The Exchanges

Q What was the history of MSD before you got here?

A So MSD started in 1998 as pure family office. It was diversify Dell family wealth away from Dell at the time. And it was started by two folks named John Phelan and Glenn Furman, who for 20 plus years ran it together. And did a phenomenal job building wealth for the Dell family, really diversifying away. There were multiple iterations of public strategies, private strategies. About 10 years in, they formed MSD Partners, which is a registered investment advisor, which allowed them to take outside capital. You had a whole bunch of friends of Michael along the way who were saying, hey, you've built this thing. Can we invest alongside you? As a family office, you couldn't. As an RIA, you could. So it really began to build up as an investment firm. Largely with Dell family capital, but other family capital. And then over time, as they built out different investing verticals in particular in credit, institutional capital. So by the time I'd gotten here, it was a meaningful investment business with a really big credit business with a great credit team, a real estate business, a private capital business. And there were still a handful of public strategies, which had been a big part of the business, but was a dwindling part of the business by the time I got here.

AI assessment note: “So MSD started in 1998 as pure family office.”

Q When you think about Michael's balance sheet as a whole, how do you think about allocation across these different strategies?

A So he's got huge exposure to two big single stock positions. It was one with Dell. They then spun off VMware, which has announced it's merging with Broadcom, but really big public market exposure there. We still have kept some public market exposure more broadly in passives and S&P indices. Now we're trying to figure out risk adjusted returns with the rest of the portfolio. And so that's why the big focus on credit, I mean, it is heavily structured, securitized, downside protected, compounding, low double digits. That's a great business for him. The same thing on the private equity side, our private equity has been these founder led businesses in things that have really been away from tech that have compounded over time. Our real estate assets, they've got some tax advantages. There's good cashflow and they're different asset class. And so these hospitality hotel businesses, I've been a great diversification away. And then growth is getting a little bit more upside in the portfolio. We've kind of gotten to the point you can have to take a little bit more risk and get a little bit more upside. But if you looked at it, it's not your standard, 60, 40 asset allocation. I used to joke with the team. I think when I got here, asset allocation was more of an output than an input. I'm trying to make it be a little bit of an input and a little bit of an output, and you can massage the tw…

AI assessment note: “Now we're trying to figure out risk adjusted returns with the rest of the portfolio.”

Q What was your mandate when you came in?

A So when I got here, what Michael and I talked about was continue the evolution of this family office to institutional firm. He said, just go build a world-class firm. He almost said, you know, I don't even know what that means you do, but make it something my family and I will be proud of. What I always said to myself, it was institutionalization without bureaucracy, trying to figure out how to get this thing in the right foundation so it can continue to grow. Without putting in all the bureaucracy you see at some of the bigger firms. So step one was build a great firm, which was kind of a fun, cool mandate. Step two was make sure you've got enough scale and capability that the Dell family can invest meaningfully more capital over the next 10, 20, 30 years as they diversify away from Dell and VMware and think about diversifying wealth and building capital to give to the foundation ultimately. And then step three was at the same time, diversify the investor base with other LPs that are like-minded, so who want the The same kinds of investments that the Dell family and our existing investors want, which is risk adjusted returns, downside protected, compound capital over time, but ultimately build an investor base where those LPs become bigger than the Dell family, because at some point in his lifetime or shortly thereafter, his plan is to give all his money away and doesn't want …

AI assessment note: “continue the evolution of this family office to institutional firm”

Q So you mentioned credit business, real estate. You think of Michael Dell as a tech entrepreneur. How are you thinking about your background in the tech ecosystem and Michael in terms of investment strategy?

A So one of the first things I'd said to Michael was, hey, this is great. This whole thing's amazing you've built, but there's no growth equity. There's no real tech business here. And he's like, yeah, we were sort of focused on diversifying away from that. And I was like, okay, that was in And you're kind of well diversified, and there's a whole lot more going on in growth equity than PCs and servers. And on top of that, you're Michael Dell. You're this iconic founder that all of these founders will want to have capital from exposure to. So we really built over the past couple of years a really impressive growth equity business, and the focus had been on great founders, late stage businesses, proven business models, and the kinds of businesses you want to own for 10 plus years. Our first investment was in Stripe. We've invested in companies like Fanatics and Goodleap and Airtable and Service Titan. That's been incredible. And that's another place where we've leveraged Michael. We did a dinner down at Michael's house around the Formula One in Austin last year and invited 10 tech founders to come to his house for dinner. And I think we went 10 for 10, not surprisingly, but it was fascinating because you have all these founders who've done incredibly well in their lives, but they don't have someone like Michael to talk to. Even the VCs can't really do it. So we had a good little di…

AI assessment note: “we really built over the past couple of years a really impressive growth equity business”

Q Which two people have had the biggest impact on your professional life?

