Sam Parr sits down with Cathie Wood, founder and CEO of ARK Invest, for a direct conversation covering her career origins — from McDonald’s cashier to managing tens of billions — through to the hard questions about ARK’s underperformance relative to the index. Cathie defends ARK’s track record by pointing to COVID distortions and supply chain blind spots, explains why ARK trades so actively despite long-term conviction, and makes the bull case for Tesla as the world’s largest AI project, autonomous vehicles, and humanoid robots as multi-trillion-dollar opportunities.
Speakers: Sam Parr (host), Cathie Wood (guest, founder and CEO of ARK Invest)
Introduction [00:00:00]
Sam: You manage more money than any other woman on earth.
Cathie: Across the company, we’re closing in on 40 billion.
Sam: She’s called one of the most disruptive and innovative forces. Cathie Wood making some big headlines. The ARK Innovation ETF soared over the early pandemic. If I’m a believer in AI, what’s the number one stock that I should own?
Cathie: I think everyone knows about Nvidia. We always try to answer that question with stocks people are not thinking about in the right way.
Sam: So here’s the tough question. If somebody else had your track record, would you invest in them?
Cathie’s Origin Story [00:00:45]
Sam: Cathie Wood, you’re here. I appreciate you doing this. You’re a pretty remarkable person. I’ve been watching you for a long time, and there’s a good chance that you manage more money than any other woman on earth as an active fund manager. I don’t know if that’s exactly true, but you’re maybe top five.
Cathie: Yeah, probably. I don’t know. I don’t have those numbers.
Sam: I’m curious about the humble origins. What was Cathie Wood’s first job?
Cathie: McDonald’s.
Sam: Cashier? What were you doing — flipping burgers?
Cathie: No, I was at the register. I was 16. I also worked at a supermarket. I was the first girl allowed to push carts at Vaughn Supermarket in Southern California.
Sam: Do you remember roughly what you were making hourly at McDonald’s?
Cathie: Well, right before that I was babysitting for a quarter an hour.
Sam: So you went from maybe a quarter an hour to managing something like 20 or 30 billion in a fund. In the world of entrepreneurship, we always hear these hustle stories. And I don’t think you go from McDonald’s to where you’re at without some hustle. So what’s the hustle story you pride yourself on?
The Art Laffer Connection and Getting Into Finance [00:02:30]
Cathie: The first big break was getting into the business. Art Laffer — I’m not sure if you know Laffer, the Laffer Curve, Supply Side Economics, Reaganomics — he was my professor at the University of Southern California.
Sam: He was like an adviser to presidents, right?
Cathie: Oh, every president since Richard Nixon except for Obama and Biden. He was agnostic. It didn’t matter what party — if anyone wanted to hear what he had to say about taxes, deregulation, monetary policy, he wanted to give his point of view.
We’ve come full circle, Art and I, because my team and I introduced Art in 2015 to Bitcoin. When he read our paper, he said, “This is what I’ve been waiting for since the US closed the gold window in 1971 — a global rules-based monetary system. Wrong rule — quantity theory of money, limited to 21 million units — but we’ll get there.” He was talking about stable coins. We introduced him to stable coins, Tether, Circle, and so forth, and he said, “Ah, the right rule.”
Sam: Have you seen this website, WTF Happened in 1971?
Cathie: It’s amazing. There’s an entire website basically asking, “What the f*** happened in 1971?” and it shows a series of charts where something happened that year and the world was really never the same. It’s a very compelling case. And obviously that’s the year we went off the gold standard.
Cathie: It’s the year we went off the gold standard and all hell broke loose in monetary policy. We went into massive inflation. So, it was in the late 70s, while I was in Art’s class, that he introduced me to Capital Group. I walked into Capital Group. I didn’t even know what the investment business was. I had been a waitress. I was interested in economics, but I didn’t know this business. And Capital was the premier firm in Southern California at the time.
Cathie: Art recommended me highly to Don Conlin, who was the chief economist of Capital Group. I walked in there, and Don was losing someone who was going on to Harvard Business School. Her name was Claudia Huntington. She was so good at what she did that he was looking for one and a half people to replace her. I was the half — but I didn’t want to be the half. I wanted to be the one and a half.
