The Exchanges

Q And they don't distribute to you, they hold for you?

A They will distribute over time, so it probably takes 18 months, 24 months, for a position to be fully realized from those managers. So, you know, we're getting to the stage now where those companies that went public in, in the second half of 21, you know, they've certainly begun, they certainly distributed the bulk of, of the shares that they had. There is some still left, so, you know, we are seeing liquidity still coming back, but it will take time to replenish that inventory. So even if we start to see IPOs in the second half of this year, it's going to be six months before those shares become freely tradable, um, and again, it will probably be another 12 to 18 months before those positions ultimately get fully distributed.

AI assessment note: “They will distribute over time, so it probably takes 18 months, 24 months”

Q I absolutely love that. I mean, often, uh, fear is a great driver. Um, when did you know that you actually loved doing it?

A Like, for me, I'm curious about things, um, and I, and I like to sort of really dig into the detail, and, and it was probably after sort of four or five years when we were starting to see, um, the first kind of dot-com companies begin to emerge. I remember we got a stock distribution, uh, of, of Netscape, um, and, and it was my job to figure out what we were going to do with stock distributions. So I remember phoning up, um, the CFO of Netscape at the time as a six-month Public company and having a conversation with them and thinking, shit, this is really interesting. I never thought that I'd be doing something like this, but actually being, having that kind of, not quite a front row seat as an LP, but, but maybe a second row seat into, into new technology, new developments that are changing society. Um, I, I, I struggle to think of a more interesting career in a more interesting way to spend the last, to have spent the last 30 years.

AI assessment note: “it was probably after sort of four or five years when we were starting to see”

Q is if you think about the last five or six years, it's impossible to select. Everyone looks good. Then you end up doing nothing and you have to stay at the forefront of great managers. You have to ensure that you don't miss the next great franchise. How do you approach that knowing that you don't want to enter a world where you can't decide, but also you can't miss?

A Yeah, I think you can miss because again, one of the things that, one of the things that we've learned is that you don't have to do every great manager out there. You just have to make sure all the managers you do are great. So it's not about trying to see everything and pick every, everything that has the potential to rise into that top quartile or top test style. It's about understanding what your lane is, being comfortable in your lane, and recognizing that lane is still relevant and is still able to produce the performance that, that you expect from the asset class. And I think particularly over the last five years, um, we just felt it was, even if we saw a really good manager, we thought it was the wrong time to intercept them. And actually, There would be a much better opportunity when there was far less noise and far more signal to fine tune that decision. And we saw this back in 2010, 2011, 2012, where we were able to add several top tier managers after the financial crisis, because a lot of their traditional MP LPs were struggling with the denominator effect. Um, there'd been very little liquidity, so they were struggling to make new commitments. And I think that a lot of those managers there recognized it was important to have a reasonably diversified LP base. So not just Ivy League endowments, but also some family offices, some funder funds. And as you know, as a fun…

AI assessment note: “you don't have to do every great manager out there. You just have to make sure all the managers you do are great.”

Q What are you sensitive? Like, how do you feel about compression of deployment timelines?

A So one of the lessons, you know, I said, we've made all the mistakes in the book. One of the mistakes we made in the late nineties was deploying our funds too quickly in, I think we had one fund that was fully invested in 15 months. Um, and it was the worst fund we had. So it was in, you know, the 1999 vintage fund. Um, so as you can imagine, not, not the best outcomes there. Um, and I think one of the lessons we learned there was that Time diversification in a fund is so important. And so we look to, to, to invest all of our funds across a three year period. And one of the things I'm really proud of was that when I look at the fund that was deploying 1920, 21, we did that in a quarter under three years. So even though our managers were coming back, some of them in 18 months, we still maintain that time diversity in our portfolio. And, and, and that was really important. And it's something we talk, you know, we push, Our managers on all the time is that we want to see three year investment cycles for them.

AI assessment note: “we want to see three year investment cycles for them”

Q Yeah. It's tough. I want to do a quick fire with you cause I could talk to you all day. So I'm going to say a short statement. You're going to meet some immediate thoughts. That sound okay. What have you changed your mind on most in the last 12 months?

