Data Brew Season 3 Episode 5: Sustainability & Sake

For our third season, we focus on how leaders use data for change. Whether it’s building data teams or using data as a constructive catalyst, we interview subject matter experts from industry to dive deeper into these topics.

We interview Junta Nakai in our most unique location yet - Brooklyn Kura - the first non-Japanese sake distillery in New York. In this episode, Junta shares the philosophical, economic, and tactical approaches to sustainability and ESG, as well as the secrets to brewing sake in the US. 

See more at databricks.com/data-brew

Transcript

Denny Lee (00:06):
Welcome to Data Brew by Databricks with Denny and Brooke. This series allows us to explore various topics in the data and AI community. Whether we're talking about data engineering, or data science, we're going to interview subject matter experts to dive deeper into these topics. Now, in this season, we're going to continue our conversations on data leadership, and while we're at it, we'll be enjoying our morning brew. I'm Denny Lee. I'm a Developer Advocate at Databricks and one half of Data Brew.

Brooke Wenig (00:35):
And hello, my name is Brooke Wenig. Machine Learning Practice Lead, and the other half of Data Brew. For today's episode, I am thrilled to introduce Junta Nakai, Global Industry Leader for Financial Services and Sustainability at Databricks. Prior to joining Databricks, he spent many years at Goldman Sachs, where he most recently served as Head of Asia Pacific Sales for the Americas in Equities Division. Welcome, Junta.

Junta Nakai (00:57):
Thanks, Brooke and Denny. Thanks for having me. I'm excited to be here.

Brooke Wenig (01:00):
So, we are a split vidcast podcast. And while we can see your background, can you share, where exactly are you right now?

Junta Nakai (01:10):
Well, I know the concept is... Well, it's called Data Brew. And when people think of brewed beverages, they typically think of coffee or tea, perhaps. But, another popular brewed beverage that you might not know is brewed is actually sake. So, I am a part owner of a sake brewery in Brooklyn, New York. And I am here right now. So, I'll be enjoying my glass of sake as we talk. And, here I am.

Brooke Wenig (01:35):
Amazing. Love it. What is the name of your sake brewery?

Junta Nakai (01:38):
Oh. It's called Brooklyn Kura. Here's a bottle. So, if you ever come by to New York, come visit our tap room. And we're in a lot of different locations around the country as well. So, hopefully some of the listeners and watchers can enjoy our sake as well.

Brooke Wenig (01:52):
So, I know our title is Data Brew, but we're a little bit more data focused, a little bit less brew focused. Maybe we'll get to a bit more brew at the end. But, to kick off our episode today, you're the head of our Sustainability Division at Databricks. I would love to hear a little bit more about, what is ESG? Everybody's talking about it. But, what is it, and why is it important?

Junta Nakai (02:11):
Yeah. So, ESG stands for Environmental Social Governance. And, this term gets thrown around with the concept of sustainability, as well. So, you've probably heard a lot companies talk about sustainability. Maybe a lot of politicians talk about sustainability. Sustainability, obviously, is the notion that, we should do things that are environmentally responsible or socially responsible. And, it's typically a set of guidelines and principles, whereas ESG or Environmental Social Governance, typically encompasses the data, the information that makes sustainability real. So, the way I would characterize it, sustainability is, again, a framework. ESG is the data and metrics around that, that makes sustainability real. And, it's really important for a multitude of reasons. And I'm sure, if you Google ESG and sustainability, every company has a sustainability message now. But I think, the way to kind of think about it is maybe threefold?

Junta Nakai (03:10):
There's kind of a, I would say a philosophical way to think about it. Maybe an economic way to think about it. And then a, tactical way to think about why is important, right? So, the philosophical one is, you may have heard of a concept called Overview Effect. So, if you haven't heard of the Overview Effect, basically it's a phenomenon that astronauts experience when they go into outer space, right? So when you go into outer space and you look towards the sky, everything looks the same. It's black and you see some white dots all over the place. But the one difference is that, when you look back on Earth, you realize how fragile it is, right? There's only a little thin layer, right? Of gases that sustain all of us today. From the depths of the ocean, to the top of the mountain, it's like 20 kilometers, right?

