Aoifinn Devitt: If this pendulum shift towards benchmark sensitivity has reached the extreme that we believe it has, then machines can probably do very well in that environment. You’re not going to need analysts, portfolio managers for that kind of style. What you will need analysts and portfolio managers for is anything about the future, which is really, we’re going back to the future. This is how I started in the industry. It was trying to figure out what the world’s going to look like in 5, 10, 15, 20 years. And yes, AI is all about pattern recognition, but if patterns are going to change radically, it’s going to need to see some good examples of that, and then it’ll be on its way. So I think the human mind is going to have more purpose in investing as we shift back to the future. Shift back to investing in the future instead of investing in the past.
Cathie Wood: In this series, as a special treat, we are featuring the music of one of our guests in the series, Julia Kwameah. You can find the link to Julia’s Spotify album in the show notes. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast., a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Cathie Wood, who is CEO of ARK Investment Management LLC. Prior to ARK, Cathie spent 12 years at AllianceBernstein as Chief Investment Officer of Global Thematic Strategies, where she managed $5 billion. Cathie joined Alliance Capital from Tupelo Capital Management, a hedge fund she co-founded, which in 2000 managed $800 million in global thematic strategies. Prior to her tenure there, she worked for 18 years with Jennison Associates as chief economist, equity research analyst, portfolio manager, and director. She started her career in Los Angeles, California at the Capital Group as an assistant economist. Welcome, Cathie. Thanks for joining me today.
Aoifinn Devitt: Thank you, Yvonne. Very happy to be here.
Cathie Wood: Well, since founding ARK, your profile has grown enormously, and I see from my perspective, your investing is grounded in a love for innovation and openness to change and big ideas. But also your public persona to me displays quite a bit of resilience and stamina. Usually I find that those traits are grounded in one’s upbringing, one’s path to here. So can you take us briefly through that and, and maybe what is it about that that made you the investor you are today?
Aoifinn Devitt: Yes. Well, yes, I suppose upbringing does make us who we are today for the most part. So yes, traveled around a lot. Both of my parents, Aoifinn, are Irish. You should know one from Donegal and the other from Kerry. And my father was in the American Air Force after he immigrated and really fell in love with technology. It was the dawn of the electronic age, radar systems. And so my father had a very strong influence on my love for innovation generally and how it can transform lives in the world. It certainly transformed my father’s life. So my father, I mean, there are various renditions, but he has a 6th grade education or he went through high school. I’m not quite sure, but got his education in the Irish Army, American Air Force, and moved to America because it was the land of opportunity. And my mother did the same, land of opportunity, when she was 18 and I think my father was 22. And then we moved around a lot when I was little. And so I had to, in fact, 10 times by the time I was 12. And so, I had to go in, size up situations pretty quickly, figure out who I trusted, who I didn’t trust, and became a decent judge of character, I would say. I think that shaped it. And then in terms of upbringing, of course, my education, my father’s emphasis on education, actually, education, career, education, career, education, career, production, production. So, he was always thinking about productivity. So, I guess he was, and my mother was the laughter in our lives. Thank goodness, you know, a wonderful partner for my very serious father. So yes, I think parents, education, traveling all around England, Ireland, Selma, Alabama, upstate New York, California. So yeah, I think that traveling was mind-opening. And, you know, I’m always excited about new technologies that can scale globally because, you know, I saw a lot of situations where technology really changed lives. When we first moved to Ireland, no one had a TV, no one had a telephone. And of course now they’re prolific and technology has transformed Ireland.
Cathie Wood: And just in terms of your imagination, to me is clearly what drives your belief in some of this technology. You can imagine maybe what transformation could occur. Were you creative in your upbringing and how did that then translate into your approach to investing?
Aoifinn Devitt: Creative. I don’t think anyone would call me creative necessarily. Very serious, very studious, very focused on outcomes. But I think my imagination for technology started, of course, with my father, but then at Jennison Associates, Sig Sigalis, God bless him, he just passed this year, an incredible influence on my life. He gave me the opportunity to do equity research. I had started in economics, but he wasn’t going to give me any stocks. He wasn’t going to take them from any analyst. I had to find my own universe. So I was like a little dog under the table, scrapping, you know, for bones or what have you. And what happened then is I learned about companies that fell through the cracks. Nobody wanted them. So, The first group of companies like this was database publishing. The technology analysts didn’t want it, that group, because it had publishing in it. And the publishing analysts didn’t want that group because it had database in it. So not in their comfort zones. So I took the fall-through-the-cracks companies, which now that I look back were the first signs that there were going to be convergences between and among technologies that would create explosive growth opportunities. So what happened with database publishing? It really became the internet, right, when you think about it. And so I was there and we were all struggling. This was in the ’80s, database publishing. So it was Reuters and Telerate, and what kind of business model is this? And it was the very early days of what would become a lot of the thinking on the internet. So I learned early, when nobody wants something and the old world is dismissing its relevance, then maybe you should take a closer look because there could be something big brewing there.
Cathie Wood: Certainly early contrarian indicators there, I can see. Let’s go to ARK now and your approach, because there’s so many aspects of this I’d like to discuss. First, I got to know you at the very early days of ARK. And I was struck by this research focus on innovation above all that went across many sectors and some of the openness you had, the almost the open source approach you had to your research. Can you talk about how that evolved?
Aoifinn Devitt: Yes. So our focus exclusively on innovation came out of my time in the industry, actually. And when I started at Capital Group on the West Coast, there were no computers or no cell phones at the time. We were trying to figure out the way the world was going to work, however. And so there was deep research and the focus was 5, 10, 15, 20 years out. So I said, oh wow, I really do want to be a part of this industry once I was introduced to it, because the world was our oyster and the ’80s and ’90s were golden. But starting with the tech and telecom bust, and even more so after ’08-’09, I saw the pendulum shift towards passive and towards extreme benchmark sensitivity. And because My strategies have always been very forward-looking. What is the future going to look like? This pendulum shift was going backwards from my point of view, certainly when it applies to innovation strategies, because the stocks at the top of benchmarks are there because of past successes, and we are looking for the stocks of the future. And so when I was asked to risk complete my funds, a third of them towards the S&P 500. I said, happy to do it in sister funds, so lower volatility sister funds, but our clients own this strategy for whatever reason, and they understand the volatility. That conversation evolved to the point where I said, let me just go out and start my company. And I will say, many people know this about me, so I’ll offer it up here. There is a spiritual element to this journey because, you know, I remember being very frustrated with what I was facing and walking into my house one summer day, beautiful sunshine, completely silent house. And like your house, and I know you have many, many children, mine was silent and everybody was gone for a reason for 2 weeks, camps and, and so forth. And All of a sudden, this idea came to me, boom, you have got to start your own company and apply the technologies that you have seen disrupting other industries. So what that meant to me was open source. So give your research away, become the first sharing company in the asset management space, give your research away, and you’ll be surprised at how much you get back. And that’s been Absolutely true, because we now have innovators around the world battle testing our assumptions because we give our research away not when it’s finished, but as it’s evolving. And so isn’t it wonderful to have individuals who are actually heads down innovating, but who love our top-down research trying to size their markets and how big these opportunities are going to be and what the unit economics look like. So they want us to be right. And so they’re helping us if they see us going astray with our assumptions. So we’re looking at exponential growth opportunities. And the problem with that is if we make a mistake early on in our assumptions, we can make exponential mistakes. So we really want this battle testing. So now we have social media. So we give our research away over social media, social marketing, and now social distribution on the Titan app. We launched a venture capital fund just last year and we entered social distribution. This is the only way to get it for retail investors, although we have separately managed accounts for institutional investors. So those are the technologies, but this sole focus on innovation has been so controversial And I find that interesting because if you’re in the late ’90s during the tech and telecom bubble, this wouldn’t have been controversial. Everybody wondered why they were investing in anything but the internet back then, right? And that ended badly. So psychologically right now, I feel like we’re in a very good place because the fear of innovation is palpable. The fear of investing in anything that delivers earnings, maybe not right now, but in the next 5 years is in the public markets considered almost suicidal by some. And yet that is the reason there are so many opportunities and there is so much inefficiency in the pricing of innovation in the public markets.
