← How I Invest with David Weisburd
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- [00:00]
Dan Ives
I've always viewed valuation more as you have to look out three, five, seven years to ultimately think where you think the market's going.
- [00:10]
Host Introduction
Today's guest is one of the most influential tech analysts on the planet. Don Ives is the managing director and head of technology research at Wedbush Securities. And for the last 25 years, he's been the person the world turns to when they need to understand what, what's really happening in tech.
- [00:29]
Dan Ives
I Remember in late 2022 meeting with like a ton of engineers, you know, just part of the work that we do, talking about AI and where everything's headed. They obviously lead 22 yelling into an empty forest. Right. But I was convinced like this was going to be the beginning in terms of everything Nvidia was doing of the AI revolution. Microsoft does the OpenAI investment for 10 billion. And I think we put a note out where like the AI revolution's begun. My whole view is like, it's not just about big tech that was 23, 24. It's about who in software, who else in chips, the grid infrastructure.
- [01:16]
Dave
Dad, I've been excited to start. Welcome to the How Invest podcast.
- [01:20]
Dan Ives
I'm so excited to be here and thanks for having me.
- [01:22]
Dave
So you're one of the most well known Wall street analysts. You're famous for your calls on Microsoft, Nvidia, Palantir, and perhaps most notably being early on Tesla. Let's start there. So why are you bullish on Tesla today?
- [01:37]
Dan Ives
Well, I mean, today it's because my view, along with Nvidia, two of the best physical AI disruptive players in the world. Look, I've never viewed Tesla going back, you know, a decade as a car company. I always viewed everything Elon was doing was disruptive tech. And today, what I think about the AI revolution, I don't think there's a better play outside Nvidia. I'm thinking about the longer term AI vision, physical AI in terms of autonomous robotics than Tesla. And that's why I think it's 2 trillion and ultimately a $3 trillion market cap.
- [02:16]
Dave
Maybe a dumb question, but how is Tesla and AI planned? Maybe you could unpack that.
- [02:20]
Dan Ives
Yeah, I mean, to me, when it comes to true AI technology, I don't believe there's a better use case than autonomous. So I continue. It's my view that Tesla will dominate the autonomous world. You know, when I look out the next three, five, seven years, Robotax I think is just the start, but I think no one can match their scale and scope. And I think when it comes to miles driven and Ultimately really viewing Tesla as much more of a, of an ecosystem. That's how I've always viewed a 10 million cars out there. I don't think there's a better AI use case than what I think about what Tesla's going to do over the coming years. And look, and I just say the last decade, no, you know, and I've covered tech, what, 25 years, there's no more emotional bull bear story than Tesla and now it's about Musk proving it out.
- [03:20]
Dave
You have kind of an art approach to your valuation as well as the science and you kind of marry these better than almost anyone. How do you go about figuring out the intrinsic value of something like a Tesla? Is it a DCF analysis 10 years from now? Or just walk me through kind of your methodology.
- [03:36]
Dan Ives
I've always said, right, like if you focus just on one year PE or one year valuation, you missed every transformational tech stock the last 20 years. So there's no doubt, like I've always viewed valuation more as you have to look out three, five, seven years to ultimately think where you think the market's going to look. I mean, Tesla be a good example. Like it's my view that like 20% of automotive is going to be autonomous by the year 2030. So when you think about Tesla today, just forget deliveries quarter to quarter and what they're doing. I mean, I could argue that Tesla's revenue today will ultimately potentially be double when you look out over the next six, seven years relative to the opportunity. So when I look at EPS, can they do 12, 15, $20 of EPS power? Yeah. So I don't view it today as just a stock trading at XXX times next year earnings. It's my view, like what is robotics going to be? What is autonomous going to be? Look in Palantir has been a perfect example of that. Right. Like the haters hated it at 12, despise at 50, yelling from the mountaintops at 100. And I always say like, you know, the bears when they're in hibernation mode, and the Pinot Millars again, I like Pinot more, but they can't see AI in spreadsheets.
- [05:11]
Dave
One of the thought experiments that you told me is that you think about kind of freezing time, almost like private equity. You make the investment in Tesla today, you wake up in five years, what is it worth? Do you take kind of a private equity lens to it or how would you describe that?
- [05:25]
Dan Ives
Yeah, Dave, I think that's a great question. I think it's much more of that approach. That I've always taken, even though like, obviously a lot of investors, you know, over time have disagreed with it. Because it's my view, like let's say, let's say a company like Palantir that's going from a government big data play transforming to a commercial AI play, I don't think you could look at that in the next one, two years. You have to say, okay, their secret sauce, what are they building out? What's this going to look like in the next three, five, seven years? And that's always how I've looked at especially disruptive technology plays. And given where we are, we're in the biggest disruption fees in the last 40, 50 years in terms of AI revolution. And it's my view, like that's how you have to be able to look at these names.
