The Pomp Podcast - #526: Raj Lala on Innovative Technology ETFs

Episode Date: April 2, 2021

Raj Lala is President and Chief Executive Officer of Evolve ETFs. He previously served as head of WisdomTree Canada. In this conversation, we discuss disruptive technology, bitcoin, cyber security, cloud computing, electric vehicles, and eSports.  ======================= Exodus is an absolute game changer in the crypto wallet space, and we’ve teamed up to offer an exclusive discount for you, as listeners of the podcast. Sign up for Exodus today using my promo code Exodus.com/pomp. This is a no brainer for both newcomers and crypto heavyweights - go sign up today.  ======================= Remote makes it easy for companies of all sizes to employ global full-time employees and contractors. We take care of international payroll, benefits, taxes and local compliance, so you can focus on growing your business. Learn more about Remote and their new Remote for Startups program at remote.com. ======================= Pomp writes a daily letter to over 150,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Raj Lala is president and CEO of Evolve ETFs. He previously served as head of Wisdom Tree Canada. In this conversation, we discussed disruptive technology, Bitcoin, cybersecurity, cloud computing, electric vehicles, and eSports. I really enjoyed my conversation with Raj, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Exodus. Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its

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All right, let's get into this episode with Raj. I hope you enjoyed this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Raj here with me. thank you so much for doing this, sir. Thanks for having me. Absolutely. Let's just jump right into your background. Where'd you grow up and how did you get into finance? Sure. I was born in England, came here when I was four here as in Canada. When I was four, grew up in the suburbs and

finished university, decided I was going to backpack for a year across the world. And I took my Canadian securities course textbook, which is kind of your first foray into the investment world in Canada. Finally read it, came back, couldn't find a job in the investment industry. So became a telemarketer for investment advisors to find people to come to financial planning seminars. Fell in love with the industry, got an opportunity to run some money, decided I wanted to get into the asset management side and started building companies. I built my first company, which was a hedge fund of funds company that I later sold. And then I went to work for that large company. And then I built another company and I sold it to one of the

largest asset managers in Canada. Then I ended up working for one of the largest ETF providers in the world, WisdomTree, running Canada for them. And when I left in 2016, I decided I wanted to build my own and started putting Evolve ETFs together. Absolutely. And so you're doing all of this. It seems like you've constantly had this obsession with innovative technology or disruptive technology. Where does that obsession come from? When we were starting to put Evolve together back in 2016, we really wanted to be different from the other ETF issuers out there in Canada. The world doesn't need another or the world doesn't need another Dow 30 ETF. Canada doesn't need another TSX-30 ETF or TSX-60 ETF. Where we really focused in on is in disruptive

technology, and there was a few reasons for it. Number one, we saw a lot of growth potential in this side of the market. Number two, we wanted to bring products to Canadian investors that they could relate to. For an investment professional to sit across from their client and talk about the yield curve or talk about dividend strategy is one thing, but being able to sit across the table from them and talk to them about cyber breaches or cybercrime or talk about e-gaming, talk about Bitcoin. It's relatable topics that most investors are reading about and are interested and can clearly see a path from an investment perspective as well. And that was really important to us in terms of building these types of products. And we're huge believers

that the world right now is going through its biggest transformation in history, especially especially from a technological perspective. So we wanted to participate in that. We wanted investors to be able to participate. And so, as you know, we launched a lot of firsts in Canada. First cybersecurity ETF, first e-gaming ETF, first cloud computing ETF. We were close to launching the first Bitcoin ETF, but we were second by a day. But we've taken a lot of pride in being very innovative

and being very fast to bring these products to market. For sure. And because you've focused on some of these kind of core niche industries, I want to go over a couple of those. But first, let's talk about the main one, the kind of granddaddy of them all, if you will, which is Bitcoin. And not so much because that's the ETF sector that's got the most flows and the most volume, but really because I think that the audience, that's the one that they care about the most and they're spending the most time thinking about. So walk us through what is the fascination with Bitcoin, how is the ETF structured, and then kind of how you've seen adoption for that product so far. Yeah, Bitcoin, as you know, has come a long way in the last 10 years. When people started to first look at it, we would often hear these comical stories that were true, but still comical, like the first Bitcoin transaction was 10,000 Bitcoins used to buy a pizza. And if you put that into today's term, that pizza is worth over $500 million. Very expensive pizza. I'm not sure who the guy was that actually used the 10,000 Bitcoin for it, but I hope