A So if you had spoken to me, um, maybe not quite the last 12 months, but, but certainly sort of two or three years ago, um, I think we were incredibly skeptical about LPs doing co-investments, direct co-investments, um, because we looked at the data, which is, you know, we know 60% of deals don't return capital, um, and we just thought, why would LPs be doing this? What's the likelihood that they're gonna be getting into those top one percent companies? I think I would, my view has definitely evolved on that. I'm not all the way there yet to say that, that actually it's a good thing, but I do think there are situations in which, um, there are different ways to optimize for those top one percent companies. One is to do it through the best, the best primary managers. One is to do it through secondaries, and I also think another way selectively is to do it through directs.

AI assessment note: “my view has definitely evolved on that”

Q I absolutely love that. I mean, often, uh, fear is a great driver. Um, when did you know that you actually loved doing it?

A Like, for me, I'm curious about things, um, and I, and I like to sort of really dig into the detail, and, and it was probably after sort of four or five years when we were starting to see, um, the first kind of dot-com companies begin to emerge. I remember we got a stock distribution, uh, of, of Netscape, um, and, and it was my job to figure out what we were going to do with stock distributions. So I remember phoning up, um, the CFO of Netscape at the time as a six-month Public company and having a conversation with them and thinking, shit, this is really interesting. I never thought that I'd be doing something like this, but actually being, having that kind of, not quite a front row seat as an LP, but, but maybe a second row seat into, into new technology, new developments that are changing society. Um, I, I, I struggle to think of a more interesting career in a more interesting way to spend the last, to have spent the last 30 years.

AI assessment note: “it was probably after sort of four or five years when we were starting to see”

Q What are you sensitive? Like, how do you feel about compression of deployment timelines?

A So one of the lessons, you know, I said, we've made all the mistakes in the book. One of the mistakes we made in the late nineties was deploying our funds too quickly in, I think we had one fund that was fully invested in 15 months. Um, and it was the worst fund we had. So it was in, you know, the 1999 vintage fund. Um, so as you can imagine, not, not the best outcomes there. Um, and I think one of the lessons we learned there was that Time diversification in a fund is so important. And so we look to, to, to invest all of our funds across a three year period. And one of the things I'm really proud of was that when I look at the fund that was deploying 1920, 21, we did that in a quarter under three years. So even though our managers were coming back, some of them in 18 months, we still maintain that time diversity in our portfolio. And, and, and that was really important. And it's something we talk, you know, we push, Our managers on all the time is that we want to see three year investment cycles for them.

AI assessment note: “we push, Our managers on all the time is that we want to see three year”

Q I mean, it is an incredibly interesting seat to have. It's also a seat that's changed over time, I'm sure. Ryan Akina at MIT said that it's become harder than ever. I'm intrigued. Do you think it has become harder than ever?

A I can see why you would have that perspective in, in, in the sense that there are just so many funds and managers out there today. Um, and, and you are constantly bombarded by people who are trying to raise money and, and, you know, want to, want to pitch you. Um, and it's simply impossible if you were trying to, to, to meet with everyone to be able to work through those and to select Successfully. And so I think from an LP, one of the things we've learned is that being an LP is all about understanding what you're good at and understanding what you're not good at and making sure that you are focused. So for us, actually, the last, the last five or six years have been very simple because our view is that it's, it's been impossible to actually distinguish good managers from average managers because everyone looked good. Everyone had companies that were getting written up. Um, everyone could talk about some interesting deals that they'd done. Everything looked great. But I think one of the advantages of having been in this industry for so long is that we've seen cycles happen before. And, and, you know, we've made all the mistakes in the book. Um, I remember in the early nineties, we mass in the late nineties, rather we massively expanded our, our roster of managers. We did a lot of first time funds and this was all in 98, 99, when things were looking unbelievable, we were backing…

AI assessment note: “So for us, actually, the last, the last five or six years have been very simple”

Q When you say that type of performance, what is the type of performance you need?

