Inside the LP Mindset: What Makes a Venture Manager Stand Out

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0:33Welcome to Swimming with Alligators, the VC podcast from the LP perspective with your

0:39Michael Wooten: hosts, Alexa Benz and Ernest Sepp. You ready? Let's dive in. Michael, it's so great to have you on Swimming with Alligators. Thanks for being on. Well, thank you for having me. I'm excited to be here. I think I first wanted to start off with your allocator story. I know you spent three years at an Atlanta-based family office, then almost three years at an allocator based out of Charlotte, and then another kind of a Bay Area private family office. I would love first to just understand how you got into this world. Or were you just like an eight-year-old who was like, I read David Swenson's book and I want to be an allocator?

1:29Yeah, it's a great question. It definitely goes back further than undergrad. I mean, if you go back to the first inklings of thinking about investing, it was probably when I was probably sub five. So part of it was my grandfather worked at a bank and he had worked at a bank and examining banks for his whole career. And so every holiday, birthday, whatnot, instead of giving presents, he would give all of his grandkids savings bonds. And which I hated at the time, obviously, like, you know, as a five year old, you want Legos. You don't want this piece of paper that I don't know what it is. Um, but that was definitely, it started me thinking about money a lot as far as like, well, what does this mean?

2:19Like, what is this? And I think even as a young kid, I was fascinated. And I remember, um, doing odd chores and collecting up, uh, you know, finding money around the house that probably didn't belong to me. But at some point I had saved up a hundred dollars in quarters and nickels and whatever. And I went to my parents and I said, um, Hey, can you take this to the bank? I want a$100 bill. And they were like, why do you want$100 bill? And I was like, well, it's just like, it's a milestone. Like it's, it's, it's awesome. And, and, uh, in my mind, it was worth more than a hundred dollars and quarters, which I know now that actually a hundred dollar bill is difficult to use.

2:58Um, um, though I will take more of them if anybody wants to give me them. Um, so that was kind of my first, like, okay, I'm not, I'm probably not doing what normal kids do at that age. And then the next big step was probably what really led me down the investor journey was in high school, my older brother gave me a book on Warren Buffett called The Warren Buffett Way by Robert Hagstrom. And I read that. And I, at the time, I believe Warren was the richest person in the world. If not, he was one of the top three. And I said, hey, this seems really interesting. I've always been fascinated by the concept of the stock market.

3:35I'd kind of, you know, been a kid watching it crash in the 2099 bubble and didn't really understand what was going on. And then I was like, OK, well, this is super interesting. I'm fascinated. How do I become an investor? And so that kind of led my journey through college and, you know, read everything I could get my hands on and didn't know how to necessarily go and get down that path. So it was kind of like I would talk to everybody, including all my professors about investing. And they were like, well, this is accounting. I'm not an investor. I'm like, OK, but who is who do I talk to? And so that that got me excited about it.

4:15And then, you know, as I did, did the finance, did the accounting, ultimately got lucky in the fact that I landed at a family office in Atlanta right out of undergrad. And it was one of those small places that they only recruit at a handful of schools where the partners went to. And so I just got lucky that I went to one of the schools that one of the partners went to. And it was the kind of job where they knew that they were probably undercompensating you relative to what you could have done if you went to investment banking. but what were you were um where they were making up for it was the experience and being on the buy side and being able to see uh just a swath of things to be able to go to conferences and things that that were you know usually more for somebody at a vp stage and later so i was there for three years and that was a great experience because i really got to see all of the landscape of both like what's going on in the public markets, but also this introduction to alternatives, which was, you know, they don't prepare you that for that school.

5:22So that's kind of really the foray into the family office. It was kind of serendipity.

5:27Michael Wooten: Did you see any, you know, I mentioned earlier at the beginning, the different places you've worked at as an allocator, um what were the main differences that you saw in the different organizations because you know that I think the adage that I learned as I got into venture was when you meet one family office you've met one family office and that is so true um so having worked at two different family offices and then having um talked to a ton of family offices through the network and um and doing research about how the different ones organize and whatnot they are all different and they're all and it's a people-driven business it's kind of like i think i think a family office is almost like startups in the sense of like whoever the first kind of five people and whoever the founders or the the you know the principles are they kind of set the overall uh tone for what it's going to be as well as like what the goals are what the risk tolerance are you know things like that And so when you come in, so my first job at Atlanta, that was an established firm that had been around for over a decade.

