This Investor Manages $1 Billion. Here's How He's Using Government Policy For Growth

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1:07Lean into your strengths. Those are the words of one investor who built a private credit powerhouse. And in a minute, we'll introduce you to Mr. Damian Dwin, Uniting Enterprise Zone from the NASDAQ.

1:24Hello, everyone. It's Jabari Young, senior writer at Forbes Uniting Enterprise Zone at the NASDAQ Market Site. And I'm joined by a special guest. His name is Mr. Damian Dwin. He is the founder and CEO of Lafayette Square. This is a private credit firm that's based in both Miami as well as offices in D.C. And he's also one of our Forbes BLK Money Master listers. Damian, thank you so much for the time, man. I really appreciate it. Making the trip all the way up from D.C. I thought you were coming from Miami, but it's D.C. Thank you, Jabari. Yeah, absolutely, man. It's not your first time with the Nasdaq, is it?

1:54No, it is not. I was going to say, you've been here plenty of times before, right? A guy who has that much assets on the management. You had to have come to the NASDAQ before. Well, thank you. Welcome back, man. Definitely appreciate the time. And before we start talking business, how's the family? I know you had a girl who went to school at Dalton and a son at Georgetown. Is he still at Georgetown now? He graduated. Graduated.

2:13Damien Dwin: Undergrad. He's in the graduate school at Georgetown now. His sister is a junior at Georgetown. Wow. And I love that place. I'm a proud Hoya and a proud Hoya dad. Yes, you are. Yes, you are. So what's it like being a girl dad? I'm a girl dad, too. Mine's just turned 13, so a few years off from college. But you let me know. What tips should I be in store for as they turn 16 and going up to college? I've got four children, three boys, one girl. And the girl, for a dad, it's something else. It's a different asset class. Yeah. Different asset class. It steals your heart, man. I'm telling you. Is she the boss in the family, right?

2:47Damien Dwin: From inception. Yeah, I figured that. I figured that. Now, what tips did you learn being a girl dad? Like, how did you, like, kind of grow into the world? It's one of the hardest jobs in the world, but it's also one of the best. I think my listening skills have improved. Yeah, nice. Just the listening? I think my listening skills have improved. And I think particularly having a daughter in this environment, the career opportunities and challenges that she faces are different. Being empathetic, but also aspirational, and working with that tension for a 20-year-old woman, finding her way, it's a blessing.

3:24Damien Dwin: So, yeah, shout out Ella. Yeah, it is, man. I love being a girl that. I tell you, you're into the stock market, right? You got to be. You're an investor. Yeah. What type of investor is Damien doing when it comes to the stock market? You're aggressive, passive, like conservative. What type of investor are you? First of all, I like 12 % as a target number. So I actually don't believe in chasing 40 % years. I like 12 compounding every year, which is part of the reason why I like private credit. if you can asset manage and create the right asset liability mix, you can have, I think, in credit, a nice glide path to 12.

4:06And 12 compounding year after year beats the historical returns we've seen from equities. I think the challenge for this environment, and these are historic times, so I hope we get into it. It reminds me, I'm born in 75, it reminds me of what I've read about the late 70s and the early 80s. 80s, just before Paul Volcker took over the Fed, he faced an Iranian geopolitical crisis that Jimmy Carter fought his way through. Oil prices were high. Inflation was not just tied to Iran and oil. There was already inflation that hadn't been properly tamped down, which is why Volcker had to raise rates so high.

4:46And when you look at what this Fed is facing, We don't have control of inflation. Interest rates are clearly going to move higher. You have disruptive technology. In our case today, we have AI. Back then, you know, Bill Gates was about to bring us all the things. So with the personal computer, I think history rhymes. It's not going to repeat itself per se. But an investor who can figure out how to compound 12, to me, is going to get an A plus. over a 20-year cycle. And that's what I'm solving for. We have equities right now which are fully priced, I think 40 times earnings. That's a lot. Yeah.

5:28Well, is it a good time if you're trying to get into the stock market? Would you get into the stock market right now? Or would you put your money elsewhere?

