Investing Billions - E107: Caltech’s CIO’s $4.6 Billion Investment Strategy

Episode Date: October 29, 2024

Scott Richland, Chief Investment Officer at Caltech sits down with David Weisburd to discuss key portfolio secrets inside Caltech’s $4.5B endowment strategy, the importance of strategy discipline in asset management and how direct investments are chosen behind Caltech's opportunistic bucket.

You run one of the top endowments in the world, Caltech. Your $4.5 billion endowment size gives you an advantage in terms of investing. The $4 billion were big enough where people pay attention to it. Do you not have special access into venture funds started by alumni? There are a handful of venture funds that have either been founded by or are currently managed by Caltech alums. There's one particularly large and very well-known fund that has a Caltech alum at its head.

You mentioned that you're a conservative investor. I've been surprised by some of my peers having 30 or 35% of their portfolio in the risk is asset class. Seems like a lot more risk than I'm willing to take. I do not pretend to know what the market will do. So Scott, you run one of the top endowments in the world, Caltech, which currently manages $4.5 billion.

Tell me about your portfolio construction today. Well thank you. First of all, let me say I'm not sure we're one of the top endowments in the country. We're probably somewhere in the 30s in terms of the absolute size of our endowment, but where we are top 10 interestingly is endowment dollars per capita per student because we have such a small student population, our undergraduates number under a thousand. If you take that thousand and divide it into our

endowment, we're actually quite large in that respect. So the allocation looks quite a bit like you might imagine other large university endowments look like we have about a third in global public equities, about 25% in private equity, which should be split between buyouts, growth, and venture capital. And then about 25% in alternative securities, which are generally non correlated assets, things like aircraft leasing, insurance products, longevity products, and then we have some distressed debt in there. We have about like aircraft leasing, insurance products, longevity products,

and then we have some distressed debt in there. We have about 12% real assets, split between energy and real estate, and then the rest is cash and short-term investments. How do you structure your team? Is it asset by asset, or do you have a more generalist approach? I'd say it's split. We have a very small team. We have six investment professionals.

They are nominally split between public securities, private securities and real estate. However, it's really quite fluid. We meet as a team twice a week. We review our portfolios in detail on a quarterly basis on any particular transaction or any particular manager there could be people from the private team working on a public transaction and and vice versa so we try and keep it pretty fluid and have a lot of cross training so that people are familiar with the entire portfolio. When we last chatted, you mentioned that your $4.5 billion endowment size gives you an advantage in terms of investing.

What did you mean by that? Yeah, and let me clarify first. We have about $4.6 billion total under management. The endowment is about $4.2 billion. And then we have another portfolio of taxable funds that we manage similarly to the endowment. But I think our size gives us an advantage in a couple of ways. One, we can be quite nimble. We don't need or frankly, we can't write $200 million checks or $300 million dollar checks because and that requires a fund of a certain size.

So we can write a $25 million check into a smaller fund and have it be significant for us as well as significant for the fund. On the flip side at $4 billion, we're big enough where people pay attention to us. So even though we're located in Pasadena, which is a little bit off the beaten path, we're about half an hour northeast of downtown Los Angeles, we still get plenty of visits and plenty of attention from fund managers and don't have to beg and plead for them to come visit us.

And you mentioned you have a taxable pocket and a non-taxable pocket. How do you go about what's the optimal portfolio for a taxable investor versus a non-taxable? We don't really focus so much on the taxes as much as the liquidity. The two portfolios serve very different functions. The endowment is a portfolio that is intended to last in perpetuity. Therefore, we take a very long horizon view of that portfolio and are willing to tie up liquidity quite a bit more

and do more private assets than we would do in the taxable portfolio. And the taxable portfolio is meant to be used for capital expenditures and other, let's say, medium term needs of the Institute. And I would expect that portfolio to be spent down over the next 15 to 20 years. So obviously, in that case, we can't have a lot of private equity, which is, you know, often even though they're 10 year partnerships, they often last 15 or 20 or even more years. So we can't have a lot of illiquidity in that taxable portfolio. I just interviewed Victor Mayer, who runs the Evergreen Fund at Pantheon and they've been doing it for a decade

or so and his view is that most top GPs will have Evergreen structures in the next five, ten years. What are your thoughts on that? Yeah, we're definitely seeing a move in that direction. We're already in a couple of funds that have that structure. And I think they make some sense. I mean, if you're honest, as I mentioned, funds are no longer, or maybe never were 10 year funds. And I think it makes a lot more sense for us to go in with our eyes

