E325: Inside the $100B Continuation Vehicle Boom

Today at TBG, you focus on a very specific part of the secondary market.

Tell me about that.

Every sponsor at some point in their history has owned a great business.

They've made four or five times the money and they sold it to one of their competitors

because they needed to get cash back.

Their investors were looking for DPI.

The management team was giving them some pressure to say,

we've done what we said we would do.

You've made, we could make five times the money.

It's time to reset or you're at the end of the life of a fund.

The fund is out of, that houses the company, is out of time, is out of money.

All these are different pressures to sell.

Historically, the sponsor would simply say,

thank you very much.

We've made five times the money and I'm going to sell the business to one of my competitors.

Notwithstanding, I see a lot of upside.

Their competitor would then go on to make four times the money and so on and so on.

And I would go to the sponsor and say, do you remember that company?

And they'd go, oh, of course I remember that company.

There was so much runway left, but we had to sell.

How do you know that you're not being adversely selected?

In other words, how do you know that the GP is not just taking a free option?

But what's critical about this business is to approach it with sector expertise,

to approach it like a private equity business,

a private equity investor would do.

And to that end, the core judgment, if I were to distill things down for us,

is at the point of entry, at the time that we're facilitating a liquidity option

for the existing investors and buying in to the continuation vehicle,

we want to make sure that they could sell the business to if they could.

And they're actually taking a proactive choice not to do that.

They're realizing five times the money, creating a lot of liquidity

or potential liquidity for the general partner,

but instead of putting it into the bank, which they could do

if they could sell the business today, they're not.

They're rolling it all into the new deal.

On double click on something you said, which is that you approach it from a buy outside,

not from an LP side, meaning you're underwriting the asset from the bottoms up,

just like a Blackstone KKR and Apollo would talk to me about that.

On our core in investing in single asset continuation vehicles,

we as a group are investing hundreds of millions of dollars into single companies.

And hopefully it's almost self evident why approaching that investment activity,

like a private equity firm, like a private equity investor just makes intuitive sense.

By contrast, the origin story of the secondary's market is actually not doing that.

Six or seven, seven or eight years ago, if a single asset deal

was brought to the secondary's market, the incumbent firms would have said,

what's this?

You've called the wrong person.

That requires a private equity skill set.

We don't have that.

But what's one of the tremendous things about the secondary's market is innovation.

And where the innovation started was in the LP business.

And just by contrast, in my time at CPP, just to talk about the specialist skills

that were required for that kind of investment activity,

the largest at the time portfolio that we ever acquired was 65 fund interests.

15, 20 companies per fund, 1,000 companies, like literally 1,000 companies.

So as you think about the skills that are required to do that,

and the people, and the systems, and the know-how,

underwriting individual companies, frankly, almost irrelevant.

There's 1,000 of them.

What you need to be is, I used to say, right on average.

So half the companies could underperform whatever you were expecting,

so long as the other half outperform.

You work out okay on average.

You can't use that average concept in putting six, seven,

800 million dollars into a single company.

You got to be right every time.

So this market, the secondary's market,

I think is a really fascinating one in that there's been huge growth.

And underpending that growth has been a lot of innovation.

And actually with it, different segments have emerged,

each of which are large, interesting.

They can be different, but each require their own, in my view, specialist skills.

And that was the opportunity step that I saw sitting back at CPP years ago.

And we're now five years into going after that opportunity,

in a private equity driven way, in a highly differentiated manner in the marketplace.

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I get why you need a buy-out skill set to approach this,

but why do you need a secondary part of the team and what value does a secondary perspective

bring to it? Given that, just one asset.

In my experience, direct private equity investors are hunters,

and when they go to make investments, it's about winning and losing,

and when you're buying a company from another sponsor,

you do that with a relatively high degree of competitive intensity,

because you compete day-to-day in acquiring and investing new businesses,

like if one of our teams, just by example, has a lot of experience in education,

and they're trying to buy an education business from a competitor who also invests in education.

You can see there can be some rivalry there, and of course,

this is not just TPG, but the private equity buyer in this instance,

trying to participate in the secondary's market.

