Building 'The World's Alternative Investment Marketplace' with Lawrence Calcano

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On Apple, Spotify, YouTube, or wherever you get your podcasts. Bloomberg Audio Studios. Podcasts, radio, news. This is Masters in Business with Barry Rittholds on Bloomberg Radio. This week on the podcast, wow, another great conversation, Lawrence Calcana really has built I capital since 2013 into what's become the dominant financial technology platform for alternative investments for wealth managers, for advisors, for banks. I found this informative and really quite interesting. And I think you will also, with no further ado, my discussion with I capital CEO Lawrence Calcano. Thanks, Barry. It's great to be here. It's great to have you. Looking forward to this for a while, before we get into your time with I capital, I want to sort of work back through your career. Starting with, you get a bachelor's from Holy Cross and an MBA from Dartmouth Talk. What was the original career plan? Boy, I don't know that I had one coming out of the gate. My dad was raised in an orphanage. His dad had died when he was two. And so he was in an orphanage, he was 18, he went into the army, and then he came out, and he had to sort of put himself through school. And so he didn't have a regular sort of path that would sort of lead him to say to me as a teenager, here's the way to do it. And so he was learning, and I was learning a little bit. I was a hockey player and I did get recruited to Holy Cross to play hockey. And when I was there, I was an economics major and a theater minor. I spent a lot of time doing theater there as well. And then I went off to Morgan Stanley and that was a really interesting decision because I was in a professional play and had sort of been asked to be in a second play. And I had a little bit of a career crisis, if you will, early on in terms of what was the first play? It was called the Murder Room. So James Sharkey Slapstick play and I played a young Texas millionaire who was engaged to a wealthy British woman and the play takes place at her father's manor in the UK. It was full of sight gags and jokes and so forth. On Broadway or off Broadway? Yeah. Anyway, it was a lot of fun. I was offered a role as a painter in the Diary of Anne Frank as a follow-up. And I had also at that point gotten an offer to go to Morgan Stanley and I was sort of in an early trade-off mode and ultimately figured I needed to eat and had a lot of student loans and I decided to go off into the world of finance. So you spend a few years at Morgan Stanley, what were you focused on while you were there? I was at Morgan's Finance. So we were both helping SNLs, the race capital, do M&A and also structuring some of the new products like some of the Genie May securities, Fannie May securities, Remic, CMOs, things like that, a lot of the structured type investments. This is late 80s early 1980s. Yeah, 80s, 85 to 88. And then I put in one application to Business School, a good friend of mine who was an analyst before me, left and went off to talk and visited him. I had an offer to stay on it at Morgan as an associate but decided that after my weekend to talk, that would be a good thing for me to kind of stop, reassess, figure out what I wanted to do and I went off to talk. So I have to ask this obvious question, is it a whole industry helping students figure out which is the right schools for them, their first school, their safety schools, their reach, it's a whole side industry, you applied a one MBA school. I applied to one MBA school and part of the reason for that is I had accepted the job to become an associate and I went off to the visit as I mentioned and I just had this sort of feeling like I was making the wrong decision. I just staying was the, I loved it was a fantastic firm but I just had this sort of sense that maybe that wasn't sort of the right thing to do and going off to Business School for two years would be the right decision and I loved it. I mean, it was an incredible two years time on the board of talk. But okay, but why just applied on one school? If you're deciding, hey, this path is exactly how I want to get a MBA, if you're applying a Dartmouth, you could apply to Stern, to Columbia, to wherever. Why only one school? You know, I just was sort of wrapped with it. You know, I went up there, it's a small school. When I was there, there were 160 or so in the class, it's very focused on team, you know, study groups and teamwork and so forth. And I, it's hard to say, I just felt really like it was the right place for me and, you know, I wasn't too worried about it if I didn't get in. I was going to become an associate of Morgan Stanley. So it wasn't like I had, you know, it was putting all your eggs in one basket so it was really interesting. How did you end up at Goldman Sachs was that at while you were in Business School or afterwards? Yeah. So when I went to Business School, I sort of said to myself, I'm going to think about all the different things I can do. And after about, you know, two months, I said to myself, you know what, I really did like finance a lot and I want to go back there. And so I applied for summer internships and had a few other ones. I did, I applied to all the summer internships and obviously coming out of Morgan Stanley was pretty helpful to my candidacy. I ended up getting an offer to be a summer associate at Goldman, which I took and was fortunate and pleased to have an offer to come back on post graduation. Which I did and spent obviously a long time there and had a very, very good experience there. So I'm really curious. There's such large and yet such different firms. What was the culture differences like? What did you learn from each? Yeah. So they are different. And both by the way, you know, there are a lot of different ways to skin the cat, right? You know, Goldman had a very team oriented culture. And I think Morgan Stanley does too, but Goldman, it's sort of right there in front of you. You know, they've got 14 business principles. The first of which is our clients come first. By the way, you think about one of the things you learned early on in your career. There were several things from that experience that really stuck with me. Starting with business principle number one, your client's interest always come first. And then secondly, broadly, just the importance of working as a team. And I, you know, my wife used to make fun of me because I would be in the office early. And if there were a party or some