top lessons from slice podcast season 4

0:00There's a sleeve that a lot of managers forget that you can create your own lane as well. It doesn't have to be a 20 million fund over four years. It can also be a much smaller vehicle every single year or a smaller fund accompanied by a much bigger fund. There's many different ways to do it. You just have to find the right strategy for yourself. Venture has changed and you should not try to do the Swenson model if you are just starting out in venture today. Yeah, 100 percent. That's so true. I think the market is very much open to novel structures, novel idea, fresh approaches, and will reward the managers who actually are first movers into this new world.

0:40But then again, there is a lot of allocators that are stuck in their ways because they are like dinosaur type of organizations. They're trying to force managers into a Swenson-style investing model. Shit doesn't work. That ship has sailed. It's ancient. First time in person, eh? Yeah, this is cool. This is a sweet spot. Thank you, LJ. Lighthouse in Venice. Check it out if you're around. Let's get into the season recap. We've had a wonderful season four now. How many episodes? Too many. So many. This is wonderful. I think every season that we do this, the easy story is about access that the managers get into the talented founders.

1:19But who knows who gets the call, who's plugged in. And you know what I kept coming back to this season? There's always a layer under what we see. A friend said, judgment clouds your true ability to reason. It's the version that they tell people or the script that they have inside their head about themselves. The pitch. Exactly. And the real thing is much quieter. These were people who arranged their whole world so that the right founder couldn't not call them before that founder was even looking for money. And for this season, there's three things I want to talk about today. and they're really three halves of the same job.

1:56As you and I both know, there's a lot of pieces to this role as a solo GP or emerging manager. How you win the deal, how do you hold the people who fund you, and the part that nobody really talks about, especially in early stage, is how do you ever give money back, which is a really hot topic amongst GPs these days. Liquidity. Liquidity. We're going to dive into it one at a time. I think first and foremost, let's start where the season started. And that building is the cheapest it's ever been. That used to maybe take 10 people. Now you get a stack of agents and everyone is networked in. So none of that really separates anyone anymore.

2:37What's left is you have to be irreplaceably good at doing just one narrow thing. It has to be very specific. It has to be very obvious. and if a manager has to ask how they stand out, they've probably already lost it because standing out isn't really a marketing problem, it's a focused decision. And the ones that always break through to us have a signature, the signature founder that they invest in, and it comes across maybe the angel track record or the fund one or the types of people they surround themselves with. It's very obvious this manager is the only right check for this founder in terms of check size, in terms of archetype.

3:18And I think that discipline runs all the way through for these types of managers, not just in the founders, but across the LP base. So I think the question for us and for you is when you see a manager front run a founder really well and when the fit is inevitably right, what does that look like up close? And how do we know when that fit is there and when the manager has that signature investment investment or archetype. I think for me, an example of this from the past season is Gaudi and Daniel from Anti-Gravity. And it looks like when they back a founder from their Puntis program or when they bring a potential or current portfolio company talent that they curated through the Puntis program.

4:04Many more examples throughout the season, but Fabri, I'm curious I mean, thank you, everybody, for being here 50 episodes deep. Thank you, Sunwoo, for elevating this platform to a level that I couldn't. I mean, how good is she? I'm done with my job here. This is the last you're going to ever hear of me. Rest in peace. Thank you. As a very public persona, I really truly hope so. But to your point, I think it comes down to a word that it's often misunderstood. which is brand, which is not your logo or the colors on your deck, but it's what people say about you when you're not in the room. And so when we think about Gaddy and Daniel, or when we think about Jacob or Saad, there is always a one sentence, very brief, like three-word sentence that defines them for who they are.

4:57And it's so painfully obvious. And I think that if you have to articulate what it is that you do, you're already half lost because it needs to be painfully obvious. It needs to be something that like, you know, before we even get on a call with the manager, we know exactly what to expect. And maybe what we find out in the call is that it's like, oh, it goes even deeper than we had thought. So their brand of who they are carries through their LP network, but most importantly, carries through their deal flow. And so how do you get to access the best deals? It's by word of mouth. It's a very small market.

