Sep 4, 2023 · 1h 4m · capital-allocators
Jenn Birmingham – Organizational Alpha at PRINCO (EP. 336)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Jen Birmingham, Managing Director at the Princeton University Investment Company (PRINCO), shares how building rigorous operational infrastructure, fostering a collaborative and pedagogical culture, and integrating operational diligence generate organizational alpha to support Princeton’s long-term endowment mission.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 9.3% of the talking time here. How this is scored →
Ted as informed peer 4.2 Guest teaching 5.6 Guest disagreement 0.5 Ted pushing back 0.3
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 21:49 Firm Stance Against Permanent Remote Work
Jen firmly rejects the popular notion that remote work is the permanent future, betting that in-person interface is indispensable for accelerating junior careers.
Hardest push from Ted ▶ 21:42 Questioning the Binary Remote Work ConsensusScott pushes Jen on whether the industry will reach a stable norm given the polarized, binary views on office return.
Biggest teaching moment ▶ 57:45 The Value of Pedagogical InefficiencyJen educates the host on why maximizing meeting efficiency can damage institutional culture, explaining that PRINCO intentionally embraces inefficiency so all analysts learn how decisions get made.
Ted holds their own ▶ 34:42 Identifying the Auditor MindsetScott demonstrates his operational expertise by pinpointing that Jen's strict data ownership model stems directly from an internal audit control philosophy.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Jen Birmingham's Career Path to PRINCO | 3 | 4 | 0 | 0 | Scott McDonald opens with a standard biographical prompt. Jen walks through her career progression from Deutsche Asset Management to joining PRINCO in 2010. | |
| Transitioning from Wall Street to Endowment Culture | 4 | 6 | 1 | 1 | Scott asks about the culture shock between Wall Street and an endowment. Jen contrasts Wall Street's frenetic pace with PRINCO's deliberate, deliberative culture where Andy Golden told her to 'put the guns back in the holster.' | |
| Building and Scaling Operations and IT Teams | 4 | 5 | 0 | 0 | Scott asks about team composition in 2010 versus today. Jen describes scaling ops from two people to 13 and modernizing IT infrastructure from on-prem fifth-floor servers. | |
| Fostering Open Collaboration and Tacit Information Flow | 4 | 6 | 1 | 0 | Jen articulates PRINCO's open-floor culture where overhearing conversations and butting in is encouraged to enable tacit knowledge transfer, which remote work during COVID hindered. | |
| Leadership Philosophy, Delegation, and Organizational Maturity | 4 | 5 | 0 | 1 | Scott asks about personal ownership versus delegation. Jen explains how hiring domain experts like an IT director enabled her to delegate and evolve beyond startup-style firefighting. | |
| Industry Peer Networks and the In-Person Mandate | 5 | 6 | 3 | 2 | Scott probes on industry peer networks and organizational debates. Jen pushes back on remote work permanence, arguing that career advancement for junior staff requires in-person interface. | |
| Board Governance and Bull-Bear Decision Frameworks | 5 | 6 | 0 | 1 | Jen outlines PRINCO's unique governance model where the board does not approve individual investments, and details the internal 'bull-bear' voting process where everyone votes. | |
| Integrated Operational Diligence and Legal Ownership | 4 | 6 | 1 | 0 | Scott asks how operations integrates into diligence. Jen explains that PRINCO avoids internal legal counsel so investment and ops leads must act as quarterbacks and understand the entire dollar flow. | |
| University Stakeholder Relations and Diversity Initiatives | 4 | 5 | 0 | 0 | Jen details how PRINCO coordinates with the university's Office of General Counsel and HR, emphasizing the importance of utilizing domain specialists for complex initiatives like DEI. | |
| Auxiliary Investment Roles and Golden Data Source | 5 | 6 | 0 | 1 | Jen details how operations serves as an auxiliary investment team managing legacy private equity runoff and controlling the golden data source, with Scott recognizing her audit background. | |
| Modernizing Investment Technology with Solovus | 4 | 6 | 2 | 0 | Jen criticizes using Excel as a database and explains selecting Solovus to unite private and public asset tracking, eliminating fragile end-user applications. | |
| Four-Eye Verification and Desktop Diligence Practices | 4 | 6 | 0 | 0 | Jen explains the four-eye verification framework and how desktop diligence across manager financials allows the ops team to catch valuation and cash flow anomalies. | |
| Change Management Strategy and Benchmark Documentation | 4 | 6 | 1 | 0 | Jen shares her tactical approach to change management by automating cash flow inputs before revealing performance calculation outputs, and enforcing benchmark documentation. | |
| Operations Recruitment and Financial Footnote Diligence | 5 | 5 | 0 | 0 | Scott inquires about operations hiring criteria. Jen emphasizes public accounting backgrounds for data rigor and attention to detail when analyzing financial statement footnotes. | |
| Proactive Diversity Diligence and Manager Partnerships | 4 | 5 | 0 | 0 | Jen describes PRINCO's proactive diversity survey framework focusing on attitude, effort, and 'faucet' hiring rather than standardized passive checkboxes. | |
| Structuring the PRINCO Summer Analyst Internship | 4 | 5 | 0 | 0 | Jen discusses the structured summer analyst program, offering pre-internship CFA prep and placing interns directly into live manager diligence alongside senior leadership. | |
| Trading Operations, Liquidity, and Intergenerational Equity | 4 | 6 | 0 | 0 | Jen breaks down in-house derivative and in-kind trade operations, and explains how PRINCO's 47% gain supported Princeton's intergenerational equity through major campus investments and financial aid expansion. | |
| CIO Alignment and Pedagogical Inefficiency | 4 | 7 | 1 | 0 | Scott asks how to manage CIO expectations. Jen explains the philosophy of pedagogical inefficiency, where broad meetings are intentionally kept large so junior staff learn how decisions are made. | |
| Leadership Principles for Investment Operations Executives | 4 | 6 | 0 | 0 | Jen shares advice for emerging managers and operations leaders, emphasizing zero infrastructure risk, buying best-of-breed software, and relying on ILPA standards. |
Statements from this episode (25)
PRINCO emphasizes deep deliberation over Wall Street's rapid execution culture
“At Deutsche it was, this is what we gotta do, go get it done. Whereas when I came here it was, whoa, let's talk about it, let's be thoughtful about the paths we're gonna take, let's talk through those, Let's talk about the risks. What are the pros and cons? An…”
PRINCO managed its endowment in 2010 with just two operations staff
“So we had two folks in operations and we had two I would call desktop support in tech.”
PRINCO's investment team has hovered between 18 and 25 people
“The investment team really has hovered over the years between 18 and 25.”
Birmingham: Overhearing and butting into conversations drives learning at PRINCO
“Overhearing conversations is a big part of our learning and culture. Someone hearing something and then interrupting or butting in is actually what we want people to do.”
Birmingham: Top 11 endowments gather annually for operational peer benchmarking
“It's about 11 of the biggest endowments, and it's all of the people that hold positions like me, and basically we have a day where we just talk about what are the five most important things going on in your organization.”
Birmingham: Career acceleration and deep learning require in-person office work
“I think junior staff members, what they don't appreciate is that, yes, you've been productive, but do you want to catapult your career? Do you want to learn as much as possible? Do you want to be the best XYZ ever? That is going to require you to have some in-…”
Birmingham: Remote work will decrease over the next five years
“I think certain fields will get back to what it used to be. I don't think everyone's going to now be hybrid. I don't think the new norm is remote work as much as it is now. Andy always does this to me. If you were going to make a bet that in five years it woul…”
PRINCO's board delegates full investment approval authority to internal team
“So one of the great parts of the governance is that the PRINCO board doesn't approve investments. PRINCO has the ability to invest without constraint as it relates to the board.”
PRINCO Mandates Every Team Member Vote on Investments Without Abstaining
“The culmination of all of that work comes to a bull bear decision meeting, and that is just the Prinko team, and we all vote. So we have this voting dynamic, two right pound the table, two left Negative, or one and one. You have to vote, though. You can't abst…”
Birmingham: PRINCO uses only external legal counsel to enforce team ownership
“It's another reason why we actually do not have internal legal counsel. We use external only, and the reason for that is that the investment person, as well as the ops team, has to play quarterback.”
PRINCO operations team monitors legacy PE managers instead of investment staff
“We still had a lot of managers on our books that had market value, but that we weren't re-upping with their next fund, and so because the operations team understood, dealt with these managers so frequently, They are actually the people who are attending the AG…”
PRINCO restricts system data entry and editing solely to operations team
“The ops team is the only team that can edit or put in data into our systems. No one else can touch it.”
Birmingham: Excel is a calculation engine, not a database
“Many folks might still be in the Excel world where you use Excel as a database, but Excel is actually a calculation engine. It's not supposed to be a database.”
Birmingham: PRINCO feeds data to its custodian rather than relying on it
“We do have a custodian, which is technically our books and records, but it's really The shadow book, because we enter all the data into our system, and then we feed that to our custodian.”
Birmingham: PE CFOs should receive portfolio data independently from boards
“I think it's a best practice and a very cool thing if the CFO Of the private equity gets the data in a different way, because then when they meet, they should be speaking the same language. And sometimes it isn't. Sometimes the CFO will get different informati…”
Birmingham: PRINCO had zero documentation for benchmarking when she joined
“One of the first things that I did when I came here was force the analyst to document. There was no documentation for anything. I forced them to document the benchmarking.”
Birmingham: PRINCO reviews every financial statement and conducts annual debt surveys
“We do read every single financial and we do call out those types of items into files and systems so that it is available. But we come at it at different ways. The investment team also does a debt survey every single year with our managers.”
PRINCO modifies diversity diligence to focus on manager recruiting pipelines
“We modified it to actually really gauge not only where managers stand in terms of their diversity, but also what we call the faucet, because that's where we feel the biggest impact's going to be.”
PRINCO quickly sells in-kind stock distributions in 90% of cases
“A manager distributes a public company securities to us. We then have the view in nine out of 10 cases that we typically sell pretty quickly.”
Princeton's endowment covers over 65% of the university's operating budget
“Over 60% of our students are on financial aid, which is no loan, and then also the endowment provides over 65% of the budget”
Birmingham: AI in operations is useful for data capture, not autonomous action
“I'm going to use it loosely because I'm not convinced it's AI the way they're promoting it, but there are certain automations of reading data that can be used by the ops team. We'll call it AI, but using AI to read K-ones, using AI to read capital calls, but m…”
PRINCO intentionally preserves inefficient large meetings to improve organizational learning
“It is ok to be inefficient sometimes if you are more effective in the learning process. So we have huge meetings. One might say that would be much more efficient if there was just five of us. We'd probably come to the same decision. Be done with it. However, y…”
Birmingham: Emerging managers must plan infrastructure five years ahead
“Plan for zero plus five. Don't plan for today. Plan for five years ahead, because infrastructure needs are not going to decrease. They are going to increase.”