00:04:33 · Jenny Johnson
Effectively, if that happens, it's hard to get insurance and it effectively stops the oil getting through the Strait Of Hormuz. Having said that, there's actually a lot more getting through than I think people thought would happen. And as I said, the economies, particularly in The US, we've been pretty well adjusted to oil at this price. But that's probably going to stay there for a while. And frankly, don't see much, you know, a quick resolution in Russia and Ukraine either. So we have to sort of look at these as almost business as usual. And then, you know, I think The US and China are much more constructive than we've been in the past. But having said that, I think it's kind of a frenemy type thing. There's areas that you're just going to not cross the line, tech particularly, China's going to head their direction, The US is going to head our direction, but there's also we need each other. We need them for rare earths, they need our economy and consumers to sell the things that they manufacture. So we'll figure out ways to work well together. What are the growth levers that you're watching? Well, think the biggest growth lever is AI. It is such a massive disruptor. Now, having said that, I'm a student of history, I tend to be more optimistic on what this means. Every major new technology that comes in, if you go back and look in history, there's the prediction of the demise of all the jobs. In 1997, the cover of Business Week said the broker of the Internet was going to eliminate broker. And now today, a financial advisor does more for their clients than ever. They're no longer just an investment advisor. They're a true financial planner. They're leveraging the Internet and these tools to provide more services. So, you know, what happens is that a lot of jobs that you couldn't imagine will come about. And so, I think that there's tremendous tailwinds for companies as they start to figure out how to leverage it. First thing that you tend to do is you make more efficient what you do today. But once you get it in the employee's hands, they start to think of the creativity. There's going to be a lot of things that we never imagined we would need or do that will come out. And I was using Meta glasses recently. Oh,
00:06:51 · Molly O'Shea, Jenny Johnson
[00:06:51] S0: you have the Kylie ones? Are those the ones with the screen? [00:06:53] S1: I don't know. You're saying the design ones. No, I got the Ray Ban basic whatever. But I was on the golf course, and I was like, why can't these MetaGlasses find my golf ball? Right? Know? Right? So I said to my son, hey. Because he's a programmer. I... Can you make it... So he's working on an app to say, right? Now did I ever know or think about it? And and by the way, my... Would leverage the iPhone, but you couldn't have your iPhone. You need to have the Meta Glasses. So suddenly there's... And I've already come up with three other programs that I told my son he should go write. So, you know, we find new things that we can't imagine initially. So I'm not a negative, but there is going to be this transition that we all have to be careful. But I do think there's massive, massive upside. And so I think that's probably the biggest tailwind. And everybody talks about AI. There's a ton of other innovation going on. What's happening in biosciences? Oh, it's major. Major. The pipeline of new drugs, the customization of medicines, you know, material sciences, there's a ton of things that are being done there and innovations. Three d printing, they're not talking about four d printing, it actually will, when it gets in the right position, it will move into place. So, you know, those are all big tailwinds that are the bull case.
