Chuck Yates Needs A Job

0:20 Hey everybody. Welcome to Chuck Yates needs a job. The podcast. Pretty cool stuff today. Trying to corner the market on former UBS bankers as guests. So I have as my guests today, Brad Olson,

0:33 Brad, welcome in. Thanks for having me Chuck. I'm excited. All right. I'm going to get you to tell your background and all this, but we got to jump to the, to the chase on this. Dude, are you

0:42 Mr. Skilling? Seriously. You have to be a non-lives matter at the Chuck Yates job. Chuck Yates needs a job podcast so we can like black you out, put a smiley face over, distort your voice. You

0:56 know, my business partners, friends, colleagues, I've been accused of being skilling by dozens of people and I know I'll disappoint some people listening that I'm not skilling. And you know, I

1:10 get a lot of grief because people just assume that I'm willing to lie. I'm willing to go to the map for this thing, But as we'll talk about in a second. Skilling really took off as I was

1:22 bootstrapping a new company with my partner and

1:27 my partner heard it from a friend and he came into my office one day and said, Dude, if you are waging Twitter war on the entire industry as we are trying to get our cash flow above cost,

1:42 that's not cool.

1:44 I looked at him and I said, Mark, listen, I've got four kids at home. They're four kids in a 36 month range - We could tell you what's causing that - By the way, that'll help - Yeah, it just

2:00 seems like the Stork visited us a handful of times in a few years. We had twins for our third kid. And so I was in my catcher's stance doing bath time every single night and people were texting me

2:14 like. Dude, this 64 team tournament is hilarious and I'm sitting there making less money than frankly I ever had starting a new company, getting beat up by four kids and yelled out by my wife and

2:25 the idea that I had anything left to make a full time job out of tweeting seemed crazy. But you know, obviously you're not the first one to accuse me of it. So I'll give you the official answer.

2:37 Okay. So here's what I did. When you agreed, whatever it was five days ago to come on the podcast And I don't think I'm violating the sanctity of the DM because you know, what happens in DM stays

2:49 in DMs, but I'll violate it here. I DMed Mr. Skilling and said, Hey, see you on Thursday. And I got nothing, nothing. So anyway, last night I DMed Mr. Skilling and I said, I said, Hey,

3:05 you didn't respond to this. Okay I think you're thinking that if I think it's you, you're going to sit. there and say, Hey, what do you mean Thursday? What are you talking about? But then you

3:20 figured out that I would think that that was what you were thinking to do it, to cover it up. So you said nothing. I see what you're doing. I got a tweet. I got a DM back this morning that said,

3:30 no, I just figured you DM the wrong person. By the way, who the hell is your guess this morning? I'm intrigued. So you're playing this well. Well, covering it up. No, thanks I mean, the

3:41 funny thing is I've heard about, I've heard about public company board meetings where skilling and my identity, my identity as skilling was discussed for a significant chunk of the board meeting.

3:54 And there are times when I hear these stories, I'm like, you can't, being surrounded by, again, a household with four kids running around. My oldest is now in second grade. I just joke with

4:06 people that I'm not that funny anymore. I've got too much Too much child there. Now who protests this much? I'm starting to think this is real, 'cause if anybody's gonna sub-born, skilling,

4:19 mannered hole, Dan Pickering, and they're not gonna tell Tudor about it. Right - Yeah, no, look, I mean, it's, I wouldn't be surprised if whoever the real skilling is shares some of that,

4:32 Houston energy finance DNA, but I'm not into golf, and skilling talked about wear patterns. I had to Google what a wear pattern was when I read skilling tweet about great wear pattern. I didn't

4:47 even know what that was, and so I kind of thought to myself, any close friend of mine, and I know we're meeting for the first time, but any close friend who's accused me, I've kind of said like,

4:56 there's too much talk of golden retrievers and golf on that thread for it to be named - Fair enough, we'll go one more thing in EFT though. Who's Kenny Lay? Any ideas - You know, I honestly Kenny

5:11 Lay one that um being a lurker, I'm not,

5:16 I follow raising the bar. Raising the bar is probably the closest I have to like somebody who, like I'm following almost every tweet that they put out just 'cause as a public market equity guy, I

5:30 love somebody who's focused on public equities all the time. Kenny Lay is more about having a good time. And as I already said, I have four young kids, I'm not into having that much of a good time

5:39 - I've given up fun for 18 years - No, I think Kenny Lay is Frankie - Huh - Paul's Frankie. Although, you know what was interesting, I went to a party that's Frankie through over July 4th, and he

5:53 was up on stage talking and I was DMing with Kenny Lay. So I'm not sure, I'm not sure it's Lay - You gotta have body doubles to be in the, an on game - I guess so, I guess so. No, I'm just

6:05 kidding, Paul. The, no, the, the last rumor we'll do on that is, you know, there's been bouncing around the column with Kolela. is actually Kenny Lay. And one, I don't know. I don't think

6:17 Colin would fast up to me, but the one theory I have on why Colin is not Kenny Lay is because Colin's ego is so freaking big. He'd tell everybody - Once it gets cool, I don't know how you could

6:28 stay in on. And I - I'm freaking kidding - I can see that - Once you get over 10, 000 followers, you want everyone to know who you are always - Exactly - Exactly - I was inspired of that one day.

6:39 All right, so you grew up in New Jersey How do we get from New Jersey to Rice University in Houston - Yeah, it's a great question. I mean, I'd always been a curious kid, I guess is the best way

6:52 to put it. Never traveled to the South - Is that like code for geek? I was a geek too - Yeah - We've got, if you got a rice, we're nerds - Yeah, anybody who ends up at Rice, and I ended up at

7:02 Rice, totally a very nerdy way, but a totally random way, grew up in New Jersey. My parents were - both from the Midwest, they are both from the Midwest. And so never really got inundated in

7:15 that, kind of like Wall Street lacrosse player, eight generations of New Jersey and kind of culture that I feel like I grew up in. And so I always kind of thought college would be a great free

7:28 option to go try out a part of the country you've never been to before. And so I had never stepped foot in Texas. And I went to speaking of nerdy, I went to a model Congress where you go to DC with

7:41 a bunch of kids from around the country and you pass a fake bill. So you talk about cool ways to meet girls in high school. I passed a bill this last weekend, no big deal. But I ended up

7:53 caulkusing - For Congressman for years, man - Yeah, I left before those perks. But I ended up caulkusing with a bunch of guys from Texas and was talking to them and was like, growing up in the

8:07 Northeast. It is an intensely competitive, great school systems, public schools, a lot of competition to go to one of those Ivy League Northeast schools, which I always kind of found nauseating.

8:19 Like the idea of a bunch of kids going to the same schools as everybody they grew up with, and crying or not showing up at school for a week 'cause they didn't get into Georgetown or Duke or whatever.

8:31 And so I thought, maybe applying to school in the South would be just a kind of cool way to zig when everyone else zags. And my issue was I didn't know the name of any schools in Texas. So I

8:42 basically came home, told my parents in between two days for football, let's go to Vanderbilt, let's go to Rice. Vanderbilt's dorms were worse, and I spent three hours on campus, knew nothing

8:55 about the school, applied, got in, and have now been in Houston for 20 years - Oh, that's crazy. The

9:03 Rice story I love is George Will. decides that his kid needs to get into a good college. And supposedly, let's be delicate about this. May not be up to standards to get into an Ivy League school.

9:19 So he writes this wonderful article about Rice, and he says, you know, is Harvard the rice of the Northeast. You know, something that's quote, and we all use this, Rice doesn't let his kid in.

9:34 It's like, come on - It feels like Rice is the kind of school that would take something like that, and use it as an opportunity to dunk on George Will, as opposed to letting us get in - Exactly -

9:47 But look, I mean, coming down to Texas, I've always been a big believer throughout my life that the world doesn't need a 20th or a 30th X. You know, name your thing, like the world doesn't need

10:00 another one of those. And so when I heard that hardly anybody from the Northeast, you know, Rice back then, Enrollment was like 25. Houston area and 50 Texas. And I thought Duke is going to get

10:14 5, 000 kind of yuppy kids from New Jersey applying for their freshman class. Rice isn't going to get that. And so, you know, I was probably trying to play the George Will game a little bit myself,

10:26 which is, you know, you're going to stand out as a New Jersey. I'm the two New Jersey Acceptances a year. And, you know, now we're filled and we're good. So what college are you in when you get

10:37 to Rice? Hanson, you're in Hanson. So for the listeners that don't know, Rice has a residential college system and no fraternities on campus because I'm thoroughly convinced Ed Groh del Love it,

10:51 the first president of Rice got his ass kicked at a fraternity party or something. So that's been banned. So your college actually kind of functions as a fraternity. It's just you're put there by

11:02 random. Totally you know in my case this is kind of a funny story that we haven't talked about, but when they select you, they hand select you. So while, you know, all my friends are going to

11:15 big schools and basically getting thrown into 10, 000 person freshman class, you know, at Rice, they sort you to a college and then they select your roommate based on a roommate questionnaire that

11:27 you fill out and a student reviews the questionnaire. And so, you know, we had all crammed for SATs, learned all the vocabulary words that, you know, you'll forget a few minutes after you learn

11:39 them. And there was a question on there that said, if you could, you know, if you could spend time with any historical figure in a romantic or torrid relationship, who would it be and why? And

11:54 so, you know, having done my SATs, one of the things they teach you is or means it means something different than the first word. And so, I thought, well, romantic or torrid, torrid just must

12:04 mean the opposite of romantic. And I wrote in my roommate questionnaire, I said, you know, I'm a kid from New Jersey, played football, you know, love going to parties, but I'm also a nerd and

12:14 I'm into school. And if I could have a torrid relationship with anyone, I think like traveling around Europe with Napoleon as he takes over all of Europe would be. We've always wondered who

12:26 purchased Napoleon's tus to call off the eBay, right? So, you know, I arrive at Rice and the students who are in charge of sorting, you know, the people who organize orientation week are

12:39 students. And, you know, one of the guys came up to me and said, Hey, man, I just need to meet you in person. I was like, Oh, great. You know, I'm thrilled. I'm from New Jersey. And like,

12:48 I'm excited to be here at college. It's like, so you like parties like there are a lot of kids here at Rice that won't party and won't drink a beer by the time they graduate. So it's weird to have

12:59 somebody say, I'm nerd, I'm a nerd, but I like partying, I played football. but I'd also like to have a relationship, a toward relationship with Napoleon. And I was like, you know, honestly,

13:10 I just didn't know what it meant.

13:13 And he said, well, you know, we're actually hedging our bets. And we've got a rice baseball player in the quad with you, in the four-man dorm with you. And then we've got, you know, this archi

13:27 from a architecture major, from a very sheltered family in Kansas, who's, you know, his application kind of jived more with the Napoleon thing. And, you know, so I ended up having a great time.

13:40 I made friends with everybody but, you know, it was just kind of funny because I had the, you know, rice baseball player who's in the process of winning the national championship my freshman year.

13:50 And then on the other side, you know, I've kind of got the archi who's up all night, you know, studying architecture, partying. And so, you know, I always tell people like, you know, not

13:58 being afraid of kind of making a fool of yourself admitting that you don't know. What something is probably got me a lot of my career so far and that's how I got my roommates at rice Tell you got on

14:10 the podcast there you go. There you go. So I will say this about rice I mean you and I have competed at the highest levels in business, right? I mean, yeah doing doing money stuff throughout our

14:24 careers and all I will say this the amount of intelligence At rice while I was there 3x 5x of what I dealt with in the rest of the world is that would you agree disagree? You know, it's really

14:41 interesting I mean not to not to you know ignite emotions about rice on that wasn't my intention coming on the podcast But you know my wife who didn't go to rice We grew up together from first to 12th

14:53 grade my you know my wife and I went to school We basically took four years off. She went to school in DC I went to school at Rice, but she would come visit me and you know, we ended up getting

15:04 married after school and, you know, having four kids, but she would always kind of say that weirdly the high school cohort that we hung with, smart, you know, educated overall, but public high

15:17 school, had more of the kind of intangible things that you encounter more in the business world, whereas the rice kids were all just astronomically smart, but would have a panic attack when it was

15:29 a resume drop for the consulting job, you know? And I remember - Smartest, one of the smartest guys I know at Rice is a postal clerk these days. And it just couldn't function in the real world,

15:41 but God, if you needed a problem solved, he was your guy - Well, yeah, I mean, I actually, I studied abroad for a semester in Russia, and when I came back, I got randomly assorted to whoever

15:51 didn't have a roommate. And so, you know, of course, how good of a sales pitch is that? There's one guy who couldn't find anyone to live with. And so, hey, you know, and - He was an

16:01 electrical engineer and electrical engineer at

16:06 Rice is an interesting guy, no matter what, what, what, what, a hard core geek. And we were going to some internship job fair and I was like, Hey, you know, I'll walk with you. I'll walk

16:16 over there and you know, I'm wearing my Dewey B Joseph Banks box, box shaped suit. And he walks out and he's wearing jeans and a Texas Instruments t-shirt I was like, well, yeah, I know you're

16:29 trying to be kind of punk rock, you know, computer science here, but don't wear a t-shirt to the job fair. And he said, dude, I'm going to talk to Texas Instruments. I'm going to have a drop on

16:39 all these guys who are wearing business casual. And I thought like, that is a classic rice job fair. Such a rice. No, it really, it really was an amazing, amazing place One last rice thing and

16:55 then I want to hear about the first job, but and maybe it actually ties to the first job.

