E324: How The University of Cambridge Built Their Privates Portfolio

Summary

Podcast Summary: How I Invest with David Weisburd

Episode E324: How The University of Cambridge Built Their Privates Portfolio

Date: March 13, 2026
Guest: Sam (Head of Private Equity, University of Cambridge)

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Episode Overview

This episode explores how the University of Cambridge built its private equity and venture capital portfolio from the ground up, led by Sam, who joined the endowment six years ago. The discussion delves into investment philosophy, alignment of incentives, manager selection, approaches to risk, transparency, and the unique advantages of a storied endowment. Sam shares candid lessons on manager relationships, navigating cyclical challenges, and the critical role of network and trust in institutional investing.

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Key Discussion Points and Insights

1. Building Cambridge’s Privates Portfolio from Scratch

• Mission-Driven Investing:

  • Cambridge’s endowment is tasked with preserving and growing capital not just for decades, but centuries ([00:51]).
  • Target return: Inflation +5% (relatively high, requiring meaningful risk and return assets like private equity).
  • Focused primarily on buyout and venture capital strategies.

• Why Private Equity?

  • Buyout managers influence operations strategically and are less pressured by short-term results than public markets, leading to higher potential returns ([01:24]).
  • In venture, the goal is “to deliver outsized success if you’re partnered with the right firms who are investing in the right companies” ([02:01]).
  • Importance of long-term relationships: “A private fund can last for 15 years or more…do you want to be in business with these people for that amount of time?” ([02:10])

• Alignment and Manager Selection:

  • Cambridge’s relatively modest endowment size (£4.5B) provides agility and focus on “best risk-adjusted returns rather than on deploying capital” and allows the team to be selective about manager alignment ([03:07]).

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2. Assessing Alignment and Incentives

• Distinguishing True Investors from Asset Gatherers:

  • Presentation of the “principal-agent problem” — motives behind return-focused managers versus those focused on asset gathering ([03:52]).
  • Key trait in standout managers: “An inert competitiveness. They want to win and they view winning as generating the best returns compared to their peers…” ([03:59]).

• The Role of Ego and Purpose:

  • Some managers’ sense of purpose is derived from assets under management, others from investment returns and smart strategies ([06:01]).
  • Sam: “That’s completely right.” ([06:24])

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3. Venture Capital: Scale vs. Focused Funds

• Brand and Capacity:
  • The episode contrasts giants like Andreessen (large funds) with smaller, tactical, capacity-constrained managers ([06:46]).
  • Sam: “There are many ways to win…it comes down to people…how many exceptional people do you have?” ([06:52])
  • Brand effects: Successful VC firms continue to attract the best founders.
  • Cambridge’s advantage: The ability to commit smaller, but meaningful, amounts to capacity-constrained managers, and act as a conduit between academia and venture firms ([08:31]).

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4. Navigating the “DPI Crisis” and Market Cycles

• Liquidity Challenges:

  • Distribution-to-paid-in (DPI) rates have dropped sharply, raising questions about deployment timing ([10:10]).
  • Sam: “It’s great if everyone is saying not to invest…fewer limited partners competing for those best general partners…should be a great thing.” ([10:55])
  • Always maintain liquidity discipline—never get overexposed.

• NAV Marks and Valuation Credibility:

  • Rigorous review of manager reports and comparisons across similar assets held by different managers to spot marking inconsistencies ([12:06]).
  • Cautious preference for managers with prudent, conservative valuations ([12:48]).
  • “If you are conservative on those valuations and then you surprise on the upside...” Trust is built and preserved ([14:06]).

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5. Organizational Incentives and Team Longevity

• “Incentives All the Way Down”:

  • Long-term focus is easier at institutions with multi-decade team stability. Rapid turnover undermines trust and incentives ([20:14]).
  • Cambridge enjoys a privileged time horizon, both institutionally and within the team: “We’re building something for the next 10, 20, 30 years…” ([20:54]).

