transcript: tom lenehan – perpetual thinking at ...€¦ · to top tier venture firms. his...

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Transcript: Tom Lenehan – Perpetual Thinking at Rockefeller University (EP.04) Published Date: April 27, 2017 Length: 57 minutes Web page: capitalallocatorspodcast.com/RockU Tom Lenehan is the Deputy Chief Investment Officer of The Rockefeller University, where he helps lead the management of the University’s $2B endowment. Rockefeller University is a unique duck – with a focused mission of improving the understanding of life for the benefit of humanity. Founded in 1901, it was the first institution in the country devoted exclusively to biomedical research. We discuss Tom’s roots in Cleveland and a look at what makes a die-hard Cleveland sports fan. We track his career, from a start at Goldman Sachs to work at premier private equity firms, and a transition from principal investor to allocator for just the right reason. Turning to investing, Tom discusses fundamental questions about asset allocation for an endowment and describes how a great story can help gain access to top tier venture firms. His insights give managers and allocators alike a window into the thought process of some of the most desired pools of capital. Topics: Private equity, Endowment, Venture Capital Edited by: Brian Stoner

mailto:[email protected]

http://www.capitalallocatorspodcast.com/RockU

Capital Allocators Podcast EP.04 Tom Lenehan

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Show Notes

02:27 - Growing up in Cleveland

04:27 - Cleveland baseball

05:40 - Cleveland sports fans

07:21 - Investment banking analyst program at Goldman Sachs

08:49 - Principal Investments at GS

11:02 - Summer at McKinsey Cleveland

11:34 - Joining Marsh Capital

14:15 - Softbank and InsWeb

17:49 - Trying venture capital

21:02 - Technology-enabled investing

25:04 - The quietest $42 billion manager

28:09 - Allocating Rockefeller University's endowment

29:30 - Investment beliefs and constraints

31:42 - Forever as a time horizon

33:50 - Asset allocation approach

34:15 - Retooling the endowment

39:01 - Sizing manager positions

41:26 - "We don't invest in asset classes, we invest in people"

44:53 - Allocation decisions and market timing

48:29 - Venture capital LP investing

51:24 - Pitching yourself as an LP to GPs

54:40 - Closing questions


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Ted Seides: 00:00:05 Hello, I'm Ted Seides and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can keep up to date by visiting www.capitalallocatorspodcast.com.

Disclaimer: 00:00:32 Ted Seides is the Managing Director of Hidden Brook Investments, LLC. All opinions expressed by Ted and podcast guests are solely their own opinions and do not reflect the opinion of Hidden Brook Investments. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Hidden Brook Investments may maintain positions and securities or managers discussed on this podcast.

Ted: 00:00:56 My guest on today's show is Tom Lenehan, that deputy chief investment officer of the Rockefeller University where he helps lead the management of the university’s $2 billion endowment. Rockefeller University is a unique duck with a focused mission of improving the understanding of life for the benefit of humanity. Founded in 1901, it was the first institution in the country devoted exclusively to biomedical research. In this episode, we start with Tom's roots in Cleveland and a look at what makes a diehard Cleveland Sports Fan. We track his career from a start at Goldman Sachs, to work at premier private equity firms, and then a transition from principal investor to allocator for just the right reason. Turning to investing, Tom discusses fundamental questions about asset allocation for an endowment, and describes how a great story can help gain access to top tier venture firms. His insights give managers and allocators are like a window into the thought process of some of the most desired pools of capital. If you've enjoyed these early episodes of Capital Allocators, please subscribe to the podcast on iTunes or your favorite access platform for podcasts and maybe even write a review on iTunes to help others find the show. I hope you enjoy my conversation with Tom Lenehan.

Ted: 00:02:25 Tom, welcome to the show.

Tom Lenehan: Ted, thanks for having me.

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Ted: 00:02:27 It's a pleasure. I always love of trying to figure out how people got to where they are, particularly in the allocators seat. Let's start with where you grew up.

Tom: Sure. I was the youngest of eight children, grew up in Akron, Ohio. I usually say northeast Ohio because most folks never heard of Akron until Lebron James hit the scene.

Ted: That's right. And it's playoff time.

It is playoff time and we're up one-nothing, which I'd like to make me think that we're in good shape. But as a lifelong Cleveland sports fan, it's never secure.

And that was an uncomfortably close first game too, wasn't it?

Tom: 00:03:00 It was. I was actually in the stands of Progressive Field watching Verlander take on Kluber - the Indians and the Tigers - and they flashed the score midway through the sixth inning and it was… a win’s a win is all I’ll say, we'll take it.

Ted: Are you a bigger baseball fan than basketball fan?

Tom: I would say baseball more so. The Cavaliers were founded as a team the year I was born. To say last year was the end of a drought – it was my entire life. It's kind of all I knew, but the baseball team has obviously been around for a lot longer. I think growing up in Cleveland you have to have to root for the Tribe.

Ted: What is it about baseball that pulls you in?

Tom: 00:03:51 There’s so many intricacies. The longer you are a fan, the more you realize how important everybody's position on the field is. Every player, the different decisions that the manager faces. To a casual fan, you might get quite bored and say, “It's just the same old thing.” But there are matchups that they're considering, even each individual pitch. The interaction between the catcher, the pitcher and the batter, if you're really watching and paying attention, is quite fascinating. And it differs all the time. Like most sports, no matter how heavily you are favored, any given Sunday or in baseball parlance, any given day, somebody else can win. And that, that proved itself on Saturday night when Verlander was bounced in the 5th inning.




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Ted: 00:04:27 That's great. Did you have memories growing up? Were you taken to games by your father?

Tom: 00:04:32 We would always go to opening day and the Fourth of July game - those are the two games that we would always go to. This was back in the day when the Tribe played in the cavernous old Cleveland Municipal Stadium that could seat 80,000 people. Most times when I was growing up, a big crowd would be 10,000 people. So if you wanted a foul ball you could have unlimited pickings - it would get hit anywhere and it would take you about a half an hour to try to reach the ball. I have fond memories of those times, but not of those teams. They started getting good when they moved into Jacob's Field in 1994, and that was the strike year. They were in first place going into the strike. We had high hopes, but we thought it was part of the Cleveland Curse. Then in 1995 and they got to the World Series, in 1997 they got to the World Series and won a bunch of Central Division titles thereafter.

Tom: 00:05:25 Never won the big one. I remember in 1997 and watching the Jose Mesa breakdown, Lebron James will talk about that often. If you're from that area and you felt that pain, you certainly can commiserate and I think it's therapeutic to talk about it.

