Ep. 14: Britt Harris – Texas Investing Legend & Founder of Titans of Investing

Tarek: Well, when you talk about relationships, what are the qualities and characteristics that contribute to those relationships?

Britt: Memories, making memories together, having experiences together, going through things together, spending, there's no such thing as quality time without quantity time. Let me just make that perfectly clear. There's no such thing as quality time without quantity time. Because you can't pick when that special moment's going to come. So you have to spend time with people. And I've had a lot of folks, really successful people, you know, who you would think would have this figured out, you know, just say to me like, how do you make friends? You know how you make friends? You start by being a friend.

Tarek: Welcome to Yallstreet. Today, we speak with Britt Harris, investing legend and the founder of the Titans program. You don't want a cup of coffee? Yes, please. This one here is for Britt. I got you guys some special coffee mugs with the Titans logo.

Britt: Oh, thank you. Yeah. Titans cups.

Tarek: Hey, coffee. Cheers, guys. Good to have you here. College station. Yeah, break a leg. Hmm. So we're healing the divide in the country by actually having an Aggie graduate and a Longhorn graduate here at the same table. And so why don't we start with that? What is the tie that binds? It's the Titans program, right? And so I'm interested in hearing about the Titans program, Britt, and how you started it and how these two gentlemen got involved.

Britt: Titans started probably 30 years ago in my mind. And you look back and there are things that happen to you along the way that kind of add up and all of a sudden you get this crescendo moment that brings everything together. So the first thing was I was mentored by a man named Bob Buford, who was a media guy and had some tragedy in his life and restructured everything. And I remember everything that Bob said, but I remember one really important thing, which was he said to us, and it wasn't just me, you know, that success is not the top of the ladder. I'm 32 or 33 and I think I'm going to ignore this guy. So what is the top of the ladder? He said, you know, significance is more important than success. And now that I'm 67, I can definitely say that he was correct. So success is not the top of the ladder, but it's not unimportant either, but there's a higher level, which is significance. And he gave us a really good model. You know, he said, look, we're all early thirties. He said, the first half of your career is about success, that it's properly defined. It's not about making a billion dollars, although there's, you know, if you can handle it, you know, nothing wrong with it, but that's not the primary goal. The primary goal of the first half of success is, you know, finding the right person to marry, you know, starting to have a family, if that's what you want to do and being a good father or mother, the developing a strong, you know, reputation in the community, becoming a master at something, you know, building some resources, whether it's financial resources or, you know, personal resources, it's also about making mistakes. And so, Bob actually wrote a book after he'd spoken to us and he called it Halftime. And so the concept is, you know, you live the first half for success, the things I've talked about, you know, you know, in the right way. And then when you get to in the middle part of your career, that could be anywhere in your forties. I was having to be literally at 45, you know, just kind of step out of the river for a second, rather than just being swept along by it, which so many people are. And my wife and I, Julia and I said, you know, what, let's think about what's happened to us up until now. And, you know, first of all, be thankful for all the blessings that we've had. I mean, it's been very good to us, you know, thinking about the mistakes that we made and what we've learned from them. And then say, you know, we, you know, we played the first half for success. It was like a football game. The first half we played, you know, we used a running game, you know, and it's got us here. Now we're going to step out, you know, when we come out of this halftime experience, we're going to go to a passing game. You know, we're going to really focus on doing things that are significant and not just things that are success. And that really changes your perspective on things. It doesn't mean that I just kept working in the financial industry. I, you know, I went to a public fund rather than, you know, being at Bridgewater and things like that, but markets are the markets. And probably the biggest thing that we did was come up and start Titans. I thought about, you know, what do I like to do? You know, I like, you know, teaching. I wanted to teach something that was unique. And if you look at, you know, I do this both at Texas A&M and at UT, and you tell me if you, you know, what is unique, you know, what can you do that they're not already doing? I mean, that is a tough question. But what we came down to was wisdom and relationships. That, you know, college is particularly about developing technical competence. And I had a conversation with Mr. Casper here and his buddy Andrew Robertson when they were interns with me, and I asked him about their college experience. And their answer was so foreign to me, I thought, well, we've got to do something here, because their answer was, well, you know, first of all, we passed out of some unbelievable number of hours. And I'm thinking, why even go to school? The, you know, and then they talked about the classes they took and the grades that they make in the clubs that they were associated with. And I said, well, did you make any friends? Like, did you, you know, did you? And of course, these are both very outgoing people and they make friends easily, but to make a 4.0 or 3.9 or whatever, I mean, that's no matter what people say, they're working hard and it's taking a lot of their time. And so I thought about what, but it's, you know, there's a tyranny now that, that, you know, you have to have a certain grade point to get the right first job, quote unquote. Of course, you know, it doesn't matter at all really in the long run what your first job is, although it's better to have somebody who's a good boss and growing. But that's just kind of like kindergarten. It's not going to define what you're going to be, you know, 20 years later, but people think it does at the time. So I thought about what would I have said? And so they're way over here on the performance spectrum, you know, so incredibly focused on their grades. And I have four kids, I want to make good grades, but I don't want to sacrifice everything, you know, for that. And, you know, my generation, we're way over here on this side about, you know, did anybody go to class today? It wasn't that bad, but I just thought my first reaction would have been all the people that I ran around with and all the experiences that we had together that formed these long-term relationships. And then somebody said, well, did you actually get a job? And I was like, yeah, you know, I guess I did get a job. And so relationships trump everything. People trump everything. You know, you get the right to work with people because, you know, initially you're technically competent, but let me ask you, if I give you two choices, you have a boss who's really technically competent, but not that wise, or you have a boss that's sufficiently technically competent, but super wise, which one are you going to go for?

Tarek: Oh, the latter. Well, when you talk about relationships, what are the qualities and characteristics that contribute to those relationships?

Britt: Memories, making memories together, having experiences together, going through things together, spending, there's no such thing as quality time without quantity time. Let me just make that perfectly clear. There's no such thing as quality time without quantity time. The, you know, because you can't pick when that special moment's going to come. So you have to spend time with people. And I've had a lot of folks, really successful people, you know, you would think would have this figured out, you know, just say to me, like, how do you make friends? You know how you make friends? You start by being a friend.

Tarek: And time for many successful people is at a premium. I mean, that's the one thing that you have the least of. And people shortchange exercise, sleep, you know, time with family, they spend a lot of time at work. And so what you're talking about is really kind of antithetical to to what it means for most high performing executives in the corporate world. So it's.

Britt: It does. It sounds like it's counterproductive because you should be doing more technical stuff. That is just not the case. It's a long ride. And as you get further and further up in the hierarchy of things, you know, it's like everybody's moving up together. So, you know, you're the number one guy, your company, your company, your company and my company. And if we establish a relationship when we're 30, you know, we're going to have that same relationship when we're 40, 50, 60. And everybody has problems. You know, whether you're rich, poor, whether you're powerful or not powerful, there's nobody on the planet who doesn't have problems. The but the people who walk in those shoes have problems that other people don't have. And you need somebody that you can talk to who doesn't just say, hey, you know, you're paid a lot of money, suck it up. The. You always need what goes on your head. Needs to come out of your mouth. This is super important because what's in your head sounds really scary and you put out your mouth and sound that scary. What's in your head sounds really smart. That's not really that smart, you know, and and you need somebody you can trust to to do that with. And so people and this depends a lot on whether you're how extroverted and introverted you are. So this you have to sort of make that caveat. But what I really stress in Titans is the accumulation of friendships, not serial friendships. I had two friends here and then I moved to another town and I left these guys behind. I got two more and then I changed jobs and I left them behind. No, you have two, four, six. You know, if you just make two or three new friends every year, you're going to have 50, 60, 100 friends by the time you get to the age that I am. And that's probably the biggest regret that people have when they get to the age that I am and say, you know, I didn't do that all the way. I didn't do it with my family, so therefore my family relationships are weak. I didn't do it with friends, so therefore I don't have a, you know, a peer set. And it's the people that really matter.

Tarek: So Jason, how did you meet Britt and how did you respond when he was asking you these questions coming out of school and those early conversations about talking about the Titans program? What was that like?

Jason: Yeah, so I was from the age of 13. My goal was to make it to New York, Wall Street, the financial world, et cetera. And I remember, you know, going down through the A&M process of trying to get an internship. And Texas A&M has an unbelievable constituency on Wall Street, but it's still small. You know, we're in Texas. It's not an Ivy League program. And so you work through the network. A&M has an unbelievable Aggie network where Aggies really help promote other Aggies. And I remember hearing about this guy named Britt Harris, A&M graduate, very successful in the finance world. And someone, oh, it was a gentleman named Ty Popowell, gave me his email address. And I just emailed him and was shocked to have an email back to me into his HR. He's like, looks like an Aggie, looks like a good guy. Make sure you interview him. And what I didn't know at the time was they had already accepted an interview and already accepted a candidate. Britt mentioned him named Andrew, and they usually only took one intern. But because Britt emailed, they said, oh, we'll interview a second candidate, if you will. And so I get up there, get to New York and, you know, first few days. And then Britt Harris, who's the CIO of the organization, most interns never interact with the CIO, comes in and is like, hey, you're coming with me to home this weekend. I'm like, coming home with you this weekend? A little bit. Like, yeah, I don't know this guy. I don't know his family. What's the situation?

Britt: He's in my lawn mode.

Jason: And what was even scarier was the Friday comes and I'm walking with him and he throws me the keys. And I'm like, oh, my gosh, I'm driving this vehicle in nowhere Connecticut to his house. And I'm like, don't go too fast. Don't go too slow. Don't run through the stop sign. And so but on that drive was sort of what Britt referenced was the first conversation of trying to get to know me. And, of course, I answered with academic platitudes and, you know, the organizations I was building my resume and talking about my career and all that kind of stuff. And he just goes, stop, stop, stop, stop, stop. You got it all wrong. And it wasn't I didn't have a light bulb moment then. But over the course of that summer and then because I went to his house multiple times and hung out with him multiple times. Actually, one of the key, maybe where it all clicked was I had a end of summer presentation that I've been working on and I was pouring my heart into it. Right. My boss, direct boss was going to be there. Britt was going to be there. And I had all of it lined out. And Britt contacts me and says, hey, we want to do a dinner at my house on the last night. I was like, no, no, no, no. I can't. I got I got to do this presentation thing. And he's like, Jason, are you going to remember the presentation in 20 years or are you going to remember the time in my house in 20 years? Come to my house. The presentation will take care of itself sort of thing. And I would say that's sort of when the sort of light bulb sort of went on. If some of the wisdom that Britt is referencing.

Tarek: And and so. The very next year is when you launched Titans class one.

Britt: Yes, because there's a great need for it.

Tarek: After you met Jason, you said, forget I'm dropping everything. Sorry, guys. And so so that first class, then you're putting together the curriculum. You have to bring together some students to interview for the program. How many students were in that first class and how did you. Same in twelve.

Britt: Twelve students were in the first class. That's just coincidental. And they were all experimental. Jerris Casper was in that group. And, you know, when I propose this. First of all, I didn't know if I'd be any good at it. I don't know if the students would like it. Didn't know if the faculty would approve of it. So I just suggested, you know, let's just do one semester and just see how it goes. And I got 12 students. We had no idea what we're doing. We prepared like 20 years later. It's pretty much the same. But we modeled it after a Ben Franklin concept called Jun Tao. And Jun Tao is a club for mutual self-improvement. Franklin had, I think, 12 or 13 guys that he met with every Friday night. And the idea was to to, you know, help people improve themselves personally, help the group improve and help the community do things. And Franklin said that this was really the most important thing he did for his entire life. Now, in these groups, you know, I have this special privilege of being selected students myself. This is not normal. And so, you know, we try to predict, you know, try to get the students in who are have the highest level of character and have the highest ability. So our first criteria is that somebody that we trust thinks you'll be very successful in business relatively early in your career. And why does it have to be early? Because I'm 67. That's why I want to see this happen. But there's a side dime. There's just so many people that can become successful. I can tell you, talk about later, about just two or three things. If you have them, and you're going to be unusually successful. But so that's a lot of people. The second one is you have to have the kind of character that that shows us that everything that you achieve and all the rewards that you get are not just about you. You know that that we just had the time I was thinking about this. We were going through the WorldCom situation and Enron. And I was with a company that had just gone, just sold itself to another company, and they fired every single person in the company, except for me and one other person. And I was just really concerned about the type of leadership that we had. And so I wanted to help build a better type of leader. So we call it narrow path to get into later. So that's the second one. The third is that you have to be a fully engaged person. And so a lesson here is in every organization, there are three types of people. This is managerial science. There are three types of people. There are fully engaged people, partially engaged people, and terrorists. So fully engaged, partially engaged, and terrorists. So what do you know, what would you guys, you know, what does it mean? What's the difference in somebody who, what's a fully engaged person and what percentage of an organization do you think you should assume are actually fully engaged? I don't care where you are, what company you're with, how elite you think you are, these stats still apply.