it was great. Furthermore, you heard stories about people losing their security key for their Bitcoin and rummaging through a garbage dump trying to find their hard drive or their USB stick to recover the Bitcoin. Still today, 20% of the Bitcoin outstanding is sitting with people that don't have security keys to access it. But if you fast forward to the last few years, we've started to see a lot more uses for Bitcoin. We've started to see wider adoption. We've seen retail investors continue to use it. We've seen institutional investors starting to adopt it. We've seen companies

starting to use it as a store of value for a component of their cash positions in their portfolios. We've seen it being used for transactions as well. So we've seen a lot more usage of Bitcoin out there in the market today. And that's what's created all of this value. So you also have over the last year, a lot of people looking at Bitcoin as a bit of a hedge against all of this quantitative easing that's taking place across the world right now. We're printing money left, right, and center. And we're potentially entering into an inflationary period. And so Bitcoin can act as a bit of a hedge against that inflation. So there's a lot of uses.

So back in 2017, we actually filed for the first Bitcoin ETF in North America. But the regulators here in Canada just weren't ready for it. And I understand why. There wasn't enough infrastructure. There wasn't widespread enough adoption as well. We revisited it a few months ago with our regulators here in Canada. They seemed a lot more open to it. We now have a futures market tied to Bitcoin that provides better liquidity and stability.

And as I mentioned before, you have a lot more adoption. So we were finally able to get the regulators comfortable to let us launch it. And the great part about it is, as you know, for a lot of people that want to buy Bitcoin, it's a bit of a daunting task to go and set up that digital wallet and access the security key. So our ETF is actually buying physical Bitcoin. If you invest $25 into our fund, you are getting $25 worth of Bitcoin. It's not tied to futures. It's actually physical.

So you can put it inside your brokerage account. And so in Canada, we have these things called RSPs. We have RIFs. We have RESPs. We have TFSAs, all these registered accounts that enable people to actually invest in Bitcoin the same way that they would buy any other equity ETF. So it becomes a very efficient way for individuals to access physical Bitcoin. And so when you think about the ETF structure versus, let's say, some of the trust structures

or the ETPs or ETNs, describe why the ETF is so important and how you do things around, let's say, the premium or discount and how that will differ versus some of the other products that people have seen. So we will always be tracking the price of Bitcoin. And with an ETF, what you have is you have market makers and the market makers will always be creating, redeeming, making markets based on that reference rate of Bitcoin. So with a fund like ours, you would never have a significant discount or a significant premium above the price. One of the challenges with a lot of the closed end funds that exist out there prior to the ETFs in Canada getting launched, Many of them were trading at anywhere from 10% to 30% premiums above the price or value of Bitcoin.

Once the ETFs came out in Canada, all of those premiums disappeared. And now many of them are trading at significant discounts to their actual value, anywhere from 5% to 10%. So an ETF provides you with clear pricing mechanism, great market making, and most importantly, intraday liquidity. You can invest in our fund, and then an hour later, if you change your mind about Bitcoin, you can redeem out of it too. You don't necessarily have that option within closed-end funds. Got it. And so when you start to think through how this will impact capital flows to Bitcoin,

the asset, and the market cap, what's the thought process there? Just tons of people show up, and they all want to buy the Bitcoin ETF, and therefore, the market cap drastically expands. What are you seeing, and how do you think about it? Well, when you think about Bitcoin, as you know, there's a limited supply of 21 million coin. Right now, we've mined about 18 and a half, 18.4 million of it. So we've still got a couple million to go.

