How I Invest with David Weisburd
01:06:36 · David Weisburd, Gavin Ezekowitz
[01:06:36] S1: What's an example? [01:06:38] S0: Let me give you an example that is not directly from venture, but to me, plays out. You've got a manager that's raised a reasonable amount of capital to manage, and he's got really good returns. Really, really good returns. He's he's stressed out because he doesn't know how to grow his capital enough to really make it into now a real business. Right? He's got a couple $100,000,000, but it's not enough. Little team. So you talk to him a little bit about it. Then you flip to the back page of his deck, and you look at all of his supporting cast, the custodian, the auditor, and all of these folks. I'm like... I said, I'm I'm looking down this list, and I said, I'm not, you know, here to judge anybody, but this is not an institutional page. You gotta have a big four auditor. Like, it's just the way. And there's a few administrators and custodians that you've gotta have [01:07:43] S1: for your fund. Of course, use Juniper Square, our sponsor. Wonderful. Is the number one sign of of an institution.
01:07:43 · David Weisburd, Gavin Ezekowitz
[01:07:43] S1: for your fund. Of course, use Juniper Square, our sponsor. Wonderful. Is the number one sign of of an institution. [01:07:49] S0: There we... Would be a wonderful choice for this this individual. Text me later, and I'll give you their name. You need to have that caliber. Not to say these aren't fine. They probably are fine, and that was his argument. But they're they're really great. I've been with them forever. They do a great job. The costs are lower. Like, all that may be true. It's just not gonna work. So so let's think about your business. Right? What is your business when you go to large family office or allocator, these are the factors that matter to them. So if you're gonna be in business selling to them, that might matter. [01:08:25] S1: That's your customer. [01:08:26] S0: That's your customer. That's what they... So that that would be an example. The other the other challenge I think we all face, investor communications. You know, at the end of the day Or lack [01:08:41] S1: or lack of. Lack of.
01:08:41 · David Weisburd, Gavin Ezekowitz
[01:08:41] S1: or lack of. Lack of. [01:08:43] S0: I mean, we we are all, to some extent, in the marketing and sales business. We are building up our cohort of LPs. We're hopefully getting some referrals from them. We're all doing the same thing. So how do you think about your communications? How do you write it? What do you write? What do your current LPs think of it? How do you think about it? It's incredibly, incredibly important. The the challenge, of course, if if you've got a small team is is how to do that. And then, of course, how do you apportion your time between capital raising for a new fund, particularly if you've a very small fund allocating to your current fund, you can very quickly see that people are quite stressed by by that. [01:09:34] S1: There's a famous founder of a $200,000,000,000 plus private equity firm that's known to told many people that asset management is about generating average returns with exceptional customer service. Some... Yes. Well And that has worked to $2,200,000,000,000. So it's hard to argue with that that kind of strategy. [01:09:53] S0: I think investors deserve good communication. [01:10:01] S1: Especially when there's bad news.
01:10:01 · David Weisburd, Gavin Ezekowitz
[01:10:01] S1: Especially when there's bad news. [01:10:03] S0: The ability to deliver authentically and honestly your case study from your worst decisions something that I really... Again, we talked about integrity and so forth. That's something that I hold dear. Any investor who does a call with us, and not all of them ask, but anyone who asks, Can you give me your worst decisions, worst fund, worst company learnings, observations? I will give them a thorough run through. And I'll be honest with you, there are many things in there that I would say are not like it shines some beautiful, and it's not sort of recasting it as... That it's all wonderful characteristics just sort of slightly misaligned. [01:10:58] S1: About you be... Having no career, life balance, and overworking seventy hours a week. There there are some genuine mistakes. [01:11:03] S0: There there are genuine mistakes. Absolutely.
01:11:03 · Gavin Ezekowitz, David Weisburd
[01:11:03] S0: There there are genuine mistakes. Absolutely. [01:11:05] S1: When I sat down with Jonathan Gray, president of Blackstone, I asked him, how do you manage LP relationships in a downturn? Mhmm. And he said, he goes on a plane and he went out. And specifically, I asked him on 2008, how did he manage that? And he said, got on a plane, and he went and met with every major LP in person. And his peers were sitting and hiding behind their desk, and he went and did the thing. And in retrospect, it's obvious. That was the hard thing. That was the, quote, unquote, right thing. That was extremely painful and probably painful for at least a year. Just brutal. It's just like going going, visiting someone, getting yelled at, going... Jumping back, staying at staying at a hotel. I'm sure his hotel was fine even then. Waking up in the morning, flying to the next place, getting yelled at, and doing this over and over and over and over and over again. And that is what it takes to build an org... Excellent organization. And the truth truth of the matter is most people just don't have that level of discipline, that level of conviction. They don't take their business to that level of seriousness in order to execute.
01:12:07 · Gavin Ezekowitz
[01:12:07] S0: It goes back to something that we talked about earlier, which is integrity and and taking seriously being a fiduciary. People have entrusted you with their capital. And while no one's expecting perfection, they're expecting candor. They deserve it. And I think when you've made a mistake or we've made a mistake, you've got to own it. You you know, and it's just it's the human thing to blame someone or blame the market or whatever it may be. But but we make mistakes. We we miss things. We... No organization, no individual that doesn't. But but I think you win you win trust when you are candid about those things, and then when you are clear about what actions you've taken and and what you're going to do to make it right. If you don't come into the business that way, I'm not sure how you're going to handle what is inevitably going to be some pretty rocky spots. And I would say that my worst investment outcomes and situations have come out of a manager making a mistake. It was a genuine mistake, not only up to the mistake. I discovered the mistake sometime later, but they'd made a genuine mistake. Never really owned up to it. And it was the end of that relationship. Mean, the mistake was what it was. They had conviction, and they did a thing, and thing didn't work. I mean, that... Okay. That's part of life. But even at the time when it clearly didn't work, they weren't clear saying, look, here are the three things we really just missed. Like, we we just got it wrong. And we're gonna have to figure out how to, you know, go from here. But this was not... This was on us. Right? We we gotta own some of that. And and I think if you can't do that with me in that situation, I look down through the rest of the portfolio, and I look out over time, and I say, you know, life's too short. Don't don't need don't need to be don't need to be wondering about that.