Iconik: Beyond ESG

Iconik website: https://www.iconikapp.com/

Transcript

Rob Johnson:

Welcome to economics and beyond. I’m Rob Johnson, president of the Institute for New Economic Thinking.

I’m here today to explore a fascinating new use of technology. The company is called Iconik. The CEO, Alex Thaler and his philanthropic advisor, and how do I say, entrepreneur and friend of mine, Adam Cummings, brought this to me on a phone call just to explore a couple weeks ago. I got so enthusiastic, I wanted to share it with our audience. Iconik is, in a nutshell, a way to efficiently connect people, owners, stockholders with the companies that they invest in across the whole spectrum of issues, making it easier to have voice, making the quality of voice better, making, how do you say it, it’s not like an all or nothing fight, a continuous stream of communication. Advise, what you might call help the CEO of the companies that are owned to navigate through difficult waters.

Gentlemen, thank you for being here today. I look forward to exploring with you, learning more and sharing this with the audience and hopefully inspiring even more accelerated rate of implementation. I know you’re off to a good start. Let’s start with Alex. Alex, where did this idea come from? What inspired it? Why are you doing it?

Alex Thaler:

Well, first of all, Rob, thanks so much for inviting me here. I’m excited to get into this. Since you opened that can of worms, I’m going to tell a story that sort of maps out some of the problems in this space and how I got involved. If we rewind a couple of years, back to late 2020, early 2021, I was software engineer at the time and always curious about new technologies. I decided I needed to download Robin hood to see what all the fuss is about. I download the app, I buy some stock, and a few months later I get a notice, an email notice. It’s a shareholder ballot. It was my first that I had received. Normally, I would disregard these shareholder ballots, but there was something this one, Microsoft, that caught my eye. It was a shareholder proposal to try to limit the company’s sale of facial recognition technology to governments.

As a tech nerd, that caught my eye and I thought, “Oh, this is interesting.” Being slightly crazy, I only had a few shares. I decided, “You know what? I’m going to pull on this thread a little bit. I want to learn a little bit more.” Because when you get the ballot, you get a one sentence summary of what these ballot items. That’s not sufficient to be able to make an informed decision.

I go down the rabbit hole and I decide I’m going to find some more information. I click to learn more. I get a taste of my first proxy statement. For all of your viewers and listeners out there, these are regulated documents that companies file ahead of the annual general meeting for shareholders. This one is about 93 pages long and just chock full of information, that some might say corporate gobbly gook, but as I started to look through, I noticed, well, this is… I noticed two things, really. That right now there are people and organizations in the United States and around the world that are using these shareholder voting rights to try to push companies to change, to have them be more in alignment with their values and their preferences. The second thing that I discovered is that the current system for shareholder democracy is hopelessly broken. It’s 88% of people aren’t voting, 91% of institutions are voting. There’s this big mismatch and a big inefficiency in the system. Rob, it’s a very long-

Rob Johnson:

Would it be something like… Let me just ask, when you say institutions, something like Vanguard, or somebody who’s running a state pension fund, but not individuals?

Alex Thaler:

Exactly, yeah. In this area, there’s a difference between retail, people like you and me that might buy shares individually, and then the institutional folks. They might be pension funds or asset managers. The asset managers are voting extensively. They vote frequently. We can get into that in a minute about how they’re voting. Individuals do not. The reason for that is it is very difficult. That’s a kind of outline for you. There’s this big knowledge gap. It’s just very difficult if you own a lot of shares to actually voice your preferences and have a voice in these companies. That really inspired me. Everything else is basically just unfolding from that initial experience.

Rob Johnson:

So you… From… Which Michael being caught in that swamp and trying to figure out how to influence Robin hood, you had a dream of how technology could address the challenge?

Alex Thaler:

Well, that’s exactly right. Yeah. I had the notion that this is an issue that could be helped by a technological solution. We just need to make it much, much easier for people to vote and to have a say. We can make the investing experience much more richer by helping them voice their values and preferences across all of these really key issues of our time. We’re talking about climate change, reproductive justice. We’re talking about governance, diversity, equity, inclusion, and all of these very, very important issues that people don’t have an opportunity right now to express themselves on.

