Ep680: Paul Krake – Surround Yourself With Experienced People

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Quick take

BIO: Paul Krake is a global strategist focusing on mega themes of climate, China, digitization, and demographics.

STORY: Paul quit a prestigious job where he had seasoned mentors to start a hedge fund. After a few years, he realized he wasn’t mature enough or emotionally prepared to run a business on his own.

LEARNING: Surround yourself with people who are more experienced than you are. Think about all the scenarios where an investment can go wrong.


“For every good idea out there, there are a million ways (that you can’t think about) for it to go wrong.”

Paul Krake


Guest profile

Paul Krake is a global strategist focusing on mega themes of climate, China, digitization, and demographics. View from the Peak, Paul’s consultancy was formed in 2011 after an 18-year career in investment banking and as a macro hedge fund manager, where he covers global institutions on these mega themes. His latest venture is Climate Transformed, a global community of climate investors, entrepreneurs, and corporate leaders who are practically implementing the $100 trillion investment required for us to achieve decarbonization and sustainability.

Worst investment ever

Paul’s dad passed away in November 2004, and a couple of days after his funeral, Paul was sitting in his mom’s backyard at four in the morning. At that moment, he thought of the idea of starting a fund.

Paul went ahead with his idea and started a hedge fund even though the timing was wrong, and it was for all the wrong reasons to follow through with this idea. There was such a high degree of emotion involved in making this decision that he didn’t really think through it and consider all that he was giving up.

At the time, Paul had a prestigious job at Caxton Associates. He had the support of great mentors and trainers. He gave up all this to start his business.

After about three years of running the hedge fund, Paul realized he wasn’t emotionally prepared or mature enough to do what he was doing.

Lessons learned

  • Surround yourself with people who are more experienced than you are.
  • Think about all the scenarios where an investment can go wrong.
  • Think of a business as trade and have an exit strategy if it doesn’t work for X years or if you spend X amount.

Andrew’s takeaways

  • When you get that wind of confidence and want to invest, take a step back and think things through.
  • When you quit a job to start a business, you lose support and have to do it alone.

Actionable advice

Before you make any investment:

  1. Think about your processes.
  2. Consider your entry and exit position and treat everything with the same agnostic clinical approach.
  3. Always have an exit strategy for when things don’t work out.

Paul’s recommendations

Recommended resources: The secret to not getting stressed over not finding ways to de-stress is to use fewer resources.

No.1 goal for the next 12 months

Paul’s number one goal for the next 12 months is to successfully roll out 30 in-person events in nine countries.

Parting words


“I love this. I think it’s a great way to get people to seriously think about the benefits of failing.”

Paul Krake


Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win an investing you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. Join me go to my worst investment ever.com and sign up for my weekly free become a better investor newsletter where I share how to reduce risk and create grow and protect your wealth. Fellow risk takers this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured cast, Paul Krake, Paul, are you ready to join the mission?

Paul Krake 00:42
i Yes, that's right him after that introduction, I certainly got us all.

Andrew Stotz 00:46
Well, the introduction is going to get even better because I'm going to talk about us so let me introduce you to the audience. Paul is a global strategies focused on Mega themes of climate, China, digitization, and demographics view from the peak, Paul's consultancy, was formed in 2011, after an 18 year career in investment banking, and as a macro hedge fund manager, where he covers global institutions on these mega themes. His latest venture is climate transformed a global community of climate investors, entrepreneurs and corporate leaders who are practically implementing the $100 trillion investment required for us to achieve deep decarbonisation, and sustainability. My goodness, Paul, take a minute and tell us about the unique value that you're bringing to this wonderful world.

