YouSaid · the spoken record

Tim Sullivan

lines on the record: 96
first: 2025-07-14
most recent: 2025-07-14
sittings or episodes: 1
sources: podcast

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“Going to do a lot of travel. We have some pretty complicated trips coming up. I also just four weeks ago today became a grandfather for the first time. That's a new chapter for us, an exciting and fun so far. And I'm sure we'll continue to be. Just looking for ways to engage with interesting people in the financial world, be it on an investment committee or as an advisor or consulting. I don't have any firm plans as to exactly what that ought to be and who it ought to be with, but I'm open to ideas and we'll see what comes of it. I'm in the fortunate position of I can just work with people that I want to work with and enjoy working with and respect and be choosy about what I do. And if I wind up doing nothing and just travel and spend time with the family and all of that stuff, that'll be fine.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“But you took a bet that the regulatory environment around this reasonably controversial business would be relatively benign and it wasn't. Just own it. Conversely, we had a manager who this is a recent deal where they did a very complicated carve out, turned out the carve-out went very badly for all kinds of different reasons. And the deal has really struggled. They've been very upfront about, in hindsight, we really blew it. We didn't think the carve-out would be as hard as it's been. We thought the management team was up to it and they weren't. And we're going to do our damnedest to fix this thing, but we really screwed up. That's a much better conversation to have. They took the risk and it didn't pay off and they're upfront about that.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Always really bugged me when managers would take a risk and then the risks blew up in their face and they'd act like it was some act of God that they couldn't possibly have foreseen and so shouldn't be punished as it were for. We talked a bit about our jar and abisco, but that was to me always the poster child of that. The deal didn't go very well for KKR. I think it was a single-digit IRR over a very long holding period. One of the big reasons for that was that shortly after they bought it, the government really cracked down on smoking and regulations around tobacco and lawsuits against tobacco companies. And tobacco was an important part of RJR's business. We were not investors with KKR at that time. We never really had direct conversations with them about it. But my sense was that they would say, well, the deal didn't go well. The government did this, and we couldn't have foreseen that. How could you not have foreseen that? Of course, it was a risk. Maybe the risk would play out one way or another or whatever.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Things that you're good at and make you happy. And then success will take care of itself. So I thought that was really important lesson that I learned from David. The other answer is my father. My father was an executive at a Fortune 500 company for most of his career. He had a pretty successful career. He definitely showed me that you could be successful in business, but it didn't require being a jerk or neglecting your family. So getting that work-life balance right. That was a really important lesson for me.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“One is David, obviously. It was a tremendous opportunity to work from him and learn from him, absorbed all of the investment strategies. But one thing I really appreciated about David was he could be incredibly arrogant, not undeservedly. But he also, I think, had a good sense of his limitations. And he sort of knew what he was good at and what Yale as an institution would be good at. And we didn't try to do other things. And there would occasionally be conversations in the office where somebody wanted to do something and he'd just say, no, we're not good at that. We don't have an advantage there. That doesn't make sense for us. That sense of knowing what you're good at and sticking to it and not wasting time on things where you don't have an advantage. I think that was really valuable. That's something I always told our managers, you should stick to what you're good at and what you like to do. And who cares what everyone else is doing?”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of people who know me will know that I like beer, but they may not know how much I like beer. I counted it up yesterday since the start of 2000. I have been to. The outskirts of London to go to these little breweries, which tend not to be in places where the real estate is expensive. So I got to see parts of London that I'd never seen before, and it was a fun way to experience different parts of the town.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Love to travel. One of the great things about my job was it enabled me to go to a lot of interesting places on Yale's dime, but I've always traveled a lot in addition to that. And now that I'm not working full-time anymore, we'll have more bandwidth to do that. And related to that, I do a lot of photography when I travel, the combination of those two things is something I've always really enjoyed and will do so even more.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“My career. I think there was a question about what the model for the future is going to be, and it may not be the same model, but if I knew the answer to that, I'd probably be doing something else today.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“The worry I had with the books is it the Lake Wobagon effect where everyone thinks that they're of above average ability and of above average intelligence, but turns out half of the people are below average in each of those things. People read the book and see all the success Yell has had in the private equity world and the hedge fund world in places where manager selection is really by far the most important factor in success. And they think, well, I'm a pretty smart guy. I can do that too. Somebody's back in those lower quartile funds and not everybody turns out to actually be a pretty smart guy. And he had some disclaimers in the book about you should make sure that you really have the skill set and the resources and everything else to execute on this program. But that's the sort of thing a lot of people would brush over and say, well, of course I do. So I did worry that he was maybe putting a loaded gun in some people's hands. It's a model that worked very well for.