John Arnold - China, Energy Markets and Fixing America's Systems

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick OShaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus along with all of our podcasts at colossus.com.

**SPEAKER_2** (2:15)
Patrick OShaughnessy is the CEO of PositiveSum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of PositiveSum may maintain positions in the securities discussed in this podcast. To learn more, visit PSUMVC.

**Patrick O'Shaughnessy** (2:43)
My guest today is John Arnold. John is probably the most famous energy trader of all time and certainly the most successful. One of the things John says was that he wanted to cultivate and build the best seat in his industry. The seat with the best perspective, with the most information, with the best systems. What's most interesting about John is after being the most successful energy trader of all time, you could argue that he's gone on to be the most innovative philanthropist as well. John has applied this idea of philanthropy to all different sectors. And what's so exciting about this conversation is it feels like you're talking to a talented entrepreneur or a talented operator in all of these different fields who's willing to share exactly what him and his team have learned about what makes certain problems manifest across our country. He has an incredible perspective, not just on the things he's worked on, but on his travels, on companies, on technology. This conversation is a reminder to me that cultivating the seat is such a powerful concept that we probably under invest in. Please enjoy this wide-ranging discussion with John Arnold.
Everyone listening, I think, is somewhat interested in what's going on in China. Your lessons that you shared were so interesting. I'd love you to just share some of the highlights from that trip and what you learned traipsing around studying robotics, studying AI, everything else that you did. What were your major takeaways from that trip?

**John Arnold** (4:00)
The origination for the trip was this realization that China has gone through this transformation unlike any other that's happened in the world, both economic and cultural, in the course of 30 years. This is a country that has gone from trying to replicate the West to in many ways leapfrogging it. I was fortunate enough to spend a week running around and met with four or five companies a day that were all very open and got to tour factories. It was really striking and came away incredibly impressed and also with a lot of questions about what happens to the rest of the world as this rise of China is happening. The one big takeaway was just the speed and scale of which they can do things is unlike anything in the world. This highly educated population, it's a very entrepreneurial culture. They've figured out how to get capital to these companies, and they have this deep domestic market. It allows them to build up the supply chains and agglomeration effects to create something that I don't think exists in the rest of the world, where we're talking to a battery company and asking them, are they looking at replicating factories elsewhere in the world? And one of their responses was, every one of my suppliers is within 200 miles of here, and I can call them and meet with them same day. And you can never get that.