In the investment and financial services industry, the dominant players like BlackRock, State Street, and Vanguard are beholden to stakeholder activism, which drives them to a greater focus on leftist ideas like DEI—diversity, equity, and inclusion—and ESG—environmental, social, and corporate governance.
Strive takes a different approach. It’s focused on maximizing value for investors—and it’s having great success. Today, Strive has over $1 billion in assets—just two years after its founding.
On today’s episode of “The Daily Signal Podcast,” Strive’s CEO and chief investment officer explains the company’s mission and why it’s thriving. Listen to the interview with Matt Cole or read a lightly edited transcript.
Rob Bluey: Matt, thanks so much for being with us today.
Matt Cole: Honored to be here. Thanks for having me, Rob.
Bluey: Our audience might be somewhat familiar with Strive, given that Vivek Ramaswamy is one of your co-founders. You’ve been at the helm for nearly a year now. Why is what you’re doing so unconventional in today’s world?
Cole: You’re right. When you open this up, the concept of Strive shouldn’t even have to exist. The idea that for a for-profit company, the shareholder comes first should not be a contrarian statement. Go back 20 years, that would be the consensus statement. But today, that’s a contrarian statement.
And so part of my background, I came from the largest pension fund in the United States, CalPERS. You’re probably familiar with them. And I was there for almost 16 years. And one of the things that I learned there was how political the asset management industry is. So I joined there.
My parents were law enforcement officers. I went to school and while I was going to school, the funded ratio of CalPERS plummeted from having enough money to pay benefits for the retirees to being under 80% funded. So I made it my professional mission to help solve this crisis. And it just kept getting worse over the last 20 years.
I was actually working on the same idea as Strive, got connected with Vivek, and we teamed up. So I was part of the Day One team initially heading up just the investment side of things. And when he decided to run for president he put me in as CEO of the company.
And I think what we’ve learned, and we believe this to be true when we started the company but I think it’s undoubtedly true now, is that the majority of Americans that are saving for retirement, they want one thing: Help me retire. And across all of America, 401Ks, pension funds, there’s one thing that’s consistent, is that people don’t have enough money to retire. So we’re trying to fix that.
It’s a contrarian position today. I’m hopeful in the near future it will no longer be a contrarian, but back to consensus.
Bluey: Let’s hope so. I want to go to your experience at CalPERS. You are quite humble because in your performance there, you were top of your game and you certainly did all that you could in that position to maximize the value for those people, like your parents.
First of all, you made it sound like it was very mission-driven for you because you had your own family who you were trying to take care of. What were some of the challenges, though, you experienced and still despite the fact that you were exceeding the market in many cases? I’ve heard you talk in the past about some of the impediments that you felt in that position.
Cole: Yeah. So, just quickly on my background, I was there. So I was doing portfolio management for 11 of the 16 years, active portfolio management. I outperformed my benchmark every single year. I was their top performing portfolio manager, was managing $70 billion of the roughly $500 billion pension fund. And over the last five years of my career there, there became increasing pressures for me to evaluate every single investment opportunity, to invest in an [environmental, social, and governance] bond because I was in the fixed-income area of CalPERS.
And what became very clear after looking at hundreds of them was that there was never a single ESG bond that was attractive to buy over the non-ESG bond from a risk-return basis. And so every single time I would write our analysis, this doesn’t make sense for “X” reason or “Y” reason. Typically it would be that it would just be at a higher price for the same amount of risk that we could get elsewhere and same amount of return potential.
So I say, “This doesn’t make sense.” And the response was always the same: “Oh, OK, don’t buy it. There’s no ESG mandate. But just make sure you look for the next one.” And it became an increasing distraction. And you just take a step back, and you’re like, we’re underfunded.
Making money over a benchmark is actually not easy. Most managers don’t do it. They underperform. And you’re going to put these constraints and these additional pressures to take my focus away. This is going to harm the fund.
I didn’t buy an ESG bond. Any of my colleagues did, and they would start getting promotions for buying certain bonds. And it just, it stunk. And I became increasingly convinced that I could not solve the problem there.
So, just as an example, I made a billion dollars of alpha over what I was asked to do in my 11 years of portfolio management. Great, I was outperforming BlackRock, I was outperforming PIMCO. But CalPERS was $200 billion underfunded. I was picking up pennies in front of a steamroller. So I said, “Enough with that, I’m going to Strive.”