Making an Impression Early in Your Career [00:06:00]
Sam: Let me ask you about that, because I think everybody in their career will have an opportunity like that. I had one when I moved to San Francisco when I was 24. I didn’t know anybody, but I wanted to be an entrepreneur. I wanted to be in Silicon Valley, and this billionaire was hiring for a role. I don’t know how I got the job. They literally told me, “You’re not qualified for this, but we like you. We’ll bring you on. We’ll still hire somebody else for the actual role, but we want you here.” So I had my foot in the door.
I think everybody has this opportunity to work hard, but there’s one thing to put in hours. First one there, last one to leave — put in the sheer number of hours. But what else goes into making an impression during that sprint phase of your career when you can just fully go full force? What else besides sitting in the chair matters?
Cathie: Sitting in the chair maybe matters, but I think the most important thing — and my objective was to bring new technology into the firm. I was using an economics time-sharing system. Each chart back then, in today’s dollars, would have cost $5,000 to $10,000. That just gives you a sense of how far we’ve come. But sparingly, I was able to use charts — ones we made up, original ones — and really develop little economic books and presentations for Don to use.
Sam: Yeah, you’ll get what you want when you help other people get what they want. The fastest way to getting what you want is to give other people what they want. As a young person, you’re coming in without the experience, without the network, without the track record. Those are your disadvantages. But your advantage is that new technology might be easier for you to pick up because you have time, maybe you grew up with those tools, and you’re less set in old ways. So you bring something to the table, and that can be your thing.
A Day in the Life at ARK Invest [00:09:30]
Sam: I’m curious — what is a day in the life of Cathie Wood? What’s your actual day-to-day focus?
Cathie: What I hold sacred is from the moment I get up in the morning until 10:30. That time is all about research. We have our research meeting from 9:00 in the morning to 10:30. The first half is the entire research team, investment team, and portfolio management teams together, sharing information. Then in the last half hour we focus on one of the four teams.
We’re broken up into: the Autonomous Technology and Robotics team; AI and Cloud, which has forked into another team covering Consumer Internet and Fintech; our Multi-Omics team, which is all about life sciences and how profoundly AI is going to transform healthcare — I think that’s the most inefficiently priced part of the market; and then our Blockchain Technology team.
On Fridays at 10:30 we have a brainstorm. All our teams come together, and we also have another 40 or so people who have followed us over the years and are passionate about innovation. We invite them to what we call the brainstorm. That’s where we really try to get out of the “not invented here” mindset — we want pushback. So these are venture capitalists, entrepreneurs, retired engineers, retired professors, people teaching in universities today. They are very vocal. All of us — them probably more for their personal accounts — are trying to figure out how the world is going to work. We’re trying to push the frontiers of knowledge forward as fast as we can, anticipate what the next set of topics are going to be, and figure out where we should position ourselves.
Sam: That’s pretty interesting. Is that common? Do other firms do this kind of Friday open-door brainstorm with external folks? That sounds pretty unique.
Cathie: No, they don’t. And I’ve done this since 2001 when I was at my last firm. I just thought it was really important not to get stuck in our own research, but to have it battle-tested.
Open-Sourcing Research and the Role of X [00:13:00]
Cathie: We took that to another level when I founded ARK, with this notion that we’re going to give our research away. Not when it’s finished — because it’s never finished — but as it is evolving, and we push it out.
Now, at the time in 2014, Twitter was for teens and celebrities, right? I didn’t think that was going to be our primary social network. We thought maybe LinkedIn would be. Instead, X has become the most important social network — even for crypto. I thought Telegram was where all of that was going to live. And yeah, there are all kinds of conversations on Telegram, but the ones I need to see are on X. Sometimes we stir the pot with our research and get debates going.
The world is moving so quickly today. It’s not like it was in 1977. Back then it was really expensive to get information and to travel to pull information from managements. Research departments like the one at Capital were closed, and that was their secret sauce. Today information is ubiquitous. In fact, you have to figure out what’s real and what’s fake — that takes another skill. I thought the closed world is probably not where we’re best suited for what we want to do, which is focus exclusively on technologically enabled disruptive innovation. There’s so much information out there and we knew we could harness it. It’s how you put it together and what priorities you place on the kind of information and assumptions you’re making that become more important.