Rob Johnson:

Well that’s… Let’s talk a little bit… How does Iconik work? Take us, how you say through the plumbing. Talk about the different interfaces between you and the company and how it’s implemented, how it serves, which I call the preferences and desires of the investor and how you keep the cost both of time to communicate and the financial costs is associated, either for the company or for the individual with making sure that communication is, which I call realized and digested.

Alex Thaler:

There’s a couple different use cases. Let me try to walk through the easiest use case, which is just an individual who owns some stock in a company, maybe they own two shares, or a hundred different shares. We are able to help them automatically vote their shares to match their values. The way that it works, they go onto our platform, they express their value set using a feature that we call Vote Forge. Vote Forge is a system of adaptive micro surveys on different environmental, social and governance topics.

This is a very user-driven experience. The investor tells us what they feel about these issues. They don’t have to do all of the surveys. After they’ve interacted with the system, we have created a customized voting profile for them. This is really the first technology to be able to do that at scale.

Very quickly, the only remaining step after that is to start to arrange to automatically receive those shareholder ballots, what we call proxies. Right now, we create a automated email forwarding rules so we can just get a copy of those proxies and then we can vote them to match that value set. Now, just so everyone’s aware of this, ahead of the vote cutoff for any particular election, the user can go in and make any changes that they want to the auto voting scheme. It’s open, it’s transparent. We let them fiddle with the dials, we let them have a voice, and there’s no black box voting here. It’s a very important part of our values and how we created the product to make sure that it’s open like that.

Rob Johnson:

What I would imagine with what you might call the convenience in the shepherding that you do, that more and more people will… That number 88 percent’s going to go, how would I say, way down. 88%, meaning those who don’t vote, if this is widely implemented. Do you experience resistance from companies, or are they enthusiastic because, how we say, get fed what people believe, what people desire, and they don’t get what I’ll call surprise attacked.

Alex Thaler:

I’ve spoken with several companies and also advisors to companies. There’s a lot of different companies out there. Some are more retail facing and some are more don’t face retail. I think there’s a difference of opinion there about this, but there is a hunger for understanding who their shareholders are. That connection right now is broken. Most companies do not know who their shareholders are. They don’t really have that mechanism to understand what their values are. A lot of companies do struggle with that. They have these ESG, environmental initiatives, social initiatives. They really do want to be able to share that with their shareholders and they want to get the feedback back from them. We do see ourselves as helping to reforge that connection.

Rob Johnson:

Well Adam, you have conveyed to me a great deal of enthusiasm. You’re in the pitch book. You’ve joined them. What inspired you? What is it that you see? What’s the good? Because I always see you doing things for the good. What’s the good in your allocation of your energy to be part of this partnership?

Adam Cummings:

Well, thank you, Rob. I think fundamentally, this really is about voice and agency for people in society, if you will. I think fundamentally, this speaks to furthering a democratic society as owners. It’s interesting because the opportunity become a pub… When you company becomes public, the shareholder is part of the public. There’s the collective that are part owners. I don’t think there’s ever been a time that the regulations, if you will, have really held the public out. I see this as an opportunity and an innovation to really further that relational engagement.

As we know, there have been many cases where corporate accountability, shareholder activism have been very successful and it’s been important. One case was early on, this is Smithfield Farms. This is one of the largest pork producers. This is back in the early 2000s. There was a lot of environmental harm based on the runoff of just their practices and their facilities. Those issues where there needs to be some kind of accountability. It’s in the best interest of companies to really tend to and serve the public, if you will. I think just, fundamentally, that’s very true. That’s very real.

Rob Johnson:

Well, I get the sense that we may want to create a variation on this where you can, as a citizen, talk to your senator, or talk to committees around the White House or the Cabinet officers in aggregate. In other words, a lot of people would say to me, “I don’t get to talk to a senator. I live in New York. I don’t get to do that.” Because they only talk to their donors. Well, that’s like only talking to the institutional investors. Here there’s a pathway, which might to call create a more honest aggregation about how people feel.

In the case of a senator, they won’t be surprised by losing their election because they didn’t stay tuned to what people really cared about. Here in the case of companies, it’s a tremendous asset for society, as I use the metaphor, being able to navigate through rough seas and know where people want to go. I think that’s a tremendous use of technology. There’s a cynicism about technology, particularly as it has displaced physical work. People feel like they got shunned aside and no transformational assistance and they then demonize all forms of technology. We got to be discriminating and see there’s a tremendous amount of good that the digital age can bring to bear.

