Speaker 1the single reason that privates exist is to make money, period. End of story. I'm a little perplexed by the length of some of these funds. It's not clear to me that the GP incentives are aligned with the math that runs endowments. What we're really after is the velocity of capital, not just returns on capital. There's a rule in our office that you're not allowed to talk about returns without also talking about time. We happen to have about 2.5% of the endowment in anthropic. I never want to be all in. Things can always get worse. You are seeing the pushback on
Speaker 2AI at the data center level. This is 20VC with me, Harry Stabbings. Now, I'm a venture investor for a living, and something that's frustrated me for a long time is that we don't get to hear from the greatest CIOs, chief investment officers, who invest in the venture funds that we run. We don't know how they think, what they like to invest in, what worries them when they're invested in a manager and they see them doing, how they think about the market today and allocating to managers. Today, I sit down with one of the best in that business, David Moorhead. He's the CIO of Baylor University Office of Investments, and he's one of the most respected CIOs in the business. Baylor's endowment is around $2.6 billion. David is quite outspoken, which makes this conversation one of the most refreshing, but also artistic. David, thank you so much for joining us. But also articulate and clear for managers thinking about raising, looking to raise, and for managers now wondering how they should operate with their LP base. David was incredible, and I'm really proud of this show because it shines a light on a part of the industry that I feel needs a lot more transparency. But before we dive into the show today, founders face a different set of challenges at every stage of growth. For Sid Shate, co-founder and CEO of D-Matrix, J.P. Morgan delivered the guidance and expertise, to help navigate what came next. He credits J.P. Morgan's high-touch approach with supporting D-Matrix as it grew and expanded internationally. Whether you're in the early days or expanding into new markets, J.P. Morgan helps startups navigate complexity with real confidence, offering personalized guidance and deep sector expertise. Find out how J.P. Morgan helps founders at jpmorgan.com forward slash grow without limits. J.P. Morgan is the bank. of the innovation economy. While J.P. Morgan supports growth, Corgi protects it. My word, what an arresting first line. Get your ass covered with Corgi insurance, and I'll tell you why. If you're running a business right now, you already know this pain all too well. Getting insurance, it's really slow, it's confusing, and my word, it's full of paperwork. Well, that's exactly why Corgi is here to change the game. Corgi is the first and only insurance carrier designed specifically for tech companies, allowing you to get covered in minutes instead of days. Corgi provides essential coverages for all growth stages, such as D&O, E&O liability, cyber, commercial, general liability, and more. Get your ass covered, I love the way we say ass, with Corgi insurance, alongside thousands of other startups at corgi.com forward slash 20VC today. That's corgi.com forward slash 20VC. You won't regret it. While Corgi covers risk, Flex gives you room to move. Business owners run their whole financial life on Flex, one platform from business revenue to their personal spend. Float every purchase for 60 days, tap capital that grows with your revenue, and pay vendors in 170 countries across 32 currencies, plus the whole back office, bills, expenses, accounting, all in one place. So you spend less time reconciling and more time growing. That's why thousands of owners use Flex, named one of Fast Company's most innovative companies of 2026. Visit flex.one, that's F-L-E-X dot O-N-E, and use the code 20VC. You have now arrived at your destination. David, I am so excited for this. I have done so much stalking over the last 24 hours, it's untrue. So thank you so much for joining me today. This will be a lot of fun. Sure, happy to be here. Now, I would love to just start with a little bit of like an overview of Baylor and how you think about investing today from Baylor as an institution.
Speaker 1Right. It's a pretty important job, right, particularly in the place that we are with higher ed. You know, we obviously have fewer high school students in the U.S. coming out of the great financial crisis. And so as a number of high school students decline, that's obviously fewer tuition dollars. The other thing that we have going on, obviously, is that the last couple of years, it's been more difficult for international students to come over to the states, appropriate visas. Stay, et cetera, all of those things. Those are full pay students, obviously. And so that kind of compresses higher ed, you know, financial books a different way. And so what that means is that collectively, there's a lot, a lot of competition for domestic students these days. And if you just look at the last, like this incoming class, I guess it would be the class of 2030. There are a lot of schools across the country that did not meet their targets for you know, incoming student class. And what that means, of course, is that the revenue has to come from somewhere else. And so in this time and space, and I think realistically, for the next 10 or 15 years, the distributions that are coming off of endowment funds are going to be increasingly important. And so we manage sort of like with that in mind. Now, we've always been good at the first quarter of 2026. I think the S&P was down 4%. We were flat. If you go back over time, and you look at the fourth quarter of 2018, the first quarter of 2016, 2012, if you look at a lot of these different times, our office in general tends to outperform to the downside. And what we've kind of gone back and looked at is how could we get better at the upside? We started this about five years ago, kind of knowing that this high school student is going to be going to be going to be going to be a problem. And so we've reorganized things over the last five years to make sure that we're doing better to the on the right side of the distribution. Is it possible to do both? Well, I've had finance faculty actually laugh at me, right? So when I when I say like what we're trying to do, and I'll let you be a little bit the judge of that. I mean, effectively, what we're doing is we run sort of like a value centric, high quality book, particularly on the equity side, because it's really, really hard to control sort of like the equity beta. So you could buy puts, that's kind of like a money losing effort, like over long periods of time. And so we try to do it thematically through factor allocations. But that then means, of course, that to the upside, when you're in a momentum driven market, a growth led market that you're going to trail. And so the issue is, you know, the market's up 70% of the time, if you're going to trail to the upside, that's going to be problematic. And what we've tried to do over the last, really, three to five years is we've tried to increasingly solve that with convexity. And we've tried to do that in a manner such that we're actually not paying a theta bill on sort of like
Speaker 2a normalized basis. I have to ask, increasingly solve that with convexity before we move to theta.
