What The Funk?

0:00 All right, we are back on what the funk it is November 1st. That's not when people are going to listen to this. I'm not even totally sure when this podcast we posted sometime in November. But

0:11 either way, it's November 1st. Kind of feels like November out there. My kids have a whole massive pocket of candy in the other room that I'm probably going to have to hit up right after this

0:23 podcast

0:25 But yeah, getting toward the end of the year, a little bit of NDU slowdown coming up, but no slowdown right now, either in the market or with general business. So really excited to have Josh

0:37 Young on today. Josh Young may or may not know this, but I've been a fan of what he does, I think bringing some insight exposure to oil and gas stocks, emerging companies, really kind of keeping

0:53 a pulse on the oil and gas market. What we'll talk about all of that stuff. But before that, I'll ask you the question that I ask everybody who comes on this podcast, and you can take this where

1:05 you want to. Who are you? Who's Josh Young?

1:10 So, thanks for having me on. And I do need to do first the disclaimer, which is none of this is an offer or recommendation or solicitation or anything like that. And if you take advice from

1:25 podcasts or social media or various other things, you should spend some time looking in the mirror. You can't really think about it. So, maybe that's me. It's funny, I have this whole reputation

1:37 on social media for not a recommendation. So, you know, it's not even a caution thing. I think it's just so important in life to really understand people's incentives and their motivations. And,

1:50 you know, that's really, you know, I guess like the pivotal moment in my life and this is who I am, I guess, So I was visiting University of Chicago. My grandfather was a math professor. He had

2:02 gotten his PhD in postdoc at University of Chicago. And so I applied. I got in. I visited. And I stumbled upon a symposium in honor of Milton Friedman. And so Milton Friedman, I met some other -

2:21 some students as a part of their perspective. Student thing, they were going to the symposium. So Milton Friedman came up with incentive theory And incentive theory is obvious. It's people behave

2:33 according to their incentives. But prior to Milton Friedman, for the most part - or at least they'll respond to their incentives, even if they do things that are self-destructive. But they are

2:43 aware of their incentives for the most part, and they respond to their incentives. And so they had a symposium in honor of Milton Friedman. This was maybe less intuitive and one of the cool things

2:53 about being innovative and brilliant is that you can come up with something that's new. And once you tell everyone, they're like, oh yeah, that was obvious and we knew that all the time, but

3:01 really it started with you. So Milton Friedman started incentive theory and I got to hear from him and a bunch of other Nobel Prize winners about it. And that's sort of been a big factor, I think,

3:12 in my life, both in terms of going there and in terms of that always sort of being a guiding light in terms of how I invest and how I think about things and how I interact with. And then even in

3:22 unpane sort of non-economic sort of interactions being clear about sort of incentives and sort of where people should

3:32 or shouldn't do things or should at least be aware of sort of the potential conflicts or other challenges around itself. Interesting. So I mean, really incentive theory, it's about life, right?

3:46 It's not just about finance or about business or about money. It's, it's really incentives in life for, and for each of us, you know, they're different, right? We're all sort of our own unique

3:56 beings and whatever incentives we align to our beliefs, kind of dictate who we are as people. So yeah, I'm going to have to read that book. I've heard of Milton Freeman. Never met him. Never

4:07 seen him talk, but that sounds fascinating. I want to go back. So I think you told me you're from Los Angeles, but you ultimately went to Chicago. And now I understand a little bit more about why,

4:17 because there is some family connection to that. We'll talk about a little bit growing up on the West Coast. Did you have any exposure to oil and gas when you were growing up on the West Coast? And

4:28 what was that like going from a warmer climate to having to wear winter coats in Chicago?

4:36 Oh, man. So no oil exposure, really, at all. Didn't really know what I wanted to do with my life. Really loved history, was good at math. Um, and that was actually part of the University of

4:51 Chicago decision was, hey, I can go take the combination of history and math and that sort of economics. And so, you know, social studies plus like sort of a harder mathematical aspects. Um,

5:02 and I will say there was this funny, funny moment where, um, my dad mailed me a winter coat in October. Um, so I started University of Chicago in September and I emailed him and I'm like, hey,

5:17 you know, this is really nice, but man, this, this winter coat, you know, it's from REI. It's for, you know, um, mountain climbing or whatever, um, you know, this is, it's puppy. This

5:27 is probably a little extreme. You know, I don't know that I'm going to need this. And you know, three months later, I emailed him, Hey, whoops, I'm freezing. So, uh, it was really, really

5:38 tough to, to go from Santa Monica 70 degrees every day to, uh, here's Chicago I mean, I think it was minus 20 or 30 or something on the coldest day when I was there. So it was pretty tough. Yeah,

5:50 you get that lake effect which just makes everything super cold. I wanna hit you with a question right now. I mean, I'll be asking you plenty of questions over the next 40-ish minutes. But if you

6:01 had to take your pick, like which city do you like more? Is your heart more in Chicago or is it in LA?

6:08 Well, I'm sitting in Houston right now and I live here, you know, between Chicago and Los Angeles, easily Los Angeles, just where I grew up and where family still is. And, you know, I really

6:22 liked getting near the beach and going hiking. And so, Chicago has a beach, but not really, sort of like, Houston has a beach, but not really. But LA has the hiking and then just sort of

6:33 geographically, physically, it's really pleasant, the weather is pleasant. So those aspects are good. But, you know, both of them were really missing something and that's, you know, beyond

6:43 oil and gas, why I'm here in Houston. Yeah, yeah, we'll get into how you ended up in Houston and all that fun stuff. But are you a Dodgers fan?