Cathie Wood: So interesting. And so many things to follow up on there. First, I’m going to listen to myself just so I got— first is time horizon. Then I want to talk about US versus non-US innovation. And I want to talk about fear and why we may have more fear today. So focusing on time horizon, it seems to me if you’re open sourcing your research, you’re going to obviously have many different opinions feeding into a thesis. And often time horizon can be the real rub because something made for innovation, its disruptive ability may well be true in the long term. But we made that classic idea of overestimating its impact in the short term. And whereas markets being the weighing machine that they are often, you know, look at short-term expectations and disappointments. So how do you square that? How do you sort of settle on a consensus of timeframe and reiterate, I suppose, course correct if your timeframe is off?
Aoifinn Devitt: Yes, so we center our research around Wright’s Law. So Wright’s Law is a relative of Moore’s Law, but Moore’s Law is a function of time every 18 months to 2 years. And Wright’s Law is a function of units. And it says, for every cumulative doubling in the number of units produced, so 1 to 2, 2 to 4, 4 to 8, for every cumulative doubling, costs associated with a new technology decline at a consistent percentage rate. And so what we’re trying to do is find that rate out and I can tell you in long-read DNA sequencing, that rate is 28%, and we’re at a very low base in terms of the number of whole human genomes sequenced. For short-read sequencing, that number is 40%, and that’s very important in liquid biopsies and other breakthroughs that we’re seeing here. For industrial robots, it’s 50%. For electric drivetrains, battery technology, it’s 28%. For artificial intelligence, it’s 48%. %. But the cumulative doubling in the metric that we use, it’s a metric involving data. The cumulative doubling is happening in less than a year’s time. So what it means is AI training costs today are dropping 70% per year. So once we’ve got these costs down, we assume that they will flow through into prices. You see Tesla’s cutting its prices. One of the reasons is its costs are going down. Many people think it’s because demand is weak, and that may be true, but it has the ability to cut costs, whereas traditional auto manufacturers really do not. And so we need to understand when will that price point appeal to a new sector. So we’re looking at technologies. So our analyst responsibilities are broken out by technologies. So they’re technology specialists with domain expertise, but they are sector generalists. Why? Because we think that the 5 major platforms around which we have centered our research— so multi-omic sequencing, robotics, energy storage, artificial intelligence, and blockchain technology— we believe that those platforms, which involve 14 different technologies, are going to scale across sectors. And so, we want them to be looking at different price points and when they’re going to hit and the price elasticity of demand is such that it will appeal to another sector. So, that’s how we’ve set up the firm. It’s our sole focus. And I don’t think anyone in the world is doing the kind of research we’re doing, certainly no one in the investment.
Cathie Wood: World. We’re going to take a short break to hear from the sponsor of this series, With Intelligence. I sat down with Kit McDaniel, President Americas of With Intelligence, to ask him what the mission of With Intelligence.
Speaker C: Was. But now with intelligence that we are not in the advertising business, we’re not really in the media business. Our goal is to arm asset managers and asset allocators with the data, with the intelligence, and with the access they need to do their jobs on an everyday basis. You know, we often, we like to think of ourselves as an extension of staff for both allocators and managers in different ways so that they can do business together. They can meet their peers in a more efficient way through with.
Cathie Wood: Intelligence. And now back to the show. The second question then around the US as the, maybe the global center of innovation versus other areas. And that we’ve seen US tech stocks really just continue to dominate in global indices. And they’re still doing that today with a lot of concentration. Where do you see other kind of pockets of innovation, or do you think this is US-centric? Where are you looking for.
Aoifinn Devitt: Ideas? Well, I will tell you, in the world of blockchain technology, the US is outright hostile to innovation. Gary Gensler, the chairman of the SEC, is turning innovation off in this country as it relates to blockchain technology. That’s a bit of an exaggeration, but I do think that a lot of talent associated with blockchain technology is moving abroad and we will follow it. We are talking to Israeli companies about blockchain technology and so forth. I think what’s interesting about the US today is San Francisco is still a hub, to be sure, but if you go to any major city around the United States, they all are now encouraging innovation. We moved to St. Petersburg, Florida, the Tampa Bay region, because they’re hungry for innovation and they want to use innovation to transform the community. And so we’ve been welcomed with open arms. So I think the U.S. Is still, from a DNA point of view, going to be a hotbed for innovation. Some of it’s moving away from San Francisco. San Francisco has its problems, as many major cities do. And because we all learned during COVID that we don’t have to be centralized in any one place, I do think more innovation hubs around the US and the world are going to take off. And we see from blockchain, we, we know that China focus on innovation and technology has increased dramatically. In fact, I was on a panel with the Minister of Innovation. I’m not quite sure what he was called at the time from China. This was in 2016 or ’17, and back then it was clear top priority. And I still think it is even more now with the geopolitical consternation that we’re seeing between the US and China. But we see Hong Kong, of course, as part of China, very open to blockchain. A lot of companies moving there. Singapore, London, Europe is so much better. From a regulatory point of view, shockingly so, than the US is. It had to get all of the countries to agree to this regulatory regime, and it did. So we’ll go anywhere that innovation is, and we’re also going to start using data a little bit more intentionally to find companies in the rest of the world. We work with MSCI, our research team and MSCI work together on keywords. So MSCI has innovation indexes, but they’re extremely diversified, 500 names plus. Ours are much more concentrated, but you’ll see many names there because of the keywords in other countries. And we think that’s a good leading.
Cathie Wood: Indicator. Well, let’s talk about innovation and maybe something that is scaring people around innovation. And let’s talk about AI, ChatGPT, Bard, etc. How would you say, why is is it, it at this juncture that people are apprehensive around the impact of this innovation and taking AI in particular? Do you think that accounts for some adoption trends, maybe not quite as you model.
