The Derivative - Black Swans, Gray Rhinos, and Tigers..Oh My with Michele Wucker

Episode Date: May 28, 2020

The financial world seems to have a fascination with zoomorphism – the attribution of animal names, emotions, or intentions to non- animal occurrences like market shocks. Black Swans are the famous one, but there’s also been White Moose and Gray Rhino added to the lexicon. This episode we sit down with the creator of the Gray Rhino risk metaphor, Michele Wucker, author of Gray Rhino. In today’s episode we’re talking about what a gray rhino is (and why it’s spelled with an ‘A’), assigning probabilities to risk, what constitutes a gray rhino event, why we’re so bad at preparing for a known risk before it happens, studying actual rhinos in Africa, was/is Coronavirus a gray rhino event, a Chinese obsession with the book, cultural reactions to these events and tips for those aspiring to write a book of their own. Follow along with Michele Wucker on LinkedIn, Twitter, and her website and purchase the Gray Rhino here. And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk

of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. You need to watch out not just for black swans, but also for gray rhinos, overheated real estate market, high corporate debt, the potential for capital markets, shocks, all these new unregulated internet products, shadow banking. A lot of that analysis has been looking at the risks themselves, you know, assigning probabilities, which in some cases, there's some empirical evidence that

makes a good case for the risk number being assigned being appropriate. But in other cases, the probability numbers are pulled straight out of the air or another three letter word starting with A. Hi, you're listening to The Derivative. I'm your host, Jeff Malek, coming to you again from the home office as we remain locked in quarantine here in Chicago. And today we're talking pachyderms and the financial world's odd obsession with assigning colored animal names to real world risk. Think of Nassim Taleb's famous black swan or the white moose phrase I semi-coined

in a blog post a few years ago. Today's guest, Michelle Wooker, brought a new animal to the lexicon, the gray rhino, with her excellent 2016 book by that name. Welcome, Michelle. Thanks for having me. Thanks for being on. So I'm a living example of a gray rhino, I think, knowing that we had this pod scheduled and only finishing the book about 20 minutes ago. So we can talk about how that works. But that's just the thing we're going to get into with Michelle of why we ignore these known threats or duties to act, failures in prediction, how identifying and reacting to looming crises can keep the bubble from popping,

and of course, how the Gray Rhino Framework could have helped or can still help in the current coronavirus pandemic. So Michelle, thanks again for joining us. I'm excited to talk some rhinos. Looking forward to it. So you're here in Chicago as well, right? I am. I'm in Uptown. Got it. It's a beautiful day. I was toying with the idea for a minute to

put the, bring the pot outside and record outside, but we're right off Damon. It would have been a little too loud. Too much. And I got to ask you while we're starting, what's the artwork over your right shoulder there? It's actually my Halloween costume from a party a couple years ago. It was an art themed. It's the shredded Banksy painting. The balloon doesn't have helium anymore. Yeah, and it's, it was just too much fun to throw away. So it fits the color scheme. So I left it up there. And what was that that they sold it at auction? And then after they bought it, it it shredded itself exactly i went with a friend who had the same costume and we did um we made newsprint hula hula skirts to to go with it that's fun so uh a little personal background first so how'd you end up being an author

uh and i think gray rhino is your third book right yes i've got bits and pieces and other books somewhere but it's the third whole book. So what was the backstory to becoming an author? Well, I sort of always knew I was going to write books. I used to write these horrible plays that I forced my siblings to act in when I was a kid. So I sort of always had this long-term plan of writing books. I started out as a financial journalist, eventually got kicked upstairs into running the Latin America Bureau for International Financing Review, which is actually where some of the original ideas in the book came from. And then I kind of went in and out of the think tank world.

I was writing these very influential books that weren't earning back their advances. And so I took a break for about 10 years from writing books, ran a think tank, sort of brought it back to life and then sort of moved on. And finally, I decided it was time for me to do my own writing and thinking again. So I've been doing that for the last five years and really enjoy it. But the book, it really comes out of my early days, writing about Brady bonds and debt restructuring and really geeky yield curve stuff. Were you a freelance writer or it was for a certain publication? So this was an international financing review. There was a spinoff called IFR Latin America.

We focused hardcore on Latin American capital markets. I was a debt correspondent at Dow Jones for a while and wrote for a bunch of other publications as well. And so you were on the front lines as some of those countries were having debt problems. And I think you opened the book with talking about Argentina defaulting on their bonds, right? Yeah, well, it was very interesting in spring of 2000, you know, ahead of the crisis. Argentina, there had actually been a plan. Argentina's debt was going up.

The economy was going down. The reserves were going down. The dollar peg was unlikely to hold. The writing was on the wall. It was very clear to everyone. And a group of very smart people on Wall Street came out in the spring, hey, you need to restructure this. And the sooner you do it, the less it's going to cost overall. But Argentina at the time was the darling of the

emerging markets and didn't want to lose face. And the banks wanted the underwriting fees from a very ill-advised restructuring that only kicked the can out into the future and added all the underwriting fees on top of the existing debt. So I wrote about that in IFR that Argentina needed to restructure. This was a good proposal. And all these bankers called me and they said, look, we agree this is what needs to happen, but we can't say it publicly or else we're going to get fired. And so of course, this was for 30% haircut and Argentina ended up doing about a 70% haircut, which by my math is not really a good deal. So I saw that and then 10 years later, Greece was going through a similar dynamic and I came out and wrote a paper that said, hey,

learn from Argentina, don't do what Argentina did. It was sort of one of the early calls for a restructuring of Greek debt. And lo and behold, spring of 2012, Greece and the creditors came to an agreement. It wasn't a holy mess the way Argentina's was. And that got me thinking about the idea that became the book. Why does one country see a big scary thing coming at it and deal with it and the other one not? And it was about the time in my personal life that I was thinking, you know, I think I'm a little bit burned out on, you know, fundraising and nonprofit management and I need to be writing again. So that idea was there at the time when I was ready to do another book. It had been about 10 years since my last book. And Argentina is a crazy example because I think they're about to default again, like within hours or days here, we're recording this on May 7th. So I think they're

about to default again. I think that's, do you know how many they're up to now? I've lost count. I gave up trying to count. Right, seven or eight or nine of like all right how many times does this have to hit people and there's one remember that one story of a hedge fund like had uh i think argentina's a sailing ship or something was in a port in england and the hedge fund like they ordered it seized yeah they ordered it seized because they owed money on the bonds um so anyway so moving on so you said you were involved in some non-profits and some other non-writing work and you've lived in a bunch of different places. What's quickly some of that background? public in Haiti don't get along. Spent a summer in Europe after college, so have spent a long time there, have family in Belgium, and have been traveling to Asia since about 2008. So, you know, it's hard to say, you know, what day is it? What continent am I on?