6:54 You know, I've really fully adopted the Houston teams. Actually, the biggest transition recently has been becoming a Texans fan. And, you know, this year, so I'm terrible at sports. I always

7:07 sort of chose stocks instead of sports, even as a teenager. But there's a, so I don't even remember the guy's name, but there's a new quarterback here and he's great. And, you know, they're

7:19 actually being a shot at winning some games made it worth starting to watch a little. And so, you know, I need to get like a Texans banner or something 'cause I started watching Texans games.

7:31 There you go. Yeah, CJ Stroud is his name for the record. But yeah, that's cool, not a sports fan. I am a big sports fan. If you were a Dodgers fan, I would say congratulations. Mostly

7:42 congratulations to the Dodgers on beating the Yankees, which is what I care about. We always say like there's two, yeah, as a Red Sox fan, right? 'Cause I'm from completely the other side of the

7:52 country from you, the two acceptable outcomes to the season are either the Red Sox winning the World Series or the Yankees season ending in heartbreaking fashion. So we didn't win this year, but

8:04 they lost in a brutal way. So this was a successful season, I'll take it. It's fun You know, as a Houstonian, you know, an adopted Houstonian, but Houstonian nonetheless, I will say, you know,

8:15 it was time for us to allow some other teams to win a film World Series, you Like yesterday. calls my of one on this about talking were people. Yeah, okay it's. So again winning start we before

8:27 know, this is the first Halloween we've had in a while where we can actually go out with the kids and not have to be glued to the TV to watch the Astros play. So I get it. I mean, it's been a

8:36 thing. They've been awesome, it's kind of like a mini dynasty or maybe even a full fledged dynasty over the past seven years. But anyways, this isn't a sports podcast. It's not a stocks podcast

8:46 either. So just for the record. So you go to the University of Chicago, right? What was your major? Were you a math major?

8:54 Finance? I was an econ major. I wasn't sure when I was gonna study exactly you, visiting, meeting Milton Friedman and Gary Becker and Bob Lucas and all the guys It was great to get to meet them

9:05 and hear them, but I still wasn't 100 sure, but I started on that econ track and it really made a lot of sense for me. So, but I think when I applied, I think I told the school I was gonna try to

9:17 double major in history and math. I think that was sort of where my head was out and I was applying. Two distinctly different disciplines. I went to Brandeis, I was a double major in history and

9:27 American studies. Those go hand in hand and it was like an accidental major Like history, you just needed to take eight or nine history classes. Whereas American studies, you had to have like,

9:37 you have to take these classes. There's like civil war. You have to take revolutionary war. You have to take certain classes. So I worked hard to get my American studies major done. And then I

9:46 started doing the math. I'm like, wait, I might have enough credits to be a history major too. Met with the department head. And they're like, yeah, actually, you have like 11 history classes

9:55 or something. You were a major two years ago. I'm like, all right, cool. So I double majored accidentally. But yeah, history is something that I find fascinating as well And these particular

10:05 type of history that you enjoy, like East Asian civilization, US. history, financial history, like anything specific on the history front that you enjoy. So my application in Sierra Chicago, my

10:19 essay was about the fall of the Roman Empire and different theories around that. So as a 17 year old, I was super interested in the collapse of empires from economic, and various other perspectives.

10:34 And I'd say that hasn't changed. So it's been, you know, I think things getting built and getting destroyed or really sort of failing are sort of the most interesting aspects, whether they're,

10:45 you know, countries or businesses or people's careers or various other things. I think these are, there's the inflection points, I think are really the points that are the most interesting.

10:57 That's cool. I mean, we could go down, you know, as a man, I have to be passionate about understanding the Roman Empire, but we can avoid that for now. Talk to me a little bit about your career

11:06 coming out of the University of Chicago. Did you stick around Chicago? Did you go to one of the financial centers? Like, what did you do when you graduated? You're 22 years old, what was the

11:16 next step for you? Yeah, so I graduated really early. So I was at your research program for two years. I took off and went to Israel for a year and I'll study you actually in a. Yeshiva there sat

11:32 on top of a hill in the Judean hills and thought about life and tried to figure out what I wanted to do and what I believed and traveled a lot while I was there. And then came back and I had a bunch

11:44 of EP credits and was able to sort of test out as some stuff, which was part of why I decided to go to University of Chicago. They would honor that when some of the Ivy League schools wouldn't honor

11:53 even if you got a lot of EP credits. They were like, yeah, that's nice. You didn't earn it here. Pay us. At the time it was 40 grand a year And now I think it's like 80 or something a year. So

12:02 they're really oddly tuition oriented. Your research travel was not to their credits. So I was there for six more months. And I finished in December of 2004. And then I think officially graduated

12:13 shortly after that. So I traveled for a while. And then I took a job with Towers Parent doing executive compensation consulting for a few months in Los Angeles And I told them, I was going to, my

12:32 full-time job is going to be doing management consulting in Chicago for a diamond technology, sorry, I was diving cluster as a technology and a strategy consulting group. And so I told the towers,

12:43 Hey, I'm going to go do this. Can I come work for you for a few months? They thought, Hey, this is the best job in the world, so you're going to come work for us and you're just not going to

12:52 follow through. And the guys in Chicago didn't care, they were like, Travel, work, study We don't care, show up with the diploma and be ready to work 80 hours a week as a management consultant.

