The Antidote to Corporate Woke-ism

Hi and welcome to Stephan Livera podcast, show about Bitcoin and Austrian economics, brought to you by Swan Bitcoin. Today I'm speaking with Vivek Ramaswamy of Strive. Now we're talking about ESG and wokeism, how it's a bit of a distraction, as well as what can be done about this kind of thing. Now this show is brought to you by Swan Bitcoin. Swan is putting on a fantastic conference on 10th and eleventh of November this year in LA, California. It is going to be awesome. There will be so many awesome Bitcoiners coming along. Michael Saylor is coming in person, Lynn Alden will be there, Pierre Rochard, Alex Epstein, Preston Pish, Jeff Booth, Greg Foss, Alex Gladstein, and so many more. There will be three tracks in terms of multiple stages going. I'll be one of the hosts of the show. There'll be workshops, there'll be side events, and for premium ticket holders, there will be a VIP party. This is going to be a great To connect with your fellow Bitcoiners or potentially if you have some new coiner or pre-coiner friends, you can bring them along. So get together, check out the tickets over at pacificbitcoin dot com, use code livera for a discount on your tickets. Are you still using a plain old block explorer? Bitcoin has grown beyond a single layer into a fully fledged multi-layer ecosystem. Mempool dot space is a comprehensive Bitcoin explorer covering the ecosystem. You can see the mempool, you can see the blockchain, you can search transactions, you can even search lightning network channels. Channel opens and closes, and see the channel that it points into, as well as explore the Lightning Network. You can see some of the large nodes, you can see who they have channels open with, you can even see the PPM, the p-parts per million fee that they are charging. You can even host mempool.space on your own and run your own instance. Now, if you're with an enterprise, mempool.space offers customized mempool instances with your company's branding, you can have increased API limits and more. Go and find out more over at memp- Paul dot space slash enterprise. This show is also brought to you by Brains. Brains is a full stack mining software and services provider. You can use Brains OS Plus, this is firmware that's available for various models of ASIC mining machines. You can also use Brains Pool. So Brains Pool, used to be called Slush Pool, is the first Bitcoin mining pool. They've got a range of features that you can use, such as frequent and customizable payout timing. You can monitor your ASIC machines and get alerted about changes in your hash rate. You've also got access management APIs so that you can share access to your pool account without fully compromising your security, and they have VIP support for large-scale mining operations, so go and get in touch. They've also got an analytics dashboard so you can keep an eye on the Bitcoin mining ecosystem. All of this is available over at brains dot com, that's b r a i i n s dot com. And now on to the show with Vivek. Vivek, welcome to the show.

Yeah, good to be on. How are you, man?

I'm doing well. I had a chance to read your book, I really enjoyed it, and, I'm looking forward to having chat with you about obviously your book and what's going on in the world today, in the world of investing, and perhaps sociologically what's going on, in terms of culture, cultural impacts on society. So, you know, you're starting Strive, and obviously you wrote this book, so maybe let's start with the reason why.

You read. Oh, Woke, Woke Inc. Woke Inc. Woke Inc. Okay, got it. So I wrote Woke Inc. And then just, just, earlier last month, I, came out with the sequel to Woke Inc., which, which, you know, I can talk about as well. But Woke Inc. I think is probably most relevant to, to our chat, to what I'm doing with Strive. So I was just, so, just so you had the idea of where the book came from, I had

no Started a hedge fund in New York for the better part of seven, eight years, left that in twenty fourteen to then start a biotech company that I led as CEO for seven years, and I ended up seeing some things during my tenure as CEO of the, of, of a biotech company, the company's Royven, that opened my eyes to this new trend of, you know, you pick the label you want, but stakeholder capitalism is the umbrella term, this idea that companies have to take responsibility for something other than just making great products and services for their customers. But also for advancing other social agendas. And there was something about it that bothered me, and, and I couldn't quite put my finger on it, right? I, I read a lot of Milton Friedman's old essays where he, you know, I think persuasively talked about the idea that companies would be less effective at making widgets for people who need them and less profitable and reduce the size of the economic pie. So I agreed with all of that, but that didn't quite hit the spot for me, right? It wasn't, it wasn't the nail on the head for what bothered me internally. What my intuition was. And so, you know, I, I kind of explored what was, what, what I found bothersome about it. And to me, at the end of the day, it was actually the opposite concern than Milton Friedman had, opposite concern from the one that Milton Friedman had. It was less that I was just worried about the fact that politics invading the boardroom was going to make companies less effective, though I did find that, you know, persuasive. My real concern was that it required an overreach of corporate power, of people who- You know, we're in the C-suites on Park Avenue of an asset manager to even, you know, folks like myself who are founders of multi-billion dollar biotech companies that we're leading them to delegate decision-making power, not on technical questions, not on market questions, but on fundamental social and political questions that market actors shouldn't have a special say in determining the outcome to. And, and so, you know, is that, is that a liberal critique or a conservative critique? I'm, I'm really not sure. I'm not even sure it fits that, that, you know Case I made was that the rise of stakeholder capitalism and its close cousins in the ESG and sustainable and socially responsible investing movements were really a threat to democracy. We're really a threat to the decentralized power, the decentralized political power that was the Premise for the birth of the modern West in the United States as we know it. And, and I thought that if we created a, a new concentration of political power in the hands of a small handful of market actors, that actually created a new form of, of almost monarchy, a new form of monarchical power exercised through the market to settle political questions that I felt we should best settle through free speech and open debate in the public square rather than through, you know, market force wielded by a small handful of market actors. That's where the journey began, at least, and then it led to, you know, I think the, the rest of the insights that formed the book that I published last year.