Right. And so that helps that you speak a bunch of different languages. I've got English, French, Spanish, Haitian, Creole. What exactly is Haitian Creole? So it's a language they speak in Haiti. Creoles are a family of languages that happened when slaves came to the United States and were no longer allowed to speak their own language. And so created a bunch of new sort of hybrid languages. So Haitian Creole is a mix of French with some African dialects and you know there's a bunch of you know English words thrown in there now. It's extremely rusty at this point. It won't make you tell us a phrase then. I say, sac passe, what's up? Sac passe.

But during graduate school, I took my midterm break from my master's to go down and cover the coup in Haiti in 1991. So that became part of the first book. And then did you do anything around the hurricanes and all the devastation there? You were out of there by that time? When was that? It's been way too long since I've been back. I did a lot of speaking about it in 2010 when they had the earthquake and it was major, major international news that there were two countries on the same Island.

Yeah. Nobody knew that before. Right. And so your other two books, the one was on Dominican Republic. What was the other one on? And the second one was on U.S. immigration policy, on how the breakdown in the immigration bureaucracy after 9-11 was really costing America in terms of lost skills.

Well, you really missed on that. Nobody talks about that anymore. I've actually been thinking about doing an update of some kind. I actually feel guilty that I don't write so much about immigration anymore. But as a volunteer, I'm a mentor editor for the Op-Ed project. So I work with a lot of other people who are writing on immigration, helping them to hone their ideas and get published. And it was interesting to me in the book, you talk some sections about how immigration was sort of a gray rhino for the Republican Party of seeing this big problem out there. And they decided they needed to kind of expand the circle. But it seems in today's world, they've gone completely the other way. It's interesting, you know, the two factions of the Republican Party defined their gray rhinos very, very differently. You know, for the, you know, the big tent group,

the gray rhino, the very big obvious thing that wasn't being dealt with was the fact that the party was not appealing to, you know, large and growing demographic groups. And the other part of the party saw the possibility of these other demographic groups becoming more involved in the party as the Gray Rhino. So they're basically completely conflicting definitions of what the problem is. And of course, the more nativist side of the party seems to have won that battle. Let's get into the book we're starting to talk about already. But my first question on the book is, what's the difference between gray with an A and gray with an E? I always get that one messed up.

I had to look that up when I was writing the book. And I went with A when I was writing, so sort of like standard usage in America. But in hindsight, actually, given how popular the book is globally, I would have gone with the E, but either one works. And it's just, it's either one and internationally, they tend to spell it with an E. Yeah, yeah. It's actually a problem sometimes in articles or interviews where the, you know, the book title is with the A, but the style of the publication is with an E, so there's a bit of a clash there, but it is what it is. It is what it is. Our first ever podcast, I asked the guest Wayne Himmelsine and it's Logica Capital Advisors

with an E, and I'm like, my first question to him was, why do you spell it with an E? And we'd met about 30 minutes earlier. So I think he was like, who's this jerk? It's a good question. I guess asked all the time and people apologize. I'm so sorry I spelled it with an E. you just roll with the punches. I've got a little OCC or OCD on spelling. So we ask all our hedge fund managers to give a little elevator pitch of their strategy when they're on the pod. So can you give a little elevator pitch of the gray rhino of the book and what the main concepts are?

Then we'll dig in some. Sure. Well, the book really explores this question of what makes the difference between people who see a big, obvious, scary horn thing coming at them and do something about it, and the ones who don't. The book explores how one of these gray rhino crises evolves, or sort of a five-stage framework that gives you a very good analytical framework and strategic approach when you see a gray rhino coming at your company, at your, you know, in policy world. And I've been very surprised to see how many people have adopted it for their

personal life. But if you identify what stage you're in, what stage the people are around you are in, particularly what stage the people who need to make decisions or do things or marshal resources are in, then you can better decide how to move them from denial, the first stage, all the way to action, the final stage. But it's also a way to connect people emotionally with some of these problems, because part of the issue is not just policy or strategy or business. It very much is an emotional connection that people have to make with the problems that they haven't solved. And it's getting over being defensive about the fact that you haven't solved the problem. My point is, hey, you're human.

This is something that all humans share, that we don't want to see the big thing in front of us and we don't want to deal with it. But once you recognize that vulnerability, you're actually much stronger and companies that recognize this and use it to create strategies and to face down the gray rhinos in front of them are actually going to be ahead of their competitors and countries or other you know government level organizations that see a big policy problem in front of them are going to have a much easier time dealing with it if they they face up to it right away and use a framework and deal with it and And it's a big, the gray rhino is a metaphor for risk, right? We're talking big, huge risks that are stampeding down on you

or maybe not yet. They're out there in the future. I actually looked it up. It's a zoomorphism. It's the opposite of an amorphism. It is. Well, it's true. What's interesting about them is when I first envisioned it,

it was the big thing in the middle of the road with the horn pointed at you, and it's pawing the ground and snorting, it's getting ready to charge at you. Like Crocodile Dundee. Yes. But the truth is, it can actually be anywhere. Some of them are, you know, way off. You know, it's harder to see. Some of them are moving fast, some of them not quite so fast. It's different from the elephant in the room, which is another safari relative. But the elephant in the room just stands there. And by definition, nobody says anything

and nobody does anything. That's what that's all about. And there's sort of this assumption that you can just leave it there and it'll just be there forever. And one, I didn't think it was a good idea to normalize doing and saying nothing. And two, with gray rhinos, there are people out there who are saying something and even doing something. And other people are still,

you know, putting their hands over their ears and going, la, la, la, la, la, la. I don't want to hear it. And the other part is that it is dynamic. It's not just standing there. Sometimes it's moving fast at you and sometimes it's not. That's actually part of one of the analytical stages is looking and seeing what exactly it's all about. And it's gray because there are five rhino species around the world. And one of them is called black and the other one is called white. Neither of which is an accurate description of the actual color. Black and white were both in air quotes there for people who aren't on the video.

Exactly. Yeah. So the black rhinos aren't black, white rhinos aren't white. They're all gray, which is kind of obvious, except we just miss it completely. And it's a bit of a play on the black swan. I've been struggling all summer to come up with a way to talk about something geeky. I mean, you know, I figure most people are not that into sovereign yield spreads and things like that. So I was talking to a friend and that's when the rhino popped in my head. I said, you know, it's really big and huge. It's got a horn. It's dangerous. And so he made a black swan joke. And he's like, oh, you can call it a black rhino, like a black swan.