5:34Damien Dwin: I sit on a bunch of investment committees, and the rule of thumb is you have to be exposed. So the question is, what percentage of your allocation should be there? And what are you solving for over the long term? And I think for today's retail investor, it's non-negotiable to have exposure to the S &P 500 or to the NASDAQ. How do you round that out in a glide path to having liquidity and downside protection? Because if we have a drawdown in equities of 10, 20 or 30 percent, many retail investors are not braced or prepared to handle that drawdown. And the fact of the matter is, the 10-year notes at 5%, smart investment committees are having conversations about preparing for a 6 % 10-year note scenario and understanding what that would mean for equity returns and, again, liquidity in their portfolio.

6:28These are the kinds of conversations that smart investors are having. So you have to be exposed. You have to be optimistic. You always have to bet on America. But I also think there's a lot to be said for a 10 to 12 percent every year sleep at night mindset. Yeah. I believe in the power of compounding. Yeah. Yeah. I love it. I love it. Well, again, man, hop into your firm in a minute. But what's your soundtrack to 2026? What's been the music that's keeping Damien Dwyane maybe excited as well as inspiration as an investor? Like who's influencing you? What's in your ear? What are you listening to?

7:00I'm born August 75.

7:02Damien Dwin: Yeah. Stevie Wonder just announced his tour. 50th anniversary of Songs in the Key of Life. Okay. I take it you'll be there. I will be there. I saw it the last time he played with an orchestra backing him. I love that double album. It came out in the mid-'70s. People remember that album cover with the orange circles. And we should be talking about workers, economic mobility, the American dream, and how that fits with a capitalist system that is evolving. To me, it is the biggest and most inspiring investment idea, but it's also very much a back to the future kind of conversation. So I've got an R &B vibe.

7:47Stevie Wonder. Yeah, Stevie Wonder. You can't go wrong with Stevie. You can't go wrong with Stevie. Even a guy like myself, I wasn't born in 75, later in the 80s, but Stevie Wonder, you know, he always is. He's the best. He always is. I love it. I love it. And listen, you walk into a third grade class, Damien, and these third graders may not have any idea what private credit is. Their mom and dad may have come to a private credit firm to get a loan to run their business, but they may not know what a private credit firm is. And they say, well, what do you do, Mr. Dwin? How do you explain your role to a group of third graders?

8:17Damien Dwin: I make loans to small businesses. I help companies grow. I partner with bosses to take care of their people. Okay. That's how I was explained it to children. It is about being a source of money for risk takers who want to create businesses and grow in this economy. People who are prepared to take chances and give jobs and create opportunity in the community. People who pay taxes. I partner with them to live out their dreams. And it's the best job because I get to see everybody's business. I get to perfect the skill set where I analyze and assess the finance ability of a business, how to put debt into that business, equity into that business.

9:06Damien Dwin: The children don't need to understand the financial instruments. Every little kid knows what a boss is and every little kid knows what a risk taker is, somebody who takes chances. And to know that someone's creating jobs and opportunity, who's supporting them? I want to be the guy who supports those founders, those entrepreneurs. Yeah, I love it. I love it. A perfect segue to get into the talk of your firm. Again, you were on our Forbes BLK Money Masters list back in February. Lafayette Square, founded in 2020, right? Again, provides private credit to small and middle market companies. 944 million in assets under management reported back in February.

9:44Any update there? Still around that size in assets under management?

9:46Damien Dwin: No, we're 1.2 billion as of 630 results. One of the things I love about Lafayette Square is we are audited by Ernst & Young, regulated by the SEC, the USDA, the SBA. We report our earnings on a quarterly basis. The transparency attached to our work is actually exciting and motivating because there's a report card. That's right. That's right. Well, listen, take me inside the firm, a state area. What's new? I see a new investment in Hollywood Trucks, New Orleans-based company specializing in clean energy transportation vehicles. They were valued at$50 million according to Fisk's pitch book. But what's new about the firm?

10:25Take me inside, update again. Up from$944 million in February, now at$1.2 billion today. What else is new about it?

10:34Damien Dwin: We're very focused on continued deployment into what is a very difficult credit market. You have rising interest rates. You have widening credit spreads. You have inflation in the economy. So business owners are looking at health care costs, which have gone up double digits again year after year. This is happening. Interestingly, the borders closed. So you also have competition for labor, which has a different flavor than we've seen in years past. So we're growing and demand for credit is is there. Yeah, I'd say fundraising is hard for most people. So we're hugely advantaged that we have permanent capital and an investment-grade rating, so we're able to tap the bond market.