Right. And I think that's something we've seen a lot of people echo this kind of sentiment as well, because on social media, we'll see people say, "Well, who made this guy king? Why is, why is this guy on TV talking about what he thinks the world should do when he doesn't necessarily rule the world? He, you know, and nor should-- whatever, whoever bil-- whichever billionaire you There's a big distraction play that is like a magician is playing this distraction game to pretend that he's not out for profit and power, but actually he is. Could you just elaborate a little bit on that?

Yeah, that was kind of what I, what I described as rule number one of the game, which is that you pretend to like you care about something other than profit and power, precisely to aggregate more profit and power. And the trick works as long as the people who are falling for it don't see it for what it is. On the flip side, once the consumers or the general population or the act, it makes the act a lot less effective, which is part of my motivation for actually writing the book and, and revealing it. And, you know, I, I think, you know, we sort of joke around a little bit, you know, it's blowing woke smoke, as I sort, sort, sort of joke around to deflect accountability from the conversations that a company would rather not have. That's a big part of what's going on, right? If, if you're BlackRock, say the world's largest asset manager, and, you know, I pick on BlackRock sometimes, we You'd rather be talking about climate risks or the risks of having a non-diverse board in the United States than you would talking about actual geopolitical risks that could impact investors' portfolios, like the impending potential blockade or invasion of Taiwan by China. But you don't talk about that risk because that's what allows you to have an asset management business in China. And so one of the things I talk about in the book, which, you know, and you're right, these ideas have, have been echoed in the last couple of years I'm not trying to be, you know, prickly about this or whatever, I'm glad they've entered public discourse. But when I started talking about this, you know, this was in February of twenty twenty, when I first wrote my op-ed in the Wall Street Journal that, you know, eventually led to the book, this was a, this was a head turner of an argument. Wait, Milton Friedman's argument was that this leads companies to be less efficient, but threat to democracy? Like, what are you talking about, man? That was sort of, that was sort of where this discourse You know, I, I think that this is, this is in part a cynical game which China plays a role, where what China's done is actually, they've created the great market opportunity for firms like BlackRock, which I was talking about, to say that, hey, you can come to the Chinese market, this could be your biggest growth opportunity of all. But you don't get in for free, okay? There's a price to entry. There's, there's an admission, admission ticket. And the admission ticket is, you can't criticize the CCP on the global stage at all, okay? It's gonna be a denial of market access entry. But you know what? If you're gonna criticize the United States or apply asymmetric standards in the United States, ESG standards to US energy companies that don't you dare apply here in, in China, great, we'll roll out the red carpet. And so that's why you see so many of these stakeholder capitalism embracing ESG promoting firms selectively critiquing systemic injustice or systemic racism or societal inequity in the United States. Without actually saying a peep about the actual human rights atrocities in places like the Shandong province of China, which reveals that cardinal rule that I just, that I just described, you pretend like you care about something other than profit and power, precisely to aggregate more of each in the United States by capturing cultural currency, by billing yourself as one of the good guys who actually cares about the, all the values of modern progress. But actually, it comes to the actual human rights atrocities that one might have guessed that a, that a human rights activist or a socially progressive mind would have been concerned about, to shut up and keep it to yourself, 'cause that's what allows you to aggregate profit and power in China. And so that's just one example, but the China example lays out, you know, lays this bare even more clearly than, than other examples I could give you. But at the end of the day, I think this is mostly a self-interested game. You know, if I had to say, I think there are Of the ESG-driven, you know, woke capitalist view, whatever description you wanna use to describe the phenomenon, there, there, there's, there's certain people who are, who are advancing that authentically. I think there's issues with that too. I, I think that's equally a threat to democracy, but at least it's authentic. I think it's about twenty-five percent. I think about seventy-five percent of it is mostly inauthentic virtue signaling. And, and, you know, I think the problem with virtue signaling is that at some point, the appearance of virtue becomes more Important than actually being virtuous. And once you see that, you know, I think that the trick no longer works, but, but it takes a while to see, and that's why it took a, you know, book length, length of work to really expose the different contours of, of this issue.

I see, yeah. And so I think we see, as, you know, examples of what you were saying when, let's say, some billionaire fund manager or billionaire supposedly legendary investor is on a TV show or an interview, and they ask their thoughts on China, and then they'll give a Politically neutral answer.

And they'll say, "Oh, I think

China's doing some things really well," you know, they'll say this kind of thing and be completely silent on human rights violations and all kinds of things. Now, to be clear, many countries around the world have all kinds of human rights violations, but it's just interesting that you're only allowed to talk about certain countries' violations.

