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We couldn't have started it as successfully today as we did in a bear market. That's a lesson. Always start your business in a recession or a bear market. It's true. It's the It's It's usually a very good time. AI and robotics are going to destroy so many jobs. This is going to be a very destructive force.
Sure, there are going to be dislocations. I think what's going to work in this new world is biotechnology. Those 14 different technologies that are converging. So, very collaborative. Cathy Wood begins by challenging the common assumption that strong bull markets are born from optimism. In reality, she argues, the most durable market expansions often emerge during periods of intense skepticism when investors are climbing what Wall Street calls the wall of wor.
Personally, as an investor, I much prefer this kind of an environment where there's a lot of controversy, a lot of angst. In the public equity markets, this kind of period we call the wall of worry because you notice the market's going to all-time highs. So, this is a wall of worry. These are the most robust and durable bull markets.
The '90s just, you know, straight up and not looking back, no worries at all. Those are very dangerous. But, it does seem like the premise is AI and robotics are going to destroy so many jobs. This is going to be a very destructive force. And we think that sure, there are going to be dislocations and people who have wrote jobs or jobs, you know, that are that are you know, we would call them well, [clears throat] they're they're monotonous, let's say.
Those are going to go away. But, what's so interesting about this period is that because of generative AI, these people who can't get jobs, and it is true, this I will give him. It is true that ages 16 to 24 years old, that unemployment rate has moved into the double digits. So, I would say the entry-level jobs are being subsumed by by AI.
So, what I tell young people, and I think this is going to be the most exciting entrepreneurial explosion in history. Now that we're talking about generative AI, and it's all about natural language, and we can speak that. We can do that. We can vibe code. We can get a lot of help from ChatGPT or Claude, Cursor, Replit,
and we can actually create our own businesses. So, my my advice is the average duration of unemployment today is 6 months. So, okay, fine. Keep looking for the job, but why don't you try and figure out a solution to a problem you have that frustrates you that you think AI can help. And if it frustrates you, it probably frustrates a lot of people.
Create a business. Just try it out. And the reason you really want to do that is anyone looking for a job now just they have to devour AI in all kinds of ways, using it, understanding it, taking a point of view of where it's taking us because those are the people who are going to become very valuable in terms of entering, if they decide to enter big corporations and not start their own jobs, their own businesses, they'll be very valuable with that skill set in in a company.
Recognizing the magnitude of these technological shifts, Wood and her team launched a venture investment strategy designed to provide broader access to emerging innovation. The initiative was partly inspired by feedback from younger investors who were eager to participate in early-stage technology companies, but lacked the accreditation typically required for venture capital funds.
So, 3 years ago, we did start a venture fund, and we our venture fund came out of a request from our clients, many of whom are very young, too too young often to be accredited and to qualify for you know, to get into venture capital funds. And so, we thought, well, why why can't we start one? And and the same analysts who do public do private.
I think that's critically important. And the same analysts collaborate with one another. So, we set about, you know, doing this in a retail wrapper. It's called an interval fund. Anyone with $500 can get direct to cap exposure to SpaceX, Anthropic, OpenAI, Neuralink, XAI, Epic. I mean, just, you know, the the the great companies.
Replit, you know, The index of the future. Yeah, yeah. So, and it was daunting in the beginning, and we were a little fearful thinking, wow, what is our calling card here? You know, this is a a market where there are where networks, communication networks really matter. And uh And so, we we basically used our big ideas, big ideas we started in 2017.
And we we actually went the other direction cuz in the beginning, we only had 12 our earliest checks cuz we started with very little seed, just employees. So, the first checks were $25,000. How could we get on the cap table? That's how Well, we were in a bear market for everything, innovation broadly.
The This was '22, late '22, just the markets had trashed innovation. M&A had stopped and was going to get even worse. So, we went to founders. We just and we used our research saying, "You're on our wish list. Here Here's some of our research." Well, the odds were very high, we learned. They already knew who we were.
And very often, they were using some of our big ideas in their pitch decks cuz what we were doing is sizing markets, trying to help people understand how big these markets are going to be, and how quickly they're going to evolve. And again, we were in the the markets were in such tough shape, the founders wanted to talk to someone positive.
