The Exchanges

Q I mean, it's a pretty smooth transition from me. Give me credit. I do want to start with just laying the kind of landscape framework for how CMU operates is structured today. If you think about like a construction, that's easy for everyone to understand. How does that portfolio construction look like for CMU today from a top down?

A From a, from a top down perspective, we manage four billion on behalf of the university. And so starting at the highest level, we think of equity and fixed income as, as kind of the two parts of the endowment. 85% of the endowment is equity. 15% is fixed income. That is our allocation. And, and we manage to that on a, on a quarterly basis. One step below that then is the sub-asset classes within that. And so our target is 50% of the portfolio Is in privates. That's a mixture of venture capital, private equity, real estate, natural resources, private credit. Um, the other 50% is hedge funds and liquids, which the liquids are public equities and fixed income. Uh, and so that is the, the top down management of the portfolio within that private bucket. We have, um, free reign into the underlying allocations within that. So we call it a best athlete portfolio. So how do we find the best risk-adjusted returns globally? Across all of those different private asset classes so we can have the best risk-adjusted return for the portfolio.

AI assessment note: “From a top down perspective, we manage four billion on behalf of the university.”

Q I mean, it's a pretty smooth transition from me. Give me credit. I do want to start with just laying the kind of landscape framework for how CMU operates is structured today. If you think about like a construction, that's easy for everyone to understand. How does that portfolio construction look like for CMU today from a top down?

A From a, from a top down perspective, we manage four billion on behalf of the university. And so starting at the highest level, we think of equity and fixed income as, as kind of the two parts of the endowment. 85% of the endowment is equity. 15% is fixed income. That is our allocation. And, and we manage to that on a, on a quarterly basis. One step below that then is the sub-asset classes within that. And so our target is 50% of the portfolio Is in privates. That's a mixture of venture capital, private equity, real estate, natural resources, private credit. Um, the other 50% is hedge funds and liquids, which the liquids are public equities and fixed income. Uh, and so that is the, the top down management of the portfolio within that private bucket. We have, um, free reign into the underlying allocations within that. So we call it a best athlete portfolio. So how do we find the best risk-adjusted returns globally? Across all of those different private asset classes so we can have the best risk-adjusted return for the portfolio.

AI assessment note: “85% of the endowment is equity. 15% is fixed income. That is our allocation.”

Q When we think about though, like, absolutely not, you're not getting paid for the risks that you're taking. And then a statement that you said to me before, which is, 90% of LPs shouldn't be investing in venture. Who should and who shouldn't then?

A That's, that's the million dollar question. I think you need to have a frank conversation with yourself. Say you're, you're a new endowment or a new family office and you say, we want technology exposure. Right? You've got two options. You could do that through the public markets. You could do that through the private markets. And so my, my question to any new allocator or an investor is, do you think you're going to have access to top decile managers? Cause at, at that point, top decile, you are achieving returns above the PME consistently, but below that, even top quartile, you're not. And so that is the question. And, and I think most people clearly buy the data. Especially as a new entrant to a mature asset class are not going to have top decile access.

AI assessment note: “do you think you're going to have access to top decile managers?”

Q give a shit about it. It's like a coffee. They put three and a half billion dollars into Ray-Ban at the same time, and no one paid any attention. My point being, we have these kind of opposing worlds of liquidity, starvation, or drought, and then the glut of these public markets players who just are playing with market caps that are two trillion. How do you think about that?

A I think, uh, if Wiz gets approved, I think Every other large Mac seven company is going to see a green light in regards to making big, splashy acquisitions again, which is a good thing. Um, I mean, you look at Google, Microsoft, Amazon, and Meta combined, I mean, they're doing six hundred billion of operating cash flow, just cash coming off the company every single year, and I think they would much rather make very strategic acquisitions than buy back 50 basis points of the company, right? Um, I, I think that the big worry that I think those companies see today from our purview is that the AI landscape is changing so rapidly that The, the, the 12 month time period it could take to go through a review to get that acquisition done, that company could be obsolete in 12 months.