17:02 So you were roughly there when the Fab 5 was at Michigan, right - Yeah, yeah, no it was - What year was the Fab 5 at Michigan - So we were just - By the way, my kids, new favorite line is, Oh,

17:16 don't worry, Dad, I'll Google that for you - Oh yeah - Well, I left my phone over there, but yeah. So Fab 5 was like late '90s or early 2000s, maybe like just 2000. And so I matriculated like

17:29 '02 So who was the Fab 5's first game - You need to tell me it's Rice - Rice University - There we go - At the summit - Okay - The Goldstein's Church.

17:43 And Rice actually played 'em tough, 'cause that was the team that had Adam Peakes on it - Okay - Brent Scott, I forget who else was there. I think Chad Michael was probably already gone, but

17:56 anyway, played, 75 tough 'em, 71 I think Pete's had a three pointer. to either tie it up or win it and missed it kind of at the end. And then we fouled them and they did that more importantly

18:08 than rice losing to the fab five for their first game. What happened at half time

18:16 given that you didn't know it. I'm just, I wanted to say let me speak there and you're going to say, well, Chuck, that's all you've been doing speaking, but sometimes I'm so entranced with what

18:28 I'm saying. It's more like a listening experience. But anyway, no, so half time they give you 35 seconds and you take as many shots as you want. You got to hit a three pointer and then you got to

18:42 go back to where the Rockets logo was. And it was kind of, let's call it halfway between the three point line and the mid court line. Okay. 35 seconds. You got to hit one of each. So the guy in

18:53 front it. So I get drawn there are two people doing it guy in front of me walks up, cans the three pointer and then steps back. that logo and cans it. I mean, two shots, boom, boom, boom,

19:05 free Southwest ticket. So anyway, then it's my turn. And I fancy myself a decent basketball player. Yeah. So I go out there. The basket hangs in the middle of nowhere. You know, when you play

19:18 in a gym, there's a wall behind it. Oh, some depth perception. And you generally have a wood backboard, certainly not a clear one. Yeah. I mean, this thing is hanging in the middle of, you

19:29 know, some of it because they're fans everywhere, right? And it's a clear backboard. No depth perception to save my life. I'm sitting there at three point line, eight straight airballs. And I'm

19:39 missing by two feet. You know, same hoop as the guy who can the two and the right. Yeah. Right. The whole, you know, and then, you know, the crowds all rice people at all, you know, no

19:50 means there's a air ball, air, but on the ninth shot, I can the three pointer. I I have two seconds left and you know they got a guy kicked the ball for you throwing it out. So the guy kind of

20:03 throws the ball out. I grab it. Step on that logo, hoist it, canned it. I got my free Southwest. Nice. There

20:12 we go. We'll, we'll make sure we edit that out.

20:17 Hey, how was the podcast with Brad? What was great? I told my stories and I think he was there. Yeah. I was there for some of it. All right So you graduate from Rice. What are you going to do?

20:30 So interview, you know, interview with Credit Suisse, Morgan Stanley, and it's funny, right? Because I was a political science, philosophy, and Slavic studies major at Rice. So all the job

20:42 skills. And, you know, my roommate who actually now works for a cane portfolio company. So he'll, he'll remain nameless. He kind of said, Hey, I know you're probably thinking law school, but

20:54 I just freaked out. I don't want to be a doctor. I'm not going to be a pre-med anymore. And I interviewed and these investment banking places will give you a shot if you just kind of say, I'm a

21:04 smart guy who just hasn't found his passion yet, or whatever. And so I was like, Oh, that sounds great. I'd much rather get paid than pay for law school. Interview at a couple of these

21:15 investment banks, credit suites, clammy, shaky, and like - So who's at Credit Suisse at that time? Because the whole

21:25 Houston investment banking, it was always the energy office, right? Yeah. And credit suites would send a team down here and then another bank would steal it. Yeah. And then credit suites would

21:38 send another team and another bank would steal it. Yeah, it's like Apocalypse Now. They just keep going upriver and going native. Yeah, exactly. Morgan Stanley needs an office boom. Let's take

21:48 credit suites Yeah, you know - Any idea who was there, do you remember? You know,

21:57 I want to say it was an associate named, maybe Mark. Okay.

22:00 And you know, so long - Did he give you a job - No, no - Oh, screw mark - Yeah, yeah, no - Let's go somewhere better - But it was funny because, you know, I think every time I went into an

22:09 interview, typical rice guy, you know, I think when you're around super smart people, there's a lot of subtle flexing. And there's a lot of engineers saying like, philosophy, good luck, you

22:20 know? And you're just kind of like, oh man, the engineer knew what job he was gonna get freshman year. And I'm here with a philosophy degree, you know, kind of out in the wind. And you know,

22:30 ultimately you get practiced and you kind of ultimately to me, it was Deutsche Bank and UBS. And the Deutsche Bank guys seem kind of fun, kind of freewheeling. And the UBS guys were just total,

22:42 you know, everyone was grumpy, nobody had time to listen to your answers in the interview. So of course, when I got both job offers, I went with UBS. 'Cause they must be cool, right? You know?

22:51 They must be cool. These guys, they seem so irritated to have a super day that like they must do a lot of deals.

22:59 You know, and so of course UBS wasn't even dominant in the league table. I mean, at the time, you know, Steve Trauber, the head of our group and yeah, you know, Steve now runs city. But at

23:10 the time, I mean, our league tables always showed us his number one, but we weren't, you know, we weren't Lehman Brothers. We weren't like a dominant JP Morgan Lehman Brothers franchise. But

23:19 when I look around, you know, the bullpen I was in all those guys, I mean, we were, I joke with people that I know, you know, I don't know enough about basketball to talk in depth about it.

23:29 But we were kind of like the fab five, maybe except for me. But you know, the other guys I was with, I mean, it was funny, you sent me an email and you called it the fab four of Michigan. And I

23:38 was going only a rice. Yeah. Rice guy totally misquoting sports knowledge. But but yeah, you know, who's in the bullpen with you. So Chris Transier, who was on the podcast, you know, Daniel

23:52 Goodman, who now runs a Carnelian was in the bullpen and you know Michael Yure, who now is CEO of Western Gas, and I hope I don't get hate mail from all these guys for mentioning their names, but

24:05 Jordan Marie - I already texted him and said you were skilling, so don't worry about it. Yeah, Jordan Marie, Gary Reeves, I mean, just a ton of guys came out of that shop that have all gone on

24:16 to do, and all guys that I worked with closely. And it was a total grind, and I went from, like, hey, guys, what's EBITDA? That was my philosophy background, and I saw just eyes roll, like,

24:31 why do we keep hiring rice people? Why do you trowelber and sten make us hire these rice guys who come in and say, like, do I pronounce every letter, or is it EBITDA? And then when you hit EBITDA,

24:42 it just blows your mind. And right? Oh my god, what's the X score? Yeah, like, there's the rice guy's giggling about EBITDA again. Like, nobody told him what it actually means. He thinks it's

24:51 just kind of a funny way to say it. So, look, UBS was a great - Testament to you because proper never hired me. I interviewed with Trapper every two years for like 10 straight years. Never got

25:05 never got a job from Trapper. Look, I mean, it was a I mean, it was a great learning experience. There was a lot of, you know, I think the friendships you make with guys at 3 am. You know, I

25:18 joke with folks now that like we were all in our twenties and we were pegging fact set would give out stress balls and we would peg each other with, you know, fact set balls. And, you know, I

25:30 remember a couple different guys would just ear hole you with these facts that ball. So when you would be you'd be carrying a bunch of perspectives, 500 pages off the printer and one time, you know,

25:40 I just got earholed with this fact set stress ball, the pages went everywhere. And, you know, I had one of those moments where like I was holding back tears because you're already under slept,

25:51 you're under slept, you're stressed all the time You're just like telling your girlfriend like I think I'll be out by midnight. I think I'll be out by 2 am. Oh wait, you're not awake anymore. And

26:01 somebody just like, oh man, I killed you with that fac set ball. And we still joke today that like, you're in the last professional setting where

26:12 somebody you'll get bald out by a vice president or an associate. And it's like football practice where you're like, dude, I think Tim's crying. You know,

26:24 like, there was a Canadian guy I worked with who's now a VP of at Halliburton. And I remember I got bald out and I was sitting there in silence and he was in the hotel desk across the wall for me.

26:36 And he heard the keyboard clicking stop. And he's like, hey man, UBS wouldn't let me meet my movers once. And I just had one of those moments where I was like, I need to see the movers. And my

26:49 MD was like, dude, that's great. This book needs to get done. He's like, and I just started crying And he's like, and I - He's like, I know you're in a place right now where my advice to you,

26:59 'cause you're unable to type on the keyboard and you're not making any noise. He's like, Just hit the men's room, hit, grab a stall. It's midnight. No one's gonna be in there, get a good cry

27:09 and come right back and bang him more. I still joke with people that I'm like, You know, it's a good story to tell now. But there were legitimate tough guys who were like, Yeah, I want this job

27:19 'cause it's the hardest job and it's the hardest thing to interview for. And a year later, they're like, I just can't so frustrated sometimes - So my story on that front, 'cause I went to work for

27:30 Stevens. I went undergrad, detour through UT Law School, Rice MBA. And after the MBA, I went to work for Stevens and my boss was Gene Shepherd. You know, he's now CEO of Brigham and Awe, I

27:46 remember. And I love Gene to death. I mean, just not a better person on this planet, But Gene is the most detailed person. you know, I've ever met. And so trying to do a book for Gene that was

27:59 okay, was really tough, right? So I had stayed up all night doing this book and Gene had just picked it apart and wanted me to stay the next night and do it. And at three in the morning, I wrote

28:09 this diatribe 'cause this is back almost before email - Oh yeah - You know electronic communication. So I wrote Gene this note about, I'm not worthy of this job. I can't do it. Vah, vah, vah,

28:21 vah. Woke up the night, came in the next morning and Gene's like, We need to talk about this. And I said, No, I hope we don't - She just tore it up, threw it away, but that was my cry - Yeah,

28:31 we've been - We were probably tears all over that letter - We all have those moments. I got somebody went to a London road show and said, You know, I wanna do a, I wanna pitch, sit, go. So

28:45 pitch a state controlled Venezuelan entity on divesting all their remaining US assets. They don't give any public info Go dig Google. you know, look for interviews with Sit Go employees, find

28:57 anything you can and make, you know, basically a hundred page asset book on Sit Go. And the associate had just, you know, the associate above me had just, he was an ex-military guy, he had just

29:09 come out of MBA and he was like, dude, I heard if we play our cards right, like you can make a million bucks in this shop. And I was like, I was like, a week from now, you're gonna forget about

29:18 the whatever the upside case was and you're just, and so he was like, how do we do a Sit Go book? And I was like, look man, like you're new, I've been doing this for a year, I can probably bang

29:28 out most of this Sit Go, but I had one of those moments where I sent him an email, I was like, just get out of my way, let me do the Sit Go book. We just got handed a total, you know,

29:39 unappealing task. I used some very unpleasant word for the unappealing task by a guy who's going to London and who doesn't give a crap. And, you know, it wasn't crap, obviously, but, you know,

29:51 and I don't believe in hypnotism, I don't believe in out of body experiences, but the associate came over to my desk looking at me like I had just run naked through the bullpen and he was like,

30:03 Dude, I know you're frustrated, but that email, I was like, You and I are friends. Like we're working together on, he's like, I know. I was like, So why would sending you the email be so bad?

30:15 He's like, Well, 'cause you see, see the MD. And I was like, No, I wouldn't, I know what the MD just walks over and it's similar deals. Like, We gonna talk about this again? I was like,

30:28 Nope, we never will. Complete mistake. Frustration has now left my body. I'm good. I will be working on Sit Go, put piecing together Google searches for the next week. And when you come back

30:38 and sure enough, we came back like, disappointing, undercooked, you know, whatever - It's all right - I'm glad we're back on good terms that you can dump on my book - You know, I dug in, there

30:50 was a merger that went three one time and it was a private company but had public debt, but the reporting requirements for the public debt wasn't as robust as being public equity and all this. And I

31:05 literally spent five straight days building this model, piecing together all this stuff. And I remember the only time I ever made Jean laugh, Jean comes into my office, well, where's this

31:17 analysis? You know, we're gonna go pitch this and I go, Jean, if I'm doing all this, I guarantee you the public market has done all this to figure out these multiples. They just haven't, Jean,

31:29 'cause I'm pretty smart. And Jean normally would have yelled at me at that point, but Jean just looked at me and busted out what happened. He's like, all right, fair enough. Slap a four times

31:39 he's done it. Oh, yeah. We rolled into the meeting. So you come in, you're doing energy, and then where does that take you? So, you know, I think I had a moment. Not a moment, but we were

31:53 working on a deal and we were working on a deal with like an old-school Burlington XTO management team, you know guy probably 70 75 and the bankers were sending over this IPO deck that the bankers

32:08 put together with all of your compliance and all of your disclosures and you know that the chairman CEO of this company would basically send back a PowerPoint with none of the corporate formatting

32:20 none of the UBS and Lehman logos in the corner They were just screenshots. He had taken a bloomberg about things. He thought were interesting and the bankers are like You can't you can't do this You

32:32 know there has to be you can't just pull a price chart of a stock and say like we're kind of like that You know like IPO docks like you see Exxon it's up a lot in the last 30 years I think we're kind

32:43 of like Exxon like you know like and And so the MDs basically got to a point on this deal

32:51 We're gonna send him, we're gonna cram a compliance approved presentation down the Chairman's throat. He was born and raised in Odessa and he is gonna take none too kindly to that. Brad, you're 23,

33:03 24, you know, you're gonna be the only banker on the road show. And I looked at them, if it sounds silly to anyone listening, like to send a 24 year old as the corporate, you know,

33:13 representative for an investment bank, is you still look young today too? I'm not sure 24 Yeah, 24 year old, you know, I was still wearing the boxy Joseph Banks, you know, Mr. Roboto suit.