Aoifinn Devitt: Them? Actually, we have been modeling AI since 2014 when we happened upon NVIDIA at $5 a share. It’s now over $400. We weren’t calling it AI at the time. We were calling it autonomous driving, which is an AI project. And of course, we learned very quickly, of course it’s an AI project. And of course, this is going to be the biggest play from a picks and shovels point of view out there. So we’ve had a beautiful ride and we own it in our specialty portfolios, but have pulled away because it’s at 25 times revenues and we see companies like Twilio, which has a trillion interactions between businesses and consumers recorded every year and is selling at only 2 times revenues. We’re looking at companies with proprietary data that no one else has as probably the biggest beneficiaries of AI. And so there’s huge valuation discrepancies. But why are we focused on it now and why are people so fearful? We’re focused on it Even though it has been in science fiction, we’ve been hearing about AI, and in actuality we’ve been hearing about it since the ’50s, right? But there were two big breakthroughs: deep learning in 2012, ImageNet, and then transformer architecture, natural language processing, in 2018. And then of course ChatGPT which is one of the most provocative results of transformer technology, 2020. The reason we’re hearing about it now is because, and this is always the case with innovation, the technology is ready and the costs have dropped to a low enough point. So if you had tried to build the GPT-3 model that produced ChatGPT in 2015, it would have cost $800 million. In 2020, it cost less than $5 million. Today it would cost about $400,000, maybe less. And in 2030, we think it’ll be hundreds of dollars. So the costs are plummeting here. And ChatGPT finally captured the imagination of consumers and businesses because We see how powerful it is. We can use it ourselves. It cuts the time of writing almost anything to a fraction of what it once was, assuming you’re a good prompt engineer in terms of asking it for the right thing, and assuming you’re using history and not current events. But I think that’s been really important to reinvigorating innovation. I wrote a piece at the beginning of this year called What Investors Missed in Innovation in 2022. And I mentioned AI because it really didn’t become a hot, hot, hot topic until January, February of this year. And I also mentioned a cure for leukemia, a little girl, Alyssa, in the UK. Nobody was talking about it. Investors, especially in the fourth quarter, were so depressed, so bearish that they couldn’t see straight. Now, now that we understand the power of ChatGPT and people’s imaginations are going wild, now there’s the real fear that Elon Musk and others have been talking about that there should be. And one of the best things to happen out of all of this is that Elon and thousands of others have signed documents saying, hey, hey, hey, hey, wait, wait, wait, wait, wait, this could get out of control. And when I say that, I don’t think we’re going to have a 6-month moratorium the way they wanted. But I do think they elevated the topic, the conversation. All technologies can be used nefariously, and AI is no exception. So I think that all businesses and even consumers are trying to think, how could this mess my life up? I think that’s a good thing. Again, half the solution is understanding the problem. But what we’re also seeing is businesses understand that this is the ticket because if if we’re right and the bigger risk here is deflation instead of inflation, and inflation’s coming down very rapidly now, commodity prices are down 30% year over year. So, if we’re right, then the pricing power that COVID gave companies is going to disappear. And in fact, we could see price cutting being the norm. And that means corporations have to figure out ways to cut costs If you look at the knowledge worker industry globally, we pay or businesses pay $32 trillion for the knowledge worker industry. This can probably cut out, I’m going to say, $10 trillion from the knowledge worker industry in terms of cost declines, really automating the jobs that are very boring, very mundane, and elevating people, giving them an opportunity to oversee AI and add more value and therefore raise their income potentials. So we’re pretty excited about.
Cathie Wood: It. I’d love to ask one of the things before we move on to just some more reflections. We speak a lot about how it will transform certain industries. So can you give us maybe a couple of bullet points as to how you think it will transform our industry, the investment management industry, active management? What’s the future of AI and that.
Aoifinn Devitt: Industry? Well, it’s already started it and it started with robo-advisors. And I think it will intensify because if this pendulum shift towards benchmark sensitivity has reached the extreme that we believe it has, then machines can probably do very well in that environment. You’re not going to need analysts, portfolio managers for that kind of style. What you will need analysts and portfolio managers for is anything about the future, which is really— we’re going back to the future. This is how I started in the industry. It was trying to figure out what the world’s going to look like in 5, 10, 15, 20 years. And yes, AI is all about pattern recognition, but if patterns are going to change radically, it’s going to need to see some good examples of that, and then it’ll be on its way. So I think the human mind is going to have more purpose in investing as we shift back to the future, shift back to investing in the future instead of investing in the past. When I first started ARK, I was trying to explain to— he actually was a chaplain and had no involvement with the financial industry, but he said, as I was trying to explain why I needed to start ARK, he said, “Oh, so you mean the future of investing is investing in the future?” And I said, yes. And I didn’t even know about AI because I’ve just described that to you. Back then when I said that to him, I did not know about AI in the way we know about it now. But I can see AI taking the place of benchmark-sensitive management, freeing up the human mind to think more about the.
Cathie Wood: Future. Thank you. And you did note your long-term conviction in the deflationary impulses around society. We didn’t even have time to touch on that, but that’s something that I’ve always known as characterizing you in a slightly contrarian way at times, but I think it definitely still prevails. Just want to move on to some reflections. When you look at, you’ve obviously been forecasting trends, looking to the future. When you look back at any perhaps missteps or mistakes or misjudgment in any of those trends, was there anything there where you just were too enthusiastic and it didn’t play out? Areas that you learned lessons.
Aoifinn Devitt: From? Yes. And this is one of the reasons I set ARK up the way in which I did is because of a big mistake. I mean, it didn’t cost the portfolio, but we were making a bet on satellite radio and we were making all kinds of assumptions that it would have much more ubiquitous uses, maybe thinking along the lines of streaming, but the technology wasn’t ready back then. XM satellite radio. Technology wasn’t ready and we were off base. And so I said after that mistake, and I think one of the reasons we had technology analysts at my former firm, but there was a little bit, maybe they were too polite, but no one wanted to dissuade us of this notion. You know, we’d be talking about this stock in morning meeting and just bought some more and here’s why. But there was never any pushback. At ARK, one of the things— we’re very collaborative, but one of the highest value adds from our analyst teams, our directors of research, and our chief futurist, Brett Winton, is the pushback, especially pushback to me because I’ve been around the track a number of times. So sure, I know a lot, but these young people, especially those coming straight from college, they know so much more about many things than I do. Absolutely insist that they push back. So big lesson learned there, and make sure that that conversation is live and that you’re battle testing the assumptions. And I say that’s why we open sourced as well. We want people pushing back, and, you know, we call them haters on Twitter, but sometimes they’re not hating us, they’re actually giving us some good insights Others are just pushing back. We’re a bit of a lightning rod, and so they’ll push back because they want more followers or what have you. It’s— that’s a bit of a game. But there are people out there who push back in a very good way, thoughtful way, and often it will be through a DM, through a direct message, not through a retweet or a response, because they want to help us. So That was one. Another big mistake I made was believing the business people in Mexico in 1994 when they were saying, there’s no way we’re going to devalue. And of course they devalued. And I was the analyst on Mexico at the time, and that was a pretty rough year end, I must say. So never trust that business people understand what politicians are going to do because politicians have very often different priorities than the business people we’re talking.