open and understand what the ultimate liquidity is. Evergreen Fund helps us in that regard to understand what our true liquidity provisions are. As an institutional investor, why does it make sense to ever invest in an Evergreen Fund? I think it helps both sides. The manager knows that they have stable capital and therefore they can make decisions based on knowing that the capital will be there for a reasonable amount of time. And secondarily, I think it gives a little more choice to the LP and they can manage their own liquidity a little bit better. Tell me about your governance structure and how does investment that come to you end up making it through the entire process? So we report to an investment committee,

which is a subcommittee of our board of trustees. We actually also have on our investment committee what we call advisory participants, which are experts not on our board of Trustees. We actually also have on our investment committee what we call advisory participants, which are experts, not on our Board of Trustees that we invite to participate in all ways on our investment committee. Currently, we have 14 people on that committee. Very generously, the committee early on provided me with an enormous amount of discretion. So we actually have pretty high limits under which we can invest without getting investment committee approval. However, I the discretion is really more of a negative consent type of structure. In other words, we treat an investment that does not require approval by our investment

committee exactly the same as one that requires approval. What that means is after we've done sometimes years of getting to know a manager and then could be six months, maybe longer of deep due diligence, then we will write a detailed memo on our views of the manager and why we recommend an investment. That will go through many drafts up and down the chain within our office, and then ultimately be distributed to the investment committee. And where the negative consent comes in is even for an investment that does not require investment committee approval. After we have sent out the memo, any committee member has the right would raise their hand. And

I think part of that is because we're relatively conservative in our approach. Obviously, having worked with the investment committee for 14 years, I know how they think, I know what they like and what they don't like. And so it's pretty infrequent that something gets up to their level that I have any doubt will not be approved either formally or informally by the committee. Hey, we'll be right back after word from our sponsor. Our sponsor for today's episode is Carta, the end-to-end accounting platform purposely built for fund CFOs. For the first time ever, private fund operators can leverage their very own bespoke software that's designed from the ground up to bring their whole portfolio together.

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I think it depends what your objectives are, right? I mean, if your objectives are to maximize return, but potentially accept volatility, then being very conservative probably isn't a good thing. In our case, the risk profile of our investment committee is, I'd say, conservative, even though interestingly, about 22% of our operating budget, incurring a lot of volatility in our portfolio would potentially lead to actual cuts in our budget if we were to have a steep and lengthy drawdown, that would have an impact on our actual operations at the Institute. And so I tend to want to reduce volatility within the portfolio. And

sometimes that means that our returns won't be quite as high as others. But on the other hand, when there is a drawdown in the market, I think we're positioned to outperform. I mean, as an example, I think I referred to it earlier. We have 6% venture capital in the portfolio. I've been surprised by some of my peers that have let their venture capital portfolios run up into the 20s and sometimes even to the 30s and high 30s. At least as far as I'm concerned, venture capital remains the riskiest asset class or certainly one of the riskiest asset classes you can invest in. And having 30 or 35% of your portfolio in the risk is as a class seems like a lot more risk than I'm willing to take. As the office of Caltech, do you not have special access into venture funds that have either been founded by or are currently

managed by Caltech alums. I can think of there's one particularly large and very well-known fund that has a Caltech alum at its head. And there have certainly been opportunities from time to time where one of our alums has reached out to us and told us that they would like to have us participate in the fund. While we certainly give those funds a really hard look, we treat them similarly to any other in terms of our due diligence and, and ultimately and investing in them. So, you know, I think we get invited, but I wouldn't say we have special access. And certainly, we don't have special access to, you know, some of the big

brand name funds. On the flip side, it will say that once we do have a relationship with some of the larger brand name funds, we invite them as a partner to come in and spend time at the Institute in our laboratories and with our tech transfer area and explore different ideas and investments that that may be available to them that they wouldn't otherwise see not having a relationship with Caltech. A famous study from University of Chicago has persistence persistent and then in private equity evidence from bio and

venture capital funds, cites that more than 50% of top quartile have retained top quartile status over the last several decades. What do you think about that? Is that not a reason to invest into venture capital? Persistency, I don't think is a reason to invest in an asset class. It may be a reason to select your managers very carefully. I do believe there is some amount of persistency, particularly in venture capital. Part of that can be attributed to the fact that they tend to see the most deal flow. Success begets success. So they tend to see the most deal flow and potentially the best deal flow.