AI assessment note: “Every other large Mac seven company is going to see a green light”

Q more and more about you, because I didn't actually realize this, but at 26, you kind of went through a cancer experience, and you know, you're a cancer survivor now. Pretty unbearable to think about, given the fact that I'm 29. Like, just the most incredible strength. How did having cancer and facing your own mortality change your mindset? And I've never asked that question to start a show before.

A Well, let's dive into it. We'll dive into the, into the heavy and hot. I mean, It's a surreal moment when that happens. You know, I think everyone at that age thinks you're invincible. I did. Right. Uh, and you get that news and you're in a bit of shock. Right. And it was, it was so abnormal to me when they told me I had lymphoma. I said, oh great. What's lymphoma? I thought it was like a, a cold. I didn't even know what it was. And they said, it's, uh, it's, it's cancer and it's progressed. You know, quite substantially, and, and we need to, you know, start a chemo process here within the week. Um, and so, like, I'd say most of all people, I, I sulked for about 12 hours. Went home, uh, was, was mad at the world. Didn't want to speak to anybody. Why me? Um, and, and I woke up that next morning, and one of my college football coaches had a, had a great quote that, that really stuck with me, which was, you know, success in life Is, you know, 10% what happens to you and 90% how you react, what happens to you. And so, uh, you know, I took that running that next day. I said, I'm going to attack this. I can't change the situation I'm in, but I can change, you know, how I react to it moving forward. And so I basically said, you know, cancer can't kill me if I don't stop moving. So I basically started, you know, a pretty insane regiment of, of workouts. Uh, and when I would go in and g…

AI assessment note: “I can't change the situation I'm in, but I can change, you know, how I react”

Q When you think about getting a good read on that, Time helps. How do you think about your willingness to write checks fast, versus the need to build the relationship over time, with the knowledge that they might scale if you wait three funds?

A It's a risk we take openly, right? Um, I'd say half of our new funds that we commit to, we will not invest, right, when we meet them over a six-year period and invest in their fund that year, and the other half will take either one fund or two funds into the future, so three to six years, we'll build that relationship over time. Um, and so, you know, the way we think about it is if you're in an early-stage venture fund, it's gonna take at least 15 years for that fund to be wrapped up, probably 18. Right. To be fully done. All positions liquidated. And when we back a new manager, we want to back them for at least three funds. So call it, you know, 25 years of an illiquid relationship. It's longer, like twice the length of like an average marriage in the US. I don't know what marriages are like here in Europe, but.

AI assessment note: “half will take either one fund or two funds into the future, so three to six years”

Q What's the takeaway to that? Is that the lack of liquidity? Is that the concentration of capital to a few number of names you've scaled and just eaten up more of that dollar allocations? What is the kind of conclusion from that?

A I think there's a lot of different reasons. I think the main reason is liquidity, right? It's, you know, 2002 to 2004. You had more dollars raised in the public markets from IPOs than you did from 2022 to 20 24. And with an asset class, 10 times the size. And just for reference, like the dot com bubble, it took you 13 years from the peak of the dot com bubble to get back to par on your public equity position in the queues or the NASDAQ. Like that was a real downturn. It makes, you know, obviously, 20, 21 look like pennies. And you had more IPOs raised the three years following that, right? Um, and so something clearly is broken In the industry, given how bad the liquidity was over the past three years. And I think what really frustrated LPs is you watch the public markets continue, especially the factor exposure of technology has done tremendously. And I am not a believer ever that the IPO markets are closed. It's purely a function of price, right? And, and, and so that is the problem folks paid significantly too high prices during the peak growth has slowed down and You know, there's not much of a market for a hundred million dollar ARR SaaS company growing 15% with breakeven free cash flow when you can buy Microsoft growing top line at 14%, growing earnings at 17% with real gap profits buying back one percent of the company every year with the strongest competitive moat in th…

AI assessment note: “I think the main reason is liquidity, right?”

Q How do you justify that? How do you reason that?

