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Fixing Fish Farm Finance with Scoot Science’s Grant Cavanaugh
Episode 4810th June 2022 • Free Money with Sloane and Ashby • Free Money with Sloane and Ashby
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If you’re like most people, you may not have realized that fish farm finance is somewhat unfixed at the moment. We talk with Scoot Science CIO Grant Cavanaugh about why that is.



and I don't know. Alliteration is need, uh, but so is this episode, I'm still on cartel. This is the free money podcast. And we're talking about fish, farm finance. Um, our guest is grant Kavanaugh. He is the guy you'd want to talk to about this.

We'll talk to them about how the, how fish farms differ from traditional fishing, where you take the boat into the ocean and like get fished that way. Um, and the sustainability difference between agriculture and traditional fishing of folks who are, you know, watched see spirits and various other things might be aware that fishing fleets are huge contributors to ocean microplastics.

over time. And what sorts of [:

If you want to ask a question. Free money at your convenience. This week we answer how much stock do you put into those various pension indices that compare various countries on a range of things. Um, Can you think of a time when someone really put the douche in fiduciary?

What was, and is the circumstance and would you ever grow mushrooms?

These are all questions that are at the center. Of every investment committee's deliberations right now. Um, thank you for joining us for another delightfully investible episode of the free money podcast. I'll catch you on the other side of the disclaimer take it away shark bait

these straight about what's [:

All opinions expressed by either Sloan or Ashby are entirely their own and do not reflect the opinions of their crew or any company clients. So invest vegan may maintain positions in securities and strategies discussed in this podcast. Advisory services are only offered to clients or prospective clients where invest vegan minutes representatives are properly licensed or exempted under client agreement has been executed.

e give you the Brooklyn bury [:

Ashby Monk: were

Sloane Ortel: craving SWAT. Oh yeah. I, I, uh, I, you know, I got a little too excited there and I, you know, I just, my voice can take it,

Ashby Monk: you know, just because I think Sloan, the craving is real. Yeah.

Sloane Ortel: I do it in podcasting and this is an athletic pursuit. I don't think that many people give it credit for that.

Ashby Monk: That's true.

You know, you have to kind of get yourself pumped up a little bit, you know, you were feeling down, you gotta look at the mirror and say, you're smart enough, you know,

Sloane Ortel: have you ever done affirmation? Uh,

Ashby Monk: no, I haven't, but they have some man in the mirror very loud to myself. Uh, it's gonna make a difference.

Can I

an, like, you know, it makes [:

Ashby Monk: yeah, I can think of is the us Senator who used to just be a comedian.

Al Franken staring at the mirror on SNL. You're good enough. You see, gosh, darn it. People like you

Sloane Ortel: or something like that. And you know, what's amazing about that character is that the, their outfit has stayed roughly the same amount of cool until now where it has become the coolest thing in the entire world.

It's not just a sweater. Yeah, this is sweater, but it's a special, it's a special kind of sweat. You can't just buy any sweater and you've, you know, that level, you got to get a norm core precision guided missile into the sweater department. It's hilarious.

Ashby Monk: Definitely at the top here. Are you doing

Sloane Ortel: okay?

ut dead friends last time? I [:

Ashby Monk: I think that was technically two episodes

Sloane Ortel: ago. It's like, you know, this is the, the dead friends and related parties and uh, yeah, at the

Ashby Monk: top here, we just take care of the business.

Sloane Ortel: I know you lost somebody close to you.

I was, yeah. I mean, w you know, one of my best friends in high school I've ever roommate, uh, you know, died of a heart attack unexpectedly recently. And like this episode was actually, you know, rescheduled. So, you know, we got to know, well, thank you. Thank you. Thank the fam and the free money, uh, you know, family for, for bearing with us as I was too sad.

It's horrible. Yeah. I mean, I feel like it's important to talk about grieving though. I mean, like if you set the example, you know, without realizing that we were entering a new death related phase on the free money podcast, a couple of episodes ago,

Ashby Monk: you know, we're all gonna die soon. Yup. We are. I mean, I don't know if the listeners are aware of that.

And sometimes, [:

And I was like, that sounds crazy. But I think I am now to. It is grounding. It is a reminder of how precious this all is. And I take, for example, this moment, Sloan more, you know, I have more compassion and more interest in being here in this moment then maybe I dunno.

Sloane Ortel: Yeah, no, I think that, that is totally real.

Like I, you know, once you, once you've lived long enough to have seen some shit.

Ashby Monk: Yeah. Because we didn't live through Nam. You know what I mean? We weren't,

ned Dallas's good. Tells us, [:

Ashby Monk: oh, I gotta get that. Oops.

Sloane Ortel: That's your tip today?

I mean, well, I'm just, I bound with gardening wisdom today. I, you know, it's spring, I'm the very spirit of Demeter herself. Let's get to the news though. I did. Let's talk about actuary.

Ashby Monk: Um, no, this one is here we go. The country of Mozambique. Ooh, no Sloan. That is that country.

Sloane Ortel: I

ia. And so Mozambique is for [:

And yet it has intended to establish a sovereign wealth fund for some time now and now that their natural gas exports are about to come online. Um, the sovereign fund will be taking deposits by October and, uh, I think it was the minister of finance, max tau Nella. We're doing a research, good name. Um, very well buttoned up story here.