• Portfolio Concentration and Manager Trust:

  • Cambridge runs a concentrated portfolio of ~30 relationships from a field of thousands ([22:20]).
  • Alignment and trust are prerequisites: “If we find a manager...something erroneous in their reporting or their valuations, it’s very hard to start a relationship when you don’t have that trust.” ([23:09])

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6. Handling Mistakes and Building Trust

• When Admitting Failure Becomes a Strength:
  • Example: A European software manager attempted expansion, failed, but was transparent with Cambridge, incorporated learnings, and succeeded on a later attempt ([24:27]).
  • Openness and willingness to self-correct strengthens the GP/LP bond.

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7. The Value of Simplicity and Focus

• Scaling Strategies and Resource Allocation:

  • Simplicity and focus yield the best, sustainable returns. Adding complexity or new strategies requires exceptional, non-replicable edge ([27:09]).
  • “There’s a huge value to simplicity…when you wake up in the morning, what’s the first thing you think about?” ([27:09])

• High-Level Productivity:

  • True “deep work” hours per year are limited—where and with whom you focus your time is critical ([28:13]).

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8. Sourcing Alpha in Venture Capital

• Changing Power Dynamics:

  • The storied “Sand Hill Road monopoly” is over; top founders now have their pick of investors ([30:19]).
  • “Alpha really lies with those venture capital firms that have a differentiated proposition or a reason why an exceptional founder would want to pick with them…” ([30:19])

• Structural Alpha and Persistence:

  • Science (historical fund numbers) vs. Art (judging if excellence will persist): “It’s a people business…and it comes down to our assessment of those people. What are their skillsets, what are their motivations?” ([32:25])
  • Referenced study: 52% of top quartile funds persist, 48% revert to mean ([33:24])

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9. Timeless Career Advice

• Network as Compounding Advantage:
  • “Network is incredibly important…I don’t think you can ever invest early enough in your network and build that up over time.” ([34:02])
  • Over time, referrals and relationships become the main deal pipeline.

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Notable Quotes & Memorable Moments

• On Endowment Mission:

  “It is to preserve or increase the real value of the endowment for not just decades, but centuries to come. We have a distribution rate of 4% and...a target return for the whole endowment of inflation plus 5%.”
  — Sam ([00:51])

• On Alignment:

  “Are the key decision makers...motivated to deliver outlier returns rather than necessarily build a large business focused on asset management...?”
  — Sam ([03:07])

• On Alpha in Venture:

  “The alpha really lies with those venture capital firms that have a differentiated proposition or a reason why an exceptional founder would want to pick them and work with them…”
  — Sam ([30:19])

• On Simplicity:

  “There’s a huge value to simplicity...you only have a certain number of hours...use that to deliver the best returns you can.”
  — Sam ([27:09])

• On Trust and Markups:

  “If you are conservative on those valuations and then you surprise on the upside. We do take a lot of note when...you start seeing markups in that portfolio...ahead of the next subsequent fundraise.”
  — Sam ([14:06])

• On Network:

  “I don’t think you can ever invest early enough in your network and build that up over time. And over time it becomes a compounding benefit…”
  — Sam ([34:02])

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Important Timestamps

• [00:51] – Cambridge’s endowment mission, risk appetite, and asset allocation rationale
• [03:07] – Assessing manager alignment and incentives
• [06:52] – VC fund sizes, brand, capacity constraint vs. scale advantage
• [08:31] – Cambridge’s specific advantages in venture capital
• [10:55] – On being contrarian in DPI crisis and liquidity management
• [12:06] – NAV marks, valuation scrutiny, and conservative manager preference
• [14:06] – Trust, incentive distortions, and valuation manipulation risks
• [20:14] – Incentives and organizational time horizon
• [24:27] – Example of transparency and trust: manager’s failed expansion
• [27:09] – Value of simplicity and limiting new strategy drift
• [30:19] – Alpha in venture in a hyper-competitive founder-driven market
• [32:25] – Science and art of persistence in top quartile funds
• [34:02] – Career advice: compounding value of building a network

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Concluding Thoughts

This episode offers an in-depth look at how the University of Cambridge approaches building a world-class privates portfolio, emphasizing mission alignment, simplicity, patient capital, and the nuanced evaluation of both managers and opportunities. It’s a masterclass in long-term, conviction-driven institutional investing, balancing historical rigor with adaptability in a shifting market.