5:34Everybody knows each other. and how do you find that perfect fit between that founder and that manager is by means of somebody saying, oh, you know what? That person is the right person for you. That manager is the right manager for you. Let me make an introduction. They would be silly not to take a look at this deal. And so that signature, as we sometimes we call it handwriting, but ultimately it's what distinguishes you as a manager that it's unique to you. What is your brand? Which then compounds in what is your edge. very often. It's a direct translation of what we call the right to win sometimes.

6:07But what do you stand for? And it could cut both ways. It could be something really good and it could be something not so good. I'm sure we'll get into some example of the not so good in a minute. But for sure, what you want to be able to be identified and you want that message to be consistent. Everybody in every room you're not present in should say the same thing about you. And if you are a different thing to everyone, then you're nothing to anyone. The 2012 to 2018 sort of vintage, backing technical founders, the hardcore techie, the ones that smell when you get in the room with the acne on their face construct of what Silicon Valley used to be.

6:43Yeah, sure, may have worked back then. You could have been the translator between the very technical guy and the LP, the investor at the back of it. But let's be honest, like you said, today, anybody can build anything. It's only going to accelerate. And so what is the value that you actually bring? It cannot just be the one of a translator. You have to be able to bring something more to the table. That's what we talk about every day. We talk like multiple managers a day. And at the end, I always call you up and I'm like, what do you think? What is that edge? Sometimes it's obvious in a day and sometimes it takes months to come clear.

7:19And that's what's really our role as allocators is to be able to comfortably articulate and say that is what it is and i know that in any room anywhere in the world people are referring about this manager in this context yeah yeah and we get a lot of questions around what's the process of slice because each lp has a different process but there is no process it depends on each manager i think this morning you said it beautifully each manager is a snowflake and everyone is so different and we want to get to know the manager And if it takes that manager some time to figure out what their niche is and what they're really good at and where they want to focus into, that's fine.

7:58And the building piece does not just apply to the founder and to the startup. It applies to the manager as well. We started to see a bunch of folks come to us. It's like, oh, we have this stack of multiple agents. We do all these things. We scout the market. We're diligent. I was like, okay, what, do we think we don't do that? We also have our own army. You don't see us bragging about it. It's like, oh, sky is blue. Water is wet. That's what the market is today. And that's table stakes. That cannot be the differentiator. The differentiator cannot be the technological edge. The differentiator is the human.

8:31It's not going to be a 10 blind reference calls that are going to tell me who you are. The words of our partner, Marco, how you do one thing is how you do everything. How you show up to us by means of an introduction. Who you show up from. How do they define you in their intro email? That says so much about your brand. On the flip side of the perspective is we can spot the manager going away from that focus, maybe fund two or fund three, where maybe they want to scale the fund. But in their mind, it's scaling in terms of AOM. But then you start to see like a sprawling across the portfolio. And once you see a sprawling across the portfolio, then you already get a sense that there's a sprawl across the LP base.

9:12There's a lot of fragmentation happening in LP updates. It's very obvious. So the earlier you can find the focus and the niche that the manager is really the only person to do, the better. And then on the piece that we always talk about, compound into it over and over and over again relentlessly. You have to compound. You're building a business. No matter who you are, no matter what you do, just focus. Focus. Vision is focus. And compounding is the proof that you are able to focus into something. And if you're focusing into something, it shows. Yeah. And then the business comes to you. The right LPs will come to you.

9:51The right founders come to you. That brand shines so bright because it's very so clear who you are and what you do. And so people will seek you out for it. Yeah. Agreed. I feel like the moment I notice a lot of our GPs go very quiet. We sit across these managers and they really light up when they talk about their founders. They could go on for hours, every single detail about them and the business, you can tell that they really love the portfolio companies of their fund. And on the flip side of things, when you ask about their LPs, the whole energy just shifts in the room and you can really feel it.

