October 31, 2023 • 36 mins
Ever wonder about the giant leap of faith it takes to plunge into the mysterious realm of index funds? Our guest today, Kevin T Carter, who is the founder and Chief Investment Officer at EMQQ Global, shares his thrilling journey of 30-years in the investment world, and the influence of 'A Random Walk Down Wall Street' on his career. Carter speaks candidly about the impact of Warren Buffett and Charlie Munger on his investing philosophy, exposing us to the underbelly of the mutual fund industry. This conversation questions historical investment norms, challenging the compulsory purchase of 100 shares of a stock for a $29 commission.
What if I told you that the next big thing in investing isn't Silicon Valley but emerging markets like India, China, Brazil, and Nigeria? Carter's eye-opening perspective on the potential of these markets is sure to get your adrenaline pumping. We talk about the transformational role of smartphones, the change in consumption patterns, and the often overlooked potential of consumer stocks in these countries. Specifically, we delve deep into the robust digital public infrastructure and massive investment potential that India presents. With its tech-savvy workforce, 50-year-old technology sector, and comprehensive intermodal plan, India is poised to take center stage in the global economy. Carter's insights will leave you with a new understanding of the power of investing in emerging markets.
To learn more about Kevin T. Carter:
1. https://www.linkedin.com/in/thekevintcarter/
2. https://www.emqqglobal.com/
To learn more about Jonathan's recession resilient mobile home park real estate Fund, as our next Fund raise is $50 million only for accredited investors: https://www.midwestparkcapital.com/
To learn more about Jonathan's highest level business growth consulting and fractional CMO services. And upcoming group zoom entrepreneur masterminds:
https://www.revenueascend.com/consulting/
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Episode Transcript
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Speaker 1 (00:00):
when you really take the whole thing apart, it's the
people that are emerging.
I mean, there's six and a halfbillion people.
They want stuff, right.
They want more and better food,more and better clothing, they
want appliances, they want to goto movies, they want to take
vacations, they want anautomobile of some sort and they
want their kids to go toHarvard.
And I didn't have to figurethat out.
(00:20):
That's been documented fordecades and McKinsey calls this
the biggest growth opportunityin the history of capital.
So if you're going to invest inemergency markets, that's what
you're trying to capture.
That's all that I've done for18 years and that's the
foundation of what we do at EMQQ.
Speaker 2 (00:38):
Welcome to the Ultra High Network podcast, which is a
global community of the mostsuccessful and their insights.
We want our families toflourish, collaborate and create
a better world for all.
This podcast is a trustedresource to learn from each
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I'm the host, jonathan Tuttle,the founder at Midwest Park
(01:02):
Capital, a boutique mobile homepark Real Estate Fund.
Revenue Sun, a leading digitalconsulting and fractional CML.
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This episode is sponsored byPrestige, the world's most
(01:23):
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Enjoy the show, please like,comment, share this podcast with
your friends.
Thanks for listening.
Welcome back to the Ultra HighNetwork podcast, and today I
have fantastic guests Kevin TCarter.
Kevin is the founder and chiefinvestment officer at EMQQ
(01:46):
Global and welcome to the show.
Thanks, good to be here.
Perfect, do you want to justgive a little background,
because I kept a real briefthere and I know I could go on,
but you got a prettydistinguished background, so I'd
rather you describe it and tellit than me.
Speaker 1 (02:00):
Okay.
Well, yes, I'm Kevin Carter.
I'm the founder of EMQQ Global.
I located in San Francisco.
I have worked in the investmentbusiness here for 30 years.
What I started in the investmentbusiness in 1992, I had a short
(02:21):
interview at the leadinginvestment bank in San Francisco
and then they told me I couldstart Monday.
And I said, well, how can Ipossibly start Monday?
I don't know anything.
And they told me to buy thisbook called A Random Walk Down
Wall Street.
And so that's how I started,and if you or your listeners are
familiar with this book, it'sor not familiar with it.
(02:42):
It was first written in 1972 bya man named Bert Malkiel, who's
a Princeton economist, and inthe first edition of that book
he suggested that somebodyshould make an index fund,
because 50 years ago there wereno index funds, but Burton was
one of a few people talkingabout the idea, and so I started
my career by reading aboutindexing and efficient markets.
(03:05):
And the person that wrote thatbook, by the way, bert Malkiel,
he's also a Vanguard boardmember and has been for a long
time, and he also was thechairman of the committee that
created the first ETF, thespider.
So he's been involved withindexing and ETFs, since before
there were indexing and ETFs.
So I read about that part ofthe investment world.
(03:25):
But then I quickly realized Iwas an Omaha person.
When it came to business andinvesting I always think about
things through a Charlie Mungeror Warren Buffett lens.
And in fact it was the 1995Berkshire Hathaway annual report
in which Warren Buffettsuggested that most people
(03:49):
should buy index funds, bothindividual and institutional.
And when I read that in early1996, my head was sort of blown
by this, because I was an activeperson and the person that best
embodied that was telling meand everybody else that they
shouldn't do that and theyshould just buy index funds.
And I found well, I was mildlyconfused but I did a little
(04:15):
research, didn't take me long torealize that it was
mathematically correct that ifthe option was to buy an active
mutual fund with one or one anda half percent management fees
and another percent of expensesto pay for the trading and all
the other things, that you wereprobably going to underperform
(04:38):
the stock market by the amountof fees because Vanguard would
give you the index for nothing.
And if the other people chargeyou two percent, then if the
market was up 11, you'd probablybe up nine and that doesn't
sound like a big difference.
But if you do that for 30 years, that's a huge difference.
And so that got me thinkingabout the investment business,
(04:59):
and I was a very idealisticyoung value investor and I also
had come to view the mutual fundworld, which had paid me a lot
of money as an analyst, but inthe hedge fund world.
But when I looked at the mutualfund world, I looked at it as
basically a giant tax.
And then several very wealthyorganizations, usually
(05:23):
controlled by families, hadbecome billionaires and
multi-billionaires by taking oneand a half percent of
everybody's money every year,and so it's a great business for
them.
But, as was pointed out in abook that's almost 100 years old
called when Are All of theCustomers?
Yachts it was the purveyors ofthe mutual fund companies that
(05:48):
made all the money, and thelong-term investors did okay and
it's possibly very well just bythe fact that they had invested
for a long time.
But the difference between 11%a year and 9% is a big deal, and
everybody on the phone shouldget out of spreadsheet and make
a 50-year model and see what itreally looks like, because it's
(06:09):
the miracle of compounding is abig deal.
So anyway, I became veryidealistic and I decided after
thinking about it that theproblem on the planet back then
was that if you want to investin the stock market directly,
you had to buy 100 shares of astock to get the $29 commission.
(06:32):
Because that was the CharlesSchwab commission.
That was the lowest on theplanet.
But you had to buy 100 sharesand the average stock was about
$30 a share.
So if you wanted to invest instocks, you had to buy $3,000 of
one stock to get the 1 percentcommission.
That was hard for most people todo.
(06:53):
If you're saving $506 a monthwhen you're in your 20s, you had
to put it into a mutual fund.
That was the only way you couldget it into the stock market.
I decided that we shoulddevelop a way that you could
invest $10 into the stock marketwithout a mutual fund involved.
So I developed a system andfiled a patent on fractional
(07:14):
share trading which we sold toeTrade in the year 2000.
When I started that business Iasked the random walk author,
the spider guy Bert Malkiel.
I asked him if he'd be on myadvisory board.
So that started myentrepreneurial I call it the
investment Peace Corps years.
(07:35):
If I had followed a morecapitalist direction I would
have started the hedge fund, butI thought I could try to save
the world.
