Friday Wrap-Up: Milken’s Method and a Tech Day in New York

0:00Marthe Skaar: Hi everyone and welcome back to our Friday wrap-up. I'm still Marthe Skaar. I'm Nicolai Tangen from New York.

0:17Marthe Skaar: Great to see you Nicolai. This week you spoke to Mike Milken. Why did you want to have him on the podcast? Well, that is just so interesting because when I went to Wharton, he was on the wall of fame and they basically had a wall where they had pictures of the alumni who had achieved great things. And he basically started up the high yield market, which is also called, you know, the junk market. They don't particularly like that word, but it's a high yield market where you basically get higher paid for lending to riskier companies. and it's just incredible what that whole industry opened up. It enabled the consolidation of totally new industries in telecom, in media and so on and these industries wouldn't have been there and some of these famous names, you know, the founders, the big founders of things like, you know, Murdoch, the big telco guys, the cable guys they just wouldn't have been there.

1:12So really fascinating. And when I meet people who now work in different types of firms, many of them basically, in a way, went to school with Mike Milken and learned from having worked with him. I think you can kind of draw the connection to some more than 80 firms, which are now, in a way, indebted to what they learned from him.

1:33Marthe Skaar: Yeah, so he for sure has been a great inspiration for many. Then he also runs an annual conference that he has been running for 30 years. What do you find most interesting in this episode? I think it's interesting how the whole thing started. I mean, he just questioned really how things were working, you know, from a young age. He just said that, listen, the things which are considered safe are actually not that safe. And the things which are considered risky are, if you just pool enough of these type of assets, it's actually not that risky and pays a lot more, even when you adjust for a higher level of losses.

2:06So it really intrigues me that people question the status quo and try out new things.

2:14Marthe Skaar: Yeah, and he for sure does that. I also find it interesting when he talks about how he's trying to change people's minds by kind of not raising your voice, but by asking simple multiple choice questions and then let people find answers themselves. What do you think of this method? I mean, it's a very, very effective method. But it's just incredible how difficult it is to get people to change their mind generally. We are so set in our opinions. It goes for everything. Things just so quickly turn into religion, be it political views or other kind of really hard-held views. And so to question people in that way is a very good trick.

2:55Marthe Skaar: Do you think we're good enough at that as investors to question everything? Absolutely not. we are i mean to work with by to pre-held biases as investors is one of the most difficult thing we do to really start every morning uh question you know why do we have this position would have would i have bought this from scratch today um you know there are so many behavioral uh kind of biases that we need to work uh that we need to work with us as investors but you meet people all the time right and interview them and ask questions how often you experience that there questions that you regret that you haven't asked?

3:32Pretty much all the time I can wake up in the morning and think why did I not ask that question. Now it's being helped a bit by the fact that many of these episodes I prepare for an extended period of time so typically I start to work on them a couple of weeks ahead of time during the weekends I start to read about it I listen to things they've done before and then importantly I ask a lot of the people I know to come up with different questions and so combined we you know get into a lot of different angles when it comes to the various people I interview so for instance in preparation for the interview with Mike Milken I spoke to people who were running different companies in this space people who'd worked with him before.

4:17I read the chapter in Robin Wigglesworth's new book on the debt market, which is called The Fabulous Debt. And it's a super good book, but there is a whole chapter on Mike and Mitten there, which really was very helpful for me to help prepare. So I think the more different angles you have into something beforehand, the less you regret not having asked questions. And then of course when you do these podcasts the key is to on the one hand is to move forward because you need to move the interview forward at the same time when there are interesting things coming up you need to follow up with follow-up questions right to drill down a bit deeper and so in my mind the art here is to move down and but at the same time move forward you know up and down up and down.

5:06Fun!

5:11Marthe Skaar: So talking about moving forward, let's move forward to the fund and the markets. It for sure is an interesting time to live. Lots of turbulence and movement since the midterms. How do you see the market? It's been volatile since the midterm. In particular, the tech sector has had a correction on the back of potential delays in data center build-outs. I think when I speak to investors here, and I've spoken to quite a few of them, the interesting thing, I think generally with the US, it's just that, OK, there's been a change of direction. Let's just move in this new direction. It goes much more for the US than it does for Europe.

5:54And we saw it, for instance, after the financial market, after the financial crisis, they just, in a way, shrug it off, take the losses, move on. It's something we did not do in Europe. We were stuck with losses for much longer, didn't clean up our financial institutions. And it means that we are just much slower and get going again. So this is, I think, one of the real positives with the U.S. is just the agility and the ability to change direction and to march on, you know.

6:23Marthe Skaar: Anything else you have learned in New York the last week? I've been sitting in on company meetings with various top managements, both, well, lately just a European company and a U.S. company. I am surprised how little effort they put into AI adoption and AI integration. Increasingly, there is this big gulf opening up between companies in the modern world, in the AI world, and all industries. And people still do things in such an old-fashioned way. And it really surprises me that there is not more focus from the top to get this going. Mike Milken actually focuses on this in the episode when he talks about old versus new business and how you classically think of a new business as something more risky.

7:14Absolutely. And I think probably a lot of the risk now in society and in the stock market is some of these old businesses which are just going to be replaced or totally obsolete. There is as we are seeing the start of a trend here which is also interesting is that the private equity companies and some of the big players are basically taking over this old fashioned company, scooping them up in order to replace the labor force with new technology. We saw SoftBank moving in on a guarding company where you expect them to replace the guards with new AI solutions. So to be stuck in old technologies and old way of doing things is risky.

7:57And if you don't implement AI, somebody else is going to take your company over and do it for you.

8:01Marthe Skaar: Talking of implementing AI, because we have had Tech Day in New York this week. Absolutely. Now, this is such a cool thing. So we have in the fund Tech Days in all our offices. and not at the same time, but we have them on a rolling basis. So we kick off in Oslo, we have London, Singapore and New York, and we basically take the best presentations and the best user cases and we move them across the world. And they are being improved as we move them. We find new ones all the time, which we add on to the range we present. It's a lot of very hands-on sessions. And so this is a totally packed day. We have no external meetings.

8:43Everybody's in the office, no conference calls, just zoom in on technology. And it's just so much fun, so vibrant. And it's such a such a buzz, you know.

8:53Marthe Skaar: And you sit down and build. Did you build an agent, Nicolai? I didn't build so many agents yesterday, but we have a lot of agents going here in the background. And Greta and I, I think we got 16 agents here. And the next thing is to make a kind of a control center in a way to. orchestrate these very helpful things you know so it's very good there will be an upcoming podcast with Giet as well we will talk a bit about how she makes life more efficient by the use of technology it's coming up in a couple of weeks so stay tuned to that great

9:37Marthe Skaar: so moving into the last segment here. So Mike says that his favorite book as a little boy was the Almanac because he loved looking into facts. What was your favorite book? Well I was more into you know the Three Musketeers and a bit of you know bravery and fighting and that kind of stuff and I also loved you know The Count of Monte Cristo. So a bit more what should we say predictable my choice I think. What about you? yeah so my favorite book was the brother's line her heart which is written by the swedish author astrid lindgren and did you not uh did you i think you called up one of your one of your kids after one of the characters yeah and i'm one of my sons uh after one of the characters his name is jonathan so i think i read that book a hundred times so it's something with those children's to just stick with you for life.

10:35Marthe Skaar: Okay, great Nikolai, thank you. Happy weekend. Happy weekend, you too.