social event, I was always the last to leave. And she would say, dude, you don't have to actually be there till the end. And but it was just I was, I just, I loved it so much. And it, you know, I just thought that camaraderie was so, it was powerful, you know, smart from a business perspective. But mostly as a person, it was just fun. I mean, it was really fun being in that group of folks. So you end up co leading Goldman's global technology banking group was your focus on tech and financial technology, a deliberate or that just evolved organically over time. It's just evolved. I was a generalist in corporate finance, it was then called global finance actually. And my Morgan Stanley friends used to make fun of me and call it intergalactic finance. But it was global finance. And I did that as a generalist for a couple of years. And then I was asked to start the East Coast tech group, which I did. This is mid to late 90s. This is early 90s. Early is a third year associate. And I did it and it was great. It was sort of late 92 early 93. And you know, we started to win some business. And as you recall, the internet started to really kick in with Netscape's IPO in 95. And we went from having a really good business to being on fire and drinking from a fire hose given all that was going on with the internet. Really, really fascinating. So you're there right through the dot com boom and bust probably the most transformative technology of the last 30 years, at least before AI. What did that teach you about how capital markets operate the way investors behave? That had to be a wildly instructive era. It was wildly instructive. And you know, it was all go it was all happening so quickly. And as you recall, people were trying to figure out how do we even value these companies, you know? But there was one thing we used to we had a great team of folks, the research team, the sales people, the bankers, we all worked really well together. And we would go out and we'd sort of make presentations to potential clients. And we'd always talk about where we saw the market going, apart from valuation. So what did we think the adoption was going to look like? And we had these, what then was viewed as wild assumptions about internet adoption. At the time, people were afraid to put their card numbers in a computer to buy anything. Right? But what happened was, for a while, the valuations sort of kept pace and at times exceeded the sort of hysteria, if you will. But even though the valuations came back at the end of sort of middle one, the internet valuations came down, middle two, the contact valuations came down, the reality of what was happening was even wilder, if you will, than what our projections suggested. I.e., the adoption rate of the internet and how it would fundamentally change people's lives, the way they bought things, where they reviewed things, where they communicated with each other. It was so powerful. And we saw that wave, you saw the communications equipment wave, now we're obviously looking at a different wave. And for me, there are several massive lessons there, one of which is you're never safe. When I started the big technology companies were called deck and Wang, you remember those companies? Oh, sure. Probably most of your. Wang, the computer. Not Wang, who owned computer associates, Wang Computers. Wang Computers, not Charles Wang, right? That's right. So, those companies all got replaced, you know, first by client server, then a lot of the client server companies got displaced with the internet. And now you're seeing another interesting potential risk of displacement. And I think one of the big things is you cannot be afraid of new changes in technology waves. You've got to adopt it. You can't, by the way, some companies, if you remember back when Amazon was growing and, you know, many of the borders, the bookstores, the music stores, etc., you know, hope is not a strategy, right? You can't hope this is going to go away. You've got to adopt it, even if it means you've got to change your business. And if it means your business model has got to sort of change and maybe your margins aren't going to be the same as what they were, you've got to adopt a new technology. Now, the one thing I would say is, is always takes a little longer than people think. You know, it's not like you snap your fingers that the hype is always ahead of the reality. I think there's a little of that right now. But AI is a massively important trend. We're spending a lot of money on it as our lots of companies. But I think you've got to be willing to sort of adopt or run the risk of dying. You know, if there's any lesson to be drawn from Elon Musk and Tesla, it's either, or maybe the lesson comes from Amazon and Jeff Bezos, that your margin is my opportunity. And if you don't pivot hard, they're going to come along and eat you lunch. It happens so regularly. Yeah. Michael never stops, never stops turning. So at what point did you decide, hey, I could do a lot with this technology in various platforms. What led you to move from Goldman to helping to build and lead eye capital? Well, the real story is I laughed in '07. And with one of my former partners, we were going to start a technology buyout fund. You may remember there were some events in '07 and '08 that were not too pleasant. Don't really recall. Every GFC. Oh, that. Yeah, it reminds me of the Leslie Neilsen joke in airplane. I picked a bad month to stop stiff and glue. It was a little of that. We went off to start a private equity fund in the middle of the GFC. So you should have started a distressed asset fund. Probably. We weren't smart enough to figure that out. But we, so anyway, so we put that in pause. And, you know, actually, it was a little bit of an unplanned cleansing in a sense that I coached my kids football teams and lacrosse teams. And, you know, I worked kind of from home. And it was actually very exciting. Did a few entrepreneurial things. But then with a great group of folks, we looked at what was happening in the independent space. You know, space you obviously know quite well. We saw a lot of firms, a lot of advisors sort of going off and starting their own firms. And that trend was significant. There were, you know, hundreds of billions or early trillions of dollars that were now being managed by these independent RIAs. And one of the things that we looked at was almost by definition, the biggest firms, the firms who were leaving were the firms with the largest asset bases and generally speaking the largest clients. And