Unknown: 0:02

The cosmos is within us. We are made of starstuff. We are a way for the universe to know itself. Carl Sagan. Welcome to the lessons from nature podcast, modeling the secrets of the bees, hosted by Mark Rubin.

Mark Rubin: 0:21

If you hear my voice, you're alive. And if you're alive, you must have stashed some energy in your habitat. I imagine that you have some food in the refrigerator, or you have some money in a bank, and you have some fat in your body that allows you to stay alive when you're not eating. Amazing. Today on the lessons from nature podcast, we'll be discussing secret 14 from honey as money stashing honey is storing work. It's about the amazing way people and bees can store energy and use it for later. I'd like to introduce my co host David door. David is the co founder and chief investment officer of door asset management, a global macro investment management and principal trading firm. He has more than 25 years in global macroeconomics with a special focus on investments and planetary health. David will co hosts four episodes with me, where we will discuss the economical secrets of the bees through the lens of the human business of making money and the bee business of making money. Welcome, David is great to have you here. Thank you, Mark, pleasure to be with you. Okay, man. So today, we're talking about storing energy, and the different ways that bees and people store energy and how storing energy improves the chances of survival and thriving. And to kick things off, I'm going to tell you a recent story about B energy storage. And last episode I told you about my backyard here where I had two beehives, and one has lots of honey and one has none. And why that was. But this is a new twist of that variation is I'm building a place in West Virginia called Honey Lake glamping to demonstrate these ideas and hang out in the woods with cool people. And I have beehives out there a total of six beehives. I was out there a couple days ago added storage capacity, a big shed next to where the bees are, I'm moving last year's via equipment, it's piled up all over my warehouse into the shed next to the bees where I want it the closest spot to reduce the amount of time it takes me to go back and forth. Because time is honey. I opened the garage door on the warehouse. And then I went back to my brand new shed and thought in my mind, like where am I going to put these in, like what's the closest access to the door and where's the light switch and like things like that, like because I have a lot of stuff to move. And I only want to move at once. And by the time I came back David to the warehouse, which was only maybe 20 minutes later, it was full of BS full of bees. So I left the garage door open. And I realized the flowers peak where I live on July 1. And the bee population peaks July 1, because the queen bee is keeping track of these things. But here's the thing I was out there, maybe like the second week in July, so just past peak season. But now the bees are hungry, because they have the biggest population and the flowers are drying up. And in one of those boxes that I had from last year, there was been sitting in my warehouse. There were half the box was full of honey, which I didn't know. And it was piled under a bunch of other boxes. And the long story short, these hungry bees in my habitat smelled that delicious energy storage, that delicious money in the money bank. And they came in they invaded my warehouse. So when I came because they were looking for the energy, okay, there's like a big pile of money sitting there. And since the population is so high, and since they're running out of energy is called the dearth. They call this the dearth. After the peak, and the bees can become a little bit more aggressive now just like people would when they're hungry, and so I'd put on my B suit and then move the equipment out. I just put it next to the beehives and let them have at it. And just let them extract it. And they got it. I mean, it was amazing to watch. It was like a frenzy. It was amazing. And so this is an example of a combination of things coming together. There was energy stored from last year it was safe behind a door until it wasn't and the living things in the habitat, smelled it and came and got it. human behaviors is the same. And all animal behavior even a tree growing is growing towards the light. So we're playing this invisible game with energy and energy transfer and storage. And I wanted to tell about a story because we're talking about energy storage today in the context of living things, and also businesses, which are living things in the same way, because they're operated by living things. So let's go through a series of scenarios. And I'll ask you some questions. And I'd love to hear your insights on the business side of these things. So first, let's talk about energy storage. From the perspective of risk management. Basically, what we're balancing with money is time, effort and risk against the reward. And so are the bees, bees store honey, to get through times when nectar is scarce, or more literally, when sugar is scarce, and people like to save money for unforeseen circumstances or for periods of time when they're not working. And this is something as like, philosophical idea about about money storage, if you think of how many hours in the day people work, let's just use an eight hour workday five days a week, 40 hours. That means you have to have enough money to live the other hours that you're not working. Same with food, food is stored as fat in your body. And if it wasn't, you'd have to continuously eat. And so in the same way, we handle food, there's a capacity for storage, and then you run out. And then you trade money for that food if you don't grow your own food. But even if you grow your own food, you're trading time work and risk to grow your own food, which costs money because you have to eat while you're growing the food. And this game that we're playing back and forth is being played out at every level of every decision people are making. When you look at companies or businesses or markets, do you consider their cash reserves the seasonality of those businesses market cycles, random events to determine if that business or asset class has enough energy storage capacity to survive, based on the scenarios that you imagine are coming next.

