The Exchanges

Q As you're diving into any one of those opportunities, you've got a different capital stack on the right-hand side of the balance sheet of the CLO, and then you've got, say, 200 loans on the left-hand side. How do you go about doing your research to determine whether you think it's an attractive opportunity?

A So one of the things that we don't do is Deep dive due diligence on the underlying loans. And the reason for that is a few. So one, there's going to be 200 or 300 different loans in the portfolio. Usually the max loan size is going to be one percent of AUM or thereabouts. And then if we're talking about broadly syndicated CLOs, the loans are traded. So you could do due diligence on underlying loan. It's 50 basis points of the loan portfolio. And then you found out three months later the CLO manager traded it and replaced it with another loan. So you're not really going one by one through loans and asking the CLO manager to explain themselves. So there's some big picture details that are reported by the CLO that would be of interest. So one is the amount of defaulted assets in there, which usually there are going to be some, the amount of triple C rated assets. So those are loans that you have much higher risk to default. And then another metric would be the amount of loans trading below a 90 dollar price. So we usually Think of loans that are worth 91 cents or higher as being worth par and loans that likely default at that two percent rate. But if the loans at 80 might not have defaulted yet, it might not even be triple C, but you would never buy a CLO with a loan trading at 80 and not make some kind of adjustment in terms of the price you'd be willing to pay. Another thing tha…

AI assessment note: “So there's some big picture details that are reported by the CLO that would be of interest.”

Q So when you're looking at this CLO equity, and you want to know that they have that attractive debt financing, it sounds like there's a chicken and egg if you're supplying the equity before you know what the terms of the debt will be. How do you resolve that in your research?

A The equity needs to be first, but the AAA is probably on deck and there's probably already been a number of conversations there. So that's part of it. But another thing is that in my market, it's very transparent as to which managers are getting the best debt execution. A seal of manager might come to me and just say, Hey, I print the tightest AAA in the market. I did it last month and three months before that. And I was talking to a Japanese bank and they seem pretty interested. And so that gets the conversation going. But the other part of this, once you have the equity, you're in a CLO warehouse and you're buying loans prior to the formation of the CLO, you have three to six months to figure out the full commitment on the AAA. So if it comes back maybe wider than you might like as an equity investor, you can always just stay in the warehouse and just wait for a better time or better execution.

AI assessment note: “you have three to six months to figure out the full commitment on the AAA”

Q Your time at UBS, how did you find your way into these nascent secondary markets?

A I started off in business strategy and fixed income, and then I was the chief operating officer of the global trade finance business. And somehow I ended up running a portfolio of e-commerce investments. When the banks were worried about the technology companies eating their lunch, they got together and they formed various platforms to transact their business on. For example, FX became FX All. U.S. government bonds became trade web. Off the back of that experience, I was asked to sell a portfolio of LP interests. It was about a two billion dollar portfolio, which had come together through M&A activity. UBS merged with Swiss bank and bought Payne Weber and Dylan Reed. Everyone had a few funds. When you put them all together, it was two billion. People said, wow. So I was given the job of selling them into the market. Which didn't really exist. So when I first found out there's only one advisor and they were a startup in Dallas called Cogent Partners. I Googled secondary buyers, came up with a number of names, and then ran a small auction in 2001. And then to remove most of the other funds, we actually executed a large structured billion dollar transaction with Harborvest Partners led by A young associate called Jeff Key, who is now one of the leaders of that business. It is amazing in this business, what they've achieved. We put together a transaction, which probably looks a lit…

AI assessment note: “Off the back of that experience, I was asked to sell a portfolio of LP interests.”

Q So let's break apart those two. You started talking about this original distressed interest from the LP and turns into more different use cases. How do you think about the breadth of why an LP does one of these transactions today?

