On this week's Stansberry Investor Hour, Dan and Corey welcome Joe Milam to the show. Joe is the founder and CEO of AngelSpan, which provides investor relations for early-stage startups. He's also the founder of The Legacy Funds and managing member of the Texas Legacy Fund.

Joe kicks things off by recounting his background in finance and the "Forrest Gump-like experiences" that got him to where he is today. He critiques the venture-capital ("VC") world, as it requires no training or certification to enter. Joe explains that his mission is to bring professional standards and practices to early-stage VC. And he shares a few anecdotes of unprofessionalism in the VC world, including investing for access to a private jet, that you'll never hear reported by the media...

The distraction of the media selling the glamorous headlines and attracting the advertising dollars from the industry participants then means they're not going to cover the stories that are legitimate journalistic disclosure of really the underbelly of the industry. So you rarely see the real underbelly of what's going on in venture from those mouthpieces that tend to be the industry rags.

Next, Joe discusses the massive opportunity in bringing professional processes to VC, especially because entrepreneurship is growing, yet the financial infrastructure has not been modernized to accommodate for this growth. He also talks about lack of diversification being a problem, the history of angel investing since the Revolutionary War, the role hype plays in VC, why he believes we're at the top of the "hype cycle" for AI, and the unintended consequences of technological innovation...

There has been a lack of sense of responsibility for those consequences, intended and unintended. And again, we can look no further than the impact on the iPhone on the younger generations. That didn't put anybody out of work. [But] it had a net negative effect.

Finally, Joe points out that an understanding of financial history is directly linked to proper risk assessment and management. He notes that many folks will ignore risk even if they're warned about it, due to a lack of discipline and their fear of missing out on the next hottest thing. As Joe explains, there's an expanding pool of innovation and places to put money, so both VC and individual investors need to manage risk...

Innovation breeds innovation. It always does. So it's not a finite pool of opportunity... The very structure of innovation is exponential... But you've got to manage risk. And that's what's lacking [in VC], but the opportunity is there.

Click here or on the image below to watch the video interview with Joe right now. For the full audio, including Dan and Corey's post-interview thoughts, click "Listen" above.

Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Joe Milam is the founder and CEO of AngelSpan, which provides investor relations for early-stage startups. He's also founder of The Legacy Funds and managing member of the Texas Legacy Fund. Before pursuing his current endeavors, Joe owned and managed a multifamily office in Menlo Park, California for 20 years. When the Internet commercialized, he became an early and active angel investor for both himself and his clients. Joe has more than 25 years' experience as a money manager and philanthropy consultant.

Dan Ferris:                 Hello, and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin:    And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today we talk with Joe Milam, founder of AngelSpan and The Legacy Funds.

Dan Ferris:                 Get out your pens and pencils and paper and laptops and get ready to type or write or take notes. However you take notes, get ready to do that. This guy knows chapter and verse. He's been there, done that, and he knows the history of venture capital and a lot of other things. He knows a lot. That's all I'm going to say. All right? So, get ready to learn, learn, learn all about venture capital and a bunch of other stuff too along the way. So, let's do it. Let's talk to Joe Milam. Let's do it right now.

Dan Ferris:                 Joe, welcome to the show. Thanks for being here.

Joe Milam:                  Happy to be here. This will be fun.

Dan Ferris:                 Yeah, yeah, it is. We're going to talk about a lot of stuff we don't normally talk about with a guy who's been there and done that and been around the block. So, this is – I'm really looking forward to this.

Joe Milam:                  Well, I've got the scars to show for it.

Dan Ferris:                 Yeah.

Corey McLaughlin:    Somehow I do, too, but I'm much younger.

                                    [Laughter]

Dan Ferris:                 OK. Yeah, I feel like I haven't done my time now because I have hair.

Joe Milam:                  Yeah.

Dan Ferris:                 So, maybe for our listeners' sake, Joe, sort of tell them, give them a quick kind of encapsulation of where you are today and how you got there. And by all means, feel free to make the Joel Litman connection as many times as you like.

Joe Milam:                  Yeah.

Dan Ferris:                 We know that name around here.

Joe Milam:                  Yeah. Well, that's – I thank Joel for getting me on your radar. And I guess we'll be seeing each other in Vegas in October. Yeah, I live in Austin, Texas now, now 11 years-plus, mainly because I followed my kids. They started the migration to Texas sooner than many people. My oldest daughter got out of college in '09 and moved here during the depths of the financial crisis. So, I followed them after a 20-year run managing money in the public markets. We were – I joined a firm in 1990 that had recently – in Menlo Park, right there in the epicenter of venture capital land. But it was a firm that was founded 1970 by a man that was old San Francisco money, highly pedigreed, wonderful family, wonderful man. And he started his own – he started the investment business in the mid-'60s, and then in 1980 – and started his own firm in '70 right there in Palo Alto. So, he was early, early, early.

                                    And then in 1988 a bank in Lichtenstein came calling because they wanted to establish a West Coast presence in boutique investment management. And his name kept popping up, so they brought him in '88. I had the good fortune of getting invited to join him in 1990. I had spent five years in retail at EF Hutton, an old name. I started there right out of college in '85 and – but I'm less of a transaction and commission guy and I'm more of a finance nerd and securities analyst and that sort of thing and I just chafed at working in the in the sell side and had a good fortune to go to the buy side.

                                    And the first portfolio I was handed to manage was Larry Sonsini's personal money at Wilson Sonsini Goodrich & Rosati. And if you know the venture world, he is – he was the original consigliere of Silicon Valley. He was the guy that made it all work in the '70s and '80s and into the '90s. That's just the evidence of the pedigree of the clients. But we – the history of the firm was old money. My boss was old money and he had a lot of prep school buddies as clients and Bohemian Grove. If you know the Bohemian Grove history in San Francisco, his grandfather was one of the early founders of it, early members. So, he was of that ilk. And so, he – the history of the firm was old money, but it was right there at 3000 Sand Hill Road in Menlo Park. So, it was the –  and he was part owner of the complex, actually. He was one of the first tenants because he grew up right over the hill in Woodside.

                                    And I give you all that because it just sets the stage for what happened. I joined in '90 and back then the venture world was on its heels. The parking lot at 3000 was half empty. It wasn't glamorous to be a VC. And he brought me in as his right-hand guy. And I had some fintech chops. I had written some programs in college, even though – as a finance nerd. I did some programming in college. And then – and when I was at EF Hutton I actually wrote a program that looked a lot like what the first version of Bloomberg was, because if you look at the history of actually what Michael Bloomberg launched, it was a software tool to trade government bonds. You could plug in your assumptions and duration expectations and goals and interest-rate sensitivity analysis and then access the government bond inventory and select and assemble a government bond portfolio. That was the original Bloomberg vision. Well, I actually wrote about the same time in the late '80s, a similar version for mini-bonds when I was at EF Hutton. Hutton was going to buy it and then Shearson came in and that whole – if you follow the Hutton thing.