And that's when I vaguely remembered a trip to the zoo and, you know, grade school that maybe there was actually a quote unquote real thing called a black rhino. And that's when I discovered that there's a black rhino and a white rhino that aren't at all those colors. So that's sort of adds to the metaphor for the obvious thing that you just miss or don't deliberately don't talk about. One of my daughter's friends calls that we're at the zoo and she said, let's go see the warrior unicorns. And I'm like, the what? Oh, that's so cool. Yeah, the warrior unicorns. And I'm like, well, I don't know what you're talking about. I don't think they have those here. And she's like, the rhinos. I'm like, oh, got it. I'm writing that

down. They have one horn. I'm going to use that. Actually, some of them have two. So they were probably, you know, Indians, Matran or Javan, which have the, you know, fewer horns. So breakdown. So I was going to say, so it's not called the risk rhino, because you were obviously drawing this comparison with a black swan. So what are those comparisons? What are those similarities? What are those differences? So gray rhino, obvious. Black swan, not obvious. Gray rhino, probable. And you can define probable in various ways. There's a little wiggle room there. Black swan, highly improbable. So you can't predict it in the future, which is crazy because, you know, since that book came out in 2007, there's all these, you know,

Black Swan spotters. This is the next Black Swan. That's the next Black Swan, which like, if you read the book, doesn't make any sense at all. If you can identify it, it's not a Black Swan, almost by definition, right? Exactly, by definition. So people have been completely misusing it all the time. And, you know, people, the other, and this is really big, actually, is that you can only see the black swan in hindsight. But the gray rhino is really intended to be forward looking. It's the thing you see through the windshield, instead of just through the rear view mirror. And what's interesting is that Taleb says, oh, the black swan is the thing that,

you know, once it happens, everyone says, oh yeah, I did see it coming, even though they didn't. But in reality, people who ignore warnings come out and say, oh, we didn't see it coming, which also is a misuse of the term. And I, you know, I've been getting, I'll do a lot of interviews lately about the term as it's been getting more and more attention. And people keep saying, you know,

was this a black swan or a gray rhino? I'm like, you know, was, past tense, that's all black swan. Let's look forward. What are the gray rhinos in front of us? This is really meant to be a tool to deal with the future and keep these things from trampling you, which is a huge difference from the black swan, because all the black swan has been really used for is, you know, something bad happens and everyone's like, oh, black swan, washing my hands, pop out. No one could have seen it.

And so Talib's rather known for being a little feisty. Has he come after you at all for stealing an animal and a color name? No, well, this is actually kind of a funny story. So in the black swan, he writes, you at all for stealing an animal and a color name? No, well, this is actually kind of a funny story. So in The Black Swan, he writes, you know, sometime in the future, someone's going to do a, you know, diatribe event against my work called The White Swan. And, you know, of course, White Swan doesn't make sense at all as a metaphor, because in the West, you know, as long as you're not in Australia, a White Swan is just a normal swan, and it's kind of redundant, so that doesn't make any sense. But the crazy thing is that he didn't start referring to white swan regularly until he saw that people were using gray rhino, which just kind of makes me laugh. So you mentioned a few different kinds of rhinos physically, but in the book you mentioned more

metaphorically the different kinds of gray rhinos. Can you talk about those a little bit? Sure. And this is really what you do during the diagnosing stage, which is a third of the five stages that I identify. It's where you prioritize. Often there are many gray rhinos around you and you decide which one to deal with first, or if you need to deal with a bunch of them. So there's sort of like a recurring rhino, which is like pandemics, like a financial crisis, like even tornadoes here in Chicago. It's something that happens on a regular, somewhat regular basis, but you don't know exactly when or where or what exactly it's

going to look like, but it's going to happen. You know, stocks go up, they're going to come down. There are some that are, you know, charging right at you. They just come up out of the blue, you know, very, very fast. And some people will see recurring rhinos as, you know, fast-charging rhinos out of the blue. There's some that are Gordian knots. You know, Syria, I think, is one of those where it's really hard to figure out what the best solution is. In many cases, it's only the least worst solution. There are inconvenient truths, things like climate change, that, you know, everybody knows about, and they just, they don't want to deal with it, partly because, you know,

they don't like the solution, or because there are financial interests and, you know, corporate interests behind not paying attention to the problem. But I ask people when they're trying to sort out what to deal with first, you know, how big is it? What's the potential impact? You know, how fast is it coming at you? Is it off there on the horizon, which is when it costs least to deal with it, but also people are least likely to do anything about it. You know, what other gray rhinos are it related to? In many cases, you've got the actual issue and then you've got what I call a meta rhino, which is sort of the structural decision-making or the governance structure that makes it hard to deal with other problems. So, you know, when you look at the other

rhinos around it, you know, is the other one upstream or downstream? You know, if you fix this one, does it matter or not? Will it fix other ones down the road? Or is all your work going to be for naught because there's something, you know, bigger behind it that you can't deal with? You talked a little bit in the book about unintended consequences of if you face the fast moving one, maybe you ignore the slow moving one or vice versa. Absolutely. It seems climate change is a great example of the whole concept, right? Like it's a known threat. Well, to most people, known threat. And it's huge,

but it's so slow moving that you think you have all this time to deal with it. So it's just huge rhino out there on the horizon that, you know, is it going to start moving? When's it going to start moving? We have time to deal with it. It is, although, you know, I hear that a lot. And over the last couple of months, I get asked a lot about how how do you use the lessons from the coronavirus to manage climate change and it's actually a lot faster moving than most people think um you know there's a great dog beach right near where i live or that there was a great dog beach i have a video of it when we first moved here in 2014. And my, my dog was about a year old then, you know, running around like a happy idiot, not like a happy idiot, she was a happy idiot. And I want, you know, I went to look

at that the other day, and I couldn't take a picture from the same angle, because it's 1520 feet underwater. Now, there's no more dog beach that you you know, the ramp and the fence all washed away a couple of years ago. So, you know, you've got global warming, you've got the rise in seawaters, you've got all waters are expanding because the temperature is higher. And, you know, with that, you've got the water table rising underneath. And so last fall, I don't remember that storm where Lakeshore Drive was shut down for miles and miles and miles. Well, all the buildings in my neighborhood flooded from underneath. Oh, wow. So we're now the proud new owners of a sump pump. But it's so it's and you know, this earlier this year, Chicago declared a state of climate

emergency. So climate change is really moving a lot faster than many people think it is. So we need to pay much closer attention to that one. But it seems the classic, some of the pieces in the book, classic denial phase, like most, a lot of people are in the denial phase. A lot of people are in the, it's moving too, even though you're saying it's moving fast, a lot of, it seems the public perception is it it's not and there's time to deal with it and then all the policy and gordian not issues of like which i want to name my boat one day gordian not that would be right or a spaceship would be a good star trek name but uh right that just sees it's that how

do you eat it eat an elephant one bite at a time, right? Old consulting joke of like, there's just too many, it's too big of a problem to handle. Yeah, well, it's interesting, you know, climate change also, you look at it, it's very closely related to all sorts of other issues. I mean, like health issues. I developed asthma after 9-11 when I was living in New York City. And, you know, debris and whatnot. Yeah, I mean, I lived, you know, fairly far uptown. But it's, you know, I got one of those,

you know, those HEPA air filters that the government paid for, for everyone living in New York City. But, and, you know, only comes back every once in a while. But, but if you read the news about it, that, you know, asthma is getting worse. And it's, it's, you know, it's partly the greenhouse gases, but it's also the change in weather changes, pollen patterns and all sorts of things. But then you look at the, like the particulate matter that comes into the air and it's, you know, spewed out at the same time as some of these gases. And there are statistics showing that the more of that there is in the air, the more likely you are to die from the coronavirus. And so there's all sorts of other health issues that are related to climate change.