A I would say Gene Sykes, who we talked about earlier. I mean, really in the early days taught me how to be a trusted advisor. And the thing that was fascinating about Gene, I still don't know how he did it, but you'd go to a deal and invariably be a tax issue and a legal issue and a business issue and something about the industry. And somehow he knew more about the tax issue than the tax guy, like the industry than the CEO. It was amazing. And he did it effortlessly. And then the most important thing is every deal you'd end, both sides would want to hire him next. And that never happens. He was great in terms of teaching you disposition and client service and how to become a trusted advisor. And I'm now going to be torn. I'd say David Solomon did teach me a ton as a manager, but Michael Dell taught me a ton as a business builder. And I feel like I'm in that mode of trying to build a business now. His ability to really just rise up out of all the day-to-day BS and think strategically. Even when he was sitting down with Byron and me one time, as we're talking about how we're going to divide all the tasks, I said to Byron, like, how many important decisions do you make in a day or a week? And Byron's like, I don't know. You're doing it wrong. He was like, what do you mean? I make six to 12 a year. All that other stuff that you think is important, number one, isn't important. Number…

AI assessment note: “I would say Gene Sykes... David Solomon did teach me... Michael Dell taught me”

Q As you start thinking about this as a business, in addition to the investment side, where do you think your competitive advantage lies?

A The thing I said really from the time I got here is there's a lot of capital out there, and there's a lot of really smart people. So we've got to figure out what our edge is, and we should only be investing where we've got, what I like to say to the team, we have a right to win. And so there's a handful of places I think we do have a right to win. We talked about duration, but duration of capital makes a real difference. And being able to hold something for 10 years, not five years, or forever, not for 10 years, is it makes a meaningful difference. And I think the world has gotten more and more short-term In particular, in the alts world of trying to get capital returned to shareholders quickly. And so going to a family business owner or to a founder of a company and say, listen, we can hold you for 10 years, or we can hold you forever, makes a meaningful difference. Duration is an advantage. I would say our credit business, just our credit team is actually our edge. You know, they've been together for 17 plus years, all six of them together, sourcing deals, investing deals, underwriting, and with that same risk-adjusted mindset where they're just not losing money. And so Michael calls our credit business his stay-rich business. So that team, I think we've got a real advantage, and we should be continuing to deploy capital across that business effectively. In real estate, I'd s…

AI assessment note: “Duration is an advantage. I would say our credit business, just our credit team is actually our edge.”

Q You'd mentioned earlier that one of the great aspects of having the seat is having Michael as this great business builder. What did Michael say about that merger?

A So when I first raised the idea with him, he said, that sounds really interesting. How do you even merge a family office with a, like, how does it even work? I said, honestly, I don't really know. I'm not sure. Let me get back to you on that one. But he was really intrigued by the potential and what it could do strategically as he thought about the goals we'd all laid out together. And then we spent time together. He's been through a lot of mergers in his career, so he was an incredible sounding board for both of us. How are you guys going to run it together? How are you going to think about it? Do BDT people think of themselves as merchant bankers and MSD as investors? How are you going to align those cultures, which actually ended up aligning relatively easily? And then he said, are there ways you can test it to make sure their investors will like it and make sure our assets appeal to them? Byron had polled his investors and they said they wanted more access to credit and real estate and growth, so we knew we had that basis, but we'd created this hospitality vehicle with all of our High-end hotels, and stuck them in a permanent vehicle, and then raised capital into it, and we actually used BDT to raise that capital from their LP base, because we wanted to see their investors like our stuff, and did it work, and it worked great. So we got a handful of their key investors align…

AI assessment note: “when I first raised the idea with him, he said, that sounds really interesting.”

Q I'd love to learn more about how you think about balancing this idea of kind of a business versus investing in that there's already a large amount of money with Michael's money. Now you're talking about many Michaels who aren't that many potentially investing. You're trying to build so you can support Michael's eventual withdrawal of that capital. How are you thinking about the business side of it?

A It is the ultimate tension. I think you highlight it well. So we're trying to build a business Partly because I want everyone aligned around building franchise value. I'm thinking about what the combined BDT, MSD can be, and begin to distribute actual ownership of the firm in a way that hadn't been done before. So people feel that they're actual owners of the firm, so there's potential value creation in the equity we're building. So we do charge fees and carry. So there's, you know, there's value in economics. Now, the vast majority of my investing teams here of the potential wealth creation is around their economics in the carry and their co-invest. So that's what I still want. I still want them focused on that as opposed to focus on generating fees. But we try to still build a business that'll steadily grow. And my hope is we do grow it steadily based on really good returns and people keep investing their capital back into us as opposed to running around the world and chasing too much capital. But it's a tricky balance.