A North of three X. North of three X. On an aggregate portfolio level. Mm-hmm. So when I look at, and, and, you know, we've, we've disclosed a little bit of the sort of high level performance. So happy to, happy to do that when I, so we have a group of a dozen core managers and, and, you know, like, 90% of all the capital we've invested over the last decade plus has gone to those managers. And when we look at the performance of, of their mature funds, so let's take away the ones that were raised in the last couple of years, we are seeing a net multiple back to us north of three X around that kind of three and a half X. On a, on a blended basis, on an aggregate basis. So this isn't pie in the sky numbers. This is what those funds have delivered. And the other thing to look at there is what percentage of them have actually lost money. So go back to that 50% of cap, of, of funds from PitchBook haven't returned one X DPI. Um, what we found is less than three percent of those funds haven't, are showing a TVPI of less than one X. And this is going back Some of those funds are going back 30 years. So that's through the dot-com boom and bust. It's through the financial crisis. So what we're able to do still is to capture a significant chunk of that upside while minimizing the risk of losing capital. But I don't want to, I don't, I don't want to not answer your question on fund size, beca…

AI assessment note: “North of three X. North of three X. On an aggregate portfolio level.”

Q I write this stupid schedule and I just don't listen to it at all because it's way more interesting. Uh, you know, liquidity is predicated on often IPOs or M&A. You mentioned Lina Khan. Uh, M&A is pretty much fucked. I'm worried about that. Do you share my concern?

A Yeah. Uh, in the short term, I do. Yeah. I think it's, it's interesting how, you know, the UK regulator can block, you know, two US companies from merging, which is Is an interesting one with, with Figma and Adobe. And so I, I think it's going to be a challenge, um, for the, the big tech companies to acquire significant new product. And that goes back to the conversation we were having a second ago about their ability to iterate and continue to, to stay in that, in that position. But I do think it makes it harder for, um, the M&A market to, to, to, to operate at scale. And so I think for companies, it's becoming increasingly important that they view themselves as standalone businesses and ones, and, and, and, and for the founders to take the view that this is not just a kind of, let's get it to a couple of million dollars in revenue and then we can sell it to someone. It's about how do we build something that's actually durable and sustainable and, and, and standalone. Um, and, and those are the sort of companies that ultimately Are able to go public. I think the impact that will have is that the concentration of returns in venture is going to be even smaller as they're going to be fewer companies that ultimately account for that, that performance. And so it's going to be even more important that your backing managers that can identify them, win them, work them. And as you said…

AI assessment note: “Yeah. Uh, in the short term, I do. Yeah.”

Q And they don't distribute to you, they hold for you?

A They will distribute over time, so it probably takes 18 months, 24 months, for a position to be fully realized from those managers. So, you know, we're getting to the stage now where those companies that went public in, in the second half of 21, you know, they've certainly begun, they certainly distributed the bulk of, of the shares that they had. There is some still left, so, you know, we are seeing liquidity still coming back, but it will take time to replenish that inventory. So even if we start to see IPOs in the second half of this year, it's going to be six months before those shares become freely tradable, um, and again, it will probably be another 12 to 18 months before those positions ultimately get fully distributed.

AI assessment note: “They will distribute over time, so it probably takes 18 months, 24 months”

Q Hard question. Those positions are fully distributed. Do you hold or do you sell?

A We tend to sell, um, because we, we don't think it's our job to, um, hold public stock for our investors. They have, they have their equity managers who do that, um, and would do a better job than, than we would. Now, we don't necessarily go back to the VCs and you, and say to them, you should distribute as soon as a stock comes freely tradable. You know, we want them to, to use their judgment Um, as to when to distribute stock, particularly if they're still closely involved with that company, because we've seen a number of occasions where, um, you know, the very best companies will continue to compound as, as a public company. Um, and, and actually holding for a period of time after that, um, is actually beneficial for, for performance.

AI assessment note: “We tend to sell, um, because we, we don't think it's our job”

Q I was speaking to a dear friend who's now P and they said, listen, the, the managers who I will chastise are those who had the chance to distribute in the last few years and did not. Then I will get angry. Do you share that perspective?

A It depends on Why they didn't distribute, and I don't think you can take it on a case by case, like company by company basis. I think you have to look at the overall volume of their work. So if they've decided to hold, let's say they had 10 companies that went public, and they decided to hold one of them, and they distributed the rest, and they decided to hold that one because there were very specific reasons why they felt there was significant upside there. Then we have no problem with that. But it should be the exception rather than the norm. And I think it's interesting that the, the, the criticism that Sakaya had for the Sakaya Fund It's absolutely the right idea. It just happened that they implemented it at a time in the market where you saw a significant correction once it was put in place.

