SLP421 Vivek Ramaswamy – The Antidote to Corporate Woke-ism

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Vivek Ramaswamy of Strive Asset Management joins me on the show to chat about: 

  • His book Woke, Inc. 
  • How executives pursue Woke-ism as a deflection strategy
  • What investors can do about it
  • Activist investing
  • Fighting fire with water
  • How it plays into Bitcoin’s world

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Stephan Livera links:

Podcast Transcription:

Stephan Livera – 00:00:08:

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. We are 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 11th of November this year in LA, California. It is going to be awesome. There will be so many awesome bitcoiners is coming along. Michael Saylor is coming in person. Lyn Alden will be there, Pierre Rochard, Alex Epstein, Preston Pysh, 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 opportunity for those of you out there who want to connect with your fellow bitcoiners or potentially if you have some new coiner or precoiner friends, you can bring them along. So get together, check out the tickets over at pacificbitcoin.com use code livera for a discount on your tickets. 

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Vivek Ramaswamy – 00:02:58:

Good to be out. How are you, man?

Stephan Livera – 00:03:00:

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’re starting trive, and obviously you read this book. So maybe let’s start with the reason why. Why did you write this book?

Vivek Ramaswamy – 00:03:24:

Yeah. And I got to tell you, I  two books. I got to ask you which one you read.

Stephan Livera – 00:03:27:

Woke Inc.

Vivek Ramaswamy – 00:03:27:

Woke Inc. Woke Inc. Okay, got it. So I wrote Woke, Inc., and then just earlier last month, I came out with the sequel to Woke, Inc. Which I can talk about as well, but Woke, Inc, I think, is probably most relevant to our chat, to what I’m doing with Strive. Just so you had the idea of where the book came from. I had no idea I was going to be an author. This is not part of my normal career track. I started my career in the sciences. I ended up going into the world of biotech investing. I was a biotech investor at a hedge fund in New York for the better part of seven, eight years, left that in 2014 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 company, at the company’s Roivantthat opened my eyes to this new trend of 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 I couldn’t quite put my finger on it. Right. I read a lot of Milton Friedman’s old essays where he, 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 agree with all of that. But that didn’t quite hit the spot for me. Right. It wasn’t the nail on the head for what bothered me internally, what my intuition was. And so, you know, I kind of explored what I found bothersome about it. And to me, at the end of the day, it was actually the opposite concern that 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 persuasive my real concern was that it required an overreach of corporate power of people who were in the C suites on Park Avenue of an asset manager to even folks like myself who were founders of multibillion dollar biotech companies that were 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 should not have a special say in determining the outcome to. And so is that a liberal critique or a conservative critique? I’m really not sure. I’m not even sure it fits the partisan spectrum. But the core case I made was that the rise of stakeholder capitalism and its close cousins and the ESG and sustainable and socially responsible investing movements were really a threat to democracy. We’re really a threat to the decentralized power, decentralized political power. That was the premise for the birth of the modern west in the United States as we know it. And I thought that if we created a new concentration of political power in the hands of a small handful of market actors that actually created a new form 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 market force wielded by a small handful of market actors. That’s where the journey began, at least. And then it led to, I think, the rest of the insights that formed the book that I published last year.

Stephan Livera – 00:06:53:

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 this guy on TV talking about what he thinks the world should do when he doesn’t necessarily rule the world, nor should whichever billionaire you want to pick. And I think what I found interesting in your book as well is that 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?

Vivek Ramaswamy – 00:07:27:

