LP Destroys ‘Fees on Fees’

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1:03welcome to swimming with alligators the vc podcast from the lp perspective with your hosts alexa benz and ernest you ready let's dive in then it's great to have you on the show thanks for being on um of course one thing that i wanted to uh talk to you about that i was interested in from our pre-conversation was how you came from baltimore i'm not gonna stop there because it'd be like, how did you get out of Baltimore? No.

1:33How, you know, your background from Baltimore to Cornell and how you first got pulled into finance and private markets. I just want you to share that story. Yeah. So, you know, I was born and raised right outside of Baltimore and I came out of the womb immediately knowing I want to allocate to venture and private equity funds. You know, my first word was actually it was an acronym. It was LPA. Now, no, in all seriousness, I, you know, always loved kind of, you know, classic story, you know, math and science and reading kind of sci fi and all of that. My dad was recently retired, actually, but he was for 37 years worked for the DOD as an engineer.

2:16So, you know, blowing stuff up, blowing stuff up and seeing what happens is literally about all I know of his job. So I've always been cognizant of the tech broadly. So everything from the computer games and RuneScape back in the day to my dad being an engineer. I'd always kind of thought about that. And then someone also, my mom being a public school teacher, also really respecting folks that are doing things that are a little bit more, call it selfless or kind of the more humanity side of things. So, you know, long winded way of saying I got to Cornell and I originally actually applied into the arts and sciences program and then decided to be kind of econ or econ math or something in that vein.

2:59And, you know, I kind of realized after I got to campus that I really, you know, I wanted to kind of marry, you know, the quantitative background. But also, you know, I'm much more of a people person. But also, you know, I knew I eventually wanted to do something that in some way, shape or form makes the world a better place. One of my great mentors is the CEO of a very large construction company, and he grew up East Baltimore, son of I think seven or eight, and kind of classic American story pulled up by the bootstraps. And something I learned from him was not necessarily having to go out immediately and working for a nonprofit or whatever, but there are other ways to kind of go into this and kind of leave the world a better place, so to speak.

3:39So I know I'm pulling on many threads there, but I ended up, you know, joining or kind of transferring into the operations research engineering department at Cornell, which, you know, is kind of the, you know, if, you know, math, statistics, computer science, business all kind of had, you know, a love child, so to speak, that that would be what OR is. And, you know, I really enjoy kind of the quantitative side of things, but always, you know, was able to, you know, think that, OK, I'm going to do something more on the people side of things. I want to, you know, be able to go into a career where I can, you know, make enough money, where I can give back in some way, shape or form over the long term.

4:13And then I frankly just kind of fell in love with the venture capital industry broadly. The Cornell Endowment, I think it's about$10 billion. You were there at this inflection point. Over those four years, is there a favorite story you can share? you're talking about sort of the human side of this and like just any favorite memory or something that comes to mind. Yeah, I'd say there are two. One kind of reflects back on my past and one kind of ties in with with summation now. You know, it kind of goes without saying it's almost table stakes that I got to, you know, meet incredible people, you know, from all walks of life, some of the most successful investors, you know, in the world at a very young age.

4:53I mean, And, you know, the fact that, you know, when you're an LP, you're meeting typically with, you know, the heads of firms, you know, the managing partners and GPs and IR folks, you know, incredible exposure for a relatively young age. But something that I really enjoyed was also, you know, getting to know other folks kind of in my shoes, you know, on the LP side of things. And one of the, you know, personally most gratifying moments was I got to meet the head of the Baltimore County Public School Teachers Pension. And I got to, you know, we were at a, I think it was a credit event, but I got to meet him and shake his hand and say, thank you for, you know, what you and your team do.

5:24Like, my mom is a, you know, is a 30 year veteran of the system. And, you know, because of your work, you know, was able to put me through Cornell without too many student loans and now be in a position where I am today. And that was, you know, kind of, you know, a full circle moment, even if I, you know, still to this day struggle to explain to my mom what private equity actually is. But that's another whole story. You know, the other one, and I think it speaks to not only just kind of the, you know, kind of the what the core of being an LP is, but I think also just a little bit on kind of the, you know, luck and serendipity and kind of non-linearity of, you know, the world broadly.