6:41By the time I got there, they were kind of like a well-oiled machine. Although, you know, I'm sure it wasn't always that way. But it was the processes had been laid out. There was already a mature portfolio. And so it was kind of a rinse and repeat. And now we kind of have this thing where we have, this is our investment pace. This is our cycle. and so it was you know filling in for somebody who had already done the job um then i go to the silicon valley family office and even though the family office had been around for several years it was morphing because there had been an external uh ocio and then we were building an internal team and we're taking over part of that portfolio and trying to bring money back in-house but as you know this asset class like alternatives they they last forever so So everything's not always liquid and, you know, without taking a haircut and stuff.

7:32So that's really the wild, wild west. And that totally depends on, okay, what is the goals? What does the principal want? And so I used to joke that my job was 50 % making money, 50 % not losing money, 50 % whatever the principal said. And I don't know on which day which 50 % doesn't show up.

7:54so um yeah yeah that transition's fascinating what was the goal at the time to take things more in-house yeah i think i think it was control control driven and i think so and that that also is a big difference between the two family offices that i've been at was the first family office had been established and the patriarch was largely out of the picture and retired and, you know, traveling around the world as you should when you're retired. And so the investment team had full discretion and it was, we check in on a quarterly or semi-annual basis. Everything's good. Like we're golden. With the second family office, I think it was a control thing where the principals were younger and still active in their day jobs, but they were also in positions of power where they were used to being kind of in control.

8:51So I think that they wanted that same feeling within the family office. And so that, I think that drove a lot of the decisions and kind of the autonomy on that front. In our asset class, being in a position of power in Silicon Valley, you do have a unique make access. Like I can recognize that having a layer between you is not necessary if you are already in that universe and really plugged in in Silicon Valley. Interesting. What's the transition been like specifically in venture? Yeah. So that was, I mean, that was actually one of the other driving parts was that you that control but it was also the ocio had really underrepresented the portfolio from venture which was you know a great tragedy because we did have access um uh the principles had come up through the venture ecosystem and were very well connected within that ecosystem and so that was really our plan and what we were trying to do was build out that um that muscle as well as that allocation within the portfolio and take advantage of that.

10:01So we kind of saw, here's an area where we think we could actually generate some alpha. And then we were still a lean team at the peak. We were four people on the investment team. So we still couldn't allocate to all the other asset classes and really be in the weeds on that. So we were still allocating to managers in all the other asset classes. But then specifically with InVenture, we said, okay, we're going to give part of the pie to managers. and then we're going to use that as a platform to then also have access on the direct front and complement on that front. So as we thought that we could actually have like above average sourcing.

10:40When you're starting that from scratch, what were some of the learnings?

10:47Michael Wooten: I would love to know what was your process in starting from scratch and then looking back now with some time in between, what would you have done differently? Yeah, I mean, it's always you always love the what would you have done differently? So I will caveat, you know, I joined that family office in midway through 2020. So it was also a crazy time where nothing was normal. And it was hard for me coming into that that that industry really and, you know, moving out Silicon Valley and everything. Understand, like, what is normal was not normal because like nothing felt normal. But I think that the first process was talk to people who had been doing it for a long time.

11:27And so it was, you know, first of all, where do we have access? It was kind of easy. Like at that point, you're pretty clear on who tier one, tier one and a half, what not are. So the first step was kind of, hey, can we get into these funds? Where are they in their investment cycle? And start building out that relationship and start having conversations. And then from there, it was, okay, we need to talk to as many people as we can and just build out that, you know, that muscle and exercise that. As far as learning goes, I wish we had talked to more people without writing checks. But it was the era of, you know, there was a lot of FOMO.

12:08And it was one of those things where it's, if you've only seen one deal, that's the best deal you've seen. So trying to get up to speed and see more deals and see what's normal on that front. And then for me personally, I have more of a background or had more of a background in public equities and traditional LBO, like private equity. and in those markets, your forecasts and expectations on financials and things like that where your margin of error was a lot smaller versus seeing a company at a Series A or Series B, you're like, oh yeah, I love this plan. This is great. And then fast forward 12 months, you're like, you're 70 % off plan.

