:25:34,560 --> 00:25:37,760
I was on the investment
committee, but you know, I

419
00:25:37,760 --> 00:25:40,480
wandered off and now just to
bring it forward and then I'll

420
00:25:40,480 --> 00:25:46,560
let you ask some more questions.
I, I'm, I'm affiliated or I'm an

421
00:25:46,560 --> 00:25:50,320
advisor and special limited with
a firm called AI Capital.

422
00:25:50,320 --> 00:25:55,320
It's AI dot VC, which gives you
a sense of how early this group

423
00:25:55,320 --> 00:25:59,000
of MIT people were.
They all came out of the AI lab

424
00:25:59,040 --> 00:26:03,280
at MIT.
I would say to them you know the

425
00:26:03,280 --> 00:26:08,160
domain name AI dot VC is
probably worth a ton of money.

426
00:26:08,360 --> 00:26:12,840
A ton of money especially, and
we met with her.

427
00:26:13,080 --> 00:26:16,160
Yes.
It was at the beginning of chat

428
00:26:16,160 --> 00:26:19,480
GTP.
I mean, Oh yeah, end of the note

429
00:26:19,480 --> 00:26:22,640
yet, right?
It was happening, but chat GTP

430
00:26:22,640 --> 00:26:24,560
wasn't happening, right?
That's right, etcetera.

431
00:26:24,880 --> 00:26:27,000
Yeah, that was Elizabeth Cook.
Yeah.

432
00:26:27,080 --> 00:26:28,960
Yeah, We met in Park City.
That's right.

433
00:26:29,080 --> 00:26:31,120
Yeah.
No, these people, you know, have

434
00:26:31,120 --> 00:26:35,920
deep resumes in machine learning
and and AI in what we call

435
00:26:35,920 --> 00:26:38,200
applied AI.
So that's pretty much what the

436
00:26:38,200 --> 00:26:39,960
company does.
Now.

437
00:26:39,960 --> 00:26:43,320
I can't talk too much about it,
but we're, we're from, from a

438
00:26:43,880 --> 00:26:48,960
concept fund one they're now, I
think going to be raising a fund

439
00:26:48,960 --> 00:26:51,640
too.
There there's a couple there.

440
00:26:51,680 --> 00:26:54,040
There's been some very nice
exits and there's, there's,

441
00:26:54,440 --> 00:26:58,200
there's some pending, but their
their whole thing is they don't

442
00:26:58,200 --> 00:27:03,400
do B to C Everything is B to B
tends to be by definition,

443
00:27:03,400 --> 00:27:07,920
enterprise software using AI
elements that solve big

444
00:27:07,920 --> 00:27:10,680
problems.
They're not interested in little

445
00:27:10,680 --> 00:27:14,760
niche businesses, not interested
in consumer has nothing to do

446
00:27:14,760 --> 00:27:19,520
with chat bots.
So they they really because of

447
00:27:19,520 --> 00:27:24,560
their history in actually
building software as

448
00:27:24,560 --> 00:27:27,000
entrepreneurs before they
decided to go into the venture

449
00:27:27,000 --> 00:27:30,760
business, they really understand
some of the trends.

450
00:27:30,760 --> 00:27:33,520
So they were very early to
things like data.

451
00:27:34,720 --> 00:27:38,840
We have a very valuable company
in the medical patient records

452
00:27:38,840 --> 00:27:41,800
database arena.
There was a there was a cover

453
00:27:41,800 --> 00:27:45,600
story several years ago that
showed Google and a couple other

454
00:27:45,600 --> 00:27:48,840
companies, Meta back in those
days, Facebook, and it said data

455
00:27:48,840 --> 00:27:50,640
is the new gold.
Yeah.

456
00:27:51,640 --> 00:27:54,320
And it it's true.
I mean, what everybody on this

457
00:27:54,320 --> 00:27:57,640
call I think knows is number 1.
You have to be careful with your

458
00:27:57,640 --> 00:28:01,800
data because if you just In the
early days we all read articles

459
00:28:01,800 --> 00:28:05,160
about engineers putting
proprietary data into ChatGPT

460
00:28:05,200 --> 00:28:08,160
without realizing that.
That was going to be used in

461
00:28:08,160 --> 00:28:09,560
domain.
That's right.