Evan: I was just in the program, so I don't want to cheat and give away the answer.

Tarek: I would say 20% are fully engaged.

Britt: 30% is the answer. Only 30% are fully engaged. So remember I talked to you a minute ago about there's just a few things that you can do that will put you, make you see, just get fully engaged. And that, that will just think, that one thing, like every day I show up to work, whether the work is really interesting or not really interesting, whether it's small or large, you know, I just have my headlights on all the time. And I'm just, you know, you're, if you try to be fully engaged, your mind will be on all those kinds of things. And believe it or not, only 30% of people are fully engaged. This is worldwide. So people say, I can't ever be successful. Well, get fully engaged. If you're not successful, you're probably not fully engaged. The, you should check yourself on that. You know, then you have people who are partially engaged, which is 50% of the people. And some people just, it's, it's rational for some people not to be fully engaged. It's kind of like, I just want to do a nice job in this area right here. I don't want to become the CEO. I'm not in it for, you know, to make a bunch of money or have a lot of influence. I'm just here to pay the bills. And they do a great job with what they're having doing. But they don't really feel like they have to bring a hundred percent all the time. But then there, there's some people just can't get fully engaged for some reason. I'll give you an example. The, I had a guy working with me and he's a PhD from MIT in aerospace engineering.

Tarek: So not particularly intelligent.

Britt: Not, yeah, not at all. The super intelligent guy. And so I wanted to build a model for us. And so I went over there and I kind of helped him, you know, get started. And it was kind of like, no, you know, he's up and running. And then I'm just kind of like, look, you're up and running now. I got other people I got to deal with. So are you good to go? And he said he was, but when he came back, he just can't sustain it. So, and you got to know this as, as a good boss. The, because then the last part, 20% are terrorists. So what, what, what kind of person would be a terrorist in your company?

Tarek: Somebody that undermines the culture. Someone that is pulling in the opposite direction.

Britt: Yeah. And they don't fight out in the open. You know, they fight around the water cooler, let's go to lunch. And, you know, they sit in meetings and don't say anything. But as soon as the meeting's over, they, you know, that was really stupid. The, and normally they're the most narcissistic people you have in your company. You know, something has happened where they didn't get what they wanted. And one of the things that we humans are all genius at, there's one thing that every human being on the planet is genius at. What do you think it is? Justifying that we're good. Justifying that we're right. Justifying that we're good. And so the only way they can justify that they're right and good is the company has to be bad. And so when I, I've managed eight different companies now, and I didn't obviously always know this, but my first goal is to make that ratio 50, 50, zero. And not all terrorists are bad. Some are, but not all. Sometimes it's my fault. You know, I thought they were in the right spot and they did everything they could and they tried really hard, but it just wasn't, we were wrong. Um, and so anybody's in that category, you do everything you can to make sure that they land somewhere else. You know, that's really good for them. Anybody who's been around for a while knows that it's, it's never, that's the worst part of the job, but I don't know, the third of the time, maybe a little bit more, you'll, you'll see that person again, five years later. And they'll say the best thing that happened was, you know, they were able to get out of where they were and get to some place where they really could succeed.

Tarek: So you begin sharing some of these insights with this Titans class one, the first 12, and, uh, the, the group got together a couple of times a month in the evenings. Pretty much every, every week, every week. Okay. And so, um, was this a credited class? Of course. Yeah. Okay.

Britt: So yeah, so it was a, uh, elective Mm-hmm. And it was really funny because as we're, I, I was very new to dealing with academia and obviously spent, you know, in overall, she's fantastic, but I had no idea how silent it was. So when I said, I just want the highest character, highest ability students, I meant in the whole school, I didn't mean just in this, the finance department. And so then they said, well, okay, we'll do it for the whole business school. I kept saying, I said anywhere. So they said to me, well, okay, no, we may, we could do one from the economics department. And, and I said, we'll start there. And then, um, they asked me, do I know anybody over there? Right? No, I don't know anybody over there. You're the, you're the academics. They don't know one another across, across the spectrum. Uh, of course, when you're going to be successful in, in your work later on, you got to know things across the spectrum. And so this class now he'll have engineers, people in government, people in political science, people in computer science, obviously people in business. Um, and it really just makes a much better class when you have that, that kind of breadth of experiences that engineers come in with it, you know, it's gotta be done just right. You know, but they don't know anything about business. You know, the business people know something about business, but they don't, they're maybe they're a little slippery on terms of how they present things. Uh, but the goal of the class is, uh, that they learn a material, which I didn't say it's not going to happen. The, and it's not, it's the material is super important and it's not difficult, but college is not about learning.

Evan: It's about memorizing.

Britt: It's about memorizing something so you can pass a test. And you know, I'm not arguing with it. You just have to accept for what it is the, because you've got to get that certain GPA. And so there's a thing called strategic learner and the strategic learner has more emphasis on the first word than the second word. Their strategy is to get a high GPA, not to learn. And this is, this is how you score points in college. I made an A, you know, that's seven points, you know, the, and that's, that's the game that you are playing in college. And so you want to win that game. And, but there, if you, there was an experiment in, in, uh, Northern Europe where they had this class, let's just say it was a hundred, take a test. And what the class didn't know is they were also going to be part of this research experiment. And the research experiment was that they would later on carve out all the people who made A's. So let's just say 10 made A's out of a hundred. And a month later, the chancellor, you know, sent them a note saying, please meet in my office. He said, I'll show up in the office. And he says, you recognize people, you know, you're all in the same class. And you all, you guys who made A's, I'm sure they thought they were going to get a scholarship or some funding. Instead, he said, you know, here's Dr. and Mrs., you know, Adam Smith. And that, you know, in their hand, they had the same test that you took a month ago, exactly the same test. And here's 10 number two pencils, and there's 10 desks. And the class was, the test was 45 minutes. Take it again. What do you think happened?

Jason: Not everyone got A's. They failed.

Britt: Yeah. Everybody failed. Nobody, nobody got an A. I think the highest grade anybody got was a C because they didn't feel, I didn't, I didn't, I don't need to know this after the test is over because my whole reason is to pass the test. And by the way, I had another test three days later or two days later. If I got to move on, I, when I was probably 24 or 26, Earl Nye, who's a famous I was fortunate to work for, you know, I'm just, I'm in a little cubicle and all of a sudden he's sitting there and he says, comes in and says, Harris, I'm unhappy with our dividend. And I want you to look at this and give me a recommendation on Friday. And he leaves. What do you think I was thinking? I was thinking, we have a dividend and there are policies about it, you know, and, and, and so I rode the bus back and forth from downtown Dallas. And I thought, you know, I didn't sell all my books. I kept a few. I could, I said, I kept three of them. I wonder if there's anything about dividend policy in those books. So I, I get back, I see it now it's green and red, of course, pull it down, look at table of contents, chapter five, dividend policy. I'm going, what, why, this is obviously important. Why would we skip this chapter? I turned it to chapter five. I'm an over highlighter. I don't know how you guys are, but, but it's all highlighted. But I thought I never bought, I never bought a new book. So, and then I noticed scribbling all over the page and everybody has unique handwriting. I certainly do. And there was no doubt that I had been there and I dwelt on that page. And guys, I could not conjure up as hard as I tried any memory whatsoever that I'd ever seen this before. I just went through the motion. I obviously got through it, but that day, because now I'm in the game, it makes a huge difference when you're in the game as opposed to when you're in practice. So now on Friday, I've got to report. Now let me just say before I say this, dividend policy is not like the most riveting subject, but when you've got an order from the CEO and three days to figure it out, it is very riveting. And so what I passed, but never learned, now every single, oh my gosh, you know, there's, oh, there's four or five different types of dividend policies. You can't know this. You know, I think this is the one. It just lights up, you know, because you're in the game. So, so that's, they meet a lot of really great people and they probably remember the people more than the message.

Tarek: Well, I was just going to, going to mention that is you mentioned at the outset, the importance of forming relationships and memories and unique to you, unlike most professors is being in the corporate world and CEO of Bridgewater and your time of rise and you, Timco and TRS, you're connected with all of these powerful and influential and experienced executives that you then bring into the program and create these lasting memories. And it's probably a good segue to kind of pull you in here, Evan, because you just recently graduated from the Titans class at UT. I don't know if he graduated, but. Well, you somehow snuck out. What was, what was your experience like? What was the journey? Like, why did you want to be part of Titans? What had you heard about Titans and, and explain what the, what the experience in the program was?

Evan: Yeah. I mean, I think it, for me, it starts, like it started a relationship. I had a friend who was a year older than me, who I respected a lot, who had told me, you have to take this Titans class. You get free food.

Britt: Because that's a big draw.

Evan: Takes us out to dinner, right? After every single class.

Tarek: Also not common amongst most professors.

Evan: No, not, absolutely not. He said, you get free food and this professor, you call him by his first name, Britt. And I was like, that's good enough for me. Kind of all I need to know, you know, pretty easy. But he had also said a lot of things about, you know, you talk about technical skills, but he cares about you as a person. And so, you know, it was my last semester of college. I was like, yeah, why not? I'll, I'll interview for this class. So I go through the interview process and I remember that asked me what the most recent book that I read was. And at Casper Companies, we read a lot before that. I did not read a lot, but I had just read Screwtape Letters by C.S. Lewis. And I was like, thank the Lord that I just read this. So I wrote about that. I answered a couple other questions. I went to the interview where actually I met Jason and somehow got in, in the program. And I think that the biggest thing that stuck out to me from the get go is a lot of times there's either this obsession with ambition and obsession with success, or there's almost a demonization of it, of it's a bad thing. And I think what Britt did is he says, I want highly competent people. I want people who have a high ceiling and I'm going to use what they've already built, those high GPAs and this work ethic that they have. I'm going to use what they've built, but I'm going to tell them what really matters is their relationships, is the people, is the integrity, is your, your moral standards, how you treat people, how you love your neighbor. And if I can combine those two things, then I can have a part in a significant part in sending out men and women into the workforce who not only have the technical or the just competence to do really well, but change people's lives because they matter. And that was the, the overarching lesson that was taught over and over and over again. And then we also got some pretty awesome people came in. Who came into the program? We had Robin Diamante, very successful CIO.

Britt: And he runs a hundred billion dollar fund.

Evan: And we talked about China. We talked about climate change. We talked about AI. We just, we talked about things that mattered and Brit has a way of talking about financial history. That's pretty mesmerizing. I was telling you this last night and you sit there and you listen for two hours and you go, oh, that makes sense.

Tarek: So Jason, Evan just mentioned that you were involved in the interview process. So Brit brings back former Titans to come and interview the new classes. What was it about Evan that was, that you felt was the, made him a good candidate for the program? I'm interested to hear this.

Jason: Yeah. So the process is you have to be recommended by a professor or current Titan or someone connected with the Titans program. I mean, back to relationship, Brit believes that, you know, great people know great people. And that is one of the highest endorsements is if a former Titan says, no, this guy or girl will be a potentially great Titan. And then from there, like you said, there's a process and filling out things. But then one of the most important gates is Brit brings back former Titans, does a dinner and the former Titan sits with somewhere between eight and 10 of the candidates and just gets to know them. And are they people of character? Are they people of competence? Are they interesting people? You know, sort of those, those three. And I remember at the table that Evan was at was a very high quality table. And there were, you know, four or five who were really sort of Titans potential material, if you will. And you just fill out and say, you know, what the things are that are highlighted. And for, you know, Evan, I think his communication skills, his ability to versatile from topic to topic and have in something interesting to add to the conversation. The fact that he was sort of an entrepreneur and already working in business during most of his college career, you don't see that a lot. And so it was, you know, more than anything, it's like, this is interesting person who's smart, who has competence. He should be considered in the pool sort of thing.

Tarek: You know, you talk about communication and I often say it's one of the most underappreciated skills and one of the least taught skills in school is how do you communicate well? And that ties into the relationship piece. Building relationships is often about being a good listener, being a good communicator, being empathetic. And my experience with the Titans program, having been sort of on the periphery as a sort of an honorary invitee to some of the events is I feel like that there is a pretty big emphasis on communicating well.

