YouSaid · the spoken record

Gary Sernovitz

lines on the record: 73
first: 2023-12-18
most recent: 2023-12-18
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I quit Goldman Sachs to become a writer. I was going to be Salbello. I was going to be Philip Roth. And I think now, 30 years later, knowing successful people in all lines, even the most successful people are millions of miles away from the sun, satisfaction is come from my wife and my daughter and my friends and my colleagues and my writing and the relationships I build. It's not going to come from the number of books sold or the prize is won, which is good because I've won no prizes. I've not sold that many books.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know if it's the best, but the one I implement the most is my grandfather started and my father worked there at the start of his career, a trucking company in Milwaukee. And they had a huge sign, the warehouse, said the customer's always right. I was a little kid. I would go and you'd see the customer's always right. Obviously, they knew that's ironic. It's paradoxical. But they fiercely believed it. And I think the advice, there's very rare times in my life, especially in my job where I don't think the customer is always right that servant leadership, this sense of this is your job. They are paying you is something that probably I implement the most often.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dominant figure can also spread a culture of partnership and a culture of no one taking themselves as too irreplaceable and too serious.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's an easy one because there's two founders of Limerock that I've been working for 20 years, and it's John, Reynolds, and Jonathan Farber. I think about it, there's three things. One, they find investing interesting. The book is about investing as interesting. It's a lifelong project. They're listening to you. They're reading books. The quest never ends to understand how to think about these ideas. I think second, they started the firm when they were 28 and 30. They had never worked in private equity. They never worked on the buy side. So to see how you invent a culture, invent a private equity firm. It's amazing you're allowed to do that in this world. And $10 billion later. So that's been a variant. And then I think the third is they sense of humor, self-deprecation, democracy, economics, and power of how an initial partnership can sometimes curdle into people not talking to each other, but also a partnership can also, without a single...”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think broadly bad writing, needless words, a subgenre of that is when I'm being spun by someone using needless words and bad language because there's condescension and an arrogance to it that jugular sticks out.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“I talk to myself a lot out loud, sometimes reciting scenes and other voices, and I do this at home and get caught by my wife and daughter a lot, but I don't think most people look at me averaging a meeting and it's like, that's some mumbling guy like Chinjigante down Sullivan Street. But in the house, it can be a little frightening.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hiking, which the irony is we moved from 21 years in New York City to even a lower sea level in New Orleans. So despite hiking and feeling most at home in the mountains, I've managed to spend the last 28 years comically far from them.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Neil Triplett at Dumac is one where there's a fundamental kindness there that I've always been interested in, a grace, if you will, a longstanding investor with ours. It's a somewhat inspiring to go in and know as a person's very busy, makes time to meet the managers, as fair, thoughtful questions. Again, I don't know how many children he has. There's a decency. That's also almost inspiring to the managers coming in because you know you're going to get a fair hearing and you know we're on the same team. Now it doesn't always do what we want them to do, obviously. Maybe there's something in the water. Maybe Coach K gave him some tips on how to get people to play in Durham that he's very good at though.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's this idea that what's going to befall a president, we'd have no idea. And we know the politics we want to vote for. And I always thought in hedge funds, you can back them for their returns, but in private equity, you back for their character. Because in a 10-year locked up fund. So from this crowd of the Allen, it's like trying to understand the character of people. And I'm not obnoxious way. I'm always admired that as part of the investment process. There's humility and patience, and that goes back to like kite aggressive. So I think Allison Thacker and John Lawrence at Rice, there is a humility and a patience to really when we see something good where we have an advantage, we're going to allow a portfolio that's not conventionally balanced. We're going to be contrarian. We're going to hug the index in certain cases because that equity bias is good and we don't care that everyone's like, oh, that's a yoner. So that humility and patience combination is also something I think I've learned a lot from folks.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“People and motivations and how you think. And I think one thing I've learned from that crowd, I have an analogy from it, which is in politics they often say like, vote for a senator or a congress because their politics and a president because of the character. Because a president's going to, they don't always have great character. So this is better analogy in 2012 maybe than in 2016. But anyway.