Junta Nakai (03:51):
So, it's not a whole... It's really, really thin. So, when people and astronauts come back, they experience something called Overview Effect. And, you kind of start to realize that hey, there's nothing inevitable about our existence, right? Let's take care of the one Earth that we have. And that's kind of the philosophical way to think about it. The economic way to think about it, and I'm a recovering banker, as you mentioned; and, there's a whole concept of something called factors of production. If you guys go back to Econ 101, and if you look at an economy, when you think about the factors of production, it comes down to, basically four things. Labor. So, how many people you got? Capital. How much money you got? Innovation, okay? How much innovation. And basically, the concept of land. And land is, just a set of natural resources, right?

Junta Nakai (04:40):
Land, water, minerals, oils that a country has. Basically the four things that define how an economy grows. And, labor and capital are pretty... We're okay. There's a lot of people, there's a lot of money in the world. But land and entrepreneurship, right? These two things come hand in hand when you start talking about sustainability. Because obviously, protecting that resources you have is really important. But, focusing on solar energy, social justice initiatives, that unleash is a new type of innovation, right? So, the land and entrepreneurship part come together, so from an economic perspective, I think it's really critical in driving growth, not just for companies, but for the world overall. And I would always say that, economic growth has lifted more people out of poverty than charity ever has, right?

Junta Nakai (05:24):
So this is really critical important to the success of, humanity and stuff like that. The other one is just tactical. And, people always believe oh, I don't believe in climate change or climate change. Or I think ESG initiatives are all greenwashing and it's not really real. The way I think about that from a very tactical perspective is, it doesn't matter, right? Sustainability to me is like Santa Claus. You could believe it. Or you may not believe in Santa Claus. But, the reality is, is the entire world operates on the fact that Santa Claus, or the belief that Santa Claus exists, right? All the shopping, all the messaging, all the marketing revolves around this concept of Santa Claus. So, even whether or not you believe or not, it's good business to focus on it, because that's the way that the world is shifting toward. So I know that was a very long answer, but that's kind of the ways I kind of think about sustainability and why it's important for, not just us, but for all companies, all regulators, all investors, all consumers in the world today.

Denny Lee (06:16):
No, no. This is actually a great answer. I think it provides a lot of context for even people who, have some semblance of knowledge to what ESG is. I think the fact that you broke it down in terms of the philosophical to tactile actually is really helpful. And, I really like the fact that you brought up this concept that ESGs, it is actually about the data, the metrics. So then, I mean, that naturally to me, with the data hat back on, how do you actually evaluate? More to the, more the tactical? If you're saying that, it just makes sense business wise to do it, then I guess we'll... Then, how do you evaluate? What are the mechanisms you would normally employ to be able to say, okay, we are in fact actually doing good or having good governance or having good sustainability versus not?

Junta Nakai (07:00):
Yeah. So, the way I characterize ESG is that, at its core, it's a data and AI challenge, right? So, think about it from this way, right? The whole point of why we're focused on this, is ultimately to do good, right? And, the way companies start thinking about this, when they start focusing on, maybe reducing carbon emissions or increasing diversity or whatever; they quickly realized hey, we have very little data around all this. What is our carbon footprint? What is our diversity inclusion metrics? And, that data might exist in different pockets. But, often it's hidden in different, system silos, data silos. So, the first step is just, being able to aggregate and put all that data together. Coming from your CRM systems and your... work, HR systems. Your customer systems, all this stuff. And, that's the aggregation phase.

Junta Nakai (07:51):
And then once you can have this ability to aggregate all the data, then you can start doing basic analytics on that data, right? So, what is our carbon footprint? And, what are some of the steps that we could do to, curb it? Or, what are some of the things that, we can do to attract more diverse candidates into our workforce? You start to, now start to analyze this data, and that's kind of step two. And then, the third part of it, so you've kind of done the aggregation. Now you're doing the analytics. The third part is, well, let's put it into action, right? And that's what, again, this is a holy grail. And this is precisely why any of this exists in the first place, is to actually do good, not look good. So, for example, a real example is this, next time you're flying a, let's say airplane.