AI assessment note: “It depends on Why they didn't distribute”

Q I mean this nicely. You push your managers all the time. Are your managers not just like, come on, like, I gotta cue people out the door, dude, like, next. I don't mean that rudely at all, but do you know what I mean? It's like.

A I think they're more polite than that. But I think we recognize that there are, we will give our opinion to our managers where we think there's something there that, that it makes sense for us to talk about. Um, if, If, if they don't want to listen to it, then, then that's fine. Um, ultimately they're the ones that are playing the game on the field. Uh, and as an investor, we trust them to do that. Um, if they decide that, that ultimately they, they, they're seeing such great opportunities that they want to put their fund to work in, in 18 months, um, then, then they've earned that right to do that. But they've also must recognize that, that they will be held accountable for what they do. Um, and, and, you know, it's not to say that, that we'll walk away from a manager if they have one bad fund. That's not the case. You know, we look at these as long-term relationships. Um, and so, you know, if, if there is a bad fund as part of that, we want the managers to be honest about, have they really thought about, you know, what are the reasons for that? What are the lessons that they've learned? Now, you know, they might just be saying that and, and we'll continue to do what they want, but, but ultimately, you know, it comes down to, um, If it's happening consistently, that's going to impact performance, and when it starts to impact performance consistently, that's one of the reasons …

AI assessment note: “I think they're more polite than that.”

Q Should UK pension funds and universities be doing more?

A I think if you look at the performance that the, you know, the best university endowments in the US have had from venture, then, then definitely, um, the challenge is Will they end up doing the best managers or will they get pushed to do local managers? And I think that's one of the challenges that we've seen, you know, particularly in the UK when the government gets involved, they want to try and encourage the UK venture scene. So they'll incentivize or restrict, um, the ability of, of local investors to, to choose managers by performance. They'll choose them because they want to, They want to try and grow the, the, the UK venture scene. And, and, and for us, that's, that's really dangerous. It hasn't worked.

AI assessment note: “best university endowments in the US have had from venture, then, then definitely”

Q Hard question. Those positions are fully distributed. Do you hold or do you sell?

A We tend to sell, um, because we, we don't think it's our job to, um, hold public stock for our investors. They have, they have their equity managers who do that, um, and would do a better job than, than we would. Now, we don't necessarily go back to the VCs and you, and say to them, you should distribute as soon as a stock comes freely tradable. You know, we want them to, to use their judgment Um, as to when to distribute stock, particularly if they're still closely involved with that company, because we've seen a number of occasions where, um, you know, the very best companies will continue to compound as, as a public company. Um, and, and actually holding for a period of time after that, um, is actually beneficial for, for performance.

AI assessment note: “We tend to sell, um, because we, we don't think it's our job”

Q Uh huh. So then they just help me understand what will lead you to outbound a manager? Is it like, oh, I really like that portfolio. Oh, that's an incredible background. Oh, I've seen that's returns in pitch book.

A It's looking at, at those top one percent companies. So we will, we will, we have a list of all the, you know, the top, the top one percent companies that we think that, you know, that are out there, the ones that have exited, the ones that are just below. Um, And, and we're looking at who are the investors in those? Who are the early stage investors? And we start to see names that we don't recognize. That's when we'll get interested and we'll do a little bit of work, um, to see, you know, is this, you know, where did they intercept these companies? You know, maybe have a, maybe that's when we'll do some soft referencing amongst our GPs and say, you know, what do you think of such and such? If they're not in that screen, then we're not going to spend our time there. And this goes back to the conversation we had right at the start about, is it, Harder to be an LP today. Yes and no, depending on how you're looking at the industry and how you're screening the potential candidates for investment.

AI assessment note: “start to see names that we don't recognize. That's when we'll get interested”

Q I don't disagree with you, but for those that maybe aren't aware, like, can you just explain your thesis why you think it is the right idea? Because many question that at all.

A Yeah, yeah. I, I think, you know, what, again, our experience has been, when we talk about venture, there's a power law, but that is even true When you look at public companies that come from the venture industry. So there are a handful of public companies that have continued to compound, um, at high levels for multiple years after, um, going public. And in a way the IPO, I don't necessarily view it as, uh, as a systematically, it's not a systematically different company post IPO than pre IPO. You know, yes, there's reporting differences and they've got to manage, You know, to call the expectations to some extent, but I think the very best companies can continue on that journey. And it seems if you're in one of those top one percent companies, like ride it all the way. Don't try and sell it early because you need to get points on the board. And again, this comes back to, you know, what do our managers do really well and what differentiates the very best managers from, from the rest of the pack. It's, They recognize when they do have one of those top one percent companies and they have the, the confidence and they've got the history to know that if they do hold on to it and things go wrong, it's not going to be fatal for them, but they trust their judgment that actually by doing that, they can see.

