Podcast Summary: How I Invest with David Weisburd
Episode 203: How Elite Endowments Invest w/John Felix
Date: August 22, 2025
Guest: John Felix
Host: David Weisburd
Episode Overview
In this engaging episode, David Weisburd sits down with John Felix to explore the intricate world of institutional investing, focusing on the approaches of elite endowments like Washington University in St. Louis (WashU) and Bowdoin College. Felix shares insights from his career journey through top endowment offices and his transition to fund-of-funds manager at Pattern Ventures. The conversation uncovers strategic philosophies, manager selection processes, portfolio construction, and lessons learned, offering a masterclass for institutional LPs, venture investors, and emerging fund managers.
Key Discussion Points & Insights
1. Early Lessons at WashU: Drinking from the Fire Hose
[00:11-02:02]
- Felix describes his foundational years at WashU, emphasizing deep training in fundamental research and investment philosophy.
- He highlights the importance of concentrated, long-term oriented managers and the value of constant learning, referencing a book club that covered Ben Graham, Philip Fisher’s "Common Stocks and Uncommon Profits," and "Margin of Safety."
“WashU was really drinking from the fire hose for two years... deep fundamental research... very long term time horizon, kind of like that private equity style investing in public markets.” — John Felix [00:16]
- Felix also recounts experiencing three CIO transitions in two years, reinforcing the importance of adaptability and resilience in dynamic investment organizations.
2. Market Efficiency: Short-Term Inefficiency, Long-Term Rationality
[02:19-03:47]
- Felix challenges the efficient market hypothesis often taught in business school, noting that markets are not efficient in the short term, which creates opportunities for active investors.
- Over longer horizons, he believes markets become more efficient and reflect true intrinsic value.
“The market is often not efficient in the short term... but in the long term, the market is efficient.” — John Felix [02:38]
3. The Scott Wilson Era at WashU: First Principles and Ruthless Objectivity
[03:54-08:56]
- Felix describes Scott Wilson as an unorthodox, first-principles thinker who rejected endowment conventions.
- Wilson implemented a “force rank” process for managers in every asset class, requiring the investment team to rank managers by conviction with no ties, compelling tough decisions on capital allocation.
“He disregarded convention completely... We force ranked every single manager in every single asset class. There could not be a tie... forced us to look in the mirror and take a hard look at our portfolio.” — John Felix [05:08]
- This approach counterbalances consistency bias (the tendency to passively re-up with managers), turning capital commitment into an active, opt-in process.
“You need a reason to keep somebody in [the portfolio].” — David Weisburd [06:36]
- Discussion on the balance between “relationship alpha” and objectivity—Wilson prioritized results and set clear performance expectations with managers, avoiding personal entanglements.
4. Best Ideas and Portfolio Concentration
[09:06-15:57]
- Wilson was “very heavily favored concentration” both at the manager and underlying position level, pushing the team to double down on highest-conviction ideas across all asset classes.
- The WashU team not only relied on manager views but also conducted their own deep dives into top holdings.
“Scott’s general philosophy was he didn’t really care if an opportunity came from public equity, private equity, real estate... concentrate on the best ideas regardless of asset class.” — John Felix [10:03]
- Data-backed insight: Their analysis showed that top holdings in managers’ portfolios often outperformed the overall portfolio, justifying increased exposure to these names.
“We looked back... at all of our public equity managers... their top one, two, three single names almost always outperformed.” — John Felix [14:31]
- Proactive co-investing: Instead of waiting for managers to offer up co-investment, the WashU team sought out and underwrote their own best idea exposures.
5. Generalist Approach and Deep Primary Research
[16:07-19:09]
- Wilson abolished asset class silos, retraining the team as generalists empowered to chase best ideas across all categories.
- Heavy emphasis on primary research: Management meetings, factory tours, diligence beyond the standard LP-manager relationship.
“Everybody became a generalist... Trying to find the best ideas in general, not just within a constraint.” — John Felix [16:23]
“They’re touring factories, talking to customers, doing that really deep primary research a lot of other endowments don’t do.” — John Felix [17:18]
6. Adverse Selection and Proactive Co-Investing
[19:09-20:37]
- Felix distinguishes WashU’s proactive approach to increasing exposure in the best opportunities from the industry’s often reactive, manager-driven co-investment paradigm.
- Alert to adverse selection risk in co-investments, especially in private markets (i.e., “if it’s so great, why am I being offered more?”).
7. Bowdoin College: Diversification, Network-Driven Access, and Multiple Paths to Alpha
[20:49-25:31]
- At Bowdoin, under Paula Volent, Felix observes a more diversified, network-driven style. Volent capitalized on venture opportunities post-dotcom bubble and leaned into relationships from networks like Sequoia and Stan Druckenmiller’s.