Yeah, that was kind of what I described as rule number one of the game, which is that you pretend 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 citizenry is able to see through that act, it makes the act a lot less effective, which is part of my motivation for actually writing the book and revealing it. I think we sort of joke around a little bit. It’s blowing woke smoke as I 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 you’re BlackRock, say, the world’s largest asset manager, and, you know, I pick on BlackRock sometimes. We’re competing against BlackRock at Strive, my new business. But BlackRock, let’s just say the world’s largest asset manager. This is one example among many. You’d rather be talking about climate risks or the risks of having a non-diverse board in the United States, then 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 and you’re right, these ideas have been echoed in the last couple of years. I’m not trying to be prickly about this or whatever. I’m glad they’ve been in public discourse. But when I started talking about this, this was in February of 2020 when I first wrote my op ed in The Wall Street Journal that eventually led to the book. This was a headturner 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 where this discourse was in February 2020 when I first brought these points up. But I think that the cynical interests was also something that it took people a lot longer to see as well. I think that this is in part a cynical gameplay 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, 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 an admission ticket. And the admission ticket is you can’t criticize the CCP on the global stage at all. To criticize the CCP that’s I think going to be a denial of market access entry. But you know what? If you’re going to 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 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 Shenzheng province of China, which reveals that cardinal rule 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 all the values of modern human rights atrocities that one might have guessed that a human rights activist or a socially progressive mind would have been concerned about to shut up and keep it to yourself because that’s what allows you to aggregate profit and power in China. And so that’s just one example. But the China example lays this bear even more clearly than another example that I could give you. But at the end of the day, I think this is mostly a self interested game. If I had to say, I think there are certain authentic proponents of the stakeholder capitalist view, of the ESG driven woke capitalist view, whatever description you want to use to describe the phenomenon. There are certain people who are advancing that authentically. I think there’s issues with that, too. I think that’s equally a threat to democracy. But at least it’s authentic. I think it’s about 25%, I think about 75% of his mostly inauthentic virtue signaling. I think the problem with virtue signaling is that at some point the appearance of virtue becomes more important than actually being virtuous. Once you see that, I think that the trick no longer works, but it takes a while to see. And that’s why I took a book length work to really expose the different contours of this issue.

Stephan Livera – 00:11:56:

I see. Yeah. And so I think we see as 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 very politically neutral answer.

Vivek Ramaswamy – 00:12:14:

Exactly.

Stephan Livera – 00:12:15:

Oh, I think China is doing some things really well. 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.

Vivek Ramaswamy – 00:12:32:

Yeah, exactly. And I think that that’s the unspoken rules of the new ESG governed world sort of ESG for thee and China for me. And 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 every ethnographic axis possible against every demographic axis possible, from gender to sexual orientation to race. And by the way. That you apply your net zero emission standards and your caps by 2050. 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 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 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 nonslavery standard. When you think about a million Uighurs who are in concentration camps subject to forced sterilization, communist indoctrination and worse. It’s great if you’re Nike to criticize slavery 250 years ago here in the United States. It’s a lot less palatable for Nike’s business to criticize modern day slavery. That by the way they use to source $250 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. I think the hypocrisy works for as long as we don’t see through it.

Stephan Livera – 00:14:13:

I see. So part of the answer then is that people have to be working 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 wokism directly or does there need to be another pathway?

Vivek Ramaswamy – 00:14:26:

Yeah look I think that there’s no silver bullet to complicated cultural challenges. I do believe in a panoply, a plethora of partial solutions and I think market solutions can play a pretty hard important role. I didn’t think I was going to start another business. I really didn’t. The time I was down with my biotech career it was a business that thankfully got multiple I think it was five drugs that the business has worked on that are FDA approved 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 multibillion dollar company today. I thought I was done with my business career and thought I was moving on to writing books to a new stage of life that went on to pursuits beyond the business world but actually at the end of writing Woke, Inc. in particular I kind of looked myself in the mirror and said look if these are problems originating in our culture and in the market you got to believe that the solutions have to start in the culture and in the market too. Probably not in politics. I thought I was actually considering career in politics myself. I thought that might be a natural next step move to public service. And the problem I realized it should have been obvious to me so you could my fault for not thinking about this more clearly before that. But if you’re a lawmaker you make laws, right? So if you have a hammer everything looks like a nail. Well 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 I aimed to influence the culture as best I could by writing a pair of books going on a national speaking circuit, appearing on television more times than I care to admit over the last couple of years. But you’re moving the ball a little bit. But when I looked in the mirror and said look, I’ve been an entrepreneur before I built successful businesses, nobody was really stepping up that I saw in a 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 place to look. And to the extent I cared about having a positive impact to the market, I figured we 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 firms in the United States managing over $21 trillion of capital. It’s about as much money as the US. GDP in the hands of three market actors. And 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 that’s a large scale fiduciary breach. It’s happening at such a large scale that I think it raised even possible anticompetitive concerns. Just to run you through a thought experiment on the anticompetitive concern, if you imagine the largest oil producers in the world getting together in a room take OPEC in recent days. 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 prices go up as a result you’d call that an antitrust violation. That’s a price fixing violation. Concentrated market actors coordinating with each other to cut supply and affect consumer prices 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 anticompetitive problem because 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 anticompetitive 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 is 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’ve got a real problem on your hands. But rather than sitting around and complaining about it and writing about books and going on television and even the alternative path of going into politics and using a different bully pulpit 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 to the market. 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 going to 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. Because 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 I will say it’s a free country, obviously right? So if you, with your own money, want to tell an American oil company 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 want to 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 money, of trillions of dollars of other people’s money who don’t want to deliver that message, to still vote their shares and speak on their behalf in the boardrooms in ways that most of those owners of capital do not agree with. That’s a problem, but rather than complain about it, we’re aiming to create a market solution through the launch of Strive, which I unveiled and earlier this year and I’m happy to say is off to the races.