33:26 And, you know, I go on this road show, I've been on enough, it's a bull market, I've been on enough IPO road shows that I'm calling multiple hedge funds ahead of time, like be ready, be 10

33:37 minutes early, we're gonna be there 10 minutes early, there's a transit strike, I've called like eight limos to follow us and these guys, you know, they're so appreciative. And they're like, so

33:47 your boss is chickened out, sent you. and you're just on the phone and like, cars are coming and going, we're making every meeting on time. And so they kind of included me in their little circle.

33:58 And the company's long since it got sold and is no longer a public company, but the CEO and the chairman kind of, we're in the car joking, the limo. And he's like, man, it turns out our CFO was

34:12 just a friend and he didn't know how to do the accounting. So we promoted our assistant treasurer to treasurer and then to CFO in one week And I just remember I'm sitting there, like I'm part of the

34:23 gang

34:25 and we're driving around and I'm thinking this is great. Of course, the guy who ended up having a private equity kind of like multi nine figure cent a million like personal windfall was the

34:35 assistant treasurer who got promoted like for the road show. But that was kind of one of those things where I remember flying around and one of the, on the company plane and one of the executives

34:47 just goes, Hey, I want to go to OSU game this weekend. And the plane just starts going, Mm, man, I thought to myself, as the plane descended, Miller light cans came off every ledge inside this

34:60 plane because we had run out of cup holders a long time ago. And about a hundred empties just banged against the pilot store and the pilots like, Everything okay? And I remember as I got back to

35:13 UBS the following Monday, you could tell that my bosses were happy that the road show went well, but there was a little bit like, this guy thinks he's pretty cool now. And I got staffed on some

35:25 horrible project and one of the hedge funds that we had been talking to in Los Angeles on the IPO road show, I basically sent him an email at like 2 am. And I said, You know, I'm getting grinded

35:36 into dust and you guys were in shorts in Santa Monica. Could I be your analyst? You know, I know what EBITDA is now. And you know, these guys in LA. probably didn't know what to make of it.

35:49 Yeah, all we do is energy MLPs, pipelines, ENPs, you know, whatever. You're from Houston. I'm like, well, I'm actually from New Jersey, but you know, you're from Houston close enough. Why

35:59 don't you come out interview for a day and you can be an analyst. And so that's how I made it. Who was that? Can you just? Yeah. Yeah. It's so the name of the firm was, was Strom investment

36:10 management and the strong came out of cane, didn't he? Yeah. Yeah. Okay. Okay. So, so like the bars of Santa Monica are littered with ex Strom traders who are just like there at like 130 PM

36:22 like, Oh, Strom, huh? See how long that lasts. And you're just like, Hi, I'm the new guy. You know, I was really fired up about that. Yeah, exactly. You know, because of course, like the

36:34 hedge fund world, all of my buddies who have all gone on to do, you know, really cool things. They were all kind of like, Hey, you know how we come to work in a tie every day and get berated by

36:45 other guys in ties. Well, you can get berated slightly less for a few hours, less per day if you go to a private equity firm, but you still gotta wear the tie. And I remember thinking like, wait,

36:56 what? Like that's the off ramp. And I was like, through these guys in LA who leave work at 1 pm - Market closes - Market closes, you're stressed, like go to one of those bars in Santa Monica.

37:09 And so, you know, I went out there, I took a very similar like New Jersey guy going to Texas. You know, I went to a hedge fund in LA, you know, sight unseen had never been to LA before other

37:19 than those IPO road shows convinced my now wife to get her company to transfer her to move us out to LA. You know, as you'll hear the end of this story, she was pretty fed up with me by the end of

37:32 our LA experience because I, you know, I jerked her out to the West Coast. But it was cool. The reality was, you know, it was a 200 million hedge fund. Strom had spun out of cane he's classic

37:45 kind of.

37:47 Iconoclastic, you know, just Miss Anthropic guy who just was kind of like, look, I gave Kane everything, everything, every investment idea that they have that's worth anything was on my desk in

37:59 pencil in 1989 or whenever I walked out of there. And he kind of rode the nascent hedge fund boom in the 90s. That's not what I left on my desk when I walked out of there. Just a better part of

38:12 discretion, just me from saying such things. Sorry, go ahead No, and so, you know, Strom was this very, I mean, he was an interesting guy because his kind of claimed a fame or at least one of

38:25 his claims to fame, he had created like a multi-strat, like a pod shop. He created like a mini citadel with the money that he managed. He would say, Hey, it's 1995. You think you know how the

38:37 world works. Here's 10 million bucks. Whip it around. You double it. I'll give you another 10. You lose 10 of it. I'll take 9 million bucks back. He created like a multi-strad hedge fund. One

38:48 of the strategies was kind of energy and midstream MLPs, you name it. And he kind of started digging in in the early 2000s and he found, you know, what is now, I mean, Mr. Skilling obviously

39:02 has made a career out of writing about the incentive structures of midstream companies. And he basically did the math and was like, so your management fee goes up every time you issue more shares,

39:14 like, that can't be right And if the deal's a creative, you get an exponential growth of the common share accretion, like, no way - No, we put a great title on it. It's called Incentive

39:28 Distribution Rights - Yeah, speaking of, you know what - When somebody figured that out and it's like, now let's just call them IDRs -

39:35 So by the end of the MLP boom, you know, when I was on that road show, there was a something, I forget what the exact name was, but it was like management incentive rights, like, And I remember,

39:46 you know, this is a little bit of a discursion, but on that road show at UBS, we're in a deep dish pizzeria right near Midway Airport. And, you know, we're one of the Lehman Brothers bankers

39:57 who's like tagged along is like, um, is there, is there a Chardonnay, you know, on the menu? And, you know, they're the management team is like, pitchers of Miller Lite, like we're about to

40:07 print a 300 million IPO, you know, and like, we're annoying everybody at tables around us And one of the management guys I remember stood up and he said, you know, I don't know why they call them

40:19 MIRs. They should call them like, they should call them MIBs for money in the bank. And, you know, standing in like a south side working class, like deep dish pizzeria wearing suits, waiting

40:31 for them to gas up, you know, the company plane and just like, you know, sloshing these Miller Lite pitchers. I remember thinking like, this is definitely the peak of my investment banking

40:39 experience. Why do they hate us? Yeah, look, I mean, you know, at the end of the day, it was an exciting time in a bull market, but we can, you know, we'll talk about it in a minute. Like

40:49 bull markets, bear markets, have their own behavioral attributes. The same way that today it's a bear market. Everything we do is wrong. You know, nobody will invest in our sector. Like that's

40:60 as natural of a part of the kind of bear market grieving process as the clanking the Miller Lite pitchers together is in the bull market, right? And there's nothing you can really do to change that

41:11 But, you know, so anyway, back to Los Angeles, the reason that out of all the strategies, the fund decided to stick with midstream, there was a private buyout of Plains All-American out of

41:26 Plains, Plains exploration or Plains resources. I know I - Corporation, Plains Resources Corporation - Right. And, you know, Strom, who was - Hold on, one second, you keep talking I'm over

41:39 here reading my separation agreement. and the disparagement clauses just to make sure and the confidentiality clauses to see what I can say during this conversation. If I just nod it, you sometimes

41:52 just keep rolling - Okay, yeah. So the reason that midstream, obviously at the time you had Matthew Simmons talking about the world's running out of energy. We're trill - Why light in the desert -

42:04 We're trillions of dollars under-invested, which is again, classic bull market behavior. No amount of investment is enough The same way that with renewables today, a thousand percent growth year

42:16 over year, not enough. And it was a very similar mentality in 0708 with the discussion around investment. And so here was Plains, an infrastructure business, effectively getting bought out in a

42:29 private deal by a private consortium, including management. So at the time, this is before I arrived at Strom and I heard all this story post, but you know, strom basically. called up

42:43 Lucadia, the financial conglomerate that now owns Jeffries and other businesses and said, hey, like, if I'm right, this business is going to get bought out and it's going to do a acquisition that

42:54 is going to effectively double the management fees. So they're going to buy it out for 10x cash flow. It's going to be a 5x deal within the year. And if the deal is a creative, it's going to end

43:04 up being a three times cash flow deal. By the way, if it's public, it trades at 15, but keep going. Exactly So clearly what we would call, you know, hypothetically speaking, you know,

43:15 asymmetric situation. And so his kind of, you know, my old boss kind of said, hey, I'm coming with Lucadia. I want, you know, I want whatever, in insider management buyout hates the most. I

43:28 want all the books open. I want your, your bid to compete with my Lucadia cash bid. And I, you know, I want us to do get out in the daylight and of course the you know minute management and

43:41 Vulcan group kind of said, would you like to participate personally for 4 of our buy? You know, I don't obviously know that that's how it all went down. But long story short, you know,

43:52 Strowman's up owning 4 of this GP personally. The deal that I described taking into a three times multiple is a tip of the iceberg over the next five years, you know, cash flow to the GP, you know,

44:04 increases 10 fold 20 fold and the multiples get bigger over that period of time So when I arrived in late 2007, he had split the ownership and basically put some of the private ownership in our fund.

44:18 And he said, Hey, 10 of our fund is private. And we mark it at a, you know, valuation mark to model. And every quarter, it is so far below market that we can basically mark it up in

44:31 anticipation of this IPO. The IPO should go down in 2008. Famous last words, right? And nothing battle happened in 2008, valuations will be great. And we'll finally liquidate this 4 position,

44:44 which should be worth nine figures, maybe multiple. And so I was there in 2008 as what's the IPO update? What's the IPO update? And we all know, whatever you learned in business, you originally

44:57 learned in high school and the high school cafeteria when like Megan's not passing notes back.

45:05 And like, what's the update? Lehman? What's the update on the IPO? Obviously, financial conditions today are unprecedented. Like the market's still trading pretty well for energy assets. What's

45:17 the story? And we're out there in LA living, holding 4 feeling very minority, powerless, whatever. And at some point, hey, great news. The mark that we are getting from Occidental buying out a

45:33 stake of the GP makes your 4 look like a lot. And of course, my boss was like, don't care where's my cash? And the response was, well, you should be really happy because with Lehman Brothers,

45:48 the book runner on the IPO, potentially not existing in a month, we're still able to get you a mark that shows it's worth 15 times current cashflow. And my boss, he was an extremely technical

45:60 trader. I mean, he was a, I don't like something opens in the morning with a gap down He'd be out of it by 10 am. He would be long something for months, for years, if he didn't like the way it

46:12 was trading - And that was very much Rick Kane. I mean, Rick Kane started off life as a Bond arbitrage guy at Canner Fitzgerald. So Rick very much a trader type. So not surprised they were drawn

46:24 together - Yeah, I mean, my interview, this is probably a very atypical interview, but Mark Strom spent five minutes with me and he said, How much is an iPod? which was the cool thing at the

46:37 time. And I was like, I don't know, 300 for the small one, 400 for the extra carrying capacity. And he said, I'd like to sell you my iPod for 200 bucks as is no returns. And I was like,

46:51 figuring this is a thought experiment. Like, no, that's all right. I'll pay 300 at the Apple store. And he's like, you're hired. Because anybody who realizes that once the bloom is off the rose

47:03 and people are trading hands for less and less, you can't go back to charging 300 to 400 bucks for an hour. Like people will not pay for an inferior good. And the market shows you when a good is

47:14 inferior by gapping down. I'm still new to the ebitconcept. So he's explaining this and I'm like, so I got the job. I can do Excel spreadsheets. And he was like, I don't care about any of that

47:26 stuff. Learn what a double top is. And so as I got through the insanity of a technical trader who you've got to remember. the world's going into meltdown and energy prices are going like this.

47:39 Yeah. And a technical trader loves that kind of strength in uncertain times. And so he is basically yelling in one ear, do you have the Plains IPO model? You know, do you have the Plains

47:52 monetization IPO model ready to go? And in the other ear, he's like Chesapeake is Saudi Arabia, but it's privately, you know, it's available to buy for anybody. This is the chance of a lifetime

48:03 They're basically buying into a Ramco before they found Goar. And I'm thinking like, whoa, this is getting very trend theme. You know, no Epidom multiples just this is, this is worth a lot more

48:15 than it currently trades at. And I'm doing my model trying to catch up with all of his Chesapeake buying and, you know, the morning they do the Hainesville JV, the stock gaps down on what is every,

48:26 you know, financial note says best deal ever. Chesapeake is now worth triple what we thought it was And Stromes, you know, were totally liquidated out of everything. And I want to get out of this

48:36 Plains IPO even more now, because even a great Hainesville announcement, the market doesn't like it. And the market doesn't like energy anymore. And I was like, it's still the best performing

48:48 asset class. You've got to be crazy, but I'm 24. I'm still learning. And so, he's desperate now to sell out of Plains. And he calls, the bankers calls Plains management, and he says, this oxy

49:02 deal will not stand It was a Houston management buyout that wanted to steal the company when I first got in. And now it's a Houston crew of different investment firms, like, you know, NCAP and

49:15 Kane were getting liquidity on the oxy buy-in. And you know, he's like, and of course, like Plains's lawyers were kind of like, Mr. Strom, you don't have any tag along when it's in this

49:25 transaction. You know, you officially cannot petition for to have your, you know, this is a private deal. You're not involved.

