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Slip into something more comfortable and delve into personal finance with Josh Sheluk and Colin White, experienced portfolio managers at Verecan Capital Management. Each episode demystifies complex financial topics, stripping them to their bare essentials. From investment strategies and financial planning to economic headlines and philanthropic giving, delivered with a blend of insight, transparency, and a touch of humour. Perfect for anyone looking to understand and navigate their financial future with confidence. Subscribe now to stay informed, empowered, and entertained.
Verecan Capital Management Inc. is registered as a Portfolio Manager in all provinces in Canada except Manitoba.
When you get all of your news and information free, you've got to start asking yourself, what is the incentive for someone to provide this information to me? If somebody's providing you information for free, they're doing it for a reason.
Josh Sheluk:Welcome to the next episode of Bare Naked Money. Colin and Josh here as usual, pulling back the shower curtain on whatever topic of the day is. And today we're joined by somebody who knows exactly how things work in the media world and why that should matter to individual consumers of media. This is again something that we talk a lot about on our podcast. Nicholas White is joining us today.
Josh Sheluk:He's the CEO of Fragment Media and they're the company behind titles like the Daily Dot and Nautilus. And he spent his entire career working in this media machine and he's building something new now. And that's something that, again, if you know us, something that we like to hear about and something that we like to sort of push back on the industry norms. So he'll fit right into that mold. So we're going to talk about the traditional media incentives, how traditional media works today, sensationalism and how that drives a lot of viewership and consumer behavior and how he's trying to build something better.
Josh Sheluk:So Nicholas, thanks so much for joining us today.
Nicholas White:Thank you very much for having me.
Colin White:I think it's important off the top that we the disclaimer, like, we're not related. You know, we we have the same last name, but there there's no relation here even though we're both bearded. That's completely a coincidence. So I wanna make sure that our listeners understand that right up front.
Nicholas White:Mean, aren't we all related at some level, some somewhere back in the, you know, whatever?
Colin White:Wow. We're getting deep early.
Nicholas White:I don't know where to go from here.
Josh Sheluk:Nick, what I was hoping you could start with is just giving us a bit of a lay of the land and maybe a look behind the curtain to use the metaphor that I used earlier on the media world. What's the incentives that are driving media these days? What is your specific issue or pushback on it? And how are you trying to do things a little bit different?
Nicholas White:Thank you for asking the question. On some level, thesis really from my entire career has been that the business model behind media is broken. And that the business model itself is really what creates sort of perverse incentives for the media, news media in particular, to sort of work in ways that are not, I think, what any of us would choose if we were designing a system from scratch. And so my personal mission in life has been to find a better business model for news media and for journalism that would be better both for the journalism itself and for society, which is ultimately what journalism is intended to serve. So if I would zoom out and sort of give you kind of the grand sweep of history macro view of where I think we've been and where I think we're going is from the invention of essentially the penny press in the 1830s, all the way to the invention of the internet, you had in the mass news media, a business model that relied a majority on advertising and a minority, but a significant minority on reader revenue.
Nicholas White:The thing that happened when the internet came along is it became accepted conventional wisdom, and was probably true at some point, that people, consumers, readers would not pay for news media on the internet. And as a result, you ended up with 95% of the revenue, give or take, coming directly from advertisers and almost none of it coming from readers. The result of that is that the perverse incentives of the previous period were just put on steroids. They got so much worse because all of the revenue was coming from advertisers. And as I think it was Larry Page said, if you're not paying for the product, then you are the product, right?
Nicholas White:And so a lot of what we see in the media, you mentioned sensationalism, is really about that the goal for media since the internet became prevalent is almost exclusively to distract you. A sensationalist headline is not about informing you or making you a more enlightened citizen or even telling you something you just really want to know. It's about distracting you. It's about getting you to click long enough to show you a few ad impressions. I think that there's a structural shift that is occurring now, which is that the major platforms are forcing a shift so that media in the future will have to be primarily driven by reader revenue.
Nicholas White:And it's one that the platforms are shifting it, forcing the shift, and two, that consumer attitudes have changed. People have sort of become aware of the fact that you get what you pay for, and that includes in news media. And so the attitude, the willingness of people to pay has really changed. So as a result, I think we're seeing a structural shift to reader revenue that presents both interesting business opportunities, which is what we're trying to capitalize on as a company, but also creates, I think, hopefully, a much better situation in the future for journalism and for society.