I see what you’re doing is fantastic and as something that will have not only a big impact straight up the line that you’re starting with, but will blossom in lots of directions. People will follow the paradigm that you’ve set in motion.

Alex Thaler:

Well, Rob, I think that’s so interesting. Thank you for that. The connection to the political side I think is very clear here. If you look at the early age of corporations and stockholders, shareholder meeting back in the 18th century was some shareholders in a room. They would have a quorum and they had raised their hand to vote on issues before the company, which is kind of like what you’re describing. We want a direct connection to the folks who are working on our behalf. We see this platform as profoundly empowering and we want to reforge that, in a sense. Let’s give voice back to the individual investors so they can be heard at the corporate level. I think Adam touched on it, voice and agency are really at the foundation of what we’re trying to build.

Rob Johnson:

I also think if I were in the management, I would be… You mentioned the ESG agendas. I’d be saying, “Okay, I got to pay bonuses to all my employees. I got to keep my investors happy so they don’t sell the stock, but there’s all these side effects, environmental issues and so forth. I’d really like to know to what extent they like my company better if I’m paying attention to those issues and not just to money and cash flow,” because I think a lot of very well-intentioned investors are conflicted now, but they don’t just get to demonize the management, or how do I say, sell the stock because the management’s misbehaving. There’s a balance here. What you’re doing is you’re allowing, which you might call the subtlety of communication and the nuance to essentially represent what people really want.

I know a lot of high level executives and CEOs that are really haunted right now about a lot of issues, not just environmental, but others related to diversity and other things. How do they manage this? Getting quality feedback from their owners is a gift.

Alex Thaler:

I think that’s right. I was speaking with the former CEO of a company in the manufacturer’s weapons. I won’t mention his name. I don’t want to embarrass him here, but he mentioned exactly what you’re describing. The companies are situated in this fabric of society. When they act, there’s these externalities. There’s these effects on their neighbors. That’s just the way it is. You can’t ignore that. They are part of the system. They just need to… But they don’t have the information, the feedback to understand how their activities are influencing on their people and how other people feel about that.

I think that’s critically important to be able to get that information and for the stakeholders, people who were affected by a company’s actions, to be able to communicate it back.

I might make sense here to bring up a really interesting survey from Stanford on this. There’s a Stanford study, it’s called the Survey of Investors, Retirement Savings and ESG. What it basically points at is that there’s a large generational divide in opinions about this issue.

Support for ESG varies widely. It’s driven by age and stage of life. This really puts folks in the bind. If you’re an asset manager and you’re managing on behalf of a very diverse community of investors who might include Boomers and Gen Z, how do you make a decision about how to manage those assets? It’s almost a no-win situation because the Gen Z folks, they almost universally would like to pursue environmental causes and these other environmental social issues. The older folks who are relying on these returns don’t want to see that happen in general.

It’s a bind. The only… BlackRock is experiencing it, Vanguard is experiencing it. This is why in the last five months or so, the big asset managers have announced that they are passing through voting. They don’t want to deal with this anymore. The only solution to this is to let the people be heard. That’s really exactly what we’re doing is just pass it through and let investors be heard.

Rob Johnson:

I think that’s fascinating, the various dilemmas that people will feel based on their stage of life. I hadn’t integrated that in my imagination to what we were talking about here, but that’s really quite powerful.

I guess there’d be another element I might throw a little imagination in. When people are involved with elder care for their parents and grandparents and then their stockholders in the medical or pharmaceutical industry, I wonder how they deal with the rate of return versus the prices they’re paying in light of the very disappointing statistics where in America the rough numbers are, we pay twice per capita what the average is in the OECD and we give the 37th best national healthcare below almost everyone in the OECD. America’s always invigorated faith in the markets. If you leave them alone and you let them innovate and be dynamic, you’ll get more for lower cost. It seems like it’s going in the other direction now. I’d be interested in seeing how those tensions manifest in the language of what you are offering for the companies that are dealing with the yin and yang of such issues. That’s really interesting.

