Expert Investor: Malcolm Turnbull – How The 29th Prime Minister Of Australia Made His Money

HOSTS Alec Renehan & Bryce Leske|2 July, 2020

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

It was an absolute honour to have the 29th Prime Minister of Australia, Malcolm Turnbull, join us on the show. Malcolm has recently released his biography ‘A Bigger Picture’, and there were some incredible stories in there about his time in finance before he got into politics.

In this episode, we unpack ‘Malcolm the investor’, to get an insight into his life as an incredibly successful lawyer and then investment banker.

In this episode we discuss:

  • Malcolm’s thought’s on Australian property, FAANG stocks, and bitcoin
  • Malcolm’s incredible defeat of the British Government as a lawyer in 1986, aged 32
  • The transition from law to finance
  • The establishment of Whitlam Turnbull & Co – Malcolm’s investment bank
  • Investing in Siberian gold
  • What it was like to establish an investment bank four months before the 1987 crash
  • The story behind the successful OzEmail investment
  • Key areas of opportunity for Australia in the coming years

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Bryce: [00:00:57] Welcome to another episode of Equity Mates, the podcast, where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my Equity Mates Ren. How's it going? [00:01:11][14.0]

Alec: [00:01:11] I'm very good Bryce. I always say I'm excited for those interviews, but this one I am particularly excited for. [00:01:17][6.8]

Bryce: [00:01:18] Yes. You've been hanging out for this one for quite a while and for good reason. It is an absolute honour to welcome the 29th Prime Minister of Australia and the author of his recent biography, A Bigger Picture. Malcolm Turnbull, thank you for joining us. [00:01:30][12.7]

Malcolm: [00:01:31] Great to be with you. [00:01:32][0.6]

Alec: [00:01:32] Now, Malcolm, it's an absolute pleasure to have you on the show today. And we're really excited to get stuck into Malcolm, the investor. We're excited to unpack that period of your life when you left the law and you join the world of finance. And there are some incredible stories that we want to unpack and hear about on the show. But before we do all that, we do like to start these interviews with a bit of a game. We call the game overrated or underrated. And what we do is we throw out some investing themes or topics or indexes and get your thoughts about whether they're overrated or underrated as an investment idea. This just gives us a chance to get your perspective on some topics that we may not otherwise cover in the interview. So you're up for playing? [00:02:15][43.3]

Malcolm: [00:02:16] Sure, yeah. Let's do [00:02:17][1.1]

Alec: [00:02:17] it. Great. So we're going to start with the hottest investment idea in the minds of most Australians, overrated or underrated Australian residential property? [00:02:27][10.0]

Malcolm: [00:02:28] I would say overrated. [00:02:29][0.9]

Bryce: [00:02:30] OK, and any particular reason for why? [00:02:32][2.1]

Malcolm: [00:02:33] Well, I think it's concentration risk, really. It's been a pretty good one way bet for a very long time. But, you know, the old story don't have all your eggs in one basket is a pretty good thing to rely on. So I think diversification is important. I mean, everyone aims to own their own house and obviously get it debt free as soon as they can, because interest on a residential mortgage for your own residence is non-deductible. But I think if you then as your investments grow, if you portale, as some people do, into more and more residential property, I think you're concentrating too much in one asset class. And, you know, you can see I mean, let me sort of flesh that out a little bit. You know, strong population growth has been really the key to driving property prices in the big Australian cities. But, you know, in a post Covid world, you can clearly see that slowing down. It's going to be quite a while, I think, before we get back to the pre existing immigration rates. And maybe it'll be a very, very long time. You know, our migration programmes, it's really a series of different programmes is in large part geared to the strength of the economy and indeed the global economy. So, you know, you can see it's going to be quite a while before foreign student numbers get back to where they were, where tourism gets back to where it was. And as far as, you know, permanent migration or longer term temporary migration like skilled migration that responds to the demands of the economy. And if the economy is flat and schools are not required, then you're not going to see that influx. So all in all, I think it's good to have a mixture of assets in your portfolio. And I mean, any investment advice? I would tell you that. [00:04:19][105.7]

Bryce: [00:04:19] So, so moving to overseas, overrated or underrated, the fang stocks. So your Facebook, Apple, Amazon, [00:04:26][7.0]

