The Illusion of ESG Investing — with Tariq Fancy

Tariq Fancy, the founder and CEO of The Rumie Initiative and the former chief investment officer for sustainable investing at BlackRock, joins Scott to discuss how ESG investing acts as “a dangerous placebo that harms the public interest.” We also hear Tariq’s take on the current state of the markets. Follow Tariq on Twitter, @sosofancy. Scott opens with his thoughts about lobbying revenue reaching an all-time high, ad-supported streaming tiers, and Peloton’s move to the rundle. Algebra of Happiness: knowing when to dial back. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 1:18Speaker 03

  Episode 146. The baby boomer generation began in 1946. I rolled up a newspaper the other day, and my son handed me an iPhone and called me a boomer. Now his iPhone is smashed, but that spider is dead. There's boomers, millennials, then Gen Z. So what's the next generation going to be? Fucked. That's right, fucked. Go, go, go!

• 1:52Speaker 03

  Welcome to the 146th episode of the Prob G Pod. My voice is deeper. I don't know if it's the testosterone or the bourbon I drank last night, but I like it. I like it. It makes me feel, I don't know, like I could do a voiceover or start, start a podcast that might reach thousands and thousands of people. In today's episode, we speak with Tariq Fancy, the founder and CEO of Roomi, an education technology nonprofit that provides micro learning courses to communities with limited internet access. He's also the former chief investment officer of sustainable investing at BlackRock, which is what we want to speak to him about today. Tariq discusses how the notion of ESG investing is actually acting as a placebo effect that's harming our public interest.

• 2:34Speaker 03

  So Tariq struck me as really common sense, practical. The part of the conversation I enjoyed the most was his overview of the markets. And I came away from it grateful and inspired that people like him decide to go into nonprofit and want to change the world. And I mean, this, this guy has literally given up millions to try and, and a conversation with him, he's trying to distribute these micro classes to girls in Pakistan. And, and he walked away from the largest alternative investments company in the world to trying to get, you'll, you'll just get a sense for how bright this, this guy is.

• 3:18Speaker 03

  And it's nice and inspiring to people with these types of options decide that now I'm gonna, I'm gonna try and do some good. Okay. What's happening? All sorts of interesting things are going down in the business world. So we're going to go through a few headlines. Couldn't, couldn't choose just one. You won't be able to stop at just one. That piqued our interest and determined some winners and losers. First up. The Washington Post reported that the lobbying industry brought in a record $4 billion in revenues in 2021. That's in the same year that the US deficit reached its second highest point in history. So it makes sense that the most money is being allocated to people who want you to spend more money. No one's there really watching the deficit.

• 4:00Speaker 03

  And what do you know, our deficit is at its greatest point in history, which is basically just a giant fuck you to future generations such that we can maintain our fossil fuel consumption and ensure that we can continue to go to Chili's and take our cruises with Nana and Pop Pop. I think debt has gotten to a point where it really is becoming almost borderline criminal. We use it as an excuse to get out of recessions because we don't want to actually disrupt the economy and let prices fall so the next generation gets the same type of opportunities that we garnered. We use it to pay more or pay for a more prosperous lifestyle than we can afford. And the only thing that passes for bipartisanship in DC right now is bottom line, one thing, and that's reckless spending. The top three

• 4:42Speaker 03

  spenders include the US Chamber of Commerce at 66 million, the National Association of Realtors at 44 million, and the Pharmaceutical Research and Manufacturers of America at 30 million. And it's no accident that corporate profits, despite probably the greatest health crisis in history, are at an all time high. It's no, it's no accident that the Forbes 400 is littered with people from the real estate industry because the real estate industry, guess what, is the most tax advantaged industry. How did that happen? See above, see above National Association of Realtors at 44 million. What can you do with real estate? Well, first off, you can lever up about 80%. Can you buy stocks and borrow $4 for every one in equity? No, you can't do that unless you're some hedge fund and it's a crazy bubble.

• 5:25Speaker 03

  Can you sell an asset and then within six months roll it into something else, tax deferred? No, you can't do that anywhere else. This is the most advantaged, tax advantaged industry in the world, and as a result, has created tremendous wealth. Is that a bad thing? No, but when other industries don't have the same sort of tax advantages, you're essentially leaking capital and opportunity from other sectors into real estate. So kids, go into real estate. And so DC, come on, level the playing field. Stop it. Stop being such whores. The thing that strikes me about DC, we've known their whores for a while. I can't get over what cheap whores they are. That just for a little bit of money, you can get access and be heard across our elected representatives. We absolute Citizens United has been terrible for us.