Yeah, e-exactly, and I think that that's the unspoken rules of the new ESG governed world. It's sort of, ESG for thee and China for me, and That's, that's effectively the mantra, which is to say that if you're operating in the US, man, we really care about making sure that your board is diverse at every ethnographic axis possible against every demographic axis possible, from gender to sexual orientation to, to race, and by the way, that you apply your net-zero emission standards and your, and your caps, by twenty fifty, but without saying a peep about the, for example, last time I checked, by the way, I think it was supposed to be global climate change change that the movement was fighting, shifting those same emissions to firms like PetroChina who are picking up the projects that firms like Chevron are dropping from, from an American perspective, to actually burn even dirtier fuel over there without saying a peep about a net zero emission standard over there, or let alone a diversity, equity, inclusion standard, let alone a non-slavery standard. When you think about a, a million Uyghurs who are in concentration camps, subject to forced sterilization, communist indoctrination, and worse, it's great if you're Nike to criticize slavery two hundred and fifty years ago You know, it's, it's, it's a lot less palatable for Nike's business to criticize modern-day slavery than, by the way, they use to source two hundred and fifty dollars sneakers that they sell to black kids in the inner city who can't afford to buy books for school. That's the game that we're playing is cultivating this appearance of virtue while actually using that as a vehicle to both advance your social cachet here in the United States and to aggregate even greater market positioning and market power in places like China. And, you know, I think, I think the hypocrisy works for as long As long as we don't see through it.

I see, so part of the answer then is that people have to be woken up to that. Obviously, that's why there's books about it, that's why people are talking about this. I'm curious if you think, is there a point to try to fight wokeism directly, or does there need to be another pathway?

Yeah, look, I think that, there's no silver bullet to complicated cultural challenges. I, I do believe in a panoply, a plethora of partial solutions, and I think market solutions can play a pretty I thought I was gonna start another business, I really didn't. I, at the time I was done with my biotech career, it was a, you know, it was business that thankfully, you know, got multiple, I think there's five drugs that the business has worked on that are FDA proof products today. I had the privilege of personally working on several of them. It was a multi-billion dollar company, when I left, it remains a multi-billion dollar company today. you know, I, I thought I was done with my business career and thought I was moving on to, you know At the end of writing Woke Inc in particular, I, I kind of looked myself in the mirror and said, "Look, if these are problems originating in our culture and in the market, you gotta believe that the solutions have to start in the culture and in the market too, probably not in politics." I, I thought I was actually, you know, considering a career in politics myself. I thought that might be a natural next step, move to public service. And, and the problem, I realized, it should have been obvious to me, so you could, you know, my fault for

You have a hammer, everything looks like a nail. Well, it turns out not all problems should be solved through lawmaking, especially if you have problems that originate in the market and the culture, you might want to solve those problems through the market and through the culture. And so, you know, I, I aimed to influence the culture as best I could by, you know, writing a pair of books, you know, going on a national speaking circuit, appearing on television more times than I care to admit over the last couple of years, but that, that you're moving the ball a little bit. But meaningful way to address some of these cultural challenges through competition in the marketplace of ideas and through competition in the marketplace of products. And so I said, you know what, that might be a, a place to look. And, and to the extent I cared about having a positive impact through the market, I figured might as well start with the one sector that's upstream of all of the others, the sector that determines the flow of capital into the other sectors of the economy, that's the global asset management industry. And it turns out that's actually the industry that I think is the fountainhead of a lot of The political and social dogmas that then permeate the private market, firms like BlackRock, State Street, and Vanguard, just those three, three firms in the United States managing over twenty-one trillion dollars of capital, it's about as much money as the US GDP in the hands of three market actors. And what they're, what's, what's clear they're doing is they're using the money of those everyday citizens to advance viewpoints in corporate America's boardrooms that ironically, many of those everyday citizens who gave them the money Don't even agree with. So, so that's a large scale fiduciary breach. It's happening at such a large scale that I think it raised, you know, even possible anti-competitive concerns. I mean, I'll, you know, just to run you through a thought experiment on the anti-competitive concern. If you imagine the largest oil producers in the world getting together in a room, you take OPEC in recent days, and this is how it works, getting together in the US if they were to do the same thing and decide to cut oil production and then gas prices go up and oil That's a price fixing violation. Concentrated market actors coordinating with each other to cut supply and, and affect consumer prices, you know, that, that would be a price fixing violation. Yet somehow the top asset managers, who are the top shareholders of those companies, effectively get together and do the same thing and describe that as ESG instead, we celebrate that as virtue. No, that's an anti-competitive problem. So it's you have this fiduciary breach, small group of market actors using other people's money to advance values that the other people, the owners of capital- disagreed with, doing it at such a scale that creates an anti-competitive problem, and by the way, with the Chinese conflicts of interest that we talked about earlier, where they might tell the US oil and gas companies like Exxon and Chevron to cut production, the people who buy up those projects are firms like PetroChina on the other side of the world, and you look up who owns a lot of PetroChina as one of its largest shareholders, it's none other than BlackRock, the same firm that's actually pressuring Exxon and Chevron to cut production over here. You got a real problem on your hands And even, you know, the alternative path of going into politics and using a different bully pulpit to, to pass laws, I'm not sure laws are actually the right answer to this question. I said, "You know what? Let's solve this through the market." So, so that's why I launched Strive, which is a new asset manager. We just launched it this year. That said, you know what, we're gonna bring a different voice to the table, telling companies to get out of politics, leave politics to the politicians, and focus exclusively on delivering excellent products and services to customers, and yes, to make a profit without apologizing for it, 'cause that's what both modern capitalism and modern democracy depend upon, is citizens being able to exercise their voices as citizens in the public square while leaving it to companies to unambiguously and unabashedly sell products and services. For profit. That's the voice we bring to the table. And, and I will say it's a free country, obviously, right? So, so if you with your own money want to tell, an American oil company to, to adopt a scope three emissions cap, or tell an American technology company to do a racial equity audit, and if that's what you wanna say with your own money as a shareholder in those firms, you're free to do that, and I don't begrudge your right to do it. But what I do begrudge is a bunch of asset managers using the people of That message to still vote their shares and speak on their behalf in the boardrooms in ways that most of those owners of capital don't agree with. That's a problem, but rather than complain about it, we, we're aiming to create a market solution through the launch of Strive, which, which I unveiled in earlier this year, and, and I'm, you know, happy to say is, is off to the races.