Malcolm: [00:04:27] I would say. Yeah, I think this sounds a bit wild, but I would say underrated. I mean, they're trading at massive valuations, but again, the pandemic is only going to accelerate their growth. I mean, what the pandemic is doing, it's accelerating a number of trends that were pre existing. And that trend in favour of digital services and digital platforms has been supercharged now. And so when I say there I've read, my inclination would be to say they're not a lot. They're not they're not excessively overrated. But I don't think they're I don't think they're a bubble. That's you know, there are real businesses that they're not like some of the bubble stocks. In 2001, four [00:05:14][46.6]

Alec: [00:05:14] of those fang stocks are now worth a trillion dollars are over. And together with Microsoft, they represent 25 percent of the S&P 500. Their growth has just been phenomenal, bringing it back to Australia. Australia has a bit of a fang equivalent, or at least we like to say so in Australia. And that's the wax tech stocks. So overrated or underrated, those wax stocks. [00:05:38][23.8]

Malcolm: [00:05:39] What are the tech stocks that you include? [00:05:41][1.6]

Alec: [00:05:41] Companies like Wise Tech, Afterpay, Altium Apon and Zero, the Australian Tech darlings, if you will. [00:05:48][6.9]

Malcolm: [00:05:49] I'll pass on that. I'm not close enough to [00:05:51][2.0]

Alec: [00:05:53] fair enough [00:05:53][0.3]

Malcolm: [00:05:54] rest of you, but they are old. Well, of course, and [00:05:56][2.6]

Bryce: [00:05:57] to round out overrated, underrated game, a bit of a controversial one, but overrated or underrated Bitcoin. [00:06:02][5.4]

Malcolm: [00:06:05] Depends what day you ask. [00:06:06][1.1]

Speaker 3: [00:06:07] I mean, [00:06:07][0.0]

Malcolm: [00:06:08] most of the time, I would say it's definitely marked for thrillseekers. More likely to be overrated than underrated. I would say nice. [00:06:16][7.9]

Alec: [00:06:17] So we can assume that you don't have any Bitcoin in your portfolio that. [00:06:20][3.2]

Malcolm: [00:06:21] No. [00:06:21][0.0]

Bryce: [00:06:23] So before we kick into the meat of the interview, Malcolm, and unpack some of your thoughts around the impact of covid and a bit about your story before politics. We like to start with the story of someone's first investment. We generally find that there's a really good story there and a few lessons that have come out that you may have perhaps learnt from them and taken over your investing life. So are you able to share with us the story of your first investment or perhaps your first meaningful investment and some lessons that you may have learnt from that? [00:06:53][30.1]

