The transcript from this week’s, MiB: Michael Carmen, Co-Head, Private Investments, Wellington Management, is below.
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This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
Barry Ritholtz: 00:00:06 This week on the podcast, I have an extra special guest. Michael Carmen is co-head of private Markets at Wellington Management. Wellington’s a fascinating company. They’ve been around literally nearly a century. At one point in time, Jack Bogle, founder of, of Vanguard was chairman of their mutual funds. Just really a fascinating history from, from a private company to a public company back to a, a partnership. Really interesting. And, and Michael has had a a bird’s eye view of this for, for really the past 25 years. He is uniquely situated because he has run both public mutual funds as well as privates, including late stage venture private equity credit down the list. He, he really sees all sides of, of the elephant and is capable of describing it in a way that I thought was both fascinating and, and informative. I found this to be an interesting discussion and I think you will also, with no further ado, my conversation with Wellington Managements Michael Carmen.
Michael Carmen: 00:01:13 Thank you, Barry. Thank you for having me.
Barry Ritholtz: 00:01:15 [Speaker Changed] So, so let’s talk a little bit about Wellington, which has really a fascinating history. Not only have they been around since I think 1925, almost a a hundred years old, and one point in time Jack Bogle was their chairman, at least of the mutual fund division. Tell us a little bit about the firm’s history and how it’s evolved over the past a hundred years.
Michael Carmen: 00:01:38 [Speaker Changed] Sure. Well, I haven’t been there for most of the a hundred years, just so you’re, just so you’re aware.
Barry Ritholtz: 00:01:42 [Speaker Changed] Thank You, you look a little younger than that.
Michael Carmen: I appreciate that. And as you noted, the firm’s almost a hundred years old, started in 1928 and I think 28. One of the interesting aspects of the firm is that it was a public company At one point in the 1970s, the company went private in 1979 and we became a partnership, 29 original partners. We now have almost 200 partners and we’ve gone through probably about three generations of partnership change, which is very unusual, as you know, in the business it usually is very difficult, but because the ownership was very dispersed among all of the partners, it made those transitions very easy. And so we’ve grown from a very small company with 29 partners back in 1979 to, as you noted, over a trillion dollars of assets and it become very diversified. We were originally very equity heavy back in the day, and we made a lot of investments on the fixed income side. So fixed income is now a substantial percentage of our assets. We entered the liquid alts market with hedge funds back in 1994, and we entered the private market in 2014 with my product in late stage growth.
Barry Ritholtz: 00:02:53 [Speaker Changed] So, so you weren’t there in 28, you weren’t there in 79. When did you join Wellington?
Michael Carmen: 00:02:58 [Speaker Changed] I joined in 1999 in the middle of the tech bubble as a growth investor.
Barry Ritholtz: 00:03:03 [Speaker Changed] Great timing
Michael Carmen: 00:03:04 [Speaker Changed] For the first nine months. Sure. It was April of 99. I had an amazing 99 in early 2000, and I had left a hedge fund, so I was probably one of the few people to leave a hedge fund and go to a larger institution in the middle of the tech bubble. But I wanted to be on a larger platform. I love being with a lot of other investors and being very collaborative and collegial and I felt that that’s what embodied Wellington’s culture, which was exactly what I, what I got and what we continue to be today. And so I loved it from the first day I got there and now I’ve been there for just under 25 years. So
Barry Ritholtz: 00:03:39 [Speaker Changed] Let’s define some terms. Everybody knows what a hedge fund is, but let’s talk about liquid alts. How do you define liquid alts?
Michael Carmen: 00:03:47 [Speaker Changed] Liquid alts, I basically define as versions of hedge funds, basically an, you know, it’s a, it’s a synonym for hedge funds and thinking about the alts market, right? There’s liquid alts and then there’s non-liquid alts, which would be mostly on the private side, right? And so our initial thrust was what our first hedge fund called Bay Pond, which is a financial services hedge fund, started by Nick Adams back in 1994, which will, I guess be celebrating its 30th anniversary next year. And now we have a number of different hedge funds, some we have in the macro, we have multi-Strat, we have point hedge funds with in technology in the healthcare field. And so we’ve built out over $20 billion hedge fund, liquid alt business. And now we’ve added privates to that.
Barry Ritholtz: 00:04:29 [Speaker Changed] So, so I wanna focus on, on the phrase liquid alts, which I don’t think a lot of laypeople understand. Typically, when you’re invested in, in a hedge fund or private equity, you agree to be locked up for a certain period of time. There are occasional windows or gates that open and you could take some capital out. So when you commit to PE or venture, whatever that, that money is, figure seven or to 10 years, you’re not gonna touch it. When you say liquid alts, what you’re really saying is if you need this money back within X period of time, you could get some or all of it. What, what is distinguished liquid alts from these illiquid locked up privates?
Michael Carmen: 00:05:11 [Speaker Changed] Sure. When I think of liquid alts, there’s probably two parts of it. So one is, to your point, the money is not locked up for multiple years. Generally we have a one to maybe two year lockup where you can, you can’t access that capital. But more importantly, when I’ve heard of liquid alts, it’s generally the investments that they’re making are in liquid, liquid products, mostly public market products. And you can go long, you can go short, you can have leverage, you could have higher exposure levels, but the securities are in the liquid public markets versus private equity, which are in illiquid private markets.
Barry Ritholtz: 00:05:45 [Speaker Changed] So it applies to both you, the investor have a, a much shorter period of illiquidity and specifically the assets that the fund is investing in.
Michael Carmen: 00:05:54 [Speaker Changed] Correct. And, and definitely more emphasis on the, the types of investments the fund is, is making. , Barry Ritholtz: Michael Carmen:
00:05:59 [Speaker Changed] So you started out investing directly in the public markets, small cap, mid cap, various styles. How did you find your way to that side of the street? The more private side of the street? Yeah,
00:06:11 [Speaker Changed] It’s a great, it’s a great question. And so to your point, I was a public portfolio manager, started as a tech analyst and made my way to associate portfolio manager and then began managing public portfolios in 1996. Prior to getting to Wellington. Where,
00:06:25 [Speaker Changed] Where were you managing those for in 96? For, for hedge fund or for,
00:06:29 [Speaker Changed] So that was actually Montgomery Asset Management. I don’t know if you remember the old Montgomery Yes. Securities
00:06:35 [Speaker Changed] And old school.