- [06:21]
Dave
And easier said than done to kind of have this mental benchmark in your head of three to five years. Very hard to kind of survive the turbulence. How do you deal with the turbulence and basically surviving the ups and downs of the public markets?
- [06:36]
Dan Ives
I could go back to like my two worst years and 25 years, 08 and 2022. Right. In terms of like, you know, just given the macro and then the re environment. And I think it's very easy as an analyst to just throw in the white towel. It's easier to kind of go with the pack, not fight sometimes the trends, stocks are selling off against you. But Look, I've traveled 3 million air miles 25 years. An advantage that we've had is that just being around the globe, you have such a sense in terms of like what things look like in Taiwan, what customers are talking about in the Midwest, what are the technologies emerging? So it's my thesis that I've always built on is that like I'm going to do the work. And even if stocks might not be reacting at that time favorably or maybe even a quarter, right? Like we miss a quarter. Like the company didn't crush numbers, like maybe the stock, but our checks are telling us otherwise lives.
- [07:40]
Dave
But if you think about the market's kind of gaslighting you telling you that it's a bad stock, and then your customers are telling something else. So you have kind of almost this counterbalancing, constant feedback. You're, you're counterbalancing the market sentiment with kind of on the ground feedback.
- [07:54]
Dan Ives
Give you like a really good example. Like I Remember in late 2022 meeting with like a ton of engineers. You know, just part of the work that we do talking about AI and where everything's headed now. I'm thinking about week 22 yelling into an empty forest. Right. But I was convinced, like, this was going to be the beginning in terms of everything Nvidia was doing of the AI revolution. Microsoft does the OpenAI investment for 10 billion. Everyone's like, why would they do this is crazy. At that moment, we're like, and I think we put a note out where the AI revolution's begun. Than the emails that I got from institutional. Let's just say I wouldn't repeat them here. What are you talking about? Create this. But that's a good example, like the mark. Because I felt like the work that we did gave us confidence, that we basically put us, you know, almost like, you know, a stamp or sort of pole on the ground, saying, like, this is it. Things have changed.
- [09:01]
Dave
I think of mimetic and herd behavior, and I think of it as like, different herds. There's like a Silicon Valley herd where certain things are accepted, certain things are paradoxical. There's like a public markets herd. And for example, like, the public markets are much more later adopters. Right. It's just a different. So saying something when you're with your Silicon Valley friends could sound very different. Could get you more isolated than with your public friends.
- [09:26]
Dan Ives
Yeah. And then also I'd say, like, it's the. It's also the role that retail has played in this market. I think the way a lot of people on the institutional side have, like, missed, you know, I think a lot of these stocks is that they've been caught up in their echo chambers from New York to San Fran to Connecticut, and they've missed some of the underlying trends that are happening in memes. And, you know, whether it's Robinhood or Palantir, some of the Nvidia moves or whatever. I. I think it's a good example where you have to have a good understanding of sentiment, whether it's Singapore or meetings in Florida. And also it's the work that we do in the field. I remember Palantir was selling off, like, massive after a quarter. Maybe I'm just from like $30 to like 23. I'm just giving an example. Was selling about around that. Everyone's like, that's it. Stories I can learn from 12 to 30. This is it. But yet, like, the work that we were doing at boot camps for Palantir with customers, it was unlike anything I've seen, you know, relative to the demand. So that was a moment where everyone's like, is this it? People are downgrading the stock. You're like, no, this is. We might have like missed the core quarter. From a timing perspective, this is a table pounder moment.
- [10:53]
Dave
When we last chatted, you said that your alpha is are things that are not in the spreadsheets, which is very surprising for public companies. What exactly is not in the spreadsheets?
- [11:01]
Dan Ives
So as I'm talking to a customer and a year ago they were. They thought AI was hype. They weren't allocating budget. It's a cio. And today after doing a bunch of demos, that customer is like all in. And now maybe it's a 1 or 2 priority in their budget. That's 1.