So we did that.
That worked out fine, sold itto eTrade.
Then, right after that, we cameup with this other idea Burton
(07:57):
and I did, which was to buildcustomized index funds so you
could build your own S&P 500strategy if you did in a
separate account.
Rather than buy all 500 stocksfrom the S&P, you buy a 50
stocks or 100 stocks subset, butthen you could customize your
portfolio and leave out tobaccostocks or something you didn't
(08:18):
like.
You could also do lossharvesting if you were a taxable
investor.
So we invented this thingthat's now called direct
indexing.
We called it active indexing 20years ago whenever we cooked it
up, but that's gone mainstream.
Both fractional shares anddirect indexing.
You can get it Schwab.
(08:39):
So as soon as Schwab launchesthat, I consider it.
How many years early was I?
Well, I was 20 years early forboth of those things, for
whatever it's worth.
So we did those things and wehad sold the Texas this is a
French, but the Boston basedFrench holding company that owns
(09:01):
a bunch of US mutual fundcompanies.
They bought the company at theend of 2004.
Right before they bought thecompany, google went public and
they asked my partner, burton,to give a talk to their
employees.
I wasn't involved, but everyonewas talking about Google and
Burton and I had dinner thenight before and then he went
(09:22):
and gave us talk, with BillSharp as the other speaker, to
the employees of Google.
Then, a few months later, myphone rang and it was a guy from
Google and he said hey, I heardabout this active indexing.
I want to make my own customS&P 500 strategy.
I told them that we didn't workwith individuals, we only work
(09:42):
with it financial advisors atMorgan Stanley or Deutsche Bank
or Credit Suisse.
He said well, I don't want anadvisor, I want to just invest
directly with you.
One thing led to another and hetalked me into becoming his
financial advisor.
Then he started introducing meto other people at Google.
In the months after the IPO ofGoogle, I started going down to
(10:06):
Mountain View every week to meetwith some new engineer who had
been there for a while and hadsome money Some of it quite
significant and wanted help innot just building a customized
S&P 500 strategy but the rest oftheir portfolios for which we
use ETFs.
(10:26):
At that same time that I startedgoing to Mountain View, burton
starts going to China.
He's a Princeton economist andhas been there for over decades,
but a couple of his callingswere Chinese and they had gone
back to Beijing in about theyear 2000 to teach economics at
the Harvard of China.
(10:46):
They had started calling Burtonand say hey, burton, you should
come see what's happening herein China.
This is back when China'seconomy was growing at 11 or 12
percent.
All of a sudden he writes awhite paper about investing in
China and the people at Googleheard about it and they called
(11:08):
me and they asked if Burtoncould come and give a talk about
investing in China.
That's actually the poster theyput around the campus
advertising that talk.
But 17 and a half years ago Idrove down to Mountain View and
picked up Burton on the way.
He gave a talk to these peopleat Google and they all looked at
(11:28):
me and said we want to investin China.
So I was not planned.
But from the moment I got backto the office that day until
today and presumably tomorrow,my whole life has been trying to
figure out.
All right.
First of all, what does thateven mean to invest in China,
and how on earth do you do it?
(11:49):
That led, of course, to allemerging markets and how to best
find the opportunity, thatgiant asset class which includes
90 percent of the world'speople.
So that's how I got here.
Speaker 2 (12:05):
No, I love it, and Charlie's poor Charlie's
Alvamack is one of my favoritebooks.
Oh, of course, such a classic,especially learning about
cognitive bias and how peoplemake buying decisions, and
pretty fascinating stuff.
Have you ever actually metWarren or Charlie?
Speaker 1 (12:20):
No, I have not.
I have not.
Speaker 2 (12:23):
Okay, I'm just curious because you're dealing
with some pretty high levelpeople.
They'd be pretty fascinating tomeet those guys.
They're gentlemen.
Speaker 1 (12:28):
Oh yeah.
Well, I'd love to get Burtonand Warren Buffett together.
That would be a interesting, Ithink, but so far no.
Speaker 2 (12:38):
I asked a question during one of the meetings the
Andrews shareholder meetingsbecause I'm sure you can have a
really good question for them.
Speaker 1 (12:44):
You know, I've never actually gone to one of those.
I've always read the A&Rreports, and now of course you
can watch them.
Speaker 2 (12:51):
But anyhow, so you want to talk about.
So you're saying before wasChina market.
Do you want to?
Are you guys mostly focused onChina or are you looking at
other emerging?
Speaker 1 (13:00):
markets.
No, here's what we do.
So the two most importantthings I've learned in the last
18 years about emerging marketsare pretty simple.
Just at a high level background, what we're talking about
emerging markets it's 46countries, it's China, it's
India, it's Brazil, it's Nigeria.
There's also 46 includes thefrontier markets.
(13:24):
So there's about call it, the26 emerging markets and 20
frontier markets Nigeria,vietnam, or frontier markets.
India, china are emergingmarkets.
So those 46 countries, it'sabout 85% of the world's
population, but they're younger.
So it's about 90% of theworld's people.
And in terms of where they are,how much?
(13:47):
You know how much is Asia, howmuch is South America?
Approximately, in terms ofpopulation and economic
opportunity?
It's about 60% Asia, china andIndia, the biggest parts, 15%
Latin America, brazil and Mexico, and then there's another 25%
that spread all over the placeSouth Africa, egypt, poland,
(14:10):
kazakhstan.
So that part's you know other.
Call it other, but that's whatit looks like on the map.
And the two things thatinvestors should know at a high
level are first, that when youreally take the whole thing
apart, it's the people that areemerging.
I mean, there's 6.5 billionpeople and they want stuff right
.
They want more and better food,more and better clothing, they
(14:33):
want appliances, they want to goto movies, they want to take
vacations, they want anautomobile of some sort and they
want their kids to go toHarvard.
And I didn't have to figurethat out.
That's been documented fordecades and McKinsey calls this
the biggest growth opportunityin the history of capital.
So if you're going to invest inemerging markets, that's what
you're trying to capture.
That's all that I've done for18 years and that's the
(14:56):
foundation of what we do at EMQQ.
The second thing to know aboutemerging markets is that there
is a serious problem in theinvestment world when it comes
to emerging markets, and I don'thave a solution for this
problem, but it's a big problemand the problem is the index
sucks Like it is.
(15:17):
You know, if you want to makemoney, the emerging market index
has failed and is likely tocontinue to if not fail, I think
be suboptimal, and this issomething I learned on the first
day, 17 and a half years ago.
So after Burton gave his talkthat morning, we, and then these
(15:39):
people, looked at me and saidall right, that was a good story
.
We want to invest in China.
We drove back to San Franciscoand I walked straight over to
the portfolio managers and Isaid the Google guys want to
invest in China.
Give me a list of all thecompanies in the China ETF,
because I assumed that's how wewould give this exposure.
(16:00):
And there was a China ETF 18years ago, but only one ticker
civil FXI, the original highshares China ETF.
And so I asked for the list ofholdings because you know, I'm
working in the index businessbut I'm an Omaha person.
I don't care what the name ofthe ETF is, I want to know what
(16:21):
are the businesses we're goingto own.
And so I asked for the list andbefore they gave me the list,
burton told me aside and told methat most of the companies were
going to be Chinese governmentowned banks and oil companies,
state owned enterprises and Iknow I knew about these things,
you know kind of.
But he went on to explain thatthese businesses, in addition to
(16:45):
having serious inefficienciesand conflicts of interest, that
they're frequently corrupt andthat nobody that runs the
company cares about growing theearnings.
And that made me sick to mystomach because in Omaha, you
know, investing is really simple.