00:06:35 [Speaker Changed] Correct. And I love Montgomery and Robertson Stevens and all these boutique firms Yeah. That are all gone. But they started an asset management division and I, my family and I moved out to California and that was my first job in being a portfolio manager, was running a small cap fund for them back in 1996.
00:06:53 [Speaker Changed] A little bit of a tech bias, or it didn’t matter, you go
00:06:56 [Speaker Changed] Anywhere, it was, it was diversified. But you know, as a growth manager, obviously you’re gonna have a reasonable weight to the tech sector. And I was, I started as a tech analyst, but I became, over the years, I became a much more diversified investor. That’s probably the biggest reason I was able to navigate the other side of the tech bubble because I grew up in a period where I did invest in other sectors besides tech. And so that was very helpful when tech went out of favor for basically a decade.
00:07:20 [Speaker Changed] Right. So, so who were the investors when you started doing small cap and and growth and are, are these the same sorts of investors now doing privates at Wellington?
00:07:33 [Speaker Changed] So when I, my first fund that I ran when I was at Montgomery was a mutual fund. So it was all individual investors and that was the period of time where you can be in some news, news publication and your fund would become hot and you would get hundreds of millions of dollars in assets in a short period of time. And that’s literally what happened to us. But when you think about what I’m doing today and the types of investors I have today, today, it’s more of a combination of wealth management. So more in the family office, high net worth, ultra high net worth. And then the other half of our business is lar large in large and medium sized institutions. How
00:08:12 [Speaker Changed] Do you transition from public investing, public stocks, you know, mom and pop mutual fund investors to family offices and privates? I would imagine that’s a series of pretty significant changes both in what you’re investing in and, and the process of finding things to put capital into. Yeah,
00:08:33 [Speaker Changed] Absolutely. And I, I, I think of it as I’ve had a second career, right, that I’ve made this transition,
00:08:37 [Speaker Changed] That difference. It, it’s like I was a lawyer, so this is my second career or third career if you include asset management, but I would think public and private are kind of shades of the same thing. You’re saying a a distinct difference from public mutual fund to private equity and and late stage venture.
00:08:56 [Speaker Changed] They are shades of the same thing. So no doubt all of the skills that I garnered on the public side have been transferable to the private side. And in fact, in terms of what I do specifically in late stage growth, my message has always been that we’ve been able to bring our public market expertise to the private markets because the companies we’re investing in, as you’re aware, used to go public at a much earlier stage. Right? When I was going back to that small cap fund I ran, I would sit across the table from companies that had two, three, $400 million market caps that were going public. Right? The best example I always love to give is that Amazon’s last private round was at a $60 million post money valuation.
00:09:39 [Speaker Changed] That’s unbelievable.
00:09:40 [Speaker Changed] Correct. And today, as you know, you have companies like Stripe doing $55 billion rounds, right? Post money valuations until the market has changed dramatically. And so, to your question, the way I started getting into this market was effectively the FOMO of now seeing companies staying private longer as a public market investor. And I was running mutual funds at Wellington as well as one of our hedge funds, and I had the latitude to invest a certain percentage of my assets in illiquid investments. And
00:10:12 [Speaker Changed] From Wellington, even though you are running mostly public equities
00:10:16 [Speaker Changed] Correct. Under the 40 act, right. You could have up to, and you wouldn’t do this, but you could have up to 15% in illiquid securities. And for me, in my mutual funds, I was in like the, the mid to high single digits. And, but I started getting involved in buying a lot of these companies as I realized that companies were beginning to stay private longer.
00:10:36 [Speaker Changed] And, and to clarify the way the SEC defined illiquid securities in the 40 act for mutual funds, some of these might even have been public companies, but trade by appointment, not a lot of float, not a lot of shares or was it strictly non-public private companies?
00:10:53 [Speaker Changed] Well, you’re getting above my pay grade, right? In terms of being that specific. That’s why you’re the lawyer and I’m not,
00:10:57 [Speaker Changed] Not, not for 30 years. But, but I mean, it, it just seems funny that the SEC would say up to 15%, you just wonder what was the genesis of that? Was this just not widely traded stocks or was it really not public stocks?
00:11:13 [Speaker Changed] I don’t know specifically the answer to the whys of this since it was done. Another thing that was done before my time 1940. Right. But
00:11:21 [Speaker Changed] I was just a kid back then, so I, I don’t remember. I wasn’t paying attention. So, so then this raises a kind of interesting question. You’re, you are adding more private and illiquid stocks to your portfolio. At what point does Wellington sort of rub its chin and say, Hey, this is an interesting space, we’re really private curious, we wanna see if we can expand to this. What, what’s that process like?
00:11:44 [Speaker Changed] So the rubbing of the chin occurred in October of 2012 when I wrote a memo to my partner in crime channel O’Reilly, who’s now my co-head on privates. And I said, Hey, I think this might be a really long-term secular trend of companies staying private longer. And I do think it’s challenging to buy illiquid in publicly daily traded vehicles because of the illiquidity aspect of it. We should consider doing a dedicated fund to take advantage of this trend for our clients. And so that was about two years before our first close. And so we had never, as you noted, we’ve never done private, so we had to socialize if this was a business and a direction that we wanted to take. And I think that Wellington has always been very bottom up and very entrepreneurial. Right? And so after explaining why I thought we can do super well in this category, we launched the product in 2014 and we were fortunate to have several of our clients and who believed in us and believed in the team. And so we had our first close in 2000 November of 2014, and ultimately we raised a billion dollars for our first fund in the private space.
00:12:56 [Speaker Changed] So, so from a billion dollars almost 10 years ago. What’s Wellington’s privates today? Some multiple that I would imagine. Correct. So
00:13:04 [Speaker Changed] We’re at about 8 billion of commitments and money under management. We now have five products in the space. In fact, my original product invested in biotech in 2019. We spun out biotech into a separate dedicated product for the biotech space. And now we’ve added products in investment grade, private credit. We have a product in the sustainability climate area. We have a product called Wave, which is focused on, on diverse founders. And so now we’ve built out the, the space further and our hopes are to launch additional products in the space over the next several years and really build a very multidimensional, multi-asset platform that will address private equity mostly in venture credit as well as as real estate.
00:13:52 [Speaker Changed] So, so I’ve read a bunch of analyst research, technical term, bunch of research, but I’ve frequently seen analyses that show micro cap and, and small cap run very parallel to venture capital in terms of performance and, and volatility and other descriptions. What have you found, given your background running small cap at one point in time and now doing a little bit later late stage venture capital? Are, are the parallels there at all? Or or is that sort of academic research overstated?