Malcolm: [00:06:54] Well, I think the first share company that I bought a share in was I think when I was I might have been a schoolboy and bought it with some money I'd saved from a holiday jobs and things like that. But was some shares in Truth and company, which was a brewer. And the reason for that wasn't that I was an underage drinker, but my dad was a hotel broker. And I must have heard him talking about to some clients are cool and being very proud of my tooth and share certificate. But I think that's sort of the investments that got me going really actually were some properties I bought again when I was in my early 20s, you know, just some terraced houses I bought in Newtown and one in Redfearn, pretty, pretty rundown, which I did up and rented and then ultimately sold. And, you know, this was all in the days when interest rates were high in those days, but there was no capital gains tax that gave me a start in terms of my investments. Yeah, I'm not a sort of a classically a classic investor in the sense that I've never been a great stock picker. I couldn't manage a portfolio for one of the super funds or something, you know, like a lot of people in the investment universe do. Where I have done well, investing for the most part has been in starting or getting involved with companies at a very early stage and growing them. And so I've been better at taking an unlevel dollar and turning it into ten dollars or even more than I am at. What a lot of people do very successfully is borrowing nine dollars, buying something for ten dollars and then selling it for twelve dollars. So I haven't been a particularly successful property developer. Obviously, I've owned properties that have increased in value, but that's not been my line of work. And when I got into politics, I had a portfolio which did include single names, stocks, and it did include quite a lot of private equity investments in businesses that I had started, started off. And, you know, General generally with Lucy, in fact, Lucy ran a number of them when I went into parliament, but I progressively exited all that. And by the time I was prime minister, my portfolio, apart from Australian real estate, really consisted of interests in big, widely held US managed funds, most of them ETFs. And the reason for that was that I concluded that transparency had to be the key. I wasn't persuaded that a blind trust would work. I mean, a lot of politicians over the years have used what's called a blind trust, which is where you give your assets to somebody you trust, obviously, and they manage them and you don't know what they're investing them in. And you hope that by the time you get out of politics, they haven't lost it all. I thought that in the Australian context, I thought people would be just too cynical about that. I didn't think that would wash. So I thought better to not invest in Australia, in Australian shares or businesses. That reduces the risk of conflicts, invest in big managed funds, big ETFs typically, and some other sort of more, some more some active fund with big managed funds managed in the US, in respect of which I obviously have no knowledge as to what they're investing in and no influence. Yeah, and their exposure to Australia would be somewhere between nil and negligible. And I also had the portfolio, you know, the allocations and so forth were managed by a financial advisor I had in in New York. So who gave sort of that arm's length advice? So that way what I could do was combine transparency with the mitigation of any realistic conflict of interest risk. And so since I've been out of politics, my portfolios remain in that shape, to be frank. But what I have been doing is you would have seen in the press of back investing in stock. OP's new companies, mostly Australian, which are in the tech sector, in particular cyber security areas, are invested in a company called Casada, which is an Australian cyber security sort of bot detection and prevention business, very outstanding company, started by a young guy called Sam Crowther. When I say young, he started off his signals intelligence career when he was a schoolboy. Would you believe in Canberra working for Defence Signals Directorate? Now, the Australian Signals Directorate, which is the building that contains the bot, by far the highest concentration of sheer brainpower in Canberra. Very, very smart guy. Funnily enough, it's not the big building on the Hill. [00:11:35][281.0]

Bryce: [00:11:36] If you're looking to get into the podcast space and looking to invest in media, you know you know the podcast. Of course, we're always. [00:11:42][5.2]

Speaker 3: [00:11:43] Yeah, I [00:11:44][0.6]

Malcolm: [00:11:44] thought I'd wait for the round, you know. Yeah, but you had a unicorn valuation. [00:11:50][5.5]

Speaker 3: [00:11:51] We're not far enough [00:11:52][0.6]

Alec: [00:11:53] now that we are looking forward to getting stuck into some of the venture capital investments you're looking at now and to hear your thoughts on the future for Australia and where you think some opportunities are. But before we get to that, we want to take you back in history. Now, as we said at the top of this interview, we want to focus on your time in finance before politics. So to start with, can you take us back to 1996? You were 32. You'd had an incredibly successful career as a lawyer defending Kerry Packer at the cost of getting commission, defeating the British government in the Spycatcher case. And then you made the decision to pack it all in and change industries and move across from law to finance. So I guess to start with, can you tell us what you were thinking at the time and why you decided to make that move? [00:12:40][46.6]

Malcolm: [00:12:40] Well, it was a bunch of reasons, but I think the most important reason was that I had together with Lucy, you know, we were basically the legal team. We'd had this extraordinary David and Goliath win against the British government in Spycatcher was the most famous, prominent notorious Australian trial from an international point of view ever, possibly even more so than the Lindy Chamberlain case. I don't think much more so, really, because it was a big political story in the UK. You know, it ran on the front page of every London newspaper for six or seven weeks. And it was a pretty big story here. So this is a gigantic win for a couple of young lawyers that established my reputation as an advocate. And so, you know, the legal world, I guess, was at my feet in that respect I had. I mean, obviously, a lot of the lawyers were pretty envious of my success. But in terms of profile, I could have stayed in the law and obviously built on that and continued to do very well that I figured that I'd had my best through. You know, I figured that out. The Spycatcher, I thought, well, you know, everything else I do is going to be an anticlimax. And then I've done enough that already to know that, you know, most of it is pretty dull, can be very lucrative, of course, but it's pretty boring. So so I figured that it was time to do something else. And I had always wanted to make not billions of dollars, but I wanted to be financially independent. I had had a bit of a hang up about that. And I knew that it's actually quite hard to accumulate wealth earning income, you know, because of tax. As my dad used to say to me, if you want to make money, you've got to try and make it in big licks. And I figured that even as a very well-paid barrister or lawyer, that was going to be challenging. So I thought what I do is set up an investment banking business. Now, everyone else seemed to be doing that. This is the sort of eighty seven and just before the crash. [00:14:39][118.3]

