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Michael Choe

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64
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2025-02-17
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2025-02-17
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  1. “And I'd say perhaps the number one area of evolution and continuous improvement that we will indefinitely work on is how do we define getting value or identifying mispriced investments in a dynamic and nuanced enough way such that we can sustain a competitive advantage?”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Arithmetically translated into let's look for things that are in a certain multiple range. The problem with that type of simple heuristic where you go for Is that especially given the dynamic evolution of the private equity industry over this last couple decade period, it's often the case that it's not dynamic or nuanced enough as a way to really think about value. And so we tend to think about our firm as a manufacturing process where the atomic unit of production is a decision. Now, some of those decisions are a final investment decisions, but really everything we do leading up to a final investment decision is the production of a decision. Which industry should we think about today? Within those industries, which themes are attractive, within those themes, which companies should we focus on? How should we staff ourselves with industry expertise to really develop differentiated conviction? The atomic output of all of those workloads is a decision. So the question for us is, how do we make that manufacturing process of producing decisions as high quality and as efficient as possible?”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “If I were to give you the most important plot points of our firm's evolution over this period of time, Harvard was a deep believer in finding value in investments through superior research. So in terms of where they wanted their investment edged to come from, it wasn't about having a better sourcing model or a better operating toolkit. It really was around doing superior research. And therefore, having differentiated conviction and using that conviction to uncover investments that are misunderstood and therefore mispriced. Now, in the early days of Charles Bank's history, and while we were part of Harvard, sometimes that inclination to find misunderstood and therefore mispriced assets would get”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Fascinating. I mean, it was great to have a front row seat to that evolution of Harvard's endowment. From a timing standpoint, we work right at the leading edge of a part of Harvard's endowment operation balkanizing into private investment operations. So when I joined, Jack was the boss of every investment team. He would show up at our weekly staff meetings. He was an exceptional investor and had this amazing ability to just see through the risk-adjusted return that people were debating across a very wide range of asset classes. So it was an amazing learning experience. And then when we started to spin out, it was our private equity team. There were some public equity teams that spent out. There were some private credit teams that spun out. And so there was a lot of news about why it was happening, whether it was better for the university or not better for the university, but it was an amazing time to be part of that transition.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Our firm was started inside Harvard Management Company, which is the umbrella organization that managed the Harvard Endowment. At the time when it was formed, Harvard was basically an in-house investment model for its endowment. So in contrast with Yale, where David Swenson pioneered the use of third-party managers to generate performance and manager selection and then also overweighting into alternatives, Harvard decided to construct their portfolio with in-house investors. And so the team that started Charles Bank was really the direct private equity investment team of Harvard. I joined the Harvard team one year before we spunded out to create Charles Bank.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “To this job that he was talking about, he said, it's private equity. I had no idea what that meant. But I followed him to this job mainly because it was a job back in Boston and it seemed like it was going to use similar skill sets as what I had developed in McKinsey. And that's the job I still have now, 27 and a half years later. And that person was my partner Brandon White and we've worked together pretty much every day of our entire professional lives.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Well, I'd say it was a series of accidental events that led me there around my junior year. I started to question whether a lifelong career in science or medicine was right for my personality, like interacting with people. I like learning things interpersonally by interacting with people kind of the way we are now. And I've loved listening to your podcast as a way to learn. And so I started to question what alternatives might exist. And at around the same time, one of my lab partners of all people got a job at McKinsey& Company, which is a strategy consulting firm. And he said, look, they think about questions that are in many ways as complicated as scientific questions, but they apply them to business problems. And so I was attracted to that. And so I ended up getting a job at McKinsey out of college. And then after my analyst stint at McKinsey, I wanted to move back to Boston. I was in the Los Angeles office. And I followed a guy who was my best friend in the analyst class at McKinsey.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Logic to construct decisions versus some other instinct. So I think that has been for lifelong idea that I've pursued. How can I get better at making decisions? And if you really think about it, you can reduce one's life to really a series of decisions you're making every day.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Remember listening to these kids who are in my class who are bound for finance and thinking, oh my gosh, I have no aptitude in terms of the kinds of problems that they like thinking about. I had no personal interest in understanding finance. I was much more interested in questions that were unanswered in science. And so I find myself really surprised that I've ended up with a career that I've had. But I'd say maybe one of the influences was my dad was an incredibly logical person. He studied math as an undergrad. He taught me most of the math that I know when I was a kid. But he was also a somewhat indecisive person. So he struggled to make even routine day-to-day decisions. And my mom, on the other hand, is an incredibly decisive person, but sometimes not the most logical. And I remember at an early age thinking, gosh, it would be great if I didn't struggle with decisions the way my dad did. But if I could figure out a way to use...”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Thought a lot about this, what influences did I get from my parents growing up? What influences did I get from the particular experiences I've had? And I'd say as a starting point, I'm pretty surprised that I have the career that I have now. I was not one of these kids who thought about economics or finance. I went to college and I studied science. One of the first classes I took as a freshman in college was a seminar on decision making. That class was populated by people who wanted to go into economics and finance. And then there was me. And so when we had to have our final project for the end of the term, many of the kids were writing papers on how to invest or how to think about different options or stocks or bonds or different structured financial instruments. And I wrote my paper on human experimentation in medicine. And so I studied the Nuremberg trials and explored the morality of that.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “It's the fact that frameworks are something that I consider to be relative. So I think if you grow up in one culture, the educational system that you grow up in, the language that you, the customs with which you interact with people, it becomes a given and you don't question those things. But because I was displaced from one system at a pretty young age and had to learn a pretty different system. I mean, Korea was somewhat westernized at the time, but in many ways it was not. And the way they teach math is very different. The way they teach history is very different. The way they teach language is very different. There's a lot more wrote input of information. And so understanding that the way an entire society does things doesn't necessarily mean it's the only way to do things. That sense of relativism where there may be a bunch of different ways to systematically approach something, I think I started to learn that at a pretty early age.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Otherwise, law abiding family is a pretty violent process. So it happened overnight at the age of eight. I suddenly moved back to Korea and found myself going to Korean public schools. And I was somewhat conversant in spoken Korean. I really didn't know how to learn a brand new language. it. But the more difficult thing was actually getting caught up with a math. They were approximately a couple years ahead of where I was on math. And so I ended up in Korea”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Mike, great to see you. Good to see you. Thank you for having me. I'd love to start all the way back. Well, in many ways, it's sort of unusual. So I'm Korean, but I don't consider myself really a typical Korean American because I was born in the States, but when I was eight, my family had to suddenly move back to Seoul. It was unexpected. The reason for that was that my parents moved here for my dad to do his graduate studies. And he ended up dropping out of grad school and opening a diner. And so I was just a regular kid living in California whose parents had a small business. But because he was operating a diner on an expired student visa and hadn't managed to get a green card, my parents were technically illegal immigrants, even though they were taxpayers and they had social security numbers. And so one day that whole situation caught up with them and they were deported. And deportation, even with a family like ours,”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Guest on today's show is Michael Che, the CEO and co head of flagship private equity strategy at Charles Bank Capital Partners, a $22 billion manager of middle market private equity, credit, and technology opportunities that spun out of Harvard Management Company in 1998. Our conversation covers Mike's paths from science to finance, including an immigrant story and draw to decision-making at a young age. We discuss Charles Bank's history and aspiration to manufacture sound decision-making as a path to investment success, applying its fan of outcomes thinking to talent, research, diligence, sourcing, and company operations.”

    2025-02-17 · Capital Allocators · Michael Choe - Atomization of Private Equity Decisions at Charlesbank (EP.432) · IDENTIFIED FROM THE TRANSCRIPT · source