The Exchanges

Q If you look through that group of managers, How do you think about what you own? China, not so much. There's a super cycle you want exposure to. There's moonshots related to that or other things that Jared would want to invest in. How do you think about the portfolio as a whole?

A It skews quite heavily to tech, particularly in the venture part of the portfolio, probably around 30 to 35%. We do a buyout. We're in some food chain type companies, and we're in other types of investments that give us exposure to a range of other sectors. Most of it is skewed to tech. It's more on the equity side, so both private and public equities. It does capture that Jared aspect. It's more U.S. focused. We have a CIO now, Jay Sheth, who's amazing. He was at Tepper for a long time, ex-Goldman as well. He has done brilliantly outperforming the market. He's good at looking beyond AI means Mag-Seven. He understands the tentacles of where the second order effects and benefits will come from. We have a big position in healthcare stocks that have done well. We have some positioning and energy that's outside of direct AI trades. That's been incredibly helpful.

AI assessment note: “It skews quite heavily to tech, particularly in the venture part of the portfolio”

Q If you look at these different experiences you're currently having, which are around Starbucks, Condé Nast, what's the most vexing challenge that the various companies are facing that you see at the board level?

A There's a narrative that has seeped into the discourse. In the United States, in particular, it's quite surprising that these companies are there doing bad stuff, whatever it may be. They're bad partners. They're not supporting the community. They are on the wrong side of societal issues. Because I've been on the board of Chevron for 10 years, Barclays Bank has been around for 300 plus years. I've been on these boards. I know that The companies are made up of tens of thousands of people who have their heart in the right place. To face a wrath at annual meetings that somehow there's a dubious agenda that's going on is the biggest, most vexing thing for the organizations I work for. There are big issues that need to be addressed. Energy is the obvious one. Delivering clean, affordable, reliable energy. You've still got about a 1,000,000,002 people who have no access to that around the world. It's such a key catalyst for economic growth. The fact that people don't have that, there are companies that are working to try and do that. A management team has to really focus on that. Then also the share price goes down. Those types of consequences, this didn't happen to us, thankfully, but then the industry as a whole stops investing in innovation because they can't afford to. They're knock on effects or They get kicked out because they don't satisfy ESG requirements, and then all of a s…

AI assessment note: “is the biggest, most vexing thing for the organizations I work for.”

Q What is it like being in the House of Lords?

A I absolutely love it. I'm going into my fifth year. I pinch myself all the time. It's a second bite at the apple from being in university, even first year of university, where you are buzzing with people with lots of different ideas who are trying to address the same issue, whether it's assisted dying or Ukraine or the budget. It goes back to this idea of the theme in my life of competing ideologies, competing views about what works and what doesn't work. What I love the most is being in a room where you think one thing and you're pretty certain that you're broadly right, and somebody stands up and delivers a speech or an argument on the same issue that's completely different. Something like immigration. As an immigrant, I'm a big believer in immigration. I think it's net positive. So society, Yes, of course, there may be challenges of assimilation, but fundamentally it's a good thing. Hearing people say, well, here's a list of where it can be problematic, and these are not people who are sort of behind a dark curtain saying we hate immigrants. It's people who are like, how do we think about education and assimilation, language adoption? It starts to get much more layered than just it's economically net good because we have more workers and those workers are producing a tax base. It is much more element to the debate on all the issues that we cover.

AI assessment note: “I absolutely love it. I'm going into my fifth year. I pinch myself all the time.”

Q How about dynamics of a board that functions effectively?

A It's having the leaders on the board, lead director, for example, or even chair, in the case of Britain, where there's a separated role, not leading with their opinion. My Maya Khan, who's now passed away, he was brilliant. Whenever there was a massive deal, hiring a CEO, M&A transaction, some big issue that company is being affected by, he would go around the table. What's your thoughts? It sounds trivial, making sure everybody is on record, voicing their assessment and their best judgment of what an issue might be. Too often, when people are in leadership roles, there's a risk that they lead with their opinion. Oh, I think we should do the deal. Now, does anybody else have any comment? Those are the places where companies end up with problems. Groupthink, the lead director is saying this, I must fall in line, giving people wide berth. Is very important.