A There's a number of reasons. It's usually strategic in a sense that it could be, I have non-core exposure. I'm not going to re-up with these particular managers. I would rather use that capital to That is invested in those managers right now and redirect it to core managers going forward. That's one reason. Sometimes it can be actually that it's core managers, but it's old funds. So I will sell my old funds to reinvest in the new funds so I can generate co-investment business. And old funds don't generate co-investment business. Many LPs these days have very active co-investment program, so they would do it for that reason. I think other reasons are strategically pivoting between buyout and venture and growth. So I might be overweight, buyout, maybe this is a great time in a market like this to be in growth. More relative value transactions are being executed these days, particularly with, I would say, public pensions who are over allocated to private equity compared to their benchmarks. So maybe they're supposed to have 15%, but actually there's very few distributions over the last few years. They may be at 20%. So there comes a time maybe to rebalance towards the benchmark they're supposed to be adherent to.

AI assessment note: “There's a number of reasons. It's usually strategic in a sense that it could be”

Q You mentioned early on that if an LP went to sell, they were looked at to say this is a separation, a divorce. What are some of the interesting dynamics that you see between LPs and GPs in the process of secondary transactions?

A There's been a big evolution over the last few years. Several years ago, a lot of LPs did not like continuation funds for a variety of reasons. Their concern was they are inherently conflict transactions and LPs generally don't like conflict transactions. However, I think a lot of LPs appreciated the industrial logic of why would you sell your best company, particularly to another GP, to a competitor, so you can watch them generate two to three times the money after you've generated. So that was a problem. That is the asset you don't want to sell. So if that transaction can be set up in a way that provides a fair option, To the selling LP at a fair price, then that would be a good transaction. So ILPA about a year ago issued updated guidance on continuation funds, and the key change in the guidance was the LPs in the selling funds need to be offered a status quo option. In other words, the option would mean economically, I mean, in the same spot as I am right now, which really means if that LP wants to continue being invested in the asset, their carried interest is not crystallized at the time. Effectively, it's held in escrow until the final determination of the company when it's finally sold. That change set the guardrails for the growth of this market.

AI assessment note: “Their concern was they are inherently conflict transactions and LPs generally don't like conflict transactions.”

Q Why don't you take me back to your upbringing and path to being in the seat?

A So I grew up in Sheffield, England, which is a northern industrial town. Many people will know it from the Full Monty. Which is, of course, a movie about male strippers who are redundant workers. I went to Newcastle University and studied politics, and then East Asian studies, and spent a year in China learning Chinese, which was very early. That was 1985. So that was many years ago. And got into banking, actually, commercial banking with a group called Standard Charter Bank, and moved to Hong Kong to work for them, and then ran a business in China. Which was actually a lot of fun. I enjoyed. In the south of China, in a city called Zhuhai, which was one of the original special economic zones. And I met my wife there and followed her back to the US. Needed something to do. Got an MBA. After my MBA, become a management consultant. And then eventually wound myself around through UBS and then Evercore to this seat.

AI assessment note: “eventually wound myself around through UBS and then Evercore to this seat.”

Q What was your early path at Well Then Morgan Guarantee?

A When I graduated and joined full time, I joined the Global Commodity Derivative Group, which consists, I think, of about four people and me. I was the only girl or woman. The bank had been in the business of bullion and related precious metals for many decades, but this was the beginning of our work in providing hedging instruments in things like jet fuel and oil and other energy related products. Over the course of many years, I spent a lot of time in and around the derivative markets, almost all of them for rates, credit, commodities, environmental commodities, and built and ran what became big franchised markets businesses for the firm, the structured credit business in the nineties. And I then moved back into commodities in the 2000 and built out the physical as well as the derivative business in commodities. Then I also did tours of duty in Risk and control functions. I looked after global credit portfolio that manages all of the loans and counterparty exposure from derivatives that the bank retains. In the era after Jamie joined the firm with the combination with bank one, became the CFO of the global investment bank, working for then CEOs, Phil Winters and Steve Black. In the aftermath of the great financial crisis, there was a wave of re-regulation and changed regulation, and I acted as the head of regulatory affairs for The investment bank while doing my day job in com…

AI assessment note: “When I graduated and joined full time, I joined the Global Commodity Derivative Group”

Q But I want to get a chance to ask you a couple of closing questions. What is your favorite hobby or activity outside of work and family?