Ted: 00:05:40 These die-hard fans you see in Cleveland - what is it that keeps people coming back in that community? There are a lot of towns that have baseball teams that haven't won for a long time. And until Theo Epstein makes his rounds to Cleveland - you never know if they're going to be the next one - what is about the community that keeps people so engaged in the sports teams?

Tom: 00:06:01 It's a great question. Cleveland had its heyday - it was a huge industrial town when US manufacturing was top of the world, it was smack in the middle between Detroit and Pittsburgh. What we now call the Rust Belt was a huge part of manufacturing – it wasn't even a renaissance, it was just our coming of age in post-World War Two. They had a greatness that they could celebrate and their sports teams were great, back in the day. Cleveland won a couple of World Series - I don't think anybody alive can be witness to that, but if you trust the record books, even the Cleveland Browns had some incredible years pre-Super Bowl era. The Cavaliers weren't really around. But they had the taste of greatness and folks really want to get back to that. It always





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makes me wonder if people ask now, now that the Cavs have won, “Are you a bandwagon fan or a fair weather fan?” And I would say any northeast Ohio sports fan, generally speaking, that's impossible. We have endured so much that you cannot. If that's the case, the bandwagon is wide open, anybody can jump in and join and be welcomed. But I think they had that past greatness. They know what it tastes like and they remain forever hungry for it again, and hope does spring eternal.

Ted: 00:07:21 I think somehow we're going to draw parallels later when we're talking about money managers and ebbs and flows in those organizations. You mentioned school on the East Coast, you went to Georgetown undergrad. And from there to the venerable Goldman Sachs investment banking program. You came out in 1992, which was right at the bottom end of the recession. What was that like getting there then?

Tom: 00:07:45 Yeah, it was quite interesting. I was a finance undergrad and didn't really know much about what investment banking actually was in terms of day-to-day activity - what do people do in that job?

Ted: 00:07:21 I also graduated in 92 - I remember going through investment banking interviews and not being able to understand. No one explained to you what they did. It didn’t seem like it was investing, and it didn't seem like going to the bank to get your money from the teller. I just remember all my friends who had been there knowing what a grind it was. I thought maybe they weren't telling you because it was such a terrible job that just didn't want to do it.

Tom: 00:08:20 Well, I knew you would work hard and I knew you would learn a ton and, from my perspective, I didn't really know much after that. When they would ask, “What do you see yourself doing in three to five years?” I said, “I don't know. But for the next two or three, I'm happy to build up the intellectual capital as best I can.” So I fell in to Goldman Sachs, was working in their Financial Institutions Group. Back then it was one of the leaner years - as you mentioned – because coming out the recession they hadn't recruited many folks the year before.

Tom: 00:08:49 Usually when that happens they always get the timing off and so our particular year was a little bit lower than average in terms of the number of folks that they hired. We just started





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getting busy. In 93 it started really picking up. I was in the FIG group for two years: I worked a year in the New York office and a year in the London office. Then I came back to New York and worked in their PIA group, which is their Principal Investment Area. That was the time in my career where I thought I would like to do private equity investing and, like investment banking, I really didn't know what that was, but just thought it would be fun to try, particularly before business school. So if that was something I wanted to do after business school, I can at least talk about some experience beforehand and be more knowledgeable about. That was a group that seemed to touch all parts of the organization - wherever ideas were bubbled up, it didn't matter.

Tom: 00:09:38 Geography didn't matter, sector didn’t matter, they would all find their way to Rich Friedman's group and he could either do them or not and they would move on. I thought it was just an interesting crossroads in the firm, having an eye on everything that the organization is up to and at that time it was just for the firm's balance sheet - that was the only money. There was no outside capital; that was all the partners’ money. This was pre-IPO. They paid extra close attention to what was going on there, as you might imagine.

Ted: 00:10:02 What was that decision point? Now you're in the PIA group, you're seeing all these incredible things happening. How did you make a decision to go? Or I imagine you could have stayed as well.

Tom: 00:10:12 At that time - I think nowadays it may be more common - it was kind of a two or three year gig and you would be pretty much pushed out the door to go on. I had an opportunity to be promoted directly to be an associate in the FIG group, back in investment banking and I had gotten my fix on PIA and decided that I actually really wanted to do that for a career and be a direct investor.

Ted: 00:10:33 What'd you get out of business school?

Tom: 00:10:36 I think the best part of business school, for me, is the people that you meet and the network that you can create. It's up to you how much you want to use that network and for what purposes, but it's always there.




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Tom: 00:10:52 This is a big reunion year for, for both undergrad and business school for me, as we talked about before, it's depressing, but at the same time it's amazing to think about how far you can grow as an individual.

Ted: 00:10:58 You were at Stanford, the weather was too nice, so you came back east.

Tom: 00:11:02 I had worked for the summer back in Cleveland for McKinsey and that answered two incredible questions that I had. Number 1: did I ever want to move back to my hometown to work and live? And the second question was: did I ever want to do management consulting? And it answered those two questions emphatically, which was, nope. I don't want to go back home to live - I would love to go visit, but I don't want to move back there. And the second question was don't want to do management consulting. Once you get your taste of the principal world and actually taking ownership of your decisions, I think it's very hard to go back.

Tom: 00:11:34 So given my prior financial institutions background from the FIG group, I got in touch with the folks at Marsh & McLennan Capital and it was a wholly owned subsidiary of Marsh & McLennan, the large insurance broker, and it was the only principal operation that they had in the whole business. They owned Putnam back at the time, they owned Mercer Management Consulting, and they had this little tiny operation in Greenwich, Connecticut called Marsh Capital. Now they spun out and they're completely their own independent company called Stone Point, but same suspects that were there.

Ted: 00:10:58 Steve Friedman was a Goldman guy.

Steve Friedman was. He and Chuck Davis both went limited in 94. And I had worked with Chuck. He was a partner in the FIG group.

Tom: 00:12:16 He was head of global investment banking services worldwide, but he also was a partner in the FIG group. So I had actually worked directly with him on a number of occasions. Steve Friedman I had only met once during the Allstate IPO. I showed him to his seat for the closing - that was my role at the time. My original boss was Jeff Greenberg. This is so now 1997. His first job out of AIG was at Marsh Capital and I didn't know this at the





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time but the master plan was that he would ultimately become head of all of Marsh McLennan and this was the entry point. When he did that, about a year and a half into my tenure at Marsh Capital, Steve and Chuck took over. So from my perspective, you went from one incredible leader to two, and folks that actually had even some part history with.

