Episode 04: From $1B Fund Mgr to Investment Boutique Founder, Ethos' James Fletcher on Authentic Leadership | The Power of People & Story to Win Clients | Why Culture is a Differentiator
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In this episode, James Fletcher and I discuss:
James’ backstory: From 9 years old sitting on his grandpa’s lap reading the Wall Street Journal, to living in Brazil falling in love with emerging markets, to running Ethos Investment Management and Young Investors Society
The importance of culture and how it changes conversations with investors
How James finds companies in emerging markets growing 10X
The power of people and story to win clients - even in the investment industry
How changing one student’s life inspired James to run a non-profit serving over 70 countries
The fulfillment of entrepreneurship despite the laundry list of challenges
About James Fletcher
James Fletcher is an experienced Emerging Markets portfolio manager. He's the CEO and founder of Ethos Investment Management, a $100M boutique EM fund.
Prior to founding Ethos Investment Management, James was the Director & Senior PM of the EM SMID Cap fund at APG Asset Management, where he managed a ~$1.2B portfolio based in Hong Kong, one of the largest EM SMID cap funds in the world. APG is the largest pension fund manager in the Netherlands and a global leader in ESG investing. Before that, James was the Lead PM at Kayne Anderson Rudnick’s EM Small Cap fund (ticker VIESX), a Morningstar 5-Star rated fund and a Senior Analyst at Westwood Global Investments from 2005-2013. James is a CFA charterholder.
James is also the founder of the global non-profit, Young Investors Society, a non-profit that teaches financial literacy and investment principles to high school students. As of March 2023, Young Investors Society serves over 1,700 high schools in 71 countries and over 10,000 students per year.
James has an undergraduate degree in Finance from Brigham Young University and is fluent in Portuguese and proficient in Spanish and has lived in Brazil and Hong Kong.
Resources mentioned in this episode:
Volunteer opportunity: Young Investors Society
Book: How Will You Measure Your Life? by Clayton M. Christensen and James Allworth
Transcript
Below is an AI-generated transcript and therefore it may contain errors.
James Fletcher: We're sitting there at a Japanese restaurant and I kind of just showed him my rough presentation materials, showed him the performance, showed him the process, and he, he looks at me and he goes, James, it's, you know, great performance. Great. It, it looks like you have a best in class process. I want to invest and I wanna seed it, but the reason I wanna seed it is because of you, because I want back you as a person.
And you know, that's people, back people. And that was kind of a light bulb moment that yes, everything else has to be good, but it's really about the person.
Stacy Havener: Hey, my name is Stacy Havener. I'm obsessed with startups, stories, and sales. Storytelling has fueled my success as a female founder in the Toughest Boys Club, wall Street.
I've raised over 8 billion that has led to 30 billion in follow-on assets for investment boutiques, you could say, against the ads. Yeah, underst. I share stories of the people behind the portfolios while teaching you how to use story to shape outcomes. It's real talk here, money, authenticity, growth, setbacks, sales and marketing are all topics we discuss.
Think of this as the capital raising class you wish you had in college mixed with happy hour. Pull up a seat, grab your notebook, and get ready to be inspired and challenged while you learn. This is the Billion Dollar Backstory podcast.
People spend so much time talking about what they do. It's a natural question when we meet someone new. So what do you do? But it's not the whole story. What you do isn't nearly as important as who you serve, how you help who you are, and why you do what you do in the first place. If you want people to choose you as their guide, they need to know you.
They need to like you, they need to trust you, and in order to do that, they need to see you. Your prospects and clients are the heroes of the story. You are the guide. My guest today does a fabulous job of using the power of story to let us see him as a guide, but my goodness, I ended this conversation also seeing him as a hero.
James Fletcher is the founder and portfolio manager of ETHOS Investment Management. The firm is relatively new, but the team isn't. James is an experienced emerging markets portfolio manager with a strong history of alpha generation and top quartile performance. Most recently, he was the director and senior portfolio manager of the EM Smid Cap Fund at a P G Asset Management, where he managed a billion dollar portfolio, one of the largest EM SMID cap funds in the world.
From 2013 to 2016, James was the lead portfolio manager at Kane Anderson Rudnick EM Small Cap Fund, ticker V I E S X. Previously, he was a senior analyst at Westwood Global Investments. He's also the founder of the Global Nonprofit Young Investor Society, which we'll talk about today, and has an undergrad degree from B Y U.
He's fluent in Portuguese and proficient in Spanish, and has lived in Brazil and Hong Kong. I hope his story inspires you, not only as someone you should know, follow, and hopefully meet. I also hope it inspires you to do work that matters to the people you serve. Lean into a mission and lead with authenticity.