12:45I don't understand. So that was a big learning of, hey, you kind of have to show me, don't tell me. And I think that a lot of people coming into the industry, that's a big change, big difference. It's also, you know, some people think of the little fraudulence or whatever that, you know, there's a lot of stretching of truth, you know, when you talk to founders. So trying to parse out the ones that can actually execute on some of those high expectations is definitely a learned skill. I get this since a lot of the allocators listening are going through the same path, that they too have a similar background to you and are the guy or gal in the office saying, we should be doing more with emerging managers and venture, et cetera.

13:34Is any advice for that transition on, you know, maybe this is not the asset class for everybody. you know like if you were going to sort of like help people make that transition uh what what do you think helps make that successful from a like a career standpoint or even like a personality standpoint um moving moving into our asset class yeah i think i think what i love most about the venture asset class is there's actually no one type of person that that is successful in there. And so it's a, it's versus, you know, if you look at traditional private equity, it's okay, you go do your banking and you go down that path and maybe you get your MBA.

14:22And like, this is, this is the way. And for venture, that's not the case. Like you can have people that have Ivy league educations. You can have people that dropped out of high school. Like there is just, it's a completely free for all. Like you have PhDs and it's very industry kind of dependent. Like if, you know, if you're doing biotech or if you're doing something like that, and that's like, you want that domain expertise for sure. But I think the biggest thing it comes down to is continuous curiosity and then tenacity. And that's honestly, it's, you know, that's going to make you a good investor is because you're going to go ask the questions and you want to learn.

14:58And you kind of want to get on a call with people and you're not just checking a box. You're actually curious about them. You're curious about what they know and why they think the way they think. And if you do that and you're tenacious and you're okay getting rejections, then you'll be good at the asset class. And, you know, there's a lot of similarities to that and actual entrepreneurs. I'd say entrepreneurs maybe have more stubbornness and or other quirks, but the curiosity, like you have to have that. There's no question.

15:28Michael Wooten: Yeah, in our pre-call, you mentioned that HFO and SignalFire were two of the most differentiated managers you backed in the past. I'm curious at the time, what set them apart from the hundreds of other pitches that you came across? Yeah, that it was something that they had to offer founders that was more than just, hey, here's some money, here's my network, and I have some experience, so I might be able to give you some advice. And while I think that those things are potentially valuable, especially if you've had somebody with a lot of experience, uh, who's at, you know, sat in your seat, that could be valuable.

16:09It can also be dangerous because, you know, things rhyme, they don't, aren't always the same. And, and you can be jaded by an experience that you had and say, Oh, well, I tried this and it didn't work. Therefore, it's never going to work for you. Um, what I liked about, uh, let's with signal fire what i really liked about them is they had something that they seemed to be early in the whole early at least within the venture realm of all right data is king we're going to build proprietary data internally and then we're going to use it for from a sourcing advantage and then what happened was they actually were able to take what was they were using internally and helping them source and they turned it around and they were able to give that product to their founders and then that became a way of winning so it wasn't just a way of sourcing the who was the right founder but then it was a way of adding value to the founders that led them getting super pro rata and getting more ownership in companies than they legally had right rights to and so when i was when they were able to actually go through their track record and show us okay this is where we've won and this is why and even though we've had like tier ones that were on the cap table we actually beat them out because we were adding more value to the founders and in this game it's it's it all comes back to the things that move the needle and it's sourcing.

17:27Michael Wooten: One thing that I've been thinking about myself and talking with other fund managers is this idea of differentiation. And it's focused a lot on telling. And I think for some people, they're really good at just telling, telling, and they'll 10x telling even more. And others, they're kind of a little hesitant with it, but still know that they need to continue to tell people. But there's also this idea of like, how do you effectively show it as well? Especially if it's not so distinct as other people and not so early, but it is still differentiation and real. So do you have any thoughts on that? Examples?

18:11Yeah, no, I think that this business, whether you're an actual VC or if you're an entrepreneur, salesmanship is everything. There's a lot of storytelling and storytelling can be very powerful. At the end of the day, you have to actually back it up with execution. So that's always going to be the case. I think that the earlier you go and if you're an emerging manager with no track record or a thin track record, you've got to be able to tell that story. and so that's and the differentiation that you have you have to be able to really talk to it with concrete examples and you can't hesitate and now the flip side of that is depending on which investors you're talking to you also have to talk to lps that want that particular flavor of differentiation um because you know as i like to joke sometimes like people want you to be differentiated but they want you to be on the edge of the box they still want you to be in the box or touching the box, but you can't be out in left field.

