Seth Levine: The Capitalism That Advisors Were Trained for Is Ending

This podcast is brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.

We're living through a moment when the very idea of capitalism is being questioned, challenged, and redefined. Today's guest argues that we're not just debating capitalism's future, we're already in the middle of its next evolution. Hi everyone, I'm business coach Steve Sandusky for Barron's Advisor, The Way Forward podcast. My guest today is Seth Levine. Seth is a co-founder and managing director of Foundry, which is one of the country's leading venture capital firms, and they have about $4 billion in assets under management. Seth is also the co-author of a new book called Capital Evolution, where he makes the case that we're reaching the end of the Milton Friedman shareholder-only era of capitalism and entering what he calls dynamic capitalism. In today's conversation, we explore why the old model of capitalism optimized for short-term profits is no longer sustainable and what a more durable long-term system could look like. We discussed the shift from shareholder capitalism to stakeholder capitalism. We discussed the role of business leaders in a deeply politicized environment and why creating more owners, not just employees, may be one of the most important economic ideas of the next decade. Seth also shares how his 25 years as a venture capitalist shaped his thinking. He talks about what he's changed his mind about while writing the book and what practical steps leaders can take, whether you run a Fortune 500 company or a small business, to build companies that are both profitable and resilient. We also dig into the evolving role of government capital allocation and why values, not politics, may be the real competitive advantage in the next era of American capitalism. With that, here's my conversation with Seth Levine. Well, Seth, you have a new book out called Capital Evolution, and it makes a, I'll say, a bold argument that we're living through an era today of American capitalism, sort of the end of what we've been calling American capitalism, and perhaps if you and your co-author have your way, maybe the start of a new one. So you're sort of laying out this vision that you call dynamic Capitalism. So why don't we start there? Tell me, what is dynamic capitalism and why is now the right time for it?

Let me first take a step back and frame what we're talking about, right? Because the book itself is somewhat of a defense of capitalism. When we, we started writing 3 years ago, it seemed like maybe that was something that was important. Sitting here today, recognizing that that's actually maybe very important, right? We're actually having a debate as a society about capitalism itself. And so the book, timely, serves as a defense of capitalism, but also describes sort of this transition that we think we're in, right? We're, we're sort of at the end of what you might call neoliberal capitalism. You could also call it Friedman-style capitalism, the Washington Consensus. There's a few names for it, but basically it was a form of capitalism that was defined most prominently by Milton Friedman, a famous economist from the Chicago University of Chicago. It's his thinking is known as the Chicago School. And that was a very absolutist form of capitalism. Shareholders are the only people that companies should care about, according to Friedman. But that's shifting, right? And we're describing the shift as much as we're trying to propel the shift. And really that shift, I think, started in the late teens, maybe punctuated in 2019 when the Business Roundtable, which is a group of 200 or so CEOs of the largest companies in the United States, They got together, as they do from time to time, and they issued a proclamation about sort of what businesses should care about. And in it, they very clearly described this move away from shareholder-only capitalism and listed out employees, suppliers, the environment, other things that companies, their leaders, their boards of directors should pay attention to. And so we packaged all of this up in Capital Evolution, our book. And wrote about this transition, right? Which is we're in the messy middle of that transition. I think we see that. I'm sure we'll jump into it. We see it in our politics and sort of the back and forth. We see it in socialists getting elected to be mayor of New York and Seattle and before that San Francisco and Minneapolis, although those two have now swung back the other way. And so lots of kind of frothiness. And what we do is define this thing that you called Dynamic Capitalism. You asked me about dynamic capitalism, which is really— and now I'll get to actually answer your question— is really sort of describes this new form of capitalism that is taking shape, that recognizes that shareholder-only capitalism doesn't work and that it's created too much and unsustainable fissures in our economy, in our society. And it treats too many things specifically in the environment, but also the middle class and workers more generally as resources to be extracted from. Right. If all you care about out as profit, and that's how you're measuring success, especially in the short term, it forces you to think about all your inputs to production as things that need to be immediately optimized. And so we feel like that clearly hasn't worked. It's led us to this moment of sort of hyper— not just hyper-partisanship, but hyper-concentration of wealth and, and opportunity in our country. And so dynamic capitalism suggests a couple things, right? It's, for starters, it balances short-term and long-term goals. This Friedman-style neoliberal capitalism was very good at optimizing for the short term, not so good at optimizing for the long term, right? The average tenure or half-life of a company on the Fortune 500 list of biggest companies in the world is only 20 years. So these are companies that they're actually not doing a very good job under this neoliberal-style capitalism of perpetuating themselves. It speaks to creating more capitalists, right? Empowering an ownership economy. We want more people to have a stake in our market economy. It describes a limited but still important role for government. And then lastly, it recognizes the importance of the rule of law, right? We need to have rules that we all agree on. And that last one is, it maybe sounds a little, I don't want to say sounds counterintuitive, like sounds obvious, but like needs to be said right now because we're a little bit making some things up as we go. And that's not probably not such a good thing. So anyway, that's, Dynamic Capitalism and maybe a quick summary of the book in a couple of minutes.