Bluey: We’re glad you’re doing it. Take us back and tell us about the history and how the financial services industry got to the point where it is. I saw a fascinating chart on Strive’s website, which showed the difference between kind of this European-style stakeholder investing versus the approach that traditionally we have embraced in the United States.
Cole: Yeah, it bundles down to this. Do you put the shareholder first or the shareholder last or the shareholder equivalent to all other stakeholders? And what our belief is, and this is actually Delaware law, so most corporations in America have had to follow this for the last hundred-plus years after Dodge v. Ford, is that corporations must prioritize the shareholder over all other stakeholders.
And so how this evolved was in 2019 there was this initiative by the Business Roundtable that was saying that the shareholder primacy idea is out. So, shareholder primacy is the idea that the shareholder is the most important stakeholder. And there was this claim that it’s outdated, and 181 CEOs of large publicly traded companies in America signed this statement in agreement with that core concept to change American capitalism toward the European model stakeholder capitalism.
To me, one of the easy ways to think about this is actually a biblical principle that you can only serve one master. And so, who is your master? And if you try to serve multiple masters, you’re going to fail. And so that’s what’s happening in corporate America. When you de-prioritize the stakeholder, the shareholder, and for other stakeholders.
And what I’ve used is actually pretty simple. When you think about stakeholder priorities, the shareholder’s first, the customer second, the employees are third. They all matter. You have to treat them all well to have a successful company, but you need a clear mind in prioritization of the different stakeholders to actually drive success for a company.
Bluey: That makes a lot of sense. Thanks for that explanation. In your business line, you’ve mentioned a couple of major companies that have embraced this pro-ESG, pro-[diversity, equity, and inclusion] type of perspective. Who do you consider Strive’s biggest competitors today?
Cole: As far as people that stand for shareholder primacy, period, I don’t think there’s actually true competitors to Strive. There are surely other asset managers, there’s wealth managers that would agree with some of the things that we’re talking about.
But Strive’s products right now are competing against BlackRock, State Street, Vanguard, index offerings that are the core equity beta, the core fixed-income beta for most people’s retirement accounts, investment accounts, passively managed products.
And I think what is the differentiator for Strive and why we have no competitors is that our differentiators actually are mandate to corporate America, how we vote, how we engage. Mandate is for these corporations to prioritize the shareholder over everything else. And it’s really, it’s a very capital-intensive industry.
Strive’s benefited from a lot of investors that believe and are excited about our mission, invest in Strive and have given us the capital to launch 11 [exchange-traded funds]. That is very difficult to compete with. And I think it’s why we don’t see competitors. I think it’s unlikely that we will see competitors.
But we’re going after the big dogs and I think it really becomes simple: Are you willing to sell your vote, sell your potential returns for a couple of pennies or do you want an asset manager that’s going to push your value into corporate America?
And I think it’s pretty simple. People’s investment accounts, their retirement accounts, they should be working for them, not against them. And I think it’s actually the opposite today. And I don’t think it has to be that way for that much longer because one of the things that we’ve noticed in a lot of our conversations with corporate America is that most corporations actually agree with us and have been pushed, pushed by these large asset managers, pushed by climate activists. …
Recently, Exxon is actually suing some climate activists to stop them from even bringing a proposal to their board because this proposal has nothing to do with shareholder value. It’s actually aimed at capping the knees off of Exxon and this doesn’t make any sense.
So this should not be a proposal that’s even voted and I think why they have to sue versus just let it go through is two reasons. One, it’d have to spend millions of dollars to block it, which instantly hurts shareholder value. And two, I think there is a little bit of worry that, historically, sometimes these large asset managers—CalPERS, BlackRock, State Street, Vanguard—vote for these climate proposals, even if they harm shareholder value.
And I think it gets back to the fundamental truth that BlackRock, State Street, Vanguard, and even Strive, we are not the shareholder. The shareholder is the people that buy our ETFs. And so I think that’s what Exxon’s really fighting against here.
Bluey: Thanks for sharing that example. On this notion of ESG and DEI, and the fact that so many have embraced it, have you seen any desire to move away from that, especially given the success that you’ve had and some of the fairly vocal criticism that we’re hearing among everyday Americans who say, “Enough is enough. This is not the direction that I want our country to go”?