- [11:25]
Plus500 Advertiser
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- [11:26]
Dan Ives
But that's important data. Like, that's showing what's happening in technology. So, like, if MongoDB misses a quarter and the stock's a disaster, but I'm hearing from customers and I'm in the work that we're doing at user conferences will realize that they have a unique mousetrap. Well, why would that not be just the opportunity rather than throw in the towel? And I'm saying, like on the. I think as an analyst in the south side, it's easier to just stay with the herd. Don't go against the grain. I've never dressed like that. I've never analyzed stocks like that. And I think that's been. Look, I think that's been part of our framework, right? Like part of our DNA. And also like, I've learned like the most from our failures too. Like, maybe like there have been stocks, like over time, like we were too early and then maybe lack the confidence. But yet at that time, that was a huge, momentous move opportunity. And I think I learned a lot of that, like, being so bullish and like, like what's like when Nadella came to Microsoft, you know, if you go back at the time, everyone's like, oh, Mike, they should have gotten like an outsider like Michael Dellums giving examples like, you know, Chambers, whoever it was, Nadella I always viewed as the Yoda. Like, he understood a Hyunjin time cloud better than anyone. But if you go back when he took over 14, it was like, okay, like it didn't at first hit. And there were maybe moments in there where we're like, okay, we're fully confident our vision, but maybe we're not going to pound the table. And. And that actually was the time to pound the table.
- [13:29]
Dave
You mentioned kind of how you dress and being outside of the herd. Is the dress a way for you to separate from the herd or are since you're separated from the herd. You dress differently. What is driving what?
- [13:40]
Dan Ives
It's kind of like I've always dressed funky, so that's always like been there. But I do think like my, it's like a little symbolism too. Like, because I'm not gonna like, I'm not gonna like go to the beat of like a typical drone. Like I'll dress different, I could care what others think. But it's just like the way that I call stocks. Investors that have followed me for decades understand who I. They understand the way that we analyze like just like our etf, right? They understand like how we pick stocks, why we pick stocks. And some could disagree, but I think over the years like we've proven out our success.
- [14:26]
Dave
I had Mike Maples, famous venture capitalist and one of the things he really focuses on, especially early on, is kind of finding your true believers and finding your early believers and not focusing on the people that don't believe in you. How do you operationalize? You seem to have operationalized this really good. How do you avoid the noise? How do you avoid conformity? And how do you find your early, early adopters? I guess two different questions.
- [14:49]
Dan Ives
Yeah, I mean like, look, it's like I found it like definitely on the institutional side, right? Like there's a lot of people that believed in me early, like you know, that were very influential, you know, on the institutional side. And that in those early days gave me like a lot of confidence. And then I think ultimately started to realize like haters hate and to some extent understand the opposite side, like understand the bear argument. Like I. That sounds like it's very important to me to engage in the opposite side to understand the differing view because actually it's helped me a lot and I think obviously with social and retail, it's one where it's kind of like I'm an open book. People love it, people hate it. But the way that we do things has been very clear in terms of our view of stocks, terms of staying long and strong, terms of our view of like just this, you know, basically 20 year tech bull market. My view of AI. So I don't, I just don't get caught up in like noise because it's also a confidence in like the work that we do.
- [16:13]
Dave
How do you know when you're wrong?
- [16:15]
Dan Ives
You know when you're wrong. More from when the thesis changes. Like when all of a sudden, like let's say like I'll give you example, it's like Adobe, like as being very bullish on Adobe over the, like I was a believer that Adobe was going to be able to like pivot and I was actually going to be like a talent for him and then basically like after like six, nine months a year, start to realize more and more from like customers and partners. Like that wasn't right. Like it was actually ops. Like I was going from like a tailwind to actual headwind. So. So that's a good example of recognizing like we are wrong maybe right obviously on the call, but on the AI piece wrong, admitting we are wrong and then ultimately taken out of our like, you know, our core AI index.
- [17:12]
Dave
Essentially a customer says something that breaks your frame of mind and then you start to build consensus on the bear case. You start to double click on the bear case.
- [17:20]
Dan Ives
And also it's like not being. I think it's easy too where like if you're, if you have a kid and your kid does something wrong, it's easy as a parent be like, oh, it's not my kid, it's the other kid. It's the parent, it's the coach. Sometimes you have to be like, okay, like yeah, like it's my kid. Like I. You got the ownership. And I think it's very easy with stocks. You can kind of like not listen to things that maybe go against the. Your thesis and rationalize them. And I think that's. I've gotten like a lot better over the years to understanding like that input and being like, hey, I gotta like this could be a red flag. Let me do more digging. Like, I think Oracle is an example like about like two years ago, like stocks going like a really rough spot. Like I spent like a two days basically just like at user conferences talking to customers. You know, it was one just to like solidify that my broader thesis, you know, was, was right at the, at the foundation. Even though the execution could be off from the time in perspective.