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Put it a little earlier than that. It was when Josh Lerner did his first Harvard Business School case study on our office, which was focused mostly on the private equity world. And I always felt if David were the CEO of Coca-Cola that he gave away the secret formula, I'm certain that every fund to fund manager in the world brought that reprint of the case study on their trips and left it behind and said, read this. And if you invest with us, you can be like Yale. So I was always very ambivalent about it. One of the things you really liked about being at Yale was the sort of educational mission he got to be involved in and that had a lot to do with funding the place, but he also loved teaching the classes he taught and interacting with the students who interned in our office and all of that stuff. And I think he looked at first the case study and then the books as part of that educational mission. Yale's fulfillment of its mission is not just in the classroom, but it's in its example to the rest of the world and its things it does on a day-to-day basis. It's hard to argue with that.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“David came out with his first book around 2000, and that opened the door to other people understanding everything that was happening at Yale. I'd love to hear what that felt like when on the one hand,”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Recognize here's this really smart, really interesting guy who's pursuing this version opportunity. And let's go along with him and see how it goes. We had definitely had an interest in emerging markets generally, but it wasn't as if, oh, now China's the thing to do. It was, oh, we found this really great guy and let's back him and see what happens. Keeping an eye out for interesting, creative people who maybe are trying to blaze a new trail and seeing how it goes, that was a much more successful strategy for us than a sort of top-down decision to now we need to be spending time on this.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“People who were doing pioneering work in a category, we might decide this is worth learning more about. Let's give them a little bit of money. Let's see how it goes and see where it goes. It didn't always work out. We spent a long time looking for opportunities in the mining and minerals world and really could never find the right firm to work with. That was one instance where we did say, oh, let's spend time proactively looking at this sector because as part of our natural resources effort, maybe that would be an interesting arrow to add to the quiver. And we couldn't find the right managers to work with. We had a similar experience in farmland. Whereas we want to make a huge amount of money in China as China opened up as an investment opportunity. But a lot of that happened because of our relationship with Lei Zang, who founded Hillhouse, and he happened to go to Yale's business school and he happened to intern in our office. And David and Dean were smart enough to.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, let me know when you find the answer. It's obvious in hindsight, but if it was easy to know the answer to that, then everybody would be doing it. I sure don't know what's next. I think it's going to be really hard for institutions to have the kind of success that particularly the endowments had over the last 30, 40 years and to do that systematically and repeatedly. It's amazing to me how much more quickly areas of opportunity become saturated. It just seems like competition for high return assets, it just gets more and more intense all of the time. And they're in a world where there's a lot of capital returns in interesting situations get bid down very quickly. We were always willing to experiment and try new things. I don't think we ever viewed our skill set as being, oh, now's the time to invest in this particular industry or now's the time to invest in this particular geography or even this particular asset class. If we met smart interest.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Always this question of what's next in the early years, venture and LBOs, then private equity was the thing. How do you think about that question with people you're working with, foundations you work with now?”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not going to have another nine to five job, but I am interested in finding ways to stay engaged. I've been on a couple of investment committees for two foundations for many years, and I've really enjoyed doing that. I'm interested in more roles like that. There's a European foundation. I'm doing a little bit of work with, helping them think about some of the ways that they establish their operations and build their team, their portfolio. I've gotten some outreach from some firms, particularly in the world of how do younger, newer firms think about how they ought to build themselves, grow themselves, how do they raise money? I couldn't end up involved in something like that. I'm very open to working with individual GPs that might look to have somebody that brings an LP perspective to what they're doing, to think about issues around firm strategy and growth and evolution and fundraising and all of those things.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“The El Name always opened a lot of doors that would not have been open if I had gone somewhere else. I have some family ties to the New Haven area, so being a New Haven made sense for that reason. There was just never a good reason to leave. So I stayed.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“I never wanted to be a CIO. One of David's true talents was he was really good at a lot of different things. I sort of looked at a lot of those things and thought I would be terrible at that. Dealing with the faculty and the alumni and dealing with the students, that aspect of the job I would be terrible at. I could then have gone to non-endowment place, but there were parts of the job that didn't interest me. What Yale's bond portfolio should look like, I have no insight into that. I always felt like I was very lucky to have wound up by accident in this private equity world where I dealt with a bunch of really interesting people doing really interesting things. And why would I want to do something else? Why would I want to have to spend time thinking about what Yale's spending policy ought to be? I was very happy to let David and Dean build their models and do all their thinking about that stuff. And it gave me the time to do the things I was interested in. There are also some reasons why staying at Yale was a great opportunity. The people I worked with were fantastic.