A Uh, I think there's a lot of reasons. I think, I think one, um, folks who had made a lot of money didn't want to deal with the crap that you're dealing with today, right? These, you know, three years of, of no liquidity, you know, dealing with broken cap tables, dealing with founder transitions. Like it's just a lot of hard work, gritty work that if you made a lot of money and why do it? Um, I think two, if you were a newer GP, you know, you were promised a certain amount of compensation. For your role, and part of that was variable carried interest. That carry has evaporated, right, as performance has come down. And, you know, now you're getting paid 70% less than, than what you thought you were. And so why not start fresh? Why not start with a new book? Or why not start my own firm?

AI assessment note: “I think there's a lot of reasons. I think, I think one”

Q Do you think they will post as good returns then? No.

A No. I mean, I'll walk you through a very simple math that Other LPs can, can put in their back pocket, but for, for how we underwrite, you know, these big funds now today, it's simple math, but, but I'll walk you through it. So, uh, and this is a live manager. I won't share their name, but, um, this is a, you know, a manager we underwrote a year ago. So we'll look at their fundraise. So this manager was, was targeting a seven billion dollar fundraise. And so what we do is we do a dollar weighted entry ownership across their different funds. So this had a, Billion dollar early stage fund, a two to three billion dollar growth fund, and the rest was an opportunity fund. And as an LP, most LPs have to invest para pursue across those funds. So like equally as a percent of the fund across those funds. And so inherently your, your smallest check is going to be to that early stage fund. Your largest checks are going to be to the growth and opportunity funds. And so what we do is we look at the early stage fund. So this fund called had 15% entry ownership for that fund. The growth fund, uh, had about Six to seven percent, and the opportunity fund had about two and a half, three percent ownership. And so we, we, we dollar weight that on the funds, and then we look at our check. What is the average entry ownership our check is getting within those funds? And so this fund was about five pe…

AI assessment note: “No. I mean, I'll walk you through a very simple math”

Q Who is the single best performer to you at scale?

A Index. I think they have to be. I mean, the performance they've put up in the last 12 months is I've, I mean, in a, in a market that is as bad as you hear in the news and from all the folks on the podcast, the performance that they've delivered and are, are delivering here in the future is unbelievable. I mean, largest shareholder in Figma, largest shareholder in Dream Games, largest shareholder in Wiz, um, you know, second largest shareholder in Scale.ai, Revolut. I mean, It's unbelievable. And, and I give index all the credit in the world for not scaling. They even reduced their latest fund size. They reduced it after the 20, 21 era, like the, the credit I give them for, for not ag, they could raise as much capital as they want to. And they don't, they, they are the most performant driven culture that we see. And so I give them a ton of respect for that.

AI assessment note: “Index. I think they have to be.”

Q Who is the single best performer to you at scale?

A Index. I think they have to be. I mean, the performance they've put up in the last 12 months is I've, I mean, in a, in a market that is as bad as you hear in the news and from all the folks on the podcast, the performance that they've delivered and are, are delivering here in the future is unbelievable. I mean, largest shareholder in Figma, largest shareholder in Dream Games, largest shareholder in Wiz, um, you know, second largest shareholder in Scale.ai, Revolut. I mean, It's unbelievable. And, and I give index all the credit in the world for not scaling. They even reduced their latest fund size. They reduced it after the 20, 21 era, like the, the credit I give them for, for not ag, they could raise as much capital as they want to. And they don't, they, they are the most performant driven culture that we see. And so I give them a ton of respect for that.

AI assessment note: “Index. I think they have to be.”

Q When you think about getting a good read on that, Time helps. How do you think about your willingness to write checks fast, versus the need to build the relationship over time, with the knowledge that they might scale if you wait three funds?

A It's a risk we take openly, right? Um, I'd say half of our new funds that we commit to, we will not invest, right, when we meet them over a six-year period and invest in their fund that year, and the other half will take either one fund or two funds into the future, so three to six years, we'll build that relationship over time. Um, and so, you know, the way we think about it is if you're in an early-stage venture fund, it's gonna take at least 15 years for that fund to be wrapped up, probably 18. Right. To be fully done. All positions liquidated. And when we back a new manager, we want to back them for at least three funds. So call it, you know, 25 years of an illiquid relationship. It's longer, like twice the length of like an average marriage in the US. I don't know what marriages are like here in Europe, but.