AI assessment note: “It is the ultimate tension... we're trying to build a business Partly because I want everyone aligned”

Q You mentioned that David Solomon was gifted at managing people. What did you learn from him that you hadn't been exposed to before?

A Blunt talk, like giving real direct feedback. It's an amazing skill and a liberating skill, and not many people do it. I think it's actually one of the biggest things holding back people from becoming effective managers. I'd say, you know, if a place like Goldman Sachs, I'd say if you asked anybody there, everyone there would tell you their top quartile, which is mathematically impossible, but it's probably because they've all been told their top quartile, and David would not do that. David would give you Direct feedback on what you did well, on what you did poorly, what you could do better. I saw him do it with me. I saw him do it with other people. It was, at the first instance, it's jarring, and then it's liberating to actually hear it. And I remember the person who ended up taking the job after me, that COO job, it was sort of a rotational job. She asked me for advice. She said, well, do you think about it? I said, listen, it's an amazing experience. You're going to learn a ton. If you're the kind of person who needs positive reinforcement, hire someone to do that for you. Like when you get home from work, just hire someone at the door who's going to say, you did a great job today, because you're probably not going to get that from David. But if you actually want to get much better at what you do, he will be incredible in terms of giving you direct feedback and then teachin…

AI assessment note: “Blunt talk, like giving real direct feedback. It's an amazing skill”

Q How have you thought about public market investing?

A It's hard. If you look at the last 15 or 20 years, it's hard to beat the market. I think given the move around indexes and all the fund flows and electronic trading, I think it's been hard. And I'd say that if you look at the history of MSD, for a long time, it had been a value investor and a public market investor. Again, before my time, there'd been a bunch of work done that effectively said, does it really make sense to pay two and 20 or one and 15 or whatever it is to a bunch of really smart people who are going to consistently underperform the S&P? No, it doesn't. So we are no longer doing that. But from a public market standpoint, when I got here, we spun out our last public market strategy, really great investor, good business. We actually took a stake in his GP and gave him a bunch of capital, but it just, in the theme of where are we differentiated and where do we have an edge as MSD, it didn't make sense. We're doing the same thing with a little part of our credit business now. Great investors, great business, but if you think about the theme of what we're trying to build of places where you have an edge, that public market investing is really tough, and so we've backed away from it. There are others who can excel in it, but again, our view is If duration's our advantage, it doesn't really play in public markets.

AI assessment note: “public market investing is really tough, and so we've backed away from it.”

Q So you've mapped out the business plan for combined MSTBDT over the next, whatever it is, five years. What are you aspiring to create in terms of the business?

A I think we want to create something where the best long-term oriented investors, and I think that's going to be mostly, but not exclusively, mostly family offices or founders or individuals, and we have a handful of really important strategic partners on the institutional side, as it is BDT. So that class of investors wants to come to us to be their solution provider across whatever asset classes we think we have the right to win in, which day one will be long-term private capital, credit, real estate, and growth equity. We may build more, but I think that's kind of enough, and it sticks to our knitting day one. And then where any family owned business or founder led business says, these guys know how I think they've worked with 200 other families that see all the same problems I have. I want to be part of that network and part of that world. And so I can ask family X or family Y how they did it. I can ask the BDT MSD team to give me advice on whatever faces me and really think that they know how to put themselves in my shoes. Someone said, well, you're going to be an investment banker again. I said, no, we're just focused on this little niche of family owned businesses. And then under my breath said it's about 98% of the businesses in the world, but it's this little niche over here. But that's where we're focused. We're not going to go try to do big, massive public company, pu…

AI assessment note: “we want to create something where the best long-term oriented investors... wants to come to us”

Q So another one in the public eye this year with super pumped was Uber and Travis. What was your role in working through that whole situation?