                                    So, I had some client-facing chops. I had some tech chops and also was a pretty good security analyst. And all those came to bear in that firm when I joined it, because I just knew this man from a duck hunting club. It was a social connection, and he needed some help because after he sold to the bank the business really started growing and he didn't have enough help. And I got engendered with him. It was a magical thing that I've actually started writing a book about. And I won't spend as much time on this call as you'd like, but we could spend two hours on what unfolded while I was there with the bank and Lichtenstein's ownership and terrorist bombings and insider trading and mafia hits. And all this was literally happening while I was there with people involved that I met at the bank in Lichtenstein and this division – through this division that they bought out there in this little spot in Menlo Park. So, it's a crazy history that you wouldn't believe it unless you lived it.

                                    He ended up sadly dying of cancer in '92.

Dan Ferris:                 I'm sorry. Who is this that we're talking about?

Joe Milam:                  His name was Dennis Bishop King, my predecessor boss. My last boss. But it he a lovely man and it really was an epic relationship. And he literally – when he went in for the first cancer treatment, he said, "Look, run the company till I get back." And I was 30 years of age. And he didn't come back.

                                    And so, six months later – he died Christmas Day – well, July of '93, I bought the business back from the bank in Lichtenstein and right there at 3000. And a year later, the Internet commercializes and all hell breaks loose and venture capital, right under my nose. We met – a couple of Sequoia partners were clients of ours. A lot of Silicon Valley bank executives, because he was the guy in Silicon Valley – new money was just started percolating the '80s. So, he was just really well positioned and I got lucky to join.

                                    But what unfolded was what I called a series of a what I label Forrest Gump-like experiences. Stuff just happened right in front of me because of where I was, when I was there, the nature of the clients I was just trying to frame, then I got lucky to step into and get exposure to. And as a compulsive researcher, this venture-capital thing was – when I was handed Larry Sonsini, I started researching Larry Sonsini and then venture capital. This was 1990. And getting to know the lay of the land, because I'm just a compulsive researcher.

                                    And long story short, I got active in angel investing as it took off. There's a fairly well-known angel group that was the first angel group that formed in this modern era of venture investing called the Band of Angels. You may have heard of it. Well, that was founded in my office by my subtenant, Hans Severiens. And Hans became fairly well known and – as did the Band of Angels as angel investing took off in the '90s. And now the Angel Capital Association names the Angel of the Year Award the Hans Severiens Award. He was my subtenant, dating one of my clients.  So, there's – that's another one of those Forrest Gump-like experiences. But I just had the good fortune of having a front row seat, started studying venture capital, and really recognized just quite frankly how – and I'm being generous here – unprofessional, the very process of how we fund innovation is. I was –

Dan Ferris:                 Still to this day?

Joe Milam:                  Oh, gosh, yes. Oh, gosh, yes. And we can get into that.

Dan Ferris:                 Of all the things I didn't expect to hear, that's way up the list.

Joe Milam:                  Oh, it's – look – well, and again, I want to be relatively even-handed here. I'm a bit of a purist. But in venture capital, the distribution curve of good venture capitalists is a lot like money managers, active managers that outperform the index, right?

Dan Ferris:                 Sure.

Joe Milam:                  It's very similar. But I would argue that the money managers that don't outperform – the active managers don't outperform the index are still deploying far more professional practices than the people in the venture world. And again, I'm particularly speaking of early stage because those VCs that are pretty good become late-stage VCs.

Dan Ferris:                 Right. I see.

Joe Milam:                  OK? So, what fills the void is anybody that can scrape together a couple nickels, they call themselves a venture capitalist. Little known fact, the venture industry is the last financial services industry that requires zero training, no body of knowledge you have to study, no – God forbid a certification like a CFA or a CAIA designation or something like that. There are zero barriers to entry to be and call yourself a VC. And the unfortunate problem is that's who entrepreneurs are pitching for money: people that are largely untrained that really don't know what they're doing. And so – and that's the cycle that just keeps repeating itself because the good ones migrate late stage and then that vacuum gets filled in with folks who just don't know what they're doing.

                                    So, what I've been on a quest on since March 28 of 2000, by the way, because what we're doing now is my second attempt. I started a predecessor company back in 2000 to try and bring professional standards, practices, and tools to early-stage venture investing, basically modeled and mirrored after how I managed my money in public markets, because we were like a quant. We were all data-driven. We never talked to Wall Street analysts. We never talked to the managements. It was all data feeds. We use fundamental tools, this whole model that Joel was so instrumental in being involved with. And then – but we also recognized the need for technical analytics. And so, in the mid – in that mid-to-late '90s we started recognizing that you could be a disciplined GART manager. We were a GART style. It was old money, typically wealth management preservation, not trying to make these people wealthy. And so, bat for average. Manage risk. That was really our mandate, and we were very good at that.

                                    And we just literally built a process to buy low and sell high. It isn't that complex in concept, but you've got to be really good at how you're doing that. And disciplined. And that's what I was particularly good at. I didn't come from the same background and pedigree that my boss did or a lot of other people in the money management world did. I didn't – oh, my dog's barking. Forgive me. I didn't come from that background. I had – but I was a compulsive researcher. I went into college as an engineer, so I had that sort of process orientation. And that's how I designed and architected the research process – well, I was starting doing that when my boss was alive. That's why he wanted me to run things until he came back, because we had already started implementing some of the design features of the trading systems in the back office, the research disciplines, those sorts of things. Focusing the data inputs to hold and then ancillary things versus just a broad swath of institutional brokers sending us ideas and, well, all the different things that are more typical of the money management world back then and I've heard largely still today. So, we're very good at that, just focusing on process and batting for average. And I wouldn't take a –

Dan Ferris:                 Sounds like just having a process made you different.

Joe Milam:                  Well, I don't want to be too harsh on my brethren in the active management world, but yes, you're absolutely right. I was an early practitioner of an adoption of  – it was sort of a natural instinct of what we now call the sort of Moneyball process and sort of behavioral finance world of managing our own egos and emotions and those sorts of things. And I sort of did it organically because I didn't have the luxury or the arrogance of saying, "Well, I went to go – I went to Harvard or I went – I was five years at Goldman Sachs" or fancy families or all those sorts of things. I had to just do it better, not act like I knew what I was doing. And that's really what I've taken, is that sort of mentality into the venture world. How can you build better processes so that you can deliver repeatable alpha? And what are those processes? And what are the tools and the data sources that are needed? So, that's what we're doing now.

Dan Ferris:                 Wow. I – what I know about venture capital could probably fit on the end of q you've forgotten much more than I'll ever know, but I'm struck by one aspect of it where you described the absolute melee of incompetence at the early stages and why that is. And it just reminds me of early stages of almost anything. If you know anything about exploration mining there's – at any given time, there's a few thousand of these little companies in the world. There's probably less than a hundred you'd ever want to go anywhere near. And they're being sold to naive retail people who – with not a lot of competence. And  just generally speaking we've seen things – even like I want to say like ARK Innovation, right? ARK innovation was loaded with cash-burning stuff that you just wouldn't want to own. If you did the work on any of – any 10 of those companies, you probably wouldn't want to own them.

Joe Milam:                  That's Cathie Wood's work?

Dan Ferris:                 Yeah.

Joe Milam:                  I was just looking at their chart today because I agree with you. Cathie is – she's like the Janus Funds of the '90s, right? They just hype concentration and hype their purported information advantage or personal expertise and they draw in a lot of unsuspecting people. Yeah.