AI assessment note: “It's a risk we take openly, right? Um, I'd say half of our new funds”

Q Do you think they will post as good returns then? No.

A No. I mean, I'll walk you through a very simple math that Other LPs can, can put in their back pocket, but for, for how we underwrite, you know, these big funds now today, it's simple math, but, but I'll walk you through it. So, uh, and this is a live manager. I won't share their name, but, um, this is a, you know, a manager we underwrote a year ago. So we'll look at their fundraise. So this manager was, was targeting a seven billion dollar fundraise. And so what we do is we do a dollar weighted entry ownership across their different funds. So this had a, Billion dollar early stage fund, a two to three billion dollar growth fund, and the rest was an opportunity fund. And as an LP, most LPs have to invest para pursue across those funds. So like equally as a percent of the fund across those funds. And so inherently your, your smallest check is going to be to that early stage fund. Your largest checks are going to be to the growth and opportunity funds. And so what we do is we look at the early stage fund. So this fund called had 15% entry ownership for that fund. The growth fund, uh, had about Six to seven percent, and the opportunity fund had about two and a half, three percent ownership. And so we, we, we dollar weight that on the funds, and then we look at our check. What is the average entry ownership our check is getting within those funds? And so this fund was about five pe…

AI assessment note: “No. I mean, I'll walk you through a very simple math”

Q a game of levers, and what I mean by a game of levers is, like, you can have a, A smaller fund, but deploy it more quickly and actually kind of play that lever game to actually just amass the fee game and the AUM game. How do you think about temporal diversification? We saw a real shift from three-year deployment to two-year deployment. How do you think about that?

A I think it's very important. I think it all stems from what did that GP tell you they were going to do? If they told us that this, hey, this is a two-year fundraise cycle. We're investing it in two years. And they come back to us two years, two years later. We're okay with that. We underwrote that, right? But if this is a three to four year investment period and you told us it was going to take three to four years and you come back in two years, then we'll have some, some questions for you and we'll want to work with you to understand why, you know, what's, what's the reason? Because time diversification is quite important in venture, extremely important.

AI assessment note: “I think it all stems from what did that GP tell you they were going”

Q What's the takeaway to that? Is that the lack of liquidity? Is that the concentration of capital to a few number of names you've scaled and just eaten up more of that dollar allocations? What is the kind of conclusion from that?

A I think there's a lot of different reasons. I think the main reason is liquidity, right? It's, you know, 2002 to 2004. You had more dollars raised in the public markets from IPOs than you did from 2022 to 20 24. And with an asset class, 10 times the size. And just for reference, like the dot com bubble, it took you 13 years from the peak of the dot com bubble to get back to par on your public equity position in the queues or the NASDAQ. Like that was a real downturn. It makes, you know, obviously, 20, 21 look like pennies. And you had more IPOs raised the three years following that, right? Um, and so something clearly is broken In the industry, given how bad the liquidity was over the past three years. And I think what really frustrated LPs is you watch the public markets continue, especially the factor exposure of technology has done tremendously. And I am not a believer ever that the IPO markets are closed. It's purely a function of price, right? And, and, and so that is the problem folks paid significantly too high prices during the peak growth has slowed down and You know, there's not much of a market for a hundred million dollar ARR SaaS company growing 15% with breakeven free cash flow when you can buy Microsoft growing top line at 14%, growing earnings at 17% with real gap profits buying back one percent of the company every year with the strongest competitive moat in th…

AI assessment note: “I think the main reason is liquidity, right?”

Q Any things that managers say in early meetings with you where you're like, oh no, just don't say that?

A Uh, when I, I've had a few manager meetings where folks come right out, uh, and, and proactively say how easy what they're doing is, and how great, much great access they have in, in the great performance that they will have, and that with the market they play is just, it's, it's just like shooting fish in a barrel, and that is always to me, like, All right, we're gonna, we're gonna stop this call early. Just the, the, that kind of hubris, you know, I mean, this is one of the most competitive asset classes in the world, and we look at returns of everybody, right? So we, we see how hard it is, like you said, to achieve, you know, a six X net fund. Um, so that's, that's definitely a big one.