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Makes a good CIO makes what makes a good person. So I think curiosity. So I think John Maguire, who's at the Pritzker Foundation, Damien Cody, who's taken over, they're definitely curious in the way of how this sector, how these businesses generate returns in a very, very thoughtful way. And so that's incredibly interesting that you walk out of that meetings shocked. I have not really examined my book because this is the book of investments because this is what we sell and we just think it's good. The ability to, that curiosity in the meetings they're actually trying to look at the gears of what we're trying to say in ways that we probably don't understand the gears fully ourselves. I think the other curiosity we have had a lot of investors become friends. Ellen Schuman line of the Swenson tree, the Ellen Schumann branch. So this is Lisa Maul and Kim Liu and Meredith Jenkins and now is Brian Ken Lee. And their curiosity of”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“A great question. I think I learned and had to think about much more sympathy for the job of a capital allocator than I ever had. Obviously, in my life, they play a functional role. Dead leads. I'm trying to get people to do things, and 99% of the time they don't do things, and they annoy me for not doing things. I tend to look at them trying to imagine how challenging that is gave me a lot of perspect when you tried to really sit down and think about what is the daily life? What is the inner life? What is the challenge? And I think the second is, is it solvable? That's what the final scene is about. It is solvable. We've always known the answer. You losers are just limited by children and lives and colleagues and desires to go have golf shirts and stuff buy it. So the other one is how do you manage that fundamental conflict that we feel like we have an answer in investing already?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“It comes to individual stock stuff, his speech he gives, he's a pretty difficult person in the libertarian SBF, that school of hedge fund data genius is open. The lessons I'm teaching you, you already know, which is equity bias, buffet, eliminate the agency Robinson. There is no great revelation, but the trick is how do you apply that with discipline in the case of him, he became an inhuman monster of some way of the market, which I would not advise to anyone.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Engineer it and it's like Swenson, it's Buffett. How could you do it? Eliminate the agency problem so he doesn't have anyone working for him and he uses outsource Indian engineers and doctors. There's a very obnoxious line anthropomorphized, which are actually people. This data, he tried to solve them. So he's in big liquid stocks. It's him. It's also like the equity bias. He went to a family office model. He has this few mystery LPs that there's a line in there. I told him if they ever asked me a question again, I'm kicking them out. He is a mystery figure in finance and the construct of his novel. And then there is this sense, and this is the hardest thing. And one of the great mysteries of the market, his line is laziness and stupidity are fundamental human characteristics. So why would anyone think that is not applicable in the market? The market is obviously inefficient. It's just inefficient and impossible to predict ways.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“A couple contexts on this. One, a character novelist can't write is a better writer than the novelist. A novelist can write a better investor than the novelist. So me, I may still be on capital allocators, but it would be in my Park Avenue, a sixth floor suite. I think this is with humility around there. Second is the origin of the character was to try to reverse engineer in my mind independent of human constraints. And so part of this scene and this final scene is patterned a little bit after the Grand Inquisitor and the Brothers Care Maza, where I think I'm every bit, I don't want Michael Herman or the CIO ever to be wrong. And they disagree on a lot. So as much as I'm in every character, this is definitely not my dream is to become weirdly computer brain asexual monster of the markets who's also extraordinarily successful. That is no aspiration of mine. But you're reversing.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it turns the end of the book, as you mentioned earlier, there's this reclusive, brilliant hedge fund gazillionaire who happens to be an alum who espouses his view on the world, which I interpret as maybe part of that is your view on the world. So we'd love to get your thoughts on we're in a different environment, people thinking about investing for the next decade, what this reclusive billionaire I could take area you think about how people should frame the investment problem.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“About having fun. I think there's something that I've seen that not everything has to be cool. Not everything has to be the most wonderful niche idea. There's some things that I just need in certain areas, just base beta or exposure. And then I'm going to be aggressive in certain areas where I think I really have an advantage or have access to a mantra as an advantage.