20VC: Why Now is the Best Time to Invest in Emerging Managers, Biggest Mistake Emerging Managers Make When Fundraising & Investing Lessons from Investing $1.5BN Per Year and Being Early Investors in Thrive, a16z and Founders Fund with Peter Lacaillade

23:56So you can get into some of the fancies from to the world. Do you think you can? I mean, you can't get into score unless you move a huge amount. You can't get into founders fund, especially with the kind of fun -sized reductions. I mean, Andrew Easton is, I'm sure you can, and some of the vehicles. I mean, I love Andrewsson, but do you see what I mean? It's not. Yeah, I hear you. I mean, I think I also have like, advanced relationships where... Totally. Yeah, you know. But I'm saying for like, random family office, multi -asset manager, whatever that is. if you're kind of knocking at the door of founders of Hunderlorn, she's gonna miss you.

24:27Yeah, you gotta be kind of like what I was doing, which was like, you gotta be a new founder, so that's not great. And I look back actually, in the mistakes I made in some ways, it's the bio -side where I've backed some alphas that were not great, but like back in Peter Teal, it kind of like makes up for other mistakes, so I'm not gonna be too critical myself doing that. Can I ask you a tough one? How do you think about like how long to have on wavering support for? Often LPs are having three fun commitments. Well, I'm often one of the first people to go into a fund and one of the first people to get out.

25:00What's the reason to get out? The fun size is getting too big, or the team composition has changed or the people are phasing out. Or you're just kind of like, it's just forced ranking. Do you not just accept that given your incredible selection and emerging managers, which you've now withrived, with founders and with Andres and the best generality scale? I love Michael Kim, but they scale out of his programs and he doesn't follow them. I think he should. I think so too. But my point being like the best scale and so do you churn because they scale? Because they thrive a great under -election. No, I'm more time up by it.

25:35And I'm so excited about like the opportunity that I'm seeing. And actually I'm going to generate like venture like returns in small cap, you've got positive businesses, right? So in my barbell approach, the way I do it is in venture is probably it's like 50, 50 franchise versus emerging. It might even be like 70 % franchise, 30 % emerging. We realized that when like people like Josh Kushner or Neumetta, they went from being emerging to being franchise. And that's why we back you and LaGill or in Zav, Ray Tonzing, there's like the OG, like older and then but then the the Locky grooms, the Josh Buckley's, the CEOs like Jack Altman, who introduced me to Zach Beret, Nico, we realized that if we just invested with Rive, it was going to be more and more growth because those funds are 70, 80 % later stage.

26:23So we had to backfill that. And then there's advantages to that too, which is the absolute return. You got to build a basket, right? But the basket I think can do five X of those seed funds versus what do I think like a franchise firm can do to an half, three X net. Injuryson has tough to do on a billion dollars. I think you get a coin base of major holding that can move the needle on a billion and a half the dollar fund. I mean, you saw that last week, but it's more rare, right? If I understand this one, I'm like, I'm setting some of the data. Like, there's a number of examples of big funds being five X plus, right?

26:58And so it happens, but you have to the best people, right? Circling back to the emerging. So yes, I think at an absolute basis, because Jack Ollman is based of $20 million on trade, the numbers work well that you can do multiples of that if he catches one or two good ones. I think that basket can do five X, but you're seeding the next gen leaders, right? So you have an optionality to go from right and $10 million check to $100 million check for fund over time. And then you get convestment because they're early stage funds. So they're gonna tap out and often founders fund might be leading a deal from one of my seed managers that's tapped out.

27:34So I have like great insight into the company. That's been super powerful on that front But circling back to the other thing we were saying around like why do we get out? I mean, there's like an inertia like harbor vest for example There's a lot of people there on the primary team You have a lot of people and they have their relationships and they like their people And it's like when you have an organization with a ton of people people get protective of their own relationships Sure the way we run it scs is it basically flows up through me You can have a brutal intellectual honesty and you can say, okay, yes, that firms great But that leap from going from 450 million to 1 .2 billion in the lower middle market side You've just completely changed your strategy.