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Yeah, you, you, I think you got that mostly right. I can, I can maybe just take a few minutes to, to sort of explain this, and I actually do think this has to do with, you know, your, your concerns, for example, about fiat money. That's, that's part and parcel of this problem is, is the use of the aggregation of literally the physical green pieces of paper by a concentrated group

Market power with that fiat money, but to wield political power with it that dilutes the voice of the everyday citizen in the economy. So, so here's how it works, okay? Hardworking everyday Americans save money, put money into a savings account, investment account, into a pension fund. That money goes into a fund that's managed by BlackRock or State Street or Vanguard. And by the way, those are just the biggest three. The problem isn't limited to them. It could be an Investco or Newberg or Bergman, or you go down the list. They're all, you know, They then buy up shares in companies through index funds. Index funds are, are funds where they say, there's an irony to this, they say, "We're too dumb to pick stocks, we're not gonna pick stocks, we can't beat the market, we're just gonna offer you low fee exposure to own the market 'cause we're too dumb to pick stocks." But the same people who told you they're too dumb to pick stocks also claim to be wise enough to know how to design an entire social universe, isn't that interesting? Where they then buy shares in those companies, they don't just Now they show up in the boardrooms of those companies and in the shareholder votes, and they-- you know, when you own a share of a company, you don't just get the financial entitlement, you get a voice and a vote as a shareholder that comes with that. They vote their shares and they advocate for policies with those management teams that tell those companies that, you know what, you also have to adopt the Paris Climate Accords as the goal that you work towards with your emissions standards, net zero pledges by twenty fifty, scope three emissions caps, if you're an oil company like Chevron, to say that you have to take responsibility not just for your own emissions, but emissions of anyone in your supply chain, either upstream or downstream, including even your own customers. Oh, by the way, your boardroom doesn't look sufficiently diverse to us along the axis of viewpoints. No, we don't care about viewpoints, but it has to be on the axis of race and gender and sexual orientation. And if not, we're gonna dock your pay, we're gonna vote against your directors, we're gonna potentially rid you as CEO, we're going to raise these as issues at your shareholder meetings because that's what the way the world needs to head. We're gonna use capital force to pressure companies into adopting these behaviors. Now, that might be fine if that's what the capital owners of this company's act- Actually want, you know, that's, that's free market capitalism, you could say. But it doesn't work when there's a, a breach of duty where the people who entrusted other people to look after their financial interests, the everyday citizens who invested their money in funds managed by BlackRock or State Street or Vanguard or Invesco or whoever else, didn't know that actually what these firms are doing is using their money to foist that agenda onto the underlying companies. Now, let me give you a couple of the counterarguments we hear, 'cause it's important to, you know, I, I best arguments on the table from all sides. When, when people say, "Oh, you're critiquing ESG," you're missing the point 'cause ESG funds are a tiny portion of the total capital that firms like even BlackRock and State Street and Vanguard manage. So they say, "Hey, you know, things are here." You know, for example, I was on CNBC yesterday and some guy was trying to, you know, dismiss my argument this way, was saying, "Oh, this guy misunderstands it. He doesn't get it. There's no such thing as an ESG

They have ESG funds, they have non-ESG funds. In fact, most of the capital they manage is in the non-ESG funds, just the regular ones. That's true. But this is again the verbal jujitsu that tries to conflate what's actually happening with the false illusion that they've created. So it's true that actually only a small portion of the money that BlackRock manages, or, or Vanguard, or anyone else, is in their ESG funds. That's not the ESG practice I'm talking about. The ESG fund, what they say is, " So, you know, tobacco companies or gaming companies or, or, or even oil and gas companies might be screened out. And the irony, we can come back to this later, is even nuclear energy companies are screened out. That's a bit of a head scratcher if you think about that. But the ESG movement is largely hostile to nuclear energy. But we're gonna screen those out, we'll screen other companies in. That's what they do through their ESG funds. I have my issues with that, but we can come back to that later, okay? The, the, the real issue is What they're doing with all of that capital is they're still voting their shares and advocating for policies with ESG linked principles. So in a certain sense, what BlackRock says, "Oh, we're not divesting from oil and gas," that's a myth. We're, look at us, we're large shareholders of Exxon and Chevron. I say, "Yeah, you are," and that's actually the problem. The problem isn't that BlackRock is really divesting from Exxon and Chevron, it's that they're invested in companies like Exxon and Chevron and changing the purpose of what those companies do. Right? And I think that that's when even companies in other sectors, from the crypto sector to Bitcoin, to, you know, to, to oil and gas, to technology, whatever it is, as those companies go public, that means you inherit these index fund managers as your shareholders. The problem isn't when they're divesting from your companies, the problem is when they're invested in your companies but show up in your boardroom through a voice and proxy votes that change the purpose of what your company itself does. So there's a whole debate around greenwashing, okay? That's the- The complaint about the ESG funds that they claim to be pro-ESG, but they're not actually advancing environmental goals or social goals because they're owning the same stocks. Okay, that's one debate to have, and, you know, I, because I live, I live and breathe this stuff, you know, I, I'm kind of bored of that debate 'cause it's just like, okay, everyone's talking about that right now, that's fine, we can talk about it too if you want. But that belies the greater problem, which is actually what I call green smuggling, which Currently using ESG values for how their shares are actually voted, so that's what I call green smuggling, that's the bigger problem. So that's the first objection you'll hear is that, "Oh, no, ESG funds are just a tiny portion of the total capital." Yeah, part of the problem is you're telling everyone that these other funds aren't ESG funds, but you're actually using ESG linked voting principles on behalf of clients who didn't know that that's how you were using, I would say, abusing their money. Now, the other argument you hear in response is, " Value. See, don't you get it? This is the way the world is going, and so this is just about capitalism. This is about actually maximizing long run interests. I, I love this argument. So, so, so fine, let's, let's have that debate out in the open, okay? First thing I love about that argument is that wasn't what these people were saying as recently as three years ago, okay? As recently as two to three years ago, what Larry Fink was saying was, and I'm quoting him exactly, "Uh, businesses have to earn their social license to