So you can get all these sort of dynamics at play,

which serve folks very well in the direct private equity business,

but in the secondary's market, we call our partners our sponsor partners.

We make judgments around, do we want to invest with them into the company,

and then turn the keys over to them to trust them to do everything?

Because ultimately, that's how the secondary's market works.

The incumbent sponsor stays and sit you.

And to that end, I actually do think there are both hard and soft skills

that are necessary to succeed in the secondary's market.

I could get into the details on the structures,

how you align incentives and some of the technical parts of the business.

But I think this partnership orientation and the necessity for trust

that they are going to appropriately manage the business

are different and potentially conflict with the mindset and experience and skills

of a private equity investor.

It's kind of two different lenses to approach the deal making in the sector,

because it's essentially two things.

It's a buyout deal in terms of you're getting exposure one asset,

but also you put in a secondary structure and you have to work out all those mechanics.

That's exactly right.

So the way that I think about most of the beginning and the end of the private equity sort of skill set

is on the buy, which company and which sponsor do you want to invest behind?

How do you diligence, underwrite, value the business?

There's then a secondary's package, economic package,

you know, all the terms and conditions,

and the structures that are associated with a secondary's deal.

But once you've made your investment, it's no longer a private equity investment.

It's a secondary investment.

We are usually a TPG and this is true for any large lead investor into one of these deals.

You're the largest investor.

You sit on an advisory board.

They report to you, but you're not sitting on the board of the company.

You're not directing management.

You're not in control.

You're passive.

I believe if you really want to understand what's going on in the market,

you have to follow the incentives.

Double click on the incentives of a GP and how they might be in conflict with either you,

the new investor or the LPs.

In these deals structurally, the general partner is a seller on one hand out of the older fund

and a buyer or investor into the continuation vehicle on the other hand.

So those two things are inherent in any of the deals that we do in this marketplace.

And that conflict, if you will, is really important to be open about and to manage.

So if you're a limited partner in their fund, there tend to be two really important questions

that they have.

The first is in one of these deals, who is the lead investor?

And are they credible in providing the offer that's in front of them?

Because they have the opportunity to waive the conflict.

And then secondly, they have to find it attractive, otherwise they won't sell into it.

So that's the first thing.

Second thing is not every LP necessarily will think I want to sell.

Notwithstanding the offer is usually for 100% of all the LP's positions.

There needs to be an opportunity.

This is the second thing to address this conflict, is there needs to be an opportunity for the

existing investors to roll into the continuation vehicle, not to sell, not to have their whole period

all it truncated, but they can continue along for the next four to five years.

Just the same way that the sponsor sees the upside, the new CB investors see upside,

sometimes limited partners see and believe in that upside and they want the option to participate in it.

So what's critically important is that that conflict is managed appropriately.

It needs to be done with correct care.

Really, it comes down to having a proper process and it comes down to

transparently sharing information.

So in this instance, the limited partners see the same information that buyers do,

so that they can make an informed decision.

The sponsors know them, the LP's know them, they created them,

and are widely adopted and guide how the market operates.

So the conflict are real, but in my experience over the last several years,

I can only think of one or two situations where the LPs, for whatever reason, decided to reject

an opportunity, 99 point, whatever percent of them go through because this market operates

in a proper way.

When I talk to LPs institutional or otherwise,

they all seem almost cognitive dissonance around CVs.

On one hand, they like the opportunity to potentially take some chips off the table.

Obviously, DPI has been a big issue.

On the other hand, they're not really set up to diligence these one-off opportunities,

which is why the opportunity exists.

Give me a sense, what percentage of the times, in terms of quantum of capital,

are LP selling versus rolling their equity on average?

The advisors in this marketplace we really see in our close to the data

would peg that somewhere around 15 to 20 percent.

In my experience, I've seen sell volume as high as 99 or 100 percent, so literally every single

LP decides to sell.

That's one end.

On the other end of the spectrum, I've seen that number is low as 50 percent.

In other words, 50 percent want to take the money and run, and 50 percent want to continue.