AI assessment note: “It's having the leaders on the board... not leading with their opinion.”

Q Any other dynamics or tips that you've seen?

A If you think about risk mitigation and questions of investing as being this balancing act, the question is for something, and I'll give an example of AI, is that a full board issue to be debated or should it be seconded to a committee where a committee gets into a deep dive and then sends recommendations to the full board? I don't think there's a settled answer on this. I've been on boards where they had a separate risk committee Other boards say, no, no, no, risk is part of audit because of controls and processes. The most important thing is making sure that the organization and certainly the board doesn't become so rigid that it's unable to evolve itself if it needs to. We've just lived through the business roundtable changes in 2019. Companies had to be willing to adapt and not just the larger organization's operations, but the board itself had to be able to say, From the board, we need to think about how we're going to reevaluate compensation or hiring or picking the CEO or risk mitigation for the company as a whole.

AI assessment note: “The most important thing is making sure that the organization and certainly the board”

Q How did you find your way into exploring some of these macroeconomic issues?

A Very fortunate to have been born in the household I was born in. I grew up in a household where everything was debated. Politics, economics, social trends. We would have massive battles. I grew up at a time where throwing rocks because the subsidies had been removed by the Zambian government. It's all funny now. I was with my PhD supervisor, Paul Collier, not too long ago. I remember meeting him because as a young student, we were pro-subsidies. You're super left when you're twenties, isn't it? Reality kicks in later. The point just being our household was fever pitch with competitive ideas. My parents grew up in the colonial era. There was a lot of communism in Africa back in the day. Glasnost and perestroika and democratic push after the fall of the wall, Berlin. I was surrounded by competitive ideas in our household. I was fortunate to be able to go to school in Zambia. There's no drink the Kool-Aid about democracy being so wonderful and having no cause.

AI assessment note: “I grew up in a household where everything was debated. Politics, economics, social trends.”

Q How much of that do you think is time and listening? As compared to them, they're going to go back to their office and maybe go about what they're doing the same way, but just making sure that you're heard.

A I'm optimistic that they'll hear us more because the role of family offices, it's only grown. Their importance in being part of markets because it's growing and changing. People care more about what does an LP think. I'm also not ignorant to the challenges that they face, they as money managers, because, yeah, sure, they can sit here and say, okay, well, Dambisa cares about structural growth and long term. She's less concerned about the immediate inflation in the near term because of Straits of Hormuz. She's more interested in the questions about deflation longer term. What does this do for the fiscal? Great. They still have to go and work and live in a competitive world where they're competing against people who haven't spoken to me or maybe just Discount my view. Maybe they think, well, we're not really macro traders. We're in the here and now, and we're building a portfolio. I'm not trying to at all say they're wrong, but I do think that it would enhance their effectiveness, particularly those who take LP money from family offices. I do get the institutional investor thing is quite different. There's different horizons. If you're taking family office money, it's probably in your interest to spend time with the families to understand what they're trying to achieve.

AI assessment note: “I'm optimistic that they'll hear us more because the role of family offices, it's only grown”

Q I'd love to turn to how all of these different lessons in governance, in growth of economies, and capital allocation have informed how Jared and you thought about investing in the family office over the last eight years. Where did you start determining the goal of the investment challenge in front of you?