49:33 you know, in a classic kind of LA guy move. Like when I'm running into the courtroom, waving a bunch of papers in the air, like we'll see if you guys still like it then, you know? And so, okay,

49:46 we'll be in touch, you know, and everybody on the plane side was so mad. And, you know, again, Mark is, Mark Stroh, my partner, or my boss, he was the kind of guy that, you know, when

49:56 things were trending up, he wanted to own more. And when things were trending down, he wanted to be out And so, you know, about a week later, we get a very nice call from planes management.

50:07 It's like, guys, we heard your concerns and we have moved heaven and earth to get Occidental to expand their purchase. And they will include your 4 stake in the Occidental GP buy-in. And, you

50:24 know, Stroh, my boss kind of sat there with a kind of calm quiet that I'm not capable of, but he would just sit for 30 seconds on a phone call people fidget and he said, well,

50:38 I guess Oxy really likes what they have in this plane's GP must be really valuable. And everyone's kind of just dead silent and he says,

50:48 yeah, I'm cool. I'm actually going to hold on to the 4

50:53 and I mean, you know, you could have, you could have hung up the phone and heard the screams and the epithets from Houston. I mean, and sure enough, right? It ends up IPOing a few years later

51:04 at an even better valuation. But, you know, I remember just like the, you couldn't even tell whose voice it was, but no good deed goes unpunished with you. LA, you know, like, and the rest is,

51:15 you know, unprinable, but it was, it was one of those moments of for a guy who had come up as an investment banker, junior investment banker and when a CEO's talking, you never talk. Oh, yeah.

51:25 And you're sitting there. My, my boss is wearing, you know, Lulu lemon or Nike dry fit coming back. from a hot yoga and just saying, oh, I'm good. Okay. Well, you know, that's the thing

51:40 that with some age and some experience that I now really, really appreciate is being that young guy, being in the room, getting to see those CEOs. 'Cause this is a related story to the time.

51:58 'Cause when you had planes of resources, it owned the GP of planes all American. And actually what was going on is research coverage on planes resources is American all planes in owns it units the

52:09 of value the, okay, say and there sit would X. And

52:18 the oil and gas reserves are Y and then it would subtract the total consolidated debt on planes resources balance sheet and we would sit there at Caine and go, the value of the MLP units already

52:34 subtracts the debt of the MLP you're subtracting it twice. And I mean, this was like Goldman Sachs research analysts and stuff. It was not Jim Bob's, you know, bucket shop investment bank. I

52:46 mean, sophisticated research guys couldn't get the concept that they were double counting. So that was the state of purpose on splitting it So when we, when we split it and cane and in cap kind of

52:58 bought the, with management and you guys bought the GP interest, we, we in effect spun. So planes resources for a while and just the GP interest, but we spun the oil and gas assets out into

53:12 planes exploration and Jim Flores came in and ran that. Okay. And so Jim Flores was CEO of planes exploration and planes resources, but we'd split it all out This is my story of being the young guy

53:26 in the meeting. This is why to this day, I love Jim Flores. calls me up and asks for anything except maybe my kids. And on certain days he might get my kids. If Jim Flores asked me if every the

53:39 answer is yes, 'cause I am the young guy, I've been at Cane Holiday Year. I mean, I'm a managing director, but I'm still 32. And the board of planes is NCAP. So, you know, I think Zorich is

53:53 in that meeting. Marty Phillips might be in that meeting. Peterson might be in that meeting. And then it's Cane Anderson So my boss Bob Sinat sitting there. And then you've got John Raymond, who

54:05 was at that time, Flores is kind of right-hand guy. And all, and then the board of planes all American was like an all-star list of old white guys and oil and gas, right? So we're sitting in this

54:20 board meeting and Flores is circling the conference room table. And what the deal was, was planes, resources was gonna potentially buy another GP interest Gotcha. It was actually natural gas.

54:33 Might have been borders, something anyway. Oh, maybe boardwalk. Yeah. It wasn't boardwalk. I don't think well, Northern borders. Oh, okay. Yeah. I mean, and so that was on the table and I

54:44 forget, I think it was splitting from Enron or something, whatever the case was. And so Plains was looking at buying it and Florida is walking around the table saying guys, we should buy it.

54:53 We've got the premier oil platform. Let's have a natural gas platform. It would be perfect. And he goes, you got any questions? And I raised my hand because you had check. What do you think?

55:05 And as I started saying my question, I realized mid-cented. It was the single stupidest question that's ever been asked in the history of business. So I utter out this ridiculous question and right

55:20 at the end of it, right at the end, Florida's goes, Chuck, stop. And I'm just like my heart saying something to get fired from Kane. I realized how stupid was. He goes, Chuck. I know exactly

55:32 where you're going. You asked that question, it's gonna lead to this question. It's gonna lead to this question. And you're right, that question is a whole gut to that. You got there after a 20

55:42 minute deal. It took me three weeks. Here's ultimately how I got comfortable with that. That question Chuck, and here's why I'm good with the deal. Blah, blah, blah, blah, blah. And

55:53 everybody on the board's like, Yeah, good question Chuck. Flora looks at me and he just wanks. And I was like, whatever you need. Yeah. Whatever you need. Yeah, no, I mean that's huge. But

56:04 the reality is, I kind of joke that there are benefits of being the philosophy, poli-sci guy in those meetings has definitely led me to ask more than my fair share of dumb questions. But you made a

56:19 great point. I mean, I ended up at TPH doing research because when I was on the buy side, I would call guys because I was genuinely like a homophosophy major I just learned. what even dollars and,

56:32 you know, like, so how did you get to this? Like, why is your terminal multiple? 'Cause this is like a seven times terminal multiple business. Yeah, yeah, I know, but there must be some like

56:42 mathematical derivation of that. Like you're not just throwing, you're saying you can't throw a seven times multiple on this year, but something magical happens in five years. You can definitely

56:51 use a seven times multiple then. And guys were like, dude, are you trying to be a wise guy? You know? You're like, no, I'm genuinely curious And, you know, when I ultimately took the research

56:60 role, it was because how many notes have you said, wait, did they double subtract the debt

57:08 at JPMorgan Goldman Sachs Wells Fargo? Like, I must be the dumb guy who just doesn't understand why you would double subtract it. And so when I went to TPH, it was like write those questions that

57:20 bothered you when you were the guy who had to be quiet in a meeting. And I was like, I'm gonna start just asking those questions And the thing that was incredible was at TPH, the number of clients

57:31 and folks who, you know, not everyone's an energy expert. I, you know, spend all my time in energy, but I still struggle with the concept of who's truly an expert. But, you know, I remember

57:41 kind of sitting there at TPH and saying, yeah, so why would this be valued this way? And people would just write back saying, makes no sense, makes no sense to me. Like, have you gotten a good

57:52 answer? And I'm like, I'm sending this thing out to 12, 000 people. The only answers are I'm getting are like, good question, man. Good question So, so your, your experience, I mean, I

58:03 think is, is pretty universal in that, you know, I look around at the table, I'm like, hey, if you have the commanding body language to know little or nothing and never ask a curious question,

58:14 and you can cruise through a career without having to be the dumb, curious guy. I have all the respect in the world for that guy. But I think, you know, you come out of rice and you're kind of

58:23 the, there's no way I can just bluff my way through the next three decades of energy finance - That's huge. No, no, that's exactly right. And there were,

58:34 I remember having the moment where the emperor had no clothes. You know, I just remember sitting in there asking a very, very well-regarded CEOs and basic questions kind of pulling the thread and

58:49 just realizing, holy cow - Yeah - then get it, you know - Well, I mean, look, you know, I made a joke about that deep dish pizza joint with the management team, but there was a great meeting

59:00 shortly before that where a hedge fund guy came in and said like, you know, your peers are all using three-way swaps or three-way collars and swaps. And you guys are out here, you know, with much

59:15 lower hedge percentages. And it was the time of Lin and Brightburn and all these other, you know, ENPMLPs. And I remember, you know, this guy, Odessa born and raised You know, 70 or 75 already

59:30 very comfortable financially. You just looked at the guy and said like, if somebody comes in here and puts enough lipstick on a pig that you want to marry that pig, then definitely buy that IPO.

59:42 But I'm not going to throw a bunch of three way collars on this business and tell you it's not an oil and gas business. And I remember sitting there as the young guy like, I think the hedge fund guy

59:51 got owned, but I'm not sure because everyone's so quiet,

59:55 you know, but, but I just remember having those conversations where when you dig in from a position of curiosity, you very quickly find out who's real. And I think, you know, in any bull market,

1:00:07 we know it right now it's happening. I'm not like a big anti green or anti renewables guy at all, but the type of people that are growing businesses rapidly in the renewable and clean tech space are

1:00:20 very reminiscent of the guys that, you know, I, I certainly spend time around and I'm sure you spend a a lot of time around where it's kind of like. here's what you need to say for the IPO to be

1:00:30 oversubscribed. It's like, what does that have to do with your business? Like, here's what you have to say. Here's the tax shield. We don't expect the MLP to pay any taxes for at least five

1:00:41 years. You know, like we plan to grow the dividend 10. Like what about a depleting like PDP business is the 10 dividend growth come from? You know, it's like, they wanna hear a growth rate,

1:00:53 we're gonna give them a growth rate And we call it the annual non-recurring work report. Yeah, no, you know, it was interesting. So I stop at the coffee shop every morning in Richmond, Texas,

1:01:05 and the police are always in there. So I chat with the police. I figure that might hold me in good stead one day. But anyway, we were talking about bubbles. And it's interesting, I've actually

1:01:16 read a lot of the academic research on bubbles and literally none of the academics, the experts that have studied it, figure out the characteristic other than it goes up and you buy because you

1:01:32 think it's going to go up and then people sell because they think it's going to go down. Yeah. You know, because if we could actually fit, because I agree with you, I mean, I think renewables,

1:01:42 et cetera, let's just call it broadly transition. I mean, I think that's going to be a huge bubble. We're probably going to spend five to 10 X what we spent in the shale revolution doing it. And

1:01:52 at the end of the day, I don't think anybody's going to make any money at it And we're going to be lucky if we don't lose half our money. Well, you know, look, the reality of how financial

1:01:60 markets work. And this has been a painful, you know, a painful firsthand lesson for everybody in energy over the last few years. And we're finally emerging from that into a better situation. But

1:02:10 if there is only a billion dollars of wells to be drilled and there's 500 million of capital available or there's 5 billion of capital available, asset markets will act very differently reality is

1:02:25 the world, you know, the physical economy still needs X dollars of investment. Sometimes there will be five X what you need available and sometimes like today there will be 50 of what you need

1:02:37 available. And

1:02:42 one of the things that without getting into too much of the kind of the boring work stuff, but we spend so much time studying the, like charging stations are low single digit return on asset

1:02:50 businesses because every, you've got a hundred different guys going out to

1:02:58 HEB and saying, how sweet do I need to make economics for you, HEB, for us to put a bunch of these in your parking lot - Right - And that's not a great economic opportunity set, but there are tens

1:03:11 of billions of dollars chasing that. Whether or not it's a good, inherent economic opportunity. And then, you know, whether it's mining, whether it's oil and gas, we're seeing these businesses

1:03:22 reinvest on average, you know, 30 to 50 of operating cash flow. because they have been beaten into submission on you guys always overspend. So they now have to demonstrate that they are legit by

1:03:35 under-investing and that capital that they used to be able to access isn't there anymore. The guy who did a deal in Boston is gone five years later. And a lot of the private equity capital isn't as

1:03:48 easily accessible. So I think the reality is it's not about people will say, Oh, green stuff is fake It's a bubble, it's whatever. I just rather than kind of use words that get people emotional,

1:04:01 I view it as, You have an opportunity set that will consume X billions of dollars. If the capital markets are throwing 5X that amount of capital, you're gonna have trouble generating returns. Like

1:04:15 no pipeline ever went bankrupt during that huge pipeline boom. Yet all the pipeline companies went down 60. Like, why is that? Well, because there was, you know, 20 billion a year of pipeline

1:04:28 opportunities. And there was probably 60 billion a year of mutual funds, hedge funds, you name it, flowing into that space during the peak of the shale boom. So let's break this down because this

1:04:41 is, I'm formulating this in my head, kind of to talk about at some point on a podcast. And I'll probably talk intelligently then, and I won't talk intelligently now. But what I find interesting

1:04:55 is we sit there and we talk about under investment. And we're all so damn arrogant that we talk about US under investment and all. I don't think that matters anymore. Because I think what happened

1:05:10 in the shale revolution, we told ourselves we were the low cost producer and that we were actually generating the marginal barrel for the world. And I said that with a straight face fundraising, I

1:05:22 truly believed it. You know, the George Costanza, it's not alive. You believe it? I really believed it, but I think we figured out that for the most part, we're really not the low cost producer.