28:13You can justify it, but like it's totally different Yeah, it's totally fine and they're good guys But there's another fund that's 200 million I think we'll deliver a higher return and also then you have the optionality to back them on the go So what is the next fund and the next, so that forced ranking, that intellectual honesty, it requires, I think, a level of trust and transparency with managers. And there have been examples where I oversharing it backfires, but more than fast majority of time, people really appreciate transparency. You mentioned the direct investing there being such an important part.

28:47Why do you think it is such an important part? People often take binary approaches. We don't do it at all. They're massively active in it. You've done, Andrew, I haven't mentioned it, you've done, Andrew, you've done, and rip playing, you're in some of the best. So why is it such an important part of the program for you to more than been less than the fee from doing the diet, come, that's the program. Yeah, sure, great question. Well, first of all, from a fee perspective, we pay, and we have over a hundred, it's maybe 130, you're so direct investments, essentially no management fee, like 10 basis points blended, and the precarious, like, seven or eight percent.

29:19There's a bunch of deals at zero, and then some at 10, and then it'll be tiered. And by the way, I'm totally fine with paying carry on the co -investments, but in general, it's a massive savings. But more importantly, I think you get to know the portfolio better, right? I know the co -investments, I do. Like, I know those companies a lot better. You get to see how managers under right deals. And you get to know the people on the team, too. You get to know the analysts. And so it just deepens the relationship. But I think what's really important is you build a portfolio of co -investments. We've made a bunch of mistakes.

29:50What have you done from the mistakes? Well, management is like super important. Having the right management team in place, like if you don't, that can be problematic. I would say diversification, like, we invested in this company called SmartTubers that did like different like tour, operate, and like COVID smoked it. How do you think about position sizing with that in mind? If you think of like our vehicle, right, it's about 20, 25 % of investments, then we've brazed these vehicles every 18, 24 months. But at the high level, a co -investment will max out around 2 % exposure, typically 1%. Like in the the common vestments sleeve we're gonna build probably portfolio 2025 But we'll have some like anderl that we'll like lean into and make that a 10 % position in the Convest sleeve which then equates to 2 % in the overall vehicle So definitely there's a big range and I would say that having a range of investments I is one of the things that's like the best for me my typical convestments somewhere between kind of 10 to 25 I'll go up to 50 I'll go down to five funds.

30:45I will write checks between 20 to like a hundred million and actually in the seed venture It's like kind of like five to fifteen. You showed me an opportunity like a million. I was like okay, whatever I remember calling you about 20 great 20 ,000 And you're like how much of a million? Yeah And I just whatever because I viewed as a relationship and not to be like flip it with Managers but like at a certain point I don't remember what we put into each one I just view it as it's a relationship with greenoaks It's a relationship there and now I'm 12 years in I feel like we're just getting started mean time flies Can I ask on the direct canvas?

31:19I feel there's also a binary approach to the dilutions processes that are taged. People are either way. We're going to do a huge amount of work and take four weeks, as you said, or we're just completely blindy following our managers, which is nice and middle. I'm in the middle. Yeah, no, no, it's a great question. This is really important. You have to know you're an LP. You're not a GP. So we only do investments with our highest convection managers in their areas of expertise, the various expertise, where they're fully aligned. When you put that filter on it, your hit rate should be really high.

31:49I'm not trying to re -underrate. If a manager is putting 10 % of their fund into a deal, they think it's one of their best ideas. I'm not there to re -underrate everything. The deal has to make sense for our returns. That typically is at least 2 .5 to 3 .5x base case that return with a right tail. And with a right tail where I hope I can make 5x plus, my goal is generally not I have lost money, but you feel like you have one X downside reduction. That's kind of the parameters with the way we do combestments. If you go out that way, then what I'm going to do, where I have an advantage, is I have this huge network of GPs and stuff.

32:25I can figure out, for example, in the bio world, if there was an auction and they won the auction, I can probably talk to the firm that was number two and see what they think, or talk to another firm that's got the competitor to the company. If you're really careful, and I'm always very transparent with GPs, there are situations where they do not talk to anyone about this. And I'm like, okay. Because the worst thing I could do would be to blow up a deal. I've never done that. I know it's happened. I remember a GP wondering who blew up their deals, another LP that did it. So that's really important.