Paul Krake 01:38
It's a pretty grandiose F, it's pretty arrogant of me, Andrew to think that I can actually challenge those things with words like 100 trillion dollars and mega themes in the light. But you know, I think that you know, the way the unique value and I like the way you sort of phrase that and I think it's important that everyone who does what I do, you know, trying to be a purveyor of information has is able to clearly define what their unique value is. And I think that the one thing that I've always tried to do, successfully, sometimes not successfully others, is to take these very big picture views the world and to boil them down into very simple, very simple logic, but actually actual actionable bite size pieces, right? So if I was thinking, What in the general context of the worst things that I've done, which the list is long and illustrious. One of the big challenges that I face currently is convincing. The trading community, whether that's in the pub publicly, the public equity macro, and the like, to actually give a shit about climate. This and the problem that we've had the problem, one of the problems that I have, is that we are competing with a framework, which is ESG. And I don't want to get into the bashing of ESG. Because I think it does enough, enough of the self destruction itself to be able to get there to convince people that ESG and impact the way we're thinking about it now is not how we get to net zero. Right? So I use this comment a lot that of course, we would need to do Greta Thornburg on climate transformed, right. So climate transform, what we do is we our goal this year is 500 hours of interviews with the leadership charged with taking us to decarbonisation and sustainability. Of course, I would interview Greta Thornburg, right. But we interview a lot of lawyers, we interview a lot of entrepreneurs, we interview the folks who are getting their hands dirty in the implementation of $100 trillion of infrastructure that's required as required to get there, right. We The best example is the whole notion of those advocates to defund oil and gas, right. You want to derail the climate agenda, we'll start by derailing the global economy first, because that trillion dollars needs to come from somewhere it's coming from government it comes from it comes from public sector, private sector, we no one body can do this alone. This is not a this is not a capitalist endeavor. This is not a socialist endeavor. This is an everyone endeavor. So you know, the frustration I have one of my biggest frustrations now in taking those mega themes and putting them into bite sized packages is to convince a macro investor who lives on a 90 day rolling cycle that the trillions of dollars of infrastructure spending that we witnessed in the next 30 years. 10s of trillions of dollars is going to matter. To DOLLAR YEN treasuries the stocks that they the stocks that they punt on a 90 day view, right. At the moment I'm fighting a losing battle in that they will care eventually it's going to matter. It's the equivalent of a macro investor not caring about Google in 2002. Because at the end of the day, I think about it like this, this is the biggest investment narrative that we will ever deal with, you're not going to get $100 trillion spent on AI. Right? You're not getting $100 trillion spent on the genome, right. But you will have a global coordinated government, corporate consumer effort to get us to net zero, we may not like what the consequences are, it is going to be a big hit to global profitability as we pay for carbon for the first time, right? But the reality is that the inflation Reduction Act, the green, the European Green Deal, these sort of measures are just going to be amplified and amplified and amplified. And that's going to be the reason why folks will eventually have

Andrew Stotz 05:48
to get, and if we, if we were to go ahead, let's say I don't know, 50 years, and that 100 trillion has been spent. And we've achieved the goals that you've talked about. Where does it? Where did that come from? Like, what amount of that would have come from the government versus what amount would have come from it? Let's say the government is getting taxes from, you know, companies and individuals. But let's say also, companies would have to suffer in some way on their bottom line, if they have to start incorporating this additional cost. Is it 5050 direct from companies? And of course, the individual pays, because they're buying the products and services from companies. But I'm just curious, like, how do you see that role?

Paul Krake 06:33
It's met, there's a wonderful guy by the name of David Karlan, who works for the UN, who runs a group within the UN, the UN environmental program runs all the financial, the financial Initiatives Program there. And what the work that David does is that he looks at these macro themes saying we need to spend $25 trillion on electricity, and we need to spend $15 trillion on agriculture. And this biggest a big picture thought processes, right. The numbers that David comes up with a predominantly from the private sector. But the risks it's it's I think I rephrase the question a little bit, right. It's not about where it comes from. It's how the money is levered. So the one of the best programs exist that exists globally, is actually here in the United States with the Department of Energy loan programs right. Now, the one yeah, we'll take that a step further, where the DOD, for example, with these grant and loan programs that exist, would do even better would be to, to take instead of doing a $400 million grant to a particular company, turn that into $4 billion of the 10% first loss loan guarantees, right to allow city city bank to deploy for $4 billion of debt. Right, two to 10 $400 million ventures, right? Those sorts of things. So I think it's the hunt the number of $100 trillion, is you've got to think about this, a lot of this money is going to be created right through the magic of the maverick the magic of the banking system. But I think things like where the way this is going to work really efficiently is with things like loan guarantees, first loss, provisioning, those, those sorts of things.