David Dorr: 6:58

Yes, absolutely. And I think that that's probably a fundamental part of, of investing in markets is, is analyzing cash flows. We're a macro firm. So we look at macroeconomic issues from the top down to identify risk. But from the bottom up, we look to see how companies can weather any type of risk. And seasonality is a big issue. So you might have companies, a lot of retail companies, for example, our impact impacted by the holiday seasons, and they have to plan around that. And you see that and it's a you know, it's an optimization game, do they have enough inventory? For anticipated sales? Do they have enough cash on hand if it's going to be you know, a rough period? Are we in a recession, and not just cash management, but definitely cash management and an inventory being the top two kind of resources that come to mind are fundamentally critical to evaluate for, for all types of, you know, seasonal opportunities and disruptions, whichever could come. That was well said. And I just want to point something out. You use the word weather to describe the weather of money. And basically, we use that word in the same context, can we weather the storm, if the storm is like literally a hurricane, then we need the money to ride out the rebuilding of that storm. And if the storm is a different kind of storm, it doesn't involve rain and wind. So it's really interesting to put those two things together, which I never did before. So thanks for that.

Mark Rubin: 8:29

Let's talk about resource allocation. And basically, it's really this is about budgeting the bees, they have a certain capacity in a beehive to store things. And to a degree, the beekeeper and honey bees that are managing that are adding boxes to the hive, which increases the storage capacity and also increases the capacity for the queen to lay eggs. But it takes money to make honey and to make one pound of wax, which is what they use to store the energy and the pollen in and the eggs in take seven pounds of sugar seven to one ratio. If the bees are investing the time effort and risk and gathering the energy to build the hive, then they're not storing that honey in the hive because they're using that working capital to expand. Okay, this is what they're doing. So there's a game of a beekeeper, okay of trying to manage, I would say the capacity for them to grow into the space with honey production. Basically, if you keep adding boxes, they'll build it out with wax, they won't store any energy. They'll use up all the money. And then when the winter comes, they'll starve you don't try to expand an office building. You wouldn't add four levels to your office building like going into your slow season. What we're talking about here is the honey flow or the cash flow. Can you talk a little bit about things that you measure early look at in terms of cash flow in terms of like either like the rate of money coming in the money coming out you look at time do you look at like stored? Like, what are the cashflow things that you look at

David Dorr: 10:04

all the above and it can almost sometimes feel overwhelming to somebody new in markets. Because there's a, there's a plethora of of ratios that you can measure for cash sales of sales to inventory sales, the bottom line profits, their margins, there's a million ways to do it. But the concept all links up together and is applicable for every business. So whether you're in the agriculture sector, and you manage grain silos for corn, and wheat, or whether you're selling Nintendo's, you still have to be able to forecast and you want to optimize your cash, right, so that cash is precious. And how you choose to use it, what you want to see is a company that has learned how to first they should have a good cash balance sheet. There are companies that lots of companies, especially in the last tech cycle, that don't have a lot of cash, they're just trading at Crazy multiples, they're burning through cash, they don't make it and what happens, they run into the wall, they crash, and they die. They don't survive. And energy. Yeah, the quite literally. And so it's the companies that have figured out how to maintain the right amount of cash, and then deploy it in the right way. Because there are other companies that have tons of cash. And they're just sitting on stockpiles of it, but they don't know how to really optimize it. So it's just sitting there. And yes, they can survive for a while. But they're not being efficient, either. They're not maximizing their potential. And so good companies do both.