Speaker 1What do you mean by that? Yeah, so basically, what we've done is typically higher ed outsources the endowment to a whole set of different managers. And so by nature, we have a bunch of investments in a number of commingled funds. And commingled funds, by definition means that there's one GP who's managing the money, and then there's like 100 or 1000 LPs who are receiving the returns on that money. The issue with commingled funds is, of course, at any given point in time, you're receiving the average risk return profile that that manager is providing in order to keep all of those LPs in place. And so we've tried to do that. And so we've tried to do that. And so at any given point in time, Baylor's risk return need might vary from what the average LP in that fund would desire. And so what we've tried to do is kind of go directly to the GP and say, hey, this commingled thing isn't like totally working for us, we need to like optimize our risk return profile better. If we give you a bunch of money, would you would you run the same strategy, but do it just for us. And then we have a little bit of time to do that. And so we've tried to do that. look or a call into what's going into the portfolio. So let me give an example. Say we have NVIDIA in the portfolio, right? And then the next marginal manager wants to add NVIDIA to his or her portfolio. But we can look at the portfolio, like the GP doesn't know that we can look at our portfolio and be like, look, we've got plenty of NVIDIA, we actually say no, we don't need more NVIDIA. Or conversely, let's say that we're value high quality, we don't need more NVIDIA, we don't the next marginal manager wants to add NVIDIA. And we're like, we actually don't have any of that. So we'd take the NVIDIA that you're offering, but why don't you make it three times as big, because that's what we need to like back into a more appropriate, more optimized risk return profile for our portfolio. And it's actually worked like exceedingly well over the last two,
Speaker 2three years. Can I ask, just taking a step up, when you think about portfolio construction today, you have a blank canvas. How do you at Baylor think about portfolio construction today? What does that blend publics, privates, credit, debt, venture P. Right. It's interesting. We actually spend a lot of time
Speaker 1talking about this. And in fact, I think we probably spend more time talking about this than we actually do manager selection, which is kind of unique in the space. Presently, we're around 45% private, 47% private, 53, 55% public. I think it's really important for if you're starting with a blank sheet and you're going to do privates, you really need to nail down the private side first. Right. Because the private side is going to suck your liquidity and sort of hogtie your ability to allocate between managers or between strategies. And so you really need to figure out what sort of liquidity environment can I live with on the private side and sort of determine what that allocation is going to be. And then I think you just need to sort of like box it. And set it aside and be like, this is what's going to be operating here. The reason you have to do that is because this can't change. Right. I mean, you can do secondaries, you can tweak it at the margin, but it's really, really hard to move a private book around. What would your answer be
Speaker 2for what sort of liquidity profile you thought you needed when you were considering this?
Speaker 1Right. So our allocation range around privates is 35 to 55, which means that we want 55 to be the case when we have a denominator issue. Right. When equities have gone down and the public side is smaller than it usually is because of this particular difficulty in the market, that the private side isn't going to kick up so much that we're going to be forced into selling. Right. Like the number one thing to avoid is fraud. And the number two thing to avoid is for selling. That's a disaster. And so we kind of target 45 percent if publics race ahead, then it puts some downward pressure on that. And if we get into, you know, a financial crisis, something like that, it would put upward pressure on that. But for example, the last bit in 2022, when tech, you know, kind of slid a bunch or you could go back a couple of years prior to the pandemic, I think that our private side got to like 51, 52. But it wasn't so much that it either constrained our ability to allocate. And it certainly wasn't enough that we got into a
Speaker 2situation. When you think about then the 45 percent say that we have as the ideal drilling one layer blower, how do you think about how to split that up between venture P and every other
Speaker 1private that we can do? We've had a different perspective on this over the last five or six years that really came out of what I was talking about before when we knew that the school was going to have issues as it related to enrollment. Right. And it's not just a Baylor thing, but like I said, it's not just a Baylor thing. It's like, you know, it's going to be school demographics can kind of be a slow moving train wreck. But the benefit of the slow movement is that we can sit back and look five years out and know what's going to happen. And so we started this five or six years ago, like shortly after the pandemic. And we basically said the single reason that privates exist is to make money, period. End of story. And so anything in the private book that isn't going to lend itself to excess returns. Again, we need to create money to create more distributions for the school that's going to have enrollment concerns. And so if you're not going to keep up with the highest returns that we can generate out of the private book, we've kind of moved on from that. And so a lot of the real asset stuff in our book is sort of like winding down, not being renewed. And so we're really focusing to get back to your question today. We're focusing on VC expansion, growth equity and buyout. That's kind of it, right? So if we're going to lock up money, we want the highest
Speaker 2returns. How do you think about trying then, if you want VC, you want growth equity, how do you think about trying to get into the big names, the sequoias, the benchmarks, the founders funds, the you name those big brands versus trying to find the young upstart, the little boutique
Speaker 1provider that could do a 10x? I will say that, you know, we're coming along a little bit later to the party than some of the Ivy Leagues or Stanford or what have you as it relates to the sort of like VC brand names that you're talking about. And so it hasn't been for lack of trying. It's just like when you knock on the door, they kind of like don't answer, right? So we've kind of had to go. We've kind of had to like try to figure that out differently. What I will say, though, is that the ladies in our office have had exceptional, absolutely exceptional returns out of the expansion growth equity category. So we've actually had some questions of like, should we just allocate more dollars to that sector of the market at the margin we have? But I would say we still do VC. It's still in probably newer upstart names. David, do you like VC? I do. I'm a little perplexed by the length of some of these funds. I've got to be honest. It's not clear to me that I'm going to be able to do VC. I'm going to be able to do VC. I'm going to be that the GP incentives are aligned with the math that runs endowments.
Speaker 2What does that mean?
Speaker 1Let's just do it for example, right? Historically, they were like 10, 12 year funds. Now they're like 15, 18 year funds, right? So much to the chagrin of like all LPs. But the issue that you run into is that, okay, so you get your money back in 15 or 18 years. And let's just say it was like phenomenal experience and you're up like 15x. You're like, that's fantastic. But the issue is that it happened over 15 to 18 years. And what simple math would suggest is that if you were in a growth equity fund that was six years in weighted average life, and you were up 3x, and then you redeployed into another growth equity fund that was up 3x in six years, and then you did it again, that over the course of 18 years, you'd be up 27x, which is better than 15x by a factor of two. I understand why people want to hang on to their winners. But the compounding of capital, and I'm trying to create the largest pile of money for students. Students can't pay their tuition with returns. They have to pay with dollars. So I'm expressly interested in creating the largest pile of money. And the largest pile of money is governed by like simple compounding math. And so what we're really after is the velocity of capital. Not just returns on capital. Whenever the velocity of capital is going to start to asymptotically approach like wherever it's going to be, then we want to be out and move on to the next thing. In other words, like it's really, really hard to do like 3x in six years, right? It's easier. You have winners now. The company's going okay. It's actually looks better on your marketing if you're up 6x instead of 3x. So like if people held on to it for another five years and got like, a double, then they'd be up 6x instead of 3x. That suggests that the next fund will be raised, etc, etc. But I actually don't care about any of that. Like that's a business decision. That's related to the business. And I'm not optimizing for the best business for the GP. I'm trying to optimize for the biggest pile of money for our students. And so I get that there's a little bit of a disconnect there. But the math issue does kind of drive me nuts.
