Intro Vocals 00:01
You’re watching the Blockchain Interviews hosted by Dan Weiskopf. Each episode features interviews with leading industry experts so that viewers can have a deeper understanding of today’s quickly evolving blockchain marketplace.
Dan Weiskopf 00:21
Thank you, Jonathan, for joining us in the blockchain CEO series. I’m so incredibly excited about our conversation. You know, I think, and I’m going to maybe pushing the envelope here. But I think we’ve known each other since your initial launch back in 2006, 16 years.
Jonathan Steinberg 00:45
It’s amazing how quickly it’s gone by, did we meet all the way back then?
Dan Weiskopf 00:50
Well, listen, you were on the Pink Sheets, and we were having conversations. And I was pounding the table, I think on you, but about transparency and the need to be transparent. And… and you know, what, you made this huge pivot. And I give you a ton of credit for it. And, you know, you got on NASDAQ, you started, you know, providing all the transparency around flows and asset levels on the Excel spreadsheet, you know, that you provide every Friday. I mean, that was incredibly leading edge. If you think about it back then nobody was doing that.
Jonathan Steinberg 01:27
It’s amazing. Some of the big asset managers don’t even have earnings calls. Even like the T Rowe Price with a trillion six, they don’t actually have an earnings call in 2022. It’s an amazing thing.
Dan Weiskopf 01:45
Yeah, no, it is amazing. And you know, especially since a lot of the information is available, if people know where they get it, at least in the ETF side, it’s available in the mutual fund. It’s not I get that. And we live in a world where in my opinion, transparency is critical. And that’s what drove me into the ETF industry. And I think that was one of the reasons why you got into it as well.
Jonathan Steinberg 02:16
There’s no question I mean, in the you know, I Wisdom Tree before it became Wisdom Tree was a financial media company called individual investor, individual investor group. And we did our story on the Q’s in 19. I think it was 1999, when the rapper only had 40 billion in AUM worldwide, but when you could just lick… list the advantages of the structure, transparency, intraday liquidity and tax efficiency, that is meaningfully significant advantages. And so it seemed to me that the future in asset management should lie in the ETF format. And I pivoted the firm from media to asset management. Thinking I could get in relatively early in what was evolving slowly, you know, if the SPYDERs were ’93, by ’97, no one had shown up by ’99, really no one knew had shown up. And one of the major reasons I think, it wasn’t fee compression, people were willing to compete with Vanguard on fees. They were most uncomfortable with transparency, the act of mutual funds shops did not want transparency. And you still have an argument today, non transparent active.
Dan Weiskopf 03:47
Yeah, we have a lot of peculiar labels in our industry, I think you would agree. You know, smart beta, as an example, is just kind of as a label comical. But, you know, that’s neither here nor there. Listen, you know, you’ve built a great organization, in the context of a culture of people wanting to be leaders, people wanting to have an effect for investors. As a CEO, you know, how did you do that? And I’m sure it’s not just you, it’s part of your… it’s your whole team that that philosophically buys into that.
Jonathan Steinberg 04:25
Um, so you know, culture is very important to us. To me, really, as a CEO, you have three constituents, it’s customers, shareholders and employees, and you need all three to be successful. So our culture, one foundationally, it was transparency. So a culture of transparency. We’re telling the outside world, everything that we do is transparent. So, really, transparency creates a culture of accountability. So that’s very, very helpful. We are regulated financial services. So standards are very, very high. When you were thinking about launching WisdomTree, you were launching against the three largest asset managers in the world, were the three largest ETF sponsors in the world. So the standards were so high, how do you thrive in a Vanguard world requires a culture of excellence, because they delivered, you know, Vanguard delivered an excellent experience. And so I also knew that I wanted a certain type of person. I, in shorthand to HR, it would hire, happy people, people comfortable in their own skin. And that has helped us tremendously. They like each other, we all like working with each other, we are transparent, we have created a culture where we trust each other. So trust is incredibly important if you’re going to try to innovate and do things, you know, early or first. And you have to be willing to know that you can fail, as well. But anyway, we, I put a lot of energy into culture from the very beginning. And it’s, you know, one when I launched, you know, if you go back to the early days, I recruited out the General Counsel of iShares, the head of their European operation, who was really one of their five founders, the head of the wirehouse channel, the head of the RA channel. So I took a lot of ETF DNA into the company from the very beginning. But then I wrapped it in something slightly differently, which was self indexing, which forced you to be a little bit different, you know, it doesn’t take a lot of energy to sell the S&P 500. It’s known, it is what it is, if you’re doing something different, it requires education, disclosure, a communication ability that is harder in some ways, but can be very much worth it over time.