Max says is fun. Could be $96 billion. Oh,

Sloane Ortel: okay. Yeah. You know, that seems a little weirdly precise for like a, obviously plucked out. I mean, like, you know, why don't I need to figure out is

Ashby Monk: this like the 40 year projection, like our net zero friends,

Sloane Ortel: um,

Ashby Monk: or is this like soon? Either way? I couldn't figure that out because I only looked at one story.

tory all the way to the end. [:

Um, which in which well increase the value of your currency, which harms your domestic exports. Yeah. The resource curse, the resource curse. Yeah. That's the Dutch disease, you know about that. And so you establish these funds, you hold the assets off shore and you only onshore the assets, the financial assets when your country has the capacity to handle it.

And so this is actually, even though it sounds crazy that the third poorest country on earth would establish a $96 billion sovereign fund. It actually makes sense. And my guess is the IMF and the world bank will be pleased to hear this.

the things like, I mean, you [:

The doting slash cajoling, grandparents of international development, finance, like starting a sovereign fund, seems like one of those things that it's like the starting to journal, you know, like it makes, it makes your grandparents very happy.

Ashby Monk: Are you journaling?

Sloane Ortel: Yeah, exactly. You got it. I'm going to be so glad someday when you look back and you just, you know, you will, you'll forget.

You'll forget all the things. I don't know. My grandmother grandmother's up somewhere.

Ashby Monk: You'll forget. You'll forget. Yeah, no, y'all new hot. That's my body. I just said no, you're not. Okay. Now we're going to go straight to Oman, Oman, Oman. Oh man. Sorry. That was good.

Ah, The town of musket, where I've been two times

pposed to have such cool low [:

Ashby Monk: in. And it's like Portuguese monuments up in the mountains above this, like middle Eastern, um, beautiful like architecture place. I mean, like, I think when the Islamic countries come together, I think they come to musket.

what we know. Um, but Oman in:

Um, very similar to the Abu Dhabi investment authority. Uh, correct, but on April 24th, um, his excellently Abdul Alma Sheedy, who I've met when I went to the Oman, um, has said we are going to split up [00:12:00] this into two portfolios, uh, one for domestic development and one for international assets. And to me, that sounds a little bit like going back to what they had, that's what they had before they did the murder.

So I thought that was newsworthy for our little community. Didn't know that. I see what they're doing. Yeah. They did the merger and then they're like, it was kind of good before. Um,

Sloane Ortel: I liked how we just had a pool of money that we could go to when we wanted like a stadium built or something that

Ashby Monk: this is the amount of investment fund and it was domestic.

And it invested in, you know, domestic development,

Sloane Ortel: probably stadium, not a great example of domestic development where the stadium is like, you know, if you want to like, literally set your money on fire. Uh, it's the, uh, I don't know what, what a good worst thing is, but it's the, I dunno, frozen hot pocket of.

Ashby Monk: [:

Sloane Ortel: lips. No, but when I'm talking about like, when you think it's cooked, but it's not really cooked and you're like through the hot, and then there's a little piece of coal that's miserable.

Ashby Monk: Yeah. That's when you thought you were going to create jobs in the local community and all you have is a $300 million bond.

Sloane Ortel: Yup.

Ashby Monk: Yup. Exactly. It's like a word it's a wasteland around the stadium that like, nobody goes to any next stories about women, the world population. That's not my story, but that's

Sloane Ortel: something I think about these women.


as, uh, women, sadly, aren't [:

Um, and has something called a gender balance index, which I thought is interesting. Uh, this year is the ninth running edition of the gender balance index. And I figured like we shouldn't be tracking that index. Yeah. I'm glad that good for home for, for like collecting the data, they track 335 institutions.

So wow. Off of is doing some data

Sloane Ortel: analysis out there. And these are, these are asset owners or asset managers. They're just big employers.

Ashby Monk: I'm pretty sure it's one of the things you said I have

Sloane Ortel: making it to the threat. So it's finance organizations we're tracking. Okay. You know

Ashby Monk: what it says it in the. Uh, central banks, commercial banks, sovereign wealth funds, public pension plans.

Sloane Ortel: That's dust. Okay. So I would expect that to be slightly more gender balanced than the industry as a whole

is is a very true statement. [:

not sick ladies. This is depressing.

Uh, I can remember being in like fourth grade when somebody was like, that's bad. What like actually bad? No, like, no, like bad means cool down. And I was saying, this has got too far, EDU, anyway, this is bad here because one in 10 institutions surveyed had no women at all in senior management or in the boardroom.

%, [:

It's not 50%, but anyone who at least they're setting the target at 30%, there's one 10% have zero points.

Sloane Ortel: Yeah. Yeah. I mean, like, I think that they could all take an example from us at the free money podcasts. I mean, we're about to do diversity by having our first male interview. We had like a year,


Ashby Monk: six. I, my other favorite quote is 60% of the time. It works every time

Sloane Ortel: well speak. I mean, like, you know, we've got a guy who works. I mean, today we got a sick way that works. Yeah. Yeah. So we're talking about, I mean, we're talking about fish farms and this is really fascinating. Well, let, let's let grant in here and you can tell us why the heck, you know, we would, we would be talking about this, uh, um,

Ashby Monk: grant.

Perfect. He's not here.

knows we were put this show. [:

Ashby Monk: technical glitch that would've been on. Brandon.

Sloane Ortel: See you grant, can

Grant Cavanaugh: you, can you hear me? Am I, am I a.

Ashby Monk: Oh, yeah, no, your brew, which is shocking. Cause, uh, yeah, no, we got you. We saw your mug, but the audience can't see you. So we, what we do is we describe you, you're wearing a nice sport coat.

You've got a green shirt on.

Sloane Ortel: There you go. Uh, and, and there's like, um, there's like standing over a trashcan fingerless gloves, which are really a,

Grant Cavanaugh: I prefer to think of them as Flashdance, my hands.