those clients typically invested in ALTS. And so as we thought about it, we thought, meaning like family offices, ultra-hyde network. Yeah. Like, think about some of your clients and what types of products they're interested in buying. So when you leave the wirehouses, did a phenomenal job and still do of providing outstanding products, support services, they do a great job. And so when somebody leaves to be independent, they don't have a platform. So we felt like we could create a platform to help advisors have access to ALTS in the right way. And it's different because at that moment in time, there was no technology. Investing in ALTS was a highly manual process. To a large degree, for a lot of firms, it still is. It doesn't seem like the various funds all play well together. Yeah. I think there's a big, and we'll come back to this experience point. But we felt like firms that were independent really needed a technology chassis. They needed access to product. They needed education, diligence, and they needed a technology platform. We felt like we could build that end-to-end, not just the diligence or not just fund sales or whatever. It was the whole end-to-end solution. And we started to build that out, and we realized that it was something that clients really needed. Another really interesting thing that we found out along the way, and I would say this was not a pivot as much as an expansion, we had assumed that the wirehouses had absolutely everything they need because they knew every manager in the world. They had close relationships. What they didn't really have at the time was much technology. They had a lot of people who were doing a great job serving advisors, but they didn't have technology. And so we felt like we could offer them a full technology platform. And we basically sort of rethought our role, if you will, in the ecosystem, to be one where we were going to serve advisors. Wherever and however they chose to practice, we wanted to be able to serve them end-to-end. And that's allowed us, I think, to be able to serve advisors at the wirehouses, advisors who are RIAs or at IBDs, and really help create a great experience for them and for their clients. But we continue our conversation with Lawrence Calcano, CEO and Chairman of I Capital, discussing how he built the firm out to a trillion dollar platform. I'm Barry Rittholtz, cheer listening to Masters in Business on Bloomberg Radio. As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis and powerful tools that help you connect the dots. Visit bloomberg.com/podcastoffer to learn more. My extra special guest this week is Lawrence Calcano. He is the chairman and chief executive officer of I Capital, where he has been helping to build the firm since 2013. They now service over a trillion dollars in client assets on behalf of advisors and other professionals. So how should a traditional 60/40 investor think about some allocation to private equity, a private credit? How do they access your platform? Is it directly through their advisor? Tell us what the process is like. Yeah, it's really, it's very much an advisor business. We are very focused on helping financial advisors serve their clients. It's not a B2C model. It's a B2B2C model. And so really all the clients at I Capital are advisors. Endor obviously the GPs that are trying to reach those advisors. And so for financial advisors, if they're large, we can build a whole white label capability for them. So they can in effect have an operating system to run their all structured investments or a newities business, as well as the data aggregation that they have to do for clients with information that's everywhere. For advisors that are maybe a little smaller that don't have sort of a persistent need, they can come to our marketplace and see a menu of hundreds of funds where they can avail themselves of those funds for their clients. Really, really interesting. So I like the description of I Capital as the world's ultimate goal. turn-alive investment marketplace for advisors and wealth managers. When you joined in 2013, what problem were you trying to solve? We were trying to help the advisors who had left, as I mentioned, left their homes to start off their new businesses and we felt like we could actually create for them an investment platform to allow them to be able to service their clients, consistent with how they had previously served them. So the part of the problem we've seen with alternatives over the years, they all seem to be a slightly different widget. They don't all fit on a platform easily, especially you have to onboard the assets and align the capital with it. You have to go through subscription documents and capital calls and custodian and performance reporting and then all the analytics. They all seem to be a little different and it's a big lift. How have you addressed this issue at ICAPI? So we think technology is essential to actually creating an experience that allows you to deal with all of those things effectively and in a way that will be encouraging to you to do the business with your clients where it makes sense. So everything from what happens before you make any decisions. Education may be you as an advisor on the asset class, maybe education for your client, the tools to help you build the portfolio research to help you learn about funds. And then once you've worked with the client and developed a portfolio perspective, tools to help you subscribe and then automation to help you manage all the things that happen post investment capital calls distribution, redemption, transfers, reporting, etc. And help create an experience that as an advisor will give you time back to serve the client and spend time with the client. We feel very strongly about going through advisors because we feel like you know, there's so much about a client that an advisor will know that a platform will never really be able to know, you know, what is their real feeling towards your liquidity? You know, I think one of the issues the industry is dealing with today is the question of ill liquidity and people's expectations about that. Advisors have a better perspective and a deeper perspective on how a client really feels about that. So we want to make sure we're partnered with advisors in bringing the solution to the client. So I'm glad you brought that up because every time there's some issue with ill liquidity, it seems that people don't seem to really understand what a lockup means. It should be fairly self-explanatory. We saw this a couple of years ago