Tom: 00:13:02 So that was incredible to be able to work with them. And Jeff was obviously still involved in the investment committee, so you still have access to him. And then a gentleman named Bob Clements kind of rounded out the four horsemen. Bob was the father of the Bermuda reinsurance market on behalf of Marsh McLennan and JP Morgan. That’s how a lot of those companies started into existence. I was very fortunate to be able to have direct exposure to them. Our team was pretty small back then, it was probably seven investment professionals and being able to work with those four folks and see how they operate was a great situation that got even better.

Ted: 00:13:30 And what were some of the key lessons? You said you have these great mentors. What did they teach you?

Tom: 00:13:35 I use this a lot with my own team - especially when we bring new people on board - something that will always stick with me, Jeff Greenberg taught me was “when there's a hole that needs to be dug, pick up a shovel and start digging.” And what I took that to mean was everybody's on the same team. We're all pulling together for the same goal. There's not this huge delineation in terms of roles and responsibilities. At the end of the day, there's one responsibility and that's to accomplish whatever goal it is - whether it's the best risk-weighted returns you can generate, whether it's the getting the IPO of Allstate across the finish line, whatever it takes. And I actually used that with my kids as well.

Ted: 00:14:15 That's a good one. How long did you stay at Marsh Mac then?

Tom: 00:14:20 I was there for four years.

Ted: 00:14:15 And what was the impetus for the decision to move?

Tom: 00:14:20 I was there from 97 to 2000. When I graduated from business school there was a classmate who went to a firm that nobody ever heard of, thought there was no chance they would ever



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exist in five years from now, let alone 20 years from now called Amazon.

Tom: 00:14:50 “I'm going to McKinsey. What is she thinking? That person is clearly lost. All they sell are books and maybe CDs and that's it.” Boy, was she the wise one? So technology was just coming out and we just had Marc Andreessen with Netscape and then all of a sudden we said one of the very first ecommerce sites with Amazon. There just wasn't a whole lot going on in that space. And I was there at Ground Zero, watching it all happen. It was very early days. A lot of venture capitalist out there I'm sure knew what was going on, but to the outside world, to the mainstream, it was going take a little bit longer. So didn't know much about what was happening in the Internet.

Ted: 00:15:25 It seems to be a pattern here. You get to banking not knowing much; get to PIA not knowing much…

Tom: 00:15:29 Bumbling through life, just hopefully keeping your head above water long enough so you don't drown.

When I was at, at Marsh, we came across a company called Softbank and at that time we actually knew they were big. They weren't the small little group, but we said, “Wow, they're pretty big” and they're actually pretty big in this emerging area called ecommerce and e-finance, in particular, they wanted to build. It's a Japanese organization. They actually want to build a keiretsu of companies that would do online lending with E-Loan, that wouldn't do online stock trades with E-Trade. They had this whole web - this was back in the late nineties - all kind of figured out, and they gave birth to all these different pieces of the puzzle, some of which are still around today.

Tom: 00:16:16 One of the companies that they started was called InsWeb. InsWeb was the very first online comparison shopping tool that you would use as an individual to shop for insurance. If you wanted to buy auto insurance or homeowners or life insurance, all personal lines, nothing commercial at the time, you could go there. In the good old days, maybe you would work with an outside broker, maybe you would dial phone numbers and call and get comparison quotes. This was the first time you can actually go online and put in your personal information and you could get a comparison amount of quotes. So revolutionary at the time. Given who we were at Marsh Capital, one of the larger





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direct insurance investors in the world, it made sense for u to take a look at it. Long story short, we ended up making the investment. It was relatively small - I think it was $4 million. We made four times our money in 18 months.

Tom: 00:17:05 This goes back to another lesson that I learned, from Steve Friedman. We were on the advisory board, InsWeb ended up going public I think in 1999 and we could have sold out the IPO. We weren't a huge shareholder, but we turned four into 16 and thought it was easy. And I remember talking to Steve Friedman saying, “What do you think we should do with this?” I said, “I don't know. I think we could probably take our bait back so we get our cost basis back and let the rest of it accrete and, and to see where we go from here because it's growing like a weed.” And he said, “You know, Tom, I think maybe we should take the money and run.”

Tom: 00:17:49 Let's not look a gift horse in the mouth. That was in 99. So we did it. We made our money and moved on. I thought in 99, this ecommerce and internet stuff is easy. Wow. Ground zero was on the West Coast going back to California. I was recruited to a firm called called FT Ventures, Financial Technology Ventures, which is now called FTV Capital. They were heavy on the banking side, but they didn't really have anybody that knew insurance. And so they were looking for somebody to fill that gap. And I left Marsh Capital and started at FT Ventures in March of 2000. I remember April 15th. The shortest tenure of my career. It was tax day, April 15th, 2000.

Tom: 00:18:38 That was the first mini crash of Nasdaq. And it kept on crashing throughout my 18 month tenure there. And so a great lesson that I learned at that time. Not so much about, “don't chase the next hot thing.” It was more so I learned about myself: I'm not a good venture capitalist. And it's hard.

Ted: 00:18:53 And what was it about the process of venture capital that led you to think it wasn't for you? Because anyone could look at that landscape and say, “There are 25 companies doing the same thing. What am I supposed to do?” And then you create criteria. You say, “No, I want the most charismatic leader. I want the businessman who had past success.” So there's ways you could filter it and make the bet anyway. But what part of the process did you come away saying, “I'm not going to be great at this”?





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Tom: 00:19:23 I think at the end of the day, for me, I wasn't a technologist, didn't fundamentally understand the technology, or, if it looks good in a demo, what does it actually take for it to work in the real world? So from my perspective, I was just completely a fish out of water.

Ted: 00:19:38 You’ve gone down a path: this fantastic pedigree of undergrad, great investment firms and you're at that moment where you say, “Uh oh, I walked down the wrong road here.” So at that time, what did you do? How did you think about how to make that transition?

Tom: I was in San Francisco and loved it. That's why found my way back and didn't want to leave at the time, but I did. It was a soul searching moment and it took 12 months for me to figure out that I was not going to be a good venture capitalist, 18 months to actually do anything about it.

Tom: 00:20:15 But for those, those six months, I knew it was without question and with utmost conviction that I needed to do something different. So I said, “What do I like to do?” I love doing the principal investing world. Coming from investment banking with that training, coming from that year in PIA, coming from Marsh Capital - I could understand and evaluate existing businesses way better than trying to identify the next new thing. Maybe it'll work, maybe it won't, but looking at something that has cash flows, that has revenues, has customers, diligencing those. Trying to understand what could be optimized if something is broken, what's broken, what could we do about it? That was much more my comfort zone. But I also liked the technology. I wasn't a technologist, but I kind of liked this idea of what technology could do in terms of growth and in terms of margins.