Adam Cummings:

I really appreciate you bringing up that point. I’m reminded of the quote by Peter Drucker that goes, “Culture eats strategy for breakfast.” I do think that…

Rob Johnson:

That’s a good one!

Adam Cummings:

The reality is that as people get informed, and actually, once they know they have a voice and there’s agency, then that’ll open up being informed. Also, now with technology, we can be connected to tremendous amounts of information. That’s very accessible. That’s really powerful, because there are… These issues, there are many organizations that are doing a lot of important deep work and research and have understanding of that and so that folks can be connected to that, so they can be informed. They can also feel good about having a voice. It’s not… There’s this… Well, you haven’t touched on it yet, this whole idea of rational apathy where there’s just… It’s too hard of an ask, if you will, from an individual to do all of this research and have the understanding to vote your proxy. This technology, by being connected with others and also being aware of your own values and others, it will encourage participation. It’s an exciting time.

Rob Johnson:

We can eat our Wheaties, as my dad used to say, “Eat your Wheaties!” Eat your cultural breakfast. That’s good. I think somebody like Dr. Mark Hyman should do an ad for you guys because he’s always thinking about broader dimensions of health and longevity.

I’m aware from our previous calls and other things that you could show us a little bit of how your system works. Is that something that we would like to do, you’d like to share with the audience here?

Alex Thaler:

Absolutely. Sure thing, Rob. I have an account open right now. I’ve gotten permission from this individual to share his investor portal so that folks can see it. Let me… Give me a second. I’ll try to share my screen. As we said before, a picture’s worth a thousand words, right?

All right. Happy to share the investor portal. This is the Iconik investor portal. The core of our experience that we offer is centered around a feature we call Vote Forge. In this page and this series of micro adaptive surveys, we allow individuals to forge their own individualized personalized proxy voting profile. The process only takes a few minutes. We have up to 16 different categories that span environmental, social and governance issues. To give you a sense of how this works, I’ll go in and do climate change.

We start with the basic filtering question. We just want to understand how folks feel about climate change. We ask, should shareholders have a say on climate change issues? We’re not trying to put our thumb on the scale here. You can answer however you want. If you answer no, we’re going to kick you out of the survey because we know how you’re going to vote. If you answer yes, we’re going to go one step deeper into this decision tree here.

The goal, of course, always is to just continue to get higher fidelity on an individual’s value set. We’re here in the second question. This question is basically asking, do you want companies to make all possible efforts to limit their negative impacts on climate change? Are you all in on this, or do you need to look at this on a case by case basis?

Again, if you pick the first one, we know how you’re going to vote as all these issues manifest and the survey’s done. If you do the second, then we go in and we’re going to start to ask you more specific questions about climate change as it manifests in this space. Certain types of proposals that come up, informational reporting, whether executive pay is linked to progress on these issues, et cetera. We try to surface as yes, no, or skip. You don’t have to weigh in on everything if you don’t want to. When you’re done with this process, we’ve been able to print out this nice investor archetype, which describes your profile and almost think about it like a Meyers-Briggs profile.

This one weighs high on methodical approach. It’s broad in that he considers almost every issue. It favors accountability and welfare over profit. Now we have a nice customized personalized voting profile and we can get to the voting. The way that we work is that we arrange to receive a copy of these shareholder voting emails in an automated fashion. We’re going to receive a copy. When we receive a copy, we can use our proprietary technology to auto vote it in accordance with that personalized voting profile.

This is an example of the Apple ballot. We have nominations for the board of directors. You can notice Al Gore is in there. We have executive compensation, and then we have some really interesting shareholder proposals on civil rights, communist China audit, racial and gender pay gaps. I’m showing this to you because a lot of people aren’t aware that these really interesting key issues are manifesting in the corporate context for stock that they own. Just to give you a sense of how our system works, you can click on this little button here that says, “See why.” That shows you why we generated a vote for or against a particular ballot item. In this case, this will-

Rob Johnson:

Can I just ask you a question?

Alex Thaler:

Oh, please.

Rob Johnson:

If you’ve made that profile with me, and then you have this proxy ballot, it fills in automatically what you think from the survey I would do, but do I have to check off and say I validate how you put it together, or am I giving you the green light to do it based just on the survey?