So you have a finite supply, which is one of the reasons why people like it as a store of value and also as a hedge against inflation. So really, what's been driving the growth of the price of Bitcoin has been the growing adoption from the institutions and from the corporates. When you see Elon Musk tweeting out that he's bought 1.5 billion of Bitcoin within Tesla, when you see companies like MicroStrategy saying that they're moving all of their cash reserves to Bitcoin, when you see PayPal doing the same and starting to facilitate transactions, this just all furthers the confidence that people have in the cryptocurrency, and it

furthers demand as well. So we're pretty excited over the next couple of years to see how Bitcoin starts to become more and more adopted. A lot of people, I think what they're saying is that I don't know whether I believe in Bitcoin or I don't believe in Bitcoin. I don't have the time to research it. But the FOMO kicks in for some people. And that FOMO says, well, why wouldn't I put a couple of percent into this asset class? Because if this continues to compound 200% return per year, which is what it's done over the last 10 years, then that couple of percent can be worth a lot. If I'm wrong and Bitcoin's down 75% in a year from now or two years from now, well, it wasn't that big a portion of my portfolio, so it's not going to sting me that much.

And that's what we're seeing a lot of from investors, from professional advisors, and even from institutions as well. For sure. And so when you think about kind of the development in Canada of these ETF approvals, or I think there's a couple of them now, do you think that puts pressure on U.S. regulators to go ahead and improve it in the United States? If that does get approved, does that essentially kind of take the wind out of the sails in Canada? Or what's the thought process in terms of U.S. versus Canada on the ETF? I've talked to a lot of people in the U.S. over the course of the last couple of months, and I get mixed opinions on this. Some people think that the SEC will approve a Bitcoin ETF in the U.S. in the next few months. Some other people think it's going to be at least a couple of years.

I really, you know, I'm not a fly on the wall at the SEC, so I can't really comment as to how close or how far they are. It's interesting that the incoming chairman of the SEC has got a crypto background and he's got deep knowledge. Gensler has got deep knowledge of cryptocurrency. So that's why some people think that a Bitcoin ETF is around the corner. it'll be interesting to see, but you're quite right in that one of the challenges that we have in Canada is it's very difficult to sell our funds. In fact, it's prohibited for us to sell our ETFs or solicit our ETFs into the US market. It's also very difficult for US investors to get access to Canadian listed ETFs. Whereas if you go northbound, meaning from where you are right now,

it's quite different. It's very easy for Canadian investors to buy U.S. listed ETFs, which has been a big challenge for us in the ETF market in Canada, because oftentimes what happens is an investor will say, well, geez, there's a cybersecurity ETF listed in the U.S. that's got $3 billion in assets trading, you know, $100 million a day of volume. And then you've got a Canadian listed cybersecurity ETF that's only trading $2 million a day of volume. I'm going to buy that U.S. listed one. So the great thing is for Canadian investors, they've got a lot of choices. The challenge that it creates for Canadian issuers like ourselves is we are actually competing with U.S. ETFs, but we can't participate in the northbound to southbound flow.

For sure. And so when you start to think about kind of where we'll be in five years, Is there multiple ETFs? They have billions, if not hundreds of billions, trillions of dollars in market cap. And it kind of follows like a gold type situation where maybe there's one or two that are the winners in a major way. And there's a couple of others that are smaller scale that maybe have some bells and whistles to it. Just size, how many? How do you think about that? Yeah, I think that you're going to see, I think there's going to be a ton of growth in Bitcoin. It's going to look, the growth of the ETFs is going to be highly correlated to the growth of the price of Bitcoin, right? Ultimately, if Bitcoin goes down to $10,000 per coin in a year from now, you're probably not going to see a lot of asset flow into the ETFs. But if Bitcoin's at $200,000 in a year or two years from now, you probably have a lot of flow. So it's definitely going to be highly correlated to the performance of it. But I think what a lot of investors are

seeing now is, and to my point earlier, is it's way easier to participate in Bitcoin through your brokerage account via an ETF than it is to go and open up that digital wallet and go through that daunting process of having to set it up and buy the Bitcoin in there and keep the security key and remember the password. And so you don't need to do any of that with an ETF. I definitely think you're going to see more crypto ETFs coming to the market. There's already been a few, including hours that have filed a preliminary prospectus around Ether to try and bring that to the Canadian market. So you'll see more and more of these.