Tom: 00:21:02 From my 18 months as a venture capitalist, I could see what technology could do in terms of disruption. So I did what I thought was a hybrid. While FT Ventures was a bridge for me to get from the old world into technology, going to Vista Equity Partners - it was literally down California Street, maybe four or five blocks closer to the Ferry Building - that was a chance to stay in technology, but with companies that have a need to exist, have a right to exist, have existing customers, more established. Vista was a couple of years old at the time - I think it was 98, 99 and I joined in 2001. They had just been around for





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a little bit and they had one investor who provided all the capital and so there wasn't fundraising involved.

Tom: 00:21:47 They actually had captive sources of money, which I thought was always a good thing. That was the case at Marsh. That was the case at Goldman when I was there. They were investing in technology-enabled businesses and services. So a lot of that translated into kind of pure software companies, but it could span across any industry and it could include financial services. At the time they hadn't done any financial services investments. The two investments that I worked on when I was there, of the eight that we completed, happened to be in financial services primarily because that was where my network was. So I guess I didn't go to a far from the mother ship, but it was terrific to be able to get back to a Goldman culture, if you will, with a lot of folks being trained in a similar way to myself.

Ted: 00:22:26 Describe that culture.

Tom: 00:22:28 Very team oriented. When I think of what Chris Cole taught me, when I think of what Jeff Greenberg taught me, there are no prescribed roles or divisions: if there's a hole that needs to be dug, pick up a shovel. So everybody was working on everything. You all had your own responsibilities and you're all in charge of your own time sheet, in terms of what you thought you should attend to, but you can draw on the resources of the firm. And so if something was happening - and back then, deals were hard to come by - and so there was no shortage of things that you could do, but in terms of things that you actually wanted to do, you had to create a lot of opportunities yourself. You would get tons of inflow from investment bankers and other types of deal flow.

Tom: 00:23:10 This was the cold call model being implemented by a handful of the Summit and TA type folks, they were the pioneers. Now it seems like it's complete commonplace for any group, of almost any size, to have some element of kind of reaching out, cold calling. But back then it was just tough, you had to be scrappy. What I loved about it was you didn't come in in the morning and have a check list or a to-do list of things to knock off a one by one. It was the only thing that you really could control in the world was your time and how you spent it. And so you had to be very judicious with it, but there was no limit. You can be as scrappy as you wanted to. Call up the CEO if you want to. Find out who owns the company and use some of the skills you learn





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in investment banking, which is really learning to dig under the covers.

Tom: 00:23:59 Don't take anything for granted, be critical about your thinking, test hypotheses, but dig deep and try to think creatively. I did very little selling when I was at Goldman, but if I had stayed there, that was absolutely part of the professional progression. You ultimately needed to, in addition to executing the business, you needed to sell additional business and I think that's the case with consulting. It's kind of the case with any professional service. Same thing with private equity investing. Eventually you need to be a deal quarterback and, as I would say, you need to hunt it, to catch it, you need to skin it and you need to kill it and eat it. And then move on and do it again.

Tom: 00:24:38 You had to have all of those skills to be considered a true deal professional. I loved i. Our group was pretty lean at the time. In addition to Robert and Steve, there three of us as deal quarterbacks and maybe three associates and that was it. So there was no limit on what you could do. If you wanted to go and jump on a plane and go down to Texas because you thought there was a great idea down there, chase it down, bring it home.

Ted: 00:25:04 And yet today you're not in that business anymore. So somewhere along the way with all this great experience and fantastic first-rate firms, even if it was early days for them, how did you come to decide to leave and move on to the allocator side?

Tom: 00:25:23 I had just gotten married and had our first child, my daughter, she was born in 2003. When they're really done, there's not a whole lot that the dads can do except his watch and try to help out wherever they can on the house, but not a whole lot we can do to rear the child at that age. But as they get older, very quickly that tide turns. For personal reasons had felt that I loved the direct side of the business, but it's incredibly intense. And the type of business that I was working with - if you're fortunate enough to get a tiger by the tail - it takes over your life. I didn't love the fact that it can be all consuming. And I did learn that from my analyst days back at Goldman that everything else comes second.

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Tom: 00:26:05 And so I thought, is there a happy medium where you can actually have a better balance between work and personal? Because they're so intertwined in those types of careers. They're kind of one in the same. And if it gets to be too much on one end, then the other and can really suffer and it can permeate to the other side. So I started thinking at that time, in 2005, is there another alternative? Or I can have all this terrific exposure and excitement to the direct investing world without having to be on the front lines. I was recruited by a firm in Connecticut that was miles away from where I started my career at Marsh Capital in a town called Wilton, Connecticut. It was Commonfund Capital. It was part of The Common Fund for nonprofit organizations. At the time when I was being recruited, it was a $42 billion AUM organization.

Tom: 00:26:56 And I said, “Oh, now I feel really stupid.” That is the quietest $42 billion firm. I've never heard of it and I worked right down the road. And then as I started doing more research and learning more about that organization, I said, “Wow, what an amazing history.” 1971 was when they were formed and their sole mission was best of class money management across all different sectors, all different products for one set of clients and it was all nonprofits. So they themselves were a nonprofit serving other nonprofit. I thought, “Wow. What an interesting mission.” And again, I had never thought about that world before and always been kind of a diehard capitalist, but I thought, “Wow, I could actually do what I do now from the LP side” and actually back people like a Vista or groups that I applied and would never consider me as a principal investor, like GTCR and HIG and Golden Gate, Bain Capital, you name your favorite GP.

Tom: 00:27:55 But I can actually invest with them. And Commonfund had a stellar reputation primarily because their mission was so pure and the better that they do as investors, the better everybody does, including a lot of these folks, alums and medical organizations that they want to support and what have you. So that's what, that's what led me to cross the chasm.

Ted: 00:28:09 And so today you sit as the deputy chief investment officer at Rockefeller University. Why don't you talk a little bit about how you go about even thinking about having a large pool of capital and managing it?





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Tom: 00:28:23 We have $2 billion under management, which I think is a terrific size. It’s not too small, where there are certain things that are off limits, and it's not too big, where we feel that we have to do everything. I work hand in hand with my boss, Amy Falls, who is our chief investment officer.