So you mentioned the Business Roundtable, and 2019 is when they came out with a, a revision to sort of what they say is the main purpose of a corporation. And Jamie Dimon, the CEO of JPMorgan, you interviewed him for the book. He, I believe, was the head of the Business Roundtable when they came out with that. I think they sort of called it stakeholder capitalism. And we have to look at, like, multiple stakeholders, not just, hey, we need to make as much money as possible for the shareholders. I'm going to sort of push back with you on this a little bit in terms of how we're moving toward the vision that they had with the Business Roundtable. Capitalism is evolving. It seems to me it's more aspirational right now, and now we're actually reversing course and we're getting back to it's all about How much money can I make? It's sort of like Monty Hall capitalism where, hey, let's make a deal. Everything's a deal and it's all about shareholder profits. It's all about let's get the stock price up and all the things about ESG and climate and, and social things and, and employees. It's like, hey, we had COVID and people could work remote. Well, now we've totally reversed that in many cases. And now we're— everybody's coming back to the office kicking and screaming. So it seems like we had a moment in 2019, 2020, but now we're sort of reversing. Do you feel that too? Or are you more optimistic that, yeah, maybe there's a short-term setback, but long-term, the course is what you're really laying out here with Dynamic Capitalism?

It's a really important question, Steve, and I'm glad you asked it. And it's, it's a bit of what I meant when I described where we are in this moment in time as a messy middle, because in these times of transition, there is a lot of frothiness. And I think that that's where we are today. I'd point out a couple of things. One is that I think some of the language that we used and some of the descriptions that we had for what— or that some people had for what we were trying to do went too far. We were asking too much of our companies. We were asking too much of our leaders. We had a very interesting conversation with Jamie Dimon about this specific topic. And he talked a lot about the difference between values, which he believes in as a values-driven leader and politics. He believes people need to be careful, CEOs in particular, of being weaponized by one interest group or another. We, society, let that happen too much. Right. And I think what we saw was a bit of a pushback, but the pushback was more around the language that we use and maybe sort of the very extreme ends that some companies had gone to, more so than it really was about their actions. Right. If you look at let's say BlackRock, right? We were able to interview Larry Fink as well for the book, who's the CEO of BlackRock. It's one of the largest, maybe the largest asset management firm out there. And Larry said things like companies need to define a purpose, right? He writes these shareholder letters, so does Jamie, and sort of similar to what Warren Buffett used to do where everyone reads them. And so he used purpose a lot in his letters. He talked about climate risk is investment risk, all of these things. And then he took a step back from that and said, hey, I feel like ESG has been weaponized by forces on both the left and the right. And he felt like he was sort of trapped in the middle and he stopped using those terms. But if you look at what they actually do as an investment firm, they still invest based on those principles, right, which are primarily around a longer-term focus. I don't think that that's going away. Right. And it's no accident that probably the investor that we've all looked up to the most, which is Warren Buffett, is a very long-term investor who actually thinks about all of these factors. Now, he believes, and I believe, that if you consider all these factors, you'll do better in the long run. And if, if your desire is to, to maximize short-term profit potential, that might be good for a quarter or two, but, but it won't ultimately lead to stability in our, in business and in society. But I would point that out that like the most, revered investor that we have, sort of in, at least in my generation, our generation, is someone who takes a long-term view. And I think, by the way, I think that's true of Larry Fink. I think that's true of Jamie Dimon. I think that's true of Dan Schulman, for example, who we interviewed at the time he was CEO of PayPal. And then he left and did some other stuff. And now he's the CEO of Verizon. Lisa Greenhall. I can sort of go on about the people that we talk to, but they really talk about taking that longer-term view. The other thing I think all these people have in mind is we spend so much time in our politics. Talking about how to split the pie up. We don't spend as much time talking about how to bake a bigger pie. And I think that that's missing in our current sort of fractured politics.