Active Trading vs. Buy and Hold [00:16:30]
Sam: You will go on TV and say, “I think Tesla’s going to $2,000 a share,” or whatever your target price is. And everyone says, “Oh my gosh, that’s really bullish.” You say, “Here’s why we believe. Here’s what we think the future looks like.” And I hold Tesla and I hope all that comes true. But you are very active — you’re buying and selling Tesla all the time. I looked, and in the last 24 hours your firm made like 20 trades, millions of dollars in and out of positions. If you believe Tesla’s going to $2,000 a share, why don’t you just buy it and hold it? What is all the active trading for? Are you day trading? I’m not from the investor world, so I’m trying to understand. You have sort of the Buffett mentality on conviction, but then you’re very, very active. I don’t really get that.
Cathie: That’s another great question. I know it must seem confusing. We often describe ourselves — and few people believe this — as a deep value manager like Warren Buffett, if you give us five years.
Warren Buffett was the first to admit he doesn’t invest in technology. He made a few good ones — Apple was great, IBM not so much — but he knew where his strengths were. He did not feel technology was where he had an edge. That’s where we do have our edge. So you can say we’re a great complement to the Warren Buffett strategy, if you give us a five-year investment time horizon.
So why do we trade so much? Because of what has happened to markets since I got into the business — more than 75% of trading is algorithmic and high-frequency. There’s a huge amount of volatility in the market itself, but especially in our stocks. So if you look at our trading in Tesla, we are using the volatility to our advantage.
Tesla has rarely dropped below the number one position in our flagship portfolio, ARK. What has happened? It has gone from $100 to $500 and becomes, you know, 13 or 14% of the portfolio. From a portfolio management point of view, we are effectively rebalancing. It’s a lot of hard work going from $100 to $500. We know Tesla is a controversial stock, Elon Musk is a controversial individual, and we are going to have opportunities at lower prices to move back in. That’s the kind of trading you see around our high-conviction stocks.
The Hard Question: Fees vs. Performance [00:20:30]
Sam: Okay, so let’s take what you just said. You said give us five years, because we’re betting on these long-term technology S-curves that we think are playing out. So here’s the tough question. Over the last 10 years, you’ve been making hundreds of millions in fees but haven’t outperformed a simple index like QQQ. Do you think that’s a fair criticism?
Cathie: Can I give you a reset here? I love the question — you’re giving me an opportunity to answer something that I know is on many people’s minds even if they don’t ask it. So thank you.
Our objective as a firm is to deliver a minimum 15% compound annual rate of return over five years. You are absolutely right — we have not done that over every period. But we have done that since inception. Since inception, our compound annual rate of return is over 15%.
Now, what happened in the middle there? You’re focused on endpoint sensitivity, and I understand why people use five years, ten years. If you use ten years and you look at Morningstar and just their quantitative metrics — rules-based system based on the benchmark they selected for us, not us — we are in the fourth percentile of performance for that benchmark. That benchmark is mid-cap growth, which kind of fits because we consider ourselves all-cap but if you average it out, you get something mid-to-mid-cap. The space we’ve been in — anything less than large-cap and especially mega-cap growth — has been very tough.
Now, what about the last five years? We had COVID in 2020, because this is when we blew up. I’m not sure if you know this part of the history, but because we were the only investment firm putting our research out on social media and the only one posting our trades every day, we went viral during COVID. Everyone was sitting in front of their computers trying to figure out what to do with their time — and their extra money.
Cathie: We were really one of the few out there teaching people about investing, bringing them along on our journey. In 2020 we were up 150%. And at the end of that year — remember, we’re five years away from that, this is what we’re comparing against — at the end of that year, I was on Eric Schatzker’s show on Bloomberg. It was a holiday show and they gave us a lot of time. One of my main messages was, “Hey, keep some powder dry. We know what goes up like this is going to come down. It’s just too much capital chasing the opportunity, perhaps too soon.” That last point I probably should have said more loudly to myself and to our team.