Alec: [00:14:40] So Malcolm, you said there that you founded your investment bank just before the 87 crash and it was literally four months before. So can you tell us what the experience was like starting an investment bank, starting a new career in finance and then having Black Monday happened four months later? [00:14:57][16.5]

Malcolm: [00:14:57] Yeah, well, we were very lucky, actually. The partners were Nick Whitlam, who had previously been running the State Bank of New South Wales, myself and Neville Wran. And we raised fifty million dollars in capital from Larry Adler and Kerry Packer in equal shares. And fortunately, when the crash happened, we hadn't actually invested any of it. [00:15:22][24.3]

Speaker 3: [00:15:23] Right. [00:15:23][0.0]

Malcolm: [00:15:24] So basically, the crash occurred and we were still in cash, pretty much, which was a great relief because, you know, we could have easily got ourselves into a situation where we lost a chunk of it. We actually ended up the next year giving all that money back to Packer and Adla. Adler really needed the money because his company came under a lot of pressure. Its market capitalisation halved. I think even worse than that, Packer was flush with funds because he told the Nine Network, in fact, up to Deep Dive. Did for him with Bond, and so he didn't really need the money, but we realised fairly quickly that we actually didn't need that much capital because our business was essentially an M&A business. And having those guys on the register and on the board was only likely to create conflicts and issues with other would be clients. So it sort of worked out OK. And we ended up raising a smaller amount of money from a British financial institution that Nick had a connexion with. In a way, we went and I mean Whitlam Turnbull was very successful for a couple of years and then Nick left us and then became Turnbull and partners, and it was actually even more successful afterwards. So we had a good 10 year run. And then in 97, I sold the business effectively to Goldman Sachs and became a partner of Goldman Sachs. [00:16:43][78.7]

Alec: [00:16:43] Malcolm, reading your book, there's a number of fascinating stories about your time in finance and running your own firm. There's three that we would would love to hear a little bit more about in this interview. And the first one was your experience with investing in a Siberian gold mine in the early 90s after the Soviet Union broke up, which sounded like a fascinating story, well off the beaten track. So can you tell us a little bit about that investment, how you found it and what your experience going to Serbia and all of that was like? [00:17:16][32.7]

Malcolm: [00:17:16] Yeah, not Serbia. Serbia's in the in the Balkans. I was in Siberia, [00:17:19][3.0]

Speaker 3: [00:17:21] but [00:17:21][0.0]

Malcolm: [00:17:22] I would have been lost. Serbia would have been pretty wild, too, at that time. Yeah, well well, through one of our directors, John Mitchell, actually, who knew a man called me who was an Australian mining entrepreneur, and he had a sort of a partner, a Russian woman, Lyudmila Melnikov, and they had secured a deal with a Russian alluvial gold mining company in Siberia at a place called Bedivere, which is our calls, about three hours north flight from Irkutsk. So it's in the middle of nowhere and it's on the Lena River. And it's been around for a long time. It was called Ren Zuleta, which means Lena Gold. And they had secured the right to buy a share of and finance the development of an enormous hard rock gold resource, which was the source of the alluvial gold in the river. And this was a mine called Sukhoi Log. And it hadn't been explored by the Soviets, I think, as far back as the 60s and proven up to around 80 million ounces, as I recall, the reserves. So it was a massive resource, but had never been developed. And so we raised some money for them. And I did a couple of fundraising's for them and help get through a whole host of legal challenges in Russia. I mean, there was enormous optimism about Russia at that time, you know, because everyone was thinking that, you know, with communism overthrown, free enterprise and the rule of law would break out. And it sort of didn't really work like that ultimately. So it was a very it was very interesting. I spent a lot of time in Moscow, a lot of time in Siberia. I was very, very interesting seeing Russia at that extraordinary stage of transition and transformation. By about 95, it was obvious the company's direct, you know, its leadership and everything had to be in the northern hemisphere. And its London is a huge source of mining finance. And so they were raised more money there. And we had some big shots in the London mining world, came on the board. And so I never and I got off the board and we basically exited the company. And then sadly, by 97, the Russians essentially double crossed them on the mining deal and and, you know, still lost its right to develop the resource. But it was an adventure, there's no doubt about that. I'll give you an example of the sort of bizarre circumstances you'd find yourself in that outside of Irkutsk, which is at the bottom of Lake Baikal, the largest freshwater lake in the world. There's a city called Angasi, which was a closed city in the Soviet era because that had a big nuclear power station, a nuclear research centre, and foreigners were not allowed into it anyway. It had been opened and we had a meeting there and we drove in past all of these featureless concrete apartment buildings, you know, absolute old Soviet looking architecture, very grim environment. And then we came to a pleasant district of suburban villas, which wouldn't have looked out of place in a posh suburb in Sydney or Melbourne, and they were surrounded by a gate. So it was a fence. Wall was a gated community. And on the right hand side of the gates, as you went in for the gates were opened. You could see this big bas relief sculpture on the wall, which had a pair of Soviet soldiers, you know, looking heroic. Helmets and bayonets, you know, poised and the slogan Slav out Friday, I think it was, which, as I recall, meant glory to labour or glory to the working class. And we went through these gates into an area of complete privilege, utterly at odds with the living circumstances of the rest of that city. And this is where, you know the nomenclature, you know, the big shots, the party bosses, the senior officials leave. And I thought, you know, the irony of that slogan on the wall, it was like it was as though the people that trudged past must have looked at that and said, gosh, you're really rubbing it. How is this a joke, you know? [00:21:38][256.8]