462
00:28:10,280 --> 00:28:14,720
So you know enterprise AI,
whether it's open AI or some of

463
00:28:14,720 --> 00:28:16,040
the other.
Closed LLM.

464
00:28:16,040 --> 00:28:17,520
Whatever, whatever, right?
That's right.

465
00:28:17,840 --> 00:28:21,960
But you you need to control your
your data so they understand all

466
00:28:21,960 --> 00:28:24,240
that stuff.
So they're really fun to work

467
00:28:24,240 --> 00:28:27,040
with as an advisor.
It's been great.

468
00:28:27,040 --> 00:28:29,360
The other thing I'm doing right
now is I'm on the board of a

469
00:28:29,360 --> 00:28:33,480
company that I helped get going
when I first got to Warburg

470
00:28:33,480 --> 00:28:35,480
Pincus.
It's been transformed by one of

471
00:28:35,480 --> 00:28:39,000
my former partners.
It's called the RBB fund.

472
00:28:39,040 --> 00:28:43,360
It's it's what's known as a
series trust, which is now got

473
00:28:43,360 --> 00:28:45,440
35 different investment
advisors.

474
00:28:45,440 --> 00:28:50,600
Essentially it's the low cost
provider for investment advisors

475
00:28:50,600 --> 00:28:54,600
to to launch originally
traditional mutual funds, but

476
00:28:54,600 --> 00:29:04,400
now ETFs and there's something
called 351 exchange, 351

477
00:29:04,400 --> 00:29:08,080
exchanges that some on the on
the call might be familiar with.

478
00:29:09,200 --> 00:29:13,520
That's something that was one of
the first RBB was one of the 1st

479
00:29:13,520 --> 00:29:19,000
platforms 40 act series trust to
do a 351 exchange, which

480
00:29:19,000 --> 00:29:23,280
provides essentially a way for
the the creation baskets behind

481
00:29:23,280 --> 00:29:28,120
ETFs to eliminate unrealized cap
gains in a separate account.

482
00:29:28,440 --> 00:29:31,800
So basically.
You can not have to sell an ATF,

483
00:29:32,000 --> 00:29:34,240
have a taxable event and move it
to another one.

484
00:29:34,920 --> 00:29:38,400
Well, what I'm going to give you
a really broad brush,

485
00:29:38,400 --> 00:29:40,720
essentially the way it works,
there's, there's several tests

486
00:29:40,720 --> 00:29:46,040
that have to be met, but one of
them is it can only be done once

487
00:29:46,040 --> 00:29:50,640
and, and it can only be done in
the formation of a new ETF.

488
00:29:51,640 --> 00:29:54,440
So it's not like you can say,
oh, we have an ETF bring your

489
00:29:54,440 --> 00:29:58,040
money in.
And you know, you actually have

490
00:29:58,040 --> 00:30:01,160
to and, and, and if you're going
to manage a 40 act fund, you

491
00:30:01,160 --> 00:30:03,280
have to be a federally
registered RAA.

492
00:30:04,120 --> 00:30:09,080
You, you can actually create an
exchange traded fund.

493
00:30:09,680 --> 00:30:12,640
And the other requirement is, of
course, it's exchange traded.

494
00:30:12,640 --> 00:30:14,560
It has to be available to
everyone.

495
00:30:14,560 --> 00:30:16,840
It can't be some sort of private
vehicle.

496
00:30:17,320 --> 00:30:20,600
But there, there are plenty of
people that have a separate

497
00:30:20,600 --> 00:30:22,480
account business.
This was certainly true at

498
00:30:22,480 --> 00:30:25,760
Wasatch, for example, certainly
true at war with Pincus.

499
00:30:26,520 --> 00:30:29,720
You know, besides mutual fund
clients, you have separate

500
00:30:29,720 --> 00:30:32,360
account clients.
I'm sure many of the wealth

501
00:30:32,360 --> 00:30:35,840
advisors on this call know that
dichotomy.

502
00:30:36,400 --> 00:30:42,640
So you know, many of these Raas
have some core strategies, model

503
00:30:42,640 --> 00:30:46,040
portfolios on the SMA side of
the fence.

504
00:30:46,080 --> 00:30:50,240
And they, they have some,
especially in the tech sector

505
00:30:50,240 --> 00:30:56,120
over the last decade or two,
some monster unrealized gap

506
00:30:56,120 --> 00:30:59,560
gains.
And this has become something

507
00:30:59,560 --> 00:31:03,360
quite, quite, this captured the
fancy of a lot of people.