A I'm a horse person. I've been a avid pony girl since I was growing up in the pony club in England and took a few years off, but I started again after I had my daughter in my twenties and I've been riding ever since I still compete to this day. I don't practice enough. Riding a 1500 pound animal over four foot six pence is not particularly advisable at the best of times, but without practice is definitely not a good idea, but it's a hobby that I'm passionate about. I love my horses and I live here in Florida. And I have a farm in Wellington where I actually have the privilege of living on my own farm with my own horses, so I can get off a zoo and get on a horse and not even have to leave the property. It's great.

AI assessment note: “I'm a horse person. I've been a avid pony girl”

Q When you went off to college, you were coming from a completely different upbringing, I imagine, than anybody else there. What was that like when you jump into college in the U.S.?

A I can't claim to have been a well-adjusted student. I was certainly probably socially very maladjusted. My neighborhood in Madrid had about a quarter of a million people. Spaniards would have dinner very late at night, and then you go for your paseo around midnight. And arriving at Chapel Hill, where the business is closed at five p.m., while I'm still waking up for my siesta, it took me quite a while to get used to. But then also, I realized that I had a very different life and childhood and a lot of cultural references than young people, and being young and foolish, you expect the world to adapt to you rather than adapting to it, and so I think it took me some time to find my feet there, but I ended up becoming very good friends with a lot of professors. I was very nerdy and bookish, but really ended up developing a great community, many of whom I'm still in touch with.

AI assessment note: “I can't claim to have been a well-adjusted student. I was certainly probably socially very maladjusted.”

Q You talked last time we had on the show about a natural monopoly. How did you decide which ones you wanted efficient?

A If you read an economics textbook, they talk about natural monopolies, which would be things like power utilities, water utilities, and it makes no sense to lay down two sets of pipes or two sets of copper wires. You tend to have one company and then to make sure that the consumer doesn't get gouged, you have a regulated rate of return and the regulator sets that. Those are natural monopolies. I think of natural monopoly a little broader, which is to say, does the delivery of the product dictate that there be a few players? Going back to the financial exchanges, you don't want to be transacting on dozens of exchanges. You want the highest amount of liquidity, and that's why you end up with one exchange that does one contract. That has a natural reason for existing, and that's what I call natural monopoly, which is much broader than the economics textbook. The unnatural monopolies, I think, are pernicious and bad for consumers, and those are essentially ones where absent Excessive regulation or mergers to monopoly. You would have competition. My entire book was written against these where the regulators and antitrust have allowed all sorts of mergers that should never happened. And then there's excessive regulation and talked about the McCurran Ferguson act with insurance where you can't sell insurance contracts across state lines. And so the U S spends more on healthcare and me…

AI assessment note: “does the delivery of the product dictate that there be a few players?”

Q It's been five years since you were last on the show. You dove in a little bit with your early childhood background, and I thought it'd be fun to flesh that out a little bit, and then we'll jump into what you've been doing. So take me back to how did your family end up in Spain?

A My parents were Presbyterian missionaries, and my parents actually wanted to work with university students, so be university chaplain. But they were also penniless missionaries, which means that they ended up settling in one of the cheapest neighborhoods in Madrid for rent. That was San Blas, which I don't think they knew at the time, but it had the highest rate of crime and juvenile violence and heroin use in all of Europe. The university students weren't particularly interested in what my father and mother had to say, and they were seeing all this need in the streets around them. And so they ended up helping heroin addicts get to rehab centers, and there wasn't almost anything in Madrid at the time, so they were generally sending them north or south to Santander, Victoria. They knew that they wanted to start a center after about two years because there was just so much need, but they didn't even know how to start it. That wasn't even their background. One addict came in and started sharing an apartment with, Lindsey McKinsey was an Australian missionary, and then he brought his friends in, eight recovering addicts in an apartment. The neighbors weren't thrilled, so then they had to go find a farm, and then it filled up with 30 men overnight. The center just grew almost exponentially after that, given the need. But my brothers and I would go hand out flyers in the neighborhood…