- [18:36]
Dave
I like the Andreessen horror was strong convictions loosely held. So it's this idea of having very strongly rooted theories but being willing to very quickly change them. And sometimes it just. Things change. A new CIO comes in, they change their strategy. It's not that you were quote unquote wrong, you were right at the time, but the, the, the thesis has changed.
- [18:53]
Dan Ives
Stocks don't lie. Sometimes it's like okay, like stocks telling you something, what is it telling you? And it's like looking and I'll be the first ones like are. If there was like a like almost kind of like a great way to like sort of symbol our career, it would be like great at picking this Inflection point. Great at riding it. But probably our fault is, like, not calling the top right. Like, it was like staying on too long. And I think that was maybe like the thesis. Like, you know, there's many times on names where, like, we've kind of gone like this stay on, okay. Then eventually, like, you know, you're right. But, like, it's hard when you're like, on this part where it's almost like you're like, okay, I should have, like, I. I should have gotten more cautious. Should. And I think that's something where it's always hard to see that. That inflection and that's something that, like, you know, we probably spend like, a lot more time trying to find that to make sure that we're not missing something and staying on stores too long.
- [20:12]
Dave
You've been doing this for decades. Have you ever had a situation where the company became more profitable, more intrinsically valuable, and the market just never caught up to it?
- [20:21]
Dan Ives
Yeah, I mean, I think there are and there like a lot of. But I think a lot of those examples were companies that ultimately ended up getting acquired by, like, private equity. I got like, Sail Point.
- [20:34]
Dave
Or they may not have intrinsic value in public markets, but they still have intrinsic value.
- [20:38]
Dan Ives
Most of those examples were coming is like they got bought. And it was almost like the public market never recognized it, whether it was like the managing team or the consistent execution or whatever. And then a lot of those companies ended up, like, getting acquired, either private equity or strategic. I think that's usually how that's played out now. Like, there have been some, like. I think Oracle is a good example where like that was happening. I felt like a year ago, but it took the market time to catch up. Like, Oracle would be a good example where those dynamics were happening a year ago, nine months ago. But only in this last six months is it truly caught up. Like another good example, let's say it'd be like, Google, like, look, I'm of you. Like, anytime someone says, like, this lawsuit, this antitrust, this breakup, I'll always take, like, if we were betting, I always take like the over. Like, I always bet. I always bet, like, this is gonna be a lot better than the fear. So Google was a good example. It was a search. It's gonna kill, you know, AI done with search, the doj. It's gonna get broken up. Like New York City cab drivers bearish in the stock. But that was an example. I see what's happened in terms of Google Cloud. I see everything Kurian's doing I see salespeople going from company X and Y. So that was one where it was like, hey, okay, we're not right, we're not right stocks telling you something like salesforce investors like, you're wrong, you're wrong and it happens.
- [22:32]
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- [23:30]
Dave
There's a famous John Maynard Keynes quote. Markets can remain irrational longer than you could remain solvent. And for somebody trying to operationalize being bullish on a single stock, what would your advice be to him or her in terms of the sizing? Because if you do size it too much, it becomes difficult to execute. So any guidance on sizing and how do you build a portfolio of these positions?
- [23:53]
Dan Ives
Yeah, I feel like it's almost like let's say if conviction level scale 110 and let's say by definition if you're bullish, you're always going to be a conviction level like 8 to 10. When you're like an 8, 8.5, you're scaling, it's still like toe in the water. Toe in the water. But when it inflects from like an 8.5 to like in the nines, that's where you scale up. Like it's almost like, because I do think you're exactly right. Like it's so it's easy where you can be like right but your timing was wrong and that and three bucks get your coffee. So it's almost like trying to figure out like when it inflects and just that's like there's those Are the moments to me where like the conviction level, it's. I think that's where you and the.
- [24:48]
Dave
Conviction and flex, not the stock exactly.
- [24:52]
Dan Ives
Almost separate from the stock.
- [24:53]
Dave
It's like you're not trying to. And you're not saying that you, you could pick inflection points in the stock. You're saying you know how to position yourself so that when there's a, I guess, catalystic, that's exactly.
- [25:04]
Dan Ives
And now you might be like, when that happens at first, like, stock might go the wrong way, but I'm fine with it because like you, you have conviction now. And that conviction could be from like the, like you're seeing more companies go for like the stack that the company that this software company sell with or people are lining up for chip demand that maybe hasn't been reflected so much in numbers. Like, that would be a good example of Nvidia in like late 22 or early 23. Sometimes it's very easy. Like, the stock could go against you based on like macro, whatever it may be. But if your work tells you that's where it's like you and look and you're betting on yourself at the end.