5:59Roger, the head of Summation, who was the head of private equity at Cornell when I was there, we were doing a lot of work on the European growth equity space and went over to a trip over in London and met with a number of managers and then over into Munich as well. And one of the managers was a gentleman who had spun out of a large growth equity firm he had found at their London office. And it fit pretty well into the kind of thesis that we were looking for. Ultimately, we didn't end up committing. I believe now we're still doing it in kind of an independent sponsor way, but got very, very close and did a lot of the work, et cetera.

6:35But what's interesting is, you know, the first meeting we had there, he had Baltimore Orioles cufflinks on. And we started chatting. And, of course, you know, I, you know, as a proud Baltimorean, if you will, always like to, you know, bring up those references. But he mentioned that, you know, that was where he's from. We went to high school there and he actually named his firm called Farview after the street that he grew up on in Baltimore. And, you know, that kind of hung out in the back of my mind. And then, you know, we still keep in touch and he's a good friend of the firm. And, you know, fast forwarding to summation, and I'll get into it in a little bit, but I effectively helped to kind of helped Roger co-found the firm.

7:13He's the founder, but I kind of helped on, you know, from day negative one. and as the first employee, I helped with everything, but including hiring my now colleague Quinn, who runs our IR and biz dev efforts. And by happenstance, she also happens to be from outside of Baltimore and around my age, but we didn't know each other. But essentially, it turns out as we were chatting and speaking through the recruiting process, we found out that she was from Baltimore and we did the classic, oh, where exactly, what street, et cetera. she was like oh i grew up on this small street you know down on charles off the charles street called farview and i was like wait a second hold on a second and then we ended up figuring out that um this guy john um who was the the london guy i believe his parents uh i believe his parents sold their house to quinn's now parents and that was where she grew up what i love in that story is it kind of puts together both what i've known from you and and rogers that like you guys have the mathematical and analytical brains, but also really understand things are, this business is about relationships and how you marry the two.

8:23And you even noticing people, the cufflinks and all that stuff and seeing how, oh, how do we build rapport? We're seeing it. We talk about this on the GP side a lot, but like, it's definitely also needed on the LP side of like, as things get faster, faster, breakneck pace, can you still cultivate strong relationships and notice things as everything else is moving fast. So that's awesome. You know, we've spoken to a lot of people on this podcast about starting new things and having all the experience. Could you talk about kind of like when the summation opportunity came up, what you had learned from previous stops and what made this like, oh, I have to jump onto to this opportunity.

9:11So to help kind of round out and kind of set the stage, so I spent a great four years at Cornell. I primarily worked under Roger, the head of summation now, but also did the rest of the allocating across credit, hedge funds, et cetera. I joke that I leave all of that to people much smarter than I am. I did the CFA, et cetera. And then I ended up moving over to a firm called Summit Rock, which is a large outsourced chief investment office, OCIO here in New York, which did very similar work, but instead of one client being, you know, Cornell, it was 40 clients, you know, ultra high net worth families, smaller foundations, et cetera.

9:47And, you know, there I was there for about two years and also saw, you know, kind of the more commercial side of the business. And, you know, I wasn't directly interfacing with clients all that often, but, you know, understanding, you know, a business that doesn't have a single captive pool of capital, you know, raising money, you know, kind of all of those things, the tax implications, et cetera, You know, I kind of got to, you know, see that, you know, to seal one of Roger's phrases, you know, there's more than one way to skin a cat. And I had a great experience there. And I parted ways with them at the end of 2022.

10:18And, you know, at that time, of course, it was, you know, not the world's best market. You know, especially if you're a early mid-career allocator with one adventure and growth experience, you know, when the market's a tank, et cetera. And, you know, I was looking out all over the place and, you know, I'd always, you know, kept in touch with Roger and, you know, obviously thought very highly of him. And one day he called me up and said, hey, let's grab a coffee and catch up. It's been a couple of months. And, you know, I went into the city and I realized he actually had an ulterior motive, which was, you know, hey, of course, obviously want to, you know, here are things are going with you, etc.