The reason businesses havevalue is because they make
(17:06):
profits for the people that ownthe companies.
And the only way to grow yourvalue is to grow your earnings.
And so if you're telling methat the people that run these
companies don't care about thatat all, why would you invest in
them?
And then, when I looked at theETF, it was 80% state owned
enterprises and it was less than10% in consumer stocks.
(17:27):
So right away I was like, waita minute, we're here for this
great consumer story, but you'regoing to give me all my money
is going to go into these legacycorrupt, you know oil companies
, and so that's the second thingto know.
And so you know it's prettymuch from that day until now.
That's what I've been trying todo is okay, how do we tap into
(17:49):
the consumer?
And you know, the first eightyears, what I told people to do
is just to buy the emergingmarket consumer ETF.
Right, buy the sector, andthere's an ETF that tracks it.
I didn't make the ETF.
It has the ticker Econ E-C-O-M.
But if you wanted to buy, youknow the 30 largest emerging
market consumer stocks accordingto Dow Jones.
(18:09):
That's what you bought.
And when people would ask me,what should I buy, I told them
to buy that I didn't.
You know, I had nothing to dowith that company, but I knew
about the product.
And nine years ago I got aphone call from a friend and I
answered it on my firstsmartphone, which was sitting
next to me on my car seat.
(18:31):
And my friend asked me what wasthe best emerging markets ETF
for their young child's collegefund?
So I got a beautiful Q-tank, Ibought the부uced verse and moved
it to my傳統 and then to my lastexample with my Q-tank class
teacher, which I also actuallygot on social media class too.
My teacher told me that she hadjust gotten intoве bottom.
I started to tell the person tobuy the emerging market consumer
ETF, but then I thought, wait aminute, that's not the answer
anymore.
I went straight back to myoffice and I started to organize
(18:53):
EMQQ.
Basically, the light bulbmoment was that consumption was
changing and that this devicewas changing our consumption.
I could see in my own life thatall of a sudden the UPS truck
was at my house once a week,then twice a week.
(19:15):
Then I knew the guy's name.
Then I can tell what color thetruck was based on the sound of
it.
Now we literally probably at myhouse get 10 deliveries on.
Some days I read at least three.
But even back then I could seethat that was changing.
That was what's for EMQQ, but Ididn't fully appreciate what
(19:42):
was happening.
But it's a big deal and it'sthree big deals.
There's three giant thingshappening at the same time on
the planet.
I've been part of all three ofthese things for decades and you
probably have as well.
But most of the world the sixand a half billion emerging
market people they're justgetting involved.
(20:04):
What are those three megatrends?
First, consumption.
I've had plenty of food,clothing, appliances, vacations
since I was a child.
My parents not as many, butstill some grandparents again,
the same.
Well, most of the world's justnow getting enough money to take
that first airplane flight togo see the sites of their
(20:27):
country.
That's the first megatrend.
Again, we've been involved fora while.
The second megatrend is calledthe computer.
When I answered that call nineyears ago, I answered it on this
supercomputer that came out ofmy pocket.
So I had a smartphone back then, but I had a computer for 20
years before this.
Well, guess what?
(20:48):
Most of the world's gettingtheir first computer today, and
it's not a desktop and itdoesn't have an Apple logo.
It's an increasingly affordableAndroid-based smartphone.
Now, five months ago, I wouldhave told you that you could get
a brand new smartphone in Indiafor $50.
That's true, except on July 3rdReliance Geo introduced the Geo
(21:13):
Barat phone for $12.
So you can now get a brand newsupercomputer that fits in your
pocket for $12.
So the computer is coming tothe world at an incredible rate.
And it's still pretty early.
Less than half of Indians havetheir own smartphone.
For example, 7 million a monthare getting a new smartphone,
(21:36):
and that was before theintroduction of the $12
smartphone.
So the computer is sweeping theplanet at an incredible rate,
again something we've had for,in my case, third years.
And those computers are bringingthe third megatrend with it,
which is called the internet.
I first got on the internet in1995 in San Francisco's Marina
(21:57):
District, on a telephone linewith a modem, and the internet's
gotten better and better, andyou could even get the internet
on an airplane now.
Well, guess what?
Most of the world never had awired connection.
So not only are those billionsof people getting their first
computer, they're getting theirfirst ever access to the
(22:17):
internet.
And so what we've had is veryevolutionary experience with
information and technology.
Billions of new consumers aregoing from here to here
instantly and leapfrogging allthe things that we have had in
terms of consumptioninfrastructure, and when I say
(22:39):
consumption infrastructure, I'mtalking about credit cards and
debit cards and chip readers.
Nobody else has had those typesof things.
So they're leapfrogging thebanking no bank account, no
checking account, no credit cardstraight to mobile phone-based
money.
That's the most important thingthat's happening at the
beginning of this thatleapfrogging and bringing people
(22:59):
into the financial system.
But they also don't have targetstores to go to, even if they
had an automobile.
So this has created what Ithink these three mega trends at
the same time have created whatI believe is the fastest
growing sector on the planet,which is the emerging market.
Internet companies, just as thefang stocks in the US Amazon,
(23:20):
facebook, google all thesethings have taken over our lives
.
This is now happening inemerging markets, and it's
mainly happened in China in thelast 15 years.
China has been the biggest partof this and it's been 80% of
the revenue in the EMQQ indexand about 60% of the portfolio.
(23:42):
But now what's coming is thethird wave, the other countries
besides China, and that is Indiafirst and foremost, but India,
brazil, indonesia, vietnam allof these countries are now part
of this third wave.
So the first wave in the UnitedStates called that 2000 to
(24:02):
2015,.
First on PCs, then onsmartphones.
China was the second wave ofthis 2005 to 2020, mainly on
smartphones.
And now comes the third wave,and while China has 1.3 billion
people, the other 45 emergingmarkets have 4 and 1 half
(24:23):
billion people, or 5 and 1 halfbillion people rather, so
they've got four times as manypeople.
And China is an emerging marketin a traditional sense, but when
it comes to the internet ande-commerce, china is the most
developed country on the planet.
China's e-commerce market ismultiple times the size of the
(24:43):
US e-commerce market and China'se-commerce market is four times
bigger than all of the otheremerging markets combined, but
the other emerging markets havefour times as many people and
while China's e-commercepenetration is 25% of retail
sales, the other 45 emergingmarkets are at 5%.
(25:03):
So you have four times as manypeople and they're basically
where China was 15 years ago.
And so this third wave ofgrowth, it's already happening,
and it's happening in Brazilwith companies like Mercado
Libre, it's happening inSoutheast Asia and now, and most
clearly, it's happening inIndia, and the India opportunity
(25:27):
is the biggest part of thisthird wave and maybe the perfect
emerging market at the perfecttime.
Speaker 2 (25:36):
Yeah, I love it.
I was at a family officeconference last year and they
were one of the focal pointsthey alluded to.
As Zachary said that, thespeakers mentioned that the
Indian market is going to be thebiggest market by the end of
some time in the century.
The data was just fascinating.
How many?
Because you mentioned,technology is a big destructor,
but at the same time they havethe most young people, but they
(25:58):
also know how to use thetechnology.
So there's not a learning curveto use the technology, which is
huge.
And he quoted Jeff Bezos.
He said it's China's century.
I think he was Jeff Bezos, billGates.
This is India's century.
Speaker 1 (26:15):
Well, there's a lot of people that have very bullish
outlooks for India and there'sa lot of quotes like the India
century I think the quote that Isaw it's not just India's
decade, it's India centurywasn't the title of one of these
reports.
So the India story is very goodand let me just mention that in
(26:37):
Omaha, as we say, you pay ahigh price for a cheery
consensus.
