Robinhood Gamestop explained

#ItzOnWealthTech Ep. 85: Reddit Targets Robinhood And The GameStop Débâcle with Aaron Klein, Riskalyze

“For markets to work there have to be winners and losers. It’s not a good look for Robinhood to change the rules of the game and effectively turn off one side of the GameStop trade. It’s also not a good look for the DTCC, the prime brokers, the intermediaries, the market makers, the exchangers, it’s not a good look for anybody. Markets need to have consistent rules to operate well and when the rules are changing in the middle, that’s a huge problem.”

–Aaron Klein, CEO, Riskalyze

Hey everyone, I’m glad you could join me for this episode of the WealthTech Today podcast. You just heard the intro from our guest, Aaron Klein, talking about the fallout from the GameStop/Robinhood controversy that has been rocking markets and social media since last week. This wasn’t what we were originally going to talk about, but current events overtook us and we felt everyone would be much more interested to hear us going back and forth with our opinions on this controversy. We can always circle back to other wealth management trends later.

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Topics Mentioned:

  • Why GameStop is a Risk 99 Stock
  • When a Billion Chinese Jump
  • Robinhood Driving Disruption
  • How to Destroy a Multi-Billion Dollar Brand in 24 Hours or Less
  • WallStreetBets is a Crowd-Sourced Hedge Fund
  • The Piggly-Wiggly Short Squeeze of 1922
  • More Regulation Protects Incumbents
  • We’re All Cyborgs Now

Complete Episode Transcript:

Craig: I’m happy to introduce our guest for this episode, Aaron Klein, CEO of Riskalyze. Aaron, hey, welcome to the program.

Aaron: Hey, great to be with you Craig.

Craig: Glad you could make it, so glad we could fine some time in your schedule and get things going in these turbulent times. Thanks for making the time for us.

Aaron: Absolutely.

Craig: So we were trying to come up with something to talk about, and it’s so boring. Nothing’s going on, we’re all just sitting around twiddling our thumbs.

Aaron: There’s nothing happening.

Craig: We’re waiting for the Superbowl. What have you guys been doing the last week or two? What’s the biggest news on your end?

Why GameStop is a Risk 99 Stock

Aaron: Oh man. Well people keep asking if we’re gonna finally let the risk number go above 99 because of everything that’s happening with GameStop and Robinhood and all of that. And no plans yet to push the risk number above 99, but yes I can confirm to you that GameStop is a risk 99 stock. That is for sure. When you go up 8000%, that’s kind of built into the math.So as always we try to bounce around a couple of ideas before we record and we had a whole bunch of stuff, which we just threw out the window, because we just were so excited to talk about the whole Robinhood/GameStop.

Aaron: Well we might cover it all. It just depends.

Craig: Well I find people are listening to the podcast on one and a half or even two times speed. So maybe we can get an hour podcast into a half an hour.

Aaron: You never know.

Craig: So I think people are familiar, but you can just Google Robinhood if you don’t know, if you’ve been living under a rock the last week and a half or so. So what’s your opinion on things and tell me what you think of this going on and how you think it’s gonna shake out.

Aaron: The whole thing first of all, is interesting and I feel like it’s very on brand for 2020, 2021. The presidential election is over, we now translated our political positions into our positions on stocks and which stocks are going to go up and which people are bad and which people are good. I mean there is some level to which, I’ve never been a fan of, I understand why short selling exists in the market. I’m not saying it doesn’t have an important part to play in the market. But you see a lot of the behavior with some of these, hedge fund players who who take a short position and then effectively are working to drive a company’s stock down and they’re taking action to try to drive a company’s stock down and it’s not a great look. I mean we’ve never seen anything like this before.

When a Billion Chinese Jump

Aaron: There’s a great book that a venture capital guy in Silicon Valley wrote, his name is Jonathan Watts, and it’s called When A Billion Chinese Jump: How China Will Save Mankind — Or Destroy It, and he was talking about how when he was a kid, there was this theory that if China could get all of their citizens to jump at the same time, it could completely destabilized the globe right and the Earth on its axis. And his point basically was that we’ve suddenly reached this place where, we’ve never had a place where for example, a president had 100 million people that he could say “jump” to, and they would jump at the same time.