• 6:08Speaker 03

  That, of course, was the Supreme Court decision that let, said that money was in fact voice and that free speech is your ability to give as much money as possible to the government. I want to be clear, happens on both sides, whether it's police unions or teachers unions or lawyers who want more and more regulations such that we have to hire more wait for lawyers. But it's totally out of fucking control. And guess which companies also landed spots in the top 10 in terms of lobbying? The ones that need the most protection because they're mendacious fucks. Meta and Amazon.com at 20 and 19 million dollars respectively. I'm being very profane this morning. I apologize. It's because I haven't eaten and I'm in a bad mood. By the way, pro tip to every person getting married.

• 6:50Speaker 03

  Never let your partner be cold or hungry. When I look at the major blowups in my life, across the key relationships in my life, it's usually two thirds of the time can be reverse engineered to someone was cold or hungry. Invest in dual climate zones in your car. Always have a power bar. Bring one of those pajminas that doubles as a blanket. Never let anyone you love be cold or hungry. Boom, sustainable relationships. Anyways, back to money and politics. These companies have notoriously tried to steamroll over government officials so they can continue to smear lipstick over business practices that damage the Commonwealth and promote anti-competitive behavior. We're in a Scarcity economy, which is just terrible. There's a scarcity strategy and that is

• 7:34Speaker 03

  once I own a home, I want to make it harder for other people to buy homes. I'm going to become a NIMBYist. Once I have my degree, I'm going to applaud the dean when they keep rejecting more and more people. Once I've built a great company and I buy another company, I'm basically going to make them sign their life away so they can never compete with me. Have you seen any of the great entrepreneurs from any of these companies, these big tech companies, go on to start anything else? They can't because they have non-compete clauses or non-solicitation offers. All that shit should be illegal. The biggest trees are meant to spawn acorns that create other saplings. Oh my God, I just made that up. Hello Maya Angelou here. Jesus Christ, I am Sting. I'm a poet. I am a poet. And plus,

• 8:18Speaker 03

  what's that new, that new woman I'm really into, Brandy something? Brandy Carlisle? Is that her? She's also a poet. Anyways, what else is happening? Some of the biggest names in streaming are introducing ad-supported tiers. Well, advertising is making a comeback. Disney Plus, for example, is launching a cheaper tier at the end of this year and noted that advertisers have been clamoring to get in front of the Disney Plus audience. Actually, I wouldn't doubt that. Fewer and fewer people of means or fewer and fewer kids whose parents have the means to buy them a bunch of shit they don't need are watching advertising. Why? Because advertising has become a tax that only the technologically literate or the poor have to pay. How do you know your life hasn't worked out that well? You'll learn what medications you buy when you get older because you're watching a lot of advertising,

• 9:00Speaker 03

  which is increasingly what advertising is, a big lesson in how it sucks to get old. And I can see that all of a sudden that probably has swung too far and there's probably an opportunity for pretty high CPMs and pretty serious cabbage if you offer selective advertising in the midst of streaming content. My suggestion to them would they not go full Monty and just literate and polluted as they do on Fox or some shows. If you make the mistake of just girding around broadcast or ad-supported TV where it's literally, how about a little bit of programming? How about some Kardashians with your commercials? It is that bad. But I think this could actually be pretty lucrative. Disney Plus, which will reach its three-year anniversary at the end of this year, garnered roughly 12 million subscribers in the last quarter, bringing it to a total of nearly 130 million subscribers. Wow, 130 million

• 9:45Speaker 03

  people. Think about that. That is the 130 million people that a lot of advertisers want to reach. I would bet parents with kids, so they're younger, they're spending a lot of money on weird stuff that's expensive and it's probably a higher. Income demographic. Hello advertisers. However, according to New York Times, the firm's streaming division lost roughly $600 million during that same period. That's about 27% more than a loss at the same time last year. Disney Plus isn't the only one that's going to let advertisers in on the fun. HBO Max, which already offers an ad-supported tier that attracts 40% of its daily signups, will expand that tier to allow advertisers to purchase exclusive spots at the beginning of select films in the HBO Max library.

• 10:27Speaker 03

  Kind of like those ads you see in the movie theater when you make the mistake of showing up earlier and they say, rent the theater out, or they say, you know, Bob, lesson BMW, come down and meet a guy in a shiny suit and have, give him your phone number and then he won't stop calling you about that new 330i. Notably, Apple and Netflix remain two key players without any plan to pelt viewers with ads. All of this points to something we've been talking about a lot recently, and that is there's so much money pouring into content. This year alone, the top nine media and technology firms will spend roughly, get this, $140 billion, which is up about 10% year over year, according to Wells Fargo data. So much money going in and they got so much investment and at some point, they gotta get the R on the ROI going here. They gotta get a return.

