Transcript
Episode 3 — If things are not failing, you’re not innovating
Tim Conlin 0:11
Welcome to the Financial Dstress podcast. How are you doing, Maria?
Maria Miletic 0:15
You forgot to say with Tim and Maria? Oh, you know, I'm feeling very innovative today. Innovative? What do you mean by that? Oh, I just feel like I'm just, you know, riddled with so many good ideas here about what we're going to talk about today in this in this third episode that we have. Yeah,
Tim Conlin 0:34
well, it's an interesting topic.
Maria Miletic 0:36
It is. And we talk about it all of the time. And it's one of those things that can really divide people because you know, innovation can either make people want to punch you in the face when you talk about it. What do you mean by that? Or they can be so happy that they jump with glee? Well, think about how polarizing it is. And how many people have so many opposing viewpoints on technology and what it's doing to our world. Yeah. Right. If you talk to people that have kids, maybe in the teenage section of their life, it's, you know, the end of the world, and technology is just making us all complete idiots. Yeah. On the other end of things, innovation is actually really, really helping us and think about all that we've been able to accomplish, even in this last decade, because of innovation six months. Exactly. Yeah. Well, the last six months has been huge, right. But people either think about it in a very negative way, or in a very positive way. Yeah. And I think from all of our conversations, things that we've talked about you love innovation, right? and rightfully so because it's, it's allowed us to do this as well. It's allowed us to have this podcast. Yeah. So I'm, you know, when I think about in my own life, too, with my little baby, I can't, I can't make his head turn away from the TV. And when I'm taking, you know, photos of him, which is watching the view, he's Yes, he's watching the view with me. And he's saying go, what be. But you know, when I'm taking photos of him, which I'm doing 26.5 hours out of the day, he's looking at this phone in my hand, and he's like, oh, give me that. I want that thing so bad. You know, I can already see it in his face. So it actually got me to thinking to his cell phones when they first came out, did yours look like one of those big things? Like the size of a briefcase the
Tim Conlin 2:24
size of a Toyota? It was big. You remember the movie? Wall Street? 1987. So Michael, no. Okay. So Michael, Michael Douglas is Gordon Gekko. He's kind of the, the, the evil guy in the, what is it? What is the word for it? I don't know. Not to be the hero, but the villain the villain. So Michael Douglas is like, is like the villain. And there's a there's a point in the movie where he's on, on the beach. And he's talking to his investment guy, bad Fox. And he's, he's got this cell phone in his ear. But Fox, but but Fox, which is Charlie Sheen, and he's got a cell phone in his ear. That is literally the size of a brick. And so my cell phone was was large. And then what was really cool for a while. And again, this is probably when you're very young. But then it became miniaturization of your cell phone. So picture me, you know, six foot eight, big old mitts. And I'm holding on to this cell phone that's smaller than like a Mars bar. And so you're holding it between two little fingers. And you're talking on this, this cell phone. And of course, they were terrible, because you'd keep dropping calls and you can talk to little fingers. So yeah, there's been tremendous innovation even even, you know what cell phones can do to occupy your time, like, you know, the games and stuff. So, you know, on the Blackberry, what was the game with a brick game? With a little ping pong ball?
Maria Miletic 3:55
Oh, well, okay, so I'm thinking about snake. I used to put on my very first cell phone. It was a Motorola and it was black and orange. And it looked like a walkie talkie. Yeah, that was the game flip phone. So cool. That was my next phone. It was the Motorola razor was the phone after the Motorola walkie talkie that had the game snake on it. And that was the only game that I had. And I loved it. Oh, cool. But now also that you said Charlie Sheen as an investment guy, I'm thinking what if Charlie Sheen was someone's financial adviser?
Tim Conlin 4:23
Oh, yeah. I don't know what a guy to give advice. Yeah, he's he's a little crazy.