508
00:31:03,360 --> 00:31:05,000
So anyways, it's, it's
interesting.

509
00:31:05,000 --> 00:31:08,240
I'm on the board of that.
So is that what catalyzed your

510
00:31:08,240 --> 00:31:11,880
comment saying that the
marketplaces for mutual funds

511
00:31:11,880 --> 00:31:13,920
are going to be replaced by
ETFs?

512
00:31:14,600 --> 00:31:20,360
Well, essentially right now
there's there's also speculation

513
00:31:20,600 --> 00:31:26,520
at the moment, I may not be you
know, super current on this

514
00:31:26,520 --> 00:31:28,280
because I'm not in the
distribution business.

515
00:31:31,320 --> 00:31:38,280
The right right now whether it's
even Vanguard with their

516
00:31:38,280 --> 00:31:43,640
brokerage accounts or Fidelity
or or Schwab ETFs have no

517
00:31:43,640 --> 00:31:46,800
Commission that they offer
Commission free trading.

518
00:31:47,200 --> 00:31:52,000
So the feeling has been that
they will move to a model.

519
00:31:52,000 --> 00:31:53,680
I'm not sure they've done it
yet.

520
00:31:53,760 --> 00:31:56,440
They will move to a model where
they're going to ask for a basis

521
00:31:56,440 --> 00:31:59,400
point fee just like they did
years ago with mutual funds.

522
00:32:00,480 --> 00:32:02,360
But at the moment I don't.
I'm not sure they have.

523
00:32:02,360 --> 00:32:07,520
People on this call may know
better than me, but ETFSETFS as

524
00:32:07,560 --> 00:32:11,560
as everyone probably knows, are
way more tax efficient by virtue

525
00:32:11,560 --> 00:32:17,280
of this in kind creation of
creation baskets for acquisition

526
00:32:17,280 --> 00:32:20,560
and the disruption of the basket
by market makers for for

527
00:32:20,560 --> 00:32:24,640
redemptions.
That process, you know, really

528
00:32:25,120 --> 00:32:30,240
was quite, quite revolutionary.
I could tell you a really funny

529
00:32:30,240 --> 00:32:31,480
story about that.
Yeah, yeah.

530
00:32:32,880 --> 00:32:37,240
Well, you know, I was at Warburg
Pincus and what some people

531
00:32:37,240 --> 00:32:41,160
don't realize is exchange traded
funds are actually exchange

532
00:32:41,160 --> 00:32:44,680
traded, open end investment
companies.

533
00:32:44,880 --> 00:32:47,680
They're open and mutual funds.
There's there's no limit to the

534
00:32:47,680 --> 00:32:51,400
number of shares that can be
produced, but they're exchange

535
00:32:51,400 --> 00:32:53,600
traded.
So you do have to get approved

536
00:32:53,680 --> 00:32:56,720
not just by the investment
company division of the SEC, but

537
00:32:56,720 --> 00:32:59,040
by the exchange division of the
SEC.

538
00:33:00,040 --> 00:33:05,600
Among the elements you must have
in offering a 40 act company is

539
00:33:05,600 --> 00:33:09,360
there has to be a legal broker
dealer distributor.

540
00:33:09,360 --> 00:33:12,400
And you know, people may be
familiar with several of them.

541
00:33:12,400 --> 00:33:16,120
One of the largest is called ACA
four side.

542
00:33:16,160 --> 00:33:20,640
But they it really could almost
almost any broker dealer can

543
00:33:20,640 --> 00:33:24,160
perform the function of being
the distributor of a mutual fund

544
00:33:24,160 --> 00:33:26,520
or, or an ETF.
I mean, there's real

545
00:33:26,520 --> 00:33:28,360
responsibilities and
regulations.

546
00:33:28,400 --> 00:33:30,560
Like compliance, so on and so
forth, right?

547
00:33:30,720 --> 00:33:36,440
Compliance, yeah, and, you know,
related to everything from the

548
00:33:36,440 --> 00:33:39,120
advertising rule and and all
sorts of other things.