So, I think the market average today in that 15 to 20 percent range is about what I would

expect going forward.

I think the demand for DPI today is perhaps at a cyclical high, which is perhaps driving

that percentage down.

Maybe it goes up a little bit more over time.

But generally speaking, at least in my experience, when LP has the opportunity,

these are successful deals, remember, to take five times the money off the table.

They're usually very happy and say, thank you very much.

It's a little extra work.

No question about that.

And that is an additional burden on LPs.

And some of them are not necessarily set up to make the decision or the

have the ability to roll into the continuation vehicle.

But it's kind of in high-class problem territory for me.

Five times the money, how bad is it?

Actually, I've probably a little flippant, but what we have found is, in general, when LPs

receive the opportunity to successfully realize a very high multiple of money on the deal,

all else equal.

They're actually quite happy.

Happy to take it.

A factor here is also most of the LP capital is non-taxable.

So they don't have to worry about compounding their capital.

There's no disadvantage taking out their capital.

I want to get it into deal specifics.

What's the market for what?

A GP that's rolling their position?

What could they expect in a CV deal?

This is a market that investors, so let me talk about that more from our perspective,

because this is underpinned by what the sponsors believe and then what we choose to underwrite.

This is a market that ought to deliver two times the money net or better and a 20% RR

net or better.

That is, I think, what buyers in this market and we would be part of that

are targeting for our investors at a deal level.

So to that end, that gives you some insight into what the general partner sees ahead of them.

When you look at them, the incentives, like, do they really believe it?

Is an important question, because we have to make our judgments.

In a typical CV deal, if you sort of think about it,

the general partner has the opportunity to take five times the money off the table.

That means a very meaningful, carried check,

plus realizing five times on their GP commitment, their GP co-invest.

And they're making a proactive choice not to do that.

If you really truly have that choice today, in other words,

you could sell the business if you wished you were choosing not to.

When you put that money back on the table,

in these deals, sponsors tend to roll 100% of the proceeds from the sell side of the deal.

The only way that's economically rational is if they really believe that there is another

three to four times the money from here.

And I think that range is generally speaking what the sponsor would say is on offer.

Most buyers would, you know, bring a skeptical lens to that and be more conservative in how they

underwrite. But I think as an upside case, that is certainly what most buyers in our market

are looking for, and more conservatively underwrite the investment into the two X 20% range that I

described. This is still a relatively nascent market. So we have yet to see a large number of

realizations proving out what I just said. That having been said, there are reports, industry reports

that both Evercore and Morgan Stanley, those two groups in particular, put out there on a regular

basis. And what they have concluded so far as they look across the market is that continuation

vehicles offer returns as high if not higher than buy out with lower risk as measured by lower

loss ratios. So if we sort of tie together what a general partner says with what well informed

buyers see and underwrite and where the market data is beginning to come out, people are beginning

to coalesce around this being a very, very attractive market. This is why we see groups following

in TPG's footsteps to enter this marketplace because they see the attractiveness from the

underlying companies and the track record of success that the sponsors have had with them.

They see the return opportunity being very attractive and the risk being low.

Let me give me some intuition behind that. Why would CV deals be better performing and lower risk?

There is potentially at least in theory of conflict between higher returns and lower risk.

How is that possible? I say there's three, maybe four things that are behind it. The first is

there is a significant supply demand imbalance in this marketplace where there is an excess supply

of deals and not enough capital and capability going after that. So that is perhaps that's a temporal

thing, but I think that's going to persist for quite a long time. That's at the market level. But if

you look at the individual deal level, there are three things together which I think result in this

really attractive return relative to risk dynamics. The first is what we call positive selection bias.

Remember the companies I've talked about here that are the purview of this market. They're the ones

that are special. They're the ones, you know, the sponsor invest in 15, 20, 25 companies in a fund.

They've owned them all for a period of time. You never know really what the great ones

going to be at the beginning, but after they've owned them for a period of time, they sure do.