00:14:27 [Speaker Changed] No, I think, I think it’s a very fair characterization of the way to think about this ’cause it’s kind of the way that I thought about this. And in fact what’s interesting is that in my product, we have several clients that use us as a small cap growth alternative. And the reason being is that if you believe in my premise that companies are staying private longer, what’s happening is many companies today are going public and skipping small cap, right? If you think about the Airbnbs and Ubers and many, many others, they’re coming public not at $300 million. They’re coming public at 10 billion, 20 billion, 30 billion. And so their view is that, well, if we want to continue to have exposure to the next generation of great companies, this is a product that will enable us to have exposure to that set of companies. And so I think it is a fair characterization. In fact, when we look at performance we use as our public market equivalent, we use the Russell 2000 growth index as our comparison of whether we’re doing a good job or not doing a good job.
00:15:29 [Speaker Changed] That’s your benchmark, correct?
00:15:30 [Speaker Changed] Correct.
00:15:31 [Speaker Changed] So, so the obvious question is it first your thesis has proven to be true for a long time. What are we down to 3,500 companies in the Wilshire, 5,000 fewer companies going public. So you definitely got that right. I gotta ask, why do you think that is? What is the underlying reason why companies are choosing to stay private for longer?
00:15:56 [Speaker Changed] I think it’s a really great question. And when we first started, we felt the thesis was that Sarbanes oxley that was put in place in the early two thousands made it a little bit more onerous and made it more expensive for smaller cap companies to go public because they, we, they raised the regulatory burden of doing that. And I think that was, that’s the, the genesis of this. But as I sat in the boardroom and we have a lot of observation rights, board observation rights in terms of what we do, probably get them close to 75% of the time. What I’ve discovered is that I think it actually makes sense because when you’re private, you can think more strategically. You’re not trying to make the march quarter and the June quarter ands,
00:16:39 [Speaker Changed] You think longer term for sure. Correct.
00:16:41 [Speaker Changed] You can think longer term. And when you’re still at a phase where you have 50, 70 $500 million of revenues, you, you wanna have a lot of latitude. You want to have the ability to say, you know what, we need to invest more money now. And as you know, you start making decisions like that in the public market and you release your earnings results and say like, Hey, our earnings next quarter are gonna be half of what we thought they were gonna be. Your stock price generally doesn’t go up, right? And then you, and then you go into the doghouse and you gotta scratch your way out of it. Whereas when I, when I’m in the boardroom, we probably spend 10% of the time maybe talking about the quarter and 90% of the time really thinking strategically about where we can take this business, how do we expand our product line, how do we expand geographically, how do we expand distribution? And so I think that for me, my, my thinking has evolved in that I believe that it could make companies stronger for longer if they have more time to think strategically and then make that transition to having to balance the strategic with the
00:17:42 [Speaker Changed] Tactical there. There’s no doubt that the era, when you were running a mutual fund the late nineties, there was a rush to bring a lot of premature companies public. So, so let’s hold that aside. Clearly just, you know, issuing IPOs based on clicks and eyeballs wasn’t gonna work. But that said, you, you bring up the regulatory burden of our, of Sarbanes Oxley, but that alone wouldn’t get it done if there wasn’t just tons and tons of capital around. Talk about what’s available for early stage seed, late stage companies that are looking to do around there. There’s no shortage of investors around, are there?
00:18:23 [Speaker Changed] Yeah, no, that’s, that’s a fair point. ’cause everything I just said would mean nothing if there wasn’t capital to deploy into these businesses. And over the last, call it 20 plus years, which from early stage and seed to late stage, there has been more and more capital in the, I think in the earlier stage it’s much more dedicated funds. It’s the traditional VCs that, that we all know that are in that market. And as you get to the later stage, it’s a, it’s a lot more eclectic. It’s some dedicated funds like ours, there are more multi-stage funds where there are funds that we’re doing series BSS and Cs and are now doing late stage. We’re generally our fund averaging a series D in terms of where we invest. There’s crossover funds, there’s hybrid funds, even hedge funds and mutual funds have invested in this space. And so there are a lot of pockets, a lot of people like myself when I first started are taking public mutual funds, some of the bigger players out there and they’re also investing in this space. And so there has been more capital available for these companies, which is what has enabled them to stay private longer.
00:19:29 [Speaker Changed] Hmm. Really interesting. So let’s talk a little bit about the process of evaluating different types of, of privates. You kind of alluded that the skills you learned evaluating small cap growth companies is very AP applicable to late stage venture and other privates. Take us through that. What, what, what are the similarities?
00:19:52 [Speaker Changed] Yes, absolutely. And because I would not be a good early stage investor, I don’t have any skill sets in evaluating three people in a garage with an idea, right? And, but when we’re looking at companies and many of the companies in our portfolio, they all have usually $50 million plus in revenues. Many of them have a hundred, 200 plus in revenues. Those skill sets are very applicable. And because there’s now product market fit, there’s now streams of data about how their customers have responded to their product, how sticky are their customers, what the competitive landscape looks like. So all of the information that we were assessing on the public side is very applicable to the private side. And what I think distinguishes us at Wellington is that we’re able to utilize our public market investors in the due diligence process in helping us assess. We have 55 global industry analysts that have been covering their industries for 10, 20, 30 plus years. And whether it’s logistics or aerospace or a software company, we have the information and we have the skillset to do that. And we have a lot of data to analyze and we could predict the future. We know what the company’s thinking about the future. Our numbers are generally going to be lower because many of those numbers are aspirational, but assessing management teams, so qualitative and quantitative is very similar to what I’ve done on the public side for many, many years. So, so the
00:21:18 [Speaker Changed] Parallels, you have a management team that you can evaluate, you have a product that you can review, you have customers and, and revenue, you can look at all this comes down to execution. Those are the similarities. What are the differences when you’re looking at a company that hasn’t yet gone public, isn’t quite that mature?
00:21:37 [Speaker Changed] I think it’s, I wouldn’t think of it as a difference, but I think it gets to your point, the part that we don’t know is the future can this management team execute from here to the public markets? And we always believe that our value added in this space is that we can help them on that last mile from the private market to the public market.
00:21:57 [Speaker Changed] So, so that’s, you, you’re touching on something I wanted to ask. What are the milestones between a $50 million company, meaning they’re doing 50 million in revenues, they’ve been around a few years, but they want to bulk up, they want to become more substantial. Do do we care about round numbers like a hundred million or 500 million in sales? Or is we just wanna see that steady growth over time and greater customer acquisition?