So you mentioned Dimon. You mentioned how he wants to really separate values from politics. You mentioned Larry Fink and how he was sort of changing the language because some of the language around ESG got weaponized. And I certainly understand and appreciate all that. But I wonder if they're a little hypocritical from the standpoint of when it was in, I'm going to say, in fashion to talk about climate, to talk about ESG and those certain types of apology and DEI, all those words that we can't say anymore. When that was, quote, in fashion, they're like all for it. But then when it sort of becomes out of fashion and when social media and the influencers are going against you and the seat is getting hot, they sort of backtrack. So is it that they're being hypocritical? Is it that they're just sort of doing what the current winds are blowing, the direction, the current environment that they're in? And that while they may still really believe in those things, they also have a business to run and they have to deal with reality, which is, hey, I've got this environment, I've got shareholders, I've got employees, so on and so forth. I got to figure out how to keep this ship moving forward in the environment in a way that's not going to get me on the front page of the news sort of thing. So I know it's a really hard job those guys and gals have running these big companies. But do you see any— I'm going to call it hypocrisy. Maybe that's not the right word, but how do they deal with that difficulty? And do they truly believe this or are they just like, this is what I need to do in this environment?

Yeah, I think it's a very fair criticism to say, hey, Is there some guiding principle behind any of this from these CEOs, or are they simply sort of doing what the market wants them to do?

And I think Mark Zuckerberg's another great example.

Yeah, well, I for one, I think it's just very complicated, right? So I— and for sure, interestingly, the companies that have sort of remained purist about this kind of stuff are private companies. I know you had David Gelles on recently, right? He wrote a book about Yvon Chouinard. Obviously Patagonia is an example of a very values-driven organization that was perfectly happy to be politicized because they're privately owned and they decided that they, they wanted to care about these politics and values. And so they brought them all together and they sued the government, et cetera. I think other examples, maybe not with the same lens in terms of political lens, would be like Hobby Lobby or Chick-fil-A, right? Who also are private companies and they've been able to stay a little bit more sort of, sort of pure to what they're doing. Chick-fil-A, both took it from the left because their founder had given some money to some anti-gay stuff years ago, but also from the right because they had— they promoted someone to be head of essentially DEI. Right. And then the right was like, oh my God, why does Chick-fil-A have this thing? Right. So everything sort of got politicized. But I think it's fair to say that companies, again, especially public companies, are struggling to navigate this moment in time. And part of— part of the audience for the book is people that run organizations or are senior in organizations, and we try to give a little bit of a roadmap for where to think about the line between values and politics and sort of what you need to or should be speaking out for or against as a company. And I absolutely think that these leaders got it wrong a little bit, right? And there was a moment in time when they were sort of trying to sort of capture a trend in society, and they got pulled too much in one direction or another, again, to use Jamie's term, got weaponized a bit, right, by one interest or the other. I also think it's fair. I don't know Mark Zuckerberg, so I'm not, I'm not here to say that he— what his transformation was all about. And I'm definitely not here to excuse either one way of his thinking or the other. But I also think it's fair to allow people a little bit of room to change their views in their minds over time based on new information. And I certainly feel one of the things I really enjoyed about the process of writing the book, and we really started on this project about 3 years ago. So it's been a bit— it's been a change. I changed my own mind on some of these things, and, and I've opened myself up to not just being open-minded about it, but also listening to people with varying perspectives in a way that maybe I hadn't even realized that I hadn't done before. And so I hope I'm answering the question because I do believe that there were absolutely CEOs that were simply trying to follow what they thought was the market trend and say things in the way that was like where the population was going. And I think what happened was they got pulled back because the world shifted a little bit on them. But I think all of this is just indicative of this messy middle that we're in. And part of what we describe in the book is the need to sort of put some boundaries around what that looks like, because otherwise we're expecting too much of our CEOs if we expect them to constantly be talking about every current issue and every current thing that comes up.

Right. And I appreciate your point there about, hey, let's give people some grace here. They can change their mind as new information arrives. Totally. And I appreciate that these CEOs are really in a difficult position. But you said something here just a second ago. You said you've been doing this book, the research, for about 3 years, and you've changed your mind on some things as a result of that. So, I'd love to hear 1 or 2 things that you have changed your mind on as a result of doing the work. Work for the book?