Stephan Livera – 00:20:15:

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 Back to the show. Excellent. And so, just to spell that out for listeners who might not be as familiar, let’s say you might be a conservative voter or a libertarian voter who doesn’t necessarily agree with certain aspects of the wokeism and the ESG stuff, and you might have your money going into a pension fund and that pension fund might be investing via one of these asset managers. And generally speaking, and you may spell out some of the details where I’m getting this wrong, but the general idea is once you get above a certain threshold in terms of votes, you tend to get more influence and more say in what happens in that company. And so what happens is, because we’re living in this age where I would argue because of fiat money degeneration and other problems, everyone’s playing this passive ETF game or even the funds are playing that game. And so people are just putting this money into the fund. They don’t necessarily understand who’s controlling it, who is influencing it. And what’s happening in practice, as you’re saying, is the Black Rocks, the vanguards and the state streets of the world are sort of being able to drive their own political agenda because of all the people just being either just putting their money to that fund or they’re forced to by government legislation.

Vivek Ramaswamy – 00:23:05:

Yeah, I think you got that mostly right. I can maybe just take a few minutes to sort of explain this. And I actually do think this has to do with your concerns, for example, about fiat money. That’s part and parcel of this problem is the use of the aggregation of literally the physical green pieces of paper by a concentrated group of actors to wield not just market power with that fiat money, but to wield political power with it that dilutes the voice of the everyday citizen of the economy. 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 Invesco or Newberg or Bergmann or you go down the list. They’re all not that different from each other. What those firms do is they then buy up shares in companies through index funds. Index funds are funds where they say, there’s an irony to this. They say, we’re too dumb to pick stocks. We’re not going to pick stocks. We can’t beat the market. We’re just going to offer you a low fee exposure to own the market because 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 buy those shares and shut up now. They show up in the boardrooms of those companies and in the shareholder votes. And 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 2050, 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 going to dock your pay. We’re going to vote against your directors. We’re going to 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 going to use capital force to pressure companies into adopting these behaviors. Now, that might be fine if that’s what the capital owners of this companies actually want. That’s free market capitalism, you could say. But it doesn’t work when there’s 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 because it’s important to, I believe in getting the best arguments on the table from all sides. When people say, oh, you’re critiquing ESG, you’re missing the point because ESG funds are a tiny portion of the total capital that firms like even BlackRock and State Street and Vanguard manage. So they say things I’ll hear. For example, I was on CNBC yesterday and some guy was trying to dismiss my argument this way was, oh, this guy misunderstands it. He doesn’t get it. There’s no such thing as an ESG promoting asset manager. They have est funds. They have nonesg 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 Vanguard or anyone else is in their ESG funds. That’s not the ESG practice I’m talking about that ESG fund. What they say is we’re going to screen in and screen out companies. So tobacco companies or gaming companies or even oil and gas companies might be screened out. And irony we’ll 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 going to 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.

Stephan Livera – 00:27:26:

Okay.

Vivek Ramaswamy – 00:27:27:

The real issue is that take the 98% of their capital under management that isn’t invested in is not invested in an ESG fund. 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. 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. And I think that’s what even companies in other sectors, from the crypto sector to Bitcoin to oil and gas to technology, whatever it is, 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 green washing. That’s 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 because I live and breathe this stuff. I’m kind of bored of that debate because 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 is all the funds that weren’t ESG funds, which is most of the capital under management, are actually quietly 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 link voting principles on behalf of clients who didn’t know that. That’s how you are using, I would say, abusing their money. Now, the other argument here in response is, okay, kid, you don’t get it, man. This isn’t about saving the world. This is about long run financial value. So 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 longrunning interests. I love this argument. Fine, 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. As recently as two to three years ago, what Larry Fink was saying was, and I’m quoting him exactly, businesses have to earn their social license to operate every day. Interesting claim, interesting idea. I love I’m an ideas guy. I love debating ideas. I talk about this extensively in my book. Look, there’s an interesting argument, 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 do not exist in the state of nature, right? Limited liability is a legal creation that says that shareholders of companies do not bear any liability for the debts and liabilities of those companies but still participate in all of the other side. That’s a legal creation that did not exist in a freedom night state of nature. Freedman 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, OK, well, you, the corporations and their shareholders owe this implicit debt back to society and have to take societal interest back and 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 of years ago. I respond to that in my book and we can get into it. I kind of go through the legal historical history and say that yeah there was a 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 because 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 power we gave you. In return the thing you’re supposed 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 exercise undue influence and power over American democracy. I have a whole book about that. We can talk about that. That’s an interesting rich intellectual debate. What happened though is when I brought that debate to the table with Woke, Inc. And it was a very successful book and I’ve been pounding the pavement on this for the last couple of years. The response of the Other side. I was hoping for an even better counterargument because I think this is how debate is supposed to work is well I level a counterargument to their argument. They level even better counterargument back and 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 maximizations. Actually we’re just saying the same thing as you got you. And by the way they had to say that because as it became evident to them their legal departments raised the fact that well actually what he’s saying is actually kind of right under the law. The law 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 got to 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 about long run financial interests. Great. Let’s have that debate. So I wrote a letter to the board of Chevron. Okay and by the way the CEO responded. That night I had dinner with their CFO at their request in New York City a couple of weeks ago. You know, 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. 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, it turns out. I think there’s no good argument for why it’s in the best business interest of Chevron. A scope three emissions gap 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 backhoes, okay, does not have a scope three emissions reduction plan. 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. The Caterpillar burns without asking Caterpillar or an Amazon Prime truck or anyone else to make a reciprocal responsibility in return. 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, the beauty of this 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 everyone who followed 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 is the proponent of. The proposal 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 adopting this proposal. So the board initially came out against it, then waddling into the debate or BlackRock State and Vanguard that say, nah, we’re actually going to vote for that proposal against Chevron’s board’s recommendation anyway to impose this scope three emissions reduction plan on Chevron 2021, this happened. So the funny thing is you got this desk 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 with the proposal, both parties agree that nothing to do with value maximization. Then waddling into the debate is Larry Fink and his allies, who then say, 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 a lie, and it’s a lie that needs to be exposed. That then, I think, exposes 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 toward a Vanguard, but by, say, the new energy fund that Strive launched in the month of August. Which, I mean, the goal is not to be an infomercial for Strive, but just to talk about the ways in which market solutions can actually provide people with added choices.

Stephan Livera – 00:36:39:

Yeah. So I’m curious as well, whether now maybe historically or reading your business textbooks, 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 equity and inclusion, whatever stuff. I want you to focus on meritocratic hiring or practices, or I want you to focus on 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 working?

Vivek Ramaswamy – 00:37:14:

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 because the way this problem came up in the first place was a group of asset managers who claimed to be passive BlackRock state of 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. 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 part of what Strive is doing 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. And 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 want to own the energy sector or the 500 largest companies in the United States in my market capitalization. In the public sector or whatever. I can do that through someone who’s going to 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 would not be a good home for your capital then. But let’s say the voice you want to bring to the table is one that tells companies to focus exclusively on making great products and services and selling them for profit and maximizing value for shoulders. That way you deserve an option, too. And that was what I saw at least as the option that was missing in the marketplace. And so in some ways, you had to play the game to change the game. If I was designing the system from scratch, it would not look the way it looks right now.

Stephan Livera – 00:39:17:

Right. But in some sense you’re fighting fire with fire, right. Like you see it like maybe these.

Vivek Ramaswamy – 00:39:22:

Activists, investors, we’re fighting fire with water. We’re fighting fire with water is the way I look at this. I  fighting fire with fire here are we the fighting fire with fire version of this, which I don’t begrudge somebody who pursues this solution it’s to say, well, you know what, you’re advancing leftwing social values in the boardroom. Well, you know what, I’m going to launch some funds that bring a right wing voice to the table that talks about abortion and gun rights and talk about you’re going to fund Planned Parenthood, as many companies do actually with your older money. Well, you know what, I’m going to push for funding a pro life cause with that money and let’s play tug of war in the boardroom. So you have ESG asset managers that work with boards of directors to fund antigun causes or 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. That was a big one in the last couple of years. Great. Well, we’re going to do this with promoting right wing values. I mean, it’s a coherent view. It’s a free country. As I said, if somebody wants to advance that view with their own money, they’re free to do it. That’s the fighting fire with fire approach. I tend to fight fire with water. It tends to be a much more effective means of fighting fire. And I think our approach is to say that we want to depoliticize extinguish the politics in the boardroom, depoliticized 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 it. And that can I share over the value that way? And that’s the voice moving to the table. I think it happens to be the voice that’s supported by modern corporate law and fiduciary duty law and 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 government and fiduciary duty canon and even modern corporate law support this view as being 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 ideas where if clients explicitly give their asset managers a mandate with their money, that’s perfectly legal behavior too. After all, capital owners are free to decide they’re the ultimate kings, right? And as a man are just a servant. I think that Larry thinks of the world makes that relationship up. Sometimes 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 adjudicator of what someone else does with their money. And 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.

Stephan Livera – 00:42:08:

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 a certain way? Is it that they all hang out in the same cocktail parties, they all want to be part of the same fashionable set? Why isn’t it that something like Strive doesn’t already exist? Why is that?

Vivek Ramaswamy – 00:42:28:

Great question. There’s no singular account. 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 2008 financial crisis. What happened on the back of the eight crisis was that you had Occupy Wall Street that landed on Wall Street’s doorstep with some legitimate beefs if you ask me. Which is to say that OK wall street firms made a lot of money when time was good, when times went bad, they got bailed out at the public fisc I was and remained to this day an opponent of those bailouts. Right? I think that was that was the original sin in this modern version of the story. So what they said was 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 Lightning, racially disparate, impact of climate change or whatever it is that you want us to do on a given day, we’ll do that. Censor, misinformation and hate speech that you don’t want to see on the internet, we’ll do all that. But we don’t do it for free. We effectively expect that will occupy Wall Street goes home and 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, it was a cynical arranged marriage between two parties who didn’t really love each other. It was more like mutual prostitution. But they got met together anyway and they gave birth to this new woke industrial, ESG industrial complex that was sort of a hybrid of government power and private power to accomplish what neither government nor private sector could accomplish on its own. And that was the dowry in the marriage. That was really the price to pay for the 2008 financial crisis and the bailout that came afterwards. I think that we’re still repaying the sins of the bailout 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 going to pursue the goals of this progressive movement itself. The opponents to Wall Street and the aggregation of capital in the hands of a small group of financial institutions. The wielders of fiat money. To speak your language. The principal opponents of that were the progressive movement. And so what they said is, okay, we’re going to 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 ESG movement. But we don’t do it for free. You effectively leave us alone to still keep doing what we want to do, generate profit and power for ourselves, for the letter of things of the world on top, but we’re going to be good stewards of not just money, but more 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 stated vanguard, literally, why are they doing this? It’s really only starting in about 2018 that BlackRock’s voting behaviors, etc. Changed as dramatically as they did. And I think that started with when President Trump, I think, basically shut the door on the Paris climate accords. That was around 2018. I think that was a big turning point where people said, look, if government isn’t going to step up or if the US government isn’t going to step up to address these shared existential challenges like global climate change, I have detailed views on the content of that debate itself. That may be a discussion for another day, but if the US government actors aren’t going to step up to address the existential challenges of global climate change, then private sector needs to do it instead. Financial institutions like CalPERS in the state of California or the state of New York or even sovereign wealth funds abroad started to say that okay. We’re not going to 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 courts. To adopting net zero standards by 2050. To adopting by the way. We’ll throw in some other things. To modern racial diversity. Equity. Inclusion standards. Okay. We’re not going to do business with you. Crucially, this part is really important. Not unless you invest our money or speak on behalf of our money that way, but unless you adopt a firm wide commitment that means using other people’s money that you manage to achieve the same goal. That was when this move began. So the Black rocks in the state truth and demand guards 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 not totally wrong what they’ll say is our clients are demanding it. Well, they’re not totally wrong because many of their biggest clients are demanding it. Like the state of California. The state of New York. But the problem is they dragged everyone else’s money along for that ride without everyone else actually knowing it. And so this has gotten really interesting even in recent weeks, where what you then see is now after I’ve been others have been talking about this 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 19 state attorneys general sent a letter to BlackRock, apparently, 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. That’s a silly idea. We don’t do it. So even though you’re accusing us of a fiduciary breach, that’s false. By the way, the state attorney general’s also included a bit about the Chinese conflicts of interest. What I love about BlackRock responses, 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 did respond to was saying, oh, you guys are accusing us of 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 City’s comptroller calls BlackRock’s response alarming. And they said, wait a minute, what are you saying? Because you told us you made a commitment to us. That’s exactly what you were going to 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 is going to give them money that generates fees for them. So back starting in 2018 to CalPERS into the state of New York, CalPERS of the California pension fund into New York where they say, oh yeah, we’ll stop these firm white commitments, paris, climate, courts, whatever you want us to do, give us your capital mandates, will adopt those commitments. But now when other people are starting to wake up and say that, wait a minute, we don’t want you exactly doing that with our money, why are you doing it? They can’t hide behind the lie and they’re trying to hide behind the lie that’s saying they don’t do that because the people on the other end of the spectrum are saying, no, no, you committed to us that actually you were going to do it. And so at the end of the day, a bifurcation in the market becomes inevitable. I think competition is a good thing and new competitors have to say that we’re going to 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 lawyer in the courtroom representing the plaintiff and the defense.