Colin White:Maybe you could comment on the idea because there's many of us having been around when the Internet was kind of coming into vogue and being invented, that it was like, oh my goodness, everybody gets a voice so that we're gonna see this huge mushroom in this plethora of points of view and public discourse. And it's gonna be so wonderful because, you know, there's no barrier now to to people communicating with each other and saying what's on their mind. And there was gonna be this democratization of the voices. That was, you know, back in the idealistic days. But the media power is finally been concentrated with with a few major ownership groups controlling some of the major pipelines.
Colin White:Like, it almost seems to have gone the opposite direction and maybe the idyllic ideas, at the outset of of of the of the Internet. You know, does that play into the narrative that you're you're you're kind of describing?
Nicholas White:Absolutely, I think it's the core of that narrative. I remember the information superhighway, right? The idea that we were all going to, and the global village, right? These were sort of the buzzwords of the '90s when the internet was first being created and starting to reach sort of the first wave of customers, users. And it did, it felt utopian.
Nicholas White:It felt magical in a lot of ways. And something I say all the time is, remember when the internet used to be fun? And it was. You have to go way back, right? But there was a time when the internet was really fun.
Nicholas White:And there were horrible things about it, too. There's always been trolls and stuff like that. But there was a time when it was fun. And I think what happened is advertising in a lot of ways. And you can't have fun for free at a certain point, right?
Nicholas White:There's no free lunch. And so that meant a couple of things. One, it meant that the algorithms are designed that run the internet, right? So you started with sort of everybody just wrote a blog or something like that. Everybody could have a website, you could have your type form or whatever it was.
Nicholas White:And there was sort of this multiplicity of voices, but then the platforms started to get more and more of the concentration of users. And in order to keep you there and keep you engaged, the platform's designed algorithms that are about that, they're about engagement. They're about saying, what's gonna maximize my time on-site? And that creates this incentive toward distraction. I think of it as if what I'm trying to do is get you to stop in the feed for an extra couple minutes, well, it's the same thing as getting you to pay attention to a car wreck on the side of the road as you're driving down the highway, right?
Nicholas White:And so there is this push toward distraction. And then on top of it, first of all, that is its own kind of specialized skill. And then all the algorithms work on a kind of batting average principle. So you build momentum over time. And what it does is it concentrates attention via the algorithm on those couple of users or companies or publishers, or what have you, those accounts that are best at driving that kind of distraction and capturing that attention and not letting it go.
Nicholas White:And so it also then gets amplified by this kind of winner take all effect that is embedded in how the algorithms work.
Josh Sheluk:You mentioned algorithms and you also mentioned that you think people are going to be more willing to pay for news going forward and there's a bit of a structural change, but aren't the 2,000,000,000 people that are doom scrolling on TikTok and Instagram every day, the exact antithesis of what you're saying there? Aren't these people kind of arguing against you that people are willing to pay for good news?
Nicholas White:On some level, what the platforms have managed to do is hack human psychology, very basic human nature. We all stop and look at the crash on the side of the highway. You can't not do that. Every ounce of our DNA makes us do that. We can't fight it.
Nicholas White:And at the same time, I think while that's true, 2,000,000,000 people are doom scrolling through TikTok, and I spend more time doom scrolling than I would like either to admit or to be doing in fact. At the same time, The New York Times has more paying subscribers than it has ever had by an order of magnitude. The number of people who are paying directly for news is higher than it's ever been. The number of people who are paying for any kind of content is higher than it's ever been. That you now have people on individuals on Patreon, on similar platforms that are able to build Kevin Kelly's 1,000 fans in a way that was not nearly as possible ten, fifteen years ago.
Nicholas White:And I think actually, if you look at I'm trying to remember these, I'm gonna get this statistic not quite right, but I believe if you look at YouTube, actually more time is spent with long form video than the shorts. There are these sort of countervailing tendencies. Look at the growth of sub Stack. As much as, yes, there are these platforms like TikTok that sort of tell the opposite story, I would actually argue that in a lot of ways, that's a lot of momentum from the old model that is continuing. And in fact, actually, I would argue that platforms like Facebook and Google have reached the extraction phase.
Nicholas White:And they're just trying to make as much as they can as long as they can. And they know it's actually declining. So they're just trying to get out as much of it as they can and prolong death as long as they can. But I think that they're really just riding on inertia and momentum and that where the movement is happening now is in higher quality, longer form, paid for forms of content across the board.
Colin White:You're afraid they're gonna notice and reverse course and come back after your lunch?
Nicholas White:I think it's really hard to do that.
Colin White:Yeah, I agree.
Nicholas White:Right? Like the number, it's sort of like, didn't Blockbuster buy Netflix? Not that it never ever happens, but you can find a lot more examples of companies failing to do that. And it's because the simple reality is that Netflix in whatever it was, 1999, 02/2001, when it was for sale, was not gonna come close to replacing the revenue that Blockbuster was going to lose from selling KitKat bars at the checkout line. That's what their real business was, and there was no way they could do that.