And it's those special companies. We call it positive selection bias. They only want to do these

deals in the companies that they really think are what we call long-term compounders. They saw the

five X they see the next four X and they see the next four X after support for today's episode

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for details. So that that's the company that you want to hold on to for longer. So this is a

positively biased opportunity set. And these companies are being selected by the general partner

to put into one of these investment opportunities. One of these single asset continuation vehicles

based on that track record of success. Inherently, that reduces risk. If you think about a regular way

buy out deal. Groups are buying companies for the first time. They do a lot of diligence. They

evaluate it as much as they can. But they don't really understand what they've owned

until they join the first board meeting. Go to the second board meeting. Then they find out

everything that they don't know. We need to change management. We got the strategy kind of right,

but we need to go in this direction, not that direction. Because the sponsor has prior experience

with the business, that risk is effectively eliminated. And then you come back to the alignment

equation as I was beginning to talk about before. General partners are making the largest GP

commitments into these deals are putting as much skin in the game alongside these deals

more than anywhere else in the private markets that I'm aware of. To give you some order of

magnitude, maybe two, two fun facts. The first is, GPs are typically committing somewhere between

eight to 10% of the capital of a continuation vehicle. And that's several times larger than they

would in a regular way buy out deal. In our experience, we've seen the quantum involved being

larger in the single asset continuation vehicle that we're involved with relative to the main fund.

So if you think about skin in the game, there's no greater place to find skin in the game than in

this market. Positive selection bias, that experience definitely lowers risk because they

direct experience with the company. And then third, greatest alignment you'll find in the private

equity market. Minds me of Stanley, Drunken Miller invests to investigate his mantra, which is

the best way to diligence a company is to be an investor. It gives you this entire advantage that's

almost impossible to get through traditional diligence. You mentioned eight to 10% GP commit.

Obviously, much more outsize than most private equity and certainly venture GP commits.

What's driving that? Is that TPG and then new investors driving this need for this kind of GP

commit that will click on that? It's it's math. So if the general partner is realizing five times

the money on the sell side of the deal and rolling their original GP co invests, which just

pick a number might have been two percent, they're rolling that into the new deal. And then they're

putting all the carry that they're realizing on top of that. That's what drives it. It's just it's

just math. The expectation in this market that buyers have is that GPs will not take liquidity on

the sell side of these deals and will roll it all into the continuation vehicle. And that's that's

what drives the outsize GP commit. Let's look at it through the GP lens. Why do a continuation

vehicle deal and talk to me about the economic incentives for GPs to do a continuation vehicle deal.

Let me bring it together. Maybe just making two points. First point is the private equity business

is competitive. It's difficult. It's hard. And when you own a company and you've owned it

successfully and done all that work, remember, there's 15, 20, 25 businesses in a fund that you

invest in. And there's the one company that everything's working. It's actually probably working

better than you thought. You got the strategy right. The company is in a great competitive position.

The management team is really, really strong. The last thing you want to do is sell that.

And the good news is, in a sense, there's going to be one of these in every single private equity

fund that exists. There's always one special company. And to that end, sponsors to the extent that

they have the ability to continue to own them for longer will take advantage of that, again,

with this narrow set of very special businesses. The second thing is we talked about the quantum

of GP commit here. These, the continuation vehicles can be very large and very large relative

to the original investment. That's five times the money. Sometimes they're also able to buy out

a co-investor or another minority investor deal. So the continuation vehicle's

relatively the original investment can actually get quite large. And then as you think about

putting, you know, an economic package around a large continuation vehicle, larger than the

original deal, the economic incentives when they are successful are commensually large.

What are the standard economics that GP could expect in the market? What's the range?

The typical incentive structure in continuation vehicles, single asset continuation vehicles,

is a management fee between 50 and 70 basis points. And that might compare to one and a half to

maybe 2% in the the regular private equity market. So it's lower. And then the carry structure is

very bespoke. Everyone will know of, you know, 20 over eight in the regular way by out business.

In this market, you tend to have what we call a tiered carry structure, where the sponsor starts

earning a 10% carry over 8% preferred return. Then they can earn their way into generating

a 15% carry after delivering one and a half times the money and a 15% net to CV investors.