AI assessment note: “if you're in one of those top one percent companies, like ride it all the way.”

Q How do you feel about fee and carry increases to the two and a half, to the 25, to the kickers? How do you feel about that?

A For us, it's about net performance. So, you know, what does that performance look like, um, after the fees and carry have been taken off? And, and if it's consistently top quartile and it's consistently strong, um, then we're relaxed about that. I think I would prefer to see the carry be tiered. So I've got no issues about paying for performance. Um, but I think it's important, you know, ideally I'd like to have that alignment of interest so that if you do have a, if you have a great manager that has a poor performing fund, then that's reflected in the economics that go back to them for that specific fund. As you said, there's a whole line of LPs queuing out the door wanting to get into these managers. So that's, you know, realistically that's not going to happen. Um, so I, I think ultimately for us it comes back to what, what's the net performance.

AI assessment note: “if it's consistently top quartile and it's consistently strong, um, then we're relaxed”

Q Um, can you talk to me about your re-up process? I'm being serious. Is it just like, yep.

A So I think we have a pretty good sense of, um, who, like if you asked me today, I could tell you who we would re-up with and, and, you know, who were the ones where it, it, it, there's more of a decision. I think 90% of the managers that we have, you know, we're very happy with, we know we're going to re-up with them. Um, and in a way, our, our diligence on them is a continuous process. It's not about, about, oh, they're now raising a fund, let's kind of meet them and talk to them for the first time. We want to continue to, you know, we want to, we spend time with our managers as much as we can without getting in their way. Um, but we also, you know, make sure that we're doing a lot of work behind the scenes to understand the quality of their portfolio. Um, you know, do they continue to have those key companies? Are they, are they the, you know, in, in their more recent funds? But having said that, we, for every investment we do, we still go through a full diligence process. Um, so, you know, we will write our, you know, we'll take references. We'll write our full investment recommendation.

AI assessment note: “for every investment we do, we still go through a full diligence process.”

Q I was speaking to a dear friend who's now P and they said, listen, the, the managers who I will chastise are those who had the chance to distribute in the last few years and did not. Then I will get angry. Do you share that perspective?

A It depends on Why they didn't distribute, and I don't think you can take it on a case by case, like company by company basis. I think you have to look at the overall volume of their work. So if they've decided to hold, let's say they had 10 companies that went public, and they decided to hold one of them, and they distributed the rest, and they decided to hold that one because there were very specific reasons why they felt there was significant upside there. Then we have no problem with that. But it should be the exception rather than the norm. And I think it's interesting that the, the, the criticism that Sakaya had for the Sakaya Fund It's absolutely the right idea. It just happened that they implemented it at a time in the market where you saw a significant correction once it was put in place.

AI assessment note: “It depends on Why they didn't distribute”

Q What would you most like to change about the world of venture?

A I think venture, Is certainly venture at the, at the highest level is, is quite exclusive, and so I, I think I'd like to try and democratize venture to some extent, and that works on multiple levels, so it's about giving, giving everyday investors the opportunity to invest in a Sequoia, or an Accel, or an Andreessen, or a Kleiner Perkins, or an Index, um, and, and not just Ivy League, um, endowments, um, Um, because I think, you know, for the average person, it's, you know, it's tough and, and, and venture done well, you know, can really drive significant outperformance over a long period of time. So I think giving, you know, giving individuals access to, to that, I think would be great. But I also think from a, you know, looking at, at who comes into venture as well, you know, I, I mentioned, I, You know, no one in the village I grew up had ever heard of venture. I was lucky. Someone was willing to gamble on me.

AI assessment note: “I think I'd like to try and democratize venture to some extent”

Q is if you think about the last five or six years, it's impossible to select. Everyone looks good. Then you end up doing nothing and you have to stay at the forefront of great managers. You have to ensure that you don't miss the next great franchise. How do you approach that knowing that you don't want to enter a world where you can't decide, but also you can't miss?

