Brookfield: From Junior Analyst to $1 Trillion CEO

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Joe Cass: [00:00:00] How did you actually find out that you were gonna become CEO? 

Connor Teskey: I don't think I expected any of this. I read the first four pages. On page five, there was a, a section on succession. I remember two comments from Bruce. He said, "I don't particularly want you to worry about whether or not you're the right guy."

Joe Cass: What do you think the market still misunderstands about the physical constraints of AI? 

Connor Teskey: The difference between the headlines and what's happening on the ground is a little bit misunderstood. Is this the dot-com era? Is this the Industrial Revolution?  

Joe Cass: How did you become CEO of one of the largest investors in the world at just 38 years old?

Connor Teskey: I don't actually know I've, I've told this story. Um-

Joe Cass: How did you become CEO of one of the largest investors in the world at just 38 years old? 

Connor Teskey: Maybe just my background. I, I've, uh, I've been at Brookfield for, for 14 years. I [00:01:00] joined the firm in Toronto. I joined in the private equity group. Uh, about 10 years ago, I moved to London. Concurrent with that move, I switched to the energy team. 

I was part of a small group that, uh, was asked to try and build a European energy platform, and over the last 10 years, I've stayed in London, but the, the roles have changed. I've been fortunate to lead the energy business since 2020 and then earlier this year was fortunate to become the CEO of Brookfield Asset Management.

We very much focus on identifying high-performing men and women, young talent, very early, and giving them a lot of accountability and responsibility, but supporting that with huge amounts of, of mentorship and, and senior leadership. And I, I've been an incredible recipient of that from the entire senior leadership team at Brookfield.

Uh, obviously, uh, in particular Bruce Flatt, who's, who's built the firm over the last 25 years. But that focus on [00:02:00] continuity and, and long-term perspective and that focus on teamwork and collective leadership, uh, enabled the transition that happened earlier this year and, and so far I think it's allowed the business to just keep doing what it was doing and keep performing as it has in the past.

Joe Cass: And how did you actually find out that you were gonna become CEO?  

Connor Teskey: I, I don't actually know I've, I've told this story. At Brookfield, we write shareholder letters on a quarterly basis. Bruce pens one, and for a number of years he had sent me an early draft of his shareholder letter to just say, "Hey, any thoughts?

Anything you think we should add? Anything you think is missing?" He sends me the draft just like he does every other quarter, and we happen to be in the same office, and he says, "Give this a read. I'll, I'll come down for your comments in 15 minutes." And I don't know, they're normally five or six pages long, and I read the first four pages.

They're just like every other letter, and then on page five there was a section on succession, and, uh, that- ... [00:03:00] that's actually how he told me. Yeah. 

Joe Cass: That's pretty cool.  

Connor Teskey: Yeah. 

Joe Cass: So you just read it and then you were just like, kind of like- And- ... what's this? 

Connor Teskey: And then, and then he- 

Joe Cass: Like, did he laugh and stuff?  

Connor Teskey: Like, what did he-

and then he came down and, uh, you know, your head spins for a little bit- ... as you, as you try and digest. To be clear, it, it wasn't something I was expecting at the time. But again, it was multiple years before we actually effectuated the change and, like everything the firm does, that gave us time to build a plan that would get everyone comfortable, get, again, all, all of our stakeholders, all of our partners, uh, comfortable with it, such that when we did in fact make the change, it, it was as much of a non-event as possible.

Joe Cass: When you look at your, let's say, meteoric rise in your career, did success happen or reach you maybe faster than you initially thought it would? 

Connor Teskey: I don't think I expected any of this, but I would say very much representative of the culture of Brookfield. I [00:04:00] also feel very strongly I was never trying to do it, i- if I can say it that way, and maybe that comes out a little bit funny. 

But everything about Brookfield is about collaboration, teamwork, uh, success. Everything we do is focused on, um, delivering success for our partners and delivering success for the firm. And I've been at Brookfield 14 years, every day has been the same. If you come in focused on delivering success for the partners of the firm and, uh, the LP partners a- and delivering success for the organization, there are no limitations to the, the speed and the, the heights at which you can ascend.

It is a complete meritocracy. So did I expect any of this? No. Um, was it ever the, you know, specific target? A- absolutely not. It, it just fell into the way the organization works, that if, if you are effective in delivering what the organization [00:05:00] is trying to achieve, it, it, it pushes you up fairly quickly. It is a complete meritocracy.