So the fact that India looksreally good is reflected in
having some of the highest PEson the planet.
But I do agree it looksincredibly good and in fact, I
actually think it maybe looksbetter than people think,
(27:01):
because there's some parts tothe India story that I don't
think that most peopleunderstand, and the reason I
think that is because I didn'tunderstand them.
India has a secret weapon that Ionly began to understand in the
last six months, which is theirdigital public infrastructure.
(27:23):
But beyond that secret weapon,which I'd love to talk about,
you are right India has a lot ofthings that nobody has, and the
one thing they have is a humancapital base that's unparalleled
.
I mean, no other developed oremerging market has what they
have, and it's a basically a 50year old technology sector.
(27:46):
I mean, their technology sectoris older than me.
Tata computer systems, as itwas originally called, was
founded in 1968.
So you've got the Infosys, tataY-Pro these are the call it
India Tech 1.0, but it's 50years old and it includes
(28:06):
publicly traded technologycompanies like those three.
They've been publicly tradedfor decades.
You've got tech billionaires,you've got an angel investor, an
venture ecosystem.
So they have that part of theirhuman capital.
They have an incredible numberof well educated Indian students
(28:32):
that go to our best collegesand I think nearly half of the
deans of our best, our IvyLeague business schools are now
Indian.
I know that the dean of thebusiness school at the
University of Arizona, my almamater, is Indian.
You have the HB1 work visasthat the US issues, about
(28:52):
300,000 a year.
200,000 go to Indiantechnologists, two of those
temporary workers now.
One of them runs Google and theother one runs Microsoft.
So the yes, the human capitaland English speaking is unmapped
.
So that is part of what makesIndia so compelling the
(29:17):
infrastructure in India.
So when I got involved withChina, you know, 18 years ago,
it was ahead of India, but onlya little bit.
I mean it's pretty shockingwhen I look back at the, even
the 15 year numbers and I'vecompared like is is India, like
China 15 years ago.
It is the economy, size and theGDP per capita is pretty close.
(29:38):
But what you could see was thatChina was building the world's
best infrastructure and theywere going all in and it was
comprehensive, and you know theyhave a system that is void of
bureaucracy.
So they were able to build theworld's best infrastructure and
meanwhile India couldn't get offof its hands and you know you
(30:00):
had brownouts and the powerdidn't even work.
Well, that's changed under Modi.
He has made massive and massiveincreases in infrastructure.
By most accounts, in almostevery category.
The amount spent or built inthe first 65 years has been
(30:20):
matched by the last 10 years.
So they have a trillion and ahalf dollar intermodal
comprehensive plan for the roads, the high speed trains.
They have an extensive trainsystem that has to update it and
electrify it.
They're making their own highspeed trains in the country.
They're going to have a massiveconsumer travel market.
(30:42):
One of the first luxuries is toget on a flight and you, when
you go to an airport in SouthAsia, you're shocked by the
number of people, but then yourealize that you know for every
one person getting on a flight.
There's several others that arethere to watch, right?
So, because the first personfrom the family that's doing
that.
So, but they need a lot moreairports they're working on that
(31:04):
.
They need seaports and they'reworking on that.
The only problem is, you know,if they're going to get jobs
from China as they will they'regoing to need to put products on
boats, because 90% of theproducts go on a boat and
China's, you know, port capacitylooks like this and India's
port capacity looks like this,and it takes a long time to
build a port.
So so India's got theinfrastructure now, but it's
(31:28):
this digital publicinfrastructure that I didn't,
you know, really quiteappreciate, because it's got the
biggest population, theyoungest population, fastest
growing economy, fastest growingcommerce market.
But the secret weapon is theIndia stack, which I think
people don't really understand.
Speaker 2 (31:49):
Yeah, very a lot of good knowledge there.
It's pretty fascinating what'sgoing on there, especially in
the e-commerce space.
What's kind of your businessgoals over the next five years?
Say that one more time.
What's your business goals orpersonal goals over the next
five years?
Speaker 1 (32:05):
Just advancing the art and giving investors
exposure to the places that Ithink will have the best
long-term growth and long-termreturn for investors.
It's been a tough couple ofyears, with the risk-free rate
going from nothing to 5% doesn'thelp growth investors very much
(32:27):
.
Then there's been a lot ofproblems, including a plague and
now a couple of different wars.
So the last couple of yearshave been tough, but the growth
continues and you can't turnthese trends around.
I mean, I've never knownanybody that used to have a
smartphone and there's stillthree billion people out there
(32:48):
that haven't got their first oneyet.
But that's changing very fast.
Speaker 2 (32:53):
Yeah, surprise, have you still used that first iPhone
?
Are you just skipping on it?
Speaker 1 (32:58):
You forget how I mean .
I try to remember what it waslike when I first got on a PC,
like in 1997 or eight, when Iwent to Yahoo.
What did that actually looklike?
I wish there was a website Icould go to and live the
internet of 1997.
And this is the internet of2000 and whatever, 10, 11.
(33:23):
And first of all, I had to findthe charger that would charge
it up, which I've done, butevery time I think I'm going to
turn it on again.
I do that and I can get itcharged up, but then it says
that I have to connect it to myiPod.
I remember that it used to haveto connect to my iPod, but I
don't know why.
(33:43):
Do you remember why that was?
Speaker 2 (33:47):
I haven't spent the time to Google it but no, no, no
, I didn't get an iPhone untillike seven.
Okay, well, I was sticking withthe Android.
And then, when I got that point, I'm like, okay, then the
iPhone sends.
Speaker 1 (33:57):
Well, so so you know again, I don't even rate the
iPod I had before, the iPhone,right, the music, the little
music player, but for and I'msure people know this, but some
of them remember this but don'tremember why, but you used to
have to have your this had to beconnected to your iPad, your
iPod, to start it, or I don'tremember why that was, but
(34:22):
anyhow, anytime I power it up,it says connect to iPhone.
So I'll have to find an oldiPod and then make the.
I'm going to do that as myhomework assignment.
I'm going to find the old iPodand the drawer and charge it up,
and then I'll connect it andsee what happens.
Speaker 2 (34:37):
It's nice.
There actually is a website.
Though you might be, I don'tknow if you're familiar with it
it's called the Wayback Machine.
It might have.
It's like an encyclopedia.
It's screenshots and we'rescreening for any websites.
Most websites are on there.
Speaker 1 (34:49):
Okay, no, that's awesome because I assume that
might be available, but I'd loveto have a full interaction.
I'll go there.
Maybe it's got the fullinteraction.
Speaker 2 (34:58):
Yeah, it shows every iteration and you click on the
date, you click on the year,click on the date and it goes
many times and there's likemovement or changes of website.
It records it.
It's like the wiki of, justlike internet websites.
Speaker 1 (35:11):
Okay, great, I'm delighted to hear that that
exists.
I'm something I will have a lotof fun yeah.
Speaker 2 (35:16):
I learned something from you.
I learned a lot from you.
Today, as we wrap this up, whatwould be?
What can people find about yourbusiness?
Contact you?
This is really fascinating.
We've got some investors thatwant to potentially invest with
you.
Just want to give somebackground how to get a hold of
you.
Speaker 1 (35:29):
Sure, well, one easy thing to do would be to find me
on LinkedIn at McKevan T Carterand EMQQ Global should pull me
up and then our website isEMQQGlobalcom, so our contact
information and otherinformation about us can be
found at that site.
Speaker 2 (35:50):
Perfect.
Yeah, I'll put all the links inthe notes below.
Well, kevin, thank you so much.
I know the meeting coming uphere, but thank you so much for
all your insights.
It's really fascinating stuff,and thanks for being on the
Ultra High Net with podcast.
