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Ed Grefenstette

lines on the record: 109
first: 2025-03-24
most recent: 2025-03-24
sittings or episodes: 1
sources: podcast

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“We timed it pretty well because we began to invest during a great run up in the Chinese private markets. We peaked at a total portfolio exposure in China of 38% in late 2020, which is a big number. Today, as we sit here, we're about 19 or 20 percent. I was just preparing some date on that. And of course, some of that was the fact that the last couple of years we've had a reduction in the unrealized value in some of these holdings. But we also got a lot of liquidity. In fact, our portfolio in China over the last 10 years produced 160 million of excess liquidity, 160 million distributions over capital calls over the last decade in our China book. That's great. That shows the pipes work. So many of my friends in the business say the pipes really work to get the money back? Yes, we get the money back.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“My wife keeps track. I think I've made 50 trips to Asia since 2007. And when I took over his Dietrich book in 2010, our China portfolio was mostly growth equity, a little bit on the venture side. When Bill and I sat down, I told him, hey, we should really go all in on venture because there's a lot of reasons why that's going to be, I think, more compelling. And he agreed, and we did.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“In 2006, he began to build a little sub portfolio in China. He didn't believe US managers could parachute in. He only wanted to support local teams who had the Guangxi to get the real deal flow and understand the market. So he approached it in a thoughtful way two thousand six he said I'm going to invest a little bit with about 10 different GPs. No real track records here, so I'm going to learn as I go understand these people, understand how they perform, and then over time go deeper with a high conviction subset, which was to me very logical approach. So he began to go to China three, four, five times a year, week on end. And by the time I joined him in 2010, the China allocation was probably about six or seven or eight percent then, and I began to travel extensively too.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“But China was an amazing insight that Bill had, and I'll tell you the quick story on that. During these many lunches that he and I had, I think it was 2006. He had just returned from China, and his eyes were like saucers. She was very excited, and he leaned across the table and said Ed, now's the time. And I said for what? He said, I'm going into China. Hard on privates. I said, Really? I said, that's the dumbest thing I've ever heard, Bill. I said, the only way to make money doing that is invest, lose all your money, and then write a book about it. And he said, no, no, no, you're wrong, Refenstedt. Let me explain. And he went through his thinking.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, we're spending more time in Europe. I'm not as dogmatic as Bill was. So Europe is actually growing in focus. Didn't want to look at cum and hanging out.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you put together innovation, emerging markets, take out Europe and Asia, it leads to China. I'd love to hear more about your full history investing in China, how that's evolved to where you are today.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Perfect example today where intellectually a lot of CIOs know these valuations are getting unjustifiably cheap. But back to career risk. They don't want to walk in in front of their investment committee who have been reading these horrific headlines and inundated with bad news about the state of affairs and they just don't want to stick their neck out and they don't want to be told I told you so there's this tough dynamic but an important and new necessary underwriting around geopolitics. It used to be just a left tail analysis but now it applies to innovation as well. You have to think about geopolitics, how that affects where innovations develop and how it's sold. And on top of that supply chains to support it or even capital flows. It's a complicated environment right now. We're in the middle of re-underwriting that theme.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's an important question. And you're right. If you step back and look at the broad arc of globalization, you can really make the argument that when the Berlin Wall came down in 89, if you made any bets that were long on globalization, long on geopolitical stability, you were rewarded until a couple of years ago. So now it's especially challenging, we think, because as allocators, you've had this muscle that hasn't been exercised in a long time, and that is how do you underwrite the effects of geopolitics? How do you underwrite the effects of this movement from globalization to what you might call modern mercantilism with less cooperation and more competition? So we spent a lot of time thinking about this very issue. It's not easy because there can be screaming opportunities and China might be.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“That other large theme of emerging markets certainly was a lot more popular, say, 10 years ago than it is today. How have you thought about that allocation going forward and the potential revision of that thesis as many of those markets have not performed as well as the US?”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mostly biased toward the US. Most recently, I'd say last five or six years we've been really leaning in on the special situation subsector within buyouts because we think I don't want to make it sound like we're dogmatic, however. If we run across opportunities that we think are extraordinary and fit, I always tell my team the legendary football coach in Pittsburgh Chuck Knowle always said when it came time for drafts, he said always draft the best available athlete. Regardless of position needs, I went the best available athlete and we take that approach. So when we travel the world, we meet with three hundred managers plus a year. We have a lot of friends who are part of our network which help us filter before things go in the funnel. We run across people who are sometimes extraordinary in unexpected places and we'll dig in there.