- [25:52]
Dave
Of the day, you travel the world, you talk to many of the buyers. Are you ever having the buyers actually point you to a new stock that you might have never heard of?
- [26:02]
Dan Ives
All the time. Like, it would be like, there's been a lot of companies where maybe like they weren't even on my radar, but they're coming up like in Bake Offs, I'm like, what? They're coming, like, there's an example, let's say Innodata, small cap, best software company in New Jersey stocks, no one cares. But then all of a sudden, a lot of these AI, I'm hearing about them a lot. Like in a lot of these AI deployments no one cared about. And that was a good example. We started covering the stock and that's been one of our core, probably one of our best calls over the last forever six months. I think that's also where, like talking to so many people, whether it's investors, customers, partners, and traveling a lot, I think that helps you. It's very easy to like, be in your own, like, echo chamber. And I think that's. That sometimes, like, I think that could be like a big negative.
- [27:15]
Dave
There's this weird psychological phenomenon where you learn something and blows your mind and then your brain convinces you that now you know everything about the topic. So you're just constantly getting, getting updates to your brain in ways that are very kind of non, non linear. And then you still think that now you know everything. So there's, there's this bias that human beings have that they know everything.
- [27:34]
Dan Ives
You don't know what you don't know. Like, I always view myself as like, I never have like hubris. Like I, I just, I'm always trying to like learn, right? So it's like to me that is, I think, I think that's one of the keys too. And it's just trying to like learn about different things that maybe you know, would just increase your ability to better understand the markets one way or another.
- [28:04]
Dave
Last time we chatted, you said that you make yourself a conduit of information. What does that mean?
- [28:09]
Dan Ives
As a conduit of information? We view ourselves as almost like very intertwined globally with investor feedback. And I think that's a big part of our value. Right? Like when I'm marketing, no matter where it is, investors, like, what's the sentiment on stock X? Why do you think a lot of people are bullish into year end? What about valuation? What are people talking about? And I think cognitive information is like a big, it's a big role you play as an analyst.
- [28:44]
Dave
I kind of look at it as information bartering. We have conversations every day, three to four LPs, GBS, they're telling us information all the time. We're telling them market information. And it's kind of like this positive sum. As long as you have information to give and as long as you're giving, kind of at the margin, more people will start feeding information. Now you have more information to give to the market.
- [29:03]
Dan Ives
And also part of it is like that. And also like I'm very active and social, right? Like in other words, like in terms like social media speak at a lot of conferences. Like I'm, you know, just by traveling, I feel like you have a lot, you're meeting like new people all the time, different perspectives. And I think like that's helped us.
- [29:28]
Dave
Marc Andreessen recently said that the top public investors that he knows look at public stocks as having power law type aspects. So power law is when your entire, you have a portfolio of 10, one of them returns more than everybody combined to an order of magnitude. That was a little surprising to me. But if you look at Amazon's returns since IPOs and the thousands of Xs and Google, Microsoft, are there still power law returns in the public markets today? Or is this kind of a thing of the 90s and 2000s more today.
- [30:05]
Dan Ives
Because of what's happened with the AI revolution. And I think how a lot of investors are maybe not even seeing the second, third, fourth derivatives that are happening. I mean I go, that's a whole part of our etf. Like my whole view is like it's not just about big tech that was 23, 24. It's about who in software, who else in chips, the grid infrastructure. And a lot of times I'm looking for names, being like okay, could this stock outperform? And then there's the rare names where you're like okay, no one cares about this. And I think this thing could be a four bagger, a five. Like I feel like sometimes you know, when you feel like you uncover some of those. And what I love is like when sentiment is like so negative and you feel like, you know, you feel like you've like stumbled onto something.
- [31:12]
Dave
It's quite common, especially smart or among smart people to think of second order effects. So you have, you now need AI, so now you need to build these data centers. Few investors actually think of third level third order effects and kind of even just it's only two derivations out. But for whatever reason investors don't think about that or it's, it's not commonplace.
- [31:33]
Dan Ives
But it's even like G Vernova like on as like a power play. Okay, like that's in our like Ives AI 30 like Nebasis which is an infrastructure play there. Like Aqua, which is a nuclear play there. But David, this is a good example. Like okay, it's like I'm not talking about like we're talking about football, not the cookie cutter for 15 scripted plays. What are those? Like moonshot play. And it's trying to sometimes see where the market is going that maybe at the time investors don't see. Like maybe even like if we're in a market now, everyone's like Nvidia open AI. Like is this a bubble? Like does this remind you of think you know, froth like maybe risk off in the near term, whatever side view it differently. For me it's like if someone covered tech stocks in 90s, I compare it dramatically different relative to the use cases, the spending and everything I see and I view times like when there's like sell offs as maybe just times just further my conviction in, you know, in, in in tech names that I think are mispriced. My, my reputation's been built. Not when stocks go from here to here, dude. Like in that my Shih Tzu or terrier could be the genius. It's when stocks are going like this and everyone's jumping ship and you're like, these are the opportunities.