00:22:22 [Speaker Changed] I think every company is unique and their journey is very unique. And what I have found is that there have been a number of situations where we invested and things went off the rail early on and the companies needed to pivot or they had big headwinds. I always love to use the example of coupon, which is in the e-commerce space in South Korea, whose growth rate while we owned it went from probably a hundred percent down to 20%. And then re-accelerate as they got their logistics strategy in order. And then DraftKings, which is kind of the poster child that was at one point sued by practically every attorney general in the country, right. Questioning whether daily fantasy sports was even legitimate and then eventually became a big player in, in sports betting and and iGaming. And so those, those went totally off the rails that we had marked them down probably close to 50% at one point and then ended up being two of our best outcomes is that every company just has a different journey and the goal is, is to be patient in many cases.
00:23:19 [Speaker Changed] You, you were an early investor in DraftKings also, is that right? Correct. And then what was the resolution? So we know what happened with them. They blew up when the Supreme Court overturned the, the rule that only allowed gambling in certain states and now they’re one of the, a handful of giant players there. What was the Korean company?
00:23:37 [Speaker Changed] So the Korean company, south Korean company is called Coupon, which is basically simply the Amazon of South Korea. And so they went through, and I remember going through this with Baum, who is the CEO, is that they were going through a very similar thing that Amazon went through early in their existence is they were going from multiple day delivery down to two day delivery to one day delivery, to literally our delivery and doing all the logistics behind that required a lot of infrastructure and at one point they had to really slow down growth to make sure they got that right. Right. And once they got it right, they were able to re-accelerate and they had a moment where they were getting very close to running outta capital, but they were able to put around together and then they ended up having a really good outcome in the public markets. And
00:24:22 [Speaker Changed] They went public. They
00:24:23 [Speaker Changed] Correct, they did. They’re public, yeah, public on, on nasdaq. And so they’ve now been public, I think they went public in 21, so they’ve been public two plus years now. And so they had a really good outcome, but those were two that were not, you know, as your, to your point, going up until the right, like it was, there was a lot of sideways there and a lot of nail biting and then they ended up having good outcomes. But then there’s others that to your point, will just continue to, to pound out 40, 50, 60% growth and, and go from unprofitable to eventually profitable. And then our job is just really to help them think through what do you need to do between now and when you go public to make sure that you remain a very attractive company in the public markets. Right. Because there’s always this risk, which I worry a lot about, is that companies stay private longer, but sometimes they can stay private too long. Right?
00:25:14 [Speaker Changed] They miss their wind though. Correct.
00:25:15 [Speaker Changed] ’cause you need, you still need to have a really good story for the public markets because the public markets wanna see a long-term trend that they can buy into. And if, if they believe that you’ve already seen your best days, your best days are now behind you, that’s not gonna be a really interesting public investment. And so we really need to think through what’s the right timing, what are the right dynamics, and what do you need to do today to set yourself up for a really strong public showing.
00:25:42 [Speaker Changed] So how do these areas work together or are they three distinct fields of investing?
00:25:49 [Speaker Changed] So some of it works together and there’s some synergies and some ability for us to really invest across the pla the platform from early stage to late stage. On the venture side, investment grade private credit is a totally new area for us, right? But I think the commonality of everything that we’re doing is through the lens of where can Wellington have an edge? What do we, what have we done historically on the public side that would make sense to port over to the private side and leverage and scale that, right? So you think about credit, we have a multiple hundred billion, hundreds of billion dollars of revenue of of asset business in credit. And so we have a lot of expertise, we have a lot of experts, whether it’s portfolio managers, analysts, macro economists. And so there’s a lot of things that we can do in that space that we think we can deliver very strong results.
00:26:42 And similarly as we think about real estate, which we’re not in yet, but something we’re thinking about, we have a, a public re team on the equity side, we have a public presence on the credit and fixed income side. And so we think that’s an area that we can extend our expertise to also. And so we think about it through, through that lens in terms of where we, where we believe the platform can enable us to be super strong. And what we’ve been very, I think very successful at doing is attracting investors who buy into that.
00:27:12 [Speaker Changed] So is some of the thinking around that, these are essentially uncorrelated in terms of of their returns or do does eventually all things go to, to one and, and the the lack of correlation goes away?
00:27:25 [Speaker Changed] I think it always depends. I think, you know, when you look at what we’re doing on the late stage space, that’s probably the most correlated to the public markets. We’re definitely taking the direction that we’re going from and, and how our performance is somewhat from what’s going on in the public side. Obviously with our early stage fund, that’s many years away from a liquidity event. So that’s probably the least correlated. So I think it’s going to depend on, on the asset class, I think all things, I don’t think all things go to one, but there’s going to be some correlation with what’s going on in the public markets and what’s happening economically that’s going to have an impact on, on the, the performance of the businesses that we’re investing in on the private side, similar to businesses that we invested on the public side.
00:28:09 [Speaker Changed] That, that’s really interesting. So, so let’s talk a little bit about the IPO market. Seems like it’s been mostly frozen this year, 2023. Why do you think that is?
00:28:22 [Speaker Changed] So the IPO market always takes its cue from the public markets. And as you know, last year 22 we had a bear market. It was pretty harsh bear market and particularly in growth,
00:28:34 [Speaker Changed] It was a modest bear market in the s and p 500 off about 19%. But the nasdaq, the tech heavy nasdaq, I think was down 32 or 34%. That’s a big, losing a third of your value, that’s a big whack.
00:28:47 [Speaker Changed] Yes. That was, that was a little bit more nuclear winter. And if you look at the innards of that, there were a lot of companies down 60, 70 and 80%. And so when that happens, portfolio managers having been one shut down, the last thing you want to do when you have 50 fires in your portfolio is to look at a, at a new idea, right? You’re still trying to figure out what, what you need to keep, what you need to jettison. And so that is why the IPO market shuts down in a bear market.
00:29:15 [Speaker Changed] Now, now today, what do we have? The s and p we’re, we’re recording this in the beginning of the fourth quarter. The s and p is up about 12% for the year above average, historically. And yet the IPO market still seems to be a little chilly. Is it just recovering from last year or why are we still, you know, floundering along?