Speaker 1 (36:01):
Thanks for having me Hope to be back.
Thank you, take care.
Speaker 2 (36:08):
Hey, it's Jonathan.
Make sure to download andlisten weekly as I bring the top
guests in the Ultra High Networth niche, sharing their best
insights and providing exclusiveresources.
Finally, I get a lot of peopleasking me to help them
one-on-one.
Yes, I can, but it's verylimited.
Go to a revenue, a sign forbusiness and CMO consulting.
For real estate investing, goto Midwest Park Capitalcom.
(36:31):
For those looking to invest inservice-based business rollups,
go to businesscashoutcom.
All links are included below.
Please like, comment and sharethis podcast with your friends.
Thanks for listening.
when you really take the whole thing apart, it's the
people that are emerging.
I mean, there's six and a halfbillion people.
They want stuff, right.
They want more and better food,more and better clothing, they
want appliances, they want to goto movies, they want to take
vacations, they want anautomobile of some sort and they
want their kids to go toHarvard.
And I didn't have to figurethat out.
(00:20):
That's been documented fordecades and McKinsey calls this
the biggest growth opportunityin the history of capital.
So if you're going to invest inemergency markets, that's what
you're trying to capture.
That's all that I've done for18 years and that's the
foundation of what we do at EMQQ.
Speaker 2 (00:38):
Welcome to the Ultra High Network podcast, which is a
global community of the mostsuccessful and their insights.
We want our families toflourish, collaborate and create
a better world for all.
This podcast is a trustedresource to learn from each
other, navigate the mostimportant global issues and find
life changing opportunities.
I'm the host, jonathan Tuttle,the founder at Midwest Park
(01:02):
Capital, a boutique mobile homepark Real Estate Fund.
Revenue Sun, a leading digitalconsulting and fractional CML.
Abc Business, cash Out, aboutique M&A firm focused on
service-based businesses, and apart of the founding team at
Wallipop, a lute enhancing coveof beverage.
This episode is sponsored byPrestige, the world's most
(01:23):
exclusive social networking app.
All links are in the show notesbelow.
Enjoy the show, please like,comment, share this podcast with
your friends.
Thanks for listening.
Welcome back to the Ultra HighNetwork podcast, and today I
have fantastic guests Kevin TCarter.
Kevin is the founder and chiefinvestment officer at EMQQ
(01:46):
Global and welcome to the show.
Thanks, good to be here.
Perfect, do you want to justgive a little background,
because I kept a real briefthere and I know I could go on,
but you got a prettydistinguished background, so I'd
rather you describe it and tellit than me.
Speaker 1 (02:00):
Okay.
Well, yes, I'm Kevin Carter.
I'm the founder of EMQQ Global.
I located in San Francisco.
I have worked in the investmentbusiness here for 30 years.
What I started in the investmentbusiness in 1992, I had a short
(02:21):
interview at the leadinginvestment bank in San Francisco
and then they told me I couldstart Monday.
And I said, well, how can Ipossibly start Monday?
I don't know anything.
And they told me to buy thisbook called A Random Walk Down
Wall Street.
And so that's how I started,and if you or your listeners are
familiar with this book, it'sor not familiar with it.
(02:42):
It was first written in 1972 bya man named Bert Malkiel, who's
a Princeton economist, and inthe first edition of that book
he suggested that somebodyshould make an index fund,
because 50 years ago there wereno index funds, but Burton was
one of a few people talkingabout the idea, and so I started
my career by reading aboutindexing and efficient markets.
(03:05):
And the person that wrote thatbook, by the way, bert Malkiel,
he's also a Vanguard boardmember and has been for a long
time, and he also was thechairman of the committee that
created the first ETF, thespider.
So he's been involved withindexing and ETFs, since before
there were indexing and ETFs.
So I read about that part ofthe investment world.
(03:25):
But then I quickly realized Iwas an Omaha person.
When it came to business andinvesting I always think about
things through a Charlie Mungeror Warren Buffett lens.
And in fact it was the 1995Berkshire Hathaway annual report
in which Warren Buffettsuggested that most people
(03:49):
should buy index funds, bothindividual and institutional.
And when I read that in early1996, my head was sort of blown
by this, because I was an activeperson and the person that best
embodied that was telling meand everybody else that they
shouldn't do that and theyshould just buy index funds.
And I found well, I was mildlyconfused but I did a little
(04:15):
research, didn't take me long torealize that it was
mathematically correct that ifthe option was to buy an active
mutual fund with one or one anda half percent management fees
and another percent of expensesto pay for the trading and all
the other things, that you wereprobably going to underperform
(04:38):
the stock market by the amountof fees because Vanguard would
give you the index for nothing.
And if the other people chargeyou two percent, then if the
market was up 11, you'd probablybe up nine and that doesn't
sound like a big difference.
But if you do that for 30 years, that's a huge difference.
And so that got me thinkingabout the investment business,
(04:59):
and I was a very idealisticyoung value investor and I also
had come to view the mutual fundworld, which had paid me a lot
of money as an analyst, but inthe hedge fund world.
But when I looked at the mutualfund world, I looked at it as
basically a giant tax.
And then several very wealthyorganizations, usually
(05:23):
controlled by families, hadbecome billionaires and
multi-billionaires by taking oneand a half percent of
everybody's money every year,and so it's a great business for
them.
But, as was pointed out in abook that's almost 100 years old
called when Are All of theCustomers?
Yachts it was the purveyors ofthe mutual fund companies that
(05:48):
made all the money, and thelong-term investors did okay and
it's possibly very well just bythe fact that they had invested
for a long time.
But the difference between 11%a year and 9% is a big deal, and
everybody on the phone shouldget out of spreadsheet and make
a 50-year model and see what itreally looks like, because it's
(06:09):
the miracle of compounding is abig deal.
So anyway, I became veryidealistic and I decided after
thinking about it that theproblem on the planet back then
was that if you want to investin the stock market directly,
you had to buy 100 shares of astock to get the $29 commission.
(06:32):
Because that was the CharlesSchwab commission.
That was the lowest on theplanet.
But you had to buy 100 sharesand the average stock was about
$30 a share.
So if you wanted to invest instocks, you had to buy $3,000 of
one stock to get the 1 percentcommission.
That was hard for most people todo.
(06:53):
If you're saving $506 a monthwhen you're in your 20s, you had
to put it into a mutual fund.
That was the only way you couldget it into the stock market.
I decided that we shoulddevelop a way that you could
invest $10 into the stock marketwithout a mutual fund involved.
So I developed a system andfiled a patent on fractional
(07:14):
share trading which we sold toeTrade in the year 2000.
When I started that business Iasked the random walk author,
the spider guy Bert Malkiel.
I asked him if he'd be on myadvisory board.
So that started myentrepreneurial I call it the
investment Peace Corps years.
(07:35):
If I had followed a morecapitalist direction I would
have started the hedge fund, butI thought I could try to save
the world.
So we did that.
That worked out fine, sold itto eTrade.
Then, right after that, we cameup with this other idea Burton
(07:57):
and I did, which was to buildcustomized index funds so you
could build your own S&P 500strategy if you did in a
separate account.
Rather than buy all 500 stocksfrom the S&P, you buy a 50
stocks or 100 stocks subset, butthen you could customize your
portfolio and leave out tobaccostocks or something you didn't
(08:18):
like.
You could also do lossharvesting if you were a taxable
investor.
So we invented this thingthat's now called direct
indexing.
We called it active indexing 20years ago whenever we cooked it
up, but that's gone mainstream.
Both fractional shares anddirect indexing.
You can get it Schwab.
(08:39):
So as soon as Schwab launchesthat, I consider it.