Aaron: So without getting political, this WallStreetBets thing is super interesting because it’s another point in this phenomenon. We’ve never had this kind of mass coordination of people organizing around this idea of a stock position to oppose a hedge fund short position and take it down. It’s fascinating. The Wall Street Journal said yesterday that that the hedge fund is down 53%. I mean that’s wild in the space of one month.

Craig: Well they needed a $2 billion lifeline right, and it’s incredible how I think we’ve always had these right we’ve always had these groups that have been trying to buy stocks but it’s never worked to this level before.

Aaron: Right. And you’ve never had this level of coordination I was on the new social app craze I guess is this is this app called Clubhouse so I actually signed on to it last night, lo and behold, a lot of the folks that like Benzinga, and in the FinTwit world we’re having a conversation on this and my buddy Jason Raznick who runs Benzinga kind of pulled me on the little stage on Clubhouse and he was live on a YouTube live stream or something, and said something about how he doesn’t understand what’s going on with this GameStop thing, and boom like 5000 people from Reddit all join the live stream and the comments went nuts in the middle of it. And the sheer central force of that action of people engaged in that you have to call it a movement. You know you can make arguments about whether or not it’s a wise investing choice or whether going with a crowd like that is a good idea, but it is fascinating to sit back and look at it and say, this is real, like this is a part of the markets. Whether we want it to happen or don’t want it to happen, whether it’s people’s play money, there is enough play money in the world that people can move markets with it. That much has been proven over the last week.

Robinhood Driving Disruption

Robinhood Gamestop explained

Craig: True. I mean if you add it all up, you add up all the stimulus checks. You have these, we were talking about memes before and how everything’s now described via a meme. One of my favorites is a Japanese anime and it’s a little girl sitting under a desk and she’s frightened and it says “hedge funds”, and then you have a Terminator that says, “GameStop guys with their $600 stimulus checks”. The world has turned upside down!

Aaron: It’s somewhat true. I mean and then you see the actions that Robinhood took last week and that was fascinating. I think a lot of people in the wealth management business have been looking at Robinhood and looking at some of these other FinTech startups and just kind of asking themselves, where does this go and how do these companies operate?

Aaron: You have to give Robinhood credit, you could argue that they are the ones that drove Schwab to eliminate trading commissions which then had the massive ripple effect and probably lead to the TD Ameritrade acquisition. So Robinhood has had a consequential impact on the market already. It’s a fascinating week for them. I’ve had a Robinhood account to just play with it and check out the user experience for a while. And the level of passion and trust that a lot of people had for that company I think has evaporated during this last week. I think it’s a huge problem for them, and I don’t think it’s something that they can just flip a switch and come back from. To shut down, especially when you have these two forces colliding of this movement saying hold the line, buy the stock, and then literally their favorite broker shutting down only the buy side of the trade. That’s a pretty fascinating collision, and I don’t know that we’ll know the full impact for a bit, but I don’t think it’s good for Robinhood. And I think it’s pretty hard to buy back that credibility.

Craig: Yeah it’s very difficult and as fast as things move today. If you look at how fast Robinhood went from nothing to destroying value all up and down the market to being the driver of multibillion dollar acquisitions and just putting  company’s out of business and and shifting retail ownership, doubling it in a short amount of time to becoming the most evil firm on the planet. Totally evil company where Elon Musk called Robinhood’s CEO, “Vlad the Stock Impaler”. So when you’ve lost Elon Musk…

Craig: Do you remember the charts where they show how fast things took to get to 100 million users, and then show the telephone took 80 years and then television took 30 years and then radio, then it’s Facebook took this, now Robinhood is like this. You can’t squeeze it any tighter, pretty soon pricing will be like, I have an app, I got 100 million users now it’s Friday and I’m out of business.

Aaron: I really wanted this experience to last longer. I mean, at Riskalyze we’re about to celebrate 10 years, we do not have 100 million users but we’ve impacted millions of people. So I’d like to think that we’re impacting on the right level of skill for us. But that said, I’m a little bit more attuned to, our mantra has always been build 100 year company and so I’m a little bit more attuned to a longer term cycle than that, but yes. I’ve got an app, I’ve had 100 million users and now I’m out of business on Friday, that that could be a cycle in the future.

How to Destroy a Multi-Billion Dollar Brand in 24 Hours or Less

Craig: It will be. But I tweeted about that, it’s how to destroy your multibillion dollar brand in 24 hours. Right. How many more mistakes can they make?