I also don't want to take anything away from the value that the top funds add. They have done deal after deal after deal. They have the experience to identify issues within a company. They know when they need to make a management change. They know how to help the companies get good product market fit. And so, just to go on back to your question, I don't think it's a reason to invest in an asset class, but I do think it's a reason to think carefully about the managers with whom you invest.

How much of your role as CIO of the endowment involves making macro forecasts or playing macro investor? In my case, very little. I think that differs from endowment to endowment, depending on the skills of the CIO and the rest of the team. I do not pretend to forecast or to know what the market will do. I tend to set up a portfolio that I believe will perform well in different environments. There are certain parts of the portfolio that will perform well in a high growth environment. There are certain parts of the portfolio that will protect us in a low growth environment or in a down environment. And so we tend to be more of a set it and forget it type portfolio. We're always trying to improve. We're always trying to add better managers, we're trying to add new ideas, but we're definitely not whipping the portfolio

around trying to chase the economy. I mean, I'll just give you one example. Look at what happened yesterday with the Fed cut. Often when we see Fed cuts, you would assume that the Fed is signaling a slowdown in the economy. And what you might expect is for the market to react negatively to that. Instead, the market took off. I imagine there might've been some people who predicted that,

but if you just think about classic economics, at least the way I learned economics, I wouldn't have necessarily predicted that. Does that signal that the market believes it's more in the know than the Fed? I doubt it. I just think there is so much money sloshing around in the markets these days that it's pretty hard to keep the market down, it would seem. I honestly not sure what the market is thinking.

I think the Fed knows what it's doing. I think they've done a pretty incredible job. If you think about it of avoiding a recession, it looks like we're going to have a soft landing. And if you go back to March of 2020, when the market fell dramatically as a result of COVID, it seems like we've recovered quite nicely from that. You mentioned that you don't like to play macro investor, but you take advantage of macro trends and market opportunities.

In terms of private credit, private credit's the hottest asset class right now. You know, are you bullish on private credit and how have you played it with the higher interest rates? I have not been bullish on private credit. We have one, not insignificant partnership with a private credit manager that we know quite well and we have been with for probably going on 10 years now. Otherwise I've been quite concerned about the future of the private private credit manager that we know quite well and we have been with for probably going on 10 years now. Otherwise, I've been quite concerned about private credit because it's a very competitive market and all you can really compete on is price and structure. So when you're competing, you're you

potentially providing a lower price to the borrower, and you're providing a looser structure to the borrower, where it's where it's not competitive. It tends to be with borrowers who are having a hard time borrowing money, right? And so in that case, the lender can dictate the terms. It's not clear to me that that's the loan that I wanna be in where the borrower has been turned down by every other lender and they finally found someone

who is willing to lend them money. The second issue and maybe having a little bit of experience is a negative, but I started my career in asset-based lending a very long time ago and working at Citibank. And so I actually understand how hard it is to make loans to manage loans and to work out loans. And it wasn't as I've looked at private lenders, it's not clear to me that many of them are prepared for the workout part of of the cycle, which I would suggest that we're moving into now. So they're either going to have to very quickly learn how to do workouts or hire people that know how to do workouts. Or I guess the third option would be to sell loans at a discount when they get into a workout situation. You've worked through six major financial crises and what lessons have you learned? Yeah, I mean, I guess first let's look at the facts and the background to that comment

I made. If you go back to 87 when I started my career, we had actually a drawdown just as I was coming out of business school and joining Citibank. In that case, the market fell, or the market is defined by the S&P 500, fell 36% over a two-month period. It took 21 months to recover back to the high. Another one that I lived through was in 2000, of course, the dot com and the telecom crash. In that case, we were down 51% over a 31 month period, and it took almost 60 months to recover. The third one I'd mention was

the 07, and I think there are a lot more people out there in the workforce who did have to live through 07. But in that case, we were down 58% over a 17-month period, and it took 49 months to recover back to the high. So in each of those situations, there was a relatively long drawn out grind down. Every day you'd come into the office and you'd be down, and you could imagine how that gets to you after a while. It took a very long time to recover. Now let's compare that to the 2020 drawdown. We were down 34% in one month and we were fully recovered in four months.

That provides you with a very different mindset on how the market works. There was no grinding down. There was a quick drawdown. Oh my gosh, oh my gosh, what's going to happen? And then before you knew it, everything was okay, and life was good. And that has created the buy the dip mentality, which may work in some circumstances and may not. So to answer your question, what have I learned? One, markets can be very competitive. which may work in some circumstances and may not. So to answer your question, what have I learned?