10:30It's really flat. And I don't think that it's because they don't care. It's the thing that matters the most. And I think they know that in hindsight, it's just because they quietly make it up as they go. They don't spend enough time understanding the true ICP. And there's variations of why it happens. Maybe it's a former founder from 2016 who learned to build companies in a certain way and is applying the same mindset and framework to building a fund in 2026. Or it could be a nuance as to a founder having not yet graduated into the investor role. But what I want to hammer in. The LP is the customer at the end of the day.

11:10Focusing in what you're really good at and your branding, same thing goes for your customer base. You have to be really focused on who your customer is, who you're selling this product to. And you want to find the people who truly understand what you're building. It's not like startups where you have friends and family around, then you get seed investors and Series A and Series B. It's very different. This is a long-term game. And I feel like a lot of the GPs come to us saying that they learned the hard way. maybe 16 months and they have to close within the next couple months and they're still talking to net new LPs.

11:44I think it's fascinating because I don't think we'd ever let a founder get away with saying that they don't know who their customer is. Yet we hear it all the time, GP saying that about their LPs. I'm winching as you speak because I used to be that founder, right? Like whoever shows up with a check, let me bank. That's like another week of runway. That's like another hire. Like, I think that's very typical of my generation of founders. We did not have chat GPT to coach us. You just get whatever money is available and you treat every check as kind of like a blessing from the sky. And then as you graduate through the ranks, like that angel round into your seed and series eight, and you realize that it's like, hold on a minute.

12:25Capital is the most undifferentiated commodity there is. Every dollar smells the same, tastes the same, does the same thing. So what is the value add of that money? And so as a founder, you start architecting your raises around, okay, I need to find the fund and the partner within that fund that is the right partner for me. You should think about it as like you're not fundraising, you're hiring a board member. And that board member has a job spec, has something that they do for you, right? And so what is the fit? So rather than just getting money from anywhere, you should be a little bit thoughtful about it.

12:58And so that's how you see a lot of second-time founders being like, I've done it before. Now when I'm going to do it, I know exactly who are the people that are going to raise this money from. And even though I can access money from other people that may be a better terms, I'm still going to index on the people that bring the best value for me. A lot of the managers that we talk to are founders, operators, background, who self-select into this category ourselves, right? A lot of these folks approach fundraising for a fund in a similar way, as you said, as fundraising for a cap table. The difference is that every vintage is not another round of funding on the same cap table.

13:36It doesn't work like that. Every vintage is the full fundraiser. There is no second passes to it. And you usually have a time clock on it. And fundraising is all about momentum. And you want to be thoughtful about how you go about it. And the number one mistake that we always see is that people don't spend any time whatsoever thinking about who's their customer. And the number one thing that we hear is like, oh, the customer is the founder. They are my customer. And I was like, my friend, the founder is your product. And yes, you should pay a lot of attention to it. And you should make sure that they're well taken care of.

14:13They're up to spec. They're as performant as they could be so that your customer, who is the one that is actually paying you to do the job, is actually happy with the product that they receive. And so it goes hand in hand. But who is your customer is very important. Like if you're raising like a 20, 30 million dollar vehicle, your customer cannot be a bank. There is a lot of banks out there willing to cut 10, 20, 30 million dollar checks. They have very strict concentration limits. They have very strict track record requirements. They have very long IC processes. They often never even do. They wait for the fourth vintage.

14:47They're in a different kind of business than back in the emerging manager. And so you have to be realistic. Like, who is the customer for me that would buy my product? And what is that they expect from me as a manager in terms of the product that I offer? And then build your fund, your thesis, your portfolio construction all around that so that you can sell this product and you don't have to be in market for. 16, 17 months on an 18-month clock, and then ending up shy of your goal and your stated target, which is the opposite of momentum. And in a business where you got to get to the fourth or fifth vintage in order to be sustainable, it's very important that momentum, you don't think of it as a sprint.