10:53But I actually have this idea I've been incubating, which is this idea of, OK, I've done a great number of things at Cornell, really helped a great institution. But I've seen this kind of gap in the market for a new kind of breed of allocator, kind of innovation at the allocation layer. And he was explaining to me kind of this grand vision and said, it's still very early days. The board and CIO have signed off on it, so it's not anything not kosher internally. But it's gotten to the point now where I can't do it just myself. I need help more than nights and weekends. Of course, right now, it's just an idea.

11:28I can't formally pay you. But of course, if this thing takes off, you'll be employee number one and we'll take care of and so on and so forth. I would love to hear the summation model today. You were about three years in. And also, if that's shifted since what you thought you were joining. You know, like what has the market, where has the market taken you and what is Summation today? So at Summation, we, you know, the overall vision is we are trying to bring what we call true endowment style private equity out to the real world in heavy air quotes. And, you know, of course that, you know, endowment investing can mean many things to many different people.

12:07But for us, you know, we think that it's more than just being a, you know, long term kind of time horizon or kind of, you know, view of the world and having, you know, permanent capital, etc. et cetera, it's a number of other things that kind of really kind of go into, you know, kind of sum up into kind of one, you know, exact model that, you know, we didn't necessarily see, you know, reflected out there in the real world, but what was being offered internally to folks like a Cornell or a Ford Foundation or a Princeton or, you know, pick your, you know, endowment foundation. And so that being said, you know, at the end of the day, we are a private equity fund investor primarily, you know, we are investing globally in venture capital, growth equity and buyout funds.

12:49We'll do some direct co-investments alongside them as well. But, you know, primarily the vast majority of our capital will be in the funds themselves. And we are a single a single fund, a single commingled entity that it's in an open ended structure. And our job is to go out and find the best VCs, growth equity and buyout firms in the world and partner with them and, you know, build a really interesting portfolio and kind the best way that we can think of for asset owners to access private equity. Yeah, that's definitely a headline grabber. And I think it really speaks to you and Roger's desire to find this true kind of alignment with your investors.

13:29Because Alexa and I have been, since we, I don't know, hopefully we're not the signal, but since we've been doing these interviews, Our friends who are fund-to-funds and OCIOs and consulting firms have been having a hard go at it in fundraising. And it comes back to a lot of times people saying fees on fees. Also, there's kind of pendulum swing of entities thinking that they can do the direct investing into funds or direct assets themselves. so yeah this I was going to ask how this is being received but it sounds like it's going pretty well any pushback you guys have heard or questions that have come up that have really kind of like made you think good question and I'll tie this into the you know kind of what's changed since launch so I would say that you know across the board you know be it small endowments pensions you know foundations sovereigns ultra high-endwards family offices and any flavor of LP you could possibly talk to, you know, we, you know, we've met with, you know, one or many of them.

14:34And I would say that our model really has resonated with them. I think the question is, especially, and, you know, to the benefit of us all, as private markets have become more and more important, and then, of course, all the dynamics around, you know, kind of a jam up in the liquidity coming from, you know, venture and private equity markets, lack of distributions, etc. You know, there are a number of groups that say, wow, I, you know, I really, really like this model. I just can't do it right now. You know, I already have too much, you know, in my, you know, pre-existing portfolio or some other need.

15:05And then you also have the kind of the whole other slew of, you know, groups on the, you know, on the kind of arguably more conservative, you know, end of the spectrum that say, hey, this is a really great idea, but give us a call in three or four years. Once you've, you know, scaled to X amount of money, you know, you're a going concern, you can, you know, raise money on your own, et cetera. And then we'll give you a look. but you know I think really for us it's you know we really find you know when we find the right LP that you know has the desire you know for you know and recognizes kind of the value and differentiation that we bring it can be a very very quick you know sales cycle per se I think and it's don't hold me to this but I think something along the lines of the largest non-founding check that we've ever gotten I think was written after you know a 20-minute phone call which you know which just speaks to, and it was a very sophisticated person, you know, much wealthier than I will ever be, I think very highly of them.