13:04 Yeah. So, I did exec comp consulting, which was amazing. It was a great starting point and you was really tied in the incentive theory stuff that I was so interested in with business life. But

13:18 you actually, what really did it for me was I saw that there were these folks that were getting paid millions of dollars a year for being on boards of directors who were in their 30s and there was

13:29 not a pathway. to do that from working at Towers Perrin doing executive compensation consulting. And so I was like, hey, I can go do that if I go do consulting, like strategy consulting, with a

13:40 big, well - reputed firm. And I can't really do that from Towers Perrin, so I'll go. And one story I think you'll really appreciate. So I had a co-worker who actually had come in at the same time

13:51 as me from University of Chicago

13:54 who was at Towers Perrin. And so I quit and went to work for Diamond Cluster doing strategic consulting, which was the thing coming out of school. It was the most prestigious, even more than an

14:05 investment bank in your whatever, it was the thing to do in 2005. And

14:11 my co-worker stayed there. Also was angsty. He saw this was not the way to the path to riches or phenomenal success. And he ended up - leaving partnering with my cousin, oddly, in some sort of

14:27 like digital rights world. They were like helping manage artists, my customers, entertainment lawyer at the time. And she ended up leaving that starting a long form ad business, growing it,

14:40 selling it for 10 figures, building. Yeah. Or was it, no, it was not 10 figures, sorry. Nine figures, I think. Oh, okay, well only nine, all right. Sorry, nine figures Yeah, yeah, I

14:52 was thinking like, you know, and then I think he sold it and then got to buy it back a couple years later because the people he sold it to mismanaged it. And so, you know, it's sort of funny

15:01 because I think if I stayed on, maybe I would have gone and worked with him at this other thing. And so there's all these like funny, since we're talking about like life and life choices and stuff,

15:10 you know, doing the thing that you think is sort of best or, you know, following that path often. you know, I've seen has actually not been the right way. And people that take those risks really

15:22 do phenomenally well and have really interesting paths. Yeah, I mean, I think we hear more about the phenomenal outcomes than we do the extreme failures, but I would agree, right? Sometimes

15:33 taking the obscure path or the riskier path can pay off in spades.

15:41 Yeah, fascinating stuff. As you were talking about that, it brought me back a little bit to like early career for me I worked at a startup in Boulder, you know, where I've lived for over 20 years

15:53 and I didn't know anything about tech. I didn't know anything about money, but I could sell and they hired me on. I was the 11th employee of this company and there were stock options and long story

16:04 short, I didn't like my boss so I left and went to like a really crappy company. And it ultimately got me into oil and gas, which I think was a positive. But I look back on that and it's like,

16:16 stayed there. I never would have ended up in oil and gas. I probably would have been retired at like 30 because that company went public and then they were taken private through. So they had two

16:25 like massive financial events. And I was so early at that company that my shares were really worth a lot, but I got nothing, you know? So yeah, like I think a lot of us, if you're in the game,

16:36 like you're going to lose sometimes in the game. And I think that kind of ties into Bison interest for you. So let's jump into Bison in a minute. But first, I want you to talk about, all right,

16:46 so after your sort of initial management consulting style gigs, you're still in Chicago, I think at this point, then what?

16:55 Yeah, so did the exec comp actually in LA and went back to Chicago to work for Diamond Cluster. Cluster gets bought by Mercer Management, which was owned by Oliver Wyman, which was owned by Marsh

17:08 McClellan and Companies, which is this big publicly-treated insurance company. So super weird they have this professional services division in a giant insurance. brokerage and consulting and

17:18 whatever business. And so I saw that part of the appeal for Diamond Cluster was to go do these complicated strategy projects they were doing that were global and really interesting. And I was less

17:29 interested in technology much to my detriment, right? Like, hey, you look at how the world has played out over the past 20 years, and then that would have been, again, one of these really

17:39 interesting paths. And so I ended up going to work for Mercer with the cluster folks, rather than staying with the diamond folks, and doing strategy consulting. And it turned out that I really

17:54 liked that sort of middle ground area where diamond was so good at finding these real problems businesses had, and then solving them. And when you're just doing the strategy part, there's like this

18:07 big disconnect. In many cases, I think the strategy is way worse if you're not the person that actually solves it or you're not really responsible. And so I think it's sort of one of these weird

18:18 things where the grass is greener is like, hey, I was in the middle of solving all these crazy projects for these big insurance companies and some utilities and some other folks and then flip to

18:27 just pure strategy. And it's like, hey, wait a second, this is like absolute nonsense and being not so about me too. They're like, hey, you'd be a great partner but you're a terrible strategy

18:36 analyst. And it's like, yeah, you guys don't know how I think about this stuff,

18:41 so that did not last long. And so I figured that out real fast, right? It took like two projects, it was like, this is just garbage, like the stuff you were telling people, you know, again,

18:51 like none of the people are still there. I think they've remained it at 10 times since then, whatever, but this just doesn't make sense. You can't know what's gonna apply this and there's no like,

19:00 you know, what we saved while I was at Diamond at this one company, of one project in 10 weeks. we saved them like20 million a year. And they were stuck on this thing. They were using two

19:14 business analytics, like business intelligence tools, which actually ironically has become this giant thing. And, you know, it's like, I mean, a lot of AI and stuff, it was LLM. And then

19:25 there's also sort of the business aspect of it and the data analysis aspect, which is huge. And they couldn't get their like actuaries to switch from using, I forget which one it was to the other

19:36 one And so I came in with like three other people and we basically carrot and stick them. And they, you know, you bribe these guys with500 gift cards which I guess in today's dollars. Post, you

19:51 know, Obama invited inflation is like, you know, 2, 000 or something. Probably, probably. Maybe more. Like you think about a nice dinner in 2006 versus a nice dinner now I mean, yeah, three

20:06 or four times as much.