549
00:33:39,120 --> 00:33:43,360
But but anyway, they since I
need to be distributor, this is

550
00:33:43,360 --> 00:33:46,520
this is in the category of what
some people call the Hall of

551
00:33:46,520 --> 00:33:50,040
Shame, which is the deals.
You didn't do that.

552
00:33:50,080 --> 00:33:52,880
You should.
So here I was at Warburg Pincus

553
00:33:52,880 --> 00:33:56,720
building a big business.
I had moved the Warburg Pincus

554
00:33:56,720 --> 00:34:01,360
funds custodianship to State
Street because State Street to

555
00:34:01,360 --> 00:34:04,960
this day maybe, maybe with Bank
of New York and Brown Brothers

556
00:34:05,360 --> 00:34:09,239
being close behind now, but back
in the day, State Street really

557
00:34:09,239 --> 00:34:12,320
had the the best global sub
custodian network.

558
00:34:12,320 --> 00:34:14,880
So if you were going to do an
emerging markets fund, are you

559
00:34:14,880 --> 00:34:19,440
really you couldn't do it with
some of the domestic custodians

560
00:34:19,440 --> 00:34:22,600
because they didn't have the
global network that stays free.

561
00:34:22,639 --> 00:34:24,120
Good.
So anyway, I knew the State

562
00:34:24,120 --> 00:34:26,159
Street people.
So one day they, they called up

563
00:34:26,159 --> 00:34:27,199
and said, Hey, we're going to be
in town.

564
00:34:27,199 --> 00:34:29,400
We, we got a, an interesting
proposition for you.

565
00:34:29,400 --> 00:34:32,320
I said, OK, come on in.
And they came in, it was a

566
00:34:32,320 --> 00:34:34,800
slightly different group than I
work with.

567
00:34:34,800 --> 00:34:37,480
And they said, you know, we were
launching something we're

568
00:34:37,480 --> 00:34:43,480
calling the Spider family, which
are exchange traded funds, you

569
00:34:43,480 --> 00:34:46,920
know, SPDR 500 and all the other
stuff.

570
00:34:46,920 --> 00:34:49,280
Like they only they, they were
talking about just one or two to

571
00:34:49,280 --> 00:34:51,840
get started.
And they said we need a 40 act

572
00:34:51,840 --> 00:34:54,080
distributor.
And we had an in house broker

573
00:34:54,080 --> 00:34:56,400
dealer.
I was the securities principal

574
00:34:56,400 --> 00:35:01,520
of that at Warburg.
And I said, yeah, well, we, we

575
00:35:01,520 --> 00:35:05,920
have a broker dealer, we act as
our own distributor in house.

576
00:35:06,360 --> 00:35:09,760
And they said, well, we'd like
to see if you'd like to be the

577
00:35:09,760 --> 00:35:13,920
distributor for the the State
Street, these things called

578
00:35:13,920 --> 00:35:17,520
exchange traded funds.
And I knew a little bit about, I

579
00:35:17,520 --> 00:35:19,800
knew a little bit about what had
been written about what exchange

580
00:35:19,800 --> 00:35:23,680
rated funds were.
And I remember thinking, yeah, I

581
00:35:23,720 --> 00:35:25,880
can't imagine this is going to
be that big a deal.

582
00:35:26,080 --> 00:35:30,680
Yeah, but a gene it also with a
company even at that point the

583
00:35:30,680 --> 00:35:34,080
size of State Street, they could
have just spun up a broker deal

584
00:35:34,080 --> 00:35:37,680
or a bought 1.
Yeah, Well, that was the strange

585
00:35:37,680 --> 00:35:41,920
thing, but, but I think part of
it was a lot of these, the one

586
00:35:41,920 --> 00:35:44,560
thing I've learned in financial
services, a lot of companies

587
00:35:44,560 --> 00:35:48,480
that are in what's called the
service vendor side of the

588
00:35:48,480 --> 00:35:52,200
business are afraid to invade
new areas.

589
00:35:53,000 --> 00:35:55,880
Yeah, make it look like they're
they're afraid that yeah,

590
00:35:56,800 --> 00:36:00,400
they'll channel, they'll be
stepping on the they'll be Yeah,

591
00:36:00,920 --> 00:36:03,840
clients.
So anyway, they came to us and

592
00:36:03,920 --> 00:36:06,120
here's the Hall of Shame part
they said.

