What I do today
- Working with a mix of institutional LPs, mainly FoFs and family offices, to underwrite emerging PE, bootstrapped growth equity, and early-stage VC GPs. Early funds, but also indy deals for PE (with a bias towards GPs that want to eventually raise a fund). Mainly US, but some Europe for PE and bootstrapped growth equity.
- I spend ~70% of my time underwriting PE (generally <$300mm funds), 15% on bootstrapped growth equity (<$150mm funds), and 15% on early-stage VC.
- Reluctantly and paranoidly write.
- I really don’t want to hit “publish” and thereafter think “shiiiiiiit.
Why I think I write
- 1) Sheer egoism. It’s bizarre to think that, out of a global population of 7.8 billion, a future population of tens to hundreds to thousands of billions (sorry doomsayers?), and in a galaxy that’s pretty big, many people would care about what I think. I’m only 30, and just a normal dude…
- 2) A desire to create something. I think a lot of people who work in finance have this desire. “Efficiently allocating capital” just doesn’t do it.
- 3) To build relationships with strangers and solicit feedback from an audience that’s larger than the people I talk to. The internet really helps. Byrne Hobart on how writing has helped him develop relationships:
- 4) To demonstrate that creativity and debate is more important in driving progress than $, background, credentials, institutions, and things. As Orwell described in (iv) in the link above, “political purpose.” I very much agree with Deidre McCloskey’s thesis in her Bourgeois series:
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- As well as Byrne (again) on why it’s important that society encourage people to share ideas that are “somewhere between ridiculous and anathema”:
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- And it seems hypocritical to think that ideas matter, yet never try to invent an idea myself. So I’m trying.
- 5) To reference.
- For example, I used to be much more of a libertarian, particularly skeptical of the government’s role in halting the GFC. But then I realized America is in pretty good shape and perhaps creating a bit of moral hazard is justified if it enables innovators to innovate another day. So now I’m more of a moderate conservative.
- I also tweet what I think is most interesting and post weekly a running list of questions I am thinking about.
- Clubhouse is a great forum for discussion—early users have generally respected other users’ opinion and the audience for speakers is rapidly growing—but writing can reach a larger audience (including future generations—back to #1 on egoism…). I’m also a poor public speaker, and you gotta pick your battles…
- 6) I am a limited partner (“LP”), which, for the 99.999% of the world that has never heard of a “LP,” entails searching across different asset classes—venture, growth equity, private equity, public equity, fixed income, hedge funds—for investment managers (“GPs”) that invest into companies. I also live on the west coast USA and focus on GPs who invest in newer and smaller companies, so I’m around a population that is quite transparent and will engage with good ideas, regardless of who the author is. Many people here recognize that ideas are important, and debate is essential for creating better ideas. The LP profession, in contrast, is opaque—so by being a LP who is more transparent and contributing ideas, hopefully GPs will appreciate this (as well as some fellow LPs), which will help me allocate $ from LPs to good GPs. I also want to explain to broader society—which includes my family and friends—how existing systems enable people with good ideas (entrepreneurs) to build companies that benefit broader society. If I can do this well, I think both LPs and GPs will appreciate it.
- Resources that have helped me write:
- Jason Zweig
- David Perrell
- Tren Griffin
- Alex Danco
- Strunk & White
- Do I Make Myself Clear?
- People: Russ Williams (high school coach and mentor), David Hall (high school teacher), Dale Richardson (college English 101 professor), Paul Graham, the authors I’ve read
Bio
- Born in Dallas (mom a nurse, dad a pilot for Southwest), but moved to Arab, Alabama, which is my father’s hometown, when I was 8. Population of ~10k with a good public school—Arab is ~30 minutes from Redstone Arsenal in Huntsville (“Rocket City”), so many engineers and government contractors live in Arab. My graduating class was ~160, which is big enough to offer plenty of opportunity via various sports and clubs, but small enough that everyone knew everyone and the high school wasn’t super competitive. Like a lot of rural southern towns, for a long time Arab was an extremely white population; however, Arab has since become more diverse and is a great place for a kid to grow up.
- YouTube has several good videos on Arabian history and culture.