I spend a lot of time talking about that. Today's episode is a masterclass. In being about it, I am honored to introduce you to my friend James Fletcher. Let's dive. James, thank you so much for being here today. This is a true pleasure for me. We're friends and we always have such great chats, and so this is like, I can't wait to let people be a fly on the wall in our conversation.
So thank you so
James Fletcher: much. Well, thank you, Stacy, and I just have so much admiration for you and what you do for our industry. It's just such an honor. And congrats on the podcast. I mean, congrats on the
Stacy Havener: lot. Oh, thank you. So excited for you. Oh, I appreciate it. It's a journey for. And an adventure. And speaking of journeys and adventures, that's actually where I wanna start.
I would love, you know, this is a, a podcast about storytelling. This is a podcast about the people behind the portfolios. Yeah. And this is also my favorite part. So I'd love for you to tell us your backstory. And you can start wherever you want. Because a lot of times some of the transformation for people starts early and kind of weaves its way through their career.
Yeah,
James Fletcher: I'd love to. In a nutshell, I've been doing emerging market equities for 18 years, but really I'd say my journey started, um, when I was nine years old, uh, sitting on my grandpa's lap. He was a famous scientist actually, but his passion in his hobby on the side was stock market investing and he. Pulled me on his lap and showed me the Wall Street Journal and he went through his investment accounts and we would kind of do this every Saturday.
He would show me the stocks he was buying and why he was buying it. And ever since that day, I've just had this love, this passion for investing. When I was in high school, I read Warren Buffett for the first time, and really probably like a lot of fun managers, it just flipped my world upside down. You know, quotes like Be greedy when others are fearful and fearful when others are greedy.
And the value of a B or good companies is better to buy a wonderful company at a fair price than a fair company, a wonderful price. It just resonated so much and I just fell in love with investing. But I say really the arc of my trajectory changed a lot. When I 19 years old, I served a a church service mission in Brazil.
Okay. Actually similar to another of your podcast guests? Yes. Wellby, who served in the Philippines. And it was just a transformational experience for me. I fell in love with the Brazilian people and fell in love with really other cultures and other people and languages, and so I came back to college and had this love of investing, but also then had this love for developing countries and just said, you know, my dream would be to invest in Brazil and get to use my Portuguese.
I got hired, um, which at hindsight was extremely fortunate at a fund in Boston called Westwood Global Investments, which, um, went on to be one of the leading investment funds in emerging markets. I started as a Latin American analyst and then started covering Asian stocks and then Eastern Europe and Africa.
We were a small team at the time, um, just managing $200 million. It was really a buffet style approach of concentrated investing. A lot of due diligence on management teams focused on quality businesses, and that fund grew to 10 billion. We were one of the top, oh my gosh, funds over the period we launched em Small Cap, and I'd say that was another pivot for me where I just fell in love with small.
Oftentimes family owned businesses that are maybe billion dollar businesses that are growing to 10 billion. And so we launched EM Small cap that was successful. Then I was hired at Kane Anderson Rudnick, uh, based in Los Angeles, a 40 billion EM or asset management fund, and I launched em. Small cap for them, became a portfolio manager.
A couple years later, a PPG Asset Management, which was Netherlands largest pension. 600 billion euros and assets that they manage. Asked if I would spearhead launching em small cap for them, and then a year and a half ago launched Ethos Investment Management after a successful track record with a p g asset management.
And ever since those days, those early days, um, being part of a boutique, being part of a small team Yeah. And seeing how successful that was, that was always the dream. And so when I got seed investors and was able to launch ETHOS Investment Management, Really, it's just that combination of my love for people, my love for emerging markets, and just that being part of an independently owned, aligned, mission oriented fund.
Um, love that brings us to where we are today.
Stacy Havener: Wow. And you know what's so interesting about it? As you were talking, there's obviously such an amazing thread on your experience in Brazil and kind of falling in love with emerging markets. Yeah. But I also love the thread. You were launching these strategies in funds.
Mm-hmm. Inside of, you know, much bigger organizations. Yes. So, yes. Now here you are as a founder and as an entrepreneur, I wanna talk about that. But you've had a little bit of tastes of that along the way because you were launching things inside these larger asset management structures, which exactly probably felt.
Entrepreneurial, I'm imagining. Yeah.
James Fletcher: Yeah. I think I was born an entrepreneur. I love building things. Yeah. I love the excitement that comes from it and creating something out of nothing and being part of teams and seeing that success. Yes. It's just fun. I mean, it's exciting. It's so fun and, uh, we'll talk about Young Investors Society later, but starting the founding a nonprofit and building that was.
Exciting as well. I think the world is great. It's abundant. There's lots of opportunities and so yeah, being able to build and create is something that's always just been exciting for me.
Stacy Havener: Same for me. It is. There's nothing like it. And especially in the early days, which you're living right now. I mean, it's super challenging.