Junta Nakai (08:32):
And there is a large engine manufacturer that manufactures the engine, that engine manufacturer is, sending data back to the cloud. And then, they're doing analytics and machine learning to optimize that engine performance, right? And by doing so they save about 22 million tons of CO2 per annum, just by optimizing that engine, and doing all the preventative maintenance also. So that's kind of an example of, hey, we have all this data. Now we have this ability to analyze this. Now, let's put into action. Build models, right? This is why I say it's a data and AI challenge because, when all those things come together, then you could actually start, again, to actually do good, rather than just looking good. So that's why it's such an important data and AI challenge for all companies today.

Brooke Wenig (09:15):
I love that. I especially like how you broke it down into aggregation, analytics, action. One thing I want to dive a little bit more deeply into is the idea of a diverse workforce. So, previously you... In previous interviews that you've done, you'd mentioned that diverse workforces financially perform better. Can you talk a bit more about the data behind that?

Junta Nakai (09:32):
Yeah. I mean, there's a lot of academic studies and Wall Street studies about this. But, one of the things that we did, and a wonderful speaker from Goldman Sachs at one of our conferences a few months ago. And, she had focused on the whole concept of Womenomics, right? So, her entire career was focusing on, hey, what happens when you empower women? And what happens to companies? What happens to economies? Et cetera, et cetera. And, the punchline is very simple, right? The more you empower a diverse workforce to succeed, if you're a company, you tend to have higher ROEs, right? Which stands for Return on Equity. That's one of the most important metrics that you have as a company to drive share prices forward. As an economy, you tend to have higher growth rates, right?

Junta Nakai (10:17):
You tend to have higher labor participation. You tend to have higher fertility rates and birth rates around as well. Not fertility rates, but birth rates, right? So, there's all these counterintuitive ways about empowering people to work, has tremendous consequences, both from an economic perspective, but also from a... sorry, a business perspective, also from a countrywide sort of macroeconomic perspective. On the company level at Databricks, we've done some interesting analysis on this, as well. High ESG companies, right? So companies that score well on this Environmental Social Governance, they tend to outperform the market, okay? And this is... Lots of papers about this that you could read, which just kind of makes sense, right? It's, they're more agile, they're more resilient. They can navigate COVID better, right? Because of all the wonderful things. That more diversity, diverse viewpoints, et cetera.

Junta Nakai (11:06):
The other way that we've looked at it is, how resilient are companies? So, one of the research that we've done here at Databricks is that, hey, let's take a basket of really high ESG companies, look at their share price. What is the volatility of that share price stock, compared to other companies? And what we found is that high ESG companies, yes, they outperform, they also tend to have lower volatility in their share price, right? Which is really... But that makes sense, because if you're, operating your business in such a way that is inherently sustainable, right? You're analyzing up and down the supply chain, you know what's happening at this factory that supplies you. And, something like COVID hits, right? You're probably going to be much more resilient to supply chain shocks, right? Or, workforce problems, because you've kind of created an ecosystem that is inherently more agile and resilient during times of tremendous change. And, all these things come together in... And so, the punch line here is that, sustainability, to be focusing on ESG, I believe, is good business, as well. In addition to being good, sort of classically and philosophically at the same time.

Denny Lee (12:10):
Excellent. Okay. So, I'm going to shift gears, but still very much in the same theme here. But... I want to discuss, because we keep, you're talking about economic performance, right? So let's discuss a little bit about, like the S&P 500. And, we're going to talk about the Databricks 30. This is a precursor to that. But, can we give a quick primer to those who... Especially because then we've got a bunch of the data folks here, right? Maybe, what's a primer? Explain, how does index funds work, even?

Junta Nakai (12:38):
Yeah. So, you've probably heard of things like the S&P 500 or the Dow Jones. Or if you're in Japan, the Nikkei, or if you're in England, the FTSE. This is basically a broad basket of all the important stocks in a country. So, when you say, hey, the Dow Jones is up 50 points today, and the Nasdaq is down 3% or whatever it is. It's just a reflection of all the important stocks in that particular economy. And, it's really important, because this is how the... For example, the S&P 500 in the United States is the crown jewel, right? Of the US economy. These are the 500 most important companies. So, tracking the stocks of that performance of those 500 companies, give you kind of a broad sense of the health of the economy and the outlook for the economy and all sorts of different stuff.