1:05:34 It's still Saudi. So shouldn't the mindset on what prices of oil going to be less about our under investment and really more about do the Saudis really have three or four million barrels sitting on

1:05:47 the sideline? Or am I thinking about it wrong? The way we kind of frame it, when we talk about it is any resilient system, let's use like Texas power because we all, well, I lost power in

1:05:60 February. You may have had some, but you know, in Houston, I've not heard my story on this. No, just real quick. So all my listeners heard this a hundred times. So go get your beer or whatever

1:06:10 you do during the podcast. But so anyway, my dad goes out and puts solar panels on the vacant lot next to his house and the Tesla batteries on the wall. Right? And I'm like, Dad, how much did

1:06:23 that cost? He's like, 125,

1:06:26 000. And I go, what's kind of the payback on that? Yeah, it's like, well, I calculated out it's 123 years. And I'm like, yeah, you're 80. I mean, I hope you're here to see what are we

1:06:38 thinking? And so anyway, he, you know, he sends me is, uh, his selling back to the grid, you know, kind of every month and all. And so her cop blows up all that good stuff. I am down

1:06:51 enrichment. I'm in equal distance, fire hospital police I don't think I'm ever going out on the grid. Of course it goes out. Yeah. So I'm freezing in my house. And my house is this old wooden

1:07:02 house. You know, wind is just howling through my house. So I load my cat up in my, in the carrier, I grab a bag of clothes and I go over to my parents house, I walk in, dad looks at me. 123

1:07:14 year payback don't sound so bad right about now. Does it? Yeah, I mean, but no, I mean, look, like the reality is every resilient system that is not prone to failures and price spikes and price

1:07:28 collapses, has to have a marginal, I find it easier to think about this marginal concept and how we talk about it in our meetings. The marginal concept is easiest to understand on the power grid.

1:07:41 You don't like, it's easy for a New York Times reporter to come to Oklahoma or Texas and say, Old Bessie is the dirtiest coal plant still in service And Old Bessie is an eyesore and it pollutes the

1:07:55 air. But the reality is, Old Bessie runs like two days every year on average because she is the thing that makes sure the grid doesn't completely go out. And one of the challenges with divestment

1:08:08 that's being created across the whole energy space is the fact that a plant that's on for two days a year is very hard to model out and say, Old Bessie will definitely pay you back 100 of capital

1:08:21 next year. It's a, Hey, let's keep it around for the next 10 years. And one time.

1:08:27 Uh, you know, weather's going to temperatures are going to go negative and we're going to make 10 years of our capital back. But because companies are being forced to rationalize, always sell

1:08:37 non-core assets, you know, your valuations getting hammered, all of these marginal assets, whether it's, you know, Bakken oil production or whether it's coal plants in Oklahoma and Texas,

1:08:48 they're all getting decommissioned at a accelerated pace, right? Because we're going through this kind of divestment period where the available capital is getting smaller, available capital gets

1:08:57 smaller, the right answer as a company trying to survive or thrive is to divest your non-core assets. And I think when you look at, you know, the oil market, the real problem was that Saudi,

1:09:10 Saudi is your big nuke plant, right? Saudi should run a hundred percent of its capacity all the time. You should not be telling a guy like, Hey, pull out the uranium rods. You know, somebody

1:09:21 just turned off their lights you know, you want to have the nuke running all the time. And then it's your kind of, you know, janky. whole plant, which is kind of the, you know, scoop stack,

1:09:31 DJ, Bakken, Eagle Fird, like, hey, prices are 80 or 90. I need you guys to ramp production in the next six months. I think the real challenge that the, you know, the oil market has

1:09:43 experienced is that the debt loads of a lot of marginal oil producers in the US reflected being a nuclear plant. When you're a nuclear plant, you run all the time, you can have debt because you

1:09:55 don't have to worry about getting shut down. The Bakken is kind of like, you know, parts of the Bakken, you know, I'm sure I'm exposing my ignorance to a lot of the technical, you know, experts

1:10:04 that listen, but you know, look, the Bakken should not be levered up 60 debt to cap because it might not be needed in the, you know, dispatch stack for a year or two. And you should have a

1:10:18 business that's able to go into base decline without a catastrophe, right? And I think like C-dabs is the perfect example of went into the downturn with the lowest debt load, tried to go into a

1:10:30 mild decline and quickly became two times levered. And then once you're two times levered, it's, hey man, you can never decline again 'cause if you decline anymore, you'll be three times levered.

1:10:40 And then if commodity prices go down, you'll be four times levered, you'll be headed towards BK watch. And so I think that's like the big concept that we talk to our clients a lot about is like

1:10:51 rather than thinking of like Saudi good, America bad or, you know, Saudi's reliable and America's kind of like the janky, just understand that an industry that is only needed in case of emergency,

1:11:04 which really marginal shale is an in case of emergency asset. Like you could argue right now, the Hainesville, if we had better, you know, bigger LNG export facilities, like Hainesville is a

1:11:16 perfect just in case asset when Europe is freezing and Europe is having to shut down fertilizer plants and shut down factories 'cause they can't get gas, you know. Hainsville can add a B in within

1:11:30 the year. And so whenever the inventory level starts to look nasty, there should be the ability for a shale company or a shale basin to ramp up. And I think the problem is with this idea that shale

1:11:41 can always get cheaper, always get more efficient, like, oh, put debt on this business. Put a lot of debt on your tech business 'cause you're always lowering your break even. You're always kind

1:11:53 of getting more competitive And I think with shale, it was, no, you're not and always getting better asset. You're actually just a high cost asset that shouldn't run with that much debt - You know,

1:12:03 I said, so the last podcast I did was I actually gave a speech to the Lafayette Geological Society. One, didn't know they had a geological society, but lo and behold, they did. And two, they

1:12:17 actually had it at the Petroleum Club in Lafayette, Louisiana. Didn't know they had one of those either But anyway, one of the things I said that I don't think I appreciated until March of 2020.

1:12:29 So I mean, literally the week before the price fight between the Russians and the Saudis is, I was up there, Kitto was at Model UN. So I just told everybody at Kane, hey, I'm available to talk

1:12:43 on the phone, but I really want to spend all day going and talking to public folks just to hear, hey, I'm private equity, you're public doing energy. Let's compare notes. And one of the things I

1:12:53 picked up on, because we all know that capital's been withdrawn because we've sucked, right? Generally, a lot of red, there's the green problem and that. But I don't think I appreciated and it,

1:13:07 you just laid out for me this whole point is a lot of capital went away because people truly think oil is going to be 60 a barrel or less for the rest of our lives.

1:13:19 So that optionality of that price spike, old bet, Bessie, as you say, running two days. a year and you making a gazillion dollars 'cause the earth caught some mess. You know, oil prices, that

1:13:33 spike that historically always happened because of bad stuff, right - Yeah - War, you know, Saudis go on strike, you know, doing oil strike, whatever the case may be. They truly don't believe

1:13:47 that's ever gonna happen again. And if you, I think if you poll a lot of Houstonian energy people, we all think it's going to 100, 125 for all the reasons you say we've under invested in the like,

1:13:58 I don't think the rest of the world thinks that - Yeah, no, I have - Five years out, we're at what, 57 or something on the curve, so - Yeah, I think like, I think it's important to remember,

1:14:08 especially as an investor, trying to take a multi-year view in our job. You know, I think one of the things that I really try to keep in mind is use Occam's razor and cut out the things that don't

1:14:20 necessarily add explanatory power to the narrative And I think you've laid it out great on your - where you say, there's a red problem and there's a green problem. And to me, I was a tutor of local

1:14:34 rice area youths who were trying to up their SAT scores when I was at Rice and there was this kid that I tutored and I remember every time I'd show up and he would ask his mom for a grilled cheese in

1:14:46 a tone of voice that made my skin crawl. Like it was like Will Ferrell like, Mom, grilled cheese! And we'd sit and I'd be chatting with him about like, what's going on? It's like, man, you

1:14:58 know, algebra, like, you know, algebra like teachers the worst, teacher sucks. And I was like, well, what's the problem with the teacher? He's like, well, she hates lacrosse players. And I

1:15:09 was like, maybe we can use a little Occam's razor here. I was like, what's your algebra average? Well, like '68, '69, you know, like, okay. And that tone of voice, like the grilled cheese

1:15:19 tone of voice, do you use that with the teacher? Like, well, no, but I mean. me to sit in the back and I kind of let her know that her class is boring, you know, and I'm sitting like, so

1:15:29 let's remove the lacrosse explanation. Cause I don't think it adds a lot. I think if we stick with gruff 68 in our class, we're covering 99 of the explanation, right? And I think when we talk to

1:15:40 people and they say, you know, I talked to private equity or public equity management teams, and they say, man, I guess if I guess if I had a scammy sales pitch like XYZ solar or Tesla, you know,

1:15:53 I'd be in a lot different position. And you know, it's hey, we've got we've got three things to unpack here. You can't find investors. You spent 10 years losing money and people are really mean

1:16:06 to you about your green credentials. Which one of those three things could we drop and still explain pretty much 99 of what's going on here? And it's like, Like, okay, you know, like, well.

1:16:18 You know, we're providing an essential service like, well, gas demand in the US has gone up by mid single digits. I mean, nobody can say that gas demand isn't growing like a weed, right? I mean,

1:16:27 you add exports on top of

1:16:30 cold to gas switching. Like gas demand over the last 15 years has grown meaningfully. Just production has grown more. You know, it's not like the market, it's not like these mean green guys have

1:16:41 shut down all the power plants you sell to. It's not like the restaurant in Cal, you know, and right next to Cal Berkeley campus that shut off its gas stove. Like that didn't hit your bottom line,

1:16:54 right? What hit the bottom line was, you know, again, going back to this, we had our kind of moment, shortly before COVID as an investment shop where we said, okay, before 2014, we grew, you

1:17:09 know, five million, four million barrels in five years post 2014 post OPEC warning shot We've grown 20 faster because that's when you kind of go into the pilot, you know, you go into the pilot's

1:17:25 cockpit and you just see the sticks just bouncing and the pilots, you know, you kind of say like, so you're drilling regardless of your break even because you have debt service as your main focus.

1:17:36 Like, okay, like this is why investors get frustrated, right? It's the business was incorrectly capitalized Do they really care like do the people who left would you have been able to keep them by

1:17:49 putting, you know, a solar panel on your compressor stations in the field? No, you wouldn't have been able to keep them like that. You would have been able to keep them by just hitting them in

1:17:58 the face with with excess cash. And unfortunately, there was none to be had because of the way you capitalized your business, which anticipated, you know, 100 oil indefinitely. And you know,

1:18:09 100 oil means two turns that goes to 60 I even think it was worse. I don't know that it was 100 oil in the model. it was more Aubrey's gonna pay me X - Well, yeah - You know what I mean, right -

1:18:22 Yeah, well, for a public perspective, you're right. For a public perspective, it was much more like, what is a hundred imply? I think, you know, on the private equity perspective, it was

1:18:31 totally like, let's just run 50 feet in front of the gold speculators and then sell a mister, and then we'll run 50 feet further. And there was definitely a real estate, you know, and even today,

1:18:43 right? When I talked to endowments or institutional capital, one of the conversations that we have is just this idea of was the huge investment boom, which almost every endowment got very involved

1:18:56 in, you know, I'll say upstream private equity. It's like, how many of those were cash flow, how many of those were EP businesses versus how many of those were extremely well-informed, like real

1:19:09 estate plays, right? Like you guys know the industry extremely well, So you can go pick out a plot of land and say this would make a great strip mall with a a anchor, you have that skill, but how

1:19:21 many of those businesses were truly like, even if no one buys us, we're going to make a ton of money just cash flowing this asset out. I don't think that happened as much. At least that's my

1:19:31 semi-informed impressions. No, no. I think saying the same thing, a slightly different way with some hindsight looking at it is one of the things we did as private equity is you wanted to

1:19:45 incentivize the management team to sell. Yeah. Right. And so we created these waterfalls with these back ends that as we, the private equity firm do better and better, you get a bigger and bigger

1:19:56 share. And so to some degree, you almost didn't care above a 2x, you know, what you were given the management team, because you're like, man, I got my 2x. And what it did on the positive is if

1:20:12 you're in the big splits with the management team, You know, in the waterfalls and it's about 5050.

1:20:18 they realize that 10 million, well, 5 million of that's their money. So they get in Senate to sell. So that's a good thing, 'cause you had people wanting to flip. The bad thing in hindsight is

1:20:29 what we were all doing. You called it real estate. I'm gonna say it was venture capital. I mean, it literally was early stage type assets. When you go to the Powder River Basin and decide let's

1:20:39 do the first slick water frack, I mean, that is venture capital. I mean, when your analogy is states away. Right, and so what happened is the reason venture capital works so well is you own

1:20:54 Microsoft and you can make 100 times your money. It makes up whatever the rest of the fund was. When we have a venture capital portfolio, and I don't care what any of the guys say, we all had it.

1:21:04 It was us in CAP, NGP. At that point, we were all doing lease and drills, early stage stuff. When you have a venture capital portfolio, there's nothing wrong with that but when you're gonna be

1:21:17 capped out it. two X or three X because the management team's going to be in Senate to sell. You don't have that 10 to 15 to 20 X that carries the rest of the fund. Yeah. So it just, it came down

1:21:30 to just bad portfolio construction. Yeah. No, look, I think that's right. I think another thing that markets again and again, show you that when a market is figuring something out for the first

1:21:42 time, that is the most likely to contribute to a, to a bubble environment, right? Throw more money out of problem that doesn't seem solvable. Now obviously, I mean, you probably recall even

1:21:54 more clearly than I do, but, you know, in 2001, I was about to graduate high school and, you know, you can see the twin towers for my high school. And that drove an idea of, man, how much are

1:22:07 we relying on other countries uh, for our energy and people, it sounds kind of hokey and sounds kind of like drill baby drill or like, you know, like a Sarah Palin kind of sound bite now, but

1:22:20 there was across the spectrum, Hey, if we can throw money and throw technology at the problem domestically and eliminate 80 of our energy imports, let's do it. Yeah. And the nuances that you're

1:22:34 talking about now, which are totally fair and accurate, are the natural retrospective nuances, right? Like I kind of joke with my wife and again, like I'm not a green hater. I try to think about

1:22:46 like, if green, like oil and gas 10 years ago, green today, you know, by the time we are, you know, kind of our kids are having kids, there will be big solar rays that are getting disassembled.