Andrew Stotz 08:27
And maybe I just explained that for the listeners. So for those people that may not get that the idea is that maybe it's better for the private sector to assess the projects, and distribute the funds and monitor the projects. And by but they may not want to do it because of the risks and the costs, and therefore by government coming in and providing some sort of guarantee for a portion of that it incentivizes them to make those loans that may they may not make if they weren't incentivize, is that is that correct? And how Yeah,

Paul Krake 09:00
exactly. Right. So look at so think here's a good example. So electric vehicles in the United States, right? consumers in the United States in the area, don't want it don't want electric vehicles. They don't trust the back. They don't trust the range anxiety, the infrastructure is not there. From a charging standpoint, you can make an argument that the Co Op, certainly the fact that we haven't reached cost parity, because an Eevee is just that much more expensive. So we know that we need to electrify mobility, if we've got any chance of getting to net zero, right. And you know, Ford has announced you know, 10, a $10 billion Evie program and the like. And the trouble is that Ford is building cars is built spending all its money on r&d, on cars that people currently don't want to buy. Right? That sounds like a really shitty business models about it, right? So what's going to have to happen is you're going to have to have more and more incentives coming through from government to bring the price down of EVs, right because they're There is the right no netzero without electric mobility, right? So you have to get there. So if the technology is not keeping up which battery range anxiety implies that currently it isn't. Right. Cost is really, you know, cost is really inhibited the price of lithium, you know, is, you know, is now in 2022. Is that for x, right? So, the cost of a lithium ion battery went up for the first time in 2022, which debunks any sorts of Moore's Law for batteries, right? How do you convince? Or how do you convince some consumer that doesn't want the product to buy the product? Because it's in the social good? Well, the way you do that is through incentives. And the inflation Reduction Act is littered with that sort of thing. But you know, I tell people all the time, I want every every American out there to retire the French Socialist jokes, because Francois Mitterrand would have been proud of the of the of the public subsidies that are going on with the inflation Reduction Act, which are essential to get this thing to get this thing moving.

Andrew Stotz 11:05
And one other question on that, and it's kind of personal. And that is, you know, Thailand's every year about this time, we go through a heavy level of pollution across the country, particularly in the North of Thailand. But also in Bangkok, it's very, pretty severe. And the major cause of that is crop burning. And crop burning is illegal in Thailand. And but yet, you know, there's just, it just happens at large scale, as well as across Southeast Asia.

Paul Krake 11:36
In Malaysia, Singapore gets covered in smoke about three times a year.

Andrew Stotz 11:40
Yeah, so let's forget about the cross country issues of how countries work together on that. Let's just look domestically, and what would a country like Thailand need to do? I mean, I had some ideas, but I really don't know the solution to this. And it's a challenge. But if, if it could be solved, you know, I've seen I've judged in a lot of case competitions in Thailand at universities, and I can't tell you the number of them that have come up with the idea of driving around a diesel truck to go pick up the waste from the farms, and then take it somewhere in processing. But the transportation cost ends up being so high. And so you just end up in this situation where the only option for a very poor farmer is to burn and the government just doesn't enforce that. The law on that, and I'm just curious if you had any thoughts, or if you've seen cases where other countries have dealt with them?

Paul Krake 12:35
What might they not? The short is the short answer countries are not and the only way you solve this is through cheap technology. It's so cheap hardware, right? Whether that's, you know, again, it's different. It's sustainable farming techniques are, you know, there's billions 10s of billions of dollars being deployed at scale, to make farming more sustainable to make sure that sugarcane crops don't be have to be burnt and default deforestation in the Amazon. We know all those stories, right? The only solution is state sponsored technology to give farmers the tools that they need to make sure they don't do this right. Look, we it's not like it's not like the rural Asian farmer. But the rural Asian communities don't have access to mobile banking. They do they have access to mobile banking, right? It's, you know, so there is, you know, there's, you know, the electrification of villages across all of Asia is going on at an unprecedented rate. And it's all because of cheap solar. Right? It's so so it's not like these places are utterly backward and an immune from the benefits of, you know, generally, generally speaking, historically, Western produced technologies, but increasingly, so there's innovation going on, all over all over the world. And it's a function again, get it's at this stage of the cycle, you need to be the cost, the cost of this technology is inhibiting for those farmers, right, you need to have government subsidies to, to ensure that they can be adopted.