Mark Rubin: 11:36

So let's talk about labor investments. So those bees work hard to produce honey, which represents stored work. And money is stored human work. That's how we tokenize work represent the work in terms of money. And one of the concepts that humans have is this idea of passive income, where you can buy things or invest in things that create money passively, which requires no work from the person except potentially a little bit of risk. Even interest from a bank where it's guaranteed, it's not guaranteed immediately, I could smash into that bank, like there's risk no matter even as a 1%. Something can happen. Bees don't really have the concept of passive income. However, they do have this idea, depending on the age of the bee, there is kind of a passive income because the baby bees can't fly. And they don't leave the hive for a while, a couple days. So they're fed the forgeries, bring back the honey, and then the nurse bees feed them. So it's to the baby bees, that's passive income. And this is really related, I suppose to like multi generational passive income. This is the same kind of concept as human beings, setting up a passive income system for future generations. Do you have any experience with either investment vehicles that generate passive income for people and how might that parallel this,

David Dorr: 12:59

this is a an opportune time to comment and emphasize something that you said, that I believe really gets overlooked is that money is stored labor. This is really important. And it's important to highlight because there's a lot of broken, economic thought, in in today's markets and models. And I'll simplify it for for the listeners, if we appreciate how nature works, what what nature is showing us is that our consumption is throttled by our work that you must work first to consume. It's not backwards, there's a larger growing body of people that believe that you can consume and delay the work. It doesn't work that way, because humans desire to consume is infinite. And if it's not throttled by anything, then you know, we just consume all our resources, which is pretty much what humans have been doing and, and why we're consuming resources at a rate that isn't sustainable. So the stored labor concept is, is important. And it makes us appreciate and value resources a little bit differently, as it relates to the to the passive income. The key to that is once you have enough stored labor, that you can then go invest that in others that are good stewards of that. Because really what passive income is passive income is passing your money to somebody or something that is going to be active with it. Because whatever you do, whether that's a passive income stream from investing in real estate, somebody's managing it, you know, you might be in a fund, you might be in, you know, some other type of arrangement, but somewhere, somehow, somebody else's is stewarding that, that capital. And so the secret to finding good passive investments is, is looking for people that understand the same principles that we're discussing. You want to look for people that know how to find these right balances, and do that and when you find people and opportunities that encapsulate that then you've got something that's that's a try To create those income streams,

Mark Rubin: 15:01

I've been as an aside, trying to explain to people that money is energy for, like 25 years. And what I learned in my explanation is two things. Most people don't know what energy is. And most people don't know what money is. So I was using two words to describe something that I know, I'd say very well. And I would look at people because like, I could say the words and they've heard those words. And I guess I had an assumption that what I meant by those words was like, universally understood, because people would, but people would like to think money is like a piece of paper with numbers on it. Like that was the sort of the extent of their assessment of what money like the like the noun of money, but not what you said about labor. And it's and really it's not, it's not the labor, it's the stored work of my definition. Because this this episode is called stashing honey is storing work. But the next episode, which you're going to be on, is honey saved his time earned. And you can buy time not working with money that you stack. Okay, and so that's the game. Let's talk about social structures, and how those affect storage capacity. So in the beehive, bees have different roles, and they all contribute either to the collective savings or the collective use of their energy, honey. And humans also have different roles in society. Because money enables specialization, which is one of the one of the magic tricks of money, which is great, is it enables people to specialize. Every bee is doing something with movements short and long. The key to making honey is to do work where you're strong. And Romani thinks it money enables people to do things that they're good at, and outsource everything else through an exchange of energy to other people through the tokenization of work through money. And that's like that's, that's why it's better because the transaction fees are lower. So if you were to grow your own food, and dig up your own, you know, iron to make your own engines and then like, have a refinery in your backyard, like, maybe the game wouldn't, you know, it would be hard. So it's easier this way. But it comes at a cost because it abstracts us from the rest of nature. And then as you said, we consume resources faster, because we don't have to grow them. So we're lost in this loop of efficiency that comes from specialization and detachment from nature. And it comes at a cost and the cost we're paying now, which is part of the project honey lives to try to get these ideas out into the world that we can do regenerative business models, like beekeeping and other things. That would be good. So the question for you about social structures is really about the structural configurations of businesses. And how collaboration across those structures creates like a hive mind and how you've seen different levels, call them industries that have more of a hive mind approach.

