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- [00:03]
A
Welcome to the Investor, a podcast where I, Joel Palo Thinkle, your host, dives deep into the minds of the world's most influential institutional investors. In each episode, we sit down with an investor to hear about their journeys and how global markets are driving capital allocation. So join us on this journey as we explore these insights. All right, we are live with a good friend of mine, multi year friend. We got Matt Ober here. I would consider Matt as one of like the New York City FinTech OGs. You know, I met Matt, I don't know Matt, if you knew this, but I worked with AKARSH back in the day, you know, and, and I, I think he introduced us and we got coffee, I think back in like 2012 and I think we had a conversation just talking about fintech or something like that. And then we went our separate ways. We ended up building other things. But you know, when I think about like New York City OG fintech, like back in the day, you know, 2013, 2014, you know, Matt was one of those people that was building, investing, scaling in fintech. I'm just going to do a quick intro and then we'll go through it. Right. But you know, Matt is currently a managing partner at Social Leverage. You know, as many of you know, we have a fund accelerator. Matt, when he was at Social Leverage, he was also a mentor. He came back and, you know, mentored some of the fund managers that were in our program. And then he also went through our program and you know, obviously shared a lot of wisdom, you know, kind of in terms of firm building, you know, asset allocation. And now it's just like, how do you merge that with data science, financial markets and alternative investment technology? And you know, before, before joining Social Leverage, he was the chief data scientist at third point, a leading hedge fund with over 20 billion in assets under management. Then he led the development and implementation of data and analytics strategies across the firm, enhancing investment performance, risk management, operational efficiency. And then before third point, he led data strategy at WorldQuant. We have a bunch of buddies that are at World Quant as well. So it's a small world, but World Quant is pretty well known. Quant hedge fund, global quantitative asset management firm. He oversaw the sourcing, processing and analysis of large scale alternative data sets. I know WorldQuant now has a venture studio. They're doing just a lot of really crazy stuff to help founders as well. And I think it's all coming from Igor, right? I mean, essentially his mind just thinking through how he can continue to innovate and then he was part of the founding team of World Quant Ventures where they've invested in both early stage fintech data technology and then before that worked at Bloomberg. I worked for one of Bloomberg's competitors, so I know the market quite well. I mean, I'm a little behind now not being an employee at one of those firms. But also he co authored a book on practical option strategies and he regularly writes on his newsletter. Check out mattober.co. hopefully I did a good job, Matt, on the intro, you.
- [03:18]
B
You crushed it better than I could do it myself.
- [03:20]
A
Well, that's why I'm here, man. But why don't we hear in your own words? You know, it's a very sexy bio that you have, but let's learn a little more about who Matt is, who you know, where did you start out? What did your parents do? Where'd you go to school? What did you think you wanted to do? And just kind of, let's unpack all of that.
- [03:37]
B
Yeah, you know, early days. My dad was a, you know, computer programmer, but he had his own consulting business. So always grew up with him, you know, working from home, building his own business. You know, worked mornings, nights, you know, was very flexible with his job, but he was always working. And we had a bunch of side businesses as well. Right. We own a candy machine business, we own a printing time card business. So he had a lot of side hustles, which I feel like is kind of my nature as well is to always have something on the side. And my mom didn't work at the beginning, and then she became like a. A buyer for one of the largest medical companies in the world, called for cius, like kidney dialysis machine. So maybe that's my negotiation background. When I was in the data strategy world, dealing with vendors, that was her job.
- [04:25]
A
Yeah.
- [04:26]
B
So I grew up in the Bay Area. I went to Cal State University, Chico. Chico State was definitely known back then as like the party school. I actually sit on the board of the university now. So trying to keep them on the right path forward and help the students figure out what's next post graduation.
- [04:45]
A
Sure.
- [04:46]
B
After Chico, I landed at Bloomberg in San Francisco, which is actually like one of their smaller satellite offices. But, you know, they have an amazing office there now on the pier. Like the whole Pier 3 is made into an office. And sure, I started with a bunch of Ivy Leaguers as the only kid out of a state school. And we answered the phone. So like, literally if you call Bloomberg's 1, 800 number back then, you were getting anybody that Had a, you know, a recent job out of Bloomberg and that's where you started. And from the phones you move to the help desk, push the help help button, answer questions. And I think that's where I figured out that I really love the markets, right. Like you get yelled at enough times by people that work at hedge funds and other places that have a terminal, you start to realize maybe you're good enough to be on the other side of that terminal. And so that's really probably what launched my career.
- [05:36]
A
Let me, let me ask you this. So what do you think has made Bloomberg so sticky? There's been, you know, obviously you're, we're both in fintech. What there's so many Bloomberg killers out there that are trying to be Bloomberg killers. But what has made Bloomberg become so resilient for multiple decades is it, it's not just the, the, the Bloomberg chat, right? I mean a lot of people buy the terminal just to chat, but what, what do you think their secret has been?
- [06:02]
B
I mean listen, I think the mo they have is the chat is very important, right? Like if you're in the buy side like you're in special rooms, right? Especially the traders and everything and then I think the news is important. Like they don't need to make money on news but like there's something power powerful about like the top news there and like they have the read function which tells you what everybody on Bloomberg is reading. Like I'd love for somebody to figure out how to build read for everybody that doesn't have Bloomberg, right? Like how do I know what's the most read article in the last hour by like a group of my peers so powerful for Bloomberg then they obviously have thousands of functions across portfolios and watch lists. I think it's hard to displace Bloomberg because like who else does every asset class, equity, credit, macro, fx like if you do Treasuries or munies or you trade, you know, CDS or interest rate swaps if you want to value exotic options, I mean it's really hard to go after every single piece, right? Sure. So the moat is, it's everything and it's sticky. But there's I think like with Bloomberg and like even More so with Factset and S& P and everything, there are definitely places where you can start to chip away, right? Like we're investors in a company called Fiscal AI like going after on the data side like there's multi billion dollar businesses within fact Bloomberg and S and P and you don't have to win the terminal and I think in this world of AI, like who cares to go win the terminal? I, I always write the. I wrote an article multiple times. I feel like it's the same thing, like, stop trying to kill Bloomberg and, and just like maybe pick off pieces that could be done better.