Cathie: Because even though our modeling stock by stock got us to a 15% compound annual rate of return over the next five years — which was very low; normally we’re expecting 25 to 40% — it had dropped because of the appreciation in stocks to 15%. But what we did not appreciate enough was this: many people think the interest rate increase was the problem. It wasn’t, as much. The problem was supply chain bottlenecks. Our models are driven by unit growth, and when there’s an interruption in unit growth, our rate of return expectations come down.
I thought — and we thought — we were going to come out of this in a V-shaped recovery, and we did. That was correct. But we didn’t catch how long it was going to take supply chains to reorient. That, I think, was a big, big lesson for us. If I had just focused on that one variable, I would have said, “All right, let’s move more into larger-cap tech stocks with a big cash position that are innovating” — and it would have been the Mag Six and all of that.
Cathie: We did not do that. What we did: we owned them, and as we had started doing that in the bull market, we always diversify as a bull market extends because our stocks do tend to go crazy to the upside. But then in 2021, those stocks kept going up and our smaller and mid-cap stocks started going down. So what we always do is rebalance — we took profits there and we bought. That was just way too soon. It worked out, and I think history will show that everything is fine. But we had to have people stick with us. And there are so many people who piled in at the top — even though we were saying “hold your horses” — and who left us at the bottom. Which is classic. It’s classic investor behavior.
So we’re going to be out there in this cycle a lot more along the way saying, “Rebalance, sell, take profit,” so that when our strategies go through a weak spot, a sinking spell, you’ll have the psychological wherewithal to buy. It’s called rebalancing. It’s a basic investment concept.
Fees, Incentives, and the Buffett Structure [00:28:00]
Sam: Betting against you is betting against a combination of things I would never want to bet against. It’s betting against AI. It’s betting against crypto. It’s betting against innovation, and it’s betting against Elon Musk. Those are the Monstars from Space Jam — I’m not trying to bet against that. You might be right on any one of those individual things, maybe for a period of time. It’s just not where I would want to be positioned against long term.
At the same time, I’m a normal person. And it’s pretty crazy — this is in venture capital too, by the way. In venture capital, it’s a rigged game. I heard this a long time ago and it never left me: venture capital is a great game. You make 2% annually on your fees regardless of whether you make money or lose money. And I think what you do is very similar. If you have, let’s just use a round number, 20 billion in assets across your ETFs — is that about right?
Cathie: Across the company we’re closing in on 40 billion.
Sam: Okay. That includes digital assets, private funds, everything?
Cathie: Yes. We do have a venture fund. I know what you’re talking about. We’re doing ours a little differently — we don’t have carry, so that anyone with $500 can get onto the cap tables of SpaceX, OpenAI, Neuralink, and so forth.
Sam: You don’t have carry. So how do you make money in that — just on fees?
Cathie: We do have a higher fee. I think it’s 2.75%. What we did to arrive there was we said: what do the best venture capital firms in the world deliver over time in terms of compound annual rate of return, and how much of the benefit do they derive? The best ones are maybe going to be north of 2.75% per year on average — especially in this kind of market where AI is just out of sight — but if you do a very long-term historical retrospective, 2.75% was the landing point. And we are offering direct cap table access — not SPVs, so there are no fees upon fees upon fees.
Sam: So I think the challenge is basically this: on $20 or $40 billion in total assets, there’s a guarantee — this is why finance and fund management is one of the best businesses in the world — you get hundreds of millions in fees guaranteed regardless of whether you’re up or down. The more you go up, maybe you have additional carry; there are other benefits in venture capital. And I think the challenge is, like Munger used to say, “Show me your incentive and I’ll show you your outcome.” All finance and fund management is generally suited toward growing assets under management — you make money either way — and then you try to do your best on performance. In the long run you will be judged on performance, but in the short run it’s hard to tell what’s working.
That’s why when Buffett started, he basically said, “I’ll take nothing for the first 6% — which was kind of the index standard at the time — and above that, if I beat the market, I want 25% of profits.” That was a great structure. I think the world of finance has moved away from that because, well, why would you? If you could take the guaranteed fees, you’d take them.
