Ep 163: John Jovanovic on Turning Around the U.S. Export-Import Bank, Trump’s $12B Critical Mineral Reserve, and "Revenge of the Physical World"

0:00We need to manufacture more in America in order to innovate more in America. You can't innovate if you can't iterate. You and President Trump stood together and announced a critical mineral reserve. I think it's$12 billion to start. White House came to us with a very clear directive. You know the problem. Think about the solution differently. You're the president and chairman of the Export and Import Bank of the U.S. After a decade or more of being unprofitable, we return the bank to profitability. What are you seeing with AI driving reindustrialization? The people on the factory floor almost have superhuman strength now.

0:33Our adversaries seem to want us to turn off all of our data centers. The average data center being built today uses as much water as your local bakery. The best way for a small business in America to leapfrog its competitors is to adopt AI. My grandfather worked at a steel mill in the south side of Chicago. And in two generations, you know, I got to truly live the American dream. These are the things that matter.

1:02The United States Export-Import Bank was an important tool during the Cold War for American interests and American jobs. But it decayed into a money-losing institution that many accused of cronyism and waste. Now John Jovanovic's taken over the bank, is making money again, and it's helping America with jobs, energy dominance, and technologies of the future. John has a really strong background in a lot of industries that were considered very boring 10 years ago. energy, infrastructure, the core high CapEx areas of our society. And now these areas are hot again as American industry is ramping up.

1:35John's helping President Trump re-industrialize, export American industry, and create American jobs, and make sure that this is the next American century. Welcome to American Optimist. We have John Jovanovic here with us today. Thank you for joining us. Joe, it's such a pleasure to be here. It's awesome to see you. You're the president and chairman of the Export and Import Bank of the US right now. What's the Ex-Im Bank? Yeah, it's a great question. So 92 years ago, Franklin Roosevelt started the Export-Import Bank with one clear idea in mind, which was he believed we needed more well-paying jobs in America to pull the US out of the Great Depression, right?

2:09And so what he didn't quite appreciate at the time was all of that industrial capacity would be needed for the war effort a few short years later. By the way, the premise was simple. If we open up more markets for American companies all around the world, and if we level the playing field for them, make them more competitive, that'll equate to sticky, real, well-paying jobs here at home. Now, after World War II, what Ex-Im then became was a vehicle, a shield, if you will, for American companies looking to battle up the Cold War in every single market around the globe. And so we actually helped usher in by this big muscle memory that we inherited in the building.

2:49A great moment of prosperity, security, stability all around the planet. Now, when I got to serve the president in the first administration and was very proud to be a part of the transition well before the election, preparing for what we hoped would be, it was a big victory in November of 24. And focusing on the economic agencies, I firmly believe that XM was a diamond in the rough. And that was the argument I made to the president, which was, Mr. President, there's a tremendous amount of muscle memory in that building. We have to channel it. We have to direct it to deliver the American dream 2.0, which you and I both know is really the president's agenda fundamentally.

3:29But at the core of it is we need to manufacture more in America in order to innovate more in America. You and I have talked about this a lot. You can't innovate if you can't iterate, right? If your competitor is in a day or two after tweaking a prototype able to see the result in real life, that's way different than waiting two weeks for something to come back from all the way around the globe. And so what I presented to the president was a plan to reinvigorate Exxon. And the plan was to reorient it around four key strategic priorities, which is actually so much of what you've dedicated your career to, both in business building and investing, but also with Cicero Institute and other things.

4:09So this will kind of ring true for your viewers. Number one, let's bring the bank back to basics. Like so many of the big agencies, so many of the government tools that were built for purpose, because we knew how to build things 92 years ago, right? We didn't build them as a sort of a compromise to a bunch of different objectives. We built it with a very clear need. Does it help create more jobs in America? Does it help make American industry more competitive? And so, all right, let's bring it back to basics. Let's help American companies win where they want to compete if we're around the globe.