And so, that's how it was really great timing, and we were able to talk to most founders. We we would go to them and say, "You're on our wish list. Here are our big ideas." And we got on to almost every cap table directly, which today, given how different the environment is and how there's just a race for capital into all of these companies, we we couldn't have We couldn't have started it as successfully today as we did in a bear market.
That's a lesson. Always start your business in a recession or a bear market. It's true. It's the It's It's usually a very good time. So, what's interesting is our calling card today is a little different because we are so close to retail. I mean, we have $30 million of in our in our public market strategies.
And because these these founders and companies want to have a broader exposure in terms of an investor base out there, want to see that appetite, they are more interested now in having us in their later-stage deals, which is which is great. Now, you know that SpaceX and XAI are probably going public.
Now, we did not hear this from anyone internal to either of those companies, but it it does seem like there's some fear about these midterm elections kind of causing, you know, problems again for the private markets, M&A, and all of that. And so, maybe some deals are going to be accelerated because we are getting a lot of inquiries, you know, saying, "We We We have a strategy.
We want to get out." And you know, I should have, but maybe it is connected to the midterm. I don't know, but I I we're seeing a lot of activity that way. One of Wood's most persistent critiques of traditional finance is that research structures within large institutions are often organized around outdated industry classifications.
Analysts are typically assigned to sectors such as consumer goods, health care, or energy, which can obscure the true nature of disruptive innovation. One of the reasons I did start ARK is I saw an unmet need. What was that? The traditional financial world was going passive or benchmark sensitive, which to me is almost the same thing.
And by the way, that is going to be completely destroyed by by AI. It's much cheaper to do this with a machine. But, what I thought was unfortunate about that is we lost a lot of research on innovation. And you know, a lot of these companies in the broad-based benchmarks, those at the top are there because of past success.
If there is the kind of disruptive innovation that we see today coming out of five major platforms, so robotics, energy storage, AI most importantly, . So, those are five platforms. They have They involve 14 different technologies. And these technologies are converging. I felt that the seeds that had been germinating were going to flourish, and I felt we wanted to be a pure play on that.
I didn't want to have to follow General Mills or Exxon, just a pure play, just many people would say it's a narrow focus, but I actually think this is the way the world is going to work, and our so-called niche strategy will turn out to be a core strategy out there somewhere. The reason the traditional world is going to have a little trouble with this is they're not research is not organized correctly.
It's very siloed by sector or industry or sub-industry. So, five consumer analysts, five health care analysts. I don' the cars will be electric and then of course the we had no idea how much more important energy energy storage would become with the data center boom, but so robots energy storage and AI they'd be powered by AI.
In a traditional firm, that was an auto analyst who knew a heck of a lot about the internal combustion engine and human driving. But that person or that research director did not define Tesla correctly. I think we're going to find a lot of examples of that as these technologies converge. Two years ago, I believe it was two years ago, we basically showed the tech stack, so the three parts of the tech stack, so infrastructure, so chips and data centers, that's one.
Platform [snorts] as a service, think Palantir, that's another. And then applications, SAS an important one, that's the third. And you could see in the last five years versus the five years prior that and this is subtle, but it was very important that incremental growth, while they were all growing quickly, the incremental growth was going to the platform even more than the infrastructure, right?
And that's why Palantir surprised enormously. Many people thought Palantir was a consultant, not a software company. So again, defining the companies correctly and understanding how the tech stack is moving over time. So, we had moved away from SAS. I won't tell you we were completely out of it. We thought some companies weren't as much SAS as they probably are.
So, you know, we made our own mistakes, but we were we were basically out of SAS, and that was kind of easy to see if you were thinking about, well, why is the incremental growth? Just asking these questions as opposed to looking at an index and, you know, saying, this piece of news in the next few months is probably going to lean to, as you say, Apple's strengths and another one's weaknesses, I'll shade it by 10 20 basis points.
By the way, I don't think that's investing at all. Yes. it's a gross misallocation of capital, but I shouldn't really say that. I'm in friendly territory, I I think here. I I do think it is. However, you know, I I think that the indexes, because of how rapidly revenue is starting to explode here, some of these stocks are getting into indexes.
They might be 10 basis points, but at least they're starting to talk about them. Cathie Wood's perspective ultimately reframes many of the fears currently dominating public discussions about technology and markets. While artificial intelligence and automation will undoubtedly disrupt certain forms of work, they may also unlock extraordinary levels of creativity, entrepreneurship, and productivity.
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