How many years early was I?
Well, I was 20 years early forboth of those things, for
whatever it's worth.
So we did those things and wehad sold the Texas this is a
French, but the Boston basedFrench holding company that owns
(09:01):
a bunch of US mutual fundcompanies.
They bought the company at theend of 2004.
Right before they bought thecompany, google went public and
they asked my partner, burton,to give a talk to their
employees.
I wasn't involved, but everyonewas talking about Google and
Burton and I had dinner thenight before and then he went
(09:22):
and gave us talk, with BillSharp as the other speaker, to
the employees of Google.
Then, a few months later, myphone rang and it was a guy from
Google and he said hey, I heardabout this active indexing.
I want to make my own customS&P 500 strategy.
I told them that we didn't workwith individuals, we only work
(09:42):
with it financial advisors atMorgan Stanley or Deutsche Bank
or Credit Suisse.
He said well, I don't want anadvisor, I want to just invest
directly with you.
One thing led to another and hetalked me into becoming his
financial advisor.
Then he started introducing meto other people at Google.
In the months after the IPO ofGoogle, I started going down to
(10:06):
Mountain View every week to meetwith some new engineer who had
been there for a while and hadsome money Some of it quite
significant and wanted help innot just building a customized
S&P 500 strategy but the rest oftheir portfolios for which we
use ETFs.
(10:26):
At that same time that I startedgoing to Mountain View, burton
starts going to China.
He's a Princeton economist andhas been there for over decades,
but a couple of his callingswere Chinese and they had gone
back to Beijing in about theyear 2000 to teach economics at
the Harvard of China.
(10:46):
They had started calling Burtonand say hey, burton, you should
come see what's happening herein China.
This is back when China'seconomy was growing at 11 or 12
percent.
All of a sudden he writes awhite paper about investing in
China and the people at Googleheard about it and they called
(11:08):
me and they asked if Burtoncould come and give a talk about
investing in China.
That's actually the poster theyput around the campus
advertising that talk.
But 17 and a half years ago Idrove down to Mountain View and
picked up Burton on the way.
He gave a talk to these peopleat Google and they all looked at
(11:28):
me and said we want to investin China.
So I was not planned.
But from the moment I got backto the office that day until
today and presumably tomorrow,my whole life has been trying to
figure out.
All right.
First of all, what does thateven mean to invest in China,
and how on earth do you do it?
(11:49):
That led, of course, to allemerging markets and how to best
find the opportunity, thatgiant asset class which includes
90 percent of the world'speople.
So that's how I got here.
Speaker 2 (12:05):
No, I love it, and Charlie's poor Charlie's
Alvamack is one of my favoritebooks.
Oh, of course, such a classic,especially learning about
cognitive bias and how peoplemake buying decisions, and
pretty fascinating stuff.
Have you ever actually metWarren or Charlie?
Speaker 1 (12:20):
No, I have not.
I have not.
Speaker 2 (12:23):
Okay, I'm just curious because you're dealing
with some pretty high levelpeople.
They'd be pretty fascinating tomeet those guys.
They're gentlemen.
Speaker 1 (12:28):
Oh yeah.
Well, I'd love to get Burtonand Warren Buffett together.
That would be a interesting, Ithink, but so far no.
Speaker 2 (12:38):
I asked a question during one of the meetings the
Andrews shareholder meetingsbecause I'm sure you can have a
really good question for them.
Speaker 1 (12:44):
You know, I've never actually gone to one of those.
I've always read the A&Rreports, and now of course you
can watch them.
Speaker 2 (12:51):
But anyhow, so you want to talk about.
So you're saying before wasChina market.
Do you want to?
Are you guys mostly focused onChina or are you looking at
other emerging?
Speaker 1 (13:00):
markets.
No, here's what we do.
So the two most importantthings I've learned in the last
18 years about emerging marketsare pretty simple.
Just at a high level background, what we're talking about
emerging markets it's 46countries, it's China, it's
India, it's Brazil, it's Nigeria.
There's also 46 includes thefrontier markets.
(13:24):
So there's about call it, the26 emerging markets and 20
frontier markets Nigeria,vietnam, or frontier markets.
India, china are emergingmarkets.
So those 46 countries, it'sabout 85% of the world's
population, but they're younger.
So it's about 90% of theworld's people.
And in terms of where they are,how much?
(13:47):
You know how much is Asia, howmuch is South America?
Approximately, in terms ofpopulation and economic
opportunity?
It's about 60% Asia, china andIndia, the biggest parts, 15%
Latin America, brazil and Mexico, and then there's another 25%
that spread all over the placeSouth Africa, egypt, poland,
(14:10):
kazakhstan.
So that part's you know other.
Call it other, but that's whatit looks like on the map.
And the two things thatinvestors should know at a high
level are first, that when youreally take the whole thing
apart, it's the people that areemerging.
I mean, there's 6.5 billionpeople and they want stuff right
.
They want more and better food,more and better clothing, they
(14:33):
want appliances, they want to goto movies, they want to take
vacations, they want anautomobile of some sort and they
want their kids to go toHarvard.
And I didn't have to figurethat out.
That's been documented fordecades and McKinsey calls this
the biggest growth opportunityin the history of capital.
So if you're going to invest inemerging markets, that's what
you're trying to capture.
That's all that I've done for18 years and that's the
(14:56):
foundation of what we do at EMQQ.
The second thing to know aboutemerging markets is that there
is a serious problem in theinvestment world when it comes
to emerging markets, and I don'thave a solution for this
problem, but it's a big problemand the problem is the index
sucks Like it is.
(15:17):
You know, if you want to makemoney, the emerging market index
has failed and is likely tocontinue to if not fail, I think
be suboptimal, and this issomething I learned on the first
day, 17 and a half years ago.
So after Burton gave his talkthat morning, we, and then these
(15:39):
people, looked at me and saidall right, that was a good story
.
We want to invest in China.
We drove back to San Franciscoand I walked straight over to
the portfolio managers and Isaid the Google guys want to
invest in China.
Give me a list of all thecompanies in the China ETF,
because I assumed that's how wewould give this exposure.
(16:00):
And there was a China ETF 18years ago, but only one ticker
civil FXI, the original highshares China ETF.
And so I asked for the list ofholdings because you know, I'm
working in the index businessbut I'm an Omaha person.
I don't care what the name ofthe ETF is, I want to know what
(16:21):
are the businesses we're goingto own.
And so I asked for the list andbefore they gave me the list,
burton told me aside and told methat most of the companies were
going to be Chinese governmentowned banks and oil companies,
state owned enterprises and Iknow I knew about these things,
you know kind of.
But he went on to explain thatthese businesses, in addition to
(16:45):
having serious inefficienciesand conflicts of interest, that
they're frequently corrupt andthat nobody that runs the
company cares about growing theearnings.
And that made me sick to mystomach because in Omaha, you
know, investing is really simple.
The reason businesses havevalue is because they make
(17:06):
profits for the people that ownthe companies.
And the only way to grow yourvalue is to grow your earnings.
And so if you're telling methat the people that run these
companies don't care about thatat all, why would you invest in
them?
And then, when I looked at theETF, it was 80% state owned
enterprises and it was less than10% in consumer stocks.
(17:27):
So right away I was like, waita minute, we're here for this
great consumer story, but you'regoing to give me all my money
is going to go into these legacycorrupt, you know oil companies
, and so that's the second thingto know.
And so you know it's prettymuch from that day until now.
That's what I've been trying todo is okay, how do we tap into
(17:49):
the consumer?
And you know, the first eightyears, what I told people to do
is just to buy the emergingmarket consumer ETF.