• 11:11Speaker 03

  Our guest the other week, Jim Miller, shined a light on the fact that companies like Apple and Amazon, where streaming is just one facet of their businesses, will do just fine in the current market because their operating lines are propping them up. They are going to sell a lot of iPhones. They're going to sell a lot of paper towels. So they can lose $2, $3, $5 billion on original content that is almost or near impossible to monetize at the extent they make those investments. On the other hand, you have Netflix, which for a long time has been the marquee player that faces new challenges as competition heats up and profits cool down. We're not so certain that being a standalone streamer is enough to signal to shareholders that this is a viable business. So...

• 11:51Speaker 03

  What do you have? We talked about the fact that there are a ton of companies that have gotten taken to the woodshed in the last 60 months. And it's not just shitty companies like Robinhood or Rent the Runway that are off 80% or 90% or Virgin Galactic, which topped out at about 50 or 60 bucks a share. And I think opened today at six bucks a share. These are just bad businesses that could go to zero. There's also some great businesses, Roku, Twilio, Moderna, that are off 70, 80%. I mean, great companies that have just gotten absolutely plastered. Why? Because too much money poured into them and there's no way to sustain those shareholder prices. They were trading at multiples that just didn't make any sense, even if they executed to perfection.

• 12:34Speaker 03

  I think we're about to see the same thing in streaming. And that is so much capital has poured in over the last few years. I bet we're going to spend more money on original scripted television this year than we spent in the entire decade of the 90s, at least. But at some point, you have to show a return on investment. I'm launching a show on CNN Plus and we, I see we, CNN, are going to try and charge five bucks a month for all of this new programming and then to watch Anderson Cooper talk about parenting and Fareed Zakaria give you an additional take. I personally think just this not having ads across that great content is worth the five bucks, but there's just no getting around it. It's so challenging now. The expectations of consumers has basically been set by Netflix.

• 13:19Speaker 03

  What do I mean by that? When entrepreneurs come to me and they say, I'm thinking about B2B or B2C, I'm always, boss, go B2B because B2C, the expectations of consumers have been set by Netflix. And what is that expectation? I expect for every dollar a month, every dollar a month I give you, I want the equivalent of a billion dollars in original content. So if I give you $12 a month for something, I'm expecting something along the lines of $12 billion a year in content. And it's actually more than that. I think Netflix is approaching $20 billion expenditure. In annual content spending, so it is near impossible to maintain that type of trajectory. So a lot of these new streaming platforms have been a big yawn, even Peacock with the office

• 14:01Speaker 03

  or Starship Commander, Jean-Luc Picard can't justify or can't convince consumers to pull out their credit cards because there's so much investment and so much content elsewhere. So what's going to happen in the next six months, just as we're going to see in kind of growth firms, a lot of layoffs, a lot of cutting back, I think in 12 to 24 months, we're going to start to see a bit of an unwinding in the streaming space. We're going to see consolidation and God help us, I also think we're going to see quite a few layoffs. Anyways, moving on to our last headline before busting into our interview with Tariq Fancy, Peloton is taking a page out of the Rundle book written by, the company is bundling

• 14:43Speaker 03

  the cost of the bike and the cost of classes into one monthly fee for customers in select cities. I like this. Daddy like, me gusto, so Rundle. Typically you have to purchase the pricey bike and pay a monthly subscription of 39 bucks to access these classes, but the new limited time pricing is expected to cost between 60 and a hundred dollars a month for the bike and subscription together. Peloton has literally been kicked in the gut repeatedly by Wall Street over the past year. I think it's down to, I think it hit a, what did it hit 150 now it's down to 23? Jesus Christ. Oh my God, hello. But it certainly has the potential to turn things around under Barry McCarthy's new leadership. According to Wall Street Journal, McCarthy said that he wants to dramatically shift

• 15:25Speaker 03

  capital spending from equipment to the digital interface and content. Well, that'd be nice, right? Making shit is actually expensive, whereas getting people to pay you for bits is less expensive. I think they get somewhere between 10 and 15% of the revenue from subscription, just fitness revenue. I'm excited about the rowing machine, but I keep talking about it, never get it. Anyways, this is sort of somewhere, the primary innovation before electric in the automobile industry was leasing. And that was, they said, okay, we'll finance the thing, we'll figure out how much the thing is approximately going to be worth in three years, and we'll let you make a series of payments at low interest costs that amount to actually what feels like a great deal. So you can go out and lease a Honda Accord for, I don't know, 200 bucks a month, which

• 16:07Speaker 03

  for zero down, which feels very reasonable, that really the innovation wasn't around the car, it was around payment strategy. So I think this is a little bit like that, and that is the. The innovation here really isn't around the product, or the interface, or customer service. It's around payment and trying to make it more accessible. And also, taking the business model of recurring revenue, which the market just absolutely loves. Okay, that's all for our headlines today. We'll be right back for our conversation with Tarek Fancy.

• 16:41Scott Galloway?

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• 17:41Scott Galloway?