There's been a lot of talk this year about the link between investment risk and climate risk. You know, Larry Fink of BlackRock in his open letter at the beginning of the year said, you know, climate risk is investment risk. A lot of other people in the industry from, you know, senior leaders at, you know, at Citigroup, at BlackRock, other places have actually been using the gray rhino metaphor as a way to draw attention to it. A couple of weeks ago, nine senators wrote a letter to Fed Chair Powell saying, you need to price climate risk into financial assets. Otherwise, we're going to get

run over by another gray rhino. So when I was writing the book, climate change was really the first big one that came into my mind. And chapter seven is all about climate change, sustainability, water scarcity and things. And a lot of people have told me that's their favorite chapter. Yeah. Did you send a copy to Greta? Not yet. Not yet, but that's a great idea.

Yeah, send her a copy. So let's dive into the coronavirus here a little bit. And I know you said earlier, if people say, was that a gray rhino? But that was going to be my question. We're still in it. Right. It seems like he's, we don't know if he's right in our face or still halfway between the charging, but it seems it's charging for sure. Right. So how do you view the virus in that framework? Like Bill Gates was out when I think as early as 2015 saying like the next crisis is going to be a pandemic.

So for sure, this was known by many to be out there on the horizon. Absolutely. Well, I wrote about this in The Washington Post in March, citing a bunch of different reports. In fact, there was a scenario planning exercise just last year under the Trump administration that, you know, that got high enough in the food chain and just got shut down. They didn't do anything about it. Johns Hopkins University has had scenario planning, a Center for Strategic International Studies, an arm of the World Health Organization

on pandemic preparedness. All of these people have been talking about how unprepared we are for pandemics. And, you know, we still are unprepared. It's been, you know, really shameful, not just the longer term cycle, we should have been prepared even before the signs of this started coming out, we should have had a much better warning system. But the fact that it took the United States so long to kick into gear in getting personal protective equipment to medical workers, the whole fiasco with the masks, because they didn't have enough masks, they told people they didn't need them,

which has become a big problem because people don't want to wear them. And they look back to, well, the government said we didn't need them. The fact that it took so long to start shelter-in-place orders, to try to really get this thing under control. I mean, it's why the United States curve looks so much worse than just about every other country in the world. And so inside of the Gray Rhino framework, it would have been, Hey, if you had read this book three years ago, you would have put, you would have seen a pandemic as a threat, as a gray Rhino and plan for it and had a response in place beforehand. Like, is that the end goal of the, of the concept? Not exactly. I mean, because, you know, the thing is that there's so many gray rhinos in the world and they're

different people with different responsibilities and people who will see them differently. And, you know, clearly the people who were doing pandemic planning saw this and yelled and screamed and got ignored. The book doesn't detail every single gray rhino in the world. In fact, there, you know, some people were like, Oh, you didn't say this was a great gray rhino. You didn't say that. You don't know what you're talking about because you didn't pick my personal pet gray rhino. 70,000 pages long.

Exactly. It's impossible. And the truth is it doesn't, it doesn't work if you're just like letting someone else do the gray rhino picking for you. It's meant to create an emotional tool for each person where, you know, you really envision that big rhino in front of you with whatever the issue tattooed across its forehead. And so, you know, I'm not, yeah, I've actually gotten, I get to ask this question so much that I've gotten a little skittish about. I mean, there's certainly things that I see as the biggest ones that bother me and that I know are on other people's radars as well. You know, some, some guy on Twitter in India was like borderline threatening me.

If you don't say this is a gray Rhino, then you'll be sorry. It's, it's, it's nuts. I mean, that's not really what the, what the book is for. Obviously it talks about some of the things that are on my radar that I know the most about. It also describes some examples from the past, not to say, gotcha, I told you so, which is not my point at all. It's like, you know, unless you have a situation that you can go back and use as an example, it's kind of hard to talk about it in any way other than theoretically.

You also talk a bit about like, inoculating yourself and having preparedness and making sure your biases aren't there, you know, and the warning signs are a little clearer. So it seems a lot of that could be applied to coronavirus. So, hey, all right, we didn't have everyone wasn't, you know, walking around in masks and bubbles. Like we didn't want to do that as a society, but now it's here. And, you know, the gray rhino framework would have made us act a little faster, I think. Do you say it's charging? Let's do something.

Yeah. And I really want people to be able to ask the questions and do the analysis themselves. And this bit about the meta rhino of decision-making structures and cognitive biases is so important. And of course, over the last, you know, decade or two, there's been so much great work done on human biases and just, you know, being aware of them lets you do some sort of, you know,

modifications to how you do things in order to try to check those. It's, you know, when you have a decision-making group, you know, ask yourself about the composition of the group. Is it everybody who comes from the same perspective? If you've got a board full of lawyers, where are you going to get a lawyer's answer, which is very different from an engineer's answer? You know, so make sure you've got the perspectives that you need around the table to make those decisions.

You know, put in structured debate, come up with, you know, when you know there's a potential bias, then correct for it and be aware of it. It's just, it's pretty simple. I can't remember where I read it, but a great piece on the Boeing debacle and the plane crashes and everything.