00:29:35 [Speaker Changed] So we’re thawing, I think we’re in the thawing thawing okay. Thawing moment, right? We’re starting to get there and if you look historically and we’ve looked at data from the last 40 years, generally the IPO market, when it shuts down, it shuts down for about a year. Occasionally it will shut down for two years plus. And as you’re noting, we’re kind of in the second year of this and as you also noted, the markets are starting to recover and as the markets recover, public investors start to get a little bit more comfortable looking at new ideas and,
00:30:04 [Speaker Changed] And we’ve, we’ve had a few IPOs trickle out this year. Right. Anything catch your eye?
00:30:08 [Speaker Changed] You know, I don’t look at the public markets quite as closely, but you had, you had a cadre of companies come public several weeks ago with Klaviyo, which is in a very interesting space in kind of the ad tech area and Instacart, which obviously was a down round but still has an eight, $9 billion market cap. And of course arm, which was a much larger play giant and it’s been out coming being re-put out from Intel. And so to me they, they’ve traded fine, which is like a nice little indication that the health of the IPO market is beginning to improve. And of course I don’t have a crystal ball, so I don’t know if the markets are up or down, but let’s assume that they’re stable over the next couple of quarters or several quarters. I think that there’s a reasonable backlog of companies that will start seeing, being surfaced and starting to come to the IPO markets. We know we have companies in our portfolio that are beginning that preparation. So I think 20, my guess right now is that 2024 begins to normalize and we’ll see, we’ll see improvements in, in the IPO market after two years of really very, very low volume.
00:31:12 [Speaker Changed] So, so a decade ago you identify private companies are gonna stay private for longer, which means there’s gonna be a delay going public and then a decade goes by and, and more or less proves your thesis. Correct. Over that ensuing decade, how has the IPO market changed? What’s different about a company going public in 2024 than you when you were first making these observations in 2014?
00:31:40 [Speaker Changed] So I think generally what we’re seeing is companies are going public later. So instead of being like 4, 5, 6 years into their existence, it’s more like 8, 9, 10 years into their existence. And so by definition, these companies tend to be more mature and tend to be larger than they were a decade ago. And particularly when I started in the business and was managing money back in the 1990s. And so there, these companies hopefully should have more sustainable performance and be a little bit less volatile, albeit in 21 we had a, a rush for a lot of companies to come public and that class has not performed well, which is probably a good cautionary tale that you should be more mature when you hit the public markets. So
00:32:21 [Speaker Changed] In the nineties when you were running public funds that IPO process was very much a dog and pony show. You would have the investment bank and the founders and a whole bunch of folks do these giant road shows and they would go from New York to Boston, they’d go out to San Francisco, they would go all around the country showing off the company before the big wedding. How is it today? Do we still go through that same process or have capital markets evolved for, for taking companies public today? Well
00:32:54 [Speaker Changed] The biggest difference is it’s now Zoom, zoom and zoom, right? It’s just a lot of zoom meetings. So they’re not running all over the world anymore, which is probably really good for
00:33:02 [Speaker Changed] More efficient, for sure,
00:33:03 [Speaker Changed] Massively more efficient. We, we do have a couple of different directions we can take, although the majority of the companies are still doing a direct IPO, right? You have direct listings that got a lot of play a few years ago. Obviously we saw a lot from the SPAC market a couple years ago. I think that trend ha is in the rear view mirror. I always felt SPACs make sense in very specific cases, but if you’re a really solid company, you can go public through an IPO, you don’t need to do a spac. So I don’t see SPACs coming back. So a lot has not really changed in that regard other than the fact that you can, that companies now can do a lot more meetings in a lot more locations in the comfort of their offices or their home. So
00:33:49 [Speaker Changed] Let’s talk a little bit about how you guys work with later stage companies. How do you think about these firms versus either an early stage company where you really don’t have a sense of product and client base and companies that have gone public where they’re fairly mature and it’s pretty clear, hey, we have a sense of what the next five years might look like. These sort of straddle that gray zone in between?
00:34:15 [Speaker Changed] Correct. And the value that we add is very different than an early stage company, right? When you’re an early stage investor, you’re gonna help them hire their first chief marketing officer, their first head of r and d and and many other, many other positions. And you’re gonna work with that founding team on their product market fit. By the time we get involved, the company has been built, they’ve had, they’ve achieved escape velocity and it’s really about how well they can scale. And that’s where we come in, is really being able to help them, as I noted earlier on that last mile. So for instance, we have an ESG team and so we have a team led by Hillary Flynn that steps in and works with the company on what they’re going to need to do from today to the time they go public to be at a level that’s gonna make them attractive to the most investors on the public side.
00:35:06 Since, as we know the public side, many investors care about issues around ESG, particularly around corporate governance and what the composition of the board of directors should look like and, and many oth other issues around that. We’re gonna help them really think about strategically and tactically the things that they’re doing today that are going to have ramifications when they are a public company. Whether they’re introducing products that have lower gross margins. So optically gross margins are gonna start going down and that could have an impact on their multiples relative to things that they can do that can be gross margin enhance and, and what can they do to sustain their level of growth for the longest period of time. And as we talked about also IPO timing, sometimes we’ve suggested that companies delay their IPO because we think that they don’t have the visibility to go public today. Others, we’ve suggested that they should go public sooner because of what we talked about, about not getting past their expiration date of having an attractiveness to public investors.
00:36:05 [Speaker Changed] So private equity firms tend to come in and take over running these companies. They, they manage them, not what you guys do. The description of how you approach late stage companies almost sounds like finishing school, you put the final touches and get them ready to send them out into the world. Is that too glib or is that a fair way to describe that? No,
00:36:29 [Speaker Changed] I like that description. I think that’s what we’re doing is really helping them with finishing school. And importantly we want them to be attractive to the public side of Wellington subsequent to their IPO. There’s no guarantee. We always tell our companies we can’t, we don’t tell our public side what to do, but we’ve had a lot of success. And in fact, when you look at the numbers over the first year, those companies have gone public. We have bought massively more on the public side than we originally bought out of our private portfolios. And so that to me suggests that our finishing school is working very effectively and creating companies that are attractive to not just the public side broadly, but to many of the investors on Wellington’s public
00:37:08 [Speaker Changed] Side. I’m I’m thinking about the tax consequences of what you just said. Can you own a company while they’re still private and then shift that over to the public funds? Or does it have to go to the process of the IPO and and then you’re buying shares in the secondary market?