Nicholas White:So the thing is, the new model always is slower to replace the old model. And so I think it's going to be very, very difficult for existing players to adapt to the new world because it's just not going to be lucrative enough, fast enough for them to be able to sell essentially their shareholders it. That being said, there are exceptions. And winners right now are The New York Times, The Atlantic, The New Yorker. These publications are actually healthier than they have ever been, and they are growth businesses.
Nicholas White:And most people haven't sort of updated their priors yet to realize that these companies are actually doing incredibly well. And it's not because they noticed that this change was happening and took advantage of it. It's because, for historical reasons, they were already set up well for it. And the world that they were trying and failing to adapt to changed back in their direction. And so I think I think it's possible they have all the money in the world that in theory they could, right?
Nicholas White:But they almost never did.
Colin White:They failed long enough they became successful. Now there's a business, like there's a book, there's a book
Nicholas White:on that.
Colin White:I think people would read that.
Josh Sheluk:Yeah, that's basically what you're saying about the traditional publications is they totally missed the boat for a long enough period of time that now they're leading again by having a subscription business. I was kind of interested to hear your thoughts on, did these traditional publications, the newspapers, if you want to call it that, did they really make a mistake by not charging for their services early? But it sounds like you very clearly think that they should have been doing that from the start.
Nicholas White:I've heard a lot of people in this business say that the huge mistake was The New York Times deciding to put all of its content for free on the internet in 'ninety six, 'ninety seven, 'ninety eight, whatever year that was. And I don't know. I think there was a culture of everything being free on the internet at that time. You were talking about a really very small number of people using it at that time. And actually, I think as much as I can rank on The New York Times as anyone else, it's a hobby in this country and it's very much a favorite pastime in the industry.
Nicholas White:At the same time, I really admire the degree to which when they did recognize that this was the model they were gonna have to have, they've worked at it very methodically over the last decade. And whereas now it's an incredibly strong company that's in growth mode. You've heard this thing in startups. There's a lot of versions of it. But it basically comes down to whoever does the most experiments in the end will win.
Nicholas White:And The New York Times has done that. The New York Times has been experimenting with how to get people to pay for news for at least ten years. And so it's not by accident. May have made a fateful decision. I don't really know for sure, if in the age of the information superhighway and the global village that we've been talking about, if they really could have been successful at that time.
Nicholas White:I know a lot of people feel like they set the industry back a decade, but at the same time, I think you have to give them credit for the fact that, like, they've also led the way into the new model.
Colin White:I think, you know, we reached out and we're excited to have this conversation as we see ourselves a little bit of the same way in our And one of the comments I'm on record of making many many times that I'd like to be a nice restaurant on a street full of nice restaurants. So I'm always like looking up and down the street to see who else is following and a bit of a proof of concept and, you know, if we are right then the speech should get pretty crowded and we should have lots of people. Do you are you either can you give I don't know if you wanna give examples or whether do you see other people thinking like you and getting traction in this kind of business model or is it just some of the incumbents are having resurgences and kind of going back to the old days? Like, do you see a combination of that? What's your view?
Nicholas White:Absolutely. I mean, I think the upstarts that are working really well right now are all moving towards the real model, right? Whether that's Substack as a platform is moving in this direction, has been one of the leaders in moving in this direction. But also there are publications, right? The most famous of which is Free Press, Barry Weiss' Substack.
Nicholas White:But you've got Puck in a little bit of a hybrid way. They're more focused on sponsored revenue, but Seven Four would be sort of on that list. Tangle actually is a newsletter with a really, really good subscription model, paid subscription model. I think you absolutely are seeing the newest players in the space that are doing well are doing it with a reader revenue model. It's just, They're just subscale at this point, as compared to a New York Times or something like that.
Nicholas White:We're early enough in the cycle where the really big numbers are actually being put up by incumbents. And I think that there is also a there is a tension, to use your restaurant example, right? It's hard to roll up on Restaurant Row where everybody else has got a Michelin star with a food truck. And one of the things that we talk about internally is the big shift that needs to be made is you need content worth paying for. And it is, in fact, it's actually very cheap to write headlines that get people to click.
Nicholas White:We've all clicked on clickbait, the headline that's sensationalistic that your couch may be killing you. Oh, I don't know about that. And you click in, it's basically a content free piece of content. There's no there, there. That is very free to mass, very, very cheap to mass produce.