- [33:18]
Dave
Do you judge yourself kind of as a venture capitalist would, based on your big outliers, or are you kind of looking at your hit rate?
- [33:26]
Dan Ives
It's a combo. It's my hit rate, but also a lot of times it's like my outliers. Like, my moonshots. Like, was I right? Like, and I take it very personally in terms of what I'm doing. Like, when I'm in an airport and some random person comes up to me and they're like, thank you so much. Because you invest in this. Or if I'm in Europe and someone's like, my grandpa invests in. See, I view it much more like, personally, this is not like, client and just numbers and whatever money you make or whatever. I take it much more personally because people are putting their confidence in me, and I take that as a very heavy weight beyond just like a job.
- [34:16]
Dave
Why is investing in the public markets like batting.300 in baseball?
- [34:21]
Dan Ives
It's hard to outperform the alpha. And the information flow is so hard to find things on the edges. So when you think about, like, batting.300, you. And ultimately about 300 over a career with some other stature in Cooperstown. Because I think it's about information flow. Like, I think it's just like, harder and harder to distinguish, differentiate. And also the timing of things, especially in a market, has become so global. Right? Like, I mean, today, by statement, today already, I've talked to investors from Korea, Middle East, New York, California, South America.
- [35:06]
Dave
One of the keys to your success is you believe you could push buttons on a stock. And you said that you could push buttons on Tesla. What does that mean? How does that help you generate returns?
- [35:16]
Dan Ives
Tesla is one where I feel like when you. When you have a big following on a name, I feel like you can, you can help. You can help change narrative. And I think Tesla is one where, like, it's very important to, like, make sure the narrative is right. Because I think as an investor, it's very easy. Just as an example, like, if you look at the last year. So let's just say, like, you looked at Tesla's numbers, so all you know is just their quarter, what they report and what street numbers have done. You'd right now think Tesla stocks 200 bucks, but instead it's whatever, 430. Because it's about the narrative. It's about this. The focus on Tesla is about the future. Back autonomous robotics and really then become much more of an AI play over the Coming years. We view ourselves as very important in a lot of these games in terms of measure the narratives. Right. Because I believe that's where the growth is. And I think it's very easy where a lot of names become very combative. You have a thesis and you have a mouthpiece and you have to be clear about that. I mean, look at Palantir as an example, right? Like the last 180 hour, whatever, $170 of the stock move. People have just fought it every time, valuation, whatever. Maybe it's a services company and they just. And that's created the opportunity.
- [37:13]
Dave
When you say push buttons, you're able to contribute to the public discussion on the stock. You're able to influence the board. What do you mean exactly?
- [37:22]
Dan Ives
Yeah, like, let's say like, like from a board perspective. Like I felt like the board needed to get a new pay package to Musk. I think there was also a groundswell among a lot of investors I was talking about. So we put out basically like a three point note to the board what they need to do in Musk. Now again, like, I think that message was well received. The board ended up, you know, whatever a month ago doing that stuff. But that was a good example. Like that was an overhang in the stock. Like Musk needs to be with Tesla, he needs a new package. He needs to get 25% ownership. Investors want more X AI and they want that ownership. So also it's like it's playing a role in that way. Like it's trying to like lay out what ultimately I believe is important. Not for me, but for the story.
- [38:19]
Dave
You mentioned Palantir. I was invested five years before I went public. I had to sell via lockup because of our provisions. But you were right on Palantir. And specifically I just want to go back because oftentimes people change the narrative in retrospect.
- [38:33]
Dan Ives
Oh, I know, yeah.
- [38:35]
Dave
At the time everyone was saying it's not great because consulting, it's masquerading around as a tech company. What did you see that other people.
- [38:44]
Dan Ives
Didn'T see, first of all? And I started off like messy of AI, whatever it was like 12 or $15, $13. Well, first of all, it was my idea of cartoon. Like I'm also a believer, whether it's seller microstrategy or strategy or the Dell at Microsoft or Carp. I think you're betting on the leaders like you're bet on Jensen Nvidia. So I'm a huge fan, huge believer in everything Carp is doing.