32:56But once you have the sign off or the implicit ability to tap into your network, I can get really interesting insight really quickly. And so the second best thing you can do besides say yes to a co -investment is quick now. And so we just move quickly on it and try to get an answer to a GP within either like no within a day or We're very interested like well, let's give back to you in like a day or two And we can execute a deal in a week or less That is like super important and so we had to change our process actually with the investment committee because we do Standing investment committee every other Monday, but for co -investments, we don't need to convene investment committee You send out a memo and the investment community has 48 hours to reply.

33:39Because that actually was like really important. Now things have slowed down. What percent rejected? What percent from by the investment community? Yeah. Almost never. The investment community, I mean I can count on one hand, the amount of funds or investments that have been declined in my 12 years. And I remember them. But your question about like our hit rate on investment is generally it's like 35%. It might be a little over and out because it's tight. I say to my team, I push, I'm like, why isn't it 50 %? How much cash do you need to do it to our income investments program? And suit effectively.

34:10Well, I feel really strongly about the need for scale. When I joined SCS, we had $7 billion under management. That's around low end the you need. When you back into what that equates to from a private equity allocation, but I think I was investing maybe $250 million a year. At that point in time now, it's like about a billion and a half. But I think that if there's a minimum scale, like if you're investing $30 million a year, like that's not enough money. Unless you want to do something like really concentrated, but I don't recommend that. So to have a co -investment program, it's like, what check size do you want to...

34:42It kind of all solves into like, how diversified do you want to be? How much is co -investment's relative to your budget? But you need to have a diversified portfolio, and I think you need to be allocating hundreds of billions of dollars a year. Can I ask do you think the incentives are aligned in terms of wealth managers today, in terms of private banks today, and how that plays out in the ecosystem? Yeah, no. So this is amazing to me. So if we go back to the founding of SCS, our founder, Pete Mattoon, he opened offices all over the world and like the age of like 42 or 43 or 44, he made like 30 or 40 million bucks.

35:17So he had a nice like wealth, and he was like trying to figure out like what he wanted to do with this money. And he was like, there is a gap in the market. There's all these like, you know, investment banks that sound smart, but like they're totally conflicted and are pushing product. And then there's these like really aligned small boutique people that are really good at like trusting and staying stuff, but they don't know much about investments. What if we do something in the middle? That was his thesis. And I think that this is basically, it could be refined, but like it's still totally there.

35:45It's amazing to me, the wealth management industry, that it continues to be so fragmented, so underserved. But if you're a Goldman Sachs or a Morgan Stanley, the funds they put on their platform are large cap funds that are having trouble distributing. Like we invest in AdVent in the large capiote. We invest in AdVent and CVC. They would never have their fund. Their funds are like two X over subscribe before they start. They would never go on to an investment bank's distribution level. And you sort of were venture by the way. I mean, I would, Oh my God. If you see, I mean, if you see a venture fund on a bank, holy shit, like that is not a good sign.

36:20And I wanna be careful. But what worries me this is like, and it makes me sad as the generation of European family the offices and institutions who did just follow that and then go, ah, that's shit because they look back at those numbers now and they look back at those funds and get, well, if they're smart, they'll realize that they were not going about it in the right way. And there are a lot of people right now are looking at their wounds. Like a lot of people going back to the start of a conversation, they're like, you know, a 6 and a 7, like a lot of people poured a bunch of money into large cap buyouts stuff and didn't commit for like, oh nine, 10, 11, 12, and they missed some of the best advantages.

36:56Like, obviously when like markets correct, that is when you want to be investing. So you have to have that mindset. Do you believe that LPs are pulling mountain stays to the East and the people are saying, it's tight? Look, I'm just super transparent with people and like look, it's like we are very tight. But we make exceptions for exceptional managers, but it is causing a force -breaking of things. And I think that some LPs are upside down and there's gonna be really interesting opportunity, I think. What are those opportunities like strip sales, buyouts? How do you think about this? No, the secondary side.