Ashby Monk: That is for your head. Oh, big Flashdance here.

port and all this, but like, [:

Um, like

Ashby Monk: how do we free money to the fish?

Grant Cavanaugh: Yeah. Okay. Great. All right. Well, um, maybe the best place to start is, uh, is going back, like basically to the beginning of my life, which is an interesting kind of early eighties. Flashdance is in theaters. Um, and thanks. Yeah, well, we're just at the beginning of the satellite era.

steam it's once in the early:

Um, and so we've gotten to a point where we'd more or less over fished, a lot of, uh, the world's main fisheries. So in 19 82, 83, that was a really big El Nino year. And it was so big and bad, the overfishing, uh, at that time and crew that the entire Probean anchovy, uh, industry collapsed and was nationalized.

So all of the, the biggest, uh, some of the biggest, um, you know, uh, oceanic fish groups in the world were nationalized because they were functionally bankrupt after this big climate event. And that, that was a time when China was. Large and per capita consumption, but hardly existed on the world stage. You know, only 10% of the world's fish was consumed by China at the time.

nd it was basically all wild [:

And so, um, you can fast forward. 30 plus years, um, Flashdance is as relevant as ever, uh, and fair. And roughly two thirds, roughly two thirds of our fish come from agriculture today. Um, and that's about, you know, uh, 16% of animal protein overall. And, uh, and so we've, uh, just since 2000, we've tripled the volume of aquaculture in the world.


Um, there's kind of three Northern European banks that, that dominate the financing for these operations globally. And those are, uh, DNB, Nordea and Rabobank. So large banks on a regional basis, but not the largest banks in the world. And they provide this, this financing and they have a real bias towards the species and locations where they feel most [00:22:00] comfortable, which tends to be Northern Europe and, um, in a select group of fishes.

And if you're an economist, you know that whenever you get, see. Financing, right. That's associated with a capital constraint and capital constraints are what, for me, what makes for extraordinary never-ending seeming, uh, profit opportunities, whether it's a capital constraint in terms of a monopoly or something like that?

had just bought the licenses [:

And, uh, and people notice that, but, uh, and, and that segues into a little bit like Bain's experience in these markets, but maybe I'll, I'll stop there and ask if, if you guys have any questions about my 30 or 40 year history of, of, of fisheries,

Sloane Ortel: uh, I'm having a lot of fun picturing like a Scottish guy throwing fish salmon meal into, into the ocean, just like, you know.

Yeah. Yeah. I, I, I'm not gonna see

Ashby Monk: monster comes out or we're going to start a new industry.

, it seems like there's this [:

Cause like you mentioned, like the big black Swan event was this like climate linked, you know, bankruptcy of all of these Peruvian, uh, anchovies, I believe. Um, you know, and so like I, you know, I guess talk to us a little bit about that. I know that like, you know, for instance, you know, a lot of people who've seen see spirits, you're like out here thinking, well, you know, fishing nets are filling the ocean with microplastics.

Ah, um, but yeah. How do you see this whole sustainability question and this? Um,

say, well, it doesn't really [:

All this progress almost necessarily has to level out it a carbon footprint and environmental footprint that we just can't accept for the long run. Like even if you're making rapid progress, there's going to be limits to that progress. And we just can't tolerate it. I don't think that's the case in, in agriculture more generally.

member, um, kind of in around:

Um, there was a lot of concern, like this might be the equivalent of the ocean [00:26:00] equivalent of like a, uh, Exxon, right? Like an operation that, that just at no point in the future could ever meaningfully contribute in a positive way to our overall, um, Uh, wellbeing, you know, as, as a, as a global society and in my lifetime, uh, the, the ratio, one of the most important ratios in terms of the footprint of salmon.


So, you know, you just have to add. Are you getting over really important thresholds that are meaningful like that, that one for one where you're actually on net creating fish for the world. And, you know, too, is just that rate of progress. That rate of progress has been exceptional. And, and today, if you look around, you probably see very few industries that have a higher percentage of green bonds or green loan facilities financing, their overall operations.

You know, I making, I'm making fun, a little bit of the cabal of Norwegian and Northern European banks that support this industry. But one thing that they've done an exceptional job at is, is, uh, routing a lot of interest and focus towards explicit green mechanisms built into their financing.

You mentioned that Bain had [:

Grant Cavanaugh: Yeah. I mean, I mean, I'm S I'm S there's part of me that's somewhat sympathetic to these folks because they started with what I think is a pretty good idea. I mean, we work really hard to write up a a hundred page paper that details, and a lot of, of why you'd want to consider this as, as a really exceptional investment.

there's, there's plenty of. [:

So I'm very partial to the city, but my guess is that they didn't have as strong a command of some of the technical, uh, nuances of the industry that they were walking into. And additionally, there's always, when you're the first mover, some sort of. Maybe adverse selection problem, where the folks who are willing to sell you an asset that seemingly is an ATM for printing returns are probably the first ones to say yes to that, to that offer are probably the ones you shouldn't buy from.

So in Bain's case, they bought a mid to large size Chilean operator, uh, about seven or eight years ago on the back of some success in turning around a feed producer. And, um, the real exceptional returns are in that primary production owning those farms. And, uh, and Bain had seen this and on that back of it that they said, all right, well, it's time to go in.

