A bite sized discussion on timely financial news and investment topics, to help you maximize your net worth and wealth for the next generation with Justin Dyer and Mena Hanna of AWM Capital.
Brandon Averill: You're
not competing against AI.
We're competing against
the peers that use AI.
'Cause at the end of the day, technology,
really only enables the change.
It's actually the people
that drive the change.
Mena Hanna: Intelligence
is going to get cheaper.
That's what happens in revolutions.
That's what happens in these new eras.
Technology is going to get cheaper.
Ultimately, what's gonna
matter is the human element.
Brandon Averill: They added up the revenue
of all the major sports in the United
States, and the total revenue generated
last year was something like $55 billion.
To put that into perspective,
Anthropic will generate that
revenue in the next six months.
Mena Hanna: Hey, everyone.
Welcome to another
episode of AWM Insights.
I am your host today filling
in for our CIO, Justin Dyer.
I am Mina Hanna, Portfolio Manager here
at AWM, and I'm joined by
an AWM
Insights OG, um, kind of the godfather
of, uh, AWM Insights, So, exciting day.
We were on the road actually
yesterday at an AGM.
And before we get into that Brandon,
tell me the most impactful story that
you heard from, this two-day AGM.
but
Brandon Averill: First off, Godfather.
I mean,
uh, I was so good that they
don't let me do this anymore.
Uh, but yeah,
It was, a, It was a great day.
Uh,
we heard some pretty
amazing things from some
pretty impact- impactful people that we'll
get into.
But
One of the craziest
stories we heard was, um,
really aroundâ¦
It was a
story about a
um, a hospital
system CEO.
he was
you know, going through some
personal health challenges.
Uh, somebody with, you know, access
and resources to, uh, you would
think anything that he possibly
needs to get to the bottom of it.
And He was having this,
this these gut issues.
And
so, um,
you know, he'd gone to multiple doctors
within his system, outside his system,
and just kinda got to dead ends, done.
all the tests, done everything,
and kind of with the Hail
Mary goes, "You know what?
Let me just take all this and
I'm gonna throw it into AI."
um, and so he used one
of the big platforms.
and he fed all of his
testing data in there
And
everything, and, um, you know,
started to interact with it.
And it told him,
"Hey,
you know, this is kind of interesting.
Why don't you go run a couple more tests?"
And what do I have to lose?
You know, can't
find a solution anyways.
He went and ran a couple
more tests and um,
asked
him to fine-tune it one
more time, and he did
that.
And
it turned out it came back and it made
this suggestion around a diagnosis.
And so he took that diagnosis to
the doctors and was like, "Hey,
this is what it's telling me.
I've got a vitamin B1 deficiency."
And they're like, "No, you're nuts."
Like, "Nobody
has a vitamin B1 d- deficiency.
It's readily available
in
food, et cetera.
Uh, you'd have to either be, like,
a raging alcoholic and not eating.
That's how you get a
vitamin B1 deficiency."
And, um, so he, he walked
away a little discouraged.
Um, but it just sat with him, and
he's like, "This can't be right."
And so he kept feeding it kept feeding it.
and sure enough, it, add-- it
ended up
diagnosing
him with a very specific, uh, genetic
disease
that he then took to the medical
professionals who probably studied
it at some point in time along the way
but had
forgotten about it.
'cause It was that rare.
And so I just thought it
was a pretty remarkable
example
of
how
quick and impactful the space can be.
I think, you know, one thing
that we heard as a theme
throughout the day, uh, was, you
know, AI can
really transform things, and I
think it's getting-- I mean, we
heard the, the stat, I think it was
Dave Morin that shared it.
like
AI
is actually less popular than ice in
this country, which is pretty remarkable.
But
I think that's because we
don't understand it.
And what we really learned and
I thought was hit on, uh, really
successfully is, how, you know, AI
can change things, it can speed
things up, but at the end of The day,
the
human is always gonna be involved.
And you know, I think
that was really impactful
for us as we think about how
we service clients as a human-centered
firm, uh, building a family office,
building 100-year families, how important
the human is to this entire relationship.