20:08 So anyway, so it was amazing to do that, right? It was so interesting, there was this big strategy and it had gotten stuck. And so there was some tactics and there was some adjusting the strategy

20:18 and we saved them just an unbelievable. We got everybody taken two years and they hadn't gotten anyone to shift. We got the important, let's say 700 people out of the 2000 needed to go. And then

20:30 once we had that, we told everybody, it's like turning off in two weeks and we got the other 500 people and whatever. You know, the people that didn't matter so much or whatever, once you had the

20:38 important ones and once you had the bulk of the people, the rest of it, they were just sort of forced to go along. And we literally, they were spending that much money just on the software and on

20:49 the computers and the, you know, all this sort of back-end to support two systems, you know, licenses and the most tourism and ever. It was really cool. I mean, we saved them just so much money

21:01 and then we actually did it two weeks early. So I then spent the next two weeks training all these people at this big insurance company on like pivot tables and on sort of project management. I

21:12 think it was 21 still and they're like training these 40 year old technology executives at a Fortune 500 company about how to, you know, plan and stuff. So anyway, that was like, that was one of

21:24 the highlights I think of my career was really just helping them and then there were a couple of other projects that were similar there and they offered me a job at that insurance company in the

21:35 suburbs of Chicago and I was tempted but it was just like not a great location. Honestly, they should just offer me more money. I think they were paying at the time 60 grand a month in consulting

21:46 fees to the firm. I was not making that. Yeah, you weren't taking home 100 of what they were paying them. I don't know. under 10, I think, what they were paying. They should have just offered

21:57 me like 50 of that. Like, hey, I would have taken it. Like, you know, would have saved that money. You would have, you know, I would have worked as hard or harder or whatever, you know,

22:05 could have done it with stock options or various other things. And it's just not a corporation's really think, especially about young talent. And so, you know, it didn't make sense to me I.

22:13 couldn't get my, wrap my head around it. And, you know, so I ended up not doing that. But that was a real big, I think, sort of, I think about that sometimes because I think there was room in

22:21 that organization to grow a lot And that would have been, sort of, it was so great to have that sort of impact. And it's also great to have these people that, like, really value you and where

22:32 you're able to have, it's almost like product market fit for a new company is to be able to find that sort of culture and that sort of fit. And so that was a really interesting, you know, I think

22:42 for years, I tried to find sort of the equivalent of that from a career perspective where you're sort of in the flow where you're learning and adding value and it's never sort of too crazy and it's

22:54 never too easy and so I think that's really important and that was something I found at 21 and had for a couple years with that client before sort of moving on. Yeah. That's neat. And still at this

23:07 point, no oil and gas exposure whatsoever, right? So talk to me about when did that happen and when did you move to Houston? How did this all start to transition? Obviously you've got a big brain,

23:22 you're a hard worker, you're starting to understand executive compensation, finances, numbers, that's all sort of core to you. But then where did Houston come from out of all this? So, um.

23:37 There's a few steps to skip, and the reality is this is probably going to take too long, so we'll just hit a few of the highlights. So

23:45 I had done some consulting, so some of the exact comp consulting was for private oil companies and a couple of, I think, publics that were relevant, so I'd seen sort of comp as well as sort of how

23:57 that was set and how the companies tried to adjust for commodity price movements versus performance, and that's actually really important right now for Bison we're working on, there's a couple of

24:10 companies where we're trying to make some changes from a governance perspective, and there's really this sort of weird delusion that, hey, oh, our company had improving operating metrics in 2021

24:19 and 2022 and improving financial metrics, therefore we're good, and therefore we should paint these executives lots of money. It's like, no, if your commodity price goes up, you do well, and

24:28 then when it came down, you did poorly, maybe that's not you, maybe that's the price, and so there's a lot of thought that should go into it and when it's free. With private companies, I think

24:38 there's a lot that does go into public sides. Sometimes I think the boards are either, they just don't have the background in oil and gas, and so they just don't know to look for this, or they do.

24:49 And there's sort of this unpleasant sort of, you know, side deal or whatever, where, hey CEO the, got me on the board. And so I'm going to like, you know, make sure they're well compensated.

25:00 And that was part of why I left that was it was great But also in addition to wanting a sort of more impactful career, I also didn't like the idea of spending my days rationalizing, overpaying,

25:12 underperforming executives. And so

25:16 that's tough. So, okay, so oil and gas. So I had been investing on my own since I was a teenager. I used to read the LA Times every day, mostly cover to cover. I'd skip the sports section for

25:28 the most part, sorry

25:31 You know, started with the comics and then, you know, it'd be like the front page and then I really liked the Motley Fool column. My mathematician grandfather, his wife, my grandma was super

25:43 into stocks and so I read this column and I talked to her about it and she had been a stay-at-home mom and a substitute teacher before that and she just loved stocks, she'd like watch CNBC or

25:53 whatever the stock channel was 30 years ago, 40 years ago and we talked about stocks and we talked about what I read and what she was investing in and so on and somehow for that I ended up investing

26:04 in value technology companies and oil companies. I had been investing in oil companies in like 2003 and 2007 and

26:16 you know it varies points just personally and so I think let's see so I did invest in In size, there's a famous investor who's these Monish Pabrai. He sort of oriented his investments around Warren

26:31 Buffett. And I think he might actually be on Berkshire's board or sort of like he's like next in line to join it or something like that. But very famous, got to know Charlie Munger really well and

26:41 so on. And so anyway, so I was following him, and I actually got to meet him a few times, really nice, guy, very generous and smart. He got big in this oil company that was active in Venezuela

26:54 called Harvest Natural Resources. And so

26:58 you might appreciate this. You might know of the guy, he's very famous now. Morgan Haussel was my intern at this private equity fund. When I left consulting, I went to work in private equity. I