What [:

It, uh, in addition to losing a bunch of different licenses and having to pay some very large fines, um, I, you know, I think all of that has been a real distraction from actually, uh, uh, growing efficient, you know, growing an efficient operation and their operation has continued to have real problems. So, you know, in a highly volatile industry, a group with a five to seven year time horizon, uh, even if, even if they're, they're working on the promise of really great returns, Might [00:31:00] still their time horizon and their attention to detail just might not be great enough, um, to overcome the challenges there, which is kind of what we ultimately like to help with from, for, you know, sustainability minded investors.

Ashby Monk: I just think it's so interesting to hear the 24% number that you threw out there on, on salmon performance. Um, I've looked at something called blue bonds, which I think are interesting. Bond is an interesting name for bond blue bond. Um, and it's about clean water. You know, you know, if you need me to clear up the, the, the name there, it's clean water, the blue bond.

uld go fishing in Alaska and [:

So I guess what I'm wondering is like, is commercial fishing just a very lucrative thing to be doing in the world? Like generally. And then beyond that, when you start thinking about non boat fishing and the fisheries, like what geographies do people go after it? And I guess what I'm trying to understand is how do you access it as an investor?

Like, do I need to go build these things? Like, is there Greenfield risk? And I have to actually build artists. Is there like an ETL fisheries ETF? So I'm sorry. That was a lot of different things I just threw at you. Hopefully you're taking notes. Yeah,

Grant Cavanaugh: there was a few questions in

Ashby Monk: there. So I do that to people.

ortunity. And I think one of [:

There are definitely fisheries in the world where, um, there's not, uh, there's not really good underlying economics. And actually, if you'll permit me, I'll give you a little detour on supply and demand in, in salmon and why what's driving those returns. So, um, so supply in the short-term is more or less fixed.

It takes two years to grow a salmon up to market weight. So, you know, the decision to produce salmon or not. You know, it's, it's like people are talking about with the disruptions to world energy markets right now, a lot of the decisions about supply were made two years ago, and you can't really change them in the short term in terms of demand.

I mean, [:

Um, and, uh, and so, uh, so whenever you have that circumstance where supply is relatively fixed in the short term and demands relatively insensitive to price you're, you can see huge disruptions like in salmon markets. Um, the prices have more than doubled in the last couple, uh, the last couple months, um, I thought you were going

Ashby Monk: to say, yeah, yeah.

. [:

Supply and demand, half the balance. And that's true of salmon too. You can't really store it. It loses tons of its value as soon as you freeze it. So fresh salmon is how most people consume it. And so it needs to be consumed within a couple of weeks of it being taken out of the sea. So supply and demand always have to balance.

And that creates these interesting economics. I

Ashby Monk: do anomaly smoked salmon though.

Grant Cavanaugh: Yep. Okay. Well, yes, you can have value added products. That'll add some shelf life, but even your smoked salmon, it's not, I mean, there's not, it's not going to shelf stable. Yeah. Well, think of it this way. Like you, you can go into a seven 11 and get beef jerky.

That's been [:

Sloane Ortel: slim Jim, uh, salmon Jim

Grant Cavanaugh: ship. Maybe

Ashby Monk: not, maybe jokes are good.

Grant Cavanaugh: I don't know. Maybe somebody likes

Ashby Monk: that. Uh, okay. But just to get, just to nail this. If I want to start investing in salmon, I don't know if you're done with your detour yet, but I want to figure out how to get access to this little space. Do I have to buy the bonds from Rabobank?

Grant Cavanaugh: Um, well, that's, that's one opportunity, right?

mpany, mostly populated with [:

Sloane Ortel: this. So only there were somebody who could help us with access to this data. I mean, yeah.

Grant Cavanaugh: I mean, what do you mean for a good example? Yeah, I know, I know a really good example is, uh, is, uh, Catastrophe finance. So if you go back to the wake of hurricane Andrew, hurricane Andrew came through, it destroyed a lot of capital within the reinsurance industry. And in the years after that, in particular, a lot of reinsurers made a lot of money.

wake of hurricane Andrew and:

And on that basis, they really democratized understanding of this industry and through a select group of investment funds slowly but surely a large amount of pension fund money. Moved into the world of catastrophe insurance and re-insurance to the point where a lot of pension funds and endowments will have one or 2% of their assets in catastrophe, uh re-insurance today or, or some form of, of insurance type, uh, uh, capital.

ers of those models. So they [:

But fast forward to today where. Catastrophe finance is not some extraordinary, um, um, money-making opportunity. It's kind of a normalized piece of up institutional portfolio. Like I said, one or 2% overall, and a lot of LPs are sophisticated enough investors that they're just buying the catastrophe models themselves.

So if you look at Canadian pension funds or Australian supers, or a bunch of funds in the Netherlands, like they are as sophisticated buyers of that type of intelligence as anybody else in the marketplace. And, um, and so they're cutting out as many middleman as they can, uh, in terms of accessing the.

y a new suite of models. And [:

Ashby Monk: That's interesting. You just mentioned a bunch of asset owner investors, um, where I would, I would think of what you are describing in the. Agriculture space as like a classical alternative market where you need kind of a specialized intermediary. Now I'm not saying that the big asset owners wouldn't be there eventually.

, the asset owners are there [:

But asset managers to do that. And so when I think about your space, you're talking about 24% returns. You need incredible domain knowledge. You need to subscribe to your data and your models to be really smart. We'll give you a plug here. No worry. This is the

Sloane Ortel: time. This is what we do. I I've I've I spent a lot of time with this paper.