Joe Cass: The day when you read that, that letter, let's say, from Bruce, how was that conversation with your wife that evening? 

Connor Teskey: Yeah. Well, it, it, it, it's very interesting, and o- obviously, Bruce and I had, had a very lengthy conversation that day. And, and I, I really remember two things. Probably 30 things got said, but two things stuck out to me because when it... 

when you hear that and you aren't expecting it, it, it's easy to let your mind wander. And I remember two comments from Bruce. He said, "I don't particularly want you to worry about whether or not you're the right guy. That's a decision that me and the senior leadership have made. Uh, what we really want you to focus on, and, and he was very considerate.

He said, "This is a decision for you and your family. I- is this something you want and you're committed to for the long term?" [00:06:00] And, and that, that... those were the two things he asked. And, and I thought that was amazing because it, it really helps focus the thinking. You don't spend hours of time, um, you know, worrying, having imposter syndrome thoughts and things like that.

You, you really just turn your focus to, to, to the future. And I've been Incredibly fortunate to, to learn under not only Bruce, but, but many of the senior leaders at Brookfield. And clearly I'm biased when I say this. I, I don't think anyone in the world has had such great mentors and support as I have had within the organization over the last, you know, 10 plus years.

And I think a lot of that kinda informs a, a succession the way we've done it to perhaps someone who's a little bit younger than, than convention, but it was done, one, with tons of support and ongoing mentorship from senior leadership. Uh, I'm very, [00:07:00] um, fortunate to have incredible experience, uh, surrounding. 

None of the leadership group changed. We just switched some titles. And two, it was really done with what's gonna be best for the firm over the next 10 or 20 years, putting a leadership structure in place where someone can really put their fingerprints on long-term growth and long-term strategy. 

Joe Cass: It's interesting because if you think about the financial world, you know, old tr- financial, traditional financial firms, leadership at the C-suite would be, you know, the general consensus in their late 40s, 50s, 60s, et cetera.

Whereas if you look at other sectors like tech, there's absolutely no question when there's a CEO who's in their 20s. Hmm. So it's, it's funny when you kind of- Yeah ... take a step back and you think, okay, there's this-- I'm asking you a question about what it's like be- to be a CEO at 38. I would never ask that of a tech CEO.

Connor Teskey: Right. Right.  

Joe Cass: So it's an interesting kind of comparison. 

Connor Teskey: Absolutely. Absolutely. 

Joe Cass: I wanted to talk just a little bit about [00:08:00] your kind of before the CEO role, the investment professional role. So- What role do you think gut feeling has in investment decisions? 

Connor Teskey: You need to acknowledge, one, that no individual has all the right perspectives to make a good investment decision. 

Um, it would be crazy to build an organization based on a singular person's ability to consistently provide the perfect perspective. A- and two, you also need to acknowledge you will never have complete certainty. Uh, the goal in life is to find-- or, or not the goal in life, but the goal in investing, sorry, is to find, uh, as many opportunities as possible where your downside is well protected and there is asymmetric potential for, for a, a, a really, um, upside scenario or an upside outcome.

We focus very heavily on the downside. We focus very heavily on [00:09:00] sectors, asset classes, investment profiles that we have what we think is unparalleled experience and knowledge of. And by taking that approach, if things go wrong, the downside tends to be small. But if things go right, the upside tends to be big.

And, and if you do that at scale on a repeatable basis, the end result are what we like to think very attractive risk-adjusted returns, but on a, a scale and a consistency that few can match. And that, that is our brand. That is our, our value add to our partners. 

Joe Cass: What's a completely normal conversation in your world now that would sound insane to most other people? 

Connor Teskey: Is just the access to extremely well-informed people all around the world that know what is going on, that know what's actually the key drivers of critical situations or critical themes o- o- on a global basis. Um, whether it's, it's a, [00:10:00] um, big investment dynamic, whether it's a global conflict, whether it's a huge market move, um, being able to talk to people who, um, respectfully aren't getting their information from the news but are getting information from the ability to have access to on-the-ground, uh, insights that others do not, that's amazing.

Those are the best conversations. I don't know if those are the most shocking conversations. Probably what would surprise people around the conversations we have is when we look at investment opportunities, no matter how amazing the upside seems, 75% of our discussion is focused on the downside. We're a growth organization.