Cole: We’ve seen some, we’ve seen a couple companies that have made some changes, some that are starting to roll back part of ESG executive compensation.
We’ve seen Exxon that proactively added two board members to their board without a shareholder vote to counteract when Engine No. 1, which is a climate activist, in 2021 got three people added to the Exxon board with no oil and gas experience, they were environmentalists. Exxon opposed it. CalPERS, BlackRock, State Street, Vanguard pushed them on. Exxon took a proactive step to counter their power by just adding more people to their board, which I think is a great thing.
It’s something that we actually had advocated for. We sent Exxon a letter a couple months prior to them doing that requesting that exact thing. So I think Exxon has been a leader in pushing back. Now it’s kind of the battlegrounds where the climate activists are forcing environmentalists onto the board. Exxon’s pushing back, adding different ones, but you are seeing this fight at different companies.
But what’s actually really worrying to me is the trend of just don’t say ESG, don’t say DEI, but keep doing the same things, the same value destructive things. And I think that’s where this is actually heading.
So as an example, in their recent 10-Q filing, BlackRock said ESG one time, and the one time was actually in their disclosures. They were talking about that their stances on ESG create a risk to their business. So. They’re kind of leading the front there of “Don’t say ESG.”
One other just interesting example was last year at Davos, the CEO of Coca-Cola, he said to a group of a bunch of CEOs that ESG has become a tainted political word. I’m just going to stop using it. I’m not changing what I’m doing.
And so I think that’s really where we are. And so my biggest worry of why Strive or why this movement to restore shareholder refers, to restore meritocracy, how it could fail is passivity amongst people that want to see it succeed because they think just because the word goes away, the issue is solved. And unfortunately, I don’t think that’s the reality.
Bluey: We know those activists on the other side are certainly not going to rest easily and will continue to look for creative ways to insert their agenda, whether it’s ESG or DEI into companies, higher education institutions, government, you name the institution in our country.
You’ve mentioned during the course of the interview some of the product offerings. If we have listeners or viewers right now who feel inspired by your words and agree with your mission, what are some of the ways that they could get involved or take advantage of what Strive has offered?
Cole: We’ve designed our product offering very carefully to fit the needs of, I’ll call it right now, 80% of the investment needs of the average person.
So we have a 500 fund, a small-cap fund, a value fund, a growth fund, a dividend growth fund, a core bond fund, and a short maturity, short-duration bond fund. We have an energy fund. We have a semiconductor fund.
And so the idea being is that we’re not necessarily—we are very bullish on energy. We’re bullish on semiconductors. But for the most part, how we’re constructing these offerings is that it’s not really bearish. It’s what are the core offerings that people need in their retirement accounts, their investment accounts, and making sure that people can have a fiduciary that’s going to push shareholder first for whatever that need is. So that’s how we’re building out that product set.
So that’s just the ETFs we have. We also have a 401(k) offering that we just launched. And one of the reasons for that is the 401(k) industry is a really interesting industry where it’s completely captured.
You go to an employer and you get put into a 401(k) plan and there’s a limited option set of what you can invest in. So in that instance, you’re actually stuck. You have to give your vote to BlackRock or Fidelity or whoever it is and let them push ESG and stakeholder capitalism with your retirement account, literally making it harder in many ways for you to retire by lowering the returns, raising the costs by constraining these businesses in different ways.
So we’re trying to make people’s retirement accounts work for them and we’re going to continue to roll out products that make that the truth.
Bluey: That’s great. I love it. I would imagine that financial advisers are a key element to this. So what’s your outreach look like to them in making sure that they are advising their clients on what you have to offer?
Cole: It’s really about education. And so when you talk to a lot of advisers and even beneath that, the people that are trying to retire, save for retirement, most people don’t realize the importance of corporate governance, the importance of the vote. I think if you were to rewind to when Strive was launched in 2022, probably over 90% of people had never even heard the term ESG.
And now I think with your group and Twitter, ESG has become a hot-button word. Most people have heard of it today. Most people have a very strong opinion of it—for it, against it. I think most people are against it. But that was not the case then.
And so it’s really education and telling and informing advisers that it’s not just risk, return, and fee that you need to look at when picking an asset manager. You actually have to look at what is their approach to corporate governance? Are they active in it? How are they voting? How are they engaging? How do they view the shareholder?