Transcript

[Host]

So Sam, you've had an incredible career going from Morgan Stanley to then Partners Capital. But I want to start with how did you came to run private equity

[Sam]

at Cambridge University six years ago now. Our CIO had joined a few months before, was looking to rebuild the whole investment team and also just looking to increase the allocation to private equity substantially. And I think all those kind of factors really kind of married with, I guess my long term ambitions and motivations, which for some reason I love private equity. And the ability to kind of take this brand and use that to leverage to build a world class portfolio was just too good an opportunity to pass up.

[Host]

You were building for one of the most historic institutions in the world, but you were more or less building it from scratch. How did you go about doing that?

[Sam]

At the core of it, what is the mission objectives of the endowment as a whole? It is to preserve or increase the real value of the endowment for not just decades, but centuries to come. We have a distribution rate of 4% and we want to have a margin of safety. So that means we have a target return for the whole endowment of inflation plus 5%. I'll admit that's a relatively high return target. And so it's therefore really important for us to have a meaningful allocation to risk assets. We believe that priorities should have the highest return out of all asset classes and so naturally makes sense for us to have a large allocation to the asset class. Why do we think that's the case? I think firstly I'm going to, I think private equity for me and just trying to keep it simple. There's many different strategies. It's kind of focusing mainly on buyout and venture capital as the two core asset classes or two core strategies. Here within buyout, we just believe managers have the ability to influence the operations and strategic directions of businesses and they also have a longer term focus than say in public markets where people are very focused on quarterly earnings and shorter term decision making. And so managers that have that skill and differentiation should lead to kind of longer term revenue and earnings growth and naturally then higher returns. On the venture side, I don't think we necessarily believe the market will have the highest absolute returns out of all asset classes. But we do believe investing in early stage disruptive technologies has the potential to deliver outside success if you're partnered with the right firms who are investing in the right companies. It is a people business. A private fund can last for 15 years or more and that's a considerable amount of time to be spending with these people. And I think there is Just a fundamental question of do you want to be in business with these people for that amount of time? And within that it comes down to alignment. Are the management incentives and motivations truly aligned with what we view as success?

[Host]

How do you ascertain that? How do you look at incentives and figure out whether you as the LP are aligned with the manager?

[Sam]

That's a really good question. The endowment is about £4.5 billion, which is obviously a lot of money, but in the grand scheme of financial assets is relatively modest, which I think gives us the real privilege that we are focused to deliver the best risk adjusted returns rather than on deploying capital. And so that alignment really boils down to that which is are the key decision makers at an investment organization, are they motivated to deliver outlier returns rather than necessarily build a large business focused on asset management and focus on gathering management fees?

[Host]

What do you find psychologically that drives those that want to be great investors versus great asset trade gathers?

[Sam]

We spend way too much time or, or may maybe is the right amount of time talking about this amongst the team. If we look at our managers that have sustained outperformance for a considerable amount of time, it comes down to she just an inert competitiveness. They want to win and they view winning as generating the best returns compared to their peers. And they will move heaven and earth to do that even after kind of reaching financial security and in some ways doing doing it more for the love of generating those returns than the economic incentives that flow from that.

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[Host]

it's where the managers get their ego and their ego attachment. Some managers get their ego from I have all this aum, I have all these management fees. Other managers actually get it from I have the best fund, I'm not an asset gatherer. I have the best returns, I have the smartest strategies and I'm doing well for my lp. So it's really about where you get your sense of purpose and your ego.

[Sam]

That's completely right.

[Host]

So let's double click on venture specifically. Andreessen Norowich just raised the largest venture fund in history. There's other venture managers that are very tactical and very capacity constrained and, and focus on having smaller funds. Where in the market is it an

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[Host]

And where in the market do you really want to be constrained?

