Meet The Disruptors: David Ko and Richard Busellato of Rethinking Choices on The Five Things You Need to Shake Up Your Industry
An Interview with Fotis Georgiadis
Our choices are always forced on us. We think we have a choice, but when we are unwilling to give up on economics we will always be making the choice that reinforces the inequalities and the biases we complain about. David is currently applying and looking for a secondary school for his daughter. This is something parents around the country are all doing. We are driven to want the best school, and in our rush to choose the best school, we increase the gap we perceive between the best and even the next school. It becomes totally unsustainable at the cost of our own children. Oddly, when was the last time someone asked you about which secondary school you attended? Choosing the best is the way we end up trapping ourselves into impossible choices.
As a part of our series about business leaders who are shaking things up in their industry, I had the pleasure of interviewing David Ko and Richard Busellato, authors of The Unsustainable Truth and co-founders of Rethinking Choices.
David Ko and Richard Busellato are seasoned investment managers turned sustainability advocates. After over thirty years working for premier hedge funds and major financial institutions they left the industry in recognition of the pressure global financial markets are placing on the planet’s limited resources. They now run a sustainability advocacy, Rethinking Choices, and their book, The Unsustainable Truth (2020), is a deep-dive into how investing for the future is destroying the planet, and what we can do about it.
Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
We are investment veterans. David started life in physics research and was a Royal Society/JSPS fellow at Tokyo University before taking a lectureship at Oxford. Back in 1994 his girlfriend at the time completed studies in Japanese, and they decided that she really should go and try her hand in Japan. That led them to make the big choice to deal with a long-distance relationship by getting married. In that time, there was no internet to speak of and international phone bills were expensive and incompatible with academic salaries. That triggered his move to finance.
Richard knew what he wanted all along, which was to trade and make money. After studying economics in Stockholm he joined one of the world’s oldest merchant banks before rising through the ranks to run significant investments. Together, we have been in the centre of many financial crises on both the winning and losing sides, and sometimes on opposite sides. In 1998, for example, David was with the hedge fund Time Magazine had labelled as The Dream Team, LTCM, when it brought the world to financial Armageddon. Richard was nimbly anticipating this having his best year.
After three decades making money from financial markets, taking advantage of investment opportunities, we started to focus on the question of investments and sustainability. This led us to spend a few years digging deeply into why, despite all the promises of investments and technology, the world has a fundamental sustainability problem. It is a eureka moment to realise that too much money actually destroys the planet. We are apex predators with no constraints, too easily persuaded by the good side of our stories and too fearful of not having enough for our future. This is a perfect marketing combination for the investment industry, playing to our desire to do good and the fear for our own security.
We left the investment industry because we realised that climate risks cannot be hedged, nor can they be diversified or divested away. The promises the investment and business industries make are false.
Can you tell our readers what it is about the work you’re doing that’s disruptive?
We advocate a radical disruption of the investment industry. The investment industry works by promising that we can rely on money for our future. This is so that we can hope to rest and retire as a reward for the work we do now. The truth is that these investments lock everyone into a lifestyle where we depend more and more on money and depend more and more on the investment industry to provide for us.
The problem is the planet cannot provide the sort of returns we need. It is no longer possible to go and exploit land and people the way it was done in the 17th and 18th century when our economic ideas developed, and it is no longer possible for people to afford long retirements as our parents did. The problem however is these are ways of thinking that are ingrained into our cultures and education. We simply believe that problems can always be solved, and investments therefore are always good.
Our book, The Unsustainable Truth, highlights the fallacy of this thinking. Our work is to sow the seeds of a rethinking of our choices at all levels, and most of all, at disrupting those ideas we take as economic truths. For example, just ask which animal or planet spends two to three decades in retirement, apart from you and me? The planet does not work that way. To change this means we need to rethink everything; not just how we work or how we live, but importantly what we are living for.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Back in 1997 when David was working for LTCM, he thought he was on a roll. The firm was labelled the Dream Team and was making huge amounts of money, and he was doing well. He was valued, earning more in one year than his entire lifetime expectation as an academic at the time, and it was time to bet big on a house. It is not really so much a funny mistake as one that shows how we can never know what is going to happen. He and his wife had a child, moved house to one worth ten times more than the flat they were in, so much that it was impossible to get a sufficiently large mortgage. So, he borrowed from everyone, including the firm he worked for. The next year, the firm took the world into global financial Armageddon. It was the first of the really big collapses that needed the central banks to step in and David was in the middle of it, on the wrong side and with all the worries of having a new-born. Having been fully leveraged with more debts than ever imaginable he lost all his savings in the collapse.
Years later, when we started working together, Richard said that it was the best year ever. “It was like stealing candy from children” was what Richard said.
This cemented our perception of two fundamental truths — one is that leverage works both ways. When the going is good, the best thing to do is obviously to do more. Doing anything else is just stupid. The second truth is of course, to do that is stupid.
These two sides of the same truth is what drives our belief that we need a radical rethinking of how we live and what we are living for.
We all need a little help along the journey. Who have been some of your mentors? Can you share a story about how they made an impact?
We met at a fund called Horizon. This fund uniquely recognised that being able to sleep well at night works out better in the long term. Life is better when it is more than simply a series of excitements. Too often we are focused on seeking out the best when in reality what we need to do is to avoid being caught up in the worst. It is not the opportunities we miss that will hurt us, but the ones that we are too eager to go for. When they don’t materialise, they will hurt us a lot.