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“All the years you're doing this, and particularly through Yale's prominence, all the people you worked with that became CIOs elsewhere, curious to ask why you chose to stay in the same spot until it was time to retire.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Being successful. And so maybe we did miss out on some opportunities there. But I'm certain we missed some that, again, the people were just in the right place at the right time. And that was not repeatable.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of picking emerging managers. One thing we thought a lot about on the venture side was in the mid 2000s, there certainly emerged some firms where people had been successful entrepreneurs, then became angel investors, and they'd put $50,000 here and $50,000 there. It turned out one of them was Twitter and one of them was Uber and whatever else. And wow, these guys are really good. But we think if there are 5,000 people in Silicon Valley writing these angel checks to entrepreneurs, some of whom end up starting the Ubers of the world, you're going to have a bell curve of outcomes and somebody can be on the top end of the bell curve because they're really good at what they do, or they can just have been lucky. How do you distinguish? We were probably slower to back people that came out of that world than maybe some other people were. Some of those people actually wind up being pretty good at what they did.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Challenge just inevitably is sample size. There's a firm that we worked with that were a couple of guys and then some people underneath them who had done some deals basically on a deal-by-deal basis in a couple different formats, and they had done quite well. There were probably five or six or seven of those deals which had performed very well in total. And then the firm didn't perform, and we were in two funds that collectively produced probably low single digit return for us. And we said, well, what went wrong? And thought, well, part of what went wrong is just that if people have five or six deals in their crack record, that's really not a representative set. Maybe they did just flip heads five times in a row and look good. And one of the problems is you never see the people who flipped tails five times in a row because they don't try to raise money. Obviously, they can. How you deal with these small sample sets, and I think it gets back to the difficult.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of the misses that you had maybe separated and venture and buyouts, what are some of the lessons that you tried to take away? Even if you're not going to dwell on, oh, we missed that one in improving your process to get the next selection right.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Confrontational, especially if there are challenges around the firm. They want to play gotcha sometimes. GPs are not going to appreciate that. It winds up being very counterproductive. We always tried to have a sense for, we want them to be great partners for us, but we want to be great partners for them as well. And there are obviously times where things might diverge and we'd have to do something to protect our interests or to have unpleasant conversations with people, but to always try and face those situations with respect and courtesy and try to work to a solution that works for everybody as opposed to defending your turf at all costs, getting that balance right of being supportive, but also being demanding in a way that everyone can feel good about it afterwards.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“David had some great insights about what it is going to take to succeed in these two investment strategies. Sticking to those insights was really, really important. Trying to make sure that we were with the very best people in the world, great partners, great stewards of our money in good times and bad, keeping that bar really, really high was super important. I wouldn't say we spent a lot of time worrying about the ones we missed. There were certainly venture firms that we might have worked with that did very well, but we didn't. The ones that we did work with were fantastic. There wasn't much point in losing sleep over, well, why weren't we with this other one? One thing that was very, very important was a sense of humility in the whole process. One problem a lot of institutions fall into is thinking, I'm just as smart as these guys. Why are they so much richer than I am? I'm on this side of the table, but I could easily be on that side of the table and they make things.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“There were certainly people who we might have thought, well, this is early. And then later on, we're like, okay, yeah, we ought to do this. There certainly weren't instances where we were an investor with somebody pulled the plug and then got back on board. That was often just too hard. I want to say emotionally, but it wasn't hurt feelings or people getting angrier. There's a big hurdle on both sides to overcome. A lot of times when we would pull the plug on a manager, they take it very personally. I would say most of the time when we passed on something that we ultimately did later, it was more, let's let this mature as opposed to screwing something up now and then they come back and say, well, we fixed those mistakes.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“In all your experience, I'm curious about times when a manager made mistakes or you saw business mistakes, you chose not to invest. And then later, maybe they learned lessons you were comfortable with, you came back, revisited a manager, you chose not to invest with at some point in time.