16:00And it just speaks to, you know, when sophisticated people kind of understand the nuances of, you know, these markets and the, you know, the incentives and dynamics at play. And, you know, and they see our model. It's, you know, it's a very kind of quick, kind of almost no brainers per se. Now we're going to take a quick break to speak with our sponsor. On the show today, we have our stellar partner and industry expert, Shane Gowdy, leader of Sidley's Venture Funds Practice and now host of the podcast Talk VC. We highly recommend you listen. The interest in secondaries, particularly in these specific names, seems like a fantastic carrot to sort of be dangling in front of your LPs.

16:41What is that? When people have packaged that together, what's an example of what that looks like? Yeah, so it's, whether it's secondaries or whether it's actually primaries, obviously in the world of venture, you know, there's a lot of regulatory implications, in particular on the SPV side, about having an SPV comprised of secondary securities because then that could blow your exemption and now you've got to become a fully registered advisor. But just given the wealth of opportunity, there have been a number of venture firms who have just, you know, kind of stopped kicking the can down the road and decided that they're going to become registered advisors so that they can take advantage of these, I don't want to say once in a lifetime, because we've seen not quite to this order of magnitude, but before cycles in nature where there have been attractive SPV opportunities, but not quite like this.

17:30So the packaging really is just kind of giving an LP of view into what the relevant investment capacity and investment opportunity scope looks like for this fund. And that for an LP is almost the holy grail of, you know, what deals am I going to get into? Not only, obviously, through and as an LP in the main fund, but if I can be economically advantaged to either get direct, you know, access to deals, you know, with some portfolio companies where, you know, frankly, given the size of these deals, it's just rare is it that many of the main funds can take the whole opportunity available. So there's just there's a lot of excess deal opportunity for so many firms that they've got to, you know, have a pass the hat approach to getting their key LPs additional ability.

18:16And, you know, LPs are smart and they're taking advantage of, you know, that kind of access and that kind of opportunity to be able to, you know, structure a relationship that is obviously pointed and mindful about their commitment to the main funds. but looking more broadly to a more holistic relationship and when those excess deal opportunities do come up, making sure that they're at the right spot in line to be able to invest in those deals and that the GP has them in mind to do that. And that can include, we've seen a lot of increasing requests about transfers of LP interests. So if you've got other LPs who are interested in getting liquidity by selling their interest, We've seen a lot of new LPs and venture funds not only be interested about direct opportunities into the portfolio companies themselves, but if there's secondary opportunities to pick up interest in this fund, in particular if it's got a great portfolio, there's no better way for them to get more access than to pick up another LP's commitment at a discount.

19:18So, you know, that for them has been, that's also been a little interesting nugget of at least not necessarily, I wouldn't say there's an overwhelming amount of that activity, but I think interest level has risen for very sophisticated institutional LPs to start asking those kinds of questions as they're coming into the main fund program. It's been a fascinating, you know, past year plus to kind of have these kinds of discussions. Yeah, these later stage deals definitely feel like they are garnering the majority of people's attention, capital, hype. Are you seeing that slow down at all? Is that a narrative of the beginning half of the year?

20:03And as we go into 2027, are those opportunities still attractive? Yeah, they are. I mean, I just, you know, given the tidal wave of interest in these just huge, you know, rounds that are going into these companies, again, it's the proverbial FOMO effect, not only at the VC level, but at the LP level. You know, they want to never have to answer to their own constituents that they haven't taken advantage and been a good fiduciary. And I just think that the risk meter is not always there when it comes to these rounds, because there's no reduction in price and value happening to any of these companies.

20:51And so if you're missing out on that opportunity to be part of that, even if it's just a small part of some SPV, and it's been the bane of a lot of companies' existence, of course, because everybody's trying to throw up an SPV to invest in these companies. And, you know, they're already very nervous about what their cap table looks like. And you can only imagine the proliferation. And, frankly, the kinds of negotiations that have gone on between companies and SPVs, which never in the world had taken place two, three, four years ago, of, you know, that they have the co-sale rights on investors not only apply to the SPV selling its interest in the company, but also the underlying LPs and an SPV.