27:10 sort of liked that idea where I thought I could go find these companies at these inflection points and really sort of make a difference. It was like the right balance between strategy consulting and

27:19 the technology stuff where I was like actually, involved in making changes in adding value. And so

27:26 there was this moment, I don't know if Morgan's going to tell the story, but there was this moment where I don't stock in harvest and he owed options and he almost retired the summer of 2007 when

27:39 there was some deal in Venezuela and harvest stock went up like 20 and his options went up like 10, 000 or something just astronomical. And you won't read this in his psychology of money book that

27:53 sold 100 million copies or whatever, but this was like very early on for him and for me. And so

28:01 I did really well in some early oil investments and doing well and stuff is a really good way to get you to do more of it and to get your attention and get you to sort of like it. And so, You know,

28:13 I ended up selling that fortunately because, you know, I felt like I'd done better than I should and then Shaba's got scarier and, you know, generally Communists will eventually steal all your

28:24 stuff. It's just sometimes they take a longer time

28:28 So so anyway, that's that was my first real sort of oil investment win And I guess sort of like human interest story in terms of being there in the room as we work it just absolutely I guess he won't

28:41 mind this story so much. It was just unbelievable like how well he did on this thing We were both just following Monisha into this trade the end up being horrible in the long run Right like it ended

28:50 up as a zero But you know, we were able to get I think Monisha actually got out too and and did Did well on it and sold before sort of it got really really bad with the old communist thing in Besso

29:03 Wow, that's that's fascinating. Yeah, if I'm Morgan I don't mind you telling that story just for the record But that that's cool. So so you still pretty early on right you're talking like over 15

29:13 years ago at this point, were you in Houston? Is that what got you to Houston? And now you're still in Chicago at that point. No, okay, so if we want to get to Houston, so I ended up working

29:24 for a family office for a few years doing investments mostly or increasingly in oil and gas and running some of their energy exposure. I thought it was brilliant 'cause I made tons of money after the

29:35 financial crisis in oil and gas. And so I quit and started a hedge fund, which was stupid 'cause I had never shorted stocks before I had done well on the long side. And I ended up doing horrible

29:47 because I didn't know how to short stocks and I shorted this company Torchlight and I shorted some other stocks that were just terrible but did well. And so that was bad. And did well on some of

29:59 these side deals I was doing and which was actually ended up being the bulk of the capital in a variety of different, some public, some private oil deals, did some convertible debt actually did

30:09 really, really well. And then. in 2015 after the oil price crash,

30:16 the financial advisor for several sort of coincidentally because he did make these connections for me, I sort of met these guys separately, sort of these very high net worth entrepreneurial folks

30:27 here in Houston I had met through different energy conferences and other stuff, had all invested with me in this convertible debt deal in a Permian-focused company that I think it was traded in

30:38 Australia And so he was so impressed that we actually made money on an investment despite the oil price crash where things went from 120 to, you know, we didn't go negative that time, but I think

30:51 oil bottomed at like 20 something in, you know, January or December 2014, January 2015. So impressed that we ended up starting an investment firm together. And the idea was, hey, let's like not

31:04 short stocks, both because I'm not good at it and no one's really good at it from what we could tell. You looked around at different long short funds and whatever, and very, very few people were

31:15 making money both on the long and short side in oil and gas. And since oil prices have just fallen, we thought, hey, we'll go buy oil and gas stocks when everyone else is selling them and

31:27 everyone's doing private deals. So we'll go focus on public deals. And so half that logic was good. It was a good time to buy oil stocks, but it was a better time to do private oil and gas deals.

31:38 And so we launched Bison. The idea was to do it in January of 2015, which was an amazing time to buy oil stocks. By the time we actually raised money, which is terrible, like you're thinking you

31:51 have20 million lined up, people say they're in and then you start and you have 500 grand and it's your money and you're just as far as money. And so even your best friends, like we're in. And it's

32:01 like, okay, where are you? And that's a very common, like frankly, I don't know anyone. other than people coming out of very large hedge funds that were somehow able to get backed by those hedge

32:12 funds or something that has launched other than with their own money or close friends and family money. And usually it's sort of similar to our experience where that money followed over six months

32:21 but didn't show up right away. So anyway, as a part of that, it was way simpler from a regulatory perspective to both be in the same state And then there

32:36 was a lot of information I felt like I was missing out on trying to invest in oil and gas stocks in Los Angeles and in California rather than being here in Houston. And so the thought was, hey,

32:47 instead of being in LA and coming to Houston for a week a month, why don't I come to Houston and then go to LA week a month if I want to or anywhere or whatever There's a ton of money on state income

32:59 taxes, a ton of money and headache from regulatory perspective and and then also. maybe do a lot better in oil and gas investing by being here. And I'd say, so far so good. And then there's one

33:15 other thing I want to not forget, which is when I was spending time here but not living here full time, there were a few people I met who were just so extraordinarily kind that, they were the

33:30 people in

33:33 LA who were really kind but they were not very impressive from a work ethic perspective or business perspective. And I met these people that were really hardworking and really good values and just

33:43 noteworthy, extraordinarily kind people. And I realized that was sort of a value here they say be kind everywhere, right? But like realistically, LA, New York, whatever, like, you know what,

33:56 like that's not a real, like people will pretend to be nice and then like talk about you the second you leave the room. The same nice things, they mean things, whatever. And Houston is actually

34:05 really a value. I really liked that. And, you know, it's hard 'cause I'm from Los Angeles, right? But like I try, it's a, it's a thing to aspire to. And I really, I really liked that. And

34:15 I'd say I really enjoyed, I met my wife here, a lot of my closest friends are here who I've met here, some are local, some are transplants, but I think Houston, just the ethos, this expectation

34:29 of being kind, I don't know that people are really different anywhere, but if you're expected to do something and there's incentives to do something, you'll do it more than you would otherwise.