Jason: Yeah. And I was just about to say that. And, you know, Brett, maybe you can talk a little bit about the Titans jokes, entertainment committee and then various committees on how basically everyone gets up during the Titans program or during the Titans class.

Britt: Yeah. So you're exactly right. There's, you know, we've gotten to where everything is through a computer. You know, it's, you know, people hardly write at all anymore in terms of like full sentences and text message shorthand and things like that. So so. And. There's a tyranny of of success in that. These young people are terrified of failing, which is a horrible thing to be terrified of, because if you're not willing to fail, you're just never going to go close enough to the scientists to. So so, you know, they're very careful to try to maintain their like, I know everything. So so we start off every class with Titan entertainment and. I'll select the Titan entertainment, do some trickery, you know, send it out an email and I write long emails and two thirds of the way through a little line that says, if you don't the last four people to contact Sharon, my assistant, you know, we're going to be tight entertainment and they'll sing a Willie Nelson song or they'll have a dance or they'll do a poem. One of the things we like to do is they have to wrap the poem if would be an example. And. They have to go up there and do something that they're not good at. And initially, they're they're kind of very hesitant. But over time, I was like, look, you're not good, just you can be hesitant and look foolish or you can just dive in and do your best and people will love it because they know you're not a professional. So you got to kind of penetrate that because. These students. And this goes back to strategic learner. They won't take risks. So, for instance, in school, if what I'm said, I love botany and just I don't know why, but, you know, I'm not a botany major and I say, hey, that's fantastic. We have the best botany teacher in the country here and you can take the botany class as an elective. Their first question is not going to be or response not going to be, oh, fantastic. Where do I sign up? You know what their first question is going to be. How many people get A's in there? And so if the answer is not very many and strictly the botany majors, they're out of there as fast as possible because it upsets their strategy. And we're trying to move people to deep learner. You know, a deep learner is somebody who will be prepared and they may he or she may think, no, I'm good. You know, I'm going to make an A or 90 or 95 and they make a 79. If you're a strategic learner, 79 is like slit your wrist time. I have to go tell mom or dad or somebody or I'm going to lose my scholarship or whatever it is. They're just petrified. Where a deep learner, which is what they become later on, says, oh, you know, I thought it was a 95 and I didn't realize only a 79. So therefore I need to keep going because I'm not where I want to be. And that's school doesn't really allow for that.

Tarek: Yeah, it's interesting. I mean, Jason uses the word fail. We talk about failure a lot and um, any successful entrepreneur, anybody who is a deep learner must by necessity fail repeatedly. Uh, we internally at Casper companies, we, we have this expression plan, do check adjust. Um, whether you are, um, learning how to play the piano or learning how to play the guitar, it's a series of incremental failures until you, you rise to the top. And, um, you know, I, I don't think that failing defines people as a failure. And that's what most people fear is that if I fail, I will be a failure. And I say, it's, it's like, um, going to the gym and lifting weights doesn't mean that you're a weightlifter. Even if you go and lift weights three times a week, it doesn't make you a weightlifter. Uh, so I think part of this is having the confidence and the willingness to take the risk to fail in order to exercise the necessary muscles that it takes to improve. And that also applies to relationships as, as we interact with people, you know, certainly there are moments that we regret. Uh, there are times that we get angry, there, there are learnings in leadership throughout the years. And, you know, again, Jason and I talk a lot about the improvements that we systematically try to make every year to become better and better at building those relationships, but that's all built on a string of failures.

Britt: Yeah. So what, um, when you meet somebody, all three of you, you don't know anything about them, just met them. Do you assume that they're fantastic? Or you say, I don't really know about this person. I'll have to wait to see what they're capable of.

Tarek: That's an interesting question.

Evan: I don't know, probably leaning towards the second. I think, I think the first, um, the first impression matters more than I would like, like it to, but I would like to admit if I really liked the person the first time I meet them over the moon, greatest person ever. If I'm like, eh, then it's, it's harder to, um, overcome that.

Tarek: Yeah. I think this is going to sound, uh, superficial, but I think much of it depends on how the person appears and interacts in the first couple of minutes, kind of make these immediate decisions as to whether or not you think this person is capable and competent or not. When the first time that I met you, like within the first minute, I said, no, not quite the way I just, I felt like you were a charity case that, you know, for philanthropic reasons, we should bring on board the company.

Evan: So I'm pro bono.

Tarek: Jason, what are your thoughts?

Jason: Um, I probably lean, um, uh, towards the second, you know, I think today in today's world, and we haven't even talked, talked about all the direction that it is with AI and all that kind of stuff, it builds in doubt and questions and all that kind of stuff. And unfortunately, you know, I think that's, uh, when, when you meet somebody, uh, and especially as, as, even as you climb up the ladder, you feel, see a lot of people trying to get something from you, if you will. And, you know, it's like, okay, what's their angle. And then if I can figure out their angle, then open up to, you know, move towards, um, the first, the third amazing person, but it's probably my honest answer.

Britt: So the better answer is answer number one, regardless of how they appear or that you assume the best, um, for one, one reason is they will live up to your, what you assume, you know, maybe nobody else assumes they're the best, but you do. They will live up. They will try to, you give them a higher stand. They'll live up to what you want. Uh, and what really is what, what, um, in the end is, uh, you know, makes them so much happier and so much better. Probably the most common thing in people today is low self-esteem. People do not need another person to tell them that I doubt you, or, you know, you're, you made this mistake or that they didn't, we don't need another person to tell us. We got a whole society of people who are critics and do that. We don't have enough encouragers. Encouragement is, is the lowest gift. And you know what encouragement means, what it stands for, to instill courage into somebody. It's not really complicated. Encourage. I'm going to try to put encourage into the three of you. You're not going to do that by, you know, thinking, you know, when you prove yourself, you know, then I'll, then, you know, then I'll start paying attention to you. You have to, I believe, and everybody can have their own opinion, you have to set a higher standard and, and encourage them to live up to it. Now you, that, the downside with that is sometimes you get really badly hurt, but it's a way lower percentage than you think it would be in the beginning.

Jason: And this isn't with somebody that you're just meeting, but at Casper Companies is something we try to codify, right, through, we say it all the time, assume good intent, right? And, because what I think you find is that most people want to please the other person in front of them, want to win. And so if you assume good intent, you know, sort of what you were referencing, it brings up the other person to a winning standard and opens your mind to things that you may not be able to see otherwise.

Evan: I think I can attest to that too with, with really with all three of you being mentors of mine and spending significant time with me. I think before I met Britt and then started working at Texas Precious Metals and Casper Companies, sure, you have confidence in yourself because you can get a good grade, but nobody really other than your family has taken that level of, of, of emphasis in you. And the fact that you show up into this class with Britt Harris and a lot of very, very highly competent other kids of your peers that you have been in class with them and you know just how amazing these guys are. And he has you talk about markets. He has you talk about investing. He has you make a mock hedge fund portfolio. He does all this stuff and he instills this level of confidence in you. And it's been just adjacent to that of my time working here. You say like, yeah, maybe I can do it. You know, maybe I can do that. And there is a level of, of course, confidence, not cockiness, but from a younger person's perspective, I don't think that you can downplay how important that is and how many more people need that and how much I have, have, you know, just been blessed by it.

Tarek: Brett, would you say that in society the trend is towards greater insecurity at the individual level? Oh, there's no question. And is that?

Britt: That's highly documented.

Tarek: And, and I'm wondering maybe some of the causes, maybe you can, you know, pontificate as to the reasons, but it strikes me that when, when families have gotten smaller and have spread out throughout the world and historically, you know, you, you'd live in a village or you'd live in a community and you'd have your grandparents around and your parents and, and your neighbors and your friends, and you'd grow up in this structure. And that, that structure, that community built in, in, in kind of created a sense of security for you and helped establish that confidence. And the communication was very verbal. The relationships were very intimate. And today with technology, as we talked about people being alone, we can sit in the same room and everybody is on their phones. Community is much more dispersed. Even, even the, the suburban pre-planned communities, you might not even know the neighbors right next to you. I'm curious if, if these factors have contributed to students coming out of college with, with, you know, greater and greater feelings of insecurity. Sure.

Britt: Just, just think about how friend has been redefined. You know, you friend somebody that makes you really that, you know, that's a, you friend somebody that makes you an intimate friend. I've got 5,000, you know, people who friended me. That's not accurate. The, the whole, the whole point of Titans really, there's so many different ways you can say it, is to get you to think correctly. All right. And we're talking about low self-esteem, but that's not an accurate picture of who you are. You know, you're, it's like, you're trying to see over here, but your head's looking this way. You know, we got to get it back over here. You know, it's not an accurate picture of who you are and it's a limiting picture. And the more you continue down that path, the more you're aligned to yourself and limiting your maximum capacity and your joy in life. And who wants to go around like this all the time? The, uh, so I'll tell a story that Harvard came and wanted to benchmark Titans. Get that phone call and I'm kind of like, well, you know, shouldn't this be the other way around? The, but, but, you know, they came down and, and they watched the class and then the professor came to the dinner at our house. And then these, these students leave at ungodly hours. And it's like 1130 at night or, you know, finally everybody's gone. And he and I are sitting on the back patio. And I said to him, you know, so what do you think? And he said to me, there's no comparison. Now, one of the things we try to teach is never be defensive, always be curious, never be defensive. But I think he's going to tell me that my students don't compare well to his students. And I'm about to be a little defensive. The, and he said, well, number one, uh, your students are working together. And my students, I said, well, what are you, what are your students do? Well, they work against each other. And I've, I've got four case studies at Harvard and I've taught at Harvard many times and I love Harvard students, but that's just, that's the way they set it up. If my mother died and I missed the class and I asked you guys to show me your notes, maybe one of the three of you might show them to me. So that didn't surprise me. But then he said, your students have healthy self-esteem. And I said, well, yeah, like what do you, what do your students have? You know, these are the ones that got through the little keyhole that everybody's trying to get through. Are you telling me that they're arrogant? What's, what are you trying to say? He said, no, most of them have low self-esteem. And it didn't make sense to me at first. So I don't, that doesn't compute. How could these people who have this high achievement have low self-esteem? And he leaned back and he said, well, Britt, you got to think about how they got there. And in my sports terminology, you know, the kid went out for the soccer team in seventh didn't make. And somebody said, are you kidding me? That's not even a good team. What's wrong with you? And the next year they went out again and they made the team. And the person said, so you're a starter, right? Not a starter. And what's wrong with you? And then the next year, they're a starter. Are you the highest scorer? No. What's wrong with you? You're a high school. Are you all district? What's wrong with you? So they climbed this ladder and they never, they never achieve any approval. So they get through, they get really high achievements, but they were never good enough. And it is a, it is a real tyranny because if you have a bad boss and he knows anything about, you know, how to manipulate people and you have, you know, you don't feel like you're good enough, which what are, what do they call that? Survival? What is it? Survival or something like that. Imposter syndrome. Like you're always like, I'm imposter syndrome. You're not an imposter. That is a lie, but you have to call it for what it is. And they really struggled. I was really surprised by that.

Evan: I would love to talk about how you instill, instill courage in Titans, because I don't want it to get misrepresented that you're always just, you know, cheerleading, cheerleading, cheerleading constantly, and that you're giving any level of like false sense of confidence to us. Because I think the way that you actually do it is very interesting. And I would love to, to hear you talk about it. You know, we talked about the, our entertainment team and how, you know, how is, how is going up and singing a song or rapping a poem or, you know, doing something that's seemingly silly and still encouraging people. Well, it's the first time for a lot of us that you get up in front of your peers and you act a fool. And then after you act a fool, you go out to dinner and you realize like, oh, they don't think less of me. I can have a little fun. And then we have the investment team and we have the economics team who go up and give presentations. And you say before, I'm going to be dead honest with you guys. And I'm doing it because I love you. Because one day you're going to be in this position where you're presenting to a board or something. And if I don't do this now, you're going to get berated in that, in that, that time. And so you instill courage, not through just, you know, blind optimism, but you instill courage through showing us kind of hardship and being, being completely honest with us and telling us that the only reason I'm doing this and that I'm being hard on you is because I believe in you and I love you. And I know you can do it. And by the end of the class, I mean, the investment team is going up and I mean, having amazing presentations. The whole class wants to get up for, for entertainment and rap a poem. I mean, it's, it's amazing how you do it.