AI assessment note: “proactively say how easy what they're doing is”

Q When we think about though, like, absolutely not, you're not getting paid for the risks that you're taking. And then a statement that you said to me before, which is, 90% of LPs shouldn't be investing in venture. Who should and who shouldn't then?

A That's, that's the million dollar question. I think you need to have a frank conversation with yourself. Say you're, you're a new endowment or a new family office and you say, we want technology exposure. Right? You've got two options. You could do that through the public markets. You could do that through the private markets. And so my, my question to any new allocator or an investor is, do you think you're going to have access to top decile managers? Cause at, at that point, top decile, you are achieving returns above the PME consistently, but below that, even top quartile, you're not. And so that is the question. And, and I think most people clearly buy the data. Especially as a new entrant to a mature asset class are not going to have top decile access.

AI assessment note: “are not going to have top decile access”

Q How do you unpack whether someone's a good picker? Is it just looking at track?

A I think it's, um, I think it's looking at track, understanding the true thought behind what, what were they thinking when they made that investment and when they met that founder. And then, you know, we speak to founders and so we want to hear from, from their side of the story as well. What was that pitch like with the broader community? They'll usually tell you, you know, no one would even pick up the phone for us, right? No one would respond to our emails and, you know, cyan or Harry, you know, sat down and they had a A blink in their eye, and they saw the idea, they believed in us before everyone else did. Um, we really want to understand the depth and granularity of those stories.

AI assessment note: “I think it's looking at track, understanding the true thought behind what”

Q Oh my god. How should GPs think about LP churn?

A I, I, I think, um, one, it's good to have a relatively diversified LP base, which protects you from that, right? So a mixture, and not everyone can choose their LP base, right? Sometimes it's, it's, you know, take whatever, yeah, take money's green, right? Um, But like in a, in a best case scenario, you've got a mix, uh, of endowments, foundations, family offices, founders, maybe a couple of GP checks in there from, from some venture funds, uh, a mixture of folks who are aligned to your long-term vision, right? And, and inherently stuff's gonna happen, right? Like, you know, folks are gonna have a liquidity crunch, a family office, the family's gonna say, you know, fuck venture. We don't wanna, we don't wanna play in this asset class anymore. Like you're gonna have some things come up. And I think, um, being open, uh, open to that and trying to still be as good of a partner as you can, uh, is, is pretty important.

AI assessment note: “it's good to have a relatively diversified LP base, which protects you from that”

Q Why do you think the fee structures need to change?

A Because when you're investing at that size and scale, so when you're, when you're a fund that big, right, you're, you are inherently setting up for a hundred million dollar checks into very well-established Well run, well oiled companies, right? You are essentially acting as a long only public equity investor, right? You're not, you know, actively, you know, managing the company. They've got their own, uh, HR team. They're doing all their own hiring. You know, they've got a, a 20 person product team. They've got a 10 person BD team. Like this is a well oiled machine. These are, these are, these are what public companies would have been 10 years ago. And so you're charging two and 20 on It's basically passive investing, right? You're not, you're not actively managing most of those positions for the most of the time.

AI assessment note: “you're charging two and 20 on It's basically passive investing”

Q know, now we have, you'll correct me, nine, 10, one trillion dollar companies. Um, we didn't have any 10 years ago. The outcome sizes are so much bigger than they've ever been. If we project forward a decade, there's a very real chance that Microsoft is worth 10 trillion. And actually we have I don't know, 50 trillion dollar companies? If that's the case, we could see that play out.

A It could. I, we, we, we acknowledge that we could be wrong, and SpaceX, and OpenAI, and Anthropic go public at, at trillion dollar vations. What we look at, and like I said, this is, is backwards looking data, but we'll give you a few data points. There's been 11 fifty billion dollar IPOs ever. Venture backed. 11. Ok? The, the two largest venture backed IPOs ever, Or Facebook in 2012 and Alibaba in 2014. So we've got a decade and one of the greatest venture bubbles of all time, 2021, and we still haven't had a bigger exit than we were getting in 2012 and 20 14. So, so my guess is that a hundred billion dollar IPO over the next 10 years is still going to be a generational outcome. And so the question I throw back is, you know, do you think there's going to be 10, 20 A hundred billion dollar plus IPOs. I do not think so. You know, you look at the trillion.