Dan Ferris:                 And they just – she's still in the buzzword of disruptive innovation. If you just keep saying that over and over and over again – the great Nazi propagandist Joseph Goebbels would be very, very proud of Cathie. Just do just find the lie, repeat it and don't ever, ever stop saying it. Disruptive innovation. Disruptive innovation. It's just – it's endless. And we see what the result is. Like you're saying, you look at the chart and it's like "Whoa!"

Joe Milam:                  Well, now magnify what you just framed. Goebbels would be jealous of the venture industry. And you can quote me on that.

Dan Ferris:                 Oh, that is – it's frightening.

Joe Milam:                  I'm serious. Oh – well, and when it was a small boutique industry, small activities largely in that Route 128 Boston area and Silicon Valley, it was fine to be this – they – the best way they framed themselves is an apprenticeship guild model. That's their justification for no professionalism, no standards of practices, no anything, is they like to call themselves an apprenticeship model. And that was fine when it was very small because everybody knew each other and there was that process. There was a natural culling of who was good and who wasn't. And those that weren't wouldn't last. But after the internet, it exploded. And now all the hot shot MBAs that instead of going to consulting or investment banking, they realize it's even easier to become a venture capitalist. And that's –

Corey McLaughlin:    What's an example of the last couple years, say the last five years of one or two that are unprofessional stories that come to mind?

Joe Milam:                  Well, the list is so long and it's pervasive. I can give you firsthand knowledge of back even in the '90s with the biggest firms back then. But I was very close to one of the senior executives at Silicon Valley Bank that had a close relationship with the venture community when it was just a burgeoning relationship. And I've got to very careful because anybody listening might figure out who it was.

Dan Ferris:                 I'm sure you do. OK.

Joe Milam:                  But we spent a lot of time together flyfishing and otherwise with other VCs and the like in social connections. And he was telling me a lot of stories of how he heard VCs investing out of their fund in another VC's idea because that VC wanted access to this VC's private jet. They were spending their LP's money in a crap portfolio holding over here because he wanted to – or that VC donated in his favorite charity, so he had to access – right?

                                    So, the fundamental problem with VC, and it's pervasive to this day, is this lack of professionalism in my assessment, because there is no barrier to entry and also no accountability. There's no standardized performance computation the industry's ever adopted like it gives compliance in the public markets. So, they can literally say, "Well, that's what happens." They have plausible deniability because so much of the investment processes are being done by following somebody else. There's no original research that's done. They plan to do due diligence. Even the biggest firms. You probably saw the fiasco with FTX with Sequoia justifying their $200 million investment in FTX. Well, it's still pervasive. Or Theranos, who raises $900 million and she was a sociopathic criminal.

                                    This goes on constantly. Constantly. And unfortunately, like any –  the distraction of the media of selling the glamorous headlines and attracting the advertising dollars from the industry participants then means they're not going to cover the stories that are legitimate journalistic disclosure of really the underbelly of the industry. So, you rarely see the real underbelly of what's going on in venture from those mouthpieces that tend to be the industry rags, if you will. I've been studying this for almost 30 years and I've followed this stuff and it's – we saw the same thing in the public markets. Don't get me wrong. I'm not saying VCs are worse than – there's a lot of fraud in any financial world. So, let's be clear on that. That's – we've got to level set on that. But in venture it's low-hanging fruit to bring a modicum of process professionalism.

Dan Ferris:                 That was my question.

Joe Milam:                  That's it.

Dan Ferris:                 How much of an opportunity is there? Sounds like there's an enormous one and it is low-hanging fruit to just be competent, bring a real process in, and the world's your oyster.

Joe Milam:                  Well, it is.. And again, entrepreneurship has exploded. It's obviously grown well outside of the Route 128 and Silicon Valley. So, entrepreneurship is growing but the financial infrastructure has not modernized to accommodate for the exponential growth of the actual marketplace of entrepreneurship itself. So, therein lies the dissonance and the opportunity without a doubt. And it's really not brain surgery. It's building the proper tools and having best practices understood because the – and the best way to characterize it for you guys and your audience is this was well sorted out in the public markets, right? If you look at the actual public markets prior to the '33 act, it will look just like venture capital. Inside information you could act on. There was no standardized reporting requirements. It was like venture capital. And that's what magnified the bust of '29 that caused the impacts we all know, with Taft-Hartley, as we could – as we historians will talk about.

                                    But literally, if you read the actual legislation of the '33 Act, it literally said in an act of risk management, they – if you want to be a publicly traded company, it established the requirements for standardized reporting and GAAP-compliant type standardized accounting practices in an act of risk management. And the '40 Act came out and says, "OK, now on a further act of risk management, let's professionalize how the money is managed when you're managing a pool for minority shareholders. ETFs, '40 Act products, mutual funds, and the like." Well, what we've got is just simply a platform to create '33 Act-like standardized reporting for startups and then we built a venture – what's called a TAMP, a turnkey asset management platform, to manage a '40 Act-like venture strategy.

                                    So, the investors and the GPs, the venture capitalists, decide what flavor of startups they want to invest in to place their LPs money in front of potential lucrative innovation. That's the future that's unknowable. But how do you place that money, i.e. that 40 Act-like portfolio construction and risk management practices, are what's never been done. And that's all we've built, is to apply '33 Act logic at the entrepreneur side, the startup company side, and '40 Act-like structure for the investor side. Pretty straightforward. It's not brain surgery. We're not recreating the wheel here.

Dan Ferris:                 Right. And so, I can't honestly say I know a lot of people well – I mean, I know people, but I don't know them well in venture capital. But I do know very well multiple folks in exploration mining, which is just sort of a more focused version of a similar thing.

Joe Milam:                  Oh, it is.

Dan Ferris:                 And there are – there's sort of different types of operators. There are a lot of what I call sheer paper hangers. And there – a lot of it is, again, and there is the similar sort of low-hanging fruit kind of opportunity for similar reasons. And it seems to me like the people who really know what they're doing, they wind up with these portfolios, like they know everybody in the business, they know who all the best entrepreneurs are in mining, and so they back them first and biggest in their portfolio. And then anybody else, they wind up with a portfolio, it's got 100 names in it. And in the end, over say a 10-year lockup or something, if they make some ungodly thing, like 50% per annum – which, it happens, I've seen it happen with my own two eyes, –

Joe Milam:                  Oh, absolutely. Absolutely.

Dan Ferris:                 – it comes from six names or something. It's just –

Joe Milam:                  It's the Pareto Principle, what they call the Power Law in venture, right? It's – but it's the Pareto Principle. That's natural. What's not done in venture capital is just that proper diversification. That's one of the fundamental tenets of this '40 Act structure we built is proper diversification.

Dan Ferris:                 Right, so that was my question then. Are you telling me that there are sort of these unprofessional, let's just stick with that term, unprofessional –

Joe Milam:                  Oh, untrained.

Dan Ferris:                 – people running around concentrating money in garbage, they're running to portfolios that aren't diversified enough, concentrated in just garbage that they threw money at.