We're excited to get out of the bed and, and put money to work in attractive opportunities. We like to think we're on the forefront of many of the most exciting and largest investment themes around the world. Uh, like I'm a pretty excitable guy. I'm, I'm not glass half full, I'm [00:11:00] glass full full. But when we talk about investments, you might think we're all kind of, uh, downers and moody people because we focus so intensely on the downside when, when allocating capital.

I think that would be surprising to people.  

Joe Cass: It's interesting your first point about kind of speaking to very interesting people within senior positions outside of your firm. 

Connor Teskey: Yeah. 

Joe Cass: It must be the case that potentially, you know, let's say you're going to Milken Conference or you're going to FII or Davos, wherever it might be, you're probably the youngest person on stage by a good 20 years.

So y- there's a-- I feel like there's, you probably know this already better than I do, there's a lot of opportunity for you to kind of spend time with these guys, and you have time on your side as a leader.  

Connor Teskey: Yeah. Well, and, and, and again, I think it goes back to this philosophy about being very honest that you don't have all the right answers.

A- and again, sorry for being redundant, I think it's crazy to bet on a single person's ability to, [00:12:00] over two or three decades, consistently in every situation be smarter than everyone else. But what is a, a fundamental competitive advantage is having access to more information and more perspectives with which your organization can make decisions.

And, and the one thing I would say, a- and, um, I played a lot of sport growing up. 

Joe Cass: What sport did you play?  

Connor Teskey: I played every sport imaginable in my younger years. I rowed, uh, I was a lightweight rower, uh, throughout university. One of the things I loved about sports is when you're at the starting line or, or, or when someone's, you know, kickoff of a football match, you want nothing more than to beat your competitor.

That is your, your goal. But at the end of the match, everyone shakes hands, hugs, and says, "Ah, you know, let's go grab a pint," or, you know, there's a, there's an understanding that you're competitors, but you- you're all in this together. And I've found the exact same thing in the financial services industry.

You know? Um, the people are very open to chat, very open to [00:13:00] share perspectives. Uh, you are competitors. Uh, you do always wanna outperform. We're all, uh, the most Type A people in the world, but to your point, maybe I am newer to, to some of the those circles than others. But I, I would say there, there's really good people at the top of the, th-this industry, and they're, they're very welcoming.

They're-- they offer to help, they offer to mentor, um, they offer to have those conversations.  

Joe Cass: What do you think the market still misunderstands about the physical constraints of AI? 

Connor Teskey: I would say there's two things that we see in the market that, um, we sometimes think the, the difference between the headlines and what's happening on the ground i-is a little bit misunderstood.

One is demand is so exceptionally high relative to supply. Demand is way up here and supply is growing down here. A-and sometimes the headlines suggest there's almost a fragility to [00:14:00] this growth or a fragility to this supply-demand imbalance. You know, a hyperscaler walks away from one lease and a shudder ripples across the sector.

Is, is the demand, is the growth trajectory compromised? Absolutely not. You know, three thousand of these things are being built at any given time. One being reallocated doesn't change anything. Um, you know, we, we hear about improvements in efficiency that might, um require less infrastructure or less resources and inputs. 

But again, the demand so strongly outweighs supply, not by percentages, but by three, four, five, six, eight, ten times. And as a result, even when things get more efficient, even if there are small adjustments to, to the demand trajectory, the supply-demand imbalance is not going anywhere a-anytime soon. It is gonna exist th-through the end of this decade and, a-a-and beyond.

The second thing we would [00:15:00] highlight is the limitation of growth in, in AI today is one of two things, and generally, they're not the things people focus on. One is the model is not the limitation. These models are incredible. A-and the use cases and the applications that they can be used for, and the efficiencies and productivity gains from their usage, we're only scratching the surface of with the existing models, and the models keep improving.

But the rollout is the limiting factor. Lots of people are using ChatGPT, but-- or, or, or Claude or whichever Gemini, whichever model is being used, what's only in the early innings is the huge amount of change management to adjust how businesses are run, how processes within a company, uh, are structured to integrate that AI.

A-and therefore, the benefits we are seeing, [00:16:00] while amazing today, are only gonna grow in the future. That, that's one limitation is just the implementation and the change management a-as opposed to actually the capability of the model. And then the second thing is the limitation is physical. The limitation is, is data centers, and the limitation to data centers is power. 