593
00:36:06,120 --> 00:36:10,000
And I said, well, if we did
this, you know what, what kind

594
00:36:10,000 --> 00:36:14,480
of fee are you talking about?
And it's much lower now, but

595
00:36:14,920 --> 00:36:17,160
they said, well, you know, we
were thinking something in the

596
00:36:17,160 --> 00:36:20,600
six or seven basis point range.
And I, I said, well, let me get

597
00:36:20,600 --> 00:36:21,600
back to you.
I remember that.

598
00:36:21,600 --> 00:36:24,080
Was the ending of that.
And I was like, Nah, I'm not

599
00:36:24,080 --> 00:36:27,720
going to do this.
It's and I think now, Oh my God,

600
00:36:27,720 --> 00:36:32,520
how many hundreds of billions in
spiders in those things at

601
00:36:32,520 --> 00:36:35,240
states alone.
And I could, I could have been

602
00:36:35,240 --> 00:36:38,240
making six basis points on that.
It's like, in fact, some

603
00:36:38,240 --> 00:36:41,200
somebody told me, the guy who
did it, I'm not sure if it was

604
00:36:41,200 --> 00:36:43,720
Merrill Lynch, somebody told me
the story that the guy who

605
00:36:43,720 --> 00:36:48,560
actually said yes when he
retired was actually able to

606
00:36:49,680 --> 00:36:55,440
work into his retirement package
that he got a forever trail of a

607
00:36:55,440 --> 00:36:57,560
piece of that.
And I thought to myself, that

608
00:36:57,560 --> 00:37:01,640
guy's sitting on a beach
somewhere counting his money.

609
00:37:01,640 --> 00:37:03,720
And I I said I'm.
Coming in, yeah.

610
00:37:04,240 --> 00:37:07,560
So I I that, that's, I'll never
forget that one.

611
00:37:07,600 --> 00:37:11,440
That's the Hall of Shame.
Yeah, I I can't even tell you

612
00:37:11,440 --> 00:37:13,120
the countless number of those
I've had.

613
00:37:14,960 --> 00:37:16,880
Yeah, we all have.
Yeah, wish I did.

614
00:37:17,360 --> 00:37:21,200
What about have you seen a this
is sort of a a curiosity

615
00:37:21,200 --> 00:37:24,400
question for me because I've
seen a fair amount of activity

616
00:37:24,400 --> 00:37:29,520
with the resurrection through I
think it's Blue Owl and others

617
00:37:29,520 --> 00:37:36,880
BlackRock doing interval funds
to help non accredited investors

618
00:37:36,880 --> 00:37:40,440
get access to private deals
right as you, you seeing any of

619
00:37:40,440 --> 00:37:41,720
that?
Yeah.

620
00:37:41,800 --> 00:37:45,560
Well, Blue Owl I think it's ABDC
business development company

621
00:37:45,560 --> 00:37:47,360
which it with a subset of the 40
act.

622
00:37:47,640 --> 00:37:51,960
I was on ABDC board back in the
day that Aries Capital bought

623
00:37:53,320 --> 00:37:57,480
the interval funds I'm very
familiar with because they they

624
00:37:57,480 --> 00:38:01,200
are a little, they're a little
more close to a traditional

625
00:38:01,200 --> 00:38:04,120
mutual fund.
It's just that they, they can

626
00:38:04,120 --> 00:38:07,920
do, you know, illiquids like
venture capital companies.

627
00:38:07,920 --> 00:38:12,840
Kathy Wood, just to name 1
famous manager has the Arc

628
00:38:14,160 --> 00:38:16,320
Investment Venture Fund,
whatever it's called.

629
00:38:16,320 --> 00:38:20,480
And essentially they, they do a
quarterly tender offer at a

630
00:38:20,480 --> 00:38:24,440
calculated NAVAV.
Yeah, and and they do a

631
00:38:24,440 --> 00:38:26,360
quarterly tender offer.
So there's a liquidity

632
00:38:26,360 --> 00:38:28,400
mechanism.
It's not daily, but it's

633
00:38:28,400 --> 00:38:31,360
quarterly.
And yeah, more and more people

634
00:38:31,360 --> 00:38:35,400
are doing those.
They, they, they haven't been,

635
00:38:36,640 --> 00:38:40,440
by my estimation, they haven't
been as as popular as I would

636
00:38:40,440 --> 00:38:43,760
have guessed.
Some, some of them don't have

637
00:38:43,880 --> 00:38:47,360
particularly great performance.
You know, everything in the

638
00:38:47,360 --> 00:38:50,840
money management business,
everybody knows this does boil

639
00:38:50,840 --> 00:38:54,000
down to to performance and
hopefully consistent

640
00:38:54,000 --> 00:38:56,640
performance.
Everybody has a bad year here

641
00:38:56,640 --> 00:38:58,920
and there, but if there's
consistent performance, money

642
00:38:58,920 --> 00:39:02,280
tends to follow.
So yeah, we'll see.