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Years from now, it'll be better, and a lot of times when an asset isn't performing, it never performs. Having Frank discussions with GPs about when is the right time to exit, it's important in any environment, understanding the firm's strategy and mentality, particularly in a time like this, you want to know that firms have some understanding that this capital is precious and there's clock ticking, and it's fine to hold things if you think the incremental return is worthwhile. But if you're just holding this in the vain hope that someday things are going to be better, if there's not a good reason to expect that, it's time to exit. And that's all said with knowing that if a business isn't performing, it's pretty hard to sell it.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“You just have to try and have good, candid discussions with managers about what are you thinking with this asset? It doesn't seem like it's going somewhere. What are your plans for it? I think institutions don't do a good job of asking GPs about cell decisions in general when we're sitting down with a manager for the first time. One of the questions we always ask in the initial meeting is, you've told us a lot about how you buy these businesses. Tell us about how do you decide to sell. And a lot of times the response I get is, oh, no one ever asks us that question. And I'm not saying this is somebody who thinks, oh, a good business ought to be sold in three years. In fact, if anything, I'd say that buyout firms are probably too quick to sell their good businesses rather than churning over your good companies every three or four years. Maybe you want to let them run a little longer and let them compound for maybe five or six years instead or maybe even longer. What winds up happening is the good businesses get sold in three or four years, the bad businesses hang around for 10 or 12 years. The GPs just think, well, I can fix this.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“The private markets, when you have a manager that's under pressure, maybe the businesses aren't doing that well, maybe the returns aren't going to look good if they sell some of those assets. There aren't as many data points to try to assess. Are they clear-headed in making good decisions about when to sell as compared to the public markets when there's so much more turnover of ideas? How do you think about getting inside the head of a GP that you have money with where the premise was supposed to be you buy, you improve, you sell, and you try to do those all well, but now there are these confounding factors about the sustainability of the business, the future of the...”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“You'd meet a group, or hey, this is a really interesting story. And they seem like they're doing interesting stuff, or they have an interesting set of backgrounds, and they seem really hungry and aggressive. And let's dig into that.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Warm introduction from somebody would always help, particularly in the venture world a lot of the ways that we found firms, whenever we would sit down with somebody in our network, be it another venture capitalist or if we'd gotten to know entrepreneurs or whomever, always ask, hey, who out there is new and interesting that we ought to get to know that did identify some opportunities for us that's harder in the bio world because people are much less prone to be working together. Normally they're competing with each other and a lot of biot managers by definition have someone outbids them for a deal, then that person is stupid. They pay too much for the company. Can that universe, it was a little more taking a lot of meetings and looking for the diamond in the rough and we'd have a lot of meetings at 15 minutes in, you sort of knew, well, this is probably not for us and you'd sit there for an hour, an hour and a half. Maybe learn something about the companies that we're investing in that was then useful somewhere else. But occasionally.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wanted that firm and maybe even that person from the venture firm to be on his board. And then we said, well, why did you pick this firm for the series B, the new firm that we had invested with? And he said, oh, they had money. That was not a good answer. Trying to find people where the answer is not just they had money is really important. That's true across the private investment world. There are tons of people with money. There's tons of money out there. You need to ask why the people that are making the decision are taking the money from the group that you might be investing with”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Always found it extremely useful to talk to the CEOs and the entrepreneurs of the portfolio companies of the venture firms, and we had a sort of eye-opening experience. This was in late 80s. There was a venture firm we backed. It was the first time we backed a firm that wasn't a brand name firm. Well, these guys, they don't have the marquee of a Kleiner Perkins, but they seem smart and hungry and interesting. We were then at their annual meeting a few years later. My colleague Dean Takahashi was sitting next to the CEO of one of their companies, and this group had just invested in the company's Series B round. He took money from four Series A venture firms, and they happened to be four firms that we worked with. So we had a reasonable exposure to this company, which actually then was a zero ultimately. Dean asked him, why did you pick those four firms? And he had a very good reason for each one of those firms. This one was going to help him recruit, and that one had the corporate relationships, but very discreet reasons why he.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Always a focus on who are the people you want to be partnering with. At the end of the day, it is very much a people business entrepreneurs, particularly today, can be very choosy about who they want to work with. You want to make sure that the people you're backing have the mindshare with the entrepreneurs. That requires spending a lot of time out on the ground meeting both the venture capitalists, but then also trying to spend time with important people in the industry. That's something the people at Yale have done quite well in the last 10 years. I got out of the venture business probably eight or nine years ago now because it was getting too complicated to do both. But the people I turned the portfolio over to, I think, have done a very good job of figuring out how do we stay in that information flow when we're a couple steps removed from the coalface, spending time, particularly in Silicon Valley, but elsewhere, trying to build a network of smart young people that are probably going to do interesting things and know who they're thinking about.