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Healthcare to consumer. We express that mainly through venture capital. And that venture piece is probably split evenly, roughly, between the US and non-U.S. Most of the non-US inventure is an emerging Asia and Latin America. A little bit in Europe. Bill always said Europe is the largest opened air museum in the history of man. So he's rather live in U.S. vacation in Europe and invest in Asia. That was another line of it. So trying to find opportunities that we think fit in that innovation theme. It could be across the globe and we spent a lot of time traveling trying to build ideas, connect the dots as one person asked about those concept of connecting the dots. I said, well, first you have to find the dots. Part of this is traveling and getting out and visiting people on the ground. On the buy outside, we've been”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Stepping back, we really take a thematic approach to investing generally. From our perspective, as Bill always said, the market timers Hall of Fame is empty. Okay, so let's pick some themes that we believe are going to play out over the next decade or so and try to find the very best, most talented managers to exploit those themes in the right parts of the world. So the two major themes as kind of course through our portfolio are innovation in all of its forms. And second is the broad opportunity set in the emerging and frontier markets. Innovation is obviously best expressed through venture capital. And that's the belief that even though we've had incredible innovation in the last couple of decades, we still think we're in this super cycle of very exciting stuff across from deep tech, obviously AI consumes so much of all of our conversations today all the way through.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if I take the 90 as a whole pie hundred percent, probably 55% of that pie is venture. And then the other is split evenly roughly between growth equity funds and buyout funds. We don't touch any real estate. We do very little in the energy space. It's principally traditional venture across a number of sectors. And then more traditional growth and buyouts globally.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's dive into this private program within the concept of wanting to invest in less liquid assets to be out on the efficient frontier. Where does that 90% fall and say venture, private equity, and other areas of the private markets?”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you'd think it would be in cash. Some of it is, but we have a fair amount of exposure in China, so we have a bit of a hedge play there in the other asset pool. But we have some long-only couple of hedge funds. And we actually have a component in emerging markets slash frontier market equities, but nothing in the S&P 500. So it's pedal to the metal.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which our trustees approve each year. That 3% spend is obviously more modest than most organizations. That's helpful as well.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Year and distributions and the second highest net distributions minus capital calls. And again, that was due to having a very diverse and a very mature book. So that's number one. The other way we're able to manage it today is we do have a line of credit, which is we have nothing drawn on it today, but it's equal to about 12% of our total NAV. So if we need to pull on that, it's available to us on a timing issue. And the other thing that allows us to operate at this very high level, which is all by design, is that we are not a private foundation, but structured as a 509A supporting organization under the code. As such, we don't have to comply with that five percent payout otherwise required, and we can pay out three percent of our NAV each year, which is the recommended amount in Bill's trust document.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Portfolio is very mature at this point. Your listeners might be wondering how this guy sleeps at night at 90% of liquid. But if you look at the dollar weighted average age of all of the partnerships we're in, it's about 7.1 years old. So we are as a portfolio out of the J curve. So I actually looked at this number just the other day. If you look at our last 10 years, we've gotten distributions of 1.4 billion dollars on capital calls of $1 billion. So that's $400 million. That's pretty much equal to our total distributions to our supported organizations, by the way. Because this May we will make our next annual distribution that'll take us to $400 million. So the portfolio is mature. Even this last year in 2024, to give you a data point, when the marketplace was facing a lot of strain around the lack of liquidity, we had our second highest.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was just trying to capture that additional return. And we didn't set out saying, hey, we should target 90. When I took over the portfolio from Bill in twenty ten, I think we were probably 50% illiquid. But the returns have been robust. We did not have in the last ten years any US public equity exposure except public positions in our private book. So that was the entirety of our U.S. beta. So the private actually continued to outperform the public in our book. So that stretched out. So we're taking the last five or seven years. We've been more careful and deliberate in terms of our fresh commitments to liquid strategies trying to get that number down.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“So 90% of liquid is a far extreme of what you hear about in a pool of capital like that. How did you come up with that number compared to a 50% number that is more common in some of the more aggressive endowment and foundation portfolios?”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“which is pretty much the upper threshold of my comfort. We'd like to be about eighty or eighty five, but it's been a first class problem. We've gotten there through performance.