Mena_Audio: Yeah.
It's a, it's a tailwind.
It's not
a headwind.
It's something that can
help multiply and magnify work.
It's not something that
completely eliminates work
for, for the humans.
And yeah, it was, it was
a really cool experience.
So, so walk us through where, where
were we and what were we doing?
Brandon_Audio: Yeah.
So we- we're actually--
it's
a-- I think it's a cool
opportunity, to share.
Um,
you know, we were up in San Francisco.
Uh, we were
at, uh,
Next
Legacy is one of the venture
relationships that we have.
Uh,
Ryan Nece is a good friend,
managing partner of that
firm.
um, and, you know, we thought it
would be helpful to share with,
you all today a little bit of what
that experience was because it's
probably a unique, uh, viewpoint in
for a lot of people, especially our
clients, into what these annual general
meetings, look like and the impact.
this one happens to be unique
because there is a huge
cross-section of our world.
So, a huge athlete, entertainer,
uh, contingent there, but also some
of the leading venture capitalists,
technologists
really in the world.
um, and so we got to spend the whole day
there hearing from different people, I
would say, um, you know, to give Ryan the
kudos, I mean, he, he really helped
us shape a lot of our early thinking
on
approaching the venture
space, uh, for our clients.
Uh, And So to be there, with him and see
what he's built is pretty remarkable.
Um, But we had this through line.
AI is, the topic everywhere, right?
and Um, the alignment
came in the
in the-- combination of yes,
AI, but then the human and how
do these things relate together.
and
I would say the
it was
resounding through
the entire program.
Um, like I
said, these, you know, highly
successful venture capitalists all
view this, this in very similar
fashion, which is pretty cool.
Mena_Audio: Yeah.
And I think one of the-- at
least for me, one of the most
interesting takeaways was
a lot of the athletes that
I talk to are not allocating capital
to venture, because it's sort of
one of those asset classes and
industries that's hard to access.
You also have to be extremely
thoughtful to access it properly.
So yeah, it was it was pretty
remarkable seeing a lot of
people there that that were interested
in all of the stories, interested in the
asset class, but haven't had exposure
yet, just through some, some either access
issues or, or just strategic planning.
Um, so you you talked about
kind
of
intelligence in general.
I wanna highlight how we
think intelligence is actually
shifting and how things are
kind of being
commoditized
in a
way, and how we are going through
what, what someone there labeled
as the intellectual revolution.
You know, we've had the
Industrial Revolution.
We are going through the
intellectual revolution where
We're going to be living
v- much, much more,
call it streamlined lives.
Humans, and this is kind of where we
were talking about human tailwinds
and
humans mattering more, we're not going
to have to do a lot of the redundant
things A lot of these things are just
gonna be taken care of by an agent.
It is really going to shift
what matters and how things are
actually being measured in general.
There was one, one example that I
thought was, was so interesting.
Aluminum was actually the most
precious metal in the mid-1800s.
Um, it-- Yeah, Napoleon used it as
his silverware when he was greeting
royalty and, and high-standing people.
Th- there's a million, a million of
these use cases, way more expensive
than both gold and platinum.
But once we figured out
how to actually refine it
properly, it
completely changed the
value of, of the metal.
And I think this is a good time to also
say that gold is at $4,000 an ounce.
Uh, so, so we were right on, on not
investing in commodities in general.
But, uh, but getting back to topic,
there is going to be a shift
in how things are judged
how things
are valued.
and at the end of the day, I think
what AI
is actually doing is it's
enabling people to do the things that
matter and spend more
time doing the things that
actually matter, which
should actually
add a lot of value in general.
You can always have, even in
our case, you can have AI take a
look at your portfolio, take a
look at, you know, the massive
portfolios of, of some of the clients
that we have that transfer in,
and
give you suggestions that are potentially
semi-similar to what we would do.
But It wouldn't be probably A, exactly
the same, and there is, I would
argue, an added value of having human
oversight to something like this,
making sure that there isn't something
that's being missed, that the AI is
understanding your family goals, the
family element, the human element.