And they basically were saying that the group had become a bunch of managerial class people who were just trying to maximize profits. They'd gotten the engineers actually out of the room in terms of high level decision making. And that was the end result was they're flying these unsafe planes. Yeah. And it really hurts the cost benefit analysis. You know, it's like people become overconfident. And one of our biases is that we do tend to estimate our own personal success or organization success to be more likely than it actually is. And certain demographics are more likely to be overconfident about their projections than others. And so you need to be aware of it, have a devil's advocate in the room, help to pass around this role of devil's advocate. So everybody in the room is comfortable with doing it and respects the person who does it. And

realize that just because you want the risk to be lower than it is doesn't make that the truth. Yeah. And how do you square some of the things when I was reading this, I'm thinking just like, we can't all walk around and see gray rhinos everywhere and not go out of our house, even though that's what we're doing currently. But right, like, how do you square seeing all these things, preparing them, knowing what to do when they're charging, but also like living your life and being able to be out there and moving forward. You know, it's interesting. It goes down to really risk perception. And there are two components to it. There's the sort of the rational and the emotional. And everybody uses a different mix of those. And they don't always respect that

people who are different, have a different mix of rational and emotional they don't always respect that people who are different, have a different mix of rational and emotional and don't recognize that you need both of them. You know, going back to Boeing after the Ethiopian Airlines crash, there was a fantastic piece I read online by a travel journalist, not just travel, more like an airline journalist, who was scheduled on a flight that was going to use one of these 737 Max's. And he looked at it. He knew that was the plane that was on the road. This was before they shut them all down. And from the information that he had read about it,

he felt fairly comfortable flying it. But his family was freaking out. And he actually ended up taking a different flight because he was worried about his family instead. And I think that's so important in thinking about how we respond to the virus. Different incentives, right? Or disincentives in that case. Even with the wearing your mask, it's like I was talking about how you're more confident about yourself. It's like Lake Wobegon, where all the children are above average. You know, everybody thinks that they're a better driver or whatever,

less likely to get sick than anyone else. So you get that bias combined with the fact that you don't know what the symptoms are and that you're wearing a mask to protect other people as much as yourself. And interestingly, some of the messaging that has been the most effective is, you know, protect grandma, protect the people around you, protect the people who have asthma. Hello, protect me. Right. You know, so it's a different way of looking at it. A lot closer than my rhino or my kids, the young kids seem to be unscathed so far, I think. So I know this isn't quite your area, but as an investment guy in here on the Alternative Investments podcast,

I can't help but think of all this in terms of allocating to this hedge fund or that investment. I think you could write a whole other book on applying the same thing just to investments if you're so inclined in the future. But as I was looking at it, like if someone's going to invest in a new investment, they're sold a narrative that's built around hiding the rhino from you, basically. Whoever's selling the investment is going to hide that from you. Then we have these biases we're talking about that blind us to the real risk. Are we engaged in active denial or we're intentionally deceived in a way? And then we muddle, which we haven't talked about, which is one of the chapters in your book, right? We have this saying, we're not sure we like it,

but the kind of inertia of the investment keeps us invested in it. I had an old client who called it financial furniture. He said he just owned these shares of IBM and he was like, it's like my grandma's piano. It's just going to sit there in the corner of the portfolio forever. I'm not going to sell it. And then we fail to inoculate or plan for a worst case scenario. You know, we don't put on the seatbelt before we crash. We think about it as we're crashing. And then finally we panic and investors panic at the exact wrong time and sell at the lows. So just what are your thoughts on like putting this in an investor framework? Well, it's interesting. It depends really on, you know, what kind of investor you are, you know, are you a long-term investor? Are you like investing in actual companies and

economically productive things? Or are you just, you're writing actual companies and economically productive things? Or are you just writing volatility up and down? Which is basically what the Black Swan is designed for. And I think that there's been a lot of people digging in their heels, wanting to say anything bad that happens is a Black Swan. Because it's a great way to explain to your clients that they should keep investing in whatever you say because then you get your Commission and and you know your assets under management or high and it's

great and then when anything bad happens you say oh black swan nobody could have known it was happening but when you look in most of these cases, you can see the smart money leaving the market when the retail money is still coming in, trying to go higher and higher and higher. And, you know, so in many cases, there are people who do see something coming. And, you know, they see it as a great runner. They go and they set up their own portfolios in a more defensive way. But they keep telling other people, oh, you know, anything that would happen would be a black swan. It's actually quite dangerous. So it's hard because there's, you know, I think people who are investing in value stocks or direct investment,

their interests in many cases are diametrically opposed to those people who are just you know speculating basically betting on the Fed continuing its very very loose monetary policy and they're betting that the real economy is not as safe a bet as putting your money into a stock market that the Fed's just pumping more and more and more money into. I mean, you look at the economic fundamentals right now, and you look at where stocks are, and there's a huge disconnect. NASDAQ just made new highs. So it's higher today than NASDAQ than when the whole virus thing started to unfold. I'm so glad I'm not watching, you know, minute by minute. 30 million people unemployed. So that's a, but to me, it seems like, right, if we're talking

climate change, there's just too many, right? It's one huge gray rhino, and it's also thousands of smaller gray rhinos. If you unpacked each, like you're saying, the Lake Michigan flooding and the Maldives and Miami, like there's all these individual ones. It seems in investing, we could say, it seems easier in investing to identify the ones that are going to directly affect this company I'm invested in or my portfolio and kind of take action steps around those ones you can identify. Well, it's interesting. I think you really need a complex systems approach to it. And I think that that's, you know, what BlackRock has been talking about in its public statements. I mean, like if you're investing in fossil fuel companies that are contributing to climate change, but if you're also invested in real estate, for example, say like coastal real estate, and, you know, most of the big cities are coastal then you know you're basically putting money into one side of your portfolio that is then uh hurting the other side

of your portfolio so this is more uh it's it's more complicated than that and what's what's interesting is that uh a lot of the esg funds have actually been holding up fairly well through this. And you've been seeing over the last year so many warnings from, you know, from central banks. And, you know, even in this letter that the nine senators wrote a couple of weeks ago to Chairman Powell saying, you know, if you're not pricing climate risk properly, you're going to get run over by the gray rhino. And, you know, it's very clear that there've been so many reports over the last year in particular that the costs of climate change have the potential to create even more financial instability. You know, there's a lot of concern that insurance companies are not properly capitalized compared to the extent of the likely damage from extreme weather and other part. And a lot of them are expecting very, very large reallocation of capital from fossil fuels, particularly with oil prices as low as they are right now. And some of the

smaller and more indebted firms being quite vulnerable. The whole ESG to me is a bit of a gray rhino in and of itself. There's been some studies on, they call it greenwashing. So these companies will greenwash their holdings or their whatever. And basically, so they can qualify to get some of this ESG billions and trillions of dollars that are going into those investments. So it seems like something's going to happen there where the curtain goes

up and it's not as, as clean as everyone thinks it is. I think that's part of why the g got added into the to the e and the s is that you know if you've got good governance if you've got transparency if you've got board members who have got a good decision making structure and um you know who are asking the right questions and you know a unicorn and a pink pony too, you know, that, you know, the governance part of it is important, you know, and, you know, we've seen governance come into play in other ways. There's a lot of attention to whether boards are paying enough attention to risk.