The main thing actually relates to this question, Steve, which is the question you just asked me, which is I think now that companies are being asked to speak out about too much. Right. I think that for the most part, companies, especially public companies, right, when you're talking about, about Patagonia, you're really talking about the owners of the companies. Right. Or Hobby Lobby. Right. Like the, the company is the instantiation of the owner. So when you are Talking about public companies, the owners are the public. And I think for the most part, those CEOs should very much stay on the right side of the line of values versus straying into politics. And I think that's not actually what I thought when I started this work. I thought, no, there's the government as an entity is less trusted, is more fractious. Media as a sort of a group is more fractious and less trusted, and companies are going to have to step in and actually be a bit bolder. The leaders want to be a bit bolder and step into political, current political and social topics. I don't believe that anymore. I think it's asking too much of our companies. And frankly, I don't want to have a world where companies are judged as being red or blue, let's say, just to pick the sort of easy political way of describing it. And that's not how I want to feel about it. I don't want to feel like— and it's not that I don't buy from some companies because I agree with their values. They give a pair of socks away or whatever like that. That's great. Like, I think I think that's fine for companies to do, but I don't necessarily need to look to Jamie Dimon, let's say, to figure out what do I believe about some social incident that happened in Portland where you are, in Colorado where I am. I don't feel like that's their role. And that changed for me. I really actually shifted quite a bit on that as one example in writing the book.

Right. But I think it's hard to not have just about anything turn political in this environment. And another Example is Cracker Barrel, of all companies, right? They come out with a new logo. Like, that shouldn't be political. And yet it got turned into something politicized. So I agree with your point about, hey, let's, let's talk about underlying values. And CEOs, you don't have to speak out so much about some of these political or social issues and sort of pick your spots. But even something as innocuous as we redid our logo, and now that's been politicized. So like, how do we get away from this when That's the environment that we live in. We've got all the social media and people are trying to make a name for themselves by being outrageous and provocative and flamethrowing. And they'll find the littlest thing to argue about. It's like, how do we deal with that?

For the most part, I think we try not to get sucked into it. I think that some of that is inevitable because everyone has a platform and a mouthpiece. And there's a lot of positive to that, but there's also a lot of negative to that. And I think companies sometimes walk into these things and then allow themselves to be politicized, right? And I think that that's— That's the mistake. But I think you could also, as Cracker Barrel, for example, sort of whether we like the logo or not, we frame everything in terms of politics. And I think the pushback from Cracker Barrel should be to either ignore or dismiss the political angle, but acknowledge that, hey, people feel really strongly about our logo and we misunderstood or we misinterpreted how much people really loved the old logo and we messed up. And that doesn't have to be framed in political terms, even if your critics are framing it in political terms. Right. And I think that that's— I've done a bunch of podcasts now to promote the book. And I, I think of the book as a relatively middle of the road. It's not overtly political in one direction or the other. The COVID is sort of blue and red and fades into, into purple. We did that on purpose. See it over his shoulder. Right. And we did that on purpose because we were trying to say, hey, this is not an overtly political book. But people try to make it political, right? And they try to— they try to pull my— my own politics out. And I stand behind my politics. I'm not averse to talking about them, but the book wasn't intended to be about that. But I think it's just an example of where we default to politics in a way that we didn't used to, because I think that it, it tells us something about people, their politics. And I'd love to see us as a society get away from that, because I think that the underlying challenges that we talk about, whether you're Mamdani as a socialist, right, or Trump as a sort of the head of the MAGA movement, are not that dissimilar. Right. Which is probably why double-digit percentage of people that voted for Mamdani also voted for Trump, as somewhat counterintuitive as that might sound. But if you think about it for a minute, the underlying economic challenges that both of those politicians bring to the fore are the same, right? Maybe that's why they had this meeting in the Oval Office. It wasn't actually that contentious because they totally disagree on the policies to address it, but they at least agree on, on what's leading us to that. And funny as it was to see that moment of these two people seemingly from opposite ends of the political spectrum, although really it's more of a circle. So they're probably just like right next to each other at the top of the circle, but come together. Like, I wish there was more of that in our politics and less fractiousness in our politics. And we may just have to live through that. And by the way, we've had other times in the US where politics were very fractious. So it's not like— I understand that people alive today don't mostly remember that, but we did not invent fractious politics. It just, we just happen to be a moment where things are getting more politicized and everyone has a mouthpiece.