4:39Number two, energy dominance, energy security. How do we position XM to help bring American energy molecules and technology to every corner of the globe? Now, not just energy molecules, right? The president has done a tremendous job at ensuring that American energy dominance pays a peace dividend, but also gives us flexibility in a lot of strategic areas around the world, which you and I have also talked about in the past, but also it's our technologies that are cutting edge, pound which, if you want to do a natural gas liquefaction project anywhere in the world, Joe, chances are you are relying on US technology.

5:13So let's keep it front and center. Number three, supply chain security. I know you want to talk about that today. We do too, right? We have inherited a supply chain issue that has been festering for a few decades, right? An order of magnitude far beyond where if you aren't doing what Joe Lanzio and ABC are doing all day, every day, you maybe don't appreciate it, but we needed to mobilize all the bank's tools, whether it's Make More in America, which actually we're in Austin today, helping open a new factory that we've allowed to be built here. I love it. We're opening a factory in Dallas today too, it turns out.

5:47There's lots of factories opening in Texas right now. That's what we do. And funny enough, the Houston Chronicle reporter asked me, are you spending a lot of time focused on Texas? I said, Texas is spending a lot of time focusing on us, right? They're bringing projects. They're able to attract talent like you have. They're able to bring capital to a place where it's appreciated and valued. But supply chain security is number three. And number four, how do we help support the industries of the future? Whether it's dual-use technology, advanced mobility, some of the other things like high payload satellites, which we were focused on today, things that have dual uses, but also the global AI export plan.

6:23So we're very proud to be the first federal agency that lived up to the president's call to action under the global AI export plan. We rewrote our policies. We are ready to go. But so coming back to your question, we said, Mr. President, we believe Ex-Im can be a frontline economic tool that matters for you in a way that you could explain to the everyday American. And that's where we are. So after a decade or more of being unprofitable, as of a couple of weeks, Joe, we return the bank to profitability. So what that means for everybody listening out there is that we're sending a profit, a dividend to the American taxpayer.

6:59Amazing. So you're helping American jobs, American energy, fixing our supply chains, future technology, and you're making money doing it. So we're competent again in DC. Right. But we're doing it in a way that's uniquely American. And so one of the things that we grapple with is, should we be a TAMU version of our strategic competitor? I don't believe that's going to work. So emulating that model will fail. What we need to be is the best version of ourselves. And putting American innovation at the forefront, right? And again, like we talked about, you have to be able to manufacture here again.

7:31So let's create the conditions where capital formation comes to light. And it's funny, you and I have talked about this a lot over the course of our friendship, but I think it's worth, and I remind people about this all the time. Five, 10 years ago, maybe longer, it was rare to see actual entrepreneurs and innovators in America focused on problems that matter, right? You and your cohort and a bunch of the, you know, heretics, as I say, we're really focused on these things, right? But if we were in a group of innovators or entrepreneurs, they'd be like, hey, I've got this great app. You're trying to figure out a hack to make money versus actually solve a societal problem.

8:06Totally. And it would be, you know, Joe, I'm going to send you a picture and it's going to turn into a picture of a cat, right? Or I'm going to get you, you know, a cappuccino five seconds faster, right? Maybe, but they don't move the needle, right? What we've seen, and which makes us so optimistic about America again, is you see innovators, entrepreneurs, big thought leaders, paired with capital coming together to say, we want to solve the biggest problems, right? How do we create missiles that are low cost, that are plentiful, where we can ramp up production? How do we maintain the integrity of our communications via space satellites and high payloads?

8:39How do we do all of the things that are actually going to make everyone out there safer, more secure, more prosperous, and be able to deliver the American dream 2.0, which we could talk more about. I love it. I love it. Well, John, let's go back a little bit. Tell us about your background. Your family immigrated here from Europe. I think your grandfather started in a steel plant. What's your history? Oh yeah. So, you know, when I talk about the American dream 2.0, it hits very close to home for me, Joe. So my family started over in America. And when I say started over, I mean, started over. What year was this?