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• 18:57Speaker 03

  Welcome back. Here's our conversation with Tarek Fancy, the founder and CEO of Roomi, an education technology nonprofit and the former chief investment officer of Sustainable Investing at BlackRock. Tarek, where does this podcast find you?

• 19:10Speaker 04

  I'm currently in Toronto.

• 19:13Speaker 03

  Toronto, Toronto, the friendly, the friendly America. Great city. How long have you been in Toronto?

• 19:19Speaker 04

  I was born and raised here, so I've been kind of back and forth between the US and Canada my whole life and back here since the pandemic started.

• 19:27Speaker 03

  Got it. So let's bust right into it. You previously served as BlackRock's Chief Investment Officer of Sustainable Investing, but you left shortly after starting once you realized that sustainable investing, also known as ESG, is quote, "a dangerous placebo that harms the public interest." All right, your turn.

• 19:46Speaker 04

  I would summarize it by saying that, you know, ESG today is a set of, you know, there's a bunch of tools and data and a lot of passionate people working in it, and that's all good, but it's combined into products and narratives that are dangerous. The products generally tend to claim that they have real-world impact, even though they don't. 99% of them are just sort of reshuffling already traded public shares and other things to, you know, give people slightly greener looking baskets so they can charge fee increases. And the narratives are the most dangerous because they convince people that we can create systemic change through individual action, through, you know, frankly voluntary compliance rather than mandatory compliance, because companies will all do the good thing, the right thing these days

• 20:31Speaker 04

  because they've suddenly magically discovered social purpose, even though the last few decades suggest that that is not occurring.

• 20:38Speaker 03

  I mean, it sounds like what you're saying is ESG has become sort of like, what's the term greenwashing that is basically just marketing?

• 20:44Speaker 04

  It pretty much is, right? I mean, ultimately, the financial system is operating the way we should expect it to, right? It maximizes profit, right? And the fundamental purpose of the industry is to sit in between savers' capital, right? Our bank deposits or pension funds managed on our behalf and to allocate that capital effectively to the most productive uses of it, right? That create jobs and, you know, grow the economy. And in that pursuit, all of the players in between are legally obligated and financially incentivized to maximize dollar value, right? That's just the way the system works. Nobody leaves money on the table. And what we're finding is that ESG is, for the most part, you know, kind of tries to convince people that if you can measure environmental and social performance, you can use that

• 21:29Speaker 04

  to be a better investor. Why? Because all of us good people are using our power as consumers, right? To buy good products, to work at nice companies. And the reality you find is that it's an attractive thesis that I believed in, right? I drank the Kool-Aid, you know, that's why I joined. And in practice, I found that that would be sort of like trying to flatten the COVID curve by just relying on a few good people doing the right thing, right? A few people wore masks so we can, you know, therefore we'll flatten the curve. And the reality is that the systemic crisis and flattening a systemic curve like that requires generally government action, because that's where you get the change at the speed and scale required.

• 22:10Speaker 04

  That's exactly what, you know, for climate change, for example, what experts tell us we need to do, we need regulatory action to flatten the curve through a price on carbon, through vehicle emissions limits, through building, you know, energy efficiency standards. And we're not doing any of them because, you know, frankly, ESG is sort of this pan-glossy in view that the market will self-correct. I mean, really, that's what it is at the end of the day. ESG today is another free market self-corrects thesis by another name.

• 22:36Speaker 03

  I sort of got turned on to this, this problem by a friend sent me the marketing materials for a company called Aspiration, which was this private company raising tens or hundreds of millions of dollars. Basically, it's a debit card and it has all this flowery language around doing good while doing better. And you can not only get a portion of this debit card is donated towards ESG related investments, but they offer these ESG funds, which includes Southwest Airlines because of the efforts they're making, you know, to level up their environmental. And I just read through this thing and it struck me as just, and it's the former, I think, chief of staff or Elizabeth Warren, and it's just such incredible bullshit.

• 23:22Speaker 03

  And it's such hype to just simply raise money at an unsustainable valuation. I mean, it's literally like, it's, it's as if these people said, people are fucking idiots. And if we use the term ESG over and over, we can raise money at a huge valuation and then cash out before anybody realizes we're just an overpriced fund investing in the same stocks everybody else invests. How common is that?

• 23:49Speaker 04

  It's super common. I mean, you know, I'll give you an example. What you mentioned, I've seen a ton of, and it reminds me of, I run a tech nonprofit now that I had funded, I'd started before BlackRock for, you know, for education and micro learning. And one thing I saw in the tech space some years ago was, you see this all the time, right? When there's a bogus idea, people just grab these words and pepper them in, right? It's crypto this, or it's blockchain that, or it's, you know, AI was the big thing some years ago. And financial services, it's ESG, right? Originally, it's still as kind of viewed as a defensive thing, right? Like you need to be able to check the box and everyone wants to say, talk about all the great ESG stuff they're doing, just like, you know, they want to talk about diversity and inclusion and a bunch of social causes where they see.