with BeReat, where which part of seven-year lockup was confusing to you? It's always, and I know what happened in 2022, the Fed raised rates and people thought, hey, let's get out of illiquid real estate before the Marx reflect the reality of pricing relative to rates. But that's not how private investments work. How do you educate investors and their advisors as to what illiquidly means? So look, I think it is a journey. There's no one answer to that question. By the way, we do, we spend a ton of time and energy on education. And as do most of the GPs in our system, when you look at the documents around some of these funds, it isn't unpaid 98 in small print. The liquidity rules, if you will, are on the front page. I think the reality is, people want to hear what they want to hear. These are illiquid securities, whether illiquid investments, whether they're wrapped as a 3C7 private fund, which are clearly illiquid, or they're wrapped in an evergreen wrapper, registered fund. The underlying investments are still illiquid. Now, some are our short duration and others, private credit is short duration than private equity or real estate. But the fact is that private credit investment is still an illiquid investment. The problem I think is when they get wrapped in a wrapper that says you can sell up to or redeem up to 5%, that confuses people. It confuses people. And I think when the industry uses terms like semi-liquid, it's really, I don't even know what that means, semi-liquid. I always think of that 5% gate as widows and orphans clause. If somebody is suddenly no longer a suitable investor for this due to the person who made the investment passed away, now the wife and kids can get out of it. It shouldn't be, oh, I could sell 5% of quarter for as long as I want. People should buy these, make these investments because they think they're going to provide medium to long-term, positive impact in their portfolio. If you're buying it to get return this quarter or next quarter, it's probably not the right investment. You're an, I'm not a financial advisor, but you need to buy these things with the right duration in your mind. And that's not a short one. The products do provide what I think of as liquidity features, opportunities if things change in your life to potentially either redeem all of it if there's not a big queue or redeem up to 5% if you need to. I think that's a flexibility and a liquidity feature in the wrapper, but it doesn't mean that the product is liquid. And people should invest thinking that these products are going to solve an investment need they have that's medium to long-term, not short-term. So let's talk a little bit about the demand for this product. We've seen at least on the institutional side flows into all, now exceeding a trillion dollars a year. As that scales, what do you think are some of the challenges in bottlenecks for advisors to allocate more to privates? So I think education is still a very important issue for advisors. And if you think about where we are, a lot of the advisors in the mix have been doing it for a while. There's still a lot of advisors who haven't really gotten into these products yet. And so they're going to need more education. 1.2, how they invest is probably going to be different. So for example, a lot of advisors use models with respect to their liquid portfolios. We believe that models will be a very important way in which people invest in alternatives. And that might mean models of just alternatives that get married to an otherwise liquid portfolio or models that include both liquid and illiquid investments together. We have brought both those types of products in partnerships with some managers into the market as well as partnerships with the infrastructure players. But I think models will represent an important way in which advisors allocate client assets to alternatives. So I've been hearing more and more about interest overseas in a global alternative platform. What do you think is driving the demand internationally versus what's driving the demand here is the same thing or is it a sort of different approach? I think it's the same thing. The adoption is a little bit behind the US adoption. On our platform, in the all space, we have over $65 billion of alternatives allocated from investors who live outside of the United States. We have half of our 20 offices are outside the United States. We think it's a really important growth area for the market and our business. But I think a lot of the same things that drive advisors to introduce these products to clients, potential for incremental return, portfolio diversification, etc. are the same types of things that drive international interest as well. Let's talk a little bit about end-to-end technology. I know this is more than just a menu of alternative funds. Tell us a little bit about your whole tech stack and what it provides for any of your clients. I think a lot of what people want help with out of the gate is just how do you build these portfolios? We talked about education, but how do you build the portfolio? How do you construct portfolios that help match what an advisor's, what a client's goals and objectives are? We've built technology to do that, which include all structured investments and newities along with all the liquid products that they might need. Then the ability, one of the things we've tried to do as an organization is not only build an end-to-end solution out for all, but do the same thing for structured investments, because those are important products for advisors and clients, as well as newities and insurance. What's happening in the market today, which I think is a really interesting and ongoing trend, is people are looking at the different types of wrappers, ETF wrappers, insurance wrappers, etc. Wrapped around things like hedge funds or private equity funds, credit funds, etc. And so being able to help advisors think about how the products should be structured, how could they address client needs is a really important part of what we're doing. And then as I mentioned earlier, just being able to automate the whole workflow is really critical. I'll make one other point as it relates to tech, and that is I think one of the issues for the industry is around data management. When you think about, we live in an ecosystem. When we first started the company, people used to say to me, "Oh, you guys are so disruptive." And I would always very politely correct them and say, we're not trying to be disruptive. We're trying to be enabling. There are