Alex Thaler:

That’s a great question. We have two flavors. One where we can automatically submit and then notify. The notification will be basically, “Hey, we think that based on your profile you wanted to vote this way.” You can go in and make any changes you want as long as it’s ahead of the vote cutoff. Notify and then you can go in and make changes. Other way to do it is to just not auto submit and then you’ll have to go in and submit it manually yourself. We just want to expose. It’s whatever the speed of the investor is.

Rob Johnson:

But what I like about your doing the pre-surveys is that if we get it right, your trust relationship with me builds and then the amount of effort I have to allocate to stay in communication with my companies goes down. That’s another dimension of the service you’ve provided here. I think it’s really interesting. That’s a really interesting, how you say, luster that you’re creating.

Alex Thaler:

Well, the whole goal is take as much pain out of it as possible because, Rob, you and I probably know better than most, people just don’t have time. You just don’t. If you have 50 of these stocks, that’s thousands of ballot items. People don’t have time to do this. We want to make it as easy as possible. Then we want to show people-

Rob Johnson:

It’s just like a presidential election. When it rains, fewer people turn out.

Alex Thaler:

Right. It’s more inconvenient.

Rob Johnson:

You’re making it more convenient and the turnout’s going to go up and the quality of information and understanding’s going to improve. That’s really great.

Alex Thaler:

We hope so. We want to show people how they’re having an impact. I’ll close this demo out in a second, but I did want to show you this because this is very important. After the proxies is going through the system and maybe you’ve overridden some votes, or it’s just auto voting, either way, we can show you how you’re having a voice and how that voice is manifesting. We can show you that you had 53 votes for diversity on the board. We can show you that you had two votes for proposals on improving workplace composition and retention. We can even show you your wins that because you answered a certain survey in a certain way, you’ve helped pass a proposal on it.

We want to bridge that 360 degrees. We want to come back and show them how they’re having that impact. Important part of the experience.

Rob Johnson:

This is really fascinating. I’m glad you showed us this, how do I say, this deeper dive on what it’s like to work with you and be a shareholder. Because I imagine if you are diversified in your portfolio and you own 40 stocks, that’s a nightmare to think I got to communicate 40 times, but if you know what I care about and you can deploy it to all the proxy votes, you’re really raising my impact through your service. That’s really… That’s a brilliant, brilliant creation.

Alex Thaler:

Well, yeah, I think we can do one better, I believe. We’re going to do this in February. Stay tuned out there for a mutual fund. Now imagine you have an S&P 500 Mutual fund. It has 500 stocks in it. We can crack that open and then use the same system to allow the fund managers to hear the voice of investors. We can do it with any fund, but that’s a particular area that I think is gathered a lot of interest in the public sphere is, “Hey, these asset managers have a lot of power. They’ve accumulated trillions of dollars of assets in these funds. We really should be cracking them open and giving that voice back to the investors.”

Rob Johnson:

Fascinating, fascinating. I saw from, I remember your pitch book that you’d shared with me, that you have surveys on what I’ll be call… What did you call them? ESG mandated, I think was the phrase you used. That the proportion of assets that are going to become ESG mandated is going way up and will be not too distant future, crossing at least half of the total assets outstanding. This is not little boutique operation for three tenths of a percent of the market. It’s becoming a concern and a practice that will be… Well, I would say pervasive in the market when you get up to more than half of the outstanding stocks.

Alex Thaler:

I believe so. The trends are pretty strong on this. All of the firms have recognized this. This is being driven by investors that want this. The investors and the future of investing really has this sort of values alignment element to it where people don’t want to just invest purely for returns. The old kind of Milton Friedman version, they want their investments to match their values to some degree, but that degree should be up to them. The issues that they engage with should really be up to them. That’s one challenge with the discussion around ESG today, is that it tends to be one flavored and everyone gets lumped in an ESG bucket. We do want to start pulling that apart and so that individuals can have their own voices heard.

Rob Johnson:

Yeah. The phrase I would use is, “You get to decide what externalities matter to you.” Your total rate of return is not just the financial rate of return. Giving voice to that other dimension would only coincide with what you called the Milton Friedman model when the company didn’t do anything that you thought had potentially toxic side effects. That’s really interesting.