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“When I think about it and I talk about the people, I think private equity is true equity return. And public equity is a discounted or a lower expected return. The reason for that is simple, I think. There's no free lunch in this world. I think we can all agree on that. And you pay something for the luxury of in a public security owning a fractional share of a publicly traded company. You change your mind, you press a button and T plus two or three, you have cash on the barrel head. That's an incredible luxury. You stop and think about that. Would you pay for those lower expected return? So over long periods of time we should continue to enjoy higher returns from the private side. Bill summed it up by saying Ed, liquidity isn't free, and therefore you should be selling your liquidity to the market as much as you can. But there are limits to that. As we sit here today, we're 90%.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Goal is exceptional outstanding long term performance, and that's ill-defined. But in my conversations with Bill, we always said, well, take some broad equity global index. And we ought to be outperforming that by $200 or $300 basis points net of everything over long periods of time. And we've done that. In terms of the actual construction of the portfolio, Bill left that largely to the CIO except to note in his documents that he felt that the private equity universe would continue to offer compelling risk adjusted returns. That's a point about which I agreed with him totally. There's logic to that. It's interesting to me, in fact, that a lot of investors, when they talk about private versus public investing, talk about private equity should generate a premium return over public equities. I changed the verbiage a little bit on that.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Question. And it's very explicit in the Declaration of Trust and Bill's statement of philosophy, the principal responsibility of the trustees is to evaluate the CIO and present. But it said it should be focused on exceptional long-term performance. So in the end of the day, Bill said, listen, you got to give the CIO enough rope, but you might have to hang the guy or gal if they're not doing their job. So the expectation is very, very high. Fortunately, we have been performing, as far as we can tell by all reported surveys, our returns are number one for the trailing ten, fifteen, and twenty years. But now we're being tested because this short period here with the S&P, doing what it has done over the last thirty odd months and the private assets resetting a little bit, this is testing the conviction. This is where the fortitude risk comes out and is front and center.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then the five, and then the three, and then the one. And I have a big line across the top where the first column says less noise. And there's a big red arrow going across in the far right it says more noise. We always, of course, address the short-term performance, but we just keep reinforcing the idea, listen, you can't possibly target a performance over a long period that outperforms everyone else unless you're willing to embrace an uncomfortably idiosyncratic portfolio. And part of that has to be a willingness to look wrong some periods of time, simply because you look totally different during those periods. So it's something you just reinforce, reinforce. I can't say it's easy. It's hard, especially when there's turnover in trustees, but we try to keep it consistent. We try to keep our thoughts well articulated in paper.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a good question. I think it's just a question of degree. If you read through our documents, we very clearly lay out we believe over long periods of time illiquids going to outperform liquid. Smalls going to outperform large, equities are going to outperform fixed income. We're really pushing the bounds of that. For instance, we have not had a direct exposure to the USS&P 500 or any US index since 1997. This is not a portfolio that looks like anyone else's. So we explain what we're doing and why. And I think that's a big part of it, but it requires constant reinforcement. Some things are trivial, some are more serious. There's a trivial thing that we do whenever we present performance information. I always start with the first column being the twenty year return. And then the fifteen.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are a fair number of investment offices that do have delegated authority. What's different about how Dietrich is set up that's allowed you to pursue this quite different investment strategy relative to the other people who do have delegated authority?”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“I say, you're going to put that in writing and say, it's in the document. That is one thing that Bill thought was important to separate to the extent possible the oversight and governance from the actual investment management. Because I serve on many investment committees today. You have great experience, of course. And you know that career risk aversion is a very powerful and probably not something a lot of people admit to. But career risk aversion derives a lot of behavior. And Bill felt to the extent you could put some distance between the asset allocator and the oversight or governance group. You had a shot at allowing the CIO to be more bold. Because Bill always said boldness is necessary for outperformance. Undoubtedly that is true. You need to be able to have the flexibility and the latitude to build something that doesn't look like everyone else.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, he put in the controlling trust document the fact that he wanted the trustees to delegate investment authority to the CIO and CEO of the foundation. That's unusual. We do not have an investment committee. I remember back when Bill was recruiting me from CMU, I asked him what you would have asked Ted. I said, hey, what's the governance structure going to look like at the Dietrich Foundation? He said, Ed, I served on many investment committees. Investment committee should always be an odd number and three is too big.