Interesting idea. I lo-- I'm, I'm an ideas guy. I love debating ideas. You know, there's a-- I, I talk about this extensively in my book. Look, there's a, there's an interesting argument. I don't- It's not one that I subscribe to, but it's an interesting argument to say that, you know what, society gave businesses benefits like limited liability that don't exist in the state of nature, right? Limited liability is a legal creation that says that shareholders of companies don't bear any liability for the debts or liabilities of those companies, but still participate in all of the upside. That's a legal creation that didn't exist in a Friedmanite state of nature. Milton Friedman never responded to this critique. I think it's an interesting critique. So I took- Several chapters in my book to respond to this critique. And so what they say is that because society conferred these great benefits like limited liability onto corporate shareholders, there's this implicit grand bargain that says that, okay, well, you, the corporations and their shareholders, owe this implicit debt back to society and have to, you know, take societal interests back into account. I find that fascinating. I don't ultimately agree with it, but I believe in airing the best version of all arguments. That's what these guys were saying as recently as a couple years ago. I respond to that in my book, and we can

Grand bargain, but the grand bargain was a different one. It was actually a grand bargain that demanded that corporations use all that power that they got from limited liability to stay in their lanes, to not interfere with politics, to not have large asset managers interfere with politics, 'cause asset managers are the ones who benefit from limited liability. BlackRock and its clients don't bear the liabilities of Coca-Cola or Nike. Great, the grand bargain that society made, and this is codified in the history of US corporate law, and I go through that in my book, is to say that, great, you have this great

To do is stay in your lane. The monster, the Frankensteinian monster, needs to stay in its cage without actually running free using other people's green pieces of paper to, to exercise undue influence and power over American democracy. So, so, I mean, that, you know, I have a whole book about that. We can talk about that. That, that's, that's an interesting rich intellectual debate. What happened though is when I brought that debate to the table with Woke Inc, and, you know, it was a very successful book, and, you know, I've been, you 'Cause I think this is how debate is supposed to work, is, you know, well, I level a, a counter argument to their argument, they level an even better counter argument back, and we, we keep debating the best ideas. That's not what happened. What they said is, "Oh, actually, forget what we said before. This wasn't about businesses earning their social license to operate. This is just about long run profit maximization. So actually, we're just saying the same thing as you. Gotcha." and by the way, they had to say that because as,

Does require you as a fiduciary to look only after the financial interests of stakeholders, and that is kind of what the law says. That was the grand bargain codified in the law. So, yeah, we, we gotta change our talk track here. So they stopped saying that businesses need to earn their social license to operate and they need to do good for the planet and good for the world. It's not about that, this is just about long run financial interests. Great, let's have that debate. So, you know, I, I wrote a letter to the board of Chevron, okay, and, you know, by the way, the CEO responded that night. I had dinner with their CFO at their request in New York City a couple weeks ago. You know, well, I can't remember when, maybe early September, it was when I was launching my second book, they said, "Would you have dinner?" We took a break during the book tour, we had dinner with them. And, and, and what I think, I think if we're honestly having the debate, the question is, why is a scope three emissions cap in the best business interests of Chevron? Not the interests of society, not earning your social license to operate, but the best business interests of Chevron. Interesting question. Well, turns out, I think there's no good argument for Demands that this oil company take responsibility for reducing not just its own emissions, but even the emissions of its customers. Caterpillar, a company that buys fuel from companies like Chevron to power its machines and its forklifts and its back loaders, okay, doesn't have a scope three emissions reduction plan. So, so Chevron adopting a scope three emissions plan says that it has to take responsibility for every unit of fuel that it sells to Caterpillar that Caterpillar burns without asking Caterpillar or an Amazon prime truck or anyone else to make a reciprocal responsibility. That makes about as much business sense as McDonald's voluntarily committing to reducing the body weight of anyone who eats a Big Mac without asking the customer to share in that responsibility at all in return. How is that in the best business interests of Chevron? The answer is it isn't. And you know what the beauty of this is, is the party who put up the scope three emissions proposal at Chevron? Was actually a Dutch nonprofit. It was founded by a former refrigerator salesman who wanted to, I mean, God bless him, I, I, it's, it's, you know, I, I, I respect anyone who follows their passions, founded a nonprofit to fight climate change. That's his prerogative. And so he put up a shareholder proposal on the ballot at Chevron that he, as the proponent of the proposal, claimed was all about fighting climate change, had nothing to do with Chevron's business interests. Chevron's board, initially, by the way, recommends adopting, against, against adopting this Initially came out against it, then waddling into the debate are BlackRock, State Street, and Vanguard that say, "Nah, we're actually gonna vote for that proposal against Chevron's board's recommendation anyway, to impose this Scope three emissions reduction plan on Chevron. Twenty twenty one, this happened. So the funny thing is, you got this dust refrigerator salesman turned nonprofit founder who puts up this proposal at Chevron. Chevron's board opposes it, but Chevron's board and the nonprofit agree on one thing, and the thing they agree on is that this has nothing to do with value maximization at Chevron. So even though they disagree whether to adopt the proposal, both parties agreed it has nothing to do with value maximization. Then waddling into the debate is Larry Fink and his allies, who then say, "No, no, no, you actually have to adopt this." But when folks like me put up the argument to say that actually the fiduciary duty laws demand that you look after not societal interests when you're managing other people's money, but their financial interests, they then say, "Oh, no, we're just looking after long run financial value. That is a farce. It is