- [07:42]
A
Yeah, no, totally fair. Where do you think the opportunities are to chip away right now? I mean, there's obviously, there's public markets, there's private markets, there's obviously a lot of the news data. Some of it you can pull from APIs and stuff. Right. But you know, if you were to look at like an emerging fintech that's taking over the terminal, where do you think the gaps are with Bloomberg?
- [08:08]
B
Maybe I'll talk about it more. Just like data information services in general because like Bloomberg's private and like they've got a separate moat maybe. Versus FactSet and. Yeah, and everybody else. We made a bet on a company called Fiscal AI. They started as a company called finjat. They actually were named Stratosphere. I think early in the, early on they were very much an early AI generation chat for finance, right. Where it's like before it was hot. And I think like what Braden and the team there realized was like, if you don't own the data, you're just going to be another, you know, chatbot, right? And like, I think like if you woke up today and you were building like an AI chatbot for finance or research, like we have thousands of these not and perplexity Claude and Chat GPT do a good job as well. Same with Google, Gemini and so fiscal a couple years ago, you know, they listen to their, you know, the, the clients. I had lots of talks with them and you know, we looked at like if we could rebuild the data sets that these big incumbents have. But Instead of having 9,000 people offshore, what if we could do it with 50 people? But AI agents before agents were as good as they are today and obviously like great timing and they went all in. And now they're building a global fundamental data API that they can deliver faster than the incumbents because they have multiple agents double checking their work. They can deliver structured KPIs. So what if you want to know how many Uber rides Uber did last quarter, which is a reported metric, how do you get that information within a few seconds or minutes? It's easy for the big guys to do that on the top 50 companies. But can you do that across the Russell 3000 within two minutes? And can you do that across the US, Europe, you know, Canada and eventually Asia and then do it with better pricing and better terms and conditions. Like you can't buy data from FactSet and S P and Bloomberg as a fintech and play it and allow people to download it or create derivatives. Like, there's so many restrictions and so much bureaucracy. And so Finch Fiscal was just like, you know what, we're going to Sprint. And they won. Perplexity. They won. Google, you know, Kalshee just made a huge announcement that there's going to be KPI markets, which I think is like a huge unlock for Wall street. And it's all powered by fiscal AI.
- [10:30]
A
So when you say KPI, what are the, what are the KPIs? Like, you're betting that someone's going to hit a certain IRR or an mla.
- [10:36]
B
No, no, you're betting that door. If you are better at forecasting how many deliveries doordash is going to do, which is a reported metric.
- [10:44]
A
Oh, wow, that's interesting.
- [10:45]
B
Or how about this? Netflix subscribers. If you're a hedge fund investor, you're using tons of data sets to forecast subscribers for Netflix. Not just us, but like, I remember when I was at, you know, on the hedge fund side, like, we'd look at India and different parts of Asia and we were like, if we knew how many subscribers they were going to have this quarter for this region, we were pretty bullish on, you know, being long the stock.
- [11:12]
A
Yeah.
- [11:12]
B
So if you're doing all that already with all these different data points, like, and then think about it from the retail perspective. You know, my good friend Chris Camillo runs Dumb Money tv and he's always like the social investor. Right. Where he tells you, like, you can read TikTok and focus on things around you. Like if you are better at understanding, like the revenue for Lululemon, if it's going to be up or down or how many, how many people, how much they're getting from just the stores versus direct to consumer, that's all. Now a KPI market for predictions like the hedge funds are spending all this money betting on the quarter. Right. Getting earnings. Right. What if they could hedge out all the KPIs that they don't know or screw earners? Guidance is going to throw you off. Trump might tweet something tomorrow and screw all the earnings and like the stock price. What if we were just like, you know, we know that Tesla is going to beat on vehicle deliveries this quarter. Like, this is the street estimate and we know that they, they're, they're beating it. We have satellites and cameras and we're Watching all the, you know, things coming out of the actual warehouses, which all the big shops do, you can go along that unbelievable opportunity for like billions of dollars of volume.
- [12:24]
A
Yeah. No, I mean, there's just secondary data that you can triangulate to kind of get a signal. That's really what it is. Right. Try to find some signal to either short or long, some type of opportunity doing it.
- [12:36]
B
Right. Like I ran the data teams at two of the biggest shops. Like we spent hundreds of millions buying data to predict these things.
- [12:43]
A
Yeah.
- [12:43]
B
Then we had to like invest in the stock. Like if you take that part of it out of it now it's a direct correlation one to one. Like if you know, you know, how much XYZ is going to be sold at a specific, you know, quick serve restaurant, like there might be a KPI market for that on Kalshi now.
- [13:01]
A
Sure.
- [13:01]
B
You have the market makers. Like, you know, it's like a whole new, it's a whole new game.
- [13:06]
A
Yeah. I've got, I've had a bunch of hedge fund managers come on the pod and you know, we just joke about like the TV shows that are out there, right. We got billions, we've got industry. I don't know if you watch any of that stuff with your, with your wife, but, but it's just so theatrical. Right. And I mean, a lot of the people that I've spoken to, they say that it's just, there's nothing, it's just nothing like that when you really work there. And then I saw something in my feed which was like the day in the life of an investment banker and it shows the day in the life of an investment banker on a TV sitcom versus the Real Office and the TV sitcom. There's all this theatrics and the market is tanking. Sell, sell, sell, sell, sell. And there's all this theatrical music and then it shows the day in the life of the actual banker at the real office. And he's like, oh, I messed up a formula on my spreadsheet and I, I just fixed it right now and we're good. You know. So wanted to know from your perspective, you know, how is it working at these large, massive, multi billion dollar hedge funds in real life versus, you know, kind of the polarity from what you see on, on Netflix and you know, hbo. Max.