So let's talk about, you've got this idea of dynamic capitalism. We're evolving from neoliberalism capitalism, Milton Friedman style capitalism. Talk to me a little bit about some actual things that business leaders can do to evolve toward dynamic capitalism. And along with that, you're a venture capitalist. And so, I want you to sort of weave in how your life as a venture capitalist— I think you're running a multibillion-dollar VC fund. You've been doing it for about 20 years. So, how has your work as a VC informed your idea of dynamic capitalism? I'm doing like the worst thing an interviewer should do, which is ask you multiple questions in one mouthful. So I will take, take any of those threads that you want there.

You've already probably figured out I'm relatively long-winded, so I will try to remember the second question by after the time I answer the first. I'm back. Well, actually, I'm gonna start with the, the last question that you asked. So I've been in venture for 25 years. Foundry is the firm that I helped start, that I co-founded. We manage about $4 billion. So it's a big, big investment platform. We invest both in other venture funds as well directly in companies. Companies that your listeners would've heard of are, are companies like Fitbit and Whoop in the wearable space. SendGrid, if you've ever received an email from basically anyone, you've received it through SendGrid's platform. Xometry went public, which was a marketplace for manufactured goods, a bunch of stuff like that. So it's been quite successful. The first question I have always asked founders is, why? Why did you come up with this idea? And I'm looking for— it's a little bit of a values question because I'm looking for what's the backstory. And the value to me is why are they passionate about it, whether that's making people healthier, unlocking human potential, which is what Whoop would say, or fixing this thing that should have existed in marketing and never has. And why can't you do this and that? Like, I'm searching for that sort of values and passion. And that's always been a part of how we've thought about the investment landscape. I— one of the organizations I helped found outside of Foundry is this group called Pledge 1%, which encourages its platform— now about 20,000 companies worldwide— encourages companies to give back to their local communities a percentage of profit, equity, time, and product. We've generated about $3 billion worth of hard dollars back to local charities through this, this initiative. Yeah, I know, it's huge. Probably the best thing, best thing I've ever done in my life. Yeah, it's wonderful. But our pitch to companies is that this actually supports your main mission. It's not a side product to it. It doesn't distract from it. Not everyone believes that, but the history suggests, if you look at the types of companies that, that actually participated in the program that actually these two things work very well in concert, right? It gives people, employees, a sense for working for a greater good. It gives them a reason to stay at— to either be attracted to a company or stay at a company longer. So you can measure things like your job acceptance rate. You can measure things like employee turnover. Both of those— acceptance rates goes up, turnover goes down for companies that participate in these sorts of programs. So from an investment perspective, I've always been on the lookout for that. And now I did the thing that I said I wasn't going to do, which is I forgot the first question.

What are some practical things that leaders can do to really move toward dynamic capitalism?

To me, the number one thing that we should be doing as a society— Every day, the people of Meta work to protect over 3 billion users around the world.

My name is Jackie. I have been at Meta almost 8 years now. As a designer, you really do have to think through the end-to-end implications of everything that you're doing so we can innovate, um, while risks are mitigated. My hope is that I am communicating really clearly the way that we're using your data and the way that we are delivering all of the products Meta offers.

Get the facts at meta.me/risk.

It's creating more owners. So if you own a business, you're senior in a business, or maybe not even senior in a business. I think the thing that I would like to see happen more— we've done a really good job of this in Silicon Valley, sort of tech entrepreneurship. This has not actually been very successfully rolled out across our society more broadly— is find ways for more employees to participate as owners of businesses. There's some very high-profile examples. Publix comes to mind, King Arthur Flour. But outside of the sort of technology sphere where it's very common to have everyone at a company participate in the upside of the business itself. It's not very common. And, and one of the people that we highlight in our book is, is a guy named Pete Stavros, who's a managing director, senior guy at KKR, right? This is the firm that they wrote Barbarians at the Gate about. They are as rapacious a capitalist firm as there is. By the way, you can own some of them, or they're actually a publicly traded company. Mm-hmm. And Pete has starting with the group that he oversees, which is the North American manufacturing group. But he has instituted this sort of very broad-based employee ownership plan that's resulted in employees at some of the companies that KKR is invested in receiving multiples of their annual salary when those businesses exit. I know he's done that because we talked to him about it because he thinks it creates better outcomes, right? It's a little bit of just he understands that world. He grew up sort of with working-class parents and saw what happens when your incentives are misaligned. And he's decided to really try to fix that, right? And so he's, he's really served as a model for that. And again, he does it because it makes more money for KKR, right? It's not because he's doing something that's altruistic. And we talk a bunch about this in the book. There are all sorts of ways to increase employee ownership, and it's pretty important right now, right? One of the things that's happened under shareholder capitalism, under Friedman-style capitalism, is We've really optimized the labor stream as much as we possibly can. Again, we treat the middle class, we treat workers as a resource to be extracted from. And what's happened is that labor as a category no longer shares in sort of the fruits of the business success in the way that they used to. If you track— and we have a graph on this in the book— if you track the percentage of revenue that, that is spent on labor over time, it's gone— to say it's gone way down, it's gone way, way down. Right. That is not in any way an argument for companies to be less efficient and hire more people than they need to. It is 100% an argument for finding ways to share the prosperity of businesses across the labor force. And again, you need to look no further than KKR and what Pete's done to realize that actually that ultimately is better for business outcomes. So it's better for owners, the existing owners, and it's better for workers as the new owners. So a lot of what we talk about relates to different ideas for how to create more owners and capitalists. To give Trump some credit for something that he, he decided to do, we actually wrote about it in our last book as well. I'm sure he got the idea from there. But no, many people have been talking about this idea of sort of like a baby bond, right? When a new child is born in the US, putting some money into almost like a 401(k) style account that grows tax-free. They can take that money out when they're either 18 or 25. But just, I want to give some credit to that because that's a really good idea. Again, How do we create more capitalists? How do we have more people have a stake in the market economy?