Cathie Wood: To. Well, it’s interesting that you mentioned pushback in a public forum because you’re known for some of the— your high conviction ideas, not being afraid to take a stance on them. Some of it is controversial. And I’d like to ask, because I think there are people listening here who’d like to have that same maybe high conviction approach, but maybe are wondering about some of the vitriol that some of the comments might— may inspire. How do you handle some of the criticism you.
Aoifinn Devitt: Get? Actually, it’s quite helpful in a way, because the more criticism we get, the stronger I feel because of our research. We have, I think, the best research team in the world when it comes to innovation. And we have done top-down analysis, bottom-up analysis. We have a scoring system around innovation. We’re looking at this 360 degrees around in a way that others are not. And so we listen to the criticism, and if we don’t have an answer to the criticism, I’m surprised, and we double down and do more research. But typically, because we do get such pushback, we do have an answer. Now, are we going to be right? I think so. I think the probabilities are very high, but of course we could be wrong. I just think the more pushback we get and the better we can answer those questions with conviction, then the stronger I feel about our investment. So it’s, it’s actually part of our research.
Cathie Wood: Process. This podcast has a focus on diversity. We ask every guest their view or the grade they would give the industry they’re in, in terms of its diversity, its inclusion. Any thoughts from yourself on that, having been in the industry now for many decades and risen to the top of.
Aoifinn Devitt: It? Having come from an industry where I was the only woman in the room, I see a lot more women at the table, which is fantastic. I see a lot more diversity. And many people ask me on that question, how did you deal with it? And to be honest, I’ve loved being a woman in our industry because especially in the early days when I was young in my 20s, many times I’d be in a meeting and there were no computers at the time. So I’d be writing and everybody assumed that I was the scribe or the secretary. But no, I had a seat at the table thanks to Don Conlon, who was the chief economist there. And I would look up and ask a question and that would be like, what? What? So low expectations and surprising those low expectations is fun. It’s fun. And I think Sig Sigalas, he and Bob Keiter at Jennison, same thing. Lulu Wang at Tupelo, they believed in me and gave me tremendous opportunities. But Art Laffer, I don’t know if you know Art Laffer, Laffer Curve, supply-side economics. He was the one who introduced me to capital when I was in college, and that’s why I got that opportunity in the first place. So I think having moved around so much when I was little, And having to get used to so many new situations quickly before we were on the move again helped me, helped me just actually enjoy new situations, whether they were different meetings or different career opportunities. So for me, it’s again, as I started out by saying, the world has been my oyster. It’s not, and it is our oyster in this industry, and it’s not like there aren’t struggles, but that everyone has struggles, no matter who you are, man, woman, no matter what nationality. We all have problems, but they’re natural growing pains. And if you punch through them, you can just keep going. And again, I think the sky’s the limit. But again, I’m the product of my parents. They moved to the US, land of opportunity. And that’s how I think about the US and now the world with all of this innovation. Ahead of.
Cathie Wood: Us. Well, just two last questions. One is around looking to the future. You mentioned, I think, your venture capital fund. What is it that you see as the opportunities that in venture, perhaps as distinct from the public equity markets that you, I suppose, have made your own over the.
Aoifinn Devitt: Years? Yes. Well, the reason we waited so long to move into venture is because of the huge valuation discrepancy in innovation in the private markets versus the public markets. Now we’re seeing down rounds and they are pretty severe. They’re more severe than even we expected in some cases. And we’ve been doing research on these private companies since we began the firm. And one of the things we wanted to do to be true to our brand, which is about transparency, that’s the open source and democratization. Giving investors, no matter who they are, from retail to institutional, giving them the best we can offer in innovation. First, we started in the public markets in the ETF format— transparent, liquid, cost-effective, tax-effective. It’s been a great move for us, and we wanted to do the same in venture. So I mentioned the Titan app, social distribution for $500. A retail investor can have access, gain exposure to some of the most important private companies in the world. And we are at the table with some of the best venture capital firms who are leading the rounds on these deals for these companies. And I think the reason we’ve found some acceptance in that community is because we, because of our social strategy, are able to elevate these companies, raise their profiles, in the social world, which helps the companies attract talent and helps the VC companies with their next round in the fund, or perhaps their IPOs. So it’s a win-win, and there’s quarterly liquidity as well because retail investors sometimes cannot lock up their money for 5 to 10 years. So quarterly liquidity up to 5% of NAV. So It’s fledgling now, but we have had inflows every day, every day, even during the height of the regional bank crisis. So we know we’re onto something and we know the retail investor is pretty excited to have access to some of these investment.
Cathie Wood: Opportunities. Well, Cathie, my closing questions usually relate to key people as well as creeds or mottos. You’ve already shared quite a lot of those. So I’m just gonna ask you for one, maybe a word of wisdom, a gem, maybe something from, from your parents, from your Irish education, your short, short time there that you can leave us with in terms of the way you sum up your approach to.
Aoifinn Devitt: Life. Well, I have on my phone, it’s a picture of a framed saying that a person named Kirill Sokolov sent me in 2006. Kirill, in our industry, in 2003 I met him and his focus was on innovation like I saw no one else. And so he and I got along very well. And he sent to me in 2006 when we were having an awful year, a saying from a philosopher, Lucius Aeneas Seneca, and he’s mostly known just as Seneca. The bravest sight in the world is to see a great man, and I would say woman as well, struggling against adversity in the world of innovation. And it’s true with, if you think about Bitcoin, There are governments trying to kill it, right? And yet it’s antifragile. Antifragile is the more someone comes at it, the stronger it gets. And I feel if people adopt that in their own lives, if they really believe in something and evidence supports them, then keep going because the more adversity people or institutions put you through, the stronger you’re going to get, and ultimately the bigger you’re going to get and the more successful you’re going to.
Cathie Wood: Get. Well, that’s a perfect way to end this. I think watching your journey has indeed been a great sight, Kathy, from those early days when we first met in the early days of ARC. And I’m going to leave you with the words you may recognize from your time as a 7-year-old student in Kerry, Angharad Míle Mahaga. It’s been wonderful to watch your journey. I think you have given us the tools with which to expand our imagination by giving us the research. We have the ability not necessarily to accept it all, but to become critical thinkers ourselves, and I think arm us to look beyond the horizon to the next wave of innovation. So thank you for that service to our industry, and thank you for joining us.
Aoifinn Devitt: Here. And thank you for your service to the industry. Congratulations on all of your success, Aoifinn, and I’m not going don’t think I I have the pronunciation quite like I did in Ireland, but go raibh maith.
Cathie Wood: Agat. I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors on their personal journeys, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any.