- My father grew up in Arab; his father, my grandfather, was an electrical engineer at NASA working on this kind of greek. My grandmother was a school teacher. Both grew up in super rural northeast Alabama. Both were heroically tough and the silent type—I plan to write about some of their struggles, which have inspired me. I’ve had it waaaay better!!!
- My mother grew up in rural Kansas; like most of the population in rural Kansas, many of my mother’s family were farmers, descendants of late 1800s/early 1900s German immigrants, and Lutheran.
- Played Football and baseball in high school; also basketball through JV. So was busy growing up.
- Was fortunate to have a stable and loving family.
- Attended Sewanee: The University of the South, which is nestled in the Cumberland mountains between Nashville and Chattanooga, Tennessee. I wanted to attend a liberal arts school because I had no idea what I wanted to do; also wanted to play football as a kicker and punter, and yeah, I wasn’t going to do that at Alabama…
- Fell in love with history and economics while at Sewanee. And like high school, developed close relationships with several of my teachers. Also was fortunate to take several business classes, which was new at Sewanee. Interned in banking before my senior year, but didn’t much like it. By senior year, I knew I wanted to do something investment-related (more macro than corporate finance), but didn’t know what. Was incredibly fortunate that Cambridge Associates in Dallas hired me.
- Worked in Cambridge Dallas on the “client-facing” side—ie, used research from manager “GP” facing teams (Cambridge has separate teams that cover managers in each asset class) to make suggestions to clients; also worked on governance, asset allocation, and general portfolio management.
- Moved to Cambridge’s Boston office in 2014 because my allergies were so damn bad in Texas (they were also terrible in college and high school).
- Was lucky to be exposed to more managers in Boston (a large % of Cambridge’s research team was based in Boston; Boston also had many more client-facing consultants).
- I took particular interest in fixed income, quantier “diversifying” hedge funds, and portfolio construction. I still liked macro.
- As I matured, I realized that it’s hard for investors to make macro bets and actually make $, so I became more interested in private investment managers, especially venture capital and biotech. During my last two years at Cambridge I worked with a consultant, David Thurston, who allocated significant client capital to early-stage venture, so I had exposure to private investments and learned why privates are outperforming—ie, benefiting from larger companies outsourcing innovation to smaller companies, easier for managers to develop a good brand that enhances sourcing, better alignment with LPs.
- Might have been the first junior person laid off in 20 years’ at Cambridge—see WSJ article. Felt pretty shitty, but I learned a lot while at Cambridge and developed so many relationships (I probably worked with ~100 people during my 4 years there, some of whom helped me land my next job; several others I consider best friends).
- Perhaps it would be cleaner if my career was A, then B, then C, but life and business is complicated, so whatever? Privileged to have been born an American and in modernity; have a supporting family; attended a good public high school and then a liberal arts school; and, post-college, have a job that I enjoyed!
- Was incredibly fortunate to join the investment office for Partners HealthCare (parent of MassGen and Brigham & Women’s) as an analyst. Working as a LP and doing deeper due diligence on investment managers, as well as working under an experienced team, enabled me to learn so much—also was great fun. This job convinced me that I wanted to build a career as a LP.
- Spent ~80% on private investments, which was a change from my publics focus at Cambridge Associates.
- After two years, I didn’t want to go to business school. Also never wanted to take the CFA. Instead, I wanted to do something more entrepreneurial—which for an LP, often means working on a smaller, newer team and managing a smaller pool of capital ($1 – $6 billion is the ideal amount because as an LP, $5 – $20 million allocations to popular managers are still meaningful within a diversified portfolio). I also wanted to build my network via research and writing.
- I also wanted to devote a percentage of my time to work with my college roommate, Andrew Duddlesten, to develop an app that we later named Aullo. We paused development in summer 2019 because of significant technical hurdles (the app requires background discovery, which iOS and Android have restricted due to privacy issues). However, I still spend ~2-5% of my time developing the idea behind Aullo—researching background discovery and writing my essay on Aullo, for example.
- iOS and Android use background discovery for the COVID tracing app, so it’s technically possible.
- During early 2019 I traveled to various cities (NYC, LA, SF, London) to meet with senior LPs at newer investment offices. I focused primarily on Europe and the bay area since so many newer family offices are emerging in these geographies (Europe because families are moving away from banker-led investment portfolios to endowment style; and bay area because of…well…tech’s dominance). The bay area was especially attractive given the culture is more entrepreneurial, less zero sum, open, and meritocratic.