Nicholas White:Nobody's gonna pay for it. If you wanna produce a subscription product that is worth paying for, you have to invest in it to a certain extent, right? You have to have a certain level of quality. And so it's harder. I think the cycle is maybe moving faster than comparable cycles because you have to either have an investment in editorial, in technology, in tools that allows you to create something worth paying for, or you have to have a unique perspective.
Nicholas White:Even something like Tangle, right, where it's in a lot of ways one guy's perspective. I mean, has a team and everything, But this is not somebody who wakes up in the morning and churns out 25 clickbait headlines before breakfast and moves on with their life. He's doing research and working on something, putting a lot of time and effort into each and every piece. And so I think that there's a high bar, a higher bar to entry that means moving forward is going to be more difficult. And the investment community isn't necessarily on board with this idea yet.
Nicholas White:And as a result, if you want to pile up a lot of capital to build the next New York Times, well, I don't know which VC is writing that check right now. Nevermind the fact that VCs are disrupted themselves.
Colin White:Well, not to monopolize, but you kind of led into my next line of questioning. What's the business model for securing the independence that you're looking for? Because there's one thing to have an ideal but there's a second thing to be able to afford the ideal. And how have you done it and maybe more broadly how should players be approaching this to be able to earn the right to take a longer view, to earn the right to have a longer payoff? Like what's the path there?
Colin White:What path are you guys on or what path is available?
Nicholas White:It comes down to a couple of different things. And we kind of, I'd say there's two or three strategies that we're employing to sort of pursue that direction. And I hope you don't mind if my cat joins the podcast.
Colin White:I love cats.
Nicholas White:She loves to be pet and does not take no for an answer. So I can put her down, but she'll just be back here. So I might as well do it. So I think in terms of getting the investment and maintaining our ideals, I go back to, again, it's the business model. First and foremost, investors of all types want some kind of return.
Nicholas White:And so if you build your house on reader revenue, if you say that's how we're going to make money and you can prove that that is a good business model, then it becomes very natural to say, and we're going to continue serving readers. We're going to give them something worth paying for. The way we think about it internally is our primary asset is if the asset of an advertising based company is eyeballs, I. E. Distraction, our asset is trust.
Nicholas White:And so I can say to an investor, Mr. Investor, you're going to get a much better return over time if I maintain the trust and loyalty of our readers who are the ones who are paying us directly. So first and foremost, the fact that our economic incentives are aligned with our journalistic incentives in the reader revenue model gives us that level of stability. We've taken it a step further in two ways. One, we are a public benefit company.
Nicholas White:And the reason we're a public benefit company is because that allows us to say, this is our mission, and we're going to hold ourselves, our management, and our board of directors accountable to it as well as to our bottom line. And the reason we're doing that really is as a filtering function for our investors. Our investors are going to see that upfront. And if they're not on board with that, if that's not something that they think is actually going to be part of how they get their return, then they're not going to invest. And so part of it is to help us find the right investors for our approach.
Nicholas White:But the last piece is, right now, we're about to launch a community equity crowdfunding round. And our philosophy is, if you want to serve your readers, then make your readers your customer and also make them your honor. And so like, we hope to be reader owned as well as reader supported on a business model level.
Josh Sheluk:Yeah, so I was just gonna ask, can you explain more about what a public benefit company actually is? Because it's not a term I'm too familiar with.
Nicholas White:So it's essentially, it's a legal designation. We are organized in Delaware as a public benefit company. And what it allows you to do is put your and I'm not a lawyer, I just play one on television. So I'm going give you my understanding of what this does. But please consult your own counsel.
Nicholas White:That being said, my understanding of what it's allowed us to do is we have put our mission in our charter. And what it means is that legally, our fiduciary responsibility is now judged both in terms of, as you probably know, historically, the board of directors, the management of a company, its fiduciary responsibility is typically measured in terms of dollars and cents. Right? Like did you make the most money for your shareholders? And that is how you're judged to have done or not done your fiduciary responsibility.
Nicholas White:Well, once you become a public benefit company and you've registered that mission as part of your charter, now your fiduciary responsibility is measured both in, it puts your mission on equal footing with your profits and says, okay, you did your fiduciary responsibility if you both maximized profit and fulfilled your mission.
Josh Sheluk:It's definitely an interesting model and we'll see if it becomes more common because it doesn't seem like something that's common to me. But in our industry, when we end up in these situations where maybe the end consumer is not best served, the finance industry, the investment industry tends to regulate. Is there a regulatory solution to some of the issues that you think exist in mainstream media?