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Couple things. One, we've talked about which is manager of people and manager of investments. Man-O-Man. That is a rare talent to have talents on that side. I think second is confidence when not to be interesting. I think certain institutions hail have the resources to always be interesting. Everything they do is interesting. But for something without resources, without that access, maybe the answer is an ETF. Maybe the answer is a Blackstone fund. Maybe it's just base infra. I'm a very infrequent poker player and a very amateur one, and I just like to have fun on very low stakes game. But there's like a poker term called tight aggressive, which is you're super conservative. It's like a very annoying if a friend of yours is this type of poker player fold, fold, fold, fold when you have mediocre hands. And then when you have something good, you're aggressive. And that poker player doesn't care about being interesting. He doesn't care.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“You're a good person. You're doing this and not working at another part because you believe in the mission of the university. You want to be remembered as someone exceptional at this job and the use of proceeds. So why wouldn't you think about that?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“That was third rail that I didn't want to do too much on. I also felt it'd be a little tacky to not have anything about it. How I dealt within the novel was to think about the pressure of the CIO, a line that I often repeat to CIOs, which is like it's 3% of the portfolio, but 97% of our headaches. And so really tried to dramatize that and the feelings around that of this is such a hard job to do with all the other things to try to deal with small parts of our portfolio that are just lightning rods for it. There's a activist professor on campus who does a lot of jokes told it, his expense from the trustee and the CIO sort of defending it. But then the CIO as much as is a clear-cut.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“The CIO would be considered a funny duddy. People who sell the GPs takes funds and have a lot of very sophisticated and very well regarded. But I allowed myself to make them a little idiosyncratically funny duddy in this one area.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Economic business of it, but more of the CIO is a CIO of the old school who fair deal. You guys can all get rich. I'm not going to complain about two and twenty. I believe in you to generate alpha for it. And he's just offended for two reasons. One, the proof of excess management fees. And second, if you talk to some of the guys in the GP stakes funds, it's a bet on the excess management fees rather than outperformance. And so he spends every moment of his day trying to find outperformance, which one would think in a GPS fund would be a fundamental underwriting thing rather than an ability to aggregate assets. So he's offended in two ways. One is just there's a deal in this business. You can have the Hampton's house on Carrie, and you can have the Park Avenue co-op on management fees, but selling 20% of them seems to be a little bit of violation of a very old school. And then the second is that underwriting. And obviously.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“I have so much sympathy for capital allocator to try to choose between them because ultimately the business model is pretty standardized now. There is some sense of you can get queued on leverage and helps in a bull market. Now the guys who queued on leverage are going to face their consequences. But the thing as I thought about it for the novel of trying to say, hey can't pay more than nine times. Two turns of leverage and be in these three sectors. But it is from a sector that is very small decisions on very specific people. I talk about thousands of things happening in those companies in a competitive market that it's amazing if someone does have persistence. That was the one that probably I let the gloves off a little more than any other chapter in it and just partly I think an unrelated to like the”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of private equity has been hot for a while too, and you have a different take on it of your run of the mill private equity firm. I'd just love to hear your thoughts on the good and the bad of that.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Meaning is and analogize to science when in fact it's just as hard as the lower middle market guy in hoping luck and skill gets you there and the lower middle market guy was in a sector that didn't have those tremendous tailwinds he leads himself to self pity and cursing his bad luck where the VC leads himself to peacock way announcing how the world works which that hubris follows almost automatically any hot sector”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and this one I had a lot of fun with, and it's just so central to returns today and returns saying 2021, the novel was finished in 2019. That era of the 2010s, both the S&P tech winners driving it, and VC is a big difference in performance between the winners and losers of capital allocators over the decade. Then the self-importance of it is what I've always been very intrigued and fascinated by this VC firm had IPO that went bust when these home delivery meal companies and then had an Uber for babysitters was the great, great win. There's actually now an Uber for babysitters, but I was like, I invented that in a novel in 2019, so I should get some warrants. The one thing I'll be like fascinated is the need to make this a philosophy, to make this a structure, to make this a long LinkedIn post, to make this a TED talk about what investing is, what means.