Speaker 3: [00:21:41] Exactly. [00:21:41][0.0]

Malcolm: [00:21:42] Exactly. Know, you'd think it would be a bit of ironic graffiti that someone put up, but instead it was an official installation anyway. It was a fascinating time. Yeah, that was pretty wild place. But we did they did a mining deal, got a big mining project underway in China, which we had more success with them in that that that mine ended up being built and is operating listed on the London Stock Exchange. And we had a gold interest in Ghana. I never went to Ghana, never used to handle that investment. And yeah, we did lots of lots of interesting, exciting investments around the world. [00:22:15][33.8]

Bryce: [00:22:16] Fascinating. So you mentioned at the start of the show there, Malcolm, that your skill lies in taking one dollar and turning it into 10 or even perhaps 100. [00:22:24][8.3]

Malcolm: [00:22:25] I mean, you know, being realistic about it, if your aim is to turn a dollar into 10 with early stage companies, a lot of the dollars you invest are going to turn into zero. [00:22:33][8.4]

Speaker 3: [00:22:34] Yeah, yeah, yeah. [00:22:35][1.0]

Malcolm: [00:22:36] I just got to make sure that the net is positive. [00:22:39][2.9]

Bryce: [00:22:40] Yes, yes. You find that 100 multipack. A great example of that. And probably one of your most notable investments is OzEmail, where you took a stake and then it ended up listing on on the Nasdaq. It's a great story. Are you able to share what it was, I guess, about OzEmail that was attractive and lent you to to putting in money and then the story of going through to it being the first Australian firm to actually IPO on the Nasdaq? [00:23:04][23.9]