Yeah. The hardest part of the whole thing. Yep. But it's also so rewarding, so fun. It's so. And now I have a question about your grandfather. I love that part of the story. Yeah. So being a scientist. Yeah. Did he sort of buy into the fundamental research or was he more quantitative? Like, I'm just curious what his.
Because science, obviously being so black and white, was there something there from him that you think you've carried forward?
James Fletcher: Yeah, good question. He was very much, um, long term, um, innovative companies and management teams. Okay. My grandpa was actually the. President of NASA twice during the seventies and eighties.
Oh my goodness. Um, and, and all of his brothers were all scientists. So the Fletcher family is a very, um, science led family. The fact that I sold out and am focused on, on, on invest. In finance is, uh, maybe a disappointment to the Fletcher, but you know, his philosophy, I think shaped mine as well. It was very focused on, yeah, what are the products, the innovations that are gonna be successful 10, 20 years in the future, and how can we invest behind it?
Stacy Havener: Wow. That is super fascinating. So you're sort of the rebel of the family over here in the investment space? Yes. I'm a, yes. I love it. Of Rebels. Ok. So let's stay with this a little bit because I think too, you've seen a lot of different things. I love the Westwood connection because that was led by a woman, if I, yeah, exactly.
Yes. So the, and one of the pioneers. Mm-hmm. Um, really in this space. When you envision, like what does success look like for you? So you've set out to build ethos and it doesn't just have to be monetary. I think that's something I really want people to understand. Like success isn't just about numbers and dollar signs.
Yeah. Success is more than that. So for you, what does success look
James Fletcher: like? You mentioned diversity, so maybe start there like mm-hmm. Like our mission is threefold. We want to build a world that's more equitable, healthy, and prosperous for all. And we're investing in a world in emerging markets, which is 85% of the world's population.
And so, All of what we do, the way we engage companies, the type of companies we invest in, the way we build a team internally, the way we give back through charitable giving is all with the focus. That diversity and having more minorities is part of the conversation is critical. Mm-hmm. And helping health and wellness and benefit of society is what leads to long-term growth and prosperity in all of its forms.
So engagement in governance, engagement, improv. Profit structures. So yeah, I mean, I've been blessed, as you mentioned, to work with some amazing female portfolio managers in my career and from my perspective in emerging markets, it's having diversity of team members from Korea and India and China.
Absolutely, yes, Brazil. And I'm just such a believer in diversity. Different mindsets and really, I think through investing we can, you know, make a difference. And then through ethos, like we intend to deliver great returns for clients, which we have in the past. And, um, through these returns, we want to basically leave a legacy that.
You don't have to be short term, you don't have to only focus on profits that the investing game, I think like Warren Buffett taught sort of quality and long term adds to investment returns. My legacy is, I want to add another portion to that, is that company culture also adds to investment returns. So when we combine, Quality long-term and company cultures and have a positive impact on society.
I think many in the industry would say, ah, you're gonna have to sacrifice returns. That's gonna hurt long-term performance. The legacy I wanna leave is that, no, this is actually gonna lead to long-term outperformance. And so that's the legacy that
Stacy Havener: we wanna leave. I love it. It's a myth and a lot of people, I think exactly carry that with them.
That bias. E s G, or you know, social responsibility that you have to sacrifice performance. So you're a MythBuster. Not only are you a rebel, but you're a MythBuster. So I love it. It's funny cuz I wanted to ask you a question. Well, I have a question for you later that talks about legacy. So we're gonna come back to it and you'll have to see if you wanna elaborate on that.
And so you probably hit on it here. But one of the things I really find critical to a good. Is uniqueness. And I think it's something we struggle with in the asset management space. You mentioned company culture. I think it's an issue at the company level. It's also an issue for us as humans. Yeah. Because we wanna blend in.
Yeah. And so when someone asks us what. Makes you different. We tend to go to things that everybody else says. Mm-hmm. I, I often say to people, you know, if you're, if you're writing your website, for example Yeah. And you read the copy on your website and you could insert any asset management firm's name.
Yeah. In that particular sentence, it's not a good enough sentence because it's not specific to you. So I share that with you to really kind of empower you to share with us what makes you different, what's unique about Ethos?
James Fletcher: Yeah. Yeah. So as you mentioned, um, there's thousands of funds out there. What I've seen though, is the reality is there's few funds that do what we do, so highly concentrated.
Extensive due diligence, a differentiated focus on quality. And then I would add a differentiated focus on long-term company cultures, long-term governance, and long-term SG factors within a portfolio. So I attend, um, add investor conferences within the majority of our industry. And so much of the questions are focused on, yeah, quarterly earnings and you know, one outlook.