- In fall 2019 I moved to San Francisco and began working with an experienced family office investor/former GP to try and raise a fund to invest in emerging growth equity and middle market private equity managers as well as co-invest and directs. But raising a fund as a new GP is hard, especially during COVID.
- Summer 2020 – 2022, consulted for a foundation, primarily on their private investments allocation; created presentations that explain investment topics (for example, see my “Asset Allocation Framework” and “Why Privates” in Presentations); wrote on various investment topics; and met with emerging managers, provided advice on how to build their firms, and shared the most interesting managers with LPs for free. I spent 2020 and 2021 as years to learn about VC and tech (living in SF helped), think, publish, and pursue more entrepreneurial LP-related endeavors, which eventually became GPE (a real business).
- Moved to DC summer of 2023 and have been focused on scaling GPE and traveling to meet US and European GPs in-person. Have spent much more time in PE, especially the independent sponsor universe.
About Me
- Very much a curious optimist—politically, philosophically, and personally. This makes me more conservative on politics/economics. I love meeting new people, developing relationships, sharing thoughts, and debating; fairly stoic personality, but goofy.
- It’s harder to be an optimist today because:
- 1) Society is bombarded by news, which is inherently pessimistic.
- See Our World In Data if you disagree
- 2) Progress today is less tangible than in the past: people being able to communicate more easily and consume free information services is less visible than prior achievements—getting electricity, toilets, vaccinations, and going to the moon, for example.
- 3) It’s popular to be pessimistic. “Global GDP grew 2.4% in 2019” doesn’t trend on twitter.
- 1) Society is bombarded by news, which is inherently pessimistic.
- It’s harder to be an optimist today because:
- Read quite a bit (see below and Favorite Books!)
- Since 2016, I have been thinking about how innovation, not risk, drives asset returns. I think the industry does a terrible job explaining how our economic system incentivizes innovation and how innovation benefits both asset owners and broader society. I acknowledge that risk and return is correlated, but it’s not causal. I plan to elaborate on my “not-CAPM” theory in My Essays.
- I don’t spend much time thinking about macro or politics; instead I study secular changes—for example:
- How limiting liabilities incentivizes risk-taking
- Why modern portfolio theory/reinterpreting the Prudent Man Rule was essential for funding innovation
- Why pecking order theory and the government’s subsidy of debt>equity is bad for innovation and leads to “too big to fail”
- Team incentives/organizational theory—for example, why small teams of people are more innovative than larger organizations
- Why the internet is more important than we think
- How Pax Americana benefitted the world
- Why immigration is good
- Why debate is important
- Why the rise of passive investing is good for society, but potentially bad for governance, and therefore innovation, if passive investors delegate monitoring company management to 3rd parties
- Over the 2020 summer I followed the Progress Studies for Young Scholars Speaker series (YouTube videos of the interviews); then during the fall, participated with ~10 others in Jason Crawford’s Study Group for Progress. ~12 weeks of readings and conversations with an incredible list of speakers and fellow participants. More writing on my experience to come!
- Here’s Jason’s 1-page overview on tech stagnation
- And Patrick Collison (Stripe co-founder) and Tyler Cowen’s (smartest dude in the world) essay on why “We Need a New Science of Progress”
- I’m a contrarian and think progress is understated because consumer surplus is much higher today than in the past. I agree with Tren Griffin and think Jason is too pessimistic (and stagnation proponents such as Robert Gordon as being way too pessimistic). More transactions, which the internet has enabled=more consumer surplus (which is the difference between what a consumer would pay for something and what the price is). And while consumer surplus was high in the past (and consumer surplus per transaction was probably higher—high-frequency trading today probably isn’t creating much consumer surplus with each transaction, for example), it’s even higher today (because the total number of transactions is exponentially higher—like 1,000,000,000x magnitude).
- In addition, maybe people destroyed relatively more consumer surplus in the past? NYC/Robert Moses bulldozing neighborhoods in the 50s to build highways, for example.
- I recognize there’s no way to test this theory, which causes most economists to ignore the question, even though it’s the most important question in economics!