A I mean, you think about all these founders, I'd say Elon is just next level genius, like sheer genius. I think generational, if not multi-generational genius. Travis, I'd say it's just the most impressive executor I'd ever seen. I mean, anyone who builds a business model at its core is taking on the taxi and limousine commissions in every single city and winning the guy's got to be able to execute and be relentless. My role was actually at that point, it was advising the board. It was when the board and Travis were having a fight. And benchmark and Travis in particular having a fight. And at the same time, we were trying to take capital in from SoftBank. And so it was negotiating a deal with SoftBank, who in classic SoftBank fashion was saying, either you take all of our money or we're going to go invest it in Lyft and kill you. It wasn't like a one friendly negotiation. So you're trying to hold all of this stuff together while effectively negotiating Travis's exit in a way that made everything work. And it was as complicated a thing, I think, as I've done Partly because you had two people who'd been so successful, or the two groups, the benchmark group, and then Travis, who'd made each other a lot of money, but they were, I've never quite seen anybody at odds, and so you'd work out all the details. You'd finally get to a transaction that worked, and invariably, you'd go to one…

AI assessment note: “My role was actually at that point, it was advising the board.”

Q So you're now sitting on a bunch of capabilities. Michael's assets are being managed, and then there's an announcement that you're merging with BDT. Why don't you explain how that fits into the mandate and the vision that you have?

A Yeah, so BDT, it's a phenomenal firm and a phenomenal business built by a former partner of mine at Goldman Sachs named Byron Trott, and he left, I think, in about 2009, and with the original backing of Warren Buffett and then a number of family-owned businesses, he started up BDT as a merchant bank, really trying to serve closely held businesses, family-owned businesses or founder-led businesses, giving them advice, advice broadly, not just the regular way investment banking of IPOs or sell side, but Trust in estate, or generational planning, or thinking about philanthropy, or all the issues that these family-held businesses have. And if you look at these family-owned businesses, they spend all their time on their family, and their family-owned business, and almost none of their time on their wealth. And Byron's background was a private wealth manager originally, and then an investment banker to these businesses. And what he realized is they want the same kind of things everyone else wants, which is risk-adjusted, downside-protected, compounding capital. And he created a model where They raised the fund, and they were investing in other businesses like theirs. So they weren't going out and buying stuff in competitive auctions from other private equity firms. They're investing in other family-owned businesses. And to the business owner, they know they've got someone just like t…

AI assessment note: “If you go back to what we talked about in terms of my objectives at MSD”

Q As we're coming out of this COVID period with virtual work, BDT's presence is in Chicago. Yours has been in New York. What have you learned from that period of time that's either made it easier or harder to take these two businesses and effectively merge them together?

A I am a huge proponent of in-person. By the way, I live in Bedford, New York. My commute's a pain in the ass. There's nothing better than actually not commuting for a couple hours a day and working from home. But as our COO, Brendan Rogers says, the magic happens when you're together. And this is an apprenticeship business in every way. So the more we can be together, the better. And that's on a standalone basis, even more so on a combined basis. Now, the good news is BDT has a pretty big presence in New York. Chicago is still their biggest presence. The objective is really to get the two New York offices together as quickly as we can. And that will then become our biggest presence. So if we can get those teams together quickly and then begin to travel around and start to make it feel like one firm, that'll be the key. What I've tried to do, I've seen all of the fits and starts around work from home and return to office. And I don't think anyone has gotten it right. And I've seen it go wrong in a bunch of places. And what I've tried to tell the team is it's an apprenticeship business. We're better when we're together. Sometimes you're going to be traveling. If you have a doctor's appointment, you want to work from home one day, or you got your kid's school play, like, I'm not going to take attendance. But if you're at home, you're not on the road for business, come to the office…

AI assessment note: “The objective is really to get the two New York offices together as quickly as”

Q I think we should start with your first career before coming to MSD. Why don't you just take me on your path at Goldman?

A So I started at Goldman in. Actually, maybe even I'll back up as to how I got there. It was not the traditional apply to the analyst program when you're a sophomore in college, and then start that path, which everyone seems to be on. I went to Dartmouth College. I played soccer at Dartmouth. And up until my senior year at Dartmouth, my plan was to play professional soccer. And that would lead you to think I was really good at soccer. It actually was more about me wanting to defer adulthood and go mess around for a while. So I, but I had a plan to go play pro soccer in Zimbabwe. A friend of mine a couple years ahead of me had gone and done that. He'd blazed the path, and up until about my senior spring, that was my plan. In my senior spring, I remember sitting outside my fraternity, getting some sun and hanging out, and someone came out and said, your parents are on the phone. And I said, my mom or my dad? They said, no, your parents are on the payphone inside. So I walked in, and both my parents were on the payphone, and they very gently said, Greg, it's been great watching you play soccer your whole life. It's been really fun supporting you for four years at Dartmouth, but Basically we just paid for an Ivy League education. You should probably go get a job. It was like really gentle and nice, but they were so right. It kind of hit me like a ton of bricks. Like, okay, I should …

AI assessment note: “Actually, maybe even I'll back up as to how I got there.”