Aaron: In my mind was the shipping story, and it just underscores how critical it is in this age to be good atRobinhood Gamestop explained communication. I think that you’ve got on Wednesday, they took the action or blocking the buy side of the trade. And there was very little communication about why that was. And you look back and you can kind of see the outlines of that communication, but I have to tell you, I started on Wednesday going, well hello, Citadel was their number one customer in payment for order flow. Obviously Citadel has come in and, money talks and the customers have said what to do. By Thursday, you know the news that the Wall Street Journal reported that they had to raise a billion dollars just to keep the doors open on Wednesday.

Aaron: And the Wall Street Journal’s reporting this morning that they just raised another $2.4 billion again just to keep the doors open with the idea being here that this is literally the collateral that they have to post, because of T + 2 settlement dates for this stock that is ranging between $4 and $400 a share, it’s kind of crazy. And I think the number I saw was that the multiplication factor went from around 3% or 4% to 86% in the mathematical calculation of how much capital they were going to have to post just for the two day settlement window. With all that reporting for the Wall Street Journal it puts some of their actions on Wednesday into perhaps a better light.

Aaron: Maybe there was no evil or nefarious intent, but I’ll tell you what, if there was no evil or nefarious intent, they did a really crappy job of communicating that. I’d say they should have gone live on Twitch and just livestream their actions throughout the day to show what they’re doing. We are trying to keep you, the individual trader in business, able to trade and DTCC has come in and told us that we have to post more collateral to let you trade, so if you see any trade restrictions on the system it’s because we want to make sure we can fill what orders we accept, but we are working our butts off just to raise more collateral and let you trade freely. And by the way, if you’re an accredited investor here’s our GoFundMe page and you can put collateral in yourself, and you’ll own equity in Robinhood at this valuation. I would have done that.

Aaron: You’ve got to do something, this is a movement. You can’t just do buttoned up corporate speak and as late as Thursday night, Vlad was on CNBC saying there’s no liquidity problem. Well if there’s no liquidity problem, then it looks like you’re just doing this at the behest of your hedge fund masters who are telling you to do it. The truth is you did have a liquidity problem. Or you could choose to turn it into a liquidity opportunity and explain to your customers, hey, hello, you all have traded 10,000 times bigger than we’ve ever traded before, and the collateral requirements went up times, 30. Okay, so do the math, we want to do what it takes to keep you in business and this is what we’re trying to do to do that. That’s what you’ve got to communicate if you want people to see your actions for what they are in this kind of situation.

Craig: I always go back to Occam’s razor where the simplest explanation is usually the right one. So in these cases is usually stupidity is the much more likely explanation and conspiracy. It reminds me of the 2008 crash where you had all these firms with these default models that showed under 2% default rate. And then when it spiked to 25% or something, then they all went out of business, very similarly they had a capital requirements model, we’ll never need more than this amount, we’ve been business five years and look we know it. But they didn’t expect this black swan event to hit them. And it completely blew up their models.

Aaron: Well, and the reality is is we still don’t know if, even if Robinhood themselves weren’t affected by something from the hedge fund side of the world. Okay, what we still don’t know is what made DTCC come in and change the collateral requirements, there’s no transparency into that. And if there’s one thing we know about Wall Street, is that it’s a it’s a club that protects its own, right, everybody can see that everybody has seen it before. Go back and read the history of long term capital, and the quasi bailout, full blown bailout like the people running the fund lost their equity in the fund, but Wall Street protects their own. And you’re in a situation here where the only reasonable explanation that you can begin to reach when you see Stevie Cohen coming in and injecting billions of dollars into that hedge fund I mean the hedge fund is down 53%, and you invest in it? maybe, if you really think that they’ve got a path out but you typically you know we’ve all heard the same “better not catch the falling knife”, and I’m not sure where you get the idea of a 10 figure wire transfer when there’s a strong probability that that’s a falling knife.