I would say that it may stop at Ether because once you start to take a look at some of the other cryptocurrencies, and I would say stop for now, once you start to take a look at the other cryptocurrencies, they are missing part of that adoption. They're also missing a futures market tied to it. And the futures market's really important for a lot of the market makers to hedge out some of that risk that they're wearing by having physical Bitcoin as well. So an Ether futures market just started a few weeks ago. So it's still very early days. But those are really the only cryptocurrencies that have a fluid futures market. So there will be more. It will be tied to the

price or the performance of Bitcoin. What we're seeing a lot of right now, though, is some of the biggest institutions in Canada taking this really seriously and considering replacing a portion of their gold allocation to the digital gold or Bitcoin. And that has really encouraged me because when we're very confident that we've put together the best structure in the Bitcoin ETF space and when people start to look under the hood at our structure, like for example, our index is the same pricing reference that's used for the futures market with CME. So when people look at our transparency and they look at our regulation and they look at our reference rate, we're very confident that they will look at our fund as being kind of the gold standard. For sure. I want to

talk about some of the other areas that you guys play in with Evolve ETFs, the first being cybersecurity. Bitcoin, I think most people are like, yes, that's super kind of innovative forward thinking and disruptive technology. Cybersecurity, what was the original impetus for going into that space? It was a no-brainer. I mean, every time we think about a product or a theme, what we think about is, is there a long-term investment thesis attached to this? Or could this be a fad. Now, we've had a really great track record of being on the long-term investment thesis and not on the fad side. And when you think about cybersecurity, you realize the long-term investment thesis for it. Number one, we all know cybercrime is going to continue to increase.

There's no doubt about it. How many more emails are you getting or viewers getting from a bank that they don't bank with asking to click on this link to verify their account details or something that looks like Microsoft, but it's not. We're encountering more and more cybercrime or attempted cybercrime on a daily basis. In fact, in the next few years, cybercrime is going to cost the global economy $10 trillion. That's more than the GDP of Germany and Japan combined. So that's huge. So check the box that we're going to be facing a lot more cybercrime over the next 10 years. The other thing that I love about cybersecurity is that it has become a non-discretionary spend for every organization out there. And let me explain what I mean by that.

If you're a US bank, a Canadian bank, a Fortune 500 company, if you have a terrible financial quarter, it's not as though you're going to stand up in front of your shareholders of your board and say, due to our poor financial results, we've decided to reduce our spending on cybersecurity, right? Never going to happen. They might say, we're going to reduce headcount, we're going to close some offices, branches, defer initiatives. But cybersecurity is one of those areas that companies cannot afford to reduce their spending on. So great from a recession resilience perspective, not necessarily depending on the economy. The last point on cybersecurity that most people are not aware of is it is one of the very few industries today that has negative

unemployment. And what I mean by that, more specifically, there are three and a half million job vacancies in the cybersecurity industry today. So if any of you have a kid trying to figure out a future path for themselves, you may want to nudge them towards a career in cybersecurity because there's virtual guaranteed employment. But the reason why that's important to investing in cybersecurity is because of that massive shortage of human capital, 75% of all the cybersecurity work that is performed for all of our Fortune 500 companies,

for our government agencies, for our banks, and so on, 75% of it is outsourced because companies can't staff up enough people to take care and manage their entire cybersecurity needs. So the case that we make for our fund when we're talking to investors is, by the way, our fund, all these companies in the fund, these are the ones that are getting all the contracts, the outsourcing contracts to protect

all of the government agencies and Fortune 500 companies. So the investment case is great. And the last point that I would make kind of going back to macro on cybersecurity, one of the reasons why it's become so important today is because we're so connected. I mean, look at your desk right now. How many devices do you have connected online?

Three, four? I know that like many people, I was bored during the Christmas holidays and I walked around my house to count how many devices I have online. I have 62 online because you've got your smart plugs, your thermostat. So it's great because we're more productive, we're more efficient, we're more happier because we're more connected. But the downside of it is that we're also creating more gateways for cyber criminals to access our data. And 2020 was a blockbuster year for cybercriminals. They made out with about