Aoifinn Devitt: If this pendulum shift towards benchmark sensitivity has reached the extreme that we believe it has, then machines can probably do very well in that environment. You’re not going to need analysts, portfolio managers for that kind of style. What you will need analysts and portfolio managers for is anything about the future, which is really, we’re going back to the future. This is how I started in the industry. It was trying to figure out what the world’s going to look like in 5, 10, 15, 20 years. And yes, AI is all about pattern recognition, but if patterns are going to change radically, it’s going to need to see some good examples of that, and then it’ll be on its way. So I think the human mind is going to have more purpose in investing as we shift back to the future. Shift back to investing in the future instead of investing in the past.
Cathie Wood: In this series, as a special treat, we are featuring the music of one of our guests in the series, Julia Kwameah. You can find the link to Julia’s Spotify album in the show notes. I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast., a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I’m joined today by Cathie Wood, who is CEO of ARK Investment Management LLC. Prior to ARK, Cathie spent 12 years at AllianceBernstein as Chief Investment Officer of Global Thematic Strategies, where she managed $5 billion. Cathie joined Alliance Capital from Tupelo Capital Management, a hedge fund she co-founded, which in 2000 managed $800 million in global thematic strategies. Prior to her tenure there, she worked for 18 years with Jennison Associates as chief economist, equity research analyst, portfolio manager, and director. She started her career in Los Angeles, California at the Capital Group as an assistant economist. Welcome, Cathie. Thanks for joining me today.
Aoifinn Devitt: Thank you, Yvonne. Very happy to be here.
Cathie Wood: Well, since founding ARK, your profile has grown enormously, and I see from my perspective, your investing is grounded in a love for innovation and openness to change and big ideas. But also your public persona to me displays quite a bit of resilience and stamina. Usually I find that those traits are grounded in one’s upbringing, one’s path to here. So can you take us briefly through that and, and maybe what is it about that that made you the investor you are today?
Aoifinn Devitt: Yes. Well, yes, I suppose upbringing does make us who we are today for the most part. So yes, traveled around a lot. Both of my parents, Aoifinn, are Irish. You should know one from Donegal and the other from Kerry. And my father was in the American Air Force after he immigrated and really fell in love with technology. It was the dawn of the electronic age, radar systems. And so my father had a very strong influence on my love for innovation generally and how it can transform lives in the world. It certainly transformed my father’s life. So my father, I mean, there are various renditions, but he has a 6th grade education or he went through high school. I’m not quite sure, but got his education in the Irish Army, American Air Force, and moved to America because it was the land of opportunity. And my mother did the same, land of opportunity, when she was 18 and I think my father was 22. And then we moved around a lot when I was little. And so I had to, in fact, 10 times by the time I was 12. And so, I had to go in, size up situations pretty quickly, figure out who I trusted, who I didn’t trust, and became a decent judge of character, I would say. I think that shaped it. And then in terms of upbringing, of course, my education, my father’s emphasis on education, actually, education, career, education, career, education, career, production, production. So, he was always thinking about productivity. So, I guess he was, and my mother was the laughter in our lives. Thank goodness, you know, a wonderful partner for my very serious father. So yes, I think parents, education, traveling all around England, Ireland, Selma, Alabama, upstate New York, California. So yeah, I think that traveling was mind-opening. And, you know, I’m always excited about new technologies that can scale globally because, you know, I saw a lot of situations where technology really changed lives. When we first moved to Ireland, no one had a TV, no one had a telephone. And of course now they’re prolific and technology has transformed Ireland.
Cathie Wood: And just in terms of your imagination, to me is clearly what drives your belief in some of this technology. You can imagine maybe what transformation could occur. Were you creative in your upbringing and how did that then translate into your approach to investing?
Aoifinn Devitt: Creative. I don’t think anyone would call me creative necessarily. Very serious, very studious, very focused on outcomes. But I think my imagination for technology started, of course, with my father, but then at Jennison Associates, Sig Sigalis, God bless him, he just passed this year, an incredible influence on my life. He gave me the opportunity to do equity research. I had started in economics, but he wasn’t going to give me any stocks. He wasn’t going to take them from any analyst. I had to find my own universe. So I was like a little dog under the table, scrapping, you know, for bones or what have you. And what happened then is I learned about companies that fell through the cracks. Nobody wanted them. So, The first group of companies like this was database publishing. The technology analysts didn’t want it, that group, because it had publishing in it. And the publishing analysts didn’t want that group because it had database in it. So not in their comfort zones. So I took the fall-through-the-cracks companies, which now that I look back were the first signs that there were going to be convergences between and among technologies that would create explosive growth opportunities. So what happened with database publishing? It really became the internet, right, when you think about it. And so I was there and we were all struggling. This was in the ’80s, database publishing. So it was Reuters and Telerate, and what kind of business model is this? And it was the very early days of what would become a lot of the thinking on the internet. So I learned early, when nobody wants something and the old world is dismissing its relevance, then maybe you should take a closer look because there could be something big brewing there.
Cathie Wood: Certainly early contrarian indicators there, I can see. Let’s go to ARK now and your approach, because there’s so many aspects of this I’d like to discuss. First, I got to know you at the very early days of ARK. And I was struck by this research focus on innovation above all that went across many sectors and some of the openness you had, the almost the open source approach you had to your research. Can you talk about how that evolved?
Aoifinn Devitt: Yes. So our focus exclusively on innovation came out of my time in the industry, actually. And when I started at Capital Group on the West Coast, there were no computers or no cell phones at the time. We were trying to figure out the way the world was going to work, however. And so there was deep research and the focus was 5, 10, 15, 20 years out. So I said, oh wow, I really do want to be a part of this industry once I was introduced to it, because the world was our oyster and the ’80s and ’90s were golden. But starting with the tech and telecom bust, and even more so after ’08-’09, I saw the pendulum shift towards passive and towards extreme benchmark sensitivity. And because My strategies have always been very forward-looking. What is the future going to look like? This pendulum shift was going backwards from my point of view, certainly when it applies to innovation strategies, because the stocks at the top of benchmarks are there because of past successes, and we are looking for the stocks of the future. And so when I was asked to risk complete my funds, a third of them towards the S&P 500. I said, happy to do it in sister funds, so lower volatility sister funds, but our clients own this strategy for whatever reason, and they understand the volatility. That conversation evolved to the point where I said, let me just go out and start my company. And I will say, many people know this about me, so I’ll offer it up here. There is a spiritual element to this journey because, you know, I remember being very frustrated with what I was facing and walking into my house one summer day, beautiful sunshine, completely silent house. And like your house, and I know you have many, many children, mine was silent and everybody was gone for a reason for 2 weeks, camps and, and so forth. And All of a sudden, this idea came to me, boom, you have got to start your own company and apply the technologies that you have seen disrupting other industries. So what that meant to me was open source. So give your research away, become the first sharing company in the asset management space, give your research away, and you’ll be surprised at how much you get back. And that’s been Absolutely true, because we now have innovators around the world battle testing our assumptions because we give our research away not when it’s finished, but as it’s evolving. And so isn’t it wonderful to have individuals who are actually heads down innovating, but who love our top-down research trying to size their markets and how big these opportunities are going to be and what the unit economics look like. So they want us to be right. And so they’re helping us if they see us going astray with our assumptions. So we’re looking at exponential growth opportunities. And the problem with that is if we make a mistake early on in our assumptions, we can make exponential mistakes. So we really want this battle testing. So now we have social media. So we give our research away over social media, social marketing, and now social distribution on the Titan app. We launched a venture capital fund just last year and we entered social distribution. This is the only way to get it for retail investors, although we have separately managed accounts for institutional investors. So those are the technologies, but this sole focus on innovation has been so controversial And I find that interesting because if you’re in the late ’90s during the tech and telecom bubble, this wouldn’t have been controversial. Everybody wondered why they were investing in anything but the internet back then, right? And that ended badly. So psychologically right now, I feel like we’re in a very good place because the fear of innovation is palpable. The fear of investing in anything that delivers earnings, maybe not right now, but in the next 5 years is in the public markets considered almost suicidal by some. And yet that is the reason there are so many opportunities and there is so much inefficiency in the pricing of innovation in the public markets.