Nicholas White:There's sort of a historical answer and there's a logical answer. And I think from a logical standpoint, it's really hard to imagine a set of regulations that does not run afoul of the right to freedom of speech. I struggle to see how you write something. Now, you get things like the Fairness Doctrine. And this is where we're going to shift to the historical version.
Nicholas White:And the Fairness Doctrine was probably the most successful version of this. And at least it said, well, you had to represent both sides of the argument. It was really only permissible from a legalistic standpoint, as I understand it, because you were giving it only applied to broadcasters. And it applied to broadcasters because you were essentially giving them a public good. You were giving them a right to the airwaves.
Nicholas White:And so therefore you could get around the government. The government on some level doesn't really have a right to regulate what people say, but because you're giving people a public good, you can at least put that kind of guardrail around it. You're not telling them what to say, you're just saying you can say it sort of both ways. And I would also argue that if you look back at some other regulations, cross media ownership, for example, was regulated in the late 60s and 70s, I think. And I would actually argue that negative on the part of free speech.
Nicholas White:And you would think it wouldn't be because what you're essentially saying is one person can't own all the media in a geographical location. If you own the newspaper, you can't own the TV station. That sounds good enough, except that at the same time, you can't copyright news. You can't copyright information. The Congress passed Bill XYZ today is not something that's copyrightable.
Nicholas White:And so in some sense, you're doing is you're saying that everybody else can copy everybody else's work. The reason we have copyright laws is so that the people who generate the creative VIP have the ability to get a return from the effort of generating that IP, which makes it worth the investment to do so. Well, when you say everybody in the world can copy your IP without any kind of restriction, and that's a free speech law, what you're doing is you're making it impossible to invest in that IP. And so it has these perverse, it can really backfire is my point. So I think regulation becomes really, really difficult in this sort of scenario, in this venue, I would say.
Colin White:Yeah, because I mean, stories don't always have two sides. Sometimes they've got one, sometimes they have five, sometimes they're six. So I mean, the oversimplification and trying to bring legislation to that seems a little bit fruitless. But let me throw another one at you because we had a great podcast guest here not that long ago, Matthew Fauciani who talked about spread of misinformation and he did studies on how misinformation spreads and that does seem to be one of the more dominant tidal waves is kind of sweeping the interweb and people are consuming what they want or what they think they want or confirmation bias and all the rest of it. So there's almost a rush to lower quality information in in some regards.
Colin White:And, you know, that seems to run contrary to the trend you're hoping to ride in providing good quality information and then paying for it. Because I don't think that your business model involves pandering to the flat earthers. You know, I don't think you're gonna have a subscription service, you know, printing things for the and I'm calling out the Flat Earthers and they can come after me if they need to. But I don't think that that's part of your model. Right?
Nicholas White:Not part of ours. That being said, I mean, we're not starting a Flat Earth publication anytime soon. But that doesn't mean that the structural change, I'm arguing I actually think the structural change that we're talking about toward reader revenue may actually benefit the Flat Earth Society and some of the disinformation. I don't think we're going to start a Flat Earth publication, but somebody will. And they will probably be able to find enough people enough people to subscribe and to support that publication.
Colin White:Your thesis is agnostic to the actual veracity of the information. Your business model could work for for good and for evil.
Nicholas White:I think business models and economics in general, right, are a tool set that we can try to use for good and ill. Yep. And they don't have in them like a hammer or a screwdriver. They're not necessarily beneficial or malevolent. But I think So we're trying to use this particular hammer and screwdriver for what we view to be good things.
Nicholas White:And I think that everything has a shadow side. And so if you're in the reader revenue business, I think you're going to get the largest possible audience offering really reliable information. You're gonna get the largest possible audience offering truth. That doesn't mean that there isn't still going to be some small group of people who has their own truth that they want to find, see, and support. And so I think, to go back to your example, I think the Round Earth magazine will be a bigger magazine and will be a better business in the end.
Nicholas White:But that doesn't mean that Flat Earth magazine won't also exist and won't also potentially do well.
Colin White:I wanna live in the world you're describing, just for the record, Nick. But I appreciate I appreciate your, ambidextrous way of of of describing the business model.
Nicholas White:I mean, it was I think
Nicholas White:it was Peter Drucker who said the best way
Nicholas White:to predict the future is to create it. Oh. So the best you can do is is is try. Right?
Colin White:We're now going firmly into the Bond supervillain category.
Josh Sheluk:You're talking about a future where we're looking for a reader revenue generated driven model. Is it something that is going to happen naturally in your mind? Or is there something we need to do as consumers or society to accelerate this push?