Invest In Others

WallStreetBets is a Crowd-Sourced Hedge Fund

Craig: I want to go back to the WallStreetBets guys. If you read the WallStreetBets forum before this happened they do a lot of fundamental analysis, they do a lot of reviews and research on these companies to find their targets. And it’s very similar to how a hedge fund works, right, they look for opportunities to make money to arbitrage and to find even areas where it’s like a crowdsource hedge fund. But people want to say, oh this is terrible that these guys are doing this, but it’s exactly the same as rich hedge fund guys in the Hamptons at a party saying, oh, here’s what we’re doing, you want to get in on it, they’re just doing out in the open they’re being complete transparent about it.

Aaron: Just at tremendous scale, at tremendous scale. I think that’s a very very great point. And that’s why, man, now you think about the political leaders who chimed in on this.

Craig: Warning, political discussion. Warning, Will Robinson, danger!

Aaron: Well, the strange bedfellows that this created right I don’t know if I’ve ever agreed with AOC on anything, and yet she comes out and says there’s something wrong when you know this brokerage firm comes in and says you can’t buy more of this security. You’re taking sides on a trade, in effect, right and and you know and then she’s in the same in the same boat as Ted Cruz. I tend to look at the world that way. I think that, I just had to laugh at Elizabeth Warren parachuting in and going oh my goodness, people are making money, we must stop this!

Aaron: Her approach of saying something to the effect of “this can’t be right, the market values have to reflect the underlying fundamentals of the companies that they represent or something is wrong and this is manipulation”. Well, that’s not what the stock market is. That’s not what the stock market is at all. And thanks to her, there’s some hedge fund guys who probably are not going to have to sell their second yachts, so congratulations Elizabeth Warren, you save some yachts.

Aaron: But it also just speaks to where we’re at as a country and I don’t mean to sound pessimistic, I’m an optimist at heart, but man, we have got to do something about the fact that politicians don’t actually know a whole heck of a lot about what they claim to be experts in. I was talking with a friend of mine who worked for years in the Chicago option pits. And he’s like, man, I would go talk to different congressional committees in Washington DC, talking about representing the CME and some of the different options traders in Chicago. And he goes, the people who get appointed to these committees just happen to represent New York and Chicago, because the exchanges are in New York and Chicago, they don’t actually have any expertise, necessarily, and understanding what the heck it is that they are supposedly regulating, and it’s a fascinating problem, it’s one that I think our country has worked through for a while and it’s not quite solved yet but it sure needs to be.

Craig: You brought another thing that bothered me for a long time was with the CFTC and these are guys who are regulating agricultural products, and someone had the idea let’s give them commodity derivatives because commodities are agricultural products, let’s just put them together, and you’re thinking, what do they have to do with each other? Why would you give these people this gigantic market, and now they’ve got incredible control and as you said, they don’t really understand what it is they’re regulating and if you remember the Facebook hearings couple years ago.

Aaron: Yeah, there’s a slight difference between hog futures and actually taking delivery of a lot of hogs.

Craig: Running a hog farm is not an easy process but it’s very different from trading hog futures or trading cattle futures, if you know what I mean. But some of the victims in this GameStop thing, just don’t look good. Gabe Plotkin who co-founded Melvin Capital and suffered that 50% loss, which is $4.5 billion in value was in the middle of upgrading his $44 million Miami beach house, and might have to stop that expansion so you know these people just don’t look sympathetic.

Aaron: I wonder if he’s gonna make a campaign contribution to Elizabeth Warren next year. You just never know, you never know, because she may have saved that Miami beach house.

Craig: Without going down the political rabbit hole too quickly, if you just Google who gets the most Wall Street hedge fund money you’ll be surprised as which is which candidates get that.

Aaron: It’s a fascinating world and I think that’s the thing, is that if we do this right in the markets there’s nobody putting their finger on the scale, and tilting the game, one way or the other. And the WallStreetBets guys have just as much right to be in the markets as Melvin Capital does Melvin Capital has just as much right to be in the markets as WallStreetBets does. For markets to work there have to be winners and losers, that’s how markets work. And so you look at that and again, to be in a position where we change the rules of the game and effectively turn off one side of the trade, it’s not a good look, it’s not a good look.

The Piggly-Wiggly Short Squeeze of 1922

Aaron: We’ve talked about it about Robinhood but frankly it’s not a good look for DTCC, it’s not a good look for any of the prime brokers, it’s not a good look for any of the firms the intermediaries, the market makers the exchangers, it’s not a good look for anybody because markets need to have consistent rules to operate well. And if the rules are changing in the middle of game, that’s a problem. Somebody posted a Twitter thread by the way on one of the fantastic short squeezes in history, which was very similar kind of circumstances, was defeated by a rules change and it was apparently it’s in a book, I’ll have to see if I can track down the book but it’s a book with 10 great stories about the market but one of them is about the short squeeze with Piggly Wiggly.

