Ben Gilbert: evaluation

Transcript context

…Yes. They hate a few things. Obviously, they hate the premium carry for the reason of what you said, Ben. They're like, there's more capital coming into the space. It's getting more competitive. We want fees to go down, not up. You got to remember. We've painted the picture a little bit here, but this was a different world in venture where you could do pretty well by being pretty lazy. In the LP world, it was even more extreme. There was nowhere near the same level of competition for institutional dollars going into private partnership alternative asset funds. If you were one of the larger university endowments, you had it pretty easy, but your team was pretty small, so you felt like you had privileged access to this small set of money managers. Now, you've got people coming in within these established firms and relationships who you like. You feel like you can deploy capital with them and get great returns either year after year or decade after decade. Those firms are blowing up, there are new firms entering the industry that you have to evaluate, and these new firms want premium carry. They're pissed. It's hard to underwrite because any LP that you talk to will tell you that it's not just the track records that we're looking at, it's not just the meetings we're having, and it's not just the relationship we have with these individuals. It's our belief that those individuals will create magic together. Will they be the Chicago Bulls or will they be the LeBron Miami Heat? You don't know that they're going to have the trust, process, and demeanor. The number one fear is everything looks great on paper, so we wrote a big check, but it turns out these guys can't work with each other. When you have a new firm with a new brand and a new set of people, that's the key risk. Hey, the Heat brought home a championship. I think actually, the analogy holds here of a fund might bring home a championship, but if you're a large endowment, you don't care about one fund.…

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