Our conversations with companies and the due diligence is way different, right? So it's very strategic, very long term. We're partnered with the owners of the business over the long run, and companies appreciate this. It's a different perspective than they get from most investors. As, as you know, when you do a discounted cash flow model, 75% of the value of any business comes after year five.
Yet, so much of our industry is focused on next quarter, next year, and they're adding a hundred stocks to the portfolio to try and time the right cycle over the next quarter. For us, it's so much about that year five to year 30, what does the business look like? What do the people look like? What does the culture look like?
And so that approach, it just changes how you do due diligence. It changes how you engage with a company and how you build that long-term relat.
Stacy Havener: Wow. I love. Also, I feel like you need, do you know Paul Black? Yeah. Oh yeah, yeah, yeah. That's one of their, they, you know, this company culture like you, I, I hear lots of people talk about what they do as investment managers.
Yeah. And I literally have only heard company culture from two people in my entire career. Yeah. Paul Black. Yeah. And you, yeah. And I think it changes the conversation you have. The companies that you're doing due diligence on, it also changes the conversation you have with investors. Exactly. Exactly. And so I love that you're digging into a different side and that focus on what happens after year five is very different.
And I think that will change the conversation you have with your investors as well, because you're taking everybody out of the weeds and sort of saying like, let's pick our heads up here Exactly. And look around and have a longer outlook, which everyone thinks they have. But do they really, if they're focused on quarterly, Performance.
James Fletcher: Yeah. With everything else in in our life, it's, you're constantly learning, you're constantly adding. For me, it was probably about 2015, 2016, I read a paper by Alex Edmonds. So he was at London School of Economics and basically his. Paper looked at the hundred best companies to work for by glass.com, and it just took those hundred every year and it created a portfolio of those best companies to work for rated by employees.
And that portfolio outperformed the market by three and a half percent alpha over the past 50 years. And he shows that, you know, and, and we're, we're looking so much for sources of Alpha and here I thought there's no way that just Glassdoor ratings could be a predictor of, of long-term alpha. And the more work we did on it, the more we realized that company culture is just something that, wow.
Is this. Undiscovered gem of outperformance. If you find those Googles and those Starbucks of the world early on with that unique, powerful company culture, it's a predictor of returns. It's a predictor of revenue, growth of profit growth. And so ever since that day, like we've developed scorecards and we analyze, um, different factors and metrics from the.
Actually Paul at Wsam is a good friend of mine and, and we sort of, yes, through, you know, that process of, of analyzing from the outside. And I'd say I am all about finding inefficiency in what is a very competitive, efficient markets. So that's why we're focused on emerging markets. We're focused on small cap, but what we've found is company cultures as well is difficult to analyze, but it's a powerful predictor of long-term.
Stacy Havener: That is so cool. I love that. And to me it also sort of ties in, you know, being the storyteller in the room here, you know that culture, it's their story. It's their story. And I love what you said about the small cap EM space. A lot of those businesses being family owned. Yeah. You know, here in the US we don't see that as much, but certainly in Europe and in other countries, family owned businesses are still.
Thriving. Yeah, they're a real thing. Exactly. And there's a lot of nuance and I would imagine, I'm not a portfolio manager, but a lot of differences in analyzing a company like that than one that's here in the states. Sort of focused on quarterly earnings. Exactly. Super cool. Thank you for sharing that. I love that.
And I am here, I am the first one buying the ticket to the Paul Black James Fletcher Road Show on company culture. I am so here. I'm gonna ask you one more question about the biz. Yeah. Because I think there's a perception, maybe not so much in em, but I'd be curious to your thoughts that boutiques are at a disadvantage.
Hmm. For instance, if I wanted to play devil's advocate here, I might say, sure, James. Like it's really great that this is what you do. You're in Utah, and there are companies who cover emerging markets, who have feet on the ground and all these things. Like, there's a lot of things I could say that maybe put you at a disadvantage.
Yeah. And how do you respond to that? Yeah.
James Fletcher: So, you know, emerging markets, I mean, just as a, as in a nutshell, right? Emerging markets is 85% of the world's population. It accounts for 60% of the world's G D P. And yet it's only on average 6% of investors' allocation. So relative to the economic footprint, em is way, way underinvested by most institutional investors and retail investors.
So it's a unique asset class and, and these are growing economies, by the way. EM is gonna grow six times faster than developed markets this year in 2023. Developed markets are going through recessionary cycles and a lot of countries in EM are still growing strongly. So, Operating at a, at a low base where you can grow from relative to me, it requires a lot of travel.
So I travel to 12 yeah. Countries a year. We meet with three to 400 management teams a year. I've lived in Brazil, I've li, I just got back from Hong Kong where we lived for five years. And was traveling to mainland China, you know, every month in Korea and India. It does require a lot of extra attention. Um, it's not that I could just start an EM fund based in Salt Lake, it's that I've had 18 years of on the ground building relationships knowing companies.