A Yeah, I think you can miss because again, one of the things that, one of the things that we've learned is that you don't have to do every great manager out there. You just have to make sure all the managers you do are great. So it's not about trying to see everything and pick every, everything that has the potential to rise into that top quartile or top test style. It's about understanding what your lane is, being comfortable in your lane, and recognizing that lane is still relevant and is still able to produce the performance that, that you expect from the asset class. And I think particularly over the last five years, um, we just felt it was, even if we saw a really good manager, we thought it was the wrong time to intercept them. And actually, There would be a much better opportunity when there was far less noise and far more signal to fine tune that decision. And we saw this back in 2010, 2011, 2012, where we were able to add several top tier managers after the financial crisis, because a lot of their traditional MP LPs were struggling with the denominator effect. Um, there'd been very little liquidity, so they were struggling to make new commitments. And I think that a lot of those managers there recognized it was important to have a reasonably diversified LP base. So not just Ivy League endowments, but also some family offices, some funder funds. And as you know, as a fun…

AI assessment note: “I think you can miss because... you don't have to do every great manager”

Q Do you care if your VCs add value? I know it sounds strange, but isn't?

A I think, I think, I think we care if our VCs, we want our VCs to understand when they need to get involved and when they need to get out of the way. Because there will be certain points in a company's life where they do need help. Nothing, no success happens in a straight line. There are, you know, you look at most of the, the companies out there that have, that have been successful. At some stage, they had a near-death experience. And I think the role of a founder is, It can be at times incredibly lonely, so I think there are times when a VC needs to be there for that founder, um, and needs to give them a hard, have a hard conversation with them, and needs to deliver a bit of tough love, but also needs to be supportive, um, and, and, and, and, and also, in a way, to be a psychological support for, for that founder. So, I think the best VCs are able to do that and can pick and choose their times. I think there are clearly VCs out there who just need to back off a whole heap.

AI assessment note: “we want our VCs to understand when they need to get involved”

Q Uh huh. So then they just help me understand what will lead you to outbound a manager? Is it like, oh, I really like that portfolio. Oh, that's an incredible background. Oh, I've seen that's returns in pitch book.

A It's looking at, at those top one percent companies. So we will, we will, we have a list of all the, you know, the top, the top one percent companies that we think that, you know, that are out there, the ones that have exited, the ones that are just below. Um, And, and we're looking at who are the investors in those? Who are the early stage investors? And we start to see names that we don't recognize. That's when we'll get interested and we'll do a little bit of work, um, to see, you know, is this, you know, where did they intercept these companies? You know, maybe have a, maybe that's when we'll do some soft referencing amongst our GPs and say, you know, what do you think of such and such? If they're not in that screen, then we're not going to spend our time there. And this goes back to the conversation we had right at the start about, is it, Harder to be an LP today. Yes and no, depending on how you're looking at the industry and how you're screening the potential candidates for investment.

AI assessment note: “we start to see names that we don't recognize. That's when we'll get interested”

Q I don't disagree with you, but for those that maybe aren't aware, like, can you just explain your thesis why you think it is the right idea? Because many question that at all.

A Yeah, yeah. I, I think, you know, what, again, our experience has been, when we talk about venture, there's a power law, but that is even true When you look at public companies that come from the venture industry. So there are a handful of public companies that have continued to compound, um, at high levels for multiple years after, um, going public. And in a way the IPO, I don't necessarily view it as, uh, as a systematically, it's not a systematically different company post IPO than pre IPO. You know, yes, there's reporting differences and they've got to manage, You know, to call the expectations to some extent, but I think the very best companies can continue on that journey. And it seems if you're in one of those top one percent companies, like ride it all the way. Don't try and sell it early because you need to get points on the board. And again, this comes back to, you know, what do our managers do really well and what differentiates the very best managers from, from the rest of the pack. It's, They recognize when they do have one of those top one percent companies and they have the, the confidence and they've got the history to know that if they do hold on to it and things go wrong, it's not going to be fatal for them, but they trust their judgment that actually by doing that, they can see.

AI assessment note: “if you're in one of those top one percent companies, like ride it all the way.”

Q I mean this nicely. You push your managers all the time. Are your managers not just like, come on, like, I gotta cue people out the door, dude, like, next. I don't mean that rudely at all, but do you know what I mean? It's like.