34:38 And so, it's really nice to be in a place where that's expected, that's encouraged, it's part of the culture, and therefore people just, you know, if you have that idea, you act like it, and

34:48 if you act like you aren't. I really, I really like that here. Well, I love the way that you told that story. And it's got me thinking a little bit about like you need to leverage your

35:02 quantitative analysis to make investments, right? And oil and gas companies, but I could see it being difficult with you being in Houston and actually meeting some of the people that run the

35:12 companies that you're investing in or don't invest in and not having a personal bias, right? Because it's like almost separating like the art from the artist, per se. It's like, I don't

35:25 particularly like this person, but their company's crushing it. Do I want to invest in that, right? How do you avoid letting your personal biases or emotions,

35:35 you know, get in the way or not get in the way of your potential investments? You know, I think, I think where I've actually messed up is not that at all. Um, it's sort of the opposite. It's

35:45 the stuff where. I know I don't like them, but the stock's really cheap, so I buy it anyway and that doesn't do very well and it's funny because I don't want to say the name, but you and I have a

35:56 mutual friend and I may be actually investing a bunch more money in this thing, which is why I don't want to talk about it by name. But it's one of those things where it's the, you know, I've seen

36:08 his tremendous success in doing something really similar and you and I talked about this a little offline

36:14 And it's just, it's so easy to find someone who's done really well in something that is now doing something that's almost identical and to bet on that and bet on the person. And where I get into

36:26 trouble over and over again is finding things that are statistically cheap that are, you know, they're value priced and so on, especially in the sector like oil and gas, where it's so out of favor,

36:34 there's not like a rising tide. There was for 18 months or so, there's not really a rising tide to lift value priced stocks So if you're not with the right people, it can really hurt. And when you

36:47 are, it can really be wonderful. And so it's sort of actually been the opposite where I've sort of been too good about like biting my tongue, ignoring my observations and just buying the stuff

36:60 that's cheap. And, you know, it's something, frankly, we're fixing both by selling stuff. But we don't like where the people are doing that, as well as by, in some cases, trying to change the

37:11 people. So there's different people there who we can actually feel comfortable with betting on and so on. So I hear you on that problem, but it's actually sort of funny. It's almost the, it's not

37:22 exactly the inverse problem, but it's sort of the inverse of that that we, that I've experienced since, since being here. That, oh, that's awesome. I mean, yeah, and, and to what you're

37:32 saying, right? It's, it's sometimes, and I have a hard time with this too, it's like betting on the founder is, the right place to put your money, even if you don't necessarily understand or

37:44 believe in the product or the solution or the basin in the case of oil and gas. But generally speaking, betting on people is what's going to win. If you're picking the right jockey, that horse is

37:58 going to raise. And I think you're spot on with that. With Bison, what is your overall investment approach? Are you just buying oil and gas stocks in North America? Are you more diversified than

38:13 that, betting on technology? Is everything surrounding oil and gas? Are you focused on energy transition stocks? Where do you place your dollars when you're looking to invest? Yeah, so I'll

38:27 answer that, but first, just one carryover from our last conversation line So one of the things I realized was, you know, the thesis for Bison was, hey, oil and gas stocks are super out of favor.

38:42 So along with oil and gas, we'll go buy the stocks. And as a part of that, we turned down literally hundreds of private deals that our friends were doing and participating in. And again, it's one

38:54 of those things you want to pay attention to, the things you missed, not because there are called strikes. If you do that, the Buffett says, you know called strikes, and he's right. You drive

39:05 yourself mad. But if you pay attention to where you're missing profitable investments, it's helpful because then it's not always done. Sometimes there's more. And so in the last few years, both

39:19 for Bison, where we have just a couple, we've been extremely selective about this and so far quite successful, as well as one that was so successful that actually got me to start having Bison in a

39:29 small way invest in privates, you know, started doing private oily gas deals and so and that's been really really successful and again something that's very new for Bison very different from sort of

39:41 where we started. And so that's like a very tiny percent of assets that are managed, but just 'cause of like the set up for our fund with quarterly liquidity and so on, it's not really something

39:53 where you wanna have too much of it in privates, but you can do some. And so, and they've so far again been really great in terms of like hitting the various metrics. My hope and expectation is

40:04 that they will do well from a financial perspective, but they're sort of early to be able to do that. So, aside from this tiny percent that's in privates, we're focused on upstream producers in

40:17 North America. That's the focus. And then where we can invest is anywhere sort of in that broader energy universe. So, we have a few sort of fabrication and, Um, you know, other sort of energy,

40:33 broad services, stocks, a couple of, you know, big companies, uh, one pressure pump, or, but, but for the most part, um, are invested in upstream producers, pretty much on shore, US and

40:46 Canada is sort of 80 plus percent of where, where our money is at this point. Wow. Yeah. That's, that makes sense. And then this has me thinking too, like, what, what do you do day to day?