37:24So it's been announced. Square, age, and Brookfield created a company called Pine Grove that's going to be dealing with liquidity in the LP ecosystem. And it can be also, if you thought you were going public this year and it's going to be three or five years, there's probably women plays. And it can be a win -win. If you're at a company and it goes for round numbers, it's worth $20 billion, right? You had no idea. You own whatever now you have like 60 million of stock when you join You didn't know it was gonna go like that and if you're selling at 30 billion if you sell 10 or 20 % of your stake at half that to buy house you still own 80 % of your shares and your wife's happy It just can be a win -win like it doesn't need to be a negative The other thing is interesting about the secondary market is that most of the secondary people are not really comfortable in venture What do you mean by that?

38:12They like buyouts. It's hard to underwrite. What does that mean for how they deploy? how they invest. Well, I think all the big secondary players skew heavily towards bioprofolios. So there's a gap in the market and there's some... I think also the level of cynicism they bring towards this. I have spoken some of my. We'll only engage at 80 % discounts and it's like that's unreasonable for assets that are actually very premium assets. Yeah, no, totally. If they're saying that, that's not a very nuanced, like, understanding of Penta right. So there are a lot of the players out there who will do venture and there's only a few.

38:43I think Lexington will as well, but they will not do it at scale. So what PineGroves is going to try to do is be a solution for Ryder at 50 million plus. And it's not to say there's not like other people that will do it, but it is a great market opportunity. I'm really excited about that one. I like it. Very excited about the opportunity in general. I think it's going to take time to play out, but when things were going nuts, 2021, I would see pitchforks like I'm going to go back to Blake Byouts a little bit. But every Every mid market, it was just like levered beta, right? Every mid market fund was putting up 50, 60, 40, 50 percent IRRs.

39:15You couldn't tell people who had no skill, everything looked great. And of course, eventually, it was like just beyond silly. And I feel like we were doing very like nuanced, thoughtful work, but you couldn't tell the difference between that and not. And so in this new environment, I think that the tide is going out. It's going to expose people. and our relative returns will be, even if the absolute returns are not quite as high, the relative returns will be better, and I feel like we've taken a lot of our waps. Like, we talked about the venture marks earlier. I feel like we've written down our portfolio in the venture, I wanna say we are managers, I don't know.

39:48It's like 25%, 30%, after having years of 100 % of our errors. So it's still good. It still looks good. It's like, it's a 29 % net error after all that, and the buyouts like 25. So venture has paid off for us, but it would have been two years ago that a number of rallied would have been like in the 40s. And I don't think we've taken all our pain. I think there's more to come, but I think we're taking like 78 % of it. I cannot ask, from investing in some of the best of last 12 years with SCS, are there any lessons or observations when it comes to liquidity management on how the best get out? I think a generation has been told about leaning, leaning, and actually liquidity management and liquidity planning is crucial.

40:29Are there any lessons from the generation of managers you've seen them back? Well, I don't know if anyone did a good job at all. Really, I mean, there were a few exceptions. That was my biggest mistake. There was a company that we invested in a $200 million valuation that had gotten bit up to 6 billion. I had people legitimately trying to buy my shares. But I was told it was going to IPO at 10 to 12 billion in like six to 12 months. And the people I was in it with were not sellers. They were long enough. You fast forward, I mean, I would sell that, I had a billion dollar valuation today. I think it's a little binary right now, I think it could be worth three billion, it could be worth zero.

41:07That's a personal situation I'm talking to, but I mean in general, would you do anything differently now? Having hunt that experience? Yeah, yeah, yeah, no, I will. By the way, that deal hurts more than some of the stupid deals I did on like frothy pricing. It wasn't like I needed to seek out a buyer. Like they were coming to me, but the second thing is, as obvious, when you want to be a seller in a buyer, Like, and so we sold, we were able to execute a secondary sale of like a bunch of like talent stuff with managers We weren't continuing to back at 94 cents in the fall of 21 It was bought by another multifamily office who's trying to build a secondary portfolio trying to like build the product I also sold a manager that we got out of because of some ethical situation at 104 I did execute a couple of and I have relationships ever core as well some boutiques and we are now getting every three to six months kind of pricing because the bankers will work for free.