a lot of infrastructure players out there that we're trying to help achieve their goals. We're not trying to, like Amazon did to borders. We're not trying to push them out of business. We're trying to enable them to participate. And I think one of the things that has to happen now in the industry is all the different big constituents have to work together to help support clients. That means administrators, transfer agents, custodians, firms like Icapital, advisors, GPs, we all work together. And I think if we can get all of our systems to be better connected, things like tokenization and blockchain will help with that. It'll end up paying huge dividends for the advisor and for the end client. - So it's funny, you mentioned disruptive in 2013. There was nothing to disrupt. It was just a series of private offerings and nothing really, no umbrella, no platform that really pulled everything together. - That's right, it was really a green field, which is why I say we're sort of enabling not disruptive. And the truth is that we're still scratching the surface. I mean, you know, BCG does a report every year and they look at global wealth. So last year late in December, they put out a report that said there's $153 trillion in wealth owned by individuals, okay? That's a huge number. It rivals the size of the institutional market. So there is a massive number of dollars that today, in the US, I think the estimates are something like two to and a half percent allocated to all outside the United States, it's even less. There's a significant amount of wealth that is going to be looking to build even more sophisticated portfolios. So tools, technology, AI, tokenization, all of these things have to evolve to create a great experience for advisors and clients to make the best decisions they can in the asset allocation world. - Really interesting. So let's stay with technology and innovation. You guys have built a number of fairly innovative technologies. You've bought, you've partnered. What is the calculus like? How do you decide whether you're gonna buy something, build something, or just partner with a provider in the space to build out the platform? - It's a combination of things. It's time to market, it's culture. You know, everything that we have purchased, we've made 24 acquisitions. Everything that we've purchased we've integrated. And to me, that's really important because if the goal is to provide an integrated solution for advisors and GPs, if you don't integrate the things you buy, you're not really doing that, point one and point two, if the people who join are an integrated, then it doesn't work either, right? It's not just about technology, it's actually more about the people. And so spending a lot of time on culture and trying to figure out how do you bring things together? How do you create what I often refer to as one eye capital is really critical? And I would say, as time has evolved, I was always very focused on culture from the very start when we were a couple of people. It's even more important than ever. And it probably continues to occupy a very significant percentage of my time and trying to get people working together, put people in the right seats for them to be successful, and creating simple ideas that people can rally around. I mentioned this earlier, clients come first, what is it we need to do to help our clients succeed? And everything we do, we have to do together. Those two things are really unifying to our culture. - So you guys did a big capital raise in 2025 that valued you at a pretty substantial multi-billion dollar level, what are you looking at for further raises, how are you deploying that sort of capital? Is it just build, build, build, and eventually you become the biggest player in the space? So we've announced a couple of acquisitions since then. We're about to close our acquisition of Hexcher. Hexcher provides an E app for newities. So as I mentioned before, kind of the complete verticals. So that helps us complete our annuities vertical. So M&A will continue to be important sort of use of cash. And we continue to sort of actively look at what's out there. We continue to grow organically, but the model is self-financing. So we don't need outside capital to run our business. I'm a believer though, when you think about, we talked about the duration of these assets. When we talk to financial advisors, financial advisors have to know that we're financed to be around for a long time. And so we've tried to finance ourselves in a way that our partners can look at us and say, they're going to be here to support me. And so a lot of it is just making sure we have a strong balance sheet to support our clients. It's always interesting when we see these big private entities go public in the alternative and private space. How do you think about that? How do you think about the black stones and carl aisles of the world, and appalows and whoever else? Well, look, I think going public allows firms to have access to capital, to have growth, leverage their growth, provide sort of secondary markets, if you will, for employees and other investors. I think for us, we spend very little time actually thinking about that other than wanting to make sure that we run the company with a discipline of a public company. We get our quarterly reports turned around, our monthly reports by the second day of every month, quarterly reports by the third day of the new quarter. And we turn the year end results in a fair spare time as well. And so the process of being public creates some disciplines that we want to make sure we have. But it's not something we're that focused on. There's two sides to every coin. When you go public and the stock is going up, everyone's really excited and everyone's really happy. When you go public and you have massive corrections, which we live through pretty regularly, I'd say, and the stock goes down. Now, you've got to deal with the opposite of motivation. There's concern and so forth. And so you've got to make sure your employees aren't staring at that I was going to say quote-tron, but only you and I would know what that means. It's so funny. I had a buddy whose firm got bought by Yahoo in '96. And he was telling me in '99, people just refreshing the screen console. It's all they did. It's so, I think there's an element to it that's super unproductive. So that's why we're in no rush to do that. We want to make sure, as I said, we have a strong balance sheet, strong capital structure. Equity is an important part of our compensation for everybody. 