[Sam]

Million dollar question, isn't it? We believe there are many ways to win. And I think kind of taking that example that you, that you just highlighted with Andreessen, I think at the end of the day it comes down to people. And so how many exceptional people do you have that are seeking to invest the amount of capital that you have and that can be in a fund of $20 million through to an institution that's, that's raised $15 billion. And I think the manager needs to know, or any asset owner or manager needs to know, what are their competitive advantages and what are their rights to win? Within venture, there is this reinforcing brand effect where people that have a desire to be successful want to be associated with successful brands and firms that have backed those amazing companies before. And in a world which has never been so competitive, having that the scale and resources to make their portfolio companies heard sounds like a very attractive strategy. On the other side, whilst we're living in this era of incredible innovation, there's still how many truly transformative companies are going to be created per year? And how does that then how many of those companies or what market share does a firm raising that amount of capital need to invest in for endowments?

[Host]

Where does your capital structure give you an advantage and how do you push that advantage in venture?

[Sam]

Well, I just said in terms of the managers, I think we need to put onto ourselves and I think I talk about it A lot with my colleagues where I think we need to look at ourselves and say well, what is our advantages? And I think yes, we can go with endowments initially where they are long term perpetual a pools of capital where they should have the ability to be consistent and loyal investors. And I think also another key point is that the returns are going to charitable and positive activities which I think at on the margin will investment managers do prefer. But I think then we have to look at ourselves and we can say well I mentioned our size before, which gives us an advantage where we can maybe make smaller commitments to managers. So with those capacity constraint managers, a $10 million commitment is a lot easier to get into some of these capacity constraint managers and that can still be very meaningful for us. We're also increasingly looking at how can we connect the venture managers with the research centers within the university. In the end, Cambridge is one of the world leading centers of excellence for artificial intelligence, for robotics, for quantum computing, for material science, which acting as a conduit for that should be incredibly attractive for venture capital firms

[Host]

Right now. There's this DPI crisis, as some people have labeled it, which is before 2024 you have on average 24% DPI per year. Last two years have been 9% DPI in alternatives. So a lot of LPs are asking themselves should we be deploying more into private equity into venture or should we wait until more DPI is made available? The contrarian point to that would be everybody is vacating the space. Why not be offensive and capture market share? Where do you sit on those two sides of the continuum and why?

[Sam]

I think it's great if everyone is saying not to invest. I think primarity has matured as an asset class over the last 30 years. And I think for us, I think as people kind of there may be kind of more here for shorter term. I think for us where we just fundamentally believe in what I talked about earlier in terms of the reasons why private equity has a right to generate significant returns above and beyond public markets, I think net fewer limited partners competing for those best general partners and those general partners having theoretically less competition should be a great thing. Looking forward on the specific point on liquidity and dpi, for us it's always been very important to manage our liquidity and not get over us skis on the liquidity and be truly reliant on distributions in any particular year.

[Host]

And how much do you trust your nav marks in your portfolio today? How much credence do you give to them?

[Sam]

It's a Good question. We obviously speak to our managers on a regular basis, spend a lot of time traveling and spending time with them in person reviewing the monitoring the quarterly reports. And every six months we do a big exercise across the portfolio on looking at the earnings growth and revenue growth and the margins and the leverage and everything like that. So we have very good visibility into the underlying assets that we hold. A Job for us is not to question whether or not a company should be marked up or down by 5, 10%. But I think with that you get a good feeling of whether or not a manager is more aggressive or more conservative on their marks. Our general bias has been towards more quality focused managers where they are more focused on, I would say they prefer to give good news. And so we've generally seen more prudent valuations, slower markups as public comparables have risen up. And I think on average we see a markup on exit of our buyout companies in the region of 20 to 30%. When we're looking re underwriting a manager, we spend a lot of time going through historical portfolios and making sure that we feel comfortable with how they're marking and compare and compare, contrast them to the rest of the portfolio. And so it's always interesting to see when you have a, when you have a venture backed company as owned by multiple managers within our portfolio and we can kind of compare and contrast to see the valuations that each of them are holding at. And naturally if one is holding it at a much higher valuation or even a much lower valuation than the others, that's good impetus to start a conversation.