Tom: 00:28:42 I met her in 2005 when I started at Commonfund. She gave up a 16 year career at Morgan Stanley as the head of fixed income research. She had a calling, not dissimilar from mine, to become the first CIO at her alma mater, where she went to high school, Phillips Academy Andover. The way I came across her was one of the first things that she did was invest in a Commonfund product. She became one of our clients and came onto our advisory board. So a couple of times a year I would have interaction with her and she really stood out in my mind as an advisory board member who gave advice. It seems like a novel, crazy idea, but she truly did. When Amy was hired in 2011 - so she had been six years as the CIO - then Rockefeller called and asked.

Tom: 00:29:30 They were really looking to take the program in a different direction and what that meant was there were no sacred cows. They were bringing somebody on board, and in this case it was Amy, to take a clear, clean look at everything and make a recommendation.

Ted: 00:29:30 Let's dive into the investment process. How do you start? What set of beliefs do Amy and you bring about investing that colors how you think about managing this pool of capital?

Tom: 00:29:53 First and foremost, we had to figure out what is our goal and what is our role on behalf of the organization and how do we fit in there and that has to be the starting point. We're a little bit unique but certainly not unprecedented, where earnings from the endowment support about a third of our operating budget every year.

Tom: 00:30:19 So not dissimilar from your alma mater at Yale - it's about, I think, I just read the annual report, it's about 34 percent, very similar to Rockefeller. It's a huge and important piece of the overall puzzle. So that's going to have implications for liquidity as well as risk management. Whenever folks talk about “what are your returns, what are your returns?” We're supposed to be investing forever. When people ask what your timeframe is at -






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20 years? 50 years? Is it your career? It's forever. It's perpetuity at least. We’ll never cure everything. We’ve been around for 110 years. We want to be around forever. People are grading us every June 30 - maybe end of August by the time the numbers start to roll in - how were your annual numbers?

Tom: 00:31:08 They matter, for sure, and certainly matter to our compensation committee and how we operate on a budget basis, but we're investing for forever. So it's that delicate balance of short term traction, but for long-term fundamental building blocks and I call it the sweepstakes that come out with all the numbers. People don't ever ask you, “what was your risk? What was your standard deviation? How did you get there in terms of your allocation? What did you do to push the envelope or not?”

Ted: 00:31:42 It's an interesting question, because if you look at this pool of capital with a time horizon of forever, as long as your governance structure is on board, short term risks shouldn't matter that much. And we know it does after 2008 and it's hard to right size budgets. So how do you take that and apply it specifically to Rockefeller, which really does have this long time horizon when it comes to thinking about asset allocation or however you go about the approach?

Tom: 00:32:08 Well, fundamentally, we have to meet that spend rate obligation on an annual basis - we're now at 5.5%, which is still high, still aggressive, plus inflation, so whatever number you want to use, 2% to 3%. Now that's not dissimilar from anybody else, but what it does mean is that's your long term bogey: maintain the purchasing power of the endowment. When you're 10 or 15 percent of the budget, not as big of a deal, when you have tuition dollars that flow in, not as big a deal, when you have gifts from alumni, there are lots of different levers you can pull.

Tom: 00:32:42 We don't have any of those, so we're unlike a traditional university, nobody pays tuition. Quite the opposite – to be technical, we have negative tuition. We actually pay people. They are heavily recruited and they are paid stipends to attend Rockefeller. We do have graduates, so we have alums. They go off and do wonderful things in the science world, but they almost think of Rockefeller like a job because they're paid. They're scientists, so they don't think of it as something you give back to, if you will, so we don't get that source of income either.





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That puts additional strain on the endowment and it just means that when we think about fundamentally how do we allocate assets and where do we start?

Tom: 00:33:23 We can't think just about return. We have to think about liquidity. Of a $2 billion endowment, we pull off about $100 million dollars a year, even more - so $25,000,000 a quarter. We've got to find something to redeem from to be able to fund that. In addition, we have to be around forever and so we have to have some growth in there as well. So once you cover things from a macro perspective in terms of knowing where you need to go with your mission, then you can turn into the micro and then you start to figure out how do we actually generate those returns on an annual basis for the long haul.

Ted: 00:33:50 Do you think about it in terms of an asset allocation approach, a factor approach, or opportunistic investing? There are a lot of different mental models you could use to get into it. what's been the one that you've adopted?

Tom: 00:34:03 It started out originally with an asset allocation approach. We looked at where Rockefeller was at the time, back in 2011, and where we thought it needed to be to accomplish several goals: generate the returns that we needed, managing the risk within certain acceptable parameters and then having liquidity.

Ted: 00:34:15 Where was Rockefeller when you got there and what direction did you take it?

Tom: 00:34:03 One of the big things that stood out was long short hedged equity funds. Rockefeller had a 25 percent allocation and was pretty much on target at that level. Amy told me what she did when she was hired - she went around to every one of the trustee members on the committee and said, “So why do we have 25 percent?” not trying to lead the witness whether that was good or bad as why are we there? And she had a myriad of answers.

Ted: 00:34:56 A myriad of inconsistent answers.

Tom: 00:35:03 Yes, on the spectrum from “I didn't know we had that much” to “Why? Was that a bad thing?” It was a lot of different answers. I think one of the first things she said was, “We - the investment office - need to do a much better job of communicating.”








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Ted: 00:35:15 Quick step back there. The board at Rockefeller is very sophisticated, if I remember right.

Tom: 00:35:18 That's right. We have 10 members of the committee, all different backgrounds. There are private equity people on there, there are public equity people, there are hedge fund folks, there are quantitative managers…

Ted: 00:35:25 But they're all super sophisticated investment people, yet they all had very different opinions about what the allocation should be.

Tom: 00:35:42 That's exactly right. We meet five times a year for two hours and it's really tough and if you've sat on committees, you have your day job and then you have other activities, which certainly contribute to what you do in the broader sense, but when they take up 10 hours of your year, you're always thinking about them in different ways and you can tap into them at times. But in terms of actually sitting down for the meeting, it's 10 hours of the year so you don't necessarily get everybody's absolute full attention, twenty four by seven, nor should you.

Ted: 00:36:05 So you started with this 25 percent allocation to long-short equity. What did the rest of the book look like?

Tom: 00:36:12 There was 15 percent dedicated to private equity and venture capital. There were virtually no investments in natural resources. There was a 15 percent allocation to real estate and there was an 8 percent allocation to fixed income and a couple percent in cash and then the remainder was long-only equity.

Ted: 00:36:36 So you're starting with a question of “Is this where we should be, blank slate?” It sounds like Amy concluded: No.