David Dorr: 17:53

I think the jury's still out. As far as what type of corporate organizational model works best. I think it depends on the business, the sector, the culture. So we've seen there's some businesses that operate stunningly well in a hierarchy model, which is the more kind of traditional model, the tech industries often seem to favor flat, flat organizational models, where they feel that that will generate easier collaboration and idea sharing. When it comes to hive minds, the place that we see that as a more natural fit. And you see the horsepower of it is actually China, there is a tendency to kind of get in rhythm in organizations in China, in regardless of the sector. And when they move they move. And if anybody's ever seen videos of skyscraper being built in China, it's like it's like magic. It's practically overnight. It looks like BS. And you know, I mean that in the most complimentary way possible. It's, it's fascinating. So it depends. There's a lot of experimentation with what works. In the West, the tendency is experimenting with collaborative models that push innovation. And, and I think in the east, there's more models for what's fast and efficient. Like what gets us from point A to point B really, really, really quick. I think the best comes from both indeed a bit of hive mind, a hive mind that has some some innovative capacity. There too, is an interesting fit. But yeah, it's fascinating.

Mark Rubin: 19:28

Let's go higher level on this. I understand what you're saying about how organizations optimized differently, but really higher level industries. Okay, collaborative industries, let's go up instead of just like the individual investment, you know, stock, whatever, but like above that, in your experience, can you think of any examples where collaboration across an industry was better than just having people compete in that industry?

David Dorr: 19:55

Oh, yeah, I think the the biggest one and this this may or may not be a enact acronym that everybody's familiar with it's, it's effectively the OEM market, which is the original equipment manufacturer. So the OEM market, which you hear a lot about, especially when you're analyzing industrial companies of any type, so you take your typical whatever, any car, any car that's built something that would be familiar, whether that's Tesla, Ford, or anything else, the number of OEM suppliers they have, which means specialists. So third party companies, you might have a third party company, and their whole specialization is they make that rear view mirror. Like, that's all they do. And they do that so well, that the car brand has figured out that it would be way more efficient for them to just buy the rearview mirror from a third party supplier, then make the mirror themselves, they'll just send the specs out and do it. And you can then extrapolate that where it gets really fascinating, especially in the in the construction of, of airplanes. So airplanes have a lot of parts, these are parts where safety is at the absolute highest level, right? Because you're flying in the air. And so the standards and quality that is required at the specialists is is enormous. So you might have 1000s of companies that serve to what you do, you do have 1000s of companies that ultimately help bring this together, there's a great little book on this, it's called the eye pencil, that goes through the thought process of everything that has to come together for a pencil to be made. Every single little detail like from the lead to the wood to the paint, like it just traces it all backwards, and you just realize, Wow, it's amazing, we do what we do, because it takes so much collaboration to get there.

Mark Rubin: 21:40

And money is what enables the specialization for people to collaborate without money. It wouldn't work, you couldn't make a pencil, it's an optimization, money's an optimization. So um, let's talk about the perception of value because what we're trading is perception of value for perception of worth, and that's the trade of money. Bs perceive the value of honey as their life saving resource, and humans perceive the value of money as their life saving resource. Both bees and humans have been known to get into worse conflicts over energy. And in the bee world, this is called robbing. And what will happen this time of year this is this is the time is the bee populations at the peak, and the bees are hungry. And some hives have more honey than others. And so as the population starts to decline, and these hungry bees, basically, they're really gentle when they have lots of money. But when they run out, and the population is big, and they're hungry, they will potentially attack another hive, as our planet is changing, what will happen is the the areas of land that can grow, food will change, some places will dry up, some places will get wet, some cities will be underwater, or people will be moving and migrating. And so if we can adapt fast enough to deal with these changes and changes that have happened before, but they've never happened with this many people on the planet, and they've never happened with this many weapons on the planet. And so just like the bees, there is a potential for conflict to come through robbing. And so what the question I'm asking you is do you factor in global conflict? In your analysis of markets? And how and what have you learned from this,