[Host]

Do you think all things being equal, LPs have incentive for their GPS to actually mark up their book and mark more aggressively.

[Sam]

Comes back to the alignment point that

[Host]

we talked about before because there's alignment with the manager of that pool of capital. There's this principal agent problem that exists on the LP side as well.

[Sam]

I can see that for us or say for me where the time horizon looking forward and building this portfolio is for decades to come. I think the underlying value is what really matters and I think it is a far easier. You build a lot more trust with your stakeholders and with your limited partners and with the general partners. I would say if you are conservative on those valuations and then you surprise on the upside. We do take a lot of note when say if a manager that is not doing so well on the performance side ahead of the next subsequent fundraise, you start seeing markups in that portfolio. And I think that for us then is really important too when you have that underlying data of the revenue growth and the EBITDA growth. Because I think it's a far easier conversation to have with the manager when you say, well, you've marked up your portfolio by 30%, but your earnings are only up by 10%. Can you please explain to us why you've changed the valuation multiple of these companies?

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[Sam]

I think unless you have that transparency and the ability to kind of go into that amount of detail, it is always going to be a a sticking point. And this may be one of the real benefits of the endowment where I think everyone has a long term horizon where if I Kept on coming to the boards that we have saying, look, we've had these amazing markups, but then coming back to them six months or a year or two years later and saying oh yeah, that great markup I told you about, it ended up being sold for a discount to that. I think that would quickly erode trust between us. So I think again you have to get the incentives right within us as an organization and I think need to be very much focused on that long term.

[Host]

Turtles all the way, all the way down. What are the incentives of the gps? What are the incentives of the people at the seat at the lp? What incentives are the underlying capital pools doing with those people in those seats? For example, some organizations I interviewed, the CIO of CalSTRS that was there for 23 years, he built a very enduring team. And as people see that they're incentivized to think more long term versus other organizations when they're turning people every three to five years, they're not going to have the same incentives as an organization that's known for giving people a long Runway. So it's really incentives all the way down.

[Sam]

Completely agree and I think I mentioned it briefly at the start, but I think that we have the time horizon of the institution which the University is over 800 years old now, which kind of think really puts things into perspective. But I think also if you look at the time horizon of the team and of the individuals and with our CIO joining in early 2020 and myself and my senior colleagues joining around a similar time, I think kind of having that mindset of the team where we're building something for the next 10, 20, 30 years and there's all having that long term time horizon I do think brings a lot more alignment, a lot more trust.

[Host]

Hi, Professor Steve Kaplan on he wrote a famous paper do private equity funds manipulate reported returns and tldr, on average they tend to skew conservative. But managers on their 5th, 6th, 7th, 8th fund tend to be more conservative than emerging managers that may be struggling to raise capital. So there's also, you have to look at those incentives. It's all fine and dandy to say the GP should have long term incentives. If they're struggling to raise and they have this existential crisis, they're going to be more likely to overinflate their marks, whether consciously or subconsciously versus somebody that's trying to build a hundred year relationship with Cambridge and wants them to invest for the next 10 funds.

[Sam]

Completely agree. And I think that's where we're in a Very privileged position where we run a relatively concentrated portfolio. So across buyout and venture capital we have around 30 relationships. And you'll probably have a better number for me, but there's well over 10,000 venture capital firms and I think a similar number for the buyout firms. And so we have the privilege of being selective and kind of running through that. And, and again, it comes back to this alignment point at the start. I think if we find a manager that, and we do our diligence and we find something erroneous in their reporting or their valuations, it's very hard to

[Host]

start

[Sam]

a relationship when you don't have that trust. We have a great team and I think we are incentivized to not just look at past performance and it's really to think about future performance. So I'm really proud that we have backed managers in the past that were not the top performers in some instances weren't even above the average in their performance. And there were reasons for in the past what led to some difficult years of performance. But they'd learned from those mistakes or they've evolved their capabilities and now we believe that going forward they can outperform again. That requires more work, that requires more diligence. But as long as we believe they are applying some differentiated capabilities in a repeatable manner, then we will spend the time to unpick that and take a look.