And then they can get back to parity and earn 20% carry after delivering two times the money and

a 20% net to investors. So to that end, there is some inherent downside protection, at least in

the carry structure, which sponsors sign up to. That's a nice positive buy signal when you think

about it, because that tells you they think they can get to the to the high end. I think they can

deliver the high end of the return and get a 20% carry. The other thing that it does, one of the

characteristics of this market is four to five year holds. And in buy out, they tend to be a lot

longer. And if you think about the interplay between having an MOC hurdle and an IRR hurdle,

once you've cleared the MOC hurdle that sponsors very focus on continuing to compound IRR at 20%

or greater, otherwise they run the risk of deluding the carry rate. So to that end, when I was

talking about the best alignment and private equity, I was initially framing that for the perspective

of the quantum of the GP commit. But as you think about the economics, there's tremendous upside

here, but it's with some constraints that have to perform otherwise the carry is lower. And there

are some constraints which incentivize prolonged cold periods. And for most LPs who care a lot about IRR,

that's really powerful. I know you don't play in this part of the market. It may be because you don't

play in this part of the market. Tell me your views as an outsider. What do you think about the CV

market for the venture? I think there is a tremendous need for liquidity in venture capital. And

at its core, the secondary market is a liquidity provider. We've been talking about this so far in

a private equity context, but I think that same need and dynamic exists within growth equity

and certainly exists in venture. The lens that we that we use here, I think is

analogous and appropriate in venture, which is to say something that's important to us

is that the sponsor has the ability to sell the business today. That's a transaction of choice

coming from a position of strength. And when the sponsor we've been talking about this,

roles significant sums of capital into the CV, that's aligning because they have the choice they

could put the money in the bank account and get the second house or the new boat whatever it was

that you described before. But I think there's some risk. I'll just give you an example. If the sponsor

owns a business and it's financially performed very nicely, but is dependent upon an IPO exit.

And if the IPO markets are closed, rolling 100% of your, you're actually crystallizing your

carry and rolling into the CV, that actually sounds like a de-risking event or de-risking

opportunity to me. And we call those life-preserver deals in our market. It's really important

for any participant in the secondary's market, including venture, to appreciate the problem

they're solving. The problem we wish to solve is that we've had this great company. We could sell

it today, but don't wish you because we see too much upside. The problem I'm less interested in

solving is, can't sell it today for one of the following long list of reasons, need to generate

liquidity for my LPs because they're a little bit upset. And this is almost a transaction from

a position of weakness. It may not be the perfect tool CVs, but I do think it's the best of

worst tools, inventor specifically, in that LPs want TPI, they're really pressuring on that.

GPs don't want to sell their biggest winners. Some LPs want to exit some don't. Nobody wants to

take a 20% haircut on a secondary. And it kind of aligns everybody as closely together as possible.

It's not perfect, but I do think it could create, unlocks some of this deep dive gridlock.

This market exists because of the combination of private equity now, I'm talking private equity

broadly speaking, has been growing. Companies wish to stay private for longer.

Second thing is we have these closed-end fund structures. They're 10-year vehicles plus one plus

one, finite time and finite capital. And then we have these businesses, these special businesses

that we've been talking about that are long-term compounders and have a path, a clear path to generating

track of compounded returns over a long period of time. That doesn't necessarily fit

within the constraints of the closed-end funds that they're housed in. The secondary's market

over time has created different solutions to provide liquidity to different stakeholders

in the market as we've talked about. And it's not going away. We had a record year

hitting $226 billion of volume this last year, roughly 40% year over year.

The single asset continuation vehicle market was actually driving a big part of that growth.

We were $30 billion in rough numbers in 2024. And north of $50 billion a record in 2025.

That's 67, 68% year over year growth. A need for this, call it new. And I would argue proven

liquidity tool is really high. Even if you have the growth rate that we've seen in the last year,

at least in single asset part of the market, it could be a 200 billion or larger market just looking

five years out. The older I get, the more I subscribe to this Charlie Munger 20 punch cards.