Stephan Livera – 00:49:13:

It’s a conflict of interest. It’s a basic principle that most people understand.

Vivek Ramaswamy – 00:49:18:

That’s part of why I think a bifurcation in the market becomes inevitable. And maybe the way this works is there won’t be a single $10 trillion asset manager. There might be a bunch of asset managers, each of whom manage trillion, single digit trillions or even hundreds of billions or tens of billions of pieces. And I think that that decentralized approach is a perfectly fine place for the market to settle in a new equilibrium. And that’s why I thought new market competitors as part of our route to get there.

Stephan Livera – 00:49:42:

Got you. Yeah. Okay. So I know we’ve got to finish up. So, I guess. Last question. I’m curious, 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 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 that kind of thing, or would you you’re supportive of that kind of idea?

Vivek Ramaswamy – 00:50:17:

Very supportive of that idea. 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 social positions you adopt, if any. Better or darn well be closely tied to advancing that mission. And if it’s not, we’re not going to do that over here. And if you want to work at a company that advances some other social mission, great. It’s a free country. Find that other place to work that isn’t going to be here. So I’m of course in favor of that. That’s actually really simple. Now. I personally think that even 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 statement van Gogh now. By the way. Launching their own bitcoin products of their own. Or at least contemplating doing so. I think that could be an existential threat to the future of bitcoin itself.

Stephan Livera – 00:51:17:

Okay.

Vivek Ramaswamy – 00:51:18:

I think the use of energy to mine for bitcoin, big topic of discussion, big topic in the ESG circles. 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 sub sector as well. And people miss the fact that actually divestment is the less dangerous approach because 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 I’m not of the world of bitcoin. I don’t profess to be an expert. I don’t claim to have expertise that I don’t have. But I am an avid and interested, recently curious student of what’s going on in your world. And I think that it’s not irrelevant. I think that to the contrary. I think the same threats that came from the outside imposed in on the US energy industry. It’s only a hop and a skip away to see that land at the doorstep of many other industries. Ranging from US tech companies and the way they adopt hiring standards for their engineers. To even the use of bitcoin and the way in which that might actually hamper the free exchange of decentralized capital and also even the energy required to power that segment of the economy in our capital markets. I think that that is very much on deck for the next step 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 and strive isn’t a silver bullet, I hope other market actors step up too. But it’s going to take 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.

Stephan Livera – 00:53:05:

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?

Vivek Ramaswamy – 00:53:10:

Yeah strive.com. It’s where you find Strive. You can find me that way. I reluctantly joined social media a couple of years ago, so I’m on Twitter at vivekgramaswamy. You can go to Vivikramaswami.com to take a look at my books and yeah, well, I’m not hard to find, so we’ll chat again too.

Stephan Livera – 00:53:30:

Fantastic. Well, thank you.

Vivek Ramaswamy – 00:53:31:

Appreciate it.

Stephan Livera – 00:53:32:

Thanks to those boosting on Podcasting 2.0 user Ultraticum left a message. Best pod out there. Got another one from Tacbtc saying, thank you for the content. Keep up the great work. Well, thank you for the boost, everyone. And anyone who wants to get involved with Podcasting 20, you can give that a try with apps like Fountain Breez or Podverse 2.0. Also, if you want to get the show notes, they’re available at stephanlivera.com. Thanks for listening and I will see you in the citadels.

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