Britt: Well, it's super important. And so I'll give you an example and also a best practice. The most important thing that I ever put into any company was something I did at the very end. So I'm big in culture. You know, great companies have defined cultures that are extreme and you either feel great about it or you don't fit in. So I'm really big on culture. And, and normally I try to let it come from the bottom up. You know, what do you guys want the culture to be? And then they'll say what they want and I'll modify it based on some experience. And we, we never have a culture until 90% of the people vote that they're abide by it. Not a hundred. We're not going to wait for the last person to get on the train, but you know, and so, so, but there's a scripture that says, speak the truth with love. And if I were to say one thing to do that's totally transformative is to put this into your life and into your family and into your culture, speak the truth with love. Five words and nobody can do all five of them because it's three different things. Do you speak? You know, do you get your voice out there? And that's the biggest problem. Most people, they, they, for confidence reasons or energy reasons, or maybe people won't let them, whatever it is, they just never speak. They might be able to tell the truth and they might be able to say it with love, but they doesn't matter. These people need to realize it doesn't matter because if you don't get it out there, you're not contributing. The second one is you hold yourself accountable for truth. Now I'm the chairman of a group called the San Jacinto Project, which is, was like the top hundred, you know, Americans that are involved in the energy transition. And these are very strong-willed people, scientists and so on. And so with, you know, we said we're going to have everybody speak. And when you go, when you go to speak and present, you're going to say ahead of time, this is my story, or this is a fact. Because we're very interested in your story, but people think they have to portray their story as an absolute fact or nobody's going to listen to them. So, and we do the same thing if you're talking, if you're a really strong-willed person and you're good at speaking, you can make things sound like facts. They're just your opinion. We're interested in your opinion, but we don't. And then the last one is you say it, you can do it with love. So you have a lot of people who speak, they stick to the truth, but the way they say it is so off-putting that it doesn't matter. So for me, I want to speak, I want to stick to the truth, and I want to try to say it with love. And that's five words. If every single person in your company or any company or in your family did just those five words, the sky would be the limit. And, you know, so in this situation, I'm thinking about a time that, you know, it happened to be the interns that we had, and they were all going to make a presentation, and the first person to make the presentation was a guy named Jose, and I happen to know that Jose was going to be in Titans in the following semester, and he went up and he's a fantastic young man, fantastic young man, but the presentation was horrible, and I raked him over the coals. I raked him over the coals. Normally, there were special circumstances like these, I was going to see him again, and I knew that these people who were observing would never, if I didn't do it right then, they would never get the benefit. But, you know, people in my company rightfully came to me and said, I don't see how that's speaking the truth with love, and yet it is, because the last 10%, most people will not give you the last 10%, because that's the emotional part. That's the part where you're going to, I'm going to have to say something to you that you don't want to hear, and it's chaotic, and it's messy, and so unless somebody really cares about you and really loves you, they're not going to go into that last 10%. But if they know that you care about them, they know that you love them, you can go there. It doesn't make it like super fun, you know, but you can go there, but you always want, like, did you give me the last 10%? What are you holding back? The one thing that, I don't know, this is too sensitive to tell you, because that is where the big issues are.

Tarek: You know, I talk to the team a lot about friendship and relationship and culture, and these are all themes that you're touching on, and one of the things that I say is, you know, friendship starts with investment. So you were saying earlier that today everybody's referred to as a friend. You get a like in social media, and that's your friend, but true friendship actually requires some risk, some time, some energy, some effort, and the outcome of that is that you're able to know who your friends are when their joys are your joys, and their failures are your failures, and their problems are your problems. And I think that when you say speak the truth with love, I think that's why it's so important, is because you want to help that friend avoid this roadblock or this problem. You want to invest and see them be successful so that you can celebrate with them and their joys. And yeah, it's something I think we all should work on and are working on every day, and probably a good segue into just maybe kind of wrapping up the Titans portion of this discussion with just the outcome. So we're celebrating... Yeah, you're the result.

Britt: It's been incredible. First of all, Titans is not a class. It's just it's an entry into a network. It started at A&M and expanded to UT. I did it at Baylor for a little while because my daughter was going there. And you know, this is like compound interest. This semester for 20, you know, now 20 years, we just crossed 1,000 Titans. These Titans are in 35 different states and in seven different countries. They've already started 41 companies, and those companies have a private market value of over $6 billion. No Titan is over 40 unless your Titan's zero. And I would say that the active participation rate of 1,065 is 80 or 90 percent. We know where every single one of them is. We know when they get promoted. We know when they get married. We know when they have a child. We know when they have a problem. And in 10 more years, you know, the most powerful groups going. And remember, they're all trying to be narrow path leaders. And I want to just spend, before we leave this subject, a little bit on this. I should mention, I know you want me to. This is completely coincidental. It's also produced 41 marriages. So 41 Titan men have married 41 Titan women. So that's about 8 percent of everybody who's ever come through Titans. So is that the key selling point for any undergraduate? So you get free food. You might find a spouse. I mean, it's a good deal. And it's not that surprising because we search the whole university. We say, here are the people with the highest character, and here are the people with the highest ability, and we put them in. And, you know, the second criteria for success, we must become lifelong friends. And I tell them right away, if this doesn't happen, I will flunk you all, every single person. And boy, this group gets motivated by that. And they also, the third one is to build a Titans brand. So one of the things that Ben Franklin's June Tout did was they would write papers for one another. Remember, books were very rare in those days. So, you know, one guy would write a book, something on science, somebody on religion, somebody on politics, you know, whatever. And then they would teach one another. And so I'm sitting there one night late in the office, and the two things that every successful person has, every successful person has, and if you don't have these two, then don't plan to be successful, but you can get them. They're all prolific readers. There's not an exception. And they're all super curious people. Of course, you know, the more you, when you're reading, you're reading to get the experiences of other people you can't get yourself. What we try to emphasize is don't read for information, read for ideas. You know, don't read Columbus and say, what year did he go over there and all that kind of stuff. Read and say, how did he get people to go to begin with? You know, when they think they're going to sail off the end of the earth, how did he get people in the boat? You know how he did it. He went to the prison and said, you can stay in prison or you can get on the boat. You know, you want to read for ideas. And so we decided that we would, you know, all these people that I know, they're all prolific readers. And if you're a prolific reader, and I know you guys are, and anybody who's listened to this, who's a prolific reader, they also have one attribute that I know for sure, and I don't even know them. They feel guilty all the time. Because you just pass that stack of books. You know, I was going to read that. I haven't gotten to it. And so one night I sent out to about 80 pretty iconic people in the country, the notion, would you like to sponsor Titans? And I meant sponsor one of the, like I was going to say, like you give us that top book on your list and we will summarize it for you. And I was so naive, I forgot that sponsors code language for give money. And so I got all these people, how much do you want? And we don't need money. And so it was great because I was able to go back to these folks who never get, they're always asked for something and they're never given anything. And I said, what we would like to give you is the opportunity to get access to all these briefs because every single book is written in 10 pages or less. Perfectly. Perfectly. That's a whole nother story, but perfectly. And so we now have a library. There's a Titans website people can go to, Titans of Investing. Make sure you get the class version. The school version is good too, but the class version has meat in it. And we have a place where you can go and see all these briefs, but you have to have the code and nobody can crack the code. It's Titans. And so all these things together gets people reading. And how many times have I heard somebody say, no, I didn't read before this and now I actually like reading. Me. Because you're also reading pretty interesting things. But I'll finish with this. So I tell them beforehand, there's not going to be any tests because there's not tests at work. So you're not going to be able to distinguish yourself by cramming for an exam. And you're going to have to decide to prepare, not prepare, but it's just your interest as opposed to a test. And this reading is really fascinating. But halfway through, I tell them ahead of time, like halfway through this, I'm going to stop the class and say, I don't think anybody's reading the material. And they'll eventually agree and I'll say, well, why aren't you reading the material? Is it not as interesting as what you're actually reading? And the answer is no, it's way more interesting. And eventually what I'm trying to get them to learn is like, only reason I read is because I take a test. And then I have somebody my age at the class and I'll turn, you know, madam, how long have you been out of school? You know, 30, 40 years. How many tests have you taken since then? Nobody's ever said more than like four or five. Most people say zero. And so the message is like, if the only reason you're going to read is because somebody's going to test you, then most top students go down to what's called routine expert. They just descend back into the population because as soon as they don't have the instructions to follow and the commands, they're not natural. They do not value learning enough. And of course, it's your brain is a muscle, just like your, you know, people don't realize this. Like if you decided you're going to work out every day for 20 years and I decided I wasn't, but I was going to read every day for 20 years and you weren't 20 years down the line, we go to the gym, you're going to kick my rear. Like I'm going to do 20 reps and I'm going to do a half a rep. You move into the mental side of it. I'm going to kick your rear because I've been exercising my brain, which is a muscle. And it's really fascinating because, you know, take our titan cup. Let's imagine that this table is all the information you could have in the world. And this is, you know, this, that right there is how much information you have now. And you can reach a little bit beyond, you know, what you, your current position. So you can, so this whole table, you know, maybe you can a couple inches around that. But as you, as you learn that grows and things that you couldn't understand that were boring to you, all of a sudden kind of, that's really fascinating. I know enough to be able, and not expert, but know enough to, I understand it enough to be fascinating. Of course, then that, then your growing just kind of starts compounding. But you do, nobody at your work, except for a cashier company apparently, is going to give you a list of reading. And so what I started with was calling these, you know, iconic people and saying, I'm assuming you're a prolific reader and you've read thousands and thousands and thousands of books, which is true. But it's also true that out of the thousands of books that you've read, there's two, three, four, maybe five that for some reason have kind of become your go-to books. And so I said, well, you just tell me what those are now, like your son or daughter's going to follow in your footsteps. Let's just have them read, read those first, and then they can go off to the less ones after that. And these are the most iconic people on Wall Street. And they all got back to me within two or three days. One guy took his entire library and called his library and said, called his bookstore and said, buy these books, put them in my library, remove everything that I have. Because just like anything else, you want your reading to be the maximum productivity. And it was also fascinating, and I'll shut up after this, that people are like, one guy won't come back, you just need to know all about leadership. Another person, you don't even need to read the classics. Another group was kind of, you just need to be a genius. I came up, where are the finance books? And so it took all eight of these people to sort of fill out every single category. For a while, it was kind of like there's no theory books in here. Then Cliff Adsens came in and filled that whole thing out from AQR. I started doing it with the British, and I thought, I realized we don't have any funny books. The Americans are not funny people. The Brits brought it all in. So, you know, people who want to, you know, reach out to you, we can get them that list if they're interested.

Tarek: So two immediate follow-up questions. The first is, what book are you reading right now and why? And the second, and this will kind of transition the conversation a little bit, is in your 45 years in finance, what is something that you have learned in the last year that has really exercised your financial muscles? So we'll start with the book.

Britt: I'm reading a book about NVIDIA. It's a simple little book, but it just talks about the history of NVIDIA and the characters that are in it. I'm very, you know, interested, not in NVIDIA per se, but just in the whole, the fact that we're in an information age now, and we've left the age where technology is replacing mental, I mean, physical labor. You guys pay for your physical labor now, you know, to an age where it's replacing mental labor, and that's going to happen a lot faster. So that's one, and I'm also reading a book about the five types of wealth. As I'm reading this book, I'm always like, did I write this? You know, because, you know, before we leave this section, the, how do you make decisions is super important. That's one, like how do you, making decisions is the most important thing. How do you do it? Most people have no idea. You know, each time it's totally different. Oh, I do some pros and cons. Well, what if the one con is a nuclear? The, and so, and does it match up with your priorities? And so, and I found this, I thought I came up with this, but I didn't, because other successful people have come up with it as well. And they put it in the same order, because it's the five F's, faith, family, friends, fitness, finance. So imagine those are five balls, and you can put them in any order you want, or you can remove some and not even use them. It turns out that the people who are the most successful have an order that's not intuitive. I'm not going to do anything that's not consistent with my faith. Full stop. Why is that? Because I'm not going to make excuses with my faith. And also, if I can't act as a man of faith, I can't bring you my whole self. And my whole self is really pretty powerful, and my partial self is not. The second thing is I'm not going to, as family, I'm not going to do anything that, you know, ends up with my being divorced from my wife. It's just not anything that's important enough or have a bad relationship with my kids. It's just not, it's not, I don't have any definition of success. And I know it happens to good people and all that kind of stuff, and you can restore it. But there's no definition of success where I have, you know, a bad relationship with my wife or children. Number three is we talked about friends. You know, I'm not going to give up my high character, high quality friends to go and work for you. I'm going to keep them, and I'm going to add some more. And if I can, now, I used to have four F's, as you can tell. I didn't have the fitness F in there. And so, the fitness is, is this going to kill me mentally, physically, emotionally, or spiritually? If any of those are going to happen, I'm out. But it's a gating system, not a waiting system for me. So, if I can be a man of faith, I don't consider anything else. If it is, then I'll consider my family. If it passes those two, friends, if it passes that, if it passes the health test, then I will say, all right, you know, what was the job? And, and I approach every decision through that lens over and over again. And you would think, so if I ask you, so if I go that way, but one of you decides, I'm just going to go everything finance, I'm going to sacrifice faith, family, friends, fitness, I'm just going to put all my chips on finance. Shouldn't you have an advantage over me, who's, who is going through this gating system and finance is the last thing that I consider? Who's going to be the better decision maker in finance? This is counterintuitive.