100% of the employees have stock at I capital. To me, that's a big cultural point in terms of bringing people together. But you need to, if you're going to provide that as part of someone's compensation, there needs to be some opportunity for people to get some liquidity. So over our history, we've provided four such opportunities for people to get a little liquidity. And as long as we stay private, we'll continue to try to find a way. It's limited, of course. But we try to find a way for people to get some liquidity from their equity holdings. Really interesting. Coming up, we continue our conversation with Lawrence, Calcano, CEO and Chairman of I capital, discussing how he built the firm out to a trillion dollar platform. I'm Barry Rittholtz, you're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Lawrence, Calcano. They now service over a trillion dollars in client assets on behalf of I capital. Since 2013, they now service over a trillion dollars in client assets on behalf of advisors and other professionals. So let's talk about what's going on today. Obviously, all of us have been very hot for the past 10 years or so, increasingly so. They've been in the news for other reasons the past few months. But let's talk about the underlying structural shift before we get to any of the noisy stuff that's going on. How are advisors and individuals changing the way they access alternative structured investments and duties, any of the products on your platform? Sure. I think if I can maybe make some divisions by wealth, the wealthier clients have tended to buy the private funds, perhaps they'll invest either directly if they can make a 20 million dollar investment, or if not, if they're a million, five million, or whatever, they'll usually come through a vehicle that will set up for them to access. And then we ask them to do that. aggregate that capital and we look like one large investor to the institution, to the GP. So the wealthier clients tend to invest through those private vehicles across the board. And we think from a platform perspective, the way you've got to build these portfolios, you know, if you have a credit in equity portfolio, debt and equity portfolio and you want to build them or rebalance them, you can do that with a few mouse clicks, right? With all, if you target an allocation, it's 10 or 15 or 20 percent, you've got to build that. So it's really important that you take time. It takes time in other words, it takes time. You need to make sure that you have sort of persistent access to quality product across all the strategies. So equity, credit, real estate, infrastructure, et cetera, hedge funds. And so our platform tries to provide that. But that wealthy individual probably use private funds to build it for the accredited investor. They'll probably use the registered funds to be able to build that. And they will either buy individual registered funds or they might buy registered funds wrapped together. That's something that we're seeing a lot of the market do today where they'll wrap three or four or five different funds together to give people an exposure to maybe it's equity. Maybe it's a growth oriented product where there's sort of a buy out, a growth, a venture kind of component or maybe it's an income oriented product where you've got credit and real estate or maybe it's multi-asset where you've got all of that sort of wrapped together. We think there's lots of different ways. Every individual has a different set of needs and objectives. And so we think it's really important that there's a lot of flexibility in the system so people can allocate precisely what's important to a given client. So what you're describing sounds fundamentally different from how portfolios used to be constructed. How significant are these changes compared to, I won't even mention the 90s, but the 2010s? Look, I think what's happened, which is a good thing, is clients have access to more products to potentially meet their needs. Doesn't mean these products, by the way, are right for everybody. They're probably not right for a lot of people. But for those that have the ability to make these investments, the willingness to tolerate the liquidity we talked about before, these products provide more opportunities to build the right portfolio. You think about the public markets. I mean, you spend a lot of time thinking about them. I know there are probably 150,000 private companies with sort of EBITDA or revenues greater than $100 million. And there are 5,000, 4,000 public companies. The private markets are so much larger than the public markets. As you know, the public markets are increasingly dominated by a small number of stocks. And so accessing the private markets gives you access to a much broader set of possible investments. Again, not right for everybody, but for those who are looking to build more involved portfolios, there's an opportunity that the private markets enable you to pursue that you just don't get by buying just stocks and stocks. So that's one compelling reason. You can access companies you wouldn't get otherwise. What are some of the sell-us-on-the-other reasons? Why else should an investor and an advisor who is alt-curious? Why should they explore this space? Well, look, I'm decidedly not trying to sell anybody on anything. This is to be clear. But I think it's like anything else in life when we're all better off when we have some more choices. Now, by the way, there's a way in which those choices can be bucketed to make it easier for you to go through that decision-making process. But I think if you have more choices to build a portfolio where you're seeking longer-dated returns, you're seeking more portfolio diversification, these products provide you with more flexibility to create a diverse portfolio, potentially have a higher returning portfolio. But ultimately, every person's got to make a decision that they can live with the products. So during the 2010s, we had 0% interest rate, Zerp and QE and all that fun, fed stuff. And I think that's where private credit really caught the attention of a lot of investors and a lot of advisors. What do you mean, my bond portfolio is yielding 3%. When you're trading off a little liquidity and you get 5, 6, 7, 8%, that's pretty attractive relative to the alternatives. Okay, you've got to deal with the K1, which nobody likes. But still, your account will deal with it for double the yield you're getting in traditional treasuries or corporates. How has that moved from just straight up credit to private