It's great. Like there's this

Ashby Monk: and the related party. We're going to just go by grants data. If you want to make 1% a year. I think we can say that. Well,

Sloane Ortel: yeah. Well, I mean, like when we were working in the paper, I was like, Hey, what if you guys just start a fund of your own? But my point is,

Ashby Monk: this is a classic alternative industry where it's, it's like, the information is hard to get the market is opaque.

sn't being the right type of [:

Grant Cavanaugh: I mean conceivably, conceivably, but I think that, uh, that, uh, that there are a lot of sophisticated folks out there who, um, are genuinely interested.

provider that loves working [:

Like that's always really, uh, exciting. So

Ashby Monk: then I know I'm worried that I'm taking you further and then we're going to go over time. But w with this one, just last one, which, and then back to you, Islam does so the way that we really convince the asset owners to build up the capability to partner with you and go do this in the agriculture space is we help them understand their comparative advantage relative to the intermediary space.

And so then the question for you grant is does it help in this space

Grant Cavanaugh: to have

Ashby Monk: a longer time horizon? So the patient hold and does it help to have big check writing ability? Or are these niche projects that begin to spin off cash in year two? You know, cause if it's the nice projects in year two, then the pension funds may as well invest their time and effort on Timberland or it takes

Grant Cavanaugh: 50 years.

Yes. [:

And. And yeah, like, like you're saying the time horizon is such an important piece of this with an industry that says all the tile as this one, that's subject to freezing events, hitting Nova Scotia, or, you know, uh, algal, bloom that knocks out of all, all most of Chile for a year or two, you can imagine that five to seven year time horizon, which is kind of over, you know, what a lot of private equity groups are looking at.

really, uh, with any kind of [:

Sloane Ortel: Beautiful. You know what, one of the things that I think is just so interesting about this too, it's like, I mean, you know, obviously like, you know, long time listeners of the show will know that I will probably not be eating this fish anytime soon, but, uh, you know, like if you think about it about, you know, first of all this, you know, protein demand is not going away, uh, right.

know, that you're like the, [:

Um, I wonder if you could talk a little bit more about that, right? Like, you know, what's the built environment like where these things are, who are the people that they're employing, um, you know, like how many other jobs. Um, in places where aquaculture is.

Grant Cavanaugh: Yeah. So, um, so you know, these are fundamentally what a fish farm today for salmon is, is, uh, is kind of a bunch of large ringed cages that are sitting in a Fjord somewhere in Norway or Scotland or chili or the Faroe islands or east and west coast of Canada.

e too, because there's not a [:

In places like Chile and in Canada, uh, those are systematically also areas that, that have a lot of overlap with indigenous communities. Um, so the west coast of Canada right now, um, there's been a big ruling just in the last couple of weeks. The, the Trudeau's government had announced an intention to phase out all net pen aquaculture in British Columbia.

d then a lot of other people [:

And in many cases we have equity stakes in the operations themselves. Uh, that's, that's pretty common in, in Canada that there'll be a revenue sharing agreement with the indigenous communities in. So, um, so all that is to say that, um, that those questions are, again, it's like over and over again, the devil is in the details.

Like what, what you make of the sustainability, uh, is a function of how well you run your farm and how well you run your farm has a lot to do with like nitpicky issues related to low dissolved oxygen or all these other technical concerns. And it's similar from the kind of governance standpoint, which is, you know, you've, you've got, uh, a really wide range of stakeholders involved.

ity and some people who, for [:

But a lot of places like Norway, there's just not a lot more space for additional. There's not a lot of hidden fjords out there, uh, that then nobody has, has yet explored or there's reasons why they aren't. So it's, it's up against the limit in some cases against, uh, expansion.

Sloane Ortel: Um, well, it's, I mean, just a fascinating, fascinating story.

Thank you so much for hopping on DAS pod and telling the family about it. Yeah.

Ashby Monk: We want to unlock capital for more sustainable

is awesome. Yeah. Eat fish, [:

I mean eat neither, but if you have to eat one knockout, thank you so much. Bye bye. Oh yeah. You know, one of the things that really jumped out at me in that interview was he was, he threw out a benchmark for sustainability of, has there been progress? Yeah. That was, you know, which like, I, I think that's a really like important thought to put a pin in and, and think about, cause it's a, it's a useful mental model for, for anything.

Totally. You know,

Ashby Monk: ask him a garden. No, we're not good at doing podcasts.

Sloane Ortel: We're not good. Maybe, maybe we're the only people who could give garbage Gardendale. Maybe that's what

Ashby Monk: we were going to ask everybody for a garden tip and now that's, what's done. We're not

Sloane Ortel: going to yeah. You know what? Yeah, it's too complicated.

The thing that I

Ashby Monk: [:

Sloane Ortel: mobile on, and

Ashby Monk: I was like, houseboat. Yeah, I would like, is that like a yacht? Like I want to chill out on a floating mobile home. I think it's called a boat.

Sloane Ortel: Yeah. Well, I mean, I, I think, you know, as great would say the devil's in the details here.


Ashby Monk: That'll do it. You see it. And you're like, oh, actually it is just a floating mobile home.

Sloane Ortel: It really does seem like a floating role. Yeah, exactly. None of the charm of the, of the Dutch, uh, you know, houseboats here,

Ashby Monk: the Senator mantra. A variety of houseboat. Oh

Sloane Ortel: God. Oh, sorry. Did I do that? Yeah. Yeah. Well, I mean, you know, I mean, I think it's, I think it's good that he lives in a house, but anyway, what's the, let's talk about hard things.

g. I imagine that was a hard [:

Ashby Monk: True, true. Full foreshadowing

Sloane Ortel: there. Uh,

Ashby Monk: yeah, so we, uh, long game, which I think long time listeners will have heard CEO of long game has been on this pod and many will know that I am a co-founder and board member of long game.