That being said, there's a lot of opportunities. These are growing markets. It's inefficient. The indices are terrible. Right. They're very focused on just a few large cap companies. Yeah. And then a lot of it's so true banks and oil companies and materials companies. And so the reality is it's low hanging fruit for, for active investors.
And then what we think sets us apart is our approach. It's a private equity style approach. We do two to three months of due diligence before investing in emerging markets. Governance is a huge risk. Fraud is a risk, regulatory, political risk, and so we're interviewing customers, former employees. Channel checks, um, talking to the owners of businesses, so I'd say even more so important than developed markets in emerging markets.
Those channel checks, that due diligence is crucial. And yeah, but you find businesses that are at a low stage where you can invest for the growth. I mean, one of the companies that comes to mind, we invested in a company in India called Varoon Beverages. So like we were talking about, this is a family run business, the GY family and the market leader of Pepsi bottling and Pepsi distribution in.
Company iPod in in 2016. Uria family was well regarded at the time. Just so you have an idea, India was at seven liters per capita of soft drink consumption compared to the global average of 92 liters per year. Oh, so so you see opportunity for them to 10 x their penetration of soft drinks and. What we found out from Verum beverages was that they were a premier partner of Pepsi globally, so they were growing double digits.
Pepsi was giving them more and more territories. We interviewed Pepsi employees and they're like, oh man, the Uria family. They are our best executors of bottling in the world. Amazing efficiency. Wow. And, um, after that it's, I mean, not a no brainin. But these opportunities are, are fantastic. So over that period, Varun has gone from 40% of India bottling to now 86%.
As Pepsi's given them more and more territories. Their core volumes have grown 18% per year. They've improved profitability. Revenues have gone up. Four x profit's gone up six x and the stock price has gone up 10 x over that period. And you say, you know, how can you find a 10 bagger? But then looking back, it's pretty easy.
I mean, Pepsi's giving them territories, the penetration is so low and, and people are improving their purchasing habits and uh, they have these iconic brands of Gatorade and Pepsi and Seven Up and Mountain Dew. And so we're excited. What a great story.
Stacy Havener: Find these ideas. That's so cool. And you know, I think going back to the question, Being a boutique.
And by the way, I wanna come back to your travel too. Yeah. But going back to the question about being a boutique, I think also what's interesting for you, you mentioned you're concentrated. Yeah. So how many holdings do you have? So we
James Fletcher: have 30 to 50 stocks in the portfolio. It's about 40, 40 stocks right now.
So it's, but our top 10 is nearly 40% of our
Stacy Havener: portfolio. Okay. And what's your turnover?
James Fletcher: Turnover's low. So it's 20% per year. Yeah. And it's, so when we say we're long-term investors, 20% turnover is on average, we're holding companies for five to 10 years. So,
Stacy Havener: exactly. So again, if we're responding to the people who say, oh, here you are in Salt Lake, and you know, there are other companies who have people all over the globe, you know, I think what's interesting is you're not trying to find hundreds and hundreds of companies to invest in.
Exactly. You're really looking for the gems that fit exactly your criteria. You're not turning over the portfolio. Often. Mm-hmm. You're using this private equity approach, so it's not like you need to go find, you know, a gaggle of companies to throw in this portfolio every year. Exactly. And I think that lends itself to being more specialist, more specialized and, and having a smaller team.
So that was great and that story was, was awesome. Exactly by the way. And I wanna come back to, I love your LinkedIn posts where you show, it's kind of like from the road and you'll, it'll be a picture of you wherever you are and you do like these really cool breakdowns of what's happening in the country.
I love those. Yeah, so I'm also a plus one on more of those posts because I think it's so great to feel like we're with you on the trip. Well, thanks Stacy. Um,
James Fletcher: yeah, my,
Stacy Havener: my, so if you don't follow James, you have to,
James Fletcher: my post in India two months ago was, um, yeah, viewed over a hundred thousand times, but it was forwarded to President Modi cuz I had talked about India's made in, made in India.
Push for manufacturing in India, and it was forwarded to moti who complimented it and said, oh, how great it is that institutional investor is, is complimenting our policy. So yeah, I mean the power of social media these days, wow. I think is, is critical.
Stacy Havener: Why don't we stay with that then? Because, okay. It's something I I talk about a lot, which is the industry, especially our industry, but maybe it's all industries really.
There's a, a bias, I think, to sort of playing down the people. Mm. And playing up other parts of process maybe, or really highlighting performance. Right. Yeah. So it's kind of not people first in general. Yeah. And in my experience working with boutiques and helping them grow, especially early adopter investors.