42:01They're pricing the portfolio and right now, I think if we wanted to sell some of our venture stuff, it would be very unattractive. Right now I'm a buyer, not a seller. How do you think about liquidity planning and like for -costing when you think about kind of IPO markets being where they are and when you think about when the mooner and the cooler, so to speak comes back? What do you not? That you are insatiable at finding the best time, I think, and winning it again. I think that's where the lessons learned where I think I can be better is actively managing liquidity. And there is a company, again, I don't know what name names, but it's a great company.

42:32We get a convestment with our manager and it's been marked up for X. And it feels fully balanced. I think that person's a complete assassin who runs the company and so could easily have a 2X plus from here, but like, am I a buyer seller? I'd be a seller, but like, I talked to this person, the GP about how are you feeling about this? Like, should we try to sell? There's a premium on getting liquidity right now. And that's one where I'm like, it feels full. It has felt full every step of the way. And so I don't know, I doubt we're gonna get liquidity, but I'm proud of us for at least like asking the question and managing it.

43:07But to tack a little bit, I would say, as it relates to the private equity market generally. Private equity in general is like, you just have an unfair advantage over the public market. You're able to plan three to seven year plans, not manage quarter to quarter. or you can optimize your capital structure, you can innovate and venture, whatever. But the reality is these funds, if not cleaned up, will last like 12 to 20 years. And so the more kind of tools in the toolkit that institutionalize and give different offerings for liquidity, I think is amazing. So people talk about all the capital that's been raised and this and that.

43:41And I'm like, it's still the penetration of private equity and say the USUK is like 5%, 10%. I mean, it could probably double. in markets like Germany, Germany is a third of the penetration of the US and the UK in Nordics. Nordics might have the highest penetration of private equity. I say bring it on and all this money that's been raised, people talk about all the dry powder. My strategy of investing in lower -middle market guys, it's great because all these middle market guys need to buy companies. They raise the money to deploy it and so there's a huge buyer universe that's out there. The other thing I was to say, and just to actually break down because I know you're a venture guy, So it depends on the business model, but let's just say you buy a founder led business.

44:23You professionalize it. You buy it at like six to eight times EBITDA. You put on like maybe three turns of debt. You professionalize it. You grow it. Say it had five million EBITDA. You grow it's a twenty five million EBITDA. Then the next buyer, the mid market buyer, will pay 10 to 14 times EBITDA for it. And they are going to lever it five to seven times. That math works really well. So you're taking a small business risk and you got to know what you're doing, but you're not using that much leverage in your about growth and professionalization. It's a really repeatable and there's a huge basket of wires.

44:52It's like a really repeatable, great way to make three, four or five times your money. Which brings me to something that I do want to talk about, which is like different types of LPs, because I think a lot of managers aren't quite sure what's actually behind the wrapper. And so when we look at, say, endowments first, often blue chip, highly respected, what do you think managers there shouldn't be about endomethoses LPs that they maybe don't. It's all about the endomeths, probably like the team, right? You gotta understand like what's going on. Notre Dame's endometh, they all went to Notre Dame.

45:23They've been around a long time. Brian's awesome. That's a really solid one. Or, you know, look at Harvard. They have had team turnover in the past, but now they have like a new regime in there. That's great. And they're actually doing a lot of new stuff. And you can't paint it with the same brush. Just understanding the people and how solid that foundation is on the flip side, like a The new CIO comes in, there's a big team change. That can very stable basic capital, but there can be team instability. That's really the main thing on the entire. Cheating people over emphasized how stable and down -and -dament fun money is.

45:53What I would say, there is that herd mentality, right? You kind of want the different food groups. You want to have your endowment, your single and multi -family hours, which I'm biased, but I think it's the best. Maybe a fun of funs that can be really good people and be thoughtful, because for example, I don't wake up every day thinking about venture. And so if you have a venture specialist fund fund, like there's things they're gonna do that can be more thoughtful Then you know more diversified pool But if you get money from in down in A and down in B and down in C and down in D that all are very close to each other and talk to each other And then one of them leaves that they might all leave I've seen that so having diversity of Minds I think you could probably I mean there's the crew of LPs that I do stuff with but I think we think it generally independently So maybe you need to be thoughtful and like oh out they all do a lot of the same things together What do you advise managers on concentration just in terms of percent of funds some of the large pension funds We talked about earlier.