11:18Damien Dwin: And we have a vibrant partnership with the Small Business Administration, which I would say is critical to our success. SBA and the work that this administration is doing to try to stimulate the middle market through programs at SBA, USDA, and so forth is top of mind. But beyond the demand function, on the supply side, we have a world in which retail and institutional investors have backed away from credit to focus on venture capital and public equities. And I think with rates rising, bonds are going to be very much back in fashion. I think we're going to get right back to the fundamentals. fixed income is extremely important with a steepening yield curve and base rates that as I mentioned everybody should be planning for a scenario in which the 10-year note reaches 6%.

12:08We may not get there but if you didn't do your homework and understanding what it does to your portfolio that's a terrible mistake. Yeah for someone who may not understand what it will do to their portfolio let's say you know the bonds did get to 10-year bond did get to 6 % or higher right? What would that do to someone?

12:25Damien Dwin: You're looking at downward pressure on equity valuations in that scenario. The productivity gains we get from AI will be cannibalized by the higher interest rates. As investors try to roll debt, businesses try to roll debt, you know, cheap money from the COVID era is going to get refinanced in the 2027 to 2030 timeframe at much higher costs. That interest expense is a burden on the enterprise. But what we know from history is when you have rising rates, M &A becomes a lot more popular, a lot more interesting. Companies want to come together now. Yes. The capital and all of that. Out of necessity.

13:02Yeah. Out of the cost of capital. I love it. It's very exciting. And the number of lenders who focus on below 50 million EBITDA is very few in number. because back to natives and tourists, a lot of tourists jumped into$200 million EBITDA lending because it looked fun and easy, like a path to have a bigger business. The fundamentals of being really good at understanding below$50 million EBITDA and having enough money to do that well, turns out there are only a handful of firms who do that, and Lafayette is one of those firms. Well, you have a goal, and you always say you want to create 100 ,000 jobs in sectors including healthcare, telecom, transportation, driving capital to working class places is what you say.

13:44Yes. Take me aside of that goal. Are you there yet by 2030 creating those 100 ,000 jobs? Have you surpassed it? We're on plan for goal 2030. We're ahead in some categories. Our cost of capital is actually tied to goal 2030. So as we meet and exceed the goal on a quarterly basis, it impacts our borrowing costs in our business development company. So it's very interesting that the economics of our business are tied to our vision. And Gold 2030, as you mentioned, 100 ,000 working class jobs, 50 % investment. How are you measuring that with the 100 ,000 jobs? How are you guys measuring it? Sovereignty and dominion of our data, our workflows and our relationships.

14:23When we lend money to a company, we know exactly how many workers they employ and where those workers live. We have context on what health care and retirement benefits those workers consume and their effectiveness. And we provide incentives to borrowers to give better benefits to companies. And we track and measure the uptake. All of that data informs Goal 2030 results that we report in our SEC filings on a quarterly basis. So I love this conversation because we're in a post ESG, post DEI world where people just want to see, do you make money? And what is the scalability and the formula for how you make money?

15:04Turns out we make money by focusing on the economic mobility of working class people, the largest pool of human capital in our society. I'm talking about tens of millions of workers employed by middle market businesses. 50 million workers employed by 150 ,000 companies. And the majority of them are work-a-day people. Yeah, the people who run our economy. I tell people it's the small businesses that run our economy right there on Main Street. Your strategy, though, because you look at your website and it says, we align our strategy to Small Business Investment Act, the Community Reinvestment Act, and the Small Business Investment Incentive Act.

15:46Take me aside of those strategies. How does Lafayette Square align with those three acts of law, which they are?

15:53Damien Dwin: Stevie Wonder, Songs and the Key of Life, Music Made in the 70s. In 1977, when the Community Reinvestment Act was made, it was nine years after riots in 1968 in places like Philadelphia and Washington, D.C. American inner cities were burned to the ground. through a series of government commissions, changes in law, Republican and Democratic administrations, decisions were made to use banks as a mechanism to stimulate communities where you got to reinvest. You got to give something back. If you're a bank with a monopoly, heavily regulated by the government with a steep yield curve, you can apportion some amount of capital to reinvest in projects that are good for society.