Craig: A classic American stock.

Aaron: Classic American story, right but they franchise in some states, and apparently the franchisees hadn’t done super well so all the corporate stores were doing great, but a few of the franchisees hadn’t done well and were closing. And so somebody picked that up and was injecting lots of rumors that the company was going down and created a massive foreplay on the stock and this is back before electronic exchanges. So basically, the guy who’d started ranting Piggly Wiggly got very pissed off about this, took out a $10 million loan. Okay, and went and went to New York and effectively cornered the market on Piggly Wiggly stock. Right. All the stock certificates that one could find in the New York City region, and effectively cornered the market and drove the stock up by three times its value, and did it all on this $10 million loan so he’s deep in debt.

Craig: Remember this is the 1920s so $10 million is around $100M today.

Aaron: Right, exactly, it’s a lot of money. It’s a fortune. And so he he accomplishes that and effectively, they changed the rules at the last minute and gave the short sellers like two extensions of time to satisfy their naked short positions. And ultimately they were able to round up enough shares out in the hinterland to make good on their short positions price stock collapse and he’s holding the bag with a $10 million loan, so filed bankruptcy at some point in the future there. But but it’s just not how markets should work that the rules can be changed in the middle of the game.

Craig: Regulation protects the incumbents. In general.

More Regulation Protects Incumbents

Aaron: That is most often the case, most often the case. And you know I think none of us think that you know completely unregulated markets would work. I mean, you have to have basic protections against fraud. You have to have basic protections against bad dealing in a lot of different ways, but at the end of the day, most regulation tends to end up protecting either the incumbent or whatever the largest players are. And a lot of the time that’s the same player, but the largest players are the ones who have the greatest opportunity to deal with regulation.

Aaron: I mean again, we do not want to go down political rat holes, but Facebook keeps saying that they are totally open to regulation from governments regarding free speech, about regulating speech online. Sure. I understand why they are, because that would be a massive moat if you as a social network cannot for example get hosting services or internet backbone services if you do not provide that kind of moderation of content. Okay. And there’s evidence that is true that without government regulation the other players in the in the marketplace are using their monopolies and duopolies to effectively create that kind of regulation. But Facebook becomes the only company that can afford to comply. And so it becomes a self creating monopoly or duopoly situation and that’s really not a great place for competition, it’s really not a great place for innovation.

Aaron: I always find it interesting to go back and read and I don’t say this, I think he’s one of the more brilliant thinkers of our time but Peter Thiel wrote the book Zero to One and talks about the fact that competition is not a good thing for businesses. Okay, you sit back, you go what? I came from the school going competition is a great thing for business, he said no competition is a great thing for consumers, it’s a great thing for markets. It’s not a great thing for individual businesses, they would prefer to have a monopoly and at the end of the day you can succeed as a business in a competitive market, and I’ve never been in anything but a competitive market, but what businesses really prefer monopolistic markets because they they have massive pricing power and they can they can control the marketplace. So a Facebook is definitely sitting there as the massive incumbent who also happens to be the largest player sitting there going, Yeah, I’ll take regulation all day long because it creates a monopoly and it keeps all my competitors out of the market.

Craig: Exactly. Yeah, I wanted to shift gears a little bit still in the same topic, but I listened to a great podcast, it’s called The Breakdown. It’s with a guy named Nathaniel Whittmore, I encourage everybody if you’re interested, it’s more of a cryptocurrency podcast, but he does talk about a lot of macroeconomic events and he spends a lot of time talking about like the head of the CFTC, the head of the OCC and who’s going to be the new SEC chairman. He has some great takes on this GameStop situation because it bled over into crypto when a huge number of Robinhood customers jumped to Coinbase, which is a cryptocurrency app. It was a huge influx of new Coinbase accounts after Robinhood did their little move. So, what he talked about was how important this event is, and he put a tweet out on January 27. Again, Nathaniel Whitmore, NLW, really really smart guy. “There are exactly two types of people on Twitter right now. Those that are absolutely convinced that this is an insanely significant cultural turning point moment, and people who don’t understand yet that this is an insanely significant cultural turning point moment.”