643
00:39:02,280 --> 00:39:04,720
I do think exchange traded
funds, I, I just read that

644
00:39:04,720 --> 00:39:08,280
BlackRock is trying to put
together, you know, a private

645
00:39:08,280 --> 00:39:11,720
equity index because everybody's
trying to figure out some other

646
00:39:11,720 --> 00:39:16,520
way to allow retail people to
get access to, you know, more of

647
00:39:16,520 --> 00:39:19,080
these private and alternative
asset classes.

648
00:39:19,080 --> 00:39:22,440
So I I think that may be more
the way it happens.

649
00:39:24,640 --> 00:39:29,080
And then there's the the work
being done to redefine what an

650
00:39:29,080 --> 00:39:31,280
accredited investor is, not
based on how much money you

651
00:39:31,280 --> 00:39:34,600
have, but how sophisticated you
might be, right?

652
00:39:35,160 --> 00:39:38,480
Yep, Yep.
Well, the, the, the first, the

653
00:39:38,480 --> 00:39:41,120
first way they did that was if
you, if you, how, if you hold a

654
00:39:41,120 --> 00:39:45,280
securities license, I think
virtually of any stripe, you

655
00:39:45,280 --> 00:39:48,120
know, that qualifies you
regardless of your net worth or

656
00:39:48,120 --> 00:39:49,320
annual income.
Yeah.

657
00:39:49,320 --> 00:39:52,440
I mean, and then of course
everybody's talking about, you

658
00:39:52,440 --> 00:39:55,640
know, 4 O1 KS and the
introduction of potentially

659
00:39:55,640 --> 00:39:57,520
privates.
And, you know, some people would

660
00:39:57,520 --> 00:40:01,880
argue that, you know, is that,
is that the sign of a top when

661
00:40:01,880 --> 00:40:05,040
Wall Street tries to start
pushing an asset class on

662
00:40:05,040 --> 00:40:09,720
retail, right.
You know who knows who knows?

663
00:40:09,720 --> 00:40:13,360
You know, I, I think in general.
You know, it's going to boil

664
00:40:13,360 --> 00:40:17,120
down to the fiduciaries of
plans, the trustees who are

665
00:40:17,120 --> 00:40:19,560
going to have to make these
difficult decisions about what

666
00:40:19,560 --> 00:40:23,760
kinds of asset classes they're
going to include on their menu

667
00:40:23,840 --> 00:40:27,680
because they they have, you
know, they have DOL liability as

668
00:40:27,680 --> 00:40:32,120
fiduciaries to, to make, you
know, good decisions in that

669
00:40:32,120 --> 00:40:34,760
department.
So we'll, we'll see.

670
00:40:35,000 --> 00:40:36,680
We'll see this, right?
And there's a lot of activity

671
00:40:36,680 --> 00:40:40,760
where private equity is buying
AUM firms because the recurring

672
00:40:40,760 --> 00:40:42,840
revenue produces a good
multiple.

673
00:40:43,480 --> 00:40:46,440
And it's sticky business because
it's not easy to go from one

674
00:40:46,440 --> 00:40:49,560
registered investment advisor or
broker deal to another as a

675
00:40:49,560 --> 00:40:51,840
client, it's like I'm not going
through that.

676
00:40:52,360 --> 00:40:54,640
Let's go play golf, right?
Yeah.

677
00:40:54,720 --> 00:40:57,160
Oh, yeah.
No, you know, steady, consistent

678
00:40:57,560 --> 00:41:01,160
cash flow is, you know, besides
Warren Buffett liking it, I

679
00:41:01,160 --> 00:41:04,840
think the rest of the world has
discovered that, you know,

680
00:41:04,840 --> 00:41:07,280
there's, there's, there's
nothing like it, whether it's,

681
00:41:08,440 --> 00:41:11,080
you know, even at the micro
level, if you will.