AI assessment note: “my guess is that a hundred billion dollar IPO over the next 10 years is still going to be”

Q Do you love thematic funds like every other LP does?

A Um, we are agnostic. We, we do not have a mandate or a rule saying, you know, we're only going to do thematic funds or we're only going to do generalist funds. We're a best athlete. So when we find really great partners aligned with us for the long term, who we think have an incredible skill set that aligns with what they're trying to do in the fund, whether that's a generalist fund, whether that's a sector focused fund, um, we'll do it. Um, and so, I mean, inherently, You know, we've done one new sector focus fund over the past three and a half years. Um, and so it hasn't been a huge part of our portfolio, but we are absolutely open to it.

AI assessment note: “we are agnostic. We, we do not have a mandate or a rule”

Q Oh my god. How should GPs think about LP churn?

A I, I, I think, um, one, it's good to have a relatively diversified LP base, which protects you from that, right? So a mixture, and not everyone can choose their LP base, right? Sometimes it's, it's, you know, take whatever, yeah, take money's green, right? Um, But like in a, in a best case scenario, you've got a mix, uh, of endowments, foundations, family offices, founders, maybe a couple of GP checks in there from, from some venture funds, uh, a mixture of folks who are aligned to your long-term vision, right? And, and inherently stuff's gonna happen, right? Like, you know, folks are gonna have a liquidity crunch, a family office, the family's gonna say, you know, fuck venture. We don't wanna, we don't wanna play in this asset class anymore. Like you're gonna have some things come up. And I think, um, being open, uh, open to that and trying to still be as good of a partner as you can, uh, is, is pretty important.

AI assessment note: “it's good to have a relatively diversified LP base, which protects you from that”

Q Do you think you can add your attribution?

A That we've gotten much more sophisticated on our reference work. We build our own attribution tables, right? So like that is another, like a huge red flag and lie that like we get from, it's not, it's not an outright lie, right? But like they will give us attribution and You have one partner leave who retires or goes to another firm. And like, you're getting this attribution from this new person who clearly we know was, was not the partner on this home run deal. Right. Um, we understand why they do it. Like they, they have to assign somebody to it, but it could be very misleading to a new LP coming into that fund and saying, oh, these, these incredible partners who led these incredible deals are all still here. And so we, through reference work and through, you know, longevity, we Build our own partner attribution.

AI assessment note: “We build our own attribution tables, right?”

Q subscale ownership or subscale diversification, or you do what everyone does, which is like, they end up writing tweener checks, like one and a half million dollar checks. It is fucking hard to get a one and a half million dollar check in a three to four million dollar seed round when the best in the world want it. Put a 50 K in, but one and a half? Mm-mm.

A My, my response to that would be consensus seed deals, either a consensus founder or consensus idea. Extremely hard to plan because the multi-stage firms have all planted a flag at seed and have essentially said, we're gonna, you know, all these seed funds are our shrapnel. Like we're, we're gonna blow this, your model up, right? Via, we have a much cheaper cost of capital than you, and we can deploy five, ten million dollar checks at seed when, when the model traditionally was you know, two to three. Um, but if you're doing non-consensus founders, non-consensus ideas, You know, those rounds are usually non-competitive, uh, and, and that shows up in price and ownership. And so I, I'd say that's the question.

AI assessment note: “if you're doing non-consensus founders, non-consensus ideas, You know, those rounds are usually non-competitive”

Q I, I agree with you, which is why in some respects I do think it is a young person's game, because it's about pounding the pavement, being there, showing up at seven a.m., and that takes youth in a lot of ways. Um, picking is the next element. Really, uh, difficult to unpack in a lot of ways. Who do you think is the best picker that you know?