00:37:24 [Speaker Changed] We can’t, it has to be, it always has to be arm’s length. And so we cannot take what we’ve done on the private side and that’s in dedicated funds and transfer that to any of the other portfolios at Wellington. So everybody needs to make an independent decision. Got it. And we can’t use our fund as a reservoir for the funds on the public side. I was
00:37:42 [Speaker Changed] Just thinking of the, the tax consequences of having to sell the privately held shares out into the market and then someone else in the same, under the same roof goes out and buys those publicly shares. Seems like there’s a, there’s a tax arbitrage to be had, but that might be a little too cute by half. No,
00:37:59 [Speaker Changed] But we, you can, you’re talking about a product that I think is very interesting in terms of the, the hybrid space where you have public private products. And so it’s something that we have actually in our FinTech product, we have a public private product that’s called, I think Creek Tank can do just that. And we’re thinking about additional ways that we can take advantage of our public and private market expertise to create products for our clients that can, that can do exactly what you’re saying is we can invest prior to the IPO and then we can hold for the long term subsequent to the IPO.
00:38:31 [Speaker Changed] Huh. Really interesting. So, so let’s talk a little bit about valuation. What metrics are you looking at when you’re thinking about a late stage venture investment?
00:38:41 [Speaker Changed] It depends on the company and every company. We’re gonna use different metrics in healthcare versus tech versus consumer and FinTech. Many of our companies are still burning cash when we get involved. And so a lot of times we’re gonna be thinking about normalized margins and those normalized margins are going to dictate how we think about that price to revenue multiple that we’re willing to put on that company at the time we invest. If a company ultimately is gonna have 10% margins, then that’s gonna be much lower relative to a company that can have 30 40% margins, right? And what I’ve done is really ported what I used to do on the public side to the private side in terms of thinking about ranges. I always like to think about what’s my downside risk and what’s my upside potential. And we wanna skew our investments. So those that we believe we have a lot more upside relative to our downside.
00:39:31 [Speaker Changed] So whenever I see, forget even seed like series A companies, it feels like everybody’s just making up numbers. Hey, there is no product, there are no customers. How do you even come up with a multiple? This has to be very, very different than either seed or a stage venture investments.
00:39:51 [Speaker Changed] Absolutely. Because as we’ve noted, we have companies with a hundred, 200, $300 million of revenues.
00:39:56 [Speaker Changed] So these are real companies, real products, real customers, real, real businesses.
00:39:59 [Speaker Changed] These are real businesses. And so we can really look at this in terms of having a little bit more confidence. I always like to say that these are not riskless, but they’ve been de-risked, right? You know, it’s a company you, what we don’t know is will it scale from a hundred million to 500 to a billion or is it gonna be a hundred and make its way to two to 300. So
00:40:20 [Speaker Changed] These aren’t barn outcomes, either they, they work or they don’t. It’s, hey, is this gonna continue along or as it is or can we get them to the next level?
00:40:30 [Speaker Changed] Correct. And when you look at our portfolio over the last 10 years and all the outcomes we’ve had, we’ve gotten back our money or made money on about 80% of the deals that we’ve done. So it’s a higher hit rate. I always think of it this as a little bit more of a fat pitch portfolio, right? Is that we stay away from binary events, we’re looking for the events that the outcomes could be less good or they can be really good.
00:40:54 [Speaker Changed] You’re not looking for the moonshots, you’re not looking for the hundred to one and the other 95% of the portfolios go, go to zero. No,
00:41:01 [Speaker Changed] We, we underwrite to a two to three x return on our investment. And when you look at the performance of our funds that are more mature, fund one and fund two, we’re right in that camp about net two x or so. But we’re doing it over a shorter period of time in terms of, of how long it takes. We have, we have a shallower J curve because we’re returning capital more quickly. And so, and that’s, so that’s how we’re thinking about this category is that to your point, the range of outcomes are a little narrower. We’re we’re never gonna have a hundred x but it’s gonna be very rare will we get when we get back zero. Right?
00:41:36 [Speaker Changed] So, so what leads you to a yes? Is it, is it a certain comfort level that with understanding the business, is it the management team? ’cause you know, in my office we’ve joked if it’s not an obvious yes, it’s a no. I don’t know if you think of it in the same way when you’re looking at late stage.
00:41:56 [Speaker Changed] I think it’s more in that camp that it’s gotta be a more obvious Yes. But it’s a lot. It’s, it’s, I always think about investing as matching the qualitative and the quantitative, right? Is that, I’ve always said to analysts when I was on the public side that we could always make the numbers work, right? But we have to have a management team that can execute. And so we spend a lot of time with our management teams. In fact, on average, we know our management teams for over a year before we invest with them. We wanna understand how did they execute from the first time we met them to now did they say they were gonna do X and they did X or above X or was it 0.5 x? Right? So we wanna see what their credibility is. We wanna understand how they built their team around them.
00:42:39 Are, are they the type of management teams that wanna hire people that are smarter than them or people that just wanna say yes to them. And so we need to understand those dynamics. And so management is very, very important. I’ve always said in my career that I’d rather have an a management team running AC business than AC management team running an A business because that team will figure out how to mess it up, right? And so I always want the former. And so that is a really, really important part of it. Then once we distinguish that we believe we have a good management team, then we have the ability to dig into the numbers and see if the numbers match what we’re hearing from the team. Because typically we don’t have numbers early on. We’re just building a relationship. And so now we’re gonna see if the numbers are matching the hype and the conversations that we’ve had with the teams.
00:43:23 And it’s amazing to me how many times that is not the case. But in the, in the times that it is the case, then those are the deals that we’re gonna wanna lean into and really determine if we believe this is a sustainable business, how big is the tam, the total available market? Or are they creating a new market? How fast are they growing today relative to other companies that were of similar scale? How sticky are their clients? What is their long-term value to customer acquisition costs? All of those dynamics to figure out if this company can be a lot larger in the future than it is today. ’cause generally we’re looking for an IPO about two to four years after we invest. And importantly we have to look at it through the lens of can this eventually be a public company? Does this make sense that our, that public market investors will be enamored and excited about seeing this company in the public market someday in the future.
00:44:15 [Speaker Changed] So do you work with other co-investors? Do you work with other firms or are these just one-off investments just with Wellington?
00:44:24 [Speaker Changed] So I’d say that almost every deal we do has a variety of investors in the cap table. We’re not exclusive. Very rarely have we been, I don’t know if we’ve ever been the only investor in the cap table in our round one is we, we’d love to see insider involvement. We wanna see insiders taking a pro ratter or a super pro ratter of the round. ’cause that there’s a lot of information in that If all the insiders aren’t playing or an insider’s selling, then we generally don’t want to be a part of that
00:44:51 [Speaker Changed] Different, different vibe there.