15:29It's an ultra long marathon that lasts 20 years. So how do you engineer momentum to be sustained for 20 years. Lower the target. If you have a smaller fund, it's going to be easier to get a better performance out of it. With better performance comes more desire to be your customer, right? Then bigger check sizes are going to see that you're able to perform and they will be willing over a 24-month period, 36-month period that they've known you to commit to be your help. At the very beginning, you're fundraising like a founder in the early days from the equivalent of angel investors for a cup table of a startup, which is high net worth individuals and small family offices or small fund of funds like ours, where the check size is 250K, 500K, maybe a million bucks.

16:17But it's going to be a very long time, unless you already have that in your pocket from a prior life as a founder, as a manager in another vehicle, as the NEPO of a family that wants to back you. No shade about that. But until if you don't set yourself up for failure, that's kind of like the number one thing. So do your research, talk to other managers about what is that LP base for them. Like, you know, who are their actual customers? And nobody talks about this. And every time we ask people, managers, who is your ideal LP? The answer is pretty much anybody who's willing to write me a check. Yes, that is so true.

16:56Yes, that's a painful truth. You bring up a good point because I think that there's a lot of GP to GP conversations happening, but not in the most productive way. I think an example of a productive GP to GP conversation could be something about fund admin or lawyers. But there's not a lot of conversation around what you just said of like, hey, who is your LPs and why did you construct it to be like that? to understand the framework in which how to understand the LP base and how to construct those principles around what they did and then apply it to your own methodology of thinking rather than just trying to do a copy-paste.

17:35Just as the way that you can't copy-paste a portfolio of founders, you cannot copy and paste the same way a GP raised from their LPs because it's a very different product and it shouldn't be a different product. I do notice a lot of discourse happening in not the most productive ways. Not productive at all. It's also like we see it as a way of people making introduction to us. There is this idea that you want to be thoughtful about the introductions that you make, right? You want to make sure that whoever you bring to an introduction, it will be seen as a potential target. And this slice of the market in the kind of like sub-20 range, we get introduction for anything between like a$5 million engine vehicle all the way to a half a billion dollar vehicle.

18:19And I'm like, y 'all, we've been in market for like two years now. You should all know what we do. Why are you bringing this to us? It's maybe interesting. We'd like to network with that person, get a perspective on the market. But realistically speaking, slice is never going to back a$100 million vehicle. We're very clear about it. read our website. I don't know how much clearer we can be around this topic. And so there is, again, you can really see the entropy to be more of, hey, I know a bunch of rich dudes that want to cut a check or, oh, this is a fund of funds that they're pretty cool, so you should talk to them.

18:55And it's like, yeah, okay, but like, does it reflect the needs of that customer? Our needs are pretty clearly stated. I agree that probably not every LP is as transparent as we are about what it is that they're looking for. But again, your job as the purveyor of that product is to be able to do that discovery. And in your CRM, you should not just categorize LP by their check size. You should also categorize what is the structure that they invest out of. What are their expectations? Are they in it for financial returns purely? Or are they looking for trimmings around it, whether it's knowledge of the market?

19:33co-invest opportunities? What is their co-invest size and so on and so forth? But do it in a way that it's human. And we've sat through phone calls where like, you know, people truly run through a checklist. And it's like being on a B2B SaaS sales call. It's like, hello, I'm a human. I'm a person like, you know, you can talk to me and you can understand my needs without necessarily like, and what is your desire co-invest check size? and give me some examples of how many have you done. It's just like, these are relationships that you want to take over a lifetime with you. Like every manager we back, I hope to be in business with them for the rest of our life.