Malcolm: [00:23:04] Well, the Aussie story begins with a very brilliant guy called Sean Howard, who was a computer geek, I guess, computer programmer and publisher. And he started a number of computer magazines which he sold to a share of and ultimately all of to Consolidated Press, which is how I got to. And in about 94, Sean had this idea to start an Internet service provider and he was looking around for partners in finance. And he was very close to Trevor Kennedy, who had been the boss of Australian Consolidated Press. The, you know, the managing director obviously working for Packer. Trevor got me involved and we both invested half a million dollars each for a quarter of the business each. And the way we went, it ended up being, I think when it was sold, it was well over half a billion dollars. And so it was a very, very good return, well over 100 bagger. I guess you don't get a lot of those. But it was a very interesting journey. I mean, Sean was and is still a real technology visionary, and he imparted to me one of the wisest things I've ever been told about Tik-tok, which is that there's always plenty of technology, but what is in scarce supply is technological imagination. You know, what you can actually do with it. You know, that was his long suit. And, you know, truthfully, apart from being the biggest ISP in Australia at the time and, you know, we're bigger than Telstra at one point now, obviously, they they were a ferocious competitor. And obviously, I, you know, the infrastructure and, you know, they were a ferocious and not at all fair, put it that. But also, you know, we had the first we believe, the first commercial voice over IP business, OzEmail, into the software for that was written by a guy called Rick Spielrein in Melbourne and who was a partner in that. And that was very innovative business. You know, we had an Internet ad placement business and ad serving business similar to what DoubleClick became called Web, what media, and that unfortunately, we got into partnership with one of Murdoch's companies and that ended in tears, but or not in tears were just ended up in an utterly inadequate return, as I describe in the book. But anyway, it was very exciting. And, you know, and we got we've got it listed in the US because and this is the interesting thing, you know, just from a historical point, at this stage, it's 96. We desperately need more capital, but we obviously want to raise it at a decent valuation so we don't get diluted. We could not raise any money for us email at that time on the Australian Stock Exchange. You know, and Sean used to say to me, say, Malcolm, what is wrong with Australian investors? He said, you can go and raise millions of dollars to invest in a bloody gold mine. In Siberia, you think is the definition of risk high risk, and he said and here we've got what is in fact a telco with hundreds of thousands of customers paying real money with real revenues. And we can't raise any money here because it's technology. And he was right. So we took it to Nasdaq and we were the first Australian company to go public on Nasdaq in 96. And we did an IPO there, which was very good, very exciting, and subsequently got second listing on the ASX. But really, all of them capital came out of the US, whereas now there is a lot of money available in Australia, both in the private equity venture capital realm and on the ASX for technology. In fact, that you mentioned some of the names earlier. [00:26:45][220.4]

Bryce: [00:26:45] Now talk there might be a lot of money around, but do you think there's a lot of opportunity to, I guess, deploy that money in Australian tech? [00:26:53][7.7]

Malcolm: [00:26:54] Yeah, sure. You know, innovation and technology, cyber security and so forth were really top priorities of my government and my economic policy. And since I've been out of politics and I'm back being able to spend some time investing, I have been absolutely blown away by the depth of the Australian technology ecosystem, the amount of innovation, the level of interest in it from VC funds overseas that, you know, you've got some big VC funds in Australia now and it is very, very busy. So there's no question that it's a completely different landscape to what it was 20 plus years ago. [00:27:35][41.0]

Alec: [00:27:35] Well, Malcolm, that might be a nice Segway to the opportunities that you're looking at today and where you think there's potential for Australian tech and Australian industry more generally, more generally to really, you know, grow in the coming years. You probably had the best vantage point of anyone in Australia being the prime minister and, you know, saying different industries rise and seeing different opportunities come about. Now that you've left the prime ministership, where do you think the biggest opportunities in the Australian economy are there? [00:28:03][27.3]

Malcolm: [00:28:03] I mean, there are so many you know, there I think there are opportunities in just about every area. We've got enormous advantages, you know, very smart, educated, innovative community, a very diverse community. I mean, that our multiculturalism is an enormous asset to us. You know, I mean, the fact that you've got a harmonious society. Nearly a third of Australians born overseas, more than half of the parent born overseas. That means you've got connexions within Australia and a familiarity within Australia of just about every part of the world. And so that really helps you in a global environment. I think the other thing, too, that, you know, we used to be hung up on the tyranny of distance, you know, and the fact that we were so far away felt remote, disconnected. Well, you know, obviously the Internet has shrunk the world incredibly. And again, this is one of those things that the pandemic has done. I mean, there has been virtually no international travel for months and months now, and yet the pace of international business continues unabated. And, you know, the fact that we're all zooming and Skype being teeming, you name your favourite with people all over the world indicates that really Australia is it is no longer a long way away. I've often said in respect of cities that that distance is a temporal concept, not a linear one. In other words, it doesn't matter how far away you are and kilometres, the question is how long does it take you to get there? So you might be only a kilometre away from another place, but if there's a big river or no bridge and, you know, 50 kilometres to the next year's bridge, you're a long way away, really, in terms of time. So anyway, all of that is kind of obvious. What's happened now, I think, is the is the extraordinary functionality and efficiency and value cheapness of these videoconferencing applications has transformed opportunities. It really has. I mean, it's not so long ago that to have a video conference like we're having now would have required each of us to have some really expensive bespoke equipment worth hundreds of thousands of dollars, probably built by Cisco or someone like that. And now you basically just need two devices and away you go. So all of that, I think, has opened the world up. So Australians have got to think globally. We are a very globalised, multicultural society. What are some screaming opportunities? I think energy is a big opportunity for us, the cost of PV photovoltaics in particular, as well as other renewable. Has come down so much, so dramatically that we're now in a position to generate clean and very cheap electricity and it's only going to get cheaper. So given our fact that we've got a lot of real estate in Australia, a lot of sunshine, a lot of locations, you know, for diversity of wind and solar and so forth, you know, we're in a position to become, as Ross Garnaut has written about recently, a real clean energy powerhouse. We could become we could become, oddly enough, weirdly enough, we could become a country that is able to get back into very energy intensive businesses because we've got so much cheap, we'll have so much cheap electricity. So that's very exciting, particularly because it's going to be zero emission. I think the opportunities here unlimited. And they're basically, as I said when I launched the Neisser in 2015, you know, the opportunities are limited only by our imagination. [00:31:50][226.9]