Dan Weiskopf 07:30
Now, you mentioned that you started out as a media company, then you did the self indexing, then the ETF, you’ve made some major pivots, as the CEO at the end of the day, ironically, you know, 16 years later or so everybody’s focused on dividends, right. But that’s the origin of the firm. Walk us through some of the major pivots, including the hedge strategies that you made. Over the time.
Jonathan Steinberg 08:00
Well, the biggest one was go… So when I launched as a media company, I was right about retail investing, but I got to retail investing in 1988. But it was sort of the death of print. Okay, so that I, my common theme has always been about enhancing the investing experience. So we pivot a bit. That was a true pivot to go from media, to asset management now, in finance, in media, free information, commoditization of information. So I take an index self indexing, which is an information product, take an index, wrap it in the 40 Act, and you hope you have a little bit more protection from fee compression.
Not that you’re immune to it, but at least it was a proprietary exposure. So I was dealing with similar issues from the very, very beginning. When you say, you know, I launched dividends in the beginning. You know, it was really It started with an idea that I did not want to compete with Vanguard on nonexclusive indexes. On price, I just didn’t think I could win that game. So then you needed to, if you’re not, you need a quote, better index, what is a better index, often that would mean better long term performance, but it could also mean different outcomes. So the one major thing about dividend waiting. So what we did in June of 2006, we launched using one month methodology 20 funds in a day. We did using a dividend waiting for the developed world. Six of them were the US so the US total dividend Market Plus large, mid and small and then high yield cuts, and then 14 which were International, which was bad then actually revolutionary because you only had iShares with international exposures State Street and power shares were doing ADRs. So it was very limited. So we created size cuts internationally. iShares was using only MSCI exposures, which is a total market exposure, so you couldn’t get international small cap. One of the beautiful things about dividends when you’re self create when you are self indexing is the purity of the information. A dividend paid in the US is the same as a dividend paid in Europe is the same as a dividend paid in Brazil. It is a clean metric that you could go around the world. And it was around that cleanliness, the purity of the data that allowed me to recruit Jeremy Siegel, right because he and Jeremy Schwartz, you know, well, they validated my back test for Michael Steinhardt. But one of the things when you’re creating indexes, it’s very easy to data mine, or almost lie to yourself. Where you create something that worked historically, the question is, will it work going forward? And you… we always really wanted to make sure that we were really being high minded, we weren’t just looking for an opportunity. But could we deliver long term better returns after fees and Vanguard? Now, being that they were cap weighting everything, we felt that they had limitations in their approach, Cap weighting is always overweight, the most overvalued sectors or companies, by definition, so now, I launched dividends. And it was at the absolute height of value versus growth. It’s been 15 years sort of out of favor. So I’m not good on my timing. But it’s terrific to see that some of the original methodologies are thriving today. And I always just thought income. Everybody likes income. I mean, you need income. And as rates continue to fall, I always felt it was an attractive way to construct a portfolio. But it’s only one of almost an infinite amount of executions that you can do when you’re really applying innovation to exposure creation in the early days, that was index creation, but between indexes or active, you know, a lot of this is now semantics. You know, you use the term earlier, smart data. In my original thinking, I was thinking of it as performance indexing. Could you create a set of rules to beat the market? And what I found is, I mean, the way I started, I took I mean, I did a lot of trial and error, yes. But what really got me to this initial dividend waiting was I wanted to create a wheelchair of dividends. I just took all dividend payers and I tested it market cap weighted. And I went back to the beginning of the S&P 500 and it beat the S&P 500. So there was selection. And then I thought, well, how do I emphasize yield? I don’t want to make it yield weighted because high yields in a small company are not scalable. So I made an actual dividends paid. And that was scalable. And when I tested that I got an extra bump in performance. So I got some from selection, some from waiting. And then the light bulb went off in waiting. Oh my God kept waiting has a law. And when I met Siegel, it was when dot com was at its you know, highest peak and he was like, my I love Vanguard. My s&p 500 fund though is wildly overweight tech at 100 PE, this can’t end well. When I showed him dividend weighting and earnings waiting for him it really resonated it’s a way to correct for market cap weightings overvalued nature growth nature. This was an interesting evolution an early weight fundamental weighting, you know, factor waiting that we were really early and all of those kinds of pushes. But when you think about it, so one of the first ones I launched, meaning day one, 20 funds, you spoke about it was DXJ, which is what at the time it was unhedged Japan, and it was winning for the first six or seven years as unhedged. Then Jeremy Schwartz had an idea. And he said, you know, there is an inverse correlation between the direction of the yen and the direction of Japanese equities. I say he misses German shorts, if we hedged out the yen making $1 weighted one, you pick up yield, and two, it works better in the Japanese market. And even though for awhile, we underperformed dramatically, the fund grew dramatically. And then QE happened, and it just took in, you know, it served a purpose, it really showed that when the dollar is strong, you could access Japan in a way that would benefit investors, and it just took off. But it was always trying to solve when you do it, when you’re creating from a product standpoint, you’re trying to create outcomes that can really work in different market cycles. And so really, my great innovation was self indexing, which allowed me a flexibility of approach.
Dan Weiskopf 16:28
Sounds like structure matters to me, I had to throw that out there, John, I’m sorry.
Jonathan Steinberg 16:32
It does matter. And you know, it, you know, it’s interesting how resistant financial services can meet to change. And then that, and then they’re always fighting the better structure in many ways.
Dan Weiskopf 16:47
So would you say that your success was driven by transparency, the democratization of investing or liquidity? What’s the big draw to your funds? Or is it all the above? And…
Jonathan Steinberg 17:06
I would say that first I got into ETFs, relatively early. So I launched in 2006. I did a lot of funds in a day, 20 in a day, I did, you know, another 10, in over the next six months, so I tried to go as quickly as I could. So I got early. So let’s say at the time, in June of 2006, I think the structure only had like 600 billion of AUM to today’s 10 trillion. So getting in early definitely mattered. Meaning I… I participated with the just the direction of the ETF industry as it evolved. And so that was just very useful. And then we tried to do some of it like, was it transparency? Was it dividends or income? Some of it was just access? My first big success was an international small capital was dividend weighted, yes. But before me, you just could not buy an international small cap ETF. So let’s say you were an iShares investor, that fund was completion to your ephah exposure. And so some of it was just access, some of it was income, some of it was performance depends on the different time, you know, but it was also a real belief that this was in the interest of investors. And we weren’t going to hedge our bet. We were going to make it work. And we, you know, do what was necessary to make it work.
Dan Weiskopf 18:46
So, so that’s, it’s a perfect transition to where we are today. So there’s a sense of irony to me that your origin is dividends. And, everybody’s looking for dividends right now, right? But you’re now pivoting more towards blockchain. Right, you know, major, major pivot, while still keeping the foundation growing, right. Talk to us a little bit about your vision in the context. And by the way, if you want to call it blockchain, you want to call it web 3.0, crypto, whatever you want to call it. Everybody seems to be trying to figure out the correct name for all this.
Jonathan Steinberg 19:27
So terminology can be very confusing. There’s a lot of semantics. It’s one of the early things that was a difficulty for Wisdom Tree as a ETF sponsor self indexing, but your passive, what are you and it took a long time, eventually people just stopped asking the question, but you would get confused on it. When you talk about dividends, you’re talking about value orientation in the markets and this has certainly been a value oriented a moment in time. When I started Wisdom Tree from a media company, I asked myself, “How do you thrive in a Vanguard world?” one of those answers beyond a different methodology was the actual ETF wrapper, which I thought, at that time Vanguard had not yet launched an ETF. But I knew they were coming, but I wanted to get ahead of them. And so on the ETF wrapper, I was much more competitive with Vanguard than in mutual funds where they were the dominant killer. Recently, over the last few years, for the last four or five years, I’ve been asking internally a couple of questions. So if my original question was how to thrive in a Vanguard world, my next question is, what could do to ETFs? With ETFs did to mutual funds? And that’s a question about the wrapper. So that’s about tokenization. And the wallet. The other question I was asking is not a newer version of the original question. How do you what’s your response to zero fee Batum, zero fee passive, which exists today. So fee compression in the 16 years that I’ve been in the ETF industry broke in a worst case scenario. Before back in the early days, no one had ever undercut Vanguard on price. Now, there are a dozen firms half a dozen firms willing to compete under Vanguards price point, and you actually have exposure with no expense ratio as a independent, pure play and asset management. That’s very scary that the expense ratio on liquid assets could go to zero. So with digital assets, so if you’re asking like what do I call it, my largest umbrella would be digital assets. Within digital assets, you get it the way I use it, crypto currencies as an asset class, which is like a Bitcoin or an Ethereum, or what have you. But then there is also tokenization. And blockchain enabled financial services. And I’m trying to put both together. That second part is competing with the wrapper, meaning ETF was a better wrapper, could and it dominated Asset Management is there once you start tokenizing, and blockchain enabling, and again, some words or semantics, but you could do more in your tokenized version of things, potentially, then you can do in the infrastructure? That is the 40 Act on the old rails. So we’re trying to get ahead. From a functionality standpoint, like when I thought about why ETFs would succeed, better functionality, better outcomes for the investor? So, you know, in the old days, it was transparency, liquidity and tax efficiency. I’m not, you know, you couldn’t say wisdom, choose an ETF sponsor. You could also say, Wisdom Tree is a manufacturer of transparent exposures. Within that tokenization is not a heavy lift. For me. It’s not hard to be transparent, the blockchain lends itself to transparency. So for me, that was my comfort zone, nothing changed.
Dan Weiskopf 23:47
Well, but wait a second, I have to interrupt you on when you’re talking about tokenization to find what that means, because I don’t think you’re talking about creating literally tokens that are unregulated.
Jonathan Steinberg 24:00
No, token, but I am tokenizing what I’ve said publicly, gold, dollar, treasuries, more recently, more of the 40 Act. And you want historical one of the things that we’re trying to do with Wisdom Tree prime, I’m sure to jumping in and so it’s not a perfect order, but I announced as a public company on the fourth quarter earnings call and again in the first quarter that we’re launching WisdomTree prime which would be WisdomTree’s wallet, and it is a way to have crypto, Bitcoin, Ethereum and others sit next to traditional assets on the same rails. So right now, you really can’t do that, because everybody has the old rails, and then they launched crypto, and so it just sits in this isolated pool. If you could really put it all together, on one tech stack, investing, savings and payments could be done together. And it will enhance your experience with your own money. So, what we did with ETFs, we enhanced your experience just with investing. But, you know, think about let’s just take gold, WisdomTree is a big gold manager in Europe, we’re like the third or fourth largest gold manager in the world. I asked you, Dan, you put money in gold? Are you putting it in gold as an investor or to save? Okay, now, does it matter?Well, let’s say you say it’s savings. Let me ask you another question. WisdomTree is the leader in floating rate treasuries, which is shortest duration treasuries. So very constructive for a rising rate environment? Are you saving or investing in floating rate treasuries, right now. Now it has no return. But it didn’t go down. When you tokenize floating rate treasuries, it will look a lot like from an experience standpoint, your savings account. It won’t be deposits certainly won’t be deposits of a commercial bank. It will have a custodial bank. Definitions blur. And it’s going to be very disruptive in Broad Financial Services, the way because we are regulated, which makes us different in technology than many other industries. We’ve been very slow to evolve. So the way our industry brought us most broad as financial services, it starts with a savings account, save your money, then somebody had another idea, we’re gonna create a brokerage account, and it was separate. And then somebody else had, let’s give credit, let’s have a credit card. And there’s credit, they’re separate. And all these things are these turfed off ecosystems, walled gardens. With blockchain technology, there is an opportunity to break down the walled gardens, put these things together, and definitions may change. But at the end of the day, you the investor, you the consumer will pick up functionality. Again, cause structure matters. So we’ll add, so you’ll add your one, you’ll have transparency, if it was transparent and tax efficient that should be as tax efficient in this new rapper in this new format this tokenization. But we’ll add, how about sending it peer to peer? Well, that’s a new functionality that you might find of interest to send to your children to your wife, you want to move your money more easily around. Now there’s regulation, then there’s the technology what’s so cool about gold. Gold travels around the world, like Bitcoin travels all around the world. Meaning but like the S&P 500 does not travel around the world. That fund exists in the United States, you can be another fund in Europe, but the same fun will not travel because of regulation. But gold can travel. So you see a whole thing like remittance can open up as a business model to Wisdom Tree. There’s just so much that will happen because there’s so much efficiency and additional functionality possible on this new set of Rails. And what I find is that what was lacking in the industry was somebody willing to put the hard energy through getting the appropriate regulatory approvals. We didn’t want it… we knew that we couldn’t go unregulated. We are fully regulated our everything we do is regulated. But when you’re dealing with money, it should be regulated. Only toy money play money can be on the side not regulated. So we… I found that my skill set, WisdomTree skill set of dealing with the regulator lined us up very well for what was necessary for blockchain enabled financial services to evolve. You need to put a specific use case in front of the regulator. You can’t do it in a grandiose vision you actually have to put something in front of them and and build It one exposure at a time, which is not different from how the ETF engine, you know, when you go back to the early days exemptive relief was time consuming, it took a lot of money. If you did something, anything differently, it took a lot of time and energy, and you weren’t sure that you would actually get through. So that was a bet I was willing to make. Because I made it in the past.
Dan Weiskopf 30:44
We’ll transition actually. Because, you know, the interesting part about what you were saying to me was that, I think often your company’s viewed strictly as an asset manager. But in fact, especially with the gross margins, you’re, you’re a solution provider, almost as a technology company, arguably, or software company with the margins that you’ve got. And your approach to blockchain is putting all the pieces together to evolve and offer a different set of solutions, whether it’s wallet, whether it’s its access, talked us a little bit about your latest announcement that you just came out yesterday.
Jonathan Steinberg 31:27
You talkin’ about Fire Blocks?
Dan Weiskopf 31:29
Fire Blocks, yes. Thank you!
Jonathan Steinberg 31:31
I mean, you know, fire block, one thing that we do is we manage vendors to act execute these investing experiences, State Street Mellon, we have lots of world class relationships that we manage, we don’t do it all ourselves, and fire blocks is an important element in our compliance. Architecture for launching tokenized exposure. So you know, it’s integrated in it’s a security and compliance regime that we’ll be integrating into our experience. So you know, it just, again, you have to patch it all together to get to the other end of this. And we’re just trying to use the best of breed, knowing where we’re trying to go. One thing that made WisdomTree interesting about sort of tokenization in the early days of tokenization. The easy money was let’s tokenize illiquid assets, something that has a very unsatisfying investing experience. And through tokenization, we can make it somewhat better. WisdomTree approached ETFs are the best experience on the old rail. So it is the best investing experience you can offer today. Can we make that better. And that is such a high standard. And so that’s really, you know, we would not have launched if we couldn’t add functionality to what is in the market today. So one of those elements is peer to peer. Others will be the way to move your money to tie it so that you can use your like gold to buy and sell things like actually make purchases, so that gold becomes currency, like it was hundreds of years ago. You know, really, that’s the kinds of patching it all together so that your experience is better with your own money. That’s really what we’re trying to do.
Dan Weiskopf 33:41
So where do you stand on WisdomTree? Prime, the mobile app, you know? How close are you to really getting it all going together?
Jonathan Steinberg 33:52
So we’ve been working on this project for years, we announced that we’ll be beta testing at the end of this quarter, and really rolling it out nationally by the end of the year. So I think that, you know, that’s the timeframe. So a lot of it is about to come to market in a lot of sort of regulatory investment. Just a lot of things that you had to do to get yourself organized for what we’re trying to do is coming together right now, we built a little team within the company. But one thing that I always like to point out is so again, like I said, you know, we’re in the business of transparent exposures. And, you know, we’re 250 people worldwide, 230 of them are on the ETF/ETP side of the business, but almost everything that the 230 people do day to day is of relevance to launching WisdomTree prime or tokenized versions of traditional assets. So it’s it’s very synergistic. It’s why we could do what we’re doing. So efficiently.
Dan Weiskopf 35:02
Yeah, so… so you’re… Is it fair to say, and I may be putting the wrong words in your mouth here so forgive me, that it’s possible that you’re going to transform from strictly an asset manager focused on ETFs, to a platform type of company delivering, you know, an investment platform.
Jonathan Steinberg 35:26
I think that it’s fair to call Wisdom Tree Prime a platform, if we scale it, it’ll be a platform. And I would just take, I would say, you call it an investment platform. And I would say it’s broader than that. Because it’ll be a merging of savings, investing in payments, onto one… onto WisdomTree prime, which is again, you could call it a platform, so I’m very comfortable with the way you described it.
Dan Weiskopf 35:59
So you’ve also had to make some venture capital investments, you know, through Wisdom Tree, you know, talk to us a little bit about securants, and you know, how you go about the venture capital side of things, because at the end of the day, what I think often is lost in the way of, of blockchain is that venture capital is driving this change, and you’ve got some participation there, whether it’s at the corporate level or otherwise.
Jonathan Steinberg 36:31
So, it is corporate and it’s strategic. So the reason we made an investment in security is they had a vision for embedding a company making their token, compliance aware. So what I wanted is, could I send gold around the world? Could I let gold travel, let’s say to Japan, but not North Korea? Could it travel to Israel, but not Iran, where it’s illegal to do business? So through? Now, what that enabled me to do one of the benefits of blockchain is it’s global, its global. So if you’re trying to improve upon the investing experience, or the experience of your exposures in ETFs, one would be globalization. Right?So my gold right now is regional, it’s in Europe, it’s no one in from the United States is buying it. And no one from Europe is buying GLD in the States. So that’s just a slight improvement. Can you make it global? We I couldn’t figure out if I saw in theory, that you could use DLT tech or, you know, blockchain technology to make for a better investing experience in theory. I needed their vision implemented, and we’ve implemented their technology into our compliance and wallet development. So some of I made an investment, it didn’t, off my balance sheet wisdom trees balance sheet. It didn’t flow through the income statement, which is constructive. I’m not that big a company, it would be hard to do. But they had expertise that I didn’t have. So they’ve got their 60-65 engineers working on a number of projects, one of them being WisdomTree prime. And I needed to make that investment because I couldn’t see how to make tokens better than ETFs without them. So they had a vision for interoperability, meaning it could travel around the world from one chain to another. I thought that was so they had a vision for open gardens. Right now, we work in a world of closed gardens, meaning, you know, you go on the Merrill Lynch and it’s a it’s a closed system. And everyone has a closed system. It’s, you know, exchanges are semi open, they take a lot of people in but they become their own ecosystem. You know, when you talk about like, you know, defi or web 3.0. Will you need an exchange? You may not Wisdom Tree prime, if it has a million users, and you’re able to trade assets amongst yourselves are we in exchange, not by legal definition, but maybe by functionality? A lot of semantics is going to get very, very confusing. And you know, you need to we have a flexible approach to how we are viewing In our role in financial services, and what drives me is I think about my media background, I’m a magazine company, in a world of newspaper companies in the newspaper companies were the height of journalism, then the internet comes out. And not one newspaper company is stronger today. Then, you know, since the internet came, why is that? They were in the information business. But they thought of themselves, not as an information business and delivering information in the most user friendly way. But they thought of themselves as a newspaper company, it’s why so many active mutual fund managers. Right, if you called yourself that, you had to miss, you know, a lot of the ETF early days, because the SEC hadn’t approved active. So it all depends.
Dan Weiskopf 41:10
And then there’s Onramp. Right. You know, and, you know, you were solving a problem for the financial advisor in that. That’s the goal, right? How did that decision come about? And, and, you know, what’s your outlook.
Jonathan Steinberg 41:27
So I don’t believe in the United… so we have a crypto ETPs. In Europe, we do not believe crypto will really emerge in the ETP wrapper in the United States. The SEC’s take on it will stifle the ability. So we have baskets in Europe, and we’re struggling to get physically back Bitcoin into the United States, though we have it in Europe. So I thought, and think that the wrapper that will be most conducive to crypto will be SMAs. And Onramp, was a technology that would connect the RIA to the SMA. And so wanting to facilitate bringing crypto to the masses through their intermediaries in the United States, it facilitated on ramp was another version of security, in a sense, it facilitated or being able to execute, where we thought we should be playing in the New World Order.
Dan Weiskopf 42:42
And by the way, I have signed up for Wisdom Tree Prime, so please count me in on as a beta. So you know, I think we’ve covered everything. Is there anything that I haven’t asked you that I should have asked you in regards to where you think you’re going? In the coming years?
Jonathan Steinberg 43:02
You know, I would just say that the ETF industry is got decades of success and growth in there. And it is so vibrant and strong. And it has been one of the great areas of innovation and asset management for the last 30 years. I completely believe in it. I am also looking though, to what’s new to see, you know, I launched in 2006, 13 years after State Street. I’m wondering, is there an opportunity to bring Asset Management onto the blockchain, but actually be ahead of State Street, Vanguard, and BlackRock. And I think that there is that opportunity, that’s what we’re trying to do make it you know, as user friendly as ETFs. So if ETFs were built on the back of exchanges and brokerage accounts, the WisdomTree prime is really built on telecom on the mobile phone, which is even more convenient. So again, great inclusivity in the future that we’re seeing. But you know, it’s just, it’s an exciting time. These are exciting, challenging times in financial services. And it’s nice to have enough critical mass and having gotten a head start, that we might be constructive in helping this evolution, and we’re just trying to play a role in it. And I see an opportunity and I think being early and first is a good business strategy to you know, being just flat out smarter than people you know, it’s not easy to just pick better stocks and deliver better after fee performance in the old wrapper every day, it’s just a hard thing to do. Nobody seems to do it consistently. So we’re just trying to be relevant in the New World Order. And sensing that real change is on the horizon.
Dan Weiskopf 43:22
I remember having conversations with you about the goal of getting to 10 billion getting to 20 billion in here, you’re around, maybe $76-$80 billion. So congratulations. I know how tough it is. It’s a grind. But let’s be honest, it really is. So I always have two wildcard questions I ask my visionary CEOs, right. So looking out to 2025 or 2030. What do you think people will look back and say, that solution needed? It was so obvious, I should have been a part of that change? Right? And putting aside if you can, financial services, because that’s just too obvious?