Speaker 2Can I ask you a blunt question then? And I love this interview, because it's completely not in my interest as a venture investor. And as someone who interviews venture investors. No, no, this is why I love it. I have the best job in the world. But given the requirements on velocity of cash and the value of compounding, which I very clearly see, do you not have a question internally of, well, why do VC at all? If we can do growth equity or mid-market and get the 3x in six years? I get you, David. I'm not doing that for you. And neither
Speaker 1is the best firms. Yeah. And that is a question that gets batted around a lot. In our office. And so, you know, there is something to be said about sort of laddering returns, right? So it's okay to go allocate money to some manager and say, like, those returns are going to show up like six, seven, 10 years from now. These other returns are going to show up three to five years from now. And then like kind of on my side, those returns are going to show up one to three years from now. So we do think about it that way. But I would say that there's a rule in our office that you're not allowed to talk about returns without also talking about time. Because it's very common on the private side to just say everything like, well, you're up 2x, 3x, 5x, whatever. But that tells you nothing. If you're up 5x over 30 years, that's horrible. And if you're up 5x in five months, that's amazing. I guess that's SpaceX.
Speaker 2Is venture then just a pure diversification play for you, which is like...
Speaker 1It is for us. Yeah, it is. It could be the case that somebody allocates to something that really takes off and goes quite well. Like, for example, we happen to have about two and a half percent of the endowment in Anthropic. We have no exposure to SpaceX. We've had no exposure to OpenAI. But about two and a half percent of the endowment is in Anthropic. Well done. I mean, that's not us, right? Like, that's managers.
Speaker 2David, for goodness sake, will you please learn from your managers? Okay. Lesson number one of Venge Capital. Even if it was not you, you take credit and say, thank you so much. I remember that one. Yes.
Speaker 1That's not really how we roll at Baylor. But... Understood.
Speaker 2Can I ask you, it's a really different, and I'm not... saying with Anthropic here, but I'm saying with positions that go public, Anthropic obviously will be one, but with positions that go public in the past, how do you think about the, I'm going to actively manage it as now the holder versus a common one that I hear, which is that's not our job. We just liquidate the minute that we get it because we don't know about this asset. How do
Speaker 1you think about it? It'll depend on what we think about the name. And it'll also depend about the size of the position once it is public. So we've sold, you know, shares before. We've also had shares before. We've also let shares run before. So it kind of depends to us what we're expecting, what the profile of the portfolio looks like and the position and the risk associated with it.
Speaker 2I was talking to Sean before this show, who you mentioned we should chat to. He's brilliant, Sean Barrett. And he said that you think more like Charlie Munger than anyone he's ever met.
Speaker 1That was that. Only because we're in the middle of the country, I think.
Speaker 2And he said that when software was getting killed early in 2026, you went deep on the situation, wanted to understand every bit of research and then piled in. Can you talk to me about that, your process there, what you saw that others didn't and how you thought about that? I'm just fascinated given that.
Speaker 1I would say like if we had an edge, I would say that we're pretty good on human behavior. And so a lot of the time, we're pretty good on human behavior. And so a lot of the time, we're pretty good on human behavior. And so a lot of the time, we're pretty good on human behavior. A lot of these things, you know, I don't dispute at all. Like I'm not an engineer. Much of the stuff that comes out of Silicon Valley is over my head. But I do know how people think. And I do know how people make decisions. And so it's pretty easy in this case of, you know, like software is dead. It's all going to zero. Somebody is going to vibe code this and whatever. And like I have friends that run three 500 person private family businesses. And I easy enough to pick up the phone and call them. And I'm like, I don't know. I don't know. I don't know. I don't we're like, hey, say your son in law vibe code something and you're going to like tear out your CRM. And they're like, not in a million years. It's not their job. Like I have a good friend who runs like a vertically integrated like potpourri business. He knows everything that there is to know about that. But he is not going to tear out key important parts of what makes his business run behind the scenes on some unproven thing that I think it was the CEO of Salesforce, like, I don't know, six or eight months ago said that like the best that AI was going to be is like 93%, right? Which is like phenomenal. And that might be like better than like a lot of people. But the issue of software is 100% right. So if you need your books to like match up and whatever, like, yeah, that's not going to happen. So I actually think as we've kind of like thought about it more, I actually think that in some of these vertical industries, that software is actually going to be the delivery mechanism for AI. That in other words, for my friend who's in like a niche business, very, very good at what they do, I think, I think they're the only vertically integrated potpourri maker in the world. I think that what's going to happen is that the trust that's been built up with the software providers is going to translate into, hey, could you add AI bits for me on the back of this software? And of course, like the SaaS companies aren't stupid. It's not like they're sitting there and like, hey, we're worth, you know, 20 or $50 billion. We should let this go to zero.
Speaker 2What's interesting for me is you analyze this situation, and then you decide to act on it. Like, this is very rare for an institution to do.
Speaker 1Like, Sean and others have like told me that, but like, that I don't actually understand, right? Because like software at that point is like on sale to the tune of like 50, 60% from like October of 25. And if the thesis is software is going away, it's down 50, 60%. You call businesses and they say that's not true. You're like, I'll own that.
Speaker 2I get you. But it's throwing the baby out with the bathwater. The trouble is, I'm not sure what's the baby and I'm not sure what's the bathwater. And with the greatest of respects, I live in technology. And that's why we have managers like Sean,
Speaker 1right? So he's the expert. So I'm like, I'm going to give you more money. But I want you to go through your list with me and tell me all the things that are least likely to be interdicted by AI. And then like, I'm going to give you more money, but I want you to go through your list like own those. So I'm making a decision based on human behavior and what how I know people make decisions, right? And I'm allocating based on that. But I'm relying on the manager to be expert in their individual field and give me the correct perspective and what's going on on the ground.