20:12And I'm honest about it. That's why we're very picky. Sometimes we pass on things, not because we don't think that they would make money, but because there is not a fit, like the human relationship that we're seeking. And that's true for many of the LPs, but most importantly, the underlying kind of theme, which goes back to our prior point about compounding, is that if you identify your ICP and then you stick to it, by the time you're raising your second vehicle and your third vehicle, you're not going to need to fundraise anymore. You're just backfilling. And then you can focus into doing what it is that creates value, which is the sourcing, the value add, the picking, the portfolio support, all of those things that actually generate returns.

20:57because fundraising doesn't generate returns. And so if you're instead graduating through the different ICP, like you're moving across the ICP, you're resetting the clock every single time. And so that's what we see a lot of managers constantly fundraising, which, by the way, it's the job. Let's be clear. That's like the lion's share. If you don't have that down, you don't have a fund if you cannot raise a fund. But at the same time, you want to be in a position where you are selling a product Just like you're doing with any other vertical business, where you're selling products where your brand and the value that the product provides are strong enough to drive your acquisition costs down to the point where it's a competitive advantage in the marketplace that generates better returns for your investors.

21:43And that's so important and so many people forget about it, especially at our desire fund size, where people do a$10 million fund and then they go up to$50. and there are some times where there are good reasons to do it but not always i would say that the majority of the cases like you're much better off sticking to one thing and compounding into that thing because that focus is a very clear signal of your vision from day one and we ask the question what does fun to look like what does the fund after that look like and the answer is so telling of how much work the manager has actually done in the wake of building the product that they're selling.

22:24And usually it's very little. It's almost no work at all. It's like, I'll figure it out. That's not vision. That's no focus. That's just kind of like, yeah, MVP style startup energy, which doesn't work in this kind of business. It's a different kind of business. You need one thing and you need to focus into it. And like you say, like founders only have one thing. And that's not a bad thing. It's great if you can compound into it and then build your brand for that. I think there's a desire to do more with a fund and a portfolio of investments. But at the end of the day, what do you want to focus in and what do you want to be remembered as?

22:59Why we get introductions that expand our coverage and our sweet spot is because we do have these candid conversations. And even if it's not for us, we'll take an introduction and the conversation with the manager because those managers might have different ICPs that aren't us, but just need some help thinking about things. And we genuinely love those conversations. I think the point of conversation that we brought on for this past season with Matt, he brought a different perspective because he's not a fund manager. And it was more so how do we cultivate a community where LPs are candid and transparent in the way that they interact with managers.

23:38But also I think it can start with the manager as well. I don't think it necessarily has to be the LP. I think that if we do our job right, we said this from the very beginning, there is this, it's a new world of venture out there compared to when I used to be a founder and I used to fundraise from seed funds and like a triple F round. And it's a very different world from what that used to be. YC really changed that world. Techstars, 500 startups, those platforms broke down a lot of the asymmetry between the investor class and the founder class. I would love for Slice to do something very similar and become a platform more than just a vehicle where people from both sides come to demystify and find a common ground, have a more fluid exchange than the very asymmetric one that is happening right now, especially in the corner of the market that we cover, where it's 100 % opaque on both sides.

24:44LPs think they know what they're doing. I guarantee you they don't. And managers think that they, well, managers know that they don't know anything about the other side, So they just keep sending yet another email, hoping to get some sort of response. But look, it wasn't too different in 2016 when you were trying to raise your seed round. It's not as transparent as it is today. It's part of the ecosystem that made it more accessible. And so I would love for us to play a part in the ecosystem to help bring down some of those barriers and have more candid conversations that can help both sides. Because this is a great asset class and it's not going anywhere.

25:20No. So, you know, like... It's only going to grow from here. Yeah. Just get more out of it. Yeah. Yeah. I agree. And the conversations that we love to have with our managers isn't the pitch and what's the strategy. It's more so what corner of the market do you see? What's your secret recipe? What's the one thing you do differently than everybody else? Honestly, it's like this is about human relationships, right? And like, you know, your brand should be very obvious, but it shouldn't be something that can be consumed by everybody, right? Like, you know, it's something that the best managers we have, I think that I learned something from them every single interaction.