Joe Milam:                  Well, yeah. I'll give these well – GPs, I'll give them the benefit of the doubt of being well-intended, although unprofessional and untrained because – and by the way, in the '90s, there was some great writing done on the parallels between the dot-com boom and the gold mining rush because the same sort of mentality influences investors, that limbic brain seeking that fast fortune. And that's why so much venture investing is with FOMO, because something has to be hot to trigger that limbic brain's gold rush mentality to be willing to write a check and give it to somebody that's pretty damn unprofessional. But an investor that's going to be more rationalized and critical thinking is going to go "Well, what's your track record? Have you done this before?" Basic tenants that we were always measured by and the SEC was auditing. All this sort of RIA world is completely different. It's to inform critical figures, not to enable and empower people selling hype and FOMO. And so much of venture is still operating under that playbook.

                                    Now, there are some well-intended GPs that will support, get behind something that hasn't been a degree of FOMO, like that gold rush mentality, whether it's female entrepreneurs or African-American entrepreneurs or AI or Web3 or fill in the blank, right? They tend to rely on that which has some degree of FOMO tailwind, because they don't have anything else to show for why they can solicit a stranger's money and actually deliver alpha..

Dan Ferris:                 I'm glad we arrived here because one thing that – with the benefit of hindsight, absolutely, you look back at the dot com boom and one of the things that strikes me now from our perch 20 years later or whatever, 25, is that it was basically correct. They were right. The internet really was an unbelievable machine for growing a whole bunch of businesses that were subscription-oriented, low capex, lots of cash flow. It really was correct. But the amount of money thrown into absolute sheer garbage like women.com and Peapod Grocer, the list just doesn't stop. It is incredible.

Corey McLaughlin:    Everybody's limbic system was out of control.

Dan Ferris:                 Yeah, I mean, that was like limbic on steroids. That was the limbic moment in human history. Still, I believe in terms of –

Joe Milam:                  It was our toolable –

Dan Ferris:                 – valuation and frenzy and – yeah.

Joe Milam:                  It still was our toolable moment, I think, yes, to a large degree. But if you – I'm a real history nut on capitalism. If you actually look how America was founded, we were – our Revolutionary War was funded by angel investors, which was what became the New York Stock Exchange.

Dan Ferris:                 This is a good example.

Joe Milam:                  It really is. If you look at the history, when Hamilton needed to go raise money – in the middle of the Revolutionary War, Washington said, "We need more money for jackets and gunpowder," and he went to this wealthy businessman's social club in lower Manhattan to raise the money. And they – and the promise that he made, Hamilton made, was that "If you give us – lend us this money and we win, these will become the first Treasury bonds of this new country. If we lose, you'll probably be hung for treason just like the rest of us. What do you say?" And they did. And then the big battle was Jefferson didn't want to honor that commitment of making actual liabilities out of this new country. And that's what resulted in the negotiation of moving the headquarters – our nation's capital from lower Manhattan to Washington, D.C., closer to the south, closer to Virginia. That was the negotiation.

                                    So, the history of this country follows this entrepreneurial journey and even the financing side. And yet, the blessing and curse is one of the same. America is unique in its entrepreneurial risk-taking attitudes. However, it's also – we're human beings; we're highly susceptible to hype. And the public markets has gone through its – what I call its enlightenment's phase, going through the '33 Act and '40 Act and a lot of other things. But the venture industry never has. And that's really what's needed, is that you're never going to avoid the foibles of human grade or ignorance or – individual investors, there's a lot of people that will just chase FOMO because that's who they are. And so, there will always be an appetite for that. But that's – yeah, entrepreneurship has become too important in our economy and our economic development in these remote regions where you've gone from blue collar jobs disappearing and with nothing to replace them. So, it's too important to get right. The definition of insanity is repeating the same practice and expecting a different outcome. And that's been the venture industry.

Dan Ferris:                 Joe, what strikes me – and you're right by all means. The things you're talking about do need to happen, I'm sure of it. And they will. Over time they will. But what strikes me –

Joe Milam:                  If you have anything to say about it, yeah.

Dan Ferris:                 Yeah. What strikes me is simply that if you even go back to = railroads or = even steamships and canals was – and then you get up to the internet, radio in the '20s, RCA – boy, that's a stock charge for the ages – and all of these things, every single time, mostly, people were right. They were basically right. But the money still was lit on fire. And it makes me wonder, well, we just – we've actually – maybe humanity has discovered the model for moving forward and it just involves a lot of people losing a sh*t ton of money and five guys becoming billionaires.

Corey McLaughlin:    A couple making it. Yeah.

Dan Ferris:                 I'm serious. I'm serious. If you look in nature, there's one in a million that's doing something different. And it's like that with human beings. We just – that frenzy focuses enormous swath of humanity and in this day and age, therefore, an enormous swath of capital, right?

Joe Milam:                  Right. Right.

Dan Ferris:                 And so, it's almost like a self-fulfilling prophecy. It's like anything we spend that much money on is going to work but it doesn't mean everyone's going to get rich. Quite the opposite.

Joe Milam:                  What I don't have a good grasp of, and this just popped in my head, I may have to go study this, is where has there been this sort of FOMO/hype capital flow where it didn't work out? You're talking about the successes, but how many of the same pattern was followed but it wasn't the next big thing. It actually imploded on itself without ever becoming like the Internet and automobiles and the rails and electricity and telephone and radio and fill in the blank. So, yeah, there – this is the nature of capitalism. Without a doubt, it's creative destruction. But there's also plenty of information on how to do it better. I'm not just striving for perfect. I'm saying better. Let's accept the realities of what you just described but also accept the realities that nobody can predict the future. That's a simple fundamental principle.

                                    So, basic investment practices to optimize on the behavior for the entrepreneurial ecosystem and the outcome for the capital providers, the risk-taking capital providers, those things in this world of early stage entrepreneurship can absolutely be much better. Much, much better. And it needs to be because right now the current system isn't scalable –

Dan Ferris:                 That's the nature of opportunity. Yes.

Joe Milam:                  Yeah, it's just not scalable. It's still largely analog. In-person pitching. That is the most silly thing I've ever heard. An industry that – well, this was Tom Nichols, who teaches entrepreneurship and venture capital at Harvard's Business School right now, he wrote a great book that's the consummate history book on venture capital, and it's called VC: An American History. It's a great book. And ironically on page 311 he writes that it's – and he says it's ironic that the industry that funds innovation hasn't innovated. This is an academic. And by the way, he's a Brit, so he's not been drinking the American Kool-Aid from the venture industry forever. But it's a great book. It's worth reading for anybody that really wants to understand. And there's wonderful parallels with gold mining, the whaling industry before that. Very similar.

Dan Ferris:                 OK, VC: An American History. I'm – as you're speaking, I'm on Amazon. I've got to have this book now because it's –

Joe Milam:                  Oh, it's a great one.

Dan Ferris:                 There's a lot of stuff about public markets. There's dozens and dozens of really quite excellent books, I would say, but venture capital, maybe not so much.

Corey McLaughlin:    Yeah. I'm looking –

Dan Ferris:                 No, that's the best book I've ever seen. And again, I'm a compulsive researcher for almost 30 years on this and that's the best work I've ever seen. Most everything else is – are books that were put out just basically applauding or patting themselves on the back on the old way of doing it. Didn't take a historical context or God forbid a more analytical view of the industry of how it – how is it doing and how could it be better.