Speaker 2But what's so interesting is most just delegate to managers and go, you're the experts, you delegate to them great. And then you go, I'm also going to operate where I have decisions myself. And I'm going to interject in those marks.
Speaker 1Okay, it's different. I kind of think that that's our job, right? I mean, like my seat is like an allocator seat. My job is to allocate to go back to the like the Buffett or Charlie example, right? They also are allocators. And they're deciding who gets the incremental dollars. Do they send it to Burlington Northern? Or do they send it to their energy company? And depending on what the outlook is, what the CapEx requirements are, etc. You know, they get budgets submitted to them. And they may or may not. They may or may not allocate more of their cash pile to those companies.
Speaker 2Quite a lot of LPs that I speak to say, I get the liquidity challenge of venture, and I get the time lags of venture being difficult. But I learn a lot from what happens in my venture portfolios in terms of AI penetration, new technologies, adoption cycles. Is your venture portfolio a learning academy for you or not?
Speaker 1Not for me. I would say it goes the other way. I actually learn a lot from the public side managers. What I find is that there's a lot of this spun up like, oh, my gosh, we're going to have autonomous cars in like three years in 2016. Yeah, right. Like all the regulatory stuff that you have to go through so that you don't kill somebody. Yeah, we're 10 years on. And what do we have, like 5000 cars on the road? Like, please. So like, I get sort of like the mental imagination that, you know, you can go like, we could put something on the moon, and we could mine the moon and whatever. Yeah. Okay, like get back to me in 30 years.
Speaker 2Okay, but you're not worried then about the casino ization of public markets?
Speaker 1No, the public markets are the big leagues. There's millions of people making decisions on dollars every single day for every single company. You know how things get valued on the private side? Of course you do. Three people get in the room and say, hey, I think the value is X. And they're like, I'll fund it at that. Great. And that resets the whole price.
Speaker 2But I think public markets in many respects are as irrational as private markets are today. And you saw that. Did you saw that? Well, you saw that.
Speaker 1They can be irrational, because they are governed by people. The difference is that there are tens of millions of people trading on that information. Whereas on the private side, there's like three.
Speaker 2And they decided those tens of millions of people that Elon Musk is a premium in himself, that SpaceX should be a $1.8 trillion business. Yeah, that doesn't mean that they're right. It
Speaker 1just means that it includes a lot of people. And that's why I think public markets are so important. I think public markets are so important. And that's why I think public markets are so important. And that's why I think public markets are so important. And that's why I think public markets are so important. And that's why I think public markets are so important. All available information, which does not happen on the private side.
Speaker 2And so what you're saying is that the sheer scale of people voting in this buying decision means that it's a more legitimate price than private side, just so I understand.
Speaker 1Correct. I don't think there's any question about that. I literally have been in these conversations, right? Where like three guys get together and are like, hey, I think it should be this. Like on what? Right? And they're like, well, I'll give you $50 million at that price. Okay, fine.
Speaker 2On the fact that I tried the product and I liked it, David, why are you asking me such intellectual questions? Do you trust, and I didn't mean that badly, but do you trust the prices coming back from your managers? You know, we all have our books, our portfolios for people listening, and we mark them in different ways.
Speaker 1We do. So that's one thing that the ladies have done an extremely good job of. Recall, again, that I'm coming from the public side. So when you run trading books, everything has to be priced every day, right? So ostensibly, it's so you make better decisions. Because if you have things mismarked, then psychology works against you. Like if you say that this is worth $30 million, and it should be worth $10 million, and somebody offers you 20, then because you would ostensibly take a loss from 30 to 20, you're liable not to hit that, even though it's a premium to the actual value. And so pricing is just a way to make sure that you are psychologically aligned to the reality of the market. And so one of the things that we really try to do is to make sure that our managers are not pushing valuations. We want valuations to be conservative rather than aggressive. And you can see that in sort of our return data in sort of like the six months, nine months prior to something being taken out. I think average gain on that is sort of like 60 to 90 percent. And I think from a market perspective, it's more like 30 to 50 percent, which would suggest that our marks, our managers marks tend to be more conservative than others. So, you know, like I kind of sit on top of this thing, and I kind of have to vouch for the valuations that we have as it relates to talking to the regents or administration. And I feel pretty comfortable that on the private side, our marks
Speaker 2are actually more sane than on average. As venture eats more and more of the world with your open AIs, Anthropix, your SpaceX, your biggest companies in the world all being venture-backed companies. do you maybe feel that you need more in venture more in tech does it change how you view the world
Speaker 1does the mindset change no i feel pretty comfortable with where we stand i think our biggest allocation is in growth equity on the private side and we feel pretty comfortable with our capability and the manager set that we have there why do you like growth equity because the return to timeline profile the return timeline there's also fewer zeros and so that kind of goes to the value bit i mean it's just simple math if there are fewer zeros then everything else doesn't have to cover for the things that don't work which is what helps get you to like i think that their book is like annualizing it like 30 on sort of like the growth equity side so that obviously meets our eight nine percent bogey so i don't even actually know that i've ever had that question
Speaker 2before how do you think about like mulligan vintages across venture and p mulligan being like not very good vintages you know a lot of people are talking about kind of 21 22 for venture and p being just like very bad vintages we all we all just kind of went crazy it was covered sorry mayor culpa and you've got now tomo bravo obviously you had medallia which is obviously quite a well-known return the keys situation that just kind of comes
Speaker 1with the territory right i mean like basically what we do is we say this is the amount that's going to be in privates and then we say we're going to allocate to pe expansion capital in vc and we're going to do it in the first place and then we're going to do it in the second place and we're going to do it in the third place and then we're going to do it in the third place and then we're going to do it in the fourth place and then we're going to do it in the fifth place and then we're going to do it in the sixth place and then we're going to do it in the seventh place and then we're going to do it in the eighth place and then we're going to do it in the eighth place and then we're going to do it in the seventh place and then we're going to do it in the eighth place and then we're going to do it in the seventh
Speaker 2place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh
Speaker 1place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh
Speaker 2place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh
Speaker 1place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh place and then we're going to do it in the seventh our cash balance is pretty low because we keep finding you know 20 30 annualized things to do and so our cash balances just end up being a function of like you know what the environment is i think
Speaker 2one learns a lot from their mistakes if you are reflective when you look at allocation decisions what's an allocation mistake that comes to mind first and how do you reflect on it and learn from
Speaker 1it i can't come up with a specific example right off the top of my head but i will say this is that when you're trading you for sure are going to lose money and sometimes you're going to lose a lot of money and sometimes you're going to lose a lot of money for a long period of time and the takeaway from that basically everyone goes through it everyone you know walks into the seat and thinks like that it's not going to happen to me this seems pretty easy sort of invariably you get kicked in the shins and then hit over the head by a two by four and the takeaway from that is i never want to be all in so things can always get worse so when we're allocating to software in you know feb march of this year we're not like drawing a line in the sand we're like every available dollar is going into software right it's down 50 60 percent like who's to say it's not going to be down 70 80 percent and so we set it up so that we're methodically and sort of mechanically allocating into difficult markets and the reason we do that is to try to take the emotion the psychology out of it how do you literally do that methodically allocate into marketing yeah so i'll give you a perspective on the overall markets right so we basically say if the market's down zero to ten percent we don't care we're an infinite live portfolio zero to ten percent is like normal stuff the way that i approach it with young analysts i'm like if something's on sale for 10 do you rush out to the store to buy it and they're like well not no not really i'm like what about 20 they're like yeah i think about it maybe 30 yeah probably 40 for sure and so we think about declines in the market in sort of 10 increments and we have liquidity set up in such a way that we could allocate sort of like every 10 percentage points down we don't
