ARK Invest Founder and CEO Cathie Wood and her team were attracted to Tampa Bay from its vibe and the notable investment pouring in – which led to Wood’s decision to move her New York HQ to St. Petersburg, where she plans to help the region gain a deeper understanding of innovation.
In October, Wood announced she’d inked a lease for 10,000 square feet of office space in downtown St. Pete and also bought naming rights for the Tampa Bay Innovation Center, which will be the first in Pinellas County purposely constructed to focus on entrepreneurs.
Wood sat down with Embarc Collective Founder Lakshmi Shenoy for a fireside chat Friday at the Florida Bitcoin & Blockchain Summit in Amalie Arena where she discussed the potential and possibilities for Tampa Bay and the future of cryptocurrency.
Here’s a highlighted rundown of the discussion panel between Shenoy and Wood:
The responses have been edited for clarity and brevity.
What attracted you to the Tampa Bay area? There were lots of reasons. What clinched it for our young employees is the vibe. There’s a lot of investment going into Tampa Bay – Jeff Vinik, Embarc Collective. We thought, “Oh wow. I thought Florida was for old people.” I said to myself many times, “I will never move to Florida.” We took a tour and were going down Central Avenue with our chief marketing officer, who was probably the biggest opponent to moving here. I could see his mind turn around as he could see the possibilities. He has been to South by Southwest in Austin and has seen what that has done for the region, and he was thinking this feels like the next Austin. As soon as he verbalized that, I knew we had him. The welcome we’ve gotten here has been so warm, genuine.
Community involvement: We like to get involved in every community. We have a big ideas summit every January. It would be wonderful to host a summit here when we open our permanent office in the third quarter next year. With our big ideas strategy and approach to giving information away, we are trying to educate parents, grandparents, and students how their lives are going to change. I’ve also set up an innovation foundation that will be headquartered in St. Pete because we want to introduce an innovation curriculum through the lens of children from the toddler stage through high school. Wouldn’t it be great if Tampa Bay was a beacon where people came here to figure out how their lives are going to change?
How was ARK created? I started ARK out of frustration with the traditional asset management world. After the tech and telecom bust from the meltdown in 2008 and 2009, we saw a tremendous risk eversion move into the markets and it was characterized by worshipping at the altar of the almighty indexes, which is what all portfolio managers and analysts are compensated to beat so they just got closer and closer to their benchmarks, and we had the rise of quantitative research. Quantitative research at the center of it is the index. Our industry was forcing more and more portfolio managers to go into benchmarks. In the beginning, I was fine with it because they wanted a new portfolio manager in the firm. But three management changes later, they were back to the old world. They wanted to take one-third of the funds from me and put it into the S and P 500 [The Standard and Poor’s 500]. Can you imagine buying an ARK fund and someone has sneakily put a third of it into S and P 500? That’s not what you are paying for. So I quit and started ARK. It was born out of a sense of this huge unmet need because of this movement toward indexes, the average pension fund intuition was very short on innovation. We see five major platforms today involving 14 different types of technologies, all of which are entering their prime time for exponential growth trajectories – the likes of which we’ve never seen before.
How did ARK get its name? Many people think the ARK is because we wanted the name to be capitalized and an acronym to stand for something, but the SEC [U.S. Securities and Exchange Commission] insisted it must stand for something. So on the spur of the moment, I said “Active Research Knowledge.” ARK came about in 2006 from my disaffection in this world of indexation, which didn’t even reach its peak at that time. I wanted to get out of that world. When I’m in a moment like that in my life, I go to the Bible and just open it up and ask God to talk to me and I read the pages. I stumbled on the “Ark of the Covenant.” Many people think the name ARK has to deal with Noah’s Ark, but Ark of the Covenant in the Old Testament is about the presence of God accompanying the Israelites into battle. I subsequently started having dreams of battles. I was in a battle of my life trying to get out of the system.
What blockchain interests you? NFTs [non-fungible tokens] are all the rage and they are so interesting. Bitcoin was the first global private monetary system ever. When we look at NFTs, it is the beginning of the first global private property system. Bitcoin is fungible and NFTs are not. Our next-generation analyst, the one who didn’t focus on crypto, is into NFTs and he owns at least 41 of them.
At what point will businesses catch up to cryptocurrency/blockchain? We talked to a few digital assets experts within financial institutions and the DNA difference is so stark that they’ll never be able to converge. I honestly don’t think they will. Our accounting rules classify crypto on the balance sheet as an intangible asset. Intangible assets can only be written down, they can’t be written up. It doesn’t make any sense.
On the future of digital wallets: Banks today are worth about $3,000 per deposit. We think digital wallets could be 10 times that if they are successful. The writing is on the wall.
What’s exciting to you within the artificial intelligence platform? AI gives companies the opportunity to move into winner-takes-most markets. If we think about why Tesla is dominating the autonomous vehicle market, it’s because they had the foresight just like Steve Jobs had to design Apple’s chip so it could turn cellphones into smartphones where you can access the internet. That was an aha moment for me. Motorola, Nokia and others lost that market to Apple from that one decision. Tesla has more real-world data on the road systems than anyone out there – and you can’t do it with just simulations. Elon Musk has millions of robots gathering data every day to look for “corner cases.” You’re going to see AI in the health care space. In health care, no one wants to analyze labs. Well, labs of the future are going to be in the winner-takes-all category. Analysts don’t like that because you are sacrificing short-term profitability for long-term gains. We think they have the most genomics data out there, including giving it away. They are collecting this data, especially with cancer to understand the dynamics of the mutation before it manifests – wouldn’t it be nice to catch cancer before it hits stage 1? There’s a company called Freenome. Founder Charles Roberts and he believes that’s possible now. He has a cancer screening blood test that’s able to diagnose pancreatic cancer in stage 1.