682
00:41:11,080 --> 00:41:15,280
I mean, you know, people are
talking about what occupations

683
00:41:15,280 --> 00:41:17,440
will AI eliminate and
everybody's sort of saying,

684
00:41:17,440 --> 00:41:21,640
well, if you're a plumber or
electrician, you're going to be

685
00:41:21,640 --> 00:41:23,440
fine.
Yeah, totally fine.

686
00:41:23,760 --> 00:41:27,120
You know, I mean, if you use
your hands, but you know, in

687
00:41:27,120 --> 00:41:29,240
some ways those.
Yeah.

688
00:41:29,320 --> 00:41:31,720
And they grow to be bigger
companies.

689
00:41:31,720 --> 00:41:34,200
But even if you're just an
individually licensed

690
00:41:34,200 --> 00:41:36,400
electrician, you know, you're
your own boss.

691
00:41:36,400 --> 00:41:39,840
You have a predictable cash flow
once you get some sort of

692
00:41:39,840 --> 00:41:42,240
reputation.
And there's a relative shortage

693
00:41:43,440 --> 00:41:47,040
of these people, you know, so.
It is hard to imagine that we're

694
00:41:47,040 --> 00:41:54,040
going to have a a robot plumber
crack under the sink, right?

695
00:41:54,400 --> 00:41:59,040
Yeah, not likely right now.
I mean, I like to tell people I

696
00:41:59,040 --> 00:42:02,640
think there's going to be many
examples of AI enhanced

697
00:42:02,640 --> 00:42:07,800
occupations and tasks, but you
know, whether, whether there's

698
00:42:07,800 --> 00:42:12,360
complete elimination, yeah, it
depends that there are going to

699
00:42:12,360 --> 00:42:16,480
be entry level positions that I
think are much skinny down.

700
00:42:16,480 --> 00:42:20,320
I I do feel sorry for junior
analyst getting out of college.

701
00:42:20,320 --> 00:42:22,000
Yeah, if you if you want to
tune.

702
00:42:22,000 --> 00:42:24,640
Your analysts.
Yeah, the analysts, I mean, you

703
00:42:24,640 --> 00:42:27,720
don't need a whole month to do
ADCF spreadsheet.

704
00:42:28,040 --> 00:42:33,760
It's like, so the world is
changing, but we'll see.

705
00:42:34,120 --> 00:42:36,400
Yeah.
Yeah, it's quite interesting.

706
00:42:37,200 --> 00:42:38,880
So I really appreciate you doing
this.

707
00:42:38,880 --> 00:42:41,200
So I didn't know a lot of that
story.

708
00:42:41,200 --> 00:42:44,480
I knew some of it, but I brought
up, but you don't know this, but

709
00:42:44,480 --> 00:42:46,200
I brought up my kids in
Villanova.

710
00:42:46,560 --> 00:42:49,640
I know the one hog.
I know the whole thing down

711
00:42:49,640 --> 00:42:50,160
there.
No.

712
00:42:52,080 --> 00:42:55,720
Went to Wharton, spent a lot of
time in Philadelphia, moved to

713
00:42:55,720 --> 00:42:58,400
New York City.
Yeah, almost 30 years ago now.

714
00:42:58,400 --> 00:43:01,360
But you know, that was my
stomping ground down there.

715
00:43:01,840 --> 00:43:03,680
Yeah, that's that's that's
amazing.

716
00:43:03,680 --> 00:43:06,440
Well, Villanova is a phenomenal
school.

717
00:43:07,120 --> 00:43:10,440
Yeah, yeah.
Well, I was, I was 5 minutes

718
00:43:10,440 --> 00:43:13,920
away from this campus.
I had AI had no business being

719
00:43:13,920 --> 00:43:17,120
in that neighborhood, but I had
had exited a company and bought

720
00:43:17,120 --> 00:43:20,440
a house near Pat Croce,
remember?

721
00:43:20,440 --> 00:43:22,800
Yeah, sure.
Yeah, yeah.

722
00:43:23,440 --> 00:43:26,640
And just, it was an epic place
to bring up kids.

723
00:43:26,640 --> 00:43:30,000
My kids went to my kids went to
Episcopal Academy.