1:22:59 There will be better uses of land than just occupying land with a low energy density three hour a day power plant, you know, and trying to just kind of visualize like this willingness to throw

1:23:13 unlimited dollars out of problem that seems unfixable always ends. And it ended with oil and gas and with grain, there will be a time where people are like, half the state of Iowa is now reflective.

1:23:25 Was that really like the straightest line from point A to point B?

1:23:30 Like there's 8, 000 degree fires in this battery station, like in downtown, whatever, because they need swing power capacity. And instead of God forbid this natural gas plant running a few hours

1:23:43 a day, they wanted to put this massive battery array right here in town. And when it ignites, it goes off to the tune of thousands of degrees, like, was this our best and final answer? And I

1:23:52 think the answer is probably gonna be no - Well, and that's the thing that bugs me right now. And I wish I could do something about it is, you know, you have extremes on both sides. We'll call it

1:24:03 hardcore environmentalists. And you've got hardcore energy louder energy problem. Those two groups are nowhere to talk but it seems like there's a fair amount in the middle. that could have some of

1:24:15 these rational discussions, like pick a rational environmentalist, just saying, Hey guys, I know we wanna force the majors to reduce their emissions, but if they just sell it to private companies,

1:24:32 it doesn't help any - It hasn't happened, it hasn't helped. And believe it or not, Exxon's better steward than XYZ. You know - No, you're totally right. And one of the things that I've gotten to

1:24:43 do, which has been cool, you know, since starting Recurrent, really we're research guys, we love investing too, but at the end of the day, hey, I'm good at picking Exxon versus Chevron. Okay,

1:24:55 stay in touch. And you know, you have to have some research, you have to explain how you think about the world. We put together a piece on electric vehicles back in 2017 saying, you know,

1:25:06 anybody with a 2 market share can talk hypothetically about what their business looks like 50 market share, but the reality is 2 to 40 and 50 involves a massive difference in how you run your

1:25:22 business, how logistically focused you have to be. You have to make sure, you know, when Elon sold his first 100, 000 Teslas, he didn't really need to know that Glencore is running a mine in the

1:25:35 Congo that produces those minerals Now he has to directly contract with Glencore to do Congolese mining to get Tesla what they need to make those batteries. You know what I'm saying? And so there's

1:25:47 a, like as we walk through that, I randomly got invited by a very academic symposium during COVID group called the Clean Air Task Force. And I, you know, when you walk into a room and you're like,

1:25:59 Oh, wait, I'm the bad guy. Like I thought I was the, I thought I was the thoughtful nerd Like my e-scooter, which I sometimes ride to work, was in the background, I was like, There's an

1:26:08 e-scooter back there. You gotta believe me.

1:26:12 But you know, the reality was it ended up being really productive, even though typical kind of academia, everyone had to explain their very nuanced position for two hours before it could be

1:26:22 discussed. But you know, basically what came out is you had professors that said, uh, professors that said the technology for electric vehicles is going to allow us to completely get rid of oil as

1:26:32 a transport fuel. And my job, well, as one of the kind of 20 different panelists was to say, so the mining industry is also getting divested based on ESG grounds. You have to increase some of

1:26:45 these minerals by 10 or 20 fold in the next 20 years to hit those targets. And it takes about five to 10 years to go from greenfield to an operational mine. And that assumes that there's not a civil

1:26:59 war or whatever in the country where you operate. And so as, you know, the academics kind of said, oh, you know, what industry are you from? Like, are you from Exxon? you know, the guys from

1:27:09 Toyota and Ford who are also on that kind of said like, Hey, I'm Toyota. I led the charge on hybrids. When gasoline went to five in 2008, we had a model internally saying, We have a five-year

1:27:22 wait list and we're only at two to three percent hybrid penetration. We are going to sell 50 of the world's market share of hybrids. And he said, You know what? We got to 4. We got all the early

1:27:35 adopters, the Trader Joe shoppers, and we've been at 4 since 2009 And it was great perspective to hear somebody from a real company say like, We've now, you know, Ford chimed in. Like, I've

1:27:48 introduced 19 different electric fiestas and focuses and guess what? We've discontinued all of them because you can't force someone to go from an F-150 and now we're introducing an electric F-150 so

1:28:01 we're trying to address that. But the F-150 is going to take a whole lot of metals and minerals out of the ground because it's a huge battery. And so you start talking to people who are

1:28:12 multidisciplinary and you talk to the guy who says, I'm a solar developer, you would need to give me an entire state of Iowa right of way to get to that academics forecast. You can't give me the

1:28:25 entire state of Iowa. People wanna grow food there. You know, I can't block out the sun on all the, and as I listen to all these other experts, you started kind of getting this idea, well, hey,

1:28:35 we don't have to make everything electric, but we can make, you know, renewable fuels. And then the guy chimes in and says, you know, my job is processing cow parts into renewable fuels. You

1:28:47 would have to quintuple the cow population of the world and slaughter them at a certain cadence to get, which by the way would deforest and depopulate all these other areas, which would make them

1:28:58 that much more susceptible to global warming, if you want that much renewable fuel. And before long - And by the way, they like to burp and they're gonna be spewing that thing. Yeah, they've got

1:29:09 their own emissions. And so the thing that I guess I'm an optimist at heart and the thing that I do truly believe is,

1:29:17 you've got a family, I've got a family, my house is always falling apart, I've never been to your house, but it's like when my wife is like, Hey, one of the gutters is kind of hanging off. I'm

1:29:27 like, I'm sorry, that didn't make the top 10 of priorities. And the reality of the capitalist system, which as much as people bag on it and it's selectively beaten up, when something's a real

1:29:41 problem, it jumps to the front of the line because real problems make real money and real money makes changes way quicker than anybody would have thought. And I think that ultimately as I talk to

1:29:53 these experts, it was like, so we're not gonna get rid of the last 40 or 50 of our fossil fuels. We're just gonna have to carbon capture them because you're already eliminated by land usage,

1:30:05 mining by cow populations. you're limited on all these other niche 1 technologies that a lot of folks just extrapolate to a 50 market share - And what I've always said about the United States is day

1:30:21 to day, we actually don't do that very well. As the United States, it's kind of, we gotta go solve this problem or that probably the gutter problem, not in the top 10. We don't do that very well.

1:30:33 I will never vote for a Houston mayor for higher office because I blow out a tire once, twice a year, because there are potholes everywhere. We don't do day to day very well. But when the shit

1:30:44 hits the fan, we do that really well. Go ask the Nazis. I mean, seriously, when stuff goes down, the United States actually circles up the wagons better than anyone. So I kind of have a

1:30:57 tendency to agree with you that when there's true evidence that this is a material problem, Ingenuity technology capital. That's right. And look, I mean, you know, you can imagine my younger

1:31:12 brother is in Brooklyn and his ex-girlfriend. I'm confident he'll never make it this far into the podcast, but you know, his ex-girlfriend, you know, my mom. Yeah, my mom listens to us. So

1:31:24 we've got that going. You know, she comes to Thanksgiving. She's, you know, nice. She's from, you know, she's from the South, but she's kind of gone to Brooklyn to make a statement to her

1:31:33 family. And it's like, you know, she's got the sleeve tattoo. And, and, you know, we're talking about this in a very kind of not angry. I don't hate you. You're letting me stay at your house.

1:31:44 So like, thanks for having us in Houston. And I was like, look, you know, most people have a mental model of how human beings behave, whether or not they know it. I think in investing, you

1:31:54 have to think a lot more about, you know, what hypothetically will happen. But I kind of said, I was like, I live on the Gulf Coast. And I'm not from the Gulf Coast. I don't have of any weird

1:32:04 kind of like emotional, you know, like. They're going to destroy this coastline. I also don't have the weird emotional other direction of like, my grandpappy did this. So like, I love this

1:32:13 industry and I wanted to survive forever. But just from a very rational perspective, I was like, you have to build me a model where my personal consumption decisions change weather patterns in a

1:32:26 way that affects my family safety in the next 50 years. Like I'm an average Joe American. Show me a model where I'm changing my behavior and my kids are not getting hit by a tidal wave here in

1:32:38 Houston. And she's like, well, that's a ridiculous. I was like, but that's really how people think people start with the, how safe is my family? What are you telling me? You're telling me that

1:32:48 Miami needs to build higher walls in the next 30 to 50 years. And if we were, if we were perfect from now on, it probably still wouldn't save Miami. It would probably save Miami a hundred years

1:32:59 from now. And even that's based on a model with a certain amount of uncertainty You have lost the average American decision maker in their household. so long ago. And that's why these debates have

1:33:10 to become emotional. Because if you're a politician, you're like, Hey, Chuck, think about the point o-o-o-o-o-o-one percent improved livelihood of your great, great, great, great, great,

1:33:22 great, grandkids if they choose to live in a hurricane zone, you know, 200 years from now. And you're like, Yeah, I'm not buying one more or one less bottle of water soda based on that. And

1:33:34 it's like, Well, in that case, this is the apocalypse, you're destroying the world. And if you don't change something about it today, it is a religious, again, the philosophy major in me. It

1:33:45 is a religious argument, which is, did I scare you with the be a good person spiel? No, I'm still gonna do whatever I was gonna do before. Well, in that case, let me introduce you to the really

1:33:56 scary kind of like afterlife punishment type stuff. You know, like when you're in philosophy of religion at Rice and they kind of say, Let's talk about the functional use of these arguments, you

1:34:06 can see that. in the green debate, right? It's like the chances of brattle, since I'll be at large six-person family changing consumption in a way that changes weather patterns, has no logical

1:34:17 appeal to me, really. Even if I believe in climate change, you know, which I do, but it is the, it's the, I can't do anything about it. Well, if I didn't get you with the logic, I'm gonna

1:34:27 hit you with the really aggressive, emotional arguments, and obviously you only have to be on the internet for about 15 seconds to hear all those The thing that scares me about it is, we actually

1:34:38 can't have this discussion. I mean, just, I mean, we've gotten to a point, and this is all of politics, where you literally can't say, Hey, let's talk about it, 'cause one thing I have, so

1:34:51 you know who Mark Mills is, right? Yeah, yeah, yeah. So Mark and I sitting there having a drink, and Mark throws out, You know what's interesting, Chuck? Last year, COVID quarantine, we

1:35:03 shut down the world, right?

1:35:07 Yeah, fair enough, Mark. He goes, you think we burned less hydrocarbons? I said, well, of course we did. You know, we shut down, nobody's on the road. He goes, yeah, I did a little math.

1:35:17 We burned 10 less hydrocarbons last year than we did the year before. I go, wow, that's pretty interesting. He goes, what happened to the CO2 parts per million in the atmosphere?

1:35:32 I was like, well, Mark, it's a good question. I don't know Kind of funny, we don't hear about that because if it had gone down 10, don't you think we would have heard about it? Yeah. See,

1:35:44 it's right. See if we stop burning hydrocarbons, CO2 will go down and we won't have global warming. No, I think there's a lot of the politically loaded stuff which, frankly, I think being a

1:35:58 polycyphalosophy major, I feel like I got a lot of that out of my system at Rice. And I even joke with my partner Oliver that he loves like the red meat. political discussions. And he's, I think

1:36:09 sometimes disappointed that I'm just kind of like, okay. You know, like because you're not changing anyone's opinion. It is a sporting event at this point - It's freaking echo chamber - It's a

1:36:18 sporting event and it's like, hey man, I'm wearing my Tom Brady jersey and I just want to approach you in your, you know, like Buffalo Bills, like Bruce Smith jersey

1:36:30 and just kind of have a rational debate about this. It's not that it's bad. You should always be trying to have that debate But I think the reality is right, the most effective carbon reduction

1:36:40 that the US has done in the last 20 or 30 years is replacing coal with gas in our power stack. But that didn't, giving kudos to the gas industry is not, you know, that's not, that doesn't align

1:36:54 with the other objectives that are trying to be accomplished by kind of the decarbonization

1:37:01 and electrification movement. You know, it's, and it's similar with Tesla, right? There was a great study that I shared with some friends a guy put together and he came to the same conclusion

1:37:09 basically as we did a few years ago. So if 10 of humanity wants a 300 mile range F 150 Tesla X Tesla S, then 10 to 15 of the human population will effectively monopolize all of our minerals for the

1:37:27 next 30 or 40 years. Right

1:37:31 Say, instead of 10 getting 100, why doesn't everyone have a 10 electric battery car? Because the reality is I drive 6000 miles a year. I go to my workplace, I go to HEB, I go to pick up the kids

1:37:44 from school. The electric battery at 10 of the range at a 30 mile range, 10 of the size of Tesla would cover all my needs would basically completely decarbonize me personally and would leave 90 of

1:37:60 the battery available for other people who want to use it. Right. Well, you're buying a petroleum car.