infrastructure, private equity, private real estate? It seems like that whole world has opened up dramatically. It has. I would say that a lot of the private credit investments you could look at are floating rate. And so they still can provide opportunities for excess return, real alpha, because of the way they float. It was interesting in the early part of the century coming out of COVID, this decade, you had people to your point very actively buying private credit. And then when interest rates went up to like 5%, some people were earning like 10 to 12% on their private credit investments. And so they were then looking not about private credit versus public credit. They were looking at private credit at 10 or 12% versus private equity. And it being shorter duration was that the right mix for them. And then right now we're seeing a lot more people focusing on equity as well. But you definitely had a period of time where private credit was very, very attractive. And I think where we sit today, I think a lot of people are very anxious to understand what the underlying credit quality is in these products. And I think there's certainly disruptive forces from AI that we've talked about. The industry talks about every single day. It's not clear to me that the existing portfolios are really in bad shape. I actually think the portfolios are likely in better shape than people think. Now, I've spent a lot of time trying to talk to various managers of both equity and credit as to what they're seeing in terms of adoption. And while everybody is working on how to implement AI, it's not like existing software vendors are seeing their businesses dry up. That's not happening. And a lot of those are the borrowers of these private credit assets. So we'll need to get more information over the next several quarters on where we are with private credit. But my guess is the portfolios are in a lot better shape than people think. So we could talk about navigating some of the headlines, but you mentioned AI. And now I'm legally obligated to ask you a question. What are the most meaningful near term applications of artificial intelligence within the alternative space? Is it administration and workflow? Is it identifying better or less great? Is it all of the back office? AI in your business? We have pilots going on across what we do. So if you take our tech stack, there are really two ways to think about it. One of which is the tech we use to empower clients and the technology that clients engage with. And the second is the technology we use to run our business. And there are big applications in both. And to give a couple of applications, when a manager comes to I capital to raise a fund, we build a sub-doc. AI can build that sub-doc for us very, very quickly. When a client comes to the site and wants to, they come to our marketplace and they want to describe to us what they are interested in and they hit toggles, et cetera. They go through a few steps to inform us what they're interested in. AI can do that really, really quickly. There are a number of ways, the way we collect data. One of the services we provide to clients is we help advisors aggregate client data because a client might have held away data in lots of different places that you want to aggregate so you can present a holistic picture to your client. How we get that data, how we retrieve the data, how we extract data from documents, and then how we reassemble AI can help drive a lot of that. So the applications of AI are sort of significant across our entire platform. Really interesting. And we've been dancing around some of the negative headlines. How are you helping advisors navigate that these days? For the most part, it's a relatively small handful of companies. Everybody knows their names. The cockroach theory has people waiting for the next GFC to unroll. We haven't really seen much like that. Well, I think this is such a smaller magnitude than the GFC. I don't think that we're anywhere near those types of concerns. You know, we're big believers in communications. I made a point earlier about how the ecosystem needs to work together. It really needs to work together now. In terms of helping people, you know, understand what's happening. I think generally speaking that the industry, and when I say the industry, I mean the asset management industry, has to be even more transparent today than ever before. And I think, by the way, that's a good thing going forward. I think the alternative asset managers probably need to be more disclosive, more transparent to clients over time. But I think the being out in front of clients, helping them understand, you know, the landscape and what's going on has been a big part of how we've spent a lot of time. And one of things we're doing now is to help is trying to bring the organ is the organise the industry to get people on the GP side working together. I talked about transparency, getting information, educational material, not promotional material, but educational material to try to help create, again, a better and deeper level of understanding about these products. So I've been hearing a little bit about convergence lately between public and private markets. You're known as dealing with the private side. Do you ever see a day where private and public both ends up on your platform, completely full wallet share, etc. I think for us, you know, we're really focused on helping people have very successful journeys with their private investments, their structured notes and newties, etc. And so I think the way in which we will interact with the public markets will be more around these model portfolios I talked about and collaborating and partnering with the GPs and other sort of more of the public company. People who either provide models or have a public company, a public investments and helping to create these model packages for investors to be able to invest holistically in a portfolio. I think that's probably how we'll play the public space in partnership and in concert with people who are experts in that area. It makes a lot of sense. Last question before our speed round, given all these major technological shifts, what do you think is going to help redefine asset management going forward? We talked about you mentioned tokenization. We hear about blockchain, AI, data analytics. What's the next big thing? Boy, I think the next big thing is the deep implementation of those technologies. We're still scratching the surface. Tokenization hasn't even hit private markets in any meaningful