Aaron: That’s a great statement, although I really thought it was going to end, “and hedge fund, guys”.

Craig: Feel free to replace that.

Aaron: Yeah, that’s a great point. And like I said very on brand for 2020/2021. And one of those things that the world is changing and shifting underneath our feet in regards to stuff that used to be the province of I guess you would call it, experts, right, and man that has profound implications you can apply that to the consternation that we have as a society over COVID right now. And you know where that all goes and I don’t think I want to touch that one with a 10 foot pole, but the old order of everything being centralized and top down is kind of crumbling and you see it crumbling everywhere across the world. You see it crumbling in financial markets and I think that hedge funds, managing billions of dollars are the epitome of that when you put them up against what effectively is a crowdsourced hedge fund as you said earlier, of the WallStreetBets guys, also running insanely large sums of money, or at the very least turning large sums of money into insanely large sums of money very very quickly.

Craig: For any Harry Potter fans out there there’s a great meme, where if you remember when Snape says to Harry Potter, “you dare use my own spells against me?”. That was a meme I saw about this, they’re taking Wall Street’s tools and using them against them.

Aaron: That’s exactly right. And it feels like the reaction was basically like, you can’t do that. That’s our place. You can’t do that. Again I that’s where I would encourage everybody to like look up Mike Solana in his article called JUMP because there’s a fascinating idea that the world genuinely has changed when people can coordinate, in a way that they just never were able to do before, whether that’s a leader, like the point he made is actually China is now able to do that. That actually wasn’t possible when we were thinking about China doing that 30 or 40, years ago. Today it technically could be possible because we’re all carrying around these pieces of glass in our pocket that can all receive a communication all at the same time, and you can actually create collective action. So it’s really interesting to see, and it’s fascinating. There are disturbing and challenging aspects of that and yet there it also creates immense opportunity for people driven change in a lot of old archaic institutions.

We’re All Cyborgs Now

Craig: Do you feel like there’s a lot of talk about the tracking device in our pockets and how we’re pseudo cyborgs? We’re cybernetic organisms, it’s not implanted in our brain. But, it almost is in fact that we just stare at it and we live with it and we can’t be without it all the time. So it’s almost as though all humanity, at least all called connected humanity, has become one organism right, we’re all connected. And we’re all taking actions that we don’t realize are being controlled by a central authority, and it’s these algorithms controlled by the big tech firms that are telling us what to do.

Aaron: I mean, I think it’s a profound thought.

Craig: Oh thank you.

Aaron: Candidly, one of the reasons that I’m more of an Apple person than anything else is that I actually believe in the company’s commitment to privacy. And I was for the longest time, not willing to have certain types of devices like for example, the voice control, the Alexa kind of devices in my house.

Craig: Ha! Join the club, I’m the same way.

Aaron: Because I didn’t trust the privacy aspect of them. I’m a little bit more comfortable with Apple’s approach to that, I feel like they bake privacy in at the core and that matters to me. But here’s where my optimistic side kicks back in. What I see, particularly over the course of this last year, first of all, I’ve said it a couple of times now, I think that COVID has turned everybody into either Libertarians or Authoritarians, you’re either one or the other. And I think that everybody looks at this in different ways and look you know some of the closest people whose relationships and advice and perspective I value the most have ended up on the other side of this from me, in some in some cases. It’s a great reminder that being open to other people’s perspectives and thoughts and ideas is a critically important skill in the 21st century, without a doubt, and it’s one that is lacking in a lot of places so it’s one that I try to teach my kids and I try to model for them as well.

Aaron: But if there’s one thing I’ve seen we had near unanimity on what the collective consciousness was telling us to do this year. I just looked back and I look at March and April and I look at those initial six weeks or so, where I think that basically everybody was like, Yeah, okay, like this is something we haven’t seen before. This is new, we all should do this. And I think it’s a healthy thing, regardless of what opinion you have on all of this, I think it’s a healthy thing that that started to diverge in June and July and August and people started to have their own intellect and their own ideas and their own perspectives, begin to form in response to or in agreement with what they were seeing and hearing. We also we live in a country with a federal system that has 50 different states. And that meant that, for better or for worse, I tend to think better, we had 50 different approaches to things like COVID. And I think that’s better because we had 50 different laboratories to see which approach is working.