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“He first decided that everything had to be as well documented as possible. If you had a shot at persistence and sustainability of this, it had to be well articulated and rooted in thoughtfulness. And as he always said, clear writing reflects clear thinking. So when he crafted his charitable trust document, alongside of it, he wrote a sixteen page statement of philosophy, which was his explanation of why he wanted to pursue a high growth strategy for the benefit of the supported organizations and how he wanted to go about doing that.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“I still don't know what the last page is going to say yet, so we're still in process. But he wanted to push that. To him, that made a great deal of sense. But you couldn't do that unless you had the governance support around it.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“The greatest opportunity for an imperpetuity pool was to be as illiquid as possible. He wanted to push the envelope of asset allocation. That was not something he thought about without study. He looked at academic and financial theory. Many of your listeners are familiar with mean variance optimization approach to portfolio construction. That is, you're trying to find an efficient frontier of an ass allocation where you can maximize return for a given level of risk or said differently, minimize risk for a given level of return. And anytime you use the mean variance optimization model, unconstrained, it pushes you entirely into privates because that's the historical return profile. And Bill's like, that's for me. I want to see if I can do this. And when he's first telling me.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, first, everything he did. He dove in with both feet and read everything he could and studied other foundations, and I think he really wanted to avoid at the high level some of the other notable foundations that have become politicized, as he would say they were got hijacked by rogue trustees generations later or decades later. And really the founder is probably spinning in his grave. So Bill wanted to avoid that. One of the things he wanted to do, and this is a structure issue, was to predetermine the beneficiaries. So he had some control from the grave. That was one piece of it. But certainly back to the investing side, he really wanted to tackle that thorny issue of how you maximize the advantages of imperpetuity pool capital and how do you address the governance challenges of doing that because from his perspective and his experience.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“First of all, he wanted very much to give back to the community from which much of it came and where he grew up in the loved western Pennsylvania. So he started to have designs around who was going to receive most of the funding. But then having served on twelve different boards in Pittsburgh and seven different investment committees and chaired a few of them, he was really driven by the opportunity he saw to improve on the model, so to speak, improve on how long term capital might be managed in order to optimize the advantages you have of an imperpetuity pool of capital. So that was his early thinking. How do I build a better mousetrap around managing in perpetuity capital? And that was really, I'd say in the 90s his principal focus.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe that meant a little different thing back then. But it resonated with Bill. Bill sat there saying, I'm going to have a lot of money when I sell my company. What am I going to do with it? How am I going to handle that wealth wisely and responsibly? So before he sold the company, he put all the stock of Dietrich Industries into a trust. So he had made the commitment there that the proceeds would go into the trust designed to fund the foundation upon his death. And that's what he did. So he started with $170 million in the trust in 1997.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“He was greatly influenced in all those books. They were all history, biographies of great men and women, political science. And Andrew Carnegie was a focal point of his study. Carnegie wrote an essay in eighteen ninety nine, I think, called The Gospel of Wealth, either in that or in a subsequent piece Carnegie wrote something like It is more difficult to give away wealth intelligently than to make it in the first place. And now let's remember that when Carnegie wrote that insider trading was legal, okay?”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“In production in nineteen states and four or five hundred million a year in revenue. So he really had a success on his hands.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, when he came out of Princeton, his father was a serial entrepreneur and had most recently started a company called Dietrich Industries, not far from Pittsburgh, and as Bill described it was a horrible business model. His father had started this thing as a lumber and steel distribution center trying to buy scrap steel, cheap from the mills in Pittsburgh and then punch them in the valuable small pieces. It was horrible. But Bill was trying to keep it afloat, eventually took over in the nineteen seventies Bill really landed on a product that he bet the farm on, which was non load bearing steel studs. So really light metal roll form steel that would hold drywall up. And Dietrich Studs became wildly popular. And that business just compounded. By the mid nineties had groaned over two thousand employees.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“He said he was 16, researching something under the letter P, and he came across Princeton University in the Encyclopedia. He said, Ed, I read it. It said, Princeton has produced more Rhodes Scholars to Oxford than any other US university. The thereafter marched into the kitchen and told his parents Bill Dietrich is going to Princeton University. Didn't know where it was, but he was going to Princeton University. And he did. He got into Princeton. That was a big moment for him.