- [14:13]
B
Yeah. I mean, Billions, they did a good job. You know, Steve Cohen and Dan Loeb worked in the same office, you know, at one point. Right. Everybody's on the west side and they, you know, did a lot of following both of them, like, learning the mannerisms and everything. I think that, like, there's a lot of. Like, we watched Billions when I was at third point. Everybody did.
- [14:35]
A
Yeah.
- [14:36]
B
And, like, there's a lot of things that they get really, really done. Well, yeah. Like, obviously there's, like, they exaggerate things and, you know, all this stuff. But, like, there was a lot of points where you're just like, yep. And like, you. You. It's probably no different than, like, if you watch Silicon Valley and you work at Twitter, right?
- [14:52]
A
Yeah.
- [14:53]
B
When Silicon Valley came out, like, sure, I'm talking to my brother. He was at Twitter at the time. And, like, Costello helped write that show. Like, he's like, yeah, a lot of it is exaggerated, but, like, it's definitely a lot of, like, what we go through. I feel the same way.
- [15:06]
A
I really enjoyed the We Work theatrical. That was the one on Apple. I forgot with the. The singer. What was his name? But that was really good with. Yeah, that was good.
- [15:18]
B
I would say also, like, World Quant and like, the Quant Shops. At least when I was there, it feels more like a tech firm. Right. Like, nobody cares about the market. Up and down. Like.
- [15:27]
A
Sure.
- [15:27]
B
Like, it's, you know, dead silent in there. Everybody on their keyboard and, like, you're watching the market, but nobody's talking about the stocks. Whereas, like, if you're at a. A hedge fund, like, you know, people are in, you know, full suit or like, blue slacks, white shirt, brown shoes. Like, there's executive assistants everywhere getting coffee. You've got, like, management of, like, the biggest firms in the world or politicians in the office every day. Right. There's, like, hundreds of millions of dollars of artwork on the wall. Like, it's a very different vibe.
- [15:58]
A
Sure.
- [15:59]
B
And everybody's in, like, their glass office versus, like, you go to a quant firm and it feels like you're at Google.
- [16:04]
A
Yeah. I feel like even if you're trying to get into finance, I thought. I just think it's really great to watch those shows because they talk about the different roles and responsibilities. So Billions. They talk about the PMs and the analysts that are working at the P. I thought industry was a really good show because they. They talked about private wealth management. Right. That woman Yasmeen, that was working in pwm, and then they had, you know, they talked about sales and trading. Right. So just to kind of like get a high level, even if it's a theatrical view, if you can't get in those rooms, just kind of do some research and learn about it. I thought succession was good in terms of just like how family offices work and, and also just how, you know, the board seats are really important right when you're making board decisions. And, and also they, they had a hostile takeover happen in one of the, one of the seasons. So again, you know, although theatrical, there's some pieces that, that are tied to the, to the, to their diligence and the research of kind of talking to some of these people at the firm. So I thought that was pretty interesting. You know, with, with AI, we can't have a podcast talk without talking about AI. You know, with these, with the roles and responsibilities at a hedge fund, I feel AI is really still going to augment the workflows. Like, I think there's going to be tools that are going to help them, you know, come up with research much quicker. But do you think that we're going to get to a point where we don't need portfolio managers anymore or analysts? Or maybe there's, you know, instead of five analysts, you only need maybe one or two. Where do you think the impact is going to tie into? Maybe we start with hedge funds and then maybe private markets.
- [17:34]
B
I mean, as I think of hedge funds, like, are we going to see more quant shops that are fully automated with one guy? I definitely think so. Like, we'll see. I mean, most of the good quant shops have been using AI and you know, Generative Alpha for a long time, so for years, yeah, getting better and better. I feel like the things that we called things at world quant are now like, you know, coming more to fruition in the world we live in, just like for the broader world. I think at hedge funds, like, Yeah, I think PMs maybe need less analysts now or their analyst coverage should go
- [18:04]
A
up a lot more.
- [18:05]
B
I also think, like as an analyst, like your free time on the, as a long, short analyst, like there's more time for in person meetings. Like I think of it's no different from like a venture seed or like any seat. Like in person meetings and spending time with people and like getting a sense of them from an investing perspective. Like the other stuff like Brett Coffran from Fundamental Edge who's like, you know, the XPM does a great job of like showing like how these AI tools are making people, you know, more efficient and like, you know, you're not going to spend two weeks building a pitch deck or, you know, a month building a model. Obviously you need to understand how they're worked and find the flaws in them and everything But a lot of our work, like if you're not getting 3 to 10x more efficiency out of your day to day right now, you're just not leaning into these tools. Yeah. So do I see a PM with like no analysts one day being successful? Definitely. Do I see like, you know, firm like third point that like, let's say it's 20 on the investment team and they, they go all in a shop similar to them and they have five people. Right. Like they've just like gone AI native from the ground up. I do think so. But you also got to remember like, there's a ton of compliance and risk and just worry of like, how do we do this without having like some sort of issue? And like, yeah, like getting to that point, I think we're still a little far away getting bought, buy in. And then I think on like wealth management, like we invest a lot there. If hedge funds are slow to adopt some of these things just because it's not easy to like, wealth is even further behind. I think a lot of wealth management still sees AI as like a chatbot and the ones that are leaning into it, they're using it. But I think like wealth management doesn't spend as much money. An education process and like, you know, like in the hedge fund world there's like 100 hedge funds that matter maybe. And then there's the long tail in wealth management. There's like 50,000 wealth managers and some of the independent guys are managing like 20 billion plus. So they're not small.
- [20:09]
A
Sure.
- [20:09]
B
And so I think there's a lot of opportunity there. But like, it's tough to navigate.
- [20:15]
A
Yeah. And it's just that, you know, when you get to that level, I mean people really, when you deal with your health or if you deal with finance. Right. People don't want to use a bot. Like, I mean if you got heart surgery, you're not going to get, you know, you're not going to go to a robot. You want to talk to a doctor in person. Same thing. If you're about to employ 50 million, you're not gonna, you know, connect your bank account and like.