Maria Miletic 4:27
Yeah, well, just a little bit. But we you know that that's a whole story for a different day. But it's just crazy to think about where we've come today. Yeah, we have self driving
Tim Conlin 4:37
cars. Oh, yeah. And I mean, I even think of the iPhone. So I was actually at a conference in New York, June of oh seven. When the iPhone first came out the very first iPhone and I remember people lined up around the block to get their iPhones and, you know, that doesn't feel like that long ago. But now, what these phones are so capable of is it's amazing the computing power on in your, in your hand is is greater than the computing power that NASA had to send people to the moon. It's amazing. Well, and
Maria Miletic 5:11
you just like our whole we're almost hyper connected to with our phones. But I mean, that's
Tim Conlin 5:16
the downside. I mean, speaking of financial Dstress, I mean, these, these devices don't have all upside. There's a downside to being so hyper connected. And so I think we have to be careful about that, too. And this is what you said in the beginning. And there's a downside to it too. And it drives us nuts. To think that we could go for dinner with our kids or with someone and they're, they're not just on one cell phone, we both know somebody who has two cell phones. So he's texting on one emailing on the other. And he's talking
Maria Miletic 5:49
to himself on each of his cell phones. Yeah, I mean, and even just without cell phones, too, like you can, you can turn your heat up and down in your house from the comfort
Tim Conlin 5:57
of your own home or turn the heat up. I got my Okay, yeah, okay, I
Maria Miletic 6:01
have a bead of sweat. So it's Yeah, it's crazy the things that you can do. But we often talk about to how much it's it's troubling when young people say that, you know, they don't want kids because they don't want to bring them into this
Tim Conlin 6:15
world. Yeah, I mean, I, I really feel kind of grieved or sad when I hear such a negative view, or a negative outlook on the world. And I've talked to 20 somethings who say they don't want to bring a kid into this world, because the world is, is is a very bad place. And it's true, it's always been a very evil place. There's, there's bad things that happen. You know, we need them, we need the old guard to change. Yeah, that's what's always advanced society. And so if they don't participate and become part of the change, and even bring kids in the world who can be be part of the change in, you know, institutions and the whole world, it's not going to get better without you, we need you. So I would, I would try to challenge people, you know, to think about what the track record has been for innovation. And one of the really difficult things about innovation is, is that, you know, we're not prophets, we can't see the future. And because we can't see a clear path for innovation, it's tempting just to assume it's not going to happen. And after doing this a while, whenever there's a crisis, or something terrible that's happening in the world or happening to markets, one of the common things I see from really negative commentators or gurus, and we'll talk about some of these financial strategists who put themselves out as gurus, is one thing they have in common, is they don't account for innovation. And I'm not just talking about technological innovation, sometimes it's policy innovation. So what do policymakers like government officials, the Federal Reserve Chairman, so in 2008, I remember hearing in the depths of the financial crisis, commentators saying, you know, the Fed, the Federal Reserve is out of bullets, meaning that the Fed has no more power, because they'd already dropped interest rates to near zero, to try to spur on the economy. Or the other phrase you'd hear is they're pushing on a string, they've got no more power to influence, and aid the economy as it's idling down. But then they came up with something, thank goodness for Ben Bernanke. They came up with something I had never heard of, in all the years of education and studying, you know, finance and economics, quantitative easing, I might have missed that chapter. I might have been away that week. But I don't think so. No, no. But they came up with a, you know, a different method of injecting monetary stimulus into the economy. And that was innovative. It was very creative. And, you know, there's a lot of debate around it. And we could probably talk about this for hours. But it worked. It helped. And, you know, other areas that we see innovation or, again, it's, you know, we don't want to spend too much time talking about just high technology. Sometimes innovation is, you know, just people picking themselves up when they've been put down.
Maria Miletic 9:37
So yeah, you made an interesting point there too, about these skeptical people that we see on the news or in the newspaper or anything else that that can't foresee all this innovation. And now they have a crystal ball, no, and they can't foresee these innovative ideas that other people are going to come up with to to lift us up out of crisis or situations that you know, the modern day person wouldn't be able to think of And so you're basically saying that everyone should have at least a baby or two, to try work. If we're there to try to make this world a little bit better, right, because without them, how are we going to get innovation?
Tim Conlin 10:12
That's right. So I want to recommend a couple of books. If, if you will, too. There's one called fact fulness. Fact fulness by Rosling and another book called enlightenment now by Steven Pinker, what's the synopsis of these? Well, I mean, ultimately, both books talk about really looking at the future through a bit more of an optimistic lens, and a lens of, of really what has been the actual track record of humanity both go into not just flowery opinions and and, you know, just idle chitchat, they get right into actual numbers that support that innovation is occurring. And in many ways, not all, but in many ways, the world is becoming a better place every year all the time, just like Warren Buffett says, you know, the best days are ahead of us.
Maria Miletic 11:04
Well, and that's also Bill, Bill Gates law, too, right? Yeah.
Tim Conlin 11:08
Yeah. So yeah, Bill Gates law, you know, I'm just going to kind of find it here. So Bill Gates, gates law, he says, we tend to overestimate what we can achieve in the short run. But we always underestimate what we can achieve in the long run.
Maria Miletic 11:26
And you brought up a point to that innovation doesn't always have to just be about high tech. I mean, it's
Tim Conlin 11:31
not always high tech. So you know, again, back to the example of 2008. So I remember, it was probably early 2009. And this was, you know, after six really horrible months, and we'd seen bank failures, we had seen some real collapse and in economic activity globally, but one of the early little green shoots of recovery, the first sign of recovery, oddly, was an increase in pickup trucks. So pickup trucks was really a sign of innovation, so that, that that individual who may have lost their job, let's say they're in Michigan, they lost a job working in the automotive sector. The purchase of pickup trucks is is a sign that people are getting out there and maybe starting a business and maybe that businesses is might be a painting business, or it might be a handy handyman handy person business. But you know, it that was a sign that things were it was one of the early kind of leading indicators and signs that things were starting to at least they were they stopped getting worse and things you have to stop getting worse before they start getting better.