Speaker 2really worry about zero to ten percent how do you think about catching a falling knife let's make this real i've done that before i've looked at your wix or your monday.com which were down impressively large amounts i love the founders indeed i just determined that i couldn't determine baby from barthold water and did nothing but dude they had another 10 20 30 to drop and that's why we do it methodically
Speaker 1and mechanistically because we're never like drawing a line in the sand and saying like down 20 oh i'm all in we're like down 20 maybe i'm 20 in down 30 i'm another 20 in down 40 i'm another 20 in so we're doing it in that way and the reality is is that we actually never get all the way invested before it rebounds and and so you could say that you know we leave money on the table that's true but the benefit is is that we're never in the situation where we're like oh my gosh i love this so much and it's down and i just can't have any more of it so that's the scenario that we're trying to avoid and that just comes from like perspective history and experience of you know having trading scars all over your body from you thought that you were right you thought that you knew where it was going to go you put a whole bunch of money to work and then it went lower it's a terrible place to be
Speaker 2it is when you're holding a stock and it's just down and you're not in a good place how do you determine between the balance of it's going to come back and i was right and i'm going to stick to my beliefs versus it i just need to sell because the utility value of cash again even if it's a loss it can be recycled again how do you think about that yeah a lot of
Speaker 1that is in the hands of the managers of course right because we're not trading individual stocks but what i do find is we spend a lot of time working with managers sort of making sure that their psychology and their emotions are in the correct place so for example interacting with sean you brought it up software space you know first part of this year i was probably on the phone with sean every day for four weeks and we're talking through individual names i'm relaying what i'm hearing in the market he's relaying what he's hearing in the market and then what he's hearing in the stock market we were sending each other articles or quotes or you know news stories at all hours of the day etc and i constantly ask him okay you have this name but if it goes down like another 20 what are you going to do or you have this name and you have another name versus each other which one do you feel better about or has better risk adjusted opportunity set here and then i'd push him to be more concentrated and that's actually what portfolio ends up doing and i think kind of to your point that's what ends up happening in most cases in sort of real life down drafts is that portfolios end up getting more concentrated does that make you nervous no we own everything under the sun so does every enf portfolio right so like we own everything from like sunscreen to helium to like tech like i don't know what right like we own all sorts of consumer product goods that you would see in the mall we own all business to business software or tech companies that i've never even heard of before right like we own real estate development project we don't like own everything right so like it's always funny to me when people like compare an endowment portfolio to the s p 500 or something like that you're like we're infinitely more diverse than the s p 500 it's not even close so if we get a little bit more concentrated on at the margin like that that doesn't remotely change anything for us what
Speaker 2do you see your endowment portfolio as? what does your endowment cio cohort do that you think is nuts or wild?
Speaker 1there's something that we do that not a lot of schools at our size do do. And that is we almost hire exclusively from undergraduate ranks. Now, to be clear, the caveat there is schools or endowments our size. So we're about 2.7 billion. 14 months ago, we were 2.2 billion. A couple of years before that, we were 1.4, right? So in that sort of like one, three to 3 billion kind of range. And I've sort of figured out why a lot of people don't do it. So it was a little bit of something that I missed. But the bit is, is like if you hire undergrads and based on where we are, our office is located in Waco. We're about 100 miles from Dallas. We're 100 miles from Austin. We're right in the middle between the two. It's pretty difficult for us to hire a mid-career professional and get them to stay for a long period of time. It'd be really difficult to pull somebody from LA or New York to Waco and say, like, I need you to be here for 10 years. And so we're not doing that. We're not doing that. We're not doing that. We're not doing that. And so what we've done to try to solve that is hire from undergrad ranks. They clearly have chosen the school. By definition, they've chosen the area, et cetera. They've been around. We actually screen pretty hard for that when we're hiring people. The issue is, is that when you do that for the next five or six years, you're spending a lot of time pouring into that person and helping them kind of like level up. And during that period of time, while they're leveling up, it's like all still on your shoulder. So I totally kind of like forgot that part. Like, we'll have a stable investment team and, you know, these people won't go anywhere or whatever. But I kind of forgot the bit of like, yeah, and for the next five or six years, you're going to be wearing
Speaker 2like all sorts of hats during that time. So do you think your colleagues are nuts then for not
Speaker 1hiring internally? I think that nuts is not the word that I would use. I would say that they are accepting alternative risks. And so the alternative risks are on the upside to me is that I have a stable team. So I think that's a good thing. I think that's a good thing. I think that's a good thing. So I have worked with Renee for almost 16 years. The next person that we hired, Jen, she's been here 11 years. And you can like kind of go on down the line that actually accrues is pretty evident across the industry. It's like longevity begets returns. So I'm benefited on the stability front. The negative for me is that the upfront bearing of all of that, you know, time, there's a period of time where I have to like carry the team. On the flip side, if you hire mid-career professionals, you don't have sort of like that upfront cost of like having to carry the team, right? Because they're more plug and play. But you sort of wear this risk of turnover and potentially more returns. David, do you think the incentive structure for LPs is
Speaker 2broken? And let's be specific on LPs or endowment fund investors. If you look at funder funds, if I crush it for my funder funds, they obviously have carry and they will do very well from that. With traditional endowment fund investing, if I do really well for you, it doesn't necessarily translate to a huge
Speaker 1paycheck. Do we have a wrong incentive mechanism? I don't think it's a wrong incentive mechanism. I think that it requires people in the space to be very missional. So like I wake up every morning motivated by sending some, you know, sophomore in high school to Baylor that hasn't even thought about college yet, or some like seventh or eighth grader who doesn't know if they're going to go to college. And they're thinking about baseball scores from the prior night, right? Like me getting out of bed in the morning, going to work and wanting to crush it is entirely due to that. So everyone likes to be able to get their wife something nice or to redo the kitchen in their house or go on trips. But like that is not the motivating factor for either myself or the people on my team. Do you worry about the impact of AI on education? I worry about the impact of AI on human thinking. There are a number of studies that have shown that the impact of AI on human thinking is actually a lot more than just the impact of AI on human thinking. There are a number of studies out, I don't know about their veracity, but they're coming out of MIT and austere places like that. This suggests that students who are using AI for everything that they do actually show less brain function, right? And this isn't really a surprise. You see the same thing like if you just sit in a chair all day that your muscle atrophies. And so I do have concern about the effect of AI on actual human logic thinking. That's sort of like an innately human trait. Animal don't think, humans think. But if you abdicate your responsibility for thinking, it's not clear that humans do that either. So I have concerns about that. I think education can figure it out and use it beneficially. I think it's more of a human discipline problem.