46:50Yes, did you have the 10 % I know some they that will say we're happy to be 75 % But we need to 100 million. I'm like half a couple of funds. I mean, I think is that okay? Yeah, it is but if you're asking me you're raising a fund I think you don't want to have too many LPs, but you also want to have diversity So I think it probably max out ideally at least at scale at call it like 20 % would be a lot That said there's the number of managers wearing more than that But I think you know we built that trust But I think sizing probably your LPs between 5 to 20 % and then having a tale of strategic small checks I think is a good idea.

47:27What do you think of the biggest mistake so much you manage to make one raising? You see so many you've gotten to generate it. Yeah, if you're really good that you can have your cake and you need to do. These are long term things, right? So it's like funds last longer than like the average marriage, like for sure, like, right? So, so think about it like that, right? So don't just take the quick money, right? And you wanna have a very stable base of capital, arguably growing, maybe not just stable, but growing base of capital, and a place that's not too bureaucratic, where you can get answers quickly, you don't have like a ton of red tape.

47:58And then it's like, are these people I wanna partner with for the long term? Do I enjoy them? make me better, but also not be annoying. My whole thing is like, I want you to do your job. I'm not gonna bug you. But I wanna be receptive when you need me, but then not put you through the ringer. Like I want you to spend your time with entrepreneurs, not with LPs. Why do you think the ball is low for competition in LP world? Well, I think it's structural. A lot of the big pulls of capital have very bureaucratic structures in low pay. That's the big one. And fun of ones are transactional. They're trying to raise their next funds.

48:29They're often like trying to like cut a deal. Like they want to look good early and I'm like I only have so many bullets I'm thinking like 20 years multiple funds doing an attractive deal People say minus manager versus play the long game with an a like just play the long game and that will come And we've seen this like our wealthiest family the family that the reason I was hired as yes Because they had the mandate that was like 250 million I built the whole thing across our base of families was 90 families and 7 billion now it's 200 families and 30 billion. But like at one point like the guy got cancer.

49:03Their allocation went to zero for a period of time and he died actually and then there was a bit of a upheaval around. The single family offices like things happen. We've had another family where it's tragic. The woman we worked for her husband, she was an ares and she's in her 30s. He was like early 40s maybe. He died suddenly of a heart attack. They're like a couple young kids. Like their allocation like just slow down close to zero for a few years. Totally understand that. But that's why I like, obviously by talking my own book, but if I were just working for a single family office and that happens, it just changes things.

49:38100 % and I feel you with that in those situations, yes, it might mean that your budget's a little bit less for that given year, but actually you can still commit to the managers in the way you want to. You can still be there and that she, yeah, we know it might commit 35, not 50. Not a problem in a real way there, but actually if you are the CEO of that family office or they are your sole LP or whatever that is. Then you're on pause. And by the way, they have a legitimate reason to be on pause. Totally. That's the risk on the single family office side. And the other thing I'll just say is like, it's funny, you know, people make some money.

50:08They think they want to like start a single family office. Like, it's definitely not a billion dollars. You have to be maybe worth 10 billion. At least five. That's all right, that's fascinating. Why? Because I see people start them with 50 -minute. With a hundred -minute means no sense. Why? Well, why are you doing it? The benefits of a multi -failing office, you get the scale of a big organization and all their institutional learnings and lower fees and access to investments. If you're sub -scale, you're going to have a less sophisticated investment portfolio and you're going to pay a lot more.

50:37Unless you're doing direct deals, you know what you're doing. You can do that. We work with a private guy who's brilliant. He works with us and then he has a team. You have to have a reason to do it. One of the biggest mistakes if family officers make is that they think they can play and play Diorats with, you know, Pida who does venture for two days. But how, if you have 50 million, I mean, let's just like back into it. Like, Lizzie's 100 for round numbers. So what should be your allocation to privates? I'm like over 50%. Our typical family is like 35. But let's just say 50. Like, I'm probably like 70, but that you might own cooking.