21:37So that upward reach of control by the underlying companies, because they have such a significant leverage point when it comes to who gets what allocation in these deals, they can almost ask for the world in some of this way. So it's been really interesting to see Ventures' reaction to that, because oftentimes that's the way that the GPs respond to LPs. and having that same kind of playbook put back on them, you know, it's been uncomfortable, I think, in certain situations. And in some ways, that's just part of getting into one of these rounds. This is just what you got to do. And, you know, it's also educating LPs along the process.

22:14Because I can remember the first time this happened, which was, you know, about a year ago when a company said that all these rights, drag along and tag along and co-sale, not only apply to your interest in the company, but the LP's interest in these SPVs. you know that just sort of blew people's minds and trying to educate people and it's like if you want the access these are the kinds of things you may have to agree to and yeah all of that has been a fascinating exercise um to try and rationalize and you know kind of talk people off the mountaintop from jumping off of it um and to just try to see what the value proposition is in some of these kind of mega deals yeah you are you're sort of the maybe not on paper but you are the equivalent of a common shareholder.

22:56You're getting in line. You know your place a little bit. Yeah, that's right. Interesting. That's right. Yeah. Thank you for joining us on the show, Shane. If you're a GP or LP looking for expert guidance on fund formation and venture capital legal matters, you can visit Sidley's website, S-I-D-L-E-Y.com. And now back to our LP interview. you. There are two threads I kind of want to, I want to get some free financial advice right now, Dan. Fees on fees as a concept feels like it is out of control right now, particularly with the top 10 names. Like the, this, this is like the most extreme example of that we've ever seen.

23:39And you're coming from working with a guy who managed to avoid a bubble. So what are you all doing about that feeding frenzy? How do you approach this kind of do you need access to those hot names right now? Is there a way that you're accessing them that makes more sense? or, you know, what should we be doing to have Cornell's outcomes where 2020 is not a bust of a year for private equity? I think, and of course, you know, all the legal disclosures, this is not financial advice, et cetera, et cetera. I am no lawyer or anything like that. But, you know, it's a really tough time. And again, every institution and individual is different.

24:28So, you know, it might wildly vary across the board. But I think, you know, our ethos is, you know, and again, we are, you know, we are doing venture capital, growth equity and buyout. We're roughly equal weighted to all three of those. So that being said, inherently, there is somewhat of the counterbalance of, you know, in our buyout book, we tend to not do, you know, software or tech within our buyout book because we're already getting so much from the other two thirds. So there already is an inherent kind of hedge where you have – in 2022, the best-performing names were very boring lower-bid market industrials and waste services businesses, for example.

25:10You know, the opposite of, you know, your high flying, you know, you know, private Mag 10 or whatever it may be. But, you know, beyond that, it kind of the, you know, I'd say that it kind of the portfolio level, we really try to, you know, stick to our guns and, you know, say, hey, you know, we are doing roughly two new names a year in venture, two new in growth, two new in buyout. here is our ballpark check size, you know, here is the, you know, relatively small amount we'll do in direct co-investments as well. But we want to, you know, kind of stick to that path and not let, you know, some of that, you know, momentum or, you know, the shiny, chase the shiny object, you know, kind of take us.

25:46So I would say that that's part of it, as well as, you know, speaking specifically kind of within a more venture-y world with some of these, you know quadruple layered spvs and other things you know to be completely honest i i'm disgusted by a lot of what i see and i think that there are a lot of bad actors um that will come out especially post the rumor of spacex and anthropic and open ai's you know um ipos and then you know you hear these crazy things about you know i didn't know they existed but forward contracts for you know employees equity that are done through an spv that's then syndicated elsewhere and it just kind of makes the hair in my neck stand up.

26:26And I say this as a self-derogatorily, very wise 31-year-old, a lot of it reminds me of the bubbly mentality of 21 and 22. However, the challenge is this time, it's even more all-encompassing and a lot of these businesses are real businesses. So it is a little bit of a catch and a balance. I think the way that we're thinking about it is, A, we are alpha-seeking fiduciaries for our LPs. We want to do true long-term outperformance. And for us, we have done a lot of thinking around who, what managers do we want to partner with that we think are going to be skilled or at least better than most of the other folks out there at investing in a hype cycle.