Cathie Wood: So interesting. And so many things to follow up on there. First, I’m going to listen to myself just so I got— first is time horizon. Then I want to talk about US versus non-US innovation. And I want to talk about fear and why we may have more fear today. So focusing on time horizon, it seems to me if you’re open sourcing your research, you’re going to obviously have many different opinions feeding into a thesis. And often time horizon can be the real rub because something made for innovation, its disruptive ability may well be true in the long term. But we made that classic idea of overestimating its impact in the short term. And whereas markets being the weighing machine that they are often, you know, look at short-term expectations and disappointments. So how do you square that? How do you sort of settle on a consensus of timeframe and reiterate, I suppose, course correct if your timeframe is off?
Aoifinn Devitt: Yes, so we center our research around Wright’s Law. So Wright’s Law is a relative of Moore’s Law, but Moore’s Law is a function of time every 18 months to 2 years. And Wright’s Law is a function of units. And it says, for every cumulative doubling in the number of units produced, so 1 to 2, 2 to 4, 4 to 8, for every cumulative doubling, costs associated with a new technology decline at a consistent percentage rate. And so what we’re trying to do is find that rate out and I can tell you in long-read DNA sequencing, that rate is 28%, and we’re at a very low base in terms of the number of whole human genomes sequenced. For short-read sequencing, that number is 40%, and that’s very important in liquid biopsies and other breakthroughs that we’re seeing here. For industrial robots, it’s 50%. For electric drivetrains, battery technology, it’s 28%. For artificial intelligence, it’s 48%. %. But the cumulative doubling in the metric that we use, it’s a metric involving data. The cumulative doubling is happening in less than a year’s time. So what it means is AI training costs today are dropping 70% per year. So once we’ve got these costs down, we assume that they will flow through into prices. You see Tesla’s cutting its prices. One of the reasons is its costs are going down. Many people think it’s because demand is weak, and that may be true, but it has the ability to cut costs, whereas traditional auto manufacturers really do not. And so we need to understand when will that price point appeal to a new sector. So we’re looking at technologies. So our analyst responsibilities are broken out by technologies. So they’re technology specialists with domain expertise, but they are sector generalists. Why? Because we think that the 5 major platforms around which we have centered our research— so multi-omic sequencing, robotics, energy storage, artificial intelligence, and blockchain technology— we believe that those platforms, which involve 14 different technologies, are going to scale across sectors. And so, we want them to be looking at different price points and when they’re going to hit and the price elasticity of demand is such that it will appeal to another sector. So, that’s how we’ve set up the firm. It’s our sole focus. And I don’t think anyone in the world is doing the kind of research we’re doing, certainly no one in the investment.
Cathie Wood: World. We’re going to take a short break to hear from the sponsor of this series, With Intelligence. I sat down with Kit McDaniel, President Americas of With Intelligence, to ask him what the mission of With Intelligence.
Speaker C: Was. But now with intelligence that we are not in the advertising business, we’re not really in the media business. Our goal is to arm asset managers and asset allocators with the data, with the intelligence, and with the access they need to do their jobs on an everyday basis. You know, we often, we like to think of ourselves as an extension of staff for both allocators and managers in different ways so that they can do business together. They can meet their peers in a more efficient way through with.
Cathie Wood: Intelligence. And now back to the show. The second question then around the US as the, maybe the global center of innovation versus other areas. And that we’ve seen US tech stocks really just continue to dominate in global indices. And they’re still doing that today with a lot of concentration. Where do you see other kind of pockets of innovation, or do you think this is US-centric? Where are you looking for.
Aoifinn Devitt: Ideas? Well, I will tell you, in the world of blockchain technology, the US is outright hostile to innovation. Gary Gensler, the chairman of the SEC, is turning innovation off in this country as it relates to blockchain technology. That’s a bit of an exaggeration, but I do think that a lot of talent associated with blockchain technology is moving abroad and we will follow it. We are talking to Israeli companies about blockchain technology and so forth. I think what’s interesting about the US today is San Francisco is still a hub, to be sure, but if you go to any major city around the United States, they all are now encouraging innovation. We moved to St. Petersburg, Florida, the Tampa Bay region, because they’re hungry for innovation and they want to use innovation to transform the community. And so we’ve been welcomed with open arms. So I think the U.S. Is still, from a DNA point of view, going to be a hotbed for innovation. Some of it’s moving away from San Francisco. San Francisco has its problems, as many major cities do. And because we all learned during COVID that we don’t have to be centralized in any one place, I do think more innovation hubs around the US and the world are going to take off. And we see from blockchain, we, we know that China focus on innovation and technology has increased dramatically. In fact, I was on a panel with the Minister of Innovation. I’m not quite sure what he was called at the time from China. This was in 2016 or ’17, and back then it was clear top priority. And I still think it is even more now with the geopolitical consternation that we’re seeing between the US and China. But we see Hong Kong, of course, as part of China, very open to blockchain. A lot of companies moving there. Singapore, London, Europe is so much better. From a regulatory point of view, shockingly so, than the US is. It had to get all of the countries to agree to this regulatory regime, and it did. So we’ll go anywhere that innovation is, and we’re also going to start using data a little bit more intentionally to find companies in the rest of the world. We work with MSCI, our research team and MSCI work together on keywords. So MSCI has innovation indexes, but they’re extremely diversified, 500 names plus. Ours are much more concentrated, but you’ll see many names there because of the keywords in other countries. And we think that’s a good leading.
Cathie Wood: Indicator. Well, let’s talk about innovation and maybe something that is scaring people around innovation. And let’s talk about AI, ChatGPT, Bard, etc. How would you say, why is is it, it at this juncture that people are apprehensive around the impact of this innovation and taking AI in particular? Do you think that accounts for some adoption trends, maybe not quite as you model.