9:11This was right after World War II. And my mother came here very, very young and not knowing the language, not having a single friend. And the bottom line was that the conditions were here, right? So my grandfather worked at a steel mill on the South side of Chicago. And in two generations, I got to truly live the American dream. So I got to go to great schools. I got to pursue my passions and I got to serve in a capacity where I want to help deliver it for another 250 years. And so, you know, my background was, I was always focused on kind of critical industries, commodities. Some of the, as I joke with my wife, Daphne, you know, some of the least sexy businesses imaginable, right?

9:57Energy investing. Yeah. Energy, commodities, supply chains, you know, infrastructure services where I've spent a fair amount of time. And so it's funny for a while there, I thought I was losing the plot. Well, no one wanted to do those for a while, but now they're hot. Nobody, nobody, right? And I was, you know, as you, as your young ambitious people do from time to time, you have these, you know, existential, you know, crises in your mind. You're just like, oh my God, I just wasted, you know, 10 years learning about, you know, all of these various elements of the global commodities landscape.

10:32And sure enough, couldn't be more relevant. Have I wasted all this time thinking about these big capital intensive industries? All people want are capital light businesses, right? Where things fly off the shelf, where there's no CapEx, no people, none of that. And what we're seeing, I think what you and I are living through, is the revenge of the physical world, right? So many of your guests have talked about it before in different ways, shapes, and forms, but things matter. Supply chains matter. Where something comes from matter. How it got to your house matters. And all in the context of an emerging competitive landscape around the globe, which the president's grappling with in real time.

11:06And you went on, you also, after doing that, you worked for the International Development Finance Corporation, I think, and Trump won, right? To counter Chinese and Russian influence. Was it in the Balkans? Tell us about this. Yeah. So it was kind of a funny thing. It was purely by coincidence, right? So there was a fateful elevator ride. So I was working in New York and a friend of mine invited me to a think tank event. And I made the mistake of riding the elevator up with the woman who raised money for the think tank. And she said, oh, you've got to meet our president. He has this, you know, we're grappling with this kind of new way of approaching diplomacy.

11:40And it was kind of coinciding with what the president and Jared were doing. It was sort of channeling what America does best, which is economic cooperation, business to business, investment, capital flows, partnering with US technology. How do we have economic diplomacy be a tip of the spear to resolving legacy political conflict around the globe? And so got involved in a project and was fortunate enough to be able to serve the president in Trump One at the Development Finance Corporation, where our good mutual friend Ben Black is doing a fantastic job as its CEO, really bringing that organization as well to the next level and preparing it for its challenges.

12:17And so we were kind of a Trojan horse into Southeast Europe, focused on 10 countries, Greece, Cyprus, Turkey, and the Western Balkans, but really trying to flush what we believe was malign influence out of critical industries and critical infrastructure. How does that work? How do you flush malign influence out of critical infrastructure using DFC or using Exxon Bank? Yeah. You want the really simple answer? American companies have to show up, right? And I would come back and I debrief people on the hill or in the building or wherever. And they'd say, okay, come on, give it to me straight. Let me guess.

12:52We've got to bribe people in order to compete. We've got to pollute the environment to compete. We have to beg, borrow, and steal. We have to do all of these kind of crazy, outlandish, fundamentally un-American things to compete. I said, guys, all we have to do is show up. And we weren't showing up. And so our strategic competitors would get a foothold in the Port of Pideos, right? Which is a 50-minute ride from Athens that's one of the busiest commercial ports. But most importantly, it's in the heart of naval patrol Mediterranean waters, right? So if we don't show up, our adversaries will. And so we've got to show up.

13:25Why were companies not showing up, do you think? You know, I think there was... I think there are two fundamental reasons, right? First and foremost, I think the opportunities within the United States, as they always are, as we continue to be such a robust, dynamic market, thank God. So much. There's so much to do here. So much to do here, right? There's more to do sometimes within a 10-mile radius of your place here in Austin than there's to do around the world. But number two is we weren't making it easy. We weren't leveling the playing field, which is why tools like DFC and XM, and thanks to the president's vision, has understood that, look, you're not here to subsidize people.