Nicholas White:I think the single biggest thing is the willingness to pay for news. Right? To sort of people to recognize that you do get what you pay for, that there is a cost to free. And when you get all of your news and information free, you've got to start asking yourself, what is the incentive for someone to provide this information to me? But as the phrase, it's not from the altruism of the baker or candlestick maker that we rely on them for our supper.
Nicholas White:It's from their regard for their own self interest. And so if somebody is providing you information for free, they're doing it for a reason. And you've got to ask yourself, what is that reason? And then I think on the flip side of that is to recognize that there are high quality publications out there. There are groups of people, there are journalists who really just want to find the truth and share it with you.
Nicholas White:And that that effort is worth paying for. And nobody's, relatively few people are charging an arm and a leg for that service. They're charging the cost of a latte in order to give you something that's really reliable. And we are in a period where it's the Wild West. Anybody can start a publication.
Nicholas White:They might be a Flat Earther. They might be Galileo, finally speaking the actual truth. And so there is a sense right now of caveat emptor. It is on us to determine who and what is a credible source and what isn't. But I think realizing that when you find a credible source, they are giving you value.
Nicholas White:They are giving you value worth paying for is, I think, the thing that that ultimately changes the world. That because the reality is I can complain about big business and the yahoos that run them and the perverse incentives. I can talk about regulatory capture. I can, you know, like I can complain with the best of them. But the reality is actually that on the whole, the market is incredibly responsive to consumer preferences.
Nicholas White:On the whole, there are of course exceptions, but on the whole, business gives people what they want. And so if people start to recognize that what they want is actually reliable, credible information and they're willing to pay for it, then whether we succeed or fail, I think you're gonna see the market change and you're gonna see it change very, very quickly.
Colin White:What's next for you? Are you looking to add more titles? Is that the the path forward for your Mary Ship? Is that you know, are you looking to acquire other other publications and put them onto your platform, or is it just an organic thing? I mean, what's next for you?
Nicholas White:That is part of the goal, but that's not next to next. That's a little bit further down the path. What we're really focused on right now is really proving out our model, proving that you can start a real revenue driven publication either from scratch or from very small, that you can make it not as a publication with a long history like The Atlantic or The New York Times, but that you can bring something that people want, you can serve an existing information need, that you can do it profitably, capital efficiently. We need to prove that you can do that and that we can do it repeatably. And then once we've done that, then we'll be looking to and I think we're close.
Nicholas White:Think within the next twelve months, I think it will have shown that we can do it. And once we have, then what we're going to be looking at is, Okay, how do we now rinse and repeat? How do we bring our model to more and more of the information needs sort of across the interest graph, if I can sound a little bit like a internet finance bro for just a second.
Colin White:So you are going after the flat earthers. Okay.
Josh Sheluk:Let's impose some really important powers on you, Nick. Let's say you have a magic wand. You can redesign the media industry from scratch. How would you structure it today so the truth wins going forward?
Nicholas White:Great question. I don't exactly know how this comes to be, I think it'll have to evolve anyway, but it's what I hope for. I think what we'd want to see is that there's a layer of well organized, accessible fact that is available to everyone and that is verifiable so that it's very hard to get away with just and it should be, right? Like with the internet, this was the promise of the information superhighway. We were supposed to be able to all see and know and look up quickly and easily that the sky is blue and that water is wet.
Nicholas White:And then you'd have and there's plenty more to argue about, right? Can all have lots of if we all agree that the sky is blue, that water is wet, and the earth is round, then we can still have plenty of other arguments. And as a journalist, I'm in no way, shape, or form trying to reduce or restrain those arguments. But I do think that there are certain things that we know to be true. And so I think the ideal scenario here is one where the internet somehow creates that layer of accessible, verified, and verifiable fact that makes it very difficult as a result to get away with saying that it's something that is simply not true.
Nicholas White:And then we still have robust argument. We still have two sides of an issue or five sides of an issue. Or as they say, you get get 50 VC in a room, you'll get 75 opinions. Same can be true of journalists, if not even more so. I think you would have this layer that is a foundation then for all those different opinions and arguments.
Nicholas White:And we would still have a robust and passionate cultural conversation, but that it would be founded on that level of verifiable, accessible fact. And in some sense, isn't that the dream we're still chasing? Isn't that that's what
Nicholas White:we hoped the internet would be. That's what
Nicholas White:we hoped a blockchain would be. We keep reinventing this idea that there should be some unified field of truth that we'd all be able to stand on together and then worry about the rest of it. Because there's still plenty to decide. And I we just haven't figured it out yet, but I hope that it's out there still. We
Colin White:met somebody that has as audacious a goal as we have for our industry. So that's that's a pretty impressive goal and that would have to be an awfully big magic wand and overcome human nature, because we gave everybody the opportunity to do this, and they chose not to. So I think there's a a fundamental flaw in human nature because I remember all the promises and you're bringing back all the memories of of, like, everything there is now is gonna be on my phone. Oh my god. This is amazing.