Speaker 2For a lot of my friends, CIOs of other endowments, sometimes larger, they've been hit with obviously the endowment fund tax, which is really hitting larger organizations. How do you think about that? How do you advise them?
Speaker 1I would love to be in their position. We are not because our endowment per student is too small to be subject to that. But I promise you, if I went to the president of Baylor, I've actually had this conversation with Linda. If I go to Linda and say like, there's good news and there's bad news, the bad news is that we're going to have to pay an endowment tax. The good news is that our endowment is three times bigger than when I last talked to you. She'd be like, yeah, and? So I would love to have to pay the endowment tax because- The endowment was bigger.
Speaker 2Do you play a game of comparison? What is it? Comparison is the thief of joy. And I think you said earlier, in down times, you obviously are brilliant. And in up times, more challenging. I think you play a defensive game. Full year, 2025, Baylor returned 9.4%. Dartmouth, lowest 10.8%. Do you do the comparative side by side, or do you row your own race?
Speaker 1We do both, which I think is the right way to do it. Every school has a different set of priorities, needs, et cetera. Baylor's is currently to get the endowment higher on a per student basis. And so, for example, what you're referring to in terms of last year, that was disappointing on sort of like a relative basis. But there were two bits that were going on. One was that we had increased the allocation to privates by in sort of like annual commitment amount by about 60, 70% in 2020, 2021 and following. And so- And so, returns from the private side have been dealing with sort of like a second J curve, if you will. And then the funds of one, and then there's like another asset class that we'd allocated to, those have been like flat and starting to inflect up. And so, this fiscal year was the first year that we weren't dealing with the J curve impact on the private side. And the first year that we got returns from both, you know, the fund of one category, and this other category. And so, we feel very, very good about sort of like, you know, our newest analyst was like, so basically, you guys tried to change the engine while the car was moving. And yeah, that's 100% what we were trying to do. We were trying to put a new bigger engine in the car while it was still going down the highway. And we did it. We had like a little bit of a lag last year. I think we'll be 18 and a half, 19% this year without any SpaceX or Cerebro. Or anything like that. So, structurally, I think the next couple of years look pretty good from
Speaker 2sort of a tailwind perspective. Can I ask you, we chatted before about a friend of mine who you're going to be working with. How do you think about position sizing in the positions that you do
Speaker 1decide to engage with? Yeah. So, this is an interesting one. And you're talking specifically on the private side. So, we spent a lot of time on this sort of because of what I had talked about under the sun. And one of the things that we had figured out is that, yeah, you know, we have this relationship with GP and we have this, you know, they send us a little note, so-and-so company got sold. It was like a 7X return. And I'm like, okay, great. What does that mean to us? And they're like, well, we'll get back like $400,000. And I'm like, what? Who cares? Right? Like, it means nothing to the overall endowment. And so, one of the things that we've changed in sort of sizing is we start to see how much money do we want to have in each underlying company. So, in other words, if the company is going to be up 5X, we want that 5X to matter to the overall fund. So, basically, what we're doing in sort of like expansion, buyout, venture is like a little bit of a different thing because it's a bigger company set. But basically, what we're saying is we want $3 million to be in each underlying company. And so, if they have 10 companies on their platform, that means we'll allocate $30 million. Yeah. So, that's a good point. Yeah. So, that's a good point.
Speaker 2I get you totally. Or another way that I think about it, and you can tell me if I'm wrong, which very possibly could be the case, I'm a low IQ individual after all, is it's a $200 million fund and you commit $20 million to it with the theory that if they say we are 10% ownership in every company, great. If we're 10% of their fund, our exposure is 1%
Speaker 1per company. Yeah. We think about it in terms of dollars. So, we say, how many companies are 2.5 to $3 million in each company? Obviously, it's up to the manager, et cetera. We're not dictating that. But we're just doing the math from a dollars perspective. So, if you have 10 companies, we want $3 million in each company. So, if it was up 5x, we'd get $15 million back. That matters.