16:39And the government came up with all these great definitions like working class, which you could also call low moderate income. So these real estate and corporate credit concepts got codified in a series of regulations. The Community Reinvestment Act of 77 presaged the invention of BDCs, business development companies, in 1980. Again, like the music, the soundtrack of the 70s and 80s. It's a very real thing. And it comes full circle. the intention then and now was to see that taxpayer dollars stimulated small, medium-sized businesses in rural communities, urban communities, and everything in between, where small businesses were prioritized because they were in the American interest.

17:24And to really roll back the tape, and you'll find this fascinating, when Dwight Eisenhower created the Small Business Administration, He was a war hero who ascended to the presidency and said the military industrial complex needs small, medium-sized business to feed its supply chain. Creating SBA was really about supporting the Department of Defense in rebuilding Europe and America, but specifically domestic jobs. You fast forward to the Trump administration prioritizing domestic drone manufacturing. What are we doing on certain commodities, minerals? This is all the same loop. We cannot live in a world where the only priority is to have 200 million EBITDA businesses that don't create a lot of jobs and charge a lot of money.

18:15We have to create jobs, whether someone graduated from high school or not. If they can be a contributor, we need to find ways to employ them in rural communities, in suburbs, in cities, but these below 50 million EBITDA businesses, which rank in vast number, are not being served by the 3 ,000 banks we have in this country. The banks are one form of support. Non-banks are a complementary addition. And in the private credit ecosystem, partnering with SBA, partnering with pension funds and capital markets to drive well-underwritten capital into these growing middle market companies. It is a brilliant idea that on a risk-adjusted basis is not speculative.

19:01We're not looking at startups that have no track record. We have family-owned businesses that are multi-generational and they're doing P &L of 20, 50, 100 million dollars. They shouldn't have to fight for a loan. There are phenomenal, nice double-digit net returns returns to be gained from taking modest amounts of financial risk to these companies. And do it in a diversified pool, I think it aligns with what the administration wants to see. I know it certainly fits the history and the mission of SBA, the Department of Defense, the USDA, the list goes on. I think in this age of AI where we have access to all this information, all this analytical capability, it actually fits the culture and the intentions of Americans.

19:48I think the best of us want to lean into creating a robust economy where everyone can participate because it's not about fairness. It's about playing the long-term strategy. Let's create an environment where everyone can win. Well, listen, that's a great segue because your company, Lafayette Square, is named after a park in D.C. right across the street from Washington to the White House, as well as the Treasury Department. And you like to say the reason why is because we want to run towards government, not away from government. That's right. You just mentioned the Trump administration and their mission to see more domestic things made.

20:23How are you running towards government in this day and age with an administration in the White House now? Midterms coming up. There could be some change in two years. Who knows? How are you running towards government today? It's everywhere. Government is our biggest lender. So government supplies us with debt capital

20:39Damien Dwin: at very attractive prices through SBA. Government informs our asset construction. We are investing in businesses that qualify, chiefly as small business investment company eligible borrowers. That SBIC program has been wildly successful for many decades at SBA. We also now own and control an SBA 7A lender where we can do government guaranteed lending through our affiliate SBA Lafayette. So SBA and government informs our assets and our liabilities. I would also say it's not just the name, it's the intentions. Gold 2030 gives us a North Star. Unlike other investment firms, we are giving a time-stamped 2030 goal to create jobs for working-class people, and we're tracking and measuring it every 90 days.

21:33That level of vulnerability, transparency, accountability speaks to the intentions which we align with our commercial goals on a daily basis. And I would say to you, that is D.C. That is what Washington is all about. It's what Washington intended when Washington invented BDCs in 1980. It's what Washington intended in 1977 when it created CRA. It's what Washington wanted in the 50s when SBA was invented. there's a through line to all of this, the private sector and the public sector partnering to support Main Street. What's it like being a black man in private credit? You know, how is that for you?