$25 to $30 billion cybercriminals. So guess what? Lucrative year means you end up getting more cybercriminals entering the fray. So this is a great long-term sector. And it's effectively become like the utilities section of the technology industry. Makes sense to me. cloud computing is a another section you guys have gone pretty heavy in to explain that one yeah you know whenever i explain um areas of the market i always think it's it's helpful to think of your life 10 years ago and what what it was like if you worked in an office you probably there was this room on your floor or in your building that had these file servers the bigger your office or company the bigger the room the more rows of file servers there were that's where

the data was being stored. Highly inefficient, right? Because companies would have to make these big one-time investments to store all of that data, not knowing whether they were going to need 20% of the server's capacity or 120% of the server's capacity. If they only needed 20%, well, then they way overpaid for their infrastructure. If they needed 120%, well, remember when people used to come to you and say, sorry, Anthony, my server crashed? you don't hear people saying to you that their server crashed anymore right well part of the reason is because much of our data has moved to the cloud major advantages to companies because what it does for them is it gives them full pricing flexibility because you pay for what you

use not for what you don't use so it's like your light switch come into your room you turn on your light you start paying for the electricity you leave the room you turn it off and stop paying it's exact same thing with cloud computing the other massive advantage and the reason why cloud computing has become front and center over the last year is because it enables users to access their data anywhere in the world. It also enables them to access software anywhere in the world. And I often say to people that, thank God, if there's one silver lining of going through this pandemic is the fact that we're going through it now, not 10 years ago. Because if we went through this 10 years ago, we wouldn't be able to use Zoom. We wouldn't be able to use

cloud-based video conferencing. We would have a tough time streaming movies off of Netflix. We would have a tough time streaming games as well. We would have been much more isolated and it would have been much darker period to go through. So thankfully, we've gotten the kind of technological advancements over the last 10 years that has made going through this pandemic a little bit bearable. But cloud computing today is going through this process where any new company that has set up in the last five years has gone straight to cloud. But any of those older companies, 30, 40, 50 years, they have these legacy systems. And so it takes a while to migrate to the cloud. So that saying that you often hear that everything is in the cloud, it's actually

not true. Only about 40% of our data is in the cloud. So we still have a long way to go, which is why I think that this is a great area to be investing in because it's actually still early days. For sure. When you start to think through other areas in cloud computing, what are some of the more niche aspects? The ETF itself tracks the macro, but are there micro areas that you're interested in? What we focus on is the three pillars of cloud computing, platform as a service, infrastructure as a service and software as a service or SaaS. Most people have heard the term SaaS very, very often. On the infrastructure as a service side, that's where you have Amazon, Microsoft, Azure, and Google. Those three companies control about 55% of the cloud

computing market. So remember a few weeks ago, the announcement came out that it's funny I mentioned Google, and of course, my phone started speaking to me. The announcement came out that said that Jeff Bezos was stepping down as CEO of Amazon, and he was appointing Andy Jassy. Well, guess what Andy Jassy used to do? He was the head of AWS, which is Amazon's cloud computing business. Why did he appoint Andy Jassy? Well, I guess you can read between the lines, which tells you that cloud computing is a very, very important pillar of Amazon's future growth. So it tells you how big it is. So that's on that side. And then where I really like the industry is on all the SaaS side, the software as a service. What we're doing right now on Zoom is SaaS-based. Salesforce

was one of the pioneers of SaaS or software as a service. I mean, when was the last time you went to a store to buy software, to buy the latest edition of Microsoft? And I often say to people, when was the last time you plugged anything into your computer other than power? I don't even know where my disk drive is and my computer because you just download all of your programs and everything that you need from the cloud. So to me, that's where there's huge growth opportunities on the SaaS side. For sure. Electric vehicles is another area that I always joke and say, ask a young person. They say, of course, all vehicles are going to be electric. Ask an older person and they think it's like the charlatans of tech have showed up in the electric vehicle space. So how

you think to that one so if you think back like 110 years ago with the horse and buggy uh and ford came out with the first car and everybody said this is a joke it's a fad never gonna replace the horses and buggies it took about 20 years to eventually phase out horses and buggies and i think that's the period that we're going through right now with the electrification of the cars it's not an overnight thing but there you're seeing these big big, bold statements being made by countries and by the auto manufacturers, Norway and Netherlands, both. No more combustible engine cars will be sold in their countries from 2025 onwards.