Junta Nakai (13:21):
So that's basically what an index is. And, one of the things that we do, for example is, again, as I mentioned, we did a lot of research about the most sustainable companies, right? But, we also do research about things like, what are the most data and AI driven companies? And, this two things will come together in a sense where, you could kind of think about it philosophically and say hey, companies that are focused on data and AI, and that do it well. So let's say, Uber, Twitter, Airbnb. Whatever those companies are, and you compare those stocks, right? Against the S&P, you would expect these stocks to outperform the overall economy, right? Because, they're growing. So, that's basically why indexes are important, because it gives you overall health of the economy, but it also gives you a benchmark. What everybody else is doing.

Junta Nakai (14:08):
Once you have that benchmark, you could now start to analyze companies based on different factors. And that's why these two things stick. Now, then going back to what I said before, if the benchline of the S&P let's say is this, but sustainable companies are going up like this, it becomes pretty clear that, high ESG or high sustainably companies outperform, right? So there is a economic value, right? Or at least a market value from doing that. And that degree of outperformance is really important. There's also a correlation, causation argument, but there's also... But, that's going to exist for everything, right? So, that's kind of in between. There's interesting things that you could read into by looking and comparing companies against the benchmark. So that's why, those benchmarks are very important.

Denny Lee (14:50):
Cool. So, all right. Related to this, now that you've set up the primer for the index funds, I'm curious. You did author the Databricks 30 index blog, which we'll actually attach to to this descriptor here, and how it outperforms the S&P 500. Which, you've been calling out. In terms of the index. Can you, just from that standpoint, can you talk a little bit more about that Databricks 30 index fund and what it really represents?

Junta Nakai (15:15):
Sure. So, I can't take credit for it, because I read this wonderful report from Morgan Stanley. So, one of the big investment banks in the US. And they wrote this wonderful report. They said, hey, companies that focus on data and AI, they tend to win, right? And they specifically said hey, companies that focus on cloud, collaboration, analytics, AI, they tend to outperform. So, the research report that I read, they identified 38 companies where they thought these companies were succeeding at doing these things. And they, compared their stock price, the basket of 38 companies, relative to the overall index, so let's say the S&P. And, what they found is that, these data and AI driven companies, outperform. Kind of makes sense intuitively, right? So, when I saw this, I said, well, Databricks is cloud, right?

Junta Nakai (16:02):
Databricks is AI. Databricks is data analytics. Databricks is collaboration. So if it's true, our customers should outperform, right? So, one of the things I did is I created an equal weight price weighted index. It's got a... You don't need to focus on those terms too much. But, let's say we find the 30 most marquee customers of Databricks, five by vertical. Financial services, healthcare, media, et cetera, put a basket of that together, and let's compare that to the S&P 500. And the punchline here is that, our customers vastly outperform their peers. And, not only at the very broad S&P 500 index level, but when I do sub segment analysis. So let's take... I did something called FS 20 which is, let's take our top 20 financial service customers in the United States, and let's compare their share price versus what's called the XLF, which is the S&P Financial Service Index, right?

Junta Nakai (16:51):
And that outperform is actually bigger, right? So, in every sector that I've kind of done this analysis on and against the benchmark, it turns out that, data and AI driven companies succeed. They tend to outperform. And then, what's really interesting is, when you look at the chart is that, up until March 18th of 2020, the index and the Databricks 30 kind of tracked each other, right? But, around March 18th of 2020, they start to diverge, like this, right? To outperform this group. Well, why is that? Well, because March 18th was the first day of the lockdown, right? One of the major lockdowns in the United States, because of COVID. And, everything that I said before, right? Agility, resilience, innovation, right? All the things that you need, data and AI and cloud computing and elastic computing. All these things that you need, those things tend to matter most, right?