And all those are wonderful ideas, but let me zoom out for a second. And it seems to me that there almost needs to be like this umbrella above all the ideas that you're talking about. And that umbrella is the values of the society at large. And so one of the people that you talked about in your book was Jack Welch, and We know Dutronc Jack, he's a guy, probably the purest form of Friedman-style capitalism as there ever was. But interestingly, and I'm sure you're aware of this, the CEO before him was Reg Jones. And Reg Jones was probably 180 degrees opposite of Jack Welch. And the environment when he was leading the company, I think he was the CEO for most of the '70s and a senior executive into the '60s. But I had Evan Asnos on this podcast a couple months ago, and he had talked to like the granddaughter of Reg Jones and talked to some other people. And what he discovered was when Jones was running GE, his pay was about 18 to 20 times the lowest paid person at GE. Today, you've probably seen the statistics, it's closer to like 350 times. The CEO gets paid about 350x the lowest employee. Jones was thrilled to write in his shareholder letter how many people they employed at the company. He was thrilled to show how much we paid in taxes to the government. So it's again a complete 180 from the world that we live in today. And so my concern is, as much as I love what you're talking about here, is until there's a shift in what the culture as a whole values, I think it's going to be hard to implement a lot of these ideas. Yes, we're going to have the Yvon Chouinards out there who own 100% of their business, and they can do whatever the heck they want and not worry about politics. But these public companies, they've got pressures. It's like, I'm just wondering, will it take a shift in what society values in order for a lot of the things that you're talking about here to actually come to fruition?

One of the questions that I think this line of questioning brings up is whether— to what extent does society lead and companies follow, or do companies lead and society follows? It's interesting because there was a time when we were sort of outlining the book where— and this goes back to an earlier question about sort of what changed in our thinking. For example, there was a time when we were outlining, when we were sort of talking about was like, can we go back to the golden age of capitalism, which was capitalism in the US between sort of the end of World War II and 1970, early '70s? Growth was higher and equality was greater, but overall growth was much higher, right? Our economy itself was growing at a higher rate. And I think ultimately we rejected that because it's too simplistic a thinking to say things worked back in the '50s and we should just repeat what that— what we worked for some people, right? We had all sorts of other issues, right? Of civil rights movement, things like that. Women were not as part of the workforce in the same way that they are now. There are a whole bunch of things that we started Thinking about saying, well, no, that's not actually a great model for what we want, which is why we're trying to define something different, right? Which is future-oriented, sort of the next phase, not the last phase of capitalism. And pointing out that capitalism can be quite dynamic, right? It has been over the years. And by the way, we had a style of capitalism before the end of World War II, right? Then the Golden Age that was different from the Golden Age that's different from neoliberal. So it's helpful to point that out. But I do feel like there is this overall shift. And again, I would, I would point to the Business Roundtable and the CEOs of the 200 biggest companies in the United States raising their hand and saying, hey, we actually have other constituents that matter and we want to operate our business to the benefit of all those constituents. And there's a reason why essentially all— we don't know exactly how many people are members of the The Business Roundtable, we know over 200 signed the statement of purpose of a corporation that they put out in 2019. But I think that what we need, and this is a little bit of what we describe in the book, is leadership from business to do that. And so many of your listeners, I suspect, aren't just executives at large businesses, but they, I hope, are— the listeners are also owners of or work in smaller businesses, right? And I, I would not at all discount the power of change that happens at small businesses, right? We sometimes talk about the states are the laboratories of democracy. Well, small businesses are the laboratories of capitalism in many senses. And so they— and they tend to be a little bit more rooted in community. They're a little closer to their communities. And so I would say that to everyone listening, yeah, I get it. Like, if you sort of paint the big picture, it can be challenging to sort of take that all in.. But the steps that you can take as a person in business, not to ignore the bottom line, not to not be profitable, especially not to not think about profitability over the medium and long term, but to ignore the Jack Welch, I'm gonna fire 10%, and turned out to be a complete house of cards, right? And GE collapsed and, and they are a shadow of what they once were because they built this thing that was completely unsustainable. And, and, and in Jack Welch's case, did it on the backs of accounting fraud and things like that. So it, it really didn't work out. But I do believe that it's not that businesses ignore society or that societal trends don't pull businesses one way or the other, but I also believe that business has a very important role to play. And that's what we, we talk about quite a bit in the book. As government and media retreats, businesses need to step into that void.