22:13Again, listening to some of your previous podcasts, again, you said don't try to out Blackstone Blackstone. Let's build our own institutions. And here you are having your own institution with$1.2 billion in asset management. management, what's it like for you navigating the private credit space in this world where ideologies change and, you know, again, you're one of the few black men that's in this industry and doing so well?

22:35Damien Dwin: I see opportunity back to the 70s. This reminds me of what Bob Johnson saw when he was a staffer on the Hill reading legislation and seeing that there's going to be an opportunity to own cable. Maybe we should go out and raise some money, bring in partners so we could participate. I think we have to have the mindset that there are no reinforcements. This is the best country in the world, and the government is open for business and has to spend a lot of cash. Just one small example, we have a defense budget next year of one and a half trillion dollars. The number of African Americans who participate in the military-industrial complex, significant.

23:19Let's play chess. We have franchise. We have a seat at the table. Let's participate. And if you need to borrow money, please call Lafayette Square. We'd love to partner with you. Yeah. Are you still operating at the investment thesis? I believe one podcast you said borrow at 6%, lend at 11%. Is that still your thesis at all?

23:39Damien Dwin: That is the net interest margin we showed for the 630 period. Yeah. And I would say to you, with a rising interest trade environment and a steepening yield curve, net interest margins for banks and for specialty lenders are likely to get wider. Wow. That's the direction of travel. That's what history would tell you is going to happen, which is why I just talked politics as a D.C. guy. Yeah. Now, we have an election coming up in November. Whether you want to bet on Democrats taking the House or not, you have to say to yourself, with a steepening yield curve, Congress is going to start to look at the banks and say, are you making too much money?

24:18How are you giving back to the community? Are you loaning it out? Yeah. How are you giving back to the community? That's what happens when you have a steep yield curve and NIMS gets so wide that regulators holding the gavel will say, I really want to call you up here to testify. And let's talk about how we create fairness and mobility in the community. You support the Community Reinvestment Act, right? Those are the kinds of questions that are very predictable coming from the Hill. By the way, this is an administration that has been giving out more bank charters than we've seen in decades. So we have a banking business that is expanding, getting more profitable, where demand for credit is growing.

25:01To the extent equities reprice in this high interest rate environment, it's kind of predictable where this is headed. mom and pop are not going to express themselves in the voting booth. They're going to express themselves on TV and at the workplace. We've got to have alignment between the private sector and the public sector and focus on keeping the main thing the main thing, which is our vibrant middle class in the middle market. We have to lean into it, particularly with AI, health care costs, inflation. this thing needs to be reframed as a conversation about economic mobility and the good that is being done by private credit and the private sector writ large.

25:47I don't think we've been as fastidious about our data. Back to sovereignty and dominion of data and workflows. I think this conversation is going to change out of necessity as the political headwinds start to emerge. Yeah. Well, listen, you, again, still in D.C., love D.C. Let's take a step back. You know, again, born in Washington, D.C., the son of a bus driver, longtime government worker. What was it like for you growing up in D.C.? Back in the day, they used to call it Chocolate City. I don't know what they call it now. But what was it like for you growing up in D.C. during the 70s?

26:20Damien Dwin: It was fantastic. Yeah, it's fantastic. Yeah. I grew up believing that bus drivers, lawyers, doctors, accountants, dentists, work-a-day people shared the same space, went to the same schools. We enjoyed public museums. We enjoyed public transportation. And great ambition and respect for this amazing society that we live in here in America. It was a really special place. I love my parents. Shout out to Henry and Charlene for what they invested in me. What did you learn from them? My dad, he's a bus driver, so he's super charismatic. He never met a stranger, so he's gregarious and open. My mother's a workaholic, self-admitted.

27:06Damien Dwin: Worked in the federal government, put in extremely long hours, took it so seriously as if it was her money when she was representing taxpayers, doing what she did for the federal government for 40 years. So I would say it's that combination of grind from my mother and personality from my dad to like people, to care, to want to be out in the world. And those traits helped me in middle market lending. What were you like as a young Damien, like on a Saturday? What cartoons were you watching? Like me, I was getting up watching Sonic the Hedgehog and all that good stuff. What were you watching back in the day?