Um, and that is really the bottleneck to more growth over time. And obviously, there is huge industry and lots of capital being dedicated to it, but the growth is not being limited by capital There's lots of capital available to invest in this. Yeah. And it's not being limited by demand. It's being limited by the actual ability to build, um, the AI infrastructure, the data centers, and the power that supports it.

That's the limiting factor in, in the growth trajectory, and that's, that's why s- the supply is lower than the demand. It just takes time to build this stuff, to get it permitted, to pull it out of the ground. One very simple way to think about this is the opportunity set [00:17:00] in today's market around some of the largest investment themes, whether it be the digitalization of everything, whether it be the fact that the world needs more energy than ever before, whether it be the fact that, that global supply chains are rewiring with a greater focus on resilience.

The opportunity is a build opportunity. There's a growing opportunity in investing in existing assets because just the scale of the industries are increasing. But the real opportunity is a build opportunity a-and that requires those that have huge amount of capital and huge amount of operating and, and construction and development, uh, expertise to actually pull new capacity of these assets out of the ground.

Joe Cass: So with that in mind, today Are we building too much AI infrastructure or nowhere near enough?  

Connor Teskey: Uh, the latter. Um, and, and, and one of the things that it perhaps again is, is slightly u-underappreciated, uh, a lot [00:18:00] of parallels get, get made to different points in, in history. Uh, is this, is this the dotcom era?

Is this the Industrial, uh, Revolution? The way we think about it very simply is the, the critical infrastructure of the past, the utilities of the past were, uh, largely physical, and that made sense. It was your transport infrastructure, your ports, your railroads, your toll roads. It was your utility infrastructure.

It was your power generation. It was your transmission lines, et cetera. As the world increasingly moves more digital, the infrastructure of the future is much more digital in nature. It is your fiber. It is your telecom towers. It is your data center. This is not a big stretch. Uh, the world is moving more digital, so the, the, the critical infrastructure and the utilities of the future will be more digital in nature.

The only thing that is different about this, [00:19:00] um, build-out is two things. One, how fast it's happening. Uh, the build-out of all that transportation and utility infrastructure took place over 50 to 80, 100 years. This is happening over 10, uh, and, and it's larger in scale. So just the scale and the speed is different. 

But what's actually happening has happened many times in history. And the other thing that is very underappreciated is a lot of the times when there's been these huge real asset build-outs in history, they've been done speculatively. Build it and they will come. And, and that has generally actually worked really well for society.

But for investors, it's, it's created an exposure and a risk that if you get the timing wrong, um, while it might work for-- Those assets might get very well utilized in the fullness of time, but for your investment, if you get the timing wrong, that can be a very bad outcome. What's very different about [00:20:00] AI infrastructure is v- very little, almost zero, certainly none at Brookfield, is being built on spec.

It is being built against long-term contracts from a small subset of the greatest corporates in the world, the, the large hyperscalers. These are the greatest corporates in the world today, which probably means they're the greatest corporates in the history of time. They're backing, um, a huge amount of this build-out, and what they're not backing, the greatest sovereigns in the world are backing.

So th- this build-out, yes, it is happening faster. Yes, it is larger scale. But the thing that is, is really incredible from an investment perspective is it is backed by the greatest corporate counterparties in the world today and the greatest corporate counterparties probably in the history of time. So the investment profile of investing in that build-out is very different than what we saw, let's say, twenty-five years ago. 

Joe Cass: Is AI more likely to create mass wealth [00:21:00] or mass unemployment? 

Connor Teskey: I would say the former. I think it will create a huge amount of value And it, it would be crazy for me to sit here and tell you exactly how AI's gonna change the world over the next five or ten or twenty years. I think, uh, anyone who, who says that definitively is, is, is stretching a little bit.

But, um, what we are seeing a-and what, um, history has suggested is, what is AI? It is very simply a productivity tool. It is used to drive efficiency and enhance growth. A-and what we are certainly seeing in the early days, and this is representative of what's happened in history, is the initial efficiency and productivity enhancement doesn't lead to mass reduction in jobs.

It r-creates capacity for people to do more than they've done in the past. The way I've heard it [00:22:00] said, you know, to give examples, is if we were offering five services, uh, to our, uh, our, our customers, let's say, within a business, AI doesn't mean we offer those same five services, but we do it with half the people. 