25:54Even if it's painfully obvious what it is that they do, there is something else that I take away from every conversation, every update, every investment they make. So many times they announce a new check and I'm like, what the heck is that? And then I talk to them and they explain it to me. And I'm like, wow, now it makes so much more sense in the light of how you look at it. And you see, even if I understood your brand to begin with, like it's you are the one that actually does it. If it says on the packet that it's made with the best quality ingredients and then you introduce some new ingredient that I never heard about.

26:25If you can explain it to me why that is the best, then that's only going to grow my interest in your product versus going the other direction, which is going to dilute the message and erode the confidence that I have in what it is that you're doing. Last thing I want to talk about today is something that we haven't talked about publicly. We talk a lot about the front half, getting in early, building conviction, sourcing the companies. We never talk publicly about what happens in the back half, but that's very important to the job as well. We believe that companies stay private forever. It's the world that we're heading towards.

27:00So in that world, we believe that having a smaller fund is how you win in this market. But there's a lot of opaqueness in the GPs in terms of DPI. They think that's what LPs care about, which is not entirely true. What's your first takes on that? And what's your ideal customer, right? I feel like we've seen the end of a cycle at the beginning of 2021 and then the beginning of a new cycle, like the back end of 23, right? And in between there, whenever you have a changing of the guard and the industry has to morph, shed their skin and find its new kind of format to survive the new environment. a lot of firms have got caught in the middle.

27:52Firms that are between the 50 to 500 million in size. Those people are people that did not sell at the end of the cycle when they should have. And so they have great paper markups, but no liquidity, no DPI. And these are bigger checks on average than the things that we do. And so for the longest part of the last five years, the kind of more established LP community discussion has been about the fact that the GPs have missed the boat and we're not going to see that liquidity for a while, if ever. And so the Twitter discourse, the conferences circuit and whatever is all about this DPI idea. But let's be clear, that was a conversation about a fund size that it's not the fund size of our managers.

28:45And so, like you said, don't try to be something that it's not you or that you don't understand. When people come to us and they're like, oh, we're trying to offer DPI early. I'm like, why? We're not doing this like as all of this is our money and a bunch of other families. This is not the 100 % of our portfolio. This is a sleeve of our portfolio that we allocate to this asset class, fully knowing that it's illiquid. If you keep it illiquid long enough, it will then generate the returns that will then support the future vintages. And so it becomes self-sustaining. as an individual OP in slice.

29:21I don't really care to get money back in three, four years. This is not why I'm doing this. Over the last five years, you would have been better off putting money in the public markets and levered in the public markets. You would have gotten a much better return cash on cash than any venture investment out there, probably with the exception of three names. Yeah, like everybody thinks that they can be in those three names, but let's be realistic. Like they did not know there were those when they started popping, right? OpenAI as an investment, Anthropic as an investment, very controversial at the time when they started cropping up, right?

29:57And still the jury is still out whether the liquidity is going to come and in what format it will come. So again, understand your ICP and understand what are their true needs. I think the bare bone need of any LP that is doing this with some sort of brains is that by the time you're raising your third vintage, the distribution of the first vintage will cover 60 % to 80 % of the capital calls of the third vintage. As a GP, you want to be in a situation, but at the time you're on your fourth vintage, the carry from the first vintage represents like 20 % to 30 % of the fourth fund. And you are an entrepreneur.

30:36You're building a business. You cannot just expect to find capital. At some point, you want to own all of it, especially if you're doing well, right? And so that's how you should think about it. But if we're talking about fourth vintage with a three-year deployment cycle, we're talking about 12 to 15 years, which is never the case. And so it's probably closer to 15 to 20 years before you get to that point. Taking chips off the table sooner may not allow you to actually be in a position to do that in 20 years' time. I sold a number of things too early, and so I learned that lesson myself. As a manager, the rule of thumb that we tell our manager is if he returns the fund 1x and if you can still keep a piece of it, you should probably sell.