- [39:12]
Dave
Is that also not, not, not in the spreadsheets, the leadership is essential. There's no line item, right?
- [39:20]
Dan Ives
Like amd, I would take this past year, amd, it's a disaster. Dude, Lisa sue, if she's flying an airplane, I'm in three a drink in a cab, feeling really good. So then there's other managing teams that I would sprint like Usain Bolt away from that stock. They're so bad. So I do think that's something that you have to have a very good sense for, like which management teams to better Proof point. Okay. Like Gary Steele. I remember when I met Gary Steele. Proof point, like this guy's hall of famer. Like he might be the best CEO of a small cap manager I've ever seen. Proofpoint ended up becoming like a 40 bag or whatever. But it was betting on garage too. And now he's at Splunk. I do think that that's important.
- [40:13]
Dave
One of the most mispriced things in the public markets is founder led companies. Because there's this three month quarterly reporting. Now the they're trying to change that to every six months. But this disconnect between playing for a quarter and playing for eternity or forever long, the founder's alive, it seems like it's not priced in. Is there any credence to that?
- [40:36]
Dan Ives
Yeah. And also I think founder led, like CEO, you know, there's, there's all differing views, right? Like sometimes like you need maybe other management to come in and they could go to chairman or whatever because they could actually lead it. Other times, you know, they're the ones to actually lead the vision. I always think sometimes like companies get to a certain scale. Especially a lot of times, like when companies go from like 500 million to a billion, even software, that's like a huge whip. And there's a lot of manager teams where like, okay, you know what, they were great to get them there. Now it's like it's time to hand over the reins, right? So but that's why not in the spreadsheets? Like I think that is something I think in this job having like EQ is as or more important than iq. I don't know how much it's innate, you're born with it or taught. But sometimes it's like sitting down with individuals being like, is this someone I want to bet on or not? And I do think like some of like the best investors, they have just their genius level eq.
- [41:59]
Dave
So another way the IQ is in the spreadsheet or the numbers are there. The EQ is almost inherently not in.
- [42:06]
Dan Ives
The spreadsheet that's like, that's like a really, really important thing that I think gets like overlooked very often people will.
- [42:15]
Dave
Fact check me but I believe the first time that there were super voting shares and these founder class was Google when it went public. Now Alphabet, I think Mark Zuckerberg has since done that. Obviously Elon has a lot of control. Do you think net net that's a good thing and how is this kind of 20 year experiment played out?
- [42:34]
Dan Ives
I think it's, I actually think it's a great thing for those companies. Like in other words like I could say sellers done very similar things in microstrategy. Like that's another because look, it's like you're betting on that pilot to fly the plane. If you get too caught up, investor boards rip quarter, quarter, make some missteps rep. So I do think like in order to have like a wartime CEO like a Zuck or a Musk or you know, a Sal or I, I do think you need that because I think it's very easy to get caught up in gyration boards and other investors.
- [43:17]
Dave
It's like an insurance against an activist short term takeover. So set it said another way. And it's not only that activists can't come in, it's that the team knows that activists can't come in so therefore they could plan for the long term.
- [43:29]
Dan Ives
I think that's right and I think like, like if you look like what Zuck's done with Meta, go back to like Metaverse, that disaster quarter in October stocks, 85 bucks, whatever. It's like it would have been very easy to like should we change course and then what does he bam bam bam change course in the rest history.
- [43:54]
Dave
It's very easy to criticize Zuckerberg, but he has been managing Facebook truly and Meta truly like a startup. What does that mean? Taking large big bets in every cycle knowing that maybe 50% or maybe even 1/3 of them will play out. But if similar to the recent bet on AI if that that winner is going to be kind of a power loss. So he's like, he's like investing 100 or $200 billion almost on a venture like bet, which is extremely bold and I think rationally is the right thing to do. Even though many the first couple of times you'll be wrong and everybody will ridicule you and then on the third you'll be a genius.
- [44:33]
Dan Ives
Exactly. But then if you don't have that structure, it's hard to do that.
- [44:39]
Dave
If you could go back to 1996, when Dan Ives graduated Penn State. What would be one piece of timeless advice you would give yourself to either accelerate your career or avoid some of those stakes.