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Categories, particularly in the venture world, things have changed there so much in terms of the balance of power between the entrepreneurs and the funding sources. The math is just completely different. When I started, if you were a smart guy in Silicon Valley, you crawled on your hands and knees up Sandhill Road to Sequoia or Kleiner Perkins and begged them to invest. They'd invest $3 million and own 30% of your company. Now it's the other way around that Sequoia and Kleiner Perkins are crawling on their hands and knees to the hot person in the AI startup and begging to invest $50 million and own 3% of the company. And maybe the outcomes today are bigger. So maybe that makes up for some of it. And I'm sure there will be times in the future where we have venture booms again, but the odds of systematically finding firms that are consistently producing 20% plus returns and the occasional 80% returning fund.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Going to be very difficult for private equity broadly defined venture and buyout and related stuff to be the single defining alpha creating strategy for institutional investors the way that it's been over the last 35, 40 years. Looking back on when I started a lot of what we did was pretty obvious if you started from first principles. the successful strategies has been copied by so many people there's so much more money there's so many more smart people trying to be successful in these fields that it's gotten very very very efficient i think there will still be firms in both the venture and the bio world that you look back on and say wow those guys did a fantastic job it's going to be harder to prospectively identify them and know that well these are the horses you want to bet on and the returns will take care of themselves institutions have to be really realistic about the returns they can expect from these”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Does in some ways maybe take some pressure off the GPs that they can tell the LPs there's liquidity if you want it and either you go out and sell your interest in our fund or we'll arrange a GP-led secondary for some portion of our assets and then it's up to you whether to buy or sell and the problem from my standpoint is we always thought at Yale One of the reasons we hire these guys is because they know when's the right time to sell an asset and we're sort of relying on them to do that. And then if they default that decision back to us and say, well, you can sell in the secondary or not, it's up to you. We don't know how to do that. You're the ones that know this is the good price for this asset. This is the valuation at which you should trade. That's not our skill set. And that's not something we've spent time historically doing. And so the idea that we're just being given this option and isn't that great, it's not really doing your LPSA service. The haircuts that you wind up taking to get.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Deals that they did in 2009, 2010, 2011 are actually doing pretty well, and they were selling those things after three or four years and earning good returns because it's been hard for people to buy things over the last three or four years for all the idiosyncratic reasons in the market. There may be not going to be as many good 2022 deals that were sold in 2025 for three and a half times your money and you look like a genius. It might be harder for firms as a whole to protect their reputations the way that maybe they were able to do after the financial crisis.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“A bad deal into a mediocre deal. There's a lot that needs to happen in terms of people coming to grips with reality that, look, I pay too much for this business and I'm going to have to accept a mediocre outcome. And it's compounded by it's obviously been a tough fundraising market. And so if you sell an asset for 0.8 times your cost after three years, that doesn't look good in the next fundraising pitch. I don't know what breaks the logjam. It seemed like a pretty consistent refrain over the last three years that the biomanagers would tell us, oh, the investment bankers tell us six months from now things will be better, whatever the date was, it would never get here. People are going to need to recognize that reality and deal with it. The other challenge that might be different this time around is those 2006, 2007, 2008 deals took a long time for managers to decide to get out of those, but at least they were selling those assets for mediocre returns in an era where then the”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Through, but it's going to take a long time for the GPs to sort of amortize their overpayment. There are going to be a lot of those assets that the GP makes $1.4 times their money after eight years. It's very hard for them to decide to make $1.4 times their money after four years because there's always the hope that things will be better. And if we bring in a new CEO and give him a couple years, or if we do this clever thing, and one problem biote managers have is they think they can fix everything and sometimes they do fix things, but they get too anchored to cost a measure of value. And if they can't get cost, they're going to do whatever they can to get their cost back. And in fact, they might be better off to sell an investment that is not going to perform well no matter how long you own it, freeing up your capital and probably more importantly freeing up your time so you can actually go out and do a good deal today and spend your time working on that instead of trying to make”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Obviously, been a series of issues in the world that have contributed to it, the change in interest rate environment, the stock market's been up and down and up and down and up and down, the tariffs, all of these factors that have contributed to the problem. But I think the fundamental problem in the bio world and probably to some extent in the venture world is that not unlike 2006, 2007, people in 2020, 2021 paid too high a price for assets in a world that is now very different. Biote firms routinely paying 20 plus times EBITDA for quality businesses, but businesses that probably should not trade at that high evaluation, doing that in a world where interest rates were zero and there was a lot of money being pumped into the economy by the government in the COVID era. They just paid too high a price at the wrong time in the cycle. Their quality businesses, a lot of them will be able to play.