27:05So when we think about our venture managers and our names, we're also being cognizant around how much exposure are we thinking we're going to get in some of those later stage, arguably overvalued, very sexy names per se. And then also how much are you going to get in other areas that might be a little bit more contrarian or less in the vogue. And we – I've alluded to it. We do some direct investments as well, primarily and for all intents and purposes. as we're doing it alongside of our GPs in a relatively systematic way to essentially offset our own fee load. So, you know, for example, if one of our managers came to us and said, hey, you know, in this fund that you're in, we're putting in X amount of money into SpaceX, or I guess, I don't want to say Anduril, you know, we're doing that, we're voting with our feet.

27:54You know, we'll look at that, we'll underwrite the alignment and sanity check it and make sure the thesis is there and isn't something totally out of, you know, left field. And then we'll probably write a small amount of direct dollars into that, again, really at good economics to offset our fee load. We're not asset pickers. It's not my job to sit there and say, you should have done Helsing versus Anduril or the valuation is too high. I leave that to the GPs. That all being said, I'll take an anecdote from one of my family office friends. They met with a number of the, call it the crossover-y late-stage folks, and on their tour of Silicon Valley on that trip, something like the same 10 names were in every single portfolio in different weights.

28:41And again, I'm sure that the returns will be just fine. But at the end of the day, sometimes when you start seeing that, you realize that, okay, access to just some of these names is great for some people. But at this point, I think we're taking our foot off the gas a little bit. And of course, we'll let our managers direct the capital where they think is smart. But we're not trying to add our overlay on top of that. That being said, if anybody wants to give me SpaceX stock at their Series A valuation, call my number. But, you know, besides that, you know, we're not we're not trying to, you know, get, you know, get cute with little, you know, short term pops or anything like that.

29:20When it comes to venture and even maybe growth equity, what what what what are you looking for? I know you try to do the rain man and figure out, all right, how much exposure are we going to have and kind of the hypey late stage names, what's going to be kind of countercultural and non-consensus. But then you're meeting a person. So how much is kind of prescribed versus like I'm also looking for these qualities in an investor? It somewhat depends. I'd say it's somewhat top down and somewhat bottoms up. And, you know, I'd say from, you know, the top down perspective, as you know, as I was mentioning around the, you know, the, you know, sticking to our guns as far as the number of new relationships a year, that was one of the learnings that came out of the, you know, 21, 22 timeframe around vintage year consistency.

30:12And, you know, all every academic study, you know, you can cut and slice any of the data any way you want. The number one thing to be a good private equity allocator is don't miss a vintage year. Be consistent and also don't necessarily, you know, over allocate into years. that might be hot. Not try to kind of time the market per se. And for us, I think that's really important. And then adding on another framework around two in venture, two in growth equity, two in buyout, that's our specific portfolio construction. And that also forces us to keep the bar exceptionally high. I have the best job in the world.

30:49I'm a kid in a candy shop. I get to meet with, I look at probably 800 or 900 things a year, meet with 200 plus, spend a lot of time with, you know, 75 to 100. And then it's my job every year to get it down to a list of, you know, something like 20 to 30, really high quality names across the board, across strategies, every possible, you know, way you could think. And then we have to do the hard work of putting that, you know, portfolio construction together and figuring out, you know, does this make sense now versus this other name that might be coming later, but then this, we also have this exposure from here.

31:21And that's kind of the art of it. And, you know, for us, I think it's when we go into a commitment, you know, it's, you know, we do a traditional, you know, institutional underwriting process, you know, we'll call all the references, we'll do background checks, etc, etc. You know, we're really not trying, we're trying to be kind of, you know, sober and thoughtful and measured while also being able to be opportunistic and, you know, move when we see something that is exceptional. You know, for us, I think, you know, and even thinking back to Cornell, probably the shortest timeframe from meeting a manager to, you know, signing a, you know, a commitment was probably in the, you know, four months range.