• 24:34Speaker 04

  You know, really no downside in appearing to be on the right side of it, but substantively, there's nothing underneath it, right? I mean, the scary thing about it is that everyone who buys one of these products, right? I'm certain of this. They believe, for the most part, especially the average person on the street, they believe that in deciding to buy that product, they're making a change in the world, right? Because we all kind of, every year, we hear more and more words about the need to do this, about climate change, around growing inequality. And so this gives them a way to feel, like it's almost like the indulgences in the Middle Ages, right? With the Catholic Church, and you get to like, pay a bit of money and you feel like you're doing something good to change the situation. In reality, the mechanics are a joke, right? Underneath all of these things, if you look, most of them have no particular

• 25:19Speaker 04

  reason to believe that they would have any real world impact. All of these products, the financial products, you've had decades of, you know, of, of research being done around it that is completely inconclusive. And what scares me more than anything else is that it just comes at the expense of the obvious answer, which is an unpopular answer, but it's regulatory action, right? I mean, capitalism, competitive markets are like competitive sports, right? You, you know, you have referees that can be called on to, you know, regulate certain industries so that they don't harm the public interest. And I think what we've found is that since the financial crisis, you know, instead of actually an end of sort of these neoliberal narratives, right? That sort of say that the market will self-correct, we've

• 26:03Speaker 04

  had very little of, of any real reform around the financial sector and this growing sort of push coming out of that and big business that says, you know, hey, listen, like you can rely on us to do the right thing, right? This is this idea of stakeholder capitalism that my old boss, CEO of BlackRock, Larry Fink, is a big proponent of. It's the capitalism version of good sportsmanship. Like, it'd be like, if this is a sport, and, you know, there's referees, and you don't want those referees coming back in because it means taxes and regulation, and obviously, Wall Street, the last thing they want is that. What you'll do in a very cynical way, to be honest, is you'll hold off taxes, regulation with one hand, by creating a set of narratives that you can rely on good sportsmanship, and that

• 26:45Speaker 04

  companies are going to discover what Fink calls "social purpose" and start doing the right thing. And then, as you have, you know, that- Holding off regulation, both because of the marketing and messaging around it, frankly, you know, frankly, buying politicians behind the scenes. You then have this effort by Wall Street to say there's this growing social angst and by a lot of companies and saying, listen, like, we can tap into that by putting green labels and names and, you know, things that haven't really fundamentally changed. The end result of that is every single year ESG words go up, ESG assets go up, right? What I call sustain a babble, right? The talk goes up and then it goes up alongside like emissions and iniquity and all the things that in theory it's meant to do something about because there's no link between the two.

• 27:27Speaker 04

  And it just, you know, that that schism is dangerous because it it lowers young people's faith in capitalism and endangers a long term, you know, existence of the entire system.

• 27:37Speaker 03

  You said that the climate crisis is the biggest market failure in history and that the government needs to incentivize the private sector in order for it to create meaningful change. What are some of the ways you suggest that the government do this?

• 27:50Speaker 04

  So the simplest model around it, and I already know the objections people are going to offer, so I'll come to that at the end. The simplest tools are above all else, a price on carbon, right? I mean, that, you know, that's the the argument by Bill Nordhaus, who won the 2018 Nobel Prize in Economics. He'd been arguing this for decades. The simple idea is that there's a, you know, there's a cost to pollution, right? Whether you're dumping it into the river, you know, next to the factory or you're putting it in the atmosphere and that cost is going to be borne by somebody. In the case of greenhouse gas emissions, it's the youngest and the poorest in the world who inherit a probably amplified problem because, you know, prevention beats cure and we're not really doing much to prevent it.

• 28:32Speaker 04

  And then in addition to the price on carbon, you have industry by industry regulations, right? If you look at vehicles and if if the government actually gave a reliable roadmap for charging on pollution and then said to different sectors, you know, vehicles, you need to be EVs by this year, you know, buildings need to hit these standards. First of all, what's gonna happen is gonna cost people a lot of money, right? That's the reason that there's a fantasy that's, you know, saying it'll magically fix itself. It's because it is gonna cost money to, you know, Morgan Stanley says it'll cost fifty trillion to decarbonize the world economy. Goldman Sachs has a hundred trillion. Those sound like big numbers until you consider that the same sources are saying that the costs of inaction will be greater, right?