And. Sold to truest, which is the sixth biggest bank in America. And truest is going to, um, build out the app and continue to try to help Americans save money through games. This is a crazy concept. Um, but this is the hard thing segment, and I can tell you, boy, was it hard? And I actually wrote down, I'm glad you raised that one.

pared to raising money for a [:

Think about the possibilities. And when you're trying to sell your company or you're in discussions to sell your company, it's like negotiating a prenup. It's like, tell me what could go wrong. And so it's actually quite a different mindset when you're going into those conversations. And I think the M and a process now that I've been through it a few times, um, is a much longer process than fundraising.

So you knew Al entrepreneurs out there, like, no, that you can't be like, well, if I don't raise money, I'll just sell my company. It's actually like almost a longer process to sell your company than it is ever to get through a fundraise in both the cases for me, w with RCI at Adipar and now long game to treat.

relationships that like were [:

Yeah. So that's hard. You're right

Sloane Ortel: now. Yeah. That's I mean like, yeah. I, you know, you don't really think about it that way because it's, that, that is sort of like the glamorous it's like retirement, you know, you ascend into the heavens and you've, you've had an exit. Yeah.

Ashby Monk: And it's like, oh man, did that just come together?

And you're like, I've been working on that for two years.

Sloane Ortel: Yeah. Yeah. And like, uh, God, I've almost died. Uh,

Ashby Monk: yes. I have law for long game. I think I've lost months of sleep. Yeah. The days of sleep, you know?

Sloane Ortel: Yeah. I mean, any kid, any good kid you're going to lose some sleep over.

Ashby Monk: Right. It's true.

like, that makes total sense.[:

Um, the, I guess what's been hard around here is I had, so I have recently, uh, this is like a little bit of foreshadowing maybe for the free money podcast. I've recently learned about Merck, um, a little bit, um, and in particular, um, like, so I basically I've, I've realized that I can stick up posters that have invest vegan stuff on them around Brooklyn, and then people will see them at their coffee shop.

Oh my God. Um, so I've been ordering like cute posters and stuff like that to put up in places. Um, but God damn, if I don't, if I haven't discovered like this perfect knack for ordering the thing to get printed right before I find a type. Um, and so, yeah, it's like, I mean, it's, you know, in the grand scheme of things, it's not the biggest thing in the world.

're going to have periods of [:

Um, you know, and then it'll be fine again, you know? Uh, but like the, when you take on that marketing dimension on the side, and you're thinking like, I literally have 150 pieces of paper that have this like typo on them now. Uh, you know, and it's like, okay, so am I going to creatively repurpose these, like, you know, I've, I've caused them to be print or do I just like, write it off, take the L like a true woman of business, you know, like the it's like, I don't know why I feel that this is such a big ethical conundrum.

You know,

Ashby Monk: you tell your story. I don't want to make this about me because I love that you're out there. And I, part of me wants to like, let's go get a billboard together. The sponsor billboard, free money podcast. If that's vegan

Sloane Ortel: [:

Ashby Monk: $24 based on my zero knowledge. Maybe it's more than that, but I have to tell you this story when I was, uh, doing my PhD at Oxford, um, we were super pumped when we could get business cards and my goal author, Adam Dickson, very dear friend of mine.

We actually lived in Paris together. And then we lived in Oxford together and we did the same doctorate program. So it was very, very fun. Um, I was at, uh, the department, we ordered our business cards and I said to this email, I got both of our business cards. I, Hey, I got your business cards. I got bad news.

There's typos in both of our business cards. And I was like, man, they, they messed up my fax machine. Oh no. And they've got your name listed as Admah Dixon. And, uh, I just thought that was so funny. Cause nobody cares about the fax machine.

Sloane Ortel: Yeah. [:

They don't deserve to get in touch with you. But like I sold it, like

Ashby Monk: we both got screwed by the business card. They got my fax machine wrong and they got your

Sloane Ortel: name wrong equally harmed by this we're both screwed. Yeah. So is your friend Admah uh, you know, like just having a nice time with his life now.

Oh, he is out there. He's

Ashby Monk: having a, he lives in the Netherlands. His life is good. Yeah. He's good. I don't know if he's a listener, so adva you're out there, but I had, I literally had his email. As adding the Dixon, I think to this day, if I was going to write an email in Gmail, it would be like, is that ad, but you're trying to reach because of that moment anyway.

Sloane Ortel: Yeah. Anyway, well, you know, I, I think that it's time.

I think it's time. We had a sound effect.

ke the last few they kind of [:

Sloane Ortel: Yup. Yup. Yup. Well, see, the thing is like, you know, I'm not recording this on my phone this time. Uh, play. Yeah. It's this weird thing I'm trying where, uh, my computer works as we're, as we're recording show, but anyway, this is a dear Ashby Sigma of the show.

It is our, one of our signature segments that we absolutely never forget to do. We always do this one. Yeah. And that's how, you know, it's a real segment. Uh, yes. And, uh, if you would like to ask a question in an upcoming episode, please do send us an email free money or go to free money podcast.

Calm and just fill out the little form and, you know, and ask a question. It can be absolutely whatever you want. Um, and Ashby will answer it and then we will vamp on it. And then we will answer the next question. That's how questions and answers work, I think. Yeah, yeah. Yeah. I mean, I think that's right. I think that's right.

Ashby Monk: Oh. Is to give people the rules of Q and a, you know?

w, and just so you know, um, [:

Ashby Monk: in one X speed. We do not like

Sloane Ortel: how we sound at two X. Oh my God. Yeah. Uh, okay, so here's this first one. How much stock do you put into those various pension indices that compare various countries on a range of things like this is like the biggest question,

Ashby Monk: but I love it.