1:38:06 you know, like that doesn't achieve the goal. Like you're still buying a petroleum technology and you're like, man, like we could decar 100 of the population or we could like virtue signal 10 of

1:38:18 the population. And if those are the choices, sadly, it feels like people are more inspired or motivated by the let's virtue signal with 10 - Yeah, we don't get any sort of benefit for

1:38:29 incrementalism. And I think where that comes from, and I've said this too many times on the podcast, but I'll say it again is just when you get outside the extremes and you have a rabid

1:38:43 environmentalist, but who's willing to chat with you, they reach out to me all the time. So I'm chatting with these folks and it's like, don't tell anyone we're talking. I'm like, fair enough,

1:38:54 I won't do it. But I'm chatting with them. You know what it comes down to? They actually just don't trust us. So they actually think they are morally correct and saying the world's gonna end and

1:39:05 all this giving us the incrementalism because they're like, you lied about climate research. We see what you guys have done polluting this and that. We just think you're after the almighty dollar

1:39:20 on this. We don't trust you. And I'd love to be able to figure out something so that you and I could sit down with those folks and say, all right, let's be reasonable about this. A pipeline leaks

1:39:33 a lot less than trucking does You know, can we think through this one? You know? Well, the two things that I view, like, you know, I'm not, I sit on my phone with everybody. You know, I can

1:39:45 compete with anybody in hours of screen time. And you know, my wife and I are both those classic people like, man, we're on our phone too much. But the reality is today, you know, trust is

1:39:54 built when you think you're going to have a recurring interaction with someone that's going to benefit you both. You know, obviously on some level, I jumped on the podcast because I was like,

1:40:04 Never met Chuck before. I'd love to be able to go to TPH or any things around town and say like, Hey, I know Chuck, like I'm gonna see Chuck from now - Dude, I would do that, man - Yeah, maybe

1:40:14 right, yeah - Yeah, I was like, Whoa - But, you know, the reality is if you are in a group where you say oil and gas guys meeting with me under the cover of Darkness, you are very much the kind

1:40:25 of like, you know, white settler and Native American just kind of like, Next time our crews meet, it's not gonna be friendly and it's not gonna be good And so, we can do it individually, but

1:40:37 it's very hard 'cause there's no anticipation that there's going to be a regular constructive dialogue. So it's a, Hey, you know, oil and gas guys are kind of hurting. They've lost a lot of money

1:40:46 in the last few years. They're hitting a really conciliatory tone, but they will not be willing to rehab. You know, they will not be able to continue that dialogue when they're in the money again.

1:40:57 Right now, renewables are in the money. Why would we, you know, I've made the joke in a lot of fundraising meetings that - energy right now is kind of the guy under a blanket and you know holding

1:41:07 a sign and you know the renewable guys in a suit and he says, Hey Slick, you know, hey Slick like 10 years ago that was me and the renewable guy. It's like, nice try, you know and he keeps

1:41:19 walking. And I make the joke about back when back in the day we used to print up bumper stickers that says you know freeze a Yankee. It was just like we're on top of the world. Yeah, totally. I

1:41:29 mean I remember hearing that for the first time at Rice because it was my first time in Texas and I was like, Wait, what's the concept? And as they explained it, I said, Well, I think in order

1:41:38 to better understand, you know, I was thinking about this the other day, there's that famous scene from Mad Men where like the really frustrated pent up junior guy is like about to cry because he's

1:41:49 so upset. He thinks that Don Draper has been dissing him or ignoring his work and he's like, Every day I look at you and I just think how miserable you must be. And Don Draper just looks at him and

1:41:57 says, I don't think about you at all. Like I remember having a conversation with a guy from Oklahoma when I was at Rice and I was like, you're thinking to yourself that like, you know, the

1:42:08 average kind of like West Chester, Long Island, Connecticut, New Jersey person thinks that all about sending 300 a month to their gas bill. Like if you think it's a very kind of like, this is our

1:42:23 industry, this is what we care about. The guy in New Jersey is just like, don't dig up my backyard. That's job one Job two is you're telling me 300 goes to 350? Don't care. You know, and so I

1:42:35 think a lot of times it's not understanding the context. It's not believing that you have a reason to build a trust relationship. And it's also, look, I mean, the reality is one of the reasons,

1:42:44 you know, we joked about skilling. One of the reasons I'm not on Twitter is I fundamentally like I have to pitch my business all the time. I have to pitch our investment strategies. I have to

1:42:53 present us in a way that is compelling in a fairly bite-sized timeframe. The idea when I read on Twitter, everyone is trying to give you a worldview that is 200 characters, and you're kind of sit

1:43:07 there and you're like, I get why that's efficient. You don't know what you're going to like and what you're not going to like. Like, Hey, this guy's funny. This guy's not funny. This guy's

1:43:14 funny. But when you live life like that, where you're trying to establish everything about you in the first three sentences, it does eliminate the nuance, right? Like when I was on that Clean Air

1:43:28 Task Force panel, Hey, Brad, interesting comments on electric vehicles. Exactly how do you make money? While I invest in, we've got a few hundred million bucks of primarily fossil fuel energy

1:43:42 investments. Okay. So everything you're saying is motivated. It's like, No, no, you don't understand. If I saw different economics and a different opportunity set in renewables, we don't

1:43:53 renewables But I see an industry that's getting divested from leaving. a huge swath of economic opportunity that nobody's grabbing for right now. Like believe me, when there's no ideological, like

1:44:06 I saw the energy industry spend its way into foolish, like, you know, we talked a little bit earlier at TPH. I just put out a report that was, Hey, I don't know the answer to this. Does anyone

1:44:19 know where we're going to get the chemical plants we need for the granite wash to triple in size and for the Marcellus to double in size and everyone's like, you're an idiot. Why do you hate the oil

1:44:29 and gas industry? And I said, Hey, like, I'm just curious, don't you want to know where your customers are even coming from? It might take six years to build a chemical plant. And as I talked

1:44:37 to the chemical industry, they said, we never hear from any of those guys. Chesapeake doesn't call us, you know, range doesn't call us. They just kind of assume we'll take their product. All of

1:44:47 our investments are in the Middle East. We don't invest in the United States right now. And so just that realization that the way the markets work, there are a lot of inefficiencies caused by

1:44:56 people not talking to each other or just assuming that the solution is going to appear when it's messier than that. When you sell a commodity, you don't have to market. I mean, say what you want,

1:45:07 Amazon, they know where all their customers are. They know what all their customers want. Nike knows it. Yeah, all that. So what is the pitch for your business? What do you guys do? You know,

1:45:17 a recurrent, we started it close to, I guess, five years ago now Mark Laskin, who's my partner, he and I were the PMs running the long-only business at Boone Pickens BP Capital. We started

1:45:31 recurring about five years ago. And really the pitch, which is going to probably underwhelm with its lack of ambition, there were so many private equity funds. There were so many complicated hedge

1:45:43 funds like, Hey, in a world of oil price uncertainty, you want us to have a long short book where we're doing all these fancy things and charging you huge fees. Our pitch to clients was pretty

1:45:54 simple. It is This market's way over capitalized on the private side. Public is going to see capital leave first because you're not locked up. You're not in a seven year fund. Public capital is

1:46:05 leaving every day. And what's left is going to be a great long opportunity. Now, using our Nostradamus compass, we were kind of like, man 2020, is gonna be the year when this thing all comes

1:46:18 together. And, but the pitch was really, you've done so many gadgets and gizmos If you're an endowment or a pension, you've done so many levered foreholding portfolios. You've done so much ultra

1:46:30 concentrated, run by a geologist who knows every layer of the Permian, like in great detail. And we kind of said like, the opportunity isn't from a

1:46:44 10 better understanding or 10 worse understanding of the geology. The opportunity is that this is a massive industry whose underlying demand changes very little every year. The amount of capital

1:46:55 available to it is going to be reduced by 50. If you are one of the few guys that we can kind of convince to throw, you know, put your money in at a time when everyone else is getting out, there's

1:47:08 going to be choppiness. It is the changing of the old guard to the new guard. You know, the, the Fidelity's and Wellington's who were max long energy in 2016 are now, you know, fleeing the

1:47:17 battlefield. And that's going to be choppy But if you stick around, there is going to be this, it's just us, you know, it's just us kind of moment. And I wouldn't say it's just us, but you know,

1:47:30 we're probably the only long only energy firm that's, that's grown in the last, you know, four or five years. And it's been, you know, as you can imagine, brutal during COVID, there are a lot

1:47:39 of people, you know, frankly looking you in the eyes and saying like, you know, I trusted you guys. And obviously I don't blame you for COVID, but like, I'm also an agent I have to sell this to

1:47:49 an end investor, my client. And you guys - have made a ton of sense on why EVs and renewables will draw capital away from oil and gas and leave great opportunities behind. But during COVID, like,

1:48:03 how do I sell this? And, you know, that's been the real gut check stuff. And, you know, at the end of the day, the skilling thing, you know, I always kind of say like when you're getting

1:48:12 those nose or we can't do this right now or we already shot our wad on oil and gas and we just can't look at it, you know, we do also invest in mining and natural resources. But a lot of folks have

1:48:23 just said mining and natural resources are still kind of a hot button with the student body or what have you. And of course, I laugh and say, all of the copper steel and aluminum that gets put into

1:48:35 wind turbines and solar panels and electric vehicles is getting dug up by an increasingly small and under capitalized group of miners who are spending most of their money on just ESG proofing a lot of

1:48:47 their operations instead of new capacity so I think the investment setup is probably as good as it's ever been. Getting people to not give up on a sector that has hit every branch of the tree on the

1:49:00 way down has obviously been tough. But look, like every entrepreneur says, I feel kind of silly even saying it, but it's like the three to four year J curve, like going through the belly of the

1:49:12 downturn and then kind of finding on the other side that people are like, I stuck with you. And it actually seems like things are, you know, we're running out of natural resources. It's not a

1:49:22 simple transition. Metals and mining prices are through the roof. And yet there's no new CAPX in any of these industries. We're starting to get some of that intellectual kind of recognition of like,

1:49:33 what you guys said made sense. But as you can imagine, COVID is just a total, you know, I don't care what you said. I'm setting my hair on fire. My clients are mad. And, you know, getting

1:49:43 through that was definitely, you know, a gut check. But where we're at today, I mean, we feel pretty good about. So not. specific names, but just in general, who's the investor base who,

1:49:54 who's receptive to that story might be the better way to put it. You know, it's funny a few weeks ago, we were in many, or maybe a couple of months ago, we were in Minneapolis and, uh, you know,

1:50:04 there was kind of a retired, uh, executive who was, we're at his like little office space on the lake, uh, on the shore of Lake Minnetonka. And he was like, man, you know, when are we going

1:50:16 to get like the family office guys, you know, who are just looking out at Lake Minnetonka back in this sector. And I was like, we're on the banks of Lake Minnetonka. Like you're in the second,

1:50:26 like, like you are the guy, right? It is the, I've spent a career in business or I've spent, like I've managed clients money for, for decades. And, you know, I know that these things come and

1:50:38 go. And that the end and the beginning of a cycle is always more violent and turbulent than anybody would have guessed. But it is that family office, the small endowment that says like, hey,

1:50:50 we're just managing a museum endowment. We're trying to do the right thing. We're not trying to satisfy a student body. Like that's been a little bit more. And then a lot of independent wealth

1:51:01 management firms. I mean, I'd be lying if anybody who's listening, who's an entrepreneur, right? I mean, when you're an entrepreneur, there is a certain fraternity that I don't even think I had

1:51:12 no idea about. I was the first time entrepreneur when we launched Recurrent and you go into the Morgan Stanley office or the Merrill Lynch office and it's a, hey man, like I'm an employee of

1:51:25 Merrill Lynch. I've got a tea time. Tell me, give me the fact sheet for your fund and get out of here. And when you talk to a guy who's like, I remember my first hundred million bucks when I

1:51:34 built my wealth management practice and people were trusting me as the CIO to do better than I was doing at Merrill Lynch or Morgan Stanley You guys are basically building that. right now. And so

1:51:48 I'd rather use you than Kane Anderson or Tortoise because frankly, like when I call you guys, you're going to pick up the phone. Like when when this fun goes down, like your net worth is getting

1:51:57 hit because you guys are kind of all in in a way that probably only an entrepreneur can can really fully be. Yeah, no, it's interesting. Investors were almost kind of bipolar in their nature in

1:52:10 that they said exactly that, you know, hey, we want you guys, you know, to be sole purpose, what you do every day is energy and the like. But then on the other hand, it's like, well, we

1:52:24 don't want to have 872 managers. Hey, Blackstone, if we give you 5 billion, can we get energy exposure, healthcare bonds, you know, and so it was, yeah, it was it was really, you know, best

1:52:39 of times worst of times, if you will. And I think ultimately what we're going to see in the money management business and what we've seen is almost the way of the cellular phone business, you're

1:52:50 gonna wind up with, call it five to 10, just big, huge, massive players that get every dollar and all they do is get to consensus-type returns and they should be index funds anyway. And then

1:53:02 you're gonna have the whole host of smaller guys like you that are focused on it and stuff. And so any alpha nature to your story or are you just out selling beta - Well, look, I mean, at the end

1:53:16 of the day, I think we're all probably more beta than we want to admit. And that's like the intellectually honest - We're all just freaking beta - I mean, the right - We're sitting on the sideline,

1:53:25 we're all beta - If you had gotten like the UT Plan 2 guy in here, he could have told you the alpha story and I'll tell you that, you know, it's hard to parse out alpha over time, but I'll give