- [20:37]
B
No, but I do want them using the best tools. Right? Yeah. Like, I would rather my doctor who's like 60 leverage AI to look at the image.
- [20:44]
A
Yeah, absolutely.
- [20:46]
B
He doesn't. No different than like, I'd rather my wealth manager spend the time talking to me than like tell me it's going to take three weeks to like give me a financial plan.
- [20:54]
A
Yeah, I know. Like, so I had a pretty couple Pretty big, large ocios, large multifamily offices.
- [21:01]
B
Come on.
- [21:01]
A
And one of the work, one of the things that they do is they do account aggregation so they'll work with you. They connect all of your accounts, right? So you got your 401ks, you got your bank accounts. Some of them don't have a digital experience. You might have to manually type that in. But that gives you kind of a high level view of like your financial well being. But you know, maybe beyond that there's some recommendations, there's maybe some things that could be driving your behavior in a better way. I feel like there's other things that leave the dashboard. Like you log out of the dashboard, maybe there's continuous things that you get reminders on to kind of continue your financial well being. And I feel like that's where AI can kind of give more, more of a personalized touch versus just kind of a dashboard with some graphs that you can like print. Right. So, so I feel like I want
- [21:50]
B
to ask questions about like our finances. Right. Or like find things like tax season obviously is a nightmare. So like there's a ton of inefficiencies that like. No, I just kind of start to think about like things that take up my own time, like what AI solutions are there out there. And I think like, it almost feels like AI to me is becoming like streaming. Like, you know, we all had a cable provider and now we have like Hulu, Netflix, Paramount, all these things. Like I have a AI agent as an EA executive right now that I'm paying X amount for. I'm using granola for my notes, I'm using whisper for voice. So I'm gonna have all these different things and it's all breaking out and like maybe one day they'll roll those things up. But like if I can save 15 hours a week and be doing other things with that, or just 15 hours back to like be with friends and family, even better, right?
- [22:42]
A
Sure. Yeah. No, I totally agree. What were some of the biggest learnings that you had when you were kind of pivoting from kind of the data, you know, executive to now just kind of being a full time investor? And what advice would you give to people that are looking to make that transition? We have a lot of people that are in our platform that are executives, corporates, they're looking to kind of pivot into the hedge fund world in vc, private equity, investment banking. So kind of changing that identity to the tech operator, the, the, you know, the expert that's kind of the quant to now just kind of traditional investing. What, what are some things that you think could help maybe in those different. Different roles?
- [23:25]
B
Yeah, I mean, I think the thing for me, like, I think that I guess we're just like to think about when I got here and then I can talk about like how to get there is like, first, like, you got to like think about like from a venture seat, you have lps and investors, right? And like, what is their ultimate goal? And like, you know, I think one thing I realized is like, not most companies shouldn't take venture money, right? Like a seed stage venture fund needs 100x returns to like justify, you know, like the investment. They don't obviously all get there, but like we need to return the fund and so that's what it takes. So like there's a lot of companies that are, that build great businesses that do a couple million dollars and want to sell for 50 to 100 million one day. That'd be a huge exit for them.
- [24:08]
A
Sure.
- [24:10]
B
Money. So I think thinking about that from a scale perspective and then also realizing that like in the day everything is a sales, right? You're selling founders on taking your money, you're helping them sell to clients, and then you're selling your LPS on giving you the money and trusting you, right? So like you never get away from being a salesperson if you truly want to like, you know, run a fund, right? Even the best fund managers, right, are great showmen and salespeople or they've hired like really expensive sales and marketing people around them. I think like when you want to transition to the role, like, you got to start doing it before you get the job, right? Like I was at World Quant and you know, I was lucky enough to tell Igor we should be investing in these companies that were giving money as like the data vendor management guy, right? And he agreed. And like between him and Jeff Blomberg, we found, you know, Steve Lau. Steve Lau joined and like, you know, I learned a ton from Steve and got to write. You know, I think between the two of us, we probably did 75 investments over the few years. And a lot of that was like, I also had to write my own checks, even if it was a small amount and I didn't have money. Then I became an investor actually with social leverage as an lp. And then at third point we had a ventures team. And Dan, when I joined there, I was like, I want to be, you know, finding deals. I was able to actually invest in a company. So like, I was doing it as part of my Job and not my main focus for a long time. So then when I joined social leverage, it was kind of natural. Like obviously our Tom and Gary, my partners, had a very good playbook on like, you know, we're valuation conscious, we're hands on like all these things and have built a great brand. But like for me it was like, obviously like coming in, knowing what I was getting myself into. And I already like, I've known the guys for 15 to 20. Right. I knew Howard the day he started Stock Twits because World Quant was the first client by the data. So I just think like, even like when I wanted to join a hedge fund, it's like, how do you network into that space? Obviously then like I got a job at worldcon in a very random way. But I definitely spent two years of my time at Bloomberg trying to figure out how to break in.
- [26:20]
A
Sure.
- [26:20]
B
Working meeting in Bloomberg was a great place.
- [26:22]
A
Like they, they had Bloomberg Beta too. I think that's still running. So the, the venture arm of Bloomberg Society. I know, I don't know if you know Morgan Politin, but he was at, he was at Bloomberg Beta for a while.
- [26:32]
B
Yeah. But Bloomberg, like from a sales perspective, I mean like if you want to get into finance, like they require anybody on the sales side to touch. They do 100 touches a month, right?
- [26:40]
A
Yeah.
- [26:41]
B
I mean like you're out on the bank, at the banks, walking the trading floor. Like if you're the expert on the Bloomberg terminal, it's pretty easy to start to impress some people. And then somebody would be like, why don't we just hire this guy? Yeah, right. Or same thing at a hedge fund. So like I do think like go for what? Like go work somewhere that gives you the access to things and kind of gives me the same comment you made. Like Bloomberg teaches you all the different rules, right? What is sales and trade? I didn't know the difference between sell side and buy side when I started there.