Talk to me a little bit about the role of government in business and maybe touch a little bit more on the question that you raised a moment ago, which was, does business lead government or does government lead business? And at the moment, again, going back to 2019, again, pivotal year, I think business was trying to lead. But now I think we've reversed again and we've got such a strong person as president that they're sort of dictating what's going to happen in the business world. Is this an aberration or is this the new normal?

Well, I think we're searching for the right role for government. Right. And I think that like a lot of things, I think Trump has actually pretty reasonable instincts. Sometimes the implementation of that can be a bit more challenged. Right. Certainly using tariff policy to open markets or protect— like there's a role for that. The way that it's been implemented, I don't really understand this question of like, should the government support industries? Biden was doing that in the CHIPS Act as well. Right. So this— giving that example because it crosses political boundaries, this idea that, yeah, we let too much go offshore of our critical supply chain. And actually there's a role for government to say, no, we want to bring some of that back. Or it would have been better to say we want some of that to not go offshore in the first place. And we as government need to invest in, in some, some businesses and platforms to make that happen. I wish that happened in more of a sort of holistic fashion, right? As opposed to Everyone likes to point out Intel and the government took a stake in Intel. I have no problem with the government taking a stake in Intel. I don't really love that they— there were like a couple dozen companies that took money under that same program. Like, if we're going to take a stake in Intel, we should take a stake in— the money should have been attached to some sort of warrant or something like that. That would have made a lot of sense. I think going to Intel after the fact as one company and saying, hey, there were a couple dozen companies that took this money, but we want a stake in your specific company, I don't quite understand that. I would have rather I would have rather that just been part of the program. And frankly, I think that probably should have been part of the program, right? The American taxpayers should get compensated for the risk that they take in supporting these companies. Right. And that, by the way, that happened previously. There were a bunch of battery manufacturers and, and EV manufacturers, car manufacturers specifically, or most notably Tesla, who took money under a program, whatever, a dozen years ago now. And the government participated in upside both in Tesla and others. Right now, whether we Had enough upside in those programs? Probably not. Right. We issued very risky debt and we basically got paid back a coupon that probably didn't make sense, but at least everyone kind of was subject to the same terms. Right. And, and so I think what is maybe not something I support is this sort of crony style of capitalism, which is like, who do you know in government? And you can get a sweetheart deal if you know them versus, hey, these are national priorities. Here's a pool of money that we're going to use to support that national priority. And here's the return that we or the deal that we expect to get from each of those companies. So I think there's absolutely a role for government in that. And one of the things that I think we've maybe moved away from, which is most concerning, is government's role in deep research, right? And really the government supporting research. Historically, that's been through colleges and universities. That's become a little less popular recently, but I do worry about us pulling away from that. When you think about the internet's the most obvious example, but was basically basically invented by the government, trillions and trillions of dollars worth of economic value to our society. I think about things like quantum computing, right? Like where the government has a role to play in supporting the science behind that. There's a bunch of national security reasons why that makes sense as well, because the GPS network is highly vulnerable, for example, and quantum offers some solutions to that. But so I'd like to see us not pull back completely from the government's role in supporting that foundational research. And then the last area that I think government has a role is in sort of defining the boundaries or the rules of the game, if you will. And I think we've become— the government as a watchdog has become sort of overburdensome, if you will. I think I live in Colorado, we're the 6th most highly regulated state. I think that's problematic. And I think that the— again, back to sort of the overall Trump instincts, like the instinct that we are overregulated and there's too many regulations in the books. Like, I agree with that. I think we should look to roll roll those back. And I think the government has a role to play in setting the right guardrails. And so, finding that balance, I think, is really, really important.