1:53:35 you kind of a simple pitch is, you know, energy because it's so hated, everything trades at the same kind of crappy valuation. And some assets in the energy patch are - 20, 30, 40 year assets,

1:53:47 and then a pump truck might have a depreciable life of three years. And yet the multiples all kind of hang around this mid-single digit place. And so there's a lot more that goes into it,

1:53:57 individual company kind of understanding how sustainable returns are in an up cycle as well as a down cycle is a big part of what we do. But what we, in a lot of ways, what we really try to do in

1:54:08 our energy portfolio is, you've got a Canadian oil sands company who's basically invested a ton on their front end. Like, you know, during the boom times they built out this massive complex that

1:54:20 really never needs to be changed. And now all I have to do is just kind of poke a new hole every few months and then steam the oil out of there. Now what everyone says is, well, aren't the cost

1:54:31 crazy high? Yeah, the upfront costs are, but they're sunk. So you're talking about a business that OPEX plus maintenance CAPEX is like 10 It's definitely under 15 USD. You talk about reinvesting

1:54:44 in the drill bit. plus OpEx in the Permian. It's higher than 15, a lot higher than 15. Now the big stumbling block has always been, well, you're stuck up there in Canada and you've got to

1:54:54 transport a lot of your stuff by rail. One of the things that's been kind of cool is, with shale kind of taking the brunt of COVID a, lot of your pipeline capacity just got freed up for companies

1:55:07 who, frankly, did everything right except for transport. That was the one thing they couldn't get right. And so we look at a company like an oil sands company and say, My Permian producer is

1:55:17 trading at seven times. My Canadian oil sands is trading at five times. And my Permian guy has a 10-year economic runway. My oil sands guy has, I would say, a less hype-prone 25 to 35-year

1:55:31 reserve runway which is truly not like counting on different horizons and different step-outs, but actually just sitting there in the tar, basically. Like that's an example of an asset where we

1:55:43 think its long duration is underappreciated. And so if we both buy an asset for six times cash flow and one cash flows out for 10 years, the other cash flows out for 25 years, I'm just going to see

1:55:57 a lot more of those spike, those upward spikes that we talked about earlier, that when they happen is where you end up getting a lot of your capital

1:56:06 back. Yeah, when I was back at Stevens way back in the day, so I guess I left Stevens in March of '01, what I found counterintuitive if you would is, and

1:56:20 why I did not practice this, it came to me, but now that I'm the senior elder statesman, I accept. But one of the things we found was beta so dominated energy, as one would expect, that actually

1:56:37 in the beta run, the worst performers, or the worst assets. did better. They had too much leverage, whatever the case may be, and actually where the good assetsgood management earned their keep

1:56:51 was in the down market. They weren't as bad as others. To your point, if you're long only and you're selling the beta story, the better the assets, the better the management teams keeps your

1:57:06 clients in the downturn Yeah, and look, the alpha, both strategies have definitely compounded outperformance over time and during COVID. So there has been alpha. I think the humility of

1:57:18 investments punch you in the face every day, saying like, I'm more than alpha guy. It's like one of these. But look, I think the reality is one of the reasons that I do like being a Twitter

1:57:31 lurker is emotions being high coincide with inflection points. I remember in our natural resources portfolio. So, you know, Mark and I, marks my partner and we were sitting in the backyard kind

1:57:45 of 10 feet away like, how contagious is this thing? It's, you know, March 23rd. And, you know, Mark kind of looks at me and says like on the resources side, I think we got to buy like aluminum

1:57:57 smelters. And I was like, you know, in energy because of the debt problem we talked about before, so many of these buy in the dip have just been widow makers, you know? And meanwhile, metals

1:58:09 and mining companies got told they were going out of business in 2015 and they've been paying down debt for five or six years. And so it's like, oh, dude, Boeing can't keep a plane in the air.

1:58:18 They're never going to buy aluminum again. No one's going to ever buy a nice new truck again. You know, what are people going to use aluminum for other than maybe, you know, automated wind farms

1:58:27 as we all hide in our homes for the rest of time, you know? But then like you go online and people are just like, things will never be the same. We'll never see each other again. This might be

1:58:36 the last time you like physically hug, you know, a family member and you start saying like this is. good because this is actually telling us that the emotional pendulum is reaching a crescendo,

1:58:46 right? People are starting to go back to the, this is going to change my life, my family life, like the way I operate on a day to day basis, like, and sure enough, the aluminum, you know, and

1:58:57 steel kind of smelting companies that had only cells from the cell side, like even the cell side, it was like, you know, abandoned hope all you enter here, right? And then you look back and now

1:59:08 it's like, China can't run as hard because of emission and smog problems. Like US is the only place with a gas advantage versus the rest of the world. Wind farms and plane orders are ramping up

1:59:20 like never before. And you kind of say, like, the only thing you can really do as an active manager to earn your fees over time is be the guy who says like, you know, the, the guy who steps back

1:59:33 and says, in 2008, people were talking about canned food. and moving out to the wilderness and Lehman Brothers is gonna take everything with it. Remember that that was the peak of the scarcity

1:59:46 bubble. The we're running out of everything. There's not enough food in Asia, there's not enough oil around the world. That was a great time to short commodities. And the same way like this,

1:59:54 we're never gonna use anything again. We're never gonna use commodities again. Ended up being, even with the huge dip of COVID, the fact that both of our strategies have made money over the last

2:00:04 few years is something we take a lot of pride in because, look, people were talking about a permanent change to all of these industries and it's been a change, but it's been more incremental than I

2:00:15 think most people would have guessed a year or two ago. I mean, like I always told LPs with a straight face is, whenever you feel like you wanna give me the money, you really shouldn't. And

2:00:27 whenever you feel like you shouldn't give me the money, you probably should. 'Cause that's the best, yeah. It's the best, because look, I mean, I had a moment where I think we all did like -

2:00:40 I would say, you know, we had gotten to above break even, but COVID was going to send us back to below break even. And then you have those moments where, you know, my wife and I are working

2:00:50 across the dinner table. We got four young kids and I'm kind of looking at my wife like, how hard should I really fight to stay to do a conference call if there's going to be kids screaming? My

2:01:01 wife's mad at me because she's also on a conference call like, like, you know, and then it was one of those things where a bunch of clients who said, you know, you guys said a lot of stuff,

2:01:10 which I don't think is discredited or disqualified by COVID. Now's the time. And I remember in a way it was actually a really great moment because as an entrepreneur, we're all everybody is hit

2:01:24 with imposter syndrome. But as an entrepreneur, you know, holding out a card that doesn't have somebody else's logo or somebody else's name, you know, there's that moment of like.

2:01:36 Would I listen to me? And to have a client kind of say,

2:01:42 almost talking ourselves through it, like, Hey, we're gonna wire you this. We love what you're doing a year from now. We'll all laugh about how overdone this was. And you're like, Wow, I

2:01:53 didn't believe in me or us probably at that moment as much as they did, but those are the moments where my dad is a Midwestern dude, not a big. It was very confused and kind of concerned by me

2:02:06 saying, I'm gonna start my own deal. Like, Is it really that bad? You know, like getting a paycheck, living the American dream? 'Cause he was a total kind of bootstrappy, or well, y'all say

2:02:16 self-made guy, like put himself through college so that he could be rewarded with a stable career. And so he's like, So you don't want the stage - In dream of a pension - Yeah, totally. And so he

2:02:26 kind of said like, Okay, well maybe new clients come in, but if they don't, and I kind of joked with my dad 'cause I love history.

2:02:37 What did George Washington say to his troops at Valley Forge about attacking a bunch of hungover Germans on Christmas morning? Like, we're about to go bayonet some dudes on Christmas morning. I

2:02:48 don't feel great about it either, you know? But the alternative is we're British subjects and probably prone to some nasty trees and marshes. So we've kind of got to put all the other stuff out of

2:02:59 our head. And I remember saying to my dad, I was like, kind of feel like we're at that moment right now. We're like six months from now. I don't really know what things are gonna look like after

2:03:07 COVID, but we've got great clients. It sounds like clients are more interested rather than less. And, you know, 12 months later, I kind of joked with my dad. It was, you know, one year later.

2:03:17 And I was like, I think things are, you know, way better than I would have ever guessed. They would have been because I was in a pessimistic place like everybody was. And life ends up beating

2:03:28 those kind of pessimistic, you know, negative expectations. And so it's been kind of a great firsthand experience, although my wife and I have both kind of. gained gray hairs together as I've put

2:03:38 us through the entrepreneurial ringer. But, you know, at the end of the day, you know, I wouldn't change it because it does kind of scratch all those itches that you develop from being like, all

2:03:51 right, I'm a good research guy. But would anyone listen to me if I didn't have the TPH card, would anybody listen to me if I didn't have the Boone Higgins card and then the meeting with me? Yeah,

2:04:00 it's not sitting there. Like, Oh, last minute I did a speaking gig in Houston where, you know, like Dan sent me the email on a Tuesday and it was like a Wednesday speaking gig and he was like,

2:04:10 Hey, you've got great macro slides. I'm gonna ask you to go present to, you know, this real estate company and, you know, there will be like some big, big Houston hitters there. And when I

2:04:20 walked into that room, like, I you saw the CEO of the real estate, like this national real estate firm, like take out his blackberry and probably like write four letter words to pickering like you

2:04:31 sent me some 28 year old scrub from your And then it ended up going really great. And I had a really good relationship with those folks, but to your point, like, Pickering totally Indiana Jones me

2:04:42 where he was like, I've got the Pickering Idol and the Brad bag of sand -

2:04:50 Now that's awesome. You know, sitting here at kind of 53 and looking back at all the stuff, these are all just cliches. You know, one of my favorite jokes is investment banking, just the art of

2:05:04 stating the obvious with an air of discovery - Yeah, at the expense of doing that is, one, you look back and you regret the things you didn't try. You never regret, man, I did that and I screwed

2:05:18 up. You don't ever regret that - Yeah - And I can tell you this, there is nothing better on this planet than not having to answer to anyone, except your wife, your kids, your partner, you know -

2:05:31 Yeah The freedom that comes with that in the mid - health. I mean, I have figured out, I like the toys. I don't need the toys. I mean, the mental health aspect being able to sit here and do

2:05:44 whatever podcast I want, talk to whoever I want. If Colin gripes about it, I just put in my earpods, whatever Colin. And so it's totally true. I mean, look, you know, there is definitely a

2:05:55 phase where, you know, my wife kind of looked at me and said, like, if we make it out of this thing alive, you can go a few years without scratching any inches. Okay. You know, it's like,

2:06:07 like, I was pregnant with twins and you said, I want to be an entrepreneur and I'll be able to help with bad time just as much as I would otherwise. I might even travel less, you know, and, and,

2:06:17 but like you said, it's, you never want to look back and say, I don't know, you know, I don't know what could have been or man, I like that was a nice stable deal. But I think, you know, you

2:06:27 know, scratching that itch has, has been a lot of fun. And obviously allows me to come on cool podcasts like this and talk about life and all the stuff we've covered. But I think discovering

2:06:39 something new, to your point, I had that bonus at TPH where I went and bought like a used Porsche Cayman, which is not even that cool. But I got it and I was like, don't get me wrong, darting

2:06:52 around on 59 is fun. But I kind of looked at at Brynn, and this was as I was kind of winding up my time at TPH. I was like, I can't find enough of these that will last me more than like a month of

2:07:05 endorphins to kind of want to just keep doing the big investment bank that pays well. You know, and that sounds really like my dad would hear that and he was just like, who did I, you know, like

2:07:16 so spoiled, such a spoiled mentality, which I get. But there's also a part of me that's like, like you said, I have missed very few bath times for the last four or five years, like my knees kind

2:07:26 of test to that. And those are the things where, you know, I obviously could tell stories all day, but the final story I'll offer is, when things were really negative and it was so early and

2:07:37 nobody was taking meetings with us, our fund had like 15 million bucks in it maybe. And I was talking to my daughter and she's really kind of a typical oldest child, grasps really quickly. And I

2:07:50 was like, she's like, What's stressing you out, Daddy? I was like, Work, it's hard to find people to invest in the fund. And she was like, Well, first of all, you just need to tell them not

2:08:00 to worry. And I was like, Okay. I was like, I wanna hear some more kid advice. And I was like, Well, honey, if we ever get to 100 million bucks in this fund, I'm gonna take you to Disney

2:08:13 World. And she was like, That is so exciting. How much is in the fund today? And I said, 15. And she goes, That's not very close. And on one hand, it was a stressful time, but looking back,

2:08:26 it's like, my kids got an upper upper up up close and personal view of that. And you know, when I was on the TPH podcast, you know, one of my daughters kind of said she was like, well, daddy,

2:08:37 you're not on big TV yet, but you are on phone TV. And I was like, you know, like my kids get to get to experience all the madness, which is, which is cool. Yeah, no, it's, it's great.

2:08:48 Because at the end of the day, I think what you'll figure out what you'll see from it is getting to watch them figure out what their passion is is everything. I mean, you think when you have a kid

2:09:04 that's born, oh, I want, you know, this child to go to Harvard or do whatever, now gives a crap about that, having them discover something they love and be passionate about it. And you know,

2:09:18 work really hard at it. And to you, you've set the environment for your kids to go chase that in life. They saw daddy do it. And that's, that's really cool. I hope so. my kids see me sit around

2:09:31 on the couch and eat bomb bonds.

2:09:34 That also and thanks for coming on. Yeah. Thanks for having me, Chuck. This is great. Yeah, it's about time we finally met. Yeah. This has been really cool.