Junta Nakai (17:40):
When times get tough. Anyone can make money when times are good. The strength of your business shines when times get tough. And, crisis always brings the future faster. And COVID was certainly a crisis, right? So that just created, huge opportunities in ability for the most agile, the most resilient, the most innovative companies, right? To adjust their business models, right? To adjust to a different type of workforce that's all distributed, and still maintain in that productivity, customer penetration and all that stuff. And you see that, the outperformance growth during times of COVID. So that's basically what the Databricks 30 shows. Again, correlation, causation, always up for debate for any index. But I think the truth is somewhere in the middle. Do companies win because of Databricks, or do winning companies or forward looking companies choose Databricks? I think it's maybe, somewhere in the middle there.

Brooke Wenig (18:32):
Whichever way it is, it's good for us here at Databricks. One thing I do want to slightly switch gears towards, on the financial services side is, throughout COVID I have heard so much discussion about cryptocurrencies. I would love to get your thoughts on the crypto market and the sustainability of that.

Junta Nakai (18:48):
I have to be very careful, because I know there's fanatics out there, including one of the founders of this brewery, as well. But, I think cryptocurrency, I think there's multiple ways to think about it, right? The most basic way to think about it is, is it a store of value? Or is it a medium of exchange, right? So is it like gold? Or is it like coins, I guess, maybe, right? So, if you think about Bitcoin, I would argue that's more of a store of valuable, right? If you look at stable coins, it's more of a medium of exchange, right? This is how you... It's like, a dollar is a dollar. You get to do it. You get the share. So that's kind of one way to think about it. The second way is, about crypto is, how do I make money off of it, right?

Junta Nakai (19:35):
And that can be as simple as, hey, I'm going to speculate and buy... Put my life savings into Bitcoin. Or, people are saying hey, I'm not going to speculate on the currency, but I'm going to sell people the picks and shovels. Kind of like in the gold rush. And, when I look back at my time at Goldman, and I look back at, and look at all the things that people have done post leaving Goldman Sachs, the majority of the people that I know, have chosen to go to the picks and shovel route, right? Not the speculation route. So, when you think about, how do I make money in crypto, it's not just about the investing, right? And I think that's kind of a really interesting kind of dichotomy, there.

Junta Nakai (20:14):
And the last one to think about is regulation, right? That's probably in my opinion, the biggest risk for, just cryptocurrency. I mean, there's DeFi and all these wonderful applications for it, but from a cryptocurrency perspective, regulation is probably the biggest... one of the biggest things that you have to think about, right? So, the United States is the world's reserve currency, right? The dollar is used to price oil, price commodities, right? It's the medium of exchange around the world. So, we enjoy enormous privileges as a result of that, right? So, think about it from the US government's perspective, right? Do you ever want to give that up? I don't know. But with that comes, with great power comes great responsibility. So, think about all the consumer protection laws that exist. The financial stability things that are done via monetary policy or fiscal policy. All the crime prevention, anti money laundering, all the things that... So, all this is embedded in this ecosystem.

Junta Nakai (21:10):
Now, all the things that I just mentioned. Consumer protection, crime prevention, financial stability, as of now, as an investor in Bitcoin, you don't appreciate. You don't get any of those things, right? So, it's great if you have... If you think about people who made gazillions of dollars investing in crypto. But, it's different from a hedge fund allocating $10 million of a $1 billion portfolio into crypto, versus an individual putting all his or her life savings in it, because a hedge fund just cares about optionality. They're like, I have a billion dollars, I'll put $10 million into Bitcoin and all these currencies. It works out? Great. It's just a bet on optionality. And oftentimes, I don't know if it's necessarily a, fundamental view that these professional investors have or just hey, if it works out, great.

Junta Nakai (21:57):
And, I think one of the concerns that I have is, people are just putting everything into one asset class and just think you're going to be able to, make a whole lot of money from that. But, I personally think fiat currencies are great. All the consumer protections, the stability, the laws, the FDIC insurance. If your bank goes bankrupt, you're still going to get your deposits back. All these things are really... We benefit tremendously from that. Just by using the dollar, in a sense. So, I'm sure I'm missing out on, a lot of the big latest innovations, but that's kind of how I think about that today.

Brooke Wenig (22:37):
Yeah. I really like that balanced look. And then also separating out the professional investor from the individual investor. If you were to leave people with a piece of advice about financial understanding, the markets, what would you want them to take away?