00:44:52 [Speaker Changed] Correct. And then generally there’ll be other investors that are invest alongside us, but importantly we’re not generally working alongside them because these are competitive deals and we want to get the maximum allocation that we need for our clients. And so we don’t want to draw other people in during that process. We might help on the backside if we’re leading the deal and there’s other investors looking at it. But job one is making is figuring out for ourselves independently if we think this will be a good idea, if making sure if we want, say our average check size now in our fund is about 75 to a hundred million. Let’s make sure that we can get that check. And we have co-investors that we work with that are clients of ours that we want to be able to offer them the opportunity to invest also. And so we, we kind of stay very stealth when we’re in the due diligence process. And then generally we’ll see other investors come in to fill out a round. Our probably our average rounds are somewhere between 200 to $300 million total rounds and we’re doing just under half of that.
00:45:53 [Speaker Changed] So where does your deal flow come from? It sounds like very competitive space. How do you find your way to some of these, some of these late stage venture investments?
00:46:02 [Speaker Changed] Yeah, which is the most important part of what we do because the old adage is, if you don’t see it, you can’t do it. Right? And so in on our team, on my product, which is called Hadley Harbor, we have 11 investors on our team and they’re out there every day sourcing. I always think of it as kind of 40, 40, 20, 40% of the scale is on sourcing, 40% is due diligence and 20% is the ongoing support of the companies, but probably close to 75% of the time is really going out and looking for deals. Our biggest source of deals are from our network of early stage investors that we have cultivated over the last decade, hundreds of investors who have invested in early stage companies that could help us get warm introductions to these companies. And by the time we get into our round, it’s very common that we know the majority of the board that’s in that company, which generally consist of early stage investors that are very important proponents of having us be involved with the company that people believe that we can add value and that we’re gonna be additive to that company over the time that we invest because we bring a much different angle given that we have the public market expertise relative to earliest age investors and have had a lot of IPO outcomes.
00:47:15 And so we understand what it’s going to take, but a lot of our sourcing comes from early stage seed series A and even series B investors who are, are part of our network.
00:47:27 [Speaker Changed] Let me throw a curve ball at you. You previously served as the first male advisory board member of the Wellington’s Women’s Network. Do I have that right?
00:47:38 [Speaker Changed] You do have that right. I love the research. So
00:47:40 [Speaker Changed] Tell us a little bit about why you were the first male member of the Wellington’s Women’s Network. Well,
00:47:48 [Speaker Changed] Well thank you for pointing that out. And it’s something I’m actually very proud of because this was probably back in 2007 and 2008 and I believe that was our first internal business network. And a couple of the heads of, of that network came to me and asked if I would serve. And I was, I was very honored and I think it was a testament to my advocacy for women in the firm. And, and so they felt that I could be a really strong advocate for them as we were trying to elevate and get more women to, as a part on the investment side and the business side and really level the playing field over the longer term. And so I was, I was super happy to do it and so I served on that I think for about six or so years. And then interestingly today, as I mentioned earlier, general O’Reilly, who’s my co-head, obviously a woman, but our whole, our management team on the private side consists of me and all women. I’m the only guy really on our private, on our private team management team, which is, which is just great that, that we’ve, we’ve come to a point where, where we can really have that much talent on our team that that could help us build the business.
00:48:58 [Speaker Changed] And, and if I recall correctly, your CEO Correct.
00:49:01 [Speaker Changed] Jean Hines.
00:49:01 [Speaker Changed] Gene Hines, right. Aren’t a lot of women in the world running a trillion dollar company? She’s one of them.
00:49:07 [Speaker Changed] Correct. And Jean and I have grown up in the firm Jean’s story. She always talks about that. She started as, as an assistant out of Wellesley and worked her way up to being a global industry analyst and then managing partner. And then in 21 she took over as CEO of the firm. And so to your point, she is, she is still in the minority, but but an increasing percentage of the, of, of men of the minority. And so it’s getting, it’s, everything is getting better over the longer term. Huh.
00:49:35 [Speaker Changed] Really interesting. All right. I know I only have you for a limited amount of time, so let’s jump to our favorite questions that we ask all of our guests. Starting with what’s keeping you entertained these days? What are you streaming, watching or listening to?
00:49:49 [Speaker Changed] Sure. So right now I’m streaming the Crown, so I know that I’m, I’m a little behind the eight ball on That
00:49:54 [Speaker Changed] One’s so good though, isn’t it?
00:49:55 [Speaker Changed] It’s, I love it because there’s so much about the, the UK that I don’t know particularly kind of pre Charles and Diana. And so I’m now on, on season four. So the first three seasons were really early in Queen Elizabeth Rain and there’s just a lot of information and just super well done. The acting is is great. And then the one that I just finished that I, and
00:50:14 [Speaker Changed] By the way, I think there’s one more season coming of the crowd.
00:50:17 [Speaker Changed] Great because I’m, I’m, I’m slowly catching up. I got, you know, it’s my, it’s my treadmill entertainment, so I’m slowly catching up and, and then the one that I watched recently that I absolutely loved was The Bear.
00:50:29 [Speaker Changed] So
00:50:29 [Speaker Changed] Good. And season two, which I just fin finished recently, my wife and I finished, was phenomenal. And episode six might be one of the
00:50:37 [Speaker Changed] Best. Was that Copenhagen or was that The Forks?
00:50:39 [Speaker Changed] No, episode six was, well when Jamie Lee Curtis and Bob Odenkirk and it was the, I think it was Oh,
00:50:45 [Speaker Changed] The Family Christmas.
00:50:46 [Speaker Changed] The Family
00:50:46 [Speaker Changed] Christmas. That was painful. That was difficult to watch. That was real time family meltdown.
00:50:52 [Speaker Changed] Yes.
00:50:53 [Speaker Changed] I mean, my, my wife walked out in the middle of that and said, let me know when it’s over. She could not sit through that. But
00:50:58 [Speaker Changed] I think, I think it was some, some of the best acting, Jamie Lee Curtis was just unbelievable. And the acting and the whole situation, I mean, I’m sure many, many families can relate to the dysfunction and just incredibly well done
00:51:11 [Speaker Changed] Re really, really interesting stuff. So let’s talk about mentors who helped shape your career.