19:13So it's like you have to be able to, we have to underwrite what you are. If you're too differentiated, then that's probably going to be tough for the investment committee. So I think that that's somehow, I tell a lot of entrepreneurs this, especially at the early stages, like if you're a pre-seed stage company, you don't really have an MVP. You definitely don't have product market fit. You really got to sell the sizzle, not the steak. Like by the time you're hitting, you know, that growth phase, you actually have the stake. You can sell like you've got a better stake than everybody else. And I think it's the same with emerging managers, too.

19:48Another topic that I really appreciated your take on was this shifting dynamic in power between the VC and the founder, specifically with like capital efficiency around AWS and modern infrastructure. Could we move to that topic? Absolutely. And that actually ties in a little bit to, I think, what HF zero and some of these other, you know, whether it's NEO or some of these other, you know, I'd say former accelerators now call themselves residency programs. But but the idea is like. If a business is more capital efficient, by definition, it just needs less capital in order to be successful. and if you are a VC where you're primarily just providing capital like that's not going to be enough because that's a commodity and so I think that um as that dynamic shifts it's not going to be enough like if you want to get that same ownership percentage that you had before which is also you know you maybe you don't need that as much if it's you know if you think that future dilution is not going to be as high um so that's a different but that's a different conversation um So I think that you're going to have to do more to give your founders to win.

20:58And I think, you know, Andreessen Horowitz was early on this. I think that was when they came into the industry. That's what they kind of saw as lacking and based on their own experiences as entrepreneurs. And I think that that's a huge shift, especially as we've moved from, you know, heavy hardware phase of early Silicon Valley to then software to then cloud computing and having all these tools and things like Y Combinator, the cost of capital has just changed. And therefore, you have to be a more full service and or you have to, you know, everybody wants three things as a founder from your from your investors.

21:38You want introductions to customers, you want capital, and you want help recruiting, because those are the three things you need to win and to continue to grow. And so a lot of the firms are now having to figure out, Hey, are we doing this with, are we hiring people specifically for recruiting? Or are we doing the recruiting ourselves, you know, as like the benchmark model? Um, but you've, you've got to figure out and solve for that, or you got to figure out where you play in the ecosystem and what your specific value add is, and then be really friendly with the firms that do all those other things.

22:10Michael Wooten: Now we're going to take a quick break to speak with our sponsor. You have a very active secondary and tender offer practice. That's what Mike is known for. I'd love to talk more about what you're seeing on the secondary side, specifically for these growth stage kind of hot portfolio companies. Yeah, yeah. It's an exciting place to be. You know, every year there's a question asked of me by somebody in the media of, hey, are you seeing a slowdown in the secondary market? And the answer is no. If anything, it keeps, you know, going faster and faster and faster. I would say the somewhat new development, if there is one, is that companies are starting to see the secondary, especially for these growth stage, kind of late stage companies, as really part of their IPO journey.

22:58So it used to be viewed as its own transaction. Maybe you would do this because it took so long to have an exit. So you want to release some of that pressure, give employees liquidity and keep going. But now it is frankly quite unusual for an IPO candidate company to not have a tender offer as part of its kind of journey towards being either a public company or actually having an exit as well. It helps bring in the right investors on board. It helps test the market in general in terms of what people are willing to offer. It also helps to test out the overall kind of built up of pressure among insiders on how much liquidity they want and how much longer they want to stay.

23:40Some of the tender offers that I work on end up actually being undersubscribed on the sell side. Because a lot of folks are saying, hey, we want to wait. We want that IPO, want that big exit. But the big development is the thinking behind it, which is even when it used to be that companies would do this because they felt like they had kind of pressure. And now they are doing it because they really feel like this is really more of the necessary step rather than anyone's pressuring them to do that. And it's exciting to me. It's exciting to have those conversations in the boardroom. It's also exciting to have those conversations with investors who are now coming in and saying, hey, I don't have to come up with some sophisticated forward purchase contract that I have to be a part of.