Colin White:I'll be wrong about anything again. And then everybody got to have an opinion. They're like, my goodness. Here we go. And, yeah, this was the room we find ourselves in.
Nicholas White:It is. And yet, I also want to be cynical. I'm super cynical. But since you've already staked out the cynical position in this argument, I feel now, as a journalist, the need to oppose everything you say. So I do want to bring out I think there are glimmers.
Nicholas White:There are moments of success. Wikipedia is actually pretty good. And that's really harking back. Because if you remember back when we were talking about the information superhighway and stuff like that, too, the idea that Wikipedia, that a crowdsourced encyclopedia could be in any way, shape, or form useful or reliable was very controversial. It was absurd.
Nicholas White:People didn't believe it. And today, there have been studies it's well verified that Wikipedia is both more comprehensive and has fewer errors than Encyclopedia Britannica and similar the World Book or whatever it was called. So I do want to believe that there is a way to do it.
Colin White:Like, I I was recently described by a journalist as being bleakly optimistic, which which I think kind of, you know, describes a little bit of where we've ended up here.
Nicholas White:Well, now you know what to put
Nicholas White:in your tombstone. That's fantastic.
Colin White:I I'm hoping that somebody is hearing this and will will think to do that because I would proudly have that in my tombstone.
Nicholas White:Yes, that's really good or or the name of your autobiography.
Colin White:Here we go. All these ideas, I hope somebody's writing them down.
Josh Sheluk:Not only is it getting written down, it's getting recorded, Colin,
Nicholas White:so.
Colin White:Oh, that's right. It's one of them fancy ones, I forgot.
Josh Sheluk:Any final thoughts or final questions, final remarks, Nick?
Nicholas White:You said a minute ago that you sound remarkably similar to your thesis for how you'd like to your magic wand that you'd like to wave in your industry. And I'm curious, I hadn't come across that. I'm curious what your magic wand is. I'm sure your listeners are already very familiar with it.
Colin White:We we we always like talking about it. So the the problem of the financial industry is that sales dominated. Success is can you sell it? And that's for lifestyle, that's for credit, that's for investments. It's not about being what's right for somebody.
Colin White:You know, Richard Theodore was one of the fathers of behavioral finances. I heard him on a podcast say it's much easier to take advantage of people's weaknesses than it is to correct them. And the financial industry has really, really, really taken that and run with it. So I think in our ideal world, and Josh, can correct me if I'm wrong or add or color. If we could eliminate the sales culture from the financial world and turn it into a service organization where it should be.
Colin White:There's different numbers out there, but if you take a look back in the early nineteen hundreds, you know, the percentage of GDP that was the financial industry was, you know, double digits, but it was low teens. Now depending on numbers you're looking at and when you look at that numbers in the mid twenties or 30% of the economy is now their GDP is the financial. All we do is move money around. Like, we don't make a car. We don't operate on anybody.
Colin White:We don't deliver a newspaper or anything. All we do is move money around. Why is it costing so much to move all that money around? Because it can and because it's a sales culture. And if people wanna be stupid, let's help them be stupid.
Colin White:Let's help them be stupid and let's be profitable at it. You know? So I think, you know, if Josh was to ask me that question, would say if we could remove the sales from the financial industry and turn it into a service industry, that would be my magic one. How to get from where we are to there? I don't know because there's such an entrenched inertia there and there's such a power base there and they've they've lulled people into a sense of comfort.
Colin White:And so we're gonna try to be the spark that ignites the plane. I don't know, Josh. Did I do a good enough job of putting words around that?
Josh Sheluk:Yeah, well, I'm sure Nick, you can see a lot of the parallels between what Colin just described and the ad revenue led media as it is today, taking advantage of people's weaknesses, monetizing them rather than actually delivering the service or the information or the good financial advice. So I think that's certainly a good way to put it. Think sales isn't a bad thing, right? I think it gets a bad connotation because what it is, but sales can be a good thing as long as it's incentivized in the right way. So I think a big issue with the financial industry and the culture in general around it is the way that things are incentivized.
Josh Sheluk:So a big part of what we've done and what we're trying to do is build an organization, framework, a platform that removes some of those conflicts or all of the conflicts if we can, and incentivizes the right type of behavior rather than the next sale.