The other thought I had was, I know that you’re not just do-gooders, you’re a company, and so you’re going to have owners. People should be proud to be stockholders or investors in your group because of the positive externality you’re creating for society’s functioning. But what kind of market is there? If you were giving me just a pure revenue plan, I’m taking the other side of the ledger now, what’s the scale that your service can reach so that you guys are making money and you can continue to update and evolve and so forth because you have the kind of retained earnings in cash flow?

Alex Thaler:

I can speak generally about our different revenue models. There’s four buckets. We serve financial advisors. A financial advisor might have between 50 and 150 clients. Their job really has evolved from pure money management towards serving their clients on an individualized basis, personalization. Their ability to personalize its scale and to take into account their client’s values, that’s where the future’s at. I think that’s what we help provide for advisors.

We also serve funds, I mentioned. Like I said before, I think funds are a bit challenged when it comes to what to do with the votes. We work with funds on an A1 basis. That’ll be one other model. We do have a retail model, so that just individuals out there, it’s not live yet, but if you’re just someone who happens to own some stock and you want to use the service, then you can pay a small monthly fee. I think we’re starting at the $5 a month, which will cover all the stocks that you own. You could participate in the service that way.

Finally, there’s one other way that we make money. That’d be working with mutual funds and other funds that have some challenges right now achieving quorum. The notion there really is that if you think the voting is bad for companies like Coca-Cola or Microsoft, it’s really bad for the mutual funds. They have a hard time getting the statutory required votes to actually pass things they need to pass. Our technology can help them achieve that quorum.

Rob Johnson:

I was in a meeting the other day where somebody said, what places like universities need to do is stop using fossil fuels, as opposed to just complaining about stock ownership of fossil fuels because if we keep using them, but we convince people to sell, then other people are getting a bargain for buying the fossil fuel companies. What we got to do is change the demand for the underlying thing and the earnings will reflect that diminished demand moving to, but I find all of these issues now are flowing through the financial markets. What I sensed was it was very awkward, cumbersome, and not well informed. Now I’m seeing your technology as a way of clarifying, deepening, and how do I say, invigorating people on both sides, both the investors and the management, about what’s really happening and what the real desires are. This is a really big and powerful potential to make a difference.

Adam Cummings:

Rob, just to build on that point, if you think about, again, the way we live, and I would argue that we’re moving towards a knowledge economy. For example, when you go out for a restaurant, how many… You look at reviews. You don’t just look at the reviews of that product or service by the professionals, you actually have customer reviews. In my opinion, that is the… Now we’re living in an age where we are informed by others that we identify with. That’s meaningful.

That information is essentially what’s going to occur when now you have 88% that aren’t voting their shares. But as folks get involved, that’s material information because in terms of… If you’re getting more information about the needs and concerns of consumers, that’s really important in terms of governance and strategy for corporate management.

In a way, the paradigm is shifting so that corporate manager, they don’t really have to guess anymore. They could actually get some feedback about what is current and then plan for that. This is just better corporate governance. Now there’s the term of corporate activism, which is really corporations getting ahead so they can be ahead of the game in terms of responding to what’s needed in their own best management practices.

Rob Johnson:

When I dream of myself in years past being a hedge fund manager, I’d be inclined to subscribe so that I can see your metadata about what the trends are in the population because it’ll affect my portfolio in the future. They’re all kinds of different angles that the improved information, how would I say, has value. That’s really interesting.

Alex Thaler:

I think so. Some of these informational inefficiencies played out in a very public way. Rob, do you recall the engine number one campaign at Exxon from a few years ago?

Rob Johnson:

Yes.

Alex Thaler:

We had a big campaign, a proxy battle. Exxon, by some accounts spent something like… I read one account. It was like a hundred million dollars to try to thwart engine number one, which owned 2 cents on every $200 of shares outstanding. They had a tiny little investment. They lost. They lost three board seats, or however much it was. You got to think that if the company had better data, if they could see that they were going to lose, they had better modeling, they understood this issue better, that they wouldn’t have spent a hundred million dollars of shareholder money to try to thwart that effort. There would’ve been a more efficient solution. It would’ve come to the center a little sooner. That played out very publicly. That was embarrassing for the company, obviously.

Rob Johnson:

I remember.

Alex Thaler:

The same might hold true for a lot of other companies.