Cathie: You know, it’s interesting. From the 80s on, when I saw hedge fund structures and venture capital structures, I said — I’m an economist — “That game’s going to end. Those kinds of excess returns, excessive returns, shall we say, they go away with competition.” But in the venture world, there is a huge amount of competition. If you look at where the real money is made, it’s in the top 10 — the top 10 is where a disproportionate amount of the returns are. And of course that’s what we’re aspiring to, and of course everyone is aspiring to it. But there’s some kind of network effect, and I think it has to do with community.
Sam: Venture has one different property than what you do outside of your venture stuff: in startups, it’s the only asset class where the security selects the investor. For Buffett or any public stock market, I get to just pick what I want and push a button — I’m in the stock. Whereas the hot startups want to be with the hot funds, and only the hot funds get to be on the cap table. The security selects the investor, not just the investor selecting the security. That’s where the network effect comes in. That’s where the brand effect comes in. And that’s why Sequoia and Benchmark and these other firms will keep showing up at the top — because if I’m one of the top startups, I want them. So they get the access, even if another investor was totally right in their thesis but just can’t get in. It’s self-selecting.
Cathie: Yes, there is self-selection. You’re seeing big changes in the hedge fund world — the fee structure is changing because passive indexes were outperforming active. It was a self-fulfilling prophecy because the pendulum was swinging there. I believe the final swish in that direction was in the last few years toward the Mag Six. And now they’re so concentrated. Are they all going to benefit from all of these new technologies? Our focus is on robotics, energy storage, AI, blockchain technology, multi-omics. Some of them will. Apple — we’ve been watching for a long time. They don’t know what they’re doing in AI. Now I think they’re scrambling a bit. Each one of the Mag Six has a weak spot. Sure, they’ll participate in the wave, but they also have some weaknesses caused by the disruptions associated with these new ways of doing things. I think we’re at the beginning of that pendulum swing in the other direction.
Misunderstood AI Stocks and Why ARK Sold Nvidia [00:38:00]
Sam: If I’m a believer in AI, what’s the number one stock I should own to benefit from the oncoming AI wave?
Cathie: I think everyone knows about Nvidia. We always try to answer that question with stocks people are not thinking about in the right way — misunderstood, or maybe not unknown, but mispriced.
As we were selling Nvidia — and we got all kinds of flack for that — nobody bothered to notice that we put it in the portfolio in 2014, because of autonomous driving, at I think 20 cents on a current-split-adjusted basis, 20 cents per share. We held it for years, and no one would listen to us. I talked about robotics, autonomous driving — nope, it was a PC gaming chip company and that’s all it was. Then it explodes with ChatGPT and we start selling it, and we exited it from the flagship. We’re back in now when it dropped during tariff turmoil.
But what did we put the money into? In portfolio management you have to look not just at what was sold, but what you did with the proceeds. How about Palantir, which I think from that point has done better than Nvidia — I’m not sure, it was the case at one point. How about Coinbase when the SEC was suing it? That’s one of the things we used some of the Nvidia proceeds for, and it has done pretty darn well — I think almost as well as Nvidia. So you have to look at the full picture.
Today, Nvidia still has a very important role. Palantir still has a very important role — it is the premier platform-as-a-service company. We think embodied AI is underappreciated.
Sam: What is that?
Cathie: Embodied AI is physical AI — physical and digital worlds meeting. You know what I’m going to say next: Tesla is the largest AI project on Earth. And it’s not just robotaxis anymore. It is humanoid robots.
According to our research, the robotaxi opportunity globally — for everyone, including China — is an $8 to $10 trillion revenue opportunity in the next 5 to 10 years, from maybe a billion today. Think about that: a billion to $8 to $10 trillion. With the platform companies like Tesla getting half of that, that’s $4 to $5 trillion. That’s a big market.
According to our estimates, the humanoid robot market will be a $26 trillion market in the next, I’ll say, 7 to 15 years.
The Cost Per Mile Slide and the Autonomous Vehicle Opportunity [00:42:30]
Sam: I wanted to ask you about this, because ARK put out a great deck. On this slide — I’ll describe it for audio listeners — it’s basically the cost per mile: how much does it cost to transport a human being one mile? Starting in the 1800s, horse and carriage, adjusted for inflation, looks like it’s about $210 per mile. Then you get the Henry Ford era and you’re at around $1.10. And basically for almost 100 years it’s been roughly the same — about $1.10 to travel a mile.