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the central question in life finance, Radalio in current headlines. I think that everyone understood to be full skill. And so the book doesn't have any particular answers to that. That's why finance investing is humanly interesting for people who are not generally baseline in this industry. That is a central question of how we deal. It's thousands of years old talking about not the race to the swift or the contest to the strong. We have those same challenges on an investing side too when we're talking about a management team that sold a company and coming back again. Do you get one of these a life? Do you get three?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Say, well, someone made the right decisions about those very few decisions can really determine the life and the reputation and the success of these guys.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“In this case, I wanted an example of a firm that didn't do well. And this comes at the end of the book. Amps up the despair of the CIO because the CIO had made a big bet relatively. He's not picking 50 lower middle marks. So this is one of the bets. This was about how few decisions in a lower middle market private equity firm separate success and failure, genius and idiot and zombie and I had account. Six things we sold too early five deals that we decided not to do, but there were ours to do. We could have paid two percent more. We just decided not to do. Four things we did and were zeros. This game of inches for a firm that has obviously some success at the beginning to achieve some institutional success. Ecclesiastes time and chance happened to us all. Is this in that of a business that's so hard and whether the firms we think of genius, there's a survivor bias to that based on if you just think about yes, you could.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd love to dive in on some of your thoughts on whether it's the strategies or the archetypes that you describe. And I can just walk through, you've mentioned a couple of times, the lower mid-market private equity firm. What are some of the things that you teased out when you were talking about that example?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“To one thing, but the collective judgment of CIOs on our business or any money manager's business is so subject to people you don't actually know that well, but you think you know that well because of repeated exposure. And I think one of the great challenges on the CIO side is your job is to figure out systems input hunger, the soul of these people pitching you, but you're seeing them in very controlled context for the most part.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“A very strange one where I think our side, we presume they think about us more, maybe than they do. Maybe this is incorrect because, you know, you're realistically a CIO is not going to every annual meeting unless it's a very glamorous one. But even there, your cocktail party conversation about kids and summer plans and things like that. And then in a meeting, the CIO is talking or whatever person on the LP side is talking 15% of the time at most. And so I think there's this presumption because you're known someone for 10 years, 15 years, but the amount of time of actual human interaction do you know how many children the CIO has, you have to listen to capital allocators, final questions. I know what he likes to do. It's a very strange relationship for groups that obviously economic life is tied together where not individually there's not one CIO.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Having sat in the seat you've been in for 20 years, you have lots of relationships with lots of these people, how do you describe the nature of the actual relationship between a CIO and the principles of a firm?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“They do an interesting edgy decision. His heart takes tremendous conviction and keeping your job loosely, I guess, in a way.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're humans. FOMO is the chief driver of a lot of human behavior, and it's not like investing is going to be immune from that. I also think that the one thing we have to remind ourselves on our side of the table is the job of a capital allocator is to generate returns, but the job of a capital allocator is also to have a job. One sees the safety in slipstreaming, the safety in numbers, and the fact that they're not just there to maximize returns very you have to be concerned about volatility. There's real institutions they support. So I think sometimes the pitching crowd gets frustrated at the same time you have a certain amount of Schadenfreude when it goes wrong, because there's also just a lot of laziness. And so to try to find that CIO who can combine that independence of thought, but also understanding that there is some need to not make every single decision.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the things you mentioned earlier is one of the characters in this investment team is someone who whatever's Yale's doing, I want to go chase that momentum. What have you seen in your seat about how some of the investor community behaves relative to what they're hearing from others?