I love it. I love the listeners that ask the questions is a good

Sloane Ortel: question. This is a re I mean, it's, it is good. It goes

Ashby Monk: into this. This is where I begin my soliloquy. There's a lot that goes into this dear listeners because pension funds have contribution rates, investment return rates, and replacement rates, which is how much of your ending salary or blend of the last few years salary are you expected to replace in retirement and a pretty good replacement rate?

, [:

So that's gotta be a give and take here. And obviously they, investment performance is the thing I spend most of my life on. So I'll tell you the, the invention. That I stole from Hugh O'Reilly a former podcast guest. I believe the Canada.

Sloane Ortel: Yes. Extraordinary. Yes. The, uh, you know, explaining the Canadian pension model with trademark Canadian poli tests.

conversation that we had no [:

You have to look at funding and discount rate together. If you have a high discount rate, then you'll look for. We have a low discount rate, then you'll look underfunded. But if you look fully funded with a low discount rate, then you've got a really healthy pension plan and that's what you was always trying to do at OPI trust.

And so I always thought, and maybe this is the part I invented. You can create a ratio based on that, where you look at the funding level. So is it a hundred percent funded, a hundred, 5% funded in the Netherlands, or is it, you know, like Chicago, 25% funded? Um, and then you would divide that by the discount rate, the expected return target, and so a very healthy fund.

n would be five for example. [:

So the answer to the question is no, I don't actually. Take that much interest in these aside from like anecdotes.

Sloane Ortel: Well, and I think that one of the things that really, you know, grinds my gears about them is that the conclusions are often very similar. Like yeah, we know the Netherlands has a great pension system.

Like, you know, I mean, the it's like, okay, the, you know, the places where there's no litter in the streets and they have great pensions. Wow. That's a shock, you know, and like the places where they have no social safety net, they have high savings rates. Wow. Uh, you know, and I think that for producing decision relevant information that they can, they can often kind of fall behind and, you know, um, it would be great if you're, if you're out here, you know, working for some sort of like nonprofit advocacy group or something like that, you're trying to come up with some thought leadership to do.

That [:

Ashby Monk: way you just mentioned a segment. We don't do. What did you hear it? And

Sloane Ortel: that's grinding gears, grinding gears. Oh, wow. I think we used to do a grinding gears. That might, yeah, that was no, that was the top. I think that was hot. Yeah.

Yeah, yeah. Yeah. I mean another masterful segue from the free money podcast. This is a great question. Uh, can you think of a time when someone really put the douche in fiduciary? Uh, what was slash is the circumstance?

Ashby Monk: I love it. Uh, I am picturing somebody just had like a funny thought ed was then like, who can I ask this to?

You know?

Grant Cavanaugh: Yeah, yeah, yeah. And that's what, that's the energy we're trying to pick up on

on this is like, I think we [:

I think whenever the do Sherry's, um, say that they aren't paying attention to shit, that's good for the world because of their obligations. Yeah. All the time on climate still happens on things like diversity and inclusion. Um, and, and they say, oh, no, I'm a fiduciary airy. I can't, this is going to take hold.

I think, I think

, like they have inhibited a [:


Ashby Monk: yeah, no, I mean, look, it's, it's not two or three years ago. I was still hearing, you know, certain pension funds saying things like, how do I get this climate thing to go away? You know? And it's like, change your portfolio D getting it zero. Like all those kinds of things. That's how it goes away. It doesn't go away by just like, thinking about how I placate stakeholders.

That's how you're a fiduciary.

Sloane Ortel: Yeah. How do I

Ashby Monk: take the box here?

Sloane Ortel: Oh, man. I'm picturing like an, like the fiduciary, like X-Men or like what the evil X-Men, uh, I don't know, like, you know, there's a, you got like box ticker, uh, you know,

Ashby Monk: I could do. Oh, there's that vibe here? Do share Jack Black vibe. Yeah.

Sloane Ortel: Yeah. I mean that tracks, that tracks.

All right. So the mind

for your, a poster printing [:

Sloane Ortel: uh, that's a good point. That's a good point. I maybe I'm just gonna, I'm just going to print a big posters that say for douche and put them up everywhere. Uh, the, you know, like I could be a lot more guerrilla about the free money podcast you would share about my like regulated asset management business.

Um, this is the last question I think, you know. Sure. You know, everybody's wondering this. Would you ever grow mushrooms? How would you do it? Do you know how to do it? Is it too scary? What do you, what are you thinking about the mushroom

Ashby Monk: I friend in college? Who for legal reasons? I will keep

Sloane Ortel: a, not you're talking about the psychedelic mushrooms.


ers. Anyway, he survived and [:

Um, so that's the good, but so I think I'm afraid, but I think I'm also. Willing to try. So I think if you gave me a controlled environment and use like, look, it's just like cooking, here's the soil. Here's how much you water, here's how you do it. You know, I would try it because, because I love, I love mushrooms.

I mean, I really do enjoy too, like grilling up mushrooms and putting it, you know, on different sandwiches, whatever it is. Like, I do love them, but I am afraid that I would kill myself.

Sloane Ortel: Yeah. I mean, like, that's always the vibe with mushrooms. It's like, and that's why they're, they're known as the gay, uh, oh, the gay, the gay kingdom.

people get like logs at the [:

You know, a backyard or something like that, they're just, you know, they'll have like, you know, maybe a hundred square feet, 200 square feet of like mushroom wood. And then, yeah. And then they'll just like go out and like grab the mushrooms when they want them. Um, you know, we, we got a Christmas gift from one of my aunts, like a mushroom growing kit.