Maria Miletic 12:41
And I'm sure that lots of the economists out there that maybe had more tendency to go towards the negative side never never foresaw these, these little shoots of recovery, right.
Tim Conlin 12:50
And, you know, people humanities had a track record of that I was able to take a trip, oh, about a half a dozen years ago to Cambodia. And, you know, you can imagine really, almost a worse situation and the late 70s, early 80s when Cambodia, you know, really the Pol Pot that literally exterminated people that were, you know, educated and that they thought might be a threat to the, to the agenda of the government at the time. So they have a very young population, and, but but incredibly vibrant. And also people, a lot of young people don't even know who the heck he was. And, but they're, you know, they put one foot in front of the other and a, and now they have a fairly vibrant economy, although albeit pretty dominated by Chinese influence. You know, it's an example. Another example would be, you know, even another trip, I was able to go to Africa and see, be in Uganda a couple times in, you know, the EDM era, same kind of thing late 70s. And, and really, he took all the, you know, the, anybody who was a migrant and immigrant into Uganda, and kicked them out of the country, and took away all is industrious and innovative people and got rid of them. But, you know, they they have also somewhat balanced bounce back. It's not a, you know, as vibrant as I'd say, as Asia. But, you know, there's still a lot of corruption and problems there. But, again, a very young population, a lot of people who don't, don't remember the past, and they're just out there to try to get back a certain quality of life.
Maria Miletic 14:38
Yeah. And it talks about how the human spirit is very resilient, right. And we will come up with solutions to problem which is another great thing about innovation gives us the opportunity to actually be able to do that. Yeah. And especially now with times of, you know, these crazy times that we're living in right now with this pandemic. Yeah, it's and the fight Financial Crisis I said crisis is because we're gonna have more of these right? crises, crises, you have to do another fact check, I think last one of the last two weeks. Some word that was like it was another stupid word anyway. But what would you say if you know someone said, well, you're you're a Pollyanna.
Tim Conlin 15:20
Yeah. Well, for one thing, I don't like the name Polly and I stopped calling. I think it's cute. Yeah, but seeing the world through rose colored glass. Yeah. Which, by the way, is a really good song. It's Blue Rodeo, I really like to play again, was this No, we can't copyright. But anyway. Yeah. I mean, I again, you know, it's very difficult, especially now, I mean, we're in this, this pandemic. And it's, it's, it's a times can feel kind of grueling. But, you know, if we go to the evidence and look at history, I think we have good reason to trust that things will happen. And it does require a trusted, trusted and fated is required belief in the unknown. And, but why is it unknown? Why, why is it when the track record is that no people do bounce back. And let's just look at this, again, this pandemic, you know, if indeed, it's true that we have a couple pharmaceutical companies who announced what they believe to be a very effective vaccine. That's actually quite astounding, because prior to this, you know, a vaccine has never really been developed in under four years. And this one would potentially be under a year. And that's just two companies. But there's dozens of companies working on different technologies all over the world. And, and that's been made possible through a lot of the tools, supercomputers ability to analyze, you know, compounds molecules using the power of brute force power of competing. And, you know, I think that's just amazing Not to mention collaboration tools, you know, we could, we could say that we'd have scientists all over the planet working together, but on different on different continents, working on problems. So picture 5060, whatever years ago, Jonas Salk working on the polio vaccine, in his lab with his immediate mates helping helping him work on this vaccine. And now it's a completely different game. So we should really trust more that there's an acceleration. So we're good.
Maria Miletic 17:27
And I actually heard on the news as well, maybe it was on the radio, I can't remember. So I'd have to fact check myself on this. But Dolly Parton, who I love, I think Dolly Parton is just such a little, she's the best. But apparently she gave a million dollars to some pharmaceutical company to help with speeding up actually finding that sweet a vaccine. Isn't that crazy? Yeah, little dolly, we have lots more to talk about with respect to innovation, obviously, and how to tap into this as an investor. And that's one thing I mean, when you're, when you're looking at companies, innovation for you is is top of mind, usually, right, you want to look for companies that are innovative. And disruptors, as you always know,
Tim Conlin 18:10
as we've said, you know, that's, that's how great companies preserve their competitive advantage, and preserve their market position, and then preserve or increase or hold on to their profit margins. And if they stopped doing that, then, you know, competitors come in and will drive profit margins lower. So you know, that's why it's so important. It's important knowing the two sides of the coin, right? One is to look for companies that are, you know, take innovation seriously. And then it's also to be ruthless, and to be very critical of companies that aren't innovating, that maybe have gotten kind of lazy or gotten lazy is the right word, but gotten a little complacent in their position. And, and, you know, we've, we see lots of examples of that. So, when we spend a lot of time looking at companies and researching, we look at both sides of that coin.