27:38Damien Dwin: At the end of my cartoon-loving career, I was all about the X-Men. I loved the X-Men. But I would say in the formative years of my cartoon career, I was a Looney Tunes guy. Looney Tunes, yeah. Big time. Do you still try to catch the old episodes? They're on HBO Max all the time. I go back and look at some of the Coyote Roadrun episodes of my daughter. She loves it. To me, it's a metaphor. It's like the life I live, yes. The TNT blowing up. Yeah, yeah. That's the classic stuff. That's the classic stuff. Well, you know, listen, you stay there because you fell in love with investment banking back then.

28:10And as a young kid back in high school, you said, you know, you found out that one of your friends' father was an investment banker. And that's how you kind of fell in love with the business. So after you realized what an investment banker is, how did you go to research it? Like, what's the Damien like after you discover? Hey, this is something I might want to get into. My classmate at Whitbury Forest, Sam Bowles, mentioned that his father, Erskine Bowles, was an investment banker. Erskine Bowles, very famous in the South, but nationally founded a bank called Bowles Hallwell, which he scaled and sold.

28:43And I met Erskine when I was 14 years old. Sam, at 14, could not tell me what an investment banker was. So I asked our headmaster, the head of school at the time, it was a guy called John Grenaultz. John Grenells, West Point Harvard Business School, Rhodes Scholar, encouraged me to go to Georgetown and was very able to explain what investment banking meant. So that gave me an orientation. But I tell you the real hook, which you'll love. My mother's coffee table always had a copy of Black Enterprise, Ebony and Jet. Yeah. And we heard about and read about entrepreneurs all the time. The neighborhood in D.C.

29:27where I was raised, 14th and Tuckerman, there's a woman two blocks away called Kathy Hughes who famously started a radio business called Radio One. Everybody in the community talked about Kathy Hughes as a single mother who managed to start this radio business two blocks from the house. Okay. And you hear about this guy called Bob Johnson, also in D.C., who started this cable business called Black Entertainment Television. And I'd be remiss in not mentioning, both of those companies received financing from small business investment companies. Both of them were financed by CINCOM, an African-American owned lender and venture capital firm back in the 70s.

30:09So when I say to you history repeats itself, I was kind of like a Forrest Gump character. I was there at the scene of the crime, not realizing what role I might play someday later in the story. So shout out Erskine Bowles for having Sam and putting the idea of investment banking into my head at 14. And John Greennells for being a great leader. He was a very famous Marine. He's an educator. He ran the Citadel after he ran Woodbury Forest. And he poured into me as a student at that school and said, go to Georgetown and you should be a Rhodes Scholar. You need to do your homework and do all the things.

30:46I did not become a Rhodes Scholar, by the way. But you became a great private credit guy, you know, because, again, you go to Georgetown, graduated in 1997, and then start your career as an analyst at Solomon Brothers. Go on again to Goldman Sachs. You spend time in New York as well as London, co-founded private credit firm Brightwood Capital Advisors also. But, you know, again, when you think about that young Damien who just was discovering what an investment banker was, right, and then you go through your career at Solomon Brothers. and I know for a fact you learned a lot at that particular time.

31:19And you also said, you know, I wasn't afraid to talk to no one at that particular time, going up back and forth. You ever sit back and reflect on your career? What's one word to describe your journey so far?

31:30Damien Dwin: Poetry. Poetry. Why poetry? Poetry. You know, at Lafayette Square today, our chief financial officer worked with me at Goldman Sachs. Our chief people officer worked with me at Salomon Brothers, my first job out of Georgetown. She was the HR lady who recruited me out of Georgetown in 96, hired me into the class of 97. I have the privilege of working with these people today. I'm 51 years old. I won't age them, but let's agree they're older than 51. So I got to grow up with these people. My boss, when I was at Sponsors for Educational Opportunity as an intern in 1995, the head of the department that hired me, I was in high yield research at Chemical Bank.

32:16Steve Ruggiero is at Lafayette today. The poetry of working with the guy who taught me leverage finance at 19, the lady who gave me a shot on the trading desk, the guy who brought me from Solomon to Goldman, to work with these people, that's poetry. And if you don't believe in a higher power, if you're not into religion, this would make you explore it. Yeah, I love that poetry. You always get back to the songs, the keys of life, right? You know, poetry, poetry and most of it. And look into your portfolio a little bit. Any missed investment opportunity that you still regret? Maybe someone came to you to get a loan and you said no at first, and then you look back, maybe I should have said yes, or any other investment opportunity you regret?