Andrew Stotz 14:17
Yeah. And I've seen some harvesting stuff for, for instance, maize that, you know, captures the waste, and then bales it and then they can sell it. One of the interesting things, you know Asia very well. And when I first came to Thailand, I was like, oh, it's all these small scale farmers, you know, they really need to industrialize farming. And then what I started to realize is that there's a reason why the government kind of didn't want to do that. And there's many different reasons but ultimately, it's about people kind of losing their control of the their little farms in their little lives. And then when you had when we had the Asian crisis in 97, when we had the COVID situation Those small scale farms are like that's the retirement plan for, you know, a huge portion of the population. Many people just went back and were able to subsist. But in order to get the technology out to the farms, there's probably a consolidation that needs to happen. And sometimes you feel like, okay, that just has to happen. And other hand, you feel like I hope it doesn't, because it's kind of one of the things it's been a real safety net, protecting people from really government and you could even say maybe business?

Paul Krake 15:35
Yeah, I don't think look, I think it's a you know, and it's not just an emerging and emerging economy issue. I mean, you know, take a take a state in the US like West Virginia, which was a, which is going to be a, you know, one, depending on which side of the fence you sit on is it's an economic revival or an economic or an economic and, you know, upheaval, the transition away from coal to something more sustainable now. It's incredibly complicated. It's socially dislocating because a coal miner is not going to get a job as a software engineer at a new wind farm. Right? It's not, it's just not going to happen. And this whole notion of retraining, re qualifications and the like, is really, I think it's a, it's a, it's a why, you know, it's a, it's an all white educated liberal dream that you can do that. And practically, it's not, you know, it doesn't matter. And, and the issue is that you have situations like Donald Trump getting elected, because you have communities around the place that are being disenfranchised because of changes in you know, this, this incredible economic transition from 150 years of fossil fuel dependence to something to something more. And I think that again, going back to the the practicality that we focus on climate transformed, you need to think about what is going to happen to those West Virginia communities, you need to think what's going to happen to those those tie, those tie farming communities met, you know, there may have been families who have been on those plots of lands for multiple generations, and twos and to say to them that they need to merge, they need to transition they need to look, you know, farming is a really crappy business. It's a single digit margin business, right? To go in and tell them that they you know, in the US context, for example, that you need to go and buy a $200,000, John Deere, John Deere environmentally friendly, harvest combine harvester? Well, no, right. Yeah, farmers don't need another app. Right, they need to find a way that they can take their very unstable business, which is made unstable by the weather, you can make an argument made even more unstable because of climate change. And to give them a real economic reason for these transition to occur. Because, you know, again, these are, these farming communities have been wiped out because of weather for years to tell them that they need to spend 1000s of dollars that they don't already have on equipment that they don't think they need, you've got to give him a real reason for that. And that's a problem.

Andrew Stotz 18:21
I one last thing you mentioned. You know, I grew up in Ohio, and in northeastern Ohio, which was originally oil refining with Rockefeller and Standard Oil, and then it moved into manufacturing cars, you know, Detroit and Cleveland. And I moved there in 1977. When I was young, my mom and dad, my father sold plastics for DuPont. He had a PhD in organic chemistry. He later went into recycling at the end of his career at DuPont. And but one of the things that I left Ohio in 1986, and I went to California got educated and I went to Thailand. I was going the exact direction, you know, I was heading to the jobs, the job creations and the jobs. I didn't realize it but when I went back to Ohio, it was hollowed out. And because of China and you know, you can't really fight a force of, you know, hundreds of millions of, you know, low cost, eager people entering the workforce as what happened in China. But it's interesting how most Americans can't see in particular, I would say, from the Democrat party, that there was this group of, you know, not particularly wealthy, you know, white citizens of America, that lost their jobs and lost everything and drug addiction and all of that. And then all of a sudden, someone like Donald Trump saw that. And he went for it. And it's a little bit like we saw in Thailand with talks in Shinawatra, where he was one of the most successful prime ministers as far as getting voted because he saw where the people were And he was