Right, buy the sector, andthere's an ETF that tracks it.
I didn't make the ETF.
It has the ticker Econ E-C-O-M.
But if you wanted to buy, youknow the 30 largest emerging
market consumer stocks accordingto Dow Jones.
(18:09):
That's what you bought.
And when people would ask me,what should I buy, I told them
to buy that I didn't.
You know, I had nothing to dowith that company, but I knew
about the product.
And nine years ago I got aphone call from a friend and I
answered it on my firstsmartphone, which was sitting
next to me on my car seat.
(18:31):
And my friend asked me what wasthe best emerging markets ETF
for their young child's collegefund?
So I got a beautiful Q-tank, Ibought the부uced verse and moved
it to my傳統 and then to my lastexample with my Q-tank class
teacher, which I also actuallygot on social media class too.
My teacher told me that she hadjust gotten intoве bottom.
I started to tell the person tobuy the emerging market consumer
ETF, but then I thought, wait aminute, that's not the answer
anymore.
I went straight back to myoffice and I started to organize
(18:53):
EMQQ.
Basically, the light bulbmoment was that consumption was
changing and that this devicewas changing our consumption.
I could see in my own life thatall of a sudden the UPS truck
was at my house once a week,then twice a week.
(19:15):
Then I knew the guy's name.
Then I can tell what color thetruck was based on the sound of
it.
Now we literally probably at myhouse get 10 deliveries on.
Some days I read at least three.
But even back then I could seethat that was changing.
That was what's for EMQQ, but Ididn't fully appreciate what
(19:42):
was happening.
But it's a big deal and it'sthree big deals.
There's three giant thingshappening at the same time on
the planet.
I've been part of all three ofthese things for decades and you
probably have as well.
But most of the world the sixand a half billion emerging
market people they're justgetting involved.
(20:04):
What are those three megatrends?
First, consumption.
I've had plenty of food,clothing, appliances, vacations
since I was a child.
My parents not as many, butstill some grandparents again,
the same.
Well, most of the world's justnow getting enough money to take
that first airplane flight togo see the sites of their
(20:27):
country.
That's the first megatrend.
Again, we've been involved fora while.
The second megatrend is calledthe computer.
When I answered that call nineyears ago, I answered it on this
supercomputer that came out ofmy pocket.
So I had a smartphone back then, but I had a computer for 20
years before this.
Well, guess what?
(20:48):
Most of the world's gettingtheir first computer today, and
it's not a desktop and itdoesn't have an Apple logo.
It's an increasingly affordableAndroid-based smartphone.
Now, five months ago, I wouldhave told you that you could get
a brand new smartphone in Indiafor $50.
That's true, except on July 3rdReliance Geo introduced the Geo
(21:13):
Barat phone for $12.
So you can now get a brand newsupercomputer that fits in your
pocket for $12.
So the computer is coming tothe world at an incredible rate.
And it's still pretty early.
Less than half of Indians havetheir own smartphone.
For example, 7 million a monthare getting a new smartphone,
(21:36):
and that was before theintroduction of the $12
smartphone.
So the computer is sweeping theplanet at an incredible rate,
again something we've had for,in my case, third years.
And those computers are bringingthe third megatrend with it,
which is called the internet.
I first got on the internet in1995 in San Francisco's Marina
(21:57):
District, on a telephone linewith a modem, and the internet's
gotten better and better, andyou could even get the internet
on an airplane now.
Well, guess what?
Most of the world never had awired connection.
So not only are those billionsof people getting their first
computer, they're getting theirfirst ever access to the
(22:17):
internet.
And so what we've had is veryevolutionary experience with
information and technology.
Billions of new consumers aregoing from here to here
instantly and leapfrogging allthe things that we have had in
terms of consumptioninfrastructure, and when I say
(22:39):
consumption infrastructure, I'mtalking about credit cards and
debit cards and chip readers.
Nobody else has had those typesof things.
So they're leapfrogging thebanking no bank account, no
checking account, no credit cardstraight to mobile phone-based
money.
That's the most important thingthat's happening at the
beginning of this thatleapfrogging and bringing people
(22:59):
into the financial system.
But they also don't have targetstores to go to, even if they
had an automobile.
So this has created what Ithink these three mega trends at
the same time have created whatI believe is the fastest
growing sector on the planet,which is the emerging market.
Internet companies, just as thefang stocks in the US Amazon,
(23:20):
facebook, google all thesethings have taken over our lives
.
This is now happening inemerging markets, and it's
mainly happened in China in thelast 15 years.
China has been the biggest partof this and it's been 80% of
the revenue in the EMQQ indexand about 60% of the portfolio.
(23:42):
But now what's coming is thethird wave, the other countries
besides China, and that is Indiafirst and foremost, but India,
brazil, indonesia, vietnam allof these countries are now part
of this third wave.
So the first wave in the UnitedStates called that 2000 to
(24:02):
2015,.
First on PCs, then onsmartphones.
China was the second wave ofthis 2005 to 2020, mainly on
smartphones.
And now comes the third wave,and while China has 1.3 billion
people, the other 45 emergingmarkets have 4 and 1 half
(24:23):
billion people, or 5 and 1 halfbillion people rather, so
they've got four times as manypeople.
And China is an emerging marketin a traditional sense, but when
it comes to the internet ande-commerce, china is the most
developed country on the planet.
China's e-commerce market ismultiple times the size of the
(24:43):
US e-commerce market and China'se-commerce market is four times
bigger than all of the otheremerging markets combined, but
the other emerging markets havefour times as many people and
while China's e-commercepenetration is 25% of retail
sales, the other 45 emergingmarkets are at 5%.
(25:03):
So you have four times as manypeople and they're basically
where China was 15 years ago.
And so this third wave ofgrowth, it's already happening,
and it's happening in Brazilwith companies like Mercado
Libre, it's happening inSoutheast Asia and now, and most
clearly, it's happening inIndia, and the India opportunity
(25:27):
is the biggest part of thisthird wave and maybe the perfect
emerging market at the perfecttime.
Speaker 2 (25:36):
Yeah, I love it.
I was at a family officeconference last year and they
were one of the focal pointsthey alluded to.
As Zachary said that, thespeakers mentioned that the
Indian market is going to be thebiggest market by the end of
some time in the century.
The data was just fascinating.
How many?
Because you mentioned,technology is a big destructor,
but at the same time they havethe most young people, but they
(25:58):
also know how to use thetechnology.
So there's not a learning curveto use the technology, which is
huge.
And he quoted Jeff Bezos.
He said it's China's century.
I think he was Jeff Bezos, billGates.
This is India's century.
Speaker 1 (26:15):
Well, there's a lot of people that have very bullish
outlooks for India and there'sa lot of quotes like the India
century I think the quote that Isaw it's not just India's
decade, it's India centurywasn't the title of one of these
reports.
So the India story is very goodand let me just mention that in
(26:37):
Omaha, as we say, you pay ahigh price for a cheery
consensus.
So the fact that India looksreally good is reflected in
having some of the highest PEson the planet.
But I do agree it looksincredibly good and in fact, I
actually think it maybe looksbetter than people think,
(27:01):
because there's some parts tothe India story that I don't
think that most peopleunderstand, and the reason I
think that is because I didn'tunderstand them.
India has a secret weapon that Ionly began to understand in the
last six months, which is theirdigital public infrastructure.
(27:23):
But beyond that secret weapon,which I'd love to talk about,
you are right India has a lot ofthings that nobody has, and the
one thing they have is a humancapital base that's unparalleled
.
I mean, no other developed oremerging market has what they
have, and it's a basically a 50year old technology sector.
(27:46):
I mean, their technology sectoris older than me.