24:28I want to be part of this company. there's going to be probably a secondary. That's the way to get into this company pre-IPO or a couple of years before that. And that's what I'm going to focus on. And so now the key is how do you get in, how do you negotiate the terms and so on. Yeah. No, that's fascinating that it doesn't have the same stigma. In fact, this idea that there's so much uninvested capital in the private markets that why not go raise from some of that growth capital as opposed to rushing into your IPO. Interesting. Yeah. Are the, on the buy side for secondaries, are there any changes you've seen of late of who is participating?

25:13Is it more retail investors through, you know, structured vehicles? Yeah, so I would say, you know, I'm seeing two kind of main developments. First is that the strategic investors and their affiliated funds are now participating in this very actively to a point where they are leading some of these. And what I mean by that is, you know, a lot of times you've got funds that are affiliated with, you know, a strategic party that actually wants to be in this company. Yes, as an investment, but also to, you know, to be closer to someone who may be providing some commercial benefits to them, you know, development agreement and so on, GPUs, whatever you can think of.

25:59And so that's an interesting development because it used to be that those players were very hesitant to participate in secondaries and tender offers. And the other one, of course, is this proliferation of secondary only funds. You know, some of them are on the, you know, kind of the borders of what we feel comfortable with. And what I mean by that is sometimes, you know, you log in online and it says buy your, you know, insert private company shares today pre IPO. Well, you know, that feels a little bit like advertising of private company stock. We don't feel comfortable with that. You know, sometimes we do have conversation with them about what they can and cannot do.

26:43But many are very much operating similar to VC funds. It's just that they are focused primarily on these growth late stage companies. By the way, I should say these days also secondaries are happening at every stage, including seed rounds. And it's not unusual at all for a seed round to have a secondary component. But, you know, the focus so far primarily has been for these secondary only to be late stage kind of pre-IPO, pre-exit companies. And that's their focus. So the exciting part, obviously, is negotiating that getting in. They are asking for their own terms. I think that's important. But at the same time, what they're buying is shares from either early investors or employees.

27:26So the concept of kind of a negotiated liquidation preference or board seats, usually not there. Those two are fairly new developments. They do require sophisticated counsel to navigate. And I'm not just saying it because I'm sophisticated counsel. There are ways to do this right. And there are ways to, you know, frankly, get in trouble. And we're also seeing that where you have issuers, you know, who call us and ask us to make a very carefully placed phone call to investors who they think are crossing the line of what they feel comfortable with when it comes to, you know, soliciting buyers for these shares of private company stock.

28:10Yeah, no. A lot of the folks listening are allocating into venture, and I'm sure spending a lot of time looking at these secondaries. So it's helpful to know who you can go to to ask for advice on where you can get into trouble. Yeah. I'll tell you one other thing, which is, you know, the thing to keep in mind for GPs on these transactions sometimes is that there is a delta in valuation, not always, but sometimes between if you have a joint kind of primary and secondary round. and oftentimes folks don't appreciate the fact that you're getting kind of a blended valuation in the company you're also getting a blend of shares but that's frankly a little less relevant because ultimately if you're having a successful exit you know you're expecting to take kind of an honest convert basis return anyways but the valuation and what your entitlement is especially if you are let's say in a second you know in a fund of funds or are investing through some sort of an aggregator to try to figure out what the value of your holdings is sometimes gets more complicated than you think because you got some shares that were bought in a primary, some shares that were bought in a secondary that was coordinated by a company, and some shares bought in an arm's length secondary from some investor that just approached the fund directly.

29:29Yeah, it does feel like you end up being quite far from the key decision makers either way. And now back to our LP interview. by the story or is there a distinction you see between those cases where people will in fact need less capital and you know we're also seeing sort of the extreme other side of that which is like mega rounds and the like there's definitely not an anti-dilution story there you know is this is is that a is there a distinction between this like how can both these stories be true Yeah. So I think that a, the capital intensities of those large companies is very different than, because they're not pure software companies.

30:17So that, that, that's, you know, and I would also say that that's not venture at this point, you know, maybe, you know, Anthropic at a billion dollars, that's, that's still venture because there's largely, you know, unproven whatnot. You know, Anthropic at a trillion dollars is, you know, they're one of the largest companies in the world. So it's a different, that's a completely different game. You know, I was talking to a guy earlier this week that is head of venture at a large global asset manager. And when I was talking to him, he was like, oh, we don't, there are only about a hundred companies in the world that we can invest in that fit our mandate and our size.