51:11Okay, so you want to be 50 % private equity. That's 50 million bucks in your growup. But you shouldn't allocate that all in one year. You should do that. that you should build that portfolio over time. Essentially, you'd want to commit a third per year. So that's 15 million a year. I'm almost surprised it's that much, but you're given liquidity windows. If you think it's going to take 10 plus to get that by, I mean, maybe seven. That's like over six. Do you see what I mean though? Yeah, I'm giving you kind of like, I'm saying I'll do like 10 million a year over five years. Yeah, you could do that, but if you really, but you're not going to get ramped, you're going to end up at 30.

51:45You have to over commit. In order to get your nav at 50, You have to have outstanding probably 20 million commitments at all times. But in this scenario, if you follow my swag model, that's 15 million year into privates. Let's just say you don't do real -stater natural resources, you just do private equity. Okay, what's the mix between buyouts and venture? The way I do it? The way I do it is. Yeah, I just do even 50 -50, or I don't like, you know whatever. But that's okay, just 7 .5 million annually. And how do you want to invent so how many funds are going to back? You're gonna write in people gonna take you seriously, like unless you have personal relationships.

52:19I think you can see people do seven seven seven one million dollar choice and you're gonna go into emerging managers raising 15 to 15. Yeah, and there's so many shitty venture funds out there. I see it. I mean, yeah I'm just breaking it down and what should you do in that scenario? You to partner with the multifamily office like SES or you should invest in a fund of funds because wait How did you just find the seven like you don't have that much money? You made a hundred million dollars you feel really rich, but I'm just like, no I get you, but the best managers in order to meet you for a million dollars if you're not here.

52:48Unless you're like friends with them. Yeah, I could go on. No, I totally agree with you. When you walk about like that, it's like, it's really else that you think that managers don't know about the LP world. When you think that emerging managers make mistakes on when they come see. I'm a big proponent of doing targeted, like not meeting like 120 LP's and taking the first dollars. But like having a thoughtful like do 20 meetings and try to have a 40 -50 % yield And so have a appropriate diversification, but like it means a lot more to get referrals through trusted sources Like I don't do cold emails and like I knew who you were, but like is Nico right?

53:24That goes and then we had Josh as well and you each other on the nights. Yeah, I mean what that was You're a different you're different animal, but like if you reach out to me cold Maybe when I started the SCS I would respond but I can't you have to show some sort of figure out a way to They hit me up, but then like I advise managers think about hiring a boutique. This is more on the outside But they they have two options they can go with like a boutique fundraiser placement agent or like one of the big guys I always generally say go with the boutique because they're much more thoughtful about it doing like like 100 meetings with like, it's so funny, you say about fundraising agents that for the, Inventory shouldn't use one at all.

54:04It should be all, all network. Good, I agree with you there. I see them sometimes. If you see a placement agent, Inventory, that's not safe. On the site or on the direct, like company investing site, because we see it in Europe on like, especially France, still placement agents for like companies, like seed company. I'm not saying I would completely rule out a venture fund that had an agent, but it's a terrible sign. Peter, is there any you know now before you do a quick fight? Is there any you know now how to eat, wish it, and when you started, that's the F12 hits of you. I think have my cake you needed to in terms of good people.

54:34I think I was attracted and still am to the force of nature people, but sometimes those organizations, if you have a certain personality, there can be more turnover, they don't have to check some balances, really trying to optimize not just the smartest people, but good long term partners. This might be the only, and then like I said earlier, making sure you're trying to find the contrary of you. like echo chambers great, but this ticket is a given and then try to see what others are saying. If you think of what I scale, it's like I will maybe do 5, 10, 15 reference calls where these funder funds will do like 60.

55:08But one of my reference calls will be to the funder funds, it's 60 calls. And yeah, that's been an all I'm like, I think. At least I want to do a quick five pt. So I say short statement, you give me your immediate thoughts, so that's not OK. It sounds great. Let's do what the others not know that you know to be true. It's the diversification piece in private equity, the way to build optimal portfolio, which I think is I have a 60 -70 active relationships in private equity. I think there's a lot of people out there this age to be like 20 to 30. How do you manage some of the scale? You're also a real partner and front to us.