Corey McLaughlin:    Yeah, I'm going to check that book out too. Also, I'm already excited to see when your book comes out too. That sounded – sounds interesting.

Joe Milam:                  It's the first – oh, it's fascinating. Denny King's grandfather – this goes back, Dan, to your topic. Denny King's grandfather and their wealth from – part of the family wealth came through a man named Roy Bishop. Denny's name was Dennis Bishop King. Well, Roy Bishop was a mining engineer. He was an adviser to the Guggenheims and then the Guggenheims sent him out to San Francisco to advise the Crocker family on their gold mining activities at the turn of the 19th and – into the 20th century. He owned a mining operation in Nevada. So – but he married Stella Wheeler. And Stella Wheeler's dad was Tom Wheeler, who was John Rockefeller's right-hand guy, back in Cleveland before he moved to New York.

Dan Ferris:                 Small world. Yeah.

Corey McLaughlin:    It's all connected.

Joe Milam:                  So, that's Denny's background, but he was a wonderful, wonderful guy. And Roy Bishop greenlighted the Crocker family's angel investment to support Philo T. Farnsworth, who sold the last technological hurdle for television. That's a great story in and of itself.

Dan Ferris:                 That is.

Joe Milam:                  And Denny's fingerprint was on that, so – his family's fingerprint was on that. So, yeah, there's layers of fascinating stories through Denny's family and then him selling to the bank in Lichtenstein being where we were, what happened at the bank. Oh, it was just crazy. And it's all true. And I had a front row seat to it all.

Corey McLaughlin:    Nice. Yeah. So, VC obviously has touched every technological development in America, essentially, from the start of the country. Can we talk about AI now and what you're seeing? What your thoughts are, what – where are we in this cycle of AI? And from your experience, what are the things that you're seeing right now?

Dan Ferris:                 And before we get to that, if you could just tell me real quick, Joe, how many times do you have to say "AI" in a pitch on Sand Hill Road to get money? And how many times per million bucks or $10 million do I – is it like 50 times and I get $10 million. What do I need to do?

Joe Milam:                  Oh, look, as a guy that was the adult in the room during the dot com era, one of the reasons that we did so well – and just to put a contextual point to this, from March of '96 through March of '09, through both bubbles, my firm was recognized as the top performing large cap core manager in the United States based on absolute risk-adjusted returns, in part because I wasn't susceptible to the hype cycles. We were 65% cash in '99 before the market crashed.

Dan Ferris:                 Wow. As a venture firm.

Joe Milam:                  Yeah. Buy low, sell high. But you have to have a – no, no, no, as a money manager for public markets.

Dan Ferris:                 Oh, the – OK.

Joe Milam:                  No, this is back in my prior –

Dan Ferris:                 Still insanely impressive. Still insanely impressive. I mean –

Joe Milam:                  Well, people came to me and said, "How did you do it? You're a great market timer." I said, "No I'm not. No one can time the market. We have a disciplined process that we don't deviate from." And that's one of the structural components you need to put in place. And how do you recognize where we're at in these hype cycles? The Gartner has a wonderful framing of this, the psychological state of mind of the collective marketplace. It's called the Gartner Hype Cycle. So, to answer your question, we're still – I think we're right near the top of the hype cycle of AI. And one of the things that I think was a very important shot across the bow as evidence of that is after all that money piled into the LLM, the big – the OpenAI and Grok with, what, xAI and all the folks putting tens and hundreds of billions of dollars to build the backend engine that's required to do this computation software and data centers and the like, then all of a sudden ChatGPT comes out and then all of a sudden you have this whole new range of startups getting funded that are agents building on top of those AI engines. And then you're having layers and layers of this sort of stuff.

                                    Well, last Thursday, OpenAI announced that they built their own agent on top of their own engine. You could have access to it for free. Well, that just literally eliminates all those companies that are being built on top of OpenAI. They thought they had exclusive access and could add on a layer of – a UI layer basically. That's what they were funding, was a UI layer on top of Chad GPT. Well, OpenAI just says, "Oh, we got this."

Corey McLaughlin:    "See you later."

Joe Milam:                  And it's free. So, I think that's –

Dan Ferris:                 This feels so much like dot-com. It feels so much like it.

Joe Milam:                  Oh, it is. Of course it is. Of course it is.

Dan Ferris:                 The business models and the clicks instead of revenues and stuff. It's just – it's all so very similar.

Joe Milam:                  Well, again, I'm studying the psychology – I've studied the psychology of wealth since college. Why do people make investment decisions? Why do they write checks either for philanthropy or investing? I'm serious.

Dan Ferris:                 That's a good question.

Joe Milam:                  That's another book people have asked me to write. Psychology is so important to behave better with your money, because better is always the goal. Don't follow the crowd. You don't have to be a complete contrarian. Just be better. And in so many cases, that's not hard because better means just simply weaning yourself from needing limbic dopamine high when you write a check. It – because you can see the same thing in charity. Paul Schervish at  Boston University was the expert studying the psychology of philanthropy. And he identified nine unique psychographic motivations of why people give money to charity. And two-thirds of them are all limbic-driven. Right?

Dan Ferris:                 Right.

Joe Milam:                  So, how do you be better? You need to get to the core of – the crux of the problem, which is manage the limbic manipulation that takes place from people selling you stuff, selling you information, selling you – wanting to extract money from you or extract money for a charity. I managed a couple of charitable endowments and it made me want to throw up when I sit in on their quarterly board meeting to see their financials and how much money they spent on just fundraising staff. They were an organization – a funding organization is all they were. They weren't in business to solve the problem. They sold the limbic emotional appeal as their principal go to market to raise money to perpetuate their salaries. And that's been well documented in the world of philanthropy.

Dan Ferris:                 Yeah, this touched me personally in college. There was a group called the Hunger Project that was always raising money on campus. And we found out that they didn't really spend any of it on anything but what they called awareness. They were there to raise awareness.

Joe Milam:                  Oh, that's – oh, yeah.

Dan Ferris:                 Not to give a penny to a hungry person. Not to feed anyone. And we all found out about it and boy, they disappeared. Their tables disappeared from campus quick.

Joe Milam:                  Well, that's – yeah, I mean, that's a well-trodden path of fraudulent nonprofits because it's the same thing. It's the same playbook as the hype cycle in any new, FOMO-driven, fund rates, money-seeking exercise. It's always appealing to a manipulated limbic brain.

                                    So, back to your AI thing, I don't like to predict the future. But I'm old enough to have seen enough hype cycles and recognize, yeah, it's not hard to see that technological evolution is an inevitability. So, that's not – and oh, by the way, there's a lot of mainframe Cobol programmers that are laughing at all this hype around AI because AI is old. It's not even new. It's just easier and faster and cheaper. That's just Moore's Law applied to what's been around a long time.

                                    Unfortunately, I also think that – thankfully, there's a world of philosophy of technology, some thoughtful people saying we may want to be a little bit more cognizant of the unintended consequences of technological evolution and change. A strong case that could be made is was the iPhone good or bad in its net impact on the human condition?

Dan Ferris:                 Yeah.