- [27:09]
A
Sure, yeah, yeah. I mean I was, I was at one of their biggest competitors and I mean I, we did like a two week training, learning every single workflow, learning every role and responsibility. I think, you know, a lot of times the people that end up becoming the president, you know, they've sat in every single seat. Right. They did sales. They did, they had, they, you know, some of these firms have like a role called consulting where you pretty much are dedicated. You're the dedicated support person. Right. And you're kind of thinking through their roadmap. So I think that's really important. Too. I would also say, like, being an lp, you know, if you haven't gotten into the industry, you know, just maybe writing a small check into a fund is a great learning experience because you get all the updates, you get the K1s. You kind of learn kind of what the LPC. And I feel like that's perfect if you do want to start your own fund because, you know, you want to deliver that same exact professional experience that you've received, you know, but you won't really learn that process or learn what K1s are, what. What the capital account are if you didn't actually receive that experience. And then even if you haven't gone to that level yet, you could, you know, you could do it at such a tiny scale. You could do like 10, you know, $100 checks using Republic writing and get into some decent deals and just show, like a markup. Right?
- [28:26]
B
Yeah, you're right, though. Like, LP perspective. Like, the best funds offer you more than just the investment, right? Like I always tell people, if you invest in social leverage, like we put on events, not only our big annual event, but multiple times a year, like, meet the other LPs, meet the founders, there's such an opportunity to, like, leverage the social network, right? Like, if you're getting that out of it, you know, like, you might get more out of that network than you even do from a fund return performance. Obviously, you want to make money on the money you invest.
- [28:56]
A
I mean, just think about it, right? If you pay, you know, if you want to go to Iconnections, right? I mean, you probably got to pay like $30,000 to. To go to the conference for one day, right? But if you do, like, 50 to 100k check into a fund, what you get the Ann, you get all the updates. You know, they have, obviously their community. You get all the deals, you get financial upside. So I feel like it's a bigger roi.
- [29:18]
B
Multiple events throughout the year when they're in your city. And, like, that money isn't upfront. I think that's what a lot of people don't realize, Right. Like, it's a capital call structure. They might deploy that over four to five years.
- [29:28]
A
Yeah.
- [29:29]
B
So then you're like, you know, it's almost like you're not. You're not putting out that money right away. Obviously, you have to be accredited or purchaser, depending on the fund, but, like, yeah, there's opportunities to, you know, dip your toe in.
- [29:42]
A
Yeah. What did you learn? You know, as you were. As you were in lp, kind of, you Know, when that seat at social leverage. What were some of the things that you learned as you were sourcing, picking and winning fund managers and what, what made you kind of finally pull the trigger to make those investments?
- [29:59]
B
Yeah, so social leverage. We did have a fund to fund that we deployed into 19 managers. Um, I think a lot of it was fund managers that like, you know, we knew through our network. Right. Or came from people in our network that from a warm introduction. No different than how do you find the best founders. Right, yeah. Having similar mindset to us just on like valuation and you know, fund creation and you know, how you think about, you know, writing your, you know, pro rata check backing founders, you know, what to do in different situations. So like we were looking for people that had similar mindsets to us or also open to feedback. Right. As an emergency manager, most of them were in areas that we understood or that were adjacent. So like we did crypto managers, I wouldn't say crypto experts, but like, yeah, touches a lot of tradfi. So like that was helpful. You know, obviously some people didn't like that from an LP perspective, but I think for us, like you invest in crypto when it's down. Like if you believe in like just blockchain in general, like, you know, I think we picked some really good managers there. And then the other, you know, areas, you know, for me it's great. Like we have, you know, guys at Infinity who are the ex PayPal Corp. Dev team. Like no better person to talk to than those guys if like we're doing something in fintech in and around payments. Right. So I think it expanded our network and then we were looking at just like, you know, some of the metrics around like what is the fun size. We wanted guys with like some deep domain expertise. We did less generalist funds. That's just more of our preference. We definitely had a generalist, but just think it's harder and harder to be a generalist these days.
- [31:40]
A
No, I totally agree. I mean I think the, you know, we had a couple family offices on and you know, they shared their experience of like deploying capital. There were families where one person got hired to build a venture program. And you know, after looking at thousands of managers, you know, what they learned was just the best performance came from obviously the smaller funds. Because if you just look at it proportionally, right. I mean you're, if you 5x a $25 billion fund, it's, it's not going to be the same impact as mega fund. Right. And then, and then the ones that they've mainly backed have been the ones that have had probably a business or an industry background in that sector. So like, you know someone who, you know, one of the, I don't know if this guy was in your cohort, but Ben Par, right? Ben Parr runs like a billion dollar AI company. So he, so he launched an AI fund, you know, so it makes sense. You got all that, all that strategic benefit from just the ecosystem that you already have, which gets you a leg up. And a lot of times these people, they, why are they launching. But they launch a fund because they've just found so many hot deals and they may not have the liquidity from their operating business to, to, or, or maybe they do and they just don't feel like it and they're like, look, I'd rather just do this at much more scale with friends. So we're gonna do our, you know, we're gonna do a 50 million dollar fund one because we have all these deals that are really hot and warehoused and we just want to put money into them, you know, so that's usually been the necessity that I've seen. And you know, from the LP's perspective, it's definitely, to your point, a specialist strategy.
- [33:18]
B
Yeah. I also think like, how you think about deployment in terms of like initial check versus pro rata or not doing pro rata. Like I remember getting into a, a large debate at one of your events with a different allocator.
- [33:33]
A
That was in the. Yeah, that was in the cohort. I remember there was an allocator and
- [33:36]
B
I had a lot of the fund managers reach out to me afterwards. Even still to this day, being like, we appreciate you arguing because like, we agree with your approach and like this and maybe it's not for everybody, but like I want my managers like guarding and doubling down on their winners.