- Bowdoin’s approach contrasts sharply with Wilson’s concentration—showing that both focused concentration and diversified network strategies can win.
“There are more than one way to win in investing and it works for somebody, it might not work for somebody else.” — John Felix [22:37]
8. Lessons from a Venture Platform—Allocate
[25:43-29:03]
- Felix’s stint at Allocate, a tech-driven alternative investment platform, gave him operational experience as a startup team member and an LP focused on emerging managers.
- The experience deepened his empathy for founders and improved his ability to diligence venture GPs by witnessing company building from scratch.
“Being at Allocate, seeing that 0 to 1, seeing what it takes to hire a team... just gave me a lot more empathy... and I’m really glad I did it because I think it’s made me a better investor.” — John Felix [28:18]
9. Fund of Funds Rationale & Emerging Manager Strategy
[29:10-33:41]
- Felix explains why the world “doesn’t need another fund of funds” unless it provides real value, arguing that Pattern earns its right to exist through network-driven sourcing and selection of emerging managers.
- He highlights the high degree of “LP error” in the venture asset class and the value of starting with fund of funds—a “crawl, walk, run” approach to learning the market and reducing costly mistakes.
“In the emerging manager world... it’s much more of a discovery and diligence and manager selection game.” — John Felix [30:29]
“LP error on the manager side and even more so on the startup side... whatever investors save in fees, they pay 5, 10x oftentimes... mistake fees.” — David Weisburd [32:48]
10. Identifying and Selecting Top Early-Stage Funds
[37:19-44:05]
- Pattern focuses on sub-$50M venture managers, citing data that the highest multiples (5x+) tend to come from this cohort.
- Smaller funds have a competitive edge sourcing and accessing top deals at pre-seed/seed, with easier fund math for meaningful returns.
- Felix notes strategic differences: Some best-in-class early-stage GPs are highly concentrated pickers (often solo GPs), others have wide networks and more diversified portfolios.
“The largest cohort of 5x returning funds was in the sub $50 million range.” — John Felix [37:24]
“We tend to prefer solo GPs… I think there’s more risk in a partnership actually.” — John Felix [43:13]
11. Mistakes & Evolving Views
[44:09-46:38]
- Felix has changed his mind on reserves, now believing pre-seed/seed managers should take more upfront ownership rather than rely on follow-on reserves, as the information advantage is usually minimal between rounds.
- He cautions that success and breakout companies often only become clear with hindsight.
“I would almost rather those funds just buy up more ownership in the early days… Reserves can be really effective, but I think they’re more effective in later stages.” — John Felix [45:22]
12. The Importance of True Partnership
[47:30-48:27]
- Felix emphasizes humility in the GP-LP relationship and the necessity of genuine, bidirectional partnership for long-term success.
“I just think this business needs more true partnership... none of these relationships are one way streets.” — John Felix [48:12]
Notable Quotes & Memorable Moments
-
On Manager Selection Bias:
“If you wouldn’t invest with a manager today, then why would you still have capital with them even if you made that decision?” — John Felix [06:53] -
On GP Differentiation:
“Everybody’s smart in this industry... it’s table stakes. That in and of itself is not enough…” — John Felix [36:15] -
On Career Takeaways:
“There are more than one way to win in investing and it works for somebody, it might not work for somebody else.” — John Felix [22:37] -
On Partnership:
“These are marriages, these are really long-term relationships, they’re two-way streets... this business needs more true partnership.” — John Felix [48:10]
Timestamps for Important Segments
- [00:11] – Felix’s early years at WashU: fire hose learning, deep research, and CIO transitions
- [03:54] – Scott Wilson’s unconventional approach and force ranking of managers
- [09:06] – Embracing best ideas and portfolio concentration
- [16:07] – Becoming generalists and deep primary research
- [20:49] – Comparing Bowdoin’s diversified, network-driven approach
- [29:10] – The rationale behind Pattern Ventures and “earning the right” as a fund of funds
- [37:19] – Why focus on sub-$50M early-stage funds
- [44:09] – Lessons learned and evolving opinions on reserves and portfolio construction
- [47:30] – Felix’s thoughts on partnership and open call to managers
Closing Thoughts
John Felix delivers a comprehensive look at what sets elite endowment investors apart: first-principle thinking, rigorous process, relentless objectivity, deep research, and flexible frameworks that play to organizational strengths. He stresses the humility and empathy needed in the GP-LP dynamic and advocates for intentional learning and development—whether entering new asset classes or building new platforms. This conversation is a must-listen for anyone investing in or alongside venture, endowments, or fund-of-funds.
Recommended to:
General partners, limited partners, institutional investors, venture fund managers, and anyone interested in the inner workings of top-tier endowment and fund-of-funds investing.