That is that is where we
specifically add value, and, and I
thought it was an interesting-- The
aluminum example was an interesting
example that shows kind of the
shift in value and the shift of
How this intellectual revolution might,
might impact what actually matters
and what's measured down the road.
Yeah.
Brandon_Audio: a great point.
I
mean, I, itâ¦
at the end of the day, there's
this saying, right, like,
um, history doesn't often repeat
itself, but it rhymes, and
we've heard this story before.
Um, you know, there was an example
of going through, um, really, uh,
and I'm not an art history major,
but there was an example going
th-th-through the different art periods.
and
it went from hieroglyphics
where it
was like
stick figures and- Yeah
the whole realism
movement.
And the
whole
point was, uh, art originally evolved
so that way we could arrive at reality.
Uh, and then
somewhere along the
line, I think it was the
1850s the photograph.
showed up and at that point,
everybody was like, "Oh, art's dead."
You know, the photograph's here, we're
gonna stop painting,
all that's gonna happen.
Um,
but what
ended up happening, of course,
that's not what took hold.
it became, uh,
impressionism and
Monet and all these
different examples, right?
Of
art,
as we potentially know it today.
and we're seeing shifts in
art, we're seeing it with music
and uh, other types of art as well.
Um, but I
think
that's
the important point is it's
gonna allow us to be more human.
it's gonna allow us to be more creative.
um, and you know, you could probably
think of a million examples along the line
where, uh, something, you know, we went
through the, the technology revolution
and,
um, you know, placing stock trades that
uh, I mean, you used to have to fill out
a piece of paper, you know, run that down
to the trading floor, Somebody had to
grab that, somebody do something else.
Like, that's insane.
Now we do it
electronically,
and we're the-- we're better off for it.
Um, and so I think y- taking
that same approach with AI,
uh,
we're gonna see more and more with this.
and I think it's always a good reminder.
we had, uhâ¦
There was a CEO
there Carl
Essenbach, um, that, uh,
was a very,
impactful
speaker in his own right but really talked
about this and had the quote, you know,
Brandon Averill: you're
not competing against AI.
um, we're competing against
the peers that you, uh, use AI.
'Cause at the end of the
day, technology, you know, it
really only enables the change.
it's actually
the people that drive the change.
Brandon_Audio: And so I think it's
a good-- it's just a good reminder
as we went through this, like, this
is all exciting.
It's all
changing.
It's a little scary for
sure.
We think, you know,
jobs are gonna go away.
They are gonna go away, but other
jobs will get created, and I think
that's just a good reminder to have.
Mena_Audio: good reminder to have.
Totally.
And,
and one other kind of
example that I know we
were talking about before,
the human element
is still what is going to drive all of
this
We're not tomorrow gonna wake up with
a robot that's developed that can
pitch a baseball and another robot
that can actually hit a baseball.
You know, we were talking about how robots
today can actually pitch potentially
a baseball at 150 miles an hour.
That's not gonna get rid of pitchers.
Right.
No one's, no one's going to wanna watch
a robot
baseball game.
We wanna watch people, we wanna
have that human experience.
We wanna understand the stories of where
all of these players have come from
what they actually wanna accomplish.
Now, how
might AI actually creep into
baseball a little bit more?
I think we're kinda seeing It with
like ESPN, some of the interesting
statistics that ESPN obviously leverages
AI to, to make things a little bit
more interesting and make things maybe
a little bit more human-centered.
But the players are never gonna disappear,
the people are never gonna disappear.
AI is just an another, another enabler
to actually make people shine a little
brighter.
Brandon_Audio: Yeah, for sure.
I think the other thing is
I mean, I guess take all of this
like AI is exciting and it's
gonna change the way we live.
I think that's, you know, hopefully a
pretty obvious statement at this point.
But, you know, purpose of this podcast
is investing,
and so I
think kinda drawing this
back, some of the lessons
or the confirmations
that came out of it for
me were,
you know, how do you invest
with all of this going on?