13:58You're not here to win things for them. You're here to level the playing field and give them a shot to compete. And we found, and by the way, what we do at XM is we do precisely zero equity investing, right? That's left to others, right? What we do is we do senior secured lending in a way that has reassurance or repayment to our most important constituent, which is the US taxpayer that gives us the capital, right? So we find that even a dollar of our capital into a project or into a deal changes the game, full stop, right? Because now all of a sudden your counterpart is the US government. Basically, they don't want to screw over a company that's tied to the US government, because if they're going to do that, they got to be more careful.

14:41100%. And there's another end of the spectrum, right? Which is, it is still aspirational to be partnered with the United States across the board. Nobody goes around and brags about their partner. You know, I've got great partners. Who are they? Oh, North Korea, Iran, Russia, Belarus. It's fantastic. Nobody says that, right? It is, they're still so proud. And we see it, by the way, with our Buy America, Build the Future framework, which we started a year ago to help really capture all of the president's momentum for all the countries around the world who are saying, listen, we've got to figure out a way to buy more American.

15:15And the way we position it, Joe, is to say, you are partnering. You're not buying a satellite from the United States. You're not buying a Starlink. You're getting to partner with cutting edge American technology, right? You're getting to infuse that into building the future that you have in mind for your people, and you're doing it with America at the core. And so giving people the opportunity to do that, they'll always pick America. I love that as using the fact that we're ostracially keeping it that way and then pushing it out there to stop the bad guys. That's a great model. So you took over the Ex-Im Bank fall of last year.

15:50You're officially appointed to Senate confirmed position. Senate confirmed position, reports to the president. Was that annoying having to go through that? Listen, it was serious. I feel like, and by the way, as it should be, right? I find that there is no greater responsibility than walking around America, writ large, in which we travel the country to every corner and understanding that you work for the people that you come across, right? And that they entrust you with their precious hard earned tax dollars. And so look, it was definitely a process, right? We live complex lives. I've, like you, many children.

16:27So with four children, you're ahead of me by a couple, but maybe we'll catch up to you, but you know, it's, you live complicated lives, but you have to put all of that on hold, understanding that you've got to serve your country. You have to have it, you have to do it with a clear line of sight to what matters. And you have to do it without all the distractions that otherwise our lives are, are, are inundated with. How does it work these days? Just to go one more of this. And a lot of people don't realize the Senate, a big part of their job is personnel. And, and, and it seems like much slower to me than it should be.

16:59I know it's supposed to be a deliberative body, but I feel like they should get people in faster falls. It's not so bad because you get three and a half years to do it. Were some moderate Democrats willing to work with you? Was there some polite engagement? Was it all just like partisan screaming? Like how does it work these days for you? It's actually a really good question. So I was told by many smart people who were helping me usher, you know, helping guide me through the process that it was a total waste the time to try to talk to Democrats on my committee. And I just fundamentally disagreed.

17:32I said, listen, there is nothing that I have in mind. My game plan for XM is fundamentally sticking right down the middle of the fairway with the president's agenda, but it fundamentally should be something that every American, no matter what your party affiliation should be able to get behind. And so it's funny how it started. First, the members wouldn't, the senators themselves would meet with me. Right. And they were just like, oh, let them meet with a junior level staffer. There's no way the president's nominee to be chairman of the Export-Import Bank of the United States is going to meet with a junior staffer.

18:02And guess what I did? I met with a junior staffer. I've often found that junior staffers are sometimes more interesting because they're up to speed on everything. Oh my God. They knew all of the things and we would, we would blow through our time. Right. And the people walking me around the Hill would be freaking out. I said, no, no, no. We're going to sit and finish this conversation because Joe has good questions. I want to answer them. And so sooner, slowly, but surely, I think the senators, the Democratic senators on my committee realized that I was really serious about turning around Exum.