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“12 other private equity strategies that do it. I think that big lie in the sense of the organizing principle of a firm tends to often be random because this is the history of my career. This is what I've always done. And so for the CIO to be able to say, hey, I don't need exposure to this, the best CIOs I see are ones who, in a polite way, can see if there's something missing in their thesis that this sector of the energy. I'm looking for innovation. I'm not looking for value or I'm looking for value, not innovation. A big endowment just said growth equity doesn't work. So things like that is a pretty amazing talent in the meetings and in general to say, hey, nothing to do with them as a manager, but I have this insight what works and what doesn't work.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Great question. There's a philosophical one, which is repeated a lot in the book. Why are you doing this? I joke. All my friends got rich in private equity. Why not me? School of private equity. There's a lot of firms, and that is the organizing thesis of that firm. All my friends got rich in private equity. Why not me? So I think first of all, what is the passion and differentiation bringing to this business? Why does this firm need to exist? A very philosophical one that I think is hugely important. And I see interesting CIOs getting to. And the other one is CIOs have everyone pitching them is long some thesis or some asset class. The best of CIOs are like, hey, does this idea you have that whatever it is, you know, lower middle market industrial businesses, you think you're paying little in leverage. You think you're multiples are cheap. But hey, I have”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Friend of mine always loves PGA Golf. You can go on the PGA website and see people's handicap. There is different views on golf as an important business, I think, and you have a lot of time on your hands. I talk about how polite folks are to assistants, cab drivers and stuff like that. But again, it's being a jerk to the assistant necessarily dispositive of being a bad investor or good investor. So these like human clues.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fascinated by it. And there's a thing we all know everyone brings their phone to the meeting and they look at it and they're very disappointed that they're going to have to be in this meeting and not look at their phone. But they leave it on the table. I'm going to be there for your buddy in an hour. Just hold on. But then when they're locking their phone, you can see their picture. And I'm always very fascinated. People have pictures of themselves. And they have children. Things like that, these human clues that novelist is supposed to pick up. But a CIO is also supposed to pick up. The CIO not only talks about these clues, but also, again, there is no formula. The guys are raging narcissist. He has three kids but has a picture of him at the Super Bowl with Tom Brady or something, whatever it is, instead of his three kids. Maybe a raging narcissist is good as an investor. Maybe a raging narcissist is a sign of outperformance. And so it's like that second iteration that even if you have fun, interesting ways of picking up human clues, because so much of this is human.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“One chapter that a lot of people who have read it it's the cringe chapter, but also the one that they enjoy. One of the pitch deck and just the absolute cliches of the pitch deck. And I have tremendous sympathy for that because as a writer and as someone pitching, there isn't a hundred ways to describe system input hunger. There are these things people talk about exactly the same. And so how to not cause that eye-rolling proprietary deals, the funnel, the sheet of paper where it's somehow God has made it. You're the only uncompetitive sector in the entire history of finance capitalism, that these are put out. Chat GPT didn't need to be invented because people were doing it themselves. The bland formulaic nature of it. So I think that is one. And then a lot of the things I just had fun with I do phone lock screens. I'm very.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Nine months. I can predict that, and I don't want to be there when that happens because usually you're there after it happens. Within that broad categorization of what you're looking for, you've been in a lot”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is the one that probably the Excel formula doesn't get right and probably one of the hardest things to do for people in a CIO seat is these natural life of a money management firm. You want someone whose life depends on it, but you also want them to prove that their inputs and systems work and you don't want them looking at their Hampton's real estate and spending for their seven-hour workday looking at art to hang on the wall and to try to find what is the optimal hunger and also when to get off a successful relationship because you can feel that hunger and it's got to be extraordinarily difficult to do because usually that hunger dissipates after success and you probably want to be off manager for that hunger dissipates, but it takes an incredible amount of fortitude to say to someone across the table, hey, I know you're getting rich, sloppy, and lazy. You're not there yet, but you're going to be there in a minute.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Talk about inputs, system, and hunger, which is if you think about hedge funds, you think about a private equity firm, you think about anything, what is the input into this investment system? Is it shop deals from Goldman Sachs? Is it data on stock price performance you get from Bloomberg that they're just smart people that can figure it out? That's frankly a lot of alternative assets is. If I were CIO, that worst is there a sector specialty? Is there some understanding of the data? Is there a data no one cares about this input into whatever this model is is hugely important. I think the second is the system of how they process it. Now, everyone pitches a very sophisticated system. We have this machine and there's a scene in this about a guy who failed at private equity and Bitcoin bullshit on the machine because especially in private equity, you don't get that many at bats in the course of a career. But there has to be some system other than we're smart guys who know a lot of people. And then hunger.