One, markets can go down and stay down. They don't always recover in a month or two. Two, you can lose money when you have a, and sometimes you have to crystallize those losses. If you have a portfolio that has gone down 20 or 30% and it's down in that range for six months, 12 months, 24 months, you may be in a position where you need to generate liquidity and you're going to sell some of your assets at a loss that will make those permanent losses. The third thing is that you really need

to manage your emotions in this business. It's very easy to get anxious and worried about the markets. But the fact of the matter is markets go up and markets go down. And we have to remind ourselves of that every day. Is the key to surviving a downturn? Having the courage to keep your positions in place as they're going down and talk to me, what are the best practices when you're going through a downturn? I wouldn't say that the best practices to keep your positions.

I think the best practice is to re underwrite your positions and make sure that they are appropriate in the current environment. You may have had a hypothesis or a theory as to why you acquired that investment three, four or five years back, it may no longer be appropriate in the new environment. And so I think there's a necessity to re-underwrite and determine whether or not the prospects for that investment are the same as what you believed when you first underwrote it. On the other hand, you don't want to throw the baby out with the bath water. It's human nature to do exactly the opposite of what you're suggesting, that when you get panicked, when the market goes down, it's human nature to sell to protect your assets or your downside. On the flip side, it's

also human nature to buy when prices are expensive. When the markets are going up, people tend to get excited and buy. And that often results in the opposite of what you what you should be doing. It results in buying high and selling low. And we do try to avoid that, of course. Stanley Drunken Miller famously said that nothing looks as cheap as once it's risen by 40%. looks as cheap as once it's risen by 40%. It is amazing. And we try very hard to be disciplined and sort of, I wouldn't say contrarians, but at least believers in reversion to the mean. So we tend to actually trim from our winners and add to our losers as as we look at the portfolio.

That doesn't always work, by the way. I mean, sometimes losers really are losers. And we find ourselves adding to the losers and we'll be patient with them. but sometimes particular strategies are out of favor for a really long time. And this current environment is an example of one of those environments where anything that's small cap or value or basically not large cap growth has been out of favor for a really long time. And that's caused a lot of portfolios to underperform simple indices. And of course, that that provides pressure or causes pressure to come from investment committees and other people who can't understand why your portfolio isn't performing as well as, you know, a simple S&P 500 index. Do you see your role as an asset allocator or as investor? Meaning, given that you have an underlying institution behind the portfolio, your number one goal

is to make sure that those liabilities are paid for rather than, you know, generating alpha or generating the highest returns. How do you look at those two different roles of maximizing returns versus preserving value? Yeah, I personally do both. And I think part of that is attributable to my personal skill set and background. Prior to becoming an allocator about halfway through my career, I was a transactor. I was a banker. I was a treasurer of a Fortune 500 financial services company, and that was very transactional. I came to this allocator role with a skillset in M&A, in treasury, in lending.

So my mindset is transactional. On the other hand, as an allocator, you're picking managers, you're choosing asset classes in which to invest, and you're choosing managers. So our portfolio actually has a sprinkling of direct investments, primarily driven by me, the investment committee has kindly allocated me a bucket, what we call the opportunistic bucket where I can do direct investments, private or public if I decide that there's a particular stock or a particular opportunity or particular asset class, we should get into in and out of quickly. I have the capability of doing that and also I have the ability to identify direct private investments. And we have probably half a dozen of those in the portfolio, but the vast majority of what the investment office does is asset allocation to managers. When you're exploring a theme, say AI, data services, social mobile back in the day, tell me about the process, how you get educated on a theme and how you get to consensus strategy between public or private investing, direct funds, or any other way you could access the theme. We spend time looking at trends and new investment areas, crypto being an example, AI being an

example, but we spend more time as an allocator trying to determine who understands it best or who we think understands it best, or who has a particularly interesting angle, or who has the best access, or who may have the best ideas in that particular sector. So we don't necessarily as an allocator need to become experts in AI or experts in crypto or blockchain or whatever it is, but we do need to become experts in understanding understanding or evaluating a manager's approach to an asset class, whether or not we believe in their thesis, whether or not we trust them to stay on point with their thesis. Of course, as an allocator, and I know I'm drifting off topic here, but as an allocator, one of your nightmares is to hire a manager to do a one particular thing only to realize a couple years in that they've actually, usually slowly migrated to a different strategy that you didn't expect that you didn't underwrite. And if it turns out really well, then you got lucky. If it turns out poorly, then you made a bad judgment in terms of understanding how that manager thinks, not knowing or not understanding