00:51:16 [Speaker Changed] Sure. So there’s so many, I’m always afraid that I’m gonna forget people, but two of the people at at Wellington who I co-managed money with when I first got there and were just phenomenal investors. One was, was Bob Rands, who was, we always refer to him as the godfather of growth. He was one of, really one of the first true growth investors at Wellington. Just a phenomenal investor and keeping it super simple, having just a great feel for the markets, but just, just being able to meet with a management team and evaluate them and, and making decisions based on those evaluations. And then the other one was Saul Pinnell, who ran the, ran the Hartford Capital Appreciation Fund from inception to, I think about 2015, had just phenomenal performance, but he was like an old school go anywhere, capital appreciation manager. There were times where he could be positioned incredibly aggressively in growth companies, and then there were times that he could be very value oriented. And so I don’t think anybody I worked with did as good a job as navigating the tech bubble back in 2000 as he did, and having great performance in 1999, and then also having amazing performance in 2000. And he, he’s just an amazing, amazing investor. So I say those would be two that were very important in my career.
00:52:30 [Speaker Changed] Let’s talk about books. What are some of your favorites and what are you reading right now?
00:52:34 [Speaker Changed] Sure. So a couple of books that I, I’ve really enjoyed over the last few years. One was a silent patient by Alex Michael Ledes that just was an kind of like a psycho thriller story and just had one of the most amazing twists towards the end that I, that I’ve ever, this
00:52:50 [Speaker Changed] Is fiction or nonfiction. This is, this is
00:52:52 [Speaker Changed] Fiction. So that’s a fiction book. And then the other one that I read, which is an older book, I think it was written 20, 25 years ago, was The Human Stain by Philip Roth. That was just also incredibly well-written matter of fact. They just, I was a part of something that everybody had to record, bring a book. You had to literally bring a book. Right. And that was the book that I, that I, I brought. And then the one I’m reading right now that I am, you know, on my kindle, supposedly 70% of the way through is a book called The Color of Water by James McBride, which was recommended to me. My, my, my favorite book recommended, which is my friend Susie. And it’s a biography slash autobiography, and it’s written by a black man who was brought up by his white mother, who grew up as an Orthodox Jew. Okay. And so he learns later in life that he didn’t know that he was actually Jewish and his mother would never tell him anything, and he finally got his mother to tell him his story. And so the, the story is like one chapter of his life, him telling his life, and then another chapter of his mom talking about her life juxtaposition between their two lives. Huh. And so how
00:53:54 [Speaker Changed] Interesting.
00:53:54 [Speaker Changed] It’s an incredibly fascinating book. And so that’s what, that’s what I’m reading right now.
00:53:58 [Speaker Changed] Our final two questions. What advice would you give a recent college grad interested in a career in either finance, mutual funds, private placements, late stage venture? What sort of advice would you give them?
00:54:12 [Speaker Changed] Yeah. Well, part of the answer is what you just said. There’s so much more variety of what you can do in the investment world than say, when I got outta school close to 40 years ago, which was, you know, it was kind of one game. It was really public markets, right? But now with private credit and private equity and ETFs as well as the public markets, it’s just a variety of things that you can do. And so the advice I would get somebody coming outta school is figure out where your passion is. Figure out what your investment style and what works for you. Do you want to be at a hedge fund and really be in the day by day and have to make basically a lot of decisions in short amount of time? Or do you wanna have a much longer timeframe? Are you more in the growth mindset versus the value mindset? So you need to think about all this and head towards a direction that really fits your personality. Like for me, I know early on, I always tell the story that my moment was when I saw Rod Canyon of Compact unveil the first true laptop back in 19, I think 88 or 89, and I was getting tingles around
00:55:11 [Speaker Changed] That. When you say laptop, I remember those. ’cause they were like these big giant suitcases. The, the monitor were like the lid of a suitcase with a handle sticking out, and they weighed like a hundred pounds. Luggable,
00:55:24 [Speaker Changed] They call them
00:55:24 [Speaker Changed] Luggable Luggable.
00:55:25 [Speaker Changed] You knew it was going to be the creation of a market, right? This, this was a totally new market. And you think about, you know, fast forward to today, I think most people have laptops versus, versus desktops. Like at Wellington, we all have laptops now. We just plug it in when we go, right? We don’t have any desktops in the entire, almost the entire organization. And so it’s, it was the beginning of a major, major trend, right? Just like the iPhone, when the iPhone was introduced, think about like nobody had a computer in their pocket. You had these blackberries or you had these, these flip phones, but you didn’t have, you didn’t have the internet in your hand right at that moment in time. So seeing those develop and understanding that sometimes these trends are overestimated in the short term and underestimated in the long term, and really trying to fi find those inflection points. That’s what I always loved about investing, is being ahead of the crowd and trying to figure out where the puck is going to go before, massively before it gets there.
00:56:22 [Speaker Changed] And our final question, what do you know about the world of investing today? You wish you knew 30 or so years ago when you were first getting started.
00:56:32 [Speaker Changed] So I think I was thinking about it from the context of like, over the last kind of two decades, and I think it, I wish I knew interest rates were going to stay low for as long as they did, because it was just
00:56:42 [Speaker Changed] 40 years. It wasn’t that big a
00:56:44 [Speaker Changed] Deal. Exactly. If you knew that, right? If, if you knew it’s just gonna be down into the right from 1982 to 2021, you would’ve been massively more aggressive in terms of your investments. I mean, I was an, I’ve been an aggressive investor, I’ve been a growth investor. That’s not been bad. It wasn’t because I knew interest rates were gonna go down. But think about all the trends around buyout and, and everything in the investment universe that’s been, that’s benefited from that, that it would’ve been great to know. Now, I think that that lesson was obviously two generations, but I don’t think that that’s gonna help you over the next couple of decades because I think interest rates going to zero is probably some a, a thing of the past. Huh.
00:57:25 [Speaker Changed] Very, very, very interesting. Michael, thank you for being so generous with your time. We have been speaking with Michael Carmen, co-head of Private Markets at Wellington Management. If you enjoy this conversation, well be sure and check out any of our previous 500 discussions we’ve had over the past nine years. You can find those at Apple Podcasts, Spotify, YouTube, wherever you find your favorite podcasts. Sign up for my daily reading [email protected]. Follow me on Twitter once again at ritholtz. Follow all of the Bloomberg Fine Family of podcasts on Twitter or X at podcast. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Rich Sub is our audio engineer, Atika Val is our project manager. Anna Luke is my producer. Sean Russo is my researcher. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.