Norway is already 54% electric. So within five to six years after 2025, so call it 2030, early 2030s, you won't even see a combustible engine vehicle on the roads in those countries. But the big behemoth countries, China, India, with massive populations are saying 2030, no more combustible engine vehicles on the road. You're seeing it with the Biden administration making huge initiatives in the EV market. He just made an announcement a few weeks ago that the entire government fleet of cars is going to move to electric. He's talking about all these charging stations that are going to be put up throughout the US as well. Then you start to see companies like GM and Volkswagen both saying now, 2030,

Anthony, which is only nine years away from now, 2030, they will not be making any more combustible engine vehicles. They will be full electric. When you think about countries making the statement, companies, the auto manufacturers making those statements, you can clearly see a path to the electrification i got an electric car a couple of months ago three months ago now i love it but here's the big challenge range anxiety i don't know if you know what i mean by that term but range anxiety i get it every time i go yeah every time i go to my cottage can i can i make it to the cottage and come back on one on one charge i can't um and so i've got two options okay coming back from my cottage one option is turn the heating or air conditioning

off completely, turn the radio off, and I'm white-knuckle driving the entire way so that I can squeeze as much juice as possible. Or I've got to go 20 minutes out of my way to a supercharging station to get a charge enough to get back and sit there. If I want to charge the full car, sit there for about 45 minutes to charge it as well. Highly, highly inefficient. So this is the issue that I think we've got with the electrification is the overall infrastructure, which is why I applaud the Biden administration for saying that they're going to be putting in 150,000 new charging stations in the US. I think that that's great. I mean, we need to do more of that in Canada. Our Trudeau government has made some commitments, but nowhere near enough.

But that is the impediment for the adoption of the that is one of the impediments of the adoption of electric vehicles. The other one in the past has been cost and because electric vehicles are too expensive. But that cost of the battery has come down about 75 percent in the last five years. So you're going to see greater and greater adoption of it. Makes makes a lot of sense. And to me, it's always one of these things where these problems people laugh at one day in the future. Right. They'll say, what do you guys mean? You didn't know if you were going to make it. but uh but it's a problem today uh last one i want to talk about on that point you know what's interesting is there's this company called neo and what neo does it's a chinese-based uh ev

manufacturer and what neo does is you actually you actually drive into a service bay and they swap the battery out so you're in and out so you're not sitting there waiting to charge your vehicle uh that i love that type of innovative thinking as it relates to the infrastructure until we get to the point where you know we can charge our vehicles faster maybe even use solar energy to charge the batteries as well. But it's a really interesting time. And I would say to you that the car is going through the biggest transformation in history right now, not just on the electrification, but in the next few years, we'll have self-driving cars on the road. We'll have autonomous taxis. It'll be strange at first to sit in the backseat and nobody's at the driver's

seat, but you'll get used to it and it'll be a great way. Because think about it, how many people dread having to have those conversations with their uber driver absolutely what i have to e-gaming and e-sports is is the fifth area that i want to talk about what uh what's going on there and why the interest in being the first etf to uh to give investors exposure yeah well you go back again think about think about your world 10 years ago you got interested in a game you went to the store you bought the disc or the cartridge brought it back home plugged it into your console and away he went. That's where the revenue stream would stop for the e-gaming company, for the video game publisher, I should say. Today's world is so different. And so I had two aha moments in terms

of wanting to create the first e-gaming ETF in Canada. The first aha moment was taking a look at how developed and intricate revenue lines these gaming publishers had set up. So you know, you download a game often for free online and then you have something that's called a freemium model where you pay for to unlock levels or you pay for boosters or in the case of fortnite you pay for skins and in north america the average millennial today is spending 110 a month on e gaming because of that freemium model so that's a huge revenue line for the gaming publisher but then they also because there's so many eyeballs playing the games and watching the games now you have companies like coca-cola t-mobile red bull that want their logos in the game embedded because

it gives them brand value and so they're paying the game publisher oftentimes to have their logos like i once in a while will play a game called nhl 2k and nhl 2k the boards used boards around the ice rink used to have these logos but it was of fake companies they didn't even exist today they have the logos of real companies as well and then you've got the tournaments and sponsorships advertising media rights so these companies have come up with these intricate business models with multiple sources of revenue so that was a big one the next aha moment for me was the viewership. Before the pandemic, you had stadiums all over the world being filled with people watching other people compete in an e-game. I would have never thought. I never

understood it. It never made any sense to me. In fact, I did a podcast where I was interviewing a professional e-gamer, and I made that comment to him. He's like, with all due respect, Raj, my generation doesn't understand why your generation watches cooking shows or home improvement shows and that put it into perspective for me because it made me realize geez well what I sometimes think is strange and what I'm doing is probably strange to other people let's not judge and let's just take a look at the business side and say okay well if there's all these people going to stadiums to watch other people compete if there's millions of people watching online other people compete this is a real uh source of entertainment uh for individuals