Junta Nakai (22:52):
Yeah. That's a great one. Well, maybe two things. Maybe somewhat unrelated, but... we are very fortunate that we live in a place where we could invest in the US stock market, right? The US stock market has been the single largest generator of wealth in the history of humanity, right? And, anyone basically, unless you live in North Korea, I don't know how many people listen to our podcast in North Korea. Anyone could basically invest in the stock market, and, and benefit from the wealth creation that it has provided. And, I'm not talking about wealth creation, the hey, that stock is going to up 30% next month. It's, the course of your lifetime, right? The S&P has historically returned about 10%ish and, if you compound that over 10 or 20 years, that's incredibly important, right?

Junta Nakai (23:41):
The concept of compounding, because it's a productive asset, right? Stocks give you dividends. You can invest those dividends. An example of non productive assets is actually crypto, because crypto... I know there's some changes happening, but most cryptocurrencies will not give you dividends, right? So it's not a productive, it's not like farmland, where you could use it every year to grow corn, and grow more corn and invest back into... That dynamic doesn't exist because of interest rate. So that's kind of one thing is that, the one thing to take away is that, we're incredibly blessed to be able to invest in stocks, in a sense in that, compounding is the most powerful mechanism you have to generate wealth over time. And, the second kind of unrelated thing, I just want to cut and bring it back to kind of data and sustainability for a second, if that's okay.

Junta Nakai (24:23):
But, I actually want to give you a very practical example of how, for example, Databricks uses data, right? To advance our sustainability goal. So if you saw early... Sorry, mid September, we announced that we are now part of the Fair Pay Workforce (Fair Pay Workplace: https://fairpayworkplace.org/in_the_news/fair-pay-workplace-certifies-american-airlines-anthem-inc-and-four-others-as-companies-achieving-pay-equity/) or something like that. Fair pay certificate, that Databricks has. So we're one of the six leading companies where a third party has come in, rigorously analyzed the data around our pay, right? And look for gender gaps or whatever. And they said, hey, this is a company that actually walks the talk, right? Equal pay for equal work, right? And so that's example of how, a data driven approach to things like diversity and inclusion, right? Is incredibly important, because now we have this, what are the practical implications for Databricks, right?

Junta Nakai (25:16):
I would argue it probably helps us retain the best talent, right? It helps us recruit the best talent. So here's just an example of just taking a data driven approach to a problem, right? Like this, as a specific ESG problem, has tremendous benefits for Databricks as a company, but also has tremendous benefits for employees, alike. So, you could think about sustainability as either an obligation, which some people think about, but I think it, much more terms in the sense of opportunity, right? Both for companies, individuals. And I think the same thing can be said about stocks, right? So again, companies that are highly sustainable, highly focused on it, over the next decade, they're probably going to outperform, I think. They're probably going to be better equipped to succeed in the new era or the new world that we're kind of, ushering into.

Denny Lee (26:00):
So, first of all, wonderful. Very insightful. Second of all, when you were talking about sustainability, this is a horrible segue, by the way, you talk about sustainability, but now we also want to talk about enjoying that sustainability. So, my question invariably is going to go back to brews. So, for starters, I want to really understand, what made you even think to go and create a sake brewery in New York? What got you into even doing this?

Junta Nakai (26:32):
So, as Brooke mentioned, I worked on Wall Street for many years. And the story I tell is that, when I joined Goldman Sachs in 2004, there was probably 600 people trading stocks, right? The equity traders. When I left, there was probably two or three, right? So you saw 600 people, and now there's two or three because, it turns out, trading is a job for algorithms, right? A machine can match trades better than a human can most of the time. So, I've kind of lived this experience of seeing change happening all around me. Automation happening all around me. And then, when I... At that point in my career, I kind of was like hmm, I think my career goes two ways. One is, I run with that change, right? So, if I think data and AI is the future, I better go work for a company that's focused on data and AI, which, I have the privilege of being able to do. But the second thing is, the other way to think about it is, I should do something so...

Junta Nakai (27:24):
Manual labor intensive that just cannot be automated, right? Which is, sake production. And, sake production is a very, very manual process. You have to wash the rice by hand. You have to steam it. You have to cool it. You have to, you might see some people in the back kind of twirling it. And, it's an incredibly, it's a labor of love. And, you really have to love it to be able to do it. So that's kind of a philosophical perspective of, hey, you know what, if I do this and also do this, then it kind of puts me in the, I kind of hedge myself both ways. But also, it's groundbreaking in a sense where, when we started thinking about this, people said, you can't make sake outside of Japan, right?