AI assessment note: “My parents were Presbyterian missionaries, and my parents actually wanted to work with university students”

Q When the AIDS epidemic ran through the neighborhood, what was that like at the time?

A It hit Madrid a little later than it did San Francisco or New York. People started getting a lot of the diagnoses in the mid-eighties, and then the average incubation period is generally about five years. It can go up to 14 years. So it was really in the late eighties, early nineties that the deaths started happening around us. And the peak of deaths in Spain was 95, and at first, some people were so ashamed to have it that people were HIV positive, but you didn't know that, and so it was only later, as numbers started growing, that my parents were encouraging everyone in the drug rehab center to get tested, and then found out that most of the addicts were HIV positive, and then they had a conference and brought doctors in, and then my childhood in high school really revolved around an enormous amount of studying, but going with my mother and father to Ramon y Cajal, which is one of the largest hospitals in Madrid, where they had the Main infectious diseases ward for AIDS.

AI assessment note: “it was really in the late eighties, early nineties that the deaths started happening around us”

Q So once you did that at school, how did you set out on what would become your professional career?

A After college, I went to law school. I got a job at a law firm. It was interesting because I had interned for a smallish firm after my second year. I continued to work there during my third year, and toward the end of that year, probably in late April, the firm announced that they were bringing in a lateral litigator to run the litigation department. By that time, I had accepted an offer from them to return after graduation as a litigator. I went and introduced myself to this gentleman, and he said, well, show me your resume, and I'll see if we have room for you. So here I am about to graduate from law school, studying for finals, I had to worry about the bar exam, and I quickly decided I had to go find a job as well. So I had a plateful that month, and I ended up finding a job with a firm called K Scholler, where I practiced litigation for four years.

AI assessment note: “I ended up finding a job with a firm called K Scholler”

Q And from that first project, What was the first big set of opportunities that you saw?

A So that would have been 1988 that I went there, and shortly thereafter, Drexel started to go bankrupt, and then we had the savings and loan crisis. So that created a bunch of unforced sellers of bank debt and bonds. So the first big opportunity we really transacted in that was new was buying bank debt, and bank debt did not historically trade. So these were one-off transactions. It was pretty much a small group of banks and funds that were doing it. I think Goldman Sachs, Oppenheimer & Company, Lehman Brothers, Bear Stearns. We were there. Randy Smith was there. Maybe Chuck Davidson was playing around at Steinhardt Partners a little bit. So we started buying bank debt, and then the real entertainment came when we had the opportunity to buy an unfunded revolver. Marvin had this thing, he would call you up to his office several times for the proponent of an investment to explain it, and you'd go over it, and over it, and over it, and he'd pick up any difference in the presentation and question you about it. So to try to explain to somebody that you were buying an unfunded revolver at 50 cents on the dollar, and the seller was going to give you 50 cents, so forever unfunded, you just pocketed 50 cents, was pretty entertaining, and we ended up doing it. But the lesson there was we were completely focused on what we were doing. We were buying senior and secured debt in bankrupt and …

AI assessment note: “the first big opportunity we really transacted in that was new was buying bank debt”

Q You decided to retire some time ago. What was the thought process that went into that?