In today’s parlance, being disruptive is usually a positive adjective. But is disrupting always good? When do we say the converse, that a system or structure has ‘withstood the test of time’? Can you articulate to our readers when disrupting an industry is positive, and when disrupting an industry is ‘not so positive’? Can you share some examples of what you mean?
To us, the past decade has been a great opportunity for anyone investing in disruption. At the current moment, the stories around decentralised finance (DeFi) that look to disrupt our financial setup and the use of money is a good example, with cryptos, blockchains and NFTs taking a prominent role. It allows many businesses to rise that otherwise would not be possible. So, on that scale, it is clearly seen as a positive. It is also addressing the issues about centralised control and opening up the idea that even the central pillars of finance can be democratised.
The reality is this is far from obvious. There are many issues with attempts to democratise finance in this way. NFTs are like the old certificate of provenance you get with paintings. With the certificates of provenance, it is the painting which is worth something. The certificate itself has little value. With NFTs, we have distorted this. Just because someone paid a lot of money for an NFT does not imply another NFT should have any value. It becomes a marketing game.
These sorts of disruptions do not create any genuine benefit to people or the planet. It merely makes things which are not worth much expensive. When that happens, things which are necessary like food and energy also become expensive. As we describe in our book, when money is involved, the disruptions are never limited just to the areas they start in. There is always a cost to everyone.
Can you share five of the best words of advice you’ve gotten along your journey? Please give a story or example for each.
We talk about the Californian wine industry in our book and how a simple thing like having a glass of wine is actually a carefully marketed choice aimed at increasing the value of our pension investments and achieved at the cost of draining the land of its water and soil. These days, sustainability has simply become a marketing device. If you see anything with a sustainability label on it of any kind, be sure it has been put there to attract you so you can consume and feel you are doing good.
Another is the idea that we want governments to help us and provide. At the current moment we are still suffering from high prices and most of all we are seeing shocking increases in our energy costs. We all clammer when things like this happen that governments need to step in and do something. The fact is when governments do that, we are ignoring what the planet is telling us — there is not enough to go around. Having governments come in and bypass that does not make the genuine shortage go away, it actually makes our lives more fragile in the future. Interventions are full of unimaginable unintended consequences.
Our choices are always forced on us. We think we have a choice, but when we are unwilling to give up on economics we will always be making the choice that reinforces the inequalities and the biases we complain about. David is currently applying and looking for a secondary school for his daughter. This is something parents around the country are all doing. We are driven to want the best school, and in our rush to choose the best school, we increase the gap we perceive between the best and even the next school. It becomes totally unsustainable at the cost of our own children. Oddly, when was the last time someone asked you about which secondary school you attended? Choosing the best is the way we end up trapping ourselves into impossible choices.
All the Money in the World was a film about the life of the original John Paul Getty and also the title of a chapter in our book. John Paul Getty was the richest man in the world at the time and the shenanigans to keep his money safe meant he was totally imprisoned by it, unable to come up with even a small amount to help his kidnapped grandchild without risking losing the rest of it. Relying on a pot of money for our future is a poor way to live.
We are sure you aren’t done. How are you going to shake things up next?
We are shaking up our ideas for fossil fuels. We have a proposal to transform the ownership of fossil fuels into stewardship so that money from the industry can be used all around the world to support people locally, and the production of energy from fossil fuels can be managed to ensure our climate is safe.
Do you have a book, podcast, or talk that’s had a deep impact on your thinking? Can you share a story with us? Can you explain why it was so resonant with you?
There are a couple of books worth mentioning. The first is Good Economics for Hard Times by Abijhit Banerjee and Esther Duflo. The authors are a Nobel prize winning couple who received the 2019 economics prize for their work on field experiments in economics. The book tells us just how people know what they need more than grand economic theories do. Just like the film Nomadland, when people’s lives are turned upside down, it is their dignity that needs protecting most. That means trusting them to know what they need. The book, for example, tells a story of a food aid project and a person who received money from it. Instead of buying food, the person bought a TV. The author was the only one to ask why, when others simply condemned the person for the action. The answer was simply that when the food program is gone, there will still be hunger and starvation. The TV gives the chance to have something useful and longer-lasting. When we think about sustainability, we need to remember that people know how to make their lives sustainable, and it will not be by the means we think best.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
In the Marvel series The Agents of S.H.I.E.L.D, the character Jemma Simmons says, “The steps you take don’t need to be big, they just need to take you in the right direction.”
We all worry whether what we are doing is going to get us to where we think we want or not. It makes us want to make sure we have the plans all worked out, and we are making the best progress possible. The reality is we often lose sight of the fact that we are not even heading in the right direction. We are so eager to reach our goals that we lose our awareness of who we are and what gives our lives real purpose.
Jemma Simmons’ simple quote tells us we need to be checking if we are going in the right direction. What was right once may no longer be so, and if we fail to recognise this, the costs will be heavy. We have done this with our economic system where we still believe that progress is in achieving things. In a world where resources are limited and running out, progress is about doing only what makes our lives more meaningful. Slowing down and doing less may well be the most progressive thing we can do today.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
We would certainly want people to support our proposal for fossil fuels, which you can read about on our website, www.rethinkingchoices.com and also in our LinkedIn posts.
How can our readers follow you online?
Our website www.rethiningchoices.com and our LinkedIn posts: https://LinkedIn/in/RethinkingChoices.. We occasionally tweet @RethinkChoices.
This was very inspiring. Thank you so much for joining us!
Meet The Disruptors: David Ko and Richard Busellato of Rethinking Choices on The Five Things You… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.