Um, It was great. Yeah. We had trumpet mushrooms growing in our kitchen and like, you know, we basically made a bunch of, we fried them up and, you know, tastes like fried chicken. Yeah. Um, yeah, exactly. Get some, you know, get some nice, like vitamin D in your bloodstream. Um, I would do it outside if I were to do it again.

. Don't eat. It's not like a [:

No, no, I think they have inoculated mulch too. Um, now, uh, I bought mulch on the weekend. That's a good shit. Right?

Ashby Monk: We're going into court. What kind of garden tips? You got

three listening to one of the guard tips so that I make sure I don't repeat my guard at depths. Oh yeah. One of the things I do for the listeners, because sometimes I'm like, did I already do that guard tip? And I heard us, our sound effect for garden tip was like, it was the, what is it? The monster truck.

: Yeah. Oh man. We've got to [:

Ashby Monk: the, I want to tell people about drought resistance plants, and because my wife and I, we were at the home of. Um, AKA home Depot on the weekend and we always gravitate towards the drought resistant plants cause we live in California and first of all, our soil is a heroic.

Combination of clay and cement. And, uh, our rain is irregular and lights. So we get like less than 10 inches a year, some year. And so it's really important to have trees that can survive in crappy soil or bushes that can survive in Capri soul and very little water. And so I want to put out the free money endorsement on tea trees.

Sloane Ortel: Hm,

Ashby Monk: tea trees that go by the Latin name of Leptospermum. And that's not why I selected it,

Sloane Ortel: but [:

Ashby Monk: I just noted it in case you needed to find it. It is the craziest name I've heard in a while, but any who?

Um, the tea tree it's got lovely pink, little flowers. It is pest free doubt resistance. It grows in poor soil. It's still, I'm still talking disease free. It attracts butterflies. It's still going deer resistant. It's one of

Sloane Ortel: your things, I think you meant to say drought resistant, but I prefer to believe that it's doubt resistant

Ashby Monk: and you can't tell, I, you just have

Sloane Ortel: to believe in this truth.

You cannot doubt it.

Ashby Monk: I did. Yeah. Lovely little pig flowers to which you don't

Sloane Ortel: doubt don't it sounds delightful. I mean like that, I mean, what a beautiful little, yeah.

ll see these gorgeous little [:

Wow. So we're just thrilled. We bought, we had two in the, no, actually we have four in the yard right now. They're all gorgeous and blooming. So we went and bought two more. Um, and it's called tea tree because the Australians and new Zealanders used to soak the leaves in boiling water to make herbal.

Apparently it's. Huh? Good. I haven't tried it yet, but.

Sloane Ortel: You know, well, I mean, yeah, you can, if, you know, when the world really ends, you can make your own tea, tree shampoo and like, uh, all sorts of other good stuff. Plus, I mean, like, I think there are a lot of, of, uh, trees that, you know, we have like these common, you know, medicinal uses for like witch, Hazel that are actually super beautiful and drought resistant, um, like hell fricking.

Yeah. I love a good tea tree. Um,

Ashby Monk: oh, you were familiar.

ese really good Teatree, um, [:

Ashby Monk: cowboy hats

Sloane Ortel: and boots.

Yeah, exactly. If it, if you're really trying to like rough it, you know, put out a vibe. Um, so I, you know, it may be too late where you are various listeners in the, in the country, but I would say one of the most important things that I do as a gardener is keep track of what's going on at like my local botanical gardens and like, you know, kind of in New York city, we're very fortunate that we have snug Harbor, which is run by the Smithsonian in Staten island.

f really cool plants usually [:

And so like, if you are fortunate enough to have the in, um, you can get yourself like a pretty reliable source of like hard to find, you know, not that typical, well grown, organically grown stuff. Um, so like, and that's like, my gardening has been really, really elevated by access to those folks, especially around stuff like compost, you know, like, cause you know, there is, there is a degree to which.

You know, not to like burden the metaphor about, you know, gardening is just like investing too much, but like, you do need a community of other practitioners to learn from. And, you know, like if you have people in your local environment that are dealing with the same similar conditions, you know, that are like, And, you know, in sitting like they, you, I guarantee you within a hundred miles of almost everybody, there is somebody who's sitting there hard thinking about how do we bring native, comfortable wildlife back into this area, you know?

And maybe even [:

Ashby Monk: of the day. You nailed it tip of the day, because I find now that I go to the garden store so much, there, they are very seasonal, relevant. Like they know what needs to be going in the ground.

Those plants are out. And so you're walking through and it's like, all curated. It's not like, this is what it looks like all the time. Like every two weeks they're changing, what's going on. And the people you're talking to. Usually are like pretty avid and know what they're doing. So the garden story is usually a fabulous reference point for first of all, like what is local and what you should be putting in the ground.

And second of all, like what is timely?

and you know, like I was, I [:

You know, you might, you might find some dirty smelling people, but I'm sure they'll all be very nice and find some posters

Ashby Monk: with an occasional misspelling around

Sloane Ortel: exactly. You might not, you might see

Ashby Monk: a misspelled poster to invest with Vivian.

Sloane Ortel: Well, you know, you know, the thing that really sucks is I, uh, I, I made it, um, complimentary, like I spelled it wrong, you know?

So I really look like an idiot. Cause it's just a, it's a, it's a very noticeable type of graphic layer I find and know. Um, I, I will hang my head in shame until the whole time. No, yes. Yeah, no, no. It's because I'm bad ass it's because it's because God hates fags.

No, [: