Why Some Wealthy Investors Are Sitting On Their Wallets
At a conference in
Orlando I met older, wealthier people who are waiting for the second coming of
Trump. They want to turn back the investment clock, too. Unless it's
healthcare, there's not much of an appetite for technology funding--and not
much funding for their kids, either.
BY HOWARD
TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH
INVESTORS@HOWARDTULLMAN1
It’s illuminating, and
highly recommended, to take a step or two out of your own financial,
educational, media and societal bubble and subject yourself (with as much of an
open mind as you can muster) to a radically different environment for a couple
of days. I just returned from speaking at The MoneyShow Orlando, a major annual
financial conference, which is held a few miles from Disney, and which was just
as insular, hyper-hygienic and self-referential as the Magic Kingdom itself.
Hundreds of financial speakers, industry presenters, investment advisors, media
personalities, and independent investors from dozens of states gathered for
several days of lectures, pitches, seminars, and conversations about the state
of the world, the economy, their own finances and portfolios, and the future.
Suffice it to say, the
overwhelming vision of the current state of affairs is bleak. They long for the
golden days of Trump when they believe the world was rosy. Universal could make
a bundle showing screenings of Back to the Future all day
long. More importantly, their views are set in concrete and utterly impervious
to debate or even discussion. It was a whole lot of “my way or the highway” and
most of these men and women were a long way down the road and unlikely to
change direction.
TO ARGUE WITH A PERSON WHO HAS RENOUNCED THE USE OF REASON
IS LIKE ADMINISTERING MEDICINE TO THE DEAD.
THOMAS PAINE
Meeting and chatting
with all manner of industry and financial “experts,” watching dozens of
presentations loaded with figures, charts, projections, and warnings, and
witnessing surveys, and other polls which reflected astonishing levels of
unanimity was an extreme, invaluable, and eye-opening experience as well as a
bubble-burster.
Until you get out
into other parts of the world, you just have no idea of how deeply, sincerely,
and unalterably certain ideas, beliefs and political positions are held. And,
much more importantly, how they impact these folks’ lives and investment decisions.
Plenty of gold hoarders, but nary a substantial bitcoin player in the bunch. My
sense is that they remembered the dot.com debacles all too well and steered
clear of crypto.00:000
Talking to these
audiences about the exciting prospects of innovation, new technologies, and the
rapid onset of radical, unavoidable, change was a lot like offering them
cancer. “Clean” anything is a dirty word; climate is the reason they live in the
South, and, if it’s okay with you, they’d just as soon see things continue
along as is - at least until they’re gone. It feels a lot like King Louis XV in
France in the late 1700’s, who purportedly said “Après moi, le deluge.”
After me, the flood.
What’s especially
clear and I think misunderstood by the media is that a substantial number of
the actions these people take and the political ideas and individuals they
choose to support are not driven by their current economic situation. They’re very
happy with what they’ve got, they’re not that excited about sharing it, and
they certainly don’t want it taken away. None of these attendees was in any
kind of dire straits although there was persistent angst (not to say fear)
about what may be coming down the pike. The vast majority of the conversations
were about capital preservation rather than appreciation -- defensive in
nature. The stink of statis could be matched only by the smell of the
omnipresent hand sanitizer dispensers.
What this means
for entrepreneurs, new business builders, change agents and even venture
capitalists isn’t totally clear, but it’s obviously not good news when millions
of independent and formerly active investors - sitting on substantial accumulations
of post-Covid capital - are also basically sitting on their hands. They’re out
of the market, waiting for a savior to show up and turn the clock back a decade
or two.
Extrapolating my
admittedly small sample size to the population is easier than you’d imagine
when you see the amazing extent to which ALL of the channels, media and
information directed at this crowd are aggressively supportive of a single dark
vision of the economy, politics and the future in the absence of a pervasive
political change. More than a third of the vendors in the exhibit space were
hawking books, newsletters, subscriptions to podcasts, and other advisory
resources and the messaging was remarkably uniform. A strong mix of Chicken
Little and Armageddon.
We’re going to
need to revise and reform our storytelling and pitches if we want to have any
chance at all of reaching and attracting these investors. Here are the areas of
appetite and interest that seemed to get through to the crowd. As I often say,
if they’re not listening, it doesn’t matter what you’re saying or selling.
1. Health care change is
hot.
Not simply because
they’re older or because it’s a growing part of their day-to-day lives, but
because: (a) they know the system is broken; and (b) they are interested in
taking a much more active role in managing their own health and health care. 2
out of every 5 adults in the U.S. are already using a health care app and/or
device on a daily basis. I couldn’t say enough about the Apple watch and the
idea of being proactive rather than reactive in respect of our health.
Interestingly, there’s a perceived difference and a comfort here between
innovation (fast and bad) and “long overdue” fixes (good and reassuringly
slow).
2. Privacy is a prime
concern.
Not because they’re
overly concerned about their own privacy - most of them understood that that
boat had already sailed. They just didn’t want to be scammed, hacked, or have
their identities or funds stolen. The real concern about privacy is how it was going
to impact their investments in Google and Facebook. Unlike Amazon, Apple and
Microsoft, Google and Facebook continue to live on ad revenue based on invading
our privacy, but the government (and 41 states especially) are finally waking
up to the risks and the problem. In an upcoming hyper-political year, attacking
the lowest hanging fruit in Big Tech as evildoers killing our kids is a no
brainer for the lazy legislators in Washington. Can’t be good news for Zuck or
Sundar or their stockholders.
3. Time
and Step Savers are Good Stories.
Time is the scarcest
resource in our lives and far more valuable than money in many ways. Ease of
use and access, convenience and simplicity, and increased productivity along
with better decision making are all simple and well-understood stories to tell and
sell. Make it easy for me and you own me.
4. They
Really Don’t Care about Junior.
Whether it’s entirely
accurate or not, to a person, these folks believed that they worked hard and
earned their good fortune and wealth. And they’re convinced that - by and large
- their kids don’t get it, that they have a lousy work ethic, and that they’re
way too entitled for their own good. I was struck by how many of the attendees
literally used this rationale to explain why they were living it up now,
enjoying their money while they could, and not really all that concerned about
passing their fortunes on to their offspring. As Covid-19 finally recedes,
expect a boom in experiences, services and adventures as opposed to hard goods
and property.
They know that you can’t
take it with you and that shrouds have no pockets.