A lot of that analysis has been looking at the risks themselves, you know, assigning probabilities, which in some cases, there are some empirical evidence that makes a good case for the, you know, the risk number being assigned being appropriate. But in other cases, the probability numbers are pulled straight out of the air, or, you know, another three letter word starting with a i hope i can say that but um i figured with you know your audience probably would you know appreciate it but um it's uh it's true you know you know that a lot of times we assign risk numbers you know you look at the numbers that were assigned to all of these subprime mortgage uh in 2008, you know, the, you know, investment grade under all these theories as to why they were not riskier than they were. And those were pulled straight out

of the air as well. But one of the things I don't think has been getting enough attention, although it's, it's starting to catch on, is this, you know, getting boards and management teams to look back on themselves and really assess their attitude towards these risks. You know, are they ignoring, what are they doing about the risks? How are those actions helping or not? You know, are they just coming up with this, this big, you know, heat map and list of risks and spending tons of money on software so that they can say they're in compliance? Or are they actually responding to that? I think we'll see the,

and I don't wanna get too deep into AI and all this, but eventually you'll see, right? Like AI is assigned probabilities. Like if you have a AI-driven car, it's computers seeing a thing in the road and it's saying that's 98.7% probability that's a tree. I'm going to avoid it or, you know, it's not entirely sure it's assigning probabilities to all these things. So I feel like you'll get that at the board level and that's going to just permeate through everything we do in life of

algorithms and probability-based risk, which I don't know if is necessarily the best thing. You still want some human intervention there, but it surely could improve a lot of these processes. It could, although, you know, the algorithm is only as good as the data you put into it and how you program it. So there's still a lot of concern about biases in some of these algorithms. But I think there are a lot of cases where taking the human element out of it could be very helpful. You override some of these human biases, but the algorithm has to be designed just right. And then there's the question of being able to look under the hood. Who knows how the algorithm is really designed?

Yeah, which is scary we actually deal with some hedge funds that do pure black box ai and they literally do not know how it's coming up with the trade uh and this comes from like google taught its ai how to recognize a picture of a cat but its engineers can't tell you how it knows how to recognize the picture it just gave it a million pictures of cats and all of a sudden it knew how to recognize the cats. So yeah, that's some scary next level stuff. And you actually mentioned in the book that that's a potential gray swan and people are talking about that. Gray rhino.

Gray rhino. Gray swan is a little baby swan. It's actually not dangerous unless the mama swan gets really, really mad at you. So, so people who come out with, with, Oh, gray swan. No. It doesn't make sense. It doesn't make any more sense as a metaphor than white swan. I mean, just swan.

And then I can't remember. I jotted a note down here. Just wanted to tell you to read this. I'll send it to you. An article in The Atlantic where the reporter went down there and posed as a condo buyer in Miami. And this is Gray Rhino. Some people were in complete denial.

Some of the realtors, some were accepting but saying, hey, you're going to flip this place within a year. It won't matter to you. It's very, it's just, you could see most of your concepts just laid out there in each of the realtors that this guy interacts with of how they view it and how they react to it and what their commentary is quite interesting. We'll put it in the show notes if i can find it uh so i wanted to switch gears a little bit and talk you mentioned you've spent a lot of time in

china uh the book is a bestseller in. It's been on the president's bookshelf. Tell us that story quickly. It's so crazy. I get this email in early January 2018 from a friend going, hey, your book is on Xi Jinping's bookshelf. And apparently, every January 1st, he does, it's sort of like a State of the Union, you know, opening your speech. And he sits at his desk, and then there's a big bookshelf behind him. And every year, the journalists go and they, you know, they check to see what are the new books on the shelf. So in early 2018, there's a picture of my book on his shelf. And people had told me that he had used the term behind closed doors before that. And the previous summer, there was a big economic policymaking

meeting in the summer. And apparently it was talked about during the meetings, and they mentioned Gray Rhinos during the closing speech. And then the next day, there was a front page above the fold editorial in People's Daily, which is sort of the official government newspaper, saying you need to watch out not just for black swans, but also for gray rhinos. And here are some of the obvious financial risk gray rhinos that we're worried about, which include the, you know the overheated real estate market, high corporate debt, the potential for capital markets shocks, all these new unregulated internet products, shadow banking. And when that came out, stocks that were seen as riskiest, big tech and small cap stocks, fell by between four and

five percent in a single day because the government put Gray Rhino on the front page of the paper. And I'd been traveling. So when I got home and opened up my computer, my email box was like full of all these emails from China going, hey, what's, what's going on? You know, this is, this is amazing. And I think it was particularly striking that it was a term that, uh, you know, that American and American had come up with. Um, so that was, that was kind of interesting. And then they, um, they started very surgically applying a lot of these policies, like they made it harder to get mortgages. And actually over the coming year, the real estate market actually started cooling down. And all the Americans papers were like,

oh yeah, we're kicking ass in the trade war. See what's happening in the real estate market. I'm like, that was the deliberate policy decision. You know, and they, you know, they were just very surgical about it. In spring of 2018, they let a lot of peer-to-peer lending platforms go under. They cracked down on these wealth platforms that said, oh, you know, less risky, higher returns, both at once. You can have your cake and eat it too.

So, you know, they really made an effort at starting to crack down on some of this over leverage, a huge problem, much bigger than you can fix in months or years. But they used the Gray Rhino framework both to help develop some of the policies and to message it publicly. So for a while, I was going to China quite frequently talking about some of these issues. Do you think as a culture, they're better suited to understand the metaphor and kind of, like, did they understand it before? Are they just better suited to enacting it? How do you think that all works out? I think there were a couple things things because I get asked that question all the time. You know, it came out in February 2017 and within three weeks it had sold 30,000 copies.

And I had to email back my editor. I was like, is that 30,000 with four zeros? Really? Yes. So if you remember sort of 2015, 2016, there was a big market shock in China. And so I think that was fresh in everybody's memories and they were really worried about it. And I think that the word, the expression sort of gave people a way to talk about something that they were already very worried about. But beyond that, I think there are cultural factors. There is this very interesting picture book from Toshin called East versus West,

East meets West, which has these diagrams, sort of like red and blue diagrams for how Asians think about things and how Westerners think about things. And I looked at that and I went, I don't know how this happened. Like, I'm American. I have spent a lot of time in Europe and Latin America, but I think I'm Asian. Because, you know, Westerners tend to be sort of very, very linear. They look at relationships as a series of, you know, two people here, two people there. Whereas it's very systems thinking-ish in Asia. And it's interesting, a couple people in states have said, oh, you've got too many different

things going on in the book. And I mean, that's just how I think, is that I pull together. I feel like you need a complete picture looking at something from different disciplines to really understand how something's happening. You need the politics, you need the economics, you need the sociology, you need the psychology. So I think on that count, one, the systems thinking approach really sort of fit the way people were thinking in Asia much better. We've seen in America in this corona crisis that we have a very, Americans have a very poor understanding of geometric and right, we're thinking literally like, oh,

there are only 70 people have died. That can't be that bad. Like, well, yeah, doubles every day for 10 days. And couldn't think into into the future on it. And so the other thing that's interesting is there's some some social psychology research that shows that if you draw a line and you ask Asians to continue the line, they're much more likely to change direction. Whereas Westerners are going to keep the line going just the way it has been, which is why everyone's like, oh, the stock market's going to keep going up. So I think Asians tend to expect change. And certainly, if you look at the extent of the economic changes in China in recent decades, I mean, it's absolutely astounding. So I think that there's more expectation of change. I think that there's a lot further and longer term thinking. There's a chapter in the book about short-term versus long-term thinking. And a lot of these really old companies actually are in Asia.