Paul Krake 20:02
one of the first true populace. Yeah. And he

Andrew Stotz 20:05
saw where people were, and they were in the Northeast, and mainly, and then a little bit in the north, where he was originally from. And so he went after it. And he brought them benefit, which just infuriated the Bangkok population, who had never seen, you know, money and benefits flowing out to the provinces to that level. And so, you know, I think that it's important to understand, you talked about it at the beginning about your ability to see the big picture. And I that's why, you know, view from the peak, it's a great demonstration of that, because looking at that big picture, and I think that you have, you know, hit upon a theme I'm sure that you've, you've talked about a lot with your clients. So I want to get on to our big question. But for those people who want to learn more about what you're doing, as far as climate, maybe you can just talk about your podcast and what they get from it, you know, and

Paul Krake 20:59
yeah, well, it's sort of people that we don't have we don't have a pot. Well, we have a podcast, but I mean, we our whole thing is about the video content that we have on climate transformed.com, which is the, I think 400 to 400 plus hours of interviews that we've got up there now, you know, ranging really to two interviews today on voluntary on voluntary cut on voluntary carbon markets. And we have what we call a Profit Loss Empire because we went into this with no clear definable business model in mind apart from, you know, having a platform to answer these practical, these practical questions. So, look, use climate transformed as the as the tool that it is to inform you to inform you on whether it's whether it's venture capital investment, private equity, but I think it's what I would say is I actively encourage public market investors to get on there because, you know, the, again, on a not on a 90 Rolling three month basis, right? It may not, it may not drive the two year note or may not drive the price of copper, but I can tell you with a lot of confidence that we're going to be in a 10 year deficit. As this Evie, this government backed evey adoption goes on around the world. And, you know, put it this way, those if you want to short copper structure, you do so at your peril, because this mega theme is going to drive, you know, structure drove the price of copper over the next 235 years.

Andrew Stotz 22:27
Fantastic. Well, ladies and gentlemen, just go to climate transform.com. And check it out and learn more. I think our discussion is interesting. I could go on for a long time on that. So I enjoyed our discussion, but now it's time to share your worst investment evidence. It's no one goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to then tell us your story, which may be a little bit of a different angle. Take it away.

Paul Krake 22:52
Yeah, and I'm gonna take a little bit of a different angle, because I don't. I don't think there's no bad ideas. Any, it's the idea side of things. That's the easy bit. Right? There are just bad risks, there are just bad risk managers. And, you know, I think that if I was to, to say, think about the, my best, my best, my worst idea was actually a change of job. And my worst, my worst trade or worst investment was leaving Caxton associates in 2004 to start my own hedge fund. It's not that I didn't learn a lot of that own my hedge fund that I had for four and a half years. But it was that I started that hedge fund for the wrong for the wrong reasons. Back then it was an easy environment to raise capital. Right so when someone dangles a couple of 100 million dollars in front of you, you take you take you do job if you're a if you're a someone who with the value of hindsight clearly had a big ego at the time, who got was seduced by that, by the wanting to have your name on the door. You you've left the the cut cover to the wrong word, but the familiarity the the the hedge fund university that that was Caxton associates or more capital Soros as they were back there, because you learned so much I mean, I had in the space of five years had the pleasure of working for Louis bacon and Bruce COVID Right. I into the into end in 2004. I could not say I I was learning so much at the time and may and a lot of it by osmosis and not actually appreciating what I was actually learning look following. Following a guy like Bruce who was just a dirt you Just a legend in this industry, right. And long story short, Andrew, my father passed away November, November 2004. I got married around the same time. And I remember being at my dad just a couple of days off my dad's funeral at my mom's place. And I was coming home from the US, flying from the US who was jetlag. So I was up at like, five, four in the morning, just sort of sitting in the backyard. And I had an idea to start a fund. Right. And it was one of those sort of moments where I just pardon my language just said, sort of said, Fuck it, I'm gonna do this. And it was such the wrong timing, it was such the wrong reason. And it was just, it was just wrong on a myriad, on a myriad of levels. And I think that there was such a degree of emotion that went on with this decision that it was not done with the clarity of sitting down saying, What am I what am I going to give up? What am I giving up on? And if I look back at the people who worked at Caxton, who, one of the great hedge funds have this reputation of turning over people consistently by just that they churn people. That wasn't Caxton. That's, that wasn't what it was. And I worked with this fabulous gentleman by the name of Roy Lennox, who was just one of the nicest human beings on the planet. There was some great just some great macro thinkers at the firm. And, you know, I think that there was a guy called by the name of John Macon, who was the chief economist to who unfortunately passed about three or four years ago, who is the Chief Economist, the sorry, who was the head of the American Enterprise Institute, richest great people. So I launched this, I launched this bid this business and it was a good time to launch I was seeded by a fabulous, fabulous individual brand, Dwight Ed named Dwight Anderson, who was running a fund called Osprey. And I've remained friends with Dwight to this day, and a lot of the Osprey crew were, as still are still great friends. And that that was no substitute for having that training ground, which was watching a guy like Bruce do what he does each day. And, you know, I am often utterly stunned when I talk to other traders, about the stupidity that comes out of a lot of traders mouths, in terms of their, their theories on, you know, the Fed being rigged, and all this sort of stuff. And they've made yet multiples of the amount of money that I will ever see. And it's why it's not the ideas that matter. It's the risk. And Bruce was that incredible hybrid of just this incredible intellect. Right. But at the end of the day, he was a grassroots gap field trader that would, that had no emotional sentiment to anything that he to anything he did. It was just a fabulous combination. And Louis, I think Louis bacon is the same, that passion, because I'm sure that there's a slew of people who have come on and given their worst trades. And if you boil down what their trade, what went wrong with those trades, is they allowed themselves to get wedded to these positions, so their egos took over, they knew more than the marketplace. Right? That's Paul Tudor Jones doesn't do that. Louis bacon doesn't do that. Bruce COVID doesn't do that. Right. And I think that if there's obviously there's, you know, if you run a $10 billion macro hedge fund, and you're worth billions of dollars, yes, you have a bit of a big ego. Right? There's not many big macro managers out there that don't. But I think there's a difference between having a big ego outside of trading and humility within the trading realm. And I think that the, you know, me starting my own hedge fund, prove that I did not have that humility.