David Dorr: 23:28

that's an area where we're, we're actually much stronger in that type of analysis than the bottom up analysis of, you know, looking at different company balance sheets, because that is to the heart of of macro. So we think a lot about global conflict, where it is what can cause it, not surprisingly, at the heart of most global conflict is conflict over resources. Yeah, and it's exactly the same as you know, the hungry bees attacking another hive. And if everybody feels that, you know, they've got enough resources, then it's not, it's not a problem. And this is rising. This is definitely rising. We've got conflict zones popping up everywhere. We have resources that are under strain, we have population density increasing and a lot of in a lot of parts that are that are climate sensitive. And I shouldn't even say climate sensitive, you know, we've degraded the areas, so their immune systems aren't as strong as they would have been. And you're gonna see a lot more conflict because of that. So yeah, resources and conflict, they go hand in hand,

Mark Rubin: 24:31

there is enough energy on this planet, and there is enough resources for people. If we manage it in a way that considers there's only one planet and we're all on it together, going 90 miles per second, but I appreciate that you factor that into your thinking because this is an important aspect of living on a planet with other living things.

David Dorr: 24:54

We talked about it in terms of, of eating pasta. So I'll share this this model with you that everybody that's ever eating pasta has had the experience of eating too much. Right. And the reason for that is that pasta in particular, it delays your body's internal syncing mechanism that your fall. So you get this sensation that you're full after you're already, you know, stuffed. One of the reasons that we're over consuming. So that's a form over eating is a form of overconsumption our economic model is we debase money, this stored work and our efforts on money. We're diluting its purchasing power. So it just gets created out of thin air and dilutes it, part of the impact of that is Miss allocation of resources, because you over consume it, it throws off all your sensors. And so we over consume, you get a big bubble, you get a big bust.

Mark Rubin: 25:48

That's a great segue into the next idea about diversification. Here's the question. So bees, stores, honey and various cells within a hive. And there's some thinking about the location other cells in terms of where they would need the honey later that they put it closest to where they're going to need it later, basically, is the game, but also factoring in the defensibility of it. So do you consider the physical risks of different assets in terms of physical storage, for example, like bars in a bank, versus cash under a mattress versus crypto and crypto wallet, the physicality of risk and or abundance either way, in terms of this diversification is that in your model

David Dorr: 26:30

all the time, so I started my career trading commodities, and we still trade a lot of commodities to this day. And so we're very cognizant of perishable items, for example, and how that plays a role in diversification. And you're right to point out is that, yes, diversification is most often first thought of as kind of a risk mitigation strategy. And we talked about that a little bit on your last episode, but it is also an opportunity strategy, too. So yes, we think about that, you know, gold bars, for example, are great, they don't go bad. They don't rust. definitely thinking about all those factors, safety perishability utility, how is it something that's liquid so real estate is, is something that doesn't usually just disappear unless it gets hit by a hurricane and you know, then your insurance pays out on it, but real estate's not liquid, we think a lot about liquidity. So that's always something that we emphasize for people because we see with a lot of portfolios, you see people that are asset rich, and their cash poor. So that's not a good balance, you need to balance that out.

Mark Rubin: 27:34

Well said, all living things store energy in various ways. When energy is stored, it can be traded for other things. The fact that you're alive means you stored enough energy in your body to survive from your last meal to now. And if you don't work 24 hours a day you store money somewhere because you need that money to buy the food that's keeping you alive when you're not working. If you enjoyed this discussion about stashing energy and storing work, please subscribe to this podcast. Lessons from nature modeling the secrets of the bees. The next two episodes of economic series cover buying time and planning for the near future. David and I will see you there. Visit project honey light dot life for more information about living in harmony with the rest of nature.