• 29:13Speaker 04

  But then what you have is fundamentally a situation where we know the changes we need to make, they're systemic reforms that would flatten the emissions curve, just like we did to very quickly flatten the infections curve. But they are unpopular, and in particular, when you have an economic system where the incentives are extremely short term, right? So the average CEO tenure is five years now. It's the shortest it's been in decades. Average CEO pay is three hundred and twenty times the industry worker, right? It's the highest it's been in decades. You have a situation where the most powerful interests have very short term incentives. And in the short term, you know, when you look at the actual challenge around climate,

• 29:54Speaker 04

  it's cheaper to market yourself as being green and to lobby to prevent the actual, you know, regulations that would cost money and start fixing things than it is to actually make the long term investments that would pay off in, you know, a decade or two to, you know, to justify it. And so when you have it in short term incentives that misalign with the, you know, long term public interest, that is exactly where government needs to come in and sort of like referees in the sports say, hey, like, we can't leave these loopholes open anymore, right? We need to, we need to move from voluntary compliance to mandatory compliance.

• 30:27Speaker 03

  Yeah, it always struck me as uniquely, I'm not even saying American, but Silicon Valleyers said, oh, we'll solve climate change and we'll, we'll become billionaires along the way. Wouldn't that be nice? That it'll be a couple of MIT grads who come up with some technology that we can buy shares in and get rich as we solve climate change. That strikes me as just delusional and dangerous. And that if you think about fossil fuels have been the gift that have kept on giving, have arguably created more stakeholder value, at least our monetization of these, of these fuels. And to think that we're just gonna unwind it and make more money feels. Sounds like a fantasy. I'm being a long-winded summary of what you said more articulately. Can you tell us a little bit about your ed tech startup?

• 31:10Speaker 04

  Yeah, so remember I started nearly 10 years ago and that I had worked on basic investments to bring mobile phones into emerging markets back in my, you know, finance, my earlier part of my career as a vulture investor at a private equity firm in New York, very much the opposite end of the, on the purpose versus profit scale. But I'd seen the power of, you know, mobile technology in places like Kenya, which is where my parents grew up before immigrating to Canada. And saw that that was a lot of potential to use the spread of mobile phones for learning and for education, right? Because everyone, you know, the youngest and the poorest globally, their computer of choice tends to be a smartphone. And so we built platforms around what we call micro learning. Micro learning is learning in five or six minutes snippets

• 31:53Speaker 04

  on your mobile phone. All of the engine is powered through a volunteer approach, right? So it's a 501(c)(3) nonprofit. And like Wikipedia, you know, people with skills contribute on the platform and create micro learning content. And then it's all open and free. And what we found actually last year is that it's growing over 10 times a year. Learners, there's over 20% gains in learning retention. And the coolest thing actually is that anecdotally we're finding in surveys that it actually competes with and replaces social media time. Because, you know, it's five or six minutes and you learn something. So you get a dopamine rush, which beats, you know, getting a dopamine rush from blowing up your mental health on Instagram.

• 32:33Speaker 03

  And so, does it aggregate into some sort of certification or skills? What are, what are you hoping is the end product here?

• 32:42Speaker 04

  So there's two models, right? The way we think about it is that because the courses are so short and easy and frictionless, right? You can find it, you don't have to log in, you don't need an app, it's just super easy. Part of, that's part of the reason it's growing quickly. And then there's two models through which you would sort of learn through what we think of as almost top of the funnel learning, right? Like, you could go and learn all kinds of deep skills, but sometimes you need five minute courses to understand even where to go. And so you either go in and the default model is it's curiosity driven, right? It's learner driven. So you go and you and you as you create, as you complete content, we keep optimizing for engagement. So we call it meme learning. If you're to go to rumi.org, R U M I E dot org, you'd literally see micro courses with animated gifs

• 33:26Speaker 04

  and, you know, memes and other things. And it's actually because we find that by keeping the learning engaging, you get better outcomes. And then either you go through it curiosity driven and AI kind of starts to drive what content it feeds up. So it's again, kind of the social media model, but bringing value to you instead of sucking out, you know, your brains to sell for advertising. And then, and we're adding now in conjunction with some universities, sort of micro credentialing courses. So you actually do specific micro courses in order and it teaches you kind of a core concept. In fact, one of the ones I'm doing, we're working on soon for Earth Data is, is shows you how the system works, how the economic system works. You know, it's taking the ESG themes, taking the themes around how to address climate change and breaking them into meme learning, right?

• 34:10Speaker 04

  So that more people completed and, and figure out how we can drive change. And is it, is it, it's a nonprofit? How are you funding it? Purely nonprofit. So we're funding it through me fundraising, pretty much, and, and partners, right? Sponsors and partners who, you know, want to see it grow into the Wikipedia of micro learning.

• 34:35Speaker 04

  Coming up after the break. You know, what worries me now is that it looks to me as a distressed person that the markets have been, to use Howard Marks's term, levitated by central bank policy for a long time. I would argue over a decade, but in particular, since the pandemic.

• 34:53Speaker 04

  Stay with us.