Really do put people first. And there's been studies that qualitative due diligence is as important, if not more important than quantitative due diligence. And that's from the standpoint of the allocator. Yeah. So Kaya did a, a fabulous study on that. So when we take all of that, and then we try to square it with the fact that here are these portfolio managers and people in the industry who aren't willing to.
Step up and say, here's who I am, here's why I do what I do. Here's who I am as a person. It's challenging. And I think your post in India really speaks to that. Like people want to see it. They want to know you. Yeah. Before they choose you. Yeah. And so how have you been able to deal with that kind of getting in touch with your authenticity?
As a portfolio
James Fletcher: manager. Yeah. So I'm blown away sometimes at the reception that I'll get traveling to a country, putting up a short positive post about what I see going on. I'm, I'm blown away at the reception. I think our industry is hungry for authenticity, for real stories and, you know, getting away from sort of the cliches or just just the marketing or compliance.
Yeah. Wording that you're supposed to say. I think our industry's hungry for authenticity. Maybe just a story of founding the ethos. I, I think, um, this resonates with, with, with your mantras as well. Um, when I was putting out some feelers to get seed capital to launch my own fund and really pursue, you know, my long-term dream, I was, I met with this successful private equity, uh, group out of Japan.
And I had known one of the managing directors, and we went to lunch. We're sitting there at a Japanese restaurant and I kind of just showed him my rough presentation materials, showed him the performance, showed him the process, and he, he looks at me and he goes, James, it's, you know, great performance.
Great. It, it looks like you have a best in class process. I want to invest and I wanna seed it, but the reason I wanna seed it is because of you, because I want back you as a person. And you know, that's people, back people. And that was kind of a light bulb moment that yes, everything else has to be good, but it's really about the person, especially when you're launching a fund and when you're, you're early and you're building a business and there's so many balls in the air.
You're really backing a person. And so I've never forgotten that. And I think that just stays in my mind is that investors are gonna back people. And it's important to be authentic. It's important to, you know, do what you say you're gonna do. And it's important, I think to have a, just cause to have a mission, to have a, yeah.
You know, something behind it. And I think that resonates in our industry.
Stacy Havener: I. That story. I mean, I could just, I could just start, you know, doing the Running Man. I mean, I love that story. That is such a phenomenal story, and I think it's true to, and I appreciate that you shared it because it's easy when we're sitting there getting ready for a pitch.
Yeah. To tell ourselves. Okay. What the investor wants to hear is this, like we tell ourselves what they wanna hear and we're not, right. Yeah. Yep. And how great that that person said to you, you know, this is all awesome, but I just want you to know it's not the reason. Yeah. Yeah. And I hope you keep that with you, even as you meet with investors, fund investors, or strategy investors, and as you grow, because I think it's a universal truth that people do business with people.
Every industry. Yep. Even this one. Yep. Yep. So I love that you shared that. Gosh, that is so good. Let's talk about Young Investors Society. Okay. I have been lucky to be involved a little bit here and there and yeah, we had fun, didn't we? Yeah. Um, I tried to keep it fun. And just tell us, as a founder, as an entrepreneur, why did you start this and sort of what's the why behind it?
Yeah.
James Fletcher: So, uh, young Investors Society in a nutshell, it's, uh, becoming the CFA Institute for high School aged students. We're now in 1,750 schools in 70 countries. It's focused on high school aged kids, learning about the stock market, but also personal finance and financial literacy. Yeah, I mean, the story behind it is started with a letter really.
I was volunteering at SMAs, the stock market game, and they had investment professionals. We were living in LA at the time. I was a scout master, so I enjoyed working with youth and. I was volunteering at high schools, just doing, uh, guest, uh, speaker assignments. And I went into Roy Ball Academy, which is in inner city Los Angeles, very low income community.
99% of the kids were Hispanic. And I walked into that classroom and said, all right, let's talk about investing. What's in your portfolio? Your, you know, stock market game portfolio. They said, well, because the stock market game is trying to beat your classmates and, you know, a simulated stock market performance over three months.
Okay. And, you know, so they were saying we're invested in triple leverage ETF and loss making, biotech company, and basically taking as much risk as you possibly can in a, in a simulated portfolio. And you know, I, every time I'd have to go, whoa, whoa, whoa guys, this isn't investing, right? Investing. What company do you want to be the owner of in 10 years and why?
What makes that a good business? Mm-hmm. Why would you want to be the owner of it? That day, um, you know, to those Roy Ball students, I said, you know, I invest in Mexico. I invest in Latin America. Here's some companies I've invested in. Our industry's looking for diversity. We're looking for different cultures, different languages.
I talked about how I had had had an analyst that was from Mexico, and I got a number of letters after that visit. But one of the letters was from a young man named Edgar, and he wrote me and he said, Mr. Fletcher, thank you for visiting my class before. He said, you probably won't believe it, but that 45 minutes has changed my life.