Alec: [00:31:51] Yeah, I think that was one of the things that while you were prime minister and afterwards, your optimism about what it is to be an Australian in the Australian economy is really infectious. And I think it's going to be really important in terms of Australia exploiting the opportunities that we have in the years to come. One other thing that you were instrumental in keeping alive while you were prime minister was the TPP, the Trans-Pacific Partnership, after President Trump was elected. And obviously there's a lot of rhetoric in Australia around, you know, the opportunity to export to Asia, to become the food bowl of Asia and stuff like that. How do you think Australia should be positioning ourselves in the Asian century to take advantage of the economic opportunity that exists? [00:32:31][40.2]

Malcolm: [00:32:32] You've got to recognise there are these very big markets in our hemisphere and market to them. [00:32:37][5.2]

Speaker 3: [00:32:39] Fair enough. [00:32:39][0.3]

Malcolm: [00:32:40] What can I say? I mean, you've got, you know, living standards are rising. You've got middle classes and all of these countries and they all want to buy various products and services from Australia. They're just a lot of opportunities. There are plenty of barriers to trade, which is why the Trans-Pacific Partnership was so important. I mean, that was a big diplomatic win by my government and frankly, a personal effort on my part to keep that alive. Because had I not been able to persuade Shinzo Abe to stick with it and then other leaders, it would have been absolutely dead, which is what everyone thought it was. So, you know, we're faced with a rising tide of protectionism around the world. I fear, you know, Trump is obviously tapped into that and exacerbated that the pandemic will only make that worse because people will be more anxious. You know, you can always get a sort of a nod from the populist right. And indeed from the populist left. In some respects, if you argue against free trade, I mean, you know, you get sort of both one nation on one side and the CFMEU have been historically anti free trade agreements. But the truth is that from Australia's point of view, free trade and open markets means jobs. And so what we've got to do is, you know, we've got so much more to gain than we have to lose from free trade and we just got to keep at it and be relentless. So, you know, out of my time as PM, apart from the TPP, we got a free trade deal done with Peru. We got a free trade deal done with Indonesia, which is very important, you know, enhanced agreements with Singapore and others. All of that was critically important. I think the Indonesian market, it's harder to access than many other markets in our region because there is a very strong protectionist tradition there and a lot of vested interests that have grown up with the benefit of protection and regulation and so forth. But, you know, it's I think persistence with the Indonesia relationship, whether it's at the governmental level or the business level or the academic level, is going to be rewarded. You know, it's the fourth biggest country in the world. It's the largest Muslim majority country in the world, and it's our closest neighbour. So it makes a lot of sense to be very attentive to it. And it's got a great leader in President Joko Widodo, how fortunate Indonesia is. And we are to have such a principled, progressive, charismatic guy as the leader of that big country. [00:35:12][151.5]

Bryce: [00:35:13] So, Malcolm, before we move to our final three questions that we always ask our guests at the end of the interview, we'd love just to briefly return to your role now back in Vaisse post parliament. And if we just bring it back to basics and you put your venture capital hat on, what are some of the, I guess, key characteristics that you look for as a as a venture capitalist in companies that you're investing in? Just to sort of help our audience form ideas around perhaps more important things to look for in early stage companies? [00:35:42][29.7]