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bill was born in Pittsburgh in 1938. His parents moved with Bill when he was young to a lovely little community called Coniat Lake about a hundred miles due north of Pittsburgh. There he was reportedly a precocious child red again incessantly, really gravitated toward the Boy Scouts, and became an Eagle Scout. In fact, later in life was awarded the Distinguished Eagle Scout Award, which is no small thing. But he told me the story when he was in high school researching a paper to write using the Encyclopedia Britannica, which is probably something some of your young listeners have no idea what it is, but it's a set of volumes of hardcover books in which you would do research.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“In his forties, when he was running his company, he went back and got his master's and PhD in political science. So he was a remarkable fellow. But I'll give you a little bit of his history and how he led up to his charitable vision.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, he was a remarkable man, the term Renaissance man is used probably too often, but he was a historian and industrialist, a philanthropist. I think character wise he always struck me as having a high sense of purpose. He has a sense of urgency as though he was really battling to get as much done in any given day as he possibly could. There was that sort of ethic around him. He was a great storyteller, in part because, as I learned later, he'd read nearly four thousand books in his life, which is a remarkable figure. That's fifty, sixty a year for a long time. He was one of the great conversationalists you'll ever encounter. He wasn't in your face about what he knew, but he'd weave in anecdotes relative to history or something usually amusing nature, and it was just a wonderful companion and a fellow from whom I always learned a great deal. On top of that,”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Foundation and run it until you're 70. That was the offer he made me in 2010. I kind of demured because I was very happy where I was and said, hey, can we have this conversation again down the road? But I think he knew he had cancer at that point, a sense of urgency to get me on board. And I joined him. He died from complications of that in October of”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“It was a great opportunity because they wanted to move the program from consultant centric to staff centric. So we were relying on Cambridge. We moved away from them. I hired Chuck Kennedy, who is now the current CIO at CMU as my number two, and we built out the team. And Bill was supportive all along the way, especially instrumental as we got through to global financial crisis, of course. And then in 10, he and I sat down at our same table at our same place and had another momentous lunch. And that one, he turned to me and said, okay, Ed, I've been secretly interviewing you now for about 10 years. And I've decided you're the guy. And I said, what are you talking about? And he said, well, I've been building up this trust and it's designed to fund the Dietrich Foundation upon my passing. And I'd like you to come and join me and work with me and be my designated successor so that once I do pass, you'll run the fact that...”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“In 2007, I threw my hat in the ring when CMU was doing a search. In the spring, they selected me and I became treasurer and chief investment officer at my alma mater, and Bill was the chair of my committee, so we worked really closely together and worked well.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“The distribution of returns looks more like a venture portfolio. We had a horrible zero transaction and we had an 8X. It all worked out, but it was a heavy, heavy lift. And through all these lunches, Bill and I got to know each other and he'd want to know exactly what we were doing and why. And then we had a very momentous lunch in 2006. He said, you know, I've been listening to you, Ed, and I really want to invest in your next fund. And I said, well, we're not going to do it for these reasons, I explained. He said, well, I have a better idea. I said, what's that? He said, I chair the investment committee at Carnegie Mellon. He said, we have a terrific guy's CIO, but he needs to move on. He's a brilliant guy, smart guy, but he's got three speeds. Slow, slower, and stop. According to Bill, it was a charge ahead guy. And Bill said, you'd be terrific. I wasn't so sure, but Bill convinced me after a couple of lunches.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“We ended up doing okay. We got 2x in net for our investors. But what we discovered in investing, we were targeting the micro market. So control transactions of industrial companies won to 3 million in EBITDA. And by the way, we thought we had a very clever pitch, Ted, on why we were investing these companies. We said, you know, these small companies are like a small ship, and it's easier to turn a small ship than a large ship. You see how sophisticated that metaphor is, Ted.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“But much to my surprise, next quarter, he invited me to lunch again, and in a quarter after that, and it was six and a half, seven years where we had these quarterly lunches in Pittsburgh and really got to know each other.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“He was a Marine too, so he liked salty language. So at the end of the pitch, he kind of slammed the table and says, God damn it, I love it. I love the passion. I love the approach. I love the thesis. I love the people. I'm not going to give you a nickel. He said, I only invest in world-class managers with long track records, and you're nothing but a greenhorn. And I said, well, I appreciate the quick and candid feedback. And he said, but I like lunch. And we did. And it was a very pleasant way, I thought, for him to say no.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source
“Immediately said this is not a man to be trifled with. So I, in my mind, jumped to a shortened version of my presentation. I gave him a 10 minute pitch as best I could.”
2025-03-24 · Capital Allocators · Ed Grefenstette – Bold Allocations at The Dietrich Foundation (EP.437) · IDENTIFIED FROM THE TRANSCRIPT · source