When you graduate from college, you should have a punch card of 20 investments that you make.

20 of the best ideas. I just see it over and over. There's just so many few really good

investments. And this is just a way for GPs to capitalize on those best investments with insider

access, with an intimate understanding of asset management team and all that.

So I love that. What's the biggest mistake that you made? And how has that evolved your strategy

today? You need to know what the fair way is. And when you have the opportunity to see all the deals

on offer in the market, it's really important to have discipline around where you have a real

right to win. So one of the lessons that I've learned, it's not just here at TPG, but over a

longer period of time is it can be very alluring. It's like the sirens call. I know this deal doesn't

quite fit. But oh, it looks interesting. And you can, you can get distracted in the different points

in my career. Maybe it's a quieter moment in the market or something just looks too good to be true.

Even though it's a little, it maybe it's on the it's on the fringe or it's in the rough. But the

discipline of defining what you do and what's of interest, having that widely adopted and embrace

across a team supported by an investment committee, which is a good support and control function

in an investment business are all critical here. So I have found myself from time to time getting

called by the siren and pulled on to the fringe. But we have the right systems, culture, etc,

around here to pull us back and focus on on the core, focus on the fairway.

Going back to the beginning, you said that you're a builder and your career is being an entrepreneur

creating financial products, creating funds in some of the world's leading institutions. What have

you learned about being an entrepreneur within the financial sector? Let me come at that from

two perspectives. The first is a personal perspective. So what switches me on and then secondly,

from a business perspective, the actual, you know, the doing of the thing. It's always been important

to me to work with a group of people that I like and that we can have fun with, that we can

disagree without being disagreeable and and get to the best decision. I've worked in places over

the years where that's been super true and that's super true here. And I don't know about you,

but I've only ever learned through making mistakes. So I had experiences where that hasn't been true.

So that's the first thing. Personally, that's just that's the kind of place I want to be, the kind of

people I want to work with, the kind of culture I want to be part of, gets me enthusiastic,

getting out of the bed out of every morning and going after the whatever the thing is. And in this

case, building, building this business, which has the genesis from the roots of the secondary's

market, but has required the investment in the skill of a private equity business is the thing

that we're doing. So I find if you can put those two things together in tandem, it's fun. Good

things can happen and you can be successful. Reminds me of what my mentor, Eric Anderson told me

he started a company called Atomab, which is multi-billion dollar company, then took a bunch of

companies public and now started alloy and you talked about build the business that you want to work

in the rest of your life. So a lot of people think about they build this company as if it's a

strategic MBA case study, not realizing that they're the main character there and that they're going

to have to be executing. And the best way to make a business anti-fragile is to actually love doing

it, love the people that you're in, the sector that you're in. It's a very underestimated aspect

of being an entrepreneur. I love that. And when you build something new from scratch as we've done

here, it's hard. Not everything works out the way that you think it's going to work. You get

surprised every day by things and you have to sort of embrace that. You have to enjoy learning.

You have to enjoy adapting and be enthusiastic about it. Like this is, you know, I've had a number of

you know, jobs over the years and I kind of work, I use that word intentionally. I think at

different point I did have jobs and at a couple of points I had things I really looked at as careers

and I feel fortunate. I'm in my six year here at TPG where this is a career. I don't plan to have

another. We have a huge market opportunity that we're going after. We have a really amazing team,

really amazing culture both within our team and across the firm to go after it together.

The second friend that I have that has started a franchise within TPG. What's quite impressive

about TPG is that even though it's scaled massively, it's kept this entrepreneurial DNA.

Maybe you could distill that. What makes TPG a place for finance entrepreneurs like yourself to come

in and partner? If you go back to TPG's origins, this was you know, way before my time when Jim

Colter and David Bonderman founded the business, you have to remember that they initially came

together in a family office with a bass family in Texas and then left to form TPG. So the business

in a sense has entrepreneurial roots and somehow they have been able to translate those roots

and the culture that's associated with being, you know, entrepreneurial into something at scale.

I can't take credit for it, but as I had the luxury, I suppose, at CPP to partner with TPG.