some of these firms to legal liability, but more importantly, gives consumers additional choices for owning energy companies, not through the funds launched by BlackRock or State Street Vanguard, but by, say, the new energy fund that Strive launched in the month of August, which, you know, I mean, this is, you know, I, I don't, you know, this, the goal is not to be an infomercial for Strive here, but just to talk about the ways in which market solutions can actually provide people with added choices. And

so, and so, so that's, you know, Or, you know, reading your business textbooks, you know, you might have seen, oh, okay, there were these activist investors who might take a share in a company and then say, "Hey, I want you to stop doing this kind of, you know, equity and inclusion, whatever stuff. I want you to focus on meritocratic hiring or practices, or I want you to focus on, you know, actually making money, profitability." Do you view yourself as doing that role, or how do you see that, or is there a role for that kind of thing as a response to the ESG woke

I think, I think there is, I think there is a role for that kind of thing. I think that, it's a little bit different than the historical activist model you'd think about, 'cause the way this problem came up in the first place was a group of asset managers who claimed to be passive BlackRock, State Street, Vanguard, these passive asset managers effectively behaving like activists, voting for policies that advance a monolithic social agenda. And the same story I told you at Chevron played out at Apple, by the way, the world's largest company, that had some fringe group that puts up a racial equity audit proposal at Apple. Apple's board recommends against it. BlackRock and State Street still vote in favor of it, it carries majority shareholder support, Apple's then browbeaten into adopting a racial equity audit, which Apple then did. So, so, so this- This is, this is like a social activist style investing that created the need for what otherwise should be obvious, which is shareholders who exercise their voice by saying, "You know what, if your company, you should focus on just your products and services for profit and don't distract yourself with anything else." And so, so part of what Strive is doing through, through the funds that we launch is bringing that different voice and vote to the table. and I think that the good news is with multiple options, I mean, I'm a big believer in competition as, in, in, in decentralized competition. As a way to bring solutions to the table, is that people can then be free to decide to say that, you know what, if I wanna own the energy sector or the five hundred largest companies in the United States in, by market capitalization, in, in pub- in the public sector or whatever, I can do that through someone who's gonna exercise my voice by advancing ESG values, if that's what you want, advocated for on behalf of your dollars. You deserve a choice, and Strive wouldn't be a good home for your capital then. But let's say the voice you wanna bring to To focus exclusively on making great products and services and selling that for profit and maximizing value for shareholders that way, you deserve an option too. And, and that was, what I saw at least as the option that was missing in the marketplace. And so, you know, in some ways, you had to play the game to change the game. You know, I mean, if I was designing the system from scratch, it wouldn't look the way it looks right now.

Right. But in some sense, you're fighting fire with fire, right? Like you see it, like maybe these activist investors-

I, is, is the way I look at this. I mean, fighting fire with fire. Here, here, here would be the fighting fire with fire version of this, okay? Which, which I don't begrudge somebody who pursues this solution, is to say, well, you know what, you're advancing left wing social values in the boardroom. Well, you know what, I'm gonna launch some funds that bring a right wing voice to the table, that tell, talks about abortion and gun rights and talk about, you're gonna fund Planned Parenthood, as many companies do, actually, with With that money. And let's play tug of war in the boardroom. So, you know, you are, you have, you have ESG asset managers that work with boards of directors to fund, you know, anti-gun causes or, or, or, you know, whatever, pro-choice causes or pick your left-wing cause of the day or La Raza or the National Urban League or Black Lives Matter, you know, that was a big one in the last couple of years. Great, well, we're gonna do this with promoting right-wing values. I mean, it's a coherent view. It That view with their own money, they're free to do it. That's the fighting fire with fire approach. I, I, I, I tend to fight fire with water, tends to be a much more effective means of fighting fire, a-and I think our approach is to say that we wanna depoliticize, extinguish the politics in the boardroom, depoliticize through a fire extinguisher here to get all politics out of the boardrooms and say companies should focus on what companies were meant to do, make products and services for people who need it, do it for profit without apologizing for Happens to be the voice that's supported by modern corporate law and fiduciary duty law and, and the, in the entire edifice of modern American capitalism built in the confines of a democratic society, which also wanted to protect democracy from capitalist overreach. So I think the law and our constitutional principles of self-governance and fiduciary duty canon and in even modern corporate law support this view as being the, the only s-- supportable one under modern legal standards, I believe. But you don't have to believe that to say that, hey, there should be a competition in the marketplace of Clients explicitly give their asset managers a mandate with their money, that's perfectly legal behavior too. You know, after all, capital owners are free to decide, they're the ultimate kings, right? We're-- and asset manager's just a servant. I think that Larry Fink's of the world mix that relationship up sometimes. The ser-- when, when the, when the servant bears the illusion that he's a king, it's time to hire a new servant. And I think that we're all in the classes of servants to the actual kings, who are capital owners, who ought to be the ultimate, What someone else does with their money. And, and, you know, I think that as long as those diverse voices can exist, may the best ideas win in the marketplace of ideas in the boardroom and in our capital markets.