31:20But realistically speaking, if it's a winner and it's running, just put more money to work. Don't take money off the table. Because if it's one of those great names, great logos, great teams, great business models of your time, you were able to be there from the beginning. Why are you selling? Why are you not buying more? We often joke about this, that it's like LPs are always broke. Somehow, we can always find the money for something that made us money in the past, even if it's on paper. But then at the same time, like if you have a mark that it's three years stale. Zombie. Yeah, just wipe it off the book, man.

32:02What are you doing? Like that's when you're breaking the trust. And that's when a seasoned LP will know that you're sort of like you don't know what you're doing. So that's when the DPI conversation comes to be, like you're starting to get three layers below, right? Like Mike or TVPI, IRR and DPI. Now we're talking about DPI because I cannot trust you because I look at your IRR and I know that's a medium number. And so that's when I'm holding you accountable to DPI. But if you keep a good track record, if you clean your marks, if you mark to market after 18 months from a fundraise that hasn't happened instead of marking to mark.

32:36If you're doing the things that you should be doing and the LP can have full confidence and trust that your numbers are solid and nobody's going to ask you for their money back. It's just not how it works, especially because the best stay private forever at this point. And so even if you go public at a trillion dollar cap, let's be realistic. You've been private for your whole life. And so you're now a mature company. To see the kind of returns that Google or Facebook did from the first day of trading to where they are now as 3-4 trillion caps in public markets for something like OpenAI or like Anthropoc, you need to think of 300x of a trillion from here.

33:18Which means that we probably have printed so much freaking money into existence that we've been eaten alive by inflation if that happens within the lifetime of any of us. Just think about the macro a little bit, right? Like, you know, it's monetary policy at the end of the day that drives a lot of these things. And so when it comes to liquidity, I think it's less about returning dollars. It takes about 10 years. We're seeing 2016, 17, 18 vintages that are doing exceptionally well in terms of DPI. But it would be a stroke of luck to be able to give DPI, 2, 3, 4x DPI and a fund younger than a 10-year vintage.

33:56And if you got lucky, that's great. You bought a ticket, you won the lottery, but that's not a strategy. Luck is not a strategy. It's similarly to the way that if you're a founder and an angel investor is asking you for a business plan with a discounted cash flow analysis at three years, run. Run. That's not an angel investor. So if you're meeting an LP that is asking you for DPI, a four-year window for a first check fund, run away. That's not your customer. Like, you know, it's really, and so don't try and fit the mold of a company because then you're just going to disappoint them. Yeah. And you're going to build the product that the LP wants, not what you want.

34:37Yeah. It's never a place you want to be. I think that doubles down on the fact that you want a smaller font at the end of the day. Even if you have the same exit outcome, if you have a$10 million fund versus a$50,$60 million fund, it's very different in terms of the return profile as well. Completely. Returning$60 million is a lot different than returning$10 million. No matter how good of a check size you get, no matter how good of an outcome you get, it's very, very different. If you're less an investor and more a trader, the secondary markets, late-stage secondary markets, are great. Wide open, flush with cash, great opportunities.

35:16If you just want to deal in real, just do that. But that's not investing. That's trading. A different business. And you don't need to be a founder to do that. And probably Silicon Valley is not the right place. Do it in New York. In between times. And just understand, like, you know, what is the product that you're building? Who is the customer for that product? And accept the reality of the business. If the business you want to do is first check investing at the earliest stages, then you're going to have to accept the trade-off that you're not going to be paying the mortgage on the fees that you're going to draw from that vehicle.

