Even God Would Be Fired | Wes Gray on Bubbles, AI Valuations and Why Size Was Never the Edge

**SPEAKER_1** (0:00)
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**SPEAKER_2** (0:30)
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**SPEAKER_3** (1:01)
We'll see you next time. Wes, thank you very much for joining us. It's been a while since we've seen you, but nice to see you.

**Wes Gray** (1:08)
Likewise, gents, long time, no talk.

**SPEAKER_3** (1:11)
We always like to check in with you to talk markets, to talk factors, ETFs, and a whole host of various topics that we're going to work through today.
What we thought we'd do is take the first part of today's discussion and talk about how maybe you're thinking about markets and looking at markets from a factor perspective. You guys run a number of factor based strategies at Alpha Architect. And then in the second part, what we thought we'd do is kind of shift over to what you're up to on the ETF architect side of things, where you're doing 351 exchanges and helping firms launch and convert to ETFs. And it's been a really fun time to watch the success that you've had over ETF architect. I think there's over 100 funds now on the platform and over 37 billion in assets, which is just amazing. And it's been fun to watch the success of that business for sure.

**Wes Gray** (2:07)
Been on a good run. Glad to live in Puerto Rico.
That's for sure.

**SPEAKER_3** (2:14)
Made that move at the right time.

**SPEAKER_1** (2:16)
I did.

**Wes Gray** (2:17)
We had good timing on that.

**SPEAKER_3** (2:20)
Yeah, we launched our ETF, Justin, not too long after Wes launched QVAL. Obviously, the path of success was what Wes was a little bit different than ours.

**SPEAKER_1** (2:28)
I'm going forward.

**SPEAKER_3** (2:29)
Wes has turned it into this massive business. But yeah, congratulations on that. It's awesome.

**Wes Gray** (2:35)
Hey, it's always good to be lucky, then good, right?

**SPEAKER_3** (2:38)
Well, and it's just an interesting story around, that wasn't the core business to begin with, but what came out of that for doing it for other ETFs. And that's how that business really evolved and developed. I mean, it wasn't like that's where the company started, you know, was you were doing it for maybe one or two other ETFs. And then you realize, you know, we have a business here. There's a white space that we can attack.

**Wes Gray** (3:01)
Yeah, no, exactly. You know, as you guys know, I have a PhD in finance. And the last thing I want to do is herd cats and do ops and compliance and trade. That's not what I signed up for when I started a biz. That sounds like my biggest nightmare.
But we were kind of in some sense, it's kind of like Amazon where I'm like, hey, we're going to create an online store. And then quickly you realize like, wait a second, we also created this massive tech infrastructure and everyone on the planet needs a server. Oh, let's create AWS. That's a way better business. And I don't think Jeff Bezos, I don't know, you could ask him, but I imagine he also didn't start Amazon thinking that was going to be like a big component of their business. Just kind of like when we started, we were not thinking about that in 2010
It was just serendipity and circumstance.

**SPEAKER_3** (3:55)
Yeah, but I think one thing on that is, you're a former Marine, Pat's a former, you guys are very process driven, very efficiency driven. And so I think that was kind of just in the culture, embedded in the organization, which allowed, I think you guys to kind of get into this other line of business completely.

**Wes Gray** (4:13)
Yeah, no, for sure. Yeah, we've always been trying to do more with less.
And a lot of times the marketplace doesn't value that until you enter the Vanguard world. And everyone's like, oh, no, we all have to be in the ETF business now. And as you guys know, like, if you can't get low cost and efficient in ETF business, you die. And so obviously having infrastructure capability, the ability to deliver these services at low cost is super critical to survival. Because if you don't have that and your product has to be too high priced, you're not going to survive in the ETF business. So it's just good timing, good circumstance and execute it on the plan.