Because, as you mentioned, on our website, we have something about shareholder capitalism versus stakeholder capitalism, which is one of the most interesting studies that I’ve seen. And part of the reason why I think it’s so interesting is that typically when you see Wall Street research, they’ll look at returns over five years or 10 years. Here we have a 40-year sample size of different forms of economic models, different forms of capitalism, and how do they return differently? And the difference was just about 4% a year, just under 4% a year in the high threes.
So, when you compound that, and that’s when you get to Finance 101, Compound III, something percent over 40 years, it’s the difference between being able to retire securely or not being able to retire securely. And that’s what we show on our website, is it’s literally for most people a difference of millions of dollars in their retirement account at the time they retire.
Frankly, we can’t afford to throw that money away for some values. And then I think when you get into the values, you quickly realize that they’re 100% left-leaning values. So it’s not even an equal distribution of values. So if you’re a Democrat, you’ll like the values. If you’re Republican, you won’t like it.
Our view is that corporate Americans shouldn’t be switching that and moving toward Republican values. They should be moving forward and focusing on shareholder value. And that’s what we’re pushing.
Bluey: You made some big news last year. You have now over $1 billion in assets. Can you share about what that means to you in terms of being a player in the market and the secret to your success?
Cole: Anytime you start a new business, the first question is not profitability. It’s actually, do you have product-market fit? And so, you take a contrarian position, for Strive, going against ESG, going against DEI, not against considering environmental risk, social risk, or governance risk, but against these politicized factors and investment decisions. And is anyone going to care?
What a billion dollars in a year showed is that people care and they care in a massive way. Because for those that aren’t familiar with this industry, you might say, “Oh, you have a billion dollars. BlackRock has $10 trillion. You’re tiny.” That is true. But when you look at success, what does success look like in asset management? A billion dollars in a year is unheard of success.
When we were actually starting Strive, we had three different competitors that we thought had found success in different ways in this industry. We’re growing at the pace of all three of them combined. … Here’s the three companies for you, J.P. Morgan, Pacer, and ARK. And they’re like, should we compare ourselves versus J.P. Morgan, Pacer, and ARK, and it’s actually all three of them combined.
And so I think when you look forward, what that means is that Strive is on place to be a major asset manager in the future. And that this is not going away. So for corporate America, they’re going to have to take seriously that Strive is going to be a long-term holder on their cap table representing the interest of everyday citizens that want the shareholder to be put first.
Bluey: That’s great. And Matt, I know that not only are you focused on investing, but Strive is also out there to educate Americans about the current situation we’re in. Could you tell us about The Fiduciary Focus, and how people can follow you personally on X and learn more about Strive.
Cole: Yeah. So, we’ve launched a weekly newsletter. You can sign up for it on Strive.com. It’s called “The Fiduciary Focus.” And part of the movement that we’re trying to create since Day One here is education.
So when Vivek was part of the firm, it was literally every week op-eds in The Wall Street Journal. Now, we’re still doing that on a less frequent basis, but we’re on a weekly basis publishing a newsletter that talks about these issues, that talks about all these issues with ESG, with DEI, how they’re actually hurting shareholder value, what you need to know.
And it’s really fascinating because every single week we have to figure out what to put in because there’s so much. And there really is a lot. It’s a complicated topic. We try to make it digestible for everyone to actually understand why they should care. And you should care. So definitely recommend signing up for “The Fiduciary Focus.” It’s completely free.
To follow me, you can follow me, @ColeMacro on Twitter. Strive is @StriveFunds. But we’re going to continue to lean into being thought leaders in this space, providing value, and really help being a solution provider in pushing shareholders first, pushing pro-capitalism, pushing pro-business, pushing pro-meritocracy across corporate America. It’s been great to see it happen recently in the university systems. Over the last couple months, this pushback against DEI, corporate America is next. And so educate yourself on where this fight is going to move next.
Bluey: Absolutely. And for our listeners who want to learn more, be sure to visit DailySignal.com or the show notes of this transcript, we’ll leave links so you can sign up for more information.
Matt, congratulations on the success that you’re having. Thanks for doing what you’re doing. We appreciate you being a guest on “The Daily Signal Podcast.”
Cole: Thanks, Rob. It was awesome being here.
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