A Well, there were two things. I got first is a year or two before I retired, a very good friend of mine was taking the train from Westchester County to New York, to the city. He got to Grand Central Terminal, felt pain in his left chest, got back on the train, went back to White Plains, and was rushed to the hospital with a heart attack. And that just reinforced for me that life changes on a dime. And what is the good Of having a fair measure of success. And not having the time to really enjoy it and use it when things can just turn on you right away. So that was part of it. Another part of it was I wanted to have more control over my time. There were other things I was interested in doing. And if you're in a partnership, I believe you have to be a hundred percent in or not there. And if you're not a hundred percent in, you're not doing your partners a favor and you're not doing yourself a favor. So, I discussed with my partners. They had asked me to stay on for a year beyond my original target to make for an orderly transition, and it went very smoothly, I'm happy to say, and it gave me the opportunity to spend more time with my children, to really delve into some reading that I had not focused on for years, and to develop my philanthropy in a more meaningful way. The biggest concern I had when I decided to step back was intellectual engagement. At a firm like Davidson, I don't…

AI assessment note: “Well, there were two things. I got first is a year or two before I retired”

Q How do potential investments fall off your radar in the process?

A There's about five or six things that are really important to understand whether something's a no go. First off, if we're looking at a sponsor and there's two partners and they've never worked together before, that's something I'm always apprehensive about. I think that one of them will not be there in six months, and I don't want that institutional risk. Along the same vein, when there are two partners who are co-chiefs, Who's the ultimate decision maker? If in meeting them there's not a clear answer to that, that's a red flag. We also always ask more about the mistakes they've made and what they've learned rather than their winners. If there's reluctance to discuss mistakes or what they've learned from them or what the lesson is, that's not really a good sign about their intellectual honesty or transparency. Of course, we also looked at whether our interests are aligned. Are they investing alongside us and are the fees that they are taking out much greater Than the capital investment they're actually making. And with respect to that capital investment, is it actually cash invested, or are they just not taking their fees out? Finally, there's something having to do with misleading marketing information. Are they cherry picking data? Are their graphs and charts skewed so as to obfuscate what really happened? And the last thing would be any inconsistent Or question marks raised …

AI assessment note: “There's about five or six things that are really important to understand whether something's a no go.”

Q Why don't you take me all the way back to your upbringing?

A That's going back quite a ways. I grew up in Montreal. My father was a congregational rabbi. Growing up in Quebec in the sixties and seventies was interesting, highlighted particularly by what's going on today, since there was pretty significant antisemitism from the Roman Catholic church at the time. That wasn't a driving factor for us. In the late sixties and early seventies, the separatist party began to emerge in Quebec, which wanted to separate Quebec from the rest of Canada. That one time that resulted in some terrorist kidnappings and the imposition by Prime Minister Pierre Trudeau of the martial law in Montreal and Quebec. So at a time there were tanks and soldiers stationed all over Montreal. In any event, it became obvious, certainly by 1976 and 77, that if French was not your native language, your career opportunities in Quebec would be limited. So, my brothers all went to university in the United States, as did I. And the transition going to the States from Canada was not that difficult, and quite frankly, coming from a day school, I was a little surprised at the light course load I had at university. It seemed easy at the time. Any conversations that we had at the table, aside from the Montreal Canadiens or Montreal Expos, focused on ideas. There was not much discussion about gossip or people. It was Idea drone.

AI assessment note: “I grew up in Montreal. My father was a congregational rabbi.”

Q What was your path from practicing litigation to investing?

A The first step was not enjoying being a litigator. I found it not very rewarding, and the hours were brutal. By matter of serendipity, I was introduced to Marvin Davidson, who was running MH Davidson and Company at the time. I was told it was a hedge fund. I had no idea what a hedge fund was. I met Marvin and spent 45 minutes talking to him On the parlor level of a brownstone on East 63rd Street, and he said they were interested in hiring somebody to invest in the financial instruments of distressed and troubled companies. I said, okay, that sounds interesting. And as I was leaving, he said, make sure to introduce yourself to Tommy, Tom Kempner, and don't let the grass grow under your feet. I met Tommy, we spoke, they guaranteed me the same salary I'd have made as a lawyer, We shook hands and that was it.