It's we keep ha- uh, we keep all of our people, but now we offer ten services to our customers. It, it's enabling the capturing of opportunity and growth that wasn't available before, so those people are, are, are all needed. And, and that is certainly what we are seeing in the market today, that AI is a growth enabler, uh, more so than an, uh, uh, an efficiency driver just in a reduction of, of required inputs.

Um, it's expanding the opportunity set, so you need the inputs, but those inputs are gonna be able to produce more. Um, is AI going to lead to some adjustments in the, the shape and structure of employment? Absolutely. It, it will, uh, create more needs in certain asset-- uh, certain [00:23:00] functions and less needs in others, but that, that's normal with every evolution in the market.

So to, to your question, is, is there... Y-y-you said it a certain way, but is there more upside or downside from this? We see way more upside. 

Joe Cass: So as private markets grow, what do you think the role of trusted credit ratings will be in the market?  

Connor Teskey: Very influential. Um, and, and, and m- maybe taking a, a step back, private markets are growing on a number of different verticals and vectors at once.

One, they are just growing in scale. You, you think of the... Again, sorry for being redundant, but you think of the largest investment themes around the world, the digitalization of anything, the world needing more energy than ever before, uh, rewiring of global supply chains. These investment themes are, are so significant, and the capital requirements are so large that it outstrips what is available from governments, and quite candidly, it outstrips what is available from the public markets, and that creates a [00:24:00] large and growing and very attractive opportunity for private capital.

So private capital is growing, uh, just in terms of, of scale. That's point one. Point two, private capital is growing in terms of its breadth. We, we make the comment at Brookfield, um, seventy percent of the things we invest in today weren't investable assets twelve or fifteen years ago. Twelve or fifteen years ago, we invested in hydro dams.

We still invest in hydro dams, but we also invest in nuclear and batteries and solar today. Twelve or fifteen years ago, we invested in ports and railroads. We still invest in those things, but now we invest in data centers and fiber and telecom towers. So the scale is growing, the breadth of it is growing, and then the third point, which is probably the most important to your question, is who is getting access to investing in private markets and alternatives is growing very [00:25:00] dramatically as well. 

Uh, it used to only be the largest, most sophisticated institutional investors, um, you know, fifteen, twenty years ago. Now it is large-scale institutions, mid-cap institutions, small institutions. It is insurance companies, it is family offices, and now increasingly, it is the individual investor. It is your, your private wealth investor.

It is your four oh one K a-and retirement plan holder. It is your insurance policy, um, uh, insurance and annuity policy holder. And as the breadth of who is investing continues to expand, the information available to make judgments and the quality and availability of that information becomes increasingly important.

So you mentioned credit ratings, that would be one example of that. But I think trusted counterparts that can provide information to that rapidly expanding [00:26:00] set of private market investors, if the demand is expanding, in theory, the, the need for supply should be expanding, and therefore the importance is going up.

Joe Cass: In an ideal world, what does Brookfield look like in 20 years' time?  

Connor Teskey: We undoubtedly think we are going to be bigger, uh, in terms of capturing this private market opportunity set. Importantly, uh, uh, a large focus of ours is expanding the types of investors that we make private capital a- and our products and services and investment capabilities available to.

We're very focused on doing that methodically, thoughtfully, incrementally. We wanna build that expansion not to be the largest next quarter or next year, but to be leading and largest in five or 10 years' time. The same way we've, we've built our institutional business, uh, o- over the last 20 [00:27:00] years. And then the third thing is one of the things we, we've touched on a couple times in the conversation, is maintaining that intense focus on what's next.

Uh, what's next in terms of large investable, uh, mega trends? Uh, what's next in terms of new asset classes or new themes where our, our past experience and capabilities can be transferred to an emerging asset class or an investment type? Continuous development, improvement, evolving with market demands a- and that widening set of investors to, to develop products that, that meet their evolving needs that, that will change over time.

So it's absolutely about growing, but it's growing very similar to how we have in the past, but on a larger a- a- and continuous and accelerated basis, and offering what we have offered in the past to a much broader set of, um, [00:28:00] counterparties and partners.  

Joe Cass: Connor, thanks so much for joining me today. 

Connor Teskey: Thank you.