Andrew Stotz 28:50
How did it end up with the hedge fund? And then, you know, how did you go from that to moving on?

Paul Krake 28:56
How did it so in 2002, the towards the start of 2008, I went through the double whammy of separating from my wife and realizing that I just couldn't do this anymore, that realizing that I'd made a mistake that I wasn't emotionally prepared, mature enough to do what I was doing. My plenty of I had plenty of support. I had a great business partner named Cindy Pando, who remains a dear friend to this day. I had, you know, I worked with, I work with a guy named Ashley Cox who is my best friend best friend to this day and the one saving grace through all of this is that our friendships survive what was a very tumultuous period. And for me, that's the one saving grace in all of that, um, but I the decision like when I separate my wife, I realize you can't, you can't run a fund. You can't run a fund and and go through divorce at the same time, I don't think I think it's, it's just emotionally impossible. I think it's a, if you view as I do that you're a steward of other people's money and you are a fiduciary that I think you're you've got to pick one or the other. And that's the reason why, why I decided to take two years off and then eventually stop you from the peak in late 2011.

Andrew Stotz 30:22
So how would you summarize the lessons that you learned from that?

Paul Krake 30:26
Um, but I think it's all about humility, the things are your, for every good idea out there, there is a million ways for it to go wrong that you can't think about. You know, I look at my look at my climate, I look at my climate, my climate business right now that we're now trying to find ways to monetize. And the thoughts that I had about how I monetize this business are different, different than what I originally thought, because I thought that everyone would care. I literally thought all I need to do is to walk into every investment firm in the world and go, it's $100 trillion narrative. That's why you have to care, get on the train, and get on the train. And they don't and it's much, it's much more nuanced than that. It is. But the, it's more nuanced than just focusing on people who care about the climate and like and being this as for its catalytic investment and catalytic investment, or if it's just anything around social socially thing that's socially responsible. It is a much more nuanced discussion. I think it is a I'm as bullish I am in terms of the business of climate as I have ever been. Because still, Andrew, it's $100 trillion. Yeah, that's long. But it's a lot of money. Right. So I think that there's still that that has to be taken into account. You know, I describe it this way. It's, as I said before, it's the equivalent of 2002, not caring about Google. It's investment firms that don't have climate analysts are like investment firms in 2002, that didn't have a tech analyst. Right. He didn't know about mobile, it didn't know about the cloud. Right? He didn't know about, you know, didn't know about electric electric electrification of vehicles, but didn't know about renewable energy. Right, and things can go and things can ebb and flow in cycles. But these are such defining times defining technologies for the global economy. I mean, the global economy is going to wean itself off oil and oil and gas in the next 30. In the next 40 years, oil will be a secondary, a secondary product in the next 40 years.