35:48And it's unfair. Yes. It is absolutely unfair only if you already bought your house. Like you don't need to worry about putting food on the table. You can do that job. That's one of the limitations of it. That's why the pool of talent is so constrained. There could be so many more people that do this job really excellently, but they can't because they just can't support a family with 200 grand in fees a year. And so this is the asymmetry. I think that this is so painfully obvious to a lot of people, and it's completely unspoken about it. Managers that do their portfolio construction off the back of what is the minimum budget that I need to run the firm the way that I want to run it, to draw a salary for myself, to hire an associate, a chief of staff, an EA, pay the accountants, the lawyers, and whatever, not$50 million.

36:40Okay, great. That's not how the business works. You know, that's not how the world works. Be honest with yourself that if it is that you're looking for is a more of a platform style where you get a good salary, you get great support, you get great people around you that you can pay for their time. Then maybe go join a fund that it's like north of 500 million and build your practice within the fund. You're going to have a better time than doing it yourself. You got to pick a lane, choose what it is that you can win at. If you're concerned about DPI, the bigger the fund, the less pressure there is on DPI because a pension fund does not care to get the money back on cash.

37:23Maybe an endowment, a sovereign wealth fund or anything, these sleeves that they have is like truly single-digit percentages of their entire allocation pool. And they care about the financial performance of the instrument. They don't care about the cash-on-cash returns of this instrument because they get money every single month, every single quarter, every single year coming in that they have to allocate, that they have to put to work. Getting money back is not going to make their life any different. And so, again, choose your customer wisely and choose the product you're building to be reflective of the actual value that you bring to the ecosystem.

37:57And in terms of pick a lane, I think there's a sleeve that a lot of managers forget is that you can create your own lane as well. It doesn't have to be a$20 million fund,$50 million fund over four years. It can also be a much smaller vehicle every single year or a smaller fund accompanied by a much bigger fund. There's many different ways to do it. You just have to find the right strategy for yourself. Venture has changed and you should not try to do the Swenson model if you are just starting out in venture today. Yeah. 100%. That's so true. I think the market is very much open to novel structures, novel idea, fresh approaches, and will reward the managers who actually are first movers into this new world.

38:40But then again, there is a lot of allocators that are stuck in their ways, like dynos type of organizations, trying to force managers into a Swenson-style investing model. Shit doesn't work anymore. That ship has sailed. It's ancient. If I try to say the whole season in a short paragraph, I think these past four seasons and also this past one, it's that the smallest funds win by being the most disciplined and compounding into what they're really good at. That they're replaceably good at and the one line that their LPs can really hold on to. A small enough number where they can finish the job and return the money instead of waiting forever for a number that might not ever come.

39:24in case you have a bigger fund. The clarity is truly on the edge of what you're doing, something truly unique. And that's the front running, the first check done right. Thank you to everyone who was part of season four and for every guest who's come on the podcast. It's helped us a lot in terms of the way we think. And thank you, Fabri. I spent every single day learning from you yet today within the past hour i've still learned a lot more and there's always more to learn as this world is always changing thank you everyone beauty of a partnership no thank you and i'm very glad we made it this far when we first started this was just a let's do a couple episodes and see where we're 50 episodes in and we definitely learned so much from the managers from the aggregate of the managers, from each other.

40:18This is also my last episode. So goodbye, everybody. You're never going to hear from me again. Season five, launching after the summer. Very excited about bringing some fresh blood from some young, fresh talent to this table and see where you guys take this. Last season, we teased some in-person events. And this past season, we did have a couple, one in Los Angeles and one in New York. You know who you are if you attended those events. Thank you so much for coming. Really appreciate it. It was a lot of fun. And we hope to see some familiar and new faces at the next ones later this fall. Yeah, in San Francisco.

40:57Our truffle hunt in Italy. Not too. In Italy. And then we'll see what 27 brings along. We'll see. Thank you so much for tuning in to the Slice podcast, where we uncover the stories of fresh emerging managers across the early stage venture landscape. Thank you, Sunwoo, for producing season four. And we'll see you again after the summer break.