Rob Johnson:

Well, this is fascinating. What’s interesting, I had asked you the question about who might be your customers and the generators of revenue, but I can’t imagine that philanthropic institutions aren’t going to want to find ways to enhance what you’re doing, or fortify, maybe it’s your R&D or whatever, to go in even further directions and dimensions. While this is a kind of aha moment for me in seeing this, I can imagine people will evolve from here. Philanthropic inspired people who are often also big investors may envision new dimensions.

I really think this is exciting. I think we’re in a world where everybody sees everything as being worse. We’re polarized. To see something that’s bringing us together and making a win-win is quite in, how do I say? A friend of mine, Robert Dugger, who used to work with Paul Tudor Jones used to say, “The problem is, we got to find a new North star.” I sense that you guys are astronomers. You’re on the path.

What’s the process from here? Are you meeting with groups, meeting with potential customers, trying to show people what kind of value add? How is it launching?

Alex Thaler:

Yeah, that’s a good question. Well, we’re a classic, I guess you might say Silicon Valley startup, full steam, pedal to the metal ahead, building this technology out and having lots of conversations with some of the big asset managers and some platforms that has significant reach for financial advisors. Also, you mentioned some nonprofit or more values aligned groups, also having conversations with them. They span the spectrum in terms of what they’re working on. A lot of these groups, and I’m sure Adam, he has a specific background in that area, groups who have used shareholder activism in this way. But yeah, there’s a lot of folks out there that they have specific issues that they want to make the companies aware of and they’ve organized around that. It’s a strategy of their theirs to try to accomplish change in this way. We are working with folks who, early adopters who understand that and who have tried to do this before, but it’s just hard to get out the vote, or it’s hard to assemble the coalition. It’s hard to do it, so having an enabling technology is hopefully very helpful to them.

Adam Cummings:

Yeah, I would just say in the shareholder activism, this is really it’s sort of the last mile, if you will, of that. There’s a lot of work and resources that go into understand the issues and into that activism, if you will, but unless you have the votes and enough of a collective, if you will, of a voice, it’s not going to matter much to some corporate, depending on the issue. Therefore, this will certainly significantly create efficiency to that. Wherever we are on the issue, what’s important is that there’s more information. Then both sides can be… Corporate governance, if you will, there can be more decisiveness around how to be effective because this is important.

Rob Johnson:

I think it’d be interesting to see how groups like rating agencies also react of seeing the ramifications for what is emanating from your voter preferences and looking at the company’s underlying structure. I’m quite curious how they will ingest this threshold change of information. There are a few scholars that I’ve encountered and work with, Andre Perry, who works on issues related to racial discrimination, it’s impact on real estate prices and on many companies. There’s others who I’ve made podcasts with and so forth relating to similar issues. I can see a whole lot of different pathways where deploying the technology that you do enhances the information, but makes us all more conscious of what we’re actually doing with our economy and with our world.

Adam Cummings:

Well Rob, and then there is a really important piece that came out of the Booth Business School that, and Oliver Hart was one of the authors of it, but it’s an argument for the title of his… Protest versus Divest, but protest really means engagement. It’s not to step away and sell. Now, just even on a democratic principle, if you will, that it really is about engagement. It’s about voting. It’s about participating. That is going to… That principle or value is about building a deeper fabric, if you will, of society. Because when we are voting or engaging, we’re expressing our needs. We all have needs. If they’re not respected or heard, then we polarize. We pull away.

Just fundamentally as human beings, we’re relational. That is really, ultimately, it’s bringing integrity to a system that was really marginalizing or oppressive. Democracy is to give that opportunity. That’s where I think that bigger picture, this is a very powerful, if you will, application where we can be more engaged and informed in society.

Rob Johnson:

Alex, you started this session off with talking about an experience you had that created a kind of aha moment, and then you started to build. I’m curious if, how would I say, the aha moments are a dynamic process? Are you still in awe of what’s unfolding since the starting gate?

Alex Thaler:

Okay, we’re going to have to dive into that. I’ve heard the act of running described as controlled falling. I think that’s how I describe this startup experience. I’m very aware we have to be extremely nimble. We want to take in as much feedback as possible. We’ve already had a major pivot. The first version of this was a trading app. I mentioned I started with Robin hood. That was my experience. I thought, “Okay, let’s do a trading app for retail. We’re going to do special voting features.” That was the very initial implementation.