Jonathan Steinberg 46:03
Well, you know, you know, with even though you say financial services obvious, you know, it really hasn’t happened. You know, it hasn’t happened. And, you know, when I met you in 2006, there was so much skepticism about ETFs. That ‘s it, it’s hard to believe, now today, it’s accepted, right? You’d never have to defend. But there was a, literally a 10, 15, 20 year journey of having to explain why. And the reason why I had to explain was, there were legacy issues, that kept people from taking advantage, like the newspaper did not want evolution, because they were the king of the information hilke. But they lost it. It’ll be obvious that, you know, in financial services, that crypto and traditional assets should sit seamlessly side by side, that will be one of the earliest use cases, when you talk about 2025. That will be a trigger for people, this will prove to be an easier way to hold crypto, and it can sit next to your other assets. And with that, now you can start sort of doing your financial life in a way that you couldn’t do on the old rails. So I think it will become more obvious as you do it. It may be obvious today, it’s just that it’s not easy to cannibalize your own business models. So that’s what’s so hard. You know, in financial services, it doesn’t lend itself to venture in the same way, because you need an appreciation for regulation in financial services. But I think it’s going to transform everything like your information, you’re seeing it now on your iPhone, where you now have privacy issues, that you can work so that on the iPhone, you can stop them from tracking you in some ways, Apple will still track you. But everyone else will not be able to your information, your health information should be tokenized. Right, you should then be able to share it with who you want and not your whole, your whole person should be tokenized, so that you could share in the economics that you allow Google to sell against. I think it’s just going to be I think that it will be transformative for a lot of and a lot of industries have already been transformed by… by this. I mean, when I think back to I launched in 1988. And I think about like 1991 and Netscape. And I could see the death of print. What I couldn’t see then in ’91, that was Netflix, and how it would change the way you view television. I mean, so much investment needed to be made. I think that these new rails will do to your money. That what the iPhone has done to your photography, it’s going to change your relationship with your own money over time. It will become more and more apparent over time, but it’ll be a slow build, because financial services don’t move as quickly as an information product. It’s your money. It has to be safe, it’s got to be secure. It has to be regulated has to have anti money laundering and know your customer fundamentals or foundations built into the products themselves. And all of that is being worked through right now with the regulator’s, but I am expecting that your money will change in the future. And that will change a lot of things, it will have a ripple effect, like the internet did on information. We’re seeing it potentially appear around your money, your assets.
Dan Weiskopf 50:31
So John, oh, you know, as we conclude this interview, and thank you again for doing it with me. You know, I think back beyond finance, what other industries are going to be changed by the blockchains?Because there’s going to be a lot of disruption. We know that. Can you think out of the box beyond finance and what other industries might be changed by blockchain?
Jonathan Steinberg 50:56
I think that there’s a high probability that medical technology, medical data could be transformed through it’s a very inefficient system today, not so dissimilar from financial services, that it’s a very fragmented, closed set of data, I think could benefit tremendously from the transparency of blockchain. So that might be an area that also benefits tremendously from blockchain in going forward, I think. But I gotta be honest, so many industries have been pushed already by technology. The one that’s really lagging is financial services. And really, that’s where my head is.
Dan Weiskopf 51:45
That’s fine. I totally, by the way, I totally agree with you. And as an example, I’m not sure why we can’t control our own healthcare records. And you know, and that would be perfect on the blockchain. So thank you for your time today. Definitely enjoyed catching up with you. And look forward to seeing your company evolve and just keep blocking and tackling.
Jonathan Steinberg 52:10
Thank you so much. It’s a pleasure to spend this time with you and thank you for including me. Have a great day.
Dan Weiskopf 52:17
Be well, bye.
Jonathan Steinberg 52:18
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