18:28I was really serious about bringing it into not just the 21st century, but ensuring that we could deliver the American dream for another 250 years. So then they started meeting with me. So then look, and also what I found, I think this is kind of, maybe there's something to this, Joe, because I know what you focus a lot of your time on is the big problems with which America is grappling. And how do we find common sense solutions that don't require a tremendous amount of explanation, here it is. The things that I agreed with, the Democratic senators were so important, they were so foundational that even though 80 % of the things we disagree on, the 20 % on which we agreed were so important that they were worth focusing on.

19:11And they were pretty simple, supply chain security, right? Show me a person out there in America who doesn't think it's a priority, who doesn't want to solve it. Access to capital, right? The reason why America is so great, and by the way, this is what people don't realize about Exxon. 87 % of our transaction activity every single year between 87 and 90 % is focused on small and medium-sized businesses. Why? Because 90 plus percent of companies in America are small and medium-sized companies. That is the secret sauce of America. But we can't simply have a subset of large banks, right? That supply capital, these small, medium-sized companies, you know it well, right?

19:50You spent a career ensuring that the best innovators have access to capital when they need it most. So the regional banks, the small community lenders, I wanted to focus on those. Turns out that very senior Democrats on my committee felt the same way, right? So I found that I could bring down the blood pressure by just focusing on the things that matter. And that doesn't mean that we agree on all the other things. And my position on every other thing was very clear. And my vision to implement the president's agenda, There was no debate about that, but let's focus on the things that matter. Let's keep the main thing the main thing.

20:22So how many votes did you get? You know, in my committee, more Democrats voted for me than against me. Very good. And by the way, again, people, you're wasting your time, John. Don't go meet with those people. So the committee got to vote for you. I get other ones you didn't meet, of course, are going to vote against Trump people. So by the time I was being voted on on the floor, Senator Thune had been able to kind of move these blocks en masse. And so they weren't voting for John or Joe or Alyssa. They were voting for dozens of the president's nominees. And look, I think it's unfortunate. That's where it had to come to.

20:53I don't pretend to understand the Senate and the intricate rules that come into play. That's fair. What I knew was I wanted to, these were people who took it upon themselves to go get people to vote for them. Because by the way, I constantly remind our team that nobody voted for us, right? 77 plus million Americans voted for the president, right? He has a generational mandate and an opportunity to put America on the right track, especially when it comes to re-industrializing the country. Same goes for all those senators with whom I don't agree. People voted for them. They're on my committee of jurisdiction.

21:28I want to pay them the respect to walk through this with them. I like it. And so you took over and the exit bank was in the red. So it was losing money from before. And I mean, how did you fix it so quickly? Were they just losing money because they were just totally incompetent? or were there some key insights that you had how to make it not be in the red anymore? How much time are we out? You know, a good mutual friend of ours and a mentor of ours sat me down and said, because he had reformed a very large, important US government entity. And he had said, listen, what you have to do is you have to walk in with a game plan and you have to be prepared to expose your game plan to the elements and really start to understand what the building is grappling with.

22:15And so what I was told about Ex-Im, Joe, throughout my confirmation process was that it was understaffed. And as a result, it had low morale and couldn't quite get things done and live up to its potential. I found out that was only partially true. In fact, that was probably 20 % true, 80 % false, right? What I quickly realized was a couple of very basic things that are going to seem so obvious to you, given that you're an entrepreneur, you know, builder of companies, people didn't have a purpose. When we walked into the building and you stopped and asked anybody, what are your priorities? You'd get, if you stop 10 people, you get 12 different answers.

22:54So there's no like uniting mission vision. I guess during the cold war was more obvious what the purpose was, I'd imagine. Obvious, right? And then thereafter, like many of the powerful tools that we use to win the cold war they went dormant yeah right and they went dormant not because they weren't funded not because they weren't sourced many of these many of these tools were quite well funded they didn't have a very clear sense of purpose and so hence the four priorities right not 27 not 18 not six we had four strategic priorities and if you stop anybody in the building for the person who operates the elevator to my chief of staff they'll all be able to recite them to you.