I want to go back to your role as a venture capitalist for a moment. Tell me what you think your role as a VC is to foster dynamic capitalism and a lot of other VCs out there. Do they share your thinking around dynamic capitalism or are they still more of the neoliberalist capitalist idea, the Chicago School kind of thing? So, what— because you guys are allocating the capital, you guys have billions or trillions of dollars that you're investing in these companies. So what are the VCs instilling in the next great companies?

Yeah, I think it varies, right? I think that baby venture was moving in one direction, as obviously in recent years maybe been a bit of a pullback in another. Although I think overall VCs recognize that we are measured on IRR, right? And we're measured by cash-on-cash return, essentially. And the question is really, how do you maximize that IRR, maximize that cash-on-cash return? The argument that I make and I've been making since I've been in venture is that you do that by investing in great people and companies who have this more holistic view about their role and how they're operating their businesses. And my very clear experience has been that companies that feel some sense of purpose, right, are values-driven. Whatever those values exactly are, and there's, there's plenty of differences, those tend to be more successful businesses in no small part because it's like a sausage factory, right? It is like you, you read the headlines and it just sounds like everything's up to the right for businesses that are successful, venture businesses that are successful. But the truth is it's very, very messy, right? And, and you need to be able to lean on those values, right, to get you up in the morning and say, okay, no, I'm fired up to go run into a bunch of brick walls again and. And I think that's why, at least in my experience, those sorts of founders are the founders that are most successful. I think most VCs believe that. And, and again, we're not necessarily talking about, and in fact we're not talking about asking companies to be overtly political and take stances on whatever the political issue of the day is, but we are talking about companies who lead from a sense of values and who therefore attract employees and retain employees against those values, which again, values are not politics in this sense. So we, we're not talking about something that's left or right. We're talking about the things that the business cares about, right? Which often center around who's your customer? How are you helping them? Why are you passionate about doing that? What does that enable you to do?

I reached out to the head of the business roundtable and I said, I've got this guy, Seth Levine. He's got this great new book. Called Capital Evolution. I want you to give him 1 hour in front of all of your members at your next meeting. They said, yes, absolutely, Steve, whatever you want. So you've got 1 hour in front of the business roundtable, in front of these 200 leaders of the biggest companies in the country. What are you going to say to them in that 1 hour?

The challenge that I would issue to them is I love this way of thinking. I love the question. I'd love for this to happen. So if anyone on the BRT is listening, okay, let's make it happen. I'm your guy. I'd love to come and talk to you. I'll bring, I'll bring books. You don't even have to buy them. I would challenge them with something, right? So it's one thing to issue a proclamation statement. It's another thing to actually live it, right? So I would actually challenge— and the pushback against the BRT was, hey, this is just greenwashing or whatever the equivalent is, and you don't actually mean this stuff and you're not actually living to these values. And then that kind of got lost, right? And they issued it like in November of 2019. Obviously, 5 months later, COVID lockdowns, and we were on to talking about other things as the economy felt like it was blowing up. That's what I would, I would challenge them on. How do you instantiate this set of things that you described in actual practices in your business? You say that employees are important. What does that actually look like? You say that suppliers are important, the environment is important. What does that actually look like in your business? How are you going about it? And then how are you telling people? How are you measuring it? And how are you telling people what you're actually doing? So that, that's, I would spend the hour talking about and pushing them on that very specific thing.

All right, Seth. Well, as we wrap up here, is there any final thought you'd like to share? And then what's the best way for folks to connect with you?

I hope I piqued your interest and you'd be interested in the book. There's an audio version as well, if that's easier to, for the busy people that are listening to this to, to get when they're running around. You can find more information on thecapitalevolution.com, or you can pick it up at your local bookstore, or you can find it on Amazon, Barnes Noble.

Books a Million, etc.

Fantastic.

All right. Well, Seth, appreciate you being on the show.

Thanks for having me. Thanks for such thoughtful questions.

All right. That's all for today. Make sure you like and share this podcast through your favorite social platforms. And for more great podcasts, visit us at barons.com/podcast.

Take care and be safe. This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.