00:08:10 · Molly O'Shea
[00:08:10] S0: Ken Griffin was just on stage for the Citadel Securities Conference, and of course, they asked him about the AI bubble, and one of the biggest positions that he had against this was we just don't know what's going happen with the supply and demand, especially with chips. We're making all these chips now. When are they going to expire? When's that going to fault? And how do you make up of this? I'm very curious because I've heard that you are a student of history and you love history, and so we've been saying we're in a bubble for two or three years now, so when are we actually in the bubble? Have we been in the bubble the whole time? How do you make bubbles while you're seeing them throughout all these cycles? When
00:08:47 · Jenny Johnson
[00:08:47] S1: I was running the technology group, there was something that Gartner had called the, it was kind of the exuberance curve or something. I can't remember exactly. It happens over and over. New technology. This is the greatest thing ever. It's gonna be the greatest thing. It goes all the way up. It's so great. It's so great. Boom. And everybody's disillusioned by it. It's terrible. And then it comes back up to where it sort of should be. Mhmm. So the question is, where are we on that curve? It certainly feels like there is a frothiness in some areas. So personally, if you're betting on the needs for energy based on today's technology, both on the manufacturing of chips as well as the production of energy, you're assuming that for the next twenty or thirty years, it doesn't change dramatically. Mhmm. But that's pretty unusual. When you get a demand, people innovate and you find, you know, tremendous advances. So my instinct is if I were to finance, I still... We like the financing on the shorter term because these are still big cash flowing companies. These are not Internet bubbled companies that didn't have revenue. These these companies have significant earnings, so they're gonna be able to pay their debt. Would I go on the longer term of the financing on things like data centers? Personally wouldn't because I just think you're betting on today's technology and that we won't entertain inundate quickly. And we see what's happening with AI. It's solving math problems that we've never been able in history to solve. So I think you have to be a little careful on that. And I think Ken's probably right on that piece of it. We've talked a little bit about the accounting side. It's a little unclear on some of these revenue and how is it apples to oranges when you compare companies. So you have to be really careful. Know your stuff as you're making those investments. Having said that, just yourself playing and probably preparing for this podcast, you probably leveraged AI. I know when I'm going go prepare for something, I literally have a conversation back and forth, which opens up new thoughts for me that would be difficult. And usually what I then do is hand it to my team of experts and say validate these things, right? Because you can't necessarily just take it for what it is, but it can lead you to how you think about stuff.
00:11:11 · Jenny Johnson, Molly O'Shea
So I think we all get a sense for how incredible this tool is and the opportunity with it, but it will take time. And when it happens in companies and sectors, the leaders could leave behind others in those sectors. I think that's how quickly this stuff is moving. It seems [00:11:28] S0: to be the quote unquote whatever kind of metric you want to use for revenue that we're seeing from Anthropic and OpenAI are unseating a lot of incumbents and people that you'd think would be kind of winning in this day and age. Now their IPOs are getting delayed, who knows why, and all these kinds of reasons. Maybe it's because they say things they don't mean, or maybe they do mean them, and we should listen. But I think this was really interesting because this this part, I told you, I did a lot of prep going into this. I listened to a lot of your interviews on podcasts, like on the news, all over the place. And there was one really interesting one that kind of like opened up this other realm of Franklin Templeton I didn't really know, but I kind of knew, right? And it was when you were talking about the upcoming SpaceX IPO back in July or whenever it was, and you were talking about how Franklin Templeton got in to late stage investments. So do you want to tell that story? I mean, think it's just like so... It's like a good kind of encapsulation of how Franklin Templeton runs.
00:12:28 · Jenny Johnson, Molly O'Shea
[00:12:28] S1: Yeah. So we're headquartered in Silicon Valley, so we have a growth equity team there. And honestly, as we all know, companies are waiting much longer to go public. And so, you know, some of the PM said, boy, these IPO kickers we used to get were not... That that were a kicker to our performance. We're not getting those. We should do some late stage venture because it's really late stage ventures what used to be you were underwriting at the IPO level. And so a mutual fund can open or an ETF can can hold up to 15% illiquid assets in there. You don't tend to run it at 15% because you'd have a breach if the market moves, but you could do 678%. And so we started to invest in late stage venture deals and then actually had some clients seeing the deals that we're in and said, Hey, could you set up a fund? So we actually now have a venture group, but they will often go into investment both with the venture fund, as well as some of the traditional portfolio managers who want to have exposure to late stage venture. [00:13:28] S0: So I found out that you guys had exposure to SpaceX. [00:13:31] S1: We did, Anthropic, a bunch of them. Yes, exactly. If you're there and you have connections with the entrepreneurs, with the other venture community, and being headquartered there, you know, you've to remember, your kids tend to go to school with these people, they're in the neighborhood, they're community people, and you get to know them, that allows you to have access to those deals.