and so the viewership and the multiple revenue lines was what really caught my attention and then of course the the adoption i mean we have three billion gamers in the world today that's anybody that spends six hours or more uh per week and i think it on gaming i think it's really important to not get too caught up in the stereotype of those teenage kids in their basement with a bag of Doritos gaming. Because yes, the teenagers are a segment of the population, but I know a lot of 40-something-year-old professionals that go and hop online and compete in an esport with their friends. I know people like my mom, 75-year-old plus, that are playing games like Candy Crush and games like word search games. So it has transcended

multiple demographics and has become so widely spread. And then you can see how it gets fed from there because our smartphone technology is getting better. We're eventually going to have a full rollout of 5G, which means your overall e-gaming experience is going to become that much better because the key to the growth of e-gaming isn't in the consoles because there's only 200 million consoles in the world. Consoles meaning the PS5s and Xbox in the world. There's only 200 million of those, but there's 4 billion smartphones. So if you're a game publisher and you're building your game for the smartphone market with all of the improvements in the hardware and technology and faster transmission, you've got a real business. I feel like the five sectors that

you guys have chosen that we talked about today to young people, no brainers, to hopefully more more investors every day becoming no brainers. I want to close out before we get into the rapid fire questions with a return back to the Bitcoin ETF. As you think through that, what is kind of your pitch to people as to why they should take a look at that and put it in their portfolio? Store of value and uncorrelated asset class. You know, for example, over the last couple of years, The relationship between Bitcoin and North American equities and North American fixed income has been zero to negative, that relationship. So it actually can really help diversifying an overall portfolio. Those to me are really the keys, the diversification aspect, the store of value and the greater adoption, which is just going to fuel the price of Bitcoin, which is why I think it should be in people's brokerage accounts.

I, uh, you know, I agree. You don't have to, uh, don't have to pitch it to me. Uh, I want to, uh, get into our rapid fire questions and you get to ask me one question to, uh, to finish this up. What is the most important book that you've ever read? poo uh the most important book that i've ever read um probably catcher in the rye why i just it really resonated with me i mean i it was it was you know i i was undiagnosed uh adhd growing up uh like a lot of people i mean it's easy to diagnose today But, you know, I was not one of those kids that could read, that could sit down and read a book. That was the only book in my childhood that I sat down and read cover to cover within a day. And the reason I was able to do that is because it was just so interesting to me. So I know most people would say like a business related book, but that was a book that when you ask me that question,

It's the first one that comes to my mind that marked me the most, uh, because I was pretty proud of myself as well, uh, for being able to, I always heard about, heard about these people saying, oh, I finished this book in like two hours. I was not that kid. Uh, so being able to finish a book in a day was a, was a, was an accomplishment. That's a, uh, that's a great reason. Uh, second question is about your sleep schedule comes from our friends over at eight sleep. Uh, I used to sleep like five or six hours and, uh, then I got an eight sleep thermoregulated

beds basically turn it really hot really cold i sleep literally on an ice cube and sleep like a little baby now i'm a full-on convert to the sleep religion what's your sleep schedule and how has that changed over the years uh well when you get older you start to go to sleep earlier so when i sometimes when i talk to people like you and uh some people say i'll give you a call around nine o'clock and i'm like pm and they say yeah and i'm like uh well that's when i'm really getting getting ready for bed i am uh i'm a early sleeper and an early riser i'm i'm very good at getting seven hours i i'm usually asleep by 10 and awake by five uh in the morning and then what i'll usually do these days during this pandemic is i'll work for about an hour and then i'll go

and hop on my peloton uh for a bit and come back up and work and get ready and and work and you know driving my these days because my daughters are back in school i'll drive them to school as well because it gives me that time. I've tried so many different things though. I actually got one of those weighted blankets a couple of months ago. I found it too restricting for me. I didn't enjoy it, so I stopped using it. I love the experimentation and the open-mindedness. I think that's always key. Third question is more fun. You get to ask me one. Is aliens, are you a believer or a non-believer? I am a believer, and I'll tell you why. Chris Hatfield, very famous astronaut, is my neighbor. And I had a conversation with him one time, and I asked him that question.