Joe Milam:                  Right? These are really important –

Corey McLaughlin:    Yeah. You know what? I was just reading randomly the other day a – my kids were snorkeling in the pool and the invention of the snorkel was at one time thought to be dangerous because people would use it as piracy to swim underwater and sneak up on people that way. It's – that just came to my mind. So, sorry.

Joe Milam:                  No, it's fine.

Dan Ferris:                 Yeah, that happens every time. Every time we get anything from weaving technology, the Luddites and so forth, there's always someone who says, "This is not good because it can be used for some nefarious purpose and it's going to put people out of work." They've said that every single time. And what it winds up doing is increasing your productivity. Right?

Joe Milam:                  It always does. Absolutely. I'm not a Luddite that's against it, but it's become so powerful, and unfortunately there's a lack of – and I'm not the only one saying this. This is –

Dan Ferris:                 Oh, yeah. Absolutely.

Joe Milam:                  There has been a lack of sense of responsibility for those consequences intended and unintended. And again, we can look no further than the impact of the iPhone on the younger generations. That didn't put anybody out of work. It had a net negative effect.

Corey McLaughlin:    Yeah. Yeah, to your point, that we're still trying to figure out – I mean, I grew up basically with – almost with a cell phone my entire life and we all – well, I started to think what is this thing actually impacting – what the negative consequences of this? I think we're seeing it eventually it with –

Joe Milam:                  Oh, no, there's been plenty of writing about it and the impacts.

Dan Ferris:                 Oh, yeah. It's been covered to death. Same thing with television.

Joe Milam:                  This is the philosophy of technology. Technology – yes.  Technology is – well, television is another good example, because ultimately what those things are doing is distracting your attention through limbic manipulation.

Dan Ferris:                 Right. So, if we go back in time, I – you can take this logically backwards, can't you? You can say, well, Internet, television, radio, print. No?

Joe Milam:                  I would argue – well, yes. And I'm not saying there aren't negative consequences. But I would say the net ROI is positive because there are studies –

Dan Ferris:                 I agree. Overwhelmingly. Yes.

Joe Milam:                  It's net positive. But again, the Gutenberg press, obviously, that facilitated education without a doubt. But it was very difficult to manipulate in the numbers and volumes with the elegance that technology has allowed for, both social media and the weaponization of some of those manipulative tools that you have distribution called the iPhone. So, that's – when you actually look at the history – the automobile. Yes, people died driving automobiles. However, why did they do that? In many cases – there are some random victims of accidents without a doubt, but in many cases, people, it's drunk driving and other things.

                                    So, there is – the net calculation is, generally speaking, has been largely positive. Now, again, if you get the environmental impact, that's a whole nother calculation that's I think people are coming to recognize, that development itself, maybe we're calculating ROI in an incomplete way that's largely serving a different audience. I'm a capitalist. Don't get me wrong. But I'd like to think of myself as a bit more enlightened than just pursuing pure self-interest in a Milton Friedman sort of way. I think that's a compartmentalized reductionist way to look at the pursuit of capitalism because of the socializing the cost oftentimes in capitalism and privatizing the profits –

Dan Ferris:                 Right, which is not capitalist. That's – I agree.

Joe Milam:                  That's exactly right. It's not capitalist. That's exactly right. Yeah, that's exactly right. So, we don't need to get into that theory. So – but this is fun, guys.

Dan Ferris:                 Yeah.

Joe Milam:                  I presume you're going to edit out a bunch of this stuff that wouldn't be interesting for your listeners.

Dan Ferris:                 Oh, I wouldn't touch a word of this. No, absolutely not. I wouldn't touch it. I hope nobody touches one word of this. This is why we do this. This is – in my opinion, this is why we do the podcast, because we had no idea where we were headed today.

Joe Milam:                  Yeah. It's fun.

Dan Ferris:                 And we got there by thinking together and speaking together and interacting, And obviously, in our case, we find a great guest who knows a whole hell of a lot more about something than we do, and then we just interact and we don't know where we're going to go. And I think we've gone somewhere very interesting.

Joe Milam:                  It makes it fun. I agree with you. I don't like talking from a script. I like to talk to people that have some sense of history and are reasonably curious.

Dan Ferris:                 Yeah, a sense of history. I've seen some stuff about that recently. People – I think Ray Dalio is probably the easiest example that most people know. And he's really come up with the idea that to understand what's going on now he's had to go back 500 years. People without a sense of history right now, whose sense of financial history begins at 1980 or something, they think "Number go up. Buy the dip." There's no – there's just no sense of trying to see around corners, as Warren Buffett might put it, or trying to assess risk. Risk assessment is like "What's that? You just buy the dip, right?" So, yeah.

Joe Milam:                  Well, and I think that's a wonderful thing to sort of start tying this closer and closer together, is that is, from my participation and observation in the venture world, is what's virtually lacking, like, 98%. That is it. Capitalism is about risk taking, but managing risk for those that are deploying particularly somebody else's capital is what's completely devoid. Or 98% devoid. And that is the basic tools. If you go back to the '33 Act and '40 Act, those are always about processes to manage risk. It's not saying "Get in the way of capitalism or investing." It's largely the responsibility of the two participants in capitalism, the person seeking the capital, the business, if you will, the public or private company, if you want somebody else's capital, you've got to level up your professional standards and manage – help manage the risk for those people you're going to try and source capital. And the same thing is true with the '40 Act. That was built to manage risk if you have the financial responsibility of managing somebody else's money that they gave you to invest through a '40 Act product.

Dan Ferris:                 I feel like one of the issues here is that too many people are simply not risk-aware. Howard Marks has a great book –

Joe Milam:                  Or trained.

Dan Ferris:                 – that I recommend all the time. It's called –

Joe Milam:                  Who?

Dan Ferris:                 Howard Marks from –

Joe Milam:                  Oh – [laughs]

Dan Ferris:                 Yeah, Howard Marks. Called The Most Important Thing. And he was sitting down with clients over time and he would say, "The most important thing is this." And then he said 18 different things, he realized,  over the years so there are 18 chapters in this book about the most important thing. But three of them are about risk, recognizing, understanding, and mitigating it, and controlling it. And it's the recognition. Right now, I'm trying to show folks that, for example, the S&P 500 is probably riskier than you think it is. It's probably riskier than you think. You're laughing because – I assume because maybe you agree. It's probably riskier than you think it is. And I think that recognition, I may as well just sit here and kind of beat my head, beat myself with a hammer, I'd get the same result, because the recognition of risk – risk recognition is "How's my portfolio doing right now?" That's what I see in people.

                                    So, it's just at the very – as soon as you start talking about risk – like, you're talking about professional standards and learning to mitigate it, control it with all these tools that people like yourself and Joel and others and King and others have pioneered and built over the years. And all I'm saying is can we please just all agree that there's such a thing as risk. I just – if I get there before I stop in my career, if I get there with a lot of people, I'll be happy.

Joe Milam:                  Right. Well, think – again, this is the interesting thing when I was running money. Both of our data vendors gave us their personal money because we were the best of all their customers using their – both the fundamental tool, Holt, and our technical research vendor also gave me his personal money. So, we're pretty anal retentive about process and disciplines and those sorts of things. And the Holt folks asked me if I'd go train and show some of their other customers how I use that same data they were subscribing to to help their investment results. And at first I kind of went "Well, gosh, those are competitors." But they're really not. They weren't competitors. They were across the country. I was in California, some were in Cleveland, some were in New York.