40:57 Like, what does your typical day look like? Are you like going out and raising money for bison? Are you analyzing stocks? Or are you reading various financial journals? Like, what, what does

41:07 someone like you do on a daily basis? I should be going out and raising money. There's this really weird thing where stocks are the only things that I'm aware of, other than maybe like, you know,

41:17 luxury handbags or something. It's sort of like luxury handbags for, for men, not, not to you, whatever. Men also come by luxury handbags, but, um, you know, we're, The higher the prices,

41:28 the more people want to buy them, and then the lower the prices, the more people want to sell them, and haven't really been great at transitioning to the point where I can go raise more money at

41:38 low prices, and unfortunately, people sort of treat bison like oil and gas stocks, where it really should be the opposite, where when stocks are cheap, you should want to buy them, and when

41:50 they're expensive, you should want to sell them, and it's the strangest thing for me where you over almost 10-year period, and again, not saying this to raise money or whatever, but we've way

42:01 outperformed relative to oil and gas stock benchmark, particularly the small cap one, that we're sort of directly measured against the small like a PSCE as an ETF or an SAP 600, whatever, which is

42:15 a quality small cap. It's not the Russell 2000, which has a bunch of stuff that never made money and never or well, or whatever. So, We've done really well over time and we've shown that after

42:26 periods where we've underperformed, we've way outperformed, I've got the, so everybody's made this, framed

42:33 this article from Barron's where we're up like 390 or something before fees in a year in 2021. So you think people would look at that and say, Okay, hey, you're down X percent. Yeah, that's like

42:46 not great. I don't want to be down X percent, but the last time you were down that amount or more, you were up this amount next So, you know, I'll connect the dots and I'll invest. And instead,

42:56 all people do, as far as I can tell, is look at the latest, oh, in the last 18 months, in the last six months, you were informed by this amount. And therefore, I will not invest in this or I

43:07 don't want to be invested in this anymore or so on. And, you know, I'm sort of being, probably too broad and too general in that, but it's a very sort of weird psychological phenomenon. And I

43:18 think the private equity funds deal with it by just having 10 year commitments and you just can't get out totally. Now you just can't leave sort of thing. But that's not really fair to people in the

43:28 public context. So I haven't exactly solved it. I've seen funds do it where they just operate long enough and have enough of those sort of trophies on the wall that people figure it out And then I

43:42 think the one other challenge for Bison is that most of those funds that have it figured out have large institutions as investors. And those folks are able to say, hey, we strategically invest in a

43:55 few funds like Bison because we know we're accepting short-term underperformance in various periods and they might have to perform in the markets up. But over time, they're gonna have this sort of,

44:08 these moments where they do extraordinarily well and compounded, they should do very well and they add to our sort of risk adjusted returns. So the math is there, but the folks that can do that

44:19 math mostly are at institutions where they, one, don't invest in active managers in public equities, so they just don't do that anymore, period, 'cause Einhorn said, or sorry, not Einhorn,

44:30 Swenson from Yale,

44:34 his theory was to invest in passive indexes in public markets and then invest in private equity and private deals, or they won't invest in oil and gas, particularly in oil and gas public equities or

44:49 both. And so it's sort of this weird, amazing spot where the people that historically would allocate to this sort of strategy, especially with a manager that outperforms a lot over the long run,

45:05 have sworn it off.

45:10 it makes being in the business extremely difficult. And so basically it's a long way of saying, Hey, I had you very few fundraising meetings 'cause everyone hates this stuff. But it also, I think,

45:18 is part of how it's possible to outperform by a statistically improbable amount. Well, I should say in the past, right? 'Cause past performance is not indicative. But outperformed by an index,

45:31 by five standard deviations or something over a 10-year period, it's statistically impossible You should not be able to do it. But you can do it if everyone that would do it isn't doing it and the

45:43 people that would invest in the people that are doing it have sworn for 10 different reasons to not do it. So anyway, do today what I'm not doing for the most part is fundraising meetings because

45:54 people, even the people that know they should, won't or don't. And so it's very lonely and that's sort of why we called it bison, right? We knew there would be volatility, we knew there'd be

46:05 significant, fundraising as well as investment headwinds. And so the idea was, if you have a problem, if you have an issue, you win by facing into it, by embracing the stockless

46:19 startup type

46:22 methodology or faced into the storm and by doing it, you get through it, see if you're investing. Yeah, I mean, this is really good stuff. I'm not like a big personal stock buyer, stock picker

46:33 investor type I have been in crypto for a while, just because I had FOMO back in like 20, I don't know, 2016, something like that, 2017. And that's done extraordinarily well, but that was

46:46 pretty lucky. It was just sort of like, I knew some people that were doing really well with it, but to buy Bitcoin when it was 14, 000 or whatever, look what it is today, right? That's like

46:56 statistical anomaly. But what I can relate to a little bit, and as we're heading into the weekend, This is when I do my daily fantasy sports lineups. is it's exactly what you're talking about.

47:09 The players that you want to put in your lineups, especially in large field tournaments, are the ones that have been underperforming. Because if they have like a statistical basis for how they've

47:21 performed in the past, the odds are they're due for a correction. But it's the hardest thing to do to click on the underperforming name and throw them in your lineup. But if you do so, then you're

47:31 gonna be one of two or three people out of every hundred that's willing to make that risk Versus the hot player that 40 of people are gonna own that has the great matchup. Yeah, even if you pick it,

47:43 everybody else picked it too. Right, so there's a lot of the game theory I think that you're talking about that applies to daily fantasy sports as well. And I don't know, do you play draft kings

47:53 or fan dual or any of that stuff?

47:56 I don't, that's, again, just too similar to stocks. And I'm too addicted to losing money in the short term and making tons of money in the long term. and so. But yeah, exactly. And I think

48:07 like the one other thing that I think is sort of similar, and everyone like talks about moneyball and so on, but that sort of methodology where you end up with when people don't like something,

48:17 it'll get priced to a crazy low level. And so if you have something

48:25 that wouldn't, that would have been cheap anyway, sometimes you can get it for stupidly cheap and you can tilt your odds extraordinarily in your favor. And again, you'll look dumb for periods of

48:38 time by doing that and that's sort of the cost of doing it. You pick the guy that looks funny and whatever, for the money ball thing, you found the guys that literally looked funny and were short

48:50 or whatever and didn't look like or really obese or something. And you win extraordinarily. How do you get a 390 year by looking like a complete idiot and being in the thing that everyone is sure.