Do you believe that there's life in the solar system? And he said, no comment. I don't know. If he believed that there wasn't, then he probably would have said, no, there isn't. But the fact that there was no comment tells me that and he would probably know better than me because he's been there a few times. So it tells me that there there probably is. But it's a great debate because I debate this also with my kids. I mean, I find that this generation of kids today are far more interested in space than than than probably the generation before them. And maybe Elon Musk has something to do with that. SpaceX has something to do with that probably. Uh, but my daughters are very fascinating watching

space shows. So I was very skeptical. I'm, I'm, I'm, I'm a very linear thinker, black and white. Uh, but in that case, um, when I heard that comment, I, I, I could see that there probably is. What about you? Yeah. I'm definitely a believer. Come on. It's just math, right? Just the, the minute possibility that there is not intelligent life is just too small. Uh, so I'm a probability believer in that case. You could ask me one question to finish up. What do you got for me? What's the, what's your favorite podcast besides yours? Oh, that I listened to? I don't have a favorite. I don't have a favorite necessarily. I'll throw some out there that I find myself listening to the most. So Joe Rogan, Tim Ferriss, Patrick O'Shaughnessy's

Invest Like the Best. I would say those three, I probably find myself listening to more than most. But I also enjoy kind of just when I see, you know, people tweeting about a specific episode, and they're just like, hey, this one's really good, going kind of listening to podcasts that I haven't listened to before. I've never listened, not one time. He's a horrible host, Peter McCormick, from What Bitcoin Did. Horrible guy. Like, literally, anyone who listens to that is crazy. I've never listened to a single episode. but other than that, uh, every other podcast episode, uh, that, uh, that people do,

I really enjoy compared to his. Can I ask you a second question? Sure. Clubhouse a year from now, people still using it or is dead. Uh, I think that there's two ways to answer this drop in audio experience, game changer here forever clubhouse likely winner could mess it up at some point some way could be copied uh like twitter spaces or something like that as well but i think that the the conviction i have in terms of uh drop-in audio for sure like that is here to stay i think people would just want the experience is like wow this is amazing uh the big question is can clubhouse continue to kind of you know distance themselves from all the competition that's coming my guess is yeah they probably can but we'll we're going to find out

for sure yeah interesting what uh what do you think i um i'm still getting my head around it like i'm still getting my head around nfts non-fungible tokens um as well and i've been asked this question about nfts a few times this week alone and never been asked about it prior to this week so obviously the big art sale and and um and the lebron videos are making headlines as it relates to clubhouse i i think the concept of live makes a ton of sense um i can tell you two things number one i never pvr sports because if i don't watch it live then i'm not going to watch it uh um recorded because i just feel like you've missed the entire experience of watching something that's already happened uh versus uh live so i i'm a big fan of the the live

medium. And I see it in our business too. I mean, we do these webinars all the time and I find that, you know, we could have 500 people, RSVP saying that they're going to be coming onto our webinar and 300 people participated in it in the end. And then we'll send the replay around and maybe two people will watch the replay because for them as well, it's already happened so i think that the concept of live uh is is a really good one which is why i think clubhouse works i have not used clubhouse yet so i'm just a student of the of it i i'm planning to use it in the next couple of weeks part of the reason why i don't use it is because i use a google phone and you have to have apple uh to uh to use it so if clubhouse is listening uh try and

make it friendly for the uh for the android users uh as well but anyways i think it's i think it's a very interesting concept and um i i think i think it could i think it could really take off and i agree with you the drop-in concept is is great for sure where can i send people to find you on the internet or find out more about evolve etfs yeah we have uh we we have a great website at evolve etfs.com lots of stuff in there infographics different media uh a newsletter as well if people want to sign up for it. We send out a newsletter on Sundays with a lot of different articles about disruptive technology. So any information that you could possibly need about our funds, it's there on our website. All right, man. Listen, I really appreciated

this conversation. I learned a ton. I think that your focus on disruptive technology and innovation is probably going to play off pretty well here for you and for folks who choose to get exposure through your ETFs. So I appreciate the time. I'll have to do it again in the future. Thanks, Anthony. I loved the experience.