Andrew Stotz 32:37
So maybe, maybe I'll summarize a couple of things I take away from your story that I think, you know, really interesting to think about for the listener. You know, there was, who was it? Was it Richard Branson that said, Screw it, let's do it. You said, you know, effort, I'm going to do this. And I think the first lesson I take away is that when you get that feeling of like that, that wind of confidence that comes to you, where you're like, let's do it, take a step back with

Paul Krake 33:11
the greatest regret, don't don't not walking around the block.

Andrew Stotz 33:14
Yeah, take a walk. So enjoy that moment of this powerful, you know, excitement. But then pause. That's the first thing. Second thing is that, when most people don't realize it, and you've described it pretty well, in your description is that when you go from working in a professional environment with professionals, and impressive people, to starting your own fun, you're alone, you're gonna find yourself in a little office, maybe one or two other people or maybe a shared office or whatever. But ultimately, you go from this environment of support and all kinds of exchange and all kinds of resources to just being, you know, on your own.

Paul Krake 33:56
And we're going to just describe it slightly differently. Yes, yes, that is one scenario. The second scenario, and the probably more dangerous scenario is that you go from being surrounded people who are more experienced to you than you by being surrounded by people that are more junior than you. Right? So if you are going to start any form of business, but we'd be that a hedge fund, asset management, firm, climate consultancy, whatever it is, you need to surround yourself with people who are more experienced than you are. Yeah, right. Having a bunch of 28 year old analysts who are never going to push back at you is really dangerous.

Andrew Stotz 34:39
And maybe the point is, is that maybe you shouldn't really start that until you've got some experience in a structured place, leading people a bit. So then when you go there, you're a little bit more comfortable with it. I guess.

Paul Krake 34:52
No one teaches you how to manage people is horrible. I'm terrible at it. horrible at it

Andrew Stotz 34:58
the challenge of a lifetime. You Everyone's like, I mean, you know, I am a people person, like, I'm gonna own it. You know, I freely admit that I'm a people person. Horrible managing people. Yeah, horrible. So let's go back in time based on what you learned from that story and what you continue to learn. what action would you recommend our listeners take to avoid suffering the same fate? We may have already identified it take a walk

Paul Krake 35:21
over the block. But I think but again, it depends. It depends on the duration of the investment. Right. So if you're thinking about this, I want to buy some dollar yen today, I think it's going up there have a think about what you probably have a think about what your processes, where are you getting in? Where are you getting out? What is treat, treat everything with the same agnostic clinical process? Right, there's no, there are no ideas there are good ideas and bad ideas there are. But there you need to treat them once they are executed with the same clinical lens, because once they're executed there, you know, you're at the whims of you're at the whims of the marketplace. And depending on the timeframe you're holding this will mean you could just get stopped out for random reasons. But you have to if you get stopped out, you just get stopped out, you stopped and you start to get bit starting businesses, I think is a different kettle of fish. The grass isn't always greener. Right. Right. So I think this is really hard. I've started multiple businesses now. Some have done well. Most of them, well, one, one fails. But it's, it's tough, it's a tough thing to do. And I think there has to be a plan, there has to be an exit strategy. So starting a business, there has to be a stop. If it doesn't work for X years, if you spend x amount of X amount of capital, you've got to treat this in some ways, like a trade. Right? Because just as running, running a trade too long can lead to you getting wiped wiping your capital out. The last thing you want to do if you start a business is to take it too far and suddenly realize that, oh, I didn't contribute to the my kids college fund this month. Because I had to plug a hole here. And I had to do that. And also, it's a function of being respectful of people that you that you hire who have put their faith in you made for firing people is is the worst thing any business owner can do. Right? Because, you know, you're disrupting people's lives. So if you're disrupting people's lives, because, you know, you're you haven't covered your bases, and you've made miss, you've made rookie errors. Well, that has consequences for their families as well. So I think the one takeaway is just, when you have the workloads that use the expression, walk around the block, walk around the block, and think about what are the scenarios where this can go wrong. And, you know, if you think that way, you will leave money on the table every day. But you may not, but you may not face systemic risk. And I think that that's, that's, that's the takeaway,

Andrew Stotz 38:04
right? So what's the resource you'd recommend for our listeners?