55:38I have good teammates. Guy, I'll let you know. There's a balance between, because I have 11 -year -old daughter, six -year -old son. I work trying to balance family and work and all the travel, but I don't go to every annual meeting. You have to pick your spots and I wish I could do more than I do, but like the balance between that and then If you have too many quicks in the kitchen, you can't the time piece is like the thing I'm possibly working on Tell me you can cool yourself up the night before your wife has her first child and your first child What do you advise yourself kids are the best my advice to you would be like definitely have kids They're definitely the most important thing But also like you just kind of like react and you kind of deal with each situation and there's no grand advice I would have, except actually my wife was a lawyer and now she's a full -time mom.

56:23She's like the best mom. So pick the right spouse. That would be obvious. I'm very lucky. I'm very involved in the weekends with my kids, but like, it's definitely divine conquer and like knowing that my wife is like on top of everything. So I can focus on Harry and work and all that is huge. Well, for me, you know what I'm saying, that you would love to be in. Probably benchmark. Yeah. So we're kind of in Sequoia. Kevin Kelly, it was like, I love Saguay Heritage. Ribbit's done a really nice job too. And I think if I had Minnes Kaplow constraint, I've met with Mickey many times over the years.

56:55That's another great one. You can have dinner with anyone better or alive. Who would you have dinner with and why them? So I'm gonna give you two, both breads, and you know I'm an angle file. But Winston Churchill would be the dad. I just, I mean, the guy, his life is so amazing. His approach and unwavering within him. Oh my God. Yeah, you know, he just, like, But also the fortitude to stand by your beliefs in the face of everything. And his ups and downs, I mean, he kind of had the different acts. He believed, like, strongly he was destined for greatness. And when he was in his early 20s, like, ran into battle, he wasn't worried about things.

57:26He's like, you know, how could I die? I'm going to do like amazing things. Like, just a total character who was very reverent and like, might type a guy. It's an easy answer, actually, for me. And who is the second? So the second is actually one that alive, and actually one who I might get dinner with. So it's Chris Blackwell who's the founder of Island Records, Jamaican slash British guy. It helped shape reggae music but also back people like Stephen Wood, you too. And now he's a hotel air in Jamaica. He's got a body in Fleming's house, Golden Eye, and turned it into a resort. And my good friend, Brian Schath, who runs a firm called Hevelli, is good friends with Chris.

58:03So Chris is 86. We'll see. Maybe you know, it gets called in Boston and maybe a trip to Jamaica this winter. We've been I've been talking about it for about a year now. There's been fantastic interrupts. Maybe you can come to I'll put the plug in for the biography the Islander is amazing. Paid a final one. What's Peter in 2033? What a ten years outlook. Well in 10 years my son Reed will be 16 so I'm living outside of Austin doing one idea. I think the more interesting question is like where did that go when Reed goes to college. One thing I love about the LP P life, being at that 10 ,000 feet or 30 ,000 feet, not like in the trenches on the deals, because I don't take boards, he's there anything that is like, I think this is something that I can do into my 70 day.

58:46Like I think I can maybe not be white as engaged on the front end as I am today, but like I think I can continue to do this for a long time and do it do so in a way that lifestyle -wise I can take more time and you know enjoy travel, which I love and all, you know, but I get it's so much positive energy from what I do and partnering with people like you that like I don't see myself ever stopping this or at least not for the next 42, so probably next 40 years. There's a me Peter, I'm absolutely loved in this. I wanna thank you all so you know, your partnership means so much to me, your friendship means so much to me.

59:21This has been a joy to do and so thank you. Thank you, Harry. I mean, I think you can tell I absolutely love that discussion. I also think it's very rare to hear such openness and transparency from the LP world and so I want to say huge thank you to Peter for joining me on the show for being so fantastic there. I want to say again a huge thank you to him for his friendship and partnership. As I said he's been an incredible partner both to me and 20VC. But before we leave you today, I love any innovative approach to venture and startups and that's why I love a rising ventures. They're a holding company that acquires tech startups, facing difficulties and they help them reach that true potential.

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1:02:03Secureframe makes it fast and easy to achieve and maintain compliance so you can focus on serving your customers, automate your security and privacy compliance with Secureframe. schedule a demo stay at secureframe .com. As always I so appreciate all your support and we have an incredible the memo episode coming on Wednesday with three of the best CPO's from Spotify, LinkedIn and Adobe on how the future of product will be changed by AI.