Jason: The holistic approach, I think you referenced it as it relates to the whole you.

Britt: Yeah. And so you've got the whole self. And so if, if you're just the finance person, you're trying to consider a decision and you don't have faith, you don't have any family support. You don't have any friend support. Maybe your health is terrible. You've got a lot of baggage. The best decision maker is not the one who's the most focused on one thing. The best decision is the one who comes with the least baggage to the decisions. I'm not having to worry about my faith. I'm not having to worry about my marriage. I'm not going to call my kids after we're trying to, you know, will you talk to me? You know, I'm going to go out with friends afterwards. You know, I'm reasonably healthy. I have no limited baggage. And so therefore my, I'm running free in terms of making decisions.

Tarek: That's super important. So, so let's actually stay here on this topic just for a minute. Is, is this something that was always top of mind for you or, or, you know, maybe, maybe talk a little bit about your career and your personal journey right now and kind of how you've arrived at a book like that being of interest to you.

Britt: Well, you know, first of all, I was, I was very fortunate to have a really solid family foundation to begin with, not a perfect family by any stretch of the imagination. I did have two good parents and great brothers and sisters. And so in that security thing that you're talking about early on, you know, that was just not, not ever a question. The, when my attitude always was, I just want to be the best wherever I am. If I'm in the controller's group, I want to be the controller. I'm in the, you know, the accountant's group, I want to be the CFO. If I'm in the treasury group, I want to be the treasurer. Just, and so I, so from the very beginning, it's like, I was very focused on doing a good job today. Not 10 years from now, not five years from now, not next year. I wasn't saying, you know, here's my five, five or 10 year plan. The person who, it's not bad to have a general version of that, better hold it kind of loosely, but the person who's effective is the person who makes progress every single day. So people looking up over the horizon, I was walking forward. The, I am, I think you're, you're always either macro or micro. There's really, I've never met anybody who's like equally both, unless they're both average at both of them. And so I'm, I'm definitely in the macro type. I'm not that interested in the micro. Other people, I'm glad other people are, because you've got to have both. So that put me reporting to the higher, high-level people pretty early in my life. The, and so, you know, I have a sister who's named Carla Harris. You didn't know about her. She's actually just a wonderful woman. She's a senior managing director at Morgan Stanley, and she's African-American, and she's one of the top 50 speakers in America. And she has this one statement in her stump speech that's so powerful. She says, every decision that's going to be made about you is when you're not in, you're not going to be in the room. Every decision made about you is you're not going to be in the room. So somebody's going to be representing you, and they're going to have a little three-by-five card, and they're going to write three words on there. And it's your job to, to lead them to write the words that you want on there. It's not their job to somehow figure it out, you know, through some kind of mystery. And a lot, another thing that happens to people, they get completely inside the company. You know, you need to have some, you know, obviously you're totally devoted to your company. You're not a professional person, but you have some breadth, you know, outside. So it's not kind of a one, you know, one trick pony. And so, and this summons a lot, right? So let's just have the starting foundation. And the way it works is, and we all come into the company, and we're all considered to be, you know, good workers. And you work, we all work for different people. And it's very hard for, for any of us to break out. Because as soon as they try to break out, you, his boss said, well, and what about him? And then he says, and so on. So they, there's the natural tendencies that just keep all these people going up at the exact same rate. So I don't want to go up the same rate. Yeah. I want to go up, you know, faster when it's deserved. The, so the, what happens is a lot of times, so they have four products for the year. We each get one that's in the budget. And then mid-year, something comes along. It's not, wasn't, we didn't know about this. We didn't know about it. And it's this new project. And you can't give it to everybody. You got to give it to one person. And you have to be that person. And how do you become that person? First of all, by the way you behave along the way. The, you know, you're very professional. You're, you're, you know, you, you keep your word. What people don't realize is when you're in a meeting and the boss says, so have you got that? You know, you're going to give me a red convertible at the end of the month for less than $65,000. This is, I just use red convertible all the time. And you say yes, then that's, I don't have to worry about it anymore. Because your word is good. But because people are such bad listeners, they, and they're, and they're not professional enough, they will, they'll miss their deadline. They'll come in with a red convertible for a hundred thousand dollars. Or what's most common is they'll bring in their green, you know, Pontiac. And you're kind of like, what in the world, you know, happened here? So good, people are really successful, are good listeners. I'm going to throw a stat at you, which you guys know, which is what percent of, of what you hear do you actually retain in a typical talk, typical suite? Like what percent of this are you going to retain if you're a normal person?

Tarek: I'm going to guess 10%.

Britt: Yeah. You're going to say something looks like.

Jason: I was going to say less than 10. It's like 8 or 9.

Britt: But yeah. So they have the statements. 9.4. 9.35. They have the statement says, if you want them to understand anything, you've got to tell them 10 times. You got to tell them 10 times. And it's kind of like, cause you're not a very good speaker. No, it's because they can, you could be Billy Graham and they own typical personal and he was, he has 10%. So if you're trying to, to create a competitive advantage for yourself, learn to listen better.

Jason: So, so Brett, you're arguably the, or for sure top five most successful finance graduates from Texas A&M as far as your career, how'd you even make it to wall street? Like you were talking about a difference in your, your college.

Britt: Good segue. So, so in that situation, we all have the same projects. The company decides to merge five subsidiaries and each of these subsidiaries had 50 million, 25 million, 75 million, not enough to really pay attention to. But when we put them all into one holding company, it was $330 million. And in this company, cause it's probably $330 million means somebody has to look at it, but it's not big enough to somebody important needs to look at. So I was perfect. I can look at it and I'm not important, but they had to select me from all the groups. And, and so, you know, and remember I talked about in the game. So now I'm in the game. I'm talking to all kinds of people. When people ask me, how did I learn the business? I say on the bus. And what, you know, you've all read Malcolm Gladwell's 10,000 hour thing. So I know nothing. But today I'm going to talk to a U.S. equity manager, growth style or buying style or something. And I'm studying on the way in like, what is public? What does it mean public? What's equity? The, and then I asked this guy every question I can think of because he's trying to sell and I'm young. And so I don't hold back. I just, and then, so he teaches me and I see what we're performing during the day. And then I review it on the bus on the way back. Tomorrow it's fixed income. Next day it's leverage bias. The next day it's venture capital and it's real estate and it's global, you know. So preparation, listening, review, preparation, listening, review, preparation, listening, review, three years. And so the way I got into Wall Street is I come into the office one day. I'm working in a utility company. A utility, that's a great company and great people, but it's not the place that you leap to Wall Street from normally. And my colleague, guy's name was John Casey, when I walked in and said, Brit, that's great. Congratulations. Really proud of you. And I'm trying to pretend like I know what he's talking about. So I can find out what he's talking about. I have no idea. What are you talking about? And this is because the bar was so low. This is like 1987. I just made the list of the top 25 investors in the entire country at 28 years old. So believe me, it's a totally different time and it's a lot easier. I don't think I could make it again today. So that produced a conflict because Earl Nye, the head of, called me and said, great job here, but this is not an investment company and we want you to be a senior leader here and we're going to set up a training program. So we're going to start a senior management training program and you're going to be the first person to go in it. And that means you're going to go out into the field to actually work with people who actually do the work. And remember, I told you I just wanted to be the best where I was. So that's fine with me. I had to write letters. None of you, I don't know if you're all aware what a letter is. You had to write the letter to the people. I wrote the letter saying, you know, thank you so much for all the help. You know, I'm going to, I'm moving on and John Casey's taking over. Thank you very much. I thought that was the end of it. Well, then I got seven letters back saying, if you're really going to move, you know, would you consider it A, B, C, or D? Now I'm in a service center, you know, going out with meter readers and, and, you know, listen to telephone operators and construction workers. And I think I should just to be glad I should respond, not that I was looking for anything. And so I'm going to, I'm looking around, there's no paper, no writing paper, and there's no pen. So this is how naive I was. I picked up a piece of typing paper and a pencil. And I wrote my resume out on pencil, in pencil. But if you have top 25 investor on it, that, you know, people tend to overlook that. But I want to tell one story because I ended up moving shortly thereafter to take one of those jobs, but a similar moment for me. Remember, I talked about how leadership was deteriorating. So I'm out there, you know, they're treating me like I'm the child from the golden tower. And when I actually got out to shovel with them, they're kind of like, what are you doing? I said, what are you doing? We're shoveling. We're all shoveling. But they were just teaching me so much. I said, they have a safety meeting. So there's always something you can do. And what can you, what can you bring? And so I said, could I have one safety meeting? Because you're teaching me all of this stuff. I can tell you how the industry works. I can tell you what the company does. I can tell you where you fit into it. Would you allow me to do that? And they were gracious enough to do that. You know, it's a one hour meeting on Thursday morning. There's probably a hundred people there. And as they came in, I said, I know you don't know exactly how many shares of our company you have, but just take a guess and write it down and drop it in a bucket. And we will see what we've got at the end of this. Then I just told them about the industry and all the things that, you know, the company and things like that. And then at the end, we counted up and these guys had something like $50 million of, you know, company stock among all of them. These are long service employees. This is the dad, the mom. And when it was over, guys, I've had a lot of wonderful things said about me. And I've had a lot of terrible things said about me. And I don't remember any of them, hardly. But I sat down with the senior people after this discussion and they said, we really hope to be a CEO of this company someday. And that meant a lot to me. And I have a hard hat to this day. I'm an honorary lineman. Any of you? Honorary lineman? No, you're not. And so I'd seen my Earl Nye, I'd seen this, you know, and then I go to this new company and it turns out, I should have checked this out a little further, the company's going bankrupt. And we get acquired by another company from overseas. And as I said, they only kept two people. This is out of like a thousand people. And there's this night when, at the end of work, we're going to have a party, party for everybody who's been laid off. And so I get up from my desk and I'm leaving somebody in my doorway. And so I'm glad I caught you, but, you know, I need you to sign this check as I'm on the way to the party for all the people who have been lost their jobs. And I said, what is it? And they gave it to me and it was a 20 or 25 million dollar golden parachute check for our senior executive. And so what had happened was the other company had said, you know, we'll make it worth your while to go ahead with this transaction. And he sacrificed, you know, 900 people. And I just couldn't take it anymore. And so that's when we started the program. But so that got me to up to Connecticut. And when you get to Connecticut, there's a street there where you just go down it. It's like 20 Fortune 500 companies. And I got some awards and I came up with some new strategies.

Tarek: Was that at Bridgewater?