Tata computer systems, as itwas originally called, was
founded in 1968.
So you've got the Infosys, tataY-Pro these are the call it
India Tech 1.0, but it's 50years old and it includes
(28:06):
publicly traded technologycompanies like those three.
They've been publicly tradedfor decades.
You've got tech billionaires,you've got an angel investor, an
venture ecosystem.
So they have that part of theirhuman capital.
They have an incredible numberof well educated Indian students
(28:32):
that go to our best collegesand I think nearly half of the
deans of our best, our IvyLeague business schools are now
Indian.
I know that the dean of thebusiness school at the
University of Arizona, my almamater, is Indian.
You have the HB1 work visasthat the US issues, about
(28:52):
300,000 a year.
200,000 go to Indiantechnologists, two of those
temporary workers now.
One of them runs Google and theother one runs Microsoft.
So the yes, the human capitaland English speaking is unmapped
.
So that is part of what makesIndia so compelling the
(29:17):
infrastructure in India.
So when I got involved withChina, you know, 18 years ago,
it was ahead of India, but onlya little bit.
I mean it's pretty shockingwhen I look back at the, even
the 15 year numbers and I'vecompared like is is India, like
China 15 years ago.
It is the economy, size and theGDP per capita is pretty close.
(29:38):
But what you could see was thatChina was building the world's
best infrastructure and theywere going all in and it was
comprehensive, and you know theyhave a system that is void of
bureaucracy.
So they were able to build theworld's best infrastructure and
meanwhile India couldn't get offof its hands and you know you
(30:00):
had brownouts and the powerdidn't even work.
Well, that's changed under Modi.
He has made massive and massiveincreases in infrastructure.
By most accounts, in almostevery category.
The amount spent or built inthe first 65 years has been
(30:20):
matched by the last 10 years.
So they have a trillion and ahalf dollar intermodal
comprehensive plan for the roads, the high speed trains.
They have an extensive trainsystem that has to update it and
electrify it.
They're making their own highspeed trains in the country.
They're going to have a massiveconsumer travel market.
(30:42):
One of the first luxuries is toget on a flight and you, when
you go to an airport in SouthAsia, you're shocked by the
number of people, but then yourealize that you know for every
one person getting on a flight.
There's several others that arethere to watch, right?
So, because the first personfrom the family that's doing
that.
So, but they need a lot moreairports they're working on that
(31:04):
.
They need seaports and they'reworking on that.
The only problem is, you know,if they're going to get jobs
from China as they will they'regoing to need to put products on
boats, because 90% of theproducts go on a boat and
China's, you know, port capacitylooks like this and India's
port capacity looks like this,and it takes a long time to
build a port.
So so India's got theinfrastructure now, but it's
(31:28):
this digital publicinfrastructure that I didn't,
you know, really quiteappreciate, because it's got the
biggest population, theyoungest population, fastest
growing economy, fastest growingcommerce market.
But the secret weapon is theIndia stack, which I think
people don't really understand.
Speaker 2 (31:49):
Yeah, very a lot of good knowledge there.
It's pretty fascinating what'sgoing on there, especially in
the e-commerce space.
What's kind of your businessgoals over the next five years?
Say that one more time.
What's your business goals orpersonal goals over the next
five years?
Speaker 1 (32:05):
Just advancing the art and giving investors
exposure to the places that Ithink will have the best
long-term growth and long-termreturn for investors.
It's been a tough couple ofyears, with the risk-free rate
going from nothing to 5% doesn'thelp growth investors very much
(32:27):
.
Then there's been a lot ofproblems, including a plague and
now a couple of different wars.
So the last couple of yearshave been tough, but the growth
continues and you can't turnthese trends around.
I mean, I've never knownanybody that used to have a
smartphone and there's stillthree billion people out there
(32:48):
that haven't got their first oneyet.
But that's changing very fast.
Speaker 2 (32:53):
Yeah, surprise, have you still used that first iPhone
?
Are you just skipping on it?
Speaker 1 (32:58):
You forget how I mean .
I try to remember what it waslike when I first got on a PC,
like in 1997 or eight, when Iwent to Yahoo.
What did that actually looklike?
I wish there was a website Icould go to and live the
internet of 1997.
And this is the internet of2000 and whatever, 10, 11.
(33:23):
And first of all, I had to findthe charger that would charge
it up, which I've done, butevery time I think I'm going to
turn it on again.
I do that and I can get itcharged up, but then it says
that I have to connect it to myiPod.
I remember that it used to haveto connect to my iPod, but I
don't know why.
(33:43):
Do you remember why that was?
Speaker 2 (33:47):
I haven't spent the time to Google it but no, no, no
, I didn't get an iPhone untillike seven.
Okay, well, I was sticking withthe Android.
And then, when I got that point, I'm like, okay, then the
iPhone sends.
Speaker 1 (33:57):
Well, so so you know again, I don't even rate the
iPod I had before, the iPhone,right, the music, the little
music player, but for and I'msure people know this, but some
of them remember this but don'tremember why, but you used to
have to have your this had to beconnected to your iPad, your
iPod, to start it, or I don'tremember why that was, but
(34:22):
anyhow, anytime I power it up,it says connect to iPhone.
So I'll have to find an oldiPod and then make the.
I'm going to do that as myhomework assignment.
I'm going to find the old iPodand the drawer and charge it up,
and then I'll connect it andsee what happens.
Speaker 2 (34:37):
It's nice.
There actually is a website.
Though you might be, I don'tknow if you're familiar with it
it's called the Wayback Machine.
It might have.
It's like an encyclopedia.
It's screenshots and we'rescreening for any websites.
Most websites are on there.
Speaker 1 (34:49):
Okay, no, that's awesome because I assume that
might be available, but I'd loveto have a full interaction.
I'll go there.
Maybe it's got the fullinteraction.
Speaker 2 (34:58):
Yeah, it shows every iteration and you click on the
date, you click on the year,click on the date and it goes
many times and there's likemovement or changes of website.
It records it.
It's like the wiki of, justlike internet websites.
Speaker 1 (35:11):
Okay, great, I'm delighted to hear that that
exists.
I'm something I will have a lotof fun yeah.
Speaker 2 (35:16):
I learned something from you.
I learned a lot from you.
Today, as we wrap this up, whatwould be?
What can people find about yourbusiness?
Contact you?
This is really fascinating.
We've got some investors thatwant to potentially invest with
you.
Just want to give somebackground how to get a hold of
you.
Speaker 1 (35:29):
Sure, well, one easy thing to do would be to find me
on LinkedIn at McKevan T Carterand EMQQ Global should pull me
up and then our website isEMQQGlobalcom, so our contact
information and otherinformation about us can be
found at that site.
Speaker 2 (35:50):
Perfect.
Yeah, I'll put all the links inthe notes below.
Well, kevin, thank you so much.
I know the meeting coming uphere, but thank you so much for
all your insights.
It's really fascinating stuff,and thanks for being on the
Ultra High Net with podcast.
Speaker 1 (36:01):
Thanks for having me Hope to be back.
Thank you, take care.
Speaker 2 (36:08):
Hey, it's Jonathan.
Make sure to download andlisten weekly as I bring the top
guests in the Ultra High Networth niche, sharing their best
insights and providing exclusiveresources.
Finally, I get a lot of peopleasking me to help them
one-on-one.
Yes, I can, but it's verylimited.
Go to a revenue, a sign forbusiness and CMO consulting.
For real estate investing, goto Midwest Park Capitalcom.
(36:31):
For those looking to invest inservice-based business rollups,
go to businesscashoutcom.
All links are included below.
Please like, comment and sharethis podcast with your friends.
Thanks for listening.
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