31:55but I'd say it certainly tends to be much longer than that. And, you know, with, with these, you know, with this industry, a lot of it is that pattern recognition and starting to recognize, you know, what is common and what is different in the world. So, you know, when, when, you know, I'm out there meeting with a number of, you know, interesting GPs, you know, it can pretty quickly come to mind, like, okay, this is actually very, very interesting. I'm going to, you know, metaphorically raise it up the chain and rope Roger in if he's not already in the meeting and, you know, kind of get them started in that process there.

32:23You know, as far as, you know, specifically what we're looking for, I mean, a lot of it is the, you know, kind of what you'd expect. You know, we're looking for, you know, professional, you know, fund managers that we could be with for hopefully multiple fund cycles and, you know, that hopefully, you know, knock on wood, are going to, you know, totally explode in fund size down the road and, you know, kind of, you know, cater to a different set of LPs. you know we're very open to emerging managers and first-time funds we tend to lean more towards you know first-time first-time funds not necessarily first-time fund managers because at the end of the day you know when you are running a fund it's not just going out and doing deals it's also all the back office it's raising money it's xyz there's a lot of other things that you know aren't necessarily you know kind of the obvious sexy things you think about when you're running a firm.

33:13And, you know, if we're already taking that, you know, that risk of, you know, being a newer, you know, a newer fund or firm, you know, having, you know, that understanding that the person, you know, has in some way, shape or form kind of done some of those things, you know, helps us get comfortable there. And then finally, I think, you know, in reality, you know, by definition, we are incredibly alpha seeking, you know, we think that there is alpha in, you know, every part of the, you know, venture and growth equity and private markets broadly. and you know for me what I really try to understand is you know what is truly different and unique and interesting about you know you as a person or you as a firm or you know what would you bring to my portfolio and you know frankly you know is that alpha or is that beta at the end of the day and you know I think it's something certainly that you know I've gained in you know over the years is you know getting a better lens on that and you know frankly that can that can take so many different you know shapes and flavors it's hard to kind of put into one easy to you know safe sentence but um you know i think and you know you can obviously cut this if you want you know there's the classic saying about pornography which is you know when you see it like when you are you know when you're an lp and you find something that's really interesting and you know you see that alpha potential there you know when you see it um but yes as an interval fund what is that end up, how does that end up affecting your decision-making or your outcomes?

34:36Just like, how does that adjust the math? Yeah. So I, I, I will, uh, I will get a little nuanced here. So technically, um, and I'm putting on my, my CFA nerd hat. Technically we are, uh, we're an open-ended fund structure, not an interval fund. So obviously like open-ended evergreen interval funds are very, you know, hot topic. One of my close friends who's also an LP went to an event yesterday at a law firm on this topic. He was the only LP that showed up. There were over a hundred different GPs there. So this is very much in the mind, you know, more so on credit and buyout, but like in the venture world as well, like it is top of mind, you know, for all of the reasons why, you know, you know, folks are kind of going into this channel for fundraising, you know, for us as an open-ended vehicle, you know, we made that intention, we made that decision very intentionally.

35:27Again, going back to the whole idea of true endowment style, we wanted to replicate as close as we could what it would look like, you know, what it looked like when we, what we were offering to the CIO at Cornell. And at the end of the day, endowment is an open-ended structure. You know, it's an indefinite life. And, you know, because of that, you know, we chose that model. The difference with, you know, open-ended versus evergreen, and it's a little nuanced, is evergreen automatically reinvests your dividends. And then at some point, you know, you can elect to redeem and there might be Gates or something like that.

36:00And, you know, for us, it looks close, but it's a little different. And again, at Cornell, when the venture portfolio got a distribution, it would not go back to Rogers desk to redeploy. It would go back to the asset owner, the CIO. And of course he could decide to go out and, you know, redeploy that into private equity, or it could go into the real assets or hedge fund or whatever portfolio he wanted to. And for us, we're the same thing. On both the entry and the exit, we're a cash flow pass-through vehicle. When our managers call capital from us, we call it from RLPs. And when our managers send us distributions back, we send them back to RLPs.