A I think they're more polite than that. But I think we recognize that there are, we will give our opinion to our managers where we think there's something there that, that it makes sense for us to talk about. Um, if, If, if they don't want to listen to it, then, then that's fine. Um, ultimately they're the ones that are playing the game on the field. Uh, and as an investor, we trust them to do that. Um, if they decide that, that ultimately they, they, they're seeing such great opportunities that they want to put their fund to work in, in 18 months, um, then, then they've earned that right to do that. But they've also must recognize that, that they will be held accountable for what they do. Um, and, and, you know, it's not to say that, that we'll walk away from a manager if they have one bad fund. That's not the case. You know, we look at these as long-term relationships. Um, and so, you know, if, if there is a bad fund as part of that, we want the managers to be honest about, have they really thought about, you know, what are the reasons for that? What are the lessons that they've learned? Now, you know, they might just be saying that and, and we'll continue to do what they want, but, but ultimately, you know, it comes down to, um, If it's happening consistently, that's going to impact performance, and when it starts to impact performance consistently, that's one of the reasons …

AI assessment note: “I think they're more polite than that. But I think we recognize that”

Q that's just competitor shit talk? Do you know what I mean? Which is like, you ask someone, oh, what's it like with X? And they're going to be a competitor in a lot of cases. Well, that's shit, and the partnership's breaking down, and they have a broken decision-making process, and the brand's there. But do you not worry that you're actually letting imperfect information then impact your decision-making process?

A Yeah, I, I think the importance There is, you have to, you have to triangulate. There's not just one specific source of information that is primary. I mean, there's stuff that you, and you also have to understand, you have to have that relationship with your VCs that you know, are they the sort of person that, that craps on everyone? Are they the sort of person that gives everyone a great reference? And you need to sort of have that history with them where you can put that into context, what they're saying. Um, and I think that's, that's really important. Um, and that just comes from time and building those relationships and having those conversations and it's getting harder. It's getting harder, you know, particularly where, you know, you, you mentioned firms that have, you know, big IR departments and it's harder to have that interaction with individual partners. You've got to work at it more.

AI assessment note: “you have to triangulate. There's not just one specific source of information”

Q Who do you think has done generational transition the best?

A I think there's two interesting ways of doing it. So if I look at the firms that are on, um, you know, I look at someone like, um, like Excel, um, who, you know, is probably on the third or fourth generation now of, of, um, of leaders within that firm. I think they'd probably admit that, that, you know, they didn't get everything perfect, but I think they've handled most of those transitions. Like, Pretty well, and it's, it's really hard. Um, I think Sequoia have a really interesting way of doing it as well, where, you know, people kind of step aside and, and, um, you know, Don Valentine stepped aside for Mike and Doug, you know, Doug stepped aside for Roloff. Um, so I think they understand the importance of doing that. The other way is, I, I think Foundry Group have done a really good job.

AI assessment note: “I look at someone like, um, like Excel... Sequoia have a really interesting way”

Q When you say that type of performance, what is the type of performance you need?

A North of three X. North of three X. On an aggregate portfolio level. Mm-hmm. So when I look at, and, and, you know, we've, we've disclosed a little bit of the sort of high level performance. So happy to, happy to do that when I, so we have a group of a dozen core managers and, and, you know, like, 90% of all the capital we've invested over the last decade plus has gone to those managers. And when we look at the performance of, of their mature funds, so let's take away the ones that were raised in the last couple of years, we are seeing a net multiple back to us north of three X around that kind of three and a half X. On a, on a blended basis, on an aggregate basis. So this isn't pie in the sky numbers. This is what those funds have delivered. And the other thing to look at there is what percentage of them have actually lost money. So go back to that 50% of cap, of, of funds from PitchBook haven't returned one X DPI. Um, what we found is less than three percent of those funds haven't, are showing a TVPI of less than one X. And this is going back Some of those funds are going back 30 years. So that's through the dot-com boom and bust. It's through the financial crisis. So what we're able to do still is to capture a significant chunk of that upside while minimizing the risk of losing capital. But I don't want to, I don't, I don't want to not answer your question on fund size, beca…

AI assessment note: “North of three X. North of three X. On an aggregate portfolio level.”