33:00Damien Dwin: No regrets about missed investments and credit. It's all about portfolio construction. And if there's disagreement within the team about making a loan, it's a pass. Any disagreement at all, you'll pass. Life is too short. If you can't make a compelling argument, we see too much flow. We reject 98 % of the deals we see. So you talk about supply, demand, and balance. There is plenty to do out in the world. Do things with great entrepreneurs where you have consensus within your team. So that's my view on you don't jam investments. It never pays off. And the risk reward for our style of investing is asymmetric.

33:40We have far more downside than upside whenever we make a loan to a company. And then in my personal life, I'm solving for steady Eddie.

33:48Damien Dwin: You know, I don't want to get famous and rich off of my personal investments. My business and what I pour into Lafayette is, to me, the highest return investment I could possibly make. Well, listen, let's say someone is sitting on one of those businesses that meets your EBITDA requirements, right? Cash flow is there, but they're looking to kind of expand. Why should they come to Lafayette Square to get a private credit loan? Why can't they go to somewhere else? Why do they come to you? What's your selling point? Insight about the industry. You know, you'd rather borrow money from someone who understands your business, one.

34:23One. Two, you want to borrow from somebody who can grow with you. You know, entrepreneurs prepare for success. They think about the bull case. And when it works, are you going to have to change lenders? Or can that lender grow with you? So we have enough scale to grow with middle market borrowers. And then the third is we have domain expertise, sovereignty and dominion, over how to help workers be more productive within your business. We will bring services to help your workers increase their health care retirement and health care retirement benefit adoption. Getting those two things right makes your workers stickier, makes the company more productive.

35:03And we're the leader in that. We do that better than anyone in private credit. Yeah, that last one, making your workers stickier, is important because you see a lot of people changing jobs. And, you know, it may be because the company that they're working for, they don't feel appreciated. They don't feel like they're getting those benefits. So we're obviously not enough money. So I love that you said that, you know, Making workers stickier is key, especially, as you said, the borders are closed, so it's harder to find employment in some cases.

35:26Damien Dwin: We give borrowers an interest rate step-down if they adopt services that help their employees. Wow. And in apples-to-apples comparison, you say, why'd she choose Lafayette? Turns out Lafayette will give me a lower cost of capital if I do the right thing for my workers, and doing the right thing for my workers was good for the business anyway. Right. Lafayette rewards me in ways that other lenders do not. Yeah, that's a win-win right there, win-win. Get you out of here on some fun stuff. But before I do, how has making the Money Masters list helped you at all? I don't know what was the response when you found out you were on a list and once they published.

35:58But did it bring more attention to your firm? Or did people call you up asking for money, thinking that that$900-plus million was yours? How did that help you at all?

36:07Damien Dwin: I would say, first, thank you for including Lafayette Square and myself on the list. It takes me back to my childhood and my mom having that jet, that ebony, that black enterprise on the coffee table. I would say your work is the new coffee table. I appreciate that. And just as a magazine touched a 19-year-old kid, in my case a 14-year-old kid, there are unintended consequences. and so have to applaud you and have to carry some amount of that water in trying to create conditions where we inspire young people to participate in this capitalist system. That's right, because it's there. As you said, the opportunities are definitely there, especially in the world of private credit.

36:51We'll love to see more individuals, younger individuals, get into that world, especially important in the world of financing. But get you out of here some fun stuff. If I gave you$10 ,000 right now, it'll be a loan, and I won't charge you 6%. What would you do with that$10 ,000? What's the first thing you invest in?

37:07Damien Dwin: Gosh, I tell you, with the Fed about to raise rates and equities looking fully valued, I would take that$10 ,000 and I would probably invest in something that had short duration, liquidity, and a payout that was higher than 8%. Wow. I think they're investment grade ideas that tick all those boxes right now. Yeah, love it. Damien Dwin's superpower, what is it? I'm super fortunate to have amazing people around me. The culture at Lafayette Square, the family that I'm attached to, that's all the glory. Yeah, love it. You look at your favorite AI app, right? What's the one that you're using constantly every single morning?