Aoifinn Devitt: Them? Actually, we have been modeling AI since 2014 when we happened upon NVIDIA at $5 a share. It’s now over $400. We weren’t calling it AI at the time. We were calling it autonomous driving, which is an AI project. And of course, we learned very quickly, of course it’s an AI project. And of course, this is going to be the biggest play from a picks and shovels point of view out there. So we’ve had a beautiful ride and we own it in our specialty portfolios, but have pulled away because it’s at 25 times revenues and we see companies like Twilio, which has a trillion interactions between businesses and consumers recorded every year and is selling at only 2 times revenues. We’re looking at companies with proprietary data that no one else has as probably the biggest beneficiaries of AI. And so there’s huge valuation discrepancies. But why are we focused on it now and why are people so fearful? We’re focused on it Even though it has been in science fiction, we’ve been hearing about AI, and in actuality we’ve been hearing about it since the ’50s, right? But there were two big breakthroughs: deep learning in 2012, ImageNet, and then transformer architecture, natural language processing, in 2018. And then of course ChatGPT which is one of the most provocative results of transformer technology, 2020. The reason we’re hearing about it now is because, and this is always the case with innovation, the technology is ready and the costs have dropped to a low enough point. So if you had tried to build the GPT-3 model that produced ChatGPT in 2015, it would have cost $800 million. In 2020, it cost less than $5 million. Today it would cost about $400,000, maybe less. And in 2030, we think it’ll be hundreds of dollars. So the costs are plummeting here. And ChatGPT finally captured the imagination of consumers and businesses because We see how powerful it is. We can use it ourselves. It cuts the time of writing almost anything to a fraction of what it once was, assuming you’re a good prompt engineer in terms of asking it for the right thing, and assuming you’re using history and not current events. But I think that’s been really important to reinvigorating innovation. I wrote a piece at the beginning of this year called What Investors Missed in Innovation in 2022. And I mentioned AI because it really didn’t become a hot, hot, hot topic until January, February of this year. And I also mentioned a cure for leukemia, a little girl, Alyssa, in the UK. Nobody was talking about it. Investors, especially in the fourth quarter, were so depressed, so bearish that they couldn’t see straight. Now, now that we understand the power of ChatGPT and people’s imaginations are going wild, now there’s the real fear that Elon Musk and others have been talking about that there should be. And one of the best things to happen out of all of this is that Elon and thousands of others have signed documents saying, hey, hey, hey, hey, wait, wait, wait, wait, wait, this could get out of control. And when I say that, I don’t think we’re going to have a 6-month moratorium the way they wanted. But I do think they elevated the topic, the conversation. All technologies can be used nefariously, and AI is no exception. So I think that all businesses and even consumers are trying to think, how could this mess my life up? I think that’s a good thing. Again, half the solution is understanding the problem. But what we’re also seeing is businesses understand that this is the ticket because if if we’re right and the bigger risk here is deflation instead of inflation, and inflation’s coming down very rapidly now, commodity prices are down 30% year over year. So, if we’re right, then the pricing power that COVID gave companies is going to disappear. And in fact, we could see price cutting being the norm. And that means corporations have to figure out ways to cut costs If you look at the knowledge worker industry globally, we pay or businesses pay $32 trillion for the knowledge worker industry. This can probably cut out, I’m going to say, $10 trillion from the knowledge worker industry in terms of cost declines, really automating the jobs that are very boring, very mundane, and elevating people, giving them an opportunity to oversee AI and add more value and therefore raise their income potentials. So we’re pretty excited about.
Cathie Wood: It. I’d love to ask one of the things before we move on to just some more reflections. We speak a lot about how it will transform certain industries. So can you give us maybe a couple of bullet points as to how you think it will transform our industry, the investment management industry, active management? What’s the future of AI and that.
Aoifinn Devitt: Industry? Well, it’s already started it and it started with robo-advisors. And I think it will intensify because if this pendulum shift towards benchmark sensitivity has reached the extreme that we believe it has, then machines can probably do very well in that environment. You’re not going to need analysts, portfolio managers for that kind of style. What you will need analysts and portfolio managers for is anything about the future, which is really— we’re going back to the future. This is how I started in the industry. It was trying to figure out what the world’s going to look like in 5, 10, 15, 20 years. And yes, AI is all about pattern recognition, but if patterns are going to change radically, it’s going to need to see some good examples of that, and then it’ll be on its way. So I think the human mind is going to have more purpose in investing as we shift back to the future, shift back to investing in the future instead of investing in the past. When I first started ARK, I was trying to explain to— he actually was a chaplain and had no involvement with the financial industry, but he said, as I was trying to explain why I needed to start ARK, he said, “Oh, so you mean the future of investing is investing in the future?” And I said, yes. And I didn’t even know about AI because I’ve just described that to you. Back then when I said that to him, I did not know about AI in the way we know about it now. But I can see AI taking the place of benchmark-sensitive management, freeing up the human mind to think more about the.
Cathie Wood: Future. Thank you. And you did note your long-term conviction in the deflationary impulses around society. We didn’t even have time to touch on that, but that’s something that I’ve always known as characterizing you in a slightly contrarian way at times, but I think it definitely still prevails. Just want to move on to some reflections. When you look at, you’ve obviously been forecasting trends, looking to the future. When you look back at any perhaps missteps or mistakes or misjudgment in any of those trends, was there anything there where you just were too enthusiastic and it didn’t play out? Areas that you learned lessons.
Aoifinn Devitt: From? Yes. And this is one of the reasons I set ARK up the way in which I did is because of a big mistake. I mean, it didn’t cost the portfolio, but we were making a bet on satellite radio and we were making all kinds of assumptions that it would have much more ubiquitous uses, maybe thinking along the lines of streaming, but the technology wasn’t ready back then. XM satellite radio. Technology wasn’t ready and we were off base. And so I said after that mistake, and I think one of the reasons we had technology analysts at my former firm, but there was a little bit, maybe they were too polite, but no one wanted to dissuade us of this notion. You know, we’d be talking about this stock in morning meeting and just bought some more and here’s why. But there was never any pushback. At ARK, one of the things— we’re very collaborative, but one of the highest value adds from our analyst teams, our directors of research, and our chief futurist, Brett Winton, is the pushback, especially pushback to me because I’ve been around the track a number of times. So sure, I know a lot, but these young people, especially those coming straight from college, they know so much more about many things than I do. Absolutely insist that they push back. So big lesson learned there, and make sure that that conversation is live and that you’re battle testing the assumptions. And I say that’s why we open sourced as well. We want people pushing back, and, you know, we call them haters on Twitter, but sometimes they’re not hating us, they’re actually giving us some good insights Others are just pushing back. We’re a bit of a lightning rod, and so they’ll push back because they want more followers or what have you. It’s— that’s a bit of a game. But there are people out there who push back in a very good way, thoughtful way, and often it will be through a DM, through a direct message, not through a retweet or a response, because they want to help us. So That was one. Another big mistake I made was believing the business people in Mexico in 1994 when they were saying, there’s no way we’re going to devalue. And of course they devalued. And I was the analyst on Mexico at the time, and that was a pretty rough year end, I must say. So never trust that business people understand what politicians are going to do because politicians have very often different priorities than the business people we’re talking.