that they were prone to strategy creep. On the flip side, when managers have returned capital, how have you looked at that? Generally good. couple of managers, well, well known managers who hold very large cash positions in anticipation of opportunities that that may come in the future. And, you know, while we invest in a couple of those, it's frustrating. First of all, you're paying relatively big fees for them to hold large portfolios of cash. And one would think that in this day and age, if they saw an opportunity, they could very

quickly issue a capital call or within a matter of a couple of days, get as much money as they need. So when managers return money, it's actually somewhat comforting because they have recognized that the opportunity set is not there and they want to maximize our returns and they believe that what they are doing at that moment with the amount of money they have will not maximize our returns. So they're giving us an opportunity to find a different area in which to invest our capital. So in general, we, we, we view it positively. Have you ever reinvested into a manager that's given back money? Yes. When we've had the opportunity, sometimes there's can think of one manager in particular, that has on several occasions offered the opportunity to get liquidity or leave

leave your money in the fund and there's one manager particular I can think of where we almost always leave the money based based upon their track record but also frankly in one particular case I'm thinking of, because we leave it there because the particular asset class that they're in looks relatively inexpensive to us. And while the performance may not have been terrific over the last 12 or 18 or 24 months, we're always looking forward. In that particular case, I'm thinking of, we wanted to leave the money there

and wait for the opportunity to come up for that particular asset class in that particular sector to recover. Now Caltech is currently discussing adding index exposure to your public equities portfolio. Tell me about your thought process. Yeah, it's been a really tough time in active management over the last several years. It's primarily driven by what everybody refers to as the magnificent seven, where if you didn't own those seven stocks or five stocks, you almost by definition underperformed the indices.

And so at some point, when you're far enough behind the indices, the question comes up, well, why not just buy the index? And it's a little bit counter to what I said previously, right? Because right now the, the Max seven or the stocks that are performed very well are on a relative basis, incredibly expensive. Would be to look for less expensive markets but at some point you look at it and you say well would it hurt me to sprinkle some index funds into the portfolio at least. I would have some part of the portfolio that would be matching the index hopefully matching the index on the way up, but it also will be matching the index on the way down. So we historically have been virtually 100% active. But we're looking now at adding to our public portfolio, maybe a 10 or 15% position in a relatively inexpensive index funds so that at least we have some part of the portfolio matching our benchmark. Warren Buffett famously took the opposite side of that trade and made a bet with the hedge fund manager Ted Cites on whether hedge funds would outperform index funds.

Why does Caltech focus so much on active investing in the public markets? We believe in general that if we're asked to outperform the indices, which we are, we're benchmarked to various asset and sector indices. The one thing I know for sure is that if I invest only in indices, then due to fees, I will underperform the indices. We're pushed in that direction as a result of attempting to outperform. Part of it is active management, but part of it is investing in areas that aren't necessarily a right on benchmark. That's particularly true in our alternative asset classes, as I mentioned, where we might be investing in lesser correlated or completely uncorrelated asset classes, which particularly in a drawdown situation where the equity markets have drawn down, those uncorrelated assets should allow us to

outperform. So in general, we've tried to remain active, tried to find really smart people who view the market similarly to us, are relatively conservative, aren't super aggressive in their approach. Because at the end of the day, what we're really trying to do is we're trying to generate a return consistent with our payout and not lose a lot of money, as I mentioned earlier. So we look for active managers that can fit that mold. You mentioned that you see hedge funds as portfolio volatility reducing instruments. What did you mean by that? As I mentioned before, the idea is to have a portfolio of less correlated or non-correlated assets that will smooth out the return of the portfolio over time. So with, as I mentioned, about 25% of the portfolio in these lesser or uncorrelated

assets, even when we have an equity drawdown, I'm relatively comfortable that those assets will at least generate a positive return. They may not generate the return that we expected. And those assets, generally we look for something in the high single digits to mid double digits. And we may not, you know, in a tremendous drawdown, you know, the old saying is all correlations go to one. So even if you thought you had an uncorrelated asset, you may see a temporary price correction. But those typically are temporary, they tend to be liquidity driven. And so we can depend on those lesser correlated or low or uncorrelated assets low or uncorrelated assets to deliver a different return stream from our equity exposed assets.