Tom: 00:36:44 We started with the lowest hanging fruit. It was, “Wow, we have too much long-short hedged equity.” She kind of thinks of that as expensive equity. What we're getting in terms of exposure - this is where it does blend into other things and thinking of it strictly as asset allocation and targeting buckets. We think of exposures, as well, so that's giving us a lot more equity beta, even though it's more muted because they had the hedge feature and component to hopefully monitor and manage the volatility, so it's not quite as volatile. At the end of the day, at least, those groups of hedge funds are folks that are giving us equity beta.





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Tom: 00:37:23 We had very little in the other types of hedge funds, which we've expanded over our tenure in what we've called absolute return managers. Those are folks that really have the ability to dampen volatility, but they don't do it necessarily through shorting equities. They do it by rotating amongst different asset classes - so they can do equities, they can do credit, they can do real estate.

Ted: 00:37:43 So those tend to be multi-strategy managers or do they tend to be more macro managers?

Tom: 00:37:49 Multi-strategy. And it can differ. There are credit specialists. We divide that bucket into folks that are true multi-strat: that are doing real estate in Japan, as an example, they're doing activist equity investing in the United States. They're doing credit in Spain. All different types of geographies, all types of asset classes. But then there's also credit folks that can do multi- strategy within the credit spectrum which is a big place.

Tom: 00:38:17 So that was a very small exposure, built that up to where it is today, about 20 percent of the overall book - there's probably eight percent of that 20 that is in the credit side, 12 percent is on the what we call the true multi-strategy, multi asset class side. And that was up from single digits where we inherited. On the other side of the hedge fund slice - where that was 25 percent - we reduced that down to 12 and we're currently at about 10. So a lot of that required letting go managers as opposed to just trimming exposures across the board. One of the things that we're big believers in is everybody having a meaningful impact on the endowments and not having manager creep or everybody having one percent.

Tom: 00:39:01 The book is today 2/3 public exposures, 1/3 private exposures between private equity and venture, natural resources, and real estate. Of the folks that are on the public side, we think between 3 and 5 percent of NAV for each manager makes sense, so that - on average - might give us 15 to 20 managers on the public side. On the private side, we want to have a little bit more diversification. We might have a little more sector specialty so folks that might, like a Stone Point, just do financial services or a Vista that just does technology. We think it's okay to have groups like that, but we don't want them to have too much because if they're a sector that is out of favor for a







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decade and we kind of want folks that can make money at any time period.

Tom: 00:39:47 But there's a role in the portfolio but it should be more muted, so anywhere between one and two percent on the private side. We might have the same number of managers on the private side, even though it's half the size of the public, but they're a little more dispersed and diverse.

Ted: 00:39:56 So when you come up with asset classes and there's always these questions of “Is it a bucket that you're filling?” Because of the character of the risk and reward characteristics, the way they correlate with other asset classes. Then you have the whole world of factor investing, which is “It doesn't matter what you call that bucket - what matters is what you own and how that's exposed to the markets.” How have you debated back and forth the merits of asset classes, the names of your asset classes, the exposures underneath them, and use that to sort of drive the engine - the managers are doing what they do and hopefully adding value in the in the bucket they're in, but the engine is asset allocation.

Tom: 00:40:43 It's a great question and I would say It's something that we continuously debate. Every February, on a very regular basis, we make sure that we dedicate a portion of that meeting to talk specifically about asset allocation. It's just important to have that meeting. We just go through where we are and where might we be. We go through our assumptions and retest those and re-underwrite those. Do they make sense in today's world?

Ted: 00:41:02 What are the types of assumptions that you're talking about?

Tom: 00:41:04 Primarily it's the big three. It would be: what are our long term return assumptions? What are our long term risk assumptions? Which primarily is volatility and standard deviation. And then the third piece would be correlations and cross correlations amongst each other. Are we really getting a benefit from diversification, and if so, can we quantify it? And how much are we getting? And if we were to tweak things, what would that impact have?

Ted: 00:41:26 So what's an example of sort of the most active debate that came out of this past February is meeting.








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Tom: 00:41:30 I hate to use names, at the risk of my own career, but Jim Simons is on our committee, from Renaissance, and he is a life trustee of Rockefeller. He’s been involved for, I think, 30 plus years. A terrific a benefactor for what we do. Two Februaries ago he said, “We don't invest in asset classes, we invest in people.” So you're making assumptions in our asset allocation mix of asset classes and we think we could expect and what kind of premiums we demand for giving up liquidity. We're happy to go liquid - that's one of the most valuable assets we have is our liquidity and we couldn't make our targeted rates of return without sacrificing it.

Tom: 00:42:22 But how should we invest in managers? They're the ones that do it. So whatever assumptions we have for the asset class, that's great. Are our managers doing exactly what we're modeling and projecting? We don't have to be theoretical at all. We can actually look at actual data. Now the issue that we have a little bit is that the manager lineup that we have today is drastically different from we had or four years ago, five years ago. We’re a very data intensive business, but sometimes track record is inconsistent or incomplete. Either the managers weren’t around that long or we've switched things around quite a bit. So there's a little bit of an exercise just to make sure that when you're back testing and looking at data backwards for 20 years, there may be - I think of Jurassic Park - there may be some gaps in the DNA sequence, you have to plug the frog DNA to get it to be complete, but you do the best you can and then it comes up with some very interesting conclusions. In some cases we actually thought that we should be getting out.

Tom: 00:43:24 I'll just use privates as an example. We should be getting 400 to 500 basis points above the public market equivalent, whatever that is. It doesn't have to be S&P 500 just because that's one of the main metrics we look at. Maybe it should be the Russell 2000 because most of what they're investing in the asset class is even smaller than that. Most of our managers are not investing in Fortune 1000 companies. So taking a look at that and saying are we getting that? Is it appropriate? And is it appropriate that we should demand that? And saying, well how are we getting that? And we were pleasantly surprised to see that - not in all cases but as a whole - we actually were getting more than that and that's what we're budgeting that we hope to get that and we actually are doing better.





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Ted: 00:44:04 You’ve said, “Okay, let's look at what the people, the managers we employ are actually doing”, you do some research and find, wow, the private managers are doing even better than we thought. Does that then color your asset allocation?

Tom: 00:44:14 It does. Having said that, we still want to try to apply some outside judgment. Does it make sense for us to get to target? Other groups have a strict adherence to whatever the allocation target is and you take all of your personal alpha based on manager selection and you're graded by how well you do adhering to that. We're not that strict. I would say that we definitely believe that asset allocation plays a part, but we also are not wholly driven that we actually have to get to whatever targets we established.