Speaker 2That's enough to matter. Do you want your manager to do what they said they'd do or to play the game on the field? Ventures change more in a year than I've seen in a decade. And actually, playing the game on the field, it's a lot of money. It's a lot of money. It's a lot of money. It's a lot of as Bill Gurley says, is the job of a venture investor. that may be different from what i said to you i'd do we always want managers to do what they said
Speaker 1that they were going to do so like my example is always this i sort of view my job as like the general manager on a baseball team right so i'm going to hire a third baseman a shortstop a second baseman first baseman etc for various reasons like depending on your fielding percentage your batting average etc but if i walk out on the field and i have two people on second base someone's getting fired and it's probably the third baseman who switched to playing second because like i have people set up on the field to play particular roles for particular reasons so like if you're a third baseman you think you can play second base better than my second baseman then you should come talk to me but if i ever walk out on the field and i have two second basemen and no third baseman the third baseman's getting fired like full stop right like that i don't like i don't care what your returns are so again we started off by talking about this we spend much more time on asset allocation and why things are where they are than we do on individual managers okay this is so
Speaker 2interesting for me so the markets have changed in the time that i've raised from you i've moved with those markets and i've done that well and i'm showing you great numbers i'm making you money
Speaker 1but my position doesn't fit what we're trying to accomplish we won't re-up the
Speaker 2that's so interesting so you would rather i stayed on second base do worse financially than move to
Speaker 1third base where you've already got someone else i would like you to have a conversation with me before you change your stripes what would you say in that conversation i'd be like why do you think that you should be able to do this when we have no data to suggest that you're good at this let's move out of vc let me do something on public equity that's easier there are managers who are like we don't know how to time allocations into and out of cash we're just going to be fully invested because we don't know like if the market's going to go up down or sideways like we're good at picking stocks so we're going to keep basically zero cash that's what we do and then there are other managers who are like we actually use cash as an allocation methodology and cash will be from zero to 15 depending on what we see to do whatever both of those track records are subject to comparison to benchmarks like we don't change the price of the asset allocation we're going to keep it at the benchmark depending on like if somebody holds cash or doesn't and so if somebody is like we're fully invested all the time and then i wake up some morning and they have 10 in cash yeah they're getting fired because like i don't want to be the guinea pig like i don't want to be the person they're like hey you have a new idea now and now you're more of a global macro equity manager and you think that you can time the markets when you have no prior experience or data to suggest that you can yeah no you're fired kind of get like give
Speaker 2in that example i think ventures more nuanced it's kind of closer it always is right i'm not
Speaker 1talking about like lines in the sand around artificially generated category limitations right like that's just an artifact that people made up i'm talking about like hey we're going to invest with a manager who is investing in companies where product market fit has already been determined and then that manager is like yeah that doesn't work anymore we're just going to like invest in two guys in the garage and we don't know if they'll come up with something or not right those are two very different approaches so yeah the switch between those yeah that's a no if you want to go from b to late a like who cares right that's the same thing
Speaker 2so we're actually aligned completely actually it's interesting i thought we were misaligned i 100 agree i think your example there it's kind of like i always say pre and post data which is like you either have nothing and we're selling walt disney tell me a story some people are great at that and you should bet on them for being great at that right or you're jerry mcguire show me the money which is the post data and some people are great at that and so i totally get that and i think you're absolutely aligned there can i ask you a tough one which is in venture it's kind of assumed and it's the unwritten rule that you commit for three funds and you should do because that's the duration required to determine quality in a manager do you think that's kind of bullshit coming from a more macro perspective where you see different asset
Speaker 1classes i don't know i think we've kind of done that the issue with one fund even two funds is that you don't have enough data to make a decision right and so yeah that kind of makes sense because you don't have data to prove it otherwise we tend to be very good when there is data to be analyzed and we tend to be less good at you guys have a vision i got a dog like give us some money like that's really hard for us so yeah people are good at different things if i would say you had
Speaker 2unlimited money today unlimited constraints and you had the harvard balance sheet what would you do differently
Speaker 1i don't know that i would do anything differently i think it gets a lot harder for sure at that size and scope so you know hats off to narv and like what his team is trying to do and that's like really really hard and i've actually talked to other cios about this because i want to be prepared for like down the road at what point do you have to change how you invest that's very top of mind for us and that's something that a lot of allocators you know work on think through struggle with how do you want yeah i mean like i've talked to the nordic dame folks and they're at 20 billion and they're kind of like we actually thought that we would run into this at 10 billion at 15 billion we actually haven't i wonder if there's a place between where nordic dame is at and where harvard or utimco is at where you actually do have to change how you invest or you can't invest in the same manner because at some point and i think that some of the ivy leagues are running into this it kind of doesn't matter how good benchmarks returns are when you're not investing in the same manner you're not investing in the same manner you're when you have 40 billion dollars or 60 billion dollars and you can allocate 20 million dollars to a fund even if you're up like a real lot doesn't move the needle as much as it used to
Speaker 2i mean when you put that into perspective if you have a 20 million dollar check in a fund and i'm sure a benchmark because we can use that with a multiple here 20 million bucks and you do a 50x say it's another ebay fund which would be amazing i mean jesus amazing 50x a fund that would return a billion dollars and so to your point of like material reality to a fund yeah if you're a 40 50 billion dollar endowment it's two percent well are you gonna send me a christmas card thanking me like come on give me i mean like a billion dollars is
Speaker 1great but like you see the point yeah i think i think that that's a little bit of what like the a16z kind of thing is like tapping into right yeah the platforms win like just don't do those checks just give me 300 million bucks exactly and so that's what i mean is like at certain sizes maybe you have to play the game a little bit differently do you like the large venture
Speaker 2platforms or are you like nah i don't like the post a billion dollar funds we like small i think
Speaker 1it just gets harder i think it gets harder to have a return figure over the requisite period of time that actually pays you for the risks that you're taking i get how they do it i get why they do it but i think it is so a lot of large numbers right it's just harder i've loved this conversation
Speaker 2very unusual
Speaker 1maybe it's maybe it's because we're in central texas i don't know so no like normally everyone
Speaker 2in my and this is like just like the most like idealistic ai pilled venture investor who's just like everything's just like we're not gonna have jobs in a year yeah that's clearly not true i mean
Speaker 1like you are seeing the pushback on ai at the data center level because where the data centers are being built is in my neck of the woods not in silicon valley and you don't want it i do because we're invested in it right but like you're seeing this sort of nationally you're seeing it actually internationally is that the most valuable thing for a data center used to be power if we go back like five six years it used to just be land and then it was powered land and now it's actually permitted powered land and the reason is because people are like kind of fed up with it and it's like not in my backyard and so you are getting sort of this pushback on the data center level
Speaker 2i'm sorry i don't understand this like why like they're utilizing land that they're bringing jobs
Speaker 1they're bringing construction and power prices go up and water prices particularly in arid regions like texas or arizona that's a big issue so yeah if the hyperscalers solve the water thing that would go a long way towards the average person being more accepting of it but then the power thing still exists and so we know that power dispatch is the most valuable thing for a data still supply constrained and so people's power prices are going to go up until that gets solved
Speaker 2over the next five six seven years david what do you think happens here as you said you're an investor and it's a fascinating perspective you have what happens here i'm very naive what happens with data centers yeah like do we see a continued protestation pushback from yeah yeah i think we do i mean we're
Speaker 1seeing it in real time in our book the data centers that have power and that have permits are becoming so like literally we have this situation in our book where our data center sites are up 50 percent
Speaker 2from where they were like six months ago can i ask what percent of data centers do you think will fail to get up and running despite having been built and this could be permitting it could
Speaker 1be power it could be whatever yeah i i am not an expert in this in terms of like total number that have power total number that have permits etc so i'm not going to be able to give you an answer that is going to sort of satisfy the question but i will say that enough are not happening that the power companies are coming to those who do have permits and saying, we can get you power sooner than we
Speaker 2thought. That's literally happening. And just so I understand, the bottleneck on those that aren't is permitting. It pushed back from locals. What's the one thing? Yeah, it's permitting.