A We're incredibly fortunate. Jared and I have been together just over 10 years now. When we met, I was doing my thing, which is public policy and investing and being more in the debate around economic growth. He was deep tech, ex-Google, but also founded Qualtrics. Neither of us had anticipated that we would be called upon to think about How to manage a portfolio of capital. Also to think about how we could best be impactful for the things that were really important to us. It's been a journey. It's ongoing. When we first started out, this is 2018 when the company was sold. It was a cash transaction. We went from doing our own thing to, okay, what do we want in this life? We don't have children, but we both come from poor backgrounds. My family background is not impoverished, but I grew up in a poor environment, broadly speaking. Jared is quite similar. He comes from a small town in Utah. We both had seen poverty, and we'd seen a lot of structural problems that we thought we could contribute to help fix. We come from different backgrounds. I'm more macroeconomics. I'd worked at Goldman Sachs for nearly a decade. I came with a bigger view in terms of making economic bets Was excited about China, for example, back in the day. Now, not so much. It's underperformed. Jared is more of a moonshot person. He grew up in tech. He believed if you put bets onto one big thing, penicillin, as …

AI assessment note: “We both had seen poverty, and we'd seen a lot of structural problems”

Q How did you get from that in your face reality growing up to being so globally aware of the different systems that exist?

A It's because superficially there's a lot of things that people think are wrong in a place like Africa. They say the population is skewed young. That's supposed to be net good. They have a lot of arable land, critical minerals, energy. Why is this place not growing at 10% a year? People come into the continent from all around the world, especially the developed world, with their opinions of not only an assessment of what's wrong, but they come with their own solutions. Aid is the obvious one. Even more recently, the Chinese approach into Africa has not been an aid-driven approach. It's more of investment. Both of these models have their problems. Being on a continent, which is a recipient of competitive ideas, there's more openness to trial and error. There's perpetual tug of war where there are a lot of costs. People from outside who try these things, more China, more U.S., More democracy, less democracy, would say it's easy to try your theories in a place where there's relatively low growth, where the regulatory and oversight governance issues generally remain weak. You can go and trial new drugs in a country without a lot of oversight.

AI assessment note: “Being on a continent, which is a recipient of competitive ideas”

Q I'm curious how you go about implementing in that in the sense that some of those big drivers are known and at times very expensive. How have you balanced the difference between the growth opportunity and the pricing of the growth in the current markets?

A It's hard. One of the challenges we have is, even though we're fortunate to be ventures, Series A, B investors, we still see a lot of this stuff as being expensive when it comes, when stuff in the public markets. We're looking for that upside. Our most important thing is making sure that we don't lose money. The discipline of our CIO is one where he doesn't like to overpay. Expensive markets are expensive markets, no matter what is promised. The specific example, we love our Teslas. We love using Starlink. It's pretty heavy. We are in SpaceX. From the venture exposure, you start to look at where these things are trading, completely delinked from 16 times PE average over the past decades or so. It's just hard to justify. At the same time, we want to be optimistic. Can we have data centers in the sky? If that's possible, then we want to play in that, but we don't want to do it at a place where it's just so expensive. It's a discipline that comes from my boards. We don't want to overpay. The companies that I've been involved with have been good at instilling that discipline. Things look attractive. There's lots of competition. There's a lot of money. We've been in an era of sovereign wealth funds, money coming from all over the world. You don't want to overpay. Same for how we run the family office. We don't want to be the dumb money that's overpaying.

AI assessment note: “The discipline of our CIO is one where he doesn't like to overpay.”

Q If you look at that on the lens of say Chevron, there's the easy high level poke at dirty energy in a world trying to make the transition to cleaner energy. How do you think about those capital allocation decisions of generating cash flow from the assets that have been around for a long time and then trying to move the world through company in a better direction?

A The immediate answer is we want to be around. We need companies. We want them to be growing concerns. We're not in the business of doing stuff that's bad, that's going to take us out of business. That would be absurd. Taking advantage of technology, for example, to revisit those assets and think about how we can do it in a clean way is absolutely the center of what we're doing. Beyond that, it's an industry-wide thing. We've restructured the business models in the case of Chevron, but it's true for other competitors. We now have a bigger footprint that's looking at renewables. The whole range of them, wind, solar, geothermal, nuclear, starting to revisit that because we want to be around. We want to be part of the solution. We have knowledge over hundreds of years of what creates energy. How do you get carbon, hydrogen, oxygen together to create energy, but also think about new forms of energy that require investment. Questions around scaling. How do you scale solar across the world? We're in the business of finding those solutions. A lot of the structural changes that have happened, not just from the market reaction or from greater voices from government and also communities, what we've been trying to do in terms of restructuring how the company's set up operationally and how we think about allocating money heavily reflects this idea of leaning into the future. It's a very pra…