Nicholas White:It is really interesting, right? Because certainly in the financial industry and a lot of roles, have an explicit fiduciary responsibility and you think of yourself in many ways as a fiduciary. And I think as a journalist, everybody gets into being a journalist in order to serve readers. Want to inform the public. They want to uncover the truth and inform the public.
Nicholas White:That's what you want to do. Right? We all get into these things not all of us, but most of us get into these things sort of with our heart in the right place. We want to be of service, actually, to use your phrase. And I think the financial incentives, the imperatives take over.
Nicholas White:If you'll permit me, actually, I read this essay by Vaclav Havel years ago. And it was one of those things where you read it and you go, man, this guy's articulating everything I ever thought and couldn't articulate myself. Was so powerful. And he was talking about how we all, as humans, are locked in a very inhuman system. He talked about walking home from school as a child and being able to see over the tops of the trees a smokestack belching black smoke into the atmosphere.
Nicholas White:And he was like, I know that's bad. I don't know how it's bad. I didn't know anything about the this was long before he wasn't talking about environmentalism, really. This was really about the fall of communism and the Western system and so on, of capitalism. And he was like, I know this is inhuman.
Nicholas White:It's not good for people. It's not good for the forest. It's not good for the farmers. It's not good for the ecosystem. Anyway, so he was criticizing this kind of system.
Nicholas White:And he tells this story about he was going to then talk about this. And he's been invited now. He's been released from prison. It's after the fall of the Berlin Wall, all that stuff. Now he's being celebrated across the world.
Nicholas White:And he's invited to speak at something, Davos type of situation. Right? And he stands up in front of this group of people, and they are all presidents and prime ministers and CEOs of Fortune 500 companies around the world. I mean, these are the people who've created the system, right, that he's going to criticize. And he's not gonna hold anything back.
Nicholas White:And he's thinking to himself, they're either going to applaud politely and walk away and forget everything I've just said, or I'm going to be arrested. One of the two. And he finishes this talk, and there's this pause. And then the entire room stands, rises to its feet in standing ovation. And he does not know what to make of it.
Nicholas White:He's just like, how is this happening? I think I know what's happening. And I think it's that all those people who have all the power in the world feel equally powerless. They feel like the system puts its imperatives on them. And they don't have a choice but to build the smokestack, belching black smoke into the atmosphere, right?
Nicholas White:That's what they have to do. If they didn't do it, they'd be fired, and somebody else would do it. If they didn't do it, another company would do it, and all their employees would be out on the street. I think that the incentives create these imperatives. And in a lot of ways, we are powerless in front of them.
Nicholas White:All of us almost all of us, not everybody, certainly, but almost all of us actually get into it for the right reasons. Those incentives take over. So anyway, that's my long way of saying, I do think if you wanna change the world, you have to sort of diagnose the incentives that are forcing everybody to behave a certain way, and then you change those incentives. And it's God's work if you can do it.
Colin White:Which takes us full circle because as we're back to business model. And, you know, I think that's where there's a good full circle to go with. Always understand the business model because that's gonna drive what actually goes on. And I think you're you're doing a remarkable job of trying to change that business model with a level of success, which is nice to see, and we'll be certainly cheering from the cheap seats. And, we'll continue on our journey.
Colin White:Also, we're gonna continue to look to find other people in other industries who have similar ideas about, you know, doing things the right way and and trying to educate people. It's it's not honestly a great business model for us to come on and just educate people. I mean, we we would make more money off of this if we were talking about crypto and the latest way to invest in crypto. That would be way more profitable for us. But a little bit of our soul would die every time we recorded a podcast and I don't want my soul to be dying.
Colin White:So we chose to invest it this way.
Nicholas White:You know, I'm so glad you brought that up because it gives me the opportunity to talk about what I really came here to talk about, which is my new AI driven crypto purchaser.
Colin White:Know? All the latest AI secrets.
Josh Sheluk:You really need to call your business Fragment AI, and then you'll triple the valuation multiple on it overnight.
Colin White:$100,000,000,000 valuation.
Nicholas White:Speaking of soul, your soul dying a little bit. The day you see us change our URL to fragment.ai, then you can schedule the funeral.
Josh Sheluk:Well, that's a good spot to leave it on, Nick. Thanks so much for joining us. We are always here,
Josh Sheluk:as Colin said, trying to educate people and again, pull back the curtain, give them a little bit of insight to what's going on in their world, in their lives, in their finances. So I think you definitely furthered that today. Much, much appreciated.
Nicholas White:Thank you guys very much for having me. It's been a ton of fun, and, I look forward to the revolution in finance that that you all are leading.
Colin White:Link soon to a street corner near you.
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