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• 36:35Speaker 03

  So I want to back up just because you you you obviously spent a lot of time working for one of the most famous alternative investment managers in the world. I'd just be curious to get your take on sort of the state of the markets right now. What is your, nobody knows, but what's your view on what's going on in the market around a lot of these, you know, the growth sector and startups? When you look at the market, give us your headline view as a former CIO of a very well-respected firm.

• 37:04Speaker 04

  Well, you know, it's interesting. I'm pessimistic, and the pessimism comes less from the time I spent recently at BlackRock and other places and more out of where I started my career. Because before I went and created a nonprofit, you know, for education, which was driven by the passing of a close friend and roommate, I worked in banking and hedge funds. And, you know, when I was in, in doing PE investing, I did what's called distressed or vulture investing. So we would raise long-term private 10-year funds in advance of what we perceived to be a coming crash. Uh, and so we raised a three and a half billion dollar fund in 2007. Um, you know, again, you, we don't, we don't really know when exactly something's gonna happen, but you can tell when the numbers

• 37:45Speaker 04

  don't add up. And, and, you know, what worries me now is that it looks to me as a distressed person that the markets have been, to use Howard Marks's term, levitated by central bank policy for a long time. I would argue over a decade, but in particular since the pandemic, it struck me as stunning that, you know, the economy blew up and GDP growth went down and the markets completely dislocated and went up. And I, and part, sometimes it'd be easier when you're a bit away from the system because I'm running roomie and I'm doing learning and I give a few calls to old friends of mine who work in the markets. And what I found fascinating was that all of them justified going back in and buying by one version or another of don't fight the Fed, right? It'd be ZIRP, right? Zero interest rate policy, Tina, there is no

• 38:30Speaker 04

  alternative, you know? It, it, and it's, it's oddly odd when you have credit analysts, credit analysts who are not doing credit analysis, right? Equity analysts who are not doing equity analysis and they all seem to be justifying an emotional call to buy based on what looks like a, you know, someone else is gonna come and buy this shit for me, you know, at a higher price slash, you know, a narrative that the markets only go up. That, that, that to me is dangerous, particularly when the one single thing that supports it, which is, you know, the extreme, the most extreme version of the central bank put that we've seen in decades. When inflation hits, you know, double digits and the Fed has to go home, it strikes me like

• 39:11Speaker 04

  wily coyote coyote running off a cliff, right? And there's been sort of a gust of wind by a giant fan that Jay Powell is operating. But when that starts to disappear, we'll have news flow that says, you know, this and that about Russia and Ukraine and commodity prices and sanctions and a whole bunch of things that throughout the course of this year will populate the news flow because, you know, people have to write headlines about why the market moves and there's not, there's no market to tell them exactly what, you know, no one, no one knows for sure. But I, I, my, my sense is that the markets are going to deflate and the most speculative asset classes, the, the narrative that underlies them is going to evaporate. And I'm not really sure what happens on the other end of that.

• 39:52Speaker 03

  So how do you protect yourself? If you're, you know, I've always been told by my colleagues in the finance department at NYU, that you always want to be on the market and why you might want to take down leverage when you think things get out over in front of their skis. And by the way, I've been saying the market's overvalued for three years. And typically, when everyone agrees that the market is overvalued, it goes up another thirty or forty percent. Everybody thought the market was overvalued in nineteen ninety seven to nineteen ninety eight. But let's assume at some point, a fairly serious violent correction is coming. How do you protect yourself? How do you, how do you try to, you know, what do you do? Is there any sort of prophylactic or kevlar you can put on yourself other than moving to cash, which I would argue is a terrible investment right now?

• 40:33Speaker 04

  Yeah, cash is tricky. I mean, the, the time when cash makes sense is when the markets look so volatile that, you know, you're getting seven percent of your cash and played it away a year. So that's not good. On the other hand, if the markets take a twenty five percent hit, you know, that is good. The biggest problem is knowing when that's going to happen because you've been saying it for three years. I've been saying it probably as long or more, right? And I often think to myself, you know, you stick to your guns. And sometimes it gets hard over the years. And sometimes people just put their gun away because they're so. You know, it's been too much and and they've gotten wrong so many times and and this and the fallacy with that sometimes is that you are finally right in the end because eventually

• 41:14Speaker 04

  the markets have to start to reflect fundamentals on some level, particularly when what seems like an irrational buyer. Whether from a technical perspective in terms of how much money they're putting in the market or from a narrative perspective, right? Is perceived to be supporting the markets when they when they disappear, you know, that's when there could be uh there could be swings in the market as we've seen already so far this year that make it made it may have made it better to sit in cash or potentially in gold or certainly a more defensive outlook, I think, given that, you know, again, over the long term, you want to be in the market. That's that's right. But, you know, when you're heading into a year like this, I'm not sure if that's necessarily a great, great idea from a timing perspective.

• 41:56Speaker 03

  What are your views on cryptocurrencies?