- [33:51]
A
Yeah.
- [33:51]
B
Versus getting diluted forever over time and then maybe getting screwed on a future pay to play or whatever happens versus like spraying all my money into initial checks and then just like hoping it works out 10 years down.
- [34:03]
A
Yeah. Yeah. So, you know, I guess to not name any names and you know, protect the innocent, I guess or whatever. But I guess the conversation was about, you know, following on and doubling down on winners versus like first round. Right. You just do one round like first round capital and just wait like 10 years and hopefully a 5000x. Right. So what you were saying in a. And I think it makes sense, you just got to make sure that you have enough capital reserve and the strategy around that. And I Guess one of the questions was like how much is enough? Right. Is it 35%, is it 50%? So catch me up on your take on that right now in terms of like how much we should reserve and, and how you think through you know doubling down.
- [34:44]
B
I mean we do 2 to 1 for follow on. So you know 100 million dollar fund will write 20 mil, 21 to 2 million dollar checks. Right. And then the rest is for follow on.
- [34:56]
A
Are you leading in those or just
- [34:57]
B
leading only 90% leading or co leading 10% minimum ownership sometimes as high as 25% depending on how early we are and then like we'll invest through the series B and like obviously we have definitely like rules in our agreements on we can't be more than X percentage of the total fund. Yeah. But you know like if I look at some of our biggest winners like yeah it's great to own 10 to 15 and we're like in the series B right?
- [35:25]
A
Yeah.
- [35:26]
B
And like that's how we you know, really think the fun, fun winners. And I think like we can go back and show you know being early in Robin Hood and a couple other companies like with my partners Tom and Howard and you know showing that like we didn't have money left and then like we did an SPV and not everybody wanted to dive in because there wasn't the conviction that we had as fund managers and you know giving up our pro rata to somebody else and they make you know an unbelievable return because Robin Hood had a billion, nobody wanted to put more money back in. Right. And who knows companies better than the seed managers if we're on the board and talking to the founders, you know in some cases I'm talking to the founders every day. Yeah, Some text messages. Right. Like on a deal by deal like client basis. Like I think this morning have already talked to six of our founders and it's 10:30 in the morning on the west coast just on like different deals they had in their pipeline or an introduction.
- [36:26]
A
So I had Rex Salisbury on the pod. You know he's, he's got a really great fintech community and you know his take is like look I only do precede because I mean it's just so competitive now. You may not even get in at the seat with some of these hot deals but if you can get in at the pre seed it's a, it's, it's a bigger risk to not get in at the pre seed and you know try to get boxed out at the seed or the A and then just Never get in. So I think there's a unique edge if you can be a pre seed manager obviously if you have those networks and that intel to be able to get in. So do you get in at the pre seed or mainly at the seed to series A?
- [37:00]
B
I mean I don't know what the terms are anymore in terms of like I think we kind of look at it from a valuation perspective. Like does it see like if you sit in San Francisco and New York, I think the seed rounds are looking more like a rounds now.
- [37:15]
A
Yeah. I mean pre seed right now. I mean. Yeah, catch me up on the market. So what do you think? What do you think is a. What is a? Yeah. When you, when you bounded by the valuation, what's kind of evaluation that you would characterize as a precede to seed the Series A?
- [37:28]
B
Listen, we love to get in and our focus is sub 10 million post. Okay.
- [37:33]
A
Yeah.
- [37:34]
B
So we'll write a 1 to $2 million check. Two on eight posts, one on five. Right. Like that's probably precede in most people's mind but we want to see a product and like a client or two. So in some cases people would be like I have a product already and a client like well much further along than that. I think it depends on the, the industry they're focused on.
- [37:54]
A
Yeah. So when you say one client they're probably sub 500k in revenue pretty early.
- [37:59]
B
Like I've had founders with like close to a million in revenue and we still did it like nine or ten posts.
- [38:05]
A
Sure.
- [38:06]
B
They didn't raise money yet. They see the value of social leverage. They know that like, you know we bring a lot of like experience to really help them. Yeah, I think a good series A now like you're probably doing 3 to 5 million in revenue and then you're going to raise 8 to 20 million. Right. I mean the numbers are extra ex, you know, extravagant if you're depending on what industry you're in, obviously how hot the demand is. We still kind of push with our founders. It's like listen, like you need to be cap table conscious and you need to also be conscious of how much money you're raising in the valuation because like yeah, it's great to get this huge valuation but like what's your ultimate goal? Like not every company we're investing in do we think it's going to be a multi billion dollar outcome. So like if you go raise money at a billion dollars, your investor probably is expecting somewhere between a 4 and 10x outcome, right?
- [38:56]
A
Oh yeah.
- [38:57]
B
So like if you're not, as a founder, aligned with that, like, why did you raise at a billion with, like. And have to grow into that valuation? I'd rather you, like, raise it something that's, like, relatively fair. Maybe you've got to grow into it a little bit, but if you have to grow into it massively, like, you're putting so much pressure on yourself. Like, obviously there's some, there's some industries and verticals where, like, you've got to raise a ton of money and you got to go for it because, like, there's competition and you need the money. There's a lot of others where it's like, you need the money to do what you're doing, but you have a moat in and of itself right now. So it's like, execute and like, find the right investors. Yeah, right. What are they gonna. And like, it's not even like the right investor sometimes. It's also the right partner at that place.
- [39:41]
A
Yeah.
- [39:43]
B
Are they gonna be around? Like, if you think about, like, the biggest shops in the world, like, those partners might not be there in four years.