How do you know who's gonna win?
You know, what's the
best way to approach
and build the portfolio?
Um, And you know, I'd
love for you to hit on?
that, Mina.
You're, you're the one that sits in that
seat and
really
thinks about these things.
Um, but you know, we did hear
an example the the founder
uh,
And CEO, of Hex.ai,
uh, went through a
whole process of, of
really the defining decisions
that he's had to make along
the lines,
um,
to
really put that company.
in a successful position.
And, you know, it's not a unique story.
You go through these ups and downs
and these inflection points, and
at the speed of all of this
moving, there are things
that they are working and spending
millions of dollars on developing that
tomorrow
they are going to
tear up and start all over again.
And it's pretty fascinating just to hear
the process that they're going through.
Um, So I'd love to hear like and then
you got-- we had Miracor, you know,
talking about- Yeah ⦠the success there.
Like, there are people attacking
this from all angles, and I
think
it was a, for me, it was actually
a, a validator of how we build.
we build diversified allocations
into these spaces because we don't
know tomorrow whether it's gonna be
Hex or Miracor or w- name your AI
tool or company.
Um, but how do
we actually go about investing in
this space, making sure that, uh,
that we're not missing out on the
opportunity that's right in front of us?
Mena_Audio: Yeah.
The
interesting thing is, uh, this
is a statistic that they quoted.
Only 2% of employees
today, of workers, actually use AI
in sophisticated-- in a sophisticated
fashion, and only four out of ten
Americans actually use a chatbot.
So on that end, we are still
in the very, very early innings
With
that being said, um, there is a lot
of, call it froth in the market.
There's a lot that's going on.
There's a lot of funding
that's coming into the markets.
There's a lot of potentially
companies that shouldn't be funded.
It kind of reminds me, and this was
a topic that came up, um, that we've
had on our podcast, and it came
up yesterday of the dot-com bubble
and
the dot-com era, where a lot of companies
got funded that shouldn't have been.
A lot of companies went to zero.
But you also had an emergence in some just
foundational and fundamental businesses
that are still ever present today.
Amazon, Google, eBay, they all
either arose or really gained
traction
during or in the shadow
of the dot-com bubble.
So with that in mind, You kind
of have to construct a portfolio.
Discipline matters even, even more
today- Yeah ⦠than it did in the past.
You do have to construct a
portfolio that is diversified,
where
you do have access to
a
lot of
companies, because you don't
know what your outcomes are
actually going to come from.
Another item that came out in
this conference is roughly 5%
Mena Hanna: five percent
Mena_Audio: of
venture-backed
companies generated 90%
of the industry's profits.
So if you really think about it,
probably 70% of, of the businesses
returned little, if, if nothing.
Um, so it is even more important
to
find those best-in-class managers to
also diversify within those best-in-class
managers because when you think about
it from a from a numerical standpoint,
each one of these managers is taking
30 to 40 shops on goal.
It's
a good amount, but if you just
over concentrate in one manager,
you're probably
going to miss that unicorn, the
next Anthropic, the next OpenAI.
You do have to
have broad-based diversification, and what
that means to us is 500 to 1,000 companies
in every vintage year.
Our clients invest in five
to seven vintage years,
So
you're looking at 3,000 to
5,000 companies in general.
That is where we feel
comfortable of hitting on
these mega companies,
these mega businesses
that
40, 50, 100X and return what's required
to actually make up for the losers.
I think one, one of the, one
of the themes is the power law
is just becoming more apparent.
So the way that, you
kind
of protect yourself and also improve your
odds of success is, is diversifying and
you know, being selective, but also taking
shots where, where it makes sense to take
shots
Brandon_Audio: I think
that's, that's huge.
The other quote that I'd be
remiss if we didn't mention,
um, or
stat rather, uh, somebody highlighted that
because
there were so many athletes in the
round or i-in the room yesterday, um,
Brandon Averill: they added up the
revenue of all the major sports, uh, in
the United States, and the
total, uh, revenue generated last year was
something like $55 billion Uh, and to put
that into perspective, what's happening
AI
in AI.
and tech right now is Anthropic
will generate that revenue
in the next six months.