[Host]

A lot of gps, obviously very hesitant to be vulnerable. And certainly there's an art to the kind of mistakes that LPs accept versus ones that are unacceptable. Maybe double click on that and tell me about a case where somebody made a mistake and that actually helped them grow trust with you as lp.

[Sam]

It's a great question and I think you can kind of take this multiple ways, going back to a previous point on managers should focus on what they're truly great at. And we've had a particular manager comes to mind that was focused on a particular geography here in Europe. They were very transparent that they thought they had a reason. They, they were software specialist manager and had a deep domain expertise in that area. And software can go across borders. And so they had a belief and an ambition to expand beyond their, their region in, in Europe to some other countries. And I think for us what was important there was they reached out to us, said that they were thinking of doing that. We advised them not to saying, you've got plenty of opportunity in your area. And they did. And they did that by building a new office, hiring a new team because they wanted people that could speak that particular language here in Europe. And that didn't work out. But to their credit, they came to us and said, yes, this did not work out. We're going to take some time to reflect. Here are our learnings from this in the sense of we are, we have a distinctive culture and trying to hire in that culture didn't work. Which I thought was a, that shows true partnership with the manager, kind of opening up to their mistake and kind of especially when we guided them otherwise. And actually a couple of years later after all of that last year, they said, oh fine, we're going to try again, but here is what we learned previously, this is what we're doing differently this time. And it's early days, but actually in kind of the year since they've done that, it seems to have, it seems to have gone exceedingly well. And so I think if you have that dialogue, you can do that.

[Host]

Most people don't realize how incredibly difficult it is to actually have alpha in the private markets, how much of a hurdle it is. And once they capture that lightning in a pan, they just assume, well how about over here? And the right way to think about it is every new strategy is default debt. You need something exceptionally unique. You need exceptional talent, exceptional synergies or exceptional perspective and track record in order to capture alpha, another part of the market. It's almost like underwriting a strategy from scratch.

[Sam]

I completely agree. I think we say to our managers quite frequently, and whether this could be with co investments or continuation vehicles, let alone new strategies, is there's a huge value to simplicity. What, when you wake up in the morning, what's the first thing that you think about? When, how many place do you want to be juggling? How much time do you want to focus on? Like you only have a certain number of hours in the day or the week or a year. And how can you use that to the best of your ability to deliver the best returns that you can? And we talked earlier, there are some benefits to scale in certain situations. But I think for in most scenarios we would argue that keeping things simple, keeping things focused, keeping things focused on those core areas of expertise will lead to better, more sustainable investment returns.

[Host]

As I turned 40, I started thinking about this finiteness of the year. Let's say there's 50 working weeks a year, there's five days, so 250 days. And I think high level thinking, tops two hours per day of truly first principle thinking or very high output thinking. So you have 500 hours per year that you could focus. Where are you going to focus those 500 hours? I think people assume they're off by an order of magnitude. They think it's 5,000 or 50,000 hours, but it's really 500 hours of really high level thought you could you have in a year.

[Sam]

I completely agree and I think you could argue maybe even less for a lot of people. One of the real joys of this job is, and the seat that I'm in is that I get to spend a lot of my time speaking to some of the most successful, intelligent people in the world. Most of the managers that we're investing with have been near the top of their fields. They've got anywhere from five to 50 years of investment experience. And so naturally, every interaction, every meeting that we have, there is something to learn, which I think, I think is just an incredible place to be or position to be in. But I think to your point, you can either look at it as a benefit or a pro or a con of what we do. Where I've come out to six years here, I think we've built a truly world class portfolio where we have these 30 relationships. And so I think what is really turning to now is unpicking with the managers that we have where we have our highest conviction. What, what has led to them being success, so successful and what has led to us having that conviction in them and what are the learnings that we can take from that to then say, okay, well how, when we're meeting the next manager in that first meeting, what are those questions that we can ask to, to kind of quickly get to that point where we think do they have those capabilities or values that we've seen successful firms before?