And he said, he said, no adult. Has ever shown that they cared before and visited my class. And, um, he said, I now want to go to college. I now wanna pursue a degree in finance. And that phrase, uh, that Edgar said, no adult has shown that they cared before. Just would not leave my head. And uh, I went to someone from Merrill Lynch that was retiring.
I went to someone from Harvard Business School and I said, let's create a program that teaches investing the right way, teaches long-term fundamental investing, and let's be a bridge between kids like Edgar and our industry and financial professionals that care. And so, I founded Young Investor Society.
We kind of modeled it after the CFA Institute where they do the stock research competition as their flagship event. And that rewards, uh, analysis and presentation rather than short term stock performance. That year I had, um, I had a group of teens that would come over to my house every Wednesday. They'd sit around my dining room table and I would.
I would just teach them about PE ratios and discounting cash flows and industry analysis. And then at the end of the class, you know, I'd say, okay, what worked, what didn't work? And they'd be like, yeah, this is boring. And at the end of that, at the end of that year, we had developed lessons and, and content.
We did a stock pitch competition. We had six schools participate that first year, and then it just caught fire. Stacy. I mean, the next year we grew to 50 schools and then, yeah, now seven years later, we're at 1,700 schools and 70 countries. C f a institute's been a great partner for us. Um, and we've had, you know, banks and financial institutions that have, have really backed it and amazing volunteers like me Wow.
And so many others. But it always goes back to that story of Edgar and being that bridge between adults that care and kids that Edgar, that, that don't see that bridge to college in the future.
Stacy Havener: I wasn't ready for that. I mean, I was not ready for that. That was an amazing story. I can only imagine That is just unbelievably powerful and I hope you kept the letter.
I did. Yep, I did. Yeah. I mean that is priceless. Now, if people wanted to get involved, so if I'm listening to this and I'm like, oh my gosh, that is amazing. I would love to get involved, or I know a school in. Community that would benefit from this? Can they and how do they do that? Yeah,
James Fletcher: so there's lots of ways.
I mean, you can go to Y is young investor society.org and you can volunteer. You can sign up as a volunteer. The reality is we have two full-time staff, but we're really run by volunteers. Volunteers do stock pitch judging. They do investment symposium speaking. So cool. They mentor access schools. I mean like, like we talked about, the whole goal is to be a bridge between our investment community and kids like Edgar.
Or you can reach out to me directly on LinkedIn. I'm, I'm active on LinkedIn and. We have hundreds and hundreds of volunteers that speak at a school, that help out at schools that judge, and yeah, it's just an amazing experience. It's an amazing bridge. So I would be personally grateful for anyone that hears this and wants to get involved.
Stacy Havener: Oh, that is so inspiring. I love that story. Um, okay, I wanna end with one more question. Yes. Going back to entrepreneurship and then I wanna do a really fun round with you. Okay, good. So I've got some kind of fast questions, but my last or bigger question, Is just about this entrepreneurial journey, and I mean, you have had actually many Yeah.
Entrepreneurial journeys as I've learned in this conversation. Yeah. I mean, including young investors Society. Yeah. Feel free to take it beyond ethos, just in all your experience as an entrepreneur. What have been some of the biggest challenges or biggest positive surprises that if someone's sitting here saying, I want to do my own thing or launch my own firm, whether that's a financial advisory firm or a fund company, or even a, a nonprofit, what advice do you have?
James Fletcher: That's a great question. So I remember in the 2008 financial crisis, Westwood Global, talking to one of the partners there, going through sort of the market turmoil and asking him, you know, what it was like to be an entrepreneur through this difficult time. And he said, it's by far the best decision I've ever made.
And if people knew the fulfillment and the upside potential from being an entrepreneur, then many, many more people would do it. And so I never forgot that and always said, yeah, at some point, that's the goal. And I would say that is. Absolutely true. So one of the positive surprises for me, both on Young Investor Society and ethos, is yes, it's a lot of work.
Yes, yes. It's incredibly difficult. Yes, you have a thousand balls in the air that you're judging. Yes. It never goes as fast as you'd like it to or as easy. Oh, preach. You know? Yeah. But it is so much more fulfilling than you would imagine, and that's just the reality. Yeah. And so like we built young investor society and ethos around.
A mission, a vision, a just cause that we really believed, we built it around a gap in the market that was not being filled both in, you know, serving teenagers and investing long-term quality in emerging markets. And honestly, I've been surprised at how many people have rallied around it, the support.
Young investor site, it blows me away that we're in 71 countries and I'm getting emails from, you know, kids around the world that it's changing their life. And volunteers, you know, we've met Mark Cuban twice, and Damon John, and so many portfolio managers just, wow, just volunteer their time because they care.