- [44:54]
Dan Ives
There were a lot of times earlier in my career where like whether it was like not getting jobs or maybe even at jobs, like you know, different failures where it was very easy to like let that get you down, you get caught up in it. The thing that I would tell like myself back then would be embrace the failures, let them make you better. And, and, and it's belief in yourself. Like it's just like all the success that you've had, right? Like I'm sure like if you went back like 20 years and showed what you're doing now, you're like whoa. But part of it is that like it's a learned behavior. And I think for me it's like once the ones like the bell went off or be like look, stop like getting focused on like new failures you've had and let them get you down because it's a true story. I'm at FBR like you know, in Freedom, Billings, Ramsey, you know, that was a core part of my career. I remember I initially I initiate on three companies and I'm like so excited. Like you know, it's like maybe it's like 2002 or something like that. And three companies in the next three weeks they all go down 50% and they, they were all byroid. And I remember I'm sitting there stuck in like Pittsburgh Airport on a Friday night and I'm think, I'm thinking like what am I going to do for my next career? You know, I mean because like disaster blow ups my head of sals the time John Billings calls me and he's like you're, you're going to let this conviction just go? Who cares if the stocks were and they all pre announced negative. So if you have conviction, that's what makes you. And he was like a Vince Lombardi type speech that weekend. Like I wrote this like crazy piece. Like this is like temporary. These companies get bought. It's like you know, just confidence in the thesis. And actually over the next like I think nine months all those companies got bought and they became like all of them were like four or five baggers. But that was like a defining moment in my career where it's like just stop, like stop feeling sorry for yourself if you're wrong and, and just have conviction yourself.
- [47:31]
Dave
It's not just the failures, it's having people around you that interpret the failures in a certain way. The Zucker example is actually pretty interesting one because he essentially tarnished his reputation for 5, 6 years even though he had made the right probabilistic bet in order to do what's right for, for Meta. And if he had been around people that were very herd like or insecure, they may have said, well, you've made these two wrong bets. Don't do the third one. But who you're surrounded with is as important as your own mental state.
- [48:02]
Dan Ives
And for me, just being on Wall Street 25 years, like there's like thousands and thousands, like they just like, you know, they disappear like, you know, like the wind or whatever, right? So it's like I've been lucky that like I like you know, an FBR and then like a web that I always like work to places where like they understood who I was and they gave me that time for the calls to play out. But maybe if I was like a different firms that didn't have, they didn't understand like this funky dresser and like, you know, they just looks at stocks differently or whatever, then maybe like, you know, like it never would have, never would have worked, right?
- [48:46]
Dave
Is there something in your childhood or background that allows you to be kind of out of the herd and eccentric?
- [48:54]
Dan Ives
Part of it is like my dad always said, like, people are always gonna be better looking, wealthier and smarter. Just accept it. Like there were certain things like growing up in like Long island in the 80s, right? It was just like, I think that was like a great place to grow up and just like living like in my household, it was one where it was like, just be your own self. So I think that was like a big thing where like it rooted back to like those days.
- [49:25]
Dave
What would you like the audience to know about you? Wedbush or anything else you'd like to share?
- [49:29]
Dan Ives
Wedbush, obviously, you know, doing great things from a tech perspective in terms of AI, you know, we have our odds etf, which is, we've been super excited about launch in June options and really good because that gives investors the opportunity to basically better AI. And then, you know, very similar to the theme. We recently became chairman of Orbs, you know, a company which is a company that's really focused on Sam Altman's world. You know, I think Sam's going to be a great partner. Everything he's done, I think there's going to be a single sign on for the AI future. You know, I think authentication is going to be more and more important in terms of human proof. And look for people that know me, I do A lot of different things, including mine may be a little different, but it's all centered around the AI Revolution. It's my passion for where that's heading.
- [50:17]
Dave
A mutual friend told me to ask you about Snow Milk and your clothing. Tell me about that.
- [50:22]
Dan Ives
So Snow Milk, you know, an awesome designer in Williamsburg, Brooklyn. They came to me and wanted to do a collab. So we did a Dan ives collab with dan ivesclothing.com and look, this is something where I have so many people, and these are for men, women, for whoever. Different colors, funky designs. We start off with shirts. We're gonna go in sweatshirts and hats. It's been great working with them. And the demands are really. It's been. Yeah, obviously go a lot higher than I ever thought.
- [50:54]
Dave
Well, Dan, you're truly a one of one. I've never met anybody like you, and I'm so lucky to have spent time and looking forward to continuing this conversation.
- [51:03]
Dan Ives
No, I'm just happy that you invited me and all the success that you've had, and it's just great to be on here.
- [51:09]
Dave
Thank you, Dan. That's it for today's episode of How I Invest. If this conversation gave you new insights or ideas, do me a quick favor. Share with one person in your network who'd find it valuable or leave a short review wherever you listen. This helps more investors discover the show and keeps us bringing you these conversations week after week.
- [51:25]
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