Britt: Well, so if you want to go there. So that was, I went from Texas Utilities to a chemical assay around Bavaria, which is Swiss and Swedish. And I had responsibility for 19 different countries. And there was a similar moment there because I got contacted by GTE, which is now Verizon, and a guy named John Carroll. And John Carroll was also on this list of the top 25, but he was a right age. And so he and I met and I left there. He asked me for my resume when we were done. And I left there thinking he had no idea how young I am. And so it's just a pleasant treat. So I didn't send him my resume. Then he asked for it again, and I didn't send it again. And this wasn't like I was, I just didn't think it was important. And so, so now I'm with this assay around the very 19 countries, you know, traveling everywhere in the world. I had a fax machine in my office at home, which was the big deal back then. That's like early nineties. I'm like, I have a fax machine. It was not for business. It was so that my wife could fax me my kids' homework, things like that. So when I'm in all these faraway places, you know, I can see what's going on. And I sat there with an offer from, from a company, you know, a U.S. company and an offer from an international company where I had more control. And T.T. had just been voted the most respected pension fund manager in the country at the time. And, and I said, I'm not, I'm going to take this and I'll be able to grade my kids' homework, you know, right from here. The, when you go to companies, normally if a new person's coming in, it means there's a problem in the company. I do think 99% of the time, if you have to replace your senior people with people from outside, you've done something wrong. You haven't prepared people inside for things that have not gone well. But every once in a while, you go to a company that's doing really well and that's a completely different situation. So, so here I am 32 and I'm a head of the, you know, the entire equity program and every single person in the company is older than I am. Every single one. And I'm, but I'm super enthusiastic. I'm in there like, we can do this, we can do that, we can do this, we can do that. And, and of course, you know, the boss or everybody gives you the passive aggressive. Sure, sure, sure. You know, and then you realize, like nobody's doing anything. And eventually I came to, came to where I realized that I had never honored the past. When you come to a company, you either dishonor the past because the vote is sinking, you don't have time to play around, not the people, the vote, or you need to honor the past because they deserve it. So I was too young and naive to know that, but now I do. So I go back to them and say, you know what, I've been here for six months or whatever it was. And, you know, I've been learning, I need to apologize. Like, I didn't really realize all the things you guys have already done. I realized this is a big change that we're making here. But when I looked at what you've done, you made a big change 10 years ago, and you made another big change five years ago. So this must be old hat to you people. And I'm so lucky that I'm working with people who've already done this twice. And I say, all right, you know, everything gets going. You know, so these are just, because you've got about, you know, I think you've got about six months maximum to make that first impression. And if you miss that six months, you know, just, you know, it's very hard to sort of go back and do it again. And when you're younger, you're gonna make a lot of mistakes in that first six months. And when you're older, you're gonna make a lot of mistakes in that first six months, you know, but it's the one who sees the mistakes the quickest and, you know, is transparent about it. Try to be as inclusive as you can, but you are the boss. And then they know this is not, this is not a democracy out here, but it is inclusive. And one of the interesting things now is generational issues, because the younger generations have grown up differently than we grew up. And one of the things that I hear constantly is the, everyone should have a vote. You know, everybody should have a voice. Everybody should, me, who's everybody should have a voice. We're about to make a big enough decision here. This is coming across to me like you want to vote for it. And to get past that, you have to put it on, call them in, put it on the table and say, this is what I'm hearing when you say this. And then my experience is, oh no, we didn't mean that we wanted to actually be the deciding vote. We just want to be included in the process. So you're in a world now where employees ask, I want to be empowered. You know what? A good boss wants to empower you. Like, I want to empower you. I want to make you our starting pitcher. But if you've never picked up a baseball in the history of your life, and it's the World Series, we're not ready to go out there. Something else has to happen. So I'll finish this section with this. There's a lot more, but so we had to have an empowerment formula. And the formula was this. Customer plus empathy plus development plus agreement equals empowerment. And what I meant was, it doesn't really matter to me what you think, how you think you did. It doesn't matter to the board how I think I did. What matters is how the customer think I did. And so what does the customer think about how I'm doing? And so we have a thing called Next Operations Customer, NOAC. And then they say, well, I want to, you know, I don't want to just be an order taker. Well, then earn the right to be a participant with your customers, treat them so well and do such a great job for them that they say, I'd like to hear what you have to say. And that's, you don't just get it because you want it, you get it because you earn it. Number three is we have all kinds of development. And it's, it's intended to get you to the next level. And you didn't take any of it. Or you took it all. And then the last one is agreement, which means that you're somebody who keeps your word. Like if you tell me you're going to write a convertible end of the month, 65,000 or less, it's, I don't, it's going to be there. Everything's going to be fine, right? I don't have to worry about you not fulfilling your promise either because you, you're just not a promise keeper or, you know, you're unable to receive the order correctly or you get confused by it. You know, and those principles, I've never seen them on any other company, but I encourage you to consider it.

Jason: So you're up in New York, I think you were at VIMCO and then, and then Ridgewater. Why'd you come back to Texas? And then the second question is, and I think you were a pretty big innovator in the finance world as it relates to partnerships. Maybe you could talk a little bit about that.

Britt: You know, and so you talked about this innovation factor and people think that innovation is, I've come up with something that nobody's ever thought of, nobody's ever done, it's totally out of the blue. 90% of innovation is not that. 90% of innovation is seeing something that's being done in some other area and saying, why aren't we doing that in our area? So remember, GTE was a top performing fund. So my normal bag of tricks, they weren't, they weren't sick. So, you know, so I found a book on quality management and it's the first time that people went out to actually benchmark other companies, including companies outside the industry. And so you'll have these epiphany moments. So I was able to go see the executives from Motorola. What does that have to do with, and they come trotting in and a friend had sort of, I guess, forced them to be there and you want to get asked questions that you are not used to answering. And I got this question, which was, what do you make? And we make phones and we're like, what do you make? And I thought, well, we make money so that you make phones. It didn't seem like that great of an answer. So that's later on, but then he said, how do you make it? I said, well, we do some ourselves and we use other people around the world for the rest of it. And they said, oh, those are your strategic suppliers. I never heard the term strategic supplier before. I said, no, no, no, no, no. You don't understand. They're not strategic suppliers. They're necessary evils. We don't even like them, you know, but we just have to have them. And they said, well, what, what happens when you see them? I said, well, they try to tell us they're smarter than they really are. And we try to tell them that they're not as smart as they think they are. And I said, you want to get things out of your mouth that are in your head. And if you say that, that sounds horrible, but it's true. And so the industry was also changing where, where they were going from these boutique firms to firms that had multiple products and services in there. And so I went back to Wall Street and said, I would like to create the first strategic partnership between an investor and, you know, an organization service investor. So JP Morgan, Goldman Sachs, that whole crowd, no one had ever done this. Is this a genius move? No, it's just recognizing that there's something that is good to do and we're not doing it. But another trick is, so like you give me your, tell me, I don't know what it is. You don't know what it is. Now you tell me what you think it is. You tell me what you think it is. You tell me what you think it is. I'll tell you what I think it is. There were, I think, eight. And so now we have eight versions of what we think it is and you guys only have your version. This is kind of using the wisdom of crowds. So I'm going to take two of your ideas, three of your ideas, four of your ideas, one of my ideas, and create the best of both. But you have to, you have to arbitrage trust. And then that becomes innovation. And when I propose a strategic partnership in the company, this is a good story. I'm pretty young and so I have my older, you know, mentor who's the CEO of company and I'm number two. And so we go up to the treasurer in New York and I present my idea about strategic partnerships. The guy, you know, is a crotch type of person and I mean he's very lustry and he listens to it and he says, is that it? I said, yes sir. And he literally takes my presentation, he stands up, he walks over to the trash can, he drops in the trash can. Now what are you going to do when that happens? And I don't know how in the world I did this, but I did. I stood up when he said that. I stood up, I went, got it out of the trash can, went up and I put it back on his desk and says, you know, sir, this is what we need to do. This is when you need the older guy. He looks over at John Carroll. John says, he knows what he's doing. And that's how it goes. And now strategic partnerships are common all over the world. But innovation is not, you know, I just came up with something out of the blue that nobody heard. It's taking things from other places that are good, they're not being used in your place and, you know, having the energy and the creativity and the desire to use them.

Tarek: So speaking of innovation, I mean we're living in an innovation age between AI and crypto. And I want to go back to this question of, you know, what financial muscles are you exercising now? Because the world has certainly changed since you had a fax machine in your house.

Britt: Yes, it has. And it's going to continue to change. I had a chance to meet with the COO of Google's quantum computing division one hour a week for about three months. And he said something I want to pass along about this. And he said, I said, well, like, what's the bottom line? And when I first heard what I'm about to say, I thought, that's it. That's all you got for me. But then it's very deep, actually. He said, technology is and always will be. That's the first thing you understand. Technology is and always will be. What is he saying? He's saying you can't stop it. And you can't stop it. You know, the, and so you have to learn how, you have to stay in control of it. You got to understand that many ways it's a Trojan horse. It comes in with beautiful stuff into your house, but inside are things that are not beautiful. And then they start creeping out afterwards. The, but you, but there's no such thing as just going out and saying, well, pull the plug. So let's imagine that you're at the beginning of time, whenever you think that was. I don't really care. The, but at that time, you know, physical labor and mental labor are kind of on the baseline. And you get, as you move out and, you know, the vertical axis is, is replaced by technology. And so what you saw was for thousands of years, technology incrementally replaced physical labor. And so let's just say you get to the tractor and you have a 500 horsepower tractor, because it's replacing 500 horses. We've had 500 men with one tractor and that ends the agricultural era. And, but during all that time, nothing had really changed about your need for mental labor. Society was still the peasants and the royals, you know, the GDP growth of the world was 0.1%. 0.1% means zero. You know, we'd only gotten to 1 billion people in all that time. And yet here in the last couple of hundred years, you know, we've boomed up to 8 billion. I love analysis. And I've said, I don't like analysis. I need to have a micro, you know, looking glass to see it. And like, it goes like this, it goes like that. So, oh, there's probably something you want to look at here. And so now, you know, every one of you probably pays to get exercise. Now you say things before you go to work, like, honey, I've got to, I got to work out before I go to work. Or you get home for it. Don't serve dinner yet. I need to work out for dinner. You know what that would sound like 200 years ago? Like you're, you are insane. But we have totally, for the developed world, eliminated physical labor with technology. And what I really think is important for us all to realize is we're now solidly in the beginning part of technology replacing mental labor. And that's a totally different story. And it's going to happen faster than people realize. There was, there are a set of questions in the 40s or 50s that never got resolved in the scientific community. And it was this, is technology here to enhance humanity or is technology here to replace humanity? Never got resolved. Now you would say, nobody would want to replace humanity. This is not some kind of, you know, sci-fi show. That's true. But you might want to lower the number of employees you have in your company. And you might do the same in you. It's the same thing. I was talking to a really great business person. I'm not going to name him. And I said, you know, how things going in your company? He said, they're really going great. I said, can you give me some examples? He said, today I just gave 800 of our employees new technology that I think is going to triple or quadruple their productivity. Fantastic. But he didn't stop talking. He said, and today we laid off 800 people. So if all of a sudden you guys can do twice, like we're all doing a quarter of the work and now you two guys can do twice the work you did before. And you're doing all the work that we used to do together. And so they have to decide, are we still going to hang around or, you know, how can they make the, how can they make the additional employees, you know, productive. And productivity is what we really need in this country. And we really haven't had it with all our technology. So we're in a, so if you're going to understand markets, you have to accept a couple of things, I think. And this is me talking, this is not, this is my story that we're not in the same era we were in from 1980 to 2000. You know, as you go through time, you go through these long eras and, you know, you go from high interest rates to low interest rates to high interest rates to low interest rates. I mean, that's the inflation cycle. And so when I came into the, you know, employment, it was 1980, the discount rate was sitting at 20%. You know, the P.E. multiple on the SCP was like eight times. The inflation rate was 14 or 15, you know, long bonds were 14 or 15. The debt service was 4% of GDP. Debt service meaning the interest payments on the debt that you have. And debt to GDP was 30%. That's 1980. Fast forward. And, oh, by the way, you know, that's because we had rapidly rising inflation. One of the main reasons was that we had, you know, oil embargo. And people who criticize the energy industry in this country don't know their history. Because in 1980, we were totally dependent on other countries for our energy. And you can only, you can only grow according to the energy capacity that you have. And so OPEC, we were totally dependent on OPEC. And if you'd ask anybody in 1980, if you'd ask, like, I will, whatever odds you want, I'll take it, we'll never be energy independent again. You could not get anybody to take the other side. There's just, it's just like a non-starter. Like, this is just the way it is. Well, between 1980 and, 1980, the S&P, you'll love this. The S&P was at 109 when I graduated. You know, now it's what, 6800 or something like that. The oil price when I graduated was $35. It was $35 just a few years ago. So how in the world do you go from energy dependent to energy independent with no price change? And it's because these technological miracles that actually occurred, occurred primarily in the energy sector. You know, and of course, and fracking came along, and that's an Aggie thing, we must say. And we took 7% market share, we took 7% market share away from OPEC. And in November, I think it was 2014, they had these OPEC meetings. And we, everybody knows, you know, what's going to happen in these meetings is they're going to figure out what the supply and demand is, and they're going to come out, Saudi Arabia primarily is going to balance that out, because that's kind of this unwritten agreement. You keep the oil price stable and flowing, and if you have problems, we'll come and defend you. It's not a law, it's not written down anywhere, but that's just what it was. But they just lost 7% market share. So they came out and essentially said, you know what, the deal is off. You know, it's called moral hazard. Moral hazard is when the price stays a certain place because of some extreme, some other arrangement that causes to stay where it is through some means of the natural market forces. So we were doing a deal, and I think the price of energy was 90 bucks or something like that, $100, somewhere in there. And we've done a downside analysis, like we can still make 10% if the oil price goes to 60 bucks. Well, when they came out and said it's not going to go to market factors, you guys remember what happened? It went to zero. It blew through our 60 bucks, you know, immediately. And because now we're in this competitive environment, there's also energy, you know, you always have to remember that you only grow as fast as the energy supply you have.