Cathie Wood: To. Well, it’s interesting that you mentioned pushback in a public forum because you’re known for some of the— your high conviction ideas, not being afraid to take a stance on them. Some of it is controversial. And I’d like to ask, because I think there are people listening here who’d like to have that same maybe high conviction approach, but maybe are wondering about some of the vitriol that some of the comments might— may inspire. How do you handle some of the criticism you.
Aoifinn Devitt: Get? Actually, it’s quite helpful in a way, because the more criticism we get, the stronger I feel because of our research. We have, I think, the best research team in the world when it comes to innovation. And we have done top-down analysis, bottom-up analysis. We have a scoring system around innovation. We’re looking at this 360 degrees around in a way that others are not. And so we listen to the criticism, and if we don’t have an answer to the criticism, I’m surprised, and we double down and do more research. But typically, because we do get such pushback, we do have an answer. Now, are we going to be right? I think so. I think the probabilities are very high, but of course we could be wrong. I just think the more pushback we get and the better we can answer those questions with conviction, then the stronger I feel about our investment. So it’s, it’s actually part of our research.
Cathie Wood: Process. This podcast has a focus on diversity. We ask every guest their view or the grade they would give the industry they’re in, in terms of its diversity, its inclusion. Any thoughts from yourself on that, having been in the industry now for many decades and risen to the top of.
Aoifinn Devitt: It? Having come from an industry where I was the only woman in the room, I see a lot more women at the table, which is fantastic. I see a lot more diversity. And many people ask me on that question, how did you deal with it? And to be honest, I’ve loved being a woman in our industry because especially in the early days when I was young in my 20s, many times I’d be in a meeting and there were no computers at the time. So I’d be writing and everybody assumed that I was the scribe or the secretary. But no, I had a seat at the table thanks to Don Conlon, who was the chief economist there. And I would look up and ask a question and that would be like, what? What? So low expectations and surprising those low expectations is fun. It’s fun. And I think Sig Sigalas, he and Bob Keiter at Jennison, same thing. Lulu Wang at Tupelo, they believed in me and gave me tremendous opportunities. But Art Laffer, I don’t know if you know Art Laffer, Laffer Curve, supply-side economics. He was the one who introduced me to capital when I was in college, and that’s why I got that opportunity in the first place. So I think having moved around so much when I was little, And having to get used to so many new situations quickly before we were on the move again helped me, helped me just actually enjoy new situations, whether they were different meetings or different career opportunities. So for me, it’s again, as I started out by saying, the world has been my oyster. It’s not, and it is our oyster in this industry, and it’s not like there aren’t struggles, but that everyone has struggles, no matter who you are, man, woman, no matter what nationality. We all have problems, but they’re natural growing pains. And if you punch through them, you can just keep going. And again, I think the sky’s the limit. But again, I’m the product of my parents. They moved to the US, land of opportunity. And that’s how I think about the US and now the world with all of this innovation. Ahead of.
Cathie Wood: Us. Well, just two last questions. One is around looking to the future. You mentioned, I think, your venture capital fund. What is it that you see as the opportunities that in venture, perhaps as distinct from the public equity markets that you, I suppose, have made your own over the.
Aoifinn Devitt: Years? Yes. Well, the reason we waited so long to move into venture is because of the huge valuation discrepancy in innovation in the private markets versus the public markets. Now we’re seeing down rounds and they are pretty severe. They’re more severe than even we expected in some cases. And we’ve been doing research on these private companies since we began the firm. And one of the things we wanted to do to be true to our brand, which is about transparency, that’s the open source and democratization. Giving investors, no matter who they are, from retail to institutional, giving them the best we can offer in innovation. First, we started in the public markets in the ETF format— transparent, liquid, cost-effective, tax-effective. It’s been a great move for us, and we wanted to do the same in venture. So I mentioned the Titan app, social distribution for $500. A retail investor can have access, gain exposure to some of the most important private companies in the world. And we are at the table with some of the best venture capital firms who are leading the rounds on these deals for these companies. And I think the reason we’ve found some acceptance in that community is because we, because of our social strategy, are able to elevate these companies, raise their profiles, in the social world, which helps the companies attract talent and helps the VC companies with their next round in the fund, or perhaps their IPOs. So it’s a win-win, and there’s quarterly liquidity as well because retail investors sometimes cannot lock up their money for 5 to 10 years. So quarterly liquidity up to 5% of NAV. So It’s fledgling now, but we have had inflows every day, every day, even during the height of the regional bank crisis. So we know we’re onto something and we know the retail investor is pretty excited to have access to some of these investment.
Cathie Wood: Opportunities. Well, Cathie, my closing questions usually relate to key people as well as creeds or mottos. You’ve already shared quite a lot of those. So I’m just gonna ask you for one, maybe a word of wisdom, a gem, maybe something from, from your parents, from your Irish education, your short, short time there that you can leave us with in terms of the way you sum up your approach to.
Aoifinn Devitt: Life. Well, I have on my phone, it’s a picture of a framed saying that a person named Kirill Sokolov sent me in 2006. Kirill, in our industry, in 2003 I met him and his focus was on innovation like I saw no one else. And so he and I got along very well. And he sent to me in 2006 when we were having an awful year, a saying from a philosopher, Lucius Aeneas Seneca, and he’s mostly known just as Seneca. The bravest sight in the world is to see a great man, and I would say woman as well, struggling against adversity in the world of innovation. And it’s true with, if you think about Bitcoin, There are governments trying to kill it, right? And yet it’s antifragile. Antifragile is the more someone comes at it, the stronger it gets. And I feel if people adopt that in their own lives, if they really believe in something and evidence supports them, then keep going because the more adversity people or institutions put you through, the stronger you’re going to get, and ultimately the bigger you’re going to get and the more successful you’re going to.
Cathie Wood: Get. Well, that’s a perfect way to end this. I think watching your journey has indeed been a great sight, Kathy, from those early days when we first met in the early days of ARC. And I’m going to leave you with the words you may recognize from your time as a 7-year-old student in Kerry, Angharad Míle Mahaga. It’s been wonderful to watch your journey. I think you have given us the tools with which to expand our imagination by giving us the research. We have the ability not necessarily to accept it all, but to become critical thinkers ourselves, and I think arm us to look beyond the horizon to the next wave of innovation. So thank you for that service to our industry, and thank you for joining us.
Aoifinn Devitt: Here. And thank you for your service to the industry. Congratulations on all of your success, Aoifinn, and I’m not going don’t think I I have the pronunciation quite like I did in Ireland, but go raibh maith.
Cathie Wood: Agat. I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors on their personal journeys, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any.