Paul Krake 38:08
How resource you'd recommend POF and apart from climate transform.com, I think that that's something which is, you know, again, it's something we're pretty proud of, in terms of, it's all free, so just please jump on there. A resource that I recommend for people. I am going through a phase now Andrew, where I am listening to every mode of every sort of full meditation podcast, I'm there's a great podcast called The doctors pharmacy with an F AR m talking about food and, and the like, if, if I could use if I could recommend resources, I would use less resources. Right? You know, we all know At our age, I'm 52. But I knew this a long time ago, what I need to do to live a long, healthy and successful life, right? You know, I know I can't eat pretzels before bed and pizza three times a week. And you know what, my alcohol consumption has collapsed. Because you know what, I can't wake up hungover again. And I know meditation is good for me. But I don't do it. I don't do it every day. And you know, I've got a peloton in my bedroom that I didn't ride this morning. And I didn't ride yesterday, and I didn't write the day before. Right. So I know what I need to do. Right. So I think that I think you can get particularly with the podcasting world, right? That you can get acid paralysis by new ideas to implement write about spirituality, about business, about health, about all sorts of stuff. I'd use less resources, right? Okay. Here's why. If you're a smart person, you know what to do, right? You don't need to read another Jon Kabat Zinn book about mindfulness, right. Because you know what? I think meditation is a wonderful thing. It's great for you Do I do it once a week for fifth? 10 To 15 minutes? Yes. Am I a yogi? No, I know I should do it every day, but I don't. And I think it's actually a lot more calming. When you appreciate. You know what? I did have some pretzels before I went to bed a couple of days. And maybe just maybe the de stress of not of not finding ways to de stress is actually just let things be as they are.

Andrew Stotz 40:27
All right. Last question, what's your number one goal for the next 12 months?

Paul Krake 40:33
meditate every day go vegan. No, all the time. Not I'm sorry, I do. But I have work at work goals is to we're rolling our climate transformed into live events. So we're working on rolling out 3030 in person events in nine countries over the next 15 months, which is getting that done successfully is the professional goal. I do have a goal about trying to do 50 Push Ups by the end of the year. And Andrew, I'm not that I'm not the people who know me will laugh at this right now. I literally started off in the first week of January doing two push ups. And what I've done is every week I've added one pushup. And I'm now I did 22 Push ups this morning. So let's take a day, every day, every day. This week, I've got to do. I've got to do 7616 Push ups this week. And I did 22 this morning 22 yesterday. So if I do what Edwin said of putting out every day, once that a push up, I will get to 50 Push Ups by Christmas.

Andrew Stotz 41:42
That's exciting. In fact, that is Christ. I watched on someone doing that a lady that was pretty impressive, and it made me think about that, so that's a good potential challenge for all of us. And

Paul Krake 41:53
the only thing that will happen is there will be no video.

Andrew Stotz 41:59
And you're smart enough to know not to not to take the challenge of doubling it every time. So at least you just add,

Paul Krake 42:07
I have a 16 year old who can't who can who's already more much fitter than I am. So I have that motivation as well.

Andrew Stotz 42:15
Well, listeners there you have it another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. If you've not yet joined that mission, just go to my worst investment ever.com and join my free weekly become a better investor newsletter to reduce risk in your life. As we conclude, Paul, I want to thank you again for joining our mission. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment. Thank you very much. Yeah. And do you have any parting words for the audience?

Paul Krake 42:46
Ah, no, I just like I love I love this. I love this. I love this concept. I think it's a great way to get people to seriously think about the benefits you get from failing, the benefits of failing and I think that's an important way to think about it.

Andrew Stotz 43:03
We appreciate it. And that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast hose Andrew Stotz saying. I'll see you on the upside.


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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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