One other question I'm curious, is it that we ended up, like, how is it that we ended up with, let's say, these, all these big asset managers all going in this certain way? Is it that they all, you know, they all hang out in the same cocktail parties, they all wanna be part of the same fashionable set?

Like, why, why Why, like, why is that?

Yeah, great question. So, so there's no, singular account. I, it's a confluence of a bunch of factors. So some of this traces back, and I talk about this in Woke Inc., some of this traces back to the two thousand and eight financial crisis, where what happened on the back of the '08 crisis was that you had Occupy Wall Street that landed on Wall Street's doorstep with, with some legitimate beefs, if you ask me, which is to say that, okay, Wall Street firms made a lot of money when to this day, an opponent of those, of those bailouts, right? That, I think that was, that was the original sin in this modern version of the story. So, so what they said was, okay, okay, okay, guys, hold the phone. We will change the purpose of capitalism to include advancing some of the agendas you want to pursue, racial diversity and, and, you know, fighting the racially disparate impact of climate change or whatever it is that, you know, you want us to do on a given day, we'll do that. Censor misinformation and hate speech that you don

That will occupy Wall Street goes home in the new left, with its climate change and diversity and equity inclusion and identity politics obsessions, that the new left looks the other way when it comes to leaving our corporate power intact. That's the grand bargain. It was this arranged marriage, this cynical arranged marriage between two parties who didn't really love each other. It was more like mutual prostitution, but they got in bed together anyway, and they gave birth to this new woke industrial, ESG industrial complex that was sort of a hybrid of, of government power and, and private power to accomplish what neither government nor private sector could accomplish on its own, and that was, that was the That was the dowry in the marriage that was really the price to pay for the two thousand and eight financial crisis and the ba-- and the bailout that came afterwards. I think that we're still repaying the sins of the bailouts of the two thousand and eight financial crisis, where the capitalist actors who benefited from it said that, you know what, before we get the ire, the public ire and the backlash that comes from it, we're just gonna pursue the, the goals of this progressive movement itself. The opponents to Wall Street and the aggregation of, of capital in the hands of small, small group of Wielders of fiat money to speak your language. The, the, the principal opponents to that were the progressive movement. And so what they said is, okay, we're gonna enter a peace treaty and say we will use that power to advance your political objectives, using our large sums of green pieces of paper as a vehicle to do it. Hence the birth of the EST movement. But we don't do it for free. You effectively leave us alone to still keep doing what we wanna do, generate profit and power for ourselves, for the Larry Fink's of the world on top, but we're gonna be

Importantly, stewards of your political values, that's where this was born. Now, when did this really take off, though? Because you asked a more precise question about like BlackRock and State Street and Vanguard, like literally when did-- Why are they doing this? It's really only starting in about twenty eighteen that BlackRock's voting behaviors, et cetera, changed as dramatically as they did. And I think that started with when President Trump, I think basically, you know, shut the door on the Paris climate accords, that was around twenty eighteen. I think that was a big step up, or the US government isn't gonna step up to address these shared existential challenges like global climate change. And, you know, I, I have detailed views on, on, you know, on that, the content of that debate itself, that may be a, a discussion for another day. But if the US government actors aren't gonna step up to address the existential challenges of global climate change, then private sector needs to do it instead. So, so financial institutions like Calpers in the state of California or the state of New York or, you know, or even sovereign wealth funds abroad started That, okay, we're not gonna do business with you if you're an asset manager, unless you adopt a firm-wide commitment to advancing the goals of the Paris Climate Accords, to adopting net-zero standards by twenty fifty, to, you know, adopting, by the way, we'll throw in some other things, to modern racial, you know, diversity, equity, inclusion standards. Okay, we're not gonna do business with you. Crucially, crucially, this, this part's really important, not unless you invest our money or speak on behalf of our money that way, but unless you adopt a That means using other people's money that you manage too to achieve the same goal. That was when this move began. So, so the black rocks in the states, which are the vanguards of the world, if you talk to them today and say, "Hey, why are you adopting this stuff?", what they'll tell you, and they're, they're not totally wrong. What they'll say is, "Our clients are demanding it." Well, they're not totally wrong, 'cause many of their biggest clients are demanding it, like the state of California or the state of New York. But the After I've been, others have been talking about this and, and shining a light on this, okay, a lot of red states are, for example, waking up in the country and saying, "Wait a minute, you're saying what? You're doing with our money?" and then, you know, nineteen state attorneys general sent a letter to BlackRock apparently, where they were, where they were asking about these fiduciary breaches, and BlackRock's response to them was fascinating. They said, "No, no, no, we don't pressure oil and gas companies to reduce production