• 41:59Speaker 04

  Boy, I have uh it's, you know, I've only tweeted once or twice on them ever in my life and I instantly got like seventeen people response bots basically responding and in every single situation, the bot was responding with a Bitcoin price going up. That tells me that um there's something that supports the underlying asset value of anything you buy. If it's a stock or a bond, it's the cash flow produces. If it's a commodity, it's it's its value in the real world, right? You know, oil, weeds, they all have value. The the one that we have never, you know, that defies that is gold. But gold does have a very long history of being a store of value, even though it has no particular day to day value unless, you know, you're in India getting married tomorrow.

• 42:43Speaker 04

  You know, the reality is that crypto has none of those things and it seems to be its only signal is price, right? And it's only what supports it seems to be a narrative, right? Um it seems to be an extreme case of what Bob Shiller, the economist, wrote in his latest book called Narrative Economics. He talks a lot about Bitcoin. And so to me, it really depends on when that narrative turns, right? That narrative is today managed very carefully through social media, online, you know, all kinds of areas where you don't need to actually argue that there's any core value, your thesis underlying, it could be web three, which strikes me as being. Fantastical at best. From a technical perspective, you know, this is long and short of it is that I would be worried and I wouldn't recommend anyone have to have their money in

• 43:28Speaker 04

  any of that stuff anytime soon. Long term, I do think that one or two will survive, right? Bitcoin or Ethereum or whatever as the brand value. But you know, the entire thesis today seems to be not only will one or two survive, but all of them will, which is strikes me as ludicrous, right? You don't need all these different random invented coins with dogs faces on them. And so to me, that strikes me as the most speculative area of the market that I am afraid a lot of good people are gonna lose money on. But often, well, by no fault of their own beyond sort of buying into hype around a get rich quick scheme.

• 44:04Speaker 03

  Hype around a get rich scheme. I like that. Tariq Chancy is the founder and CEO of Roomi, an education technology nonprofit that develops and distributes free micro learning courses to communities with limited internet access. He previously served as BlackRock's first ever chief investment officer of sustainable investing. He joins us from his home in Toronto. Tariq, thanks so much for your time.

• 44:27Speaker 04

  Thanks for having me.

• 44:34Speaker 03

  Algebra of happiness. So getting older, we have mostly younger viewers, younger listeners that don't need worry about this. But it's always good to constantly reassess your relationship with not only others, but your relationship with substances as it relates to your age and your fitness. I like to drink and I like edibles. And I always think that I can manage those two things. And recently, in the last few months, I've had a couple of episodes where I've had a couple of drinks and I take an edible to help me sleep and I wake up in the middle of the night and I have what I think is a pretty massive drop in blood pressure and feel just awful and kind of pass out in my bed, having to be out of flight, which was really fucking scary.

• 45:16Speaker 03

  And the bottom line is, I'm no longer 25. I'm not encouraging 25 year olds to abuse alcohol or edibles. But you constantly want to look at, how do I feel the next day? Thinking that you can get away with having two or three drinks every night because you were 27 and could pull that off. Once you're 37, it gets harder. Once you're 47, it becomes near impossible. I don't think it's a bad idea on a regular basis to say, am I as fit? Am I as alert? Am I killing it as much as work? As you can tell, I am not a teetotaling person that doesn't engage in substances. I like them. I enjoy them. I think I'm good at them. I talk about them a lot. So people think that I engage more than I do. But I

• 45:58Speaker 03

  think they can play an additive role in people's lives. And then we have a knee jerk reaction that anyone who's involved in any substance has some sort of a problem. However, however, it is important on a regular basis to ask yourself, is this adding to my life? Or is there something about my physicality or my physiology that's changed? And clearly, as I get older, it's just not a good idea for me to mix alcohol and edibles. So I'm going to stop. I'm going to dial it down. And that's not a bad thing. That's not a bad thing. So take an audit. Take an audit of the substances that you ingest, whether it's trans fats, whether it's alcohol, whether it's THC, whether it's other stuff. And then ask yourself, would

• 46:39Speaker 03

  I feel better? Or would I be just a little less shitty to a bunch of different things if I kind of dialed it back? I'm not saying you have to go cold turkey. That works for some people. I wouldn't take that off the table. But you can also modulate. You can also just pull back. We're heading out of the pandemic. Hopefully, this thing is going endemic. Make an investment in your health, your mental wellbeing. Make an investment in spending more time at work or with loved ones and being fucking strong. Be a monster and decide if you should dial back some of these substances.

• 47:13Speaker 03

  Our producers are Caroline Shager and Drew Burrows. Claire Miller is our associate producer. If you like what you heard, please follow, download and subscribe. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday.

• 47:34Speaker 03

  He looks like a whiskey commercial. Seriously, I want to go out and buy Ballantines or something, or, I don't know, have a drink with the ambassador to Finland. He just looks like that statement's like...

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