30:50And when I was like, oh, so you're actually not head of venture, you're head of growth, private equity. Like that is, so, yeah. And so, so I do think that they're different. They're two different markets really in my head. And we even like when I was at the family office, one of the first things I did was separate out and create two different asset classes within our tracking system and really had growth equity as its own asset class that was separate from LBO because it's a different risk factor you're underwriting, but then it's very much separate from the early stage feature. So, cause you're, you're, what you're doing there is like you're underwriting, what is the risk that you're, that you're underwriting and the return expectations.

31:27I think that you have to look at capital dilution industry by industry too, because I think if you look at biotech or anything that you have to go through FDA, it's just going to be a very different dilution framework. And everybody lately, the big thing everybody's been talking about is these tronched rounds.

31:49Michael Wooten: What else do you think needs to change from an allocator perspective that you aren't seeing today? You mentioned that of like being able to split it out, but are there other things you think or other trends you're seeing that would help with as the asset class matures and gets more complex? Yeah. I mean, it always kind of goes back to what is your goal with the asset class and what is your, what does this fit? You know, as, as an LP, especially an institutional investor, there's always the underlying, like, what is my portfolio supposed to look like and what is it supposed to be providing? and what is this venture sleeve?

32:27What is that? What does this fit within the portfolio? And then from there, I think that you have two different dynamics that are difficult and make the LP job very difficult. One is the long-term nature of, I don't really know my winners for seven plus years. And that's where the allure of the growth equity is. You kind of, hey, we've already seen that these are the winners. We know that they're the winners from a company standpoint, but then where you get there, it's all about valuation. And so that's the potential hiccup there. And the other aspect is this asset class is incredibly cyclical.

33:08And I think that that, to me, was the biggest learning curve of, you know, my whole career has been around portfolio management and trying to think about diversification, the benefits of diversification. and you know historically i think about it from a risk standpoint of like how am i diversifying my risks and and the diversification of of the returns but there's also this diversification of liquidity that is a component that is different and especially in venture where sometimes you can't artificially create your own liquidity like you can in private equity you know lbo and definitely in the stock market or bonds and liquid type stuff to that point are

33:46Michael Wooten: there types of funds and strategies you wish you saw more of today or that you anticipate should be you know maybe they're a little contrarian today but they'll be they'll look very smart in the next 10 years i'd say yes but it what i okay here's here's my hot take for for today i there's been a lot of talk lately about you have to be a thesis driven vc and you have to have a sector focus or you have to have some like boilerplate thesis. And I think that that is like really like I think it could work, but I think it works better at the growth stage. Honestly, I think that at the early stages, that doesn't make sense to me at all.

34:30I think your thesis should be find great founders who are trying to tackle hard problems. And I think that specific investments should have thesis. So if you go invest in company A, the reason you invest in company a should have a thesis but as a fund to have an overall arching thesis i get it and i understand why we got here it's because once again it's lps wanting to put people in a box or put funds in a box and then the problem though is everybody then goes and you're reverse engineering you're like i'm going to be differentiated because i'm only going to invest in fintech between you know x and z and um but then when everybody does that reverse engineers it you've crowded out that market now you're no longer differentiated because everybody else is doing that i always like

35:11Michael Wooten: asking uh lps what are some of your favorite questions or tactics with diligencing a fund manager yeah i really like understanding um you know how they are as people because i think that that always like everybody is going to be your best friend when they're trying to you know sell you on something and so it's like if you're if you're if you have money and you're trying to give somebody uh you know potentially give somebody money they are going to love you no matter what So I do like the, you can't always do this, but if you can go to a restaurant with somebody, see how they treat the wait staff, get in a car, see how they drive, see how they, you know, because a lot of personality comes out when you're driving on the highway.