Tarek: So you mentioned this period from 1980 to 2000, that we're not in that same period, but 2000 was 25 years ago. Was there another period between 2000 and 2025? Are we in this new scenario?

Britt: It's the same period. And so I got kind of off in the left field there. So just start with a discount rate. 20%, 1980. What was it in 2020?

Jason: Zero.

Britt: That's as far as you can go. I'm not a mathematical wizard. Well, actually, I thought the Swiss went to negative. That was a total disaster. And actually something like 85% of all bonds in the world that were sovereign had negative interest rate. I don't even know how that works. But it didn't because it didn't work. And our Fed has said, we're never going to go negative. So we're going to either go sideways or we're going to go up. So I think of this as like a ski. You know, we went up this mountain in the late 70s. People thought we're going to go over the cliff because of this rampant inflation. Paul Volcker came in, slayed the inflation, and we're sitting there with our ski gear on at a 14,000 foot mountain. And for 40 years, we skied down that mountain to zero. And every time, you know, there were some bumps along the way, but it was all one directional. And every time you went to a lower altitude, you lowered the interest rate, you got a higher multiple. And even if it didn't change earnings, like the multiple is now a percent lower, so the earnings are going to go up. And then so you're talking about a multiple changing from 15% to 2%. Over half of the gain in the S&P 500 over that period of time was multiple expansion. And so we also had, you know, I know you want to talk about the Federal Reserve, so I'll give you an opening here. We also had the Federal Reserve on our back. The Federal Reserve is very good at preventing that dealing with, you know, they can lower interest rates very easily and have a pretty quick effect. And so if you start out with interest rates at 15%, now you can lower them by 200 basis points, and you still at 13, you still have a lot of, just once you consider this, like how many bullets do they have in their gun belt? Because when bad stuff happens, they're going to, those interest rate changes are bullets that they're firing to stop the fall, or they're turning around, you know, firing to keep it from going too high. But this whole time it's every, so think of it, I have a really sophisticated view of markets. Markets are a catamaran. And a catamaran, you know, has this beautiful centerpiece, and it has these two pontoons on the outside. And the pontoons are, you don't need the pontoons when the weather is good and everything is smooth and you tip your margaritas and tan and you play music. And that happens about 65% of the time. But when things go wrong, they can go wrong to the deflationary side when you don't have enough demand for the supply that you have. And so, you know, let's just say I don't have enough demand for housing because the interest rates are 10% in those days. But if I could make them 8% by lowering the rates, all of a sudden, you know, more people can buy a house, plus there were people who can go bankrupt, they can stay around for a while. And so for this entire 40 years, we sailed this portion of our time in good weather, and 90% of the time that we didn't have good weather, it was all in this direction. May have all been this direction. And so we finally got down to the zero bound, where, from that perspective, the Fed's out of ammo when it's at zero. The Fed wants 500 basis points of cushion, or 500 basis points of bullets. So for, you know, 25 basis points, you know, so you got, you know, is that 20 bullets? I want 20 bullets in my gun belt before anything bad happens. Because I, you know, that's how I found if I, that's enough for me to eventually blow this thing out. And so we had, the Fed was able to be on our side that whole time. Now we're at the bottom of the skew run, and the Fed is not going to be able to be on our side all the time. You know, right now we have all this controversy. You want to get this now or you want to wait? Yeah, let's hear it. The, so, so the first thing is just to recognize that, in general, there's no law about this, but the Fed wants to be able to get the discount rate to 5% before, after any kind of thing. When the bad thing happens, we use some of our bullets. When it's over, we raise it till we get to at least 5%. And so they got a little over 5%. And now we're on the way, you know, down. And we're in this middle ground. Do you think we are on the way down? Well, to, for rates?

Jason: Yes.

Britt: That's what the market is expecting. Okay. Yeah. Market's expecting two more.

Jason: We've gone from 5.25 to 4.25. Yeah.

Evan: And they're pricing in two drops in 25. Yeah.

Britt: And so you're hearing all this, you guys gotta, you know, lower rates. Just wait two months and it's already discounted. And there's another one after that. The, but the Federal Reserve's job in America is to keep economic growth stable and to keep the, and to keep the interest rate, you know, stable and low. Now this is important because Europe only has one of those two. Europe doesn't have anything to do with, with economic activity, just kind of keep the interest rate low. And the reason they want that is they want to keep their rich people rich, but we also have full employment as part of ours. And so we're at a point now where, you know, I think you're sitting around a table, like six guys said we should lower it. Six people say we should, you know, not lower it. And in the Fed, if I was the Fed chairman, I would say, well, I don't want to fire these bullets if I don't have to. These bullets are meant to be there for when I really need them. And the economy's expected to grow, you know, 2%, I think next year and inflation's under control. I don't need to fire these bullets right now, because even though the Taylor rule and different things say I could, I don't need to. And so I'm, I'm choosing to keep my bullets, you know, available to me because it's not really that bad. And if I fire them now, now some people might say it will never get bad, but more than likely it will get bad at some point. You just want to have a bunch of ammo. The, and for, for, for the Fed's independence to be called into question by any political official, and I'm, I'm a Republican, is foolhardy and extremely dangerous. The minute the world gets a sense that our Federal Reserve is not independent, that it's controlled by politicians, our dollar will crash. Our dollar will crash. Confidence in the dollar will just go to zero. The, and we're already, this last year we had the biggest, last, not last year, this year so far, we've had the biggest depreciation in the dollar in the last 40 years already, just because people have some notion that that could be in, be in there. Just imagine that, that all of a sudden politicians got to weigh in on this. Well, I've got my, you know, I want to spend a lot of money on climate change, well, let's get the Fed to finance it. You know, I've got, you know, I want to spend my pet project, well, let's get the Fed to finance it. It'd just be terrible, but the typical person has no way to understand this, and the President of the United States just says, you know, they're just trying to keep us from a growing, and there's, you know, here's some points that, you know, if you make, just make these points over here and leave these out on this side, you know, you don't give the information people need to really understand it.

Jason: What do you think? So, I was going to ask that the argument against Powell was that he was slow to raise rates on inflation, of course, with COVID and all that kind of stuff, caused a lot of spending, and the argument would be that he's now slow on the back end to lower them. So, he's just, some Fed chairmen's probably fired too quickly, and some are just going to be a little bit more conservative and slow. Thoughts on that?

Britt: Yeah, it's, you know, who knows if you're too slow or too fast, but the inflation rate is coming down, you know, and it's predicted, you know, to obey. I don't think it's going to get down as low as people think, but it's going to get pretty low.

Tarek: I want to ask you about the inflation rate, because I know the Fed is looking at their Excel spreadsheets and looking at all of the numbers. There are so many people here listening to this podcast who are saying, my food prices keep going up, the cost of meat, the cost of eggs, housing prices continue to, you know, they're leveling off now, but they're very, very expensive. If the Fed lowers rates, typically there's an inverse correlation between the asset value of a home with the rate changes going down. The lower the rate, typically the higher the value of the home. So you're looking at food, shelter, and clothing. Clothing probably has, you know, the inflation on that has remained flat, but on food and shelter, you know, what has been the impact of the Fed, and does the Fed even think about just those two as being the primary sensitivities to, you know, young families and new family formation, et cetera?

Britt: Well, the interest in y'all's opinion as well, you know, the real estate part of it, you know, is proctored by, you know, rent, so it's not based on housing prices. But you remember something that I think nobody would realize is these are human beings, and why do I say that now? In the 2007-2008 period, you know, we had a huge bubble in real estate, in debt-related real estate, and there are two types of bubbles. There's productive and unproductive. So we had a bubble in tech and telecom in 2000, but it was productive, and so we could use that to sort of earn our way out.

Jason: Say more on that. What do you mean for the audience when you say it's a productive bubble?

Britt: Well, like we had a completely new technological infrastructure, new computers, all that kind of thing. But now, in 2007-2008, we just had this huge bill, and the bill was related to real estate. So normally when you lower rates, you stimulate, the first thing you stimulate is residential real estate, but residential real estate for the first time ever was the problem. And so lowering rates, you know, didn't stimulate residential real estate until 10 years later. And so what happened was the Fed, in their last resort, had to fill in for that part of the process that real estate was not able to fill in. So I think they're, and I don't, this is just me talking, I heard this from anybody, just, you know, they're going to be a little more reluctant to kind of jump ahead of anything regarding residential real estate. And because we got into that situation, the, you had the longest expansion that we've had in history, you know, 10 or 11 years, long expansion history, but it was also the lowest. What people, I don't think, really realize is that's the perfect environment for stocks. When you get that environment with just enough GDP and just enough inflation, and you're just kind of barely in that zone, but you're in it, the history of the stock market goes up 15% a year while that's happening. And if you look back at that period of time, the stock market went up 13 to 15% a year. But what I told, and we got so many things wrong, I got to mention one thing I got right, the, you know, I went to our board in 2010, I said, look, here's what's going to, here's how this is going to work. I'm going to use a plane example. You know, we used to go to Austin airport and we get in a jet plane and we fly to New York at 30,000 feet, we get there in three and a half hours. That's, that's where our economy was, that's not the way our economy is. We're now going to get into a helicopter and we're going to fly at 10,000 feet and it's going to take a lot longer, but we're still going to get there. But when we have some volatility, if you have 10,000 foot drop from 30,000, it's, you know, you don't like it, but it's kind of like 20,000, but you have a 10,000 foot drop and you're flying at 10,000, it's a little bit different. And so that's the, that is the economy that we're in. Then just when we got over that, the virus comes. Now, it's best to think of monetary policy and fiscal policy as dragons that we have to bring out to slay whatever the problem is. And so from the end of World War II to until, you know, around 2000, we just brought out the monetary dragon and the monetary dragon got more and more powerful. It came out in the 40s and it was like a baby dragon. We didn't really know how to ride it by the time it got to 2000. Like this is a big bag, you know, fully mature dragon. And we think we know how to ride this thing, but it's not enough. It's not enough to now deal with the size of the problem. So we bring out the sister dragon, you know, which is fiscal policy and the two of them, you know, blow fire and they get this thing out. So now you've got both of them out and then you have the 2007-2008. We were very close to depression, you know. One of the things that, you know, nobody, it's like if we avoid a depression and nobody knows how close we were to a depression. So you do the right thing and you avoid the bad thing, but nobody knows how close you were to the bad thing. And so they think you're too slow or, you know, whatever it is. But in that case, you know, both of the monetary and fiscal were on full force. We put more stimulus into the economy than at any time in history and the Federal Reserve thinks it's undefeated. You go back to World War II to today, they have blown out every problem. So you might not like the way they did it or that they did it, but in their mind they've won every game. They're undefeated. Some games were harder than others and the 2000-2008 was the hardest. But, you know, the next week everybody comes in, let's have some punch, let's have some cake, let's, nice job everybody, nice job everybody, you know. So let's celebrate today, but tomorrow let's come back and assess what we should do now that we know what we know now that we didn't know then. And this is why I felt probably the most stupid in my investment career. The, because they wrote a page in, like a playbook, that said we both blew this thing out, but we started too small and we started too late. So next time start big and start early. Then we don't have a problem for 10, 11 years. And also over the transom comes not, not the virus. That wasn't the reason that we went down. The virus caused the President of the United States and all the other potentates around the world to say something that had never been said ever. Stop everything now. What? I, excuse me? Stop everything now. So we forced ourselves into a recession that was declining at 32 percent on an annualized rate in the second quarter. 45 million people unemployed, you know, just like that. Sort of a shock to the system. And so I'm sitting there saying, well it normally takes, you know, nine months to, you know, 14 months to kind of get back to where we're back on sides. And yet the last, so, so March of that year was the fastest decline of the stock market in history. There were only two comparable times. One of them was the depression. The other one was 1987, which is an event. So kind of, is this a depression? Is this an event? You know. And all of a sudden, you know, I think it was the last, and the Federal Reserve was having to break the law in order to keep the financial system liquid, even barely liquid. You know, they said we could use, you know, I think triple C, you know, rated bonds in the energy sector because the markets were completely frozen. The reason that people get mad at the Fed because they seem like they're catering to banks is because if they don't keep the banks up and running, you're not going to be able to do anything. That's just unnecessary. If the banks can't operate, then you can't operate. Now, banks are not the most important thing, but without them, you know, nobody can do anything. So it looks very strange and everybody gets upset about it. I totally get it. But if they don't do that, then you're not going to get your money. And so they have to do it. So there in the last week of March, you know, we're just in this catastrophic. Markets going down 7%, 8% every single day. And I'm managing $100 billion and I don't even know where we are. Like, you know, we don't have our gauges because this is happening inside a month, none. And we're sort of flying blind. And then all of a sudden, come out and say, we're going to open the spigot on monetary and fiscal policy. And we brought the biggest, you know, stimulus in history. We brought as much stimulus in the first few months as the entire time that we gave, put stimulus in, in the previous time. And the market from April 1st at the end of the year doubled, you know, doubled. Now, again, there's no way people can know all this stuff. But 1.5% real GDP growth and below is Japan. And so if you look back from 1980 forward, every expansion that we had was on average 80 basis points below the previous expansion. And the expansion we had before the virus hit was 2.1. Again, not being a mathematical wizard, I'm pretty sure 2.1 minus 80 base points is below 1.5. We cannot go there. You know, this is, you know, you cannot risk going there and getting stuck there because then we're looking at like 10, 15, 20 years. When I trade the Japanese, the Japanese market at 39,000 in the late 80s, and they didn't get back to 39,000 until, you know, last year. So there are factors that are going on that, you know, the general population doesn't, I don't know why we don't tell them, but, but, you know, if you, if you cannot allow something to happen, then you do whatever it takes to make sure that doesn't happen.