So that combination reduces volatility within the portfolio. Yeah, it's sort of like having cash on the balance sheet, having even a little bit could basically smooth out return. Why are you so concerned with drawdowns versus expected value? Yeah, as I mentioned before, the Institute depends quite heavily on a steady stream of income or payout from the portfolio. Secondarily, as I mentioned before, 22% of our operating budget is dependent upon the payout. The second issue with our particular portfolio is that our payout is relatively high compared to our peers. We are, depending on how you calculate it, somewhere in the mid 5% range on payout,

whereas I think you'd find the average among many of our peers in the probably mid 4%, maybe high 4% range. And so the combination of those two causes us to be a little more conservative. And dumb question, why does that matter? So in your most extreme of the six kind of financial crises, I think it took five years to get back. You know, clearly you have five years of budget. So talk me through the math about why drawdowns are critical when you have a mid five high five distribution.

Well, I I'm not going to walk you through the math, but I can give you a real life example. I joined Caltech in September of 2010. The 07-08 drawdown at that point was starting to have a very meaningful impact on the payout based on the calculation of how we look at the balance in the endowment and what percentage that gets paid out. We had quite dramatic budget cuts in 2009, 2010, uncomfortable layoff of many people. And so it's real world stuff. I mean, we have on campus, we have 3000 employees. And if we have a sustained drawdown in the endowment, in the endowment, it's unfortunate, but we're going to have to cut costs because we depend on that payout in order to keep our budget stable. Absolutely. You mentioned a big part of my job is to be an acoustic wall to keep noise away from my

team. What did you mean by that? As a CIO, there's a lot of managing up and managing down. Part of my job is, of course, asset allocation, managing the people in my office, reviewing investment ideas, approving investment ideas. But another part of my job is managing the investment committee and managing our president and other and I don't mean that in a pejorative way as if I'm managing him but communicating with him, liaising with him, liaising with other members of the senior management of Caltech communicating our ideas and what we're doing and the risks we're taking. However, I want my team to focus on investing. And so part of what I tried to do is make sure that any as I called it noise, but but any distractions that might be coming from campus or from the investment committee or from any other area that I'm able to absorb that and allow my team to focus on what they do about, you know, what's going on around them,

I think it allows them to perform in a better way. Do you believe in the principle of praise in public, criticizing private? I believe definitely in the principle of praise in public and mostly praise in private. I am the type of manager where I give the credit for positive things to my team and I take the blame for negative things that happen within my purview. I think my team appreciates that. I mean, they look, we're all adults. We know what we've made a mistake.

I don't have to tell my team member when they've made a mistake. They know, and there's no need for me to pile on. What I can do is make sure they learn from it. I can make sure that they understand what went wrong. I can offer advice on how they might have approached the issue or handled issue differently. But we all make mistakes and so I tend not to be particularly critical. Rather I tend to focus on what we can learn from an error and most importantly what we can and will do in the future to avoid a repeat. What do you wish you knew before starting 14 years ago? What do you wish

you knew before starting at Caltech? I think I probably wish I understood the pace of higher ed versus being in the business world. I came from banking, I came from financial services, and as you can imagine, things move very quickly in those types of businesses. In particular, the firm, I worked for for 12 years from called Sun America,

which was founded and run by a gentleman named Eli Broad. It's very aggressive. I mean, we were always pushing, pushing, pushing to make things better and faster and less expensive. That was what we understood our job was to do. our job was to do. Academia runs at a slower pace. It just does. And sometimes my personality and my drive for constant improvement conflicts a little bit with the culture of higher ed. culture of higher ed. So I, you know, I said what I had made a different decision if I had known upfront, that things run a little more slowly when I have decided not to go to Caltech. I don't I don't think so because it's been a fantastic experience. As you know, I'm stepping down in in a few months

after a great 14 year run and I've enjoyed every minute of it. I've learned so much from the institution and from the faculty and from my colleagues. And it's been a fantastic experience. But there have definitely been times when I've been, you know, banged my head against the wall because I wasn't able to accomplish something that I felt was important to accomplish. Well, Scott, thank you for sharing your wisdom from many decades.

Thank you for jumping on the podcast. Thank you. It's been a pleasure. Thank you for listening. The 10xCapital podcast now receives more than 170,000 downloads per month. If you are interested in sponsoring, please email me at david at 10xcapital.com.