37:42So I have an unconventional comment on that. I personally like Gemini. Gemini, okay. I like Gemini. I like Gemini. Why? For the day-to-day exercises, if you're an Android user, it's really good. I think Claude is amazing for a different set of use cases, but I actually think it's hard to bet against Google ever. It is. It is. And I think they got something really good that's not getting the kudos it deserves. Yeah. I love Claude, but Gemini is like one of my second favorites. So it does some creative stuff. I love it. You look around the world, right? And Damien, I know you've been your believer in America, and I know that.

38:20But what country do you invest in right now outside of the U.S.? I'm all U.S. all day. But I have a book recommendation, and it ties to your point. An author called Sven Beckert just published a book called Capitalism. And the book is beautifully written. He wrote another book called Empire of Cotton, which is also phenomenal, particularly for African-Americans.

38:43Damien Dwin: I highly recommend this history professor at Harvard, Sven Beckert. These two books, to me, every black person should read. But in capitalism, one of the very first points he makes is that you cannot think about American capitalism or Indian capitalism or British capitalism. Capitalism was born global. It was born about point-to-point connections. So in thinking about investing outside of the U.S., to me, that would really be more about a currency bet than thinking about the GDP of some other continent or some other country. I think the United States remains the center of the universe, and I think Washington, D.C.

39:23is the most important city within that universe. Not New York, and I say that as a long-time New Yorker. But D.C. is where the money comes from. That's right. That federal budget cannot be argued with. But it turns out America relies on its reputation and connectivity to the world. And we have a lot of interest, not just in Western Europe. We got to get it right in Asia. And it's more than just China. Our India relationships, like the list goes on. So I really love where we are globally. But if you talk to me about growth and what the math tells me, it's easy. Africa is where it's at. I mean, the demographics are jaw-dropping.

40:08It's more than symbolic what the United Nations did a week ago in acknowledging the actual geographic size of the continent because it had been misrepresented on maps for many years. All the people and all the growth over the next 50 years would be in Africa. But if you talk about liquid markets and immediate opportunities, I'm a USA guy. Yeah, yeah, I love it. USA and Africa, one continent and obviously one country. But I figured you would say Africa. A lot of people picked there, billion people, a lot of them young. and so you know the next 50 years, it definitely is the future in Africa. It gets you out of here on this, Good to Great, my favorite business book, Jim Collins.

40:49And I ask you, what's the difference between a good private credit firm and a great one? Culture. Culture. Culture.

40:56Damien Dwin: It's so clear to me. Ken Chenault famously talks about followership and judging great CEOs based on who would follow them and who has followed them. This culture point defines the success of all institutions, but in private credit, it is so clear. The defining characteristic is what motivates the people to come to work, what gives them passion, what makes them sticky within the organization. Wages are insufficient. They're necessary but insufficient. The culture of the firm is what drives. And at Lafayette, our culture is driven by a goal 2030. People know when they come in, as we pursue that sovereignty and dominion of our data, our workflows, our relationships, we are focused on creating 100 ,000 working-class jobs by 2030, investing 50 % of our capital in working-class places by 2030, and seeing half of our companies adopt services that make their workers better in categories like health care and retirement.

42:00Keeping everybody focused helps inform the culture, but the culture is something you live and breathe, and it is by far the most important thing to distinguish winners from losers among these firms. It's not just investment returns. People who have good investment returns in a given year and a bad culture, it catches up. Yeah, love it, love it. Culture, definitely have good culture at Lafayette Square. You have to, otherwise you wouldn't have$1.2 billion in assets under management, right? That culture would have let that money go out the door. Damien, you've got to come back and talk more business, man, especially after midterms because a lot of things can change when it comes down to where the direction from Washington is headed, and it obviously influences the rest of the country.

42:40I definitely appreciate the time, and good luck the rest of the way. Hopefully, you'll be back on the money master's list when it comes back out in 2027. So I definitely appreciate it. Thank you for your work. Appreciate you. Absolutely. Damien Dwin here at the NASDAQ. You're in the Enterprise Zone, and you're leaving the Enterprise Zone. Thank you for watching. Thank you for listening.

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