- [39:50]
A
Sure. I had a guy that came on the pod. It was really interesting. This is the first time I saw this. He has a practice, I think it's called 2 meter capital. What he does is essentially, you know, look, Matt, at some point you're going to be like 60 years old and you may not want to run social leverage anymore, you may not want to do anything anymore. So what? But there's still LPs and there's still like, you know, there's still like six years left with, like, your, you know, 20th fund. So what do you do? Right. So, like, what this firm does, which. This is the first time I've seen this, they kind of will come in and they'll just GP the fund. They'll just take it over. And then what do you got to do? You got to give investor updates. You got to give K1s. So I thought that's an interesting niche in the market. It's kind of like gps. It's, it's essentially like, you know, the funniest, the funniest comparison is like, you know, these mom and pop shops that, you know, don't want to run their laundromat anymore. It's essentially that for vc, it's like, look, I'm. I'm a baby boomer now. I mean, whatever we're going to call
- [40:47]
B
this, right, it's the one transfer for the, for the venture world.
- [40:50]
A
Yeah, exactly. So you kind of come in and you, you operate that fun. I've never seen that before, but like that's kind of. So I think there's going to be newer kind of, you know, bridges where people like, you're a mom and pop private equity fund owner, you know, you're on your fifth fund and you're just, you got sick or you just don't want to do this anymore, you don't want to be in the game anymore. You know, but there's someone that's young and hungry that comes out of Harvard or they come out of some accelerator and they're like, look, I would love to acquire the GP stake of this, this firm and just operate this for the next two, three years. What better learning are you going to get, you know, doing that? Let's say you spend 250k doing that instead of going to B school, you, you bought into the stakes and you're running it and then you go out and then you build your own franchise for the next 50 years. You know, so that was pretty interesting.
- [41:37]
B
I mean, listen, I think like, you know, for us it's a 10 year fund and you know, there's definitely like extensions. But like the best company is like What? Robinhood took nine years to go public. EToro took 13. Like a lot of other companies, even if they go through M and A, take a long time. So like, yeah, we still have companies in our fund one and two that are alive that like will return money. And you know, we definitely have to like figure out ways to get out. Right. Or like monetize because the. We're at end of fun.
- [42:06]
A
Yeah, because even if you do the secondary, it may not be that massive of an outsized return yet versus just holding for maybe another five, six years. Right.
- [42:15]
B
So yeah, figure that out. Well, there's a continuation funds and there's other things done there.
- [42:21]
A
Absolutely. So what are, you know, we're, we're wrapping up. I mean we essentially wrapped up Q1. Right. So what are some of the really cool, exciting things you've seen and what are some of the learnings kind of reflecting on Q1 20, 26?
- [42:33]
B
I mean, listen, I think like AI is like exhilarating, relentless and like tiring at the same time. Like, I think I was in a conversation the other day and somebody was like, oh, did you see xyz? And somebody's like, course that happened like over a week ago. And like that's how quick AI is moving. And so I think it's exciting, but it's definitely like, I can see the, the Craziness of, like, you know, founders are now working, you know, 9, 9am to 9pm six days a week. Right. Like a different level of commitment. I mean, we're excited. Tons of great companies, tons of opportunity, obviously, lots of risks now with, like, waking up and Claude, you know, going after what you're building. But, like, yeah, that's always a risk that, like, it comes in. I think it's just happening a lot quicker now from the AI LLMs. But, you know, we're probably seven companies in, soon to be eight in our fun five. So, you know, we're pretty active.
- [43:36]
A
Well, you know, to kind of use data analytics, talk screening. Right. So, like, how do you source and screen some of these deals with all the noise and all the hot hype? I mean, what I heard, I heard a manager that came back from sf. She's based in Boston.
- [43:51]
B
Right.
- [43:51]
A
I think they're on their. She's part of a large construction conglomerate and they have a venture arm. But she was like, look, I went to SF and like, I just felt these crazy AI vibes, you know, that was just kind of the whole buzz. So with just all that hype and buzz with AI, like, what. How are you kind of refining your screen? Because you can't deploy into everything. Right. So there's only, you know, there's only a select amount of slots in your portfolio construction. So how do you really thoughtfully, you know, not get. Get kind of caught up?
- [44:22]
B
I mean, 99 of the deals we do are inbound. I mean, I think, thankfully, we've been around 17 years, and yeah, each one of us as partners have, like, pretty deep networks. Sure. As we're sitting here, I think I've seen three founders that I have send me new deals of people they know, which are usually the best.
- [44:39]
A
Yeah.
- [44:40]
B
But we also have very active lps. So, like, I'm not, you know, for as much as I have this data background, I'm not like, deploying AI agents onto LinkedIn to find stealth companies. And I'm not going to a happy hour on a Wednesday to hopefully meet some kid that's, you know, starting something. I think, like, that's a different game. And I think, like, you got to do that when you're young. Like, you know, when I was at worldcorn, we went to every conference in the world, Right? Yeah. I might have been at like, three conferences a week around, like, in different countries. I do think it's helpful to build those networks, but I think, like, the best funds have their own unique deal flow and aren't chasing things. And so if I think about all the deals we've done in this fund so far, it's been RLP is our founders. We definitely have like, you know, other managers that we're close with that like they do stuff after us or before us and like, so we share things. Like no, I do a ton of stuff with Portage. They're not usually doing as early as we are. They'll send things to me, I'll call them when I do a fintech deal and you know, they'll be like as soon as it gets to, you know, these metrics, we love this. So yeah, I think like, you know, a lot of the job is like keeping strong networks and like, I think it goes back to the in person, right? Like I can live in San Diego, but I, I go to New York, I go to San Francisco, I'm in Toronto. We do a bunch in Toronto. Like, yeah, see people talk about, share what we're interested in. Howard writes a lot, I write a lot. So I think that's important.
- [46:10]
A
I totally agree. I mean look, we're, you know, we run an education company, you know, helping people pivot into Wall street essentially.
- [46:19]
B
Right.