35:54You can really get to know some people, myself included. The Michael, would you drive me somewhere to test? Yeah. Well, I mean, so I used to do this when I was at one of my former jobs, when we would hire people. and and I think hiring a fund manager is probably similar to the hiring anybody but I would tell them at the beginning of the interview I would say hey I want you to teach me something we're not going to do it right now but we're going to come back to this in 30 minutes or whatever at the end of the interview and then part of that is um I'm going to say it doesn't have to be about investing in fact like it's probably better if it's not about investing like but I want you to teach me something and then part of that is okay now I've I've got them like oh man I've got to think of something before this interview is over and someone will see like can they multitask and keep the conversation going while in the back like they're thinking about something else and then part of that is i really don't care what they teach me it's about communication and it's like can they break down a concept and can they really um do they get flustered by it and it's an unexpected question that they probably haven't gotten before versus if i talked to you it's like what is your you know portfolio strategy or what is your liquidation plan like all that kind of I'm like, they had that memorized.

37:04So you have to throw them a little bit of a curve ball. So they're thinking on their feet. And then that's, I was like, okay, this interview didn't go as I expected. How do you recover from that? So that's, you know, not investment related, but it's once again, this whole industry, everything is, it's all people related. And it's, it's, you know, one of my favorite books is the business adventures. And you go, you know, that book is so old and it's still so relevant from all the stories in it because it's all people driven.

37:32Michael Wooten: Are there any kind of pet peeves that you've had with fund managers that repeatedly showed up that you just don't understand why? Yeah, I mean, look, I think life is short. And so I think that dealing with people who are, you know, a-holes, it's just not it's not worth it. and it's um no there's some tolerance and it's one of those things where it's like okay if you're putting up numbers and you're doing great then maybe there's a little more tolerance for that and but at the end of the day it's like there are a lot of managers there are a lot of people you can work with and i think you know for me it's all about communication like even if you get back to me and um you say hey i'm slammed right now like let's dive in this at another time just like a quick response but no response or non-response especially when you know we've invested you and we've given you our money even if we're a small portion of the fund it's uh you know i think that treating you know all of your customers the same regardless of how they i think that's really important to me um and you know i saw firsthand at one of my former employers um you know at one point they had an investor who was waiting on the phone and and I said hey like you know I can step out we do you know you can take that call right now and the partner said nah he's a small investor he's kind of annoying and I'm like oh my gosh no but he's your investor like you should take this call and I think that that's like the mentality like if that's a good way to run a business regardless of what kind of business you're running so I think that that's how you should treat other people.

39:14And that hat you're wearing these days you're running some SPVs under the snowball adventures title. I love it. You have been picking deals on behalf of this family office for many years. You also are coming at it from the allocator perspective where you're sort of reviewing these SPVs. Do you think any advice on if you're packaging SPVs on behalf of other folks, you know, how do you do that so that it's more allocator friendly, so that family offices can participate with what how does an allocator present spvs to uh his homies yeah i think i think a communication is everything and b is like you should never sell something that you're not putting your own money in i think that like it like some people have told me like you should go into sales and i'm like i could only work as a sales job of a product that i really truly believe in like i can't sell a lemon like i'm sorry it's just not my personality i'm you know boy scout like honest to a fault.

40:17So if I'm really excited about a deal and I want to invest, then it's easy for me to go and say, Hey, like, let me go to my network and say, I think this is great. I'm putting my money in it. Would you like to join? Um, and I think that that's the authenticity. I think, I think that what you get, um, where you get in trouble with SPVs is thinking about it purely as a call option where, and you're overrunning and you're saying like, I don't really care if this works out or not because it's like heads I win tails you lose and that is absolutely how you you know like lose complete trust in this industry um so I think that that is and we saw a lot of bad behaviors more so probably in SPACs and whatnot back in 2021 and I do worry about some of the SPVs now and like especially when you start thinking about charging fees and everything on that front I think I think a I think alignment's always good and I think getting paid on the back in and not getting paid on the front end is, is ideal.

41:13So I think that that's, you know, yeah, you did work. And so you, maybe you need to take a little bit of a management fee or something like that, but it's, it's a, you know, that's the trade-off versus raising a fund, raising a fund is a lot harder, I think. And, but then you get, you know, a little bit more comfortable from that management fee. Um, so yeah, I think, I think, look, honesty, transparency, and you never sell something that you're not buying yourself.

41:37Michael Wooten: Well, Michael, we've loved speaking with you. Thank you so much for sharing your journey. And thanks for being on this one with Allocators. Absolutely. This has been a lot of fun. Thank you, guys. See you later, Allocator. After Portfolio Tile, investing with a smile.