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Net returns that they're getting from their financial advisor plowing their capital into private equity. Gross returns might be fine, but between the fees that the GPU is charging and the fees that the investment advisor are charging, the net might not be very interesting.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Raise money in a normal way, they have to go to the government to get a lot of their capital by and large those firms did not do very well. There's some value in sticking with things that you know, particularly from a structural standpoint. We've seen firms evolve their businesses in ways that might be good for the general partners and good for the value of their management companies but are not good necessarily for LP returns and the very large firms going public and managing these giant pools of insurance assets and they're really more credit businesses now than they are LBO businesses and the LBO business is kind of on the side even though it's what the brand name is still associated with. To me that doesn't seem like a way for LPs to be expected to generate exceptional rates of return. Similarly, a lot of those firms now turning to the wealth management world is their next source of capital. There are going to be a lot of doctors and dentists who are pretty disappointed 10 years from now with the”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Model from this traditional oh let's have five or six or eight GPs sit around a table and everybody do their own deal and hopefully it all works out to having a ton of internal resources and doing things soup to nuts in terms of stage and ways to try and add value. Innovation like that is interesting and buyout firms innovating in the way that they worked with their portfolio companies or in the way in which they tried to generate investment opportunities we always wanted to understand those things. Some of the structural innovations never really appealed to us. If things got too complicated structurally that was often a sign of a problem. One thing I never liked was we would have bio firms come to us and talk about, oh, we're going to get all this leverage from the small business administration. That's going to allow us to goose the returns and do all this clever stuff. To me, that was always sort of a code for all these people can't.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Everything we did at Yale was people first driven. Do we want to be partners with these people? Why are they going to succeed in a crowded competitive, expensive world? And are they going to be good partners that are not going to demand their extra large piece of pie when times are bad? If that wasn't there, it didn't matter what kind of innovation somebody was proposing. And a lot of times, if you or somebody that had already established yourself as I'm a successful venture capitalist or I'm a successful LBO firm, you didn't need to offer the LPs some different mousetrap in order to raise money. Sometimes there was a little bit of selection bias that if somebody was coming to us with a different proposition in terms of structure or economics, you'd have to ask, well, why is this person feel like they need to do this in order to attract to our capital as opposed to just doing what has worked for so many others? That's not to say firms shouldn't innovate. Andresen was very successful in building a different”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“You look at the last 15 years, there have been a lot of innovations or evolutions of some of the investment strategies and firms in private equity. You have the Softbank Tiger Growth Stage Inventure. You have the Andreessen full service model to venture. Starting with that lens of you want operational driven buyouts and the certain venture firms that tend to be where the lottery tickets are housed, how did you think about looking at these different sub-areas within the two asset classes?”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“You just had to work through it. It was hard. Some of the original GP secondaries came out of that world. That's how that whole phenomenon started that you had these zombie funds in the 2010-ish era where it was clear that there was no way for the GP to earn a carry, but there needed to be some kind of resolution and you needed to figure out a way to pay the people that were still around to work out the assets and bringing in some fresh capital to provide liquidity to LPs that just wanted to be gone and to provide some ability for these management teams to have some income and maybe some fresh capital to do New Deals and reestablish their credibility and so on. That's how that started. And then it morphed into what it's become today. much bigger business.”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dead. I can only think of one firm off the top of my head, maybe two that were holes in the ground. And then how do you deal with the damage and how do you pay somebody to turn off the lights when there's no incentive compensation left to give anybody?”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pi was much smaller, they'd say, but I still want my pie, where I can get my pie from is from my LPs, when we'd have to say, no, no, no, that was not the agreement. Those conversations got very difficult. That happened with some of the post-2008 firms too. Although the post-2008 era was not as bad as I think we feared it was going to be, there were certainly a lot of businesses that in 2009 were like, oh my God, these things are zeros. That by and large proved not to be the case. The LBO managers spent five or six or eight years digging out from having paid too high a price at the wrong point in the cycle. But by and large, they had bought quality companies that could survive volatile worlds. And a lot of those deals wound up being 1.4 times your money after eight years, which is not a great outcome, but is a lot better than a zero. There weren't as many situations where a firm just completely imploded because its portfolio was just”
2025-07-14 · Capital Allocators · Tim Sullivan – Yale's Private Portfolio (EP.456) · IDENTIFIED FROM THE TRANSCRIPT · source