36:34And then they can, of course, decide if they want to, to, you know, reinvest or re-up with us if they want to. With so much, like, efficiency, efficiency, efficiency with, you know, AI. I'm sure in all those meetings, not only the same 10 names, but everybody had an AI strategy. I just want to know from your perspective, and we've spoken before, you always have said that how people treat others, especially when there's no specific benefit. So like service providers, placement agents, peers, the GP or LP side, you've always felt is important. Why is it so much more important now than ever? Great question.

37:18And yes, if I hit a dollar for every time I've had a conversation with a manager where the topic of AI came up, I'd probably be retired on a beach somewhere. So it certainly is top of mind. But in all seriousness, I think as you were implying, as knowledge and information gets more and more accessible and democratized and other barriers fall, at the end of the day, what is truly durable and sustainable and a lot of that, you know, other aspects too, but a large number of that is, is kind of relationships in the reputation that you have, you know, within your industry or with peers or whatever it may be.

37:53And, you know, I think part of it, you know, on my side, you know, a lot of the times the perception of LPs can be, you know, LPs are sitting up in this ivory tower and the managers must come grovel to them. And, you know, they are the, you know, the kingmakers per se, and, you know, you really have to suck up to them. And, you know, sure, that can be the case at some places. And I very much don't agree with that ethos. I think for us, we kind of, you know, Roger coming out of the GP world, you know, me coming from, you know, seeing multiple sides of the table and now building a business. And also, frankly, just the way I was raised, you know, it's not just, you know, can you do something now in a transactional way that can get you some kind of tangible benefit in the near term?

38:34You know, I personally had a lot of, you know, great mentors and friends and people who took a chance on me and a leap of faith for me and my, you know, personal development and career and whatnot. And I love paying that forward whenever I can be it, you know, you know, a Cornell undergrad that's asking for, you know, thoughts on XYZ or, you know, a manager we're not even committed to ask for an intro to somebody in my network. And of course, within reason, I will, you know, 99 times out of 100, I'll jump to that opportunity. My takeaway, Dan, I am cracking up that the stereotype of the allocators is that they don't get the upside.

39:09And so, you know, that's what's distinguishing the LP from the GP. And meanwhile, all of the people who want to come work with you and give their money to you are the GPs who don't want to pay$2.20. So this is not lost on me that if you want diversification across this asset class and not to be paying$2.20, you're going to put your money with an alligator. it's it's it's it's true i mean you know of course there are there are some people that you know can do it themselves are very happy with their providers or whatnot but you know at the end of the day the you know called that you know the fund of funds is a you know i think it was invented in the well before i was born the 70s or 80s in what other area of the world are we still using 70s or 80s technology especially in one as important as you know the fundamental layer connecting who has the capital with the people deploying the capital.

40:10I guess that's pretty insane. And, you know, it's, you know, of course, you know, we are very proud of what we're building here. And it's great being, you know, an end of one, you know, I would not be surprised. And frankly, I think, you know, in some senses would welcome if other groups kind of take this idea, you know, I think our impression of leaving on the world is this is the right way to go as far as, you know, where, you know, the puck is moving, you know, the cost of equity beta has gone from expensive to basically free over Roger and certainly my lifetime. And hopefully by the time that I'm retired sitting on a beach somewhere with my 15 Bernese Mountain Dogs, that the cost of allocation will have broadly moved to something in this kind of general direction.

40:52Because I think it just sets everybody else up for success and across the chain, all the way from the portfolio companies to the GPs, to the LPs, to the asset owners. Oh, it's been such a pleasure, Dan. Thank you. Absolutely. See you later, Allocator. After Portfolio Tile, investing with a smile. Mr. Monopoly here. Miss me? Monopoly is back at McDonald's with millions of prizes. A 2027 cheap charity. A Carnival Cruise vacation. Gift cards from DoorDash and Best Buy. He'll then play in the McDonald's app. Get your bag. No purchase necessary. 50 U.S. and D.C. age 18 plus. See play at mcd.com for rules and play at mcd.com slash AMOE for info and playing without purchase by mail by November 2nd.

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