Then your estimate is that with self-driving electric cars — where there’s no driver and you’re on an autonomous vehicle — the cost per mile could drop to a quarter. Four times cheaper than what it’s cost for the last 100 years. Did I summarize your slide correctly?
Cathie: That is correct. And when we first did this research, we too were astonished. “Wait a minute — it costs the same, inflation-adjusted?” One of the reasons for that is the automobile matured fairly quickly. And we’re all about Wright’s Law. Wright’s Law tries to understand: you’ve got this new technology, you’re starting from a low base. For every cumulative doubling in that base — from one to two, two to four, four to eight — costs decline at a consistent percentage rate for each technology. Well, the internal combustion engine is mature, so it has no shot against EVs. I know that’s not the prevailing wisdom in this political climate. I’m just using economics and learning curves.
Sam: Sorry — what do you mean “no shot”? You mean in cost comparison?
Cathie: Because of the chart you just showed — you can’t get that cost down any lower. There are no more cumulative doublings. Everybody’s already got one. In the emerging markets they don’t, but they’re not going to be paying up for internal combustion engines. They’re going to be looking for the cheapest solutions, and those are going to be electric.
Sam: And the part I didn’t get was: okay, the cost is going to go down because it’s a self-driving electric vehicle, and when the cost goes down demand goes up, it gets selected over other more expensive ways to travel. But the estimate you have for autonomous revenue — I think you said $10 trillion — right now if I just take Uber, Lyft, and DoorDash, the total revenue of all those companies is only in the $50 to $60 billion range. Uber’s at about $40 billion, Lyft’s another six, DoorDash does about $10 billion. But you’re saying autonomous is going to be 20 times more revenue?
Cathie: What we’re doing is moving from a very narrow subset of transportation called ride-hail today to all of transportation. So we’re moving the entire market to autonomous to get that number. Ride-hail is a very, very small slice.
And what’s so interesting: in San Francisco, research is showing that people are willing to wait longer and pay more for a Waymo than for an Uber or Lyft. The number of miles that Waymo is driving per day in the San Francisco metropolitan area — even though Waymo is geofenced there — has surpassed Lyft and is heading toward Uber. Isn’t that remarkable? People are willing to pay up.
Now that’s not in our $8 to $10 trillion. We assume they’ll start right at or below the prevailing prices for Uber, and they will drop over time to that 25 cents. So starting at around $2, $2.50 maybe — and then surge pricing, you know, it can be $8 per mile — and dropping to 25 cents at scale. That’s the $8 to $10 trillion.
And just think about it. I would prefer to take an Uber today, even though I have two Teslas and I love them, but I still have to pay some attention on the road.
How Much of Tesla’s Value Is Elon? [00:49:30]
Sam: I’m curious — how much of Tesla’s market cap, I think it’s 1.3 or 1.4 trillion, how much of that is Elon? Meaning if I took Elon off the company — if Elon went to sleep for the next 20 years — would you keep your position the same way? And just as a pie chart: of that $1.3 trillion, what do you think that number goes to if there’s no Elon?
Cathie: If you had asked that question five years ago, the answer would have been different. But what has happened — and one of the reasons Elon has spent so much time doing other things, some of which people didn’t agree with — is that I think he feels they have pretty much solved the last mile in FSD. And if they’ve done that, they’re going to capture the robotaxi opportunity and they’re going to be able to scale.
We would not, however, start incorporating humanoid robots into our model in the way we perhaps will with Elon at the helm. We haven’t done much yet for humanoid in our $2,600 price target — we’ll update that, we usually update it each spring for public consumption. So we’d probably be much less optimistic on humanoid robots without Elon there.
Closing [00:52:00]
Sam: Wonderful. Well, Cathie, I appreciate you coming on. It was fun to hear some of your stories. It was good to hear your take on some of the tougher questions. I appreciate you doing this.
Cathie: Thank you, Sam. And thank you for the tougher questions — they’re important. Thank you for giving me a platform to answer those questions, because it is important.
Sam: Great. Well, thank you. I hope to do it again.