What we found was that was a bit challenged and that it is hard to get folks to buy or transfer in stock based on a campaign. That’s a bit challenging, especially if it’s a campaign on an issue they care deeply about, maybe it’s climate change or something like that, and you’re asking them, “Hey, buy some Exxon to have a voice at Exxon.” We ended up, we had to think really hard about that. There was some technical breakthroughs. We’re back to the drawing board. That’s how we came up with the current iteration, which is we’re just going to help you vote what you got, which is the easiest version. Let’s just separate the process of building portfolios and doing all the stock picking from having a voice.

Yeah, we need to be nimble to survive. I think it’s a classic startup adage and is very much at the center of our approach here.

Rob Johnson:

To me, it feels like jazz music. You’re improvising every time you hear somebody else play a solo. That’s good. That’s really good stuff. But it just must be exciting to feel this blossoming like it is. I’m excited just learning about it. That deeper sense of purpose that comes from being the people who made it is, how do I say, an even more fulfilling sense of satisfaction, I would imagine. But, how would I say, doing good and doing well at the same time is a pretty nice mix.

I always hear everything in songs. As I’ve been listening to you, Marvin Gaye’s going back at me, “We got to find a way to bring some understanding here today.” I just did. That’s from what’s going on.

Alex Thaler:

Love me some Marvin Gaye. Yeah. Yeah. Well, thank you so much for that. Actually, I kind of live for a little bit of validation from people like you who have thought deeply about these issues. It’s very helpful to get that. Some people who are doing this work might consider themselves afflicted with this burning need to build new things, punctuated by little successes over time. If we’re able to inspire and empower, then that’s what we live for.

Rob Johnson:

Yeah, exactly. All right, gentlemen. Adam, any final thoughts here?

Adam Cummings:

Well, thank you. It is such an honor to be able to be here and talk about these… Well, important… These are big issues. We’re in an incredible time. I just love, just building off of Marvin Gaye and some of the lyrics, but this is an opportunity for people to really show up. When we show up in our lives more and engage more, things get better. They just do.

I’ve always… Again, as we have more opportunity to be more connected to ourselves and others, it just feels better to be alive as a human being, especially in the era of the technology that’s coming our way with AI and all of that. At the end of the day, we still have each other. Nothing can replace that. That’s really important because there’s a lot of… Yeah, these are incredible times. The more we can be connected I think is really an important piece of resilience and important for the human spirit as well.

Rob Johnson:

It is. Alex, final thoughts?

Alex Thaler:

Do we get a Marvin Gaye outro music? I would love that.

Rob Johnson:

I got a couple rabbits in my hat. Yeah.

Alex Thaler:

Just thank you so much. It’s been great pleasure being here. Thank you for inviting me on. I really enjoyed talking with you today.

Rob Johnson:

Great. Well, the story I’ll tell, because I was a producer of the film, Amazing Grace, that Aretha Franklin made a live concert in the early 1970s in Los Angeles. With the help of digital, the fact that the three cameras and the sound were not synced was changed, and we were able to release the film. But the opening song is Marvin Gaye. It’s called Holy Holy. Aretha Modified the lyrics a little bit, but she said essentially, “Holy, holy, we’ve got to believe in each other’s dreams.” I think that the dream that you had, and it’s being realized, is a great source of inspiration.

I have 20,000 people in a Young Scholars initiative who can feel that the world’s been off course and they’re trying to find their North Star. I’m excited that I got to be with you two today to create something that I can show them. I think this is a very, very positive development. Thank you both for taking the time and sharing with me, and sharing with the [inaudible 00:53:59] community.

Alex Thaler:

Thank you.

Adam Cummings:

It’s been a pleasure. It’s been a pleasure. Thank you so much.

Rob Johnson:

Keep me posted. We’ll do some updates. I’m sure there are more chapters to come.

Adam Cummings:

Will do.

Rob Johnson:

Thank you guys.

Alex Thaler:

Absolutely. Thank you. Bye-bye.

Rob Johnson:

Check out more from the Institute for New Economic Thinking at ineteconomics.org.