Junta Nakai (27:59):
You need Japanese water, you need Japanese rice and you need all this and this, and they've done it for eight million years in Japan. How are you going to be able to do it? And, especially the co-founders are two Americans. Two hipsters from Brooklyn. And, what we found is that, when we, every time someone said, no, we were like hey, we think we can do it, right? And once we found out the water quality is very similar to... Actually, New York city water is phenomenal water. I could talk day about the water in New York. But New York City, that's why our bagels are good. Our pizza is good, right? New York has very soft... The characteristics are very similar to the very nice Japanese water.

Junta Nakai (28:32):
All our rice comes from Arkansas and California. So we use American rice, and the combination of that, and bringing that in New York, we make, what I think is one of the best sakes in the world. So, it's a really unique proposition, and I really enjoy it because, it just proves that, not everything has been figured out yet. If you have the grit and the vision and, just the passion for it, you could do anything. I think it's kind of an example of this. And of course I get to, drink it while I do... Talk to you guys. That's another big perk of it, as well.

Brooke Wenig (29:08):
I love the resiliency that you and your co-founders had. So, when everybody said no, that was actually a challenge that you had wanted to overcome. What were some of the biggest challenges that you had found apart from just, pushing back and actually creating the sake brewery? What were some of the obstacles you weren't necessarily expecting?

Junta Nakai (29:26):
Yeah. I mean, there's a lot of obstacles. But, anything that's easy is probably not worth doing, right? So, when we started talking about this, I mean, there are so many obstacles, right? Like equipment. There is no sake industry outside of Japan. Where do we get a rice steamer to steam 200 kilograms of rice at the same time, right? So one of our co-founders, Brandon, is a scientist by trade. He literally went to Home Depot. He went to go all these machinery shops and he custom designed a giant steel tube, where you can now... We have to build it ourselves, quite frankly. Or, in Japan, and another thing is there is a very specific, metal thing that you use. So basically, sake has multiple ingredients. One of the ingredients is a special enzyme that converts starch into sugar.

Junta Nakai (30:14):
And there's a very specific kind of metal thing that you use to kind of sprinkle the thing. We couldn't buy any of those, right? So we used a pizza shaker. So, it's like the red pepper things that you find at pizza, turns out that works fine, right? So there's all these kind of practical things of just getting the equipment, right? And getting the talent together. I don't know why it's so regulatory. So, regulators don't know what to do with sake. We're the first and only sake brewery in New York. Is it a beer? Is it a wine? Is it a spirit? And, the nuances have seemed, very minute to us, but from a regulatory standpoint, a taxation standpoint, it matters greatly if something is a beer or a spirit, right?

Junta Nakai (30:53):
Right. And, just as I mentioned, sake is brewed. Is much more similar to a beer in how it's made, but the alcohol content is about 13% or 14%. It's much more similar to a wine. So, if you're a regulator's perspective, is this a wine or a sake? How do you think about that? And the punchline is, it depends by state. So, I think we talked a little bit earlier, I think Denny was like hey, can you ship me some? The answer is, it depends on what state you live in, right? So there's all these kind of, regulatory hurdles, business hurdles, talent and people hurdles that we have to overcome. But, and I always quote Henry Ford, and I'm going to paraphrase and butcher it, but it's always, whether you think you can or you can't, you're right, right? So, if you think you can't do it, you're right. But if you think you can do it, you're also right. So it's all about that, just a forward looking, and the grit and just, doing it until you succeed. And fortunately, we've been decently successful so far.

Denny Lee (31:52):
Perfect. Well, Junta, this was an amazingly thoughtful, insightful, and very, not just data centric, but very brew centric session. We really enjoyed your... you joining us for this session. Thank you very much, for providing us insight about ESG and insight about sake.

Junta Nakai (32:12):
Oh, thanks for having me. And, hopefully you guys can visit me in person. We'll do this in person. Three of us, at the brewery, sometime in the future.