724
00:43:30,000 --> 00:43:33,040
I was a member of Marion and
Philadelphia Country Club and

725
00:43:33,040 --> 00:43:34,920
blah blah blah.
Main line, yeah.

726
00:43:35,480 --> 00:43:37,280
Yeah, the whole main line thing
going.

727
00:43:37,600 --> 00:43:42,440
Yeah, it's a beautiful all.
All those towns are beautiful.

728
00:43:42,440 --> 00:43:46,000
And, you know, Philadelphia's
again one of those cities on the

729
00:43:46,000 --> 00:43:49,680
East Coast that you know, it
just for all the booms we've

730
00:43:49,680 --> 00:43:57,000
had, whether itwas.com or the
90s, you know, whatever, you

731
00:43:57,000 --> 00:44:01,480
know, Philadelphia itself still
is, you know, it's never really

732
00:44:01,480 --> 00:44:04,920
boomed quite the way other East
Coast towns did.

733
00:44:05,360 --> 00:44:07,520
We all know that's changing
again now.

734
00:44:07,520 --> 00:44:10,840
Who knows what's happening with
a lot of the the large cities

735
00:44:10,840 --> 00:44:13,560
these days, but they did.
The Philadelphia suburbs were

736
00:44:13,560 --> 00:44:16,600
always amazing.
It was just fantastic to bring

737
00:44:16,600 --> 00:44:18,120
up.
Yeah, Yeah.

738
00:44:18,200 --> 00:44:19,960
That's great.
Well, I didn't know that that's

739
00:44:20,040 --> 00:44:23,480
that's really civilized.
Yeah, it's very, very well.

740
00:44:23,480 --> 00:44:27,720
They they good transportation
and train systems and you know,

741
00:44:27,960 --> 00:44:35,000
Sept is kind of a basket case
these days, but totally don't

742
00:44:35,000 --> 00:44:36,560
anyway.
Well, that's great.

743
00:44:36,560 --> 00:44:38,120
Now I appreciate you having me
and.

744
00:44:38,520 --> 00:44:40,920
Being it was amazing.
Yeah, when you get.

745
00:44:41,040 --> 00:44:44,080
Back getting your head back it's
it's finally snowing here in

746
00:44:44,080 --> 00:44:47,080
Park City so get back up here
and.

747
00:44:48,200 --> 00:44:51,000
Yeah, I heard I left on this
business trip.

748
00:44:51,160 --> 00:44:54,120
It's now been extended.
But you know, I left just as

749
00:44:54,120 --> 00:44:56,560
that storm was hitting.
Was that last Wednesday, I

750
00:44:56,560 --> 00:44:57,440
think, Yeah.
So.

751
00:44:58,080 --> 00:45:01,240
But yeah, we certainly needed
the snow in Park City and they

752
00:45:01,240 --> 00:45:04,760
got it, I guess, right?
Yeah, so they got enough for the

753
00:45:05,120 --> 00:45:10,120
Alta and Snowbird and, you know,
Park City Mountain and Deer

754
00:45:10,120 --> 00:45:13,840
Valley to just take, take a
breath, right?

755
00:45:13,840 --> 00:45:17,160
Because they were, they were
just wailing in the streets, you

756
00:45:17,160 --> 00:45:19,560
know, was like, holy cow, is it
ever going to snow?

757
00:45:19,920 --> 00:45:21,760
Yeah.
So I think they're going to get

758
00:45:21,760 --> 00:45:24,680
a base and easier to make snow,
right.

759
00:45:24,760 --> 00:45:27,520
So people are feeling better.
There's no question about.

760
00:45:27,600 --> 00:45:30,000
That's a good question.
Beautiful, of course.

761
00:45:30,160 --> 00:45:31,680
I'll be back in a week or so.
We'll.

762
00:45:32,160 --> 00:45:33,600
All right.
Sounds good, Gene.

763
00:45:33,600 --> 00:45:35,840
Thanks for doing this.
Well, thanks, Arthur.

764
00:45:36,320 --> 00:45:38,880
Yeah, that was fun.
Yeah, we'll do it again soon.

765
00:45:39,280 --> 00:45:40,360
OK, good.
Afternoon to you.

766
00:45:40,360 --> 00:45:42,720
You too.
Thanks everybody for tuning in.

767
00:45:43,200 --> 00:45:43,680
Thank you.