A I, I love the way Mike Maples discusses picking in his The way he thinks about these companies that are, you know, going against the grain of the universe and are inherently, you know, not going to be, uh, super attractive or super hot because it is against the grain and it is, you know, dysfunctional against the way that, you know, our human minds work today. I'll never forget. I mean, when I first heard of Uber, I thought it was the stupidest idea I've ever heard. I mean, that's how, you know, I'd be a bad venture capitalist. I mean, I, I was in, you know, late in college, I'm going to get in some random person's car. And they're going to drive me some same with Airbnb. I'm going to go to some random person's house. I'm just going to sleep in their bedroom. Is this, I mean, this is the craziest idea ever, right? Those are the people and investors, you know, sign Bannister, another one, like who, who in, in a lot of those companies, Uber, right? That we mentioned, like their ability to see into the future is something that not a lot of people can do. And it's, it's a superpower.

AI assessment note: “I love the way Mike Maples discusses picking”

Q Do you give a shit about other people's, uh, perspectives on other GPs? Like venture to venture? Does that make much?

A Perspective on strategy, not so much. We are very much trying to find interpersonal risk and partnership risk. Those are, Two things that we are really digging. We want to know, are they a good person, right? Have they, um, you know, have they, uh, created a bad persona amongst other people? Have they wronged others in a, in a pretty malicious way? Um, and, and then understanding the partnership dynamic, things that they will never tell us on a call, on a phone call, right? We could ask them blunt to their face. Is there any risks in the partnership? Do you, You know, does Harry like Sally? Does, uh, you know, how is the mesh? Oh, it's incredible. This is the best partnership ever. We love each other. We sit down every day. We, we've never disagreed on a deal. We spent a lot of time trying to understand that partnership risk.

AI assessment note: “Perspective on strategy, not so much. We are very much trying to find interpersonal risk”

Q eight to 10% that these kind of endowment funds and the endowment model kind of relies on to keep that, um, kind of corpus the same. Everyone says, oh, well, it's going to be fine because basically, yes, they will have worse returns being multi-stage funds, eight to 12% say, but the LPs they have are different now, and that's good enough for them. How do you think about that?

A It worries us. The funds are extremely large today, and I think it's hard to assume the same returns you had from, you know, 2010 to, call it 2017. I think, you know, Masa and SoftBank, I would, I would put as the, the, the flag in the ground, Vision Fund One, when, when all the other venture firms saw that as the opportunity to just absolutely scale their capital base. Um, I think it's, it's wrong to assume the returns you had from, from those years where most all venture funds were basically raising a four hundred million dollar Series A fund, all the premier funds, and maybe they had a, maybe they had a four hundred million growth fund attached to it, but the fund sizes stayed basically the same for a decade. Um, and so it, it worries us tremendously.

AI assessment note: “It worries us. The funds are extremely large today”

Q Why do you think the fee structures need to change?

A Because when you're investing at that size and scale, so when you're, when you're a fund that big, right, you're, you are inherently setting up for a hundred million dollar checks into very well-established Well run, well oiled companies, right? You are essentially acting as a long only public equity investor, right? You're not, you know, actively, you know, managing the company. They've got their own, uh, HR team. They're doing all their own hiring. You know, they've got a, a 20 person product team. They've got a 10 person BD team. Like this is a well oiled machine. These are, these are, these are what public companies would have been 10 years ago. And so you're charging two and 20 on It's basically passive investing, right? You're not, you're not actively managing most of those positions for the most of the time.

AI assessment note: “you're charging two and 20 on It's basically passive investing”

Q Do you love thematic funds like every other LP does?

A Um, we are agnostic. We, we do not have a mandate or a rule saying, you know, we're only going to do thematic funds or we're only going to do generalist funds. We're a best athlete. So when we find really great partners aligned with us for the long term, who we think have an incredible skill set that aligns with what they're trying to do in the fund, whether that's a generalist fund, whether that's a sector focused fund, um, we'll do it. Um, and so, I mean, inherently, You know, we've done one new sector focus fund over the past three and a half years. Um, and so it hasn't been a huge part of our portfolio, but we are absolutely open to it.

AI assessment note: “we are agnostic. We, we do not have a mandate or a rule”