So people are more likely to think that way. And then you look at the differences in systems of government. You've got all kinds of governments in Asia, but all of them tend to be much more technocratic than in the West. And they don't need to worry about their next election as much. So they can get things done and not worry about the perception. Yeah, yeah. And even the democracies, it's just a completely different mentality.

And a lot of the people in the civil service have had a lot of training in that. I mean, China's civil service exams go back to the 12th century, obviously not the same exam, but that principle is very, very important. So they're not as focused on what this focus group or that focus group or this political interest is going to do, that they're interested in solving the problems. The other part is that they know that they're going to be held accountable in very different ways from us, but for a longer term, because they're not necessarily going to see a change of office and handing it off to the next person. If the problem happens, it's probably going to happen on their watch as well. So there are different incentives to deal with this uh earlier and you can see some of this in in the way that

a lot of asian countries have have dealt with the the virus yeah to shut down the whole province there was massive 60 million people or whatever on complete lockdown the uh but then i think of that and i think of all the from a financial world perspective like the accounting mischief that goes on in chinese a shares and uh some of these companies their coffee one was just in the news recently it was just basically fraudulent looking looking coffee yeah it had a few stores and it said it had hundreds and hundreds of stores so it seems odd to me of like if the culture's more understanding of this concept, but at the same time,

they're willing to kind of look the other way in their financial market seems a little. We have an awful lot of that too. I mean, I think we notice much more when it's in another country and particularly with the public narrative about China right now. I mean, we talk about,

if any other country says certain things about the US, they're like, oh, it's propaganda. And mean, you know, we talk about, you know, if any other country says certain things about the U.S., they're like, oh, it's propaganda. And if there's certain things we say about other countries, then it's not propaganda. I mean, there's a real narrative about it. And I think it's actually quite a dangerous one and not necessarily in touch with reality. So yes, obviously, the, you know know the funny books are are problems but we we've got problems with that too i mean you know enron i mean obviously it was a ways back but you know we can you know you can just you know list so many of them in the united states so i think it's you know there there are some countries that probably are worse than others, but I think, hello pot,

meet cattle. Oh, definitely. I think that's it on the book. We'll go into our favorites unless you got any other quick comments or what. Yeah, we can ask real quickly. I know you don't necessarily like this either, but some of the gray rhinos that you see out there on the horizon right now, besides climate change, we've talked about that one quite a bit. Sure. Well, there's a couple of things. There's, you know, one every year,

the last five years, I've been doing a meta analysis of like all the top risks and forecasts and outlooks, which all come from different perspectives. I mean, some of them are, you know, political risks, some of them are, you know, a particular industry group, some of them are, you know, insurance risks, some of them are operational risks. But I look at it's, it's, it's well over four dozen at this point, and do sort of a meta analysis of, you know, what are the things that keep recurring, you know, high on the list? What are the things that recur across most of the lists? And then I, I sort of it's, it's a mix of art and science because so many of them are, you know, apples and oranges and pears and Kiwis and who knows what. But pull those together into a top five list every year.

And, and then they're the things that just worry me. And for me, it's really a big triad. I mean, climate change is one of them. It's financial fragilities, particularly the unintended consequences of this extraordinarily loose monetary policy. There have been a couple of estimates of the earlier quantitative easing. From from 75 to 92% of that money just went straight into the stock market. And, you know, and we actually subsidize that, you know, even after the corporate tax rate cuts here, if you hold stocks for longer than a year, you're actually paying fewer taxes, you know, playing with the casino than investing in a company that's going to create jobs. So, you know, so that's the other one. And the third one is inequality, which is directly

related to both of those. I mean, you know, the people who suffer most- Racial or gender or economic, all the above? Economic, economic, that, you know, the people who are contributing the least to climate change are the most likely to be vulnerable to it. And, you know, go back to Haiti and Dominican Republic, I mean, a very small percentage of global greenhouse gases and those hurricanes go through and wipe everything out. So those three are very closely interrelated. We were talking earlier about the relationship between climate risk and financial risk. Obviously, the fact that the quantitative easing is only going to the people who already have money to put into the stock market and not to everybody else. And I think

there are lots of policy interventions that we can do on all three of those. And frankly, they were there before the pandemic, but the pandemic has really shown the worst of all of those things. And that's what I'm going to be doing in the last next several months is looking at a lot of how we deal with those in the future, particularly some of the debt issues. I wrote a paper in 2001, the summer of 2001, so ahead of Argentina's default saying that there wasn't a good sovereign debt restructuring mechanism and that ultimately this was going to cost investors more money and it was going to make it longer, make it harder for countries to come out of financial crisis and take a longer time and ultimately be worse for everybody. And I think those principles are still true today. I mean, those were part of the discussions that led into

sovereign lending involving, they started adding a collective action clause into a lot of the legal paperwork for those. And I think that we need to really be thinking about debt going forward, the relationship between debt and quantitative easing and the unintended side effects. So that try to get bad. Do you read Scott Galloway at all? He's a professor at NYU. Yeah.

So he's recently been saying some good stuff on, basically we're borrowing from the future to make these people who are already insanely rich, insanely richer. Like, does that make any sense? We're just borrowing, we're making inequality worse in the future to make it worse today. It's like, right. It doesn't make sense. Last year, it was true. The last year, everyone was talking about pitchforks. They're coming with the pitchforks. And I'm like, okay, yeah, that's probably true. But you shouldn't worry about the pitchforks.