[Host]

Where is alpha in venture capital today?

[Sam]

Great question. It's clear that the asset class has never been so competitive, not just from a number of managers and a capital raise perspective, but also from the number of underlying companies that are competing against each other trying to do the same thing. Investing in ventures, investing in innovation. And it's just clear that we're living in unprecedented times at the moment. And so therefore we do believe there is a lot of value to be created. But this competition has really kind of switched how ventures worked over the last 30 years. And I think gone are the days when a founder would have to go up Sandhill Road in Palo Alto kind of meeting the 20 firms and asking them for money to. Now the power very much relies with the founders. And those, the founders that have the highest potential know that they have a choice over which venture capital firms they partner with. And take money from. And so the alpha really lies with those venture capital firms that have a differentiated proposition or a reason why an exceptional founder would want to pick with them and work with them for the next decade of their journey.

[Host]

What about structural alpha in venture?

[Sam]

In the end you have to say there is structural alpha where there are a number of firms that consistently generate superior outperformance compared to the rest of the markets. And then I think the question becomes, well, do you think they can continue it or do you think at some point all of these storied venture firms, they started themselves at some point and then they got themselves into that position?

[Host]

That's the art and the science. The science is being quickly commoditized by AI. You put in the portfolio returns over the last five funds and AI will give you the right answer, whether it was a good fund. The art is will they continue to perform?

[Sam]

We spend a lot of time analyzing historical performance and was it luck, was it judgment? Do we think it's repeatable? But in the end, it's a people business and it comes down to our assessment of those people. What are their skill sets, what are their motivations? And I think it's really important to have those dialogues of managers and try and get a sense of when you think those skills, capabilities, motivations will be changing or waning or passing on to the next generation. And how you think about all of that is incredibly important as you think about the life cycle of an investment. Because in the end we want to be invested with managers for multiple fund cycles having this long term horizon. So spending that time so we can either double down and increase our commitment size next time around or decide to part ways is a really important part of the job once you are invested with the manager.

[Host]

Going back to another Professor Steve Kaplan study, 52% of top quartile funds have persisted and stayed top quartile. Which is why LPs are so focused on this top quartile. But said another way, 48% do not persist. So you have a coin flip and figuring out who's going to continue to be great and who's going to revert to the mean is the hard part. If you could go back to 2012 when you had just started your career at Morgan Stanley, what is one piece of timeless advice you'd give a younger Sam that would have either accelerated your career or helped you avoid costly mistakes?

[Sam]

Network is incredibly important. I don't think you can ever invest early enough in your network and build that up over time. And over time it becomes a compounding benefit. And I think a lot of a young Sam was very focused on making sure that their core, that model was done correctly on the day. And I think actually spending that time, whether it be finding mentors you can learn from, finding peers that you can collaborate with and share ideas, finding people that may not actually seem directly relevant right then, but over time can do. And over time that compounds and really puts you in a very strong and privileged position. And for example, now I would say nearly all if not all of our venture capital investments that we've made over the last three years have come from referrals from our network, whether that be other limited partners or existing managers in our portfolio or even we've spoke. When we've spoken to founders and entrepreneurs, they've mentioned some other firm and connected us.

[Host]

You have to understand who's playing the long term games and who you spend your time on, where you focus your time, that is upstream of everything. If you think of people as downstream as the most important upstream of it is what people are in your network and what people talk to on day to day. Sam, this has been absolute masterclass. Thanks so much for jumping on the podcast.

[Sam]

Thanks for having me.

[Podcast Host]

That's it for today's episode of how to Invest. If this conversation gave you new insights

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