Acquired
01:42:20 · David Rosenthal, Ben Gilbert
[01:42:20] S1: Yep. [01:42:21] S0: You know, it's funny. You said something a couple minutes ago that I'm stewing on here. This whole in equities, a low cost index fund, in the long run, will outperform, you know, 85% or something of other actively managed funds. Listeners are probably wondering, is that really just fees? Is it just that having low fees makes you better than that much of the market? There are other components to it. A giant one is behavioral. If you are in a mindset where you are actively trying to pick the best companies Yep. You do a lot of trading. And aside from the fact that that has a lot of transaction costs, you tend to react to external stimuli, the market being up. [01:43:16] S1: You don't stay in your winners long enough. [01:43:17] S0: Market being down. You having conversations with other people. Exactly, David. You selling out of your winners too early. Whatever it is, and you can make the errors on either side. There's a behavioral component where passive index investors tend to not act, and what you need to do is not act for long periods of time to be a great investor. [01:43:38] S1: Yes. It's the great Warren Buffett line. Don't just do something. Stand there.
01:43:38 · David Rosenthal, Ben Gilbert
[01:43:38] S1: Yes. It's the great Warren Buffett line. Don't just do something. Stand there. [01:43:42] S0: Yes. Yes. Whether you are trying to shoot the lights out like Warren Buffett and you are active and trying to find the very best businesses you can or whether you are passive and sort of throwing your hands up. Either way, you need to mostly not act every day. And passive index investing just lends itself better behaviorally if if you're in one of those funds to just saying, I know the market's up. I know the market's down, but whatever. I own the index. I've I've made my piece. Whereas if you are either the active manager trying to improve the outcome of the fund or an investor in an active manager, both of you have a higher predisposition to do stuff. And for most investors in the long run, you shouldn't do stuff most of the time. [01:44:30] S1: Yep. Yep. Absolutely. So as we exit the eighties here, all the pieces are in place finally for the rise of indexing. The Vanguard five hundred fund crosses a billion, as we said in 1988, and then the model's working better and better. The scale economies are getting shared. [01:44:54] S0: Fees are coming down from that initial launch price of 68 basis points to in 1979, 59 basis points, then down to 50 basis points in 1985 to 35 basis points in 1987. We are really starting to be the true low cost index fund. They've already dropped by 50% here by the end of the eighties.
01:44:54 · Ben Gilbert, David Rosenthal
[01:44:54] S0: Fees are coming down from that initial launch price of 68 basis points to in 1979, 59 basis points, then down to 50 basis points in 1985 to 35 basis points in 1987. We are really starting to be the true low cost index fund. They've already dropped by 50% here by the end of the eighties. [01:45:16] S1: Yeah. Yeah. I mean, the scale economies are getting shared. Yep. Everybody around the table is eating good. So after assets crossed the billion dollar threshold in 1988, around nineteen ninety two ish, they hit $10,000,000,000. So, you know, 10 x in four, five years with strong acceleration. Also in 1992, Vanguard launches the sister fund, the total stock market index fund. They now have more than enough capital base that they can own every single stock. Why stop at the S and P five hundred? Own everything, all US stocks. [01:45:49] S0: And computers are sophisticated enough by this point in time where you can track the entire stock market and own the entire stock market and handle the reporting on that. Not to mention you have the benefit of not having to pay S and P Global a licensing fee [01:46:03] S1: Yes. Yes. [01:46:03] S0: Index the entire market. [01:46:07] S1: Quite convenient. You know? Look. They're not not business people at Vanguard. Right. [01:46:12] S0: Oh, they're great business [01:46:13] S1: people. Business people. [01:46:14] S0: It's just on your behalf instead of on shareholders' behalf.
01:46:14 · Ben Gilbert, David Rosenthal
[01:46:14] S0: It's just on your behalf instead of on shareholders' behalf. [01:46:17] S1: They're working for you. And so by the mid to late nineties, the two sister funds together are approaching, like, a $100,000,000,000. Like, the Vanguard Colossus is rolling. Yep. Things are going great. And then in 1999, you're not gonna believe this, Jack manages to get himself fired again. Unbelievably. Unbelievably. [01:46:46] S0: Yes. But listeners, before we tell you that story, now is a great time to thank one of our favorite partners, Vercel. So for twenty years, cloud infrastructure was built around a pretty simple mental model. Humans send requests, servers respond, and then they scale according to the traffic. But what happens in the era of AI agents when the software itself is sending the requests and making decisions, not just responding to them? [01:47:15] S1: That's the shift is building for. The cloud wasn't designed for agents, but Vercel is. They've purpose built agentic infrastructure where agents are first class users alongside human developers. It's not just an old deployment platform with AI features bolted on. It's a ground up rethink. Tools, frameworks, infrastructure, all engineered to work together.
01:47:15 · David Rosenthal, Ben Gilbert
[01:47:15] S1: That's the shift is building for. The cloud wasn't designed for agents, but Vercel is. They've purpose built agentic infrastructure where agents are first class users alongside human developers. It's not just an old deployment platform with AI features bolted on. It's a ground up rethink. Tools, frameworks, infrastructure, all engineered to work together. [01:47:36] S0: So one particularly noteworthy element of this is their AI gateway. Just like content delivery networks accelerated and secured the web, Vercel is doing that for agents. It's a single endpoint that routes across every major AI model with automatic failovers. So when a provider goes down, and as you know, they do Oh, yes. Your product keeps humming. So since launch, it serves 60,000,000,000,000 tokens across a 180,000 unique teams. Vercel is a new type of delivery network for tokens. [01:48:07] S1: A good example of what this unlocks is Poke, who are building personal superintelligence that hundreds of thousands of people use. Before switching to Vercel, they were maintaining their own AI infrastructure, infrastructure, everything from routing and retries to cost tracking by users. After switching, their retry rate dropped 20 x. So virtually every message now succeeds on the first try.
01:48:07 · David Rosenthal, Ben Gilbert
[01:48:07] S1: A good example of what this unlocks is Poke, who are building personal superintelligence that hundreds of thousands of people use. Before switching to Vercel, they were maintaining their own AI infrastructure, infrastructure, everything from routing and retries to cost tracking by users. After switching, their retry rate dropped 20 x. So virtually every message now succeeds on the first try. [01:48:29] S0: AI gateway is just one tool in a complete AI stack built with, for, and optimized by agents. And that's what Vercel is really about, making sure that the most ambitious teams like OpenAI, Stripe, and Polymarket have the infrastructure to match. Because when code is increasingly autonomous, the question is no longer can you ship, it's what you choose to ship. Learn more at vercel.com/acquired. That's vercel.com/acquired, and just tell them that Ben and David sent you. Alright. So, David, there is something that you have not been telling us about Jack's life over the years. [01:49:06] S1: Yes. Jack, unfortunately, has a bad heart. He was born with a rare genetic heart disease called arrhythmogenic right ventricular dysplasia or ARVD. And that means that Jack suffers his first heart attack in 1960 at age 31. So before he even becomes CEO of Wellington management, that was his first heart attack. He had, like, ten, twelve over his life. It was like a ticking time bomb. At any moment in time, he knew he could just drop dead.