And same thing for ethos. I mean, everyone said raising money is so difficult and operations is so difficult, but I think when you. Authenticity and adjust cause and emission behind it. It's been incredibly fulfilling. Yeah, I'd say that's the biggest surprise, actually, is that Yes, is how fulfilling and enjoyable it is.
Despite the stress, despite the hard work, despite the late nights, it's just been incredibly fulfilling.
Stacy Havener: And I think that is so good because you need that. Yeah. You need that to carry you through those late nights. Exactly. And those long hours and the, you know, all the balls in the air that you're juggling that crash down on your head.
By the way, don't forget that part. Yes. Right. And so if you don't have the fulfillment and if you don't have the why Yeah. And if you're not having fun Yeah. Yeah. Then don't do it. Yeah. Then it's not aligned yet. Yeah. That was amazing. So, I'm not even going to I, okay. I am gonna share with you where this comes from, but I know you're not gonna know it.
Okay. Because I feel like whenever I share this, people are like, I don't remember that show. Okay. So I'm dating myself here, but there was a show way back when, not a Netflix show on an actual cable television show. Yeah. Called Inside the Actor Studio. James Lipton was the host. He was a professor. I think it was like SUNY purchase.
It was very kind of cottagey and random, but he would bring actors into his classroom. I mean, it would literally be, the set was like a class of students. Yeah. It would be James Lipton sitting with, you know, an actor and he would ask them questions about their career and it was just this wonderful, authentic, convers.
And at the end of every show, I'm telling you way more than I planned on telling you at this point. Yeah. At the end of every conversation, he would end with his version of Bruce's questionnaire. Hmm. And the idea of this questionnaire is like, there's certain questions you can ask somebody that help you understand who they are as a person.
So I've kind of put together a little bit from the Bruce questionnaire, which is rather long, a little bit from James Lipton's questionnaire to come up with some questions that help us know James Fletcher even more. Okay. Very good. Okay. Are you ready? We're nervous? Yep. But ready? Okay. Don't be nervous.
It's gonna be fun. I hope it's fun. Okay. What book inspires you? We're starting with an easy one, I hope. What book inspires you?
James Fletcher: Uh, how will you measure your life by Clayton Christensen has been transformed for me. What
Stacy Havener: a book. If people haven't read that book, get it. Yeah, that is fabulous. Okay. Now you mentioned a lot of different places you've lived, so this is gonna be interesting.
What place inspires you?
James Fletcher: Yeah, I have lived and traveled a lot, but I'd say my happy place is just sitting on my deck, watching the sun go down, thinking about companies in the markets with my kids around me. I think that's
Stacy Havener: Aw. That's a wonderful picture and I can relate to that because I think when you travel Yeah.
Home takes on a whole different Exactly. Level of value, doesn't it? Exactly. Yeah. Absolutely. Okay, so we talked about when you, you and Paul Black go on tour. Mm-hmm. I'm the first fan that buys a ticket. So let's go back to that vision. Here you are, you're, it's just you though, you're walking out onto this stage.
Okay. At some big stadium. What is your walkout anthem? What song do they play as James takes the stage? Ooh,
James Fletcher: good question. I've always liked, uh, the Tom Petty song. I won't back down, so we'll, we'll call, we'll call that, we'll call that the classic rock anthem.
Stacy Havener: I love it. That's, that's perfect. It would be cool if I could like play that on the podcast, but I definitely can't, but we'll, Okay.
What profession, other than your own, would you like to attempt? I'd say
James Fletcher: probably teacher or scientist.
Stacy Havener: I was wondering if you were gonna say scientist. Your whole family is cheering right now, so, so that,
okay. What profession would you not like to.
James Fletcher: Uh, how about Instagram influencer?
We talked about social media, but I wouldn't wanna have that as a profession.
Stacy Havener: Oh my gosh. That is a great answer.
James Fletcher: And I, I actually say that in some seriousness because my, my sister is, is an Instagram influencer. Oh, so
Stacy Havener: you know, the behind the scenes, the followers.
James Fletcher: Yeah. She travels around the world for a living, but it is so much work, so tedious, so fickle that, um, it'd be a tough, it'd be a tough career.
Stacy Havener: Wow. So that's an inside scoop for anybody that thinks they wanna be an Instagram influencer. It's not all it's cracked up to be. You heard it here first. Okay. And last, what do you want people to say about you after you've retired or left the
James Fletcher: industry? Oh, you know, I think just very simply that I had an impact for good on the world and on people one by one.
Stacy Havener: I think they will. I think they will say that. I think you already are. Hope so. Thanks, Stacy. It's really been such a pleasure to spend time with you today. I hope everyone enjoyed this conversation as much as I have in James. Thank you for your time and your candor and your stories. Thank you, Stacy. Just epic.
It's an honor.
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