Aaron: And again, I don’t want to go down into a political rat hole and start talking about which governor is smarter and deaths per 100,000 and all those kinds of things, you can go look at the data and come to your own conclusion. The point is that that diversity of thought, that diversity of approach, that diversity of perspective, is something that makes us stronger as a country, and makes us better as people. So I’d like to think that even as the technology continues to become more embedded in our everyday lives that our ability to think and reason keeps pace with that and allows us to form opposing thoughts at times. But where it seems to be leading, and I don’t know that this is completely healthy, but it seems to be leading us to a world where we just kind of block the other side on Twitter. And you know Mike Solana, the venture capitalist guy, also talks about it. He goes, I feel like at this point like that’s the outcome of all of this is that we just block the other side on Twitter, and pretty soon my Twitter feed is basically just me talking to myself because that’s the only person I fully agree with.

Aaron: I hope it doesn’t get there, and go to that level, but there is kind of this approach where we seem to be bifurcating the world and I don’t think that’s an incredibly healthy approach. We took a different approach internally, and I can’t claim that I first saw all of this back, nearly a year ago now, right. But I remember in April, we did an employee all hands so we’re talking about some of the stuff that we’re dealing with, or we’re doing to try to help our employees deal with the pandemic. And one of the things I said is look I’m already starting to see this devolve into like a red approach and a blue approach to this and we are not going to do that here. We’re not gonna have a red approach to the pandemic or a blue approach to the pandemic, we’re gonna figure out the right course and we’re going to use data. We’re gonna act fearlessly, we are the fearless investing company after all, and we’re gonna pick an approach to this that we think is best for our organization our people, our circumstances. And what I’m going to ask all of you to do is not waste your time and energy and breath campaigning against each other.

Aaron: We’ve preached the gospel for 10 years that everybody has a risk number, and they are individuals. And we believe that same thing is true about people’s health, everybody has a different risk number for their health. Okay. So at the end of the day, what I’m going to ask you to do is like respect each other, and do what’s right for you, and we made coming into the office optional. Of course we shut our offices down completely at the beginning but even when we opened up and allowed people to come back we made it optional, because we said, we’re in a global pandemic for crying out loud. Some people have a very low health risk number, some people are living with and caring for elderly parents, you know there’s all kinds of factors. And so we made it a very individualized thing that approach has worked really, really well for us. And you know we’ve had, at this stage we’re at a point, we’ve had, like, I think 20% of our employees are from time to time coming back into an office of ours. We’ve had six cases of COVID among that population of employees. Not a single one of those cases originated inside of our office or spread to somebody else inside of our office because we put a bunch of protocols in place. And we’ve made it optional, we’ve made it people’s choice. And so I think that’s largely worked and from my perspective, that’s instructive of what I think we’re gonna have to do as a society to move past all of this is we’re gonna have to move to a model where we respect people’s choices. We respect that people take different risks and people have different risk appetites and we’re gonna have to respect that as a society.

Aaron: I don’t see any other way forward as a society, particularly as we see new headlines about new variants and maybe the vaccines not working, and things like that, the only way out of this really is to give people choices and respect them as individuals.

Craig: Well said, and I wish more companies would take that same advice. I also wish more companies, such as Robinhood would follow their own company’s mission statement.

Aaron: There you go.

Craig: You’re fearless and, and you’re following your mission statement and I respect that. And I think we are out of time, we’re actually over time but I didn’t want to stop the conversation.

Aaron: This has been a blast. What a great conversation.

Craig: I’m glad you enjoyed it, we’ll do it again, we should do it more often. Where can everyone who’s listening if they want to learn more about Riskalyze, what should they do?

Aaron: Oh, sure. Riskalyze.com You can also check us out on Twitter. And I always like to connect with people personally on Twitter so I’m @AaronKlein on Twitter, and some people prefer connecting with people instead of brands and I’m totally game for that so I look forward to connecting with you all on Twitter.

Craig: I would say you’re a master social media user, you’ve done a good balance of family, business.

Aaron: Well, thanks. I appreciate that.

Craig: My hat is off to you. Great, Aaron Klein, thanks so much for being with me.

Aaron: Thanks, Craig.

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