Tarek: So, so based on that, you know, pretending we're back in like 2010, but you fast forward, it's 2025. You were sitting in that board meeting and you were saying, let me tell you how this is going to play out. It's going to be a helicopter at 10,000 instead of the jet. If we're the board, what are you telling us right now?

Britt: Well, right now, you know, we have the economy mapped out back to for 80 years and the economic environment that we're in today is fine. It's actually, there's an economic environment that we're in 54% of the time. So when, you know, we show it as a box with nine, like a square with nine boxes, but you really should think of it as a, as a target, like you're, you're throwing darts. And that middle part is every single person who throws at this dartboard is trying to hit, you know, that center part. And going back 80 years, we've hit that center piece 54% of the time. And you might say, well, that's fantastic, 54% of the time. Or you might say, oh my gosh, what about the other 46? But we're in that box. And so remember last year, so our model said last year that we were in this sort of a safe zone in January and they never changed the entire year. And so while everybody was calling for recession and all these various things, it didn't happen. And the stock market went up 25, 24, 25%. In that scenario, it normally goes up 18%. So this is just to build up to where we are now. So you, so we were overweight in January of 2020 for 75, we're overweight 15 points of equity, 75, 25, no cash. And because the economic environment didn't change and we don't rebalance and that's heresy, but there's reason for it. So, and we also have two other models, a bubble model and a bear market model. And because we're trying to pay attention to the things that, you know, we don't mind losing 100 basis points on a stock here or there. We're looking for things where we lose 25% on the whole, you shouldn't match. But we have neither a bear market signal nor a bubble signal for the entire year. So we ended up last year at 83.17. Now, if we had 83.17 going into the first quarter, for the first quarter, we got our head in to us.

Jason: 83.17, that's an allocation?

Britt: Yeah. 83% S&P 500, 17% 10-year trade rebounds. The, but in early January, we got a bubble signal on the MAG-7. And the MAG-7 appears to have concentration, it's true. The MAG-7 then, and pretty much now, is 38% of the S&P 500. And we have 83%. So I think the math turned out to be like 31%. We had to sell and redistribute into bonds and cash. And we held that position until, and we also took what we had in S&P 500 cap weighted and moved into equal weighted. And that helped for a while. The, and then you have this, you know, with the markets, you always have these things that come out of blue. And so obviously tariffs come out of blue and, and I, I believe that the performance that Wall Street put on, which is normally actually pretty good performance, the performance that Wall Street put on during that first quarter was terrible. I mean, talk about, so the way I've, the way I would phrase it to you is, there are two types of options. You're from the East Coast, you go to Southerly. And they're very genteel. Thank you, madam. Would you like to bid, sir? We'll wait for you, for you to take your phone call, please. And they're going bidder, bidder, bidder. You know, we have auctions of Mustang horses where they start out with astronomical prices going, and everybody's going, what in the world is happening here? And it's chaotic. We're running a Mustang horse auction, not a Sotheby's auction. And if you don't understand that, then you're just unwilling to think that people could do something any other way than what you think is normal. And I don't know what it takes for them to realize this. So April 2nd, I think it was, you know, everything goes crashing down. You know, what is it, one week or two weeks later, kind of, you know, okay, you know, we're not going to be 50%, maybe 10 or 20%. I don't know why people are surprised by that, because they've never been to a Mustang auction. And they have such a bias against the president that people want to believe the worst. And I don't know, I'm not saying that I know exactly what's totally right about everything. But again, just remember that fulcrum moment in March of 2000, when the Fed suddenly surprised everybody and the market went up 100%. The Magnificent Seven went up 21%, you know, between that moment and the end of the quarter. Gross stocks outperformed value stocks 17 to 3. You know, this is a slaughter. It's an absolute slaughter. We got another signal in the first part of the last end of April, kind of moved one box over a little lower box. Basically said, you know, get back to a base like my plane tag, you know, get back to whatever you think the base is. And so we luckily went back to cap weighted. And so our performance so far, you know, in the year and a half, cumulative is 18% cumulative. And the alpha that we have cumulated 700 basis points.

Tarek: And when you talk about we, you're talking about your new fund on Eagle's wings.

Britt: Yeah. So let me just talk about, you know, what I've been doing lately, meaning the last couple of years. So number one is I turned 65. And I, there's two philosophies about what you should do when you get to 65. The philosophy forever and ever was you get to 65, you just check out. And in the beginning, it was because like, you're not going to be around for much longer. So get your funeral, you know, prepared. But now if you get 65, you're probably going to live into your 80s, not guaranteed, of course. And we've never made any adjustments for that. So I have, since then, you know, you get better and better in your life about, about prioritizing the right things and actually having priorities and being able to stick to them a little bit better, at least for me, because I'm not a very disciplined person normally. And so I have a, and you guys all know this, I have a three cheeseburger, you know, life plan. And so it's because everybody can visualize what everybody knows what a cheeseburger isn't. So the bun has to be there or everything that you're trying to do is just going to be very messy. You're not going to be able to control. It just kind of goes everywhere. So for me, I have to strengthen my spiritual life and I have to strengthen my physical life. And if I don't do that, then nothing inside is going to work. Inside, and this is going to end up with the company, there are three priorities. Number one is I need to spend more time with my wife. The, you know, if you have unusual success, if you deserve or don't deserve either way, you don't get paid more money to have more time. You don't get paid more money to have less stress. You know, and so I love my wife dearly, but I'm in this job where, you know, I wasn't home at five o'clock. And so, of course, it's her problem because her love language is time. I just said, just switch it to gifts. And she said, no, no, no. So priority number one is to spend time with her, my grandchildren, my rest of my family. The second priority is to endow Titans. So I wanted to go on, you know, after I'm not able to do it anymore, which is not anytime soon, I hope. So we're going to try to raise two and a half million dollars for each school to endow it. And then third is to start a new company called On Eagle's Wings Investment Advisors. So, you know, the scripture, On Eagle's Wings comes from the Old Testament. And we saw it on the angel of eagles, you know, we never get tired. We see everything. And I really am probably the longest serving, you know, fund, you know, global fund manager alive today, which means everything up till now, I've seen it. Good, bad, you know, and I've done a lot of the good and I've done a lot of the bad. And so I have a pretty strong opinion now about I only want to do the good. And so we have a strategy that nobody else has. And when people see it, they're kind of like, this is never going to work because we decided years and years ago that this was never going to work at a different point in the market, in a different era, and with different tools. And so right now, the way that what's happening in the market, particularly at the upper end and family offices and things like that, is it's become very complex, very illiquid, levered, and expensive. You know, a lot of us have to achieve a certain rate of return so that people get their pensions and things like that. And you should have been with me at meetings along my career where we'd go and say, you know, you want, you say we're going to make eight and a half percent, you know, interest rates are now two percent, you know, there's a pretty good possibility we're not going to make eight and a half percent. So you need to lower the benefits or you need to put in more money. And they're kind of like, what? And you go around and around and eventually someone would say, did you say you actually couldn't make eight and a half percent? Or you probably couldn't? You know, I said, I probably couldn't. Said, so there's a chance, you know, that's what it's the reactors, there's a chance, you know, you're going to make it, which of course we did do. But that caused people to, when the rate of return gets low and you have to make a certain higher number, you really only have three choices. One is make the whole thing much more aggressive, you know, raise your equity exposure from 60% to 80%. Number two is leave things the way they are, but take a lot of your public stuff and put it in the private markets to get the illiquidity premium. The third is, and so that's private equity. And then the third is lever what you have. And that's what, that's risk parity. So it's, all this stuff is going on, that's all that's happening. Nobody really went for the higher equity, which is what we should have all done. The, and so now we're in a situation where the private part of the markets are struggling. The, and one thing that's hard to learn is that no matter how attractive something is, you know, in the beginning, there's a certain amount of capital that's the right amount. You know, let's say it's $100. It's a good thing, it needs $100 in capital. The, but in these situations, just like the internet, they get 300 million, 300 in capital. And so at some point somebody realizes, oh wait a minute, you know, we should have put 100 in this and we put 300 and they have to, you know, take it off the, they have to get that 200 back. So people ask, you know, whether the Yale model is going to go forward. And for your guests, the Yale model was developed by David Swenson, one of the all-time greats at Yale. And basically was using this illiquidity premium and, you know, highly active management and did really well. Sadly, he passed away a few years ago. But Yale just sold, you know, over $2 billion at the private markets. So when some people say, oh, it's the Yale model, it can't go forward, and kind of like, can't go forward when Yale's not doing it? And you still call it the, and you have to know that, and the Yale's one of the better private equity investors, and they went through the secondary markets. So right now people do not want to sell what they have because they know that they probably can't sell it at the prices where it's marked. And so there's this thing called extend and pretend. If we can hang in there for another year, you know, maybe this will get corrected, maybe it will, probably won't, but maybe it will. But when people go to the secondary markets, and this is a high quality Yale portfolio, it sold at 11% discount. So that to me is a very good clue that pretty much everybody is 10 or 11%, 10 to 15% too high. And unless something happens, they're going to eventually, because distributions, you know, we know with vintage year what we should get back based on how far along it was. So 19, the 2019 vintage year, we should have back 90% of our money. 65% is what we have back. And for every vintage year forward, no vintage year we have back the amount of money that we should have back based on previous cycles. And then there's this monstrous amount of dry powder. There's only one way really, and private equity is now for the last three years, you know, underperformed public equity by a pretty good margin. But their five-year number is still good and a 10-year number is still good. But in two more years, that three-year will turn into a five-year number. And so they're on the clock now for something to happen in these next two years to get them so that their five-year number looks decent. The only way that's probably going to happen, and this is counterintuitive, is if we have a big bear market. Because when you have a big bear market, you know, the market will fall between, you know, 30 and 60%. But because the way private equity is marked, it'll fall about 60 or 70% of that amount, and that will get them back on side. But this doesn't mean every single private company is not going to be able to get there, but the average one, it's not looking good for the next couple of years.

Tarek: So word of caution, and we'll probably close with that. Unfortunately, not too uplifting point. You know, Britt, thank you so much for sharing your words of wisdom. I know I speak on behalf of these guys when I say we've learned so much from you. And, you know, when you leave the room and we make some notes on a three-by-five card, I think each and every one of us, and probably the thousand titans that are out there, will all say that as great of an investor as you are, the best investment that you've ever made is in the people and the relationships that you've touched along the way. So thank you very much for that.

Britt: My pleasure.