Malcolm: [00:35:43] The key thing is people, you've got to have a good leadership. Typically, there will be a founder or founders. You've got to have people that are able to build teams. You need to have people with the skills to grow the business. A lot of start-ups struggle to get to scale because the founders don't have the management skills they need. So you may have to bring that. In fact, I think you generally do need to enhance that, but that's got to be done in a way that doesn't disempower the founders as a lot of personal chemistry associated with all businesses, with politics for that matter, but particularly with start-ups. That's important. Obviously, you've got to look at the competitive environment. I mean, just because they might have the best mousetrap, that doesn't mean it's going to be the most commercially successful one. Financing is very important, particularly at the moment. You've got to be careful to make sure that you're investing in a business that has got a fair amount of runway in terms of the capital that it's got, that it's not going to run out of cash any time soon because you might find yourself trying to raise money in an adverse environment. So ideally, look for businesses that have got two years of runway, ideally, sometimes a bit less. You know, obviously you've got to be looking to businesses that can get into positive cash flow as soon as possible. I'm probably more cautious on that score than experienced venture capitalists would be. I'm not going to say experienced. I mean, I'm just because I've got grey hair doesn't right from the life of being a VC. So I've had some success in venture capital, but there's plenty of people that have done a lot more people than me and may be more prepared to take on more risk. And generally, I'm investing my own money, so I can't afford to take a sort of spray and pray approach to invest. [00:37:33][109.4]

Alec: [00:37:34] Now, Malcolm, we want to say a big thank you for taking the time. As Bryce mentioned, we do like to finish these interviews with a final three questions, so we'll get stuck into those. OK, so the first one is, do you have any books that you consider must read? [00:37:49][15.2]

Malcolm: [00:37:50] Let me master it well to so many. [00:37:52][2.2]

Speaker 3: [00:37:54] And of course, because yours is the first time you have course my the picture available at all. Good bookstores. [00:38:01][6.9]

Malcolm: [00:38:01] You'd like to talk about a classic. I would encourage people to read the city's history of the Peloponnesian War, probably the first history written in the Western tradition. That would be, I guess, a must read, great political strategic study. [00:38:18][16.5]

Alec: [00:38:19] The second question is, what is your go to source for investing or financial information? [00:38:25][5.6]

Malcolm: [00:38:26] Well, again, it's just so many. I mean, to be to be honest, I often I often talk to our son, Alex, who's a professional investor and much more of a he's a trader and a stock picker. You know, he can pick stocks and so forth. He's much more of a conventional investor than me. I would often talk to Alex and, you know, there's just such a massive financial information. I don't have a Bloomberg screen, but I subscribe to all the financial news services that. So many people listening to this will do pretty broad brush. [00:38:59][33.1]

Alec: [00:39:00] Now, Malcolm, the last question that we have that we like to end these interviews with, if you think back to your younger self, you know, investing in truth and co or buying that first house in Redfern or Newtown, what advice would you have for your younger self? [00:39:14][14.5]

Malcolm: [00:39:15] I would say, listen more, listen more and be more patient. But maybe I had been more patient. I might have gone as far as I did. So who knows? One of the songs on Hamilton, isn't it? Listen, more talk less. Yeah. It's good advice for people of any age. Yeah. [00:39:33][17.5]

Bryce: [00:39:33] A nice way to finish a great piece of advice there, Malcolm. And as Alex said, really appreciate you taking the time to join us on Equity Mates today. We know our audience certainly would have got a lot of value out of the discussion. And it's been great to understand, I guess, some aspects of your life that otherwise haven't been so public or I guess so recent. So, again, thank you for your time. We certainly enjoyed it. [00:39:56][22.9]

Malcolm: [00:39:56] Thanks a lot, guys. Thank you. [00:39:57][1.3]

Alec: [00:39:58] Good luck. Thanks, Malcolm. [00:39:59][0.9]

Speaker 5: [00:39:59] Thanks for listening to Equity Mates investing podcast production of Equity Mates Media. Please remember that everything you hear in Equity Mates investment podcast is general advice. Only the content has been prepared without knowing your personal objectives, specific financial circumstances or goals. The host of Equity Mates Investment Podcast may maintain positions in the companies discussed before considering any investment. Please read the product disclosure statement and consider speaking to a licenced financial professional. [00:40:24][24.4]

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