                                    And I'd go into their shop and actually show them how exact – open my entire research kimono, say, "Here's how we do it. Here's how we interpreted this stock. This is where we bought it. This is where –" I gave them all of my secret sauce. They still wouldn't implement it.

Dan Ferris:                 Yeah. Yep.

Joe Milam:                  So, that was the biggest revelation for me about thinking differently. I thought once you got information you would simply apply it if it was a better way to do it. But oh my gosh. People are so –

Dan Ferris:                 They're still humans, man. As soon as you show them a process that requires discipline, they're like, "Eh, we don't want to do that."

Joe Milam:                  They don't. Well, cynically, a lot of people are intellectually lazy.

Dan Ferris:                 Emotionally, yeah.

Joe Milam:                  I think that's the difference. Oh, it's – no, as I said, I can be heavy-handed. And so, that's my characterization because I don't think the way I think is that revolutionary. I just studied Charlie Ellis, Greenwich and Associates. We subscribed to his work when Denny was still alive and I would read it and then I tore it out and put it in a file. When Denny died I opened up Charlie's work and did what he said to do to build a good firm. It's not brain surgery.

Dan Ferris:                 Yeah.

Joe Milam:                  So, it's like –

Corey McLaughlin:    Yeah, what I'm hearing also is if you're just a disciplined – if you are a disciplined VC, individually see there is – there's tremendous opportunity.

Joe Milam:                  Low-hanging fruit. And that's the toolkit we built to help those that actually want to do it better and actually use their – would prefer to use their critical thinking side of their brain versus leveraging their limbic tools to manipulate other LPs to give them money to chase the latest FOMO deal. That's most of the early stage industry.

Dan Ferris:                 And I just want to interrupt just for our listeners' sake. I want them to know that they should absolutely, whatever they're reading, put it down and read Winning the Loser's Game by Charlie Ellis. Phenomenal book. Phenomenal book.

Joe Milam:                  Yep. Couldn't agree more. Couldn't agree more. Yeah. I met Howard Marks at an event a couple of months ago up in Dallas. He was the speaker at a group – Britt Harris is a very well-known guy in the institutional investing world. And he's in the [chief investment officer ("CIO")] Hall of Fame and Pensions and Investments Hall of Fame, blah, blah, blah. And he's been teaching a class at Texas A&M and now UT and soon to be Baylor, I guess, called "Titans of Investing." And Charlie's one of the buddies and this is one of the required readings, but Howard Marks is one of those guys. And when they had a dinner up in Dallas, I got invited by Britt and his group, and turns out Howard Marks was the speaker. So, I got to walk up and talk to Howard Marks at this dinner event. I said, "Mr. Marks, it's a pleasure to meet you. I followed you for a long time. I used to be in the public market but I'm now in the venture world. And I find myself quoting you through Bill Gurley," because Bill Gurley was – talked to Howard Marks, and when Bill Gurley was explaining venture capital to Howard Marks, Howard Marks says, "Well, Jesus, that's just a bad industry." And Bill Gurley did a formal presentation on this at a big, big event in Silicon Valley back in '22. You can see it on YouTube. It's called "Why Venture Capital is a Bad Industry." And it was all – he opens up by saying "This is Howard Marks."

                                    So, Howard and I had a conversation there at this event a couple months ago. And he said, "Oh, yeah," and he goes off and he rails against all the things that you've heard me say and many other people that's been in the public markets that dived into venture capital can recognize. And I said, "Yeah, but it doesn't have to be." And he said, "What do you mean?" I said, "Well, I've been researching the venture industry for almost 30 years and I've had some published white papers and institutional investors journals." And I said – he gets his pen out and he says, "Give me your name tag." And he gives me his e-mail. He said, "Send me your research." So, I've got Howard seeing my research on the changes taking place and the necessary changes taking place. So, yeah, I'm – he's kind of one of my litmus tests and sounding boards, is – because I just – the changes are needed or it just makes it more – I called it Marxist ventures.

                                    [Laughter]

Dan Ferris:                 Yeah. We should all be Marxist.

Joe Milam:                  If you just apply the humility – if you apply the points in his book, which is humility is one of the things he talked about at this thing. You can't predict the future. Risk management is always the first focus point. All these things, if you just – I call it Marxist ventures, is the right way to manage money in the venture world. So...

Dan Ferris:                 Amen to that. Yeah, so that's what we're doing and it's – the neat thing is when you look at the total assets that are – the market cap of total assets, venture capital is still really small. So, while it looks on the surface there's been a lot of capital destroyed, in the bigger marketplace of total capital it's still very, very small. And there's a lot more people getting to the point that they're saying, "Look, the public markets, you've got to be more active to manage risk and to capture real returns." If you're going to index from here forward, whether it's Cambridge or some of the big consulting firms, they'll tell you the next 10 years what's it going to do? Five percent, 6%, 7% on average with probably a fair amount of volatility in between? Where can you get better nominal returns, in what asset classes, the least financialized benefit the least from lower interest rates, benefiting from – the least from the financialization of our economy? And that's entrepreneurship, at least early stage. Because none of that matters to an entrepreneur trying to start something new to solve an otherwise unvented need, leveraging new cheaper technology tools like AI and others. Sure, leverage those and use them. Innovation is – it's a wonderful asset class because innovation breeds innovation. It always does.

                                    So, it's not a finite pool of opportunity set. You don't need to think you spotted a hot deal and they keep it to yourself or act like it's the only thing you can find and get access to to make money in innovation. The very structure of innovation is exponential. It breeds innovation. So, there's an expanding pool of opportunity set of things to deploy capital. But you've got to manage risk.

Dan Ferris:                 Yeah. Amen.

Joe Milam:                  And that's what's lacking. But the opportunity set is there.

Dan Ferris:                 So, Joe, it's time for our final question. And thanks so much for being here. I want to do this for two more hours.

Corey McLaughlin:    Yeah.

Dan Ferris:                 And the final question is the same for every guest, no matter what the topic, identical question. If you've already said the answer, feel free to repeat it. That's fine. But the final question is this: If you could leave our listener today with a single takeaway, a single idea, what would you like that to be?

Joe Milam:                  Define and prioritize your legacy, because that's all that's going to be left behind.

Dan Ferris:                 OK. Boom. Wow.

Joe Milam:                  It's really, really important.

Dan Ferris:                 Define and prioritize your legacy.

Joe Milam:                  It's all that we leave behind. If you study – define and prioritize your legacy because it's all you're going to leave behind.

Dan Ferris:                 I might have to steal that.

Joe Milam:                  That's philosophers, religions. Oh, it's – don't think it's any of my original thought. Believe me. I'm just compulsive in absorbing information. I've studied philosophy, stoicism, different religions. I really care about optimizing the human experience. I just happen to be a finance nerd in the process.

Dan Ferris:                 Well, it shows.