AI assessment note: “The first step was not enjoying being a litigator. I found it not very rewarding”

Q So a couple of years in, your role shifted, and so why don't you take me to what happened?

A One afternoon on a Friday, November of 1986, when the market closed, somebody came down to my office and says, did you see what just came across the tape? Ivan Boesky is pleading guilty to a crime, and he's paying a huge Penalty, which really is huge news. I had worked on a transaction where we had invested in a financing that Drexel did for Boski the prior March. And I got a phone call that there were federal marshals downstairs and others serving subpoenas that related to that transaction and referred to a statute I'd never heard of called RICO. They came from the U.S. Attorney in Southern District in New York. This was something I had no prior relationship with, no prior knowledge about, and it changed our lives dramatically.

AI assessment note: “One afternoon on a Friday, November of 1986, when the market closed”

Q What was he like as both a kid and in college?

A He was always an outgoing guy, a leader. People were drawn to Mike. So he had a competitive nature, but he was always easy to get along with and very popular in school. He was head cheerleader in high school. I think he was the prom king at his prom, but he didn't have any airs about him. So you never saw that part of him. He did really well in college. The story people like to tell is when he was in his last quarter at Berkeley, needed whatever it was, 10 units to graduate. And he had worked at Touche Ross, the accounting firm in Los Angeles during the summer, and he stayed in LA and continued to work for the accounting firm during that quarter. He came up a week before finals, bought the books, read the books, looked at notes of other people he knew and passed all his classes. So he was always a person that was easy to admire, and he worked hard.

AI assessment note: “He was always an outgoing guy, a leader... He did really well in college.”

Q What happened from there in Mike's involvement in all this?

A Well, the first thing we did is we realized that this was something that we didn't know anything about. And we needed to get advice from people that didn't know something about it, and it was late in the afternoon that Friday, November 14th, that we gathered, and one of the names that Mike had mentioned that he had met before was Edward Bennett Williams, who at the time was probably the best known defense lawyer in the country. He was one of the founders of the major law firm that still exists today, Williams and Conley in Washington, D.C., We reached out and we got him on the phone to try to talk to him about what should we do? What are we thinking about? I had a good conversation with him. We called other lawyers we knew to get recommendations since this was all centered in Washington, D.C. and New York City to get names of lawyers on the East Coast and planned that next Monday to be in New York and start interviewing lawyers.

AI assessment note: “one of the names that Mike had mentioned that he had met before was Edward”

Q What does your team look like in each of the locations?

A So these locations, you have two partners. Typically the partners are like me, so they've built something great in that region. So if you go to Bangalore, for example, Rajiv Sistra is there. He built Urban Ladder, which is one of the most successful companies there. If you go to Germany, Alan Ponskin built West Wing, which is one of the most successful companies there. The people running these locations are very successful founders in that region before, which is necessary to attract the best Founders into that program. They also then have a team of about six to eight people around them, depending on the size of the locations. It's a team there that ultimately are focused on two things, which is finding the very best founders in the region, and then being a really good partner to them as they're just getting started.

AI assessment note: “these locations, you have two partners... a team of about six to eight people”

Q Why don't you take me all the way back to your upbringing?

A Yeah, so I grew up in Norway on the countryside on a small farm there, where we actually didn't have farm animals, but we had huskies. My father was a competitive dog sledger, so we had 36 huskies. Really in the middle of nowhere, lots of forest nature, was outside all the time. It's about eight kilometers to the nearest door. Then at some point, I got to hear about this school called United World Colleges, a high school where you can apply for a scholarship. It brings people together from all across the globe. I thought it was amazing to study with people from everywhere. So I applied for a scholarship, luckily got in, so I ended up doing high school in the UK with people from A to Two Nations. It's like a boarding school. We lived together for two years in an old castle. We did an international baccalaureate there.

