Three in 30 Episode 1 Recap: Financial Physics with John Shrewsberry

Three in 30 is Blooma’s new content series bringing perspectives on financial markets, real estate, and career from people from across the finance and tech world.

It’s three people having a conversation revolving loosely around three topics in 30 minutes or less.  With each guest, we’ll cover everything from finance, to commercial real estate, and technology, and get their take on the state of the markets, make predictions about what’s to come, and ask their perspective on career growth, work, and life.

We knew that if we were going to take a dip into the oversaturated pool of podcasts out there, we had to cannonball right into the deep end … and our first guest did not disappoint. If you haven’t already given it a listen, our conversation with John Shrewsberry (ex-CFO of Wells Fargo) is certainly worth 30 minutes of your time.

In our brief chat, we went long on all things commercial real estate and capital markets, but still found ourselves moseying into much more lighthearted and familiar territory: incoming phone calls from the Mrs., navigating a lot of time at home during lockdown (including the strange, but welcome return to office), and picking up new hobbies in retirement (I-spy an electric guitar). If there were a more perfect first guest, we can’t think of one.

Considering that just hours before our conversation, we’d learned inflation had reached historic levels, increasing to 9.1%, there was no shortage of things to talk about. Here are some of the key topics & takeaways from our conversation:

Recession, who?

When we brought up some of the more dismal economic events of late and the looming recession, John’s take was the embodiment of ‘cool’. His response?: We’ve been here before, and we’ll be here again. Recessions aren’t great but they are a natural part of the economic cycle.  

“You don’t have to roll the tape back that far [to the time] we were all pulling our hair out worried about disinflation, about negative interest rates, about an aging population, about the lack of growth – that was moment’s ago in market terms. We’re probably in, or soon to be, in a recession. Other than the fact that we’re heading into the midterms and it’s a huge political hot topic, who cares? It’s going to happen from time to time. It’s never really the end of the world.”

Back to Basics: Financial Physics 101

A welcome departure from the news media’s sensational interpretation of current events, John is a true business fundamentalist. Undistracted by shiny objects (think: crypto, NFTs and the like), he seems largely unbothered and unphased by what’s going on the world because he’s focused on the big picture, or what he calls, “the immutable truths of Financial Physics”. What goes up, must come down? Yeah, something like that. If there was a running theme of this episode, it would be John’s rationally optimistic slant on just about everything. A perspective that’s surely the hard-won result of riding out his fair share of cycles at the helm of a business he grew from the ground up, all the way to his stint as CFO.

“Rule number one in my version of financial physics is that if something doesn’t generate cash flow or have a reasonable possibility of generating cash flow in the foreseeable future, it’s not a thing. It’s not really an asset, anyway. It’s an idea, a speculation. It’s something other than a reliable financial asset. And that was not true for the last several years, but I think it’s true again.” 

COVID, CRE, and raising the next generation of work

The pandemic only served to accelerate a silent generational clash that’s been going on for the last several years in the workplace. At their worst, the Millenial and Zillenial generations get a bad wrap for being lazy and entitled. At best, they could be credited for driving some of the most significant dialogue about “work-life balance” ever. COVID forced tough conversations about the role work should play in our lives, how long is too long for a commute, and the slow creep of burn-out that’s been catching up to us for quite some time. With three teenagers of his own, John is no stranger to any of this and gave a candid take on what it’s like to be a financial fundamentalist teaching young people about investing, the importance of hard work, and being ‘present’. 

 “I’m in the process of teaching my kids about some financial literacy and I’m glad to get the meme stocks and crypto off the table because now we can really talk about sensible value characteristics, multiples of profitability, hopefully, not just revenue or customer count as ways to think of a companies as ‘good’ or ‘bad’.” 

These macro trends have certainly had their effect on CRE in waves – particularly office as an asset class, and while things seem to be reaching homeostasis, John’s account of downtown San Francisco makes you question what the next few years will bring, “it’s like something out of a science fiction movie”. 

PWFH (Pretending to Work From Home)

Jokes aside, we talked a lot about office space and what the future might look like a few years from now. As a CFO, John has an opinion about the price per square foot and what that ultimately costs the business, but his opinion on the topic was surprising. More than a year into his retirement, John expressed a nostalgia for being together in the office and talked about the value it adds for professional and business growth – cost be damned.

“It feels different. It may take a few more years before people realize that apprenticeship culture, watercooler culture, are necessary for the development of talent. If it’s intrinsically better for business when people are together (and I believe that), then ultimately you’ll get to equilibrium where people will say:  ‘If you want to get ahead, you need to be productive. You need to be engaged. You need to be present.’  What better way to differentiate yourself than to be the person that’s in the office everyday? If that’s true, then more people will do that and we’ll find equilibrium.” 

When asked about his own rise up the corporate ladder, John left us with this simple bit of advice, “Don’t imagine that you’ll have a plan that’s going to get you from A to B to C. Things never turn out the way you imagine. Things occur that create twists and turns in the road and that’s where all the fun is.” 

Lindsay Curry | Head of Marketing

Listen to “Financial physics with John Shrewsberry” on Spreaker.