49:04 will never work. And then here we are again, right? We're on the very similar to the Cisco analysis you're talking about for, you know, for fantasy sports. You can do these long-term analyses of

49:17 stocks. If you're buying something, you know, a friend from LA, Toby Carla, he does this stuff with like the founders multiple or whatever, very similar. So the idea, if you look at stocks of

49:27 companies that aren't overlevered, that are at, let's say, less than three times EBITDA and have been at that for more than a certain amount of time. So you know, you're not at like the peak

49:37 multiple, like peak of earnings and therefore should be at the lowest valuation multiple. If you're not there, you end up massively outperforming the market over like a five or 10 year period. And

49:47 so you have these small cap, like oil and gas producers and service companies in similar at less than three times EBITDA. And again, everyone is its own thing. There's no guarantees. Maybe we are

49:57 at a peak, although we're down 50 or something in oil from the. recent peak. So probably that's usually a tell that you're not at the peak if you're down 50.

50:07 So, you know, it does look, it's I think in many ways similar and then possibly even more extreme where however much you don't want to lose your fantasy sports game and you don't want to do the

50:18 thing that makes you feel bad, even more so for stocks even more so where people are betting their retirements, their betting people's retirements, their betting institutions, you know,

50:30 endowments and foundations ability to pay so they really feel uncomfortable and the reality is that you have to to outperform, you have to be able to do the things that make you really uncomfortable

50:43 in order to do it. So that's like what I do day to day is try to evaluate all these things, whether it's talking to industry experts or looking at the numbers and digging into the financials or

50:53 reading the various reports or listening to corporate conference calls or attending conferences, which is where you and I connected at one of these conferences. speaking at it two days before, but

51:02 I just stepped around for the whole thing and got to listen to people. I think my favorite, I won't be in the company but they were talking about their brilliant AI solutions and we're actually in

51:11 some of their wells and they're underperforming. And so it was one of these fun moments where it's like, did your computer tell you to do that and mess up or did you choose to? But anyway, you

51:21 learned so much from those things but that's what I spend my time doing. And it's wonderful. It's like the, it's a great game, right? So I try to solve this just infinitely complicated problem

51:34 and you know you're gonna get wrong repeatedly in the short term and often you're just wrong and sometimes you're wrong and you end up being proven right over time if you do it all right. Yeah, yeah.

51:46 Well, Josh, this is really good stuff. Like I love getting into your brain a little bit, understanding, you know, how you look at things. And I think that there's a lesson to be learned here to

51:55 take some of the emotion out of it 'cause it is so hard to bet on. a failing stock. But if you have conviction that it shouldn't be failing or that there's long term upside with it, that's where

52:07 you get your massive wins. And that's what people are betting on you to do. So good for you, right? They're not, they're not betting on you to buy a new video at an all time high. So kudos to

52:18 you on that. Josh, where can people find you? Like if somebody wants to reach out to you, check out your website, like where's the best place to get ahold of you or to find you in the digital

52:27 ecosystem. Yeah, bisoninterestcom is a good place. We have some of our content up there and contact us and so on. That's probably the best place. And then if you want to see my random ponderings

52:43 or, you know, I try to share various like media appearances and stuff, you can find me on LinkedIn or on X or Twitter. I probably post a little too much on there, but, you know, That's a good

52:56 spot to see if you're less interested in oil and gas investments and finance stuff and more interested in various random things. That's a decent spot to find me to. Nice, and my final question, so

53:09 you're going to the electric chair. You got one day to live. You're caught for extreme fraud or something like that. I don't know, or you kill somebody. Anyways, you have one day where you can

53:20 eat whatever food you want in Houston. What are the two or three restaurants that you're going to in your last day before going to the chair? This is a great question. So actually I have a hobby

53:31 barbecue oriented Twitter account that really only like my very most dedicated fans and friends and so on go on. It's, I think it was called like it's BBQ Time or Bison BBQ Time, I don't know,

53:44 something like that. So

53:47 okay, so definitely like if I've got one day, I'm probably going to Killens BBQ and having. their beef burnt ends and a beef rib.

53:59 And occasionally I think they have wacky beef ribs and if they don't, then I'm going to pit room where they have more often wagyu barbecue beef ribs.

54:10 And that's, honestly, that's probably like, I don't know that I'm gonna have any room gene, anything else, and I think I'm okay with that. I think that's it. I'm good to go. Some burnt ends,

54:20 some barbecue beef rib and good to go Well, I mean, you are now officially a Texan with that answer. But yeah, I mean, the barbecue down there is good. Maybe good is an understatement. But yes,

54:33 I actually, for Thanksgiving, I'm gonna order a Snake River Farms Wagyu brisket, like going above and beyond with that, and it's gonna be next level. I can't go to an HEB like you guys can and

54:46 just buy that, you know, out of the freezer. So, anyways, don't judge. But Josh Young, this was a blast, man. Thank you so much for coming on. Best of luck with all of the investments that

54:56 you continue to place with Bison. And I appreciate you being a flag waiver a little bit for the industry, right? I think you're bringing exposure to the commodity space that's undervalued, that's

55:07 sort of under invested in. And it seems to work for you. So keep it up, my brother. Appreciate you coming on. Thank you very much. And I'm going long funk futures. I see them in the background.

55:17 So let's do it.