AI assessment note: “restructuring how the company's set up operationally and how we think about allocating money”

Q your investment management tech, request a demo at ridgeline.ai. And now back to the show. If you take that lens and put it over to your current third board of Condé Nast, a content company with that black swan of AI, being at the board of a company in the space that for sure is thinking about those questions of AI disruption, what have you learned from seeing that experience?

A Condé Nast was established in 19 oh nine. What an eternity. So much has happened. Radio, television, black and white, live events. Tons have happened. Condé Nast, as a privately held family business, has taught me one thing that is pronounced in how I even think about AI, which is when everything is stripped away, what are the human aspects and elements that remain? We own Vogue, we own Vanity Fair, New Yorker. It reflects human tastes. I don't think that necessarily goes away. How it's distributed, how it's produced. Is it in video? Is it in writing? All those things ebb and flow and they can even change in a very disruptive, revolutionary way. It's not losing sight of what ultimately the business is doing. That's the big driver. We're not immune or ignorant to the changes that are happening around us and what that might mean for how we operate. As a company, the types of people we hire, who gets hired where, the danger is there's so much change, geopolitical, economic, financial, that you lose sight of what you actually do. One other thing I would say with the money manager, I understand the tension of their short-term goal. It's a competitive environment. They're trying to generate returns above the cost of capital. Maybe the mist's secret sauce is trying to understand what your end user, your LP, is trying to do. Because do I want more returns? Yeah, of course. It's not at …

AI assessment note: “when everything is stripped away, what are the human aspects and elements that remain?”

Q How did you take what you saw and evolve it into your interests and passions professionally?

A I would like to think that my career and my experiences have generated more humility about the challenge and the complexity of questions around economic growth and development. There are lots of big books, Adam Smith's Wealth of Nations, David Landy's, lots of Nobel Prizes have been given for people arguing that they've cracked the case as to why some societies grow, others don't. That's been an open question for me. I learned early that there was no specific answer. It had to be tailor-made, and also it had to be something that wasn't one and done. It had to constantly evolve. As we're seeing in the United States, there might be some societal costs that weren't priced in initially. Inequality or questions around the climate. Those just weren't seen. Adam Smith didn't write a treatise that said, oh, by the way, If we do all this great stuff and it's a great free market with some constraints and some regulation, potentially we need to think about these societal costs that come from climate change. He didn't talk about that. He didn't even see the industrial revolution. A lot of the questioning comes from not being raised in an ideological environment. That's helped me in my corporate board work. It's helped me being on the Oxford University endowment with our family office. We've even made some mistakes. I would say I was the reason for those mistakes, if I'm quite candid. Being…

AI assessment note: “That's helped me in my corporate board work. It's helped me being on the Oxford”

Q From the GP's perspective that have a variety of different LPs, how have you seen someone who does that well either cater or do things slightly differently because of what they're hearing from their LPs?

A It's exhausting work because they essentially have to get into the minds of the LP, and the only way they can do that is by spending time with the LPs. There are gatherings, annual presentations, this is what our returns have been, this is our cost, this is how the J-curve is working. You have to understand that we have our own J-curve. The thing about AI, we're no longer going to rely on the GPs or our money managers to tell us how the J-curve is operating. I can now look through our own portfolio and see where that J-curve is. It's one small example. If they understood us, it's hard because if you have a lot of LPs, who's got the time to talk to 400 LPs or whatever it may be? For institutional investors, maybe the LP is here today and gone tomorrow. That would be my slight. I wish they knew more about us, what drives us, what we care about, what we believe is possible.

AI assessment note: “I wish they knew more about us, what drives us, what we care about”