- Huge fan of minimalist music: Ludovico Einaudi, Yann Tiersen, Olafur Arnolds, Carlos Cipa, Max Arnald, Yiruma
What I try to read regularly
Daily
- Ben Thompson
- Secular trends in tech
- Must read for any LP
- ~$15/month
- Byrne Hobart
- Matt Levine
- Hilarious explanations of current and complicated finance mechanics
- Also prooooolific
- Must read for any LP active in public markets. A NYT profile of Matt. Ted Seides interview with him.
- See my running list of Matt’s funiest quips. I’m a fanboy.
- Recurring themes:
- Blockchain, blockchain, blockchain
- Shareholder governance
- How everything is considered securities fraud, which is dumb
- Actual fraud
- Weird trades such as the Hovnanian CDS trade
- Fears about bond market illiquidity
- Dumb finance things that go viral—Matt was born to explain GME/WSB, for example
- Explanations of how different markets actually work—for example, why Citadel executing retail order flow is actually good for retail!
- Institutional Investor
- Good articles on LPs and GPs
- Axios/Primack
- Daily updates on deals/funds raised in private markets/relevant regulatory changes to private equity
- Pitchbook
- Daily updates on happenings in private markets; also links to other good articles
- John Authers
- Daily updates on markets
Consistently (when they publish)
- More work-related:
- Not Boring (PackyM) on tech/VC
- Paul Graham (YC founder) on learning/tech/innovation/VC
- Alex Danco on tech/venture
- Favorite essay on why non-bay area VC ecosystems struggle
- Interview with Patrick O’Shaughnessy
- Jerry Neumann
- The Generalist on tech/VC
- Ingenuism (Don Watkins and Robert Hendershott) on innovation and incentives
- Eric Newcomer
- Kevin Kwok on VC
- Neckar’s Notes on bios/investing/life
- Digital Native (Rex Woodbury) on consumer tech
- Mike Solano’s Pirate Wires (~weekly) on venture and politics
- Ha Duong on VC, especially European
- Nikhil Trivedi Next Big Thing on consumer VC/tech
- Marc Rubinstein Net Interest on fintech
- Matthew Ball on gaming/social apps
- Dan Wang on China/Asia
- Eugene Wei on tech/VC/social apps
- Benedict Evans on tech/media/regulations/Europe
- Morgan Housel on investing (longer term) and human behavior
- Oper8r content for emerging VC GPs
- Permanent Equity on PE/business management
- Marcus Frampton on microcap stocks and macro
- GMO and Howard Marks quarterly letters (the value guys)
- OSAM (especially Jesse Livermore) on quantitative investing
- Li Jin on the creator economy
- General/Politics:
- Andrew Sullivan (more moderate liberal perspective)
- David Brooks (more moderate conservative perspective)
- Matt Yglesias (more moderate liberal perspective)
- Matt Taibbi (more moderate liberal perspective; his substack is also named after me)
- On Innovation:
- Applied Divinity Studies (pseudonym)
- Roots of Progress (Jason Crawford)
- Works in Progress
- New Things Under the Sun (Matt Clancy)
Occasionally
- Economist (from 2012-2019 I read ~95% of issues, then it got to be too much/replaced by twitter)
- Tren Griffin on tech/business/VC (more on twitter now)
- LPs: Jamil Batcha (LP—Brookings), Peter Teneriello (LP—Texas Municipal), Joel Cohen (LP—MIT), EndowmentLP, Institutional Allocator
- Jamie Catherwood on history of finance
- Trusted Insight
- Links to other good articles
- The Information
- Bethany McClean on culture/finance/business fraud
- Paul Krugman on economics
- CIO Magazine
- CBInsights
- David Perell
- Farnam Street
- Platformer (Casey Newton)
- Persuasion
- Matt Klein
Podcasts
- Invest Like the Best (Patrick O’Shaughnessy)
- Capital Allocators (Ted Seides)
- Conversations with Tyler (Tyler Cowen)
- Venture Unlocked (Samir Kaji)
- Origins (Notation Capital)
- Occasionally: 20VC, Venture Stories (Village Global), Super Soul (Oprah)
- My list of favorite podcasts