- [46:19]
A
And if you really think about it, like if you want to learn DCF, you want to learn LBOs, a lot of that is on yout. But the value is like, hey, let's meet, you know, Matt's in town, Steven's in town, let's get a bunch of buddies together, let's hang out. You can't really AI that out of obsolescence, right? It's just the relationships, you know, are kind of what really is just impossible to to differentiate. Now you can optimize your relationships. Maybe you have an inbox that kind of recommends the top prioritize emails that you should respond to or maybe your CRM, it's like, hey, this LP just reached out to you and you should reach out to them in the next two, three minutes. That's the hot person to respond. So you can like, you know, have these tools to augment it. But you know, people remember that long term relationship. I mean from five years ago. It's like they remember that memory of like hanging out with you and having that good experience, right? And I think that's really where the in person comes in. What, let's talk like just kind of future stuff, right? Like, I mean what, like what do you think is gonna change kind of humanity, right? I mean obviously we already know about robo taxis. We know about potentially, you know, fixing your spine using neuralink but what's kind of some next level stuff that you've been hearing about or.
- [47:43]
B
Yeah, I mean I'm excited about space. I think everybody is. I think humanoids are coming. Yep. Personal investor and Apptronic and I. So I got to like see the robot, the humanoids in the, the facilities, then building them. Like, you know, my buddy always talks about what's the world look like if you have infinite labor. Think humanoids are coming. So I think you know, AI. I mean between us having robo taxis and humanoids and being able to go to space and like, you know, do we get more of these like tunnels from Elon so I can get from LA to San Francisco in two hours or like other ways? Like, like I'm curious like in 20, 30 years, like how can I get from San Diego to London in like two hours? It's gotta be like travel's gotta change, I imagine. But like I love traveling, I love going to Asia. Like if I could get there, I could do a weekend in Thailand by living in San Diego. Yeah, like that's like, I think like the huge unlock, right?
- [48:45]
A
Yeah, like you know those, I mean it's interesting. So you know, Naval mentioned something about this like I think years ago and he's like there'll be some point where humans are just, you know, like a lot of the labor is taken over by maybe automation by robotics. I mean. So, you know, a lot of times people go to London. Why? Because they have to work, they have to do this project or they have to see a client. Right. But if you don't have to see the client because the, the goal of servicing that client is already automated, then maybe you just go to London to. You know, humans are meant to actually enjoy life. Right. And actually go to London to see the sites and see the relationships.
- [49:21]
B
Right. Like I'd rather have lunch with you in person than do a zoom catch up in a month.
- [49:28]
A
Yeah.
- [49:28]
B
What if I can like wake up at 6am my time and be in New York in two hours and not have to get from and get. And cut out all the transportation to the airport somehow? Like I don't know like how we're gonna. But if we truly believe like the world is changing and anything is possible, like can we build tunnels that have cars that drive at 10000 miles an hour across the country? I don't know. Right. We're getting really crazy on what's possible.
- [49:58]
A
Yeah, I mean I think instead of being investing in multifamily, you just buy a fleet of like 50 robo taxis.
- [50:03]
B
Right?
- [50:03]
A
And it's the same amount of money. And the Uber drivers are gonna have to skill up and learn something else.
- [50:08]
B
Right?
- [50:09]
A
I mean, so I think that's.
- [50:10]
B
Yeah. I mean, my brother works at a zipline, which is like the drone delivery company. So, like, you get rid of like, you know, Uber Eats and Doordash, because, like, these drones can fly your food and just drop a zip line down to your house and drop off the burrito. What does that cost? Yeah, cents for the delivery. I don't have to tip that drone either. And then, like, you know, the crazy cost that we have of like 50 bucks to get a burrito delivered to your house now just went back down to like 10 bucks. And a dollar. And a dollar.
- [50:44]
A
And people, you know, the safety thing, I mean, people. People are already using Waymo and sf, right? I saw one Waymo in New York that was driven by a human. So I think they're coming to New York at some point. But. But, you know, there's going to be a point where people will take the risk if the price is right. Right. Instead of paying for you, you open up the app and you're like, hey, if you. Uber's 30 bucks to get from, like, midtown to FIDI, where it's 12 using Waymo and hey, it's not a human, but, like, you know, I'll take way more.
- [51:11]
B
Experience is amazing. I did it in San Francisco.
- [51:13]
A
I didn't get a chance to do it yet.
- [51:14]
B
I've seen them around twice as long because, like, they don't. They don't cut corners, they don't speed. So you gotta have, like, if you gotta get somewhere in 20 minutes, and Uber says, I can get there in 12, and Waymo says 30. Waymo probably takes 30.
- [51:28]
A
Yeah, sure, yeah, no, that's. That's great. You know, I know we're about three minutes left. I mean, I really appreciate this. I mean, this was amazing. Just give me one piece of wisdom, man. I mean, it could be from a mentor, it could be from a family member, could be just from your life as. As you've lived so far up to today. But what, what piece of advice you got for us?
- [51:46]
B
I mean, I think the advice, if it's like, you know, especially for people trying to go after the career, is like, move to where you need to be. You know, you got to go for it. I remember living in San Francisco and every mentor I had said, if you want to work in a hedge fund or venture or pro, you know, do it. You got to go to New York, you got to move to go get the experience. You know, I grew up in the Bay Area, but, like, outside the city. So, like, I think you have to, like, move. And I think the more that, you know, the world is getting back to in person and AI takes care of all the headaches we have, and we have to be in person. I think you gotta, like, you know, get on a plane or just, you know, take a few years ago life and live somewhere else.
- [52:27]
A
Yeah, yeah. And sometimes, you know, there. There's an edge to go to the less sexy places. You know, we had a student that was in our program that landed a role at Stepstone. And like, Stepstone, I think their office is kind of like in the boonies, like outside of D.C. but look, you're at. You're at like a massive, you know, multi mega, institutional lp. You go there, work there for one
- [52:47]
B
or two years, move to the right firm. Exactly. Yeah.
- [52:50]
A
Yeah, exact. Awesome. Well, hey, Matt, thank you so much. Really good catching up and.
- [52:54]
B
Yeah, I appreciate it.
- [52:55]
A
I'll see you when you come out to New York, obviously. All right, man, take care. Bye.
- [52:59]
B
Thank. You.