Tom: 00:44:53 We have a 5 percent target to fixed income, so we reduced it from the 8 percent that we had before. We've never gotten there. Amy's a fixed income person. It keeps her up at night. It pains her not to have that exposure at the levels that we're hoping for to combat other types of risks. Like the risk of deflation, which wasn't too long ago - a year, two years ago, that was a real risk. It's certainly happening in other parts of the world. It’s a real risk in the United States that we'd actually be facing huge deflation and we had nothing in the portfolio that would do well in that environment. We've maintained around a 2 percent of effective allocation to fixed income, against our five percent target, but it's incredibly short duration. We've been staring at this shift in Federal Reserve policy, thinking it was going to come years ago and it never did and now it's starting to happen, but in a very muted way.

Tom: 00:45:45 Now we sure don't want to get into five percent or anything with duration, but in our business we realized that we try not to keep score too much because you can think that we're right, but if it's not timely, you're wrong.

Ted: 00:45:55 But yet it's one of those great unknowns, say lesser known aspects of asset allocation and policy targets, that we're all forced with market timing decisions. Exactly what you're talking about in fixed income. “Our target's 5%, we didn't want to be at 5% because we knew that rates were going to go up at some point in time, so we're underweight.” That was the wrong decision. Now we really don't want to be at 5%, but







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that's effectively a market timing decision. How do you work with the investment committee and your team to recognize that these are the decisions we're making, these are the bets we're making relative to what our espoused policy target is that we set last February?

Tom: 00:46:32 I think the key is, again, what we inherited and what we've been able to build with the committee. You want to have that goodwill with the committee for the times when you really need it and you don't get that overnight. It is part of a long term process and a trust that is built up every day, every meeting, every decision, and you keep them informed and you ask their advice. You know, we don't have all the answers. They don't have all the answers and we muddle through it together. We make sure that everybody dissents; everybody has an obligation to speak up. And there are different debates and those are some of the most fun meetings to be at because you have all these terrific brains in the room and they don't all agree.

Tom: 00:47:23 Most of the time they do. Most of the time they agree on lots of different things including the premiums. A lot of the private folks in the room that believe fundamentally there is premium you can have for giving up liquidity, but they all believe it's getting tougher and that that premium is getting smaller. What do we do in the long haul? And so one of the things we did recently, getting back to your original question about the February meeting, we increased our allocation to privates, incrementally. Originally it was 15 percent, then 20 percent over the last several years, and now we increased it to 22 percent. Not wholesale shifts. I always love looking at the Yale report and they have several years’ worth of asset allocations. So you look at the current year and say, “well that's not much different from last year.” Well look at what it was five years ago, look what it was 10 years ago. It's actually dramatically different in terms of what they've done with their domestic equity book - shrinking that and increasing the foreign equity exposure. So when you're around forever, that actually is a pretty big shift from 15 to 22 and where we're at today and from fixed income of eight down to five and currently a two. Any given meeting, any given year, it's not wholesale changes.

Ted: 00:48:29 Let's turn to the manager selection part of it. I'm particularly curious to talk to you about private markets because that's certainly an area you've been in your whole career in the





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venture capital world. I heard a statistic recently that something like 50% of all the profits earned from venture capital firms have only come from a very, very small subset of venture capitalists. I don't know if the number was 50 or even 10 firms, or some incredibly concentrated number. If that's the case, everyone knows who the winners are. How do you create a portfolio where either you have access to the winners or you don't? And then: how do you live with that knowing it has nothing to do with you, it's really whether you're able to get access?

Tom: 00:49:13 I think it's an age old question. The debate has gone on for a long time and will continue. It will never get old. I think it’s true to the n-th degree with the caveat is that it’s not all the returns. You can still generate great venture returns if the firms are small enough and if they're going early stage enough and they get meaningful ownership positions in some of the better companies and certainly it favors the incumbents. When you have a brand - pick your favorite, everybody already knows who the top five, top 10 firms are for the most part - but they don't invest in every great company and there are groups that you may never have heard of before.

Tom: 00:49:55 You might've heard of their companies, you may not have heard of the top venture capitalists, in terms of ownership, or maybe the only ownership position, and you'll be like, “I've never heard of that group.” Maybe they are the next great group, or you say, no, they're perfectly fine. Kind of where they are. They don't need to grow, but they've continued to just make great investments every now and then. So as it relates to Rockefeller, we looked at our venture program and because of who we are as a medical research institute, we had a lot of healthcare exposure. I think we had nine incumbent managers fund families. That was the bulk of our venture exposure. And at the time I think it was over 10 percent of our total NAV of the entire endowment was venture and, of that, over half of it was healthcare VC.

Tom: 00:50:45 Now a student of venture capital going back 20, 30 years would say, “You can have IT and healthcare, and IT won.” There are times when healthcare does fine and in last couple of years it's actually done great. But for the most part on the whole IT has done better. So when we thought about how to resuscitate our venture program, we broke it down into parts. We said, number





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one, why don't we try to get access to elite group, we know who they are, why don't we call them? The cold calling that I did at Vista and other places - that training - because you just go and give it all you can. Nothing to lose. No, it wasn't complete cold call. I certainly had known about some of these groups from my time at Commonfund.

Tom: 00:51:24 Rockefeller is an unbelievable brand, but most folks have never heard of us outside of the science world. So we put together a pitch book, borrowing from my analyst days. We said we got to market ourselves, don't take anything for granted. Rockefeller is a gigantic name, but folks will confuse us with the foundation, the Rockefeller brothers, with a lot of the different entities that are out there. And most folks have never heard of what we do outside. Certainly in the IT space, they're just not in our world. So we had to pitch who we are and what we do. We talked to all of the usual suspects and we got some. Not everybody said yes, it not really shocking - they have a surplus of organizations as amazing as ours, and they can pick and choose who they want to be with. We continued to knock on their doors and then maybe we'll make inroads someday, but we did make inroads with some. So that was problem number one, was talking to the incumbents.

Ted: 00:52:15 When there's excess demand for fund, there's definitely a tendency to not do the type of research that you would do. If there's excess supply of new funds coming out, you're going to spend time; you're going to do your full swath of diligence. See who the people are, what deals they did. Do you think that there's a tendency for investors to get lazy or complacent just by pounding to get access with certain firms that have demonstrated success in the past?