What you need to worry about is that this is a house of cards and it's going to collapse on you as well. Because here you are buying all these assets that are just puffed up by air. And at some point, it's sucking energy out of the real economy. And at some point, this monopoly money is not going to be worth anything either. And, you know, do you want to live in that kind of world where there's big swaths of your cities where, you know, you're, you don't feel safe to go. And where, you know, you're just, the question is just, you know, who can capture the government more to like steal more of the monopoly money for themselves and be the banker? Like, that's what's, what's the fun? What's the sort of

satisfaction in that, as opposed to, you know, building companies that have products that actually help people and do cool things and provide jobs. I mean, there's so many business owners at so many levels who actually take a lot of pride in that kind of stuff. And I think that's where the emphasis on the economy needs to be. So, you know, yeah, worry about the pitchforks, but worry first about this house cards falling because you'll have pitchforks and no value in you know this speculative nonsense you've been and i think what will get them in the end is the worry that they'll have no customers right if you if there's nobody left with any money except for the right 300 people in the

world who's who's buying your stuff exactly exactly exactly so it's a self-interested argument yeah for sure let's go into some uh of your favorites we'll end up the pod here so uh favorite uh book besides your own i have to pass on that one i'm just really bad at favorites and there's like and you know i've got so many friends who are authors who like their their you know feelings would be hurt okay favorite financial book can we get you there favorite finance well i mean this is a one of my favorites one of the ones that i really have been obsessed with lately is um uh the hour whenets Wolf by John Coates. It's about the neuroscience of risk. Fantastic book. Great. I don't know it. I'll put it on my list. All right. So I won't ask you your favorite,

but if you had to pick in all the places you've lived, Tex-Mex, New York pizza, or Chicago hot dog? Tex-Mex, but that's an easy one because I have celiac disease. I can't eat hot dogs unless they're on gluten-free bread, which really you don't want to eat. It's not going to be your favorite. I do low carbs, and I've been known to eat a hot dog at a Cubs game without a bun, and people definitely look at you weird. Yeah, and pizza.

I mean, pizza, it's all bread too, and most Tex-Mex is gluten-free. But also, I mean, I actually, pizza, it's all, it's all bread too. And most, most Tex-Mex is, is gluten-free, but, but also, I mean, I actually do eat that an awful lot cause I really like it. So on sticking on food, what's the Chicago restaurant you can't wait to get back out to once we're off lockdown? Well, I can actually walk there and get delivery. So I'm actually planning to do that in the next couple of days, but I'm really looking forward to eating there in person because it's an Ethiopian restaurant. And it's like, it's just not as much fun if it's not in person. Damara.

You eat with your hands at Ethiopian? Yeah. You eat with your hands. It comes on a piece of bread called injera, which is gluten-free, if you ask it. Interesting. A lot of American restaurants cut it with wheat. So you have to be careful and ask specially, but Damara is fantastic. So you take the bread, it's kind of spongy and rolls up, and you pick up the food with that. And it's just absolutely fantastic. I used to go to that one on Wells Street in Old Town. I can't remember the name. There was an Ethiopian spot there. I don't know that one. Yeah, it was pretty good. What's your favorite bit of book research you've done either for this one

or one of your past books favorite bit of research i have to say it was it was the rhino stuff i mean i i went to south africa uh the actual animal rhino stuff the actual animal rhino stuff yes i stayed on a um private reserve next to kruger Park. And I was there for about a week. And I didn't get, until the very last night, I didn't get as close to rhinos as I wanted. And I didn't get like that really great picture. But the last night there, it was like just at sundown. And there were a bunch of rhinos that were napping.

And we were able to drive right up next to them and sit and watch them for a while and that it just blew me away especially since i was feeling kind of dejected i'm like i came all the way south africa and i didn't get to see a rhino close up and that doesn't work for the book if they're just sitting there all docile you know sleeping what you want i was no i didn't i i was like, I don't need to have that experience personally. And you went into the book a little, just can you briefly tell us like, what do those numbers look like? They're endangered, right? The black rhino, I think is. All of them, all of them are, you know, I don't have them on the top of my head, but the Sumatran and Javan, the numbers are very, very, very low. I think some of the numbers, I forget, have actually gone up a little bit, thankfully,

since I did the book. But there are a lot of subspecies, sort of, you know, northern, eastern, southern, white, black. So, you know, that's been, it's been hard to see. And that's all poaching and environment encroaching on their territory. And now my last that we ask every guest, your favorite Star Wars character. Well, again, I'm terrible with favorites,

but I would have to say it's the Wookiee. All right. The Wookiee for Wooker. Chewbacca. All right. Well, thanks so much, Michelle. This has been fun. Tell everyone where they can find you. Your website has a lot of great resources. So what's that URL? Sure. It's thegrayrhino.com, G-R-A-Y, rhino.com. Although the E will get you to the A spot. You can find me on Twitter, at Wooker. I'm on LinkedIn.

I've got a weekly newsletter that comes out there. Good. Yeah, the website's got a little quiz that I took the other day and some blog posts and media. And so it's a good resource. And then the book, of course, you can find wherever Amazon or any place you'd prefer they buy it. Actually, yeah. Lately I've been, you know, saying, you know, go to your,

your local independent bookstore. You can order online from them. They really, really, really need your support right now. If, if that's too, you know, too difficult, there's a new place called bookshop.org that gives a portion of the profits to independent bookstores, which are just really, really struggling. They need your help. So whichever one's in your neighborhood or bookshop.org. Or if you're doing it for your company, Porchlight Books in Milwaukee will do bulk purchases. And I work with them closely.

So if you want, you know, autograph book plates and stuff, they know where to find me. And so that's a great place to do that. Do you ever do any sort of talks or anything for like company risk departments and things like that? I do. I do some workshops, which are sort of like a hybrid of consulting and training. So if there's a particular gray rhino that your company has, I can help walk your team through the five stages. But I also can do particular issues, a lot of global macro stuff. When I go to Asia, I talk a lot about future work, fourth industrial revolution, but then also some of these big global macro trends.

Great. And then I wanted to ask you earlier, but what any tips I'm been writing a book for like six years, maybe one day I'll finish, but any tips for aspiring book authors? I always say having a book is like having a kid. You should only do it if you can't not do it. Every time, every time I finish a book, I'm like, okay, remind yourself what was this like, this was like before you do another one. And then I, in spite of myself, end up doing them. I'm almost done with the next one, you know, within, within shooting distance. But give us the teaser on the next one. It's, it's actually sort of a sequel to The Gray Rhino. I mean, it came out of this question about, you know,

how come China got what you were talking about right away? How come you're, you know, so famous in China and it's taken longer to catch on in the West? So it really looks at what shapes our attitudes and behaviors towards risk. And I've just found some fascinating stuff. That's probably why I was reading John Coates' book, some of the neuroscience that shapes it,

some of the habits, some of the cultural and demographic influences, some of the policy decisions we can make as a result. So it delves a lot more into the psychological and cultural side of things. So I'm very, very excited about it. I recommend as a title, the red Panda. Keep the theme going. I like it. All right, Michelle, thanks so much.

This has been fun. We'll talk to you soon. Likewise. Had a great time. Thanks for having me. Thank you. You've been listening to The Derivative. Links from this episode will be in the episode description of this channel. Follow us on Twitter at RCM Alts and visit our website to read our blog or subscribe to our newsletter at rcmalts.com. If you liked our show, introduce a friend and show them how to subscribe. And be sure to leave comments. We'd love to hear from you.