way yet. AI is same. So I think there is significant application of those technologies that will be meaningful. And I think really for the financial advisors, this reminds me 10 years ago when all the robots were coming out. There was this big debate, Robo advisors versus human advisors. I always thought that was a false choice. I always thought the best answer for clients was a great financial advisor who leveraged technology to create an incredible experience for their clients. I think the same is true today. The best financial advisors are going to not be afraid of technology. They're going to adopt it and they're going to embrace it to create an incredible client experience. That's how I think the market will evolve in a constructive and positive way. All right, so let's jump into our speed round. These are really quick answers. So people get a flavor of who you are, starting with who are your mentors, who help shape your career. I had a lot of mentors growing up. I always try to watch people and see what they did. There were several senior people at Goldman Sachs that I learned things from. I remember the head of investment banking once told me when I was like a young associate, he said the loneliest job on the planet is the CEO's job. So if you want to be a successful investment banker, make a friend of the CEO and be a sounding board and you'll have a good career. That was pretty good advice. But I remember the other piece of advice I got from another senior partner in banking was you always have to be intellectually honest. A lot of people are afraid to be intellectually honest because they're calculating what's happening in the room versus being true to what you think and saying it and not being afraid to do that. I've tried to really do that in all the things that I've done as I've grown on my career. Really interesting. What are you reading these days? What are some of your favorite books? I'm overwhelmed with work reading right now between what we're doing in our business and client stuff. I'm reading a lot of stuff on AI that sort of if I were to admit the honest thing is I keep reading new AI books about AI and technology, AI in general. There are a lot of incredibly positive things about AI. There are a lot of risks with AI and a couple of the books I've read recently were really focusing on the risks around unemployment, around control and governance. And when you get to natural intelligence when AI reaches sort of human intelligence, what happens then? So there's a really exciting and bright side and there's really a dark side that's going to need a lot of governance to protect all of us. A lot of good rails. So if you don't have time to read, you have time to listen to podcasts or watch anything. What do you stream? One of the, so that I'm married 33 years and say and honestly, my wife and I are just binge watching a series of shows. We've gone through the whole Yellowstone saga, the prequels and did you get to Landman yet? We finished Landman, Love Landman, looking forward to watching the Peaky Blinders movie, which we haven't seen. But probably when I get home, when I'm sort of when I put the work down, my wife and I tend to watch shows together. That sounds fun. Our final two questions, what sort of advice would you give to a recent college grad interested in a career in alternatives or investing? I would say, the world owes you nothing. This is by the way what I have several kids who have graduated college. When I said to them and I'd say to anyone at I capital or generally, the world owes you nothing. What you get in this life is a function of what you work for. I think that people need to be flexible, they need to have an open attitude. That, to me, at a given level of intelligence, that's what attitude makes the difference. It's funny, we all went through this work from home during COVID and now some people want to continue to work remotely. When you ask about mentors, a lot of the mentorship that I got, probably a lot of people got, was just being in the office watching people, listening to people. How do they act? How do they treat other people? How do they behave in meetings? That's stuff that's super valuable, the osmosis learning. You don't get when you're sitting in your apartment on a Zoom screen. Zoom screen is one-dimensional. Life is multi-dimensional. I'm a huge, some people in the company love this, some people don't, but I'm a huge work from the office person because I believe that that multi-dimensional experience is much more powerful and it's better for every individual from a learning perspective. Yeah, I couldn't agree more. Although I do love those Fridays from home, no, no, no, no. And final question, what do you know about the world of alternatives and investing in technology today might have been useful back in the mid-1980s when you were first getting started? I think, I think probably, I'll generalize that a little bit, is patience. I was sort of young and just hard-charging and so forth and as a lot of us are, but you just have to be patient. It's funny, I response our golfers and I watch golf, I love golf. And you see people, they bogey holes, John Rom, won the Master's of Fee years ago, he doubled bogey the first hole. I remember I was standing there watching it and I was like, it's over. It wasn't over. It was one hole and it reminds me of my youngest daughter graduated Dartmouth a few years ago and Roger Federer was the speaker. I recall that speech and it was really amazing coming from him. It was an amazing speech and one of the things he said is in his career, he's one, and I may get the number slightly off, 80% of his matches and 54% of his points and his point was it's just a point. And I think that's a huge lesson. It's just a point. It happened, you lost it, you won it, you lost it, you move on. I think it's great advice and advice I wish I had had when I was younger. Lawrence, this has been absolutely fabulous. Thank you for being so generous with your time. We have been speaking with Lawrence Calcano, CEO and chairman of iCapital. If you enjoy this conversation, well check out any of the 650 we've done over the past 12 years. You can find those at iTunes, Apple, Spotify, Bloomberg, wherever you get your favorite podcasts. I would be remiss if I can thank the crack team that helps put these conversations together. Each week Alexis Noriega is my My video producer, Sean Russo is my researcher, and a Luke is my podcast producer. I'm Barry Goodhulse. You've been watching Masters in Business on Bloomberg Radio.