Yeah.
Like, that is
insane, uh,
that one
company,
the
entire
Sports industry
in
the United States.
It's, it's remarkable when you start
to think about the scale and what that
impact means ultimately long term.
Um,
And then I would just
say, you know, the other
uh,
lessons that you know,
certainly sitting in that room.
really on a,
on a--
with my client hat on my, you
know, how, how do we relate this
to clients and what are the lessons
that I would
be pulling
out of, this as a
client, um, is, you know,
in all this
tech, like
Mena Hanna: I
found it extremely comforting
throughout the team development.
Brandon_Audio: found it extremely
comforting around the human element.
I found
it extremely comforting knowing that we
have all this technological advancement
coming, but at the end of the-- day, it
is still the humans that drive things.
Um, so that was, that was
certainly one lesson.
We had the opportunity
to
hear from people like, Larry Fitzgerald,
who, uh, And LL Cool J, which,
he, you know
I don't know that I shouldn't
have expected this from him, but
was one of the most impressive
people I've ever s-heard speak.
Uh, just incredibly articulate,
very
thoughtful, um, you know,
just, just fantastic.
and
he he even had the
point, like the, theâ¦
incalculable human will.
So it's like, you know What
we can't
measure is still is a man's heart.
And all athletes know, this right?
We've all played with a guy that
was immensely talented, um, and
maybe even got picked really high,
but you, knew, knew in the back of your
head there's no
way
he was
gonna make it.
Um, and then you played with a guy who,
you
know, maybe lacked some of the physical
tools,
but there was no doubt that Dustin
Pedroia was gonna have success
in the big leagues, um, if you
played with him or you knew him.
And so I think Like that human
element still carries through
in so many of these, uh, so
many of these areas.
Um, And so I just thought
that was really comforting.
And then the last thing was, I'm
always reminded and I'd be, you
know, I, I definitely wanna mention,
I'm always reminded of, you know,
the--
who we're competing against.
when I'm in that room.
And, you know, oftentimes clients bring
deals to us take a look at this and
the opportunity, and that's awesome.
We love talking about
that type
of stuff.
Um, but at the
end of the day, you know,
um- I
is sitting there and
asking the question, wow, I'm competing
against these men and women that do
this on a daily basis and look at
these
companies on a daily basis.
Um,
it's quite humbling to
sit there and go, "Oh,
I
might be excited about this
company," but like, why is it here?
And then ultimately, am I equipped
to make a better decision on this
company than, you know, the, the GPs
that
we have picked, these investors
that we have picked to invest with?
Um, I, I'm not
taking that bet.
You
know, I always
Make the joke
like I, I did play a little
pro ball, believe it or not, but
I'm not running over and pinch-hitting
for Ohtani tonight.
Like, that would be silly.
that's, what we're talking about
here, and I'm always reminded
of that being in that room.
Mena_Audio: Totally.
And that's, that's actually, uh,
that's a that's a great place to wrap.
so in this world,
Mena Hanna: intelligence
is going to get cheaper.
That's what happens in revolutions.
That's what happens in these tectonic
shifts, um, in these new eras.
Technology is going to get cheaper.
Ultimately, what's gonna
matter is the, human element.
Mena_Audio: It's gonna matter when
it comes to investments in general,
And
I would say it's gonna matter
even more when it comes to setting
intention about how you actually
wanna build your 100-year family,
what
principles you wanna think about, and
and yeah,
who you actually wanna
take this journey with.
So
kind of
gonna end
with uh, with a last quote that, that
we thought was cool here: "Before you
can go upward, you have to go inward."
I think that's very reflective
of the conversation that,
uh, that,
we just had.
Uh, no need to go further on that.
Uh, if you guys have any
questions, please shoot me a text
or give me a call, 626-862-0355.
And on that note, own your wealth,
make an impact, and always be a pro.
Thanks for listening.