AI assessment note: “I grew up in Norway on the countryside on a small farm there”

Q How do you go about taking a team of whatever is six to eight people and getting these 130,000 applicants for your program?

A Applicants come from many places. The best location to get applicants these days is through referrals. We have a founder community of about 7000 people now who refer people to us. We have an advisory network of about a thousand people. We have 2600 angel investors in our network. We have 3000 VCs in our network. And they tend to refer founders to us who are too early for them, or they believe are really strong founders, but they haven't really gotten started yet. So there's no kind of business to invest in. This is a tremendous Referral network. And by far, that's where you get strongest founders. The second place is we do outbound headhunting. So Index, for example, the entire LinkedIn database, we built a tool called Haystack. We pulled all the data we could from public sources, combine it with our own data on now more than 400,000 applicants and more than a thousand portfolio companies. And it literally gives people a score based on how strong a founder they might be. And we reach out to them, and we might reach out to them one or two or three or four years before they actually decide to build a business. They might be working in Stripe right now, they might be working in Spotify, but they'll receive an email from us saying, hey, congrats on building Spotify. If at some point in time you want to leave and build your own billion dollar business, we'd love to support you. And …

AI assessment note: “Applicants come from many places. The best location to get applicants these days is through referrals.”

Q So that team that gets that initial 250 K in the U.S., they're then leaving your offices. How do you go about supporting them once you've made that first investment?

A Once we made the first investment, they can actually still stay in our office for another two to three months, but it typically end up growing quite quickly. So they outgrow and get their own offices. They're still assigned the coach. So we check in with them more or less weekly. Typically what they need support with is in the early days, it's getting the product in the market, getting the first customer, sometimes hiring. We have a strong network of customers. We have strong network of advisors who can support on the product. And then Within a few months, they typically will raise their next round if they have a lot of momentum. Then we have this network of more than 3000 VCs and 2600 angel investors where we can make very relevant introductions. We also have many LPs who are interested in co-investing and we can make those introductions. So a lot of portfolio companies look at us as almost like a third or fourth co-founder because we can support with a system and a community on a lot of those things that are very important in the early days.

AI assessment note: “They're still assigned the coach. So we check in with them more or less weekly.”

Q As you have all these teams in the different locations doing the investing, what's the centralized activity that's building all the technology, sharing these best practices, and how does all that work?

A We have a global support team, which I lead, which is fully focused on creating leverage for the partnership. The most important thing they do is building technology. So we have a tech team of about 15 people who build out Antifusion, which includes the productivity tools I spoke about earlier, the data platform, but also crude tools for the founders, right? So we have their access to our investor database with all of the VC relationships and the angel relationships. So let's say I'm a health tech company in Africa that needs to raise my Series A. You can go in there and put in that criteria and out pops, okay, here are four of the relationships that Antler have. Who would make the introduction? Or do we have a portfolio company that have backed them? Can we make an introduction to them so we can create a competitive advantage in terms of funding rounds for our portfolio? There's the talent network I spoke about. It's the advisory network. There's the founder community. There's the perks platform. So we negotiated free credits with Microsoft, the store, AWS, Stripe, any type of platform or API an early stage startup needs to use. We can offer, for most of them, it's like almost a million dollars worth of free services. So all this is technology enabled. It's also what makes the data and the learning and the network effects work. So that's one part of the global support team. Th…

AI assessment note: “We have a global support team, which I lead, which is fully focused on creating leverage”

Q What's another example of one that cuts through different industries, but works if you look at it as its own typology?