By the way, they didn't, the, the state attorney generals also included, a bit about the Chinese conflicts of interest. What I love about BlackRock's response is they didn't say a peep about that. They just ignored that and pretended like that didn't even exist in the letter. But the part they didn't respond to was saying, "Oh, you guys are accusing us of redu-pressuring oil and gas firms to reduce oil and gas production using voting power. No, we don't do that over here. Sorry, you're wrong." Within weeks, New York's, New Calls BlackRock's response alarming, and they said, "Wait a minute, what are you saying? 'Cause you told us, you made a commitment to us that that's exactly what you were gonna do." And so we, New York, find that really alarming. And so that reveals what's actually been going on is they've been saying whatever they need to say To whoever's gonna give them money that generates fees for them. So back starting in twenty eighteen, to Calpers, into the state of New York, Calpers, the California pension fund, into New York, what they say is, "Oh yeah, we'll adopt these firm-wide commitments, Paris Climate Accords, whatever you want us to do, give us your capital mandates, we'll adopt those commitments." But now when other people are starting to wake up and say, "Wait a minute, we don't want you exactly doing that with our money, why are you doing it?" They can't hide behind And so at the end of the day, a bifurcation in the market becomes inevitable. I think competition's a good thing, and new competitors have to say that we're gonna service those interests instead. Maybe the state of New York and the state of Texas and the state of California don't have the same interests as one another. That's okay, but that means that we can't have one hegemon representing those diverse client interests as an active voice, just like you can't have a, a lawyer in the courtroom representing the plaintiff and the defense and every- Of course, conflict

of interest. It's a

So that's part of why I think, I think, I think a bifurcation in the market becomes inevitable, and maybe the way this works is there won't be a single ten trillion dollar asset manager, there might be a bunch of asset managers each of whom manage trillions, single digit trillions, or even hundreds of billions or tens of billions apiece. And I think that that decentralized approach is a, is a perfectly fine, fine place for the market to settle in a new equilibrium, and, and that's why I thought new market competitors is part of our route to get there.

Gotcha. There is something that we've seen in, more quote-unquote crypto world, although I prefer to focus on Bitcoin only, but we've seen some of the quote-unquote crypto companies start to push against this as well. We've seen, as you might have seen, Coinbase and Kraken start to sort of do this idea of, "We're not going to be a political company. You should come here and work on the goal for the company." I'm curious, is that something that you as Strive would try to invest in, in that kind of thing, or would you, you're

supportive you know, I mean, I think it's pretty basic. If you're an organization, you have a mission, pursue that mission. Maybe it's to be a solar company, maybe it's to be a coal company, maybe it's to be a cryptocurrency exchange, whatever it is, have a well-defined mission, and everything you do, and the diversity standards you adopt, and the, and the, and the social positions you adopt, if any, better darn well be closely tied to advancing that mission. And if it's not, we're not gonna do that over here. And if you want

Great, it's a free country, find that other place to work that isn't gonna be here. So, so I, I'm of course in favor of that. That's actually really simple. Now, I, I personally think that even for, for the future of Bitcoin, I think the problem that I'm talking about here, the aggregation of capital at a scale in the hands of market actors like BlackRock and State Street and Vanguard, now by the way, launching their own Bitcoin products of their own, you know, or at least contemplating doing so, I think that could be an existential threat

Use of energy to mine for Bitcoin, big topic of discussion, big topic in the ESG circles. I think once, I, I think that once you realize the Trojan horse model works to suck the air out of the US energy industry, it can be used to suck the air out of any other industry or subsector as well. And people miss the fact that actually divestment is the less dangerous approach, 'cause at least then they're out of your hair, okay? Investment is actually far more dangerous when investment comes with sociopolitical- objectives. And I think in the same way that it's landed in the doorstep of the US energy industry, I think it could land in the doorstep of the world of Bitcoin. And, and, and I'm, I'm, I'm not of the world of Bitcoin. I don't profess to be an expert, you know, I don't, I don't claim to have expertise that I don't have. But I am an avid, an interested, recently curious student of what's, what's going on in your world. And, and I think that, it's not irrelevant On the US energy industry, it's only a hop and a skip away to see that land at the, at the doorstep of many other industries, ranging from US tech companies in the way they're, they adopt hiring standards for their engineers, to even, to even the use of Bitcoin and the way in which, you know, that might actually hamper the free exchange of decentralized, of decentralized capital and also even the energy required to power that segment of, of the economy and our capital markets. I think that that is, is very much on deck for being next up to be threatened next to the US energy industry If we don't wake up to these threats and solve the problem in ways that, you know, and Strive isn't a silver bullet, I hope other market actors step up too, but it's gonna take a, a whole plethora of these partial solutions to stave off what otherwise I think is a grave threat to both the future of American capitalism and American democracy.

Fantastic. Well, I think that's all we've got time for, Vivek. So thank you for joining me, and, just before we let you go, where can people find you?

Yeah, Strive dot com On Twitter at Vivek G Ramaswamy. you can go to vivekramaswamy dot com to take a look at my books. And, yeah, well, I'm, I'm not hard to find. So, so, you know, hopefully we can-- Hope we'll chat again too.

Fantastic. Well, thank you. Appreciate it. Thanks to those boosting on Podcasting 2.0, user altraticum left a message, "Best pod out there." Got another one from TackBTC saying, "Thank you for the content.

You can give that a try with apps like Fountain, Breeze, or Podverse two point o. Also, if you wanna get the show notes, they're available at stephanlivera dot com. Thanks for listening, and I will see you in the citadels.