Joe Milam:                  But this is really important. And I've found in managing old money, I had great mentors. My boss was a mentor. This guy was class. He didn't care about materialism. He was – but he didn't flash. We managed money for du Ponts. The oldest money in this country. They came here after the French Revolution with money and technology. It was the first economic development recruitment job by Jefferson and Franklin, was the du Pont family bringing their wealth and their knowledge of chemistry and particularly gunpowder to this new country. 1801, they landed here. And I – the former – Irénée du Pont was my client's grandfather. And I've got du Pont's family history right here. They gave me – they self-published this and they gave it to family members. And my client gave me his copy.

Dan Ferris:                 Wow.

Joe Milam:                  Well gave me another laboratory to study the history of wealth and what can be done well with it and how pursuing a legacy is the most self-actualizing, fulfilling human experience one can have. It's true. Maslow knew it in Maslow's hierarchy of needs and motivations. Every philosopher knew it. Every religion gets to this point.

                                    So, that's what I've had the luxury of being curious and having great mentors thankfully,  and from 30 – at 30 years of age and on – or, no, 28 and on when I joined Denny's firm. But these are things that are important to me. I've found – the best part of my career trajectory was when I started at EF Hutton right out of college. My finance professor, which I was kind of his star student, he left teaching and went to EF Hutton, and so he got me to get hired. I learned money didn't motivate. That was the gift of working on the sell side, is money didn't motivate. I cared about the elegance of process and outcomes. And elegance is a pretty broad definition and the more I've learned and the more I've gotten exposure to more philosophical thoughts, the scope of the human condition, elegance is defined by a lot of inputs, by just efficient ROI, a financial metric.

                                    And I've been around people that have experienced self-actualization but most importantly those that are pursuing it with an authentic heart and a degree of focus are the happiest people I've ever encountered, regardless of how much money they had. Very rich people, happy as a clam. Very rich people, miserable. And the gap was they hadn't defined or they're not prioritizing their legacy. That was the only difference I could spot. And so, yeah, it's the best gift I can give anybody – my children, my colleagues. It's the best thing I've learned. And it's one which I've been very serious about pursuing myself for a long time.

Dan Ferris:                 Excellent. That is a great answer. Thanks for that and thanks for being here, Joe.

Joe Milam:                  Well, look, I thank Joel for putting my – me on your radar and I'm excited to be there in October. What I'm not is a very good marketing person.

Dan Ferris:                 Ah, that's OK.

Joe Milam:                  I tend to not chase money because it feels a little bit untoward to me, which is a little bit heavy-handed on my part. So, this is an opportunity that I think is both – I can be professorial to your audience, but also for me it's a branding opportunity for people to go "Wait a second. There's people that – a guy that knows what he's talking about." In the venture world, there's all four of us by the way.

Corey McLaughlin:    I was going to say it must be a small group.

Joe Milam:                  The very first paper I had published in Institutional Investors Journal of Private Equity was in 2018. And I've been published six times now in the II journals. And they've recognized me as the – arguably the world expert in the optimal venture fund structure, the '40 Act-like structure. There's a new journal getting launched – the first one's coming out in October called the Journal of Private Markets Investing. And I've been added to the editorial review board as the venture expert with guys from Apollo and BlackRock and Ares and the big platforms are also on it, but they're in their different alternative asset categories or private market categories. But I'm the venture expert.

                                    And when I published the first one and got it published it. Raghu Rao, who is the Sir Evelyn de Rothschild endowed professor of finance at Cambridge University – you can look him up – he wrote it. And he wanted to talk. So, we spoke on the phone that summer, and he said, "You may be the world expert venture capital." And I went, "Well, (a) that's hard to measure, (b) I don't care. I mean – but (c) I also have studied long enough to know that's a really low bar. That's not that big an accomplishment because the bar was so low."

                                    And that's really what I've been trying to do, is to get people to aspirationally think, how could we do this better? It's still important not to just keep following these hype cycles and the loudest voice that's the most effective at raising money from unsuspecting LPs or who eats. There's a better way to do this. But – because entrepreneurial capitalism is the purest form of capitalism. And to me, that's laced with American history. And that's why it's so important to me to also get it right.

Dan Ferris:                 All right. Thanks a lot, Joe. We will definitely be giving you a call in the next six or 12 months to come back and talk with us again.

Joe Milam:                  Guys, I'm happy to do it anytime. As you can tell, I don't need any prompting or any topic. You throw it out there and we can chew it pretty hard together. And I do like the intellectual exchange of being able to talk to people. And I love learning from others. That's the whole point. Finding people that are intellectually curious and create a forum to allow others to be – that are curious to learn something new. I'll contribute anytime you want.

Dan Ferris:                 All right.

Joe Milam:                  So, if you get somebody to cancel or you get crowded, just call me.

Dan Ferris:                 Will do.

                                    I say "wow" a lot when we talk about our guests after we've interviewed them. But wow. That guy, he's been there and done that. He knows a lot. You can just – we could just sort of start him up at the beginning of the hour and go have coffee and come back and say, "All done" without intervening because he's got stories and experience and connections and knowledge and skill and track record. He's got everything you'd ever want in a financial guy and certainly in a financial podcast guest.

Corey McLaughlin:    Yes. I mean, he could have his own podcast if he doesn't have one already as well. It's – and it was all interesting. It's all – it's kind of a different topic, venture capital, than we cover and he is just obviously a wealth of knowledge in the field and just one of those people – after our conversation I just was like he's just one of those people that just makes things happen and connects with other people and that's just his personality. And it – yeah, I learned a ton. So, happy to have him on. Happy to listen to him. I'm glad he'll be at our conference in Vegas in October.

Dan Ferris:                 Yeah, I can't wait to hear what he has to say there. And he's a – yeah, he is a mover and shaker, an intellectual finance mover and shaker. I agree. He's a force of nature – Joe. And as I said, we're lucky to have them on the show. We're lucky to have them in our conference. To all those of you who are coming to the conference, wow, that's just one of the speakers. That's just one of them. That guy could do a conference himself. Really, really great stuff. I know – I feel like I've gotten – this is my intro to venture capital. It's like your first seminar the day you go in when you're starting your Ph.D. degree venture in capital. We just got the first day and it was pretty, pretty amazing.

Corey McLaughlin:    Yeah, I agree. I just was – sat back listening. I feel like I just got an education in something I was totally not expecting. So, it was awesome.

Dan Ferris:                 All right. I think we'll let the – rather than comment on anything else, we'll let the education stand for what it is. Just listen to it. Listen to every word. Take notes. And take his book recommendations and read Howard Marks and all the other folks that we talked about.

                                    All right, that was fun. And that was another interview. And that was another episode of the Stansberry Investor Hour. I hope you enjoyed it every bit as much as we really, really did. We do provide a transcript for every episode. Just go to www.investorhour.com, click on the episode you want, scroll all the way down, click on the word "Transcript" and enjoy. If you liked this episode and know anybody else who might like it, tell them to check it out on their podcast app or at investorhour.com, please. And also do me a favor, subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram; our handle is @InvestorHour. On Twitter, our handle is @Investor_Hour. Have a guest you want us to interview? Drop us a note at feedback@investorhour.com or call our listener feedback line, 800-381-2357. Tell us what's on your mind and hear your voice on the show. For my co-host, Corey McLaughlin, until next week, I'm Dan Ferris. Thanks for listening.

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