Speaker 1Permitting. Yeah, it is now. And that's something that didn't exist six months ago.
Speaker 2And just so I understand again, I'm dumb as rocks. Why is it so difficult to get permits for these?
Speaker 1Because the permitting boards are governed by the citizenry and the citizenry is putting signs up in everybody's front lawn saying, we don't want this, right? So if those people want to get reelected, then they've got to say no. Do you not worry that this doesn't happen in China? It's just a free for all. Well, I don't think that it does happen in China because they don't particularly care. They just build it where they need it. But I mean, it's a bigger issue. Honestly, it's a huge, massive issue in the UK. It's like, by far a much bigger issue in the UK than it is in the US on the permitting front.
Speaker 2What are you talking about? We're not allowed to go outside or move a bin, let alone build a data center. That's my point. That's my point. So we have a permitted data
Speaker 1center site in the UK and it's worth a lot of money simply because we have a permit.
Speaker 2Are you bullish on Europe, given what you just said there? No. Because of the permitting, because of...
Speaker 1Yeah, because of all of it, because the defense structure... Because of Russia, because of behind on AI, because, because, because. Yeah.
Speaker 2Would that prevent you allocating towards European managers?
Speaker 1No. We have allocated to long short managers in Europe precisely because I think there are going to be some companies that win and some companies that lose. But I will also say that some of our bigger macro hedges are on European indices. So...
Speaker 2David, I could talk to you all day. I'd love to do a quick fire answer. I say a short statement, you give me your immediate thoughts.
Speaker 1It would be like highly dangerous for me.
Speaker 2I don't know why. We've gone to Chinese permits. So trust me, the quick fire will be like a piece of cake. What have you changed your mind on in the last 12
Speaker 1months? Software was one. So software, we kind of leaned into pretty hard. We also took energy off at around the same time, sort of with the advent of the US-Iran war, the Strait of Hormuz bit, when crude kind of went north of 100. We took a lot of our energy length off. We did add, too, private equity sponsors in sort of like March, April-ish. So we don't really like private credit, but we do like the private equity sponsors. And so we've allocated more in that direction.
Speaker 2What asset class do you think is overhyped today? Private credit, because it's easy. Why do you not like private credit? I'm not in it. I don't understand. Yeah, I'm not in it and I don't understand either. But is it just shit returns? I remember I had a girlfriend who did private credit and she told me it was like crap returns. I don't understand. I don't understand. I don't understand. I don't understand. And I listened and I was like, yeah, you're right. It is crap returns.
Speaker 1Well, I think effectively what is happening is that you have credit exposure in companies that looks and acts a lot like equity to the downside, but you don't have upside equity returns. And so I think the risk reward profile is kind of off, right? So we prefer equity to that.
Speaker 2What other endowment fund do you most respect and admire because of their build out? And why them? Brown, without question.
Speaker 1I just have like a ton of respect for Jane and the team that they have built there. I mean, it's also the case that their returns are better than ours, at least over the last 10 years. I think our returns might be better than theirs over the last five years, but we've got a lot of wood to chop to, you know, kind of catch up to where they're at. They are what I would describe as real investors. They'll do things that take a lot of courage. I'm not saying that they're riskier, but they're thinking through the risk return profile of things. And like placing, but they've just done an extraordinary, extraordinary job. And not like I know, Jane, we talk and chat and whatever. I just utmost respect for that team.
Speaker 2Which fund are you not in that you would most like to be in? We mentioned some of the big names. Probably Benchmark. Be the same for me. Yeah. Ton of respect there. Final one for you. What are you most excited for in the next few years?
Speaker 1I do think that biotech is going to be even more impactful over the next 10 years than it has been over the last 10 or 20 years. So we're spending more time on that. In fact, later this week, I'm headed to a biotech conference and then again in October. So biotech is something that we're actually spending a lot of time on. We certainly have like a lot of biotech exposure, but we're wondering if we should have more even. It seemingly is less correlated with, certainly the science is less correlated with markets, but what scientists are doing these days and actually like solving. Diseases as opposed to simply treating symptoms is extraordinary. So biotech certainly is something that's like kind of high on the list and that we're spending a bunch of time on. Aside from that, like from a personal perspective, I'm really excited to see, you know, our team, our office build out over the next three years. As I've done this, I think that there is really a major inflection point that happens when you are $1 billion. Going to $5 billion. And we're kind of like right in the middle of that. And so we're dealing with all of the issues around, you know, how do you grow a team? What systems do you set up so that when you're at five or $10 billion, like you can actually keep track of everything. How do you systematize things so that this is a self-perpetuating office, et cetera, but retain the creativity to continue to do the new things that you've done in the past to get here. There's a lot of decision-making that has to go on between one and $5 billion. And I didn't really appreciate that until kind of being in the middle of it over these last couple of years. We're sort of like halfway through it, but I kind of think in the next two to three years, we'll kind of get out to the other side and then be like off and running. So that at a personal level, that'd be tops for me.
Speaker 2David, I've so enjoyed this. I'm very grateful to you for putting up with my varying questions, naivety in certain cases, but I've loved it. And so thank
Speaker 1you so much for joining me. Yeah, no worries. We're down here in central Texas trying to do a good job. So thanks for having us. Thank you. Thank you. Thank you. Thank you. Thank you.
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