Tom: 00:52:44 There's an element of that. You have to court before you know you want to date somebody. I’m going down a terrible path in terms of an analogy, but you don't know yet if you want to marry that person, meaning you know, actually make a commitment to them and they make a commitment to you because you don't know. You don't have the data and that data is incredibly prized. It's not publicly available. It's not remotely publicly available, sometimes not even privately available. They just won't give you the information. I think you have to stick to your underwriting criteria and stick to your diligence process that will save you at the end of the day, but it does mean you





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have to find it to be creative in terms of how do you get the information that you need to make the decision. I can tell you with complete confidence, our committee won't let things slide by, if you will.

Tom: 00:53:27 They won't let us get complacent. Quite the opposite. They keep us on our toes, which is a wonderful, wonderful place to be.

Ted: 00:53:30 And have you had examples of getting to the courting stage where all the sudden the venture capitalists accepted your phone call, you're having a conversation and then as you got into it, you decided this isn't quite what we thought from that.

Tom: 00:53:40 Absolutely. All the time. Like today. And that's where you have to look in the mirror. I mean, for us, we know what the answer is. It's not easy. You have to take everything into consideration. Say, well, are the returns a certain way, was it a bad vintage? Was it a bad employee? Is this exactly the wrong time to get off the bus with them?

Tom: 00:54:12 And one of the research projects at Commonfund that I participated in, we found out that even the top quartile, best managers of all time, will have at least one fund in their history that is not top quartile. Returns are persistent in the long haul and then the overall body that record, but it may not be for each individual fund, which is the folly of market timing for us to think, “Okay, this is the one that will work, that one won't.” There are so many things that go into that you really can't underwrite. You just stick with your best managers. That is one of our primary maxims.

Ted: 00:54:40 So let's turn to a couple of lessons learned along the way. What's the biggest mistake that you made and more importantly what did you learn from it?

Tom: 00:54:52 Wow. There's been several. I'll answer that directly. I would say in general, I think what's most important is you're going to make mistakes all the time, learn from them, and try not to make the same mistake twice. It may look different the next time around is. Our business a lot of is pattern recognition and looking at things and seeing patterns and using the history. Investing is a learning field. The longer you're in it, the better you should do because you're going to see more. Getting more


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experienced. The caveat that comes with that is if and only if you're learning from your mistakes. To think that you're not going to make mistakes is crazy.

Tom: 00:55:34 But what do you learn from them? And how do things that look similar. You can say, “Okay, given what we did before, this may not be the right way to go, let's go this direction because this seemed to work before.” So just recognizing that all those things happened.

I would say, this may not be exactly what you're thinking, but we made a mistake on hiring on one of our junior folks. It wasn't devastating. But we're a small team - we're six investment professionals in our corner of Founder's Hall and that's not a very big team. The philosophy that we subscribe to, which is everybody works on everything. We're all generalists. We all contribute. We made a hiring mistake.

Tom: 00:56:19 We let the person kind of ride out to the end of the program, which was fine. But what it did to our culture. And again, you're looking around, there's only kind of five other people and one of these does not look like the other. Within the first six months because of here's where you are, here's where we think the director needs to be, here's how we think you can get there, here's the resources we can provide to help you get there. We noticed instantly there was an improvement and then it kind of flattened out again. And so it never got to the point where we needed it to be and let it ride out for the full two years. It’s not the end of the world, but what it says to me is how important it is to hire right.

Ted: 00:56:57 And what's the lesson? Would you, if the same thing happened again, cut the cord earlier?

Tom: 00:56:57 I think we would do that for sure.

Ted: 00:56:58 And how about a big winner and lessons learned or how you exited?

Tom: 00:56:57 I hate to use names, but Greylock is one. We love all of our managers. Greylock was proof to us that what we thought about rebuilding the venture strategy, our thesis, a piece of that thesis worked. We weren't sure if it would work. We had no clue. But we never had spoken to Greylock as an institution. And there are plenty of groups that we didn't speak with. We kind of






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scratched our head like, “That's on everybody's list” in terms of a top organization and there's a lot of reasons why. And it's not just because of their financial returns. I would say that's looking at the end game and not looking at how they got there.

Tom: 00:57:46 We look at how they got there. They do at least two meetings four times a year and he level of transparency and the level of disclosure and how they think of the world as a partnership, not only with their portfolio company CEOs, their own team members, their own LPs. They think of the whole thing is a partnership. That is so refreshing. I'd like to say it's so commonplace and it's so not. We try to really find that in every one of our groups, but that was not easy. We spoke with them for several years and they loved the story, loved what we do. They don't increase their fund sizes. Every one of their existing LPs wants five times more than what they have. So for us to get a little bit with them means somebody else has to give up a little bit against their will, if nothing else.

Tom: 00:58:35 So that was one that it was, it was very helpful to get across the finish line.

Ted: 00:58:36 I want to close with a bunch of questions that don't necessarily have anything to do with investing but are kind of always fun to talk about. What is your favorite book?

Tom: 00:58:42 I would say right now I think it's very timely. My daughter who's in eighth grade, we just got her a copy of “Animal Farm” from George Orwell. Timely indeed, unfortunately. I mean, and not just here, just you know, throughout the world.

Ted: What do you know now that you wish you knew 10 years ago?

Tom: 00:59:11 Oh, wow. I love when other people get this question. You could phrase it as what advice would you give yourself 10 years ago. I guess I would say don't be overly consumed with a path to success, whatever that means. Meaning one path. There's multiple ways to skin a cat. I think back to Berkshire Partners, every annual meeting that whenever you're at it, they always say, “We look for companies and investment that have multiple ways to win.” There's multiple ways to succeed in this world. There isn't one prescribed path and if you're hitting a dead end somewhere, that's okay. Retool, rethink about what you want to do and if you have a general idea on the macro sense on





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where you want the direction of your life to go in terms of do you want to. Do you want to have a family? Do you want to have a spouse?

Tom: 00:59:55 Do you want to have a career in a certain geography? What have you. The big pieces are in place, but then when you actually get to the micro, don't be overly consumed. If you're in a dead end job, if you're not where you want to be, that's okay. Just keep on trucking. I think of like the batting cage examples as we're in baseball season, keep swinging. The pitches are going to come. Most of the times they're going to be out of the strike zone. It doesn't matter. You're going to whiff a couple of times. Keep on swinging and you'll, you'll. If you get 3 out of 10, you're in the hall of fame.

Ted: Tom, thanks so much. It's so much fun.

Tom: Ted, my pleasure.

Ted: Thanks for listening to this episode. I hope you found a nugget or two to take away and apply in your investing and your life. If you've liked what you've heard, please rate and review on iTunes or Google Play to help others find out about the show. Have a good one and see you next time.


transcript: tom lenehan – perpetual thinking at ...€¦ · to top tier venture firms. his...

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