Maria Miletic 19:11
So if you could slice and dice this for us and give us a couple of easily digestible things to think about here. In closing,
Tim Conlin 19:20
I would just say, you know, bad times will come again, there's always something and usually it's something unforeseen. But you know, I'd say the next time we see this happen, again, that predictable thing when, when we we look at the financial press and the business channels, and the commentators start to, you know, speak in really negative terms and somewhat make that bad situation worse. I think we should remind ourselves of the, you know, history and the fact that you know, every crises has been followed by a significant event. provement and it's a significant improvement in innovation. We've already seen that, after the
Maria Miletic 20:07
example then than the last eight months. Yeah,
Tim Conlin 20:11
it's it's just astounding how much there's been in terms of policy. I mean, going back to this policy innovation, it took it took policymakers weeks, not months, to come up with both a monetary and fiscal response. And that was astounding, in the early 30s. policymakers, when faced with the collapse in the economy, and the stock market, did all the wrong things. And for the first half of the 30s, you know, interest rates around higher taxes went higher government spending went lower all the wrong things. So everybody's acutely aware, all these policymakers have the playbook to deal with a financial crisis. So have a little faith have a little belief in policymakers, that they will respond. And we've we saw that in a big way, in around the world, really how both monetary policymakers so we're talking about our central bankers, and then legislators in legislating sort of fiscal stimulus or trying to push cash to people, you know, to help in in a collapse of the economy. We saw that already. We have evidence of that even six short months ago.
Maria Miletic 21:26
So another quote is from Ilan Musk, who said failure is an option here. If things are not failing, you are not in a failure is an option isn't
Tim Conlin 21:36
interesting. You know, that reminds me for those quick story I have a friend used to ski with and back when I did ski, and it's not pretty watching six foot eight guys, he can only imagine. But anyway, he said, if you're not falling, if you don't have at least one or two wipeouts, he says you haven't had a good day, you're not going to get any better, unless you have a few wipeouts. Now, that's a whole different story now that it's hard to recover from injuries. But I mean, I think that I love that quote. That's great. I'm gonna remember that. Yeah, not failing. You're not innovating. That's great.
Maria Miletic 22:10
No. And so we're gonna go back to talking about tech innovation here from the earlier points of our smartphones and everything else. But if you only had the choice of having one tech innovation, one to live with, for the rest of your life, so this is like the genie I get one wish you get one wish. What would that one tech innovation be that you could not live without?
Tim Conlin 22:37
Oh, you want? I love my iPhone. Yeah. And that's almost multiple innovations. That is cheating a little bit. You are because
Maria Miletic 22:43
that's not but I mean, okay, let's take what about you though, okay, so we can take the phones out of it. Because like you said to that is something that literally all of these tech innovations are tied into our smartphones. But if I just had to pick one not counting the phone, because it's, it's unfair to even put that as a comparison. Yeah, probably Google. Yeah. The amount of things that I google and Gary gets so mad. I google, he says something in a tone. And I'm gonna Google what tone of voice is. Like, it's it's absolutely crazy. Yeah. But I think about like, what did I do when I was in in junior high, and I was trying to write an essay about something. I was looking at encyclopedias.
Tim Conlin 23:25
Yeah. Oh, that's right. I mean, I'm of course, I'm, I'm a lot older. You were
Maria Miletic 23:31
you were looking at some way before I was like, Yeah, one encyclopedia that you could rent out at the library World
Tim Conlin 23:38
Book. Encyclopedia from 10 years earlier. Yeah.
Maria Miletic 23:43
So what would what would you what would yours be?
Tim Conlin 23:46
Okay. Well, you know, you said Google, I mean, I would probably say go on it multiple times a day, especially for our jobs too, right. Yeah. Go it's so so valuable on any of course, it learns. And, you know, again, that gets in a little bit of a debate of whether you want this thing to learn from you, but boy, does it make life easier?
Maria Miletic 24:04
It does, but I don't want anyone looking at my Google search history. Oh, no,
Tim Conlin 24:07
you haven't learned how to clear your
Maria Miletic 24:11
that's another moment. Yeah, but, but this is something that we're gonna ask people to consider is what tech innovation.
Tim Conlin 24:17
I'd like to hear from people what what is the thing you couldn't live without?
Maria Miletic 24:21
I would love it. Don't Don't tell us anything weird, though. Just tell us the you know, the normal things, but to have but that wraps up our discussion for today. So you know, if you liked it, then again, share it with your friends and family and keep on listening to us and we're going to be here hopefully bi weekly. So thank you very much.
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