I mean, I had the luxury of choice. I had known TPG for a long time. We had worked in, I'd work with

the firm in various capacities over most of my time at CPP and I liked the people and liked the

culture. And so at least for me, it was very intentional to look to build this business from scratch,

wanting to find, you know, the recipe that we talked about before, having the latitude to hire a

teen that was going to have the characteristics that I talked about, fun, hardworking, capable,

and all that. But I also wanted to be able to leverage the capabilities of what's now kind of like

big TPG, where we're one of the largest private equity houses on the planet. And being able to take

that experience and those skills and apply them into this entrepreneurial venture is pretty

special and pretty amazing and very intentional at least on my part. If you could go back to 1993,

when you were just starting Insolven Brothers, what would one piece of advice you'd give a younger

Michael that would have either accelerated your career helped you avoid constant mistakes?

If I could go back to the beginning, I'd say be less afraid to fail. I might have said this

earlier, the only time I've really learned in my career, like really learned, you can read a book,

you can talk to somebody, you can have an idea, but the only way that you can really learn is by

acting and having a bias to action. And when you do that, you want to do that with some speed,

because if you just analysis, paralysis, everything, you're just going to lose. So the implication,

though of acting quickly, you want to be intentional and thoughtful and do enough work, etc. To

say this is the direction I want to go, you have to be prepared to make a mistake. I try and instill

this culture in the team that I run now, which is, you know, you have to have the best intentions,

but you're going to make a mistake. We're going to make a mistake. And the obligation that we all

have is when you do, you raise it quickly, you don't keep it to yourself, and you'll learn from it,

so you don't make it again. And I think applying that to myself, there's, I'm sure if I were to look

back over the long arc of my career, I've probably been a little too cautious, haven't acted as

quickly as I could and should have just gone on with it. That's a hard thing for young people to

embrace, especially young people like I look at the associates and whatnot that we recruit.

They're like 4.0 GPAs at school. They were top in their class here or there before they join us,

and they literally have never failed at anything. What we do is super hard. You will make a mistake.

And sometimes that can really rattle, rattle young people would have rattled me. And so we try to

create an environment where they don't get rattled, that they are actually willing to push

and have a bias to action. And sometimes, you know, intention and speed make all the difference

in the world to win. And you have to have a culture which actually is aligned with that.

This buys for speed is so critical. I've become completely converted to this church of quantity.

I believe quantity is upstream of quality. That doesn't mean you go out and put $2 billion

in make mistakes and do all these things. What it means in investing specifically is you take more

meetings. You can't go to an associate and say be smarter and make better decisions. That's

not so cool advice. You have to tell them take 10 times more meetings, work more, do more meetings,

more and more reps. Don't worry about you took this meeting. It was a dumb meeting. You know,

you shouldn't have taken it. Just do more. Do more. And then you will become quality. Then you're

going to refine your skill as an investor where so many people focus on the downstream consequences of

as if somebody's sitting around saying, I don't want to be a better investor. I want to be a

mediocre investor. I've never met anyone that said that. Investing is an apprenticeship

business where you learn by doing. And there was this one young fellow who we recruited into the team.

I'm just reminded of this him telling me this, which was he was so surprised how included he was

with senior people brought to meetings. He was in the room for all the conversations.

He goes previously, I would do analysis. I would pass it up the food chain. Then it would disappear

for a while. I wasn't involved and he wasn't involved in the meeting. It would come back to him.

So a bit of a black box. And he said it was such a breath of fresh air to be included. I think that's

there's critical. If you want to manufacture or apprentice great investors, they have to be in the

room. Maybe there's a handful of conversations where that's not appropriate. But take lots of meetings,

get lots of experience, being in a culture where you can listen, participate, say something,

maybe say the wrong thing at the wrong time, and have that be okay. That's how they accelerate

their development. And that's how they become great investors and at least succeed within

within our organization. Michael, this has been absolute masterclass. Thanks so much for jumping

on the podcast. Thank you, David. That's it for today's episode of How Invest. If this

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