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“A specific model formula on this, but yeah, it's quite amazing sometimes the depth of very random questions you get. How do you think about from a CIO's perspective, but you as the CIO, what goes into the selection process for a manager?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then for years we thought they just loved us. Our spouses do not love us as much as these. And then you realize that's just who they are. Every single person who walks into that meeting, they're just enthusiastic people who generally appreciate intelligent people coming to talk them and investing and that has nothing to do with their ability to invest. On the opposite side, we're in media. It's like, they actually say anything during the meeting, like statues. Sometimes it seems to be reflective of it didn't want us to be in the room. Sometimes there's also just a different personality, like whether they're not interested in expressing their opinions. They're just studying. And then the one thing that we've always found super interesting is the questions that come up, sometimes very detailed 2025 EBITDA projections. And this is a case of a private equity decision. What is the purpose of these questions? Are you curious and you're in a room and you might as well ask any question you're curious about there?”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of your perspectives with the different types of LPs that you encounter as a GP. I mean, I have a lot of time to observe it because remember in my role, I'm talking five, ten percent of the time, and a lot of time I'm staring at the window, looking at the people on the other side of the room. Occasionally they're like, why are you creeping on me, man? Like they're looking at me. It's like, I have nothing to do. I've heard this pitch before. I wrote this pitch. I don't really have anything to do. So I'm going to study you as a human being. You can come out of meetings with the most enthusiastic I call like buddy buddy.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Personally, you actually don't want to manage people. The CIO definitely is on the side of in a perfect world. He would do everything himself. And I think there are other CIOs like that. This is a very simplified investment office. There's really two deputy CIOs managing directors under him that represent the opposite of it. One is just like a very attracted to the bright shiny thing, a real calls, you see how calls like a pop-in jail. Yale's doing mussy. We all know that this exists and he's just really into the horse race. And the other one's very diligent, but almost the flaw he sees in her are some of his own flaws of just feeling like you can master this as something that should be able to fit into the Excel formula, making these capital decisions, which obviously is not something that Fcel had a formula. It would make everyone's life a lot easier. A lot of the book is framed around manager meetings. I'd love to talk about”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“And you feel that a little bit on our side of the table in professional life, a little bit more at a remove, like you're proud, but it's so abstract. And one thing I actually did for my own amusement is put him on the campus. A lot are not even close anymore. And I find that interesting in my fictional university have watched the students walk by every day as a reminder. So you go from managing up to the Borden, you have managing a team of people. What are some of the key challenges that you've seen for CIOs in being able to manage their team while managing a pool of assets? I mean, I think that's one of the biggest dispersions of talents in CIOs that I've seen. Because as you imagine managing people and managing investments are not the same side of your brain. There's no a priori reason that someone should be skilled at both. And maybe that's, in fact, the opposite. If you're an analytical, quiet.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source
“Partner in there who's wonderfully foul mouthed and everyone's favorite character in the book, feeling those soft pressures, those questions and espousal, the relationship they have. It's like, I know you got to do your job. But what are you doing? So I think that the CIO is kind of the fortunate end of this governance, the university president is shockingly nice to him relative to his own self-doubts and how hard he is on it, what I was trying to capture the toughest middle case where it's not clearly just irresponsibly managed institution, but also feels these real pressures. There's a reason that it's the CIO of a college endowment. The real pressures of that money. If I did this about like a family off, no one would care. I think a lot of the CIOs I've met and their purpose of life on earth has become that scholarship, that research budget, and wanted a hero of the book who felt that deeply, which is something very nice about that seat.”
2023-12-18 · Capital Allocators · Gary Sernovitz - Inside the CIO Seat (EP.357) · IDENTIFIED FROM THE TRANSCRIPT · source