A One that we find ourselves owning more and more is what we call niche industrials. And so these are companies that operate in a niche, have a significant market share, but in an industry with limited scale. So it doesn't invite multiple competitors. There tends to be a complicated route to market, could be an engineer to engineer sale. And oftentimes there is that climbing the value chain element to them. And niche industrial would make you think they should be industrial companies, but in fact, many healthcare companies. We owned a company called West Pharmaceutical, which is a pharmaceutical packaging company, and for us, what it is effectively, it's a niche industrial. It's a low cost of goods, extremely high cost of failure product, 75 cents for a rubber stopper or plunger that goes in a syringe for a drug that costs a thousand dollars plus a dose. What makes our business model unique is the packaging is Part of the product from a regulatory standpoint. So if you want to switch suppliers and switch from West to a competitor, you have to refile for approval. So that's going to take years of testing and trials, and you're not going to take a chance on a fly-by-night operator in China to save a few cents. So that's one where a similar concept, we looked at it, I think, at fifteen-ish percent margins when we bought it, and we said, look, other similar niche industrial companies…

AI assessment note: “One that we find ourselves owning more and more is what we call niche industrials.”

Q Well, why don't we start with your respective backgrounds? And Chad, I know there's a path before investing for you. Why don't we dive right into that?

A I definitely have taken a non-traditional route. I started my career after the Naval Academy in submarines in the back of an engine room. I had a wonderful time and experience in the service. Climbed out a hatch and found myself at Procter & Gamble. I was really a formative state to understand the consumer at such a great company and the maker of big brands and spent most of my time in baby care, their biggest division around the globe, marketing baby diapers. Funny enough, I have a family of four, so it was very apropos. Ended up on a smaller brand that we were taking digital and really became enamored with the tech space and digital solutions that were helping brands grow and jumped into one of our partners coupons.com and had a wonderful eight year experience helping that company grow from a variety of different positions, running sales, ultimately becoming their chief operating officer, chief strategy officer. And serving both CPG space and retail. Started out digitizing promotions and went into digital media and being pioneers of what today is one of the fastest spaces in all digital media, which is retail media. So we launched some of the first media platforms for big retailers like Albertson Safeway and Dollar General and others. And it was just a really fun space to be pioneering and setting the course forward. Which then brought me to eGateway in 2020. Mike and I and s…

AI assessment note: “I definitely have taken a non-traditional route. I started my career after the Naval Academy”

Q So Mike, if you bring what Chad said together to build a firm that can partner with companies serving this community and their certain sectors, CPG, supply chain, how do you turn that into an investment strategy?

A Yeah, Ted, our investment strategy centers around our belief that the economy looks much more digital in the decades to come. We often say here at the firm that the opportunity is big, it's early, and it's urgent. To be clear, we're more focused on the B to B components of this digital transformation and the growth stage technologies that are enabling this future of commerce. We define commerce across four distinct investment pillars. The first is how things are made. The second is how things are marketed. The third is how things are sold. And the fourth, ultimately, how things are distributed. When we think of how things are made, we think the technologies driving advanced manufacturing or the sourcing and procurement processes inside of large companies. When we think marketed, we think how new mediums like video commerce platforms are driving consumer engagement and how data is driving measurable outcomes for brands and retailers. When we think sold, we think social commerce, B to B marketplaces, fintech, Brand and price protection online and several more. And when we think distributed, we think first, middle, and last mile supply chain and logistics technologies.

AI assessment note: “our investment strategy centers around our belief that the economy looks much more digital”

Q So as you start to get your feet in that part of investing, at some point in time, you moved from the investment side, say, to the manager selection allocation side. What led to that change?

A This was around late, 2007, early 2008. It just felt like the right time for a change. And I left Apex and was really attracted to the allocator side, I think by the increased breadth of the role. I'd been very, very narrow and deep. Apex is a sectorally focused firm. So I'd been focusing on one sector, one geography, working on buyouts at that time. It was slightly less frenzy pace than it is today. So we'd be working on one business for many months. Subsequently, of course, if you own the business, you'd work on it for many years. I really, really enjoyed that. But what appealed to me about my subsequent role at Alta was just the international breadth of being able to look at different types of strategies, different types of organizations. And I found that really fascinating.

AI assessment note: “was really attracted to the allocator side, I think by the increased breadth”